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Ark the Herald Angels Sing

If what Ark Restaurants (Nasdaq: ARKR  ) is serving on its financial statements isn't too appetizing, maybe a special dividend distribution will soothe your yield-hungry pangs.

The operator of two dozen stand-alone restaurants and casino dining facilities closed out fiscal 2007 in unspectacular fashion. Fourth-quarter sales clocked in flat as earnings from continuing operations tallied $0.51 a share. Even if you were to generously factor out the $0.04-per-share line item for stock-based compensation expenses, the bottom line would still fall short of last year's $0.63-per-share production.

Comps fell 2.8% for the period, mostly the result of a jaw-dropping 15.5% slide in comps at its four Washington D.C. eateries (America, Center Cafe, Sequoia, and Thunder Grill).

Before investors can say "check, please" Ark will be rewarding those who stick around with a special $3-per-share dividend as a result of the successful sale of its Lutece and Tsunami facilities inside the Venetian resort in Las Vegas earlier this month.

Unfortunately, the taxable event will eat into the company's cash mattress of nearly $7 a share. Yes, Ark is one of those rare debt-free restaurateurs. Even when companies like Brinker International (NYSE: EAT  ) and CBRL Group (Nasdaq: CBRL  ) are kicking in with generous share buybacks, they are often purchased with borrowed bucks.

I'm not generally a fan of special dividends. Just as you wouldn't expect to walk into the company's Bryant Park Grill in New York City and avoid getting hit with a tab at the end of your meal, there are no free lunches with these one-off dividends. The day that the $3 distributions go into effect, Ark's stock will be adjusted $3 lower, and there's no reason to expect inertia to win that drop back. It will take healthy financial production to make back those bucks, and for now at least, this Ark is looking a bit leaky.

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Longtime Fool contributor Rick Munarriz has only had one meal at an Ark eatery, an enjoyable lunch at the Center Cafe in Union Station a few years ago. He does own shares in CBRL Group. He is also part of the Rule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Fool has a disclosure policy.

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