UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 18, 1999
Commission File No. 0-24982
SILVER DINER, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-3234411
- --------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or organization)
11806 Rockville Pike, Rockville, Maryland, 20852
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(301) 770-0333
- --------------------------------------------------------------------------------
(Registrant's telephone number)
SILVER DINER DEVELOPMENT, INC.
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since the last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ].
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.00074 par value, outstanding as of August 18, 1999:
11,784,633 shares
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of July 18, 1999
and January 3, 1999 3
Consolidated Statements of Operations for the
Twelve and Twenty Eight Weeks Ended July 18, 1999
and July 12, 1998 4
Consolidated Statements of Cash Flows for the
Twenty Eight Weeks Ended July 18, 1999 and July 12, 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Repots on Form 8-K 12
Signature 13
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
July 18, January 3,
1999 1999
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,064,915 $ 1,611,757
Marketable securities available for sale -- 746,597
Inventory 138,120 139,039
Prepaid rent -- 182,796
Incentive rebates 56,543 61,410
Prepaid expenses and other current assets 84,739 110,666
------------ ------------
Total current assets 2,344,317 2,852,265
Property, equipment and improvements, net 15,649,280 16,117,417
Due from related parties 138,942 126,516
Goodwill, net 2,199,739 2,299,082
Deposits and other 369,745 243,217
------------ ------------
Total assets $ 20,702,023 $ 21,638,497
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,677,925 $ 1,960,222
Note payable 267,000 267,000
------------ ------------
Total current liabilities 1,944,925 2,227,222
Deferred rent liability 1,150,886 1,173,280
------------ ------------
Total liabilities 3,095,811 3,400,502
Stockholders' equity:
Preferred stock, at July 18, 1999 and January 3, 1999, $.001 par
value, 1,000,000 shares authorized, none issued -- --
Common stock, $.00074 par value, 20,000,000 shares authorized; at
July 18, 1999, 11,769,885 shares issued and outstanding; at January
3, 1999, 11,585,510 shares issued and outstanding 8,570 8,558
Additional paid-in capital 30,659,999 30,688,714
Unearned compensation (203,372) (252,453)
Accumulated deficit (12,858,985) (12,206,824)
------------ ------------
Total stockholders' equity 17,606,212 18,237,995
------------ ------------
Total liabilities and stockholders' equity $ 20,702,023 $ 21,638,497
============ ============
</TABLE>
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
3
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty Eight Weeks Ended
July 18, July 12, July 18, July 12,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 6,819,461 $ 6,563,484 $ 15,539,191 $ 14,842,418
Restaurant costs and expenses
Cost of sales 1,783,764 1,816,638 4,050,579 4,129,542
Labor 2,292,128 2,212,141 5,274,008 5,075,686
Operating 1,321,167 1,325,090 2,756,761 2,701,132
Occupancy 668,619 651,053 1,554,213 1,519,453
Depreciation and amortization 263,865 300,062 630,288 696,543
------------ ------------ ------------ ------------
Total restaurant costs and expenses 6,329,543 6,304,984 14,265,849 14,122,356
------------ ------------ ------------ ------------
Restaurant operating income 489,918 258,500 1,273,342 720,062
General and administrative expenses 781,583 585,764 1,807,313 1,451,773
Depreciation and amortization 72,616 57,946 171,915 144,746
------------ ------------ ------------ ------------
Operating loss (364,281) (385,210) (705,886) (876,457)
Interest expense 5,763 5,763 13,446 15,505
Investment income (30,373) (44,301) (67,167) (94,879)
------------ ------------ ------------ ------------
Loss before cumulative effect of a change
in accounting principle (339,671) (346,672) (652,165) (797,083)
Cumulative effect of a change in accounting principle -- -- -- (326,868)
------------ ------------ ------------ ------------
NET LOSS $ (339,671) $ (346,672) $ (652,165) $ (1,123,951)
============ ============ ============ ============
Basic and diluted loss per common share
Loss per common share before cumulative
effect of a change in accounting principle $ (0.03) $ (0.03) $ (0.06) $ (0.07)
Cumulative effect of a change in accounting
principle -- -- -- (0.03)
============ ============ ============ ============
Net loss per common share $ (0.03) $ (0.03) $ (0.06) $ (0.10)
============ ============ ============ ============
Weighted average shares outstanding 11,769,885 11,587,946 11,769,885 11,592,722
============ ============ ============ ============
</TABLE>
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Twenty Eight Weeks Ended
July 18, 1999 July 12, 1998
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (652,165) $(1,123,951)
Adjustments to reconcile net loss to net cash provided by (used in)
operations
Cumulative effect of a change in accounting principle -- 326,868
Depreciation and amortization 802,203 841,289
Compensation expense - stock options and deferred compensation 30,378 78,281
Changes in operating assets and liabilities
Inventory 919 25,443
Prepaid rent 182,796 --
Incentive rebates 4,867 --
Prepaid expenses and other current assets 25,927 (124,580)
Deposits and other (119,585) (1,299)
Accounts payable and accrued expenses (282,297) 134,830
Deferred rent liability (22,394) (4,116)
Advances to officers and employees (12,426)
----------- -----------
Net cash (used in) provided by operating activities (41,777) 152,765
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (241,662) (677,709)
Purchases of marketable securities available for sale (1,606,137)
Maturities of available for sale marketable securities 746,597 1,250,000
----------- -----------
Net cash provided by (used in) investing activities 504,935 (1,033,846)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of common stock -- 12,500
Repurchase of common stock from employees (10,000) --
Purchase of treasury stock -- (47,500)
----------- -----------
Net cash (used in) financing activities (10,000) (35,000)
----------- -----------
Net increase/(decrease) in cash and cash equivalents 453,158 (916,081)
Cash and cash equivalents at beginning of the period 1,611,757 1,597,430
----------- -----------
Cash and cash equivalents at end of the period $ 2,064,915 $ 681,349
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 13,446 $ 15,505
=========== ===========
NONCASH INVESTING AND FINANCING:
Construction payables included in accounts payable and
accrued expenses
$ -- $ 30,945
=========== ===========
</TABLE>
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
5
<PAGE>
SILVER DINER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE TWELVE AND TWENTY EIGHT WEEKS ENDED
JULY 18, 1999 AND JULY 12, 1998
(UNAUDITED)
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Silver Diner,
Inc., a Delaware Corporation, and its wholly owned subsidiary, Silver Diner
Development, Inc. ("SDDI"), (collectively the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the twelve and twenty eight week periods ended
July 18, 1999 are not necessarily indicative of the results that may be expected
for the year ending January 2, 2000. All significant intercompany balances and
transactions have been eliminated in consolidation. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended January 3, 1999.
2. CHANGE IN ACCOUNTING PRINCIPLE
On April 3, 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-5, "Reporting on the Cost of Start-Up
Activities". SOP No. 98-5 requires that costs associated with start-up
activities, such as opening a new facility, be expensed as incurred. This SOP is
effective for financial statements with fiscal years beginning after December
15, 1998, however, early application is encouraged.
Prior to the sixteen weeks ended April 19, 1998, the Company capitalized
preopening costs, including payroll, employee recruitment and advertising,
incurred in the restaurant start-up and training period prior to the opening of
each restaurant, and amortized these costs over twelve months from the date of
opening. For the sixteen weeks ended April 19, 1998 the Company elected early
application of SOP 98-5. As a result of the early application, all preopening
costs capitalized as of December 28, 1997 were expensed and recorded as a
cumulative effect of a change in accounting principle for the sixteen weeks
ended April 19, 1998.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING DISCLOSURE
Certain information included herein contains statements that are
forward-looking, such as statements relating to plans for future expansion and
other business development activities as well as operating costs, capital
spending, financial sources and the effects of competition. Such forward-looking
information is subject to changes and variations which are not reasonably
predictable and which could significantly affect future results. Accordingly,
such results may differ from those expressed in any forward-looking statements
made by or on behalf of the Company. These changes and variations which could
significantly affect future results include, but are not limited to, those
relating to development and construction activities, including delays in opening
new Diners, acceptance of the Silver Diner concept, the quality of the Company's
restaurant operations, the adequacy of operating and management controls,
dependence on discretionary consumer spending, dependence on existing
management, inflation and general economic conditions, and changes in federal or
state laws or regulations.
GENERAL
The Company currently operates ten Silver Diners in the
Washington/Baltimore metropolitan area and one in Cherry Hill, New Jersey.
Currently, there are no Silver Diners under construction. The Company is
pursuing additional locations in the Philadelphia/Southern New Jersey market and
throughout the Mid-Atlantic region. Longer term, the Company plans to expand the
Silver Diner chain nationwide through additional openings of Company-owned
restaurants and possibly through the development of franchise or joint venture
relationships.
7
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth the percentage of net sales of items
included in the consolidated condensed statements of operations for the periods
indicated:
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty Eight Weeks Ended
July 18, July 12, July 18, July 12,
1999 1998 1999 1998
-------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Restaurant costs and expenses:
Cost of sales 26.2% 27.7% 26.1% 27.8%
Labor 33.6% 33.7% 33.9% 34.2%
Operating 19.4% 20.2% 17.7% 18.2%
-------------- ------------- ------------ -----------
Restaurant operating margin 20.8% 18.4% 22.3% 19.8%
Occupancy 9.8% 9.9% 10.0% 10.2%
Depreciation and amortization 3.9% 4.6% 4.1% 4.7%
-------------- ------------- ------------ -----------
Restaurant operating income 7.1% 3.9% 8.2% 4.9%
General and administrative expenses 11.5% 8.9% 11.6% 9.8%
Depreciation and amortization 1.1% 0.9% 1.1% 1.0%
-------------- ------------- ------------ -----------
Operating loss (5.5%) (5.9%) (4.5%) (5.9%)
Interest expense 0.1% 0.1% 0.1% 0.1%
Investment income (0.4%) (0.7%) (0.4%) (0.6%)
-------------- ------------- ------------ -----------
Loss before cumulative effect of a change in
accounting principle (5.2%) (5.3%) (4.2%) (5.4%)
Cumulative effect of a change in accounting
principle -- -- -- (2.2%)
-------------- ------------- ------------ -----------
Net Loss (5.2%) (5.3%) (4.2%) (7.6%)
============== ============= ============ ===========
</TABLE>
Net sales for the twelve weeks ended July 18, 1999 ("Second Quarter 1999")
increased $255,977, or 3.9%, to $6,819,461, compared to $6,563,484 for the 12
weeks ended July 12, 1998 ("Second Quarter 1998"). Year-to-date, net sales for
the twenty-eight weeks ended July 18, 1999 ("1999 YTD Period") increased
$696,773, or 4.7%, to 15,539,191, compared to $14,842,418 for the twenty-eight
weeks ended July 12, 1998 ("1998 YTD Period"). The increase for Second Quarter
1999 was primarily attributable to sales generated by a 4.4% increase in
customer traffic coupled with a 1.1% increase in average guest check. The
increase for the 1999 YTD Period was attributable to similar increases in
customer counts and average guest check.
8
<PAGE>
Comparable Silver Diner sales (sales for Silver Diners open throughout
both periods being compared, excluding the initial six months of operations
during which sales are typically higher than normal) for the 1999 Second Quarter
increased 5.7% compared to the second quarter of 1998 and for the 1999 YTD
Period increased 7.1% compared to the 1998 YTD Period. The increases in
comparable sales for the quarter were the continuing result of the Company's
110% guarantee initiative and direct coupon mailing. The 110% guarantee
initiative calls for a 10% discount for a patron's current meal and a coupon for
a free entree if not completely satisfied with the meal, while the direct
mailing involved distributing discount entree coupons. These two initiatives
continued the trend of increased customer traffic over the first two quarters of
1998 and, combined with the increases in average net sales per customer
discussed above, resulted in the increased sales.
Cost of sales, primarily food and beverage costs decreased to 26.2% of net
sales for Second Quarter 1999, compared to 27.7% of net sales for Second Quarter
1998. Cost of sales for the 1999 YTD Period were 26.1% of net sales, compared to
27.8% of net sales for the 1998 YTD Period. The decrease from the Second Quarter
1998 was attributable to the Company's ongoing focus on the cost of its menu
offerings combined with less extensive seasonal menu updates.
Labor, which consists of restaurant management and hourly employee wages and
bonuses, payroll taxes, workers' compensation insurance, group health insurance
and other benefits, decreased to 33.6% of net sales in Second Quarter 1999
compared to 33.7% of net sales for Second Quarter 1998. For the 1999 YTD Period,
labor expense as a percentage of sales decreased from 34.2% in the 1998 YTD
Period to 33.9%. During 1999 labor expenses, as a percentage of net sales, have
remained reasonably stable as a result of increased unit volumes partially
offset by a highly competitive labor market.
Operating expenses, which consist of all restaurant operating costs other
than cost of goods, labor and occupancy, including supplies, utilities, repairs
and maintenance and advertising, decreased to 19.4% of net sales for Second
Quarter 1999, compared to 20.2% for Second Quarter 1998. For the 1998 YTD
Period, operating expenses decreased from 18.2% in 1998 to 17.7%. Operating
expenses in both the quarterly and year-to-date periods were favorably affected
by continued operational cost control efforts.
Occupancy, which is composed primarily of rent, property taxes and property
insurance, increased $17,566 for Second Quarter 1999 compared to Second Quarter
1998. The increase of $34,760 for the 1999 YTD Period over the 1998 YTD Period
was due primarily to normal annual rent increases. As a percentage of net sales,
occupancy has decreased from 9.9% for Second Quarter 1998 to 9.8% for Second
Quarter 1999, and from 10.2% for the 1998 YTD Period to 10.0% for the 1999 YTD
period.
Restaurant depreciation and amortization decreased $36,197 for Second
Quarter 1999 compared to Second Quarter 1998 and decreased $66,255 for 1999 YTD
Period compared to 1998 YTD Period. Both the decrease for the second quarter and
for the year-to-date period were due to the Fourth Quarter 1998 reduction in the
Company's asset base. Prior to the First Quarter 1998, the Company had
capitalized all preopening costs and amortized these costs over a twelve-month
period. As a result of the application of SOP No. 98-5, all preopening cost as
of December 28, 1997 were expensed and recorded as a cumulative effect of a
change in accounting principle for the First Quarter of 1998.
9
<PAGE>
General and administrative expenses include the cost of corporate
administrative personnel and functions, multi-unit management and restaurant
management recruitment and initial training. Such expenses were $781,583 for
Second Quarter 1999, an increase of $195,819, or 33.4%, compared to Second
Quarter 1998. As a percentage of net sales, general and administrative expenses
increased to 11.5% for Second Quarter 1999 from 8.9% for Second Quarter 1998.
The increase was primarily attributable to an increase in professional fees, a
significant portion of which involved reorganizing and streamlining the
Company's stock option plans, increased management recruitment and training
expenses due to an increase in the hiring of store managers to support the
Company's higher sales and timing differences related to investor relations
expense recognition. General and administrative expenses for the 1999 YTD Period
increased $355,540, or 24.5% from $1,451,773 in 1998 YTD Period. Despite the
increase in general and administrative expenses in the 1999 reporting periods,
the Company remains committed to controlling overhead expenses, and expects
general and administrative expenditures to decrease as a percentage of sales as
a result of overall operating leverage.
Depreciation and amortization increased $14,670 for Second Quarter 1999 as
compared to $57,946 in the Second Quarter 1998 and increased $27,169 for 1999
YTD Period compared to $144,746 in the 1998 YTD Period. The increased expense
for both reporting periods is a function of purchases of equipment. Depreciation
and amortization included amortization expense of approximately $43,000 for both
the Second Quarter 1998 and 1999 and approximately $99,000 for both year-to-date
periods.
The Company earned $30,373 in investment income for Second Quarter 1999,
compared to investment income of $44,301 for Second Quarter 1998. Investment
income for 1999 YTD Period was $67,167 compared to $94,879 in 1998 YTD period.
The decrease for both the quarterly and year-to-date periods is the result of
reduced levels of invested funds and slightly lower yields. Interest expense of
$5,763 in Second Quarter 1999 remained unchanged from the Second Quarter 1998.
For the 1999 YTD Period interest expense of $13,446 decreased by $2,059 as
compared to the 1998 YTD Period.
Net loss for Second Quarter 1999 was $339,671, or $0.03 per share on a basic
and diluted basis, compared to $346,672, or $0.03 per share on a basic and
diluted basis, for Second Quarter 1998. Net loss before cumulative effect of a
change in accounting principle for 1998 YTD Period was $797,083, or $0.07 per
share on a basic and diluted basis, compared to $652,165, or $0.06 per share on
a basic and diluted basis, for 1999 YTD Period. Net loss for the twenty-eight
weeks ended July 18, 1999 was $652,165, or $0.06 per share on a basic and
diluted basis, compared to $1,123,951, or $0.10 per share on a basic and diluted
basis for the twenty-eight weeks ended July 12, 1998. Management expects that
the Company will continue incurring losses until sufficient revenue is generated
from new units to absorb start-up expenses and the general and administrative
costs associated with developing and running the Company.
LIQUIDITY AND CAPITAL RESOURCES
At July 18, 1999, cash and cash equivalents were approximately $2.06
million, working capital was approximately $0.40 million, the Company had $0.27
million of long-term debt and stockholders' equity was approximately $17.61
million. Cash and cash equivalents decreased $0.29 million during the 1999 YTD
Period, due primarily to expenditures for property and equipment.
The Company's principal future capital requirement is expected to be the
development of restaurants. Currently, the typical building, equipment
(including smallwares) and site development cost of a new Silver Diner prototype
is expected to be $1.3 to $1.5 million. However, due to above average site costs
and architectural and design costs, the five Silver Diner locations opened since
December 1995 have averaged approximately $1.8 million for building, equipment
and site costs. The Company is currently endeavoring to decrease the cost of the
Silver Diner prototype for the next restaurant. There is no assurance that the
Company's prototype redesign plans will produce significant savings in the
prototype costs. Land will generally be leased. When land is not leased,
management may pursue a purchase, sale-leaseback, build-to-suit or debt
financing strategy.
10
<PAGE>
At July 18, 1999, the Company did not have any restaurants under
construction, and as previously announced management does not anticipate opening
its next diner until the year 2000. The Company has been pursuing locations in
new geographical markets, specifically in the Mid-Atlantic area from North
Carolina to Southern New Jersey. To that end, the Company opened a new store in
Cherry Hill, New Jersey in November 1997, and is aggressively pursuing several
locations for new store openings. Management is continuing to negotiate to
obtain other sites throughout the Mid-Atlantic region.
Management believes that the Company's current capital resources and expected
1999 cash flow will be adequate to construct up to two units. Additional
financing will be required to finance growth in 2000 beyond the next two diners.
The Company has entered into a preliminary loan agreement with its lead bank to
extend a $3.0 million credit facility that, if obtained, would be sufficient to
fund at least two additional diners. Should the Company be unable to close on
the financing commitment, management may be forced to limit unit growth.
YEAR2000 ISSUE AND COMPLIANCE
The Year2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Computer
equipment, software and other devices with embedded technology that are
date-sensitive may incorrectly recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions or engage in normal
business activities both at the restaurant and corporate level. The Company is
continually evaluating its risk and the related costs of updating its computer
hardware and software to properly process Year2000 and later dates. This process
includes the upgrade of its point of sale systems, which has been assessed by
the vendor as being Year2000 compliant, the successful completion of an embedded
technology evaluation of our restaurants and corporate offices and the continued
engagement of consultants and other contract service providers to evaluate the
preparedness of the Company's information technology systems as well as
non-information technology systems with embedded technology applications. The
Company has identified other areas potentially affected by the Year2000 issue:
credit card processing machines, and the Year2000 compliance of those entities
on which the Company relies for goods and services, such as its suppliers and
bank. The Company expects the cost related to the Year2000 issue to be between
$10,000 and $50,000 and has incurred costs of approximately $6,000 to date. In
the event that the Company's systems fail as a result of the Year2000 issue,
management believes that the Company's restaurants will remain operating on a
manual basis. The risks associated with this contingency plan involve the
decreased level of operational controls and the inability to process credit card
transactions.
The forward-looking nature, lack of precedent and general uncertainty
surrounding the Year2000 issue present a difficult set of disclosure
circumstances, the only certainty is in fact uncertainty as to what might occur
after December 31, 1999. Management believes they have taken the necessary,
prudent steps relating to the Year2000 issue and its business enterprise.
However, management cannot guarantee that their actions are accurate or complete
and actual results could vary significantly from expectations. Notwithstanding
our preparation, unforeseen failures by third parties, public utilities and
infrastructure or our own failure to identify and remedy Year2000 issues could
have a material adverse impact on our restaurant operations, cash flows and
overall financial condition.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No reportable events or material developments in reported events
occurred during the period ended July 18, 1999.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of the Company was held on June 18,
1999. The following items were voted on and approved by a majority of
the stockholders:
1. Re-election of the Company's directors.
DIRECTOR VOTED FOR WITHHELD
-------- --------- --------
Robert T. Giaimo 9,200,068 293,742
Catherine Britton 9,197,863 295,947
Michael Collier 9,235,724 258,086
Ype Von Hengst 9,235,484 258,326
Edward H. Kaplan 9,236,334 257,476
Louis P. Neeb 9,235,574 258,236
Charles M. Steiner 9,234,724 259,086
2. Approval of the amendment to the Company's Stock Option Plan
increasing the number of shares of Common Stock available for
grant under the Stock Option plan from 1,200,000 to 1,750,000.
With regards to this item, 8,954,208 shares were voted for,
509,900 were voted against, 29,702 shares were abstained, and
2,275,773 were not voted.
3. Approval of the amendment to the Company's 1996 Non-Employee
Directors Stock Option Plan to modify the schedule under which
options are granted, the manner in which they vest and the period
in which they expire. With regards to this item, 8,972,762 shares
were voted in favor of the resolution, 461,610 shares were voted
against the resolution, 59,438 shares were abstained, and
2,275,773 were not voted.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
27. Financial Data Schedule (Submitted electronically for SEC information
only)
(B) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the period ended
July 18, 1999.
Item 3 is not applicable and has been omitted.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SILVER DINER, INC.
------------------------------------------------
(Registrant)
September 1, 1999 /s/ Craig A. Kendall
- -------------------------- ------------------------------------------------
Date Craig A. Kendall
Vice President, Finance
(Duly Authorized Officer and Principal Financial
Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Silver Diner, Inc. and Subsidiaries, for the twelve
weeks ended July 18, 1999, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-END> JUL-18-1999
<CASH> 2,064,915
<SECURITIES> 0
<RECEIVABLES> 0
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0
0
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