SOURCE: Cosi, Inc.

Cosi, Inc.

March 28, 2011 16:00 ET

Cosi, Inc. Reports 2010 Fourth Quarter and Full Year Results

DEERFIELD, IL--(Marketwire - March 28, 2011) - Così, Inc. (NASDAQ: COSI), the premium convenience restaurant company, today reported a net loss for the fourth quarter ended December 27, 2010 of $(2,784,000), or $(0.05) per basic and diluted common share, compared with a net loss of $(4,447,000), or $(0.11) per basic and diluted common share in the fourth quarter of 2009.

Così's total revenues for the 2010 fourth quarter decreased 10.2% to $25,355,000 from $28,238,000 in the 2009 fourth quarter. Company-owned restaurant net sales declined 11.1% in the fourth quarter to $24,632,000, compared to $27,708,000 in the previous year's quarter largely due to the sale of 13 Company-owned restaurants to a franchisee in the second quarter of 2010. Franchise fees and royalty revenues for the 2010 fourth quarter contributed $723,000 compared to $530,000 in the 2009 fourth quarter. The year over year fourth quarter increase in franchise fees and royalties was largely the result of royalties associated with the 13 restaurants sold to a franchisee in the second quarter of 2010.

System-wide comparable restaurant net sales for the 2010 fourth quarter as measured for restaurants in operation for more than 15 months recorded an aggregate 4.5% increase compared to the fourth quarter of 2009. The breakdown in comparable sales between Company-owned and franchise-operated restaurants is as follows:

                               For the 13 weeks ended
                                 December 27, 2010
                               ----------------------
      Company-owned                      6.1%
      Franchise-operated                 1.8%
      Total System                       4.5%

For the fiscal year ended December 27, 2010 Così reported a net loss of $(3,141,000) or $(0.06) per basic and diluted common share, compared with fiscal 2009, when Così's net loss was $(11,104,000), or $(0.27) per basic and diluted common share.

Così's total revenues for fiscal 2010 decreased 7.5% to $109,699,000 from $118,573,000 in fiscal 2009. Company-owned net restaurant sales declined 8.4% in fiscal 2010 to $106,636,000, compared to $116,375,000 in fiscal 2009 due primarily to the sale of 13 Company-owned restaurants to a franchisee in the second quarter of 2010. Franchise fees and royalty revenues for fiscal 2010 contributed $3,063,000 compared to $2,198,000 in fiscal 2009. The year over year increase in franchise fees and royalties was largely the result of royalties associated with the 13 restaurants sold to a franchisee in the second quarter of 2010.

System-wide comparable restaurant net sales for fiscal 2010 as measured for restaurants in operation for more than 15 months increased by 2.4% as compared to fiscal 2009. The breakdown in comparable sales between Company-owned and franchise-operated restaurants is as follows:

                               For the 52 weeks ended
                                 December 27, 2010
                               ----------------------
      Company-owned                      2.6%
      Franchise-operated                 2.0%
      Total System                       2.4%

"We are pleased to report our third consecutive quarter of system-wide comparable sales growth," James Hyatt, Così's President and Chief Executive Officer, said. "We are also pleased with the quarter over quarter improvement achieved in our restaurant operating margins. We believe the results for the quarter reflect our continued focus on driving traffic and sales while working to improve operating margins and control administrative costs."

2010 Fourth Quarter and Full Year Financial Performance Review

Contributing to Così's aforementioned 11.1% decrease in fourth quarter Company-owned net sales as compared to the fourth quarter last year was the impact of the sale of thirteen Company-owned restaurants to a franchisee during the second quarter of 2010 which was partially offset by a 6.1% increase in Company-owned comparable sales. The Company-owned comparable net sales increase of 6.1% was comprised of a 3.8% increase in traffic and a 2.3% increase in average guest check

For the fourth quarter, Così reported a 120 basis point decrease in costs and expenses related to Company-owned restaurant operations as a percentage of restaurant net sales compared with the fourth quarter of 2009. The change resulted from decreases of 80, 30 and 10 basis points, as a percentage of restaurant net sales, in labor and related benefits, cost of food and beverage and occupancy and other restaurant operating expenses, respectively. The decrease in labor and related benefits and occupancy and other restaurant operating expenses as a percentage of restaurant net sales was due primarily to the impact of the comparable restaurant net sales increase on the fixed portion of these costs during the period.

During the 2010 fourth quarter, the Company reported general and administrative expenses of $3,584,000 or 14.1% of total revenues as compared to $3,719,000 or 13.2% for the 2009 fourth quarter. The decrease in 2010 expense as compared to 2009 was due primarily to reductions in labor and related benefits as well as certain third party fees partially offset by higher marketing costs.

For the full year 2010, the 8.4% decrease in Company-owned restaurant net sales as compared to fiscal 2009 was due primarily to the impact of the sale of thirteen Company-owned restaurants to a franchisee during the second quarter of 2010 which was partially offset by a 2.6% increase in Company-owned comparable sales. The Company-owned comparable sales increase of 2.6% was comprised of a 0.9% increase in traffic and a 1.7% increase in average guest check.

For fiscal 2010, Così reported a 110 basis point increase in costs and expenses related to Company-owned restaurant operations as a percentage of restaurant net sales compared with fiscal 2009. The change resulted from increases of 60, 40 and 10 basis points, as a percentage of restaurant net sales, in labor and related benefits, occupancy and other restaurant operating expenses and cost of food and beverage, respectively.

During fiscal 2010, the Company reduced its general and administrative expenses by 6.4% or $943,000 to $13,692,000 from $14,635,000 due primarily to savings in labor and related benefits. As a percentage of total revenues, general and administrative expenses increased to 12.5% in fiscal 2010 as compared to 12.3% in 2009 largely due to the impact of the sale of thirteen Company-owned restaurants to a franchisee during the second quarter of 2010.

Così reported that as of December 27, 2010 it had cash and cash equivalents of $10,307,000 and virtually no debt other than lease obligations.

Development Performance

Così ended fiscal 2010 with a total of 142 locations consisting of 83 Company-owned locations and 59 franchised locations. During the 2010 fourth quarter, two Company-owned locations were closed, one in Darien, Connecticut and one in Ann Arbor, Michigan. Subsequent to the end of the 2010 fourth quarter, one additional Company-owned location was closed in Oak Park, Illinois.

About Così, Inc.

Così® (http://www.getcosi.com) is a national premium convenience restaurant chain that has developed featured foods built around a secret, generations-old recipe for crackly crust flatbread. This artisan bread is freshly baked in front of customers throughout the day in open-flame stone-hearth ovens prominently located in each of the restaurants. Così's warm and urbane atmosphere is geared towards its sophisticated, upscale, urban and suburban guests. There are currently 82 Company-owned and 59 franchise restaurants operating in eighteen states, the District of Columbia and the United Arab Emirates. The Così vision is to become America's favorite premium convenience restaurant by providing customers authentic, innovative, savory food while remaining an affordable luxury.

The Così® menu features Così® sandwiches, freshly-tossed salads, melts, soups, Così® Squagels®, breakfast wraps, oatmeal, flatbread pizzas, S'mores, snacks and other desserts, and a wide range of coffee and coffee-based drinks and other specialty beverages. Così® restaurants are designed to be welcoming and comfortable with an eclectic environment. Così's sights, sounds, and spaces create a tasteful, relaxed ambience that provides a fresh and new dining experience.

"Così," "(Sun & Moon Design)" and related marks are registered trademarks of Così, Inc. in the U.S.A. and certain other countries. Copyright © 2011 Così, Inc. All rights reserved.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This press release contains statements that constitute forward-looking statements under the federal securities laws. Forward-looking statements are statements about future events and expectations and not statements of historical fact. The words "believe," "may," "will," "should," "anticipate," "estimate," "expect," "intend," "objective," "seek," "plan," "strive," or similar words, or negatives of these words, identify forward-looking statements. We qualify any forward-looking statements entirely by these cautionary factors. Forward-looking statements are based on management's beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available to management. Forward-looking statements involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. Factors that could contribute to these differences include, but are not limited to: the cost of our principal food products and supply and delivery shortages or interruptions; labor shortages or increased labor costs; changes in consumer preferences and demographic trends; expansion into new markets including foreign markets; our ability to locate suitable restaurant sites in new and existing markets and negotiate acceptable lease terms; competition in our markets, both in our business and in locating suitable restaurant sites; our operation and execution in new and existing markets; our ability to recruit, train and retain qualified corporate and restaurant personnel and management; cost effective and timely planning, design and build-out of restaurants; our ability to attract and retain qualified franchisees; the availability and cost of additional financing, both to fund our existing operations and to open new restaurants; the rate of our internal growth and our ability to generate increased revenue from our existing restaurants; our ability to generate positive cash flow from existing and new restaurants; the reliability of our customer and market studies; fluctuations in our quarterly results due to seasonality; increased government regulation and our ability to secure required governmental approvals and permits; our ability to create customer awareness of our restaurants in new markets; market saturation due to new restaurant openings; inadequate protection of our intellectual property; adverse weather conditions which impact customer traffic at our restaurants and adverse economic conditions. Further information regarding factors that could affect our results and the statements made herein are included in our filings with the Securities and Exchange Commission.

Additional information is available on Così's website at http://www.getcosi.com in the investor relations section.





                                Cosi, Inc.
                        Consolidated Balance Sheets
              As of December 27, 2010 and December 28, 2009
                          (dollars in thousands)


                                                  December 27, December 28,
                                                     2010         2009
                                                  -----------  -----------
Assets
Current assets:
  Cash and cash equivalents                       $    10,307  $     4,079
  Accounts receivable, net                                697          539
  Notes receivable, current portion                       506           21
  Inventories                                             744          967
  Prepaid expenses and other current assets             1,639        2,136
                                                  -----------  -----------
      Total current assets                             13,893        7,742

Furniture and fixtures, equipment and leasehold
 improvements, net                                     15,009       22,100
Notes receivable, net of current portion                1,195          141
Other assets                                            1,254        1,587
                                                  -----------  -----------
      Total assets                                $    31,351  $    31,570
                                                  ===========  ===========

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                                $     2,992  $     3,079
  Accrued expenses                                      9,237        9,628
  Deferred franchise revenue                               61           44
  Current portion of other long-term liabilities          545          588
                                                  -----------  -----------
      Total current liabilities                        12,835       13,339

  Deferred franchise revenue                            2,238        2,563
  Other long-term liabilities, net of current
   portion                                              4,592        6,343
                                                  -----------  -----------
      Total liabilities                                19,665       22,245
                                                  -----------  -----------

Commitments and contingencies

Stockholders' equity:
  Common stock - $.01 par value; 100,000,000
   shares authorized, 51,682,891 and 40,862,474
   shares issued, respectively                            517          409
  Additional paid-in capital                          283,388      277,994
  Treasury stock, 239,543 shares at cost               (1,198)      (1,198)
  Accumulated deficit                                (271,021)    (267,880)
                                                  -----------  -----------
      Total stockholders' equity                       11,686        9,325
                                                  -----------  -----------
      Total liabilities and stockholders'
       equity                                     $    31,351  $    31,570
                                                  ===========  ===========

The accompanying notes are an intergral part of these consolidated
financial statements.






                                Cosi, Inc.
                  Consolidated Statements of Operations
    For the Three and Twelve Month Periods Ended December 27, 2010 and
                            December 28, 2009
              (dollars in thousands, except per share data)


                              Three Months Ended      Twelve Months Ended
                             December    December    December    December
                             27, 2010    28, 2009    27, 2010    28, 2009
                            ----------  ----------  ----------  ----------

Revenues:
    Restaurant net sales    $   24,632  $   27,708  $  106,636  $  116,375
    Franchise fees and
     royalties                     723         530       3,063       2,198
                            ----------  ----------  ----------  ----------
      Total revenues            25,355      28,238     109,699     118,573
                            ----------  ----------  ----------  ----------

Costs and expenses:
    Cost of food and
     beverage                    5,636       6,418      24,366      26,429
    Restaurant labor and
     related benefits            9,182      10,559      40,161      43,151
    Occupancy and other
     restaurant operating
     expenses                    7,972       9,010      33,977      36,617
                            ----------  ----------  ----------  ----------
                                22,790      25,987      98,504     106,197
    General and
     administrative expenses     3,584       3,719      13,692      14,635
    Depreciation and
     amortization                1,101       1,606       4,773       7,050
    Restaurant pre-opening
     expenses                        -          13           -          13
    Provision for losses on
     asset impairments and
     disposals                     432       1,292         732       1,530
    Closed store costs             132           3         152          48
    Lease termination
     expense, net                   39         116         203         322
    Gain on sale of assets          61        (102)     (5,205)       (102)
                            ----------  ----------  ----------  ----------
      Total costs and
       expenses                 28,139      32,634     112,851     129,693
                            ----------  ----------  ----------  ----------
      Operating loss            (2,784)     (4,396)     (3,152)    (11,120)
Other income (expense):
  Interest income                    -           -           1           3
  Interest expense                   -           -          (4)         (4)
  Other income                       -         (51)         14          17
                            ----------  ----------  ----------  ----------
      Total other income
       (expense)                     -         (51)         11          16
                            ----------  ----------  ----------  ----------
      Net loss                  (2,784)     (4,447)     (3,141)    (11,104)
                            ==========  ==========  ==========  ==========

Per Share Data:
  Loss per share, basic
   and diluted              $    (0.05) $    (0.11) $    (0.06) $    (0.27)
                            ==========  ==========  ==========  ==========

  Weighted average common
   shares outstanding       51,233,243  40,528,857  50,638,031  40,423,184
                            ==========  ==========  ==========  ==========

The accompanying notes are an intergral part of these consolidated
financial statements.







                                Cosi, Inc.
            Results of Operations as a Percentage of Revenues
    For the Three and Twelve Month Periods Ended December 27, 2010 and
                            December 28, 2009


                              Three Months Ended      Twelve Months Ended
                             December    December    December    December
                             27, 2010    28, 2009    27, 2010    28, 2009
                            ---------   ---------   ---------   ---------

Revenues:
  Restaurant net sales           97.1 %      98.1 %      97.2 %      98.1 %
  Franchise fees and
   royalties                      2.9         1.9         2.8         1.9
                            ---------   ---------   ---------   ---------
     Total revenues             100.0       100.0       100.0       100.0
                            ---------   ---------   ---------   ---------
Cost and expenses:
  Cost of food and beverage
   (1)                           22.9        23.2        22.8        22.7
  Restaurant labor and
   related benefits (1)          37.3        38.1        37.7        37.1
  Occupancy and other
   restaurant operating
   expenses (1)                  32.4        32.5        31.9        31.5
                            ---------   ---------   ---------   ---------
                                 92.6        93.8        92.4        91.3
General and administrative
 expenses:                       14.1        13.2        12.5        12.3
  Depreciation and
   amortization                   4.3         5.7         4.4         5.9
  Restaurant pre-opening
   expenses                         -           -           -           -
  Provision for losses on
   asset impairments and
   disposals                      1.7         4.6         0.7         1.3
  Closed store costs              0.5           -         0.1           -
  Lease termination expense,
   net                            0.2         0.4         0.2         0.3
  Gain on sale of assets          0.2        (0.4)       (4.7)       (0.1)
                            ---------   ---------   ---------   ---------
     Total costs and
      expenses                  111.0       115.6       102.9       109.4
                            ---------   ---------   ---------   ---------
     Operating loss             (11.0)      (15.6)       (2.9)       (9.4)
Other income (expense):
  Interest income                   -           -           -           -
  Interest expense                  -           -           -           -
  Other expense                     -        (0.2)          -           -
                            ---------   ---------   ---------   ---------
     Total other income
      (expense)                     -           -           -           -
                            ---------   ---------   ---------   ---------

     Net loss                   (11.0)%     (15.8)%      (2.9)%      (9.4)%
                            =========   =========   =========   =========

(1) These are expressed as a pecentage of restaurant net sales versus all
    other items expressed as a percentage of total revenues.







Cosi, Inc.
System-wide Restaurants

                                        Fiscal Year
                       2010                2009                2008
                ------------------- ------------------- -------------------
                Company Fran-       Company Fran-       Company Fran-
                -Owned  chise Total -Owned  chise Total -Owned  chise Total
                ------- ----- ----- ------- ----- ----- ------- ----- -----
Restaurants at
 beginning of
 period              99    46   145     101    50   151     107a   34   141

Company-owned
 sold to
 franchisee          13    13     -       -     -     -       -     -     -
New restaurants
 opened               -     2     2       2     6     8       1    19    20
Restaurants
 permanently
 closed               3     2     5       4    10    14       7     3    10
                ------- ----- ----- ------- ----- ----- ------- ----- -----
Restaurants at
 end of period       83    59   142      99    46   145     101    50   151
                ======= ===== ===== ======= ===== ===== ======= ===== =====

a - Includes three locations that are classified as discontinued
    operations.


Contact Information

  • CONTACT:
    William Koziel
    (847) 597-8800