SOURCE: Cosi, Inc.
DEERFIELD, IL–(Marketwire – August 12, 2010) – Così, Inc. (
convenience restaurant company, today reported net income for the second
quarter ended June 28, 2010 of $3,793,000, or $0.07 per basic and diluted
common share, compared with a net loss of $(969,000), or $(0.02) per basic
and diluted common share, for the 2009 second quarter. Included in the
reported net income for the 2010 second quarter is a gain of $5,120,000, or
$0.10 per basic and diluted common share, related to the sale of thirteen
Company-owned restaurants in Washington D.C. to a franchisee.
Così’s total revenues for the 2010 second quarter decreased 6.4% to
$29,623,000 from $31,636,000 in the 2009 second quarter. Company-owned net
restaurant sales declined 7.8% in the quarter to $28,589,000, compared to
$31,015,000 in the previous year’s quarter. Franchise fees and royalty
revenues for the quarter contributed $1,034,000 compared to $621,000 in the
2009 second quarter.
System-wide comparable restaurant sales for the second quarter as measured
for restaurants in operation for more than 15 months recorded an aggregate
3.1% increase as compared to the second quarter of 2009. The breakdown in
comparable sales between Company-owned and franchise-operated restaurants
is as follows:
For the 13 weeks ended
June 28, 2010
Company-owned 3.3%
Franchise-operated 2.6%
Total System 3.1%
James Hyatt, Così’s President and Chief Executive Officer, said, “We are
pleased with the continued positive comparable sales trends we saw
throughout the second quarter. We will continue to focus on driving
traffic and sales while remaining committed to improving restaurant
operating margins and controlling administrative costs.”
2010 Second Quarter Financial Performance Review
Così’s aforementioned 7.8% or $2,426,000 decrease in second quarter
Company-owned net sales as compared to the 2009 second quarter was due to a
$3,436,000 decrease in sales related to the thirteen Company-owned
restaurants in Washington D.C. that were sold to a franchisee during the
2010 second quarter. The decline was partially offset by the 3.3% increase
in Company-owned comparable net sales during the quarter which was
comprised of a 3.1% increase in traffic and a 0.2% increase in average
guest check.
For the second quarter, Così reported a 360 basis point increase in costs
and expenses related to Company-owned restaurant operations as a percentage
of restaurant net sales compared with the second quarter of 2009. The
change resulted from increases of 170, 120 and 70 basis points, as a
percentage of net sales, in labor and related benefits, occupancy and other
restaurant operating expenses and cost of food and beverage, respectively.
The increase in labor and related benefits as a percentage of net sales was
due primarily to our investment in training in the restaurants to support
our traffic-driving marketing efforts as well as from incremental labor
deployed to support the expansion of hours of operations in a number of
locations during the quarter. Occupancy and other restaurant operating
expenses increased as a percentage of sales due primarily to higher costs
associated with the ongoing repair and maintenance of existing locations.
The increase in the cost of food and beverage as a percentage of net sales
was due primarily to the menu mix impact of certain new products and
limited-time promotional menu offerings in the 2010 second quarter that
carried a higher cost as a percentage of net sales as compared to the prior
year period.
During the 2010 second quarter, Così reported general and administrative
expense of approximately $3,600,000 which was comparable with the 2009
second quarter general and administrative expense.
Così reported that as of June 28, 2010 it had cash and cash equivalents of
$12,335,000 and virtually no debt other than lease obligations.
Development
Così ended the 2010 second quarter with 144 locations consisting of 86
Company-owned locations and 58 franchise locations. During the 2010 second
quarter, one new franchise location was opened in the United Arab Emirates.
Subsequent to the end of the 2010 second quarter, one additional franchise
location was opened in the Boston market.
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 86 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®, 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.
Copyright © 2010 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 June 28, 2010 and December 28, 2009
(dollars in thousands, except share and per share data)
June 28, December 28,
2010 2009
----------- -----------
(Unaudited) (Note 1)
Assets
Current assets:
Cash and cash equivalents $ 12,335 $ 4,079
Accounts receivable, net 858 560
Inventories 793 967
Prepaid expenses and other current assets 1,243 2,136
----------- -----------
Total current assets 15,229 7,742
Furniture and fixtures, equipment and leasehold
improvements, net 16,699 22,100
Intangibles, security deposits and other assets,
net 2,742 1,728
----------- -----------
Total assets $ 34,670 $ 31,570
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,112 $ 3,079
Accrued expenses 8,012 9,628
Deferred franchise revenue 61 44
Current portion of other long-term liabilities 574 588
----------- -----------
Total current liabilities 11,759 13,339
Deferred franchise revenue 2,238 2,563
Other long-term liabilities, net of current
portion 5,351 6,343
----------- -----------
Total liabilities 19,348 22,245
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock - $.01 par value; 100,000,000
shares authorized, 51,683,441 and 40,862,474
shares issued, respectively 517 409
Additional paid-in capital 283,144 277,994
Treasury stock, 239,543 shares at cost (1,198) (1,198)
Accumulated deficit (267,141) (267,880)
----------- -----------
Total stockholders' equity 15,322 9,325
----------- -----------
Total liabilities and stockholders'
equity $ 34,670 $ 31,570
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
Cosi, Inc.
Consolidated Statements of Operations
For the Three and Six Month Periods Ended June 28, 2010 and June 29, 2009
(dollars in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
2010 2009 2010 2009
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Restaurant net sales $ 28,589 $ 31,015 $ 55,663 $ 59,139
Franchise fees and
royalties 1,034 621 1,558 1,163
----------- ----------- ----------- -----------
Total revenues 29,623 31,636 57,221 60,302
----------- ----------- ----------- -----------
Costs and expenses:
Cost of food and
beverage 6,567 6,915 12,895 13,153
Restaurant labor and
related benefits 10,631 11,006 21,295 21,750
Occupancy and other
restaurant operating
expenses 8,704 9,044 17,748 18,011
----------- ----------- ----------- -----------
25,902 26,965 51,938 52,914
General and
administrative
expenses 3,630 3,621 6,952 7,458
Depreciation and
amortization 1,196 1,779 2,576 3,743
Provision for losses on
asset impairments and
disposals 212 238 212 238
Lease termination
expense and closed
store costs 11 7 12 252
Gain on sale of assets (5,120) - (5,207) -
----------- ----------- ----------- -----------
Total costs and
expenses 25,831 32,610 56,483 64,605
----------- ----------- ----------- -----------
Operating income
(loss) 3,792 (974) 738 (4,303)
Interest income - 1 - 2
Interest expense (1) (1) (2) (3)
Other income 2 5 3 9
----------- ----------- ----------- -----------
Net income (loss) $ 3,793 $ (969) $ 739 $ (4,295)
=========== =========== =========== ===========
Per Share Data:
Earnings per share:
Basic $ 0.07 $ (0.02) $ 0.01 $ (0.11)
----------- ----------- ----------- -----------
Diluted 0.07 (0.02) 0.01 (0.11)
----------- ----------- ----------- -----------
Weighted average
shares outstanding:
Basic 51,108,465 40,030,460 50,045,292 40,321,325
=========== =========== =========== ===========
Diluted 51,324,065 40,030,460 50,260,892 40,321,325
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
Cosi, Inc.
Results of Operations as a Percent of Sales
Three Months Ended Six Months Ended
------------------ ------------------
June 28, June 29, June 28, June 29,
2010 2009 2010 2009
-------- ------- -------- -------
Revenues:
Restaurant net sales 96.5% 98.0% 97.3% 98.1%
Franchise fees and royalties 3.5 2.0 2.7 1.9
-------- ------- -------- -------
Total revenue 100.0 100.0 100.0 100.0
-------- ------- -------- -------
Cost and expenses:
Cost of food and beverage (1) 23.0 22.3 23.2 22.2
Restaurant labor and related
benefits (1) 37.2 35.5 38.3 36.8
Occupancy and other restaurant
operating expenses (1) 30.4 29.2 31.9 30.5
-------- ------- -------- -------
90.6 87.0 93.4 89.5
General and administrative expenses 12.3 11.4 12.1 12.4
Depreciation and amortization 4.0 5.6 4.5 6.2
Provision for losses on asset
impairments and disposals 0.7 0.8 0.4 0.4
Lease termination expense and
closed store costs - - - 0.4
Gain on sale of assets (17.3) - (9.1) -
-------- ------- -------- -------
Total costs and expenses 87.2 103.1 98.7 107.1
-------- ------- -------- -------
Operating income (loss) 12.8 (3.1) 1.3 (7.1)
Interest income - - - -
Interest expense - - - -
Other income - - - -
-------- ------- -------- -------
Net income (loss) 12.8% (3.1)% 1.3% (7.1)%
======== ======= ======== =======
(1) These are expressed as a percentage of restaurant net sales versus all
other items expressed as a percentage of total revenues
For the Three Months Ended
June 28, 2010 June 29, 2009
-------------------------- --------------------------
Company- Company-
Owned Franchise Total Owned Franchise Total
--------- --------- ------ --------- --------- ------
Restaurants at
beginning of period 99 44 143 97 49 146
Company-owned sold to
franchisee 13 13 - - - -
New restaurants
opened - 1 1 1 1 2
Restaurants
permanently closed - - - - 4 4
--------- --------- ------ --------- --------- ------
Restaurants at end of
period 86 58 144 98 46 144
========= ========= ====== ========= ========= ======
For the Six Months Ended
June 28, 2010 June 29, 2009
-------------------------- --------------------------
Company- Company-
Owned Franchise Total Owned Franchise Total
--------- --------- ------ --------- --------- ------
Restaurants at
beginning of period 99 46 145 101 50 151
Company-owned sold to
franchisee 13 13 - - - -
New restaurants
opened - 1 1 1 3 4
Restaurants
permanently closed - 2 2 4 7 11
--------- --------- ------ --------- --------- ------
Restaurants at end of
period 86 58 144 98 46 144
========= ========= ====== ========= ========= ======