DEERFIELD, IL -- (Marketwire) -- 03/16/09 -- Così, Inc. (NASDAQ: COSI), the premium
convenience restaurant company, today reported a net loss for the fourth
quarter ended December 29, 2008 of $(8,370,000), or $(0.21) per basic and
diluted common share, compared with the 2007 fourth quarter, when Così's
net loss was $(6,175,000), or $(0.16) per basic and diluted common share.
Così reduced its operating loss in the fourth quarter compared with the
year-earlier period by 33%, to $(2,086,000) from $(3,123,000), excluding
impairment provisions, closed store costs and lease termination costs.
Così recorded charges of $(6,300,000) and $(2,667,000) in the 2008 and 2007
fourth quarters, respectively, related to asset impairment provisions,
closed store costs and lease termination costs.
Così's total revenues for the 2008 fourth quarter decreased 7.3% to
$30,735,000 from $33,150,000 in the 2007 fourth quarter.
For the 2008 fiscal year ended December 29, 2008, Così reported a net loss
of $(16,222,000), or $(0.40) per basic and diluted common share, and an
operating loss of $(16,046,000). Così's 2008 operating loss included
$(7,719,000) or $(0.19) per basic and diluted common share in losses from
impairment provisions, closed store costs and lease termination costs.
In the 2007 fiscal year ended December 31, 2007, Così reported a net loss
of $(20,783,000), or $(0.53) per basic and diluted common share, and an
operating loss of $(17,717,000). Così's 2007 operating loss included
$(4,431,000) or $(0.11) in basic and diluted common share in losses from
impairment provisions, closed store costs and lease termination costs,
partially offset by one-time gains.
Così's revenues for the 2008 full year grew 0.8% to $135,579,000 from
$134,556,000 in the prior year. Così reported that 20 new restaurants were
opened in 2008, 19 of which were franchise locations.
James Hyatt, Così's President and Chief Executive Officer, said, "While the
current stress on the economy, the financial system and the consumer has
created a very difficult environment for the restaurant industry, our team
remains intensely focused on driving sales and operating margin
improvement, and working very closely with our franchise partners for our
mutual benefit and the long-term benefit of our shareholders."
2008 Fourth Quarter and Full Year Financial Performance and Restaurant
Economics
Contributing to Così's aforementioned 7.3% decrease in fourth quarter
revenues as compared to the 2007 fourth quarter revenues was the decline of
the Company's restaurant net sales to $29,860,000 from $32,456,000 in the
prior year quarter due primarily to 6.2% decrease in comparable restaurant
net sales as well as the impact of seven locations closed since the fourth
quarter of 2007. Franchise fees and royalties grew to $875,000 in the
fourth quarter from $694,000 in the 2007 fourth quarter. During the fourth
quarter, Così added nine new franchise locations and closed two franchise
locations.
Così stated that it was able to offset higher restaurant-level costs by
successfully exhibiting disciplined corporate expense control. For the
fourth quarter, Così reported a 220 basis point increase in costs and
expenses related to Company-owned restaurant operations as a percentage of
restaurant net sales compared with the fourth quarter 2007. The increase
resulted from a 240 basis point increase in occupancy and other restaurant
operating expenses due primarily to the deleveraging impact of the decrease
in comparable restaurant net sales on fixed occupancy costs as well higher
costs for utilities during the period. Labor and related benefits costs
increased 100 basis points over the 2007 fourth quarter and were offset by
a 120 basis point decline in the cost of food and beverage.
During the same period, the Company improved by 380 basis points its
general and administrative expenses as a percentage of total revenues, to
$3,434,000 or 11.2% from $4,979,000 or 15.0% in the fourth quarter 2007.
For the full year, Così saw restaurant net sales increase to $132,501,000
in 2008, up from $132,414,000 in 2007. Franchise fees and royalties grew
43.7% on the year, to $3,078,000 for 2008 from $2,142,000 a year earlier.
Costs and expenses of Company-owned restaurant operations as a percentage
of restaurant net sales for 2008 were comparable with the previous year.
Labor and related benefits as a percentage of restaurant net sales
decreased by 50 basis points compared to the previous year reflecting the
improvement in labor costs resulting from better deployment of partners
during peak and non-peak hours of operations. Così also reported a 60
basis point decrease in food and beverage cost due primarily to menu price
increases taken during the 2008 second quarter. The decreases in labor and
food and beverage costs were offset by a 110 basis point increase in
occupancy and other restaurant operating expenses as a percentage of
restaurant net sales.
Così demonstrated continued corporate expense control over the course of
the year, as general and administrative expense decreased 240 basis points
as a percentage of restaurant net sales to 14.7%, compared with 17.1% in
2007. Included in general and administrative expense for 2008 were
one-time litigation costs and severance related to workforce reductions of
approximately $2,400,000.
Così reported that as of December 29, 2008 it had cash, cash equivalents,
and short-term investments of $5,589,000 and virtually no debt other than
lease obligations.
Development Performance
Così finished the year with a total of 151 locations consisting of 101
Company-owned locations and 50 franchised locations. It opened one
Company-owned location and 19 franchised locations during 2007. Seven
Company-owned and three franchise locations were closed during the year.
Subsequent to the 2008 fiscal year end, one additional franchise location
opened while three Company-owned and three franchise locations were closed.
Investor Teleconference
Given the ongoing efforts of the special committee of independent directors
to review and evaluate strategic alternatives, as previously announced, as
well as the uncertainty of the macroeconomic environment and its impact on
the general business climate, Così is temporarily suspending its quarterly
investor calls. Management will continue to focus all of its efforts on
creating shareholder value through revenue growth and improvements in
operating margin while also supporting the continued growth of our
franchise system.
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 98 Company-owned and 48 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 bagels, 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," "Così w/hearth design," "Simply Good Taste" and related marks are
registered trademarks of Così, Inc.
Copyright © 2008 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 the company's website at
http://www.getcosi.com in the investor relations section.
Cosi, Inc.
Consolidated Balance Sheets
As of December 29, 2008 and December 31, 2007
(dollars in thousands)
December 29, December 31,
2008 2007
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 5,589 $ 6,309
Accounts receivable, net 916 658
Inventories 998 1,045
Prepaid expenses and other current assets 3,650 3,796
Assets held for sale - 122
Assets of discontinued operations - 35
------------- -------------
Total current assets 11,153 11,965
Furniture and fixtures, equipment and
leasehold improvements, net 29,779 42,477
Intangibles, security deposits and other
assets 1,849 1,970
------------- -------------
Total assets $ 42,781 $ 56,412
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,378 $ 2,106
Accrued expenses 9,835 9,014
Deferred franchise revenue 149 783
Current liabilities of discontinued
operations 4 285
Current portion of other long-term
liabilities 668 465
------------- -------------
Total current liabilities 14,034 12,653
Deferred franchise revenue 2,545 2,730
Other long-term liabilities, net of current
portion 7,176 7,183
------------- -------------
Total liabilities 23,755 22,566
------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock - $.01 par value; 100,000,000
shares authorized, 40,663,189 and
41,052,170 shares issued, respectively 407 411
Additional paid-in capital 276,593 275,187
Treasury stock, 239,543 shares at cost (1,198) (1,198)
Accumulated deficit (256,776) (240,554)
------------- -------------
Total stockholders' equity 19,026 33,846
------------- -------------
Total liabilities and
stockholders' equity $ 42,781 $ 56,412
============= =============
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 29, 2008
and December 31, 2007
(dollars in thousands, except per share data)
Three Months Ended Twelve Months Ended
December December December December
29, 31, 29, 31,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues:
Restaurant net sales $ 29,860 $ 32,456 $ 132,501 $ 132,414
Franchise fees and
royalties 875 694 3,078 2,142
---------- ---------- ---------- ----------
Total revenues 30,735 33,150 135,579 134,556
---------- ---------- ---------- ----------
Costs and expenses:
Cost of food and beverage 6,827 7,811 30,235 30,972
Restaurant labor and
related benefits 10,818 11,438 45,375 45,995
Occupancy and other
restaurant operating
expenses 9,652 9,699 39,821 38,369
---------- ---------- ---------- ----------
27,297 28,948 115,431 115,336
General and
administrative expenses 3,434 4,979 19,966 22,973
Depreciation and
amortization 2,090 2,273 8,409 8,823
Restaurant pre-opening
expenses - 73 100 710
Provision for losses on
asset impairments
and disposals 6,031 2,535 7,099 3,845
Closed store costs 16 62 69 262
Lease termination
expense, net 253 70 551 347
Gain on sale of assets - - - (23)
---------- ---------- ---------- ----------
Total costs and expenses 39,121 38,940 151,625 152,273
---------- ---------- ---------- ----------
Operating loss (8,386) (5,790) (16,046) (17,717)
Interest income 12 75 102 524
Interest expense (2) (36) (7) (42)
Other income 6 (11) 41 705
---------- ---------- ---------- ----------
Total other income
(expense) 16 28 136 1,187
---------- ---------- ---------- ----------
Loss from continuing
operations (8,370) (5,762) (15,910) (16,530)
---------- ---------- ---------- ----------
Discontinued operations:
Operating loss from
discontinued operations - (138) (224) (903)
Asset impairments of
discontinued operations - (275) (88) (3,350)
---------- ---------- ---------- ----------
Loss from discontinued
operations - (413) (312) (4,253)
---------- ---------- ---------- ----------
Net loss $ (8,370) $ (6,175) $ (16,222) $ (20,783)
========== ========== ========== ==========
Per Share Data:
Loss per share, basic and
diluted
Continuing operations $ (0.21) $ (0.15) $ (0.40) $ (0.42)
Discontinued operations $ - $ (0.01) $ - $ (0.11)
---------- ---------- ---------- ----------
Net loss $ (0.21) $ (0.16) $ (0.40) $ (0.53)
========== ========== ========== ==========
Weighted average common
shares outstanding 40,249,372 39,790,233 40,078,511 39,332,226
========== ========== ========== ==========
The accompanying notes are an intergral part of these consolidated
financial statements.
Cosi, Inc.
Results of Operations as a Percent of Revenues
Three Months Ended Twelve Months Ended
December December December December
29, 31, 29, 31,
2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Restaurant net sales 97.2% 97.9% 97.7% 98.4%
Franchise fees and royalties 2.8 2.1 2.3 1.6
-------- -------- -------- --------
Total revenues 100.0 100.0 100.0 100.0
-------- -------- -------- --------
Cost and expenses:
Cost of food and beverage (1) 22.9 24.1 22.8 23.4
Restaurant labor and related
benefits (1) 36.2 35.2 34.2 34.7
Occupancy and other restaurant
operating expenses (1) 32.3 29.9 30.1 29.0
-------- -------- -------- --------
91.4 89.2 87.1 87.1
General and administrative
expenses: 11.2 15.0 14.7 17.1
Depreciation and amortization 6.8 6.9 6.2 6.6
Restaurant pre-opening expenses 0.2 0.1 0.5
Provision for losses on asset
impairments and disposals 19.6 7.6 5.2 2.9
Closed store costs 0.1 0.2 0.1 0.2
Lease termination expense, net 0.8 0.2 0.4 0.3
Gain on sale of assets - - - -
-------- -------- -------- --------
Total costs and expenses 127.3 117.5 111.8 113.2
-------- -------- -------- --------
Operating loss (27.3) (17.5) (11.8) (13.2)
Other income (expense):
Interest income - 0.1 - 0.4
Other income - - - 0.5
-------- -------- -------- --------
Loss from continuing operations (27.3) (17.4) (11.8) (12.3)
Discontinued operations:
Operating loss from discontinued
operations (0.4) (0.2) (0.7)
Asset imparments of discontinued
operations (0.8) - (2.4)
-------- -------- -------- --------
Loss from discontinued operations - (1.2) (0.2) (3.1)
-------- -------- -------- --------
Net loss (27.3) (18.6) (12.0) (15.4)
======== ======== ======== ========
(1) These are expressed as a pecentage of restaurant net sales versus all
other items expressed as a percentage of total revenues.
Fiscal Year
2008 2007 2006
-------------------- -------------------- --------------------
Company Fran- Company Fran- Company Fran-
-Owned chise Total -Owned chise Total -Owned chise Total
------- ------ ----- ------- ------ ----- ------- ------ -----
Restaurants
at beginning
of period 107c 34 141 110b 13 123 96a 5 101
New restaurants
opened 1 19 20 6 22 28 21 8 29
Restaurants
permanently
closed 7 3 10 9 1 10 7 - 7
------- ------ ----- ------- ------ ----- ------- ------ -----
Restaurants
at end of
period 101 50 151 107c 34 141 110b 13 123
======= ====== ===== ======= ====== ===== ======= ====== =====
a - Includes six locations that are classified as discontinued operations.
b - Includes nine locations that are classified as discontinued operations.
c - Includes three locations that are classified as discontinued
operations.
CONTACT:
William Koziel
(847) 597-8800
