Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 14, 2014

Cosi, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-50052	06-1393745
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

294 Washington Street, Suite 510 Boston, Massachusetts		02108
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (857) 415-5000


(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Second Quarter Results of Operations and Financial Condition.

On August 14, 2014, Cosi, Inc. issued a press release reporting its earnings for the second quarter ended June 30, 2014. A copy of the press release is furnished as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure.

On August 14, 2014, the Company hosted a teleconference and webcast to discuss its second quarter results. The text of the supplemental slides to which management referred during the presentation is attached hereto as Exhibit 99.2

Item 9.01 (c). Exhibits.

99.1	Press Release of Cosi, Inc., dated August 14, 2014.

99.2	Slides from teleconference held on August 14, 2014.

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 hereunto duly authorized.

		Cosi, Inc.


Date: August 15, 2014		/s/ Scott Carlock
		Name: Scott Carlock
		Title: Chief Financial Officer

EXHIBIT INDEX


Exhibit No.	Description	Paper (P) or Electronic (E)

99.1	Press Release of Cosi, Inc., August 14, 2014.	E

99.2	Slides from teleconference held on August 14, 2014.	E

Exhibit 99.1

CONTACT:

Scott Carlock

(857) 415-5020

Così, Inc. Reports 2014 Second Quarter Results

BOSTON, MA – August 14, 2014 – Così, Inc. (NASDAQ: COSI), the fast casual restaurant company, today reported a net loss for the second quarter ended June 30, 2014 of $(4,814,000), or $(0.27) per basic and diluted common share, compared with the net loss of $(2,135,000), or $(0.12) per basic and diluted common share, reported for the 2013 second quarter. Excluding the impact of one-time costs of $2,103,000 incurred during the 2014 second quarter, the net loss was $(2,711,000) or $(0.15) per basic and diluted common share.

Così’s total revenues for the 2014 second quarter decreased by $2,738,000 to $20,670,000 from $23,408,000 in the 2013 second quarter. Company-owned net restaurant sales decreased by $2,649,000 to $20,007,000 from $22,656,000 for the 2013 second quarter. Franchise fees and royalty revenues for the quarter contributed $663,000 compared to $752,000 in the 2013 second quarter. The decline in revenues compared to last year’s second quarter was due primarily to the decline in comparable Company-owned restaurant sales, the closure of Company-owned and franchise locations during and subsequent to the second quarter of 2013.

System-wide comparable restaurant sales for the second quarter as measured for restaurants in operation for more than 15 months recorded an aggregate decline of (4.7%) as compared to the second quarter of 2013. The breakdown in comparable sales between Company-owned and franchise restaurants are as follows:

		For the 13 weeks ended June 30, 2014
	Company-owned	(7.5%)
	Franchise	(0.1%)
	Total System	(4.7%)

"The Cosi management team took aggressive, corrective action in the second quarter, which we believe will ensure the long-term health of Cosi,” stated RJ Dourney, Così's President and Chief Executive Officer, “These actions came at a cost, one I view as an investment in the future.”

2014 Second Quarter Financial Performance Review

Così’s aforementioned $2,649,000 decrease in second quarter Company-owned net sales as compared to the 2013 second quarter was due primarily to a 7.5% decrease in comparable restaurant net sales as well as a $1,534,000 decline in net sales from 11 locations closed during and subsequent to the second quarter of 2013. The decrease in Company-owned comparable net sales during the quarter was comprised of a 9.2% decrease in traffic partially offset by a 1.7% increase in average guest check.

For the second quarter, Così reported a 430 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 2013. The change resulted from increases of 220, 120 and 90 basis points, as a percentage of net sales, in occupancy and other restaurant operating expenses food and beverage costs and labor and related benefits expense, respectively. The increase in occupancy and other restaurant operating expenses and labor and related benefits expense as a percentage of net sales was due primarily to the deleveraging impact of the comparable restaurant net sales decline on the fixed portion of these costs during the period. The increase in food and beverage costs was driven by a shift in sales mix as well as higher year-over-year costs of certain commodities, including poultry and dairy products.

During the second quarter of 2014, the Company’s general and administrative expenses increased by $544,000 to $3,685,000 from $3,141,000 in the 2013 second quarter. The increase was due to a one-time termination fee related to exiting the Deerfield corporate office as well as other related expenses. Excluding these one-time costs, general and administrative expenses for the quarter decreased by $290,000 as compared to the prior year quarter.

Così reported that as of June 30, 2014 it had cash and cash equivalents of $6,084,000.

About Così, Inc.

Così® (http://www.getcosi.com) is a national fast casual 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 63 Company-owned and 46 franchise restaurants operating in sixteen states, the District of Columbia, the United Arab Emirates, and Costa Rica. The Così® vision

is to become America's favorite fast casual restaurant by providing customers authentic, innovative, savory food while remaining an affordable luxury.

The Così® menu features Così® sandwiches, freshly-tossed salads, bowls, breakfast wraps, melts, soups, 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.

"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 and interruptions; labor shortages or increased labor costs; changes in demographic trends and consumer tastes and preferences, including changes resulting from concerns over nutritional or safety aspects of beef, poultry, produce, or other foods or the effects of food-borne illnesses, such as E. coli, “mad cow disease” and avian influenza or “bird flu”; competition in our markets, both in our business and in locating suitable restaurant sites; our operation and execution in new and existing markets; expansion into new markets including foreign markets; our ability to attract and retain qualified franchisees and our franchisees’ ability to open restaurants on a timely basis; our ability to locate suitable restaurant sites in new and existing markets and negotiate acceptable lease terms; 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; fluctuations in our quarterly results due to seasonality; increased government regulation and our ability to secure required government approvals and permits; our ability to create customer awareness of our restaurants in new markets; the reliability of our customer and market studies; cost effective and timely planning, design

and build out of restaurants; our ability to recruit, train and retain qualified corporate and restaurant personnel and management; market saturation due to new restaurant openings; inadequate protection of our intellectual property; our ability to obtain additional capital and financing; 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 30, 2014 and December 30, 2013
(dollars in thousands)

	June 30, 2014			December 30, 2013
Assets
Current assets:
Cash and cash equivalents	$	6,084		$	6,021
Accounts receivable, net		641			594
Notes receivable, current portion		551			551
Inventories		793			779
Prepaid expenses and other current assets		744			1,348
Total current assets		8,813			9,293

Furniture and fixtures, equipment and leasehold improvements, net		7,143			8,195
Other assets		1,470			1,115
Total assets	$	17,426		$	18,603

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,691		$	2,462
Accrued expenses		8,474			9,088
Deferred franchise revenue		18			18
Current portion of other long-term liabilities		998			196
Total current liabilities		11,181			11,764

Long-term debt		6,023			-
Deferred franchise revenue		1,931			1,931
Other long-term liabilities, net of current portion		1,642			2,189
Total liabilities		20,777			15,884

Stockholders' deficit:
Common stock - $.01 par value; 100,000,000 shares authorized,
19,312,794 and 18,106,979 shares issued, respectively		193			181
Additional paid-in capital		299,039			297,181
Treasury stock, 59,886 shares at cost		(1,198	)		(1,198	)
Accumulated deficit		(301,385	)		(293,445	)
Total stockholders' deficit		(3,351	)		2,719
Total liabilities and stockholders' deficit	$	17,426		$	18,603

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

Cosi, Inc.
Consolidated Statements of Operations and Comprehensive Loss
For the Three and Six Month Periods Ended June 30, 2014 and July 1, 2013
(dollars in thousands, except share and per share data)

	Three Months Ended						Six Months Ended
	June 30,			July 1,			June 30,			July 1,
	2014			2013			2014			2013
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues:
Restaurant net sales	$	20,007		$	22,656		$	37,735		$	43,510
Franchise fees and royalties		663			752			1,310			1,459
Total revenues		20,670			23,408			39,045			44,969

Costs and expenses:
Cost of food and beverage		5,122			5,521			9,537			10,723
Restaurant labor and related benefits		7,432			8,198			14,526			16,308
Occupancy and other restaurant operating expenses		7,078			7,523			14,079			14,669
		19,632			21,242			38,142			41,700
General and administrative expenses		3,685			3,141			6,054			5,898
Depreciation and amortization		601			672			1,240			1,420
Restaurant pre-opening expenses		-			11			-			11
Provision for losses on asset impairments and disposals		120			355			120			694
Lease termination expense and closed store costs		1,269			126			1,255			147
Gain on sale of assets		(50	)		-			(50	)		-
Total costs and expenses		25,257			25,547			46,761			49,870

Operating loss		(4,587	)		(2,139	)		(7,716	)		(4,901	)

Interest expense		(239	)		-			(239	)		-
Other income		12			4			15			25

Net loss and comprehensive loss	$	(4,814	)	$	(2,135	)	$	(7,940	)	$	(4,876	)

Per Share Data:
Loss per share, basic and diluted	$	(0.27	)	$	(0.12	)	$	(0.44	)	$	(0.27	)

Weighted average shares outstanding		18,148,966			17,988,624			18,101,773			17,969,198

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 30, 2014			July 1, 2013			June 30, 2014			July 1, 2013

Revenues:
Restaurant net sales		96.8	%		96.8	%		96.6	%		96.8	%
Franchise fees and royalties		3.2			3.2			3.4			3.2
Total revenue		100.0			100.0			100.0			100.0
Cost and expenses:
Cost of food and beverage (1)		25.6			24.4			25.3			24.6
Restaurant labor and related benefits (1)		37.1			36.2			38.5			37.5
Occupancy and other restaurant operating expenses (1)		35.4			33.2			37.3			33.7
		98.1			93.8			101.1			95.8
General and administrative expenses		17.8			13.4			15.5			13.1
Depreciation and amortization		2.9			2.9			3.2			3.2
Provision for losses on asset impairments and disposals		0.6			1.5			0.3			1.5
Lease termination expense and closed store costs		6.2			0.5			3.2			0.3
Gain on sales of assets		(0.2	)		-			(0.1	)		-
Total costs and expenses		122.2			109.1			119.8			110.9
Operating loss		(22.2	)		(9.1	)		(19.8	)		(10.9	)
Interest expense		(1.2	)		-			(0.6	)		-
Other income		0.1			-			0.1			0.1
Net loss and comprehensive loss		(23.3	) %		(9.1	) %		(20.3	) %		(10.8	) %

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

Cosi, Inc.
System-wide Restaurants
	For the Three Months Ended
	June 30, 2014						July 1, 2013
	Company-Owned		Franchise		Total		Company-Owned		Franchise		Total

Restaurants at beginning of period		72		49		121		74		50		124
Restaurants permanently closed		6		2		8		-		-		-
Restaurants at end of period		66		47		113		74		50		124

	For the Six Months Ended
	June 30, 2014						July 1, 2013
	Company-Owned		Franchise		Total		Company-Owned		Franchise		Total

Restaurants at beginning of period		70		52		122		75		50		125
Franchise-owned converted to Company-owned		2		2		-		-		-		-
Restaurants permanently closed		6		3		9		1		-		1
Restaurants at end of period		66		47		113		74		50		124

Exhibit 99.2

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