Sonic 2013 Annual Report Download - page 40

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Notes to Consolidated Financial Statements
August 31, 2013, 2012 and 2011 (In thousands, except per share data)
38
The Company’s assessment in fiscal year 2013 resulted in provisions for impairment totaling $1.8 million. Of
this total, $1.6 million related to the write-off of assets associated with a change in the vendor providing technology
for the Sonic system’s new point-of-sale technology. The remaining $0.2 million reflects reducing the carrying
amount of surplus properties to fair value.
In fiscal years 2012 and 2011 the Company recorded $0.8 million in provisions for impairment resulting from
the assessment of surplus properties in both years and properties leased to franchisees in fiscal year 2011. These
write-downs were completed to reduce the carrying amount of these properties to fair value.
4. Accounts and Notes Receivable
Accounts and notes receivable consist of the following:
Year Ended August 31,
2013 2012
Current Accounts and Notes Receivable:
Royalties and other trade receivables $ 16,506 $ 17,030
Notes receivable from franchisees 4,003 1,304
Notes receivable from advertising funds 5,203 4,825
Other 4,977 6,109
Accounts and notes receivable, gross 30,689 29,268
Allowance for doubtful accounts and notes receivable (1,547) (2,195)
Accounts and notes receivable, net $ 29,142 $ 27,073
Noncurrent Notes Receivable:
Notes receivable from franchisees $ 5,003 $ 5,286
Notes receivable from advertising funds 5,810 7,152
Allowance for doubtful notes receivable (800) (797)
Notes receivable, net $ 10,013 $ 11,641
The Company’s receivables are primarily due from franchisees, all of whom are in the restaurant business.
Substantially all of the notes receivable from franchisees are collateralized by real estate or equipment. During fiscal
year 2013, notes receivable from franchisees increased as a result of a franchisee’s purchase of real estate
discussed in note 6 – Other Operating Income and Expenses. The notes receivable from advertising funds represent
transactions in the normal course of business.
5. Goodwill and Other Intangibles
As of August 31, 2013, the Company had $77.1 million of goodwill, of which $71.1 million was attributable to
the Company Drive-Ins segment and $6.0 million was attributable to the Franchise Operations segment. There have
been no changes in the goodwill balance attributable to the Franchise Operations segment since August 31, 2012.
The changes in the carrying amount of goodwill were as follows:
Year Ended August 31,
2013 2012
Balance at beginning of year $ 76,997 $ 81,625
Goodwill acquired during the year 96 –
Goodwill disposed of related to the sale of Company Drive-Ins –(4,628)
Balance at end of year $ 77,093 $ 76,997