Sonic 2014 Annual Report Download - page 17

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Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Fiscal Year Ended Fiscal Year Ended
August 31, 2013 August 31, 2012
Net Diluted Net Diluted
Income EPS Income EPS
Reported – GAAP $ 36,701 $ 0.64 $ 36,085 $ 0.60
After-tax loss from early extinguishment of debt(2) 2,798 0.05 – –
Retroactive tax benefit of WOTC and resolution of tax matters(3) (743) (0.02) – –
After-tax loss on closure of Company Drive-Ins(4) 1,510 0.03 – –
After-tax impairment charge for point-of-sale assets(5) 1,013 0.02 – –
Adjusted - Non-GAAP $ 41,279 $ 0.72 $ 36,085 $ 0.60
(1) Tax benefit resulting from the IRS’ acceptance of a federal tax method change during the first quarter of fiscal year 2014.
(2) Loss on early extinguishment of debt including $0.5 million and $3.9 million in the second and fourth quarters of fiscal year
2013, respectively.
(3) Tax benefit which includes the retroactive reinstatement of the Work Opportunity Tax Credit (“WOTC”) and resolution of certain
income tax matters during the second quarter of fiscal year 2013.
(4) Loss of $2.4 million on the closure of 12 lower-performing Company Drive-Ins as a result of an assessment in advance of
capital expenditures for planned technology initiatives.
(5) Impairment charge of $1.6 million related to the write-off of assets associated with a change in the vendor for the Sonic
system’s new point-of-sale technology.
The following table provides information regarding the number of Company Drive-Ins and Franchise Drive-Ins operating as
of the end of the years indicated as well as the system-wide change in sales and average unit volume. System-wide information
includes both Company Drive-In and Franchise Drive-In information, which we believe is useful in analyzing the growth of the brand
as well as the Company’s revenues, since franchisees pay royalties based on a percentage of sales.
System-wide Performance
Year Ended August 31,
($ in thousands) 2014 2013 2012
Increase in total sales 3.9% 2.4% 2.7%
System-wide drive-ins in operation(1):
Total at beginning of year 3,522 3,556 3,561
Opened 40 27 37
Closed (net of re-openings) (44) (61) (42)
Total at end of year 3,518 3,522 3,556
Average sales per drive-in $ 1,153 $ 1,109 $ 1,066
Change in same-store sales(2) 3.5% 2.3% 2.2%
(1) Drive-ins that are temporarily closed for various reasons (repairs, remodeling, relocations, etc.) are not considered closed
unless the Company determines that they are unlikely to reopen within a reasonable time.
(2) Represents percentage change for drive-ins open for a minimum of 15 months.
15