Sonic 2014 Annual Report Download - page 23

In October 2011, our Board of Directors approved a $30 million share repurchase program. Under that program, we were
authorized to purchase up to $30 million of our outstanding shares of common stock through August 31, 2012. During fiscal year
2012, the Company completed this share repurchase program.
In August 2012, our Board of Directors approved a $40 million share repurchase program. Under that program, we were
authorized to purchase up to $40 million of our outstanding shares of common stock through August 31, 2013. In January 2013,
the Board of Directors increased the purchase authorization to $55 million. During fiscal year 2013, we completed this share
repurchase program.
In August 2013, the Board of Directors extended the share repurchase program, authorizing us to purchase up to $40 million of
our outstanding shares of common stock. In January 2014, our Board of Directors approved an incremental $40 million authorization
for this program that allowed for up to $80 million of common stock to be repurchased through August 31, 2014.
As part of this program, in February 2014, we entered into an accelerated share repurchase (“ASR”) agreement with a financial
institution to purchase $40 million of our common stock. In exchange for a $40 million up-front payment, the financial institution
delivered approximately 2.1 million shares. During March 2014, the ASR purchase period concluded with no additional shares
delivered, resulting in an average price per share of $19.13. We reflected the ASR transaction as a repurchase of common stock
for purposes of calculating earnings per share and as a forward contract indexed to its own common stock. The forward contract
met all of the applicable criteria for equity classification.
The Company completed the Board-approved share repurchase program during fiscal year 2014, with approximately
4.1 million shares repurchased, resulting in an average price per share of $19.61.
In August 2014, our Board of Directors further extended our share repurchase program, authorizing us to purchase up to $105
million of our outstanding shares of common stock during fiscal year 2015.
Share repurchases will be made from time to time in the open market or otherwise, including through an accelerated
share repurchase program, under the terms of a Rule 10b5-1 plan, in privately negotiated transactions or in round lot or block
transactions. The share repurchase program may be extended, modified, suspended or discontinued at any time. We plan to fund
the share repurchase program from existing cash on hand at August 31, 2014, cash flows from operations and borrowings under
our 2011 Variable Funding Notes.
As of August 31, 2014, our total cash balance of $55.6 million ($35.7 million of unrestricted and $19.9 million of restricted cash
balances) reflected the impact of the cash generated from operating activities, cash used for share repurchases, debt prepayment
and capital expenditures mentioned above. We believe that existing cash, funds generated from operations and the $100 million
available under our 2011 Variable Funding Notes will meet our needs for the foreseeable future.
The Company did not pay any cash dividends on its common stock during its two most recent fiscal years. However, in August
2014, the Board of Directors initiated a cash dividend program under which the Company will pay a regular quarterly cash dividend.
The Board declared the first quarterly cash dividend of $0.09 per share of common stock to be paid to stockholders of record as
of the close of business on November 12, 2014, with a payment date of November 21, 2014. The total dividend payable at August
31, 2014 was $4.9 million and is included in accrued liabilities in the consolidated balance sheet. Future declaration of quarterly
dividends and the establishment of future record and payment dates are subject to the final determination of the Company’s Board
of Directors.
Off-Balance Sheet Arrangements
The Company has obligations for guarantees on certain franchisee loans, which in the aggregate are immaterial, and
obligations for guarantees on certain franchisee lease agreements. Other than such guarantees and various operating leases and
purchase obligations, which are disclosed below in “Contractual Obligations and Commitments” and in note 7 - Leases and note
15 – Commitments and Contingencies to our Consolidated Financial Statements, the Company has no other material off-balance
sheet arrangements.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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