Sonic 2014 Annual Report Download - page 35

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Notes to Consolidated Financial Statements
August 31, 2014, 2013 and 2012 (In thousands, except per share data)
2. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
Year Ended August 31,
2014 2013 2012
Numerator:
Net income $ 47,916 $ 36,701 $ 36,085
Denominator:
Weighted average common shares outstanding– basic 55,164 56,384 60,078
Effect of dilutive employee stock options and
unvested restricted stock units 1,455 807 94
Weighted average common shares – diluted 56,619 57,191 60,172
Net income per common share – basic $ 0.87 $ 0.65 $ 0.60
Net income per common share – diluted $ 0.85 $ 0.64 $ 0.60
Anti-dilutive securities excluded(1) 988 3,278 6,705
(1) Anti-dilutive securities consist of stock options and unvested restricted stock units that were not included in the computation
of diluted earnings per share because either the exercise price of the options was greater than the average market price of
the common stock or the total assumed proceeds under the treasury stock method resulted in negative incremental shares
and thus the inclusion would have been anti-dilutive.
3. Impairment of Long-Lived Assets
During the fiscal years ended August 31, 2014, 2013 and 2012, the Company identified impairments for certain brand technology
assets and surplus property through regular quarterly reviews of long-lived assets. The recoverability of Company Drive-Ins is
assessed by estimating the undiscounted net cash flows expected to be generated over the remaining life of the Company Drive-Ins.
This involves estimating same-store sales and margins for the cash flow periods. When impairment exists, the carrying value of
the asset is written down to fair value.
In fiscal years 2014 and 2012, the Company recorded $0.1 and $0.8 million, respectively, in provisions for impairment resulting
from the assessment of surplus properties. These write-downs were completed to reduce the carrying amount of these properties
to fair value.
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.
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