Sonic 2014 Annual Report Download - page 46

Stock Repurchase Programs
In October 2011, the Company’s Board of Directors approved a $30 million share repurchase program. Under that program,
the Company was authorized to purchase up to $30 million of its outstanding shares of common stock through August 31, 2012.
During fiscal year 2012, the Company completed this share repurchase program.
In August 2012, the Company’s Board of Directors approved a share repurchase program authorizing the Company to purchase
up to $40 million of its outstanding shares of common stock. In January 2013, the Board of Directors increased the repurchase
program to $55 million in authorized purchases through August 31, 2013. During fiscal year 2013, approximately 3.3 million shares
were acquired pursuant to this program for a total cost of $35.5 million; this is in addition to the approximately 0.1 million shares
that were acquired for a total cost of $1.1 million during the fourth quarter of fiscal year 2012.
In August 2013, the Board of Directors extended the share repurchase program through August 31, 2014, with a total
authorization of up to $40 million of its outstanding shares of common stock. In January 2014, the Company’s Board of Directors
approved an incremental $40 million authorization for the 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, the Company entered into an accelerated share
repurchase (“ASR”) agreement with a financial institution to purchase $40 million of the Company’s 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. The Company
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 this 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, the Board of Directors further extended the Company’s share repurchase program, authorizing the Company
to purchase up to $105 million of its outstanding shares of common stock beginning September 1, 2014 through August 31, 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.
Dividends
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.
14. Employee Benefit and Cash Incentive Plans
The Company sponsors a qualified defined contribution 401(k) plan for employees meeting certain eligibility requirements.
Under the plan, employees are entitled to make pre-tax contributions. The Company matches an amount equal to the employee’s
contributions up to a maximum of 6% of the employee’s salaries depending on years of service. The Company’s contributions
during fiscal years 2014, 2013 and 2012 were $1.3 million, $1.9 million and $1.7 million, respectively.
The Company has cash incentive plans (the “Incentive Plans”) that apply to certain members of management, and grants
of awards under the Incentive Plans are at all times subject to the approval of the Company’s Board of Directors. Under certain
awards pursuant to the Incentive Plans, if predetermined earnings goals for a fiscal year are met, a predetermined percentage of
the employee’s salary may be paid in the form of a bonus. The Company recognized as expense incentive bonuses of $6.5 million,
$6.7 million and $4.9 million during fiscal years 2014, 2013 and 2012, respectively.
Notes to Consolidated Financial Statements
August 31, 2014, 2013 and 2012 (In thousands, except per share data)
44