Sonic 2002 Annual Report Download - page 35

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Sonic 02 33
Notes to Consolidated Financial Statements
August 31, 2002, 2001 and 2000 (In thousands, except share data)
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate
due to the following for the years ended August 31:
2002 2001 2000
Amount computed by applying a tax rate of 35% $ 26,601 $ 21,729 $ 18,198
State income taxes (net of federal income tax benefit) 1,368 1,110 923
Other 342 287 247
Provision for income taxes $ 28,311 $ 23,126 $ 19,368
Deferred tax assets and liabilities consist of the following at August 31, 2002 and 2001:
2002 2001
Current deferred tax assets (liabilities):
Allowance for doubtful accounts and notes receivable $ 116 $ 133
Property, equipment and capital leases 162 118
Accrued litigation costs 206 139
Other (3) (2)
Current deferred tax assets, net $ 481 $ 388
Noncurrent deferred tax assets (liabilities):
Net investment in direct financing leases including differences related to
capitalization and amortization $ (2,426) $ (2,047)
Investment in partnerships, including differences in capitalization and
depreciation related to direct financing leases and different year ends
for financial and tax reporting purposes (3,008) 497
State net operating losses 2,567 1,967
Property, equipment and capital leases (936) (391)
Allowance for doubtful accounts and notes receivable 194 148
Deferred income from affiliated franchise fees 897 –
Accrued liabilities 223 –
Intangibles and other assets 45 (25)
Other 288 83
(2,156) 232
Valuation allowance (2,567) (1,967)
Noncurrent deferred tax liabilities, net $ (4,723) $ (1,735)
Deferred tax assets and (liabilities):
Deferred tax assets (net of valuation allowance) $ 1,987 $ 1,072
Deferred tax liabilities (6,229) (2,419)
Net deferred tax liabilities $ (4,242) $ (1,347)
State net operating loss carryforwards expire generally beginning in 2010. Management does not believe the
company will be able to realize the state net operating loss carryforwards and therefore has provided a valuation
allowance as of August 31, 2002 and 2001.