Sonic 2003 Annual Report Download - page 37

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p.35
Notes to Consolidated Financial Statements
August 31, 2003, 2002 and 2001 (In thousands, except share data)
2. Net Income Per Share
The following table sets forth the computation of basic and diluted earnings per share for the years ended August 31:
2003 2002 2001
Numerator:
Net income $ 52,261 $ 47,692 $ 38,956
Denominator:
Weighted average shares outstanding - basic 38,976,686 40,155,522 39,848,519
Effect of dilutive employee stock options 1,629,779 2,051,227 1,883,269
Weighted average shares – diluted 40,606,465 42,206,749 41,731,788
Net income per share – basic $ 1.34 $ 1.19 $ .98
Net income per share – diluted $ 1.29 $ 1.13 $ .93
Anti-dilutive employee stock options excluded 622,516 104,806 14,630
See Note 12 for information regarding shares available for grant under the 2001 Sonic Corp. Stock Option Plan and
the 2001 Sonic Corp. Directors’ Stock Option Plan.
3. Impairment of Long-Lived Assets
As of August 31, 2003 and 2002, the company had identified certain underperforming restaurants whose operating
results indicated that certain assets of these restaurants might be impaired. The buildings and improvements of these
restaurants had combined carrying amounts of $2,786 and $1,990 respectively. During fiscal years 2003 and 2002, the
company performed quarterly analyses of these and other restaurants which had incurred operating losses. As a result of
these analyses, the company determined that certain restaurants with then-existing carrying amounts of $1,214 and $1,139,
respectively, were impaired and wrote them down by $727 and $970, respectively, to their fair values. In addition, estimates
were revised on three stores which were previously impaired under FAS 121 resulting in additional provisions totaling $291 in
fiscal year 2002. Management’s estimate of undiscounted future cash flows indicates that the remaining carrying amounts
as of August 31, 2003 are expected to be recovered. However, it is reasonably possible that the estimate of cash flows may
change in the near future resulting in the need to write-down one or more of the identified assets to fair value.
4. Accounts and Notes Receivable
Accounts and notes receivable consist of the following at August 31, 2003 and 2002:
2003 2002
Royalties and other trade receivables $ 8,052 $ 7,701
Notes receivable—current 3,061 2,290
Other 6,410 5,252
17,523 15,243
Less allowance for doubtful accounts and notes receivable 533 1,488
$ 16,990 $ 13,755
Notes receivable—noncurrent $ 10,274 $ 9,034
Less allowance for doubtful notes receivable 624 505
$ 9,650 $ 8,529