Sonic 2003 Annual Report Download - page 43

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Notes to Consolidated Financial Statements
August 31, 2003, 2002 and 2001 (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:
2003 2002 2001
Amount computed by applying a tax rate of 35% $ 29,149 $ 26,601 $ 21,729
State income taxes (net of federal income tax benefit) 1,812 1,368 1,110
Other 62 342 287
Provision for income taxes $ 31,023 $ 28,311 $ 23,126
Deferred tax assets and liabilities consist of the following at August 31, 2003 and 2002:
2003 2002
Current deferred tax assets (liabilities):
Allowance for doubtful accounts and notes receivable $ 314 $ 116
Property, equipment and capital leases 326 162
Accrued litigation costs 93 206
Deferred income from affiliated technology fund 479 –
Other (2) (3)
Current deferred tax assets, net $ 1,210 $ 481
Noncurrent deferred tax assets (liabilities):
Net investment in direct financing leases including differences related to
capitalization and amortization $ (2,569) $ (2,426)
Investment in partnerships, including differences in capitalization and
depreciation related to direct financing leases and different year ends
for financial and tax reporting purposes (4,862) (3,008)
State net operating losses 3,112 2,567
Property, equipment and capital leases (1,301) (936)
Allowance for doubtful accounts and notes receivable 238 194
Deferred income from affiliated franchise fees 1,083 897
Accrued liabilities 331 223
Intangibles and other assets 152 45
Other 199 288
(3,617) (2,156)
Valuation allowance (3,112) (2,567)
Noncurrent deferred tax liabilities, net $ (6,729) $ (4,723)
Deferred tax assets and (liabilities):
Deferred tax assets (net of valuation allowance) $ 3,215 $ 1,987
Deferred tax liabilities (8,734) (6,229)
Net deferred tax liabilities $ (5,519) $ (4,242)
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, 2003 and 2002.
12. Stockholders’ Equity
On November 14, 2000, the company’s board of directors authorized a three-for-two stock split in the form of a
stock dividend. A total of 15,662,417 shares of common stock were issued on November 30, 2000 in connection with the
split. The stated par value of each share was not changed from $.01. An aggregate amount equal to the par value of the
common stock issued of $104 was reclassified from paid-in capital to common stock.