Sonic 2004 Annual Report Download - page 36

17. Fair Values of Financial Instruments
The following discussion of fair values is not indicative of the overall fair value of the
Company’s consolidated balance sheet since the provisions of SFAS No. 107, “Disclosures
About Fair Value of Financial Instruments,”do not apply to all assets,including intangibles.
The following methods and assumptions were used by the Company in estimating its
fair values of financial instruments:
Cash and cash equivalents – Carrying value approximates fair value due to the short
duration to maturity.
Notes receivable – For variable rate loans with no significant change in credit risk since
the loan origination, fair values approximate carrying amounts. Fair values for fixed-rate
loans are estimated using discounted cash flow analysis, using interest rates that would
currently be offered for loans with similar terms to borrowers of similar credit quality
and/or the same remaining maturities.
As of August 31, 2004 and 2003, carrying values approximate their estimated
fair values.
Borrowed funds – Fair values for fixed rate borrowings are estimated using a discounted
cash flow analysis that applies interest rates currently being offered on borrowings of
similar amounts and terms to those currently outstanding. Carrying values for variable-rate
borrowings approximate their fair values.
The carrying amounts, including accrued interest, and estimated fair values of the
Company’s fixed-rate borrowings at August 31, 2004 were $59,955 and $61,515,
respectively, and at August 31, 2003 were $60,959 and $63,803, respectively.
18. Subsequent Events
Subsequent to August 31, 2004, the Company repaid the balance outstanding under
its line of credit in the amount of $14,075.
Notes to Consolidated Financial Statements
August 31, 2004, 2003 and 2002 (In thousands, except per share data)
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16. Selected Quarterly Financial Data (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year
2004 2003 2004 2003 2004 2003 2004 2003 2004 2003
Income statement data:
Partner Drive-In sales $ 99,745 $ 81,574 $ 94,105 $ 74,828 $ 121,630 $ 102,214 $ 134,105 $ 112,902 $ 449,585 $ 371,518
Other 18,963 17,011 17,490 15,524 24,312 20,391 26,096 22,196 86,861 75,122
Total revenues 118,708 98,585 111,595 90,352 145,942 122,605 160,201 135,098 536,446 446,640
Partner Drive-In operating expenses 79,852 64,873 76,320 60,628 95,723 78,587 106,964 87,676 358,859 291,764
Selling, general and administrative 9,121 8,222 9,083 8,418 9,914 9,483 10,152 9,303 38,270 35,426
Other 7,823 6,973 8,840 6,994 8,285 7,330 8,255 8,653 33,203 29,950
Total expenses 96,796 80,068 94,243 76,040 113,922 95,400 125,371 105,632 430,332 357,140
Income from operations 21,912 18,517 17,352 14,312 32,020 27,205 34,830 29,466 106,114 89,500
Interest expense, net 1,579 1,559 1,679 1,600 1,586 1,441 1,534 1,616 6,378 6,216
Income before income taxes 20,333 16,958 15,673 12,712 30,434 25,764 33,296 27,850 99,736 83,284
Provision for income taxes 7,574 6,317 5,838 4,735 11,337 9,597 11,972 10,374 36,721 31,023
Net income $ 12,759 $ 10,641 $ 9,835 $ 7,977 $ 19,097 $ 16,167 $ 21,324 $ 17,476 $ 63,015 $ 52,261
Net income per share:
Basic $ .22 $ .18 $ .17 $ .14 $ .32 $ .28 $ .36 $ .30 $ 1.06 $ .89
Diluted $ .21 $ .17 $ .16 $ .13 $ .31 $ .27 $ .34 $ .29 $ 1.02 $ .86
Weighted average shares outstanding:
Basic 58,908 58,823 59,237 58,033 59,512 58,250 59,598 58,754 59,314 58,465
Diluted 61,194 61,457 61,689 60,444 61,832 60,796 61,902 60,941 61,654 60,910