Sonic 2005 Annual Report Download - page 46

Deferred tax assets and liabilities consist of the following at August 31, 2005 and 2004:
2005 2004
Current deferred tax assets (liabilities):
Allowance for doubtful accounts and notes receivable $83$77
Property, equipment and capital leases 194 326
Accrued litigation costs 76 119
Accrued liabilities –(432)
Deferred income from affiliated technology fund 468 710
Other –(2)
Current deferred tax assets, net $ 821 $ 798
Noncurrent deferred tax assets (liabilities):
Net investment in direct financing leases including differences
related to capitalization and amortization $ (2,649) $ (2,705)
Investment in partnerships, including differences in capitalization
and depreciation related to direct financing leases and different
year ends for financial and tax reporting purposes (10,587) (6,266)
Capital loss carryover 1,313 226
State net operating losses 3,939 3,460
Property, equipment and capital leases (2,104) (3,732)
Allowance for doubtful accounts and notes receivable 111 201
Deferred income from affiliated franchise fees 1,559 1,239
Accrued liabilities 1,125 1,131
Intangibles and other assets 93 164
Other (25) (84)
(7,225) (6,366)
Valuation allowance (3,939) (3,460)
Noncurrent deferred tax liabilities, net $ (11,164) $ (9,826)
Deferred tax assets and (liabilities):
Deferred tax assets (net of valuation allowance) $5,022 $4,193
Deferred tax liabilities (15,365) (13,221)
Net deferred tax liabilities $ (10,343) $ (9,028)
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, 2005 and 2004.
The Company has capital loss carryovers of approximately $1.3 million which expire beginning in fiscal year 2008.
Management has developed a plan that it believes will result in the realization of the carryovers before they expire.
12. Stockholders’ Equity
On April 30, 2004, the Company’s board of directors authorized a three-for-two stock split in the form of a stock
dividend. A total of 24,845,132 shares of common stock were issued on May 21, 2004 in connection with the split, and
an aggregate amount equal to the par value of the common stock issued of $248 was reclassified from paid-in capital
to common stock.
All references in the accompanying consolidated financial statements to weighted average numbers of shares
outstanding, per share amounts and Stock Purchase Plan and Stock Options share data have been adjusted to reflect
the stock splits on a retroactive basis.
Stock Purchase Plan
The Company has an employee stock purchase plan for all full-time regular employees. Employees are eligible to
purchase shares of common stock each year through a payroll deduction not in excess of the lesser of 10% of
compensation or $25.The aggregate amount of stock that employees may purchase under this plan is limited to
759,375 shares.The purchase price will be between 85% and 100% of the stock’s fair market value and will be
determined by the Company’s board of directors.
Notes to Consolidated Financial Statements
August 31, 2005, 2004 and 2003 (In thousands, except share data)
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