Sonic 2005 Annual Report Download - page 49

for the lease payments for which it was responsible as the original lessee. As of August 31, 2005, the amount
remaining under the guaranteed lease obligations totaled $4,900.
The Company has not recorded a liability for its obligations under the guarantees, and none of the notes or leases
related to the guarantees were in default as of August 31, 2005.
16. Selected Quarterly Financial Data (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004
Income statement data:
Partner Drive-In sales $ 120,211 $ 99,745 $ 112,655 $ 94,105 $141,797 $ 121,630 $151,325 $134,105 $525,988 $449,585
Other 22,016 18,963 19,958 17,490 25,856 24,312 29,248 26,096 97,078 86,861
Total revenues 142,227 118,708 132,613 111,595 167,653 145,942 180,573 160,201 623,066 536,446
Partner Drive-In
operating expenses 97,784 79,852 91,682 76,320 111,691 95,723 120,749 106,964 421,906 358,859
Selling, general and
administrative 9,493 9,121 10,060 9,083 10,209 9,914 10,984 10,152 40,746 38,270
Other 8,406 7,823 9,257 8,840 9,051 8,285 9,494 8,255 36,208 33,203
Total expenses 115,683 96,796 110,999 94,243 130,951 113,922 141,227 125,371 498,860 430,332
Income from operations 26,544 21,912 21,614 17,352 36,702 32,020 39,346 34,830 124,206 106,114
Interest expense, net 1,605 1,579 1,532 1,679 1,292 1,586 1,356 1,534 5,785 6,378
Income before
income taxes 24,939 20,333 20,082 15,673 35,410 30,434 37,990 33,296 118,421 99,736
Provision for
income taxes 8,939 7,574 7,487 5,838 12,664 11,337 13,950 11,972 43,040 36,721
Net income $ 16,000 $ 12,759 $ 12,595 $ 9,835 $ 22,746 $ 19,097 $ 24,040 $ 21,324 $ 75,381 $ 63,015
Net income per share:
Basic $.27 $.22 $.21 $.17 $.38 $.32 $.40 $.36 $1.26 $1.06
Diluted $.26 $.21 $.20 $.16 $.36 $.31 $.39 $.34 $1.21 $1.02
Weighted average
shares outstanding:
Basic 60,010 58,908 60,263 59,237 60,197 59,512 59,509 59,598 59,995 59,314
Diluted 62,38
6 61,194 62,788 61,689 62,716 61,832 61,836 61,902 62,431 61,654
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, 2005 and 2004, 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, 2005 were $24,526 and $25,123, respectively, and at August 31, 2004 were $59,955 and
$61,515, respectively.
Notes to Consolidated Financial Statements
August 31, 2005, 2004 and 2003 (In thousands, except per share data)
39