Sonic 2006 Annual Report Download - page 43

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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:
2006 2005* 2004*
Numerator:
Net income $ 78,705 $ 70,443 $ 58,031
Denominator:
Weighted average shares outstanding - basic 86,260 89,992 88,970
Effect of dilutive employee stock options 2,979 3,655 3,511
Weighted average shares - diluted 89,239 93,647 92,481
Net income per share - basic $ 0.91 $ 0.78 $ 0.65
Net income per share - diluted $0.88 $ 0.75 $ 0.63
Anti-dilutive employee stock options excluded 1,378 249 389
* Adjusted to include the impact of stock-based compensation expense and the three-for-two stock split in April 2006.
3. Impairment of Long-Lived Assets
During the fiscal years ended August 31, 2006, 2005 and 2004 the company identified impairments for certain
drive-in assets and surplus property through regular quarterly reviews of long-lived assets. During fiscal year 2006,
these analyses resulted in provisions for impairment totaling $264 to reduce the carrying amount of three surplus
properties down to fair value. During fiscal year 2005, these analyses resulted in provisions for impairment totaling
$387, including $286 to writedown the carrying amount of building and leasehold improvements on an
underperforming drive-in, and $101 to reduce the carrying amount of a surplus property down to fair value. During
fiscal year 2004, the regular quarterly reviews resulted in a provision of $675 to writedown the carrying amount of
building and leasehold improvements for an underperforming drive-in.
4. Accounts and Notes Receivable
Accounts and notes receivable consist of the following at August 31, 2006 and 2005:
2006 2005
Current Accounts and Notes Receivable:
Royalties and other trade receivables $ 12,863 $ 10,303
Notes receivable franchisees 353 104
Notes receivable from advertising funds 3,681 2,171
Other 4,682 6,446
21,579 19,024
Less allowance for doubtful accounts and notes receivable 308 223
$ 21,271 $ 18,801
Noncurrent Notes Receivable:
Notes receivable franchisees $ 5,509 $ 3,422
Less allowance for doubtful notes receivable 327 284
$5,182 $3,138
Sonic Corp. 2006 Annual Report
41
Notes to Consolidated
Financial Statements
August 31, 2006, 2005 and 2004
(In thousands, except per share data)