Sonic 2006 Annual Report Download - page 53

for the lease payments for which it was responsible as the original lessee. As of August 31, 2006, the amount
remaining under the guaranteed lease obligations totaled $3,934.
Effective November 30, 2005, the company extended a note purchase agreement to a bank that serves to
guarantee the repayment of a franchisee loan and also benefits the franchisee with a lower financing rate. In the event
of default by the franchisee, the company would purchase the franchisee loan from the bank, thereby becoming the
note holder and providing an avenue of recourse with the franchisee. As of August 31, 2006, the balance of the loan
was $2,631.
The company has not recorded a liability for its obligations under the guarantees, other than an immaterial
amount related to the fair value of the guarantee associated with the note purchase agreement, and has not been
required to make any payments under any of these guarantees.
16. Selected Quarterly Financial Data (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year
2006 2005* 2006 2005* 2006 2005* 2006 2005* 2006 2005*
Income statement data:
Partner Drive-In sales $135,422 $120,211 $126,376 $112,655 $156,921 $141,797 $167,113 $151,325 $585,832 $525,988
Other 24,378 22,016 22,572 19,958 29,548 25,856 30,932 29,248 107,430 97,078
Total revenues 159,800 142,227 148,948 132,613 186,469 167,653 198,045 180,573 693,262 623,066
Partner Drive-In
operating expenses 110,125 97,784 102,615 91,682 123,755 111,691 132,132 120,749 468,627 421,906
Selling, general and
administrative 12,196 10,833 13,214 11,785 13,293 12,096 13,345 12,789 52,048 47,503
Other 9,897 8,406 9,997 9,257 10,361 9,051 10,705 9,494 40,960 36,208
Total expenses 132,218 117,023 125,826 112,724 147,409 132,838 156,182 143,032 561,635 505,617
Income from operations 27,582 25,204 23,122 19,889 39,060 34,815 41,863 37,541 131,627 117,449
Interest expense, net 1,307 1,605 2,096 1,532 2,215 1,292 1,960 1,356 7,578 5,785
Income before
income taxes 26,275 23,599 21,026 18,357 36,845 33,523 39,903 36,185 124,049 111,664
Provision for
income taxes 9,845 8,485 8,122 7,084 13,011 12,248 14,366 13,404 45,344 41,221
Net income $ 16,430 $ 15,114 $ 12,904 $ 11,273 $ 23,834 $ 21,275 $ 25,537 $ 22,781 $ 78,705 $ 70,443
Net income per share:
Basic $ 0.19 $ 0.17 $ 0.15 $ 0.12 $ 0.28 $ 0.24 $ 0.30 $ 0.26 $ 0.91 $ 0.78
Diluted $0.18 $0.16 $0.14 $0.12 $0.27 $0.23 $0.29 $0.25 $0.88 $0.75
Weighted average
shares outstanding:
Basic 87,415 90,015 86,227 90,394 85,993 90,296 85,405 89,264 86,260 89,992
Diluted 90,521 93,578 89,261 94,182 89,007 94,074 88,168 92,755 89,239 93,647
* Prior years adjusted to include the impact of stock-based compensation expense and the three-for-two stock split in April
2006; see Note 1 and Note 12 for additional information.
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.
Sonic Corp. 2006 Annual Report
51
Notes to Consolidated
Financial Statements
August 31, 2006, 2005 and 2004
(In thousands, except per share data)