Sonic 2008 Annual Report Download - page 57

Under the share repurchase program authorized by our Board of Directors, the company acquired 1.5 million
shares for a total cost of $32.2 million during fiscal 2008. In addition to the current-year share repurchases, $14.4
million in share repurchases entered into at the end of fiscal year 2007 were settled and paid in fiscal year 2008.
The share repurchase program expired August 31, 2008.
We plan capital expenditures of approximately $60 to $70 million in fiscal year 2009, excluding potential
share repurchases. These capital expenditures primarily relate to the development of additional Partner Drive-
Ins, retrofit of existing Partner Drive-Ins and other drive-in level expenditures. We expect to fund these capital
expenditures through cash flow from operations as well as cash on hand.
As of August 31, 2008, our total cash balance of $70.4 million reflected the impact of the cash generated
from operating activities, borrowing activity, including additional advances on our credit facility at year-end, and
capital expenditures mentioned above. We believe that existing cash and funds generated from operations, as
well as borrowings under the Variable Funding Notes, will meet our needs for the foreseeable future.
Off-Balance-Sheet Arrangements
The company has obligations for guarantees on certain franchisee loans and lease agreements. See Note 16
of the Notes to Consolidated Financial Statements for additional information about these guarantees. Other
than such guarantees and various operating leases, which are disclosed more fully in “Contractual Obligations
and Commitments” below and Note 6 to our Consolidated Financial Statements, the company has no other
material off-balance sheet arrangements.
Contractual Obligations and Commitments
In the normal course of business, Sonic enters into purchase contracts, lease agreements and borrowing
arrangements. Our commitments and obligations as of August 31, 2008 are summarized in the following table:
Payments Due by Period
(In thousands)
Less than 1 – 3 3 – 5 More than
Total 1 Year Years Years 5 Years
Contractual Obligations
Long-term debt
(1)
$ 1,057,188 $ 70,363 $ 183,434 $ 803,199 $ 192
Capital leases 52,987 5,571 10,989 10,280 26,147
Operating leases 195,220 12,152 23,707 22,672 136,689
Total $ 1,305,395 $ 88,086 $ 218,130 $ 836,151 $ 163,028
(1)
The fixed-rate interest payments included in the table above assume that the related notes will be
outstanding for the expected six-year term, and all other fixed-rate notes will be held to maturity. Interest
payments associated with variable-rate debt have not been included in the table. Assuming the amounts
outstanding under the variable-rate notes as of August 31, 2008 are held to maturity, and utilizing interest
rates in effect at August 31, 2008, the interest payments will be approximately $6.8 million on an annual
basis through December 2013.
Impact of Inflation
We have experienced impact from inflation. Inflation has caused increased food, labor and benefits costs
and has increased our operating expenses. To the extent permitted by competition, increased costs are recovered
through a combination of menu price increases and reviewing, then implementing, alternative products or
processes, or by implementing other cost reduction procedures.
Seasonality
We do not expect seasonality to affect our operations in a materially adverse manner. Our results during
the second fiscal quarter (the months of December, January and February) generally are lower than other
quarters because of the climate of the locations of a number of Partner and Franchise Drive-Ins.
Managemen' Discuio  Anali  nancia Condo  Resu  Operaon
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Sonic Corp. 2008 Annual Report