Sonic 2008 Annual Report Download - page 70

Note  Consolidate nancia Satement
August 31, 2008, 2007 and 2006 (In thousands, except per share data)
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Sonic Corp. 2008 Annual Report
In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), “Business Combinations” (“SFAS
141(R)”). This standard retains the fundamental requirements in SFAS No. 141 that the acquisition method of
accounting be used for all business combinations and for an acquirer to be identified for each business
combination. SFAS 141(R) requires an acquirer to recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at their fair values at the acquisition date. Costs incurred by the acquirer
to effect the acquisition are not allocated to the assets acquired or liabilities assumed, but are recognized
separately. SFAS 141(R) is effective prospectively to business combinations for which the acquisition date is on
or after the beginning of the first annual reporting period beginning on or after December 15, 2008, which for
us will be business combinations with an acquisition date beginning on or after September 1, 2009. The company
is evaluating the impact that SFAS 141(R) will have on its consolidated financial position and results of operations.
In December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests in Consolidated
Financial Statements, an amendment to ARB No. 51” (“SFAS 160”). This standard establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary
and clarifies that a noncontrolling interest in a subsidiary is an ownership interest that should be reported as
equity in the consolidated financial statements. SFAS 160 establishes a single method of accounting for changes
in a parent’s ownership interest in a subsidiary that do not result in deconsolidation and requires a parent to
recognize a gain or loss in net income when a subsidiary is deconsolidated. SFAS 160 also requires consolidated
net income to be reported at amounts that include the amounts attributable to both the parent and the
noncontrolling interest and to disclose, on the face of the consolidated statement of income, the amounts of
consolidated net income attributable to the parent and to the noncontrolling interest. SFAS 160 is effective for
fiscal years beginning on or after December 15, 2008, which for us will be our fiscal year beginning September 1,
2009. The company is evaluating the impact that SFAS 160 will have on its consolidated financial position and
results of operations.
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:
2008 2007 2006
Numerator:
Net income $ 60,319 $ 64,192 $ 78,705
Denominator:
Weighted average shares outstanding – basic 60,403 68,019 86,260
Effect of dilutive employee stock options 1,867 2,573 2,979
Weighted average shares – diluted 62,270 70,592 89,239
Net income per share – basic $ 1.00 $ 0.94 $ 0.91
Net income per share – diluted $ 0.97 $ 0.91 $ 0.88
Anti-dilutive employee stock options excluded 3,255 1,858 1,378
3. Impairment of Long-Lived Assets
During the fiscal years ended August 31, 2008, 2007 and 2006, the company identified impairments for
certain drive-in assets and surplus property through regular quarterly reviews of long-lived assets. During fiscal
year 2008, these analyses resulted in provisions for impairment totaling $571, including $99 to write down the
carrying amount of building and leasehold improvements on an underperforming drive-in, and $472 to reduce
the carrying amount of five surplus properties down to fair value. During fiscal year 2007, these analyses resulted
in provisions for impairment totaling $1,165, including $412 to reduce the carrying amount of assets in excess
of fair value for two drive-ins, and $753 to reduce to fair value the carrying amount of assets for three properties
leased to franchisees. 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.