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Note  Consolidate nancia Satement
August 31, 2008, 2007 and 2006 (In thousands, except per share data)
36
Sonic Corp. 2008 Annual Report
17. Selected Quarterly Financial Data (Unaudited)
18. 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, 2008 and 2007, 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 as similar as available in terms of amounts and
terms to those currently outstanding. There are few leveraged loan transactions occurring in the current market.
The rate spread used in our discounted cash flow analysis was from transactions with lower ratings; thus, we
believe the rate assumed is conservatively high.
The carrying amounts, including accrued interest, and estimated fair values of the company’s fixed-rate
borrowings at August 31, 2008 were $574,193 and $517,315, respectively, and at August 31, 2007 were $594,364
and $591,668, respectively. Carrying values for variable-rate borrowings approximate their fair values.
First Quarter Second Quarter
2008 2007 2008 2007
Income statement data:
Partner Drive-In sales $ 159,285 $ 146,419 $ 147,139 $ 137,007
Other 30,896 28,371 27,482 24,445
Total revenues 190,181 174,790 174,621 161,452
Partner Drive-In operating expenses 129,174 119,480 119,497 112,050
Selling, general and administrative 14,914 14,033 15,540 14,401
Other 12,206 10,758 12,793 11,099
Total expenses 156,294 144,271 147,830 137,550
Income from operations 33,887 30,519 26,791 23,902
Debt extinguishment and other costs – 1,258 – 4,818
Interest expense, net 11,980 5,759 12,214 10,304
Income before income taxes 21,907 23,502 14,577 8,780
Provision for income taxes 8,324 8,216 5,324 2,555
Net income $ 13,583 $ 15,286 $ 9,253 $ 6,225
Net income per share:
Basic $ 0.22 $ 0.20 $ 0.15 $ 0.09
Diluted $ 0.22 $ 0.19 $ 0.15 $ 0.09
Weighted average shares outstanding:
Basic 60,772 76,606 60,303 67,325
Diluted 63,065 79,489 62,384 70,026