Sonic 2011 Annual Report Download - page 41

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4. Accounts and Notes Receivable
Accounts and notes receivable consist of the following at August 31:
2011 2010
Current Accounts and Notes Receivable:
Royalties and other trade receivables $ 17,729 $ 18,021
Notes receivable from franchisees 3,173 4,432
Notes receivable from advertising funds 1,500 2,440
Other 4,853 3,769
27,255 28,662
Less allowance for doubtful accounts and notes receivable 2,697 3,199
$ 24,558 $ 25,463
Noncurrent Notes Receivable:
Notes receivable from franchisees $ 6,286 $ 4,244
Notes receivable from advertising funds 5,469 4,591
Less allowance for doubtful notes receivable 669 11
$ 11,086 $ 8,824
The company’s receivables are primarily due from franchisees, all of whom are in the restaurant business. Substantially
all of the notes receivable from franchisees are collateralized by real estate or equipment. The notes receivable from
advertising funds represent transactions in the normal course of business. See note 1 – Summary of Significant Accounting
Policies for further discussion of the company’s accounts and notes receivable.
The following table summarizes the activity in the allowance for doubtful accounts related to the company’s
notes receivable:
Balance at August 31, 2010 $ 54
Additions to provision 694
Balance at August 31, 2011 $ 748
5. Goodwill and Other Intangibles
As of August 31, 2011, the company had $81.6 million of goodwill, of which $75.6 million was attributable to the
Company Drive-Ins segment and $6.0 million was attributable to the Franchise Operations segment. There have been no
changes in the goodwill balance attributable to the Franchise Operations segment since August 31, 2010. The changes
in the carrying amount of goodwill for fiscal years ending August 31 were as follows:
2011 2010
Balance as of September 1 $ 82,089 $ 82,343
Goodwill acquired during the year 427 21
Goodwill disposed of for noncontrolling interests in Company Drive-Ins (891) (5)
Goodwill disposed of related to the sale of Company Drive-Ins – (270)
Balance as of August 31 $ 81,625 $ 82,089
The gross carrying amount of franchise agreements, franchise fees and other intangibles subject to amortization was
$6.8 million and $7.0 million at August 31, 2011 and 2010, respectively. Accumulated amortization related to these
intangible assets was $2.6 million and $2.2 million at August 31, 2011 and 2010, respectively. Intangible assets
amortization expense for the fiscal years ended August 31, 2011, 2010 and 2009 was $0.4 million, $0.5 million and $0.5
million, respectively. Estimated intangible assets amortization expense is $0.4 million for fiscal year 2012 and $0.3 million
annually for fiscal years 2013, 2014, 2015 and 2016.
Notes to Consolidated Financial Statements
August 31, 2011, 2010 and 2009 (In thousands, except per share data)
3 9