Sonic 2011 Annual Report Download - page 52

18. Selected Quarterly Financial Data (Unaudited)
19. 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 ASC Topic 825, “Financial Instruments,” does 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, 2011 and 2010, carrying values approximate their estimated
fair values.
Borrowed funds - The company prepares a discounted cash flow analysis for its fixed and variable rate borrowings to
estimate fair value each quarter. This analysis uses interest rates being offered in the current market for borrowings
with similar terms to the company’s borrowings. There are few leveraged loan transactions occurring in the current
market. Management used market information available for public debt transactions for companies with ratings that
are at or below the company’s ratings. Management believes this fair value is a reasonable estimate with the
information that is available.
At August 31, 2011, the fair value of the 2011 Fixed Rate Notes approximated the carrying value of $497.0 million
(including accrued interest). During the fourth quarter of fiscal year 2011, the company repaid the outstanding
balance under its 2011 Variable Funding Notes. At August 31, 2010, the fair value of the 2006 Fixed Rate Notes was
estimated at $388.1 million versus a carrying value of $404.0 million (including accrued interest). At August 31,
2010, the fair value of the 2006 Variable Funding Notes was estimated at $163.6 million versus a carrying value of
$187.3 million (including accrued interest).
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Notes to Consolidated Financial Statements
August 31, 2011, 2010 and 2009 (In thousands, except per share data)
First Quarter Second Quarter
2011 2010 2011 2010
Income statement data:
Company Drive-In sales $ 97,274 $ 103,584 $ 86,435 $ 86,627
Franchise operations 30,748 31,717 26,482 26,000
Other 1,124 1,180 606 702
Total revenues 129,146 136,481 113,523 113,329
Company Drive-In operating expenses 84,725 87,962 77,953 75,834
Selling, general and administrative 16,281 16,132 15,285 17,324
Depreciation and amortization 10,300 10,666 10,367 10,647
Provision for impairment of long-lived assets 88 – 176 –
Total expenses 111,394 114,760 103,781 103,805
Other operating income (expense), net 277 18 (2) (540)
Income from operations 18,029 21,739 9,740 8,984
Net (gain) loss from early extinguishment of debt ––(5,205) –
Interest expense, net 8,079 9,520 7,992 9,377
Income (loss) before income taxes 9,950 12,219 6,953 (393)
Provision (benefit) for income taxes 2,471 3,877 2,466 (789)
Net income (loss)-including noncontrolling interests 7,479 8,342 4,487 396
Net income- noncontrolling interests 237 2,112 139 1,038
Net income (loss)-attributable to Sonic Corp. $ 7,242 $ 6,230 $ 4,348 $ (642)
Net income (loss) per share:
Basic $ 0.12 $ 0.10 $ 0.07 $ (0.01)
Diluted $ 0.12 $ 0.10 $ 0.07 $ (0.01)
Weighted average shares outstanding:
Basic 61,639 61,086 61,687 61,146
Diluted 61,753 61,415 61,865 61,385