Sonic 2012 Annual Report Download - page 37

Notes to Consolidated Financial Statements
August 31, 2012, 2011 and 2010 (In thousands, except per share data)
Noncontrolling Interests
Effective September 1, 2009, the company implemented Accounting Standards Codification, (“ASC”) Topic 810,
“Consolidation,” which requires noncontrolling interests, previously called minority interests, to be presented as a separate
item in the equity section of the consolidated balance sheets. It also requires the amount of consolidated net income related
to noncontrolling interests to be clearly presented on the face of the consolidated statements of income. Effective April 1,
2010, the company revised its compensation program at the Company Drive-In level. As a result of these changes,
noncontrolling interests are immaterial for fiscal years 2012 and 2011 and have been included in “payroll and other employee
benefits” on the Consolidated Statements of Income and in “other noncurrent liabilities” on the Consolidated Balance Sheets.
New Accounting Pronouncements
In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2011-08, “Testing Goodwill for Impairment.” This pronouncement was issued to simplify how entities test goodwill for
impairment. Under this pronouncement, entities may first assess qualitative factors to determine whether it is necessary to
perform the two-step goodwill impairment test. If the qualitative assessment results in a more than 50% likely result that the
fair value of a reporting unit is less than the carrying amount, then the entity must continue to apply the two-step impairment
test. If the entity concludes the fair value exceeds the carrying amount, then neither of the two steps in the goodwill impairment
test is required. This pronouncement is effective for annual and interim goodwill impairment tests performed for fiscal years
beginning after December 15, 2011 with early adoption permitted. The adoption of this pronouncement is not expected to
have a material impact on the company’s consolidated financial statements.
In July 2012, the FASB issued ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment.” This
pronouncement was issued to simplify how entities test for impairment of indefinite-lived intangible assets. Under this
pronouncement, an entity has the option first to assess qualitative factors to determine whether it is more likely than not that
an indefinite-lived intangible asset is impaired. In conclusion of this assessment, if an entity finds that it is not more likely
than not that an indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However,
if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and
perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with ASC Topic
350, “Intangibles – Goodwill and Other.” This pronouncement is effective for annual and interim impairment tests performed
for fiscal years beginning after September 15, 2012 with early adoption permitted. The adoption of this pronouncement is
not expected to have a material impact on the company’s consolidated financial statements.
2. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share for the years ended August 31:
2012 2011 2010
Numerator:
Net income – attributable to Sonic Corp. $ 36,085 $ 19,225 $ 21,209
Denominator:
Weighted average common shares outstanding – basic 60,078 61,781 61,319
Effect of dilutive employee stock options
and unvested restricted stock units 94 162 257
Weighted average common shares – diluted 60,172 61,943 61,576
Net income per common share – basic $ 0.60 $ 0.31 $ 0.35
Net income per common share – diluted $ 0.60 $ 0.31 $ 0.34
Anti-dilutive securities excluded(1) 6,705 6,367 6,834
(1) Anti-dilutive securities consist of stock options and unvested restricted stock units that were not included in the
computation of diluted earnings per share because either the exercise price of the options was greater than the average
market price of the common stock or the total assumed proceeds under the treasury stock method resulted in negative
incremental shares and thus the inclusion would have been anti-dilutive.
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