Sonic 2014 Annual Report Download - page 36

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Notes to Consolidated Financial Statements
August 31, 2014, 2013 and 2012 (In thousands, except per share data)
4. Accounts and Notes Receivable
Accounts and notes receivable consist of the following:
August 31,
2014 2013
Current Accounts and Notes Receivable:
Royalties and other trade receivables $ 18,292 $ 16,506
Notes receivable from franchisees 1,468 4,003
Receivables from advertising funds 5,597 5,203
Other 9,068 4,977
Accounts and notes receivable, gross 34,425 30,689
Allowance for doubtful accounts and notes receivable (1,592) (1,547)
Accounts and notes receivable, net $ 32,833 $ 29,142
Noncurrent Notes Receivable:
Receivables from franchisees $ 4,688 $ 5,003
Receivables from advertising funds 3,646 5,810
Allowance for doubtful notes receivable (179) (800)
Notes receivable, net $ 8,155 $ 10,013
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. During fiscal year 2013, notes receivable
from franchisees increased as a result of a franchisee’s purchase of real estate discussed in note 6 – Other Operating Income and
Expenses. The receivables from advertising funds represent transactions in the normal course of business.
5. Goodwill and Other Intangibles
As of August 31, 2014, the Company had $77.1 million of goodwill.
The changes in the carrying amount of goodwill were as follows:
Year Ended August 31,
2014 2013
Balance at beginning of year $ 77,093 $ 76,997
Goodwill acquired during the year – 96
Balance at end of year $ 77,093 $ 77,093
The gross carrying amount of franchise agreements, intellectual property, franchise fees and other intangibles subject to
amortization was $10.3 million at August 31, 2014 and 2013 and is included in other assets in the accompanying consolidated
balance sheets. Accumulated amortization related to these intangible assets was $5.0 million and $4.1 million at August 31, 2014
and 2013, respectively. Intangible assets amortization expense was $0.9 million for the fiscal years ended August 31, 2014 and 2013
and $0.8 million for fiscal year 2012. At August 31, 2014, the remaining weighted-average life of amortizable intangible assets was
approximately 11 years. Estimated intangible assets amortization expense is $0.9 million annually for fiscal years 2015, 2016 and
2017 and $0.3 million for fiscal years 2018 and 2019.
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