Sonic 2015 Annual Report Download - page 17

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Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Fiscal Year Ended Fiscal Year Ended
August 31, 2014 August 31, 2013
Net Diluted Net Diluted
Income EPS Income EPS
Reported – GAAP $ 47,916 $ 0.85 $ 36,701 $ 0.64
Benefit from the IRS’s acceptance of a federal tax method change (484) (0.01)
After-tax loss from early extinguishment of debt 2,798 0.05
Retroactive tax benefit of WOTC and resolution of tax matters (743) (0.02)
After-tax loss on closure of Company Drive-Ins(1) 1,510 0.03
After-tax impairment charge for point-of-sale assets(2) 1,013 0.02
Adjusted - Non-GAAP $ 47,432 $ 0.84 $ 41,279 $ 0.72
(1) Loss of $2.4 million on the closure of 12 lower-performing Company Drive-Ins as a result of an assessment in advance of
capital expenditures for planned technology initiatives.
(2) Impairment charge of $1.6 million related to the write-off of assets associated with a change in the vendor for the Sonic
system’s new point-of-sale technology.
The following table provides information regarding the number of Company Drive-Ins and Franchise Drive-Ins operating
as of the end of the years indicated as well as the system-wide change in sales and average unit volume. System-wide
information includes both Company Drive-In and Franchise Drive-In information, which we believe is useful in analyzing
the growth of the brand as well as the Company’s revenues, since franchisees pay royalties based on a percentage of sales.
System-wide Performance
Year Ended August 31,
($ in thousands) 2015 2014 2013
Increase in total sales 8.3% 3.9% 2.4%
System-wide drive-ins in operation(1):
Total at beginning of year 3,518 3,522 3,556
Opened 41 40 27
Closed (net of re-openings) (33) (44) (61)
Total at end of year 3,526 3,518 3,522
Average sales per drive-in $ 1,244 $ 1,153 $ 1,109
Change in same-store sales(2) 7.3% 3.5% 2.3%
(1) Drive-ins that are temporarily closed for various reasons (repairs, remodeling, relocations, etc.) are not considered closed
unless the Company determines that they are unlikely to reopen within a reasonable time.
(2) Represents percentage change for drive-ins open for a minimum of 15 months.
Results of Operations
Revenues. The following table sets forth the components of revenue for the reported periods and the relative change
between the comparable periods.
Revenues Percent
Year Ended August 31, Increase Increase
($ in thousands) 2015 2014 (Decrease) (Decrease)
Revenues:
Company Drive-In sales $ 436,031 $ 405,363 $ 30,668 7.6 %
Franchise Drive-Ins:
Franchise royalties 158,813 137,125 21,688 15.8
Franchise fees 2,529 1,291 1,238 95.9
Lease revenue 5,583 4,291 1,292 30.1
Other 3,133 4,279 (1,146) (26.8)
Total revenues $ 606,089 $ 552,349 $ 53,740 9.7 %
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