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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sonic Corp. (delisted) | NASDAQ:SONC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 43.49 | 43.01 | 43.50 | 0 | 01:00:00 |
Delaware
(State or other jurisdiction of
incorporation or organization)
|
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73-1371046
(I.R.S. Employer Identification No.)
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300 Johnny Bench Drive
Oklahoma City, Oklahoma
(Address of principal executive offices)
|
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73104
(Zip Code)
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Large accelerated filer ☒
|
Accelerated filer ☐
|
Non-accelerated filer ☐ (Do no check if a smaller reporting company)
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Smaller reporting company ☐
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Emerging growth company ☐
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 4A.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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•
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A distinctive drive-in concept focusing on a unique menu of quality, made-to-order food products including several signature items and innovative technology;
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•
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A commitment to customer service featuring the quick delivery of food by friendly carhops;
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•
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Integrated national marketing programs across media channels, including broadcast, digital and mobile; and
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•
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A commitment to strong franchisee relationships.
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•
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Same-store sales growth;
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•
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Improved performance of Company Drive-Ins, including consistent operations execution and restaurant-level margins; and
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•
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Expansion of Sonic Drive-Ins.
|
|
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2018
|
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2017
|
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2016
|
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2015
|
|
2014
|
||||||||||
Average sales per Franchise Drive-In
|
|
$
|
1,260
|
|
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$
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1,260
|
|
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$
|
1,301
|
|
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$
|
1,261
|
|
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$
|
1,170
|
|
(
In thousands
)
|
|
|
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|
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|||||
Number of Franchise Drive-Ins:
|
|
|
|
|
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|
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|
|
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|||||
Total open at beginning of year
|
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3,365
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3,212
|
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3,139
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|
|
3,127
|
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3,126
|
|
|||||
New Franchise Drive-Ins
|
|
41
|
|
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63
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52
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|
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38
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|
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37
|
|
|||||
Sold to the Company
|
|
—
|
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—
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—
|
|
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(3
|
)
|
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—
|
|
|||||
Purchased from the Company
|
|
49
|
|
|
117
|
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38
|
|
|
9
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7
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|||||
Closed (net of re-openings)
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(28
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)
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(27
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)
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(17
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)
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(32
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)
|
|
(43
|
)
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|||||
Total open at end of year
|
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3,427
|
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3,365
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3,212
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3,139
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3,127
|
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|
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2018
|
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2017
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2016
|
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2015
|
|
2014
|
||||||||||
Average sales per Company Drive-In
|
|
$
|
1,155
|
|
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$
|
1,134
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$
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1,142
|
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$
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1,116
|
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$
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1,043
|
|
(
In thousands
)
|
|
|
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|||||
Number of Company Drive-Ins:
|
|
|
|
|
|
|
|
|
|
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|
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|
|
||||||
Total open at beginning of year
|
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228
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345
|
|
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387
|
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391
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396
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|||||
New Company Drive-Ins
|
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—
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3
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1
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3
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3
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|||||
Purchased from franchisees
|
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—
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—
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—
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3
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—
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|||||
Sold to franchisees
|
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(49
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)
|
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(117
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)
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(38
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)
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(9
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)
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(7
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)
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|||||
Closed (net of re-openings)
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—
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(3
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)
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(5
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)
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(1
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)
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(1
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)
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|||||
Total open at end of year
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179
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228
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345
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387
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391
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•
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sales promotions and product offerings by Sonic and its competitors;
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•
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changes in average same-store sales and customer visits;
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•
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the inability to purchase sufficient levels of media;
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•
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variations in the price, availability and shipping costs of supplies such as food products;
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•
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seasonal effects on demand for Sonic’s products;
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•
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slowdowns in new drive-in development or franchise agreement renewals;
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•
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changes in competitive conditions;
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•
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changes in economic conditions generally, including consumer spending;
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•
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consumer sensitivity to price and value;
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•
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changes in consumer tastes and preferences;
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•
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changes in the cost of labor; and
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•
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weather and other acts of God.
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•
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competition from other restaurants in current and future markets;
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•
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the degree of saturation in existing markets;
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•
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consumer interest in and acceptance of the Sonic brand in existing and new markets;
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•
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the identification and availability of suitable and economically viable locations;
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•
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sales and profit levels at existing drive-ins;
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•
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the negotiation of acceptable lease or purchase terms for new locations;
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•
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permitting and regulatory requirements;
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•
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the cost and availability of construction resources and financing;
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•
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the ability to meet construction schedules;
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•
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the availability of qualified franchisees and their financial and other development capabilities, including their desire and ability to access and commit capital;
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•
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the ability to hire and train qualified management personnel;
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•
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sufficient marketing efforts;
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•
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weather; and
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•
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general economic and business conditions.
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•
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Our flexibility may be reduced in responding to changes in business, industry, regulatory or economic conditions.
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•
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Our ability to obtain additional financing in the future for acquisitions, working capital, capital expenditures and general corporate or other purposes could be impaired or any such financing may not be available on terms favorable to us.
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•
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Any substantial decrease in net operating cash flows or any substantial increase in expenses could make it difficult for us to meet our debt service requirements or force us to modify our operations or sell assets; as a result a substantial portion of our cash flows could be required for debt service and might not be available for our operations or other purposes.
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•
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Unpaid amounts outstanding could become immediately due and payable.
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Name
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Age
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Position
|
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Executive
Officer Since
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Clifford Hudson
|
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63
|
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Chairman of the Board of Directors and Chief Executive Officer
|
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1985
|
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Claudia S. San Pedro
|
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49
|
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President
|
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2007
|
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John H. Budd III
|
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51
|
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Executive Vice President and Chief Strategy and Business Development Officer
|
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2013
|
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Jose A. Dueñas
|
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46
|
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Executive Vice President and Chief Brand Officer
|
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2017
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Christina D. Vaughan
|
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43
|
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President of Sonic Restaurants, Inc.
|
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2017
|
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Paige S. Bass
|
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49
|
|
Senior Vice President, General Counsel and Assistant Corporate Secretary
|
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2007
|
|
|
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E. Edward Saroch
|
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61
|
|
Senior Vice President of Franchise Relations
|
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2017
|
|
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|
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|
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Corey R. Horsch
|
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40
|
|
Vice President, Chief Financial Officer and Treasurer
|
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2015
|
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|
|
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|
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Lori Abou Habib
|
|
38
|
|
Vice President and Chief Marketing Officer
|
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2017
|
|
|
|
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|
|
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Michelle E. Britten
|
|
51
|
|
Vice President and Chief Accounting Officer
|
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2012
|
|
|
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|
|
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Carolyn C. Cummins
|
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60
|
|
Vice President of Compliance and Corporate Secretary
|
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2004
|
|
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Sales Price
|
|
Dividends Declared and Paid
|
||||||||||||||||||||
|
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Fiscal year ended
|
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Fiscal year ended
|
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Fiscal year ended
|
||||||||||||||||||
|
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August 31, 2018
|
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August 31, 2017
|
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August 31,
|
||||||||||||||||||
|
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High
|
|
Low
|
|
High
|
|
Low
|
|
2018
|
|
2017
|
||||||||||||
First Quarter
|
|
$
|
27.00
|
|
|
$
|
22.11
|
|
|
$
|
28.87
|
|
|
$
|
21.12
|
|
|
$
|
0.16
|
|
|
$
|
0.14
|
|
Second Quarter
|
|
29.62
|
|
|
23.22
|
|
|
28.60
|
|
|
24.57
|
|
|
0.16
|
|
|
0.14
|
|
||||||
Third Quarter
|
|
27.52
|
|
|
23.51
|
|
|
29.44
|
|
|
22.50
|
|
|
0.16
|
|
|
0.14
|
|
||||||
Fourth Quarter
|
|
37.44
|
|
|
24.29
|
|
|
30.05
|
|
|
22.66
|
|
|
0.16
|
|
|
0.14
|
|
Period
|
|
Total
Number of
Shares
Purchased
|
|
Average
Price
Paid per
Share
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
|
|
Maximum Dollar
Value that May
Yet Be
Purchased
Under the
Program
(1)
|
||||||
June 1, 2018 through June 30, 2018
|
|
318
|
|
|
$
|
31.43
|
|
|
318
|
|
|
$
|
380,914
|
|
July 1, 2018 through July 31, 2018
|
|
268
|
|
|
35.76
|
|
|
268
|
|
|
371,325
|
|
||
August 1, 2018 through August 31, 2018
|
|
304
|
|
|
34.49
|
|
|
304
|
|
|
360,822
|
|
||
Total
|
|
890
|
|
|
|
|
|
890
|
|
|
|
|
(1)
|
In August 2017, the Board of Directors extended the share repurchase program, authorizing the purchase of up to $160 million of the Company’s outstanding shares of common stock through August 31, 2018. In June 2018, the Board of Directors authorized a $500.0 million share repurchase program through August 31, 2021, replacing the Company's previous fiscal year 2018 authorization.
|
Selected Financial Data
(In thousands, except per share data)
|
||||||||||||||||||||
|
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|
|
|
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|
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|
|
|
||||||||||
|
|
Fiscal year ended August 31,
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company Drive-In sales
|
|
$
|
240,722
|
|
|
$
|
296,101
|
|
|
$
|
425,795
|
|
|
$
|
436,031
|
|
|
$
|
405,363
|
|
Franchise Drive-Ins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Franchise royalties and fees
|
|
172,443
|
|
|
170,527
|
|
|
170,319
|
|
|
161,342
|
|
|
138,416
|
|
|||||
Lease revenue
|
|
7,804
|
|
|
7,436
|
|
|
7,459
|
|
|
5,583
|
|
|
4,291
|
|
|||||
Other
|
|
2,621
|
|
|
3,203
|
|
|
2,747
|
|
|
3,133
|
|
|
4,279
|
|
|||||
Total revenues
|
|
423,590
|
|
|
477,267
|
|
|
606,320
|
|
|
606,089
|
|
|
552,349
|
|
|||||
Cost of Company Drive-In sales
|
|
203,177
|
|
|
249,911
|
|
|
356,820
|
|
|
363,938
|
|
|
342,109
|
|
|||||
Selling, general and administrative
|
|
80,077
|
|
|
78,687
|
|
|
82,089
|
|
|
79,336
|
|
|
69,415
|
|
|||||
Depreciation and amortization
|
|
38,355
|
|
|
39,248
|
|
|
44,418
|
|
|
45,892
|
|
|
42,210
|
|
|||||
Provision for impairment of long-lived assets
|
|
664
|
|
|
1,140
|
|
|
232
|
|
|
1,440
|
|
|
114
|
|
|||||
Other operating (income) expense, net
|
|
(5,086
|
)
|
|
(14,994
|
)
|
|
(4,691
|
)
|
|
(945
|
)
|
|
(176
|
)
|
|||||
Total expenses
|
|
317,187
|
|
|
353,992
|
|
|
478,868
|
|
|
489,661
|
|
|
453,672
|
|
|||||
Income from operations
|
|
106,403
|
|
|
123,275
|
|
|
127,452
|
|
|
116,428
|
|
|
98,677
|
|
|||||
Interest expense, net
(1)
|
|
32,464
|
|
|
27,808
|
|
|
34,948
|
|
|
24,706
|
|
|
24,913
|
|
|||||
Income before income taxes
|
|
73,939
|
|
|
95,467
|
|
|
92,504
|
|
|
91,722
|
|
|
73,764
|
|
|||||
Net income
(2)
|
|
$
|
71,205
|
|
|
$
|
63,663
|
|
|
$
|
64,067
|
|
|
$
|
64,485
|
|
|
$
|
47,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
1.89
|
|
|
$
|
1.47
|
|
|
$
|
1.32
|
|
|
$
|
1.23
|
|
|
$
|
0.87
|
|
Diluted
|
|
$
|
1.87
|
|
|
$
|
1.45
|
|
|
$
|
1.29
|
|
|
$
|
1.20
|
|
|
$
|
0.85
|
|
Weighted average shares used in calculation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
37,618
|
|
|
43,306
|
|
|
48,703
|
|
|
52,572
|
|
|
55,164
|
|
|||||
Diluted
|
|
38,086
|
|
|
44,043
|
|
|
49,669
|
|
|
53,953
|
|
|
56,619
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash dividends declared per common share
(3)
|
|
$
|
0.64
|
|
|
$
|
0.56
|
|
|
$
|
0.44
|
|
|
$
|
0.27
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital
|
|
$
|
42,350
|
|
|
$
|
30,568
|
|
|
$
|
62,994
|
|
|
$
|
(2,383
|
)
|
|
$
|
16,201
|
|
Property, equipment and capital leases, net
|
|
298,222
|
|
|
312,380
|
|
|
392,380
|
|
|
421,406
|
|
|
441,969
|
|
|||||
Total assets
|
|
531,134
|
|
|
561,744
|
|
|
648,661
|
|
|
620,024
|
|
|
650,972
|
|
|||||
Obligations under capital leases (including current portion)
|
|
15,457
|
|
|
19,631
|
|
|
21,064
|
|
|
24,440
|
|
|
26,743
|
|
|||||
Long-term debt (including current portion)
|
|
717,396
|
|
|
637,521
|
|
|
578,938
|
|
|
438,028
|
|
|
437,318
|
|
|||||
Stockholders’ equity (deficit)
|
|
(288,846
|
)
|
|
(201,758
|
)
|
|
(75,643
|
)
|
|
17,433
|
|
|
62,675
|
|
(1)
|
Includes net loss from early extinguishment of debt of $1.3 million and $8.8 million in fiscal years 2018 and 2016, respectively.
|
(2)
|
Includes the benefit from the Tax Cuts and Job Act of $19.8 million, or $0.52 per diluted share, primarily from the deferred tax remeasurement in the second quarter of fiscal year 2018 of $14.1 million and the impact of the change in tax rate from 35% to the Company’s blended statutory federal tax rate of 25.7%.
|
(3)
|
The first quarter dividend for fiscal year 2015 was declared in the fourth quarter of fiscal year 2014.
|
|
Fiscal year ended August 31,
|
||||||
|
2017
|
|
2016
|
||||
Number of refranchised Company Drive-Ins
|
110
|
|
|
29
|
|
||
|
|
|
|
||||
Proceeds from sales of Company Drive-Ins
|
$
|
20,036
|
|
|
$
|
3,568
|
|
Proceeds from sale of real estate
(1)
|
11,726
|
|
|
—
|
|
||
|
|
|
|
||||
Real estate assets sold
(1)
|
(12,095
|
)
|
|
(2,402
|
)
|
||
Assets sold, net of retained minority investment
(2)
|
(7,891
|
)
|
|
—
|
|
||
Initial and subsequent lease payments for real estate option
(1)
|
(3,178
|
)
|
|
—
|
|
||
Goodwill related to sales of Company Drive-Ins
|
(966
|
)
|
|
(194
|
)
|
||
Deferred gain for real estate option
(3)
|
(809
|
)
|
|
—
|
|
||
Loss on assets held for sale
|
(65
|
)
|
|
—
|
|
||
Refranchising initiative gains, net
|
$
|
6,758
|
|
|
$
|
972
|
|
(1)
|
During the first quarter of fiscal year 2017, as part of a
53
drive-in refranchising transaction, a portion of the proceeds was applied as the initial payment for an option to purchase the real estate within the next
24
months. The franchisee exercised the option in the last six months of the fiscal year. Until the option was fully exercised, the franchisee made monthly lease payments which are included in other operating income, net of sub-lease expense.
|
(2)
|
Net assets sold consisted primarily of equipment.
|
(3)
|
The deferred gain of
$0.8 million
is recorded in other non-current liabilities as a result of a real estate purchase option extended to the franchisee in the second quarter of fiscal year 2017. The deferred gain will continue to be amortized into income through January 2020 when the option becomes exercisable.
|
(1)
|
Drive-ins that are temporarily closed for various reasons (repairs, remodeling, relocations, etc.) are not considered closed unless the Company determines that they are unlikely to reopen within a reasonable time.
|
(2)
|
Represents percentage change for drive-ins open for a minimum of 15 months.
|
Company Drive-In Sales
($ in thousands)
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Fiscal year ended August 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Company Drive-In sales
|
|
$
|
240,722
|
|
|
$
|
296,101
|
|
|
$
|
425,795
|
|
Percentage decrease
|
|
(18.7
|
)%
|
|
(30.5
|
)%
|
|
(2.3
|
)%
|
|||
|
|
|
|
|
|
|
||||||
Company Drive-Ins in operation
(1)
:
|
|
|
|
|
|
|
||||||
Total at beginning of year
|
|
228
|
|
|
345
|
|
|
387
|
|
|||
Opened
|
|
—
|
|
|
3
|
|
|
1
|
|
|||
Sold to franchisees
|
|
(49
|
)
|
|
(117
|
)
|
|
(38
|
)
|
|||
Closed (net of re-openings)
|
|
—
|
|
|
(3
|
)
|
|
(5
|
)
|
|||
Total at end of year
|
|
179
|
|
|
228
|
|
|
345
|
|
|||
|
|
|
|
|
|
|
||||||
Average sales per Company Drive-In
|
|
$
|
1,155
|
|
|
$
|
1,134
|
|
|
$
|
1,142
|
|
|
|
|
|
|
|
|
||||||
Change in same-store sales
(2)
|
|
(0.8
|
)%
|
|
(4.7
|
)%
|
|
1.7
|
%
|
(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.
|
Franchise Information
($ in thousands)
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Fiscal year ended August 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Franchise Drive-In sales
|
|
$
|
4,205,782
|
|
|
$
|
4,112,062
|
|
|
$
|
4,092,303
|
|
Percentage increase
|
|
2.3
|
%
|
|
0.5
|
%
|
|
4.1
|
%
|
|||
|
|
|
|
|
|
|
||||||
Franchise Drive-Ins in operation
(1)
:
|
|
|
|
|
|
|
||||||
Total at beginning of year
|
|
3,365
|
|
|
3,212
|
|
|
3,139
|
|
|||
Opened
|
|
41
|
|
|
63
|
|
|
52
|
|
|||
Acquired from the Company
|
|
49
|
|
|
117
|
|
|
38
|
|
|||
Closed (net of re-openings)
|
|
(28
|
)
|
|
(27
|
)
|
|
(17
|
)
|
|||
Total at end of year
|
|
3,427
|
|
|
3,365
|
|
|
3,212
|
|
|||
|
|
|
|
|
|
|
||||||
Average sales per Franchise Drive-In
|
|
$
|
1,260
|
|
|
$
|
1,260
|
|
|
$
|
1,301
|
|
|
|
|
|
|
|
|
||||||
Change in same-store sales
(2)
|
|
(0.3
|
)%
|
|
(3.2
|
)%
|
|
2.7
|
%
|
|||
|
|
|
|
|
|
|
||||||
Franchising revenues
(3)
|
|
$
|
180,247
|
|
|
$
|
177,963
|
|
|
$
|
177,778
|
|
Percentage increase
|
|
1.3
|
%
|
|
0.1
|
%
|
|
6.5
|
%
|
|||
|
|
|
|
|
|
|
||||||
Effective royalty rate
(4)
|
|
4.08
|
%
|
|
4.12
|
%
|
|
4.12
|
%
|
(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.
|
(3)
|
Consists of revenues derived from franchising activities, including royalties, franchise fees and lease revenues. See Revenue Recognition in the Critical Accounting Policies and Estimates section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Form 10-K.
|
(4)
|
Represents franchise royalties as a percentage of Franchise Drive-In sales.
|
Company Drive-In Margins
|
||||||||
|
|
|
|
|
|
|
||
|
|
Fiscal year ended August 31,
|
|
Percentage Points
Increase (Decrease)
|
||||
|
|
2018
|
|
2017
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
Company Drive-Ins:
|
|
|
|
|
|
|
|
|
Food and packaging
|
|
27.7
|
%
|
|
27.3
|
%
|
|
0.4%
|
Payroll and other employee benefits
|
|
36.5
|
%
|
|
36.3
|
%
|
|
0.2%
|
Other operating expenses
|
|
20.2
|
%
|
|
20.8
|
%
|
|
(0.6)%
|
Cost of Company Drive-In sales
|
|
84.4
|
%
|
|
84.4
|
%
|
|
—%
|
|
|
|
|
|
|
|
||
|
|
Fiscal year ended August 31,
|
|
Percentage Points
Increase (Decrease)
|
||||
|
|
2017
|
|
2016
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
Company Drive-Ins:
|
|
|
|
|
|
|
|
|
Food and packaging
|
|
27.3
|
%
|
|
27.7
|
%
|
|
(0.4)%
|
Payroll and other employee benefits
|
|
36.3
|
%
|
|
35.3
|
%
|
|
1.0%
|
Other operating expenses
|
|
20.8
|
%
|
|
20.8
|
%
|
|
0.0%
|
Cost of Company Drive-In sales
|
|
84.4
|
%
|
|
83.8
|
%
|
|
0.6%
|
|
|
Fiscal year ended
August 31, 2018 |
|
Fiscal year ended
August 31, 2017 |
||||||||||||
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
||||||||
Reported – GAAP
|
|
$
|
71,205
|
|
|
$
|
1.87
|
|
|
$
|
63,663
|
|
|
$
|
1.45
|
|
Payment card breach expense
(1)
|
|
1,676
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
||||
Tax impact on payment card breach expense
(2)
|
|
(548
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
||||
Loss from debt transaction
(3)
|
|
1,310
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
||||
Tax impact on debt transaction
(4)
|
|
(384
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
||||
Discrete impact of the Tax Cuts and Jobs Act
|
|
(14,120
|
)
|
|
(0.37
|
)
|
|
—
|
|
|
—
|
|
||||
Net gain on refranchising transactions
(5)
|
|
(3,153
|
)
|
|
(0.08
|
)
|
|
(6,758
|
)
|
|
(0.15
|
)
|
||||
Tax impact on refranchising transactions
(6)
|
|
924
|
|
|
0.02
|
|
|
2,542
|
|
|
0.06
|
|
||||
Gain on sale of investment in refranchised drive-in operations
(7)
|
|
—
|
|
|
—
|
|
|
(3,795
|
)
|
|
(0.09
|
)
|
||||
Tax impact on sale of investment in refranchised drive-in operations
(8)
|
|
—
|
|
|
—
|
|
|
1,350
|
|
|
0.03
|
|
||||
Restructuring charges
(9)
|
|
—
|
|
|
—
|
|
|
1,819
|
|
|
0.04
|
|
||||
Tax impact of restructuring charges
(10)
|
|
—
|
|
|
—
|
|
|
(672
|
)
|
|
(0.02
|
)
|
||||
Gain on sale of real estate
|
|
—
|
|
|
—
|
|
|
(4,702
|
)
|
|
(0.11
|
)
|
||||
Tax impact on real estate sale
(10)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,738
|
|
|
$
|
0.04
|
|
Adjusted - Non-GAAP
|
|
$
|
56,910
|
|
|
$
|
1.49
|
|
|
$
|
55,185
|
|
|
$
|
1.25
|
|
(1)
|
Costs include legal fees, investigative fees and costs related to customer response.
|
(2)
|
Combined tax impact at consolidated blended statutory tax rates of 38.2% during the first quarter of fiscal year 2018 and 29.3% during the second, third and fourth quarters of fiscal year 2018.
|
(3)
|
Includes a $0.7 million write-off of unamortized deferred loan fees related to the reduction of the company's variable funding note commitments, as well as a $0.4 million write-off of unamortized deferred loan fees related to the prepayment on the Company's 2013 and 2016 fixed rate notes. Additionally, as required by the terms of the 2016 fixed rate notes, we paid a $0.2 million prepayment premium.
|
(4)
|
Tax impact during the period at a consolidated blended statutory tax rate of 29.3%.
|
(5)
|
During fiscal year 2018 and 2017, we completed transactions to refranchise the operations of Company Drive-Ins. Refer to Note 6 - Refranchising Initiative, included in Part II, Item 8, “Financial Statements and Supplementary Data,” in this Annual Report on Form 10-K for more information
|
(6)
|
Tax impact at a consolidated blended statutory tax rate of 29.3% during fiscal year 2018; a combined tax impact at an effective tax rate of 35.6% during the first quarter of fiscal year 2017 and at adjusted effective tax rates of 36.0%, 48.7% and 37.0% during the second, third and fourth quarters of fiscal year 2017, respectively.
|
(7)
|
We recorded a gain related to minority investments in franchise operations retained as part of a refranchising transaction that occurred in fiscal year 2009.
|
(8)
|
Tax impact during the period at an adjusted effective tax rate of 35.6%.
|
(9)
|
During the fourth quarter of fiscal year 2017 the company incurred severance costs related to the elimination of certain corporate positions.
|
(10)
|
Tax impact during the period at an adjusted effective tax rate of 37.0%.
|
|
|
Fiscal year ended
August 31, 2017 |
|
Fiscal year ended
August 31, 2016 |
||||||||||||
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
||||||||
Reported – GAAP
|
|
$
|
63,663
|
|
|
$
|
1.45
|
|
|
$
|
64,067
|
|
|
$
|
1.29
|
|
Net gain on refranchising transactions
(1)
|
|
(6,758
|
)
|
|
(0.15
|
)
|
|
(972
|
)
|
|
(0.02
|
)
|
||||
Tax impact on refranchising transactions
(2)
|
|
2,542
|
|
|
0.06
|
|
|
317
|
|
|
0.00
|
|
||||
Gain on sale of investment in refranchised drive-in operations
(3)
|
|
(3,795
|
)
|
|
(0.09
|
)
|
|
—
|
|
|
—
|
|
||||
Tax impact on sale of investment in refranchised drive-in operations
(4)
|
|
1,350
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
||||
Restructuring charges
(5)
|
|
1,819
|
|
|
0.04
|
|
|
—
|
|
|
—
|
|
||||
Tax impact of restructuring charges
(6)
|
|
(672
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
||||
Gain on sale of real estate
|
|
(4,702
|
)
|
|
(0.11
|
)
|
|
(1,875
|
)
|
|
(0.04
|
)
|
||||
Tax impact on real estate sale
(7)
|
|
1,738
|
|
|
0.04
|
|
|
664
|
|
|
0.01
|
|
||||
FIN 48 release of income tax credits and deductions
|
|
—
|
|
|
—
|
|
|
(3,038
|
)
|
|
(0.06
|
)
|
||||
Loss from early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
8,750
|
|
|
0.18
|
|
||||
Tax impact on debt extinguishment
(8)
|
|
—
|
|
|
—
|
|
|
(3,027
|
)
|
|
(0.06
|
)
|
||||
Retroactive benefit of Work Opportunity Tax Credit and resolution of tax matters
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(585
|
)
|
|
$
|
(0.01
|
)
|
Adjusted - Non-GAAP
|
|
$
|
55,185
|
|
|
$
|
1.25
|
|
|
$
|
64,301
|
|
|
$
|
1.29
|
|
(1)
|
During fiscal year 2017 and fiscal year 2016, we completed transactions to refranchise the operations of Company Drive-Ins. Refer to Note 6 - Refranchising of Company Drive-Ins, included in Part II, Item 8, “Financial Statements and Supplementary Data,” in this Annual Report on Form 10-K for more information.
|
(2)
|
Combined tax impact at an effective tax rate of 35.6% during the first quarter of fiscal year 2017 and at adjusted effective tax rates of 36.0%, 48.7% and 37.0% during the second, third and fourth quarters of fiscal year 2017, respectively; tax impact during fiscal year 2016 at an adjusted effective tax rate of 32.6%.
|
(3)
|
We recorded a gain related to minority investments in franchise operations retained as part of a refranchising transaction that occurred in fiscal year 2009. Income from minority investments is included in other revenue on the consolidated statements of income.
|
(4)
|
Tax impact during the period at an effective tax rate of 35.6%.
|
(5)
|
During the fourth quarter of fiscal year 2017, the Company incurred severance costs related to the elimination of certain corporate positions.
|
(6)
|
Tax impact during the period at an adjusted effective tax rate of 37.0%.
|
(7)
|
Tax impact during fiscal year 2017 at an adjusted effective tax rate of 37.0%; tax impact during fiscal year 2016 at an adjusted effective tax rate of 35.4%.
|
(8)
|
Tax impact during the period at an effective tax rate of 34.6%.
|
Brand technology investments
|
$
|
14.1
|
|
Acquisition of underlying real estate for drive-ins
|
7.6
|
|
|
Purchase and replacement of equipment and technology
|
7.5
|
|
|
Rebuilds, relocations and remodels of existing drive-ins
|
6.5
|
|
|
Newly constructed drive-ins leased or sold to franchisees
|
0.8
|
|
|
Newly constructed Company Drive-Ins
|
0.2
|
|
|
Total investments in property and equipment
|
$
|
36.7
|
|
|
|
|
|
Payments Due by Fiscal Year
|
||||||||||||||||
|
|
Total
|
|
Less than
1 Year (2019) |
|
1 - 3
Years (2020-2021) |
|
3 - 5
Years (2022-2023) |
|
More than
5 Years (2024 and thereafter) |
||||||||||
Long-term debt
(1)
|
|
$
|
856,279
|
|
|
$
|
35,079
|
|
|
$
|
210,734
|
|
|
$
|
430,390
|
|
|
$
|
180,076
|
|
Capital leases
|
|
19,345
|
|
|
3,489
|
|
|
6,303
|
|
|
5,012
|
|
|
4,541
|
|
|||||
Operating leases
|
|
80,754
|
|
|
8,198
|
|
|
15,709
|
|
|
12,830
|
|
|
44,017
|
|
|||||
Purchase obligations
(2)
|
|
113,178
|
|
|
17,301
|
|
|
24,858
|
|
|
26,275
|
|
|
44,744
|
|
|||||
Other
(3)
|
|
21,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total
|
|
$
|
1,090,695
|
|
|
$
|
64,067
|
|
|
$
|
257,604
|
|
|
$
|
474,507
|
|
|
$
|
273,378
|
|
(1)
|
Includes scheduled principal and interest payments on our 2013 Fixed Rate Notes, 2016 Notes and 2018 Fixed Rate Notes and assumes these notes will be outstanding for the expected seven-year life with anticipated repayment dates in July 2020, May 2023 and February 2025, respectively.
|
(2)
|
Purchase obligations primarily relate to the Company’s estimated share of system commitments to purchase food products. We have excluded agreements that are cancelable without penalty. These amounts require estimates and could vary due to the timing of volumes and changes in market pricing.
|
(3)
|
Includes $0.8 million of unrecognized tax benefits related to uncertain tax positions and $20.3 million related to guarantees of franchisee leases and loan agreements. As we are not able to reasonably estimate the timing or amount of these payments, if any, the related balances have not been reflected in the “Payments Due by Fiscal Year” section of the table.
|
|
|
|
(signed) KPMG LLP
|
|
Page
|
|
Agreement and Plan of Merger, dated as of September 24, 2018, among Inspire Brands, Inc., SSK Merger Sub, Inc. and Sonic Corp., which the Company incorporates by reference from Exhibit 2.1 to the Company’s Form S-8 filed on September 27, 2018.
|
|
|
|
|
3.01.
|
|
Certificate of Incorporation of the Company, which the Company incorporates by reference from Exhibit 3.1 to the Company’s Form S-1 Registration Statement No. 33-37158 filed on October 3, 1990.
|
|
|
|
|
Certificate of Amendment of Certificate of Incorporation of the Company, March 4, 1996, which the Company incorporates by reference from Exhibit 3.05 to the Company’s Form 10-K for the fiscal year ended August 31, 2000.
|
|
|
|
|
|
Certificate of Amendment of Certificate of Incorporation of the Company, January 22, 2002, which the Company incorporates by reference from Exhibit 3.06 to the Company’s Form 10-K for the fiscal year ended August 31, 2002.
|
|
|
|
|
|
Certificate of Amendment of Certificate of Incorporation of the Company, January 31, 2006, which the Company incorporates by reference from Exhibit 3.04 to the Company’s Form 10-K for the fiscal year ended August 31, 2006.
|
|
|
|
|
|
Bylaws of the Company, as amended and restated January 27, 2016, which the Company incorporates by reference from Exhibit 3.1 to the Company’s Form 8-K filed on February 1, 2016.
|
|
|
|
|
|
Certificate of Designations of Series A Junior Preferred Stock, which the Company incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K filed on June 17, 1997.
|
|
|
|
|
4.03.
|
|
Specimen Certificate for Common Stock, which the Company incorporates by reference from Exhibit 4.01 to the Company’s Form 10-K for the fiscal year ended August 31, 1999.
|
|
|
|
|
Form of Sonic License Agreement, which the Company incorporates by reference from Exhibit No. 10.01 to the Company’s Form 10-K for the fiscal year ended August 31, 2016.
|
|
|
|
|
|
Form of Sonic Development Agreement, which the Company incorporates by reference from Exhibit No. 10.13 to the Company’s Form 10-K for the fiscal year ended August 31, 2007.
|
|
|
|
|
|
Sonic Corp. Stock Purchase Plan, as amended and restated effective April 20, 2011, which the Company incorporates by reference from Exhibit 10.07 to the Company’s Form 10-K for the fiscal year ended August 31, 2012.*
|
|
|
|
|
|
Sonic Corp. Savings and Profit-Sharing Plan, as amended and restated effective January 1, 2013, which the Company incorporates by reference from Exhibit 10.1 to the Company’s Form 10-Q filed on July 3, 2013.*
|
|
|
|
|
|
Sonic Corp. Nonqualified Deferred Compensation Plan as amended and restated April 10, 2013, which the Company incorporates by reference from Exhibit 10.06 to the Company’s Form 10-K for the fiscal year ended August 31, 2013.*
|
|
|
|
|
10.06.
|
|
Form of Indemnification Agreement for Directors, which the Company incorporates by reference from Exhibit 10.7 to the Company’s Form S-1 Registration Statement No. 33-37158 filed on October 3, 1990.*
|
|
|
|
10.07.
|
|
Form of Indemnification Agreement for Officers, which the Company incorporates by reference from Exhibit 10.14 to the Company’s Form 10-K for the fiscal year ended August 31, 1995.*
|
|
|
|
|
Form of Chief Executive Officer Amended and Restated Employment Agreement dated January 1, 2017, which the Company incorporates by reference from Exhibit 10.01 to the Company’s Form 10-Q filed January 6, 2017.*
|
|
|
|
|
|
Form of Executive Officer Amended and Restated Employment Agreement dated January 1, 2017, which the Company incorporates by reference from Exhibit 10.02 to the Company’s Form 10-Q filed January 6, 2017.*
|
|
|
|
|
|
Amended and Restated Sonic Corp. Executive Severance Plan dated January 1, 2017, which the Company incorporates by reference from Exhibit 10.03 to the Company’s Form 10-Q filed January 6, 2017.*
|
|
|
|
|
|
Amendment to Sonic Corp. Executive Severance Plan (as amended and restated effective January 1, 2017) dated September 24, 2018*
|
|
|
|
|
|
Sonic Corp. Non-Executive Severance Plan dated September 24, 2018*
|
|
|
|
|
|
Sonic Corp. 2006 Long-Term Incentive Plan, as amended and restated effective January 16, 2014, which the Company incorporates by reference from Exhibit 4.1 to the Company’s Form S-8 filed on April 4, 2014.*
|
|
|
|
|
|
Form of Restricted Stock Unit Award Agreement under Sonic Corp. 2006 Long-Term Incentive Plan, which the Company incorporates by reference from Exhibit No. 10.13 to the Company’s Form 10-K for the fiscal year ended August 31, 2016.*
|
|
|
|
|
|
Form of Director Restricted Stock Unit Award Agreement under Sonic Corp. 2006 Long-Term Incentive Plan, which the Company incorporates by reference from Exhibit No. 10.15 to the Company’s Form 10-K for the fiscal year ended August 31, 2016.*
|
|
|
|
|
Sonic Corp. Senior Executive Cash Incentive Plan dated January 19, 2017, which the Company incorporates by reference from Appendix B to the Company’s Proxy Statement filed December 8, 2016.*
|
|
|
|
|
|
Sonic Corp. Employee Cash Incentive Plan dated January 6, 2011, which the Company incorporates by reference from Exhibit 10.02 to the Company’s Form 10-Q filed on April 8, 2011.*
|
|
|
|
|
|
Form of Long-Term Award Agreement under Sonic Corp. Senior Executive Cash Incentive Plan, which the Company incorporates by reference from Exhibit No. 10.18 to the Company’s Form 10-K for the fiscal year ended August 31, 2016.*
|
|
|
|
|
|
Form of Short-Term Award Agreement under Sonic Corp. Senior Executive Cash Incentive Plan, which the Company incorporates by reference from Exhibit No. 10.19 to the Company’s Form 10-K for the fiscal year ended August 31, 2016.*
|
|
|
|
|
|
Compensation Recoupment Policy dated October 19, 2016, which the Company incorporates by reference from Exhibit No. 10.20 to the Company’s Form 10-K for the fiscal year ended August 31, 2016.*
|
|
|
|
|
|
Base Indenture dated May 20, 2011 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Securities Intermediary, which the Company incorporates by reference from Exhibit 99.1 to the Company’s Form 8-K filed on May 26, 2011.
|
|
|
|
|
|
Supplemental Indenture dated May 20, 2011 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes, and Citibank, N.A. as Trustee and the Series 2011-1 Securities Intermediary, which the Company incorporates by reference from Exhibit 99.2 to the Company’s Form 8-K filed on May 26, 2011.
|
|
|
|
|
|
Guarantee and Collateral Support Agreement dated May 20, 2011 made by Sonic Franchising LLC, as Guarantor in favor of Citibank N.A. as Trustee, which the Company incorporates by reference from Exhibit 99.4 to the Company’s Form 8-K filed on May 26, 2011.
|
|
|
|
|
|
Parent Company Support Agreement dated May 20, 2011 made by Sonic Corp. in favor of Citibank N.A., as Trustee, which the Company incorporates by reference from Exhibit 99.5 to the Company’s Form 8-K filed on May 26, 2011.
|
|
|
|
|
|
Supplemental Indenture dated July 18, 2013 among Sonic Capital LLC, Sonic Industries LLC, America's Drive-In Brand Properties LLC, America's Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Series 2013-1 Notes, and Citibank, N.A., as Trustee and Series 2013-1 Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on July 24, 2013.
|
|
|
|
|
|
First Supplement to the Base Indenture dated as of July 21, 2012 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on May 19, 2016.
|
|
|
|
|
|
Second Supplement to the Base Indenture dated as of April 12, 2016 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on May 19, 2016.
|
|
|
|
|
|
Third Supplement to the Base Indenture dated as of May 17, 2016 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on May 19, 2016.
|
|
|
|
|
|
Supplemental Indenture dated May 17, 2016 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Series 2016-1 Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on May 19, 2016.
|
|
|
|
|
|
Purchase Agreement dated April 12, 2016 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer, Sonic Franchising LLC, as Guarantor, Sonic Industries Services Inc., as Manager, Sonic Corp., Sonic Restaurants, Inc., and Guggenheim Securities, LLC, as Initial Purchaser and as representative to the Initial Purchasers named therein, which the Company incorporates by reference to the Company’s Form 8‑K filed on May 19, 2016.
|
|
|
|
|
|
Class A-1 Note Purchase Agreement dated April 12, 2016 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer and Sonic Industries Services Inc., as Manager, certain private conduit investors, committed note purchasers and funding agents, and Coöperatieve Rabobank, U.A., New York Branch, as provider of letters of credit, swingline lender and Administrative Agent, which the Company incorporates by reference to the Company’s Form 8‑K filed on May 19, 2016.
|
|
|
|
|
|
Purchase Agreement dated January 23, 2018 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer, Sonic Franchising LLC, as Guarantor, Sonic Industries Services Inc., as Manager, Sonic Corp., Sonic Restaurants, Inc., and Guggenheim Securities, LLC, as Initial Purchaser and as representative to the Initial Purchasers named therein, which the Company incorporates by reference to the Company’s Form 8‑K filed on January 24, 2018.
|
|
|
|
|
|
Fourth Supplement to the Base Indenture dated as of February 1, 2018 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on February 1, 2018.
|
|
|
|
|
|
Fifth Supplement to the Base Indenture dated as of February 1, 2018 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on February 1, 2018.
|
|
|
|
|
|
Supplemental Indenture dated February 1, 2018 among Sonic Capital LLC, Sonic Industries LLC, America’s Drive-In Brand Properties LLC, America’s Drive-In Restaurants LLC, SRI Real Estate Holding LLC and SRI Real Estate Properties LLC, each as Co-Issuer of the Fixed Rate Notes and Citibank, N.A., as Trustee and Series 2018-1 Securities Intermediary, which the Company incorporates by reference to the Company’s Form 8‑K filed on February 1, 2018.
|
|
|
|
|
|
Stock Option Award Agreement under Sonic Corp. 2006 Long-Term Incentive Plan, which the Company incorporates by reference from Exhibit No. 10.01 to the Company’s Form 10-Q filed on April 3, 2018.*
|
|
|
|
|
|
Director Stock Option Award Agreement under Sonic Corp. 2006 Long-Term Incentive Plan, which the Company incorporates by reference from Exhibit No. 10.02 to the Company’s Form 10-Q filed on April 3, 2018.*
|
|
|
|
|
|
Subsidiaries of the Company.
|
|
|
|
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to S.E.C. Rule 13a-14.
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to S.E.C. Rule 13a-14.
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
(signed) KPMG LLP
|
|
|
August 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
$
|
39,835
|
|
|
$
|
22,340
|
|
Restricted cash
|
|
19,598
|
|
|
19,736
|
|
||
Accounts and notes receivable, net
|
|
34,967
|
|
|
33,758
|
|
||
Inventories
|
|
1,774
|
|
|
2,343
|
|
||
Prepaid expenses
|
|
6,481
|
|
|
5,455
|
|
||
Property held for sale
|
|
1,310
|
|
|
5,150
|
|
||
Other current assets
|
|
464
|
|
|
402
|
|
||
Total current assets
|
|
104,429
|
|
|
89,184
|
|
||
Noncurrent restricted cash
|
|
7,909
|
|
|
42,120
|
|
||
Investment in direct financing leases
|
|
11,391
|
|
|
11,853
|
|
||
Notes receivable, net
|
|
10,932
|
|
|
9,801
|
|
||
Property, equipment and capital leases, net
|
|
298,222
|
|
|
312,380
|
|
||
Goodwill
|
|
75,344
|
|
|
75,756
|
|
||
Debt origination costs, net
|
|
1,191
|
|
|
2,439
|
|
||
Other assets, net
|
|
21,716
|
|
|
18,211
|
|
||
Total assets
|
|
$
|
531,134
|
|
|
$
|
561,744
|
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
10,338
|
|
|
$
|
9,213
|
|
Franchisee deposits
|
|
723
|
|
|
1,093
|
|
||
Accrued liabilities
|
|
44,314
|
|
|
44,846
|
|
||
Current maturities of long-term debt and capital leases
|
|
6,704
|
|
|
3,464
|
|
||
Total current liabilities
|
|
62,079
|
|
|
58,616
|
|
||
Obligations under capital leases due after one year
|
|
13,003
|
|
|
16,167
|
|
||
Long-term debt, net
|
|
701,478
|
|
|
628,116
|
|
||
Deferred income taxes
|
|
24,226
|
|
|
40,101
|
|
||
Other non-current liabilities
|
|
19,194
|
|
|
20,502
|
|
||
Commitments and contingencies (Notes 7, 8, 14, 15)
|
|
|
|
|
|
|
||
Stockholders’ deficit:
|
|
|
|
|
|
|
||
Preferred stock, par value $.01; 1,000 shares authorized; none outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, par value $.01; 245,000 shares authorized; 118,309 shares
|
|
|
|
|
|
|
||
issued in 2018 and in 2017
|
|
1,183
|
|
|
1,183
|
|
||
Paid-in capital
|
|
238,369
|
|
|
236,895
|
|
||
Retained earnings
|
|
981,251
|
|
|
934,017
|
|
||
Treasury stock, at cost; 82,734 shares in 2018 and 78,081 shares in 2017
|
|
(1,509,649
|
)
|
|
(1,373,853
|
)
|
||
Total stockholders’ deficit
|
|
(288,846
|
)
|
|
(201,758
|
)
|
||
Total liabilities and stockholders’ deficit
|
|
$
|
531,134
|
|
|
$
|
561,744
|
|
|
|
Fiscal year ended August 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||
Company Drive-In sales
|
|
$
|
240,722
|
|
|
$
|
296,101
|
|
|
$
|
425,795
|
|
Franchise Drive-Ins:
|
|
|
|
|
|
|
|
|
|
|||
Franchise royalties and fees
|
|
172,443
|
|
|
170,527
|
|
|
170,319
|
|
|||
Lease revenue
|
|
7,804
|
|
|
7,436
|
|
|
7,459
|
|
|||
Other
|
|
2,621
|
|
|
3,203
|
|
|
2,747
|
|
|||
Total revenues
|
|
423,590
|
|
|
477,267
|
|
|
606,320
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|||
Company Drive-Ins:
|
|
|
|
|
|
|
|
|
|
|||
Food and packaging
|
|
66,583
|
|
|
80,971
|
|
|
118,136
|
|
|||
Payroll and other employee benefits
|
|
88,008
|
|
|
107,477
|
|
|
150,260
|
|
|||
Other operating expenses, exclusive of depreciation and amortization included below
|
|
48,586
|
|
|
61,463
|
|
|
88,424
|
|
|||
Total cost of Company Drive-In sales
|
|
203,177
|
|
|
249,911
|
|
|
356,820
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
|
80,077
|
|
|
78,687
|
|
|
82,089
|
|
|||
Depreciation and amortization
|
|
38,355
|
|
|
39,248
|
|
|
44,418
|
|
|||
Provision for impairment of long-lived assets
|
|
664
|
|
|
1,140
|
|
|
232
|
|
|||
Other operating income, net
|
|
(5,086
|
)
|
|
(14,994
|
)
|
|
(4,691
|
)
|
|||
Total costs and expenses
|
|
317,187
|
|
|
353,992
|
|
|
478,868
|
|
|||
Income from operations
|
|
106,403
|
|
|
123,275
|
|
|
127,452
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Interest expense
|
|
33,058
|
|
|
29,206
|
|
|
26,714
|
|
|||
Interest income
|
|
(1,904
|
)
|
|
(1,398
|
)
|
|
(516
|
)
|
|||
Loss from debt transactions
|
|
1,310
|
|
|
—
|
|
|
8,750
|
|
|||
Net interest expense
|
|
32,464
|
|
|
27,808
|
|
|
34,948
|
|
|||
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
73,939
|
|
|
95,467
|
|
|
92,504
|
|
|||
Provision for income taxes
|
|
2,734
|
|
|
31,804
|
|
|
28,437
|
|
|||
Net income
|
|
$
|
71,205
|
|
|
$
|
63,663
|
|
|
$
|
64,067
|
|
|
|
|
|
|
|
|
|
|
|
|||
Basic income per share
|
|
$
|
1.89
|
|
|
$
|
1.47
|
|
|
$
|
1.32
|
|
Diluted income per share
|
|
$
|
1.87
|
|
|
$
|
1.45
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash dividends declared per common share
|
|
$
|
0.64
|
|
|
$
|
0.56
|
|
|
$
|
0.44
|
|
|
|
Common
Stock
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Treasury Stock
|
|
Total
Stockholders’
Equity
(Deficit)
|
|||||||||||||
|
|
|
|
|
Shares
|
|
Amount
|
|
|||||||||||||||
Balance at August 31, 2015
|
|
$
|
1,183
|
|
|
$
|
232,550
|
|
|
$
|
851,715
|
|
|
67,249
|
|
|
$
|
(1,068,015
|
)
|
|
$
|
17,433
|
|
Net income
|
|
—
|
|
|
—
|
|
|
64,067
|
|
|
—
|
|
|
—
|
|
|
64,067
|
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
(21,340
|
)
|
|
—
|
|
|
—
|
|
|
(21,340
|
)
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
3,766
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,766
|
|
|||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,209
|
|
|
(148,345
|
)
|
|
(148,345
|
)
|
|||||
Exercise of stock options and issuance of restricted stock
|
|
—
|
|
|
(5,941
|
)
|
|
—
|
|
|
(767
|
)
|
|
9,783
|
|
|
3,842
|
|
|||||
Other
|
|
—
|
|
|
4,581
|
|
|
—
|
|
|
(21
|
)
|
|
353
|
|
|
4,934
|
|
|||||
Balance at August 31, 2016
|
|
$
|
1,183
|
|
|
$
|
234,956
|
|
|
$
|
894,442
|
|
|
71,670
|
|
|
$
|
(1,206,224
|
)
|
|
$
|
(75,643
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
63,663
|
|
|
—
|
|
|
—
|
|
|
63,663
|
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
(24,088
|
)
|
|
—
|
|
|
—
|
|
|
(24,088
|
)
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
3,942
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,942
|
|
|||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,726
|
|
|
(172,913
|
)
|
|
(172,913
|
)
|
|||||
Exercise of stock options and issuance of restricted stock
|
|
—
|
|
|
(2,203
|
)
|
|
—
|
|
|
(293
|
)
|
|
4,885
|
|
|
2,682
|
|
|||||
Other
|
|
—
|
|
|
200
|
|
|
—
|
|
|
(22
|
)
|
|
399
|
|
|
599
|
|
|||||
Balance at August 31, 2017
|
|
$
|
1,183
|
|
|
$
|
236,895
|
|
|
$
|
934,017
|
|
|
78,081
|
|
|
$
|
(1,373,853
|
)
|
|
$
|
(201,758
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
71,205
|
|
|
—
|
|
|
—
|
|
|
71,205
|
|
|||||
Cash dividends
|
|
—
|
|
|
—
|
|
|
(23,971
|
)
|
|
—
|
|
|
—
|
|
|
(23,971
|
)
|
|||||
Stock-based compensation expense
|
|
—
|
|
|
4,556
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,556
|
|
|||||
Purchase of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,215
|
|
|
(139,178
|
)
|
|
(139,178
|
)
|
|||||
Exercise of stock options and issuance of restricted stock
|
|
—
|
|
|
(3,140
|
)
|
|
—
|
|
|
(542
|
)
|
|
3,022
|
|
|
(118
|
)
|
|||||
Other
|
|
—
|
|
|
58
|
|
|
—
|
|
|
(20
|
)
|
|
360
|
|
|
418
|
|
|||||
Balance at August 31, 2018
|
|
$
|
1,183
|
|
|
$
|
238,369
|
|
|
$
|
981,251
|
|
|
82,734
|
|
|
$
|
(1,509,649
|
)
|
|
$
|
(288,846
|
)
|
|
|
Fiscal year ended August 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
71,205
|
|
|
$
|
63,663
|
|
|
$
|
64,067
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
38,355
|
|
|
39,248
|
|
|
44,418
|
|
|||
Stock-based compensation expense
|
|
4,556
|
|
|
3,942
|
|
|
3,766
|
|
|||
Loss from debt transactions
|
|
1,310
|
|
|
—
|
|
|
8,750
|
|
|||
Provision (benefit) for deferred income taxes
|
|
(15,812
|
)
|
|
(2,469
|
)
|
|
4,509
|
|
|||
Gain on disposition of assets
|
|
(5,086
|
)
|
|
(14,994
|
)
|
|
(4,691
|
)
|
|||
Other
|
|
3,276
|
|
|
1,265
|
|
|
452
|
|
|||
(Increase) decrease in operating assets:
|
|
|
|
|
|
|
|
|
|
|||
Restricted cash
|
|
889
|
|
|
886
|
|
|
(2,829
|
)
|
|||
Accounts receivable and other assets
|
|
(4,354
|
)
|
|
1,918
|
|
|
2,109
|
|
|||
Increase (decrease) in operating liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Accounts payable
|
|
(2,507
|
)
|
|
(4,404
|
)
|
|
380
|
|
|||
Accrued and other liabilities
|
|
(151
|
)
|
|
(10,884
|
)
|
|
4,520
|
|
|||
Income taxes
|
|
(135
|
)
|
|
(3,299
|
)
|
|
(9,242
|
)
|
|||
Total adjustments
|
|
20,341
|
|
|
11,209
|
|
|
52,142
|
|
|||
Net cash provided by operating activities
|
|
91,546
|
|
|
74,872
|
|
|
116,209
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Purchases of property and equipment
|
|
(36,690
|
)
|
|
(46,528
|
)
|
|
(46,553
|
)
|
|||
Proceeds from sale of assets
|
|
21,646
|
|
|
91,741
|
|
|
16,206
|
|
|||
Proceeds from the sale of investments in refranchised drive-in operations
|
|
—
|
|
|
8,357
|
|
|
—
|
|
|||
Issuance of notes receivable
|
|
(15,779
|
)
|
|
(7,338
|
)
|
|
(12,705
|
)
|
|||
Collections on notes receivable
|
|
16,232
|
|
|
11,911
|
|
|
7,229
|
|
|||
Other
|
|
530
|
|
|
2,345
|
|
|
1,763
|
|
|||
Net cash provided by (used in) investing activities
|
|
(14,061
|
)
|
|
60,488
|
|
|
(34,060
|
)
|
•
|
Notes receivable
- As of
August 31, 2018
and
2017
, the carrying amounts of notes receivable (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts.
|
•
|
Long-term debt
- The Company prepares a discounted cash flow analysis for its fixed and variable rate borrowings to estimate fair value each quarter. This analysis uses Level 2 inputs from market information available for public debt transactions for companies with ratings that are similar to the Company’s ratings and from information gathered from brokers who trade in the Company’s notes. The fair value estimate required significant assumptions by management. Management believes this fair value is a reasonable estimate. For more information regarding the Company’s long-term debt, see note 10 - Debt and note 11 - Fair Value of Financial Instruments.
|
|
|
Fiscal year ended August 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
71,205
|
|
|
$
|
63,663
|
|
|
$
|
64,067
|
|
|
|
|
|
|
|
|
|
|
|
|||
Denominator:
|
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding– basic
|
|
37,618
|
|
|
43,306
|
|
|
48,703
|
|
|||
Effect of dilutive employee stock options and unvested RSUs
|
|
468
|
|
|
737
|
|
|
966
|
|
|||
Weighted average common shares outstanding – diluted
|
|
38,086
|
|
|
44,043
|
|
|
49,669
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Net income per common share – basic
|
|
$
|
1.89
|
|
|
$
|
1.47
|
|
|
$
|
1.32
|
|
Net income per common share – diluted
|
|
$
|
1.87
|
|
|
$
|
1.45
|
|
|
$
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|||
Anti-dilutive securities excluded
(1)
|
|
1,157
|
|
|
1,154
|
|
|
615
|
|
(1)
|
Anti-dilutive securities consist of stock options and unvested RSUs 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.
|
|
|
August 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Current Accounts and Notes Receivable:
|
|
|
|
|
||||
Royalties and other trade receivables
|
|
$
|
20,177
|
|
|
$
|
19,571
|
|
Notes receivable from franchisees
|
|
2,006
|
|
|
1,441
|
|
||
Receivables from system funds
|
|
2,480
|
|
|
6,360
|
|
||
Other
|
|
11,080
|
|
|
7,475
|
|
||
Accounts and notes receivable, gross
|
|
35,743
|
|
|
34,847
|
|
||
Allowance for doubtful accounts and notes receivable
|
|
(776
|
)
|
|
(1,089
|
)
|
||
Current accounts and notes receivable, net
|
|
$
|
34,967
|
|
|
$
|
33,758
|
|
|
|
|
|
|
|
|
||
Noncurrent Notes Receivable:
|
|
|
|
|
|
|
||
Receivables from franchisees
|
|
$
|
7,597
|
|
|
$
|
6,810
|
|
Receivables from system funds
|
|
5,143
|
|
|
3,033
|
|
||
Allowance for doubtful notes receivable
|
|
(1,808
|
)
|
|
(42
|
)
|
||
Noncurrent notes receivable, net
|
|
$
|
10,932
|
|
|
$
|
9,801
|
|
|
|
August 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Balance at beginning of year
|
|
$
|
75,756
|
|
|
$
|
76,734
|
|
Goodwill disposed of related to the sale of Company Drive-Ins
|
|
(412
|
)
|
|
(978
|
)
|
||
Balance at end of year
|
|
$
|
75,344
|
|
|
$
|
75,756
|
|
5.
|
Other Operating Income
|
|
Fiscal year ended August 31,
|
||||||
|
2017
|
|
2016
|
||||
Number of refranchised Company Drive-Ins
|
110
|
|
|
29
|
|
||
|
|
|
|
||||
Proceeds from sales of Company Drive-Ins
|
$
|
20,036
|
|
|
$
|
3,568
|
|
Proceeds from sale of real estate
(1)
|
11,726
|
|
|
—
|
|
||
|
|
|
|
||||
Real estate assets sold
(1)
|
(12,095
|
)
|
|
(2,402
|
)
|
||
Assets sold, net of retained minority investment
(2)
|
(7,891
|
)
|
|
—
|
|
||
Initial and subsequent lease payments for real estate option
(1)
|
(3,178
|
)
|
|
—
|
|
||
Goodwill related to sales of Company Drive-Ins
|
(966
|
)
|
|
(194
|
)
|
||
Deferred gain for real estate option
(3)
|
(809
|
)
|
|
—
|
|
||
Loss on assets held for sale
|
(65
|
)
|
|
—
|
|
||
Refranchising initiative gains, net
|
$
|
6,758
|
|
|
$
|
972
|
|
(1)
|
During the first quarter of fiscal year 2017, as part of a
53
drive-in refranchising transaction, a portion of the proceeds was applied as the initial payment for an option to purchase the real estate within the next
24
months. The franchisee exercised the option in the last six months of the fiscal year. Until the option was fully exercised, the franchisee made monthly lease payments which are included in other operating income, net of sub-lease expense.
|
(2)
|
Net assets sold consisted primarily of equipment.
|
(3)
|
The deferred gain of
$0.8 million
is recorded in other non-current liabilities as a result of a real estate purchase option extended to the franchisee in the second quarter of fiscal year 2017. The deferred gain will continue to be amortized into income through January 2020 when the option becomes exercisable.
|
|
|
2018
|
|
2017
|
||||
Minimum lease payments receivable
|
|
$
|
17,068
|
|
|
$
|
18,156
|
|
Less unearned income
|
|
(5,217
|
)
|
|
(5,932
|
)
|
||
Net investment in direct financing leases
|
|
11,851
|
|
|
12,224
|
|
||
Less amount due within one year
|
|
(460
|
)
|
|
(371
|
)
|
||
Amount due after one year
|
|
$
|
11,391
|
|
|
$
|
11,853
|
|
|
|
Operating
|
|
Direct Financing
|
||||
Years ended August 31:
|
|
|
|
|
||||
2019
|
|
$
|
7,124
|
|
|
$
|
1,156
|
|
2020
|
|
7,544
|
|
|
1,269
|
|
||
2021
|
|
7,787
|
|
|
1,365
|
|
||
2022
|
|
7,804
|
|
|
1,362
|
|
||
2023
|
|
7,884
|
|
|
1,362
|
|
||
Thereafter
|
|
60,331
|
|
|
10,554
|
|
||
|
|
$
|
98,474
|
|
|
$
|
17,068
|
|
Less unearned income
|
|
|
|
$
|
(5,217
|
)
|
||
|
|
|
|
$
|
11,851
|
|
|
|
Operating
|
|
Capital
|
||||
Years ended August 31:
|
|
|
|
|
||||
2019
|
|
$
|
8,198
|
|
|
$
|
3,489
|
|
2020
|
|
8,173
|
|
|
3,194
|
|
||
2021
|
|
7,536
|
|
|
3,109
|
|
||
2022
|
|
6,393
|
|
|
2,597
|
|
||
2023
|
|
6,437
|
|
|
2,415
|
|
||
Thereafter
|
|
44,017
|
|
|
4,541
|
|
||
Total minimum lease payments
(1)
|
|
$
|
80,754
|
|
|
19,345
|
|
|
Less amount representing interest averaging 5.4%
|
|
|
|
(3,888
|
)
|
|||
Present value of net minimum lease payments
|
|
|
|
15,457
|
|
|||
Less amount due within one year
|
|
|
|
(2,454
|
)
|
|||
Amount due after one year
|
|
|
|
$
|
13,003
|
|
(1)
|
Minimum payments have not been reduced by future minimum rentals receivable under noncancellable operating and capital subleases of
$25.9 million
and
$1.3 million
, respectively. They also do not include contingent rentals which may be due under certain leases. Contingent rentals for capital leases amounted to
$0.2 million
,
$0.3 million
and
$0.9 million
in fiscal years
2018
,
2017
and
2016
, respectively.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Minimum rentals
|
|
$
|
8,039
|
|
|
$
|
11,224
|
|
|
$
|
12,441
|
|
Contingent rentals
|
|
140
|
|
|
283
|
|
|
284
|
|
|||
Total rent expense
|
|
8,179
|
|
|
11,507
|
|
|
12,725
|
|
|||
Less sublease rentals
|
|
(3,464
|
)
|
|
(2,513
|
)
|
|
(2,372
|
)
|
|||
Net rent expense
|
|
$
|
4,715
|
|
|
$
|
8,994
|
|
|
$
|
10,353
|
|
|
|
Estimated
Useful Life
|
|
2018
|
|
2017
|
||||
Property, equipment and capital leases:
|
|
|
|
|
|
|
||||
Land
|
|
|
|
$
|
120,352
|
|
|
$
|
117,402
|
|
Buildings and improvements
|
|
8 – 25 yrs
|
|
243,434
|
|
|
251,695
|
|
||
Drive-In equipment
|
|
5 – 7 yrs
|
|
62,679
|
|
|
75,410
|
|
||
Brand technology development and other equipment
|
|
2 – 5 yrs
|
|
133,020
|
|
|
126,179
|
|
||
Property and equipment, at cost
|
|
|
|
559,485
|
|
|
570,686
|
|
||
Accumulated depreciation
|
|
|
|
(271,940
|
)
|
|
(272,233
|
)
|
||
Property and equipment, net
|
|
|
|
287,545
|
|
|
298,453
|
|
||
|
|
|
|
|
|
|
||||
Capital leases
|
|
Life of lease
|
|
39,204
|
|
|
45,315
|
|
||
Accumulated amortization
|
|
|
|
(28,527
|
)
|
|
(31,388
|
)
|
||
Capital leases, net
|
|
|
|
10,677
|
|
|
13,927
|
|
||
Property, equipment and capital leases, net
|
|
|
|
$
|
298,222
|
|
|
$
|
312,380
|
|
|
|
2018
|
|
2017
|
||||
Wages and employee benefit costs
|
|
$
|
16,338
|
|
|
$
|
17,705
|
|
Property taxes, sales and use taxes and employment taxes
|
|
4,677
|
|
|
5,634
|
|
||
Unredeemed gift cards
|
|
13,184
|
|
|
11,319
|
|
||
Other
|
|
10,115
|
|
|
10,188
|
|
||
|
|
$
|
44,314
|
|
|
$
|
44,846
|
|
|
|
2018
|
|
2017
|
||||
Class A-2 2018-1 senior secured fixed rate notes
|
|
$
|
170,000
|
|
|
$
|
—
|
|
Class A-2 2016-1 senior secured fixed rate notes
|
|
399,911
|
|
|
422,521
|
|
||
Class A-1 2016-1 senior secured variable funding notes
|
|
—
|
|
|
60,000
|
|
||
Class A-2 2013-1 senior secured fixed rate notes
|
|
147,485
|
|
|
155,000
|
|
||
|
|
717,396
|
|
|
637,521
|
|
||
Less unamortized debt issuance costs
|
|
(11,668
|
)
|
|
(9,405
|
)
|
||
Less long-term debt due within one year
|
|
(4,250
|
)
|
|
—
|
|
||
Long-term debt, net
|
|
$
|
701,478
|
|
|
$
|
628,116
|
|
•
|
Level 1 valuations use quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
•
|
Level 2 valuations use inputs other than actively quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include: (a) quoted prices for similar assets or liabilities in active markets, (b) quoted prices for identical or similar assets or liabilities in markets that are not active, (c) inputs other than quoted prices that are observable for the asset or liability such as interest rates and yield curves observable at commonly quoted intervals and (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
Level 3 valuations use unobservable inputs for the asset or liability. Unobservable inputs are used to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
15,597
|
|
|
$
|
30,352
|
|
|
$
|
20,137
|
|
State
|
|
2,949
|
|
|
3,921
|
|
|
3,791
|
|
|||
|
|
18,546
|
|
|
34,273
|
|
|
23,928
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
(16,460
|
)
|
|
(2,378
|
)
|
|
4,372
|
|
|||
State
|
|
648
|
|
|
(91
|
)
|
|
137
|
|
|||
|
|
(15,812
|
)
|
|
(2,469
|
)
|
|
4,509
|
|
|||
Provision for income taxes
|
|
$
|
2,734
|
|
|
$
|
31,804
|
|
|
$
|
28,437
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Amount computed by applying the statutory federal tax rate
|
|
25.7
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes (net of federal income tax benefit)
|
|
3.8
|
|
|
2.6
|
|
|
2.8
|
|
Employment related and other tax credits, net
|
|
(1.8
|
)
|
|
(1.9
|
)
|
|
(2.5
|
)
|
Change in uncertain tax positions
|
|
0.2
|
|
|
—
|
|
|
(3.3
|
)
|
Federal tax benefit of statutory tax deduction
|
|
(1.3
|
)
|
|
(1.6
|
)
|
|
(1.4
|
)
|
Stock option excess tax benefit
|
|
(2.9
|
)
|
|
(1.0
|
)
|
|
—
|
|
Deferred tax revaluation
|
|
(19.1
|
)
|
|
—
|
|
|
—
|
|
Other
|
|
(0.9
|
)
|
|
0.2
|
|
|
0.1
|
|
Provision for income taxes
|
|
3.7
|
%
|
|
33.3
|
%
|
|
30.7
|
%
|
•
|
Effective January 1, 2018, the U.S. corporate federal statutory income tax rate was reduced from 35% to 21%. Because of our fiscal year end, the Company’s blended statutory federal tax rate is
25.7%
for fiscal year 2018 and 21% for fiscal year 2019 and thereafter.
|
•
|
The Company remeasured its existing deferred tax assets and liabilities at the rate the Company expected to be in effect when those deferred taxes would be realized (either 25.7% if in fiscal year 2018 or
21.0%
for fiscal year 2019 and thereafter). The Company recognized a discrete benefit from the deferred tax remeasurement of approximately
$14.1 million
in the second quarter of fiscal year 2018.
|
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Allowance for doubtful accounts and notes receivable
|
|
$
|
661
|
|
|
$
|
419
|
|
Leasing transactions
|
|
1,928
|
|
|
3,083
|
|
||
Deferred income
|
|
1,846
|
|
|
3,011
|
|
||
Accrued liabilities
|
|
2,292
|
|
|
4,339
|
|
||
Stock compensation
|
|
1,553
|
|
|
3,156
|
|
||
Other
|
|
59
|
|
|
929
|
|
||
State net operating losses
|
|
18,659
|
|
|
18,031
|
|
||
Total deferred tax assets
|
|
26,998
|
|
|
32,968
|
|
||
Valuation allowance
|
|
(17,117
|
)
|
|
(16,254
|
)
|
||
Total deferred tax assets after valuation allowance
|
|
$
|
9,881
|
|
|
$
|
16,714
|
|
|
|
|
|
|
|
|||
Deferred tax liabilities:
|
|
|
|
|
|
|||
Prepaid expenses
|
|
$
|
(798
|
)
|
|
$
|
(956
|
)
|
Investment in partnerships, including differences in capitalization,
|
|
|
|
|
|
|||
depreciation and direct financing leases
|
|
(3,083
|
)
|
|
(4,026
|
)
|
||
Property, equipment and capital leases
|
|
(12,603
|
)
|
|
(23,756
|
)
|
||
Intangibles and other assets
|
|
(14,837
|
)
|
|
(22,983
|
)
|
||
Debt extinguishment
|
|
—
|
|
|
(838
|
)
|
||
Direct financing leases
|
|
(2,786
|
)
|
|
(4,256
|
)
|
||
Total deferred tax liabilities
|
|
(34,107
|
)
|
|
(56,815
|
)
|
||
Net deferred tax liabilities (noncurrent)
|
|
$
|
(24,226
|
)
|
|
$
|
(40,101
|
)
|
|
|
2018
|
|
2017
|
||||
Balance at beginning of year
|
|
$
|
643
|
|
|
$
|
625
|
|
Additions for tax positions of prior years
|
|
147
|
|
|
18
|
|
||
Balance at end of year
|
|
$
|
790
|
|
|
$
|
643
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Expected term (years)
|
|
5.2
|
|
|
5.3
|
|
|
5.3
|
|
Expected volatility
|
|
31
|
%
|
|
34
|
%
|
|
34
|
%
|
Risk-free interest rate
|
|
2.5
|
%
|
|
2.0
|
%
|
|
1.4
|
%
|
Expected dividend yield
|
|
2.5
|
%
|
|
2.2
|
%
|
|
1.5
|
%
|
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life (Yrs.)
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding September 1, 2017
|
|
2,536
|
|
|
$
|
20.42
|
|
|
|
|
|
||
Granted
|
|
713
|
|
|
25.84
|
|
|
|
|
|
|||
Exercised
|
|
(1,055
|
)
|
|
15.59
|
|
|
|
|
|
|||
Forfeited or expired
|
|
(101
|
)
|
|
27.93
|
|
|
|
|
|
|||
Outstanding at August 31, 2018
|
|
2,093
|
|
|
$
|
24.34
|
|
|
4.68
|
|
$
|
24,117
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at August 31, 2018
|
|
968
|
|
|
$
|
22.42
|
|
|
3.18
|
|
$
|
13,013
|
|
|
|
Restricted Stock Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding September 1, 2017
|
|
95
|
|
|
$
|
26.64
|
|
Granted
|
|
34
|
|
|
25.82
|
|
|
Vested
|
|
(39
|
)
|
|
27.20
|
|
|
Forfeited
|
|
(7
|
)
|
|
29.26
|
|
|
Outstanding at August 31, 2018
|
|
83
|
|
|
$
|
25.75
|
|
|
Dividend per share
|
|
Total amount
|
|
Payment date
|
||||
Fiscal year 2018
|
|
|
|
|
|
||||
First Quarter
|
$
|
0.16
|
|
|
$
|
6,243
|
|
|
November 17, 2017
|
Second Quarter
|
0.16
|
|
|
6,103
|
|
|
February 16, 2018
|
||
Third Quarter
|
0.16
|
|
|
5,879
|
|
|
May 18, 2018
|
||
Fourth Quarter
|
0.16
|
|
|
5,746
|
|
|
August 17, 2018
|
||
|
|
|
|
|
|
||||
Fiscal year 2017
|
|
|
|
|
|
||||
First Quarter
|
$
|
0.14
|
|
|
$
|
6,359
|
|
|
November 18, 2016
|
Second Quarter
|
0.14
|
|
|
6,100
|
|
|
February 17, 2017
|
||
Third Quarter
|
0.14
|
|
|
6,041
|
|
|
May 19, 2017
|
||
Fourth Quarter
|
0.14
|
|
|
5,588
|
|
|
August 18, 2017
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
Total revenues
|
|
$
|
105,428
|
|
|
$
|
129,551
|
|
|
$
|
88,102
|
|
|
$
|
100,158
|
|
|
$
|
118,306
|
|
|
$
|
123,990
|
|
|
$
|
111,754
|
|
|
$
|
123,568
|
|
Income from operations
|
|
22,448
|
|
|
27,052
|
|
|
14,914
|
|
|
22,627
|
|
|
37,261
|
|
|
35,441
|
|
|
31,780
|
|
|
38,155
|
|
||||||||
Net income
(1)
|
|
$
|
11,430
|
|
|
$
|
13,118
|
|
|
$
|
19,607
|
|
|
$
|
10,963
|
|
|
$
|
21,576
|
|
|
$
|
18,751
|
|
|
$
|
18,592
|
|
|
$
|
20,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic income per share
(2)
|
|
$
|
0.29
|
|
|
$
|
0.29
|
|
|
$
|
0.51
|
|
|
$
|
0.25
|
|
|
$
|
0.58
|
|
|
$
|
0.44
|
|
|
$
|
0.52
|
|
|
$
|
0.50
|
|
Diluted income per share
(2)
|
|
$
|
0.29
|
|
|
$
|
0.28
|
|
|
$
|
0.51
|
|
|
$
|
0.25
|
|
|
$
|
0.58
|
|
|
$
|
0.44
|
|
|
$
|
0.51
|
|
|
$
|
0.50
|
|
(1)
|
For fiscal year 2018, includes the after tax expense of
$0.4 million
related to the cybersecurity incident in the first quarter, the after tax expense of
$0.2 million
related to the cybersecurity incident, the
$0.9 million
after tax loss from the debt transactions and
$14.1 million
for the discrete impact of the Tax Cuts and Jobs Act in the second quarter, the after tax expense of
$0.2
related to the cybersecurity incident and the after tax gain of
$2.2 million
on refranchising transactions in the third quarter, and the after tax expense of
$0.3
related to the cybersecurity incident in the fourth quarter. For fiscal year 2017, includes the after tax loss of
$0.6 million
on refranchising transactions and the after tax gain of
$2.4 million
on the sale of investment in refranchised drive-in operations in the first quarter, the after tax gain of
$4.3 million
on refranchising transactions in the second quarter, the after tax gain of
$0.4 million
on refranchising transactions in the third quarter and the after tax gain of
$0.1 million
on refranchising transactions, after tax restructuring charges of
$1.1 million
and the after tax gain on the sale of real estate of
$3.0 million
in the fourth quarter.
|
(2)
|
The sum of per share data may not agree to annual amounts due to rounding.
|
Description
|
|
Balance at
Beginning of
Year
|
|
Additions
Charged to
Costs and
Expenses
|
|
Amounts
Written Off
Against the
Allowance
|
|
(Transfers)
Recoveries
|
|
Balance at
End of Year
|
|||||||
|
|
(In thousands)
|
|||||||||||||||
Allowance for doubtful accounts and notes receivable
|
|||||||||||||||||
Fiscal years ended:
|
|
|
|
|
|
|
|
|
|
|
|||||||
August 31, 2018
|
|
$
|
1,131
|
|
|
1,825
|
|
|
(374
|
)
|
|
2
|
|
|
$
|
2,584
|
|
August 31, 2017
|
|
$
|
1,041
|
|
|
113
|
|
|
(23
|
)
|
|
—
|
|
|
$
|
1,131
|
|
August 31, 2016
|
|
$
|
1,105
|
|
|
(53
|
)
|
|
(13
|
)
|
|
2
|
|
|
$
|
1,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Accrued liability for drive-in closings and disposals
|
|||||||||||||||||
Fiscal years ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
August 31, 2018
|
|
$
|
532
|
|
|
222
|
|
|
(241
|
)
|
|
(18
|
)
|
|
$
|
495
|
|
August 31, 2017
|
|
$
|
611
|
|
|
178
|
|
|
(243
|
)
|
|
(14
|
)
|
|
$
|
532
|
|
August 31, 2016
|
|
$
|
807
|
|
|
208
|
|
|
(376
|
)
|
|
(28
|
)
|
|
$
|
611
|
|
|
Sonic Corp.
|
|
|
By:
|
/s/ J. Clifford Hudson
|
|
J. Clifford Hudson
|
|
Chairman of the Board of Directors and
|
|
Chief Executive Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/ J. Clifford Hudson
|
Chairman of the Board of Directors and Chief Executive Officer
|
October 23, 2018
|
J. Clifford Hudson,
Principal Executive Officer
|
||
|
|
|
/s/ Corey R. Horsch
|
Vice President and Chief Financial Officer
|
October 23, 2018
|
Corey R. Horsch,
Principal Financial Officer
|
||
|
|
|
/s/ Michelle E. Britten
|
Vice President and Chief Accounting Officer
|
October 23, 2018
|
Michelle E. Britten,
Principal Accounting Officer
|
||
|
|
|
/s/ Tony D. Bartel
|
Director
|
October 23, 2018
|
Tony D. Bartel
|
||
|
|
|
/s/ R. Neal Black
|
Director
|
October 23, 2018
|
R. Neal Black
|
||
|
|
|
/s/ Steven A. Davis
|
Director
|
October 23, 2018
|
Steven A. Davis
|
||
|
|
|
/s/ Lauren R. Hobart
|
Director
|
October 23, 2018
|
Lauren R. Hobart
|
||
|
|
|
/s/ S. Kirk Kinsell
|
Director
|
October 23, 2018
|
S. Kirk Kinsell
|
||
|
|
|
/s/ Kate S. Lavelle
|
Director
|
October 23, 2018
|
Kate S. Lavelle
|
||
|
|
|
/s/ Federico F. Peña
|
Director
|
October 23, 2018
|
Federico F. Peña
|
||
|
|
|
/s/ Jeffrey H. Schutz
|
Director
|
October 23, 2018
|
Jeffrey H. Schutz
|
||
|
|
|
/s/ Kathryn L. Taylor
|
Director
|
October 23, 2018
|
Kathryn L. Taylor
|
||
|
|
|
/s/ Susan E. Thronson
|
Director
|
October 23, 2018
|
Susan E. Thronson
|
10.11
|
Amendment to Sonic Corp. Executive Severance Plan (as amended and restated effective January 1, 2017) dated September 24, 2018
|
10.12
|
Sonic Corp. Non-Executive Severance Plan dated September 24, 2018
|
21.01
|
Subsidiaries of the Company
|
23.01
|
Consent of Independent Registered Public Accounting Firm
|
31.01
|
Certification of Chief Executive Officer pursuant to SEC Rule 13a-14
|
31.02
|
Certification of Chief Financial Officer pursuant to SEC Rule 13a-14
|
32.01
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
|
32.02
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
|
101. INS
|
XBRL Instance Document
|
101. SCH
|
XBRL Taxonomy Extension Schema Document
|
101. CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101. DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101. LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101. PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1 Year Sonic Chart |
1 Month Sonic Chart |
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