Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Nov. 30, 2014 | Jan. 02, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 30-Nov-14 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | SONIC CORP. | |
Entity Central Index Key | 868611 | |
Current Fiscal Year End Date | -23 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 53,517,843 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $45,221 | $35,694 |
Restricted cash | 7,792 | 13,208 |
Accounts and notes receivable, net | 28,089 | 32,833 |
Income taxes receivable | 61 | 1,887 |
Prepaid expenses and other current assets | 9,181 | 12,090 |
Total current assets | 90,344 | 95,712 |
Noncurrent restricted cash | 6,619 | 6,652 |
Notes receivable, net | 7,898 | 8,155 |
Property, equipment and capital leases | 773,331 | 771,019 |
Less accumulated depreciation and amortization | -336,563 | -329,050 |
Property, equipment and capital leases, net | 436,768 | 441,969 |
Goodwill | 77,001 | 77,093 |
Other assets, net | 22,987 | 21,391 |
Total assets | 641,617 | 650,972 |
Current liabilities: | ||
Accounts payable | 15,289 | 17,207 |
Franchisee deposits | 1,459 | 2,678 |
Accrued liabilities | 40,491 | 43,681 |
Income taxes payable | 5,204 | 2,461 |
Current maturities of long-term debt and capital leases | 13,236 | 13,484 |
Total current liabilities | 75,679 | 79,511 |
Obligations under capital leases due after one year | 22,430 | 23,050 |
Long-term debt due after one year | 425,079 | 427,527 |
Deferred income taxes | 38,420 | 37,611 |
Other non-current liabilities | 18,538 | 20,598 |
Total non-current liabilities | 504,467 | 508,786 |
Stockholders' equity: | ||
Preferred stock, par value $.01; 1,000 shares authorized; none outstanding | ||
Common stock, par value $.01; 245,000 shares authorized; 118,309 shares issued (118,309 shares issued at August 31, 2014) | 1,183 | 1,183 |
Paid-in capital | 224,947 | 225,004 |
Retained earnings | 811,341 | 801,202 |
Treasury stock, at cost; 64,874 shares (64,505 shares at August 31, 2014) | -976,000 | -964,714 |
Total stockholders’ equity | 61,471 | 62,675 |
Total liabilities and stockholders' equity | $641,617 | $650,972 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
Condensed Consolidated Balance Sheets [Abstract] | ||
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 245,000,000 | 245,000,000 |
Common stock, shares issued | 118,309,000 | 118,309,000 |
Treasury stock, shares | 64,874,000 | 64,505,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements Of Income (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Revenues: | ||
Company Drive-In sales | $100,138 | $93,499 |
Franchise Drive-Ins: | ||
Franchise royalties and fees | 38,264 | 31,221 |
Lease revenue | 1,065 | 886 |
Other | 389 | 1,046 |
Total revenues | 139,856 | 126,652 |
Costs and expenses: | ||
Food and packaging | 28,573 | 26,236 |
Payroll and other employee benefits | 35,271 | 33,340 |
Other operating expenses, exclusive of depreciation and amortization included below | 22,605 | 21,807 |
Total cost of Company Drive-In sales | 86,449 | 81,383 |
Selling, general and administrative | 18,788 | 17,005 |
Depreciation and amortization | 11,660 | 10,034 |
Other operating (income) expense, net | 421 | -129 |
Total costs and expenses | 117,318 | 108,293 |
Income from operations | 22,538 | 18,359 |
Interest expense | 6,281 | 6,383 |
Interest income | -102 | -117 |
Net interest expense | 6,179 | 6,266 |
Income before income taxes | 16,359 | 12,093 |
Provision for income taxes | 6,274 | 3,885 |
Net income | $10,085 | $8,208 |
Basic income per share | $0.19 | $0.15 |
Diluted income per share | $0.18 | $0.14 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements Of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Cash flows from operating activities: | ||
Net income | $10,085 | $8,208 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 11,660 | 10,034 |
Stock-based compensation expense | 952 | 828 |
Other | 58 | -1,383 |
Decrease in operating assets: | ||
Restricted cash | 5,407 | 4,912 |
Accounts receivable and other assets | 4,470 | 3,799 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | -179 | -3,088 |
Accrued and other liabilities | -4,517 | -4,947 |
Income taxes | 5,763 | 9,700 |
Total adjustments | 23,614 | 19,855 |
Net cash provided by operating activities | 33,699 | 28,063 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -10,830 | -7,618 |
Proceeds from sale of assets | 605 | 616 |
Other | 7,130 | 1,271 |
Net cash used in investing activities | -3,095 | -5,731 |
Cash flows from financing activities: | ||
Payments on debt | -2,447 | -2,446 |
Purchases of treasury stock | -20,425 | -7,155 |
Proceeds from exercise of stock options | 7,679 | 5,961 |
Payment of dividends | -4,795 | |
Other | -1,089 | -695 |
Net cash used in financing activities | -21,077 | -4,335 |
Net increase in cash and cash equivalents | 9,527 | 17,997 |
Cash and cash equivalents at beginning of period | 35,694 | 77,896 |
Cash and cash equivalents at end of period | 45,221 | 95,893 |
Non-cash investing and financing activities: | ||
Change in obligation to acquire treasury stock | -233 | 355 |
Change in obligation for purchase of property and equipment | ($1,625) | $182 |
Basis_Of_Presentation
Basis Of Presentation | 3 Months Ended |
Nov. 30, 2014 | |
Basis Of Presentation [Abstract] | |
Basis Of Presentation | 1.Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements of Sonic Corp. (the “Company”). In the opinion of management, these financial statements reflect all adjustments of a normal recurring nature, including recurring accruals, necessary for the fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. In certain situations, recurring accruals, including franchise royalties, are based on more limited information at interim reporting dates than at the Company’s fiscal year end due to the abbreviated reporting period. Actual results may differ from these estimates. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended August 31, 2014, included in the Company’s Annual Report on Form 10-K. Interim results are not necessarily indicative of the results that may be expected for a full year or any other interim period. | |
Principles of Consolidation | |
The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and a number of Company Drive-Ins in which a subsidiary has a controlling ownership interest. All intercompany accounts and transactions have been eliminated. | |
New Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires entities to recognize revenue in the way it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most of the existing revenue recognition requirements in U.S. GAAP when it becomes effective. This pronouncement is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and is to be applied retrospectively, with early application not permitted. The Company is currently evaluating the effect that this pronouncement will have on its financial statements and related disclosures. | |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||
Nov. 30, 2014 | |||||||
Earnings Per Share [Abstract] | |||||||
Earnings Per Share | 2.Earnings Per Share | ||||||
The following table sets forth the computation of basic and diluted earnings per share: | |||||||
Three months ended | |||||||
November 30, | |||||||
2014 | 2013 | ||||||
Numerator: | |||||||
Net income | $ | 10,085 | $ | 8,208 | |||
Denominator: | |||||||
Weighted average common shares outstanding– basic | 53,360 | 56,292 | |||||
Effect of dilutive employee stock options and | |||||||
unvested restricted stock units | 1,467 | 1,605 | |||||
Weighted average common shares – diluted | 54,827 | 57,897 | |||||
Net income per common share – basic | $ | 0.19 | $ | 0.15 | |||
Net income per common share – diluted | $ | 0.18 | $ | 0.14 | |||
Anti-dilutive securities excluded(1) | 455 | 967 | |||||
————————— | |||||||
(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. | |||||||
Share_Repurchase_Program
Share Repurchase Program | 3 Months Ended |
Nov. 30, 2014 | |
Share Repurchase Program [Abstract] | |
Share Repurchase Program | 3.Share Repurchase Program |
In August 2014, the Company’s Board of Directors extended the Company’s share repurchase program, authorizing the Company to purchase up to $105 million of its outstanding shares of common stock to be repurchased through August 31, 2015. Share repurchases may be made from time to time in the open market or otherwise, including through an accelerated share repurchase program, under terms of a Rule 10b5-1 plan, in privately negotiated transactions or in round lot or block transactions. The share repurchase program may be extended, modified, suspended or discontinued at any time. | |
In October 2014, the Company entered into an accelerated share repurchase agreement (“ASR”) with a financial institution to purchase $15 million of the Company’s common stock. In exchange for a $15 million up-front payment, the financial institution delivered approximately 0.6 million shares. The actual number of shares repurchased will be determined upon completion of the program, which is expected to occur in January 2015. | |
The Company reflected the ASR transaction as a repurchase of common stock for purposes of calculating earnings per share and as a forward contract indexed to its own common stock. The forward contract met all of the applicable criteria for equity classification. | |
Including repurchases under the ASR transaction described above, during the first three months of fiscal year 2015, approximately 0.8 million shares were repurchased for a total cost of $20.2 million, resulting in an average price per share of $24.82. | |
The total remaining amount authorized under the share repurchase program, as of November 30, 2014, was $84.8 million. | |
Income_Taxes
Income Taxes | 3 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
Income Taxes [Abstract] | |||||||||
Income Taxes | 4.Income Taxes | ||||||||
The following table presents the Company’s provision for income taxes and effective income tax rate for the periods below: | |||||||||
Three months ended | |||||||||
November 30, | |||||||||
2014 | 2013 | ||||||||
Provision for income taxes | $ | 6,274 | $ | 3,885 | |||||
Effective income tax rate | 38.4 | % | 32.1 | % | |||||
The increase in the Company’s effective income tax rate during the first quarter of fiscal year 2015 was primarily attributable to a decrease in employment tax credits due to expired credit provisions and a decrease in unrecognized tax benefits resulting from the acceptance of a federal tax method change that took place during the first quarter of fiscal year 2014. | |||||||||
Contingencies
Contingencies | 3 Months Ended |
Nov. 30, 2014 | |
Contingencies [Abstract] | |
Contingencies | 5.Contingencies |
The Company is involved in various legal proceedings and has certain unresolved claims pending. Based on the information currently available, management believes that all claims currently pending are either covered by insurance or would not have a material adverse effect on the Company’s business, operating results or financial condition. | |
On December 20, 2013, the Company extended a note purchase agreement to a bank that serves to guarantee the repayment of a franchisee loan, with a term through 2018, and also benefits the franchisee with a lower financing rate. In the event of default by the franchisee, the Company would purchase the franchisee loan from the bank, thereby becoming the note holder and providing an avenue of recourse with the franchisee. The Company recorded a liability for this guarantee which was based on the Company’s estimate of fair value. As of November 30, 2014, the balance of the franchisee’s loan was $6.1 million. | |
The Company has obligations under various operating lease agreements with third-party lessors related to the real estate for certain Company Drive-In operations that were sold to franchisees. Under these agreements, which expire through 2029, the Company remains secondarily liable for the lease payments for which it was responsible as the original lessee. As of November 30, 2014, the amount remaining under these guaranteed lease obligations totaled $8.9 million. At this time, the Company does not anticipate any material defaults under the foregoing leases; therefore, no liability has been provided. | |
Fair_Value_Of_Financial_Instru
Fair Value Of Financial Instruments | 3 Months Ended |
Nov. 30, 2014 | |
Fair Value Of Financial Instruments [Abstract] | |
Fair Value Of Financial Instruments | 6.Fair Value of Financial Instruments |
The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The Company has no financial liabilities that are required to be measured at fair value on a recurring basis. | |
The Company categorizes its assets and liabilities recorded at fair value based upon the following fair value hierarchy established by the Financial Accounting Standards Board: | |
•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. | |
The Company’s cash equivalents are carried at cost which approximates fair value and totaled $36.3 million at November 30, 2014 and $34.4 million at August 31, 2014. This fair value is estimated using Level 1 inputs. | |
At November 30, 2014, the fair value of the Company’s Series 2011-1 Senior Secured Fixed Rate Notes, Class A-2 (the “2011 Fixed Rate Notes”) and Series 2013-1 Senior Secured Fixed Rate Notes, Class A-2 (the “2013 Fixed Rate Notes”) approximated the carrying value of $435.4 million, including accrued interest. At August 31, 2014, the fair value of the 2011 Fixed Rate Notes and 2013 Fixed Rate Notes approximated the carrying value of $437.8 million, including accrued interest. The fair value of the 2011 Fixed Rate Notes and the 2013 Fixed Rate Notes is estimated using 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. | |
Basis_Of_Presentation_Policy
Basis Of Presentation (Policy) | 3 Months Ended |
Nov. 30, 2014 | |
Basis Of Presentation [Abstract] | |
Principles Of Consolidation | Principles of Consolidation |
The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and a number of Company Drive-Ins in which a subsidiary has a controlling ownership interest. All intercompany accounts and transactions have been eliminated. | |
New Accounting Pronoucements | New Accounting Pronouncements |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which requires entities to recognize revenue in the way it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most of the existing revenue recognition requirements in U.S. GAAP when it becomes effective. This pronouncement is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and is to be applied retrospectively, with early application not permitted. The Company is currently evaluating the effect that this pronouncement will have on its financial statements and related disclosures. | |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||
Nov. 30, 2014 | |||||||
Earnings Per Share [Abstract] | |||||||
Computation Of Basic And Diluted Earnings Per Share | |||||||
Three months ended | |||||||
November 30, | |||||||
2014 | 2013 | ||||||
Numerator: | |||||||
Net income | $ | 10,085 | $ | 8,208 | |||
Denominator: | |||||||
Weighted average common shares outstanding– basic | 53,360 | 56,292 | |||||
Effect of dilutive employee stock options and | |||||||
unvested restricted stock units | 1,467 | 1,605 | |||||
Weighted average common shares – diluted | 54,827 | 57,897 | |||||
Net income per common share – basic | $ | 0.19 | $ | 0.15 | |||
Net income per common share – diluted | $ | 0.18 | $ | 0.14 | |||
Anti-dilutive securities excluded(1) | 455 | 967 | |||||
————————— | |||||||
(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. | |||||||
Income_Taxes_Tables
Income Taxes (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
Income Taxes [Abstract] | |||||||||
Schedule Of Provision (Benefit) For Income Taxes And Effective Income Tax Rate | |||||||||
Three months ended | |||||||||
November 30, | |||||||||
2014 | 2013 | ||||||||
Provision for income taxes | $ | 6,274 | $ | 3,885 | |||||
Effective income tax rate | 38.4 | % | 32.1 | % | |||||
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |||
In Thousands, except Per Share data, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 | ||
Earnings Per Share [Abstract] | ||||
Net income | $10,085 | $8,208 | ||
Weighted average common shares outstanding – basic | 53,360 | 56,292 | ||
Effect of dilutive employee stock options and unvested restricted stock units | 1,467 | 1,605 | ||
Weighted average common shares - diluted | 54,827 | 57,897 | ||
Net income per common share - basic | $0.19 | $0.15 | ||
Net income per common share - diluted | $0.18 | $0.14 | ||
Anti-dilutive securities excluded | 455 | [1] | 967 | [1] |
[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. |
Share_Repurchase_Program_Detai
Share Repurchase Program (Details) (USD $) | 3 Months Ended | 1 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Nov. 30, 2014 | Oct. 31, 2014 | Aug. 31, 2014 |
Share Repurchase Program [Line Items] | |||
Shares repurchase authorized amount | $105 | ||
Shares acquired through stock repurchase program | 0.8 | ||
Purchase of treasury stock | 20.2 | ||
Remaining amount authorized for repurchase through share repurchase program | 84.8 | ||
Weighted-average price per share | $24.82 | ||
Accelerated Share Repurchase Program [Member] | |||
Share Repurchase Program [Line Items] | |||
Shares repurchase authorized amount | 15 | ||
Shares acquired through stock repurchase program | 0.6 | ||
Purchase of treasury stock | $15 |
Income_Taxes_Schedule_Of_Provi
Income Taxes (Schedule Of Provision (Benefit) For Income Taxes And Effective Income Tax Rate) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Nov. 30, 2014 | Nov. 30, 2013 |
Income Taxes [Abstract] | ||
Provision for income taxes | $6,274 | $3,885 |
Effective income tax rate | 38.40% | 32.10% |
Contingencies_Details
Contingencies (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Nov. 30, 2014 |
Note Repurchase Agreement [Member] | |
Loss Contingencies [Line Items] | |
Guaranteed obligations | $6.10 |
Guarantor Obligations, Term | 2018 |
Guarantee Operating Lease Obligations [Member] | |
Loss Contingencies [Line Items] | |
Guaranteed obligations | 8.9 |
Guaranteed liability, carrying value | $0 |
Guarantor Obligations, Term | 2029 |
Fair_Value_Of_Financial_Instru1
Fair Value Of Financial Instruments (Narrative) (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
In Millions, unless otherwise specified | ||
Fair Value Of Financial Instruments [Abstract] | ||
Cash equivalents carried at cost | $36.30 | $34.40 |
Fixed Rate Notes, fair value | 435.4 | 437.8 |
Fixed rate notes, carrying value, including accrued interest | $435.40 | $437.80 |