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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
| /x/ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended August 31, 1999
OR
| / / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
Commission file number 018859
| A. |
Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Sonic Corp. Savings and Profit Sharing Plan
| B. |
Name of issuer of the sucurities held pursuant to the plan and the address of its principal executive office: |
Sonic Corp.
101 Park Avenue
Oklahoma City, Oklahoma 73102
Sonic Corp. Savings and Profit Sharing Plan
Financial Statements
and Supplemental Schedules
Years ended August 31, 1999 and 1998
| Report of Independent Auditors | ||
| Audited Financial Statements |
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| Statements of Net Assets Available for Benefits |
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| Statements of Changes in Net Assets Available for Benefits | ||
| Notes to Financial Statements | ||
| Supplemental Schedules |
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| Line 27(a)—Schedule of Assets Held for Investment Purposes |
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| Line 27(d)—Schedule of Reportable Transactions |
Report of Independent Auditors
The Plan Administrator
Sonic Corp. Savings and Profit Sharing Plan
We have audited the accompanying statements of net assets available for benefits of Sonic Corp. Savings and Profit Sharing Plan as of August 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at August 31, 1999 and 1998, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of August 31, 1999, and reportable transactions for the year then ended, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
ERNST & YOUNG LLP
Oklahoma
City, Oklahoma
December 18, 1999
Sonic Corp. Savings and Profit Sharing Plan
Statements of Net Assets Available for Benefits
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August 31, |
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|---|---|---|---|---|---|---|
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1999 |
1998 |
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| Assets | ||||||
| Investments | $ | 5,746,527 | $ | 4,068,444 | ||
| Receivables: |
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| Contributions: | ||||||
| Participants | 19,178 | 16,809 | ||||
| Employer | 207,798 | 123,127 | ||||
| Accrued interest | 1,917 | 1,530 | ||||
| Total receivables | 228,893 | 141,466 | ||||
| Cash |
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23,908 |
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12,519 |
| Net assets available for benefits | $ | 5,999,328 | $ | 4,222,429 | ||
See accompanying notes.
Sonic Corp. Savings and Profit Sharing Plan
Statements of Changes in Net Assets Available for Benefits
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Year ended August 31, |
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|---|---|---|---|---|---|---|---|
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1999 |
1998 |
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| Additions to net assets attributed to: | |||||||
| Investment income (loss): | |||||||
| Net appreciation (depreciation) in fair value of investments | $ | 988,002 | $ | (273,747 | ) | ||
| Interest and dividends | 296,076 | 41,412 | |||||
| Net investment income (loss) | 1,284,078 | (232,335 | ) | ||||
| Contributions: |
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| Participants | 521,949 | 421,060 | |||||
| Employer (including profit sharing contributions of $200,000 in 1999 and $100,000 in 1998) | 397,114 | 300,083 | |||||
| Total additions | 2,203,141 | 488,808 | |||||
| Deductions from net assets attributed to benefits paid to participants |
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426,242 |
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337,901 |
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| Net increase | 1,776,899 | 150,907 | |||||
| Net assets available for benefits: |
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| Beginning of year | 4,222,429 | 4,071,522 | |||||
| End of year | $ | 5,999,328 | $ | 4,222,429 | |||
See accompanying notes.
Sonic Corp. Savings and Profit Sharing Plan
Notes to Financial Statements
August 31, 1999 and 1998
1. Description of Plan
The following description of the Sonic Corp. (the "Company") Savings and Profit Sharing Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all full-time employees of the Company who have one year of service. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Contributions
Each year, participants may contribute up to 11% of pretax annual compensation, as defined in the Plan. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans. Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers seven mutual funds and the Company's common stock as investment options for participants. The Company voluntarily matched three percent of participants' compensation in 1999 and 1998. Additional profit sharing amounts may be contributed at the option of the Company's board of directors. Contributions are subject to certain limitations.
Participant Accounts
Each participant's account is credited with the participant's contribution and allocations of (a) the Company's contributions and (b) Plan earnings. Allocations are based on participant compensation or account balances, as defined. Forfeited balances of terminated participants' nonvested accounts are used to reduce plan expenses, then future Company contributions. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account.
Vesting
Participants are vested immediately in their contributions plus actual earnings thereon. Vesting in the Company's contribution portion of their accounts is based on years of continuous service. A participant is 100% vested after six years of credited service.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account balance, whichever is less. The loans are secured by the balance in the participant's account and bear interest at rates which are commensurate with local prevailing rates as determined quarterly by the Plan Administrator (rates range from 8.75% to 9.5% at August 31, 1999).
Payment of Benefits
On termination of service, a participant may elect to receive a lump-sum amount equal to the value of the participant's vested interest in his or her account, or upon death, disability or retirement, may elect to receive annual installments over a period of not more than a participant's assumed life expectancy.
Forfeited Accounts
During the years ended August 31, 1999 and 1998, forfeited nonvested accounts amounted to $27,299 and $28,136, respectively.
Administration
The Plan is administered by the Company. Administrative expenses incurred by the Plan are paid by the Company. During the years ended August 31, 1999 and 1998, administrative expenses paid by the Company amounted to $36,461 and $23,259, respectively.
2. Summary of Accounting Policies
Reclassification
The accompanying 1998 financial statements have been reclassified to conform to the current year presentation.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year end. The Company's common stock is valued at its quoted market price. Participant notes receivable are valued at cost which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Related Party Transactions
Certain Plan investments are shares of a mutual fund managed by BancOklahoma Trust Company, the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
3. Investments
The Plan's investments are held by BancOklahoma Trust Company. The following presents investments that represent 5% or more of the Plan's net assets:
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August 31, |
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1999 |
1998 |
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| American Performance Cash Management Fund | $ | 299,791 | $ | 219,163 | ||
| AIM Constellation Fund | 934,565 | 668,679 | ||||
| AIM Value Fund | 821,750 | 551,042 | ||||
| American AAdvantage Balanced Fund | 844,990 | 747,172 | ||||
| Federated Max Cap Fund | 904,014 | 579,962 | ||||
| Neuberger & Berman Guardian Trust Fund | 1,084,446 | 774,402 | ||||
| Sonic Corp. common stock | 459,283 | 228,662 | ||||
| Other | 397,688 | 299,362 | ||||
| $ | 5,746,527 | $ | 4,068,444 | |||
During the years ended August 31, 1999 and 1998, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value by $988,002 and $(273,747), respectively, as follows:
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1999 |
1998 |
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|---|---|---|---|---|---|---|---|
| Mutual funds | $ | 771,863 | $ | (278,648 | ) | ||
| Sonic Corp. common stock | 216,139 | 4,901 | |||||
| $ | 988,002 | $ | (273,747 | ) | |||
4. Plan Termination
Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time. In the event of termination of the Plan, all participants would become fully vested and the net assets of the Plan are to be distributed by the plan administrator.
5. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated October 19, 1992, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt.
6. Year 2000 (Unaudited)
The Plan Sponsor determined that it was necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle year 2000 dates. The Plan Sponsor took a two phase approach. The first phase addressed internal systems that must be modified or replaced to function properly. Both internal and external resources were utilized to replace or modify existing software applications, and test the software and equipment for the year 2000 modifications. The Plan Sponsor has completed this phase of the project. Costs associated with modifying software and equipment were not significant and were paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated that they will be year 2000 compliant by the end of 1999. If modification of data processing systems of either the Plan, the Plan Sponsor, or its service providers are not completed timely, the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready.
Sonic Corp. Savings and Profit Sharing Plan
Line 27(a)—Schedule of Assets Held for Investment Purposes
EIN: 73-1371046 PN: 001
August 31, 1999
| Identity of Issue, Borrower, Lessor or Similar Party |
Description of Investment, Including Maturity Date, Rate of Interest, Par or Maturity Value |
Cost |
Current Value |
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|---|---|---|---|---|---|---|---|---|
| *American Performance Cash Management Fund | 299,791 shares | $ | 299,791 | $ | 299,791 | |||
| *American Performance Intermediate Bond Fund | 15,856 shares | 161,230 | 159,041 | |||||
| AIM Constellation Fund | 29,196 shares | 767,861 | 934,565 | |||||
| AIM Value Fund | 18,583 shares | 603,774 | 821,750 | |||||
| American AAdvantage Balanced Fund | 64,405 shares | 904,238 | 844,990 | |||||
| Federated Max Cap Fund | 33,260 shares | 626,286 | 904,014 | |||||
| Neuberger & Berman Guardian Trust Fund | 66,286 shares | 1,056,657 | 1,084,446 | |||||
| 4,419,837 | 5,048,597 | |||||||
| *Sonic Corp. |
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14,997 shares of common stock |
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257,837 |
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459,283 |
| *Participant notes receivable | 8.75% to 9.5% | — | 238,647 | |||||
| $ | 4,677,674 | $ | 5,746,527 | |||||
- *
- Party-in-interest.
Sonic Corp. Savings and Profit Sharing Plan
Line 27(d)—Schedule of Reportable Transactions
EIN: 73-1371046 PN: 001Year ended August 31, 1999
| (a) Identity of Party Involved |
(b) Description of Assets |
(c) Purchase Price |
(d) Selling Price |
(g) Cost of Asset |
(h) Current Value of Asset on Transaction Date |
(i) Net Gain or (Loss) |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Category (iii)—series of transactions in excess of 5% of plan assets: |
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| *American Performance | Cash Management Fund: | ||||||||||||||||
| Purchases | $ | 354,118 | $ | 354,118 | |||||||||||||
| Sales | $ | 273,490 | $ | 273,490 | $ | 273,490 | $ | — | |||||||||
| AIM | Constellation Fund: | ||||||||||||||||
| Purchases | $ | 191,970 | $ | 191,970 | |||||||||||||
| Sales | $ | 188,768 | $ | 163,039 | $ | 188,768 | $ | 25,729 | |||||||||
| AIM | Value Fund: | ||||||||||||||||
| Purchases | $ | 171,529 | $ | 171,529 | |||||||||||||
| Sales | $ | 163,089 | $ | 96,816 | $ | 163,089 | $ | 66,273 | |||||||||
| American AAdvantage | Balanced Fund: | ||||||||||||||||
| Purchases | $ | 179,441 | $ | 179,441 | |||||||||||||
| Sales | $ | 137,038 | $ | 72,691 | $ | 137,038 | $ | 64,347 | |||||||||
| Federated | Max Cap Fund: | ||||||||||||||||
| Purchases | $ | 188,539 | $ | 188,539 | |||||||||||||
| Sales | $ | 86,598 | $ | 58,368 | $ | 86,598 | $ | 28,230 | |||||||||
| Neuberger & Berman Management | Guardian Trust Fund: | ||||||||||||||||
| Purchases | $ | 269,729 | $ | 269,729 | |||||||||||||
| Sales | $ | 154,110 | $ | 69,900 | $ | 154,110 | $ | 84,210 | |||||||||
Columns (e) and (f) are not applicable.
*Party-in-interest.
There were no category (i), (ii) or (iv) reportable transactions during the year ended August 31, 1999.
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Sonic Corp. Savings and Profit Sharing Plan | ||||
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By: |
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/s/ RONALD L. MATLOCK |
Ronald L. Matlock, Senior Vice President, General Counsel and Secretary |
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| Date: February 25, 2000 | ||||
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Supplemental Schedules
SIGNATURES