SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended August 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File Number 000-18859
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 securities held pursuant to the plan and the
address of its principal executive office:
SONIC CORP.
101 PARK AVENUE
OKLAHOMA CITY, OKLAHOMA 73102
Report of Independent Auditors.................................................1
Financial Statements
Statements of Net Assets Available for Benefits With Fund Information..........2
Statements of Changes in Net Assets Available for Benefits With Fund
Information...................................................................4
Notes to Financial Statements..................................................6
Supplemental Schedules
Item 27a--Schedule of Assets Held for Investment Purposes.....................10
Item 27d--Schedule of Reportable Transactions.................................11
Party-in-interest transactions are not presented because there are no
party-in-interest transactions which are prohibited by ERISA Section 406 and for
which there is no statutory or administrative exemption.
SIGNATURES
The Plan. 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.
SONIC CORP.
Date: February 27, 1997 By: /s/ RONALD L. MATLOCK
-----------------------------------
Ronald L. Matlock, Vice President
and General Counsel
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
with fund information of Sonic Corp. Savings and Profit Sharing Plan as of
August 31, 1996 and 1995, and the related statements of changes in net assets
available for benefits with fund information 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, 1996 and 1995, 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, 1996, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the 1996 basic financial statements. The Fund Information
in the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for benefits
and changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information 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
January 14, 1997
1
Sonic Corp. Savings and Profit Sharing Plan
Statements of Net Assets Available for Benefits
With Fund Information
AUGUST 31, 1996
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FUND INFORMATION
------------------------------------------------------
CAPITAL
STOCK GROWTH BALANCED PRESERVATION
FUND FUND FUND FUND TOTAL
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ASSETS
Investments:
Shares of registered investment companies:
American Performance Equity Fund,
36,147 shares $ - $ 369,937 $126,366 $ - $ 496,303
Russell Special Growth Fund #9,
4,340 shares - 138,511 41,080 - 179,591
Russell Equity Income Fund #10,
5,814 shares - 225,891 - - 225,891
Russell International Securities
Fund #13, 3,994 shares - 166,948 63,610 - 230,558
Russell Quantitative Equity Fund
#17, 15,822 shares - 371,483 125,970 - 497,453
Russell Real Estate Securities Fund
#18, 4,493 shares - 81,537 34,607 - 116,144
Russell Emerging Markets Fund #22,
5,252 shares - 43,748 21,060 - 64,808
Cash Plus Government Fund,
380,288 shares 5,051 78,795 83,566 212,876 380,288
U.S. Treasury notes - - 249,574 - 249,574
Federal National Mortgage Association
debenture - - 28,247 - 28,247
Sonic Corp. common stock, 17,543 shares 412,260 - - - 412,260
Participant notes receivable - - - 90,830 90,830
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Total investments 417,311 1,476,850 774,080 303,706 2,971,947
Receivables:
Contributions:
Participants 2,579 7,724 4,690 2,121 17,114
Employer 4,643 22,425 9,043 7,787 43,898
Loan repayments 259 1,880 404 222 2,765
Accrued interest 18 368 5,103 903 6,392
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Total receivables 7,499 32,397 19,240 11,033 70,169
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Total assets 424,810 1,509,247 793,320 314,739 3,042,116
LIABILITIES--cash overdraft 3,550 5,387 2,916 566 12,419
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Net assets available for benefits $421,260 $1,503,860 $790,404 $314,173 $3,029,697
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(CONTINUED ON FOLLOWING PAGE)
2
Sonic Corp. Savings and Profit Sharing Plan
Statements of Net Assets Available for Benefits
With Fund Information (continued)
AUGUST 31, 1995
-----------------------------------------------------------------
FUND INFORMATION
------------------------------------------------------
CAPITAL
STOCK GROWTH BALANCED PRESERVATION
FUND FUND FUND FUND TOTAL
-----------------------------------------------------------------
ASSETS
Investments:
Shares of registered investment companies:
Russell Diversified Equity Fund #8,
9,023 shares $ - $ 256,388 $101,366 $ - $ 357,754
Russell Special Growth Fund #9,
4,664 shares - 162,524 27,288 - 189,812
Russell Equity Income Fund #10,
6,555 shares - 257,607 - - 257,607
Russell International Securities Fund
#13, 3,862 shares - 138,444 80,245 - 218,689
Russell Quantitative Equity Fund
#17, 11,710 shares - 256,146 102,643 - 358,789
Russell Real Estate Securities Fund
#18, 3,883 shares - 58,571 30,819 - 89,390
Russell Emerging Markets Fund #22,
4,678 shares - 34,651 19,899 - 54,550
Cash Plus Government Fund,
192,211 shares 7,245 - 16,843 168,123 192,211
U.S. Treasury notes - - 265,520 - 265,520
Federal National Mortgage Association
debenture - - 29,007 - 29,007
Sonic Corp. common stock, 25,091 shares 514,355 - - - 514,355
Participant notes receivable - - - 115,273 115,273
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Total investments 521,600 1,164,331 673,630 283,396 2,642,957
Receivables:
Contributions:
Participants 3,040 6,677 5,241 1,478 16,436
Employer 7,764 29,750 13,520 7,568 58,602
Loan repayments 243 2,032 530 299 3,104
Accrued interest 22 - 3,621 1,115 4,758
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Total receivables 11,069 38,459 22,912 10,460 82,900
Cash 9,790 - - 2,615 12,405
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Total assets 542,459 1,202,790 696,542 296,471 2,738,262
LIABILITIES
Accounts payable 16,863 2,470 - - 19,333
Cash overdraft - 8,609 4,220 - 12,829
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Total liabilities 16,863 11,079 4,220 - 32,162
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Net assets available for benefits $525,596 $1,191,711 $692,322 $296,471 $2,706,100
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SEE ACCOMPANYING NOTES.
3
Sonic Corp. Savings and Profit Sharing Plan
Statements of Changes in Net Assets Available for Benefits
With Fund Information
YEAR ENDED AUGUST 31, 1996
------------------------------------------------------------------
FUND INFORMATION
-----------------------------------------------------
CAPITAL
STOCK GROWTH BALANCED PRESERVATION
FUND FUND FUND FUND TOTAL
------------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments $ 37,559 $ 29,958 $ 4,401 $ - $ 71,918
Interest and dividends 243 152,394 69,097 17,537 239,271
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Net investment income 37,802 182,352 73,498 17,537 311,189
Contributions:
Participants 33,419 109,184 68,201 26,590 237,394
Employer 16,592 71,301 37,550 23,891 149,334
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Total additions 87,813 362,837 179,249 68,018 697,917
Deductions from net assets attributed to:
Benefits paid to participants 89,994 157,488 86,007 35,963 369,452
Loan fees and trustee fees - 1,868 1,715 1,285 4,868
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Total deductions 89,994 159,356 87,722 37,248 374,320
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Net increase (decrease) prior to interfund transfers (2,181) 203,481 91,527 30,770 323,597
Interfund transfers (net) (102,155) 108,668 6,555 (13,068) -
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Net increase (decrease) (104,336) 312,149 98,082 17,702 323,597
Net assets available for benefits:
Beginning of year 525,596 1,191,711 692,322 296,471 2,706,100
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End of year $ 421,260 $1,503,860 $790,404 $314,173 $3,029,697
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(CONTINUED ON FOLLOWING PAGE)
4
Sonic Corp. Savings and Profit Sharing Plan
Statements of Changes in Net Assets Available for Benefits
With Fund Information (continued)
YEAR ENDED AUGUST 31, 1995
-----------------------------------------------------------------
FUND INFORMATION
----------------------------------------------------
CAPITAL
STOCK GROWTH BALANCED PRESERVATION
FUND FUND FUND FUND TOTAL
-----------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of
investments $189,686 $ 65,771 $ 33,436 $ - $ 288,893
Interest and dividends 273 75,232 55,929 15,409 146,843
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Net investment income 189,959 141,003 89,365 15,409 435,736
Contributions:
Participants 36,227 97,910 71,954 19,478 225,569
Employer 23,260 70,208 42,246 15,377 151,091
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Total additions 249,446 309,121 203,565 50,264 812,396
Deductions from net assets attributed to:
Benefits paid to participants 9,192 150,429 402,248 14,192 576,061
Loan fees and trustee fees - 438 421 360 1,219
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Total deductions 9,192 150,867 402,669 14,552 577,280
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Net increase (decrease) prior to interfund
transfers 240,254 158,254 (199,104) 35,712 235,116
Interfund transfers (net) (27,485) (25,999) 32,725 20,759 -
-----------------------------------------------------------------
Net increase (decrease) 212,769 132,255 (166,379) 56,471 235,116
Net assets available for benefits:
Beginning of year 312,827 1,059,456 858,701 240,000 2,470,984
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End of year $525,596 $1,191,711 $ 692,322 $296,471 $2,706,100
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SEE ACCOMPANYING NOTES.
5
Sonic Corp. Savings and Profit Sharing Plan
Notes to Financial Statements
August 31, 1996 and 1995
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. The Company may contribute a percentage of participants' contributions to
the Plan. Additional 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 contribution and (b) Plan earnings, and charged
with an allocation of trustee fees. Allocations are based on participant
compensation or account balances, as defined. The benefit to which a participant
is entitled is the benefit that can be provided from the participant's vested
account.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's discretionary contribution portion of their
accounts plus actual earnings thereon is based on years of continuous service. A
participant is 100% vested after seven years of credited service.
6
Sonic Corp. Savings and Profit Sharing Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct employee contributions in
10% increments in any of four investment options.
STOCK FUND--Funds are invested in shares of common stock of the Company and
in shares of a registered investment company that invests in U.S.
Government securities.
GROWTH FUND--Funds are invested in shares of registered investment
companies that invests in equity securities.
BALANCED FUND--Funds are invested in U.S. Government securities and in
shares of registered investment companies that invest in equity securities
and in U.S. Government securities.
CAPITAL PRESERVATION FUND--Funds are invested in shares of a registered
investment company that invests in U.S. Government securities and in
participant notes receivable.
Participants may change their investment options quarterly.
PARTICIPANT NOTES RECEIVABLE
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50% of their vested account balance.
Loan transactions are treated as a transfer to (from) the investment fund from
(to) the Capital Preservation fund. Loan terms range from 1-5 years or up to 10
years for the purchase of a primary residence. The loans are secured by the
balance in the participant's account and bear interest at a rate commensurate
with local prevailing rates as determined quarterly by the Plan Administrator.
Interest rates range from 7% to 10%. Principal and interest is paid ratably
through monthly payroll deductions. Such deductions are remitted by the Company
to the Plan in the month following the payroll deductions.
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
7
Sonic Corp. Savings and Profit Sharing Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF PLAN (CONTINUED)
retirement, may elect to receive annual installments over a period of not
more than a participant's assumed life expectancy.
FORFEITED ACCOUNTS
At August 31, 1996, forfeited nonvested accounts totaled $38,333. These accounts
will be allocated to participants' accounts. Also, during the year ended August
31, 1996, $14,412 was allocated to participants' accounts from forfeited
nonvested accounts.
ADMINISTRATION
The Plan is administered by the Company. Administrative expenses, other than
loan fees and trustee fees, incurred by the Plan are paid by the Company. During
fiscal years ended August 31, 1996 and 1995, such expenses incurred amounted to
$19,406 and $20,600, respectively.
2. SUMMARY OF ACCOUNTING POLICIES
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. U.S. Government securities and the
Company's common stock are valued at their quoted market prices. 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.
8
Sonic Corp. Savings and Profit Sharing Plan
Notes to Financial Statements (continued)
2. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
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. Investments that
represent 5% or more of the Plan's net assets are separately identified in the
accompanying statements of net assets available for benefits with fund
information.
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
5. INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated October 19, 1992, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code ("IRC"). The
Plan has been amended since receiving the determination letter to incorporate
certain administrative provisions required by recent changes in the IRC.
However, the Plan administrator and the Plan's tax counsel believe that the Plan
is designed and is currently being operated in compliance with the applicable
requirements of the IRC.
9
SUPPLEMENTAL SCHEDULES
Sonic Corp. Savings and Profit Sharing Plan
Item 27a--Schedule of Assets Held for Investment Purposes
August 31, 1996
DESCRIPTION OF INVESTMENT,
IDENTITY OF ISSUE, BORROWER, INCLUDING MATURITY DATE, RATE OF CURRENT
LESSOR OR SIMILAR PARTY INTEREST, PAR OR MATURITY VALUE COST VALUE
- ----------------------------------------------------------------------------------------------------------
Shares of registered investment companies:
*American Performance Equity Fund 36,147 shares $ 499,046 $ 496,303
Russell Special Growth Fund #9 4,340 shares 164,439 179,591
Russell Equity Income Fund #10 5,814 shares 214,913 225,891
Russell International Securities Fund #13 3,994 shares 208,514 230,558
Russell Quantitative Equity Fund #17 15,822 shares 431,878 497,453
Russell Real Estate Securities Fund #18 4,493 shares 104,275 116,144
Russell Emerging Markets Fund #22 5,252 shares 62,306 64,808
Cash Plus Government Fund 380,288 shares 380,288 380,288
-------------------------
2,065,659 2,191,036
U.S. Government securities:
Treasury note $25,000 principal amount, 7%
due April 15, 1999 25,766 25,320
Treasury note $25,000 principal amount, 6.75%
due May 31, 1997 25,398 25,188
Treasury note $40,000 principal amount, 6.375%
due July 15, 1999 39,375 39,875
Treasury note $50,000 principal amount, 6.375%
due August 15, 2002 50,762 49,000
Treasury note $20,000 principal amount, 6.875%
due March 31, 1997 19,894 20,144
Treasury note $40,000 principal amount, 7.125%
due February 29, 2000 40,331 40,625
Treasury note $30,000 principal amount, 7.125%
due October 15, 1998 29,894 30,459
Treasury note $20,000 principal amount, 5.25%
due January 31, 2001 19,956 18,963
Federal National Mortgage Association $30,000 principal amount, 6.2%
due July 10, 2003 27,684 28,247
-------------------------
279,060 277,821
*Sonic Corp. 17,543 shares of common stock 282,427 412,260
*Participant loans 7% to 10% - 90,830
-------------------------
$2,627,146 $2,971,947
-------------------------
-------------------------
*Party-in-interest.
10
Sonic Corp. Savings and Profit Sharing Plan
Item 27d--Schedule of Reportable Transactions
Year ended August 31, 1996
(H) CURRENT
VALUE
(C) (D) (G) OF ASSET ON (I)
PURCHASE SELLING COST OF TRANSACTION NET
(A) IDENTITY OF PARTY INVOLVED (B) DESCRIPTION OF ASSETS PRICE PRICE ASSET DATE GAIN
- ----------------------------------------------------------------------------------------------------------------------------------
Category (iii)--series of
transactions in excess of 5% of
plan assets:
*Sonic Corp. Sonic Corp. common stock:
5,308 shares $ 104,600 $ 104,600
12,856 shares $242,421 $205,762 $ 242,421 $36,659
*BancOklahoma Trust Company American Performance Equity Fund--SSR:
36,147 shares $ 499,046 $ 499,046
Frank Russell Investment Russell Diversified Equity Fund #8:
Company 2,374 shares $ 92,551 $ 92,551
11,397 shares $459,793 $409,167 $ 459,793 $50,626
Russell Special Growth Fund #9:
2,160 shares $ 86,896 $ 86,896
2,484 shares $101,893 $ 93,881 $ 101,893 $ 8,012
Russell Equity Income Fund #10:
1,838 shares $ 70,998 $ 70,998
2,579 shares $102,708 $ 95,153 $ 102,708 $ 7,555
Russell Quantitative Equity Fund #17:
4,756 shares $ 149,324 $ 149,324
644 shares $ 20,278 $ 16,821 $ 20,278 $ 3,457
SEI Corporation Cash Plus Government Fund:
1,103,757 shares $1,103,757 $1,103,757
915,680 shares $915,680 $915,680 $ 915,680 $ -
*Party-in-interest.
Columns (e) and (f) are not applicable.
There were no category (i), (ii) or (iv) reportable transactions during the
year ended August 31, 1996.
11