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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
  For the quarterly period ended February 28, 2003  
     
  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 0-18859  
 
SONIC CORP.
(Exact Name of Registrant as Specified in Its Charter)
 
 
Delaware
73-1371046
(State of Incorporation) (I.R.S. Employer
Identification No.)
  101 Park Avenue
  Oklahoma City, Oklahoma
 73102
  (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (405) 280-7654

        Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for the shorter period that the Registrant has had to file the reports), and (2) has been subject to the filing requirement for the past 90 days.
Yes X . No     .

        As of February 28, 2003, the Registrant had 38,696,675 shares of common stock issued and outstanding (excluding 9,959,445 shares of common stock held as treasury stock).

SONIC CORP.
Index

PART I.  FINANCIAL INFORMATION Page
Number
 
Item 1.   Financial Statements  
     
   Condensed Consolidated Balance Sheets at February 28, 2003 and August 31, 2002 3
     
   Condensed Consolidated Statements of Income for the three months and six months ended February 28, 2003 and 2002 4
     
   Condensed Consolidated Statements of Cash Flows for the six months ended February 28, 2003 and 2002 5
      
   Notes to Condensed Consolidated Financial Statements 6
     
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations8
     
Item 3.  Quantitative and Qualitative Disclosures About Market Risk15
     
Item 4.  Controls and Procedures15


PART II.   OTHER INFORMATION  
 
Item 1.   Legal Proceedings 15
    
Item 2.  Changes in Securities and Use of Proceeds 15
    
Item 3.  Defaults Upon Senior Securities 15
    
Item 4.  Submission of Matters to a Vote of Security Holders 15
    
Item 5.  Other Information 16
    
Item 6.  Exhibits and Reports on Form 8-K 16
    

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SONIC CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

ASSETS (Unaudited)
February 28,
2003
August 31,
2002
Current assets:            
      Cash and cash equivalents   $ 4,554   $ 8,951  
      Accounts and notes receivable, net    13,884    13,755  
      Other current assets    6,258    7,267  
                 Total current assets    24,696    29,973  
             
Property, equipment and capital leases    426,530    406,799  
Less accumulated depreciation and amortization    (113,576 )  (101,513 )
      Property, equipment and capital leases, net    312,954    305,286  
                       
Goodwill, net    47,755    46,826  
Trademarks, trade names and other intangible assets, net    6,674    6,755  
Investment in deferred financing leases and noncurrent portion of              
      notes receivable    16,560    15,666  
Other assets, net    729    850  
      Intangibles and other assets, net    71,718    70,097  
                 Total assets   $ 409,368   $ 405,356  
LIABILITIES AND STOCKHOLDERS' EQUITY               
Current liabilities:              
      Accounts payable   $ 5,925   $ 6,799  
      Deposits from franchisees    878    1,015  
      Accrued liabilities    14,598    28,968  
      Income taxes payable    1,772    5,061  
      Obligations under capital leases and long-term debt              
           due within one year    1,048    1,072  
                 Total current liabilities    24,221    42,915  
             
Obligations under capital leases due after one year    11,241    11,991  
Long-term debt due after one year    138,093    109,250  
Other noncurrent liabilities    10,730    10,530  
                  
Stockholders' equity:              
      Preferred stock, par value $.01; 1,000,000 shares              
           authorized; none outstanding    —    —  
      Common stock, par value $.01; 100,000,000 shares              
           authorized; 48,656,120 shares issued (48,477,652 shares              
           issued at August 31, 2002)    487    485  
      Paid-in capital    88,756    86,563  
      Retained earnings    254,744    236,126  
     343,987    323,174  
      Treasury stock, at cost; 9,959,445 common shares (8,736,701              
           shares at August 31, 2002)    (118,904 )  (92,504 )
                 Total stockholders' equity    225,083    230,670  
                 Total liabilities and stockholders' equity   $ 409,368   $ 405,356  

See accompanying notes.

3

SONIC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

(Unaudited)
Three months ended
February 28, 		(Unaudited)
Six months ended
February 28,
2003
 2002
 2003
 2002
Revenues:                        
   Company-owned restaurant sales   $ 74,828   $ 67,355   $ 156,402   $ 139,076  
   Franchised restaurants:                      
       Franchise royalties    13,733    12,629    28,693    26,403  
       Franchise fees    918    679    1,945    1,728  
   Other    873    913    1,897    1,698  
     90,352    81,576    188,937    168,905  
Cost and expenses:                      
   Company-owned restaurants:                      
       Food and packaging    19,970    18,086    41,149    37,176  
       Payroll and other employee benefits    22,905    20,003    47,722    40,736  
       Other operating expenses    15,636    13,746    31,938    27,945  
     58,511    51,835    120,809    105,857  
                       
   Selling, general and administrative    8,418    7,786    16,640    15,444  
   Depreciation and amortization    6,994    6,439    13,967    12,694  
   Minority interest in earnings of restaurants    2,117    2,113    4,692    4,711  
   Provision for impairment of long-lived assets    —    567    —    567  
     76,040    68,740    156,108    139,273  
Income from operations    14,312    12,836    32,829    29,632  
                       
Interest expense    1,857    1,764    3,704    3,591  
Interest income    (257 )  (247 )  (545 )  (505 )
Net interest expense    1,600    1,517    3,159    3,086  
Income before income taxes    12,712    11,319    29,670    26,546  
Provision for income taxes    4,735    4,216    11,052    9,888  
Net income   $ 7,977   $ 7,103   $ 18,618   $ 16,658  
   Net income per share - basic   $ .21   $ .18   $ .48   $ .42  
   Net income per share - diluted   $ .20   $ .17   $ .46   $ .40  

See accompanying notes.

4

SONIC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

(Unaudited)
Six months ended
February 28,
2003
2002
Cash flows from operating activities:              
     Net income   $ 18,618   $ 16,658  
     Adjustments to reconcile net income to net cash provided by            
          operating activities:            
             Depreciation and amortization    13,967    12,694  
             Other    (1,742 )  (780 )
             Decrease in operating assets    183    437  
             Decrease in operating liabilities    (8,941 )  (1,045 )
                 Total adjustments    3,467    11,306  
                 Net cash provided by operating activities    22,085    27,964  
             
Cash flows from investing activities:             
     Purchases of property and equipment    (23,603 )  (23,827 )
     Other    1,690    791  
                 Net cash used in investing activities    (21,913 )  (23,036 )