Back to GetFilings.com



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, 2005  
     
  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.)
  300 Johnny Bench Drive
  Oklahoma City, Oklahoma
 73104
  (Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (405) 225-5000

        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, 2005, the Registrant had 60,360,110 shares of common stock issued and outstanding (excluding 15,098,687 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, 2005 and August 31, 2004 3
     
   Condensed Consolidated Statements of Income for the three months and six months ended February 28, 2005 and February 29, 2004 4
     
   Condensed Consolidated Statements of Cash Flows for the six months ended February 28, 2005 and February 29, 2004 5
      
   Notes to Condensed Consolidated Financial Statements 6
     
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations9
     
Item 3.  Quantitative and Qualitative Disclosures About Market Risk21
     
Item 4.  Controls and Procedures21


PART II.   OTHER INFORMATION  
 
Item 1.   Legal Proceedings 21
    
Item 2.  Changes in Securities and Use of Proceeds 21
    
Item 3.  Defaults Upon Senior Securities 21
    
Item 4.  Submission of Matters to a Vote of Security Holders 21
    
Item 5.  Other Information 22
    
Item 6.  Exhibits and Reports on Form 8-K 22
    

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SONIC CORP.

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

ASSETS (Unaudited)
February 28,
2005
 August 31,
2004
Current assets:               
     Cash and cash equivalents   $ 16,235   $ 7,993  
     Accounts and notes receivable, net     15,806    18,087  
     Other current assets     7,127    8,503  
         Total current assets     39,168    34,583  
              
Property, equipment and capital leases     544,735    511,167  
Less accumulated depreciation and amortization     (150,187 )  (134,852 )
     Property, equipment and capital leases, net     394,548    376,315  
              
Goodwill, net     87,994    87,420  
Trademarks, trade names and other intangible assets, net     6,401    6,450  
Investment in direct financing leases and noncurrent portion of             
     notes receivable     8,566    11,566  
Other assets, net     2,029    2,299  
     Intangibles and other assets, net     104,990    107,735  
         Total assets   $ 538,706   $ 518,633  
              
LIABILITIES AND STOCKHOLDERS' EQUITY             
Current liabilities:             
     Accounts payable   $ 9,559   $ 7,695  
     Deposits from franchisees     3,048    2,867  
     Accrued liabilities     24,160    27,711  
     Income taxes payable     1,871    4,841  
     Obligations under capital leases and long-term debt             
       due within one year     20,655    6,006  
         Total current liabilities     59,293    49,120  
              
Obligations under capital leases due after one year     36,668    38,020  
Long-term debt due after one year     49,594    78,674  
Other noncurrent liabilities     18,236    18,057  
              
Stockholders' equity:             
     Preferred stock, par value $.01; 1,000,000 shares             
       authorized; none outstanding     –    –  
     Common stock, par value $.01; 100,000,000 shares             
       authorized; 75,458,797 shares issued (74,617,554 shares             
       issued at August 31, 2004)     755    746  
     Paid-in capital     116,561    105,012  
     Retained earnings     379,997    351,402  
      497,313    457,160  
     Treasury stock, at cost; 15,098,687 common shares (15,098,687             
       shares at August 31, 2004)     (122,398 )  (122,398 )
         Total stockholders' equity     374,915    334,762  
         Total liabilities and stockholders' equity   $ 538,706   $ 518,633  

See accompanying notes.

3

SONIC CORP.

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

(Unaudited)
Three months ended 		(Unaudited)
Six months ended
February 28,
2005
 February 29,
2004
 February 28,
2005
 February 29,
2004
Revenues:                          
   Partner Drive-In sales   $ 112,655   $ 94,105   $ 232,866   $ 193,850  
   Franchise Drive-Ins:                        
       Franchise royalties     18,169    15,906     38,275    33,040  
       Franchise fees     874    833     1,809    1,867  
   Other     915    751     1,890    1,546  
      132,613    111,595     274,840    230,303  
Cost and expenses:                        
   Partner Drive-Ins:                        
       Food and packaging     29,415    24,505     61,988    50,709  
       Payroll and other employee benefits     34,910    29,527     71,875    59,723  
       Minority interest in earnings                        
          of Partner Drive-Ins     4,048    3,693     8,627    7,414  
       Other operating expenses     23,309    18,595     46,976    38,326  
      91,682    76,320     189,466    156,172  
                         
   Selling, general and administrative     10,060    9,083     19,553    18,204  
   Depreciation and amortization     8,870    8,165     17,276    15,988  
   Provision for impairment of long-lived                        
       assets     387    675     387    675  
      110,999    94,243     226,682    191,039  
Income from operations     21,614    17,352     48,158    39,264  
                         
Interest expense     1,712    1,989     3,491    3,910  
Interest income     (180 )  (310 )   (354 )  (652 )
>
Net interest expense     1,532    1,679     3,137    3,258  
Income before income taxes     20,082    15,673     45,021    36,006  
Provision for income taxes     7,487    5,838     16,426    13,412  
Net income   $ 12,595   $ 9,835   $ 28,595   $ 22,594  
                         
   Net income per share - basic   $ .21   $ .17   $ .48   $ .38  
                         
   Net income per share - diluted   $ .20   $ .16   $ .46   $ .37  

See accompanying notes.

4



SONIC CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

(Unaudited)
Six months ended
February 28,
2005
 February 29,
2004
Cash flows from operating activities:            
   Net income   $ 28,595   $ 22,594  
   Adjustments to reconcile net income to net cash provided by             
           operating activities:             
              Depreciation and amortization     17,276    15,988  
              Tax benefit related to exercise of employee stock options     4,114    2,684  
              Other     1,091    839  
              (Increase) decrease in operating assets     2,168    (1,288 )
              Increase (decrease) in operating liabilities:             
      &nbs