Attached files
file | filename |
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EX-31.02 - EXHIBIT 31.02 - SONIC CORP | ex31_02.htm |
EX-32.01 - EXHIBIT 32.01 - SONIC CORP | ex32_01.htm |
EX-32.02 - EXHIBIT 32.02 - SONIC CORP | ex32_02.htm |
EX-31.01 - EXHIBIT 31.01 - SONIC CORP | ex31_01.htm |
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: November 30,
2009
|
|||||
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
|
(I.R.S.
Employer
|
||||
incorporation)
|
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 such
shorter period that the registrant was required to file the reports), and (2)
has been subject to such filing requirements for the past 90
days. Yes X . No .
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes____. No____.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act (Check one):
Large
accelerated filer X . Accelerated
filer
____. Non-accelerated
filer .
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes
. No X .
As of
November 30, 2009, the Registrant had 61,087,635 shares of common stock issued
and outstanding (excluding 56,683,942 shares of common stock held as treasury
stock).
SONIC
CORP.
Index
Page
Number
|
||
PART I. FINANCIAL
INFORMATION
|
||
Item
1. Financial
Statements
|
||
4
|
||
5
|
||
|
||
6
|
||
7
|
||
8
|
||
12
|
||
17
|
||
Item
4. Controls and
Procedures
|
18
|
|
PART II. OTHER
INFORMATION
|
||
Item
1. Legal
Proceedings
|
18
|
|
Item
1A. Risk Factors
|
18
|
|
19
|
||
Item
3. Defaults Upon Senior
Securities
|
19
|
|
19
|
||
Item
5. Other
Information
|
19
|
|
Item
6. Exhibits
|
19
|
|
SONIC
CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In
thousands, except per share amounts)
|
||||||||
(Unaudited)
|
||||||||
ASSETS
|
November
30, 2009
|
August
31, 2009
|
||||||
Current
assets:
|
||||||||
Cash and cash
equivalents
|
$ | 146,754 | $ | 137,597 | ||||
Restricted cash
|
9,975 | 24,900 | ||||||
Accounts and notes receivable,
net
|
24,911 | 27,585 | ||||||
Assets
held for sale
|
3,052 | 2,939 | ||||||
Other current
assets
|
8,004 | 9,111 | ||||||
Total current
assets
|
192,696 | 202,132 | ||||||
Property,
equipment and capital leases
|
767,031 | 769,716 | ||||||
Less
accumulated depreciation and amortization
|
(250,054 | ) | (245,778 | ) | ||||
Property, equipment and
capital leases, net
|
516,977 | 523,938 | ||||||
Goodwill,
net
|
76,315 | 76,299 | ||||||
Trademarks,
trade names and other intangible assets, net
|
11,861 | 12,011 | ||||||
Noncurrent
restricted cash
|
10,305 | 10,468 | ||||||
Investment
in direct financing leases and noncurrent portion of notes
receivable
|
9,939 | 9,202 | ||||||
Debt
origination costs and other assets, net
|
14,039 | 14,991 | ||||||
Intangibles and other
assets, net
|
122,459 | 122,971 | ||||||
Total assets
|
$ | 832,132 | $ | 849,041 | ||||
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 14,395 | $ | 17,174 | ||||
Deposits from
franchisees
|
3,405 | 1,833 | ||||||
Accrued
liabilities
|
30,910 | 34,512 | ||||||
Income taxes
payable
|
2,783 | 8,156 | ||||||
Obligations under capital leases and long-term debt due within one
year
|
59,658 | 55,644 | ||||||
Total current
liabilities
|
111,151 | 117,319 | ||||||
Obligations
under capital leases due after one year
|
35,426 | 36,516 | ||||||
Long-term
debt due after one year
|
631,888 | 646,851 | ||||||
Deferred
income taxes
|
25,817 | 26,507 | ||||||
Other
noncurrent liabilities
|
22,638 | 24,200 | ||||||
Stockholders’
equity (deficit):
|
||||||||
Preferred stock, par value $.01; 1,000 shares authorized; none
outstanding
|
─
|
─
|
||||||
Common stock, par value $.01; 245,000 shares authorized; 117,791 shares
issued (117,781 shares issued at August 31, 2009)
|
1,178 | 1,178 | ||||||
Paid-in
capital
|
220,976 | 219,736 | ||||||
Retained
earnings
|
655,628 | 649,398 | ||||||
Accumulated other
comprehensive loss
|
(1,359 | ) | (1,500 | ) | ||||
876,423 | 868,812 | |||||||
Treasury stock, at cost; 56,684 common shares (56,684 shares at
August 31, 2009)
|
(873,080 | ) | (873,080 | ) | ||||
Total Sonic Corp. stockholders’
equity (deficit)
|
3,343 | (4,268 | ) | |||||
Noncontrolling interest
|
1,869 | 1,916 | ||||||
Total stockholders’ equity (deficit)
|
5,212 | (2,352 | ) | |||||
Total liabilities and
stockholders’ equity (deficit)
|
$ | 832,132 | $ | 849,041 |
See
accompanying notes.
4
SONIC
CORP.
(In
thousands, except per share amounts)
|
||||||||
(Unaudited)
Three
months ended
|
||||||||
November
30,
|
||||||||
2009
|
2008
|
|||||||
Revenues:
|
||||||||
Partner Drive-In
sales
|
$ | 103,584 | $ | 153,047 | ||||
Franchise
Drive-Ins:
|
||||||||
Franchise
royalties
|
29,450 | 29,055 | ||||||
Franchise fees
|
692 | 1,171 | ||||||
Other
|
2,773 | 793 | ||||||
136,499 | 184,066 | |||||||
Costs
and expenses:
|
||||||||
Partner
Drive-Ins:
|
||||||||
Food and
packaging
|
28,671 | 42,424 | ||||||
Payroll and other
employee benefits
|
34,325 | 49,863 | ||||||
Other
operating expenses, exclusive of depreciation and amortization included
below
|
24,966 | 34,523 | ||||||
87,962 | 126,810 | |||||||
Selling,
general and administrative
|
16,132 | 16,162 | ||||||
Depreciation and
amortization
|
10,666 | 13,019 | ||||||
Provision for impairment of
long-lived assets
|
─
|
414 | ||||||
114,760 | 156,405 | |||||||
Income
from operations
|
21,739 | 27,661 | ||||||
Interest
expense
|
9,804 | 12,053 | ||||||
Interest
income
|
(284 | ) | (387 | ) | ||||
Interest
and other expense, net
|
9,520 | 11,666 | ||||||
Income
before income taxes
|
12,219 | 15,995 | ||||||
Provision
for income taxes
|
3,877 | 5,039 | ||||||
Net
income - including noncontrolling interest
|
$ | 8,342 | $ | 10,956 | ||||
Net
income - noncontrolling interest
|
2,112 | 3,825 | ||||||
Net
income - attributable
to Sonic Corp.
|
$ | 6,230 | $ | 7,131 | ||||
Net
income per share – basic
|
$ | .10 | $ | .12 | ||||
Net
income per share – diluted
|
$ | .10 | $ | .12 | ||||
See
accompanying notes.
5
SONIC
CORP.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In
thousands)
|
||||||||
(Unaudited)
Three
months ended
|
||||||||
November
30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net income - including noncontrolling interest
|
$ | 8,342 | $ | 10,956 | ||||
Adjustments to reconcile net
income to net cash provided by
|
||||||||
operating
activities:
|
||||||||
Depreciation and
amortization
|
10,666 | 13,019 | ||||||
Stock-based compensation
expense
|
1,924 | 1,806 | ||||||
Amortization
of debt costs to interest expense
|
1,049 | 1,182 | ||||||
Noncontrolling interest | (2,112 | ) | (3,825 | ) | ||||
Other
|
(806 | ) | 37 | |||||
Decrease in operating
assets
|
7,759 | 3,284 | ||||||
Increase (decrease) in
operating liabilities:
|
||||||||
Accounts
payable
|
1,567 | (3,422 | ) | |||||
Accrued and other
liabilities
|
(8,945 | ) | (4,712 | ) | ||||
Total
adjustments
|
11,102 | 7,369 | ||||||
Net cash provided by operating
activities
|
19,444 | 18,325 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchases of property and
equipment
|
(3,158 | ) | (15,113 | ) | ||||
Proceeds from disposition of
assets, net of cash paid
|
8,961 | 14,354 | ||||||
Other
|
224 | 277 | ||||||
Net cash provided by (used in)
investing activities
|
6,027 | (482 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Payments on and purchases of
debt
|
(15,566 | ) | (16,268 | ) | ||||
Restricted cash for
securitization obligations
|
1,531 | 1,346 | ||||||
Proceeds from exercise of
stock options
|
63 | 708 | ||||||
Contributions from noncontrolling interest | 254 | 1,746 | ||||||
Distributions to noncontrolling interest | (1,818 | ) | (3,041 | ) | ||||
Other
|
(778 | ) | (737 | ) | ||||
Net cash used in financing
activities
|
(16,314 | ) | (16,246 | ) | ||||
Net
increase in cash and cash equivalents
|
9,157 | 1,597 | ||||||
Cash
and cash equivalents at beginning of period
|
137,597 | 44,266 | ||||||
Cash
and cash equivalents at end of period
|
$ | 146,754 | $ | 45,863 | ||||
Supplemental
cash flow information:
|
||||||||
Stock
options exercised by stock swap
|
$ | – | $ | 669 |
See accompanying
notes.
6
SONIC
CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(DEFICIT)
(In thousands)
Common Stock
Shares
Amount
|
Paid-in
Capital
|
Retained
Earnings
|
Noncontrolling
Interest
|
Accumulated
Other
Comprehensive
Income
|
Treasury Stock
Shares
Amount
|
|||||||||||||||||||||||||||
Balance
at August 31, 2009
|
117,781 | $ | 1,178 | $ | 219,736 | $ | 649,398 | $ | 1,916 | $ | (1,500 | ) | 56,684 | $ | (873,080 | ) | ||||||||||||||||
Exercise
of common stock options
|
10 | – | 62 | – | – | – | – | – | ||||||||||||||||||||||||
Stock-based
compensation expense
|
– | – | 1,924 | – | – | – | – | – | ||||||||||||||||||||||||
Tax
decrement related to exercise of employee stock options
|
– | – | (9 | ) | – | – | – | – | – | |||||||||||||||||||||||
Net
change in deferred hedging losses, net of tax of $229
|
– | – | – | – | – | 141 | – | – | ||||||||||||||||||||||||
Purchases
of minority interests in Partner Drive-Ins
|
– | – | (1,145 | ) | – | – | – | – | – | |||||||||||||||||||||||
Proceeds
from sale of minority interests in Partner Drive-Ins
|
– | – | 408 | – | – | – | – | – | ||||||||||||||||||||||||
Distributions
to noncontrolling interest
|
– | – | – | – | (2,159 | ) | – | – | – | |||||||||||||||||||||||
Net
income - noncontrolling interest
|
– | – | – | – | 2,112 | – | – | – | ||||||||||||||||||||||||
Net
income - attributable
to Sonic Corp.
|
– | – | – | 6,230 | – | – | – | – | ||||||||||||||||||||||||
Balance
at November 30, 2009
|
117,791 | 1,178 | 220,976 | 655,628 | 1,869 | (1,359 | ) | 56,684 | (873,080 | ) | ||||||||||||||||||||||
Balance
at August 31, 2008
|
117,045 | 1,170 | 209,316 | 599,956 | 3,097 | (2,191 | ) | 56,600 | (872,367 | ) | ||||||||||||||||||||||
Exercise
of common stock options
|
117 | 1 | 708 | – | – | – | – | – | ||||||||||||||||||||||||
Stock-based
compensation expense
|
– | – | 1,806 | – | – | – | – | – | ||||||||||||||||||||||||
Tax
decrement related to exercise of employee stock options
|
– | – | (380 | ) | – | – | – | – | – | |||||||||||||||||||||||
Net
change in deferred hedging losses, net of tax of $271
|
– | – | – | – | – | 159 | – | – | ||||||||||||||||||||||||
Distributions
to noncontrolling interest
|
– | – | – | – | (2,953 | ) | – | – | – | |||||||||||||||||||||||
Net
income - noncontrolling interest
|
– | – | – | – | 3,825 | – | – | – | ||||||||||||||||||||||||
Net
income - attributable
to Sonic Corp.
|
– | – | – | 7,131 | – | – | – | – | ||||||||||||||||||||||||
Balance
at November 30, 2008
|
117,162 | $ | 1,171 | $ | 211,450 | $ | 607,087 | $ | 3,969 | $ | (2,032 | ) | 56,600 | $ | (872,367 | ) |
See
accompanying notes.
7
SONIC
CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In
thousands, except per share data)
1.
Basis of Presentation
The
unaudited Condensed Consolidated Financial Statements include all adjustments,
consisting of normal, recurring accruals, which Sonic Corp. (the “Company”)
considers necessary for a fair presentation of the financial position and the
results of operations for the indicated periods. In certain
situations, these 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. The notes to the Condensed Consolidated
Financial Statements should be read in conjunction with the Notes to the
Consolidated Financial Statements contained in the Company’s Form 10-K for the
fiscal year ended August 31, 2009. The results of operations for the
three-month period ended November 30, 2009, are not necessarily indicative of
the results to be expected for the full year ending August 31,
2010.
2.
Changes in Accounting Principles
Codification
In June
2009, the Financial Accounting Standards Board (FASB) issued FASB Statement No.
168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally
Accepted Accounting Principles” (“SFAS 168”). SFAS 168 is
effective for financial statements issued after September 15,
2009. SFAS 168 requires that the FASB’s Accounting Standards
Codification (ASC) become the sole source of authoritative U.S. generally
accepted accounting principles recognized by the FASB for nongovernmental
entities. We have applied this Codification effective September 1,
2009.
Subsequent
Events
Effective
September 1, 2009, we adopted FASB Statement No. 165, “Subsequent
Events.” This statement was codified into ASC Topic 855, “Subsequent
Events.” Topic 855 establishes the accounting for, and disclosure of,
material events that occur after the balance sheet but before the financial
statements are issued. In general, these events will be recognized if
the condition existed at the date of the balance sheet, but will not be
recognized if the condition did not exist at the balance sheet
date. Disclosure is required for nonrecognized events if required to
keep the financial statements from being misleading. This guidance is
very similar to previous guidance provided in auditing literature and,
therefore, should not result in significant changes in
practice. Subsequent events have been evaluated through January 8,
2010, the date our interim financial statements were issued with the filing of
this Quarterly Report on Form 10-Q.
Business
Combination
In
December 2007, the FASB issued Statement No. 141 (Revised), “Business
Combinations,” which was subsequently amended by FASB Staff Position No. FAS
141(R)-1 in April 2009. This statement was codified into FASB ASC Topic
805, “Business Combinations.” Topic 805 is effective prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008,
which for us is September 1, 2009. In general, Topic 805 requires the
acquiring entity in a business combination to recognize the fair value of all
assets acquired and liabilities assumed in the transaction; establishes the
acquisition date as the fair value measurement point; and modifies disclosure
requirements.
Noncontrolling
Interests
Effective
September 1, 2009, we implemented FASB Statement No. 160,
“Noncontrolling Interests in Consolidated Financial Statements—an amendment of
ARB No. 51.” This statement was codified into FASB ASC Topic 810,
“Consolidation.” Topic 810 requires noncontrolling interests, previously called
minority interests, to be presented as a separate item in the equity section of
the consolidated balance sheet. It also requires the amount of consolidated net
income attributable to noncontrolling interests to be clearly presented on the
face of the consolidated income statement. Additionally, Topic 810 clarifies
that changes in a parent’s ownership interest in a subsidiary that do not result
in deconsolidation are equity transactions, and that deconsolidation of a
subsidiary requires gain or loss recognition in net income based on the fair
value on the deconsolidation date. Topic 810 was applied prospectively with the
exception of presentation and disclosure requirements, which were applied
8
retrospectively for all periods
presented, and did not significantly change the presentation of our consolidated
financial statements.
Prior to
the adoption of Topic 810, noncontrolling interest was reported as a component
of operating income. Due to the adoption, noncontrolling interest is
now presented pre-tax as net income-noncontrolling interest and no longer as a
component of operating income. This presentation gives an appearance
of a lower effective tax rate than the Company’s actually effective tax rate.
The following table reconciles the difference in the effective tax rate as a
result of adoption of this topic:
November
30, 2009
|
||||
Effective
income tax rate reconciliation (post-adoption of Topic
810):
|
||||
Effective
tax rate per consolidated income statement
|
31.7 | % | ||
Book
income attributable to noncontrolling interest
|
6.7 | |||
Effective
tax rate for the three months ended November 30, 2009
|
38.4 | % |
3.
Net Income per Share
The
following table sets forth the computation of basic and diluted earnings per
share:
Three
months ended
|
||||||||
November
30,
|
||||||||
2009
|
2008
|
|||||||
Numerator:
|
||||||||
Net income
|
$ | 6,230 | $ | 7,131 | ||||
Denominator:
|
||||||||
Weighted average shares
outstanding – basic
|
61,086 | 60,459 | ||||||
Effect of dilutive employee
stock options
|
329 | 751 | ||||||
Weighted average shares –
diluted
|
61,415 | 61,210 | ||||||
Net
income per share – basic
|
$ | .10 | $ | .12 | ||||
Net
income per share – diluted
|
$ | .10 | $ | .12 |
4.
Assets Held for Sale and Impairment of Goodwill and Long-Lived
Assets
Assets
held for sale consists of Partner Drive-Ins (drive-ins in which the Company owns
a majority interest) that we expect to sell within one year. Such assets are
classified as assets held for sale upon meeting the requirements of
SFAS 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets.” This Statement was codified
into FASB ASC Topic 360, “Property, Plant and Equipment.” These assets are
recorded at the
lower of the carrying amount or fair value less costs to sell. Assets are
no longer depreciated once classified as held for sale. The following
table sets forth the components of assets held for sale:
November
30, 2009
|
August
31, 2009
|
|||||||
Assets:
|
||||||||
Property, equipment and capital
leases
|
$ | 1,554 | $ | 1,531 | ||||
Goodwill, net
|
1,274 | 1,274 | ||||||
Other
|
224 | 134 | ||||||
Total
assets held for sale
|
$ | 3,052 | $ | 2,939 |
Also in
accordance with ASC 360, the Company assesses long-lived assets used in
operations for possible impairment losses when events and circumstances indicate
that such assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than their carrying amount. We
assess the
9
recoverability
of our Partner Drive-Ins by estimating the undiscounted net cash flows expected
to be generated over the remaining life of the Partner
Drive-Ins. This involves estimating same-store sales and margins for
the cash flows period. The amount of impairment, if any, is measured based on
projected discounted future net cash flows. When impairment exists, the carrying
value of the asset is written down to fair value. During the first quarter
of fiscal 2010, we reviewed Partner Drive-Ins and other long-lived assets with
combined carrying amounts of $24,683 in property, equipment and capital leases
for possible impairment. This review concluded that no drive-ins were within the
threshold of a write-down. Projecting the cash flows for the
impairment analysis involves significant estimates with regard to the
performance of each drive-in, and it is reasonably possible that the estimates
of cash flows may change in the near term resulting in the need to write down
additional operating assets to fair value.
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 or financial
condition.
The
Company initiated an agreement with Irwin Franchise Capital Corporation
(“Irwin”) in September 2006, pursuant to which existing Sonic franchisees may
qualify with Irwin to finance drive-in retrofit projects. The
agreement, which was amended in October 2008, provides that Sonic will guarantee
at least $250 of such financing, limited to 5% of the aggregate amount of loans,
not to exceed $3,750. As of November 30, 2009, the total amount
guaranteed under the Irwin agreement was $708. The agreement provides
for release of Sonic’s guarantee on individual loans under the program that meet
certain payment history criteria at the mid-point of each loan’s
term. Existing loans under the program have terms through
2016. In the event of default by a franchisee, the Company is
obligated to pay Irwin the outstanding balances, plus limited interest and
charges up to Sonic’s guarantee limitation. Irwin is obligated to
pursue collections as if Sonic’s guarantee were not in place, therefore,
providing recourse with the franchisee under the notes. The Company’s
liability for this guarantee, which is based on fair value, is $266 as of
November 30, 2009.
The
Company has an agreement with GE Capital Franchise Finance Corporation (“GEC”),
pursuant to which GEC made loans to existing Sonic franchisees who met certain
underwriting criteria set by GEC. Under the terms of the agreement with GEC, the
Company provided a guarantee of 10% of the outstanding balance of loans from GEC
to the Sonic franchisees, limited to a maximum amount of $5,000. As of November
30, 2009, the total amount guaranteed under the GEC agreement was $1,266. The
Company ceased guaranteeing new loans under the program during fiscal year 2002
and has not been required to make any payments under its agreement with GEC.
Existing loans under guarantee will expire through 2013. In the event of default
by a franchisee, the Company has the option to fulfill the franchisee’s
obligations under the note or to become the note holder, which would provide an
avenue of recourse with the franchisee under the notes. Based
on the ending date for this program, no liability is required for these
guarantees.
The
Company has obligations under various lease agreements with third-party lessors
related to the real estate for Partner Drive-Ins that were sold to franchisees.
Under these agreements, the Company remains secondarily liable for the lease
payments for which it was responsible as the original lessee. As of November 30,
2009, the amount remaining under the guaranteed lease obligations totaled
$10,751. At this time, the Company has no reason to anticipate any
default under the foregoing leases; therefore, no liability has been provided as
of November 30, 2009. In addition, capital lease obligations totaling $967 are
still reflected as liabilities as of November 30, 2009 for properties sold to
franchisees.
6.
Debt and Other Comprehensive Income
On
November 9, 2009, the parent of Ambac Assurance Corporation (“Ambac”), the
third-party insurance company that provides credit enhancements in the form of
financial guaranties of our fixed and variable rate note payments, filed a
document with the Securities and Exchange Commission stating that due to
deterioration in Ambac’s financial condition, the state insurance commissioner
that regulates Ambac had increased oversight of the company. While no
proceeding is currently pending, the document further stated that the state
insurance commissioner could decide to initiate delinquency proceedings against
Ambac. We are unable to determine whether such proceedings may occur
and what impact they would have on our insurance policy. For
information regarding the potential consequences if Ambac were to become the
subject of delinquency or similar proceedings, see Part I, Item IA, “Risk
Factors” in our Annual Report on Form 10-K for the year ended August 31,
2009.
10
In August
2006, the Company entered into a forward starting swap agreement with a
financial institution to hedge part of the exposure to changing interest rates
for debt until it was settled in conjunction with financing closed in
December 2006. The forward starting swap was designated as a cash
flow hedge. The loss resulting from settlement was recorded in
accumulated other comprehensive income and is being amortized to interest
expense over the expected term of the related debt.
The
following table presents the components of comprehensive income:
Three
months ended
|
||||||||
November
30,
|
||||||||
2009
|
2008
|
|||||||
Net
income - attributable
to Sonic Corp.
|
$ | 6,230 | $ | 7,131 | ||||
Net
income - noncontrolling interest
|
2,112 | 3,825 | ||||||
Change
in deferred hedging loss, net of tax
|
141 | 159 | ||||||
Total
comprehensive income
|
$ | 8,483 | $ | 11,115 |
7.
Segment Information
FASB
Statement No. 131, “Disclosures about Segments of an Enterprise and Related
Information” (“FAS 131”) establishes annual and interim reporting standards for
an enterprise’s operating segments. This statement was codified into
FASB ASC Topic 280, “Segment Reporting.” Operating segments are generally
defined as components of an enterprise about which separate discrete financial
information is available as the basis for management to allocate resources and
assess performance.
Based on
internal reporting and management structure, the Company has two reportable
segments: Partner Drive-Ins and Franchise Operations. The Partner
Drive-Ins segment consists of the drive-in operations in which the Company owns
a majority interest and derives its revenues from operating drive-in
restaurants. The Franchise Operations segment consists of franchising
activities and derives its revenues from royalties and initial franchise fees
received from franchisees. The accounting policies of the segments
are the same as those described in the Summary of Significant Accounting
Policies in our most recent Annual Report on Form 10-K. Segment
information for total assets and capital expenditures is not presented as such
information is not used in measuring segment performance or allocating resources
between segments.
The
following table presents the revenues and income from operations for each
reportable segment, along with reconciliation to reported revenue and income
from operations:
11
Three
months ended
|
||||||||
November
30,
|
||||||||
2009
|
2008
|
|||||||
Revenues:
|
||||||||
Partner
Drive-Ins
|
$ | 103,584 | $ | 153,047 | ||||
Franchise
Operations
|
30,142 | 30,226 | ||||||
Unallocated
revenues
|
2,773 | 793 | ||||||
$ | 136,499 | $ | 184,066 | |||||
Income
from Operations:
|
||||||||
Partner
Drive-Ins
|
$ | 15,622 | $ | 26,237 | ||||
Franchise
Operations
|
30,142 | 30,226 | ||||||
Unallocated
revenues
|
2,773 | 793 | ||||||
Unallocated
expenses:
|
||||||||
Selling,
general and administrative
|
(16,132 | ) | (16,162 | ) | ||||
Depreciation
and amortization
|
(10,666 | ) | (13,019 | ) | ||||
Provision
for impairment of long-lived assets
|
– | (414 | ) | |||||
$ | 21,739 | $ | 27,661 |
8. Fair
Value Measures
As of
November 30, 2009, the Company’s financial assets that are measured at fair
value on a recurring basis consisted of $141,600, $9,975, and $10,305 of
short-term investments recorded in cash and cash equivalents, current restricted
cash and noncurrent restricted cash, respectively. The fair value of these
accounts is determined based on quoted market prices, which represents level 1
in the fair value hierarchy. The Company has no financial liabilities that are
required to be measured at fair value on a recurring basis.
Item
2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations
Overview
Results
for the first quarter ended November 30, 2009 reflected continued challenges
including high unemployment and weak consumer sentiment accompanying the general
business recession. System-wide same-store sales declined during the
quarter, and the performance of Partner Drive-Ins continued to lag behind that
of Franchise Drive-Ins.
For the
first quarter of fiscal 2010, revenues and operating income decreased 25.8% and
21.4%, respectively. Net income decreased 12.6% during the quarter,
and earnings per share decreased 16.7% to $0.10 per diluted share from $0.12 in
the year-earlier period.
The
following table provides information regarding the number of Partner Drive-Ins
and Franchise Drive-Ins in operation as of the end of the periods indicated as
well as the system-wide growth in sales and average unit volume. System-wide
information includes both Partner and Franchise Drive-In information, which we
believe is useful in analyzing the growth of the brand as well as the Company’s
revenues because franchisees pay royalties based on a percentage of
sales.
12
System-wide
Performance
($
in thousands)
Three
months ended
November
30,
|
||||||||
2009
|
2008
|
|||||||
Percentage
increase (decrease) in sales
|
(2.3 | %) | 1.2 | % | ||||
System-wide
drive-ins in operation (1):
|
||||||||
Total
at beginning of period
|
3,544 | 3,475 | ||||||
Opened
|
25 | 39 | ||||||
Closed
(net of re-openings)
|
(9 | ) | (9 | ) | ||||
Total
at end of period
|
3,560 | 3,505 | ||||||
Average
sales per drive-in
|
$ | 250 | $ | 262 | ||||
Change
in same-store sales (2)
|
(6.5 | %) | (3.6 | %) |
(1)
|
Drive-ins
that are temporarily closed for various reasons (repairs, remodeling,
management changes, etc.) are not considered closed unless the Company
determines that they are unlikely to reopen within a reasonable
time.
|
(2)
|
Represents
percentage change for drive-ins open for a minimum of 15
months.
|
System-wide
same-store sales decreased during the first quarter as a result of a decline in
average check and, to a lesser extent, a decrease in traffic (number of
transactions per drive-in). The decrease in check is consistent with
an industry trend of consumers purchasing fewer items per transaction and
purchasing lower-priced items. The Company has implemented a number
of initiatives to improve system-wide same-store sales. These include
promotions that drive traffic, such as the Everyday Value Menu; loyalty, such as
Happy Hour; and check, which includes a revised pricing strategy to make combo
meals purchases a better value relative to ala carte menu pricing.
The
following table provides information regarding drive-in development across the
system.
Three
months ended
|
||||||||
November
30,
|
||||||||
2009
|
2008
|
|||||||
New
drive-ins:
|
||||||||
Partner
|
3 | 5 | ||||||
Franchise
|
22 | 34 | ||||||
System-wide
|
25 | 39 | ||||||
Rebuilds/relocations:
|
||||||||
Partner
|
– | 2 | ||||||
Franchise
|
5 | 19 | ||||||
System-wide
|
5 | 21 |
Results
of Operations
Revenues. The following table
sets forth the components of revenue for the reported periods and the relative
change between the comparable periods.
13
Revenues
($
in thousands)
|
||||||||||||||||
Three
months ended
|
Percent
|
|||||||||||||||
November
30,
|
Increase
|
Increase
|
||||||||||||||
2009
|
2008
|
(Decrease)
|
(Decrease)
|
|||||||||||||
Revenues:
|
||||||||||||||||
Partner Drive-In
sales
|
$ | 103,584 | $ | 153,047 | $ | (49,463 | ) | (32.3 | %) | |||||||
Franchise
revenues:
|
||||||||||||||||
Franchise
royalties
|
29,450 | 29,055 | 395 | 1.4 | % | |||||||||||
Franchise fees
|
692 | 1,171 | (479 | ) | (40.9 | %) | ||||||||||
Other
|
2,773 | 793 | 1,980 | 249.7 | % | |||||||||||
Total
revenues
|
$ | 136,499 | $ | 184,066 | $ | (47,360 | ) | (25.7 | %) | |||||||
The
following table reflects the changes in Partner Drive-In sales and changes in
comparable drive-in sales for Partner Drive-Ins. It also presents
information about average unit volumes and the number of Partner Drive-Ins,
which is useful in analyzing the growth of Partner Drive-In
sales.
Partner
Drive-In Sales
($
in thousands)
Three
months ended
November
30,
|
||||||||
2009
|
2008
|
|||||||
Partner
Drive-In sales
|
$ | 103,584 | $ | 153,047 | ||||
Percentage
increase (decrease)
|
(32.3 | %) | (3.9 | %) | ||||
Partner
Drive-Ins in operation (1):
|
||||||||
Total
at beginning of period
|
475 | 684 | ||||||
Opened
|
3 | 5 | ||||||
Acquired
from (sold to) franchisees
|
– | (8 | ) | |||||
Closed
|
(2 | ) | (1 | ) | ||||
Total
at end of period
|
476 | 680 | ||||||
Average
sales per drive-in
|
$ | 218 | $ | 226 | ||||
Percentage
increase (decrease)
|
(3.5 | %) | (7.0 | %) | ||||
Change
in same-store sales (2)
|
(9.1 | %) | (6.6 | %) |
(1)
|
Drive-ins
that are temporarily closed for various reasons (repairs, remodeling,
management changes, etc.) are not considered closed unless the Company
determines that they are unlikely to reopen within a reasonable
time.
|
(2)
|
Represents
percentage change for drive-ins open for a minimum of 15
months.
|
The
decrease in Partner Drive-In sales was largely driven by the decline in
same-store sales for existing drive-ins and the refranchising of 205 Partner
Drive-Ins during the previous fiscal year. The Company has
implemented initiatives designed to provide a unique and high quality customer
service experience with the goal of improving same-store sales. These
initiatives include restructuring the Partner Drive-In organization, simplifying
incentive compensation plans for store-level management, implementing a customer
service satisfaction measurement tool, and implementing a more effective pricing
tool at the drive-in level.
The
following table reflects the growth in franchise income (franchise royalties and
franchise fees) as well as franchise sales, average unit volumes and the number
of Franchise Drive-Ins. While we do not record Franchise Drive-In sales as
revenues, we believe this information is important in understanding our
financial performance since these sales are the basis on which we calculate and
record franchise royalties. This information is also indicative of the financial
health of our franchisees.
14
Franchise
Information
($
in thousands)
Three
months ended
November
30,
|
||||||||
2009
|
2008
|
|||||||
Franchise
fees and royalties (1)
|
$ | 30,142 | $ | 30,226 | ||||
Percentage
increase (decrease)
|
(0.3 | %) | 1.2 | % | ||||
Franchise
Drive-Ins in operation (2):
|
||||||||
Total
at beginning of period
|
3,069 | 2,791 | ||||||
Opened
|
22 | 34 | ||||||
Acquired
from (sold to) company
|
– | 8 | ||||||
Closed
|
(7 | ) | (8 | ) | ||||
Total
at end of period
|
3,084 | 2,825 | ||||||
Franchise
Drive-In sales
|
$ | 786,344 | $ | 757,443 | ||||
Percentage
change
|
(3.8 | %) | 2.3 | % | ||||
Effective
royalty rate
|
3.75 | % | 3.84 | % | ||||
Average
sales per Franchise Drive-In
|
$ | 255 | $ | 270 | ||||
Change
in same-store sales (3)
|
(6.0 | %) | (2.9 | %) |
(1)
|
See Revenue
Recognition Related to Franchise Fees and Royalties in the Critical
Accounting Policies and Estimates section of “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
in our Annual Report on Form 10-K for the year ended August 31,
2009.
|
(2)
|
Drive-ins
that are temporarily closed for various reasons (repairs, remodeling,
management changes, etc.) are not considered closed unless the Company
determines that they are unlikely to reopen within a reasonable
time.
|
(3)
|
Represents percentage
change for drive-ins open for a minimum of 15
months.
|
Franchise
royalties increased 1.4% compared to the same period last year. The increase was
attributable to royalties from new and refranchised drive-ins, partially offset
by the impact of the decline in same-store sales at Franchise
Drive-Ins.
Franchise
fees decreased by 40.9% compared to the same period last year. The
decline primarily resulted from fewer Franchise Drive-In openings.
Other
income increased by $2.0 million to $2.8 million in the first fiscal quarter of
2010. The increase for the first quarter resulted primarily from rental revenue
on refranchised drive-ins in which the Company retained ownership of real
estate.
Operating
Expenses. The following table
presents the overall costs of drive-in operations as a percentage of Partner
Drive-In sales. Minority interest in earnings of Partner Drive-Ins
(now called noncontrolling interest) is no longer included as a part of cost of
sales, in the consolidated income statements, due to recent accounting guidance
changes. We have included noncontrolling interest for
comparative purposes in the table below.
15
Restaurant-Level
Margins
|
||||||||||||
Three
months ended
|
Percentage
points
|
|||||||||||
November
30,
|
Increase/
|
|||||||||||
2009
|
2008
|
(Decrease)
|
||||||||||
Costs
and expenses(1):
|
||||||||||||
Partner
Drive-Ins:
|
||||||||||||
Food and
packaging
|
27.7 | % | 27.7 | % |
─
|
|||||||
Payroll and other employee
benefits
|
33.1 | 32.6 | 0.5 | |||||||||
Other operating
expenses
|
24.1 | 22.6 | 1.5 | |||||||||
Cost
of sales, as reported
|
84.9 | % | 82.9 | % | 2.0 | |||||||
Noncontrolling
interest
|
2.0 | % | 2.5 | % | (0.5 | ) | ||||||
Pro forma cost of sales, including noncontrolling interest
|
86.9 | % | 85.4 | % | 1.5 |
(1) Calculated as a
percentage of Partner Drive-In Sales.
Restaurant-level
operating costs increased overall for the first quarter 2010 compared to the
same period of the prior year. The increase resulted from higher
labor costs driven by minimum wage increases and the de-leveraging impact of
lower sales.
Selling,
General and Administrative (“SG&A”). SG&A
expenses decreased 0.2% to $16.1 million during the first fiscal quarter of 2010
compared to the same period of fiscal year 2009. We anticipate that
SG&A costs will be flat to slightly higher in fiscal year 2010, on a year
over year basis, as a result of continued investment in the franchise side of
our business.
Depreciation
and Amortization. Depreciation and
amortization expense decreased 18% to $10.7 million in the first quarter of
fiscal year 2010. Capital expenditures during the first three months
of fiscal year 2010 were $3.2 million. Looking forward, we expect
depreciation and amortization to decline in the range of 10% to 15% for fiscal
2010 as a result of refranchising.
Interest
and Other Expense, Net. Net interest and
other expense decreased $2.1 million to $9.5 million for the first quarter of
fiscal year 2010 as compared to the same period in fiscal year
2009. The primary cause for the decrease is the lower outstanding
debt balance as a result of the scheduled repayment of $38 million of principal
as well as the purchase of $25.0 million of the Company’s fixed rate notes at a
discount in February 2009.
Income
Taxes. The provision for income taxes reflects an effective
tax rate of 38.4% for the three-month period of fiscal year 2010 as compared to
41.1% in the same period of 2009. The lower rate for the first
quarter of 2010 compared to the first quarter of 2009 primarily relates to an
accrual of tax due to an IRS audit assessment that occurred in Q1 2009 and did
not recur in Q1 2010. Our tax rate may continue to vary significantly
from quarter to quarter depending on the timing of option exercises and
dispositions by option-holders and as circumstances on individual tax matters
change. See Note 2 of the Notes to the Consolidated Financial Statements
included in this Form 10-Q for additional information regarding the
reconciliation of the effective tax rate based on the presentation of the
noncontrolling interest.
Financial
Position
Total
liabilities decreased $24.5 million or 2.9% during the first three months of
fiscal year 2010 primarily as a result of the decrease in long-term debt which
resulted from the payments on the Company’s fixed rate notes as well as the
payment of income taxes.
Stockholders’ equity increased $7.6 million during the first three
months of fiscal year 2010 primarily as a result of the current year
earnings.
Liquidity
and Sources of Capital
Operating
Cash Flows. Net cash provided by operating activities increased
$1.1 million or 6.1% to $19.4 million in the first three months of fiscal year
2010 as compared to $18.3 million in the same period of fiscal year
16
2009. This
increase resulted primarily from a decrease in working capital which partially
offset by lower operating income before depreciation expense for the first three
months of fiscal 2010.
Investing
Cash Flows. Net
cash generated by investing activities was $4.5 million in the first three
months of 2010 as compared to $1.8 million used in investing activities in the
same period of fiscal year 2009. Purchases of property and equipment
of $3.2 million were offset by $9.0 million of proceeds from the disposition of
assets in fiscal year 2009 that became unrestricted in the first quarter of
fiscal year 2010. We opened three newly constructed Partner drive-ins
during the quarter, purchasing the real estate for all of these new
drive-ins. The following table sets forth the components of our
investments in capital additions for the first three months of fiscal year 2010
(in millions):
New
Partner Drive-Ins, including drive-ins under construction
|
1.2 | |||
Retrofits,
drive-thru additions and LED signs in existing drive-ins
|
.2 | |||
Rebuilds,
relocations and remodels of existing drive-ins
|
.1 | |||
Replacement
equipment for existing drive-ins and other
|
1.7 | |||
Total
investing cash flows for capital additions
|
3.2 |
Financing
Cash Flows. Net cash used in financing activities was $14.8
million in the first three months of 2010 as compared to $15 million used in the
same period of fiscal year 2009. The amount used was primarily
attributable to the scheduled pay-down of debt during the period.
The
Company has a securitized financing facility of variable funding notes that
provides for the issuance of up to $200.0 million in borrowings and certain
other credit instruments, including letters of credit. As of November
30, 2009, our outstanding balance under the variable funding notes totaled
$187.3 million at an effective borrowing rate of 1.5%, as well as $0.3 million
in outstanding letters of credit. In fiscal year 2009, one of the lenders,
which had previously filed for Chapter 11 bankruptcy, notified the Company that
it could not meet its additional funding obligation. As a result, the Company no
longer considers $12.3 million of the securitized financing facility to be
available. See Note 10 of the Notes to Consolidated Financial
Statements in the Company’s Form 10-K for the fiscal year ended August 31, 2009
for additional information regarding our long-term debt.
We plan
capital expenditures of approximately $30 to $40 million in fiscal year 2010.
These capital expenditures primarily relate to the development of additional
Partner Drive-Ins, retrofits of existing Partner Drive-Ins and other drive-in
level expenditures. We expect to fund these capital expenditures through cash
flow from operations as well as cash on hand.
As of
November 30, 2009, our total cash balance of $167 million ($146.8 million of
unrestricted and $20.0 million of restricted cash balances) reflected the impact
of the cash generated from operating activities, borrowing activities, proceeds
from refranchising Partner Drive-Ins, and capital expenditures mentioned above.
We believe that existing cash and funds generated from operations will meet our
needs for the foreseeable future.
Critical
Accounting Policies and Estimates
Critical
accounting policies are those the Company believes are most important to
portraying its financial conditions and results of operations and also require
the greatest amount of subjective or complex judgments by management. Judgments
and uncertainties regarding the application of these policies may result in
materially different amounts being reported under various conditions or using
different assumptions. There have been no material changes to the critical
accounting policies previously disclosed in the Company’s Form 10-K for the
fiscal year ended August 31, 2009.
Item
3. Quantitative and Qualitative
Disclosures About Market Risk
Sonic’s
use of debt directly exposes the Company to interest rate
risk. Floating rate debt, where the interest rate fluctuates
periodically, exposes the Company to short-term changes in market interest
rates. Fixed rate debt, where the interest rate is fixed over the
life of the instrument, exposes the Company to changes in market interest rates
reflected in the fair value of the debt and to the risk that the Company may
need to refinance maturing debt with new debt at a higher rate. Sonic
is also exposed to market risk from changes in commodity
prices. Sonic does not utilize financial instruments for trading
purposes. Sonic manages its debt portfolio to achieve an overall
desired position of fixed and floating rates and may employ interest rate swaps
as a tool to achieve that goal in the future.
17
Interest
Rate Risk. Our exposure to interest rate risk at November 30,
2009 is primarily based on the fixed rate notes with an effective rate of 5.7%,
before amortization of debt-related costs. At November 30, 2009, the
fair value of the fixed rate notes was estimated at $480.9 million versus
carrying value of $500.6 million (including accrued interest). Should
interest rates and/or credit spreads increase or decrease by one percentage
point, the estimated fair value of the fixed rate notes would decrease by
approximately $11.0 million or increase by approximately $11.3 million,
respectively. The fair value estimate required significant
assumptions by management as there are few, if any, securitized loan
transactions occurring in the current market. Management used market
information available for public debt transactions for companies with ratings
that are close to or lower than ratings for the Company (without consideration
for the third-party credit enhancement). Management believes this
fair value is a reasonable estimate with the information that is
available. The difference between fair value and carrying value is
attributable to interest rate decreases subsequent to when the debt was
originally issued, more than offset by the increase in credit spreads required
by issuers of similar debt instruments in the current market.
The
variable funding notes outstanding at November 30, 2009 totaled $187.3 million,
with a variable rate of 1.5%. The annual impact on our results of
operations of a one-point interest rate change for the balance outstanding would
be approximately $1.9 million before tax. At November 30, 2009, the
fair value of the variable funding notes was estimated at $164.2 million versus
carrying value of $187.3 million (including accrued interest). Should
credit spreads increase or decrease by one percentage point, the estimated fair
value of the variable funding notes would decrease by approximately $4.8 million
or increase by approximately $5.0 million, respectively. The Company
used similar assumptions to value the variable funding notes as were used for
the fixed rate notes. The difference between fair value and carrying
value is attributable to the increase in credit spreads required by issuers of
similar debt instruments in the current market.
For
further discussion of our exposure to market risk, refer to Part II,
Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in
our Annual Report on Form 10-K for the fiscal year ended August 31,
2009.
Item
4. Controls and
Procedures
As of the end of the period covered by
this report, the Company carried out an evaluation, under the supervision and
with the participation of the Company’s management, including the Company’s
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures (as
defined in Rule 13a-14 under the Securities Exchange Act of
1934). Based upon that evaluation, the Chief Executive Officer and
the Chief Financial Officer concluded that the Company’s disclosure controls and
procedures were effective. There were no significant changes in the
Company’s internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.
PART II – OTHER
INFORMATION
Item
1. Legal
Proceedings
The
Company is involved in various legal proceedings and has certain unresolved
claims pending. Based on 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 or financial
condition.
Item 1A. Risk Factors
On
November 9, 2009, the parent of Ambac Assurance Corporation (“Ambac”), the
third-party insurance company that provides credit enhancements in the form of
financial guaranties of our fixed and variable rate note payments, filed a
document with the Securities and Exchange Commission stating that due to
deterioration in Ambac’s financial condition, the insurance commissioner that
regulates Ambac had increased oversight of the company. While no
proceeding is currently pending, the document further stated that the
state insurance commissioner could decide to initiate delinquency
proceedings against Ambac. We are unable to determine whether such
proceedings may occur and what impact they would have on our insurance
policy. For information regarding the potential consequences if Ambac
were to become the subject of delinquency or similar proceedings, see Part
I,
18
Item IA,
“Risk Factors” in our Annual Report on Form 10-K for the year ended August 31,
2009. Except as disclosed above, there has been no material change in the risk
factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on
Form 10-K for the year ended August 31, 2009.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
(c)
Issuer Purchases of Equity Securities
None.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Submission of Matters to a Vote of Security
Holders
None.
Item
5. Other
Information
None.
Item
6. Exhibits
Exhibits.
31.01 Certification of Chief Executive
Officer Pursuant to SEC Rule 13a-14
31.02 Certification of Chief Financial
Officer Pursuant to SEC Rule 13a-14
32.01 Certification of Chief Executive
Officer Pursuant to 18 U.S.C. Section 1350
32.02 Certification of Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350
19
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1934, the Company has caused the undersigned, duly authorized,
to sign this report on behalf of the Company.
SONIC
CORP.
|
||
By:
|
/s/
Stephen C. Vaughan
|
|
Stephen
C. Vaughan, Executive Vice President
|
||
and
Chief Financial Officer
|
Date: January
8, 2010
EXHIBIT
INDEX
Exhibit Number and
Description
Certification
of Chief Executive Officer Pursuant to SEC Rule 13a-14
|
||
Certification
of Chief Financial Officer Pursuant to SEC Rule 13a-14
|
||
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350
|
||
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350
|