Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Aug. 31, 2018 | Oct. 12, 2018 | Feb. 28, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | SONIC CORP | ||
Entity Central Index Key | 868,611 | ||
Current Fiscal Year End Date | --08-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Aug. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 35,687,663 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 926,082,360 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 39,835 | $ 22,340 |
Restricted cash | 19,598 | 19,736 |
Accounts and notes receivable, net | 34,967 | 33,758 |
Inventories | 1,774 | 2,343 |
Prepaid expenses | 6,481 | 5,455 |
Property held for sale | 1,310 | 5,150 |
Other current assets | 464 | 402 |
Total current assets | 104,429 | 89,184 |
Noncurrent restricted cash | 7,909 | 42,120 |
Investment in direct financing leases | 11,391 | 11,853 |
Notes receivable, net | 10,932 | 9,801 |
Property, equipment and capital leases, net | 298,222 | 312,380 |
Goodwill | 75,344 | 75,756 |
Debt origination costs, net | 1,191 | 2,439 |
Other assets, net | 21,716 | 18,211 |
Total assets | 531,134 | 561,744 |
Current liabilities: | ||
Accounts payable | 10,338 | 9,213 |
Franchisee deposits | 723 | 1,093 |
Accrued liabilities | 44,314 | 44,846 |
Current maturities of long-term debt and capital leases | 6,704 | 3,464 |
Total current liabilities | 62,079 | 58,616 |
Obligations under capital leases due after one year | 13,003 | 16,167 |
Long-term debt, net | 701,478 | 628,116 |
Deferred income taxes | 24,226 | 40,101 |
Other non-current liabilities | 19,194 | 20,502 |
Commitments and contingencies | ||
Stockholders’ deficit: | ||
Preferred stock, par value $.01; 1,000 shares authorized; none outstanding | 0 | 0 |
Common stock, par value $.01; 245,000 shares authorized; 118,309 shares issued in 2018 and in 2017 | 1,183 | 1,183 |
Paid-in capital | 238,369 | 236,895 |
Retained earnings | 981,251 | 934,017 |
Treasury stock, at cost; 82,734 shares in 2018 and 78,081 shares in 2017 | (1,509,649) | (1,373,853) |
Total stockholders’ deficit | (288,846) | (201,758) |
Total liabilities and stockholders’ deficit | $ 531,134 | $ 561,744 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Aug. 31, 2018 | Aug. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 245,000,000 | 245,000,000 |
Common stock, shares issued (in shares) | 118,309,000 | 118,309,000 |
Treasury stock, shares (in shares) | 82,734,000 | 78,081,000 |
Consolidated Statements Of Inco
Consolidated Statements Of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Revenues: | |||
Company Drive-In sales | $ 240,722 | $ 296,101 | $ 425,795 |
Franchise Drive-Ins: | |||
Franchise royalties and fees | 172,443 | 170,527 | 170,319 |
Lease revenue | 7,804 | 7,436 | 7,459 |
Other | 2,621 | 3,203 | 2,747 |
Total revenues | 423,590 | 477,267 | 606,320 |
Company Drive-Ins: | |||
Food and packaging | 66,583 | 80,971 | 118,136 |
Payroll and other employee benefits | 88,008 | 107,477 | 150,260 |
Other operating expenses, exclusive of depreciation and amortization included below | 48,586 | 61,463 | 88,424 |
Total cost of Company Drive-In sales | 203,177 | 249,911 | 356,820 |
Selling, general and administrative | 80,077 | 78,687 | 82,089 |
Depreciation and amortization | 38,355 | 39,248 | 44,418 |
Provision for impairment of long-lived assets | 664 | 1,140 | 232 |
Other operating income, net | (5,086) | (14,994) | (4,691) |
Total costs and expenses | 317,187 | 353,992 | 478,868 |
Income from operations | 106,403 | 123,275 | 127,452 |
Interest expense | 33,058 | 29,206 | 26,714 |
Interest income | (1,904) | (1,398) | (516) |
Loss from debt transactions | 1,310 | 0 | 8,750 |
Net interest expense | 32,464 | 27,808 | 34,948 |
Income before income taxes | 73,939 | 95,467 | 92,504 |
Provision for income taxes | 2,734 | 31,804 | 28,437 |
Net income | $ 71,205 | $ 63,663 | $ 64,067 |
Basic income per share (usd per share) | $ 1.89 | $ 1.47 | $ 1.32 |
Diluted income per share (usd per share) | 1.87 | 1.45 | 1.29 |
Cash dividends declared per common share (usd per share) | $ 0.64 | $ 0.56 | $ 0.44 |
Consolidated Statements Of Stoc
Consolidated Statements Of Stockholders' Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] |
Stockholders' equity (deficit), beginning balance at Aug. 31, 2015 | $ 17,433 | $ 1,183 | $ 232,550 | $ 851,715 | $ (1,068,015) |
Beginning balance (in shares) at Aug. 31, 2015 | 67,249 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 64,067 | 64,067 | |||
Cash dividends | (21,340) | (21,340) | |||
Stock-based compensation expense | 3,766 | 3,766 | |||
Purchase of treasury stock | (148,345) | $ (148,345) | |||
Purchase of treasury stock (in shares) | 5,209 | ||||
Exercise of stock options and issuance of restricted stock | 3,842 | (5,941) | $ 9,783 | ||
Exercise of stock options and issuance of restricted stock (in shares) | (767) | ||||
Other | 4,934 | 4,581 | $ 353 | ||
Other (in shares) | (21) | ||||
Stockholders' equity (deficit), ending balance at Aug. 31, 2016 | (75,643) | 1,183 | 234,956 | 894,442 | $ (1,206,224) |
Ending balance (in shares) at Aug. 31, 2016 | 71,670 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 63,663 | 63,663 | |||
Cash dividends | (24,088) | (24,088) | |||
Stock-based compensation expense | 3,942 | 3,942 | |||
Purchase of treasury stock | (172,913) | $ (172,913) | |||
Purchase of treasury stock (in shares) | 6,726 | ||||
Exercise of stock options and issuance of restricted stock | 2,682 | (2,203) | $ 4,885 | ||
Exercise of stock options and issuance of restricted stock (in shares) | (293) | ||||
Other | 599 | 200 | $ 399 | ||
Other (in shares) | (22) | ||||
Stockholders' equity (deficit), ending balance at Aug. 31, 2017 | $ (201,758) | 1,183 | 236,895 | 934,017 | $ (1,373,853) |
Ending balance (in shares) at Aug. 31, 2017 | 78,081 | 78,081 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 71,205 | 71,205 | |||
Cash dividends | (23,971) | (23,971) | |||
Stock-based compensation expense | 4,556 | 4,556 | |||
Purchase of treasury stock | (139,178) | $ (139,178) | |||
Purchase of treasury stock (in shares) | 5,215 | ||||
Exercise of stock options and issuance of restricted stock | (118) | (3,140) | $ 3,022 | ||
Exercise of stock options and issuance of restricted stock (in shares) | (542) | ||||
Other | 418 | 58 | $ 360 | ||
Other (in shares) | (20) | ||||
Stockholders' equity (deficit), ending balance at Aug. 31, 2018 | $ (288,846) | $ 1,183 | $ 238,369 | $ 981,251 | $ (1,509,649) |
Ending balance (in shares) at Aug. 31, 2018 | 82,734 | 82,734 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Cash flows from operating activities: | |||
Net income | $ 71,205 | $ 63,663 | $ 64,067 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 38,355 | 39,248 | 44,418 |
Stock-based compensation expense | 4,556 | 3,942 | 3,766 |
Loss from debt transactions | 1,310 | 0 | 8,750 |
Provision (benefit) for deferred income taxes | (15,812) | (2,469) | 4,509 |
Gain on disposition of assets | (5,086) | (14,994) | (4,691) |
Other | 3,276 | 1,265 | 452 |
(Increase) decrease in operating assets: | |||
Restricted cash | 889 | 886 | (2,829) |
Accounts receivable and other assets | (4,354) | 1,918 | 2,109 |
Increase (decrease) in operating liabilities: | |||
Accounts payable | (2,507) | (4,404) | 380 |
Accrued and other liabilities | (151) | (10,884) | 4,520 |
Income taxes | (135) | (3,299) | (9,242) |
Total adjustments | 20,341 | 11,209 | 52,142 |
Net cash provided by operating activities | 91,546 | 74,872 | 116,209 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (36,690) | (46,528) | (46,553) |
Proceeds from sale of assets | 21,646 | 91,741 | 16,206 |
Proceeds from the sale of investments in refranchised drive-in operations | 0 | 8,357 | 0 |
Issuance of notes receivable | (15,779) | (7,338) | (12,705) |
Collections on notes receivable | 16,232 | 11,911 | 7,229 |
Other | 530 | 2,345 | 1,763 |
Net cash provided by (used in) investing activities | (14,061) | 60,488 | (34,060) |
Cash flows from financing activities: | |||
Purchases of treasury stock | (141,095) | (171,562) | (150,444) |
Payment of dividends | (23,914) | (24,062) | (21,309) |
Payments on debt | (173,125) | (24,416) | (422,090) |
Debt issuance and extinguishment costs | (5,145) | (10) | (18,420) |
Proceeds from borrowings | 253,000 | 83,000 | 563,000 |
Restricted cash for securitization obligations | 33,460 | (46,730) | 6,587 |
Proceeds from exercise of stock options | 4,147 | 2,682 | 3,842 |
Other | (7,318) | (4,014) | 1,586 |
Net cash used in financing activities | (59,990) | (185,112) | (37,248) |
Net increase (decrease) in cash and cash equivalents | 17,495 | (49,752) | 44,901 |
Cash and cash equivalents at beginning of year | 22,340 | 72,092 | 27,191 |
Cash and cash equivalents at end of year | 39,835 | 22,340 | 72,092 |
Cash paid during the year for: | |||
Interest | 30,581 | 27,082 | 24,883 |
Income taxes (net of refunds) | 18,764 | 37,642 | 27,821 |
Non-cash investing and financing activities: | |||
Change in obligation to acquire treasury stock | (1,917) | 1,350 | (2,099) |
Stock options exercised by stock swap | 12,375 | 451 | 6,396 |
Accrued PP&E at year end | $ 4,783 | $ 1,577 | $ 3,471 |
Summary Of Significant Accounti
Summary Of Significant Accounting Policies | 12 Months Ended |
Aug. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary Of Significant Accounting Policies | Summary of Significant Accounting Policies Operations Sonic Corp. (the “Company”), through its subsidiaries, operates and franchises a chain of quick-service restaurants in the United States (“U.S.”). It derives its revenues primarily from Company Drive-In sales and royalty fees from franchisees. The Company also leases real estate and receives equity earnings in noncontrolling ownership in a number of Franchise Drive‑Ins. Principles of Consolidation The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and a number of Company Drive-Ins in which a subsidiary has a controlling ownership interest. All intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported and contingent assets and liabilities disclosed in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements. Segment Reporting In accordance with Accounting Standards Update (“ASU”) No. 280, “Segment Reporting,” the Company uses the management approach for determining its reportable segments. The management approach is based upon the way that management reviews performance and allocates resources. The Company’s chief operating decision maker and his management team review operating results on a consolidated basis for purposes of allocating resources and evaluating the financial performance of the Sonic brand. Accordingly, the Company has determined that it has one operating segment and, therefore, one reporting segment. Cash Equivalents Cash equivalents consist of highly liquid investments, primarily money market accounts that mature in three months or less from the date of purchase, and depository accounts. Restricted Cash As of August 31, 2018 , the Company had restricted cash balances totaling $27.5 million for funds required to be held in trust for the benefit of senior noteholders under the Company’s debt arrangements. The current portion of restricted cash of $19.6 million represents amounts to be returned to the Company or paid to service current debt obligations, including $5.0 million in proceeds from the sale of securitized real estate. The noncurrent portion of $7.9 million primarily represents proceeds from the sale of securitized real estate, as well as interest reserves required to be set aside for the duration of the debt. Under the Company's securitized finance structure, the Company has 12 months to reinvest the real estate proceeds in eligible capital expenses. If the $12.8 million in proceeds are not reinvested within a year, all amounts above $5 million , which is reflected in current restricted cash, must be used to pay down the fixed-rate debt and may require a make-whole premium. The Company may also pay down debt prior to that 12-month time period which could require a make-whole premium. The make-whole premium calculation is, in general, based on the discounted present value of the amount of interest that would otherwise have been paid had the prepayment not been made. Accounts and Notes Receivable The Company charges interest on past due accounts receivable and recognizes income as it is collected. Interest accrues on notes receivable based on the contractual terms of the respective note. The Company monitors all accounts and notes receivable for delinquency and provides for estimated losses for specific receivables that are not likely to be collected. The Company assesses credit risk for accounts and notes receivable of specific franchisees based on payment history, current payment patterns, the health of the franchisee’s business and an assessment of the franchisee’s ability to pay outstanding balances. In addition to allowances for bad debt for specific franchisee receivables, a general provision for bad debt is estimated for the Company’s accounts receivable based on historical trends. Account balances generally are charged against the allowance when the Company believes that the collection is no longer reasonably assured. The Company continually reviews its allowance for doubtful accounts. Inventories Inventories consist principally of food and supplies that are carried at the lower of cost (first-in, first-out basis) or market. Property, Equipment and Capital Leases Property and equipment are recorded at cost, and leased assets under capital leases are recorded at the present value of future minimum lease payments. Depreciation of property and equipment and amortization of capital leases are computed by the straight-line method over the estimated useful lives or the lease term, including cancelable option periods when appropriate, and are combined for presentation in the financial statements. Accounting for Long-Lived Assets The Company reviews long-lived assets quarterly or whenever changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which generally represents the individual drive-in. Earnings before interest, taxes and depreciation (“EBITDA”) is the cash flow measure monitored at the drive-in level for indicators of impairment. As the cash flow measure reaches levels to indicate potential impairment, the Company estimates the future cash flows expected to be generated from the use of the asset and its eventual disposal. If the sum of undiscounted future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. Fair value is typically determined to be the value of the land since drive-in buildings and improvements are single-purpose assets and have little value to market participants. The equipment associated with a drive-in can be easily relocated to another drive-in and therefore is not adjusted. Surplus property assets are carried at the lower of depreciated cost or fair value less cost to sell. The majority of the value in surplus property is land. Fair values are estimated based upon management’s assessment as well as independent market value assessments of the assets’ estimated sales values. Goodwill and Other Intangible Assets Goodwill is determined based on an acquisition purchase price in excess of the fair value of identified assets. Intangible assets with lives restricted by contractual, legal or other means are amortized over their useful lives. The Company tests goodwill at least annually for impairment using the fair value approach on a reporting unit basis. Since the Company is one reporting unit, potential goodwill impairment is evaluated by comparing the fair value of the Company to its carrying value. The fair value of the Company is determined using a market approach. If the carrying value of the Company exceeds fair value, a comparison of the fair value of goodwill against the carrying value of goodwill is made to determine whether goodwill has been impaired. During the fourth quarters of fiscal years 2018 and 2017 , the annual assessment of the recoverability of goodwill was performed, and no impairment was indicated. The Company’s intangible assets subject to amortization consist primarily of acquired franchise agreements and other intangibles. Amortization expense is calculated using the straight-line method over the asset’s expected useful life. See note 4 - Goodwill and Other Intangibles for additional related disclosures. Refranchising and Closure of Company Drive-Ins Gains and losses from the sale or closure of Company Drive-Ins are recorded as other operating (income) expense, net on the consolidated statements of income. Revenue Recognition, Franchise Fees and Royalties Revenue from Company Drive-In sales is recognized when food and beverage products are sold. Company Drive-In sales are presented net of sales tax and other sales-related taxes. The Company’s gift card program serves all Sonic Drive-Ins and is administered by the Company on behalf of a system advertising fund. The Company records a liability in the period in which a gift card is sold. The gift cards do not have expiration dates. As gift cards are redeemed, the liability is reduced with revenue recognized on redemptions at Company Drive-Ins. Breakage is the amount on a gift card that is not expected to be redeemed and that the Company is not required to remit to a state under unclaimed property laws. The Company estimates breakage based upon the historical trend in redemption patterns from previously sold gift cards. The Company’s policy is to recognize the breakage, using the delayed recognition method, when it is apparent that there is a remote likelihood the gift card balance will be redeemed. The Company reduces the gift card liability for the estimated breakage and uses that amount to defray the costs of operating the gift card program. There is no income recognized on unredeemed gift card balances. Costs to administer the gift card program, net of breakage, are included in the receivables from system funds as set forth in note 3 – Accounts and Notes Receivable. Such costs were not material in fiscal years 2018 , 2017 or 2016 . Franchise fees are recognized in income when the Company has substantially performed or satisfied all material services or conditions relating to the sale of the franchise, and the fees are generally nonrefundable. Development fees are generally nonrefundable and are recognized in income on a pro-rata basis when the conditions for revenue recognition under the individual development agreements are met. Both franchise fees and development fees are generally recognized upon the opening of a Franchise Drive-In or upon termination of the agreement between the Company and the franchisee. The Company’s franchisees pay royalties based on a percentage of sales. Royalties are recognized as revenue when they are earned. Advertising Costs Costs incurred in connection with advertising and promoting the Company’s products are included in other operating expenses and are expensed as incurred. Such costs amounted to $12.6 million , $15.8 million and $23.4 million in fiscal years 2018 , 2017 and 2016 , respectively. Under the Company’s franchise agreements, both Company Drive-Ins and Franchise Drive-Ins must contribute a minimum percentage of revenues to the Sonic Brand Fund, a national media production fund, and spend an additional minimum percentage of revenues on advertising, either directly or through Company-required participation in advertising cooperatives. A significant portion of the advertising cooperative contributions is remitted to the System Marketing Fund, which purchases advertising on national cable and broadcast networks and local broadcast networks and also funds other national media expenses and sponsorship opportunities. As stated in the terms of existing franchise agreements, these funds do not constitute assets of the Company, and the Company acts with limited agency in the administration of these funds. Accordingly, neither the revenues and expenses nor the assets and liabilities of the advertising cooperatives, the Sonic Brand Fund or the System Marketing Fund are included in the Company’s consolidated financial statements. However, all advertising contributions by Company Drive-Ins are recorded as an expense on the Company’s financial statements. Under the Company’s franchise agreements, the Company is reimbursed by the Sonic Brand Fund for costs incurred to administer the fund at an amount not to exceed 15% of the Sonic Brand Fund’s gross receipts. Reimbursements from the Sonic Brand Fund are offset against selling, general and administrative expenses and totaled $5.1 million , $5.1 million and $5.2 million in fiscal years 2018 , 2017 and 2016 , respectively. Technology Costs Under the Company’s franchise agreements, both Company Drive-Ins and Franchise Drive-Ins must pay a set technology fee to the Brand Technology Fund (“BTF”), which was established in the third quarter of fiscal year 2016. The BTF administers cybersecurity and other technology programs for the Sonic system. As stated in the terms of existing franchise agreements, these funds do not constitute assets of the Company, and the Company acts with limited agency in the administration of these funds. Accordingly, neither the revenues and expenses nor the assets and liabilities of the BTF are included in the Company’s consolidated financial statements. However, technology fees paid by Company Drive-Ins are recorded as an expense on the Company’s financial statements. Under the Company’s franchise agreements, the Company is reimbursed by the BTF for costs incurred to administer the fund at an amount not to exceed 15% of the BTF’s gross receipts. Reimbursements from the BTF are offset against selling, general and administrative expenses and totaled $6.0 million , $5.4 million and $2.5 million in fiscal years 2018 , 2017 and 2016 , respectively. Operating Leases Rent expense is recognized on a straight-line basis over the expected lease term, including cancelable option periods when it is deemed to be reasonably assured that the Company would incur an economic penalty for not exercising the options. Within the terms of some of the leases, there are rent holidays and/or escalations in payments over the base lease term, as well as renewal periods. The effects of the holidays and escalations have been reflected in rent expense on a straight-line basis over the expected lease term, which includes cancelable option periods when appropriate. The lease term commences on the date when the Company has the right to control the use of the leased property, which can occur before rent payments are due under the terms of the lease. Contingent rent is generally based on sales levels and is accrued at the point in time it is probable that such sales levels will be achieved. Stock-Based Compensation The Company grants incentive stock options (“ISOs”), non-qualified stock options (“NQs”) and restricted stock units (“RSUs”). For grants of NQs and RSUs, the Company expects to recognize a tax benefit upon exercise of the option or vesting of the RSU. As a result, a tax benefit is recognized on the related stock-based compensation expense for these types of awards. For grants of ISOs, a tax benefit only results if the option holder has a disqualifying disposition. As a result of the limitation on the tax benefit for ISOs, the tax benefit for stock-based compensation will generally be less than the Company’s overall tax rate and will vary depending on the timing of employees’ exercises and sales of stock. Stock-based compensation is measured at the grant date based on the calculated fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period of the award, generally the vesting period of the grant. For additional information on stock-based compensation, see note 13 - Stockholders’ Equity (Deficit). Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. During the first quarter of fiscal year 2017, the Company early adopted ASU No. 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” which required the Company to recognize excess tax benefits related to share-based payments in the provision for income taxes in the consolidated statements of income. Prior to adoption, the Company recorded these excess tax benefits in additional paid-in capital. These benefits are principally generated from employee exercises of NQs, the vesting of RSUs and disqualifying dispositions of ISOs. The threshold for recognizing the financial statement effects of a tax position is when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority. Interest and penalties related to unrecognized tax benefits are included in income tax expense. Additional information regarding the Company’s unrecognized tax benefits is provided in note 12 - Income Taxes. Fair Value Measurements The Company’s financial assets and liabilities consist of cash and cash equivalents, accounts and notes receivable, accounts payable and long-term debt. The fair value of cash and cash equivalents, accounts receivable and accounts payable approximates their carrying amounts due to the short-term nature of these assets and liabilities. The following methods and assumptions were used by the Company in estimating fair values of its financial instruments: • Notes receivable - As of August 31, 2018 and 2017 , the carrying amounts of notes receivable (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. • Long-term debt - The Company prepares a discounted cash flow analysis for its fixed and variable rate borrowings to estimate fair value each quarter. This analysis uses Level 2 inputs from market information available for public debt transactions for companies with ratings that are similar to the Company’s ratings and from information gathered from brokers who trade in the Company’s notes. The fair value estimate required significant assumptions by management. Management believes this fair value is a reasonable estimate. For more information regarding the Company’s long-term debt, see note 10 - Debt and note 11 - Fair Value of Financial Instruments. Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis, which means these assets and liabilities are not measured at fair value on an ongoing basis but are subject to periodic impairment tests. For the Company, these items primarily include long-lived assets, goodwill and other intangible assets. Refer to sections “Accounting for Long-Lived Assets” and “Goodwill and Other Intangible Assets,” discussed above, for inputs and valuation techniques used to measure the fair value of these nonfinancial assets. The fair value was based upon management’s assessment as well as independent market value assessments which involved Level 2 and Level 3 inputs. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled for the transfer of promised goods or services to customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued clarifying guidance concerning principal versus agent considerations, identifying performance obligations and licensing and corrections or improvements to issues that affect narrow aspects of the guidance. In August 2015, the FASB issued ASU 2015-14 delaying the effective date of adoption. These updates are now effective for annual and interim periods for fiscal years beginning after December 15, 2017, which will require us to adopt these provisions in the first quarter of fiscal 2019. The standards are to be applied retrospectively to each prior period presented or using a modified retrospective transition method. As a result of our evaluation of the Company’s revenue streams, we do not believe the new revenue recognition standards will impact the Company’s two largest sources of revenue: the recognition of sales from Company Drive-Ins and the recognition of royalty fees from franchisees that are based on a percentage of franchise sales. The standards are also not anticipated to have a material impact to the recognition of gift card breakage. Additionally, the standards will not impact the accounting for Company’s contributions and expenses to its advertising funds. Neither the revenues and expenses nor the assets and liabilities of the advertising funds are included in the Company’s consolidated financial statements and as such, are not included in the scope of the revenue standards. The new revenue recognition standards will impact the recognition of the initial franchise fee. Under existing guidance, the initial franchise fee is recognized as revenue when the Company has substantially performed or satisfied all material services or conditions relating to the sale of the franchise, which is typically upon the opening of a Franchise Drive-In. Under the new standards, the services provided relating to the sale of the franchise do not constitute a separate and distinct performance obligation from the ongoing franchise right and, as such, the initial franchise fees will be deferred and recognized as revenue over the term of each franchise agreement. The standards require any unamortized portion of the initial franchise fee be presented in the consolidated balance sheets as a deferred revenue liability. The impact of the amortization of these fees is not expected to be material to total revenue or net income. The standards will impact the Company’s recording of administrative fees received from the Sonic Brand Fund and Brand Technology Fund. The Company currently records the administrative fees from the funds as a reduction to administrative expenses within selling, general, and administrative expenses. Upon adoption of the standards, the Company will recognize the administrative fees from the funds on a gross basis within revenues in the consolidated statements of income, and the related administrative expenses will continue to be reported within selling, general, and administrative expenses. The Company continues to evaluate the effect the standards will have on related disclosures. Further, the Company is currently implementing internal controls related to the recognition and presentation of revenues under the standards. The Company will adopt the standards using the modified retrospective transition method effective September 1, 2018, which aligns with the required adoption date. Upon adoption, the Company expects to record a cumulative adjustment before income tax effects of approximately $17.4 million to total liabilities in the consolidated balance sheets, with an offsetting adjustment within total stockholder's deficit, primarily related to unearned initial franchise fees for franchise agreements entered into prior to adoption. In February 2016, the FASB issued ASU No. 2016-02, “Leases.” The new standard, which replaces existing lease guidance, requires lessees to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. Accounting guidance for lessors is largely unchanged. In January 2018, the FASB issued ASU No. 2018-01 which permits an entity to elect an optional transition practical expedient to forgo the evaluation of land easements that existed or expired before the entity’s adoption of 2016-02 and that were not accounted for as leases under previous lease guidance. Further improvements have been issued in ASUs 2018-10 and 2018-11. The standard is effective for fiscal year 2020, with early application permitted. This standard requires adoption based upon a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with optional practical expedients. Based on a preliminary assessment, the Company expects that most of its operating lease commitments will be subject to the new guidance and recognized as operating lease liabilities and right-of-use assets upon adoption, resulting in a significant increase in the assets and liabilities on the consolidated balance sheets. The Company is continuing its assessment, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses.” The update was issued to provide more decision-useful information about the expected credit losses on financial instruments. The update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update is effective for fiscal year 2021, with early adoption permitted for fiscal years beginning after December 15, 2018. The update should be adopted using a modified-retrospective approach. The Company is currently evaluating the effect this update will have on its financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments.” The update is intended to reduce diversity in practice in how certain transactions are classified and will make eight targeted changes to how cash receipts and cash payments are presented in the statement of cash flows. The update is effective for fiscal year 2019. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the amendments will apply prospectively as of the earliest date practicable. The Company does not expect a material impact on its financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory,” as part of its simplification initiatives. The update requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than deferring the recognition until the asset has been sold to an outside party as is required under current GAAP. The update is effective for fiscal year 2019. The new standard will require adoption on a modified retrospective basis through a cumulative-effect adjustment to retained earnings, and early adoption is permitted. The Company does not expect a material impact on its financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows - Restricted Cash.” The update requires that restricted cash balances be included in the beginning and ending cash balance within the statement of cash flows. The update is effective for fiscal year 2019. The amendments should be adopted on a retrospective basis for each period presented, and early adoption is permitted. The adoption will increase the beginning and ending cash balance within the Company's statement of cash flows by its restricted cash balances and will require a new disclosure to reconcile the cash balances within the statement of cash flows to the balance sheets. The Company does not expect any other material impacts to its financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation: Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. The update is effective for fiscal year 2019. The update is to be adopted prospectively to an award modified on or after the adoption date. Early adoption is permitted. The Company does not expect a material impact on its financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The amendments in the update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The update is effective for fiscal year 2021 and is to be applied either retrospectively or prospectively to all implementation costs incurred after the adoption date. Early adoption is permitted. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its financial statements and related disclosures. The Company has reviewed all other recently issued accounting pronouncements and concluded they are not applicable or not expected to be significant to our operations. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Aug. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share: Fiscal year ended August 31, 2018 2017 2016 Numerator: Net income $ 71,205 $ 63,663 $ 64,067 Denominator: Weighted average common shares outstanding– basic 37,618 43,306 48,703 Effect of dilutive employee stock options and unvested RSUs 468 737 966 Weighted average common shares outstanding – diluted 38,086 44,043 49,669 Net income per common share – basic $ 1.89 $ 1.47 $ 1.32 Net income per common share – diluted $ 1.87 $ 1.45 $ 1.29 Anti-dilutive securities excluded (1) 1,157 1,154 615 _______________ (1) Anti-dilutive securities consist of stock options and unvested RSUs that were not included in the computation of diluted earnings per share because either the exercise price of the options was greater than the average market price of the common stock or the total assumed proceeds under the treasury stock method resulted in negative incremental shares, and thus the inclusion would have been anti-dilutive. |
Accounts And Notes Receivable
Accounts And Notes Receivable | 12 Months Ended |
Aug. 31, 2018 | |
Receivables [Abstract] | |
Accounts And Notes Receivable | Accounts and Notes Receivable Accounts and notes receivable consist of the following: August 31, 2018 2017 Current Accounts and Notes Receivable: Royalties and other trade receivables $ 20,177 $ 19,571 Notes receivable from franchisees 2,006 1,441 Receivables from system funds 2,480 6,360 Other 11,080 7,475 Accounts and notes receivable, gross 35,743 34,847 Allowance for doubtful accounts and notes receivable (776 ) (1,089 ) Current accounts and notes receivable, net $ 34,967 $ 33,758 Noncurrent Notes Receivable: Receivables from franchisees $ 7,597 $ 6,810 Receivables from system funds 5,143 3,033 Allowance for doubtful notes receivable (1,808 ) (42 ) Noncurrent notes receivable, net $ 10,932 $ 9,801 The Company’s receivables are primarily due from franchisees, all of whom are in the restaurant business. Substantially all of the notes receivable from franchisees are collateralized by real estate or equipment. The receivables from system funds represent transactions in the normal course of business. |
Goodwill And Other Intangibles
Goodwill And Other Intangibles | 12 Months Ended |
Aug. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill And Other Intangibles | Goodwill and Other Intangibles As of August 31, 2018 , the Company had $75.3 million of goodwill. The changes in the carrying amount of goodwill were as follows: August 31, 2018 2017 Balance at beginning of year $ 75,756 $ 76,734 Goodwill disposed of related to the sale of Company Drive-Ins (412 ) (978 ) Balance at end of year $ 75,344 $ 75,756 The gross carrying amount of franchise agreements, intellectual property, franchise fees and other intangibles subject to amortization was $5.9 million and $9.3 million at August 31, 2018 and 2017 , respectively. Accumulated amortization related to these intangible assets was $3.4 million and $6.6 million at August 31, 2018 and 2017 , respectively. Intangible assets amortization expense was $0.3 million , $1.0 million and $0.9 million for fiscal years ended August 31, 2018 , 2017 and 2016 , respectively. At August 31, 2018 , the remaining weighted-average life of amortizable intangible assets was approximately 10.7 years . Estimated intangible assets amortization expense is $0.3 million annually for fiscal years 2019 , 2020 , 2021 and 2022 and $0.2 million for fiscal year 2023 . |
Other Operating Income
Other Operating Income | 12 Months Ended |
Aug. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Other Operating Income | Other Operating Income During the first quarter of fiscal year 2017, the Company recorded a gain of $3.8 million on the sale of minority investments in franchise operations retained as part of a refranchising transaction that occurred in fiscal year 2009. The Company also recorded $6.8 million in refranchising initiative gains as described below in note 6 - Refranchising of Company Drive-Ins. During the fourth quarter of fiscal year 2017, the Company recorded a gain of $4.7 million on the sale of real estate. In addition, the Company recorded offsetting severance costs of $1.8 million related to the elimination of certain corporate positions. During the third quarter of fiscal year 2018, the Company recorded a gain on refranchised drive-ins of $3.2 million , further described below in note 6 - Refranchising of Company Drive-Ins. |
Refranchising of Company Drive-
Refranchising of Company Drive-Ins | 12 Months Ended |
Aug. 31, 2018 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Refranchising of Company Drive-Ins | Refranchising of Company Drive-Ins In June 2016, the Company announced plans to refranchise Company Drive-Ins as part of an initiative to move toward an approximately 95% ‑franchised system. During fiscal year 2016, the Company refranchised the operations of 29 Company Drive-Ins and retained a non-controlling minority investment in the franchise operations of 25 of these refranchised drive-ins. The Company completed the previously announced refranchising initiative during fiscal year 2017. During the first six months of fiscal year 2017, 110 Company Drive-Ins were refranchised and the Company retained a non-controlling minority investment in 106 of the franchise operations. The following is a summary of the pretax activity recorded as a result of the refranchising initiative (in thousands, except number of refranchised Company Drive-Ins): Fiscal year ended August 31, 2017 2016 Number of refranchised Company Drive-Ins 110 29 Proceeds from sales of Company Drive-Ins $ 20,036 $ 3,568 Proceeds from sale of real estate (1) 11,726 — Real estate assets sold (1) (12,095 ) (2,402 ) Assets sold, net of retained minority investment (2) (7,891 ) — Initial and subsequent lease payments for real estate option (1) (3,178 ) — Goodwill related to sales of Company Drive-Ins (966 ) (194 ) Deferred gain for real estate option (3) (809 ) — Loss on assets held for sale (65 ) — Refranchising initiative gains, net $ 6,758 $ 972 _______________ (1) During the first quarter of fiscal year 2017, as part of a 53 drive-in refranchising transaction, a portion of the proceeds was applied as the initial payment for an option to purchase the real estate within the next 24 months. The franchisee exercised the option in the last six months of the fiscal year. Until the option was fully exercised, the franchisee made monthly lease payments which are included in other operating income, net of sub-lease expense. (2) Net assets sold consisted primarily of equipment. (3) The deferred gain of $0.8 million is recorded in other non-current liabilities as a result of a real estate purchase option extended to the franchisee in the second quarter of fiscal year 2017. The deferred gain will continue to be amortized into income through January 2020 when the option becomes exercisable. During fiscal year 2018, the Company recognized a net gain of $3.2 million related to the refranchised operations of 41 drive-ins and retained a non-controlling minority investment in the franchise operations. These transactions represent additional markets identified after completion of the refranchising initiative in fiscal year 2017 and bring the Company to a 95% franchised system. In addition to the refranchised drive-ins discussed above in which the Company retained a non-controlling minority investment in the operations, the Company also refranchised the operations of eight drive-ins during fiscal year 2018, five during fiscal year 2017 and nine during fiscal year 2016. These refranchising transactions all occurred in the normal course of business and did not result in any retained interests. Income from minority investments is included in other revenue on the consolidated statements of income. The gains and losses related to refranchised drive-ins are recorded in other operating income, net, on the consolidated statement of income. |
Leases
Leases | 12 Months Ended |
Aug. 31, 2018 | |
Leases [Abstract] | |
Leases | Leases Leasing Arrangements as a Lessor The Company’s leasing activities consist principally of leasing certain land and buildings as well as subleasing certain buildings to franchise operators. The land and building portions for the majority of these leases are classified as operating leases and have lease terms expiring through May 2037 . The leases classified as direct financing leases are related to owned and subleased properties that were refranchised in fiscal year 2017 (see note 6 - Refranchising of Company Drive-Ins). The terms of these leases expire through September 2031 . These leases include provisions for contingent rentals that may be received on the basis of a percentage of sales in excess of stipulated amounts. Income is not recognized on contingent rentals until sales exceed the stipulated amounts. Some leases contain escalation clauses over the lives of the leases. For property owned by third parties, the lease term runs concurrently with the term of the third-party lease arrangement. Most of the leases contain renewal option periods of five years at the end of the initial term. Components of net investment in direct financing leases are as follows at August 31: 2018 2017 Minimum lease payments receivable $ 17,068 $ 18,156 Less unearned income (5,217 ) (5,932 ) Net investment in direct financing leases 11,851 12,224 Less amount due within one year (460 ) (371 ) Amount due after one year $ 11,391 $ 11,853 Initial direct costs incurred in the negotiation and consummation of direct financing lease transactions have not been material. Accordingly, no portion of unearned income has been recognized to offset those costs. Future minimum rental payments receivable as of August 31, 2018 , are as follows: Operating Direct Financing Years ended August 31: 2019 $ 7,124 $ 1,156 2020 7,544 1,269 2021 7,787 1,365 2022 7,804 1,362 2023 7,884 1,362 Thereafter 60,331 10,554 $ 98,474 $ 17,068 Less unearned income $ (5,217 ) $ 11,851 Leasing Arrangements as a Lessee Certain Company Drive-Ins lease land and buildings from third parties. These leases, with lease terms expiring through January 2037 , include provisions for contingent rents that may be paid on the basis of a percentage of sales in excess of stipulated amounts. For the majority of leases, the land portions are classified as operating leases, and the building portions are classified as capital leases. Future minimum lease payments on operating and capital leases as of August 31, 2018 , are as follows: Operating Capital Years ended August 31: 2019 $ 8,198 $ 3,489 2020 8,173 3,194 2021 7,536 3,109 2022 6,393 2,597 2023 6,437 2,415 Thereafter 44,017 4,541 Total minimum lease payments (1) $ 80,754 19,345 Less amount representing interest averaging 5.4% (3,888 ) Present value of net minimum lease payments 15,457 Less amount due within one year (2,454 ) Amount due after one year $ 13,003 _______________ (1) Minimum payments have not been reduced by future minimum rentals receivable under noncancellable operating and capital subleases of $25.9 million and $1.3 million , respectively. They also do not include contingent rentals which may be due under certain leases. Contingent rentals for capital leases amounted to $0.2 million , $0.3 million and $0.9 million in fiscal years 2018 , 2017 and 2016 , respectively. Total rent expense for all operating leases consists of the following for the years ended August 31: 2018 2017 2016 Minimum rentals $ 8,039 $ 11,224 $ 12,441 Contingent rentals 140 283 284 Total rent expense 8,179 11,507 12,725 Less sublease rentals (3,464 ) (2,513 ) (2,372 ) Net rent expense $ 4,715 $ 8,994 $ 10,353 |
Property, Equipment And Capital
Property, Equipment And Capital Leases | 12 Months Ended |
Aug. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Equipment And Capital Leases | Property, Equipment and Capital Leases Property, equipment and capital leases consist of the following at August 31: Estimated Useful Life 2018 2017 Property, equipment and capital leases: Land $ 120,352 $ 117,402 Buildings and improvements 8 – 25 yrs 243,434 251,695 Drive-In equipment 5 – 7 yrs 62,679 75,410 Brand technology development and other equipment 2 – 5 yrs 133,020 126,179 Property and equipment, at cost 559,485 570,686 Accumulated depreciation (271,940 ) (272,233 ) Property and equipment, net 287,545 298,453 Capital leases Life of lease 39,204 45,315 Accumulated amortization (28,527 ) (31,388 ) Capital leases, net 10,677 13,927 Property, equipment and capital leases, net $ 298,222 $ 312,380 Depreciation expense for property and equipment was $35.3 million , $35.6 million and $40.4 million for fiscal years 2018 , 2017 and 2016 , respectively. Land, buildings and equipment with a carrying amount of $155.5 million and $110.8 million at August 31, 2018 and August 31, 2017, respectively, were leased under operating leases to franchisees and other parties. The accumulated depreciation related to these buildings and equipment was $63.2 million and $45.0 million at August 31, 2018 and August 31, 2017, respectively. Amortization expense related to capital leases is included within depreciation and amortization on the consolidated statements of income. As of August 31, 2018 , the Company had two drive-ins under construction with costs to complete. Interest incurred in connection with the construction of new drive-ins and technology projects is capitalized. Capitalized interest was $0.4 million , $0.6 million and $0.6 million for fiscal years 2018 , 2017 and 2016 , respectively. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Aug. 31, 2018 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consist of the following at August 31: 2018 2017 Wages and employee benefit costs $ 16,338 $ 17,705 Property taxes, sales and use taxes and employment taxes 4,677 5,634 Unredeemed gift cards 13,184 11,319 Other 10,115 10,188 $ 44,314 $ 44,846 |
Debt
Debt | 12 Months Ended |
Aug. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consists of the following at August 31: 2018 2017 Class A-2 2018-1 senior secured fixed rate notes $ 170,000 $ — Class A-2 2016-1 senior secured fixed rate notes 399,911 422,521 Class A-1 2016-1 senior secured variable funding notes — 60,000 Class A-2 2013-1 senior secured fixed rate notes 147,485 155,000 717,396 637,521 Less unamortized debt issuance costs (11,668 ) (9,405 ) Less long-term debt due within one year (4,250 ) — Long-term debt, net $ 701,478 $ 628,116 At August 31, 2018 , future maturities of long-term debt were $4.3 million for fiscal year 2019 , $151.7 million for fiscal year 2020 , $4.3 million for fiscal year 2021 , $4.3 million for fiscal year 2022 and $382.9 million for fiscal year 2023 . This includes principal payments on the Series 2016-1 Senior Secured Fixed Rate Notes, Class A-2 (the “2016 Fixed Rate Notes”) as a result of an amortization requirement based on a leverage ratio calculation. During fiscal year 2013, in a private transaction, various subsidiaries of the Company (the “Co-Issuers”) refinanced and paid $155.0 million of the Series 2011-1 Senior Secured Fixed Rate Notes, Class A-2 (the “2011 Fixed Rate Notes”) with the issuance of $155.0 million of Series 2013-1 Senior Secured Fixed Rate Notes, Class A-2 (the “2013 Fixed Rate Notes”), which bear interest at 3.75% per annum. The 2013 Fixed Rate Notes have an expected life of seven years , interest payable monthly, no scheduled principal amortization and an anticipated repayment date in July 2020 . On May 17, 2016, in a private transaction, the Co-Issuers issued $425.0 million of 2016 Fixed Rate Notes, which bear interest at 4.47% per annum. The 2016 Fixed Rate Notes have an expected life of seven years with an anticipated repayment date in May 2023 . The Co-Issuers also entered into a securitized financing facility of Series 2016-1 Senior Secured Variable Funding Notes, Class A-1 (the “2016 Variable Funding Notes” and, together with the 2016 Fixed Rate Notes, the “2016 Notes”) to replace the Series 2011-1 Senior Secured Variable Funding Notes, Class A-1 (the “2011 Variable Funding Notes”). The 2016 revolving credit facility provided access to a maximum of $150.0 million of 2016 Variable Funding Notes and certain other credit instruments, including letters of credit. Interest on the 2016 Variable Funding Notes is based on the one-month London Interbank Offered Rate or Commercial Paper, depending on the funding source, plus 2.0% , per annum. An annual commitment fee of 0.5% is payable monthly on the unused portion of the 2016 Variable Funding Notes facility. The 2016 Variable Funding Notes have an expected life of five years with an anticipated repayment date in May 2021 with two one -year extension options available upon certain conditions including meeting a minimum debt service coverage ratio threshold. Sonic used a portion of the net proceeds from the issuance of the 2016 Fixed Rate Notes to repay its existing 2011 Fixed Rate Notes and 2011 Variable Funding Notes in full and to pay the costs associated with the securitized financing transaction, including prepayment premiums. Loan origination costs associated with the Company’s 2016 transaction totaled $12.5 million and were allocated among the 2016 Notes. In connection with the 2016 transaction described above, the Company recognized an $8.8 million loss from the early extinguishment of debt during the third quarter of fiscal year 2016, which primarily consisted of a $5.9 million prepayment premium and the $2.9 million write-off of unamortized deferred loan fees remaining from the refinanced debt. This is reflected in loss from debt transactions on the consolidated statements of income. During the second quarter of fiscal year 2018, the Company made a pro rata prepayment of $28.0 million on its 2013 Fixed Rate Notes and 2016 Fixed Rate Notes. The prepayment was made at par, as allowed under the note terms. On February 1, 2018, the Co-Issuers issued $170.0 million of Series 2018-1 Senior Secured Fixed Rate Notes, Class A-2 (the "2018 Fixed Rate Notes" and together with the 2016 Fixed Rate Notes and 2013 Fixed Rate Notes, the “Fixed Rate Notes”) in a private transaction which bears interest at 4.03% per annum. The 2018 Fixed Rate Notes have an expected life of seven years with an anticipated repayment date in February 2025 . Sonic used a portion of the net proceeds from the issuance of the 2018 Fixed Rate Notes to pay down the outstanding portion of the 2016 Variable Funding Notes and to pay the costs associated with the securitized financing transaction. In conjunction with the issuance of the 2018 Fixed Rate Notes, the commitments under the 2016 Variable Funding Notes were reduced to $100.0 million . Loan origination costs associated with the Company’s 2018 Fixed Rate Notes totaled $5.0 million . Loan costs are amortized over each note’s expected life, and the unamortized balance related to the 2016 Variable Funding Notes and the Fixed Rate Notes is included in debt origination costs, net and long-term debt, net, respectively, on the consolidated balance sheets. In connection with the 2018 transactions described above, the Company recognized a $1.3 million loss during the second quarter of fiscal year 2018. The loss consisted of a $0.7 million write-off of unamortized deferred debt origination costs related to the reduction of the 2016 Variable Funding Notes commitments, as well as a $0.4 million write-off of unamortized deferred debt origination costs related to the prepayment on its 2013 Fixed Rate Notes and 2016 Fixed Rate Notes. Additionally, as required by the terms of the 2016 Fixed Rate Notes, the Company paid a $0.2 million prepayment premium. As of August 31, 2018 , the weighted-average interest cost of the 2013 Fixed Rate Notes, the 2016 Fixed Rate Notes and the 2018 Fixed Rate Notes was 4.1% , 4.8% and 4.4% , respectively. The weighted-average interest cost includes the effect of the loan origination costs. While the 2013 Fixed Rate Notes, the 2016 Fixed Rate Notes and the 2018 Fixed Rate Notes are structured to provide for seven -year lives from their original issuance dates, they have legal final maturity dates of July 2043 , May 2046 and February 2048 , respectively. The 2016 Variable Funding Notes are structured to provide for a five -year life with two one -year options available under certain conditions and with a legal final maturity date of May 2046 . The Company intends to repay or refinance the 2013 Fixed Rate Notes, the 2018 Fixed Rate Notes and the 2016 Notes on or before the end of their expected lives. If the Company prepays the debt prior to the anticipated repayment date the Company may be required to pay a prepayment penalty under certain circumstances. In the event the 2013 Fixed Rate Notes, the 2018 Fixed Rate Notes and the 2016 Notes are not paid in full by the end of their expected lives, they are subject to an upward adjustment in the annual interest rate of at least 5% . In addition, principal payments will accelerate by applying all of the royalties, lease revenues and other fees securing the debt, after deducting certain expenses, until the debt is paid in full. Also, any unfunded amount under the 2016 Variable Funding Notes will become unavailable. The Co-Issuers and Sonic Franchising LLC (the “Guarantor”) are existing special purpose, bankruptcy remote, indirect subsidiaries of Sonic Corp. that hold substantially all of Sonic's franchising assets and real estate. As of August 31, 2018 , assets for these combined indirect subsidiaries totaled $242.0 million , including receivables for royalties, certain Company and Franchise Drive-In real estate, intangible assets and restricted cash balances of $27.5 million . The 2013 Fixed Rate Notes, the 2016 Notes and the 2018 Fixed Rate Notes are secured by franchise fees, royalty payments and lease payments, and the repayment of the 2013 Fixed Rate Notes, the 2016 Notes and the 2018 Fixed Rate Notes is expected to be made solely from the income derived from the Co-Issuer's assets. In addition, the Guarantor, a Sonic Corp. subsidiary that acts as a franchisor, has guaranteed the obligations of the Co-Issuers under the 2013 Fixed Rate Notes, 2018 Fixed Rate Notes and the 2016 Notes and pledged substantially all of its assets to secure those obligations. Neither Sonic Corp., the ultimate parent of the Co-Issuers and the Guarantor, nor any other subsidiary of Sonic Corp., guarantees or is in any way liable for the obligations of the Co-Issuers under the 2013 Fixed Rate Notes, 2018 Fixed Rate Notes and the 2016 Notes. The Company has, however, agreed to cause the performance of certain obligations of its subsidiaries, principally related to managing the assets included as collateral for the 2013 Fixed Rate Notes, 2018 Fixed Rate Notes and the 2016 Notes and certain indemnity obligations relating to the transfer of the collateral assets to the Co-Issuers. The 2013 Fixed Rate Notes, 2018 Fixed Rate Notes and the 2016 Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) required actions to better secure collateral upon the occurrence of certain performance-related events, (ii) application of certain disposition proceeds as note prepayments after a set time is allowed for reinvestment, (iii) maintenance of specified reserve accounts, (iv) maintenance of certain debt service coverage ratios, (v) optional and mandatory prepayments upon change in control, (vi) indemnification payments for defective or ineffective collateral, and (vii) covenants relating to recordkeeping, access to information and similar matters. If certain covenants or restrictions are not met, the 2013 Fixed Rate Notes, 2018 Fixed Rate Notes and the 2016 Notes are subject to customary accelerated repayment events and events of default. Although management does not anticipate an event of default or any other event of noncompliance with the provisions of the debt, if such event occurred, the unpaid amounts outstanding could become immediately due and payable. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Aug. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Of Financial Instruments | Fair Value of Financial Instruments The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties. The Company has no financial liabilities that are required to be measured at fair value on a recurring basis. The Company categorizes its assets and liabilities recorded at fair value based upon the following fair value hierarchy established by the FASB: • Level 1 valuations use quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. • Level 2 valuations use inputs other than actively quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include: (a) quoted prices for similar assets or liabilities in active markets, (b) quoted prices for identical or similar assets or liabilities in markets that are not active, (c) inputs other than quoted prices that are observable for the asset or liability such as interest rates and yield curves observable at commonly quoted intervals and (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 valuations use unobservable inputs for the asset or liability. Unobservable inputs are used to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The Company’s cash equivalents are carried at cost which approximates fair value and totaled $58.0 million and $73.9 million at August 31, 2018 and 2017 , respectively. This fair value is estimated using Level 1 methods. The fair value of the Company’s 2013 Fixed Rate Notes, 2016 Fixed Rate Notes and 2018 Fixed Rate Notes approximated the carrying value, including accrued interest, of $718.2 million at August 31, 2018 . The fair value of the Company’s 2013 Fixed Rate Notes and 2016 Fixed Rate Notes approximated the carrying value, including accrued interest, of $578.2 million at August 31, 2017 . The 2016 Variable Funding Notes had no balance at August 31, 2018 . The fair value of the Company's 2016 Variable Funding Notes approximated the carrying value, including accrued interest, of $60.1 million at August 31, 2017 . The fair value of the 2013 Fixed Rate Notes, 2016 Notes and 2018 Fixed Rate Notes is estimated using Level 2 inputs from market information available for public debt transactions for companies with ratings that are similar to the Company’s ratings and from information gathered from brokers who trade in the Company’s notes. |
Income Taxes
Income Taxes | 12 Months Ended |
Aug. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income before the provision for income taxes is classified by source as domestic income. The components of the provision for income taxes consist of the following for the years ended August 31: 2018 2017 2016 Current: Federal $ 15,597 $ 30,352 $ 20,137 State 2,949 3,921 3,791 18,546 34,273 23,928 Deferred: Federal (16,460 ) (2,378 ) 4,372 State 648 (91 ) 137 (15,812 ) (2,469 ) 4,509 Provision for income taxes $ 2,734 $ 31,804 $ 28,437 The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate due to the following for the fiscal years ended August 31: 2018 2017 2016 Amount computed by applying the statutory federal tax rate 25.7 % 35.0 % 35.0 % State income taxes (net of federal income tax benefit) 3.8 2.6 2.8 Employment related and other tax credits, net (1.8 ) (1.9 ) (2.5 ) Change in uncertain tax positions 0.2 — (3.3 ) Federal tax benefit of statutory tax deduction (1.3 ) (1.6 ) (1.4 ) Stock option excess tax benefit (2.9 ) (1.0 ) — Deferred tax revaluation (19.1 ) — — Other (0.9 ) 0.2 0.1 Provision for income taxes 3.7 % 33.3 % 30.7 % On December 22, 2017, the Tax Cuts and Job Act ("TCJA") was signed into law, significantly impacting several sections of the Internal Revenue Code. The most significant impacts on the Company for fiscal year 2018 include: • Effective January 1, 2018, the U.S. corporate federal statutory income tax rate was reduced from 35% to 21%. Because of our fiscal year end, the Company’s blended statutory federal tax rate is 25.7% for fiscal year 2018 and 21% for fiscal year 2019 and thereafter. • The Company remeasured its existing deferred tax assets and liabilities at the rate the Company expected to be in effect when those deferred taxes would be realized (either 25.7% if in fiscal year 2018 or 21.0% for fiscal year 2019 and thereafter). The Company recognized a discrete benefit from the deferred tax remeasurement of approximately $14.1 million in the second quarter of fiscal year 2018. In December 2017, the Securities and Exchange Commission provided guidance allowing registrants to record provisional amounts, during a specified measurement period, when the necessary information is not available, prepared or analyzed in reasonable detail to account for the impact of the TCJA. Accordingly, during the second and third quarters of fiscal year 2018, we reported the revaluation of our deferred tax assets and liabilities based on provisional amounts. As of August 31, 2018, we have completed our analysis of the revaluation of our deferred tax assets and liabilities and have no material changes to the discrete benefit recognized in the second quarter of fiscal year 2018. We continue to assess the impacts of the TCJA on future fiscal years and monitor the Internal Revenue Service guidance intended to interpret the most complex provisions. Deferred tax assets and liabilities consist of the following at August 31: 2018 2017 Deferred tax assets: Allowance for doubtful accounts and notes receivable $ 661 $ 419 Leasing transactions 1,928 3,083 Deferred income 1,846 3,011 Accrued liabilities 2,292 4,339 Stock compensation 1,553 3,156 Other 59 929 State net operating losses 18,659 18,031 Total deferred tax assets 26,998 32,968 Valuation allowance (17,117 ) (16,254 ) Total deferred tax assets after valuation allowance $ 9,881 $ 16,714 Deferred tax liabilities: Prepaid expenses $ (798 ) $ (956 ) Investment in partnerships, including differences in capitalization, depreciation and direct financing leases (3,083 ) (4,026 ) Property, equipment and capital leases (12,603 ) (23,756 ) Intangibles and other assets (14,837 ) (22,983 ) Debt extinguishment — (838 ) Direct financing leases (2,786 ) (4,256 ) Total deferred tax liabilities (34,107 ) (56,815 ) Net deferred tax liabilities (noncurrent) $ (24,226 ) $ (40,101 ) State net operating loss carryforwards expire beginning in December 2018 through May 2039 . Management does not believe the Company will be able to realize the state net operating loss carryforwards utilizing future income exclusive of the reversal of existing deferred tax liabilities and therefore has provided a valuation allowance of $17.1 million and $16.3 million as of August 31, 2018 and 2017 , respectively. As of August 31, 2018 and 2017 , the Company had approximately $0.8 million and $0.6 million of unrecognized tax benefits, including approximately $0.4 million of accrued interest and penalty for each year. If recognized, these benefits would favorably impact the effective tax rate. The Company recognizes estimated interest and penalties as a component of its income tax expense, net of federal benefit, as a component of provision for income taxes in the consolidated statements of income. During the years ended August 31, 2018 , 2017 and 2016 , the Company recognized a net expense of $0.1 million , a negligible net expense and a net benefit of $0.1 million , respectively. A reconciliation of unrecognized tax benefits is as follows for fiscal years ended August 31: 2018 2017 Balance at beginning of year $ 643 $ 625 Additions for tax positions of prior years 147 18 Balance at end of year $ 790 $ 643 The Company or one of its subsidiaries is subject to U.S. federal income tax and income tax in multiple U.S. state jurisdictions. At August 31, 2018 , the Company was subject to income tax examinations for its U.S. federal income taxes and for state and local income taxes generally after fiscal year 2014. The Company anticipates that the results of any examinations or appeals, combined with the expiration of applicable statutes of limitations and the additional accrual of interest related to unrecognized benefits on various return positions taken in years still open for examination, could result in a change to the liability for unrecognized tax benefits during the next 12 months ranging from a negligible increase to a decrease of $0.8 million depending on the timing and terms of the examination resolutions. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 12 Months Ended |
Aug. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity (Deficit) | Stockholders’ Equity (Deficit) Employee Stock Purchase Plan The Company has an employee stock purchase plan (“ESPP”) that permits eligible employees to purchase the Company’s common stock at a 15% discount from the stock’s fair market value. Participating employees may purchase shares of common stock each year up to the lesser of 10% of their base compensation or $25 thousand in the stock’s fair market value. At August 31, 2018 , 0.8 million shares were available for grant under the ESPP. Stock-Based Compensation The Sonic Corp. 2006 Long-Term Incentive Plan (the “2006 Plan”) provides flexibility to award various forms of equity compensation, such as stock options, stock appreciation rights, performance shares, RSUs and other share-based awards. At August 31, 2018 , 5.8 million shares were available for grant under the 2006 Plan. The Company grants stock options to employees with a seven -year term and a three -year vesting period and grants RSUs to employees with a minimum full vesting period of three years. The Company grants stock options to its Board of Directors with a seven -year term and one -year vesting period and also grants RSUs to its Board of Directors that vest over one year. The Company’s policy is to issue shares from treasury stock to satisfy stock option exercises, the vesting of RSUs and shares issued under the ESPP. Total stock-based compensation cost recognized for fiscal years 2018 , 2017 and 2016 was $4.6 million , $3.9 million and $3.8 million , respectively, net of related income tax benefits of $0.3 million , $1.3 million and $1.2 million , respectively. At August 31, 2018 , the total remaining unrecognized compensation cost related to unvested stock-based arrangements was $7.1 million and is expected to be recognized over a weighted average period of 1.8 years . The Company measures the compensation cost associated with stock option-based payments by estimating the fair value of stock options as of the grant date using the Black-Scholes option pricing model. The Company believes the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options granted during fiscal years 2018 , 2017 and 2016 . Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the employees who receive equity awards. The fair value of RSUs granted is equal to the Company’s closing stock price on the date of the grant. The per share weighted average fair value of stock options granted during 2018 , 2017 and 2016 was $6.37 , $6.65 and $8.23 , respectively. In addition to the exercise and grant date prices of the awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants in the respective periods are listed in the table below: 2018 2017 2016 Expected term (years) 5.2 5.3 5.3 Expected volatility 31 % 34 % 34 % Risk-free interest rate 2.5 % 2.0 % 1.4 % Expected dividend yield 2.5 % 2.2 % 1.5 % The Company estimates expected volatility based on historical daily price changes of the Company’s common stock for a period equal to the current expected term of the options. The risk-free interest rate is based on the U.S. treasury yields in effect at the time of grant corresponding with the expected term of the options. The expected option term is the number of years the Company estimates that options will be outstanding prior to exercise considering vesting schedules and historical exercise patterns. Stock Options A summary of stock option activity under the Company’s stock-based compensation plans for the year ended August 31, 2018 , is presented in the following table: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Yrs.) Aggregate Intrinsic Value Outstanding September 1, 2017 2,536 $ 20.42 Granted 713 25.84 Exercised (1,055 ) 15.59 Forfeited or expired (101 ) 27.93 Outstanding at August 31, 2018 2,093 $ 24.34 4.68 $ 24,117 Exercisable at August 31, 2018 968 $ 22.42 3.18 $ 13,013 Proceeds from the exercise of stock options for fiscal years 2018 , 2017 and 2016 were $4.1 million , $2.7 million and $3.8 million , respectively. The total intrinsic value of options exercised during the years ended August 31, 2018 , 2017 and 2016 was $14.8 million , $4.6 million and $18.9 million , respectively. Restricted Stock Units A summary of the Company’s RSU activity during the year ended August 31, 2018 is presented in the following table: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding September 1, 2017 95 $ 26.64 Granted 34 25.82 Vested (39 ) 27.20 Forfeited (7 ) 29.26 Outstanding at August 31, 2018 83 $ 25.75 The aggregate fair value of RSUs that vested during the fiscal years ended August 31, 2018 , 2017 and 2016 was $1.2 million , $0.5 million and $0.4 million , respectively. Share Repurchase Programs In August 2015, the Board of Directors extended the Company’s share repurchase program, authorizing the Company to purchase up to $145.0 million of its outstanding shares of common stock through August 31, 2016. The Board of Directors further extended the share repurchase program effective May 2016, authorizing the purchase of up to an additional $155.0 million of the Company's outstanding shares of common stock through August 31, 2017. During fiscal year 2016, approximately 5.2 million shares were repurchased for a total cost of $148.3 million , resulting in an average price per share of $28.48 . In October 2016, the Board of Directors increased the authorization under the share repurchase program by $40.0 million. During fiscal year 2017, approximately 6.7 million shares were repurchased for a total cost of $172.9 million , resulting in an average price per share of $25.71 . In August 2017, the Board of Directors approved an incremental $160.0 million share repurchase authorization of the Company's outstanding shares of common stock through August 31, 2018. In June 2018, the Board of Directors authorized a $500.0 million share repurchase program through August 31, 2021, replacing the Company’s previous fiscal year 2018 authorization. During fiscal year 2018, approximately 5.2 million shares were repurchased for a total cost of $139.2 million, resulting in an average price per share of $26.69 . We do not intend to repurchase outstanding shares of our common stock during the pendency of our merger with Inspire Brands, Inc. Dividends The Company paid dividends on common stock as follows (in thousands, except per share amounts): Dividend per share Total amount Payment date Fiscal year 2018 First Quarter $ 0.16 $ 6,243 November 17, 2017 Second Quarter 0.16 6,103 February 16, 2018 Third Quarter 0.16 5,879 May 18, 2018 Fourth Quarter 0.16 5,746 August 17, 2018 Fiscal year 2017 First Quarter $ 0.14 $ 6,359 November 18, 2016 Second Quarter 0.14 6,100 February 17, 2017 Third Quarter 0.14 6,041 May 19, 2017 Fourth Quarter 0.14 5,588 August 18, 2017 Subsequent to the end of fiscal year 2018, the Company and Inspire Brands, Inc. ("Inspire") entered into a definitive merger agreement under which Inspire will acquire Sonic. The agreement remains subject to shareholder approval, and the Company is not permitted to pay a dividend prior to the effective time of the merger. For more information regarding the merger agreement, see note 16 - Subsequent events. |
Employee Benefit And Cash Incen
Employee Benefit And Cash Incentive Plans | 12 Months Ended |
Aug. 31, 2018 | |
Compensation Related Costs [Abstract] | |
Employee Benefit And Cash Incentive Plans | Employee Benefit and Cash Incentive Plans The Company sponsors a qualified defined contribution 401(k) plan for employees meeting certain eligibility requirements. Under the plan, employees are entitled to make pre-tax contributions. The Company matches an amount equal to the employee’s contributions up to a maximum of 6% of the employee’s salaries depending on years of service and income. The Company’s contributions during fiscal years 2018 , 2017 and 2016 were $1.8 million , $1.9 million and $1.8 million , respectively. The Company has short-term and long-term cash incentive plans (the “Incentive Plans”) that apply to certain employees, and grants of awards under the Incentive Plans are at all times subject to the approval of the Company’s Board of Directors. Under certain awards pursuant to the Incentive Plans, if predetermined earnings goals are met, a predetermined percentage of the employee’s salary may be paid in the form of a bonus. The Company recognized as expense incentive bonuses of $9.2 million , $8.3 million and $13.4 million during fiscal years 2018 , 2017 and 2016 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Aug. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Payment Card Breach On September 18, 2017, the Company was informed by its payment card processor that there appeared to be suspicious activity involving credit and debit cards used at certain Sonic Drive-In locations. Upon learning of the suspicious activity, the Company immediately contacted and began working with law enforcement to investigate the matter. At the same time, the Company immediately launched its own investigation with the help of experienced third-party forensics firms. On October 4, 2017, the Company issued a public statement notifying guests and the public that it had discovered that credit and debit card numbers may have been acquired without authorization as part of a malware attack experienced at certain Sonic Drive-In locations. Subsequent to September 18, 2017, the Company incurred costs associated with this payment card breach, including legal fees, investigative fees and costs of communications with customers. In addition, payment card companies may issue assessments for card replacement and card issuer losses alleged to be associated with the payment card breach, as well as fines and penalties relating to the payment card breach. The Company expects that certain of such costs and assessments will be covered under the Company’s cyber liability insurance coverage. Currently, the Company cannot reasonably estimate a loss or range of losses associated with resolution of the payment card networks’ expected claims for non-ordinary course operating expenses or any amounts associated with the networks’ expected claims for alleged card issuer losses and/or card replacement costs. The Company believes that it is possible that the ultimate amount to be paid on payment card network claims, to the extent not covered by, or in excess of the limits of, the Company’s cyber liability insurance, could be material to its results of operations in future periods. The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable. In addition, the Company may incur legal and other professional services expenses associated with the payment card breach in future periods. The Company will recognize these expenses as such services are received. Litigation The Company was named as a defendant in nine purported class action complaints related to the 2017 payment card breach at certain Sonic Drive-Ins. The cases were consolidated in the Northern District of Ohio (the “Litigation”). The plaintiffs in the Litigation assert various claims related to the Company’s alleged failure to safeguard customer credit card information and seek monetary damages, injunctive and declaratory relief and attorneys’ fees and costs. The Company believes it has meritorious defenses to the Litigation and intends to vigorously oppose the claims asserted by the plaintiffs. On October 10, 2018, the parties to the Litigation filed a joint motion seeking preliminary approval of a class settlement. Based on the terms of class settlement, which is subject to final court approval, we do not believe any payments made in connection with the class settlement or the Litigation more generally would be in excess of our cyber liability insurance coverage. The estimated settlement amount has been recorded in accrued liabilities, with an offsetting amount recorded in accounts and notes receivable, net, related to the cyber liability insurance coverage. The Company has since been named as a defendant in one additional purported class action complaint filed on October 16, 2018, in the United States District Court for the Eastern District of Arkansas. We cannot provide assurance that we will not become subject to other inquiries or claims relating to the payment card breach in the future. Although we maintain cyber liability insurance, it is possible the ultimate amount paid by us relating to the payment card breach may be in excess of our cyber liability insurance coverage applicable to claims of this nature. We are unable to estimate the amount of any such excess. The Company is involved in various other 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, operating results or financial condition. Note Repurchase Agreement On December 20, 2013, the Company extended a note purchase agreement to a bank that serves to guarantee the repayment of a franchisee loan, with a term through 2018 , and also benefits the franchisee with a lower financing rate. In the event of default by the franchisee, the Company would purchase the franchisee loan from the bank, thereby becoming the note holder and providing an avenue of recourse with the franchisee. The Company recorded a liability for this guarantee which was based on the Company’s estimate of fair value. As of August 31, 2018 , the balance of the franchisee’s loan was $4.4 million . Lease Commitments The Company has obligations under various operating lease agreements with third-party lessors related to the real estate for certain Company Drive-In operations that were sold to franchisees. Under these agreements, which expire through 2029 , the Company remains secondarily liable for the lease payments for which it was responsible as the original lessee. As of August 31, 2018 , the amount remaining under these guaranteed lease obligations totaled $15.1 million . At this time, the Company does not anticipate any material defaults under the foregoing leases; therefore, no liability has been provided. Purchase Obligations At August 31, 2018 , the Company had purchase obligations of approximately $113.2 million which primarily related to its estimated share of system commitments for food products. The Company has excluded agreements that are cancelable without penalty. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Aug. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent events On September 24, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Inspire Brands, Inc. (“Parent”) and SSK Merger Sub, Inc., a wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Parent. At the effective time of the Merger, each share of common stock, par value $0.01 per share, of the Company (the “Common Stock”), issued and outstanding as of immediately prior to the effective time of the Merger (other than shares of Common Stock (i) held in treasury by the Company or owned by any direct or indirect wholly owned subsidiary of the Company, (ii) owned by Parent or Merger Sub or any direct or indirect wholly owned subsidiary of Parent or (iii) for which appraisal rights have been properly demanded in accordance with the General Corporation Law of the State of Delaware) will be cancelled and automatically converted into the right to receive $43.50 in cash (the “Merger Consideration”). In connection with the Merger, each unvested option of the Company that is outstanding and unexercised immediately prior to the effective time of the Merger will vest and each outstanding option that has an exercise price below the Merger Consideration will convert into the right to receive a cash payment equal to the product of (i) the difference between the Merger Consideration and the exercise price and (ii) the number of shares of Common Stock issuable upon exercise of such option. In connection with the Merger, each unvested restricted stock unit of the Company that is outstanding immediately prior to the effective time of the Merger will vest and will convert into the right to receive a cash payment equal to the product of (i) the Merger Consideration and (ii) the number of shares of Common Stock subject to such restricted stock unit. The Board of Directors of the Company unanimously has (i) determined that the Merger Agreement and the Transactions are in the best interests of the Company and its stockholders, (ii) declared it advisable to enter into the Merger Agreement, (iii) authorized and approved the Merger Agreement and the consummation of the Transactions, (iv) resolved to recommend that the Company’s stockholders vote in favor of adoption of the Merger Agreement and (v) directed that the Merger Agreement be submitted to a vote of the Company’s stockholders. Consummation of the Merger is subject to certain conditions, including (i) the adoption of the Merger Agreement by the Company’s stockholders, (ii) the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (iii) the absence of any law or order restraining, enjoining or otherwise prohibiting the Merger. Each of Parent’s and the Company’s obligation to consummate the Merger is also subject to certain additional conditions, including (i) subject to specific standards, the accuracy of the representations and warranties of the other party, (ii) performance in all material respects by the other party of its obligations under the Merger Agreement and (iii) with respect to Parent’s obligations to consummate the Merger, the absence of a material adverse effect with respect to the Company. The Merger Agreement provides that consummation of the Merger will occur on the later of two business days after (a) satisfaction or waiver of such closing conditions and (b) December 21, 2018, subject to certain exceptions to extend the consummation of the Merger. The Company has made customary representations and warranties in the Merger Agreement and has agreed to customary covenants regarding the operation of the business of the Company and its subsidiaries prior to the closing of the Merger. These covenants, among other matters, do not allow the Company to declare or pay dividends during the pendency of the Transactions. The Company is also subject to customary restrictions on its ability to solicit acquisition proposals from third parties, to provide information to, and enter into discussions or negotiations with, third parties regarding alternative acquisition proposals, and to withdraw its recommendation in favor of the Merger. However, prior to the receipt of the approval of the Merger from the Company’s stockholders, these restrictions are subject to customary “fiduciary out” provisions that allow the Company, under certain circumstances, to (i) provide information to, and enter into discussions or negotiations with, third parties with respect to an acquisition proposal if the Company’s Board of Directors determines that such acquisition proposal either constitutes, or could reasonably be expected to result in, a superior proposal and (ii) withdraw or change its recommendation in favor of the Merger if it determines that its failure to take such action is reasonably likely to be inconsistent with its fiduciary duties under applicable law. The Merger Agreement contains certain termination rights for the Company and Parent. Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee of $47,736,000 . Specifically, if the Merger Agreement is terminated by (i) the Company in order to accept a superior proposal, (ii) Parent if the Company’s Board of Directors withdraws or changes its recommendation of the Merger (unless the Company’s stockholders have already approved the Merger) or (iii) Parent or the Company if the Company fails to obtain the necessary approval from the Company’s stockholders, if, prior to the time the Company’s stockholders vote on the Merger (but after the date of the Merger Agreement), an acquisition proposal has been publicly made or becomes publicly known, and not publicly withdrawn, and the Company thereafter consummates, or enters into a definitive agreement providing for, an acquisition transaction within 12 months of the termination of the Merger Agreement. The termination fee will also be payable in certain other circumstances if the Merger Agreement is terminated and prior to such termination (but after the date of the Merger Agreement) an acquisition proposal has been made to the Company’s Board of Directors or becomes publicly known, and is not withdrawn, and the Company later consummates, or enters into a definitive agreement providing for, an acquisition transaction within 12 months of the termination. If the termination fee becomes payable, it is payable upon termination in the case of (i) above, and two business days after termination in the case of (ii) above and all other cases. Parent has entered into commitment letters with funds managed by Roark Capital Management LLC aggregating approximately $1.635 billion pursuant to which the funds have committed to capitalize Parent in connection with the Merger. The equity financing and Merger Agreement contemplate that the existing securitization indebtedness of the Company remains outstanding without default and on current terms in connection with the Merger, provided that the Merger Agreement permits Parent to seek alternative financing to reduce the equity commitment or otherwise finance the Merger. On October 1, 2018, the Company filed its Premerger Notification and Report Form with respect to the Merger under the HSR Act with the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice. The HSR waiting period was terminated effective October 15, 2018. Additional information about the Merger Agreement and the Transactions can be found in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 27, 2018. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Aug. 31, 2018 | |
Quarterly Financial Data [Abstract] | |
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter 2018 2017 2018 2017 2018 2017 2018 2017 Total revenues $ 105,428 $ 129,551 $ 88,102 $ 100,158 $ 118,306 $ 123,990 $ 111,754 $ 123,568 Income from operations 22,448 27,052 14,914 22,627 37,261 35,441 31,780 38,155 Net income (1) $ 11,430 $ 13,118 $ 19,607 $ 10,963 $ 21,576 $ 18,751 $ 18,592 $ 20,831 Basic income per share (2) $ 0.29 $ 0.29 $ 0.51 $ 0.25 $ 0.58 $ 0.44 $ 0.52 $ 0.50 Diluted income per share (2) $ 0.29 $ 0.28 $ 0.51 $ 0.25 $ 0.58 $ 0.44 $ 0.51 $ 0.50 __________ (1) For fiscal year 2018, includes the after tax expense of $0.4 million related to the cybersecurity incident in the first quarter, the after tax expense of $0.2 million related to the cybersecurity incident, the $0.9 million after tax loss from the debt transactions and $14.1 million for the discrete impact of the Tax Cuts and Jobs Act in the second quarter, the after tax expense of $0.2 related to the cybersecurity incident and the after tax gain of $2.2 million on refranchising transactions in the third quarter, and the after tax expense of $0.3 related to the cybersecurity incident in the fourth quarter. For fiscal year 2017, includes the after tax loss of $0.6 million on refranchising transactions and the after tax gain of $2.4 million on the sale of investment in refranchised drive-in operations in the first quarter, the after tax gain of $4.3 million on refranchising transactions in the second quarter, the after tax gain of $0.4 million on refranchising transactions in the third quarter and the after tax gain of $0.1 million on refranchising transactions, after tax restructuring charges of $1.1 million and the after tax gain on the sale of real estate of $3.0 million in the fourth quarter. (2) The sum of per share data may not agree to annual amounts due to rounding. |
Schedule II - Valuation And Qua
Schedule II - Valuation And Qualifying Accounts | 12 Months Ended |
Aug. 31, 2018 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation And Qualifying Accounts | Sonic Corp . Schedule II – Valuation and Qualifying Accounts Description Balance at Beginning of Year Additions Charged to Costs and Expenses Amounts Written Off Against the Allowance (Transfers) Recoveries Balance at End of Year (In thousands) Allowance for doubtful accounts and notes receivable Fiscal years ended: August 31, 2018 $ 1,131 1,825 (374 ) 2 $ 2,584 August 31, 2017 $ 1,041 113 (23 ) — $ 1,131 August 31, 2016 $ 1,105 (53 ) (13 ) 2 $ 1,041 Accrued liability for drive-in closings and disposals Fiscal years ended: August 31, 2018 $ 532 222 (241 ) (18 ) $ 495 August 31, 2017 $ 611 178 (243 ) (14 ) $ 532 August 31, 2016 $ 807 208 (376 ) (28 ) $ 611 See accompanying Report of Independent Registered Pubic Accounting Firm. |
Summary Of Significant Accoun_2
Summary Of Significant Accounting Policies (Policy) | 12 Months Ended |
Aug. 31, 2018 | |
Accounting Policies [Abstract] | |
Operations | Operations Sonic Corp. (the “Company”), through its subsidiaries, operates and franchises a chain of quick-service restaurants in the United States (“U.S.”). It derives its revenues primarily from Company Drive-In sales and royalty fees from franchisees. The Company also leases real estate and receives equity earnings in noncontrolling ownership in a number of Franchise Drive‑Ins. |
Principles of Consolidation | Principles of Consolidation The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and a number of Company Drive-Ins in which a subsidiary has a controlling ownership interest. All intercompany accounts and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported and contingent assets and liabilities disclosed in the financial statements and accompanying notes. Actual results may differ from those estimates, and such differences may be material to the financial statements. |
Segment Reporting | Segment Reporting In accordance with Accounting Standards Update (“ASU”) No. 280, “Segment Reporting,” the Company uses the management approach for determining its reportable segments. The management approach is based upon the way that management reviews performance and allocates resources. The Company’s chief operating decision maker and his management team review operating results on a consolidated basis for purposes of allocating resources and evaluating the financial performance of the Sonic brand. Accordingly, the Company has determined that it has one operating segment and, therefore, one reporting segment. |
Cash Equivalents | Cash Equivalents Cash equivalents consist of highly liquid investments, primarily money market accounts that mature in three months or less from the date of purchase, and depository accounts. |
Restricted Cash | Restricted Cash As of August 31, 2018 , the Company had restricted cash balances totaling $27.5 million for funds required to be held in trust for the benefit of senior noteholders under the Company’s debt arrangements. The current portion of restricted cash of $19.6 million represents amounts to be returned to the Company or paid to service current debt obligations, including $5.0 million in proceeds from the sale of securitized real estate. The noncurrent portion of $7.9 million primarily represents proceeds from the sale of securitized real estate, as well as interest reserves required to be set aside for the duration of the debt. Under the Company's securitized finance structure, the Company has 12 months to reinvest the real estate proceeds in eligible capital expenses. If the $12.8 million in proceeds are not reinvested within a year, all amounts above $5 million , which is reflected in current restricted cash, must be used to pay down the fixed-rate debt and may require a make-whole premium. The Company may also pay down debt prior to that 12-month time period which could require a make-whole premium. The make-whole premium calculation is, in general, based on the discounted present value of the amount of interest that would otherwise have been paid had the prepayment not been made. |
Accounts and Notes Receivable | Accounts and Notes Receivable The Company charges interest on past due accounts receivable and recognizes income as it is collected. Interest accrues on notes receivable based on the contractual terms of the respective note. The Company monitors all accounts and notes receivable for delinquency and provides for estimated losses for specific receivables that are not likely to be collected. The Company assesses credit risk for accounts and notes receivable of specific franchisees based on payment history, current payment patterns, the health of the franchisee’s business and an assessment of the franchisee’s ability to pay outstanding balances. In addition to allowances for bad debt for specific franchisee receivables, a general provision for bad debt is estimated for the Company’s accounts receivable based on historical trends. Account balances generally are charged against the allowance when the Company believes that the collection is no longer reasonably assured. The Company continually reviews its allowance for doubtful accounts. |
Inventories | Inventories Inventories consist principally of food and supplies that are carried at the lower of cost (first-in, first-out basis) or market. |
Property, Equipment and Capital Leases | Property, Equipment and Capital Leases Property and equipment are recorded at cost, and leased assets under capital leases are recorded at the present value of future minimum lease payments. Depreciation of property and equipment and amortization of capital leases are computed by the straight-line method over the estimated useful lives or the lease term, including cancelable option periods when appropriate, and are combined for presentation in the financial statements. |
Accounting for Long-Lived Assets | Accounting for Long-Lived Assets The Company reviews long-lived assets quarterly or whenever changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which generally represents the individual drive-in. Earnings before interest, taxes and depreciation (“EBITDA”) is the cash flow measure monitored at the drive-in level for indicators of impairment. As the cash flow measure reaches levels to indicate potential impairment, the Company estimates the future cash flows expected to be generated from the use of the asset and its eventual disposal. If the sum of undiscounted future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. Fair value is typically determined to be the value of the land since drive-in buildings and improvements are single-purpose assets and have little value to market participants. The equipment associated with a drive-in can be easily relocated to another drive-in and therefore is not adjusted. Surplus property assets are carried at the lower of depreciated cost or fair value less cost to sell. The majority of the value in surplus property is land. Fair values are estimated based upon management’s assessment as well as independent market value assessments of the assets’ estimated sales values. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is determined based on an acquisition purchase price in excess of the fair value of identified assets. Intangible assets with lives restricted by contractual, legal or other means are amortized over their useful lives. The Company tests goodwill at least annually for impairment using the fair value approach on a reporting unit basis. Since the Company is one reporting unit, potential goodwill impairment is evaluated by comparing the fair value of the Company to its carrying value. The fair value of the Company is determined using a market approach. If the carrying value of the Company exceeds fair value, a comparison of the fair value of goodwill against the carrying value of goodwill is made to determine whether goodwill has been impaired. During the fourth quarters of fiscal years 2018 and 2017 , the annual assessment of the recoverability of goodwill was performed, and no impairment was indicated. The Company’s intangible assets subject to amortization consist primarily of acquired franchise agreements and other intangibles. Amortization expense is calculated using the straight-line method over the asset’s expected useful life. See note 4 - Goodwill and Other Intangibles for additional related disclosures. |
Refranchising and Closure of Company Drive-Ins | Refranchising and Closure of Company Drive-Ins Gains and losses from the sale or closure of Company Drive-Ins are recorded as other operating (income) expense, net on the consolidated statements of income. |
Revenue Recognition, Franchise Fees and Royalties | Revenue Recognition, Franchise Fees and Royalties Revenue from Company Drive-In sales is recognized when food and beverage products are sold. Company Drive-In sales are presented net of sales tax and other sales-related taxes. The Company’s gift card program serves all Sonic Drive-Ins and is administered by the Company on behalf of a system advertising fund. The Company records a liability in the period in which a gift card is sold. The gift cards do not have expiration dates. As gift cards are redeemed, the liability is reduced with revenue recognized on redemptions at Company Drive-Ins. Breakage is the amount on a gift card that is not expected to be redeemed and that the Company is not required to remit to a state under unclaimed property laws. The Company estimates breakage based upon the historical trend in redemption patterns from previously sold gift cards. The Company’s policy is to recognize the breakage, using the delayed recognition method, when it is apparent that there is a remote likelihood the gift card balance will be redeemed. The Company reduces the gift card liability for the estimated breakage and uses that amount to defray the costs of operating the gift card program. There is no income recognized on unredeemed gift card balances. Costs to administer the gift card program, net of breakage, are included in the receivables from system funds as set forth in note 3 – Accounts and Notes Receivable. Such costs were not material in fiscal years 2018 , 2017 or 2016 . Franchise fees are recognized in income when the Company has substantially performed or satisfied all material services or conditions relating to the sale of the franchise, and the fees are generally nonrefundable. Development fees are generally nonrefundable and are recognized in income on a pro-rata basis when the conditions for revenue recognition under the individual development agreements are met. Both franchise fees and development fees are generally recognized upon the opening of a Franchise Drive-In or upon termination of the agreement between the Company and the franchisee. The Company’s franchisees pay royalties based on a percentage of sales. Royalties are recognized as revenue when they are earned. |
Advertising Costs | Advertising Costs Costs incurred in connection with advertising and promoting the Company’s products are included in other operating expenses and are expensed as incurred. Such costs amounted to $12.6 million , $15.8 million and $23.4 million in fiscal years 2018 , 2017 and 2016 , respectively. Under the Company’s franchise agreements, both Company Drive-Ins and Franchise Drive-Ins must contribute a minimum percentage of revenues to the Sonic Brand Fund, a national media production fund, and spend an additional minimum percentage of revenues on advertising, either directly or through Company-required participation in advertising cooperatives. A significant portion of the advertising cooperative contributions is remitted to the System Marketing Fund, which purchases advertising on national cable and broadcast networks and local broadcast networks and also funds other national media expenses and sponsorship opportunities. As stated in the terms of existing franchise agreements, these funds do not constitute assets of the Company, and the Company acts with limited agency in the administration of these funds. Accordingly, neither the revenues and expenses nor the assets and liabilities of the advertising cooperatives, the Sonic Brand Fund or the System Marketing Fund are included in the Company’s consolidated financial statements. However, all advertising contributions by Company Drive-Ins are recorded as an expense on the Company’s financial statements. Under the Company’s franchise agreements, the Company is reimbursed by the Sonic Brand Fund for costs incurred to administer the fund at an amount not to exceed 15% of the Sonic Brand Fund’s gross receipts. Reimbursements from the Sonic Brand Fund are offset against selling, general and administrative expenses and totaled $5.1 million , $5.1 million and $5.2 million in fiscal years 2018 , 2017 and 2016 , respectively. |
Technology Costs | Technology Costs Under the Company’s franchise agreements, both Company Drive-Ins and Franchise Drive-Ins must pay a set technology fee to the Brand Technology Fund (“BTF”), which was established in the third quarter of fiscal year 2016. The BTF administers cybersecurity and other technology programs for the Sonic system. As stated in the terms of existing franchise agreements, these funds do not constitute assets of the Company, and the Company acts with limited agency in the administration of these funds. Accordingly, neither the revenues and expenses nor the assets and liabilities of the BTF are included in the Company’s consolidated financial statements. However, technology fees paid by Company Drive-Ins are recorded as an expense on the Company’s financial statements. Under the Company’s franchise agreements, the Company is reimbursed by the BTF for costs incurred to administer the fund at an amount not to exceed 15% of the BTF’s gross receipts. Reimbursements from the BTF are offset against selling, general and administrative expenses and totaled $6.0 million , $5.4 million and $2.5 million in fiscal years 2018 , 2017 and 2016 , respectively. |
Operating Leases | Operating Leases Rent expense is recognized on a straight-line basis over the expected lease term, including cancelable option periods when it is deemed to be reasonably assured that the Company would incur an economic penalty for not exercising the options. Within the terms of some of the leases, there are rent holidays and/or escalations in payments over the base lease term, as well as renewal periods. The effects of the holidays and escalations have been reflected in rent expense on a straight-line basis over the expected lease term, which includes cancelable option periods when appropriate. The lease term commences on the date when the Company has the right to control the use of the leased property, which can occur before rent payments are due under the terms of the lease. Contingent rent is generally based on sales levels and is accrued at the point in time it is probable that such sales levels will be achieved. |
Stock-Based Compensation | Stock-Based Compensation The Company grants incentive stock options (“ISOs”), non-qualified stock options (“NQs”) and restricted stock units (“RSUs”). For grants of NQs and RSUs, the Company expects to recognize a tax benefit upon exercise of the option or vesting of the RSU. As a result, a tax benefit is recognized on the related stock-based compensation expense for these types of awards. For grants of ISOs, a tax benefit only results if the option holder has a disqualifying disposition. As a result of the limitation on the tax benefit for ISOs, the tax benefit for stock-based compensation will generally be less than the Company’s overall tax rate and will vary depending on the timing of employees’ exercises and sales of stock. Stock-based compensation is measured at the grant date based on the calculated fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period of the award, generally the vesting period of the grant. For additional information on stock-based compensation, see note 13 - Stockholders’ Equity (Deficit). |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. During the first quarter of fiscal year 2017, the Company early adopted ASU No. 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” which required the Company to recognize excess tax benefits related to share-based payments in the provision for income taxes in the consolidated statements of income. Prior to adoption, the Company recorded these excess tax benefits in additional paid-in capital. These benefits are principally generated from employee exercises of NQs, the vesting of RSUs and disqualifying dispositions of ISOs. The threshold for recognizing the financial statement effects of a tax position is when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority. Interest and penalties related to unrecognized tax benefits are included in income tax expense. Additional information regarding the Company’s unrecognized tax benefits is provided in note 12 - Income Taxes. |
Fair Value Measurements | Fair Value Measurements The Company’s financial assets and liabilities consist of cash and cash equivalents, accounts and notes receivable, accounts payable and long-term debt. The fair value of cash and cash equivalents, accounts receivable and accounts payable approximates their carrying amounts due to the short-term nature of these assets and liabilities. The following methods and assumptions were used by the Company in estimating fair values of its financial instruments: • Notes receivable - As of August 31, 2018 and 2017 , the carrying amounts of notes receivable (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. • Long-term debt - The Company prepares a discounted cash flow analysis for its fixed and variable rate borrowings to estimate fair value each quarter. This analysis uses Level 2 inputs from market information available for public debt transactions for companies with ratings that are similar to the Company’s ratings and from information gathered from brokers who trade in the Company’s notes. The fair value estimate required significant assumptions by management. Management believes this fair value is a reasonable estimate. For more information regarding the Company’s long-term debt, see note 10 - Debt and note 11 - Fair Value of Financial Instruments. Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis, which means these assets and liabilities are not measured at fair value on an ongoing basis but are subject to periodic impairment tests. For the Company, these items primarily include long-lived assets, goodwill and other intangible assets. Refer to sections “Accounting for Long-Lived Assets” and “Goodwill and Other Intangible Assets,” discussed above, for inputs and valuation techniques used to measure the fair value of these nonfinancial assets. The fair value was based upon management’s assessment as well as independent market value assessments which involved Level 2 and Level 3 inputs. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled for the transfer of promised goods or services to customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued clarifying guidance concerning principal versus agent considerations, identifying performance obligations and licensing and corrections or improvements to issues that affect narrow aspects of the guidance. In August 2015, the FASB issued ASU 2015-14 delaying the effective date of adoption. These updates are now effective for annual and interim periods for fiscal years beginning after December 15, 2017, which will require us to adopt these provisions in the first quarter of fiscal 2019. The standards are to be applied retrospectively to each prior period presented or using a modified retrospective transition method. As a result of our evaluation of the Company’s revenue streams, we do not believe the new revenue recognition standards will impact the Company’s two largest sources of revenue: the recognition of sales from Company Drive-Ins and the recognition of royalty fees from franchisees that are based on a percentage of franchise sales. The standards are also not anticipated to have a material impact to the recognition of gift card breakage. Additionally, the standards will not impact the accounting for Company’s contributions and expenses to its advertising funds. Neither the revenues and expenses nor the assets and liabilities of the advertising funds are included in the Company’s consolidated financial statements and as such, are not included in the scope of the revenue standards. The new revenue recognition standards will impact the recognition of the initial franchise fee. Under existing guidance, the initial franchise fee is recognized as revenue when the Company has substantially performed or satisfied all material services or conditions relating to the sale of the franchise, which is typically upon the opening of a Franchise Drive-In. Under the new standards, the services provided relating to the sale of the franchise do not constitute a separate and distinct performance obligation from the ongoing franchise right and, as such, the initial franchise fees will be deferred and recognized as revenue over the term of each franchise agreement. The standards require any unamortized portion of the initial franchise fee be presented in the consolidated balance sheets as a deferred revenue liability. The impact of the amortization of these fees is not expected to be material to total revenue or net income. The standards will impact the Company’s recording of administrative fees received from the Sonic Brand Fund and Brand Technology Fund. The Company currently records the administrative fees from the funds as a reduction to administrative expenses within selling, general, and administrative expenses. Upon adoption of the standards, the Company will recognize the administrative fees from the funds on a gross basis within revenues in the consolidated statements of income, and the related administrative expenses will continue to be reported within selling, general, and administrative expenses. The Company continues to evaluate the effect the standards will have on related disclosures. Further, the Company is currently implementing internal controls related to the recognition and presentation of revenues under the standards. The Company will adopt the standards using the modified retrospective transition method effective September 1, 2018, which aligns with the required adoption date. Upon adoption, the Company expects to record a cumulative adjustment before income tax effects of approximately $17.4 million to total liabilities in the consolidated balance sheets, with an offsetting adjustment within total stockholder's deficit, primarily related to unearned initial franchise fees for franchise agreements entered into prior to adoption. In February 2016, the FASB issued ASU No. 2016-02, “Leases.” The new standard, which replaces existing lease guidance, requires lessees to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. Accounting guidance for lessors is largely unchanged. In January 2018, the FASB issued ASU No. 2018-01 which permits an entity to elect an optional transition practical expedient to forgo the evaluation of land easements that existed or expired before the entity’s adoption of 2016-02 and that were not accounted for as leases under previous lease guidance. Further improvements have been issued in ASUs 2018-10 and 2018-11. The standard is effective for fiscal year 2020, with early application permitted. This standard requires adoption based upon a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with optional practical expedients. Based on a preliminary assessment, the Company expects that most of its operating lease commitments will be subject to the new guidance and recognized as operating lease liabilities and right-of-use assets upon adoption, resulting in a significant increase in the assets and liabilities on the consolidated balance sheets. The Company is continuing its assessment, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses.” The update was issued to provide more decision-useful information about the expected credit losses on financial instruments. The update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update is effective for fiscal year 2021, with early adoption permitted for fiscal years beginning after December 15, 2018. The update should be adopted using a modified-retrospective approach. The Company is currently evaluating the effect this update will have on its financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments.” The update is intended to reduce diversity in practice in how certain transactions are classified and will make eight targeted changes to how cash receipts and cash payments are presented in the statement of cash flows. The update is effective for fiscal year 2019. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case the amendments will apply prospectively as of the earliest date practicable. The Company does not expect a material impact on its financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory,” as part of its simplification initiatives. The update requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than deferring the recognition until the asset has been sold to an outside party as is required under current GAAP. The update is effective for fiscal year 2019. The new standard will require adoption on a modified retrospective basis through a cumulative-effect adjustment to retained earnings, and early adoption is permitted. The Company does not expect a material impact on its financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows - Restricted Cash.” The update requires that restricted cash balances be included in the beginning and ending cash balance within the statement of cash flows. The update is effective for fiscal year 2019. The amendments should be adopted on a retrospective basis for each period presented, and early adoption is permitted. The adoption will increase the beginning and ending cash balance within the Company's statement of cash flows by its restricted cash balances and will require a new disclosure to reconcile the cash balances within the statement of cash flows to the balance sheets. The Company does not expect any other material impacts to its financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation: Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. The update is effective for fiscal year 2019. The update is to be adopted prospectively to an award modified on or after the adoption date. Early adoption is permitted. The Company does not expect a material impact on its financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The amendments in the update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The update is effective for fiscal year 2021 and is to be applied either retrospectively or prospectively to all implementation costs incurred after the adoption date. Early adoption is permitted. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its financial statements and related disclosures. The Company has reviewed all other recently issued accounting pronouncements and concluded they are not applicable or not expected to be significant to our operations. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Earnings Per Share [Abstract] | |
Computation Of Basic And Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share: Fiscal year ended August 31, 2018 2017 2016 Numerator: Net income $ 71,205 $ 63,663 $ 64,067 Denominator: Weighted average common shares outstanding– basic 37,618 43,306 48,703 Effect of dilutive employee stock options and unvested RSUs 468 737 966 Weighted average common shares outstanding – diluted 38,086 44,043 49,669 Net income per common share – basic $ 1.89 $ 1.47 $ 1.32 Net income per common share – diluted $ 1.87 $ 1.45 $ 1.29 Anti-dilutive securities excluded (1) 1,157 1,154 615 _______________ (1) Anti-dilutive securities consist of stock options and unvested RSUs that were not included in the computation of diluted earnings per share because either the exercise price of the options was greater than the average market price of the common stock or the total assumed proceeds under the treasury stock method resulted in negative incremental shares, and thus the inclusion would have been anti-dilutive. |
Accounts And Notes Receivable (
Accounts And Notes Receivable (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Receivables [Abstract] | |
Schedule Of Accounts And Notes Receivable | Accounts and notes receivable consist of the following: August 31, 2018 2017 Current Accounts and Notes Receivable: Royalties and other trade receivables $ 20,177 $ 19,571 Notes receivable from franchisees 2,006 1,441 Receivables from system funds 2,480 6,360 Other 11,080 7,475 Accounts and notes receivable, gross 35,743 34,847 Allowance for doubtful accounts and notes receivable (776 ) (1,089 ) Current accounts and notes receivable, net $ 34,967 $ 33,758 Noncurrent Notes Receivable: Receivables from franchisees $ 7,597 $ 6,810 Receivables from system funds 5,143 3,033 Allowance for doubtful notes receivable (1,808 ) (42 ) Noncurrent notes receivable, net $ 10,932 $ 9,801 |
Goodwill And Other Intangibles
Goodwill And Other Intangibles (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes In The Carrying Amount Of Goodwill | The changes in the carrying amount of goodwill were as follows: August 31, 2018 2017 Balance at beginning of year $ 75,756 $ 76,734 Goodwill disposed of related to the sale of Company Drive-Ins (412 ) (978 ) Balance at end of year $ 75,344 $ 75,756 |
Refranchising of Company Driv_2
Refranchising of Company Drive-Ins Refranchising of Company Drive-Ins (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Summary of Pretax Activity Recorded as a Result of the Refranchising Initiative | The following is a summary of the pretax activity recorded as a result of the refranchising initiative (in thousands, except number of refranchised Company Drive-Ins): Fiscal year ended August 31, 2017 2016 Number of refranchised Company Drive-Ins 110 29 Proceeds from sales of Company Drive-Ins $ 20,036 $ 3,568 Proceeds from sale of real estate (1) 11,726 — Real estate assets sold (1) (12,095 ) (2,402 ) Assets sold, net of retained minority investment (2) (7,891 ) — Initial and subsequent lease payments for real estate option (1) (3,178 ) — Goodwill related to sales of Company Drive-Ins (966 ) (194 ) Deferred gain for real estate option (3) (809 ) — Loss on assets held for sale (65 ) — Refranchising initiative gains, net $ 6,758 $ 972 _______________ (1) During the first quarter of fiscal year 2017, as part of a 53 drive-in refranchising transaction, a portion of the proceeds was applied as the initial payment for an option to purchase the real estate within the next 24 months. The franchisee exercised the option in the last six months of the fiscal year. Until the option was fully exercised, the franchisee made monthly lease payments which are included in other operating income, net of sub-lease expense. (2) Net assets sold consisted primarily of equipment. (3) The deferred gain of $0.8 million is recorded in other non-current liabilities as a result of a real estate purchase option extended to the franchisee in the second quarter of fiscal year 2017. The deferred gain will continue to be amortized into income through January 2020 when the option becomes exercisable. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Leases [Abstract] | |
Components of Net Investment in Direct Financing Leases | Components of net investment in direct financing leases are as follows at August 31: 2018 2017 Minimum lease payments receivable $ 17,068 $ 18,156 Less unearned income (5,217 ) (5,932 ) Net investment in direct financing leases 11,851 12,224 Less amount due within one year (460 ) (371 ) Amount due after one year $ 11,391 $ 11,853 |
Schedule Of Future Minimum Rental Payments Receivable | Future minimum rental payments receivable as of August 31, 2018 , are as follows: Operating Direct Financing Years ended August 31: 2019 $ 7,124 $ 1,156 2020 7,544 1,269 2021 7,787 1,365 2022 7,804 1,362 2023 7,884 1,362 Thereafter 60,331 10,554 $ 98,474 $ 17,068 Less unearned income $ (5,217 ) $ 11,851 |
Schedule Of Future Minimum Rental Payments | Future minimum lease payments on operating and capital leases as of August 31, 2018 , are as follows: Operating Capital Years ended August 31: 2019 $ 8,198 $ 3,489 2020 8,173 3,194 2021 7,536 3,109 2022 6,393 2,597 2023 6,437 2,415 Thereafter 44,017 4,541 Total minimum lease payments (1) $ 80,754 19,345 Less amount representing interest averaging 5.4% (3,888 ) Present value of net minimum lease payments 15,457 Less amount due within one year (2,454 ) Amount due after one year $ 13,003 _______________ (1) Minimum payments have not been reduced by future minimum rentals receivable under noncancellable operating and capital subleases of $25.9 million and $1.3 million , respectively. They also do not include contingent rentals which may be due under certain leases. Contingent rentals for capital leases amounted to $0.2 million , $0.3 million and $0.9 million in fiscal years 2018 , 2017 and 2016 , respectively. |
Schedule Of Rent Expense For Operating Leases | Total rent expense for all operating leases consists of the following for the years ended August 31: 2018 2017 2016 Minimum rentals $ 8,039 $ 11,224 $ 12,441 Contingent rentals 140 283 284 Total rent expense 8,179 11,507 12,725 Less sublease rentals (3,464 ) (2,513 ) (2,372 ) Net rent expense $ 4,715 $ 8,994 $ 10,353 |
Property, Equipment And Capit_2
Property, Equipment And Capital Leases (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule Of Property, Equipment And Capital Leases | Property, equipment and capital leases consist of the following at August 31: Estimated Useful Life 2018 2017 Property, equipment and capital leases: Land $ 120,352 $ 117,402 Buildings and improvements 8 – 25 yrs 243,434 251,695 Drive-In equipment 5 – 7 yrs 62,679 75,410 Brand technology development and other equipment 2 – 5 yrs 133,020 126,179 Property and equipment, at cost 559,485 570,686 Accumulated depreciation (271,940 ) (272,233 ) Property and equipment, net 287,545 298,453 Capital leases Life of lease 39,204 45,315 Accumulated amortization (28,527 ) (31,388 ) Capital leases, net 10,677 13,927 Property, equipment and capital leases, net $ 298,222 $ 312,380 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Accrued Liabilities, Current [Abstract] | |
Schedule Of Accrued Liabilities | Accrued liabilities consist of the following at August 31: 2018 2017 Wages and employee benefit costs $ 16,338 $ 17,705 Property taxes, sales and use taxes and employment taxes 4,677 5,634 Unredeemed gift cards 13,184 11,319 Other 10,115 10,188 $ 44,314 $ 44,846 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Long-term debt consists of the following at August 31: 2018 2017 Class A-2 2018-1 senior secured fixed rate notes $ 170,000 $ — Class A-2 2016-1 senior secured fixed rate notes 399,911 422,521 Class A-1 2016-1 senior secured variable funding notes — 60,000 Class A-2 2013-1 senior secured fixed rate notes 147,485 155,000 717,396 637,521 Less unamortized debt issuance costs (11,668 ) (9,405 ) Less long-term debt due within one year (4,250 ) — Long-term debt, net $ 701,478 $ 628,116 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Components Of Provision For Income Taxes | The components of the provision for income taxes consist of the following for the years ended August 31: 2018 2017 2016 Current: Federal $ 15,597 $ 30,352 $ 20,137 State 2,949 3,921 3,791 18,546 34,273 23,928 Deferred: Federal (16,460 ) (2,378 ) 4,372 State 648 (91 ) 137 (15,812 ) (2,469 ) 4,509 Provision for income taxes $ 2,734 $ 31,804 $ 28,437 |
Provision For Income Taxes Computed By Applying The Statutory Federal Income Tax Rate | The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate due to the following for the fiscal years ended August 31: 2018 2017 2016 Amount computed by applying the statutory federal tax rate 25.7 % 35.0 % 35.0 % State income taxes (net of federal income tax benefit) 3.8 2.6 2.8 Employment related and other tax credits, net (1.8 ) (1.9 ) (2.5 ) Change in uncertain tax positions 0.2 — (3.3 ) Federal tax benefit of statutory tax deduction (1.3 ) (1.6 ) (1.4 ) Stock option excess tax benefit (2.9 ) (1.0 ) — Deferred tax revaluation (19.1 ) — — Other (0.9 ) 0.2 0.1 Provision for income taxes 3.7 % 33.3 % 30.7 % |
Schedule Of Deferred Tax Assets And Liabilities | Deferred tax assets and liabilities consist of the following at August 31: 2018 2017 Deferred tax assets: Allowance for doubtful accounts and notes receivable $ 661 $ 419 Leasing transactions 1,928 3,083 Deferred income 1,846 3,011 Accrued liabilities 2,292 4,339 Stock compensation 1,553 3,156 Other 59 929 State net operating losses 18,659 18,031 Total deferred tax assets 26,998 32,968 Valuation allowance (17,117 ) (16,254 ) Total deferred tax assets after valuation allowance $ 9,881 $ 16,714 Deferred tax liabilities: Prepaid expenses $ (798 ) $ (956 ) Investment in partnerships, including differences in capitalization, depreciation and direct financing leases (3,083 ) (4,026 ) Property, equipment and capital leases (12,603 ) (23,756 ) Intangibles and other assets (14,837 ) (22,983 ) Debt extinguishment — (838 ) Direct financing leases (2,786 ) (4,256 ) Total deferred tax liabilities (34,107 ) (56,815 ) Net deferred tax liabilities (noncurrent) $ (24,226 ) $ (40,101 ) |
Reconciliation Of Unrecognized Tax Benefits | A reconciliation of unrecognized tax benefits is as follows for fiscal years ended August 31: 2018 2017 Balance at beginning of year $ 643 $ 625 Additions for tax positions of prior years 147 18 Balance at end of year $ 790 $ 643 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Equity [Abstract] | |
Weighted Average Assumptions Used To Estimate The Fair Value Of Stock Option Grants | In addition to the exercise and grant date prices of the awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants in the respective periods are listed in the table below: 2018 2017 2016 Expected term (years) 5.2 5.3 5.3 Expected volatility 31 % 34 % 34 % Risk-free interest rate 2.5 % 2.0 % 1.4 % Expected dividend yield 2.5 % 2.2 % 1.5 % |
Summary Of Stock Option Activity | A summary of stock option activity under the Company’s stock-based compensation plans for the year ended August 31, 2018 , is presented in the following table: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Yrs.) Aggregate Intrinsic Value Outstanding September 1, 2017 2,536 $ 20.42 Granted 713 25.84 Exercised (1,055 ) 15.59 Forfeited or expired (101 ) 27.93 Outstanding at August 31, 2018 2,093 $ 24.34 4.68 $ 24,117 Exercisable at August 31, 2018 968 $ 22.42 3.18 $ 13,013 |
Summary Of Restricted Stock Units | A summary of the Company’s RSU activity during the year ended August 31, 2018 is presented in the following table: Restricted Stock Units Weighted Average Grant Date Fair Value Outstanding September 1, 2017 95 $ 26.64 Granted 34 25.82 Vested (39 ) 27.20 Forfeited (7 ) 29.26 Outstanding at August 31, 2018 83 $ 25.75 |
Summary Of Dividends Paid | The Company paid dividends on common stock as follows (in thousands, except per share amounts): Dividend per share Total amount Payment date Fiscal year 2018 First Quarter $ 0.16 $ 6,243 November 17, 2017 Second Quarter 0.16 6,103 February 16, 2018 Third Quarter 0.16 5,879 May 18, 2018 Fourth Quarter 0.16 5,746 August 17, 2018 Fiscal year 2017 First Quarter $ 0.14 $ 6,359 November 18, 2016 Second Quarter 0.14 6,100 February 17, 2017 Third Quarter 0.14 6,041 May 19, 2017 Fourth Quarter 0.14 5,588 August 18, 2017 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Aug. 31, 2018 | |
Quarterly Financial Data [Abstract] | |
Schedule Of Selected Quarterly Financial Data | First Quarter Second Quarter Third Quarter Fourth Quarter 2018 2017 2018 2017 2018 2017 2018 2017 Total revenues $ 105,428 $ 129,551 $ 88,102 $ 100,158 $ 118,306 $ 123,990 $ 111,754 $ 123,568 Income from operations 22,448 27,052 14,914 22,627 37,261 35,441 31,780 38,155 Net income (1) $ 11,430 $ 13,118 $ 19,607 $ 10,963 $ 21,576 $ 18,751 $ 18,592 $ 20,831 Basic income per share (2) $ 0.29 $ 0.29 $ 0.51 $ 0.25 $ 0.58 $ 0.44 $ 0.52 $ 0.50 Diluted income per share (2) $ 0.29 $ 0.28 $ 0.51 $ 0.25 $ 0.58 $ 0.44 $ 0.51 $ 0.50 __________ (1) For fiscal year 2018, includes the after tax expense of $0.4 million related to the cybersecurity incident in the first quarter, the after tax expense of $0.2 million related to the cybersecurity incident, the $0.9 million after tax loss from the debt transactions and $14.1 million for the discrete impact of the Tax Cuts and Jobs Act in the second quarter, the after tax expense of $0.2 related to the cybersecurity incident and the after tax gain of $2.2 million on refranchising transactions in the third quarter, and the after tax expense of $0.3 related to the cybersecurity incident in the fourth quarter. For fiscal year 2017, includes the after tax loss of $0.6 million on refranchising transactions and the after tax gain of $2.4 million on the sale of investment in refranchised drive-in operations in the first quarter, the after tax gain of $4.3 million on refranchising transactions in the second quarter, the after tax gain of $0.4 million on refranchising transactions in the third quarter and the after tax gain of $0.1 million on refranchising transactions, after tax restructuring charges of $1.1 million and the after tax gain on the sale of real estate of $3.0 million in the fourth quarter. (2) The sum of per share data may not agree to annual amounts due to rounding. |
Summary Of Significant Accoun_3
Summary Of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2018USD ($) | Aug. 31, 2017USD ($) | Aug. 31, 2018USD ($)segment | Aug. 31, 2017USD ($) | Aug. 31, 2016USD ($) | Oct. 01, 2018USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of operating segments | segment | 1 | |||||
Number of reportable segments | segment | 1 | |||||
Total restricted cash | $ 27,500,000 | $ 27,500,000 | ||||
Amount of proceeds to be reinvested | 12,800,000 | $ 12,800,000 | ||||
Threshold to reinvest proceeds in eligible capital expenses, term | 12 months | |||||
Amount used to pay down fixed-rate debt, threshold | 5,000,000 | $ 5,000,000 | ||||
Restricted cash (current) | 19,598,000 | $ 19,736,000 | 19,598,000 | $ 19,736,000 | ||
Restricted cash (noncurrent) | 7,909,000 | 42,120,000 | $ 7,909,000 | 42,120,000 | ||
Number of reporting units | segment | 1 | |||||
Goodwill impairment | 0 | $ 0 | ||||
Advertising and promotion costs | $ 12,600,000 | 15,800,000 | $ 23,400,000 | |||
Reimbursed Sonic Brand Fund administration costs, percent | 15.00% | |||||
Reimbursed Sonic Brand Fund administration costs | $ 5,100,000 | 5,100,000 | 5,200,000 | |||
Reimbursed Brand Technology Fund administration costs, percent | 15.00% | |||||
Reimbursed Brand Technology Fund administration costs | $ 6,000,000 | $ 5,400,000 | $ 2,500,000 | |||
Restricted Cash From Sale of Securitized Real Estate [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Restricted cash (current) | $ 5,000,000 | $ 5,000,000 | ||||
Scenario, Forecast [Member] | Accounting Standards Update 2014-09 [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Cumulative adjustment for deferred revenue | $ 17,400,000 |
Earnings Per Share (Computation
Earnings Per Share (Computation Of Basic And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2017 | Feb. 28, 2017 | Nov. 30, 2016 | Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Numerator: | |||||||||||
Net income | $ 18,592 | $ 21,576 | $ 19,607 | $ 11,430 | $ 20,831 | $ 18,751 | $ 10,963 | $ 13,118 | $ 71,205 | $ 63,663 | $ 64,067 |
Denominator: | |||||||||||
Weighted average common shares outstanding - basic (in shares) | 37,618 | 43,306 | 48,703 | ||||||||
Effect of dilutive employee stock options and unvested RSUs (in shares) | 468 | 737 | 966 | ||||||||
Weighted average common shares outstanding - diluted (in shares) | 38,086 | 44,043 | 49,669 | ||||||||
Net income per common share - basic (usd per share) | $ 0.52 | $ 0.58 | $ 0.51 | $ 0.29 | $ 0.50 | $ 0.44 | $ 0.25 | $ 0.29 | $ 1.89 | $ 1.47 | $ 1.32 |
Net income per common share - diluted (usd per share) | $ 0.51 | $ 0.58 | $ 0.51 | $ 0.29 | $ 0.50 | $ 0.44 | $ 0.25 | $ 0.28 | $ 1.87 | $ 1.45 | $ 1.29 |
Anti-dilutive securities excluded (in shares) | 1,157 | 1,154 | 615 |
Accounts And Notes Receivable_2
Accounts And Notes Receivable (Schedule Of Accounts And Notes Receivable) (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Royalties and other trade receivables | $ 20,177 | $ 19,571 |
Current accounts and notes receivable, gross | 35,743 | 34,847 |
Allowance for doubtful accounts and notes receivable | (776) | (1,089) |
Current accounts and notes receivable, net | 34,967 | 33,758 |
Allowance for doubtful notes receivable | (1,808) | (42) |
Noncurrent notes receivable, net | 10,932 | 9,801 |
Notes Receivable From Franchisees [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Current accounts and notes receivable, gross | 2,006 | 1,441 |
Noncurrent notes receivable, gross | 7,597 | 6,810 |
Receivables From System Funds [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Current accounts and notes receivable, gross | 2,480 | 6,360 |
Noncurrent notes receivable, gross | 5,143 | 3,033 |
Other [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Current accounts and notes receivable, gross | $ 11,080 | $ 7,475 |
Goodwill And Other Intangible_2
Goodwill And Other Intangibles (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 75,344 | $ 75,756 | $ 76,734 |
Gross carrying amount of franchise agreements, intellectual property franchise fees and other intangibles | 5,900 | 9,300 | |
Accumulated amortization of intangible assets | 3,400 | 6,600 | |
Amortization of intangible assets | $ 300 | $ 1,000 | $ 900 |
Weighted-average life of amortizable intangible assets | 10 years 8 months 12 days | ||
Estimated intangible assets amortization expense, 2019 | $ 300 | ||
Estimated intangible assets amortization expense, 2020 | 300 | ||
Estimated intangible assets amortization expense, 2021 | 300 | ||
Estimated intangible assets amortization expense, 2022 | 300 | ||
Estimated intangible assets amortization expense, 2023 | $ 200 |
Goodwill And Other Intangible_3
Goodwill And Other Intangibles (Changes In The Carrying Amount Of Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Aug. 31, 2018 | Aug. 31, 2017 | |
Goodwill [Roll Forward] | ||
Balance at beginning of year | $ 75,756 | $ 76,734 |
Goodwill disposed of related to the sale of Company Drive-Ins | (412) | (978) |
Balance at end of year | $ 75,344 | $ 75,756 |
Other Operating Income (Narrati
Other Operating Income (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2017 | Nov. 30, 2016 | Aug. 31, 2018 | Aug. 31, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Gain on sale of investments in franchise operations | $ 3,800 | |||
Gain on sale of real estate | $ 4,700 | |||
Severance costs | $ 1,800 | |||
Refranchising Initiative 2017 [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Refranchising initiative gains | $ 6,758 | |||
2018 Refranchising [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Refranchising initiative gains | $ 3,200 |
Refranchising of Company Driv_3
Refranchising of Company Drive-Ins (Details) $ in Thousands | 12 Months Ended | |||
Aug. 31, 2018USD ($)franchise | Aug. 31, 2017USD ($)franchise | Aug. 31, 2016USD ($)franchise | Jun. 30, 2016 | |
Franchisor Disclosure [Line Items] | ||||
Number of refranchised Company Drive-Ins | 8 | 5 | 9 | |
Franchise restaurant, ownership percentage | 95.00% | 95.00% | ||
Refranchising Initiative 2016 [Member] | ||||
Franchisor Disclosure [Line Items] | ||||
Refranchising initiative gains | $ | $ 972 | |||
Number of refranchised Company Drive-Ins | 29 | |||
Refranchising Initiative 2016 [Member] | Non-controlling operating interest [Member] | ||||
Franchisor Disclosure [Line Items] | ||||
Number of refranchised Company Drive-Ins | 25 | |||
Refranchising Initiative 2017 [Member] | ||||
Franchisor Disclosure [Line Items] | ||||
Refranchising initiative gains | $ | $ 6,758 | |||
Number of refranchised Company Drive-Ins | 110 | |||
Refranchising Initiative 2017 [Member] | Non-controlling operating interest [Member] | ||||
Franchisor Disclosure [Line Items] | ||||
Number of refranchised Company Drive-Ins | 106 | |||
2018 Refranchising [Member] | ||||
Franchisor Disclosure [Line Items] | ||||
Refranchising initiative gains | $ | $ 3,200 | |||
2018 Refranchising [Member] | Non-controlling operating interest [Member] | ||||
Franchisor Disclosure [Line Items] | ||||
Number of refranchised Company Drive-Ins | 41 |
Refranchising of Company Driv_4
Refranchising of Company Drive-Ins (Refranchising Initiative Summary) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2016franchise | Aug. 31, 2018USD ($)franchise | Aug. 31, 2017USD ($)franchise | Aug. 31, 2016USD ($)franchise | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of refranchised Company Drive-Ins | franchise | 8 | 5 | 9 | |
Proceeds from sales of Company Drive-Ins | $ 21,646 | $ 91,741 | $ 16,206 | |
Goodwill related to sales of Company Drive-Ins | $ (412) | $ (978) | ||
Franchisee option to purchase real estate, term | 24 months | |||
Refranchising Initiative 2017 [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of refranchised Company Drive-Ins | franchise | 110 | |||
Proceeds from sales of Company Drive-Ins | $ 20,036 | |||
Proceeds from sale of real estate | 11,726 | |||
Initial and subsequent lease payments for real estate option | (3,178) | |||
Goodwill related to sales of Company Drive-Ins | (966) | |||
Deferred gain for real estate option | (809) | |||
Loss on assets held for sale | (65) | |||
Refranchising initiative gains, net | 6,758 | |||
Number of drive-ins in refranchising transaction | franchise | 53 | |||
Refranchising Initiative 2016 [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of refranchised Company Drive-Ins | franchise | 29 | |||
Proceeds from sales of Company Drive-Ins | $ 3,568 | |||
Proceeds from sale of real estate | 0 | |||
Initial and subsequent lease payments for real estate option | 0 | |||
Goodwill related to sales of Company Drive-Ins | (194) | |||
Deferred gain for real estate option | 0 | |||
Loss on assets held for sale | 0 | |||
Refranchising initiative gains, net | 972 | |||
Land and Building [Member] | Refranchising Initiative 2017 [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Assets sold | (12,095) | |||
Land and Building [Member] | Refranchising Initiative 2016 [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Assets sold | (2,402) | |||
Drive-In Equipment [Member] | Refranchising Initiative 2017 [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Assets sold | $ (7,891) | |||
Drive-In Equipment [Member] | Refranchising Initiative 2016 [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Assets sold | $ 0 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) | 12 Months Ended |
Aug. 31, 2018 | |
Leases [Line Items] | |
Lease expiration date | May 31, 2037 |
Lease renewal options, initial term period | 5 years |
Company Drive Ins [Member] | |
Leases [Line Items] | |
Lease expiration date | Jan. 22, 2037 |
Direct Financing Leases [Member] | |
Leases [Line Items] | |
Lease expiration date | Sep. 30, 2031 |
Leases (Components of Net Inves
Leases (Components of Net Investment in Direct Financing Leases) (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 |
Leases [Abstract] | ||
Minimum lease payments receivable | $ 17,068 | $ 18,156 |
Less unearned income | (5,217) | (5,932) |
Net investment in direct financing leases | 11,851 | 12,224 |
Less amount due within one year | (460) | (371) |
Amount due after one year | $ 11,391 | $ 11,853 |
Leases (Schedule Of Future Mini
Leases (Schedule Of Future Minimum Rental Payments Receivable) (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 |
Operating | ||
Operating, 2019 | $ 7,124 | |
Operating, 2020 | 7,544 | |
Operating, 2021 | 7,787 | |
Operating, 2022 | 7,804 | |
Operating, 2023 | 7,884 | |
Operating, Thereafter | 60,331 | |
Operating, Total | 98,474 | |
Direct Financing | ||
Direct Financing, 2019 | 1,156 | |
Direct Financing, 2020 | 1,269 | |
Direct Financing, 2021 | 1,365 | |
Direct Financing, 2022 | 1,362 | |
Direct Financing, 2023 | 1,362 | |
Direct Financing, Thereafter | 10,554 | |
Direct Financing, Total | 17,068 | $ 18,156 |
Less unearned income | (5,217) | (5,932) |
Net investment in direct financing leases | $ 11,851 | $ 12,224 |
Leases (Schedule Of Future Mi_2
Leases (Schedule Of Future Minimum Rental Payments) (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 |
Operating | |||
Operating, 2019 | $ 8,198 | ||
Operating, 2020 | 8,173 | ||
Operating, 2021 | 7,536 | ||
Operating, 2022 | 6,393 | ||
Operating, 2023 | 6,437 | ||
Operating, Thereafter | 44,017 | ||
Operating, Total minimum lease payments | 80,754 | ||
Capital | |||
Capital, 2019 | 3,489 | ||
Capital, 2020 | 3,194 | ||
Capital, 2021 | 3,109 | ||
Capital, 2022 | 2,597 | ||
Capital, 2023 | 2,415 | ||
Capital, Thereafter | 4,541 | ||
Capital, Total minimum lease payments | 19,345 | ||
Less amount representing interest averaging 5.4% | (3,888) | ||
Present value of net minimum lease payments | 15,457 | ||
Less amount due within one year | (2,454) | ||
Amount due after one year | 13,003 | $ 16,167 | |
Debt Instrument [Line Items] | |||
Minimum rentals receivable under noncancelable operating subleases | 25,900 | ||
Minimum rentals receivable under noncancelable capital subleases | 1,300 | ||
Contingent rentals for capital leases | $ 200 | $ 300 | $ 900 |
Capital Lease Obligations [Member] | |||
Debt Instrument [Line Items] | |||
Average interest rate | 5.40% |
Leases (Schedule Of Rent Expens
Leases (Schedule Of Rent Expense For Operating Leases) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Leases [Abstract] | |||
Minimum rentals | $ 8,039 | $ 11,224 | $ 12,441 |
Contingent rentals | 140 | 283 | 284 |
Total rent expense | 8,179 | 11,507 | 12,725 |
Less sublease rentals | (3,464) | (2,513) | (2,372) |
Net rent expense | $ 4,715 | $ 8,994 | $ 10,353 |
Property, Equipment And Capit_3
Property, Equipment And Capital Leases (Schedule Of Property, Equipment And Capital Leases) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Aug. 31, 2018 | Aug. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 559,485 | $ 570,686 |
Accumulated depreciation | (271,940) | (272,233) |
Property and equipment, net | 287,545 | 298,453 |
Capital leases | 39,204 | 45,315 |
Accumulated amortization | (28,527) | (31,388) |
Capital leases, net | 10,677 | 13,927 |
Property, equipment and capital leases, net | 298,222 | 312,380 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 120,352 | 117,402 |
Buildings And Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 243,434 | 251,695 |
Drive-In Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 62,679 | 75,410 |
Brand Technology Development And Other Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 133,020 | $ 126,179 |
Minimum [Member] | Buildings And Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 8 years | |
Minimum [Member] | Drive-In Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 5 years | |
Minimum [Member] | Brand Technology Development And Other Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 2 years | |
Maximum [Member] | Buildings And Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 25 years | |
Maximum [Member] | Drive-In Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 7 years | |
Maximum [Member] | Brand Technology Development And Other Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 5 years |
Property, Equipment And Capit_4
Property, Equipment And Capital Leases (Narrative) (Details) $ in Thousands | 12 Months Ended | ||
Aug. 31, 2018USD ($)drive-in | Aug. 31, 2017USD ($) | Aug. 31, 2016USD ($) | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, at cost | $ 559,485 | $ 570,686 | |
Accumulated depreciation related to buildings and equipment | 271,940 | 272,233 | |
Interest costs capitalized | 400 | 600 | $ 600 |
Property And Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | 35,300 | 35,600 | $ 40,400 |
Leased To Franchisees And Other Parties [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, at cost | 155,500 | 110,800 | |
Accumulated depreciation related to buildings and equipment | $ 63,200 | $ 45,000 | |
Drive-ins under construction | |||
Property, Plant and Equipment [Line Items] | |||
Drive-ins under construction | drive-in | 2 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 |
Accrued Liabilities, Current [Abstract] | ||
Wages and employee benefit costs | $ 16,338 | $ 17,705 |
Property taxes, sales and use taxes and employment taxes | 4,677 | 5,634 |
Unredeemed gift cards | 13,184 | 11,319 |
Other | 10,115 | 10,188 |
Accrued liabilities | $ 44,314 | $ 44,846 |
Debt (Schedule Of Long-Term Deb
Debt (Schedule Of Long-Term Debt) (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 717,396 | $ 637,521 |
Less unamortized debt issuance costs | (11,668) | (9,405) |
Less long-term debt due within one year | (4,250) | 0 |
Long-term debt, net | 701,478 | 628,116 |
Class A-2 2018 Fixed Rate Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 170,000 | 0 |
Class A-2 2016 Fixed Rate Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 399,911 | 422,521 |
Class A-1 2016 Variable Funding Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 0 | 60,000 |
Class A-2 2013 Fixed Rate Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 147,485 | $ 155,000 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) | 3 Months Ended | 12 Months Ended | |||||
Feb. 28, 2018USD ($) | Aug. 31, 2018USD ($)extension | Aug. 31, 2017USD ($) | Aug. 31, 2016USD ($) | Aug. 31, 2013USD ($) | Feb. 01, 2018USD ($) | May 17, 2016USD ($) | |
Debt Instrument [Line Items] | |||||||
Future maturities of long-term debt, 2019 | $ 4,300,000 | ||||||
Future maturities of long-term debt, 2020 | 151,700,000 | ||||||
Future maturities of long-term debt, 2021 | 4,300,000 | ||||||
Future maturities of long-term debt, 2022 | 4,300,000 | ||||||
Future maturities of long-term debt, 2023 | 382,900,000 | ||||||
Debt origination costs, net | 1,191,000 | $ 2,439,000 | |||||
Loss from debt transactions | $ 1,300,000 | (1,310,000) | 0 | $ (8,750,000) | |||
Prepayment premium | 5,900,000 | ||||||
Write-off of unamortized debt origination costs | 2,900,000 | ||||||
Pro rata prepayment | 173,125,000 | 24,416,000 | 422,090,000 | ||||
Total assets | 531,134,000 | $ 561,744,000 | |||||
Restricted cash | 27,500,000 | ||||||
Co-Issuers And Guarantor [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Total assets | 242,000,000 | ||||||
Restricted cash | $ 27,500,000 | ||||||
2011 Fixed Rate Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt prepayment | $ 155,000,000 | ||||||
Class A-2 2013 Fixed Rate Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 155,000,000 | ||||||
Senior secured notes interest rate, percentage | 3.75% | ||||||
Expected life of debt instrument | 7 years | ||||||
Debt instrument, maturity year | Jul. 20, 2020 | ||||||
Weighted-average interest cost, percentage | 4.10% | ||||||
Legal final maturity date | Jul. 20, 2043 | ||||||
Class A-2 2016 Fixed Rate Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 425,000,000 | ||||||
Senior secured notes interest rate, percentage | 4.47% | ||||||
Expected life of debt instrument | 7 years | ||||||
Debt instrument, maturity year | May 20, 2023 | ||||||
Prepayment premium | 200,000 | ||||||
Weighted-average interest cost, percentage | 4.80% | ||||||
Legal final maturity date | May 20, 2046 | ||||||
2016 Variable Funding Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 100,000,000 | $ 150,000,000 | |||||
Expected life of debt instrument | 5 years | ||||||
Debt instrument, maturity year | May 20, 2021 | ||||||
Interest rate spread, percentage | 2.00% | ||||||
Annual commitment fee payable, percentage | 0.50% | ||||||
Debt instruments, number of extensions | extension | 2 | ||||||
Debt instrument, extension period | 1 year | ||||||
Write-off of unamortized debt origination costs | 700,000 | ||||||
Legal final maturity date | May 20, 2046 | ||||||
2016 Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt origination costs, net | $ 12,500,000 | ||||||
Class A-2 2013 and 2016 Fixed Rate Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Write-off of unamortized debt origination costs | 400,000 | ||||||
Pro rata prepayment | 28,000,000 | ||||||
Class A-2 2018 Fixed Rate Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, face amount | $ 170,000,000 | ||||||
Senior secured notes interest rate, percentage | 4.03% | ||||||
Expected life of debt instrument | 7 years | ||||||
Debt instrument, maturity year | Feb. 20, 2025 | ||||||
Debt origination costs, net | $ 5,000,000 | ||||||
Weighted-average interest cost, percentage | 4.40% | ||||||
Legal final maturity date | Feb. 20, 2048 | ||||||
Interest Rate Upward Adjustment Due To Nonpayment [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior secured notes interest rate, percentage | 5.00% |
Fair Value Of Financial Instr_2
Fair Value Of Financial Instruments (Narrative) (Details) - USD ($) | Aug. 31, 2018 | Aug. 31, 2017 |
Cash equivalents carried at cost | $ 58,000,000 | $ 73,900,000 |
2018, 2016 and 2013 Fixed Rate Notes [Member] | ||
Long-term debt, fair value | 718,200,000 | 578,200,000 |
Long-term debt, carrying value, including accrued interest | 718,200,000 | 578,200,000 |
2016 Variable Funding Notes [Member] | ||
Long-term debt, fair value | 0 | 60,100,000 |
Long-term debt, carrying value, including accrued interest | $ 0 | $ 60,100,000 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | 14 Months Ended | ||
Feb. 28, 2018 | Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | Aug. 31, 2019 | |
Income Tax Contingency [Line Items] | |||||
Statutory federal tax rate | 25.70% | 35.00% | 35.00% | ||
State net operating loss carryforwards, valuation allowance | $ 17,100 | $ 16,300 | |||
Unrecognized tax benefits | 790 | 643 | $ 625 | ||
Unrecognized tax benefits, accrued interest and penalty | 400 | 400 | |||
Unrecognized tax benefits, interest and penalties expense (benefit) | 100 | $ 0 | $ (100) | ||
Possible decrease in unrecognized tax benefits, upper bound | $ 800 | ||||
Benefit from deferred tax remeasurement | $ (14,100) | ||||
Minimum [Member] | |||||
Income Tax Contingency [Line Items] | |||||
State net operating loss carryforward expiration date | Dec. 1, 2018 | ||||
Maximum [Member] | |||||
Income Tax Contingency [Line Items] | |||||
State net operating loss carryforward expiration date | May 1, 2039 | ||||
Scenario, Forecast [Member] | |||||
Income Tax Contingency [Line Items] | |||||
Statutory federal tax rate | 21.00% |
Income Taxes (Components Of Pro
Income Taxes (Components Of Provision For Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Current: | |||
Federal | $ 15,597 | $ 30,352 | $ 20,137 |
State | 2,949 | 3,921 | 3,791 |
Current | 18,546 | 34,273 | 23,928 |
Deferred: | |||
Federal | (16,460) | (2,378) | 4,372 |
State | 648 | (91) | 137 |
Deferred | (15,812) | (2,469) | 4,509 |
Provision for income taxes | $ 2,734 | $ 31,804 | $ 28,437 |
Income Taxes (Provision For Inc
Income Taxes (Provision For Income Taxes Computed By Applying The Statutory Federal Income Tax Rate) (Details) | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Amount computed by applying the statutory federal tax rate | 25.70% | 35.00% | 35.00% |
State income taxes (net of federal income tax benefit) | 3.80% | 2.60% | 2.80% |
Employment related and other tax credits, net | (1.80%) | (1.90%) | (2.50%) |
Change in uncertain tax positions | 0.20% | 0.00% | (3.30%) |
Federal tax benefit of statutory tax deduction | (1.30%) | (1.60%) | (1.40%) |
Stock option excess tax benefit | (2.90%) | (1.00%) | 0.00% |
Deferred tax revaluation | (19.10%) | 0.00% | 0.00% |
Other | (0.90%) | 0.20% | 0.10% |
Provision for income taxes | 3.70% | 33.30% | 30.70% |
Income Taxes (Schedule Of Defer
Income Taxes (Schedule Of Deferred Tax Assets And Liabilities) (Details) - USD ($) $ in Thousands | Aug. 31, 2018 | Aug. 31, 2017 |
Deferred tax assets: | ||
Allowance for doubtful accounts and notes receivable | $ 661 | $ 419 |
Leasing transactions | 1,928 | 3,083 |
Deferred income | 1,846 | 3,011 |
Accrued liabilities | 2,292 | 4,339 |
Stock compensation | 1,553 | 3,156 |
Other | 59 | 929 |
State net operating losses | 18,659 | 18,031 |
Total deferred tax assets | 26,998 | 32,968 |
Valuation allowance | (17,117) | (16,254) |
Total deferred tax assets after valuation allowance | 9,881 | 16,714 |
Deferred tax liabilities: | ||
Prepaid expenses | (798) | (956) |
Investment in partnerships, including differences in capitalization, depreciation and direct financing leases | (3,083) | (4,026) |
Property, equipment and capital leases | (12,603) | (23,756) |
Intangibles and other assets | (14,837) | (22,983) |
Debt extinguishment | 0 | (838) |
Direct financing leases | (2,786) | (4,256) |
Total deferred tax liabilities | (34,107) | (56,815) |
Net deferred tax liabilities (noncurrent) | $ (24,226) | $ (40,101) |
Income Taxes (Reconciliation Of
Income Taxes (Reconciliation Of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Aug. 31, 2018 | Aug. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance at beginning of year | $ 643 | $ 625 |
Additions for tax positions of prior years | 147 | 18 |
Balance at end of year | $ 790 | $ 643 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands | 12 Months Ended | ||||||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | Jun. 30, 2018 | Oct. 31, 2016 | May 31, 2016 | Aug. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation cost recognized | $ 4,556,000 | $ 3,942,000 | $ 3,766,000 | ||||
Excess tax benefits | 300,000 | $ 1,300,000 | $ 1,200,000 | ||||
Unvested unrecognized compensation cost | $ 7,100,000 | ||||||
Unvested unrecognized compensation cost, period | 1 year 9 months 4 days | ||||||
Weighted average fair value of stock options granted | $ 6.37 | $ 6.65 | $ 8.23 | ||||
Proceeds from exercise of stock options | $ 4,147,000 | $ 2,682,000 | $ 3,842,000 | ||||
Total intrinsic value of options exercised | 14,800,000 | 4,600,000 | 18,900,000 | ||||
Shares repurchase authorized amount | 160,000,000 | $ 500,000,000 | $ 40,000,000 | $ 155,000,000 | $ 145,000,000 | ||
Total cost for shares acquired through stock repurchase program | $ 139,178,000 | $ 172,913,000 | $ 148,345,000 | ||||
Weighted-average price per share | $ 26.69 | $ 25.71 | $ 28.48 | ||||
Treasury Stock [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares acquired through stock repurchase program | 5,215 | 6,726 | 5,209 | ||||
Total cost for shares acquired through stock repurchase program | $ 139,178,000 | $ 172,913,000 | $ 148,345,000 | ||||
2006 Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for grant | 5,800 | ||||||
Employee Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Contractual term | 7 years | ||||||
Vesting period | 3 years | ||||||
Restricted Stock Units [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | ||||||
Aggregate fair value of vested restricted stock | $ 1,200,000 | $ 500,000 | $ 400,000 | ||||
Board of Director Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Contractual term | 7 years | ||||||
Vesting period | 1 year | ||||||
Board of Director Restricted Stock Unit [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Employee Stock [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Discount price percentage | 15.00% | ||||||
Compensation percentage | 10.00% | ||||||
Stock’s fair market value | $ 25,000 | ||||||
Shares available for grant | 800 |
Stockholders' Equity (Deficit_3
Stockholders' Equity (Deficit) (Weighted Average Assumptions Used To Estimate The Fair Value Of Stock Option Grants) (Details) | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Equity [Abstract] | |||
Expected term (years) | 5 years 2 months 12 days | 5 years 3 months 18 days | 5 years 3 months 18 days |
Expected volatility | 31.00% | 34.00% | 34.00% |
Risk-free interest rate | 2.50% | 2.00% | 1.40% |
Expected dividend yield | 2.50% | 2.20% | 1.50% |
Stockholders' Equity (Deficit_4
Stockholders' Equity (Deficit) (Summary Of Stock Option Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Aug. 31, 2018USD ($)$ / sharesshares | |
Options | |
Outstanding at September 1, 2017 | shares | 2,536 |
Granted | shares | 713 |
Exercised | shares | (1,055) |
Forfeited or expired | shares | (101) |
Outstanding at August 31, 2018 | shares | 2,093 |
Exercisable at August 31, 2018 | shares | 968 |
Weighted Average Exercise Price | |
Outstanding at September 1, 2017 | $ / shares | $ 20.42 |
Granted | $ / shares | 25.84 |
Exercised | $ / shares | 15.59 |
Forfeited or expired | $ / shares | 27.93 |
Outstanding at August 31, 2018 | $ / shares | 24.34 |
Exercisable at August 31, 2018 | $ / shares | $ 22.42 |
Weighted Average Remaining Contractual Life, Outstanding at August 31, 2018 | 4 years 8 months 5 days |
Weighted Average Remaining Contractual Life, Exercisable at August 31, 2018 | 3 years 2 months 5 days |
Aggregate Intrinsic Value, Outstanding at August 31, 2018 | $ | $ 24,117 |
Aggregate Intrinsic Value, Exercisable at August 31, 2018 | $ | $ 13,013 |
Stockholders' Equity (Deficit_5
Stockholders' Equity (Deficit) (Summary Of Restricted Stock Units) (Details) shares in Thousands | 12 Months Ended |
Aug. 31, 2018$ / sharesshares | |
Restricted Stock Units | |
Outstanding at September 1, 2017 | shares | 95 |
Granted | shares | 34 |
Vested | shares | (39) |
Forfeited | shares | (7) |
Outstanding at August 31, 2018 | shares | 83 |
Weighted Average Grant Date Fair Value | |
Outstanding at September 1, 2017 | $ / shares | $ 26.64 |
Granted | $ / shares | 25.82 |
Vested | $ / shares | 27.20 |
Forfeited | $ / shares | 29.26 |
Outstanding at August 31, 2018 | $ / shares | $ 25.75 |
Stockholders' Equity (Deficit_6
Stockholders' Equity (Deficit) (Summary Of Dividends Paid) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2017 | Feb. 28, 2017 | Nov. 30, 2016 | Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Equity [Abstract] | |||||||||||
Dividend per share (usd per share) | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.16 | $ 0.14 | $ 0.14 | $ 0.14 | $ 0.14 | |||
Total amount | $ 5,746 | $ 5,879 | $ 6,103 | $ 6,243 | $ 5,588 | $ 6,041 | $ 6,100 | $ 6,359 | $ 23,971 | $ 24,088 | $ 21,340 |
Employee Benefit And Cash Inc_2
Employee Benefit And Cash Incentive Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Compensation Related Costs [Abstract] | |||
Employer contributions, percentage (less than) | 6.00% | ||
Employer contributions | $ 1.8 | $ 1.9 | $ 1.8 |
Incentive bonus expense | $ 9.2 | $ 8.3 | $ 13.4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended |
Aug. 31, 2018USD ($) | |
Loss Contingencies [Line Items] | |
System-wide purchase obligations | $ 113,200,000 |
Note Repurchase Agreement [Member] | |
Loss Contingencies [Line Items] | |
Guarantor obligations, term | 2,018 |
Guaranteed obligations | $ 4,400,000 |
Guarantee Operating Lease Obligations [Member] | |
Loss Contingencies [Line Items] | |
Guarantor obligations, term | 2,029 |
Guaranteed obligations | $ 15,100,000 |
Guaranteed lease liability | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Sep. 24, 2018 | Aug. 31, 2018 | Aug. 31, 2017 |
Subsequent Event [Line Items] | |||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Common stock, par value (usd per share) | $ 0.01 | ||
Inspire Brands, Inc. [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Merger consideration (usd per share) | $ 43.50 | ||
Required termination fee | $ 47,736,000 | ||
Roark Capital Management LLC [Member] | Commitment Letters [Member] | Inspire Brands, Inc. [Member] | Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Funds, commitment letters | $ 1,635,000,000 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) (Schedule Of Selected Quarterly Financial Data) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Aug. 31, 2018 | May 31, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Aug. 31, 2017 | May 31, 2017 | Feb. 28, 2017 | Nov. 30, 2016 | Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Selected Quarterly Financial Data [Line Items] | |||||||||||
Total revenues | $ 111,754 | $ 118,306 | $ 88,102 | $ 105,428 | $ 123,568 | $ 123,990 | $ 100,158 | $ 129,551 | $ 423,590 | $ 477,267 | $ 606,320 |
Income from operations | 31,780 | 37,261 | 14,914 | 22,448 | 38,155 | 35,441 | 22,627 | 27,052 | 106,403 | 123,275 | 127,452 |
Net income | $ 18,592 | $ 21,576 | $ 19,607 | $ 11,430 | $ 20,831 | $ 18,751 | $ 10,963 | $ 13,118 | $ 71,205 | $ 63,663 | $ 64,067 |
Basic income per share (usd per share) | $ 0.52 | $ 0.58 | $ 0.51 | $ 0.29 | $ 0.50 | $ 0.44 | $ 0.25 | $ 0.29 | $ 1.89 | $ 1.47 | $ 1.32 |
Diluted income per share (usd per share) | $ 0.51 | $ 0.58 | $ 0.51 | $ 0.29 | $ 0.50 | $ 0.44 | $ 0.25 | $ 0.28 | $ 1.87 | $ 1.45 | $ 1.29 |
After tax expense related to cybersecurity incident [Member] | |||||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||
Quarterly charges (credits) that affect comparability | $ 300 | $ 200 | $ 200 | $ 400 | |||||||
After tax loss from debt transactions [Member] | |||||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||
Quarterly charges (credits) that affect comparability | 900 | ||||||||||
Impact of Tax Cuts and Jobs Act [Member] | |||||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||
Quarterly charges (credits) that affect comparability | $ (14,100) | ||||||||||
After tax (gain) loss on refranchising transactions [Member] | |||||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||
Quarterly charges (credits) that affect comparability | $ (2,200) | $ (100) | $ (400) | $ (4,300) | $ 600 | ||||||
After tax gain on sale of investment in refranchised drive-in operations [Member] | |||||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||
Quarterly charges (credits) that affect comparability | $ (2,400) | ||||||||||
After tax restructuring charges [Member] | |||||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||
Quarterly charges (credits) that affect comparability | 1,100 | ||||||||||
After tax gain on sale of real estate [Member] | |||||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||
Quarterly charges (credits) that affect comparability | $ (3,000) |
Schedule II - Valuation And Q_2
Schedule II - Valuation And Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Aug. 31, 2018 | Aug. 31, 2017 | Aug. 31, 2016 | |
Allowance For Doubtful Accounts And Notes Receivable [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 1,131 | $ 1,041 | $ 1,105 |
Additions Charged to Costs and Expenses | 1,825 | 113 | (53) |
Amounts Written Off Against the Allowance | (374) | (23) | (13) |
(Transfer) Recoveries | 2 | 0 | 2 |
Balance at End of Year | 2,584 | 1,131 | 1,041 |
Accrued Liability For Drive-In Closings And Disposals [Member] | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | 532 | 611 | 807 |
Additions Charged to Costs and Expenses | 222 | 178 | 208 |
Amounts Written Off Against the Allowance | (241) | (243) | (376) |
(Transfer) Recoveries | (18) | (14) | (28) |
Balance at End of Year | $ 495 | $ 532 | $ 611 |