Sonic Corp.
SONIC CORP (Form: 11-KT, Received: 05/23/2002 16:55:13)

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 11-K

 

 

o

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended               

 

OR

 

ý

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from September 1, 2001 to December 31, 2001

 

Commission File Number: 0-18859

 

A.                                    Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

Sonic Corp. Savings and Profit Sharing Plan

 

B.                                      Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

Sonic Corp.

101 Park Avenue

Oklahoma City, Oklahoma 73102

 

 



 

SONIC CORP. SAVINGS AND PROFIT SHARING PLAN

 

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE

DECEMBER 31, 2001 AND AUGUST 31, 2001

 

 

FINANCIAL STATEMENTS:

 

Report of Independent Public Accountants

 

Statements of Net Assets Available for Benefits as of December 31, 2001 and August 31, 2001

 

Statements of Changes in Net Assets Available for Benefits for the period from September 1, 2001 through December 31, 2001, and the year ended August 31, 2001

 

Notes to Financial Statements as of December 31, 2001 and August 31, 2001

 

 

SUPPLEMENTAL SCHEDULE:

 

Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes as of December 31, 2001

 

 

 

All other schedules required by the Employee Retirement Income Security Act of 1974 and the regulations promulgated by the Department of Labor have been omitted since they are not applicable.

 

2



 

Report of Independent Public Accountants

 

 

To the Plan Administrator of the

Sonic Corp. Savings and Profit Sharing Plan:

 

We have audited the accompanying statements of net assets available for benefits of the Sonic Corp. Savings and Profit Sharing Plan (the “Plan”) as of December 31, 2001, and the related statements of changes in net assets available for benefits for the period from September 1, 2001 through December 31, 2001.  These financial statements and the schedule referred to below are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements and schedule based on our audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2001, and the changes in net assets available for benefits for the period from September 1, 2001 through December 31, 2001, in conformity with accounting principles generally accepted in the United States.

 

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental schedule of assets held for investment purposes, is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

 

 

ARTHUR ANDERSEN LLP

 

Oklahoma City, Oklahoma

April 19, 2002

 

3



 

The Plan Administrator

Sonic Corp. Savings and Profit Sharing Plan

 

We have audited the accompanying statement of net assets available for benefits of Sonic Corp. Savings and Profit Sharing Plan (the Plan) as of August 31, 2001, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at August 31, 2001, and the changes in its net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States.

 

 

 

ERNST & YOUNG LLP

 

Oklahoma City, Oklahoma

January 29, 2002

 

4



 

SONIC CORP. SAVINGS AND PROFIT SHARING PLAN

 

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

DECEMBER 31, 2001 AND AUGUST 31, 2001

 

 

 

 

December 31,

 

August 31,

 

 

 

2001

 

2001

 

CASH

 

$

99,993

 

$

70,642

 

 

 

 

 

 

 

INVESTMENTS

 

7,788,001

 

7,734,176

 

 

 

 

 

 

 

RECEIVABLES:

 

 

 

 

 

Contributions—

 

 

 

 

 

Participants

 

26,040

 

31,714

 

Employer

 

15,867

 

19,266

 

Accrued interest

 

1,985

 

2,480

 

 

 

 

 

 

 

Total receivables

 

43,892

 

53,460

 

 

 

 

 

 

 

Net assets available for benefits

 

$

7,931,886

 

$

7,858,278

 

 

 

The accompanying notes are an integral part of these financial statements.

 

5



 

SONIC CORP. SAVINGS AND PROFIT SHARING PLAN

 

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE PERIOD FROM SEPTEMBER 1, 2001 THROUGH DECEMBER 31, 2001

AND THE YEAR ENDED AUGUST 31, 2001

 

 

 

 

For the Period From
September 1, 2001
Through
December 31, 2001

 

For the Year
Ended
August 31, 2001

 

ADDITIONS:

 

 

 

 

 

Investment income (loss)—

 

 

 

 

 

Net appreciation (depreciation) in fair value of investments

 

$

257,659

 

$

(1,975,176

)

Interest and dividends

 

67,292

 

599,001

 

 

 

 

 

 

 

Total investment income (loss)

 

324,951

 

(1,376,175

)

 

 

 

 

 

 

Contributions—

 

 

 

 

 

Participants

 

306,759

 

1,209,291

 

Employer

 

184,174

 

485,799

 

 

 

 

 

 

 

Total contributions

 

490,933

 

1,695,090

 

 

 

 

 

 

 

Total additions

 

815,884

 

318,915

 

 

 

 

 

 

 

DEDUCTIONS:

 

 

 

 

 

Benefit payments

 

742,276

 

308,645

 

 

 

 

 

 

 

INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS

 

73,608

 

10,270

 

 

 

 

 

 

 

NET ASSETS AVAILABLE FOR BENEFITS:

 

 

 

 

 

Beginning of period

 

7,858,278

 

7,848,008

 

 

 

 

 

 

 

End of period

 

$

7,931,886

 

$

7,858,278

 

 

 

The accompanying notes are an integral part of this financial statement.

 

6



 

SONIC CORP. SAVINGS AND PROFIT SHARING PLAN

 

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2001 AND AUGUST 31, 2001

 

 

1. DESCRIPTION OF THE PLAN:

 

General

 

The Sonic Corp., Savings and Profit Sharing Plan (the “Plan”), is a defined contribution plan covering substantially all employees of Sonic Corp. (the “Employer”), who have completed three consecutive months of service or at least 1,000 hours of service in any eligibility computation period, as defined in Section 2.02 of the Plan agreement.  The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).  Reference should be made to the Plan agreement for more complete information.

 

Effective December 31, 2001, the Plan adopted a new plan document, changed administrators, and changed certain investment options available under the Plan.  The provisions under the new plan document are substantially the same as those in effect at August 31, 2001.  The Plan also changed its fiscal year-end from August 31, to December 31.

 

Contributions

 

Each year, participants may contribute up to 11% of pretax annual compensation, as defined in the Plan.  Participants may also rollover amounts representing distributions from other qualified defined benefit or defined contribution plans, which totaled $6,121 at December 31, 2001 and $390,759 at August 31, 2001.  Participants direct the investment of their contributions into various investment options offered by the Plan.  The Plan currently offers ten mutual funds and the Company’s common stock as investment options for participants.  The Company voluntarily matched up to 4.5% (100% of the first 3%, plus 50% of the next 3%) of participants’ compensation for the period from September 1, 2001 through December 31, 2001, and for the year ended August 31, 2001, respectively.  Additional profit sharing amounts may be contributed at the option of the Company’s Board of Directors.  Contributions are subject to certain limitations.

 

Participants’ Accounts

 

Each participant’s account is credited with the participant’s contribution and allocations of the Company’s contributions and Plan earnings.  Allocations are based on participant compensation or account balances, as defined.  Forfeited balances of terminated participants’ nonvested accounts are used to reduce plan expenses, then future Company contributions.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

Vesting

 

Participants are vested immediately in their contributions plus actual earnings thereon.  Vesting in the Company’s contribution portion of their accounts is based on years of continuous service.  A participant is 100% vested after six years of credited service.  Participants who are employed as of December 31, 2001, will be credited with a year of service towards vesting for the period of September 1, 2001 through December 31, 2001.

 

Participant Loans

 

Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account balance, whichever is less.  The loans are secured by the balance in the participant’s account and bear interest at rates which are commensurate with local prevailing rates as determined quarterly by the plan administrator.

 

7



 

Amounts Due to Participants

 

As of December 31, 2001 and August 31, 2001, there were no participants that had terminated and requested a distribution and had not received payment of the distribution.

 

Payment of Benefits

 

On termination of service, death, disability, or retirement, a participant with an account balance in excess of $5,000 may elect to receive a lump-sum payment in an amount equal to the value of the participant’s vested interest or may elect to receive monthly, quarterly, or annual installments over a period of not more than the participant’s assumed life expectancy.

 

Forfeited Accounts

 

Included in the Plan assets at December 31, 2001 and August 31, 2001, were $10,570 and $49,176, respectively, of unallocated forfeited nonvested accounts.

 

Administration

 

The Plan is administered by the Company.  Administrative expenses incurred by the Plan are paid by the Company.  During the period from September 1, 2001 through December 31, 2001 and for the year ended August 31, 2001, administrative expenses paid by the Company totaled $19,400 and $44,879, respectively.

 

Basis of Accounting

 

The accompanying financial statements are prepared on the accrual basis of accounting.  Benefits paid to participants are recorded when paid.

 

Termination

 

Although it has not expressed any intent to do so, the Company has the right to terminate the Plan at any time.  Upon termination of the Plan, the rights of participants under the Plan shall become 100% vested and nonforfeitable and the net assets of the Plan would be distributed by the Plan Administrator.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 

Investment Valuation and Income Recognition

 

The Plan’s investments are stated at fair value.  Shares of registered investment companies are valued at published market prices which represent the net asset value of shares held by the Plan at December 31, 2001 and August 31, 2001.  The Company’s common stock is valued at its published market price.  Participant notes receivable are valued at cost which approximates fair value.

 

Purchases and sales of securities are recorded on a trade-date basis.  Interest income is recorded on the accrual basis.  Dividends are recorded on the ex-dividend date.

 

Related Party Transactions

 

Certain Plan investments are shares of a mutual fund managed by BancOklahoma Trust Company, the trustee as defined by the Plan, and, therefore, these transactions qualify as party-in-interest transactions.

 

8



 

Use of Estimates

 

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period.  Actual results could differ from those estimates.

 

3. INVESTMENTS:

 

The Plan’s investments are held by BancOklahoma Trust Company.  The following presents investments that represent 5% or more of the Plan’s net assets:

 

 

 

December 31,

2001

 

August 31,

2001

 

American Performance Cash Management Fund

 

$

448,517

 

$

416,247

 

AIM Constellation Fund

 

1,174,068

 

1,109,615

 

AIM Value Fund

 

784,840

 

790,507

 

American AAdvantage Balanced Fund

 

807,197

 

1,121,582

 

Federated Max Cap Fund

 

1,219,338

 

1,195,592

 

Neuberger & Berman Guardian Trust Fund

 

879,897

 

841,269

 

Sonic Corp. common stock

 

1,349,821

 

1,135,988

 

 

The Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value during the period from September 1, 2001 through December 31, 2001, and the year ended August 31, 2001, as follows:

 

 

 

For the Period From
September 1, 2001
Through
December 31, 2001

 

For the Year
Ended
August 31, 2001

 

Mutual funds

 

$

43,963

 

$

(2,250,077)

 

Sonic Corp. common stock

 

213,696

 

274,901

 

 

 

 

 

 

 

 

 

$

257,659

 

$

(1,975,176

)

 

4. INCOME TAX STATUS:

 

The Plan has received a determination letter from the Internal Revenue Service dated October 19, 1992, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the “Code”) and, therefore, the related trust is exempt from taxation.  Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification.  The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt.

 

9



 

SONIC CORP. SAVINGS AND PROFIT SHARING PLAN

 

EMPLOYER IDENTIFICATION NUMBER: 73-1371046

 

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES

DECEMBER 31, 2001

 

 

(a)*

 

(b) Identity of Issuer, Borrower,
Lessor or Similar Party

 

(c) Description of
Investment

 

(e) Current
Value

 

 

 

 

 

 

 

*

 

American Performance Cash Management Fund

 

448,517 shares

 

$

448,517

*

 

American Performance Intermediate Bond Fund

 

29,093 shares

 

305,474

 

 

AIM Constellation Fund

 

53,125 shares

 

1,174,068

 

 

AIM Value Fund

 

72,202 shares

 

784,840

 

 

AIM Balanced Fund

 

3,857 shares

 

100,058

 

 

American Century International Growth Fund

 

16,939 shares

 

135,000

 

 

American AAdvantage Balanced Fund

 

67,266 shares

 

807,197

 

 

Federated Max Cap Fund

 

52,490 shares

 

1,219,338

 

 

Newberger & Berman Guardian Trust Fund

 

77,252 shares

 

879,897

 

 

Vanguard Growth & Income Fund

 

9,481 shares

 

267,370

 

 

Sonic Corp.

 

37,495 shares

 

1,349,821

*

 

Participant Loans

 

Participant loans, interest
rates from 6.0% to 10.5%

 

316,421

 

 

 

 

 

 

 

 

 

Total assets held for investment

 

 

 

$

7,788,001


*Party-in-interest

 

10


 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this transition report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

Sonic Corp. Savings and Profit Sharing Plan

 

 

 

 

 

 

By:

/s/  Nancy L. Robertson

 

 

 

Nancy L. Robertson, Chair of the Sonic
Corp. Savings and Profit Sharing Plan
Advisory Committee

 

 

 

 

Date:  May 23, 2002

 

 

 

 

 

11



Exhibit 23.1

 

 

Consent of Independent Accountants

 

As independent public accountants, we hereby consent to the incorporation of our report dated April 19, 2002, included in the Sonic Corp. Savings and Profit Sharing Plan Form 11-K for the period from September 1, 2001 through December 31, 2001, into the previously filed Form S-8 Registration Statement No. 333-26359.

 

 

ARTHUR ANDERSEN LLP

 

Oklahoma City, Oklahoma

May 17, 2002

 

 



Exhibit 23.2

 

 

 

Consent of Independent Auditors

 

 

We consent to the incorporation by reference in the Registration Statement (Form S–8 No. 333-26359) pertaining to the Sonic Corp. Savings and Profit Sharing Plan of our report dated January 29, 2002, with respect to the financial statements of Sonic Corp. Savings and Profit Sharing Plan included in this Transition Report (Form 11-K) for the transition period from September 1, 2001 to December 31, 2001.

 

 

 

ERNST & YOUNG LLP

 

Oklahoma City, Oklahoma

May 17, 2002

 

 



Exhibit 99.02

 

 

May 17, 2002

 

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

 

Re:                                Representations by Arthur Andersen LLP

                                                In connection with audit of Sonic Corp. Savings and Profit Sharing Plan

 

Ladies and Gentlemen:

 

    On behalf of Sonic Corp. (the “Company”), please be advised that Arthur Andersen LLP (“Andersen”) has represented to the Company that its audit of the Company’s financial statements included in the Company’s Form 11-K for the period from September 1, 2001 through December 31, 2001, to which this letter is an exhibit, was subject to Andersen’s quality control system for the U.S. accounting and auditing practice to provide reasonable assurance that the engagement was conducted in compliance with professional standards and that there was appropriate continuity of Andersen personnel working on the audit, availability of national office consultation and availability of personnel at foreign affiliates of Andersen to conduct the relevant portions of the audit.

 

 

Sincerely,

 

/s/Terry Harryman

 

Terry Harryman

Controller