UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
11-K
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x
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the Year Ended December 31, 2007
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the Transition Period from __________ to __________
Commission
File Number: 0-18859
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A.
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Full
title of the plan and the address of the plan, if different from
that of
the issuer named below:
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Sonic
Corp. Savings and Profit Sharing Plan
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B.
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Name
of issuer of the securities held pursuant to the plan and the address
of
its principal executive office:
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Sonic
Corp.
300
Johnny Bench Drive
Oklahoma
City, Oklahoma 73104
Sonic
Corp. Savings and Profit Sharing Plan
Financial
Statements and Supplemental Schedule
As
of December 31, 2007 and 2006, and for the Year Ended December 31,
2007
Contents
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1
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Audited
Financial Statements
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2
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3
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4
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Supplemental
Schedule
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11
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The
Plan
Administrator
Sonic
Corp. Savings and Profit Sharing Plan
We
have
audited the accompanying statements of net assets available for benefits of
Sonic Corp. Savings and Profit Sharing Plan as of December 31, 2007 and 2006,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 2007. 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 audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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. We were not engaged to perform
an
audit of the Plan’s internal control over financial reporting. Our
audits included consideration of internal control over financial reporting
as a
basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Plan’s internal control over financial reporting. Accordingly, we
express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and
evaluating the overall financial statement presentation. We believe that our
audits provide 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, 2007 and 2006, and the changes in net assets available for benefits
for the year ended December 31, 2007, in conformity with U.S. generally accepted
accounting principles.
Our
audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2007, is presented for the purpose
of
additional analysis and is not a required part of the 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. This supplemental schedule is the responsibility of the
Plan’s management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
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/s/
Ernst & Young LLP
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Oklahoma
City, Oklahoma
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June
19, 2008
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Statements
of Net Assets Available for Benefits
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December
31,
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2007
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2006
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Cash
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$ | 105,216 | $ | 19,454 | ||||
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Investments
(at fair value)
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21,986,764 | 23,783,177 | ||||||
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Receivables:
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Trades
in transit
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3,620,085 | – | ||||||
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Contributions:
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Participants
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– | 48,815 | ||||||
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Employer
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– | 28,856 | ||||||
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Accrued
interest:
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Participant
loans
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– | 6,233 | ||||||
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Investments
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– | 1,366 | ||||||
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Total
receivables
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3,620,085 | 85,270 | ||||||
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Total
assets
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25,712,065 | 23,887,901 | ||||||
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Liabilities:
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Excess
deferrals and other
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305 | 1,573 | ||||||
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Net
assets available for benefits, at fair value
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25,711,760 | 23,886,328 | ||||||
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Adjustment
from fair value to contract value for fully benefit-responsive investment
contracts held by a common collective trust
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150 | 37,698 | ||||||
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Net
assets available for benefits
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$ | 25,711,910 | $ | 23,924,026 | ||||
See
accompanying notes.
Sonic
Corp. Savings and Profit Sharing Plan
Statement
of Changes in Net Assets Available for Benefits
Year
Ended December 31, 2007
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Additions:
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Net
investment income:
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Net
depreciation in fair value of investments
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$ | (408,913 | ) | |
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Interest
and dividends
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1,672,929 | |||
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Total
net investment income
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1,264,016 | |||
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Contributions:
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Participants
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1,760,692 | |||
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Employer
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961,949 | |||
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Rollover
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96,930 | |||
| 2,819,571 | ||||
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Total
additions
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4,083,587 | |||
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Deductions:
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Benefit
payments
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2,276,656 | |||
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Administrative
expenses
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19,047 | |||
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Total
deductions
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2,295,703 | |||
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Net
increase in net assets available for benefits
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1,787,884 | |||
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Net
assets available for benefits at beginning of year
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23,924,026 | |||
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Net
assets available for benefits at end of year
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$ | 25,711,910 | ||
See
accompanying notes.
Sonic
Corp. Savings and Profit Sharing Plan
Notes
to Financial Statements
December
31, 2007
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 or the
Company), who have completed three consecutive months of service or at least
1,000 hours of service in any eligibility computation period, as defined in
the
Plan agreement. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA). Reference should be made to
the
Plan agreement for more complete information.
Contributions
Participants
may contribute up to 50% of pretax annual compensation, as defined in the Plan
document. A salary deferral contribution will automatically be made
for each newly eligible participant in the amount of 3% of the participant's
plan year compensation, unless the participant elects to defer an amount other
than 3%. Participants may also roll over amounts representing
distributions from other qualified defined benefit or defined contribution
plans. Such rollover amounts totaled $96,930 in 2007. Participants
direct the investment of all contributions into various investment options
offered by the Plan. The Plan limits a participant’s contributions to
the Sonic Stock investment fund to 25% of the participant’s total
contributions. The Company voluntarily matched up to 4.5% (100% of
the first 3%, plus 50% of the next 3%) of participants’ compensation for the
year ended December 31, 2007. Additional profit sharing amounts may be
contributed at the option of the Company’s Board of Directors. Contributions are
subject to certain limitations. No such discretionary contribution
was made for 2007.
Participants’
Accounts
Each
participant’s account is credited with the participant’s contribution and
allocations of the Company’s contributions and Plan earnings and charged with
applicable administrative expenses. Allocations are based on participant
compensation or account balances, as defined. Forfeited
balances of terminated participants’ non-vested accounts may be used to reduce
Company contributions or pay plan expenses. The benefit to which a participant
is entitled is the benefit that can be provided from the participant’s vested
account. Forfeitures used to reduce Company contributions for the year ended
December 31, 2007 were $24,205. Forfeitures used to pay plan expenses
for the year ended December 31, 2007 were $6,151. Included in the
Plan assets at December 31, 2007 and 2006, were $21,317 and $32,588,
respectively, of unallocated forfeited non-vested accounts.
Vesting
Participants
are vested immediately in their contributions plus actual earnings thereon.
Vesting in the Company contributions is based on years of continuous service.
A
participant is 100% vested after six years of credited service, with 20% vesting
after two years of service, followed by additional 20% annual increments through
the sixth year.
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. Principal and interest are paid ratably
through payroll deductions.
Payment
of Benefits
On
termination of service, death, disability, or retirement, a participant 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.
Administration
The
Plan
is administered by the Sonic Corp. Savings and Profit Sharing Plan
Administrative Committee of the Company. Certain administrative expenses
incurred by the Plan are paid by the Company.
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 non-forfeitable and the net assets
of the Plan would be distributed by the Plan Administrator.
2.
Summary of Significant Accounting Policies
Basis
of Accounting
The
accompanying financial statements are prepared on the accrual basis of
accounting. Benefit payments are recorded when paid.
Recent
Accounting Pronouncement
In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157 (FAS 157), Fair
Value Measurement. This
standard clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 is effective
for
financial statements issued for fiscal years beginning after November 15, 2007.
Plan management is currently evaluating the effect that the provisions of FAS
157 will have on the Plan’s financial statements.
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, 2007 and
2006. The Company’s common stock is valued at its quoted market
price. Participant loans are valued at their outstanding balances
which approximates fair value.
As
described in Financial Accounting Standards Board Staff Position AAG INV-1
and
SOP 94-4-1, Reporting of Fully
Benefit-Responsive Investment Contracts Held by Certain Investment Companies
Subject to the AICPA Investment Company Guide and Defined-Contribution Health
and Welfare and Pension Plans (the FSP), investment contracts held by a
defined contribution plan are required to be reported at fair
value. However, contract value is the relevant measurement attribute
for that portion of the net assets available for benefits of a defined
contribution plan attributable to fully benefit-responsive investment contracts
because contract value is the amount participants would receive if they were
to
initiate permitted transactions under the terms of the Plan. The Plan
invests in investment contracts through a common collective trust, the SEI
Stable Value Fund (SEI Fund). As required by the FSP, the statements
of net assets available for benefits present the fair value of the SEI Fund
and
the adjustment from fair value to contract value. The fair value of
the Plan’s interest in the SEI Fund is determined by the issuer of the common
collective trust at year-end based on the fair value of its underlying
investments. The contract value of the SEI Fund represents
contributions plus earnings, less participant withdrawals and administrative
expenses.
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.
The
Plan
invests in various investment securities. Investment securities are
exposed to various risks, such as interest rate, credit and market
risks. Due to the level of risk associated with certain investment
securities, it is at least reasonably possible that changes in the values of
investment securities will occur in the near term and that such changes could
materially affect the participants’ account balances and the amounts reported in
the statements of net assets available for benefits.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
3.
Investments
The
Plan's investments are held by an appointed trust company. Effective in June
2007, The Charles Schwab Trust Company became the successor trustee to
Nationwide Trust Company. This change occurred in conjunction with
ownership changes at the Plan's record keeper. The following represents the
fair
value of investments that represent 5% or more of the Plan’s net
assets:
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December
31,
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2007
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2006
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American
Funds EuroPacific Growth Fund/ A
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$ | 5,214,283 | $ | 3,960,797 | ||||
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American
Funds Growth Fund of America/ A
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3,540,120 | 3,501,557 | ||||||
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BlackRock
Aurora A
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* | 1,679,725 | ||||||
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Dreyfus
Intermediate Term Income Fund
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3,022,387 | 2,681,203 | ||||||
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SEI
Stable Asset**
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* | 1,432,282 | ||||||
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Van
Kampen Growth and Income A
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4,414,366 | 4,391,925 | ||||||
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AIM
Small Cap Growth Fund
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1,317,231 | * | ||||||
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Sonic
Corp. common stock
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3,952,359 | 4,432,695 | ||||||
*
Amount
did not represent 5% or more of the Plan’s net assets as of the period
indicated.
**
Contract value for this fund at December 31, 2006 was $1,469,980.
The
Plan’s investments (including gains and losses on investments bought and sold,
as well as held during the year) depreciated in fair value as
follows:
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For
the Year Ended
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December
31, 2007
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Registered
investment companies
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$ | (35,513 | ) | |
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Sonic
Corp. common stock
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(373,400 | ) | ||
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Net
depreciation in fair value of investments
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$ | (408,913 | ) | |
4.
Income Tax Status
The
Plan
has received a determination letter from the Internal Revenue Service (IRS)
dated October 15, 2007 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. Subsequent to this determination by the
IRS, the Plan was amended. 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, as amended, is qualified and the related
trust is tax-exempt.
5.
Related-Party Transactions
A
portion
of the Plan’s assets are invested in the Company’s common
stock. Because the Company is the Plan Sponsor, transactions
involving the Company’s common stock qualify as party-in-interest
transactions. All of these transactions are exempt from the
prohibited transaction rules.
6.
Reconciliation of Financial Statements to Form 5500
The
following is a reconciliation of net assets available for benefit per the
financial statements to the Form 5500:
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December 31,
2007
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December 31,
2006
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Net
assets available for benefits per the financial statements
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$ | 25,711,910 | $ | 23,924,026 | ||||
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Amounts
allocated to withdrawing participants
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- | (11,101 | ) | |||||
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Difference
in excess deferrals and other
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- | 842 | ||||||
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Adjustment
from contract value to fair value for fully benefit-responsive
investment
contracts held by a common collective trust
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(150 | ) | (37,698 | ) | ||||
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Net
assets available for benefits per the Form 5500
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$ | 25,711,760 | 23,876,069 | |||||
The
following is a reconciliation of the increase per the financial statements
to
the Form 5500:
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Year
Ended
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||||
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December 31,
2007
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||||
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Net
increase per the financial statements
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$ | 1,787,884 | ||
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Add: Amounts
allocated to withdrawing participants at December 31, 2006
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11,101 | |||
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Less: Difference
in excess deferrals and other at December 31, 2006
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(842 | ) | ||
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Less: Adjustment
from contract value to fair value for fully benefit-responsive investment
contracts held by a common collective trust at December 31,
2007
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(150 | ) | ||
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Add: Adjustment
from fair value to contract value for fully benefit-responsive investment
contracts held by a common collective trust at December 31,
2006
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37,698 | |||
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Net
increase per the Form 5500
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$ | 1,835,691 | ||
Certain
fully benefit-responsive contracts (common collective trusts that invest in
insurance contracts, synthetic contracts and separate guaranteed contracts)
are
recorded on the financial statements at contract value versus fair value on
the
Form 5500. Amounts allocated to withdrawing participants are recorded
on the Form 5500 for benefit claims that have been processed and approved for
payment prior to December 31, but not yet paid as of that date.
7.
Subsequent Event
Effective
January 1, 2008, the Plan changed record keeper from The 401(k) Company to
Diversified Investment Advisors (DIA). Concurrently, the trustee for
the Plan changed from Charles Schwab Trust Company to Investors Bank and Trust
Company, which was aquired by State Street Bank and Trust
Company. The Plan had $3,620,085 of investments in transit on
December 31, 2007. These investments were received by DIA by January
2, 2008.
Supplemental
Schedule
Sonic
Corp. Savings and Profit Sharing Plan
Schedule
H, Line 4i – Schedule of Assets (Held at End of Year)
Plan
Number 001
EIN:
73-1371046
December 31,
2007
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(a)
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(b)
Identity
of Issue, Borrower, Lessor or Similar Party
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(c)
Description
of Investment including maturity date, rate of interest, collateral,
par
or maturity value
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(e)
Current
Value
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American
Funds EuroPacific Growth Fund/ A
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102,502
shares
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$ | 5,214,283 | |||
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American
Funds Growth Fund of America/ A
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104,091
shares
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3,540,120 | ||||
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BlackRock
Aurora A
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1
share
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23 | ||||
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Cash
Management Trust of America
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655
shares
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655 | ||||
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Dreyfus
Intermediate Term Income Fund
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242,762
shares
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3,022,387 | ||||
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SEI
Stable Asset
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5,948
shares
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5,798 | ||||
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Van
Kampen Growth and Income A
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207,735
shares
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4,414,366 | ||||
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AIM
Small Cap Growth Fund
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45,422
shares
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1,317,231 | ||||
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*
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Sonic
Corp. common stock
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180,473
shares
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3,952,359 | |||
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*
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Participant
Loans
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Participant
loans, interest rates from 5.99% to 9.13%
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519,542 | |||
| $ | 21,986,764 | |||||
*Indicates
party-in-interest to the Plan.
Column
(d) is not applicable as investments are participant-directed.
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
annual report to be signed on its behalf by the undersigned thereunto duly
authorized.
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Sonic
Corp. Savings and Profit Sharing Plan
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By:
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/s/
Claudia San Pedro
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Claudia
San Pedro, Chair of the Sonic
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Corp.
Savings and Profit Sharing Plan
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Administrative
Committee
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Date: June
19, 2008
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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Consent
of Independent Registered Public Accounting
Firm
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