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Income Taxes (Tables)
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12 Months Ended |
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Dec. 31, 2012
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| Income Taxes [Abstract] |
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| Provision for income tax (benefit) expense from continuing operations |
The provision for income tax (benefit) expense from
continuing operations consists of the following:
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Year Ended December 31, |
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2012 |
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2011 |
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|
2010 |
|
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|
(In thousands) |
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Current:
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Federal
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$ |
22,982 |
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$ |
3,677 |
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|
$ |
7,918 |
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State
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1,090 |
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8,646 |
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3,013 |
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24,072 |
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12,323 |
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10,931 |
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Deferred
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25,900 |
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39,408 |
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(26,701 |
) |
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Total provision for income taxes — (benefit) expense
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|
$ |
49,972 |
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|
$ |
51,731 |
|
|
$ |
(15,770 |
) |
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| Reconciliation of statutory federal income tax rate with federal and state overall effective income tax rate from continuing operations |
The reconciliation of the statutory federal income tax rate
with Sonic’s federal and state overall effective income tax rate from continuing operations is as follows:
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Year Ended December 31, |
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2012 |
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2011 |
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|
2010 |
|
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Statutory federal rate
|
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|
35.00 |
% |
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|
35.00 |
% |
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|
35.00 |
% |
|
Effective state income tax rate
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|
4.22 |
% |
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|
3.92 |
% |
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|
4.70 |
% |
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Valuation allowance adjustments
|
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(3.15 |
%) |
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— |
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(58.69 |
%) |
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Other
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(0.69 |
%) |
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(0.10 |
%) |
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|
0.01 |
% |
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Effective tax rate
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35.38 |
% |
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|
38.82 |
% |
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(18.98 |
%) |
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| Components of deferred tax assets and liabilities |
Significant components of Sonic’s deferred tax assets and liabilities are as follows:
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December 31, |
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2012 |
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|
2011 |
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(In thousands) |
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Deferred tax assets:
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Accruals and reserves
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$ |
40,944 |
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$ |
42,436 |
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State net operating loss carryforwards
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11,093 |
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14,186 |
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Fair value of interest rate swaps
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12,999 |
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14,240 |
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Interest and state taxes associated with the liability for uncertain income tax positions
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3,260 |
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6,194 |
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Other
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269 |
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298 |
|
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Total deferred tax assets
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68,565 |
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77,354 |
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Deferred tax liabilities:
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Basis difference in inventory
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(2,055 |
) |
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(1,795 |
) |
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Basis difference in property and equipment
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(9,993 |
) |
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(16,344 |
) |
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Basis difference in goodwill
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(36,381 |
) |
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(18,641 |
) |
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Basis difference in debt
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— |
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(7,703 |
) |
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Other
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(3,791 |
) |
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(3,690 |
) |
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Total deferred tax liability
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(52,220 |
) |
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(48,173 |
) |
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Valuation allowance
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(6,333 |
) |
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(10,781 |
) |
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Net deferred tax asset (liability)
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$ |
10,012 |
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$ |
18,400 |
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| Summary of changes in liability related to unrecognized tax benefits |
A summary of the changes in the liability related to Sonic’s unrecognized tax benefits is presented below.
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2012 |
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2011 |
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2010 |
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(In thousands) |
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Unrecognized tax benefit liability, January 1(1)
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$ |
13,689 |
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$ |
22,535 |
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$ |
24,790 |
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Prior period positions:
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Increases
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35 |
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|
684 |
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|
518 |
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Decreases
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(1,101 |
) |
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— |
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(162 |
) |
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Current period positions
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1,155 |
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1,498 |
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1,212 |
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Settlements
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(2,924 |
) |
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(9,391 |
) |
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(1,706 |
) |
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Lapse of statute of limitations
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(1,275 |
) |
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(1,175 |
) |
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(1,762 |
) |
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Other
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(482 |
) |
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(462 |
) |
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(355 |
) |
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Unrecognized tax benefit liability, December 31(2)
|
|
$ |
9,097 |
|
|
$ |
13,689 |
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$ |
22,535 |
|
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| (1) |
Excludes accrued interest and penalties of $4.9 million, $5.1 million and $6.4 million at January 1, 2012, 2011 and 2010, respectively. |
| (2) |
Excludes accrued interest and penalties of $2.4 million, $4.9 million and $5.1 million at December 31, 2012, 2011 and 2010, respectively. |
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