Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v2.4.0.8
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
Provision for Income Tax (Benefit) Expense from Continuing Operations

The provision for income tax (benefit) expense from continuing operations consists of the following:

 

     Year Ended December 31,  
      2013      2012      2011  
     (In thousands)  

Current:

         

Federal

    $ 33,367       $ 22,982       $ 3,677   

State

      5,647         1,090         8,646   
  

 

 

     

 

 

     

 

 

  

Total current

      39,014         24,072         12,323   

Deferred

      5,329         25,900         39,408   
  

 

 

     

 

 

     

 

 

  

Total provision for income taxes — (benefit) expense

    $ 44,343       $ 49,972       $ 51,731   
  

 

 

     

 

 

     

 

 

  
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:

 

     Year Ended December 31,  
     2013     2012     2011  

Statutory federal rate

      35.00 %      35.00 %      35.00 % 

Effective state income tax rate

      3.22 %      4.22 %      3.92 % 

Valuation allowance adjustments

      0.33 %      (3.15 %)      —   

Uncertain tax positions

      (1.76 %)      (3.37 %)      (0.40 %) 

Other

      (2.42 %)      2.68 %      0.30 % 
  

 

 

    

 

 

    

 

 

  

Effective tax rate

      34.37 %      35.38 %      38.82 % 
  

 

 

    

 

 

    

 

 

  
Components of Deferred Tax Assets and Liabilities

Significant components of Sonic’s deferred tax assets and liabilities are as follows:

 

     December 31,     December 31,  
     2013     2012  
     (In thousands)  

Deferred tax assets:

     

Accruals and reserves

    $ 38,931      $ 40,944   

State net operating loss carryforwards

      10,194        11,093   

Fair value of interest rate swaps

      6,185        12,999   

Interest and state taxes associated with the liability for uncertain income tax positions

      1,910        3,260   

Other

      701        269   
  

 

 

    

 

 

  

Total deferred tax assets

      57,921        68,565   

Deferred tax liabilities:

     

Basis difference in inventory

      (1,636 )      (2,055 ) 

Basis difference in property and equipment

      (1,978 )      (9,993 ) 

Basis difference in goodwill

      (57,028 )      (36,381 ) 

Other

      (2,328 )      (3,791 ) 
  

 

 

    

 

 

  

Total deferred tax liability

      (62,970 )      (52,220 ) 

Valuation allowance

      (6,758 )      (6,333 ) 
  

 

 

    

 

 

  

Net deferred tax asset (liability)

    $ (11,807 )    $ 10,012   
  

 

 

    

 

 

  
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.

 

     2013     2012     2011  
     (In thousands)  

Unrecognized tax benefit liability, January 1(1)

    $ 9,097      $ 13,689      $ 22,535   

Prior period positions:

       

Increases

      409        35        684   

Decreases

      (233 )      (1,101 )      —   

Increases from current period positions

      799        1,155        1,498   

Settlements

      (1,721 )      (2,924 )      (9,391 ) 

Lapse of statute of limitations

      (1,164 )      (1,275 )      (1,175 ) 

Other

      (494 )      (482 )      (462 ) 
  

 

 

    

 

 

    

 

 

  

Unrecognized tax benefit liability, December 31(2)

    $ 6,693      $ 9,097      $ 13,689   
  

 

 

    

 

 

    

 

 

  
 
(1) Excludes accrued interest and penalties of $2.4 million, $4.9 million and $5.1 million at January 1, 2013, 2012 and 2011, respectively.

 

(2) Excludes accrued interest and penalties of $1.1 million, $2.4 million and $4.9 million at December 31, 2013, 2012 and 2011, respectively. Amount presented is net of state net operating losses of $1.0 million, $1.3 million and $3.5 million at December 31, 2013, 2012 and 2011, respectively.