8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 8-K

_____________________

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

March 29, 2016

Date of Report (Date of earliest event reported)

_____________________

SONIC CORP.

(Exact name of registrant as specified in its charter)

_____________________

Delaware	0-18859	73-1371046
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer Identification No.)
incorporation or organization)

300 Johnny Bench Drive	73104
Oklahoma City, Oklahoma	(Zip Code)
(Address of Principal Executive Offices)

(405) 225-5000

(Registrant’s telephone number, including area code)

_____________________

Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[   ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[   ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[   ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On March 29, 2016, Sonic Corp. (the “Registrant”) issued a press release announcing results for its secondquarter of fiscal 2016.  The information in the press release attached hereto as Exhibit 99 is furnished pursuant to this Item 2.02.

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits.

99  Press Release, dated March 29, 2016, announcing results forthe secondquarter of fiscal 2016.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	REGISTRANT:
	SONIC CORP.
Date: March 29, 2016	By: /s/ Claudia S. San Pedro
	Claudia S. San Pedro,
	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX
Exhibit No.	Description
99	Press Release, dated March 29, 2016,  announcing results for thesecondquarter of fiscal 2016.

EX-99

Contact:	Corey Horsch
	Vice President of Investor Relations
	and Treasurer
	(405) 225-4800

SONIC SAME-STORE SALES GROW 6.5% FOR THE QUARTER ending february 29

Two Year Winter Quarter Cumulative Sales Growth Totals 18%

OKLAHOMA CITY (March 29, 2016) – Sonic Corp. (NASDAQ: SONC), the nation’s largest chain of drive-in restaurants, today announced results for its second fiscal quarter ended February 29, 2016.

Key highlights of the company’s second quarter of fiscal year 2016 included:

· Net income per diluted share increased 57% to $0.22 compared with $0.14 in the same period prior year; adjusted net income per diluted share increased 38% to $0.18 compared with adjusted net income per diluted share of $0.13 in the prior-year period;

· System same-store sales increased 6.5%, consisting of a 6.5% same-store sales increase at franchise drive-ins and an increase of 6.3% at company drive-ins;

· Company drive-in margins improved by 60 basis points;

· Five new franchise drive-ins opened; and

· The company purchased 0.9 million outstanding shares.  

"Our business continues to perform at an exceptional level, generating 6.5% same-store sales growth for the system while lapping our strongest same-store sales comparison in ten years,” said Cliff Hudson, Sonic Corp. CEO.  “Continued strength in core menu items, combined with highly effective limited-time-offer and value-based promotions, allowed us to increase market share in a highly competitive environment.  The combination of sales leverage and a favorable commodity cost environment helped to generate another quarter of solid margin improvement at the drive-in level.

“As we look to sustain our recent momentum, we continue to invest aggressively in our people and technology initiatives, which we believe will further differentiate the experience we provide to our consumers,"  continued Hudson.    "And we are pleased to have repurchased 2.7 million shares in the first half of 2016, representing 5.2% of shares outstanding.  We remain confident in the ability of our multi-layered growth strategy toincrease EPS throughsame-store sales growth, improved margins, increased royalty revenues, accelerated new drive-in development and the deployment of free cash flow1.”

1Free cash flow is defined as net income plus depreciation, amortization and stock compensation expenses, less capital expenditures.

Same-Store Sales

For the second fiscal quarter ended February 29, 2016, system same-store sales increased 6.5%, which was comprised of a 6.5% same-store sales increase at franchise drive-ins and an increase of 6.3% at company drive-ins.

Financial Overview

For the second fiscal quarter of 2016, the company’s net income increased to $10.8 million or $0.22 per diluted share compared with net income of $7.7million or $0.14 per diluted share in the same period in the prior year.  Excluding the items outlined below, net income and net income per diluted share increased 29% and 38%, respectively.

The following analysis of non-GAAP adjustments is intended to supplement the presentation of the company’s financial results in accordance with GAAP.  The company believes that the presentation of this analysis provides useful information to investors and management regarding the underlying business trends and the performance of the company’s ongoing operations and is helpful for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the financial results of the company and predicting future performance.

	Three months ended				Three months ended
	February 29, 2016				February 28, 2015
	Net		Diluted		Net		Diluted		Net Income				Diluted EPS
	Income		EPS		Income		EPS		$ Change		% Change		$ Change		% Change
Reported – GAAP	$	10,819	$	0.22	$	7,662	$	0.14	$	3,157	41	%	$	0.08	57	%
After-tax gain on sale of real estate		(1,211)		(0.03)		-		-
Retroactive benefit of Work Opportunity Tax Credit and resolution of tax matters		(585)		(0.01)		(666)		(0.01)
Adjusted - Non-GAAP	$	9,023	$	0.18	$	6,996	$	0.13	$	2,027	29	%	$	0.05	38	%

For the first six months of fiscal year 2016, net income totaled $23.3 million or $0.46 per diluted share compared with net income of $17.7 million or $0.32 per diluted share for the same period in 2015.  Excluding the items outlined below, net income and net income per diluted share increased 26% and 35%, respectively. 

	Six months ended				Six months ended
	February 29, 2016				February 28, 2015
	Net		Diluted		Net		Diluted		Net Income				Diluted EPS
	Income		EPS		Income		EPS		$ Change		% Change		$ Change		% Change
Reported – GAAP	$	23,277	$	0.46	$	17,747	$	0.32	$	5,530	31	%	$	0.14	44	%
After-tax gain on sale of real estate		(1,211)		(0.03)		-		-
Retroactive benefit of Work Opportunity Tax Credit and resolution of tax matters		(585)		(0.01)		(666)		(0.01)
Adjusted - Non-GAAP	$	21,481	$	0.42	$	17,081	$	0.31	$	4,400	26	%	$	0.11	35	%

Fiscal Year 2016 Outlook

While the macroeconomic environment may impact results, the company is revising its outlook for adjusted earnings per share growth for fiscal year 2016 from 16% to 20% to 20% to 25%. The outlook for fiscal 2016 anticipates the following elements:  

· 4% to 6% same-store sales growth for the system;

· Royalty revenue growth from same-store sales improvements and new unit development;

· 50 to 60 new franchise drive-in openings;

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· Drive-in-level margin improvement between 50 to 60 basis points, depending upon the degree of same-store sales growth at company drive-ins; 

· Selling, general and administrative expenses of approximately $84.0 million to $85.0 million reflecting increased investment in human resources and technology to support brand initiatives;

· Depreciation and amortization expense of $45.0 million to $46.0 million as a result of capital investment in fiscal 2016;

· Capital expenditures of $35 million to $40 million;

· Free cash flow of approximately $75 million to $80 million;

· An income tax rate between 36.0% to 37.0%; 

· The planned repurchase of $126 million of stock across the fiscal year; and

· An expected quarterly cash dividend of $0.11 per share.

Earnings Conference Call

The company will host a conference call to review financial results at 5:00 PM ET this evening.  The conference call can be accessed live over the phone by dialing  (888) 438-5448or (719) 325-2491 for international callers.  A replay will be available one hour after the call and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the conference ID is 8155461.  The replay will be available until Tuesday, April 5,2016.  An online replay of the conference call will be available approximately two hours after the conclusion of the live broadcast. A link to this event may be found on the company's investor relations website at http://ir.sonicdrivein.com/.

About Sonic

SONIC, America's Drive-In is the nation's largest drive-in restaurant chain serving more than 3 million customers every day. Nearly 90 percent of SONIC's 3,500 drive-in locations are owned and operated by local business men and women. For the past 60 years, SONIC has delighted guests with signature menu items, more than 1.3 million drink combinations and friendly service by iconic Carhops. To learn more about Sonic Corp. (NASDAQ/NM: SONC), please visit sonicdrivein.com or follow us on Facebook and Twitter.

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. Factors that could cause actual results to differ materially from those expressed in, or underlying, these forward-looking statements are detailed in the company’s annual and quarterly report filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly release revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events, except as required to be reported under the rules and regulations of the Securities and Exchange Commission.

The tables that follow provide information regarding the number of company drive-ins, franchise drive-ins and system drive-ins in operation as of the end of the periods indicated.  In addition, these tables provide information regarding franchise sales, system growth in sales, and both franchise and system average drive-in sales and change in same-store sales.  System information includes both company and franchise drive-in information, which we believe is useful in analyzing the growth of our brand.  While we do not record franchise drive-in sales as revenues, we believe this information is important in understanding our financial performance since we calculate and record franchise royalties based on a percentage of franchise sales.  This information also is indicative of the financial health of our franchisees.

SONC-F

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SONIC CORP.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
	Three months ended				Six months ended
	February 29,		February28,		February 29,		February28,
	2016		2015		2016		2015
Revenues:
Company Drive-In sales	$	95,313	$	92,309	$	199,196	$	192,447
Franchise Drive-Ins:
Franchise royalties and fees		36,047		32,407		75,969		70,671
Lease revenue		1,399		979		2,991		2,044
Other		401		524		807		913
Total revenues		133,160		126,219		278,963		266,075
Costs and expenses:
Company Drive-Ins:
Food and packaging		26,213		25,828		55,159		54,401
Payroll and other employee benefits		35,359		33,880		71,723		69,151
Other operating expenses, exclusive of
depreciation and amortization included below		20,100		19,924		43,008		42,529
Total cost of Company Drive-In sales		81,672		79,632		169,890		166,081
Selling, general and administrative		20,785		18,138		41,725		36,926
Depreciation and amortization		11,057		11,539		22,056		23,199
Other operating (income) expense, net		(2,566)		(81)		(2,965)		340
Total costs and expenses		110,948		109,228		230,706		226,546
Income from operations		22,212		16,991		48,257		39,529
Interest expense		6,467		6,318		12,689		12,599
Interest income		(105)		(97)		(205)		(199)
Net interest expense		6,362		6,221		12,484		12,400
Income before income taxes		15,850		10,770		35,773		27,129
Provision for income taxes		5,031		3,108		12,496		9,382
Net income	$	10,819	$	7,662	$	23,277	$	17,747
Basic income per share	$	0.22	$	0.14	$	0.47	$	0.33
Diluted income per share	$	0.22	$	0.14	$	0.46	$	0.32
Weighted average basic shares		48,977		53,171		49,599		53,226
Weighted average diluted shares		49,988		54,660		50,656		54,744

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SONIC CORP.
Unaudited Supplemental Information
	Three months ended		Six months ended
	February 29,	February28,	February 29,	February28,
	2016	2015	2016	2015
Drive-Ins in Operation
Company:
Total at beginning of period	382	389	387	391
Opened	-	-	-	1
Acquired from (sold to) franchisees	(7)	3	(9)	1
Closed (net of re-openings)	-	-	(3)	(1)
Total at end of period	375	392	375	392
Franchise:
Total at beginning of period	3,147	3,128	3,139	3,127
Opened	5	4	18	16
Acquired from (sold to) the company	7	(3)	9	(1)
Closed (net of re-openings)	(6)	(13)	(13)	(26)
Total at end of period	3,153	3,116	3,153	3,116
System-wide:
Total at beginning of period	3,529	3,517	3,526	3,518
Opened	5	4	18	17
Closed (net of re-openings)	(6)	(13)	(16)	(27)
Total at end of period	3,528	3,508	3,528	3,508

	Three months ended						Six months ended
	February 29,			February28,			February 29,			February28,
	2016			2015			2016			2015
	($ in thousands)						($ in thousands)
Sales Analysis
Company Drive-Ins:
Total sales	$	95,313		$	92,309		$	199,196		$	192,447
Average drive-in sales		253			237			522			496
Change in same-store sales		6.3	%		11.2	%		5.3	%		9.5	%
Franchised Drive-Ins:
Total sales	$	886,313		$	818,601		$	1,854,828		$	1,732,254
Average drive-in sales		283			267			593			561
Change in same-store sales		6.5	%		11.5	%		5.9	%		9.8	%
System-wide:
Change in total sales		7.8	%		12.8	%		6.7	%		10.9	%
Average drive-in sales	$	280		$	264		$	585		$	554
Change in same-store sales		6.5	%		11.5	%		5.9	%		9.8	%

Note:  Change in same-store sales based on restaurants open for a minimum of 15 months.

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SONIC CORP.
Unaudited Supplemental Information
	Three months ended				Six months ended
	February 29,		February28,		February 29,		February28,
	2016		2015		2016		2015
	(In thousands)				(In thousands)
Revenues
Company Drive-In sales	$	95,313	$	92,309	$	199,196	$	192,447
Franchise Drive-Ins:
Franchise royalties		35,807		32,236		75,269		69,012
Franchise fees		240		171		700		1,659
Lease revenue		1,399		979		2,991		2,044
Other		401		524		807		913
Total revenues	$	133,160	$	126,219	$	278,963	$	266,075

	Three months ended				Six months ended
	February 29,		February28,		February 29,		February28,
	2016		2015		2016		2015
Margin Analysis (percentage of Company Drive-In sales)
Company Drive-Ins:
Food and packaging	27.5	%	28.0	%	27.7	%	28.3	%
Payroll and employee benefits	37.1		36.7		36.0		35.9
Other operating expenses	21.1		21.6		21.6		22.1
Cost of Company Drive-In sales	85.7	%	86.3	%	85.3	%	86.3	%

	February 29,		August 31,
	2016		2015
	(In thousands)
Selected Balance Sheet Data
Cash and cash equivalents	$	36,106	$	27,191
Current assets		85,024		85,438
Property, equipment and capital leases, net		411,226		421,406
Total assets	$	606,747	$	620,024
Current liabilities, including capital lease obligations and
long-term debt due within one year	$	69,484	$	87,821
Obligations under capital leases due after one year		19,493		20,763
Long-term debt due after one year		484,863		428,238
Total liabilities		639,967		602,591
Stockholders' equity (deficit)	$	(33,220)	$	17,433

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