With more than 3,500 drive-ins from coast to coast, Sonic is the nation's largest chain of drive-in restaurants. More important, Sonic is the most highly differentiated quick-service brand, offering:

• Streamlined service delivery system;


• Personalized Friendly Carhop service that's fast, convenient and a lot more fun than the typical drive-thru; and


• Fresh, quality food, made to order for each individual customer.

At Sonic, we're all about feeding our customers' desires for choices. Our made-when-you-order menu includes items you won't readily find elsewhere, going well beyond what may come to mind when you first think about fast food. Sonic features a diverse selection of sandwiches, salads and frozen treats in addition to burgers, fries and sodas offered at traditional quick service restaurants. At Sonic, our customers can choose from eight different burgers to healthy alternatives such as the Santa Fe Grilled Chicken Salad or our signature selections, like Extra-Long Cheese Coneys with chili, Tater Tots, and hand-battered Onion Rings. Drink choices also abound to take our customers well off the beaten path to a place where Cherry Limeade reigns supreme - and still symbolizes the unique combinations of drinks, slushes, juices, teas, fruits, and flavors (over 168,000 drink combinations and counting) available at Sonic, along with our famous Frozen Favorites® desserts.

Serving Up Higher Financial Returns
How do we do it? - Multi-Layered Growth Strategy

Since becoming public in 1991, Sonic has consistently served up high financial returns. Highlights of the company's record of strong financial results include:

• System-wide sales increased 9% during fiscal 2007 as system-wide same-store sales rose 3.1%, marking the twenty-first consecutive year of higher same store sales for Sonic;


• System-wide average unit volume increased another 4% in fiscal 2007 to over $1.1 million;


• Revenues increased 11% to $770 million in fiscal 2007 and have increased an average of 14% over the past five years;


• Net income per diluted share rose 9% to $0.96 in fiscal 2007, excluding $0.05 in special items, and has increased an average of 16% over the past five years (adjusted for stock splits); and


• Solid growth in operating cash flow, which helps support Sonic's development of new partner drive-ins and opportunistic acquisitions of franchised drive-ins.

Sonic posts perhaps the most consistent and attractive sales and earnings trends in the industry. At a time when many chains count on sales growth to come mainly from new units, and rarely see sustained same-store sales growth stretch beyond a several quarters, perhaps a few years, Sonic has attained levels unmatched in the QSR industry. In fiscal year 2007, the company recorded its twenty-first consecutive year of positive same-store sales.

The primary objective of Sonic's capital management strategy is to maximize total stockholder returns - including earnings per share and share price appreciation - while managing the capital structure to an acceptable level of debt and financial risk. This includes deploying cash flow for capital expenditures to increase the number partner drive-ins, fund capital improvements and make technology investments, and to repurchase stock.

One principal use of Sonic's capital is the opening of new partner drive-ins. Sonic targets the opening of 30 to 40 new partner drive-ins per year. Another is share repurchases, a strategy Sonic has employed to increase shareholder value over the past fifteen years. Since 1994, Sonic has invested over $806 to purchase approximately 53.5 shares.

Taking advantage of its strong balance sheet, in October 2006 Sonic completed the buyback of $366 million of its common stock through a tender offer. Subsequent to the tender offer, the company has repurchased approximately $180 million of stock in the open market. Collectively, the total stock repurchased in fiscal year 2007 amounted to more than 25 million shares or approximately $578 million, representing over 30% of the company's outstanding stock at September 1, 2006, the beginning of fiscal year 2007.

For more current FY 2007 earnings information

To achieve solid gains in earnings per share for stockholders, we pursue a multi-layered growth strategy which includes:

• Media expenditures and new product news to drive same-store sales and average unit volume growth;


• A broad menu focusing on alternative day parts to increase operating leverage and sales;


• Increased expansion in core and developing markets with a primary emphasis on franchise drive-ins; and


• Increased royalty income through Sonic's ascending royalty rate which increases as sales increase.

Increased marketing expenditures, with almost one-half focused on network cable, build brand awareness efficiently and effectively across developing and new markets. National cable provides 12 months of commercials to feature new products, emphasize alternative day parts and target specific customer segments.

Average Unit Volume (thousands)	National Marketing Fund (millions)	Total Media (millions)

At Sonic, we increasingly have viewed our business in terms of day part performance and have placed greater emphasis on how we can improve sales and profits by day part for our partners and franchisees. These goals intersect critically with our marketing strategies as we deploy our advertising dollars both to promote specific products and build our business across the day - not only in the typical peak times of lunch and dinner, but in non-traditional day parts, particularly mornings, afternoons, and evenings after dinner.

Over the past five years, we have opened more than 900 new Sonic Drive-Ins, expanding the size of our chain by almost one-third. Along with the accelerated pace of new drive-in development, our expansion has taken us to five new states in the past two years. With strong opening and sustained sales in new northern markets, our concept has proven successful in all regions. Sonic is on the move and plans to continue developing units in new and core markets at a rate of at least 6% a year.

Our franchisees - who operate approximately 80% of our system - continue to take the lead in our development process. This tandem approach to expanding our chain, complementing the growth of our partner drive-ins, promotes a healthy balance in our revenues and limits the risk associated with developing markets. Moreover, considering our unique ascending royalty rate and the implementation of new licenses from time to time, our franchise-focused development also translates into a consistent and growing stream of franchising income for the company.

These multi-layered strategies have enabled Sonic to emerge as a leader in QSR, providing perhaps the most attractive growth and financial returns to franchisees and stockholders of any company in the QSR industry. More important, these strategies, coupled with our distinctive concept, position Sonic to continue its strong expansion program nationwide, draw new franchisees to Sonic family, and build the brand among a growing number of loyal customers.