Sonic 2008 Annual Report Download - page 6

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We experienced both unusual successes and sizeable near-term challenges in fiscal year 2008.
Unprecedented changes in the economy and capital markets have affected every consumer
and business across the nation. At Sonic, we approach our business not only by building on
successes, but by also confronting challenges, viewing them as opportunities, with the
expectation that we will emerge stronger than before. As a leading franchising company with
healthy operating cash flows, we are well positioned to face these challenges and adapt our
strategy to meet today's consumer and business needs.
Brand successes for 2008 included achieving our 22nd consecutive year of positive system-wide
same-store sales, a noteworthy and unique record, a great tribute to our operators and our
brand and a tremendous accomplishment considering the strong headwinds our industry faces
today. In addition, we continue to make the transition from a regional to a national brand,
opening new drive-ins in New Jersey, Michigan and Minnesota, not to mention the first Sonic
in the Chicago metropolitan area. Sales for new drive-ins in these and other new markets
exceeded our expectations and, in many cases, broke prior sales records. Our development
pipeline is the strongest it has ever been with commitments for almost 1,000 new drive-ins
over the next several years in both new and existing markets. These highlights not only reflect
the fundamental strength of our brand, but the building blocks of our multi-layered growth
strategy, which position us well for long-term success.
The challenges we confronted in 2008 were numerous and included a decline in partner drive-
in same-store sales, a more price-driven competitive environment, increased commodity costs
and falling consumer discretionary income. The combination of these factors resulted in lower-
than-expected sales and earnings for the fiscal year. Sonic's revenues increased 4 percent to
$804.7 million from $770.5 million in fiscal 2007, and net income per share for fiscal 2008 was
$0.97 versus $0.96 last year, with the prior-year amount excluding $0.05 per share of debt
extinguishment charges incurred in fiscal 2007. While these challenges affect our near-term
T Our Sockholder
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