Sonic Corporation today reported record revenues and earnings for the first quarter of fiscal year 2001, which ended November 30, 2000.

Net income rose 13% to $8.5 million versus $7.5 million
in the first quarter of fiscal year 2000 and was up 19%
to $0.31 per diluted share from $0.26 per diluted share
last year (all per share amounts have been adjusted for
a three-for-two stock split distributed on November 30,
2000). Sonic’s revenues for the quarter increased 8% to
$71.0 million compared with $65.9 million in the year-earlier
period.

Commenting on the results, Clifford Hudson, chairman and
CEO, noted that the company’s ongoing earnings momentum
in the first quarter highlights the impact of Sonic’s multi-layered
growth strategies. “These strategies provide balanced opportunities
to drive our profits through continued expansion of the
chain and the positive impact that has on our franchising
income, strong media support for our brand-building efforts,
a steady flow of new product news, and increased leverage
of corporate-level expenses,” he said. “Although sales
during the latter part of the quarter were, as previously
announced, restrained by unseasonably cold and wet weather
across many of our markets, we are pleased that our multi-layered
growth strategies have continued to produce solid gains
in earnings and a strong return on equity.”

According to Hudson, Sonic’s system-wide same-store sales
declined 1.1% in the first quarter. The late fall and winter
months are seasonally slower periods of the year for Sonic
and, thus, sales volumes in these months are more easily
disrupted by harsh weather conditions, which continued during
December in many areas of the country. Moreover, weather
conditions in November and December have been unusually
mild in recent years, so Sonic’s same-store sales comparisons
for fiscal 2001 also come against very strong prior-year
results.

“Despite slower sales in November and December, we continue
to believe that initiatives are in place, weather permitting,
to support same-store sales growth of between 2% and 4%
during the remaining months of the fiscal year,” he said.
“We anticipate that media expenditures, which will increase
20% to over $80 million this year, will help fuel sales
growth in the months to come and continue to improve Sonic’s
advertising awareness versus competitors. In addition, we
plan a steady stream of product promotions and new product
news, and we intend to continue to focus on initiatives
to build our business in underserved day parts.”

During the first quarter, Sonic opened a total of 46 new
drive-ins, including 40 franchised restaurants, marking
a solid start to system expansion in the new year. With
a strong development pipeline in place for new company-owned
and franchised locations, Sonic expects to open at least
200 new drive-ins during fiscal year 2001. “The primary
thrust of our system development remains on the franchise
side of our business, which reduces operating risk for the
company and allows it to achieve stronger returns on equity,”
Hudson said.

“Combined with the ascending nature of our royalty
agreements, this strategy also has resulted in a strong
and growing base for franchising income. In addition, this
focus has enabled Sonic to generate higher levels of free
cash flow to reduce bank borrowings—as we did during
the first quarter, to support our ongoing share repurchase
program—which has a remaining authorization of $20
million, and to fund other opportunistic initiatives—like
the purchase of 10 Dallas-area franchised drive-ins scheduled
to close January 3, 2001.”

Hudson added: “Sonic’s business fundamentals remain
very healthy and the outlook for continued success in expanding
the chain and providing the differentiated fast-food dining
experience that customers demand is as strong as ever. These
achievements have been the hallmark of our success in the
past and they give us the confidence to look for continued
earnings growth in the range of 18% to 20% for fiscal year
2001.”