OAK BROOK, Ill., July 22, 2014 /PRNewswire/ -- McDonald's
Corporation today announced results for the second quarter ended
June 30, 2014, reflecting higher
revenues and earnings per share for the quarter.
"The McDonald's System is committed to creating the best
experience for our customers by offering great-tasting food and
beverages and a memorable and contemporary experience," said
McDonald's President and Chief Executive Officer Don Thompson. "During the quarter, we evolved
our strategic Plan to Win framework to enhance our focus on the
customer through insights, planning and actions. To reignite
momentum over the next 18 months, we're focused on fortifying the
foundational elements of our business by concentrating our efforts
on compelling value, marketing and operations excellence to become
a more relevant and trusted brand."
Second Quarter results included:
- Global comparable sales were relatively flat, reflecting
higher average check and negative guest traffic in all major
segments
- Consolidated revenues increase of 1% (1% in constant
currencies), benefiting from expansion
- Consolidated operating income was flat (decrease of 1% in
constant currencies)
- Diluted earnings per share of $1.40, an increase of 1% (1% in constant
currencies), benefiting from a decrease in diluted weighted average
shares outstanding
- Returned $1.6 billion to
shareholders through dividends and share repurchases, in connection
with our $18-$20 billion, 3-year cash
return target
In the U.S., second quarter comparable sales decreased 1.5%
while operating income rose 1%. Results for the quarter reflected
negative comparable guest traffic amid ongoing broad-based
challenges. Looking ahead, McDonald's U.S. is intent on
strengthening the overall customer experience to effectively
position the segment for long-term growth. Key areas of focus
include service excellence, enhanced marketing, and value, core
menu and breakfast daypart initiatives.
In Europe, comparable sales
declined 1.0% and operating income was flat (decrease of 4% in
constant currencies) for the second quarter. The U.K. and
France delivered solid comparable
sales and operating income results for the quarter. Germany's quarterly performance reflected
ongoing weakness. Emphasis on compelling premium menu offers,
renewed focus on core menu and value options, and the roll-out of
blended ice beverages in several markets supported the quarter's
performance.
APMEA's (Asia/Pacific,
Middle East and Africa) second quarter comparable sales
increased 1.1%, reflecting strong comparable sales performance in
China, as well as positive
performance in many other markets. Results were impacted by
continued weakness in Japan.
APMEA's second quarter operating income declined 2% (increase of 1%
in constant currencies). Enhanced value offerings, locally-relevant
product promotions, convenience initiatives and new store
development were positive contributors to the segment's
results.
Pete Bensen, McDonald's Chief
Financial Officer noted, "McDonald's underlying financial strength
and our ability to build long-term shareholder value have been
hallmarks of our strategic plan. In keeping with this discipline,
during the quarter we announced plans to return $18-$20 billion to shareholders through a
combination of dividends and share repurchases between 2014 and
2016. This cash return target reflects a 10-20% increase over the
amount of cash returned in the prior 3-year period and is based on
several ongoing factors, including the significant free cash flow
generated from our operations, as well as the use of cash proceeds
from debt additions and refranchising of at least 1,500
restaurants. These actions are a testament to our commitment to
enhancing shareholder value."
Don Thompson concluded, "Overall,
2014 is a year of strengthening the foundational elements of our
business that are critical to enabling and advancing our
longer-term strategies. Heading into 2014, we acknowledged that we
did not expect any material changes to the operating environment
this year. As such, full year 2014 global comparable sales are
expected to be relatively similar to year-to-date June performance,
with July global comparable sales expected to be negative. While
near-term results are expected to remain muted, sizable growth
opportunities remain, and we are committed to pursuing these
opportunities through continuous improvement in everything we do -
from the food we serve, to our engagement with our customers, to
the management of our financial resources."
KEY HIGHLIGHTS -
CONSOLIDATED
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2014
|
|
2013
|
|
Inc/(Dec)
|
|
Inc/ (Dec)
Excluding Currency Translation
|
|
2014
|
|
2013
|
|
Inc/(Dec)
|
|
Inc/ (Dec)
Excluding Currency Translation
|
|
Revenues
|
$
|
7,181.7
|
|
$
|
7,083.8
|
|
1%
|
|
1%
|
|
$
|
13,882.0
|
|
$
|
13,689.1
|
|
1%
|
|
2%
|
|
Operating
income
|
2,189.0
|
|
2,197.7
|
|
0
|
|
(1)
|
|
4,125.0
|
|
4,147.2
|
|
(1)
|
|
0
|
|
Net income
|
1,387.1
|
|
1,396.5
|
|
(1)
|
|
(1)
|
|
2,591.9
|
|
2,666.7
|
|
(3)
|
|
(2)
|
|
Earnings per
share-diluted*
|
$
|
1.40
|
|
$
|
1.38
|
|
1%
|
|
1%
|
|
$
|
2.61
|
|
$
|
2.64
|
|
(1)%
|
|
0%
|
|
|
*
|
Foreign currency
translation had a positive impact of $0.01 on diluted earnings per
share for the quarter and negative impact of $0.02 for the six
months ended June 30, 2014.
|
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
Comparable sales represent sales at all restaurants and
comparable guest counts represent the number of transactions at all
restaurants, whether operated by the Company or by franchisees, in
operation at least thirteen months including those temporarily
closed. Some of the reasons restaurants may be temporarily closed
include reimaging or remodeling, rebuilding, road construction and
natural disasters. Comparable sales exclude the impact of currency
translation. Comparable sales are driven by changes in guest counts
and average check, which is affected by changes in pricing and
product mix. Typically, pricing has a greater impact on average
check than product mix. Management reviews the increase or decrease
in comparable sales and comparable guest counts compared with the
same period in the prior year to assess business trends. The number
of weekdays and weekend days, referred to as the calendar
shift/trading day adjustment, can impact comparable sales and guest
counts. In addition, the timing of holidays can impact comparable
sales and guest counts.
Information in constant currency is calculated by translating
current year results at prior year average exchange rates.
Management reviews and analyzes business results excluding the
effect of foreign currency translation and bases incentive
compensation plans on these results because they believe this
better represents the Company's underlying business trends.
RELATED COMMUNICATIONS
This press release should be read in conjunction with Exhibit
99.2 in the Company's Form 8-K filing for supplemental information
related to the Company's results for the quarter ended June 30, 2014.
McDonald's Corporation will broadcast its investor conference
call live over the Internet at 10:00 a.m.
Central Time on July 22, 2014.
A link to the live webcast will be available at
www.investor.mcdonalds.com. There will also be an archived webcast
and podcast available for a limited time.
The Company plans to release July
2014 sales information on August 8,
2014.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 35,000 locations serving approximately 70 million
customers in over 100 countries each day. More than 80% of
McDonald's restaurants worldwide are owned and operated by
independent local business men and women.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements, which
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. The factors that could cause actual results to
differ materially from our expectations are detailed in the
Company's filings with the Securities and Exchange Commission, such
as its annual and quarterly reports and current reports on Form
8-K.
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
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|
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|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Quarters Ended
June 30,
|
2014
|
|
|
2013
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
4,785.9
|
|
|
$
|
4,761.4
|
|
|
$
|
24.5
|
|
|
1%
|
|
Revenues from
franchised restaurants
|
2,395.8
|
|
|
2,322.4
|
|
|
73.4
|
|
|
3
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
7,181.7
|
|
|
7,083.8
|
|
|
97.9
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
3,969.8
|
|
|
3,919.5
|
|
|
50.3
|
|
|
1
|
|
Franchised
restaurants—occupancy expenses
|
427.6
|
|
|
399.1
|
|
|
28.5
|
|
|
7
|
|
Selling, general
& administrative expenses
|
629.2
|
|
|
607.0
|
|
|
22.2
|
|
|
4
|
|
Other operating
(income) expense, net
|
(33.9)
|
|
|
(39.5)
|
|
|
5.6
|
|
|
15
|
|
Total operating costs
and expenses
|
4,992.7
|
|
|
4,886.1
|
|
|
106.6
|
|
|
2
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
2,189.0
|
|
|
2,197.7
|
|
|
(8.7)
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
137.9
|
|
|
129.8
|
|
|
8.1
|
|
|
6
|
|
Nonoperating (income)
expense, net
|
(20.4)
|
|
|
8.0
|
|
|
(28.4)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
2,071.5
|
|
|
2,059.9
|
|
|
11.6
|
|
|
1
|
|
Provision for income
taxes
|
684.4
|
|
|
663.4
|
|
|
21.0
|
|
|
3
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,387.1
|
|
|
$
|
1,396.5
|
|
|
$
|
(9.4)
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.40
|
|
|
$
|
1.38
|
|
|
$
|
0.02
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
993.2
|
|
|
1,008.7
|
|
|
(15.5)
|
|
|
(2)%
|
|
|
n/m Not
meaningful
|
McDONALD'S
CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
Six Months Ended
June 30,
|
2014
|
|
|
2013
|
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
9,276.4
|
|
|
$
|
9,206.8
|
|
|
$
|
69.6
|
|
|
1%
|
|
Revenues from
franchised restaurants
|
4,605.6
|
|
|
4,482.3
|
|
|
123.3
|
|
|
3
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
13,882.0
|
|
|
13,689.1
|
|
|
192.9
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
7,736.9
|
|
|
7,645.5
|
|
|
91.4
|
|
|
1
|
|
Franchised
restaurants—occupancy expenses
|
844.7
|
|
|
794.3
|
|
|
50.4
|
|
|
6
|
|
Selling, general
& administrative expenses
|
1,249.6
|
|
|
1,203.5
|
|
|
46.1
|
|
|
4
|
|
Other operating
(income) expense, net
|
(74.2)
|
|
|
(101.4)
|
|
|
27.2
|
|
|
27
|
|
Total operating costs
and expenses
|
9,757.0
|
|
|
9,541.9
|
|
|
215.1
|
|
|
2
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
4,125.0
|
|
|
4,147.2
|
|
|
(22.2)
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
273.4
|
|
|
257.9
|
|
|
15.5
|
|
|
6
|
|
Nonoperating (income)
expense, net
|
(3.2)
|
|
|
12.6
|
|
|
(15.8)
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
3,854.8
|
|
|
3,876.7
|
|
|
(21.9)
|
|
|
(1)
|
|
Provision for income
taxes
|
1,262.9
|
|
|
1,210.0
|
|
|
52.9
|
|
|
4
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
2,591.9
|
|
|
$
|
2,666.7
|
|
|
$
|
(74.8)
|
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
2.61
|
|
|
$
|
2.64
|
|
|
$
|
(0.03)
|
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
994.6
|
|
|
1,009.9
|
|
|
(15.3)
|
|
|
(2)%
|
|
|
n/m Not
meaningful
|
SOURCE McDonald's Corporation