OAK BROOK, Ill., Jan. 23, 2015 /PRNewswire/ -- McDonald's
Corporation today announced results for the fourth quarter and year
ended December 31, 2014.
"2014 was a challenging year for McDonald's around the world.
Our results declined as unforeseen events and weak operating
performance pressured results in each of our geographic segments,"
said McDonald's President and Chief Executive Officer Don Thompson. "As we begin 2015, we are taking
decisive action to regain momentum in sales, guest counts and
market share. This involves driving foundational improvements in
our major markets and continuing our recovery efforts in markets
affected by unusual events. We are accelerating our efforts behind
solutions that capitalize on the investments we're making in our
technology and our restaurants to bring McDonald's Experience of
the Future to life for our customers and deliver on our commitment
to drive sustained, profitable growth for all stakeholders."
Full year results included:
- Global comparable sales decrease of 1.0%, reflecting
negative guest traffic in all major segments
- Consolidated revenues decrease of 2% (flat in constant
currencies)
- Consolidated operating income decrease of 9% (8% in
constant currencies), primarily due to the impact of the
previously-disclosed supplier issue in APMEA (Asia/Pacific, Middle
East and Africa) and weak
operating performance in the U.S.
- Effective tax rate of 35.5%, primarily due to an increase
in reserves related to certain foreign tax matters
- Diluted earnings per share of $4.82, a decrease of 13% (11% in constant
currencies). The following items, which total $0.54 per share, negatively impacted diluted
earnings per share by 10% (10% in constant currencies) for the
year:
- $0.31 per share due to an
increase in reserves related to certain foreign tax
matters
- $0.23 per share due to the
estimated impact of the supplier issue resulting from lost sales
and profitability in APMEA
- Excluding the impact of these items, earnings per share
for the year would have been down 3% (1% in constant currencies)
compared to the prior year
- Returned $6.4 billion to
shareholders through dividends and share repurchases, in connection
with our $18-$20 billion, 3-year cash
return target for the years 2014-2016
Fourth quarter results included:
- Global comparable sales decrease of 0.9%, reflecting
negative guest traffic in all major segments
- Consolidated revenues decrease of 7% (1% in constant
currencies)
- Consolidated operating income decrease of 20% (15% in
constant currencies), primarily due to weak operating performance
in the U.S. and the impact of the supplier issue in
APMEA
- Diluted earnings per share of $1.13, a decrease of 19% (14% in constant
currencies), which includes a negative impact of $0.09 per share due to the supplier issue in
APMEA
- Returned $1.8 billion to
shareholders through dividends and share repurchases
In the U.S., fourth quarter comparable sales decreased 1.7% and
operating income declined 15%, reflecting negative guest traffic
amid ongoing broad-based challenges, including sustained
competitive activity. In addition, results were impacted by higher
selling, general and administrative and other expenses associated
with positioning the business for the future. McDonald's U.S.
business begins 2015 evolving to a more nimble, customer-led
organization with a strategic roadmap focused on menu
simplification and local customer tastes and preferences.
Europe's fourth quarter
comparable sales declined 1.1% and operating income decreased 14%
(down 6% in constant currencies). While consumer confidence issues,
particularly in Russia and
Ukraine, and weakness in
France and Germany negatively impacted the segment's
quarterly results, the U.K. delivered positive comparable sales and
operating income results.
APMEA's fourth quarter comparable sales decreased 4.8% and
operating income declined 44% (down 40% in constant currencies)
primarily due to the lingering impact of the supplier issue on
sales and profitability in China,
Japan and certain other markets.
Sales and operating income benefited from solid performance in
Australia.
Pete Bensen, McDonald's Chief
Financial Officer noted, "Last year, we announced a set of
financial goals for the three-year period from 2014 through 2016.
We outlined specific targets to return $18-$20 billion to shareholders through a
combination of dividends and share repurchases, refranchise at
least 1,500 restaurants and reallocate resources to higher growth
initiatives. These targets are designed to enhance long-term
shareholder value while supporting the work underway to reignite
our business results, and we remain on track to meet these
targets."
Bensen continued, "As we begin 2015, we're exercising further
financial discipline - starting with a capital expenditure plan for
the year of approximately $2.0
billion - our lowest capital budget in more than 5 years -
as we're strategically targeting fewer openings in our most
challenged markets. We believe this lower level of capital spending
is prudent while we work to regain our business momentum and
improve the sales and profitability at our more than 36,000
restaurants around the world."
Don Thompson concluded, "Our
business continues to face meaningful headwinds. As the world's
leading food service organization, we will continue to evolve,
focusing on the customer as our first priority. Over the next 12
months, our charge is to ensure that we are adapting to the
changing marketplace and maximizing the potential of our global
growth priorities to serve our customers' favorite food and drink,
create memorable experiences, offer unparalleled convenience and
become an even more trusted brand. While January comparable sales
are expected to be negative and results are expected to remain
pressured, particularly in the first half of the year, I am
energized by the opportunities ahead for McDonald's and remain
confident that we can regain our momentum and build value for
shareholders over the long term."
KEY HIGHLIGHTS -
CONSOLIDATED
|
Dollars in millions,
except per share data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
December 31,
|
|
Years Ended
December 31,
|
|
2014
|
|
2013
|
|
(Dec)
|
|
(Decrease)
Excluding
Currency
Translation
|
|
2014
|
|
2013
|
|
(Dec)
|
|
(Decrease)
Excluding
Currency
Translation
|
Revenues
|
$
|
6,572.2
|
|
$
|
7,093.2
|
|
(7)%
|
|
(1)%
|
|
$
|
27,441.3
|
|
$
|
28,105.7
|
|
(2)%
|
|
0%
|
Operating
income
|
1,751.7
|
|
2,200.4
|
|
(20)
|
|
(15)
|
|
7,949.2
|
|
8,764.3
|
|
(9)
|
|
(8)
|
Net income
|
1,097.5
|
|
1,397.0
|
|
(21)
|
|
(16)
|
|
4,757.8
|
|
5,585.9
|
|
(15)
|
|
(13)
|
Earnings per
share-diluted*
|
$
|
1.13
|
|
$
|
1.40
|
|
(19)%
|
|
(14)%
|
|
$
|
4.82
|
|
$
|
5.55
|
|
(13)%
|
|
(11)%
|
|
* Foreign currency translation had a negative impact
of $0.08 and $0.12 on diluted earnings per share for the quarter
and year, respectively.
|
The following items, which total $0.13 and $0.54 per
share for the quarter and year, respectively, negatively impacted
diluted earnings per share by 9% (10% in constant currencies) for
the quarter and 10% (10% in constant currencies) for the year:
- $0.04 and $0.31 per share for the quarter and year,
respectively, due to an increase in tax reserves for 2003-2010
resulting from an unfavorable lower tax court ruling in a foreign
tax jurisdiction, as well as an increase in tax reserves related to
audit progression in other foreign tax jurisdictions.
- $0.09 and $0.23 per share for the quarter and year,
respectively, due to the estimated impact of the
previously-disclosed supplier issue in China. In mid-July, food quality issues were
discovered at a supplier to McDonald's and other food companies in
China. As a consequence, results
in China, Japan and certain other markets were
negatively impacted due to lost sales and profitability, including
expenses associated with customer recovery efforts.
For the year, excluding the impact of these items, diluted
earnings per share would have been down 3% (1% in constant
currencies) compared to the prior year. This supplemental
information is provided to assist investors in understanding the
impact of recent events on the Company's results.
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 and year ended
December 31, 2014.
McDonald's Corporation will broadcast its investor conference
call live over the Internet at 10:00 a.m.
Central Time on January 23,
2015. 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 January
2015 sales information on February 9,
2015.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 36,000 locations serving approximately 69 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
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
|
|
Quarters Ended
December 31,
|
2014
|
|
2013
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
4,296.7
|
|
$
|
4,744.3
|
|
$
|
(447.6)
|
|
(9)%
|
Revenues from
franchised restaurants
|
2,275.5
|
|
2,348.9
|
|
(73.4)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
6,572.2
|
|
7,093.2
|
|
(521.0)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
3,676.7
|
|
3,928.7
|
|
(252.0)
|
|
(6)
|
Franchised
restaurants—occupancy expenses
|
421.4
|
|
421.7
|
|
(0.3)
|
|
0
|
Selling, general
& administrative expenses
|
662.5
|
|
627.8
|
|
34.7
|
|
6
|
Other operating
(income) expense, net
|
59.9
|
|
(85.4)
|
|
145.3
|
|
n/m
|
Total operating costs
and expenses
|
4,820.5
|
|
4,892.8
|
|
(72.3)
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
1,751.7
|
|
2,200.4
|
|
(448.7)
|
|
(20)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
147.8
|
|
133.5
|
|
14.3
|
|
11
|
Nonoperating (income)
expense, net
|
7.8
|
|
11.7
|
|
(3.9)
|
|
(34)
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
1,596.1
|
|
2,055.2
|
|
(459.1)
|
|
(22)
|
Provision for income
taxes
|
498.6
|
|
658.2
|
|
(159.6)
|
|
(24)
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
1,097.5
|
|
$
|
1,397.0
|
|
$
|
(299.5)
|
|
(21)%
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
1.13
|
|
$
|
1.40
|
|
$
|
(0.27)
|
|
(19)%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
971.5
|
|
999.3
|
|
(27.8)
|
|
(3)%
|
McDONALD'S
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
Dollars and shares
in millions, except per share data
|
|
|
|
|
|
|
|
Years Ended
December 31,
|
2014
|
|
2013
|
|
Inc/
(Dec)
|
Revenues
|
|
|
|
|
|
|
|
Sales by
Company-operated restaurants
|
$
|
18,169.3
|
|
$
|
18,874.2
|
|
$
|
(704.9)
|
|
(4)%
|
Revenues from
franchised restaurants
|
9,272.0
|
|
9,231.5
|
|
40.5
|
|
0
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
27,441.3
|
|
28,105.7
|
|
(664.4)
|
|
(2)
|
|
|
|
|
|
|
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company-operated
restaurant expenses
|
15,288.3
|
|
15,578.6
|
|
(290.3)
|
|
(2)
|
Franchised
restaurants—occupancy expenses
|
1,697.3
|
|
1,624.4
|
|
72.9
|
|
4
|
Selling, general
& administrative expenses
|
2,487.9
|
|
2,385.6
|
|
102.3
|
|
4
|
Other operating
(income) expense, net
|
18.6
|
|
(247.2)
|
|
265.8
|
|
n/m
|
Total operating costs
and expenses
|
19,492.1
|
|
19,341.4
|
|
150.7
|
|
1
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
7,949.2
|
|
8,764.3
|
|
(815.1)
|
|
(9)
|
|
|
|
|
|
|
|
|
Interest
expense
|
570.5
|
|
521.9
|
|
48.6
|
|
9
|
Nonoperating (income)
expense, net
|
6.7
|
|
37.9
|
|
(31.2)
|
|
(82)
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
7,372.0
|
|
8,204.5
|
|
(832.5)
|
|
(10)
|
Provision for income
taxes
|
2,614.2
|
|
2,618.6
|
|
(4.4)
|
|
0
|
|
|
|
|
|
|
|
|
NET INCOME
|
$
|
4,757.8
|
|
$
|
5,585.9
|
|
$
|
(828.1)
|
|
(15)%
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE-DILUTED
|
$
|
4.82
|
|
$
|
5.55
|
|
$
|
(0.73)
|
|
(13)%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding-diluted
|
986.3
|
|
1,006.0
|
|
(19.7)
|
|
(2)%
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mcdonalds-reports-fourth-quarter-and-full-year-2014-results-300024666.html
SOURCE McDonald's Corporation