McDonald's Reports Increase in Quarterly Earnings per Share
PRNewswire
OAK BROOK, Ill.
Oct 18, 2001
McDonald's Corporation (NYSE: MCD) today announced global results for the quarter and nine months ended September 30, 2001.
* Diluted net income per common share was 42 cents for the quarter, an
increase of 5% in constant currencies.
* In constant currencies, Systemwide sales increased in all segments
for a total increase of 4% for the quarter and 5% for the nine months.
* Revenues increased 6% for the quarter and 8% for the nine months in
constant currencies.
* The Company repurchased $914 million of stock during the nine months.
Key highlights - Consolidated
Dollars in millions, except per Percent
common share data Increase/(Decrease)
Quarters ended September 30 2001 2000 As Constant
Reported Currency*
Systemwide sales $10,629.2 $10,512.4 1 4
Total revenues 3,879.3 3,749.0 3 6
Operating income 746.6 910.8 (18) (16)
Net income 545.5 548.5 (1) 3
Net income per common
share - diluted .42 .41 2 5
Nine months ended September 30
Systemwide sales $30,517.7 $30,256.7 1 5
Total revenues 11,098.5 10,653.4 4 8
Operating income 2,214.3 2,555.7 (13) (10)
Net income 1,364.7 1,525.3 (11) (7)
Net income per common
share - diluted 1.04 1.12 (7) (4)
* Information in constant currencies excludes the effect of foreign
currency translation on reported results, except for
hyperinflationary economies, such as Russia, whose functional
currency is the U.S. Dollar.
SUMMARY COMMENTARY
Chairman and Chief Executive Officer Jack M. Greenberg said, "McDonald's reported earnings per share of 42 cents for the quarter, in line with previous guidance. These results include a $137 million after-tax gain related to the initial public offering of McDonald's Japan and after-tax charges of about $84 million, primarily related to closing 154 under performing restaurants in international markets. In constant currencies, earnings per share was 43 cents, an increase of 5% for the quarter. Systemwide sales increased 4% and revenues increased 6% for the quarter in constant currencies.
"Europe's operating income continued to show improvement compared with the first half of the year, excluding the charges for restaurant closings. Quarterly comparable sales also improved sequentially in Europe, led by France, which had positive comparable sales for each of the past seven months. Germany also posted continuing comparable sales improvement, with September's results the best in the past 12 months. Consumer concerns about the safety of the European beef supply in certain markets appear to be lessening and we look forward to a stronger fourth quarter.
"In the U.S., third quarter comparisons were difficult, primarily due to the Teenie Beanie Babies and Olympic Taste Trials promotions last year. As announced yesterday, the U.S. business has made organizational changes and redeployed resources designed to improve our customers' experience, build sales and encourage more frequent visits.
"In addition to the plans announced for the U.S., we are carefully reviewing our business around the world. We will determine the most efficient methods to deliver our strategic priorities -- people, operational excellence and profitability -- and strive to improve sales, margins and returns.
"As a result of these change initiatives around the world, we expect to incur a special charge to earnings in the fourth quarter. We anticipate these initiatives will produce future savings in selling, general and administrative expenses. We will announce the amounts of the charge and expected savings in the near future.
"While we continue to target relatively flat constant currency earnings per share for the year, in light of continued economic weakness and its negative effect on consumer spending around the world, we expect fourth quarter earnings per share of 34 to 36 cents in constant currencies. These expectations exclude the impact of the fourth quarter special charge.
"This has been a challenging year for many global companies, including McDonald's. While I am not pleased with our overall results, I am proud of how our System has responded to the many difficult conditions we've faced. I am also proud of our great brand, our outstanding franchisees and suppliers, our employees and our exciting plans to build an even stronger and more productive McDonald's for the future."
OPERATING RESULTS
The Company operates in the food service industry and primarily operates quick-service restaurant businesses under the McDonald's brand. To capture additional meal occasions, the Company also operates other restaurant concepts: Aroma Cafe, Boston Market, Chipotle and Donatos Pizza. Collectively these four businesses are referred to as "Partner Brands." In addition, McDonald's has a minority ownership in Pret A Manger.
Impact of Foreign Currencies on Reported Results
While changing foreign currencies affect reported results, McDonald's lessens exposures, where practical, by financing in local currencies, hedging certain foreign-denominated cash flows and by purchasing goods and services in local currencies.
Reported results for the quarter and nine months were negatively affected by foreign currency translation primarily due to the weaker Euro, British Pound, Japanese Yen and the Australian Dollar.
If foreign currency exchange rates remain constant for the remainder of the year, we expect translation will reduce full-year reported earnings per share by 4 to 5 cents.
Net Income and Net Income Per Common Share-Diluted
Net income for the quarter was $545.5 million, a decrease of 1% while diluted net income per common share increased 2% for the quarter to 42 cents. For the nine months, net income decreased 11% to $1,364.7 million and diluted net income per common share decreased 7% to $1.04. In constant currencies, net income and diluted net income per common share increased 3% and 5%, respectively, for the quarter, and decreased 7% and 4%, respectively, for the nine months.
For the quarter, the Company recorded a $137.1 million after-tax gain related to the initial public offering of McDonald's Japan. The Company also recorded $84.1 million in after-tax charges primarily related to the closing of 154 under performing restaurants in international markets and the write-off of certain technology costs. In addition, the nine months included a $24.0 million after-tax asset impairment charge in Turkey.
Weighted average shares outstanding for the quarter and nine months were lower compared with the prior year due to shares repurchased. In addition, outstanding stock options had a less dilutive effect than in the prior year. During the first nine months of 2001, the Company repurchased 30.2 million shares of its common stock for approximately $914 million.
Systemwide Sales and Revenues
Systemwide sales represent sales by Company-operated, franchised and affiliated restaurants. Total revenues include sales by Company- operated restaurants and fees from restaurants operated by franchisees and affiliates. These fees include rent, service fees and royalties that are based on a percent of sales, with specified minimum payments along with initial fees.
Systemwide sales
Percent
Dollars in millions Increase/(Decrease)
Quarters ended September 30 2001 2000 As Constant
Reported Currency*
U.S. $ 5,206.5 $ 5,051.4 3 n/a
Europe 2,520.2 2,449.9 3 5
Asia/Pacific 1,721.2 1,820.2 (5) 5
Latin America 431.4 456.2 (5) 7
Other** 749.9 734.7 2 5
Total Systemwide sales $10,629.2 $10,512.4 1 4
Nine months ended September 30
U.S. $15,071.6 $14,748.9 2 n/a
Europe 6,969.6 7,082.4 (2) 4
Asia/Pacific 5,043.9 5,302.1 (5) 6
Latin America 1,318.4 1,319.8 - 9
Other** 2,114.2 1,803.5 17 21
Total Systemwide sales $30,517.7 $30,256.7 1 5
* Excluding the effect of foreign currency translation on reported
results.
** Includes Systemwide sales for Partner Brands in 2001 of $251.0
million for the quarter and $718.7 million for the nine months.
In 2000, Systemwide sales for Partner Brands were $219.0 million
for the quarter and $378.2 million for the nine months.
n/a Not applicable
On a global basis, the increases in sales and revenues for the quarter and nine months were primarily due to restaurant expansion, partly offset by negative comparable sales. The acquisition of Boston Market in the second quarter 2000 also contributed to the increases for the nine months. Foreign currency translation had a negative effect on the growth rates for both Systemwide sales and revenues for both periods. On a constant currency basis, revenues increased at a higher rate than sales for both the quarter and the nine months partly due to a restructure of our ownership in the Philippines, effective July 1, 2001. As a result of the restructuring, most of our restaurants in the Philippines are now Company-operated rather than franchised. The higher revenue increase for the nine months was also partly due to the acquisition of Boston Market restaurants, which are all Company- operated. In addition, revenues in both periods benefited from an increase in the royalty percent received from our Japanese affiliate, effective January 1, 2001.
U.S. sales increased 3% for the quarter and 2% for the nine months primarily due to expansion. Comparable sales were slightly positive for the quarter and relatively flat for the nine months.
In Europe, Asia/Pacific and Latin America, constant currency sales increased for the quarter and nine months due to expansion, partly offset by negative comparable sales.
In Europe, France and the U.K. were primary contributors to the sales growth for the quarter and nine months. Also, the Netherlands and Russia delivered strong performances in both periods. Comparable sales continued to be affected by consumer confidence issues regarding the European beef supply in certain markets. We expect the impact from these issues to lessen as the fourth quarter progresses. In addition, comparisons become easier since the initial concerns arose last year in the fourth quarter. Sales trends are improving in several markets, most notably France, which had positive comparable sales in each month from March through September.
In Asia/Pacific, the quarter and nine months benefited from expansion in Japan and strong performance in China. A weak economic environment in Taiwan and weak consumer spending in Australia and Japan negatively impacted sales growth, although we are encouraged by improvement in Australia's comparable sales trend.
In Latin America, expansion and positive comparable sales in Mexico and Venezuela were the primary contributors to the sales increases for the quarter and nine months. In addition, expansion in Brazil contributed to the increases for both periods. Weak consumer spending continued to negatively affect most markets in this segment.
In the Other segment, the increases for the quarter and nine months were driven by Canada and the Partner Brands.
Combined Operating Margins
The following combined operating margin information represents margins for McDonald's restaurant business only.
Combined operating margins
Quarters ended Nine months ended
September 30 September 30
2001 2000 2001 2000
Dollars in millions
Company-operated $ 419.2 $ 453.1 $1,164.5 $1,284.6
Franchised 798.6 788.0 2,269.8 2,281.3
Combined operating margins $1,217.8 $1,241.1 $3,434.3 $3,565.9
Percent of sales/revenues
Company-operated 15.9% 17.7% 15.4% 17.3%
Franchised 79.7 80.4 79.1 79.7
In constant currencies, combined operating margin dollars were relatively flat, increasing $3.5 million for the quarter while decreasing $21.9 million, or 1%, for the nine months. The U.S. and Europe segments accounted for over 80% of the combined margin dollars in both periods.
As a percent of sales, consolidated Company-operated margins decreased for the quarter and nine months. Food & paper costs, payroll costs and occupancy & other operating expenses all increased as a percent of sales for both periods.
In the U.S., Company-operated margins decreased as a percent of sales for the quarter and nine months. As a percent of sales, food & paper costs decreased while payroll costs and occupancy & other operating expenses increased for both periods.
In each of the remaining segments, Company-operated margins decreased as a percent of sales for the quarter and nine months, primarily due to negative comparable sales. Higher food costs also contributed to the decline in Latin America and Asia/Pacific for both periods and in Europe for the nine months. Higher labor costs impacted Europe for both periods and Asia/Pacific for the nine months. In Asia/Pacific, the change in restaurant classification in the Philippines contributed to the declines for both periods because its Company-operated margins are lower than the average for the Asia/Pacific segment.
Franchised margins as a percent of applicable revenues increased in Asia/Pacific and decreased in the U.S., Europe and Latin America for the quarter and nine months.
Franchised margins as a percent of revenues in all segments were negatively impacted by weak comparable sales and by higher occupancy costs as a result of our strategy to lease more sites. By leasing a higher proportion of new sites, we have reduced initial capital requirements. However, as anticipated, this practice reduces franchised margins because the financing costs implicit in the lease are included in occupancy expense, whereas for owned sites, financing costs are reflected in interest expense.
The decreases in franchised margins as a percent of revenues in Europe for the nine months and in Latin America for both periods were also partly due to rent assistance provided to franchisees. The franchised margin percent in Asia/Pacific increased for both periods primarily due to an increase in the royalty percent received from our Japanese affiliate and the restructuring of the Philippines' operations, which resulted in the reclassification of franchised margins that were lower than the average for the segment.
Selling, General & Administrative Expenses
Selling, general & administrative expenses increased 2% for the quarter and 4% for the nine months. The increases were partly due to increased spending on future restaurant technology improvements. Both periods benefited from weaker foreign currencies.
Other Operating Income (Expense), net
Equity in earnings of unconsolidated affiliates decreased for both periods, primarily due to weaker results in Japan, the increase in Japan's royalty expense and a weaker Japanese Yen. Although the increase in royalty expense reduced McDonald's equity in earnings for Japan, it was more than offset by the royalty benefit McDonald's received in franchised revenues. Other income (expense) for the quarter and nine months included $101.5 million of charges primarily related to the closing of 154 under performing restaurants and the write-off of certain technology costs. The Company expects to close about 10 additional under performing restaurants in the fourth quarter. Other income (expense) for the nine months also included a $24.0 million asset impairment charge in Turkey.
Other operating income (expense), net Quarters ended Nine months ended
Dollars in millions September 30 September 30
2001 2000 2001 2000
Gains on sales of restaurant
businesses $ 21.0 $20.5 $ 67.3 $ 58.4
Equity in earnings of
unconsolidated affiliates 12.4 32.9 49.5 92.8
Other income (expense) (106.0) 7.2 (148.7) (10.6)
Total $ (72.6) $60.6 $ (31.9) $140.6
Operating Income
Consolidated operating income decreased $150.2 million, or 16% for the quarter and $263.6 million, or 10%, for the nine months, in constant currencies. Excluding the charge related to restaurant closings, the technology cost write-off and the Turkey asset impairment, adjusted consolidated operating income decreased 5% for both periods. The adjusted operating income decreases for both periods were due to lower combined operating margin dollars, lower other operating income and higher selling, general & administrative expenses.
Operating income***
Dollars in millions Percent Increase/(Decrease)
Quarters ended Adjusted
September 30 2001 2000 As Constant Constant
Reported Currency* Currency**
U.S. $ 472.7 $ 466.8 1 n/a n/a
Europe 288.0 330.4 (13) (10) -
Asia/Pacific 79.9 122.1 (35) (28) (18)
Latin America (22.3) 31.1 n/m n/m (53)
Other**** 20.2 26.0 (22) (18) 2
Corporate (91.9) (65.6) (40) n/a (18)
Total operating
income $ 746.6 $ 910.8 (18) (16) (5)
Nine months ended
September 30
U.S. $1,350.9 $1,337.4 1 n/a n/a
Europe 775.0 903.9 (14) (9) (6)
Asia/Pacific 294.3 349.7 (16) (6) (3)
Latin America 14.2 87.2 n/m n/m (39)
Other**** 27.6 74.8 (63) (59) (20)
Corporate (247.7) (197.3) (26) n/a (18)
Total operating
income $2,214.3 $2,555.7 (13) (10) (5)
* Excluding the effect of foreign currency translation on reported
results.
** Excluding the effect of foreign currency translation on reported
results where applicable and excluding the unusual items noted above.
*** Segment operating income has been restated for 2000 to break out
corporate expenses from the other operating segments.
**** Includes operating losses for Partner Brands in 2001 of $10.4
million for the quarter and $37.8 million for the nine months. In
2000, operating losses for Partner Brands were $15.5 million for
the quarter and $33.4 million for the nine months.
n/a Not applicable
n/m Not meaningful
U.S. operating income increased 1% for the quarter and nine months. The increases were due to higher combined operating margin dollars. The quarter included lower selling, general & administrative expenses and lower other operating income, while the nine months included higher selling, general & administrative expenses and higher other operating income.
Europe's adjusted operating income was flat for the quarter and decreased 6% for the nine months in constant currencies. Strong results in France and Russia drove this segment's improved performance in the quarter. However, operating income continued to be negatively affected by the decline in consumer confidence regarding the safety of the European beef supply in certain markets.
The adjusted operating income in Asia/Pacific decreased 18% for the quarter and 3% for the nine months in constant currencies. In both periods, strong performance in China and the increase in the royalty percent received from Japan was more than offset by weak operating results in Australia, Japan and Taiwan. In addition, a gain on the sale of real estate in Singapore contributed to the results for the nine months.
Latin America's adjusted operating income decreased 53% for the quarter and 39% for the nine months in constant currencies. Both periods were negatively impacted by the continuing difficult economic conditions experienced by most markets in the region.
In the Other segment, Canada's continued strong performance was offset by weak results in several markets in the Middle East & Africa for both periods.
INTEREST, NONOPERATING EXPENSE AND INCOME TAXES
Interest expense decreased slightly for the quarter and increased for the nine months. Lower average interest rates were partly offset for the quarter and more than offset for the nine months by higher average debt levels. The higher average debt levels were a result of the Company using its available credit capacity to repurchase shares of its common stock. Both periods benefited from weaker foreign currencies.
Nonoperating (income) expense for the quarter and nine months included a $137.1 million gain on the initial public offering of McDonald's Japan. The gain was due to the increase in the carrying value of our investment as a result of the cash proceeds from the IPO received by McDonald's Japan. Also contributing to the nonoperating income for both periods were higher foreign currency translation gains. Partly offsetting the income for the quarter was the write-off of a domestic investment. The nine months included nonoperating expenses associated with the write-off of a financing receivable from a Latin American supplier and minority interest expense related to the sale of real estate in Singapore.
The third quarter effective income tax rate was 27.3% compared with 30.5% in 2000. The effective tax rate for the nine months was 30.4% compared with 31.4% in 2000. The decrease in the income tax rate in 2001 was the result of the Japan IPO gain, partly offset by certain restaurant closing charges and the Turkey asset impairment charge, none of which were tax-effected for financial reporting purposes. For the full year, we expect the tax rate to be about 30.0%.
FORWARD-LOOKING STATEMENTS
Certain forward-looking statements are included in this release. They use such words as "may," "will," "expect," "believe," "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this release. These forward-looking statements involve a number of risks and uncertainties. The following are some of the factors that could cause actual results to differ materially from those expressed in or underlying our forward-looking statements: the effectiveness of operating initiatives and advertising and promotional efforts, the effects of the Euro conversion, as well as changes in: global and local business and economic conditions; currency exchange and interest rates; food, labor and other operating costs; political or economic instability in local markets; competition; consumer preferences, spending patterns and demographic trends; legislation and governmental regulation; and accounting policies and practices. The foregoing list of important factors is not exclusive.
The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
RELATED COMMUNICATIONS
In conjunction with its third quarter earnings release, McDonald's Corporation will broadcast its conference call with members of management live over the Internet on Thursday, October 18, 2001 at 12:00 p.m. Central Time. Interested parties are invited to listen by logging on to http://www.mcdonalds.com/corporate/investor and clicking "Latest Investor Webcast", which appears below the stock quote.
McDonald's Corporation will also make additional sales information available by voicemail. Please call 630-623-7253 to obtain comparable sales information by segment for the quarter and nine months.
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, except per common share data
--------------------------------------------------------------------
Inc/(Dec)
Quarters ended September 30, 2001 2000 $ %
--------------------------------------------------------------------
SYSTEMWIDE SALES $10,629.2 $10,512.4 116.8 1
Revenues
Sales by Company-operated
restaurants 2,876.9 2,768.5 108.4 4
Revenues from franchised
and affiliated restaurants 1,002.4 980.5 21.9 2
TOTAL REVENUES 3,879.3 3,749.0 130.3 3
Operating costs and expenses
Company-operated
restaurants 2,440.8 2,297.6 143.2 6
Franchised restaurants
--occupancy costs 203.4 192.0 11.4 6
Selling, general &
administrative expenses 415.9 409.2 6.7 2
Other operating (income)
expense, net 72.6 (60.6) 133.2 n/m
Total operating costs
and expenses 3,132.7 2,838.2 294.5 10
OPERATING INCOME 746.6 910.8 (164.2) (18)
Interest expense 110.6 111.4 (0.8) (1)
Nonoperating (income)
expense, net (114.5) 10.3 (124.8) n/m
Income before provision
for income taxes 750.5 789.1 (38.6) (5)
Provision for
income taxes 205.0 240.6 (35.6) (15)
NET INCOME $ 545.5 $ 548.5 (3.0) (1)
NET INCOME PER
COMMON SHARE $ 0.42 $ 0.42 - -
NET INCOME PER
COMMON SHARE-DILUTED $ 0.42 $ 0.41 (0.01) 2
Weighted average
common shares outstanding 1,286.1 1,315.6
Weighted average
common shares outstanding
-diluted 1,305.8 1,346.0
n/m Not meaningful
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, except per common share data
---------------------------------------------------------------------
Inc/(Dec)
Nine months ended September 30, 2001 2000 $ %
---------------------------------------------------------------------
SYSTEMWIDE SALES $30,517.7 $30,256.7 261.0 1
Revenues
Sales by Company-operated
restaurants 8,229.3 7,790.4 438.9 6
Revenues from franchised
and affiliated restaurants 2,869.2 2,863.0 6.2 -
TOTAL REVENUES 11,098.5 10,653.4 445.1 4
Operating costs and expenses
Company-operated
restaurants 7,025.8 6,477.7 548.1 8
Franchised restaurants
--occupancy costs 598.2 580.4 17.8 3
Selling, general &
administrative expenses 1,228.3 1,180.2 48.1 4
Other operating (income)
expense, net 31.9 (140.6) 172.5 n/m
Total operating costs
and expenses 8,884.2 8,097.7 786.5 10
OPERATING INCOME 2,214.3 2,555.7 (341.4) (13)
Interest expense 348.6 318.0 30.6 10
Nonoperating (income)
expense, net (94.5) 12.9 (107.4) n/m
Income before provision
for income taxes 1,960.2 2,224.8 (264.6) (12)
Provision for
income taxes 595.5 699.5 (104.0) (15)
NET INCOME $ 1,364.7 $ 1,525.3 (160.6) (11)
NET INCOME PER
COMMON SHARE $ 1.06 $ 1.15 (0.09) (8)
NET INCOME PER
COMMON SHARE-DILUTED $ 1.04 $ 1.12 (0.08) (7)
Weighted average
common shares outstanding 1,292.1 1,328.7
Weighted average
common shares outstanding
-diluted 1,313.4 1,364.2
n/m Not meaningful
McDONALD'S CORPORATION SYSTEMWIDE SALES
Dollars in millions
------------------------------------------------------------------------
% Inc/(Dec)
As Constant
Quarters ended September 30, 2001 2000 Reported Currency*
------------------------------------------------------------------------
US
Operated by franchisees $ 4,104.8 $ 3,964.7 4
Operated by the Company 802.9 782.9 3
Operated by affiliates 298.8 303.8 (2)
5,206.5 5,051.4 3 n/a
Europe
Operated by franchisees 1,412.3 1,372.8 3
Operated by the Company 992.4 957.3 4
Operated by affiliates 115.5 119.8 (4)
2,520.2 2,449.9 3 5
Asia/Pacific
Operated by franchisees 440.8 456.2 (3)
Operated by the Company 491.6 469.0 5
Operated by affiliates 788.8 895.0 (12)
1,721.2 1,820.2 (5) 5
Latin America
Operated by franchisees 218.0 237.6 (8)
Operated by the Company 204.6 198.7 3
Operated by affiliates 8.8 19.9 n/m
431.4 456.2 (5) 7
Other**
Operated by franchisees 309.4 360.5 (14)
Operated by the Company 385.4 360.6 7
Operated by affiliates 55.1 13.6 n/m
749.9 734.7 2 5
Systemwide
Operated by franchisees 6,485.3 6,391.8 1
Operated by the Company 2,876.9 2,768.5 4
Operated by affiliates 1,267.0 1,352.1 (6)
$10,629.2 $10,512.4 1 4
* Excluding the effect of foreign currency translation on reported
results.
** The Other segment includes $251.0 million of sales in 2001 and
$219.0 million in 2000 related to Partner Brands.
n/a Not applicable
n/m Not meaningful
McDONALD'S CORPORATION SYSTEMWIDE SALES
Dollars in millions
------------------------------------------------------------------------
% Inc/(Dec)
As Constant
Nine months ended September 30, 2001 2000 Reported Currency*
------------------------------------------------------------------------
US
Operated by franchisees $11,845.5 $11,561.7 2
Operated by the Company 2,365.6 2,283.1 4
Operated by affiliates 860.5 904.1 (5)
15,071.6 14,748.9 2 n/a
Europe
Operated by franchisees 3,879.4 3,920.2 (1)
Operated by the Company 2,761.1 2,807.7 (2)
Operated by affiliates 329.1 354.5 (7)
6,969.6 7,082.4 (2) 4
Asia/Pacific
Operated by franchisees 1,268.8 1,363.5 (7)
Operated by the Company 1,375.8 1,364.6 1
Operated by affiliates 2,399.3 2,574.0 (7)
5,043.9 5,302.1 (5) 6
Latin America
Operated by franchisees 674.8 686.7 (2)
Operated by the Company 624.9 557.2 12
Operated by affiliates 18.7 75.9 n/m
1,318.4 1,319.8 - 9
Other**
Operated by franchisees 937.6 989.6 (5)
Operated by the Company 1,101.9 777.8 42
Operated by affiliates 74.7 36.1 n/m
2,114.2 1,803.5 17 21
Systemwide
Operated by franchisees 18,606.1 18,521.7 -
Operated by the Company 8,229.3 7,790.4 6
Operated by affiliates 3,682.3 3,944.6 (7)
$30,517.7 $30,256.7 1 5
* Excluding the effect of foreign currency translation on reported
results.
** The Other segment includes $718.7 million of sales in 2001 and
$378.2 million in 2000 related to Partner Brands.
n/a Not applicable
n/m Not meaningful
McDONALD'S CORPORATION TOTAL REVENUES
-----------------------------------------------------------------------
% Inc/(Dec)
As Constant
Quarters ended September 30, 2001 2000 Reported Currency*
-----------------------------------------------------------------------
U.S. $ 1,390.8 $ 1,347.7 3 n/a
Europe 1,267.5 1,229.3 3 5
Asia/Pacific 552.0 520.4 6 14
Latin America 241.3 246.4 (2) 11
Other** 427.7 405.2 6 8
$ 3,879.3 $ 3,749.0 3 6
Dollars in millions
-----------------------------------------------------------------------
% Inc/(Dec)
As Constant
Nine months ended September 30, 2001 2000 Reported Currency*
-----------------------------------------------------------------------
U.S. $ 4,060.8 $ 3,937.3 3 n/a
Europe 3,518.1 3,590.3 (2) 3
Asia/Pacific 1,559.4 1,523.5 2 11
Latin America 739.1 701.1 5 15
Other** 1,221.1 901.2 35 39
$11,098.5 $10,653.4 4 8
* Excluding the effect of foreign currency translation on reported
results.
** The Other segment for the quarter includes $241.7 million of
revenue in 2001 and $208.6 million in 2000 related to Partner Brands.
For the nine months, the Other segment includes $690.2 million of
revenue in 2001 and $347.1 million in 2000 related to Partner Brands.
n/a Not applicable
McDONALD'S CORPORATION OPERATING MARGINS
OPERATING MARGINS - McDONALD'S RESTAURANT BUSINESS**
------------------------------------------------------------------------
% Inc/(Dec)
Quarters ended Percent Amount As Constant
September 30, 2001 2000 2001 2000 Reported Currency*
------------------------------------------------------------------------
Company-operated
U.S. 15.9 17.1 $ 127.3 $ 133.9 (5) n/a
Europe 18.9 19.9 187.7 190.2 (1) 1
Asia/Pacific 12.9 16.8 63.6 78.6 (19) (13)
Latin America 10.1 12.8 20.7 25.5 (19) (10)
Other 13.8 16.3 19.9 24.9 (20) (16)
Total 15.9 17.7 $ 419.2 $ 453.1 (7) (5)
Franchised
U.S. 79.9 80.9 $ 469.9 $ 456.8 3 n/a
Europe 78.4 80.1 215.6 217.8 (1) 1
Asia/Pacific 88.9 83.1 53.7 42.7 26 40
Latin America 68.4 73.4 25.1 35.0 (28) (20)
Other 81.9 81.0 34.3 35.7 (4) -
Total 79.7 80.4 $ 798.6 $ 788.0 1 3
------------------------------------------------------------------------
% Inc/(Dec)
Nine months ended Percent Amount As Constant
September 30, 2001 2000 2001 2000 Reported Currency*
------------------------------------------------------------------------
Company-operated
U.S. 16.2 17.1 $ 383.8 $ 391.0 (2) n/a
Europe 16.8 18.7 464.5 525.2 (12) (7)
Asia/Pacific 13.9 17.0 190.6 232.0 (18) (11)
Latin America 11.1 12.8 69.5 71.1 (2) 5
Other 13.6 15.1 56.1 65.3 (14) (10)
Total 15.4 17.3 $1,164.5 $1,284.6 (9) (6)
Franchised
U.S. 79.9 80.5 $1,354.1 $1,331.9 2 n/a
Europe 77.1 78.6 583.6 614.9 (5) -
Asia/Pacific 86.9 82.6 159.5 131.3 21 37
Latin America 68.6 74.1 78.3 106.7 (27) (21)
Other 79.9 79.0 94.3 96.5 (2) 2
Total 79.1 79.7 $2,269.8 $2,281.3 (1) 2
* Excluding the effect of foreign currency translation on reported
results.
** Operating margin information relates to McDonald's restaurant
business and excludes Partner Brands.
n/a Not applicable
McDONALD'S CORPORATION FINANCIAL INFORMATION
COMPANY-OPERATED MARGINS AS A PERCENT OF SALES -
McDONALD'S RESTAURANT BUSINESS*
------------------------------------------------------------------------
Quarters ended Nine months ended
September 30 September 30
2001 2000 2001 2000
------------------------------------------------------------------------
Food & paper 34.5 34.1 34.3 34.0
Payroll & employee
benefits 25.4 25.0 26.0 25.3
Occupancy & other
operating expenses 24.2 23.2 24.3 23.4
Total expenses 84.1 82.3 84.6 82.7
Company-operated margins 15.9 17.7 15.4 17.3
* Operating margin information relates to McDonald's restaurant
business and excludes Partner Brands.
McDONALD'S CORPORATION RESTAURANT INFORMATION
SYSTEMWIDE RESTAURANTS
------------------------------------------------------------------------
At September 30, 2001 2000** Inc/(Dec)
------------------------------------------------------------------------
U.S.* 12,953 12,703 250
Europe
United Kingdom 1,150 1,074 76
Germany 1,114 1,061 53
France 884 822 62
Italy 303 269 34
Spain 294 251 43
Sweden 234 219 15
Netherlands 207 203 4
Poland 185 172 13
Austria 155 143 12
Other 1,096 1,028 68
Total Europe 5,622 5,242 380
Asia/Pacific
Japan* 3,718 3,413 305
Australia 711 702 9
China 392 294 98
Taiwan 341 336 5
South Korea 289 225 64
Philippines 231 230 1
Hong Kong 185 171 14
Other 656 617 39
Total Asia/Pacific 6,523 5,988 535
Latin America
Brazil 556 507 49
Mexico 218 190 28
Argentina 214 204 10
Other 558 530 28
Total Latin America 1,546 1,431 115
Other
Canada* 1,181 1,131 50
Other McDonald's 532 476 56
Partner Brands*** 1,060 922 138
Total Other 2,773 2,529 244
Systemwide restaurants 29,417 27,893 1,524
Countries 121 120 1
* Includes satellites at September 30, 2001: U.S. 989; Japan 1,737;
Canada 286. At September 30, 2000: U.S. 1,000; Japan 1,429;
Canada 270.
** Adjusted to exclude 561 (517 in Brazil) dessert-only kiosks from
the September 30, 2000 restaurant counts.
*** Restaurants at September 30, 2001: Aroma Cafe 43; Boston
Market 674; Chipotle 152; Donatos Pizza 191. At September 30,
2000: Aroma Cafe 40; Boston Market 650; Chipotle 83; Donatos
Pizza 149.
McDONALD'S CORPORATION RESTAURANT INFORMATION
RESTAURANT ADDITIONS
------------------------------------------------------------------------
Quarters ended Nine months ended
September 30 September 30
2001* 2000** 2001* 2000**
------------------------------------------------------------------------
U.S. 74 45 149 74
Europe 27 110 162 299
Asia/Pacific 63 158 263 334
Latin America (28) 45 36 132
Other McDonald's 18 21 48 39
Partner Brands 13 12 52 706***
Systemwide additions 167 391 710 1,584
* Under performing restaurant closings by segment: Europe 47;
Asia/Pacific 37; Latin America 56; Other McDonald's 14.
** Adjusted by 17 for the quarter and 64 for the nine months to
exclude dessert-only kiosks.
*** Primarily relates to the acquisition of Boston Market in second
quarter 2000.
SYSTEMWIDE RESTAURANTS
------------------------------------------------------------------------
At September 30, 2001 2000* Inc/(Dec)
------------------------------------------------------------------------
US
Operated by franchisees 10,342 10,079 263
Operated by the Company 1,902 1,858 44
Operated by affiliates 709 766 (57)
12,953 12,703 250
Europe
Operated by franchisees 3,211 2,950 261
Operated by the Company 2,182 2,069 113
Operated by affiliates 229 223 6
5,622 5,242 380
Asia/Pacific
Operated by franchisees 1,580 1,594 (14)
Operated by the Company 1,776 1,421 355
Operated by affiliates 3,167 2,973 194
6,523 5,988 535
Latin America
Operated by franchisees 726 715 11
Operated by the Company 779 634 145
Operated by affiliates 41 82 (41)
1,546 1,431 115
Other
Operated by franchisees 1,156 1,115 41
Operated by the Company 1,498 1,324 174
Operated by affiliates 119 90 29
2,773 2,529 244
Systemwide
Operated by franchisees 17,015 16,453 562
Operated by the Company 8,137 7,306 831
Operated by affiliates 4,265 4,134 131
29,417 27,893 1,524
* Adjusted by 561 to exclude dessert-only kiosks.
FOR ACCESS TO CONFERENCE CALL:
When: 12:00 p.m. CT,
Thursday, October 18, 2001
Where: http://www.mcdonalds.com
http://www.newscom.com/cgi-bin/prnh/19990916/MCDLOGOAP Archive: http://photoarchive.ap.org/
PRN Photo Desk, +1-888-776-6555 or +1-212-782-2840
SOURCE: McDonald's Corporation
Contact: Investors, Mary Healy, +1-630-623-6429, or Media, Anna
Rozenich, +1-630-623-7316, both of McDonald's Corporation
Website: http://www.mcdonalds.com/