McDonald's Reports First Quarter 2003 Results
PRNewswire-FirstCall
OAK BROOK, Ill.
Apr 28, 2003
McDonald's Corporation today announced that results for the quarter ended March 31, 2003 showed a 7% gain in earnings per share (before the cumulative effect of accounting changes) on higher revenues, although comparable unit sales declined.
Chairman and Chief Executive Officer Jim Cantalupo said, "I certainly am not satisfied with our results this quarter. Yet, I am confident we are getting the business back on track. We are moving ahead with plans to revitalize McDonald's business everywhere. And we've made a strategic shift to concentrate on building sales at existing restaurants rather than adding new ones. We will continue to take decisive actions to build momentum to deliver results for customers, shareholders, employees and owner/operators."
Cantalupo reported the following highlights of the latest quarter and McDonald's long-term outlook:
-- Diluted earnings per share were 29 cents, up 7% before the cumulative
effect of accounting changes (flat in constant currencies).
-- Revenues increased 6% to $3.8 billion (1% in constant currencies).
-- Systemwide sales increased 5% to $10.2 billion (flat in constant
currencies).
-- Comparable unit sales were 2.0% lower among U.S. Brand McDonald's
restaurants, and were 3.6% lower on a worldwide basis in constant
currencies.
-- Capital spending will be reduced by $800 million in 2003 compared with
2002, significantly increasing cash available for debt reduction,
dividend increase and share repurchase.
-- In the coming 12 to 18 months, plans call for the Company to be well
on its way toward a 2005 goal of annual Systemwide sales growth of 3%
to 5%, operating income growth of 6% to 7%, and return on incremental
invested capital in the high teens.(1)
(1) Return on incremental invested capital is defined as the change in
operating income plus depreciation divided by the change in gross
assets, and excludes the impact of changes in foreign currency
exchange rates.
Key highlights - Consolidated
Dollars in millions, except per common share data
Percent
Increase/(Decrease)
As Constant
Quarters ended March 31 2003 2002 Reported Currency*
Systemwide sales** $10,151.9 $9,698.5 5 -
Revenues 3,799.7 3,597.4 6 1
Operating income 674.6 641.3 5 (3)
Income before cumulative effect
of accounting changes 364.2 351.7 4 (4)
Cumulative effect of accounting
changes, net of tax (36.8) (98.6) n/m n/m
Net income 327.4 253.1 29 19
Per common share-diluted:
Income before cumulative effect
of accounting changes 0.29 0.27 7 -
Cumulative effect of
accounting changes (0.03) (0.07) n/m n/m
Net income 0.26 0.20 30 20
* Information in constant currencies excludes the effect of foreign
currency translation on reported results, except for hyperinflationary
economies, whose functional currency is the U.S. Dollar. Constant
currency results are calculated by translating current year results at
prior year average exchange rates.
** Systemwide sales include sales by all Brand McDonald's and Partner
Brand restaurants, whether operated by the Company, by franchisees or
by affiliates operating under joint-venture agreements.
n/m Not meaningful
Cantalupo also said, "Over the next 12 to 18 months, we will build a rock- solid foundation that can deliver reliable top-line and bottom-line growth, while moderating our capital spending - thus improving returns on investment. An initial step is the reduction in 2003 capital expenditures to $1.2 billion, down 40% from 2002.
"This calculated slowing of expansion will be combined with an unprecedented effort to increase sales at our existing restaurants. We intend to achieve our objectives through disciplined action focused on five drivers of superior customer experiences - people, products, place, price and promotion. The net result should be improved momentum in comparable unit sales, margins and returns. This won't happen overnight. While our first quarter reported sales and operating income grew, constant currency comparable unit sales and operating income declined - affected by world events and weak economic conditions in many nations, severe winter weather, and the shift in Easter school holidays from March to April in Europe.
"Nevertheless, we won't allow these short-term factors to stand in our way as we move aggressively to reaffirm McDonald's leadership in marketing and delivering quality food and outstanding service. We have challenged our lead advertising agencies to reinvigorate our marketing and strengthen our traditional appeal with a special focus on young people and women. We also are working on a number of efforts to speed service and to offer product innovations responsive to customer tastes for additional wholesome choices. In the U.S. last week, we nationally launched a new line of Premium Salads served with warm grilled or crispy chicken and Newman's Own salad dressing - with encouraging initial results. We're also adding more choices to Happy Meals. In the U.K., we've introduced no-sugar-added drinks, organic milk and fruit as Happy Meal options. In Australia, kids can now choose a toasted cheese and tomato sandwich, raisins and orange juice.
"I am confident that our current strategies and more disciplined approach will improve the customer's experience in our restaurants and ultimately increase restaurant cash flow and shareholder value."
OUTLOOK FOR 2003 The Company is focused on delivering improved results over the long term. As previously announced, the Company will not be providing an earnings per share target by quarter or for the year. Instead, the Company is providing the following outlook on key components influencing earnings per share and will continue to communicate its strategies and priorities as well as actual results throughout the year.
The information provided below is as of April 2003 and excludes any impact from changes in foreign currency exchange rates.
-- McDonald's expects sales from new restaurants to add approximately two
to three percentage points to sales growth in 2003. Most of this
anticipated growth will be a result of restaurants opened in 2002
rather than in 2003, as the majority of restaurants are opened in the
last few months of the year.
In 2002, the Company opened 1,363 traditional restaurants and
392 satellite McDonald's restaurants. Net of closings, worldwide
restaurant additions totaled 1,015, with 781 net traditional and 234
net satellite restaurants. In 2003, the Company expects to open about
620 traditional restaurants and 340 satellite McDonald's restaurants,
for a total of 960 new restaurants worldwide. Net of planned
closings, worldwide restaurant additions are expected to total 360,
with 200 net traditional and 160 net satellite restaurants.
McDonald's expects new restaurants to add approximately one percentage
point to sales growth in 2004.
-- Worldwide comparable sales were -2.1% and -1.3% for full years 2002
and 2001. McDonald's strategies for 2003 are designed to reverse the
negative comparable sales trend through a heightened focus on
restaurant level execution and marketing. Our outlook remains
cautious until we see improved performance in our key markets. As a
guideline, generally, one percentage point of comparable sales in the
U.S. impacts annual earnings per share by 1.5 cents, and one
percentage point of comparable sales in Europe impacts annual earnings
per share by about one cent, assuming no change in profit margins.
-- McDonald's expects the total amount of selling, general &
administrative expenses in 2003 to be relatively flat compared with
2002.
-- A significant part of McDonald's operating income is from outside the
U.S., and more than 60% of total debt is denominated in foreign
currencies. The Euro and the British Pound are the most significant
currencies impacting our business. If the Euro and the British Pound
both move 10% (compared with 2002 average rates), McDonald's annual
reported earnings per share would change by about 4 cents to 5 cents.
Through year-to-date March 2003, foreign currency translation
benefited diluted earnings per share by $0.02.
-- McDonald's expects to decrease its debt level in 2003 by $300 million
to $700 million. In December 2002, we moved our fixed percentage of
debt from 45% to about 60%. The weighted average interest rate for
debt was 4.2% for first quarter 2003.
-- McDonald's expects the effective income tax rate for full year 2003 to
be in the range of 33.5% to 34.5%.
-- McDonald's expects capital expenditures for 2003 to be $1.2 billion,
$800 million less than in 2002. McDonald's also plans to use cash
from operations to strengthen the balance sheet by paying down debt
($300 million to $700 million) and returning cash to shareholders
through dividends and share repurchase (combined $500 million to
$1 billion).
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, except per common share data
--------------------------------------------------------------------
Inc/(Dec)
Quarters ended March 31, 2003 2002 $ %
--------------------------------------------------------------------
Revenues
Sales by Company-operated
restaurants $2,856.1 $2,678.5 177.6 7
Revenues from franchised
and affiliated restaurants 943.6 918.9 24.7 3
TOTAL REVENUES 3,799.7 3,597.4 202.3 6
Operating costs and expenses
Company-operated restaurant
expenses 2,509.4 2,309.6 199.8 9
Franchised restaurants
--occupancy expenses 223.3 202.7 20.6 10
Selling, general &
administrative expenses 396.4 384.9 11.5 3
Other operating (income)
expense, net (4.0) 58.9 (62.9) n/m
Total operating costs
and expenses 3,125.1 2,956.1 169.0 6
OPERATING INCOME 674.6 641.3 33.3 5
Interest expense 101.8 92.3 9.5 10
Nonoperating expense, net 25.2 11.8 13.4 n/m
Income before provision for
income taxes 547.6 537.2 10.4 2
Provision for income taxes 183.4 185.5 (2.1) (1)
Income before cumulative
effect of accounting changes 364.2 351.7 12.5 4
Cumulative effect of
accounting changes, net
of tax (36.8) (98.6) n/m n/m
NET INCOME $ 327.4 $ 253.1 74.3 29
PER COMMON SHARE-DILUTED:
Income before cumulative
effect of accounting changes $ 0.29 $ 0.27 0.02 7
Cumulative effect of
accounting changes $ (0.03) $ (0.07) n/m n/m
Net income $ 0.26 $ 0.20 0.06 30
Weighted average common
shares outstanding-diluted 1,270.3 1,292.7
n/m Not meaningful
McDONALD'S CORPORATION
CONSOLIDATED BALANCE SHEET
Dollars in millions
--------------------------------------------------------------------------
March 31, December 31,
2003 2002
--------------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents $ 488.0 $ 330.4
Accounts and notes receivable 816.7 855.3
Inventories 103.7 111.7
Prepaid expenses and other current asset 433.4 418.0
Total current assets 1,841.8 1,715.4
Other assets
Investments in and advances to affiliates 1,050.7 1,037.7
Goodwill, net 1,652.0 1,559.8
Miscellaneous 1,048.7 1,074.2
Total other assets 3,751.4 3,671.7
Property and equipment
Property and equipment, at cost 26,689.8 26,218.6
Accumulated depreciation and amortization (7,873.1) (7,635.2)
Net property and equipment 18,816.7 18,583.4
Total assets $24,409.9 $23,970.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 488.0 $ 635.8
Income taxes 100.7 16.3
Other taxes 194.4 191.8
Accrued interest 197.0 199.4
Accrued restructuring and restaurant
closing costs 241.6 328.5
Accrued payroll and other liabilities 782.7 774.7
Current maturities of long-term debt 319.1 275.8
Total current liabilities 2,323.5 2,422.3
Long-term debt 9,686.9 9,703.6
Other long-term liabilities and
minority interests 598.1 560.0
Deferred income taxes 979.7 1,003.7
Shareholders' equity
Common stock 16.6 16.6
Additional paid-in capital 1,775.5 1,747.3
Unearned ESOP compensation (98.2) (98.4)
Retained earnings 19,532.3 19,204.4
Accumulated other comprehensive
income (loss) (1,442.5) (1,601.3)
Common stock in treasury (8,962.0) (8,987.7)
Total shareholders' equity 10,821.7 10,280.9
Total liabilities and
shareholders' equity $24,409.9 $23,970.5
SUPPLEMENTAL INFORMATION
OPERATING RESULTS The Company operates in the food service industry and primarily operates and franchises quick-service restaurant businesses under the McDonald's brand (McDonald's restaurants). The Company also operates other restaurant concepts under its Partner Brands.
Net Income and Diluted Net Income Per Common Share
Income before the cumulative effect of accounting changes increased $12.5 million or 4%, and diluted income per common share before the cumulative effect of accounting changes increased $0.02 or 7% for the quarter. First quarter 2002 results included asset impairment charges of $43 million or $.04 per diluted share. Net income, which included the cumulative effect of the accounting changes, increased $74.3 million, and diluted net income per common share increased $0.06 for the quarter.
Weighted average shares outstanding were lower compared with the prior year due to shares repurchased during 2002. In addition, outstanding stock options had a less dilutive effect than in the prior year.
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. Foreign currency translation had a positive impact on both the consolidated revenue growth rate and operating income growth rate for the quarter, primarily due to the stronger Euro and British Pound. The following table presents the effect of foreign currency translation on consolidated reported results for the quarter.
Benefit of foreign currency translation on consolidated reported results
In millions, except per common share data Quarter ended
March 31, 2003
Revenues $168.4
Operating income 54.0
Income before cumulative effect of accounting
changes 25.5
Income before cumulative effect of accounting
changes-per diluted common share 0.02
Cumulative Effect of Accounting Changes and 2002 Asset Impairment Charges
Effective January 1, 2003, the Company adopted SFAS No. 143, "Accounting for Asset Retirement Obligations." The Statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time the obligations are incurred. Upon initial recognition of a liability, the cost is capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. In first quarter 2003, the Company recorded a charge of $36.8 million after tax ($0.03 per diluted share) related to lease obligations in certain international markets to reflect the cumulative effect of this accounting change.
Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," which eliminated the amortization of goodwill and instead subjects it to annual impairment tests. As a result of the initial required goodwill impairment test, the Company recorded a charge of $98.6 million after tax ($0.07 per diluted share) in first quarter 2002 to reflect the cumulative effect of this accounting change. The impaired goodwill was primarily in Argentina, Uruguay and other markets in Latin America and the Middle East, where economies had weakened significantly.
The Company also recorded $43.0 million (pre and after tax) of asset impairment charges in first quarter 2002, primarily related to the impairment of assets in certain existing restaurants in Chile and other Latin American markets and the closing of 32 underperforming restaurants in Turkey, as a result of continued economic weakness.
Systemwide Sales and Revenues
Systemwide sales include sales by all restaurants, whether operated by the Company, by franchisees or by affiliates operating under joint-venture agreements. Management believes that Systemwide sales information is useful in analyzing the Company's revenues because franchisees and affiliates pay rent, service fees and/or royalties that generally are based on a percent of sales with specified minimum payments. These fees received from franchisees and affiliates along with sales from Company-operated restaurants are reported as revenues.
Systemwide sales
Percent
Dollars in millions Increase/(Decrease)
As Constant
Quarters ended March 31 2003 2002 Reported Currency*
U.S. $ 4,829.7 $4,792.7 1 n/a
Europe 2,718.0 2,308.7 18 (1)
APMEA 1,696.0 1,632.1 4 (4)
Latin America 304.0 390.2 (22) 1
Canada 332.8 320.1 4 (2)
Partner Brands 271.4 254.7 7 7
Total Systemwide sales $10,151.9 $9,698.5 5 -
* Excluding the effect of foreign currency translation on reported
results.
n/a Not applicable
Systemwide sales and revenues may grow at different rates during a given period, primarily due to a change in the mix of Company-operated, franchised and affiliated restaurants. For example, this mix is impacted by purchases and sales of restaurants between the Company and franchisees. For the quarters ended March 31, 2003 and 2002, Company-operated restaurants generated about 30% of Systemwide sales and about 75% of revenues.
Total revenues
Percent
Dollars in millions Increase/(Decrease)
As Constant
Quarters ended March 31 2003 2002 Reported Currency*
U.S. $1,316.1 $1,266.3 4 n/a
Europe 1,302.5 1,146.3 14 (3)
APMEA 581.7 584.0 - (5)
Latin America 186.4 217.2 (14) 13
Canada 151.1 138.2 9 3
Partner Brands 261.9 245.4 7 7
Total revenues $3,799.7 $3,597.4 6 1
* Excluding the effect of foreign currency translation on reported
results.
n/a Not applicable
On a global basis, Systemwide sales and revenues were relatively flat for the quarter in constant currencies as restaurant expansion offset negative comparable sales.
U.S. sales increased for the quarter due to expansion, partly offset by negative comparable sales. U.S. revenues increased at a higher rate than sales for the quarter due to a higher percentage of Company-operated restaurants.
In Europe, constant currency sales decreased for the quarter due to negative comparable sales, partly offset by expansion. Expansion and slightly positive comparable sales in France were more than offset by negative comparable sales in Germany, where the economy remains weak, and in the U.K., where consumer confidence continues to decline. Europe's revenue growth rate was lower than the sales growth rate, primarily due to a higher percentage of franchised restaurants.
Constant currency sales results in APMEA declined for the quarter due to negative comparable sales, partly offset by expansion mainly in China. The negative comparable sales in this segment were made worse by changes in consumer behavior as a result of events in the Persian Gulf and, to a lesser extent, concerns about SARS. We expect results in APMEA to continue to be impacted by these issues in the near term.
In Latin America, constant currency sales increased for the quarter, primarily due to positive comparable sales, despite the impact of the temporary closure of restaurants in Venezuela through mid-February, due to the national strike. Positive comparable sales in Brazil, Puerto Rico and Mexico led the sales results for the segment. Revenues increased at a higher rate than sales for the quarter, partly due to a higher percentage of Company- operated restaurants in 2003.
The sales and revenue increases in Partner Brands were due to expansion and positive comparable sales at Chipotle Mexican Grill.
Combined Operating Margins
The following combined operating margin information represents margins for McDonald's restaurant business only and excludes Partner Brands.
Combined operating margins
Quarters ended
March 31
2003 2002
Dollars in millions
Company-operated $ 328.7 $ 350.3
Franchised 719.9 715.9
Combined operating margins $1,048.6 $1,066.2
Percent of sales/revenues
Company-operated 12.7% 14.4%
Franchised 76.3 78.0
Combined operating margin dollars decreased $17.6 million or 2% for the quarter (8% in constant currencies). The U.S. and Europe segments accounted for more than 80% of the combined margin dollars in both years.
Consolidated food & paper costs decreased as a percent of sales for the quarter, while payroll costs and occupancy & other operating expenses increased as a percent of sales.
The U.S. Company-operated margin percent decreased for the quarter, primarily due to negative comparable sales. Food & paper costs, payroll costs and occupancy & other operating expenses all increased as a percent of sales for the quarter.
The Company-operated margin percent in Europe and APMEA decreased for the quarter, primarily due to negative comparable sales. Payroll and occupancy & other costs as a percent of sales increased for the quarter for both segments. In Latin America, Company-operated margins decreased for the quarter, primarily due to higher commodity and utility costs.
The decline in the consolidated franchised margin percent for the quarter reflects negative comparable sales, higher short-term financial support to franchisees, primarily in the U.S., and higher occupancy costs due, in part, to an increased proportion of leased sites.
Selling, General & Administrative Expenses
Selling, general & administrative expenses increased 3% for the quarter (flat in constant currencies).
Other Operating (Income) Expense, Net
Other operating (income) expense, net
Quarters ended
Dollars in millions March 31
2003 2002
Gains on sales of restaurant businesses $(18.4) $(10.1)
Equity in earnings of unconsolidated affiliates (0.8) (8.3)
Team service system payments - U.S. - 21.6
Asset impairment - Latin America and Turkey - 43.0
Other expense 15.2 12.7
Total $ (4.0) $ 58.9
Equity in earnings of unconsolidated affiliates decreased for the quarter due to a net loss from our Japanese affiliate in 2003 compared with income in 2002. The team service system payments were made to U.S. owner/operators in first quarter 2002 to facilitate the introduction of the team service front counter system.
Operating Income
Consolidated operating income increased $33.3 million or 5% for the quarter. Results in 2002 included $43.0 million of asset impairment charges.
Operating income
Percent
Dollars in millions Increase/(Decrease)
Adjusted
As Constant
Quarters ended March 31 2003 2002 Reported Currency(1)
U.S. $405.7 $402.1 1 n/a
Europe 268.4 242.9 10 (7)
APMEA 69.4 71.2(2) (3) (27)
Latin America 2.2 (13.2)(3) n/m n/m
Canada 26.2 27.6 (5) (11)
Partner Brands (12.9) (11.6) (11) (8)
Corporate (84.4) (77.7) (9) n/a
Total operating income $674.6 $641.3 5 (9)
(1) Excluding the effect of foreign currency translation on reported
results and excluding $43.0 million of asset impairment charges in
2002.
(2) Includes $15.9 million of asset impairment charges in Turkey.
(3) Includes $27.1 million of asset impairment charges.
n/a Not applicable
n/m Not meaningful
U.S. operating income increased 1% for the quarter, primarily due to $21.6 million of payments made to U.S. owner/operators in first quarter 2002 and lower selling, general & administrative expenses, partly offset by lower combined operating margin dollars.
Europe's operating income decreased 7% for the quarter in constant currencies, primarily due to weak results in Germany and the U.K., partly offset by positive results in France.
APMEA's adjusted operating income decreased 27% for the quarter in constant currencies, primarily due to weak results in Japan, Australia, China and South Korea.
Latin America's adjusted operating results declined significantly for the quarter as most markets in the segment continue to experience difficult economic conditions. In addition, Latin America's results for the quarter were negatively impacted by the national strike in Venezuela.
INTEREST, NONOPERATING EXPENSE AND INCOME TAXES
Interest expense increased for the quarter primarily due to stronger foreign currencies and higher average debt levels in first quarter 2003 compared with first quarter 2002. The increase in average debt levels was primarily due to non-cash items, including the impact of changes in exchange rates on foreign currency-denominated debt and SFAS No. 133 fair value adjustments.
Nonoperating expense for the quarter reflected foreign currency translation losses in 2003 compared with foreign currency translation gains in 2002.
The first quarter effective income tax rate was 33.5% compared with 34.5% in 2002. The higher effective income tax rate in 2002 was due to the asset impairment charges recorded in 2002 that were not tax-effected for financial reporting purposes.
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: effectiveness of operating initiatives; success in advertising and promotional efforts; changes in global and local business and economic conditions, including their impact on consumer confidence; consumer response to the occurrence of severe acute respiratory syndrome; fluctuations in currency exchange and interest rates; food, labor and other operating costs; political or economic instability in local markets, including the effects of war and terrorist activities; competition, including pricing and marketing initiatives and new product offerings by the Company's competitors; consumer preferences or perceptions concerning the Company's product offerings; spending patterns and demographic trends; availability of qualified restaurant personnel; severe weather conditions; existence of positive or negative publicity regarding the Company or its industry generally; effects of legal claims; cost and development of capital; changes in future effective tax rates; changes in governmental regulations; and changes in applicable accounting policies and practices. The foregoing list of important factors is not all inclusive.
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 first quarter earnings release, McDonald's Corporation will broadcast its conference call with members of management live over the Internet on Monday, April 28, 2003, at 10:30 a.m. Central Time. Interested parties are invited to listen by logging on to www.investor.mcdonalds.com and selecting "Webcast." Separately, an archived replay of this call will be available on McDonald's website for a limited time.
For second quarter sales updates, the Company plans to release monthly sales information on May 13, June 12 and July 14.
McDONALD'S SYSTEMWIDE SALES
Dollars in millions
------------------------------------------------------------------------
% Inc/(Dec)
As Constant
Quarters ended March 31, 2003 2002 Reported Currency*
------------------------------------------------------------------------
U.S.
Operated by franchisees $ 3,785.7 $3,811.4 (1)
Operated by the Company 790.0 725.3 9
Operated by affiliates 254.0 256.0 (1)
4,829.7 4,792.7 1 n/a
Europe
Operated by franchisees 1,563.0 1,302.7 20
Operated by the Company 999.9 892.9 12
Operated by affiliates 155.1 113.1 37
2,718.0 2,308.7 18 (1)
APMEA
Operated by franchisees 542.2 477.2 14
Operated by the Company 517.4 522.1 (1)
Operated by affiliates 636.4 632.8 1
1,696.0 1,632.1 4 (4)
Latin America
Operated by franchisees 130.7 198.8 (34)
Operated by the Company 165.2 183.0 (10)
Operated by affiliates 8.1 8.4 (4)
304.0 390.2 (22) 1
Canada
Operated by franchisees 194.3 197.7 (2)
Operated by the Company 122.3 110.3 11
Operated by affiliates 16.2 12.1 34
332.8 320.1 4 (2)
Partner Brands
Operated by franchisees 10.1 9.8 3
Operated by the Company 261.3 244.9 7
271.4 254.7 7 7
Systemwide
Operated by franchisees 6,226.0 5,997.6 4
Operated by the Company 2,856.1 2,678.5 7
Operated by affiliates 1,069.8 1,022.4 5
$10,151.9 $9,698.5 5 -
* Excluding the effect of foreign currency translation on reported
results.
n/a Not applicable
The following 3 schedules relate to McDonald's restaurant business and exclude Partner Brands.
McDONALD'S COMPARABLE SALES*
-------------------------------------------------------------------------
Percent
Increase/(Decrease)
Quarters ended March 31, 2003 2002
-------------------------------------------------------------------------
U.S. (2.0) (0.1)
Europe (4.4) 5.0
APMEA (8.3) (8.0)
Latin America 3.4 (5.5)
Canada (6.1) (3.3)
Brand McDonald's (3.6) (0.8)
* Comparable sales or comparable unit sales represent the percent change
in constant currency sales from the same period in the prior year for
restaurants in operation at least thirteen months.
McDONALD'S COMPANY-OPERATED AND FRANCHISED RESTAURANT MARGINS
------------------------------------------------------------------------
% Inc/(Dec)
Quarters ended Percent Amount As Constant
March 31, 2003 2002 2003 2002 Reported Currency*
------------------------------------------------------------------------
Company-operated
U.S. 14.5 16.8 $114.4 $121.5 (6) n/a
Europe 13.8 14.7 138.1 131.2 5 (9)
APMEA 9.7 12.4 50.0 65.0 (23) (28)
Latin America 7.8 10.1 12.9 18.4 (30) (20)
Canada 10.9 12.9 13.3 14.2 (6) (12)
Total 12.7 14.4 $328.7 $350.3 (6) (12)
Franchised
U.S. 77.2 78.6 $405.9 $425.1 (5) n/a
Europe 74.1 75.9 224.3 192.4 17 (4)
APMEA 83.8 86.4 53.9 53.5 1 (10)
Latin America 66.0 67.8 14.0 23.2 (40) (28)
Canada 75.8 77.8 21.8 21.7 - (5)
Total 76.3 78.0 $719.9 $715.9 1 (5)
* Excluding the effect of foreign currency translation on reported
results.
n/a Not applicable
McDONALD'S COMPANY-OPERATED COSTS AND MARGINS AS A PERCENT OF SALES
-------------------------------------------------------------------------
Quarters ended March 31, 2003 2002
-------------------------------------------------------------------------
Food & paper 33.9 34.8
Payroll & employee
benefits 27.2 26.1
Occupancy & other
operating expenses 26.2 24.7
Total expenses 87.3 85.6
Company-operated margins 12.7 14.4
McDONALD'S CORPORATION RESTAURANT INFORMATION
SYSTEMWIDE RESTAURANTS
-----------------------------------------------------------------------
At March 31, 2003 2002 Inc/(Dec)
-----------------------------------------------------------------------
U.S.* 13,531 13,148 383
Europe
United Kingdom 1,224 1,191 33
Germany 1,216 1,154 62
France 974 917 57
Spain 332 313 19
Italy 329 323 6
Other 1,997 1,927 70
Total Europe 6,072 5,825 247
APMEA
Japan* 3,866 3,836 30
Australia 729 716 13
China 564 458 106
South Korea 354 333 21
Taiwan 350 354 (4)
Other 1,690 1,664 26
Total APMEA 7,553 7,361 192
Latin America
Brazil 582 573 9
Mexico 263 236 27
Other 760 782 (22)
Total Latin America 1,605 1,591 14
Canada* 1,320 1,238 82
Partner Brands 1,091 1,029 62
Systemwide restaurants 31,172 30,192 980
Countries 119 121 (2)
* Includes satellites at March 31, 2003: U.S. 1,178; Japan 1,854;
Canada 340. At March 31, 2002: U.S. 1,018; Japan 1,836; Canada 312.
McDONALD'S CORPORATION RESTAURANT INFORMATION
SYSTEMWIDE RESTAURANTS
-----------------------------------------------------------------------
At March 31, 2003 2002 Inc/(Dec)
-----------------------------------------------------------------------
U.S.
Operated by franchisees 10,660 10,504 156
Operated by the Company 2,138 1,907 231
Operated by affiliates 733 737 (4)
13,531 13,148 383
Europe
Operated by franchisees 3,498 3,346 152
Operated by the Company 2,293 2,228 65
Operated by affiliates 281 251 30
6,072 5,825 247
APMEA
Operated by franchisees 2,197 2,010 187
Operated by the Company 2,251 2,094 157
Operated by affiliates 3,105 3,257 (152)
7,553 7,361 192
Latin America
Operated by franchisees 623 729 (106)
Operated by the Company 963 791 172
Operated by affiliates 19 71 (52)
1,605 1,591 14
Canada
Operated by franchisees 786 782 4
Operated by the Company 463 406 57
Operated by affiliates 71 50 21
1,320 1,238 82
Partner Brands
Operated by franchisees 52 51 1
Operated by the Company 1,039 978 61
1,091 1,029 62
Systemwide
Operated by franchisees 17,816 17,422 394
Operated by the Company 9,147 8,404 743
Operated by affiliates 4,209 4,366 (157)
31,172 30,192 980
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
Web site: http://www.mcdonalds.com/