McDonald's Reports Record EPS of $0.43 - Up 13% For Third Quarter
PRNewswire-FirstCall
OAK BROOK, Ill.
Oct 22, 2003
McDonald's Corporation today announced positive results for the quarter and nine months ended September 30, 2003.
Chairman and Chief Executive Officer Jim Cantalupo said, "Earnings per share increased 13% to a record high of 43 cents. This performance indicates that our revitalization plan is beginning to yield results. Our focused and disciplined approach is producing strong sales and profitability improvements in our U.S. business and improved trends in some international markets; still, there are many opportunities to improve our business as we move forward."
Cantalupo reported the following highlights:
- Diluted earnings per share for the quarter were $0.43, a 13% increase
(8% in constant currencies).
- Net income increased 12% (8% in constant currencies) to $547 million
for the quarter.
- Operating income increased 16% (10% in constant currencies) to
$964 million for the quarter; U.S. operating income increased 19% to
$571 million.
- Systemwide sales and revenues were up 11% (7% in constant currencies)
for the quarter.
- Comparable unit sales for Brand McDonald's restaurants increased 3.9%
worldwide and 9.5% in the U.S. for the quarter.
- The Company repurchased $139 million of its common stock during the
quarter.
"In the U.S., our emphasis on improving the taste of our food, the introduction of Premium Salads and McGriddles, continued demand for the Dollar Menu's outstanding value, and other initiatives are generating almost one million new customer visits each day. While we are pleased with our customers' response to these innovations, our efforts remain aligned around delivering improved service and a superior overall restaurant experience.
"Europe delivered its highest quarterly sales increase this year. While we've had solid performance in many European markets, improving results in our largest markets is critical to achieving our long-term sales and profit targets. To strengthen the business in these markets, we are working to increase relevance and customer visit frequency by enhancing our value positioning and adding more menu choices. I am confident that our European customers will notice the changes and respond favorably.
"Around the world, we recently launched our first-ever global marketing initiative, 'i'm lovin' it'. This initiative is designed to reaffirm McDonald's marketing leadership and help keep McDonald's contemporary and relevant in the minds of our customers.
"Financially, we have put in place a more disciplined capital allocation approach intended to maximize returns over the long term. Our free cash flow - cash from operations less capital expenditures - is significant and growing. We are paying down debt, buying back stock and paying a significantly higher dividend. These actions are aligned with our commitment to return cash to shareholders without compromising our financial strength or flexibility.
"While we are encouraged by our current business momentum, we know that significant opportunities remain - particularly in the area of service. Every day, we have nearly 47 million occasions to demonstrate operational excellence and satisfy our customers. Our revitalization plan is designed to build on our strengths, address our challenges and deliver consistent, positive results."
OUTLOOK
The information provided below is as of October 2003.
- McDonald's expects sales from new restaurants to add two to three
percentage points to Systemwide sales growth in 2003 (in constant
currencies). Most of this anticipated growth will result from
restaurants opened in 2002. McDonald's expects new restaurants to add
approximately one percentage point to sales growth in 2004 (in constant
currencies). In 2003 net worldwide restaurant additions are expected
to total 360, with 260 net traditional and 100 net satellite
restaurants.
- Through September 2003, comparable sales have increased 0.7% worldwide
and 4.3% in the U.S., while Europe's comparable sales decreased 2.0%
for this period. As a guideline, assuming no change in profit margins,
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.
- McDonald's expects 2003 selling, general & administrative expenses to
increase 5% to 6% (2% in constant currencies) 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 to 5 cents.
Through September 2003, foreign currency translation benefited diluted
earnings per share by 6 cents.
- For the year 2003, the Company previously indicated its net debt
payments would be in the $300 million to $700 million range. The
Company now expects net debt payments to be at the higher end of this
range, and expects interest expense to increase 3% to 4% for the year.
- McDonald's expects the effective income tax rate for the year 2003 to
be about 33.5% to 34.0%.
- McDonald's expects capital expenditures for 2003 to be approximately
$1.2 billion in constant currencies. However, as a result of foreign
currency translation, reported capital expenditures are expected to be
closer to $1.3 billion.
- McDonald's will return approximately $500 million to shareholders
through dividends and $200 million to $300 million through share
repurchases in 2003.
- The Company's goals beginning in 2005 include achieving sustainable
annual Systemwide sales and revenue 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.
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, except per common share data
--------------------------------------------------------------------
Quarters ended Inc /(Dec)
September 30, 2003 2002 $ %
--------------------------------------------------------------------
Revenues
Sales by Company-operated
restaurants $3,351.2 $3,019.3 331.9 11
Revenues from franchised
and affiliated restaurants 1,153.4 1,027.7 125.7 12
TOTAL REVENUES 4,504.6 4,047.0 457.6 11
Operating costs and expenses
Company-operated restaurant
expenses 2,840.6 2,584.8 255.8 10
Franchised restaurants
--occupancy expenses 236.0 214.2 21.8 10
Selling, general &
administrative expenses 456.3 438.2 18.1 4
Other operating (income)
expense, net 7.8 (20.0) 27.8 n/m
Total operating costs
and expenses 3,540.7 3,217.2 323.5 10
OPERATING INCOME 963.9 829.8 134.1 16
Interest expense 93.8 93.8 - -
Nonoperating expense, net 47.0 20.7 26.3 n/m
Income before provision for
income taxes 823.1 715.3 107.8 15
Provision for income taxes 275.7 228.6 47.1 21
NET INCOME $ 547.4 $ 486.7 60.7 12
NET INCOME PER
COMMON SHARE-DILUTED $ 0.43 $ 0.38 0.05 13
Weighted average common
shares outstanding-diluted 1,281.0 1,280.5
n/m Not meaningful
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars & shares in millions, except per common share data
----------------------------------------------------------------------
Nine months ended Inc /(Dec)
September 30, 2003 2002 $ %
----------------------------------------------------------------------
Revenues
Sales by Company-operated
restaurants $ 9,397.0 $ 8,566.8 830.2 10
Revenues from franchised
& affiliated restaurants 3,188.1 2,939.7 248.4 8
TOTAL REVENUES 12,585.1 11,506.5 1,078.6 9
Operating costs & expenses
Company-operated restaurant
expenses 8,094.0 7,348.3 745.7 10
Franchised restaurants
--occupancy costs 690.3 622.9 67.4 11
Selling, general &
administrative expenses 1,319.1 1,226.0 93.1 8
Other operating (income)
expense, net 17.0 (7.0) 24.0 n/m
Total operating costs & expenses 10,120.4 9,190.2 930.2 10
OPERATING INCOME 2,464.7 2,316.3 148.4 6
Interest expense 297.3 279.5 17.8 6
Nonoperating expense, net 88.5 53.1 35.4 n/m
Income before provision for
income taxes 2,078.9 1,983.7 95.2 5
Provision for income taxes 696.4 647.8 48.6 8
Income before cumulative
effect of accounting changes 1,382.5 1,335.9 46.6 3
Cumulative effect of
accounting changes, net of tax (36.8) (98.6) n/m n/m
NET INCOME $ 1,345.7 $ 1,237.3 108.4 9
PER COMMON SHARE-DILUTED:
Income before cumulative
effect of accounting changes $ 1.08 $ 1.04 0.04 4
Cumulative effect of
accounting changes $ (0.03) $ (0.08) n/m n/m
Net income $ 1.05 $ 0.96 0.09 9
Weighted average common
shares outstanding-diluted 1,276.2 1,286.8
n/m Not meaningful
McDONALD'S CORPORATION
CONSOLIDATED BALANCE SHEET
Dollars in millions
----------------------------------------------------------------------
September 30, December 31,
2003 2002
----------------------------------------------------------------------
ASSETS
Current assets
Cash and equivalents $ 647.4 $ 330.4
Accounts and notes receivable 703.0 855.3
Inventories 116.2 111.7
Prepaid expenses and other current assets 471.9 418.0
Total current assets 1,938.5 1,715.4
Other assets
Investments in and advances to affiliates 1,092.2 1,037.7
Goodwill, net 1,763.6 1,559.8
Miscellaneous 1,041.2 1,074.2
Total other assets 3,897.0 3,671.7
Property and equipment
Property and equipment, at cost 27,884.2 26,218.6
Accumulated depreciation and amortization (8,485.6) (7,635.2)
Net property and equipment 19,398.6 18,583.4
Total assets $25,234.1 $23,970.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 507.0 $ 635.8
Dividend Payable 508.0 0.0
Income taxes 125.1 16.3
Other taxes 209.0 191.8
Accrued interest 172.4 199.4
Accrued restructuring and restaurant
closing costs 152.5 328.5
Accrued payroll and other liabilities 843.6 774.7
Current maturities of long-term debt 115.8 275.8
Total current liabilities 2,633.4 2,422.3
Long-term debt 9,291.7 9,703.6
Other long-term liabilities and
minority interests 668.0 560.0
Deferred income taxes 992.4 1,003.7
Shareholders' equity
Common stock 16.6 16.6
Additional paid-in capital 1,808.4 1,747.3
Unearned ESOP compensation (97.9) (98.4)
Retained earnings 20,043.3 19,204.4
Accumulated other comprehensive income (loss) (1,018.7) (1,601.3)
Common stock in treasury (9,103.1) (8,987.7)
Total shareholders' equity 11,648.6 10,280.9
Total liabilities and shareholders' equity $25,234.1 $23,970.5
SUPPLEMENTAL INFORMATION
Impact of Foreign Currencies on Reported Results
Information in constant currencies excludes the effect of foreign currency translation on reported results. Constant currency results are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results in constant currencies and bases certain compensation plans on these results because it believes these results better represent the Company's underlying business trends.
- Foreign currency translation had a positive impact on the growth rates of
consolidated revenue, operating income and earnings per share for the
quarter and nine months, primarily due to the stronger Euro.
Comparable Sales and Revenues
COMPARABLE SALES* - McDONALD'S RESTAURANT BUSINESS
-----------------------------------------------------------------------
Percent Increase/(Decrease)
Quarters ended Nine months ended
September 30 September 30
2003 2002 2003 2002
-----------------------------------------------------------------------
U.S. 9.5 (2.8) 4.3 (1.6)
Europe (0.1) (1.3) (2.0) 2.0
APMEA (3.9) (8.1) (6.2) (9.2)
Latin America (1.8) 3.6 2.5 (2.1)
Canada 0.7 (0.9) (1.8) (2.0)
Brand McDonald's 3.9 (3.0) 0.7 (2.1)
* Comparable sales represent the percent change in constant currency
sales from the same period in the prior year for all Systemwide
restaurants in operation at least thirteen months.
Revenues include sales by Company-operated restaurants and fees from restaurants operated by franchisees or affiliates under joint-venture agreements. These fees include rent, service fees and/or royalties that are based on a percent of sales with specified minimum payments, along with initial fees.
TOTAL REVENUES
Dollars in millions
-----------------------------------------------------------------------
Quarters ended 2003 2002
September 30, ------------------------- ------
Currency As Constant
Trans- Rept'd Currency*
As lation Constant As % Inc % Inc
Rept'd Impact Currency* Rept'd (Dec) (Dec)
-----------------------------------------------------------------------
U.S. $ 1,593.5 n/a $ 1,593.5 $ 1,408.1 13 n/a
Europe 1,525.4 $(134.5) 1,390.9 1,380.7 10 1
APMEA 659.3 (31.0) 628.3 623.7 6 1
Latin America 221.3 0.1 221.4 201.2 10 10
Canada 213.8 (24.9) 188.9 172.9 24 9
Partner Brands 291.3 (0.6) 290.7 260.4 12 12
Total revenues $ 4,504.6 $(190.9) $ 4,313.7 $ 4,047.0 11 7
-----------------------------------------------------------------------
Nine months ended
September 30,
-----------------------------------------------------------------------
U.S. $ 4,460.6 n/a $ 4,460.6 $ 4,076.3 9 n/a
Europe 4,291.2 $(535.8) 3,755.4 3,789.1 13 (1)
APMEA 1,811.8 (87.1) 1,724.7 1,788.0 1 (4)
Latin America 620.4 86.9 707.3 619.4 - 14
Canada 561.6 (53.1) 508.5 473.7 19 7
Partner Brands 839.5 (1.1) 838.4 760.0 10 10
Total revenues $12,585.1 $(590.2) $11,994.9 $11,506.5 9 4
* Information in constant currencies excludes the effect of foreign
currency translation on reported results.
n/a Not applicable
- U.S.: Continued strong customer response to the new Premium Salads and
McGriddles breakfast sandwiches, popular Happy Meals, extended hours,
continued everyday value and focus on improved food taste and service,
all contributed to the revenue increases for the quarter and nine
months.
- Europe: Expansion in France and strong performance in Russia were
offset by continued negative trends in the U.K. and Germany for the
quarter and nine months.
- APMEA: Revenues for the quarter and nine months were impacted by
positive comparable sales in Australia, expansion in China and weak
results in South Korea and Taiwan. For the nine months, revenues were
also affected by concerns about SARS (Severe Acute Respiratory
Syndrome).
- Latin America: Revenues increased for both periods in constant
currencies primarily due to a higher percentage of Company-operated
restaurants in 2003.
Operating Margins
COMPANY-OPERATED AND FRANCHISED RESTAURANT MARGINS -
McDONALD'S RESTAURANT BUSINESS*
Dollars in millions
------------------------------------------------------------
Quarters ended Percent Amount % Inc/
September 30, 2003 2002 2003 2002 (Dec)
------------------------------------------------------------
Company-operated
U.S. 18.6 15.5 $ 175.5 $ 128.5 37
Europe 17.0 17.1 197.5 182.0 9
APMEA 12.2 12.2 71.4 68.0 5
Latin America 5.7 10.1 11.4 17.4 (34)
Canada 17.1 15.1 29.7 20.7 43
Total 15.9 15.1 $ 485.5 $ 416.6 17
Franchised
U.S. 80.4 79.6 $ 524.3 $ 462.5 13
Europe 77.4 77.6 281.6 244.5 15
APMEA 86.7 86.1 65.0 56.7 15
Latin America 64.7 69.3 14.1 20.3 (31)
Canada 79.3 80.6 31.8 28.9 10
Total 79.5 79.2 $ 916.8 $ 812.9 13
------------------------------------------------------------
Nine months ended Percent Amount % Inc/
September 30, 2003 2002 2003 2002 (Dec)
------------------------------------------------------------
Company-operated
U.S. 17.3 16.7 $ 461.6 $ 394.9 17
Europe 15.5 16.0 509.7 468.8 9
APMEA 9.9 12.3 159.4 196.3 (19)
Latin America 7.1 9.2 39.6 48.4 (18)
Canada 14.5 14.6 66.0 55.2 20
Total 14.4 14.9 $1,236.3 $1,163.6 6
Franchised
U.S. 79.5 79.5 $1,429.6 $1,357.6 5
Europe 75.8 76.9 766.9 653.7 17
APMEA 85.0 86.1 175.1 162.9 7
Latin America 64.9 68.1 41.7 64.4 (35)
Canada 78.3 79.4 83.0 76.8 8
Total 78.3 78.8 $2,496.3 $2,315.4 8
* Operating margin information relates to McDonald's restaurant
business and excludes Partner Brands.
- Combined operating margin dollars increased $172.8 million or 14% for
the quarter and $253.6 million or 7% for the nine months. The U.S. and
Europe segments accounted for more than 80% of the combined margin
dollars in both periods of 2003 and 2002.
- U.S.: Company-operated margin percent increased for both periods
primarily due to positive comparable sales and lower payroll as a
percent of sales due to improved productivity, partly offset by
increased commodity costs.
- Europe: Company-operated margin percent declined for both periods due
to weak performance in the U.K., partly offset by improved margin
performance in Germany and France.
- APMEA: Company-operated margin percent benefited from SARS-related
sales tax relief received from the Chinese government.
- The increase in the consolidated franchised margin percent for the
quarter reflects positive comparable sales partly offset by higher
occupancy costs, due in part to an increased proportion of leased
sites. Positive comparable sales were more than offset by these higher
occupancy costs for the nine months.
Selling, General & Administrative Expenses
- Selling, general & administrative expenses increased 4% for the quarter
and 8% for the nine months partly due to higher marketing costs related
to the introduction of the new 'i'm lovin' it' campaign, and higher
performance-based incentive compensation. The nine months also
included approximately $14 million in severance costs, primarily
associated with streamlining restaurant development functions, and $11
million of incremental marketing in the second quarter, principally in
the U.S. In addition, stronger foreign currencies impacted selling,
general & administrative expenses by $14.6 million for the quarter and
$44.2 million for the nine months, contributing to the increases.
Other Operating (Income) Expense, Net
OTHER OPERATING (INCOME) EXPENSE, NET
Dollars in millions
-----------------------------------------------------------------------
Quarters ended Nine months ended
September 30 September 30
2003 2002 2003 2002
-----------------------------------------------------------------------
Gains on sales of
restaurant businesses $(11.5) $(38.1) $(42.3) $(78.5)
Equity in earnings of
unconsolidated affiliates (20.7) (14.1) (24.2) (29.5)
Front counter service
system payments - U.S. - - - 21.6
Asset impairment - Latin
America and Turkey - - - 43.0
Other expense 40.0 32.2 83.5 36.4
Total $ 7.8 $(20.0) $ 17.0 $ (7.0)
- Equity in earnings of unconsolidated affiliates for the quarter and
nine months reflected weaker results from our Japanese affiliate in
2003 and stronger performance in the U.S.
- Other expense for both periods reflected higher provisions for
uncollectible receivables in 2003 compared with 2002. In addition, the
nine months 2003 included about $25 million of costs in the U.S. as a
result of management's decision to significantly reduce capital
expenditures.
Operating Income
OPERATING INCOME
Dollars in millions
-----------------------------------------------------------------------
Quarters ended 2003 2002
September 30, ------------------------- ------
Currency As Constant
Trans- Rept'd Currency*
As lation Constant As % Inc % Inc
Rept'd Impact Currency* Rept'd (Dec) (Dec)
-----------------------------------------------------------------------
U.S. $ 571.0 n/a $ 571.0 $ 479.9 19 n/a
Europe 382.6 $ (38.5) 344.1 336.3 14 2
APMEA 91.4 (7.8) 83.6 84.2 9 (1)
Latin America (20.2) 3.4 (16.8) 6.7 n/m n/m
Canada 47.3 (5.6) 41.7 39.3 20 6
Partner Brands (0.2) 0.3 0.1 (10.1) 98 n/m
Corporate (108.0) n/a (108.0) (106.5) (1) n/a
Total operating
income $ 963.9 $ (48.2) $ 915.7 $ 829.8 16 10
-----------------------------------------------------------------------
Nine months ended
September 30,
-----------------------------------------------------------------------
U.S. $1,480.0 n/a $1,480.0 $1,400.0 6 n/a
Europe 980.8 $(134.0) 846.8 877.7 12 (4)
APMEA 208.7 (19.8) 188.9 229.6 (9) (18)
Latin America (15.2) (0.3) (15.5) (2.7) n/m n/m
Canada 114.4 (11.3) 103.1 104.8 9 (2)
Partner Brands (23.4) 1.1 (22.3) (28.7) 18 22
Corporate (280.6) n/a (280.6) (264.4) (6) n/a
Total operating
income $2,464.7 $(164.3) $2,300.4 $2,316.3 6 (1)
* Information in constant currencies excludes the effect of foreign
currency translation on reported results.
n/a Not applicable
n/m Not meaningful
- U.S.: Higher combined operating margin dollars were partly offset by
lower other operating income for both periods and higher selling,
general & administrative expenses for the nine months. Selling,
general & administrative expenses were relatively flat for the quarter.
- Europe: Both periods reflect positive results in France and weak
results in Germany and the U.K.
- APMEA: For the quarter, positive results in Australia and the sales tax
relief benefit in China were offset by weak results in other markets.
For the nine months, operating income decreased due to negative
comparable sales, compounded by concerns about SARS. Results for the
nine months 2002 included $15.9 million of asset impairment charges in
Turkey.
- Latin America: The declines for both periods reflected weak results in
Brazil and Argentina, and higher provisions for uncollectible
receivables. In addition, Latin America's results for the nine months
were negatively impacted by the national strike in Venezuela. Results
for the nine months 2002 included $27.1 million of asset impairment
charges.
INTEREST, NONOPERATING EXPENSE AND INCOME TAXES
- Interest expense was flat for the quarter but increased for the nine
months due to stronger foreign currencies.
- Nonoperating expense for both periods reflected an $11 million loss on
the early extinguishment of $200 million of debt in July 2003. In
addition, the nine months reflected higher foreign currency translation
losses in 2003 compared with 2002.
- The effective income tax rate for both periods in 2003 was 33.5%
compared with 32.0% for third quarter 2002 and 32.7% for the nine
months 2002.
CUMULATIVE EFFECT OF ACCOUNTING CHANGES
- First quarter 2003 included a charge of $36.8 million after tax ($0.03
per diluted share) for the cumulative effect of an accounting change
that impacted lease obligations in certain international markets.
- First quarter 2002 included a charge of $98.6 million after tax ($0.08
per diluted share) to reflect the cumulative effect of an accounting
change that impacted goodwill.
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; 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 deployment 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
McDonald's Corporation will broadcast its investor conference call live over the Internet at 11:30 a.m. Central Time on October 22, 2003. For access, go to www.investor.mcdonalds.com. An archived replay of this webcast will be available for a limited time.
See the Company's website for additional, detailed information related to company-operated margins and Systemwide restaurants for the quarter and nine months ended September 30, 2003.
Jim Cantalupo, Chairman and Chief Executive Officer, and Matthew Paull, Chief Financial Officer, will participate in the Morgan Stanley Global Consumer Conference on November 5 at 9:20 a.m. Eastern Time. McDonald's presentation will be webcast live and available for replay for a limited time at www.investor.mcdonalds.com.
The Company plans to release October sales information on November 7.
MCDONALD'S CORPORATION
SYSTEMWIDE SALES PERCENT INCREASE/(DECREASE)*
-----------------------------------------------------------------------
Quarter ended Nine months ended
September 30, 2003 September 30, 2003
--------------------- -----------------------
As Constant As Constant
Rept'd Currency** Rept'd Currency**
% Inc % Inc % Inc % Inc
(Dec) (Dec) (Dec) (Dec)
-----------------------------------------------------------------------
U.S. 12 n/a 7 n/a
Europe 14 3 17 1
APMEA 2 (3) 3 (4)
Latin America - 1 (9) 3
Canada 19 5 13 2
Partner Brands 11 11 10 10
Total sales 11 7 9 4
COMPANY-OPERATED SALES
Dollars in millions
-----------------------------------------------------------------------
Quarters ended 2003 2002
September 30, ------------------------- ------
Currency As Constant
Trans- Rept'd Currency**
As lation Constant As % Inc % Inc
Rept'd Impact Currency** Rept'd (Dec) (Dec)
-----------------------------------------------------------------------
U.S. $ 941.7 n/a $ 941.7 $ 827.2 14 n/a
Europe 1,161.4 (93.2) 1,068.2 1,065.6 9 -
APMEA 584.3 (22.9) 561.4 557.9 5 1
Latin America 199.6 (0.9) 198.7 171.9 16 16
Canada 173.7 (20.3) 153.4 137.0 27 12
Partner Brands 290.5 (0.6) 289.9 259.7 12 12
Total $ 3,351.2 (137.9) $ 3,213.3 $ 3,019.3 11 6
-----------------------------------------------------------------------
Nine months ended
September 30,
-----------------------------------------------------------------------
U.S. $ 2,662.3 n/a $ 2,662.3 $ 2,368.5 12 n/a
Europe 3,279.8 (381.1) 2,898.7 2,939.5 12 (1)
APMEA 1,605.9 (65.1) 1,540.8 1,598.8 - (4)
Latin America 556.1 78.0 634.1 524.7 6 21
Canada 455.4 (43.1) 412.3 376.9 21 9
Partner Brands 837.5 (1.1) 836.4 758.4 10 10
Total $ 9,397.0 (412.4) $ 8,984.6 $ 8,566.8 10 5
* Systemwide sales represent sales at all McDonald's restaurants:
Company-operated, franchised and affiliated. Management believes
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.
** Information in constant currencies excludes the effect of foreign
currency translation on reported results.
n/a Not applicable
MCDONALD'S CORPORATION
NET INCOME AND DILUTED NET INCOME PER COMMON SHARE
Dollars in millions, except per common share data
-----------------------------------------------------------------------
Quarters ended 2003 2002
September 30, ------------------------- ------
Currency As Constant
Trans- Rept'd Currency*
As lation Constant As % Inc % Inc
Rept'd Impact Currency* Rept'd (Dec) (Dec)
-----------------------------------------------------------------------
Net income $ 547.4 $(23.4) $ 524.0 $ 486.7 12 8
Net income per
common share
diluted 0.43 (0.02) 0.41 0.38 13 8
-----------------------------------------------------------------------
Nine months ended
September 30,
-----------------------------------------------------------------------
Income before
cumulative effect
of accounting
changes $1,382.5 $(83.3) $1,299.2 $1,335.9 3 (3)
Net income 1,345.7 (83.3) 1,262.4 1,237.3 9 2
Per common share -
diluted:
Income before
cumulative effect
of accounting
changes 1.08 (0.06) 1.02 1.04 4 (2)
Net income 1.05 (0.06) 0.99 0.96 9 3
* Information in constant currencies excludes the effect of foreign
currency translation on reported results.
SOURCE: McDonald's Corporation
CONTACT: 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/