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McDonald's Revitalization Plan Delivering Results

Company Says Revitalization Plan Is Working But More To Do

Mar 8, 2004

McDonald's (NYSE: MCD) Chairman and Chief Executive Officer Jim Cantalupo provided an update on the company's revitalization momentum and positive business trends during an investor presentation/webcast in New York City today. Presenting with Cantalupo were Charlie Bell, President and Chief Operating Officer; Matthew Paull, Executive Vice President and Chief Financial Officer; Mike Roberts, President, McDonald's U.S.A.; and Russ Smyth, President, McDonald's Europe.

Cantalupo said, "Last year, we laid out a comprehensive revitalization plan designed to get McDonald's business back on track. With the results that we have seen in 2003, it's clear that our 'Plan to Win' is making a difference and driving results beyond even our own expectations. While I'm pleased with our performance, I know we have more work to do."

"Our recent performance proves that operating restaurants better is a strategy that delivers growth and attracts customers," said Cantalupo. "February marked the tenth consecutive month of positive systemwide comparable sales which we achieved by focusing on our customers and restaurants. Our progress to date has been significant, however, our revitalization will not be complete until we see sustainable improvements around the world. To achieve this kind of growth, we must focus on improving execution and innovation to give our customers a better experience."

  McDonald's sustaining growth targets for 2005 and beyond are:
   -- Annual systemwide sales and revenue growth of 3% to 5% (constant
   -- Annual operating income growth of 6% to 7% (constant currencies)
   -- Annual return on incremental invested capital in the high teens
      (constant currencies)

During his remarks, Charlie Bell, President and Chief Operating Officer, said, "Last April, we focused the entire McDonald's System on the five drivers of superior customer experiences -- people, products, place, price and promotion -- which will result in enduring profitable growth for McDonald's global business.

"We also established three-year goals to measure our progress against these business drivers. I am glad to report that we have made progress in some areas, but overall we are not satisfied. Our near-term objective is to continue to strengthen our foundation by improving customer relevance through operations excellence and leadership marketing."

Matthew Paull, Executive Vice President and Chief Financial Officer, said, "Over the long term, we see ourselves as a steadily growing, reliable generator of cash. With more than 30,000 restaurants worldwide, our existing restaurants are a powerful growth engine with enormous opportunity for sustainable profitable growth and higher returns.

"In 2003, McDonald's generated $3.3 billion of cash from operations. As we become even more relevant to our customers, we have strategically increased capital expenditures for 2004 by $200 million to $300 million, to $1.5 billion to $1.6 billion. This increase is primarily for higher reinvestment in existing restaurants to build our brand and attract more customers. Nothing represents our brand more than the look and feel of our restaurants. Generally, remodeled restaurants drive incremental sales and profits as they are more appealing to customers and more efficient to operate. In terms of new restaurant openings, we are expanding in markets where we expect good returns and where long-term opportunities are significant, such as China.

"We also plan to pay down $400 million to $700 million in debt this year and return about $1 billion to shareholders through dividends and share repurchase. McDonald's will continue to exercise discipline in management of G&A and capital expenditures."

At the conclusion of the webcast, Cantalupo noted, "McDonald's is one of the world's favorite brands. We know our business requires a relentless focus on the details. Our revitalization is not complete, however, the changes we put in place over the past year have put us well on the track toward sustainable, predictable, earnings growth and increased returns."

More than 30,000 local McDonald's restaurants serve approximately 47 million customers each day in more than 100 countries. Please visit our newly designed website at to learn more McDonald's.

  -- Comparable sales represent sales at Systemwide restaurants in operation
     at least thirteen months, excluding the impact of currency translation.
     Management reviews the increase or decrease in comparable sales
     compared with the same period in the prior year to assess business
  -- Systemwide sales include sales at all McDonald's restaurants, including
     those operated by the Company, franchisees and affiliates. 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 rent payments.
  -- Information in constant currency is calculated by translating current
     year results at prior year average exchange rates.
  -- Return on incremental invested capital is 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.


This release contains certain forward-looking statements that reflect management's expectations regarding future events and operating performance and speak only as of March 8, 2004. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to differ materially from those expressed in, or underlying, our forward-looking statements are detailed in the Company's filings with the Securities and Exchange Commission, such as its annual (10-K) and quarterly (10-Q) reports.


McDonald's Corporation broadcast this meeting with the financial community live over the Internet. An archived replay of the meeting is available on McDonald's website for a limited time by logging on to .

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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

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