McDonald's Announces Strong Operating Results for First Quarter 2006
PRNewswire-FirstCall
OAK BROOK, Ill.
Apr 21, 2006
McDonald's Corporation (NYSE: MCD) today announced strong operating results for the first quarter ended March 31, 2006. The Company reported diluted earnings per share of $0.49 for the quarter, driven by positive comparable sales in all geographic segments.
The Company reported the following highlights for the quarter:
-- Revenues increased 6% (8% in constant currencies) fueled by a global
comparable sales increase of 5.2%
-- Company-operated and franchised restaurant margin percents improved in
all geographic segments
-- The Company repurchased $1.0 billion or 29.5 million shares of its
stock
Chief Executive Officer Jim Skinner commented, "Strategic initiatives aligned behind McDonald's Plan to Win are strengthening our competitive position and delivering positive results worldwide. Performance for the first quarter reflected more customer visits and enhanced profitability as we continued to connect with our customers and increase the relevance of our brand.
"In the first quarter, the U.S. marked its 36th consecutive month of positive comparable sales. The ongoing momentum of our U.S. business drove the segment's double-digit revenue growth and margin improvement. We will continue to maximize our U.S. performance by providing customers with an exceptional experience that offers expanded menu choices like our Spicy Premium Chicken Sandwich and Premium Roast Coffee, enhanced conveniences including cashless payment options and gift cards and the compelling everyday value of our Dollar Menu. Next week, we'll add even more variety to our menu with the introduction of the new Asian Salad featuring grilled or crispy chicken, mandarin orange slices, red bell peppers, soybeans, snow peas and slivered almonds served with all-natural, Newman's Own Lighten up!® Low Fat Sesame Ginger salad dressing.
"In Europe and Asia/Pacific, Middle East and Africa, our ongoing commitment to everyday value, balanced with premium products that appeal to local tastes contributed to each segment's financial performance for the quarter. While I am pleased with these results, we remain focused on further strengthening the contribution from both of these critical business segments.
"During the quarter we made progress on previously announced actions designed to enhance overall profitability and improve returns for all shareholders -- we closed a limited number of restaurants in the U.K. in conjunction with the strategic review of the market's real estate portfolio, completed the buy out of certain franchisees in Brazil and moved forward on the anticipated sale of a small market in Europe to a developmental licensee. We remain committed to returning value to shareholders through share repurchase and dividends. This quarter, we bought back $1 billion or 29.5 million shares of McDonald's stock.
"Overall, our strong quarterly financial performance reflects diligent execution of our fundamental business drivers. Our results confirm that our strategy of growing by improving our existing restaurants and focusing on the 5 P's of People, Products, Place, Price and Promotion is the right strategy for McDonald's, our customers and our shareholders."
KEY HIGHLIGHTS - CONSOLIDATED
Dollars in millions, except per common share data
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%Inc/(Dec)
Currency Excluding
%Inc/ Trans Currency
Quarters ended March 31, 2006 2005 (Dec) (Loss) Trans
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Revenues $ 5,100.9 $ 4,802.8 6 $(96.6) 8
Operating income 923.8 909.6 2 (31.3) 5
Net income 625.3 727.9 (14) (15.0) (12)
Earnings per share-diluted* 0.49 0.56 (13) (0.01) (11)
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-- The following items, in total, negatively impacted the percentage
change for first quarter 2006 diluted earnings per share compared with
2005 by 29 percentage points:
2006
-- Approximately $0.045 per share of operating expenses primarily related
to: previously announced actions taken for a limited number of
restaurant closings in the U.K. in conjunction with an overall
restaurant portfolio review; costs to buy out certain litigating
franchisees in Brazil; and an impairment charge on the anticipated
sale of a small market in Europe to a developmental licensee; and
-- Approximately $0.035 per share of nonoperating income due to the IPO
of Chipotle Mexican Grill and the concurrent sale of Chipotle shares.
2005
-- A $0.13 per share tax benefit due to a favorable audit settlement of
the Company's 2000-2002 U.S. tax returns.
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED THROUGHOUT THIS RELEASE
Comparable sales represent sales at all McDonald's restaurants, including those operated by the Company, franchisees and affiliates, in operation at least thirteen months including those temporarily closed, excluding the impact of currency translation. Some of the reasons restaurants may be closed include road construction, reimaging or remodeling, and natural disasters. Management reviews the increase or decrease in comparable sales compared with the same period in the prior year to assess business trends.
Information in constant currency is calculated by translating current year results at prior year average exchange rates.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in the Company's filings with the Securities and Exchange Commission, such as its annual and quarterly reports.
RELATED COMMUNICATIONS
McDonald's Corporation will broadcast its investor conference call live over the Internet at 10:30 a.m. Central Time on April 21, 2006. A link to the live webcast will be available at http://www.investor.mcdonalds.com/ and an archived replay of this webcast will be available for a limited time.
See Exhibit 99.2 in the Company's Form 8-K filing for supplemental information related to the Company's results for the quarter ended March 31, 2006.
The Company plans to release April 2006 sales information on May 9, 2006.
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
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Dollars and shares in millions, except per common share data
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Inc/(Dec)
Quarters ended March 31, 2006 2005 $ %
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Revenues
Sales by Company-operated
restaurants $3,855.9 $3,599.5 256.4 7
Revenues from franchised
and affiliated restaurants 1,245.0 1,203.3 41.7 3
TOTAL REVENUES 5,100.9 4,802.8 298.1 6
Operating costs and expenses
Company-operated restaurant
expenses 3,302.8 3,109.1 193.7 6
Franchised restaurants
-- occupancy expenses 252.1 257.0 (4.9) (2)
Selling, general &
administrative expenses 550.3 520.1 30.2 6
Impairment and other
charges (credit), net 86.1 (18.7) 104.8 n/m
Other operating (income)
expense, net (14.2) 25.7 (39.9) n/m
Total operating costs
and expenses 4,177.1 3,893.2 283.9 7
OPERATING INCOME 923.8 909.6 14.2 2
Interest expense 102.3 89.8 12.5 14
Nonoperating(income), net (84.3) (10.4) 73.9 n/m
Income before provision
for income taxes 905.8 830.2 75.6 9
Provision for income taxes 280.5 102.3 178.2 n/m
NET INCOME $ 625.3 $ 727.9 (102.6) (14)
EARNINGS PER SHARE-DILUTED $ 0.49 $ 0.56 (0.07) (13)
Weighted average shares
outstanding-diluted 1,271.2 1,289.0 (17.8) (1)
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n/m Not meaningful
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SOURCE: McDonald's Corporation
CONTACT: Investors, Mary Kay Shaw, +1-630-623-7559, or Media, Anna
Rozenich, +1-630-623-7316, both of McDonald's Corporation
Web site: http://www.mcdonalds.com/
http://www.investor.mcdonalds.com/