McDonald's Reports Second Quarter 2014 Results

                McDonald's Reports Second Quarter 2014 Results

PR Newswire

OAK BROOK, Ill., July 22, 2014

OAK BROOK, Ill., July 22, 2014 /PRNewswire/ --McDonald's Corporation today
announced results for the second quarter ended June 30, 2014, reflecting
higher revenues and earnings per share for the quarter.

"The McDonald's System is committed to creating the best experience for our
customers by offering great-tasting food and beverages and a memorable and
contemporary experience," said McDonald's President and Chief Executive
Officer Don Thompson. "During the quarter, we evolved our strategic Plan to
Win framework to enhance our focus on the customer through insights, planning
and actions. To reignite momentum over the next 18 months, we're focused on
fortifying the foundational elements of our business by concentrating our
efforts on compelling value, marketing and operations excellence to become a
more relevant and trusted brand."

Second Quarter results included:

  oGlobal comparable sales were relatively flat, reflecting higher average
    check and negative guest traffic in all major segments
  oConsolidated revenues increase of 1% (1% in constant currencies),
    benefiting from expansion
  oConsolidated operating income was flat (decrease of 1% in constant
    currencies)
  oDiluted earnings per share of $1.40, an increase of 1% (1% in constant
    currencies), benefiting from a decrease in diluted weighted average shares
    outstanding
  oReturned $1.6 billion to shareholders through dividends and share
    repurchases, in connection with our $18-$20 billion, 3-year cash return
    target

In the U.S., second quarter comparable sales decreased 1.5% while operating
income rose 1%. Results for the quarter reflected negative comparable guest
traffic amid ongoing broad-based challenges. Looking ahead, McDonald's U.S. is
intent on strengthening the overall customer experience to effectively
position the segment for long-term growth. Key areas of focus include service
excellence, enhanced marketing, and value, core menu and breakfast daypart
initiatives.

In Europe, comparable sales declined 1.0% and operating income was flat
(decrease of 4% in constant currencies) for the second quarter. The U.K. and
France delivered solid comparable sales and operating income results for the
quarter. Germany's quarterly performance reflected ongoing weakness. Emphasis
on compelling premium menu offers, renewed focus on core menu and value
options, and the roll-out of blended ice beverages in several markets
supported the quarter's performance.

APMEA's (Asia/Pacific, Middle East and Africa) second quarter comparable sales
increased 1.1%, reflecting strong comparable sales performance in China, as
well as positive performance in many other markets. Results were impacted by
continued weakness in Japan. APMEA's second quarter operating income declined
2% (increase of 1% in constant currencies). Enhanced value offerings,
locally-relevant product promotions, convenience initiatives and new store
development were positive contributors to the segment's results.

Pete Bensen, McDonald's Chief Financial Officer noted, "McDonald's underlying
financial strength and our ability to build long-term shareholder value have
been hallmarks of our strategic plan. In keeping with this discipline, during
the quarter we announced plans to return $18-$20 billion to shareholders
through a combination of dividends and share repurchases between 2014 and
2016. This cash return target reflects a 10-20% increase over the amount of
cash returned in the prior 3-year period and is based on several ongoing
factors, including the significant free cash flow generated from our
operations, as well as the use of cash proceeds from debt additions and
refranchising of at least 1,500 restaurants. These actions are a testament to
our commitment to enhancing shareholder value."

Don Thompson concluded, "Overall, 2014 is a year of strengthening the
foundational elements of our business that are critical to enabling and
advancing our longer-term strategies. Heading into 2014, we acknowledged that
we did not expect any material changes to the operating environment this year.
As such, full year 2014 global comparable sales are expected to be relatively
similar to year-to-date June performance, with July global comparable sales
expected to be negative. While near-term results are expected to remain muted,
sizable growth opportunities remain, and we are committed to pursuing these
opportunities through continuous improvement in everything we do - from the
food we serve, to our engagement with our customers, to the management of our
financial resources."

KEY HIGHLIGHTS - CONSOLIDATED

Dollars in millions, except per share data
               Quarters Ended June 30,                       Six Months Ended June 30,
                                                Inc/ (Dec)                                      Inc/ (Dec)
               2014       2013       Inc/(Dec)  Excluding    2014        2013        Inc/(Dec)  Excluding
                                                Currency                                        Currency
                                                Translation                                     Translation
Revenues       $ 7,181.7  $ 7,083.8  1%         1%           $ 13,882.0  $ 13,689.1  1%         2%
Operating      2,189.0    2,197.7    0          (1)          4,125.0     4,147.2     (1)        0
income
Net income     1,387.1    1,396.5    (1)        (1)          2,591.9     2,666.7     (3)        (2)
Earnings per   $ 1.40     $ 1.38     1%         1%           $ 2.61      $ 2.64      (1)%       0%
share-diluted*

  Foreign currency translation had a positive impact of $0.01 on diluted
* earnings per share for the quarter and negative impact of $0.02 for the six
  months ended June 30, 2014.

THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED THROUGHOUT THIS RELEASE

Comparable sales represent sales at all restaurants and comparable guest
counts represent the number of transactions at all restaurants, whether
operated by the Company or by franchisees, in operation at least thirteen
months including those temporarily closed. Some of the reasons restaurants may
be temporarily closed include reimaging or remodeling, rebuilding, road
construction and natural disasters. Comparable sales exclude the impact of
currency translation. Comparable sales are driven by changes in guest counts
and average check, which is affected by changes in pricing and product mix.
Typically, pricing has a greater impact on average check than product mix.
Management reviews the increase or decrease in comparable sales and comparable
guest counts compared with the same period in the prior year to assess
business trends. The number of weekdays and weekend days, referred to as the
calendar shift/trading day adjustment, can impact comparable sales and guest
counts. In addition, the timing of holidays can impact comparable sales and
guest counts.

Information in constant currency is calculated by translating current year
results at prior year average exchange rates. Management reviews and analyzes
business results excluding the effect of foreign currency translation and
bases incentive compensation plans on these results because they believe this
better represents the Company's underlying business trends.

RELATED COMMUNICATIONS

This press release should be read in conjunction with Exhibit 99.2 in the
Company's Form 8-K filing for supplemental information related to the
Company's results for the quarter ended June 30, 2014.

McDonald's Corporation will broadcast its investor conference call live over
the Internet at 10:00 a.m. Central Time on July 22, 2014. A link to the live
webcast will be available at www.investor.mcdonalds.com. There will also be an
archived webcast and podcast available for a limited time.

The Company plans to release July 2014 sales information on August 8, 2014.

ABOUT McDONALD'S

McDonald's is the world's leading global foodservice retailer with over 35,000
locations serving approximately 70 million customers in over 100 countries
each day. More than 80% of McDonald's restaurants worldwide are owned and
operated by independent local business men and women.

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 and current reports on Form 8-K.



McDONALD'S CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, except
per share data
Quarters Ended June 30,                2014        2013        Inc/ (Dec)
Revenues
Sales by Company-operated restaurants  $ 4,785.9   $ 4,761.4   $ 24.5    1%
Revenues from franchised restaurants   2,395.8     2,322.4     73.4      3
TOTAL REVENUES                         7,181.7     7,083.8     97.9      1
Operating costs and expenses
Company-operated restaurant expenses   3,969.8     3,919.5     50.3      1
Franchised restaurants—occupancy       427.6       399.1       28.5      7
expenses
Selling, general & administrative      629.2       607.0       22.2      4
expenses
Other operating (income) expense, net  (33.9)      (39.5)      5.6       15
Total operating costs and expenses     4,992.7     4,886.1     106.6     2
OPERATING INCOME                       2,189.0     2,197.7     (8.7)     0
Interest expense                       137.9       129.8       8.1       6
Nonoperating (income) expense, net     (20.4)      8.0         (28.4)    n/m
Income before provision for income     2,071.5     2,059.9     11.6      1
taxes
Provision for income taxes             684.4       663.4       21.0      3
NET INCOME                             $ 1,387.1   $ 1,396.5   $ (9.4)   (1)%
EARNINGS PER SHARE-DILUTED             $ 1.40      $ 1.38      $ 0.02    1%
Weighted average shares                993.2       1,008.7     (15.5)    (2)%
outstanding-diluted
n/m Not meaningful





McDONALD'S CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions,
except per share data
Six Months Ended June 30,             2014        2013        Inc/ (Dec)
Revenues
Sales by Company-operated restaurants $ 9,276.4   $ 9,206.8   $ 69.6     1%
Revenues from franchised restaurants  4,605.6     4,482.3     123.3      3
TOTAL REVENUES                        13,882.0    13,689.1    192.9      1
Operating costs and expenses
Company-operated restaurant expenses  7,736.9     7,645.5     91.4       1
Franchised restaurants—occupancy      844.7       794.3       50.4       6
expenses
Selling, general & administrative     1,249.6     1,203.5     46.1       4
expenses
Other operating (income) expense, net (74.2)      (101.4)     27.2       27
Total operating costs and expenses    9,757.0     9,541.9     215.1      2
OPERATING INCOME                      4,125.0     4,147.2     (22.2)     (1)
Interest expense                      273.4       257.9       15.5       6
Nonoperating (income) expense, net    (3.2)       12.6        (15.8)     n/m
Income before provision for income    3,854.8     3,876.7     (21.9)     (1)
taxes
Provision for income taxes            1,262.9     1,210.0     52.9       4
NET INCOME                            $ 2,591.9   $ 2,666.7   $ (74.8)   (3)%
EARNINGS PER SHARE-DILUTED            $ 2.61      $ 2.64      $ (0.03)   (1)%
Weighted average shares               994.6       1,009.9     (15.3)     (2)%
outstanding-diluted
n/m Not meaningful



SOURCE McDonald's Corporation

Website: http://www.mcdonalds.com
Contact: Investors, Kathy Martin, 630-623-7833, or Media, Heidi Barker,
630-623-3791
 
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