SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 1999
McDONALD'S CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 1-5231 36-2361282
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
One McDonald's Plaza
Oak Brook, Illinois 60523
(630) 623-3000
(Address and Phone Number of Principal Executive Offices)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibit
-------
(99) Press Release dated October 21, 1999 -- McDonald's Reports 15%
Increase in Net Income Per Share
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
McDONALD'S CORPORATION
(Registrant)
By: /s/ Gloria Santona
---------------------------------
Gloria Santona
Vice President, Deputy General
Counsel and Secretary
EXHIBIT 99
Investor Release
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
10/21/99 Investors: Mary Kay Shaw, 630-623-7559
Media: Chuck Ebeling, 630-623-6150
McDONALD'S REPORTS 15% INCREASE IN NET INCOME PER SHARE
OAK BROOK, IL -- McDonald's Corporation today reported diluted net income
per common share increased 15 percent for the quarter ended September 30,
1999.
- - Diluted net income per common share was 39 cents for the quarter, up
15 percent, as reported and in constant currencies.
- - Operating income rose nine percent for the quarter; 11 percent in
constant currencies.
- - Nearly 12,000 restaurants, including all Canadian and more than
85 percent of U.S. restaurants, are currently using the Made for You food
preparation system.
- - Sales for the quarter were up 19 percent in Latin America, 10 percent in
Europe and six percent in Asia/Pacific in constant currencies. U.S. sales
increased six percent for the quarter.
- - For the quarter, operating income increased 11 percent in the U.S. and
in constant currencies, 12% in Europe, nine percent in Asia/Pacific and
one percent in Latin America. Excluding Russia, Europe's operating income
increased 15 percent in constant currencies.
Information in constant currencies excludes the effect of foreign currency
translation on reported results, except for hyperinflationary economies,
such as Russia, whose functional currency is the U.S. dollar.
Key highlights - Consolidated 1999 1998 Increase
Dollars in millions, except per As In Constant
common share data Reported Currencies*
Quarters ended September 30
Systemwide sales $9,997.8 $9,246.2 8% 8%
Total revenues 3,444.2 3,215.0 7 10
Operating income 907.7 835.2 9 11
Net income 540.9 482.2 12 14
Net income per common
share - diluted .39 .34 15 15
*Excluding the effect of foreign currency translation on reported results.
Key highlights - 1999 1998 Increase
Consolidated ------------------------------
Excluding 1998
Dollars in millions, except special charge (1)
per common share data As In Constant
Reported Adjusted Currencies*
Nine months ended September 30
Systemwide sales $28,741.0 $26,663.5 8% 8% 8%
Total revenues 9,886.4 9,200.7 7 7 10
Operating income 2,502.8 2,124.7 18 10 11
Net income 1,461.7 1,201.6 22 11 13
Net income per
common share - diluted 1.04 .85 22 12 13
* Excluding the effect of foreign currency translation on reported results.
(1) Excluding the second quarter 1998 $160 million special charge ($110
million after tax or $.08 per diluted share) related to the home office
productivity initiative.
SUMMARY COMMENTARY
Chairman and Chief Executive Officer Jack M. Greenberg commented,
"McDonald's third quarter results reflect the continued strong performance
of our U.S. business and our success internationally, despite the difficult
economic environment in several areas of the world. We remain on track to
add approximately 1,750 restaurants in 1999, with about 90% outside the
U.S.
"I'd like to share several important milestones we achieved recently,
as further evidence of McDonald's strength. We celebrated the opening of
our 25,000th restaurant worldwide in Chicago. We opened our 3,000th
restaurant in Japan, our 1,000th in Germany and soon will open our 1,000th
restaurant in the U.K. The 200th Ronald McDonald House was opened in
Budapest, Hungary. And, we are also pleased to announce the opening of
Hamburger University in Brazil.
"In addition, it's my pleasure to welcome the Donatos and Chipotle
families to McDonald's, as we closed on the acquisition of Donatos Pizza
and acquired a majority interest in Chipotle. I am very proud of our
McDonald's family in Taiwan, Turkey, the Southeastern U.S. and other areas.
They have fed thousands by donating food and water and taking time to
assist relief efforts from natural disasters."
Jim Cantalupo, Vice Chairman McDonald's Corporation, Chairman and
Chief Executive Officer - McDonald's International said, "Consolidated
operating income for the quarter increased 11 percent in constant
currencies. The U.S. and Europe segments combined accounted for nearly 80
percent of operating income. The U.S. contributed an 11 percent operating
income increase and Europe contributed 12 percent in constant currencies.
France, Germany, Italy, Spain and the U.K. all reported strong results,
contributing to Europe's increase. Excluding Russia, Europe's operating
income increased 15 percent in constant currencies.
"Asia/Pacific's operating income increased nine percent in constant
currencies, despite Japan's economic weakness and difficult comparisons
with strong third quarter 1998 price-value promotions. We continue to gain
market share and achieve economies of scale as our long-term approach
positions us for the future. Strong results in Australia, along with
improved results in several Southeast Asia markets, contributed to the
increase.
"Latin America's results were adversely affected by the devaluation
and difficult economic conditions in Brazil. But, we are seeing
improvement in Brazil and are optimistic that we will continue to improve
going forward."
Alan Feldman, President - McDonald's USA said, "I'm excited that we
have been able to maintain our momentum in this tough U.S. competitive
environment. We had great success this quarter with our Inspector Gadget
promotion, an innovative idea in Happy Meal premiums, which expanded our
kids business. Our fourth quarter marketing calendar is equally exciting,
featuring a tie-in with Toy Story II, a Disney movie in December.
"Our Made for You food preparation system is in nearly 11,000, or more
than 85%, of our U.S. restaurants. We are on track to have virtually all
U.S. restaurants converted by year end. Our owner/operators and customers
are pleased with the improvements in food quality that Made for You
brings."
NET INCOME AND NET INCOME PER COMMON SHARE - DILUTED
Net income and diluted net income per common share increased 12 and 15
percent for the quarter, respectively (14 and 15 percent in constant
currencies). For the nine months, net income increased 11 percent and
diluted net income per common share increased 12 percent (13 percent for
both in constant currencies), excluding the $160 million second quarter
1998 special charge related to the home office productivity initiative
($110 million after tax or $.08 per diluted share). Including the second
quarter 1998 special charge, both reported net income and diluted net
income per common share increased 22 percent for the nine months.
Weighted average shares outstanding for the third quarter and the nine
months were lower compared with the prior year, due to the Company's share
repurchase program. During the first nine months of 1999, the Company
repurchased 17.5 million shares of its common stock for approximately
$654 million, under its three-year, $3.5 billion program, which is
scheduled to be completed by the end of 2001.
OPERATING RESULTS
McDonald's operates primarily in the quick-service hamburger
restaurant business, which we refer to as "Brand McDonald's". The Company
also operates other branded restaurants: Donatos Pizza, Chipotle Mexican
Grill and Aroma Cafe. Collectively these three businesses are referred to
as "Other Brands". For the quarter and nine months ended September 30,
1999, Brand McDonald's comprised virtually all of consolidated operating
results.
The following discussion includes only Brand McDonald's. Refer to the
table on page nine for summarized financial information of our Other
Brands.
Systemwide Sales and Revenues
Systemwide sales represent sales by Company-operated, franchised and
affiliated restaurants. Total revenues include sales by Company-operated
restaurants and fees from restaurants operated by franchisees and
affiliates. These fees include rent, service fees and royalties that are
based on a percent of sales with specified minimum payments along with
initial fees.
On a global basis, the increases in sales and revenues for the quarter
and nine months were due to expansion and positive comparable sales.
Foreign currency translation had no impact on the total Systemwide sales
growth rate for either the quarter or the nine months. However, it had a
negative impact on the growth rate in revenues for both periods, primarily
because the stronger Japanese Yen had a greater positive currency
translation effect on sales. This is due to our affiliate structure in
Japan. Under this structure, we record a service fee in revenues based on
a percentage of Japan's sales, whereas 100 percent of its sales are
included in Systemwide sales. On a constant currency basis, revenues
increased at a higher rate than sales in both periods due to the higher
unit growth rate of Company-operated restaurants outside the U.S. relative
to Systemwide restaurants.
Systemwide sales -
Brand McDonald's
Dollars in millions 1999 1998 Increase/(Decrease)
As In Constant
Reported Currencies*
Quarters ended September 30
U.S. $ 4,870.8 $ 4,600.9 6% n/a
Europe 2,458.1 2,349.4 5 10%
Asia/Pacific 1,725.1 1,416.0 22 6
Latin America 431.9 445.8 (3) 19
Other 475.6 434.1 10 9
Total Systemwide sales $ 9,961.5 $ 9,246.2 8% 8%
Nine months ended September 30
U.S. $14,324.0 $13,639.7 5% n/a
Europe 7,107.2 6,481.4 10 12%
Asia/Pacific 4,738.7 4,046.9 17 7
Latin America 1,227.6 1,276.6 (4) 17
Other 1,297.4 1,218.9 6 9
Total Systemwide sales $28,694.9 $26,663.5 8% 8%
* Excluding the effect of foreign currency translation on reported results.
n/a Not applicable
U.S. sales increased due to positive comparable sales and restaurant
expansion for the quarter and the nine months. Successful promotions such
as Furby, Teenie Beanie Babies, Winnie the Pooh, Tarzan and Inspector
Gadget, combined with local market initiatives, such as our breakfast bagel
sandwich launch in nearly 50 percent of the U.S. restaurants, contributed
to the sales increases.
In Europe, positive comparable sales and expansion drove the constant
currency sales increases for the quarter and the nine months. Strong
performances in France, Germany, Italy, Spain, and the U.K. drove these
increases in both periods.
In Asia/Pacific, the constant currency sales increases were driven by
expansion, partly offset by negative comparable sales for the quarter and
nine months. Expansion in Japan, as well as positive comparable sales in
Australia and South Korea, contributed to the segment's sales increases in
both periods.
In Latin America, positive comparable sales and expansion drove the
constant currency sales increase for the quarter. The results for the nine
months were driven by expansion, partly offset by negative comparable
sales. Brazil contributed to the increases due to expansion for both
periods and positive comparable sales for the quarter. Both periods
benefited from continued positive comparable sales in Mexico and Venezuela.
Combined Operating Margins
Combined operating margins - Quarters ended Nine months ended
Brand McDonald's September 30 September 30
1999 1998 1999 1998
Dollars in millions
Company-operated $ 455.3 $ 437.5 $1,265.3 $1,215.1
Franchised 782.7 737.3 2,252.5 2,113.7
Combined operating margins $1,238.0 $1,174.8 $3,517.8 $3,328.8
Percent of sales/revenues
Company-operated 18.6% 19.0% 17.9% 18.4%
Franchised 80.7 81.1 80.5 81.0
Combined operating margin dollars increased $63 million, or five
percent for the quarter and $189 million, or six percent for the nine
months. These increases were primarily driven by expansion and positive
comparable sales.
Company-operated margins as a percent of sales decreased for both
periods. Food & paper costs as a percent of sales increased for the
quarter and were flat for the nine months. Payroll costs increased as a
percent of sales for both periods, while occupancy & other expenses as a
percent of sales were flat for the quarter and increased for the nine
months.
As a percent of sales, U.S. Company-operated margins decreased for the
quarter and increased for the nine months. Food & paper costs as a percent
of sales decreased for both periods, while payroll costs increased for both
periods. Occupancy & other operating expenses increased for the quarter
and were flat for the nine months.
Outside the U.S., Company-operated margins decreased as a percent of
sales for the quarter and nine months. As a percent of sales, food & paper
and payroll costs increased for the quarter and nine months, while
occupancy & other operating expenses were flat for the quarter and
increased for the nine months. Economic difficulties in Brazil and Russia
negatively impacted the Company-operated margin percent outside the U.S.,
accounting for about 70 percent of the decline for both periods.
Franchised margin dollars comprised more than 60 percent of the
combined operating margins for both periods, the same as in the prior year.
Franchised margin dollars increased six percent for the quarter and seven
percent for the nine months, while franchised margins as a percent of
applicable revenues decreased for the quarter and the nine months.
As a percent of revenues, U.S. franchised margins increased for the
quarter and the nine months, primarily due to positive comparable sales
growth. Higher occupancy costs and the consolidation, for financial
reporting purposes, of Sweden in 1999 negatively affected the franchised
margin percent outside the U.S. in both periods.
Selling, General & Administrative Expenses
Selling, general & administrative expenses increased two percent for
the quarter and were flat for the nine months. In the U.S., selling,
general & administrative expenses decreased for both periods due to savings
as a result of the home office productivity initiative. This decrease was
less in the quarter than for the nine months since the productivity
initiative savings were realized beginning in third quarter 1998 and due to
an increase in performance based incentive compensation in third quarter
1999. Outside the U.S., selling, general & administrative expenses
increased at a rate substantially less than the sales growth rates for both
periods. The consolidation, for financial reporting purposes, of Sweden in
1999 and spending to support restaurant development primarily drove the
increases. As a result of the home office productivity initiative, the
Company expects to save about $100 million of selling, general &
administrative expenses per year, beginning in 2000, with about two-thirds
of the annual savings expected to be realized in 1999. About $15 million
of these savings were realized in 1998.
Other Operating (Income) Expense
Other operating (income) expense - Quarters ended Nine months ended
Brand McDonald's September 30 September 30
Dollars in millions 1999 1998 1999 1998
Gains on sales of restaurant
businesses $(16.2) $(10.5) $ (38.6) $(32.5)
Equity in earnings of
unconsolidated affiliates (36.5) (31.5) (111.7) (65.9)
Other (income) expense 9.8 12.5 75.1 60.5
Other operating (income)
expense $(42.9) $(29.5) $ (75.2) $(37.9)
Made for You costs $ 7.0 $ 10.6 $ 17.3 $ 15.6
Special charge - - - $160.0
Other operating (income) expense consists of transactions related to
franchising and the food service business. The increase for the nine
months in equity in earnings of unconsolidated affiliates was primarily due
to a second quarter gain from the sale of real estate in a U.S.
partnership. Results in Japan, which benefited from a lower effective tax
rate and the stronger Japanese Yen, also contributed to the increases for
both periods. Costs associated with implementation of the Made for You
food preparation system related primarily to accelerated depreciation on
equipment being replaced in U.S. Company-operated restaurants. The special
charge in the second quarter 1998 reflected employee severance and
outplacement, consolidation of facilities and other costs in connection
with the home office productivity initiative.
Operating Income
Operating income increased $74 million, or nine percent for the
quarter, and $221 million, or ten percent for the nine months, excluding
the second quarter 1998 special charge. For both periods, these increases
were primarily driven by higher combined operating margin dollars and
higher other operating income, partly offset by weaker foreign currencies.
Operating income - 1999 1998 Increase/(Decrease)
Brand McDonald's (1)
Dollars in millions As In Constant
Reported Currencies*
Quarters ended September 30
U.S. $ 389.6 $ 350.6 11% n/a
Europe 324.8 303.7 7 12%
Asia/Pacific 119.8 98.9 21 9
Latin America 36.5 46.4 (21) 1
Other 38.3 35.6 8 7
Total operating income $ 909.0 $ 835.2 9% 11%
Nine months ended September 30
U.S. (2) $1,132.8 $ 846.3 34% n/a
Europe 881.1 806.1 9 12%
Asia/Pacific 305.0 254.7 20 12
Latin America 94.1 124.5 (24) (4)
Other 92.4 93.1 (1) 1
Total operating income (2) $2,505.4 $2,124.7 18 19
* Excluding the effect of foreign currency translation on reported results.
(1) For financial reporting purposes, Corporate selling, general &
administrative expenses (costs related to home office support of the
Company's global business) were allocated to the various geographic
segments, beginning in 1999. Prior year amounts have been restated to
conform to this presentation.
(2) Excluding the second quarter 1998 $160 million special charge related
to the home office productivity initiative, U.S. operating income increased
13% and total operating income increased 10%, 11% in constant currencies.
n/a Not applicable
U.S. operating income increased $39 million, or 11 percent for the
quarter and increased $127 million, or 13 percent for the nine months,
excluding the second quarter 1998 special charge. The increases in both
periods were driven by higher combined operating margin dollars, higher
other operating income and lower selling, general & administrative
expenses.
Europe's operating income increased 12 percent for both the quarter
and nine months in constant currencies. The strong results in France,
Germany, Italy, Spain and the U.K. drove this segment's performance in both
periods. Additionally, Europe's operating income benefited from the
consolidation of Sweden, due to an increase in ownership, but was dampened
by the difficult economic conditions in Russia, which began in September
1998. Excluding Russia, Europe's constant currency operating income
increased 15 percent for the quarter and 16 percent for the nine months.
Operating income in Asia/Pacific increased nine percent for the
quarter and 12 percent for the nine months in constant currencies, despite
Japan's economic weakness and difficult comparisons with strong third
quarter 1998 price-value promotions. For the quarter, the increase was
primarily due to strong results in Australia and improved results in China,
and for the nine months the increase was primarily due to Japan, which
benefited from a lower effective tax rate. In both periods, improved
results in several Southeast Asia markets contributed to the increases.
The late September earthquake in Taiwan will likely temper fourth
quarter results for Asia/Pacific, due primarily to its temporary negative
impact on consumer spending patterns.
Latin America's operating income increased one percent for the quarter
and decreased four percent for the nine months in constant currencies.
Difficult economic conditions in Brazil and other parts of the region,
along with Brazil's currency devaluation, had a significant adverse effect
on this segment's operating results. We are cautiously optimistic that
improvements in the Brazilian economy and actions we have taken will
continue to improve operating results as we move forward. Mexico and
Venezuela contributed positively to this segment's performance with strong
results in both periods.
Summary of Operating Results by Brand
The following table summarizes key operating results of Brand
McDonald's and our Other Brands.
Summary of Operating Results by Brand
Dollars in millions Brand Other
McDonald's Brands Consolidated
Quarter ended September 30, 1999
Systemwide sales $ 9,961.5 $36.3 $ 9,997.8
Revenues 3,422.0 22.2 3,444.2
Combined operating margins 1,238.0 3.8 1,241.8
Selling, general & administrative
expenses 364.9 3.1 368.0
Operating income (loss) $ 909.0 $(1.3) $ 907.7
Nine months ended September 30, 1999
Systemwide sales $28,694.9 $46.1 $28,741.0
Revenues 9,864.2 22.2 9,886.4
Combined operating margins 3,517.8 3.8 3,521.6
Selling, general & administrative
expenses 1,070.3 3.1 1,073.4
Operating income (loss) $ 2,505.4 $(2.6) $ 2,502.8
INTEREST AND NONOPERATING EXPENSE AND INCOME TAXES
Lower interest expense in both periods reflected lower average
interest rates and weaker foreign currencies, partly offset by higher debt
levels.
Nonoperating (income) expense reflected lower translation losses for
the quarter compared with 1998, and higher translation losses for the nine
months.
The effective income tax rate was 32.4 percent for the quarter and
32.8 percent for the nine months of 1999 compared with 32.8 percent for the
quarter and 32.9 percent for the nine months of 1998.
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.
The primary currencies positively affecting reported results in both
periods were the Australian Dollar, the Japanese Yen and the Southeast
Asian currencies. The Brazilian Real, the British Pound, and the Euro,
which encompasses 11 of our European markets including Germany and France,
had a negative effect on reported results in both periods.
Effect of foreign currency translation on
worldwide reported results - Consolidated Increase
Dollars in millions, Over Prior Period
except per common As In Constant As In Constant
share data Reported Currencies* Change Reported Currencies*
Quarter ended September 30, 1999
Systemwide sales $ 9,997.8 $ 9,994.0 $ (3.8) 8% 8%
Total revenues 3,444.2 3,532.1 87.9 7 10
Operating income 907.7 922.9 15.2 9 11
Net income 540.9 550.7 9.8 12 14
Net income per common
share - diluted .39 .39 - 15 15
Nine months ended September 30, 1999
Systemwide sales $28,741.0 $28,783.1 $ 42.1 8% 8%
Total revenues 9,886.4 10,091.4 205.0 7 10
Operating income (1) 2,502.8 2,530.9 28.1 10 11
Net income (1) 1,461.7 1,481.7 20.0 11 13
Net income per common
share - diluted (1) 1.04 1.05 .01 12 13
* Excluding the effect of foreign currency translation on reported results.
(1) The percentage increase over the prior period excludes the second
quarter 1998 $160 million special charge ($110 million after tax or $.08
per diluted share) related to the home office productivity initiative.
FORWARD-LOOKING STATEMENTS
Certain forward-looking statements are included in this report. They
use such words as "may," "will," "expect," "believe," "plan" and other
similar terminology. These statements reflect management's current
expectations and involve a number of risks and uncertainties. Actual
results could differ materially due to the effectiveness of operating
initiatives, advertising and promotional efforts, and Year 2000 compliance
and Euro conversion efforts of the Company, its owner/operators, suppliers
and service providers, as well as changes in: global and local business
and economic conditions; currency exchange and interest rates; food, labor
and other operating costs; political or economic instability in local
markets; competition; consumer preferences, spending patterns and
demographic trends; availability and cost of land and construction;
legislation and government regulation; and accounting policies and
practices.
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, except per common share data
- --------------------------------------------------------------------
Inc/(Dec)
Quarters ended September 30, 1999 1998 $ %
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SYSTEMWIDE SALES $9,997.8 $9,246.2 751.6 8
Revenues
Sales by Company-operated
restaurants 2,474.4 2,305.7 168.7 7
Revenues from franchised
and affiliated restaurants 969.8 909.3 60.5 7
TOTAL REVENUES 3,444.2 3,215.0 229.2 7
Operating costs and expenses
Company-operated restaurants 2,015.6 1,868.2 147.4 8
Franchised restaurants --
occupancy costs 186.8 172.0 14.8 9
Selling, general &
administrative expenses 368.0 358.5 9.5 3
Other operating (income)
expense (40.9) (29.5) (11.4) n/m
Made for You costs 7.0 10.6 (3.6) n/m
Total operating costs
and expenses 2,536.5 2,379.8 156.7 7
OPERATING INCOME 907.7 835.2 72.5 9
Interest expense 95.4 102.8 (7.4) (7)
Nonoperating (income) expense 12.0 15.1 (3.1) n/m
Income before provision
for income taxes 800.3 717.3 83.0 12
Provision for income taxes 259.4 235.1 24.3 10
NET INCOME $ 540.9 $ 482.2 58.7 12
NET INCOME PER COMMON SHARE $ 0.40 $ 0.35* 0.05 14
NET INCOME PER
COMMON SHARE-DILUTED $ 0.39 $ 0.34* 0.05 15
Weighted average common
shares outstanding 1,354.7 1,362.1*
Weighted average common
shares outstanding-diluted 1,403.1 1,404.7*
* Restated for 2-for-1 common stock split in March 1999.
n/m Not meaningful
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, except per common share data
- --------------------------------------------------------------------
Inc/(Dec)
Nine months ended September 30, 1999 1998 $ %
- --------------------------------------------------------------------
SYSTEMWIDE SALES $28,741.0 $26,663.5 2,077.5 8
Revenues
Sales by Company-operated
restaurants 7,087.6 6,590.4 497.2 8
Revenues from franchised
and affiliated restaurants 2,798.8 2,610.3 188.5 7
TOTAL REVENUES 9,886.4 9,200.7 685.7 7
Operating costs and expenses
Company-operated restaurants 5,818.8 5,375.3 443.5 8
Franchised restaurants --
occupancy costs 546.0 496.6 49.4 10
Selling, general &
administrative expenses 1,073.4 1,066.4 7.0 1
Other operating (income)
expense (71.9) (37.9) (34.0) n/m
Made for You costs 17.3 15.6 1.7 n/m
Special charge - 160.0 (160.0) n/m
Total operating costs
and expenses 7,383.6 7,076.0 307.6 4
OPERATING INCOME (1) 2,502.8 2,124.7 378.1 18
Interest expense 298.1 312.0 (13.9) (4)
Nonoperating (income) expense 30.9 21.4 9.5 n/m
Income before provision
for income taxes 2,173.8 1,791.3 382.5 21
Provision for income taxes 712.1 589.7 122.4 21
NET INCOME (1) $ 1,461.7 $ 1,201.6 260.1 22
NET INCOME PER
COMMON SHARE (1) $ 1.08 $ 0.88* 0.20 23
NET INCOME PER
COMMON SHARE-DILUTED (1) $ 1.04 $ 0.85* 0.19 22
Weighted average common
shares outstanding 1,355.8 1,369.0*
Weighted average common
shares outstanding-diluted 1,405.4 1,408.4*
* Restated for 2-for-1 common stock split in March 1999.
n/m Not meaningful
(1) Excluding the second quarter 1998 special charge, operating income
increased 10%, net income increased 11%, net income per common share
increased 13% and net income per common share - diluted increased 12%.
MCDONALD'S CORPORATION FINANCIAL INFORMATION - BRAND MCDONALD'S
Dollars in millions
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Inc/(Dec)
Quarters ended September 30, 1999 1998 $ %
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SYSTEMWIDE SALES
By Type
Operated by franchisees $ 6,154.6 $ 5,740.4 414.2 7
Operated by the Company 2,452.5 2,305.7 146.8 6
Operated by affiliates 1,354.4 1,200.1 154.3 13
$ 9,961.5 $ 9,246.2 715.3 8
TOTAL REVENUES
By Segment
U.S. $ 1,303.1 $ 1,240.9 62.2 5
Europe 1,258.0 1,165.1 92.9 8
Asia/Pacific 503.9 434.2 69.7 16
Latin America 174.2 203.7 (29.5) (14)
Other 182.8 171.1 11.7 7
$ 3,422.0 $ 3,215.0 207.0 6
Inc/(Dec)
Nine months ended September 30, 1999 1998 $ %
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SYSTEMWIDE SALES
By Type
Operated by franchisees $17,853.1 $16,602.0 1,251.1 8
Operated by the Company 7,065.7 6,590.4 475.3 7
Operated by affiliates 3,776.1 3,471.1 305.0 9
$28,694.9 $26,663.5 2,031.4 8
TOTAL REVENUES
By Segment
U.S. $ 3,834.2 $ 3,659.7 174.5 5
Europe 3,651.3 3,253.3 398.0 12
Asia/Pacific 1,374.2 1,209.1 165.1 14
Latin America 503.6 593.4 (89.8) (15)
Other 500.9 485.2 15.7 3
$ 9,864.2 $ 9,200.7 663.5 7
MCDONALD'S CORPORATION FINANCIAL INFORMATION - BRAND MCDONALD'S
RESTAURANT MARGINS
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Quarters ended Nine months ended
September 30 September 30
1999 1998 1999 1998
- ---------------------------------------------------------------------------
Company-operated
U.S. 17.2% 17.5% 17.8% 17.7%
Outside the U.S. 19.2% 19.6% 18.0% 18.8%
Franchised
U.S. 81.2% 80.9% 81.3% 81.2%
Outside the U.S. 80.1% 81.3% 79.4% 80.6%
% CONTRIBUTION TO
CONSOLIDATED MARGINS
- ---------------------------------------------------------------------------
Quarters ended Nine months ended
September 30 September 30
1999 1998 1999 1998
- ---------------------------------------------------------------------------
Company-operated
U.S. 28 29 31 31
Outside the U.S. 72 71 69 69
100 100 100 100
Franchised
U.S. 57 57 58 59
Outside the U.S. 43 43 42 41
100 100 100 100
MCDONALD'S CORPORATION RESTAURANT INFORMATION - BRAND MCDONALD'S
- -------------------------------------------------------------
At September 30, 1999 1998 Inc/(Dec)
- -------------------------------------------------------------
By Type
Operated by franchisees 15,713 14,932 781
Operated by the Company 5,909 5,350 559
Operated by affiliates 4,137 3,847 290
Systemwide restaurants 25,759 24,129 1,630
By Segment
U.S. 12,529 12,424 105
Europe
Germany 972 894 78
England 842 776 66
France 756 692 64
Italy 222 182 40
Spain 204 168 36
Netherlands 192 179 13
Sweden 191 171 20
Poland 150 113 37
Other 1,160 1,025 135
Total Europe 4,689 4,200 489
Asia/Pacific
Japan 3,073 2,679 394
Australia 674 662 12
Taiwan 317 284 33
China 244 213 31
Philippines 206 183 23
Hong Kong 158 145 13
South Korea 158 129 29
Other 569 571 (2)
Total Asia/Pacific 5,399 4,866 533
Latin America
Brazil 805 568 237
Argentina 186 155 31
Mexico 158 140 18
Other 471 394 77
Total Latin America 1,620 1,257 363
Other
Canada 1,111 1,063 48
Other 411 319 92
Total Other 1,522 1,382 140
Systemwide restaurants 25,759 24,129 1,630
Countries 117 113
MCDONALD'S CORPORATION RESTAURANT INFORMATION - OTHER BRANDS
- ------------------------------------------------------------------
At September 30, 1999 1998 Increase
- ------------------------------------------------------------------
Donatos Pizza 147 * 147
Chipotle Mexican Grill 29 16 13
Aroma Cafe 19 * 19
Total Other Brands 195 16 179
*Business acquired in 1999.
MCDONALD'S CORPORATION RESTAURANT INFORMATION - BRAND MCDONALD'S
- ------------------------------------------------
Quarters ended September 30, 1999 1998
- ------------------------------------------------
Additions
U.S. 39 18
Europe 131 124
Asia/Pacific 138 142
Latin America 66 97
Other 44 22
Systemwide additions 418 403
- ------------------------------------------------
Nine months ended September 30, 1999 1998
- ------------------------------------------------
Additions
U.S. 57 44
Europe 268 314
Asia/Pacific 344 410
Latin America 215 166
Other 75 63
Systemwide additions 959 997
