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McDONALD'S REPORTS RECORD RESULTS, EXPANSION ACCELERATES, OPERATING PERFORMANCE STRONG

 OAK BROOK, Ill., Oct. 21 /PRNewswire/ -- McDonald's Corporation (NYSE: MCD) today announced record results for the nine months and third quarter ended Sept. 30, 1993:
 -- NET RESTAURANT ADDITIONS FOR 1993 WILL BE CLOSE TO 900.
 -- NET INCOME GREW 12 PERCENT (YTD), 8 PERCENT (QTR).
 -- NET INCOME PER COMMON SHARE UP 10 PERCENT (YTD), 8 PERCENT (QTR).
 -- NET INCOME PER COMMON SHARE -- ADJUSTED FOR FOREIGN CURRENCIES
 AND TAXES -- ROSE 16 PERCENT (YTD), 19 PERCENT (QTR).
 -- OPERATING INCOME ON A LOCAL CURRENCY BASIS INCREASED 10 PERCENT
 (YTD), 13 PERCENT (QTR).
 -- OPERATING INCOME INCREASED 7 PERCENT (YTD), 6 PERCENT (QTR).
 -- RESTAURANTS IN OPERATION REACHED 13,669.
 -- SYSTEMWIDE SALES GREW 8 PERCENT (YTD), 6 PERCENT (QTR).
 Period Ended September 30
 Nine Months Third Quarter
 Percent Percent
 Dollars Increase Dollars Increase
 Net income per common
 share as reported $2.19 10 $ .85 8
 Impact of changing
 foreign currencies .07 .05
 Retroactive impact of
 U.S. tax law changes .04 .04
 Adjusted net income
 per common share $2.30 16 $ .94 19
 Period Ended September 30
 Nine Months Third Quarter
 Percent Percent
 Dollars Increase Dollars Increase
 Net income as reported $818.0 12 $310.9 8
 Impact of changing
 foreign currencies 24.5 16.1
 Retroactive impact of
 U.S. tax law changes 15.2 15.2
 Adjusted net income $857.7 17 $342.2 18
 KEY HIGHLIGHTS Nine Months Ended September 30
 (Dollars in millions, except Increase
 per common share amounts) 1993 1992 Dollars Percent
 Systemwide sales $17,441.2 $16,173.8 1,267.4 8
 Total revenues $ 5,476.2 $ 5,304.9 171.3 3
 Operating income $ 1,497.4 $ 1,405.9 91.5 7
 Net income $ 818.0 $ 730.7 87.3 12
 Net income per common share $ 2.19 $ 1.99 .20 10
 Third Quarter Ended September 30
 Increase
 1993 1992 Dollars Percent
 Systemwide sales $ 6,247.2 $ 5,871.3 375.9 6
 Total revenues $ 1,944.3 $ 1,912.5 31.8 2
 Operating income $ 568.2 $ 534.7 33.5 6
 Net income $ 310.9 $ 289.2 21.7 8
 Net income per common share $ .85 $ .79 .06 8
 SUMMARY COMMENTARY
 McDonald's business continued to show growth on a worldwide basis. The U.S. business benefited from the ongoing evolution of the value program established nationally in 1991, our focus on customer satisfaction and expansion. The international business benefited from expansion and higher sales at existing restaurants, but was hurt by weaker foreign currencies.
 We are pleased with our sales performance on a worldwide basis, reflecting excellent momentum in the third quarter. Net income per common share adjusted for the impact of changing foreign currencies and the retroactive impact of U.S. tax law changes rose 19 percent for the third quarter.
 CONSOLIDATED OPERATING RESULTS
 Net income and net income per common share increased 12 and 10 percent for the nine months, respectively. The 2 percentage point spread reflected the dilutive impact of the preferred stock issued last year. This spread has narrowed during the year as the full impact of share repurchase is realized; the $700 million common stock repurchase program was completed in July.
 Systemwide sales represent sales by company-operated, franchised and affiliated restaurants. The increases were due to new restaurant expansion and higher sales at existing restaurants worldwide, offset by weaker foreign currencies, one less day in 1993 since 1992 was a leap year and severe weather conditions worldwide in the first quarter.
 A total of 576 restaurants were added in 1993 (334 in 1992), including 254 in the U.S. (87 in 1992) and 322 outside of the U.S. (247 in 1992). An additional 355 restaurants were under construction at quarter-end (307 in 1992), including 125 in the U.S. (99 in 1992) and 230 outside of the U.S. (208 in 1992).
 The percent increases in revenues continued to register below the percent increases in Systemwide sales because of weaker foreign currencies and the increasing base of franchised restaurants worldwide, occurring primarily from expansion.
 Franchised restaurant margins comprised about two-thirds of the combined operating margins. Consolidated franchised margins improved to 83.2 percent of applicable revenues for the first nine months of 1993, compared to 82.7 percent one year ago, largely due to sales growth. For the third quarters, margins were 83.9 percent in 1993, and 83.4 percent in 1992.
 Consolidated company-operated margins were 19.2 percent of sales for the first nine months of 1993, compared to 19.1 percent in 1992. For the third quarters, margins were 20.3 percent in 1993, and 20.1 percent in 1992. For the nine months, as a percent of sales, food and paper costs increased; payroll, occupancy and other operating costs declined. For the quarter, as a percent of sales, food and paper and payroll costs increased; occupancy and other operating costs declined.
 The increases in general, administrative and selling expenses were due to higher employee costs associated with expansion and key priorities, offset by weaker foreign currencies.
 Other operating transactions relate to franchising and the food business such as gains on sales of restaurant businesses, equity in earnings of unconsolidated affiliates and other items:
 Period Ended September 30
 Nine Months Third Quarter
 (In millions of dollars) 1993 1992 1993 1992
 Gains on sales of
 restaurant businesses $(39.5) $(35.1) $(15.1) $(13.8)
 Equity in earnings of
 unconsolidated affiliates (27.9) (21.9) (15.6) (12.9)
 Other 1.9 (5.6) (.4) 5.0
 Other operating (income)
 expense--net $(65.5) $(62.6) $(31.1) $(21.7)
 The increases in consolidated operating income primarily reflected better results from franchised restaurants, partially offset by higher general, administrative and selling expenses and weaker foreign currencies.
 The decreases in interest expense were due to lower debt balances, weaker foreign currencies and lower interest rates.
 Nonoperating items were affected by $12.1 million in charges related to debt redemptions in the first quarter of 1992, and $9.1 million in gains throughout 1993.
 The effective income tax rate increased to 35.7 percent for 1993, compared to 33.8 percent for the years 1992 and 1991, primarily as a result of the U.S. tax law changes and lower foreign tax benefits. The effective tax rate for the third quarter was 37.8 percent, due to the $15.2 million retroactive adjustment to comply with the new law. Of this amount, $14.0 million was attributable to a one-time, noncash revaluation of deferred tax liabilities and $1.2 million related to periods prior to the third quarter. In addition, the impact of the U.S. tax law changes attributable to the third quarter was $2.4 million. The full-year impact on the 1993 income tax provision is expected to be $20.0 million.
 U.S. OPERATING RESULTS
 U.S. sales grew 7 percent for the nine months and quarter due to higher sales at existing restaurants and expansion. Sales and transaction counts were positively driven by the emphasis on value and customer satisfaction in the form of Extra-Value Meals, Happy Meals, "2 for $2" offers and the Burger of the Month program; as well as the NBA Fantasy Pack Trading Card, Happy Birthday Big Mac and Jurassic Park promotions. The loss of one day and severe weather conditions in the first quarter negatively impacted the results.
 U.S. revenues increased 4 percent for the nine months and 6 percent for the quarter, primarily as a result of strong sales, partially offset by the franchising of certain company-operated restaurant businesses in the first half of 1992.
 U.S. operating income increased 4 percent for the nine months and 8 percent for the quarter, as higher franchised and company-operated restaurant margins were partially offset by higher general, administrative and selling expenses.
 OPERATING RESULTS OUTSIDE OF THE U.S.
 Sales outside of the U.S. rose 9 percent for the nine months and 5 percent for the quarter due to expansion and higher sales at existing restaurants, but were hurt by weaker foreign currencies, the loss of one day and severe weather conditions in the first quarter. If exchange rates had remained at 1992 levels, sales outside of the U.S. would have increased 14 and 13 percent for the nine months and quarter, respectively. Many markets -- including Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, England, France, Germany, Hungary, Italy, Netherlands, New Zealand, Puerto Rico, Scotland, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey and Wales -- delivered excellent sales on a local currency basis.
 Pacific sales were strong with the exception of our affiliate in Japan which continues to be affected by a weak economy. Although many European economies showed weakness, many McDonald's markets performed well because of an emphasis on value, including England where sales growth over the past several quarters has been noteworthy. Latin American economies have been weak, but our business there has been improving. Canada continued to improve, despite a weak economy.
 Revenues outside of the U.S. increased 2 percent for the nine months and decreased 2 percent for the quarter, constrained by weaker foreign currencies especially in Europe, Canada and Australia. If exchange rates had remained at 1992 levels, revenues outside of the U.S. would have increased 12 percent for both periods.
 Operating income outside of the U.S. grew 9 percent for the nine months and 5 percent for the quarter reflecting higher franchised restaurant margins, partially offset by weaker foreign currencies. If exchange rates had remained at 1992 levels, operating income outside of the U.S. would have increased 18 and 19 percent for the nine months and quarter, respectively. The nine-month increase was affected by the favorable settlement of a sales tax case in Brazil recorded in second quarter 1992.
 IMPACT OF FOREIGN CURRENCIES ON REPORTED RESULTS
 Local currency results were strong. However, weaker foreign currencies continued to negatively impact consolidated operating results, most dramatically in the third quarter. European currencies, along with the Canadian and Australian Dollars, were primarily responsible for the impact in both periods. If exchange rates had remained at 1992 levels, the results would have been as follows:
 Nine Months Ended September 30, 1993
 (Dollars in millions) Reported Adjusted
 Dollars Percent Dollars Percent
 Systemwide sales $17,441.2 8 $17,761.0 10
 Operating income $ 1,497.4 7 $ 1,550.6 10
 Net income $ 818.0 12 $ 842.5 15
 Third Quarter Ended September 30, 1993
 Reported Adjusted
 Dollars Percent Dollars Percent
 Systemwide sales $ 6,247.2 6 $ 6,451.1 10
 Operating income $ 568.2 6 $ 602.5 13
 Net income $ 310.9 8 $ 327.0 13
 While changing foreign currencies impact reported results, McDonald's lessens short-term cash exposures by purchasing goods and services in local currencies, financing in local currencies and hedging foreign-denominated cash flows.
 McDONALD'S CORPORATION
 FINANCIAL INFORMATION
 Nine Months Ended September 30
 Increase(Decrease)
 (Dollars in millions) 1993 1992 Dollars Percent
 SYSTEMWIDE SALES
 U.S.
 Operated by franchisees $ 8,478.8 $ 7,843.9 634.9 8
 Operated by the company 1,794.5 1,757.1 37.4 2
 Operated by affiliates 239.9 204.4 35.5 17
 Total 10,513.2 9,805.4 707.8 7
 Outside of the U.S.
 Operated by franchisees 3,186.4 2,827.8 358.6 13
 Operated by the company 2,017.5 2,050.5 (33.0) (2)
 Operated by affiliates 1,724.1 1,490.1 234.0 16
 Total 6,928.0 6,368.4 559.6 9
 $17,441.2 $16,173.8 1,267.4 8
 By Type
 Operated by franchisees $11,665.2 $10,671.7 993.5 9
 Operated by the company 3,812.0 3,807.6 4.4 -
 Operated by affiliates 1,964.0 1,694.5 269.5 16
 Total $17,441.2 $16,173.8 1,267.4 8
 TOTAL REVENUES
 U.S. $ 2,915.4 $ 2,791.5 123.9 4
 Outside of the U.S. 2,560.8 2,513.4 47.4 2
 Total $ 5,476.2 $ 5,304.9 171.3 3
 OPERATING INCOME
 U.S. $ 824.9 $ 790.7 34.2 4
 Outside of the U.S. 672.5 615.2 57.3 9
 Total $ 1,497.4 $ 1,405.9 91.5 7
 Percent Contribution to Consolidated Margins
 Company-operated Franchised
 1993 1992 1993 1992
 U.S. 45 45 68 69
 Outside of the U.S. 55 55 32 31
 Total 100 100 100 100
 McDONALD'S CORPORATION
 RESTAURANT INFORMATION
 At September 30
 Increase(Decrease)
 1993 1992 Number Percent
 U.S.
 Operated by franchisees 7,555 7,267 288 4
 Operated by the company 1,434 1,402 32 2
 Operated by affiliates 224 182 42 23
 Total 9,213 8,851 362 4
 Outside of the U.S.
 Operated by franchisees 2,057 1,734 323 19
 Operated by the company 1,211 1,108 103 9
 Operated by affiliates 1,188 1,059 129 12
 Total 4,456 3,901 555 14
 13,669 12,752 917 7
 By Type
 Operated by franchisees 9,612 9,001 611 7
 Operated by the company 2,645 2,510 135 5
 Operated by affiliates 1,412 1,241 171 14
 Total 13,669 12,752 917 7
 Restaurants in Markets Outside of the U.S.
 Japan 1,016 908
 Canada 671 651
 Germany 462 406
 England 449 411
 Australia 370 320
 France 271 229
 Brazil 118 95
 Other 1,099 881
 Total 4,456 3,901
 McDONALD'S CORPORATION
 CONDENSED CONSOLIDATED STATEMENT OF INCOME
 (Dollars and shares in Nine Months Ended September 30
 millions, except per Increase(Decrease)
 common share amounts) 1993 1992 Dollars Percent
 SYSTEMWIDE SALES $17,441.2 $16,173.8 1,267.4 8
 Revenues
 Sales by company-
 operated restaurants $ 3,812.0 $ 3,807.6 4.4 -
 Revenues from
 franchised restaurants 1,664.2 1,497.3 166.9 11
 TOTAL REVENUES 5,476.2 5,304.9 171.3 3
 Operating costs and expenses
 Company-operated
 restaurants 3,079.3 3,082.1 (2.8) -
 Franchised restaurants 280.1 258.5 21.6 8
 General, administrative
 and selling expenses 684.9 621.0 63.9 10
 Other operating (income)
 expense--net (65.5) (62.6) (2.9) 5
 Total operating
 costs and expenses 3,978.8 3,899.0 79.8 2
 OPERATING INCOME 1,497.4 1,405.9 91.5 7
 Interest expense 237.4 287.2 (49.8) (17)
 Nonoperating income
 (expense)--net 12.7 (14.9) 27.6 NM
 Income before provision
 for income taxes 1,272.7 1,103.8 168.9 15
 Provision for income taxes 454.7 373.1 81.6 22
 NET INCOME $ 818.0 $ 730.7 87.3 12
 NET INCOME PER COMMON
 SHARE(A) $ 2.19 $ 1.99 .20 10
 Weighted average common
 shares outstanding 356.8 362.9
 (A) -- Computed using net income reduced by preferred stock dividends (net of tax) of $35.4 and $9.8 million for the nine months of 1993 and 1992, respectively.
 NM = Not Meaningful
 McDONALD'S CORPORATION
 CONDENSED CONSOLIDATED STATEMENT OF INCOME
 (Dollars and shares in Third Quarter Ended September 30
 millions, except per Increase(Decrease)
 common share amounts) 1993 1992 Dollars Percent
 SYSTEMWIDE SALES $ 6,247.2 $ 5,871.3 375.9 6
 Revenues
 Sales by company-
 operated restaurants $ 1,351.1 $ 1,366.9 (15.8) (1)
 Revenues from
 franchised restaurants 593.2 545.6 47.6 9
 TOTAL REVENUES 1,944.3 1,912.5 31.8 2
 Operating costs and expenses
 Company-operated restaurants 1,076.9 1,092.0 (15.1) (1)
 Franchised restaurants 95.7 90.4 5.3 6
 General, administrative
 and selling expenses 234.6 217.1 17.5 8
 Other operating (income)
 expense--net (31.1) (21.7) (9.4) 43
 Total operating
 costs and expenses 1,376.1 1,377.8 (1.7) -
 OPERATING INCOME 568.2 534.7 33.5 6
 Interest expense 75.7 97.0 (21.3) (22)
 Nonoperating income
 (expense)--net 7.2 (.8) 8.0 NM
 Income before provision
 for income taxes 499.7 436.9 62.8 14
 Provision for income taxes 188.8 147.7 41.1 28
 NET INCOME $ 310.9 $ 289.2 21.7 8
 NET INCOME PER COMMON
 SHARE(A) $ .85 $ .79 .06 8
 Weighted average common
 shares outstanding 352.9 363.6
 (A) -- Computed using net income reduced by preferred stock dividends (net of tax) of $11.7 and $3.0 million for the third quarters of 1993 and 1992, respectively.
 NM = Not Meaningful
 -0- 10/21/93
 /CONTACT: Sharon Vuinovich, investors, 708-575-3395, or Chuck Ebeling, media, 708-575-6150, both of McDonald's/
 (MCD)


CO: McDonald's Corp. ST: Illinois IN: LEI SU: ERN

BM -- CL011 -- 5017 10/21/93 09:24 EDT
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Date:Oct 21, 1993
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