01—Abstract
Summary
Summary of the 10-K/A filed April 5, 1994. Cited figures are marked; the original filing is the authoritative source.
McDonald's reported 1993 net income of $1,082.5 milliona, up 12.9% from $958.6 million in 1992 and 11.5% above 1991's $859.6 million.
After preferred stock dividends, net income available to common shareholders was $1,036.8 millionb, and fully diluted earnings per common share rose to $2.83 from $2.53, an increase of about 11.9%. This exhibit covers only the earnings-per-share computation, so it does not include revenue, margins, cash flow, or balance sheet data that would be needed for a complete assessment of the business. Per-share growth outpaced net income growth in 1993 because the share base shrank.
Weighted average common shares outstanding fell to 355.9 million from 363.2 million, a decline of about 2.0%c, which is consistent with share repurchases. Fully diluted shares fell to 366.7 million from 373.9 million. Together, the rise in net income and the lower share count produced the stronger EPS gain.
Preferred stock dividends rose sharply to $46.9 milliond in 1993 from $14.7 million in 1992, reducing earnings available to common shareholders. Investors should review the 10-K's financial statements and notes to understand the reason for this increase, including any new preferred issuance, and to assess how it affects future common earnings.
02—Key points
Key Highlights
- Net income rose 12.9% to $1,082.5 million in 1993, from $958.6 million in 1992.
- Fully diluted EPS increased to $2.83 in 1993 from $2.53 in 1992, roughly 11.9% growth, and up from $2.28 in 1991.
- Weighted average common shares outstanding declined about 2.0% to 355.9 million, indicating share repurchase activity that boosted per-share results.
- Preferred stock dividends more than tripled to $46.9 million from $14.7 million, a significant drag on income available to common shareholders.
- Net income available to common shareholders reached $1,036.8 million, up from $945.7 million in 1992, a gain of about 9.6%.
- Two-year earnings trend is consistently upward, with net income growing from $859.6 million in 1991 to $1,082.5 million in 1993.
- This exhibit does not include revenue, operating margin, cash flow, or balance sheet data, so it cannot confirm the drivers of underlying profitability.
03—Questions
Frequently Asked Questions
How much did McDonald's earnings per share grow in 1993?
Fully diluted earnings per common share rose to $2.83 in 1993 from $2.53 in 1992, an increase of about 11.9%. The 1992 figure was up from $2.28 in 1991.
Why did earnings per share grow faster than net income?
Net income grew about 12.9%, but fully diluted EPS grew about 11.9%, so the per-share gain was actually slightly smaller here. Share count reduction is a contributor, with weighted average common shares falling about 2.0%. However, higher preferred dividends of $46.9 million, compared with $14.7 million in 1992, reduced income available to common shareholders and offset part of the benefit.
Why did preferred stock dividends increase so much?
Preferred dividends rose to $46.9 million in 1993 from $14.7 million in 1992. This exhibit does not explain the cause. The main 10-K filing, including the notes on preferred stock and shareholders' equity, should be reviewed for details on any new issuance or changes in terms.
Did McDonald's reduce its share count in 1993?
Yes. Weighted average common shares outstanding fell to 355.9 million from 363.2 million, and fully diluted shares fell to 366.7 million from 373.9 million. The decline is consistent with share repurchases, though the exhibit does not state the cause directly.
What information is missing from this exhibit that investors should look for?
This exhibit only shows the per-share earnings computation. Investors should review the full 1993 10-K for revenue and sales trends, restaurant growth and franchising data, operating margins, cash flow, debt levels, and management's discussion of results and outlook.
04—Continue