10-KPeriod: FY2009

MCDONALDS CORP Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:MCD

Summary

McDonald's Corporation's 2009 10-K filing highlights a company navigating a challenging global economic environment with resilience. Despite economic headwinds, McDonald's demonstrated strength through comparable sales growth and improved operating margins. The company continued its strategic focus on enhancing customer experience through its 'Plan to Win,' emphasizing value, menu variety, and convenience. A key strategic move was the ongoing refranchising of restaurants, which shifts the business model towards a more asset-light, franchisor-centric approach, contributing to stable cash flow and improved returns. Financially, McDonald's reported solid performance with growth in operating income and net income per share, driven by both company-operated and franchised restaurants across its major geographic segments. The company also remained committed to returning capital to shareholders through dividends and share repurchases, reflecting confidence in its long-term financial health and growth prospects.

Financial Highlights

49 data points
Beta

Revenue

$22.74B

Net Income

$4.55B

20.0% Net Margin

EPS (Diluted)

$4.11

Total Assets

$30.22B

Cash & Equivalents

$1.80B

Free Cash Flow

$3.80B

Financial Statements
Beta
Revenue$22.74B
SG&A Expenses$2.23B
Operating Expenses$15.90B
Operating Income$6.84B
Interest Expense$473.20M
Net Income$4.55B
EPS (Basic)$4.17
EPS (Diluted)$4.11
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.11B

Key Highlights

  • 1Comparable sales grew by 3.8% and customer visits increased by 1.4% in 2009, demonstrating continued customer engagement despite economic challenges.
  • 2Combined operating margin improved by 2.7 percentage points to 30.1% in 2009, indicating enhanced operational efficiency.
  • 3Net income per share increased by 9% (13% in constant currencies) to $4.11, reflecting strong profitability.
  • 4The company returned $5.1 billion to shareholders in 2009 through dividends ($2.2 billion) and share repurchases ($2.9 billion), reinforcing its commitment to shareholder value.
  • 5McDonald's continued its refranchising strategy, increasing the percentage of franchised restaurants to 81% by year-end 2009, aiming for a more asset-light and stable cash flow model.
  • 6Investments in reimaging and new restaurant openings continued, with approximately 1,850 existing locations being re-imaged and 868 new restaurants opened (511 net) in 2009.
  • 7The company maintained a strong balance sheet with total assets of $30.2 billion and shareholders' equity of $14.0 billion.

Frequently Asked Questions

Despite a challenging global economy, McDonald's demonstrated resilience. Comparable sales grew by 3.8%, and operating income increased by 6% (10% in constant currencies). Net income per share rose by 9% to $4.11, and the company improved its combined operating margin to 30.1%. This performance was supported by strong execution of its 'Plan to Win' strategy and a focus on value and customer experience.

McDonald's continued its refranchising strategy, increasing the proportion of franchised restaurants to 81% of its total Systemwide restaurants. This strategy aims to create a more asset-light business model with stable, franchisor-based revenue streams. The company also continued to invest in growth, opening a net of 511 restaurants and re-imaging approximately 1,850 existing locations in 2009.

McDonald's demonstrated a strong commitment to returning capital to shareholders in 2009. The company returned a total of $5.1 billion, comprising $2.2 billion in dividends and $2.9 billion in share repurchases. This is part of a larger three-year target to return $15 billion to $17 billion to shareholders.

Key risks identified include the ability to remain a relevant and trusted brand, execute its 'Plan to Win,' and adapt to changing consumer preferences and global economic conditions. Other significant risks involve increasing regulatory complexity worldwide, potential adverse effects from litigation (e.g., related to nutrition), and stock price volatility influenced by various market and economic factors.