10-QPeriod: Q2 FY2011

MCDONALDS CORP Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:MCD

Summary

McDonald's Corporation (MCD) reported strong financial results for the second quarter and first six months of 2011, demonstrating robust growth driven by an increase in comparable sales across all major geographic segments. Total revenues saw a significant increase, supported by both company-operated and franchised restaurant sales, with constant currency growth highlighting the underlying business strength. Diluted earnings per share also saw a healthy increase, reflecting operational efficiency and effective cost management. The company continued its commitment to returning value to shareholders through substantial share repurchases and dividend payments. Despite a challenging global economic environment, McDonald's "Plan to Win" strategy, focusing on customer experience, product innovation, and operational excellence, continues to drive positive performance and market share gains.

Financial Highlights

47 data points
Beta

Revenue

$6.91B

Net Income

$1.41B

20.4% Net Margin

EPS (Diluted)

$1.35

Total Assets

$32.83B

Cash & Equivalents

$2.07B

Free Cash Flow

$1.05B

Financial Statements
Beta
Revenue$6.91B
SG&A Expenses$588.00M
Operating Expenses$4.72B
Operating Income$2.19B
Interest Expense$121.80M
Net Income$1.41B
EPS (Basic)$1.36
EPS (Diluted)$1.35
Shares Outstanding (Basic)1.04B
Shares Outstanding (Diluted)1.05B

Key Highlights

  • 1Total revenues increased by 16% (8% in constant currencies) for the quarter and 13% (8% in constant currencies) for the six months ended June 30, 2011, driven by comparable sales growth and expansion.
  • 2Global comparable sales increased by 5.6% for the quarter and 4.9% for the six months, with all geographic segments (U.S., Europe, APMEA) contributing positively.
  • 3Diluted earnings per share (EPS) rose by 19% to $1.35 for the quarter and by 17% to $2.49 for the six months, demonstrating improved profitability.
  • 4The company repurchased $743.9 million of common stock in the second quarter, totaling $2.1 billion for the first six months of 2011, alongside dividend payments of $632.0 million for the quarter.
  • 5Company-operated restaurant margins increased by 12% (3% in constant currencies) for the quarter, while franchised margins increased by 15% (8% in constant currencies), indicating improved profitability across both operational models.
  • 6Operating income saw a substantial increase of 19% (11% in constant currencies) for the quarter and 14% (9% in constant currencies) for the six months.
  • 7The company maintained a strong cash flow from operations, totaling $3.2 billion for the first six months, which comfortably covered capital expenditures.

Frequently Asked Questions

McDonald's reported a 16% increase in total revenues for the second quarter of 2011, reaching $6,905.4 million, and a 13% increase for the first six months, totaling $13,017.0 million. Excluding the impact of currency translation, constant currency revenue growth was 8% for both periods, indicating strong underlying business performance.

Comparable sales increased across all geographic segments, with a global total of 5.6% for the quarter and 4.9% for the six months. This growth was attributed to the success of the "Plan to Win" strategy, which focuses on optimizing the menu (e.g., McCafé offerings, breakfast items), modernizing the customer experience, and broadening accessibility through convenience and value initiatives.

The company demonstrated effective expense management, leading to improved profitability. Company-operated restaurant margins increased, while franchised restaurant margins also showed healthy growth. Operating income increased significantly, up 19% for the quarter and 14% for the six months in constant currencies, supported by higher revenues and disciplined cost control.

McDonald's actively returned value to shareholders through share repurchases and dividend payments. In the first six months of 2011, the company repurchased $2.1 billion of its stock and paid $1.3 billion in dividends. The share repurchase program is ongoing with significant authorization remaining.