[Company Info Below]
In his first public comments since succeeding the late James Cantalupo, the new chief executive of McDonald's Corp. vowed there would be no deviation from the plan that has fueled the company's recovery.
"We are staying the course because our strategy is working," Charlie Bell, 43, told investors in a Webcast Wednesday. Bell was named chief executive after the unexpected death of Cantalupo April 19 at a meeting of franchise owners in Orlando.
"We know that the best way to pay him tribute is to continue to execute the `Plan to Win' that Jim and I put into place a year ago.
"We have momentum. In fact, there has been fundamental lift in our business," Bell said. "In the first quarter, we served 2.3 million more customers per day than we did the same period last year. This is the equivalent of adding 1,500 new restaurants.
"Clearly our strategy of adding more customers to our existing restaurants is working for our system and our shareholders."
McButt cartoon by John Jonik
Bell's comments came as the Oak Brook-based company said it plans to add two items to its U.S. menu in an effort to help maintain the growth that the back-to-basics operating approach has helped foster.
The company said it soon would add a spicy salad to its line of premium salads. Later this year it will add another chicken selection.
The Fiesta salad will consist of greens with seasoned ground beef and cheddar jack cheese topped with tortilla and Paul Newman's Own dressing. The chicken selection, fried strips with dipping sauces, will be introduced in the second half of the year, according to a McDonald's spokeswoman.
Bell's vow to stay the course set by Cantalupo won praise from Wall Street, which bid the company's shares up and issued higher target prices even as the overall market was falling.
McDonald's stock closed at $27.61, up 41 cents, on the New York Stock Exchange. The Dow Jones industrial average fell 135.56 points, to 10,342.60.
The Webcast came a day after the company issued first-quarter results showing a 56 percent increase in profit, with its biggest U.S. sales increase in more than 30 years--14 percent in stores open a year or more.
Worldwide, McDonald's reported a 9.4 percent increase in same-store sales.
"There has been a real philosophical change in the way they do their business," said Mark Sheridan, a restaurant industry analyst for Johnson Rice & Co. in New Orleans. "They undertook a pretty aggressive strategy change a year ago, and they have executed the strategy very effectively.
"I think that they very clearly see the pitfalls of the prior `grow, grow' strategy and conversely see the merits of this strategy," he said.
Mike Roberts, president of McDonald's USA, said he believed extended hours at many restaurants will help push sales even higher.
"Currently 75 percent of the [U.S.] stores are on extended hours. But only 12 percent are operating 24 hours a day," he said, noting that evening sales were up 28 percent in the first quarter from a year earlier.
Bell told investors: "Let me assure you, we are not stopping here. We are intent on continuing to drive positive results."
source: http://www.chicagotribune.com/business/chi-0404290279apr29,1,3192839,print.story 29apr04
OAK BROOK, IL -- McDonald's Corporation today announced strong operating results for the first quarter, reporting diluted earnings per share of $0.40, up 38% over the prior year on strong comparable sales and improved margins.
McDonald's reported the following first quarter highlights:
Revenues increased 16% (8% in constant currencies), Systemwide sales increased 17% (10% in constant currencies), and comparable sales increased 9.4%.
Company-operated restaurant margins increased 160 basis points to 14.3%, and franchised restaurant margins increased 160 basis points to 77.9%. Company-operated restaurant margins improved in all segments, led by a 370 basis point improvement in the U.S. to 18.2%.
Operating income increased 27% (18% in constant currencies).
Diluted earnings per share were $0.40 compared with $0.29 for first quarter 2003 before the effect of an accounting change, a 38% increase (31% in constant currencies).
KEY HIGHLIGHTS - CONSOLIDATED
Dollars in millions, except per common share data
% Increase Currency Excluding Quarters ended % Translation Currency March 31, 2004 2003 Inc Benefit Translation Revenues $4,399.7 $3,799.7 16 $288.0 8 Operating income 858.4 674.6 27 59.9 18 Income before cumulative effect of accounting change 511.5 364.2 40 30.0 32 Net income 511.5 327.4 56 30.0 47 Per common share-diluted: Income before cumulative effect of accounting change 0.40 0.29 38 0.02 31 Net income 0.40 0.26 54 0.02 46
Chief Executive Officer and President Charlie Bell, said, "Last week we suffered the tragic and sudden loss of our esteemed Chairman and Chief Executive Officer, Jim Cantalupo. Jim was an incredibly inspiring and passionate leader whose legacy and impact on our System are as far reaching as our restaurants around the world. Jim's emphasis on the customer fostered a Systemwide dedication to delivering a superior restaurant experience. My management team and I remain firmly committed to strengthening McDonald's relevancy and continuing the momentum that began under Jim's leadership.
"We delivered impressive first quarter results fueled by the overall performance of our U.S. business, improved comparable sales across all geographic segments, and increased margins. We served 2.3 million more customers per day during the first quarter compared with the same period in the prior year – the equivalent of adding roughly 1,500 restaurants, yet we added only 100 restaurants over the past 12 months. In addition, we achieved double- digit growth in Systemwide sales and generated operating income growth of more than 25% in the first quarter. To date in April, U.S. sales remain strong, and as expected, Europe's sales trends have improved significantly compared with March, following the successful launch of the Salads Plus menu in several key markets. These results are a clear indication that our Plan to Win is working.
"At the beginning of last year we mapped out our path to predictable, sustainable growth beginning in 2005. Since then, we've raised the bar on operations excellence and leadership marketing, and we've seen a fundamental lift in our business. Last week, our global System came together at McDonald's Worldwide Convention. It is evident that the improvements we've made on behalf of our customers worldwide have rekindled the System's enthusiasm and competitiveness. Our franchisees and local management teams are aligned and infused with the 'i'm lovin' it TM' spirit. The entire McDonald's System is energized and excited about our momentum and opportunities. As we have done during the past 16 months, we will forge ahead with the business of delivering a great McDonald's experience for every one of our customers – it is the greatest tribute we can pay to Jim."
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED THROUGHOUT THIS RELEASE
Constant currency results are calculated by translating current year results at prior year average exchange rates.
Systemwide Sales include sales at all restaurants, whether operated by the Company, by franchisees or by affiliates operating under joint-venture agreements.
Comparable Sales represent sales at Systemwide restaurants in operation at least thirteen months, excluding the impact of currency translation.
This release contains certain forward-looking statements which reflect management's expectations regarding future events and operating performance and speak only as of April 27, 2004. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to differ materially from those expressed in, or underlying, our forward-looking statements is detailed in the Company's filings with the Securities and Exchange Commission, such as its annual and quarterly reports.
McDonald's Corporation will broadcast its investor conference call live over the Internet at 8:30 a.m. Central Time on April 28, 2004. For access, go to www.investor.mcdonalds.com. An archived replay of this webcast will be available for a limited time.
See Exhibit 99.2 in the Company's Form 8-K filing for additional, supplemental information related to the Company's results for the quarter ended March 31, 2004.
The Company plans to release April 2004 sales information on Monday, May 10.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars in millions, except per common share data
Quarters ended Inc /(Dec) March 31, 2004 2003 $ % Revenues Sales by Company-operated restaurants $3,283.0 $2,856.1 426.9 15 Revenues from franchised and affiliated restaurants 1,116.7 943.6 173.1 18 TOTAL REVENUES 4,399.7 3,799.7 600.0 16 Operating costs and expenses Company-operated restaurant expenses 2,827.4 2,509.4 318.0 13 Franchised restaurants— occupancy expenses 246.4 223.3 23.1 10 Selling, general & administrative expenses 457.5 396.4 61.1 15 Other operating (income) expense, net 10.0 (4.0) 14.0 n/m Total operating costs and expenses 3,541.3 3,125.1 416.2 13 OPERATING INCOME 858.4 674.6 183.8 27 Interest expense 91.7 101.8 (10.1) (10) Nonoperating expense, net 8.9 25.2 (16.3) (65) Income before provision for income taxes 757.8 547.6 210.2 38 Provision for income taxes 246.3 183.4 62.9 34 Income before cumulative effect of accounting change 511.5 364.2 147.3 40 Cumulative effect of accounting change, net of tax* - (36.8) 36.8 n/m NET INCOME $ 511.5 $ 327.4 184.1 56 PER COMMON SHARE-DILUTED: Income before cumulative effect of accounting change $0.40 $ 0.29 0.11 38 Cumulative effect of accounting change* $ - $ (0.03) 0.03 n/m Net income $ 0.40 $ 0.26 0.14 54 Weighted average common shares outstanding-diluted 1,275.5 1,270.3 5.2 - n/m Not meaningful * Relates to change in accounting for asset retirement obligations in 2003.
The text in the second paragraph following the key highlights table of this press release has been corrected from the version issued via the wire services on 4/28/04. The words "per day" were inserted into the following sentence: We served 2.3 million more customers per day during the first quarter compared with the same period in the prior year ...
For More Information Contact:
Investors: Mary Healy, (630) 623-6429
Media: Anna Rozenich, (630) 623-7316
source: http://www.mcdonalds.com/corp/news/fnpr/fpr_04272004.html 29apr04
Charlie Bell, president and chief operating officer, is responsible for the company's more than 30,000 restaurants in 118 countries, and is a director of the Board, effective January 1, 2003.
Most recently, he served as president of McDonald's Europe, and was responsible for the company's 6,000 restaurants in this geographic sector.
Prior to that, he was president of Asia/Pacific, Middle East and Africa Group. He began his career at age 15 as a part-time crew member at the Kingsford restaurant in Sydney, Australia.
Bell progressed quickly through the ranks, becoming Australia's youngest store manager at age 19. He became a vice president at 27 and a member of the board of directors by 29. Between 1983 and 1985, Bell spent two years working for the McDonald's Europe development company in Frankfurt, Germany, and worked with joint venture partners and developmental licensees in Sweden, Norway, Holland and Belgium in operations. He held the position of operations director and regional manager before being made vice president of marketing in 1990. In 1993, Bell was appointed managing director, McDonald's Australia.
Bell was a member of the board of Ronald McDonald House Charities in Australia until 2001 and is a former member of the Business Council of Australia. He served as a member of the advisory board of the Juvenile Diabetes Foundation from 1993 to 1999. In 1993, he was also an advisory director of the McDonald's Corporation Board of Directors.
In 1996, the Prime Minister of Australia, the Hon. John Howard, appointed Bell to chair the Small Business Deregulation Task Force. In addition, between 1997 and 2000, he was a trustee of the Sydney Theatre Company and between 1988 to 1997, he was a director of the Pact Youth Theatre in Sydney, Australia.
source: http://www.mcdonalds.com/corp/about/bios/charlie_bell.html 29apr04