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Share Name | Share Symbol | Market | Type |
---|---|---|---|
McDonalds Corp | NYSE:MCD | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-2.31 | -0.84% | 273.29 | 276.11 | 270.3701 | 271.23 | 3,636,460 | 01:00:00 |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the quarterly period ended |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
Chicago, Illinois | ||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
☒ | Accelerated Filer | ☐ | ||
Non-accelerated Filer | ☐ | Smaller Reporting Company | ||
Emerging Growth Company | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||
Page Reference | |
Item 1 – Financial Statements | |
Item 4 – Controls and Procedures | |
Item 1 – Legal Proceedings | |
Item 1A – Risk Factors | |
Item 6 – Exhibits | |
CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||
(unaudited) | |||||||||
In millions, except per share data | September 30, 2020 | December 31, 2019 | |||||||
Assets | |||||||||
Current assets | |||||||||
Cash and equivalents | $ | $ | |||||||
Accounts and notes receivable | |||||||||
Inventories, at cost, not in excess of market | |||||||||
Prepaid expenses and other current assets | |||||||||
Total current assets | |||||||||
Other assets | |||||||||
Investments in and advances to affiliates | |||||||||
Goodwill | |||||||||
Miscellaneous | |||||||||
Total other assets | |||||||||
Lease right-of-use asset, net | |||||||||
Property and equipment | |||||||||
Property and equipment, at cost | |||||||||
Accumulated depreciation and amortization | ( | ) | ( | ) | |||||
Net property and equipment | |||||||||
Total assets | $ | $ | |||||||
Liabilities and shareholders’ equity | |||||||||
Current liabilities | |||||||||
Accounts payable | |||||||||
Lease liability | |||||||||
Income taxes | |||||||||
Other taxes | |||||||||
Accrued interest | |||||||||
Accrued payroll and other liabilities | |||||||||
Current maturities of long-term debt | |||||||||
Total current liabilities | |||||||||
Long-term debt | |||||||||
Long-term lease liability | |||||||||
Long-term income taxes | |||||||||
Deferred revenues - initial franchise fees | |||||||||
Other long-term liabilities | |||||||||
Deferred income taxes | |||||||||
Shareholders’ equity (deficit) | |||||||||
Preferred stock, no par value; authorized – 165.0 million shares; issued – none | |||||||||
Common stock, $.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares | |||||||||
Additional paid-in capital | |||||||||
Retained earnings | |||||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||||
Common stock in treasury, at cost; 915.5 and 914.3 million shares | ( | ) | ( | ) | |||||
Total shareholders’ equity (deficit) | ( | ) | ( | ) | |||||
Total liabilities and shareholders’ equity (deficit) | $ | $ |
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) | |||||||||||||||||||
Quarters Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
In millions, except per share data | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Revenues | |||||||||||||||||||
Sales by Company-operated restaurants | $ | $ | $ | $ | |||||||||||||||
Revenues from franchised restaurants | |||||||||||||||||||
Other revenues | |||||||||||||||||||
Total revenues | |||||||||||||||||||
Operating costs and expenses | |||||||||||||||||||
Company-operated restaurant expenses | |||||||||||||||||||
Franchised restaurants-occupancy expenses | |||||||||||||||||||
Other restaurant expenses | |||||||||||||||||||
Selling, general & administrative expenses | |||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||
Other | |||||||||||||||||||
Other operating (income) expense, net | ( | ) | ( | ) | ( | ) | |||||||||||||
Total operating costs and expenses | |||||||||||||||||||
Operating income | |||||||||||||||||||
Interest expense | |||||||||||||||||||
Nonoperating (income) expense, net | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Income before provision for income taxes | |||||||||||||||||||
Provision for income taxes | |||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||
Earnings per common share-basic | $ | $ | $ | $ | |||||||||||||||
Earnings per common share-diluted | $ | $ | $ | $ | |||||||||||||||
Dividends declared per common share | $ | $ | $ | $ | |||||||||||||||
Weighted-average shares outstanding-basic | |||||||||||||||||||
Weighted-average shares outstanding-diluted |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||||||||
Quarters Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||||
Gain (loss) recognized in accumulated other comprehensive income ("AOCI"), including net investment hedges | ( | ) | ( | ) | ( | ) | |||||||||||||
Reclassification of (gain) loss to net income | |||||||||||||||||||
Foreign currency translation adjustments-net of tax benefit (expense) of $116.8, ($145.5), $67.6, and ($177.6) | ( | ) | ( | ) | ( | ) | |||||||||||||
Cash flow hedges: | |||||||||||||||||||
Gain (loss) recognized in AOCI | ( | ) | ( | ) | |||||||||||||||
Reclassification of (gain) loss to net income | ( | ) | ( | ) | ( | ) | |||||||||||||
Cash flow hedges-net of tax benefit (expense) of $6.6, ($3.3), $27.1, and ($1.0) | ( | ) | ( | ) | |||||||||||||||
Defined benefit pension plans: | |||||||||||||||||||
Gain (loss) recognized in AOCI | ( | ) | |||||||||||||||||
Reclassification of (gain) loss to net income | |||||||||||||||||||
Defined benefit pension plans-net of tax benefit (expense) of $0.0, $0.0, $0.5, and $0.0 | |||||||||||||||||||
Total other comprehensive income (loss), net of tax | ( | ) | ( | ) | ( | ) | |||||||||||||
Comprehensive income (loss) | $ | $ | $ | $ |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) | |||||||||||||||||
Quarters Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Operating activities | |||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||
Adjustments to reconcile to cash provided by operations | |||||||||||||||||
Charges and credits: | |||||||||||||||||
Depreciation and amortization | |||||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||||
Share-based compensation | |||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | |||||||||||
Changes in working capital items | ( | ) | |||||||||||||||
Cash provided by operations | |||||||||||||||||
Investing activities | |||||||||||||||||
Capital expenditures | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Purchases of restaurant businesses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Sales of restaurant businesses | |||||||||||||||||
Sales of property | |||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | |||||||||||
Cash used for investing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Financing activities | |||||||||||||||||
Net short-term borrowings | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Long-term financing issuances | |||||||||||||||||
Long-term financing repayments | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Treasury stock purchases | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Common stock dividends | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from stock option exercises | |||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Cash used for financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Effect of exchange rates on cash and cash equivalents | ( | ) | ( | ) | |||||||||||||
Cash and equivalents increase | |||||||||||||||||
Cash and equivalents at beginning of period | |||||||||||||||||
Cash and equivalents at end of period | $ | $ | $ | $ |
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) | |||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||
Common stock issued | Accumulated other comprehensive income (loss) | Common stock in treasury | Total shareholders’ equity (deficit) | ||||||||||||||||||||||||||||||||||
Additional paid-in capital | Retained earnings | Pensions | Cash flow hedges | Foreign currency translation | |||||||||||||||||||||||||||||||||
In millions, except per share data | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($4.73 per share) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Treasury stock purchases | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||
Stock option exercises and other | |||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) |
For the nine months ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||
Common stock issued | Accumulated other comprehensive income (loss) | Common stock in treasury | Total shareholders’ equity (deficit) | ||||||||||||||||||||||||||||||||||
Additional paid-in capital | Retained earnings | Pensions | Cash flow hedges | Foreign currency translation | |||||||||||||||||||||||||||||||||
In millions, except per share data | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($3.75 per share) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Treasury stock purchases | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||
Stock option exercises and other | |||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) |
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) | |||||||||||||||||||||||||||||||||||||
For the quarter ended September 30, 2019 | |||||||||||||||||||||||||||||||||||||
Common stock issued | Accumulated other comprehensive income (loss) | Common stock in treasury | Total shareholders’ equity (deficit) | ||||||||||||||||||||||||||||||||||
Additional paid-in capital | Retained earnings | Pensions | Cash flow hedges | Foreign currency translation | |||||||||||||||||||||||||||||||||
In millions, except per share data | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($2.41 per share) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Treasury stock purchases | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||
Stock option exercises and other | |||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) |
For the quarter ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||
Common stock issued | Accumulated other comprehensive income (loss) | Common stock in treasury | Total shareholders’ equity (deficit) | ||||||||||||||||||||||||||||||||||
Additional paid-in capital | Retained earnings | Pensions | Cash flow hedges | Foreign currency translation | |||||||||||||||||||||||||||||||||
In millions, except per share data | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ) | |||||||||||||||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($1.25 per share) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Treasury stock purchases | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
Share-based compensation | |||||||||||||||||||||||||||||||||||||
Stock option exercises and other | |||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
Restaurants at September 30, | 2020 | 2019 | |||
Conventional franchised | |||||
Developmental licensed | |||||
Foreign affiliated | |||||
Total Franchised | |||||
Company-operated | |||||
Total Systemwide restaurants |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
In millions | Balance Sheet Classification | September 30, 2020 | December 31, 2019 | Balance Sheet Classification | September 30, 2020 | December 31, 2019 | |||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||
Foreign currency | Prepaid expenses and other current assets | $ | $ | Accrued payroll and other liabilities | $ | ( | ) | $ | ( | ) | |||||||||
Interest rate | Prepaid expenses and other current assets | Accrued payroll and other liabilities | |||||||||||||||||
Foreign currency | Miscellaneous other assets | Other long-term liabilities | ( | ) | ( | ) | |||||||||||||
Interest rate | Miscellaneous other assets | Other long-term liabilities | |||||||||||||||||
Total derivatives designated as hedging instruments | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||
Equity | Prepaid expenses and other current assets | $ | $ | Accrued payroll and other liabilities | $ | ( | ) | $ | ( | ) | |||||||||
Foreign currency | Prepaid expenses and other current assets | Accrued payroll and other liabilities | ( | ) | ( | ) | |||||||||||||
Equity | Miscellaneous other assets | ||||||||||||||||||
Total derivatives not designated as hedging instruments | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||
Total derivatives | $ | $ | $ | ( | ) | $ | ( | ) |
Location of Gain or Loss Recognized in Income on Derivative | Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified into Income from AOCI | Gain (Loss) Recognized in Income on Derivative | ||||||||||||||||||||||
In millions | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | ( | ) | $ | $ | $ | ||||||||||||||||||
Interest rate | Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Cash flow hedges | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
Foreign currency denominated debt | Nonoperating income/expense | $ | ( | ) | $ | $ | |||||||||||||||||||
Foreign currency derivatives | Nonoperating income/expense | ||||||||||||||||||||||||
Foreign currency derivatives(1) | Interest expense | $ | $ | ||||||||||||||||||||||
Net investment hedges | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | ( | ) | $ | ||||||||||||||||||||
Equity | Selling, general & administrative expenses | ||||||||||||||||||||||||
Equity | Other operating income/expense, net | ( | ) | ||||||||||||||||||||||
Undesignated derivatives | $ | $ | |||||||||||||||||||||||
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing. |
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||
Rents | $ | $ | $ | $ | |||||||||||
Royalties | |||||||||||||||
Initial fees | |||||||||||||||
Revenues from franchised restaurants | $ | $ | $ | $ |
• | U.S. - the Company's largest market. The segment is 95% franchised as of September 30, 2020. |
• | International Operated Markets - comprised of wholly-owned markets, or countries in which the Company operates restaurants, including Australia, Canada, France, Germany, Italy, the Netherlands, Russia, Spain and the U.K. The segment is 84% franchised as of September 30, 2020. |
• | International Developmental Licensed Markets & Corporate - comprised of primarily developmental licensee and affiliate markets in the McDonald’s system. Corporate activities are also reported within this segment. The segment is 98% franchised as of September 30, 2020. |
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
In millions | 2020 | 2019 | 2020 | 2019 | |||||||||||
Revenues | |||||||||||||||
U.S. | $ | $ | $ | $ | |||||||||||
International Operated Markets | |||||||||||||||
International Developmental Licensed Markets & Corporate | |||||||||||||||
Total revenues | $ | $ | $ | $ | |||||||||||
Operating Income | |||||||||||||||
U.S. | $ | $ | $ | $ | |||||||||||
International Operated Markets | |||||||||||||||
International Developmental Licensed Markets & Corporate * | |||||||||||||||
Total operating income | $ | $ | $ | $ |
* | Results for the quarter and nine months 2020 included $ |
• | Purpose to feed and foster communities, |
• | Mission to create delicious feel-good moments for everyone, and |
• | Core values that define who we are and how we run our business. |
• | Maximize our Marketing by investing in new, culturally relevant approaches to effectively communicate the story of our brand, food and purpose. This will focus on enhanced digital capabilities that provide a more personal connection with customers. The Company is also committed to a marketing strategy that highlights value at every tier of the menu, as affordability remains a cornerstone of the McDonald’s brand. |
• | Commit to the Core by tapping into customer demand for the familiar and focusing on serving delicious burgers, chicken and coffee. The Company will prioritize chicken and beef offerings as we expect they represent the largest growth opportunities. The Company expects there is significant opportunity to expand its chicken offerings by leveraging line extensions of customer favorites. In addition, the Company plans to introduce a new Crispy Chicken Sandwich in the U.S. in early 2021. The Company will also implement a series of operational and formulation changes designed to improve upon the great taste of our burgers. We also see a significant opportunity with coffee, and markets will leverage the McCafe brand, experience, value and quality to drive long-term growth. |
• | Double Down on the 3D's: Digital, Delivery and Drive Thru by leveraging competitive strengths and building a powerful digital experience growth engine that provides a fast, easy experience for our customers. To unlock further growth, the Company will accelerate technology innovation so that when customers interact with McDonald’s, they can enjoy a fast, easy experience that meets their needs. |
◦ | Digital: The Company’s new digital experience growth engine, “MyMcDonald’s” will transform its digital offerings across drive thru, takeaway, delivery, curbside pick-up and dine-in. Through the digital tools across this platform, customers will receive tailored offers, be able to participate in a new loyalty program and order and receive McDonald's food through the channel of their choice. The Company expects to launch “MyMcDonald’s” across its top six markets by the end of 2021. |
◦ | Delivery: Over the past three years, the Company has expanded the number of McDonald’s restaurants offering delivery to about 28,000 restaurants, and delivery sales have grown significantly. The Company will build on this progress and enhance the delivery experience for customers by adding the ability to order on the McDonald’s app, which is already available in several markets around the world, and optimizing operations with a focus on speed and accuracy. |
◦ | Drive Thru:. The Company has drive thru locations in 65% of restaurants globally, including nearly 95% of the approximately 14,000 locations in the U.S. During the COVID-19 pandemic, this channel has heightened importance and we expect that it will become even more critical to meet customers’ demand for flexibility and choice. The Company will build on its drive thru advantage as the vast majority of new restaurant openings in the U.S. and International Operated Markets will include a drive thru. The Company will test new concepts and technology to enhance the customer experience, including automated order taking; a new drive thru express pick-up lane for customers with a digital order; and a restaurant concept that offers drive thru, delivery and takeaway only to provide a faster, more convenient experience. |
• | U.S. comparable sales increased 4.6% for the quarter and decreased 1.4% for the nine months. Comparable sales results for the third quarter of 2020 continued to benefit from strong average check growth from larger group orders as well as strong performance at the dinner daypart. The Company's strategic marketing investments and resulting promotional activity drove low double-digit comparable sales for the month of September, including positive comparable sales across all dayparts. Comparable guest counts remained negative for the quarter. |
• | International Operated Markets segment comparable sales decreased 4.4% for the quarter and 17.6% for the nine months. The third quarter comparable sales were a significant improvement over the second quarter comparable sales of negative 41.4%. While nearly all restaurants were open, performance was impacted by customer sentiment and instances of government restrictions on operating hours, limited dine-in capacity and in some cases, forced dining room closures. While performance was mixed, the pace of recovery in each market is also impacted by drive thru penetration. For both periods, comparable sales varied across markets with negative comparable sales in France, Spain, Germany and the U.K., partly offset by positive comparable sales in Australia. |
• | International Developmental Licensed Markets segment comparable sales decreased 10.1% for the quarter and 12.9% for the nine months. Results for both periods were primarily impacted by negative comparable sales in Latin America and China, partly offset by strong positive comparable sales in Japan. |
• | Consolidated revenues decreased 2% (2% in constant currencies) for the quarter and 13% (12% in constant currencies) for the nine months. |
• | Systemwide sales were flat with the prior year (decreased 1% in constant currencies) for the quarter and decreased 10% (9% in constant currencies) for the nine months. |
• | Consolidated operating income increased 5% (3% in constant currencies) for the quarter and decreased 24% (23% in constant currencies) for the nine months. Refer to the Operating Income section on page 28 for additional details. |
• | Diluted earnings per share increased 11% (10% in constant currencies) to $2.35 for the quarter and decreased 23% (23% in constant currencies) to $4.47 for the nine months. Refer to the Net Income and Diluted Earnings per Share section on page 21 for additional details. |
• | Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other strategic charges and gains, as well as income tax provision adjustments related to the Tax Act, and bases incentive compensation plans on these results, because the Company believes this better represents underlying business trends. |
• | Comparable sales are compared to the same period in the prior year and represent sales at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction and natural disasters (which includes restaurants temporarily closed due to COVID-19 in 2020). Comparable sales exclude the impact of currency translation, and, since 2017, also exclude sales from Venezuela due to its hyper-inflation. Management generally identifies hyper-inflationary markets as those markets whose cumulative inflation rate over a three-year period exceeds 100%. Management believes that these exclusions more accurately reflect the underlying business trends. Comparable sales are driven by changes in guest counts and average check, which is affected by changes in pricing and product mix. The goal is to achieve a relatively balanced contribution from both guest counts and average check. |
• | Comparable guest counts represent the number of transactions at all restaurants, whether operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. |
• | Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company's financial performance, because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. The Company's revenues consist solely of sales by Company-operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. |
• | Free cash flow, defined as cash provided by operations less capital expenditures, and free cash flow conversion rate, defined as free cash flow divided by net income, are measures reviewed by management in order to evaluate the Company’s ability to convert net profits into cash resources, after reinvesting in the core business, that can be used to pursue opportunities to enhance shareholder value. |
CONSOLIDATED OPERATING RESULTS | |||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||
Dollars in millions, except per share data | September 30, 2020 | September 30, 2020 | |||||||||||||
Amount | Increase/ (Decrease) | Amount | Increase/ (Decrease) | ||||||||||||
Revenues | |||||||||||||||
Sales by Company-operated restaurants | $ | 2,286.4 | (5 | )% | $ | 5,905.9 | (16 | )% | |||||||
Revenues from franchised restaurants | 3,044.8 | 1 | 7,740.8 | (11 | ) | ||||||||||
Other revenues | 86.9 | 21 | 247.3 | 18 | |||||||||||
Total revenues | 5,418.1 | (2 | ) | 13,894.0 | (13 | ) | |||||||||
Operating costs and expenses | |||||||||||||||
Company-operated restaurant expenses | 1,876.3 | (5 | ) | 5,077.5 | (13 | ) | |||||||||
Franchised restaurants-occupancy expenses | 567.9 | 2 | 1,646.6 | 1 | |||||||||||
Other restaurant expenses | 69.2 | 20 | 198.0 | 19 | |||||||||||
Selling, general & administrative expenses | |||||||||||||||
Depreciation and amortization | 75.8 | 10 | 220.3 | 14 | |||||||||||
Other | 454.7 | (4 | ) | 1,547.0 | 12 | ||||||||||
Other operating (income) expense, net | (152.2 | ) | n/m | 23.5 | n/m | ||||||||||
Total operating costs and expenses | 2,891.7 | (7 | ) | 8,712.9 | (5 | ) | |||||||||
Operating income | 2,526.4 | 5 | 5,181.1 | (24 | ) | ||||||||||
Interest expense | 310.1 | 10 | 909.2 | 8 | |||||||||||
Nonoperating (income) expense, net | (0.8 | ) | 97 | (38.8 | ) | 27 | |||||||||
Income before provision for income taxes | 2,217.1 | 3 | 4,310.7 | (28 | ) | ||||||||||
Provision for income taxes | 454.5 | (16 | ) | 957.4 | (38 | ) | |||||||||
Net income | $ | 1,762.6 | 10 | % | $ | 3,353.3 | (25 | )% | |||||||
Earnings per common share-basic | $ | 2.37 | 11 | % | $ | 4.50 | (23 | )% | |||||||
Earnings per common share-diluted | $ | 2.35 | 11 | % | $ | 4.47 | (23 | )% |
IMPACT OF FOREIGN CURRENCY TRANSLATION | ||||||||||||||
Dollars in millions, except per share data | ||||||||||||||
Currency Translation Benefit/ (Cost) | ||||||||||||||
Quarters Ended September 30, | 2020 | 2019 | 2020 | |||||||||||
Revenues | $ | 5,418.1 | $ | 5,502.3 | $ | 30.7 | ||||||||
Company-operated margins | 410.1 | 448.9 | 1.9 | |||||||||||
Franchised margins | 2,476.9 | 2,454.5 | 36.9 | |||||||||||
Selling, general & administrative expenses | 530.5 | 543.6 | (4.0 | ) | ||||||||||
Operating income | 2,526.4 | 2,409.3 | 34.4 | |||||||||||
Net income | 1,762.6 | 1,607.9 | 23.5 | |||||||||||
Earnings per share-diluted | $ | 2.35 | $ | 2.11 | $ | 0.03 | ||||||||
Currency Translation Benefit/ (Cost) | ||||||||||||||
Nine Months Ended September 30, | 2020 | 2019 | 2020 | |||||||||||
Revenues | $ | 13,894.0 | $ | 15,936.2 | $ | (126.6 | ) | |||||||
Company-operated margins | 828.4 | 1,236.5 | (3.0 | ) | ||||||||||
Franchised margins | 6,094.2 | 7,032.7 | (19.4 | ) | ||||||||||
Selling, general & administrative expenses | 1,767.3 | 1,575.8 | 4.6 | |||||||||||
Operating income | 5,181.1 | 6,777.2 | (18.4 | ) | ||||||||||
Net income | 3,353.3 | 4,453.2 | 0.2 | |||||||||||
Earnings per share-diluted | $ | 4.47 | $ | 5.80 | $ | 0.00 |
• | The impact of foreign currency translation on consolidated operating results for the quarter and nine months primarily reflected the strengthening of the Euro and British Pound. The nine months was offset by the weakening of the Brazilian Real and Australian Dollar. |
• | Lower incentive-based compensation expense for the quarter and nine months. |
• | A net reduction of reserves for bad debts of $27 million for the quarter and an increase of reserves for bad debts of $66 million for the nine months, all related to rent and royalty deferrals. |
• | The nine months included over $200 million of committed incremental franchisee support for marketing to accelerate recovery and drive growth across the U.S. and International Operated Markets. |
◦ | About $100 million was recorded in the U.S. and the remaining support was recorded in the International Operated Markets segment. |
Quarters Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | 2020 | 2019 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | ||||||||||||||||||||||
GAAP earnings per share-diluted | $ | 2.35 | $ | 2.11 | 11 | % | 10 | % | $ | 4.47 | $ | 5.80 | (23 | ) | % | (23 | ) | % | |||||||||||
Strategic charges | (0.13 | ) | — | (0.12 | ) | 0.07 | |||||||||||||||||||||||
Non-GAAP earnings per share-diluted | $ | 2.22 | $ | 2.11 | 5 | % | 4 | % | $ | 4.35 | $ | 5.87 | (26 | ) | % | (26 | ) | % |
REVENUES | |||||||||||
Dollars in millions | |||||||||||
Quarters Ended September 30, | 2020 | 2019 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | |||||||
Company-operated sales | |||||||||||
U.S. | $ | 625.9 | $ | 624.8 | 0 | % | 0 | % | |||
International Operated Markets | 1,499.2 | 1,639.7 | (9 | ) | (7 | ) | |||||
International Developmental Licensed Markets & Corporate | 161.3 | 152.1 | 6 | 5 | |||||||
Total | $ | 2,286.4 | $ | 2,416.6 | (5 | )% | (5 | )% | |||
Franchised revenues | |||||||||||
U.S. | $ | 1,425.6 | $ | 1,365.6 | 4 | % | 4 | % | |||
International Operated Markets | 1,318.1 | 1,326.2 | (1 | ) | (5 | ) | |||||
International Developmental Licensed Markets & Corporate | 301.1 | 322.2 | (7 | ) | (5 | ) | |||||
Total | $ | 3,044.8 | $ | 3,014.0 | 1 | % | (1 | )% | |||
Total Company-operated sales and Franchised revenues | |||||||||||
U.S. | $ | 2,051.5 | $ | 1,990.4 | 3 | % | 3 | % | |||
International Operated Markets | 2,817.3 | 2,965.9 | (5 | ) | (6 | ) | |||||
International Developmental Licensed Markets & Corporate | 462.4 | 474.3 | (3 | ) | (1 | ) | |||||
Total | $ | 5,331.2 | $ | 5,430.6 | (2 | )% | (2 | )% | |||
Total Other revenues | $ | 86.9 | $ | 71.7 | 21 | % | 20 | % | |||
Total Revenues | $ | 5,418.1 | $ | 5,502.3 | (2 | )% | (2 | )% | |||
Nine Months Ended September 30, | 2020 | 2019 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | |||||||
Company-operated sales | |||||||||||
U.S. | $ | 1,756.9 | $ | 1,857.2 | (5 | )% | (5 | )% | |||
International Operated Markets | 3,687.3 | 4,749.5 | (22 | ) | (21 | ) | |||||
International Developmental Licensed Markets & Corporate | 461.7 | 450.8 | 2 | 6 | |||||||
Total | $ | 5,905.9 | $ | 7,057.5 | (16 | )% | (15 | )% | |||
Franchised revenues | |||||||||||
U.S. | $ | 3,841.5 | $ | 3,987.0 | (4 | )% | (4 | )% | |||
International Operated Markets | 3,098.6 | 3,763.7 | (18 | ) | (18 | ) | |||||
International Developmental Licensed Markets & Corporate | 800.7 | 919.3 | (13 | ) | (10 | ) | |||||
Total | $ | 7,740.8 | $ | 8,670.0 | (11 | )% | (10 | )% | |||
Total Company-operated sales and Franchised revenues | |||||||||||
U.S. | $ | 5,598.4 | $ | 5,844.2 | (4 | )% | (4 | )% | |||
International Operated Markets | 6,785.9 | 8,513.2 | (20 | ) | (19 | ) | |||||
International Developmental Licensed Markets & Corporate | 1,262.4 | 1,370.1 | (8 | ) | (5 | ) | |||||
Total | $ | 13,646.7 | $ | 15,727.5 | (13 | )% | (12 | )% | |||
Total Other revenues | $ | 247.3 | $ | 208.7 | 18 | % | 19 | % | |||
Total Revenues | $ | 13,894.0 | $ | 15,936.2 | (13 | )% | (12 | )% |
• | Total Company-operated sales and franchised revenues decreased 2% (2% in constant currencies) for the quarter and decreased 13% (12% in constant currencies) for the nine months. The quarter reflected stronger operating performance in the U.S., partly offset by sales declines in the International Operated Markets and International Developmental Licensed Markets segments as a result of COVID-19. The nine months reflected sales declines in all segments as a result of COVID-19. |
Increase/(Decrease) | |||||||||
Quarters Ended September 30, | Nine Months Ended September 30, | ||||||||
2020 | 2019 | 2020 | 2019 | ||||||
U.S. | 4.6 | % | 4.8 | % | (1.4 | )% | 5.0 | % | |
International Operated Markets | (4.4 | ) | 5.6 | (17.6 | ) | 6.1 | |||
International Developmental Licensed Markets & Corporate | (10.1 | ) | 8.1 | (12.9 | ) | 7.3 | |||
Total | (2.2 | )% | 5.9 | % | (9.9 | )% | 5.9 | % |
Quarter Ended September 30, 2020 | Nine Months Ended September 30, | ||||||||||
Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | ||||||||
U.S. | 4 | % | 4 | % | (1 | )% | (1 | )% | |||
International Operated Markets | 0 | (3 | ) | (17 | ) | (16 | ) | ||||
International Developmental Licensed Markets & Corporate | (9 | ) | (7 | ) | (13 | ) | (10 | ) | |||
Total | 0 | % | (1 | )% | (10 | )% | (9 | )% |
* | Unlike comparable sales, the Company has not excluded hyper-inflationary market results (currently, only Venezuela) from Systemwide sales as these sales are the basis on which the Company calculates and records revenues. |
FRANCHISED SALES | ||||||||||||||
Dollars in millions | ||||||||||||||
Quarters Ended September 30, | 2020 | 2019 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | ||||||||||
U.S. | $ | 10,180.3 | $ | 9,721.7 | 5 | % | 5 | % | ||||||
International Operated Markets | 7,700.5 | 7,569.1 | 2 | (2 | ) | |||||||||
International Developmental Licensed Markets & Corporate | 5,748.7 | 6,325.8 | (9 | ) | (8 | ) | ||||||||
Total | $ | 23,629.5 | $ | 23,616.6 | 0 | % | (1 | )% | ||||||
Ownership type | ||||||||||||||
Conventional franchised | $ | 17,775.7 | $ | 17,172.5 | 4 | % | 2 | % | ||||||
Developmental licensed | 3,126.4 | 3,769.3 | (17 | ) | (14 | ) | ||||||||
Foreign affiliated | 2,727.4 | 2,674.8 | 2 | 1 | ||||||||||
Total | $ | 23,629.5 | $ | 23,616.6 | 0 | % | (1 | )% | ||||||
Nine Months Ended September 30, | 2020 | 2019 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | ||||||||||
U.S. | $ | 27,943.9 | $ | 28,283.0 | (1 | )% | (1 | )% | ||||||
International Operated Markets | 18,078.1 | 21,430.3 | (16 | ) | (16 | ) | ||||||||
International Developmental Licensed Markets & Corporate | 15,577.4 | 17,889.4 | (13 | ) | (11 | ) | ||||||||
Total | $ | 61,599.4 | $ | 67,602.7 | (9 | )% | (8 | )% | ||||||
Ownership type | ||||||||||||||
Conventional franchised | $ | 45,813.2 | $ | 49,448.8 | (7 | )% | (7 | )% | ||||||
Developmental licensed | 8,411.3 | 10,648.9 | (21 | ) | (17 | ) | ||||||||
Foreign affiliated | 7,374.9 | 7,505.0 | (2 | ) | (2 | ) | ||||||||
Total | $ | 61,599.4 | $ | 67,602.7 | (9 | )% | (8 | )% |
RESTAURANT MARGINS | |||||||||||||
Dollars in millions | |||||||||||||
Amount | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | |||||||||||
Quarters Ended September 30, | 2020 | 2019 | |||||||||||
Franchised | |||||||||||||
U.S. | $ | 1,122.1 | $ | 1,076.2 | 4 | % | 4 | % | |||||
International Operated Markets | 1,059.9 | 1,063.1 | 0 | (4 | ) | ||||||||
International Developmental Licensed Markets & Corporate | 294.9 | 315.2 | (6 | ) | (5 | ) | |||||||
Total | $ | 2,476.9 | $ | 2,454.5 | 1 | % | (1 | )% | |||||
Company-operated | |||||||||||||
U.S. | $ | 118.7 | $ | 97.8 | 21 | % | 21 | % | |||||
International Operated Markets | 289.5 | 348.8 | (17 | ) | (18 | ) | |||||||
International Developmental Licensed Markets & Corporate | n/m | n/m | n/m | n/m | |||||||||
Total | $ | 410.1 | $ | 448.9 | (9 | )% | (9 | )% | |||||
Total restaurant margins | |||||||||||||
U.S. | $ | 1,240.8 | $ | 1,174.0 | 6 | % | 6 | % | |||||
International Operated Markets | 1,349.4 | 1,411.9 | (4 | ) | (8 | ) | |||||||
International Developmental Licensed Markets & Corporate | n/m | n/m | n/m | n/m | |||||||||
Total | $ | 2,887.0 | $ | 2,903.4 | (1 | )% | (2 | )% | |||||
Amount | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | |||||||||||
Nine Months Ended September 30, | 2020 | 2019 | |||||||||||
Franchised | |||||||||||||
U.S. | $ | 2,966.1 | $ | 3,148.9 | (6 | )% | (6 | )% | |||||
International Operated Markets | 2,345.7 | 2,986.6 | (21 | ) | (22 | ) | |||||||
International Developmental Licensed Markets & Corporate | 782.4 | 897.2 | (13 | ) | (10 | ) | |||||||
Total | $ | 6,094.2 | $ | 7,032.7 | (13 | )% | (13 | )% | |||||
Company-operated | |||||||||||||
U.S. | $ | 282.5 | $ | 284.8 | (1 | )% | (1 | )% | |||||
International Operated Markets | 544.3 | 946.2 | (42 | ) | (42 | ) | |||||||
International Developmental Licensed Markets & Corporate | n/m | n/m | n/m | n/m | |||||||||
Total | $ | 828.4 | $ | 1,236.5 | (33 | )% | (33 | )% | |||||
Total restaurant margins | |||||||||||||
U.S. | $ | 3,248.6 | $ | 3,433.7 | (5 | )% | (5 | )% | |||||
International Operated Markets | 2,890.0 | 3,932.8 | (27 | ) | (27 | ) | |||||||
International Developmental Licensed Markets & Corporate | n/m | n/m | n/m | n/m | |||||||||
Total | $ | 6,922.6 | $ | 8,269.2 | (16 | )% | (16 | )% |
• | Total restaurant margins decreased $16.4 million or 1% (2% in constant currencies) for the quarter and decreased $1,346.6 million or 16% (16% in constant currencies) for the nine months. The quarter reflected stronger operating performance in the U.S., partly offset by sales declines in the International Operated Markets segment as a result of COVID-19. The nine months reflected sales declines in the U.S. and International Operated Markets segments as a result of COVID-19. |
• | Due to the nature of our operating model, franchised margin expenses (primarily comprised of lease expense and depreciation expense) are mainly fixed, whereas Company-operated restaurant expenses have more variable cost components. Total restaurant margins included $376.6 million and $1,082.1 million of depreciation and amortization expense for the quarter and nine months, respectively. |
• | Selling, general and administrative expenses decreased $13.1 million or 2% (3% in constant currencies) for the quarter and increased $191.5 million or 12% (12% in constant currencies) for the nine months. Both periods reflected lower incentive-based compensation expense and travel costs, and higher investments in strategic technology initiatives. The nine months also reflected about $175 million of committed incremental marketing contributions by the Company to the System's advertising cooperative arrangements across the U.S. and International Operated Markets to accelerate recovery and drive growth; $40 million of costs related to the cancellation of the 2020 Worldwide Owner/Operator Convention; and approximately $20 million of incremental costs related to contractual obligations as a result of a reduction in scope of certain investments in restaurant technology and research & development. |
• | Selling, general and administrative expenses as a percent of Systemwide sales was 2.6% and 2.1% for the nine months ended 2020 and 2019, respectively. |
OTHER OPERATING (INCOME) EXPENSE, NET | |||||||||||||||
Dollars in millions | |||||||||||||||
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Gains on sales of restaurant businesses | $ | (0.7 | ) | $ | (17.4 | ) | $ | (3.5 | ) | $ | (90.4 | ) | |||
Equity in earnings of unconsolidated affiliates | (48.7 | ) | (42.8 | ) | (67.9 | ) | (112.0 | ) | |||||||
Asset dispositions and other (income) expense, net | 35.9 | 23.3 | 220.3 | 80.9 | |||||||||||
Impairment and other charges, net | (138.7 | ) | 1.6 | (125.4 | ) | 80.2 | |||||||||
Total | $ | (152.2 | ) | $ | (35.3 | ) | $ | 23.5 | $ | (41.3 | ) |
• | Gains on sales of restaurant businesses decreased for the quarter and nine months primarily due to fewer restaurant sales. |
• | Equity in earnings of unconsolidated affiliates declined for the nine months primarily due to sales declines as a result of COVID-19 in both the International Operated Markets and International Developmental Licensed Markets. |
• | Asset dispositions and other expense reflected a net reduction of reserves for bad debts of $27 million for the quarter and an increase of reserves for bad debts of $66 million for the nine months, all related to rent and royalty deferrals. The Company does not currently expect any significant changes in reserves for bad debts related to rent and royalty deferrals for the remainder of 2020. |
• | Impairment and other charges, net for the quarter and nine months 2020 reflected $138.7 million of pre-tax strategic gains related to the sale of McDonald’s Japan stock as the Company divested about 3% of its ownership in McDonald's Japan. The nine months also reflected the write-off of impaired software that was no longer being used of $26.3 million, partly offset by $13.0 million of income primarily comprised of a reversal of a reserve associated with the Company's sale of its business in the India Delhi market in January 2020. |
OPERATING INCOME | |||||||||||||
Dollars in millions | |||||||||||||
Quarters Ended September 30, | 2020 | 2019 | Inc/ (Dec) | Inc/ (Dec) Excluding Currency Translation | |||||||||
U.S. | $ | 1,078.3 | $ | 1,038.7 | 4 | % | 4 | % | |||||
International Operated Markets | 1,197.9 | 1,284.0 | (7 | ) | (10 | ) | |||||||
International Developmental Licensed Markets & Corporate | 250.2 | 86.6 | n/m | n/m | |||||||||
Total | $ | 2,526.4 | $ | 2,409.3 | 5 | % | 3 | % | |||||
Nine Months Ended September 30, | 2020 | 2019 | Inc/ (Dec) | Increase Excluding Currency Translation | |||||||||
U.S. | $ | 2,705.9 | $ | 3,039.4 | (11 | )% | (11 | )% | |||||
International Operated Markets | 2,311.8 | 3,550.8 | (35 | ) | (35 | ) | |||||||
International Developmental Licensed Markets & Corporate | 163.4 | 187.0 | (13 | )% | 0 | % | |||||||
Total | $ | 5,181.1 | $ | 6,777.2 | (24 | )% | (23 | )% | |||||
Operating margin | 37.3 | % | 42.5 | % | |||||||||
Non-GAAP operating Margin | 36.4 | % | 43.0 | % | |||||||||
• | Operating Income: Operating income increased $117.1 million or 5% (3% in constant currencies) for the quarter and decreased $1,596.1 million or 24% (23% in constant currencies) for the nine months. Results for the quarter and nine months 2020 included $139 million of strategic gains related to the sale of McDonald's Japan stock, and results for the nine months 2020 also included a net $13 million of strategic charges. Results for the nine months 2019 reflected $80 million of net impairment and strategic charges. Excluding these current year and prior year items, operating income decreased $21.6 million or 1% (2% in constant currencies) for the quarter and decreased $1,801.7 million or 26% (26% in constant currencies) for the nine months. |
• | U.S.: The operating income increase for the quarter was driven by strong sales performance. The decrease for the nine months reflected sales declines as a result of COVID-19; about $100 million of support for marketing to accelerate recovery and drive growth; and lower gains on sales of restaurant businesses. |
• | International Operated Markets: The operating income decrease for the quarter and nine months reflected sales declines as a result of COVID-19; incremental COVID-19 Company-operated expenses primarily for employee related costs; and lower gains on sales of restaurant businesses primarily in the U.K. Results for the nine months also reflected over $100 million of support for marketing to accelerate recovery and drive growth; lower equity in earnings from unconsolidated affiliates; and $23 million of payments to distribution centers for obsolete inventory. |
• | International Developmental Licensed Markets & Corporate: Excluding the current year and prior year strategic gains and charges described above, results reflected a net reduction of reserves for bad debts of $27 million for the quarter and an increase of reserves for bad debts of $66 million for the nine months, all related to rent and royalty deferrals. |
• | Operating Margin: Operating margin is defined as operating income as a percent of total revenues. The contributions to operating margin differ by segment due to each segment's ownership structure, primarily due to the relative percentage of franchised versus Company-operated restaurants. Additionally, the number of temporary restaurant closures, which varies by segment, as a result of COVID-19, also impacts the contribution of each segment to the consolidated operating margin. |
• | Interest expense increased 10% (10% in constant currencies) for the quarter and increased 8% (9% in constant currencies) for the nine months, reflecting higher average debt balances, partly offset by a decrease in the amount of Euro denominated deposits incurring interest expense as a result of the Company's cash management strategies. |
• | Based on current interest and foreign currency exchange rates, the Company expects interest expense for the full year 2020 to increase about 8% to 9% due primarily to higher average debt balances as a result of additional issuances in response to COVID-19. |
NONOPERATING (INCOME) EXPENSE, NET | |||||||||||||||
Dollars in millions | |||||||||||||||
Quarters Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Interest income | $ | (3.4 | ) | $ | (8.9 | ) | $ | (13.8 | ) | $ | (29.6 | ) | |||
Foreign currency and hedging activity | 0.6 | (18.8 | ) | (17.8 | ) | (38.5 | ) | ||||||||
Other expense, net | 2.0 | 4.2 | (7.2 | ) | 15.1 | ||||||||||
Total | $ | (0.8 | ) | $ | (23.5 | ) | $ | (38.8 | ) | $ | (53.0 | ) |
• | The effective income tax rate was 20.5% and 25.3% for the quarters ended 2020 and 2019, respectively, and 22.2% and 25.7% for the nine months ended 2020 and 2019, respectively. |
• | Results for the quarter and nine months 2020 included $50 million of income tax benefits due to new U.S. tax regulations issued in the third quarter and $48 million of income tax benefits related to the impact of a tax rate change in the U.K. |
• | The Company expects the effective income tax rate for the full year 2020 to be about 23% and the fourth quarter 2020 to be about 25%. |
• | The Company expects Systemwide sales growth in the mid-single digits. Changes in Systemwide sales are driven by comparable sales and net restaurant unit expansion. |
◦ | For 2021, the expected Systemwide sales growth will be as compared to 2019. |
◦ | For 2022, the Company expects net restaurant unit expansion to contribute 1.5% to 2% to Systemwide sales growth. |
• | The Company expects operating margin percent to be in the low-to-mid 40% range. Operating margin is defined as operating income as a percent of total revenues. |
• | The Company expects full year selling, general and administrative expenses to be about 2.3% of Systemwide sales. |
• | The Company expects capital expenditures to be approximately $2.3 billion for each year 2021 and 2022, about half of which will be directed towards new unit expansion across the U.S. and International Operated Markets for both years. |
• | The Company expects to achieve a free cash flow conversion rate greater than 90%. |
• | Capitalize on our global scale, iconic brand and local market presence to build upon our historic strengths and competitive advantages; |
• | Continue to innovate and differentiate the McDonald's experience, including by preparing and serving our food in a way that balances value and convenience to our customers with profitability; |
• | Accelerate digital innovation for a fast and easy customer experience; |
• | Continue to run great restaurants by driving efficiencies and expanding capacities while continuing to prioritize health and safety; |
• | Identify and develop restaurant sites consistent with our plans for net growth of Systemwide restaurants; |
• | Accelerate our existing strategies, including through growth opportunities and potential acquisitions, investments and partnerships; and |
• | Evolve and adjust our business strategies in response to, among other things, changing consumer behavior, operational restrictions and impacts to our results of operations and liquidity as a result of the COVID-19 pandemic. |
• | The relative level of our defense costs, which vary from period to period depending on the number, nature and procedural status of pending proceedings; |
• | The cost and other effects of settlements, judgments or consent decrees, which may require us to make disclosures or take other actions that may affect perceptions of our brand and products; and |
• | Adverse results of pending or future litigation, including litigation challenging the composition and preparation of our products, or the appropriateness or accuracy of our marketing or other communication practices. |
• | The unpredictable nature of global economic and market conditions; |
• | Governmental action or inaction in light of key indicators of economic activity or events that can significantly influence financial markets, particularly in the U.S., which is the principal trading market for our common stock, and media reports and commentary about economic, trade or other matters, even when the matter in question does not directly relate to our business; |
• | Trading activity in our common stock or trading activity in derivative instruments with respect to our common stock or debt securities, which can be affected by market commentary (including commentary that may be unreliable or incomplete); unauthorized disclosures about our performance, plans or expectations about our business; our actual performance and creditworthiness; investor confidence, driven in part by expectations about our performance; actions by shareholders and others seeking to influence our business strategies; portfolio transactions in our stock by significant shareholders; or trading activity that results from the ordinary course rebalancing of stock indices in which McDonald’s may be included, such as the S&P 500 Index and the Dow Jones Industrial Average; |
• | The impact of our stock repurchase program or dividend rate; and |
• | The impact on our results of corporate actions and market and third-party perceptions and assessments of such actions, such as those we may take from time to time as we implement our strategies, including through acquisitions, in light of changing business, legal and tax considerations and evolve our corporate structure. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||
July 1-31, 2020 | 1,896 | $ | 192.40 | 1,896 | $ | 14,128,474,585 | ||||||||
August 1-31, 2020 | 1,802 | 207.27 | 1,802 | 14,128,101,079 | ||||||||||
September 1-30, 2020 | 261 | 205.33 | 261 | 14,128,047,489 | ||||||||||
Total | 3,959 | $ | 200.02 | 3,959 |
* | Subject to applicable law, the Company may repurchase shares directly in the open market, in privately negotiated transactions, or pursuant to derivative instruments and plans complying with Rule 10b5-1, among other types of transactions and arrangements. |
(1) | On December 31, 2019, the Company's Board of Directors approved a share repurchase program, effective January 1, 2020, that authorized the purchase of up to $15 billion of the Company's outstanding common stock. In early March 2020, the Company voluntarily suspended share repurchases from the open market. Therefore, the table above reflects only shares withheld for taxes under the Company’s equity compensation program. |
Item 6. Exhibits | |||||
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(101.INS) | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
(101.SCH) | Inline XBRL Taxonomy Extension Schema Document. | ||||
(101.CAL) | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
(101.DEF) | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||
(101.LAB) | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||
(101.PRE) | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
(104) | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | ||||
* | Other instruments defining the rights of holders of long-term debt of the registrant, and all of its subsidiaries for which consolidated financial statements are required to be filed and which are not required to be registered with the Commission, are not included herein as the securities authorized under these instruments, individually, do not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. An agreement to furnish a copy of any such instruments to the Commission upon request has been filed with the Commission. |
** | Denotes compensatory plan. |
McDONALD’S CORPORATION (Registrant) | ||||
/s/ Kevin M. Ozan | ||||
Date: | November 9, 2020 | Kevin M. Ozan | ||
Corporate Executive Vice President and Chief Financial Officer |
(1) | I have reviewed this quarterly report on Form 10-Q of McDonald’s Corporation; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(5) | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Christopher J. Kempczinski |
Christopher J. Kempczinski |
President and Chief Executive Officer |
(1) | I have reviewed this quarterly report on Form 10-Q of McDonald’s Corporation; |
(2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
(3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
(4) | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
(5) | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Kevin M. Ozan |
Kevin M. Ozan |
Corporate Executive Vice President and Chief Financial Officer |
/s/ Christopher J. Kempczinski |
Christopher J. Kempczinski |
President and Chief Executive Officer |
/s/ Kevin M. Ozan |
Kevin M. Ozan |
Corporate Executive Vice President and Chief Financial Officer |
Condensed Consolidated Balance Sheet (Parenthetical) - $ / shares |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, authorized | 165,000,000 | 165,000,000 |
Preferred stock, issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 3,500,000,000 | 3,500,000,000 |
Common stock, issued | 1,660,600,000 | 1,660,600,000 |
Common stock in treasury, shares | 915,500,000 | 914,300,000 |
Condensed Consolidated Statement of Income - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Revenues | ||||
Sales by Company-operated restaurants | $ 2,286.4 | $ 2,416.6 | $ 5,905.9 | $ 7,057.5 |
Revenues from franchised restaurants | 3,044.8 | 3,014.0 | 7,740.8 | 8,670.0 |
Other Revenues | 86.9 | 71.7 | 247.3 | 208.7 |
Total revenues | 5,418.1 | 5,502.3 | 13,894.0 | 15,936.2 |
Operating costs and expenses | ||||
Company-operated restaurant expenses | 1,876.3 | 1,967.7 | 5,077.5 | 5,821.0 |
Franchised restaurants-occupancy expenses | 567.9 | 559.5 | 1,646.6 | 1,637.3 |
Other Restaurant Expenses | 69.2 | 57.5 | 198.0 | 166.2 |
Depreciation and Amortization | 75.8 | 69.0 | 220.3 | 193.6 |
Other Selling, General and Administrative Expense | 454.7 | 474.6 | 1,547.0 | 1,382.2 |
Other operating (income) expense, net | (152.2) | (35.3) | 23.5 | (41.3) |
Total operating costs and expenses | 2,891.7 | 3,093.0 | 8,712.9 | 9,159.0 |
Operating income | 2,526.4 | 2,409.3 | 5,181.1 | 6,777.2 |
Interest expense | 310.1 | 280.6 | 909.2 | 838.9 |
Nonoperating (income) expense, net | (0.8) | (23.5) | (38.8) | (53.0) |
Income before provision for income taxes | 2,217.1 | 2,152.2 | 4,310.7 | 5,991.3 |
Provision for income taxes | 454.5 | 544.3 | 957.4 | 1,538.1 |
Net income | $ 1,762.6 | $ 1,607.9 | $ 3,353.3 | $ 4,453.2 |
Earnings per common share-basic | $ 2.37 | $ 2.13 | $ 4.50 | $ 5.85 |
Earnings per common share-diluted | 2.35 | 2.11 | 4.47 | 5.80 |
Dividends declared per common share | $ 1.25 | $ 2.41 | $ 3.75 | $ 4.73 |
Weighted average shares outstanding-basic | 744.5 | 756.6 | 744.4 | 761.1 |
Weighted average shares outstanding-diluted | 750.0 | 763.9 | 749.8 | 768.1 |
Condensed Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Other comprehensive income (loss), foreign currency translation adjustment, tax | $ 116.8 | $ (145.5) | $ 67.6 | $ (177.6) |
Other comprehensive income (loss), derivatives qualifying as hedges, tax | 6.6 | (3.3) | 27.1 | (1.0) |
Other comprehensive income (loss), pension and other postretirement benefit plans, tax | $ 0.0 | $ 0.0 | $ 0.5 | $ 0.0 |
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Operating activities | ||||
Net income | $ 1,762.6 | $ 1,607.9 | $ 3,353.3 | $ 4,453.2 |
Charges and credits: | ||||
Depreciation and amortization | 440.1 | 413.4 | 1,287.1 | 1,204.3 |
Deferred income taxes | (38.0) | 78.5 | 196.3 | 190.8 |
Share-based compensation | 7.3 | 29.6 | 64.0 | 90.1 |
Other | (56.8) | (64.2) | (25.5) | 2.2 |
Changes in working capital items | 824.3 | 221.5 | (602.8) | 292.2 |
Cash provided by operations | 2,939.5 | 2,286.7 | 4,272.4 | 6,232.8 |
Investing activities | ||||
Capital expenditures | (390.2) | (548.7) | (1,177.7) | (1,661.8) |
Purchases of restaurant businesses | (6.7) | (41.0) | (50.0) | (434.8) |
Sales of restaurant businesses | 8.0 | 49.4 | 35.5 | 249.9 |
Sales of property | 0.2 | 21.1 | 17.8 | 112.3 |
Other | 120.8 | (73.6) | (8.5) | (529.7) |
Cash used for investing activities | (267.9) | (592.8) | (1,182.9) | (2,264.1) |
Financing activities | ||||
Net short-term borrowings | (993.4) | (600.7) | (885.7) | (105.6) |
Long-term financing issuances | 2.8 | 1,975.0 | 5,543.0 | 4,494.8 |
Long-term financing repayments | (451.5) | (667.9) | (1,414.1) | (2,064.1) |
Treasury stock purchases | (0.7) | (1,467.8) | (905.6) | (3,531.3) |
Common stock dividends | (930.9) | (876.9) | (2,791.3) | (2,646.7) |
Proceeds from stock option exercises | 105.3 | 73.4 | 262.3 | 323.4 |
Other | (0.1) | (12.7) | (122.0) | (23.5) |
Cash used for financing activities | (2,268.5) | (1,577.6) | (313.4) | (3,553.0) |
Effect of exchange rates on cash and cash equivalents | 25.0 | (73.5) | 9.2 | (104.4) |
Cash and equivalents increase | 428.1 | 42.8 | 2,785.3 | 311.3 |
Cash and equivalents at beginning of period | 3,255.7 | 1,134.5 | 898.5 | 866.0 |
Cash and equivalents at end of period | $ 3,683.8 | $ 1,177.3 | $ 3,683.8 | $ 1,177.3 |
Condensed Consolidated Statement of Shareholders' Equity Consolidated Statement of Shareholders Equity (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared per common share | $ 1.25 | $ 2.41 | $ 3.75 | $ 4.73 |
Basis of Presentation |
9 Months Ended |
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Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | McDonald’s Corporation, the registrant, together with its subsidiaries, is referred to herein as the "Company." The Company, its franchisees and suppliers, are referred to herein as the "System." Basis of Presentation The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s December 31, 2019 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter and nine months ended September 30, 2020, do not necessarily indicate the results that may be expected for the full year. Prior to January 1, 2020, the Company presented both expenditures and receipts related to technology fees charged to franchisees and revenues related to certain licensing arrangements within Other operating (income) expense, net, because these activities were not part of the Company’s ongoing major or central operations. Effective January 1, 2020, the Company is presenting the revenues and expenses related to these activities within Other revenues and Other restaurant expenses, respectively, in the Condensed Consolidated Statement of Income. The change in presentation was applied retrospectively to all periods presented and had no effect on Operating income, Net income, or Earnings per share.
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Restaurant Information |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Restaurant Information By Ownership Type [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restaurant Information | Restaurant Information The following table presents restaurant information by ownership type:
The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either individually or in the aggregate to the Condensed Consolidated Financial Statements for the periods prior to purchase and sale.
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Per Common Share Information |
9 Months Ended |
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Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Per Common Share Information | Per Common Share Information Diluted earnings per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation, calculated using the treasury stock method, of 5.5 million shares and 7.3 million shares for the quarters 2020 and 2019, respectively, and 5.4 million shares and 7.0 million shares for the nine months 2020 and 2019, respectively. Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 1.8 million shares and 0.1 million shares for the quarters 2020 and 2019, respectively, and 1.9 million shares and 0.1 million shares for the nine months 2020 and 2019, respectively.
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Fair Value Measurements |
9 Months Ended |
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Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company measures certain financial assets and liabilities at fair value. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs. The Company did not have any significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2019 Annual Report on Form 10-K. At September 30, 2020, the fair value of the Company’s debt obligations was estimated at $43.4 billion, compared to a carrying amount of $37.8 billion, which reflects $5.5 billion of debt issuances during the first quarter under the Company's existing registration statement on Form S-3 with maturities ranging from 2025 to 2050 and interest rates ranging from 1.45% to 4.20%. The balances at September 30, 2020 also reflect the retirement of $900 million of commercial paper and $1.4 billion of other debt maturities compared with December 31, 2019. In addition, a $1 billion line of credit was entered into during the first quarter of 2020, and subsequently repaid in the third quarter. The fair value was based upon quoted market prices, Level 2 within the valuation hierarchy. The carrying amounts of cash and equivalents, short-term investments and notes receivable approximate fair value.
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Financial Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments and Hedging Activities | Financial Instruments and Hedging Activities The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not hold or issue derivatives for trading purposes. The following table presents the fair values of derivative instruments included on the Condensed Consolidated Balance Sheet:
The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the nine months ended September 30, 2020 and 2019, respectively:
Fair Value Hedges The Company enters into fair value hedges to reduce the exposure to changes in fair values of certain liabilities. The Company enters into fair value hedges that convert a portion of its fixed rate debt into floating rate debt by use of interest rate swaps. At September 30, 2020, the carrying amount of fixed-rate debt that was effectively converted was $1.0 billion, which included an increase of $37.9 million of cumulative hedging adjustments. For the nine months ended September 30, 2020, the Company recognized a $25.8 million gain on the fair value of interest rate swaps, and a corresponding loss on the fair value of the related hedged debt instrument to interest expense. Cash Flow Hedges The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. To protect against the reduction in value of forecasted foreign currency cash flows (such as royalties denominated in foreign currencies), the Company uses foreign currency forwards to hedge a portion of anticipated exposures. The hedges cover the next 18 months for certain exposures and are denominated in various currencies. To protect against the variability of interest rates of an anticipated bond issuance, the Company may use treasury locks to hedge a portion of the expected future cash flows. As of September 30, 2020, the Company had derivatives outstanding with an equivalent notional amount of $1.1 billion that hedged a portion of forecasted foreign currency denominated cash flows. Based on market conditions at September 30, 2020, the $78.0 million in cumulative cash flow hedging losses, after tax, is not expected to have a significant effect on earnings over the next 12 months. Net Investment Hedges The Company primarily uses foreign currency denominated debt (third party and intercompany) to hedge its investments in certain foreign subsidiaries and affiliates. Realized and unrealized translation adjustments from these hedges are included in shareholders' equity in the foreign currency translation component of Other comprehensive income ("OCI") and offset translation adjustments on the underlying net assets of foreign subsidiaries and affiliates, which also are recorded in OCI. As of September 30, 2020, $12.7 billion of the Company's third party foreign currency denominated debt and $0.6 billion of intercompany foreign currency denominated debt was designated to hedge investments in certain foreign subsidiaries and affiliates. Undesignated Derivatives The Company enters into certain derivatives that are not designated for hedge accounting, therefore the changes in the fair value of these derivatives are recognized immediately in earnings together with the gain or loss from the hedged balance sheet position. As an example, the Company enters into equity derivative contracts, including total return swaps, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. Changes in the fair value of these derivatives are recorded in Selling, general & administrative expenses together with the changes in the supplemental benefit plan liabilities. The Company may also use certain derivatives to mitigate the share price risk related to its sale of stock in McDonald’s Japan. The changes in the fair value of the undesignated derivatives used for the most recent sale transaction were recognized immediately in earnings in Other Operating (income) expense, net. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. The changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net, along with the currency gain or loss from the hedged balance sheet position. Credit Risk The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties. The Company did not have significant exposure to any individual counterparty at September 30, 2020 and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in the financial statements and supplementary data, including for counterparties subject to netting arrangements. Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits. At September 30, 2020, the Company was required to post an immaterial amount of collateral due to the negative fair value of certain derivative positions. The Company's counterparties were not required to post collateral on any derivative position, other than on certain hedges of the Company’s supplemental benefit plan liabilities where the counterparties were required to post collateral on their liability positions.
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Segment Information |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company operates under an organizational structure with the following global business segments reflecting how management reviews and evaluates operating performance:
The following table presents the Company’s revenues and operating income by segment:
* Results for the quarter and nine months 2020 included $139 million of strategic gains related to the sale of McDonald's Japan stock, which reduced the Company's ownership by about 3%.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. The Company began the third quarter with nearly all restaurants globally open for business, and which currently remain open as of the date of filing. However, as a result of COVID-19 resurgences, since September, there have been numerous instances of government restrictions on operating hours, limited dine-in capacity in most countries and, in some cases, mandated dining room closures. These restrictions are impacting most of the Company's key markets outside of the U.S., including France, Germany, Canada and the U.K. The Company expects some restrictions in various markets so long as the COVID-19 pandemic continues. There were no other subsequent events that required recognition or disclosure.
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Updates to Significant Accounting Policies (Notes) |
9 Months Ended |
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Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Updates to Significant Accounting Policies Revenue recognition The Company's revenues consist of sales by Company-operated restaurants and fees from restaurants operated by franchisees, developmental licensees and affiliates. Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales with minimum rent payments, and initial fees. Revenues from restaurants licensed to developmental licensees and affiliates include a royalty based on a percent of sales, and generally include initial fees. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology platforms, revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand, and third party revenues for the Dynamic Yield business. Sales by Company-operated restaurants are recognized on a cash basis at the time of the underlying sale and are presented net of sales tax and other sales-related taxes. Royalty revenues are based on a percent of sales and recognized at the time the underlying sales occur. Rental income includes both minimum rent payments, which are recognized straight-line over the franchise term (with the exception of rent concessions as a result of COVID-19 – refer to the Leasing policy update on page 11), and variable rent payments based on a percent of sales, which are recognized at the time the underlying sales occur. Initial fees are recognized as the Company satisfies the performance obligation over the franchise term, which is generally 20 years. The Company provides goods or services related to various technology platforms to certain franchisees that are distinct from the franchise agreement because they do not require integration with other goods or services we provide. The Company has determined that it is the principal in these arrangements. Accordingly, the related revenue is presented on a gross basis on the Condensed Consolidated Statement of Income. These revenues are recognized as the goods or services are transferred to the franchisee, and related expenses are recognized as incurred. Brand licensing arrangement revenues are based on a percent of sales and are recognized at the time the underlying sales occur. Dynamic Yield third party revenues are generated from providing software as a service solutions to customers and are recognized over the applicable subscription period as the service is performed. Long-lived assets, Goodwill and Capitalized Software Long-lived assets and Goodwill are typically reviewed for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or if an indicator of impairment exists. The Company has continued to monitor the global economic uncertainty as a result of COVID-19 to assess the outlook for restaurant operations and the impact that any disruption may have on the Company's business and overall financial performance. As a result of the Company's analysis, and in consideration of the totality of events and circumstances, including the potential impact of COVID-19 related disruptions on the Company’s operating results, there were no indicators of impairment during the quarter or nine months 2020. In addition to the Long-lived assets and Goodwill impairment analysis, the Company reviews capitalized software for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or if an indicator of impairment exists, which occurs more regularly throughout the year, such as when new software may be ready for its intended use. Results for the nine months 2020 reflected write-offs of impaired software that were no longer being used of $26.3 million. Leasing The FASB issued guidance for how companies may account for COVID-19 related rent concessions in the form of FASB staff and Board members’ remarks at the April 8, 2020 public meeting and the FASB Staff Q&A issued on April 10, 2020. The Company elected the practical expedient to account for COVID-19 related rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. This was elected for the Company’s entire lessee and lessor portfolio for any rent deferrals or rent abatements. For the lessee portfolio, the Company elected not to remeasure the lease liability and right-of-use asset if a rent deferral or a rent abatement is granted. The Company deferred collection of approximately $20 million and $470 million of rental income on revenue that was recognized in the quarter and nine months, respectively. Rental income includes both minimum rent payments and variable rent payments based on a percent of sales. Refer to the Cash Flow and Liquidity section on page 29 of this Form 10-Q for additional information on deferred collections of rental income as well as royalties.
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Recent Accounting Pronouncements Recent Accounting Pronouncements (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Accounting Standards Update and Change in Accounting Principle [Text Block] | Recently Adopted Accounting Pronouncements Financial Instruments - Credit Losses In June 2016, the FASB issued guidance codified in Accounting Standards Codification Topic 326, "Financial Instruments – Credit Losses: Measurements of Credit Losses on Financial Instruments". The standard replaces the incurred loss impairment methodology in prior GAAP with a methodology that instead reflects a current estimate of all expected credit losses on financial assets, including receivables. The guidance requires that an entity measure and recognize expected credit losses at the time the asset is recorded, while considering a broader range of information to estimate credit losses including country specific macroeconomic conditions that correlate with historical loss experience, delinquency trends and aging behavior of receivables, among others. The Company adopted this guidance effective January 1, 2020, prospectively, and the adoption of this standard did not have a material impact to the Condensed Consolidated Financial Statements. The Company had an Allowance for bad debts of $85.3 million as of September 30, 2020 recorded as a reduction to Accounts and notes receivable on the Condensed Consolidated Balance Sheet. Included in this amount were net reductions in the allowance related to rent and royalty deferrals of $27 million for the quarter and an increase in the allowance related to rent and royalty deferrals of $66 million for the nine months. The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected losses. Recent Accounting Pronouncements Not Yet Adopted Income Taxes In December 2019, the FASB issued Accounting Standard Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” ("ASU 2019-12"), which simplifies the accounting for income taxes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including applicable interim periods. The Company anticipates the adoption of ASU 2019-12 will not have a material impact on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04"). The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating the impact the adoption of ASU 2020-04 will have on its consolidated financial statements.
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Updates to Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | Long-lived assets, Goodwill and Capitalized Software Long-lived assets and Goodwill are typically reviewed for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or if an indicator of impairment exists. The Company has continued to monitor the global economic uncertainty as a result of COVID-19 to assess the outlook for restaurant operations and the impact that any disruption may have on the Company's business and overall financial performance. As a result of the Company's analysis, and in consideration of the totality of events and circumstances, including the potential impact of COVID-19 related disruptions on the Company’s operating results, there were no indicators of impairment during the quarter or nine months 2020. In addition to the Long-lived assets and Goodwill impairment analysis, the Company reviews capitalized software for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or if an indicator of impairment exists, which occurs more regularly throughout the year, such as when new software may be ready for its intended use. Results for the nine months 2020 reflected write-offs of impaired software that were no longer being used of $26.3 million.
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Revenue Recognition, Sales of Goods [Policy Text Block] | Revenue recognition The Company's revenues consist of sales by Company-operated restaurants and fees from restaurants operated by franchisees, developmental licensees and affiliates. Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales with minimum rent payments, and initial fees. Revenues from restaurants licensed to developmental licensees and affiliates include a royalty based on a percent of sales, and generally include initial fees. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology platforms, revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand, and third party revenues for the Dynamic Yield business. Sales by Company-operated restaurants are recognized on a cash basis at the time of the underlying sale and are presented net of sales tax and other sales-related taxes. Royalty revenues are based on a percent of sales and recognized at the time the underlying sales occur. Rental income includes both minimum rent payments, which are recognized straight-line over the franchise term (with the exception of rent concessions as a result of COVID-19 – refer to the Leasing policy update on page 11), and variable rent payments based on a percent of sales, which are recognized at the time the underlying sales occur. Initial fees are recognized as the Company satisfies the performance obligation over the franchise term, which is generally 20 years. The Company provides goods or services related to various technology platforms to certain franchisees that are distinct from the franchise agreement because they do not require integration with other goods or services we provide. The Company has determined that it is the principal in these arrangements. Accordingly, the related revenue is presented on a gross basis on the Condensed Consolidated Statement of Income. These revenues are recognized as the goods or services are transferred to the franchisee, and related expenses are recognized as incurred. Brand licensing arrangement revenues are based on a percent of sales and are recognized at the time the underlying sales occur. Dynamic Yield third party revenues are generated from providing software as a service solutions to customers and are recognized over the applicable subscription period as the service is performed.
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Leases of Lessee Disclosure [Text Block] | Leasing The FASB issued guidance for how companies may account for COVID-19 related rent concessions in the form of FASB staff and Board members’ remarks at the April 8, 2020 public meeting and the FASB Staff Q&A issued on April 10, 2020. The Company elected the practical expedient to account for COVID-19 related rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. This was elected for the Company’s entire lessee and lessor portfolio for any rent deferrals or rent abatements. For the lessee portfolio, the Company elected not to remeasure the lease liability and right-of-use asset if a rent deferral or a rent abatement is granted. The Company deferred collection of approximately $20 million and $470 million of rental income on revenue that was recognized in the quarter and nine months, respectively. Rental income includes both minimum rent payments and variable rent payments based on a percent of sales. Refer to the Cash Flow and Liquidity section on page 29 of this Form 10-Q for additional information on deferred collections of rental income as well as royalties.
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Restaurant Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Restaurant Information By Ownership Type [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restaurant Information by Ownership Type | The following table presents restaurant information by ownership type:
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Financial Instruments and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Derivative Instruments Included on Consolidated Balance Sheet | The following table presents the fair values of derivative instruments included on the Condensed Consolidated Balance Sheet:
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Derivatives Pretax Amounts Affecting Income and Other Comprehensive Income | The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the nine months ended September 30, 2020 and 2019, respectively:
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Franchise Arrangements (Tables) |
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Disclosure Franchise Arrangements Additional Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues from Franchised Restaurants | Revenues from franchised restaurants consisted of:
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues and Operating Income by Geographic Segment | The following table presents the Company’s revenues and operating income by segment:
* Results for the quarter and nine months 2020 included $139 million of strategic gains related to the sale of McDonald's Japan stock, which reduced the Company's ownership by about 3%.
|
Restaurant Information by Ownership Type (Details) - Restaurant |
Sep. 30, 2020 |
Sep. 30, 2019 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Number of Restaurants | 39,096 | 38,298 |
Franchised | ||
Segment Reporting Information [Line Items] | ||
Number of Restaurants | 36,438 | 35,663 |
Franchised | Conventional franchised | ||
Segment Reporting Information [Line Items] | ||
Number of Restaurants | 21,781 | 21,758 |
Franchised | Developmental licensed | ||
Segment Reporting Information [Line Items] | ||
Number of Restaurants | 7,660 | 7,473 |
Franchised | Affiliated | ||
Segment Reporting Information [Line Items] | ||
Number of Restaurants | 6,997 | 6,432 |
Company-operated | ||
Segment Reporting Information [Line Items] | ||
Number of Restaurants | 2,658 | 2,635 |
Per Common Share Information (Additional Information) (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||
Dilutive effect of share-based compensation | 5.5 | 7.3 | 5.4 | 7.0 |
Stock options that were not included in diluted weighted-average shares | 1.8 | 0.1 | 1.9 | 0.1 |
Recent Accounting Pronouncements (Recently Adopted Accounting Standards) (Income Taxes) (Details) - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Retained earnings | $ 53,492.5 | $ 52,930.5 |
Recent Accounting Pronouncements (Recently Adopted Accounting Standards) (Lease Accounting) (Details) - USD ($) $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Accounting Policies [Abstract] | ||
Lease right-of-use asset, net | $ 13,276.2 | $ 13,261.2 |
Recent Accounting Pronouncements Recent Accounting Pronouncements (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Allowance For Doubtful Accounts, Accounts Receivable | $ 85.3 | |
Increase (Decrease) in Accounts and Notes Receivable | $ (27.0) | $ 66.0 |
Fair Value Measurements (Additional Information) (Details) $ in Billions |
Sep. 30, 2020
USD ($)
|
---|---|
Fair Value Measurements [Line Items] | |
Debt obligations, carrying amount | $ 37.8 |
Line of Credit, Current | 1.0 |
Long-term Debt | 5.5 |
Commercial Paper | 0.9 |
Debt, Current | 1.4 |
Level 2 | |
Fair Value Measurements [Line Items] | |
Debt obligations, fair value | $ 43.4 |
Minimum [Member] | |
Fair Value Measurements [Line Items] | |
Debt Instrument, Interest Rate, Stated Percentage | 1.45% |
Maximum [Member] | |
Fair Value Measurements [Line Items] | |
Debt Instrument, Interest Rate, Stated Percentage | 4.20% |
Revenues from Franchised Restaurants (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Franchisor Disclosure | ||||
Rents | $ 1,961.7 | $ 1,935.9 | $ 4,944.8 | $ 5,582.1 |
Royalties | 1,071.3 | 1,067.6 | 2,762.1 | 3,056.1 |
Initial Fees | 11.8 | 10.5 | 33.9 | 31.8 |
Revenues from franchised restaurants | $ 3,044.8 | $ 3,014.0 | $ 7,740.8 | $ 8,670.0 |
Franchise Arrangements - Additional Information (Detail) |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Franchisor Disclosure [Abstract] | |
Franchise Agreement Period | 20 years |
Segment Information (Segment and Geographic Information) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Segment Reporting Information [Line Items] | ||||
Gain (Loss) on Disposition of Stock in Subsidiary or Equity Method Investee | $ 139.0 | |||
Document Fiscal Year Focus | 2020 | |||
Total revenues | $ 5,418.1 | $ 5,502.3 | $ 13,894.0 | $ 15,936.2 |
Operating Income | 2,526.4 | 2,409.3 | 5,181.1 | 6,777.2 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 2,094.2 | 2,028.5 | 5,723.8 | 5,959.9 |
Operating Income | 1,078.3 | 1,038.7 | 2,705.9 | 3,039.4 |
International Operated Markets | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 2,845.9 | 2,986.2 | 6,862.7 | 8,573.4 |
Operating Income | 1,197.9 | 1,284.0 | 2,311.8 | 3,550.8 |
International Developmental Licensed Markets and Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 478.0 | 487.6 | 1,307.5 | 1,402.9 |
Operating Income | $ 250.2 | $ 86.6 | $ 163.4 | $ 187.0 |
Subsequent Events Subsequent Events (Details) $ in Billions |
Sep. 30, 2020
USD ($)
|
---|---|
Subsequent Events [Abstract] | |
Line of Credit, Current | $ 1 |
Updates to Significant Accounting Policies (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
|
Accounting Policies [Abstract] | ||
Deferred collection amount of rental income | $ 20 | $ 470 |
Franchise Agreement Period | 20 years |
Updates to Significant Accounting Policies Capitalized Software (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Capitalized Software [Abstract] | |
Asset Impairment Charges | $ 26.3 |
1 Year McDonalds Chart |
1 Month McDonalds Chart |
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