CHICAGO, April 29, 2021 /PRNewswire/ -- McDonald's
Corporation today announced results for the first quarter ended
March 31, 2021.
"Our first quarter 2021 global comparable sales and revenues
surpassed first quarter 2019 levels, even as resurgences and
operating restrictions persist in many parts of the world. I
continue to be inspired by the resilience of our crew members,
franchisees, suppliers, and company employees as we lead with our
values and stay true to our purpose of feeding and fostering
communities," said McDonald's President and Chief Executive Officer
Chris Kempczinski. "Our teams around
the world are focused on executing our Accelerating the Arches
strategy at the highest level - we're maximizing our marketing in a
culturally relevant way, committed to the great tasting customer
favorites on our core menu and doubling-down on digital, delivery
and drive thru to create a faster and easier customer
experience."
First quarter financial performance:
- Global comparable sales increased 7.5%, reflecting positive
comparable sales across all segments: 13.6% in the U.S.; 0.6% in
the International Operated segment; and 6.4% in the International
Developmental Licensed segment.
- Consolidated revenues increased 9% (5% in constant
currencies).
- Systemwide sales increased 12% (8% in constant
currencies).
- Consolidated operating income increased 35% (30% in constant
currencies) and included $135 million
of strategic gains primarily related to the sale of McDonald's
Japan stock. Excluding these
gains, operating income increased 27% (22% in constant
currencies).
- Diluted earnings per share of $2.05 increased 39% (35% in constant currencies).
Excluding $0.13 per share of
strategic gains, diluted earnings per share was $1.92 for the quarter, an increase of 31% (27% in
constant currencies).
COMPARABLE SALES
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Increase/(Decrease)
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Quarters Ended
March 31,
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2021
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2020
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U.S.
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13.6%
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0.1%
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International
Operated Markets
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0.6
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(6.9)
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International
Developmental Licensed Markets & Corporate
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6.4
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(4.3)
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Total
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7.5%
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(3.4)%
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- Comparable Sales: Quarterly comparable sales results
were positive across all segments as we began to lap the
significant impact of COVID-19 on our global results beginning in
March 2020. Guest counts remained
negative for all segments.
-
- U.S.: Comparable sales results benefited from average
check growth with double digit positive comparable sales across all
dayparts. The Company's strong national menu and marketing
offerings, as well as growth in delivery and digital platforms,
contributed to the comparable sales growth.
- International Operated Markets: Results reflected strong
positive comparable sales in the U.K., Australia and Canada, partly offset by significantly
negative comparable sales in France and Germany. Comparable sales in many markets
continued to be impacted by varying levels of government imposed
COVID-19 restrictions on restaurant operations.
- International Developmental Licensed Markets: Monthly
comparable sales results improved sequentially throughout the
quarter. The strong quarterly comparable sales were primarily
driven by China and Japan.
KEY FINANCIAL METRICS - CONSOLIDATED
Dollars in millions, except per share data
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Quarters Ended
March 31,
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2021
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2020
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Inc/
(Dec)
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Inc/ (Dec)
Excluding
Currency
Translation
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Revenues
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$
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5,124.6
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$
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4,714.4
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9%
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5%
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Operating
income
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2,281.3
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1,693.6
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35
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30
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Net income
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1,537.2
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1,106.9
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39
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35
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Earnings per
share-diluted
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$
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2.05
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$
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1.47
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39%
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35%
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Results for the quarter reflected stronger operating performance
in the U.S. due to higher sales-driven restaurant margins.
Results for the quarter included $135
million of pre-tax strategic gains, or $0.13 per share, primarily related to the sale of
McDonald's Japan stock, which
reduced the Company's ownership by an additional 3%.
Foreign currency translation had a positive impact of
$0.06 on diluted earnings per share
for the quarter.
EARNINGS PER SHARE-DILUTED RECONCILIATION
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Quarters Ended
March 31,
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2021
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2020
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Inc/
(Dec)
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Inc/ (Dec)
Excluding
Currency
Translation
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GAAP earnings per
share-diluted
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$
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2.05
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$
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1.47
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39%
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35%
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Strategic
gains
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(0.13)
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—
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Non-GAAP earnings per
share-diluted
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$
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1.92
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$
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1.47
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31%
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27%
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Excluding the strategic gains, for the quarter net income
increased 30% (26% in constant currencies) and diluted earnings per
share increased 31% (27% in constant currencies).
RESTAURANT UPDATE
The Company has continued to follow the guidance of expert
health authorities to ensure the appropriate precautionary steps
are taken to protect the health and safety of our people and our
customers.
As a result of COVID-19 resurgences, throughout the quarter
there have been numerous instances of government restrictions on
restaurant operating hours, limited dine-in capacity and, in some
cases, mandated dining room closures particularly in the
International Operated Markets. These restrictions are impacting
most of the Company's markets across Europe, particularly those with fewer drive
thru restaurant locations. The Company expects some restrictions in
various markets so long as the COVID-19 pandemic continues.
THE FOLLOWING DEFINITIONS APPLY TO THESE TERMS AS USED
THROUGHOUT THIS RELEASE
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, as well as impairment and other strategic
charges and gains, 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
(including restaurants temporarily closed due to COVID-19).
Comparable sales exclude the impact of currency translation and the
sales of any market considered hyper-inflationary (generally
identified as those markets whose cumulative inflation rate over a
three-year period exceeds 100%), which management believes more
accurately reflects 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.
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 of sales by Company-operated restaurants
and fees from franchised restaurants operated by conventional
franchisees, developmental licensees and affiliates. Changes in
Systemwide sales are primarily driven by comparable sales and net
restaurant unit expansion.
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.
RELATED COMMUNICATIONS
This press release should be read in conjunction with Exhibit
99.2 in the Company's Form 8-K filing for supplemental
information related to the Company's results for the quarter ended
March 31, 2021.
McDonald's Corporation will broadcast its investor earnings
conference call live over the Internet at 7:30 a.m. (Central Time) on April 29, 2021.
A link to the live webcast will be available at
www.investor.mcdonalds.com. There will also be an archived webcast
available for a limited time thereafter.
UPCOMING COMMUNICATIONS
For important news and information regarding McDonald's,
including the timing of future investor conferences and earnings
calls, visit the Investor Relations section of the Company's
Internet home page at www.investor.mcdonalds.com. McDonald's uses
this website as a primary channel for disclosing key information to
its investors, some of which may contain material and previously
non-public information.
ABOUT McDONALD'S
McDonald's is the world's leading global foodservice retailer
with over 39,000 locations in over 100 countries. Approximately 93%
of McDonald's restaurants worldwide are owned and operated by
independent local business owners.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements, which
reflect management's expectations regarding future events and
operating performance and speak only as of the date hereof. These
forward-looking statements involve a number of risks and
uncertainties. Factors that could cause actual results to differ
materially from our expectations are detailed in the Company's
filings with the Securities and Exchange Commission, including the
risk factors discussed in Exhibit 99.2 in the Company's Form
8-K filing on April 29, 2021. The Company undertakes no
obligation to update such forward-looking statements, except as may
otherwise be required by law.
McDONALD'S CORPORATION
CONDENSED
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
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Dollars and shares
in millions, except per share data
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Quarters Ended
March 31,
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2021
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2020
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Inc/
(Dec)
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Revenues
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Sales by
Company-operated restaurants
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$
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2,161.5
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$
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2,025.8
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$
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135.7
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7%
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Revenues from
franchised restaurants
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2,877.4
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2,608.0
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269.4
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10
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Other
revenues
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85.7
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80.6
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5.1
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6
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TOTAL
REVENUES
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5,124.6
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4,714.4
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410.2
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9
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Operating costs and
expenses
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Company-operated
restaurant expenses
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1,817.6
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1,752.8
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64.8
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4
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Franchised
restaurants-occupancy expenses
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571.5
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554.2
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17.3
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3
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Other restaurant
expenses
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67.2
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65.5
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1.7
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3
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Selling,
general & administrative expenses
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Depreciation and
amortization
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76.0
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73.5
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2.5
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3
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Other
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490.4
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516.3
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(25.9)
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(5)
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Other operating
(income) expense, net
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(179.4)
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58.5
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(237.9)
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n/m
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Total operating costs
and expenses
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2,843.3
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3,020.8
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(177.5)
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(6)
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OPERATING
INCOME
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2,281.3
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1,693.6
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|
587.7
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35
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Interest
expense
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300.0
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280.0
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20.0
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7
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Nonoperating (income)
expense, net
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28.6
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(31.3)
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59.9
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n/m
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Income before
provision for income taxes
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1,952.7
|
|
1,444.9
|
|
507.8
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|
35
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Provision for income
taxes
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415.5
|
|
338.0
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|
77.5
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23
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NET INCOME
|
$
|
1,537.2
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$
|
1,106.9
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$
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430.3
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39%
|
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EARNINGS PER
SHARE-DILUTED
|
$
|
2.05
|
|
$
|
1.47
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$
|
0.58
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39%
|
|
|
|
|
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Weighted average
shares outstanding-diluted
|
751.0
|
|
750.7
|
|
0.3
|
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0%
|
n/m Not meaningful
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SOURCE McDonald's Corporation