Company Information ACCT 370-B05 EXCEL PROJECT McDonald's Company Information Melissa Eddleman Company NameMcDonald's Corporation Ticker SymbolMCD IndustryQuick-service restaurant industry Products and Services OfferedLocally-relevant quality food and beverages Major competitorsInternational, national, regional, and local retailers of traditional, fast casual, and other food service competitors. Examples of competitors in the industry are Wendy's, Burger King, KFC, Taco Bell and Subway. Historical Income Statements Consolidated Statement of Income - USD ($) shares in Millions, $ in Millions 12 months ended Dec. 31, 2020Dec. 31, 2019Dec. 31, 2018 REVENUES Sales by Company-operated restaurants$ 8,139.2$ 9,420.8$ 10,012.7 Revenues from franchised restaurants10,726.111,655.711,012.5 Other Revenues342.5287.9232.7 Total revenues19,207.821,364.421,257.9 OPERATING COSTS AND EXPENSES Food & paper2,564.22,980.33,153.8 Payroll & employee benefits2,416.42,704.42,937.9 Occupancy & other operating expenses2,000.62,075.92,174.2 Franchised restaurants occupancy expenses2,207.52,200.61,973.3 Other Expenses267223.8186.1 Depreciation, Depletion and Amortization300.6262.5214.8 Other Selling, General and Administrative Expense2,2451,966.91,985.4 Other operating (income) expense, net(117.5)(119.8)(190.2) Total operating costs and expenses11,883.812,294.612,435.3 Operating income7,3249,069.88,822.6 Interest expense-net of capitalized interest of $6.0, $7.4 and $5.61,218.11,121.9981.2 Nonoperating (income) expense, net(34.8)(70.2)25.3 Income before provision for income taxes6,140.78,018.17,816.1 Provision for income taxes1,410.21,992.71,891.8 Net income$ 4,730.5$ 6,025.4$ 5,924.3 Earnings per common share–basic$ 6.35$ 7.95$ 7.61 Earnings per common share–diluted6.317.887.54 Dividends declared per common share$ 5.04$ 4.73$ 4.19 Weighted-average shares outstanding–basic744.6758.1778.2 Weighted-average shares outstanding–diluted750.1764.9785.6 Consolidated Statement of Income (Parenthetical) - USD ($) $ in Millions12 Months Ended Dec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Interest expense, capitalized interest$ 6$ 7.4$ 5.6 Consolidated Statement of Comprehensive Income - USD ($) $ in Millions12 Months Ended Dec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Net income$ 4,730.5$ 6,025.4$ 5,924.3 Foreign currency translation adjustments: Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges46127.5(453.6) Reclassification of (gain) loss to net income17.146.80 Foreign currency translation adjustments-net of tax benefit (expense) of $204.8, $(55.4), and $(90.7)63.1174.3(453.6) Cash flow hedges: Gain (loss) recognized in AOCI(129.1)17.346.5 Reclassification of (gain) loss to net income5.8(37.7)2.4 Cash flow hedges-net of tax benefit (expense) of $36.6, $6.1, and $(14.5)(123.3)(20.4)48.9 Defined benefit pension plans: Gain (loss) recognized in AOCI(43.5)(24.5)(27) Reclassification of (gain) loss to net income(0.4)(2.6)0.6 Defined benefit pension plans-net of tax benefit (expense) of $9.3, $5.2, and $4.3(43.9)(27.1)(26.4) Total other comprehensive income (loss), net of tax(104.1)126.8(431.1) Comprehensive income$ 4,626.4$ 6,152.2$ 5,493.2 Consolidated Statement of Comprehensive Income (Parenthetical) - USD ($) $ in Millions12 Months Ended Dec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Other comprehensive income (loss), foreign currency translation adjustment, tax$ 204.8$ (55.4)$ (90.7) Other comprehensive income (loss), derivatives qualifying as hedges, tax36.66.1(14.5) Other comprehensive income (loss), pension and other postretirement benefit plans, tax$ 9.3$ 5.2$ 4.3 Historical Balance Sheets Consolidated Balance Sheet - USD ($) $ in MillionsDec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Current assets Cash and equivalents$ 3,449.1$ 898.5$ 866 Accounts and notes receivable2,110.32,224.22,441.5 Inventories, at cost, not in excess of market51.150.251.1 Prepaid expenses and other current assets632.7385694.6 Total current assets6,243.23,557.94,053.2 Other assets Investments in and advances to affiliates1,297.21,270.31,202.8 Goodwill2,773.12,677.42,331.5 Miscellaneous3,527.42,5842,381 Total other assets7,597.76,531.75,915.3 Lease right-of-use asset, net13,827.713,261.20 Property and equipment Property and equipment, at cost41,476.539,050.937,193.6 Accumulated depreciation and amortization(16,518.3)(14,890.9)(14,350.9) Net property and equipment24,958.224,16022,842.7 Total assets52,626.847,510.832,811.2 Current liabilities Accounts payable741.3988.21,207.9 Lease liability701.56210 Income taxes741.1331.7228.3 Other taxes227247.5253.7 Accrued interest388.4337.8297 Accrued payroll and other liabilities1,138.31,035.7986.6 Current maturities of long term debt2,243.659.10 Total current liabilities6,181.23,6212,973.5 Long-term debt35,196.834,118.131,075.3 Long-term lease liability13,321.312,757.80 Long-term income taxes1,970.72,265.92,081.2 Deferred revenues - initial franchise fees702660.6627.8 Other long-term liabilities1,054.1979.61,096.3 Deferred Income Taxes2,025.61,318.11,215.5 Shareholders' equity (deficit) Preferred stock, no par value; authorized – 165.0 million shares; issued – none000 Common stock, $.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares16.616.616.6 Additional paid-in capital7,903.67,653.97,376 Retained earnings53,908.152,930.550,487 Accumulated other comprehensive income (loss)(2,586.8)(2,482.7)(2,609.5) Common stock in treasury, at cost; 915.2 and 914.3 million shares(67,066.4)(66,328.6)(61,528.5) Total shareholders' equity (deficit)(7,824.9)(8,210.3)(6,258.4) Total liabilities and shareholders' equity (deficit)$ 52,626.8$ 47,510.8$ 32,811.2 Consolidated Balance Sheet (Parenthetical) - $ / sharesDec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Preferred stock, par value$ 0$ 0$ 0 Preferred stock, authorized165,000,000165,000,000165,000,000 Preferred stock, issued000 Common stock, par value$ 0.01$ 0.01$ 0.01 Common stock, authorized3,500,000,0003,500,000,0003,500,000,000 Common stock, issued1,660,600,0001,660,600,0001,660,600,000 Common stock in treasury, shares915,200,000914,300,000893,500,000 McDonald's Corporation Historical Stmt of Cash Flows Consolidated Statement of Cash Flows - USD ($) $ in Millions12 Months Ended Dec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Operating activities Net income$ 4,730.5$ 6,025.4$ 5,924.3 Charges and credits: Depreciation and amortization1,751.41,617.91,482 Deferred income taxes6.4149.7102.6 Share-based compensation92.4109.6125.1 Net gain on sale of restaurant businesses(28.2)(128.2)(308.8) Other(75.2)49.2114.2 Changes in working capital items: Accounts receivable(6.8)27(479.4) Inventories, prepaid expenses and other current assets(68.6)128.8(1.9) Accounts payable(137.5)(26.8)129.4 Income taxes(43.6)173.4(33.4) Other accrued liabilities44.4(3.9)(87.4) Cash provided by operations6,265.28,122.16,966.7 Investing activities Capital expenditures(1,640.8)(2,393.7)(2,741.7) Purchases of restaurant and other businesses(66.1)(540.9)(101.7) Sales of restaurant businesses76.3340.8530.8 Sales of property27.4151.2160.4 Other57.4(628.5)(302.9) Cash used for investing activities(1,545.8)(3,071.1)(2,455.1) Financing activities Net short-term borrowings(893.1)799.295.9 Long-term financing issuances5,5434,4993,794.5 Long-term financing repayments(2,411.7)(2,061.9)(1,759.6) Treasury stock purchases(907.8)(4,976.2)(5,207.7) Common stock dividends(3,752.9)(3,581.9)(3,255.9) Proceeds from stock option exercises295.5350.5403.2 Other(122)(23.5)(20) Cash used for financing activities(2,249)(4,994.8)(5,949.6) Effect of exchange rates on cash and equivalents80.2(23.7)(159.8) Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect, Total2,550.632.5(1,597.8) Cash and equivalents at beginning of year898.58662,463.8 Cash and equivalents at end of year3,449.1898.5866 Supplemental cash flow disclosures Interest Paid1,1361,066.5959.6 Income taxes paid$ 1,441.9$ 1,589.7$ 1,734.4 McDonald's Corporation 5 - Wendy's Income Statements Consolidated Statements of Income - USD ($) $ in Millions12 Months Ended Dec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Revenues Total revenues$5,652$5,597$5,688 Costs and Expenses, Net Company restaurant expenses150612351634 General and administrative expenses1064917895 Franchise and property expenses145180188 Franchise advertising and other services expense131413681208 Refranchising (gain) loss(34)(37)(540) Other (income) expense15447 Total costs and expenses, net414936673392 Operating Profit150319302296 Investment (income) expense, net[1](74)67(9) Other Pension (income) expense[1]14414 Interest expense, net[1](543)(486)(452) Income before income taxes102013731839 Income tax provision11679297 Net Income$904$1,294$1,542 Basic Earnings Per Common Share (in dollars per share)$3$4$5 Diluted Earnings Per Common Share (in dollars per share)2.944.144.69 Dividends Declared Per Common Share (in dollars per share)$2$2$1 Company Sales Revenues Revenue from Contract with Customer, Excluding Assessed Tax$1,810$1,546$2,000 Franchise and property revenue [Member] Revenues Revenue from Contract with Customer, Excluding Assessed Tax251026602482 Franchise contributions for advertising and other services Revenues Revenue from Contract with Customer, Excluding Assessed Tax$1,332$1,391$1,206 [1]Amounts have not been allocated to any segment for performance reporting purposes. Consolidated Statement of Comprehensive Income - USD ($) $ in Millions12 Months Ended Dec. 31, 2020Dec. 31, 2019Dec. 31, 2018 Net Income$ 904$ 1,294$ 1,542 Adjustments and gains (losses) arising during the year3928(94) Reclassifications of adjustments and (gains) losses into Net Income00(4) Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, before Tax3928(98) Tax (expense) benefit0(4)6 Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax3924(92) Unrealized gains (losses) arising during the year(8)(39)32 Reclassification of (gains) losses into Net Income181022 Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Unrealized Gains (Losses), before Tax10(29)54 Pension and post-retirement benefit plans (tax impact)(2)7(13) Pension and post-retirement benefit plans (net of tax impact)8(22)41 Unrealized gains (losses) arising during the year(99)(51)19 Reclassification of (gains) losses into Net Income6(25)(39) Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, before Tax(93)(76)(20) Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax(23)(20)(6) Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax(70)(56)(14) Other Comprehensive Income (Loss), Net of Tax(23)(54)(65) Comprehensive Income$ 881$ 1,240$ 1,477 Wendy's Income Statements Consolidated Statements of Operations - USD ($) $ in Thousands12 Months Ended Jan. 03, 2021Dec. 29, 2019Dec. 30, 2018 Revenues Franchise rental income$ 232,648$ 233,065 Franchise rental income$ 203,297 Revenues1,733,8251,709,0021,589,936 Costs and Expenses Cost of sales614,907597,530548,588 Franchise support and other costs26,46443,68625,203 Franchise rental expense125,613123,92991,104 Advertising funds expense345,360338,116321,866 General and administrative206,876200,206217,489 Depreciation and amortization132,775131,693128,879 System optimization gains, net(3,148)(1,283)(463) Reorganization and realignment costs16,03016,9659,068 Impairment of long-lived assets8,0376,9994,697 Other operating income, net(8,397)(11,418)(6,387) Costs and expenses1,464,5171,446,4231,340,044 Operating profit269,308262,579249,892 Interest expense, net(117,737)(115,971)(119,618) Loss on early extinguishment of debt0(8,496)(11,475) Investment (loss) income, net(225)25,598450,736 Other income, net1,4497,7715,381 Income before income taxes152,795171,481574,916 Provision for income taxes(34,963)(34,541)(114,801) Net Income$ 117,832$ 136,940$ 460,115 Earnings Per Share Earnings Per Share, Basic$ 0