XXXXXXXXXX
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from XXXXXXXXXXto
Commission File Number 1-5231
McDONALD’S CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware XXXXXXXXXX
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employe
Identification No.)
110 North Carpenter Street
60607Chicago, Illinois
(Address of Principal Executive Offices) (Zip Code)
XXXXXXXXXX
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value MCD New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
equirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§ XXXXXXXXXXof this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒ 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
730,093,896
(Number of shares of common stock
outstanding as of March 31, 2023)
Table of Contents
McDONALD’S CORPORATION
___________________________
INDEX
_______
Page Reference
Part I. Financial Information
Item 1 – Financial Statements
Condensed Consolidated Balance Sheet, March 31, 2023 (unaudited) and December 31, 2022 3
Condensed Consolidated Statement of Income (unaudited), quarters ended March 31, 2023 and 2022 4
Condensed Consolidated Statement of Comprehensive Income (unaudited), quarters ended March 31, 2023 and 2022 5
Condensed Consolidated Statement of Cash Flows (unaudited), quarters ended March 31, 2023 and 2022 6
Condensed Consolidated Statement of Shareholders' Equity (unaudited), quarters ended March 31, 2023 and 2022 7
Notes to Condensed Consolidated Financial Statements (unaudited) 8
Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3 – Quantitative and Qualitative Disclosures About Market Risk 34
Item 4 – Controls and Procedures 34
Part II. Other Information
Item 1 – Legal Proceedings 36
Item 1A – Risk Factors 36
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds 36
Item 6 – Exhibits 37
Signature 39
All trademarks used herein are the property of their respective owners and are used with permission.
2
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
In millions, except per share data
March 31,
2023
December 31,
2022
Assets
Cu
ent assets
Cash and equivalents $ 3,708.1 $ 2,583.8
Accounts and notes receivable 2,075.5 2,115.0
Inventories, at cost, not in excess of market XXXXXXXXXX
Prepaid expenses and other cu
ent assets XXXXXXXXXX
Total cu
ent assets 6,798.7 5,424.2
Other assets
Investments in and advances to affiliates 1,087.6 1,064.5
Goodwill 2,930.6 2,900.4
Miscellaneous 4,794.8 4,707.2
Total other assets 8,813.0 8,672.1
Lease right-of-use asset, net 12, XXXXXXXXXX,565.7
Property and equipment
Property and equipment, at cost 41, XXXXXXXXXX,037.6
Accumulated depreciation and amortization (17, XXXXXXXXXX,264.0)
Net property and equipment 23, XXXXXXXXXX,773.6
Total assets $ 52,014.4 $ 50,435.6
Liabilities and shareholders’ equity
Cu
ent liabilities
Short-term bo
owings and cu
ent maturities of long-term debt $ 524.2 $ —
Accounts payable XXXXXXXXXX
Lease liability XXXXXXXXXX
Income taxes XXXXXXXXXX
Other taxes XXXXXXXXXX
Accrued interest XXXXXXXXXX
Accrued payroll and other liabilities 1,186.6 1,237.4
Total cu
ent liabilities 4,624.7 3,802.1
Long-term debt 36, XXXXXXXXXX,903.5
Long-term lease liability 12, XXXXXXXXXX,134.4
Long-term income taxes XXXXXXXXXX
Defe
ed revenues - initial franchise fees XXXXXXXXXX
Other long-term liabilities 1,059.4 1,051.8
Defe
ed income taxes 1,882.5 1,997.5
Shareholders’ equity (deficit)
Prefe
ed stock, no par value; authorized – 165.0 million shares; issued – none — —
Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares XXXXXXXXXX
Additional paid-in capital 8,635.5 8,547.1
Retained earnings 60, XXXXXXXXXX,543.9
Accumulated other comprehensive income (loss) (2, XXXXXXXXXX,486.6)
Common stock in treasury, at cost; 930.5 and 929.3 million shares (72, XXXXXXXXXX,624.4)
Total shareholders’ equity (deficit) (5, XXXXXXXXXX,003.4)
Total liabilities and shareholders’ equity (deficit) $ 52,014.4 $ 50,435.6
See Notes to condensed consolidated financial statements.
3
Table of Contents
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Quarters Ended
March 31,
In millions, except per share data XXXXXXXXXX
Revenues
Sales by Company-operated restaurants $ 2,224.3 $ 2,302.4
Revenues from franchised restaurants 3,587.5 3,262.8
Other revenues XXXXXXXXXX
Total revenues 5,897.8 5,665.6
Operating costs and expenses
Company-operated restaurant expenses 1,923.1 1,959.2
Franchised restaurants-occupancy expenses XXXXXXXXXX
Other restaurant expenses XXXXXXXXXX
Selling, general & administrative expenses
Depreciation and amortization XXXXXXXXXX
Other XXXXXXXXXX
Other operating (income) expense, net XXXXXXXXXX
Total operating costs and expenses 3,365.4 3,353.0
Operating income 2,532.4 2,312.6
Interest expense XXXXXXXXXX
Nonoperating (income) expense, net XXXXXXXXXX
Income before provision for income taxes 2,267.0 1,541.2
Provision for income taxes XXXXXXXXXX
Net income $ 1,802.3 $ 1,104.4
Earnings per common share-basic $ 2.47 $ 1.49
Earnings per common share-diluted $ 2.45 $ 1.48
Dividends declared per common share $ 1.52 $ 1.38
Weighted-average shares outstanding-basic XXXXXXXXXX
Weighted-average shares outstanding-diluted XXXXXXXXXX
See Notes to condensed consolidated financial statements.
4
Table of Contents
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Quarters Ended
March 31,
In millions XXXXXXXXXX
Net income $ 1,802.3 $ 1,104.4
Other comprehensive income (loss), net of tax
Foreign cu
ency translation adjustments:
Gain (loss) recognized in accumulated other comprehensive
income ("AOCI"), including net investment hedges XXXXXXXXXX)
Reclassification of (gain) loss to net income — —
Foreign cu
ency translation adjustments-net of tax
enefit (expense) of $35.6 and $ XXXXXXXXXX)
Cash flow hedges:
Gain (loss) recognized in AOCI XXXXXXXXXX
Reclassification of (gain) loss to net income XXXXXXXXXX)
Cash flow hedges-net of tax benefit (expense) of $4.5 and $ XXXXXXXXXX
Defined benefit pension plans:
Gain (loss) recognized in AOCI XXXXXXXXXX
Reclassification of (gain) loss to net income XXXXXXXXXX)
Defined benefit pension plans-net of tax benefit (expense)
of $1.1 and $ XXXXXXXXXX)
Total other comprehensive income (loss), net of tax XXXXXXXXXX)
Comprehensive income $ 1,799.5 $ 1,036.2
See Notes to condensed consolidated financial statements.
5
Table of Contents
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Quarters Ended
March 31,
In millions XXXXXXXXXX
Operating activities
Net income $ 1,802.3 $ 1,104.4
Adjustments to reconcile to cash provided by operations
Charges and credits:
Depreciation and amortization XXXXXXXXXX
Defe
ed income taxes XXXXXXXXXX)
Share-based compensation XXXXXXXXXX
Other XXXXXXXXXX
Changes in working capital items XXXXXXXXXX
Cash provided by operations 2,420.7 2,133.3
Investing activities
Capital expenditures XXXXXXXXXX)
Purchases of restaurant businesses XXXXXXXXXX)
Sales of restaurant businesses XXXXXXXXXX
Sales of property XXXXXXXXXX
Other XXXXXXXXXX)
Cash used for investing activities XXXXXXXXXX)
Financing activities
Net short-term bo
owings XXXXXXXXXX
Long-term financing issuances 1,054.3 —
Long-term financing repayments — (1,350.6)
Treasury stock purchases XXXXXXXXXX,506.5)
Common stock dividends (1, XXXXXXXXXX,025.1)
Proceeds from stock option exercises XXXXXXXXXX
Other XXXXXXXXXX)
Cash used for financing activities XXXXXXXXXX,830.1)
Effect of exchange rates on cash and cash equivalents XXXXXXXXXX)
Cash and equivalents increase (decrease) 1, XXXXXXXXXX,373.5)
Cash and equivalents at beginning of period 2,583.8 4,709.2
Cash and equivalents at end of period $ 3,708.1 $ 2,335.7
See Notes to condensed consolidated financial statements.
6
Table of Contents
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
For the quarter ended March 31, 2022
Common stock
issued
Accumulated othe
comprehensive income (loss)
Common stock in
treasury Total
shareholders’
equity (deficit)
Additional
paid-in
capital
Retained
earnings Pensions
Cash flow
hedges
Foreign
cu
ency
translationIn millions, except per share data Shares Amount Shares Amount
Balance at December 31, 2021 1,660.6 $ 16.6 $ 8,231.6 $ 57,534.7 $ (179.5) $ (24.8) $ (2, XXXXXXXXXX) $ (67,810.2) $ (4,601.0)
Net income 1,104.4 1,104.4
Other comprehensive income (loss),
net of tax XXXXXXXXXX68.2)
Comprehensive income 1,036.2
Common stock cash dividends
($1.38 per share) (1, XXXXXXXXXX,025.1)
Treasury stock purchases XXXXXXXXXX, XXXXXXXXXX,506.5)
Share-based compensation XXXXXXXXXX
Stock option exercises and other XXXXXXXXXX
Balance at March 31, 2022 1,660.6 $ 16.6 $ 8,307.1 $ 57,614.0 $ (180.8) $ (7.5) $ (2, XXXXXXXXXX) $ (69,286.6) $ (5,990.8)
For the quarter ended March 31, 2023
Common stock
issued
Accumulated othe
comprehensive income (loss)
Common stock in
treasury Total
shareholders’
equity (deficit)
Additional
paid-in
capital
Retained
earnings Pensions
Cash flow
hedges
Foreign
cu
ency
translationIn millions, except per share data Shares Amount Shares Amount
Balance at December 31, 2022 1,660.6 $ 16.6 $ 8,547.1 $ 59,543.9 $ (298.2) $ 30.7 $ (2, XXXXXXXXXX) $ (71,624.4) $ (6,003.4)
Net income 1,802.3 1,802.3
Other comprehensive income (loss),
net of tax XXXXXXXXXX2.8)
Comprehensive income 1,799.5
Common stock cash dividends
($1.52 per share) (1, XXXXXXXXXX,111.2)
Treasury stock purchases XXXXXXXXXX5)
Share-based compensation XXXXXXXXXX
Stock option exercises and other XXXXXXXXXX
Balance at March 31, 2023 1,660.6 $ 16.6 $ 8,635.5 $ 60,235.0 $ (299.3) $ 14.0 $ (2, XXXXXXXXXX) $ (72,173.8) $ (5,776.1)
See Notes to condensed consolidated financial statements.
7
Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
McDonald’s Corporation, the registrant, together with its subsidiaries, is refe
ed to herein as the "Company." The Company, its franchisees and
suppliers, are refe
ed 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, 2022 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recu
ing accruals)
necessary for a fair presentation have been included. The results for the quarter ended March 31, 2023 do not necessarily indicate the results that may be
expected for the full year.
Restaurant Information
The following table presents restaurant information by ownership type:
Restaurants at March 31, XXXXXXXXXX
Conventional franchised 21,701 21,558
Developmental licensed 8,289 7,981
Foreign affiliated 8,427 8,013
Total Franchised 38,417 37,552
Company-operated 2,118 2,792
Total Systemwide restaurants 40,535 40,344
Restaurant information reflects the sale