McDonalds 2001 Annual Report Download - page 8

In July 2001, Matt Paull was appointed Executive
Vice President and Chief Financial Officer of
McDonald’s Corporation. Prior to becoming CFO,
he was the Company’s Senior Vice President—
Finance. Matt brings a wealth of business experi-
ence, as well as financial expertise, to the position.
The brief interview that follows is provided to intro-
duce Matt to investors.
How do you see your role as CFO?
I view my role in very broad terms. Of course,
measuring growth in sales and income, as well as
improvements in returns,
margins and other financial
metrics are critical to gauging
performance. I oversee the
establishment and measure-
ment of those metrics to ensure
that we are focused on building
the business for the benefit of
shareholders.
Yet, that is only part of my
job. I view working with the
entire management team to
focus the organization on
critical nonfinancial goals as
one of my key responsibilities.
Setting and achieving the right
nonfinancial goals—such as
improving the speed, accuracy
and friendliness of our service,
as well as other customer satisfaction attributes—
ultimately will determine whether we achieve our
financial goals.
How is the Company determining whether
important nonfinancial goals are being met?
We are assessing the quality of our customers’
experiences with metrics that are both timely and
actionable. More specifically, we have calibrated and
refined our measurement criteria and essentially
eliminated the subjectivity that often creeps into
evaluation processes. Perhaps more importantly, we
are holding our people more accountable and are
tying their compensation more directly to results.
How have world economic situations impacted
the Company’s expansion plans?
Opening profitable restaurants is part of our
growth strategy. We have the financial capacity to
invest for the long term. At the same time, we plan
to invest prudently.
When planning openings, we consider each mar-
ket’s current economic conditions, long-term demo-
graphic and lifestyle trends, competitive environment
and stage of development, as well as the potential
effect on existing McDonald’s restaurants and returns.
Based on these criteria, we reduced the number
of restaurant additions over the past few years and
expect to add 1,300 to 1,400 McDonald’s restaurants
in 2002. About 60 percent of these openings will be
in the U.S., Europe and Canada, where economies
are relatively stable and returns are strong. We also
are adding restaurants in China, where the near-
and long-term growth potential is enormous.
At the same time, we are reducing openings in
markets with weak economic environments until we
see signs of improvement. Since we already have a
clear competitive lead in these countries, this tempo-
rary slowdown makes good business sense.
In addition, we plan to open 100 to 150 new
restaurants under our Partner Brands in 2002.
What are McDonald’s priorities for using the cash
it generates?
McDonald’s consistently generates a significant
amount of cash from operations, and our focus
remains on using that cash to enhance shareholder
value.
Clearly, our priority is to invest in growing the
business—first by investing in Brand McDonald’s
and second, by investing in our Partner Brand con-
cepts. Our goal is to put our cash to work to capture
more meal occasions and to generate attractive
returns in the process.
Further, since our annual cash from operations
is more than $2.5 billion, a sizeable amount remains
after making capital expenditures. We deploy that
excess cash—together with our credit capacity—to
repurchase shares of McDonald’s stock and to pay
dividends—both uses that benefit shareholders.
Perspectives from our CFO
We continue to achieve returns
in excess of our cost of capital,
and our objective is to
increase returns over time.
6
...we are holding
our people more
accountable and
are tying their
compensation
more directly to
results.