McDonalds 2007 Annual Report Download - page 7

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5
By all these measures, McDonald’s has performed very well. We
are proud of our results and equally enthusiastic about our ability
to succeed in 2008 and beyond. Through a combination of
operations excellence and leadership marketing,
we are operating
from a position of
strength and prepared
to capture the growth
opportunities in the
marketplace.
I am confident we will continue to meet our long-term
financial targets:
• 3-5% average annual sales and revenue growth
• 6-7% average annual operating income growth
• Returns on incremental invested capital in the high teens.
I am confident because we have an exceptional Board of
Directors … an outstanding global leadership team … committed
franchisees … passionate suppliers … the best trained restaurant
staff … and highly experienced company people – all of whom
are aligned and focused on delivering a better experience for
our customers.
Thank you for your continued confidence and investment in
McDonald’s. We look forward to enjoying more success with
you in the future.
Sincerely,
Jim Skinner
Chief Executive Officer
March 17, 2008
The focus on people through talent management and leadership
development is delivering improved business performance and
strong succession planning around the world. As a result, we
are proud to see McDonald’s recognized among companies
known for their leadership by prestigious publications and
organizations.
Concerning fiscal responsibility, we have made discipline
our watchword. We are generating a more reliable cash flow,
investing capital wisely to ensure the highest returns over the
long-term, and being prudent with the overhead we spend to
support growth. Our franchising initiatives have brought our
restaurant ownership mix to 78% franchised, 22% Company-
operated. Return on incremental invested capital has consistently
exceeded our high teens target. At the same time, our general,
selling and administrative expenses have consistently declined
as a percentage of sales and revenues.
Most important to our valued investors, this combination of
restaurant performance and financial diligence has enabled
us to increase shareholder value significantly.
Since 2004, the compounded annual total return on our stock
is 25 percent, more than double the Dow Jones Industrial
Average and S&P 500 Index during the same period. Our cash
dividend is a big contributor to this overall return, increasing more
than 170 percent in the last three years. In 2007 alone, through
a combination of share repurchase and dividends, we returned
$5.7 billion to shareholders, and ...
we are on track
to fulfill our target to
return $15 billion to
$17 billion from 2007
through 2009.