McDonalds 2009 Annual Report Download - page 16

In addition to the consolidated operating results shown on the
previous page, consolidated results for 2007 and adjusted
growth rates for 2008 are presented in the following table
excluding the impact of the Latam transaction. These results
include the effect of foreign currency translation further dis-
cussed in the section titled Impact of foreign currency translation
on reported results. While the Company has converted certain
other markets to a developmental license arrangement, manage-
ment believes the Latam transaction and the associated charge
are not indicative of ongoing operations due to the size and
scope of the transaction. Management believes that the adjusted
operating results better reflect the underlying business trends
relevant to the periods presented.
Dollars in millions, except per share data 2009 2008 2007(1) Latam Transaction(1)
2007
Excluding
Latam
Transaction
2009
% Inc
2008
Adjusted
% Inc
Operating income $6,841 $6,443 $3,879 $(1,641) $5,520 617
Income from continuing operations 4,551 4,313 2,335 (1,579) 3,914 610
Income from discontinued operations 60 60
Net income 4,551 4,313 2,395 (1,579) 3,974 69
Income per common share – diluted
Continuing operations(2,3) 4.11 3.76 1.93 (1.30) 3.23 916
Discontinued operations 0.05 0.05
Net income(2,3) 4.11 3.76 1.98 (1.30) 3.28 915
nm Not meaningful.
(1) The results for the full year 2007 included impairment and other charges of $1,665 million, partly offset by a benefit of $24 million due to eliminating depreciation on the assets in Latam
in mid-April 2007, and a tax benefit of $62 million.
(2) The following items impact the comparison of growth in diluted income per share from continuing operations and diluted net income per share for the year ended December 31, 2009
compared with 2008. On a net basis, these items positively impact the comparison by 1 percentage point:
2009
• $0.08 per share after tax income primarily due to the resolution of certain liabilities retained in connection with the 2007 Latam transaction.
• $0.05 per share after tax gain on the sale of the Company’s minority ownership interest in Redbox.
2008
• $0.09 per share after tax gain on the sale of the Company’s minority ownership interest in Pret A Manger.
(3) The following items impact the comparison of adjusted growth in diluted income per share from continuing operations and diluted net income per share for the year ended December 31,
2008 compared with 2007. On a net basis, these items negatively impact the comparison by 7 and 6 percentage points, respectively:
2008
• $0.09 per share after tax gain on the sale of the Company’s minority ownership interest in Pret A Manger.
2007
• $0.26 per share of income tax benefit resulting from the completion of an Internal Revenue Service (IRS) examination of the Company’s 2003-2004 U.S. federal income tax returns;
partly offset by
• $0.02 per share of income tax expense related to the impact of a tax law change in Canada.
NET INCOME AND DILUTED NET INCOME PER COMMON SHARE
In 2009, net income and diluted net income per common share
were $4.6 billion and $4.11. Results benefited by after tax
income of $87 million or $0.08 per share primarily due to the
resolution of certain liabilities retained in connection with the
2007 Latam transaction. Results also benefited by an after tax
gain of $59 million or $0.05 per share due to the sale of the
Company’s minority ownership interest in Redbox. Results were
negatively impacted by $0.15 per share due to the effect of for-
eign currency translation.
In 2008, net income and diluted net income per common share
were $4.3 billion and $3.76. Results benefited by a $109 million or
$0.09 per share after tax gain on the sale of the Company’s minor-
ity ownership interest in Pret A Manger. Results also benefited by
$0.09 per share due to the effect of foreign currency translation.
In 2007, net income and diluted net income per common
share were $2.4 billion and $1.98. Income from continuing oper-
ations was $2.3 billion or $1.93 per share, which included
$1.6 billion or $1.30 per share of net expense related to the
Latam transaction. This reflects an impairment charge of
$1.32 per share, partly offset by a $0.02 per share benefit due
to eliminating depreciation on the assets in Latam in mid-April
2007 in accordance with accounting rules. In addition, 2007
results included a net tax benefit of $288 million or $0.24 per
share resulting from the completion of an IRS examination of the
Company’s 2003-2004 U.S. federal income tax returns, partly
offset by the impact of a tax law change in Canada. Income from
discontinued operations was $60 million or $0.05 per share.
The Company repurchased 50.3 million shares of its stock for
$2.9 billion in 2009 and 69.7 million shares for $4.0 billion in
2008, driving reductions of over 3% and 4% of total shares out-
standing, respectively, net of stock option exercises.
IMPACT OF FOREIGN CURRENCY TRANSLATION ON REPORTED
RESULTS
While changing foreign currencies affect reported results,
McDonald’s mitigates exposures, where practical, by financing in
local currencies, hedging certain foreign-denominated cash
flows, and purchasing goods and services in local currencies.
In 2009, foreign currency translation had a negative impact
on consolidated operating results, primarily driven by the Euro,
British Pound, Russian Ruble, Australian Dollar and Canadian
Dollar. In 2008, foreign currency translation had a positive impact
on consolidated operating results, driven by the stronger Euro
and most other currencies, partly offset by the weaker British
Pound. In 2007, foreign currency translation had a positive
impact on consolidated operating results, primarily driven by the
Euro, British Pound, Australian Dollar and Canadian Dollar.
14 McDonald’s Corporation Annual Report 2009