McDonalds 2012 Annual Report Download - page 17

• With about 75% of McDonald’s grocery bill comprised of 10
different commodities, a basket of goods approach is the most
comprehensive way to look at the Company’s commodity costs.
For the full year 2013, the total basket of goods cost is
expected to increase 1.5-2.5% in the U.S. and 3-4% in Europe.
• The Company expects full-year 2013 selling, general and
administrative expenses to increase approximately 2-3% in
constant currencies, with fluctuations expected between the
quarters.
• Based on current interest and foreign currency exchange rates,
the Company expects interest expense for the full year 2013
to increase approximately 4-6% compared with 2012.
• A significant part of the Company’s operating income is gen-
erated outside the U.S., and about 35% of its total debt is
denominated in foreign currencies. Accordingly, earnings are
affected by changes in foreign currency exchange rates,
particularly the Euro, British Pound, Australian Dollar and
Canadian Dollar. Collectively, these currencies represent
approximately 65% of the Company’s operating income out-
side the U.S. If all four of these currencies moved by 10% in
the same direction, the Company’s annual diluted earnings per
share would change by about 25 cents.
• The Company expects the effective income tax rate for the full-
year 2013 to be 31% to 33%. Some volatility may be
experienced between the quarters resulting in a quarterly tax
rate that is outside the annual range. As a result of the Ameri-
can Taxpayer Relief Act of 2012, our income tax provision for
the first quarter of 2013 will include a tax benefit of about $50
million reflecting the retroactive impact of certain tax benefits,
which may result in a first quarter effective tax rate below the
full year range.
• The Company expects capital expenditures for 2013 to be
approximately $3.2 billion. Over half of this amount will be used
to open new restaurants. The Company expects to open
between 1,500–1,600 restaurants including about 500
restaurants in affiliated and developmental licensee markets,
such as Japan and Latin America, where the Company does
not fund any capital expenditures. The Company expects net
additions of between 1,200–1,300 traditional restaurants. The
remaining capital will be used to reinvest in existing locations,
in part through reimaging. More than 1,600 restaurants world-
wide are expected to be reimaged, including locations in
affiliated and developmental licensee markets that require no
capital investment from the Company.
McDonald’s Corporation 2012 Annual Report 15