McDonalds 2014 Annual Report Download - page 22

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16 McDonald’s Corporation 2014 Annual Report
Based on current interest and foreign currency exchange
rates, the Company expects interest expense for the full-year
2015 to increase slightly compared with 2014.
A significant part of the Company's operating income is
generated outside the U.S., and about 40% 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 70% of the Company's operating income
outside 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 2015 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.
The Company expects capital expenditures for 2015 to be
approximately $2.0 billion. About half of this amount will be
used to open new restaurants. The Company expects to
open more than 1,000 restaurants including about 450
restaurants in affiliated and developmental licensee markets
where the Company does not fund any capital expenditures.
The Company expects net additions of between 600-700
restaurants. The remaining capital will be used to reinvest in
existing locations.
The Company has established a 3-year cash return target of
$18-$20 billion for 2014 to 2016. This target is based on
several ongoing factors, including the significant free cash
flow generated from our operations, as well as the use of
cash proceeds from debt additions and refranchising of at
least 1,500 restaurants.