Saying, “More than ever before, we must adapt and seize opportunities. Our goal is to improve results in 2002 and put ourselves in position to return to double-digit earnings growth,” McDonald’s chairman and CEO Jack M. Greenberg today discussed the company’s 2002 outlook and announced a $5 billion share repurchase program.
The company’s goal, according to Greenberg, is to increase sales and improve profitability and returns. It expects 2002 earnings per share to increase by 5 percent to 10 percent, excluding the effect of foreign currency translation and a fourth-quarter 2001 special charge. Such results, says the company, would represent a significant improvement over 2001 and set the stage for stronger growth in 2003 and beyond.
To prepare the company for future growth, McDonald’s is implementing a number of change initiatives around the world. In connection with these changes, McDonald’s expects to take a special charge of $175 million to $200 million in the fourth quarter of 2001, primarily for employee severance and outplacement, consolidation of facilities, and related costs. After
redeploying more than $50 million, the company expects ongoing annual S,G&A savings of about $100 million beginning in 2002, compared with what otherwise would be spent.
Given the weak global economic environment, the company expects to open approximately 200 fewer McDonald’s restaurants in 2002 than this year. Net of restaurant closings, this reflects plans to add 1,300 to 1,400 McDonald’s restaurants in 2002, a number similar to this year. In addition, the Company expects to add 100 to 150 restaurants under its Partner Brands in 2002.
The Company announced that it will embark on a newly authorized $5 billion share repurchase program in the near future. To date, it has repurchased $4.2 billion of McDonald’s stock under its current program.
Also, McDonald’s Board of Directors approved a 4.7 percent increase in the annual dividend to 22.5 cents per share, payable on December 3, 2001 to shareholders of record at the close of business on November 15, 2001.
In other McDonald’s news, the Chicago Tribune reported October 24 that McDonald’s and Disney might extend their mutually exclusive co-marketing deal past the 2006 expiration date.
