BUSN 5200 McDonald's and McWendy's Financial Statement Analysis

Sales and Income Record

Dollars in millions, except per share data	2008	2009	2010	2011	2012	2013
Company-operated sales	$ 16,561	$ 15,459	$ 16,233	$ 18,293	$ 18,603	$ 18,875
Franchised revenues	$ 6,961	$ 7,286	$ 7,842	$ 8,713	$ 8,964	$ 9,231
Total revenues	$ 23,522	$ 22,745	$ 24,075	$ 27,006	$ 27,567	$ 28,106
Revenue Growth Rate % (YoY)		-3.3%	5.8%	12.2%	2.1%	2.0%
Operating income	$ 6,443	$ 6,841	$ 7,473	$ 8,530	$ 8,605	$ 8,764
Operating Income Growth Rate % (YoY)		6.2%	9.2%	14.1%	0.9%	1.8%
Net income	$ 4,313	$ 4,551	$ 4,946	$ 5,503	$ 5,465	$ 5,586
Net Income Growth Rate % (YoY)		5.5%	8.7%	11.3%	-0.7%	2.2%

Revenue and Net Income Trend (FY 2008 to FY 2012)

Total revenues 2008 2009 2010 2011 2012 23522 22745 24075 27006 27567 Net income 2008 2009 2010 2011 2012 4313 4551 4946 5503 5465 Revenue Growth Rate % (YoY) 2008 2009 2010 2011 2012 2013 -3.3032905365190032E-2 5.8474389975818858E-2 0.12174454828660436 2.0773161519662298E-2 Net Income Growth Rate % (YoY) 2008 2009 2010 2011 2012 2013 5.5182007883143987E-2 8.679411118435508E-2 0.11261625556004852 -6.9053243685262581E-3

Revenue / Net Income

Revenue / Net Income Growth %

MCD-Income Statement

Dollars in millions, except per share data	2010	2011	2012
REVENUES
Sales by Company Operated Restaurants	16233.3	18292.8	18602.5
Revenues from Franchised Restaurants	7841.3	8713.2	8964.5
Total Revenues	24074.6	27006.0	27567.0
OPERATING COSTS AND EXPENSES
Company Operated Restaurant Expenses	13059.5	14837.9	15223.7
Food and Paper	5300.1	6167.2	6318.2
Payroll and Employee Benefits	4121.4	4606.3	4710.3
Occupancy and Other Operating Expenses	3638.0	4064.4	4195.2
Franchised Restaurant Occupancy Expenses	1377.8	1481.5	1527.0
Selling, General and Administrative Expenses	2333.3	2393.7	2455.2
Impairments and Other Charges	29.1	(3.9)	8.0
Other Operating Expenses (Income)	(198.2)	(232.9)	(251.5)
Total Operating Costs and Expenses	16601.5	18476.3	18962.4
Operating Income	7473.1	8529.7	8604.6
Interest Expenses	450.9	492.8	516.6
Nonoperating Expenses (Income)	21.9	24.7	9.0
Income Before Taxes	7000.3	8012.2	8079.0
Provision for Income Taxes	2054.0	2509.1	2614.2
Net Income	4946.3	5503.1	5464.8
Shares Outstanding	1066.0	1032.1	1010.1
EPS	$ 4.64	$ 5.33	$ 5.41

OPERATING COSTS AND EXPENSES (FY 2012)

OPERATING COSTS AND EXPENSES

Food and Paper Payroll and Employee Benefits Occupancy and Other Operating Expenses Franchised Restaurant Occupancy Expenses Selling, General and Administrative Expenses Impairments and Other Charges Other Operating Expenses (Income) 6318.2 4710.3 4195.2 1527 2455.1999999999998 8 -251.5

MCD - Balance Sheet

Dollars in millions, except per share data	2010	2011	2012			Asset Distribution (FY 2012)
ASSETS						Cash and Equivalents	2336.10
Current Assets						Accounts Receivables	1375.30
Cash and Equivalents		2335.70	2336.10			Inventories	121.70
Accounts Receivables		1334.70	1375.30			Fixed Assets	24677.20
Inventories		116.80	121.70			Other Assets	6876.20
Prepaid Expenses		615.80	1089.00			Dollars in millions, except per share data
Total Current Assets		4403.00	4922.10
Other Assets
Investments		1427.00	1380.50
Goodwill		2653.20	2804.00
Miscellaneous		1672.20	1602.70
Total Other Assets		5752.40	5787.20
Property and Equipment
Property and Equipment		35737.60	38491.10
Accumulated Depreciation		(12903.10)	(13813.90)
Net Property and Equipment		22834.50	24677.20
TOTAL ASSETS		32989.90	35386.50
Dollars in millions, except per share data	2010	2011	2012			Capital Structure (FY 2012)
LIABILITIES AND SHAREHOLDER'S EQUITY						Current Liabilities	3403.10
Current Liabilities						Long-Term and Other Liabilities	16689.80
Accounts Payables		961.30	1141.90			Preferred Stock	0.00
Income Taxes		262.20	298.70			Common Equity	15293.60
Other Taxes		338.10	370.70			Dollars in millions, except per share data
Accrued Interest		218.20	217.00
Accrued Payroll and Liabilities		1362.80	1374.80
Current Maturities of LT Debt		366.60	0.00
Total Current Liabilities		3509.20	3403.10
Long Term Debt		12133.80	13632.50
Other Long Term Liabilities		1612.60	1526.20
Deferred Income Taxes		1344.10	1531.10
Shareholder's Equity
Preferred Stock		0.00	0.00
Commom Stock		16.60	16.60
Additional Paid-In Capital		5487.30	5778.90
Retained Earnings		36707.50	39278.00
Accumulated Other Comprehensive Income		449.70	796.40
Common Stock in Treasury		(28270.90)	(30576.30)
Total Shareholder's Equity		14390.20	15293.60
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY		32989.90	35386.50

Asset Distribution (FY 2012)

Cash and Equivalents Accounts Receivables Inventories Fixed Assets Other Assets 2336.1 1375.3 121.7 24677.199999999997 6876.2000000000044

Capital Structure (FY 2012)

Current Liabilities Long-Term and Other Liabilities Preferred Stock Common Equity 3403.1000000000004 16689.8 0 15293.600000000002

WENDY-Income Statement

Dollars in millions, except per share data	2010	2011	2012
REVENUES
Sales	2079.08	2126.54	2198.32
Franchise Revenues	296.36	304.81	306.92
Total Revenues	2375.44	2431.36	2505.24
OPERATING COSTS AND EXPENSES
Cost of Sales	1756.95	1816.11	1881.25
General and Administrative	311.51	292.39	287.81
Depreciation and Amortization	126.85	122.99	146.98
Impairment of Long lived Assets	26.33	12.88	21.10
Facilities Relocation Costs and Other transactions	0.00	45.71	41.03
Other Operating Expenses	3.36	4.15	4.34
Total Operating Costs and Expenses	2224.99	2294.24	2382.50
Operating Income	150.45	137.12	122.75
Interest Expenses	118.39	114.11	98.60
Los on Early extinguishment of debt	26.20	0.00	75.08
Investment Income	5.26	0.48	36.24
Other Income	2.43	0.95	1.57
Income from Continuing Operations before Taxes	13.56	24.44	(13.13)
Provision for Income Taxes	(4.56)	6.53	(21.08)
Net Income from Continuing Operations	18.11	17.91	7.96
Net Income from Discontinued Operations	(22.44)	(8.04)	1.51
Net Income attributable to non-controlling interests	0.00	0.00	(2.38)
Net Income attributable to Wendy's	(4.32)	9.88	7.08
Shares Outstanding	427.2	407.2	392.1
EPS	$ (0.01)	$ 0.02	$ 0.02

WENDY - Balance Sheet

Dollars in millions, except per share data	2010	2011	2012
ASSETS
Current Assets
Cash and Equivalents		475.2	453.4
Accounts and Notes Receivables		68.3	61.2
Inventories		12.9	13.8
Prepaid Expenses and Other Current Assets		27.4	24.2
Deferred Income Tax Benefit		81.0	91.5
Advertising Funds Restricted Access		70.5	65.8
Total Current Assets		735.4	709.8
Properties		1192.2	1250.3
Goodwill		870.4	876.2
Other Tangible Assets		1304.3	1301.5
Investments		119.3	113.3
Deferred Costs and Other Assets		67.5	52.0
TOTAL ASSETS		4289.1	4303.2
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Current Maturities of LT Debt		6.6	12.9
Accounts Payables		81.3	70.8
Accrued Expenses and Other Current Liabilities		178.3	137.3
Advertising Funds Restricted Liabilities		70.5	65.8
Total Current Liabilities		336.7	286.9
Long Term Debt		1350.4	1444.7
Deferred Income Taxes		458.1	438.2
Other Long Term Liabilities		147.8	147.6
Shareholder's Equity
Preferred Stock		0.0	0.0
Commom Stock		47.0	47.0
Additional Paid-In Capital		2779.9	2782.8
Retained Earnings		(435.0)	(467.0)
Common Stock in Treasury		(395.9)	(382.9)
Accumulated Other Comprehensive Income		0.1	6.0
Total Shareholder's Equity		1996.1	1985.9
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY		4289.1	4303.2

Ratios

	Mc Donalds		Wendy's
Liquidity	2011	2012	2011	2012
Current Ratio	1.25	1.45	2.18	2.47
Quick Ratio	1.22	1.41	2.15	2.43
	Mc Donalds		Wendy's
Asset Management	2011	2012	2011	2012
Asset Turnover	0.82	0.78	0.57	0.58
Average Collection Period	18.04	18.21	10.26	8.91
	Mc Donalds		Wendy's
Debt Management	2011	2012	2011	2012
Debt to Assets	0.38	0.39	0.32	0.34
Times Interest Earned	17.31	16.66	1.20	1.24
	Mc Donalds		Wendy's
Profitability	2011	2012	2011	2012
Net Profit Margin	20.38%	19.82%	0.41%	0.28%
Return on Assets	16.68%	15.44%	0.23%	0.16%
Return on Equity	38.24%	35.73%	0.49%	0.36%
	Mc Donalds		Wendy's
Modified Dupont Equation	2011	2012	2011	2012
Net Profit Margin	20.38%	19.82%	0.41%	0.28%
Asset Turnover	0.82	0.78	0.57	0.58
Equity Multiplier	2.29	2.31	2.15	2.17
	Mc Donalds		Wendy's
Market Value	2011	2012	2011	2012
Price per Share (As on December 31)	$ 100.33	$ 88.21	$ 5.36	$ 4.70
Book Value per Share	$ 31.96	$ 35.03	$ 10.53	$ 10.97
Earnings Per Share	$ 5.33	$ 5.41	$ 0.02	$ 0.02
PE Ratio	18.82	16.30	221.02	260.18
Market to Book Ratio	3.14	2.52	0.51	0.43