McD posts expected 3rd-Q profit jump; closes sale of $1.5b in debt

Nation's Restaurant News,  Oct 29, 2007  

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OAK BROOK, ILL. -- McDonald's Corp. credited strong coffee, breakfast, burger and Snack Wrap sales with pushing earnings up 27 percent in the third quarter ended Sept. 30.

As the company previously projected, net income totaled $1.07 billion, or 89 cents per share, compared with $843.3 million, or 68 cents per share, in the year-ago third quarter. The company's latest per-share earnings included 83 cents from continuing operations and an after-tax gain of 6 cents per share from the sale of Boston Market.

Revenue of $5.9 billion was up 7 percent from a year ago. Global same-store sales increased 6.9 percent. The highest same-store sales rise occurred in McDonald's Asia-Pacific, Middle East and Africa division, which posted a jump of 11.4 percent, its best result in a decade.

In the United Sates, McDonald's said results were fueled by value-driven initiatives. "For the quarter, McDonald's U.S. generated strong operating income growth despite industry-wide commodity and labor headwinds," the company reported.

McDonald's also sold this month $1.5 billion in investment-grade-rated debt that included $650 million in 5.8-percent medium-term notes due 2017 and $850 million in 6.3-percent medium-term notes due 2037. Citing its strong cash flow and consistently strong credit rating, McDonald's said previously that it planned to return between $15 billion and $17 billion in cash to shareholders from 2007 through 2009.

Separately, quick-service competitor Yum! Brands Inc., parent of the KFC, Pizza Hut and Taco Bell brands, also completed a debt offering this month. Yum's note sale totaled $1.2 billion that included $600 million in 6.25-percent senior notes due 2018 and $600 million in 6.875-percent senior notes due 2037.

McDonald's operates or franchises more than 30,000 restaurants worldwide.

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