McDonalds Corporation: 2006 Annual Report

AN ANNUAL REPORT REVIEW

McDonalds Corporation:  2006 Annual Report

Introduction

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As a totally encompassing narration of the overall health, efficiency and effectiveness of a business, an annual report provides both internal users (the employees and the executives) and external users (bankers, customers, shareholders, the general public) the complete picture of the company they are involve with.  This report is created, processed and published usually during the first quarter of a year.  The report covers the activities of the company and its financial performance for the preceding year.  Government institutions; banks; stakeholders; stockholders and customers want and need an annual report of companies for their guidance and information.

A company annual report generally contains the statements and reports of the Chairman of the Board and the Chief Executive Officer of the company.  It likewise carries a report on corporate governance by Auditors.  The statement of the company’s mission together with a statement of compliance of corporate governance policies are part of the report.   The financial statements carry the balance sheet, retained earnings, cash flow, income statement.  In addition, notes to the financial statements are reflected, together with an outline of the accounting policies of the company and the certification of the external auditor towards review of all financial statements reflected in the annual report.

The overall function of an annual report is to project the successful image of a company; to confirm and affirm the health of the company that stockholders invest in; to invite customers to share in the pride and growth of the company, the brand, the product they patronize – as such, customer loyalty is achieved.

The 2006 McDonalds Annual Report

The Cover

The 2006 McDonalds Annual Report carries a front cover and an inside flap cover that is extremely artistic and very colorful.  The cover automatically conveys an inviting and tasteful product and workplace and business undertaking.  The cover spread already emblazons what difference McDonalds does not only in the market place but to the overall global community.

Year’s Accomplishment Summary

The entire annual report is presented in 67 beautifully and artistically laid pages.  Right after the cover page, the annual report glaringly outlines the summary of the year 2005 accomplishments starting with the staggering $4 billion cash from operation consistently maintained for years 2004, 2005, 2006.  Most importantly, the earnings per share that consistently grows up to $2.30 in 2006 can even make a stockholder reading the report finally ends the reading because of the confidence and belief it shares with his company.

The Letter from the CEO

The letter to the shareholders with vivid and enthusiastic commentary was made and signed by Mr. Jim Skinner, the Chief Executive Officer of McDonalds.  It runs to 3 pages with very positive and proud summary in his statement:  “…..2006 was one of the most successful years in McDonald’s history” - because of a total of $9 billion returned to shareholders from 2003 to 2006.

Operations Statement

After the letter of the CEO come the six pages of exotic blown photographs and synopsis of how McDonalds invests in training and care for its human resources:  their employees.  The description of how the company provides premium concern and motivation to its employees is very descriptive and admirable.  The outline of skills development programs and work incentives seemingly create an extremely satisfactory working environment and such satisfaction is reflected in the photographs in the annual report.

Then comes the equally exotic blown up photographs of customers and products happily complementing each other – all shown in 11 pages.  The very alive and excellent photographs are excellent visual tools to denote contentment and success from the company to the customers.  The prime consideration that McDonalds place on its products and customers is truly convincing and comforting in the way the narratives and captions and photographs were created and laid out.  The very palpable joy of eating a Big Mac is so real in the photographs placed in the annual report.

Also read: Scientific Management Examples McDonalds

List of Officers

A full page photograph and listing of the members of the management team of McDonalds reflect a viable teamwork and happy group of executives, leaders and managers.  The caption using the metaphor of a 3-legged stool describes the business and operational model that McDonalds sustain:  the three legs of the company are the operators; suppliers and employees.

Letter from the Chairman

Affirming “a clear and compelling strategic vision”, Mr. Andy McKenna, Chairman of the Board of McDonalds writes about the sustained outstanding growth and progress of the company in 2006.  Presented in one page, it likewise contains the list of its Board members.

The Financial Report

The later parts of the annual report are the very comprehensive and thorough financial report.  Presented in a total of 38 pages, these include:

1)      an 11-year summary from 1996 to 2006

2)      a stock performance graph

3)      the outline of the management’s discussion and analysis of the financial condition and results of operation

4)      consolidated statement of income

5)      consolidated balance sheet

6)      consolidated statement of shareholders’ equity

7)      notes to consolidated financial statements

8)      unaudited, detailed quarterly results

9)      management’s report

10)  report of Ernst & Young, the company’s independent registered public accounting firm

11)  report of  Ernst & Young, the company’s independent registered public accounting firm on internal control over financial reporting (McDonalds Annual Report:  2006)

Overall Assessment

The 2006 Annual Report of McDonalds more than meets the standards and requirement of a reporting medium of a company and its business.  As one of the tools of corporate communications that defines and illustrates company image and identity, this annual report of McDonalds is a very powerful marketing tool.  It is likewise an effective, impressive and strong confirmation of the soundness of the company that warrants the health of the capital investment of stockholders.  The 2006 Annual Report of McDonalds reaffirms that the government and all other stakeholders can sustain its trust and confidence on the company.  (Goodman, 1998:90)

Works Cited

McDonald’s Corporation 2006 Annual Report

http://www.mcdonalds.com/corp/invest/pub/annual_rpt_archives/2006_Annual_ Report.html.

Goodman, Michael B.  1998.  “Corporate Communications for Executives”

SUNY Press.  Page 90

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