<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-5231 ---------- ----------
------
McDONALD'S CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-2361282
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
McDonald's Plaza, Oak Brook, Illinois 60521
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (708) 575-3000
--------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
698,514,915
---------------------------------
(Number of shares of common stock
outstanding as of September 30, 1994)<PAGE>
<PAGE> 2
McDONALD'S CORPORATION
----------------------
INDEX
-----
Page Reference
Part I. Financial Information
Item 1 - Financial Statements
Condensed consolidated balance sheet,
September 30, 1994 (unaudited) and
December 31, 1993 3
Condensed consolidated statement of
income (unaudited), nine months, and
third quarters ended September 30,
1994 and 1993 4
Condensed consolidated statement of
cash flows (unaudited), nine months,
and third quarters ended September 30,
1994 and 1993 5
Financial comments (unaudited) 6
Item 2 - Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a)Exhibits
The exhibits listed in the
accompanying Exhibit Index are filed
as part of this report 12
(b)Reports on Form 8-K 15
Signature 16
Exhibit Index 17<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
-----------------------------
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
(unaudited)
(In millions of dollars) September 30, 1994 December 31, 1993
---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 180.5 $ 185.8
Accounts receivable 327.5 287.0
Notes receivable 43.4 27.6
Inventories, at cost, not in excess
of market 45.3 43.5
Prepaid expenses and other current
assets 144.1 118.9
---------------------------------------------------------------------------
TOTAL CURRENT ASSETS 740.8 662.8
---------------------------------------------------------------------------
OTHER ASSETS AND DEFERRED CHARGES 1,029.1 875.3
---------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment, at cost 14,796.6 13,459.0
Accumulated depreciation and
amortization (3,786.0) (3,377.6)
---------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 11,010.6 10,081.4
---------------------------------------------------------------------------
INTANGIBLE ASSETS-NET 456.3 415.7
---------------------------------------------------------------------------
TOTAL ASSETS $13,236.8 $12,035.2
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 934.7 $ 193.3
Accounts payable 380.5 395.7
Income taxes 51.6 56.0
Accrued interest 103.7 132.9
Other accrued liabilities 368.8 294.1
Current maturities of long-term debt 204.3 30.0
---------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,043.6 1,102.0
---------------------------------------------------------------------------
LONG-TERM DEBT 3,144.8 3,489.4
OTHER LONG-TERM LIABILITIES AND
MINORITY INTERESTS 409.1 334.4
DEFERRED INCOME TAXES 834.9 835.3
COMMON EQUITY PUT OPTIONS 58.8
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
authorized - 165.0 million shares;
issued - 11.3 and 11.4 million 675.0 677.3<PAGE>
Common stock, no par value;
authorized - 1.25 billion shares;
issued - 830.3 million 92.3 92.3
Additional paid-in capital 274.0 256.7
Guarantee of ESOP notes (252.4) (253.6)
Retained earnings 8,370.5 7,612.6
Foreign currency translation
adjustment (106.1) (192.2)
---------------------------------------------------------------------------
9,053.3 8,193.1
---------------------------------------------------------------------------
Common stock in treasury, at cost;
131.8 and 123.0 million shares (2,307.7) (1,919.0)
---------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,745.6 6,274.1
---------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $13,236.8 $12,035.2
===========================================================================
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 4
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
(In millions of dollars, except Nine Months Ended Quarters Ended
per common share data) September 30 September 30
1994 1993 1994 1993
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales by Company-operated
restaurants $4,205.8 $3,812.0 $1,551.9 $1,351.1
Revenues from franchised
restaurants 1,844.9 1,664.2 673.5 593.2
------------------------------------------------------------------------------
TOTAL REVENUES 6,050.7 5,476.2 2,225.4 1,944.3
------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 3,377.3 3,079.3 1,231.3 1,076.9
Franchised restaurants-
occupancy costs 317.7 280.1 111.7 95.7
General, administrative and
selling expenses 773.6 684.9 277.1 234.6
Other operating (income)
expense-net (83.3) (65.5) (32.6) (31.1)
------------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 4,385.3 3,978.8 1,587.5 1,376.1
------------------------------------------------------------------------------
OPERATING INCOME 1,665.4 1,497.4 637.9 568.2
------------------------------------------------------------------------------
Interest expense 225.6 237.4 80.2 75.7
Nonoperating income
(expense)-net (24.8) 12.7 (16.6) 7.2
------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,415.0 1,272.7 541.1 499.7
------------------------------------------------------------------------------
Provision for income taxes 499.5 454.7 191.3 188.8
------------------------------------------------------------------------------
NET INCOME $ 915.5 $ 818.0 $ 349.8 $ 310.9
==============================================================================
NET INCOME PER COMMON SHARE $ 1.25 $ 1.10 $ .48 $ .42
------------------------------------------------------------------------------
DIVIDENDS PER COMMON SHARE $ .1738 $ .1575 $ .0600 $ .0538
------------------------------------------------------------------------------
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 5
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Quarters
Ended September 30 Ended September 30
(In millions of dollars) 1994 1993 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $915.5 $818.0 $349.8 $310.9
Adjustments to reconcile to cash
provided by operations
Depreciation and amortization 454.2 415.1 157.7 144.1
Changes in operating working
capital items (23.6) (41.3) 45.8 40.6
Other (30.3) (26.0) (6.5) (11.6)
-------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS 1,315.8 1,165.8 546.8 484.0
-------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment expenditures (1,022.6) (802.7) (401.9) (334.1)
Sales of restaurant businesses 111.4 88.6 47.6 39.5
Purchases of restaurant businesses (81.4) (63.5) (28.3) (44.3)
Property sales 33.9 44.0 6.6 10.7
Other (42.5) (25.0) (39.5) (9.8)
-------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (1,001.2) (758.6) (415.5) (338.0)
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net short-term borrowings 411.9 23.7 (14.6) (9.3)
Long-term financing issuances 254.3 983.9 143.0 256.3
Long-term financing repayments (504.9) (962.4) (15.4) (281.7)
Treasury stock purchases (351.5) (614.2) (163.3) (83.4)
Common and preferred stock dividends (161.0) (150.5) (54.8) (50.7)
Other 31.3 48.5 6.9 14.2
-------------------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (319.9) (671.0) (98.2) (154.6)
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS INCREASE
(DECREASE) (5.3) (263.8) 33.1 (8.6)
Cash and equivalents at beginning of
period 185.8 436.5 147.4 181.3
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF PERIOD $180.5 $172.7 $180.5 $172.7
===============================================================================
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 6
FINANCIAL COMMENTS (UNAUDITED)
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements in the
Company's 1993 Annual Report to Shareholders. In the opinion of the
Company, all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation have been included.
The results of operations of restaurant businesses purchased and
sold were not material to the condensed consolidated financial
statements for periods prior to purchase and sale.
In 1994, due to an increase in ownership, the Company
consolidated affiliates in Taiwan, South Korea and Turkey, which
increased total assets and liabilities by approximately $200.0
million.
NET INCOME PER COMMON SHARE
Net income per common share was computed using net income, reduced by
preferred stock cash dividends (net of tax) of $35.5 and $35.4 million
for the first nine months of 1994 and 1993, and $11.8 and $11.7
million for the third quarters of 1994 and 1993, respectively.
Adjusted net income was divided by the weighted average shares of
common stock outstanding: 704.1 and 713.5 million for the nine months
ended September 30, 1994 and 1993, and 699.9 and 705.7 million for the
third quarters of 1994 and 1993, respectively. The effect of
potentially dilutive securities was not material.
STOCK SPLITS
On May 27, 1994, the Board of Directors approved two-for-one stock
splits to be effected in the form of stock dividends distributed on
June 24, 1994, to common and Series B and C Preferred shareholders of
record on June 7, 1994. All common and Series B and C ESOP Convertible
Preferred stock information appearing in the accompanying condensed
consolidated financial statements has been restated to give
retroactive effect to the stock splits, including the transfer of an
appropriate amount to common stock from additional paid-in capital.
LINE OF CREDIT AGREEMENT
Effective July 20, 1994, the Company reduced the amount and term of
its long-term line of credit agreement to $600.0 million and 364 days,
respectively. This resulted in the reclassification of certain amounts
from long-term debt to notes payable or current maturities of long-
term debt. The agreement, which remained unused at September 30, 1994,
is renewable and provides for fees of .07% per annum on the unused
portion of the commitment.
COMMON EQUITY PUT OPTIONS
In June 1994, the Company sold 2.0 million common equity put options
which are exercisable in November, 1994 at an average price of $29.41
per share. The exercise price of $58.8 million was classified in
common equity put options and the related offset was recorded in
common stock in treasury, net of premiums received, at
September 30, 1994.<PAGE>
<PAGE> 7
Item 2. Management's Discussion And Analysis Of Financial Condition
--------------------------------------------------------------------
And Results Of Operations
-------------------------
<TABLE>
INCREASES (DECREASES) IN OPERATING RESULTS OVER 1993
<CAPTION>
(Dollars in millions, except Nine Months Third Quarter
per common share data) Ended September 30 Ended September 30
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SYSTEMWIDE SALES $1,582.2 9% $696.8 11%
-------------------------------------------------------------------------
REVENUES
Sales by Company-operated
restaurants $393.8 10% $200.8 15%
Revenues from franchised
restaurants 180.7 11 80.3 14
-------------------------------------------------------------------------
TOTAL REVENUES 574.5 10 281.1 14
-------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 298.0 10 154.4 14
Franchised restaurants-
occupancy costs 37.6 13 16.0 17
General, administrative
and selling expenses 88.7 13 42.5 18
Other operating (income)
expense-net (17.8) 27 (1.5) 5
-------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 406.5 10 211.4 15
-------------------------------------------------------------------------
OPERATING INCOME 168.0 11 69.7 12
Interest expense (11.8) (5) 4.5 6
Nonoperating income
(expense)-net (37.5) NM (23.8) NM
-------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 142.3 11 41.4 8
-------------------------------------------------------------------------
Provision for income taxes 44.8 10 2.5 1
NET INCOME $97.5 12% $38.9 13%
=========================================================================
NET INCOME PER COMMON SHARE* $ .15 14% $ .06 14%
-------------------------------------------------------------------------
NM - Not Meaningful
*Restated for the two-for-one common stock split.
/TABLE
<PAGE>
<PAGE> 8
CONSOLIDATED OPERATING RESULTS
Net income and net income per common share increased 12 and 14%,
respectively, for the nine months; and 13 and 14%, respectively, for
the quarters. The spreads between the percent increases in net income
and net income per common share reflected the impact of share
repurchase.
Systemwide sales represent sales by Company-operated, franchised
and affiliated restaurants, including satellite locations. The
increases were due to expansion and higher sales at existing
restaurants, affected in part by severe weather conditions worldwide
in early 1994. The increases in revenues reflected strong worldwide
operating results.
A total of 672 restaurants were added in the first nine months of
1994 (576 in 1993), including 280 in the U.S. (254 in 1993) and 392
outside of the U.S. (322 in 1993). An additional 449 restaurants were
under construction at quarter-end (355 in 1993), including 170 in the
U.S. (125 in 1993) and 279 outside of the U.S. (230 in 1993). In
addition, more than 500 satellites were operating worldwide at
quarter-end. These sites leverage the infrastructure of existing
restaurants by using their storage capability and inventory or by
drawing on their management talent and labor pool. Satellite locations
were not included in the count of Systemwide restaurants.
Franchised restaurant margins comprised about two-thirds of the
combined operating margins. Consolidated franchised margins were 82.8%
of applicable revenues for the nine months of 1994, compared to 83.2%
one year ago. For the quarters, margins were 83.4% in 1994, and 83.9%
in 1993. The decreases reflected accelerated expansion including a
higher number of leased sites.
Consolidated Company-operated margins were 19.7% of sales for the
nine months of 1994, compared to 19.2% one year ago. For the quarters,
margins were 20.7% in 1994, and 20.3% in 1993. For both periods, as a
percent of sales, food and paper, and occupancy and other operating
costs declined, while payroll costs increased.
The increases in general, administrative and selling expenses
were primarily due to higher employee costs associated with strategic
investment spending to support expansion and value.
Other operating transactions relate to franchising and the food
business as follows:
-----------------------------------------------------------------------
Nine Months Third Quarter
Ended September 30 Ended September 30
(In millions of dollars) 1994 1993 1993 1994
-----------------------------------------------------------------------
Gains on sales of
restaurant businesses $(49.4) $(39.5) $(19.0) $(15.1)
Equity in earnings of
unconsolidated affiliates (41.0) (27.9) (22.7) (15.6)
Other 7.1 1.9 9.1 (0.4)
-----------------------------------------------------------------------
Other operating
(income) expense-net $(83.3) $(65.5) $(32.6) $(31.1)
=======================================================================<PAGE>
<PAGE> 9
The other category included higher losses on property
dispositions for both the nine months and third quarter in 1994,
compared to the same periods in 1993.
The increases in consolidated operating income primarily
reflected better results from combined operating margins and higher
other operating income, partially offset by higher general,
administrative and selling expenses. Weaker foreign currencies
impacted this line item for the first six months of 1994, whereas
stronger foreign currencies in the third quarter offset this impact
for the nine months.
Interest expense decreased for the nine months due to lower
interest rates and debt levels, and increased for the quarter due to
higher interest rates and debt levels, coupled with stronger foreign
currencies.
Nonoperating income (expense) was affected in 1993 by gains on
terminations of debt financings and higher interest income mainly
because a portion of the proceeds from the 1992 preferred stock
issuance-later used for share repurchase-was invested during the first
quarter. In addition, greater translation losses impacted this
category in 1994.
The effective income tax rates were 35.3% for the nine months of
1994, and 35.7% one year ago. The effective rates for the third
quarters of 1994 and 1993 were 35.4 and 37.8%, respectively. The
changes were primarily a result of U.S. tax legislation enacted in the
third quarter of 1993.
U.S. OPERATING RESULTS
U.S. sales grew 5% for the nine months and quarter due to expansion
and higher sales at existing restaurants. Positive comparable sales
were achieved in both periods through the emphasis on value and
customer satisfaction in the form of Extra Value Meals, Happy Meals
and the three-tier value program; as well as the NBA cup promotion
highlighting large sandwiches, the Flintstones movie tie-in featuring
the McRib Grand Poobah Meal and a set of four Bedrock mugs, the Dream
Team II collector cup promotion, and Music Event which offered four
"Best of" collections with the purchase of a large sandwich or Extra
Value Meal. U.S. revenues rose 6% for both periods.
U.S. operating income increased 5% for the nine months and 3% for
the quarter, as higher combined operating margins were partially
offset by higher general, administrative and selling expenses. The
improvement in U.S. Company-operated margins was noteworthy, reaching
19.4% of sales in the third quarter of 1994, compared to 19.0% one
year ago. For the nine months, margins were 19.3% in 1994, compared to
18.3% in 1993.
OPERATING RESULTS OUTSIDE OF THE U.S.
Sales outside of the U.S. rose 15% for the nine months and 20% for the
quarter due to expansion and higher sales at existing restaurants as
comparable sales on a local currency basis were positive for both
periods. Revenues outside of the U.S. increased 16% for the nine
months and 25% for the quarter.
For the nine months, many markets delivered excellent comparable
sales on a local currency basis: Argentina, Australia, Austria,
Brazil, Canada, Denmark, England, Finland, Hungary, Ireland, Italy,
Malaysia, Netherlands, New Zealand, Norway, Panama, Philippines,
Puerto Rico, Scotland, Singapore, South Korea, Spain, Sweden, Taiwan
and Wales.<PAGE>
<PAGE> 10
Pacific sales were strong with the exception of our joint venture
in Japan which has been affected by a weak economy, but which has
shown improvement in the quarter. Although many European economies
have been weak over the past 18 months, McDonald's markets generally
performed well. Throughout 1994, France and Germany have shown signs
of being affected both positively and negatively by the economy, and
negatively impacted by unusually hot weather and World Cup Soccer.
Nevertheless, both delivered good results in the quarter. Latin
American economies have been weak, but our business there has been
quite good. Business in Canada continued to improve, despite a weak
economy.
Operating income outside of the U.S. grew 19% for the nine months
and 24% for the quarter, reflecting expansion, higher combined
operating margins and higher other operating income, partially offset
by higher general, administrative and selling expenses and for the
quarter, stronger foreign currencies. The level of international
Company-operated margins remained noteworthy, reaching 21.6% of sales
in the third quarter of 1994, compared to 21.4% one year ago; margins
were 20.0% in both nine-month periods of 1994 and 1993.
IMPACT OF FOREIGN CURRENCIES ON REPORTED RESULTS
If exchange rates had remained at 1993 levels, reported results would
have been as follows:
---------------------------------------------------------------
Nine Months Ended September 30, 1994
(Dollars in millions) Reported Adjusted
---------------------------------------------------------------
Systemwide sales $19,023.4 9% $18,938.3 9%
Operating income 1,665.4 11 1,663.2 11
Net income 915.5 12 921.3 13
---------------------------------------------------------------
Third Quarter Ended September 30, 1994
---------------------------------------------------------------
Systemwide sales $6,944.0 11% $6,822.1 9%
Operating income 637.9 12 624.8 10
Net income 349.8 13 346.7 12
---------------------------------------------------------------
While changing foreign currencies impact reported results,
McDonald's lessens short-term cash exposures by primarily purchasing
goods and services in local currencies, financing in local currencies
and hedging foreign-denominated cash flows.
FINANCIAL POSITION
Cash provided by operations for the nine months increased 13% in 1994.
Together with other sources of cash such as borrowings, cash provided
by operations was used primarily for capital expenditures, debt
repayments, share repurchase and dividends. For the nine months, U.S.
capital expenditures increased 43% and capital expenditures outside of
the U.S. increased 17%.
In January, the Company announced its plan to purchase up to $1
billion of common stock within the next three years. The Company
purchased 12.4 million shares of common stock for $351.5 million
during the first nine months.<PAGE>
<PAGE> 11
<TABLE>
<CAPTION>
NINE MONTHS AND THIRD QUARTER HIGHLIGHTS
---------------------------------------------------------------------------
(Dollars in millions, except Nine Months Ended Quarters Ended
per common share data) September 30 September 30
1994 1993 1994 1993
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Systemwide sales $19,023.4 $17,441.2 $6,944.0 $6,247.2
---------------------------------------------------------------------------
U.S. sales $11,087.5 $10,513.2 $3,920.8 $3,729.3
Operated by franchisees 8,894.0 8,478.8 3,144.5 3,007.3
Operated by the Company 1,894.6 1,794.5 665.2 634.1
Operated by affiliates 298.9 239.9 111.1 87.9
---------------------------------------------------------------------------
Sales outside of the U.S. $ 7,935.9 $ 6,928.0 $3,023.2 $2,517.9
Operated by franchisees 3,705.4 3,186.4 1,373.5 1,155.5
Operated by the Company 2,311.2 2,017.5 886.6 717.0
Operated by affiliates 1,919.3 1,724.1 763.1 645.4
---------------------------------------------------------------------------
Total revenues $ 6,050.7 $ 5,476.2 $2,225.4 $1,944.3
U.S. 3,081.1 2,915.4 1,087.8 1,030.8
Outside of the U.S. 2,969.6 2,560.8 1,137.6 913.5
---------------------------------------------------------------------------
Operating income $ 1,665.4 $ 1,497.4 $ 637.9 $ 568.2
U.S. 867.5 824.9 314.3 306.4
Outside of the U.S. 797.9 672.5 323.6 261.8
---------------------------------------------------------------------------
Income before provision for
income taxes $ 1,415.0 $ 1,272.7 $ 541.1 $ 499.7
Net income 915.5 818.0 349.8 310.9
Net income per common share* 1.25 1.10 .48 .42
---------------------------------------------------------------------------
Cash provided by operations $ 1,315.8 $ 1,165.8 $ 546.8 $ 484.0
---------------------------------------------------------------------------
At September 30, 1994 1993
Systemwide restaurants 14,665 13,669
---------------------------------------------------------------------------
U.S. restaurants 9,563 9,213
Operated by franchisees 7,784 7,555
Operated by the Company 1,492 1,434
Operated by affiliates 287 224
---------------------------------------------------------------------------
Restaurants outside of the U.S. 5,102 4,456
Operated by franchisees 2,426 2,057
Operated by the Company 1,455 1,211
Operated by affiliates 1,221 1,188
---------------------------------------------------------------------------
*Restated for the two-for-one common stock split.
/TABLE
<PAGE>
<PAGE> 12
PART II
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) - Exhibits
--------------
(4) Instruments defining the rights of security holders,
including indentures (A):
(a) Debt Securities. Indenture dated as of March 1, 1987
incorporated herein by reference from Exhibit 4(a) of
Form S-3 Registration Statement, SEC file no. 33-12364.
(i) Supplemental Indenture No. 5 incorporated herein
by reference from Exhibit (4) of Form 8-K dated
January 23, 1989.
(ii) 9-3/4% Notes due 1999. Supplemental Indenture
No. 6 incorporated herein by reference from
Exhibit (4) of Form 8-K dated January 23, 1989.
(iii) Medium-Term Notes, Series B, due from nine
months to 30 years from Date of Issue.
Supplemental Indenture No. 12 incorporated
herein by reference from Exhibit (4) of Form 8-K
dated August 18, 1989 and Forms of Medium-Term
Notes, Series B, incorporated herein by
reference from Exhibit (4)(b) of Form 8-K dated
September 14, 1989.
(iv) 9-3/8% Notes due 1997. Form of Supplemental
Indenture No. 14 incorporated herein by
reference from Exhibit (4) of Form 10-K for the
year ended December 31, 1989.
(v) Medium-Term Notes, Series C, due from nine
months to 30 years from Date of Issue. Form of
Supplemental Indenture No. 15 incorporated
herein by reference from Exhibit 4(b) of
Form S-3 Registration Statement, SEC file
no. 33-34762 dated May 14, 1990.
(vi) Medium-Term Notes, Series C, due from nine
months (U.S. issue)/184 days (Euro issue) to 30
years from Date of Issue. Amended and restated
Supplemental Indenture No. 16 incorporated
herein by reference from Exhibit (4) of Form 10-
Q for the period ended March 31, 1991.
(vii) 8-7/8% Debentures due 2011. Supplemental
Indenture No. 17 incorporated herein by
reference from Exhibit (4) of Form 8-K dated
April 22, 1991.<PAGE>
<PAGE> 13
(viii)Medium-Term Notes, Series D, due from nine
months (U.S. issue)/184 days (Euro issue) to 60
years from Date of Issue. Supplemental
Indenture No. 18 incorporated herein by
reference from Exhibit 4(b) of Form S-3
Registration Statement, SEC file no. 33-42642
dated September 10, 1991.
(ix) 7-3/8% Notes due July 15, 2002. Form of
Supplemental Indenture No. 19 incorporated
herein by reference from Exhibit (4) of Form 8-K
dated July 10, 1992.
(x) 6-3/4% Notes due February 15, 2003. Form of
Supplemental Indenture No. 20 incorporated
herein by reference from Exhibit (4) of Form 8-K
dated March 1, 1993.
(xi) 7-3/8% Debentures due July 15, 2033. Form of
Supplemental Indenture No. 21 incorporated
herein by reference from Exhibit (4)(a) of Form
8-K dated July 15, 1993.
(b) Form of Deposit Agreement dated as of November 25, 1992
by and between McDonald's Corporation, First Chicago
Trust Company of New York, as Depositary, and the
Holders from time to time of the Depositary Receipts.
(c) Rights Agreement dated as of December 13, 1988 between
McDonald's Corporation and The First National Bank of
Chicago, incorporated herein by reference from Exhibit
1 of Form 8-K dated December 23, 1988.
(i) Amendment No. 1 to Rights Agreement incorporated
herein by reference from Exhibit 1 of Form 8-K
dated May 25, 1989.
(ii) Amendment No. 2 to Rights Agreement incorporated
herein by reference from Exhibit 1 of Form 8-K
dated July 25, 1990.
(d) Indenture and Supplemental Indenture No. 1 dated as of
September 8, 1989, between McDonald's Matching and
Deferred Stock Ownership Trust, McDonald's Corporation
and Pittsburgh National Bank in connection with SEC
Registration Statement Nos. 33-28684 and 33-28684-01,
incorporated herein by reference from Exhibit (4)(a) of
Form 8-K dated September 14, 1989.
(e) Form of Supplemental Indenture No. 2 dated as of April
1, 1991, supplemental to the Indenture between
McDonald's Matching and Deferred Stock Ownership Trust,
McDonald's Corporation and Pittsburgh National Bank in
connection with SEC Registration Statement Nos.
33-28684 and 33-28684-01, incorporated herein by
reference from Exhibit (4)(c) of Form 8-K dated
March 22, 1991.<PAGE>
<PAGE> 14
(10) Material Contracts
(a) Material contract between McDonald's Corporation and
Joan B. Kroc, incorporated herein by reference from
Exhibit (10) of Form 10-K for the year ended
December 31, 1984.
(b) Director's Deferred Compensation Plan, incorporated
herein by reference from Exhibit (10)(b)of Form 10-K
for the year ended December 31, 1992*.
(c) Profit Sharing Program, as amended, McDonald's
Supplemental Employee Benefit Equalization Plan,
McDonald's Profit Sharing Program Equalization Plan and
McDonald's 1989 Equalization Plan, incorporated by
reference from Form 10-K/A dated May 4, 1993, Amendment
No. 1 to Form 10-K for the year ended December 31, 1992*.
(i) Amendment No. 1 to McDonald's 1989 Equalization
Plan, incorporated herein by reference from Form
10-Q for the period ended June 30, 1993.
(ii) Amendment No. 2 to McDonald's 1989 Equalization
Plan, incorporated herein by reference from
Exhibit (10)(c) of Form 10-K for the year ended
December 31, 1993.
(iii) Amendment No. 1 to McDonald's Supplemental
Employee Benefit Equalization Plan, incorporated
herein by reference from Exhibit (10)(c) of Form
10-K for the year ended December 31, 1993.
(iv) Amendment No. 2 to McDonald's Supplemental
Employee Equalization Plan, incorporated herein by
reference from Exhibit (10)(c) of Form 10-K for
the year ended December 31, 1993.
(v) Amendment No. 5 to the Profit Sharing Program, as
amended, incorporated herein by reference from
Exhibit (10)(c) of Form 10-K for the year ended
December 31, 1993.
(vi) Amendment No. 6 to the Profit Sharing Program, as
amended, incorporated herein by reference from
Exhibit (10)(c) of Form 10-K for the year ended
December 31, 1993.
(d) 1975 Stock Ownership Option Plan, incorporated herein
by reference from Exhibit (10)(d) of Form 10-K for the
year ended December 31, 1992*.
(e) Stock Sharing Plan, incorporated herein by reference
from Exhibit (10)(e) of Form 10-K for the year ended
December 31, 1992*.<PAGE>
<PAGE> 15
(f) 1992 Stock Ownership Incentive Plan, incorporated
herein by reference from exhibit pages 20-34 of
McDonald's 1992 Proxy Statement and Notice of 1992
Annual Meeting of Shareholders dated April 10, 1992*.
(g) McDonald's Corporation Deferred Incentive Plan,
incorporated herein by reference from Exhibit (10) of
Form 10-Q for the period ended September 30, 1993*.
(11) Statement re: Computation of per share earnings.
(12) Statement re: Computation of ratios.
(27) Financial Data Schedule
--------------------
* Denotes compensatory plan.
(A) Other instruments defining the rights of holders of long-term
debt of the registrant and all of its subsidiaries for which
consolidated financial statements are required to be filed and
which are not required to be registered with the Securities and
Exchange Commission, are not included herein as the securities
authorized under these instruments, individually, do not exceed
10% of the total assets of the registrant and its subsidiaries on
a consolidated basis. An agreement to furnish a copy of any such
instruments to the Securities and Exchange Commission upon
request has been filed with the Commission.
(b) Reports on Form 8-K
The following report on Form 8-K was filed for the last quarter
covered by this report, and subsequently up to November 9, 1994.
Financial Statements
Date of Report Item Number required to be filed
-------------- ----------- --------------------
7/18/94 Item 5 & 7 No<PAGE>
<PAGE> 16
Signature
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
McDONALD'S CORPORATION
(Registrant)
By /s/ Jack M. Greenberg
-----------------
(Signature)
Jack M. Greenberg
Vice Chairman,
Chief Financial Officer
November 9, 1994
----------------
(Date)<PAGE>
<PAGE> 17
EXHIBIT INDEX
The following Exhibits are filed as part of Form 10-Q for the quarter
ended September 30, 1994.
Exhibit
Number Description of Document
------- -----------------------
11 Statement re: Computation of Per Share Earnings
12 Statement re: Computation of Ratios
27 Financial Data Schedule<PAGE>
<PAGE> 18
<TABLE> Exhibit 11
McDONALD'S CORPORATION
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Dollars and shares in millions, except per common share data)
<CAPTION> Nine Months Ended Quarters Ended
September 30, September 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $915.5 $818.0 $349.8 $310.9
Preferred stock dividends (net of tax) (35.5) (35.4) (11.8) (11.7)
------- ------- ------- -------
Net income available after preferred stock dividends (A) 880.0 782.6 338.0 299.2
Common stock dividends on assumed conversion of preferred stock 1.0 0.9 0.4 0.3
------- ------- ------- -------
Net income available to common shareholders $881.0 $783.5 $338.4 $299.5
======= ======= ======= =======
Weighted average number of common shares outstanding during the period (A) 704.1 713.5 699.9 705.7
Additional shares related to potentially dilutive securities 19.0 20.4 19.4 20.2
------- ------- ------- -------
Adjusted weighted average common shares 723.1 733.9 719.3 725.9
======= ======= ======= =======
Fully diluted net income per common share $ 1.22 $ 1.07 $ 0.47 $ 0.41
------- ------- ------- -------
---------------------
NOTES:
(A) Refer to Condensed consolidated statement of income on page 4 and to Financial comments -
Net income per common share on page 6 of this report.
/TABLE
<PAGE>
<PAGE> 19
<TABLE> Exhibit 12
McDONALD'S CORPORATION
STATEMENT RE: COMPUTATION OF RATIOS
(Dollars in Millions)
<CAPTION> Nine Months
Ended September 30, Year Ended December 31,
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
- Income before provision for income taxes $1,415.0 $1,272.7 $1,675.7 $1,448.1 $1,299.4 $1,246.3 $1,157.2
- Minority interest in operating results of
majority-owned subsidiaries, less equity in
undistributed operating results of
less-than-50% owned affiliates 4.1 5.8 6.9 5.3 5.1 0.6 1.3
- Provision for income taxes of 50% owned
affiliates included in consolidated income
before provision for income taxes 28.9 21.7 34.2 29.4 34.1 28.8 29.3
- Portion of rent charges (after reduction
for rental income from subleased
properties) considered to be representative
of interest factors* 61.2 53.9 71.6 70.1 67.9 59.0 51.8
- Interest expense, amortization of debt
discount and issuance costs, and
depreciation of capitalized interest* 254.0 268.5 358.0 413.8 433.9 411.9 332.3
---------------------------------------------------------------------------
$1,763.2 $1,622.6 $2,146.4 $1,966.7 $1,840.4 $1,746.6 $1,571.9
===========================================================================
FIXED CHARGES
- Portion of rent charges (after reduction
for rental income from subleased
properties) considered to be representative
of interest factors* $61.2 $53.9 $71.6 $70.1 $67.9 $59.0 $51.8
- Interest expense and amortization of debt
discount and issuance costs* 252.7 262.2 349.3 405.4 425.7 403.4 324.8
- Capitalized interest* 14.8 15.5 20.7 20.5 28.5 38.9 31.8
---------------------------------------------------------------------------
$328.7 $331.6 $441.6 $496.0 $522.1 $501.3 $408.4
===========================================================================
RATIO OF EARNINGS TO FIXED CHARGES 5.36 4.89 4.86 3.96 3.53 3.48 3.85
===========================================================================
*Includes amounts of the Registrant and its majority-owned subsidiaries, and one-half of the amounts of 50%-owned affiliates.
/TABLE
<PAGE>
<PAGE> 20
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 181
<SECURITIES> 0
<RECEIVABLES> 371
<ALLOWANCES> 0
<INVENTORY> 45
<CURRENT-ASSETS> 741
<PP&E> 14,797
<DEPRECIATION> 3,786
<TOTAL-ASSETS> 13,237
<CURRENT-LIABILITIES> 2,044
<BONDS> 3,145
<COMMON> 92
0
675
<OTHER-SE> 5,978
<TOTAL-LIABILITY-AND-EQUITY> 13,237
<SALES> 4,206
<TOTAL-REVENUES> 6,051
<CGS> 3,377
<TOTAL-COSTS> 3,695
<OTHER-EXPENSES> 690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 226
<INCOME-PRETAX> 1,415
<INCOME-TAX> 499
<INCOME-CONTINUING> 916
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 916
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 0
</TABLE>
