<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (fee required) for the fiscal year ended
December 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (no fee required) 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
-------------------------- -----------------------
Common stock, no par value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
9-3/4% Notes due 1999 New York Stock Exchange
9-3/8% Notes due 1997 New York Stock Exchange
8-7/8% Debentures due 2011 New York Stock Exchange
7-3/8% Notes due 2002 New York Stock Exchange
Depositary Shares representing 7.72%
Cumulative Preferred Stock, Series E New York Stock Exchange
6-3/4% Notes due 2003 New York Stock Exchange
7-3/8% Notes due 2033 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
-----
(Title of Class)
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
--- ---
<PAGE>
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. / /
The aggregate market value of voting stock held by nonaffiliates
of the registrant is $21,708,859,265 and the number of shares of
common stock outstanding is 353,866,072 as of January 31, 1994.
Documents incorporated by reference. Part III of this 10-K
incorporates information by reference from the registrant's definitive
proxy statement which will be filed no later than 120 days after
December 31, 1993.
<PAGE>
<PAGE> 3
PART I
Item 1. Business
McDonald's Corporation, the registrant, together with its
subsidiaries, is referred to herein as the "Company".
(a) General development of business
There have been no significant changes to the Company's
corporate structure during 1993, nor material changes in the Company's
method of conducting business.
(b) Financial information about industry segments
Industry segment data for the years ended December 31, 1993,
1992 and 1991 is included in Part II, item 8, pages 33 and 41 of this
Form 10-K.
(c) Narrative description of business
General
The Company develops, operates, franchises and services a
worldwide system of restaurants which prepare, assemble, package and
sell a limited menu of value-priced foods. These restaurants are
operated by the Company or, under the terms of franchise arrangements,
by franchisees who are independent third parties, or by affiliates
operating under joint-venture agreements between the Company and local
businesspeople.
The Company's franchising program assures consistency and
quality. The Company is selective in granting franchises and is not
in the practice of franchising to investor groups or passive
investors. Under the conventional franchise arrangement, franchisees
supply capital - initially, by purchasing equipment, signs, seating,
and decor, and over the long term, by reinvesting in the business.
The Company shares the investment by owning or leasing the land and
building; franchisees then contribute to the Company's revenues
through payment of rent and service fees based upon a percent of
sales, with specified minimum payments. Generally, the conventional
franchise arrangement lasts 20 years and franchising practices are
consistent throughout the world. Further discussion regarding site
selection is included in Part 1, item 2, page 6 of this Form 10-K.
Training begins at the restaurant with one-on-one instruction
and videotapes. Aspiring restaurant managers progress through a
development program of classes in basic and intermediate operations,
management and equipment. Assistant managers are eligible to attend
the advanced operations and management class at one of the five
Hamburger University (H.U.) campuses in the U.S., Germany, England,
Japan or Australia. The curriculum at H.U. concentrates on skills and
practices essential to delivering customer satisfaction and running a
restaurant business.
<PAGE>
<PAGE> 4
The Company's global brand is well-known. Marketing and
promotional activities are designed to nurture this brand image and
differentiate the Company from competitors by focusing on value and
customer satisfaction. Funding for promotions is handled at the local
restaurant level; funding for regional and national efforts is handled
through advertising cooperatives. Franchised, Company-operated and
affiliated restaurants throughout the world make voluntary
contributions to cooperatives which purchase media. Production costs
for certain advertising efforts are borne by the Company.
Products
McDonald's restaurants offer a substantially uniform menu
consisting of hamburgers and cheeseburgers, including the Big Mac and
Quarter Pounder with Cheese sandwiches, the Filet-O-Fish, McGrilled
Chicken and McChicken sandwiches, french fries, Chicken McNuggets,
salads, low fat shakes, sundaes and cones made with low fat frozen
yogurt, pies, cookies and a limited number of soft drinks and other
beverages. In addition, the restaurants sell a variety of products
during limited promotional time periods. McDonald's restaurants
operating in the United States are open during breakfast hours and
offer a full breakfast menu including the Egg McMuffin and the Sausage
McMuffin with Egg sandwiches, hotcakes and sausage; three varieties of
biscuit sandwiches; Apple-Bran muffins; and cereals. McDonald's
restaurants in many countries around the world offer many of these
same products as well as other products and limited breakfast menus.
The Company tests new products on an ongoing basis.
The Company, its franchisees and affiliates purchase food
products and packaging from numerous independent suppliers. Quality
specifications for both raw and cooked food products are established
and strictly enforced. Alternative sources of these items are
generally available. Quality assurance labs in the U.S., Europe and
the Pacific work to ensure that the Company's high standards are
consistently met. The quality assurance process involves ongoing
testing and on-site inspections of suppliers' facilities.
Independently owned and operated distribution centers distribute
products and supplies to most McDonald's restaurants. The restaurants
then prepare, assemble and package these products using specially
designed production techniques and equipment to obtain uniform
standards of quality.
Trademarks and patents
The Company has registered trademarks and service marks, some
of which, including "McDonald's", "Ronald McDonald" and other related
marks, are of material importance to the Company's business. The
Company also has certain patents on restaurant equipment which, while
valuable, are not material to its business.
Seasonal operations
The Company does not consider its operations to be seasonal to
any material degree.
<PAGE>
<PAGE> 5
Working capital practices
Information about the Company's working capital practices is
incorporated herein by reference to Management's Discussion and
Analysis of the Company's financial position and the consolidated
statement of cash flows for the years ended December 31, 1993, 1992
and 1991 in Part II, item 7, pages 26 through 28, and Part II, item 8
page 35 of this Form 10-K.
Customers
The Company's business is not dependent upon a single customer
or small group of customers.
Backlog
Company-operated restaurants have no backlog orders.
Government contracts
No material portion of the business is subject to renegotiation
of profits or termination of contracts or subcontracts at the election
of the U.S. government.
Competition
McDonald's restaurants compete with international, national,
regional, and local retailers of food products. The Company competes
on the basis of price and service and by offering quality food
products. The Company's competition in the broadest perspective
includes restaurants, quick-service eating establishments, pizza
parlors, coffee shops, street vendors, convenience food stores,
delicatessens, and supermarket freezers.
In the U.S., about 372,000 restaurants generate nearly $213
billion in annual sales. McDonald's accounts for about 2.5% of those
restaurants and approximately 6.7% of those sales. No reasonable
estimate can be made of the number of competitors outside of the U.S.;
however, the Company's business in foreign markets continues to grow.
Research and development
The Company operates research and development facilities in
Illinois. While research and development activities are important to
the Company's business, these expenditures are not material.
Independent suppliers also conduct research activities for the benefit
of the McDonald's System, which includes franchisees and suppliers, as
well as McDonald's, its subsidiaries and joint ventures.
<PAGE>
<PAGE> 6
Environmental matters
The Company is not aware of any federal, state or local
environmental laws or regulations which will materially affect its
earnings or competitive position, or result in material capital
expenditures; however, the Company cannot predict the effect on its
operations of possible future environmental legislation or
regulations. During 1993, there were no material capital expenditures
for environmental control facilities and no such material expenditures
are anticipated.
Number of employees
During 1993, the Company's average number of employees was
approximately 167,000.
(d) Financial information about foreign and domestic operations
Financial information about foreign and domestic markets is
incorporated herein by reference from selected Financial Data,
Management's Discussion and Analysis and Segment and Geographic
Information in Part II, item 6, page 10, Part II, item 7, pages 11
through 29 and Part II, item 8, page 41, respectively, of this Form
10-K.
Item 2. Properties
The Company identifies and develops sites that offer
convenience to customers and provide for long-term sales and profit
potential. To assess potential, the Company analyzes traffic and
walking patterns, census data, school enrollments and other relevant
data. The Company's experience and access to advanced technology aids
in evaluating this information. In order to control occupancy costs
and rights, the Company owns restaurant sites and buildings where
feasible and where it is not practical, secures long-term leases.
Restaurant profitability for both the Company and franchisees is
important; therefore, ongoing efforts are made to lower average
development costs through construction and design efficiencies and by
leveraging the Company's global sourcing system. Additional
information about the Company's properties is incorporated herein by
reference to Management's Discussion and Analysis and the related
financial statements with footnotes in Part II, item 7, pages 11
through 29 and Part II, item 8, pages 34, 35, 37, 38, 42, 46 and 47,
respectively, of this Form 10-K.
Item 3. Legal Proceedings
The Company has pending a number of lawsuits which have been
filed from time to time in various jurisdictions. These lawsuits cover
a broad variety of allegations spanning the Company's entire business.
The following is a brief description of the more significant of these
categories of lawsuits and government regulations.
<PAGE>
<PAGE> 7
Franchising
A substantial number of McDonald's restaurants are franchised
to independent businesspeople operating under arrangements with the
Company. In the course of the franchise relationship, occasional
disputes arise between the Company and its franchisees relating to a
broad range of subjects including, without limitation, quality,
service and cleanliness issues, contentions regarding grants or
terminations of franchises, franchisee claims for additional
franchises or rewrites of franchises, and delinquent payments.
Suppliers
The Company and its affiliates and subsidiaries do not supply,
with minor exceptions outside of the United States, food, paper, or
related items to any McDonald's restaurants. The Company relies upon
independent suppliers which are required to meet and maintain the
Company's standards and specifications. There are a number of such
suppliers worldwide and on occasion disputes arise between the Company
and its suppliers on a number of issues including, by way of example,
compliance with product specifications and McDonald's business
relationship with suppliers.
Employees
Thousands of persons are employed by the Company and in
restaurants owned and operated by subsidiaries of the Company. In
addition, thousands of persons, from time to time, seek employment in
such restaurants. In the ordinary course of business, disputes arise
regarding hiring, firing and promotion practices.
Customers
McDonald's restaurants serve a large cross-section of the
public and in the course of serving so many people, disputes arise as
to products, service, accidents and other matters typical of an
extensive restaurant business such as that of the Company.
Trademarks
McDonald's has registered trademarks and service marks, some of
which are of material importance to the Company's business. From time
to time, the Company may become involved in litigation to defend and
protect its use of such registered marks.
Government Regulations
Local, state and federal governments have adopted laws and
regulations involving various aspects of the restaurant business,
including, but not limited to, franchising, health, environment,
zoning and employment. The Company does not believe that it is in
violation of any existing statutory or administrative rules, but it
cannot predict the effect on its operations from promulgation of
additional requirements in the future.
Item 4. Submission of Matters to a Vote of Shareholders
None.
<PAGE>
<PAGE> 8
Executive Officers of the Registrant
All of the executive officers of McDonald's Corporation as of
March 1, 1994 are shown below. Each of the executive officers has been
continuously employed by the Company for at least five years and has a
term of office until the May 1994 Board of Directors' meeting.
<TABLE>
<CAPTION> Number
Number of
of years
years in
Date of with present
Name Office Birth Company position
--------------------- --------------------- -------- ------- --------
<S> <C> <C> <C> <C>
Robert M. Beavers, Jr. Senior Vice President 01/27/44 30 *
James R. Cantalupo President and 11/14/43 19 2
Chief Executive
Officer-International
Michael L. Conley Senior Vice President, 03/28/48 20 3
Controller
Thomas S. Dentice Executive Vice President 01/12/39 28 9
Patrick J. Flynn Executive Vice President 05/01/42 32 6
Thomas W. Glasgow, Jr. Executive Vice President, 02/17/47 25 2
Chief Operations Officer
Jack M. Greenberg Vice Chairman, Chief 09/28/42 12 2
Financial Officer
Michael R. Quinlan Chairman, Chief 12/09/44 30 4
Executive Officer
Edward H. Rensi President and Chief 08/15/44 28 2
Executive Officer-U.S.A.
Paul D. Schrage Senior Executive Vice 02/25/35 26 9
President, Chief
Marketing Officer
Fred L. Turner Senior Chairman 01/06/33 37 4
* Less than one year in current position.
</TABLE>
<PAGE>
<PAGE> 9
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters
The Company's common stock trades under the symbol MCD and is
listed on the following stock exchanges in the United States: New
York, Chicago and Pacific.
The common stock price range on the New York Stock Exchange
composite tape has been as follows:
---------------------------------------------------------
Quarter 1993 1992
---------------------------------------------------------
First $54 1/4 - 46 3/4 $45 - 38 3/8
Second $53 1/2 - 45 1/2 $47 1/2 - 39 3/8
Third $55 5/8 - 48 1/4 $47 1/4 - 41 1/8
Fourth $59 1/8 - 51 1/4 $50 3/8 - 40 7/8
---------------------------------------------------------
Year $59 1/8 - 45 1/2 $50 3/8 - 38 3/8
---------------------------------------------------------
The approximate number of shareholders of record and beneficial
owners of the Company's common stock as of December 31, 1993 was
estimated to be 459,000.
Given the Company's returns on equity and assets, the Company's
management believes it is prudent to reinvest a significant portion of
earnings back into the business. The Company has paid 72 consecutive
quarterly dividends on common stock and has increased the per share
amount 19 times since the first dividend was paid in 1976. Additional
dividend increases will be considered after reviewing returns to
shareholders, profitability expectations and financing needs.
Dividends per common share for the years ended December 31,
1993 and 1992 are incorporated herein by reference from Part II,
item 8, page 33. <PAGE>
<PAGE> 10
Item 6. Selected Financial Data
<TABLE>
11-YEAR SUMMARY
<CAPTION>
(Dollars rounded to millions, except per common share data and average restaurant sales)
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Systemwide sales $23,587 21,885 19,928 18,759 17,333 16,064 14,330 12,432 11,001 10,007 8,687
U.S. $14,186 13,243 12,519 12,252 12,012 11,380 10,576 9,534 8,843 8,071 7,069
Outside of the U.S. $ 9,401 8,642 7,409 6,507 5,321 4,684 3,754 2,898 2,158 1,936 1,618
Systemwide sales by type
Operated by franchisees $15,756 14,474 12,959 12,017 11,219 10,424 9,452 8,422 7,612 6,914 5,929
Operated by the Company $ 5,157 5,103 4,908 5,019 4,601 4,196 3,667 3,106 2,770 2,538 2,297
Operated by affiliates $ 2,674 2,308 2,061 1,723 1,513 1,444 1,211 904 619 555 461
Average sales by
restaurants open at least
one year, in thousands $ 1,768 1,733 1,658 1,649 1,621 1,596 1,502 1,369 1,296 1,264 1,169
Revenues from franchised
restaurants $ 2,251 2,031 1,787 1,621 1,465 1,325 1,186 1,037 924 828 704
Total revenues $ 7,408 7,133 6,695 6,640 6,066 5,521 4,853 4,143 3,694 3,366 3,001
Operating income $ 1,984 1,862 1,679 1,596 1,438 1,288 1,160 983 905 812 713
Income before provision
for income taxes $ 1,676 1,448 1,299 1,246 1,157 1,046 959 848 782 707 628
Net income $ 1,083 959 860 802 727 646 549 * 480 433 389 343
Cash provided by
operations $ 1,680 1,426 1,423 1,301 1,246 1,177 1,051 852 813 701 618
Financial position at year end
Net property and
equipment $10,081 9,597 9,559 9,047 7,758 6,800 5,820 4,878 4,164 3,521 3,183
Total assets $12,035 11,681 11,349 10,668 9,175 8,159 6,982 5,969 5,043 4,230 3,727
Long-term debt $ 3,489 3,176 4,267 4,429 3,902 3,111 2,685 2,131 1,638 1,268 1,171 <PAGE>
Total shareholders'
equity $ 6,274 5,892 4,835 4,182 3,550 3,413 2,917 2,506 2,245 2,009 1,755
Per common share
Net income $ 2.91 2.60 2.35 2.20 1.95 1.71 1.45 * 1.24 1.11 .97 .85
Dividends declared $ .42 .39 .36 .33 .30 .27 .24 .21 .20 .17 .14
Total shareholders'
equity at year end $ 16.24 14.77 13.48 11.65 9.81 9.09 7.72 6.45 5.67 4.94 4.38
Market price at
year end $ 57 48 3/4 38 29 1/8 34 1/2 24 1/8 22 20 1/4 18 11 1/2 10 1/2
Systemwide restaurants
at year end 13,993 13,093 12,418 11,803 11,162 10,513 9,911 9,410 8,901 8,304 7,778
Operated by franchisees 9,832 9,237 8,735 8,131 7,573 7,110 6,760 6,406 6,150 5,724 5,371
Operated by the Company 2,699 2,551 2,547 2,643 2,691 2,600 2,399 2,301 2,165 2,053 1,949
Operated by affiliates 1,462 1,305 1,136 1,029 898 803 752 703 586 527 458
U.S. 9,283 8,959 8,764 8,576 8,270 7,907 7,567 7,272 6,972 6,595 6,251
Outside of the U.S. 4,710 4,134 3,654 3,227 2,892 2,606 2,344 2,138 1,929 1,709 1,527
Number of countries at
year end 70 65 59 53 51 50 47 46 42 36 32
*Before the cumulative prior years' benefit from the change in accounting for income taxes.
</TABLE>
<PAGE>
<PAGE> 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------------------
CONSOLIDATED OPERATING RESULTS
-----------------------------------------------------------------------
INCREASES (DECREASES) IN OPERATING RESULTS OVER PRIOR YEAR
-----------------------------------------------------------------------
(Dollars rounded to millions, 1993 1992
except per common share data) Amount % Amount %
-----------------------------------------------------------------------
SYSTEMWIDE SALES $1,702 8 $1,957 10
-----------------------------------------------------------------------
REVENUES
Sales by Company-operated
restaurants $ 55 1 $ 194 4
Revenues from franchised
restaurants 220 11 244 14
-----------------------------------------------------------------------
TOTAL REVENUES 275 4 438 7
-----------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 38 1 97 2
Franchised restaurants 32 9 42 14
General, administrative
and selling expenses 81 9 66 8
Other operating (income)
expense--net 2 (3) 50 (44)
-----------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 153 3 255 5
-----------------------------------------------------------------------
OPERATING INCOME 122 7 183 11
-----------------------------------------------------------------------
Interest expense (58) (15) (18) (5)
Nonoperating income
(expense)--net 48 N/M (52) N/M
-----------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 228 16 149 11
-----------------------------------------------------------------------
Provision for income taxes 104 21 50 11
-----------------------------------------------------------------------
NET INCOME $ 124 13 $ 99 12
=======================================================================
NET INCOME PER COMMON SHARE $ .31 12 $ .25 11
-----------------------------------------------------------------------
N/M - Not Meaningful
<PAGE>
<PAGE> 12
SYSTEMWIDE SALES AND RESTAURANTS
Systemwide sales are comprised of sales by restaurants operated by the
Company, franchisees and affiliates operating under joint-venture
agreements between McDonald's and local businesspeople. The 1993
increase was due to new restaurant expansion and higher sales at
existing restaurants worldwide, offset in part by weaker foreign
currencies and one less day in 1993 since 1992 was a leap year. The
1992 increase was due to new restaurant expansion, higher sales at
existing restaurants and stronger foreign currencies. Sales by
Company-operated restaurants grew at a slower rate than Systemwide
sales in 1993 and 1992. The slower rate of growth in 1993 occurred
primarily because weaker foreign currencies had a greater impact on
sales by Company-operated restaurants than on Systemwide sales,
combined with an increasing global base of franchised restaurants from
expansion. The slower rate of growth in 1992 reflected the
franchising of certain Company-operated businesses.
Average sales by restaurants open at least one year were $1,768,000
in 1993, which was $35,000 higher than in 1992. Average sales both in
the U.S. and outside of the U.S. improved due to the value program and
various promotional efforts.
Expansion has continued at an accelerated pace as 900 restaurants
were added in 1993, compared with 675 in 1992 and 615 in 1991.
Restaurants opened during the year (excluding satellite locations)
contributed $572 million to Systemwide sales in 1993, $478 million in
1992 and $460 million in 1991. McDonald's plans to add between 900
and 1,200 restaurants (excluding satellite locations) around the world
in 1994 and in each of the next several years. The mix of net
additions will remain the same -- approximately one-third in the U.S.
and two-thirds in markets outside of the U.S. Our global expansion
plan also includes satellites -- sites that leverage the
infrastructure of existing restaurants, either by using their storage
capability or by drawing on their management talent and labor pool.
At year-end 1993, 170 satellites were operating around the world. In
addition, we expect to add several hundred satellite locations around
the world each year.
TOTAL REVENUES
Total revenues consist of sales by Company-operated restaurants and
fees from restaurants operated by franchisees and affiliates, based
upon a percent of sales with specified minimum payments. The minimum
franchise fee generally has been 12% of sales for new U.S. franchise
arrangements since 1987. Higher fees are charged for sites that
require a higher investment on the part of the Company. Fees paid by
franchisees outside of the U.S. vary according to local business
conditions. These fees, together with occupancy and operating rights,
are stipulated in franchise arrangements that generally have 20-year
terms.
Revenues grow as restaurants are added and as existing restaurants
build sales. Menu price adjustments affect revenues as well as sales;
however, different pricing structures, new products, promotions, and
product mix variations make it impractical to quantify the impact for
the System.
<PAGE>
<PAGE> 13
The rates of increases in total revenues for 1993 and 1992 were
less than the rates of increases in Systemwide sales. In 1993, this
reflected weaker foreign currencies which had a greater impact on
revenues than on Systemwide sales and the increasing global base of
franchised restaurants, occurring primarily from expansion. In 1992,
the franchising of certain Company-operated restaurant businesses
primarily in the U.S. and Canada affected the rate of increase.
Growth rates in sales by Company-operated restaurants and revenues
from franchised restaurants varied because of expansion and changes in
ownership and because sales by Company-operated restaurants were
impacted to a greater degree by changing foreign currencies than were
revenues. In 1993, about 53% of sales by Company-operated restaurants
were outside of the U.S., compared with 33% of revenues from
franchised restaurants.
RESTAURANT MARGINS
Company-operated restaurant margins were 19.2% of sales in 1993,
compared with 19.1% in 1992 and 17.9% in 1991. As a percent of sales,
food and paper costs increased, while occupancy, other operating and
payroll costs declined in 1993. All costs as a percent of sales
declined in 1992.
Franchised restaurant margins were 83.1% of applicable revenues for
1993, compared with 82.8% in 1992 and 1991. Franchised margins
include revenues and expenses associated with restaurants operating
under business facilities lease arrangements. Under these
arrangements, the Company leases the businesses -- including
equipment -- to franchisees who have options to purchase the
businesses. While higher fees are charged under these arrangements,
margins are generally lower because of equipment depreciation. When
these purchase options are exercised, the resulting gains compensate
the Company for lower margins prior to exercise and are included in
other operating (income) expense--net. At year-end 1993, 544
restaurants were operating under such arrangements, compared with 583
and 584 at year-end 1992 and 1991, respectively.
GENERAL, ADMINISTRATIVE AND SELLING EXPENSES
The 1993 increase was due primarily to higher employee costs
associated with expansion and key priorities, partially offset by
weaker foreign currencies. The 1992 increase was due to higher
employee costs associated with expansion, partially offset by a
reduction in U.S. marketing costs associated with the value program.
These expenses as a percent of Systemwide sales have remained
relatively constant over the past five years, and were 4.0% in 1993
and 3.9% in 1992.
<PAGE>
<PAGE> 14
OTHER OPERATING (INCOME) EXPENSE--NET
This category is comprised primarily of gains on sales of restaurant
businesses, equity in earnings of unconsolidated affiliates, and net
gains or losses from property dispositions. The 1993 and 1992 amounts
were relatively constant, reflecting greater income from affiliates
and gains on sales of restaurant businesses in 1993, offset by the
favorable settlement of a sales tax case in Brazil in 1992. Major
factors contributing to the 1992 decrease included lower affiliate
results due to 1991 gains from property dispositions and lower
operating results in Japan, lower gains on sales of restaurant
businesses, and greater losses on property dispositions, partially
offset by the favorable settlement of a sales tax case in Brazil in
1992.
Gains on sales of restaurant businesses include gains from
exercises of purchase options by franchisees operating under business
facilities lease arrangements and from sales of Company-operated
restaurants. As a franchisor, McDonald's purchases and sells
businesses in transactions with franchisees and affiliates in an
ongoing effort to achieve the optimal ownership mix in each market.
These transactions and the resulting gains are integral to
franchising, and are appropriately recorded in operating income.
Equity in earnings of unconsolidated affiliates is reported after
interest expense and income taxes, except for U.S. partnerships that
are reported before income taxes. The Company actively participates
in, but does not control, these businesses.
Net gains or losses from property dispositions result from disposal
of excess properties that occur because of closings, relocations and
other transactions.
OPERATING INCOME
The 1993 and 1992 increases reflected better results from combined
restaurant margins, partially offset by higher general, administrative
and selling expenses. Additionally, 1993 was impacted by weaker
foreign currencies, while 1992 was impacted by lower income from other
operating transactions and stronger foreign currencies.
INTEREST EXPENSE
The 1993 and 1992 decreases were primarily due to lower average debt
balances and lower average interest rates; 1993 also was impacted by
weaker foreign currencies. The trends have been positively affected
by the fact that cash provided by operations exceeded capital
expenditures in each of the last three years.
NONOPERATING INCOME (EXPENSE)--NET
This category includes interest income, gains and losses related to
investments and financings, as well as miscellaneous income and
expense. The 1993 increase reflected $9 million in gains related to
debt extinguishments and $29 million in charges related to various
early redemptions of high-coupon, U.S. Dollar debt in 1992.
<PAGE>
<PAGE> 15
PROVISION FOR INCOME TAXES
The effective tax rate increased to 35.4% for 1993, compared with
33.8% for 1992 and 1991, primarily as a result of new U.S. tax
legislation enacted in the third quarter of 1993 and lower foreign tax
benefits. The full-year impact of the U.S. tax law changes on the
1993 income tax provision was approximately $20 million. Of this
amount, the retroactive impact was $15 million, comprised of nearly
$14 million attributable to a one-time, noncash revaluation of
deferred tax liabilities, and $1 million related to periods prior to
the third quarter. The Company expects its 1994 effective income tax
rate to be in the 35.5% to 36.0% range.
Consolidated net deferred tax liabilities included tax assets of
$148 million, net of valuation allowance, in 1993 and 1992.
Substantially all of the tax assets arose from profitable markets and
the majority is expected to be realized in future U.S. income tax
returns.
NET INCOME AND NET INCOME PER COMMON SHARE
Net income and net income per common share increased 13 and 12
percent, respectively, in 1993. These increases were negatively
affected by weaker foreign currencies and the new U.S. tax
legislation.
----------------------------------------------------------------
NET INCOME
(Dollars in NET INCOME PER
millions) COMMON SHARE
----------------------------------------------------------------
AMOUNT % AMOUNT %
----------------------------------------------------------------
1993 AS REPORTED $1,083 13 $2.91 12
Impact of changing foreign
currencies 32 .09
Retroactive impact of U.S.
tax law changes 15 .04
----------------------------------------------------------------
1993 AS ADJUSTED $1,130 18 $3.04 17
================================================================
<PAGE>
<PAGE> 16
IMPACT OF CHANGING FOREIGN CURRENCIES
Changing foreign currencies do impact reported results from time to
time, but McDonald's manages foreign currencies to mitigate business
risk and the reporting impact. As previously noted, weaker foreign
currencies had a significant negative impact on 1993 results, while
stronger foreign currencies had a positive impact in 1992. Further
discussion of our approach to managing changing foreign currencies can
be found on pages 26 through 28 in Financings and Total Shareholders'
Equity.
-----------------------------------------------------------------------
Impact of changing foreign currencies 1993
-----------------------------------------------------------------------
Reported Adjusted
-----------------------------------------------------------------------
(Dollars in millions) Amount % Amount %
-----------------------------------------------------------------------
Systemwide sales $23,587 8 $23,993 10
Revenues 7,408 4 7,721 8
Operating income 1,984 7 2,051 10
Net income 1,083 13 1,114 16
-----------------------------------------------------------------------
1992
-----------------------------------------------------------------------
Systemwide sales $21,885 10 $21,717 9
Revenues 7,133 7 7,116 6
Operating income 1,862 11 1,846 10
Net income 959 12 953 11
-----------------------------------------------------------------------
<PAGE>
<PAGE> 17
------------------------------------------------------------------------
U.S. OPERATIONS
------------------------------------------------------------------------
SALES
The 1993 and 1992 increases were due to higher sales and transaction
counts at existing restaurants and expansion. Sales and transaction
counts in 1993 were positively driven by the emphasis on value and
customer satisfaction in the form of Extra-Value Meals, Happy Meals,
"2 for $2" offers and the Burger of the Month program; as well as the
NBA Fantasy Pack Trading Card, Happy Birthday Big Mac, Jurassic Park,
Double Plays and Holiday Video promotions.
------------------------------------------------------------------------
Five Ten
years years
(In millions of dollars) 1993 1992 1991 ago ago
------------------------------------------------------------------------
Operated by franchisees $11,435 $10,615 $ 9,873 $ 8,574 $5,322
Operated by the Company 2,420 2,353 2,410 2,629 1,716
Operated by affiliates 331 275 236 177 31
------------------------------------------------------------------------
U.S. sales $14,186 $13,243 $12,519 $11,380 $7,069
========================================================================
RESTAURANTS
There were 324 restaurants added in the U.S. in 1993, representing 36%
of Systemwide additions, compared with 195 additions and 29% in 1992,
and 340 additions and 56% five years ago. McDonald's expects to boost
U.S. expansion in 1994 and in each of the next several years by adding
between 300 and 400 restaurants, exclusive of satellites.
------------------------------------------------------------------------
Five Ten
years years
1993 1992 1991 ago ago
------------------------------------------------------------------------
Operated by franchisees 7,628 7,375 7,149 6,017 4,791
Operated by the Company 1,433 1,395 1,446 1,758 1,430
Operated by affiliates 222 189 169 132 30
------------------------------------------------------------------------
U.S. restaurants 9,283 8,959 8,764 7,907 6,251
========================================================================
Restaurants operated by franchisees and affiliates represented 85%
of U.S. restaurants at year-end 1993, compared with 78% five years
ago. During the period 1989 through 1991, the Company franchised
certain restaurants it previously operated, while continuing to own or
control the land and buildings. The restaurants that had been
franchised either were generating weak operating results, not building
sales as expected, or located in outlying markets. The franchising of
these businesses accomplished several objectives. On-site,
entrepreneurial owners with an equity stake in the business improved
operations, sales and profits; and franchising of these restaurants
also improved consolidated profits.
<PAGE>
<PAGE> 18
OPERATING RESULTS
------------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991 1990 1989
------------------------------------------------------------------------
REVENUES
Sales by Company-
operated restaurants $2,420 $2,353 $2,410 $2,655 $2,728
Revenues from
franchised restaurants 1,511 1,396 1,300 1,216 1,159
------------------------------------------------------------------------
TOTAL REVENUES 3,931 3,749 3,710 3,871 3,887
------------------------------------------------------------------------
OPERATING COSTS AND
EXPENSES
Company-operated
restaurants 1,977 1,920 2,000 2,221 2,250
Franchised restaurants 247 235 217 202 180
General, administrative
and selling expenses 638 566 549 511 490
Other operating (income)
expense--net (18) (13) (56) (49) (22)
------------------------------------------------------------------------
TOTAL OPERATING
COSTS AND EXPENSES 2,844 2,708 2,710 2,885 2,898
------------------------------------------------------------------------
U.S. OPERATING INCOME $1,087 $1,041 $1,000 $ 986 $ 989
========================================================================
U.S. revenues were positively impacted by strong sales and expansion
in 1993 and 1992, and negatively affected by the franchising of
certain Company-operated restaurant businesses in 1992, 1991 and 1990.
U.S. Company-operated margins increased $11 million or 3% in 1993.
These margins were 18.3% of sales in 1993, compared with 18.4% in 1992
and 17.0% in 1991. U.S. franchised margins rose $102 million or 9% in
1993, reflecting sales improvement and expansion. These margins were
83.6% of applicable revenues in 1993, compared with 83.2% in 1992 and
83.3% in 1991. While it is difficult to assess the potential effects
of federal and state legislation in the U.S. that may impact the
industry, the Company believes it can maintain operating margins
within the same range of the past ten years by continuing to build
sales and reduce costs.
U.S. operating income rose $46 million or 4% in 1993 and was 55% of
consolidated operating income, compared with 56% in 1992. This
increase resulted primarily from higher combined restaurant margins,
partially offset by higher general, administrative and selling
expenses in the form of higher employee costs and other expenditures
to support our global strategies and strengthen our competencies. The
1992 increase was driven by strong sales and combined restaurant
margins, partially offset by lower gains on sales of restaurant
businesses in 1992 and a gain on the sale of real estate by a U.S.
affiliate in 1991. Operating income included $348 million of
depreciation and amortization in 1993, compared with $330 million in
1992 and $325 million in 1991.
<PAGE>
<PAGE> 19
ASSETS AND CAPITAL EXPENDITURES
-------------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991 1990 1989
-------------------------------------------------------------------------
New restaurants $ 332 $ 196 $ 214 $ 446 $ 490
Existing restaurants 122 125 151 249 283
Other properties 130 76 45 51 74
-------------------------------------------------------------------------
U.S. capital expenditures $ 584 $ 397 $ 410 $ 746 $ 847
=========================================================================
U.S. assets $6,385 $6,410 $6,154 $6,060 $5,646
-------------------------------------------------------------------------
U.S. assets decreased $25 million or .4% in 1993, due to the
utilization of year-end 1992 cash balances. At year-end 1993, 53% of
consolidated assets were located in the U.S., compared with 55% at
year-end 1992. Capital expenditures increased $187 million or 47% in
1993, and represented 44% of consolidated capital expenditures,
compared with 60% five years ago. The amounts excluded expenditures
made by franchisees such as their initial investments in equipment,
signs, seating and decor and over the long term, ongoing reinvestment
in their businesses. New restaurant expenditures increased $136
million or 69% because of accelerated expansion, tempered by lower
average development costs.
Expenditures for existing restaurants included modifications to
achieve higher levels of customer satisfaction and implementation of
technology to improve service and food quality. The decline over time
highlighted aggressive reinvestment in prior years.
Rebuilding and relocating restaurants has generated additional
sales, reflecting our ability to adjust to changing demographics,
traffic patterns and market opportunities. More than $35 million was
spent for these investments in 1993 and $291 million over the past
five years. The rise in other property expenditures was attributable
to the further testing of Leaps & Bounds, a family play center
concept.
-------------------------------------------------------------------------
(In thousands of dollars) 1993 1992 1991 1990 1989
-------------------------------------------------------------------------
Land $ 328 $ 361 $ 433 $ 433 $ 472
Building 482 515 608 720 682
Equipment 317 361 362 403 416
-------------------------------------------------------------------------
U.S. average costs $1,127 $1,237 $1,403 $1,556 $1,570
=========================================================================
Average land costs declined as a result of the implementation of
low-cost building designs, which require smaller parcels, and a softer
real estate market. Average building costs decreased due to low-cost
building designs and construction efficiencies. Low-cost building
designs comprised nearly 80% of 1993 openings, compared with 60% in
1992. Average equipment costs decreased due to standardization and
global sourcing. McDonald's intends to pursue ongoing development
cost reductions by taking further advantage of standardization, global
sourcing and economies of scale.
<PAGE>
<PAGE> 20
The Company continues to emphasize restaurant property ownership.
Real estate ownership yields long-term benefits, including the ability
to fix occupancy costs. In addition to purchasing new properties,
previously leased properties are acquired. The Company owned 68% of
U.S. sites at year-end 1993, the same as five years ago.
<PAGE>
<PAGE> 21
----------------------------------------------------------------------
OPERATIONS OUTSIDE OF THE U.S.
----------------------------------------------------------------------
SALES
The 1993 and 1992 increases were due to expansion and higher sales at
existing restaurants; however, 1993 was impacted by weaker foreign
currencies, most notably the European currencies along with the
Canadian and Australian Dollars. On the other hand, 1992 benefited
from stronger foreign currencies in the form of the Japanese Yen,
Deutsche Mark and French Franc. Strong operating results have been
achieved in the past several years despite weak economies in several
countries, particularly Canada, England and Japan.
----------------------------------------------------------------------
Five Ten
years years
(In millions of dollars) 1993 1992 1991 ago ago
----------------------------------------------------------------------
Operated by franchisees $4,321 $3,859 $3,085 $1,850 $ 607
Operated by the Company 2,737 2,750 2,499 1,567 581
Operated by affiliates 2,343 2,033 1,825 1,267 430
----------------------------------------------------------------------
Sales outside of the U.S. $9,401 $8,642 $7,409 $4,684 $1,618
======================================================================
European sales rose because of accelerated expansion and higher
sales at existing restaurants, partially offset by weaker foreign
currencies. Asia/Pacific sales grew because of expansion coupled with
the favorable impact of a stronger Japanese Yen. Latin American sales
increased because of expansion and higher sales at existing
restaurants. Canadian sales were negatively impacted by the weaker
currency, partially offset by higher sales at existing restaurants and
expansion.
In 1993, four of the six largest markets outside of the U.S. --
France, Germany, Australia and England -- reported double digit sales
increases on a local currency basis. Other markets -- including
Argentina, Austria, Belgium, Brazil, Canada, Denmark, Hong Kong,
Hungary, Italy, Malaysia, Netherlands, New Zealand, Norway, Panama,
Puerto Rico, Scotland, Singapore, Spain, Sweden, Switzerland, Taiwan,
Thailand, Turkey and Wales -- delivered excellent results on a local
currency basis.
RESTAURANTS
During the past five years, 60% of Systemwide additions have been
outside of the U.S. Of the 576 restaurants added in 1993, 54% were in
the six largest markets, compared with 57% in 1992 and 63% in 1991.
This continued relative decline was indicative of the growing
importance of emerging markets. McDonald's expects to boost expansion
outside of the U.S. in 1994 and in each of the next several years by
adding between 600 and 800 restaurants, exclusive of satellites.
<PAGE>
<PAGE> 22
-----------------------------------------------------------------------
Five Ten
years years
1993 1992 1991 ago ago
-----------------------------------------------------------------------
Operated by franchisees 2,204 1,862 1,586 1,093 580
Operated by the Company 1,266 1,156 1,101 842 519
Operated by affiliates 1,240 1,116 967 671 428
-----------------------------------------------------------------------
Restaurants outside of
the U.S. 4,710 4,134 3,654 2,606 1,527
=======================================================================
About 82% of Company-operated restaurants outside of the U.S. were
in England, Canada, Germany, Australia, Hong Kong and France. About
71% of franchised restaurants outside of the U.S. were in Canada,
Germany, Australia, France, Japan and the Netherlands. Restaurants
operated by affiliates were principally located in Japan and other
Asia/Pacific countries.
OPERATING RESULTS
-----------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991 1990 1989
-----------------------------------------------------------------------
REVENUES
Sales by Company-
operated restaurants $2,737 $2,750 $2,499 $2,364 $1,873
Revenues from
franchised restaurants 740 634 486 405 306
-----------------------------------------------------------------------
TOTAL REVENUES 3,477 3,384 2,985 2,769 2,179
-----------------------------------------------------------------------
OPERATING COSTS AND
EXPENSES
Company-operated
restaurants 2,188 2,206 2,029 1,915 1,528
Franchised restaurants 133 114 90 77 61
General, administrative
and selling expenses 303 295 246 213 166
Other operating (income)
expense--net (44) (51) (58) (46) (25)
-----------------------------------------------------------------------
TOTAL OPERATING
COSTS AND EXPENSES 2,580 2,564 2,307 2,159 1,730
-----------------------------------------------------------------------
OPERATING INCOME
OUTSIDE OF THE U.S. $ 897 $ 820 $ 678 $ 610 $ 449
=======================================================================
The 1993 and 1992 revenue and operating income increases reflected
accelerated expansion and better performance despite weak economies in
several major markets. Changing foreign currencies had a negative
effect in 1993 and a positive one in 1992 on these increases.
<PAGE>
<PAGE> 23
Company-operated and franchised dollar margins were negatively
impacted by weaker foreign currencies. Company-operated margins
increased $6 million or 1% in 1993. These margins improved to 20.1%
of sales in 1993, compared with 19.8% in 1992 and 18.8% in 1991.
Franchised margins grew $86 million or 17% in 1993. These margins
were 82.0% of applicable revenues in 1993, compared with 82.1% in 1992
and 81.5% in 1991.
The 1993 and 1992 increases in general, administrative and selling
expenses were due primarily to higher employee costs associated with
expansion, partially offset by weaker foreign currencies in 1993.
Other operating income decreased in 1993 due to the favorable
settlement of a sales tax case in Brazil in 1992, offset somewhat by
1993 increases in gains on sales of restaurant businesses and greater
affiliate earnings. Other operating income decreased in 1992 due to
lower affiliate results and lower gains on sales of restaurant
businesses, offset somewhat by the favorable settlement of a sales tax
case in Brazil.
Operations outside of the U.S. continued to contribute greater
amounts to consolidated results as shown below:
---------------------------------------------------------------------
(As a percent of consolidated) 1993 1992 1991 1990 1989
---------------------------------------------------------------------
Systemwide sales 40 39 37 35 31
Total revenues 47 47 45 42 36
Operating income 45 44 40 38 31
Restaurant margins
Company-operated 55 56 53 51 42
Franchised 32 31 27 24 20
Systemwide restaurants 34 32 29 27 26
Assets 47 45 46 43 38
---------------------------------------------------------------------
The Europe/Africa/Middle East segment accounted for 64% of revenues
and 61% of operating income outside of the U.S. in 1993, growing $49
and $64 million, respectively. Germany, England and France accounted
for 85% of this segment's operating income, compared with 90% in 1992.
The 1993 increases were primarily due to strong operating results in
Germany and France, as well as many emerging markets, offset by weaker
foreign currencies. England's operating income decrease was due to
the significant impact of the weaker currency. The majority of the
1992 revenue and operating income increases were generated by Germany,
France and England.
Asia/Pacific revenues grew $60 million and operating income
increased $27 million in 1993; 82% of the operating income was
contributed by Australia, Japan and Hong Kong. The 1993 increases
were attributable to expansion and developing economies in many
Asia/Pacific markets, with the exception of Japan which continues to
suffer from a weak economy. In 1992, stronger operations in
Australia, and better results in Hong Kong and Singapore improved
operating income, while earnings from Japan were affected by the
economy.
Latin American revenues grew $22 million, while operating income
decreased $12 million in 1993. The 1993 increase in revenues was
primarily a function of expansion, while the decrease in operating
income reflected the favorable settlement of a sales tax case in
Brazil in 1992, partially offset by better results in Argentina.
Brazil was affected by a weak economy in 1993 and 1992.
<PAGE>
<PAGE> 24
Canadian revenues decreased $37 million due to a weaker Canadian
Dollar in 1993. Operating income decreased $2 million, reflecting the
weaker currency and a decrease in other operating income, partially
offset by better Company-operated margins. Revenues decreased in 1992
due to the franchising of certain restaurant businesses and the weaker
currency, while operating income declined due to lower gains on sales
of restaurant businesses and the weaker currency.
ASSETS AND CAPITAL EXPENDITURES
Assets outside of the U.S. rose $379 million or 7% in 1993; the
effects of expansion were partially offset by weaker foreign
currencies. At year-end 1993, about 47% of consolidated assets were
located outside of the U.S.; 64% of these assets were located in
England, France, Germany, Canada and Australia.
-----------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991 1990 1989
-----------------------------------------------------------------------
New restaurants $ 609 $ 603 $ 612 $ 639 $ 486
Existing restaurants 94 91 94 126 148
Other properties 55 47 39 74 64
-----------------------------------------------------------------------
Capital expenditures
outside of the U.S. $ 758 $ 741 $ 745 $ 839 $ 698
=======================================================================
Assets outside of
the U.S. $5,650 $5,271 $5,195 $4,608 $3,529
-----------------------------------------------------------------------
In the past five years, nearly $3.8 billion has been invested
outside of the U.S.; in 1993, capital expenditures rose in all
geographic segments except Canada. Weaker foreign currencies
negatively impacted Europe, Asia/Pacific and Canada. Approximately
72% of capital expenditures outside of the U.S. were invested in
Europe -- primarily in Germany, France and England.
In general, average development costs for new restaurants for the
five largest, majority-owned markets -- Australia, Canada, England,
France and Germany -- were nearly double the U.S. average; such costs
accommodate higher sales volumes and transaction counts. Even so,
1993 average development costs have decreased approximately one-third
since 1991 in these markets. Over the past two years, average
development costs have decreased due to construction and design
efficiencies, standardization, global sourcing and changes in the mix
of openings, and because of weaker foreign currencies in 1993.
Expenditures for existing restaurants included seating and decor
upgrades, and equipment required for new products and operating
efficiencies. The majority of these expenditures were in Europe.
Expenditures for other properties were principally for office
facilities.
<PAGE>
<PAGE> 25
As in the U.S., business outside of the U.S. emphasizes restaurant
property ownership. However, various laws and regulations make
property acquisition and ownership much more difficult than in the
U.S. Ownership is obtained when practical; otherwise, long-term
leases are an alternative. In addition, certain markets have laws and
customs that offer stronger tenancy rights than are available in the
U.S. The Company and affiliates owned 36% of sites outside of the
U.S. at year-end 1993, compared with 35% five years ago.
Capital expenditures made by affiliates -- which were not included
in consolidated amounts -- were $207 million in 1993, compared with
$206 million in 1992. The majority of the 1993 expenditures were for
development in Japan, Argentina and Russia. Included in the amounts
for Russia were costs for constructing an office building which is
leased primarily to third parties.
<PAGE>
<PAGE> 26
-----------------------------------------------------------------------
FINANCIAL POSITION
-----------------------------------------------------------------------
TOTAL ASSETS AND CAPITAL EXPENDITURES
Total assets grew $354 million or 3% in 1993; net property and
equipment represented 84% of total assets and rose $484 million.
Capital expenditures increased $204 million or 18%, reflecting higher
expansion, partially offset by lower average development costs and
weaker foreign currencies.
CASH PROVIDED BY OPERATIONS
Cash provided by operations increased $254 million or 18% in 1993, and
was relatively flat in 1992 mainly due to $159 million in payments
related to various prior years' tax matters. 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 third straight year, cash provided
by operations exceeded capital expenditures.
While cash generated is significant relative to cash required, the
Company also has the ability to meet short-term needs through
commercial paper borrowings and line of credit agreements.
Accordingly, a relatively low current ratio has been purposefully
maintained; it was .60 at year-end 1993.
The Company believes that cash flow measures are meaningful
indicators of growth and financial strength, when evaluated in the
context of absolute dollars, uses and consistency. Over the past five
years, cash flow coverage has improved significantly. Cash provided
by operations is expected to cover capital expenditures over the next
several years, even as expansion continues to accelerate.
-----------------------------------------------------------------------
(Dollars in millions) 1993 1992 1991 1990 1989
-----------------------------------------------------------------------
Cash provided by
operations $1,680 $1,426 $1,423 $1,301 $1,246
Cash provided by operations
minus capital expenditures $ 363 $ 339 $ 294 $ (270) $ (309)
Cash provided by operations
as a percent of capital
expenditures 128 131 126 83 80
Cash provided by operations
as a percent of total debt 45 37 31 27 31
-----------------------------------------------------------------------
FINANCINGS
The Company strives to minimize interest expense and the impact of
changing foreign currencies, while maintaining the capacity to meet
increasing growth requirements. To accomplish these objectives,
McDonald's generally finances long-term assets with long-term debt in
the currencies in which the assets are denominated, while remaining
flexible to take advantage of changing foreign currencies and interest
rates.
<PAGE>
<PAGE> 27
Over the years, major capital markets and various techniques have
been utilized to meet financing requirements and reduce interest
expense. Currency exchange agreements have been employed in
conjunction with borrowings to obtain desired currencies at attractive
rates. Interest-rate exchange agreements and interest-rate caps have
been used to effectively convert fixed-rate to floating-rate debt, or
vice versa, and to limit interest expense. Foreign-denominated debt
has been used to lessen the impact of changing foreign currencies on
net income and shareholders' equity. Total foreign-denominated debt,
including the effects of currency exchange agreements, was $3.1 and
$2.7 billion at year-end 1993 and 1992, respectively.
The Company manages its debt portfolio, including the use of
derivatives, in order to respond to changes in interest rates and
foreign currencies. Accordingly, the Company periodically retires,
redeems, and repurchases debt, and terminates exchange agreements.
While changing foreign currencies affect reported results, the Company
actively hedges the seven currencies that have significant potential
impact in order to minimize the cash exposure of royalty and other
payments received in the U.S. in foreign currencies. In addition,
McDonald's restaurants primarily purchase goods and services in local
currencies resulting in natural hedges; McDonald's typically finances
in local currencies creating economic hedges; and the Company's
foreign currency exposure is diversified within a basket of
currencies, as opposed to one or several.
-----------------------------------------------------------------------
(Includes the net asset
positions of currency
exchange agreements) 1993 1992 1991 1990 1989
-----------------------------------------------------------------------
Fixed-rate debt as a percent
of total debt at year end 77 75 78 78 76
Weighted average annual
interest rate 9.1 9.3 9.4 9.4 9.4
Foreign-denominated debt
as a percent of total debt
at year end 86 72 61 60 59
-----------------------------------------------------------------------
Moody's and Standard & Poor's have rated McDonald's debt Aa2 and
AA, respectively, since 1982. Duff & Phelps began rating the debt in
1990, and currently rates it AA+. The Company has not experienced,
nor does it expect to experience, difficulty in obtaining financing or
in refinancing existing debt. The Company had $1.7 billion under line
of credit agreements and $685 million under previously filed shelf
registrations available at year-end 1993 for future debt issuance.
Although McDonald's prefers to own real estate, leases are an
alternative financing method. As in the past, some new properties
will be leased. Such leases frequently include renewal and/or
purchase options. In the past five years, McDonald's has leased
properties related to 41% of U.S. openings and 67% of openings outside
of the U.S.
<PAGE>
<PAGE> 28
During the past three years, the Company has improved its balance
sheet by reducing leverage while simultaneously increasing expansion
and repurchasing shares. Total debt as a percent of total
capitalization -- defined as total debt and total shareholders'
equity -- was 37% at year-end 1993, compared with 40% and 49% at year-
end 1992 and 1991, respectively.
TOTAL SHAREHOLDERS' EQUITY
Total shareholders' equity rose $382 million and represented 52% of
total assets at year-end 1993. One technique used to enhance common
shareholder value is share repurchase through excess cash flow or debt
capacity, while maintaining a strong equity base for future expansion.
At year-end 1993, the market value of shares repurchased by the
Company and recorded as common stock in treasury was $3.5 billion.
In conjunction with efforts to enhance common shareholder value,
the Company recently announced its intention to purchase up to $1
billion of its common stock within the next three years, primarily
from excess cash flow. In 1993, the Company completed a $700 million
common share repurchase program begun in 1992. In order to lower the
cost of equity capital, the Company issued $500 million of Series E
7.72% Cumulative Preferred Stock in 1992; at the same time, the Board
of Directors authorized a $500 million common share repurchase program
and the use of derivatives. Subsequently, the Board authorized an
additional $200 million expenditure for share repurchase in 1993.
Weaker foreign currencies reduced shareholders' equity by $65
million in 1993; however, financing foreign-denominated assets with
foreign-denominated debt tempered the effect. At year-end 1993,
foreign-denominated assets not entirely financed with the related
foreign-denominated debt were primarily located in England, Canada,
Australia, France and Germany.
RETURNS
Return on average assets is computed using income before provision for
income taxes, preferred dividends and interest expense. Net income,
less preferred stock dividends (net of tax in 1993 and 1992), is used
to calculate return on average common equity. Month-end balances are
used to compute both average assets and average common equity.
----------------------------------------------------------------------
1993 1992 1991 1990 1989
----------------------------------------------------------------------
Return on average assets 17.1 16.1 15.8 16.7 17.3
Return on average common
equity 19.0 18.2 19.1 20.7 20.5
----------------------------------------------------------------------
The 1993 and 1992 improvements in return on average assets
reflected better global operating results and a slower rate of asset
growth. The 1993 improvement in return on average common equity
reflected higher levels of share repurchase, whereas declines in 1992
and 1991 resulted from lower levels of share repurchase as excess cash
flow was used to reduce debt. In recent years, returns were affected
by soft economies in the U.S. and certain markets outside of the U.S.
Also influencing these returns were expansion outside of the U.S. and,
prior to 1991, escalating development costs and higher reinvestment.
<PAGE>
<PAGE> 29
EFFECTS OF CHANGING PRICES--INFLATION
McDonald's has demonstrated an ability to manage inflationary cost
increases effectively. Rapid inventory turnover, the ability to
adjust prices, substantial property holdings--many of which are at
fixed costs and partially financed by debt made cheaper by inflation--
and cost controls have enabled McDonald's to mitigate the effects of
inflation.
<PAGE>
<PAGE> 30
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Reference
---------
Management's Report 31
Report of independent auditors 32
Consolidated statement of income
for each of the three years in the
period ended December 31, 1993 33
Consolidated balance sheet
at December 31, 1993 and 1992 34
Consolidated statement of cash flows
for each of the three years in the
period ended December 31, 1993 35
Consolidated statement of shareholders'
equity for each of the three years in
the period ended December 31, 1993 36
Notes to consolidated financial statements
(Financial comments) 37-50
Quarterly Results (unaudited) 51
<PAGE>
<PAGE> 31
MANAGEMENT'S REPORT
Management is responsible for the preparation and integrity of the
consolidated financial statements and Financial Comments appearing in
this annual report. The financial statements were prepared in
accordance with generally accepted accounting principles and include
certain amounts based on management's best estimates and judgments.
Other financial information presented in the annual report is
consistent with the financial statements.
The Company maintains a system of internal accounting controls
designed to provide reasonable assurance that assets are safeguarded,
and that transactions are executed as authorized and are recorded and
reported properly. This system of controls is based upon written
policies and procedures, appropriate divisions of responsibility and
authority, careful selection and training of personnel and utilization
of an internal audit program. Policies and procedures prescribe that
the Company and all employees are to maintain the highest ethical
standards and that business practices throughout the world are to be
conducted in a manner which is above reproach.
Ernst & Young, independent auditors, has audited the Company's
financial statements and their report is presented herein.
The Board of Directors has an Audit Committee composed entirely of
outside Directors. Ernst & Young has direct access to the Audit
Committee and periodically meets with the Committee to discuss
accounting, auditing and financial reporting matters.
McDONALD'S CORPORATION
Oak Brook, Illinois
January 27, 1994
<PAGE>
<PAGE> 32
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
McDonald's Corporation
Oak Brook, Illinois
We have audited the accompanying consolidated balance sheet of
McDonald's Corporation as of December 31, 1993 and 1992, and the
related consolidated statements of income, shareholders' equity and
cash flows for each of the three years in the period ended December
31, 1993. These financial statements are the responsibility of
McDonald's Corporation management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position
of McDonald's Corporation at December 31, 1993 and 1992, and the
consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles.
ERNST & YOUNG
Chicago, Illinois
January 27, 1994
<PAGE>
<PAGE> 33
<TABLE>
McDONALD'S CORPORATION CONSOLIDATED STATEMENT OF INCOME
--------------------------------------------------------------------------
<CAPTION>
(In millions of dollars, except per common share data)
Years ended December 31, 1993 1992 1991
--------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales by Company-operated restaurants $5,157.2 $5,102.5 $4,908.5
Revenues from franchised restaurants 2,250.9 2,030.8 1,786.5
--------------------------------------------------------------------------
TOTAL REVENUES 7,408.1 7,133.3 6,695.0
--------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants
Food and packaging 1,735.1 1,688.8 1,627.5
Payroll and other employee benefits 1,291.2 1,281.4 1,259.2
Occupancy and other operating expenses 1,138.3 1,156.3 1,142.4
--------------------------------------------------------------------------
4,164.6 4,126.5 4,029.1
--------------------------------------------------------------------------
Franchised restaurants--occupancy expenses 380.4 348.6 306.5
General, administrative and selling expenses 941.1 860.6 794.7
Other operating (income) expense--net (62.0) (64.0) (113.8)
--------------------------------------------------------------------------
TOTAL OPERATING COSTS AND EXPENSES 5,424.1 5,271.7 5,016.5
--------------------------------------------------------------------------
OPERATING INCOME 1,984.0 1,861.6 1,678.5
--------------------------------------------------------------------------
Interest expense--net of capitalized interest
of $20.0, $19.5 and $26.2 316.1 373.6 391.4
Nonoperating income (expense)--net 7.8 (39.9) 12.3
--------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,675.7 1,448.1 1,299.4
--------------------------------------------------------------------------
Provision for income taxes 593.2 489.5 439.8
--------------------------------------------------------------------------
NET INCOME $1,082.5 $ 958.6 $ 859.6
==========================================================================
NET INCOME PER COMMON SHARE $ 2.91 $ 2.60 $ 2.35
--------------------------------------------------------------------------
DIVIDENDS PER COMMON SHARE $ .42 $ .39 $ .36
--------------------------------------------------------------------------
The accompanying Financial Comments are an integral part of the
consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 34
<TABLE>
McDONALD'S CORPORATION CONSOLIDATED BALANCE SHEET
<CAPTION>
--------------------------------------------------------------------
(In millions of dollars) December 31, 1993 1992
--------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $185.8 $436.5
Accounts receivable 287.0 245.9
Notes receivable 27.6 33.7
Inventories, at cost, not in excess of market 43.5 43.5
Prepaid expenses and other current assets 118.9 105.1
--------------------------------------------------------------------
TOTAL CURRENT ASSETS 662.8 864.7
--------------------------------------------------------------------
OTHER ASSETS AND DEFERRED CHARGES
Notes receivable due after one year 90.0 99.0
Investments in and advances to affiliates 446.7 399.7
Miscellaneous 338.6 330.7
--------------------------------------------------------------------
TOTAL OTHER ASSETS AND DEFERRED CHARGES 875.3 829.4
--------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment, at cost 13,459.0 12,658.0
Accumulated depreciation and amortization (3,377.6) (3,060.6)
--------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 10,081.4 9,597.4
--------------------------------------------------------------------
INTANGIBLE ASSETS--NET 415.7 389.7
--------------------------------------------------------------------
TOTAL ASSETS $12,035.2 $11,681.2
====================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $193.3 $411.0
Accounts payable 395.7 343.3
Income taxes 56.0 109.7
Other taxes 90.2 74.8
Accrued interest 132.9 133.3
Other accrued liabilities 203.9 203.1
Current maturities of long-term debt 30.0 269.4
--------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,102.0 1,544.6
--------------------------------------------------------------------
LONG-TERM DEBT 3,489.4 3,176.4
OTHER LONG-TERM LIABILITIES AND
MINORITY INTERESTS 334.4 225.2
DEFERRED INCOME TAXES 835.3 748.6
COMMON EQUITY PUT OPTIONS 94.0
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
authorized--165.0 million shares;
issued--5.7 and 5.8 million 677.3 680.2 <PAGE>
Common stock, no par value;
authorized--1.25 billion shares;
issued--415.2 million 46.2 46.2
Additional paid-in capital 302.8 260.2
Guarantee of ESOP Notes (253.6) (271.3)
Retained earnings 7,612.6 6,727.3
Foreign currency translation adjustment (192.2) (127.4)
--------------------------------------------------------------------
8,193.1 7,315.2
--------------------------------------------------------------------
Common stock in treasury, at cost;
61.5 and 51.6 million shares (1,919.0) (1,422.8)
--------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,274.1 5,892.4
--------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,035.2 $11,681.2
====================================================================
The accompanying Financial Comments are an integral part of the
consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
McDONALD'S CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
--------------------------------------------------------------------------
(In millions of dollars)
Years ended December 31, 1993 1992 1991
--------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $1,082.5 $958.6 $859.6
Adjustments to reconcile to cash
provided by operations
Depreciation and amortization 568.4 554.9 514.2
Deferred income taxes 52.4 22.4 64.7
Changes in operating working capital items
Accounts receivable increase (48.3) (29.1) (40.9)
Inventories, prepaid expenses and other
current assets (increase) decrease (9.6) 2.2 .4
Accounts payable increase (decrease) 45.4 .8 (22.7)
Accrued interest increase (decrease) (5.1) (27.4) 27.5
Taxes and other liabilities increase
(decrease) 26.5 (68.2) 85.2
Other--net (32.4) 11.7 (64.8)
--------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS 1,679.8 1,425.9 1,423.2
--------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment expenditures (1,316.9) (1,086.9) (1,128.8)
Sales of restaurant businesses 114.2 124.5 159.8
Purchases of restaurant businesses (64.2) (64.1) (30.1)
Notes receivable additions (33.1) (31.8) (38.8)
Property sales 61.6 52.2 58.6
Notes receivable reductions 75.7 78.5 53.1
Other (55.3) (71.1) (13.5)
--------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (1,218.0) (998.7) (939.7)
--------------------------------------------------------------------------
FINANCING ACTIVITIES
Notes payable and commercial paper net
borrowings supported by line of
credit agreements (8.9) 17.0 (676.7)
Other long-term financing issuances 1,241.0 509.5 1,004.1
Other long-term financing repayments (1,185.9) (1,041.5) (606.9)
Treasury stock purchases (620.1) (79.7) (109.2)
Preferred stock issuances 484.9 100.0
Common and preferred stock dividends (201.2) (160.5) (148.3)
Other 62.6 59.4 30.9
--------------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (712.5) (210.9) (406.1)
--------------------------------------------------------------------------
CASH AND EQUIVALENTS INCREASE (DECREASE) (250.7) 216.3 77.4
--------------------------------------------------------------------------
Cash and equivalents at beginning of year 436.5 220.2 142.8
--------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF YEAR $185.8 $436.5 $220.2
========================================================================== <PAGE>
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $312.2 $395.7 $368.1
Income taxes paid $521.7 $531.6 $313.5
--------------------------------------------------------------------------
The accompanying Financial Comments are an integral part of the
consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 36
<TABLE>
McDONALD'S CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
(Dollars and shares in millions, except per share data)
Foreign
Preferred Common Additional Guarantee currency Common stock
stock issued stock issued paid-in of Retained translation in treasury
Shares Amount Shares Amount capital ESOP Notes earnings adjustment Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1990 6.9 $199.7 415.2 $46.2 $173.7 $(196.5) $5,214.5 $46.7 (56.1) $(1,302.0)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 859.6
Common stock cash dividends
($.36 per share) (129.7)
Preferred stock cash dividends
($2.01 for Series B and
$1.74 for Series C) (19.2)
Preferred stock issuance 3.0 100.0 (.2) (100.0)
ESOP Notes payment 8.1
Treasury stock acquisitions (3.4) (116.7)
Translation adjustments
(including taxes of $1.0) (14.4)
Stock option exercises and other
(including tax benefits of
$15.9) (1.5) 28.4 1.7 3.0 36.7
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1991 9.9 298.2 415.2 46.2 201.9 (286.7) 5,925.2 32.3 (56.5) (1,382.0)
- ---------------------------------------------------------------------------------------------------------------------------------- <PAGE>
Net income 958.6
Common stock cash dividends
($.39 per share) (141.8)
Preferred stock cash dividends
($2.01 for Series B, $2.32 for
Series C and $.16 for Series E
depositary share), (net of tax
benefits of $6.4) (14.7)
Preferred stock issuance 500.0 (15.1)
Preferred stock conversion (4.1) (118.0) 22.9 3.2 95.1
ESOP Notes payment 12.6
Treasury stock acquisitions (1.9) (92.3)
Translation adjustments
(including taxes of $21.2) (159.7)
Common equity put options
issuance (91.5)
Stock option exercises and other
(including tax benefits of
$29.7) 50.5 2.8 3.6 47.9
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 5.8 680.2 415.2 46.2 260.2 (271.3) 6,727.3 (127.4) (51.6) (1,422.8)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 1,082.5
Common stock cash dividends
($.42 per share) (150.3)
Preferred stock cash dividends
($2.01 for Series B, $2.32 for
Series C and $1.93 for Series E
depositary share), (net of tax
benefits of $4.1) (46.9)
Preferred stock conversion (.1) (2.9) .5 .1 2.4
ESOP Notes payment 15.5
Treasury stock acquisitions (12.5) (627.7)
Translation adjustments
(including taxes of $1.6) (64.8)
Common equity put options
expiration 94.0 <PAGE>
Stock option exercises and other
(including tax benefits of
$23.0) 42.1 2.2 2.5 35.1
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 5.7 $677.3 415.2 $46.2 $302.8 $(253.6) $7,612.6 $(192.2) (61.5) $(1,919.0)
==================================================================================================================================
The accompanying Financial Comments are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 37
MCDONALD'S CORPORATION FINANCIAL COMMENTS
--------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------
CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries. Investments in 50% or less owned
affiliates are carried at equity in the companies' net assets.
FOREIGN CURRENCY TRANSLATION
The functional currency of each operation outside of the U.S., except
for those located in hyperinflationary countries, is the respective
local currency.
INCOME TAXES
In 1992, the Company adopted Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. The effects were not
material, as the Company had previously adopted Statement No. 96.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost with depreciation and
amortization provided on the straight-line method over the following
estimated useful lives: buildings--up to 40 years; leasehold
improvements--lesser of useful lives of assets or lease terms
including option periods; and equipment--3 to 12 years.
INTANGIBLE ASSETS
Intangible assets consist primarily of franchise rights reacquired
from franchisees and affiliates, and are amortized on the straight-
line method over an average life of 29 years.
FINANCIAL INSTRUMENTS
Non-U.S. Dollar financing transactions generally are effective as
hedges of long-term investments in the corresponding currency.
Interest-rate exchange agreements are designated and generally are
effective as hedges of the Company's interest-rate exposures. The
carrying amounts for cash and equivalents and notes receivable
approximated fair value. For noninterest-bearing security deposits by
franchisees, no fair value was provided as these deposits are an
integral part of the overall franchise arrangements.
STATEMENT OF CASH FLOWS
The Company considers all highly liquid investments with short-term
maturity dates to be cash equivalents. The impact of changing foreign
currencies on cash and equivalents was not material.
<PAGE>
<PAGE> 38
----------------------------------------------------------------------
NUMBER OF RESTAURANTS IN OPERATION
----------------------------------------------------------------------
1993 1992 1991 1990
----------------------------------------------------------------------
Operated by franchisees 9,288 8,654 8,151 7,578
Operated under business
facilities lease arrangements 544 583 584 553
Operated by the Company 2,699 2,551 2,547 2,643
Operated by 50% or less
owned affiliates 1,462 1,305 1,136 1,029
----------------------------------------------------------------------
Systemwide restaurants 13,993 13,093 12,418 11,803
======================================================================
Franchisees operating under business facilities lease arrangements
have options to purchase the businesses. The results of operations of
restaurant businesses purchased and sold in transactions with
franchisees and affiliates were not material to the consolidated
financial statements for periods prior to purchase and sale.
----------------------------------------------------------------------
OTHER OPERATING (INCOME) EXPENSE--NET
----------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991
----------------------------------------------------------------------
Gains on sales of restaurant businesses $(48.2) $(43.1) $ (64.0)
Equity in earnings of unconsolidated
affiliates (34.6) (29.5) (57.5)
Net losses from property dispositions 15.5 18.1 9.9
Other--net 5.3 (9.5) (2.2)
----------------------------------------------------------------------
Other operating (income) expense--net $(62.0) $(64.0) $(113.8)
======================================================================
Gains on sales of restaurant businesses are recognized as income when
the sales are consummated and other stipulated conditions are met.
Proceeds from certain sales of restaurant businesses and property
include notes receivable.
---------------------------------------------------------------------
INCOME TAXES
---------------------------------------------------------------------
Income before provision for income taxes and the provision for income
taxes, classified by source of income, were as follows:
---------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991
---------------------------------------------------------------------
U.S. $ 986.0 $ 873.3 $ 847.3
Outside of the U.S. 689.7 574.8 452.1
---------------------------------------------------------------------
Income before provision for
income taxes $1,675.7 $1,448.1 $1,299.4
=====================================================================
U.S. $ 391.9 $ 316.8 $ 312.6
Outside of the U.S. 201.3 172.7 127.2
---------------------------------------------------------------------
Provision for income taxes $ 593.2 $ 489.5 $ 439.8
=====================================================================
<PAGE>
<PAGE> 39
Income before provision for income taxes outside of the U.S. and the
related provision for income taxes reflect fees received in the U.S.
from operations outside of the U.S. Income before provision for income
taxes in the U.S. and the related provision for income taxes reflect
interest received in the U.S. from operations outside of the U.S.
The provision for income taxes, classified by the timing and location
of payment, consisted of:
-------------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991
-------------------------------------------------------------------------
Current
U.S. federal $331.6 $256.8 $230.8
U.S. state 62.0 56.3 45.3
Outside of the U.S. 147.2 154.0 99.0
-------------------------------------------------------------------------
540.8 467.1 375.1
-------------------------------------------------------------------------
Deferred
U.S. federal 21.9 (10.3) 46.9
U.S. state 3.4 4.0 8.2
Outside of the U.S. 27.1 28.7 9.6
-------------------------------------------------------------------------
52.4 22.4 64.7
-------------------------------------------------------------------------
Provision for income taxes $593.2 $489.5 $439.8
=========================================================================
Included in the 1993 deferred tax provision were $14.0 million
attributable to a one-time, noncash revaluation of deferred tax
liabilities resulting from the increase in the statutory U.S. federal
income tax rate.
Net deferred tax liabilities were comprised of:
-------------------------------------------------------------------------
(In millions of dollars) December 31, 1993 1992
-------------------------------------------------------------------------
Property and equipment basis differences $786.1 $738.2
Other 175.4 154.8
-------------------------------------------------------------------------
Total deferred tax liabilities 961.5 893.0
-------------------------------------------------------------------------
Deferred tax assets before valuation allowance (1) (192.8) (183.8)
Valuation allowance 44.5 35.7
-------------------------------------------------------------------------
Net deferred tax liabilities (2) $813.2 $744.9
=========================================================================
(1) Includes loss carryforwards: 1993--$46.7 million; 1992--$44.4
million.
(2) Net of assets recorded in current income taxes: 1993--$22.1
million; 1992--$3.7 million.
<PAGE>
<PAGE> 40
Reconciliations of the statutory U.S. federal income tax rates to the
effective income tax rates are shown in the following table.
--------------------------------------------------------------------
1993 1992 1991
--------------------------------------------------------------------
Statutory federal income tax rates 35.0% 34.0% 34.0%
State income taxes, net of related
federal income tax benefit 2.5 2.7 2.7
Other (2.1) (2.9) (2.9)
--------------------------------------------------------------------
Effective income tax rates 35.4% 33.8% 33.8%
====================================================================
U.S. income and foreign withholding taxes have not been provided on
$760.8 million of undistributed earnings of certain subsidiaries and
affiliates outside of the U.S. at December 31, 1993. These earnings are
considered to be permanently invested in the businesses and, under the
tax laws, are not subject to taxes until distributed as dividends. If
these earnings were not considered permanently invested, no additional
taxes would be provided due to the overall higher tax rates in markets
outside of the U.S. and the ability to recover withholding taxes as
foreign tax credits in the U.S.
<PAGE>
<PAGE> 41
----------------------------------------------------------------------
SEGMENT AND GEOGRAPHIC INFORMATION
----------------------------------------------------------------------
The Company operates exclusively in the foodservice industry.
Substantially all revenues result from the sale of menu products at
restaurants operated by the Company, franchisees or affiliates.
Operating income includes the Company's share of operating results of
affiliates. All intercompany revenues and expenses are eliminated in
computing revenues and operating income. Fees received in the U.S.
from subsidiaries outside of the U.S. were: 1993--$202.8 million;
1992--$187.8 million; 1991--$153.1 million.
----------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991
----------------------------------------------------------------------
U.S. $3,931.2 $3,749.4 $3,710.2
Europe/Africa/Middle East 2,235.9 2,187.0 1,806.0
Canada 557.8 595.1 629.5
Asia/Pacific 494.4 434.6 392.5
Latin America 188.8 167.2 156.8
----------------------------------------------------------------------
Total revenues $7,408.1 $7,133.3 $6,695.0
======================================================================
U.S. $1,087.1 $1,041.6 $1,000.4
Europe/Africa/Middle East 547.5 484.0 361.3
Canada 111.2 113.5 120.7
Asia/Pacific 190.6 163.2 157.2
Latin America 47.6 59.3 38.9
----------------------------------------------------------------------
Operating income $1,984.0 1,861.6 1,678.5
======================================================================
U.S. $6,385.4 $6,410.6 $6,154.3
Europe/Africa/Middle East 3,473.2 3,290.9 3,316.1
Canada 562.5 587.4 618.2
Asia/Pacific 1,103.2 980.3 925.0
Latin America 510.9 412.0 335.5
----------------------------------------------------------------------
Total assets $12,035.2 $11,681.2 $11,349.1
======================================================================
<PAGE>
<PAGE> 42
------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
------------------------------------------------------------------------
(In millions of dollars) December 31, 1993 1992
------------------------------------------------------------------------
Land $2,587.2 $2,440.0
Buildings and improvements on owned land 5,209.4 4,906.0
Buildings and improvements on leased land 3,673.0 3,423.7
Equipment, signs and seating 1,545.4 1,467.2
Other 444.0 421.1
------------------------------------------------------------------------
13,459.0 12,658.0
------------------------------------------------------------------------
Accumulated depreciation and amortization (3,377.6) (3,060.6)
------------------------------------------------------------------------
Net property and equipment $10,081.4 $9,597.4
========================================================================
Depreciation and amortization were: 1993--$492.8 million; 1992--$492.9
million; 1991--$456.9 million. Contractual obligations for the
acquisition and construction of property amounted to $193.1 million at
December 31, 1993.
------------------------------------------------------------------------
DEBT FINANCING
------------------------------------------------------------------------
LINE OF CREDIT AGREEMENTS
The Company has a long-term line of credit agreement for $700.0
million, which remained unused at December 31, 1993, and which
continues indefinitely unless terminated by the participating banks
upon advance notice of at least 18 months. Each borrowing under the
agreement bears interest at one of several specified floating rates,
to be selected by the Company at the time of borrowing. The agreement
provides for fees of .15 of 1% per annum on the unused portion of the
commitment. In addition, certain subsidiaries outside of the U.S. had
unused lines of credit totaling $1.0 billion at December 31, 1993;
these were principally short-term and denominated in various
currencies at local market rates of interest.
<PAGE>
<PAGE> 43
EXCHANGE AGREEMENTS
The Company uses derivatives and has entered into agreements for the
exchange of various currencies. Certain of these agreements also
provide for the periodic exchange of interest payments. These
agreements, as well as additional interest-rate exchange agreements,
expire through 2003 and provide for an effective right of offset;
therefore, the related receivable and liability are offset in the
financial statements. The counterparties to these exchange agreements
consist of a diverse group of financial institutions. The Company
continually monitors its positions and the credit ratings of its
counterparties, and adjusts positions as appropriate.
The Company also had short-term forward foreign exchange contracts
outstanding at December 31, 1993, with a U.S. Dollar equivalent of
$83.4 million in various currencies, primarily the Japanese Yen,
Deutsche Mark and British Pound Sterling.
AGGREGATE MATURITIES
Included in the 1995 maturities are $700.0 million of notes maturing
within one year, as 1995 is the earliest time at which the banks can
terminate the line of credit agreement, which supports the
classification in long-term debt. Under certain agreements, the
Company has the option to retire debt prior to maturity, either at par
or at a premium over par. During 1993, $264.5 million was retired
prior to maturity.
GUARANTEES
Included in total debt at December 31, 1993, were $171.3 million of
7.60% ESOP Notes Series A and $89.0 million of 7.23% ESOP Notes Series
B issued by the Leveraged Employee Stock Ownership Plan (LESOP), with
payments through 2004 and 2006, respectively, which are guaranteed by
the Company. Interest rates on the notes were adjusted due to U.S. tax
law changes in 1993. The Company has agreed to repurchase the notes
upon the occurrence of certain events.
The Company also has guaranteed certain foreign affiliate loans of
$154.7 million at December 31, 1993. The Company also was a general
partner in 48 domestic partnerships with total assets of
$174.3 million and total liabilities of $95.8 million at December 31,
1993.
FAIR VALUES
The carrying amounts for notes payable and short-term forward foreign
exchange contracts approximated fair value at December 31, 1993. The
fair value of the remaining debt obligations (excluding capital
leases), including the net effects of currency and interest-rate
exchange agreements, was estimated using quoted market prices, various
pricing models or discounted cash flow analyses. At December 31, 1993,
the fair value of these obligations, which were primarily used to
finance property and equipment, was $3.7 billion, compared to a
carrying value of $3.4 billion. The Company currently has no plans to
retire any of these obligations prior to maturity.
The Company believes that the fair value of total assets is higher
than their carrying value. <PAGE>
<PAGE> 44
DEBT OBLIGATIONS
<TABLE>
The Company has incurred debt obligations principally through various public and private offerings and bank loans. The terms of
most debt obligations contain restrictions on Company and subsidiary mortgages and long-term debt of certain subsidiaries. The
following table summarizes these debt obligations:
<CAPTION>
Interest rates (1) Amounts outstanding
Maturity December 31 December 31 Aggregate maturities by currency for 1993 balances
dates 1993 1992 1993 1992 1994 1995 1996 1997 1998 Thereafter
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(In millions of U.S. Dollars)
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed-original issue 8.5% 8.9% $1,790.6 $2,002.8
Fixed-converted via
exchange agreements(2) 5.6 6.9 (1,449.0) (1,174.7)
Floating 3.0 4.0 163.2 214.6
- ---------------------------------------------------------------------------------------------------------------------------------
Total U.S. Dollars 1994-2033 504.8 1,042.7 $419.2 $39.7 $(143.8) $(73.7) $(299.4) $562.8
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed 9.8 10.8 498.6 489.6
Floating 5.4 7.8 178.0 275.3
- ---------------------------------------------------------------------------------------------------------------------------------
Total British Pounds
Sterling 1994-2003 676.6 764.9 61.5 29.6 151.2 14.8 73.4 346.1
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed 8.9 9.9 447.1 293.2
Floating 6.7 10.1 168.6 165.6
- ---------------------------------------------------------------------------------------------------------------------------------
Total French Francs 1994-2003 615.7 458.8 102.7 50.3 53.7 50.8 88.3 269.9
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed 6.3 7.4 423.1 366.9
Floating 6.9 11.5 116.7 19.3
- ---------------------------------------------------------------------------------------------------------------------------------
Total Deutsche Marks 1994-2007 539.8 386.2 71.1 85.4 17.6 104.0 203.6 58.1
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed Japanese Yen 1996-2023 4.3 5.8 357.7 120.2 89.6 89.6 178.5
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed 11.6 11.4 166.9 175.7
Floating 4.5 7.4 50.3 56.7
- ---------------------------------------------------------------------------------------------------------------------------------
Total Canadian Dollars 1994-2021 217.2 232.4 75.8 64.0 75.7 .2 .2 1.3
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed 12.0 12.9 117.3 155.7
Floating 5.0 6.2 61.0 64.3
- ---------------------------------------------------------------------------------------------------------------------------------
Total Australian
Dollars 1994-2000 178.3 220.0 58.1 2.0 57.4 .9 58.7 1.2 <PAGE>
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed 8.6 8.9 118.4 115.4
Floating 4.1 4.2 21.0 34.5
- ---------------------------------------------------------------------------------------------------------------------------------
Total Hong Kong
Dollars 1994-2008 139.4 149.9 42.2 19.4 11.2 17.7 17.7 31.2
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed 8.0 8.5 303.3 246.1
Floating 11.2 14.6 71.1 119.8
- ---------------------------------------------------------------------------------------------------------------------------------
Total other currencies 1994-2003 374.4 365.9 76.2 56.5 14.6 2.1 81.2 143.8
- ---------------------------------------------------------------------------------------------------------------------------------
Debt obligations
including the net effects
of currency and interest-
rate exchange agreements 3,603.9 3,741.0 906.8 346.9 327.2 206.4 223.7 1,592.9
- ---------------------------------------------------------------------------------------------------------------------------------
Obligations supported by
long-term line of credit
agreement (700.0) 700.0
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset positions of
currency exchange
agreements (included in
miscellaneous other
assets) 108.8 115.8 16.5 10.1 15.6 8.4 19.0 39.2
- ---------------------------------------------------------------------------------------------------------------------------------
Total debt obligations $3,712.7 $3,856.8 $223.3 $1,057.0 $342.8 $214.8 $242.7 $1,632.1
=================================================================================================================================
(1) Weighted average effective rate, computed on a semi-annual basis.
(2) A portion of U.S. Dollar fixed-rate debt effectively has been converted into other currencies and/or into floating-rate debt
through the use of exchange agreements. The rates shown reflected the fixed rate on the receivable portion of the exchange
agreements. All other obligations in this table reflected the gross effects of these and other exchange agreements.
</TABLE>
<PAGE>
<PAGE> 45
-------------------------------------------------------------------
OTHER LONG-TERM LIABILITIES AND MINORITY INTERESTS
-------------------------------------------------------------------
(In millions of dollars) December 31, 1993 1992
-------------------------------------------------------------------
Security deposits by franchisees $121.4 $116.6
Preferred interests in consolidated
subsidiaries 106.7 12.8
Minority interests in consolidated
subsidiaries 38.2 32.1
Other 68.1 63.7
-------------------------------------------------------------------
Other long-term liabilities and minority
interests $334.4 $225.2
===================================================================
In 1993, a Company subsidiary issued 50 million British Pounds
Sterling (U.S. $74.0 million at December 31, 1993) of 5.91% Series A
Preferred Stock which, unless redeemed earlier at the Company's
option, must be redeemed on February 19, 1998. Also, another
subsidiary issued additional preferred stock. All of the preferred
stock of this subsidiary has a dividend rate adjusted annually (8.2%
at December 31, 1993) and is redeemable at the option of the holder at
a current redemption price of $32.7 million. Both of these issues were
reflected in preferred interests in consolidated subsidiaries.
Included in other was the $100.00 per share redemption value of
181,868 shares of 5% Series D Preferred Stock issued in connection
with the Company's 1991 increase in ownership of its Hawaii affiliate.
This stock, which carries one vote per share, must be redeemed on the
occurrence of specified events.
<PAGE>
<PAGE> 46
---------------------------------------------------------------------
LEASING ARRANGEMENTS
---------------------------------------------------------------------
At December 31, 1993, the Company was lessee at 2,294 restaurant
locations under ground leases (the Company leases land and constructs
and owns buildings) and at 2,305 locations under improved leases
(lessor owns land and buildings). Land and building lease terms are
generally for 20 to 25 years and, in many cases, provide for rent
escalations and one or more five-year renewal options with certain
leases providing purchase options. The Company is generally obligated
for the related occupancy costs that include property taxes, insurance
and maintenance. In addition, the Company is lessee under
noncancelable leases covering offices and vehicles.
Future minimum payments required under operating leases with
initial terms of one year or more after December 31, 1993, are:
------------------------------------------------------------
(In millions of dollars) Restaurant Other Total
------------------------------------------------------------
1994 $ 277.0 $ 34.7 $ 311.7
1995 266.7 33.3 300.0
1996 255.7 31.5 287.2
1997 242.4 28.4 270.8
1998 227.2 25.8 253.0
Thereafter 2,334.1 165.0 2,499.1
------------------------------------------------------------
Total minimum payments $3,603.1 $318.7 $3,921.8
============================================================
Rent expense was: 1993--$339.0 million; 1992--$320.2 million;
1991-$283.6 million. Included in these amounts were percentage rents
based on sales by the related restaurants in excess of minimum rents
stipulated in certain lease agreements: 1993--$29.0 million;
1992--$26.1 million; 1991--$26.3 million.
<PAGE>
<PAGE> 47
----------------------------------------------------------------------
FRANCHISE ARRANGEMENTS
----------------------------------------------------------------------
Franchise arrangements, with franchisees who operate in various
geographic locations, generally provide for initial fees and
continuing payments to the Company based upon a percentage of sales,
with minimum rent payments. Among other things, franchisees are
provided the use of restaurant facilities, generally for a period of
20 years. They are required to pay related occupancy costs that
include property taxes, insurance, maintenance and a refundable,
noninterest-bearing security deposit. On a limited basis, the Company
receives notes from franchisees. Generally the notes are secured by
interests in restaurant equipment and franchises.
----------------------------------------------------------------------
(In millions of dollars) 1993 1992 1991
----------------------------------------------------------------------
Minimum rents
Owned sites $ 573.6 $ 538.7 $ 494.5
Leased sites 381.7 353.3 303.7
----------------------------------------------------------------------
955.3 892.0 798.2
----------------------------------------------------------------------
Percentage fees 1,272.1 1,120.6 970.4
Initial fees 23.5 18.2 17.9
----------------------------------------------------------------------
Revenues from franchised restaurants $2,250.9 $2,030.8 $1,786.5
======================================================================
Future minimum payments based on minimum rents specified under
franchise arrangements after December 31, 1993, are:
----------------------------------------------------------------------
Owned Leased
(In millions of dollars) sites sites Total
----------------------------------------------------------------------
1994 $ 618.4 $ 404.7 $ 1,023.1
1995 607.4 390.3 997.7
1996 593.2 375.9 969.1
1997 579.5 365.2 944.7
1998 567.3 353.2 920.5
Thereafter 5,309.1 3,406.6 8,715.7
----------------------------------------------------------------------
Total minimum payments $8,274.9 $5,295.9 $13,570.8
======================================================================
At December 31, 1993, net property and equipment under franchise
arrangements totaled $5.9 billion (including land of $1.8 billion),
after deducting accumulated depreciation and amortization of $1.7
billion.
<PAGE>
<PAGE> 48
----------------------------------------------------------------------
PROFIT SHARING PROGRAM
----------------------------------------------------------------------
The Company has a program for U.S. employees which includes profit
sharing, 401(k) (McDESOP), and leveraged employee stock ownership
features. McDESOP allows employees to invest in McDonald's common
stock by making contributions that are partially matched by the
Company. Assets of the profit sharing plan can be invested in
McDonald's common stock, or among several other alternatives. Certain
subsidiaries outside of the U.S. also offer profit sharing, stock
purchase or other similar benefit plans. Total U.S. program costs
were: 1993--$47.1 million; 1992--$38.8 million; 1991--$46.4 million.
Total plan costs outside of the U.S. were: 1993--$13.0 million; 1992--
$14.0 million; 1991--$9.8 million. The Company does not provide any
other postretirement benefits, and postemployment benefits were
immaterial.
----------------------------------------------------------------------
STOCK OPTIONS
----------------------------------------------------------------------
Under the 1992 Stock Ownership Incentive and the 1975 Stock Ownership
Option Plans, options to purchase common stock are granted at prices
not less than fair market value of the stock on date of grant.
Substantially all of these options become exercisable in four equal
biennial installments, commencing one year from date of grant, and
expire ten years from date of grant. At December 31, 1993, 41.5
million shares of common stock were reserved for issuance under both
plans.
-----------------------------------------------------------------------
(In millions, except per common share data) 1993 1992 1991
-----------------------------------------------------------------------
Options outstanding at January 1 25.1 23.7 21.6
Options granted 6.0 5.8 5.5
Options exercised (2.7) (3.8) (2.6)
Options forfeited (.9) (.6) (.8)
-----------------------------------------------------------------------
Options outstanding at December 31 27.5 25.1 23.7
=======================================================================
Options exercisable at December 31 8.8 7.7 7.8
Common shares reserved for future
grants at December 31 14.0 19.1 6.3
Option prices per common share
Exercised during the year $ 9 to $48 $9 to $45 $6 to $34
Outstanding at year end $10 to $56 $9 to $48 $9 to $34
-----------------------------------------------------------------------
<PAGE>
<PAGE> 49
----------------------------------------------------------------------
CAPITAL STOCK
----------------------------------------------------------------------
PER COMMON SHARE INFORMATION
Income used in the computation of per common share information was
reduced by preferred stock cash dividends (net of tax benefits in 1993
and 1992) and divided by the weighted average shares of common stock
outstanding during each year: 1993--355.9 million; 1992--363.2
million; 1991--358.1 million. The effect of potentially dilutive
securities was not material.
PREFERRED STOCK
In December 1992, the Company issued $500.0 million of Series E 7.72%
Cumulative Preferred Stock; 10,000 preferred shares are equivalent to
20.0 million depositary shares having a liquidation preference of
$25.00 per depositary share. Each preferred share is entitled to one
vote under certain circumstances, and is redeemable at the option of
the Company beginning on December 3, 1997, at its liquidation
preference plus accrued and unpaid dividends.
In September 1989 and April 1991, the Company sold $200.0 million
of Series B and $100.0 million of Series C ESOP Convertible Preferred
Stock, respectively, to the LESOP. The LESOP financed the purchase by
issuing notes that are guaranteed by the Company and are included in
long-term debt, with an offsetting reduction in shareholders' equity.
Each preferred share has a liquidation preference of $28.75 and
$33.125, respectively, and is convertible into a minimum of .7692 and
.8 common share (conversion rate), respectively. Upon termination,
employees are guaranteed a minimum value payable in common shares
equal to the greater of the conversion rate; the fair market value of
their preferred shares; or the liquidation preference plus accrued
dividends, not to exceed one common share. Each preferred share is
entitled to one vote and is redeemable at the option of the Company
three years after issuance and, under certain circumstances, is
redeemable prior to that date. In 1992, 4.1 million Series B shares
were converted into 3.2 million common shares.
COMMON EQUITY PUT OPTIONS
In December 1992, the Company sold 2.0 million common equity put
options. At December 31, 1992, the $94.0 million exercise price of
these options was classified in common equity put options and the
related offset was recorded in common stock in treasury, net of
premiums received. In April 1993, these options expired unexercised.
In April 1993, the Company also sold 1.0 million common equity put
options which expired unexercised in July 1993.
<PAGE>
<PAGE> 50
SHAREHOLDER RIGHTS PLAN
In December 1988, the Company declared a dividend of one Preferred
Share Purchase Right (Right) on each outstanding share of common
stock. Under certain conditions, each Right may be exercised to
purchase one two-hundredth of a share of Series A Junior Participating
Preferred Stock (the economic equivalent of one common share) at an
exercise price of $125.00 (which may be adjusted under certain
circumstances), and is transferable apart from the common stock ten
days following a public announcement that a person or group has
acquired beneficial ownership of 20% or more of the outstanding common
shares, or ten business days following the commencement or
announcement of an intention to make a tender or exchange offer,
resulting in beneficial ownership by a person or group of 20% or more
of the outstanding common shares.
If a person or group acquires 20% or more of the outstanding common
shares, or if the Company is acquired in a merger or other business
combination transaction, each Right will entitle the holder, other
than such person or group, to purchase at the then current exercise
price, stock of the Company or the acquiring company having a market
value of twice the exercise price.
Each Right is nonvoting and expires on December 28, 1998, unless
redeemed by the Company, at a price of $.005, at any time prior to the
public announcement that a person or group has acquired beneficial
ownership of 20% or more of the outstanding common shares. At December
31, 1993, 2.1 million shares of the Series A Junior Participating
Preferred Stock were reserved for issuance under this plan.
<PAGE>
<PAGE> 51
<TABLE>
QUARTERLY RESULTS (UNAUDITED)
<CAPTION>
(In millions of dollars, except per common share data)
- ---------------------------------------------------------------------------------------------------------------------------------
Quarters ended December 31 September 30 June 30 March 31
1993 1992 1993 1992 1993 1992 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Sales by Company-operated
restaurants $1,345.2 $1,294.9 $1,351.1 $1,366.9 $1,307.6 $1,273.6 $1,153.3 $1,167.1
Revenues from franchised
restaurants 586.7 533.5 593.2 545.6 570.2 500.5 500.8 451.2
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUES 1,931.9 1,828.4 1,944.3 1,912.5 1,877.8 1,774.1 1,654.1 1,618.3
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 1,085.3 1,044.4 1,076.9 1,092.0 1,049.5 1,031.6 952.9 958.5
Franchised restaurants 100.3 90.1 95.7 90.4 93.6 85.1 90.8 83.0
General, administrative
and selling expenses 256.2 239.6 234.6 217.1 232.5 209.4 217.8 194.5
Other operating (income)
expense--net 3.5 (1.4) (31.1) (21.7) (15.6) (30.0) (18.8) (10.9)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 1,445.3 1,372.7 1,376.1 1,377.8 1,360.0 1,296.1 1,242.7 1,225.1
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 486.6 455.7 568.2 534.7 517.8 478.0 411.4 393.2
- ---------------------------------------------------------------------------------------------------------------------------------
Interest expense 78.7 86.4 75.7 97.0 82.4 93.0 79.3 97.2
Nonoperating income
(expense)--net (4.9) (25.0) 7.2 (.8) 4.3 (1.2) 1.2 (12.9)
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 403.0 344.3 499.7 436.9 439.7 383.8 333.3 283.1
- ---------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes 138.5 116.4 188.8 147.7 150.9 129.7 115.0 95.7
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME $264.5 $227.9 $310.9 $289.2 $288.8 $254.1 $218.3 $187.4
=================================================================================================================================
NET INCOME PER COMMON SHARE $ .72 $ .61 $ .85 $ .79 $ .78 $ .69 $ .57 $ .51
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE> 52
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors is incorporated herein by
reference from the Company's definitive proxy statement which will be
filed no later than 120 days after December 31, 1993.
On December 1, 1993, Donald R. Keough, Chairman of Allen &
Company, Inc., was appointed to the Company's Board of Directors.
Information regarding all of the Company's executive officers
is included in Part I.
Item 11. Executive Compensation
Incorporated herein by reference from the Company's definitive
proxy statement which will be filed no later than 120 days after
December 31, 1993.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Incorporated herein by reference from the Company's definitive
proxy statement which will be filed no later than 120 days after
December 31, 1993.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference from the Company's definitive
proxy statement which will be filed no later than 120 days after
December 31, 1993.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) 1. Financial statements
Consolidated financial statements filed as part of this
report are listed under Part II, Item 8 of this Form
10-K.
2. Financial statement schedules
The financial schedules listed in the accompanying
index to consolidated financial statement schedules are
filed as part of this report.
3. Exhibits
<PAGE>
<PAGE> 53
(3) Restated Certificate of Incorporation, dated as of February
2, 1993, incorporated herein by reference from Exhibit (3)
of Form 10-K dated December 31, 1992. By-laws incorporated
herein by reference from Exhibit 3 of Form 10-K dated
December 31, 1991.
(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/184 days 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> 54
(viii)Medium-Term Notes, Series D, due from nine
months/184 days 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.
<PAGE>
<PAGE> 55
(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.
(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, attached hereto as an Exhibit.
(iii)Amendment No. 1 to McDonald's Supplemental
Employee Benefit Equalization Plan, attached
hereto as an Exhibit.
(iv) Amendment No. 2 to McDonald's Supplemental
Employee Equalization Plan, attached hereto as an
Exhibit.
<PAGE>
<PAGE> 56
(v) Amendment No. 5 to the Profit Sharing Program, as
amended, attached hereto as an Exhibit.
Amendment No. 6 to the Profit Sharing Program, as
(vi)
amended, attached hereto as an Exhibit.
(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*.
(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.
(21) Subsidiaries of the registrant.
(23) Consent of independent auditors.
--------------------
* 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 reports on Form 8-K were filed for the last quarter
covered by this report, and subsequently up to March 29, 1994.
Financial Statements
Date of Report Item Number required to be filed
-------------- ----------- --------------------
November 22, 1993 Item 7 No
January 18, 1994 Item 7 No
<PAGE>
<PAGE> 57
McDONALD'S CORPORATION
INDEX TO CONSOLIDATED
FINANCIAL STATEMENT SCHEDULES
(Item 14)
(a) The following documents are filed as part of this report:
Page
1. Financial Statement Schedules Reference
Report of Independent Auditors 58
Consolidated schedules for the years ended
December 31, 1993, 1992 and 1991:
V - Property and equipment 59
VI - Accumulated depreciation and
amortization of property and equipment 60
IX - Short-term borrowings 62
X - Supplementary income statement information 63
Consolidated schedule at December 31, 1993:
VII - Guarantees of securities of other issuers 61
All other schedules have been omitted as the required
information is not present or is not present in amounts sufficient to
require submission of the schedule, or because the information
required is included in the consolidated financial statements or the
notes thereto.
<PAGE>
<PAGE> 58
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of McDonald's
Corporation as of December 31, 1993 and 1992, and for each of the
three years in the period ended December 31, 1993, and have issued our
report thereon dated January 27, 1994 (included elsewhere in this
Annual Report on Form 10-K). Our audits also included the
consolidated financial statement schedules of McDonald's Corporation
listed in Item 14(a). These schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion
based on our audits.
In our opinion, the consolidated financial statement schedules
referred to above, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
Ernst & Young
Chicago, Illinois
January 27, 1994
<PAGE>
<PAGE> 59
<TABLE> McDONALD'S CORPORATION Schedule V
SCHEDULE V - PROPERTY AND EQUIPMENT
(In millions of dollars)
Years Ended December 31, 1993, 1992 and 1991
<CAPTION> Balance at Other changes Balance
beginning Additions add (deduct) at end
Classification of period at cost (A) Retirements (B) of period
-------------- --------- ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1993:
Land $ 2,440.0 $ 206.1 $ 31.4 $ (27.5) $ 2,587.2
Buildings and improvements on owned land 4,906.0 383.5 33.0 (47.1) 5,209.4
Buildings and improvements on leased land 3,423.7 433.1 50.0 (133.8) 3,673.0
Equipment, signs and seating 1,467.2 247.8 164.8 (4.8) 1,545.4
Other 421.1 83.6 43.8 (16.9) 444.0
--------- --------- --------- --------- ---------
$12,658.0 $1,354.1 $323.0 $(230.1) $13,459.0
========= ========= ========= ========= =========
1992:
Land $ 2,375.8 $ 170.1 $ 5.4 $(100.5) $ 2,440.0
Buildings and improvements on owned land 4,774.3 335.0 17.4 (185.9) 4,906.0
Buildings and improvements on leased land 3,293.2 357.6 39.7 (187.4) 3,423.7
Equipment, signs and seating 1,516.4 225.9 180.3 (94.8) 1,467.2
Other 408.3 82.3 51.6 (17.9) 421.1
--------- --------- --------- --------- ---------
$12,368.0 $1,170.9 $294.4 $(586.5) $12,658.0
========= ========= ========= ========= =========
1991:
Land $ 2,227.4 $ 179.3 $ 24.7 $ (6.2) $ 2,375.8
Buildings and improvements on owned land 4,529.2 306.6 54.6 (6.9) 4,774.3
Buildings and improvements on leased land 2,895.5 456.5 40.6 (18.2) 3,293.2
Equipment, signs and seating 1,490.0 233.0 200.8 (5.8) 1,516.4
Other 393.4 57.2 41.3 (1.0) 408.3
--------- --------- --------- --------- ---------
$11,535.5 $1,232.6 $362.0 $ (38.1) $12,368.0
========= ========= ========= ========= =========
(A) Includes $13.1 in 1993, $33.4 in 1992, and $77.5 in 1991, as a result of purchases of restaurant businesses.
Additionally, 1992 includes the consolidation of the Company's affiliates in Hungary, South Korea and Chile.
In 1991, affiliates in Hawaii and Venezuela were consolidated.
(B) Primarily foreign currency translation effects and certain reclassification between accounts.
</TABLE>
<PAGE>
<PAGE> 60
<TABLE> McDONALD'S CORPORATION Schedule VI
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
(In millions of dollars)
Years Ended December 31, 1993, 1992 and 1991
<CAPTION> Balance at Other changes Balance
beginning Additions add (deduct) at end
Classification of period at cost Retirements (A) of period
-------------- --------- ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
1993:
Buildings and improvements on owned land $1,390.3 $175.1 $ 11.7 $ (9.4) $1,544.3
Buildings and improvements on leased land 813.8 123.4 14.2 (22.3) 900.7
Equipment, signs and seating 653.3 143.3 80.2 .3 716.7
Other 203.2 51.0 24.7 (13.6) 215.9
--------- --------- --------- --------- ---------
$3,060.6 $492.8 $130.8 $ (45.0) $3,377.6
========= ========= ========= ========= =========
1992:
Buildings and improvements on owned land $1,262.4 $165.9 $ 7.9 $ (30.1) $1,390.3
Buildings and improvements on leased land 726.7 129.4 10.6 (31.7) 813.8
Equipment, signs and seating 626.1 150.5 85.2 (38.1) 653.3
Other 194.3 47.1 28.6 (9.6) 203.2
--------- --------- --------- --------- ---------
$2,809.5 $492.9 $132.3 $(109.5) $3,060.6
========= ========= ========= ========= =========
1991:
Buildings and improvements on owned land $1,114.7 $160.4 $ 12.5 $ (0.2) $1,262.4
Buildings and improvements on leased land 632.0 105.0 9.5 (0.8) 726.7
Equipment, signs and seating 564.3 149.7 87.7 (0.2) 626.1
Other 177.4 41.8 24.8 (0.1) 194.3
--------- --------- --------- --------- ---------
$2,488.4 $456.9 $134.5 $ (1.3) $2,809.5
========= ========= ========= ========= =========
(A) Primarily foreign currency translation effects and certain reclassifications between accounts.
</TABLE>
<PAGE>
<PAGE> 61
<TABLE> Schedule VII
McDONALD'S CORPORATION
SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS
December 31, 1993
<CAPTION>
Total Amount
Name of Issuer of Title of Issue Guaranteed and
Securities Guaranteed of Each Class of Outstanding Nature of
by Registrant Securities Guaranteed (In millions of dollars) Guarantee
--------------------- --------------------- ------------------------ ---------
<S> <C> <C> <C>
Quanta Foods, Ltd. (Taiwan) Unsecured Notes $99.9 Principal and Interest
De Alba, S. de R.L. de C.V.
(Mexico) Unsecured Notes 10.1 Principal and Interest
Golden Arches Restaurants Sdn. Bhd.
(Malaysia) Unsecured Notes 10.0 Principal and Interest
Sistemas de Alimentos Rapido
S. de R.L. de C.V. (Mexico) Unsecured Notes 9.4 Principal and Interest
McThai Company, Ltd. (Thailand) Unsecured Notes 9.2 Principal and Interest
Arcos Dorados S.A. (Argentina) Unsecured Notes 6.5 Principal and Interest
Okil S. de R.L. de C.V. (Mexico) Unsecured Notes 4.2 Principal and Interest
Alimentos Rapidos de Occidente
S. de R.L. de C.V. (Mexico) Unsecured Notes 3.4 Principal and Interest
To Go, S.A. (Chile) Unsecured Notes 1.4 Principal and Interest
McKey Food Svcs., Ltd. (China) Unsecured Notes .6 Principal and Interest
</TABLE>
<PAGE>
<PAGE> 62
<TABLE> Schedule IX
McDONALD'S CORPORATION
SCHEDULE IX - SHORT-TERM BORROWINGS
(In millions of dollars)
Years Ended December 31, 1993, 1992 and 1991
<CAPTION>
Maximum amount Average amount
Balance Weighted average outstanding at outstanding Weighted average
at end of interest rate at any month end during the interest rate
period end of period during the period period during the period
------ ------------- ----------------- ------ -----------------
<C> <C> <C> <C> <C>
Notes payable:
1993 $193.3 8.1% $561.1 $297.9 7.4%
====== ====== ====== ====== ======
1992 $411.0 9.5% $668.3 $410.4 8.4%
====== ====== ====== ====== ======
1991 $278.3 10.0% $517.4 $254.0 11.1%
====== ====== ====== ====== ======
_________________________
Notes payable generally represent obligations of the Company under line of credit agreements with various banks.
Borrowings are denominated in various currencies, generally at local market rates of interest.
The average amount outstanding each period was computed by averaging the month-end balances during the year.
The weighted average interest rate during the period was computed on a semi-annual basis by dividing interest
expense by the average amount outstanding.
</TABLE>
<PAGE>
<PAGE> 63
<TABLE> Schedule X
McDONALD'S CORPORATION
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(In millions of dollars)
Years Ended December 31, 1993, 1992 and 1991
<CAPTION>
Charged to operating costs
and expenses
------------------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Maintenance and repairs $84.7 $85.2 $83.2
====== ====== ======
Advertising costs $332.8 $334.1 $344.4
====== ====== ======
</TABLE>
<PAGE>
<PAGE> 64
McDonald's Corporation
Exhibit Index
(Item 14)
Amendment No. 2 to McDonald's 1989 Equalization Plan
Amendment No. 1 to McDonald's Supplemental Employee Benefit
Equalization Plan
Amendment No. 2 to McDonald's Supplemental Employee Benefit
Equalization Plan
Amendment No. 5 to the Profit Sharing Program
Amendment No. 6 to the Profit Sharing Program
Statement re: Computation of per share earnings
Statement re: Computation of ratios
Subsidiaries of the registrant
Consent of independent auditors
<PAGE>
<PAGE> 65
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 Jack M. Greenberg
----------------------
Jack M. Greenberg
Vice Chairman,
Chief Financial Officer
March 29, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated:
Signature Title Date
--------- ----- ----
------------------------- Director
Hall Adams, Jr.
Robert M. Beavers, Jr.
------------------------- Senior Vice President March 29, 1994
Robert M. Beavers, Jr. and Director
James R. Cantalupo
------------------------- President and Chief Executive March 29, 1994
James R. Cantalupo Officer-International and
Director
Michael L. Conley
------------------------- Senior Vice President, March 29, 1994
Michael L. Conley Controller
Gordon C. Gray
------------------------- Director March 29, 1994
Gordon C. Gray
Jack M. Greenberg
------------------------- Vice Chairman, March 29, 1994
Jack M. Greenberg Chief Financial Officer
and Director
------------------------- Director
Donald R. Keough
<PAGE>
<PAGE> 66
Signature Title Date
--------- ----- ----
Donald G. Lubin
------------------------- Director March 29, 1994
Donald G. Lubin
------------------------- Director
Andrew J. McKenna
Michael R. Quinlan
------------------------- Chairman, Chief Executive March 29, 1994
Michael R. Quinlan Officer and Director
Edward H. Rensi
------------------------- President and Chief Executive March 29, 1994
Edward H. Rensi Officer-U.S.A. and Director
------------------------- Director
Terry Savage
Paul D. Schrage
------------------------- Senior Executive Vice March 29, 1994
Paul D. Schrage President, Chief Marketing
Officer and Director
------------------------- Director
Ballard F. Smith
------------------------- Director
Roger W. Stone
Robert N. Thurston
------------------------- Director March 29, 1994
Robert N. Thurston
Fred L. Turner
------------------------- Senior Chairman and Director March 29, 1994
Fred L. Turner
B. Blair Vedder, Jr.
------------------------- Director March 29, 1994
B. Blair Vedder, Jr.
<PAGE>
EXHIBIT 10-A
AMENDMENT NO. 2
TO THE
McDONALD'S 1989 EXECUTIVE
EQUALIZATION PLAN
("McCAP I")
WHEREAS, McDonald's Corporation (the "Company") established the
McDonald's 1989 Executive Equalization Plan ("McCAP I") and amended
and restated McCAP I effective January 1, 1990, which restatement was
most recently amended by the first amendment effective January 1,
1993; and
WHEREAS, the Company has given the Committee responsible for the
administration of McCAP I the right to amend McCAP I in Section 5
thereof; and
WHEREAS, the Committee now desires to amend McCAP I to reflect
the change in the compensation limit under Internal Revenue Code
Section 401(a)(17), as amended by the Omnibus Budget Reconciliation of
1993;
NOW, THEREFORE, IT IS RESOLVED, that McCAP I is hereby amended,
effective January 1, 1994, by substituting the following for the
second sentence of Section 1.2 thereof:
Code Section 402(g) generally limits to $8,994 (in 1993, as
adjusted in subsequent years by the Secretary of the Treasury for
cost of living adjustments in accordance with Code Section
402(g)(5)) the maximum amount of employee elective deferrals
under a qualified plan ("Elective Contribution Limit"); Code
Section 401(a)(17) limits to $150,000 (in 1994, as adjusted in
subsequent years as provided by the Secretary of the Treasury)
the amount of compensation which may be taken into account for a
plan year under a qualified plan ("Compensation Limit"); and
elective deferrals to a non-qualified plan are not taken into
account in determining compensation and benefits under the
qualified plans ("Elective Deferral Exclusions") (such limits and
exclusion are collectively referred to herein as the "Limits").
IN WITNESS WHEREOF, the Committee has caused an authorized
officer of the Company to execute this Amendment No. 2 in multiple
originals this 17th day of December, 1993.
By: /s/ Stanley R. Stein
Title: Senior Vice President <PAGE>
EXHIBIT 10-B
AMENDMENT NO. 1
TO THE
McDONALD'S SUPPLEMENTAL EMPLOYEE BENEFIT
EQUALIZATION PLAN
("McCAP II")
WHEREAS, McDonald's Corporation (the "Company") established the
McDonald's Supplemental Employee Benefit Equalization Plan
("McCap II") and amended and restated McCap II most recently effective
January 1, 1990; and
WHEREAS, the Company has given the Committee responsible for its
administration the right to amend McCap II in Section 5 thereof; and
WHEREAS, the Committee now desires to amend McCap II to provide a
procedure for the payment of benefits thereunder to a spouse, child or
other dependent pursuant to a state court domestic relations order;
NOW, THEREFORE, BE IT RESOLVED, that McCap II is hereby amended
effective January 1, 1993 as follows:
I
The following sentence shall be added to Section 2.5(a) at
the end thereof:
Notwithstanding the foregoing, no distribution shall be made
in accordance with the first sentence of this Section 2.5(a)
on account of the payment under the McDESOP portion of the
Profit Sharing Program of a distribution from the account of
a participant who is at the time of distribution a
McDonald's employee, including a distribution made from the
Profit Sharing Program in accordance with a Qualified
Domestic Relations Order.
II
The following sentence shall be added to Section 2.5(b) at
the end thereof:
Notwithstanding the foregoing, no distribution shall be made
in accordance with the first sentence of this Section 2.5(b)
on account of the payment under the Profit Sharing Plan
portion of the Profit Sharing Program of a distribution from
the account of a participant who is at the time of
distribution a McDonald's employee, including a distribution
made from the Profit Sharing Program in accordance with a
Qualified Domestic Relations Order.
III
A new Section 3.8 shall be added to read as follows:
3.8 Qualified Domestic Relations Order.
(a) Notwithstanding the provision of Section 3.3, the
Committee shall comply with the provisions of any <PAGE>
order determined by the Committee to be a
Qualified Domestic Relations Order.
(b) "Qualified Domestic Relations Order" means any
judgment, decree, or order (including approval of
a property settlement agreement):
(1) which is made pursuant to a state domestic
relations law (including a community property
law);
(2) which relates to the provision of child
support, alimony payments, or marital
property rights to a spouse, former spouse,
child, or other dependent of a Participant;
(3) which creates or recognizes the existence of
an alternate payee's right to or assigns to
an alternate payee the right to receive all
or a portion of the Participant's Accrued
Benefit under the Plan; and
(4) with respect to which the requirements of
paragraphs (c) and (d) are met.
(c) A domestic relations order can be a Qualified
Domestic Relations Order only if such order
clearly specifies:
(1) the name and last known mailing address, if
any, of the Participant and the name and
mailing address of each alternate payee
covered by the order;
(2) the amount or percentage of the Participant's
Accrued Benefit to be paid by the Plan to
each such alternate payee, or the manner in
which such amount or percentage is to be
determined;
(3) the number of payments or period to which
such order applies; and
(4) each plan to which such order applies.
(d) A domestic relations order can be a Qualified
Domestic Relations Order only if such order does
not
(1) require the Plan to provide any type or form
of benefit, or any option not otherwise
provided under the Plan;
(2) require the Plan to provide increased
benefits (determined on the basis of
actuarial value); or
(3) require the payment of benefits to an
alternate payee which are required to be paid
to another alternate payee under another <PAGE>
order previously determined to be a Qualified
Domestic Relations Order.
(e) In the case of any payment before a Participant
has had a termination of employment, a domestic
relations order shall not be treated as failing to
meet the requirements of Section 3.8(d)(1) solely
because such order requires that payment of
benefits be made to an alternate payee:
(1) in the case of any payment before a
Participant has had a termination of
employment, on or after the earlier of:
(i) the date on which the Participant is
entitled to receive benefits under the
Plan, or
(ii) the later of (A) the date the
Participant attains age 50, or (B) the
earliest date on which the Participant
could begin receiving benefits under the
Plan if the Participant had a
termination of employment;
(2) as if the Participant had retired on the date
on which such payment is to begin under such
order; and
(3) in any form in which such benefits may be
paid under the Plan to the Participant.
IN WITNESS WHEREOF, the Committee has caused an authorized
officer of the Company to execute this Amendment No. 1 in multiple
originals this 1st day of July, 1993.
By: /s/ Stanley R. Stein
Title: Senior Vice President
<PAGE>
EXHIBIT 10-C
AMENDMENT NO. 2
TO THE
McDONALD'S SUPPLEMENTAL EMPLOYEE BENEFIT
EQUALIZATION PLAN
("McCAP II")
WHEREAS, McDonald's Corporation (the "Company") established the
McDonald's Supplemental Employee Benefit Equalization Plan ("McCAP
II") and amended and restated McCAP II effective January 1, 1990,
which restatement was most recently amended by the first amendment
effective January 1, 1993; and
WHEREAS, the Company has given the Committee responsible for the
administration of McCAP II the right to amend McCAP II in Section 5
thereof; and
WHEREAS, the Committee now desires to amend McCAP II to reflect
the change in the compensation limit under Internal Revenue Code
Section 401(a)(17), as amended by the Omnibus Budget Reconciliation of
1993;
NOW, THEREFORE, IT IS RESOLVED, that McCAP II is hereby amended,
effective January 1, 1994, by substituting the following for the
second sentence of Section 1.2 thereof:
Code Section 402(g) generally limits to $8,994 (in 1993, as
adjusted in subsequent years by the Secretary of Treasury for
cost of living adjustments in accordance with Code Section
402(g)(5)) the maximum amount of employee elective deferrals
under a qualified plan ("Elective Contribution Limit"); Code
Section 401(a)(17) limits to $150,000 (in 1994, as adjusted in
subsequent years as provided by the Secretary of the Treasury)
the amount of compensation which may be taken into account for a
plan year under a qualified plan ("Compensation Limit"); and
elective deferrals to a non-qualified plan are not taken into
account in determining compensation and benefits under the
qualified plans ("Elective Deferral Exclusions") (such limits and
exclusion are collectively referred to herein as the "Limits").
IN WITNESS WHEREOF, the Committee has caused an authorized
officer of the Company to execute this Amendment No. 2 in multiple
originals this 17th day of December, 1993.
By: /s/ Stanley R. Stein
Title: Senior Vice President
<PAGE>
EXHIBIT 10-D
FIFTH AMENDMENT
TO THE
MCDONALD'S CORPORATION PROFIT SHARING PROGRAM
The McDonald's Corporation Profit Sharing Program (the "Plan"),
as amended and restated effective January 1, 1989 and subsequently
amended by the First Amendment, effective January 1, 1990, the Second
Amendment, generally effective May 1, 1992, the Third Amendment,
effective July 1, 1992 and the Fourth Amendment, generally effective
January 1, 1993 is hereby amended effective July 1, 1993, except as
otherwise provided herein.
I
Section 1.2(a) shall be amended to delete the phrase "the Profit
Sharing Plan portion of the Plan" and to substitute the following
therefore:
"receiving an allocation of Profit Sharing Contributions pursuant
to Section 7.1"
II
Effective January 1, 1993, section 1.14 shall be amended to read
as follows:
1.14 "Considered Compensation" of a Participant for a Plan Year
means:
(a) except as otherwise specified below, the Participant's
total compensation paid during the Plan Year to such
Participant by an Employer while an Active Participant
as reported in Box 1 of Internal Revenue Service Form
W-2 as revised for 1993 (or the equivalent box on any
comparable form for subsequent years) for the Plan
Year, increased by any amounts by which the
Participant's compensation is reduced by Participant
Elected Contributions under the McDESOP portion of the
Plan or any other portion of the Plan or of any Related
Plan which meets the requirements of Section 401(k) of
the Internal Revenue Code; compensation reduction
contributions for medical, dental or dependent care or
other benefits under a cafeteria plan meeting the
requirements of Section 125 of the Internal Revenue
Code; and excluding provisions for life insurance;
reimbursement or other payments for expenses related to
moving (other than the relocation bonus); any benefits
under the Plan or any other qualified plan described in
Section 401(a) of the Internal Revenue Code; and
distributions under McDonald's Profit Sharing Program
Equalization Plan ("McEqual"), McDonald's 1989
Executive Equalization Plan ("McCAP I") or the
McDonald's Supplemental Employee Benefit Equalization
Plan ("McCAP II"); income earned from stock options
granted under the McDonald's 1975 Stock Ownership
Option Plan; options, restricted stock, stock
appreciation rights, performance units and stock <PAGE>
bonuses awarded under the McDonald's 1992 Stock
Ownership Incentive Plan; Stock Exchange Rights or
Performance Units awarded under the McDonald's
Corporation 1978 Incentive Plan; payments to a
Participant for foreign service in the form of tax
gross-up benefits, allowances for cost of living,
housing and education, and other similar payments; and,
any severance pay and any special termination bonus
paid pursuant to a termination agreement;
(b) for purposes of Article XV (except for determining
whether a Participant is a Key Employee pursuant to
Section 15.2(d)) and for determining the limitations
under Article IX, Considered Compensation means total
compensation paid to the Participant by an Employer, a
Commonly Controlled Entity or a member of an Affiliated
Service Group in the Plan Year, including distributions
from any nonqualified deferred compensation plans
maintained by an Employer, Commonly Controlled Entity
or member of an Affiliated Service Group and amounts
paid or reimbursed by the employer for moving expenses
incurred by the Participant to the extent it is
reasonable to believe that such amounts are not
deductible by the Participant under Section 217 of the
Internal Revenue Code and excluding any salary
reduction contributions to a cafeteria plan meeting the
requirements of Code Section 125 or to the Plan or any
other qualified plan described in Section 401(a) of the
Internal Revenue Code, or the amount of the
Participant's Participant Elected Contributions under
the McDESOP portion of the Plan or any other portion of
the Plan or of any other plan which meets the
requirements of Section 401(k) of the Internal Revenue
Code, whether credited to the Participant's accounts
under the Plan, the McDonald's Supplemental Employee
Benefit Equalization Plan ("McCAP II"), the McDonald's
Profit Sharing Program Equalization Plan ("McEqual"),
the McDonald's 1989 Executive Equalization Plan
("McCAP I") or any other non-qualified deferred
compensation plans from time to time maintained by the
Company, or other deferred compensation, stock options,
and any other amounts which receive special tax
benefits;
(c) for the purpose of determining whether a Participant is
(1) a Highly Compensated Employee in accordance with
Section 1.30 or (2) a member of the Top Paid Group as
defined in Section 1.52 and (3) whether a Participant
is a Key Employee pursuant to Section 15.2(d),
Considered Compensation shall be the Participant's
Considered Compensation as defined in Section 1.14(b)
increased by the amount by which the Participant's
compensation is reduced pursuant to a compensation
reduction election under Section 5.1 or any Related
Plan which meets the requirements of Code Section
401(k) or pursuant to other compensation reduction
contributions for medical, dental or dependent care or
other benefits under a cafeteria plan meeting the
requirements of Section 125 of the Internal Revenue
Code; <PAGE>
(d) for the purpose of calculating (1) the actual
contribution percentage in accordance with Section 4.1,
(2) the actual deferral percentage in accordance with
Section 5.2 or (3) the multiple use test in accordance
with Section 5.4, Considered Compensation shall be the
Participant's compensation for the portion of the Plan
Year during which he or she was an Active Participant
as defined in Section 1.2(c) (i) as reported in Box 1
of his Internal Revenue Service Form W-2 as revised for
1993 (or the equivalent box on any comparable form for
subsequent years) plus (ii) any amounts by which the
Participant's compensation is reduced by Participant
Elected Contributions under the McDESOP portion of the
Plan or any other portion of the Plan or any other plan
which meets the requirements of Section 401(k) of the
Internal Revenue Code or compensation reduction
contributions for medical, dental or dependent care or
other benefits under a cafeteria plan meeting the
requirements of Section 125 of the Internal Revenue
Code;
(e) for the purpose of determining the amount of
Participant Elected Contributions pursuant to Section
5.1, Considered Compensation means a Participant's
Considered Compensation as defined in Section 1.14(a)
increased by expatriate equalization differentials and
reduced by all compensation not paid in cash, by cash
perquisites and by any payments for referrals to the
extent included in Considered Compensation as defined
in Section 1.14(a).
For purposes of Sections 1.14(a), (c), (d) and (e), Considered
Compensation taken into account under the Plan shall not exceed
$200,000 (in 1989, and as adjusted in subsequent years as provided by
the Secretary of the Treasury). In determining whether a
Participant's compensation for a Plan Year exceeds $200,000, if and
only to the extent required by the Internal Revenue Code, the
compensation of each Five Percent Owner and of each Participant who is
one of the ten Highly Compensated Employees paid the greatest
compensation (determined before the aggregation of the compensation of
any family member) shall include the compensation of such
Participant's spouse and lineal descendants who have not attained
age 19 before the end of the Plan Year earned as employees of
McDonald's or a Commonly Controlled Entity. Effective January 1,
1994, "$150,000" shall be substituted for "$200,000" in this
paragraph.
Anything to the contrary herein notwithstanding, Considered
Compensation for a Plan Year shall not be reduced by the pay for a
period of short term disability which is repaid to an Employer in a
subsequent Plan Year by a Participant who fails to complete the
requirements to be eligible to retain such pay.
III
The final paragraph of Section 1.30 is hereby deleted and the
following substituted therefore: <PAGE>
(h) In lieu of determining which individuals are Highly
Compensated Employees as provided in paragraphs (a), (b),
(c), and (d) of this Section 1.30, the Committee may elect
for any Plan Year to consider as a Highly Compensated
Employee for such Plan Year each Participant who performs
services as an employee for an Employer, Commonly Controlled
Entity or member of an Affiliated Service Group during such
Plan Year and who, during the Plan Year:
(1) was at any time a Five Percent Owner;
(2) received Considered Compensation in excess of $81,720
(for 1989, adjusted in subsequent years as provided by
the Secretary of the Treasury or his delegate);
(3) received Considered Compensation in excess of $64,245
(for 1993, adjusted in subsequent years as provided by
the Secretary of the Treasury or his delegate) and was
a member of the Top Paid Group; and
(4) was an officer of (or performed the duties of an
officer for) an Employer, a Commonly Controlled Entity
or member of an Affiliated Service Group and received
Considered Compensation in excess of fifty percent
(50%) of the amount in effect under Section
415(b)(1)(A) of the Internal Revenue Code ($98,064 for
1989, adjusted in subsequent years as provided by the
Secretary of the Treasury or his delegate).
(i) The Plan Administrator may elect for any Plan Year to
determine the Highly Compensated Employees for such year by
substituting (1) "$54,480" (in 1989, adjusted in subsequent
years provided by the Secretary of the Treasury or his
delegate) for "$81,720" (in 1989, adjusted in subsequent
years provided by the Secretary of the Treasury or his
delegate) in Sections 1.30(b) or 1.30(h)(2) as applicable,
and ignoring Sections 1.30(c) or 1.30(h)(3), respectively.
(j) A Plan Administrator may make any of the elections permitted
under Sections 1.30(h) and 1.30(i) for a Plan Year, may make
different elections from Plan Year to Plan Year and may make
different elections for different purposes under the Plan
(e.g., which Participants are considered to be Highly
Compensated Employees (1) for the purposes of calculating
the limits described in Sections 4.1(c), 5.2(e) and 5.4 and
(2) for other purposes under the Plan).
IV
Section 1.56(a)(6) shall be deleted.
V
A new Section 1.56(c) shall be added to read as follows:
(c) The Diversification Trust Sub-fund is part of the McDESOP
portion of the Plan but is held in the Profit Sharing Master
Trust in order to implement Participants' diversification
elections made in accordance with Section 10.12. <PAGE>
"Diversification Fund" means the portion of the Trust Fund
established by segregating the amounts transferred from
Participant's Employer Auxiliary ESOP Contribution Accounts,
Participant Elected Contribution Accounts and Employer
Matching Contribution Accounts in the McDESOP portion of the
Plan in accordance with Section 10.12.
VI
Section 1.57 shall be amended to read as follows:
1.57 "Valuation Date" means the last business day of each
calendar month and such additional dates as the Committee
may from time to time specify except that solely for the
purpose of valuing accounts to make distributions pursuant
to Article XI, "Valuation Date" means the fifteenth day of
each calendar month (or if the fifteenth day of the month is
not a business day, the next previous business day) and the
last business day of each calendar month and such additional
dates as the Committee may from time to time specify.
VII
Effective January 1, 1993, Section 4.3(a) is amended to read as
follows:
4.3 Annual Employer Contribution Elections.
(a) Minimum and Maximum Amount of Participant Elected
Matched Contributions. If Participant Elected Matched
Contributions are permitted for all or any portion of a
Plan Year, the Company by action of its Board of
Directors shall specify for the Plan Year or portion of
a Plan Year, the amount (either as a dollar amount or a
percentage of each Active Participant's Considered
Compensation) of such Participant Elected Matched
Contributions ("Specified Participant Elected Matched
Contributions") which shall be made on behalf of an
Active Participant in the absence of a contrary
election by the Participant and may also specify, the
minimum and maximum amounts of Participant Elected
Matched Contributions which a Participant may elect in
lieu of Specified Participant Elected Matched
Contributions (either as a dollar amount or a
percentage of each Participant's Considered
Compensation) for the Plan Year or portion of the Plan
Year as permitted by procedures established by the Plan
Administrator, provided that such minimum and maximum
amounts shall not be greater for any Plan Year than:
(1) five percent (5%) of the Participant's Considered
Compensation if the Participant is a staff or an
executive employee or a store manager,
(2) ten percent (10%) of the Participant's
Compensation if the Participant is a Certified
Swing Manager or primary maintenance employee, and
<PAGE>
(3) eight percent (8%) of the Participant's
Compensation if the Participant is a crew member
or other hourly restaurant employee; and
VIII
The first paragraph of Section 5.1 is amended, effective
January 1, 1993, to substitute "seven percent (7%)" for "five percent
(5%)" in the second sentence thereof.
IX
The first two sentences of the second paragraph of Section 5.1
shall be deleted and the third sentence of the second paragraph shall
become the last sentence of the first paragraph of Section 5.1.
X
Section 10.6(a) up to the colon (:) shall be amended to read as
follows:
(a) Profit Sharing Plan. The assets of the Profit Sharing Plan
portion of the Trust shall be held in the following
Investment Funds:
XI
Section 10.6 shall be amended to add the following at the end
thereof:
(c) McDESOP Diversification Account. Participant Elected
Contributions which a Participant has elected to diversify
pursuant to Section 10.12(a) or (b) shall be credited to the
Participant's McDESOP Contribution Diversification Account
and invested in the Trust Investment Funds listed in Section
10.6(a) as provided in Section 10.12(a) or (b) as of the
first business day of the calendar month following the month
in which (1) the diversification election was made for
amounts diversified in accordance with Section 10.12(a) and
(2) the compensation (from which such Participant Elected
Contributions were taken) was paid or as of such earlier
date as the Committee shall provide for amounts diversified
in accordance with Section 10.12(b). Until such date as the
Committee shall provide otherwise, Participant Elected
Contributions and Employer Matching Contributions which the
Participant has elected to diversify pursuant to Section
10.12 shall be invested in the McDESOP McDonald's Common
Stock Fund until invested pursuant to the preceding
sentence.
XII
Section 10.8 shall be amended to read as follows:
10.8 Investment Election with Regard to a Participant's Profit
Sharing Fund Account and Diversification Account. Four times
each Plan Year (or on such more frequent basis as the
Committee shall permit), each Participant shall have the
right to elect, on such forms and in accordance with such
rules and procedures as the Committee may from time to time <PAGE>
prescribe, to have his Profit Sharing Fund Account
(including any amounts which have previously been invested
in the Profit Sharing McDonald's Common Stock Fund pursuant
to Section 10.7) and his Diversification Account, if any,
invested in the Diversified Stock Fund, the Bond Fund (for
periods before December 1, 1989), the Money Market Fund, the
Profit Sharing McDonald's Common Stock Fund, the Insurance
Contract Fund or the Multi-Asset Fund (for periods on or
after March 1, 1990 or other similar fund designated by the
Committee or in any combination of them; provided that
amounts which have been invested in the Profit Sharing
McDonald's Common Stock Fund in accordance with Section 10.7
shall remain invested in the Profit Sharing McDonald's
Common Stock Fund until a new investment election made by
the Participant in accordance with this Section 10.8 is
effective.
If a Participant makes a Diversification Election or a
Future Contribution Diversification Election in accordance
with Section 10.12, his Diversification Account, if any,
shall be invested in accordance with his Profit Sharing Fund
Account investment election in effect at the time of his
diversification election or in accordance with
Section 10.11(a) if no such investment election is in effect
and shall be invested in accordance with any subsequently
effective Investment Election as provided above. The
Participant's election as to the percentage of his Profit
Sharing Fund Account and Diversification Account to be
invested in each Investment Fund, shall be made in
increments of 10 percent (10%) up to 100 percent (100%). A
Participant may elect to invest as much as 100% of his
Profit Sharing Fund Account and Diversification Account in
the Profit Sharing McDonald's Common Stock Fund. Subject to
Section 10.7, a Participant's investment election shall be
effective until his next investment election is effective.
Notwithstanding the foregoing, the Bond Fund is dissolved
effective November 30, 1989. After November 30, 1989, any
effective investment election made by a Participant on any
date to invest contributions in the Bond Fund shall be
treated as an election to invest such contributions in the
Money Market Fund.
XIII
Sections 10.9 and 10.10 shall be amended to substitute "Four
times" for "Three times" in the first sentence of each such section.
XIV
Section 10.12 is hereby amended to read as follows:
10.12 Diversification of McDESOP Accounts and Contributions.
(a) Diversification of Account Balances.
(1) Elections by Qualified Participant. At the same
time that he may make an Investment Election in
accordance with Section 10.8 or during each Annual
Election Period, each Qualified Participant who is
an Employee, the total of whose Qualified Account <PAGE>
balances have, at any time, been equal to or more
than $500, shall be permitted to elect
("Diversification Election") to transfer an amount
equal to the difference between (A) 25 percent of
the sum of (i) the balances of the Participant's
Qualified Accounts which are Accounts under the
Plan plus (ii) the total amount previously
transferred under this Section 10.12(a) from the
Qualified Accounts which are Accounts under the
Plan to such Participant's Diversification Account
("Prior Diversification Transfers"), reduced by
(B) the total amount of such Participant's Prior
Diversification Transfers and to have the same
percentage of his future contributions or
allocations, to the Qualified Accounts credited to
his Diversification Account. Commencing with the
earlier of the first day of the sixth Plan Year
after the Participant became a Qualified
Participant or the first day of the calendar month
after he attains 60 years of age, a Qualified
Participant may make a Diversification Election,
(A) in accordance with such rules and procedures
and effective dates as the Committee shall from
time to time prescribe or (B) during his sixth
Annual Election Period, to transfer from his
Qualified Accounts which are Accounts in the Plan
to his Diversification Account an amount equal to
the difference between (A) 50 percent of the sum
of (i) the balances of the Participant's Qualified
Accounts which are Accounts under the Plan plus
(ii) the total amount of the Participant's Prior
Diversification Transfers, reduced by (B) the
total amount of the Participant's Prior
Diversification Transfers and to have the same
percentage of his future contributions to the
Qualified Accounts credited to his Diversification
Account.
If the total balances of a Qualified Participant's
Qualified Accounts under the Plan have, at any
time, been equal to or more than $500, a Qualified
Participant who has had a Termination of
Employment or the Beneficiary of a deceased
Qualified Participant may make a Diversification
Election, at such time and in such manner as such
elections are otherwise permitted pursuant to this
Section 10.12(a), with respect to 100 percent of
the balances of his Qualified Accounts; provided
that at the time such election is made the
Participant is not an employee of McDonald's or of
any Commonly Controlled Entity. Not later than
90 days after each Annual Election Period during
which the Participant makes a Diversification
Election or at such earlier dates as the
Committee, pursuant to Section 10.13 shall permit,
the applicable amount shall be transferred to the
Participant's Diversification Account under the
Plan and thereafter shall be invested in
accordance with the Participant's elections
pursuant to Section 10.8 or 10.11(a) but <PAGE>
determined without regard to Section 10.7. A
Participant to whom a distribution is payable
under Article X shall have the right to elect to
receive any distributions made from his
Diversification Account attributable to
Participant Elected Contributions or Employer
Matching Contributions in McDonald's common stock.
(2) "Qualified Participant" means a Participant who
has attained age 55 or the Beneficiary of a
deceased Participant who would have attained the
age of 55 if he were alive.
(3) "Annual Election Period" means the 90 day period
after the last day of each Plan Year commencing
with the Plan Year in which the Participant first
becomes a Qualified Participant.
(4) "Qualified Accounts" means a Qualified
Participant's accounts identified below:
(A) before July 1, 1990, the Qualified
Participant's Employer Auxiliary ESOP
Contribution Account (and any
corresponding accounts in McEqual,
McCAP I or McCAP II) and his McDonald's
Stock Sharing Plan Accounts (the latter
considering only the portion of the
balance attributable to Company Stock
acquired by the McDonald's Stock Sharing
Plan after December 31, 1986); and
(B) on or after July 1, 1990, the Qualified
Participant's Employer Auxiliary ESOP
Contribution Account, Participant
Elected Contribution Account and
Employer Matching Contribution Account
(and any corresponding accounts in
McEqual, McCAP I or McCAP II) and his
McDonald's Stock Sharing Plan Accounts
(the latter considering only the portion
of the balance attributable to Company
Stock acquired by the McDonald's Stock
Sharing Plan after December 31, 1986).
(b) Diversification of Future Contributions. If the sum of
the balances of a Participant's Participant Elected
Contribution Account and his Employer Matching
Contribution Account is equal to $1500 or more, the
Participant may make an election ("Future Contribution
Diversification Election") with respect to his future
Participant Elected Contributions in accordance with
such rules and procedures and effective dates as the
Committee shall from time to time prescribe, to have up
to 100 percent of the amount of such contributions, in
increments of 25 percent, credited to his
Diversification Account. Once he has made a Future
Contribution Diversification Election, a Participant
may change his election with respect to future
Participant Elected Contributions, in accordance with <PAGE>
such rules and procedures and effective dates as the
Committee shall from time to time prescribe, but each
such change shall only effect Participant Elected
Contributions made to the Plan after the date the
election is effective and before the date a new Future
Contribution Diversification Election becomes
effective.
The provisions of the Plan shall apply to Participants'
Diversification Accounts in the same manner as to
Participant Elected Contribution Accounts, except that
the balance in a Participant's Diversification Account
shall be invested in the Trust Investment Funds in the
same manner as the Participant elects to invest his
Profit Sharing Fund Account pursuant to Section 10.8 or
as provided in Section 10.11(a), whichever is
applicable, but determined without regard to Section
10.7. Contributions credited to a Participant's
McDESOP Contribution Diversification Account shall be
credited to the Investment Funds available under the
Profit Sharing Plan in the same proportions as the
Participant elects pursuant to Section 10.8 or as
provided in Section 10.11(a) whichever is applicable,
but determined without regard to Section 10.7. A
Participant to whom a distribution is payable under
Article X shall have the right to elect to receive any
distributions made from his Diversification Account in
McDonald's common stock.
XV
Section 10.18 is hereby amended to add the following sentence at
the end thereof:
For purposes of making the foregoing allocations, distributions
from Participants' Diversification Accounts shall be considered
to be part of the McDESOP portion of the Plan.
XVI
Section 11.2(a)(2) is hereby amended as follows:
(2) Termination for Reasons Other than Retirement or Disability
or Death. If a Participant has a Termination of Employment
for reasons other than retirement on or after his Vesting
Retirement Date, Disability or death, the Trustee shall
distribute the Participant's vested Net Balance Account,
subject to (i) the Participant's election to receive
nonperiodic or installment distributions or, (ii) if
applicable, Section 11.2(a)(2)(E) as follows:
(A) Profit Sharing Fund Account. The vested portion of the
Participant's Profit Sharing Fund Account shall be
distributed to the Participant in cash or in McDonald's
common stock, in accordance with Section 11.2(f),
within a reasonable time after the Participant elects
to receive or to commence receiving a distribution of
such account. <PAGE>
(B) Investment Savings Fund Account. The Participant's
Investment Savings Fund Account shall be distributed to
the Participant in cash within a reasonable time after
the Participant elects to receive or to commence
receiving a distribution of such account.
(C) Rollover Contribution Account and Rollover Contribution
Holding Account. The Participant's Rollover
Contribution Account and Rollover Contribution Holding
Account shall be distributed to the Participant in cash
within a reasonable time after the Participant elects
to receive or to commence receiving a distribution of
such account.
(D) McDESOP Accounts. The Participant's McDESOP Accounts,
including the vested portion of all accounts identified
in Section 1.1(a)(5) and in 1.1(b) shall be distributed
to the Participant in cash or in McDonald's common
stock as provided in Section 11.2(g) within a
reasonable time after the Participant elects to receive
or to commence receiving a distribution of such
account.
(E) Distributions in Default of Election. In the absence
of an election by a Participant to receive a
distribution of his entire vested Net Balance Account
or to commence to receive installment distributions at
least equal to the greater of the Minimum Distribution
Amount and the amount determined under Section
11.2(d)(3), his entire vested Net Balance Account shall
be distributed or to commence to be distributed within
a reasonable time after the last day of the Plan Year
in which he attains the age of 70 1/2, but not later
than his Required Beginning Date.
A Participant entitled to elect to receive a
distribution or to commence receiving distributions
pursuant to this Section 11.2(a)(2) is not entitled to
elect an annuity form of distribution.
XVII
Section 11.2(f) shall be amended to read as follows:
(f) Form of Profit Sharing Distributions. If the method of
distribution selected by a Participant includes either a
nonperiodic payment or installment payments or a combination
of nonperiodic payments and installments, the Participant
who has a Termination of Employment on or after his Vesting
Retirement Date or on account of Disability or Death may
elect, on such form and in such manner as the Committee
shall provide or permit, to receive the portion of his
vested Net Balance Account in the Profit Sharing Plan
distributed in cash or in shares of McDonald's common stock
or in any combination of the two as elected by the
Participant; provided however that, in the absence of an
election to receive shares of McDonald's common stock, such
distributions shall be made in cash and, further provided,
that the portion of such distribution distributed in the
form of shares of McDonald's common stock shall not, except <PAGE>
as otherwise provided below, exceed the value (if any) of
the Participant's interest in the Profit Sharing McDonald's
Common Stock Fund.
Until such time as a Participant's vested Net Balance
Account has been distributed, transferred to a Distribution
Fund in accordance with Section 10.27 or forfeited in
accordance with Section 11.4, any portion of the
Participant's Net Balance Account remaining in the Profit
Sharing Plan portion of the Plan shall continue to be
invested in accordance with Section 10.7 and the
Participant's (or his Beneficiary's) investment elections in
accordance with Sections 10.8, 10.9, 10.10 and 10.11, as
applicable.
XVIII
Effective January 1, 1989, Section 11.2(g) shall be redesignated
Section 11.2(h) and Section 11.2(f)(2) shall be redesignated Section
11.2(g) and shall be amended as read as follows:
(g) McDESOP Accounts. If the sum of the portion of a
Participant's vested balances in his Participant Elected
Contribution Account, Employer Matching Contribution Account
and Diversification Account to the extent it is attributable
to amounts diversified from his Participant Elected
Contributions or Employer Matching Contribution Account and
is invested in McDonald's common stock, consists of $1500 or
more as of the Valuation Date immediately preceding a
distribution, such accounts shall be distributed in the form
of shares of McDonald's common stock, unless the Participant
(or his Beneficiary) elects a distribution in cash. If the
sum of the portion of a Participant's vested balance in his
Employer Auxiliary ESOP Contribution Accounts and his
Diversification Account to the extent it is attributable to
amounts diversified from his Employer Auxiliary ESOP
Contribution Account and is invested in McDonald's common
stock consists of $1500 or more as of the Valuation Date
immediately preceding the date of distribution, such
accounts shall be distributed in the form of shares of
McDonald's common stock, unless the Participant (or his
Beneficiary) elects a distribution in cash. If the sum of
the portion of a Participant's vested balance in his
Participant Elected Contribution Account, Employer Matching
Contribution Account and his Diversification Account to the
extent it is attributable to his Participant Elected
Contributions or Employer Matching Contributions and is
invested in McDonald's common stock is less than $1500 as of
the Valuation Date immediately preceding the distribution,
such Accounts shall be distributed in cash, unless the
Participant (or his Beneficiary) elects to receive a
distribution in shares of McDonald's common stock. If the
sum of the portion of a Participant's vested Net Balance
Account in his Employer Auxiliary ESOP Contribution Account
and his Diversification Account to the extent it is
attributable to his Employer Auxiliary ESOP Contributions
and is invested in McDonald's common stock has a value of
less than $1500 as of the Valuation Date immediately
preceding the distribution, such Accounts shall be
distributed in cash, unless the Participant (or his
<PAGE>
Beneficiary) elects to receive a distribution in shares of
McDonald's common stock. If any distribution in shares of
McDonald's common stock described in this Section 11.2 would
not be in whole shares, the value of any fractional share
shall be distributed in cash. A Participant or Beneficiary
who is entitled to a distribution may elect to receive a
cash distribution in lieu of McDonald's common stock or a
McDonald's common stock distribution in lieu of cash by
filing a written election with the Committee on forms
approved by the Committee and in a manner prescribed by the
Committee on or before the Valuation Date coincident with or
next preceding the date of distribution.
Until such time as a Participant's vested Net Balance
Account has been distributed, transferred to a Distribution
Fund in accordance with Section 10.27, or forfeited in
accordance with Section 11.4 (A) any portion of his Net
Balance Account in his Diversification Account shall
continue to be invested as provided in Section 10.12(b), and
(B) any portion of his Net Balance Account remaining in the
McDESOP portion of the Plan shall continue to be invested in
Company Stock and held therein.
If any McDonald's common stock distributed from a
Participant's Participant Elected Contribution Account,
Employer Matching Contribution Account or Diversification
Account is not readily tradeable on an established market
when distributed, the distributee shall have the put option
rights which are described in Section 6.5(b) with respect to
such shares.
XIX
Section 11.9 is hereby amended to read as follows:
11.9 Deadline for Payment of Benefits. Except to the extent that
a Participant in accordance with the Plan otherwise elects
and except to the extent it is not administratively
feasible, payment of benefits shall be made or commence not
later than sixty (60) days after the latest of (a) the close
of the Plan Year in which the Participant attains age fifty-
five (55), (b) the close of the Plan Year in which occurs
the tenth (10th) anniversary of the Plan Year in which the
Participant commenced participation, and (c) the close of
the Plan Year in which the Participant has a Termination of
Employment; provided that a Participant, who is entitled to
receive a distribution pursuant to this Section 11.9, must
submit a claim for benefits before any distributions will be
made hereunder.
XX
Section 11.11 shall be amended to read as follows:
11.11 Single Sum Payment without Election. Notwithstanding
any provisions of this Article XI (except Section 11.14 to
the extent therein provided) to the contrary, if the
Participant or Beneficiary is entitled to a distribution
because of the Participant's Break in Service (but not in
the case of a Break in Service without a Termination of <PAGE>
Employment), retirement on or after his Vesting Retirement
Date, death, Disability, or other Termination of Employment,
and if the value of the sum of (a) the vested portion of a
Participant's Net Balance Account under the Plan and (2) his
Accounts under the McDonald's Stock Sharing Plan does not
exceed $3,500, the Committee shall direct the immediate
distribution of such benefit prior to the annuity starting
date or other date of distribution or commencement of
distribution, regardless of any election or consent of the
Participant, his spouse, or other Beneficiary.
XXI
The reference to "Section 11.2(e)" in Section 11.12(a) shall be
amended to refer to "Section 11.12(e)".
XXII
The last sentence of Section 11.15 shall be amended to read as
follows:
This Section 11.15 shall not apply to any Participant who has a
Termination of Employment on or after January 1, 1993; provided
however, that this Section 11.15 will continue to apply to
Participants who had a Termination of Employment before
January 1, 1993, and who timely made the election provided
herein.
XXIII
A new Section 11.17 is hereby added to the plan to read as
follows:
11.17 Direct Rollovers. This Section 11.17 applies to
distributions made on or after January 1, 1993.
(a) Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's
election under this Section 11.17, a Distributee may
elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover;
subject to such reasonable administrative requirements
as the Committee may from time to time establish which
may include, but shall not be limited to, requirements
consistent with Treasury Regulations and other guidance
issued by the Internal Revenue Service permitting
de minimis standards for amounts eligible to be rolled
over or paid partly to the Participant and partly
rolled over. A Participant may make an election
pursuant to this Section 11.17 only after the
Distributee has met otherwise applicable requirements
for receipt of a distribution under the Plan, including
but not limited to any applicable requirements that the
Participant's spouse or (pursuant to a Qualified
Domestic Relations Order as defined in Section 16.5)
former spouse consent to the Participant's waiver of a
Qualified Joint and Survivor Annuity or Qualified
Preretirement Survivor Annuity. <PAGE>
If a Participant or Beneficiary elects to receive a
Direct Rollover or a distribution in a form other than
an annuity as provided in Section 11.2(a)(1)(C) or
11.3(a)(3)(C), such distribution may be made or
commence to be made less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) the plan administrator clearly informs the
participant that the participant has a right to a
period of at least 30 days after receiving the
notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the participant after receiving the notice
affirmatively elects a distribution
(b) In the absence of the adoption by the Committee of any
requirements to the contrary, the following shall
apply:
(1) A Distributee whose Eligible Rollover Distribution
is less than $200 upon the Valuation Date
immediately preceding the date of distribution
shall not be permitted to elect to have all or any
portion of the distribution made in the form of a
Direct Rollover.
(2) A Distributee who elects a Direct Rollover in an
amount equal to at least $500 may also elect to
have the remaining portion of his distribution
paid to the Distributee.
(3) A Distributee shall be permitted to divide an
Eligible Rollover Distribution into separate
distributions to be paid to two or more Eligible
Retirement Plans in two or more Direct Rollovers.
(4) A Distributee's election to make or not to make a
Direct Rollover with respect to a payment in a
series of periodic payments shall apply to all
subsequent payments in the series until the
Distributee changes his election.
(5) If a Distributee, who has been notified as to the
availability of the Direct Rollover option, fails
to elect a Direct Rollover with respect to an
Eligible Rollover Distribution, such Distributee
shall be deemed to have elected not to make a
Direct Rollover.
(c) As used in this Section 11.17, the following terms
shall have the following meanings:
(1) "Eligible Rollover Distribution" means any
distribution of all or any portion of the balance
to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: <PAGE>
any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the
Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under Section 11.13; and
the portion of any distribution that is not
includable in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(2) "Eligible Retirement Plan" means an individual
retirement account described in Section 408(a) of
the Internal Revenue Code, an individual
retirement annuity described in Section 408(b) of
the Internal Revenue Code, an annuity plan
described in Section 403(a) of the Internal
Revenue Code, or a qualified trust described in
Section 401(a) of the Internal Revenue Code, that
accepts the Distributee's Eligible Rollover
Distributions. However, in the case of an
Eligible Rollover Distribution to a Participant's
surviving spouse or surviving former spouse who is
a Distributee pursuant to a Qualified Domestic
Relations Order, an Eligible Retirement Plan is an
individual retirement account or individual
retirement annuity.
(3) "Distributee" means a Participant. In addition, a
Participant's surviving spouse and a former spouse
who is the alternate payee under a Qualified
Domestic Relations Order are Distributees with
regard to the interest of such spouse or former
spouse.
(4) "Direct Rollover" means a payment by the Plan to
the Eligible Retirement Plan specified by the
Distributee.
XXIV
Except as amended herein, the Plan as previously amended shall
remain in full force and effect.
Executed in multiple copies this 17th day of December, 1993.
McDonald's Corporation
By: /s/ Stanley R. Stein
Its: Senior Vice President
<PAGE>
EXHIBIT 10-E
SIXTH AMENDMENT
TO THE
MCDONALD'S CORPORATION PROFIT SHARING PROGRAM
The McDonald's Corporation Profit Sharing Program (the "Plan"),
as amended and restated effective January 1, 1989 and subsequently
amended by the First Amendment, effective January 1, 1990; the Second
Amendment, generally effective May 1, 1992; Third Amendment, effective
July 1, 1992; the Fourth Amendment, generally effective January 1,
1993, and the Fifth Amendment, generally effective July 1, 1993 is
hereby amended effective January 1, 1994, except as otherwise provided
herein.
I
Section 1.14(a) shall be amended as follows
1.14 "Considered Compensation" of a Participant for a Plan Year
means:
(a) except as otherwise specified below, the Participant's
total compensation paid during the Plan Year to such
Participant by an Employer while an Active Participant
as reported in Box 1 of Internal Revenue Service Form
W-2 as revised for 1993 (or the equivalent box on any
comparable form for subsequent years) for the Plan
Year, increased by any amounts by which the
Participant's compensation is reduced by Participant
Elected Contributions under the McDESOP portion of the
Plan or any other portion of the Plan or of any Related
Plan which meets the requirements of Section 401(k) of
the Internal Revenue Code; compensation reduction
contributions for medical, dental or dependent care or
other benefits under a cafeteria plan meeting the
requirements of Section 125 of the Internal Revenue
Code; and payments under the McDonald's Target
Incentive Plan which the Participant elected to have
paid in April, 1994 and excluding provisions for life
insurance; reimbursement or other payments for expenses
related to moving (including the relocation bonus); any
benefits under the Plan or any other qualified plan
described in Section 401(a) of the Internal Revenue
Code; and distributions under McDonald's Profit Sharing
Program Equalization Plan ("McEqual"), McDonald's 1989
Executive Equalization Plan ("McCAP I"), the McDonald's
Supplemental Employee Benefit Equalization Plan
("McCAP II") or the McDonald's Corporation Deferred
Incentive Plan; income earned from stock options
granted under the McDonald's 1975 Stock Ownership
Option Plan; options, restricted stock, stock
appreciation rights, performance units and stock
bonuses awarded under the McDonald's 1992 Stock
Ownership Incentive Plan; Stock Exchange Rights or
Performance Units awarded under the McDonald's
Corporation 1978 Incentive Plan; payments to a
Participant for foreign service in the form of tax
gross-up benefits, allowances for cost of living, <PAGE>
housing and education, and other similar payments; any
income attributable to personal use of an employer-
provided vehicle, an allowance paid for the loss of an
employer-provided vehicle, use of a company condo,
participation in group trips, gift stock, spouse's
travel and perquisites whether in cash or in kind and
other similar items; and, any severance pay and any
special termination bonus paid pursuant to a
termination agreement;
II
Effective November 1, 1993, Section 1.31(b)(1) is hereby amended
to read as follows:
(b)(1) The credit for Hours of Service shall be given for
the following:
(i) For Plan Years beginning before January 1, 1994,
an Employee's prior or subsequent employment by a
Foreign Affiliate or Domestic Affiliate;
(ii) For Plan years beginning after December 31, 1993,
an Employee's prior or subsequent employment by a
Domestic or Foreign Affiliate if the employee is
transferred to or from such Domestic or Foreign
Affiliate from or to the employment of an Employer
at the initiative of an Employer (a "Company
Initiated Transfer").
In determining the number of such Hours of Service to be
credited, the Plan Administrator shall make good faith
estimates based upon the available information and records
including the use of reasonable equivalencies similar to
those permitted under DOL Reg. Section 2530.200b-3 or
estimated average number of hours per week for employees in
a given job category.
III
Section 4.3(a)(1) shall be amended to read as follows:
(1) six percent (6%) of the Participant's Considered
Compensation if the Participant is a staff or an
executive employee or a store manager,
IV
Except as amended here, the Plan as previously amended shall
remain in full force and effect.
Executed in multiple copies this 17th day of December, 1993.
McDonald's Corporation
By: /s/ Stanley R. Stein
Its: Senior Vice President
<PAGE>
<PAGE>
<TABLE>
Exhibit 1
McDONALD'S CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(Dollars and shares in millions, except per common share data)
<CAPTION>
Year ended December 31,
1993 1992 199
---- ---- ---
<S> <C> <C> <C>
Net Income $1,082.5 $958.6 $859.
Preferred stock dividends (net of tax benefits of $4.1 for 1993 and $6.4 for 1992) (46.9) (14.7) (19.2
-------- -------- -------
Net income available after preferred stock dividends (A) 1,035.6 943.9 840.
Common stock dividends on assumed conversion of preferred stock 1.2 1.8 1.
-------- -------- -------
Net income available to common shareholders $1,036.8 $945.7 $842.
======== ======== =======
Weighted average number of common shares outstanding during the period (A) 355.9 363.2 358.
Additional shares related to potentially dilutive securities 10.8 10.7 11.
-------- -------- -------
Adjusted weighted average common shares 366.7 373.9 370.
======== ======== =======
Fully diluted net income per common share $2.83 $2.53 $2.2
======== ======== =======
---------------------
(A) Refer to Consolidated statement of income and Financial comments on pages 33 and 49 from Part II,
item 8 of this 1993 10-K for information concerning the computation of Net income per common share.
</TABLE> <PAGE>
<TABLE> Exhibit 12
McDONALDS' CORPORATION
STATEMENT RE COMPUTATION OF RATIOS
(Dollars in Millions)
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
- Income before provision for income taxes $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 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 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* 71.6 70.1 67.9 59.0 51.8
- Interest expense, amortization of debt
discount and issuance costs, and
depreciation of capitalized interest* 358.0 413.8 433.9 411.9 332.3
--------------------------------------------------------------
$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* $71.6 $70.1 $67.9 $59.0 $51.8
- Interest expense and amortization of debt
discount and issuance costs* 349.3 405.4 425.7 403.4 324.8
- Capitalized interest* 20.7 20.5 28.5 38.9 31.8
--------------------------------------------------------------
$441.6 $496.0 $522.1 $501.3 $408.4
==============================================================
RATIO OF EARNINGS TO FIXED CHARGES 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>
Exhibit 21
MCDONALD'S CORPORATION
SUBSIDIARIES OF THE REGISTRANT
NAME OF SUBSIDIARY (STATE OR COUNTRY OF INCORPORATION)
DOMESTIC SUBSIDIARIES
McDonald's Australian Property Corporation (Delaware)
McDonald's Deutschland, Inc. (Delaware)
McDonald's Restaurant Operations, Inc. (Delaware)
McDonald's Property Company Limited (Delaware)
McDonald's System of France, Inc. (Delaware)
FOREIGN SUBSIDIARIES
McDonald's Restaurants of Canada Limited (Canada)
McDonald's Australia Limited (Australia)
McDonald's Properties (Australia) Pty., Ltd. (Australia)
McDonald's Immobilien GmbH (Germany)
McDonald's GmbH (Germany)
McDonald's Restaurants Limited (England)
McDonald's France, S.A. (France)
McDonald's Restaurants Limited (Hong Kong)
McDonald's Nederland B.V. (Netherlands)
_______________________
The names of certain subsidiaries have been omitted as follows:
(a) 46 wholly-owned subsidiaries of the Company, each of which
operates one or more McDonald's restaurants within the United
States.
(b) Additional subsidiaries, including some foreign, other than those
mentioned in (a), because considered in the aggregate as a single
subsidiary, they would not constitute a significant subsidiary.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following
registration statements of McDonald's Corporation and in the related
prospectuses of our reports dated January 27, 1994 with respect to the
consolidated financial statements and schedules of McDonald's
Corporation included in this Annual Report on Form 10-K:
Commission File No.
------------------------------------------
Form S-8 Form S-3
------------------------------------------
33-09267 33-00001
33-24958 33-40194
33-49817 33-42642
33-50701 33-50025
33-58840 33-50695
Ernst & Young
Chicago, Illinois
March 29, 1994
<PAGE>
