<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-5231 ---------- ----------
------
McDONALD'S CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-2361282
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
McDonald's Plaza, Oak Brook, Illinois 60521
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (708) 575-3000
--------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
702,541,408
---------------------------------
(Number of shares of common stock
outstanding as of June 30, 1994)
<PAGE> 2
McDONALD'S CORPORATION
----------------------
INDEX
-----
Page Reference
Part I. Financial Information
Item 1 - Financial Statements
Condensed consolidated balance sheet,
June 30, 1994 (unaudited) and
December 31, 1993 3
Condensed consolidated statement of
income (unaudited), six months, and
second quarters ended June 30, 1994
and 1993 4
Condensed consolidated statement of
cash flows (unaudited), six months,
and second quarters ended June 30,
1994 and 1993 5
Financial comments (unaudited) 6
Item 2 - Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7
Part II. Other Information
Item 4 - Submission of Matters to a Vote
of Security Holders 12
Item 6 - Exhibits and Reports on Form 8-K
(a)Exhibits
The exhibits listed in the
accompanying Exhibit Index are
filed as part of this report 12
(b)Reports on Form 8-K 15
Signature 16
Exhibit Index 17
<PAGE> 3
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
-----------------------------
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
(unaudited)
(In millions of dollars) June 30, 1994 December 31, 1993
---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 147.4 $ 185.8
Accounts receivable 292.2 287.0
Notes receivable 41.1 27.6
Inventories, at cost, not in excess
of market 45.1 43.5
Prepaid expenses and other current
assets 134.6 118.9
-------------------------------------------------------------------------
TOTAL CURRENT ASSETS 660.4 662.8
-------------------------------------------------------------------------
OTHER ASSETS AND DEFERRED CHARGES 891.1 875.3
-------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment, at cost 14,437.8 13,459.0
Accumulated depreciation and
amortization (3,660.5) (3,377.6)
-------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 10,777.3 10,081.4
-------------------------------------------------------------------------
INTANGIBLE ASSETS-NET 447.4 415.7
-------------------------------------------------------------------------
TOTAL ASSETS $12,776.2 $12,035.2
=========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 931.1 $ 193.3
Accounts payable 358.6 395.7
Income taxes 45.2 56.0
Accrued interest 101.9 132.9
Other accrued liabilities 326.0 294.1
Current maturities of long-term debt 154.1 30.0
-------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,916.9 1,102.0
-------------------------------------------------------------------------
LONG-TERM DEBT 3,021.6 3,489.4
OTHER LONG-TERM LIABILITIES AND
MINORITY INTERESTS 390.8 334.4
DEFERRED INCOME TAXES 824.1 835.3
COMMON EQUITY PUT OPTIONS 58.8
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
authorized - 165.0 million shares;
issued - 11.3 and 11.4 million 675.8 677.3
Common stock, no par value;
authorized - 1.25 billion shares;
issued - 830.3 million 92.3 92.3
Additional paid-in capital 277.7 256.7
Guarantee of ESOP notes (252.8) (253.6)
Retained earnings 8,074.4 7,612.6
Foreign currency translation
adjustment (137.3) (192.2)
-------------------------------------------------------------------------
8,730.1 8,193.1
-------------------------------------------------------------------------
Common stock in treasury, at cost;
127.8 and 123.0 million shares (2,166.1) (1,919.0)
-------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 6,564.0 6,274.1
-------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $12,776.2 $12,035.2
=========================================================================
See accompanying Financial comments.
</TABLE>
<PAGE> 4
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
(In millions of dollars, except Six Months Ended Quarters Ended
per common share data) June 30 June 30
1994 1993 1994 1993
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales by Company-operated
restaurants $2,654.0 $2,460.9 $1,409.3 $1,307.6
Revenues from franchised
restaurants 1,171.3 1,071.0 620.0 570.2
------------------------------------------------------------------------------
TOTAL REVENUES 3,825.3 3,531.9 2,029.3 1,877.8
------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 2,146.0 2,002.4 1,128.6 1,049.5
Franchised restaurants-
occupancy costs 206.0 184.4 105.6 93.6
General, administrative and
selling expenses 496.5 450.3 257.0 232.5
Other operating (income)
expense-net (50.7) (34.4) (30.3) (15.6)
------------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 2,797.8 2,602.7 1,460.9 1,360.0
------------------------------------------------------------------------------
OPERATING INCOME 1,027.5 929.2 568.4 517.8
------------------------------------------------------------------------------
Interest expense 145.4 161.7 73.6 82.4
Nonoperating income
(expense)-net (8.2) 5.5 1.7 4.3
------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 873.9 773.0 496.5 439.7
Provision for income taxes 308.2 265.9 174.2 150.9
------------------------------------------------------------------------------
NET INCOME $ 565.7 $ 507.1 $ 322.3 $ 288.8
==============================================================================
NET INCOME PER COMMON SHARE $ .77 $ .67 $ .44 $ .39
------------------------------------------------------------------------------
DIVIDENDS PER COMMON SHARE $ .1138 $ .1038 $ .06 $ .0538
------------------------------------------------------------------------------
See accompanying Financial comments.
</TABLE>
<PAGE> 5
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Quarters
Ended June 30 Ended June 30
(In millions of dollars) 1994 1993 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $565.7 $507.1 $322.3 $288.8
Adjustments to reconcile to cash
provided by operations
Depreciation and amortization 296.5 271.0 148.6 134.4
Changes in operating working
capital items (69.4) (81.9) (56.1) (22.9)
Other (23.7) (14.4) (22.5) (9.8)
-------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS 769.1 681.8 392.3 390.5
-------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment expenditures (620.7) (468.6) (360.5) (256.5)
Sales of restaurant businesses 63.8 49.1 34.4 31.2
Purchases of restaurant businesses (53.1) (19.2) (25.3) (12.8)
Property sales 27.3 33.3 20.9 12.1
Other (3.0) (15.2) 1.8 (7.5)
-------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (585.7) (420.6) (328.7) (233.5)
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net short-term borrowings 426.5 33.0 310.7 (244.4)
Long-term financing issuances 111.4 727.6 16.5 521.2
Long-term financing repayments (489.5) (680.7) (205.5) (218.4)
Treasury stock purchases (187.9) (530.8) (160.0) (274.5)
Common and preferred stock dividends (106.2) (99.8) (55.4) (51.0)
Other 23.9 34.3 9.4 13.8
-------------------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (221.8) (516.4) (84.3) (253.3)
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS DECREASE (38.4) (255.2) (20.7) (96.3)
Cash and equivalents at beginning of
period 185.8 436.5 168.1 277.6
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF PERIOD $147.4 $181.3 $147.4 $181.3
===============================================================================
See accompanying Financial comments.
</TABLE>
<PAGE> 6
FINANCIAL COMMENTS (UNAUDITED)
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements in the
Company's 1993 Annual Report to Shareholders. In the opinion of the
Company, all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation have been included.
The results of operations of restaurant businesses purchased and
sold were not material to the condensed consolidated financial
statements for periods prior to purchase and sale.
In 1994, due to an increase in ownership, the Company consolidated
affiliates in Taiwan, South Korea and Turkey, which increased total
assets and liabilities by approximately $200.0 million.
NET INCOME PER COMMON SHARE
Net income per common share was computed using net income, reduced by
preferred stock cash dividends (net of tax) of $23.7 million for the
first six months of 1994 and 1993, and $11.8 and $11.9 million for the
second quarters of 1994 and 1993, respectively. Adjusted net income
was divided by the weighted average shares of common stock
outstanding: 706.1 and 717.5 million for the six months ended June 30,
1994 and 1993, and 704.7 and 712.0 million for the second quarters of
1994 and 1993, respectively. The effect of potentially dilutive
securities was not material.
COMMON STOCK SPLIT
On May 27, 1994, the Board of Directors approved a two-for-one common
stock split to be effected in the form of a stock dividend distributed
on June 24, 1994, to common shareholders of record on June 7, 1994.
All common and Series B and C ESOP Convertible Preferred stock
information appearing in the accompanying condensed consolidated
financial statements has been restated to give retroactive effect to
the stock split, including the transfer of an appropriate amount to
common stock from additional paid-in capital.
LINE OF CREDIT AGREEMENT
Effective July 20, 1994, the Company reduced the amount and term of
its long-term line of credit agreement, which previously supported the
classification of certain notes maturing within one year as long-term
debt, to $600.0 million and 364 days, respectively. Accordingly, these
notes have been reclassified to notes payable or current maturities of
long-term debt at June 30, 1994. The agreement, which remained unused
at June 30, 1994, is renewable and provides for fees of .07% per annum
on the unused portion of the commitment.
COMMON EQUITY PUT OPTIONS
In June 1994, the Company sold 2.0 million common equity put options
which are exercisable in November 1994, at an average price of $29.41
per share. The exercise price of $58.8 million was classified in
common equity put options and the related offset was recorded in
common stock in treasury, net of premiums received, at June 30, 1994.
<PAGE> 7
Item 2. Management's Discussion And Analysis Of Financial Condition
--------------------------------------------------------------------
And Results Of Operations
-------------------------
<TABLE>
INCREASES (DECREASES) IN OPERATING RESULTS OVER 1993
<CAPTION>
(Dollars in millions, except Six Months Second Quarter
per common share data) Ended June 30 Ended June 30
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
SYSTEMWIDE SALES $885.4 8% $411.3 7%
----------------------------------------------------------------------
REVENUES
Sales by Company-operated
restaurants $193.1 8% $101.7 8%
Revenues from franchised
restaurants 100.3 9 49.8 9
----------------------------------------------------------------------
TOTAL REVENUES 293.4 8 151.5 8
----------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 143.6 7 79.1 8
Franchised restaurants-
occupancy costs 21.6 12 12.0 13
General, administrative
and selling expenses 46.2 10 24.5 11
Other operating (income)
expense-net (16.3) 47 (14.7) 94
----------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 195.1 7 100.9 7
----------------------------------------------------------------------
OPERATING INCOME 98.3 11 50.6 10
----------------------------------------------------------------------
Interest expense (16.3) (10) (8.8) (11)
Nonoperating income
(expense)-net (13.7) NM (2.6) (60)
----------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 100.9 13 56.8 13
----------------------------------------------------------------------
Provision for income taxes 42.3 16 23.3 15
----------------------------------------------------------------------
NET INCOME $58.6 12% $33.5 12%
======================================================================
NET INCOME PER COMMON SHARE* $ .10 15% $ .05 13%
----------------------------------------------------------------------
NM - Not Meaningful
*Restated for the 2-for-1 common stock split.
</TABLE>
<PAGE> 8
CONSOLIDATED OPERATING RESULTS
Net income and net income per common share increased 12 and 15%,
respectively, for the six months; and 12 and 13%, respectively, for
the quarter. The respective 3 and 1 percentage-point spreads between
the increases in net income and net income per common share reflected
the impact of share repurchase.
Systemwide sales represent sales by Company-operated, franchised
and affiliated restaurants. The increases were due to expansion and
higher sales at existing restaurants, affected in part by severe
weather conditions worldwide in early 1994. The increases in revenues
reflected strong worldwide operating results.
A total of 365 restaurants were added in the first half of 1994
(296 in 1993), including 142 in the U.S. (119 in 1993) and 223 outside
of the U.S. (177 in 1993). An additional 330 restaurants were under
construction at quarter-end (250 in 1993), including 115 in the U.S.
(80 in 1993) and 215 outside of the U.S. (170 in 1993). In addition,
more than 300 satellites were operating worldwide at quarter-end.
These sites leverage the infrastructure of existing restaurants by
using their storage capability and inventory or by drawing on their
management talent and labor pool. Satellite locations were not
included in Systemwide restaurants.
Franchised restaurant margins comprised about two-thirds of the
combined operating margins. Consolidated franchised margins were 82.4%
of applicable revenues for the first six months of 1994, compared to
82.8% one year ago. For the second quarters, margins were 83.0% in
1994, and 83.6% in 1993. The decreases reflected accelerated expansion
and a higher number of leased sites.
Consolidated Company-operated margins were 19.1% of sales for the
first six months of 1994, compared to 18.6% one year ago. For the
second quarters, margins were 19.9% in 1994, and 19.7% in 1993. For
both periods, food and paper, and occupancy and other operating costs
declined, while payroll costs increased as a percent of sales.
The increases in general, administrative and selling expenses
were due primarily to higher employee costs associated with expansion
and key priorities.
Other operating transactions relate to franchising and the food
business, such as gains on sales of restaurant businesses, equity in
earnings of unconsolidated affiliates and other items:
-----------------------------------------------------------------------
Six Months Second Quarter
Ended June 30 Ended June 30
(In millions of dollars) 1994 1993 1993 1994
-----------------------------------------------------------------------
Gains on sales of
restaurant businesses $(30.4) $(24.4) $(13.0) $(14.3)
Equity in earnings of
unconsolidated affiliates (18.3) (12.3) (7.4) (5.6)
Other (2.0) 2.3 (9.9) 4.3
-----------------------------------------------------------------------
Other operating
(income) expense-net $(50.7) $(34.4) $(30.3) $(15.6)
=======================================================================
<PAGE> 9
The other category included gains related to property
transactions in 1994, compared to losses in 1993.
The increases in consolidated operating income primarily
reflected better results from combined operating margins and higher
other operating income, partially offset by higher general,
administrative and selling expenses and weaker foreign currencies.
The decreases in interest expense were due primarily to lower
interest rates, weaker foreign currencies and higher capitalized
interest.
Nonoperating income (expense) was affected by a gain on the
termination of debt financings in the second quarter of 1993. In 1994,
lower interest income mainly because a portion of the proceeds from
the 1992 preferred stock issuance, later used for share repurchase,
was invested during the first quarter of 1993; greater translation
losses primarily from Latin American countries; and higher dividends
associated with preferred interests in consolidated subsidiaries
impacted this category.
The effective income tax rate was 35.3% for the first six months
of 1994, compared to 35.4% for the year 1993 and 34.4% for the first
six months of 1993. The changes were primarily as a result of U.S. tax
legislation enacted in the third quarter of 1993.
U.S. OPERATING RESULTS
U.S. sales grew 6 and 5% for the six months and quarter due to
expansion and higher sales at existing restaurants. Sales were
positively driven by the emphasis on value and customer satisfaction
in the form of Extra Value Meals, Happy Meals and the three-tier value
program; as well as the NBA cup promotion highlighting large
sandwiches and the Flintstones movie tie-in featuring the McRib Grand
Poobah Meal and a set of four Bedrock mugs. U.S. revenues rose 6% for
both periods.
U.S. operating income increased 7 and 8% for the six months and
quarter, as higher combined operating margins and higher other
operating income were partially offset by higher general,
administrative and selling expenses. The improvement in U.S. Company-
operated margins was noteworthy, reaching 20.6% of sales in the second
quarter of 1994 compared to 19.0% one year ago. For the six months,
margins were 19.3% of sales in 1994 compared to 17.9% in 1993.
OPERATING RESULTS OUTSIDE OF THE U.S.
Sales outside of the U.S. rose 11% for the six months and 9% for the
quarter due to expansion. If exchange rates had remained at 1993
levels, the increases would have been 12 and 10% for the six months
and quarter. For the six months, many markets delivered excellent
sales on a local currency basis: Argentina, Australia, Austria,
Brazil, Canada, Denmark, England, Finland, Germany, Hungary, Ireland,
Italy, Malaysia, Netherlands, New Zealand, Norway, Panama,
Philippines, Puerto Rico, Scotland, Singapore, South Korea, Spain,
Sweden, Switzerland, Taiwan, Thailand and Wales.
<PAGE> 10
Pacific sales were strong with the exception of our joint venture
in Japan which continues to be affected by a weak economy. Although
many European economies showed weakness, McDonald's markets generally
performed well because of an emphasis on value. Latin American
economies have been weak, but our business there has been improving.
Business in Canada continued to improve, despite a weak economy.
Revenues outside of the U.S. increased 11% for the six months and
quarter, constrained by weaker foreign currencies especially in
Canada, Germany and France. If exchange rates had remained at 1993
levels, the increases would have been 14% for both periods.
Operating income outside of the U.S. grew 16% for the six months
and 12% for the quarter, reflecting expansion, higher combined
operating margins and higher other operating income, partially offset
by higher general, administrative and selling expenses and weaker
foreign currencies. If exchange rates had remained at 1993 levels, the
increases would have been 18 and 15% for the six months and quarter.
IMPACT OF FOREIGN CURRENCIES ON REPORTED RESULTS
Local currency results were strong. However, weaker foreign currencies
continued to negatively impact consolidated operating results
throughout 1994. The Canadian Dollar, the Deutsche Mark and the French
Franc were primarily responsible for this impact. Although the impacts
of the Japanese Yen and Australian Dollar were positive, the benefit
was more significant to sales than operating income since our
operations in Japan are managed through a joint venture and hence, not
consolidated. If exchange rates had remained at 1993 levels, reported
results would have been as follows:
-------------------------------------------------------------
Six Months Ended June 30, 1994
(Dollars in millions) Reported Adjusted
-------------------------------------------------------------
Systemwide sales $12,079.4 8% $12,116.1 8%
Operating income 1,027.5 11 1,038.4 12
Net income 565.7 12 574.6 13
-------------------------------------------------------------
Second Quarter Ended June 30, 1994
-------------------------------------------------------------
Systemwide sales $6,370.2 7% $6,397.5 7%
Operating income 568.4 10 574.5 11
Net income 322.3 12 326.3 13
-------------------------------------------------------------
While changing foreign currencies impact reported results,
McDonald's lessens short-term cash exposures by primarily purchasing
goods and services in local currencies, financing in local currencies
and hedging foreign-denominated cash flows.
FINANCIAL POSITION
Cash provided by operations for the six months increased 13% in 1994.
Together with other sources of cash such as borrowings, cash provided
by operations was used primarily for capital expenditures, debt
repayments, share repurchase and dividends. U.S. capital expenditures
increased 43% and capital expenditures outside of the U.S. increased
20%.
<PAGE> 11
In January, the Company announced its plan to purchase up to $1
billion of common stock within the next three years. The Company
purchased 6.9 million shares of common stock for $203.0 million during
the first six months.
<TABLE>
<CAPTION>
SIX MONTHS AND SECOND QUARTER HIGHLIGHTS
---------------------------------------------------------------------------
(Dollars in millions, except Six Months Ended Quarters Ended
per common share data) June 30 June 30
1994 1993 1994 1993
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Systemwide sales $12,079.4 $11,194.0 $6,370.2 $5,958.9
---------------------------------------------------------------------------
U.S. sales $ 7,166.7 $ 6,783.9 $3,820.3 $3,625.5
Operated by franchisees 5,749.5 5,471.5 3,064.6 2,925.9
Operated by the Company 1,229.4 1,160.4 654.1 617.4
Operated by affiliates 187.8 152.0 101.6 82.2
---------------------------------------------------------------------------
Sales outside of the U.S. $ 4,912.7 $ 4,410.1 $2,549.9 $2,333.4
Operated by franchisees 2,332.0 2,030.9 1,223.9 1,076.3
Operated by the Company 1,424.6 1,300.5 755.2 690.2
Operated by affiliates 1,156.1 1,078.7 570.8 566.9
---------------------------------------------------------------------------
Total revenues $ 3,825.3 $ 3,531.9 $2,029.3 $1,877.8
U.S. 1,993.3 1,884.6 1,060.3 1,003.6
Outside of the U.S. 1,832.0 1,647.3 969.0 874.2
---------------------------------------------------------------------------
Operating income $ 1,027.5 $ 929.2 $ 568.4 $ 517.8
U.S. 553.1 518.5 313.3 290.7
Outside of the U.S. 474.4 410.7 255.1 227.1
---------------------------------------------------------------------------
Income before provision for
income taxes $ 873.9 $ 773.0 $ 496.5 $ 439.7
Net income 565.7 507.1 322.3 288.8
Net income per common share* .77 .67 .44 .39
---------------------------------------------------------------------------
Cash provided by operations $ 769.1 $ 681.8 $ 392.3 $ 390.5
---------------------------------------------------------------------------
At June 30, 1994 1993
Systemwide restaurants 14,358 13,389
---------------------------------------------------------------------------
U.S. restaurants 9,425 9,078
Operated by franchisees 7,694 7,476
Operated by the Company 1,482 1,401
Operated by affiliates 249 201
---------------------------------------------------------------------------
Restaurants outside of the U.S. 4,933 4,311
Operated by franchisees 2,351 1,975
Operated by the Company 1,408 1,175
Operated by affiliates 1,174 1,161
---------------------------------------------------------------------------
*Restated for the 2-for-1 common stock split.
</TABLE>
<PAGE> 12
PART II
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
(a) The Annual Meeting of Shareholders was held on May 27, 1994.
(b) Not Applicable.
(c) Shareholder-proposed environmental principles
---------------------------------------------
(The votes do not reflect the impact of the 2-for-1 stock
split, as the voting was done prior to the split.)
Number of Votes Against 235,547,979
Number of Votes For 21,963,637
Number of Abstentions 17,888,737
Number of Broker Non-Votes 35,730,466
(d) Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) - Exhibits
--------------
(4) Instruments defining the rights of security holders,
including indentures (A):
(a) Debt Securities. Indenture dated as of March 1, 1987
incorporated herein by reference from Exhibit 4(a) of
Form S-3 Registration Statement, SEC file no. 33-12364.
(i) Supplemental Indenture No. 5 incorporated herein
by reference from Exhibit (4) of Form 8-K dated
January 23, 1989.
(ii) 9-3/4% Notes due 1999. Supplemental Indenture
No. 6 incorporated herein by reference from
Exhibit (4) of Form 8-K dated January 23, 1989.
(iii) Medium-Term Notes, Series B, due from nine
months to 30 years from Date of Issue.
Supplemental Indenture No. 12 incorporated
herein by reference from Exhibit (4) of Form 8-K
dated August 18, 1989 and Forms of Medium-Term
Notes, Series B, incorporated herein by
reference from Exhibit (4)(b) of Form 8-K dated
September 14, 1989.
(iv) 9-3/8% Notes due 1997. Form of Supplemental
Indenture No. 14 incorporated herein by
reference from Exhibit (4) of Form 10-K for the
year ended December 31, 1989.
<PAGE> 13
(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.
(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.
(i) Amendment No. 1 to Rights Agreement incorporated
herein by reference from Exhibit 1 of Form 8-K
dated May 25, 1989.
<PAGE> 14
(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, incorporated herein by reference from
Exhibit (10)(c) of Form 10-K for the year ended
December 31, 1993.
(iii) Amendment No. 1 to McDonald's Supplemental
Employee Benefit Equalization Plan, incorporated
herein by reference from Exhibit (10)(c) of Form
10-K for the year ended December 31, 1993.
(iv) Amendment No. 2 to McDonald's Supplemental
Employee Equalization Plan, incorporated herein by
reference from Exhibit (10)(c) of Form 10-K for
the year ended December 31, 1993.
<PAGE> 15
(v) Amendment No. 5 to the Profit Sharing Program, as
amended, incorporated herein by reference from
Exhibit (10)(c) of Form 10-K for the year ended
December 31, 1993.
(vi) Amendment No. 6 to the Profit Sharing Program, as
amended, incorporated herein by reference from
Exhibit (10)(c) of Form 10-K for the year ended
December 31, 1993.
(d) 1975 Stock Ownership Option Plan, incorporated herein
by reference from Exhibit (10)(d) of Form 10-K for the
year ended December 31, 1992*.
(e) Stock Sharing Plan, incorporated herein by reference
from Exhibit (10)(e) of Form 10-K for the year ended
December 31, 1992*.
(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.
--------------------
* 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 August 9, 1994.
Financial Statements
Date of Report Item Number required to be filed
-------------- ----------- --------------------
5/27/94 Item 5 & 7 No
7/21/94 Item 5 & 7 No
<PAGE> 16
Signature
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
McDONALD'S CORPORATION
(Registrant)
By /s/ Jack M. Greenberg
-----------------
(Signature)
Jack M. Greenberg
Vice Chairman,
Chief Financial Officer
August 9, 1994
----------------
(Date)
<PAGE> 17
EXHIBIT INDEX
The following Exhibits are filed as part of Form 10-Q for the quarter
ended June 30, 1994.
Exhibit
Number Description of Document
------- -----------------------
11 Statement re: Computation of Per Share Earnings
12 Statement re: Computation of Ratios
<TABLE> Exhibit 11
McDONALD'S CORPORATION
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Dollars and shares in millions, except per common share data)
<CAPTION> Year Ended Quarters Ended
June 30, June 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $565.7 $507.1 $322.3 $288.8
Preferred stock dividends (net of tax) (23.7) (23.7) (11.8) (11.9)
------- ------- ------- -------
Net income available after preferred stock dividends (A) 542.0 483.4 310.5 276.9
Common stock dividends on assumed conversion of preferred stock 0.7 0.6 0.4 0.3
------- ------- ------- -------
Net income available to common shareholders $542.7 $484.0 $310.9 $277.2
======= ======= ======= =======
Weighted average number of common shares outstanding during the period (A) 706.1 717.5 704.7 712.0
Additional shares related to potentially dilutive securities 21.4 20.2 21.2 19.8
------- ------- ------- -------
Adjusted weighted average common shares 727.5 737.7 725.9 731.8
======= ======= ======= =======
Fully diluted net income per common share $ 0.75 $ 0.66 $ 0.43 $ 0.38
------- ------- ------- -------
---------------------
NOTES:
(A) Refer to Condensed consolidated statement of income on page 4 and to Financial comments -
Net income per common share on page 6 of this report.
</TABLE>
<TABLE> Exhibit 12
McDONALD'S CORPORATION
STATEMENT RE: COMPUTATION OF RATIOS
(Dollars in Millions)
<CAPTION> Six Months
Ended June 30, Years Ended December 31,
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
- Income before provision for income taxes $874.0 $773.0 $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 2.9 4.1 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 10.2 11.4 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* 38.6 35.0 71.6 70.1 67.9 59.0 51.8
- Interest expense, amortization of debt
discount and issuance costs, and
depreciation of capitalized interest* 164.1 182.1 358.0 413.8 433.9 411.9 332.3
---------------------------------------------------------------------------
$1,089.8 $1,005.6 $2,146.4 $1,966.7 $1,840.4 $1,746.6 $1,571.9
===========================================================================
FIXED CHARGES
- Portion of rent charges (after reduction
for rental income from subleased
properties) considered to be representative
of interest factors* $38.6 $35.0 $71.6 $70.1 $67.9 $59.0 $51.8
- Interest expense and amortization of debt
discount and issuance costs* 162.7 177.5 349.3 405.4 425.7 403.4 324.8
- Capitalized interest* 9.1 6.9 20.7 20.5 28.5 38.9 31.8
---------------------------------------------------------------------------
$210.4 $219.4 $441.6 $496.0 $522.1 $501.3 $408.4
===========================================================================
RATIO OF EARNINGS TO FIXED CHARGES 5.18 4.58 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>
