<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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
--- ---
696,278,630
---------------------------------
(Number of shares of common stock
outstanding as of September 30, 1995)<PAGE>
<PAGE> 2
McDONALD'S CORPORATION
----------------------
INDEX
-----
Page Reference
Part I. Financial Information
Item 1 - Financial Statements
Condensed consolidated balance sheet,
September 30, 1995 (unaudited) and
December 31, 1994 3
Condensed consolidated statement of
income (unaudited), nine months and
third quarters ended September 30, 1995
and 1994 4
Condensed consolidated statement of
cash flows (unaudited), nine months and
third quarters ended September 30, 1995
and 1994 5
Financial comments (unaudited) 6
Item 2 - Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 15
(a)Exhibits
The exhibits listed in the
accompanying Exhibit Index are filed
as part of this report 15
(b)Reports on Form 8-K 19
Signature 20<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
-----------------------------
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
(unaudited)
Dollars in millions September 30, 1995 December 31, 1994
---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 317.6 $ 179.9
Accounts receivable 356.2 348.1
Notes receivable 31.6 31.2
Inventories, at cost, not in excess
of market 50.6 50.5
Prepaid expenses and other current
assets 157.3 131.0
---------------------------------------------------------------------------
TOTAL CURRENT ASSETS 913.3 740.7
---------------------------------------------------------------------------
OTHER ASSETS AND DEFERRED CHARGES 1,100.4 1,039.7
---------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment, at cost 16,601.3 15,184.6
Accumulated depreciation and
amortization (4,241.6) (3,856.2)
---------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 12,359.7 11,328.4
---------------------------------------------------------------------------
INTANGIBLE ASSETS-NET 528.3 483.1
---------------------------------------------------------------------------
TOTAL ASSETS $14,901.7 $13,591.9
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 706.1 $ 1,046.9
Accounts payable 426.4 509.4
Income taxes 106.9 25.0
Accrued interest 108.2 107.7
Other accrued liabilities 454.8 394.0
Current maturities of long-term debt 135.3 368.3
---------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,937.7 2,451.3
---------------------------------------------------------------------------
LONG-TERM DEBT 3,978.7 2,935.4
OTHER LONG-TERM LIABILITIES AND
MINORITY INTERESTS 665.0 422.8
DEFERRED INCOME TAXES 787.0 840.8
---------------------------------------------------------------------------
TOTAL LIABILITIES 7,368.4 6,650.3
---------------------------------------------------------------------------<PAGE>
COMMON EQUITY PUT OPTIONS 19.0 56.2
---------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
authorized - 165.0 million shares;
issued - 3.5 and 11.2 million 411.1 674.2
Common stock, no par value;
authorized - 1.25 billion shares;
issued - 830.3 million 92.3 92.3
Additional paid-in capital 355.7 286.0
Guarantee of ESOP notes (233.5) (234.4)
Retained earnings 9,519.6 8,625.9
Foreign currency translation
adjustment (68.7) (114.9)
Common stock in treasury, at cost;
134.0 and 136.6 million shares (2,562.2) (2,443.7)
---------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 7,514.3 6,885.4
---------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $14,901.7 $13,591.9
===========================================================================
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 4
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
Dollars in millions, except Nine Months Ended Quarters Ended
per common share data September 30 September 30
1995 1994 1995 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales by Company-operated
restaurants $5,051.3 $4,205.8 $1,811.9 $1,551.8
Revenues from franchised
restaurants 2,157.7 1,844.9 768.2 673.6
------------------------------------------------------------------------------
TOTAL REVENUES 7,209.0 6,050.7 2,580.1 2,225.4
------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 4,070.9 3,377.3 1,448.0 1,231.3
Franchised restaurants-
occupancy expenses 377.7 317.7 131.7 111.7
General, administrative and
selling expenses 894.9 773.6 314.1 277.1
Other operating (Income)
expense-net (89.7) (83.3) (35.8) (32.6)
------------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 5,253.8 4,385.3 1,858.0 1,587.5
------------------------------------------------------------------------------
OPERATING INCOME 1,955.2 1,665.4 722.1 637.9
------------------------------------------------------------------------------
Interest expense 252.5 225.6 86.1 80.2
Nonoperating income
(expense)-net (73.2) (24.8) (26.5) (16.6)
------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,629.5 1,415.0 609.5 541.1
------------------------------------------------------------------------------
Provision for income taxes 569.0 499.5 209.4 191.3
------------------------------------------------------------------------------
NET INCOME $1,060.5 $915.5 $400.1 $349.8
==============================================================================
NET INCOME PER COMMON SHARE $ 1.46 $ 1.25 $ .56 $ .48
------------------------------------------------------------------------------
DIVIDENDS PER COMMON SHARE $ .1950 $.1738 $.0675 $.0600
------------------------------------------------------------------------------
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 5
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Ended Quarters Ended
September 30 September 30
Dollars in millions 1995 1994 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $1,060.5 $915.5 $400.1 $349.8
Adjustments to reconcile to cash
provided by operations
Depreciation and amortization 521.8 454.2 175.9 157.7
Changes in operating working
capital items 72.3 (23.6) 153.0 45.8
Other (34.4) (30.3) (51.1) (6.5)
-------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS 1,620.2 1,315.8 677.9 546.8
-------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment expenditures (1,380.7) (1,022.6) (587.8) (401.9)
Purchases and sales of restaurant
businesses and sales of other property 72.5 63.9 52.3 25.9
Other (120.2) (42.5) (35.7) (39.5)
-------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (1,428.4) (1,001.2) (571.2) (415.5)
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Notes payable and long-term
financing issuances and repayments 350.3 161.3 123.5 113.0
Treasury stock purchases (284.1) (351.5) (195.0) (163.3)
Common and preferred stock dividends (170.6) (161.0) (56.2) (54.8)
Other 50.3 31.3 19.6 6.9
-------------------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (54.1) (319.9) (108.1) (98.2)
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS INCREASE 137.7 (5.3) (1.4) 33.1
(DECREASE)
-------------------------------------------------------------------------------
Cash and equivalents at beginning of 179.9 185.8 319.0 147.4
period
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF PERIOD $317.6 $180.5 $317.6 $180.5
===============================================================================
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 6
FINANCIAL COMMENTS (UNAUDITED)
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements in
the Company's 1994 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.
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 $31.8 and $35.5 million
for the first nine months of 1995 and 1994, respectively, and $8.0 and
$11.8 million for the third quarters of 1995 and 1994, respectively.
In addition, net income available to common shareholders for the nine
month period of 1995 was reduced by $3.9 million for the one-time
effect of the Company's offer to exchange its Series E 7.72%
Cumulative Preferred Stock for subordinated debt securities completed
on June 30, 1995, and by an additional $.4 million for the effect of
the Company's repurchase of additional Series E preferred stock in the
third quarter. Adjusted net income was divided by the weighted average
shares of common stock outstanding: 699.6 and 704.1 million for the
nine months ended September 30, 1995 and 1994, respectively, and 698.4
and 699.9 million for the third quarters of 1995 and 1994,
respectively. The effect of potentially dilutive securities was not
material.
COMMON EQUITY PUT OPTIONS
During November and December 1994, the Company sold 2.0 million common
equity put options which expired unexercised in the first quarter of
1995. During May and June 1995, the Company sold 1.5 million common
equity put options which expired unexercised in August and September.
During August 1995, the Company sold .5 million common equity put
options of which .4 million were exercised and .1 million expired
unexercised in October 1995. The total exercise prices of $56.2 and
$19.0 million at December 31, 1994, and September 30, 1995,
respectively, were classified in common equity put options, and the
related offsets were recorded in common stock in treasury, net of
premiums received.<PAGE>
<PAGE> 7
PREFERRED STOCK
On June 26, 1995, the Company gave notice of its plan to redeem
3,115,029 shares of Series B ESOP Convertible Preferred Stock and
4,464,055 shares of Series C ESOP Convertible Preferred Stock on
August 14, 1995. Prior to the redemption, each Series B and Series C
ESOP Convertible Preferred Share was converted into .7692 and .8 share
of common stock, respectively, issued from common stock in treasury.
LINE OF CREDIT AGREEMENT
Effective April 19, 1995, the Company cancelled its existing $700.0
million line of credit agreement and entered into a new $675.0 million
five-year revolving credit agreement with various banks. Accordingly,
$675.0 million of notes maturing within one year have been
reclassified as long-term debt. In June 1995, the Company entered into
an additional $25.0 million line of credit agreement with various
banks for a renewable term of 364 days. Both agreements remained
unused at September 30, 1995, and provide for fees of .07% per annum
on the total commitment.<PAGE>
<PAGE> 8
Item 2. Management's Discussion And Analysis Of Financial Condition
--------------------------------------------------------------------
And Results Of Operations
-------------------------
<TABLE>
INCREASES (DECREASES) IN OPERATING RESULTS OVER 1994
<CAPTION>
Dollars in millions, except Nine Months Third Quarter
per common share data Ended September 30 Ended September 30
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SYSTEMWIDE SALES $3,156.1 17% $922.6 13%
-------------------------------------------------------------------------
REVENUES
Sales by Company-operated
restaurants $ 845.5 20% $260.1 17%
Revenues from franchised
restaurants 312.8 17 94.6 14
-------------------------------------------------------------------------
TOTAL REVENUES 1,158.3 19 354.7 16
-------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 693.6 21 216.7 18
Franchised restaurants-
occupancy costs 60.0 19 20.0 18
General, administrative
and selling expenses 121.3 16 37.0 13
Other operating (income)
expense-net (6.4) 8 (3.2) 10
-------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 868.5 20 270.5 17
-------------------------------------------------------------------------
OPERATING INCOME 289.8 17 84.2 13
-------------------------------------------------------------------------
Interest expense 26.9 12 5.9 7
Nonoperating income
(expense)-net (48.4) N/M (9.9) 60
-------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 214.5 15 68.4 13
-------------------------------------------------------------------------
Provision for income taxes 69.5 14 18.1 9
-------------------------------------------------------------------------
NET INCOME $145.0 16% $50.3 14%
=========================================================================
NET INCOME PER COMMON SHARE $ .21 17% $ .08 17%
-------------------------------------------------------------------------
NM - Not Meaningful
/TABLE
<PAGE>
<PAGE> 9
CONSOLIDATED OPERATING RESULTS
Net income and net income per common share increased 16 and 17% for
the nine months, respectively; and 14 and 17% for the quarter,
respectively. As of September 30, 1995, the Company had repurchased
about $800.0 million of its common stock in connection with a three-
year, $1.0 billion program announced in January 1994.
Systemwide sales represent sales by Company-operated, franchised and
affiliated restaurants. The increases were due to expansion and higher
comparable sales, aided by stronger foreign currencies.
----------------------------------------------------------------------
SYSTEMWIDE RESTAURANTS Nine Months Quarters
Ended Ended
September 30 September 30
1995 1994 1995 1994
----------------------------------------------------------------------
Traditional restaurants
U.S. 326 280 142 138
Outside of the U.S. 568 392 250 169
----------------------------------------------------------------------
Total traditional restaurant 894 672 392 307
additions
----------------------------------------------------------------------
Satellite restaurants
U.S. 389 242 150 122
Outside of the U.S. 170 141 77 78
----------------------------------------------------------------------
Total satellite restaurant 559 383 227 200
additions
----------------------------------------------------------------------
Systemwide restaurant additions 1,453 1,055 619 507
----------------------------------------------------------------------
At September 30
----------------------------------------------------------------------
Traditional restaurants under
construction
U.S. 203 170
Outside of the U.S. 313 279
----------------------------------------------------------------------
Total traditional restaurants 516 449
----------------------------------------------------------------------
Total revenues consist of sales by Company-operated restaurants, and
fees from restaurants operated by franchisees and affiliates. These
fees are based upon a percent of sales with specified minimum
payments. The increases reflected strong worldwide operating results.
Franchised margin dollars comprised about two-thirds of the combined
operating margins, the same as in the prior year. Franchised margins
as a percent of revenues declined slightly for both periods,
reflecting a higher proportion of leased sites resulting from
accelerated expansion. Company-operated margins as a percent of sales
declined for both periods; as a percent of sales, food and paper and
occupancy and other operating costs increased, while payroll costs
declined slightly.<PAGE>
<PAGE> 10
--------------------------------------------------------------------------
CONSOLIDATED OPERATING MARGINS Nine Months Ended Quarters Ended
September 30 September 30
1995 1994 1995 1994
--------------------------------------------------------------------------
In millions of dollars
Franchised $1,780.0 $1,527.2 $636.5 $561.9
Company-operated 980.4 828.5 363.9 320.5
--------------------------------------------------------------------------
As a percent of sales/revenues
Franchised 82.5 82.8 82.9 83.4
Company-operated 19.4 19.7 20.1 20.7
--------------------------------------------------------------------------
The increases in general, administrative and selling expenses were
primarily due to strategic global spending to support the convenience
and value strategies and stronger foreign currencies.
Other operating transactions relate to franchising and the
foodservice business, the details of which are shown below. The
increases occurred because of greater income from affiliates,
principally Japan, offset by higher provisions for property
dispositions included in the other category and lower gains on sales
of restaurant businesses.
------------------------------------------------------------------------
OTHER OPERATING (INCOME) Nine Months Ended Quarters Ended
EXPENSE-NET September 30 September 30
In millions of dollars 1995 1994 1995 1994
------------------------------------------------------------------------
Gains on sales of restaurant
businesses $(45.0) $(49.4) $(16.6) $(19.0)
Equity in earnings of
unconsolidated affiliates (75.9) (41.0) (28.2) (22.7)
Other 31.2 7.1 9.0 9.1
------------------------------------------------------------------------
Other operating (income)
expense-net $(89.7) $(83.3) $(35.8) $(32.6)
========================================================================
The increases in consolidated operating income primarily reflected
higher combined operating margin dollars and stronger foreign
currencies, partially offset by higher general, administrative and
selling expenses.
The increases in interest expense were due to higher debt levels and
stronger foreign currencies, partially offset by lower average
interest rates.
Nonoperating income (expense) was impacted by higher losses on
investments and higher charges associated with minority interests.
The effective income tax rate was 34.9 and 35.3% for the first nine
months of 1995 and 1994, respectively, compared to 35.1% for the year
1994.<PAGE>
<PAGE> 11
U.S. OPERATING RESULTS
Expansion and higher comparable sales were responsible for driving
U.S. sales. Positive comparable sales were achieved for the nine
months of 1995 and for both comparable periods of 1994 through an
emphasis on value and customer satisfaction in the form of Extra
Value Meals, Happy Meals and the three-tier value program. Ongoing
programs-Operation Mac Attack and Tastes of the Month-and promotions
such as Monopoly in May contributed to higher sales in 1995.
----------------------------------------------------------------------
U.S. OPERATING RESULTS Nine Months Ended Quarters Ended
September 30 September 30
1995 1994 1995 1994
----------------------------------------------------------------------
Percent increase
Sales 7 5 5 5
Revenues 8 6 6 6
Operating income 3 6 2 3
----------------------------------------------------------------------
As a percent of sales/revenues
Company-operated margins 17.8 19.3 18.3 19.4
Franchised margins 82.7 83.2 82.6 83.5
----------------------------------------------------------------------
The increases in U.S. operating income were driven by higher
franchised margin dollars, partially offset by higher general,
administrative and selling expenses and a slight reduction in
Company-operated margin dollars. The declines in Company-operated
margins primarily resulted from higher payroll costs due to higher
average hourly wages, and increased staffing levels designed to
improve customer satisfaction. Higher franchised margin dollars were
the result of expansion and for the nine months, improved comparable
sales.
OPERATING RESULTS OUTSIDE OF THE U.S.
Expansion, stronger foreign currencies and higher comparable sales
were responsible for driving sales outside of the U.S. Comparable
sales on a local currency basis were positive in all comparable
periods of 1995 and 1994.
----------------------------------------------------------------------
OPERATING RESULTS Nine Months Ended Quarters Ended
OUTSIDE OF THE U.S. September 30 September 30
1995 1994 1995 1994
----------------------------------------------------------------------
Percent increase
Sales 30 15 24 20
Revenues 31 16 25 25
Operating income 34 19 25 25
----------------------------------------------------------------------
As a percent of sales/revenues
Company-operated margins 20.5 20.0 21.2 21.6
Franchised margins 82.1 82.1 83.2 83.2
----------------------------------------------------------------------<PAGE>
<PAGE> 12
All geographic segments reported excellent operating results, and
results for the following markets were noteworthy: Canada; Australia,
Hong Kong, Taiwan, Japan and Philippines in Asia/Pacific; France,
Germany, England and Spain in Europe; and Brazil in Latin America.
Transactions, sales and profits have improved notably in France,
England, Germany, Japan, Hong Kong and Brazil in 1995. Results in
Mexico continued to be impacted by the economy and currency
devaluation; however, we continue to believe this market offers long-
term potential.
The increases in operating income outside of the U.S. resulted from
expansion, higher comparable sales, higher combined operating margins
and stronger foreign currencies, partially offset by higher general,
administrative and selling expenses.
The improvement in Company-operated margins as a percent of sales
for the nine months reflected higher food costs which were more than
offset by a reduction in payroll and other costs; in addition, Brazil
delivered better operating performance. The decline in this margin
for the quarter was due to Brazil's improved performance beginning in
the 1994 third quarter. The increases in combined operating margin
dollars occurred because of better sales and stronger foreign
currencies.
IMPACT OF FOREIGN CURRENCIES ON REPORTED RESULTS
The Deutsche Mark, French Franc, British Pound Sterling and Japanese
Yen represented the foreign currencies which significantly
contributed to the impact on reported results for both periods in
1995. If exchange rates had remained at 1994 levels, reported results
would have been as follows:
---------------------------------------------------------------
FOREIGN CURRENCY IMPACT Nine Months Ended September 30, 1995
Dollars in millions Reported Adjusted
---------------------------------------------------------------
Systemwide sales $22,179.5 17% $21,412.2 13%
Operating income 1,955.2 17 1,878.6 13
Net income 1,060.5 16 1,026.1 12
---------------------------------------------------------------
Quarter Ended September 30, 1995
Reported Adjusted
---------------------------------------------------------------
Systemwide sales $7,866.6 13% $7,691.8 11%
Operating income 722.1 13 702.8 10
Net income 400.1 14 390.5 12
---------------------------------------------------------------
While changing foreign currencies impact reported results,
McDonald's lessens short-term cash exposures by primarily purchasing
goods and services in local currencies, financing in local currencies
and hedging foreign-denominated cash flows.
FINANCIAL POSITION
Cash provided by operations increased 23% for the nine months.
Together with other sources of cash such as borrowings, cash provided
by operations was used primarily for capital expenditures, debt
repayments, share repurchases and dividends. In connection with
accelerated expansion, U.S. capital expenditures increased 26% and
capital expenditures outside of the U.S. increased 43% in the first
nine months.<PAGE>
<PAGE> 13
<TABLE>
NINE MONTHS AND THIRD QUARTER HIGHLIGHTS
<CAPTION>
OPERATING RESULTS
---------------------------------------------------------------------------
In millions of dollars, Nine Months Ended Quarters Ended
except per common share data September 30 September 30
1995 1994 1995 1994
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Systemwide sales $22,179.5 $19,023.4 $7,866.6 $6,944.0
---------------------------------------------------------------------------
U.S. sales 11,854.2 11,087.5 4,103.3 3,920.8
Operated by franchisees 9,313.1 8,894.0 3,219.5 3,144.5
Operated by the Company 2,034.9 1,894.6 701.3 665.2
Operated by affiliates 506.2 298.9 182.5 111.1
---------------------------------------------------------------------------
Sales outside of the U.S. 10,325.3 7,935.9 3,763.3 3,023.2
Operated by franchisees 4,907.7 3,705.4 1,795.9 1,373.5
Operated by the Company 3,016.4 2,311.2 1,110.6 886.6
Operated by affiliates 2,401.2 1,919.3 856.8 763.1
---------------------------------------------------------------------------
Total revenues 7,209.0 6,050.7 2,580.1 2,225.4
U.S. 3,328.0 3,081.1 1,153.5 1,087.8
Outside of the U.S. 3,881.0 2,969.6 1,426.6 1,137.6
---------------------------------------------------------------------------
Operating income* 1,955.2 1,665.4 722.1 637.9
U.S. 951.6 928.0 337.4 332.1
Outside of the U.S. 1,038.2 772.4 396.9 318.4
Corporate (34.6) (35.0) (12.2) (12.6)
---------------------------------------------------------------------------
Income before provision for
income taxes 1,629.5 1,415.0 609.5 541.1
Net income 1,060.5 915.5 400.1 349.8
Net income per common share 1.46 1.25 .56 .48
---------------------------------------------------------------------------
Cash provided by operations 1,620.2 1,315.8 677.9 546.8
---------------------------------------------------------------------------
* 1994 operating income has been restated to reflect a more
meaningful allocation of general, administrative and selling
expenses between the U.S. and international segments and now
includes an additional corporate category which is not allocated.
/TABLE
<PAGE>
<PAGE> 14
<TABLE>
RESTAURANTS
<CAPTION>
-------------------------------------------------------------------------
At September 30, 1995 1994
-------------------------------------------------------------------------
<S> <C> <C>
Systemwide restaurants 17,403 15,218
-------------------------------------------------------------------------
Traditional U.S. restaurants 10,070 9,563
Operated by franchisees 7,989 7,784
Operated by the Company 1,607 1,492
Operated by affiliates 474 287
-------------------------------------------------------------------------
Traditional restaurants
Outside of the U.S. 6,029 5,102
Operated by franchisees 2,878 2,426
Operated by the Company 1,743 1,455
Operated by affiliates 1,408 1,221
-------------------------------------------------------------------------
Satellite restaurants 1,304 553
U.S. 883 356
Outside of the U.S. 421 197
-------------------------------------------------------------------------<PAGE>
<PAGE> 15
PART II
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) - Exhibits
--------------
Exhibit Number Description
-------------- -----------
(3) Restated Certificate of Incorporation and By-Laws, dated as
of November 15, 1994, incorporated herein by reference from
Exhibit 3 of Form 10-K for the year ended December 31, 1994.
(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) 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.
(v) Medium-Term Notes, Series C, due from nine
months (U.S. issue)/184 days (Euro issue) to 30
years from Date of Issue. Amended and restated
Supplemental Indenture No. 16 incorporated
herein by reference from Exhibit (4) of Form
10-Q for the period ended June 30, 1991.<PAGE>
<PAGE> 16
Exhibit Number Description
-------------- -----------
(vi) 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.
(vii) Medium-Term Notes, Series D, due from nine
months (U.S. issue)/184 days (Euro issue) to 60
years from Date of Issue. Supplemental
Indenture No. 18 incorporated herein by
reference from Exhibit 4(b) of Form S-3
Registration Statement, SEC file no. 33-42642
dated September 10, 1991.
(viii)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.
(ix) 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.
(x) 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.
(xi) Medium-Term Notes, Series E, due from nine
months to 60 years from date of issue. Form of
Supplemental Indenture No. 22, incorporated
herein by reference from Exhibit (4) of Form
10-Q for the period ended June 30, 1995.
(xii) 6-5/8% Notes due September 1, 2005 Form of
Supplemental Indenture No. 23 incorporated
herein by reference from Exhibit 4(a) of Form
8-K dated September 5, 1995.
(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>
<PAGE> 17
Exhibit Number Description
-------------- -----------
(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.
(f) 8.35% Subordinated Deferrable Interest Debentures due
2025. Indenture incorporated herein by reference from
Exhibit 99.1 of Schedule 13E-4/A Amendment No. 2 dated
July 14, 1995.
(10) Material Contracts
(a) Directors' Stock Plan, as amended and restated,
incorporated herein by reference from Form 10-K for the
year ended December 31, 1994.*
(b) Profit Sharing Program, as amended and restated,
incorporated herein by reference from Form 10-K for the
year ended December 31, 1994.*
(c) 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 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 Form 10-K for the year
ended December 31, 1993.<PAGE>
<PAGE> 18
Exhibit Number Description
-------------- -----------
(iv) Amendment No. 2 to McDonald's Supplemental
Employee Equalization Plan, incorporated herein
by reference from 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, as amended and restated,
incorporated herein by reference from Form 10-K for the
year ended December 31, 1994.*
(f) 1992 Stock Ownership Incentive Plan, as amended and
restated, incorporated herein by reference from Exhibit
B on pages 29-41 of McDonald's 1995 Proxy Statement and
Notice of 1995 Annual Meeting of Shareholders dated
April 12, 1995*.
(g) McDonald's Corporation Deferred Incentive Plan, as
amended and restated, incorporated herein by reference
from Form 10-K for the year ended December 31, 1994.*
(h) Non-Employee Director Stock Option Plan, incorporated
by reference from Exhibit A on pages 25-28 of
McDonald's 1995 Proxy Statement and Notice of 1995
Annual Meeting of Shareholders dated April 12, 1995.*
(11) Statement re: Computation of per share earnings.
(12) Statement re: Computation of ratios.
(27) Financial Data Schedule
--------------------
* Denotes compensatory plan.
(A) Other instruments defining the rights of holders of long-term
debt of the registrant and all of its subsidiaries for which
consolidated financial statements are required to be filed and
which are not required to be registered with the Securities and
Exchange Commission, are not included herein as the securities
authorized under these instruments, individually, do not exceed
10% of the total assets of the registrant and its subsidiaries on
a consolidated basis. An agreement to furnish a copy of any such
instruments to the Securities and Exchange Commission upon
request has been filed with the Commission.<PAGE>
<PAGE> 19
(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 November 13, 1995.
Financial Statements
Date of Report Item Number required to be filed
-------------- ----------- --------------------
9/5/95 Item 7 No<PAGE>
<PAGE> 20
Signature
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
McDONALD'S CORPORATION
(Registrant)
By /s/ Jack M. Greenberg
-----------------
(Signature)
Jack M. Greenberg
Vice Chairman,
Chief Financial Officer
November 13, 1995
-----------------
(Date)<PAGE>
</TABLE>
<PAGE> 21
<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
September 30 September 30
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $1,060.5 $915.5 $400.1 $349.8
Preferred Stock Dividends (net of tax benefits) (A) (36.1) (35.5) (8.4) (11.8)
--------- ------- ------- -------
Net income available after preferred stock dividends (B) 1,024.4 880.0 391.7 338.0
Common stock dividends on assumed conversion of preferred stock 0.6 1.0 0.1 0.4
--------- ------- ------- -------
Net income available to common shareholders $1,025.0 $881.0 $391.8 $338.4
========= ======= ======= =======
Weighted average number of common shares outstanding during the
period (B) 699.6 704.1 698.4 699.9
Additional shares related to potentially dilutive securities 19.9 19.0 19.2 19.4
--------- ------- ------- -------
Adjusted weighted average common shares 719.5 723.1 717.6 719.3
========= ======= ======= =======
Fully diluted net income per common share $ 1.42 $ 1.22 $ 0.55 $ 0.47
--------- ------- ------- -------
NOTES:
(A) The 1995 periods include $3.9 million for the one-time effect of the Company's exchange of Series E Cumulative
Preferred Stock for subordinated debt securities completed in June, 1995 and by an additional $.4 million for
the effect of the Company's repurchase of additional Series E preferred stock in the third quarter.
(B) Refer to Condensed consolidated statement of income on page 4 and to Financial comments - Net income per
common share on page 6 of this report.
/TABLE
<PAGE>
<PAGE> 22
<TABLE> Exhibit 12
McDONALD'S CORPORATION
STATEMENT RE: COMPUTATION OF RATIOS
Dollars in Millions
<CAPTION> Nine Months
Ended September 30, Years Ended December 31,
------------------- --------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
- Income before provision for income taxes $1,629.5 $1,415.0 $1,886.6 $1,675.7 $1,448.1 $1,299.4 $1,246.3
- Minority interest in operating results of
majority-owned subsidiaries, including
fixed charges related to redeemable
preferred stock, less equity in
undistributed operating results of
less-than-50% owned affiliates 11.2 4.1 6.6 6.9 5.3 5.1 0.6
- Provision for income taxes of 50% owned
affiliates included in consolidated income
before provision for income taxes 49.4 28.9 34.9 34.2 29.4 34.1 28.8
- Portion of rent charges (after reduction
for rental income from subleased
properties) considered to be representative
of interest factors* 82.0 61.2 83.4 71.6 70.1 67.9 59.0
- Interest expense, amortization of debt
discount and issuance costs, and
depreciation of capitalized interest* 286.5 254.0 346.0 358.0 413.8 433.9 411.9
---------------------------------------------------------------------------
$2,058.6 $1,763.2 $2,357.5 $2,146.4 $1,966.7 $1,840.4 $1,746.6
===========================================================================
FIXED CHARGES
- Portion of rent charges (after reduction
for rental income from subleased
properties) considered to be representative
of interest factors* $82.0 $61.2 $83.4 $71.6 $70.1 $67.9 $59.0
- Interest expense, amortization of debt
discount and issuance costs, and fixed
charges related to redeemable preferred
stock* 296.9 252.7 343.9 349.3 405.4 425.7 403.4
- Capitalized interest* 15.8 14.8 21.0 20.7 20.5 28.5 38.9
---------------------------------------------------------------------------
$394.7 $328.7 $448.3 $441.6 $496.0 $522.1 $501.3
===========================================================================
RATIO OF EARNINGS TO FIXED CHARGES 5.22 5.36 5.26 4.86 3.96 3.53 3.48
===========================================================================
*Includes amounts of the Registrant and its majority-owned subsidiaries, and one-half of the amounts of 50%-owned affiliates.
/TABLE
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5 Exhibit 27
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 318
<SECURITIES> 0
<RECEIVABLES> 388
<ALLOWANCES> 0
<INVENTORY> 51
<CURRENT-ASSETS> 913
<PP&E> 16,601
<DEPRECIATION> 4,241
<TOTAL-ASSETS> 14,902
<CURRENT-LIABILITIES> 1,938
<BONDS> 3,979
<COMMON> 92
0
411
<OTHER-SE> 7,011
<TOTAL-LIABILITY-AND-EQUITY> 14,902
<SALES> 5,051
<TOTAL-REVENUES> 7,209
<CGS> 4,071
<TOTAL-COSTS> 4,449
<OTHER-EXPENSES> 805
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 253
<INCOME-PRETAX> 1,630
<INCOME-TAX> 569
<INCOME-CONTINUING> 1,061
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,061
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 0
</TABLE>
