<PAGE>
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 March 31, 1996
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
--- ---
699,250,278
---------------------------------
(Number of shares of common stock
outstanding as of March 31, 1996)
<PAGE>
McDONALD'S CORPORATION
----------------------
INDEX
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Page Reference
Part I. Financial Information
Item 1 - Financial Statements
Condensed consolidated balance sheet,
March 31, 1996 (unaudited) and
December 31, 1995 3
Condensed consolidated statement of
income (unaudited), first quarters ended
March 31, 1996 and 1995 4
Condensed consolidated statement of
cash flows (unaudited), first quarters
ended March 31, 1996 and 1995 5
Financial comments (unaudited) 6
Item 2 - Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 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 18
Signature 19
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
-----------------------------
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
Dollars in millions March 31, 1996 December 31, 1995
---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 329.5 $ 334.8
Accounts receivable 355.1 377.3
Notes receivable 37.5 36.3
Inventories, at cost, not in excess
of market 56.8 58.0
Prepaid expenses and other current
assets 154.2 149.4
---------------------------------------------------------------------------
TOTAL CURRENT ASSETS 933.1 955.8
---------------------------------------------------------------------------
OTHER ASSETS AND DEFERRED CHARGES 1,073.6 1,112.7
---------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment, at cost 17,430.4 17,137.6
Accumulated depreciation and
amortization (4,417.2) (4,326.3)
---------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 13,013.2 12,811.3
---------------------------------------------------------------------------
INTANGIBLE ASSETS-NET 556.0 534.8
---------------------------------------------------------------------------
TOTAL ASSETS $15,575.9 $15,414.6
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 536.8 $ 413.0
Accounts payable 462.4 564.3
Income taxes 87.4 55.4
Other taxes 128.8 127.1
Accrued interest 110.9 117.4
Other accrued liabilities 330.1 352.5
Current maturities of long-term debt 465.2 165.2
---------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,121.6 1,794.9
---------------------------------------------------------------------------
LONG-TERM DEBT 3,935.3 4,257.8
OTHER LONG-TERM LIABILITIES AND
MINORITY INTERESTS 656.2 664.7
DEFERRED INCOME TAXES 868.8 835.9
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
authorized - 165.0 million shares;
issued - 7.2 thousand 358.0 358.0
Common stock, no par value;
authorized - 1.25 billion shares;
issued - 830.3 million 92.3 92.3
Additional paid-in capital 441.5 387.4
Guarantee of ESOP notes (214.0) (214.2)
Retained earnings 10,079.0 9,831.3
Foreign currency translation
adjustment (107.6) (87.1)
---------------------------------------------------------------------------
10,649.2 10,367.7
---------------------------------------------------------------------------
Common stock in treasury, at cost;
131.1 and 130.6 million shares (2,655.2) (2,506.4)
---------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 7,994.0 7,861.3
---------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $15,575.9 $15,414.6
===========================================================================
See accompanying Financial comments.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Dollars in millions, except Quarters Ended
per common share data March 31
1996 1995
------------------------------------------------------------------------------
<S> <C> <C>
REVENUES
Sales by Company-operated
restaurants $1,713.8 $1,511.6
Revenues from franchised
restaurants 712.2 649.7
------------------------------------------------------------------------------
TOTAL REVENUES 2,426.0 2,161.3
------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 1,419.3 1,233.2
Franchised restaurants-
occupancy expenses 137.2 118.2
General, administrative and
selling expenses 311.2 275.4
Other operating (income)
expense-net (4.2) (12.2)
------------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 1,863.5 1,614.6
------------------------------------------------------------------------------
OPERATING INCOME 562.5 546.7
------------------------------------------------------------------------------
Interest expense 84.8 81.0
Nonoperating income
(expense)-net (25.6) (30.6)
------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 452.1 435.1
------------------------------------------------------------------------------
Provision for income taxes 150.5 154.4
------------------------------------------------------------------------------
NET INCOME $301.6 $280.7
==============================================================================
NET INCOME PER COMMON SHARE $ .42 $ .39
------------------------------------------------------------------------------
DIVIDENDS PER COMMON SHARE $.0675 $.0600
------------------------------------------------------------------------------
See accompanying Financial comments.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Quarters Ended
March 31
Dollars in millions 1996 1995
-------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $301.6 $280.7
Adjustments to reconcile to cash
provided by operations
Depreciation and amortization 186.6 168.8
Changes in operating working
capital items (26.0) (72.3)
Other 12.1 28.6
-------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS 474.3 405.8
-------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment expenditures (467.1) (347.7)
Purchases and sales of restaurant
businesses and sales of other property 4.6 8.1
Other (31.7) (8.1)
-------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (494.2) (347.7)
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Notes payable and long-term
financing issuances and repayments 171.9 10.1
Treasury stock purchases (140.0) (6.9)
Common and preferred stock dividends (53.5) (54.6)
Other 36.2 11.6
-------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) FINANCING 14.6 (39.8)
ACTIVITIES
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS INCREASE (5.3) 18.3
(DECREASE)
-------------------------------------------------------------------------------
Cash and equivalents at beginning of 334.8 179.9
period
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF PERIOD $329.5 $198.2
===============================================================================
See accompanying Financial comments.
</TABLE>
<PAGE>
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 1995 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 $6.9 and $11.9 million
for the first quarters of 1996 and 1995, respectively. Adjusted net
income was divided by the weighted average shares of common stock
outstanding: 700.5 and 694.3 million for the first quarters ended
March 31, 1996 and 1995, respectively. Including the effect of
potentially dilutive securities, fully diluted earnings per common
share amounts were $0.41 and $0.38 for the first quarters ended
March 31, 1996 and 1995, respectively.
LINE OF CREDIT AGREEMENT
The Company has a long-term revolving credit agreement for $675.0
million and a $25 million revolving credit agreement expiring
April 19, 2000 with a renewable term of 364 days. Both agreements,
with various banks, remained unused at March 31, 1996 and provide for
fees of .07% per annum on the total commitment.
NEW ACCOUNTING STANDARD - ASSET IMPAIRMENT
The Company adopted Statement of Financial Accounting Standard No.
121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of, in the first quarter 1996. This
statement requires impairment losses be recognized for long-lived
assets, whether these assets are held for disposal or continue to be
used in operations, when indicators of impairment are present and the
fair value of assets are estimated to be less than carrying amounts.
The fair value of assets was based on projected future cash flows.
The adoption of this standard resulted in a $16 million noncash pre-
tax charge in first quarter 1996 to other operating (income) expense,
equivalent to 2 cents per common share, related to restaurant sites in
Mexico.
<PAGE>
Item 2. Management's Discussion And Analysis Of Financial Condition
--------------------------------------------------------------------
And Results Of Operations
-------------------------
<TABLE>
<CAPTION>
INCREASES (DECREASES) IN OPERATING RESULTS OVER 1995
Dollars in millions, except First Quarter
per common share data Ended March 31
-------------------------------------------------------------------------
<S> <C> <C>
SYSTEMWIDE SALES $637.9 10%
-------------------------------------------------------------------------
REVENUES
Sales by Company-operated
restaurants $202.2 13%
Revenues from franchised
restaurants 62.5 10
-------------------------------------------------------------------------
TOTAL REVENUES 264.7 12
-------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 186.1 15
Franchised restaurants-
occupancy costs 19.0 16
General, administrative
and selling expenses 35.8 13
Other operating (income)
expense-net* 8.0 (66)
-------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES* 248.9 15
-------------------------------------------------------------------------
OPERATING INCOME* 15.8 3
-------------------------------------------------------------------------
Interest expense 3.8 5
Nonoperating income
(expense)-net 5.0 (16)
-------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES* 17.0 4
-------------------------------------------------------------------------
Provision for income taxes (3.9) (3)
NET INCOME* $20.9 7%
=========================================================================
NET INCOME PER COMMON SHARE* $ .03 8%
-------------------------------------------------------------------------
* Including the effect of the 1996 noncash charge related to the
adoption of SFAS No. 121.
</TABLE>
<PAGE>
CONSOLIDATED OPERATING RESULTS
Reported net income and net income per common share increased 7 and 8
percent, respectively. Excluding the noncash charge for the adoption
of SFAS No. 121, net income and net income per common share increased
11 and 13 percent, respectively. In the first quarter of 1996, the
Company repurchased about $165 million of its common stock in
connection with a three-year, $2.2 billion program announced in
January, 1996.
Systemwide sales represent sales by Company-operated, franchised
and affiliated restaurants. 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 in sales and
revenues were due to worldwide expansion and positive comparable sales
outside of the U.S.
----------------------------------------------------------------------
SYSTEMWIDE RESTAURANT ADDITIONS Quarters Ended
March 31
1996 1995
----------------------------------------------------------------------
Traditional restaurants
U.S. 62 51
Outside of the U.S. 143 114
----------------------------------------------------------------------
Total traditional restaurant additions 205 165
----------------------------------------------------------------------
Satellite restaurants
U.S. 67 109
Outside of the U.S. 44 29
----------------------------------------------------------------------
Total satellite restaurant additions 111 138
----------------------------------------------------------------------
Systemwide restaurants
U.S. 129 160
Outside of the U.S. 187 143
----------------------------------------------------------------------
Systemwide restaurant additions 316 303
----------------------------------------------------------------------
TRADITIONAL RESTAURANTS UNDER CONSTRUCTION First Quarters
1996 1995
----------------------------------------------------------------------
U.S. 115 99
Outside of the U.S. 272 228
----------------------------------------------------------------------
Total traditional restaurants under construction 387 327
----------------------------------------------------------------------
CONSOLIDATED OPERATING MARGINS First Quarters
1996 1995
----------------------------------------------------------------------
In millions of dollars
Company-operated $294.5 $278.4
Franchised 575.0 531.5
As a percent of sales/revenues
Company-operated 17.2 18.4
Franchised 80.7 81.8
----------------------------------------------------------------------
<PAGE>
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 applicable revenues declined. This reflects a
higher proportion of leased sites which have financing costs embedded
in rent expense, contrasted with owned sites whose financing costs are
reflected in interest expense. The decline in Company-operated
margins as a percent of sales reflected higher food & paper and
occupancy & other operating costs. Payroll costs remained relatively
flat as a percent of sales.
The increase in general, administrative & selling expenses was
primarily due to strategic global spending to support the Convenience,
Value and Execution Strategies.
Other operating transactions relate to franchising and the
foodservice business, the details of which are shown below. The
increase in the other category reflects the $16 million noncash charge
related to the adoption of SFAS No. 121, partially offset by lower
provisions for property dispositions.
------------------------------------------------------------------------
OTHER OPERATING (INCOME) EXPENSE-NET First Quarters
In millions of dollars 1996 1995
------------------------------------------------------------------------
Gains on sales of restaurant
businesses $(9.0) $(11.9)
Equity in earnings of
unconsolidated affiliates (18.5) (19.2)
Other 23.3 18.9
------------------------------------------------------------------------
Other operating (income)
expense--net $(4.2) $(12.2)
========================================================================
The increase in consolidated operating income primarily reflected
higher combined operating margin dollars, partially offset by higher
general, administrative & selling expenses and the $16 million noncash
charge related to the adoption of SFAS No. 121.
The increase in interest expense was due to higher debt levels,
partially offset by lower average interest rates.
Nonoperating income (expense) in the first quarter of 1996
included $22 million of unrealized losses associated with the
Company's investment in Discovery Zone common stock, which reduced the
carrying value of this investment to zero. Similar unrealized losses
totaling $60 million were recorded throughout 1995. The 1996 amount
was also impacted by higher interest income and lower translation
losses.
The effective income tax rate was 33.3 percent in the first
quarter of 1996, compared to 35.5 percent in the first quarter of 1995
and 34.2 percent for the year 1995. The 1996 decrease was primarily
due to lower taxes related to foreign operations. For the year, the
Company expects the effective tax rate to be in the range of 32.5 to
33.5 percent.
<PAGE>
U.S. OPERATING RESULTS
Restaurant expansion was responsible for increasing U.S. sales.
Comparable U.S. sales were negative for the quarter reflecting an
extremely challenging U.S. operating environment, difficult
comparisons and severe weather. National promotional efforts included
discounted price points on selected products. The U.S. business also
continued its emphasis on value and customer satisfaction in the form
of Extra Value Meals, Happy Meals and the three-tier value program.
----------------------------------------------------------------------
U.S. OPERATING RESULTS First Quarters
1996 1995
----------------------------------------------------------------------
Percent increase
Sales 3 8
Revenues 4 9
Operating income (4) 4
----------------------------------------------------------------------
As a percent of sales/revenues
Company-operated margins 15.0 16.3
Franchised margins 80.5 82.4
----------------------------------------------------------------------
The decrease in U.S. operating income reflected lower Company-
operated margin dollars, higher general, administrative & selling
expenses and higher other operating expenses. These items were
partially offset by higher franchised margin dollars resulting from
expansion.
The decline in Company-operated margins as a percent of sales
primarily resulted from higher occupancy & other operating expenses
and higher payroll costs due to higher average hourly wages and
increased staffing levels designed to improve customer satisfaction.
The decline in franchised margins as a percent of revenues was
primarily due to increased rent expense reflecting a higher proportion
of leased sites resulting from accelerated expansion.
OPERATING RESULTS OUTSIDE OF THE U.S.
Expansion and higher comparable sales were responsible for sales
increases outside of the U.S., offset in part by the impact of a
weaker Japanese Yen. Comparable sales on a local currency basis were
positive for the first quarters of 1996 and 1995.
----------------------------------------------------------------------
OPERATING RESULTS OUTSIDE OF THE U.S. First Quarters
1996 1995
----------------------------------------------------------------------
Percent increase
Sales 17 30
Revenues 20 33
Operating income excluding
noncash accounting charge 15 38
----------------------------------------------------------------------
As a percent of sales/revenues
Company-operated margins 18.5 19.9
Franchised margins 81.1 81.0
----------------------------------------------------------------------
<PAGE>
Of the fifteen largest international markets, the following had
strong sales and operating income for the first quarter 1996:
Australia, Hong Kong, and Japan in Asia/Pacific; and Austria,
England, France, Germany, Spain and Sweden in Europe. In Latin
America, Brazil continued to deliver strong comparable sales
performance but government mandated increases in payroll costs
negatively impacted Brazil's operating income. Results in Mexico
continued to be weak due to its adverse economy and currency
devaluation; however, we continue to believe this market offers long-
term potential. Sales and operating income in Canada increased
slightly despite slowing consumer spending and a weak economy.
The increases in operating income outside of the U.S. were driven
by higher combined operating margins resulting from expansion and
higher comparable sales, partially offset by higher general,
administrative & selling expenses. Operating income outside of the
U.S. increased 15 percent excluding the $16 million noncash charge
for the adoption of the accounting standard for asset impairment for
restaurant sites in Mexico.
The decline in Company-operated margins as a percent of sales
reflected higher food & paper and occupancy & other operating costs.
Payroll costs as a percent of sales were relatively flat. Brazil and
Taiwan contributed the most to the decline in Company-operated
margins as a percent of sales due to higher payroll costs in both
markets and higher food & paper costs in Taiwan. While margins
declined, both Brazil and Taiwan had strong comparable sales and
market share increases.
As a percent of sales, franchised margins remained relatively flat
compared to 1995.
IMPACT OF FOREIGN CURRENCIES ON REPORTED RESULTS
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.
The weakening of the Japanese Yen was the primary foreign currency
change which had an impact on 1996 first quarter results. If
exchange rates had remained at 1995 levels, results would have been
as follows:
<PAGE>
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FOREIGN CURRENCY IMPACT
Dollars in millions First Quarter 1996
-------------------------------------------------------------------------
Reported Adjusted Adjustment Reported Adjusted
-------------------------------------------------------------------------
Consolidated
Systemwide sales $7,309.5 $7,362.6 $(53.1) 10% 10%
Operating income* 578.5 579.4 (.9) 6 6
Net income* 312.3 312.4 (.1) 11 11
Outside of the U.S.
Sales $3,586.7 $3,639.8 $(53.1) 17% 19%
Operating income* 330.2 331.1 (.9) 15 15
-------------------------------------------------------------------------
* Excluding noncash accounting charge.
NEW ACCOUNTING STANDARD - ASSET IMPAIRMENT
The Company adopted Statement of Financial Accounting Standard No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of, in the first quarter 1996. This
statement requires impairment losses be recognized for long-lived
assets, whether these assets are held for disposal or continue to be
used in operations, when indicators of impairment are present and the
fair value of assets are estimated to be less than carrying amounts.
The fair value of assets was based on projected future cash flows.
The adoption of this standard resulted in a $16 million noncash pre-
tax charge in first quarter 1996 other operating (income) expense,
equivalent to 2 cents per common share, related to restaurant sites in
Mexico.
<PAGE>
<TABLE>
<CAPTION>
FIRST QUARTER HIGHLIGHTS
OPERATING RESULTS
-------------------------------------------------------------------------
Dollars in millions, except Quarters Ended
per common share data March 31
1996 1995
-------------------------------------------------------------------------
<S> <C> <C>
Systemwide Sales $7,309.5 $6,671.6
-------------------------------------------------------------------------
U.S. sales $3,722.8 $3,604.6
Operated by franchisees 2,884.7 2,836.0
Operated by the Company 640.0 622.3
Operated by affiliates 198.1 146.3
-------------------------------------------------------------------------
Sales outside of the U.S. $3,586.7 $3,067.0
Operated by franchisees 1,686.3 1,450.0
Operated by the Company 1,073.8 889.3
Operated by affiliates 826.6 727.7
-------------------------------------------------------------------------
Total Revenues $2,426.0 $2,161.3
U.S. 1,053.0 1,013.9
Outside of the U.S. 1,373.0 1,147.4
-------------------------------------------------------------------------
Operating Income $ 562.5 $ 546.7
U.S. 259.2 269.4
Outside of the U.S.* 314.2 288.1
Corporate (10.9) (10.8)
-------------------------------------------------------------------------
Income before provision for
income taxes* $ 452.1 $ 435.1
Net income* 301.6 280.7
Net income per common share .42 .39
-------------------------------------------------------------------------
Cash provided by operations $ 474.4 $ 405.8
-------------------------------------------------------------------------
* Including the effect of the 1996 noncash charge related to the
adoption of SFAS No. 121.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESTAURANTS
-------------------------------------------------------------------------
At March 31, 1996 1995
-------------------------------------------------------------------------
<S> <C> <C>
Systemwide restaurants 18,696 16,253
-------------------------------------------------------------------------
Traditional U.S. restaurants 10,403 9,795
Operated by franchisees 8,196 7,813
Operated by the Company 1,641 1,563
Operated by affiliates 566 419
-------------------------------------------------------------------------
Traditional Restaurants outside of the U.S. 6,611 5,575
Operated by franchisees 3,121 2,664
Operated by the Company 1,973 1,580
Operated by affiliates 1,517 1,331
-------------------------------------------------------------------------
Satellite restaurants 1,682 883
U.S. 1,094 603
Outside U.S. 588 280
-------------------------------------------------------------------------
</TABLE>
<PAGE>
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) 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.
(iii) 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.
(iv) Medium-Term Notes, Series C, due from nine
months (U.S. Issue)/184 days (Euro Issue) to 30
years from Date of Issue. Amended and restated
Supplemental Indenture No. 16 incorporated
herein by reference from Exhibit (4) of Form
10-Q for the period ended March 31, 1991.
(v) 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>
Exhibit Number Description
-------------- -----------
(vi) 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.
(vii) 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.
(viii) 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.
(ix) 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.
(x) 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.
(xi) 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.
(xii) 7.05% Debentures due 2025. Form of Supplemental
Indenture No. 24 incorporated herein by
reference from Exhibit (4)(a) of Form 8-K dated
November 13, 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.
<PAGE>
Exhibit Number Description
-------------- -----------
(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.
(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, 1995.*
(c) McDonald's Supplemental Employee Benefit Equalization
Plan, McDonald's Profit Sharing Program Equalization Plan
and McDonald's 1989 Equalization Plan, as amended and
restated, incorporated herein by reference from Form 10-K
for the year ended December 31, 1995.*
(d) 1975 Stock Ownership Option Plan, as amended and
restated.*
<PAGE>
Exhibit Number Description
-------------- -----------
(e) 1992 Stock Ownership Incentive Plan, 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.*
(f) McDonald's Corporation Deferred Incentive Plan,
incorporated herein by reference from Form 10-K for the
year ended December 31, 1994, amendment filed
herewith.*
(g) 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.
(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 May 9, 1996.
Financial Statements
Date of Report Item Number Required to be Filed
-------------- ----------- --------------------
01/25/96 Item 7 No
04/22/96 Item 7 No
<PAGE>
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
May 9, 1996
-----------------
(Date)
<PAGE>
Exhibit 10(d)
McDONALD'S CORPORATION
1975 STOCK OWNERSHIP OPTION PLAN
AS AMENDED AND RESTATED
-----------------------
THE PLAN
--------
McDonald's Corporation (the "Company") hereby amends and restates
the McDonald's Corporation 1975 Stock Ownership Option Plan, effective
March 19, 1996. As so amended and restated, the McDonald's Corporation
1975 Stock Ownership Option Plan is hereinafter called the "Plan". The
terms of options granted prior to the effective date of this amendment
shall not be adversely affected in any way by this amendment.
1. Purpose. The purpose of this Plan is to advance the interest
of the Company by encouraging and enabling the acquisition of a larger
personal financial interest in the Company by those employees upon whose
judgment and efforts the Company is largely dependent for the successful
conduct of its operations. It is anticipated that the acquisition of
such financial interest will stimulate the efforts of such employees on
behalf of the Company, strengthen their desire to continue in the service
of the Company and encourage shareholder and entrepreneurial perspectives
through employee stock ownership. It is also anticipated that the
opportunity to obtain such financial interest will prove attractive to
promising new managerial and executive talent and will assist the Company
in attracting such employees. The options granted hereunder shall not
constitute incentive stock options as such term is defined in Section
422A of the Internal Revenue Code.
2. Scope of the Plan. An aggregate of 60,890,394 of the Company's
authorized but unissued shares of common stock without par value or
shares acquired by purchase as described in the paragraph below or any
combination of shares from both sources are hereby made available, and
shall be reserved for issuance, under the Plan. The aggregate number of
shares available under this Plan shall be subject to adjustment on the
occurrence of any of the events and in the manner set forth in Section 11
hereof. If an option shall expire or terminate for any reason, without
having been exercised in full, the unpurchased shares subject thereto
shall (unless the Plan shall have terminated or unless all or a part of
such shares were issued under the Company's 1978 Incentive Plan) become
available for other options under the Plan.
The Board of Directors (called the "Board") or such person or
persons that the Board shall specifically authorize or direct to act on
its behalf shall also have the authority to purchase from time to time,
in such amounts and at such prices as it, in its discretion, shall deem
advisable or appropriate, shares of the common stock of the Company, to
be held as treasury shares and reserved and used solely for issuance at
the discretion of the Option Committee, as set forth in Section 3 hereof,
upon exercise of options granted under this Plan and in accordance with
the provisions of the preceding paragraph.
<PAGE>
3. Administration. Except as herein expressly reserved by the
Board and not delegated by the Board to the Committee, the Plan shall be
administered by a Committee, to be known as the Option Committee (called
the "Committee"), which will include not less than three Directors of
the Company, who shall be appointed, from time to time, by the Board.
Except as herein expressly reserved by the Board and not delegated by the
Board to the Committee, the Committee shall have full and final
authority, in its discretion, but subject to the express provisions of
the Plan: (a) to determine the purchase price of the common stock
covered by each option, and the individuals to whom, and the time or
times at which, options shall be granted and the number of shares to be
covered by each option; (b) to interpret the Plan; (c) to prescribe,
amend and rescind rules and regulations relating to the Plan; (d) to
determine the terms, provisions, and any restrictions or conditions
(including but not limited to restrictions with respect to stock acquired
upon exercise of the option which may continue beyond the date of the
optionee's termination of employment) of the respective option agreements
(which need not be identical) by which options shall be evidenced and,
with the consent of the optionee, to modify the terms, provisions,
restrictions or conditions of any option agreement; (e) to cancel, with
the consent of the optionee, outstanding options and to grant new options
in substitution therefor; (f) to authorize foreign subsidiaries to adopt
plans as provided in Section 17; (g) to delegate its duties and
responsibilities under the Plan with respect to such foreign subsidiary
plans, except its duties and responsibilities with respect to grants of
options to persons who, under Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Act"), are treated (in the opinion of
counsel for the Company) as officers or directors of the Company, to such
individuals or committees as the Committee in its sole discretion may
approve and (i) the acts thereunder by such individuals or committees
shall be treated hereunder as acts of the Committee and (ii) such
individuals or committees shall report to the Committee regarding the
delegated duties and responsibilities; and (h) to make all other
determinations deemed necessary or advisable for the administration of
the Plan.
4. Eligibility. With the exception of clerical employees and with
the further exception of persons (other than managers) employed in
Company-owned restaurants, options may be granted to (a) any employees of
the Company or its domestic subsidiaries, or (b) any employees, officers
and directors of the Company's foreign subsidiaries. Any entity in which
the Company directly or through intervening subsidiaries owns twenty-five
percent (25%) or more of the total combined voting power or value of all
classes of stock or, in the case of an unincorporated entity, a twenty-
five percent (25%) or more interest in the capital and profits, shall be
treated as a subsidiary. In selecting the individuals to whom options
shall be granted, as well as in determining the number of shares subject
to each option, the Committee shall take into consideration such factors
as it deems relevant in connection with accomplishing the purpose of the
Plan. Subject to the provisions of Section 2 hereof, an individual who
has been granted an option may, if he is otherwise eligible, be granted
additional options if the Committee shall so determine.
5. Option price. The purchase price of the stock covered by each
option shall not be less than the fair market value of such stock on the
date the option is granted (herein called the "Option Date"). For the
purposes hereof the fair market value shall be deemed to be the closing
price of said stock on the New York Stock Exchange Composite Tape on the
Option Date or, if
-2-
<PAGE>
no sales of said stock appear on such Tape on that date, on the next preceding
date on which there were such sales. Such price shall be subject to adjustment
as provided in Section 11 hereof.
6. Terms of employment. No obligation of the Company as to the
length of employment shall be implied by the terms of this Plan or any
option granted hereunder. The Company reserves the same rights to
terminate employment of any employee as existed prior to the date hereof.
7. Non-transferability of options. An option granted hereunder
shall, by its terms, not be transferable other than by will or the laws
of descent and distribution and may be exercised, during his lifetime,
only by the optionee; provided, however, that an optionee may, in a
manner specified by the Committee, designate in writing an individual
beneficiary or beneficiaries to exercise an option granted hereunder
after the optionee's death.
8. Restricted stock. Upon granting an option or a substituted
option or upon accelerating the exercise date of an option pursuant to
Section 16 or, with respect to previously granted outstanding options,
upon consent of the optionee, the Committee may provide that shares
granted upon exercise of the option shall be subject to such restrictions
as it may from time to time deem appropriate. Specifically, but without
limitation, the Committee may provide that shares granted upon exercise
of the option shall be restricted for such period after the date of
exercise as the Committee may determine, and shall be non-transferable
during such period, provided that with respect to options which are
accelerated, the restriction period shall not extend beyond the earliest
date on which the option or portion thereof could have been exercised
prior to acceleration. The restriction shall provide that if the
optionee's employment is terminated for reasons other than death,
permanent disability or any other reason specified by the Committee
during the restriction period, the optionee shall resell the restricted
stock to the Company at the lesser of the option exercise price paid or
the fair market value on the date of termination of employment. Any such
shares shall bear an appropriate legend specifying that such shares are
subject to such restrictions. The Committee shall have authority, in its
discretion, to accelerate the time at which any or all of the
restrictions may lapse prior to the expiration of the restrictions or to
remove any or all of the restrictions. After the expiration of the
restrictions, the Committee shall cause shares free of the restrictions
to be reissued without a legend. Notwithstanding the foregoing, such
restrictions shall not apply to shares issued upon exercise after
termination of employment by reason of death or permanent disability
pursuant to Subsection 9(a) and 9(b) hereof and, with respect to shares
issued subject to such restrictions, such restrictions shall be cancelled
by the Committee upon submission to the Committee of proof that the
termination of the optionee's employment occurred by reason of the
optionee's death, permanent disability (as defined in Section 9) or other
reasons specified by the Committee.
9. Termination of employment. An unexercised option, or any
unexercised installment thereof, shall terminate if the employment of the
optionee by the Company or any of its subsidiaries shall be terminated
for any reason; except that (a) if such employment is so terminated by
death of the optionee, any unexercised portion of the option (whether or
not currently exercisable) at the date of death may be exercised, in
whole or in part, at any time within two years after the date of death,
by the optionee's personal representative or by the person to
-3-
<PAGE>
whom the option is transferred by will or the applicable laws of descent and
distribution, and any such option which by its terms would otherwise expire
after the optionee's death but prior to the end of such two-year period
following the optionee's death, shall be extended so as to permit any
unexercised portion thereof to be exercised at any time within such two-year
period, provided that in no event shall any option be exercised after 12 years
from the Option Date; or (b) if such employment is terminated as a result of
the permanent disability of the optionee, the unexercised portion of the
option (whether or not currently exercisable) at the date of such termination
of employment may be exercised, in whole or in part, at any time within two
years after the date of such termination, and any such option which by its
terms would otherwise expire after the optionee's termination of employment by
reason of permanent disability but prior to the end of the two-year period
following the optionee's termination of employment, shall be extended so as to
permit any unexercised portion thereof to be exercised at any time within such
two-year period, provided that in no event shall any option be exercised after
12 years from the Option Date; (c) if such employment is terminated on account
of retirement after attaining age 60 with at least 20 years of Company service
(excluding any termination to become an owner-operator of a McDonald's
restaurant), any unexercised portion of an option or an installment which is
then exercisable or which becomes exercisable within the year following the
date of retirement may be exercised at any time within three years after such
retirement, provided that in no event shall any option be exercised after 10
years from the Option Date; or (d) if such employment is terminated for any
other reason excluding termination for cause, the unexercised portion of the
option (to the extent exercisable on the date such employment is terminated)
shall be exercisable at any time within 30 days after the date of such
termination, provided that in no event shall any option be exercised after 10
years from the Option Date. Permanent disability shall mean a mental or
physical condition which renders an optionee unable or incompetent to carry
out the job responsibilities he held or tasks to which he was assigned at the
time the disability was incurred.
10. Time of granting options. The Option Date under the Plan shall
be the date on which such option shall be duly granted by or on behalf of
the Company.
11. Adjustments. Notwithstanding any other provision or the Plan,
option agreements entered into hereunder shall contain such provisions as
the Committee shall determine for adjustment of the number and class of
shares covered thereby, or of the option prices, or both, to reflect a
stock dividend, stock split-up, share combination, recapitalization,
merger, consolidation, acquisition of property or shares, separation,
reorganization, liquidation or the like, of or by the Company. In any
such event, the aggregate number of class of shares available under the
Plan, shall be appropriately adjusted.
12. Termination and amendment of the Plan. This Plan shall
terminate on May 4, 2010. The Plan may be terminated at such earlier
time, or be further extended until such time, as the Board may determine.
A termination shall not affect any options then outstanding under the
Plan.
The Board may make modifications of the Plan as it shall deem
advisable, without further approval of the stockholders of the Company,
except as such stockholder approval may be required under (i) Rule 16b-3
(or any successor provision) under the Act or (ii) the listing
-4-
<PAGE>
requirements of any securities exchange registered under the Act on which
are listed any of the Company's equity securities.
13. Liquidation. Upon the complete liquidation of the Company, any
unexercised options theretofore granted under this Plan shall be deemed
cancelled, except as otherwise provided in Section 11 in connection with
a merger, consolidation or reorganization of the Company.
14. Stock purchased for investment. Shares purchased under the
options shall be purchased for investment and without present intention
of resale, unless, in the opinion of counsel for the Company, the shares
may be purchased without investment representation. Where an investment
representation or other restrictive representation or agreement is deemed
necessary, the Committee may require a written representation or
agreement to that effect by the optionee at the time the option is
granted or exercised.
15. Term of options. Except as provided in Subsections 9(a) and
9(b), the term of each option granted hereunder shall be for a period of
no more than 10 years from the Option Date, and shall be subject to
earlier termination as hereinbefore provided.
16. Exercise of options.
(a) Subject to the provisions of Section 9 and Subsections 16(b)
and 16(c), each option granted hereunder shall be exercisable in four equal
biennial installments, commencing on the first anniversary of the date of
grant.
(b) The Board (or if delegated by the Board to the Committee, the
Committee) may specify a different exercise schedule or schedules for all or
any group or groups of employees to whom grants are made hereunder.
(c) The Committee, in its sole discretion, shall have the authority
to accelerate on an individual by individual basis, the time at which options
or any part thereof become exercisable to such earlier date or dates as
determined by the Committee. The Board (or if delegated by the Board to the
Committee, the Committee) shall have the authority to accelerate the time or
times at which all or any part of the options of all or any group of employees
may be exercised.
(d) The Committee, in its sole discretion, shall have the authority
to extend on an individual by individual basis the period of time during which
options or installments or any part thereof which have not been exercised may
be exercised. The Board (or if delegated by the Board to the Committee, the
Committee) shall have the authority to extend the period of time during which
all or any part of the options or installments of all or any group of
employees may be exercised.
(e) An optionee may exercise the option (or a part thereof) in
whole or in part at any time commencing on the date the option (or such part)
becomes exercisable. An option
-5-
<PAGE>
shall be exercised by written notice of intent to exercise the option with
respect to a specific number of option shares. Except as provided in Section
18 hereof, the purchase of any shares as to which an option shall be exercised
shall be paid in full at the time of the purchase. Payment of the option
exercise price shall be made in cash or, with the consent of the Committee, in
whole or in part, in common stock of the Company valued at fair market value.
An optionee shall not, by reason of any option granted hereunder,
have any right of a stockholder of the Company with respect to the shares
covered by his option until such shares have been issued to him. Any of the
provisions of this Section 16 to the contrary notwithstanding, except as
provided in Subsections 9(a) or 9(b), in no event shall any option be
exercised after 10 years from the Option Date.
17. Stock option plans of foreign subsidiaries. The Committee may, in
its sole discretion, authorize any foreign subsidiary to adopt a plan for
granting options to purchase shares of common stock of the Company ("Foreign
Option Plan"). All grants of options under such Foreign Option Plans shall be
treated as grants under the Plan. Such Foreign Option Plans shall have such
terms and provisions as the Committee permits not inconsistent with the
provisions of the Plan and which may be more restrictive than those contained
in the Plan. Options granted under such Foreign Option Plans shall be
governed by the terms of the Plan except to the extent that the provisions of
the Foreign Option Plans are more restrictive than the terms of the Plan in
which cash such terms of the Foreign Option Plans shall control.
18. Loans and guarantees. The Board (or, if delegated by the Board to
the Committee, the Committee) may, in its discretion, allow an optionee to
defer all or any portion of the option exercise price or may cause the Company
to guarantee a loan from a third party to the optionee, in an amount equal to
all or any portion of the option exercise price. Any such payment deferral by
the Company pursuant to this Section 18 shall be for such periods, at such
interest rates and on such other terms and conditions as the Board (or, if
delegated to the Committee, the Committee) may determine. Notwithstanding the
foregoing, an optionee shall not be entitled to defer the payment of the
option exercise price unless the optionee (a) has a binding obligation to pay
the portion of the option exercise price which is deferred and (b) pays at the
time of exercise a minimum amount, with respect to the shares to be granted
upon exercise, equal to the amount determined pursuant to resolution of the
Board to be capital within the meaning of Section 154 of the Delaware General
Corporation Law.
19. Substituted options. In the event the Committee cancels with the
consent of an optionees any option granted under this Plan or any other Stock
Option Plan, and a new option is substituted therefor, the Option Date of the
cancelled option shall be the date used to determine the exercisability of the
new substituted option under Section 16 hereof so that the optionee may
exercise the substituted option in the same percentages and at the same times
as if the optionee has held the substituted option since the Option Date of
the cancelled option. This Section 19 shall be effective with respect to all
options granted on or after October 25, 1976, in substitution of cancelled
options.
-6-
<PAGE>
20. Elective Share Withholding. The Committee (or in its discretion,
the Board) may provide with respect to any option that an optionee may,
subject to Committee approval, elect the withholding by the Company of a
portion of the shares of common stock otherwise issuable to such optionee upon
option exercise in the amount necessary to satisfy (i) his required United
States, state and local withholding tax liability with respect to the exercise
of the option for the year such exercise becomes taxable or (ii) a greater
amount, not to exceed the estimated total amount of United States, state and
local income tax liability with respect to the exercise of the option for the
year such exercise becomes taxable ("Share Withholding"). In order for Share
Withholding to be so exempt, elections by participants to have shares withheld
will be subject to the following restrictions: (1) they must be made prior to
the date the amount of tax to be withheld is determined (the "Tax Date"); (2)
they will be irrevocable; (3) they will be subject to the disapproval of the
Committee; (4) if a participant is an officer or director of the Company
within the meaning of Section 16 of the Act, they may not be made within six
months of the grant of the option (except that this limitation will not apply
in the event death or disability of the participant occurs prior to the
expiration of the six-month period); and (5) if a participant is an officer or
director of the Company within the meaning of Section 16 of the Act, such
elections must be made either six months prior to the Tax Date or in the ten
day "window period" beginning on the third business day following the release
of the Company's quarterly or annual summary statement of sales and earnings.
Executed this 3rd day of May, 1996.
McDONALD'S CORPORATION
By: /s/ Gloria Santona
------------------------
Vice President
-7-
<PAGE>
Exhibit 10(f)
FIRST AMENDMENT
OF THE
McDONALD'S CORPORATION DEFERRED INCENTIVE PLAN
(As amended and restated effective as of September 1, 1994)
WHEREAS, McDonald's Corporation (the "Company") established the McDonald's
Corporation Deferred Incentive Plan (the "Deferred Incentive Plan'') effective
as of November 1, 1993 and amended and restated the Deferred Incentive Plan
effective as of September 1, 1994; and
WHEREAS, the Board of Directors of the Company by resolutions dated
January 16, 1996, has authorized the undersigned officer to further amend the
Deferred Incentive Plan effective as of February 1, 1996 to allow the five
highest compensated officers (as defined in the Deferred Incentive Plan) to
defer up to 90% of their base pay earned after February 1, 1996; provided that
any such election shall apply in 1996 only to those individuals who had
previously elected to defer at least 50% of their base pay for 1996 and who
filed an additional election prior to December 31, 1995 to defer up to 90% of
base pay earned after February 1, 1996;
NOW, THEREFORE, the Deferred Incentive Plan is hereby amended, effective
as of February 1, 1996, by substituting the following for the second sentence of
Section 2.2 thereof:
"Any Eligible Employee who is one of the five highest compensated officers
of the Company (ranked by the total of base pay and the target incentive
under TIP for the current year) may also elect to defer up to 90% of his or
her base salary for the following calendar year. For 1996, any one of the
five highest compensated officers of the Company who had previously elected
to defer at least 50% of his base pay for the 1996 year and who filed an
election prior to December 31, 1995 may defer up to 90% of base pay earned
after February 1, 1996 through the remainder of the 1996 calendar year."
IN WITNESS WHEREOF, Stanley R. Stein, as authorized officer of the
Company, has executed this First Amendment of the McDonald's Corporation
Deferred Incentive Plan in multiple originals this 31st day of January, 1996.
/s/ Stanley R. Stein
----------------------
Stanley R. Stein
Senior Vice President
<PAGE>
Exhibit 11
McDONALD'S CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Dollars and shares in millions, except per common share data
<TABLE>
<CAPTION>
Quarters Ended
March 31
1996 1995
---- ----
<S> <C> <C>
Net Income $301.6 $280.7
Preferred stock dividends (net of tax) (6.9) (11.9)
-------- --------
Net income available after preferred stock dividends 294.7 268.8
Common stock dividends on assumed conversion of preferred stock 0.4
-------- --------
Net income available to common shareholders $294.7 $269.2
======== ========
Weighted average number of common shares outstanding during the
period (A) 700.5 694.3
Additional shares related to potentially dilutive securities 20.6 22.8
-------- --------
Adjusted weighted average common shares 721.1 717.1
======== ========
Fully diluted net income per common share $ .41 $ 0.38
-------- --------
</TABLE>
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.
<PAGE>
Exhibit 12
McDONALD'S CORPORATION
STATEMENT RE: COMPUTATION OF RATIOS
Dollars in Millions
<TABLE>
<CAPTION>
Quarters
Ended March 31, Years Ended December 31,
------------------- --------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
- - Income before provision for income taxes $452.1 $435.1 $2,169.1 $1,886.6 $1,675.7 $1,448.1 $1,299.4
- - 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 4.0 3.9 19.6 6.6 6.9 5.3 5.1
- - Provision for income taxes of 50% owned
affiliates included in consolidated income
before provision for income taxes 22.4 18.6 73.3 34.9 34.2 29.4 34.1
- - Portion of rent charges (after reduction
for rental income from subleased
properties) considered to be representative
of interest factors* 29.6 24.5 103.8 83.4 71.6 70.1 67.9
- - Interest expense, amortization of debt
discount and issuance costs, and
depreciation of capitalized interest* 96.6 91.8 388.8 346.0 358.0 413.8 433.9
---------------------------------------------------------------------------
$604.7 $573.9 $2,754.6 $2,357.5 $2,146.4 $1,966.7 $1,840.4
===========================================================================
FIXED CHARGES
- - Portion of rent charges (after reduction
for rental income from subleased
properties) considered to be representative
of interest factors* $29.6 $24.5 $103.8 $83.4 $71.6 $70.1 $67.9
- - Interest expense, amortization of debt
discount and issuance costs, and fixed
charges related to redeemable preferred
stock* 100.4 94.3 403.4 343.9 349.3 405.4 425.7
- - Capitalized interest* 4.5 4.5 22.8 21.0 20.7 20.5 28.5
---------------------------------------------------------------------------
$134.5 $123.3 $530.0 $448.3 $441.6 $496.0 $522.1
===========================================================================
RATIO OF EARNINGS TO FIXED CHARGES 4.50 4.66 5.20 5.26 4.86 3.96 3.53
===========================================================================
</TABLE>
*Includes amounts of the Registrant and its majority-owned subsidiaries, and
one-half of the amounts of 50%-owned affiliates.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 330
<SECURITIES> 0
<RECEIVABLES> 393
<ALLOWANCES> 0
<INVENTORY> 57
<CURRENT-ASSETS> 933
<PP&E> 17,430
<DEPRECIATION> 4,417
<TOTAL-ASSETS> 15,576
<CURRENT-LIABILITIES> 2,122
<BONDS> 3,935
0
358
<COMMON> 92
<OTHER-SE> 10,199
<TOTAL-LIABILITY-AND-EQUITY> 15,576
<SALES> 1,714
<TOTAL-REVENUES> 2,426
<CGS> 1,419
<TOTAL-COSTS> 1,557
<OTHER-EXPENSES> 307
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85
<INCOME-PRETAX> 452
<INCOME-TAX> 151
<INCOME-CONTINUING> 302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 302
<EPS-PRIMARY> .42
<EPS-DILUTED> 0
</TABLE>
