<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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) (630) 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
--- ---
699,451,640
---------------------------------
(Number of shares of common stock
outstanding as of June 30, 1996)<PAGE>
<PAGE> 2
McDONALD'S CORPORATION
----------------------
INDEX
-----
Page Reference
Part I. Financial Information
Item 1 - Financial Statements
Condensed consolidated balance sheet,
June 30, 1996 (unaudited) and
December 31, 1995 3
Condensed consolidated statement of
income (unaudited), six months and
second quarters ended June 30, 1996
and 1995 4
Condensed consolidated statement of
cash flows (unaudited), six months and
second quarters ended June 30, 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 4 - Submission of Matters to a Vote
of Security Holders 16
Item 6 - Exhibits and Reports on Form 8-K 16
(a) Exhibits
The exhibits listed in the
accompanying Exhibit Index are
filed as part of this report 16
(b) Reports on Form 8-K 20
Signature 21<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
-----------------------------
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEET
<CAPTION>
(unaudited)
Dollars in millions June 30, 1996 December 31, 1995
---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 345.7 $ 334.8
Accounts receivable 415.2 377.3
Notes receivable 38.6 36.3
Inventories, at cost, not in excess
of market 55.5 58.0
Prepaid expenses and other current
assets 166.9 149.4
---------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,021.9 955.8
---------------------------------------------------------------------------
OTHER ASSETS AND DEFERRED CHARGES 1,082.2 1,112.7
---------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment, at cost 17,855.3 17,137.6
Accumulated depreciation and
amortization (4,530.3) (4,326.3)
---------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 13,325.0 12,811.3
---------------------------------------------------------------------------
INTANGIBLE ASSETS-NET 592.3 534.8
---------------------------------------------------------------------------
TOTAL ASSETS $16,021.4 $15,414.6
===========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 654.5 $ 413.0
Accounts payable 447.9 564.3
Income taxes 103.1 55.4
Other taxes 135.1 127.1
Accrued interest 84.0 117.4
Other accrued liabilities 323.6 352.5
Current maturities of long-term debt 115.6 165.2
---------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,863.8 1,794.9
---------------------------------------------------------------------------
LONG-TERM DEBT 4,273.8 4,257.8
OTHER LONG-TERM LIABILITIES AND
MINORITY INTERESTS 680.0 664.7
DEFERRED INCOME TAXES 884.7 835.9<PAGE>
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
authorized - 165.0 million shares;
issued - 7.2 thousand 358.0 358.0
Common stock, 1996-$.01 par;
1995-no par value; authorized,
1996-3.5 billion shares;
1995-1.25 billion shares;
issued-830.3 million 8.3 92.3
Additional paid-in capital 545.3 387.4
Guarantee of ESOP notes (213.8) (214.2)
Retained earnings 10,440.5 9,831.3
Foreign currency translation
adjustment (128.2) (87.1)
---------------------------------------------------------------------------
11,010.1 10,367.7
---------------------------------------------------------------------------
Common stock in treasury, at cost;
130.9 and 130.6 million shares (2,691.0) (2,506.4)
---------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 8,319.1 7,861.3
---------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $16,021.4 $15,414.6
===========================================================================
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 4
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<CAPTION>
Dollars in millions, except Six Months Ended Quarters Ended
per common share data June 30 June 30
1996 1995 1996 1995
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales by Company-operated
restaurants $3,599.6 $3,239.4 $1,885.8 $1,727.8
Revenues from franchised
restaurants 1,491.5 1,389.5 779.3 739.8
------------------------------------------------------------------------------
TOTAL REVENUES 5,091.1 4,628.9 2,665.1 2,467.6
------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 2,942.4 2,622.9 1,523.1 1,389.7
Franchised restaurants-
occupancy expenses 277.9 246.0 140.7 127.8
General, administrative and
selling expenses 637.5 580.8 326.3 305.4
Other operating (income)
expense-net (41.3) (53.9) (37.1) (41.7)
------------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 3,816.5 3,395.8 1,953.0 1,781.2
------------------------------------------------------------------------------
OPERATING INCOME 1,274.6 1,233.1 712.1 686.4
------------------------------------------------------------------------------
Interest expense 167.6 166.4 82.8 85.4
Nonoperating income
(expense)-net (29.4) (46.7) (3.8) (16.1)
------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 1,077.6 1,020.0 625.5 584.9
------------------------------------------------------------------------------
Provision for income taxes 355.6 359.6 205.1 205.2
------------------------------------------------------------------------------
NET INCOME $ 722.0 $ 660.4 $ 420.4 $ 379.7
==============================================================================
NET INCOME PER COMMON
SHARE $ 1.01 $ .90 $ .59 $ .52
------------------------------------------------------------------------------
DIVIDENDS PER COMMON SHARE $ .1425 $ .1275 $ .0750 $ .0675
------------------------------------------------------------------------------
Weighted average common shares
outstanding 699.8 700.2 699.1 700.1
------------------------------------------------------------------------------
See accompanying Financial comments.
/TABLE
<PAGE>
<PAGE> 5
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended Quarter Ended
June 30 June 30
Dollars in millions 1996 1995 1996 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 722.0 $660.4 $420.4 $379.7
Adjustments to reconcile to cash
provided by operations
Depreciation and amortization 371.6 345.9 185.0 177.1
Changes in operating working
capital items (94.0) (80.7) (68.0) (8.4)
Other 21.2 16.7 9.1 (11.9)
-------------------------------------------------------------------------------
CASH PROVIDED BY OPERATIONS 1,020.8 942.3 546.5 536.5
-------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment expenditures (984.5) (792.9) (517.4) (445.2)
Purchases and sales of restaurant
businesses and sales of other property 17.4 20.2 12.8 12.1
Other (86.7) (84.5) (55.0) (76.4)
-------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (1,053.8) (857.2) (559.6) (509.5)
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Notes payable and long-term
financing issuances and repayments 312.8 226.8 140.9 216.7
Treasury stock purchases (239.5) (89.1) (99.5) (82.2)
Common and preferred stock dividends (112.0) (114.4) (58.5) (59.8)
Other 82.6 30.7 46.4 19.1
-------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING
ACTIVITIES 43.9 54.0 29.3 93.8
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS INCREASE 10.9 139.1 16.2 120.8
-------------------------------------------------------------------------------
Cash and equivalents at beginning of
period 334.8 179.9 329.5 198.2
-------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF PERIOD $345.7 $319.0 $345.7 $319.0
===============================================================================
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 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 $13.8 and $23.8 million
for the first six months of 1996 and 1995, and $6.9 and $11.9 million
for the second quarters of 1996 and 1995, respectively. In addition,
net income per common share for both 1995 periods was reduced by $3.9
million for the one-time effect of the exchange of preferred stock for
debt completed in June 1995. Adjusted net income was divided by the
weighted average shares of common stock outstanding: 699.8 and 700.2
million for the six months ended June 30, 1996 and 1995, and 699.1 and
700.1 million for the second quarters of 1996 and 1995, respectively.
During 1995, shares of Series B and C Preferred Stock were converted
into 8.7 million common shares. Including the effect of potentially
dilutive securities, fully diluted earnings per common share amounts
were $0.98 and $0.88 for the six months ended June 30, 1996 and 1995,
and $0.58 and $0.51 for the second quarters of 1996 and 1995,
respectively.
CAPITAL STOCK
In May 1996, the shareholders of the Company approved an increase in
the total number of authorized shares of Common Stock from 1.25
billion shares with no par value to 3.5 billion shares with $.01 par
value. The change in par value did not affect any of the existing
rights of shareholders and has been recorded as an adjustment to
additional paid-in capital and common stock.
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>
<PAGE> 7
Item 2. Management's Discussion And Analysis Of Financial Condition
--------------------------------------------------------------------
And Results Of Operations
-------------------------
<TABLE>
INCREASES (DECREASES) IN OPERATING RESULTS OVER 1995
<CAPTION>
Dollars in millions, except Six Months Second Quarter
per common share data Ended June 30 Ended June 30
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SYSTEMWIDE SALES $928.6 6% $290.7 4%
-------------------------------------------------------------------------
REVENUES
Sales by Company-operated
restaurants $360.2 11% $158.0 9%
Revenues from franchised
restaurants 102.0 7 39.5 5
-------------------------------------------------------------------------
TOTAL REVENUES 462.2 10 197.5 8
-------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants 319.5 12 133.4 10
Franchised restaurants-
occupancy costs 31.9 13 12.9 10
General, administrative
and selling expenses 56.7 10 20.9 7
Other operating (income)
expense-net 12.6 (23) 4.6 (11)
-------------------------------------------------------------------------
TOTAL OPERATING COSTS
AND EXPENSES 420.7 12 171.8 10
-------------------------------------------------------------------------
OPERATING INCOME 41.5 3 25.7 4
-------------------------------------------------------------------------
Interest expense 1.2 1 (2.6) (3)
Nonoperating income
(expense)-net 17.3 (37) 12.3 (76)
-------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 57.6 6 40.6 7
-------------------------------------------------------------------------
Provision for income taxes (4.0) (1) (0.1) 0
-------------------------------------------------------------------------
NET INCOME $61.6 9% $40.7 11%
=========================================================================
NET INCOME PER COMMON
SHARE $ .11 12% $ .07 13%
-------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE> 8
CONSOLIDATED OPERATING RESULTS
Net income and net income per common share respectively increased 9
and 12% for the six months, and 11 and 13% for the quarter. Excluding
the noncash charge for the adoption of SFAS 121, net income and net
income per common share increased 11 and 14% for the six months,
respectively. In the first six months of 1996, the Company repurchased
about $240 million of its common stock.
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 for the six months,
positive comparable sales outside of the U.S., partially offset by
weaker foreign currencies.
----------------------------------------------------------------------
SYSTEMWIDE RESTAURANT ADDITIONS Six Months Ended Quarters Ended
June 30 June 30
1996 1995 1996 1995
----------------------------------------------------------------------
Traditional restaurants
U.S. 183 184 121 133
Outside of the U.S. 428 318 285 204
----------------------------------------------------------------------
Total traditional restaurant
additions 611 502 406 337
----------------------------------------------------------------------
Satellite restaurants
U.S. 130 239 63 130
Outside of the U.S. 142 93 98 64
----------------------------------------------------------------------
Total satellite restaurant 272 332 161 194
additions
----------------------------------------------------------------------
Systemwide restaurants
U.S. 313 423 184 263
Outside of the U.S. 570 411 383 268
----------------------------------------------------------------------
Systemwide restaurant
additions 883 834 567 531
----------------------------------------------------------------------
TRADITIONAL RESTAURANTS UNDER CONSTRUCTION At June 30
1996 1995
----------------------------------------------------------------------
U.S. 153 130
Outside of the U.S. 389 260
----------------------------------------------------------------------
Total traditional restaurants under construction 542 390
----------------------------------------------------------------------<PAGE>
<PAGE> 9
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 for both periods,
reflecting 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. While Company-
operated margins as a percent of sales decreased for both periods, the
decrease narrowed in the second quarter. For the six months, as a
percent of sales, food and paper costs were relatively flat, while
payroll costs and occupancy and other operating costs increased. For
the quarter, as a percent of sales, food and paper costs decreased,
while payroll and occupancy and other operating costs increased.
----------------------------------------------------------------------
CONSOLIDATED OPERATING MARGINS Six Months Ended Quarters Ended
June 30 June 30
1996 1995 1996 1995
----------------------------------------------------------------------
In millions of dollars
Company-operated $ 657.2 $ 616.5 $362.7 $338.1
Franchised 1,213.6 1,143.5 638.6 612.0
As a percent of sales/revenues
Company-operated 18.3 19.0 19.2 19.6
Franchised 81.4 82.3 81.9 82.7
----------------------------------------------------------------------
The increases in general, administrative and selling expenses were
primarily due to strategic global spending to support the Convenience,
Value and Execution Strategies.
The increases in consolidated operating income primarily reflected
higher combined operating margin dollars, partially offset by higher
general, administrative and selling expenses and lower other operating
income which reflected the $16 million noncash charge related to the
adoption of SFAS 121 in the first quarter of 1996.
Other operating (income) expense-net is composed of transactions
related to franchising and the foodservice business, the details of
which are shown below. The decreases in equity in earnings occurred
primarily because of nonrecurring income items recognized in both
periods of 1995 and a weaker Japanese Yen, partially offset with
stronger operating results from affiliates. The increases in other
expenses reflected the $16 million noncash charge related to the
adoption of SFAS 121 recorded in the first quarter 1996, and increased
provisions for property dispositions in the second quarter 1996.
------------------------------------------------------------------------
OTHER OPERATING (INCOME) Six Months Ended Quarters Ended
EXPENSE-NET June 30 June 30
In millions of dollars 1996 1995 1996 1995
------------------------------------------------------------------------
Gains on sales of restaurant
businesses $(42.3) $(28.4) $(33.3) $(16.5)
Equity in earnings of
unconsolidated affiliates (34.4) (47.7) (15.9) (28.5)
Other 35.4 22.2 12.1 3.3
------------------------------------------------------------------------
Other operating (income)
expense--net $(41.3) $(53.9) $(37.1) $(41.7)
========================================================================<PAGE>
<PAGE> 10
The increase in interest expense for the six months was due to
higher debt levels, partially offset by lower average interest rates
and weaker foreign currencies. For the quarter, interest expense
decreased as higher debt levels were completely offset by lower
average interest rates and weaker foreign currencies.
Nonoperating income (expense) was impacted by lower losses
associated with the Company's investment in Discovery Zone common
stock, as the carrying value of this investment was reduced to zero in
the first quarter 1996. Nonoperating income (expense) also reflected
translation gains in 1996 compared to translation losses in 1995.
The effective income tax rate was 33.0 and 35.3% for the first six
months of 1996 and 1995, respectively, and 34.2% 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%.
U.S. OPERATING RESULTS
Restaurant expansion was responsible for increasing U.S. sales as we
added 1,020 restaurants in the last 12 months. Comparable U.S. sales
were negative for both periods reflecting an extremely challenging
U.S. operating environment, difficult comparisons and severe weather.
The U.S. business continued its emphasis on value and customer
satisfaction in the form of Extra Value Meals, Happy Meals and the
three-tier value program as well as promotional games like Deluxe
Monopoly in June. In addition, the introduction of Arch Deluxe in May
benefited U.S. sales in the second quarter.
----------------------------------------------------------------------
U.S. OPERATING RESULTS Six Months Ended Quarters Ended
June 30 June 30
1996 1995 1996 1995
----------------------------------------------------------------------
Percent increase
Sales 3 8 3 9
Revenues 4 9 4 9
Operating income (1) 3 0 3
----------------------------------------------------------------------
As a percent of sales/revenues
Company-operated margins 16.8 17.6 18.3 18.7
Franchised margins 81.5 82.8 82.4 83.2
----------------------------------------------------------------------
U.S. operating income decreased slightly for the six months and
increased modestly, less than one percent, for the quarter. This
performance reflected a slight decline in Company-operated margin
dollars for the six months and a slight increase in Company-operated
margin dollars for the quarter, and for both periods, higher
franchised margin dollars, higher general, administrative and selling
expenses and higher other operating expenses.
The declines in Company-operated margins as a percent of sales for
both periods primarily resulted from higher payroll and occupancy and
other operating expenses, partially offset by lower food and paper
costs. The declines in franchised margins as a percent of revenues
were primarily due to increased rent expense reflecting a higher
proportion of leased sites resulting from accelerated expansion.<PAGE>
<PAGE> 11
OPERATING RESULTS OUTSIDE OF THE U.S.
Expansion and higher year-to-date comparable sales were responsible
for sales increases outside of the U.S., offset in part by weaker
foreign currencies. The difference between the percentage increase in
sales and revenues for both periods is primarily due to the weakening
Japanese Yen that had a greater effect on sales versus revenues and
the higher growth rate in Company-operated versus franchised
restaurants. If exchange rates had remained at 1995 levels, sales
outside of the U.S. would have increased 15% and 12% for the six
months and quarter, respectively.
----------------------------------------------------------------------
OPERATING RESULTS OUTSIDE OF Six Months Ended Quarters Ended
THE U.S. June 30 June 30
1996 1995 1996 1995
----------------------------------------------------------------------
Percent increase
Sales (1) 10 34 5 37
Revenues (1) 15 34 11 35
Operating income (2) 8 41 7 44
----------------------------------------------------------------------
As a percent of sales/revenues
Company-operated margins 19.2 20.1 19.8 20.2
Franchised margins 81.1 81.5 81.2 82.0
----------------------------------------------------------------------
(1) Excluding the impact of weaker foreign currencies, sales and
revenues, respectively, increased 15 and 17% for the six months,
and 12 and 15% for the second quarter 1996.
(2) Excluding the impact of weaker foreign currencies and the $16
million noncash charge related to SFAS 121, adopted in the first
quarter 1996, operating income increased 13 and 11% for the six
months and the second quarter, respectively.
Of the fifteen largest international markets, the following had
strong sales and operating income for both periods of 1996: Australia,
Japan and Hong Kong in Asia/Pacific; England in Europe; and Brazil in
Latin America. 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 and are encouraged by
indications that the economy and currency are becoming more stable.
Our business in Canada continued to be negatively impacted by the weak
economy.
The increases in operating income outside of the U.S. were driven
by higher combined operating margin dollars resulting from expansion
and positive year-to-date comparable sales, partially offset by weaker
foreign currencies, higher general, administrative and selling
expenses and for the six months, lower other operating income.
Excluding the impact of weaker foreign currencies and the $16 million
noncash charge for the adoption of the accounting standard for asset
impairment for restaurant sites in Mexico recorded in the first
quarter of 1996, operating income outside of the U.S. increased 13%
for the six months and 11% for the quarter.<PAGE>
<PAGE> 12
While Company-operated margins as a percent of sales declined for
both periods, the decrease narrowed in the second quarter. For the six
months, all costs increased, while for the quarter, food and paper
costs were flat, payroll costs increased and occupancy and other
operating costs decreased. 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 and paper costs
in Taiwan. These higher costs reflected strategic pricing concessions
which resulted in strong comparable sales and substantial market share
gains. Margin trends in both markets are improving. While franchised
margins as a percent of revenues decreased for both periods, the
current levels are reflective of historical trends.
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 and Deutsche Mark were the
primary foreign currency changes impacting 1996 results. If exchange
rates had remained at 1995 levels, results would have been as follows:
--------------------------------------------------------------------------
FOREIGN CURRENCY IMPACT ON INTERNATIONAL RESULTS
--------------------------------------------------------------------------
Dollars in millions Six Months Ended June 30, 1996
--------------------------------------------------------------------------
Reported Adjusted Adjustment Reported Adjusted
--------------------------------------------------------------------------
Sales $7,239.9 $7,552.9 $(313.0) 10% 15%
Operating income 691.5 708.6 (17.1) 8 10
--------------------------------------------------------------------------
Quarter Ended June 30, 1996
--------------------------------------------------------------------------
Reported Adjusted Adjustment Reported Adjusted
--------------------------------------------------------------------------
Sales $3,653.2 $3,913.1 $(259.9) 5% 12%
Operating income 377.3 393.5 (16.2) 7 11
--------------------------------------------------------------------------<PAGE>
<PAGE> 13
--------------------------------------------------------------------------
FOREIGN CURRENCY IMPACT ON WORLDWIDE RESULTS
--------------------------------------------------------------------------
Dollars in millions Six Months Ended June 30, 1996
--------------------------------------------------------------------------
Reported Adjusted Adjustment Reported Adjusted
--------------------------------------------------------------------------
Systemwide sales $15,241.5 $15,554.5 $(313.0) 6% 9%
Revenues 5,091.1 5,143.3 (52.2) 10 11
Operating income 1,274.6 1,291.7 (17.1) 3 5
Net income 722.0 726.1 (4.1) 9 10
--------------------------------------------------------------------------
Quarter Ended June 30, 1996
--------------------------------------------------------------------------
Reported Adjusted Adjustment Reported Adjusted
--------------------------------------------------------------------------
Systemwide sales $7,932.0 $8,191.9 $(259.9) 4% 7%
Revenues 2,665.1 2,715.8 (50.7) 8 10
Operating income 712.1 728.3 (16.2) 4 6
Net income 420.4 424.4 (4.0) 11 12
--------------------------------------------------------------------------
FINANCIAL POSITION
Cash provided by operations for the six months increased 8%. 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, capital expenditures increased 24% in the first
six months (13% in the U.S. and 33% outside of the U.S.).<PAGE>
<PAGE> 14
<TABLE>
SIX MONTHS AND SECOND QUARTER 1996 HIGHLIGHTS
<CAPTION>
OPERATING RESULTS
--------------------------------------------------------------------------
Dollars in millions, except Six Months Ended Quarters Ended
per common share data June 30 June 30
1996 1995 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Systemwide sales $15,241.5 $14,312.9 $7,932.0 $7,641.3
--------------------------------------------------------------------------
U.S. sales 8,001.6 7,750.9 4,278.8 4,146.3
Operated by franchisees 6,190.1 6,093.6 3,305.4 3,257.6
Operated by the Company 1,381.5 1,333.6 741.5 711.3
Operated by affiliates 430.0 323.7 231.9 177.4
--------------------------------------------------------------------------
Sales outside of the U.S. 7,239.9 6,562.0 3,653.2 3,495.0
Operated by franchisees 3,435.2 3,111.8 1,748.9 1,661.8
Operated by the Company 2,218.1 1,905.8 1,144.3 1,016.5
Operated by affiliates 1,586.6 1,544.4 760.0 816.7
--------------------------------------------------------------------------
Total Revenues 5,091.1 4,628.9 2,665.1 2,467.6
U.S. 2,264.0 2,174.5 1,211.0 1,160.6
Outside of the U.S. 2,827.1 2,454.4 1,454.1 1,307.0
--------------------------------------------------------------------------
Operating Income* 1,274.6 1,233.1 712.1 686.4
U.S. 605.2 614.2 346.0 344.8
Outside of the U.S.* 691.5 641.3 377.3 353.2
Corporate G&A (22.1) (22.4) (11.2) (11.6)
--------------------------------------------------------------------------
Income before provision for
income taxes* 1,077.6 1,020.0 625.5 584.9
Net income* 722.0 660.4 420.4 379.7
Net income per common share* 1.01 .90 .59 .52
--------------------------------------------------------------------------
Cash provided by operations 1,020.8 942.3 546.5 536.5
--------------------------------------------------------------------------
Total assets 16,021.4 14,657.5
Total shareholders' equity 8,319.1 7,319.1
--------------------------------------------------------------------------
* Including the $16 million noncash charge related to the adoption
of SFAS 121.
/TABLE
<PAGE>
<PAGE> 15
<TABLE>
RESTAURANTS
<CAPTION>
-------------------------------------------------------------------------
At June 30, 1996 1995
-------------------------------------------------------------------------
<S> <C> <C>
Systemwide restaurants 19,263 16,784
-------------------------------------------------------------------------
Traditional U.S. restaurants 10,524 9,928
Operated by franchisees 8,282 7,902
Operated by the Company 1,643 1,598
Operated by affiliates 599 428
-------------------------------------------------------------------------
Traditional Restaurants outside of the U.S. 6,896 5,779
Operated by franchisees 3,251 2,770
Operated by the Company 2,061 1,642
Operated by affiliates 1,584 1,367
-------------------------------------------------------------------------
Satellite restaurants 1,843 1,077
U.S. 1,157 733
Outside U.S. 686 344
-------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE> 16
PART II
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
(a) The Annual Meeting of Shareholders was held on May 23, 1996.
(b) Not Applicable.
(c) At the Annual Meeting, the shareholders:
(i) Voted to elect five directors to serve until the 1999
Annual Meeting of Shareholders. Each nominee was elected
by a vote of the Shareholders as follows:
Director For Withheld
-------- --- --------
Hall Adams, Jr. 599,242,413 6,743,020
Robert M. Beavers, Jr. 599,014,921 6,970,512
Gordon C. Gray 599,251,652 6,733,781
Terry L. Savage 599,306,389 6,679,044
Fred L. Turner 598,927,967 7,057,466
(ii) Voted upon the amendment to the Company's Restated
Certificate of Incorporation, which was approved by a vote
of shareholders as follows:
FOR: 492,392,655
AGAINST: 110,520,794
ABSTAIN: 3,057,304
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) - Exhibits
--------------
Exhibit Number Description
-------------- -----------
(3) Restated Certificate of Incorporation, dated May 23, 1996,
filed herewith; By-Laws dated 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.<PAGE>
<PAGE> 17
Exhibit Number Description
-------------- -----------
(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.
(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.<PAGE>
<PAGE> 18
Exhibit Number Description
-------------- -----------
(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.
(i) Amendment No. 1 to Rights Agreement incorporated
herein by reference from Exhibit 1 of Form 8-K
dated May 25, 1989.
(ii) Amendment No. 2 to Rights Agreement incorporated
herein by reference from Exhibit 1 of Form 8-K
dated July 25, 1990.
(d) Indenture and Supplemental Indenture No. 1 dated as of
September 8, 1989, between McDonald's Matching and
Deferred Stock Ownership Trust, McDonald's Corporation
and Pittsburgh National Bank in connection with SEC
Registration Statement Nos. 33-28684 and 33-28684-01,
incorporated herein by reference from Exhibit (4)(a) of
Form 8-K dated September 14, 1989.
(e) Form of Supplemental Indenture No. 2 dated as of
April 1, 1991, supplemental to the Indenture between
McDonald's Matching and Deferred Stock Ownership Trust,
McDonald's Corporation and Pittsburgh National Bank in
connection with SEC Registration Statement Nos.
33-28684 and 33-28684-01, incorporated herein by
reference from Exhibit (4)(c) of Form 8-K dated
March 22, 1991.<PAGE>
<PAGE> 19
Exhibit Number Description
-------------- -----------
(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, incorporated herein by reference from Exhibit
10(d) of Form 10-Q for the period ended March 31, 1996.*
(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.*
(i) Amendment No. 1 to McDonald's Corporation Deferred
Incentive Plan incorporated herein by reference
from Exhibit 10(f) of Form 10-Q for the period
ended March 31, 1996.
(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.<PAGE>
<PAGE> 20
(A) Other instruments defining the rights of holders of long-term
debt of the registrant and all of its subsidiaries for which
consolidated financial statements are required to be filed and
which are not required to be registered with the Securities and
Exchange Commission, are not included herein as the securities
authorized under these instruments, individually, do not exceed
10% of the total assets of the registrant and its subsidiaries on
a consolidated basis. An agreement to furnish a copy of any such
instruments to the Securities and Exchange Commission upon
request has been filed with the Commission.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed for the last quarter
covered by this report, and subsequently up to August 12, 1996.
Financial Statements
Date of Report Item Number Required to be Filed
-------------- ----------- --------------------
07/18/96 Item 7 No<PAGE>
<PAGE> 21
Signature
-----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
McDONALD'S CORPORATION
(Registrant)
By /s/ Jack M. Greenberg
-----------------
(Signature)
Jack M. Greenberg
Vice Chairman,
Chief Financial Officer
August 12, 1996
-----------------
(Date)<PAGE>
EXHIBIT 3
RESTATED CERTIFICATE OF INCORPORATION
OF
McDONALD'S CORPORATION
(originally incorporated on December 21, 1964
under the name "Regrub, Inc.")
FIRST: The name of the corporation is McDONALD'S
CORPORATION.
SECOND: Its registered office in the State of
Delaware is located at 1013 Centre Road, Wilmington, New
Castle County, Delaware 19805.
The name and address of its registered agent is The
Prentice-Hall Corporation System, Inc., 1013 Centre Road,
Wilmington, New Castle County, Delaware 19805.
THIRD: The nature of the business of the
Corporation and the objects and purposes to be transacted,
promoted or carried on are as follows:
1. To obtain by license or otherwise and to grant
to others by license or otherwise the right to the use of
drive-in food establishment systems and food service systems
of every kind and character, and to manage and operate drive-
in and other restaurants and eating places of all kinds.
2. To manufacture, construct, lease, purchase and
otherwise acquire; to hold, own, repair, maintain, operate
and invest, trade and deal in; to lien, mortgage, pledge and
otherwise encumber, and to let, assign, transfer, sell and
otherwise dispose of goods, wares and merchandise and
personal property of every kind and description and wherever
situated.
3. To the same extent as natural persons might or
could do, to purchase or otherwise acquire, hold, own,
maintain, work, develop, sell, lease, sublease, exchange,
hire, convey, mortgage or otherwise dispose of and turn to
account and deal in, lands, leaseholds, any interests,
estates and rights in real property, any personal or mixed
property, and franchises, rights, licenses, permits or
privileges of every character.
4. To acquire by purchase, exchange or otherwise,
all, or any part of, or any interest in, the properties,
assets, business and good will of any one or more persons,
firms, associations, corporations or syndicates engaged in
any business which the Corporation is authorized to engage
in; to pay for the same in cash, property or its own or other
securities; to hold, operate, reorganize, liquidate, sell or
in any manner dispose of the whole or any part thereof; and
in connection therewith, to assume or guarantee performance<PAGE>
of any liabilities, obligations or contracts of such persons,
firms, associations, corporations or syndicates, and to
conduct in any lawful manner the whole or any part of any
business thus acquired.
5. To acquire by purchase, subscription, contract
or otherwise, and to hold for investment or otherwise, sell,
exchange, mortgage, pledge or otherwise dispose of, or turn
to account or realize upon, and generally to deal in and
with, any and all kinds of securities issued or created by,
or interests in, corporations, associations, partnerships,
firms, trustees, syndicates, individuals, municipalities or
other political or governmental divisions or subdivisions, or
any thereof, or by any combinations, organizations or
entities whatsoever, irrespective of their form or the name
by which they may be described; and to exercise any and all
rights, powers, and privileges of individual ownership or
interest in respect of any and all such securities and
interests, including the right to vote thereon and to consent
and otherwise act with respect thereto; to do any and all
acts and things for the preservation, protection, improvement
and enhancement in value of any and all such securities or
interests, and to aid by loan, subsidy, guaranty or in any
other manner permitted by law those issuing, creating, or
responsible for any such securities or interests.
6. To develop, apply for, obtain, register,
purchase, lease, take licenses in respect of or otherwise
acquire, and to hold, own, use, operate, enjoy, turn to
account, grant licenses in respect of, manufacture under,
introduce, sell, assign, mortgage, pledge or otherwise
dispose of any and all inventions, devices, formulae,
processes, improvements and modifications thereof, letters
patent and all rights connected therewith or appertaining
thereunto, copyrights, trademarks, trade names, trade symbols
and other indications of origin and ownership, franchises,
licenses, grants and concessions granted by or recognized
under the laws of the United States of America or of any
state or subdivision thereof or of any other country or
subdivision thereof.
7. To loan money upon the security of real and/or
personal property of whatsoever name, nature or description,
or without security.
8. To borrow money for any of the purposes of the
Corporation, from time to time, and without limit as to
amount; to issue and sell its own securities in such amounts,
on such terms and conditions, for such purposes and for such
prices, as the Board of Directors shall determine; and to
secure such securities, by mortgage upon, or the pledge of,
or the conveyance or assignment in trust of, the whole or any
part of the properties, assets, business and good will of the
Corporation, then owned or thereafter acquired.
It is the intention that the objects and purposes
set forth in the foregoing clauses of this Article Third
shall not, unless otherwise specified herein, be in any wise
limited or restricted by reference to, or inference from, the
terms of any other clause of this or any other article in
this Certificate, but that the objects and purposes specified<PAGE>
in each of said clauses shall be regarded as independent
objects and purposes.
It is also the intention that the foregoing clauses
shall be construed as powers as well as objects and purposes;
that the Corporation shall be authorized to conduct its
business or hold property in any part of the United States
and its possessions, and foreign countries; that the
foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the
Corporation; and that generally the Corporation shall be
authorized to exercise and enjoy all other powers conferred
on corporations by the laws of Delaware.
FOURTH: The total number of shares of stock which
the Corporation shall have authority to issue is Three
Billion Six Hundred Sixty-Five Million (3,665,000,000),
consisting of Three Billion Five Hundred Million
(3,500,000,000) shares of Common Stock with one cent ($.01)
par value and One Hundred Sixty-Five Million (165,000,000)
shares of Preferred Stock without par value.
A. COMMON STOCK
Each share of Common Stock shall be equal to every
other share of Common Stock in every respect. Subject to any
exclusive voting rights which may vest in holders of
Preferred Stock under the provisions of any series of the
Preferred Stock established by the Board of Directors
pursuant to authority herein provided, the shares of Common
Stock shall entitle the holders thereof to one vote for each
share upon all matters upon which stockholders have the right
to vote.
B. PREFERRED STOCK
(1) Preferred Stock may be issued from time to
time in one or more series, each of such series to have such
designations, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, as are stated and
expressed in this Article and in the resolution or
resolutions providing for the issuance of such series adopted
by the Board of Directors as hereinafter provided.
(2) Authority is hereby expressly granted to the
Board of Directors subject to the provisions of this Article
to authorize the issuance of one or more series of Preferred
Stock and, with respect to each series, to fix by resolution
or resolutions providing for the issuance of such series:
(a) The number of shares to constitute such
series and the distinctive designations thereof;
(b) The dividend rate or rates to which such
shares shall be entitled and the restrictions, limitations
and conditions upon the payment of such dividends, whether
dividends shall be cumulative or non-cumulative and, if
cumulative, the date or dates from which dividends shall
accumulate, the dates on which dividends, if declared, shall<PAGE>
be payable, and the preferences or relations to the dividends
payable on any other series of Preferred Stock;
(c) Whether or not all or any part of the
shares of such series shall be redeemable, and if so, the
limitations and restrictions with respect to such
redemptions, the manner of selecting shares of such series
for redemption if less than all shares are to be redeemed,
and the amount, if any, in addition to any accrued dividends
thereon, which the holder of shares of such series shall be
entitled to receive upon the redemption thereof, which amount
may vary at different redemption dates and may be different
with respect to shares redeemed through the operation of any
retirement or sinking fund and with respect to shares
otherwise redeemed;
(d) The amount in addition to any accrued
dividends thereon which the holders of shares of such series
shall be entitled to receive upon the voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, which amount may vary depending on whether such
liquidation, dissolution or winding up is voluntary or
involuntary and, if voluntary, may vary at different dates;
(e) Whether or not the shares of such series
shall be subject to the operation of a purchase, retirement
or sinking fund, and, if so, whether such purchase, retire-
ment or sinking fund shall be cumulative or non-cumulative,
the extent and the manner in which such fund shall be applied
to the purchase or redemption of the shares of such series
for retirement or to other corporate purposes and the terms
and provisions relative to the operation thereof;
(f) Whether or not the shares of such series
shall be convertible into, or exchangeable for, shares of
stock of any other class or classes, or of any other series
of the same class, and if so convertible or exchangeable, the
price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same;
(g) The voting powers, if any, of such series
in addition to the voting powers provided by law; except that
such powers shall not include the right to have more than one
vote per share;
(h) Any other preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof as shall
not be inconsistent with law or with this Article.
Notwithstanding the fixing of the number of shares
constituting a particular series upon the issuance thereof,
the Board of Directors may at any time thereafter authorize
the issuance of additional shares of the same series, or
decrease the number of shares constituting such series (but
not below the number of shares of such series then
outstanding).
(3) All shares of any one series of Preferred
Stock shall be identical with all other shares of the same
series except that shares of any one series issued at<PAGE>
different times may differ as to the dates from which
dividends thereon shall be cumulative; and all series shall
rank equally and be identical in all respects, except as
permitted by the foregoing provisions of paragraph B. (2).
(4) (a) The holders of Preferred Stock shall be
entitled to receive cash dividends when and as declared by
the Board of Directors at such rate per share per annum,
cumulatively if so provided, and with such preferences, as
shall have been fixed by the Board of Directors, before any
dividends shall be paid upon or declared and set apart for
the Common Stock or any other class of stock ranking junior
to the Preferred Stock, and such dividends on each series of
the Preferred Stock shall cumulate, if at all, from and after
the dates fixed by the Board of Directors with respect to
such cumulation. Accrued dividends shall bear no interest.
(b) If dividends on the Preferred Stock are
not declared in full then dividends shall be declared ratably
on all shares of stock of each series of equal preference in
proportion to the respective unpaid cumulative dividends, if
any, to the end of the then current dividend period. No
ratable distribution shall be declared or set apart for
payment with respect to any series until accumulated
dividends in arrears in full have been declared and paid on
any series senior in preference.
(c) Unless dividends on all outstanding
shares of series of the Preferred Stock having cumulative
dividend rights shall have been fully paid for all past
dividend periods, and unless all required sinking fund
payments, if any, shall have been made or provided for, no
dividend (except a dividend payable in Common Stock or in any
other class of stock ranking junior to the Preferred Stock)
shall be paid upon or declared and set apart for the Common
Stock or any other class of stock ranking junior to the
Preferred Stock.
(d) Subject to the foregoing provisions, the
Board of Directors may declare and pay dividends on the
Common Stock and on any class of stock ranking junior to the
Preferred Stock, to the extent permitted by law. After full
dividends for the current dividend period, and, in the case
of Preferred Stock having cumulative dividend rights after
all prior dividends have been paid or declared and set apart
for payment, the holders of the Common Stock shall be
entitled, to the exclusion of the holders of the Preferred
Stock, to all further dividends declared and paid in such
current dividend period.
(5) In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary, before any payment or distribution of the assets
of the Corporation shall be made to or set apart for the
holders of shares of any class or classes of stock of the
Corporation ranking junior to the Preferred Stock, the
holders of the shares of each series of the Preferred Stock
shall be entitled to receive payment of the amount per share
fixed in the resolution or resolutions adopted by the Board
of Directors providing for the issuance of the shares of such
series, plus an amount equal to all dividends accrued thereon<PAGE>
to the date of final distribution to such holders; but they
shall be entitled to no further payment. If, upon any
liquidation, dissolution or winding up of the Corporation,
the assets of the Corporation, or proceeds thereof,
distributable among the holders of the shares of the
Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributed among such holders
ratably in accordance with the respective amount which would
be payable on such shares if all amounts payable thereon were
paid in full. For the purposes of this paragraph B. (5), the
sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or
substantially all of the property or assets of the
Corporation or a consolidation or merger of the Corporation
with one or more corporations shall not be deemed to be a
dissolution, liquidation or winding up, voluntary or
involuntary.
(6) Shares of any series of Preferred Stock which
have been issued and reacquired in any manner by the Company
(excluding shares purchased and retired, whether through the
operation of a retirement or sinking fund or otherwise, and
shares which, if convertible or exchangeable, have been
converted into or exchanged for shares of stock of any other
class or classes) shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as a
part of the series of which they were originally a part or
may be reclassified and reissued as part of a new series of
Preferred Stock or as part of any other series of Preferred
Stock, all subject to the conditions or restrictions on
issuance fixed by the Board of Directors with respect to the
shares of any other series of Preferred Stock.
(7) Except as otherwise specifically provided
herein or in the authorizing resolutions, none of the shares
of any series of Preferred Stock shall be entitled to any
voting rights and the Common Stock shall have the exclusive
right to vote for the election of directors and for all other
purposes. So long as any shares of any series of Preferred
Stock are outstanding, the Corporation shall not, without the
consent of the holders of a majority of the then outstanding
shares of Preferred Stock, irrespective of series, either
expressed in writing (to the extent permitted by law) or by
their affirmative vote at a meeting called for that purpose:
(i) adopt any amendment to this Restated Certificate of
Incorporation or take any other action which in any material
respect adversely affects any preference, power, special
right, or other term of the Preferred Stock or the holders
thereof, (ii) create or issue any class of stock entitled to
any preference over the Preferred Stock as to the payment of
dividends, or the distribution of capital assets, (iii)
increase the aggregate number of shares constituting the
authorized Preferred Stock or (iv) create or issue any other
class of stock entitled to any preference on a parity with
the Preferred Stock as to the payment of dividends or the
distribution of capital assets.
(8) If in any case the amounts payable with
respect to any obligations to retire shares of the Preferred
Stock are not paid in full in the case of all series with<PAGE>
respect to which such obligations exist, the number of shares
of each of such series to be retired pursuant to any such
obligations shall be in proportion to the respective amounts
which would be payable on account of such obligations if all
amounts payable in respect of such series were discharged in
full.
(9) The shares of Preferred Stock may be issued by
the Corporation from time to time for such consideration as
may be fixed from time to time by the Board of Directors.
Any and all shares for which the consideration so fixed shall
have been paid or delivered shall be deemed fully paid and
nonassessable.
(10) For the purpose of the provisions of this
Article dealing with Preferred Stock or of any resolution of
the Board of Directors providing for the issuance of any
series of Preferred Stock or of any certificate filed with
the Secretary of State of the State of Delaware pursuant to
any such resolution (unless otherwise provided in any such
resolution or certificate):
(a) The term "outstanding", when used in
reference to shares of stock, shall mean issued shares,
excluding shares held by the Corporation and shares called
for redemption, funds for the redemption of which shall have
been set aside or deposited in trust;
(b) The amount of dividends "accrued" on any
share of Preferred Stock as at any dividend date shall be
deemed to be the amount of any unpaid dividends accumulated
thereon to and including such dividend date, whether or not
earned or declared, and the amount of dividends "accrued" on
any share of Preferred Stock as at any date other than a
dividend date shall be calculated as the amount of any unpaid
dividends accumulated thereon to and including the last
preceding dividend date, whether or not earned or declared,
plus an amount equivalent to interest on the involuntary
liquidation value of such share at the annual dividend rate
fixed for the shares of such series for the period after such
last preceding dividend date to and including the date as of
which the calculation is made;
(c) The term "class or classes of stock of
the corporation ranking junior to the Preferred Stock" shall
mean the Common Stock of the Corporation and any other class
or classes of stock of the Corporation hereafter authorized
which shall rank junior to the Preferred Stock as to
dividends or upon liquidation.
C. PROVISIONS APPLICABLE TO ALL CAPITAL STOCK
No holder of any share or shares of any class of
stock of the Corporation shall have any preemptive or
preferential right to subscribe for or purchase any shares of
stock of any class of the Corporation now or hereafter
authorized or any securities convertible into or carrying any
rights to purchase any shares of stock of any class of the
Corporation now or hereafter authorized, other than such
rights, if any, as the Board of Directors in its discretion
from time to time may grant, and at such prices and upon such<PAGE>
other terms and conditions as the Board of Directors in its
discretion may fix.
D. SERIES OF PREFERRED STOCK
Following are the statements of the designations,
preferences and relative, participating, optional or other
special rights, and qualifications, limitations and
restrictions thereof, of the series of Preferred Stock that
have been designated by the Board of Directors as authorized
herein:
1. Series A Junior Participating Preferred Stock.
RESOLVED, that pursuant to the authority granted to
and vested in the Board of Directors of this Corporation
(hereinafter called the "Board of Directors" or the "Board")
in accordance with the provisions of the Restated Certificate
of Incorporation, the Board of Directors hereby creates a
series of Preferred Stock, without par value (the "Preferred
Stock"), of the Corporation and hereby states the designation
and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of
such series shall be designated as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting the Series A
Preferred Stock shall be 2,050,000. Such number of shares
may be increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the number
of shares of Series A Preferred Stock to a number less than
the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible
into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar
stock) ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of
Common Stock, without par value (the "Common Stock"), of the
Corporation, and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of
March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of
(a) $1 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per<PAGE>
share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to
which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share
on the Series A Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Preferred Stock
from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for
the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment
thereof.<PAGE>
Section 3. Voting Rights. The holders of shares
of Series A Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock
shall entitle the holder thereof to one vote on all matters
submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of
votes per share to which holders of Series A Preferred Stock
were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event, provided that in
no event shall a share of Series A Preferred Stock be
entitled to more than one vote.
(B) Except as otherwise provided herein, in any
other Certificate of Designations creating a series of
Preferred Stock or any similar stock, or by law, the holders
of shares of Series A Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together
as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred
Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except divi-<PAGE>
dends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either
as to dividends or upon dissolution, liquidation or winding
up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A Pre-
ferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A)
of this Section 4, purchase or otherwise acquire such shares
at such time and in such manner.
Section 5. Reacquired Shares. Any shares of
Series A Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in
the Restated Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred
Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders
of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of<PAGE>
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution
or winding up. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in
each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case
the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of
Common stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immedi-
ately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock
shall rank, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.
Section 10. Amendment. The Restated Certificate
of Incorporation of the Corporation shall not be amended in
any manner which would materially alter or change the powers,<PAGE>
preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote
of the holders of at least two-thirds of the outstanding
shares of Series A Preferred Stock, voting together as a
single class.
2. Series D Preferred Stock.
FURTHER RESOLVED, that pursuant to the authority
granted to and vested in the Board of Directors of this
Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the
Restated Certificate of Incorporation, the Board of Directors
hereby creates a series of Preferred Stock, without par value
(the "Preferred Stock"), of the Corporation and hereby states
the designation and number of shares, and fixes the relative
rights, preferences and limitations thereof as follows:
Series D Preferred Stock:
Section 1. Designation and Amount. The shares of
such series shall be designated as Series D Preferred Stock
(the "Series D Preferred Stock") and the number of shares
constituting the Series D Preferred Stock shall be three
hundred thousand (300,000). Shares of Series D Preferred
Stock shall have a stated value of $100 per share. Such
number may be increased or decreased by resolution of the
Board of Directors; provided, however that no decrease shall
reduce the number of shares of Series D Preferred Stock to a
number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants issued by or upon
the conversion of any outstanding securities issued by the
Corporation convertible into Series D Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar
stock) ranking prior and superior to the Series D Preferred
Stock with respect to dividends, the holders of shares of
Series D Preferred Stock, in preference to the holders of
Common Stock and of any other Junior Stock (as hereinafter
defined in Section 4(B)), shall be entitled to receive a cash
dividend payable in an amount per share equal to $1.25 per
quarter and no more (such amount being referred to herein as
the "Dividend Amount"), which dividend shall be payable when
and as declared by the Board of Directors, out of funds
legally available for the purpose, payable quarterly in
arrears on the first day of March, June, September and
December in each year (each such date being referred to
herein as "Dividend Payment Date"), subject to Section 2(B)
below, commencing on the first Dividend Payment Date after
the first issuance of a share of Series D Preferred Stock.
In the event that any Dividend Payment Date shall occur on
any day other than a "Business Day" (as hereinafter defined),
the dividend payment due on such Dividend Payment Date shall
be paid on the Business Day immediately preceding such
Dividend Payment Date. The Board of Directors may fix a
record date for the determination of holders of shares of
Series D Preferred Stock entitled to receive payment of a<PAGE>
dividend or distribution declared thereon, which record date
shall be not more than 60 days prior to the date fixed for
the payment thereof. For purposes of these resolutions,
"Business Day" shall mean each day that is not a Saturday,
Sunday or a date on which federally or state chartered
banking institutions in Chicago, Illinois or New York, New
York are required or authorized to be closed.
(B) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series D Preferred Stock
from the date of issue of such shares and shall accrue on a
daily basis whether or not declared and whether or not the
Corporation shall have earnings or surplus out of which such
dividends could be paid at the time. Dividends accrued on the
shares of Series D Preferred Stock for any period less than a
full quarterly period between Dividend Payment Dates shall be
computed on the basis of a 360-day year of 30-day months and
in lieu of the initial quarterly dividend, such a
proportional dividend shall accrue for the period from the
date of issue until the first Dividend Payment Date after the
issuance of any such shares. Accrued but unpaid dividends
shall not bear interest. Accumulated but unpaid dividends
shall cumulate as of the Dividend Payment Date on which they
first become payable, but no interest shall accrue on
accumulated but unpaid dividends.
(C) Dividends paid on the shares of Series D
Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares
of Series D Preferred Stock shall have the following voting
rights:
(A) Each share of Series D Preferred Stock shall
entitle the holder thereof to one vote on all matters
submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided by law or in the
Restated Certificate of Incorporation, the holders of shares
of Series D Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise
provided by law or in the Restated Certificate of
Incorporation, holders of Series D Preferred Stock shall have
no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with
holders of Common stock as set forth herein) for taking any
corporate action. Any increase or decrease in the authorized
class of Preferred Stock shall not be deemed to alter or
change the powers, preferences, or special rights of the
shares of Series D Preferred Stock so as to affect them
adversely within the meaning of the General Corporation Law
of the State of Delaware and no class vote shall be required
to authorize such increase or decrease.<PAGE>
Section 4. Certain Restrictions.
(A) So long as any Series D Preferred Stock shall
be outstanding, no dividend shall be declared and paid or set
apart for payment on any other series of stock ranking on a
parity with the Series D Preferred Stock as to dividends
("Parity Stock"), unless there shall also be or have been
declared and paid or set apart for payment on the Series D
Preferred Stock dividends for all dividend payment periods of
the Series D Preferred Stock ending on or before the dividend
payment date of such Parity Stock, ratably in proportion to
the respective amounts of dividends on the Series D Preferred
Stock accumulated and unpaid through the most recent such
dividend payment period, and accumulated and unpaid on such
Parity Stock through the dividend payment period on such
Parity Stock ending on such dividend payment date or such
dividend payment date immediately preceding such dividend
payment period.
(B) So long as any Series D Preferred Stock shall
be outstanding, in the event that full cumulative dividends
on the Series D Preferred Stock have not been declared and
paid or set apart for payment, the Corporation shall not
declare and pay or set apart for payment any dividends or
make any other distributions on, or make any payment on
account of the purchase, redemption or other retirement of,
Common Stock or any other class of stock or series thereof of
the Corporation ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or
winding up of the Corporation, junior to the Series D
Preferred Stock (collectively, "Junior Stock") until full
cumulative and unpaid dividends on the Series D Preferred
Stock shall have been paid or declared and set apart for
payment; provided, however, that the foregoing shall not
apply to (i) any dividend payable solely in any shares of
Junior Stock, or (ii) the acquisition of shares of Junior
Stock either (x) pursuant to any employee or director
incentive or benefit plan or arrangement of the Corporation
or any subsidiary of the Corporation heretofore or hereafter
adopted or (y) in exchange solely for shares of any other
Junior Stock. Subject to the foregoing provisions of this
Section 4, the Board of Directors may declare and the
Corporation may pay or set apart for payment dividends and
other distributions on any Junior Stock or Parity Stock; and
may purchase or otherwise redeem or retire any of the Junior
Stock or Parity Stock or any warrants, rights, or options or
other securities exercisable for or convertible into any of
the Junior Stock or Parity Stock and the holders of shares of
the Series D Preferred Stock shall not be entitled to share
therein.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding
up of the Corporation, no distribution shall be made (i) to
the holders of shares of Junior Stock unless, prior thereto,
the holders of shares of Series D Preferred Stock shall have
received $100 per share (such amount being referred to herein
as the "Liquidation Preference"), plus an amount equal to
accrued and unpaid dividends and distributions thereon,<PAGE>
whether or not declared, as to the date of such payment, or
(ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series D Preferred Stock
and all such Parity Stock in proportion to the total amounts
to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up. After payment
of the full amount to which they are entitled as provided by
the foregoing provisions of this Section 5(A), the holders of
shares of Series D Preferred Stock shall not be entitled to
any further right or claim to any of the remaining assets of
the Corporation.
(B) Neither the merger or consolidation of the
Corporation with or into any other corporation or other
entity, nor the merger or consolidation of any other
corporation or other entity with or into the Corporation, nor
the sale, transfer or lease of all or any portion of the
assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for
purposes of this Section 5.
(C) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
stating the payment date or dates when, and the place or
places where, the amounts distributable to holders of Series
D Preferred Stock in such circumstances shall be payable,
shall be made in accordance with Section 8 below not less
than 20 days prior to any payment date stated therein, to the
holders of Series D Preferred Stock, at their respective
addresses shown on the books of the Corporation or any
transfer agent for the Series D Preferred Stock; provided,
however, that a failure to give notice as provided herein or
any defect therein shall not affect the Corporation's ability
to consummate a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation.
Section 6. Redemption.
All of the outstanding Series D Preferred Stock
shall be redeemed, by the Corporation, out of funds legally
available therefor, on the later of (i) February 1, 1997 and
(ii) the death of Maurice J. Sullivan, an individual residing
in the State of Hawaii, to whom the initial shares of Series
D Preferred Stock will initially be issued (the "Redemption
Date"). The shares shall be redeemed at a price of $100 per
share, plus an amount equal to accrued and unpaid dividends
thereon, to the Redemption Date (the "Redemption Price"). On
or subsequent to the Redemption Date, upon surrender of the
certificates for any shares to be redeemed pursuant to the
provisions of this Section 6, the Redemption Price of such
shares shall be paid in cash. In the event that the
Redemption Price is either paid or made available for
payment, then, notwithstanding that the certificate or
certificates evidencing any of the shares of the Series D
Preferred Stock shall not have been surrendered, all rights
with respect to such shares shall terminate, effective on the
Redemption Date, and any such certificate shall represent
only the right to receive the Redemption Price, without
interest, upon surrender. No interest shall accrue on the
Redemption Price after the Redemption Date. <PAGE>
Section 7. Reacquired Shares. Any shares of
Series D Preferred Stock acquired by the Corporation by
reason of the redemption of such shares as provided hereby,
or otherwise so acquired, shall be retired and the
Corporation shall take all actions necessary to restore such
shares to the status of authorized but unissued shares of
Preferred Stock, without par value, of the Corporation, which
shares may thereafter be reissued as part of a new series of
such Preferred Stock or as Series D Preferred Stock, as
permitted by law.
Section 8. Miscellaneous.
(A) All notices referred to herein shall be in
writing, and delivered personally, sent by courier, or by
registered or certified mail (postage prepaid, return receipt
requested) addressed: (i) if to the Corporation, to its
office at McDonald's Plaza, Oak Brook, Illinois 60521
(Attention: Secretary) or to the transfer agent designated by
the Corporation or (ii) if to any holder of the Series D
Preferred Stock, to such holder at the address of such holder
as listed in the stock records books of the Corporation
(which may include the records of any transfer agent for the
Series D Preferred Stock or Common Stock, as the case may be)
or (iii) to such other address as the Corporation or any such
holder, as the case may be, shall have designated by notice
similarly given.
(B) The Corporation shall pay any and all stock
transfer and documentary stamp taxes that may be payable in
respect of any issuance or delivery or shares of Series D
Preferred Stock or certificates representing such shares.
The Corporation shall not, however, be required to pay any
such tax which may be payable in respect of any transfer
involved in the issuance or delivery of shares of Series D
Preferred Stock in a name other than the name in which the
shares of Series D Preferred Stock with respect to which such
shares are issued or delivered were registered, or in respect
of any payment to any person with respect to any such shares
other than a payment to the registered holder thereof, and
shall not be required to make any such issuance, delivery or
payment unless and until the person otherwise entitled to
such issuance, delivery or payment has paid to the
Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been
paid or is not payable.
(C) Unless otherwise provided in the Certificate
of Designations as the same may be amended, all payments in
the form of dividends, distributions on voluntary or
involuntary dissolution, liquidation or winding-up otherwise
made upon the shares of Series D Preferred Stock and any
other stock ranking on a parity with the Series D Preferred
Stock with respect to such dividend or distribution shall be
made pro rata, so that amounts paid per share on the Series D
Preferred Stock and such other stock shall in all cases bear
to each other the same ratio that the required dividends,
distributions or payments, as the case may be, then payable
per share on the shares of the Series D Preferred Stock and
such other stock bear to each other. <PAGE>
(D) The Corporation may appoint and from time to
time discharge and change, a transfer agent for the Series D
Preferred Stock. Upon any such appointment or discharge of a
transfer agent, the Corporation shall send notice thereof in
accordance with Section 8(A) to each holder of record of
Series D Preferred Stock.
3. Series E Preferred Stock.
RESOLVED, That the issuance of a series of
Preferred Stock, without par value, of the Corporation is
hereby authorized and the designations, preferences and
privileges, relative, participating, optional and other
special rights and qualifications, limitations and
restrictions thereof, in addition to those set forth in the
Restated Certificate of Incorporation of the Corporation, are
hereby fixed as follows:
7.72% Cumulative Preferred Stock, Series E
Section 1. Designation and Amount. The shares of
such series shall be designated as 7.72% Cumulative
Preferred Stock, Series E (the "Series E Preferred Stock"),
and the number of shares constituting the Series E Preferred
Stock shall be 7,407. Shares of Series E Preferred Stock
shall have a liquidation preference of $50,000 per share.
The number of shares may be increased or decreased by
resolution of the Board of Directors; provided, however,
that no decrease shall reduce the number of shares of Series
E Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or
warrants issued by or upon the conversion of any outstanding
securities issued by the Corporation convertible into Series
E Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any series of Preferred Stock (or any similar
stock) ranking prior and superior to Series E Preferred
Stock with respect to dividends, the holders of shares of
Series E Preferred Stock, in preference to the holders of
Common Stock and of any other Junior Stock (as hereinafter
defined in Section 4(B)), shall be entitled to receive a
cash dividend payable in an amount per share equal to
$965.00 per quarter and no more (such amount being referred
to herein as the "Dividend Amount"), which dividend shall be
payable when, as and if declared by the Board of Directors,
out of funds legally available for that purpose, quarterly
in arrears on the first day of March, June, September and
December in each year (each such date being referred to
herein as a "Dividend Payment Date"), commencing on March 1,
1993. In the event that any Dividend Payment Date shall
occur on any day other than a "Business Day" (as hereinafter
defined), the dividend payment due on such Dividend Payment
Date shall be paid on the Business Day immediately preceding
such Dividend Payment Date. The Board of Directors may fix
a record date for the determination of holders of shares of
Series E Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date<PAGE>
shall be not more than 60 days prior to the date fixed for
the payment thereof. For purposes of these resolutions,
"Business Day" shall mean each day that is not a Saturday,
Sunday or a date on which federally or state chartered
banking institutions in Chicago, Illinois or New York, New
York are required or authorized to be closed.
(B) Dividends shall begin to accrue on
outstanding shares of Series E Preferred Stock from the date
of original issuance of such shares and shall accrue on a
daily basis whether or not declared and whether or not the
Corporation shall have earnings or surplus out of which such
dividends could be paid at the time. Dividends accrued on
the shares of Series E Preferred Stock for any period
greater or less than a full quarterly period between
Dividend Payment Dates shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid
dividends shall not bear interest. Accrued but unpaid
dividends shall cumulate as of the Dividend Payment Date on
which they first become payable, but no interest shall
accrue on such accumulated but unpaid dividends.
(C) Dividends paid on the shares of Series E
Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Section 3. Voting Rights.
(A) Except as set forth herein, or as otherwise
provided by law or in the Restated Certificate of
Incorporation, holders of Series E Preferred Stock shall have
no special voting rights and their consent shall not be
required for taking any corporate action. On those matters
where voting rights are conferred herein, by law or in the
Restated Certificate of Incorporation, each share of Series E
Preferred Stock shall entitle the voter thereof to one vote.
Any increase or decrease in the authorized class of Preferred
Stock shall not be deemed to alter or change the powers,
preferences, or special rights of the shares of Series E
Preferred Stock so as to affect them adversely within the
meaning of the General Corporation Law of the State of
Delaware and no class vote shall be required to authorize
such increase or decrease.
(B) If at any time dividends payable on Series E
Preferred Stock, or on any one or more other series of
Preferred Stock of the Corporation entitled to receive
cumulative preferred dividends, are in arrears and unpaid in
an amount equal to or exceeding the amount of dividends
payable on such Series E Preferred Stock and/or other series
of Preferred Stock entitled to receive cumulative dividends
for six quarterly dividend periods, whether or not
consecutive, the holders of all outstanding shares of
Preferred Stock entitled to receive cumulative preferred
dividends will have the exclusive right, voting separately
as a class, to elect two directors to the Board of Directors
of the Corporation at the next annual meeting of
stockholders of the Corporation. The authorized number of
Directors shall not be increased for this purpose. Such<PAGE>
voting right will continue for such Preferred Stock until
all dividends on Series E Preferred Stock and on such other
series have been paid in full, at which time such voting
right of the holders of such Preferred Stock will terminate,
subject to re-vesting in the event of a subsequent
arrearage. Upon any termination of the aforesaid voting
right, the term of office of those directors elected by
holders of Preferred Stock voting separately as a class will
terminate.
Section 4. Certain Restrictions.
(A) So long as any Series E Preferred Stock shall
be outstanding, no dividend shall be declared and paid or
set apart for payment on any other series of stock ranking
on a parity with Series E Preferred Stock as to dividends
("Parity Stock"), unless there shall also be or have been
declared and paid or set apart for payment on Series E
Preferred Stock dividends for all dividend payment periods
of Series E Preferred Stock ending on or before the dividend
payment date of such Parity Stock, ratably in proportion to
the respective amounts of dividends on the Series E
Preferred Stock accrued and unpaid through the most recent
such dividend payment period, and accrued and unpaid on such
Parity Stock through the dividend payment period on such
Parity Stock ending on such dividend payment date or such
dividend payment date immediately preceding such dividend
payment period.
(B) So long as any Series E Preferred Stock shall
be outstanding, in the event that full cumulative dividends
on the Series E Preferred Stock have not been declared and
paid or set apart for payment when due, the Corporation
shall not declare and pay or set apart for payment any
dividends on Common Stock or any other class of stock or
series thereof of the Corporation ranking as to dividends
junior to Series E Preferred Stock (collectively, "Junior
Stock") until full cumulative and unpaid dividends on Series
E Preferred Stock shall have been paid or declared and set
apart for payment; provided, however, that the foregoing
shall not apply to any dividend payable solely in any shares
of Junior Stock. Subject to the foregoing provisions of
this Section 4, the Board of Directors may declare and the
Corporation may pay or set apart for payment dividends on
any Junior Stock or Parity Stock and the holders of shares
of Series E Preferred Stock shall not be entitled to share
therein.
Section 5. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding
up of the Corporation, either voluntary or involuntary, no
distribution shall be made (i) to the holders of shares of
stock ranking junior to the Series E Preferred Stock as to
distributions in the event of any liquidation, dissolution
or winding up of the Corporation unless, prior thereto, the
holders of shares of Series E Preferred Stock shall have
received $50,000 per share (such amount being referred to
herein as the "Liquidation Preference"), plus an amount
equal to accrued and unpaid dividends and distributions<PAGE>
thereon, whether or not declared, as to the date of such
payment, or (ii) to the holders of shares of stock ranking
on a parity with the Series E Preferred Stock as to
distributions in the event of any liquidation, dissolution
or winding up of the Corporation ("Parity Liquidation
Stock"), except distributions made ratably on Series E
Preferred Stock and all such Parity Liquidation Stock in
proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution
or winding up. After payment of the full amount to which
they are entitled as provided by the foregoing provisions of
this Section 5(A), the holders of shares of Series E
Preferred Stock shall not be entitled to any further right
or claim to any of the remaining assets of the Corporation.
(B) Neither the merger or consolidation of the
Corporation with or into any other corporation or other
entity, nor the merger or consolidation of any other
corporation or other entity with or into the Corporation,
nor the sale, lease, exchange or other transfer of all or
any portion of the assets of the Corporation, shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section 5.
(C) Written notice of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, stating the payment date or dates when, and the
place or places where, the amounts distributable to holders
of Series E Preferred Stock in such circumstances shall be
payable, shall be made in accordance with Section 9 below
not less than 20 days prior to any payment date stated
therein, to the holders of Series E Preferred Stock, at
their respective addresses shown on the books of the
Corporation or any transfer agent for the Series E Preferred
Stock; provided, however, that a failure to give notice as
provided herein or any defect therein shall not affect the
Corporation's ability to consummate a voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation.
Section 6. Redemption. The Series E Preferred
Stock will not be redeemable prior to December 3, 1997. The
Series E Preferred Stock will be redeemable, at the option
of the Corporation, in whole or in part, out of funds
legally available therefor, at any time, on or after
December 3, 1997, upon not less than 30 nor more than 90
days' notice, at a redemption price per share of Series E
Preferred Stock equal to the Liquidation Preference, plus an
amount equal to accrued and unpaid dividends to the
redemption date. On or subsequent to the redemption date,
upon surrender of the certificates for any shares to be
redeemed pursuant to the provisions of this Section 6, the
redemption price of such shares shall be paid in cash. In
the event that the redemption price is either paid or made
available for payment, then, notwithstanding that the
certificate or certificates evidencing any of the shares of
the Series E Preferred Stock shall not have been
surrendered, all rights with respect to such shares shall
terminate, effective on the redemption date, and any such
certificate shall represent only the right to receive the
redemption price, without interest, upon surrender. No<PAGE>
interest shall accrue on the redemption price after the
redemption date.
Section 7. Reacquired Shares. Any shares of
Series E Preferred Stock acquired by the Corporation by
reason of the redemption of such shares as provided hereby,
or otherwise acquired, shall be retired and the Corporation
shall take all actions necessary to restore such shares to
the status of authorized but unissued shares of Preferred
Stock, without par value, of the Corporation, which shares
may thereafter be reissued as part of a new series of such
Preferred Stock or as Series E Preferred Stock, as permitted
by law.
Section 8. Ranking. The Series E Preferred Stock
will rank on a parity as to payment of dividends and
distribution of assets upon liquidation, dissolution or
winding up, whether voluntary or involuntary, of the
Corporation with the Corporation's Series B ESOP Convertible
Preferred Stock, Series C ESOP Convertible Preferred Stock
and Series D Preferred Stock (which are the only series of
Preferred Stock currently outstanding) and prior to the
Corporation's Common Stock. The Series E Preferred Stock
will rank prior to the Corporation's Series A Junior
Participating Preferred Stock (the "Series A Preferred
Stock") as to the payment of dividends and on a parity with
the Series A Preferred Stock as to distribution of assets
upon liquidation, dissolution or winding up, whether
voluntary or involuntary, if such Series A Preferred Stock
is issued.
Section 9. Miscellaneous.
(A) All notices referred to herein shall be in
writing, and delivered personally, sent by courier, or by
registered or certified mail (postage prepaid, return
receipt requested) addressed: (i) if to the Corporation, to
its office at One McDonald's Plaza, Oak Brook, Illinois
60521 (Attention: Secretary) or to the transfer agent
designated by the Corporation or (ii) if to any holder of
Series E Preferred Stock, to such holder at the address of
such holder as listed in the stock record books of the
Corporation or (iii) to such other address as the
Corporation or any such holder, as the case may be, shall
have designated by notice similarly given.
(B) The Corporation shall pay any and all stock
transfer and documentary stamp taxes that may be payable in
respect of any issuance or delivery of shares of Series E
Preferred Stock or certificates representing such shares.
The Corporation shall not, however, be required to pay any
such tax which may be payable in respect of any transfer
involved in the issuance or delivery of shares of Series E
Preferred Stock in a name other than the name in which such
shares of Series E Preferred Stock were registered, or in
respect of any payment to any person with respect to any
such shares other than a payment to the registered holder
thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person
otherwise entitled to such issuance, delivery or payment has
paid to the Corporation the amount of any such tax or has<PAGE>
established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.
(C) Unless otherwise provided in the Certificate
of Designations, Preferences and Rights, as the same may be
amended, all payments in the form of dividends,
distributions on voluntary or involuntary dissolution,
liquidation or winding-up otherwise made upon the shares of
Series E Preferred Stock and any other stock ranking on a
parity with Series E Preferred Stock with respect to such
dividend or distribution shall be made pro rata, so that
amounts paid per share on Series E Preferred Stock and such
other stock shall in all cases bear to each other the same
ratio that the required dividends, distributions or
payments, as the case may be, then payable per share on the
shares of the Series E Preferred Stock and such other stock
bear to each other.
(D) The Corporation may appoint, and from time to
time discharge and change, a transfer agent for Series E
Preferred Stock. Upon any such appointment or discharge of
a transfer agent, the Corporation shall send notice thereof
in accordance with Section 9(A) to each holder of record of
Series E Preferred Stock.
FIFTH: The minimum amount of capital with which
the Corporation will commence business is One Thousand
Dollars ($1,000).
SIXTH: The Corporation is to have perpetual
existence.
SEVENTH: The private property of the stockholders
of the Corporation shall not be subject to the payment of
corporate debts to any extent whatsoever.
EIGHTH: In furtherance and not in limitation of
the powers conferred by the laws of the State of Delaware the
Board of Directors is expressly authorized and empowered:
(a) In the manner provided in the by-laws of the
Corporation to make, alter, amend and repeal the by-laws of
the Corporation in any respect not inconsistent with the laws
of the State of Delaware or with the Restated Certificate of
Incorporation of the Corporation;
(b) By a resolution or resolutions passed by a
majority of the whole Board, to designate one or more
committees, each committee to consist of two or more of the
directors of the Corporation which, to the extent provided in
said resolution or resolutions or in the by-laws of the
Corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and
affairs of the Corporation, and may have power to authorize
the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such
name or names as may be stated in the by-laws of the
Corporation or as may be determined from time to time by
resolution adopted by the Board of Directors; <PAGE>
(c) Subject to any applicable provisions of the
by-laws of the Corporation then in effect, to determine from
time to time, whether and to what extent and at what times
and places and under what conditions and regulations the
accounts and books of the Corporation, or any of them, shall
be open to the inspection of the stockholders; and no
stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by
the laws of the State of Delaware, unless and until
authorized so to do by resolution of the Board of Directors
or of the stockholders of the Corporation;
(d) To fix from time to time the amount of the
surplus or profits of the Corporation to be reserved as
working capital or for any other lawful purpose;
(e) Without any action by the stockholders, to
authorize the borrowing of moneys for any of the purposes of
the Corporation and, from time to time without limit as to
amount, to authorize and cause the making, execution,
issuance, sale or other disposition of promissory notes,
drafts, bonds, debentures and other negotiable or non-
negotiable instruments and evidences of indebtedness, and the
securing of the same by mortgage, pledge, deed of trust or
otherwise.
In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon it, the
Board of Directors may exercise all such powers and do all
such acts and things as may be exercised, or done by the
Corporation, subject, nevertheless, to the provisions of the
laws of the State of Delaware, this Restated Certificate of
Incorporation and the by-laws of the Corporation.
Any contract, transaction or act of the Corporation
or of the directors or of any committee, which shall be
ratified by the holders of a majority of the shares of stock
of the Corporation present in person or by proxy and voting
at any annual meeting, or at any special meeting called for
such purpose, shall, insofar as permitted by law or by this
Restated Certificate of Incorporation, be as valid and as
binding as though ratified by every stockholder of the
Corporation.
The Corporation may enter into contracts or
transact business with one or more of its directors, or with
any firm of which one or more of its directors are members or
with any trust, firm, corporation or association in which any
one or more of its directors is a stockholder, director or
officer or otherwise interested, and any such contract or
transaction shall not be invalidated in the absence of fraud
because such director or directors have or may have interests
therein which are or might be adverse to the interest of the
Corporation, even though the presence and/or vote of the
director or directors having such adverse interest shall have
been necessary to constitute a quorum and/or to obligate the
Corporation upon such contract or transaction, provided that
such interests shall have been disclosed to the other
directors and a majority of the directors voting shall have
approved such contract or transaction; and no director having
such adverse interest shall be liable to this Corporation or<PAGE>
to any stockholder or creditor thereof, or to any other
person for any loss incurred by it under or by reason of any
such contract or transaction; nor shall any such director or
directors be accountable for any gains or profits realized
thereon.
The Corporation shall have power to indemnify any
and all of its directors or officers or former directors or
officers or any person who may have served at its request as
a director or officer of another corporation in which it owns
shares of capital stock or of which it is a creditor against
liabilities and expenses actually and necessarily incurred by
them in connection with the defense of any action, suit or
proceeding in which they, or any of them, are made parties,
or a party, by reason of being or having been directors or
officers or a director or officer of the Corporation, or of
such other corporation, except in relation to matters as to
which any such director or officer or former director or
officer or person shall be adjudged in such action, suit or
proceeding to be liable for negligence or misconduct in the
performance of duty. Such indemnification shall not be deemed
exclusive of any other rights to which those indemnified may
be entitled, under any by-law, agreement, vote of
stockholders or otherwise.
NINTH: Meetings of stockholders may be held
outside the State of Delaware, if the by-laws so provide.
The books of the Corporation may be kept (subject to the laws
of the State of Delaware) outside the State of Delaware at
such place or places as may be designated from time to time
by the Board of Directors or in the by-laws of the
Corporation. Elections of directors need not be by ballot
unless the by-laws of the Corporation shall so provide.
TENTH: The Corporation reserves the right to
amend, alter, change or repeal any provision contained in
this Restated Certificate of Incorporation, to the extent and
in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject
to this reservation.
ELEVENTH: It is hereby declared to be a proper
corporate purpose, reasonably calculated to benefit
stockholders, for the Board of Directors to base the response
of the Corporation to any 'Acquisition Proposal' on the Board
of Directors' evaluation of what is in the best interests of
the Corporation and for the Board of Directors, in evaluating
what is in the best interests of the Corporation, to
consider:
(i) the best interest of the stockholders; for
this purpose the Board shall consider, among other factors,
not only the consideration being offered in the Acquisition
Proposal, in relation to the then current market price, but
also in relation to the then current value of the Corporation
in a freely negotiated transaction and in relation to the
Board of Directors' then estimate of the future value of the
Corporation as an independent entity; and
(ii) such other factors as the Board of Directors
determines to be relevant, including, among other factors,<PAGE>
the social, legal and economic effects upon franchisees,
employees, suppliers, customers and business.
'Acquisition Proposal' means any proposal of any
person (a) for a tender offer or exchange offer for any
equity security of the Corporation, (b) to merge or
consolidate the Corporation with another corporation, or (c)
to purchase or otherwise acquire all or substantially all of
the properties and assets of the Corporation.
TWELFTH: Subject to all other applicable
provisions of this Restated Certificate of Incorporation and
to all applicable provisions of the law of Delaware,
relating, inter alia, to stockholder approval, the Board of
Directors shall have the power to merge or consolidate the
Corporation with another corporation or to sell, lease or
exchange all or substantially all of the property and assets
of the Corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such
consideration, which may be in whole or in part shares of
stock in, and/or other securities of, any corporation or
corporations, as the Board of Directors shall deem expedient
and for the best interests of the Corporation, but,
regardless of any other provision of this Restated
Certificate of Incorporation, if any party to any such
transaction shall be a person or entity owning, immediately
prior to the consummation of such transaction, of record or
beneficially, 2% or more of the stock of the Corporation
issued and outstanding having voting power, such power of the
Board of Directors shall be exercisable only when and as duly
authorized by the affirmative vote of the holders of not less
than 66-2/3% of the stock of the Corporation issued and
outstanding having voting power given at a stockholders'
meeting duly called for that purpose; provided, however, that
the Board of Directors shall have the power to merge the
Corporation with another corporation without action by the
stockholders to the extent and in the manner permitted from
time to time by the law of Delaware. In determining whether
or not any person or entity (the 'Primary Holder') owns, of
record or beneficially, 2% or more of the stock of the
Corporation issued and outstanding having voting power, there
shall be aggregated with all shares of such stock owned of
record or beneficially by the Primary Holder (a) all shares
of such stock owned of record or beneficially by any person
or entity who or which would be deemed to be controlling,
controlled by or under common control with the Primary Holder
under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any federal statute enacted
to take the place of either or both such statutes or any
regulation promulgated under either of such statutes or such
successor statutes (an 'Affiliate') and (b) all shares of
such stock owned of record or beneficially by any person or
entity acting in concert with the Primary Holder and/or with
an Affiliate of the Primary Holder. This Article Twelfth
shall not be altered, amended or repealed except by the
affirmative vote of the holders of not less than 66-2/3% of
the stock of the Corporation issued and outstanding having
voting power, given at a stockholders' meeting duly called
for that purpose, upon a proposal adopted by the Board of
Directors. <PAGE>
THIRTEENTH: Board of Directors.
(a) Number, Election and Terms. The business and
affairs of the Corporation shall be managed by or under the
direction of a Board of Directors consisting of not less than
11 nor more than 24 persons. The exact number of directors
within the minimum and maximum limitations specified in the
preceding sentence shall be fixed from time to time by the
Board of Directors pursuant to a resolution adopted by a
majority of the entire Board of Directors.
At the 1983 Annual Meeting of Stockholders, the
directors shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the
first class to expire at the 1984 annual meeting of
stockholders, the term of office of the second class to
expire at the 1985 annual meeting of stockholders and the
term of office of the third class to expire at the 1986
annual meeting of stockholders.
At each annual meeting of stockholders following
such initial classification and election, directors elected
to succeed those whose terms then expire shall be elected for
a term of office expiring at the third succeeding annual
meeting of stockholders after their election.
(b) Newly Created Directorships and Vacancies.
Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall be
filled by a majority vote of the directors then in office.
Directors so chosen shall hold office for a term expiring at
the annual meeting of stockholders at which the term of the
class to which they have been elected expires. No decrease
in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
(c) Removal. Subject to the rights of the holders
of any series of Preferred Stock then outstanding, any
director, or the entire Board of Directors, may be removed
from office at any time, but only for cause and only by the
affirmative votes of the holders of at least 80% of the
voting power of all the shares of the Corporation entitled to
vote for the election of directors.
(d) Amendment, Repeal, Etc. Notwithstanding
anything to the contrary contained in this Restated
Certificate of Incorporation, the affirmative vote of the
holders of at least 80% of the voting power of all of the
shares of the Corporation entitled to vote for the election
of directors shall be required to amend, alter or repeal, or
to adopt any provision inconsistent with, this Article Thir-
teenth.
FOURTEENTH: Stockholder Action. Any action
required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may<PAGE>
not be effected by any consent in writing by such
stockholders. Special meetings of stockholders of the
Corporation may be called upon not less than 10 nor more than
60 days' written notice only by the Board of Directors
pursuant to a resolution approved by a majority of the Board
of Directors. Notwithstanding anything contained in this
Restated Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80% of the voting
power of all of the shares of the Corporation entitled to
vote for the election of directors shall be required to
amend, alter or repeal, or to adopt any provision
inconsistent with, this Article Fourteenth.
FIFTEENTH: Elimination of Certain Liability of
Directors. To the fullest extent that the general corporate
law of the State of Delaware, as it exists on the date hereof
or as it may hereafter be amended, permits the limitation or
elimination of the liability of directors, no director of the
Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary
duty as a director. No amendment to or repeal of this
Article Fifteenth shall apply to or have any effect on
liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, this Restated Certificate of
Incorporation, which restates and integrates but does not
further amend the Restated Certificate of Incorporation of
McDonald's Corporation, as heretofore amended or
supplemented, there being no discrepancy between such
Restated Certificate of Incorporation, as so amended and
supplemented, and the provisions hereof, and having been
adopted in accordance with Section 245 of the Delaware
General Corporation Law, has been executed by its Vice
President and attested by its Assistant Secretary, as of this
23rd day of May, 1996.
McDONALD'S CORPORATION
By: /s/ Gloria Santona
-------------------------
Vice President
ATTEST:
/s/ Joseph Thomas
-----------------------
Assistant Secretary<PAGE>
<PAGE> 22
<TABLE>
Exhibit 11
McDONALD'S CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Dollars and shares in millions, except per common share data
<CAPTION> Year Ended Quarters Ended
June 30 June 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $722.0 $660.4 $420.4 $379.7
Preferred stock dividends (net of tax benefits) (13.8) (23.8) (6.9) (11.9)
------- ------- ------- -------
Net income available after preferred stock dividends (A) 708.2 636.6 413.5 367.8
Effect of preferred stock exchange* .0 (3.9) (0.0) (3.9)
Common stock dividends on assumed conversion of preferred stock .0 .5 .0 .1
------- ------- ------- -------
Net income available to common shareholders $708.2 $633.2 $413.5 $364.0
======= ======= ======= =======
Weighted average number of common shares outstanding during the
period (A) 699.8 700.2 699.1 700.1
Additional shares related to potentially dilutive securities 19.7 20.9 18.9 20.6
------- ------- ------- -------
Adjusted weighted average common shares 719.5 721.1 718.0 720.7
======= ======= ======= =======
Fully diluted net income per common share $ 0.98 $ 0.88 $ 0.58 $ 0.51
------- ------- ------- -------
NOTES:
* 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.
(A) Refer to Condensed consolidated statement of income on page 4 and to Financial comments -
Net income per common share on page 6 of this report.
/TABLE
<PAGE>
<PAGE> 23
<TABLE> Exhibit 12
McDONALD'S CORPORATION
STATEMENT RE: COMPUTATION OF RATIOS
Dollars in Millions
<CAPTION> Six Months
Ended June 30, Year 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 $1,077.6 $1,020.0 $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 18.3 4.7 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 33.6 27.0 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* 59.9 52.1 103.8 83.4 71.6 70.1 67.9
- Interest expense, amortization of debt
discount and issuance costs, and
depreciation of capitalized interest* 191.8 188.2 388.8 346.0 358.0 413.8 433.9
---------------------------------------------------------------------------
$1,381.2 $1,292.0 $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* $59.9 $52.1 $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* 199.8 194.6 403.4 343.9 349.3 405.4 425.7
- Capitalized interest* 10.3 10.1 22.8 21.0 20.7 20.5 28.5
---------------------------------------------------------------------------
$270.0 $256.8 $530.0 $448.3 $441.6 $496.0 $522.1
===========================================================================
RATIO OF EARNINGS TO FIXED CHARGES 5.12 5.03 5.20 5.26 4.86 3.96 3.53
===========================================================================
*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
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 346
<SECURITIES> 0
<RECEIVABLES> 454
<ALLOWANCES> 0
<INVENTORY> 55
<CURRENT-ASSETS> 1,022
<PP&E> 17,855
<DEPRECIATION> 4,530
<TOTAL-ASSETS> 16,021
<CURRENT-LIABILITIES> 1,864
<BONDS> 4,274
0
358
<COMMON> 8
<OTHER-SE> 10,644
<TOTAL-LIABILITY-AND-EQUITY> 16,021
<SALES> 3,600
<TOTAL-REVENUES> 5,091
<CGS> 2,942
<TOTAL-COSTS> 3,220
<OTHER-EXPENSES> (41)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 168
<INCOME-PRETAX> 1,078
<INCOME-TAX> 356
<INCOME-CONTINUING> 722
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 722
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 0
</TABLE>
