SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 17, 1998
McDONALD'S CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 1-5231 36-2361282
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
One McDonald's Plaza
Oak Brook, Illinois 60523
(630) 623-3000
(Address and Phone Number of Principal Executive Offices)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibit
------ -----------------------------------------------------------------
(c) Exhibits
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(3) Restated Certificate of Incorporation effective as of March 24,
1998 filed herewith and By-Laws, effective as of December 19, 1997,
incorporated by reference from Form 8-K dated January 5, 1998.
(99) Press Release dated April 17, 1998 -- McDonald's Reports Global
Results
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
McDONALD'S CORPORATION
(Registrant)
By: /s/ Gloria Santona
--------------------------------------
Gloria Santona
Vice President, Deputy General Counsel
and Secretary
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 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<PAGE>
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
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 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, retirement 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<PAGE>
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 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 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 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 corpora-
tion 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 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<PAGE>
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 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.
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 dividends 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 Preferred 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 canceled 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 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 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 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, 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.
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;
(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 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, 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.
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 Thirteenth.
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 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 24th day of
March, 1998.
McDONALD'S CORPORATION
By: /s/ Gloria Santona
-------------------------
Gloria Santona
Vice President
ATTEST:
/s/ Joseph R. Thomas
-------------------------
Joseph R. Thomas
Assistant Secretary
Exhibit 99
Investor Release
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
04/17/98 Investors: Mary Healy, 630-623-6429
Media: Chuck Ebeling, 630-623-6150
McDONALD'S REPORTS GLOBAL RESULTS
OAK BROOK, IL -- McDonald's Corporation today announced record results
for the quarter ended March 31, 1998.
Constant currency information excludes the effect of foreign
currency translation on reported results.
- Diluted net income per common share rose 8%; 12% in constant
currencies.
- Net income grew 5%; 9% in constant currencies.
- Systemwide sales increased 4%; 9% in constant currencies.
- Total revenues exceeded $2.8 billion and increased 7%; 12% in constant
currencies.
- Operating income increased 5% in the U.S.; on a constant currency
basis, operating income increased 18% and 29% in Europe and Latin
America, respectively, and declined 5% in Asia/Pacific. The U.S.
and Europe comprised 80% of consolidated operating income.
- McDonald's added 214 restaurants, about 85% were outside the U.S.
Key highlights
Dollars in millions, Quarters ended March 31
except per
common share data 1998 1997 Increase
In
As Constant
Reported Currencies*
Systemwide sales $8,169.7 $7,833.1 4% 9%
Total revenues 2,804.9 2,617.6 7 12
Operating income 642.7 614.2 5 9
Net income 362.2 344.5 5 9
Net income per common
share - diluted .52 .48 8 12
* Excluding the effect of foreign currency translation on reported results
SUMMARY COMMENTARY
Chairman and Chief Executive Officer Michael R. Quinlan commented,
"McDonald's global food service business continued to deliver record
results despite the combined effects of the strong U.S. dollar, weak
economies in several key markets outside the U.S., the economic downturns
in Southeast Asia and a very competitive U.S. operating environment.
"I am encouraged by the positive momentum in our global business and
the direction we are taking. Our operations generate a significant
amount of cash. Our job is to effectively use this capital to maximize
shareholder returns, and we are focused on doing just that. Our plans
for 1998 include adding about 2,100 restaurants, approximately 85 percent
outside the U.S. Our free cash flow will be used for share repurchase as
we complete our $2 billion, three-year program by year end.
"The strategic initiatives announced last month are designed to
improve restaurant operations, enhance returns and reduce expenses. We
are rolling out our "Made for You" food preparation system in the U.S.
and Canada. We are giving our owner/operators the opportunity to own new
restaurant buildings in the U.S., which we expect will increase the
Company's return on new restaurants and increase cash flow while lowering
franchisees' occupancy costs. In addition, we have undertaken a study of
home office spending to determine alignment, productivity and cost
reduction opportunities. We plan to conclude the study by the end of the
second quarter. As previously announced, we anticipate recording a
second quarter 1998 special charge to operating income of approximately
$170-$190 million related to the conversion to "Made for You," as well
as any charge for one-time costs associated with decisions resulting from
the study of home office spending."
Jack M. Greenberg, Vice Chairman, Chairman and Chief Executive
Officer - U.S.A., said, "Our first quarter performance in the U.S.
exceeded our expectations, especially in light of the strong performance
in the first quarter of 1997. However, we still have a lot of work to do
to unlock the potential of our business. Our vision is to make
McDonald's America's best fast food restaurant experience. First and
foremost, we want to have the best quality, service and cleanliness for
customers. We also want to be the best place for employees to work, for
owner/operators to invest their hard work and capital, and for
shareholders to invest their money.
"To achieve these goals we must be the best innovators in the
industry, driving growth through new ideas. Our new "Made for You"
food preparation system is such an innovation. We are also refining our
core menu and testing new products to reflect customers' tastes. In
addition, we continue to focus on value and improving each customer's
experience through an emphasis on fast and accurate drive-thru operations
and excellent front-counter service. But innovations alone are not
enough; commitment is essential. I am encouraged by the alignment and
support expressed by our owner/operators, and I believe that together we
will continue the momentum in the U.S."
James R. Cantalupo, President and Chief Executive Officer -
International, said, "Our strategies are simple: provide everyday low
prices and outstanding restaurant operations, build market share, and
increase profitability by being more efficient and creating economies of
scale. And these strategies are working. Although first quarter results
were affected by the strong U.S. dollar and economic difficulties in a
number of markets, I am especially pleased with our strong underlying
performance in Europe and Latin America. In constant currencies, sales
and operating income in Europe increased 16 and 18 percent, respectively,
while sales and operating income in Latin America increased 30 and 29
percent, respectively.
"On the other hand, we experienced some negative impact from the
economic downturns in several Southeast Asian countries. Despite these
cyclical issues, we are staying the course and positioning ourselves to
seize opportunities when the cycles turn. In the meantime, some of these
markets have adjusted their menus, changed supply sources, increased menu
prices and reduced planned openings in order to minimize the short-term
negative impact."
CONSOLIDATED OPERATING RESULTS
Net income and diluted net income per common share for the quarter
increased five percent and eight percent, respectively, over the same
period of 1997. Changing foreign currencies significantly reduced
reported results. Excluding the foreign currency translation effect, net
income would have increased nine percent and diluted net income per
common share would have increased 12 percent.
During the first quarter, we repurchased $127 million of our common
stock. Fewer shares outstanding and the absence of preferred dividends
in first quarter 1998, due to the retirement of our remaining Series E
Preferred Stock in December 1997, resulted in the higher increase in
diluted net income per common share compared with net income.
Systemwide sales Quarters ended March 31
Dollars in millions 1998 1997 Increase/(Decrease)
As In Constant
Reported Currencies*
U.S. $4,119.2 $3,988.9 3% n/a
Europe 1,949.9 1,801.0 8 16%
Asia/Pacific 1,334.0 1,377.7 (3) 10
Latin America 410.6 328.6 25 30
Other 356.0 336.9 6 11
Total Systemwide sales $8,169.7 $7,833.1 4% 9%
*Excluding the effect of foreign currency translation on reported results
n/a Not applicable
Systemwide sales represent sales by Company-operated, franchised and
affiliated restaurants. Comparable sales are measured on a constant
currency basis. Total revenues include sales by Company-operated
restaurants and fees from restaurants operated by franchisees and
affiliates. These fees include rent, service fees and royalties that are
based on a percent of sales with specified minimum payments along with
initial fees.
On a global basis, the increases in sales and revenues were
primarily due to expansion, offset in part by weaker foreign currencies.
U.S. sales increased primarily due to restaurant expansion as
comparable sales were relatively flat.
In Europe, the constant currency sales increase was driven by
expansion and positive comparable sales. England, France, Italy and
Spain were the primary contributors to the strong sales performance.
In Asia/Pacific, the constant currency sales increase was due to
expansion, partly offset by negative comparable sales. Difficult
economic conditions in Japan and the economic downturns in Southeast Asia
negatively impacted consumer spending.
In Latin America, the constant currency sales increase was driven by
expansion and positive comparable sales. Brazil accounted for more than
half of the sales growth. In addition, strong sales in Argentina,
Mexico, and Venezuela contributed to Latin America's strong performance.
Revenues increased at a faster rate than sales for first quarter
1998. This was primarily due to the weakening Japanese Yen, which had a
greater negative effect on sales than revenues due to our affiliate
structure in Japan, and the higher growth rate in Company-operated versus
franchised restaurants.
Consolidated operating margins Quarters ended
March 31
1998 1997
Dollars in millions
Company-operated $350.9 $326.1
Franchised 632.5 616.1
Combined operating margins $983.4 $942.2
Percent of sales/revenues
Company-operated 17.4% 17.6%
Franchised 80.0 80.6
Company-operated margins as a percent of sales decreased slightly
for the quarter. Occupancy & other operating expenses increased as a
percent of sales, while food & paper and payroll costs were relatively
flat.
U.S. Company-operated margins as a percent of sales increased for
the quarter, while Company-operated margins outside the U.S. declined,
primarily in Asia/Pacific. In the U.S., decreases in food & paper costs
and occupancy & other operating expenses as a percent of sales were
partially offset by increases in payroll costs. Outside the U.S., as a
percent of sales, increases in food & paper costs and occupancy & other
operating expenses were offset in part by decreases in payroll costs.
Franchised margin dollars comprised about two-thirds of the combined
operating margins, the same as in the prior year. While franchised
margins as a percent of applicable revenues decreased, franchised margin
dollars increased three percent.
As a percent of revenues, franchised margins declined both in the
U.S. and outside the U.S. The declines reflected higher occupancy costs,
including rent expense, driven by an increase in the number of leased
sites.
The increase in selling, general & administrative expenses was
primarily due to strategic global spending to support restaurant
development, value initiatives and execution strategies, offset in part
by the translation effect of weaker foreign currencies.
Other operating (income) expense-net Quarters ended
March 31
Dollars in millions 1998 1997
Gains on sales of restaurant businesses $ (8.0) $ (7.6)
Equity in earnings of unconsolidated affiliates (12.4) (15.9)
Other (income) expense 18.1 17.5
Other operating (income) expense-net $ (2.3) $ (6.0)
Other operating (income) expense-net consists of transactions
related to franchising and the food service business. The decrease in
equity in earnings of unconsolidated affiliates was due to the weaker
Japanese Yen; increased ownership in Singapore, changing its
classification from an affiliate to a consolidated subsidiary; and weak
performance in certain Asia/Pacific markets, partly offset by increased
equity in earnings of U.S. affiliates.
Operating income Quarters ended March 31
Dollars in millions 1998 1997 Increase/(Decrease)
As In Constant
Reported Currencies*
U.S. $284.5 $271.2 5% n/a
Europe 228.6 205.0 12 18%
Asia/Pacific 81.5 95.1 (14) (5)
Latin America 39.8 32.8 21 29
Other 23.9 23.2 3 8
Corporate SG&A (15.6) (13.1) 19 n/a
Total operating
income $642.7 $614.2 5% 9%
*Excluding the effect of foreign currency translation on reported results
n/a Not applicable
Consolidated operating income increased $55.7 million or nine
percent in constant currencies. The increase reflected higher combined
operating margin dollars, offset in part by higher selling, general &
administrative expenses and slightly lower other operating income.
U.S. operating income increased $13.3 million or five percent,
reflecting higher combined operating margin dollars and relatively flat
selling, general & administrative expenses and other operating income.
Europe's operating income increased 18 percent in constant
currencies. This performance was primarily due to strong results in
England, France, Germany, Italy and Spain.
Asia/Pacific's operating income decreased five percent in constant
currencies. The benefit from the consolidation of our Singapore
affiliate was more than offset by the depressed operating results in
certain Southeast Asian markets.
Latin America's operating income increased 29 percent in constant
currencies, primarily driven by strong operating results in Brazil.
Higher interest expense reflected higher debt levels, offset in part
by weaker foreign currencies and lower average interest rates. The
higher debt levels were primarily due to borrowings in the last half of
1997 to fund the retirement of preferred stock issued by a foreign
subsidiary and the Company's Series E Preferred Stock.
Nonoperating (income) expense-net reflected lower charges for
minority interests.
The effective income tax rate was 33.0 percent for first quarter
1998 compared with 33.2 percent for first quarter 1997. For the year
1998, the Company expects the effective tax rate to be in the range of
32.5 percent to 33.5 percent.
IMPACT OF FOREIGN CURRENCIES ON REPORTED RESULTS
While changing foreign currencies affect reported results, McDonald's
lessens exposures by financing in local currencies, hedging certain
foreign-denominated cash flows and, where practical, by purchasing goods
and services in local currencies.
The weakening Australian Dollar, Deutsche Mark, French Franc and
Japanese Yen, as well as the significantly weakened Southeast Asian
currencies, were the primary foreign currencies that negatively affected
reported results for first quarter 1998.
The following table presents the 1998 results translated at 1997 rates
compared with reported results.
Effect of foreign currency translation on worldwide reported results
Increase
Dollars in millions, As In Constant As In Constant
except per common Reported Currencies* Change Reported Currencies*
share data
Quarter ended March 31, 1998
Systemwide sales $8,169.7 $8,526.9 $357.2 4% 9%
Total revenues 2,804.9 2,935.4 130.5 7 12
Operating income 642.7 669.9 27.2 5 9
Net income 362.2 373.8 11.6 5 9
Net income per common
share - diluted .52 .54 .02 8 12
* Excluding the effect of foreign currency translation on reported results
FORWARD-LOOKING STATEMENTS
Certain forward-looking statements are included in this report. They use
such words as "may," "will," "expect," "believe," "plan" and other
similar terminology. These statements reflect management's current
expectations and involve a number of risks and uncertainties. Actual
results could differ materially due to the success of operating
initiatives and advertising and promotional efforts and changes in:
global and local business and economic conditions; currency exchange and
interest rates; food, labor and other operating costs; political or
economic instability in local markets; competition; consumer preferences,
spending patterns and demographic trends; availability and cost of land
and construction; legislation and government regulation; and accounting
policies and practices.
<PAGE>
McDONALD'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Dollars and shares in millions, Quarters ended March 31
except per common share data --------------------------------------
Increase/(Decrease)
------------------
1998 1997 Dollars Percent
---- ---- ------- -------
SYSTEMWIDE SALES $8,169.7 $7,833.1 336.6 4
Revenues
Sales by Company-operated
restaurants $2,014.3 $1,853.2 161.1 9
Revenues from franchised and
affiliated restaurants 790.6 764.4 26.2 3
TOTAL REVENUES 2,804.9 2,617.6 187.3 7
Operating costs and expenses
Company-operated restaurants 1,663.4 1,527.1 136.3 9
Franchised restaurants--occupancy costs 158.1 148.3 9.8 7
Selling, general and administrative
expenses 343.0 334.0 9.0 3
Other operating (income) expense--net (2.3) (6.0) 3.7 n/m
Total operating costs and
expenses 2,162.2 2,003.4 158.8 8
OPERATING INCOME 642.7 614.2 28.5 5
Interest expense 102.8 90.0 12.8 14
Nonoperating (income) expense--net (0.3) 8.5 (8.8) n/m
Income before provision for
income taxes 540.2 515.7 24.5 5
Provision for income taxes 178.0 171.2 6.8 4
NET INCOME $ 362.2 $ 344.5 17.7 5
NET INCOME PER COMMON SHARE(1) $ 0.53 $ 0.49 0.02 8
NET INCOME PER COMMON SHARE-DILUTED(1) $ 0.52 $ 0.48 0.04 8
Weighted average common shares
outstanding 686.4 691.6
Weighted average common shares
outstanding-diluted 701.9 707.5
(1) Computed using net income reduced by preferred stock dividends of
$6.9 million for the first quarter of 1997. These preferred shares
were redeemed in December 1997.
n/m Not meaningful
<PAGE>
McDONALD'S CORPORATION
FINANCIAL INFORMATION
Dollars in millions Quarters ended March 31
-----------------------------------------
Increase
-------------------
1998 1997 Dollars Percent
---- ---- ------- -------
SYSTEMWIDE SALES
----------------
By Type
-------
Operated by franchisees $ 5,030.2 $ 4,864.1 166.1 3
Operated by the Company 2,014.3 1,853.2 161.1 9
Operated by affiliates 1,125.2 1,115.8 9.4 1
--------- --------- ------- --
$ 8,169.7 $ 7,833.1 336.6 4
========= ========= ======= ==
--------------------------------------------------------------------------
TOTAL REVENUES
U.S. $ 1,102.0 $ 1,083.9 18.1 2
Europe 990.3 890.5 99.8 11
Asia/Pacific 376.3 351.8 24.5 7
Latin America 192.9 149.1 43.8 29
Other 143.4 142.3 1.1 1
--------- --------- ------- --
$ 2,804.9 $ 2,617.6 187.3 7
========= ========= ======= ==
--------------------------------------------------------------------------
RESTAURANT MARGINS
Company-operated
----------------
U.S. 16.4% 16.0%
Outside the U.S. 17.9% 18.4%
Franchised
----------
U.S. 80.1% 80.5%
Outside the U.S. 79.8% 80.7%
--------------------------------------------------------------------------
PERCENT CONTRIBUTION TO
CONSOLIDATED MARGINS
Company-operated
----------------
U.S. 30 31
Outside the U.S. 70 69
--- ---
100 100
=== ===
Franchised
----------
U.S. 58 58
Outside the U.S. 42 42
--- ---
100 100
=== ===
--------------------------------------------------------------------------
CONSOLIDATED COMPANY-OPERATED MARGINS
AS A PERCENT OF SALES
Food & paper 33.9 33.8
Payroll & employee benefits 25.4 25.5
Occupancy & other operating
expenses 23.3 23.1
---- ----
Total expenses 82.6 82.4
==== ====
Company-operated margins 17.4 17.6
==== ====
--------------------------------------------------------------------------
<PAGE>
McDONALD'S CORPORATION
RESTAURANT INFORMATION
At March 31
-----------------------
1998 1997 Increase
---- ---- --------
By Type
-------
Operated by franchisees 14,366 13,510 856
Operated by the Company 5,065 4,406 659
Operated by affiliates 3,915 3,360 555
------ ------ -----
Systemwide restaurants 23,346 21,276 2,070
------ ------ -----
--------------------------------------------------------------------------
By Segment
----------
U.S. 12,413 12,104 309
Europe
Germany 855 751 104
England 757 661 96
France 647 554 93
Netherlands 177 152 25
Italy 173 144 29
Sweden 155 131 24
Spain 151 122 29
Other 1,028 829 199
------ ------ -----
Total Europe 3,943 3,344 599
Asia/Pacific
Japan 2,467 2,055 412
Australia 650 616 34
Taiwan 254 181 73
China 196 132 64
Philippines 164 114 50
Other 816 662 154
------ ------ -----
Total Asia/Pacific 4,547 3,760 787
Latin America
Brazil 482 346 136
Other 627 521 106
------ ------ -----
Total Latin America 1,109 867 242
Other
Canada 1,054 1,004 50
Other 280 197 83
------ ------ -----
Total Other 1,334 1,201 133
------ ------ -----
Systemwide restaurants 23,346 21,276 2,070
====== ====== =====
-------------------------------------------------------------------------
Countries 109 101
-------------------------------------------------------------------------
Quarters ended
March 31
--------------
1998 1997
---- ----
Additions
---------
U.S. 33 10
Europe 57 61
Asia/Pacific 91 127
Latin America 18 30
Other 15 26
--- ---
Systemwide additions 214 254
=== ===
