McDonaldโs Corporation is an American operator and franchisor of fast food restaurants represented worldwide and the biggest fast food company in the world.
1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-5231 ---------- ---------- ------ McDONALD'S CORPORATION ----------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 36-2361282 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) McDonald's Plaza, Oak Brook, Illinois 60521 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (708) 575-3000 -------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- 696,278,630 --------------------------------- (Number of shares of common stock outstanding as of September 30, 1995)
2 McDONALD'S CORPORATION ---------------------- INDEX ----- Page Reference Part I. Financial Information Item 1 - Financial Statements Condensed consolidated balance sheet, September 30, 1995 (unaudited) and December 31, 1994 3 Condensed consolidated statement of income (unaudited), nine months and third quarters ended September 30, 1995 and 1994 4 Condensed consolidated statement of cash flows (unaudited), nine months and third quarters ended September 30, 1995 and 1994 5 Financial comments (unaudited) 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information Item 6 - Exhibits and Reports on Form 8-K 15 (a)Exhibits The exhibits listed in the accompanying Exhibit Index are filed as part of this report 15 (b)Reports on Form 8-K 19 Signature 20
3 PART I. FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements ----------------------------- <TABLE> CONDENSED CONSOLIDATED BALANCE SHEET <CAPTION> (unaudited) Dollars in millions September 30, 1995 December 31, 1994 --------------------------------------------------------------------------- <S> <C> <C> ASSETS CURRENT ASSETS Cash and equivalents $ 317.6 $ 179.9 Accounts receivable 356.2 348.1 Notes receivable 31.6 31.2 Inventories, at cost, not in excess of market 50.6 50.5 Prepaid expenses and other current assets 157.3 131.0 --------------------------------------------------------------------------- TOTAL CURRENT ASSETS 913.3 740.7 --------------------------------------------------------------------------- OTHER ASSETS AND DEFERRED CHARGES 1,100.4 1,039.7 --------------------------------------------------------------------------- PROPERTY AND EQUIPMENT Property and equipment, at cost 16,601.3 15,184.6 Accumulated depreciation and amortization (4,241.6) (3,856.2) --------------------------------------------------------------------------- NET PROPERTY AND EQUIPMENT 12,359.7 11,328.4 --------------------------------------------------------------------------- INTANGIBLE ASSETS-NET 528.3 483.1 --------------------------------------------------------------------------- TOTAL ASSETS $14,901.7 $13,591.9 =========================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 706.1 $ 1,046.9 Accounts payable 426.4 509.4 Income taxes 106.9 25.0 Accrued interest 108.2 107.7 Other accrued liabilities 454.8 394.0 Current maturities of long-term debt 135.3 368.3 --------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 1,937.7 2,451.3 --------------------------------------------------------------------------- LONG-TERM DEBT 3,978.7 2,935.4 OTHER LONG-TERM LIABILITIES AND MINORITY INTERESTS 665.0 422.8 DEFERRED INCOME TAXES 787.0 840.8 --------------------------------------------------------------------------- TOTAL LIABILITIES 7,368.4 6,650.3 ---------------------------------------------------------------------------
COMMON EQUITY PUT OPTIONS 19.0 56.2 --------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Preferred stock, no par value; authorized - 165.0 million shares; issued - 3.5 and 11.2 million 411.1 674.2 Common stock, no par value; authorized - 1.25 billion shares; issued - 830.3 million 92.3 92.3 Additional paid-in capital 355.7 286.0 Guarantee of ESOP notes (233.5) (234.4) Retained earnings 9,519.6 8,625.9 Foreign currency translation adjustment (68.7) (114.9) Common stock in treasury, at cost; 134.0 and 136.6 million shares (2,562.2) (2,443.7) --------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 7,514.3 6,885.4 --------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $14,901.7 $13,591.9 =========================================================================== See accompanying Financial comments. /TABLE
4 <TABLE> CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) <CAPTION> Dollars in millions, except Nine Months Ended Quarters Ended per common share data September 30 September 30 1995 1994 1995 1994 ------------------------------------------------------------------------------ <S> <C> <C> <C> <C> REVENUES Sales by Company-operated restaurants $5,051.3 $4,205.8 $1,811.9 $1,551.8 Revenues from franchised restaurants 2,157.7 1,844.9 768.2 673.6 ------------------------------------------------------------------------------ TOTAL REVENUES 7,209.0 6,050.7 2,580.1 2,225.4 ------------------------------------------------------------------------------ OPERATING COSTS AND EXPENSES Company-operated restaurants 4,070.9 3,377.3 1,448.0 1,231.3 Franchised restaurants- occupancy expenses 377.7 317.7 131.7 111.7 General, administrative and selling expenses 894.9 773.6 314.1 277.1 Other operating (Income) expense-net (89.7) (83.3) (35.8) (32.6) ------------------------------------------------------------------------------ TOTAL OPERATING COSTS AND EXPENSES 5,253.8 4,385.3 1,858.0 1,587.5 ------------------------------------------------------------------------------ OPERATING INCOME 1,955.2 1,665.4 722.1 637.9 ------------------------------------------------------------------------------ Interest expense 252.5 225.6 86.1 80.2 Nonoperating income (expense)-net (73.2) (24.8) (26.5) (16.6) ------------------------------------------------------------------------------ INCOME BEFORE PROVISION FOR INCOME TAXES 1,629.5 1,415.0 609.5 541.1 ------------------------------------------------------------------------------ Provision for income taxes 569.0 499.5 209.4 191.3 ------------------------------------------------------------------------------ NET INCOME $1,060.5 $915.5 $400.1 $349.8 ============================================================================== NET INCOME PER COMMON SHARE $ 1.46 $ 1.25 $ .56 $ .48 ------------------------------------------------------------------------------ DIVIDENDS PER COMMON SHARE $ .1950 $.1738 $.0675 $.0600 ------------------------------------------------------------------------------ See accompanying Financial comments. /TABLE
5 <TABLE> CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) <CAPTION> Nine Months Ended Quarters Ended September 30 September 30 Dollars in millions 1995 1994 1995 1994 ------------------------------------------------------------------------------- <S> <C> <C> <C> <C> OPERATING ACTIVITIES Net income $1,060.5 $915.5 $400.1 $349.8 Adjustments to reconcile to cash provided by operations Depreciation and amortization 521.8 454.2 175.9 157.7 Changes in operating working capital items 72.3 (23.6) 153.0 45.8 Other (34.4) (30.3) (51.1) (6.5) ------------------------------------------------------------------------------- CASH PROVIDED BY OPERATIONS 1,620.2 1,315.8 677.9 546.8 ------------------------------------------------------------------------------- INVESTING ACTIVITIES Property and equipment expenditures (1,380.7) (1,022.6) (587.8) (401.9) Purchases and sales of restaurant businesses and sales of other property 72.5 63.9 52.3 25.9 Other (120.2) (42.5) (35.7) (39.5) ------------------------------------------------------------------------------- CASH USED FOR INVESTING ACTIVITIES (1,428.4) (1,001.2) (571.2) (415.5) ------------------------------------------------------------------------------- FINANCING ACTIVITIES Notes payable and long-term financing issuances and repayments 350.3 161.3 123.5 113.0 Treasury stock purchases (284.1) (351.5) (195.0) (163.3) Common and preferred stock dividends (170.6) (161.0) (56.2) (54.8) Other 50.3 31.3 19.6 6.9 ------------------------------------------------------------------------------- CASH USED FOR FINANCING ACTIVITIES (54.1) (319.9) (108.1) (98.2) ------------------------------------------------------------------------------- CASH AND EQUIVALENTS INCREASE 137.7 (5.3) (1.4) 33.1 (DECREASE) ------------------------------------------------------------------------------- Cash and equivalents at beginning of 179.9 185.8 319.0 147.4 period ------------------------------------------------------------------------------- CASH AND EQUIVALENTS AT END OF PERIOD $317.6 $180.5 $317.6 $180.5 =============================================================================== See accompanying Financial comments. /TABLE
6 FINANCIAL COMMENTS (UNAUDITED) BASIS OF PRESENTATION The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company's 1994 Annual Report to Shareholders. In the opinion of the Company, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results of operations of restaurant businesses purchased and sold were not material to the condensed consolidated financial statements for periods prior to purchase and sale. NET INCOME PER COMMON SHARE Net income per common share was computed using net income, reduced by preferred stock cash dividends (net of tax) of $31.8 and $35.5 million for the first nine months of 1995 and 1994, respectively, and $8.0 and $11.8 million for the third quarters of 1995 and 1994, respectively. In addition, net income available to common shareholders for the nine month period of 1995 was reduced by $3.9 million for the one-time effect of the Company's offer to exchange its Series E 7.72% Cumulative Preferred Stock for subordinated debt securities completed on June 30, 1995, and by an additional $.4 million for the effect of the Company's repurchase of additional Series E preferred stock in the third quarter. Adjusted net income was divided by the weighted average shares of common stock outstanding: 699.6 and 704.1 million for the nine months ended September 30, 1995 and 1994, respectively, and 698.4 and 699.9 million for the third quarters of 1995 and 1994, respectively. The effect of potentially dilutive securities was not material. COMMON EQUITY PUT OPTIONS During November and December 1994, the Company sold 2.0 million common equity put options which expired unexercised in the first quarter of 1995. During May and June 1995, the Company sold 1.5 million common equity put options which expired unexercised in August and September. During August 1995, the Company sold .5 million common equity put options of which .4 million were exercised and .1 million expired unexercised in October 1995. The total exercise prices of $56.2 and $19.0 million at December 31, 1994, and September 30, 1995, respectively, were classified in common equity put options, and the related offsets were recorded in common stock in treasury, net of premiums received.
7 PREFERRED STOCK On June 26, 1995, the Company gave notice of its plan to redeem 3,115,029 shares of Series B ESOP Convertible Preferred Stock and 4,464,055 shares of Series C ESOP Convertible Preferred Stock on August 14, 1995. Prior to the redemption, each Series B and Series C ESOP Convertible Preferred Share was converted into .7692 and .8 share of common stock, respectively, issued from common stock in treasury. LINE OF CREDIT AGREEMENT Effective April 19, 1995, the Company cancelled its existing $700.0 million line of credit agreement and entered into a new $675.0 million five-year revolving credit agreement with various banks. Accordingly, $675.0 million of notes maturing within one year have been reclassified as long-term debt. In June 1995, the Company entered into an additional $25.0 million line of credit agreement with various banks for a renewable term of 364 days. Both agreements remained unused at September 30, 1995, and provide for fees of .07% per annum on the total commitment.
8 Item 2. Management's Discussion And Analysis Of Financial Condition -------------------------------------------------------------------- And Results Of Operations ------------------------- <TABLE> INCREASES (DECREASES) IN OPERATING RESULTS OVER 1994 <CAPTION> Dollars in millions, except Nine Months Third Quarter per common share data Ended September 30 Ended September 30 ------------------------------------------------------------------------- <S> <C> <C> <C> <C> SYSTEMWIDE SALES $3,156.1 17% $922.6 13% ------------------------------------------------------------------------- REVENUES Sales by Company-operated restaurants $ 845.5 20% $260.1 17% Revenues from franchised restaurants 312.8 17 94.6 14 ------------------------------------------------------------------------- TOTAL REVENUES 1,158.3 19 354.7 16 ------------------------------------------------------------------------- OPERATING COSTS AND EXPENSES Company-operated restaurants 693.6 21 216.7 18 Franchised restaurants- occupancy costs 60.0 19 20.0 18 General, administrative and selling expenses 121.3 16 37.0 13 Other operating (income) expense-net (6.4) 8 (3.2) 10 ------------------------------------------------------------------------- TOTAL OPERATING COSTS AND EXPENSES 868.5 20 270.5 17 ------------------------------------------------------------------------- OPERATING INCOME 289.8 17 84.2 13 ------------------------------------------------------------------------- Interest expense 26.9 12 5.9 7 Nonoperating income (expense)-net (48.4) N/M (9.9) 60 ------------------------------------------------------------------------- INCOME BEFORE PROVISION FOR INCOME TAXES 214.5 15 68.4 13 ------------------------------------------------------------------------- Provision for income taxes 69.5 14 18.1 9 ------------------------------------------------------------------------- NET INCOME $145.0 16% $50.3 14% ========================================================================= NET INCOME PER COMMON SHARE $ .21 17% $ .08 17% ------------------------------------------------------------------------- NM - Not Meaningful /TABLE
9 CONSOLIDATED OPERATING RESULTS Net income and net income per common share increased 16 and 17% for the nine months, respectively; and 14 and 17% for the quarter, respectively. As of September 30, 1995, the Company had repurchased about $800.0 million of its common stock in connection with a three- year, $1.0 billion program announced in January 1994. Systemwide sales represent sales by Company-operated, franchised and affiliated restaurants. The increases were due to expansion and higher comparable sales, aided by stronger foreign currencies. ---------------------------------------------------------------------- SYSTEMWIDE RESTAURANTS Nine Months Quarters Ended Ended September 30 September 30 1995 1994 1995 1994 ---------------------------------------------------------------------- Traditional restaurants U.S. 326 280 142 138 Outside of the U.S. 568 392 250 169 ---------------------------------------------------------------------- Total traditional restaurant 894 672 392 307 additions ---------------------------------------------------------------------- Satellite restaurants U.S. 389 242 150 122 Outside of the U.S. 170 141 77 78 ---------------------------------------------------------------------- Total satellite restaurant 559 383 227 200 additions ---------------------------------------------------------------------- Systemwide restaurant additions 1,453 1,055 619 507 ---------------------------------------------------------------------- At September 30 ---------------------------------------------------------------------- Traditional restaurants under construction U.S. 203 170 Outside of the U.S. 313 279 ---------------------------------------------------------------------- Total traditional restaurants 516 449 ---------------------------------------------------------------------- Total revenues consist of sales by Company-operated restaurants, and fees from restaurants operated by franchisees and affiliates. These fees are based upon a percent of sales with specified minimum payments. The increases reflected strong worldwide operating results. Franchised margin dollars comprised about two-thirds of the combined operating margins, the same as in the prior year. Franchised margins as a percent of revenues declined slightly for both periods, reflecting a higher proportion of leased sites resulting from accelerated expansion. Company-operated margins as a percent of sales declined for both periods; as a percent of sales, food and paper and occupancy and other operating costs increased, while payroll costs declined slightly.
10 -------------------------------------------------------------------------- CONSOLIDATED OPERATING MARGINS Nine Months Ended Quarters Ended September 30 September 30 1995 1994 1995 1994 -------------------------------------------------------------------------- In millions of dollars Franchised $1,780.0 $1,527.2 $636.5 $561.9 Company-operated 980.4 828.5 363.9 320.5 -------------------------------------------------------------------------- As a percent of sales/revenues Franchised 82.5 82.8 82.9 83.4 Company-operated 19.4 19.7 20.1 20.7 -------------------------------------------------------------------------- The increases in general, administrative and selling expenses were primarily due to strategic global spending to support the convenience and value strategies and stronger foreign currencies. Other operating transactions relate to franchising and the foodservice business, the details of which are shown below. The increases occurred because of greater income from affiliates, principally Japan, offset by higher provisions for property dispositions included in the other category and lower gains on sales of restaurant businesses. ------------------------------------------------------------------------ OTHER OPERATING (INCOME) Nine Months Ended Quarters Ended EXPENSE-NET September 30 September 30 In millions of dollars 1995 1994 1995 1994 ------------------------------------------------------------------------ Gains on sales of restaurant businesses $(45.0) $(49.4) $(16.6) $(19.0) Equity in earnings of unconsolidated affiliates (75.9) (41.0) (28.2) (22.7) Other 31.2 7.1 9.0 9.1 ------------------------------------------------------------------------ Other operating (income) expense-net $(89.7) $(83.3) $(35.8) $(32.6) ======================================================================== The increases in consolidated operating income primarily reflected higher combined operating margin dollars and stronger foreign currencies, partially offset by higher general, administrative and selling expenses. The increases in interest expense were due to higher debt levels and stronger foreign currencies, partially offset by lower average interest rates. Nonoperating income (expense) was impacted by higher losses on investments and higher charges associated with minority interests. The effective income tax rate was 34.9 and 35.3% for the first nine months of 1995 and 1994, respectively, compared to 35.1% for the year 1994.
11 U.S. OPERATING RESULTS Expansion and higher comparable sales were responsible for driving U.S. sales. Positive comparable sales were achieved for the nine months of 1995 and for both comparable periods of 1994 through an emphasis on value and customer satisfaction in the form of Extra Value Meals, Happy Meals and the three-tier value program. Ongoing programs-Operation Mac Attack and Tastes of the Month-and promotions such as Monopoly in May contributed to higher sales in 1995. ---------------------------------------------------------------------- U.S. OPERATING RESULTS Nine Months Ended Quarters Ended September 30 September 30 1995 1994 1995 1994 ---------------------------------------------------------------------- Percent increase Sales 7 5 5 5 Revenues 8 6 6 6 Operating income 3 6 2 3 ---------------------------------------------------------------------- As a percent of sales/revenues Company-operated margins 17.8 19.3 18.3 19.4 Franchised margins 82.7 83.2 82.6 83.5 ---------------------------------------------------------------------- The increases in U.S. operating income were driven by higher franchised margin dollars, partially offset by higher general, administrative and selling expenses and a slight reduction in Company-operated margin dollars. The declines in Company-operated margins primarily resulted from higher payroll costs due to higher average hourly wages, and increased staffing levels designed to improve customer satisfaction. Higher franchised margin dollars were the result of expansion and for the nine months, improved comparable sales. OPERATING RESULTS OUTSIDE OF THE U.S. Expansion, stronger foreign currencies and higher comparable sales were responsible for driving sales outside of the U.S. Comparable sales on a local currency basis were positive in all comparable periods of 1995 and 1994. ---------------------------------------------------------------------- OPERATING RESULTS Nine Months Ended Quarters Ended OUTSIDE OF THE U.S. September 30 September 30 1995 1994 1995 1994 ---------------------------------------------------------------------- Percent increase Sales 30 15 24 20 Revenues 31 16 25 25 Operating income 34 19 25 25 ---------------------------------------------------------------------- As a percent of sales/revenues Company-operated margins 20.5 20.0 21.2 21.6 Franchised margins 82.1 82.1 83.2 83.2 ----------------------------------------------------------------------
12 All geographic segments reported excellent operating results, and results for the following markets were noteworthy: Canada; Australia, Hong Kong, Taiwan, Japan and Philippines in Asia/Pacific; France, Germany, England and Spain in Europe; and Brazil in Latin America. Transactions, sales and profits have improved notably in France, England, Germany, Japan, Hong Kong and Brazil in 1995. Results in Mexico continued to be impacted by the economy and currency devaluation; however, we continue to believe this market offers long- term potential. The increases in operating income outside of the U.S. resulted from expansion, higher comparable sales, higher combined operating margins and stronger foreign currencies, partially offset by higher general, administrative and selling expenses. The improvement in Company-operated margins as a percent of sales for the nine months reflected higher food costs which were more than offset by a reduction in payroll and other costs; in addition, Brazil delivered better operating performance. The decline in this margin for the quarter was due to Brazil's improved performance beginning in the 1994 third quarter. The increases in combined operating margin dollars occurred because of better sales and stronger foreign currencies. IMPACT OF FOREIGN CURRENCIES ON REPORTED RESULTS The Deutsche Mark, French Franc, British Pound Sterling and Japanese Yen represented the foreign currencies which significantly contributed to the impact on reported results for both periods in 1995. If exchange rates had remained at 1994 levels, reported results would have been as follows: --------------------------------------------------------------- FOREIGN CURRENCY IMPACT Nine Months Ended September 30, 1995 Dollars in millions Reported Adjusted --------------------------------------------------------------- Systemwide sales $22,179.5 17% $21,412.2 13% Operating income 1,955.2 17 1,878.6 13 Net income 1,060.5 16 1,026.1 12 --------------------------------------------------------------- Quarter Ended September 30, 1995 Reported Adjusted --------------------------------------------------------------- Systemwide sales $7,866.6 13% $7,691.8 11% Operating income 722.1 13 702.8 10 Net income 400.1 14 390.5 12 --------------------------------------------------------------- While changing foreign currencies impact reported results, McDonald's lessens short-term cash exposures by primarily purchasing goods and services in local currencies, financing in local currencies and hedging foreign-denominated cash flows. FINANCIAL POSITION Cash provided by operations increased 23% for the nine months. Together with other sources of cash such as borrowings, cash provided by operations was used primarily for capital expenditures, debt repayments, share repurchases and dividends. In connection with accelerated expansion, U.S. capital expenditures increased 26% and capital expenditures outside of the U.S. increased 43% in the first nine months.
13 <TABLE> NINE MONTHS AND THIRD QUARTER HIGHLIGHTS <CAPTION> OPERATING RESULTS --------------------------------------------------------------------------- In millions of dollars, Nine Months Ended Quarters Ended except per common share data September 30 September 30 1995 1994 1995 1994 --------------------------------------------------------------------------- <S> <C> <C> <C> <C> Systemwide sales $22,179.5 $19,023.4 $7,866.6 $6,944.0 --------------------------------------------------------------------------- U.S. sales 11,854.2 11,087.5 4,103.3 3,920.8 Operated by franchisees 9,313.1 8,894.0 3,219.5 3,144.5 Operated by the Company 2,034.9 1,894.6 701.3 665.2 Operated by affiliates 506.2 298.9 182.5 111.1 --------------------------------------------------------------------------- Sales outside of the U.S. 10,325.3 7,935.9 3,763.3 3,023.2 Operated by franchisees 4,907.7 3,705.4 1,795.9 1,373.5 Operated by the Company 3,016.4 2,311.2 1,110.6 886.6 Operated by affiliates 2,401.2 1,919.3 856.8 763.1 --------------------------------------------------------------------------- Total revenues 7,209.0 6,050.7 2,580.1 2,225.4 U.S. 3,328.0 3,081.1 1,153.5 1,087.8 Outside of the U.S. 3,881.0 2,969.6 1,426.6 1,137.6 --------------------------------------------------------------------------- Operating income* 1,955.2 1,665.4 722.1 637.9 U.S. 951.6 928.0 337.4 332.1 Outside of the U.S. 1,038.2 772.4 396.9 318.4 Corporate (34.6) (35.0) (12.2) (12.6) --------------------------------------------------------------------------- Income before provision for income taxes 1,629.5 1,415.0 609.5 541.1 Net income 1,060.5 915.5 400.1 349.8 Net income per common share 1.46 1.25 .56 .48 --------------------------------------------------------------------------- Cash provided by operations 1,620.2 1,315.8 677.9 546.8 --------------------------------------------------------------------------- * 1994 operating income has been restated to reflect a more meaningful allocation of general, administrative and selling expenses between the U.S. and international segments and now includes an additional corporate category which is not allocated. /TABLE
14 <TABLE> RESTAURANTS <CAPTION> ------------------------------------------------------------------------- At September 30, 1995 1994 ------------------------------------------------------------------------- <S> <C> <C> Systemwide restaurants 17,403 15,218 ------------------------------------------------------------------------- Traditional U.S. restaurants 10,070 9,563 Operated by franchisees 7,989 7,784 Operated by the Company 1,607 1,492 Operated by affiliates 474 287 ------------------------------------------------------------------------- Traditional restaurants Outside of the U.S. 6,029 5,102 Operated by franchisees 2,878 2,426 Operated by the Company 1,743 1,455 Operated by affiliates 1,408 1,221 ------------------------------------------------------------------------- Satellite restaurants 1,304 553 U.S. 883 356 Outside of the U.S. 421 197 -------------------------------------------------------------------------
15 PART II Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- (a) - Exhibits -------------- Exhibit Number Description -------------- ----------- (3) Restated Certificate of Incorporation and By-Laws, dated as of November 15, 1994, incorporated herein by reference from Exhibit 3 of Form 10-K for the year ended December 31, 1994. (4) Instruments defining the rights of security holders, including indentures (A): (a) Debt Securities. Indenture dated as of March 1, 1987 incorporated herein by reference from Exhibit 4(a) of Form S-3 Registration Statement, SEC file no. 33-12364. (i) Supplemental Indenture No. 5 incorporated herein by reference from Exhibit (4) of Form 8-K dated January 23, 1989. (ii) 9-3/4% Notes due 1999. Supplemental Indenture No. 6 incorporated herein by reference from Exhibit (4) of Form 8-K dated January 23, 1989. (iii) Medium-Term Notes, Series B, due from nine months to 30 years from Date of Issue. Supplemental Indenture No. 12 incorporated herein by reference from Exhibit (4) of Form 8-K dated August 18, 1989 and Forms of Medium-Term Notes, Series B, incorporated herein by reference from Exhibit (4)(b) of Form 8-K dated September 14, 1989. (iv) Medium-Term Notes, Series C, due from nine months to 30 years from Date of Issue. Form of Supplemental Indenture No. 15 incorporated herein by reference from Exhibit 4(b) of Form S-3 Registration Statement, SEC file no. 33-34762 dated May 14, 1990. (v) Medium-Term Notes, Series C, due from nine months (U.S. issue)/184 days (Euro issue) to 30 years from Date of Issue. Amended and restated Supplemental Indenture No. 16 incorporated herein by reference from Exhibit (4) of Form 10-Q for the period ended June 30, 1991.
16 Exhibit Number Description -------------- ----------- (vi) 8-7/8% Debentures due 2011. Supplemental Indenture No. 17 incorporated herein by reference from Exhibit (4) of Form 8-K dated April 22, 1991. (vii) Medium-Term Notes, Series D, due from nine months (U.S. issue)/184 days (Euro issue) to 60 years from Date of Issue. Supplemental Indenture No. 18 incorporated herein by reference from Exhibit 4(b) of Form S-3 Registration Statement, SEC file no. 33-42642 dated September 10, 1991. (viii)7-3/8% Notes due July 15, 2002. Form of Supplemental Indenture No. 19 incorporated herein by reference from Exhibit (4) of Form 8-K dated July 10, 1992. (ix) 6-3/4% Notes due February 15, 2003. Form of Supplemental Indenture No. 20 incorporated herein by reference from Exhibit (4) of Form 8-K dated March 1, 1993. (x) 7-3/8% Debentures due July 15, 2033. Form of Supplemental Indenture No. 21 incorporated herein by reference from Exhibit (4)(a) of Form 8-K dated July 15, 1993. (xi) Medium-Term Notes, Series E, due from nine months to 60 years from date of issue. Form of Supplemental Indenture No. 22, incorporated herein by reference from Exhibit (4) of Form 10-Q for the period ended June 30, 1995. (xii) 6-5/8% Notes due September 1, 2005 Form of Supplemental Indenture No. 23 incorporated herein by reference from Exhibit 4(a) of Form 8-K dated September 5, 1995. (b) Form of Deposit Agreement dated as of November 25, 1992 by and between McDonald's Corporation, First Chicago Trust Company of New York, as Depositary, and the Holders from time to time of the Depositary Receipts. (c) Rights Agreement dated as of December 13, 1988 between McDonald's Corporation and The First National Bank of Chicago, incorporated herein by reference from Exhibit 1 of Form 8-K dated December 23, 1988. (i) Amendment No. 1 to Rights Agreement incorporated herein by reference from Exhibit 1 of Form 8-K dated May 25, 1989.
17 Exhibit Number Description -------------- ----------- (ii) Amendment No. 2 to Rights Agreement incorporated herein by reference from Exhibit 1 of Form 8-K dated July 25, 1990. (d) Indenture and Supplemental Indenture No. 1 dated as of September 8, 1989, between McDonald's Matching and Deferred Stock Ownership Trust, McDonald's Corporation and Pittsburgh National Bank in connection with SEC Registration Statement Nos. 33-28684 and 33-28684-01, incorporated herein by reference from Exhibit (4)(a) of Form 8-K dated September 14, 1989. (e) Form of Supplemental Indenture No. 2 dated as of April 1, 1991, supplemental to the Indenture between McDonald's Matching and Deferred Stock Ownership Trust, McDonald's Corporation and Pittsburgh National Bank in connection with SEC Registration Statement Nos. 33-28684 and 33-28684-01, incorporated herein by reference from Exhibit (4)(c) of Form 8-K dated March 22, 1991. (f) 8.35% Subordinated Deferrable Interest Debentures due 2025. Indenture incorporated herein by reference from Exhibit 99.1 of Schedule 13E-4/A Amendment No. 2 dated July 14, 1995. (10) Material Contracts (a) Directors' Stock Plan, as amended and restated, incorporated herein by reference from Form 10-K for the year ended December 31, 1994.* (b) Profit Sharing Program, as amended and restated, incorporated herein by reference from Form 10-K for the year ended December 31, 1994.* (c) McDonald's Supplemental Employee Benefit Equalization Plan, McDonald's Profit Sharing Program Equalization Plan and McDonald's 1989 Equalization Plan, incorporated by reference from Form 10-K/A dated May 4, 1993, Amendment No. 1 to Form 10-K for the year ended December 31, 1992*. (i) Amendment No. 1 to McDonald's 1989 Equalization Plan, incorporated herein by reference from Form 10-Q for the period ended June 30, 1993. (ii) Amendment No. 2 to McDonald's 1989 Equalization Plan, incorporated herein by reference from Form 10-K for the year ended December 31, 1993. (iii)Amendment No. 1 to McDonald's Supplemental Employee Benefit Equalization Plan, incorporated herein by reference from Form 10-K for the year ended December 31, 1993.
18 Exhibit Number Description -------------- ----------- (iv) Amendment No. 2 to McDonald's Supplemental Employee Equalization Plan, incorporated herein by reference from Form 10-K for the year ended December 31, 1993. (d) 1975 Stock Ownership Option Plan, incorporated herein by reference from Exhibit (10)(d) of Form 10-K for the year ended December 31, 1992*. (e) Stock Sharing Plan, as amended and restated, incorporated herein by reference from Form 10-K for the year ended December 31, 1994.* (f) 1992 Stock Ownership Incentive Plan, as amended and restated, incorporated herein by reference from Exhibit B on pages 29-41 of McDonald's 1995 Proxy Statement and Notice of 1995 Annual Meeting of Shareholders dated April 12, 1995*. (g) McDonald's Corporation Deferred Incentive Plan, as amended and restated, incorporated herein by reference from Form 10-K for the year ended December 31, 1994.* (h) Non-Employee Director Stock Option Plan, incorporated by reference from Exhibit A on pages 25-28 of McDonald's 1995 Proxy Statement and Notice of 1995 Annual Meeting of Shareholders dated April 12, 1995.* (11) Statement re: Computation of per share earnings. (12) Statement re: Computation of ratios. (27) Financial Data Schedule -------------------- * Denotes compensatory plan. (A) Other instruments defining the rights of holders of long-term debt of the registrant and all of its subsidiaries for which consolidated financial statements are required to be filed and which are not required to be registered with the Securities and Exchange Commission, are not included herein as the securities authorized under these instruments, individually, do not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. An agreement to furnish a copy of any such instruments to the Securities and Exchange Commission upon request has been filed with the Commission.
19 (b) Reports on Form 8-K The following reports on Form 8-K were filed for the last quarter covered by this report, and subsequently up to November 13, 1995. Financial Statements Date of Report Item Number required to be filed -------------- ----------- -------------------- 9/5/95 Item 7 No
20 Signature ----------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. McDONALD'S CORPORATION (Registrant) By /s/ Jack M. Greenberg ----------------- (Signature) Jack M. Greenberg Vice Chairman, Chief Financial Officer November 13, 1995 ----------------- (Date)
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