Mark Cohen, Elaine Hirt, Kyle Larkin, Zachary Rogers & Jaana Valimaki

Presentation Topics• History & Company Description• Product Offerings• Industry Attributes• Profitability• Cash & Growth• Capital Structure• Asset Structure• Competitors—Burger King & Wendy’s• Stock Summary

History of the Corporation1940: Dick and Mac McDonald opened McDonald’s

Bar-B-Que in San Bernardino, California

Key Milestones

• 1948: “Speedee Service System” Key item: 15 cent hamburger

• 1954: Salesman Ray Kroc Goes West

• 1955: The McDonald’s Corporation opened the first McDonald’s

• 1961: Ray Kroc bought all rights to McDonald’s for $2.7 million

Key Milestones—1963• One Billion Hamburgers Sold• The 500th Restaurant Opened• The 500th Student Graduates from Hamburger University• McDonald's Net Income Exceeded $1 Million• Ronald McDonald's First TV Commercial

What Is McDonald’s?• Headquarters Oak Brook, Illinois• Traded in NYSE: MCD• Auditing done by Ernst & Young LLP• CEO: Jim Skinner• McDonald’s is the leading global foodservice retailer with nearly

32,000 local restaurants in more than 100 countries. • McDonald's successful “Plan to Win” • Large scale efficiency and local flair• Serving 58 million customers daily worldwide• Revenues in 2008 at record $23.5 billion• Returned $5.8 billion to shareholders in 2008

Traditional Products

Non-Traditional Products

Fast Food Industry AttributesQuick Service, Convenience, Inexpensive

Industry Worldwide Sales: Over $100 Billion

McDonald’s Attributes• Quick Service• Systematic Production & Efficiency• Convenience• Located Everywhere• Solid Brand Recognition• Familiar Menu• Drive-Thru• Inexpensive• Pricing Leader• McDonald’s: $23.5 Billion• 23% of Industry Market

McDonald’s Profitability• Net Income Increased to a Record of $4.3 Billion in 2008• Net Income Increased in the last 6 Years

(Except for 2007)• Latam Transaction• Impairment Charges of $1.7 Billion• Otherwise, 2007 Net Income $4.1 Billion

• Worldwide Operating Income• 60% Overseas Operating Income

More Cash, Less Assets

2006 2007 20080

1000

2000

3000

4000

5000

6000

7000

Operating Cash

2006 2007 200827800

28000

28200

28400

28600

28800

29000

29200

29400

29600

Total Assets

• Sold 1,600 Restaurants in Latin America & Caribbean

• Focused Resources on Markets to Cash In the Biggest Opportunities

• Over 71% of Total Assets are Land & Equipment Net Accumulated Depreciation & Amortization

• Greatly Improved Operations Streamlined Production

Assets Making Money•For Every Dollar of Assets, 20.8 Cents is Produced•McDonald’s is Very Cash Rich—Ready Access to Capital•Can Easily Pay Its Debts Plus Debts of Competitors•Highest Credit Ratio in Restaurant Industry

McDonald's Burger King Wendy's0

5

10

15

20

25

20.8

11.5

1.6

Smarter Strategies = Growth• Leveraged Dramatic Growth in Net Income• Decrease Non-Operating Income Expense• Investment Sale Loss

• Income Tax Deferment Saving $140.6 Million• Improved Impairment from $1,670.3 Million to $6.0 Million • Accounts Receivable Dropped Bringing In $122.6 Million in Cash• More Cash Spent on Property & Equipment• Gained More Cash on Sale of Businesses & Property

2010 Short Term Growth Plans

• Open 1,000 New Stores• Remodel 2,300 Stores• Continue Growth Targets• 3-5% Sales Growth• 6-7% Operating Income

Growth

• Increase Capital Expenditures to $2.4 Billion for Strategic Brand Investments

McDonald’s Financial Press Release 11/12/2009

Company Financing• Equal Use of Debt & Equity• Long-Term Debt of Bank Loans & Bonds• $2 billion Unused Credit Line

$15,078.9 $13,382.6

Total Debt Total Equity

Company Financing• Slowly Increasing its Use of Debt• Increasing its Risk

2006 2007 20080.00

0.20

0.40

0.60

0.80

1.00

1.20

0.87

0.92

1.13

0.47 0.48 0.53

Debt to Equity Debt to Assets Ratio

Company Financing – Risk

• Liquidity• Current Ratio of 1.39

• Ability to Cover Debt Payments• Times Interest Earned of 14.5

• Overall - Moderate Risk

Company Financing – Profitability

• Financial Leverage – Increasing ROE

2006 2007 20081.70

1.75

1.80

1.85

1.90

1.95

2.00

2.05

2.10

2.15

$-

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

$3,000.0

$3,500.0

$4,000.0

$4,500.0

$5,000.0

Financial Leverage (FL)Net Income (mil)

2006 2007 20080.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

22.9%

15.7%

32.2%

12.2%

8.1%

15.2%

ROE ROA

Asset Structure – Capital Intensity

• Relatively Easy Market Entry: +/- $900K per Store• Difficult to Match Size• 995 New Stores in 2008• Net Fixed Assets of $20 Billion

Asset Structure - Breakdown

• Very Little Asset Structure Change• Investing Activities Show Growth

• Capital Expenditures of $2.3 Billion• Depreciation of $1.2 Billion

2006 2007 2008 $-

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0

$35,000.0 Net Property Plant & Equipment Current Assets Other Assets

Asset Structure - ROA• Profit Margin• Product Differentiation• Efficiency

• Asset Turnover• Cost Leadership• Effectiveness

2006 2007 20080.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

0.66

0.68

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

Profit Margin Asset Turnover

Asset Structure - Risk• Significant Operating Leverage• 3-Year Trend

• Revenue ↑ 12.6 %• Net Income ↑ 21.7%

Asset Structure - Unrecorded

• Advertising Expense of +/- $800 Million

• Significant Local Franchisee Expense

Number 1 Asset—Brand Name

1. Coca-Cola ($68,734 million)2. IBM ($60,211 million)3. Microsoft ($56,647 million)4. GE ($47,777 million)5. Nokia ($34,864 million)6. McDonald's ($32,275 million)7. Google ($31,980 million)8. Toyota ($31,330 million)9. Intel ($30,636 million)10.Disney ($28,447 million)

BusinessWeek’s 2009 Report: 100 Best Global Brand Values as of 09/21/2009

Competitors—Burgers to Burgers

• Burger King Holdings• Wendy’s International

MCD BK Wendy’s

ROE 32.2% 20.6% (20%)

Dividend payout ratio

42.3% 8.5% 6.3%

Stock Price (12/5/09)

$61.59 $18.27 $4.12

Current Ratio 139% 76.8% 75.8%

ROA 15.35 7.2% 25%

Number of Locations

McDonald's Burger King Wendy's0

5000

10000

15000

20000

25000

30000

35000

McDonald’s Relative to Major Stock Indices

2003 2004 2005 2006 2007 2008$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

McDonald's

S&P Index

DJIA Companies

Stock Summary

• Stock Price Grew Consistently Past 3 Years• From $24.83 in 2003 to

$61.59 today• Stock Advisors—Buy!

Questions???