Contents
1 11-year summary
2 Letter to shareholders
6 Perspectives from our CFO
7 What do you have a taste for?
21 Putting sparkle in our service
23 Building on a strong heritage of values
25 Directors and corporate officers
25 Investor information and services
McDonald’s 2001 financial information, including management’s discussion and analysis, consolidated financial statements and notes, is in the McDonald’s Corporation Annual Meeting Notice, Proxy Statement and 2001 Financial Information and is available at www.mcdonalds.com/corporate/investor/financialinfo.
<< About the covers
WHAT DO YOU HAVE A TASTE FOR?People are eating out more often, and their tastes
are becoming more adventuresome. As a result,
they are demanding more variety . . .and McDonald’s
is listening.
Our New Tastes Menu—available in Australia,
Canada, Hong Kong, Taiwan and the U.S.—is
adding excitement and variety for customers
through an ongoing rotation of product offerings.
Designed to firmly establish McDonald’s as a place
for variety, we are supporting our New Tastes Menu
with advertising. We also are making it easy for
customers to determine what’s new by prominently
featuring current selections on our menu boards.
Our goal is to entice regular customers to visit us
even more frequently and to attract new customers
by satisfying their cravings for something different.
Pictured on the covers are McDonald’s World
Famous Fries, a rich triple-thick chocolate shake
and some New Tastes Menu items recently or soon
to be featured in the U.S. on a national or local
level: the mouthwatering McPhilly Cheesesteak
sandwich, the satisfying Cheddar Bacon
Sausage McMuffin, the succulent crispy coated,
all-white-meat Chicken Select Strips with zippy
dipping sauces and the tempting Tin Roof Waffle
Cone Sundae.
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Dollars in millions, except per share data 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991
Franchised sales $24,838 24,463 23,830 22,330 20,863 19,969 19,123 17,146 15,756 14,474 12,959Company-operated sales $11,040 10,467 9,512 8,895 8,136 7,571 6,863 5,793 5,157 5,103 4,908Affiliated sales $ 4,752 5,251 5,149 4,754 4,639 4,272 3,928 3,048 2,674 2,308 2,061
Total Systemwide sales $40,630 40,181 38,491 35,979 33,638 31,812 29,914 25,987 23,587 21,885 19,928
Total revenues $14,870 14,243 13,259 12,421 11,409 10,687 9,795 8,321 7,408 7,133 6,695Operating income $ 2,697(1) 3,330 3,320 2,762(3) 2,808 2,633 2,601 2,241 1,984 1,862 1,679Income before taxes $ 2,330(2) 2,882 2,884 2,307(3) 2,407 2,251 2,169 1,887 1,676 1,448 1,299Net income $ 1,637(2) 1,977 1,948 1,550(3) 1,642 1,573 1,427 1,224 1,083 959 860
Cash provided by operations $ 2,688 2,751 3,009 2,766 2,442 2,461 2,296 1,926 1,680 1,426 1,423Capital expenditures $ 1,906 1,945 1,868 1,879 2,111 2,375 2,064 1,539 1,317 1,087 1,129Free cash flow $ 782 806 1,141 887 331 86 232 387 363 339 294Treasury stock purchases $ 1,090 2,002 933 1,162 765 605 321 500 628 92 117
Financial position at year end
Total assets $22,535 21,684 20,983 19,784 18,242 17,386 15,415 13,592 12,035 11,681 11,349Total debt $ 8,918 8,474 7,252 7,043 6,463 5,523 4,836 4,351 3,713 3,857 4,615Total shareholders’ equity $ 9,488 9,204 9,639 9,465 8,852 8,718 7,861 6,885 6,274 5,892 4,835Shares outstanding IN MILLIONS 1,280.7 1,304.9 1,350.8 1,356.2 1,371.4 1,389.2 1,399.5 1,387.4 1,414.7 1,454.1 1,434.5
Per common share
Net income $ 1.27(2) 1.49 1.44 1.14(3) 1.17 1.11 .99 .84 .73 .65 .59Net income–diluted $ 1.25(2) 1.46 1.39 1.10(3) 1.15 1.08 .97 .82 .71 .63 .57Dividends declared $ .23 .22 .20 .18 .16 .15 .13 .12 .11 .10 .09Market price at year end $ 26.47 34.00 40.31 38.41 23.88 22.69 22.56 14.63 14.25 12.19 9.50
Franchised restaurants 17,395 16,795 15,949 15,086 14,197 13,374 12,186 10,944 9,918 9,237 8,735Company-operated restaurants 8,378 7,652 6,059 5,433 4,887 4,294 3,783 3,216 2,733 2,551 2,547Affiliated restaurants 4,320 4,260 4,301 3,994 3,844 3,216 2,330 1,739 1,476 1,305 1,136
Total Systemwide restaurants 30,093 28,707 26,309 24,513 22,928 20,884 18,299 15,899 14,127 13,093 12,418
(1) Includes $378 million of pretax special operating charges primarily related to the U.S. business reorganization and other global change initiatives, and the closing of 163 underperforming restaurants in international markets.
(2) Includes the $378 million of pretax special operating charges noted above and $125 million of net pretax special nonoperating income items primarily related to a gain on the initial public offering of McDonald’s Japan, for a net pretax expense of $253 million ($143 million after tax or $0.11 per share). Net income also reflects an effective tax rate of 29.8 percent, primarily due to the one-time benefit of tax law changes in certain international markets ($147 million).
(3) Includes $162 million of Made For You costs and the $160 million special charge related to the home office productivity initiative for a pretax total of $322 million ($219 million after tax or $0.16 per share).
11-year summary
In 2002, we plan to add between 1,300 and 1,400 McDonald’s restaurants, as well as open 100 to 150 new restaurants under our Partner Brands.
1
5-year performance
1997 1997 2001 (2)
$33.6 $2.8 $18.2
SYSTEMWIDE SALESIN BILLIONS
OPERATING INCOME (1)
IN BILLIONSTOTAL ASSETS
IN BILLIONS
$40.6 $3.1 $22.5
1997 2001
U.S. Europe Asia/Pacific, Middle East and Africa Latin America Canada Partner Brands Corporate(1) Graph excludes Corporate segment and Partner Brands.
(2) Excludes special charges of $378 million.
2001
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From many different perspectives, 2001 wasone tough year.
It was a year in which the strength andresolve of the United States was tested. Itwas a year in which the resourcefulness ofmany of the world’s best-known companies,including McDonald’s, was tested.
Clearly, I am disappointed in McDonald’sglobal business performance. I also am deeply concerned about the erosion in totalshareholder value that has occurred as aresult.
Our 2001 performance was hampered by the strong U.S. dollar and weak economies in
many countries in which we operate. And obviously,the tragic events ofSeptember 11 have had an impact.
Additionally, despiteMcDonald’s outstandingquality and safety record,our business suffered fromconsumer concerns aboutbeef safety in Europe and Japan. Fortunately,this negative impact was significantly less on ourbusiness than on othercompanies selling beef inthese markets, because so
many customers knew they could trust ourhigh standards.
Let me state the obvious: we can and must dobetter than the 4 percent constant currencysales increase we generated in 2001. We mustdeliver the kinds of growth in sales and profitsthat can make a positive difference in thevalue of your investment in McDonald’s.
The reality is there will always be challenges. It is our job to manage through the challengesby leveraging our strengths to overcomethem. We often tell our children, “With chal-lenges come opportunities.” The same is truefor businesses. So, more than ever before,McDonald’s must adapt and evolve to seizeopportunities as they unfold.
Over the years, three core strengths have driven our business success. They differenti-ate McDonald’s from other companies, are not easily imitated and can be leveraged tocreate a significant benefit for consumers andshareholders. We intend to build on thesestrengths to return our business to double-digit growth.
The first is our ability to forge bonds of trustwith customers throughout the world. Peopleknow they can enjoy the same great taste of a Big Mac whether they are at a McDonald’sin Paris, France, or Paris, Texas. They alsoknow that they can rely on McDonald’s high-quality and safety standards.
The second strength is our expertise in find-ing, negotiating, building and managing a complex network of real estate locations. Thisis evidenced by the fact that we operate more
Dear shareholder:
Last year, McDonald’s served 46 million customers a day,
an increase of more than 1 millioncustomers a day compared
with 2000.
2
Our goal for 2002is to leverageour powerfulstrengths toimprove performance and ensure thatour foundationfor growth isrock solid.
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McDonald’s global supply infrastructure is unparalleled,
allowing us to achieve economies of scale and offer great values
to customers.
3
than 30,000 conveniently located points of distribution in 121 countries across the globe.
The third strength is our ability to execute aretail business model successfully in marketsaround the world. This is about finding theright balance on the global-local continuum...about being able to train and develop a diversegroup of employees, franchisees, joint-venturepartners and suppliers who are committed tocore principles and operating systems.
These are powerful strengths. Our goal for2002 is to leverage them to improve perfor-mance and ensure that our foundation forgrowth is rock solid. We are holding ourselvesaccountable for results.
First and foremost, we plan to improve thecustomers’ experience, especially in marketswhere our customer satisfaction scores haveslipped. Frankly, this is unacceptable.
We have rededicated ourselves to giving cus-tomers the world over an outstanding experi-ence on each and every visit to McDonald’s. Weknow that if we raise the bar on the Quality,Service, Cleanliness and Value we deliver, cus-tomers will visit our restaurants more often.
We also made important changes in 2001 tohelp us achieve better results.
We restructured our global organization tocreate clearer lines of accountability and
McDONALD’S VISION:BE THE WORLD’S BEST QUICK-SERVICE RESTAURANT EXPERIENCE
To achieve our vision, we will:
BE THE BEST EMPLOYER for our people in every market around the world, as only satisfied employees can deliver the friendly, efficient service customers want and deserve
DELIVER EXCEPTIONAL CUSTOMER EXPERIENCES through a combination of great-tasting food, outstanding service, exciting promotions, inviting restaurants and reliable value
EXPAND OUR POWERFUL BRAND by using innovation and technology to enhance customer experiences for years to come
LEVERAGE THE SYSTEM’S STRENGTHS by developing new business concepts
SOLIDIFY OUR LEADERSHIP IN SOCIAL RESPONSIBILITY by giving back to our communities and making the world a better place for future generations
By doing this, we will:
ACHIEVE ENDURING, PROFITABLE GROWTH
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greater role clarity in our hamburger busi-ness. We created a single point of leadershipfor our Partner Brands to help us capturemore meal occasions outside the reach ofMcDonald’s. We also elevated the role of corporate strategy and business developmentin order to accelerate ideas for growing ourexisting businesses and to identify new busi-ness opportunities.
In addition, we implemented a number of initiatives around the world in 2001 that areexpected to generate ongoing annual savingsof about $100 million in selling, general andadministrative expenses, starting this year.
In the U.S., we have streamlined the respon-sibilities of our field staff so they can focusmore attention on the Quality, Service andCleanliness that our customers receive. Wehave improved training for our restaurantmanagers to enhance their ability to adapt to changing situations in their day-to-dayrestaurant environments. We are compilingmore objective customer perspectives andusing an enhanced national restaurant evaluation system. And, we are providingmore menu variety and are implementingprograms to improve customers’ perception of the value we represent. Importantly, weare linking employee compensation moredirectly to customer satisfaction, as well as to financial performance.
We won’t see the results of these U.S. initiativesovernight. But our customers will begin to seea noticeable difference as the year progresses.
In 2001, we implemented a similar changeinitiative across Europe. Called EuroMission,the goal is to increase sales and transactionsby collaborating on strategies and implement-ing programs that drive employee satisfaction,customer service and value.
With consumer concerns regarding the safetyof the European beef supply largely behindus, our management team is moving quicklyto take advantage of improved business conditions.
On the other hand, we expect the weak eco-nomic conditions in many Asian and LatinAmerican markets to continue for some time.Yet, these countries represent an enormouslong-term opportunity for McDonald’s, giventheir potential for economic growth and theirlarge populations. Accordingly, in the shortterm, we are focusing on increasing ouraffordability and building our brand.
While attractive prices are important every-where, they are especially important in coun-tries experiencing economic difficulties andwhere income levels are often low. To prof-itably support the great value we offer inthese challenging—yet promising—countries,we have been, and continue to be, focused on improving our cost structures. And sinceattractive prices alone are not enough, we areintent on strengthening the preference forMcDonald’s by delivering on the basics ofcleanliness, quality and speed of service andby providing experiences that build bondswith kids and families.
Fortune magazine ranked McDonald’s among America’s
Most Admired Companies in the area of social responsibility.
4
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McDonald’s brand is strong, and our business is resilient.
We have taken action to improve our customers’ experience and
drive long-term success.
5
Globally, we plan to addbetween 1,300 and 1,400McDonald’s restaurantsin 2002. These plansreflect our intent to becautious with invest-ments in markets thatare experiencing eco-nomic difficulties and to increase openings inthose markets withattractive near-termopportunities.
Collectively, the actionswe have taken aredesigned to create astronger, more nimbleMcDonald’s—a globalorganization that is leanerand better aligned, amanagement group that is more focused and more accountable,and a worldwide corps of owner/operators, joint-venture partners, devel-opmental licensees,employees and suppliersthat is committed to the
ideals that have won the trust of so many the world over.
McDonald’s global management team, whichI believe is one of the most talented in theworld, shares my sense of urgency to deliverimproved results. Further, that sense of
urgency permeates the entire organization ofowner/operators, suppliers and employees.
Our shareholders should expect nothing less.
We are a System with a long heritage of success. Certainly, we are not pleased withrecent performance. At the end of the day,there can be no excuses. . . legitimate or otherwise.
The many changes and initiatives we haveundertaken, combined with our powerfulbrand and lead position in most markets inwhich we do business, put us in an excellentposition to improve results.
And that’s what we intend to do.
In closing, I want to thank you for your continued confidence in McDonald’s. Wedeeply appreciate your trust. I am confidentthat the McDonald’s System can, and will,return the business to the kind of growth youexpect and deserve.
Sincerely,
Jack M. GreenbergChairman and Chief Executive Officer Shareholder
March 12, 2002
A TRIBUTE TO AMcDONALD’S VISIONARY
Jim Cantalupo, who mostrecently served as McDonald’sVice Chairman and President,has announced plans to retireafter 28 remarkable years ofservice.
Jim joined the Company as Controller in 1974. Over theyears, he held numerous opera-tions management positions in the U.S. business beforeassuming responsibility forMcDonald’s international operations in 1987. At thattime, the System had nearly2,350 restaurants in 46 coun-tries outside the U.S. Thanks to Jim’s vision and leadership,today the Company has aninternational presenceapproaching 16,000 restaurantsin 120 countries. He truly hasbeen a driving force and chiefbuilder of the greatest globalretail business ever developed.
Jim’s achievements are legendary, and literally each of the 1.5 million members of the McDonald’s Family owes him a debt of gratitude for hisoutstanding contributions.
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In July 2001, Matt Paull was appointed Executive
Vice President and Chief Financial Officer of
McDonald’s Corporation. Prior to becoming CFO,
he was the Company’s Senior Vice President—
Finance. Matt brings a wealth of business experi-
ence, as well as financial expertise, to the position.
The brief interview that follows is provided to intro-
duce Matt to investors.
How do you see your role as CFO?
I view my role in very broad terms. Of course,measuring growth in sales and income, as well as
improvements in returns, margins and other financialmetrics are critical to gaugingperformance. I oversee theestablishment and measure-ment of those metrics to ensurethat we are focused on buildingthe business for the benefit ofshareholders.
Yet, that is only part of myjob. I view working with theentire management team tofocus the organization on critical nonfinancial goals asone of my key responsibilities.Setting and achieving the rightnonfinancial goals—such asimproving the speed, accuracyand friendliness of our service,
as well as other customer satisfaction attributes—ultimately will determine whether we achieve ourfinancial goals.
How is the Company determining whether
important nonfinancial goals are being met?
We are assessing the quality of our customers’experiences with metrics that are both timely andactionable. More specifically, we have calibrated andrefined our measurement criteria and essentiallyeliminated the subjectivity that often creeps intoevaluation processes. Perhaps more importantly, weare holding our people more accountable and aretying their compensation more directly to results.
How have world economic situations impacted
the Company’s expansion plans?
Opening profitable restaurants is part of ourgrowth strategy. We have the financial capacity toinvest for the long term. At the same time, we planto invest prudently.
When planning openings, we consider each mar-ket’s current economic conditions, long-term demo-graphic and lifestyle trends, competitive environmentand stage of development, as well as the potentialeffect on existing McDonald’s restaurants and returns.
Based on these criteria, we reduced the numberof restaurant additions over the past few years andexpect to add 1,300 to 1,400 McDonald’s restaurantsin 2002. About 60 percent of these openings will bein the U.S., Europe and Canada, where economiesare relatively stable and returns are strong. We alsoare adding restaurants in China, where the near-and long-term growth potential is enormous.
At the same time, we are reducing openings inmarkets with weak economic environments until wesee signs of improvement. Since we already have aclear competitive lead in these countries, this tempo-rary slowdown makes good business sense.
In addition, we plan to open 100 to 150 newrestaurants under our Partner Brands in 2002.
What are McDonald’s priorities for using the cash
it generates?
McDonald’s consistently generates a significantamount of cash from operations, and our focusremains on using that cash to enhance shareholdervalue.
Clearly, our priority is to invest in growing thebusiness—first by investing in Brand McDonald’sand second, by investing in our Partner Brand con-cepts. Our goal is to put our cash to work to capturemore meal occasions and to generate attractivereturns in the process.
Further, since our annual cash from operationsis more than $2.5 billion, a sizeable amount remainsafter making capital expenditures. We deploy thatexcess cash—together with our credit capacity—torepurchase shares of McDonald’s stock and to paydividends—both uses that benefit shareholders.
Perspectives from our CFO
We continue to achieve returns in excess of our cost of capital,
and our objective is to increase returns over time.
6
. . .we are holdingour people moreaccountable andare tying theircompensationmore directly toresults.
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research tells us...
PEOPLE ARE EATING OUT MORE THAN EVER BEFORE.Expenditures on food and drink away from home in the U.S.
are expected to increase by $87 billion—in real terms—
during the 10-year period ending December 2010.
Time pressure is a key factor causing increased demand
for food service in major markets around the world.
THE MORE PEOPLE EAT OUT, THE MORE VARIETY THEY WANT.Due to the desire for a greater variety of tastes and experiences,
new food categories are emerging—such as “fast casual,”
which combines quick counter service and value pricing
with the menu and atmosphere of a casual restaurant.
ONE BRAND CAN’T BE ALL THINGS TO ALL PEOPLE.People choose where to eat based on situational factors, such as
with whom they are dining. . .how much time they have. . .
what is convenient or available . . .how much money they want to spend. . .
the atmosphere they are seeking. . .and the type of food they are craving.
THERE IS A LOT OF OPPORTUNITY FOR GROWTH.In our 10 largest markets, McDonald’s share of total commercial meals
is 12 percent . . .and assuming that people eat three meals a day,
our share of total meals consumed is less than 1 percent.
McDonald’s is pursuing opportunities to serve more
customers, more meals–and to doso more frequently–by offering
convenience, value, taste and variety.
7
WHAT DO YOU HAVE A TASTE FOR?
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McDonald’s is the place for a
Big Mac and World Famous Fries
. . . and a whole lot more.
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we’re broadening our appeal
The vast majority of McDonald’s futuregrowth will come from our core hambur-ger business, which we are determinedto grow to its fullest potential.
To start, we are building on ourstrengths.
McDonald’s is already a favorite with kids and fami-lies. We have terrific Happy Meals and PlayPlaces. . .we’re the home of Ronald McDonald . . .and we connectwith kids of all ages through our relationship with Disney.
We are building on this special bond with our MightyKids Meal, the perfect transition meal for youngstersbetween the ages of eight and 10. The Mighty Kids Mealsatisfies their growing appetites with larger entrées, such as double cheeseburgers or six-piece Chicken
McNuggets, along with a smallfry and drink, while still providinggreat Happy Meal toys.
We also are reinforcing ourpowerful relationship with kids by appealing to their sense offun. Notably, we are enhancingthe play areas in a number ofour restaurants around the worldby adding interactive electronicgame centers, such asKidzpace.
McDonald’s is also top ofmind when customers want ahand-held meal on the run. So, we are making a visit toMcDonald’s more convenient by speeding up service andimproving the quality of the over-all experience. (See story on page 21.)
In addition, we are creatingnew sales and profit generatorsby increasing the variety weoffer. While we are often the first place customers think of
when they have a craving for great-tasting hamburgersand fries, we’re not always top of mind when they have a taste for something different. So, we have made it apriority to gain recognition as a place for variety, as well as value.
Customers in the U.S. now have more choices, includ-ing Fruit ’N Yogurt Parfaits, McSalad Shakers andBreakfast Bagel sandwiches, as well as traditional favor-ites, such as Big Mac and Quarter Pounder sandwiches.
In several European markets, we offer large beefsandwiches, similar to France’s popular, promotional, premium Le 280. And customers in the U.K. and Belgiumare giving a thumbs up to our new McChickenPremiere sandwich—a tasty chicken breast patty, leaflettuce, salsa and sour cream on a focaccia bun.
In many Asian markets, where customers preferchicken to beef, we offer an array of chicken products—including Chicken McCrispy, Spicy McWings and theSpicy Chicken Filet Burger—designed to appeal tolocal tastes. In addition, we are exploring ways to addvalue and variety to our menus throughout Asia with newfish, pork and rice products.
We also are mixing it up a bit and offering customersongoing food news with our New Tastes Menu inAustralia, Canada, Hong Kong, Taiwan and the U.S. Thisrotating menu allows markets to select and showcase lim-ited-time taste offerings from a wide variety of breakfast,entrée and dessert pleasers. For example, the OutbackOmelette McMuffin—a pepper and onion omeletserved on a toasted English muffin with bacon, cheeseand a tangy BBQ sauce—is a popular choice among customers Down Under.
In addition, we are exploring ways to increase varietyby giving customers more flexibility with our Menú a Tu Pinta, which is available throughout Chile, and ourMcPick Value Meal menu, which is in a small markettest in the U.S. These menus allow customers to createtheir own value meal by selecting one of several entréesand two side items from seven choices, which includeside McSalad Shakers, hot apple pies, French fries andsoft drinks. And for those who prefer to dine a la carte, we are testing value menus that highlight products, suchas cheeseburgers, McChicken sandwiches and soft serve cones, that are available everyday for $1 or less.Currently, such menus are available in more than 4,000McDonald’s restaurants across the U.S.
Looking forward, we will continue to stir the pot and cook up new and different ways to give customersaround the world compelling kinds of tastes, variety, values and experiences that will make them chooseMcDonald’s again and again.
MAGNIFIQUE!
We are attracting meat lovers inFrance with a new, beefy taste andappetite pleaser. . .Le 280. True toits name, this delicious, promotionalsandwich weighs a total of 280grams and has a distinct flavorprofile. Nearly one-third pound of pure beef is first seasoned andgrilled to perfection, then toppedwith cheese, tomatoes, lettuce andbéarnaise sauce–all served on atoasted, home-style Ciabatta bun.
An instant success in France, similar premium sandwiches arenow available as promotionalitems in other European markets.
The restaurant industry’s share of U.S. food dollars has grown from
25% in 1955 to 46% today . . .and it isexpected to grow to 53% by 2010.
National Restaurant Association
10
WHAT DO YOU HAVE A TASTE FOR?
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CREAM CHEESE & JAM BAGELNEW ZEALAND
CHICKEN FAJITAU.S.
TERIYAKI BURGERJAPAN
McPOLLO PREMIUMCHILE
McMUFFIN A LA MEXICANAMEXICO
VEGGIE SURPRISEINDIA
SPICY CRISPY CHICKEN U.S.
ASIAN McSALADU.S.
POUTINECANADA
CHEESE AND TOMATOTOASTED SANDWICH
AUSTRALIA
McHEROU.S.
CHILE CHEESE McDOUBLEU.S.
DRUMSTICK McFLURRYU.S.
CHICKEN BREAST PARMESAN U.S.
BERRY CHERRYFRUIT ’N YOGURT PARFAIT
U.S.
OUTBACK OMELETTEMcMUFFINAUSTRALIA
BBQ BACON BIG N’ TASTY
U.S.
McAFRIKANORWAY
EGG McQUESOCOSTA RICA
CRISPY CHICKEN McCLUBU.S.
MOUNTAIN RASPBERRY SHAKE
U.S.
SPICY CHICKEN FILET BURGER
CHINA
BIG McBACONCHEESEBURGER
U.S.
SPICY McWINGSHONG KONG
LE 280FRANCE
JOHNSONVILLE BRATU.S.
McGOLDEN CORN SOUPHONG KONG
McCHICKEN PREMIEREU.K.
BULGOGI BURGERSOUTH KOREA
HOT HAM ‘N CHEESEU.S.
McRIBU.S.
McBLTU.S.
A sampling of McDonald’smenu variety
Pictured are just a few ofMcDonald’s permanent andpromotional products from
around the world.
CHICKEN McCRISPYSINGAPORE
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McDonald’s is a trusted friend
among kids . . . and grown-ups, too.
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Designed to captureMcDonald’s meal occasions
in locations where the sales potential would notsupport a large, traditionalrestaurant, McSnack Spotoffers a limited selection
of McDonald’s menu items, as well as
snack favorites.
TOP RIGHT
STRAWBERRY BANANA
FRUIT ‘N YOGURT PARFAIT
Originally developed in Australia, McCafés generally are attached to existing McDonald’s restaurants and have
a cosmopolitan atmosphere with
distinct adult appeal.
TOP LEFT
CAPPUCCINO AND
BANANA CAKE
This concept brings two great restaurant
experiences together under one roof with classic,
cooked-to-order diner fare and traditional
McDonald’s favorites.
BOTTOM RIGHT
TRIPLE DECKER
TURKEY AND BACON CLUB
McTreat Spot kiosks sell indulgent sweet treats
in high-traffic, high-volume locations.
BOTTOM LEFT
HOT FUDGE BROWNIE SUNDAE
TM
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we’re extending our reach
There is more innovation than ever underThe Golden Arches, as we exploreopportunities to extend the ways inwhich we serve our customers.
Take, for example, our McCafécoffee concept. Originally developed
in Australia, McCafés generally are attached to existingMcDonald’s restaurants and have a cosmopolitan atmosphere with distinct adult appeal. Here, customerscan enjoy premium coffees, cakes and pastries—all at a value price compared with typical coffeehouses.
Clearly, the coffee market varies significantly bycountry, and the demographics need to be right. So,McCafés may not be appropriate for all our restaurants.Yet, in the right locations, they can add to the bottom line. In Australia, where the coffee market is growing atan annual rate of 10 percent, we have experienced sig-nificant sales increases with McCafé additions. Theseincreases are being driven by the sale of McCafé offer-ings, as well as incremental regular menu sales to ourcoffee-loving customers. Today, we operate more than300 McCafés in over 15 countries, and we will continueto explore opportunities to add McCafés where theymake sense.
We also want to be top of mind when customerswant an indulgent sweet treat or a snack when they areon the go. So, we are using dessert kiosks and smallrestaurant units to earn such recognition and captureincremental sales.
For example, McDonald’s currently operates morethan 600 dessert kiosks in Latin America. Initially devel-oped about 10 years ago in Brazil, where they have beenvery successful, these kiosks typically sell bottled waterand a variety of soft serve products, including McFlurrydesserts. Since they are situated in shopping malls nearfull McDonald’s restaurants, they serve as billboards for those restaurants, as well as convenient places forcustomers to break to satisfy their sweet tooth.
Now, we are adapting this profit generator for theU.S. market with McTreat Spot kiosks and are testing a variety of dessert concepts in southeast Asia.
In the U.S., our McTreat Spot kiosks are situated inhigh-traffic, high-volume locations, like the Minneapolis,Minnesota, airport, the Circus-Circus Casino in LasVegas, Nevada, and the Woodfield Shopping Mall inSchaumburg, Illinois. Offerings include satisfying
sundaes, rich McFlurry desserts, refreshing Fruit ’NYogurt Parfaits and delicious triple-thick shakes. Initialresults indicate that McTreat Spot kiosks are attractingcustomers who would have gone somewhere else to satisfy their cravings.
We also have a small test of a concept calledMcSnack Spot underway in Texas. It is designed tocapture McDonald’s meal occasions in locations, such as within retail outlets and train stations, where the salespotential would not support alarge, traditional restaurant.McSnack Spots are highly effi-cient operating units that requirelow investments and generatehigh profit margins. They offer alimited selection of McDonald’smenu items, as well as snackfavorites, such as popcorn andpretzels. Early results indicategreat consumer acceptance.
Another concept in early testthat is resonating with consumersis McDonald’s with the DinerInside. It brings two greatrestaurant experiences togetherunder one roof with classic,cooked-to-order diner fare andtraditional McDonald’s favorites.
We opened our first diner inKokomo, Indiana, in 2001 andhave several under construction.Current plans include convertinga number of restaurants in a television market to McDonald’swith the Diner Inside in order toconduct an advertised sales test.
Clearly, we are pursuing a number of opportunities toextend the reach of BrandMcDonald’s and are monitoring results to determinewhether a viable business case can be made for prof-itably expanding each of the concepts in test.
We are committed to ongoing innovation and experi-mentation. Our intent is to tap into our assets to give customers what they want, to enhance their experienceand to build the business under The Golden Arches.
THINKING OUTSIDE THE FRY BOX
We are tapping into the growingtrend for retro-nostalgia with a concept that combines aMcDonald’s restaurant with a classic diner experience. The concept–McDonald’s with theDiner Inside–is designed to be best in class in the midscale diningarena, serving both traditionaldiner fare, such as Belgian waffles,triple decker sandwiches andchicken fried steak, as well as Big Mac sandwiches, ChickenMcNuggets and Happy Meals.
During its first year of opera-tion, the McDonald’s restaurant inKokomo, Indiana, which had beenconverted to a McDonald’s with the Diner Inside, saw significantsales increases.
More than 60% of Americans snack regularly.
2000 Roper Reports, Roper ASW
15
WHAT DO YOU HAVE A TASTE FOR?
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Growing the core McDonald’s businessis our number one priority.
At the same time, we know customers want—and are spendingtheir eating-out dollars on—a varietyof foods and dining experiences. So,
we plan to supplement the growth of our core businessand add shareholder value with a portfolio of PartnerBrands—concepts that we believe will make a meaning-ful contribution to earnings over the next five to 10 years.
We embarked on our Partner Brand strategy in 1998, with the purchase of a minority interest in Chipotle
Mexican Grill, which then consisted of 14 restaurants inDenver, Colorado. Today, wehave a portfolio of four PartnerBrand concepts—BostonMarket, Chipotle, DonatosPizzeria and Pret A Manger.Collectively, they generateapproximately $1 billion in annualsales. To put this in perspective,there are only 12 quick-servicerestaurant chains with more than $1 billion in annual sales.
For our strategy to succeed,we must ensure that we havethe right portfolio of PartnerBrands. Accordingly, we haveestablished very specific criteriaagainst which to measure eachbrand’s potential. It must demon-strate broad consumer appeal. Itmust have a scalable, replicablebusiness model that producesreturns that exceed our cost ofcapital. It also must have thelong-term potential to have thou-sands of restaurants.
We think our Partner Brandsare best-in-class players in theirrespective large and growing
market segments. Here’s a brief rundown on each brand. Boston Market serves the needs of increasingly
time-pressed consumers who want a home-style mealwithout the fuss. With more than 650 restaurants across
the country, Boston Market is targeting the $18 billionU.S. home-meal replacement opportunity with selectionsthat include rotisserie chicken, grilled chicken, ham,meatloaf and a wide array of salads, side dishes anddesserts. Customers can choose to take their mealshome or dine in the restaurant. They also can takeadvantage of Boston Market’s catering service. In early2002, we opened our first Boston Market in Australia,and we have plans to open in Canada by year end.
Chipotle, which operates more than 175 restaurants,offers fresh, gourmet burritos and tacos in an energetic,contemporary atmosphere. Credited by some industryanalysts as pioneering a new category—“fast casual”—Chipotle competes within and beyond the $13 billion U.S.Mexican restaurant segment. This concept’s unique styleand flavorful food combinations have generated a loyalcustomer following and strong positive comparable salesgrowth.
Donatos Pizzeria competes in the $24 billion U.S.pizza segment. With nearly 200 restaurants across theU.S., Donatos is known for world-class, thin-crust pizzawith fresh Edge-to-Edge toppings. Donatos enjoys a loyalfollowing in its home market of Columbus, Ohio, andplans to build brand awareness and further differentiateitself from the competition with a new and inviting pizzeriaformat. Building on a heritage of innovation, this new format accommodates varied lifestyles with dine-in, take-out and delivery service, as well as a call-ahead pick-upwindow and catering options. The first Donatos inGermany is scheduled to open later this year.
Pret A Manger, in which we have a minority interest,sells upscale, ready-to-eat sandwiches that are prepareddaily on the premises. Pret is relatively new to the $30 billion U.S. cold sandwich segment with seven shopsin New York City, and competes in the $5 billion U.K.segment, with more than 115 shops there. The concept’spopularity is evidenced by its strong comparable salesincreases in 2001. Pret opened its first shop in HongKong early this year and has plans to open in Japan.
We believe these four brands have a lot of potential.We will nurture and grow each carefully and will scale a brand only after it demonstrates that it can meet ourstringent criteria. In the end, we will leverage ourresources and competencies to capture more meal occasions around the world—both under and beyondThe Golden Arches.
we’re exploring new avenues of growth
COOKING UPNEW POTENTIAL
The two-square mile trading areain Dublin, Ohio, pictured above, is home to three successfulMcDonald’s restaurants with combined annual sales of $5.1 million. Frankly, there is little room for an additionalMcDonald’s in the neighborhood.However, we also operate aChipotle, a Boston Market and aDonatos Pizzeria in the area, eachgenerating about $1 million ormore in annual sales.
Together, these six restaurants–representing four different brands,serving four different meal occasions–generate $8.2 million in annualsales. That’s 60 percent more thanwe would have generated withMcDonald’s restaurants alone.
Americans no longer consider going out to eat a luxury.
It has become an integral part of their lives.
Yankelovich Partners
18
$8.2 million salesDublin,Ohio, area
WHAT DO YOU HAVE A TASTE FOR?
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Many consumers want an alternative to cooking that allows them to slow
down and spend more time with loved ones.
Boston Market offers fresh,delicious home-style meals
–without the hassle of preparation and cleanup.
<< CHICKEN WHITE-MEAT INDIVIDUAL
MEAL WITH MASHED POTATOES,
STEAMED VEGETABLE MEDLEY AND
CORNBREAD
Unique in the mainstreampizza category, Donatos’ menu
includes a distinctive line of Signature Pizzas,
plus a selection of oven-baked Big Don Subs and fresh, crispy salads. But it’s the Edge-to-Edge toppings that have made
Donatos famous.
<< “THE WORKS” PIZZA
Pret creates hand-made, natural food.
If it’s not natural, it’s not Pret.
All Pret’s sandwiches,baguettes and wraps are made fresh daily
in every shop.
<< THAI CHICKEN SANDWICH
WITH PRET COOL LEMON DRINK
Chipotle’s recipes are original and innovative,
using only the finest ingredients. The guacamole is
made fresh daily, and marinated meat is grilled
throughout the day.
<< CHICKEN TACOS
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experience tells us...
McDONALD’S IS UNIQUELY SUITED TO TAP INTO THE GROWING EATING-OUT DEMAND AROUND THE WORLD.We manage a complex network of 30,000 local community restaurants in 121 countries
and are adding more than 1,300 restaurants annually.
McDONALD’S IS ONE OF THE MOST POWERFUL BRANDS IN THE WORLD.
McDonald’s is a brand that customers the world over recognize and trust.
McDonald’s is known as a great place for kids and families; for convenient,
hand-held meals; for World Famous Fries and Big Macs; and for outstanding value.
We are building on these strengths, while also innovating to become
top of mind as a place for taste and variety.
McDONALD’S PORTFOLIO OF PARTNER BRANDS SERVES NEEDS BEYOND THOSE THAT BRAND McDONALD’S CAN FILL.
Through Boston Market, Chipotle, Donatos Pizzeria and Pret A Manger,
we are meeting customers’ desires for a variety of foods and dining experiences.
WE ARE IN AN EXCELLENT POSITION TO CAPTURE MORE MEAL OCCASIONS BOTH UNDER AND BEYOND
THE GOLDEN ARCHES.
We are leveraging our competencies to seize new growth opportunities...
while, at the same time, maximizing the potential of the existing McDonald’s business.
20
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Putting sparkle in our service
One of our key global growth
strategies is to deliver
exceptional customer
experiences through a combination
of great-tasting food, outstanding
service, exciting promotions, inviting
restaurants and reliable value.
However, even the very best food,promotions, restaurants and valueare meaningless without top-notchservice.
But what exactly is outstandingservice? And how are we doing?
Outstanding service starts with a welcoming smile and ends with a satisfied customer. Although weoften get high marks from cus-tomers, both internal and externaldata indicate that at times we missthe mark.
So, we’re taking action.The following are just some initia-
tives underway to put sparkle in ourservice.
TRAINING FOR THE UNEXPECTEDOur restaurant teams must have the knowledge and tools needed todeliver great customer experiences.So, training is an ongoing priorityfor McDonald’s.
An enhanced training programthat is being rolled out in the U.S.teaches our restaurant managershow to plan and prepare for eachshift by simulating a variety of scenarios. For exam-ple, they are being taught how to optimize customerservice if several crewmembers cannot make it intowork or if busloads of hungry tourists unexpectedlyarrive at the same time.
Such simulations really pay off. Restaurantteams that have gone through this training arefinding it easier to do their jobs. They are morefocused and more productive than before, and their
shifts run more smoothly. Most importantly, theyare giving our customers the fast, friendly servicethey deserve.
KEEPING IT SIMPLEOur people in the U.S. are eliminating non-value-added restaurant activities while optimizing ourmenu, merchandising and operations—all to thebenefit of the customer.
“Look after the customer, and the business
will take care of itself.”Ray Kroc, McDonald’s Founder
21
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Such efforts are part of an ongoing simplificationprocess that focuses on big and small changes, suchas using easy-to-open sauce tubes. . .eliminatingmenu items that don’t sell well . . .streamlininginventory management by consolidating cup and lid sizes. . .and using fewer, more targeted point-of-purchase materials.
As appropriate, these simplification initiativeswill be shared with other markets around theworld, making our restaurants more employee andcustomer friendly.
DIVIDING AND CONQUERINGMore and more of our restaurant staffs in Japan,the U.S. and Latin America are using a new team-based service approach to enhance our customers’front-counter experiences. It’s really simple: onecrewmember takes the order and payment, whileanother assembles and presents the order.
It’s fast, too. Using this system, the crew at aMcDonald’s on the Pennsylvania Turnpike served a caravan of seven buses in 35 minutes, less thanhalf the time it otherwise would have taken. Also,our people in Venezuela and Costa Rica attributeincreases in transactions and average checks to thebetter customer/crew interaction resulting from thisservicing technique.
In light of these positive results, we are begin-ning to test this team approach to wowing our cus-tomers in a number of other countries.
FASTER IS BETTERCustomers using the drive-thru tend to be pressedfor time. So, we continue to focus on improving thespeed of our drive-thru service.
We are exploring opportunities to enhance thedrive-thru experience by serving two cars at a time.In some locations, we are using double-lane drive-thrus. In others, crew people equipped with remoteorder-taking devices are assisting drive-thru cus-tomers during busy periods.
Adding a creative twist to branding speed of ser-vice at the front counter, as well as in the drive-thru, we have adopted a Formula 1 racecar-inspiredapproach in a number of Asian markets. Racing-
themed signs and uniforms, as well as timers andcrew incentives, make the program fun for crew andcustomers alike. In Indonesia, where this approachoriginated, we have rung up double-digit compara-ble sales increases for the past two years. Further,95 percent of our transactions in that market havebeen completed in 60 seconds or less.
NO MONEY.. .NO WORRYWe also are exploring alternative payment methodsto make a visit to McDonald’s more convenient.
Customers now can pay for their McDonald’smeal by swiping electronic devices or credit/debitcards past an electronic reader at a number ofMcDonald’s restaurants around the world. Forexample, more than 400 restaurants in the Chicago,Illinois, region accept Mobil Speedpasses as a pay-ment method, and many of our restaurants inAustralia, Denmark, France, Germany and NewZealand accept credit or debit cards. In some cases,customers can even get cash back.
This payment option not only speeds service, but customers are finding that being short on cashdoes not mean having to pass up a meal atMcDonald’s.
NOT SO MYSTERIOUS AFTER ALLWe are putting ourselves in our customers’ shoes.We are introducing mystery shopper programs incountries where we have not used them and step-ping up their use in those that do.
In essence, mystery shoppers are “undercover”restaurant visitors who evaluate the experiencefrom a customer’s perspective. The results of mystery shops, which are often accompanied bycrew and manager incentives for excellent perfor-mance, are helping our restaurant staffs to cele-brate successes and identify training opportunities.In addition, the feedback is being used to assisteach restaurant’s management team to developaction plans to raise the bar on service levels.
We believe this relevant measurement tool willdrive improved performance. In fact, customer satisfaction scores in Argentina and Australia haveimproved since mystery shops were introduced.
“Satisfied customers are our goal and our reward.”
Jack Greenberg, McDonald’s Chairman and Chief Executive Officer
22
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McDonald’s was founded on values. The
entire McDonald’s System owes a huge
debt of gratitude to the men and women
who shaped the Company in the early days and
defined who we are and that for which we stand.
We have never lost sight of the foundation they laid.
As a result, Brand McDonald’s has earned thetrust and confidence of people the world over. Weearn the right to that trust each and every day. It isa fragile—yet priceless—asset. And we are commit-ted to protecting and nurturing our Brand.
UNWAVERING COMMITMENT TO SAFETY AND QUALITY McDonald’s goes to great lengths to ensure that allaspects of our customers’ experience, from the foodwe serve to the toys in our Happy Meals, meet ourhigh-quality and safety standards.
To start, we are aligned with world-class suppliersthat share our high standards, and our restaurantstaffs around the world are trained in the properstorage, handling and preparation of our products.In addition, we continuously seek opportunities to
raise the bar on our own stringentsafety criteria, which always meet—and often exceed—those establishedby industry and governments.
For example, last year we intensi-fied our leadership efforts in thearea of meat safety through the for-mation of McDonald’s InternationalScientific Advisory Council. ThisCouncil of leading scientists andmedical experts from around theworld reviewed key industry safetypractices for beef. We are pleasedthat the members of the Council not only validated the McDonald’sSystem’s best practices, but alsoworked with us to identify newopportunities to further heighten thesafety of our beef supply.
COMMUNITY INVOLVEMENTWe value the communities we serveand believe that it is important togive back to others on both a localand global level.
We are active in the communitiesin which we do business. Thisinvolvement extends from owner/operators’ support of local soccerteams to being there in times ofneed. After all, that’s what goodneighbors do. The entire System ofemployees, franchisees and suppliershave a long history of helping those
Building on a strong heritage of values
Our commitment to quality and safety extends beyond our food
to all we do.
23
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less fortunate, including offering much neededassistance after natural disasters, such as earth-quakes and hurricanes.
McDonald’s also has long held the belief that wehave a responsibility to protect the environment forfuture generations. Consistent with our leadershipposition on a host of environmental issues, we, inpartnership with Conservation International, arecollaborating with McDonald’s suppliers to furtherintegrate environmentally sustainable practicesinto their operations. Primary areas of focus includethe conservation of water and energy and the safe-guarding of animal and plant biodiversity.
RONALD McDONALD HOUSE CHARITIESOne of the more visible aspects of our ongoing commitment to others is our support of RonaldMcDonald House Charities (RMHC). RMHC workstirelessly to improve the health and well being ofchildren by funding programs that meet their spe-cial needs and by supporting more than 200 RonaldMcDonald Houses, which provide a home-away-from-home for families of children with serious illnesses.
We are privileged and pleased that we can havea positive impact on the lives of children around theworld and that many of our employees, franchisees,joint-venture partners, suppliers, shareholders andcustomers share our belief in, and support of, RMHC.
PEOPLE FIRSTAt McDonald’s, we value our people, their ideas andtheir contributions. We are committed to diversity,and do not and will not tolerate discrimination ofany kind. In fact, treating people right is at theheart of our vision to be the best—and it is anexpectation to which we hold the entire System.
We also value hard work and expect McDonald’speople to give their very best. We empower them,hold them accountable for their decisions and actions,pay them fairly and reward them for performance.
We are gratified to note that last year, McDonald’sreceived the prestigious Best Employer Award inBrazil. We also were recognized as one of the 100Best Employers for Working Mothers in the U.S.and ranked third among America’s Best Companies
for Minorities. Although weare proud of these and otherachievements, we know thatwe can—and must—domore in order to become thebest employer in each com-munity around the world.
CASTING ALONG SHADOWHonesty and integrity are atthe very core of who we are.We are demanding. . .yetfair. We expect the samefrom those with whom weassociate.
Our suppliers know thatwe expect them to maintainour high-quality and safetystandards, to share our com-mitment to socially responsi-ble activities, and to valueand respect their employees.
Consistent with our phi-losophy of treating employeesright, we insist that suppliersabide by McDonald’s Code ofConduct, which describeshow we expect them, as wellas their suppliers who workon McDonald’s business, totreat their employees.
Our commitment to goodemployee practices is notnegotiable. We reserve theright to verify compliance byhaving external monitorsconduct periodic, announcedand unannounced inspec-tions of the facilities makingproducts for McDonald’s. Inaddition, we emphasize dia-logues, training and remediation. Although we willterminate suppliers when absolutely necessary, ourobjective is to help them to continuously improve.
RMHC was ranked as one ofAmerica’s 100 Best Charities
by Worth magazine.
24
BEING A GOOD NEIGHBOR
No one can forget the terroristattacks on the U.S. last September.Nor should we. Our hearts go outto the many people who lost theirlives in this tragedy and to theirfamilies and friends.
We are proud of the amazingresponse by those who spentcountless hours working to rescuevictims and remove the rubble.They indeed are heroes–a specialkind of hero, as their work wasboth physically and emotionallydifficult. We salute you!
Many members of McDonald’sFamily–owner/operators, employ-ees, restaurant staffs and suppliers–also made us proud. These indi-viduals pulled together in theaftermath of these horrific eventsto serve food to rescue and reliefworkers at the World TradeCenter, the Pentagon and thecrash site in Pennsylvania. Andacross the country, the McFamilystepped up to feed stranded trav-elers at airports and the volun-teers at countless blood centers.Collectively, more than 750,000McDonald’s meals were served.
Like so many others, we havefamily, friends and colleaguesamong the victims of this tragedy.Yet, we are grateful that no one inthe McDonald’s Family was physi-cally hurt. We also are gratefulthat we could make a small differ-ence by helping others at a timeof dire need.
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Account inquiries and online transactionsTransfer agent, registrar andMCDirect Shares Administrator
EquiServe Trust Company, NA
Attn: McDonald’s Shareholder Services
P.O. Box 2591Jersey City NJ 07303-2591
www.equiserve.com
1-800-Mc1-STCK (1-800-621-7825) from the U.S. and Canada
1-201-222-4990 call collect from outside the U.S. and Canada
1-201-222-4489 TDD for the hearing impaired
Other inquiries
Customer-related 1-630-623-6198
Investor-related 1-630-623-7428
Stockbrokers 1-630-623-5137
Financial media 1-630-623-3678
Franchising 1-630-623-6196
Ronald McDonald House Charities 1-630-623-7048
MCDirect Sharesprospectus and enrollment formMCDirect Shares is our directstock purchase plan, throughwhich investors may purchaseMcDonald’s common stock andreinvest dividends.
www.mcdonalds.com/corporate/investor
1-800-228-9623 to obtain a copy via mail
1-630-623-0172 to obtain a copy via fax
2002 individual investor fairs
February 2 NAIC Fair, Atlanta GA
March 9–10 Rukeyser InvestmentConference, Las Vegas NV
October 12 NAIC Fair, Phoenix AZ
Investor information and services
Stock exchange listings
New York, Chicago,Euronext Paris, German and Swiss
Trading symbol
MCD
Annual meeting
May 23, 2002 10:30 a.m. Central TimeThe LodgeMcDonald’s Office CampusOak Brook IL 60523
Live webcast available onwww.mcdonalds.com/corporate/investor
Website
www.mcdonalds.com
Sign up for future onlinedelivery of summaryannual reports, proxymaterials and annualfinancial information
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Sign up for e-notification of investor news
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McDonald’s 2001 annualreport on Form 10-K isavailable free of charge
www.sec.gov
www.mcdonalds.com/corporate/investor
1-630-623-7428
McDonald’s social responsibility report
www.mcdonalds.com/corporate/social
Home office
McDonald’s CorporationMcDonald’s PlazaOak Brook IL 60523
Forward-looking statements
Certain forward-looking statementsare included in this report. They usesuch words as "may," "will,""expect," "believe," "plan" and othersimilar terminology. These state-ments reflect management's currentexpectations regarding future eventsand operating performance andspeak only as of March 12, 2002.These forward-looking statementsinvolve a number of risks and uncer-tainties. The following are some ofthe factors that could cause actualresults to differ materially from thoseexpressed in or underlying our forward-looking statements: theeffectiveness of operating initiativesand advertising and promotionalefforts, as well as changes in: globaland local business and economicconditions; currency exchange andinterest rates; food, labor and otheroperating costs; political or eco-nomic instability in local markets;competition; consumer preferences,spending patterns and demographictrends; legislation and governmentalregulation; and accounting policiesand practices. The foregoing list ofimportant factors is not exclusive.
The Company undertakes no obliga-tion to publicly update or revise anyforward-looking statements,whether as a result of new informa-tion, future events or otherwise.
The following trademarks usedherein are the property ofMcDonald’s Corporation and itsaffiliates: Big Don; Big Mac; Big N’ Tasty; Boston Market; ChickenMcGrill; Chicken McNuggets;Chicken Select Strips; Chipotle;Donatos; Edge To Edge; French FryBox Design; Golden Arches Logo;Happy Meal; Le280, McBacon;McBLT; McCafé; McChicken;McCrispy; MCDirect Shares;McDonald’s; McDouble; McFamily;McFlurry; McHero; McMuffin;McQueso; McPick; McPollo; McRib; McSalad; McSalad Shaker;McSnack; McSnack Spot; McTreatSpot; Mighty Kids Meal; New TastesMenu; PlayPlace; Pret; Pret AManger; Pret Cool; Quality, Service,Cleanliness and Value; QuarterPounder; RMHC; Ronald McDonald;Ronald McDonald Care Mobile;Ronald McDonald House; RonaldMcDonald House Charities;Sausage McMuffin; Spicy McWings;The Golden Arches; The Lodge;World Famous Fries; 1-800-Mc1-STCK; www.mcdonalds.com.
The Summary Annual Report ispublished once a year.Reproduction of photography, illustration and/or text in whole or in part without permission is prohibited.
Design: Robertz & Kobold Inc.Major Photography: Joe DeNataleIllustrations: Tatjana KrizmanicPrinting: George Rice & Sons
Printed in the U.S.A. on recycledpaper with 10% post-consumer content
©2002 McDonald’s Corporation McD 01-4173
Directors and corporate officersAs of February 1, 2002
Board of Directors
Hall Adams, Jr.
James Cantalupo
Jack GreenbergChairman
Enrique Hernandez, Jr.
Jeanne Jackson
Donald Lubin
Walter Massey
Andrew McKenna
Michael Quinlan
Terry Savage
Roger Stone
Robert Thurston
Fred Turner
Gordon GraySenior Director
Donald KeoughSenior Director
June Martino Honorary Director
Corporate Officers
Ralph AlvarezPresident–U.S. Central Division
Claire BabrowskiPresident–Asia/Pacific, Middle East and Africa
Charles Bell President–Europe
James CantalupoVice Chairman, Emeritus and President, Emeritus
Lynn Crump-CaineExecutive Vice President
Henry Gonzalez, Jr. President–U.S. East Division
Jack GreenbergChairman and Chief Executive Officer
Mats LederhausenExecutive Vice President
Raymond Mines, Jr. Executive Vice President
Matthew PaullExecutive Vice President,Chief Financial Officer
Michael Roberts President–U.S.A.
Thomas RyanExecutive Vice President
Eduardo SanchezPresident–Latin America
James SkinnerPresident and Chief OperatingOfficer–McDonald’s WorldwideRestaurant Group
Russell SmythPresident–Partner Brands
Stanley SteinExecutive Vice President
Donald ThompsonPresident–U.S. West Division
Marvin WhaleyPresident–North Asia
Corporate Controller
David Pojman
General Counsel andCorporate Secretary
Gloria Santona
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McDonald’s Corporation
McDonald’s Plaza
Oak Brook IL 60523
www.mcdonalds.com
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8-7/8 % Debentures due 2011 New York Stock Exchange
7-3/8% Debentures due 2033 New York Stock Exchange
6-5/8% Notes due 2005 New York Stock Exchange
7.05% Debentures due 2025 New York Stock Exchange
7.31% Subordinated Deferrable Interest Debentures due 2027 New York Stock Exchange
6-3/8% Debentures due 2028 New York Stock Exchange
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ts f
or th
e pa
st 9
0 da
ys. Y
es [
X]
No
[_]
Indi
cate
by
chec
k m
ark
if d
iscl
osur
e of
del
inqu
ent f
ilers
pur
suan
t to
Item
405
of
Reg
ulat
ion
S-K
is n
ot c
onta
ined
her
ein,
and
will
not
be
cont
aine
d, to
the
best
of
regi
stra
nt's
kno
wle
dge,
in d
efin
itive
pro
xyor
info
rmat
ion
stat
emen
ts in
corp
orat
ed b
y re
fere
nce
in P
art I
II o
f th
is F
orm
10-
K o
r an
y am
endm
ent t
o th
is F
orm
10-
K. [
X]
The
agg
rega
te m
arke
t val
ue o
f vo
ting
stoc
k he
ld b
y no
naff
iliat
es o
f th
e re
gist
rant
is $
34,7
49,6
48,8
63 a
nd th
e nu
mbe
r of
sha
res
of c
omm
on s
tock
out
stan
ding
is 1
,281
,311
,354
as
of J
anua
ry 3
1, 2
002.
Doc
umen
ts in
corp
orat
ed b
y re
fere
nce.
Par
t III
of
this
10-
K in
corp
orat
es in
form
atio
n by
ref
eren
ce f
rom
the
regi
stra
nt's
200
1 de
fini
tive
prox
y st
atem
ent w
hich
will
be
file
d no
late
r th
an 1
20 d
ays
afte
rD
ecem
ber
31, 2
001.
McD
onal
d's
Cor
pora
tion
3
Par
t I
Item
1. B
usin
ess
McD
onal
d's
Cor
pora
tion,
the
regi
stra
nt, t
oget
her
with
its
subs
idia
ries
, is
refe
rred
to h
erei
n as
the
"Com
pany
."
(a)
GE
NE
RA
L D
EV
EL
OPM
EN
T O
F B
USI
NE
SS
The
re h
ave
been
no
sign
ific
ant c
hang
es to
the
Com
pany
's c
orpo
rate
str
uctu
re d
urin
g 20
01, o
r m
ater
ial c
hang
es in
the
Com
pany
's m
etho
d of
con
duct
ing
busi
ness
.
(b)
FIN
AN
CIA
L I
NFO
RM
AT
ION
AB
OU
T I
ND
UST
RY
SE
GM
EN
TS
Indu
stry
seg
men
t dat
a fo
r th
e ye
ars
ende
d D
ecem
ber
31, 2
001,
200
0 an
d 19
99 a
re in
clud
ed in
Par
t II,
Ite
m 8
, pag
es 3
0-31
of
this
For
m 1
0-K
.
(c)
NA
RR
AT
IVE
DE
SCR
IPT
ION
OF
BU
SIN
ESS
Gen
eral
The
Com
pany
ope
rate
s in
the
food
ser
vice
indu
stry
and
pri
mar
ily o
pera
tes
quic
k-se
rvic
e re
stau
rant
bus
ines
ses
unde
r th
e M
cDon
ald'
s br
and.
The
se r
esta
uran
ts s
erve
a v
arie
d, y
et li
mite
d, v
alue
-pri
ced
men
u
gp
y
(see
Pro
duct
s) in
121
cou
ntri
es a
roun
d th
e w
orld
.
To
capt
ure
addi
tiona
l mea
l occ
asio
ns, t
he C
ompa
ny o
pera
tes
othe
r re
stau
rant
con
cept
s un
der
its P
artn
er B
rand
s: B
osto
n M
arke
t, C
hipo
tle a
nd D
onat
os P
izze
ria
whi
ch a
re a
ll lo
cate
d pr
imar
ily in
the
U.S
.an
d A
rom
a C
afe,
loca
ted
prim
arily
in th
e U
.K. I
n ad
ditio
n, th
e C
ompa
ny h
as a
min
ority
ow
ners
hip
in U
.K.-
base
d Pr
et A
Man
ger.
In
four
th q
uart
er 2
001,
the
Com
pany
app
rove
d a
plan
to d
ispo
se o
f its
Aro
ma
Caf
e bu
sine
ss in
the
U.K
. and
exp
ects
to c
ompl
ete
the
sale
in th
e fi
rst h
alf
of 2
002.
Sinc
e M
cDon
ald'
s re
stau
rant
bus
ines
s co
mpr
ises
vir
tual
ly a
ll of
the
Com
pany
's c
onso
lidat
ed o
pera
ting
resu
lts, t
his
narr
ativ
e pr
imar
ily r
elat
es to
the
McD
onal
d's
rest
aura
nt b
usin
ess,
unl
ess
othe
rwis
e no
ted.
All
rest
aura
nts
are
oper
ated
by
the
Com
pany
or,
und
er th
e te
rms
of f
ranc
hise
arr
ange
men
ts, b
y fr
anch
isee
s w
ho a
re in
depe
nden
t ent
repr
eneu
rs, o
r by
aff
iliat
es o
pera
ting
unde
r jo
int-
vent
ure
agre
emen
tsbe
twee
n th
e C
ompa
ny a
nd lo
cal b
usin
ess
peop
le.
The
Com
pany
's o
pera
tions
are
des
igne
d to
ass
ure
cons
iste
ncy
and
high
qua
lity
at e
very
McD
onal
d's
rest
aura
nt. W
hen
gran
ting
fran
chis
es a
nd f
orm
ing
join
t-ve
ntur
e ag
reem
ents
, the
Com
pany
is s
elec
tive
and
is n
ot in
the
prac
tice
of f
ranc
hisi
ng to
, or
part
neri
ng w
ith, i
nves
tor
grou
ps o
r pa
ssiv
e in
vest
ors.
Und
er th
e co
nven
tiona
l fra
nchi
se a
rran
gem
ent,
fran
chis
ees
prov
ide
capi
tal b
y in
itial
ly in
vest
ing
in th
e eq
uipm
ent,
sign
s, s
eatin
g an
d de
cor
of th
eir
rest
aura
nt b
usin
esse
s, a
nd b
y re
inve
stin
g in
the
busi
ness
over
tim
e. T
he C
ompa
ny s
hare
s th
e in
vest
men
t by
gene
rally
ow
ning
or
leas
ing
the
land
and
bui
ldin
g. F
ranc
hise
es in
the
U.S
. gen
eral
ly h
ave
the
optio
n to
ow
n ne
w r
esta
uran
t bui
ldin
gs w
hile
leas
ing
the
land
fro
m th
e C
ompa
ny. F
ranc
hise
es c
ontr
ibut
e to
the
Com
pany
's r
even
ue s
trea
m th
roug
h pa
ymen
t of
rent
and
ser
vice
fee
s ba
sed
upon
a p
erce
nt o
f sa
les,
with
spe
cifi
ed m
inim
um p
aym
ents
, alo
ng w
ithin
itial
fee
s. T
he c
onve
ntio
nal f
ranc
hise
arr
ange
men
t typ
ical
ly la
sts
20 y
ears
and
fra
nchi
sing
pra
ctic
es a
re g
ener
ally
con
sist
ent t
hrou
ghou
t the
wor
ld. A
dis
cuss
ion
rega
rdin
g si
te s
elec
tion
is in
clud
ed in
Par
tI,
Ite
m 2
, pag
e 5
of th
is F
orm
10-
K.
The
Com
pany
, its
fra
nchi
sees
and
aff
iliat
es p
urch
ase
food
, pac
kagi
ng, e
quip
men
t, et
c. f
rom
num
erou
s in
depe
nden
t sup
plie
rs w
ho h
ave
been
app
rove
d by
the
Com
pany
. The
Com
pany
has
est
ablis
hed
and
stri
ctly
enf
orce
s hi
gh-q
ualit
y st
anda
rds.
We
have
qua
lity
assu
ranc
e la
bs a
roun
d th
e w
orld
that
wor
k to
ens
ure
that
our
hig
h st
anda
rds
are
cons
iste
ntly
met
. The
qua
lity
assu
ranc
e pr
oces
s no
t onl
y in
volv
eson
goin
g pr
oduc
t rev
iew
s, b
ut a
lso
on-s
ite in
spec
tions
of
supp
liers
' fac
ilitie
s. F
urth
er, w
e ha
ve a
Qua
lity
Ass
uran
ce B
oard
, com
pose
d of
the
Com
pany
's te
chni
cal,
safe
ty a
nd s
uppl
y ch
ain
spec
ialis
ts, w
hich
prov
ides
str
ateg
ic g
loba
l lea
ders
hip
for
all a
spec
ts o
f fo
od q
ualit
y an
d sa
fety
. In
addi
tion,
the
Com
pany
wor
ks c
lose
ly w
ith M
cDon
ald'
s su
pplie
rs to
enc
oura
ge in
nova
tion,
ass
ure
best
pra
ctic
es a
nd d
rive
cont
inuo
us im
prov
emen
t.
Inde
pend
ently
ow
ned
and
oper
ated
dis
trib
utio
n ce
nter
s, a
lso
appr
oved
by
the
Com
pany
, dis
trib
ute
prod
ucts
and
sup
plie
s to
mos
t McD
onal
d's
rest
aura
nts.
In
addi
tion,
res
taur
ant p
erso
nnel
are
trai
ned
in th
epr
oper
sto
rage
, han
dlin
g an
d pr
epar
atio
n of
our
pro
duct
s an
d in
the
deliv
ery
of c
usto
mer
ser
vice
exp
ecta
tions
.
McD
onal
d's
glob
al b
rand
is w
ell k
now
n. M
arke
ting,
pro
mot
iona
l and
pub
lic r
elat
ions
act
iviti
es a
re d
esig
ned
to n
urtu
re th
is b
rand
imag
e an
d di
ffer
entia
te th
e C
ompa
ny f
rom
com
petit
ors.
Mar
ketin
g an
dpr
omot
iona
l eff
orts
foc
us o
n va
lue,
foo
d ta
ste
and
the
cust
omer
exp
erie
nce.
In
addi
tion,
the
Com
pany
is f
ocus
ed o
n be
ing
a le
ader
in th
e ar
ea o
f so
cial
res
pons
ibili
ty, a
s w
e be
lieve
it is
impo
rtan
t to
give
back
to th
e pe
ople
aro
und
the
wor
ld w
ho a
re r
espo
nsib
le f
or o
ur s
ucce
ss.
Pro
duct
s
McD
onal
d's
rest
aura
nts
offe
r a
subs
tant
ially
uni
form
men
u. I
n ad
ditio
n, M
cDon
ald'
s te
sts
new
pro
duct
s on
an
ongo
ing
basi
s.
McD
onal
d's
men
u in
clud
es h
ambu
rger
s an
d ch
eese
burg
ers,
Big
Mac
, Qua
rter
Pou
nder
with
Che
ese,
File
t-O
-Fis
h an
d se
vera
l chi
cken
san
dwic
hes,
Chi
cken
McN
ugge
ts, f
renc
h fr
ies,
sal
ads,
milk
sha
kes,
McF
lurr
y de
sser
ts, s
unda
es a
nd s
oft-
serv
e co
nes,
pie
s, c
ooki
es a
nd s
oft d
rink
s an
d ot
her
beve
rage
s. I
n ad
ditio
n, th
e re
stau
rant
s se
ll a
vari
ety
of o
ther
pro
duct
s du
ring
lim
ited-
time
prom
otio
ns.
McD
onal
d's
rest
aura
nts
oper
atin
g in
the
U. S
. and
cer
tain
inte
rnat
iona
l mar
kets
are
ope
n du
ring
bre
akfa
st h
ours
and
off
er a
ful
l-or
lim
ited-
brea
kfas
t men
u. B
reak
fast
off
erin
gs in
clud
e E
gg M
cMuf
fin
and
Saus
age
McM
uffi
n w
ith E
gg s
andw
iche
s, h
otca
kes,
bis
cuit
and
bage
l san
dwic
hes,
and
muf
fins
.
4 M
cDon
ald'
s C
orpo
ratio
n
Chi
potle
is a
fre
sh-M
ex g
rill
serv
ing
gour
met
bur
rito
s an
d ta
cos.
Don
atos
sel
ls p
izza
, sub
s an
d sa
lads
. Bos
ton
Mar
ket i
s a
hom
e-m
eal r
epla
cem
ent c
once
pt s
ervi
ng c
hick
en, m
eatlo
af a
nd a
var
iety
of
side
dish
es. P
ret A
Man
ger
is a
qui
ck-s
ervi
ce f
ood
conc
ept t
hat s
erve
s m
ainl
y co
ld s
andw
iche
s, s
nack
s an
d dr
inks
dur
ing
lunc
htim
e.
Food
pre
para
tion
The
Mad
e Fo
r Y
ou f
ood
prep
arat
ion
syst
em is
inst
alle
d in
vir
tual
ly a
ll M
cDon
ald'
s re
stau
rant
s in
the
U.S
., C
anad
a an
d Pu
erto
Ric
o as
wel
l as
abou
t one
-thi
rd o
f th
e re
stau
rant
s in
Jap
an. M
ade
For
You
isba
sed
on a
just
-in-
time
prod
uctio
n ph
iloso
phy
whe
re e
ach
sand
wic
h is
ass
embl
ed to
ord
er. T
hrou
gh a
dvan
ces
in e
quip
men
t and
tech
nolo
gy, t
he n
ew s
yste
m a
ims
to p
rovi
de c
usto
mer
s w
ith f
resh
-tas
ting
food
. In
addi
tion,
the
syst
em c
an s
uppo
rt f
utur
e gr
owth
thro
ugh
prod
uct d
evel
opm
ent b
ecau
se it
can
eas
ily a
ccom
mod
ate
an e
xpan
ded
men
u.
Inte
llect
ual P
rope
rty
The
Com
pany
ow
ns v
alua
ble
inte
llect
ual p
rope
rty
incl
udin
g tr
adem
arks
, ser
vice
mar
ks, p
aten
ts, c
opyr
ight
s, tr
ade
secr
ets
and
othe
r pr
opri
etar
y in
form
atio
n, s
ome
of w
hich
, inc
ludi
ng "
McD
onal
d's,
""R
onal
d M
cDon
ald,
" "B
ig M
ac"
and
othe
r re
late
d m
arks
, are
of
mat
eria
l im
port
ance
to th
e C
ompa
ny's
bus
ines
s. T
he C
ompa
ny a
lso
has
cert
ain
pate
nts
on r
esta
uran
t equ
ipm
ent w
hich
, whi
le v
alua
ble,
are
gp
y
not m
ater
ial t
o its
bus
ines
s.
Seas
onal
ope
ratio
ns
The
Com
pany
doe
s no
t con
side
r its
ope
ratio
ns to
be
seas
onal
to a
ny m
ater
ial d
egre
e.
Wor
king
cap
ital p
ract
ices
Info
rmat
ion
abou
t the
Com
pany
's w
orki
ng c
apita
l pra
ctic
es is
inco
rpor
ated
her
ein
by r
efer
ence
to M
anag
emen
t's d
iscu
ssio
n an
d an
alys
is o
f fi
nanc
ial c
ondi
tion
and
resu
lts o
f op
erat
ions
for
the
year
s en
ded
Dec
embe
r 31
, 200
1, 2
000
and
1999
in P
art I
I, I
tem
7, p
ages
8-2
0, a
nd th
e C
onso
lidat
ed s
tate
men
t of
cash
flo
ws
for
the
year
s en
ded
Dec
embe
r 31
, 200
1, 2
000
and
1999
in P
art I
I, I
tem
8, p
age
24 o
f th
isFo
rm 1
0-K
.
Cus
tom
ers
The
Com
pany
's b
usin
ess
is n
ot d
epen
dent
upo
n a
sing
le c
usto
mer
or
smal
l gro
up o
f cu
stom
ers.
Bac
klog
Com
pany
-ope
rate
d re
stau
rant
s ha
ve n
o ba
cklo
g or
ders
.
Gov
ernm
ent c
ontr
acts
No
mat
eria
l por
tion
of th
e bu
sine
ss is
sub
ject
to r
eneg
otia
tion
of p
rofi
ts o
r te
rmin
atio
n of
con
trac
ts o
r su
bcon
trac
ts a
t the
ele
ctio
n of
the
U.S
. gov
ernm
ent.
Com
peti
tion
McD
onal
d's
rest
aura
nts
com
pete
with
inte
rnat
iona
l, na
tiona
l, re
gion
al a
nd lo
cal r
etai
lers
of
food
pro
duct
s. T
he C
ompa
ny c
ompe
tes
on th
e ba
sis
of p
rice
, con
veni
ence
and
ser
vice
and
by
offe
ring
qua
lity
food
pro
duct
s. T
he C
ompa
ny's
com
petit
ion
in th
e br
oade
st p
ersp
ectiv
e in
clud
es r
esta
uran
ts, q
uick
-ser
vice
eat
ing
esta
blis
hmen
ts, p
izza
par
lors
, cof
fee
shop
s, s
tree
t ven
dors
, con
veni
ence
foo
d st
ores
,de
licat
esse
ns a
nd s
uper
mar
kets
.
In th
e U
.S.,
ther
e ar
e ab
out 5
15,0
00 r
esta
uran
ts th
at g
ener
ate
$303
bill
ion
in a
nnua
l sal
es. M
cDon
ald'
s re
stau
rant
bus
ines
s ac
coun
ts f
or 2
.5%
of
thos
e re
stau
rant
s an
d 6.
6% o
f th
e sa
les.
No
reas
onab
lees
timat
e ca
n be
mad
e of
the
num
ber
of c
ompe
titor
s ou
tsid
e th
e U
.S.;
how
ever
, the
Com
pany
's b
usin
ess
in f
orei
gn m
arke
ts c
ontin
ues
to g
row
.
Res
earc
h an
d de
velo
pmen
t
The
Com
pany
ope
rate
s a
rese
arch
and
dev
elop
men
t fac
ility
in I
llino
is. W
hile
res
earc
h an
d de
velo
pmen
t act
iviti
es a
re im
port
ant t
o th
e C
ompa
ny's
bus
ines
s, th
ese
expe
nditu
res
are
not m
ater
ial.
Inde
pend
ent
supp
liers
als
o co
nduc
t res
earc
h ac
tiviti
es f
or th
e be
nefi
t of
the
McD
onal
d's
Syst
em, w
hich
incl
udes
fra
nchi
sees
and
sup
plie
rs, a
s w
ell a
s th
e C
ompa
ny, i
ts s
ubsi
diar
ies
and
join
t ven
ture
s.
Env
iron
men
tal m
atte
rs
The
Com
pany
is n
ot a
war
e of
any
fed
eral
, sta
te o
r lo
cal e
nvir
onm
enta
l law
s or
reg
ulat
ions
that
will
mat
eria
lly a
ffec
t its
ear
ning
s or
com
petit
ive
posi
tion,
or
resu
lt in
mat
eria
l cap
ital e
xpen
ditu
res;
how
ever
,th
e C
ompa
ny c
anno
t pre
dict
the
effe
ct o
n its
ope
ratio
ns o
f po
ssib
le f
utur
e en
viro
nmen
tal l
egis
latio
n or
reg
ulat
ions
. Dur
ing
2001
, the
re w
ere
no m
ater
ial c
apita
l exp
endi
ture
s fo
r en
viro
nmen
tal c
ontr
olfa
cilit
ies
and
no s
uch
mat
eria
l exp
endi
ture
s ar
e an
ticip
ated
.
Num
ber
of e
mpl
oyee
s
Dur
ing
2001
, the
Com
pany
's a
vera
ge n
umbe
r of
em
ploy
ees
wor
ldw
ide,
incl
udin
g C
ompa
ny-o
pera
ted
rest
aura
nt e
mpl
oyee
s, w
as a
ppro
xim
atel
y 39
5,00
0. T
his
incl
udes
McD
onal
d's
rest
aura
nts
as w
ell a
sot
her
rest
aura
nt c
once
pts
oper
ated
by
the
Com
pany
.
(d)
FIN
AN
CIA
L I
NFO
RM
AT
ION
AB
OU
T F
OR
EIG
N A
ND
DO
ME
STIC
OPE
RA
TIO
NS
Fina
ncia
l inf
orm
atio
n ab
out f
orei
gn a
nd d
omes
tic m
arke
ts is
inco
rpor
ated
her
ein
by r
efer
ence
to M
anag
emen
t's d
iscu
ssio
n an
d an
alys
is o
f fi
nanc
ial c
ondi
tion
and
resu
lts o
f op
erat
ions
in P
art I
I, I
tem
7,
page
s 8-
20 a
nd S
egm
ent a
nd g
eogr
aphi
c in
form
atio
n in
Par
t II,
Ite
m 8
, pag
es 3
0-31
of
this
For
m 1
0-K
.
McD
onal
d's
Cor
pora
tion
5
Item
2. P
rope
rtie
s
gp
y
The
Com
pany
iden
tifie
s an
d de
velo
ps s
ites
that
off
er c
onve
nien
ce to
cus
tom
ers
and
prov
ide
for
long
-ter
m s
ales
and
pro
fit p
oten
tial.
To
asse
ss p
oten
tial,
the
Com
pany
ana
lyze
s tr
affi
c an
d w
alki
ng p
atte
rns,
cens
us d
ata,
sch
ool e
nrol
lmen
ts a
nd o
ther
rel
evan
t dat
a. T
he C
ompa
ny's
exp
erie
nce
and
acce
ss to
adv
ance
d te
chno
logy
aid
in e
valu
atin
g th
is in
form
atio
n. T
he C
ompa
ny g
ener
ally
ow
ns o
r se
cure
slo
ng-t
erm
land
and
bui
ldin
g le
ases
for
res
taur
ant s
ites,
whi
ch e
nsur
es lo
ng-t
erm
occ
upan
cy r
ight
s an
d he
lps
cont
rol r
elat
ed c
osts
. Res
taur
ant p
rofi
tabi
lity
for
both
the
Com
pany
and
fra
nchi
sees
is im
port
ant;
ther
efor
e, o
ngoi
ng e
ffor
ts a
re m
ade
to c
ontr
ol a
vera
ge d
evel
opm
ent c
osts
thro
ugh
cons
truc
tion
and
desi
gn e
ffic
ienc
ies
and
stan
dard
izat
ion
and
by le
vera
ging
the
Com
pany
's g
loba
l sou
rcin
g ne
twor
k.A
dditi
onal
info
rmat
ion
abou
t the
Com
pany
's p
rope
rtie
s is
incl
uded
in M
anag
emen
t's d
iscu
ssio
n an
d an
alys
is o
f fi
nanc
ial c
ondi
tion
and
resu
lts o
f op
erat
ions
in P
art I
I, I
tem
7, p
ages
8-2
0 an
d in
Fin
anci
alst
atem
ents
and
sup
plem
enta
ry d
ata
in P
art I
I, I
tem
8, p
ages
21-
36 o
f th
is F
orm
10-
K.
Item
3. L
egal
pro
ceed
ings
The
Com
pany
has
pen
ding
a n
umbe
r of
law
suits
whi
ch h
ave
been
file
d fr
om ti
me
to ti
me
in v
ario
us ju
risd
ictio
ns. T
hese
law
suits
cov
er a
bro
ad v
arie
ty o
f al
lega
tions
spa
nnin
g th
e C
ompa
ny's
ent
ire
busi
ness
. The
fol
low
ing
is a
bri
ef d
escr
iptio
n of
the
mor
e si
gnif
ican
t of
thes
e ca
tego
ries
of
law
suits
. In
addi
tion,
the
Com
pany
is s
ubje
ct to
var
ious
fed
eral
, sta
te a
nd lo
cal r
egul
atio
ns th
at im
pact
var
ious
aspe
cts
of it
s bu
sine
ss, a
s di
scus
sed
belo
w. T
he C
ompa
ny d
oes
not b
elie
ve th
at a
ny s
uch
clai
ms,
law
suits
or
regu
latio
ns w
ill h
ave
a m
ater
ial a
dver
se e
ffec
t on
its f
inan
cial
con
ditio
n or
res
ults
of
oper
atio
ns.
Fra
nchi
sing
A s
ubst
antia
l num
ber
of M
cDon
ald'
s re
stau
rant
s ar
e fr
anch
ised
to in
depe
nden
t ent
repr
eneu
rs o
pera
ting
unde
r ar
rang
emen
ts w
ith th
e C
ompa
ny. I
n th
e co
urse
of
the
fran
chis
e re
latio
nshi
p, o
ccas
iona
ldi
sput
es a
rise
bet
wee
n th
e C
ompa
ny a
nd it
s fr
anch
isee
s re
latin
g to
a b
road
ran
ge o
f su
bjec
ts in
clud
ing,
with
out l
imita
tion,
qua
lity,
ser
vice
and
cle
anlin
ess
issu
es, c
onte
ntio
ns r
egar
ding
gra
nts
orte
rmin
atio
ns o
f fr
anch
ises
, fra
nchi
see
clai
ms
for
addi
tiona
l fra
nchi
ses
or r
ewri
tes
of f
ranc
hise
s, a
nd d
elin
quen
t pay
men
ts. A
dditi
onal
ly, o
n oc
casi
on, d
ispu
tes
aris
e be
twee
n th
e C
ompa
ny a
nd in
divi
dual
sw
ho c
laim
they
sho
uld
have
bee
n gr
ante
d a
McD
onal
d's
fran
chis
e.
Supp
liers
The
Com
pany
and
its
affi
liate
s an
d su
bsid
iari
es d
o no
t sup
ply,
with
min
or e
xcep
tions
out
side
the
U.S
., fo
od, p
aper
, or
rela
ted
item
s to
any
McD
onal
d's
rest
aura
nts.
The
Com
pany
rel
ies
upon
num
erou
sin
depe
nden
t sup
plie
rs th
at a
re r
equi
red
to m
eet a
nd m
aint
ain
the
Com
pany
's h
igh
stan
dard
s an
d sp
ecif
icat
ions
. On
occa
sion
, dis
pute
s ar
ise
betw
een
the
Com
pany
and
its
supp
liers
on
a nu
mbe
r of
issu
esin
clud
ing,
by
way
of
exam
ple,
com
plia
nce
with
pro
duct
spe
cifi
catio
ns a
nd th
e C
ompa
ny's
bus
ines
s re
latio
nshi
p w
ith s
uppl
iers
. In
addi
tion,
on
occa
sion
, dis
pute
s ar
ise
on a
num
ber
of is
sues
bet
wee
n th
eC
ompa
ny a
nd in
divi
dual
s or
ent
ities
who
cla
im th
at th
ey s
houl
d be
(or
sho
uld
have
bee
n) g
rant
ed th
e op
port
unity
to s
uppl
y pr
oduc
ts o
r se
rvic
es to
the
Com
pany
's r
esta
uran
ts.
Em
ploy
ees
Tho
usan
ds o
f pe
ople
are
em
ploy
ed b
y th
e C
ompa
ny a
nd in
res
taur
ants
ow
ned
and
oper
ated
by
subs
idia
ries
of
the
Com
pany
. In
addi
tion,
thou
sand
s of
peo
ple,
fro
m ti
me
to ti
me,
see
k em
ploy
men
t in
such
rest
aura
nts.
In
the
ordi
nary
cou
rse
of b
usin
ess,
dis
pute
s ar
ise
rega
rdin
g hi
ring
, fir
ing
and
prom
otio
n pr
actic
es.
Cus
tom
ers
The
Com
pany
's r
esta
uran
ts s
erve
a la
rge
cros
s-se
ctio
n of
the
publ
ic a
nd in
the
cour
se o
f se
rvin
g so
man
y pe
ople
, dis
pute
s ar
ise
as to
pro
duct
s, s
ervi
ce, a
ccid
ents
, adv
ertis
ing
and
othe
r m
atte
rs ty
pica
l of
anex
tens
ive
rest
aura
nt b
usin
ess
such
as
that
of
the
Com
pany
.
Inte
llect
ual P
rope
rty
The
Com
pany
has
reg
iste
red
trad
emar
ks a
nd s
ervi
ce m
arks
, som
e of
whi
ch a
re o
f m
ater
ial i
mpo
rtan
ce to
the
Com
pany
's b
usin
ess.
The
Com
pany
als
o ha
s ce
rtai
n pa
tent
s on
res
taur
ant e
quip
men
t, w
hich
whi
le v
alua
ble,
are
not
mat
eria
l to
its b
usin
ess.
Fro
m ti
me
to ti
me,
the
Com
pany
may
bec
ome
invo
lved
in li
tigat
ion
to d
efen
d an
d pr
otec
t its
use
of
its in
telle
ctua
l pro
pert
y.
Gov
ernm
ent r
egul
atio
ns
Loc
al, s
tate
and
fed
eral
gov
ernm
ents
hav
e ad
opte
d la
ws
and
regu
latio
ns in
volv
ing
vari
ous
aspe
cts
of th
e re
stau
rant
bus
ines
s, in
clud
ing,
but
not
lim
ited
to, f
ranc
hisi
ng, h
ealth
, saf
ety,
env
iron
men
t, zo
ning
and
empl
oym
ent.
The
Com
pany
doe
s no
t bel
ieve
that
it is
in v
iola
tion
of a
ny e
xist
ing
stat
utor
y or
adm
inis
trat
ive
rule
s, b
ut it
can
not p
redi
ct th
e ef
fect
on
its o
pera
tions
fro
m th
e is
suan
ce o
f ad
ditio
nal
requ
irem
ents
in th
e fu
ture
.
6 M
cDon
ald'
s C
orpo
ratio
n
Item
4. S
ubm
issi
on o
f m
atte
rs t
o a
vote
of
shar
ehol
ders
Non
e.
TH
E F
OL
LO
WIN
G A
RE
TH
E E
XE
CU
TIV
E O
FF
ICE
RS
OF
OU
R C
OM
PA
NY
:
gp
y
Jack
M. G
reen
berg
, 59,
is C
hair
man
and
Chi
ef E
xecu
tive
Off
icer
. He
was
app
oint
ed to
that
pos
ition
in M
ay 1
999.
Pre
viou
sly,
he
was
Pre
side
nt a
nd C
hief
Exe
cutiv
e O
ffic
er s
ince
Aug
ust 1
998.
Pri
or to
that
, he
serv
ed a
s V
ice
Cha
irm
an o
f M
cDon
ald'
s C
orpo
ratio
n, a
nd C
hair
man
and
Chi
ef E
xecu
tive
Off
icer
of
McD
onal
d's
U.S
.A. M
r. G
reen
berg
has
bee
n w
ith th
e C
ompa
ny f
or m
ore
than
20
year
s.
Mat
s L
eder
haus
en, 3
9, is
Exe
cutiv
e V
ice
Pres
iden
t--S
trat
egy
and
Bus
ines
s D
evel
opm
ent.
He
has
serv
ed in
that
pos
ition
sin
ce h
is a
ppoi
ntm
ent i
n Ju
ly 2
001.
Fro
m M
ay to
Jul
y 20
01, M
r. L
eder
haus
ense
rved
as
Seni
or V
ice
Pres
iden
t, C
orpo
rate
Str
ateg
y. P
rior
to th
at, h
e se
rved
as
Vic
e Pr
esid
ent,
Cor
pora
te S
trat
egy
follo
win
g hi
s ap
poin
tmen
t to
that
pos
ition
in A
pril
1999
. Bef
ore
join
ing
McD
onal
d's
corp
orat
e st
aff,
Mr.
Led
erha
usen
was
Man
agin
g D
irec
tor
and
Join
t Ven
ture
Par
tner
for
Sve
nska
McD
onal
d's
Dev
elop
men
t AB
, a s
ubsi
diar
y of
the
Com
pany
. He
is n
o lo
nger
Man
agin
g D
irec
tor
and
Join
tV
entu
re P
artn
er o
f th
e su
bsid
iary
. Mr.
Led
erha
usen
has
bee
n w
ith th
e M
cDon
ald'
s Sy
stem
for
17
year
s.
Mat
thew
H. P
aull,
50,
is E
xecu
tive
Vic
e Pr
esid
ent,
Chi
ef F
inan
cial
Off
icer
, a p
ositi
on to
whi
ch h
e w
as a
ppoi
nted
in J
uly
2001
. Pri
or to
that
tim
e, h
e se
rved
as
Seni
or V
ice
Pres
iden
t, C
orpo
rate
Tax
and
Fina
nce
from
Dec
embe
r 20
00 to
Jul
y 20
01, S
enio
r V
ice
Pres
iden
t fro
m J
anua
ry 2
000
to D
ecem
ber
2000
, and
Vic
e Pr
esid
ent f
rom
Jun
e 19
93 to
Jan
uary
200
0. M
r. P
aull
has
been
with
the
Com
pany
for
8ye
ars.
Dav
id M
. Poj
man
, 42,
is S
enio
r V
ice
Pres
iden
t-C
ontr
olle
r, a
pos
ition
he
has
held
sin
ce M
arch
200
2. P
revi
ousl
y, h
e se
rved
as
Vic
e Pr
esid
ent a
nd C
orpo
rate
Con
trol
ler
from
Jan
uary
200
2. P
rior
to th
at ti
me,
he s
erve
d as
Vic
e Pr
esid
ent a
nd A
ctin
g C
ontr
olle
r fr
om O
ctob
er 2
001.
Fro
m J
anua
ry 2
000
to O
ctob
er 2
001,
Mr.
Poj
man
ser
ved
as V
ice
Pres
iden
t and
Ass
ista
nt C
orpo
rate
Con
trol
ler.
Fro
m J
uly
1997
toJa
nuar
y 20
00, h
e se
rved
as
Vic
e Pr
esid
ent a
nd I
nter
natio
nal C
ontr
olle
r. M
r. P
ojm
an h
as b
een
with
the
Com
pany
for
19
year
s.
Glo
ria
Sant
ona,
51,
is S
enio
r V
ice
Pres
iden
t, G
ener
al C
ouns
el a
nd S
ecre
tary
, a p
ositi
on s
he h
as h
eld
sinc
e Ju
ne 2
001.
Fro
m D
ecem
ber
2000
to J
une
2001
, she
was
Vic
e Pr
esid
ent,
U.S
. Gen
eral
Cou
nsel
and
Secr
etar
y; f
rom
Mar
ch 1
997
to D
ecem
ber
2000
, she
was
Vic
e Pr
esid
ent,
Dep
uty
Gen
eral
Cou
nsel
and
Sec
reta
ry; a
nd f
rom
Jan
uary
199
6 to
Mar
ch 1
997,
she
ser
ved
as V
ice
Pres
iden
t, A
ssoc
iate
Gen
eral
Cou
nsel
and
Sec
reta
ry. M
s. S
anto
na h
as b
een
with
the
Com
pany
for
24
year
s.
Jam
es A
. Ski
nner
, 57,
is P
resi
dent
and
Chi
ef O
pera
ting
Off
icer
--M
cDon
ald'
s W
orld
wid
e R
esta
uran
t Gro
up. M
r. S
kinn
er w
as p
rom
oted
to h
is c
urre
nt p
ositi
on in
Jan
uary
200
2. P
revi
ousl
y, h
e se
rved
as
Pres
iden
t and
Chi
ef O
pera
ting
Off
icer
of
McD
onal
d's
Eur
ope/
Asi
a/Pa
cifi
c si
nce
May
200
1. P
rior
to th
at, h
e w
as P
resi
dent
of
McD
onal
d's
Eur
ope.
Mr.
Ski
nner
has
bee
n w
ith th
e C
ompa
ny f
or 3
1 ye
ars.
Stan
ley
R. S
tein
, 59,
is E
xecu
tive
Vic
e Pr
esid
ent,
Glo
bal H
uman
Res
ourc
es, a
pos
ition
he
has
held
sin
ce J
uly
1997
. Pri
or to
that
tim
e M
r. S
tein
ser
ved
as S
enio
r V
ice
Pres
iden
t. H
e ha
s be
en w
ith th
eC
ompa
ny f
or 2
7 ye
ars.
Fred
L. T
urne
r, 6
9, is
Sen
ior
Cha
irm
an. H
e ha
s be
en w
ith th
e C
ompa
ny f
or m
ore
than
45
year
s.
Par
t II
Item
5. M
arke
t fo
r re
gist
rant
's c
omm
on e
quit
y an
d re
late
d sh
areh
olde
r m
atte
rs
The
Com
pany
's c
omm
on s
tock
trad
es u
nder
the
sym
bol M
CD
and
is li
sted
on
the
New
Yor
k an
d C
hica
go s
tock
exc
hang
es in
the
U.S
.
The
fol
low
ing
tabl
e se
ts f
orth
the
com
mon
sto
ck p
rice
ran
ges
on th
e N
ew Y
ork
Stoc
k E
xcha
nge
com
posi
te ta
pe a
nd d
ivid
ends
dec
lare
d pe
r co
mm
on s
hare
.
--------------------------------------------------------------------------------
2001 2000
DOLLARS ------------------------- ---------------------------
PER SHARE High Low Dividend High Low Dividend
================================================================================
Quarter:
First 35.06 24.75 -- 43.63 29.81 --
Second 30.96 25.39 -- 39.94 31.00 --
Third 31.00 26.00 -- 34.25 26.38 .215
Fourth 30.10 25.00 .225 34.50 27.56 --
--------------------------------------------------------------------------------
Year 35.06 24.75 .225 43.63 26.38 .215
================================================================================
The
app
roxi
mat
e nu
mbe
r of
sha
reho
lder
s of
rec
ord
and
bene
fici
al o
wne
rs o
f th
e C
ompa
ny's
com
mon
sto
ck a
s of
Jan
uary
31,
200
2 w
as e
stim
ated
to b
e 1,
027,
000.
gp
y
Giv
en th
e C
ompa
ny's
ret
urns
on
equi
ty a
nd a
sset
s, m
anag
emen
t bel
ieve
s it
is p
rude
nt to
rei
nves
t a s
igni
fica
nt p
ortio
n of
ear
ning
s ba
ck in
to th
e bu
sine
ss a
nd u
se f
ree
cash
flo
w f
or s
hare
rep
urch
ases
.A
ccor
ding
ly, t
he c
omm
on s
tock
div
iden
d yi
eld
is m
odes
t. T
he C
ompa
ny h
as p
aid
divi
dend
s on
com
mon
sto
ck f
or 2
6 co
nsec
utiv
e ye
ars
thro
ugh
2001
and
has
incr
ease
d th
e di
vide
nd a
mou
nt a
t lea
st o
nce
ever
y ye
ar. A
dditi
onal
div
iden
d in
crea
ses
will
be
cons
ider
ed a
fter
rev
iew
ing
retu
rns
to s
hare
hold
ers,
pro
fita
bilit
y ex
pect
atio
ns a
nd f
inan
cing
nee
ds. D
ivid
ends
are
dec
lare
d an
d pa
id o
n an
ann
ual b
asis
. As
in th
e pa
st, f
utur
e di
vide
nds
will
be
decl
ared
at t
he d
iscr
etio
n of
the
Com
pany
's B
oard
of
Dir
ecto
rs.
McD
onal
d's
Cor
pora
tion
7
Item
6. S
elec
ted
fina
ncia
l dat
a
----------------------------------------------------------------------------------------------------------------------------------
11-year summary
----------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS,
EXCEPT PER SHARE DATA 2001 2000 1999 1998 1997 1996 1995 1994
1993 1992 1991
==================================================================================================================================
Franchised sales $24,838 24,463 23,830 22,330 20,863 19,969 19,123 17,146
15,756 14,474 12,959
Company-operated sales $11,040 10,467 9,512 8,895 8,136 7,571 6,863 5,793
5,157 5,103 4,908
Affiliated sales $ 4,752 5,251 5,149 4,754 4,639 4,272 3,928 3,048
2,674 2,308 2,061
----------------------------------------------------------------------------------------------------------------------------------
Total Systemwide sales $40,630 40,181 38,491 35,979 33,638 31,812 29,914 25,987
23,587 21,885 19,928
----------------------------------------------------------------------------------------------------------------------------------
Total revenues $14,870 14,243 13,259 12,421 11,409 10,687 9,795 8,321
7,408 7,133 6,695
Operating income $ 2,697(1) 3,330 3,320 2,762(3) 2,808 2,633 2,601 2,241
1,984 1,862 1,679
Income before taxes $ 2,330(2) 2,882 2,884 2,307(3) 2,407 2,251 2,169 1,887
1,676 1,448 1,299
Net income $ 1,637(2) 1,977 1,948 1,550(3) 1,642 1,573 1,427 1,224
1,083 959 860
----------------------------------------------------------------------------------------------------------------------------------
Cash provided by operations $ 2,688 2,751 3,009 2,766 2,442 2,461 2,296 1,926
1,680 1,426 1,423
Capital expenditures $ 1,906 1,945 1,868 1,879 2,111 2,375 2,064 1,539
1,317 1,087 1,129
Free cash flow $ 782 806 1,141 887 331 86 232 387
363 339 294
Treasury stock purchases $ 1,090 2,002 933 1,162 765 605 321 500
628 92 117
----------------------------------------------------------------------------------------------------------------------------------
Financial position at year end
Total assets $22,535 21,684 20,983 19,784 18,242 17,386 15,415 13,592
12,035 11,681 11,349
Total debt $ 8,918 8,474 7,252 7,043 6,463 5,523 4,836 4,351
3,713 3,857 4,615
gp
y
Total shareholders' equity $ 9,488 9,204 9,639 9,465 8,852 8,718 7,861 6,885
6,274 5,892 4,835
Shares outstanding IN MILLIONS 1,280.7 1,304.9 1,350.8 1,356.2 1,371.4 1,389.2 1,399.5 1,387.4
1,414.7 1,454.1 1,434.5
----------------------------------------------------------------------------------------------------------------------------------
Per common share
Net income $ 1.27(2) 1.49 1.44 1.14(3) 1.17 1.11 .99 .84
.73 .65 .59
Net income-diluted $ 1.25(2) 1.46 1.39 1.10(3) 1.15 1.08 .97 .82
.71 .63 .57
Dividends declared $ .23 .22 .20 .18 .16 .15 .13 .12
.11 .10 .09
Market price at year end $ 26.47 34.00 40.31 38.41 23.88 22.69 22.56 14.63
14.25 12.19 9.50
----------------------------------------------------------------------------------------------------------------------------------
Franchised restaurants 17,395 16,795 15,949 15,086 14,197 13,374 12,186 10,944
9,918 9,237 8,735
Company-operated restaurants 8,378 7,652 6,059 5,433 4,887 4,294 3,783 3,216
2,733 2,551 2,547
Affiliated restaurants 4,320 4,260 4,301 3,994 3,844 3,216 2,330 1,739
1,476 1,305 1,136
----------------------------------------------------------------------------------------------------------------------------------
Total Systemwide restaurants 30,093 28,707 26,309 24,513 22,928 20,884 18,299 15,899
14,127 13,093 12,418
----------------------------------------------------------------------------------------------------------------------------------
(1)
Incl
udes
$37
8 m
illio
n of
pre
tax
spec
ial o
pera
ting
char
ges
prim
arily
rel
ated
to th
e U
.S. b
usin
ess
reor
gani
zatio
n an
d ot
her
glob
al c
hang
e in
itiat
ives
, and
the
clos
ing
of 1
63 u
nder
perf
orm
ing
rest
aura
nts
inin
tern
atio
nal m
arke
ts d
iscu
ssed
on
page
9.
(2)
Incl
udes
the
$378
mill
ion
of p
reta
x sp
ecia
l ope
ratin
g ch
arge
s no
ted
abov
e an
d $1
25 m
illio
n of
net
pre
tax
spec
ial n
onop
erat
ing
inco
me
item
s pr
imar
ily r
elat
ed to
a g
ain
on th
e in
itial
pub
lic o
ffer
ing
ofM
cDon
ald'
s Ja
pan,
for
a n
et p
reta
x ex
pens
e of
$25
3 m
illio
n ($
143
mill
ion
afte
r ta
x or
$0.
11 p
er s
hare
). N
et in
com
e al
so r
efle
cts
an e
ffec
tive
tax
rate
of
29.8
per
cent
, pri
mar
ily d
ue to
the
one-
time
bene
fit o
fta
x la
w c
hang
es in
cer
tain
inte
rnat
iona
l mar
kets
($1
47 m
illio
n). S
ee p
age
9 fo
r fu
rthe
r de
tails
.
(3)
Incl
udes
$16
2 m
illio
n of
Mad
e Fo
r Y
ou c
osts
and
the
$160
mill
ion
spec
ial c
harg
e re
late
d to
the
hom
e of
fice
pro
duct
ivity
initi
ativ
e fo
r a
pret
ax to
tal o
f $3
22 m
illio
n ($
219
mill
ion
afte
r ta
x or
$0.
16 p
ersh
are)
.
8 M
cDon
ald'
s C
orpo
ratio
n
Item
7. M
anag
emen
t's
disc
ussi
on a
nd a
naly
sis
of f
inan
cial
con
diti
on a
nd r
esul
tsof
ope
ratio
ns
Nat
ure
of b
usin
ess
The
Com
pany
ope
rate
s in
the
food
ser
vice
indu
stry
and
pri
mar
ily o
pera
tes
quic
k-se
rvic
e re
stau
rant
bus
ines
ses
unde
r th
e M
cDon
ald'
s br
and.
App
roxi
mat
ely
80%
of
McD
onal
d's
rest
aura
nts
and
mor
e th
an80
% o
f th
e Sy
stem
wid
e sa
les
of M
cDon
ald'
s re
stau
rant
s ar
e in
eig
ht m
arke
ts: A
ustr
alia
, Bra
zil,
Can
ada,
Fra
nce,
Ger
man
y, J
apan
, the
Uni
ted
Kin
gdom
and
the
Uni
ted
Stat
es. T
hrou
ghou
t thi
s di
scus
sion
,M
cDon
ald'
s re
stau
rant
bus
ines
ses
in th
ese
eigh
t mar
kets
col
lect
ivel
y ar
e re
ferr
ed to
as
"maj
or m
arke
ts."
To
capt
ure
addi
tiona
l mea
l occ
asio
ns, t
he C
ompa
ny a
lso
oper
ates
oth
er r
esta
uran
t con
cept
s un
der
its P
artn
er B
rand
s: A
rom
a C
afe,
Bos
ton
Mar
ket,
Chi
potle
and
Don
atos
Piz
zeri
a. I
n ad
ditio
n, th
e C
ompa
nyha
s a
min
ority
ow
ners
hip
in P
ret A
Man
ger.
In
four
th q
uart
er o
f 20
01, t
he C
ompa
ny a
ppro
ved
a pl
an to
dis
pose
of
its A
rom
a C
afe
busi
ness
in th
e U
.K.,
and
expe
cts
to c
ompl
ete
the
sale
in th
e fi
rst h
alf
of20
02.g
py
The
seg
men
ts p
rese
nted
in a
ll ta
bles
and
rel
ated
dis
cuss
ion
refl
ect t
he C
ompa
ny's
cur
rent
man
agem
ent s
truc
ture
. Pre
viou
sly,
McD
onal
d's
rest
aura
nt o
pera
tions
in C
anad
a, th
e M
iddl
e E
ast a
nd A
fric
a, a
sw
ell a
s th
e Pa
rtne
r B
rand
s w
ere
incl
uded
in th
e O
ther
seg
men
t. T
he n
ew A
PME
A s
egm
ent i
nclu
des
resu
lts f
or M
cDon
ald'
s re
stau
rant
ope
ratio
ns in
Asi
a/Pa
cifi
c, th
e M
iddl
e E
ast a
nd A
fric
a, w
hile
Can
ada
and
the
Part
ner
Bra
nds
are
now
pre
sent
ed a
s in
divi
dual
ope
ratin
g se
gmen
ts. I
n ad
ditio
n, U
.S. a
nd C
orpo
rate
sel
ling,
gen
eral
& a
dmin
istr
ativ
e ex
pens
es r
efle
ct a
rea
lignm
ent o
f ce
rtai
n ho
me
offi
cede
part
men
ts' r
espo
nsib
ilitie
s, f
or a
ll ye
ars
pres
ente
d.
Con
solid
ated
ope
ratin
g re
sults
Operating results
-------------------------------------------------------------------------------------------------------------------------
2001 2000
1999
----------------------------- -----------------------------
-------
DOLLARS IN MILLIONS,
EXCEPT PER SHARE DATA Amount Increase/(decrease) Amount Increase/(decrease)
Amount
=========================================================================================================================
Systemwide sales $40,630 1% $40,181 4%
$38,491
-------------------------------------------------------------------------------------------------------------------------
Revenues
Sales by Company-operated restaurants $11,041 5% $10,467 10%
$ 9,512
Revenues from franchised and affiliated 3,829 1 3,776 1
3,747
restaurants
-------------------------------------------------------------------------------------------------------------------------
Total revenues 14,870 4 14,243 7
13,259
-------------------------------------------------------------------------------------------------------------------------
Operating costs and expenses
Company-operated restaurants 9,454 8 8,750 12
7,829
Franchised restaurants 800 4 772 5
738
Selling, general & administrative expenses 1,662 5 1,587 7
1,477
Special charge-global change initiatives 200 nm - -
- Other operating (income) expense, net 57 nm (196) nm
(105)
-------------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 12,173 12 10,913 10
9,939
-------------------------------------------------------------------------------------------------------------------------
Operating income 2,697 (19) 3,330 -
3,320
-------------------------------------------------------------------------------------------------------------------------
Interest expense 452 5 430 8
gp
y
396
McDonald's Japan IPO gain (137) nm - -
- Nonoperating expense, net 52 nm 18 nm
40-------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 2,330 (19) 2,882 -
2,884
-------------------------------------------------------------------------------------------------------------------------
Provision for income taxes 693 (23) 905 (3)
936
-------------------------------------------------------------------------------------------------------------------------
Net income $ 1,637 (17)% $ 1,977 2%
$ 1,948
=========================================================================================================================
Net income per common share $ 1.27 (15)% $ 1.49 3%
$ 1.44
Net income per common share -diluted 1.25 (14) 1.46 5
1.39
=========================================================================================================================
nm Not meaningful.
McD
onal
d's
Cor
pora
tion
9
The
fol
low
ing
tabl
e pr
esen
ts th
e 20
01 g
row
th r
ates
for
rep
orte
d re
sults
, res
ults
adj
uste
d fo
r th
e sp
ecia
l ite
ms
note
d be
low
, and
the
adju
sted
res
ults
on
a co
nsta
nt c
urre
ncy
basi
s. I
n ad
ditio
n, th
e ta
ble
incl
udes
the
2000
gro
wth
rat
es f
or r
epor
ted
and
cons
tant
cur
renc
y re
sults
. All
info
rmat
ion
in c
onst
ant c
urre
ncie
s ex
clud
es th
e ef
fect
of
fore
ign
curr
ency
tran
slat
ion
on r
epor
ted
resu
lts, e
xcep
t for
hype
rinf
latio
nary
eco
nom
ies,
suc
h as
Rus
sia,
who
se f
unct
iona
l cur
renc
y is
the
U.S
. Dol
lar.
Con
stan
t cur
renc
y re
sults
are
cal
cula
ted
by tr
ansl
atin
g th
e cu
rren
t yea
r re
sults
at p
rior
yea
r m
onth
ly a
vera
geex
chan
ge r
ates
.
---------------------------------------------------------------------------------------------------
Key highlights
---------------------------------------------------------------------------------------------------
2001 2000
Increase (decrease) Increase
-------------------------------------------- ---------------------
Adjusted
As constant As Constant
reported/(1)/ Adjusted/(2)/ currency/(2,3)/ reported currency/(3)/
===================================================================================================
Systemwide sales 1% 1% 4% 4% 7%
---------------------------------------------------------------------------------------------------
Revenues 4 4 8 7 12
---------------------------------------------------------------------------------------------------
Operating income (19) (8) (5) - 5
---------------------------------------------------------------------------------------------------
Net income (17) (10) (8) 2 6
---------------------------------------------------------------------------------------------------
Net income per
common share (15) (7) (5) 3 8
gp
y
---------------------------------------------------------------------------------------------------
Net income per
common share-
diluted (14) (7) (5) 5 10
---------------------------------------------------------------------------------------------------
(1)
The
rep
orte
d ef
fect
ive
tax
rate
was
29.
8%, p
rim
arily
due
to th
e on
e-tim
e be
nefi
t of
tax
law
cha
nges
in c
erta
in in
tern
atio
nal m
arke
ts (
$147
mill
ion)
.
(2)
Adj
uste
d op
erat
ing
inco
me
of $
3.1
billi
on a
nd a
djus
ted
net i
ncom
e of
$1.
8 bi
llion
exc
lude
the
follo
win
g sp
ecia
l ite
ms:
Ope
ratin
g in
com
e:
* $2
00 m
illio
n of
cha
rges
($1
36 m
illio
n af
ter
tax)
rel
ated
to th
e U
.S.
busi
ness
reo
rgan
izat
ion
and
othe
r gl
obal
cha
nge
initi
ativ
es d
iscu
ssed
on
page
13.
* $9
1 m
illio
n of
cha
rges
($6
9 m
illio
n af
ter
tax)
rel
ated
to th
e cl
osin
g of
163
und
erpe
rfor
min
g re
stau
rant
s in
inte
rnat
iona
l mar
kets
.
* $2
5 m
illio
n of
cha
rges
($1
7 m
illio
n af
ter
tax)
pri
mar
ily r
elat
ed to
unr
ecov
erab
le c
osts
incu
rred
in c
onne
ctio
n w
ith th
e th
eft o
f pr
omot
iona
l gam
e pi
eces
and
the
rela
ted
term
inat
ion
of a
sup
plie
r di
scus
sed
on p
age
14.
* $2
4 m
illio
n as
set i
mpa
irm
ent c
harg
e (p
re a
nd a
fter
tax)
in T
urke
y.
* $2
0 m
illio
n ch
arge
($1
4 m
illio
n af
ter
tax)
rel
ated
to th
e an
ticip
ated
dis
posi
tion
of A
rom
a C
afe
in th
e U
.K.
* $1
8 m
illio
n of
cha
rges
($1
2 m
illio
n af
ter
tax)
pri
mar
ily r
elat
ed to
the
wri
te-o
ff o
f ce
rtai
n te
chno
logy
cos
ts.
Non
oper
atin
g in
com
e:
* $1
37 m
illio
n ga
in (
pre
and
afte
r ta
x) o
n th
e in
itial
pub
lic o
ffer
ing
of M
cDon
ald'
s Ja
pan.
* $1
2 m
illio
n of
cha
rges
($8
mill
ion
afte
r ta
x) p
rim
arily
rel
ated
to th
e w
rite
-off
of
a co
rpor
ate
inve
stm
ent.
(3)
Exc
lude
s th
e ef
fect
of
fore
ign
curr
ency
tran
slat
ion
on r
epor
ted
resu
lts.
The
pri
mar
y cu
rren
cies
neg
ativ
ely
affe
ctin
g re
port
ed r
esul
ts in
200
1 an
d 20
00 w
ere
the
Eur
o, w
hich
is th
e cu
rren
cy in
12
of o
ur E
urop
ean
mar
kets
incl
udin
g Fr
ance
and
Ger
man
y, th
e B
ritis
h Po
und
and
the
Aus
tral
ian
Dol
lar.
In
addi
tion,
the
Japa
nese
Yen
and
Can
adia
n D
olla
r ne
gativ
ely
impa
cted
rep
orte
d re
sults
in 2
001,
whi
le th
e Ja
pane
se Y
en p
ositi
vely
impa
cted
rep
orte
d re
sults
in 2
000.
SYST
EM
WID
E S
AL
ES
Syst
emw
ide
sale
s in
clud
e sa
les
by a
ll re
stau
rant
s, w
heth
er o
pera
ted
by th
e C
ompa
ny, b
y fr
anch
isee
s or
by
affi
liate
s op
erat
ing
unde
r jo
int-
vent
ure
agre
emen
ts. W
e co
ntin
ue to
foc
us o
n gr
owin
g m
arke
tsh
are
by in
crea
sing
com
para
ble
sale
s w
ith a
n em
phas
is o
n im
prov
ing
cust
omer
sat
isfa
ctio
n th
roug
h Q
ualit
y, S
ervi
ce, C
lean
lines
s an
d V
alue
as
wel
l as
stra
tegi
c re
stau
rant
dev
elop
men
t. R
esta
uran
tex
pans
ion,
par
tly o
ffse
t by
nega
tive
com
para
ble
sale
s, d
rove
the
cons
tant
cur
renc
y sa
les
incr
ease
in 2
001,
whi
le r
esta
uran
t exp
ansi
on a
long
with
pos
itive
com
para
ble
sale
s dr
ove
the
incr
ease
in 2
000.
--------------------------------------------------------------------------------------------------------------------
Systemwide sales
--------------------------------------------------------------------------------------------------------------------
2001 2000
1999
------------------- -------------------
--------
Increase/(decrease) Increase/(decrease)
---------------------------------- -----------------------------------
DOLLARS IN As Constant As Constant
MILLIONS Amount reported currency/(1)/ Amount reported currency/(1)/
Amount
gp
y
====================================================================================================================
U.S. $ 20,051 2% na $ 19,573 3% na $
19,006
Europe 9,412 1 5% 9,293 (3) 9%
9,557
APMEA 7,010 (6) 3 7,477 10 9
6,826
Latin America 1,733 (3) 6 1,790 7 9
1,665
Canada 1,447 - 5 1,443 7 7
1,346
Partner Brands 977 61 62 605 nm nm
91
--------------------------------------------------------------------------------------------------------------------
Total $ 40,630 1% 4% $ 40,181 4% 7% $
38,491
====================================================================================================================
(1)
Exc
lude
s th
e ef
fect
of
fore
ign
curr
ency
tran
slat
ion
on r
epor
ted
resu
lts.
na N
ot a
pplic
able
.
nm N
ot m
eani
ngfu
l.
In a
ll se
gmen
ts, t
he c
onst
ant c
urre
ncy
sale
s in
crea
ses
in 2
001
and
2000
wer
e pr
imar
ily d
rive
n by
exp
ansi
on.
In th
e U
.S.,
com
para
ble
sale
s w
ere
slig
htly
pos
itive
in 2
001
and
posi
tive
in 2
000.
The
intr
oduc
tion
of th
e N
ew T
aste
s M
enu
in e
arly
200
1 an
d su
cces
sful
pro
mot
ions
and
new
pro
duct
intr
oduc
tions
in 2
000,
com
bine
d w
ith lo
cal m
arke
t ini
tiativ
es in
bot
h ye
ars,
con
trib
uted
to th
e in
crea
ses.
In E
urop
e, c
ompa
rabl
e sa
les
wer
e ne
gativ
e in
200
1 an
d po
sitiv
e in
200
0. T
he p
rim
ary
cont
ribu
tors
to E
urop
e's
cons
tant
cur
renc
y sa
les
grow
th in
bot
h ye
ars
wer
e Fr
ance
and
the
U.K
. In
addi
tion,
the
Net
herl
ands
and
Rus
sia
deliv
ered
str
ong
perf
orm
ance
s in
200
1, w
hile
res
ults
in 2
000
also
ben
efite
d fr
om in
crea
ses
in G
erm
any,
Ita
ly a
nd S
pain
. Des
pite
the
Com
pany
's o
utst
andi
ng q
ualit
y an
d sa
fety
reco
rd, E
urop
e's
resu
lts in
bot
h ye
ars
wer
e ne
gativ
ely
impa
cted
by
cons
umer
con
fide
nce
issu
es r
egar
ding
the
Eur
opea
n be
ef s
uppl
y. H
owev
er, t
he im
pact
less
ened
as
we
prog
ress
ed th
roug
h 20
01, a
nd w
edo
not
exp
ect t
he n
egat
ive
impa
ct f
rom
thes
e is
sues
to b
e si
gnif
ican
t goi
ng f
orw
ard.
In A
PME
A, c
ompa
rabl
e sa
les
wer
e ne
gativ
e in
200
1 an
d sl
ight
ly n
egat
ive
in 2
000.
Sal
es in
200
1 w
ere
impa
cted
by
wea
k ec
onom
ic c
ondi
tions
in J
apan
, Tai
wan
and
Tur
key
and
wea
k co
nsum
er s
pend
ing
inA
ustr
alia
, whi
ch a
lso
impa
cted
the
seco
nd h
alf
of 2
000.
Beg
inni
ng in
the
four
th q
uart
er o
f 20
01, s
ales
wer
e al
so d
ampe
ned
by c
onsu
mer
con
fide
nce
issu
es r
egar
ding
the
Japa
nese
bee
f su
pply
,
10 M
cDon
ald'
s C
orpo
ratio
n
desp
ite th
e fa
ct th
at M
cDon
ald'
s Ja
pan
does
not
use
Jap
anes
e be
ef. A
lthou
gh w
e ar
e pr
oact
ivel
y co
mm
unic
atin
g ou
r st
rong
bee
f sa
fety
and
qua
lity
mes
sage
s, w
e ex
pect
Jap
an's
res
ults
in th
e ne
ar te
rm to
cont
inue
to b
e ne
gativ
ely
affe
cted
by
thes
e co
nsum
er c
once
rns.
Pos
itive
com
para
ble
sale
s in
Chi
na c
ontr
ibut
ed to
this
seg
men
t's to
tal c
onst
ant c
urre
ncy
sale
s in
crea
ses
in b
oth
year
s.
In L
atin
Am
eric
a, c
ompa
rabl
e sa
les
wer
e ne
gativ
e in
200
1 an
d 20
00 a
s w
eak
econ
omic
con
ditio
ns a
ffec
ted
mos
t mar
kets
in th
is s
egm
ent.
Posi
tive
com
para
ble
sale
s in
Mex
ico
and
Ven
ezue
la h
elpe
d dr
ive
this
seg
men
t's to
tal c
onst
ant c
urre
ncy
sale
s in
crea
ses
in b
oth
year
s.
We
expe
ct th
e w
eak
econ
omic
con
ditio
ns in
man
y A
sian
, Mid
dle
Eas
tern
and
Lat
in A
mer
ican
mar
kets
to c
ontin
ue in
the
near
term
.
In C
anad
a, c
ompa
rabl
e sa
les
wer
e po
sitiv
e in
200
1 an
d 20
00. C
anad
a's
valu
e pr
ogra
m c
ombi
ned
with
dri
ve-t
hru
initi
ativ
es, e
xten
ded
hour
s an
d ne
w p
rodu
ct in
trod
uctio
ns d
rove
the
incr
ease
s in
bot
h ye
ars.
The
sal
es in
crea
ses
in th
e Pa
rtne
r B
rand
s in
200
1 an
d 20
00 w
ere
prim
arily
due
to th
e ac
quis
ition
of
Bos
ton
Mar
ket i
n se
cond
qua
rter
200
0. E
xpan
sion
of
Chi
potle
alo
ng w
ith s
tron
g co
mpa
rabl
e sa
les
atC
hipo
tle a
nd B
osto
n M
arke
t als
o he
lped
dri
ve th
e in
crea
ses
in b
oth
year
s.
Ave
rage
ann
ual s
ales
--M
cDon
ald'
s re
stau
rant
s
gp
y
2001 2000 1999
------------------ ------------------ -------
Increase/ Increase/
(decrease) (decrease)
--------- ---------
Constant Constant
DOLLARS IN THOUSANDS Amount currency/(2)/ Amount currency/(2)/ Amount
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Per restaurant/(1)/
------------------------------------------------------------------------------------------------
Traditional:
U.S. $1,650 - $1,647 1% $1,625
Europe 1,722 (4)% 1,851 (2) 2,130
APMEA 1,190 (5) 1,376 (2) 1,411
Latin America 1,154 (5) 1,333 (7) 1,464
Canada 1,469 - 1,530 6 1,451
------------------------------------------------------------------------------------------------
Satellite:
U.S. $ 546 2% $ 536 9% $ 490
Outside the U.S./(3)/ 533 (1) 598 2 561
================================================================================================
Per new restaurant/(4)/
------------------------------------------------------------------------------------------------
Traditional:
U.S. $1,550 (1)% $1,570 7% $1,473
Europe 1,304 (6) 1,430 (4) 1,673
APMEA 984 (6) 1,143 2 1,110
Latin America 888 (5) 1,030 (9) 1,152
Canada 1,144 (7) 1,278 5 1,218
------------------------------------------------------------------------------------------------
Satellite:/(5)/
Outside the U.S./(3)/ $ 591 2% $ 649 8% $ 574
================================================================================================
(1)
McD
onal
d's
rest
aura
nts
in o
pera
tion
at le
ast 1
3 co
nsec
utiv
e m
onth
s.
(2)
Exc
lude
s th
e ef
fect
of
fore
ign
curr
ency
tran
slat
ion
on r
epor
ted
resu
lts.
(3)
Rep
rese
nts
sate
llite
res
taur
ants
loca
ted
in C
anad
a an
d Ja
pan,
whi
ch c
ompr
ise
subs
tant
ially
all
sate
llite
s ou
tsid
e th
e U
.S.
(4)
McD
onal
d's
rest
aura
nts
in o
pera
tion
at le
ast 1
3 co
nsec
utiv
e m
onth
s bu
t not
mor
e th
an 2
5 m
onth
s.
(5)
Exc
lude
s U
.S. b
ecau
se th
e C
ompa
ny d
id n
ot o
pen
a si
gnif
ican
t num
ber
of s
atel
lite
rest
aura
nts
in th
e U
.S.
Ave
rage
sal
es p
er r
esta
uran
t in
cons
tant
cur
renc
ies
are
affe
cted
by
com
para
ble
sale
s as
wel
l as
the
size
, loc
atio
n an
d nu
mbe
r of
new
res
taur
ants
. The
num
ber
of n
ew r
esta
uran
ts a
ffec
ts a
vera
ge s
ales
beca
use
new
res
taur
ants
typi
cally
take
a f
ew y
ears
to r
each
long
-ter
m s
ales
vol
umes
. In
addi
tion,
ove
r th
e la
st s
ever
al y
ears
mor
e re
stau
rant
s ou
tsid
e th
e U
.S. h
ave
open
ed in
low
er-d
ensi
ty a
reas
and
inco
untr
ies
with
low
er a
vera
ge s
ales
vol
umes
and
cor
resp
ondi
ngly
low
er a
vera
ge d
evel
opm
ent c
osts
.
In 2
001,
ave
rage
ann
ual s
ales
per
trad
ition
al r
esta
uran
t wer
e re
lativ
ely
flat
for
the
U.S
. and
Can
ada
in c
onst
ant c
urre
ncie
s. I
n th
e ot
her
segm
ents
, ave
rage
ann
ual s
ales
per
trad
ition
al r
esta
uran
t dec
lined
inco
nsta
nt c
urre
ncie
s du
e to
neg
ativ
e co
mpa
rabl
e sa
les
and
the
sign
ific
ant n
umbe
r of
new
res
taur
ants
add
ed, p
artly
off
set b
y th
e be
nefi
t of
clos
ing
163
unde
rper
form
ing
rest
aura
nts.
In
2000
, pos
itive
com
para
ble
sale
s in
the
U.S
. and
Can
ada
drov
e th
eir
incr
ease
s in
ave
rage
ann
ual s
ales
per
trad
ition
al r
esta
uran
t. In
the
othe
r se
gmen
ts, t
he d
eclin
es w
ere
mai
nly
due
to n
ew r
esta
uran
t dev
elop
men
t.
gp
y
Sate
llite
res
taur
ants
gen
eral
ly h
ave
sign
ific
antly
low
er d
evel
opm
ent c
osts
and
sal
es v
olum
es th
an tr
aditi
onal
res
taur
ants
. The
use
of
thes
e sm
all,
limite
d-m
enu
rest
aura
nts
has
allo
wed
pro
fita
ble
expa
nsio
nin
to a
reas
that
oth
erw
ise
wou
ld n
ot h
ave
been
fea
sibl
e. I
n 20
01 a
nd 2
000,
ave
rage
ann
ual s
ales
for
sat
ellit
e re
stau
rant
s in
crea
sed
in th
e U
.S. p
artly
due
to th
e cl
osin
g of
cer
tain
low
-vol
ume
sate
llite
s.O
utsi
de th
e U
.S.,
aver
age
annu
al s
ales
for
sat
ellit
e re
stau
rant
s de
clin
ed s
light
ly in
con
stan
t cur
renc
ies
in 2
001
prim
arily
due
to n
egat
ive
com
para
ble
sale
s in
Jap
an, a
fter
incr
easi
ng in
200
0 pr
imar
ily d
ue to
high
er s
ales
vol
umes
for
ope
ning
s in
Jap
an.
In 2
001,
ave
rage
sal
es f
or n
ew tr
aditi
onal
res
taur
ants
in th
e U
.S. r
emai
ned
at a
bout
$1.
6 m
illio
n as
we
cont
inue
d ou
r se
lect
ive
expa
nsio
n in
hig
her
volu
me
loca
tions
with
the
deve
lopm
ent o
f la
rger
fac
ilitie
sth
at s
uppo
rt h
ighe
r av
erag
e sa
les.
In
segm
ents
out
side
the
U.S
., av
erag
e sa
les
for
new
trad
ition
al r
esta
uran
ts in
con
stan
t cur
renc
ies
decl
ined
due
to a
hig
her
prop
ortio
n of
ope
ning
s in
low
er v
olum
e m
arke
tssu
ch a
s So
uth
Kor
ea a
nd M
exic
o an
d lo
wer
sal
es v
olum
es f
or n
ew tr
aditi
onal
res
taur
ants
ope
ned
in G
erm
any,
Ita
ly, t
he U
.K.,
Japa
n, A
rgen
tina
and
Can
ada.
The
low
er v
olum
es in
Ger
man
y, I
taly
and
Jap
anw
ere
part
ly d
ue to
the
cons
umer
con
fide
nce
issu
es r
egar
ding
the
beef
sup
ply.
In 2
000,
ave
rage
sal
es f
or n
ew tr
aditi
onal
res
taur
ants
in th
e U
.S. i
ncre
ased
due
to s
elec
tive
expa
nsio
n an
d th
e de
velo
pmen
t of
larg
er f
acili
ties.
In
Eur
ope
and
Lat
in A
mer
ica,
ave
rage
sal
es f
or n
ewtr
aditi
onal
res
taur
ants
in c
onst
ant c
urre
ncie
s de
crea
sed
due
to a
hig
her
prop
ortio
n of
ope
ning
s in
low
er v
olum
e m
arke
ts. I
n A
PME
A, a
vera
ge s
ales
for
new
trad
ition
al r
esta
uran
ts in
crea
sed
due
to h
ighe
rsa
les
volu
mes
in C
hina
and
a h
ighe
r pr
opor
tion
of o
peni
ngs
in h
ighe
r vo
lum
e m
arke
ts s
uch
as J
apan
.
McD
onal
d's
Cor
pora
tion
11
TO
TA
L R
EV
EN
UE
S
Tot
al r
even
ues
incl
ude
sale
s by
Com
pany
-ope
rate
d re
stau
rant
s an
d fe
es f
rom
res
taur
ants
ope
rate
d by
fra
nchi
sees
and
aff
iliat
es. T
hese
fee
s in
clud
e re
nt, s
ervi
ce f
ees
and
roya
lties
that
are
bas
ed o
n a
perc
ent
of s
ales
with
spe
cifi
ed m
inim
um p
aym
ents
alo
ng w
ith in
itial
fee
s. F
ees
vary
by
type
of
site
and
inve
stm
ent b
y th
e C
ompa
ny a
nd a
lso
acco
rdin
g to
loca
l bus
ines
s co
nditi
ons.
The
se f
ees,
alo
ng w
ithoc
cupa
ncy
and
oper
atin
g ri
ghts
, are
stip
ulat
ed in
fra
nchi
se a
gree
men
ts th
at g
ener
ally
hav
e 20
-yea
r te
rms.
Rev
enue
s gr
ow a
s ne
w r
esta
uran
ts a
re a
dded
and
as
sale
s bu
ild in
exi
stin
g re
stau
rant
s. M
enu
pric
e ch
ange
s al
so a
ffec
t rev
enue
s an
d sa
les,
but
it is
impr
actic
al to
qua
ntif
y th
eir
impa
ct b
ecau
se o
f di
ffer
ent
pric
ing
stru
ctur
es, n
ew p
rodu
cts,
pro
mot
ions
and
pro
duct
-mix
var
iatio
ns a
mon
g re
stau
rant
s an
d m
arke
ts.
Rev
enue
s
2001 2000
1999
------------------------------- --------------------------------
------
Increase/(decrease) Increase/(decrease)
------------------ ------------------
DOLLARS IN As Constant As Constant
MILLIONS Amount reported currency/(1)/ Amount reported currency/(1)/
Amount
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
U.S. $ 5,396 3% na $ 5,259 3% na $
5,093
Europe 4,752 - 4% 4,754 (3) 7%
4,925
APMEA 2,203 5 12 2,102 9 11
1,928
Latin America 971 2 12 949 40 41
680
Canada 608 (1) 3 615 7 7
576
Partner Brands 940 67 67 564 nm nm
57
gp
y
-----------------------------------------------------------------------------------------------------------------
Total $14,870 4% 8% $14,243 7% 12%
$13,259
=================================================================================================================
(1)
Exc
lude
s th
e ef
fect
of
fore
ign
curr
ency
tran
slat
ion
on r
epor
ted
resu
lts.
na N
ot a
pplic
able
.
nm N
ot m
eani
ngfu
l.
On
a co
nsta
nt c
urre
ncy
basi
s, to
tal r
even
ues
incr
ease
d at
a h
ighe
r ra
te th
an s
ales
in 2
001
prim
arily
due
to th
e se
cond
qua
rter
200
0 ac
quis
ition
of
Bos
ton
Mar
ket r
esta
uran
ts, w
hich
are
all
Com
pany
-ope
rate
d, a
nd th
e re
stru
ctur
ing
of o
ur o
wne
rshi
p in
the
Phili
ppin
es, e
ffec
tive
July
1, 2
001.
As
a re
sult
of th
e re
stru
ctur
ing,
mos
t of
our
rest
aura
nts
in th
e Ph
ilipp
ines
are
now
Com
pany
-ope
rate
dra
ther
than
fra
nchi
sed.
In
addi
tion,
rev
enue
s be
nefi
ted
from
an
incr
ease
in th
e ro
yalty
per
cent
rec
eive
d fr
om o
ur J
apan
ese
affi
liate
, eff
ectiv
e Ja
nuar
y 1,
200
1. I
n 20
00, t
otal
rev
enue
s in
crea
sed
at a
hig
her
rate
than
sal
es d
ue th
e ac
quis
ition
of
Bos
ton
Mar
ket a
nd th
e ac
quis
ition
of
Don
atos
in th
ird
quar
ter
1999
as
wel
l as
the
cons
olid
atio
n of
Arg
entin
a an
d In
done
sia
for
fina
ncia
l rep
ortin
g pu
rpos
es in
200
0.
OP
ER
AT
ING
IN
CO
ME
Con
solid
ated
ope
ratin
g in
com
e de
crea
sed
19%
in 2
001
and
was
rel
ativ
ely
flat
in 2
000
com
pare
d w
ith 1
999.
Exc
ludi
ng th
e sp
ecia
l ite
ms
note
d in
the
foot
note
to th
e ta
ble
on p
age
9, a
djus
ted
oper
atin
gin
com
e de
crea
sed
5% in
con
stan
t cur
renc
ies
in 2
001.
Adj
uste
d op
erat
ing
inco
me
decr
ease
d in
200
1 pr
imar
ily d
ue to
low
er c
ombi
ned
oper
atin
g m
argi
n do
llars
and
low
er o
ther
ope
ratin
g in
com
e al
ong
with
high
er s
ellin
g, g
ener
al &
adm
inis
trat
ive
expe
nses
. In
cons
tant
cur
renc
ies,
ope
ratin
g in
com
e in
crea
sed
5% in
200
0, p
rim
arily
due
to h
ighe
r co
mbi
ned
oper
atin
g m
argi
n do
llars
and
hig
her
othe
r op
erat
ing
inco
me,
par
tly o
ffse
t by
high
er s
ellin
g, g
ener
al &
adm
inis
trat
ive
expe
nses
.
Ope
ratin
g in
com
e fr
om th
e m
ajor
mar
kets
acc
ount
ed f
or m
ore
than
90%
of
cons
olid
ated
ope
ratin
g in
com
e in
200
1, 2
000
and
1999
.
Ope
ratin
g in
com
e
2001
2000 1999
---------------------------------
------------------ ------
Increase/(decrease)
Increase/(decrease)
---------------------------------
------------------
Adjusted
DOLLARS IN As Constant constant As
Constant
MILLIONS Amount reported currency/(1)/ currency/(1,2)/ Amount reported
currency/(1)/ Amount
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
U.S. $ 1,622 (10)% na - $ 1,795 7%
na $ 1,679
Europe 1,063 (10) (7)% (3)% 1,180 (6)
6% 1,257
APMEA 325 (28) (20) (10) 451 4
5 433
Latin America 11 (89) (91) (46) 103 (23)
(23) 133
Canada 124 (2) 2 10 126 12
gp
y
11 113
Partner
Brands (66) (61) (62) (1) (41) nm
nm (7)
Corporate (382) (35) na (22) (284) 1
na (288)
---------------------------------------------------------------------------------------------------------------------------------
Total $ 2,697 (19)% (17)% (5)% $ 3,330 -%
5% $ 3,320
=================================================================================================================================
(1)
Exc
lude
s th
e ef
fect
of
fore
ign
curr
ency
tran
slat
ion
on r
epor
ted
resu
lts.
(2)
Exc
lude
s th
e sp
ecia
l ite
ms
note
d in
the
foot
note
to th
e ta
ble
on p
age
9 an
d qu
antif
ied
belo
w.
na N
ot a
pplic
able
.
nm N
ot m
eani
ngfu
l.
U.S
. ope
ratin
g in
com
e fo
r 20
01 in
clud
ed $
181
mill
ion
of s
peci
al c
harg
es, p
rim
arily
rel
ated
to th
e U
.S. b
usin
ess
reor
gani
zatio
n an
d co
sts
incu
rred
in c
onne
ctio
n w
ith th
e th
eft o
f pr
omot
iona
l gam
e pi
eces
and
rela
ted
term
inat
ion
of a
sup
plie
r di
scus
sed
on p
age
14. U
.S. o
pera
ting
inco
me
acco
unte
d fo
r ov
er 5
0% o
f co
nsol
idat
ed o
pera
ting
inco
me
in 2
001,
200
0 an
d 19
99. E
xclu
ding
the
spec
ial c
harg
es, U
.S.
adju
sted
ope
ratin
g in
com
e w
as r
elat
ivel
y fl
at in
200
1 co
mpa
red
with
an
incr
ease
of
$116
mill
ion
or 7
% in
200
0. T
he in
crea
se in
200
0 w
as d
ue to
hig
her
com
bine
d op
erat
ing
mar
gin
dolla
rs a
nd h
ighe
r ot
her
oper
atin
g in
com
e.
Eur
ope'
s op
erat
ing
inco
me
for
2001
incl
uded
$46
mill
ion
of s
peci
al c
harg
es r
elat
ed to
the
clos
ing
of 5
0 un
derp
erfo
rmin
g re
stau
rant
s ac
ross
Eur
ope
and
glob
al c
hang
e in
itiat
ives
. Eur
ope'
s op
erat
ing
inco
me
acco
unte
d fo
r m
ore
than
35%
of
cons
olid
ated
ope
ratin
g in
com
e in
200
1, 2
000
and
1999
. Exc
ludi
ng th
e sp
ecia
l cha
rges
, Eur
ope'
s ad
just
ed o
pera
ting
inco
me
decr
ease
d 3%
in 2
001
and
incr
ease
d 6%
in 2
000
in c
onst
ant c
urre
ncie
s. I
n bo
th y
ears
, con
sum
er c
onfi
denc
e is
sues
reg
ardi
ng th
e E
urop
ean
beef
sup
ply
nega
tivel
y im
pact
ed r
esul
ts. T
his
segm
ent's
res
ults
in 2
001
bene
fite
d fr
om s
tron
g pe
rfor
man
ces
inFr
ance
and
Rus
sia.
The
incr
ease
in 2
000
was
pri
mar
ily d
rive
n by
str
ong
oper
atin
g re
sults
in F
ranc
e, I
taly
and
Spa
in. F
ranc
e, G
erm
any
and
the
U.K
. acc
ount
ed f
or a
bout
75%
of
Eur
ope'
s op
erat
ing
inco
me
in 2
001,
200
0 an
d 19
99.
APM
EA
's o
pera
ting
inco
me
for
2001
incl
uded
$42
mill
ion
of s
peci
al c
harg
es, p
rim
arily
rel
ated
to th
e cl
osin
g of
50
unde
rper
form
ing
rest
aura
nts,
mai
nly
in M
alay
sia
and
the
Phili
ppin
es, a
nd th
e as
set
impa
irm
ent c
harg
e in
12 M
cDon
ald'
s C
orpo
ratio
n
Tur
key.
Exc
ludi
ng th
e sp
ecia
l cha
rges
, APM
EA
's a
djus
ted
oper
atin
g in
com
e de
crea
sed
10%
in 2
001
and
incr
ease
d 5%
in 2
000
in c
onst
ant c
urre
ncie
s. I
n 20
01, s
tron
g re
sults
in C
hina
, the
incr
ease
in th
ero
yalty
per
cent
rec
eive
d fr
om o
ur a
ffili
ate
in J
apan
and
a g
ain
on th
e sa
le o
f re
al e
stat
e in
Sin
gapo
re w
ere
mor
e th
an o
ffse
t by
wea
k op
erat
ing
resu
lts in
Aus
tral
ia, J
apan
, Tai
wan
and
Tur
key.
The
incr
ease
in 2
000
was
dri
ven
prim
arily
by
Japa
n, w
hich
ben
efite
d fr
om th
e pa
rtia
l sal
e of
its
owne
rshi
p in
Toy
s `R
' Us
Japa
n, a
s w
ell a
s st
rong
res
ults
in C
hina
and
Sou
th K
orea
. Res
ults
in b
oth
year
s w
ere
nega
tivel
yaf
fect
ed b
y th
e in
trod
uctio
n of
the
good
s an
d se
rvic
es ta
x in
Aus
tral
ia in
Jul
y 20
00. A
ustr
alia
and
Jap
an a
ccou
nted
for
mor
e th
an 6
0% o
f A
PME
A's
ope
ratin
g in
com
e in
200
1, 2
000
and
1999
.
Lat
in A
mer
ica'
s op
erat
ing
inco
me
for
2001
incl
uded
$40
mill
ion
of s
peci
al c
harg
es r
elat
ed to
the
clos
ing
of 5
8 un
derp
erfo
rmin
g re
stau
rant
s, p
rim
arily
in B
razi
l and
Pue
rto
Ric
o, a
nd g
loba
l cha
nge
initi
ativ
es. E
xclu
ding
the
spec
ial c
harg
es, L
atin
Am
eric
a's
adju
sted
ope
ratin
g in
com
e de
crea
sed
46%
in 2
001
and
23%
in 2
000
in c
onst
ant c
urre
ncie
s. R
esul
ts in
bot
h ye
ars
wer
e ne
gativ
ely
impa
cted
by
the
cont
inui
ng d
iffi
cult
econ
omic
con
ditio
ns e
xper
ienc
ed b
y m
ost m
arke
ts in
the
segm
ent.
Bra
zil a
ccou
nted
for
mor
e th
an 5
5% o
f L
atin
Am
eric
a's
oper
atin
g in
com
e in
eac
h of
the
past
thre
e ye
ars.
Can
ada'
s op
erat
ing
inco
me
for
2001
incl
uded
$10
mill
ion
of s
peci
al c
harg
es r
elat
ed to
the
clos
ing
of f
ive
unde
rper
form
ing
rest
aura
nts
and
to g
loba
l cha
nge
initi
ativ
es.
Ope
ratin
g in
com
e fo
r th
e Pa
rtne
r B
rand
s in
200
1 in
clud
ed s
peci
al c
harg
es o
f $2
0 m
illio
n re
late
d to
the
antic
ipat
ed d
ispo
sal o
f A
rom
a C
afe
and
$5 m
illio
n re
late
d to
glo
bal c
hang
e in
itiat
ives
.
Res
ults
in th
e C
orpo
rate
seg
men
t inc
lude
d $3
4 m
illio
n of
spe
cial
cha
rges
rel
ated
to g
loba
l cha
nge
initi
ativ
es a
nd th
e w
rite
-off
of
cert
ain
tech
nolo
gy c
osts
. Exc
ludi
ng th
e sp
ecia
l cha
rges
, the
adj
uste
dde
crea
se in
the
Cor
pora
te s
egm
ent o
f 22
% in
200
1 w
as p
rim
arily
due
to in
crea
sed
spen
ding
on
futu
re r
esta
uran
t-re
late
d te
chno
logy
impr
ovem
ents
.
As
a re
sult
of c
ontin
uing
eco
nom
ic w
eakn
ess
in L
atin
Am
eric
a an
d T
urke
y, th
e C
ompa
ny e
xpec
ts to
rec
ord
a no
n-ca
sh c
harg
e of
app
roxi
mat
ely
$45
mill
ion
(pre
and
aft
er ta
x) r
elat
ed to
the
impa
irm
ent o
fas
sets
in L
atin
Am
eric
a an
d cl
osin
g of
und
erpe
rfor
min
g re
stau
rant
s in
Tur
key
in f
irst
qua
rter
200
2.
OP
ER
AT
ING
MA
RG
INS
gp
y
Ope
ratin
g m
argi
n in
form
atio
n an
d di
scus
sion
s re
late
to M
cDon
ald'
s re
stau
rant
s on
ly a
nd e
xclu
de P
artn
er B
rand
s.
Com
pany
-ope
rate
d m
argi
ns
Com
pany
-ope
rate
d m
argi
n do
llars
are
equ
al to
sal
es b
y C
ompa
ny-o
pera
ted
rest
aura
nts
less
the
oper
atin
g co
sts
of th
ese
rest
aura
nts.
Com
pany
-ope
rate
d m
argi
n do
llars
dec
lined
$14
5 m
illio
n in
200
1 an
d $4
mill
ion
in 2
000.
In
cons
tant
cur
renc
ies,
Com
pany
-ope
rate
d m
argi
n do
llars
dec
lined
$96
mill
ion
or 6
% in
200
1, c
ompa
red
with
an
incr
ease
of
$73
mill
ion
or 4
% in
200
0. T
he 2
001
cons
tant
cur
renc
yde
crea
se w
as p
rim
arily
due
to n
egat
ive
com
para
ble
sale
s, p
artly
off
set b
y ex
pans
ion,
whi
le th
e 20
00 c
onst
ant c
urre
ncy
incr
ease
was
due
to e
xpan
sion
and
pos
itive
com
para
ble
sale
s.
Com
pany
-ope
rate
d m
argi
ns w
ere
15.1
% o
f sa
les
in 2
001,
16.
9% in
200
0 an
d 17
.7%
in 1
999.
Ope
ratin
g co
st tr
ends
as
a pe
rcen
t of
sale
s w
ere
as f
ollo
ws:
foo
d &
pap
er c
osts
as
wel
l as
occu
panc
y &
oth
erop
erat
ing
expe
nses
incr
ease
d in
200
1 an
d 20
00; p
ayro
ll co
sts
incr
ease
d in
200
1 an
d w
ere
flat
in 2
000.
Com
pany
-ope
rate
d m
argi
ns--
McD
onal
d's
rest
aura
nts
IN MILLIONS 2001 2000 1999
===============================================================================
U.S. $ 501 $ 521 $ 516
Europe 626 683 743
APMEA 240 296 274
Latin America 83 95 70
Canada 75 75 71
-------------------------------------------------------------------------------
Total $1,525 $1,670 $1,674
===============================================================================
PERCENT OF SALES
-------------------------------------------------------------------------------
U.S. 16.0% 17.0% 17.5%
Europe 16.8 18.3 19.2
APMEA 12.4 15.9 16.4
Latin America 10.1 12.4 14.1
Canada 15.6 15.4 15.7
-------------------------------------------------------------------------------
Total 15.1% 16.9% 17.7%
===============================================================================
In th
e U
.S.,
food
& p
aper
cos
ts w
ere
low
er a
s a
perc
ent o
f sa
les
in 2
001
and
2000
, whi
le p
ayro
ll co
sts
and
occu
panc
y &
oth
er e
xpen
ses
wer
e hi
gher
in b
oth
year
s.
Eur
ope'
s C
ompa
ny-o
pera
ted
mar
gins
as
a pe
rcen
t of
sale
s de
clin
ed in
200
1, p
rim
arily
due
to h
ighe
r pa
yrol
l cos
ts a
nd n
egat
ive
com
para
ble
sale
s. I
n 20
00, E
urop
e's
Com
pany
-ope
rate
d m
argi
n pe
rcen
tde
clin
ed a
s al
l cos
ts in
crea
sed
as a
per
cent
of
sale
s.
In A
PME
A, n
egat
ive
com
para
ble
sale
s in
200
1 an
d sl
ight
ly n
egat
ive
com
para
ble
sale
s in
200
0 af
fect
ed C
ompa
ny-o
pera
ted
mar
gins
as
a pe
rcen
t of
sale
s. I
n 20
01, t
he c
hang
e in
res
taur
ant c
lass
ific
atio
n in
the
Phili
ppin
es a
lso
cont
ribu
ted
to A
PME
A's
mar
gin
decl
ine
beca
use
its C
ompa
ny-o
pera
ted
mar
gins
wer
e lo
wer
than
the
aver
age
for
the
segm
ent.
In L
atin
Am
eric
a, th
e m
argi
n de
clin
es w
ere
due
to d
iffi
cult
econ
omic
con
ditio
ns in
mos
t mar
kets
and
neg
ativ
e co
mpa
rabl
e sa
les
in b
oth
year
s.
Fran
chis
ed m
argi
ns
Fran
chis
ed m
argi
n do
llars
are
equ
al to
rev
enue
s fr
om f
ranc
hise
d an
d af
filia
ted
rest
aura
nts
less
the
Com
pany
's o
ccup
ancy
cos
ts (
rent
and
dep
reci
atio
n) a
ssoc
iate
d w
ith th
ose
site
s. F
ranc
hise
d m
argi
n do
llars
repr
esen
ted
mor
e th
an 6
0% o
f th
e co
mbi
ned
oper
atin
g m
argi
ns in
200
1, 2
000
and
1999
. Fra
nchi
sed
mar
gin
dolla
rs in
crea
sed
$26
mill
ion
in 2
001,
com
pare
d w
ith a
$6
mill
ion
decl
ine
in 2
000.
In
cons
tant
curr
enci
es, t
he f
ranc
hise
d m
argi
n do
llars
incr
ease
d $9
1 m
illio
n or
3%
in 2
001
and
$119
mill
ion
or 4
% in
200
0, p
rim
arily
dri
ven
by th
e in
crea
se in
the
Japa
n ro
yalty
per
cent
eff
ectiv
e Ja
nuar
y 1,
200
1, a
sw
ell a
s ex
pans
ion
in b
oth
year
s an
d po
sitiv
e co
mpa
rabl
e sa
les
in 2
000.
gp
y
McD
onal
d's
Cor
pora
tion
13
Fran
chis
ed m
argi
ns--
McD
onal
d's
rest
aura
nts
IN MILLIONS 2001 2000 1999
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
U.S. $ 1,799 $ 1,765 $ 1,730
Europe 792 802 828
APMEA 229 199 211
Latin America 103 135 144
Canada 105 101 95
-------------------------------------------------------------------------------
Total $ 3,028 $ 3,002 $ 3,008
===============================================================================
PERCENT OF REVENUES
-------------------------------------------------------------------------------
U.S. 79.7% 80.4% 81.0%
Europe 77.2 78.3 79.0
APMEA 86.2 81.5 82.3
Latin America 68.4 73.0 77.5
Canada 80.4 80.2 79.9
-------------------------------------------------------------------------------
Total 79.1% 79.5% 80.3%
===============================================================================
The
dec
lines
in th
e co
nsol
idat
ed f
ranc
hise
d m
argi
n pe
rcen
t in
2001
and
200
0 re
flec
ted
high
er o
ccup
ancy
cos
ts d
ue to
an
incr
ease
d nu
mbe
r of
leas
ed s
ites
in a
ll ge
ogra
phic
seg
men
ts. O
ur s
trat
egy
of le
asin
ga
high
er p
ropo
rtio
n of
new
site
s ov
er th
e pa
st f
ew y
ears
has
red
uced
initi
al c
apita
l req
uire
men
ts a
nd r
elat
ed in
tere
st e
xpen
se. H
owev
er, a
s an
ticip
ated
, fra
nchi
sed
mar
gins
as
a pe
rcen
t of
appl
icab
le r
even
ues
have
bee
n ne
gativ
ely
impa
cted
bec
ause
fin
anci
ng c
osts
impl
icit
in th
e le
ase
are
incl
uded
in r
ent e
xpen
se, w
hich
aff
ects
thes
e m
argi
ns. F
or o
wne
d si
tes,
fin
anci
ng c
osts
are
ref
lect
ed in
inte
rest
exp
ense
,w
hich
doe
s no
t aff
ect t
hese
mar
gins
.
In 2
001,
fra
nchi
sed
mar
gins
as
a pe
rcen
t of
appl
icab
le r
even
ues
decr
ease
d in
Eur
ope
and
Lat
in A
mer
ica
part
ly d
ue to
ren
t ass
ista
nce
prov
ided
to f
ranc
hise
es in
cer
tain
mar
kets
and
neg
ativ
e co
mpa
rabl
esa
les.
We
expe
ct to
con
tinue
pro
vidi
ng r
ent a
ssis
tanc
e in
cer
tain
Lat
in A
mer
ican
mar
kets
in 2
002.
The
fra
nchi
sed
mar
gin
perc
ent i
n A
PME
A in
crea
sed
for
2001
and
dec
reas
ed in
200
0. T
he 2
001
incr
ease
was
pri
mar
ily d
ue to
an
incr
ease
in th
e ro
yalty
per
cent
rec
eive
d fr
om o
ur J
apan
ese
affi
liate
and
the
rest
ruct
urin
g of
the
Phili
ppin
es' o
pera
tions
that
res
ulte
d in
the
recl
assi
fica
tion
of f
ranc
hise
d m
argi
ns th
atw
ere
low
er th
an th
e av
erag
e fo
r th
e se
gmen
t. In
200
0, o
ur p
urch
ase
of a
maj
ority
inte
rest
in c
erta
in a
ffili
ate
mar
kets
in b
oth
APM
EA
and
Lat
in A
mer
ica
shif
ted
reve
nues
fro
m f
ranc
hise
d an
d af
filia
ted
rest
aura
nts
to C
ompa
ny-o
pera
ted
rest
aura
nts,
whi
ch c
ontr
ibut
ed to
the
redu
ctio
n in
the
fran
chis
ed r
esta
uran
t mar
gin
perc
ents
.
SEL
LIN
G, G
EN
ER
AL
& A
DM
INIS
TR
AT
IVE
EX
PE
NSE
S
Con
solid
ated
sel
ling,
gen
eral
& a
dmin
istr
ativ
e ex
pens
es in
crea
sed
5% in
200
1 an
d 7%
in 2
000
(7%
and
11%
in c
onst
ant c
urre
ncie
s). S
ellin
g, g
ener
al &
adm
inis
trat
ive
expe
nses
as
a pe
rcen
t of
sale
s w
ere
4.1%
in 2
001,
4.0
% in
200
0 an
d 3.
8% in
199
9. T
he in
crea
se in
200
1 w
as p
artly
due
to in
crea
sed
spen
ding
on
futu
re r
esta
uran
t-re
late
d te
chno
logy
impr
ovem
ents
in th
e C
orpo
rate
seg
men
t and
hig
her
selli
ng, g
ener
al &
adm
inis
trat
ive
expe
nses
for
the
Part
ner
Bra
nds.
The
incr
ease
in 2
000
was
pri
mar
ily d
ue to
spe
ndin
g to
sup
port
the
deve
lopm
ent o
f Pa
rtne
r B
rand
s an
d th
e co
nsol
idat
ion
of A
rgen
tina
and
Indo
nesi
a fo
r fi
nanc
ial r
epor
ting
purp
oses
. Sel
ling,
gen
eral
& a
dmin
istr
ativ
e ex
pens
es in
bot
h ye
ars
bene
fite
d fr
om w
eake
r fo
reig
n cu
rren
cies
and
low
er e
xpen
se f
or p
erfo
rman
ce-b
ased
ince
ntiv
eco
mpe
nsat
ion.
As
a re
sult
of th
e gl
obal
cha
nge
initi
ativ
es d
escr
ibed
bel
ow, t
he C
ompa
ny e
xpec
ts o
ngoi
ng a
nnua
l sel
ling,
gen
eral
& a
dmin
istr
ativ
e sa
ving
s of
abo
ut $
100
mill
ion
in 2
002,
com
pare
d w
ith w
hat o
ther
wis
ew
ould
hav
e be
en s
pent
.
Selli
ng, g
ener
al &
adm
inis
trat
ive
expe
nses
gp
y
2001 2000 1999
------------------------------- -------------------------------- ------
Increase/(decrease) Increase/(decrease)
------------------ ------------------
DOLLARS IN As Constant As Constant
MILLIONS Amount reported currency/(1)/ Amount reported currency/(1)/ Amount
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
U.S. $ 563 1% na $ 559 - na $ 559
Europe 328 (2) 1% 336 (3)% 8% 348
APMEA 152 2 9 149 10 16 135
Latin America 126 5 14 120 45 45 83
Canada 51 (6) (2) 54 4 4 52
Partner Brands 102 20 20 85 nm nm 12
Corporate 340 20 na 284 (1) na 288
--------------------------------------------------------------------------------------------------------------
Total $1,662 5% 7% $1,587 7% 11% $1,477
==============================================================================================================
(1)
Exc
lude
s th
e ef
fect
of
fore
ign
curr
ency
tran
slat
ion
on r
epor
ted
resu
lts.
na N
ot a
pplic
able
.
nm N
ot m
eani
ngfu
l.
Cor
pora
te e
xpen
ses
cons
ist o
f ho
me
offi
ce s
uppo
rt c
osts
in a
reas
suc
h as
fac
ilitie
s, f
inan
ce, h
uman
res
ourc
es, i
nfor
mat
ion
tech
nolo
gy, l
egal
, sup
ply
chai
n m
anag
emen
t and
trai
ning
.
SPE
CIA
L C
HA
RG
E--
GL
OB
AL
CH
AN
GE
IN
ITIA
TIV
ES
In f
ourt
h qu
arte
r 20
01, t
he C
ompa
ny r
ecor
ded
a $2
00 m
illio
n pr
etax
spe
cial
cha
rge
($13
6 m
illio
n af
ter
tax)
rel
ated
to s
trat
egic
cha
nges
and
ong
oing
res
taur
ant i
nitia
tives
in th
e U
.S. a
nd c
erta
inin
tern
atio
nal m
arke
ts. T
he c
hang
es a
nd in
itiat
ives
are
des
igne
d to
impr
ove
the
cust
omer
exp
erie
nce
and
grow
McD
onal
d's
glob
al b
usin
ess.
The
cha
nges
in th
e U
.S. i
nclu
ded
stre
amlin
ing
oper
atio
ns b
yre
duci
ng th
e nu
mbe
r of
reg
ions
and
div
isio
ns, e
nabl
ing
the
Com
pany
to c
ombi
ne s
taff
fun
ctio
ns a
nd im
prov
e ef
fici
ency
. In
addi
tion,
the
U.S
. bus
ines
s in
trod
uced
a v
arie
ty o
f in
itiat
ives
des
igne
d to
impr
ove
the
rest
aura
nt e
xper
ienc
e in
clud
ing
acce
lera
ted
oper
atio
ns tr
aini
ng, r
esta
uran
t sim
plif
icat
ion,
ince
ntiv
es f
or o
utst
andi
ng r
esta
uran
t ope
ratio
ns a
nd a
n en
hanc
ed n
atio
nal r
esta
uran
t eva
luat
ion
syst
em.
In c
onne
ctio
n w
ith th
ese
initi
ativ
es, t
he C
ompa
ny e
limin
ated
app
roxi
mat
ely
850
posi
tions
, con
sist
ing
of 7
00 p
ositi
ons
in th
e U
.S.,
prim
arily
in th
e di
visi
ons
and
regi
ons,
and
150
pos
ition
s in
inte
rnat
iona
lm
arke
ts.
The
spe
cial
cha
rge
cons
iste
d of
$11
4 m
illio
n of
sev
eran
ce a
nd o
ther
em
ploy
ee-r
elat
ed c
osts
; $69
mill
ion
of le
ase
canc
ella
tion
and
othe
r co
sts
rela
ted
to th
e cl
osin
g of
reg
ion
and
divi
sion
fac
ilitie
s; a
nd $
17m
illio
n of
oth
er c
ash
cost
s, p
rim
arily
con
sist
ing
of p
aym
ents
mad
e to
fac
ilita
te a
tim
ely
and
smoo
th c
hang
e of
ow
ners
hip
from
fra
nchi
sees
who
hav
e ha
d a
hist
ory
of f
inan
cial
dif
ficu
lty a
nd c
onse
quen
tlyw
ere
unab
le to
del
iver
the
leve
l of
oper
atio
nal e
xcel
lenc
e ne
eded
to s
ucce
ed in
the
futu
re.
14 M
cDon
ald'
s C
orpo
ratio
n
Of
the
orig
inal
$20
0 m
illio
n pr
etax
spe
cial
cha
rge,
the
rem
aini
ng a
ccru
al o
f ap
prox
imat
ely
$126
mill
ion
at y
ear-
end
2001
pri
mar
ily r
elat
ed to
em
ploy
ee s
ever
ance
and
leas
e pa
ymen
ts f
or f
acili
ties
that
hav
ebe
en c
lose
d an
d w
as in
clud
ed in
oth
er a
ccru
ed li
abili
ties
in th
e C
onso
lidat
ed b
alan
ce s
heet
. Em
ploy
ee s
ever
ance
is p
aid
in in
stal
lmen
ts o
ver
a pe
riod
of
up to
one
yea
r af
ter
term
inat
ion,
and
the
rem
aini
ngle
ase
paym
ents
for
fac
ilitie
s th
at h
ave
been
clo
sed
will
be
paid
thro
ugh
2010
. No
sign
ific
ant a
djus
tmen
ts h
ave
been
mad
e to
the
orig
inal
pla
n ap
prov
ed b
y m
anag
emen
t. T
he C
ompa
ny e
xpec
ts to
use
cas
hpr
ovid
ed b
y op
erat
ions
to f
und
the
rem
aini
ng e
mpl
oyee
sev
eran
ce a
nd le
ase
oblig
atio
ns.
OT
HE
R O
PE
RA
TIN
G (
INC
OM
E)
EX
PE
NSE
, NE
T
gp
y
Oth
er o
pera
ting
(inc
ome)
exp
ense
incl
udes
gai
ns o
n sa
les
of r
esta
uran
t bus
ines
ses,
equ
ity in
ear
ning
s of
unc
onso
lidat
ed a
ffili
ates
, res
taur
ant c
losi
ng a
nd a
sset
impa
irm
ent c
harg
es, a
nd o
ther
tran
sact
ions
rela
ted
to f
ranc
hisi
ng a
nd th
e fo
od s
ervi
ce b
usin
ess.
--------------------------------------------------------------------------------
Other operating (income) expense, net
--------------------------------------------------------------------------------
IN MILLIONS 2001 2000 1999
================================================================================
Gains on sales of restaurant businesses $(112) $ (87) $ (75)
Equity in earnings of unconsolidated affiliates (62) (121) (138)
Charges for underperforming restaurant closings 91 - -
Asset impairment charges 44 - -
Other, net 96 12 108
--------------------------------------------------------------------------------
Total $ 57 $(196) $(105)
================================================================================
Gai
ns o
n sa
les
of r
esta
uran
t bus
ines
ses
incl
ude
gain
s fr
om s
ales
of
Com
pany
-ope
rate
d re
stau
rant
s as
wel
l as
gain
s fr
om e
xerc
ises
of
purc
hase
opt
ions
by
fran
chis
ees
with
bus
ines
s fa
cilit
ies
leas
ear
rang
emen
ts (
arra
ngem
ents
whe
re th
e C
ompa
ny le
ases
the
busi
ness
es, i
nclu
ding
equ
ipm
ent,
to f
ranc
hise
es w
ho h
ave
optio
ns to
pur
chas
e th
e bu
sine
sses
). T
he C
ompa
ny's
pur
chas
es a
nd s
ales
of
busi
ness
esw
ith it
s fr
anch
isee
s an
d af
filia
tes
are
aim
ed a
t ach
ievi
ng a
n op
timal
ow
ners
hip
mix
in e
ach
mar
ket.
Res
ultin
g ga
ins
or lo
sses
are
rec
orde
d in
ope
ratin
g in
com
e be
caus
e th
e tr
ansa
ctio
ns a
re a
n in
tegr
al p
art o
fou
r bu
sine
ss.
Equ
ity in
ear
ning
s of
unc
onso
lidat
ed a
ffili
ates
--bu
sine
sses
in w
hich
the
Com
pany
act
ivel
y pa
rtic
ipat
es b
ut d
oes
not c
ontr
ol--
is r
epor
ted
afte
r in
tere
st e
xpen
se a
nd in
com
e ta
xes,
exc
ept f
or U
.S. r
esta
uran
tpa
rtne
rshi
ps, w
hich
are
rep
orte
d be
fore
inco
me
taxe
s. T
he d
ecre
ase
in 2
001
was
due
to w
eake
r re
sults
in J
apan
, the
incr
ease
in J
apan
's r
oyal
ty e
xpen
se a
nd a
wea
ker
Japa
nese
Yen
. Alth
ough
the
incr
ease
inro
yalty
exp
ense
red
uced
McD
onal
d's
equi
ty in
ear
ning
s fo
r Ja
pan,
it w
as m
ore
than
off
set b
y th
e ro
yalty
ben
efit
McD
onal
d's
rece
ived
in f
ranc
hise
d re
venu
es. I
n 19
99, e
quity
in e
arni
ngs
of u
ncon
solid
ated
affi
liate
s in
clud
ed a
$21
mill
ion
gain
fro
m th
e sa
le o
f re
al e
stat
e in
a U
.S. p
artn
ersh
ip.
The
Com
pany
rec
orde
d $9
1 m
illio
n of
pre
tax
char
ges
($69
mill
ion
afte
r ta
x) in
200
1 re
late
d to
the
clos
ing
of 1
63 u
nder
perf
orm
ing
rest
aura
nts
in in
tern
atio
nal m
arke
ts. T
he lo
sses
on
thes
e cl
osed
rest
aura
nts
wer
e re
cogn
ized
in th
e pe
riod
the
rest
aura
nt c
ease
d op
erat
ions
, and
the
char
ges
prim
arily
con
sist
ed o
f as
set w
rite
-off
s an
d le
ase
term
inat
ion
cost
s.
The
ass
et im
pair
men
t cha
rges
in 2
001
cons
iste
d of
a $
24 m
illio
n ch
arge
(pr
e an
d af
ter
tax)
as
a re
sult
of a
n as
sess
men
t of
the
ongo
ing
impa
ct o
f si
gnif
ican
t cur
renc
y de
valu
atio
n on
McD
onal
d's
cash
flo
ws
in T
urke
y an
d a
pret
ax c
harg
e of
$20
mill
ion
($14
mill
ion
afte
r ta
x) r
elat
ed to
the
antic
ipat
ed s
ale
of A
rom
a w
hich
we
expe
ct to
be
com
plet
ed in
the
firs
t hal
f of
200
2.
Oth
er e
xpen
se f
or 2
001
incl
uded
a p
reta
x ch
arge
of
$25
mill
ion
($17
mill
ion
afte
r ta
x) in
the
U.S
., pr
imar
ily r
elat
ed to
unr
ecov
erab
le c
osts
incu
rred
in c
onne
ctio
n w
ith th
e th
eft o
f w
inni
ng g
ame
piec
esfr
om th
e C
ompa
ny's
Mon
opol
y an
d ce
rtai
n ot
her
prom
otio
nal g
ames
ove
r an
ext
ende
d pe
riod
of
time,
and
the
rela
ted
term
inat
ion
of th
e su
pplie
r of
the
gam
e pi
eces
. Fif
ty-o
ne p
eopl
e (n
one
of w
hom
wer
eC
ompa
ny e
mpl
oyee
s) w
ere
subs
eque
ntly
indi
cted
on
cons
pira
cy a
nd m
ail f
raud
cha
rges
. In
2001
, the
Com
pany
als
o re
cord
ed a
pre
tax
char
ge o
f $1
7 m
illio
n ($
12 m
illio
n af
ter
tax)
, pri
mar
ily r
elat
ed to
the
wri
te-o
ff o
f ce
rtai
n te
chno
logy
cos
ts in
the
Cor
pora
te s
egm
ent.
Oth
er e
xpen
se f
or 1
999
incl
uded
the
wri
te-o
ff o
f $2
4 m
illio
n ($
16 m
illio
n af
ter
tax)
of
soft
war
e no
t use
d in
the
busi
ness
.
INT
ER
EST
EX
PE
NSE
Inte
rest
exp
ense
incr
ease
d in
200
1 an
d 20
00 d
ue to
hig
her
aver
age
debt
leve
ls, p
artly
off
set b
y w
eake
r fo
reig
n cu
rren
cies
in b
oth
year
s an
d lo
wer
ave
rage
inte
rest
rat
es in
200
1. A
vera
ge d
ebt l
evel
s w
ere
high
er in
bot
h ye
ars
beca
use
the
Com
pany
use
d its
ava
ilabl
e cr
edit
capa
city
to r
epur
chas
e sh
ares
of
its c
omm
on s
tock
. Bas
ed o
n cu
rren
t int
eres
t rat
es, w
e an
ticip
ate
inte
rest
exp
ense
will
dec
line
in 2
002.
McD
ON
AL
D'S
JA
PA
N I
NIT
IAL
PU
BL
IC O
FF
ER
ING
(IP
O)
GA
IN
In th
ird
quar
ter
2001
, McD
onal
d's
Japa
n, th
e C
ompa
ny's
larg
est m
arke
t in
the
APM
EA
seg
men
t, co
mpl
eted
an
IPO
of
12 m
illio
n sh
ares
at a
n of
feri
ng p
rice
of
4,30
0 Y
en p
er s
hare
($3
4.77
per
sha
re).
The
Com
pany
ow
ns 5
0% o
f M
cDon
ald'
s Ja
pan
whi
le th
e C
ompa
ny's
par
tner
Den
Fuj
ita a
nd h
is f
amily
ow
n ap
prox
imat
ely
26%
and
con
tinue
to b
e in
volv
ed in
the
busi
ness
. The
Com
pany
rec
orde
d a
$137
mill
ion
gain
(pr
e an
d af
ter
tax)
in n
onop
erat
ing
inco
me
to r
efle
ct a
n in
crea
se in
the
carr
ying
val
ue o
f its
inve
stm
ent a
s a
resu
lt of
the
cash
pro
ceed
s fr
om th
e IP
O r
ecei
ved
by M
cDon
ald'
s Ja
pan.
NO
NO
PE
RA
TIN
G E
XP
EN
SE, N
ET
Non
oper
atin
g ex
pens
e in
clud
es m
isce
llane
ous
inco
me
and
expe
nse
item
s su
ch a
s in
tere
st in
com
e, m
inor
ity in
tere
sts,
and
gai
ns a
nd lo
sses
rel
ated
to o
ther
inve
stm
ents
, fin
anci
ngs
and
tran
slat
ion.
Res
ults
in20
01 in
clud
ed th
e w
rite
-off
of
a co
rpor
ate
inve
stm
ent,
the
wri
te-o
ff o
f a
fina
ncin
g
gp
y
McD
onal
d's
Cor
pora
tion
15
rece
ivab
le f
rom
a s
uppl
ier
in L
atin
Am
eric
a an
d m
inor
ity in
tere
st e
xpen
se r
elat
ed to
the
sale
of
real
est
ate
in S
inga
pore
, par
tly o
ffse
t by
tran
slat
ion
gain
s. R
esul
ts in
200
0 re
flec
ted
low
er m
inor
ity in
tere
stex
pens
e an
d lo
wer
tran
slat
ion
loss
es th
an 1
999
and
a ga
in r
elat
ed to
the
sale
of
a pa
rtia
l ow
ners
hip
inte
rest
in a
maj
ority
-ow
ned
inte
rnat
iona
l sub
sidi
ary.
PR
OV
ISIO
N F
OR
IN
CO
ME
TA
XE
S
The
eff
ectiv
e in
com
e ta
x ra
te w
as 2
9.8%
in 2
001,
31.
4% in
200
0 an
d 32
.5%
in 1
999.
The
low
er e
ffec
tive
inco
me
tax
rate
in 2
001
was
pri
mar
ily d
ue to
the
one-
time
bene
fit o
f ta
x la
w c
hang
es in
cer
tain
inte
rnat
iona
l mar
kets
. Als
o co
ntri
butin
g to
the
decr
ease
in th
e in
com
e ta
x ra
te w
as th
e Ja
pan
IPO
gai
n, p
artly
off
set b
y ce
rtai
n re
stau
rant
clo
sing
cha
rges
and
the
Tur
key
asse
t im
pair
men
t cha
rge,
non
e of
whi
ch w
ere
tax-
affe
cted
for
fin
anci
al r
epor
ting
purp
oses
. The
dec
reas
e in
the
inco
me
tax
rate
in 2
000
was
the
resu
lt of
a ta
x be
nefi
t res
ultin
g fr
om a
n in
tern
atio
nal t
rans
actio
n. T
he C
ompa
ny e
xpec
ts it
s20
02 e
ffec
tive
inco
me
tax
rate
to b
e ap
prox
imat
ely
32.0
% to
33.
0%.
Con
solid
ated
net
def
erre
d ta
x lia
bilit
ies
incl
uded
tax
asse
ts, n
et o
f va
luat
ion
allo
wan
ce, o
f $7
20 m
illio
n in
200
1 an
d $5
23 m
illio
n in
200
0. S
ubst
antia
lly a
ll of
the
net t
ax a
sset
s ar
ose
in th
e U
.S. a
nd o
ther
prof
itabl
e m
arke
ts.
NE
T I
NC
OM
E A
ND
NE
T I
NC
OM
E P
ER
CO
MM
ON
SH
AR
E
In 2
001,
net
inco
me
decr
ease
d 17
%, a
nd d
ilute
d ne
t inc
ome
per
com
mon
sha
re d
ecre
ased
14%
. Exc
ludi
ng th
e sp
ecia
l ite
ms
note
d in
the
foot
note
to th
e ta
ble
on p
age
9, n
et in
com
e de
crea
sed
8%, a
nddi
lute
d ne
t inc
ome
per
com
mon
sha
re d
ecre
ased
5%
in c
onst
ant c
urre
ncie
s. I
n 20
00, n
et in
com
e in
crea
sed
2%, a
nd d
ilute
d ne
t inc
ome
per
com
mon
sha
re in
crea
sed
5%. O
n a
cons
tant
cur
renc
y ba
sis,
thes
ein
crea
ses
wer
e 6%
and
10%
. The
spr
ead
betw
een
the
perc
ent c
hang
e in
net
inco
me
and
dilu
ted
net i
ncom
e pe
r co
mm
on s
hare
for
bot
h ye
ars
was
due
to lo
wer
wei
ghte
d av
erag
e sh
ares
out
stan
ding
as
are
sult
of s
hare
s re
purc
hase
d an
d a
less
dilu
tive
effe
ct f
rom
sto
ck o
ptio
ns.
Cas
h fl
ows
The
Com
pany
gen
erat
es s
igni
fica
nt c
ash
from
ope
ratio
ns a
nd h
as s
ubst
antia
l cre
dit c
apac
ity to
fun
d op
erat
ing
and
disc
retio
nary
spe
ndin
g. C
ash
from
ope
ratio
ns to
tale
d $2
.7 b
illio
n in
200
1 an
d, a
lthou
ghsl
ight
ly lo
wer
than
the
amou
nt in
200
0, e
xcee
ded
capi
tal e
xpen
ditu
res
for
the
elev
enth
con
secu
tive
year
. In
2000
, cas
h fr
om o
pera
tions
tota
led
$2.8
bill
ion.
Thi
s am
ount
was
less
than
in 1
999,
pri
mar
ily d
ueto
hig
her
inco
me
tax
paym
ents
in 2
000
as a
res
ult o
f bo
th lo
wer
tax
bene
fits
rel
ated
to s
tock
opt
ion
exer
cise
s an
d hi
gher
gai
ns o
n th
e te
rmin
atio
n of
for
eign
cur
renc
y ex
chan
ge a
gree
men
ts. C
ash
prov
ided
by o
pera
tions
, alo
ng w
ith b
orro
win
gs a
nd o
ther
sou
rces
of
cash
, is
used
for
cap
ital e
xpen
ditu
res,
sha
re r
epur
chas
es, d
ivid
ends
and
deb
t rep
aym
ents
.
--------------------------------------------------------------------------------
Cash provided by operations
--------------------------------------------------------------------------------
DOLLARS IN MILLIONS 2001 2000 1999
================================================================================
Cash provided by operations $ 2,688 $ 2,751 $ 3,009
Free cash flow/(1)/ 782 806 1,141
Cash provided by operations
as a percent of capital expenditures 141% 141% 161%
Cash provided by operations
as a percent of average total debt 31 35 42
================================================================================
(1)
Cas
h pr
ovid
ed b
y op
erat
ions
less
cap
ital e
xpen
ditu
res.
In a
dditi
on to
its
free
cas
h fl
ow, t
he C
ompa
ny c
an m
eet s
hort
-ter
m f
undi
ng n
eeds
thro
ugh
com
mer
cial
pap
er b
orro
win
gs a
nd li
ne o
f cr
edit
agre
emen
ts. A
ccor
ding
ly, t
he C
ompa
ny s
trat
egic
ally
and
purp
osef
ully
mai
ntai
ns a
rel
ativ
ely
low
cur
rent
rat
io, w
hich
was
.81
at y
ear-
end
2001
.
CA
PIT
AL
EX
PE
ND
ITU
RE
S A
ND
RE
STA
UR
AN
T D
EV
EL
OP
ME
NT
Cap
ital e
xpen
ditu
res
decr
ease
d $3
9 m
illio
n or
2%
in 2
001
and
incr
ease
d $7
7 m
illio
n or
4%
in 2
000.
Cap
ital e
xpen
ditu
res
for
McD
onal
d's
rest
aura
nts
in 2
001,
200
0 an
d 19
99 r
efle
cted
our
str
ateg
y of
leas
ing
a hi
gher
pro
port
ion
of n
ew s
ites
and
the
U.S
. bui
ldin
g pr
ogra
m, w
hich
giv
es f
ranc
hise
es th
e op
tion
to o
wn
new
res
taur
ant b
uild
ings
. Abo
ut 8
0% o
f ne
w a
nd r
ebui
lt U
.S. t
radi
tiona
l fra
nchi
sed
and
affi
liate
d re
stau
rant
bui
ldin
gs in
200
1 an
d 20
00 a
re o
wne
d by
fra
nchi
sees
and
aff
iliat
es. T
he d
ecre
ase
in c
apita
l exp
endi
ture
s in
200
1 w
as p
rim
arily
due
to lo
wer
spe
ndin
g in
Eur
ope
and
Lat
in A
mer
ica
and
gp
y
wea
ker
fore
ign
curr
enci
es, p
artly
off
set b
y ad
ditio
nal e
xpen
ditu
res
for
Part
ner
Bra
nds
and
McD
onal
d's
rest
aura
nt b
usin
ess
in th
e U
.S. a
nd C
hina
. Cap
ital e
xpen
ditu
res
in 2
000
incr
ease
d du
e to
hig
her
spen
ding
for
Par
tner
Bra
nds
and
the
cons
olid
atio
n of
Arg
entin
a an
d In
done
sia,
par
tly o
ffse
t by
wea
ker
fore
ign
curr
enci
es.
App
roxi
mat
ely
60%
of
capi
tal e
xpen
ditu
res
was
inve
sted
in m
ajor
mar
kets
exc
ludi
ng J
apan
in 2
001,
200
0 an
d 19
99 (
Japa
n is
acc
ount
ed f
or u
nder
the
equi
ty m
etho
d, a
nd a
ccor
ding
ly, i
ts c
apita
lex
pend
iture
s ar
e no
t inc
lude
d in
con
solid
ated
am
ount
s). C
apita
l exp
endi
ture
s in
mar
kets
out
side
the
U.S
. acc
ount
ed f
or a
bout
65%
of
tota
l exp
endi
ture
s in
200
1 an
d ab
out 7
0% in
200
0 an
d 19
99.
The
Com
pany
's e
xpen
ditu
res
for
new
res
taur
ants
in th
e U
.S. a
re lo
wer
than
they
wou
ld h
ave
been
as
a re
sult
of th
e le
asin
g st
rate
gy a
nd th
e U
.S. b
uild
ing
prog
ram
. For
new
fra
nchi
sed
and
affi
liate
dre
stau
rant
s, w
hich
rep
rese
nt a
bout
85%
of
U.S
. res
taur
ants
, the
Com
pany
gen
eral
ly in
curs
no
capi
tal e
xpen
ditu
res.
How
ever
, the
Com
pany
mai
ntai
ns lo
ng-t
erm
occ
upan
cy r
ight
s fo
r th
e la
nd a
nd r
ecei
ves
rela
ted
rent
al in
com
e.
Whi
le th
e C
ompa
ny n
o lo
nger
mak
es s
igni
fica
nt e
xpen
ditu
res
on n
ew s
ites
in th
e U
.S.,
we
cont
inue
to f
ocus
on
the
Syst
em's
ave
rage
dev
elop
men
t cos
ts (
land
, bui
ldin
g an
d eq
uipm
ent)
to e
nsur
e an
appr
opri
ate
retu
rn o
n in
vest
men
t for
the
Syst
em. A
vera
ge d
evel
opm
ent c
osts
for
new
trad
ition
al r
esta
uran
ts in
the
U.S
. Sys
tem
wer
e $1
.7 m
illio
n in
200
1, $
1.6
mill
ion
in 2
000
and
$1.5
mill
ion
in 1
999.
The
16 M
cDon
ald'
s C
orpo
ratio
n
incr
ease
s w
ere
prim
arily
due
to th
e co
nstr
uctio
n of
larg
er f
acili
ties
desi
gned
to s
uppo
rt h
ighe
r av
erag
e sa
les
volu
mes
.
Cer
tain
of
the
land
the
Com
pany
leas
es in
the
U.S
. is
leas
ed f
rom
Sys
tem
Cap
ital C
orpo
ratio
n (S
CC
). T
he C
ompa
ny a
nd s
ix o
ther
una
ffili
ated
com
pani
es th
at s
uppl
y th
e M
cDon
ald'
s Sy
stem
are
equ
alow
ners
of
SCC
. No
empl
oyee
s of
SC
C a
re e
mpl
oyee
s of
the
seve
n sh
areh
olde
rs. T
he C
ompa
ny's
inve
stm
ent i
n SC
C is
acc
ount
ed f
or o
n th
e co
st b
asis
. SC
C's
pur
pose
is to
pro
vide
fun
ding
to M
cDon
ald'
sfr
anch
isee
s, s
uppl
iers
to th
e M
cDon
ald'
s Sy
stem
and
McD
onal
d's
Cor
pora
tion
and
to b
uild
equ
ity w
ithin
SC
C th
at w
ill b
enef
it th
e M
cDon
ald'
s Sy
stem
. Its
fun
ctio
n is
sim
ilar
to th
at o
f a
coop
erat
ive.
SC
C's
prim
ary
oper
atin
g ac
tiviti
es in
clud
e (1
) pr
ovid
ing
loan
s to
qua
lifyi
ng U
.S. f
ranc
hise
es to
pur
chas
e ex
istin
g re
stau
rant
bus
ines
ses
as w
ell a
s fi
nanc
e eq
uipm
ent,
build
ings
and
wor
king
cap
ital,
(2)
cont
ract
ing
for
cons
truc
tion
of r
esta
uran
t bui
ldin
gs a
nd s
ellin
g th
em to
U.S
. fra
nchi
sees
, (3)
pur
chas
ing
acco
unts
rec
eiva
ble
and
fina
ncin
g in
vent
ory
and
othe
r ne
eds
of e
ligib
le s
uppl
iers
and
dis
trib
utor
s, a
nd (
4)ac
quir
ing
and
leas
ing
land
to M
cDon
ald'
s C
orpo
ratio
n fo
r ne
w r
esta
uran
ts, p
rim
arily
in th
e U
.S. T
he C
ompa
ny's
com
mitm
ents
und
er th
ese
leas
es a
re in
clud
ed in
ope
ratin
g le
ase
com
mitm
ents
on
page
s 19
and
31 a
nd to
tal a
ppro
xim
atel
y $1
4 m
illio
n an
nual
ly b
ased
on
curr
ent i
nter
est r
ates
.
SCC
fun
ds it
self
in th
e ca
pita
l mar
kets
on
an in
depe
nden
t bas
is. M
oody
's, S
tand
ard
& P
oor's
and
Fitc
h pe
riod
ical
ly r
evie
w S
CC
, inc
ludi
ng r
evie
ws
of k
ey p
erfo
rman
ce in
dica
tors
and
ass
et q
ualit
y. T
hese
ratin
g ag
enci
es c
urre
ntly
rat
e SC
C's
fun
ding
sub
sidi
ary'
s co
mm
erci
al p
aper
A-1
, P-1
and
F1;
and
its
long
-ter
m d
ebt A
a2, A
A a
nd A
A, r
espe
ctiv
ely.
SC
C c
ompe
tes
with
oth
er le
nder
s w
ho p
rovi
de s
imila
rfi
nanc
ing
to f
ranc
hise
es a
nd s
uppl
iers
.
SCC
is n
ot p
erm
itted
to h
old
McD
onal
d's
stoc
k, a
nd M
cDon
ald'
s ha
s no
com
mitm
ents
or
guar
ante
es th
at p
rovi
de f
or th
e po
tent
ial i
ssua
nce
of it
s st
ock
to S
CC
. SC
C d
oes
not e
ngag
e in
spe
cula
tive
deri
vativ
e ac
tiviti
es, a
nd S
CC
doe
s no
t hed
ge M
cDon
ald'
s po
sitio
ns. I
n ad
ditio
n, n
o M
cDon
ald'
s em
ploy
ee is
per
mitt
ed to
inve
st in
SC
C.
--------------------------------------------------------------------------------
Capital expenditures
--------------------------------------------------------------------------------
IN MILLIONS 2001 2000 1999
================================================================================
New restaurants $ 1,198 $ 1,308 $ 1,231
Existing restaurants/(1)/ 571 507 515
Other properties/(2)/ 137 130 122
--------------------------------------------------------------------------------
Total $ 1,906 $ 1,945 $ 1,868
================================================================================
Total assets $22,535 $21,684 $20,983
================================================================================
(1)
Incl
udes
tech
nolo
gy to
impr
ove
serv
ice
and
food
qua
lity
and
enha
ncem
ents
to o
lder
fac
ilitie
s in
ord
er to
ach
ieve
hig
her
leve
ls o
f cu
stom
er s
atis
fact
ion.
(2)
Prim
arily
for
com
pute
r eq
uipm
ent a
nd f
urni
shin
gs f
or o
ffic
e bu
ildin
gs.
Ave
rage
dev
elop
men
t cos
ts o
utsi
de th
e U
.S. v
ary
wid
ely
by m
arke
t dep
endi
ng o
n th
e ty
pes
of r
esta
uran
ts b
uilt
and
the
real
est
ate
and
cons
truc
tion
cost
s w
ithin
eac
h m
arke
t. T
hese
cos
ts, w
hich
incl
ude
land
, bui
ldin
gs a
nd e
quip
men
t ow
ned
by th
e C
ompa
ny, a
re m
anag
ed th
roug
h th
e us
e of
opt
imal
ly s
ized
res
taur
ants
, con
stru
ctio
n an
d de
sign
eff
icie
ncie
s, s
tand
ardi
zatio
n an
d gl
obal
sou
rcin
g. I
n ad
ditio
n,
gp
y
fore
ign
curr
ency
flu
ctua
tions
aff
ect a
vera
ge d
evel
opm
ent c
osts
.
Ave
rage
dev
elop
men
t cos
ts f
or n
ew tr
aditi
onal
res
taur
ants
in m
ajor
mar
kets
out
side
the
U.S
. exc
ludi
ng J
apan
wer
e ap
prox
imat
ely
$1.5
mill
ion
in 2
001,
$1.
6 m
illio
n in
200
0 an
d $1
.8 m
illio
n in
199
9.A
vera
ge a
nnua
l sal
es f
or n
ew tr
aditi
onal
res
taur
ants
in th
e sa
me
mar
kets
wer
e ab
out $
1.4
mill
ion
in 2
001,
$1.
5 m
illio
n in
200
0 an
d $1
.7 m
illio
n in
199
9. A
vera
ge d
evel
opm
ent c
osts
for
new
sat
ellit
ere
stau
rant
s lo
cate
d in
Can
ada
and
Japa
n, w
hich
com
pris
e m
ore
than
90%
of
the
sate
llite
s ou
tsid
e th
e U
.S.,
wer
e ab
out $
200,
000
(exc
ludi
ng le
ase
cost
s) in
200
1, 2
000
and
1999
. The
use
of
thes
e sm
all,
limite
d-m
enu
rest
aura
nts,
for
whi
ch th
e la
nd a
nd b
uild
ing
gene
rally
are
leas
ed, h
as a
llow
ed e
xpan
sion
into
are
as th
at o
ther
wis
e w
ould
not
hav
e be
en f
easi
ble.
The
Com
pany
and
its
affi
liate
s ow
ned
38%
of
the
land
for
its
rest
aura
nt s
ites
at y
ear-
end
2001
and
40%
at y
ear-
end
2000
.
Cap
ital e
xpen
ditu
res
by a
ffili
ates
, whi
ch w
ere
not i
nclu
ded
in c
onso
lidat
ed a
mou
nts,
wer
e ab
out $
181
mill
ion
in 2
001,
$20
4 m
illio
n in
200
0 an
d $2
59 m
illio
n in
199
9. T
he d
ecre
ase
in 2
000
was
pri
mar
ilydu
e to
the
cons
olid
atio
n of
Arg
entin
a in
200
0.
Syst
emw
ide
rest
aura
nts
at y
ear
end/
(1)/
2001 2000 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
U.S. 13,099 12,804 12,629
Europe 5,794 5,460 4,943
APMEA 7,321 6,771 6,097
Latin America 1,581 1,510 1,299
Canada 1,223 1,154 1,125
Partner Brands 1,075 1,008 216
--------------------------------------------------------------------------------
Total 30,093 28,707 26,309
================================================================================
(1)
Incl
udes
sat
ellit
e un
its a
t Dec
embe
r 31
, 200
1, 2
000
and
1999
as
follo
ws:
U.S
.--1
,004
, 999
, 1,0
48; E
urop
e--6
3, 4
6, 4
4; A
PME
A (
prim
arily
Jap
an)-
-1,8
79, 1
,681
, 1,3
54; L
atin
Am
eric
a--4
6, 4
5, 4
1; a
nd C
anad
a--3
07, 2
80, 2
59.
McD
onal
d's
cont
inue
s to
foc
us o
n m
anag
ing
capi
tal o
utla
ys e
ffec
tivel
y th
roug
h se
lect
ive
expa
nsio
n. I
n 20
01, t
he C
ompa
ny a
dded
1,3
19 M
cDon
ald'
s re
stau
rant
s Sy
stem
wid
e, c
ompa
red
with
1,6
06 in
200
0an
d 1,
598
in 1
999.
In
addi
tion,
the
Com
pany
add
ed 6
7 re
stau
rant
s in
200
1 op
erat
ed b
y Pa
rtne
r B
rand
s, c
ompa
red
with
792
res
taur
ants
in 2
000,
707
of
whi
ch w
ere
the
resu
lt of
the
Bos
ton
Mar
ket
acqu
isiti
on. I
n 20
02, t
he C
ompa
ny e
xpec
ts to
add
1,3
00 to
1,4
00 M
cDon
ald'
s re
stau
rant
s an
d op
en 1
00 to
150
new
Par
tner
Bra
nds'
res
taur
ants
.
In 2
001,
mor
e th
an 6
0% o
f M
cDon
ald'
s re
stau
rant
add
ition
s w
as in
the
maj
or m
arke
ts, a
nd w
e an
ticip
ate
a si
mila
r pe
rcen
t for
200
2. A
lmos
t 50%
of
Com
pany
-ope
rate
d re
stau
rant
s an
d ne
arly
85%
of
fran
chis
ed r
esta
uran
ts w
ere
loca
ted
in th
e m
ajor
mar
kets
at t
he e
nd o
f 20
01. F
ranc
hise
es a
nd a
ffili
ates
ope
rate
d 74
% o
f M
cDon
ald'
s re
stau
rant
s at
yea
r-en
d 20
01. P
artn
er B
rand
s' r
esta
uran
ts a
re p
rim
arily
Com
pany
-ope
rate
d.
McD
onal
d's
Cor
pora
tion
17
SHA
RE
RE
PU
RC
HA
SES
AN
D D
IVID
EN
DS
The
Com
pany
use
s fr
ee c
ash
flow
and
cre
dit c
apac
ity to
rep
urch
ase
shar
es, a
s w
e be
lieve
this
enh
ance
s sh
areh
olde
r va
lue.
Dur
ing
2001
, the
Com
pany
pur
chas
ed 3
6.1
mill
ion
shar
es f
or a
ppro
xim
atel
y $1
.1bi
llion
. Cum
ulat
ive
shar
e pu
rcha
ses
over
the
past
fiv
e ye
ars
tota
led
$6.0
bill
ion
or 1
87.4
mill
ion
shar
es. I
n 20
02, t
he C
ompa
ny b
egan
pur
chas
ing
shar
es u
nder
a n
ew $
5.0
billi
on s
hare
rep
urch
ase
prog
ram
anno
unce
d in
Oct
ober
200
1. W
e ex
pect
to p
urch
ase
shar
es u
nder
this
pro
gram
ove
r th
e ne
xt f
our
year
s, d
epen
ding
on
free
cas
h fl
ow.
To
redu
ce th
e ov
eral
l cos
t of
trea
sury
sto
ck p
urch
ases
, the
Com
pany
sel
ls c
omm
on e
quity
put
opt
ions
in c
onne
ctio
n w
ith it
s sh
are
repu
rcha
se p
rogr
am a
nd r
ecei
ves
prem
ium
s fo
r th
ese
optio
ns. T
heC
ompa
ny s
old
12.2
mill
ion
com
mon
equ
ity p
ut o
ptio
ns in
200
1 an
d 16
.8 m
illio
n in
200
0 an
d re
ceiv
ed p
rem
ium
s of
$32
mill
ion
in 2
001
and
$56
mill
ion
in 2
000.
The
se p
rem
ium
s w
ere
refl
ecte
d in
shar
ehol
ders
' equ
ity a
s a
redu
ctio
n of
the
cost
of
trea
sury
sto
ck p
urch
ased
. At D
ecem
ber
31, 2
001,
12.
2 m
illio
n co
mm
on e
quity
put
opt
ions
wer
e ou
tsta
ndin
g, o
f w
hich
3.0
mill
ion
wer
e ex
erci
sed
inFe
brua
ry 2
002
at a
cos
t of
$87
mill
ion.
The
rem
aini
ng o
ptio
ns e
xpir
e at
var
ious
dat
es th
roug
h N
ovem
ber
2002
, with
exe
rcis
e pr
ices
bet
wee
n $2
6.37
and
$30
.23.
Dur
ing
2001
, the
Com
pany
als
o en
tere
d in
to e
quity
for
war
d co
ntra
cts
in c
onne
ctio
n w
ith it
s sh
are
repu
rcha
se p
rogr
am. T
he e
quity
for
war
d co
ntra
cts,
tota
ling
$151
mill
ion
for
5.5
mill
ion
shar
es, s
ettle
d in
gp
y
Mar
ch 2
002
at a
n av
erag
e pr
ice
of $
27.4
1 pe
r sh
are.
Giv
en th
e C
ompa
ny's
ret
urns
on
equi
ty a
nd a
sset
s, m
anag
emen
t bel
ieve
s it
is p
rude
nt to
rei
nves
t a s
igni
fica
nt p
ortio
n of
ear
ning
s ba
ck in
to th
e bu
sine
ss a
nd u
se f
ree
cash
flo
w f
or s
hare
rep
urch
ases
.A
ccor
ding
ly, t
he c
omm
on s
tock
div
iden
d yi
eld
is m
odes
t. H
owev
er, t
he C
ompa
ny h
as p
aid
divi
dend
s on
com
mon
sto
ck f
or 2
6 co
nsec
utiv
e ye
ars
and
has
incr
ease
d th
e di
vide
nd a
mou
nt e
very
yea
r.A
dditi
onal
div
iden
d in
crea
ses
will
be
cons
ider
ed a
fter
rev
iew
ing
retu
rns
to s
hare
hold
ers,
pro
fita
bilit
y ex
pect
atio
ns a
nd f
inan
cing
nee
ds. C
ash
divi
dend
s ar
e de
clar
ed a
nd p
aid
on a
n an
nual
bas
is. A
s in
the
past
, fut
ure
divi
dend
s w
ill b
e de
clar
ed a
t the
dis
cret
ion
of th
e B
oard
of
Dir
ecto
rs.
Fina
ncia
l pos
ition
and
cap
ital r
esou
rces
TO
TA
L A
SSE
TS
AN
D R
ET
UR
NS
Tot
al a
sset
s gr
ew b
y $8
51 m
illio
n or
4%
in 2
001
and
$700
mill
ion
or 3
% in
200
0. A
t yea
r-en
d 20
01 a
nd 2
000,
mor
e th
an 6
0% o
f co
nsol
idat
ed a
sset
s w
as lo
cate
d in
the
maj
or m
arke
ts e
xclu
ding
Jap
an. N
etpr
oper
ty a
nd e
quip
men
t ros
e $2
42 m
illio
n in
200
1 an
d re
pres
ente
d 77
% o
f to
tal a
sset
s at
yea
r en
d.
Ope
ratin
g in
com
e is
use
d to
com
pute
ret
urn
on a
vera
ge a
sset
s, w
hile
net
inco
me
is u
sed
to c
alcu
late
ret
urn
on a
vera
ge c
omm
on e
quity
. Mon
th-e
nd b
alan
ces
are
used
to c
ompu
te b
oth
aver
age
asse
ts a
ndav
erag
e co
mm
on e
quity
.
--------------------------------------------------------------------------------
Returns on assets and equity
--------------------------------------------------------------------------------
2001/(1)/ 2000 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Return on average assets 14.1% 15.9% 16.6%
Return on average common equity 19.1 21.6 20.8
================================================================================
(1)
Exc
lude
s th
e sp
ecia
l ite
ms
note
d in
foo
tnot
e 2
to th
e ta
ble
on p
age
9. I
nclu
ding
the
spec
ial i
tem
s, r
etur
n on
ave
rage
ass
ets
was
12.
3% a
nd r
etur
n on
ave
rage
com
mon
equ
ity w
as 1
7.5%
.
Bot
h re
turn
on
aver
age
asse
ts a
nd r
etur
n on
ave
rage
com
mon
equ
ity d
eclin
ed in
200
1, p
rim
arily
due
to lo
wer
ope
ratin
g in
com
e as
a r
esul
t of
cons
umer
con
fide
nce
issu
es r
egar
ding
the
Eur
opea
n be
efsu
pply
and
wea
k op
erat
ing
resu
lts in
APM
EA
and
Lat
in A
mer
ica
prev
ious
ly d
iscu
ssed
. In
gene
ral,
retu
rns
bene
fite
d fr
om th
e C
ompa
ny's
con
tinue
d fo
cus
on m
ore
effi
cien
t cap
ital d
eplo
ymen
t. T
his
incl
uded
a m
ore
prud
ent s
ite s
elec
tion
proc
ess,
leas
ing
a hi
gher
pro
port
ion
of n
ew s
ites,
the
U.S
. bui
ldin
g pr
ogra
m a
nd th
e us
e of
fre
e ca
sh f
low
for
sha
re r
epur
chas
es. I
n 20
00, r
etur
n on
ave
rage
com
mon
equi
ty b
enef
ited
from
an
incr
ease
in th
e av
erag
e am
ount
of
com
mon
equ
ity p
ut o
ptio
ns o
utst
andi
ng c
ompa
red
with
199
9, w
hich
red
uced
ave
rage
com
mon
equ
ity.
FIN
AN
CIN
GS
AN
D M
AR
KE
T R
ISK
The
Com
pany
gen
eral
ly b
orro
ws
on a
long
-ter
m b
asis
and
is e
xpos
ed to
the
impa
ct o
f in
tere
st-r
ate
chan
ges
and
fore
ign
curr
ency
flu
ctua
tions
. In
man
agin
g th
e im
pact
of
thes
e ch
ange
s, th
e C
ompa
ny u
ses
inte
rest
-rat
e ex
chan
ge a
gree
men
ts a
nd f
inan
ces
in th
e cu
rren
cies
in w
hich
ass
ets
are
deno
min
ated
. All
deri
vativ
es u
sed
to m
inim
ize
thes
e ri
sks
wer
e re
cord
ed a
t fai
r va
lue
in th
e C
ompa
ny's
Con
solid
ated
bala
nce
shee
t at D
ecem
ber
31, 2
001,
and
tota
led
$213
mill
ion
in m
isce
llane
ous
othe
r as
sets
and
$13
4 m
illio
n in
oth
er lo
ng-t
erm
liab
ilitie
s. S
ee s
umm
ary
of s
igni
fica
nt a
ccou
ntin
g po
licie
s re
late
d to
fina
ncia
l ins
trum
ents
on
page
s 27
-28
for
addi
tiona
l inf
orm
atio
n re
gard
ing
thei
r us
e an
d th
e im
pact
of
SFA
S N
o.13
3 re
gard
ing
deri
vativ
es.
The
Com
pany
use
s m
ajor
cap
ital m
arke
ts, b
ank
fina
ncin
gs a
nd d
eriv
ativ
es to
mee
t its
fin
anci
ng r
equi
rem
ents
and
red
uce
inte
rest
exp
ense
. For
exa
mpl
e, f
orei
gn c
urre
ncy
exch
ange
agr
eem
ents
inco
njun
ctio
n w
ith b
orro
win
gs h
elp
obta
in d
esir
ed c
urre
ncie
s at
attr
activ
e ra
tes
and
mat
uriti
es. I
nter
est-
rate
exc
hang
e ag
reem
ents
eff
ectiv
ely
conv
ert f
ixed
-rat
e to
flo
atin
g-ra
te d
ebt,
or v
ice
vers
a. T
heC
ompa
ny a
lso
man
ages
the
leve
l of
fixe
d-ra
te d
ebt t
o ta
ke a
dvan
tage
of
chan
ges
in in
tere
st r
ates
.
The
Com
pany
use
s fo
reig
n cu
rren
cy d
ebt a
nd d
eriv
ativ
es to
hed
ge c
erta
in f
orei
gn c
urre
ncy
roya
lties
, int
erco
mpa
ny f
inan
cing
s an
d lo
ng-t
erm
inve
stm
ents
in f
orei
gn s
ubsi
diar
ies
and
affi
liate
s. T
his
redu
ces
the
impa
ct o
f fl
uctu
atin
g fo
reig
n cu
rren
cies
on
net i
ncom
e an
d sh
areh
olde
rs' e
quity
. Tot
al f
orei
gn c
urre
ncy
deno
min
ated
deb
t, in
clud
ing
the
effe
cts
of f
orei
gn c
urre
ncy
exch
ange
agr
eem
ents
, was
$5.
0bi
llion
and
$5.
1 bi
llion
at y
ear-
end
2001
and
200
0, r
espe
ctiv
ely.
18 M
cDon
ald'
s C
orpo
ratio
n
The
Com
pany
doe
s no
t hav
e si
gnif
ican
t exp
osur
e to
any
indi
vidu
al c
ount
erpa
rty
and
has
mas
ter
agre
emen
ts th
at c
onta
in n
ettin
g ar
rang
emen
ts. C
erta
in o
f th
ese
agre
emen
ts a
lso
requ
ire
each
par
ty to
pos
tco
llate
ral i
f cr
edit
ratin
gs f
all b
elow
, or
aggr
egat
e ex
posu
res
exce
ed, c
erta
in c
ontr
actu
al li
mits
. At D
ecem
ber
31, 2
001,
nei
ther
the
Com
pany
nor
its
coun
terp
artie
s w
as r
equi
red
to p
ost c
olla
tera
l for
any
gp
y
oblig
atio
n.
--------------------------------------------------------------------------------
Debt highlights/(1)/
--------------------------------------------------------------------------------
2001 2000 1999
================================================================================
Fixed-rate debt as a percent of total debt 45% 58% 70%
Weighted-average annual interest rate
of total debt 5.4 5.8 5.9
Foreign currency-denominated debt as a
percent of total debt 57 60 76
Total debt as a percent of total capitalization
(total debt and total shareholders' equity) 48 48 43
================================================================================
(1)
All
perc
enta
ges
are
as o
f D
ecem
ber
31, e
xcep
t for
the
wei
ghte
d-av
erag
e an
nual
inte
rest
rat
e, w
hich
is f
or th
e ye
ar.
Moo
dy's
, Sta
ndar
d &
Poo
r's a
nd F
itch
curr
ently
rat
e M
cDon
ald'
s de
bt A
a3, A
+ a
nd A
A, r
espe
ctiv
ely.
A s
tron
g ra
ting
is im
port
ant t
o th
e C
ompa
ny b
ecau
se o
f its
glo
bal d
evel
opm
ent p
lans
. The
Com
pany
has
not e
xper
ienc
ed, a
nd d
oes
not e
xpec
t to
expe
rien
ce, d
iffi
culty
in o
btai
ning
fin
anci
ng o
r in
ref
inan
cing
exi
stin
g de
bt. C
erta
in o
f th
e C
ompa
ny's
deb
t obl
igat
ions
con
tain
cro
ss-d
efau
lt pr
ovis
ions
and
rest
rict
ions
on
Com
pany
and
sub
sidi
ary
mor
tgag
es a
nd th
e lo
ng-t
erm
deb
t of
cert
ain
subs
idia
ries
. The
re a
re n
o pr
ovis
ions
in th
e C
ompa
ny's
deb
t obl
igat
ions
that
wou
ld a
ccel
erat
e re
paym
ent o
f de
bt a
s a
resu
lt of
a c
hang
e in
cre
dit r
atin
gs.
At y
ear-
end
2001
, the
Com
pany
had
$1.
3 bi
llion
ava
ilabl
e un
der
com
mitt
ed li
ne o
f cr
edit
agre
emen
ts (
see
debt
fin
anci
ng n
ote
on p
age
31)
as w
ell a
s $1
.2 b
illio
n un
der
a U
.S. s
helf
reg
istr
atio
n an
d $1
.1bi
llion
und
er a
Eur
o M
ediu
m-T
erm
Not
es p
rogr
am f
or f
utur
e de
bt is
suan
ce. I
n ea
rly
2002
, the
Com
pany
issu
ed $
450
mill
ion
of M
ediu
m-T
erm
Not
es (
$150
mill
ion
at a
rat
e of
4.1
5% d
ue 2
005
and
$300
mill
ion
at a
rat
e of
5.7
5% d
ue 2
012)
und
er th
e U
.S. s
helf
reg
istr
atio
n to
pay
dow
n co
mm
erci
al p
aper
. At t
he ti
me
of th
ese
issu
ance
s, th
e C
ompa
ny e
nter
ed in
to in
tere
st-r
ate
exch
ange
agr
eem
ents
to c
onve
rtfi
xed-
rate
inte
rest
pay
men
ts o
n th
e de
bt to
a f
loat
ing-
rate
bas
ed o
n L
IBO
R. A
lso
in e
arly
200
2, th
e C
ompa
ny r
edee
med
$50
mill
ion
of 6
.0%
Med
ium
-Ter
m N
otes
ori
gina
lly d
ue 2
008.
The
not
es w
ere
rede
emed
at 1
00%
of
prin
cipa
l plu
s ac
crue
d in
tere
st.
The
Com
pany
man
ages
its
debt
por
tfol
io in
res
pons
e to
cha
nges
in in
tere
st r
ates
and
for
eign
cur
renc
y ra
tes
by p
erio
dica
lly r
etir
ing,
red
eem
ing
and
repu
rcha
sing
deb
t, te
rmin
atin
g ex
chan
ge a
gree
men
ts a
ndus
ing
deri
vativ
es. T
he C
ompa
ny d
oes
not u
se d
eriv
ativ
es w
ith a
leve
l of
com
plex
ity o
r w
ith a
ris
k hi
gher
than
the
expo
sure
s to
be
hedg
ed a
nd d
oes
not h
old
or is
sue
deri
vativ
es f
or tr
adin
g pu
rpos
es. A
llex
chan
ge a
gree
men
ts a
re o
ver-
the-
coun
ter
inst
rum
ents
.
The
Com
pany
act
ivel
y he
dges
sel
ecte
d cu
rren
cies
to m
inim
ize
the
cash
exp
osur
e of
for
eign
cur
renc
y ro
yalty
and
oth
er p
aym
ents
rec
eive
d in
the
U.S
. In
addi
tion,
whe
re p
ract
ical
, McD
onal
d's
rest
aura
nts
purc
hase
goo
ds a
nd s
ervi
ces
in lo
cal c
urre
ncie
s re
sulti
ng in
nat
ural
hed
ges,
and
the
Com
pany
typi
cally
fin
ance
s in
loca
l cur
renc
ies,
cre
atin
g ec
onom
ic h
edge
s.
The
Com
pany
's e
xpos
ure
is d
iver
sifi
ed a
mon
g a
broa
d ba
sket
of
curr
enci
es. A
t yea
r-en
d 20
01 a
nd 2
000,
ass
ets
in h
yper
infl
atio
nary
mar
kets
wer
e pr
inci
pally
fin
ance
d in
U.S
. Dol
lars
. The
Com
pany
'sla
rges
t net
ass
et e
xpos
ures
(de
fine
d as
for
eign
cur
renc
y as
sets
less
for
eign
cur
renc
y lia
bilit
ies)
at y
ear
end
wer
e as
fol
low
s:
Foreign currency exposures
--------------------------------------------------------------------------------
IN MILLIONS OF U.S. DOLLARS 2001 2000
================================================================================
Euro $1,251 $1,185
British Pounds Sterling 786 638
Canadian Dollars 738 763
Australian Dollars 516 329
Brazilian Reais 490 491
================================================================================
gp
y
The
Com
pany
pre
pare
d se
nsiti
vity
ana
lyse
s of
its
fina
ncia
l ins
trum
ents
to d
eter
min
e th
e im
pact
of
hypo
thet
ical
cha
nges
in in
tere
st r
ates
and
for
eign
cur
renc
y ex
chan
ge r
ates
on
the
Com
pany
's r
esul
ts o
fop
erat
ions
, cas
h fl
ows
and
the
fair
val
ue o
f its
fin
anci
al in
stru
men
ts. T
he in
tere
st-r
ate
anal
ysis
ass
umed
a o
ne p
erce
ntag
e po
int a
dver
se c
hang
e in
inte
rest
rat
es o
n al
l fin
anci
al in
stru
men
ts b
ut d
id n
otco
nsid
er th
e ef
fect
s of
the
redu
ced
leve
l of
econ
omic
act
ivity
that
cou
ld e
xist
in s
uch
an e
nvir
onm
ent.
The
for
eign
cur
renc
y ra
te a
naly
sis
assu
med
that
eac
h fo
reig
n cu
rren
cy r
ate
wou
ld c
hang
e by
10%
inth
e sa
me
dire
ctio
n re
lativ
e to
the
U.S
. Dol
lar
on a
ll fi
nanc
ial i
nstr
umen
ts; h
owev
er, t
he a
naly
sis
did
not i
nclu
de th
e po
tent
ial i
mpa
ct o
n sa
les
leve
ls o
r lo
cal c
urre
ncy
pric
es o
r th
e ef
fect
of
fluc
tuat
ing
curr
enci
es o
n th
e C
ompa
ny's
ant
icip
ated
for
eign
cur
renc
y ro
yalti
es a
nd o
ther
pay
men
ts r
ecei
ved
in th
e U
.S. B
ased
on
the
resu
lts o
f th
ese
anal
yses
of
the
Com
pany
's f
inan
cial
inst
rum
ents
, nei
ther
a o
nepe
rcen
tage
poi
nt a
dver
se c
hang
e in
inte
rest
rat
es f
rom
200
1 le
vels
nor
a 1
0% a
dver
se c
hang
e in
for
eign
cur
renc
y ra
tes
from
200
1 le
vels
wou
ld m
ater
ially
aff
ect t
he C
ompa
ny's
res
ults
of
oper
atio
ns, c
ash
flow
s or
the
fair
val
ue o
f its
fin
anci
al in
stru
men
ts.
CO
NT
RA
CT
UA
L O
BL
IGA
TIO
NS
AN
D C
OM
MIT
ME
NT
S
The
Com
pany
has
long
-ter
m c
ontr
actu
al o
blig
atio
ns p
rim
arily
in th
e fo
rm o
f le
ase
and
debt
obl
igat
ions
. In
addi
tion,
the
Com
pany
has
long
-ter
m c
ontr
actu
al r
even
ue a
nd c
ash
flow
str
eam
s th
at r
elat
e to
its
fran
chis
e ar
rang
emen
ts. C
ash
prov
ided
by
oper
atio
ns (
incl
udin
g ca
sh p
rovi
ded
by th
ese
fran
chis
e ar
rang
emen
ts)
alon
g w
ith o
ur b
orro
win
g ca
paci
ty a
nd o
ther
sou
rces
of
cash
will
be
used
to s
atis
fy th
eob
ligat
ions
. The
fol
low
ing
tabl
e su
mm
ariz
es th
e C
ompa
ny's
con
trac
tual
obl
igat
ions
and
thei
r ag
greg
ate
mat
uriti
es a
s w
ell a
s fu
ture
min
imum
con
trac
tual
ren
t pay
men
ts d
ue to
the
Com
pany
und
er e
xist
ing
fran
chis
e ar
rang
emen
ts a
s of
Dec
embe
r 31
, 200
1 (s
ee d
iscu
ssio
ns o
f ca
sh f
low
s, f
inan
cial
pos
ition
and
cap
ital r
esou
rces
in
McDonald's Corporation 19
Management's discussion and analysis as well as the Notes to the consolidated
financial statements for further details):
--------------------------------------------------------------------------------
Contractual cash flows
--------------------------------------------------------------------------------
Outflows Inflows
----------------------------- ----------------------
Operating Debt Minimum rent under
IN MILLIONS leases obligations/(1)/ franchise arrangements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2002 $ 841 $ 363 $ 1,669
2003 815 796 1,651
2004 779 1,621 1,624
2005 722 1,072 1,576
2006 690 844 1,532
Thereafter 6,069 4,128 13,368
--------------------------------------------------------------------------------
Total $9,916 $8,824 $21,420
================================================================================
(1)
The
mat
uriti
es r
efle
ct r
ecla
ssif
icat
ions
of
shor
t-te
rm o
blig
atio
ns to
long
-ter
m o
blig
atio
ns o
f $7
50 m
illio
n in
200
4 an
d $5
00 m
illio
n in
200
7 as
they
are
sup
port
ed b
y lo
ng-t
erm
line
of
cred
it ag
reem
ents
.D
ebt o
blig
atio
ns d
o no
t inc
lude
$94
mill
ion
of f
air
valu
e ad
just
men
ts r
ecor
ded
as a
res
ult o
f SF
AS
No.
133,
Acc
ount
ing
for
Der
ivat
ive
Inst
rum
ents
and
Hed
ging
Act
iviti
es.
In a
dditi
on to
long
-ter
m o
blig
atio
ns, t
he C
ompa
ny h
ad c
erta
in o
ther
com
mitm
ents
at D
ecem
ber
31, 2
001.
In
conn
ectio
n w
ith it
s sh
are
repu
rcha
se p
rogr
am, t
he C
ompa
ny h
ad 1
2.2
mill
ion
com
mon
equ
itypu
t opt
ions
out
stan
ding
at D
ecem
ber
31, 2
001,
with
a to
tal e
xerc
ise
pric
e of
$35
0 m
illio
n, o
f w
hich
3.0
mill
ion
wer
e ex
erci
sed
in F
ebru
ary
2002
at a
cos
t of
$87
mill
ion.
The
rem
aini
ng o
ptio
ns e
xpir
e at
vari
ous
date
s th
roug
h N
ovem
ber
2002
with
exe
rcis
e pr
ices
bet
wee
n $2
6.37
and
$30
.23.
In
addi
tion,
the
Com
pany
ent
ered
into
equ
ity f
orw
ard
cont
ract
s, in
con
nect
ion
with
its
shar
e re
purc
hase
pro
gram
,to
talin
g $1
51 m
illio
n fo
r 5.
5 m
illio
n sh
ares
that
set
tled
in M
arch
200
2. T
he C
ompa
ny a
lso
guar
ante
ed c
erta
in a
ffili
ate
and
othe
r lo
ans
tota
ling
$148
mill
ion.
Oth
er m
atte
rs
CR
ITIC
AL
AC
CO
UN
TIN
G P
OL
ICIE
S A
ND
EST
IMA
TE
S
gp
y
Man
agem
ent's
dis
cuss
ion
and
anal
ysis
of
fina
ncia
l con
ditio
n an
d re
sults
of
oper
atio
ns a
re b
ased
upo
n th
e C
ompa
ny's
con
solid
ated
fin
anci
al s
tate
men
ts, w
hich
hav
e be
en p
repa
red
in a
ccor
danc
e w
ithac
coun
ting
prin
cipl
es g
ener
ally
acc
epte
d in
the
U.S
. The
pre
para
tion
of th
ese
fina
ncia
l sta
tem
ents
req
uire
s th
e C
ompa
ny to
mak
e es
timat
es a
nd ju
dgm
ents
that
aff
ect t
he r
epor
ted
amou
nts
of a
sset
s,lia
bilit
ies,
rev
enue
s an
d ex
pens
es a
nd r
elat
ed d
iscl
osur
es. O
n an
ong
oing
bas
is, t
he C
ompa
ny e
valu
ates
its
estim
ates
and
judg
men
ts b
ased
on
hist
oric
al e
xper
ienc
e an
d va
riou
s ot
her
fact
ors
that
are
bel
ieve
dto
be
reas
onab
le u
nder
the
circ
umst
ance
s. A
ctua
l res
ults
may
dif
fer
from
thes
e es
timat
es u
nder
dif
fere
nt a
ssum
ptio
ns o
r co
nditi
ons.
The
Com
pany
ann
ually
rev
iew
s its
fin
anci
al r
epor
ting
and
disc
losu
re p
ract
ices
and
acc
ount
ing
polic
ies
to e
nsur
e th
at it
s fi
nanc
ial r
epor
ting
and
disc
losu
res
prov
ide
accu
rate
and
tran
spar
ent i
nfor
mat
ion
rela
tive
to th
e cu
rren
t eco
nom
ic a
nd b
usin
ess
envi
ronm
ent.
The
Com
pany
bel
ieve
s th
at o
f its
sig
nifi
cant
acc
ount
ing
polic
ies
(see
sum
mar
y of
sig
nifi
cant
acc
ount
ing
polic
ies
mor
e fu
lly d
escr
ibed
on
page
s26
-28)
, the
fol
low
ing
polic
ies
invo
lve
a hi
gher
deg
ree
of ju
dgm
ent a
nd/o
r co
mpl
exity
.
Prop
erty
and
equ
ipm
ent
Prop
erty
and
equ
ipm
ent a
re d
epre
ciat
ed o
r am
ortiz
ed o
ver
thei
r us
eful
live
s ba
sed
on m
anag
emen
t's e
stim
ates
of
the
peri
od o
ver
whi
ch th
e as
sets
will
gen
erat
e re
venu
e. T
he C
ompa
ny p
erio
dica
lly r
evie
ws
thes
e liv
es r
elat
ive
to p
hysi
cal f
acto
rs, e
cono
mic
fac
tors
and
indu
stry
tren
ds.
Ass
et im
pair
men
t
In a
sses
sing
the
reco
vera
bilit
y of
the
Com
pany
's f
ixed
ass
ets,
goo
dwill
and
oth
er n
on-c
urre
nt a
sset
s, th
e C
ompa
ny c
onsi
ders
cha
nges
in e
cono
mic
con
ditio
ns a
nd m
akes
ass
umpt
ions
reg
ardi
ng e
stim
ated
futu
re c
ash
flow
s an
d ot
her
fact
ors.
If
thes
e es
timat
es o
r th
eir
rela
ted
assu
mpt
ions
cha
nge
in th
e fu
ture
, the
Com
pany
may
be
requ
ired
to r
ecor
d im
pair
men
t cha
rges
.
Res
truc
turi
ng a
nd li
tigat
ion
accr
uals
In 2
001,
the
Com
pany
rec
orde
d a
$200
mill
ion
pret
ax s
peci
al c
harg
e re
late
d to
str
ateg
ic c
hang
es a
nd o
ngoi
ng r
esta
uran
t ini
tiativ
es in
the
U.S
. and
cer
tain
inte
rnat
iona
l mar
kets
. The
acc
rual
rec
orde
din
clud
ed e
stim
ates
per
tain
ing
to e
mpl
oyee
term
inat
ion
cost
s an
d re
mai
ning
leas
e ob
ligat
ions
for
clo
sed
faci
litie
s. A
lthou
gh w
e do
not
ant
icip
ate
sign
ific
ant c
hang
es, t
he a
ctua
l cos
ts m
ay d
iffe
r fr
om th
ese
estim
ates
.
From
tim
e to
tim
e, th
e C
ompa
ny is
sub
ject
to p
roce
edin
gs, l
awsu
its a
nd o
ther
cla
ims
prim
arily
rel
ated
to f
ranc
hise
es, s
uppl
iers
, em
ploy
ees,
cus
tom
ers
and
com
petit
ors.
We
are
requ
ired
to a
sses
s th
elik
elih
ood
of a
ny a
dver
se ju
dgm
ents
or
outc
omes
to th
ese
mat
ters
as
wel
l as
pote
ntia
l ran
ges
of p
roba
ble
loss
es. A
det
erm
inat
ion
of th
e am
ount
of
accr
ual r
equi
red,
if a
ny, f
or th
ese
cont
inge
ncie
s is
mad
eaf
ter
care
ful a
naly
sis
of e
ach
mat
ter.
The
req
uire
d ac
crua
l may
cha
nge
in th
e fu
ture
due
to n
ew d
evel
opm
ents
in e
ach
mat
ter
or c
hang
es in
app
roac
h su
ch a
s a
chan
ge in
set
tlem
ent s
trat
egy
in d
ealin
g w
ithth
ese
mat
ters
. The
Com
pany
doe
s no
t bel
ieve
that
any
suc
h m
atte
r w
ill h
ave
a m
ater
ial a
dver
se e
ffec
t on
its f
inan
cial
con
ditio
n or
res
ults
of
oper
atio
ns.
Fina
ncia
l ins
trum
ents
The
Com
pany
's d
eriv
ativ
es a
re r
ecor
ded
in th
e C
onso
lidat
ed b
alan
ce s
heet
at f
air
valu
e. F
air
valu
e is
est
imat
ed u
sing
var
ious
pri
cing
mod
els
or d
isco
unte
d ca
sh f
low
ana
lyse
s th
at in
corp
orat
e qu
oted
mar
ket p
rice
s. T
he u
se o
f di
ffer
ent p
rici
ng m
odel
s or
ass
umpt
ions
cou
ld p
rodu
ce d
iffe
rent
res
ults
.
Inco
me
taxe
s
The
Com
pany
rec
ords
a v
alua
tion
allo
wan
ce to
red
uce
its d
efer
red
tax
asse
ts if
it is
mor
e lik
ely
than
not
that
som
e po
rtio
n or
all
of th
e de
ferr
ed a
sset
s w
ill n
ot b
e re
aliz
ed. W
hile
the
Com
pany
has
cons
ider
ed f
utur
e ta
xabl
e in
com
e an
d on
goin
g fe
asib
le ta
x st
rate
gies
in a
sses
sing
the
need
for
the
valu
atio
n al
low
ance
, if
thes
e es
timat
es a
nd a
ssum
ptio
ns c
hang
e in
the
futu
re, t
he C
ompa
ny m
ay b
ere
quir
ed to
adj
ust i
ts v
alua
tion
allo
wan
ce. T
his
coul
d re
sult
in a
cha
rge
to, o
r an
incr
ease
in, i
ncom
e in
the
peri
od s
uch
dete
rmin
atio
n is
mad
e.
20 M
cDon
ald'
s C
orpo
ratio
n
Def
erre
d U
.S. i
ncom
e ta
xes
have
not
bee
n re
cord
ed f
or b
asis
dif
fere
nces
tota
ling
$2.7
bill
ion
rela
ted
to in
vest
men
ts in
cer
tain
for
eign
sub
sidi
arie
s or
aff
iliat
es. T
he b
asis
dif
fere
nces
con
sist
pri
mar
ily o
fun
dist
ribu
ted
earn
ings
con
side
red
perm
anen
tly in
vest
ed in
the
busi
ness
es. I
f m
anag
emen
t's in
tent
ions
cha
nge
in th
e fu
ture
, def
erre
d ta
xes
may
nee
d to
be
prov
ided
.
In a
dditi
on, t
he C
ompa
ny o
pera
tes
with
in m
ultip
le ta
juri
sdic
tions
and
is s
ubje
ct to
aud
it in
thes
e ju
risd
ictio
ns. T
he C
ompa
ny r
ecor
ds a
ccru
als
for
the
estim
ated
out
com
es o
f th
ese
audi
ts, a
nd th
eac
crua
ls m
ay c
hang
e in
the
futu
re d
ue to
new
dev
elop
men
ts in
eac
h m
atte
r.
NE
W A
CC
OU
NT
ING
ST
AN
DA
RD
S
Goo
dwill
In J
une
2001
, the
Fin
anci
al A
ccou
ntin
g St
anda
rds
Boa
rd is
sued
SFA
S N
o.14
1, B
usin
ess
Com
bina
tions
, eff
ectiv
e fo
r ac
quis
ition
s in
itiat
ed o
n or
aft
er J
uly
1, 2
001,
and
No.
142,
Goo
dwill
and
Oth
erIn
tang
ible
Ass
ets,
eff
ectiv
e fo
r fi
scal
yea
rs b
egin
ning
aft
er D
ecem
ber
15, 2
001.
SFA
S N
o.14
1 re
quir
es th
at th
e pu
rcha
se m
etho
d of
acc
ount
ing
be u
sed
for
all b
usin
ess
com
bina
tions
initi
ated
aft
er J
une
30,
2001
, and
incl
udes
gui
danc
e on
the
initi
al r
ecog
nitio
n an
d m
easu
rem
ent o
f go
odw
ill a
nd o
ther
inta
ngib
le a
sset
s ar
isin
g fr
om b
usin
ess
com
bina
tions
. SFA
S N
o.14
2 in
dica
tes
that
goo
dwill
(an
d in
tang
ible
asse
ts d
eem
ed to
hav
e in
defi
nite
live
s) w
ill n
o lo
nger
be
amor
tized
but
will
be
subj
ect t
o an
nual
impa
irm
ent t
ests
. Oth
er in
tang
ible
ass
ets
will
con
tinue
to b
e am
ortiz
ed o
ver
thei
r us
eful
live
s.
gp
y
The
Com
pany
beg
an a
pply
ing
the
new
rul
es o
n ac
coun
ting
for
good
will
and
oth
er in
tang
ible
ass
ets
Janu
ary
1, 2
002.
App
licat
ion
of th
e no
nam
ortiz
atio
n pr
ovis
ions
of
SFA
S N
o.14
2 w
ould
hav
e in
crea
sed
2001
net
inco
me
by a
ppro
xim
atel
y $3
0 m
illio
n ($
0.02
per
sha
re)
and
is e
xpec
ted
to r
esul
t in
a si
mila
r in
crea
se in
200
2. T
he C
ompa
ny is
per
form
ing
the
firs
t of
requ
ired
goo
dwill
impa
irm
ent t
ests
as
ofJa
nuar
y 1,
200
2, a
nd e
xpec
ts to
rec
ord
a no
n-ca
sh c
harg
e of
abo
ut $
100
mill
ion
afte
r ta
x ($
0.08
per
sha
re),
pri
mar
ily in
cer
tain
Lat
in A
mer
ican
mar
kets
. The
impa
irm
ent c
harg
e re
quir
ed to
be
reco
gniz
edup
on a
dopt
ion
of S
FAS
No.
142
will
be
refl
ecte
d as
the
cum
ulat
ive
effe
ct o
f a
chan
ge in
acc
ount
ing
prin
cipl
e in
the
firs
t qua
rter
of
2002
.
Lon
g-liv
ed a
sset
s
In A
ugus
t 200
1, th
e Fi
nanc
ial A
ccou
ntin
g St
anda
rds
Boa
rd is
sued
SFA
S N
o.14
4, A
ccou
ntin
g fo
r th
e Im
pair
men
t or
Dis
posa
l of
Lon
g-L
ived
Ass
ets,
whi
ch p
rovi
des
addi
tiona
l gui
danc
e on
the
fina
ncia
lac
coun
ting
and
repo
rtin
g fo
r th
e im
pair
men
t or
disp
osal
of
long
-liv
ed a
sset
s. T
he C
ompa
ny a
dopt
ed th
e ne
w r
ules
as
of J
anua
ry 1
, 200
2, a
nd th
e ad
optio
n w
ill n
ot h
ave
a m
ater
ial e
ffec
t on
the
Com
pany
'sre
sults
of
oper
atio
ns o
r fi
nanc
ial p
ositi
on.
EF
FE
CT
S O
F C
HA
NG
ING
PR
ICE
S--I
NF
LA
TIO
N
The
Com
pany
has
dem
onst
rate
d an
abi
lity
to m
anag
e in
flat
iona
ry c
ost i
ncre
ases
eff
ectiv
ely.
Thi
s is
bec
ause
of
rapi
d in
vent
ory
turn
over
, the
abi
lity
to a
djus
t men
u pr
ices
, cos
t con
trol
s an
d su
bsta
ntia
lpr
oper
ty h
oldi
ngs-
-man
y of
whi
ch a
re a
t fix
ed c
osts
and
par
tly f
inan
ced
by d
ebt m
ade
less
exp
ensi
ve b
y in
flat
ion.
In
hype
rinf
latio
nary
mar
kets
, men
u bo
ard
pric
es ty
pica
lly a
re a
djus
ted
to k
eep
pace
with
infl
atio
n, m
itiga
ting
the
effe
ct o
n re
port
ed r
esul
ts.
EU
RO
CO
NV
ER
SIO
N
Tw
elve
mem
ber
coun
trie
s of
the
Eur
opea
n U
nion
hav
e es
tabl
ishe
d fi
xed
conv
ersi
on r
ates
bet
wee
n th
eir
exis
ting
curr
enci
es (
"leg
acy
curr
enci
es")
and
one
com
mon
cur
renc
y, th
e E
uro.
Sin
ce J
anua
ry 1
,20
02, t
he n
ew E
uro-
deno
min
ated
not
es a
nd c
oins
are
in c
ircu
latio
n, a
nd le
gacy
cur
renc
ies
have
bee
n w
ithdr
awn
from
cir
cula
tion.
The
Com
pany
has
res
taur
ants
loca
ted
in a
ll m
embe
r co
untr
ies,
and
the
conv
ersi
on to
the
Eur
o ha
s el
imin
ated
cur
renc
y ex
chan
ge r
ate
risk
for
tran
sact
ions
am
ong
the
mem
ber
coun
trie
s, w
hich
for
the
Com
pany
pri
mar
ily c
onsi
sts
of p
aym
ents
to s
uppl
iers
. In
addi
tion,
bec
ause
the
Com
pany
use
s fo
reig
n-de
nom
inat
ed d
ebt a
nd d
eriv
ativ
es to
mee
t its
fin
anci
ng r
equi
rem
ents
and
to r
educ
e its
for
eign
cur
renc
y ri
sks,
cer
tain
of
thes
e fi
nanc
ial i
nstr
umen
ts a
re d
enom
inat
ed in
Eur
o. T
heC
ompa
ny s
ucce
ssfu
lly a
ddre
ssed
all
issu
es in
volv
ed w
ith c
onve
rtin
g to
the
new
cur
renc
y, a
nd th
e co
nver
sion
did
not
hav
e a
sign
ific
ant i
mpa
ct o
n its
fin
anci
al p
ositi
on, r
esul
ts o
f op
erat
ions
or
cash
flo
ws.
FO
RW
AR
D-L
OO
KIN
G S
TA
TE
ME
NT
S
Cer
tain
for
war
d-lo
okin
g st
atem
ents
are
incl
uded
in th
is r
epor
t. T
hey
use
such
wor
ds a
s "m
ay,"
"w
ill,"
"ex
pect
," "
belie
ve,"
"pl
an"
and
othe
r si
mila
r te
rmin
olog
y. T
hese
sta
tem
ents
ref
lect
man
agem
ent's
curr
ent e
xpec
tatio
ns r
egar
ding
fut
ure
even
ts a
nd o
pera
ting
perf
orm
ance
and
spe
ak o
nly
as o
f th
e da
te o
f th
is r
epor
t. T
hese
for
war
d-lo
okin
g st
atem
ents
invo
lve
a nu
mbe
r of
ris
ks a
nd u
ncer
tain
ties.
The
follo
win
g ar
e so
me
of th
e fa
ctor
s th
at c
ould
cau
se a
ctua
l res
ults
to d
iffe
r m
ater
ially
fro
m th
ose
expr
esse
d in
or
unde
rlyi
ng o
ur f
orw
ard-
look
ing
stat
emen
ts: t
he e
ffec
tiven
ess
of o
pera
ting
initi
ativ
es a
ndad
vert
isin
g an
d pr
omot
iona
l eff
orts
as
wel
l as
chan
ges
in: g
loba
l and
loca
l bus
ines
s an
d ec
onom
ic c
ondi
tions
; cur
renc
y ex
chan
ge a
nd in
tere
st r
ates
; foo
d, la
bor
and
othe
r op
erat
ing
cost
s; p
oliti
cal o
rec
onom
ic in
stab
ility
in lo
cal m
arke
ts; c
ompe
titio
n; c
onsu
mer
pre
fere
nces
, spe
ndin
g pa
ttern
s an
d de
mog
raph
ic tr
ends
; leg
isla
tion
and
gove
rnm
enta
l reg
ulat
ion;
and
acc
ount
ing
polic
ies
and
prac
tices
. The
fore
goin
g lis
t of
impo
rtan
t fac
tors
is n
ot e
xclu
sive
.
The
Com
pany
und
erta
kes
no o
blig
atio
n to
pub
licly
upd
ate
or r
evis
e an
y fo
rwar
d-lo
okin
g st
atem
ents
, whe
ther
as
a re
sult
of n
ew in
form
atio
n, f
utur
e ev
ents
or
othe
rwis
e.
Item
7A
. Qua
ntit
ativ
e an
d qu
alit
ativ
e di
sclo
sure
s ab
out
mar
ket
risk
Qua
ntita
tive
and
qual
itativ
e di
sclo
sure
s ab
out m
arke
t ris
k ar
e in
clud
ed in
Par
t II,
Ite
m 7
, pag
es 1
7-18
of
this
For
m 1
0-K
.
McD
onal
d's
Cor
pora
tion
21
Item
8. F
inan
cial
sta
tem
ents
and
sup
plem
enta
ry d
ata
gp
y
Index to consolidated financial statements
====================================================================================================================================
PAGE REFERENCE
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Consolidated statement of income for each of the three years in the period ended December 31, 2001
22Consolidated balance sheet at December 31, 2001 and 2000
23Consolidated statement of cash flows for each of the three years in the period ended December 31, 2001
24Consolidated statement of shareholders' equity for each of the three years in the period ended December 31,
2001 25
Notes to consolidated financial statements
26Quarterly results (unaudited)
35Management's report
36Report of independent auditors
36------------------------------------------------------------------------------------------------------------------------------------
22 M
cDon
ald'
s C
orpo
ratio
n
Con
solid
ated
sta
tem
ent o
f in
com
e
===================================================================================================================
IN MILLIONS, EXCEPT PER SHARE DATA Years ended December 31, 2001 2000
1999
===================================================================================================================
Revenues
Sales by Company-operated restaurants $11,040.7 $10,467.0 $
9,512.5
Revenues from franchised and affiliated restaurants 3,829.3 3,776.0
3,746.8
-------------------------------------------------------------------------------------------------------------------
Total revenues 14,870.0 14,243.0
13,259.3
-------------------------------------------------------------------------------------------------------------------
Operating costs and expenses
Food and packaging 3,802.1 3,557.1
3,204.6
Payroll and employee benefits 2,901.2 2,690.2
2,418.3
Occupancy and other operating expenses 2,750.4 2,502.8
gp
y
2,206.7
-------------------------------------------------------------------------------------------------------------------
Total Company-operated restaurant expenses 9,453.7 8,750.1
7,829.6
-------------------------------------------------------------------------------------------------------------------
Franchised restaurants-occupancy expenses 800.2 772.3
737.7
Selling, general & administrative expenses 1,661.7 1,587.3
1,477.6
Special charge-global change initiatives 200.0
Other operating (income) expense, net 57.4 (196.4)
(105.2)
-------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 12,173.0 10,913.3
9,939.7
-------------------------------------------------------------------------------------------------------------------
Operating income 2,697.0 3,329.7
3,319.6
-------------------------------------------------------------------------------------------------------------------
Interest expense-net of capitalized interest of $15.2, $16.3 and $14.3 452.4 429.9
396.3
McDonald's Japan IPO gain (137.1)
Nonoperating expense, net 52.0 17.5
39.2
-------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 2,329.7 2,882.3
2,884.1
-------------------------------------------------------------------------------------------------------------------
Provision for income taxes 693.1 905.0
936.2
-------------------------------------------------------------------------------------------------------------------
Net income $ 1,636.6 $ 1,977.3 $
1,947.9
===================================================================================================================
Net income per common share $ 1.27 $ 1.49 $
1.44
Net income per common share-diluted $ 1.25 $ 1.46 $
1.39
-------------------------------------------------------------------------------------------------------------------
Dividends per common share $ .23 $ .22 $
.20
-------------------------------------------------------------------------------------------------------------------
Weighted-average shares 1,289.7 1,323.2
1,355.3
Weighted-average shares-diluted 1,309.3 1,356.5
1,404.2
===================================================================================================================
See notes to consolidated financial statements.
gp
y
McD
onal
d's
Cor
pora
tion
23
Consolidated balance sheet
=============================================================================================================
IN MILLIONS, EXCEPT PER SHARE DATA December 31, 2001 2000
=============================================================================================================
Assets
Current assets
Cash and equivalents $ 418.1 $ 421.7
Accounts and notes receivable 881.9 796.5
Inventories, at cost, not in excess of market 105.5 99.3
Prepaid expenses and other current assets 413.8 344.9
-------------------------------------------------------------------------------------------------------------
Total current assets 1,819.3 1,662.4
-------------------------------------------------------------------------------------------------------------
Other assets
Investments in and advances to affiliates 990.2 824.2
Goodwill, net 1,419.8 1,278.2
Miscellaneous 1,015.7 871.1
-------------------------------------------------------------------------------------------------------------
Total other assets 3,425.7 2,973.5
-------------------------------------------------------------------------------------------------------------
Property and equipment
Property and equipment, at cost 24,106.0 23,569.0
Accumulated depreciation and amortization (6,816.5) (6,521.4)
-------------------------------------------------------------------------------------------------------------
Net property and equipment 17,289.5 17,047.6
-------------------------------------------------------------------------------------------------------------
Total assets $22,534.5 $21,683.5
=============================================================================================================
Liabilities and shareholders' equity
Current liabilities
Notes payable $ 184.9 $ 275.5
Accounts payable 689.5 684.9
Income taxes 20.4 92.2
Other taxes 180.4 195.5
Accrued interest 170.6 149.9
Other accrued liabilities 824.9 608.4
Current maturities of long-term debt 177.6 354.5
-------------------------------------------------------------------------------------------------------------
Total current liabilities 2,248.3 2,360.9
-------------------------------------------------------------------------------------------------------------
Long-term debt 8,555.5 7,843.9
Other long-term liabilities and minority interests 629.3 489.5
Deferred income taxes 1,112.2 1,084.9
Common equity put options and forward contracts 500.8 699.9
Shareholders' equity
Preferred stock, no par value; authorized--165.0 million shares;
issued-none
Common stock, $.01 par value; authorized--3.5 billion shares;
gp
y
issued-1,660.6 million shares 16.6 16.6
Additional paid-in capital 1,591.2 1,441.8
Unearned ESOP compensation (106.7) (115.0)
Retained earnings 18,608.3 17,259.4
Accumulated other comprehensive income (1,708.8) (1,287.3)
Common stock in treasury, at cost; 379.9 and 355.7 million shares (8,912.2) (8,111.1)
-------------------------------------------------------------------------------------------------------------
Total shareholders' equity 9,488.4 9,204.4
-------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $22,534.5 $21,683.5
=============================================================================================================
See
note
s to
con
solid
ated
fin
anci
al s
tate
men
ts.
24 M
cDon
ald'
s C
orpo
ratio
n
Consolidated statement of cash flows
============================================================================================================
IN MILLIONS Years ended December 31, 2001 2000 1999
============================================================================================================
Operating activities
Net income $ 1,636.6 $ 1,977.3 $ 1,947.9
Adjustments to reconcile to cash provided by operations
Depreciation and amortization 1,086.3 1,010.7 956.3
Deferred income taxes (87.6) 60.5 52.9
Changes in operating working capital items
Accounts receivable (104.7) (67.2) (81.9)
Inventories, prepaid expenses and other current assets (62.9) (29.6) (47.7)
Accounts payable 10.2 89.7 (23.9)
Taxes and other liabilities 160.0 (45.8) 270.4
Other 50.4 (244.1) (65.1)
------------------------------------------------------------------------------------------------------------
Cash provided by operations 2,688.3 2,751.5 3,008.9
------------------------------------------------------------------------------------------------------------
Investing activities
Property and equipment expenditures (1,906.2) (1,945.1) (1,867.8)
Purchases of restaurant businesses (331.6) (425.5) (340.7)
Sales of restaurant businesses and property 375.9 302.8 262.4
Other (206.3) (144.8) (315.7)
------------------------------------------------------------------------------------------------------------
Cash used for investing activities (2,068.2) (2,212.6) (2,261.8)
------------------------------------------------------------------------------------------------------------
Financing activities
Net short-term borrowings (repayments) (248.0) 59.1 116.7
Long-term financing issuances 1,694.7 2,381.3 902.5
Long-term financing repayments (919.4) (761.9) (682.8)
Treasury stock purchases (1,068.1) (2,023.4) (891.5)
Common stock dividends (287.7) (280.7) (264.7)
gp
y
Other 204.8 88.9 193.0
------------------------------------------------------------------------------------------------------------
Cash used for financing activities (623.7) (536.7) (626.8)
------------------------------------------------------------------------------------------------------------
Cash and equivalents increase (decrease) (3.6) 2.2 120.3
------------------------------------------------------------------------------------------------------------
Cash and equivalents at beginning of year 421.7 419.5 299.2
------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $ 418.1 $ 421.7 $ 419.5
============================================================================================================
Supplemental cash flow disclosures
Interest paid $ 446.9 $ 469.7 $ 411.5
Income taxes paid 773.8 854.2 642.2
============================================================================================================
See
note
s to
con
solid
ated
fin
anci
al s
tate
men
ts.
McD
onal
d's
Cor
pora
tion
25
Consolidated statement of shareholders' equity
===================================================================================================================================
Accumulated other
comprehensive income
--------------------
Common Stock Addi- Unearned Deferred Foreign
Common stock Total
issued tional ESOP hedging currency
in treasury share-
IN MILLIONS, ------------- paid-in compen- Retained adjust- trans-
----------------- holders'
EXCEPT PER SHARE DATA Shares Amount capital sation earnings ment lation Shares
Amount equity
===================================================================================================================================
Balance at December 31,1998 1,660.6 $16.6 $ 989.2 $ (148.7) $13,879.6 $ -- $ (522.5) (304.4)
$(4,749.5) $9,464.7
-----------------------------------------------------------------------------------------------------------------------------------
Net income 1,947.9
1,947.9
-----------------------------------------------------------------------------------------------------------------------------------
Translation adjustments
(including taxes of $53.5) (364.3)
(364.3)
-----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
1,583.6
-----------------------------------------------------------------------------------------------------------------------------------
Common stock cash dividends
($.20 per share) (264.7)
(264.7)
gp
y
-----------------------------------------------------------------------------------------------------------------------------------
ESOP loan payment 15.8
15.8
-----------------------------------------------------------------------------------------------------------------------------------
Treasury stock purchases (24.2)
(932.7) (932.7)
-----------------------------------------------------------------------------------------------------------------------------------
Common equity put option
issuances and expirations, net
(665.9) (665.9)
-----------------------------------------------------------------------------------------------------------------------------------
Stock option exercises and other
(including tax benefits of $185.3) 299.1 (0.4) 18.8
139.6 438.3
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 1,660.6 16.6 1,288.3 (133.3) 15,562.8 -- (886.8) (309.8)
(6,208.5) 9,639.1
===================================================================================================================================
Net income 1,977.3
1,977.3
-----------------------------------------------------------------------------------------------------------------------------------
Translation adjustments
(including taxes of $65.1) (400.5)
(400.5)
-----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
1,576.8
-----------------------------------------------------------------------------------------------------------------------------------
Common stock cash dividends
($.22 per share) (280.7)
(280.7)
-----------------------------------------------------------------------------------------------------------------------------------
ESOP loan payment 20.1
20.1
-----------------------------------------------------------------------------------------------------------------------------------
Treasury stock purchases (56.7)
(2,002.2) (2,002.2)
-----------------------------------------------------------------------------------------------------------------------------------
Common equity put option
issuances and expirations, net
25.5 25.5
-----------------------------------------------------------------------------------------------------------------------------------
Stock option exercises and other
(including tax benefits of $80.3) 153.5 (1.8) 10.8
74.1 225.8
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 1,660.6 16.6 1,441.8 (115.0) 17,259.4 -- (1,287.3) (355.7)
(8,111.1) 9,204.4
===================================================================================================================================
Net income 1,636.6
1,636.6
-----------------------------------------------------------------------------------------------------------------------------------
gp
y
Translation adjustments
(including taxes of $65.7) (412.2)
(412.2)
-----------------------------------------------------------------------------------------------------------------------------------
SFAS No. 133 transition adjustment
(including tax benefits of $9.2) (17.0)
(17.0)
-----------------------------------------------------------------------------------------------------------------------------------
Fair value adjustments-cash flow
hedges (including taxes of $1.4) 7.7
7.7
-----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income
1,215.1
-----------------------------------------------------------------------------------------------------------------------------------
Common stock cash dividends
($.23 per share) (287.7)
(287.7)
-----------------------------------------------------------------------------------------------------------------------------------
ESOP loan payment 8.0
8.0
-----------------------------------------------------------------------------------------------------------------------------------
Treasury stock purchases (36.1)
(1,090.2) (1,090.2)
-----------------------------------------------------------------------------------------------------------------------------------
Common equity put option
issuances and expirations, net
and forward contracts
199.2 199.2
-----------------------------------------------------------------------------------------------------------------------------------
Stock option exercises and other
(including tax benefits of $70.0) 149.4 0.3 11.9
89.9 239.6
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001 1,660.6 $16.6 $1,591.2 $ (106.7) $18,608.3 $ (9.3) $(1,699.5) (379.9)
$(8,912.2) $9,488.4
===================================================================================================================================
See
note
s to
con
solid
ated
fin
anci
al s
tate
men
ts.
26 M
cDon
ald'
s C
orpo
ratio
n
Not
es to
con
solid
ated
fin
anci
al s
tate
men
ts
Sum
mar
y of
sig
nifi
cant
acc
ount
ing
polic
ies
NA
TU
RE
OF
BU
SIN
ESS
The
Com
pany
ope
rate
s in
the
food
ser
vice
indu
stry
and
pri
mar
ily o
pera
tes
quic
k-se
rvic
e re
stau
rant
bus
ines
ses
unde
r th
e M
cDon
ald'
s br
and.
To
capt
ure
addi
tiona
l mea
l occ
asio
ns, t
he C
ompa
ny o
pera
tes
othe
r re
stau
rant
con
cept
s un
der
its P
artn
er B
rand
s: A
rom
a C
afe,
Bos
ton
Mar
ket,
Chi
potle
and
Don
atos
Piz
zeri
a. I
n ad
ditio
n, th
e C
ompa
ny h
as a
min
ority
ow
ners
hip
in P
ret A
Man
ger.
In
four
th q
uart
er
gp
y
2001
, the
Com
pany
app
rove
d a
plan
to d
ispo
se o
f its
Aro
ma
Caf
e bu
sine
ss in
the
U.K
. and
exp
ects
to c
ompl
ete
the
sale
in th
e fi
rst h
alf
of 2
002.
All
rest
aura
nts
are
oper
ated
by
the
Com
pany
or,
und
er th
e te
rms
of f
ranc
hise
arr
ange
men
ts, b
y fr
anch
isee
s w
ho a
re in
depe
nden
t ent
repr
eneu
rs, o
r by
aff
iliat
es o
pera
ting
unde
r jo
int-
vent
ure
agre
emen
tsbe
twee
n th
e C
ompa
ny a
nd lo
cal b
usin
ess
peop
le.
CO
NSO
LID
AT
ION
The
con
solid
ated
fin
anci
al s
tate
men
ts in
clud
e th
e ac
coun
ts o
f th
e C
ompa
ny a
nd it
s su
bsid
iari
es. S
ubst
antia
lly a
ll in
vest
men
ts in
aff
iliat
es o
wne
d 50
% o
r le
ss a
re a
ccou
nted
for
by
the
equi
ty m
etho
d.
EST
IMA
TE
S IN
FIN
AN
CIA
L S
TA
TE
ME
NT
S
The
pre
para
tion
of f
inan
cial
sta
tem
ents
in c
onfo
rmity
with
acc
ount
ing
prin
cipl
es g
ener
ally
acc
epte
d in
the
U.S
. req
uire
s m
anag
emen
t to
mak
e es
timat
es a
nd a
ssum
ptio
ns th
at a
ffec
t the
am
ount
s re
port
ed in
the
fina
ncia
l sta
tem
ents
and
acc
ompa
nyin
g no
tes.
Act
ual r
esul
ts c
ould
dif
fer
from
thos
e es
timat
es.
RE
VE
NU
E R
EC
OG
NIT
ION
Sale
s by
Com
pany
-ope
rate
d re
stau
rant
s ar
e re
cogn
ized
on
a ca
sh b
asis
. Rev
enue
s fr
om f
ranc
hise
d an
d af
filia
ted
rest
aura
nts
incl
ude
cont
inui
ng r
ent a
nd s
ervi
ce f
ees
as w
ell a
s in
itial
fee
s. C
ontin
uing
fee
sar
e re
cogn
ized
in th
e pe
riod
ear
ned.
Ini
tial f
ees
are
reco
gniz
ed u
pon
open
ing
of a
res
taur
ant,
whi
ch is
whe
n th
e C
ompa
ny h
as p
erfo
rmed
sub
stan
tially
all
initi
al s
ervi
ces
requ
ired
by
the
fran
chis
ear
rang
emen
t.
FO
RE
IGN
CU
RR
EN
CY
TR
AN
SLA
TIO
N
The
fun
ctio
nal c
urre
ncy
of s
ubst
antia
lly a
ll op
erat
ions
out
side
the
U.S
. is
the
resp
ectiv
e lo
cal c
urre
ncy,
exc
ept f
or a
sm
all n
umbe
r of
cou
ntri
es w
ith h
yper
infl
atio
nary
eco
nom
ies,
whe
re th
e fu
nctio
nal
curr
ency
is th
e U
.S. D
olla
r.
AD
VE
RT
ISIN
G C
OST
S
Prod
uctio
n co
sts
for
radi
o an
d te
levi
sion
adv
ertis
ing,
whi
ch a
re p
rim
arily
in th
e U
.S.,
are
expe
nsed
whe
n th
e co
mm
erci
als
are
initi
ally
air
ed. A
dver
tisin
g ex
pens
es in
clud
ed in
cos
ts o
f C
ompa
ny-o
pera
ted
rest
aura
nts
and
in s
ellin
g, g
ener
al &
adm
inis
trat
ive
expe
nses
wer
e (i
n m
illio
ns):
200
1-$6
00.9
; 200
0-$5
95.3
; 199
9-$5
22.9
.
STO
CK
-BA
SED
CO
MP
EN
SAT
ION
The
Com
pany
acc
ount
s fo
r st
ock
optio
ns a
s pr
escr
ibed
by
Acc
ount
ing
Prin
cipl
es B
oard
Opi
nion
No.
25 a
nd in
clud
es p
ro f
orm
a in
form
atio
n in
the
stoc
k op
tions
not
e, a
s pr
ovid
ed b
y St
atem
ent o
f Fi
nanc
ial
Acc
ount
ing
Stan
dard
s (S
FAS)
No.
123,
Acc
ount
ing
for
Stoc
k-B
ased
Com
pens
atio
n.
PR
OP
ER
TY
AN
D E
QU
IPM
EN
T
Prop
erty
and
equ
ipm
ent a
re s
tate
d at
cos
t, w
ith d
epre
ciat
ion
and
amor
tizat
ion
prov
ided
usi
ng th
e st
raig
ht-l
ine
met
hod
over
the
follo
win
g es
timat
ed u
sefu
l liv
es: b
uild
ings
-up
to 4
0 ye
ars;
leas
ehol
dim
prov
emen
ts-t
he le
sser
of
usef
ul li
ves
of a
sset
s or
leas
e te
rms
incl
udin
g op
tion
peri
ods;
and
equ
ipm
ent-
thre
e to
12
year
s.
GO
OD
WIL
L
Goo
dwill
rep
rese
nts
the
exce
ss o
f co
st o
ver
the
valu
e of
net
tang
ible
ass
ets
of a
cqui
red
rest
aura
nt b
usin
esse
s an
d, f
or a
cqui
sitio
ns p
rior
to J
uly
1, 2
001,
is a
mor
tized
usi
ng th
e st
raig
ht-l
ine
met
hod
over
an
aver
age
life
of a
bout
30
year
s.
In J
une
2001
, the
Fin
anci
al A
ccou
ntin
g St
anda
rds
Boa
rd is
sued
SFA
S N
o.14
1, B
usin
ess
Com
bina
tions
, eff
ectiv
e fo
r ac
quis
ition
s in
itiat
ed o
n or
aft
er J
uly
1, 2
001,
and
No.
142,
Goo
dwill
and
Oth
erIn
tang
ible
Ass
ets,
eff
ectiv
e fo
r fi
scal
yea
rs b
egin
ning
aft
er D
ecem
ber
15, 2
001.
SFA
S N
o.14
1 re
quir
es th
at th
e pu
rcha
se m
etho
d of
acc
ount
ing
be u
sed
for
all b
usin
ess
com
bina
tions
initi
ated
aft
er J
une
30,
2001
, and
incl
udes
gui
danc
e on
the
initi
al r
ecog
nitio
n an
d m
easu
rem
ent o
f go
odw
ill a
nd o
ther
inta
ngib
le a
sset
s ar
isin
g fr
om b
usin
ess
com
bina
tions
. SFA
S N
o.14
2 in
dica
tes
that
goo
dwill
(an
d in
tang
ible
asse
ts d
eem
ed to
hav
e in
defi
nite
live
s) w
ill n
o lo
nger
be
amor
tized
but
will
be
subj
ect t
o an
nual
impa
irm
ent t
ests
. Oth
er in
tang
ible
ass
ets
will
con
tinue
to b
e am
ortiz
ed o
ver
thei
r us
eful
live
s.
The
Com
pany
beg
an a
pply
ing
the
new
rul
es o
n ac
coun
ting
for
good
will
and
oth
er in
tang
ible
ass
ets
Janu
ary
1, 2
002.
App
licat
ion
of th
e no
nam
ortiz
atio
n pr
ovis
ions
of
SFA
S N
o.14
2 w
ould
hav
e in
crea
sed
2001
net
inco
me
by a
ppro
xim
atel
y $3
0 m
illio
n ($
0.02
per
sha
re)
and
is e
xpec
ted
to r
esul
t in
a si
mila
r in
crea
se in
200
2.
In th
e fi
rst q
uart
er o
f 20
02, t
he C
ompa
ny is
per
form
ing
the
firs
t of
requ
ired
goo
dwill
impa
irm
ent t
ests
as
of J
anua
ry 1
, 200
2. T
he im
pair
men
t tes
t com
pare
s th
e fa
ir v
alue
of
a re
port
ing
unit,
gen
eral
ly b
ased
on d
isco
unte
d ca
sh f
low
s, w
ith it
s ca
rryi
ng a
mou
nt in
clud
ing
good
will
(w
e ha
ve d
efin
ed r
epor
ting
units
as
each
indi
vidu
al c
ount
ry f
or M
cDon
ald'
s re
stau
rant
bus
ines
s an
d ea
ch in
divi
dual
Par
tner
Bra
nd).
If
the
carr
ying
am
ount
of
a re
port
ing
unit
exce
eds
its f
air
valu
e, a
n im
pair
men
t los
s is
mea
sure
d as
the
diff
eren
ce b
etw
een
the
fair
val
ue o
f re
port
ing
unit
good
will
and
the
carr
ying
am
ount
of
the
good
will
.
Bas
ed o
n th
e C
ompa
ny's
pre
limin
ary
anal
ysis
, the
Com
pany
exp
ects
to r
ecor
d a
non-
cash
goo
dwill
impa
irm
ent c
harg
e of
abo
ut $
100
mill
ion
afte
r ta
x ($
0.08
per
sha
re),
pri
mar
ily in
cer
tain
Lat
in A
mer
ican
mar
kets
. Any
impa
irm
ent
gp
y
McD
onal
d's
Cor
pora
tion
27
that
is r
equi
red
to b
e re
cogn
ized
whe
n ad
optin
g SF
AS
No.
142
will
be
refl
ecte
d as
the
cum
ulat
ive
effe
ct o
f a
chan
ge in
acc
ount
ing
prin
cipl
e in
the
firs
t qua
rter
of
2002
.
LO
NG
-LIV
ED
ASS
ET
S
In a
ccor
danc
e w
ith S
FAS
No.
121,
Acc
ount
ing
for
the
Impa
irm
ent o
f L
ong-
Liv
ed A
sset
s an
d fo
r L
ong-
Liv
ed A
sset
s to
Be
Dis
pose
d O
f, lo
ng-l
ived
ass
ets
are
revi
ewed
for
impa
irm
ent w
hene
ver
even
ts o
rch
ange
s in
cir
cum
stan
ces
indi
cate
that
the
carr
ying
am
ount
of
an a
sset
may
not
be
reco
vera
ble.
For
pur
pose
s of
rev
iew
ing
McD
onal
d's
rest
aura
nt a
sset
s fo
r po
tent
ial i
mpa
irm
ent,
asse
ts a
re g
roup
ed to
geth
erat
a te
levi
sion
mar
ket l
evel
in th
e U
.S. a
nd a
t a c
ount
ry le
vel f
or e
ach
of th
e in
tern
atio
nal m
arke
ts. F
or P
artn
er B
rand
s, a
sset
s ar
e gr
oupe
d by
eac
h in
divi
dual
bra
nd. I
f an
indi
cato
r of
impa
irm
ent (
e.g.
,ne
gativ
e op
erat
ing
cash
flo
ws
for
the
mos
t rec
ent c
alen
dar
year
) ex
ists
for
any
gro
upin
g of
ass
ets,
an
estim
ate
of u
ndis
coun
ted
futu
re c
ash
flow
s pr
oduc
ed b
y ea
ch r
esta
uran
t with
in th
e as
set g
roup
ing
isco
mpa
red
to it
s ca
rryi
ng v
alue
. If
a re
stau
rant
is d
eter
min
ed to
be
impa
ired
, the
loss
is m
easu
red
by th
e ex
cess
of
the
carr
ying
am
ount
of
the
rest
aura
nt o
ver
its f
air
valu
e as
det
erm
ined
by
an e
stim
ate
ofdi
scou
nted
fut
ure
cash
flo
ws.
Los
ses
on a
sset
s he
ld f
or d
ispo
sal a
re r
ecog
nize
d w
hen
man
agem
ent h
as a
ppro
ved
and
com
mitt
ed to
a p
lan
to d
ispo
se o
f th
e as
sets
, and
the
asse
ts a
re a
vaila
ble
for
disp
osal
. Gen
eral
ly, s
uch
loss
es r
elat
e to
eith
er r
esta
uran
ts th
at h
ave
clos
ed a
nd c
ease
d op
erat
ions
or
busi
ness
es th
at a
re a
vaila
ble
for
sale
.
In A
ugus
t 200
1, th
e Fi
nanc
ial A
ccou
ntin
g St
anda
rds
Boa
rd is
sued
SFA
S N
o.14
4, A
ccou
ntin
g fo
r th
e Im
pair
men
t or
Dis
posa
l of
Lon
g-L
ived
Ass
ets,
whi
ch p
rovi
des
addi
tiona
l gui
danc
e on
the
fina
ncia
lac
coun
ting
and
repo
rtin
g fo
r th
e im
pair
men
t or
disp
osal
of
long
-liv
ed a
sset
s. T
he C
ompa
ny w
ill a
dopt
the
new
rul
es a
s of
Jan
uary
1, 2
002,
and
the
adop
tion
will
not
hav
e a
mat
eria
l eff
ect o
n th
e C
ompa
ny's
resu
lts o
f op
erat
ions
or
fina
ncia
l pos
ition
.
FIN
AN
CIA
L I
NST
RU
ME
NT
S
The
Com
pany
gen
eral
ly b
orro
ws
on a
long
-ter
m b
asis
and
is e
xpos
ed to
the
impa
ct o
f in
tere
st-r
ate
chan
ges
and
fore
ign
curr
ency
flu
ctua
tions
. In
man
agin
g th
e im
pact
of
thes
e ch
ange
s, th
e C
ompa
ny u
ses
inte
rest
-rat
e ex
chan
ge a
gree
men
ts a
nd f
inan
ces
in th
e cu
rren
cies
in w
hich
ass
ets
are
deno
min
ated
. The
Com
pany
use
s fo
reig
n cu
rren
cy d
enom
inat
ed d
ebt a
nd d
eriv
ativ
es to
hed
ge f
orei
gn c
urre
ncy
roya
lties
, int
erco
mpa
ny f
inan
cing
s an
d lo
ng-t
erm
inve
stm
ents
in f
orei
gn s
ubsi
diar
ies
and
affi
liate
s. T
his
redu
ces
the
impa
ct o
f fl
uctu
atin
g fo
reig
n cu
rren
cies
on
net i
ncom
e an
d sh
areh
olde
rs' e
quity
. The
Com
pany
doe
s no
t use
der
ivat
ives
with
a le
vel o
f co
mpl
exity
or
with
a r
isk
high
er th
an th
e ex
posu
res
to b
e he
dged
and
doe
s no
t hol
d or
issu
e de
riva
tives
for
trad
ing
purp
oses
.
The
cou
nter
part
ies
to th
ese
agre
emen
ts c
onsi
st o
f a
dive
rse
grou
p of
fin
anci
al in
stitu
tions
. The
Com
pany
con
tinua
lly m
onito
rs it
s po
sitio
ns a
nd th
e cr
edit
ratin
gs o
f its
cou
nter
part
ies,
and
adj
usts
pos
ition
sas
app
ropr
iate
. The
Com
pany
did
not
hav
e si
gnif
ican
t exp
osur
e to
any
indi
vidu
al c
ount
erpa
rty
at D
ecem
ber
31, 2
001
and
has
mas
ter
agre
emen
ts th
at c
onta
in n
ettin
g ar
rang
emen
ts. C
erta
in o
f th
ese
agre
emen
ts a
lso
requ
ire
each
par
ty to
pos
t col
late
ral i
f cr
edit
ratin
gs f
all b
elow
, or
aggr
egat
e ex
posu
res
exce
ed, c
erta
in c
ontr
actu
al li
mits
. At D
ecem
ber
31, 2
001,
nei
ther
the
Com
pany
nor
its
coun
terp
artie
sw
as r
equi
red
to p
ost c
olla
tera
l for
any
obl
igat
ion.
Eff
ectiv
e Ja
nuar
y 1,
200
1, th
e C
ompa
ny a
dopt
ed S
FAS
No.
133,
Acc
ount
ing
for
Der
ivat
ive
Inst
rum
ents
and
Hed
ging
Act
iviti
es, a
s am
ende
d. S
FAS
No.
133
requ
ires
com
pani
es to
rec
ogni
ze a
ll de
riva
tives
as e
ither
ass
ets
or li
abili
ties
in th
e ba
lanc
e sh
eet a
t fai
r va
lue.
SFA
S N
o.13
3 al
so r
equi
res
com
pani
es to
des
igna
te a
ll de
riva
tives
that
qua
lify
as h
edgi
ng in
stru
men
ts a
s ei
ther
fai
r va
lue
hedg
es, c
ash
flow
hedg
es o
r he
dges
of
net i
nves
tmen
ts in
for
eign
ope
ratio
ns. T
his
desi
gnat
ion
is b
ased
upo
n th
e ex
posu
re b
eing
hed
ged.
The
Com
pany
rec
orde
d a
tran
sitio
n ad
just
men
t at J
anua
ry 1
, 200
1 re
late
d to
cas
h fl
ow h
edge
s, w
hich
red
uced
acc
umul
ated
oth
er c
ompr
ehen
sive
inco
me
in s
hare
hold
ers'
equ
ity b
y $1
7.0
mill
ion,
aft
er ta
x.T
his
adju
stm
ent w
as p
rim
arily
rel
ated
to in
tere
st-r
ate
exch
ange
agr
eem
ents
use
d to
lock
in lo
ng-t
erm
bor
row
ing
rate
s. T
he c
umul
ativ
e ef
fect
of
adop
ting
SFA
S N
o.13
3 at
Jan
uary
1, 2
001
was
not
mat
eria
lto
the
Com
pany
's s
tate
men
t of
inco
me.
All
deri
vativ
es, p
rim
arily
inte
rest
-rat
e ex
chan
ge a
gree
men
ts a
nd f
orei
gn c
urre
ncy
exch
ange
agr
eem
ents
, wer
e cl
assi
fied
in th
e C
ompa
ny's
Con
solid
ated
bal
ance
she
et a
t Dec
embe
r 31
, 200
1 as
eith
erm
isce
llane
ous
othe
r as
sets
or
othe
r lo
ng-t
erm
liab
ilitie
s (e
xclu
ding
acc
rued
inte
rest
) an
d to
tale
d $2
12.6
mill
ion
and
$134
.2 m
illio
n, r
espe
ctiv
ely.
Fair
val
ue h
edge
s
The
Com
pany
ent
ers
into
fai
r va
lue
hedg
es to
red
uce
the
expo
sure
to c
hang
es in
the
fair
val
ue o
f an
ass
et o
r a
liabi
lity,
or
an id
entif
ied
port
ion
ther
eof,
whi
ch is
attr
ibut
able
to a
par
ticul
ar r
isk.
The
type
s of
fair
val
ue h
edge
s th
e C
ompa
ny e
nter
s in
to in
clud
e: (
1) in
tere
st-r
ate
exch
ange
agr
eem
ents
to c
onve
rt a
por
tion
of it
s fi
xed-
rate
deb
t to
floa
ting-
rate
deb
t and
(2)
for
eign
cur
renc
y ex
chan
ge a
gree
men
ts f
or th
eex
chan
ge o
f va
riou
s cu
rren
cies
and
inte
rest
rat
es. T
he f
orei
gn c
urre
ncy
exch
ange
agr
eem
ents
are
ent
ered
into
to h
edge
the
curr
ency
ris
k as
soci
ated
with
deb
t and
inte
rcom
pany
loan
s de
nom
inat
ed in
fore
ign
curr
enci
es, a
nd e
ssen
tially
res
ult i
n fl
oatin
g-ra
te a
sset
s or
liab
ilitie
s de
nom
inat
ed in
U.S
. Dol
lars
or
appr
opri
ate
func
tiona
l cur
renc
ies.
For
fair
val
ue h
edge
s, th
e ga
ins
or lo
sses
on
deri
vativ
es a
s w
ell a
s th
e of
fset
ting
gain
s or
loss
es o
n th
e re
late
d he
dged
item
s ar
e re
cogn
ized
in c
urre
nt e
arni
ngs.
Dur
ing
the
year
end
ed D
ecem
ber
31, 2
001,
ther
e w
as n
o si
gnif
ican
t im
pact
to th
e C
ompa
ny's
ear
ning
s re
late
d to
the
inef
fect
ive
port
ion
of f
air
valu
e he
dgin
g in
stru
men
ts.
Cas
h fl
ow h
edge
s
The
Com
pany
ent
ers
into
cas
h fl
ow h
edge
s to
miti
gate
the
expo
sure
to v
aria
bilit
y in
exp
ecte
d fu
ture
cas
h fl
ows
attr
ibut
able
to a
par
ticul
ar r
isk.
The
type
s of
cas
h fl
ow h
edge
s
gp
y
28 M
cDon
ald'
s C
orpo
ratio
n
the
Com
pany
ent
ers
into
incl
ude:
(1)
inte
rest
-rat
e ex
chan
ge a
gree
men
ts th
at e
ffec
tivel
y co
nver
t a p
ortio
n of
flo
atin
g-ra
te d
ebt t
o fi
xed-
rate
deb
t and
are
des
igne
d to
red
uce
the
impa
ct o
f in
tere
st-r
ate
chan
ges
on f
utur
e in
tere
st e
xpen
se, (
2) f
orw
ard
fore
ign
exch
ange
con
trac
ts a
nd f
orei
gn c
urre
ncy
optio
ns th
at a
re d
esig
ned
to p
rote
ct a
gain
st th
e re
duct
ion
in v
alue
of
fore
cast
ed f
orei
gn c
urre
ncy
cash
flo
ws
such
as
roya
lties
and
oth
er p
aym
ents
den
omin
ated
in f
orei
gn c
urre
ncie
s, a
nd (
3) f
orei
gn c
urre
ncy
exch
ange
agr
eem
ents
for
the
exch
ange
of
vari
ous
curr
enci
es a
nd in
tere
st r
ates
. The
for
eign
cur
renc
yex
chan
ge a
gree
men
ts a
re e
nter
ed in
to to
hed
ge th
e cu
rren
cy r
isk
asso
ciat
ed w
ith d
ebt a
nd in
terc
ompa
ny lo
ans
deno
min
ated
in f
orei
gn c
urre
ncie
s, a
nd e
ssen
tially
res
ult i
n fi
xed-
rate
ass
ets
or li
abili
ties
deno
min
ated
in U
.S. D
olla
rs o
r ap
prop
riat
e fu
nctio
nal c
urre
ncie
s.
For
cash
flo
w h
edge
s, th
e ef
fect
ive
port
ion
of th
e ga
ins
or lo
sses
on
deri
vativ
es is
rep
orte
d in
the
defe
rred
hed
ging
adj
ustm
ent c
ompo
nent
of
accu
mul
ated
oth
er c
ompr
ehen
sive
inco
me
in s
hare
hold
ers'
equi
ty a
nd r
ecla
ssif
ied
into
ear
ning
s in
the
sam
e pe
riod
or
peri
ods
in w
hich
the
hedg
ed tr
ansa
ctio
n af
fect
s ea
rnin
gs. T
he r
emai
ning
gai
n or
loss
in e
xces
s of
the
cum
ulat
ive
chan
ge in
the
pres
ent v
alue
of
futu
re c
ash
flow
s of
the
hedg
ed it
em, i
f an
y, is
rec
ogni
zed
in c
urre
nt e
arni
ngs
duri
ng th
e pe
riod
of
chan
ge. D
urin
g th
e ye
ar e
nded
Dec
embe
r 31
, 200
1, th
ere
was
no
sign
ific
ant i
mpa
ct to
the
Com
pany
'sea
rnin
gs r
elat
ed to
the
inef
fect
ive
port
ion
of c
ash
flow
hed
ging
inst
rum
ents
.
Subs
eque
nt to
the
tran
sitio
n ad
just
men
t rec
orde
d at
Jan
uary
1, 2
001,
the
Com
pany
rec
orde
d in
crea
ses
to th
e de
ferr
ed h
edgi
ng a
djus
tmen
t com
pone
nt o
f ac
cum
ulat
ed o
ther
com
preh
ensi
ve in
com
e in
shar
ehol
ders
' equ
ity o
f $7
.7 m
illio
n, a
fter
tax,
rel
ated
to c
ash
flow
hed
ges
duri
ng th
e ye
ar e
nded
Dec
embe
r 31
, 200
1. B
ased
on
inte
rest
rat
es a
nd f
orei
gn c
urre
ncy
exch
ange
rat
es a
t Dec
embe
r 31
, 200
1, n
osi
gnif
ican
t am
ount
of
defe
rred
hed
ging
adj
ustm
ents
, aft
er ta
x, in
clud
ed in
acc
umul
ated
oth
er c
ompr
ehen
sive
inco
me
in s
hare
hold
ers'
equ
ity a
t Dec
embe
r 31
, 200
1, w
ill b
e re
cogn
ized
in e
arni
ngs
in 2
002
asth
e un
derl
ying
hed
ged
tran
sact
ions
are
rea
lized
. The
max
imum
mat
urity
dat
e of
any
cas
h fl
ow h
edge
of
fore
cast
ed tr
ansa
ctio
ns a
t Dec
embe
r 31
, 200
1 w
as 1
5 m
onth
s, e
xclu
ding
inst
rum
ents
hed
ging
fore
cast
ed p
aym
ents
of
vari
able
inte
rest
on
exis
ting
fina
ncia
l ins
trum
ents
that
hav
e va
riou
s m
atur
ity d
ates
thro
ugh
2011
.
Hed
ges
of n
et in
vest
men
ts in
for
eign
ope
ratio
ns
The
Com
pany
use
s fo
rwar
d fo
reig
n ex
chan
ge c
ontr
acts
and
for
eign
cur
renc
y de
nom
inat
ed d
ebt t
o he
dge
its in
vest
men
ts in
cer
tain
for
eign
sub
sidi
arie
s an
d af
filia
tes.
Rea
lized
and
unr
ealiz
ed tr
ansl
atio
nad
just
men
ts f
rom
thes
e he
dges
are
incl
uded
in s
hare
hold
ers'
equ
ity in
the
fore
ign
curr
ency
tran
slat
ion
com
pone
nt o
f ac
cum
ulat
ed o
ther
com
preh
ensi
ve in
com
e an
d of
fset
tran
slat
ion
adju
stm
ents
on
the
unde
rlyi
ng n
et a
sset
s of
for
eign
sub
sidi
arie
s an
d af
filia
tes,
whi
ch a
lso
are
reco
rded
in a
ccum
ulat
ed o
ther
com
preh
ensi
ve in
com
e.
Dur
ing
the
year
end
ed D
ecem
ber
31, 2
001,
the
Com
pany
rec
orde
d in
crea
ses
in tr
ansl
atio
n ad
just
men
ts in
acc
umul
ated
oth
er c
ompr
ehen
sive
inco
me
of $
168.
5 m
illio
n, a
fter
tax,
rel
ated
pri
mar
ily to
for
eign
curr
ency
den
omin
ated
deb
t des
igna
ted
as h
edge
s of
net
inve
stm
ents
.
CO
MM
ON
EQ
UIT
Y P
UT
OP
TIO
NS
AN
D F
OR
WA
RD
CO
NT
RA
CT
S
Dur
ing
2001
, 200
0 an
d 19
99, t
he C
ompa
ny s
old
12.2
mill
ion,
16.
8 m
illio
n an
d 27
.0 m
illio
n co
mm
on e
quity
put
opt
ions
, res
pect
ivel
y, in
con
nect
ion
with
its
shar
e re
purc
hase
pro
gram
. Pre
miu
ms
rece
ived
are
reco
rded
in s
hare
hold
ers'
equ
ity a
s a
redu
ctio
n of
the
cost
of
trea
sury
sto
ck p
urch
ased
and
wer
e $3
1.8
mill
ion
in 2
001,
$56
.0 m
illio
n in
200
0 an
d $9
7.5
mill
ion
in 1
999.
At D
ecem
ber
31, 2
001,
12.
2m
illio
n co
mm
on e
quity
put
opt
ions
wer
e ou
tsta
ndin
g. T
he o
ptio
ns e
xpir
e at
var
ious
dat
es th
roug
h N
ovem
ber
2002
at e
xerc
ise
pric
es b
etw
een
$26.
37 a
nd $
30.2
3. A
t Dec
embe
r 31
, 200
1, th
e $3
50.0
mill
ion
tota
l exe
rcis
e pr
ice
of th
ese
outs
tand
ing
optio
ns w
as c
lass
ifie
d in
com
mon
equ
ity p
ut o
ptio
ns a
nd f
orw
ard
cont
ract
s in
the
Con
solid
ated
bal
ance
she
et, a
nd th
e re
late
d of
fset
was
rec
orde
d in
com
mon
sto
ckin
trea
sury
, net
of
the
prem
ium
s re
ceiv
ed.
Dur
ing
2001
, the
Com
pany
als
o en
tere
d in
to e
quity
for
war
d co
ntra
cts
in c
onne
ctio
n w
ith it
s sh
are
repu
rcha
se p
rogr
am. T
he f
orw
ard
cont
ract
s, f
or 5
.5 m
illio
n sh
ares
, set
tle in
Mar
ch 2
002
and
have
an
aver
age
purc
hase
pri
ce o
f $2
7.41
. At D
ecem
ber
31, 2
001,
the
$150
.8 m
illio
n to
tal p
urch
ase
pric
e of
thes
e ou
tsta
ndin
g fo
rwar
d co
ntra
cts
was
cla
ssif
ied
in c
omm
on e
quity
put
opt
ions
and
for
war
d co
ntra
cts,
and
the
rela
ted
offs
et w
as r
ecor
ded
in c
omm
on s
tock
in tr
easu
ry.
SAL
ES
OF
ST
OC
K B
Y S
UB
SID
IAR
IES
AN
D A
FF
ILIA
TE
S
As
perm
itted
by
Staf
f A
ccou
ntin
g B
ulle
tin N
o. 5
1 is
sued
by
the
Secu
ritie
s an
d E
xcha
nge
Com
mis
sion
, whe
n a
subs
idia
ry o
r af
filia
te s
ells
uni
ssue
d sh
ares
in a
pub
lic o
ffer
ing,
the
Com
pany
rec
ords
an
adju
stm
ent t
o re
flec
t an
incr
ease
or
decr
ease
in th
e ca
rryi
ng v
alue
of
its in
vest
men
t and
a r
esul
ting
gain
or
loss
in n
onop
erat
ing
(inc
ome)
exp
ense
.
PE
R C
OM
MO
N S
HA
RE
IN
FO
RM
AT
ION
Dilu
ted
net i
ncom
e pe
r co
mm
on s
hare
is c
alcu
late
d us
ing
net i
ncom
e di
vide
d by
dilu
ted
wei
ghte
d-av
erag
e sh
ares
. Dilu
ted
wei
ghte
d-av
erag
e sh
ares
incl
ude
wei
ghte
d-av
erag
e sh
ares
out
stan
ding
plu
s th
edi
lutiv
e ef
fect
of
stoc
k op
tions
, cal
cula
ted
usin
g th
e tr
easu
ry s
tock
met
hod.
The
dilu
tive
effe
ct o
f st
ock
optio
ns w
as (
in m
illio
ns o
f sh
ares
): 2
001-
19.6
; 200
0-33
.3; 1
999-
48.9
. Sto
ck o
ptio
ns th
at w
ere
not
incl
uded
in d
ilutiv
e w
eigh
ted-
aver
age
shar
es b
ecau
se th
ey w
ould
hav
e be
en a
ntid
ilutiv
e w
ere
(in
mill
ions
of
shar
es):
200
1-83
.1; 2
000-
49.2
; 199
9-9.
9. T
he d
ilutiv
e ef
fect
of
com
mon
equ
ity p
ut o
ptio
ns a
ndfo
rwar
d co
ntra
cts
was
not
sig
nifi
cant
.
STA
TE
ME
NT
OF
CA
SH F
LO
WS
The
Com
pany
con
side
rs s
hort
-ter
m, h
ighl
y liq
uid
inve
stm
ents
to b
e ca
sh e
quiv
alen
ts. T
he im
pact
of
fluc
tuat
ing
fore
ign
curr
enci
es o
n ca
sh a
nd e
quiv
alen
ts w
as n
ot m
ater
ial.
gp
y
McD
onal
d's
Cor
pora
tion
29
Oth
er o
pera
ting
(inc
ome)
exp
ense
, net
===============================================================================
-------------------------------------------------------------------------------
IN MILLIONS 2001 2000 1999
===============================================================================
Gains on sales of restaurant businesses $(112.4) $ (86.9) $ (75.0)
Equity in earnings of unconsolidated affiliates (61.5) (120.9) (138.3)
Charges for underperforming restaurant closings 91.2
Asset impairment charges 44.0
Other, net 96.1 11.4 108.1
-------------------------------------------------------------------------------
Other operating (income) expense, net $ 57.4 $(196.4) $(105.2)
===============================================================================
CH
AR
GE
S F
OR
UN
DE
RP
ER
FO
RM
ING
RE
STA
UR
AN
T C
LO
SIN
GS
In th
ird
and
four
th q
uart
ers
2001
, the
Com
pany
rec
orde
d $9
1.2
mill
ion
of p
reta
x ch
arge
s ($
68.8
mill
ion
afte
r ta
x) r
elat
ed to
the
clos
ing
of 1
63 u
nder
perf
orm
ing
rest
aura
nts
in in
tern
atio
nal m
arke
ts. T
hech
arge
s pr
imar
ily c
onsi
st o
f as
set w
rite
-off
s an
d le
ase
term
inat
ion
paym
ents
.
ASS
ET
IM
PA
IRM
EN
T C
HA
RG
ES
In s
econ
d qu
arte
r 20
01, t
he C
ompa
ny r
ecor
ded
a $2
4.0
mill
ion
asse
t im
pair
men
t cha
rge
(pre
and
aft
er ta
x) d
ue to
an
asse
ssm
ent o
f th
e on
goin
g im
pact
of
sign
ific
ant c
urre
ncy
deva
luat
ion
on M
cDon
ald'
sca
sh f
low
s in
Tur
key.
In f
ourt
h qu
arte
r 20
01, t
he C
ompa
ny r
ecor
ded
a pr
etax
cha
rge
of $
20.0
mill
ion
($13
.6 m
illio
n af
ter
tax)
rel
ated
to th
e an
ticip
ated
dis
posa
l of
Aro
ma
Caf
e in
the
U.K
.
OT
HE
R, N
ET
Oth
er, n
et in
clud
es m
isce
llane
ous
oper
atin
g in
com
e an
d ex
pens
e ite
ms
incl
udin
g ne
t gai
ns o
r lo
sses
fro
m p
rope
rty
disp
ositi
ons,
pro
visi
ons
for
bad
debt
s an
d ot
her
tran
sact
ions
rel
ated
to f
ranc
hisi
ng a
nd th
efo
od s
ervi
ce b
usin
ess.
In th
ird
quar
ter
2001
, the
Com
pany
rec
orde
d a
pret
ax c
harg
e of
$17
.4 m
illio
n ($
12.0
mill
ion
afte
r ta
x) p
rim
arily
rel
ated
to th
e w
rite
-off
of
cert
ain
tech
nolo
gy c
osts
in th
e C
orpo
rate
seg
men
t.
In f
ourt
h qu
arte
r 20
01, t
he C
ompa
ny r
ecor
ded
a pr
etax
cha
rge
of $
25.0
mill
ion
($17
.0 m
illio
n af
ter
tax)
in th
e U
.S. p
rim
arily
rel
ated
to u
nrec
over
able
cos
ts in
curr
ed in
con
nect
ion
with
the
thef
t of
win
ning
gam
e pi
eces
fro
m th
e C
ompa
ny's
Mon
opol
y an
d ce
rtai
n ot
her
prom
otio
nal g
ames
ove
r an
ext
ende
d pe
riod
of
time,
and
the
rela
ted
term
inat
ion
of th
e su
pplie
r of
the
gam
e pi
eces
. Fif
ty-o
ne p
eopl
e (n
one
ofw
hom
wer
e C
ompa
ny e
mpl
oyee
s) w
ere
subs
eque
ntly
indi
cted
on
cons
pira
cy a
nd m
ail f
raud
cha
rges
.
In 1
999,
the
Com
pany
wro
te o
ff $
24.0
mill
ion
($16
.3 m
illio
n af
ter
tax)
of
soft
war
e no
t use
d in
the
busi
ness
.
Spec
ial c
harg
e-gl
obal
cha
nge
initi
ativ
es
In f
ourt
h qu
arte
r 20
01, t
he C
ompa
ny r
ecor
ded
a $2
00.0
mill
ion
pret
ax s
peci
al c
harg
e ($
136.
1 m
illio
n af
ter
tax)
rel
ated
to s
trat
egic
cha
nges
and
ong
oing
res
taur
ant i
nitia
tives
in th
e U
.S. a
nd c
erta
inin
tern
atio
nal m
arke
ts. T
he c
hang
es a
nd in
itiat
ives
are
des
igne
d to
impr
ove
the
cust
omer
exp
erie
nce
and
grow
McD
onal
d's
glob
al b
usin
ess.
The
cha
nges
in th
e U
.S. i
nclu
ded
stre
amlin
ing
oper
atio
ns b
yre
duci
ng th
e nu
mbe
r of
reg
ions
and
div
isio
ns, e
nabl
ing
the
Com
pany
to c
ombi
ne s
taff
fun
ctio
ns a
nd im
prov
e ef
fici
ency
. In
addi
tion,
the
U.S
. bus
ines
s in
trod
uced
a v
arie
ty o
f in
itiat
ives
des
igne
d to
impr
ove
the
rest
aura
nt e
xper
ienc
e in
clud
ing
acce
lera
ted
oper
atio
ns tr
aini
ng, r
esta
uran
t sim
plif
icat
ion,
ince
ntiv
es f
or o
utst
andi
ng r
esta
uran
t ope
ratio
ns a
nd a
n en
hanc
ed n
atio
nal r
esta
uran
t eva
luat
ion
syst
em.
In c
onne
ctio
n w
ith th
ese
initi
ativ
es, t
he C
ompa
ny e
limin
ated
app
roxi
mat
ely
850
posi
tions
, con
sist
ing
of 7
00 p
ositi
ons
in th
e U
.S.,
prim
arily
in th
e di
visi
ons
and
regi
ons,
and
150
pos
ition
s in
inte
rnat
iona
lm
arke
ts.
The
spe
cial
cha
rge
cons
iste
d of
$11
4.4
mill
ion
of s
ever
ance
and
oth
er e
mpl
oyee
-rel
ated
cos
ts; $
68.8
mill
ion
of le
ase
canc
ella
tion
and
othe
r co
sts
rela
ted
to th
e cl
osin
g of
reg
ion
and
divi
sion
fac
ilitie
s; a
nd$1
6.8
mill
ion
of o
ther
cas
h co
sts,
pri
mar
ily c
onsi
stin
g of
pay
men
ts m
ade
to f
acili
tate
a ti
mel
y an
d sm
ooth
cha
nge
of o
wne
rshi
p fr
om f
ranc
hise
es w
ho h
ave
had
a hi
stor
y of
fin
anci
al d
iffi
culty
and
cons
eque
ntly
wer
e un
able
to d
eliv
er th
e le
vel o
f op
erat
iona
l exc
elle
nce
need
ed to
suc
ceed
in th
e fu
ture
.
Of
the
orig
inal
$20
0.0
mill
ion
pret
ax s
peci
al c
harg
e, th
e re
mai
ning
acc
rual
of
appr
oxim
atel
y $1
26.0
mill
ion
at y
ear-
end
2001
pri
mar
ily r
elat
ed to
em
ploy
ee s
ever
ance
and
leas
e pa
ymen
ts f
or f
acili
ties
that
gp
y
have
bee
n cl
osed
and
was
incl
uded
in o
ther
acc
rued
liab
ilitie
s in
the
Con
solid
ated
bal
ance
she
et. E
mpl
oyee
sev
eran
ce is
pai
d in
inst
allm
ents
ove
r a
peri
od o
f up
to o
ne y
ear
afte
r te
rmin
atio
n, a
nd th
ere
mai
ning
leas
e pa
ymen
ts f
or f
acili
ties
that
hav
e be
en c
lose
d w
ill b
e pa
id th
roug
h 20
10. N
o si
gnif
ican
t adj
ustm
ents
hav
e be
en m
ade
to th
e or
igin
al p
lan
appr
oved
by
man
agem
ent.
McD
onal
d's
Japa
n in
itial
pub
lic o
ffer
ing
(IPO
) ga
in
In th
ird
quar
ter
2001
, McD
onal
d's
Japa
n, th
e C
ompa
ny's
larg
est m
arke
t in
the
Asi
a/Pa
cifi
c, M
iddl
e E
ast a
nd A
fric
a se
gmen
t, co
mpl
eted
an
IPO
of
12 m
illio
n sh
ares
at a
n of
feri
ng p
rice
of
4,30
0 Y
en p
ersh
are
($34
.77
per
shar
e). T
he C
ompa
ny o
wns
50%
of
McD
onal
d's
Japa
n w
hile
the
Com
pany
's p
artn
er D
en F
ujita
and
his
fam
ily n
ow o
wn
appr
oxim
atel
y 26
% a
nd c
ontin
ue to
be
invo
lved
in th
e bu
sine
ss.
The
Com
pany
rec
orde
d a
$137
.1 m
illio
n ga
in (
pre
and
afte
r ta
x) in
non
oper
atin
g in
com
e to
ref
lect
an
incr
ease
in th
e ca
rryi
ng v
alue
of
its in
vest
men
t as
a re
sult
of th
e ca
sh p
roce
eds
from
the
IPO
rec
eive
dby
McD
onal
d's
Japa
n.
Fran
chis
e ar
rang
emen
ts
Indi
vidu
al f
ranc
hise
arr
ange
men
ts g
ener
ally
incl
ude
a le
ase
and
a lic
ense
and
pro
vide
for
pay
men
t of
initi
al f
ees
as w
ell a
s co
ntin
uing
ren
t and
ser
vice
fee
s to
the
Com
pany
bas
ed u
pon
a pe
rcen
t of
sale
s,w
ith m
inim
um r
ent p
aym
ents
. McD
onal
d's
fran
chis
ees
are
gran
ted
the
righ
t to
oper
ate
a re
stau
rant
usi
ng th
e M
cDon
ald'
s sy
stem
and
, in
cert
ain
case
s, th
e us
e of
a r
esta
uran
t fac
ility
, gen
eral
ly f
or a
per
iod
of 2
0 ye
ars.
Fra
nchi
sees
pay
rel
ated
occ
upan
cy c
osts
incl
udin
g pr
oper
ty ta
xes,
insu
ranc
e an
d m
aint
enan
ce. F
ranc
hise
es in
the
U.S
. gen
eral
ly h
ave
the
optio
n to
ow
n
30 M
cDon
ald'
s C
orpo
ratio
n
new
res
taur
ant b
uild
ings
, whi
le le
asin
g th
e la
nd f
rom
McD
onal
d's.
In
addi
tion,
fra
nchi
sees
out
side
the
U.S
. gen
eral
ly p
ay a
ref
unda
ble,
non
inte
rest
-bea
ring
sec
urity
dep
osit.
For
eign
aff
iliat
es p
ay a
roy
alty
to th
e C
ompa
ny b
ased
upo
n a
perc
ent o
f sa
les.
The
res
ults
of
oper
atio
ns o
f re
stau
rant
bus
ines
ses
purc
hase
d an
d so
ld in
tran
sact
ions
with
fra
nchi
sees
, aff
iliat
es a
nd o
ther
s w
ere
not m
ater
ial t
o th
e co
nsol
idat
ed f
inan
cial
sta
tem
ents
for
per
iods
pri
or to
purc
hase
and
sal
e.
Rev
enue
s fr
om f
ranc
hise
d an
d af
filia
ted
rest
aura
nts
cons
iste
d of
:
--------------------------------------------------------------------------------
IN MILLIONS 2001 2000 1999
================================================================================
Minimum rents $ 1,477.9 $ 1,465.3 $ 1,473.8
Percent rent and service fees 2,290.2 2,247.0 2,208.8
Initial fees 61.2 63.7 64.2
--------------------------------------------------------------------------------
Revenues from franchised
and affiliated restaurants $ 3,829.3 $ 3,776.0 $ 3,746.8
================================================================================
Futu
re m
inim
um r
ent p
aym
ents
due
to th
e C
ompa
ny u
nder
exi
stin
g fr
anch
ise
arra
ngem
ents
are
:
--------------------------------------------------------------------------------
Owned Leased
IN MILLIONS sites sites Total
================================================================================
2002 $ 948.7 $ 707.5 $ 1,656.2
2003 935.9 701.4 1,637.3
2004 920.3 689.3 1,609.6
2005 895.7 666.7 1,562.4
2006 870.8 647.2 1,518.0
Thereafter 7,384.0 5,771.9 13,155.9
--------------------------------------------------------------------------------
Total minimum payments $11,955.4 $9,184.0 $21,139.4
================================================================================
gp
y
At D
ecem
ber
31, 2
001,
net
pro
pert
y an
d eq
uipm
ent u
nder
fra
nchi
se a
rran
gem
ents
tota
led
$9.0
bill
ion
(inc
ludi
ng la
nd o
f $2
.7 b
illio
n) a
fter
ded
uctin
g ac
cum
ulat
ed d
epre
ciat
ion
and
amor
tizat
ion
of $
3.4
billi
on.
Inco
me
taxe
s
Inco
me
befo
re p
rovi
sion
for
inco
me
taxe
s, c
lass
ifie
d by
sou
rce
of in
com
e, w
as a
s fo
llow
s:
--------------------------------------------------------------------------------
IN MILLIONS 2001 2000 1999
================================================================================
U.S. $ 958.2 $1,280.6 $1,222.2
Outside the U.S. 1,371.5 1,601.7 1,661.9
--------------------------------------------------------------------------------
Income before provision for
income taxes $2,329.7 $2,882.3 $2,884.1
================================================================================
The
pro
visi
on f
or in
com
e ta
xes,
cla
ssif
ied
by th
e tim
ing
and
loca
tion
of p
aym
ent,
was
as
follo
ws:
--------------------------------------------------------------------------------
IN MILLIONS 2001 2000 1999
================================================================================
U.S. federal $ 357.3 $ 361.1 $ 347.4
U.S. state 59.7 77.0 68.9
Outside the U.S. 363.7 406.4 467.0
--------------------------------------------------------------------------------
Current tax provision 780.7 844.5 883.3
--------------------------------------------------------------------------------
U.S. federal 57.7 75.2 31.3
U.S. state 4.3 9.5 12.3
Outside the U.S. (149.6) (24.2) 9.3
--------------------------------------------------------------------------------
Deferred tax provision/(1)/ (87.6) 60.5 52.9
--------------------------------------------------------------------------------
Provision for income taxes $ 693.1 $ 905.0 $ 936.2
================================================================================
(1)
Incl
udes
the
one-
time
bene
fit o
f ta
x la
w c
hang
es in
cer
tain
inte
rnat
iona
l mar
kets
: 200
1-$(
147.
3) m
illio
n; a
mou
nts
in 2
000
and
1999
wer
e no
t sig
nifi
cant
.
Net
def
erre
d ta
x lia
bilit
ies
cons
iste
d of
:
gp
y
--------------------------------------------------------------------------------
IN MILLIONS December 31, 2001 2000
================================================================================
Property and equipment basis differences $ 1,304.4 $ 1,202.6
Other 429.9 353.3
--------------------------------------------------------------------------------
Total deferred tax liabilities 1,734.3 1,555.9
--------------------------------------------------------------------------------
Deferred tax assets before valuation allowance/(1)/ (899.9) (646.9)
Valuation allowance 180.1 124.0
--------------------------------------------------------------------------------
Net deferred tax liabilities/(2)/ $ 1,014.5 $ 1,033.0
================================================================================
(1)
Incl
udes
tax
effe
cts
of lo
ss c
arry
forw
ards
(in
mill
ions
): 2
001-
$166
.0; 2
000-
$129
.4, a
nd f
orei
gn ta
x cr
edit
carr
yfor
war
ds: 2
001-
$21.
6; 2
000-
$41.
2.
(2)
Net
of
curr
ent t
ax a
sset
s in
clud
ed in
pre
paid
exp
ense
s an
d ot
her
curr
ent a
sset
s in
the
Con
solid
ated
bal
ance
she
et (
in m
illio
ns):
200
1-$9
7.7;
200
0-$5
1.9.
The
sta
tuto
ry U
.S. f
eder
al in
com
e ta
x ra
te r
econ
cile
d to
the
effe
ctiv
e in
com
e ta
x ra
tes
as f
ollo
ws:
--------------------------------------------------------------------------------
2001 2000 1999
================================================================================
Statutory U.S. federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of related
federal income tax benefit 1.8 1.9 1.8
Benefits and taxes related to
foreign operations/(1)/ (7.8) (4.8) (4.4)
Other, net .8 (.7) .1
--------------------------------------------------------------------------------
Effective income tax rates 29.8% 31.4% 32.5%
================================================================================
(1)
Incl
udes
the
one-
time
bene
fit o
f ta
x la
w c
hang
es.
Def
erre
d U
.S. i
ncom
e ta
xes
have
not
bee
n re
cord
ed f
or b
asis
dif
fere
nces
rel
ated
to in
vest
men
ts in
cer
tain
for
eign
sub
sidi
arie
s an
d af
filia
tes.
The
se b
asis
dif
fere
nces
wer
e ap
prox
imat
ely
$2.7
bill
ion
atD
ecem
ber
31, 2
001,
and
con
sist
ed p
rim
arily
of
undi
stri
bute
d ea
rnin
gs c
onsi
dere
d pe
rman
ently
inve
sted
in th
e bu
sine
sses
. Det
erm
inat
ion
of th
e de
ferr
ed in
com
e ta
x lia
bilit
y on
thes
e un
rem
itted
ear
ning
s is
not p
ract
icab
le b
ecau
se s
uch
liabi
lity,
if a
ny, i
s de
pend
ent o
n ci
rcum
stan
ces
exis
ting
if a
nd w
hen
rem
ittan
ce o
ccur
s.
Segm
ent a
nd g
eogr
aphi
c in
form
atio
n
The
Com
pany
ope
rate
s in
the
food
ser
vice
indu
stry
. Sub
stan
tially
all
reve
nues
res
ult f
rom
the
sale
of
men
u pr
oduc
ts a
t res
taur
ants
ope
rate
d by
the
Com
pany
, fra
nchi
sees
or
affi
liate
s. A
ll in
terc
ompa
nyre
venu
es a
nd e
xpen
ses
are
elim
inat
ed in
com
putin
g re
venu
es a
nd o
pera
ting
inco
me.
Ope
ratin
g in
com
e in
clud
es th
e C
ompa
ny's
sha
re o
f op
erat
ing
resu
lts o
f af
filia
tes
afte
r in
tere
st e
xpen
se a
nd in
com
eta
xes,
exc
ept f
or U
.S. a
ffili
ates
, whi
ch a
re r
epor
ted
befo
re in
com
e ta
xes.
Roy
altie
s an
d ot
her
paym
ents
rec
eive
d fr
om s
ubsi
diar
ies
outs
ide
the
U.S
. wer
e (i
n m
illio
ns):
200
1-$6
07.7
; 200
0-$6
03.6
;19
99-$
568.
3.
Segm
ent i
nfor
mat
ion
refl
ects
the
Com
pany
's c
urre
nt m
anag
emen
t str
uctu
re. T
he n
ew A
PME
A s
egm
ent i
nclu
des
resu
lts f
or M
cDon
ald'
s re
stau
rant
ope
ratio
ns in
Asi
a/Pa
cifi
c, th
e M
iddl
e E
ast a
nd A
fric
a.T
he P
artn
er B
rand
s se
gmen
t inc
lude
s re
sults
for
Aro
ma
Caf
e, B
osto
n M
arke
t, C
hipo
tle, D
onat
os a
nd P
ret A
Man
ger.
In
addi
tion,
U.S
. and
Cor
pora
te s
ellin
g, g
ener
al &
adm
inis
trat
ive
McD
onal
d's
Cor
pora
tion
31
gp
y
expe
nses
hav
e be
en r
esta
ted
to r
efle
ct a
rea
lignm
ent o
f ce
rtai
n ho
me
offi
ce d
epar
tmen
ts' r
espo
nsib
ilitie
s.
Cor
pora
te g
ener
al &
adm
inis
trat
ive
expe
nses
are
incl
uded
in th
e co
rpor
ate
segm
ent o
f op
erat
ing
inco
me
and
cons
ist o
f ho
me
offi
ce s
uppo
rt c
osts
in a
reas
suc
h as
fac
ilitie
s, f
inan
ce, h
uman
res
ourc
es,
info
rmat
ion
tech
nolo
gy, l
egal
, sup
ply
chai
n m
anag
emen
t and
trai
ning
. Cor
pora
te a
sset
s in
clud
e co
rpor
ate
cash
and
equ
ival
ents
, ass
et p
ortio
ns o
f fi
nanc
ing
inst
rum
ents
, hom
e of
fice
fac
ilitie
s an
d de
ferr
edta
x as
sets
.
-----------------------------------------------------------------------------------
IN MILLIONS 2001 2000 1999
===================================================================================
U.S. $ 5,395.6 $ 5,259.1 $ 5,093.0
Europe 4,751.8 4,753.9 4,924.9
APMEA 2,203.3 2,101.8 1,928.8
Latin America 971.3 949.3 680.3
Canada 608.1 615.1 575.6
Partner Brands 939.9 563.8 56.7
-----------------------------------------------------------------------------------
Total revenues $14,870.0 $14,243.0 $13,259.3
===================================================================================
U.S. $ 1,622.5 $ 1,795.7 $ 1,678.6
Europe 1,063.2 1,180.1 1,256.5
APMEA 325.0 451.2 433.5
Latin America 10.9 102.3 133.0
Canada 123.7 126.3 113.3
Partner Brands (66.5) (41.5) (7.5)
Corporate (381.8) (284.4) (287.8)
-----------------------------------------------------------------------------------
Total operating income $ 2,697.0/(1)/ $ 3,329.7 $ 3,319.6
===================================================================================
U.S. $ 8,213.7 $ 7,798.1 $ 7,607.4
Europe 7,139.1 7,083.7 6,966.8
APMEA 3,144.5 2,983.4 3,030.5
Latin America 1,898.3 1,855.6 1,477.5
Canada 574.2 552.0 573.6
Partner Brands 637.1 450.7 203.2
Corporate 927.6 960.0 1,124.2
-----------------------------------------------------------------------------------
Total assets $22,534.5 $21,683.5 $20,983.2
===================================================================================
U.S. $ 545.9 $ 468.6 $ 426.4
Europe 635.8 797.6 881.8
APMEA 275.7 253.5 221.3
Latin America 197.5 245.7 213.2
Canada 80.4 52.5 63.0
Partner Brands 153.3 79.6 16.4
Corporate 17.6 47.6 45.7
-----------------------------------------------------------------------------------
Total capital expenditures $ 1,906.2 $ 1,945.1 $ 1,867.8
===================================================================================
U.S. $ 449.9 $ 417.6 $ 399.7
Europe 313.7 296.5 305.2
APMEA 133.2 129.8 123.5
gp
y
Latin America 79.3 69.4 45.5
Canada 32.9 34.9 35.3
Partner Brands 36.8 16.6 2.3
Corporate 40.5 45.9 44.8
-----------------------------------------------------------------------------------
Total depreciation and amortization $ 1,086.3 $ 1,010.7 $ 956.3
===================================================================================
(1)
Incl
udes
$37
7.6
mill
ion
of p
reta
x sp
ecia
l cha
rges
(U
.S.-
$181
.0; E
urop
e-$4
5.8;
APM
EA
-$41
.5; L
atin
Am
eric
a-$4
0.4;
Can
ada-
$9.8
; Par
tner
Bra
nds-
$24.
9 an
d C
orpo
rate
-$34
.2)
prim
arily
rel
ated
to th
eU
.S. b
usin
ess
reor
gani
zatio
n an
d ot
her
glob
al c
hang
e in
itiat
ives
, the
clo
sing
of
163
unde
rper
form
ing
rest
aura
nts
in in
tern
atio
nal m
arke
ts a
nd a
sset
impa
irm
ent c
harg
es. S
ee o
ther
ope
ratin
g (i
ncom
e)ex
pens
e, n
et a
nd s
peci
al c
harg
e-gl
obal
cha
nge
initi
ativ
es n
otes
for
fur
ther
dis
cuss
ion.
Tot
al lo
ng-l
ived
ass
ets,
pri
mar
ily p
rope
rty
and
equi
pmen
t and
goo
dwill
, wer
e (i
n m
illio
ns)-
-Con
solid
ated
: 200
1-$2
0,35
5.3;
200
0-$1
9,79
8.3;
199
9-$1
9,08
2.8.
U.S
. bas
ed: 2
001-
$8,6
70.4
; 200
0-$8
,373
.2;
1999
-$7,
984.
9.
Lea
sing
arr
ange
men
ts
At D
ecem
ber
31, 2
001,
the
Com
pany
was
less
ee a
t 6,8
66 r
esta
uran
t loc
atio
ns th
roug
h gr
ound
leas
es (
the
Com
pany
leas
es th
e la
nd a
nd th
e C
ompa
ny o
r fr
anch
isee
ow
ns th
e bu
ildin
g) a
nd a
t 7,0
89 r
esta
uran
tlo
catio
ns th
roug
h im
prov
ed le
ases
(th
e C
ompa
ny le
ases
land
and
bui
ldin
gs).
Lea
se te
rms
for
mos
t res
taur
ants
are
gen
eral
ly f
or 2
0 to
25
year
s an
d, in
man
y ca
ses,
pro
vide
for
ren
t esc
alat
ions
and
ren
ewal
optio
ns, w
ith c
erta
in le
ases
pro
vidi
ng p
urch
ase
optio
ns. F
or m
ost l
ocat
ions
, the
Com
pany
is o
blig
ated
for
the
rela
ted
occu
panc
y co
sts
incl
udin
g pr
oper
ty ta
xes,
insu
ranc
e an
d m
aint
enan
ce. I
n ad
ditio
n, th
eC
ompa
ny is
less
ee u
nder
non
canc
elab
le le
ases
cov
erin
g of
fice
s an
d ve
hicl
es.
Futu
re m
inim
um p
aym
ents
req
uire
d un
der
exis
ting
oper
atin
g le
ases
with
initi
al te
rms
of o
ne y
ear
or m
ore
are:
--------------------------------------------------------------------------------
IN MILLIONS Restaurant Other Total
================================================================================
2002 $ 772.3 $ 69.1 $ 841.4
2003 756.8 57.7 814.5
2004 731.1 48.2 779.3
2005 681.1 41.1 722.2
2006 653.5 36.4 689.9
Thereafter 5,901.6 166.8 6,068.4
--------------------------------------------------------------------------------
Total minimum payments $9,496.4 $419.3 $9,915.7
================================================================================
Ren
t exp
ense
was
(in
mill
ions
): 2
001-
$958
.6; 2
000-
$886
.4; 1
999-
$796
.3. T
hese
am
ount
s in
clud
ed p
erce
nt r
ents
in e
xces
s of
min
imum
ren
ts (
in m
illio
ns):
2001
-$11
9.6;
200
0-$1
33.0
; 199
9-$1
17.1
.
Deb
t fin
anci
ng
LIN
E O
F C
RE
DIT
AG
RE
EM
EN
TS
At D
ecem
ber
31, 2
001,
the
Com
pany
had
sev
eral
line
of
cred
it ag
reem
ents
with
var
ious
ban
ks to
talin
g $1
.3 b
illio
n, a
ll of
whi
ch r
emai
ned
unus
ed a
t yea
r-en
d 20
01. S
ubse
quen
t to
year
end
, the
Com
pany
rene
gotia
ted
thes
e lin
e of
cre
dit a
gree
men
ts a
s fo
llow
s: a
$75
0.0
mill
ion
line
expi
ring
in 2
003
with
a te
rm o
f 36
4 da
ys a
nd f
ees
of .0
45%
per
ann
um o
n th
e to
tal c
omm
itmen
t, w
ith a
fea
ture
that
allo
ws
the
Com
pany
to c
onve
rt th
e bo
rrow
ings
to a
one
-yea
r te
rm lo
an a
t any
tim
e pr
ior
to e
xpir
atio
n; a
$50
0.0
mill
ion
line
expi
ring
in F
ebru
ary
2007
with
fee
s of
.065
% p
er a
nnum
on
the
tota
l com
mitm
ent;
and
a$2
5.0
mill
ion
line
expi
ring
in 2
003
with
a te
rm o
f 36
4 da
ys a
nd f
ees
of .0
7% p
er a
nnum
on
the
tota
l com
mitm
ent.
Bor
row
ings
und
er th
e ag
reem
ents
bea
r in
tere
st a
t one
of
seve
ral s
peci
fied
flo
atin
g ra
tes
sele
cted
by
the
Com
pany
at t
he ti
me
of b
orro
win
g. I
n ad
ditio
n, c
erta
in s
ubsi
diar
ies
outs
ide
the
U.S
. had
unu
sed
lines
of
cred
it to
talin
g $7
85.3
mill
ion
at D
ecem
ber
31, 2
001;
thes
e w
ere
prin
cipa
lly s
hort
term
and
den
omin
ated
in v
ario
us c
urre
ncie
s at
loca
l mar
ket r
ates
of
inte
rest
.
gp
y
32 M
cDon
ald'
s C
orpo
ratio
n
The
wei
ghte
d-av
erag
e in
tere
st r
ate
of s
hort
-ter
m b
orro
win
gs, c
onsi
stin
g of
U.S
. Dol
lar
and
Eur
o co
mm
erci
al p
aper
and
for
eign
cur
renc
y ba
nk li
ne b
orro
win
gs, w
as3.
4% a
t Dec
embe
r 31
, 200
1 an
d 6.
9% a
t Dec
embe
r 31
, 200
0.
FA
IR V
AL
UE
S
At D
ecem
ber
31, 2
001,
the
fair
val
ue o
f th
e C
ompa
ny's
deb
t and
not
es p
ayab
le o
blig
atio
ns w
as e
stim
ated
at $
9.1
billi
on, c
ompa
red
to a
car
ryin
g am
ount
of
$8.9
bill
ion.
Thi
s fa
ir v
alue
was
est
imat
ed u
sing
vari
ous
pric
ing
mod
els
or d
isco
unte
d ca
sh f
low
ana
lyse
s th
at in
corp
orat
ed q
uote
d m
arke
t pri
ces.
The
Com
pany
has
no
curr
ent p
lans
to r
etir
e a
sign
ific
ant a
mou
nt o
f its
deb
t pri
or to
mat
urity
.
The
car
ryin
g am
ount
s fo
r bo
th c
ash
and
equi
vale
nts
and
note
s re
ceiv
able
app
roxi
mat
e fa
ir v
alue
. For
eign
cur
renc
y an
d in
tere
st-r
ate
exch
ange
agr
eem
ents
, for
eign
cur
renc
y op
tions
and
for
war
d fo
reig
nex
chan
ge c
ontr
acts
wer
e re
cord
ed in
the
Con
solid
ated
bal
ance
she
et a
t fai
r va
lue
estim
ated
usi
ng v
ario
us p
rici
ng m
odel
s or
dis
coun
ted
cash
flo
w a
naly
ses
that
inco
rpor
ated
quo
ted
mar
ket p
rice
s. N
o fa
irva
lue
was
est
imat
ed f
or n
onin
tere
st-b
eari
ng s
ecur
ity d
epos
its b
y fr
anch
isee
s, b
ecau
se th
ese
depo
sits
are
an
inte
gral
par
t of
the
over
all f
ranc
hise
arr
ange
men
ts. G
iven
the
mar
ket v
alue
of
its c
omm
on s
tock
and
its s
igni
fica
nt r
eal e
stat
e ho
ldin
gs, t
he C
ompa
ny b
elie
ves
that
the
fair
val
ue o
f its
tota
l ass
ets
was
sub
stan
tially
hig
her
than
the
carr
ying
val
ue a
t Dec
embe
r 31
, 200
1.
ESO
P L
OA
NS
AN
D O
TH
ER
GU
AR
AN
TE
ES
The
Com
pany
has
gua
rant
eed
and
incl
uded
in to
tal d
ebt a
t Dec
embe
r 31
, 200
1 $2
6.8
mill
ion
of N
otes
issu
ed b
y th
e L
ever
aged
Em
ploy
ee S
tock
Ow
ners
hip
Plan
(E
SOP)
with
pay
men
ts th
roug
h 20
06.
Bor
row
ings
rel
ated
to th
e E
SOP
at D
ecem
ber
31, 2
001,
whi
ch in
clud
e $8
9.1
mill
ion
of lo
ans
from
the
Com
pany
to th
e E
SOP
and
the
$26.
8 m
illio
n of
Not
es g
uara
ntee
d by
the
Com
pany
, are
ref
lect
ed a
slo
ng-t
erm
deb
t with
a c
orre
spon
ding
red
uctio
n of
sha
reho
lder
s' e
quity
(un
earn
ed E
SOP
com
pens
atio
n). T
he E
SOP
is r
epay
ing
the
loan
s an
d in
tere
st th
roug
h 20
18 u
sing
Com
pany
con
trib
utio
ns a
nddi
vide
nds
from
its
McD
onal
d's
com
mon
sto
ck h
oldi
ngs.
As
the
prin
cipa
l am
ount
of
the
borr
owin
gs is
rep
aid,
the
debt
and
the
unea
rned
ESO
P co
mpe
nsat
ion
are
bein
g re
duce
d.
The
Com
pany
als
o ha
s gu
aran
teed
cer
tain
aff
iliat
e an
d ot
her
loan
s to
talin
g $1
48.0
mill
ion
at D
ecem
ber
31, 2
001.
DE
BT
OB
LIG
AT
ION
S
The
Com
pany
has
incu
rred
deb
t obl
igat
ions
pri
ncip
ally
thro
ugh
publ
ic a
nd p
riva
te o
ffer
ings
and
ban
k lo
ans.
The
re a
re n
o pr
ovis
ions
in th
e C
ompa
ny's
deb
t obl
igat
ions
that
wou
ld a
ccel
erat
e re
paym
ent o
fde
bt a
s a
resu
lt of
a c
hang
e in
cre
dit r
atin
gs. C
erta
in o
f th
e C
ompa
ny's
deb
t obl
igat
ions
con
tain
cro
ss-d
efau
lt pr
ovis
ions
and
res
tric
tions
on
Com
pany
and
sub
sidi
ary
mor
tgag
es a
nd th
e lo
ng-t
erm
deb
t of
cert
ain
subs
idia
ries
. Und
er c
erta
in a
gree
men
ts, t
he C
ompa
ny h
as th
e op
tion
to r
etir
e de
bt p
rior
to m
atur
ity, e
ither
at p
ar o
r at
a p
rem
ium
ove
r pa
r. T
he f
ollo
win
g ta
ble
sum
mar
izes
the
Com
pany
's d
ebt
oblig
atio
ns (
the
inte
rest
rat
es r
efle
cted
in th
e ta
ble
incl
ude
the
effe
cts
of in
tere
st-r
ate
and
fore
ign
curr
ency
exc
hang
e ag
reem
ents
):
-------------------------------------------------------------------------------------------
Interest rates(1) Amounts outstanding
December 31 December 31
Maturity ----------- ------------------------
IN MILLIONS OF U.S. DOLLARS dates 2001 2000 2001 2000
===========================================================================================
Fixed-original issue(2) 6.2% 6.8% $ 3,293.8 $ 2,793.2
Fixed-converted via
exchange agreements(3) 5.3 6.1 (1,829.9) (351.5)
Floating 2.3 6.6 2,364.8 914.1
-------------------------------------------------------------------------------------------
Total U.S. Dollars 2002-2033 3,828.7 3,355.8
-------------------------------------------------------------------------------------------
Fixed 5.7 5.7 629.7 679.1
Floating 3.5 4.8 1,724.9 1,609.6
-------------------------------------------------------------------------------------------
Total Euro 2002-2015 2,354.6 2,288.7
-------------------------------------------------------------------------------------------
Fixed 6.1 6.2 698.8 524.6
Floating 5.6 7.2 150.3 233.3
-------------------------------------------------------------------------------------------
Total British Pounds
Sterling 2002-2021 849.1 757.9
-------------------------------------------------------------------------------------------
gp
y
Fixed 4.5 5.5 276.9 346.5
Floating 6.2 6.7 58.9 25.7
-------------------------------------------------------------------------------------------
Total other European
currencies(4) 2002-2006 335.8 372.2
-------------------------------------------------------------------------------------------
Fixed 2.3 2.7 584.0 589.0
Floating 0.1 0.5 227.9 262.4
-------------------------------------------------------------------------------------------
Total Japanese Yen 2005-2030 811.9 851.4
-------------------------------------------------------------------------------------------
Fixed 7.1 8.6 317.6 322.0
Floating 6.2 7.6 300.0 453.5
-------------------------------------------------------------------------------------------
Total other Asia/Pacific
currencies(5) 2002-2006 617.6 775.5
-------------------------------------------------------------------------------------------
Fixed 5.8 5.6 3.2 4.1
Floating 15.5 12.8 23.2 68.3
-------------------------------------------------------------------------------------------
Total other currencies 2002-2021 26.4 72.4
-------------------------------------------------------------------------------------------
Debt obligations before fair
value adjustments(6) 8,824.1 8,473.9
-------------------------------------------------------------------------------------------
Fair value adjustments(7) 93.9
-------------------------------------------------------------------------------------------
Total debt obligations $ 8,918.0 $ 8,473.9
===========================================================================================
(1)
Wei
ghte
d-av
erag
e ef
fect
ive
rate
, com
pute
d on
a s
emia
nnua
l bas
is.
(2)
Incl
udes
$15
0 m
illio
n of
deb
entu
res
that
mat
ure
in 2
027
($50
0 m
illio
n of
deb
entu
res
in 2
000)
, whi
ch a
re s
ubor
dina
ted
to s
enio
r de
bt a
nd p
rovi
de f
or th
e ab
ility
to d
efer
inte
rest
pay
men
ts u
p to
fiv
eye
ars
unde
r ce
rtai
n co
nditi
ons.
(3)
A p
ortio
n of
U.S
. Dol
lar
fixe
d-ra
te d
ebt e
ffec
tivel
y ha
s be
en c
onve
rted
into
oth
er c
urre
ncie
s an
d/or
into
flo
atin
g-ra
te d
ebt t
hrou
gh th
e us
e of
exc
hang
e ag
reem
ents
. The
rat
es s
how
n re
flec
t the
fix
ed r
ate
on th
e re
ceiv
able
por
tion
of th
e ex
chan
ge a
gree
men
ts. A
ll ot
her
oblig
atio
ns in
this
tabl
e re
flec
t the
net
eff
ects
of
thes
e an
d ot
her
inte
rest
-rat
e ex
chan
ge a
gree
men
ts.
(4)
Prim
arily
con
sist
s of
Sw
iss
Fran
cs, S
wed
ish
Kro
nor
and
Dan
ish
Kro
ner
in 2
001
(Sw
iss
Fran
cs in
200
0).
(5)
Prim
arily
con
sist
s of
Kor
ean
Won
, Chi
nese
Ren
min
bi a
nd N
ew T
aiw
anes
e D
olla
rs in
200
1 (A
ustr
alia
n D
olla
rs a
nd N
ew T
aiw
anes
e D
olla
rs in
200
0).
(6)
Agg
rega
te m
atur
ities
for
deb
t bal
ance
s at
Dec
embe
r 31
, 200
1, b
efor
e fa
ir v
alue
adj
ustm
ents
, wer
e as
fol
low
s: 2
002-
$362
.5; 2
003-
$796
.4; 2
004-
$1,6
21.6
; 200
5-$1
,072
.0; 2
006-
$843
.9; a
ndth
erea
fter
-$4,
127.
7. T
hese
am
ount
s in
clud
e re
clas
sifi
catio
ns o
f sh
ort-
term
obl
igat
ions
to lo
ng-t
erm
obl
igat
ions
of
$750
.0 in
200
4 an
d $5
00.0
in 2
007
as th
ey a
re s
uppo
rted
by
long
-ter
m li
ne o
f cr
edit
agre
emen
ts d
iscu
ssed
on
page
31.
(7)
Eff
ectiv
e Ja
nuar
y 1,
200
1, th
e C
ompa
ny a
dopt
ed S
FAS
133.
As
a re
sult,
deb
t obl
igat
ions
are
adj
uste
d to
fai
r va
lue
to th
e ex
tent
of
rela
ted
hedg
ing
inst
rum
ents
. The
rel
ated
hed
ging
inst
rum
ents
are
als
ore
cord
ed a
t fai
r va
lue
in e
ither
mis
cella
neou
s ot
her
asse
ts o
r lo
ng-t
erm
liab
ilitie
s.
gp
y
McDonald's Corporation 33
Property and equipment
===============================================================================
Net property and equipment consisted of:
-------------------------------------------------------------------------------
IN MILLIONS December 31, 2001 2000
===============================================================================
Land $ 3,975.6 $ 3,932.7
Buildings and improvements on owned land 8,127.0 8,250.0
Buildings and improvements on leased land 8,020.2 7,513.3
Equipment, signs and seating 3,371.7 3,172.2
Other 611.5 700.8
-------------------------------------------------------------------------------
24,106.0 23,569.0
-------------------------------------------------------------------------------
Accumulated depreciation and amortization (6,816.5) (6,521.4)
-------------------------------------------------------------------------------
Net property and equipment $ 17,289.5 $ 17,047.6
===============================================================================
Dep
reci
atio
n an
d am
ortiz
atio
n ex
pens
e w
as (
in m
illio
ns):
200
1-$9
45.6
; 200
0-$9
00.9
; 199
9-$8
58.1
.
Em
ploy
ee b
enef
it pl
ans
The
Com
pany
's P
rofi
t Sha
ring
and
Sav
ings
Pla
n fo
r U
.S.-
base
d em
ploy
ees
incl
udes
pro
fit s
hari
ng, 4
01(k
) an
d le
vera
ged
empl
oyee
sto
ck o
wne
rshi
p (E
SOP)
fea
ture
s. T
he 4
01(k
) fe
atur
e al
low
s pa
rtic
ipan
tsto
mak
e pr
etax
con
trib
utio
ns th
at a
re p
artly
mat
ched
fro
m s
hare
s re
leas
ed u
nder
the
ESO
P. M
cDon
ald'
s ex
ecut
ives
, sta
ff a
nd r
esta
uran
t man
ager
s pa
rtic
ipat
e in
add
ition
al E
SOP
allo
catio
ns a
nd p
rofi
tsh
arin
g co
ntri
butio
ns, b
ased
on
thei
r co
mpe
nsat
ion.
The
pro
fit s
hari
ng c
ontr
ibut
ion
is d
iscr
etio
nary
, and
the
Com
pany
det
erm
ines
the
amou
nt e
ach
year
.
Part
icip
ant 4
01(k
) co
ntri
butio
ns, p
rofi
t sha
ring
con
trib
utio
ns a
nd a
ny r
elat
ed e
arni
ngs
can
be in
vest
ed in
McD
onal
d's
com
mon
sto
ck o
r am
ong
seve
ral o
ther
inve
stm
ent a
ltern
ativ
es. T
he C
ompa
ny's
mat
chin
g co
ntri
butio
ns a
nd E
SOP
allo
catio
ns a
re g
ener
ally
inve
sted
in M
cDon
ald'
s co
mm
on s
tock
. Beg
inni
ng in
fir
st q
uart
er 2
002,
the
Com
pany
's m
atch
ing
cont
ribu
tions
can
be
inve
sted
in M
cDon
ald'
sco
mm
on s
tock
or
amon
g th
e ot
her
inve
stm
ent a
ltern
ativ
es.
In a
dditi
on, t
he C
ompa
ny m
aint
ains
a n
onqu
alif
ied,
unf
unde
d Su
pple
men
tal P
lan
that
allo
ws
part
icip
ants
to m
ake
tax-
defe
rred
con
trib
utio
ns a
nd r
ecei
ve C
ompa
ny-p
rovi
ded
allo
catio
ns th
at c
anno
t be
mad
eun
der
the
Prof
it Sh
arin
g an
d Sa
ving
s Pl
an b
ecau
se o
f In
tern
al R
even
ue S
ervi
ce li
mita
tions
. The
inve
stm
ent a
ltern
ativ
es in
the
Supp
lem
enta
l Pla
n in
clud
e ce
rtai
n of
the
sam
e in
vest
men
ts a
s th
e Pr
ofit
Shar
ing
and
Savi
ngs
Plan
. Tot
al li
abili
ties
unde
r th
e Su
pple
men
tal P
lan
wer
e $3
01.1
mill
ion
at D
ecem
ber
31, 2
001
and
$288
.8 m
illio
n at
Dec
embe
r 31
, 200
0, a
nd w
ere
incl
uded
in o
ther
long
-ter
mlia
bilit
ies
in th
e C
onso
lidat
ed b
alan
ce s
heet
.
The
Com
pany
has
ent
ered
into
der
ivat
ive
cont
ract
s to
hed
ge th
e ch
ange
s in
thes
e lia
bilit
ies.
At D
ecem
ber
31, 2
001,
der
ivat
ives
with
a f
air
valu
e of
$68
.2 m
illio
n in
dexe
d to
the
Com
pany
's s
tock
and
$18
.5m
illio
n in
dexe
d to
cer
tain
mar
ket i
ndic
es w
ere
incl
uded
in m
isce
llane
ous
othe
r as
sets
in th
e C
onso
lidat
ed b
alan
ce s
heet
. All
chan
ges
in P
lan
liabi
litie
s an
d in
the
fair
val
ue o
f th
e de
riva
tives
are
rec
orde
d in
selli
ng, g
ener
al &
adm
inis
trat
ive
expe
nses
. Cha
nges
in f
air
valu
e of
the
deri
vativ
es in
dexe
d to
the
Com
pany
's s
tock
are
rec
orde
d in
the
inco
me
stat
emen
t bec
ause
the
cont
ract
s pr
ovid
e th
e co
unte
rpar
ty w
itha
choi
ce o
f ca
sh s
ettle
men
t or
settl
emen
t in
shar
es.
Tot
al U
.S. c
osts
for
the
Prof
it Sh
arin
g an
d Sa
ving
s Pl
an, i
nclu
ding
non
qual
ifie
d be
nefi
ts a
nd r
elat
ed h
edgi
ng a
ctiv
ities
, wer
e (i
n m
illio
ns):
2001
-$54
.6; 2
000-
$49.
6; 1
999-
$49.
4.
Cer
tain
sub
sidi
arie
s ou
tsid
e th
e U
.S. a
lso
offe
r pr
ofit
shar
ing,
sto
ck p
urch
ase
or o
ther
sim
ilar
bene
fit p
lans
. Tot
al p
lan
cost
s ou
tsid
e th
e U
.S. w
ere
(in
mill
ions
): 2
001-
$39.
7; 2
000-
$38.
1; 1
999-
$37.
2.
Oth
er p
ostr
etir
emen
t ben
efits
and
pos
tem
ploy
men
t ben
efits
, exc
ludi
ng s
ever
ance
ben
efits
rel
ated
to th
e gl
obal
cha
nge
initi
ativ
es, w
ere
imm
ater
ial.
Stoc
k op
tions
At D
ecem
ber
31, 2
001,
the
Com
pany
had
fiv
e st
ock-
base
d co
mpe
nsat
ion
plan
s fo
r em
ploy
ees
and
none
mpl
oyee
dir
ecto
rs. O
ptio
ns to
pur
chas
e co
mm
on s
tock
are
gra
nted
at t
he f
air
mar
ket v
alue
of
the
gp
y
stoc
k on
the
date
of
gran
t. T
here
fore
, no
com
pens
atio
n co
st h
as b
een
reco
gniz
ed in
the
cons
olid
ated
fin
anci
al s
tate
men
ts f
or th
ese
plan
s.
Subs
tant
ially
all
of th
e op
tions
bec
ome
exer
cisa
ble
in f
our
equa
l ins
tallm
ents
, beg
inni
ng a
yea
r fr
om th
e da
te o
f th
e gr
ant,
and
expi
re 1
0 ye
ars
from
the
gran
t dat
e. I
n 20
01, t
he B
oard
of
Dir
ecto
rs a
ppro
ved
a th
ree-
year
ext
ensi
on to
the
term
of
44.2
mill
ion
optio
ns g
rant
ed b
etw
een
May
1, 1
999
and
Dec
embe
r 31
, 200
0 w
ith a
n ex
erci
se p
rice
gre
ater
than
$28
.90.
Bec
ause
the
mar
ket v
alue
of
the
stoc
k w
as le
ssth
an th
e ex
erci
se p
rice
of
the
optio
ns a
t the
tim
e of
ext
ensi
on, n
o co
mpe
nsat
ion
expe
nse
was
req
uire
d to
be
reco
rded
.
Als
o in
200
1, th
e B
oard
of
Dir
ecto
rs a
ppro
ved
a sp
ecia
l gra
nt o
f 11
.9 m
illio
n op
tions
at a
pri
ce o
f $2
8.90
as
an in
cent
ive
to m
eet a
n op
erat
ing
inco
me
perf
orm
ance
goa
l for
cal
enda
r ye
ar 2
003.
The
opt
ions
vest
on
Janu
ary
31, 2
004,
and
if th
e pe
rfor
man
ce g
oal i
s m
et, t
he o
ptio
ns w
ill r
etai
n th
eir
orig
inal
10-
year
term
; oth
erw
ise,
they
will
exp
ire
on J
une
30, 2
004.
34 M
cDon
ald'
s C
orpo
ratio
n
At D
ecem
ber
31, 2
001,
the
num
ber
of s
hare
s of
com
mon
sto
ck r
eser
ved
for
issu
ance
und
er th
e pl
ans
was
263
.5 m
illio
n in
clud
ing
70.6
mill
ion
avai
labl
e fo
r fu
ture
gra
nts.
A s
umm
ary
of th
e st
atus
of
the
Com
pany
's p
lans
as
of D
ecem
ber
31, 2
001,
200
0 an
d 19
99, a
nd c
hang
es d
urin
g th
e ye
ars
then
end
ed, i
s pr
esen
ted
in th
e fo
llow
ing
tabl
e.
---------------------------------------------------------------------------------------------------------
2001 2000 1999
----------------------- ----------------------- ----------------------
Weighted- Weighted- Weighted-
average average average
Shares exercise Shares exercise Shares exercise
Options IN MILLIONS price IN MILLIONS price IN MILLIONS price
=========================================================================================================
Outstanding at
beginning of year 175.8 $25.34 164.7 $23.06 164.0 $ 19.32
Granted(1) 38.6 29.37 26.5 35.16 25.4 40.35
Exercised (11.9) 13.70 (10.8) 13.68 (18.8) 13.89
Forfeited (9.6) 29.03 (4.6) 27.81 (5.9) 18.01
---------------------------------------------------------------------------------------------------------
Outstanding at
end of year 192.9 $26.65 175.8 $25.34 164.7 $ 23.06
=========================================================================================================
Exercisable at
end of year 98.2 79.3 69.4
=========================================================================================================
(1)
Incl
udes
the
spec
ial g
rant
in 2
001
of 1
1.9
mill
ion
optio
ns d
iscu
ssed
on
page
33.
Opt
ions
gra
nted
eac
h ye
ar w
ere
3.0%
, 2.0
% a
nd 1
.9%
of
wei
ghte
d av
erag
e co
mm
on s
hare
s ou
tsta
ndin
g fo
r 20
01, 2
000
and
1999
, rep
rese
ntin
g gr
ants
to a
ppro
xim
atel
y 15
,100
, 14,
100
and
12,7
00em
ploy
ees
in th
ose
thre
e ye
ars.
Whe
n st
ock
optio
ns a
re e
xerc
ised
, sha
res
are
issu
ed f
rom
trea
sury
sto
ck. T
he a
vera
ge p
er s
hare
cos
t of
trea
sury
sto
ck is
sued
for
opt
ion
exer
cise
s ov
er th
e la
st th
ree
year
s w
as $
7.29
, whi
le th
e av
erag
eop
tion
exer
cise
pri
ce o
ver
this
per
iod
was
$13
.79.
In
addi
tion,
sto
ck o
ptio
n ex
erci
ses
resu
lted
in $
335.
6 m
illio
n of
tax
bene
fits
for
the
Com
pany
dur
ing
the
thre
e ye
ars
ende
d D
ecem
ber
31, 2
001.
The
fol
low
ing
tabl
e pr
esen
ts in
form
atio
n re
late
d to
opt
ions
out
stan
ding
and
opt
ions
exe
rcis
able
at D
ecem
ber
31, 2
001,
bas
ed o
n ra
nges
of
exer
cise
pri
ces.
gp
y
-----------------------------------------------------------------------------------
December 31, 2001
-----------------------------------------------------------------------------------
Options outstanding Options exercisable
--------------------------------------- ------------------------
Weighted-
average
remaining Weighted- Weighted-
Range Number contractual average Number average
of exercise of options life exercise of options exercise
prices IN MILLIONS IN YEARS price IN MILLIONS price
===================================================================================
$10 to 15 26.9 1.7 $ 13.58 26.9 $ 13.56
16 to 23 36.1 4.4 20.64 22.3 20.05
24 to 34 83.6 7.2 27.25 29.9 25.64
35 to 46 46.3 10.6 37.85 19.1 38.60
-----------------------------------------------------------------------------------
$10 to 46 192.9 6.7 $ 26.65 98.2 $ 23.60
===================================================================================
Pro
form
a ne
t inc
ome
and
net i
ncom
e pe
r co
mm
on s
hare
wer
e de
term
ined
as
if th
e C
ompa
ny h
ad a
ccou
nted
for
its
empl
oyee
sto
ck o
ptio
ns u
nder
the
fair
val
ue m
etho
d of
SFA
S N
o. 1
23. F
or p
ro f
orm
adi
sclo
sure
s, th
e op
tions
' est
imat
ed f
air
valu
e w
as a
mor
tized
ove
r th
eir
expe
cted
sev
en-y
ear
life.
SFA
S N
o. 1
23 d
oes
not a
pply
to g
rant
s be
fore
199
5. A
s a
resu
lt, th
e pr
o fo
rma
disc
losu
res
for
2000
and
199
9do
not
incl
ude
a fu
ll se
ven
year
s of
gra
nts
and,
ther
efor
e, m
ay n
ot b
e in
dica
tive
of a
ntic
ipat
ed f
utur
e di
sclo
sure
s. T
he f
air
valu
e fo
r th
ese
optio
ns w
as e
stim
ated
at t
he d
ate
of g
rant
usi
ng a
n op
tion
pric
ing
mod
el. T
he m
odel
was
des
igne
d to
est
imat
e th
e fa
ir v
alue
of
exch
ange
-tra
ded
optio
ns th
at, u
nlik
e em
ploy
ee s
tock
opt
ions
, can
be
trad
ed a
t any
tim
e an
d ar
e fu
lly tr
ansf
erab
le. I
n ad
ditio
n, s
uch
mod
els
requ
ire
the
inpu
t of
high
ly s
ubje
ctiv
e as
sum
ptio
ns in
clud
ing
the
expe
cted
vol
atili
ty o
f th
e st
ock
pric
e. T
here
fore
, in
man
agem
ent's
opi
nion
, the
exi
stin
g m
odel
s do
not
pro
vide
a r
elia
ble
sing
le m
easu
re o
fth
e va
lue
of e
mpl
oyee
sto
ck o
ptio
ns. T
he f
ollo
win
g ta
bles
pre
sent
the
pro
form
a di
sclo
sure
s an
d th
e w
eigh
ted-
aver
age
assu
mpt
ions
use
d to
est
imat
e th
e fa
ir v
alue
of
thes
e op
tions
:
---------------------------------------------------------------------------------------------
Pro forma disclosures 2001 2000 1999
=============================================================================================
Net income-pro forma IN MILLIONS $ 1,481.8 $ 1,842.4 $ 1,844.0
Net income per common share-
pro forma
Basic 1.15 1.39 1.36
Diluted 1.13 1.36 1.31
Weighted-average fair value
per option granted 10.66 14.11 14.06
=============================================================================================
---------------------------------------------------------------------------------------------
Assumptions 2001 2000 1999
---------------------------------------------------------------------------------------------
Expected dividend yield .65% .65% .65%
Expected stock price volatility 29.9% 38.8% 22.9%
Risk-free interest rate 5.03% 6.39% 5.72%
Expected life of options IN YEARS 7 7 7
=============================================================================================
gp
y
McD
onal
d's
Cor
pora
tion
35
Quarterly results (unaudited)
====================================================================================================================================
------------------------------------------------------------------------------------------------------------------------------------
Quarters ended Quarters ended Quarters ended
Quarters ended
December 31 September 30 June 30
March 31
------------------------------------------------------------------------------------------------------------------------------------
IN MILLIONS, EXCEPT PER SHARE DATA 2001 2000 2001 2000 2001 2000
2001 2000
------------------------------------------------------------------------------------------------------------------------------------
Systemwide sales $10,112.7 $9,924.5 $10,629.2 $10,512.4 $10,238.8 $10,237.6
$9,649.7 $9,506.7
------------------------------------------------------------------------------------------------------------------------------------
Revenues
Sales by Company-operated
restaurants $ 2,811.4 $2,676.6 $ 2,876.9 $ 2,768.5 $ 2,738.2 $ 2,582.0
$2,614.2 $2,439.9
Revenues from franchised
and affiliated restaurants 960.1 913.0 1,002.4 980.5 969.3 978.6
897.5 903.9
------------------------------------------------------------------------------------------------------------------------------------
Total revenues 3,771.5 3,589.6 3,879.3 3,749.0 3,707.5 3,560.6
3,511.7 3,343.8
------------------------------------------------------------------------------------------------------------------------------------
Company-operated margin 383.5 404.2 436.1 470.9 396.6 435.0
370.8 406.8
Franchised margin 758.1 721.1 799.0 788.5 771.4 784.0
700.6 710.1
Operating income 482.7(1) 774.0 746.6(2) 910.8 772.5(4) 876.3
695.2 768.6
Net income $ 271.9(1) $ 452.0 $ 545.5(3) $ 548.5 $ 440.9(4) $ 525.9
$ 378.3 $ 450.9
------------------------------------------------------------------------------------------------------------------------------------
Net income per common share $ .21(1) $ .35 $ .42(3) $ .42 $ .34(4) $ .40
$ .29 $ .34
Net income per common
share-diluted .21(1) .34 .42(3) .41 .34(4) .39
.29 .33
------------------------------------------------------------------------------------------------------------------------------------
Dividends per common share $ .225 $ -- $ -- $ .215 $ -- $ --
$ -- $ --
------------------------------------------------------------------------------------------------------------------------------------
Weighted-average shares 1,282.7 1,307.0 1,286.1 1,315.6 1,289.7 1,327.1
1,300.7 1,343.4
Weighted-average
shares-diluted 1,299.3 1,335.8 1,305.8 1,346.0 1,311.1 1,365.5
1,325.3 1,383.8
gp
y
------------------------------------------------------------------------------------------------------------------------------------
Market price per common share
High $ 30.10 $ 34.50 $ 31.00 $ 34.25 $ 30.96 $ 39.94
$ 35.06 $ 43.63
Low 25.00 27.56 26.00 26.38 25.39 31.00
24.75 29.81
Close 26.47 34.00 27.14 30.19 27.06 32.94
26.55 37.38
====================================================================================================================================
(1)
Incl
udes
the
follo
win
g pr
etax
spe
cial
cha
rges
tota
ling
$0.1
3 of
exp
ense
per
sha
re:
. $20
0.0
mill
ion
($13
6.1
mill
ion
afte
r ta
x) r
elat
ed to
the
U.S
. bus
ines
s re
orga
niza
tion
and
glob
al c
hang
e in
itiat
ives
.. $
25.0
mill
ion
($17
.0 m
illio
n af
ter
tax)
rel
ated
to u
nrec
over
able
cos
ts in
curr
ed in
con
nect
ion
with
the
thef
t of
prom
otio
nal g
ame
piec
es a
nd th
e re
late
d te
rmin
atio
n of
a s
uppl
ier.
. $20
.0 m
illio
n ($
13.6
mill
ion
afte
r ta
x) r
elat
ed to
the
antic
ipat
ed d
ispo
sitio
n of
Aro
ma
Caf
e in
the
U.K
.. $
7.1
mill
ion
($4.
8 m
illio
n af
ter
tax)
rel
ated
to th
e cl
osin
g of
an
addi
tiona
l nin
e un
derp
erfo
rmin
g re
stau
rant
s in
inte
rnat
iona
l mar
kets
.(2
) In
clud
es $
101.
5 m
illio
n of
pre
tax
spec
ial c
harg
es (
$76.
0 m
illio
n af
ter
tax)
rel
ated
pri
mar
ily to
the
clos
ing
of 1
54 u
nder
perf
orm
ing
rest
aura
nts
in in
tern
atio
nal m
arke
ts a
nd th
e w
rite
-off
of
cert
ain
tech
nolo
gy c
osts
.(3
) In
add
ition
to th
e $1
01.5
mill
ion
of p
reta
x sp
ecia
l cha
rges
not
ed in
(2)
abo
ve, i
nclu
des
$137
.1 m
illio
n ga
in (
pre
and
afte
r ta
x) o
n th
e in
itial
pub
lic o
ffer
ing
of M
cDon
ald'
s Ja
pan
and
$12.
4 m
illio
n of
pret
ax s
peci
al c
harg
es (
$8.1
mill
ion
afte
r ta
x) p
rim
arily
rel
ated
to th
e w
rite
-off
of
a co
rpor
ate
inve
stm
ent (
tota
ling
$0.0
4 of
inco
me
per
shar
e).
(4)
Incl
udes
$24
.0 m
illio
n as
set i
mpa
irm
ent c
harg
e (p
re a
nd a
fter
tax
or $
0.02
per
sha
re)
in T
urke
y.
36 M
cDon
ald'
s C
orpo
ratio
n
Man
agem
ent's
rep
ort
Man
agem
ent i
s re
spon
sibl
e fo
r th
e pr
epar
atio
n, in
tegr
ity a
nd f
air
pres
enta
tion
of th
e co
nsol
idat
ed f
inan
cial
sta
tem
ents
and
fin
anci
al c
omm
ents
. The
fin
anci
al s
tate
men
ts w
ere
prep
ared
in a
ccor
danc
e w
ithac
coun
ting
prin
cipl
es g
ener
ally
acc
epte
d in
the
U.S
. and
incl
ude
cert
ain
amou
nts
base
d on
man
agem
ent's
judg
men
t and
bes
t est
imat
es. O
ther
fin
anci
al in
form
atio
n pr
esen
ted
is c
onsi
sten
t with
the
fina
ncia
lst
atem
ents
.
The
Com
pany
mai
ntai
ns a
sys
tem
of
inte
rnal
con
trol
s ov
er f
inan
cial
rep
ortin
g in
clud
ing
safe
guar
ding
of
asse
ts a
gain
st u
naut
hori
zed
acqu
isiti
on, u
se o
r di
spos
ition
, whi
ch is
des
igne
d to
pro
vide
rea
sona
ble
assu
ranc
e to
the
Com
pany
's m
anag
emen
t and
Boa
rd o
f D
irec
tors
reg
ardi
ng th
e pr
epar
atio
n of
rel
iabl
e pu
blis
hed
fina
ncia
l sta
tem
ents
and
ass
et s
afeg
uard
ing.
The
sys
tem
incl
udes
a d
ocum
ente
dor
gani
zatio
nal s
truc
ture
and
app
ropr
iate
div
isio
n of
res
pons
ibili
ties;
est
ablis
hed
polic
ies
and
proc
edur
es th
at a
re c
omm
unic
ated
thro
ugho
ut th
e C
ompa
ny; c
aref
ul s
elec
tion,
trai
ning
, and
dev
elop
men
t of
our
peop
le; a
nd u
tiliz
atio
n of
an
inte
rnal
aud
it pr
ogra
m. P
olic
ies
and
proc
edur
es p
resc
ribe
that
the
Com
pany
and
all
empl
oyee
s ar
e to
mai
ntai
n hi
gh s
tand
ards
of
prop
er b
usin
ess
prac
tices
thro
ugho
ut th
e w
orld
.
The
re a
re in
here
nt li
mita
tions
to th
e ef
fect
iven
ess
of a
ny s
yste
m o
f in
tern
al c
ontr
ol, i
nclu
ding
the
poss
ibili
ty o
f hu
man
err
or a
nd th
e ci
rcum
vent
ion
or o
verr
idin
g of
con
trol
s. A
ccor
ding
ly, e
ven
an e
ffec
tive
inte
rnal
con
trol
sys
tem
can
pro
vide
onl
y re
ason
able
ass
uran
ce w
ith r
espe
ct to
fin
anci
al s
tate
men
t pre
para
tion
and
safe
guar
ding
of
asse
ts. F
urth
erm
ore,
the
effe
ctiv
enes
s of
an
inte
rnal
con
trol
sys
tem
can
chan
ge w
ith c
ircu
mst
ance
s. T
he C
ompa
ny b
elie
ves
that
it m
aint
ains
an
effe
ctiv
e sy
stem
of
inte
rnal
con
trol
ove
r fi
nanc
ial r
epor
ting
and
safe
guar
ding
of
asse
ts a
gain
st u
naut
hori
zed
acqu
isiti
on, u
se o
rdi
spos
ition
.
The
con
solid
ated
fin
anci
al s
tate
men
ts h
ave
been
aud
ited
by in
depe
nden
t aud
itors
, Ern
st &
You
ng L
LP,
who
wer
e gi
ven
unre
stri
cted
acc
ess
to a
ll fi
nanc
ial r
ecor
ds a
nd r
elat
ed d
ata.
The
aud
it re
port
of
Ern
st&
You
ng L
LP
is p
rese
nted
her
ein.
The
Boa
rd o
f D
irec
tors
, ope
ratin
g th
roug
h its
Aud
it C
omm
ittee
com
pose
d en
tirel
y of
inde
pend
ent D
irec
tors
, pro
vide
s ov
ersi
ght t
o th
e fi
nanc
ial r
epor
ting
proc
ess.
Ern
st &
You
ng L
LP
has
unre
stri
cted
acce
ss to
the
Aud
it C
omm
ittee
and
reg
ular
ly m
eets
with
the
Com
mitt
ee to
dis
cuss
acc
ount
ing,
aud
iting
and
fin
anci
al r
epor
ting
mat
ters
.
McD
ON
AL
D'S
CO
RP
OR
AT
ION
Janu
ary
24, 2
002
Rep
ort o
f in
depe
nden
t aud
itors
The
Boa
rd o
f D
irec
tors
and
Sha
reho
lder
s M
cDon
ald'
s C
orpo
rati
on
gp
y
We
have
aud
ited
the
acco
mpa
nyin
g C
onso
lidat
ed b
alan
ce s
heet
of
McD
onal
d's
Cor
pora
tion
as o
f D
ecem
ber
31, 2
001
and
2000
, and
the
rela
ted
Con
solid
ated
sta
tem
ents
of
inco
me,
sha
reho
lder
s' e
quity
and
cash
flo
ws
for
each
of
the
thre
e ye
ars
in th
e pe
riod
end
ed D
ecem
ber
31, 2
001.
The
se f
inan
cial
sta
tem
ents
are
the
resp
onsi
bilit
y of
McD
onal
d's
Cor
pora
tion
man
agem
ent.
Our
res
pons
ibili
ty is
to e
xpre
ss a
nop
inio
n on
thes
e fi
nanc
ial s
tate
men
ts b
ased
on
our
audi
ts.
We
cond
ucte
d ou
r au
dits
in a
ccor
danc
e w
ith a
uditi
ng s
tand
ards
gen
eral
ly a
ccep
ted
in th
e U
.S. T
hose
sta
ndar
ds r
equi
re th
at w
e pl
an a
nd p
erfo
rm th
e au
dit t
o ob
tain
rea
sona
ble
assu
ranc
e ab
out w
heth
er th
efi
nanc
ial s
tate
men
ts a
re f
ree
of m
ater
ial m
isst
atem
ent.
An
audi
t inc
lude
s ex
amin
ing,
on
a te
st b
asis
, evi
denc
e su
ppor
ting
the
amou
nts
and
disc
losu
res
in th
e fi
nanc
ial s
tate
men
ts. A
n au
dit a
lso
incl
udes
asse
ssin
g th
e ac
coun
ting
prin
cipl
es u
sed
and
sign
ific
ant e
stim
ates
mad
e by
man
agem
ent,
as w
ell a
s ev
alua
ting
the
over
all f
inan
cial
sta
tem
ent p
rese
ntat
ion.
We
belie
ve th
at o
ur a
udits
pro
vide
a r
easo
nabl
eba
sis
for
our
opin
ion.
In o
ur o
pini
on, t
he f
inan
cial
sta
tem
ents
ref
erre
d to
abo
ve p
rese
nt f
airl
y, in
all
mat
eria
l res
pect
s, th
e co
nsol
idat
ed f
inan
cial
pos
ition
of
McD
onal
d's
Cor
pora
tion
at D
ecem
ber
31, 2
001
and
2000
, and
the
cons
olid
ated
res
ults
of
its o
pera
tions
and
its
cash
flo
ws
for
each
of
the
thre
e ye
ars
in th
e pe
riod
end
ed D
ecem
ber
31, 2
001,
in c
onfo
rmity
with
acc
ount
ing
prin
cipl
es g
ener
ally
acc
epte
d in
the
U.S
.
As
disc
usse
d in
the
Not
es to
the
cons
olid
ated
fin
anci
al s
tate
men
ts, e
ffec
tive
Janu
ary
1, 2
001,
the
Com
pany
cha
nged
its
met
hod
for
acco
untin
g fo
r de
riva
tive
fina
ncia
l ins
trum
ents
to c
onfo
rm w
ith S
FAS
No.
133
, Acc
ount
ing
for
Der
ivat
ive
Inst
rum
ents
and
Hed
ging
Act
iviti
es.
ER
NST
& Y
OU
NG
LL
PC
hica
go, I
llino
isJa
nuar
y 24
, 200
2
McD
onal
d's
Cor
pora
tion
37
Item
9. C
hang
es in
and
dis
agre
emen
ts w
ith
acco
unta
nts
on a
ccou
ntin
g an
dfi
nanc
ial d
iscl
osur
e
Non
e.
Par
t II
I
Item
10.
Dir
ecto
rs a
nd E
xecu
tive
Off
icer
s of
the
reg
istr
ant
Info
rmat
ion
rega
rdin
g di
rect
ors
is in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
the
Com
pany
's d
efin
itive
pro
xy s
tate
men
t, w
hich
will
be
file
d no
late
r th
an 1
20 d
ays
afte
r D
ecem
ber
31, 2
001.
Info
rmat
ion
rega
rdin
g al
l of
the
Com
pany
's e
xecu
tive
offi
cers
is in
clud
ed in
Par
t I, I
tem
4, p
age
6 of
this
For
m 1
0-K
.
Item
11.
Exe
cuti
ve c
ompe
nsat
ion
Inco
rpor
ated
her
ein
by r
efer
ence
fro
m th
e C
ompa
ny's
def
initi
ve p
roxy
sta
tem
ent,
whi
ch w
ill b
e fi
led
no la
ter
than
120
day
s af
ter
Dec
embe
r 31
, 200
1.
Item
12.
Sec
urit
y ow
ners
hip
of c
erta
in b
enef
icia
l ow
ners
and
man
agem
ent
Inco
rpor
ated
her
ein
by r
efer
ence
fro
m th
e C
ompa
ny's
def
initi
ve p
roxy
sta
tem
ent,
whi
ch w
ill b
e fi
led
no la
ter
than
120
day
s af
ter
Dec
embe
r 31
, 200
1.
Item
13.
Cer
tain
rel
atio
nshi
ps a
nd r
elat
ed t
rans
acti
ons
Inco
rpor
ated
her
ein
by r
efer
ence
fro
m th
e C
ompa
ny's
def
initi
ve p
roxy
sta
tem
ent,
whi
ch w
ill b
e fi
led
no la
ter
than
120
day
s af
ter
Dec
embe
r 31
, 200
1.
gp
y
Par
t IV
Item
14.
Fin
anci
al s
tate
men
t sc
hedu
les,
exh
ibit
s, a
nd r
epor
ts o
n F
orm
8-K
(a)
1. F
INA
NC
IAL
ST
AT
EM
EN
TS
Con
solid
ated
fin
anci
al s
tate
men
ts f
iled
as p
art o
f th
is r
epor
t are
list
ed u
nder
Part
II,
Ite
m 8
, pag
es 2
2-25
of
this
For
m 1
0-K
.
2.FI
NA
NC
IAL
ST
AT
EM
EN
T S
CH
ED
UL
ES
No
sche
dule
s ar
e re
quir
ed b
ecau
se e
ither
the
requ
ired
info
rmat
ion
is n
ot p
rese
nt o
r is
not
pre
sent
in a
mou
nts
suff
icie
nt to
req
uire
sub
mis
sion
of
the
sche
dule
, or
beca
use
the
info
rmat
ion
requ
ired
is in
clud
edin
the
cons
olid
ated
fin
anci
al s
tate
men
ts o
r th
e no
tes
ther
eto.
(b)
RE
POR
TS
ON
FO
RM
8-K
The
fol
low
ing
repo
rts
on F
orm
8-K
wer
e fi
led
for
the
last
qua
rter
cov
ered
by
this
rep
ort,
and
subs
eque
ntly
up
to M
arch
25,
200
2.
--------------------------------------------------------------------------------
Financial statements
Date of report Item number required to be filed
================================================================================
10/17/2001 Item 5 and 7 No
10/29/2001 Item 5 and 7 No
12/14/2001 Item 5 and 7 No
1/24/2002 Item 5 and 7 No
2/12/2002 Item 5 and 7 No
--------------------------------------------------------------------------------
(c)
EX
HIB
ITS
The
exh
ibits
list
ed in
the
acco
mpa
nyin
g in
dex
are
file
d as
par
t of
this
rep
ort.
38 M
cDon
ald'
s C
orpo
ratio
n
McD
onal
d's
Cor
pora
tion
exhi
bit i
ndex
(It
em 1
4)
Exh
ibit
Num
ber/
Des
crip
tion
(3)
(i)
Res
tate
d C
ertif
icat
e of
Inc
orpo
ratio
n, e
ffec
tive
as o
f M
arch
24,
199
8, in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
For
m 8
-K d
ated
Apr
il 17
, 199
8.
(ii)
By-
Law
s, e
ffec
tive
as o
f Ju
ne 1
, 200
0, in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
For
m 1
0-Q
for
the
quar
ter
ende
d Ju
ne 3
0, 2
000.
(4)
Inst
rum
ents
def
inin
g th
e ri
ghts
of
secu
rity
hol
ders
, inc
ludi
ng I
nden
ture
s: *
*
(a)
Seni
or D
ebt S
ecur
ities
Ind
entu
re d
ated
as
of O
ctob
er 1
9, 1
996
inco
rpor
ated
her
ein
by r
efer
ence
fro
m E
xhib
it 4(
a) o
f Fo
rm S
-3 R
egis
trat
ion
Stat
emen
t (Fi
le N
o. 3
33-1
4141
).
(i)
6 3/
8% D
eben
ture
s du
e Ja
nuar
y 8,
202
8. S
uppl
emen
tal I
nden
ture
No.
1 d
ated
as
of J
anua
ry 8
, 199
8, in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
4(a)
of
Form
8-K
dat
ed J
anua
ry 5
, 199
8.
(ii)
6%
RE
set P
ut S
ecur
ities
due
201
2. S
uppl
emen
tal I
nden
ture
No.
3 d
ated
as
of J
une
23, 1
998,
inco
rpor
ated
her
ein
by r
efer
ence
fro
m E
xhib
it 4(
a) o
f Fo
rm 8
-K d
ated
Jun
e 18
, 199
8.
(iii)
Med
ium
-Ter
m N
otes
, Ser
ies
F, d
ue f
rom
1 y
ear
to 6
0 ye
ars
from
the
Dat
e of
Iss
ue. S
uppl
emen
tal I
nden
ture
No.
4 in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
4(c)
of
Form
S-3
Reg
istr
atio
n
gp
y
Stat
emen
t (Fi
le N
o. 3
33-5
9145
) da
ted
July
15,
199
8.
(iv)
Med
ium
-Ter
m N
otes
, Ser
ies
G, d
ue f
rom
1 Y
ear
to 6
0 Y
ears
fro
m D
ate
of I
ssue
. Sup
plem
enta
l Ind
entu
re, N
o. 6
inco
rpor
ated
her
ein
by r
efer
ence
fro
m E
xhib
it 4(
c) o
f Fo
rm S
-3 R
egis
trat
ion
Stat
emen
t(F
ile N
o. 3
33-6
0170
) da
ted
May
3, 2
001.
(b)
Subo
rdin
ated
Deb
t Sec
uriti
es I
nden
ture
dat
ed a
s of
Oct
ober
18,
199
6, in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
For
m 8
-K d
ated
Oct
ober
18,
199
6.
(i)
7.31
% S
ubor
dina
ted
Def
erra
ble
Inte
rest
Deb
entu
res
due
2027
. Sup
plem
enta
l Ind
entu
re N
o. 3
dat
ed S
epte
mbe
r 24
, 199
7, in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
(4)(
b) o
f Fo
rm 8
-K d
ated
Sept
embe
r 19
, 199
7.
(c)
Deb
t Sec
uriti
es. I
nden
ture
dat
ed a
s of
Mar
ch 1
, 198
7 in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
4(a)
of
Form
S-3
Reg
istr
atio
n St
atem
ent (
File
No.
33-
1236
4).
(i)
Med
ium
-Ter
m N
otes
, Ser
ies
B, d
ue f
rom
nin
e m
onth
s to
30
year
s fr
om D
ate
of I
ssue
. Sup
plem
enta
l Ind
entu
re N
o. 1
2 in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
(4)
of F
orm
8-K
dat
ed A
ugus
t 18,
1989
and
For
ms
of M
ediu
m-T
erm
Not
es, S
erie
s B
, inc
orpo
rate
d he
rein
by
refe
renc
e fr
om E
xhib
it (4
)(b)
of
Form
8-K
dat
ed S
epte
mbe
r 14
, 198
9.
(ii)
Med
ium
-Ter
m N
otes
, Ser
ies
C, d
ue f
rom
nin
e m
onth
s to
30
year
s fr
om D
ate
of I
ssue
. For
m o
f Su
pple
men
tal I
nden
ture
No.
15
inco
rpor
ated
her
ein
by r
efer
ence
fro
m E
xhib
it 4(
b) o
f Fo
rm S
-3R
egis
trat
ion
Stat
emen
t (Fi
le N
o. 3
3-34
762)
dat
ed M
ay 1
4, 1
990.
(iii)
Med
ium
-Ter
m N
otes
, Ser
ies
C, d
ue f
rom
nin
e m
onth
s (U
.S. I
ssue
) /1
84 d
ays
(Eur
o Is
sue)
to 3
0 ye
ars
from
Dat
e of
Iss
ue. A
men
ded
and
rest
ated
Sup
plem
enta
l Ind
entu
re N
o. 1
6 in
corp
orat
ed h
erei
n by
refe
renc
e fr
om E
xhib
it (4
) of
For
m 1
0-Q
for
the
peri
od e
nded
Mar
ch 3
1, 1
991.
(iv)
8-7
/8%
Deb
entu
res
due
2011
. Sup
plem
enta
l Ind
entu
re N
o. 1
7 in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
(4)
of F
orm
8-K
dat
ed A
pril
22, 1
991.
(v)
Med
ium
-Ter
m N
otes
, Ser
ies
D, d
ue f
rom
nin
e m
onth
s (U
.S. I
ssue
) /1
84 d
ays
(Eur
o Is
sue)
to 6
0 ye
ars
from
Dat
e of
Iss
ue. S
uppl
emen
tal I
nden
ture
No.
18
inco
rpor
ated
her
ein
by r
efer
ence
fro
m E
xhib
it4(
b) o
f Fo
rm S
-3 R
egis
trat
ion
Stat
emen
t (Fi
le N
o. 3
3-42
642)
dat
ed S
epte
mbe
r 10
, 199
1.
(vi)
7-3
/8%
Deb
entu
res
due
July
15,
203
3. F
orm
of
Supp
lem
enta
l Ind
entu
re N
o. 2
1 in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
(4)(
a) o
f Fo
rm 8
-K d
ated
Jul
y 15
, 199
3.
(vii)
Med
ium
-Ter
m N
otes
, Ser
ies
E, d
ue f
rom
nin
e m
onth
s (U
.S. I
ssue
) /1
84 d
ays
(Eur
o Is
sue)
to 6
0 ye
ars
from
the
Dat
e of
Iss
ue. S
uppl
emen
tal I
nden
ture
No.
22
inco
rpor
ated
her
ein
by r
efer
ence
fro
mE
xhib
it 4(
b) o
f Fo
rm S
-3 R
egis
trat
ion
Stat
emen
t (Fi
le N
o. 3
3-60
939)
dat
ed J
uly
13, 1
995.
(viii
) 6-
5/8%
Not
es d
ue S
epte
mbe
r 1,
200
5. F
orm
of
Supp
lem
enta
l Ind
entu
re N
o. 2
3 in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
(4)(
a) o
f Fo
rm 8
-K d
ated
Sep
tem
ber
5, 1
995.
(ix)
7.0
5% D
eben
ture
s du
e 20
25. F
orm
of
Supp
lem
enta
l Ind
entu
re N
o. 2
4 in
corp
orat
ed h
erei
n by
ref
eren
ce f
rom
Exh
ibit
(4)(
a) o
f Fo
rm 8
-K d
ated
Nov
embe
r 13
, 199
5.
McD
onal
d's
Cor
pora
tion
39
Exh
ibit
Num
ber/
Des
crip
tion
(10)
Mat
eria
l Con
trac
ts
(a)
Dir
ecto
rs' S
tock
Pla
n, a
s am
ende
d an
d re
stat
ed, i
ncor
pora
ted
here
in b
y re
fere
nce
from
For
m 1
0-Q
for
the
quar
ter
ende
d Ju
ne 3
0, 2
001.
*
(b)
Prof
it Sh
arin
g Pr
ogra
m, a
s am
ende
d an
d re
stat
ed, i
ncor
pora
ted
here
in b
y re
fere
nce
from
For
m 1
0-K
for
the
year
end
ed D
ecem
ber
31, 1
999.
*
(i)
Firs
t Am
endm
ent t
o th
e M
cDon
ald'
s Pr
ofit
Shar
ing
Prog
ram
, inc
orpo
rate
d he
rein
by
refe
renc
e fr
om F
orm
10-
Q f
or th
e qu
arte
r en
ded
Sept
embe
r 30
, 200
0.*
(ii)
Sec
ond
Am
endm
ent t
o th
e M
cDon
ald'
s Pr
ofit
Shar
ing
Prog
ram
, inc
orpo
rate
d he
rein
by
refe
renc
e fr
om F
orm
10-
Q f
or th
e qu
arte
r en
ded
Mar
ch 3
1, 2
001.
*
(iii)
Thi
rd A
men
dmen
t to
the
McD
onal
d's
Prof
it Sh
arin
g Pr
ogra
m, i
ncor
pora
ted
here
in b
y re
fere
nce
from
For
m 1
0-Q
for
the
quar
ter
ende
d M
arch
31,
200
1.*
(c)
McD
onal
d's
Cor
pora
tion
Supp
lem
enta
l Pro
fit S
hari
ng a
nd S
avin
gs P
lan,
file
d he
rew
ith.*
(d)
1975
Sto
ck O
wne
rshi
p O
ptio
n Pl
an, a
s am
ende
d an
d re
stat
ed, i
ncor
pora
ted
here
in b
y re
fere
nce
from
For
m 1
0-Q
for
the
quar
ter
ende
d Se
ptem
ber
30, 2
001.
*
(e)
1992
Sto
ck O
wne
rshi
p In
cent
ive
Plan
, as
amen
ded
and
rest
ated
, inc
orpo
rate
d he
rein
by
refe
renc
e fr
om F
orm
10-
Q f
or th
e qu
arte
r en
ded
Mar
ch 3
1, 2
001.
*
gp
y
(f)
1999
Non
-Em
ploy
ee D
irec
tor
Stoc
k O
ptio
n Pl
an, a
s am
ende
d an
d re
stat
ed, i
ncor
pora
ted
here
in b
y re
fere
nce
from
For
m 1
0-Q
for
the
quar
ter
ende
d Se
ptem
ber
30, 2
000.
*
(g)
Exe
cutiv
e R
eten
tion
Plan
, as
amen
ded
and
rest
ated
Mar
ch 2
0, 2
002,
file
d he
rew
ith.*
(h)
Seni
or D
irec
tor
Let
ter
Agr
eem
ent b
etw
een
Gor
don
C. G
ray
and
the
Com
pany
, inc
orpo
rate
d he
rein
by
refe
renc
e fr
om F
orm
10-
Q f
or th
e qu
arte
r en
ded
June
30,
200
1.*
(i)
Seni
or D
irec
tor
Let
ter
Agr
eem
ent b
etw
een
Don
ald
R. K
eoug
h an
d th
e C
ompa
ny, i
ncor
pora
ted
here
in b
y re
fere
nce
from
For
m 1
0-Q
for
the
quar
ter
ende
d Ju
ne 3
0, 2
001.
*
(j)
McD
onal
d's
Cor
pora
tion
2001
Om
nibu
s St
ock
Ow
ners
hip
Plan
, inc
orpo
rate
d he
rein
by
refe
renc
e fr
om F
orm
10-
Q f
or th
e qu
arte
r en
ded
June
30,
200
1.*
(k)
Form
of
McD
onal
d's
Cor
pora
tion
Tie
r I
Cha
nge
of C
ontr
ol E
mpl
oym
ent A
gree
men
t aut
hori
zed
by th
e B
oard
of
Dir
ecto
rs a
nd e
xpec
ted
to b
e en
tere
d in
to b
etw
een
the
Com
pany
and
cer
tain
key
exec
utiv
es, a
nd f
iled
here
with
.* T
he A
gree
men
t will
be
desc
ribe
d in
the
Prox
y St
atem
ent c
ircu
late
d in
con
nect
ion
with
the
Com
pany
's 2
002
Ann
ual S
hare
hold
ers'
Mee
ting.
(l)
Wri
tten
desc
ript
ion
of o
ral a
rran
gem
ent b
etw
een
Jack
M. G
reen
berg
and
the
Com
pany
, dat
ed M
arch
21,
200
2, f
iled
here
with
.
(12)
Sta
tem
ent r
e: c
ompu
tatio
n of
rat
ios
(21)
Sub
sidi
arie
s of
the
regi
stra
nt
(23)
Con
sent
of
inde
pend
ent a
udito
rs
(99)
Pre
ss R
elea
se d
ated
Mar
ch 2
2, 2
002-
-McD
onal
d's
Firs
t Qua
rter
200
2 U
pdat
e
* D
enot
es c
ompe
nsat
ory
plan
.**
Oth
er in
stru
men
ts d
efin
ing
the
righ
ts o
f ho
lder
s of
long
-ter
m d
ebt o
f th
e re
gist
rant
and
all
of it
s su
bsid
iari
es f
or w
hich
con
solid
ated
fin
anci
al s
tate
men
ts a
re r
equi
red
to b
e fi
led
and
whi
ch a
re n
otre
quir
ed to
be
regi
ster
ed w
ith th
e Se
curi
ties
and
Exc
hang
e C
omm
issi
on, a
re n
ot in
clud
ed h
erei
n as
the
secu
ritie
s au
thor
ized
und
er th
ese
inst
rum
ents
, ind
ivid
ually
, do
not e
xcee
d 10
% o
f th
e to
tal a
sset
s of
the
regi
stra
nt a
nd it
s su
bsid
iari
es o
n a
cons
olid
ated
bas
is. A
n ag
reem
ent t
o fu
rnis
h a
copy
of
any
such
inst
rum
ents
to th
e Se
curi
ties
and
Exc
hang
e C
omm
issi
on u
pon
requ
est h
as b
een
file
d w
ith th
eC
omm
issi
on.
40 M
cDon
ald'
s C
orpo
ratio
n
Sign
atur
es
Purs
uant
to th
e re
quir
emen
ts o
f Se
ctio
n 13
or
15(d
) of
the
Secu
ritie
s E
xcha
nge
Act
of
1934
, the
reg
istr
ant h
as d
uly
caus
ed th
is r
epor
t to
be s
igne
d on
its
beha
lf b
y th
e un
ders
igne
d, th
ereu
nto
duly
auth
oriz
ed.
McD
onal
d's
Cor
pora
tion
(Reg
istr
ant)
/S/ Matthew H. Paull
-------------------------------------------------------------------------------
By Matthew H. Paull
Executive Vice President, Chief Financial Officer
Mar
ch 2
5, 2
002
Dat
e
Purs
uant
to th
e re
quir
emen
ts o
f th
e Se
curi
ties
Exc
hang
e A
ct o
f 19
34, t
his
repo
rt h
as b
een
sign
ed b
elow
by
the
follo
win
g pe
rson
s on
beh
alf
of th
e re
gist
rant
and
in th
eir
capa
citie
s in
dica
ted
belo
w o
n th
e25
th d
ay o
f M
arch
, 200
2:
Sign
atur
e, T
itle
gp
y
/S/ Hall Adams, Jr.
-------------------------------------------------------------------------------
By Hall Adams, Jr.
Director
/S/ James R. Cantalupo
-------------------------------------------------------------------------------
By James R. Cantalupo
Vice Chairman, Emeritus and President, Emeritus and Director
/S/ Jack M. Greenberg
-------------------------------------------------------------------------------
By Jack M. Greenberg
Chairman and Chief Executive Officer and Director
/S/ Enrique Hernandez, Jr.
-------------------------------------------------------------------------------
By Enrique Hernandez, Jr.
Director
/S/ Jeanne P. Jackson
-------------------------------------------------------------------------------
By Jeanne P. Jackson
Director
/S/ Donald G. Lubin
-------------------------------------------------------------------------------
By Donald G. Lubin
Director
/S/ Walter E. Massey
-------------------------------------------------------------------------------
By Walter E. Massey
Director
/S/ Andrew J. McKenna
-------------------------------------------------------------------------------
By Andrew J. McKenna
Director
/S/ Michael R. Quinlan
-------------------------------------------------------------------------------
By Michael R. Quinlan
Director
/S/ Terry L. Savage
-------------------------------------------------------------------------------
By Terry L. Savage
Director
gp
y
/S/ Roger W. Stone
-------------------------------------------------------------------------------
By Roger W. Stone
Director
/S/ Robert N. Thurston
-------------------------------------------------------------------------------
By Robert N. Thurston
Director
/S/ Fred L. Turner
-------------------------------------------------------------------------------
By Fred L. Turner
Senior Chairman and Director
/S/ Matthew H. Paull
-------------------------------------------------------------------------------
By Matthew H. Paull
Executive Vice President, Chief Financial Officer
/S/ David M. Pojman
-------------------------------------------------------------------------------
By David M. Pojman
Senior Vice President - Controller
McD
onal
d's
Cor
pora
tion
41
Exh
ibit
10(c
). M
cDon
ald'
s C
orpo
ratio
nSu
pple
men
tal P
rofi
t Sha
ring
and
Sav
ings
Pla
n
Sect
ion
1 In
trod
uctio
n
1.1
The
Pla
n; th
e Pl
an M
erge
r; H
isto
ry.
(a)
The
McD
onal
d's
Cor
pora
tion
Supp
lem
enta
l Pro
fit S
hari
ng a
nd S
avin
gs P
lan
(the
"Pl
an")
as
set f
orth
her
ein
is th
e re
sult
of th
e m
erge
r of
the
McD
onal
d's
Prof
it Sh
arin
g Pl
an E
qual
izat
ion
Plan
as
amen
ded
and
rest
ated
eff
ectiv
e Ja
nuar
y 1,
199
6 ("
McE
qual
"), t
he M
cDon
ald'
s 19
89 E
xecu
tive
Equ
aliz
atio
n Pl
an a
s am
ende
d an
d re
stat
ed e
ffec
tive
Janu
ary
1, 1
996
("M
cCA
P I"
) an
d th
e M
cDon
ald'
sSu
pple
men
tal E
mpl
oyee
Ben
efit
Equ
aliz
atio
n Pl
an a
s am
ende
d an
d re
stat
ed e
ffec
tive
Janu
ary
1, 1
996
("M
cCA
P II
") in
to th
e M
cDon
ald'
s C
orpo
ratio
n D
efer
red
Inco
me
Plan
(th
e "D
IP")
pur
suan
t to
aM
erge
r D
ocum
ent e
xecu
ted
by M
cDon
ald'
s C
orpo
ratio
n ("
McD
onal
d's"
or
the
"Com
pany
") a
s of
Sep
tem
ber
1, 2
001
(the
"M
erge
r D
ocum
ent"
), a
ttach
ed h
eret
o as
Exh
ibit
A. T
he e
ffec
tive
date
of
that
mer
ger
is J
anua
ry 1
, 200
2; p
rovi
ded,
that
this
Pla
n sh
all b
e co
nsid
ered
to b
e in
eff
ect a
s of
Sep
tem
ber
1, 2
001
for
purp
oses
of
perm
ittin
g Pa
rtic
ipan
ts (
as d
efin
ed b
elow
) to
mak
e D
efer
ral E
lect
ions
with
resp
ect t
o co
mpe
nsat
ion
that
wou
ld o
ther
wis
e be
pai
d to
them
on
or a
fter
Jan
uary
1, 2
002
and
to m
ake
inve
stm
ent e
lect
ions
, Pay
men
t Ele
ctio
ns, I
nsta
llmen
t Ele
ctio
ns a
nd b
enef
icia
ry d
esig
natio
ns to
take
effe
ct u
nder
this
Pla
n on
or
afte
r Ja
nuar
y 1,
200
2.
(b)
The
DIP
, for
mer
ly k
now
n as
the
McD
onal
d's
Cor
pora
tion
Def
erre
d In
cent
ive
Plan
, was
est
ablis
hed
Nov
embe
r 1,
199
3. T
he D
IP w
as a
men
ded
and
rest
ated
eff
ectiv
e Se
ptem
ber
1, 1
994
and
was
subs
eque
ntly
am
ende
d by
the
firs
t am
endm
ent t
here
of e
ffec
tive
as o
f Fe
brua
ry 1
, 199
6 an
d th
e se
cond
am
endm
ent t
here
of e
ffec
tive
as o
f A
ugus
t 15,
199
6. T
he D
IP w
as s
ubse
quen
tly a
men
ded
and
rest
ated
effe
ctiv
e se
vera
l tim
es, i
nclu
ding
am
endm
ents
and
res
tate
men
ts e
ffec
tive
as o
f Ja
nuar
y 1,
199
7, J
uly
15, 1
997,
Aug
ust 1
, 199
8, D
ecem
ber
1, 1
998,
Sep
tem
ber
1, 1
999
and
Sept
embe
r 1,
200
0.
gp
y
(c)
McE
qual
was
est
ablis
hed,
eff
ectiv
e Ja
nuar
y 1,
198
9, b
y th
e m
erge
r, a
men
dmen
t and
res
tate
men
t of
the
McD
onal
d's
Supp
lem
enta
l Em
ploy
ee B
enef
it E
qual
izat
ion
Plan
, est
ablis
hed
effe
ctiv
e Ja
nuar
y 1,
1983
, app
rove
d by
the
shar
ehol
ders
on
May
19,
198
3, a
nd a
men
ded
and
rest
ated
eff
ectiv
e Ja
nuar
y 1,
198
7, a
nd th
e M
cDE
SOP
Equ
aliz
atio
n Pl
an, e
stab
lishe
d ef
fect
ive
Janu
ary
1, 1
986,
app
rove
d by
the
shar
ehol
ders
on
May
23,
198
6, a
nd a
men
ded
and
rest
ated
eff
ectiv
e Ja
nuar
y 1,
198
7. M
cEqu
al w
as f
urth
er a
men
ded
and
rest
ated
eff
ectiv
e Ja
nuar
y 1,
198
9, J
anua
ry 1
, 199
0 an
d Ja
nuar
y 1,
199
6.
(d)
McC
AP
I w
as e
stab
lishe
d ef
fect
ive
Janu
ary
1, 1
989,
and
am
ende
d an
d re
stat
ed f
rom
tim
e to
tim
e th
erea
fter
, with
the
mos
t rec
ent a
men
dmen
t and
res
tate
men
t bei
ng e
ffec
tive
Janu
ary
1, 1
996.
(e)
McC
AP
II (
form
erly
, the
McD
onal
d's
1986
Tax
Ref
orm
Equ
aliz
atio
n Pl
an)
was
am
ende
d an
d re
stat
ed, e
ffec
tive
Janu
ary
1, 1
989,
Jan
uary
1, 1
990
and
amen
ded
and
rest
ated
, eff
ectiv
e Ja
nuar
y 1,
199
6,an
d pr
ovid
ed c
erta
in b
enef
its p
revi
ousl
y pr
ovid
ed b
y M
cDon
ald'
s 19
86 T
ax R
efor
m E
qual
izat
ion
Plan
with
res
pect
to y
ears
bef
ore
Janu
ary
1, 1
989
and
cert
ain
addi
tiona
l ben
efits
.
1.2
Purp
oses
and
Fea
ture
s of
Pla
n.
(a)
The
pur
pose
s of
the
Plan
are
(i)
to p
rovi
de to
cer
tain
hig
hly-
com
pens
ated
em
ploy
ees
the
oppo
rtun
ity to
ele
ct to
def
er c
ompe
nsat
ion
unde
r th
e "D
efer
red
Inco
me
Feat
ure"
of
the
Plan
, and
(ii)
to p
rovi
de,
unde
r th
e "M
cCA
P Fe
atur
e" o
f th
e Pl
an, c
erta
in p
artic
ipan
ts in
the
McD
onal
d's
Cor
pora
tion
Prof
it Sh
arin
g an
d Sa
ving
s Pl
an (
the
"Pro
fit S
hari
ng P
lan"
) w
ith b
enef
its th
at th
ey w
ould
hav
e re
ceiv
ed u
nder
the
Prof
it Sh
arin
g Pl
an, a
bsen
t the
Lim
its (
as d
efin
ed in
Sec
tion
1.2(
b) b
elow
). T
hese
two
purp
oses
are
impl
emen
ted
unde
r th
e Pl
an's
two
feat
ures
. The
Def
erre
d In
com
e Fe
atur
e re
pres
ents
a c
ontin
uatio
n of
the
DIP
. The
"Pa
rtic
ipan
ts"
in th
e D
efer
red
Inco
me
Feat
ure
shal
l be
a se
lect
gro
up o
f m
anag
emen
t or
high
ly c
ompe
nsat
ed e
mpl
oyee
s, a
s m
ore
fully
pro
vide
d in
Sec
tion
2 be
low
. The
McC
AP
Feat
ure
repr
esen
ts a
con
tinua
tion
of M
cEqu
al, M
cCA
P I
and
McC
AP
II. T
he "
Part
icip
ants
" in
the
McC
AP
Feat
ure
shal
l be
cert
ain
empl
oyee
s w
hose
em
ploy
er a
nd/o
r em
ploy
ee c
ontr
ibut
ions
und
er th
e Pr
ofit
Shar
ing
Plan
hav
e be
en o
r ar
e ex
pect
ed to
be
limite
d by
the
Lim
its, a
s m
ore
fully
pro
vide
d in
Sec
tion
3 be
low
.
(b)
The
Pro
fit S
hari
ng P
lan
has,
as
of S
epte
mbe
r 1,
200
1, th
ree
mai
n fe
atur
es, t
he P
rofi
t Sha
ring
Fea
ture
, the
401
(k)
Feat
ure
(whi
ch in
clud
es p
artic
ipan
t def
erra
ls a
nd th
e em
ploy
er m
atch
), a
nd th
e E
SOP,
and
is in
tend
ed to
mee
t the
req
uire
men
ts o
f a
qual
ifie
d pl
an u
nder
Sect
ion
401(
a) o
f th
e In
tern
al R
even
ue C
ode
of 1
986,
as
amen
ded
(the
"C
ode"
). C
ode
Sect
ion
415
plac
es li
mits
on
the
max
imum
am
ount
of
cont
ribu
tions
and
ben
efits
that
may
be
paid
und
er a
qua
lifie
dpl
an (
the
"415
Lim
its")
and
Cod
e Se
ctio
n 40
1(a)
(17)
lim
its th
e am
ount
of
com
pens
atio
n th
at m
ay b
e ta
ken
into
acc
ount
for
a P
lan
Yea
r un
der
a qu
alif
ied
plan
(th
e
42 M
cDon
ald'
s C
orpo
ratio
n
"Com
pens
atio
n L
imit"
). I
n ad
ditio
n, C
ode
Sect
ion
402(
g) g
ener
ally
lim
its th
e m
axim
um a
mou
nt o
f em
ploy
ee e
lect
ive
defe
rral
s un
der
a qu
alif
ied
plan
("E
lect
ive
Con
trib
utio
n L
imit"
); a
nd e
lect
ive
defe
rral
sto
a n
onqu
al-i
fied
pla
n ar
e no
t tak
en in
to a
ccou
nt in
det
erm
inin
g co
mpe
nsat
ion
and
bene
fits
und
er th
e qu
alif
ied
plan
s ("
Ele
ctiv
e D
efer
ral E
xclu
sion
") (
thes
e lim
its a
nd e
xclu
sion
are
col
lect
ivel
y re
ferr
ed to
here
in a
s th
e "O
ther
Lim
its"
and,
toge
ther
with
the
415
Lim
its a
nd th
e C
ompe
nsat
ion
Lim
it, a
s th
e "L
imits
").
1.3
Adm
inis
trat
ion.
The
Pla
n sh
all b
e ad
min
iste
red
by a
com
mitt
ee o
f th
ree
offi
cers
of
the
Com
pany
(th
e "C
omm
ittee
"), t
he m
embe
rs o
f w
hich
sha
ll be
app
oint
ed f
rom
tim
e to
tim
e by
the
Com
pens
atio
nC
omm
ittee
of
the
Boa
rd o
f D
irec
tors
of
the
Com
pany
(th
e "C
ompe
nsat
ion
Com
mitt
ee")
. The
Com
mitt
ee s
hall
have
the
pow
ers
set f
orth
in th
e Pl
an a
nd th
e po
wer
to in
terp
ret i
ts p
rovi
sion
s. A
ny d
ecis
ions
of th
e C
omm
ittee
sha
ll be
fin
al a
nd b
indi
ng o
n al
l per
sons
with
reg
ard
to th
e Pl
an.
1.4
Initi
al P
artic
ipan
ts, B
enef
icia
ries
and
Acc
ount
s. T
he M
erge
r D
ocum
ent s
ets
fort
h pr
ovis
ions
for
indi
vidu
als
who
are
, as
of S
epte
mbe
r 1,
200
1, p
artic
ipan
ts in
or
bene
fici
arie
s un
der
McE
qual
, McC
AP
I,M
cCA
P II
and
/or
the
DIP
to b
ecom
e Pa
rtic
ipan
ts in
, or
bene
fici
arie
s un
der,
the
Plan
, and
spe
cifi
es th
e m
anne
r in
whi
ch th
eir
Acc
ount
s in
itial
ly s
hall
be d
eem
ed in
vest
ed a
nd th
e Pa
ymen
t Ele
ctio
ns a
ndbe
nefi
ciar
y de
sign
atio
ns th
at in
itial
ly s
hall
appl
y to
thei
r A
ccou
nts.
The
pro
visi
ons
of th
e M
erge
r D
ocum
ent s
hall
appl
y no
twith
stan
ding
any
oth
er p
rovi
sion
of
this
Pla
n.
1.5
Def
ined
Ter
ms.
Cap
italiz
ed te
rms
used
in th
is P
lan
that
are
not
def
ined
her
ein
have
the
sam
e m
eani
ng a
s th
e sa
me
term
in th
e M
cDon
ald'
s Pr
ofit
Shar
ing
Plan
. An
inde
x of
term
s de
fine
d in
the
Plan
isat
tach
ed a
s E
xhib
it B
to th
e Pl
an.
Sect
ion
2 D
efer
red
Inco
me
Feat
ure:
Par
ticip
atio
n an
d D
efer
ral E
lect
ions
2.1
Elig
ibili
ty a
nd P
artic
ipat
ion.
Sub
ject
to th
e co
nditi
ons
and
limita
tions
of
the
Plan
, the
fol
low
ing
indi
vidu
als
shal
l be
elig
ible
to p
artic
ipat
e in
the
Def
erre
d In
com
e Fe
atur
e of
the
Plan
("D
efer
red
Inco
me
Elig
ible
Em
ploy
ees"
):(a
) al
l off
icer
s, r
egio
nal m
anag
ers,
dep
artm
ent d
irec
tors
and
oth
er e
mpl
oyee
s w
ho a
re in
the
Seni
or D
irec
tion
Com
pens
atio
n B
and
of th
e C
ompa
ny;
(b)
inte
rnat
iona
l cou
ntry
hea
ds w
ho a
re o
n U
nite
d St
ates
pay
roll
of th
e C
ompa
ny a
nd w
ho a
re id
entif
ied
as e
ligib
le b
y th
e C
omm
ittee
; and
(c)
em
ploy
ees
of B
rand
s m
eetin
g th
e re
quir
emen
ts s
et f
orth
on
Exh
ibit
C to
the
Plan
. Any
Def
erre
d In
com
e E
ligib
le E
mpl
oyee
who
mak
es a
Def
erre
d In
com
e D
efer
ral E
lect
ion
as d
escr
ibed
in S
ectio
n 2.
2 be
low
and
in a
ccor
danc
e w
ith th
e re
quir
emen
ts o
f Se
ctio
ns 2
.3an
d 4
belo
w s
hall
beco
me
a Pa
rtic
ipan
t, an
d sh
all r
emai
n a
Part
icip
ant u
ntil
the
entir
e ba
lanc
e of
the
Part
icip
ant's
Acc
ount
is d
istr
ibut
ed.
2.2
Def
erra
l Ele
ctio
ns. S
ubje
ct to
Sec
tions
2.3
and
4 b
elow
:
(a)
Any
Def
erre
d In
com
e E
ligib
le E
mpl
oyee
may
mak
e an
ele
ctio
n (a
"D
efer
red
Inco
me
Def
erra
l Ele
ctio
n")
to d
efer
rec
eipt
of
all o
r an
y po
rtio
n (i
n 1%
incr
emen
ts)
of h
is o
r he
r co
mpe
nsat
ion
unde
r th
eM
cDon
ald'
s T
arge
t Inc
entiv
e Pl
an, a
ny s
ucce
ssor
ann
ual b
onus
pla
n of
McD
onal
d's,
or
any
annu
al b
onus
pla
n of
a B
rand
, in
whi
ch th
e D
efer
red
Inco
me
Elig
ible
Em
ploy
ee p
artic
ipat
es (
colle
ctiv
ely,
the
"Ann
ual B
onus
Pla
n")
that
is to
be
paid
in a
sub
sequ
ent c
alen
dar
year
. Any
Def
erre
d In
com
e E
ligib
le E
mpl
oyee
als
o m
ay m
ake
a D
efer
red
Inco
me
Def
erra
l Ele
ctio
n to
def
er a
per
cent
age
(in
1%in
crem
ents
) of
his
or
her
base
sal
ary
for
the
follo
win
g ca
lend
ar y
ear
in a
ccor
danc
e w
ith th
e fo
llow
ing
sche
dule
:
gp
y
----------------------------------------------------------------------------------------------
Compensation Band
(or Category of Deferred Income Eligible Employee) Maximum Deferral Percentage
==============================================================================================
Highest paid five officers of McDonald's
(ranked by the total of base pay and the target incentive
under the Annual Bonus Plan for the current year) 90%
Executive Management Band (includes Executive Vice Presidents) 80%
Senior Leadership and Leadership Bands (includes all other
officers and regional managers) 70%
Senior Direction Band (includes Department Directors) 60%
-----------------------------------------------------------------------------------------------
prov
ided
, how
ever
, tha
t the
Com
mitt
ee m
ay, i
n its
dis
cret
ion,
gra
nt in
divi
dual
req
uest
s fo
r hi
gher
def
erra
l per
cent
ages
of
base
sal
ary;
and
pro
vide
d, f
urth
er, t
hat t
he C
omm
ittee
may
, in
its d
iscr
etio
n,au
thor
ize
Def
erre
d In
com
e E
ligib
le E
mpl
oyee
s to
mod
ify
thei
r de
ferr
al p
erce
ntag
es o
f ba
se s
alar
y as
may
be
nece
ssar
y to
ref
lect
org
aniz
atio
nal,
title
or
com
pens
atio
n ba
nd c
hang
es. S
uch
mod
ific
atio
n m
ayon
ly b
e m
ade
with
res
pect
to b
ase
sala
ry e
arne
d an
d pa
id a
fter
the
effe
ctiv
e da
te o
f th
e m
odif
icat
ion.
The
fir
st e
lect
ions
McD
onal
d's
Cor
pora
tion
43
unde
r th
is S
ectio
n 2.
2(a)
sha
ll be
per
mitt
ed w
ith r
espe
ct to
pay
men
ts u
nder
the
Ann
ual B
onus
Pla
n an
d ba
se s
alar
y th
at a
re p
ayab
le o
n or
aft
er J
anua
ry 1
, 200
2.
(b)
If a
pplic
able
, any
Def
erre
d In
com
e E
ligib
le E
mpl
oyee
may
als
o m
ake
a D
efer
red
Inco
me
Def
erra
l Ele
ctio
n to
def
er a
ll or
a p
ortio
n (i
n 1%
incr
emen
ts)
of h
is o
r he
r T
hree
-Yea
r In
cent
ive
awar
d un
der
the
McD
onal
d's
Cor
pora
tion
1992
Om
nibu
s St
ock
Ow
ners
hip
Ince
ntiv
e Pl
an o
r th
e M
cDon
ald'
s C
orpo
ratio
n 20
01 O
mni
bus
Stoc
k O
wne
rshi
p In
cent
ive
Plan
, in
eith
er c
ase
paya
ble
in 2
002
or la
ter.
(c)
No
othe
r fo
rms
of c
ompe
nsat
ion,
incl
udin
g, b
ut n
ot li
mite
d to
exi
t bon
uses
, sev
eran
ce b
onus
es o
r bo
nuse
s pa
id u
nder
the
Exe
cutiv
e R
eten
tion
Plan
dur
ing
a tr
ansi
tion
or r
eten
tion
peri
od, m
ay b
ede
ferr
ed u
nder
the
Def
erre
d In
com
e Fe
atur
e of
the
Plan
.
2.3
Rul
es f
or D
efer
red
Inco
me
Def
erra
l Ele
ctio
ns. D
efer
red
Inco
me
Def
erra
l Ele
ctio
ns s
hall
be m
ade
in a
ccor
danc
e w
ith S
ectio
n 4
belo
w. A
n in
divi
dual
sha
ll be
elig
ible
to m
ake
a D
efer
red
Inco
me
Def
erra
l Ele
ctio
n on
ly if
he
or s
he is
a D
efer
red
Inco
me
Elig
ible
Em
ploy
ee o
n th
e D
ue D
ate.
Not
with
stan
ding
the
fore
goin
g, a
n in
divi
dual
who
bec
omes
a D
efer
red
Inco
me
Elig
ible
Em
ploy
ee a
fter
the
Due
Dat
e, b
y re
ason
of
bein
g hi
red
or p
rom
oted
into
an
elig
ible
pos
ition
und
er S
ectio
n 2.
1 ab
ove
afte
r th
e D
ue D
ate,
will
be
elig
ible
to m
ake
a D
efer
red
Inco
me
Def
erra
l Ele
ctio
n, to
def
er b
ase
sala
ry o
nly,
with
in 6
0 da
ys a
fter
the
date
he
or s
he b
ecom
es a
Def
erre
d In
com
e E
ligib
le E
mpl
oyee
. Suc
h a
Def
erre
d In
com
e D
efer
ral E
lect
ion
shal
l bec
ome
effe
ctiv
e, a
nd th
e in
divi
dual
mak
ing
it sh
all b
ecom
e a
Part
icip
ant,
as s
oon
as a
dmin
istr
ativ
ely
feas
ible
aft
er th
e D
efer
red
Inco
me
Def
erra
l Ele
ctio
n is
mad
e.
Sect
ion
3 M
cCA
P Fe
atur
e of
Pla
n: P
artic
ipat
ion
and
Def
erra
l Ele
ctio
ns
3.1
Elig
ibili
ty f
or B
enef
its.
(a)
415
Lim
its. I
f an
em
ploy
ee o
f th
e C
ompa
ny o
r of
any
Ado
ptin
g Su
bsid
iary
who
is a
par
ticip
ant i
n th
e Pr
ofit
Shar
ing
Plan
has
the
amou
nt o
f em
ploy
er c
ontr
ibut
ions
(in
clud
ing
Part
icip
ant E
lect
edC
ontr
ibut
ions
) an
d fo
rfei
ture
s th
at w
ould
hav
e be
en a
lloca
ted
to h
is a
ccou
nts
unde
r th
e Pr
ofit
Shar
ing
Plan
for
200
2 or
a la
ter
cale
ndar
yea
r re
duce
d pu
rsua
nt to
the
415
Lim
its, t
he a
mou
nt o
f ea
ch s
uch
redu
ctio
n sh
all b
e cr
edite
d to
the
empl
oyee
's A
ccou
nt a
s pr
ovid
ed in
Sec
tion
5.1.
(b)
Com
pens
atio
n L
imit.
If
an e
mpl
oyee
of
the
Com
pany
or
of a
ny A
dopt
ing
Subs
idia
ry w
ho is
a p
artic
ipan
t in
the
Prof
it Sh
arin
g Pl
an h
as th
e am
ount
of
empl
oyer
con
trib
utio
ns (
incl
udin
g Pa
rtic
ipan
tE
lect
ed C
ontr
ibut
ions
) an
d fo
rfei
ture
s th
at w
ould
hav
e be
en a
lloca
ted
to h
is a
ccou
nts
unde
r th
e Pr
ofit
Shar
ing
Plan
for
200
2 or
a la
ter
cale
ndar
yea
r lim
ited
as a
res
ult o
f th
e C
ompe
nsat
ion
Lim
it, th
eam
ount
of
each
suc
h re
duct
ion
shal
l be
cred
ited
to th
e em
ploy
ee's
Acc
ount
as
prov
ided
in S
ectio
n 5.
1 be
low
.
(c)
Oth
er L
imits
.
(i)
Eac
h em
ploy
ee o
f th
e C
ompa
ny o
r of
any
Ado
ptin
g Su
bsid
iary
who
is a
par
ticip
ant i
n th
e Pr
ofit
Shar
ing
Plan
as
of th
e fi
rst d
ay o
f 20
02 o
r of
a la
ter
cale
ndar
yea
r (t
he "
Spec
ifie
d Y
ear"
) w
hose
Spe
cifi
edC
ompe
nsat
ion
exce
eds
the
dolla
r am
ount
in e
ffec
t und
er C
ode
Sect
ion
gp
y
414(
q)(1
)(B
)(i)
and
the
Tre
asur
y R
egul
atio
ns th
ereu
nder
dur
ing
Aug
ust o
f th
e ye
ar im
med
iate
ly p
rece
ding
the
Spec
ifie
d Y
ear
(the
"Pr
ior
Yea
r")
shal
l be
entit
led
to th
e cr
edits
pro
vide
d fo
r in
Sec
tion
3.1(
c)(i
i) b
elow
, so
long
as
he o
r sh
e re
mai
ns a
n em
ploy
ee o
f th
e C
ompa
ny o
r su
ch A
dopt
ing
Subs
idia
ry a
s of
the
firs
t day
of
the
Spec
ifie
d Y
ear.
For
thes
e pu
rpos
es, t
he te
rm "
Spec
ifie
d C
ompe
nsat
ion"
for
a Pa
rtic
ipan
t for
a S
peci
fied
Yea
r sh
all m
ean
the
sum
of
(A)
the
amou
nt o
f th
e Pa
rtic
ipan
t's a
nnua
l bas
e sa
lary
at t
he r
ate
in e
ffec
t for
one
of
the
payr
oll p
erio
ds d
urin
g A
ugus
t of
the
Prio
r Y
ear,
as
spec
ifie
dby
the
Com
mitt
ee, a
nd (
B)
the
amou
nt o
f th
e bo
nus,
if a
ny, p
ayab
le to
the
Part
icip
ant u
nder
the
Ann
ual B
onus
Pla
n du
ring
the
Prio
r Y
ear
(in
each
cas
e, w
ithou
t reg
ard
to a
ny e
lect
ive
defe
rral
s th
ereo
fun
der
the
Plan
, the
Pro
fit S
hari
ng P
lan
or o
ther
wis
e).
(ii)
The
re s
hall
be c
redi
ted
to th
e A
ccou
nt o
f ea
ch P
artic
ipan
t who
is e
ligib
le f
or c
redi
ts u
nder
Sec
tion
3.1(
c)(i
) ab
ove
for
a Sp
ecif
ied
Yea
r an
am
ount
equ
al to
(A
) th
e am
ount
, if
any,
the
Part
icip
ant w
ould
have
rec
eive
d un
der
the
Prof
it Sh
arin
g Pl
an f
or th
at y
ear
(inc
ludi
ng, i
f th
e Pa
rtic
ipan
t so
elec
ts p
ursu
ant t
o Se
ctio
n 3.
1(d)
bel
ow, t
he a
mou
nt o
f an
y el
ectio
ns o
f Pa
rtic
ipan
t Ele
cted
Con
trib
utio
ns m
ade
byth
e Pa
rtic
ipan
t and
any
ass
ocia
ted
Mat
chin
g C
ontr
ibut
ions
) in
the
abse
nce
of th
e O
ther
Lim
its, r
educ
ed b
y (B
) th
e su
m o
f th
e am
ount
s al
loca
ted
to th
e Pa
rtic
ipan
t's a
ccou
nts
unde
r th
e Pr
ofit
Shar
ing
Plan
and
to th
e Pa
rtic
ipan
t's A
ccou
nt u
nder
Sec
tions
3.1
(a)
and
3.1(
b) a
bove
. Not
with
stan
ding
the
fore
goin
g, a
Par
ticip
ant w
ho d
oes
not h
ave
an e
lect
ion
in e
ffec
t und
er S
ectio
n 3.
1(d)
bel
ow o
f th
e Pl
an f
or a
cale
ndar
yea
r sh
all n
ot b
e cr
edite
d w
ith a
ny P
artic
ipan
t Ele
cted
Con
trib
utio
ns o
r E
mpl
oyer
Mat
chin
g C
ontr
ibut
ions
her
eund
er f
or th
at c
alen
dar
year
.
44 M
cDon
ald'
s C
orpo
ratio
n
(d)
Def
erra
l Ele
ctio
ns. T
he f
ollo
win
g pr
ovis
ions
app
ly to
eac
h Pa
rtic
ipan
t who
is e
ligib
le f
or c
redi
ts u
nder
Sec
tion
3.1(
c)(i
) ab
ove
for
a Sp
ecif
ied
Yea
r:
(i)
Eac
h su
ch P
artic
ipan
t may
ele
ct, b
y fi
ling
a w
ritte
n el
ectio
n (a
"M
cCA
P D
efer
ral E
lect
ion"
and
, tog
ethe
r w
ith th
e D
efer
red
Inco
me
Def
erra
l Ele
ctio
ns, t
he "
Def
erra
l Ele
ctio
ns")
with
the
Com
mitt
eebe
fore
the
begi
nnin
g of
the
Spec
ifie
d Y
ear,
in a
ccor
danc
e w
ithSe
ctio
n 4
belo
w, t
o ha
ve th
e Pa
rtic
ipan
t Ele
cted
Con
trib
utio
ns a
nd E
mpl
oyer
Mat
chin
g C
ontr
ibut
ions
des
crib
ed in
Sec
tion
3.1(
c)(i
i) a
bove
, if
any,
cre
dite
d to
his
Acc
ount
.
(ii)
If
such
a P
artic
ipan
t has
a M
cCA
P D
efer
ral E
lect
ion
in e
ffec
t for
a c
alen
dar
year
, the
McC
AP
Def
erra
l Ele
ctio
n an
d th
e Pa
rtic
ipan
t's e
lect
ed d
efer
rals
und
er th
e 40
1(k)
Fea
ture
of
the
Prof
it Sh
arin
g Pl
anm
ay n
ot b
e ch
ange
d du
ring
the
year
. If
such
a P
artic
ipan
t doe
s no
t hav
e a
McC
AP
Def
erra
l Ele
ctio
n in
eff
ect f
or th
e ca
lend
ar y
ear,
any
am
ount
s of
Par
ticip
ant E
lect
ed C
ontr
ibut
ions
in e
xces
s of
the
Ele
ctiv
e C
ontr
ibut
ion
Lim
it th
at a
re e
lect
ed b
y th
e Pa
rtic
ipan
t und
er th
e 40
1(k)
Fea
ture
of
the
Prof
it Sh
arin
g Pl
an e
ither
sha
ll no
t be
cont
ribu
ted
or s
hall
be r
etur
ned
to h
im o
r he
r as
pro
vide
d th
ereu
nder
and
no b
enef
it sh
all b
e cr
edite
d to
him
or
her
here
unde
r w
ith r
espe
ct to
his
or
her
Part
icip
ant E
lect
ed C
ontr
ibut
ions
and
Em
ploy
er M
atch
ing
Con
trib
utio
ns u
nder
the
Prof
it Sh
arin
g Pl
an.
3.2
Equ
aliz
atio
n. B
ase
sala
ry a
nd c
ompe
nsat
ion
paya
ble
unde
r th
e A
nnua
l Bon
us P
lan
that
are
def
erre
d un
der
the
Def
erre
d In
com
e Fe
atur
e of
the
Plan
sha
ll be
con
side
red
com
pens
atio
n fo
r th
e M
cCA
PFe
atur
e of
the
Plan
, inc
ludi
ng, w
ithou
t lim
itatio
n, f
or p
urpo
ses
of e
lect
ions
to c
ontr
ibut
e a
perc
enta
ge o
f co
mpe
nsat
ion
as S
ectio
n 40
1(k)
con
trib
utio
ns. T
hree
-Yea
r In
cent
ive
awar
ds th
at a
re d
efer
red
unde
rth
e D
efer
red
Inco
me
Feat
ure
of th
e Pl
an s
hall
not b
e co
nsid
ered
com
pens
atio
n fo
r th
e M
cCA
P Fe
atur
e of
the
Plan
.
Sect
ion
4 R
ules
for
Def
erra
l Ele
ctio
ns
4.1
Tim
ing
for
Def
erra
l Ele
ctio
ns. A
ll D
efer
ral E
lect
ions
mus
t be
retu
rned
to th
e C
omm
ittee
no
late
r th
an th
e da
te s
peci
fied
by
the
Com
mitt
ee (
the
"Due
Dat
e").
In
no e
vent
will
the
Due
Dat
e be
late
r th
anth
e en
d of
the
year
that
pre
cede
s th
e ye
ar th
at th
e am
ount
def
erre
d w
ould
oth
erw
ise
be m
ade
avai
labl
e to
the
Part
icip
ant m
akin
g th
e D
efer
ral E
lect
ion.
4.2
Tax
With
hold
ing
and
Oth
er S
peci
al R
ules
. Not
with
stan
ding
any
oth
er p
rovi
sion
of
the
Plan
, if
the
Com
mitt
ee d
eter
min
es th
at it
is n
eces
sary
or
appr
opri
ate
for
adm
inis
trat
ive,
lega
l or
othe
r ap
prop
riat
ere
ason
s, th
e C
omm
ittee
may
dec
ide
not t
o ap
ply
any
Def
erra
l Ele
ctio
n in
who
le o
r in
par
t. W
ithou
t lim
iting
the
gene
ralit
y of
the
fore
goin
g, th
e C
omm
ittee
may
dec
ide
not t
o ap
ply
a D
efer
ral E
lect
ion
to th
eex
tent
nec
essa
ry o
r ap
prop
riat
e in
ord
er to
com
ply
with
app
licab
le la
ws
rega
rdin
g ta
x w
ithho
ldin
g, a
fter
app
licat
ion
of S
ectio
n 6.
4 be
low
.
Sect
ion
5 A
ccou
nts
5.1
Acc
ount
s.
(a)
A b
ookk
eepi
ng a
ccou
nt s
hall
be e
stab
lishe
d in
eac
h Pa
rtic
ipan
t's n
ame
(an
"Acc
ount
"). T
he A
ccou
nt o
f ea
ch in
divi
dual
who
is a
Par
ticip
ant i
n bo
th th
e D
efer
red
Inco
me
Feat
ure
and
the
McC
AP
Feat
ure
of th
e Pl
an s
hall
be d
ivid
ed in
to tw
o su
bacc
ount
s, o
ne r
epre
sent
ing
the
amou
nts
cred
ited
to th
e Pa
rtic
ipan
t's A
ccou
nt p
ursu
ant t
o Se
ctio
n 2
abov
e of
the
Plan
, and
the
othe
r re
pres
entin
g th
e am
ount
scr
edite
d to
the
Part
icip
ant's
Acc
ount
pur
suan
t to
Sect
ion
3 ab
ove,
in e
ach
case
, as
adju
sted
pur
suan
t to
Sect
ion
5.2
belo
w a
nd a
s a
resu
lt of
dis
trib
utio
ns f
rom
the
Acc
ount
.
(b)
The
Par
ticip
ants
' Acc
ount
s m
ay b
e fu
rthe
r su
bdiv
ided
as
the
Com
mitt
ee m
ay f
rom
tim
e to
tim
e de
term
ine
to b
e ne
cess
ary
or a
ppro
pria
te, i
nclu
ding
with
out l
imita
tion
to r
efle
ct d
iffe
rent
sou
rces
of
cred
its to
the
Acc
ount
s an
d di
ffer
ent d
eem
ed in
vest
men
ts th
ereo
f.
(c)
Am
ount
s de
ferr
ed p
ursu
ant t
o a
Def
erra
l Ele
ctio
n sh
all b
e cr
edite
d to
the
appl
icab
le A
ccou
nt a
s of
the
date
the
Part
icip
ant w
ould
oth
erw
ise
have
rec
eive
d th
e de
ferr
ed a
mou
nts
in th
e ab
senc
e of
aD
efer
ral E
lect
ion.
Any
Equ
aliz
atio
n A
mou
nts
shal
l be
cred
ited
to th
e ap
plic
able
Acc
ount
as
soon
as
adm
inis
trat
ivel
y fe
asib
le a
fter
the
date
whe
n th
e am
ount
of
the
corr
espo
ndin
g em
ploy
er c
ontr
ibut
ions
toth
e Pr
ofit
Shar
ing
Plan
is d
eter
min
ed. A
ny a
mou
nt c
redi
ted
unde
r th
e M
cCA
P Fe
atur
e of
the
Plan
sha
ll be
cre
dite
d to
the
appl
icab
le A
ccou
nt a
s of
the
date
the
amou
nt w
ould
hav
e be
en a
lloca
ted
unde
r th
ePr
ofit
Shar
ing
Plan
if th
e L
imits
had
not
app
lied.
Adj
ustm
ents
of
a Pa
rtic
ipan
t's v
ario
us s
ubac
coun
ts to
ref
lect
inve
stm
ent e
xper
ienc
e an
d di
stri
butio
ns s
hall
in a
ll ca
ses
be d
one
on a
pro
-rat
a ba
sis,
and
suc
h
gp
y
suba
ccou
nts
shal
l be
trea
ted
in th
e sa
me
man
ner
for
all o
ther
pur
pose
s of
the
Plan
, exc
ept a
s sp
ecif
ical
ly p
rovi
ded
in S
ectio
n 9.
2 be
low
.
McD
onal
d's
Cor
pora
tion
45
5.2
Inve
stm
ent E
lect
ions
and
Ear
ning
s C
redi
ts.
(a)
Eac
h Pa
rtic
ipan
t in
the
Plan
sha
ll be
per
mitt
ed f
rom
tim
e to
tim
e to
mak
e an
inve
stm
ent e
lect
ion
rega
rdin
g th
e m
anne
r in
whi
ch h
is o
r he
r A
ccou
nt s
hall
be d
eem
ed in
vest
ed. S
ubje
ct to
the
follo
win
g,th
e C
omm
ittee
sha
ll es
tabl
ish
and
com
mun
icat
e to
Par
ticip
ants
the
inve
stm
ent c
hoic
es th
at w
ill b
e av
aila
ble
to P
artic
ipan
ts a
nd th
e pr
oced
ures
for
mak
ing
and
chan
ging
inve
stm
ent e
lect
ions
, as
it m
ay f
rom
time
to ti
me
dete
rmin
e to
be
appr
opri
ate.
Unl
ess
othe
rwis
e de
term
ined
by
the
Com
mitt
ee, a
Par
ticip
ant's
inve
stm
ent e
lect
ion
may
be
split
am
ong
the
avai
labl
e ch
oice
s in
incr
emen
ts o
f 1%
, tot
alin
g 10
0%.
The
pro
cedu
res
as in
eff
ect a
s of
Jan
uary
1, 2
002
are
atta
ched
as
Exh
ibit
D to
the
Plan
.
(b)
As
of J
anua
ry 1
, 200
2, th
e av
aila
ble
inve
stm
ent c
hoic
es u
nder
the
Plan
are
:
(i)
a ra
te o
f re
turn
bas
ed u
pon
the
McD
onal
d's
Com
mon
Sto
ck E
quiv
alen
t und
er th
e Pr
ofit
Shar
ing
Plan
, aft
er a
djus
tmen
t for
exp
ense
s un
der
the
Plan
(th
e "S
uppl
emen
tal M
cDon
ald'
s C
omm
on S
tock
Ret
urn"
);
(ii)
a r
ate
of r
etur
n ba
sed
upon
the
Stab
le V
alue
Equ
ival
ent u
nder
the
Prof
it Sh
arin
g Pl
an, a
fter
adj
ustm
ent f
or e
xpen
ses
unde
r th
e Pl
an (
the
"Sup
plem
enta
l Sta
ble
Val
ue R
etur
n");
and
(iii)
a r
ate
of r
etur
n ba
sed
upon
the
S&P
500
Inde
x E
quiv
alen
t und
er th
e Pr
ofit
Shar
ing
Plan
, aft
er a
djus
tmen
t for
exp
ense
s un
der
the
Plan
(th
e "S
uppl
emen
tal S
&P
500
Inde
x R
etur
n").
(c)
For
any
peri
od d
urin
g w
hich
a P
artic
ipan
t has
fai
led
to m
ake
an in
vest
men
t ele
ctio
n, th
e Pa
rtic
ipan
t's A
ccou
nt s
hall
be c
redi
ted
with
the
Supp
lem
enta
l Sta
ble
Val
ue R
etur
n. A
Par
ticip
ant's
inve
stm
ent
elec
tion
will
con
tinue
in e
ffec
t unt
il th
e Pa
rtic
ipan
t file
s a
new
inve
stm
ent e
lect
ion.
5.3
Ves
ting.
A P
artic
ipan
t sha
ll be
ful
ly v
este
d at
all
times
in th
e ba
lanc
e of
his
or
her
Acc
ount
, exc
ept a
s sp
ecif
ical
ly p
rovi
ded
in S
ectio
n 6.
3 be
low
.
Sect
ion
6 Pa
ymen
t of
Ben
efits
6.1
Tim
e an
d M
etho
d of
Pay
men
t. Pa
ymen
ts o
f a
Part
icip
ant's
Acc
ount
sha
ll be
mad
e to
a P
artic
ipan
t, or
the
Part
icip
ant's
ben
efic
iary
if th
e Pa
rtic
ipan
t is
dece
ased
, in
acco
rdan
ce w
ith th
e ru
les
set f
orth
belo
w:
(a)
Tim
e of
Pay
men
t. E
ach
paym
ent u
nder
the
Plan
sha
ll be
mad
e in
a p
artic
ular
cal
enda
r m
onth
as
prov
ided
bel
ow. T
he p
aym
ents
und
er th
e Pl
an th
at a
re to
be
mad
e in
a p
artic
ular
cal
enda
r m
onth
sha
ll in
all c
ases
be
mad
e as
soo
n as
adm
inis
trat
ivel
y fe
asib
le a
fter
the
firs
t bus
ines
s da
y of
suc
h ca
lend
ar m
onth
.
(b)
Def
ault
Rul
e an
d Pa
rtic
ipan
t Ele
ctio
ns. U
nles
s th
e Pa
rtic
ipan
t has
ele
cted
oth
erw
ise
as p
rovi
ded
for
belo
w, p
aym
ent o
f th
e Pa
rtic
ipan
t's A
ccou
nt s
hall
be m
ade
in a
sin
gle
lum
p su
m in
Apr
il of
the
year
follo
win
g th
e ye
ar in
whi
ch th
e Pa
rtic
ipan
t ter
min
ates
em
ploy
men
t. Pa
rtic
ipan
ts s
hall
be p
erm
itted
to e
lect
dif
fere
nt ti
mes
to r
ecei
ve p
aym
ents
("P
aym
ent E
lect
ions
") a
nd f
orm
s of
pay
men
t oth
er th
an a
lum
p su
m (
"Ins
tallm
ent E
lect
ions
"), s
ubje
ct to
the
rule
s se
t for
th b
elow
. Any
fili
ng, c
hang
e or
rev
ocat
ion
of a
Pay
men
t Ele
ctio
n th
at o
ccur
s af
ter
the
appl
icab
le d
eadl
ine
set f
orth
bel
ow s
hall
be v
oid
and
ofno
eff
ect.
In e
ach
case
, the
mos
t rec
ent s
uch
filin
g, c
hang
e or
rev
ocat
ion
by a
Par
ticip
ant o
n or
bef
ore
the
appl
icab
le d
eadl
ine
shal
l gov
ern
the
Part
icip
ant's
ent
ire
Acc
ount
exc
ept a
s ex
pres
sly
prov
ided
belo
w.
(c)
Ter
min
atio
n D
istr
ibut
ions
. Dis
trib
utio
ns f
rom
a P
artic
ipan
t's A
ccou
nt a
fter
term
inat
ion
of e
mpl
oym
ent (
othe
r th
an d
istr
ibut
ions
mad
e pu
rsua
nt to
Sec
tion
6.1(
f) b
elow
) ar
e re
ferr
ed to
as
"Ter
min
atio
nD
istr
ibut
ions
." A
Par
ticip
ant m
ay e
lect
to h
ave
his
or h
er T
erm
inat
ion
Dis
trib
utio
ns p
aid,
or
begi
n to
be
paid
in in
stal
lmen
ts, l
ater
than
Apr
il of
the
year
fol
low
ing
the
year
in w
hich
the
Part
icip
ant
term
inat
es e
mpl
oym
ent.
Such
a P
aym
ent E
lect
ion
shal
l be
mad
e no
late
r th
an D
ecem
ber
31 o
f th
e ye
ar in
whi
ch th
e Pa
rtic
ipan
t ter
min
ates
em
ploy
men
t.
(d)
Inst
allm
ent P
aym
ents
of
Ter
min
atio
n D
istr
ibut
ions
. A P
artic
ipan
t may
mak
e an
Ins
tallm
ent E
lect
ion
sele
ctin
g on
e of
the
follo
win
g in
stal
lmen
t pay
men
t met
hods
to a
pply
to h
is o
r he
r T
erm
inat
ion
Dis
trib
utio
ns:
(i)
Mon
thly
, qua
rter
ly o
r an
nual
inst
allm
ents
ove
r a
peri
od e
ndin
g no
t lat
er th
an th
e fi
rst A
pril
that
beg
ins
afte
r th
e 25
th a
nniv
ersa
ry o
f th
e da
te o
f th
e Pa
rtic
ipan
t's te
rmin
atio
n of
em
ploy
men
t, as
spe
cifi
edin
the
Inst
allm
ent E
lect
ion.
Suc
h in
stal
lmen
t pay
men
ts s
hall
be m
ade
in s
ubst
antia
lly e
qual
inst
allm
ents
ove
r th
e in
stal
lmen
t per
iod
spec
ifie
d. E
ach
such
inst
allm
ent p
aym
ent s
hall
be c
ompu
ted
by d
ivid
ing
the
then
-bal
ance
of
the
Acc
ount
by
the
num
ber
of p
aym
ents
rem
aini
ng in
the
inst
allm
ent p
erio
d.
(ii)
Mon
thly
, qua
rter
ly o
r an
nual
inst
allm
ents
of
a do
llar
amou
nt s
peci
fied
in th
e In
stal
lmen
t Pay
men
t Ele
ctio
n; p
rovi
ded,
how
ever
, tha
t in
any
even
t, th
e la
st s
uch
inst
allm
ent m
ust b
e pa
id n
ot la
ter
than
the
firs
t Apr
il th
at b
egin
s af
ter
the
25th
ann
iver
sary
of
the
date
of
the
Part
icip
ant's
term
inat
ion
of e
mpl
oym
ent.
46 M
cDon
ald'
s C
orpo
ratio
n
(iii)
An
initi
al p
artia
l lum
p su
m p
aym
ent w
ith s
ubse
quen
t mon
thly
, qua
rter
ly o
r an
nual
inst
allm
ent p
aym
ents
, whi
ch s
hall
be e
ither
(A
) m
ade
over
a p
erio
d of
yea
rs (
as d
escr
ibed
in S
ectio
n
gp
y
6.1(
d)(i
) ab
ove)
or
(B)
of a
spe
cifi
ed d
olla
r am
ount
(as
des
crib
ed in
Sec
tion
6.1(
d)(i
i) a
bove
), a
s sp
ecif
ied
in th
e In
stal
lmen
t Pay
men
t Ele
ctio
n.
An
Inst
allm
ent E
lect
ion
shal
l be
mad
e on
or
befo
re th
e D
ecem
ber
31 o
f th
e ca
lend
ar y
ear
prec
edin
g th
e da
te w
hen
the
Part
icip
ant's
Ter
min
atio
n D
istr
ibut
ions
are
sch
edul
ed to
beg
in, a
nd, o
nce
mad
e w
ithre
spec
t to
a Pa
rtic
ipan
t's A
ccou
nt, m
ay n
ot b
e re
voke
d or
cha
nged
by
the
Part
icip
ant o
r th
e Pa
rtic
ipan
t's b
enef
icia
ry, e
xcep
t to
the
exte
nt p
erm
itted
und
er S
ectio
n 6.
3 be
low
.
(e)
In-S
ervi
ce W
ithdr
awal
s. A
Par
ticip
ant m
ay e
lect
(an
"In
-Ser
vice
With
draw
al E
lect
ion"
) to
hav
e al
l or
a sp
ecif
ied
port
ion
of h
is o
r he
r A
ccou
nt p
aid
in a
spe
cifi
ed m
onth
bef
ore
term
inat
ion
ofem
ploy
men
t (su
ch p
aym
ents
bei
ng c
alle
d "I
n-Se
rvic
e W
ithdr
awal
s"),
sub
ject
to th
e fo
llow
ing
rule
s:
(i)
such
an
elec
tion
mus
t be
mad
e be
fore
the
Part
icip
ant's
term
inat
ion
of e
mpl
oym
ent,
and
once
mad
e, s
hall
be ir
revo
cabl
e;
(ii)
the
mon
th s
o el
ecte
d fo
r an
In-
Serv
ice
With
draw
al m
ust (
A)
occu
r du
ring
a c
alen
dar
year
beg
inni
ng s
ubse
quen
t to
the
date
of
the
elec
tion
and
(B)
begi
n at
leas
t six
mon
ths
afte
r th
e da
te o
f th
e el
ectio
n;an
d
(iii)
the
amou
nt d
istr
ibut
ed in
an
In-S
ervi
ce W
ithdr
awal
may
not
incl
ude
any
amou
nts
cred
ited
to th
e Pa
rtic
ipan
t's A
ccou
nt u
nder
Sect
ion
2 or
Sec
tion
3 on
or
afte
r Ja
nuar
y 1
of th
e ye
ar p
rece
ding
the
year
in w
hich
the
In-S
ervi
ce W
ithdr
awal
occ
urs,
nor
any
ear
ning
s on
suc
h am
ount
s.
(f)
Ter
min
atio
n B
efor
e In
-Ser
vice
With
draw
al. I
f th
e Pa
rtic
ipan
t's e
mpl
oym
ent t
erm
inat
es a
t a ti
me
whe
n on
e or
mor
e In
-Ser
vice
With
draw
al E
lect
ions
are
in e
ffec
t, th
e In
-Ser
vice
With
draw
als
shal
lco
ntin
ue to
be
paid
in a
ccor
danc
e w
ith s
uch
elec
tions
, exc
ept t
hat a
ll In
-Ser
vice
With
draw
als
that
rem
ain
unpa
id a
t the
ear
lier
of (
i) th
e be
ginn
ing
of A
pril
of th
e ye
ar f
ollo
win
g th
e ye
ar in
whi
ch th
ePa
rtic
ipan
t ter
min
ates
em
ploy
men
t, an
d (i
i) th
e da
te w
hen
the
Part
icip
ant's
Ter
min
atio
n D
istr
ibut
ions
are
pai
d or
beg
in to
be
paid
, sha
ll be
trea
ted
as T
erm
inat
ion
Dis
trib
utio
ns a
nd p
aid
in a
ccor
danc
e w
ithSe
ctio
ns 6
.1(a
) th
roug
h (d
).
(g)
Smal
l Bal
ance
Rul
e. N
otw
ithst
andi
ng a
ny o
ther
pro
visi
on o
f th
e Pl
an, a
nd n
otw
ithst
andi
ng a
ny e
lect
ion
that
the
Part
icip
ant m
ay h
ave
mad
e, if
the
bala
nce
in a
Par
ticip
ant's
Acc
ount
as
of th
e en
d of
the
mon
th d
urin
g w
hich
the
Part
icip
ant's
em
ploy
men
t ter
min
ates
is le
ss th
an $
50,0
00, t
hen
such
Par
ticip
ant's
Acc
ount
sha
ll be
pai
d in
a s
ingl
e lu
mp
sum
as
soon
as
adm
inis
trat
ivel
y fe
asib
le a
fter
the
end
ofsu
ch m
onth
.
(h)
Cha
nge
in C
ontr
ol. T
he C
omm
ittee
may
(bu
t sha
ll no
t be
requ
ired
to)
esta
blis
h pr
oced
ures
und
er w
hich
Par
ticip
ants
may
be
perm
itted
to e
lect
to h
ave
all o
r a
spec
ifie
d po
rtio
n of
thei
r A
ccou
nts
paid
ina
sing
le lu
mp
sum
upo
n a
Cha
nge
in C
ontr
ol, a
s th
at te
rm is
def
ined
in th
e M
cDon
ald'
s C
orpo
ratio
n 20
01 O
mni
bus
Stoc
k O
wne
rshi
p In
cent
ive
Plan
, not
with
stan
ding
any
oth
er p
rovi
sion
of
the
Plan
, and
notw
ithst
andi
ng a
ny o
ther
ele
ctio
n th
at th
e Pa
rtic
ipan
t may
hav
e m
ade.
6.2
Form
of
Paym
ent.
All
paym
ents
sha
ll be
mad
e in
cas
h. H
owev
er, a
Par
ticip
ant w
ho h
as e
lect
ed a
McD
onal
d's
Com
mon
Sto
ck E
quiv
alen
t ret
urn
and
who
use
s am
ount
s th
at h
ave
been
dee
med
so
inve
sted
and
then
dis
trib
uted
in c
ash
to p
urch
ase
shar
es o
f M
cDon
ald'
s co
mm
on s
tock
on
the
open
mar
ket i
n on
e or
mor
e tr
ansa
ctio
ns w
ithin
sev
en m
onth
s af
ter
the
date
suc
h am
ount
s w
ere
dist
ribu
ted,
shal
l be
entit
led
to r
ecei
ve r
eim
burs
emen
t fro
m th
e C
ompa
ny f
or a
ll re
ason
able
bro
kera
ge f
ees
and
othe
r tr
ansa
ctio
n co
sts
incu
rred
by
him
or
her
in c
onne
ctio
n w
ith s
uch
purc
hase
s, u
pon
pres
enta
tion
toth
e C
omm
ittee
not
late
r th
an 6
0 da
ys a
fter
the
date
of
each
tran
sact
ion
of s
atis
fact
ory
evid
ence
ther
eof.
6.3
Har
dshi
p W
ithdr
awal
s an
d A
ccel
erat
ion
of I
nsta
llmen
t Pay
men
ts. T
he C
ompa
ny r
ecog
nize
s th
at th
ere
will
be
circ
umst
ance
s in
whi
ch a
Par
ticip
ant w
ill n
eed
to w
ithdr
aw a
mou
nts
from
his
or
her
Acc
ount
mor
e qu
ickl
y th
an is
per
mitt
ed f
or I
n-Se
rvic
e W
ithdr
awal
s un
der
Sect
ion
6.1(
e) a
bove
. The
refo
re, a
Par
ticip
ant s
hall
have
the
righ
t to
with
draw
in c
ash
any
port
ion
of th
e ba
lanc
e of
his
or
her
Acc
ount
at a
ny ti
me
befo
re h
is o
r he
r te
rmin
atio
n of
em
ploy
men
t, su
bjec
t to
the
Com
mitt
ee's
con
sent
and
a 1
0% f
orfe
iture
pen
alty
on
the
amou
nt r
eque
sted
. A P
artic
ipan
t who
is r
ecei
ving
Ter
min
atio
nD
istr
ibut
ions
in in
stal
lmen
ts m
ay a
lso
acce
lera
te p
aym
ent o
f an
y un
paid
am
ount
, sub
ject
to th
e C
omm
ittee
's c
onse
nt a
nd 1
0% f
orfe
iture
pen
alty
on
the
amou
nt a
ccel
erat
ed. A
ny w
ithdr
awal
s or
acc
eler
ated
paym
ents
pur
suan
t to
this
Sec
tion
6.3
(red
uced
by
the
10%
for
feitu
re p
enal
ty)
shal
l be
paid
as
soon
as
adm
inis
trat
ivel
y fe
asib
le a
fter
the
elec
tion
to w
ithdr
aw o
r ac
cele
rate
pay
men
ts is
app
rove
d by
the
Com
mitt
ee.
6.4
With
hold
ing
of T
axes
. The
Com
pany
sha
ll w
ithho
ld a
ny a
pplic
able
Fed
eral
, sta
te o
r lo
cal i
ncom
e ta
x fr
om p
aym
ents
due
und
er th
e Pl
an in
acc
orda
nce
with
suc
h pr
oced
ures
as
the
Com
pany
may
esta
blis
h. G
ener
ally
, any
Soc
ial S
ecur
ity ta
xes,
incl
udin
g th
e M
edic
are
port
ion
of s
uch
taxe
s, s
hall
be w
ithhe
ld f
rom
oth
er c
ompe
nsat
ion
to th
e Pa
rtic
ipan
t in
ques
tion,
or
paid
by
the
Part
icip
ant i
n qu
estio
nto
the
Com
pany
, at t
he ti
me
amou
nts
are
cred
ited
to th
e Pa
rtic
ipan
t's A
ccou
nt. T
he C
ompa
ny s
hall
also
with
hold
any
oth
er e
mpl
oym
ent t
axes
as
nece
ssar
y to
com
ply
with
app
licab
le la
ws.
McD
onal
d's
Cor
pora
tion
47
6.5
Ben
efic
iary
.
(a)
A P
artic
ipan
t sha
ll ha
ve th
e ri
ght t
o na
me
a be
nefi
ciar
y or
ben
efic
iari
es w
ho s
hall
rece
ive
the
bala
nce
of a
Par
ticip
ant's
Acc
ount
in th
e ev
ent o
f th
e Pa
rtic
ipan
t's d
eath
pri
or to
the
paym
ent o
f hi
s or
her
entir
e A
ccou
nt (
a "B
enef
icia
ry D
esig
natio
n").
A b
enef
icia
ry m
ay b
e an
indi
vidu
al, a
trus
t or
an e
ntity
that
is ta
x-ex
empt
und
er C
ode
Sect
ion
501(
c)(3
). I
f no
ben
efic
iary
is n
amed
by
a Pa
rtic
ipan
t or
if th
ePa
rtic
ipan
t sur
vive
s al
l of
the
nam
ed b
enef
icia
ries
, the
Par
ticip
ant's
Acc
ount
sha
ll be
pai
d to
the
Part
icip
ant's
est
ate.
A P
artic
ipan
t may
cha
nge
or r
evok
e an
exi
stin
g B
enef
icia
ry D
esig
natio
n by
fili
ngan
othe
r B
enef
icia
ry D
esig
natio
n w
ith th
e C
omm
ittee
. The
late
st B
enef
icia
ry D
esig
natio
n re
ceiv
ed b
y th
e C
omm
ittee
sha
ll be
con
trol
ling.
(b)
A b
enef
icia
ry d
esig
nate
d by
a P
artic
ipan
t or
anot
her
bene
fici
ary
who
has
not
yet
rec
eive
d pa
ymen
t of
the
entir
e be
nefi
t pay
able
to h
im o
r he
r un
der
the
Plan
sha
ll ha
ve th
e ri
ght t
o na
me
a be
nefi
ciar
y or
bene
fici
arie
s to
rec
eive
the
bala
nce
of s
uch
bene
fit i
n th
e ev
ent o
f th
e be
nefi
ciar
y's
deat
h pr
ior
to th
e pa
ymen
t of
the
entir
e am
ount
of
such
ben
efit,
in a
ccor
danc
e w
ith S
ectio
n 6.
5(a)
abo
ve, a
s if
the
gp
y
bene
fici
ary
wer
e a
Part
icip
ant (
rega
rdle
ss o
f w
heth
er th
e Pa
rtic
ipan
t or
such
oth
er b
enef
icia
ry is
stil
l aliv
e).
(c)
In a
dditi
on, a
fter
the
deat
h of
a P
artic
ipan
t or
a be
nefi
ciar
y th
ereo
f, a
ny b
enef
icia
ry d
esig
nate
d by
the
Part
icip
ant o
r su
ch d
ecea
sed
bene
fici
ary,
as
appl
icab
le, w
ho h
as n
ot y
et r
ecei
ved
paym
ent o
f th
een
tire
bene
fit p
ayab
le to
him
or
her
unde
r th
e Pl
an s
hall
be tr
eate
d fo
r al
l pur
pose
s of
Sec
tions
5 th
roug
h 10
of
the
Plan
in th
e sa
me
man
ner
as th
e Pa
rtic
ipan
t with
res
pect
to th
e A
ccou
nt o
r po
rtio
n th
ereo
fof
whi
ch s
uch
pers
on is
the
bene
fici
ary,
incl
udin
g, w
ithou
t lim
itatio
n, f
or p
urpo
ses
of m
akin
g in
vest
men
t ele
ctio
ns, P
aym
ent E
lect
ions
and
Ins
tallm
ent E
lect
ions
.
Sect
ion
7 M
isce
llane
ous
7.1
Fund
ing.
Ben
efits
pay
able
und
er th
e Pl
an to
any
Par
ticip
ant s
hall
be p
aid
dire
ctly
by
the
Com
pany
. The
Com
pany
sha
ll no
t be
requ
ired
to f
und,
or
othe
rwis
e se
greg
ate
asse
ts to
be
used
for
pay
men
t of
bene
fits
und
er th
e Pl
an. W
hile
the
Com
pany
may
, in
the
disc
retio
n of
the
Com
mitt
ee, m
ake
inve
stm
ents
(a)
in s
hare
s of
McD
onal
d's
Com
mon
Sto
ck th
roug
h op
en m
arke
t pur
chas
es o
r (b
) in
oth
erin
vest
men
ts in
am
ount
s eq
ual o
r un
equa
l to
amou
nts
paya
ble
here
unde
r, th
e C
ompa
ny s
hall
not b
e un
der
any
oblig
atio
n to
mak
e su
ch in
vest
men
ts a
nd a
ny s
uch
inve
stm
ent s
hall
rem
ain
an a
sset
of
the
Com
pany
sub
ject
to th
e cl
aim
s of
its
gene
ral c
redi
tors
. Not
with
stan
ding
the
fore
goin
g, th
e C
ompa
ny m
ay m
aint
ain
one
or m
ore
trus
ts (
each
, a "
Tru
st")
to h
old
asse
ts to
be
used
for
pay
men
t of
bene
fits
unde
r th
e Pl
an. A
ny p
aym
ents
by
a T
rust
of
bene
fits
pro
vide
d to
a P
artic
ipan
t und
er th
e Pl
an s
hall
be c
onsi
dere
d pa
ymen
t by
the
Com
pany
and
sha
ll di
scha
rge
the
Com
pany
of
any
furt
her
liabi
lity
unde
rth
e Pl
an f
or s
uch
paym
ents
.
7.2
Acc
ount
Sta
tem
ents
. The
Com
pany
sha
ll pr
ovid
e Pa
rtic
ipan
ts w
ith s
tate
men
ts o
f th
e ba
lanc
es o
f th
eir
Acc
ount
s un
der
the
Plan
at l
east
ann
ually
.
7.3
Em
ploy
men
t Rig
hts.
Est
ablis
hmen
t of
the
Plan
sha
ll no
t be
cons
true
d to
giv
e an
y em
ploy
ee o
r Pa
rtic
ipan
t the
rig
ht to
be
reta
ined
in th
e C
ompa
ny's
ser
vice
or
that
of
its s
ubsi
diar
ies
and
affi
liate
s, o
r to
any
bene
fits
not
spe
cifi
cally
pro
vide
d by
the
Plan
.
7.4
Inte
rest
s N
ot T
rans
fera
ble.
Exc
ept a
s to
with
hold
ing
of a
ny ta
x un
der
the
law
s of
the
Uni
ted
Stat
es o
r an
y st
ate
or lo
calit
y an
d th
e pr
ovis
ions
of
Sect
ion
6.5
abov
e, n
o be
nefi
t pay
able
at a
ny ti
me
unde
r th
e Pl
an s
hall
be s
ubje
ct in
any
man
ner
to a
liena
tion,
sal
e, tr
ansf
er, a
ssig
nmen
t, pl
edge
, atta
chm
ent,
or o
ther
lega
l pro
cess
, or
encu
mbr
ance
of
any
kind
. Any
atte
mpt
to a
liena
te, s
ell,
tran
sfer
, ass
ign,
ple
dge
or o
ther
wis
e en
cum
ber
any
such
ben
efits
, whe
ther
cur
rent
ly o
r th
erea
fter
pay
able
, sha
ll be
voi
d. N
o pe
rson
sha
ll, in
any
man
ner,
be
liabl
e fo
r or
subj
ect t
o th
e de
bts
or li
abili
ties
of a
ny p
erso
n en
title
d to
suc
h be
nefi
ts. I
f an
y pe
rson
sha
ll at
tem
pt to
, or
shal
l alie
nate
, sel
l, tr
ansf
er, a
ssig
n, p
ledg
e or
oth
erw
ise
encu
mbe
r be
nefi
ts u
nder
the
Plan
, or
if b
yan
y re
ason
of
the
Part
icip
ant's
ban
krup
tcy
or o
ther
eve
nt h
appe
ning
at a
ny ti
me,
suc
h be
nefi
ts w
ould
dev
olve
upo
n an
y ot
her
pers
on o
r w
ould
not
be
enjo
yed
by th
e pe
rson
ent
itled
ther
eto
unde
r th
e Pl
an,
then
the
Com
pany
, in
its d
iscr
etio
n, m
ay te
rmin
ate
the
inte
rest
in a
ny s
uch
bene
fits
of
the
pers
on e
ntitl
ed th
eret
o un
der
the
Plan
and
hol
d or
app
ly th
em to
or
for
the
bene
fit o
f su
ch p
erso
n en
title
d th
eret
oun
der
the
Plan
or
such
indi
vidu
al's
spo
use,
chi
ldre
n or
oth
er d
epen
dent
s, o
r an
y of
them
, in
such
man
ner
as th
e C
ompa
ny m
ay d
eem
pro
per.
7.5
Forf
eitu
res
and
Unc
laim
ed A
mou
nts.
Unc
laim
ed a
mou
nts
shal
l con
sist
of
the
amou
nt o
f th
e A
ccou
nt o
f a
Part
icip
ant t
hat c
anno
t be
dist
ribu
ted
beca
use
of th
e C
omm
ittee
's in
abili
ty, a
fter
a r
easo
nabl
ese
arch
, to
loca
te a
Par
ticip
ant o
r th
e Pa
rtic
ipan
t's b
enef
icia
ry, a
s ap
plic
able
, with
in a
per
iod
of tw
o ye
ars
afte
r th
e Pa
ymen
t Dat
e up
on w
hich
the
paym
ent o
f be
nefi
ts b
ecom
e du
e. U
ncla
imed
am
ount
s sh
all
be f
orfe
ited
at th
e en
d of
suc
h tw
o-
48 M
cDon
ald'
s C
orpo
ratio
n
year
per
iod.
Pen
altie
s ch
arge
d fo
r w
ithdr
awal
s un
der
Sect
ion
6.3
shal
l als
o be
for
feite
d in
the
year
in w
hich
the
pena
lty is
cha
rged
. The
se f
orfe
iture
s w
ill r
educ
e th
e ob
ligat
ions
of
the
Com
pany
und
er th
ePl
an. A
fter
an
uncl
aim
ed a
mou
nt h
as b
een
forf
eite
d, th
e Pa
rtic
ipan
t or
bene
fici
ary,
as
appl
icab
le, s
hall
have
no
furt
her
righ
t to
the
Part
icip
ant's
Acc
ount
.
7.6
Con
trol
ling
Law
. The
law
of
Illin
ois,
exc
ept i
ts la
w w
ith r
espe
ct to
cho
ice
of la
w, s
hall
be c
ontr
ollin
g in
all
mat
ters
rel
atin
g to
the
Plan
to th
e ex
tent
not
pre
empt
ed b
y th
e E
mpl
oyee
Ret
irem
ent I
ncom
eSe
curi
ty A
ct o
f 19
74, a
s am
ende
d ("
ER
ISA
").
7.7
Act
ion
by th
e C
ompa
ny. E
xcep
t as
othe
rwis
e sp
ecif
ical
ly p
rovi
ded
in th
e Pl
an, a
ny a
ctio
n re
quir
ed o
f or
per
mitt
ed b
y th
e C
ompa
ny u
nder
the
Plan
sha
ll be
by
reso
lutio
n of
the
Boa
rd o
f D
irec
tors
of
the
Com
pany
or
by a
ctio
n of
any
mem
ber
of th
e C
omm
ittee
or
pers
on(s
) au
thor
ized
by
reso
lutio
n of
the
Boa
rd o
f D
irec
tors
of
the
Com
pany
.
7.8
Sect
ion
16. N
otw
ithst
andi
ng a
ny o
ther
pro
visi
on o
f th
e Pl
an, t
he C
ompe
nsat
ion
Com
mitt
ee m
ay im
pose
suc
h re
stri
ctio
ns, r
ules
and
reg
ulat
ions
on
the
term
s an
d co
nditi
ons
of p
artic
ipat
ion
in th
e Pl
anby
any
Par
ticip
ant w
ho h
as b
een
deem
ed b
y th
e B
oard
of
Dir
ecto
rs o
f th
e C
ompa
ny to
be
subj
ect t
o Se
ctio
n 16
of
the
Secu
ritie
s E
xcha
nge
Act
of
1934
, as
amen
ded,
as
the
Com
pens
atio
n C
omm
ittee
may
dete
rmin
e to
be
nece
ssar
y or
app
ropr
iate
. Any
tran
sact
ion
that
wou
ld r
esul
t in
liabi
lity
or p
oten
tial l
iabi
lity
unde
r sa
id S
ectio
n 16
sha
ll be
voi
d ab
initi
o.
Sect
ion
8 Su
bsid
iary
Par
ticip
atio
n
8.1
Ado
ptio
n of
Pla
n. A
ny e
ntity
in w
hich
the
Com
pany
dir
ectly
or
thro
ugh
inte
rven
ing
subs
idia
ries
ow
ns 2
5% o
r m
ore
of th
e to
tal c
ombi
ned
votin
g po
wer
or
valu
e of
all
clas
ses
of s
tock
, or,
in th
e ca
se o
fan
uni
ncor
pora
ted
entit
y, a
25%
or
mor
e in
tere
st in
the
capi
tal a
nd p
rofi
ts (
a "S
ubsi
diar
y")
may
, with
the
appr
oval
of
the
Com
pens
atio
n C
omm
ittee
and
und
er s
uch
term
s an
d co
nditi
ons
as th
eC
ompe
nsat
ion
Com
mitt
ee m
ay p
resc
ribe
, ado
pt th
e co
rres
pond
ing
port
ions
of
the
Plan
by
reso
lutio
n of
its
boar
d of
dir
ecto
rs a
nd th
ereb
y be
com
e an
"A
dopt
ing
Subs
idia
ry,"
exc
ept t
hat t
he B
rand
s sh
all
auto
mat
ical
ly b
e co
nsid
ered
Ado
ptin
g Su
bsid
iari
es. T
he C
ompe
nsat
ion
Com
mitt
ee m
ay a
men
d th
e Pl
an a
s ne
cess
ary
or d
esir
able
to r
efle
ct th
e ad
optio
n of
the
Plan
by
an A
dopt
ing
Subs
idia
ry, p
rovi
ded,
how
ever
, tha
t an
Ado
ptin
g Su
bsid
iary
sha
ll no
t hav
e th
e au
thor
ity to
am
end
or te
rmin
ate
the
Plan
und
er S
ectio
n 9
belo
w.
gp
y
8.2
With
draw
al f
rom
the
Plan
by
Subs
idia
ry. A
ny A
dopt
ing
Subs
idia
ry s
hall
have
the
righ
t, at
any
tim
e, u
pon
the
appr
oval
of
and
unde
r su
ch c
ondi
tions
as
may
be
prov
ided
by
the
Com
pens
atio
nC
omm
ittee
, to
with
draw
fro
m th
e Pl
an b
y de
liver
ing
to th
e C
ompe
nsat
ion
Com
mitt
ee w
ritte
n no
tice
of it
s el
ectio
n so
to w
ithdr
aw, u
pon
whi
ch it
sha
ll be
con
side
red
a "W
ithdr
awin
g Su
bsid
iary
." U
pon
rece
ipt o
f su
ch n
otic
e, th
e C
ompe
nsat
ion
Com
mitt
ee m
ay (
but n
eed
not)
det
erm
ine
that
not
with
stan
ding
any
oth
er p
rovi
sion
of
this
Pla
n an
d w
ithou
t reg
ard
to a
ny P
aym
ent E
lect
ions
mad
e by
the
affe
cted
Part
icip
ants
, the
Com
pany
sha
ll pa
y ou
t the
por
tion
of th
e A
ccou
nts
of P
artic
ipan
ts a
nd b
enef
icia
ries
attr
ibut
able
to c
redi
ts m
ade
whi
le th
e Pa
rtic
ipan
ts w
ere
empl
oyee
s of
suc
h W
ithdr
awin
g Su
bsid
iary
,pl
us a
ny n
et e
arni
ngs,
gai
ns a
nd lo
sses
on
such
cre
dits
.
8.3
Spec
ial R
ule
for
Sale
s or
Oth
er D
ispo
sitio
ns o
f Su
bsid
iari
es. N
otw
ithst
andi
ng a
ny o
ther
pro
visi
on o
f th
e Pl
an, i
f an
Ado
ptin
g Su
bsid
iary
cea
ses
to b
e a
Subs
idia
ry (
ther
eby
beco
min
g a
"Dis
affi
liate
dSu
bsid
iary
") a
s a
resu
lt of
(a)
a s
ale,
spi
noff
, pub
lic o
ffer
ing
or o
ther
tran
sact
ion
invo
lvin
g th
e D
isaf
filia
ted
Subs
idia
ry, o
r if
one
or
mor
e bu
sine
sses
con
duct
ed b
y an
Ado
ptin
g Su
bsid
iary
are
sol
d to
anot
her
entit
y (a
"B
uyer
"), a
ny P
artic
ipan
t who
as
a re
sult
of s
uch
tran
sact
ion
ceas
es to
be
empl
oyed
by
the
Com
pany
or
one
of it
s re
mai
ning
Sub
sidi
arie
s sh
all b
e co
nsid
ered
to h
ave
expe
rien
ced
ate
rmin
atio
n of
em
ploy
men
t for
pur
pose
s of
the
Plan
, unl
ess
the
next
sen
tenc
e ap
plie
s. I
f in
con
nect
ion
with
suc
h a
tran
sact
ion,
a P
artic
ipan
t rem
ains
an
empl
oyee
of
the
Dis
affi
liate
d Su
bsid
iary
or
beco
mes
an e
mpl
oyee
of
the
Buy
er o
r on
e of
its
subs
idia
ries
or
affi
liate
s, a
s ap
plic
able
, and
the
Dis
affi
liate
d Su
bsid
iary
or
the
Buy
er, a
s ap
plic
able
, ass
umes
all
liabi
litie
s to
the
Part
icip
ant u
nder
this
Pla
n, th
en th
ePa
rtic
ipan
t sha
ll no
t be
cons
ider
ed to
hav
e ex
peri
ence
d a
term
inat
ion
of e
mpl
oym
ent f
or p
urpo
ses
of th
e Pl
an, b
ut th
e C
ompa
ny a
nd it
s re
mai
ning
Sub
sidi
arie
s an
d af
filia
tes
shal
l hav
e no
fur
ther
oblig
atio
ns to
the
Part
icip
ant o
r an
y of
his
or
her
bene
fici
arie
s un
der
the
Plan
.
McD
onal
d's
Cor
pora
tion
49
Sect
ion
9 A
men
dmen
t and
Ter
min
atio
n; E
RIS
A I
ssue
s
9.1
Am
endm
ent a
nd T
erm
inat
ion.
The
Com
pany
inte
nds
the
Plan
to b
e pe
rman
ent,
but r
eser
ves
the
righ
t at a
ny ti
me
by a
ctio
n of
its
Boa
rd o
f D
irec
tors
of
the
Com
pany
or
the
Com
pens
atio
n C
omm
ittee
tom
odif
y, a
men
d or
term
inat
e th
e Pl
an; p
rovi
ded,
how
ever
, tha
t any
am
endm
ent o
r te
rmin
atio
n of
the
Plan
sha
ll no
t red
uce
or e
limin
ate
any
Acc
ount
acc
rued
thro
ugh
the
date
of
such
am
endm
ent o
rte
rmin
atio
n; a
nd p
rovi
ded,
fur
ther
, tha
t no
such
am
endm
ent m
ade
afte
r a
Cha
nge
in C
ontr
ol o
r in
con
tem
plat
ion
of a
Cha
nge
in C
ontr
ol m
ay e
limin
ate
any
of th
e Pa
rtic
ipan
ts' c
hoic
es a
s to
the
timin
g an
dm
etho
d of
pay
men
ts o
f A
ccou
nts
unde
r Se
ctio
n 6
with
res
pect
to a
mou
nts
cred
ited
to A
ccou
nts
befo
re th
e da
te o
f th
e C
hang
e in
Con
trol
. The
Com
pens
atio
n C
omm
ittee
sha
ll pr
ovid
e no
tice
of a
men
dmen
tsad
opte
d by
the
Com
pens
atio
n C
omm
ittee
to th
e B
oard
of
Dir
ecto
rs o
f th
e C
ompa
ny o
n a
timel
y ba
sis.
9.2
ER
ISA
Iss
ues.
It i
s th
e in
tent
ion
of th
e C
ompa
ny th
at th
e Pl
an b
e vi
ewed
, for
pur
pose
s of
ER
ISA
, as
com
pris
ing
thre
e di
stin
ct p
lans
(ea
ch, a
"Su
bpla
n"),
eac
h of
whi
ch is
unf
unde
d w
ithin
the
mea
ning
of E
RIS
A a
nd th
eref
ore
exem
pt f
rom
the
repo
rtin
g, d
iscl
osur
e an
d fi
duci
ary
rule
s of
ER
ISA
: (a)
an
"exc
ess
bene
fit p
lan"
as
defi
ned
in S
ectio
n 3(
36)
of E
RIS
A, c
over
ing
Part
icip
ants
who
se A
ccou
nts
cont
ain
only
am
ount
s cr
edite
d pu
rsua
nt to
Sec
tion
3.1(
a) o
f th
e Pl
an; (
b) a
pla
n de
scri
bed
in S
ectio
ns 2
01(2
),30
1(a)
(3)
and
401(
a)(1
) of
ER
ISA
(a
"Top
Hat
Pla
n")
cove
ring
Par
ticip
ants
not
des
crib
ed in
the
prec
edin
g cl
ause
(a)
but
who
se A
ccou
nts
cont
ain
only
am
ount
s cr
edite
d un
der
the
McC
AP
Feat
ure
of th
ePl
an; a
nd (
c) a
Top
Hat
Pla
n co
veri
ng P
artic
ipan
ts w
hose
Acc
ount
s co
ntai
n am
ount
s cr
edite
d un
der
the
Def
erre
d In
com
e Fe
atur
e of
the
Plan
. With
out l
imiti
ng th
e ge
nera
lity
of th
e fo
rego
ing
prov
isio
ns o
fth
is S
ectio
n 9,
the
Com
pany
res
erve
s th
e ri
ght t
o te
rmin
ate
any
Subp
lan,
and
to p
ay o
ut th
e A
ccou
nts
of P
artic
ipan
ts u
nder
the
Subp
lan
in c
onne
ctio
n w
ith s
uch
term
inat
ion,
with
out r
egar
d to
any
Pay
men
tE
lect
ions
mad
e by
suc
h Pa
rtic
ipan
ts, i
f it
is d
eter
min
ed b
y an
y co
mpe
tent
aut
hori
ty, o
r by
the
Com
pany
with
the
advi
ce o
f co
unse
l, th
at s
uch
Subp
lan
does
not
qua
lify
as a
n ex
cess
ben
efit
plan
or
Top
Hat
Plan
.
Sect
ion
10 C
omm
ittee
Act
ions
and
Ele
ctro
nic
Ele
ctio
ns
10.1
Act
ions
of
Com
mitt
ees.
Any
act
ions
by
the
Com
mitt
ee o
r th
e C
ompe
nsat
ion
Com
mitt
ee s
hall
be ta
ken
upon
the
appr
oval
of
a m
ajor
ity o
f th
e m
embe
rs th
ereo
f at
any
in-p
erso
n or
tele
phon
ic m
eetin
gor
in w
ritin
g.
10.2
Ele
ctro
nic
Ele
ctio
ns. A
nyth
ing
in th
e Pl
an to
the
cont
rary
not
with
stan
ding
, the
Com
mitt
ee m
ay in
its
disc
retio
n m
ay m
ake
disc
losu
re o
r gi
ve in
form
atio
n to
Par
ticip
ants
and
ben
efic
iari
es a
nd p
erm
itPa
rtic
ipan
ts o
r th
eir
bene
fici
arie
s to
mak
e el
ectr
onic
ele
ctio
ns in
lieu
of
wri
tten
disc
losu
re, i
nfor
mat
ion
or e
lect
ions
pro
vide
d in
the
Plan
. In
mak
ing
such
a d
eter
min
atio
n, th
e C
omm
ittee
sha
ll co
nsid
er th
eav
aila
bilit
y of
ele
ctro
nic
disc
losu
re o
f in
form
atio
n an
d el
ectio
ns to
Par
ticip
ants
and
ben
efic
iari
es, t
he p
rote
ctio
n of
the
righ
ts o
f Pa
rtic
ipan
ts a
nd th
eir
bene
fici
arie
s, th
e ap
prop
riat
enes
s of
the
stan
dard
s fo
rau
then
ticat
ion
of id
entit
y an
d ot
her
secu
rity
con
side
ratio
ns in
volv
ed in
the
elec
tron
ic e
lect
ion
syst
em a
nd a
ny g
uida
nce
issu
ed b
y an
y re
leva
nt g
over
nmen
tal a
utho
ritie
s.
Exe
cute
d in
mul
tiple
ori
gina
ls th
is 1
st d
ay o
f O
ctob
er, 2
001.
McD
ON
AL
D'S
CO
RP
OR
AT
ION
gp
y
By: /s/ Stanley R. Stein
---------------------------------------
Name: Stanley R. Stein
Title: Executive Vice President
50 M
cDon
ald'
s C
orpo
ratio
n
EXHIBIT A Index of Defined Terms
-------------------------------------------------------------------------------
Defined Term Section
Account 5.1(a)
Adopting Subsidiary 8.1
Annual Bonus Plan 2.2(a)
Beneficiary Designation 6.5(a)
Brands Exhibit C
Buyer 8.3
Change in Control 6.1(h)
Code 1.2(b)
Company 1.1(a)
Committee 1.3
Compensation Committee 1.3
Compensation Limit 1.2(b)
Deferral Elections 3.1(d)(i)
Deferred Income Deferred Election 2.2(a)
Deferred Income Eligible Employees 2.1
Deferred Income Feature 1.2(a)
DIP 1.1(a)
Disaffiliated Subsidiary 8.3
Due Date 4.1
Elective Contribution Limit 1.2(a)
ERISA 7.6
415 Limits 1.2(b)
In-Service Withdrawal Election 6.1(e)
In-Service Withdrawals 6.1(e)
Installment Elections 6.1(b)
Limits 1.2(b)
Merger Document 1.1(a)
McDonald's 1.1(a)
McCap I 1.1(a)
McCap II 1.1(a)
McCap Deferral Election 3.1(d)(i)
McCap Feature 1.2(a)
McEqual 1.1(a)
Other Limits 1.2(b)
Participants 1.2(a)
Payment Elections 6.1(b)
Plan 1.1(a)
gp
y
Prior Year 3.1(c)(i)
Profit Sharing Plan 1.2(a)
Specified Compensation 3.1(c)(i)
Specified Year 3.1(c)(i)
Subplan 9.2
Subsidiary 8.1
Supplemental McDonald's Common Stock Return 5.2(b)(i)
Supplemental S&P 500 Index Return 5.2(b)(iii)
Supplemental Stable Value Return 5.2(b)(ii)
Termination Distributions 6.1(c)
Top Hat Plan 9.2(b)
Trust 7.1
Withdrawing Subsidiary 8.2
McDonald's Corporation 51
EX
HIB
IT B
Mer
ger
Doc
umen
t
(a)
WH
ER
EA
S, M
cDon
ald'
s C
orpo
ratio
n (t
he "
Com
pany
") h
as e
stab
lishe
d an
d m
aint
aine
d th
e fo
llow
ing
four
non
-qua
lifie
d de
ferr
ed c
ompe
nsat
ion
plan
s (c
olle
ctiv
ely,
the
"Pla
ns")
: the
McD
onal
d's
Prof
itSh
arin
g Pr
ogra
m E
qual
izat
ion
Plan
as
amen
ded
and
rest
ated
eff
ectiv
e Ja
nuar
y 1,
199
6 ("
McE
qual
"); t
he M
cDon
ald'
s 19
89 E
xecu
tive
Equ
aliz
atio
n Pl
an a
s am
ende
d an
d re
stat
ed e
ffec
tive
Janu
ary
1, 1
996
("M
cCA
P I"
); th
e M
cDon
ald'
s Su
pple
men
tal E
mpl
oyee
Ben
efit
Equ
aliz
atio
n Pl
an a
s am
ende
d an
d re
stat
ed e
ffec
tive
Janu
ary
1, 1
996
("M
cCA
P II
"); a
nd th
e M
cDon
ald'
s C
orpo
ratio
n D
efer
red
Inco
me
Plan
(the
"D
IP")
; and
(b)
WH
ER
EA
S, th
e B
oard
of
Dir
ecto
rs o
f th
e C
ompa
ny h
as a
ppro
ved
the
mer
ger
of M
cEqu
al, M
cCA
P I
and
McC
AP
II in
to th
e D
IP, a
nd th
e am
endm
ent a
nd r
esta
tem
ent o
f th
e D
IP u
nder
the
new
nam
e of
the
McD
onal
d's
Cor
pora
tion
Supp
lem
enta
l Pro
fit S
hari
ng a
nd S
avin
gs P
lan
(the
"C
ombi
ned
Plan
"), a
ll as
mor
e fu
lly s
et f
orth
bel
ow;
(c)
NO
W, T
HE
RE
FOR
E, t
he f
ollo
win
g ac
tions
are
her
eby
appr
oved
, eff
ectiv
e as
of
Sept
embe
r 1,
200
1:
1. T
he C
ombi
ned
Plan
is h
ereb
y ad
opte
d su
bsta
ntia
lly in
the
form
pre
sent
ed to
the
Boa
rd. C
apita
lized
term
s us
ed a
nd n
ot d
efin
ed h
erei
n sh
all h
ave
the
mea
ning
s gi
ven
them
in th
e Pl
ans
or in
the
Com
bine
dPl
an, a
s ap
plic
able
.
2. E
ach
Part
icip
ant i
n an
y of
the
Plan
s w
hose
com
bine
d ac
coun
t bal
ance
s un
der
the
Plan
s eq
uals
$5,
000
or le
ss a
s of
Sep
tem
ber
1, 2
001
and
eith
er (
i) h
as te
rmin
ated
em
ploy
men
t bef
ore
Sept
embe
r 1,
200
1or
(ii)
has
200
1 C
ompe
nsat
ion
(as
defi
ned
belo
w)
of n
ot m
ore
than
$85
,000
, and
eac
h be
nefi
ciar
y of
suc
h a
Part
icip
ant,
shal
l be
paid
the
entir
e ba
lanc
e in
all
of h
is o
r he
r ac
coun
ts u
nder
the
Plan
s in
asi
ngle
lum
p su
m p
aym
ent n
ot la
ter
than
Dec
embe
r 31
, 200
1, a
nd s
hall
have
no
furt
her
righ
ts u
nder
the
Plan
s. F
or th
ese
purp
oses
the
term
"20
01 C
ompe
nsat
ion"
sha
ll m
ean
the
sum
of
(A)
the
amou
nt o
f th
ePa
rtic
ipan
t's a
nnua
l bas
e sa
lary
at t
he r
ate
in e
ffec
t for
one
of
the
payr
oll p
erio
ds d
urin
g A
ugus
t of
the
Prio
r Y
ear,
as
spec
ifie
d by
the
Com
mitt
ee, a
nd (
B)
the
amou
nt o
f th
e bo
nus,
if a
ny, p
ayab
le to
the
Part
icip
ant u
nder
the
McD
onal
d's
Tar
get I
ncen
tive
Plan
dur
ing
2001
(in
eac
h ca
se w
ithou
t reg
ard
to a
ny e
lect
ive
defe
rral
s th
ereo
f un
der
the
Plan
s, th
e Pr
ofit
Shar
ing
Plan
or
othe
rwis
e).
3. E
ach
Part
icip
ant i
n an
d ea
ch b
enef
icia
ry u
nder
McE
qual
, McC
AP
I or
McC
AP
II w
hose
acc
ount
bal
ance
s un
der
thos
e Pl
ans
are
not p
aid
out p
ursu
ant t
oSe
ctio
n 2
abov
e sh
all a
utom
atic
ally
bec
ome
a Pa
rtic
ipan
t in
or a
ben
efic
iary
und
er th
e M
cCA
P Fe
atur
e of
the
Com
bine
d Pl
an, a
s ap
plic
able
, and
his
or
her
McE
qual
Acc
ount
, McC
AP
I A
ccou
nt a
nd/o
rM
cCA
P II
Acc
ount
, as
appl
icab
le, s
hall
be in
clud
ed in
his
or
her
Acc
ount
und
er th
e C
ombi
ned
Plan
.
4. E
ach
Part
icip
ant i
n an
d ea
ch b
enef
icia
ry u
nder
the
DIP
who
se D
efer
ral A
ccou
nt u
nder
the
DIP
is n
ot p
aid
out p
ursu
ant t
o Se
ctio
n 2
abov
e sh
all a
utom
atic
ally
bec
ome
a Pa
rtic
ipan
t in
or a
ben
efic
iary
unde
r th
e D
efer
red
Inco
me
Feat
ure
of th
e C
ombi
ned
Plan
, as
appl
icab
le, a
nd h
is o
r he
r D
efer
ral A
ccou
nt s
hall
be in
clud
ed in
his
or
her
Acc
ount
und
er th
e C
ombi
ned
Plan
.
5. E
ach
Part
icip
ant i
n an
y of
the
Plan
s w
hose
em
ploy
men
t has
term
inat
ed o
n or
bef
ore
Dec
embe
r 31
, 200
1, b
ut w
hose
acc
ount
bal
ance
s un
der
the
Plan
s ar
e no
t pai
d ou
t pur
suan
t to
Sect
ion
2 ab
ove,
and
each
ben
efic
iary
of
such
a P
artic
ipan
t, sh
all b
e pa
id th
e en
tire
bala
nce
in h
is o
r he
r A
ccou
nts
unde
r th
e C
ombi
ned
Plan
in a
sin
gle
lum
p su
m p
aym
ent i
n M
arch
of
2002
, unl
ess
he o
r sh
e ha
s pr
evio
usly
elec
ted
a la
ter
paym
ent d
ate
unde
r Se
ctio
n 6.
1(c)
of
the
Com
bine
d Pl
an o
r m
ade
an I
nsta
llmen
t Ele
ctio
n un
der
Sect
ion
6.1(
d) o
f th
e C
ombi
ned
Plan
, in
acco
rdan
ce w
ith th
e ru
les
set f
orth
in th
e C
ombi
ned
Plan
; pro
vide
d, th
at th
e du
e da
te f
or e
ither
suc
h el
ectio
n sh
all b
e D
ecem
ber
15, 2
001.
gp
y
6. E
ffec
tive
as o
f Ja
nuar
y 1,
200
2, e
xcep
t as
spec
ific
ally
pro
vide
d in
Sec
tion
5 ab
ove,
the
prov
isio
ns o
f Se
ctio
n 6
of th
e C
ombi
ned
Plan
rel
atin
g to
the
time
and
met
hod
of p
aym
ents
of
Acc
ount
s sh
all a
pply
to th
e in
itial
bal
ance
s of
Par
ticip
ants
' Acc
ount
s un
der
the
Com
bine
d Pl
an th
at a
re c
arri
ed o
ver
from
acc
ount
s un
der
the
Plan
s (t
he "
Prio
r A
ccou
nts"
) as
pro
vide
d in
Sec
tions
4 a
nd 5
abo
ve (
such
initi
alba
lanc
es, t
he "
Initi
al C
ombi
ned
Acc
ount
s"),
sup
erse
ding
all
prio
r el
ectio
ns m
ade
unde
r th
e Pl
ans
(inc
ludi
ng w
ithou
t lim
itatio
n D
elin
king
Ele
ctio
ns u
nder
the
Prio
r Pl
ans)
and
all
rule
s re
gard
ing
the
time
and
met
hod
of p
aym
ents
und
er th
e Pl
ans
as p
revi
ousl
y in
eff
ect.
52 M
cDon
ald'
s C
orpo
ratio
n
7. T
he I
nitia
l Com
bine
d A
ccou
nts
shal
l be
deem
ed in
vest
ed, a
s of
Jan
uary
1, 2
002,
bas
ed u
pon
how
the
corr
espo
ndin
g ac
coun
t or
acco
unts
in th
e Pl
ans
wer
e in
vest
ed im
med
iate
ly a
s of
Dec
embe
r 31
, 200
1,as
fol
low
s: (
a) th
e po
rtio
n of
the
Initi
al C
ombi
ned
Acc
ount
s th
at w
ere
inve
sted
in th
e St
able
Val
ue o
r M
oney
Mar
ket E
quiv
alen
ts s
hall
be d
eem
ed in
vest
ed in
the
Supp
lem
enta
l Sta
ble
Val
ue R
etur
n un
der
the
Com
bine
d Pl
an; (
b) th
e po
rtio
n of
the
Initi
al C
ombi
ned
Acc
ount
s th
at w
ere
inve
sted
in th
e In
tern
atio
nal S
tock
, Div
ersi
fied
Sto
ck, S
&P
500
or B
lend
ed S
tock
and
Bon
d E
quiv
alen
ts s
hall
be d
eem
edin
vest
ed in
the
Supp
lem
enta
l S&
P 50
0 R
etur
n un
der
the
Com
bine
d Pl
an; a
nd (
c) th
e po
rtio
n of
the
Initi
al C
ombi
ned
Acc
ount
s th
at w
ere
inve
sted
in th
e M
cDon
ald'
s C
omm
on S
tock
Equ
ival
ent s
hall
bede
emed
inve
sted
in th
e Su
pple
men
tal M
cDon
ald'
s C
omm
on S
tock
Ret
urn
unde
r th
e C
ombi
ned
Plan
.
8. A
ny b
enef
icia
ry d
esig
natio
n th
at is
in e
ffec
t with
res
pect
to a
Pri
or A
ccou
nt a
s of
Dec
embe
r 31
, 200
1 (a
"Pr
ior
Des
igna
tion"
) sh
all a
pply
as
of J
anua
ry 1
, 200
2 to
the
corr
espo
ndin
g po
rtio
n of
the
corr
espo
ndin
g In
itial
Com
bine
d A
ccou
nt in
whi
ch s
uch
Prio
r A
ccou
nt is
incl
uded
, sub
ject
to a
ny s
ubse
quen
t ben
efic
iary
des
igna
tions
that
may
be
mad
e af
ter
Janu
ary
1, 2
002
by th
e ap
plic
able
Par
ticip
ant
or b
enef
icia
ry u
nder
the
term
s of
the
Com
bine
d Pl
an; p
rovi
ded,
that
the
Com
mitt
ee m
ay d
eter
min
e th
at in
any
eve
nt, a
ll Pr
ior
Des
igna
tions
sha
ll ce
ase
to b
e ef
fect
ive
as to
Acc
ount
s un
der
the
Com
bine
dPl
an, u
pon
reas
onab
le a
dvan
ce n
otic
e to
the
indi
vidu
als
who
mad
e su
ch P
rior
Des
igna
tions
.
9. A
s so
on a
s pr
actic
able
aft
er th
e da
te h
ereo
f, T
he M
cDon
ald'
s Pr
ofit
Shar
ing
Prog
ram
Equ
aliz
atio
n T
rust
, The
McD
onal
d's
1989
Exe
cutiv
e E
qual
izat
ion
Tru
st, a
nd T
he M
cDon
ald'
s Su
pple
men
tal
Em
ploy
ee B
enef
it E
qual
izat
ion
Tru
st s
hall
be m
erge
d in
to a
sin
gle
trus
t, su
bjec
t to
the
agre
emen
t of
the
trus
tee
of e
ach
such
trus
t and
the
exec
utio
n of
a n
ew tr
ust a
gree
men
t. Su
ch n
ew tr
ust a
gree
men
tsh
all r
equi
re f
ull f
undi
ng o
f th
e tr
ust i
n co
nnec
tion
with
a C
hang
e in
Con
trol
as
defi
ned
in th
e C
ombi
ned
Plan
.
10. A
ll ac
tions
and
det
erm
inat
ions
that
are
nec
essa
ry o
r ap
prop
riat
e to
impl
emen
t the
for
egoi
ng s
hall
be ta
ken
by th
e C
omm
ittee
, as
defi
ned
in th
e C
ombi
ned
Plan
, or
its d
eleg
ee.
Exe
cute
d in
mul
tiple
ori
gina
ls th
is 1
st d
ay o
f O
ctob
er, 2
001.
McD
ON
AL
D'S
CO
RP
OR
AT
ION
/s/ Stanley R. Stein
------------------------------------
By: Stanley R. Stein
Title: Executive Vice President
McD
onal
d's
Cor
pora
tion
53
EX
HIB
IT C
Bra
nd E
mpl
oyee
s W
ho A
re D
efer
red
Inco
me
Elig
ible
Em
ploy
ees
The
"B
rand
s" m
eans
Chi
potle
, Bos
ton
Mar
ket,
Don
atos
and
thei
r re
spec
tive
subs
idia
ries
.
The
Def
erre
d In
com
e E
ligib
le E
mpl
oyee
s of
the
Bra
nds
and
McD
onal
d's
Cor
pora
tion
are
as f
ollo
ws:
gp
y
----------------------------------------------------------------------------------------------------------------
Maximum Salary Deferral % McDonald's Boston Market Donatos Chipotle
================================================================================================================
60% Senior Direction Band Officers Vice President Band C -
Executives
70% Leadership & Sr. Leadership Team Sr. Vice President, Band B -
Officers/
Leadership Bands CFO, CEO, COO Vice Presidents
80% Executive Management N/A N/A Band A - CEO
Band
90% 5 Highest Paid Officers N/A N/A N/A
of McDonald's
----------------------------------------------------------------------------------------------------------------
EX
HIB
IT D
Pro
cedu
res
for
Inve
stm
ent
Ele
ctio
ns
[Atta
ched
]
Exh
ibit
10g
EX
EC
UT
IVE
RE
TE
NT
ION
PL
AN
(as
amen
ded
and
rest
ated
Mar
ch 2
0, 2
002)
McD
onal
d's
Cor
pora
tion,
a D
elaw
are
corp
orat
ion
(the
"C
ompa
ny")
, her
eby
esta
blis
hes
the
Exe
cutiv
e R
eten
tion
Plan
(th
e "P
lan"
) ef
fect
ive
as o
f O
ctob
er 1
, 199
8 (t
he "
Eff
ectiv
e D
ate"
). T
he P
lan
was
amen
ded
and
rest
ated
on
Mar
ch 2
0, 2
001
and
Mar
ch 2
0, 2
002.
Art
icle
1
Pur
pose
It is
in th
e be
st in
tere
sts
of th
e C
ompa
ny a
nd it
s sh
areh
olde
rs to
ass
ure
that
the
Com
pany
has
the
cont
inue
d de
dica
tion
of it
s ke
y ex
ecut
ives
in a
hig
hly
com
petit
ive
glob
al m
arke
tpla
ce. T
his
Plan
ises
tabl
ishe
d to
pro
mot
e th
e re
tent
ion
of th
ese
key
exec
utiv
es a
nd p
rovi
de th
e C
ompa
ny w
ith a
sm
ooth
suc
cess
ion
proc
ess.
Thi
s Pl
an is
als
o in
tend
ed to
pro
vide
thes
e ke
y ex
ecut
ives
with
ince
ntiv
es th
at a
rede
sign
ed to
foc
us th
eir
ener
gy o
n co
ntri
butin
g to
the
ultim
ate
succ
ess
of th
e C
ompa
ny.
Art
icle
2
Pla
n A
dmin
istr
atio
n
2.01
The
Com
mitt
ee. T
he C
ompe
nsat
ion
Com
mitt
ee o
f th
e B
oard
of
Dir
ecto
rs o
f th
e C
ompa
ny, a
s co
nstit
uted
fro
m ti
me
to ti
me
(the
"C
omm
ittee
"), s
hall
have
ove
rall
resp
onsi
bilit
y fo
r th
e es
tabl
ishm
ent,
amen
dmen
t, ad
min
istr
atio
n an
d op
erat
ion
of th
e Pl
an. T
he C
omm
ittee
may
ele
ct to
del
egat
e ce
rtai
n of
suc
h re
spon
sibi
litie
s to
one
or
mor
e of
its
mem
bers
and
, in
such
cas
e, a
ll re
fere
nces
in th
is P
lan
to th
e"C
omm
ittee
" sh
all i
nclu
de a
ref
eren
ce to
one
or
mor
e of
the
Com
mitt
ee m
embe
rs to
who
m a
ny s
uch
resp
onsi
bilit
ies
have
bee
n de
lega
ted.
Thi
s Pl
an s
hall
be a
dmin
iste
red
in a
uni
form
and
nond
iscr
imin
ator
y m
anne
r by
the
Com
mitt
ee, w
hich
sha
ll ha
ve th
e re
spon
sibi
litie
s an
d du
ties
and
pow
ers
unde
r th
is P
lan
whi
ch a
re n
ot s
peci
fica
lly d
eleg
ated
to a
nyon
e el
se, i
nclu
ding
the
follo
win
gpo
wer
s:gp
y
(i)
subj
ect t
o an
y lim
itatio
ns u
nder
this
Pla
n or
app
licab
le la
w, t
o m
ake
and
enfo
rce
such
rul
es a
nd r
egul
atio
ns o
f th
is P
lan
and
pres
crib
e th
e us
e of
suc
h fo
rms
as it
sha
ll de
em n
eces
sary
for
the
effi
cien
tad
min
istr
atio
n of
this
Pla
n;
(ii)
to r
equi
re a
ny p
erso
n to
fur
nish
suc
h in
form
atio
n as
it m
ay r
easo
nabl
y re
ques
t as
a co
nditi
on to
rec
eivi
ng a
ny b
enef
it un
der
this
Pla
n;
(iii)
to d
ecid
e on
que
stio
ns c
once
rnin
g th
is P
lan
and
the
elig
ibili
ty o
f th
e pe
rson
s id
entif
ied
as "
Tie
r I
Exe
cutiv
es"
and
"Tie
r II
Exe
cutiv
es"
(col
lect
ivel
y, th
e "E
xecu
tives
") o
n A
ppen
dix
A to
par
ticip
ate
inth
is P
lan,
in a
ccor
danc
e w
ith th
e pr
ovis
ions
of
this
Pla
n;
1
(iv)
to c
ompu
te o
r ca
use
to b
e co
mpu
ted
the
amou
nt o
f be
nefi
ts w
hich
sha
ll be
pay
able
to a
ny p
erso
n in
acc
orda
nce
with
the
prov
isio
ns o
f th
is P
lan;
and
(v)
to a
ppoi
nt a
nd r
emov
e, a
s it
deem
s ad
visa
ble,
the
Plan
Adm
inis
trat
or.
2.02
The
Pla
n A
dmin
istr
ator
. The
Com
mitt
ee m
ay a
ppoi
nt a
Pla
n A
dmin
istr
ator
who
may
(bu
t nee
d no
t) b
e a
mem
ber
of th
e C
omm
ittee
, and
in th
e ab
senc
e of
suc
h ap
poin
tmen
t, th
e C
omm
ittee
sha
ll be
the
Plan
Adm
inis
trat
or. T
he P
lan
Adm
inis
trat
or s
hall
perf
orm
the
adm
inis
trat
ive
resp
onsi
bilit
ies
dele
gate
d to
the
Plan
Adm
inis
trat
or f
rom
tim
e to
tim
e by
the
Com
mitt
ee.
2.03
Dis
cret
iona
ry P
ower
of
the
Com
mitt
ee. T
he C
omm
ittee
fro
m ti
me
to ti
me
may
est
ablis
h ru
les
for
the
adm
inis
trat
ion
of th
is P
lan.
The
Com
mitt
ee s
hall
have
the
sole
dis
cret
ion
to m
ake
deci
sion
s an
dta
ke a
ny a
ctio
n w
ith r
espe
ct to
que
stio
ns a
risi
ng in
con
nect
ion
with
this
Pla
n, in
clud
ing
the
cons
truc
tion
and
inte
rpre
tatio
n of
this
Pla
n an
d th
e de
term
inat
ion
of e
ligib
ility
for
and
the
amou
nt o
f be
nefi
tsun
der
this
Pla
n. T
he d
ecis
ions
or
actio
ns o
f th
e C
omm
ittee
as
to a
ny q
uest
ions
ari
sing
in c
onne
ctio
n w
ith th
is P
lan,
incl
udin
g th
e co
nstr
uctio
n an
d in
terp
reta
tion
of th
is P
lan,
sha
ll be
fin
al a
nd b
indi
ng u
pon
all E
xecu
tives
and
thei
r re
spec
tive
bene
fici
arie
s.
2.04
Act
ion
of th
e C
omm
ittee
. The
Com
mitt
ee m
ay a
ct a
t a m
eetin
g, in
clud
ing
a te
leph
onic
mee
ting,
by
the
cons
ent o
f a
maj
ority
of
the
mem
bers
of
the
Com
mitt
ee a
t the
tim
e in
off
ice,
or
with
out a
mee
ting,
by
the
unan
imou
s w
ritte
n co
nsen
t of
the
indi
vidu
al m
embe
rs o
f th
e C
omm
ittee
. An
exec
uted
doc
umen
t sig
ned
by a
n in
divi
dual
mem
ber
of th
e C
omm
ittee
and
tran
smitt
ed b
y fa
csim
ile s
hall
beva
lid a
s th
e or
igin
al s
igne
d do
cum
ent f
or a
ll pu
rpos
es. A
ny p
erso
n de
alin
g w
ith th
e C
omm
ittee
sha
ll be
ent
itled
to r
ely
upon
a c
ertif
icat
e of
any
mem
ber
of th
e C
omm
ittee
, or
the
Secr
etar
y or
any
Ass
ista
ntSe
cret
ary
of th
e C
ompa
ny, a
s to
any
act
or
dete
rmin
atio
n of
the
Com
mitt
ee.
2.05
Adv
isor
s an
d A
gent
s of
the
Com
mitt
ee. T
he C
omm
ittee
may
, sub
ject
to p
erio
dic
revi
ew, (
a) a
utho
rize
one
or
mor
e of
its
mem
bers
or
an a
gent
to e
xecu
te o
r de
liver
any
inst
rum
ent,
and
mak
e an
ypa
ymen
t on
its b
ehal
f an
d (b
) ut
ilize
the
serv
ices
of
asso
ciat
es a
nd e
ngag
e ac
coun
tant
s, a
gent
s, le
gal c
ouns
el, r
ecor
d ke
eper
s, p
rofe
ssio
nal c
onsu
ltant
s (a
ny o
f w
hom
may
als
o be
ser
ving
the
Com
pany
) or
auth
oriz
ed C
ompa
ny p
erso
nnel
to a
ssis
t in
the
adm
inis
trat
ion
of th
is P
lan
or to
ren
der
advi
ce w
ith r
egar
d to
any
res
pons
ibili
ty o
r is
sue
aris
ing
unde
r th
is P
lan.
2.06
Rec
ords
and
Rep
orts
of
the
Com
mitt
ee. T
he C
omm
ittee
sha
ll m
aint
ain
reco
rds
and
acco
unts
rel
atin
g to
the
adm
inis
trat
ion
of th
is P
lan.
An
Exe
cutiv
e sh
all b
e en
title
d to
rev
iew
any
rec
ords
rel
atin
g to
his
or h
er in
divi
dual
par
ticip
atio
n in
the
Plan
and
to m
ake
copi
es o
f su
ch r
ecor
ds u
pon
wri
tten
requ
est t
o th
e C
omm
ittee
.
2.07
Lia
bilit
y of
the
Com
mitt
ee; I
ndem
nifi
catio
n. T
he m
embe
rs o
f th
e C
omm
ittee
and
the
Plan
Adm
inis
trat
or s
hall
have
no
liabi
lity
with
res
pect
to a
ny a
ctio
n or
2
omis
sion
mad
e by
them
in g
ood
faith
nor
fro
m a
ny a
ctio
n or
om
issi
on m
ade
in r
elia
nce
upon
(a)
the
advi
ce o
r op
inio
n of
any
acc
ount
ant,
lega
l cou
nsel
, med
ical
adv
iser
or
othe
r pr
ofes
sion
al c
onsu
ltant
or
(b)
any
reso
lutio
ns o
f th
e B
oard
(or
the
Com
mitt
ee)
cert
ifie
d by
the
Secr
etar
y or
Ass
ista
nt S
ecre
tary
of
the
Com
pany
. Eac
h m
embe
r of
the
Com
mitt
ee a
nd th
e Pl
an A
dmin
istr
ator
sha
ll be
inde
mni
fied
,de
fend
ed a
nd h
eld
harm
less
by
the
Com
pany
and
its
resp
ectiv
e su
cces
sors
aga
inst
all
clai
ms,
liab
ilitie
s, f
ines
and
pen
altie
s an
d al
l exp
ense
s (i
nclu
ding
rea
sona
ble
atto
rney
s' f
ees
and
disb
urse
men
ts a
ndot
her
prof
essi
onal
cos
ts in
curr
ed in
enf
orci
ng th
is p
rovi
sion
) re
ason
ably
incu
rred
by
or im
pose
d up
on s
uch
indi
vidu
al w
hich
ari
se a
s a
resu
lt of
his
or
her
actio
ns o
r fa
ilure
to a
ct in
con
nect
ion
with
the
oper
atio
n an
d ad
min
istr
atio
n of
this
Pla
n, to
the
exte
nt la
wfu
lly a
llow
able
and
to th
e ex
tent
that
suc
h cl
aim
, lia
bilit
y, f
ine,
pen
alty
or
expe
nse
is n
ot p
aid
for
by li
abili
ty in
sura
nce
purc
hase
d by
or
paid
for
by th
e C
ompa
ny o
r an
aff
iliat
e th
ereo
f. N
otw
ithst
andi
ng th
e fo
rego
ing,
the
Com
pany
sha
ll no
t ind
emni
fy a
ny p
erso
n fo
r an
y su
ch a
mou
nt in
curr
ed th
roug
h an
y se
ttlem
ent o
r co
mpr
omis
e of
any
act
ion
unle
ss th
e C
ompa
ny c
onse
nts
in w
ritin
g to
suc
h se
ttlem
ent o
r co
mpr
omis
e, w
hich
con
sent
sha
ll no
t be
unre
ason
ably
with
held
.
2.08
Pla
n E
xpen
ses.
Exp
ense
s re
latin
g to
this
Pla
n pr
ior
to it
s te
rmin
atio
n sh
all b
e pa
id f
rom
the
gene
ral a
sset
s of
the
Com
pany
. To
the
exte
nt r
equi
red
by a
pplic
able
law
, the
Com
pany
may
req
uire
any
mem
ber
of th
e C
omm
ittee
to f
urni
sh a
fid
elity
bon
d sa
tisfa
ctor
y to
the
Com
pany
.
2.09
Ser
vice
in M
ore
than
One
Cap
acity
. Any
per
son
or g
roup
of
pers
ons
may
ser
ve th
is P
lan
in m
ore
than
one
cap
acity
.
2.10
Nam
ed F
iduc
iary
. The
nam
ed f
iduc
iary
of
this
Pla
n sh
all b
e th
e C
omm
itte
e.
2.11
Del
egat
ion
of R
espo
nsib
ility
. The
Com
mitt
ee s
hall
have
the
auth
ority
to d
eleg
ate
from
tim
e to
tim
e, in
wri
ting,
all
or a
ny p
art o
f its
res
pons
ibili
ties
unde
r th
is P
lan
to a
mem
ber
of th
e C
omm
ittee
. The
Com
mitt
ee m
ay a
lso
dele
gate
adm
inis
trat
ive
func
tions
to th
e Pl
an A
dmin
istr
ator
pur
suan
t to
Sect
ion
2.02
. The
Com
mitt
ee m
ay in
the
sam
e m
anne
r re
vise
or
revo
ke a
ny s
uch
dele
gatio
n of
res
pons
ibili
ty. A
ny a
ctio
n of
the
dele
gate
in th
e ex
erci
se o
f su
ch d
eleg
ated
res
pons
ibili
ties
shal
l hav
e th
esa
me
forc
e an
d ef
fect
for
all
purp
oses
her
eund
er a
s if
suc
h ac
tion
had
been
take
n by
the
Com
mitt
ee. T
he C
omm
ittee
sha
ll no
t be
liabl
e fo
r an
y ac
ts o
r om
issi
ons
of a
ny s
uch
dele
gate
. The
del
egat
e sh
all
gp
y
peri
odic
ally
rep
ort t
o th
e C
omm
ittee
con
cern
ing
the
disc
harg
e of
the
dele
gate
d re
spon
sibi
litie
s.
2.12
Allo
catio
ns o
f R
espo
nsib
ility
. The
Com
mitt
ee s
hall
have
the
auth
ority
to a
lloca
te f
rom
tim
e to
tim
e, in
wri
ting,
all
or a
ny p
art o
f its
res
pons
ibili
ties
unde
r th
is P
lan
to o
ne o
r m
ore
of it
s m
embe
rs a
s it
may
dee
m a
dvis
able
, and
in th
e sa
me
man
ner
to r
evok
e su
ch a
lloca
tion
of r
espo
nsib
ilitie
s. A
ny a
ctio
n of
the
mem
ber
to w
hom
res
pons
ibili
ties
are
allo
cate
d in
the
exer
cise
of
such
allo
cate
d re
spon
sibi
litie
ssh
all h
ave
the
sam
e fo
rce
and
effe
ct f
or a
ll pu
rpos
es h
ereu
nder
as
if s
uch
actio
n ha
d be
en ta
ken
by th
e al
loca
ting
auth
ority
. The
Com
mitt
ee s
hall
not b
e lia
ble
for
any
acts
or
omis
sion
s of
suc
h m
embe
r. T
hem
embe
r to
who
m r
espo
nsib
ilitie
s ha
ve b
een
allo
cate
d sh
all p
erio
dica
lly r
epor
t to
the
Com
mitt
ee c
once
rnin
g th
e di
scha
rge
of th
e al
loca
ted
resp
onsi
bilit
ies.
3
2.13
Fili
ng a
Cla
im. E
ach
indi
vidu
al e
ligib
le f
or b
enef
its u
nder
this
Pla
n ("
Cla
iman
t")
may
sub
mit
a cl
aim
for
ben
efits
("C
laim
") to
the
Plan
Adm
inis
trat
or in
wri
ting
on a
for
m p
rovi
ded
or a
ppro
ved
by th
ePl
an A
dmin
istr
ator
or,
if n
o su
ch f
orm
has
bee
n so
pro
vide
d or
app
rove
d, o
n an
y fo
rm th
at s
peci
fies
, in
reas
onab
le d
etai
l, fa
cts
and
circ
umst
ance
s an
d th
e ap
plic
able
Pla
n pr
ovis
ions
whi
ch th
e C
laim
ant
belie
ves
entit
le h
im o
r he
r to
com
pens
atio
n or
ben
efits
und
er th
is P
lan.
A C
laim
ant s
hall
have
no
righ
t to
seek
rev
iew
of
a de
nial
of
bene
fits
, or
to b
ring
any
act
ion
in a
ny c
ourt
to e
nfor
ce a
Cla
im, p
rior
tohi
s fi
ling
a C
laim
and
exh
aust
ing
his
or h
er r
ight
s to
rev
iew
und
er th
is A
rtic
le 2
.
Whe
n a
Cla
im h
as b
een
file
d pr
oper
ly, i
t sha
ll be
eva
luat
ed a
nd th
e C
laim
ant s
hall
be n
otif
ied
of th
e ap
prov
al o
r th
e de
nial
of
the
Cla
im w
ithin
45
days
aft
er th
e re
ceip
t of
such
Cla
im u
nles
s sp
ecia
lci
rcum
stan
ces
requ
ire
an e
xten
sion
of
time
for
proc
essi
ng th
e C
laim
. If
such
an
exte
nsio
n is
req
uire
d, w
ritte
n no
tice
of th
e ex
tens
ion
shal
l be
furn
ishe
d to
the
Cla
iman
t pri
or to
the
end
of th
e in
itial
45-
day
peri
od, w
hich
not
ice
shal
l spe
cify
the
spec
ial c
ircu
mst
ance
s re
quir
ing
an e
xten
sion
and
the
date
by
whi
ch a
fin
al d
ecis
ion
will
be
reac
hed
(whi
ch d
ate
shal
l not
be
late
r th
an 9
0 da
ys a
fter
the
date
on
whi
chth
e C
laim
was
file
d). A
Cla
iman
t sha
ll be
giv
en a
wri
tten
notic
e in
whi
ch th
e C
laim
ant s
hall
be a
dvis
ed a
s to
whe
ther
the
Cla
im is
gra
nted
or
deni
ed, i
n w
hole
or
in p
art.
If a
Cla
im is
den
ied,
in w
hole
or
inpa
rt, t
he n
otic
e sh
all c
onta
in(a
) th
e sp
ecif
ic r
easo
ns f
or th
e de
nial
, (b)
ref
eren
ces
to p
ertin
ent P
lan
prov
isio
ns u
pon
whi
ch th
e de
nial
is b
ased
, (c)
a d
escr
iptio
n of
any
add
ition
al m
ater
ial o
r in
form
atio
n ne
cess
ary
to p
erfe
ct th
e C
laim
and
an e
xpla
natio
n of
why
suc
h m
ater
ial o
r in
form
atio
n is
nec
essa
ry, a
nd (
d) th
e C
laim
ant's
rig
ht to
see
k re
view
of
the
deni
al.
2.14
Rev
iew
of
Cla
im D
enia
l. If
a C
laim
is d
enie
d, in
who
le o
r in
par
t, th
e C
laim
ant s
hall
have
the
righ
t to
(a)
requ
est a
rev
iew
of
the
deni
al b
y th
e C
omm
ittee
or
its d
eleg
ate,
(b)
rev
iew
per
tinen
tdo
cum
ents
(c)
sub
mit
issu
es a
nd c
omm
ents
in w
ritin
g to
the
Com
mitt
ee a
nd (
d) a
ppea
r be
fore
the
Com
mitt
ee in
per
son
to p
rese
nt s
uch
issu
es a
nd c
omm
ents
; pro
vide
d th
at th
e C
laim
ant f
iles
a w
ritte
nre
ques
t for
rev
iew
with
the
Com
mitt
ee w
ithin
60
days
aft
er th
e C
laim
ant's
rec
eipt
of
wri
tten
notic
e of
the
deni
al. W
ithin
60
days
aft
er th
e C
omm
ittee
rec
eive
s a
requ
est f
or r
evie
w, t
he r
evie
w s
hall
be m
ade
and
the
Cla
iman
t sha
ll be
adv
ised
in w
ritin
g of
the
deci
sion
on
revi
ew, u
nles
s sp
ecia
l cir
cum
stan
ces
requ
ire
an e
xten
sion
of
time
for
such
rev
iew
, in
whi
ch c
ase
the
Cla
iman
t sha
ll be
giv
en a
wri
tten
notic
ew
ithin
suc
h in
itial
60-
day
peri
od s
peci
fyin
g th
e re
ason
s fo
r th
e ex
tens
ion
and
whe
n su
ch r
evie
w s
hall
be c
ompl
eted
; pro
vide
d th
at s
uch
revi
ew s
hall
be c
ompl
eted
with
in 1
20 d
ays
afte
r th
e fi
ling
of th
ere
ques
t for
rev
iew
. The
Com
mitt
ee's
dec
isio
n on
rev
iew
sha
ll be
sen
t to
the
Cla
iman
t in
wri
ting
and
shal
l inc
lude
(a)
spe
cifi
c re
ason
s fo
r th
e de
cisi
on a
nd (
b) r
efer
ence
s to
Pla
n pr
ovis
ions
upo
n w
hich
the
deci
sion
is b
ased
. A d
ecis
ion
on r
evie
w s
hall
be b
indi
ng o
n al
l per
sons
for
all
purp
oses
.
If a
Cla
iman
t sha
ll fa
il to
file
a r
eque
st f
or r
evie
w in
acc
orda
nce
with
the
proc
edur
es h
erei
n ou
tline
d, s
uch
Cla
iman
t sha
ll ha
ve n
o ri
ght t
o ob
tain
suc
h a
revi
ew o
r to
bri
ng a
n ac
tion
in a
ny c
ourt
, and
the
deni
al o
f th
e C
laim
sha
ll be
com
e fi
nal a
nd b
indi
ng o
n al
l per
sons
for
all
purp
oses
exc
ept u
pon
a sh
owin
g of
goo
d ca
use
for
such
fai
lure
.
4
Art
icle
3
Ret
enti
on P
erio
d
As
a co
nditi
on o
f re
ceiv
ing
the
Tra
nsiti
on B
enef
its (
as d
efin
ed in
Sect
ion
4.02
) an
d th
e C
ontin
ued
Em
ploy
men
t Ben
efits
(as
def
ined
in S
ectio
n5.
02),
an
Exe
cutiv
e m
ust p
rovi
de s
ervi
ces
to th
e C
ompa
ny a
s an
Exe
cutiv
e O
ffic
er (
as d
efin
ed b
elow
) th
roug
hout
the
Ret
entio
n Pe
riod
. Dur
ing
the
Ret
entio
n Pe
riod
,(i
) an
Exe
cutiv
e's
empl
oym
ent s
hall
be o
n an
at-
will
bas
is a
nd (
ii) th
e E
xecu
tive
shal
l be
entit
led
to p
artic
ipat
e in
the
Com
pany
's b
enef
its a
nd c
ompe
nsat
ion
plan
s, p
ract
ices
, pol
icie
s an
d pr
ogra
ms
as in
effe
ct f
rom
tim
e to
tim
e.
For
purp
oses
of
this
Pla
n:
(a)
an E
xecu
tive'
s "R
eten
tion
Peri
od"
shal
l mea
n th
e pe
riod
com
men
cing
on
the
Exe
cutiv
e's
Star
t Dat
e (a
s sp
ecif
ied
on A
ppen
dix
A)
and
endi
ng f
ive
year
s th
erea
fter
(in
the
case
of
Jack
Gre
enbe
rg)
or th
ree
year
s th
erea
fter
(in
the
case
of
all o
ther
Exe
cutiv
es);
and
(b)
"Exe
cutiv
e O
ffic
er"
mea
ns a
n ex
ecut
ive
offi
cer
(as
defi
ned
by R
ule
3b-7
(or
any
suc
cess
or r
ule)
und
er th
e Se
curi
ties
Exc
hang
e A
ct o
f 19
34 a
s in
eff
ect f
rom
tim
e to
tim
e) o
f th
e C
ompa
ny.
Art
icle
4
Tra
nsit
ion
Per
iod
gp
y
4.01
Ele
ctio
n to
Bec
ome
a T
rans
ition
Off
icer
. Upo
n an
Exe
cutiv
e's
com
plet
ion
of h
is o
r he
r R
eten
tion
Peri
od, s
uch
Exe
cutiv
e m
ay e
lect
by
wri
tten
notic
e (a
ccom
pani
ed b
y a
fully
exe
cute
d R
elea
se (
asde
scri
bed
in S
ectio
n8.
01(i
)) a
nd N
onco
mpe
titio
n A
gree
men
t (as
def
ined
in S
ectio
n 9.
01)
(suc
h no
tice,
Rel
ease
and
Non
com
petit
ion
Agr
eem
ent c
olle
ctiv
ely
refe
rred
to h
erei
n as
the
"Tra
nsiti
on D
ocum
ents
") to
the
Com
mitt
eeto
bec
ome
an o
ffic
er o
f th
e C
ompa
ny w
ho is
not
an
Exe
cutiv
e O
ffic
er (
such
non
-Exe
cutiv
e O
ffic
er, a
"T
rans
ition
Off
icer
), p
rovi
ded
that
, in
the
case
of
a T
ier
II E
xecu
tive
(i)
a su
cces
sor
has
been
sel
ecte
dby
the
Com
pany
and
has
bee
n ap
prov
ed b
y th
e C
hief
Exe
cutiv
e O
ffic
er o
f th
e C
ompa
ny (
the
"CE
O")
in s
uch
CE
O's
sol
e di
scre
tion,
or
(ii)
suc
h T
ier
II E
xecu
tive
has
atta
ined
age
62.
Suc
h el
ectio
n sh
all
beco
me
effe
ctiv
e up
on th
e C
hang
e-in
-Sta
tus
Dat
e (a
s de
fine
d be
low
) an
d th
e E
xecu
tive
shal
l the
reaf
ter
serv
e as
a T
rans
ition
Off
icer
dur
ing
a nu
mbe
r of
mon
ths
(the
"T
rans
ition
Per
iod"
) eq
ual t
o th
e le
sser
of (
i) th
e nu
mbe
r of
the
Exe
cutiv
e's
Yea
rs o
f Se
rvic
e (a
s de
fine
d be
low
), o
r (i
i) 1
8 m
onth
s. D
urin
g th
e T
rans
ition
Per
iod,
an
Exe
cutiv
e's
empl
oym
ent s
hall
be o
n an
at-
will
bas
is a
nd s
ubje
ct to
the
term
inat
ion
prov
isio
ns s
et f
orth
in A
rtic
les
6 an
d 7.
For
purp
oses
of
this
Pla
n:
5
(a)
an E
xecu
tive'
s "C
hang
e-in
-Sta
tus
Dat
e" s
hall
mea
n th
e da
te s
peci
fied
in th
e E
xecu
tive'
s T
rans
ition
Doc
umen
ts, p
rovi
ded
that
the
Com
mitt
ee m
ay a
ccel
erat
e su
ch d
ate
in it
s so
le d
iscr
etio
n; a
nd
(b)
an E
xecu
tive'
s "Y
ears
of
Serv
ice"
sha
ll eq
ual t
he n
umbe
r of
con
secu
tive
com
plet
e 12
-mon
th in
terv
als
duri
ng th
e pe
riod
beg
inni
ng o
n th
e ea
rlie
r of
the
Exe
cutiv
e's
hist
oric
al s
ervi
ce d
ate
or c
ompa
nyse
rvic
e da
te a
nd e
ndin
g on
the
Cha
nge-
in-S
tatu
s D
ate
roun
ded
dow
n to
the
near
est c
ompl
ete
12-m
onth
inte
rval
(e.
g., a
per
iod
of 1
0 ye
ars,
8 m
onth
s an
d 3
days
sha
ll eq
ual 1
0 "y
ears
of
serv
ice"
).
4.02
Tra
nsiti
on B
enef
its. (
a) B
ase
Sala
ry. D
urin
g th
e T
rans
ition
Per
iod,
the
Com
pany
sha
ll pa
y an
Exe
cutiv
e a
base
sal
ary
at th
e an
nual
ized
rat
e in
eff
ect o
n th
e da
y im
med
iate
ly p
rece
ding
the
Cha
nge-
in-S
tatu
s D
ate
but i
n no
eve
nt lo
wer
than
the
high
est b
ase
sala
ry in
eff
ect a
t any
tim
e be
twee
n th
e E
ffec
tive
Dat
e an
d th
e C
hang
e-in
-Sta
tus
Dat
e, p
rovi
ded
that
the
base
sal
ary
paya
ble
unde
r th
isSe
ctio
n sh
all b
e re
duce
d to
ref
lect
any
acr
oss-
the-
boar
d re
duct
ions
impl
emen
ted
by th
e C
omm
ittee
pri
or to
the
Cha
nge-
in-S
tatu
s D
ate
whi
ch r
educ
tions
aff
ect C
ompa
ny o
ffic
ers
gene
rally
(th
e "A
nnua
lB
ase
Sala
ry")
. The
Ann
ual B
ase
Sala
ry s
hall
also
be
redu
ced
to th
e ex
tent
that
the
Exe
cutiv
e el
ects
to d
efer
or
redu
ce s
uch
sala
ry u
nder
the
term
s of
any
def
erre
d co
mpe
nsat
ion
plan
or
othe
r em
ploy
eebe
nefi
t pla
n or
arr
ange
men
t mai
ntai
ned
or e
stab
lishe
d by
the
Com
pany
.
(b)
Ann
ual B
onus
. In
resp
ect o
f ea
ch c
alen
dar
year
whi
ch e
nds
duri
ng th
e T
rans
ition
Per
iod,
the
Com
pany
sha
ll pa
y to
the
Exe
cutiv
e an
Ann
ual B
onus
(as
def
ined
bel
ow),
whi
ch b
onus
sha
ll be
pay
able
in a
lum
p su
m o
n A
pril
1st o
f th
e ye
ar f
ollo
win
g th
e ye
ar in
whi
ch it
was
ear
ned
(or
such
oth
er d
ate,
as
dete
rmin
ed b
y th
e C
omm
ittee
in a
ccor
danc
e w
ith th
e C
ompa
ny's
Tar
get I
ncen
tive
Prog
ram
or
any
succ
esso
r pl
an (
"TIP
")).
In
resp
ect o
f an
y ca
lend
ar y
ear
in w
hich
the
Tra
nsiti
on P
erio
d en
ds, t
he C
ompa
ny s
hall
pay
to th
e E
xecu
tive
(in
lieu
of a
n A
nnua
l Bon
us)
a Pr
orat
ed A
nnua
l Bon
us (
as d
efin
edbe
low
), w
hich
Pro
rate
d B
onus
sha
ll be
pay
able
in a
lum
p su
m w
ithin
60
days
aft
er th
e en
d of
the
Tra
nsiti
on P
erio
d.
Not
with
stan
ding
the
fore
goin
g, th
e A
nnua
l Bon
us s
hall
be r
educ
ed to
the
exte
nt th
at th
e E
xecu
tive
prev
ious
ly e
lect
ed to
def
er o
r re
duce
suc
h bo
nus
unde
r th
e te
rms
of a
ny d
efer
red
com
pens
atio
n pl
an o
rot
her
empl
oyee
ben
efit
plan
or
arra
ngem
ent m
aint
aine
d or
est
ablis
hed
by th
e C
ompa
ny. T
he E
xecu
tive
shal
l not
be
entit
led
to d
efer
any
por
tion
of th
e Pr
orat
ed B
onus
.
For
purp
oses
of
this
Pla
n,
(i)
"Ann
ual B
onus
" sh
all m
ean
an a
nnua
l bon
us p
ursu
ant t
o T
IP w
hich
is e
qual
to th
e pr
oduc
t of
the
Ann
ual B
ase
Sala
ry a
nd th
e Fu
ll T
arge
t Per
cent
age
(as
defi
ned
belo
w);
(ii)
"Fu
ll T
arge
t Per
cent
age"
sha
ll m
ean
the
targ
et p
erce
ntag
e w
hich
the
Exe
cutiv
e w
as e
ligib
le to
rec
eive
und
er T
IP o
n th
e da
y im
med
iate
ly
6
prec
edin
g th
e C
hang
e-in
-Sta
tus
Dat
e w
ithou
t any
adj
ustm
ent,
but i
n no
eve
nt lo
wer
than
the
Exe
cutiv
e's
high
est t
arge
t per
cent
age
in e
ffec
t at a
ny ti
me
betw
een
the
Eff
ectiv
e D
ate
and
the
Cha
nge-
in-S
tatu
sD
ate,
pro
vide
d th
at th
e ta
rget
per
cent
age
shal
l be
redu
ced
to r
efle
ct a
ny a
cros
s-th
e-bo
ard
redu
ctio
ns im
plem
ente
d by
the
Com
mitt
ee p
rior
to th
e C
hang
e-in
-Sta
tus
Dat
e w
hich
red
uctio
ns a
ffec
t Com
pany
offi
cers
gen
eral
ly, a
nd
(iii)
"Pr
orat
ed A
nnua
l Bon
us"
shal
l mea
n a
bonu
s in
an
amou
nt e
qual
to th
e A
nnua
l Bon
us m
ultip
lied
by a
fra
ctio
n, th
e nu
mer
ator
of
whi
ch is
the
num
ber
of d
ays
whi
ch h
ave
elap
sed
duri
ng s
uch
cale
ndar
year
thro
ugh
the
last
day
of
the
Tra
nsiti
on P
erio
d, a
nd th
e de
nom
inat
or o
f w
hich
is 3
65.
(c)
Thr
ee-Y
ear
Ince
ntiv
e Pl
an A
war
ds. D
urin
g th
e T
rans
ition
Per
iod,
any
out
stan
ding
aw
ards
und
er th
e C
ompa
ny's
Thr
ee-Y
ear
Ince
ntiv
e Pl
an o
r an
y su
cces
sor
plan
("L
TIP
") w
ill c
ontin
ue to
ves
t and
beco
me
paya
ble
in a
ccor
danc
e w
ith th
e C
ompa
ny's
pol
icie
s as
in e
ffec
t fro
m ti
me
to ti
me.
Suc
h L
TIP
aw
ards
("L
TIP
Aw
ards
") s
hall
be c
ompu
ted
by r
efer
ence
to 1
00%
of
the
targ
et p
erce
ntag
e th
eE
xecu
tive
wou
ld h
ave
rece
ived
pur
suan
t to
the
term
s of
the
orig
inal
LT
IP g
rant
with
out a
ny a
djus
tmen
t. D
urin
g th
e T
rans
ition
Per
iod,
the
Exe
cutiv
e sh
all n
ot b
e el
igib
le to
par
ticip
ate
in a
ny n
ew c
ycle
sun
der
LT
IP o
r ot
her
long
-ter
m in
cent
ive
plan
.
(d)
Con
tinue
d V
estin
g an
d E
xerc
isab
ility
of
Stoc
k O
ptio
ns. D
urin
g th
e T
rans
ition
Per
iod,
sto
ck o
ptio
ns w
ill c
ontin
ue to
ves
t, ex
pire
and
oth
erw
ise
be s
ubje
ct to
the
expr
ess
term
s of
the
rela
ted
stoc
k op
tion
plan
and
the
appl
icab
le G
olde
n M
Cer
tific
ate
(or
othe
r ap
plic
able
aw
ard
agre
emen
t). D
urin
g th
e T
rans
ition
Per
iod,
an
Exe
cutiv
e sh
all r
etai
n th
e ri
ght t
o ex
erci
se a
ny u
nexe
rcis
ed s
tock
opt
ion
to th
e ex
tent
vest
ed o
n th
e da
te o
f ex
erci
se, p
rovi
ded,
how
ever
, tha
t an
Exe
cutiv
e sh
all n
ot b
e en
title
d to
rec
eive
any
add
ition
al s
tock
opt
ion
gran
ts a
nd in
no
even
t sha
ll th
e te
rm o
f an
y st
ock
optio
n ex
tend
bey
ond
itsor
igin
al te
rm.
gp
y
(e)
Ben
efit
Prog
ram
s an
d Po
licie
s. D
urin
g th
e T
rans
ition
Per
iod,
all
bene
fit p
lans
, pol
icie
s, f
ring
e be
nefi
ts a
nd p
ract
ices
in e
ffec
t fro
m ti
me
to ti
me
shal
l con
tinue
to a
pply
to th
e E
xecu
tive
in a
ccor
danc
ew
ith th
e te
rms
of th
e be
nefi
t pla
ns s
pons
ored
by
the
Com
pany
and
the
Com
pany
's p
olic
ies
and
proc
edur
es e
stab
lishe
d fo
r of
fice
rs o
f th
e C
ompa
ny w
ho a
re n
ot E
xecu
tive
Off
icer
s, e
xcep
t tha
t: (i
) th
eE
xecu
tive
will
not
be
elig
ible
for
any
pay
incr
ease
, (ii)
the
Exe
cutiv
e w
ill n
ot b
e el
igib
le to
par
ticip
ate
in T
IP d
urin
g an
y ye
ar if
the
Tra
nsiti
on P
erio
d en
ds p
rior
to th
e en
d of
a c
alen
dar
year
,(i
ii) n
o ne
w s
tock
opt
ion
gran
ts w
ill b
e gi
ven
to th
e E
xecu
tive,
and
(iv
) no
new
aw
ards
will
be
gran
ted
unde
r L
TIP
. Am
ount
s pa
id d
urin
g th
e T
rans
ition
Per
iod
shal
l be
trea
ted
as "
com
pens
atio
n" f
orpu
rpos
es o
f de
term
inin
g an
y be
nefi
ts p
rovi
ded
unde
r M
cDon
ald'
s C
orpo
ratio
n Pr
ofit
Shar
ing
Prog
ram
and
the
rela
ted
non-
qual
ifie
d be
nefi
t pla
ns k
now
n as
McC
AP
I, M
cCA
P II
or
McE
QU
AL
, and
McD
onal
d's
Cor
pora
tion
Def
erre
d In
com
e Pl
an a
nd li
fe in
sura
nce
bene
fit p
lans
spo
nsor
ed b
y M
cDon
ald'
s C
orpo
ratio
n (c
olle
ctiv
ely,
the
"Ben
efit
Plan
s")
to th
e ex
tent
per
mitt
ed b
y th
e te
rms
of s
uch
Ben
efit
Plan
s as
in e
ffec
t fro
m ti
me
to ti
me.
Not
hing
in th
is P
lan
shal
l be
cons
true
d to
lim
it th
e ab
ility
of
the
Com
pany
to a
men
d or
term
inat
e an
y of
the
plan
s, p
rogr
ams
or a
rran
gem
ents
und
er w
hich
ben
efits
are
prov
ided
to o
ffic
ers
and
empl
oyee
s of
the
Com
pany
, and
any
suc
h te
rmin
atio
ns o
r am
endm
ents
sha
ll be
eff
ectiv
e as
to th
e E
xecu
tives
.
7
4.03
Tim
e D
evot
ed to
Dut
ies
Dur
ing
Tra
nsiti
on P
erio
d. D
urin
g th
e T
rans
ition
Per
iod,
an
Exe
cutiv
e sh
all d
evot
e su
bsta
ntia
lly a
ll of
his
or
her
norm
al b
usin
ess
time
and
effo
rts
to th
e bu
sine
ss o
f th
eC
ompa
ny, i
ts s
ubsi
diar
ies
and
its a
ffili
ates
, the
am
ount
of
such
tim
e to
be
suff
icie
nt to
per
mit
him
or
her
to d
ilige
ntly
and
fai
thfu
lly s
erve
and
end
eavo
r to
fur
ther
its
inte
rest
s to
the
best
of
his
or h
er a
bilit
y.Su
bjec
t to
the
fore
goin
g, a
n E
xecu
tive
may
par
ticip
ate
in v
ario
us c
ivic
and
phi
lant
hrop
ic a
ctiv
ities
, may
ser
ve o
n bo
ards
of
dire
ctor
s an
d co
mm
ittee
s of
not
-for
-pro
fit o
rgan
izat
ions
of
the
Exe
cutiv
e's
choi
ce, a
nd, c
onsi
sten
t with
the
polic
ies
of th
e C
ompa
ny, m
ay s
erve
as
a no
n-em
ploy
ee d
irec
tor
of o
ne o
r m
ore
corp
orat
ions
(un
less
the
Com
mitt
ee c
oncl
udes
that
suc
h se
rvic
e w
ould
be
inap
prop
riat
e or
not i
n th
e be
st in
tere
sts
of th
e C
ompa
ny).
Art
icle
5
Con
tinu
ed E
mpl
oym
ent
Per
iod
5.01
Em
ploy
ee S
tatu
s. F
ollo
win
g th
e T
rans
ition
Per
iod,
the
Exe
cutiv
e w
ill b
ecom
e a
staf
f em
ploy
ee o
f th
e C
ompa
ny f
or a
fiv
e ye
ar "
Con
tinue
d E
mpl
oym
ent P
erio
d", p
rovi
ded
that
the
Exe
cutiv
e co
mpl
ies
with
the
Non
com
petit
ion
Agr
eem
ent a
t all
times
dur
ing
the
term
of
the
Con
tinue
d E
mpl
oym
ent P
erio
d. A
s a
cond
ition
to r
ecei
ving
the
Con
tinue
d E
mpl
oym
ent B
enef
its (
defi
ned
in S
ectio
n5.
02),
the
Exe
cutiv
e sh
all h
ave
exec
uted
and
del
iver
ed to
the
Com
mitt
ee th
e R
elea
se d
escr
ibed
in S
ectio
n 8.
01(i
i). D
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
an
Exe
cutiv
e's
empl
oym
ent s
hall
be o
n an
at-w
ill b
asis
and
sub
ject
to th
e te
rmin
atio
n pr
ovis
ions
set
for
th in
Art
icle
s 6
and
7.
5.02
Con
tinue
d E
mpl
oym
ent B
enef
its. (
a) B
ase
Sala
ry. D
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
the
Com
pany
sha
ll pa
y th
e E
xecu
tive
a ba
se s
alar
y fo
r ea
ch y
ear
equa
l to
twen
ty-f
ive
perc
ent (
25%
) of
his
or h
er A
nnua
l Bas
e Sa
lary
(fi
fty
perc
ent (
50%
) in
the
case
of
Jack
M. G
reen
berg
, and
thir
ty-f
ive
perc
ent (
35%
) in
the
case
of
Jam
es R
. Can
talu
po)
(the
"C
ontin
ued
Em
ploy
men
t Per
iod
Sala
ry")
,pr
ovid
ed, h
owev
er, t
hat t
he C
ontin
ued
Em
ploy
men
t Per
iod
Sala
ry s
hall
be r
educ
ed to
the
exte
nt th
at th
e E
xecu
tive
elec
ts to
def
er o
r re
duce
suc
h sa
lary
und
er th
e te
rms
of a
ny e
mpl
oyee
ben
efit
plan
or
arra
ngem
ent m
aint
aine
d or
est
ablis
hed
by th
e C
ompa
ny.
(b)
Tar
get I
ncen
tive
Aw
ards
. Dur
ing
the
Con
tinue
d E
mpl
oym
ent P
erio
d, a
n E
xecu
tive
shal
l not
be
elig
ible
to p
artic
ipat
e in
TIP
or
any
othe
r an
nual
ince
ntiv
e pl
an o
f th
e C
ompa
ny.
(c)
LT
IP A
war
ds. D
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
any
out
stan
ding
aw
ards
und
er L
TIP
will
con
tinue
to v
est a
nd b
ecom
e pa
yabl
e in
acc
orda
nce
with
the
Com
pany
's th
en c
urre
nt p
olic
ies
notw
ithst
andi
ng th
e E
xecu
tive'
s st
aff
empl
oyee
sta
tus
duri
ng th
is p
erio
d. S
uch
LT
IP A
war
ds s
hall
be c
ompu
ted
by r
efer
ence
to 1
00%
of
the
targ
et p
erce
ntag
e th
e E
xecu
tive
wou
ld h
ave
rece
ived
pur
suan
t to
the
term
s of
the
orig
inal
LT
IP g
rant
with
out a
ny a
djus
tmen
t. D
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
the
Exe
cutiv
e sh
all n
ot b
e el
igib
le to
par
ticip
ate
in a
ny n
ew c
ycle
s un
der
LT
IP o
r ot
her
long
-ter
min
cent
ive
plan
.
8
(d)
Con
tinue
d V
estin
g an
d E
xerc
isab
ility
of
Stoc
k O
ptio
ns. D
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
sto
ck o
ptio
ns w
ill c
ontin
ue to
ves
t, ex
pire
and
oth
erw
ise
be g
over
ned
by th
e ex
pres
s te
rms
of th
ere
late
d st
ock
optio
n pl
an a
nd th
e ap
plic
able
Gol
den
M C
ertif
icat
e (o
r ot
her
appl
icab
le a
war
d ag
reem
ent)
. Dur
ing
the
Con
tinue
d E
mpl
oym
ent P
erio
d, a
n E
xecu
tive
shal
l ret
ain
the
righ
t to
exer
cise
any
unex
erci
sed
stoc
k op
tion
to th
e ex
tent
ves
ted
on th
e da
te o
f ex
erci
se, p
rovi
ded,
how
ever
, tha
t an
Exe
cutiv
e sh
all n
ot b
e en
title
d to
rec
eive
any
add
ition
al s
tock
opt
ion
gran
ts a
nd, i
n no
eve
nt, s
hall
the
term
of a
ny s
tock
opt
ion
exte
nd b
eyon
d its
ori
gina
l ter
m.
(e)
Ben
efit
Prog
ram
s an
d Po
licie
s. D
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
all
bene
fit p
lans
, pol
icie
s, f
ring
e be
nefi
ts a
nd p
ract
ices
in e
ffec
t fro
m ti
me
to ti
me
shal
l con
tinue
to a
pply
to th
e E
xecu
tive
inac
cord
ance
with
the
term
s of
the
bene
fit p
lans
spo
nsor
ed b
y M
cDon
ald'
s an
d M
cDon
ald'
s po
licie
s an
d pr
oced
ures
est
ablis
hed
for
staf
f em
ploy
ees
of th
e C
ompa
ny, e
xcep
t tha
t: (i
) th
e E
xecu
tive
will
not
be
elig
ible
for
any
pay
incr
ease
, (ii)
the
Exe
cutiv
e w
ill n
ot b
e el
igib
le to
par
ticip
ate
in th
e T
IP, (
iii)
no n
ew s
tock
opt
ion
gran
ts w
ill b
e gi
ven
to th
e E
xecu
tive,
and
(iv
) no
new
aw
ards
will
be
gran
ted
unde
rL
TIP
. Am
ount
s pa
id d
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod
shal
l be
trea
ted
as "
com
pens
atio
n" f
or p
urpo
ses
of d
eter
min
ing
any
bene
fits
pro
vide
d un
der
the
Ben
efit
Plan
s to
the
exte
nt p
erm
itted
by
the
term
s of
suc
h B
enef
it Pl
ans
as in
eff
ect f
rom
tim
e to
tim
e. N
othi
ng in
this
Pla
n sh
all b
e co
nstr
ued
to li
mit
the
abili
ty o
f th
e C
ompa
ny to
am
end
or te
rmin
ate
any
of th
e pl
ans,
pro
gram
s or
arr
ange
men
tsun
der
whi
ch b
enef
its a
re p
rovi
ded
to o
ffic
ers
or e
mpl
oyee
s of
the
Com
pany
, and
any
suc
h te
rmin
atio
ns o
r am
endm
ents
sha
ll be
eff
ectiv
e as
to th
e E
xecu
tives
.
5.03
Tim
e D
evot
ed to
Dut
ies
Dur
ing
Con
tinue
d E
mpl
oym
ent P
erio
d. D
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
an
Exe
cutiv
e sh
all d
evot
e su
ch ti
me
to th
e bu
sine
ss o
f th
e C
ompa
ny a
s m
ay b
e re
ason
ably
requ
este
d by
the
Com
pany
fro
m ti
me
to ti
me,
whi
ch r
eque
sts
shal
l be
com
men
sura
te w
ith th
e co
mpe
nsat
ion
the
Exe
cutiv
e is
rec
eivi
ng h
ereu
nder
. Not
with
stan
ding
the
fore
goin
g, a
n E
xecu
tive
may
part
icip
ate
in v
ario
us c
ivic
and
phi
lant
hrop
ic a
ctiv
ities
, may
ser
ve o
n bo
ards
of
dire
ctor
s an
d co
mm
ittee
s of
not
-for
-pro
fit o
rgan
izat
ions
of
the
Exe
cutiv
e's
choi
ce, m
ay s
erve
as
a m
embe
r of
one
or
mor
e
gp
y
corp
orat
e bo
ards
of
dire
ctor
s an
d m
ay e
ngag
e in
a f
ull-
time
empl
oym
ent a
rran
gem
ent w
ith a
noth
er o
rgan
izat
ion
of th
e E
xecu
tive'
s ch
oice
, pro
vide
d th
at s
uch
activ
ities
do
not v
iola
te th
e E
xecu
tive'
sob
ligat
ions
set
for
th in
Art
icle
9. T
he C
ompa
ny s
hall
have
the
righ
t to
requ
est t
hat t
he E
xecu
tive
prov
ide
serv
ices
to th
e C
ompa
ny d
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod
in a
man
ner
that
rea
sona
bly
acco
mm
odat
es s
uch
outs
ide
activ
ities
, ser
vice
s an
d ar
rang
emen
ts.
5.04
Miti
gatio
n. I
n th
e ev
ent t
hat a
n E
xecu
tive
shal
l eng
age
in a
ny e
mpl
oym
ent a
rran
gem
ent p
erm
itted
by
Sect
ion
5.03
(in
clud
ing
self
-em
ploy
men
t) d
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
no
amou
ntpa
id to
or
earn
ed b
y su
ch E
xecu
tive
ther
efro
m s
hall
redu
ce a
ny p
aym
ents
or
othe
r be
nefi
ts d
ue s
uch
Exe
cutiv
e pu
rsua
nt to
the
Plan
.
9
Art
icle
6
Ter
min
atio
n of
Em
ploy
men
t
6.01
Dea
th o
r D
isab
ility
. An
Exe
cutiv
e's
empl
oym
ent s
hall
term
inat
e au
tom
atic
ally
upo
n hi
s or
her
dea
th. I
n th
e ev
ent t
hat (
a) th
e C
omm
ittee
det
erm
ines
in g
ood
faith
that
the
Exe
cutiv
e is
suf
feri
ng f
rom
a"D
isab
ility
" (t
oget
her
with
its
vari
ous
cogn
ates
, as
defi
ned
belo
w)
and
(b)
the
appr
opri
ate
deci
sion
mak
er u
nder
any
app
licab
le C
ompa
ny p
lan
or p
rogr
am p
rovi
ding
dis
abili
ty b
enef
its to
the
Exe
cutiv
e (a
"Dis
abili
ty P
lan"
) si
mila
rly
dete
rmin
es th
at th
e E
xecu
tive
is e
ligib
le f
or s
uch
bene
fits
by
virt
ue o
f th
e E
xecu
tive'
s di
sabi
lity
(as
defi
ned
for
purp
oses
of
such
pla
n or
pro
gram
), th
e C
ompa
ny m
ay d
eliv
er to
the
Exe
cutiv
e w
ritte
n no
tice
(a "
Dis
abili
ty T
erm
inat
ion
Not
ice"
) in
acc
orda
nce
with
Sec
tion
6.05
of
this
Pla
n of
the
Com
pany
's in
tent
ion
to te
rmin
ate
the
Exe
cutiv
e's
empl
oym
ent.
In s
uch
even
t, th
eE
xecu
tive'
s em
ploy
men
t sha
ll te
rmin
ate
effe
ctiv
e on
the
late
r of
(y)
the
30th
day
aft
er r
ecei
pt o
f su
ch D
isab
ility
Ter
min
atio
n N
otic
e by
the
Exe
cutiv
e an
d (z
) th
e fi
rst d
ate
on w
hich
the
Exe
cutiv
e be
com
esel
igib
le f
or lo
ng-t
erm
dis
abili
ty b
enef
its u
nder
the
prin
cipa
l Dis
abili
ty P
lan
appl
icab
le to
the
Exe
cutiv
e (t
he "
Dis
abili
ty E
ffec
tive
Dat
e"),
pro
vide
d, h
owev
er, t
hat (
1) in
the
inte
rim
the
Exe
cutiv
e sh
all n
otha
ve r
etur
ned
to f
ull-
time
perf
orm
ance
of
the
Exe
cutiv
e's
dutie
s an
d/or
(2)
the
Exe
cutiv
e sh
all n
ot h
ave
deliv
ered
to th
e C
omm
ittee
with
in 3
0 da
ys o
f re
ceip
t of
a D
isab
ility
Ter
min
atio
n N
otic
e a
wri
tten
obje
ctio
n th
eret
o (a
n "O
bjec
tion"
). I
n th
e ev
ent o
f a
timel
y O
bjec
tion,
any
term
inat
ion
of th
e E
xecu
tive
shal
l be
susp
ende
d an
d th
e E
xecu
tive
shal
l be
prom
ptly
exa
min
ed b
y tw
o ph
ysic
ians
or
othe
rpr
ofes
sion
als
skill
ed in
the
rele
vant
fie
ld, o
ne s
elec
ted
by th
e E
xecu
tive
and
one
by th
e C
omm
ittee
. Eac
h of
the
two
prof
essi
onal
s sh
all i
ssue
a w
ritte
n op
inio
n w
ithin
15
days
fol
low
ing
the
com
plet
ion
ofhi
s or
her
exa
min
atio
n as
to w
heth
er th
e E
xecu
tive
is D
isab
led
in a
ccor
danc
e w
ith th
e de
fini
tion
prov
ided
in th
is P
lan.
If
the
two
prof
essi
onal
s ag
ree,
eac
h of
the
Exe
cutiv
e an
d th
e C
ompa
ny s
hall
be b
ound
by th
eir
join
t con
clus
ion.
If
the
two
prof
essi
onal
s di
sagr
ee, t
hey
shal
l joi
ntly
agr
ee o
n a
thir
d pr
ofes
sion
al to
con
duct
a s
imila
r ex
amin
atio
n. E
ach
of th
e E
xecu
tive
and
the
Com
pany
sha
ll be
bou
nd b
y th
eco
nclu
sion
of
such
thir
d pr
ofes
sion
al. T
he E
xecu
tive
agre
es to
eac
h su
ch e
xam
inat
ion
and
to w
aive
any
con
fide
ntia
lity
righ
ts n
eces
sary
to a
llow
eac
h of
the
prof
essi
onal
s co
nduc
ting
such
exa
min
atio
ns to
do s
o. T
he C
ompa
ny s
hall
pay
all f
ees
and
cost
s of
all
such
exa
min
atio
ns. I
n th
e ev
ent o
f a
disa
gree
men
t as
to th
e de
term
inat
ion
of th
e E
xecu
tive'
s di
sabi
lity
for
purp
oses
of
a D
isab
ility
Pla
n, s
uch
disa
gree
men
t sha
ll be
res
olve
d as
pro
vide
d fo
r in
suc
h D
isab
ility
Pla
n. F
or p
urpo
ses
of th
is P
lan,
the
term
"D
isab
ility
" sh
all m
ean
the
mat
eria
l ina
bilit
y of
the
Exe
cutiv
e, d
ue to
inju
ry, i
llnes
s, d
isea
se o
rbo
dily
, men
tal o
r em
otio
nal i
nfir
mity
, to
carr
y ou
t the
job
resp
onsi
bilit
ies
whi
ch s
uch
Exe
cutiv
e he
ld o
r th
e ta
sks
to w
hich
suc
h E
xecu
tive
was
ass
igne
d at
the
time
of th
e in
curr
ence
of
such
Dis
abili
ty,
whi
ch in
abili
ty is
rea
sona
bly
expe
cted
to b
e pe
rman
ent o
r of
inde
fini
te d
urat
ion
exce
edin
g on
e ye
ar.
6.02
Cau
se. T
he C
ompa
ny m
ay te
rmin
ate
an E
xecu
tive'
s em
ploy
men
t at a
ny ti
me
for
Cau
se. F
or p
urpo
ses
of th
is P
lan,
"C
ause
" m
eans
: (i)
the
will
ful f
ailu
re o
f an
Exe
cutiv
e to
per
form
sub
stan
tially
all
ofth
e E
xecu
tive'
s du
ties
with
the
Com
pany
(ot
her
than
any
fai
lure
res
ultin
g fr
om in
capa
city
due
to p
hysi
cal o
r m
enta
l illn
ess)
, aft
er w
ritte
n de
man
d fo
r su
bsta
ntia
l per
form
ance
is d
eliv
ered
to th
e E
xecu
tive
by th
e C
omm
ittee
or
the
CE
O; (
ii) a
will
ful v
iola
tion
10
of M
cDon
ald'
s ru
les
and
polic
ies
as in
eff
ect f
rom
tim
e to
tim
e; o
r (i
ii) th
e co
mm
issi
on o
f an
y ac
t or
acts
invo
lvin
g di
shon
esty
, fra
ud, i
llega
lity
or m
oral
turp
itude
. For
pur
pose
s of
this
pro
visi
on, n
o ac
t or
failu
re to
act
, on
the
part
of
the
Exe
cutiv
e, s
hall
be c
onsi
dere
d "w
illfu
l", u
nles
s it
is d
one,
or
omitt
ed to
be
done
, by
the
Exe
cutiv
e in
bad
fai
th o
r w
ithou
t rea
sona
ble
belie
f th
at th
e E
xecu
tive'
s ac
tion
orom
issi
on w
as in
the
best
inte
rest
s of
the
Com
pany
. Any
act
, or
failu
re to
act
, bas
ed u
pon
auth
ority
giv
en p
ursu
ant t
o a
reso
lutio
n du
ly a
dopt
ed b
y th
e B
oard
or
upon
the
inst
ruct
ions
of
the
CE
O o
r an
off
icer
of th
e C
ompa
ny s
enio
r in
ran
k to
the
Exe
cutiv
e to
who
m th
e E
xecu
tive
repo
rts
or b
ased
upo
n th
e ad
vice
of
coun
sel f
or th
e C
ompa
ny s
hall
be c
oncl
usiv
ely
pres
umed
to b
e do
ne, o
r om
itted
to b
e do
ne, b
yth
e E
xecu
tive
in g
ood
faith
and
in th
e be
st in
tere
sts
of th
e C
ompa
ny. T
he c
essa
tion
of e
mpl
oym
ent o
f th
e E
xecu
tive
shal
l not
be
deem
ed to
be
for
Cau
se u
nles
s an
d un
til th
ere
shal
l hav
e be
en d
eliv
ered
toth
e E
xecu
tive
a co
py o
f a
reso
lutio
n du
ly a
dopt
ed b
y th
e af
firm
ativ
e vo
te o
f a
maj
ority
of
the
Boa
rd a
t a m
eetin
g of
the
Boa
rd c
alle
d an
d he
ld u
pon
appr
opri
ate
notic
e (a
fter
rea
sona
ble
notic
e is
pro
vide
d to
the
Exe
cutiv
e an
d th
e E
xecu
tive
is g
iven
an
oppo
rtun
ity, t
oget
her
with
cou
nsel
, to
be h
eard
bef
ore
the
Boa
rd),
fin
ding
that
, in
the
good
fai
th o
pini
on o
f th
e B
oard
, the
Exe
cutiv
e is
gui
lty o
f th
e co
nduc
tde
scri
bed
in th
is p
arag
raph
, and
spe
cify
ing
the
part
icul
ars
ther
eof
in d
etai
l.
6.03
Goo
d R
easo
n. D
urin
g th
e R
eten
tion
Peri
od a
nd th
e T
rans
ition
Per
iod,
a T
ier
I E
xecu
tive
may
term
inat
e hi
s em
ploy
men
t at a
ny ti
me
for
Goo
d R
easo
n. F
or p
urpo
ses
of th
is P
lan,
"G
ood
Rea
son"
sha
llm
ean:
(i)
the
assi
gnm
ent t
o th
e E
xecu
tive
of a
ny d
utie
s in
cons
iste
nt in
any
res
pect
with
the
Exe
cutiv
e's
posi
tion
(inc
ludi
ng s
tatu
s, o
ffic
es, t
itles
and
rep
ortin
g re
quir
emen
ts),
aut
hori
ty, d
utie
s or
res
pons
ibili
ties
asof
the
Eff
ectiv
e D
ate,
or
any
othe
r ac
tion
by th
e C
ompa
ny w
hich
res
ults
in a
dim
inut
ion
in s
uch
posi
tion,
aut
hori
ty, d
utie
s or
res
pons
ibili
ties,
exc
ludi
ng f
or th
is p
urpo
se a
n is
olat
ed, i
nsub
stan
tial a
ndin
adve
rten
t act
ion,
pro
vide
d th
at a
ny c
hang
e in
sta
tus,
dut
ies
and
resp
onsi
bilit
ies
resu
lting
fro
m a
cha
nge
in s
tatu
s fr
om E
xecu
tive
Off
icer
to T
rans
ition
Off
icer
pur
suan
t to
the
prov
isio
ns o
f th
is P
lan
shal
lno
t con
stitu
te G
ood
Rea
son;
or
(ii)
the
relo
catio
n of
the
Exe
cutiv
e's
prin
cipa
l pla
ce o
f em
ploy
men
t to
a lo
catio
n ou
tsid
e th
e gr
eate
r C
hica
go m
etro
polit
an a
rea.
gp
y
Not
with
stan
ding
the
fore
goin
g, a
Tie
r I
Exe
cutiv
e ca
nnot
term
inat
e em
ploy
men
t for
Goo
d R
easo
n (i
) if
the
Exe
cutiv
e co
nsen
ted
in w
ritin
g to
the
occu
rren
ce o
f th
e ev
ent g
ivin
g ri
se to
the
clai
m o
f G
ood
Rea
son
or (
ii) u
nles
s th
e E
xecu
tive
shal
l hav
e de
liver
ed a
wri
tten
notic
e to
the
Com
mitt
ee w
ithin
30
days
of
his
havi
ng a
ctua
l kno
wle
dge
of th
e oc
curr
ence
of
such
eve
nt s
tatin
g th
at h
e in
tend
s to
term
inat
ehi
s em
ploy
men
t for
Goo
d R
easo
n an
d sp
ecif
ying
the
fact
ual b
asis
for
suc
h te
rmin
atio
n, a
nd s
uch
even
t is
not c
ured
with
in 3
0 da
ys o
f th
e re
ceip
t of
such
not
ice.
6.04
Ter
min
atio
n of
Em
ploy
men
t For
Any
Oth
er R
easo
n. T
he C
ompa
ny m
ay te
rmin
ate
an E
xecu
tive'
s em
ploy
men
t at a
ny ti
me
by w
ritte
n no
tice
to th
e E
xecu
tive
in a
ccor
danc
e w
ith S
ectio
n 6.
05 o
f th
isA
gree
men
t of
its in
tent
ion
to te
rmin
ate
the
Exe
cutiv
e's
empl
oym
ent f
or a
ny r
easo
n ot
her
than
dea
th, D
isab
ility
or
Cau
se.
11
6.05
Not
ice
of T
erm
inat
ion.
Any
term
inat
ion
by th
e C
ompa
ny o
ther
than
for
dea
th, o
r by
a T
ier
I E
xecu
tive
for
Goo
d R
easo
n, s
hall
be c
omm
unic
ated
by
Not
ice
of T
erm
inat
ion
to th
e ot
her
part
y he
reto
give
n in
acc
orda
nce
with
this
Sect
ion
6.05
. For
pur
pose
s of
this
Pla
n, a
"N
otic
e of
Ter
min
atio
n" m
eans
a w
ritte
n no
tice
whi
ch (
i) in
dica
tes
the
spec
ific
term
inat
ion
prov
isio
n in
this
Pla
n re
lied
upon
, (ii)
to th
e ex
tent
app
licab
le, s
ets
fort
h in
rea
sona
ble
deta
il th
e fa
cts
and
circ
umst
ance
s cl
aim
ed to
pro
vide
a b
asis
for
term
inat
ion
of th
e E
xecu
tive'
s em
ploy
men
t und
er th
e pr
ovis
ion
so in
dica
ted,
and
(iii
) if
the
Dat
e of
Ter
min
atio
n (a
sde
fine
d in
Sec
tion
6.06
) is
oth
er th
an th
e da
te o
f re
ceip
t of
such
not
ice,
spe
cifi
es th
e te
rmin
atio
n da
te (
whi
ch d
ate
shal
l be
not m
ore
than
30
days
aft
er th
e gi
ving
of
such
not
ice)
. The
fai
lure
by
the
Exe
cutiv
e or
the
Com
pany
to s
et f
orth
in th
e N
otic
e of
Ter
min
atio
n an
y fa
ct o
r ci
rcum
stan
ce w
hich
con
trib
utes
to a
sho
win
g of
Goo
d R
easo
n or
Cau
se s
hall
not w
aive
any
rig
ht o
f th
e E
xecu
tive
or th
eC
ompa
ny, r
espe
ctiv
ely,
her
eund
er o
r pr
eclu
de th
e E
xecu
tive
or th
e C
ompa
ny, r
espe
ctiv
ely,
fro
m a
sser
ting
such
fac
t or
circ
umst
ance
in e
nfor
cing
the
Exe
cutiv
e's
or th
e C
ompa
ny's
rig
hts
here
unde
r.
6.06
Dat
e of
Ter
min
atio
n. "
Dat
e of
Ter
min
atio
n" m
eans
(i)
if th
e E
xecu
tive'
s em
ploy
men
t is
term
inat
ed b
y th
e C
ompa
ny o
ther
than
for
dea
th o
r D
isab
ility
, or
by th
e T
ier
I E
xecu
tive
for
Goo
d R
easo
n, th
eda
te o
f re
ceip
t of
the
Not
ice
of T
erm
inat
ion
or a
ny la
ter
date
spe
cifi
ed th
erei
n, a
s th
e ca
se m
ay b
e, (
ii) if
the
Exe
cutiv
e's
empl
oym
ent i
s te
rmin
ated
by
deat
h, th
e da
te o
f de
ath,
and
(iii
) if
the
Exe
cutiv
e's
empl
oym
ent i
s te
rmin
ated
by
reas
on o
f D
isab
ility
, the
Dis
abili
ty E
ffec
tive
Dat
e.
Art
icle
7
Obl
igat
ions
of
the
Com
pany
upo
n T
erm
inat
ion
7.01
By
an E
xecu
tive
for
Goo
d R
easo
n; B
y th
e C
ompa
ny O
ther
Tha
n fo
rC
ause
, Dea
th o
r D
isab
ility
. If
the
Com
pany
term
inat
es a
n E
xecu
tive'
s em
ploy
men
t oth
er th
an f
or C
ause
, dea
th o
r D
isab
ility
or
if a
Tie
r I
Exe
cutiv
e te
rmin
ates
his
em
ploy
men
t for
Goo
d R
easo
n,
(i)
the
Com
pany
sha
ll pa
y th
e fo
llow
ing
amou
nts
(col
lect
ivel
y, th
e "T
erm
inat
ion
Paym
ent"
) to
the
Exe
cutiv
e in
a lu
mp
sum
in c
ash
with
in 6
0 da
ys a
fter
the
Dat
e of
Ter
min
atio
n:
A. t
he A
ccru
ed O
blig
atio
ns (
as d
efin
ed b
elow
), a
nd
B. t
he S
ever
ance
Ben
efit
(as
def
ined
bel
ow),
and
C. t
he W
elfa
re B
enef
it (
as d
efin
ed b
elow
); a
nd
(ii)
the
Exe
cutiv
e sh
all h
ave
the
righ
t to
exer
cise
the
follo
win
g ca
tego
ries
of
stoc
k op
tions
as
of h
is o
r he
r D
ate
of T
erm
inat
ion
and
for
five
yea
rs th
erea
fter
: (i)
all
optio
ns e
xerc
isab
le a
s of
the
Exe
cutiv
e's
Dat
e of
Ter
min
atio
n, a
nd (
ii) a
ll op
tions
that
will
bec
ome
exer
cisa
ble
with
in
12
five
yea
rs f
ollo
win
g th
e E
xecu
tive'
s D
ate
of T
erm
inat
ion
(col
lect
ivel
y, th
e "E
xerc
isab
le O
ptio
ns")
, pro
vide
d th
at in
no
even
t sha
ll an
y op
tion
be e
xerc
ised
mor
e th
an te
n ye
ars
afte
r th
e da
te o
f gr
ant.
For
purp
oses
of
this
Pla
n:
(a)
"Acc
rued
Obl
igat
ions
" sh
all m
ean
the
sum
of
(1)
any
unpa
id b
ase
sala
ry a
ccru
ed th
roug
h th
e D
ate
of T
erm
inat
ion
unle
ss p
revi
ousl
y de
ferr
ed b
y th
e E
xecu
tive
purs
uant
to th
e te
rms
of a
n em
ploy
eebe
nefi
t pla
n or
arr
ange
men
t mai
ntai
ned
by th
e C
ompa
ny (
"Acc
rued
Sal
ary"
), (
2) a
ny u
npai
d an
nual
bon
us a
mou
nts
in r
espe
ct o
f an
y ca
lend
ar y
ear
ende
d be
fore
the
Dat
e of
Ter
min
atio
n (c
ompu
ted
byre
fere
nce
to th
e T
arge
t Per
cent
age
(as
defi
ned
belo
w))
("E
arne
d B
onus
"), u
nles
s pr
evio
usly
def
erre
d by
the
Exe
cutiv
e pu
rsua
nt to
the
term
s of
an
empl
oyee
ben
efit
plan
or
arra
ngem
ent m
aint
aine
d by
the
Com
pany
, (3)
the
prod
uct o
f (x
) an
y an
nual
bon
us in
res
pect
of
any
inco
mpl
ete
cale
ndar
yea
r (c
ompu
ted
by r
efer
ence
to th
e T
arge
t Per
cent
age
and
(y)
a fr
actio
n, th
e nu
mer
ator
of
whi
ch is
the
num
ber
ofda
ys in
the
curr
ent f
isca
l yea
r th
roug
h th
e D
ate
of T
erm
inat
ion,
and
the
deno
min
ator
of
whi
ch is
365
("P
rora
ted
Bon
us")
, and
(4)
any
acc
rued
vac
atio
n pa
y, in
eac
h ca
se to
the
exte
nt n
ot p
revi
ousl
y pa
id;
(b)
"Dis
coun
t Rat
e" s
hall
mea
n th
e in
tere
st r
ate
equa
l to
the
Prim
e R
ate
as r
epor
ted
in T
he W
all S
tree
t Jou
rnal
, Mid
wes
t Edi
tion,
as
in e
ffec
t on
the
Dat
e of
Ter
min
atio
n;
(c)
"Sev
eran
ce B
enef
it" m
eans
(x)
in th
e ca
se o
f a
term
inat
ion
of e
mpl
oym
ent w
hich
occ
urs
prio
r to
the
com
men
cem
ent o
f th
e T
rans
ition
Per
iod,
a lu
mp
sum
pay
men
t equ
al to
the
aggr
egat
e of
the
amou
nts
of th
e A
nnua
l Bas
e Sa
lary
, the
Ann
ual B
onus
and
Con
tinue
d E
mpl
oym
ent P
erio
d Sa
lary
whi
ch w
ould
hav
e be
en r
ecei
vabl
e by
the
Exe
cutiv
e if
his
or
her
Tra
nsiti
on P
erio
d co
mm
ence
d on
the
Dat
e of
Ter
min
atio
n an
d he
or
she
had
rem
aine
d em
ploy
ed d
urin
g th
e T
rans
ition
Per
iod
and
the
Con
tinue
d E
mpl
oym
ent P
erio
d, a
nd (
y) in
the
case
of
a te
rmin
atio
n of
em
ploy
men
t whi
ch o
ccur
s du
ring
the
Tra
nsiti
on P
erio
d or
the
Con
tinue
d E
mpl
oym
ent P
erio
d, a
lum
p su
m p
aym
ent e
qual
to th
e ag
greg
ate
of th
e am
ount
s of
the
Ann
ual B
ase
Sala
ry, t
he A
nnua
l Bon
us a
nd C
ontin
ued
Em
ploy
men
t Per
iod
Sala
ry
gp
y
whi
ch o
ther
wis
e w
ould
hav
e be
en r
ecei
vabl
e by
the
Exe
cutiv
e if
he
or s
he h
ad r
emai
ned
empl
oyed
dur
ing
the
Tra
nsiti
on P
erio
d an
d th
e C
ontin
ued
Em
ploy
men
t Per
iod;
with
the
appl
icab
le a
mou
nt b
eing
disc
ount
ed f
rom
its
sche
dule
d pa
ymen
t dat
e to
the
Dat
e of
Ter
min
atio
n by
ref
eren
ce to
the
Dis
coun
t Rat
e,
(d)
"Tar
get P
erce
ntag
e" s
hall
mea
n th
e ta
rget
per
cent
age
whi
ch th
e E
xecu
tive
was
elig
ible
to r
ecei
ve u
nder
TIP
on
the
day
imm
edia
tely
pre
cedi
ng th
e C
hang
e-in
-Sta
tus
Dat
e (o
r in
the
abse
nce
of a
Cha
nge-
In
13
Stat
us D
ate,
the
day
imm
edia
tely
pre
cedi
ng th
e D
ate
of T
erm
inat
ion)
with
out a
ny a
djus
tmen
t, bu
t in
no e
vent
low
er th
an th
e E
xecu
tive'
s hi
ghes
t tar
get p
erce
ntag
e in
eff
ect a
t any
tim
e be
twee
n th
e E
ffec
tive
Dat
e an
d th
e C
hang
e-in
-Sta
tus
Dat
e (o
r in
the
abse
nce
of a
Cha
nge-
In-S
tatu
s D
ate,
the
Dat
e of
Ter
min
atio
n), p
rovi
ded
that
the
targ
et p
erce
ntag
e sh
all b
e re
duce
d to
ref
lect
any
acr
oss-
the-
boar
d re
duct
ions
impl
emen
ted
by th
e C
omm
ittee
pri
or to
the
Cha
nge-
in-S
tatu
s D
ate
(or
in th
e ab
senc
e of
a C
hang
e-In
-Sta
tus
Dat
e, th
e D
ate
of T
erm
inat
ion)
whi
ch r
educ
tions
aff
ect C
ompa
ny o
ffic
ers
gene
rally
; and
(e)
"Wel
fare
Ben
efit"
sha
ll m
ean
a lu
mp
sum
pay
men
t (in
lieu
of
cont
inue
d pa
rtic
ipat
ion
in th
e B
enef
it Pl
ans)
equ
al to
an
amou
nt e
qual
to th
e C
ompa
ny's
est
imat
ed c
ost o
f pr
ovid
ing
the
Ben
efit
Plan
s to
the
Exe
cutiv
e th
roug
hout
the
Tra
nsiti
on P
erio
d an
d th
e C
ontin
ued
Em
ploy
men
t Per
iod
(as
reas
onab
ly d
eter
min
able
by
the
Com
mitt
ee in
its
sole
dis
cret
ion
on th
e D
ate
of T
erm
inat
ion)
.
7.02
Dea
th. I
f th
e E
xecu
tive
dies
dur
ing
the
Ret
entio
n Pe
riod
, the
Tra
nsiti
on P
erio
d or
the
Con
tinue
d E
mpl
oym
ent P
erio
d (c
olle
ctiv
ely,
the
"Per
iods
"), t
he C
ompa
ny s
hall
have
no
furt
her
oblig
atio
ns to
the
Exe
cutiv
e's
lega
l rep
rese
ntat
ives
und
er th
is P
lan,
oth
er th
an f
or p
aym
ent o
f A
ccru
ed S
alar
y, a
ny E
arne
d B
onus
and
any
pay
men
t or
prov
isio
n of
Oth
er B
enef
its (
as d
efin
ed in
this
Sec
tion
7.02
). S
uch
amou
nts
shal
l be
paid
to th
e E
xecu
tive'
s le
gal r
epre
sent
ativ
es in
a lu
mp
sum
in c
ash
with
in 6
0 da
ys o
f de
ath
unle
ss d
efer
red
in a
ccor
danc
e w
ith th
e te
rms
of a
n em
ploy
ee b
enef
it pl
an o
r ar
rang
emen
tm
aint
aine
d by
the
Com
pany
. Upo
n de
ath,
the
Exe
cutiv
e's
unex
erci
sed
stoc
k op
tions
sha
ll re
mai
n su
bjec
t to
the
appl
icab
le p
rovi
sion
s of
the
rela
ted
stoc
k op
tion
plan
s an
d ap
plic
able
Gol
den
M C
ertif
icat
es(o
r ot
her
appl
icab
le a
war
d ag
reem
ents
).
The
term
"O
ther
Ben
efits
" as
util
ized
in th
is S
ectio
n sh
all m
ean
bene
fits
equ
al to
the
bene
fits
pro
vide
d by
the
Com
pany
to th
e es
tate
s an
d be
nefi
ciar
ies
of:
(i)
othe
r E
xecu
tive
Off
icer
s of
the
Com
pany
if th
e E
xecu
tive
dies
dur
ing
the
Ret
entio
n Pe
riod
,
(ii)
oth
er o
ffic
ers
of th
e C
ompa
ny w
ho a
re n
on-E
xecu
tive
Off
icer
s if
the
Exe
cutiv
e di
es d
urin
g th
e T
rans
ition
Per
iod,
or
(iii)
oth
er s
taff
em
ploy
ees
of th
e C
ompa
ny if
the
Exe
cutiv
e di
es d
urin
g th
e C
ontin
ued
Em
ploy
men
t Per
iod,
unde
r su
ch p
lans
, pro
gram
s, p
ract
ices
and
pol
icie
s re
latin
g to
dea
th b
enef
its, i
f an
y, a
s in
eff
ect o
n th
e da
te o
f th
e E
xecu
tive'
s de
ath.
7.03
Dis
abili
ty. I
f th
e E
xecu
tive'
s em
ploy
men
t is
term
inat
ed b
y re
ason
of
Dis
abili
ty d
urin
g an
y of
the
Peri
ods,
the
Com
pany
sha
ll no
t hav
e an
y fu
rthe
r ob
ligat
ions
to th
e
14
Exe
cutiv
e, o
ther
than
for
pay
men
t of
Acc
rued
Sal
ary,
any
Ear
ned
Bon
us a
nd p
aym
ent o
r pr
ovis
ion
of O
ther
Ben
efits
(as
def
ined
in th
is S
ectio
n 7.
03).
Suc
h am
ount
s sh
all b
e pa
id to
the
Exe
cutiv
e in
a lu
mp
sum
in c
ash
with
in 6
0 da
ys o
f th
e D
isab
ility
Eff
ectiv
e D
ate
unle
ss d
efer
red
in a
ccor
danc
e w
ith th
e te
rms
of a
n em
ploy
ee b
enef
it pl
an o
r ar
rang
emen
t mai
ntai
ned
by th
e C
ompa
ny. I
n th
e ev
ent o
f D
isab
ility
,th
e E
xecu
tive'
s un
exer
cise
d st
ock
optio
ns s
hall
rem
ain
subj
ect t
o th
e ap
plic
able
pro
visi
ons
of th
e re
late
d st
ock
optio
n pl
ans
and
appl
icab
le G
olde
n M
Cer
tific
ates
(or
oth
er a
pplic
able
aw
ard
agre
emen
ts).
The
term
"O
ther
Ben
efits
" as
util
ized
in th
is S
ectio
n sh
all m
ean
disa
bilit
y an
d ot
her
bene
fits
equ
al to
thos
e ge
nera
lly p
rovi
ded
by th
e C
ompa
ny to
:
(i)
disa
bled
Exe
cutiv
e O
ffic
ers
and/
or th
eir
fam
ilies
if th
e E
xecu
tive
beco
mes
dis
able
d du
ring
the
Ret
entio
n Pe
riod
,
(ii)
dis
able
d of
fice
rs w
ho a
re n
ot E
xecu
tive
Off
icer
s an
d/or
thei
r fa
mili
es if
the
Exe
cutiv
e be
com
es d
isab
led
duri
ng th
e T
rans
ition
Per
iod,
or
(iii)
dis
able
d st
aff
empl
oyee
s an
d/or
thei
r fa
mili
es if
the
Exe
cutiv
e be
com
es d
isab
led
duri
ng th
e C
ontin
ued
Em
ploy
men
t Per
iod,
in a
ccor
danc
e w
ith s
uch
plan
s, p
rogr
ams,
pra
ctic
es a
nd p
olic
ies
rela
ting
to d
isab
ility
, if
any,
as
in e
ffec
t on
the
Dis
abili
ty E
ffec
tive
Dat
e.
7.04
By
the
Com
pany
for
Cau
se. I
f an
Exe
cutiv
e's
empl
oym
ent i
s te
rmin
ated
dur
ing
any
of th
e Pe
riod
s by
the
Com
pany
for
Cau
se, t
he C
ompa
ny s
hall
have
no
oblig
atio
n to
the
Exe
cutiv
e pu
rsua
nt to
this
Plan
oth
er th
an to
pay
the
Exe
cutiv
e hi
s or
her
Acc
rued
Sal
ary
thro
ugh
the
Dat
e of
Ter
min
atio
n an
d an
y E
arne
d B
onus
. In
any
such
cas
e, a
ll A
ccru
ed S
alar
y an
d E
arne
d B
onus
sha
ll be
pai
d to
the
Exe
cutiv
e in
a lu
mp
sum
in c
ash
with
in 6
0 da
ys o
f th
e D
ate
of T
erm
inat
ion
unle
ss o
ther
wis
e de
ferr
ed b
y th
e E
xecu
tive
purs
uant
to th
e te
rms
of a
n em
ploy
ee b
enef
it pl
an o
r ar
rang
emen
t mai
ntai
ned
by th
eC
ompa
ny. U
pon
such
term
inat
ion,
the
Exe
cutiv
e's
stoc
k op
tions
sha
ll be
gov
erne
d by
the
expr
ess
prov
isio
ns o
f th
e re
late
d st
ock
optio
n pl
ans
and
appl
icab
le G
olde
n M
Cer
tific
ates
(or
oth
er a
pplic
able
awar
d ag
reem
ents
).
7.05
By
a T
ier
I E
xecu
tive
With
out G
ood
Rea
son.
If
a T
ier
I E
xecu
tive
term
inat
es h
is e
mpl
oym
ent d
urin
g th
e R
eten
tion
Peri
od o
r th
e T
rans
ition
Per
iod
with
out G
ood
Rea
son,
or
duri
ng th
e C
ontin
ued
Em
ploy
men
t Per
iod
for
any
reas
on, t
he C
ompa
ny s
hall
have
no
oblig
atio
n to
the
Exe
cutiv
e pu
rsua
nt to
this
Pla
n ot
her
than
to p
ay th
e E
xecu
tive
his
or h
er A
ccru
ed S
alar
y th
roug
h th
e D
ate
of T
erm
inat
ion
and
any
Ear
ned
Bon
us. I
n an
y su
ch c
ase,
all
Acc
rued
Sal
ary
and
Ear
ned
Bon
us s
hall
be p
aid
to th
e E
xecu
tive
in a
lum
p su
m in
cas
h w
ithin
60
days
of
the
Dat
e of
Ter
min
atio
n un
less
oth
erw
ise
defe
rred
by
gp
y
the
Exe
cutiv
e pu
rsua
nt to
the
term
s of
an
empl
oyee
ben
efit
plan
or
arra
ngem
ent m
aint
aine
d by
the
Com
pany
. Upo
n su
ch te
rmin
atio
n, th
e E
xecu
tive'
s st
ock
optio
ns s
hall
be g
over
ned
by th
e ex
pres
spr
ovis
ions
of
the
rela
ted
stoc
k op
tion
plan
s an
d ap
plic
able
Gol
den
M C
ertif
icat
es (
or o
ther
app
licab
le a
war
d ag
reem
ents
).
15
7.06
By
a T
ier
II E
xecu
tive
for
any
Rea
son.
If
a T
ier
II E
xecu
tive
term
inat
es h
is e
mpl
oym
ent d
urin
g an
y of
the
Peri
ods
for
any
reas
on o
r no
rea
son,
the
Com
pany
sha
ll ha
ve n
o ob
ligat
ion
to th
e E
xecu
tive
purs
uant
to th
is P
lan
othe
r th
an to
pay
the
Exe
cutiv
e hi
s or
her
Acc
rued
Sal
ary
thro
ugh
the
Dat
e of
Ter
min
atio
n an
d an
y E
arne
d B
onus
. In
any
such
cas
e, a
ll A
ccru
ed S
alar
y an
d E
arne
d B
onus
sha
ll be
pai
dto
the
Exe
cutiv
e in
a lu
mp
sum
in c
ash
with
in 6
0 da
ys o
f th
e D
ate
of T
erm
inat
ion
unle
ss o
ther
wis
e de
ferr
ed b
y th
e E
xecu
tive
purs
uant
to th
e te
rms
of a
n em
ploy
ee b
enef
it pl
an o
r ar
rang
emen
t mai
ntai
ned
by th
e C
ompa
ny. U
pon
such
term
inat
ion,
the
Exe
cutiv
e's
stoc
k op
tions
sha
ll be
gov
erne
d by
the
expr
ess
prov
isio
ns o
f th
e re
late
d st
ock
optio
n pl
ans
and
appl
icab
le G
olde
n M
Cer
tific
ates
(or
oth
erap
plic
able
aw
ard
agre
emen
ts).
Art
icle
8
Req
uire
men
t of
Eff
ectiv
e R
elea
ses;
Inte
grat
ion
with
Oth
er S
epar
atio
n B
enef
its
8.01
Rel
ease
s as
a C
ondi
tion
to P
lan
Ben
efits
. It s
hall
be a
con
ditio
n to
an
Exe
cutiv
e's
righ
t to
rece
ive
any
bene
fits
pur
suan
t to
this
Pla
n th
at th
e E
xecu
tive
shal
l exe
cute
and
del
iver
to th
e C
ompa
ny th
efo
llow
ing
rele
ases
in th
e fo
rm p
rovi
ded
by th
e C
ompa
ny (
each
, a "
Rel
ease
"):
(i)
in th
e ca
se o
f T
rans
ition
Ben
efits
, a R
elea
se w
ith r
espe
ct to
the
peri
od e
nded
on
the
Cha
nge-
in-S
tatu
s D
ate,
(ii)
in th
e ca
se o
f C
ontin
ued
Em
ploy
men
t Ben
efits
, a R
elea
se w
ith r
espe
ct to
all
peri
ods
ende
d on
or
befo
re th
e la
st d
ay o
f th
e T
rans
ition
Per
iod,
and
(iii)
in th
e ca
se o
f th
e T
erm
inat
ion
Paym
ent,
a R
elea
se w
ith r
espe
ct to
all
peri
ods
ende
d on
the
Dat
e of
Ter
min
atio
n.
8.02
For
m o
f R
elea
se. E
ach
Rel
ease
sha
ll pr
ovid
e am
ong
othe
r th
ings
that
the
Exe
cutiv
e un
ders
tand
s, in
tend
s an
d ag
rees
that
the
agre
emen
t he
or s
he is
sig
ning
con
stitu
tes
full,
com
plet
e an
d fi
nal
satis
fact
ion
of a
ll cl
aim
s, d
eman
ds, l
awsu
its o
r ac
tions
of
any
kind
, whe
ther
kno
wn
or u
nkno
wn,
aga
inst
the
Com
pany
or
its s
ubsi
diar
ies,
div
isio
ns, a
ffili
ates
and
rel
ated
com
pani
es (
colle
ctiv
ely
"McD
onal
d's"
) or
thei
r re
spec
tive
dire
ctor
s, o
ffic
ers
or e
mpl
oyee
s (w
ith M
cDon
ald'
s co
llect
ivel
y th
e "R
elea
sed
Pers
ons"
) an
d th
at th
e E
xecu
tive
fore
ver
rele
ases
eac
h R
elea
sed
Pers
on f
rom
all
such
mat
ters
. Thi
s in
clud
es, b
ut is
not
lim
ited
to, a
rel
ease
of
clai
ms,
dem
ands
, law
suits
and
act
ions
of
any
kind
rel
atin
g to
any
em
ploy
men
t or
appl
icat
ion
for
empl
oym
ent o
r fr
anch
ise,
cla
ims
rela
ting
tore
sign
atio
n an
d/or
ces
satio
n of
em
ploy
men
t, cl
aim
s al
legi
ng b
reac
h of
con
trac
t of
any
tort
, cla
ims
for
wro
ngfu
l ter
min
atio
n, d
efam
atio
n, in
tent
iona
l inf
lictio
n of
em
otio
nal d
istr
ess,
per
sona
l inj
ury,
viol
atio
n of
pub
lic p
olic
y an
d/or
neg
ligen
ce r
elat
ed to
em
ploy
men
t or
resi
gnat
ion,
cla
ims
unde
r T
itle
VII
of
the
Civ
il R
ight
s A
ct o
f 19
64, a
s am
ende
d, S
ectio
n 19
81 o
f th
e C
ivil
Rig
hts
Act
of
1866
, as
amen
ded,
the
Age
Dis
crim
inat
ion
in E
mpl
oym
ent A
ct o
f 19
67, a
s am
ende
d, th
e R
ehab
ilita
tion
Act
of
1973
, the
Am
eric
ans
with
Dis
abili
ties
Act
of
1990
, the
Em
ploy
ee R
etir
emen
t Inc
ome
Secu
rity
Act
of
1974
, as
amen
ded,
the
16
Wor
ker
Adj
ustm
ent a
nd R
etra
inin
g N
otif
icat
ion
Act
, the
Fam
ily a
nd M
edic
al L
eave
Act
of
1993
, the
Illi
nois
Hum
an R
ight
s A
ct, o
r an
y ot
her
stat
e, F
eder
al o
r lo
cal l
aw p
rohi
bitin
g di
scri
min
atio
n, a
ndcl
aim
s ba
sed
on a
ny o
ther
law
, reg
ulat
ion,
or
com
mon
law
, whe
ther
bef
ore
any
Fede
ral,
stat
e or
loca
l age
ncy,
in a
ny c
ourt
of
law
or
befo
re a
ny o
ther
for
um.
8.03
Oth
er S
epar
atio
n B
enef
its. T
he R
elea
ses
will
als
o pr
ovid
e th
at(i
) th
e pa
ymen
ts o
r be
nefi
ts p
rovi
ded
for
here
unde
r sh
all b
e in
lieu
of
any
paym
ents
, ben
efits
or
arra
ngem
ents
to w
hich
the
Exe
cutiv
e m
ight
oth
erw
ise
be e
ntitl
ed to
und
er a
ny p
lan
or a
rran
gem
ent w
hich
prov
ides
for
sev
eran
ce o
r se
para
tion
("O
ther
Sep
arat
ion
Ben
efits
") a
nd, t
hat (
ii) th
e E
xecu
tive
wai
ves
any
and
all r
ight
s an
d cl
aim
s th
at h
e or
she
may
then
or
ther
eaft
er h
ave
to (
A)
any
Oth
er S
epar
atio
nB
enef
its a
nd (
B)
retir
ee s
tatu
s un
der
any
of th
e C
ompa
ny's
sto
ck o
ptio
n pl
ans.
8.04
Eff
ect o
f C
laim
. If
an E
xecu
tive
(i)
file
s a
law
suit,
cha
rge,
com
plai
nt o
r ot
her
clai
m a
sser
ting
any
clai
m o
r de
man
d w
ithin
the
scop
e of
his
or
her
Rel
ease
s, (
ii) f
ails
to e
xecu
te a
nd d
eliv
er a
Rel
ease
requ
ired
pur
suan
t to
Sect
ion
8.01
, or
(iii)
pur
port
s to
rev
oke
any
of th
e R
elea
ses,
the
Com
pany
sha
ll re
tain
all
righ
ts a
nd b
enef
its o
f th
e R
elea
ses,
and
in a
dditi
on, s
hall
be e
ntitl
ed to
can
cel a
ny a
nd a
llfu
ture
obl
igat
ions
und
er th
is P
lan
and
reco
up th
e va
lue
of a
ll pa
ymen
ts a
nd b
enef
its u
nder
this
Pla
n, to
geth
er w
ith th
e C
ompa
ny's
cos
ts a
nd r
easo
nabl
e at
torn
ey's
fee
s. I
n ad
ditio
n, th
e C
ompa
ny s
hall
been
title
d to
pur
sue
any
othe
r re
med
y av
aila
ble
to e
nfor
ce th
e te
rms
of th
e R
elea
ses
and
Non
com
petit
ion
Agr
eem
ent d
escr
ibed
in A
rtic
le 9
.
Art
icle
9
Req
uire
men
t of
Non
com
peti
tion
Agr
eem
ent
9.01
Non
com
petit
ion
Agr
eem
ent a
s a
Con
ditio
n to
Pla
n B
enef
its. I
t sha
ll be
a c
ondi
tion
to r
ecei
ve T
rans
ition
Ben
efits
, Con
tinue
d E
mpl
oym
ent B
enef
its a
nd th
e Se
vera
nce
Ben
efit
unde
r th
is P
lan
that
the
Exe
cutiv
e sh
all h
ave
sign
ed a
con
fide
ntia
lity
and
nonc
ompe
titio
n ag
reem
ent i
n th
e fo
rm p
rovi
ded
by th
e C
ompa
ny a
s su
bsta
ntia
lly d
escr
ibed
in th
is A
rtic
le 9
(th
e "N
onco
mpe
titio
n A
gree
men
t").
The
failu
re o
r re
fusa
l of
an E
xecu
tive
to s
ign
such
a N
onco
mpe
titio
n A
gree
men
t sha
ll di
squa
lify
the
Exe
cutiv
e fr
om r
ecei
ving
any
ben
efits
und
er th
is P
lan.
gp
y
9.02
For
m o
f N
onco
mpe
titio
n A
gree
men
t.
(a)
Con
fide
ntia
lity.
Eac
h E
xecu
tive'
s N
onco
mpe
titio
n A
gree
men
t sha
ll pr
ovid
e th
at:
(i)
the
Exe
cutiv
e ac
know
ledg
es th
at it
is th
e po
licy
of M
cDon
ald'
s to
mai
ntai
n as
sec
ret a
nd c
onfi
dent
ial a
ll va
luab
le a
nd u
niqu
e ta
ngib
le a
nd in
tang
ible
info
rmat
ion
and
tech
niqu
es a
cqui
red,
dev
elop
ed o
rus
ed b
y M
cDon
ald'
s re
latin
g to
its
busi
ness
, ope
ratio
ns, e
mpl
oyee
s an
d cu
stom
ers,
whi
ch g
ives
McD
onal
d's
a co
mpe
titiv
e ad
vant
age
in th
e bu
sine
sses
in w
hich
McD
onal
d's
is e
ngag
ed (
"Con
fide
ntia
lIn
form
atio
n").
17
(ii)
the
Exe
cutiv
e re
cogn
izes
that
all
such
Con
fide
ntia
l Inf
orm
atio
n is
the
sole
and
exc
lusi
ve p
rope
rty
of M
cDon
ald'
s, a
nd th
at d
iscl
osur
e of
Con
fide
ntia
l Inf
orm
atio
n w
ould
cau
se s
igni
fica
nt d
amag
e to
McD
onal
d's;
and
(iii)
the
Exe
cutiv
e sh
all n
ot, w
ithou
t the
pri
or w
ritte
n co
nsen
t of
the
Com
pany
, use
, dis
clos
e, f
urni
sh o
r m
ake
acce
ssib
le to
any
per
son,
fir
m, c
orpo
ratio
n, p
artn
ersh
ip o
r ot
her
entit
y of
any
kin
d(c
olle
ctiv
ely,
"Pe
rson
") a
ny C
onfi
dent
ial I
nfor
mat
ion
obta
ined
dur
ing
the
Exe
cutiv
e's
empl
oym
ent w
ith M
cDon
ald'
s at
any
tim
e (i
nclu
ding
, with
out l
imita
tion,
dur
ing
or a
fter
the
Ret
entio
n Pe
riod
, the
Tra
nsiti
on P
erio
d or
the
Con
tinue
d E
mpl
oym
ent P
erio
d) f
or s
o lo
ng a
s su
ch in
form
atio
n is
val
uabl
e an
d un
ique
exc
ept (
A)
with
the
prio
r w
ritte
n co
nsen
t of
McD
onal
d's
in r
espe
ct o
f su
ch d
iscl
osur
e, (
B)
asre
quir
ed b
y th
e du
ties
of th
e E
xecu
tive'
s em
ploy
men
t with
McD
onal
d's,
(C
) in
con
nect
ion
with
the
Exe
cutiv
e's
good
-fai
th e
nfor
cem
ent o
f hi
s or
her
rig
hts
unde
r th
is P
lan,
or
(D)
if th
e E
xecu
tive
reas
onab
lyan
d in
goo
d fa
ith b
elie
ves
that
he
or s
he is
com
pelle
d by
law
or
by a
cou
rt o
r go
vern
men
tal a
genc
y by
a p
rope
r pr
ocee
ding
; pro
vide
d th
at th
e E
xecu
tive,
to th
e ex
tent
not
pro
hibi
ted
from
doi
ng s
o by
appl
icab
le la
w o
r co
urt o
rder
, sha
ll gi
ve th
e C
ompa
ny w
ritte
n no
tice
of th
e C
onfi
dent
ial I
nfor
mat
ion
to b
e so
dis
clos
ed p
ursu
ant t
o cl
ause
(C
) or
(D
) of
this
sen
tenc
e as
far
in a
dvan
ce o
f its
dis
clos
ure
as is
law
ful a
nd p
ract
icab
le, s
hall
coop
erat
e (a
t the
Com
pany
's s
ole
expe
nse)
with
the
Com
pany
in it
s ef
fort
s to
pro
tect
the
info
rmat
ion
from
dis
clos
ure,
and
sha
ll lim
it hi
s or
her
dis
clos
ure
of s
uch
Con
fide
ntia
lIn
form
atio
n to
the
min
imum
dis
clos
ure
requ
ired
by
law
or
cour
t ord
er u
nles
s th
e C
ompa
ny a
gree
s in
wri
ting
to a
gre
ater
leve
l of
disc
losu
re.
(b)
Non
com
petit
ion.
Eac
h E
xecu
tive'
s N
onco
mpe
titio
n A
gree
men
t will
als
o pr
ovid
e th
at th
e E
xecu
tive
will
not
, at a
ny ti
me
duri
ng th
e pe
riod
spe
cifi
ed in
Sec
tion
9.02
(c),
dir
ectly
or
indi
rect
ly:
(i)
in a
ny c
apac
ity, e
ngag
e or
par
ticip
ate
in, o
r be
com
e em
ploy
ed b
y or
ren
der
advi
sory
or
cons
ultin
g or
oth
er s
ervi
ces
in c
onne
ctio
n w
ith a
ny P
rohi
bite
d B
usin
ess
(as
defi
ned
in S
ectio
n9.
03),
pro
vide
d th
at n
othi
ng in
this
Sec
tion
9.02
(b)
shal
l pre
clud
e an
Exe
cutiv
e fr
om p
erfo
rmin
g se
rvic
es o
n be
half
of
an in
vest
men
t ban
king
or
com
mer
cial
ban
king
, aud
iting
or
cons
ultin
g fi
rm s
o lo
ng a
she
or
she
is n
ot e
ngag
ed in
ren
deri
ng s
ervi
ces
to o
r so
liciti
ng b
usin
ess
of a
Pro
hibi
ted
Bus
ines
s;
(ii)
mak
e an
y fi
nanc
ial i
nves
tmen
t, w
heth
er in
the
form
of
equi
ty o
r de
bt, o
r ow
n an
y in
tere
st, d
irec
tly o
r in
dire
ctly
, in
any
Proh
ibite
d B
usin
ess,
pro
vide
d th
at n
othi
ng in
this
Sec
tion
9.02
(b)
shal
l res
tric
t the
Exe
cutiv
e fr
om o
wni
ng, o
f re
cord
or
bene
fici
ally
, up
to o
ne p
erce
nt o
f th
e ou
tsta
ndin
g vo
ting
secu
ritie
s of
any
pub
licly
trad
ed c
orpo
ratio
n; p
rovi
ded
18
that
suc
h in
vest
men
t doe
s no
t cre
ate
a co
nflic
t of
inte
rest
bet
wee
n th
e E
xecu
tive'
s du
ties
here
unde
r an
d th
e E
xecu
tive'
s in
tere
st in
suc
h in
vest
men
t;
(iii)
em
ploy
any
em
ploy
ee o
f M
cDon
ald'
s (w
ith th
e ex
cept
ion
of th
e E
xecu
tive'
s ad
min
istr
ativ
e as
sist
ant)
or
any
Pers
on w
ho w
as e
mpl
oyed
by
the
Com
pany
with
in 1
80 d
ays
of s
uch
hiri
ng; o
r
(iv)
inte
rfer
e w
ith M
cDon
ald'
s re
latio
nshi
p w
ith, o
r en
deav
or to
ent
ice
away
fro
m M
cDon
ald'
s an
y em
ploy
ees
(oth
er th
an th
e E
xecu
tive'
s ad
min
istr
ativ
e as
sist
ant)
, cus
tom
ers,
ven
dors
or
supp
liers
,fr
anch
isee
s or
bus
ines
s pa
rtne
rs o
f th
e C
ompa
ny.
(c)
Res
tric
tive
Peri
od. T
he N
onco
mpe
titio
n A
gree
men
t sha
ll pr
ovid
e th
at th
e co
vena
nts
desc
ribe
d in
Sec
tion
9.02
(b)
shal
l rem
ain
in e
ffec
t (i)
at a
ll tim
es d
urin
g an
Exe
cutiv
e's
Tra
nsiti
on P
erio
d an
dC
ontin
ued
Em
ploy
men
t Per
iod
and
(ii)
if th
e E
xecu
tive'
s em
ploy
men
t is
term
inat
ed b
y th
e C
ompa
ny o
r by
the
Exe
cutiv
e fo
r an
y re
ason
or
for
no r
easo
n du
ring
the
Tra
nsiti
on P
erio
d or
the
Con
tinue
dE
mpl
oym
ent P
erio
d, f
or tw
o ye
ars
afte
r th
e D
ate
of T
erm
inat
ion
(but
in n
o ev
ent a
fter
the
end
of th
e C
ontin
ued
Em
ploy
men
t Per
iod)
.
9.03
Pro
hibi
ted
Bus
ines
s. F
or p
urpo
ses
of th
is P
lan,
"Pr
ohib
ited
Bus
ines
s" m
eans
any
Per
son
(and
any
bra
nche
s, o
ffic
es o
r op
erat
ions
ther
eof)
that
is a
mat
eria
l and
dir
ect c
ompe
titor
of
McD
onal
d's
in a
nyco
untr
y in
the
wor
ld o
r in
any
sta
te o
f th
e U
nite
d St
ates
, but
sha
ll no
t inc
lude
any
Per
son
whi
ch is
not
one
of
the
15 o
r fe
wer
Per
sons
des
igna
ted
as a
Pro
hibi
ted
Bus
ines
s on
Ann
ex A
atta
ched
to th
eE
xecu
tive'
s N
onco
mpe
titio
n A
gree
men
t.
9.04
Rem
edy.
(a)
Inj
unct
ive
Rel
ief.
The
Non
com
petit
ion
Agr
eem
ent s
hall
also
pro
vide
that
:
(i)
in r
ecog
nitio
n of
the
conf
iden
tial n
atur
e of
the
Con
fide
ntia
l Inf
orm
atio
n, a
nd in
rec
ogni
tion
of th
e ne
cess
ity o
f th
e lim
ited
rest
rict
ions
impo
sed
by th
e N
onco
mpe
titio
n A
gree
men
t, it
wou
ld b
e im
poss
ible
to m
easu
re s
olel
y in
mon
ey th
e da
mag
es w
hich
the
Com
pany
wou
ld s
uffe
r if
the
Exe
cutiv
e w
ere
to b
reac
h an
y of
his
obl
igat
ions
und
er s
uch
Agr
eem
ent;
(ii)
any
bre
ach
of a
ny s
uch
prov
isio
ns o
f th
e N
onco
mpe
titio
n A
gree
men
t wou
ld ir
repa
rabl
y in
jure
the
Com
pany
;
(iii)
if th
e E
xecu
tive
brea
ches
any
of
the
prov
isio
ns o
f th
e N
onco
mpe
titio
n A
gree
men
t, th
e C
ompa
ny s
hall
be e
ntitl
ed, i
n ad
ditio
n to
any
oth
er r
emed
ies
to w
hich
the
Com
pany
may
be
entit
led
unde
r th
eN
onco
mpe
titio
n A
gree
men
t or
othe
rwis
e, to
an
inju
nctio
n is
sued
by
a co
urt o
f co
mpe
tent
juri
sdic
tion,
to r
estr
ain
any
brea
ch o
r th
reat
ened
bre
ach,
of
such
pro
visi
ons,
and
the
Exe
cutiv
e w
aive
s an
y ri
ght t
o
gp
y
asse
rt
19
any
clai
m o
r de
fens
e th
at th
e C
ompa
ny h
as a
n ad
equa
te r
emed
y at
law
for
any
suc
h br
each
.
(b)
Eff
ect o
n O
ther
Ben
efits
. Eac
h E
xecu
tive'
s N
onco
mpe
titio
n A
gree
men
t sha
ll al
so p
rovi
de th
at, i
n th
e ev
ent o
f a
brea
ch b
y su
ch E
xecu
tive
of th
e pr
ovis
ions
of
his
or h
er N
onco
mpe
titio
n A
gree
men
tex
clud
ing
for
this
pur
pose
an
isol
ated
, ins
ubst
antia
l and
inad
vert
ent a
ctio
n, th
e C
ompa
ny s
hall
be e
ntitl
ed to
(i)
dis
cont
inue
any
and
all
paym
ents
and
oth
er b
enef
its to
whi
ch th
e E
xecu
tive
or h
is o
r he
rbe
nefi
ciar
ies
wou
ld o
ther
wis
e be
ent
itled
pur
suan
t to
this
Pla
n, (
ii) te
rmin
ate
any
and
all u
nexe
rcis
ed s
tock
opt
ions
then
hel
d by
the
Exe
cutiv
e or
by
any
tran
sfer
ee o
f th
e E
xecu
tive,
(iii
) re
quir
e th
eE
xecu
tive
to r
epay
to th
e C
ompa
ny th
e ag
greg
ate
amou
nt o
f ca
sh p
aym
ents
rec
eive
d by
the
Exe
cutiv
e fr
om th
e C
ompa
ny p
ursu
ant t
o th
is P
lan
duri
ng th
e pe
riod
com
men
cing
on
the
Exe
cutiv
e's
Cha
nge-
in-S
tatu
s D
ate
and
endi
ng o
n th
e da
te o
n w
hich
the
Com
pany
req
uest
s su
ch r
epay
men
t (th
e "R
ecov
ery
Peri
od")
and
(iv
) re
quir
e th
e E
xecu
tive
to p
ay to
the
Com
pany
(A
) w
ith r
espe
ct to
sto
ckop
tions
that
wer
e no
t ves
ted
as o
f th
e E
xecu
tive'
s C
hang
e-in
-Sta
tus
Dat
e, th
e ag
greg
ate
amou
nt o
f ga
in r
ecog
nize
d by
the
Exe
cutiv
e du
ring
the
Rec
over
y Pe
riod
as
the
resu
lt of
the
exer
cise
by
the
Exe
cutiv
e or
by
any
tran
sfer
ee o
f th
e E
xecu
tive
of s
uch
stoc
k op
tions
, and
(B
) w
ith r
espe
ct to
sto
ck o
ptio
ns th
at w
ere
vest
ed a
s of
the
Exe
cutiv
e's
Cha
nge-
in-S
tatu
s D
ate,
an
amou
nt e
qual
to th
e po
sitiv
edi
ffer
ence
, if
any,
of
(I)
the
aggr
egat
e am
ount
of
gain
rec
ogni
zed
by th
e E
xecu
tive
duri
ng th
e R
ecov
ery
Peri
od a
s th
e re
sult
of th
e ex
erci
se b
y th
e E
xecu
tive
or b
y an
y tr
ansf
eree
of
the
Exe
cutiv
e of
suc
hst
ock
optio
ns (
"Exe
rcis
ed O
ptio
ns")
, min
us(I
I) th
e am
ount
of
gain
that
wou
ld h
ave
been
rec
ogni
zed
by th
e E
xecu
tive
had
the
Exe
rcis
ed O
ptio
ns b
een
exer
cise
d as
of
the
Exe
cutiv
e's
Cha
nge-
in-S
tatu
s D
ate.
Art
icle
10
Leg
al F
ees
and
Oth
er E
xpen
ses
If a
n E
xecu
tive
incu
rs le
gal a
nd o
ther
fee
s or
oth
er e
xpen
ses
in a
goo
d fa
ith e
ffor
t to
obta
in b
enef
its u
nder
this
Pla
n, r
egar
dles
s of
whe
ther
the
Exe
cutiv
e ul
timat
ely
prev
ails
, the
Com
pany
sha
ll re
imbu
rse
the
Exe
cutiv
e on
a m
onth
ly b
asis
upo
n th
e w
ritte
n re
ques
t for
suc
h fe
es a
nd e
xpen
ses
to th
e ex
tent
not
rei
mbu
rsed
und
er th
e C
ompa
ny's
off
icer
s an
d di
rect
ors
liabi
lity
insu
ranc
e po
licy,
if a
ny. T
he e
xist
ence
of a
ny c
ontr
ollin
g ca
se o
r re
gula
tory
law
whi
ch is
dir
ectly
inco
nsis
tent
with
the
posi
tion
take
n by
the
Exe
cutiv
e sh
all b
e ev
iden
ce th
at th
e E
xecu
tive
did
not a
ct in
goo
d fa
ith.
Rei
mbu
rsem
ent o
f le
gal f
ees
and
expe
nses
sha
ll be
mad
e m
onth
ly u
pon
the
wri
tten
subm
issi
on o
f a
requ
est f
or r
eim
burs
emen
t tog
ethe
r w
ith e
vide
nce
that
suc
h fe
es a
nd e
xpen
ses
are
due
and
paya
ble
orw
ere
paid
by
the
Exe
cutiv
e. I
f th
e C
ompa
ny s
hall
have
rei
mbu
rsed
the
Exe
cutiv
e fo
r le
gal f
ees
and
expe
nses
and
it is
late
r de
term
ined
that
the
Exe
cutiv
e w
as n
ot a
ctin
g in
goo
d fa
ith, a
ll am
ount
s pa
id o
nbe
half
of,
or
reim
burs
ed to
, the
Exe
cutiv
e sh
all b
e pr
ompt
ly r
efun
ded
to th
e C
ompa
ny.
20
Art
icle
11
Am
endm
ent
and
Ter
min
atio
n of
thi
s P
lan
Thi
s Pl
an s
hall
be e
ffec
tive
on th
e E
ffec
tive
Dat
e an
d sh
all r
emai
n in
eff
ect u
ntil
the
late
r of
(i)
Oct
ober
1, 2
004,
or
(ii)
a d
ate
that
is tw
o ye
ars
afte
r th
e da
te o
n w
hich
the
Com
pany
giv
es w
ritte
n no
tice
toal
l Exe
cutiv
es o
f its
inte
ntio
n to
term
inat
e th
e Pl
an. T
he C
ompa
ny h
as th
e ri
ght t
o am
end
this
Pla
n in
who
le o
r in
par
t at a
ny ti
me;
pro
vide
d th
at n
o am
endm
ent o
f th
is P
lan
shal
l be
effe
ctiv
e as
to a
nyE
xecu
tive
who
is o
r m
ay r
easo
nabl
y be
exp
ecte
d to
be
mat
eria
lly a
dver
sely
aff
ecte
d th
ereb
y (a
n "A
ffec
ted
Exe
cutiv
e")
until
the
late
r of
(i)
Oct
ober
1, 2
004,
or
(ii)
a d
ate
that
is tw
o ye
ars
afte
r th
e da
te o
nw
hich
the
Com
pany
giv
es w
ritte
n no
tice
to a
ll A
ffec
ted
Exe
cutiv
es o
f its
inte
ntio
n to
ado
pt s
uch
amen
dmen
t. N
otw
ithst
andi
ng th
e fo
rego
ing,
no
Plan
term
inat
ion
or a
men
dmen
t sha
ll be
com
e ef
fect
ive
duri
ng th
e T
rans
ition
Per
iod
or C
ontin
ued
Em
ploy
men
t Per
iod
as to
any
Aff
ecte
d E
xecu
tive.
Any
pur
port
ed P
lan
term
inat
ion
or a
men
dmen
t in
viol
atio
n of
this
Sec
tion
11 s
hall
be v
oid
and
of n
o ef
fect
.N
otw
ithst
andi
ng th
e fo
rego
ing,
any
Exe
cutiv
e m
ay c
onse
nt in
wri
ting
to a
ny a
men
dmen
t or
term
inat
ion
of th
is P
lan.
Art
icle
12
Mis
cella
neou
s P
rovi
sion
s
12.0
1 Su
cces
sors
. Thi
s Pl
an s
hall
be b
indi
ng u
pon
the
Com
pany
and
its
succ
esso
rs a
nd a
ssig
ns. S
ubje
ct to
sat
isfa
ctio
n of
the
cond
ition
s se
t for
th in
Sec
tions
3, 4
, 5 a
nd 8
, the
Pla
n sh
all i
nure
to th
e be
nefi
tof
the
Exe
cutiv
es a
nd th
eir
resp
ectiv
e su
cces
sors
, hei
rs a
nd p
erm
itted
ass
igns
.
12.0
2 E
xecu
tive
Info
rmat
ion.
Eac
h E
xecu
tive
shal
l not
ify
the
Com
mitt
ee o
f hi
s or
her
mai
ling
addr
ess
and
each
cha
nge
of m
ailin
g ad
dres
s to
the
exte
nt th
at h
e or
she
has
not
pre
viou
sly
info
rmed
the
Com
pany
ther
eof.
In
addi
tion,
eac
h E
xecu
tive
shal
l fur
nish
the
Com
mitt
ee w
ith a
ny o
ther
info
rmat
ion
and
data
that
the
Com
mitt
ee r
easo
nabl
y co
nsid
ers
nece
ssar
y fo
r th
e pr
oper
adm
inis
trat
ion
of th
is P
lan.
The
info
rmat
ion
prov
ided
by
the
Exe
cutiv
e un
der
this
Sec
tion
shal
l be
bind
ing
upon
the
Exe
cutiv
e, h
is o
r he
r de
pend
ents
and
any
ben
efic
iari
es f
or a
ll pu
rpos
es o
f th
is P
lan.
The
Com
mitt
ee s
hall
be e
ntitl
edto
rel
y on
any
rep
rese
ntat
ions
reg
ardi
ng p
erso
nal f
acts
mad
e by
an
Exe
cutiv
e, h
is o
r he
r de
pend
ents
or
bene
fici
arie
s, u
nles
s it
has
know
ledg
e th
at s
uch
repr
esen
tatio
ns a
re f
alse
.
12.0
3 Pa
ymen
ts to
Ben
efic
iary
. If
an E
xecu
tive
dies
bef
ore
rece
ivin
g am
ount
s to
whi
ch h
e is
ent
itled
und
er th
is P
lan,
suc
h am
ount
s sh
all b
e pa
id to
the
Ben
efic
iary
(as
def
ined
bel
ow)
or if
non
e, to
the
Exe
cutiv
e's
esta
te. I
f a
Ben
efic
iary
die
s be
fore
com
plet
e pa
ymen
t of
any
bene
fits
attr
ibut
able
to a
dec
ease
d E
xecu
tive,
the
rem
aini
ng b
enef
its s
hall
be p
aid
the
Ben
efic
iary
's e
stat
e. F
or p
urpo
ses
of th
is P
lan,
gp
y
a B
enef
icia
ry s
hall
mea
n an
y Pe
rson
or
Pers
ons,
incl
udin
g an
y en
tity
whi
ch is
tax-
exem
pt u
nder
Sec
tion
501(
c)(3
) of
the
Inte
rnal
Rev
enue
Cod
e, d
esig
nate
d in
wri
ting
by a
n E
xecu
tive.
21
12.0
4 N
otic
es. A
ny n
otic
e, r
eque
st, e
lect
ion,
or
othe
r of
fici
al c
omm
unic
atio
n un
der
this
Pla
n sh
all b
e in
wri
ting
and
shal
l be
deliv
ered
per
sona
lly, b
y co
urie
r se
rvic
e, b
y re
gist
ered
or
cert
ifie
d m
ail,
retu
rnre
ceip
t req
uest
ed o
r by
tele
copy
and
sha
ll be
eff
ectiv
e up
on a
ctua
l rec
eipt
by
the
part
y to
whi
ch s
uch
notic
e sh
all b
e di
rect
ed, a
nd s
hall
be a
ddre
ssed
as
follo
ws:
(i)
if to
the
Com
pany
, McD
onal
d's
Cor
pora
tion,
One
McD
onal
d's
Plaz
a, O
ak B
rook
IL
605
23, A
ttent
ion:
Cor
pora
te S
ecre
tary
, and
(ii)
if to
an
Exe
cutiv
e, th
e la
st m
ailin
g ad
dres
s as
spe
cifi
ed b
y th
e E
xecu
tive
in a
ccor
danc
e w
ith S
ectio
n12
.02.
12.0
5 N
o E
mpl
oym
ent C
ontr
act.
The
exi
sten
ce o
f th
is P
lan
shal
l not
con
fer
any
lega
l or
othe
r ri
ghts
upo
n an
y E
xecu
tive
to a
con
tinua
tion
of e
mpl
oym
ent.
The
Com
pany
and
eac
h su
cces
sor
ther
eof
rese
rves
the
righ
t to
term
inat
e th
e em
ploy
men
t of
any
Exe
cutiv
e, w
ith o
r w
ithou
t cau
se, a
t any
tim
e, n
otw
ithst
andi
ng th
e ex
iste
nce
of th
is P
lan.
12.0
6 N
on-A
liena
tion.
Exc
ept t
o th
e ex
tent
exp
ress
ly p
erm
itted
by
law
, no
Exe
cutiv
e sh
all h
ave
the
righ
t to
assi
gn, t
rans
fer
or a
ntic
ipat
e an
inte
rest
in a
ny b
enef
it un
der
this
Pla
n.
12.0
7 Se
vera
bilit
y. I
f an
y on
e or
mor
e ar
ticle
s, s
ectio
ns o
r ot
her
port
ions
of
this
Pla
n ar
e de
clar
ed b
y an
y co
urt o
r go
vern
men
tal a
utho
rity
to b
e un
law
ful o
r in
valid
, suc
h un
law
fuln
ess
or in
valid
ity s
hall
not
serv
e to
inva
lidat
e an
y ar
ticle
, sec
tion
or o
ther
por
tion
not s
o de
clar
ed to
be
unla
wfu
l or
inva
lid. A
ny a
rtic
le, s
ectio
n or
oth
er p
ortio
n so
dec
lare
d to
be
unla
wfu
l or
inva
lid s
hall
be c
onst
rued
so
as to
effe
ctua
te th
e te
rms
of s
uch
artic
le, s
ectio
n or
oth
er p
ortio
n to
the
fulle
st e
xten
t pos
sibl
e w
hile
rem
aini
ng la
wfu
l and
val
id.
12.0
8 N
o W
aive
r. A
n E
xecu
tive'
s fa
ilure
to in
sist
upo
n st
rict
com
plia
nce
with
any
pro
visi
on o
f th
is P
lan
shal
l not
be
deem
ed a
wai
ver
of s
uch
prov
isio
n or
any
oth
er p
rovi
sion
of
this
Pla
n. A
n E
xecu
tive
may
wai
ve a
ny o
r al
l of
the
prov
isio
ns o
f th
is P
lan
only
by
sign
ing
a do
cum
ent t
o th
at e
ffec
t. A
wai
ver
of a
ny p
rovi
sion
of
this
Pla
n sh
all n
ot b
e de
emed
a w
aive
r of
any
oth
er p
rovi
sion
, and
any
wai
ver
ofan
y de
faul
t in
any
such
pro
visi
on s
hall
not b
e de
emed
a w
aive
r of
any
late
r de
faul
t the
reof
or
of a
ny o
ther
pro
visi
on.
12.0
9 G
over
ning
Law
. To
the
exte
nt n
ot p
reem
pted
by
fede
ral l
aw, t
his
Plan
sha
ll be
inte
rpre
ted
and
cons
true
d in
acc
orda
nce
with
the
law
s of
the
Stat
e of
Illi
nois
, with
out r
egar
d to
any
oth
erw
ise
appl
icab
le c
onfl
icts
of
law
or
choi
ce o
f la
w p
rinc
iple
s.
12.1
0 C
onst
ruct
ion.
Any
mas
culin
e pe
rson
al p
rono
un s
hall
be c
onsi
dere
d to
mea
n al
so th
e co
rres
pond
ing
fem
inin
e or
neu
ter
pers
onal
pro
noun
, as
the
cont
ext r
equi
res.
The
sin
gula
r an
d pl
ural
for
ms
of a
nyte
rm u
sed
in th
is P
lan
shal
l be
inte
rcha
ngea
ble,
as
the
cont
ext r
equi
res.
12.1
1 C
aptio
ns. T
he c
aptio
ns o
f th
e Se
ctio
ns a
nd A
rtic
les
of th
is P
lan
are
not a
par
t of
the
prov
isio
ns h
ereo
f an
d sh
all h
ave
no f
orce
or
effe
ct.
22
App
endi
x A
Tie
r I
Exe
cuti
ves
Jack
Gre
enbe
rgJi
m C
anta
lupo
Tie
r II
Exe
cuti
ves
Cla
ire
Bab
row
ski
Mik
e C
onle
yA
lan
Feld
man
Jeff
Kin
dler
Jim
Ski
nner
Stan
Ste
in
Star
t D
ates
Tie
r I
Exe
cutiv
es: A
pril
29, 1
998
Tie
r II
Exe
cutiv
es: O
ctob
er 1
, 199
8
23
gp
y
Exh
ibit
10(
k)
For
m o
f
McD
onal
d's
Cor
pora
tion
Tie
r I
Cha
nge
of C
ontr
ol E
mpl
oym
ent A
gree
men
t
(Aut
hori
zed
by th
e B
oard
of
Dir
ecto
rs a
nd e
xpec
ted
to b
e en
tere
d in
to b
etw
een
the
Com
pany
and
cer
tain
key
exe
cutiv
es)
McD
onal
d's
Cor
pora
tion
Tie
r I
Cha
nge
of C
ontr
ol E
mpl
oym
ent
Agr
eem
ent
TH
IS A
GR
EE
ME
NT
dat
ed a
s of
___
____
, 200
2 (t
he "
Agr
eem
ent D
ate"
) is
mad
e by
and
am
ong
McD
onal
d's
Cor
pora
tion,
a D
elaw
are
corp
orat
ion
(the
"C
ompa
ny")
, and
___
____
____
("E
xecu
tive"
).
RE
CIT
AL
S
The
Com
pany
has
det
erm
ined
that
it is
in th
e be
st in
tere
sts
of th
e C
ompa
ny a
nd it
s st
ockh
olde
rs to
ass
ure
that
the
Com
pany
will
hav
e th
e co
ntin
ued
serv
ice
of E
xecu
tive.
The
Com
pany
als
o be
lieve
s it
isim
pera
tive
to r
educ
e th
e di
stra
ctio
n of
Exe
cutiv
e th
at w
ould
res
ult f
rom
the
pers
onal
unc
erta
intie
s ca
used
by
a pe
ndin
g or
thre
aten
ed c
hang
e of
con
trol
of
the
Com
pany
, to
enco
urag
e E
xecu
tive'
s fu
llat
tent
ion
and
dedi
catio
n to
the
Com
pany
, and
to p
rovi
de E
xecu
tive
with
com
pens
atio
n an
d be
nefi
ts a
rran
gem
ents
upo
n a
chan
ge o
f co
ntro
l whi
ch e
nsur
e th
at th
e ex
pect
atio
ns o
f E
xecu
tive
will
be
satis
fied
and
are
com
petit
ive
with
thos
e of
sim
ilarl
y-si
tuat
ed c
orpo
ratio
ns. T
his
Agr
eem
ent i
s in
tend
ed to
acc
ompl
ish
thes
e ob
ject
ives
.
AR
TIC
LE
I.
CE
RT
AIN
DE
FIN
ITIO
NS
As
used
in th
is A
gree
men
t, th
e te
rms
spec
ifie
d be
low
sha
ll ha
ve th
e fo
llow
ing
mea
ning
s:
1.1
"Acc
rued
Ann
ual B
onus
" m
eans
the
amou
nt o
f an
y A
nnua
l Bon
us e
arne
d bu
t not
yet
pai
d w
ith r
espe
ct to
the
Com
pany
's la
test
fis
cal y
ear
ende
d pr
ior
to th
e T
erm
inat
ion
Dat
e.
1.2
"Acc
rued
Bas
e Sa
lary
" m
eans
the
amou
nt o
f E
xecu
tive'
s B
ase
Sala
ry th
at is
ear
ned
but n
ot y
et p
aid
as o
f th
e T
erm
inat
ion
Dat
e.
1.3
"Acc
rued
Obl
igat
ions
" m
eans
, as
of a
ny d
ate,
the
sum
of
Exe
cutiv
e's
Acc
rued
Bas
e Sa
lary
, Acc
rued
Ann
ual B
onus
, any
acc
rued
but
unp
aid
vaca
tion
pay,
and
any
oth
er a
mou
nts
and
bene
fits
whi
ch a
reth
en d
ue to
be
paid
or
prov
ided
to E
xecu
tive
by th
e C
ompa
ny, b
ut h
ave
not y
et b
een
paid
or
prov
ided
(as
app
licab
le).
1.4
"Agr
eem
ent D
ate"
--
see
the
intr
oduc
tory
par
agra
ph o
f th
is A
gree
men
t.
1.5
"Agr
eem
ent T
erm
" m
eans
the
peri
od c
omm
enci
ng o
n th
e A
gree
men
t Dat
e an
d en
ding
on
the
thir
d an
nive
rsar
y of
the
Agr
eem
ent D
ate
or, i
f la
ter,
the
date
to w
hich
the
Agr
eem
ent T
erm
is e
xten
ded
unde
r th
e fo
llow
ing
sent
ence
, or,
if e
arlie
r, a
s te
rmin
ated
und
er S
ectio
n 9.
4. C
omm
enci
ng o
n th
e fi
rst a
nniv
ersa
ry o
f th
e A
gree
men
t Dat
e, th
e A
gree
men
t Ter
m s
hall
auto
mat
ical
ly b
e ex
tend
ed o
n su
ch d
ate
and
on e
ach
day
ther
eaft
er b
y on
e da
y un
til, a
t any
time
afte
r th
e fi
rst a
nniv
ersa
ry o
f th
e A
gree
men
t Dat
e, th
e C
ompa
ny d
eliv
ers
wri
tten
notic
e (a
n "E
xpir
atio
n N
otic
e")
to E
xecu
tive
that
the
Agr
eem
ent s
hall
expi
re o
n a
date
spe
cifi
ed in
the
Exp
irat
ion
Not
ice
(the
"E
xpir
atio
n D
ate"
); p
rovi
ded
that
suc
h da
te is
not
pri
or to
the
last
day
of
the
Agr
eem
ent T
erm
(as
ext
ende
d); p
rovi
ded
furt
her,
how
ever
, tha
t if
an E
ffec
tive
Dat
e or
an
Imm
inen
t Cha
nge
Dat
eoc
curs
bef
ore
the
Exp
irat
ion
Dat
e sp
ecif
ied
in th
e E
xpir
atio
n N
otic
e, th
en s
uch
Exp
irat
ion
Not
ice
shal
l be
void
and
of
no f
urth
er e
ffec
t.
1.6
"Ann
ual B
onus
" --
see
Sec
tion
2.2(
b).
1.7
"Ann
ual P
erfo
rman
ce P
erio
d" -
- se
e Se
ctio
n 2.
2(b)
.
1.8
"Art
icle
" m
eans
an
artic
le o
f th
is A
gree
men
t.
gp
y
1.9
"Bas
e Sa
lary
" --
see
Sec
tion
2.2(
a).
1.10
"B
enef
icia
l Ow
ners
hip"
has
the
mea
ning
spe
cifi
ed in
Rul
e 13
d-3
of th
e SE
C u
nder
Exc
hang
e A
ct f
or a
"B
enef
icia
l Ow
ner.
"
1.11
"B
enef
icia
ry"
-- s
ee S
ectio
n 10
.3.
1.12
"B
oard
" m
eans
the
Com
pany
's B
oard
of
Dir
ecto
rs.
1.13
"B
onus
Pla
n" -
- se
e Se
ctio
n 2.
2(b)
.
1.14
"B
usin
ess
Com
bina
tion"
mea
ns a
reo
rgan
izat
ion,
mer
ger,
sta
tuto
ry s
hare
exc
hang
e or
con
solid
atio
n or
sim
ilar
corp
orat
e tr
ansa
ctio
n in
volv
ing
the
Com
pany
and
/or
any
entit
y co
ntro
lled
by th
eC
ompa
ny, o
r a
sale
or
othe
r di
spos
ition
of
all o
r su
bsta
ntia
lly a
ll of
the
asse
ts o
f th
e C
ompa
ny, o
r th
e ac
quis
ition
of
asse
ts o
r st
ock
of a
noth
er e
ntity
by
the
Com
pany
or
any
entit
y co
ntro
lled
by th
eC
ompa
ny.
1.15
"C
ause
" m
eans
any
one
or
mor
e of
the
follo
win
g:
(a)
Exe
cutiv
e's
conv
ictio
n of
a f
elon
y or
oth
er c
rim
e in
volv
ing
frau
d, d
isho
nest
y or
mor
al tu
rpitu
de, e
xclu
ding
Lim
ited
Vic
ario
us L
iabi
lity;
(b)
Exe
cutiv
e's
will
ful o
r re
ckle
ss m
ater
ial m
isco
nduc
t in
the
perf
orm
ance
of
Exe
cutiv
e's
dutie
s;
(c)
Exe
cutiv
e's
will
ful h
abitu
al n
egle
ct o
f m
ater
ial d
utie
s; o
r
(d)
Exe
cutiv
e's
will
ful o
r in
tent
iona
l mat
eria
l bre
ach
of th
is A
gree
men
t;
prov
ided
, how
ever
, tha
t for
pur
pose
s of
cla
uses
(b)
, (c)
, and
(d)
, Cau
se s
hall
not i
nclu
de a
ny o
ne o
r m
ore
of th
e fo
llow
ing:
(i)
bad
judg
men
t or
negl
igen
ce;
(ii)
any
act
or
omis
sion
bel
ieve
d by
Exe
cutiv
e in
goo
d fa
ith to
hav
e be
en in
or
not o
ppos
ed to
the
inte
rest
of
the
Com
pany
(w
ithou
t int
ent o
f E
xecu
tive
-2-
to g
ain,
dir
ectly
or
indi
rect
ly, a
pro
fit t
o w
hich
Exe
cutiv
e w
as n
ot le
gally
ent
itled
);
(iii)
any
act
or
omis
sion
with
res
pect
to w
hich
a d
eter
min
atio
n co
uld
prop
erly
hav
e be
en m
ade
by th
e B
oard
that
Exe
cutiv
e m
et th
e ap
plic
able
sta
ndar
d of
con
duct
for
inde
mni
fica
tion
or r
eim
burs
emen
tun
der
the
Com
pany
's b
y-la
ws,
any
app
licab
le in
dem
nifi
catio
n ag
reem
ent,
or a
pplic
able
law
, in
each
cas
e in
eff
ect a
t the
tim
e of
suc
h ac
t or
omis
sion
; or
(iv)
any
act
or
omis
sion
with
res
pect
to w
hich
the
Com
pany
giv
es E
xecu
tive
a N
otic
e of
Con
side
ratio
n m
ore
than
six
(6)
mon
ths
afte
r th
e ea
rlie
st d
ate
on w
hich
any
mem
ber
of th
e B
oard
, not
a p
arty
to th
eac
t or
omis
sion
, kne
w o
r sh
ould
hav
e kn
own
of s
uch
act o
r om
issi
on; a
nd
furt
her
prov
ided
that
, if
a br
each
of
this
Agr
eem
ent i
nvol
ved
an a
ct, o
r a
failu
re to
act
, whi
ch w
as d
one,
or
omitt
ed to
be
done
, by
Exe
cutiv
e in
goo
d fa
ith a
nd w
ith a
rea
sona
ble
belie
f th
at E
xecu
tive'
s ac
t, or
failu
re to
act
, was
in th
e be
st in
tere
sts
of th
e C
ompa
ny o
r w
as r
equi
red
by a
pplic
able
law
or
adm
inis
trat
ive
regu
latio
n, s
uch
brea
ch s
hall
not c
onst
itute
Cau
se if
, with
in th
irty
(30
) da
ys a
fter
Exe
cutiv
e is
give
n w
ritte
n no
tice
of s
uch
brea
ch th
at s
peci
fica
lly r
efer
s to
this
Sec
tion,
Exe
cutiv
e cu
res
such
bre
ach
to th
e fu
llest
ext
ent t
hat i
t is
cura
ble.
1.16
"C
hang
e of
Con
trol
" m
eans
the
happ
enin
g of
any
of
the
follo
win
g ev
ents
:
(a)
the
acqu
isiti
on b
y an
y Pe
rson
of
"ben
efic
ial o
wne
rshi
p" (
with
in th
e m
eani
ng o
f R
ule
13d-
3 pr
omul
gate
d un
der
the
1934
Act
) of
20%
or
mor
e of
eith
er (
A)
the
then
-out
stan
ding
sha
res
of S
tock
("O
utst
andi
ng C
ompa
ny C
omm
on S
tock
") o
r (B
) th
e co
mbi
ned
votin
g po
wer
of
the
then
-out
stan
ding
vot
ing
secu
ritie
s of
the
Com
pany
ent
itled
to v
ote
gene
rally
in th
e el
ectio
n of
dir
ecto
rs (
the
"Out
stan
ding
Com
pany
Vot
ing
Secu
ritie
s");
pro
vide
d, h
owev
er, t
hat,
for
purp
oses
of
this
Sect
ion
1.16
(a),
the
follo
win
g ac
quis
ition
s sh
all n
ot c
onst
itute
a C
hang
e of
Con
trol
: (1)
any
acq
uisi
tion
dire
ctly
fro
m th
e C
ompa
ny, (
2) a
ny a
cqui
sitio
n by
the
Com
pany
, (3)
any
acq
uisi
tion
by a
nyem
ploy
ee b
enef
it pl
an (
or r
elat
ed tr
ust)
spo
nsor
ed o
r m
aint
aine
d by
the
Com
pany
or
any
entit
y co
ntro
lled
by th
e C
ompa
ny, o
r (4
) an
y ac
quis
ition
by
any
entit
y pu
rsua
nt to
a tr
ansa
ctio
n th
at c
ompl
ies
with
Sect
ions
1.16
(c)(
i), (
ii) a
nd (
iii);
or
(b)
indi
vidu
als
who
, as
of th
e da
te h
ereo
f, c
onst
itute
the
Boa
rd (
the
"Inc
umbe
nt B
oard
") c
ease
for
any
rea
son
to c
onst
itute
at l
east
a m
ajor
ity o
f th
e B
oard
; pro
vide
d, h
owev
er, t
hat a
ny in
divi
dual
bec
omin
ga
dire
ctor
sub
sequ
ent t
o th
e da
te h
ereo
f w
hose
ele
ctio
n, o
r no
min
atio
n fo
r el
ectio
n by
the
Com
pany
's s
hare
hold
ers,
was
app
rove
d by
a v
ote
of a
t lea
st a
maj
ority
of
the
dire
ctor
s th
en c
ompr
isin
g th
eIn
cum
bent
Boa
rd s
hall
be c
onsi
dere
d as
thou
gh s
uch
indi
vidu
al w
ere
a m
embe
r of
the
Incu
mbe
nt B
oard
, but
exc
ludi
ng, f
or th
is p
urpo
se, a
ny s
uch
indi
vidu
al w
hose
initi
al a
ssum
ptio
n of
off
ice
occu
rs a
s a
resu
lt of
an
actu
al o
r th
reat
ened
ele
ctio
n co
ntes
t with
res
pect
to th
e el
ectio
n or
rem
oval
of
dire
ctor
s or
oth
er a
ctua
l or
thre
aten
ed s
olic
itatio
n of
pro
xies
or
cons
ents
by
or o
n be
half
of
a Pe
rson
oth
er th
an th
e
gp
y
Boa
rd; o
r
-3-
(c)
cons
umm
atio
n of
a r
eorg
aniz
atio
n, m
erge
r, s
tatu
tory
sha
re e
xcha
nge
of c
onso
lidat
ion
or s
imila
r co
rpor
ate
tran
sact
ion
invo
lvin
g th
e C
ompa
ny a
nd/o
r an
y en
tity
cont
rolle
d by
the
Com
pany
, or
a sa
le o
rot
her
disp
ositi
on o
f al
l or
subs
tant
ially
all
of th
e as
sets
of
the
Com
pany
, or
the
acqu
isiti
on o
f as
sets
or
stoc
k of
ano
ther
ent
ity b
y th
e C
ompa
ny o
r an
y en
tity
cont
rolle
d by
the
Com
pany
(ea
ch, a
"B
usin
ess
Com
bina
tion"
), in
eac
h ca
se, u
nles
s, f
ollo
win
g su
ch B
usin
ess
Com
bina
tion,
(i)
all
or s
ubst
antia
lly a
ll of
the
indi
vidu
als
and
entit
ies
that
wer
e th
e be
nefi
cial
ow
ners
of
the
Out
stan
ding
Com
pany
Com
mon
Stoc
k an
d O
utst
andi
ng C
ompa
ny V
otin
g Se
curi
ties
imm
edia
tely
pri
or to
suc
h B
usin
ess
Com
bina
tion
bene
fici
ally
ow
n, d
irec
tly o
r in
dire
ctly
, mor
e th
an 6
0% o
f th
e th
en-o
utst
andi
ng s
hare
s of
com
mon
sto
ckan
d th
e co
mbi
ned
votin
g po
wer
of
the
then
-out
stan
ding
vot
ing
secu
ritie
s en
title
d to
vot
e ge
nera
lly in
the
elec
tion
of d
irec
tors
, as
the
case
may
be,
of
the
corp
orat
ion
resu
lting
fro
m s
uch
Bus
ines
sC
ombi
natio
n (i
nclu
ding
, with
out l
imita
tion,
an
entit
y th
at, a
s a
resu
lt of
suc
h tr
ansa
ctio
n, o
wns
the
Com
pany
or
all o
r su
bsta
ntia
lly a
ll of
the
Com
pany
's a
sset
s ei
ther
dir
ectly
or
thro
ugh
one
or m
ore
subs
idia
ries
) in
sub
stan
tially
the
sam
e pr
opor
tions
as
thei
r ow
ners
hip,
imm
edia
tely
pri
or to
suc
h B
usin
ess
Com
bina
tion
of th
e O
utst
andi
ng C
ompa
ny C
omm
on S
tock
and
Out
stan
ding
Com
pany
Vot
ing
Secu
ritie
s, a
s th
e ca
se m
ay b
e, (
ii) n
o Pe
rson
(ex
clud
ing
any
entit
y re
sulti
ng f
rom
suc
h B
usin
ess
Com
bina
tion
or a
ny e
mpl
oyee
ben
efit
plan
(or
rel
ated
trus
t) o
f th
e C
ompa
ny o
r su
ch e
ntity
res
ultin
g fr
omsu
ch B
usin
ess
Com
bina
tion)
ben
efic
ially
ow
ns, d
irec
tly o
r in
dire
ctly
, 20%
or
mor
e of
, res
pect
fully
, the
then
-out
stan
ding
sha
res
of c
omm
on s
tock
of
the
corp
orat
ion
resu
lting
fro
m s
uch
Bus
ines
sC
ombi
natio
n or
the
com
bine
d vo
ting
pow
er o
f th
e th
en-o
utst
andi
ng v
otin
g se
curi
ties
of s
uch
corp
orat
ion,
exc
ept t
o th
e ex
tent
that
suc
h ow
ners
hip
exis
ted
prio
r to
the
Bus
ines
s C
ombi
natio
n, a
nd (
iii)
atle
ast a
maj
ority
of
the
mem
bers
of
the
boar
d of
dir
ecto
rs o
f th
e en
tity
resu
lting
fro
m s
uch
Bus
ines
s C
ombi
natio
n w
ere
mem
bers
of
the
Incu
mbe
nt B
oard
at t
he ti
me
of th
e ex
ecut
ion
of th
e in
itial
agr
eem
ent,
or o
f th
e ac
tion
of th
e B
oard
, pro
vidi
ng f
or s
uch
Bus
ines
s C
ombi
natio
n; o
r
(d)
appr
oval
by
the
shar
ehol
ders
of
the
Com
pany
of
a co
mpl
ete
liqui
datio
n or
dis
solu
tion
of th
e C
ompa
ny.
1.17
"C
ode"
mea
ns th
e In
tern
al R
even
ue C
ode
of 1
986,
as
amen
ded.
1.18
"C
ompa
ny"
mea
ns M
cDon
ald'
s C
orpo
ratio
n.
1.19
"C
ompa
ny C
ertif
icat
e" -
- se
e Se
ctio
n 5.
1(a)
.
1.20
"C
ompa
ny C
ouns
el O
pini
on"
-- s
ee S
ectio
n 5.
5.
1.21
"C
onfi
dent
ial I
nfor
mat
ion"
mea
ns a
ny in
form
atio
n no
t gen
eral
ly k
now
n in
the
rele
vant
trad
e or
indu
stry
of
the
Com
pany
, whi
ch w
as o
btai
ned
from
the
Com
pany
, or
whi
ch w
as le
arne
d, d
isco
vere
d,de
velo
ped,
con
ceiv
ed, o
rigi
nate
d or
pre
pare
d du
ring
or
as a
res
ult o
f th
e pe
rfor
man
ce o
f an
y se
rvic
es b
y E
xecu
tive
on b
ehal
f of
the
Com
pany
and
whi
ch:
(a)
rela
tes
to o
ne o
r m
ore
of th
e fo
llow
ing:
(i)
trad
e se
cret
s of
the
Com
pany
or
any
cust
omer
or
supp
lier
of th
e C
ompa
ny;
-4-
(ii)
exi
stin
g or
con
tem
plat
ed p
rodu
cts,
ser
vice
s, te
chno
logy
, des
igns
, pro
cess
es, f
orm
ulae
, alg
orith
ms,
res
earc
h or
pro
duct
dev
elop
men
ts o
f th
e C
ompa
ny o
r an
y cu
stom
er o
r su
pplie
r of
the
Com
pany
;
(iii)
bus
ines
s pl
ans,
sal
es o
r m
arke
ting
met
hods
, met
hods
of
doin
g bu
sine
ss, c
usto
mer
list
s, c
usto
mer
usa
ges
and/
or r
equi
rem
ents
, sup
plie
r in
form
atio
n of
the
Com
pany
or
any
cust
omer
or
supp
lier
of th
eC
ompa
ny; o
r
(iv)
info
rmat
ion
obta
ined
by
the
Com
pany
fro
m a
thir
d pa
rty
and
whi
ch th
e C
ompa
ny is
req
uire
d to
pre
serv
e as
con
fide
ntia
l pur
suan
t to
a co
nfid
entia
lity
agre
emen
t, ap
plic
able
law
or
cour
t or
adm
inis
trat
ive
orde
r;
(b)
the
Com
pany
or
any
cust
omer
or
supp
lier
of th
e C
ompa
ny m
ay r
easo
nabl
y ha
ve th
e ri
ght t
o pr
otec
t by
pate
nt, c
opyr
ight
or
by k
eepi
ng it
sec
ret a
nd c
onfi
dent
ial;
or
(c)
othe
rwis
e of
fers
the
Com
pany
a c
ompe
titiv
e ad
vant
age
in th
e re
leva
nt in
dust
ry o
r in
any
oth
er b
usin
ess
in w
hich
the
Com
pany
is e
ngag
ed.
Con
fide
ntia
l Inf
orm
atio
n do
es n
ot in
clud
e an
y in
form
atio
n th
at is
or
may
bec
ome
publ
icly
kno
wn
othe
r th
an th
roug
h th
e im
prop
er a
ctio
ns o
f E
xecu
tive.
1.22
"C
onsu
mm
atio
n D
ate"
mea
ns th
e da
te u
pon
whi
ch a
Bus
ines
s C
ombi
natio
n is
con
sum
mat
ed.
1.23
"D
isab
ility
" m
eans
any
med
ical
ly d
eter
min
able
phy
sica
l or
men
tal i
mpa
irm
ent t
hat h
as la
sted
for
a c
ontin
uous
per
iod
of n
ot le
ss th
an s
ix (
6) m
onth
s an
d ca
n be
exp
ecte
d to
be
perm
anen
t or
ofin
defi
nite
dur
atio
n, a
nd th
at r
ende
rs E
xecu
tive
unab
le to
per
form
the
dutie
s re
quir
ed u
nder
this
Agr
eem
ent.
1.24
"D
isab
ility
Eff
ectiv
e D
ate"
--
see
Sect
ion
3.1.
1.25
"E
ffec
tive
Dat
e" m
eans
eac
h da
te o
n w
hich
a C
hang
e of
Con
trol
fir
st o
ccur
s du
ring
the
Agr
eem
ent T
erm
.
gp
y
1.26
"E
mpl
oyer
Def
ined
Con
trib
utio
n Pl
an C
ontr
ibut
ion"
mea
ns th
e pr
oduc
t of
(i)
the
aver
age
annu
al p
erce
ntag
e of
Exe
cutiv
e's
annu
al b
ase
sala
ry p
aid
with
in th
e th
ree-
year
per
iod
imm
edia
tely
pre
cedi
ngth
e E
ffec
tive
Dat
e by
the
Com
pany
to o
r fo
r th
e be
nefi
t of
Exe
cutiv
e as
an
empl
oyer
con
trib
utio
n un
der
the
Com
pany
's N
on-Q
ualif
ied
Plan
s an
d Q
ualif
ied
Plan
s w
hich
are
def
ined
con
trib
utio
n pl
ans
onbe
half
of
Exe
cutiv
e, m
ultip
lied
by (
ii) E
xecu
tive'
s B
ase
Sala
ry a
s of
the
Ter
min
atio
n D
ate
or, i
f gr
eate
r, d
urin
g th
e 12
-mon
th p
erio
d im
med
iate
ly p
rece
ding
the
Eff
ectiv
e D
ate.
1.27
"E
xcha
nge
Act
" m
eans
the
Secu
ritie
s E
xcha
nge
Act
of
1934
.
1.28
"E
xcis
e T
axes
" -
- se
e Se
ctio
n 5.
1(a)
.
1.29
"E
xecu
tive
Cou
nsel
Opi
nion
" -
- se
e Se
ctio
n 5.
5.
-5-
1.30
"E
xecu
tive
Ret
entio
n Pl
an"
mea
ns th
e C
ompa
ny's
Exe
cutiv
e R
eten
tion
Plan
, as
amen
ded
and
rest
ated
Mar
ch 2
0, 2
001,
and
as
furt
her
amen
ded
from
tim
e to
tim
e.
1.31
"E
xecu
tive
Ret
entio
n Pl
an B
enef
its"
mea
ns th
e su
m o
f th
e ca
sh s
ever
ance
ben
efits
, if
any,
pai
d or
pay
able
to E
xecu
tive
purs
uant
to S
ectio
n7.
01 o
f th
e C
ompa
ny's
Exe
cutiv
e R
eten
tion
Plan
.
1.32
"E
xecu
tive'
s G
ross
-Up
Det
erm
inat
ion"
- -
see
Sec
tion
5.2(
a).
1.33
"G
ood
Rea
son"
mea
ns th
e oc
curr
ence
of
any
one
or m
ore
of th
e fo
llow
ing
actio
ns o
r om
issi
ons
that
, unl
ess
othe
rwis
e sp
ecif
ied,
occ
urs
duri
ng a
Pos
t-C
hang
e E
mpl
oym
ent P
erio
d:
(a)
any
failu
re to
pay
Exe
cutiv
e's
Bas
e Sa
lary
or
Ann
ual B
onus
in v
iola
tion
of S
ectio
n 2.
2 or
any
fai
lure
to in
crea
se E
xecu
tive'
s B
ase
Sala
ry to
the
exte
nt, i
f an
y, r
equi
red
by s
uch
Sect
ion;
(b)
any
failu
re b
y th
e C
ompa
ny to
com
ply
with
any
pro
visi
on o
f A
rtic
le I
I;
(c)
any
mat
eria
l adv
erse
cha
nge
in E
xecu
tive'
s po
sitio
n (i
nclu
ding
off
ices
, titl
es, r
epor
ting
requ
irem
ents
or
resp
onsi
bilit
ies)
, aut
hori
ty, d
utie
s or
oth
er te
rms
and
cond
ition
s of
Exe
cutiv
e's
empl
oym
ent;
(d)
requ
irin
g E
xecu
tive
to b
e ba
sed
at a
ny o
ffic
e or
loca
tion
othe
r th
an th
e lo
catio
n sp
ecif
ied
in S
ectio
n 2.
1(a)
;
(e)
any
mat
eria
l bre
ach
of th
is A
gree
men
t by
the
Com
pany
;
(f)
any
Ter
min
atio
n of
Em
ploy
men
t by
the
Com
pany
that
pur
port
s to
be
for
Cau
se, b
ut is
not
in f
ull c
ompl
ianc
e w
ith a
ll of
the
subs
tant
ive
and
proc
edur
al r
equi
rem
ents
of
this
Agr
eem
ent (
any
such
purp
orte
d te
rmin
atio
n sh
all b
e tr
eate
d as
a T
erm
inat
ion
of E
mpl
oym
ent w
ithou
t Cau
se f
or a
ll pu
rpos
es o
f th
is A
gree
men
t);
(g)
the
failu
re a
t any
tim
e of
a s
ucce
ssor
to th
e C
ompa
ny o
r a
Pare
nt C
orpo
ratio
n of
a s
ucce
ssor
to th
e C
ompa
ny e
xplic
itly
to a
ssum
e an
d ag
ree
to b
e bo
und
by th
is A
gree
men
t; or
(h)
a T
erm
inat
ion
of E
mpl
oym
ent b
y E
xecu
tive
for
any
reas
on o
r no
rea
son
at a
ny ti
me
duri
ng th
e 30
-day
per
iod
com
men
cing
on
the
firs
t ann
iver
sary
of
the
Eff
ectiv
e D
ate.
Not
with
stan
ding
the
fore
goin
g, in
the
case
of
the
even
ts o
r ci
rcum
stan
ces
cons
titut
ing
Goo
d R
easo
n de
scri
bed
in (
a) th
roug
h (e
), a
bove
, Exe
cutiv
e m
ay te
rmin
ate
for
Goo
d R
easo
n on
ly if
the
Com
pany
fails
to c
ure
such
eve
nts
or c
ircu
mst
ance
s w
ithin
thir
ty (
30)
days
aft
er r
ecei
ving
wri
tten
notic
e fr
om E
xecu
tive
of E
xecu
tive'
s in
tent
to te
rmin
ate
for
Goo
d R
easo
n. N
o su
ch w
ritte
n no
tice
or o
ppor
tuni
ty to
cure
mus
t be
prov
ided
by
Exe
cutiv
e if
Exe
cutiv
e te
rmin
ates
for
Goo
d R
easo
n as
pro
vide
d in
(f)
thro
ugh
(h),
abo
ve, o
r in
the
even
t tha
t the
Com
pany
has
cau
sed
repe
ated
eve
nts
or c
ircu
mst
ance
s de
scri
bed
in (a)
thro
ugh
(e),
abo
ve, o
r if
the
Com
pany
's
-6-
actio
n(s)
and
/or
omis
sion
(s)
entit
ling
Exe
cutiv
e to
term
inat
e fo
r G
ood
Rea
son
wer
e ei
ther
inte
ntio
nal o
r w
illfu
l.
1.34
"G
ross
-up
Mul
tiple
" --
see
Sec
tion
5.4.
1.35
"G
ross
-up
Paym
ent"
--
see
Sect
ion
5.1(
a).
1.36
"Im
min
ent C
hang
e D
ate"
mea
ns a
ny d
ate
on w
hich
one
or
mor
e of
the
follo
win
g oc
curs
(i)
a p
rese
ntat
ion
to th
e C
ompa
ny's
sto
ckho
lder
s ge
nera
lly o
r an
y of
the
Com
pany
's d
irec
tors
or
exec
utiv
eof
fice
rs o
f a
prop
osal
or
offe
r w
hich
, if
cons
umm
ated
, wou
ld b
e a
Cha
nge
of C
ontr
ol, (
ii) th
e pu
blic
ann
ounc
emen
t (w
heth
er b
y ad
vert
isem
ent,
pres
s re
leas
e, p
ress
inte
rvie
w, p
ublic
sta
tem
ent,
SEC
fili
ng o
rot
herw
ise)
of
a pr
opos
al o
r of
fer
whi
ch if
con
sum
mat
ed w
ould
be
a C
hang
e of
Con
trol
, or
(iii)
suc
h pr
opos
al o
r of
fer
rem
ains
eff
ectiv
e an
d un
revo
ked.
1.37
"Im
min
ent C
hang
e Pe
riod
" m
eans
the
peri
od c
omm
enci
ng o
n th
e Im
min
ent C
hang
e D
ate
and
endi
ng o
n th
e ea
rlie
r to
occ
ur o
f (a
) a
Cha
nge
of C
ontr
ol o
r (b
) th
e da
te th
e of
fer
or p
ropo
sal f
or a
Cha
nge
of C
ontr
ol is
no
long
er e
ffec
tive
or h
as b
een
revo
ked.
gp
y
1.38
"In
clud
ing"
mea
ns in
clud
ing
with
out l
imita
tion.
1.39
"In
cum
bent
Boa
rd"
mea
ns, a
s of
any
spe
cifi
ed b
asel
ine
date
, ind
ivid
uals
then
ser
ving
as
mem
bers
of
the
Boa
rd w
ho w
ere
mem
bers
of
the
Boa
rd a
s of
the
date
imm
edia
tely
pre
cedi
ng s
uch
base
line
date
; pro
vide
d th
at a
ny s
ubse
quen
tly-a
ppoi
nted
or
elec
ted
mem
ber
of th
e B
oard
who
se e
lect
ion,
or
nom
inat
ion
for
elec
tion
by s
tock
hold
ers
of th
e C
ompa
ny o
r th
e Su
rviv
ing
Cor
pora
tion,
as
appl
icab
le, w
asap
prov
ed b
y a
vote
or
wri
tten
cons
ent o
f at
leas
t tw
o-th
irds
of
the
dire
ctor
s th
en c
ompr
isin
g th
e In
cum
bent
Boa
rd s
hall
also
ther
eaft
er b
e co
nsid
ered
to b
e on
the
Incu
mbe
nt B
oard
, unl
ess
the
initi
alas
sum
ptio
n of
off
ice
of s
uch
subs
eque
ntly
-ele
cted
or
appo
inte
d di
rect
or w
as in
con
nect
ion
with
(i)
an
actu
al o
r th
reat
ened
ele
ctio
n co
ntes
t, in
clud
ing
a co
nsen
t sol
icita
tion,
rel
atin
g to
the
elec
tion
orre
mov
al o
f on
e or
mor
e m
embe
rs o
f th
e B
oard
, (ii)
a "
tend
er o
ffer
" (a
s su
ch te
rm is
use
d in
Sec
tion
14(d
) of
the
Exc
hang
e A
ct),
or
(iii)
a p
ropo
sed
Bus
ines
s C
ombi
natio
n.
1.40
"IR
S" m
eans
the
Inte
rnal
Rev
enue
Ser
vice
.
1.41
"L
imite
d V
icar
ious
Lia
bilit
y" m
eans
any
liab
ility
whi
ch is
(i)
bas
ed o
n ac
ts o
f th
e C
ompa
ny f
or w
hich
Exe
cutiv
e is
res
pons
ible
sol
ely
as a
res
ult o
f hi
s of
fice
(s)
with
the
Com
pany
and
(ii)
pro
vide
dth
at (
x) h
e w
as n
ot d
irec
tly in
volv
ed in
suc
h ac
ts a
nd e
ither
had
no
prio
r kn
owle
dge
of s
uch
inte
nded
act
ions
or
prom
ptly
act
ed r
easo
nabl
y an
d in
goo
d fa
ith to
atte
mpt
to p
reve
nt th
e ac
ts c
ausi
ng s
uch
liabi
lity
or (
y) h
e di
d no
t hav
e a
reas
onab
le b
asis
to b
elie
ve th
at a
law
was
bei
ng v
iola
ted
by s
uch
acts
.
1.42
"M
axim
um A
nnua
l Bon
us"
mea
ns th
e m
axim
um b
onus
am
ount
ach
ieva
ble
by E
xecu
tive
unde
r a
Bon
us P
lan
for
a gi
ven
Ann
ual P
erfo
rman
ce P
erio
d; p
rovi
ded,
that
in n
o ev
ent s
hall
such
am
ount
be
less
than
the
amou
nt r
equi
red
to b
e pa
id p
ursu
ant t
o Se
ctio
n 2.
2(b)
.
-7-
1.43
"N
on-C
ompe
titio
n an
d R
elea
se A
gree
men
t" is
an
agre
emen
t, in
sub
stan
tially
the
form
atta
ched
her
eto
in A
nnex
A, e
xecu
ted
by a
nd b
etw
een
Exe
cutiv
e an
d th
e C
ompa
ny a
s a
cond
ition
to E
xecu
tive'
sre
ceip
t of
the
bene
fits
des
crib
ed in
Sec
tion
4.1.
1.44
"N
on-Q
ualif
ied
Plan
" m
eans
any
def
erre
d co
mpe
nsat
ion
Plan
that
is n
ot q
ualif
ied
unde
r Se
ctio
n 40
1(a)
of
the
Cod
e.
1.45
"N
otic
e of
Con
side
ratio
n" -
- s
ee S
ectio
n 3.
3(b)
(ii)
.
1.46
"N
otic
e of
Ter
min
atio
n" m
eans
a w
ritte
n no
tice
give
n in
acc
orda
nce
with
Sec
tion
10.8
whi
ch s
ets
fort
h (a
) th
e sp
ecif
ic te
rmin
atio
n pr
ovis
ion
in th
is A
gree
men
t rel
ied
upon
by
the
part
y gi
ving
suc
hno
tice,
(b)
in r
easo
nabl
e de
tail
the
spec
ific
fac
ts a
nd c
ircu
mst
ance
s cl
aim
ed to
pro
vide
a b
asis
for
suc
h T
erm
inat
ion
of E
mpl
oym
ent,
and
(c)
if th
e T
erm
inat
ion
Dat
e is
oth
er th
an th
e da
te o
f re
ceip
t of
such
Not
ice
of T
erm
inat
ion,
the
Ter
min
atio
n D
ate.
1.47
"O
utst
andi
ng C
ompa
ny C
omm
on S
tock
" m
eans
Sha
res
of S
tock
of
the
Com
pany
that
are
out
stan
ding
as
of th
e E
ffec
tive
Dat
e.
1.48
"O
utst
andi
ng C
ompa
ny V
otin
g Se
curi
ties"
mea
ns V
otin
g Se
curi
ties
of th
e C
ompa
ny th
at a
re o
utst
andi
ng a
s of
the
Eff
ectiv
e D
ate.
1.49
"Pa
rent
Cor
pora
tion"
mea
ns a
cor
pora
tion
whi
ch o
wns
50%
or
mor
e of
the
com
mon
sto
ck o
r V
otin
g Se
curi
ties
of a
ny c
orpo
ratio
n an
d an
y ot
her
corp
orat
ion
whi
ch o
wns
any
cor
pora
tion
whi
ch is
in a
nun
brok
en c
hain
of
corp
orat
ions
eac
h of
whi
ch o
wns
suc
cess
ivel
y in
an
unbr
oken
cha
in o
f co
rpor
atio
ns w
hich
incl
udes
the
subj
ect c
orpo
ratio
n.
1.50
"Pe
rson
" m
eans
any
indi
vidu
al, s
ole
prop
riet
orsh
ip, p
artn
ersh
ip, j
oint
ven
ture
, lim
ited
liabi
lity
com
pany
, tru
st, u
ninc
orpo
rate
d or
gani
zatio
n, a
ssoc
iatio
n, c
orpo
ratio
n, in
stitu
tion,
pub
lic b
enef
itco
rpor
atio
n, e
ntity
or
gove
rnm
ent i
nstr
umen
talit
y, d
ivis
ion,
age
ncy,
bod
y or
dep
artm
ent.
1.51
"Pl
ans"
mea
ns p
lans
, pro
gram
s, o
r Po
licie
s of
the
Com
pany
.
1.52
"Po
licie
s" m
eans
pol
icie
s, p
ract
ices
or
proc
edur
es o
f th
e C
ompa
ny.
1.53
"Po
st-C
hang
e E
mpl
oym
ent P
erio
d" m
eans
the
peri
od c
omm
enci
ng o
n th
e E
ffec
tive
Dat
e, o
r, if
ear
lier,
und
er S
ectio
n 9.
4, a
nd e
ndin
g on
the
thir
d an
nive
rsar
y of
the
Eff
ectiv
e D
ate.
1.54
"Po
st-R
etir
emen
t Med
ical
Pla
n" m
eans
the
McD
onal
d's
Cor
pora
tion
Post
-Ret
irem
ent M
edic
al P
lan
or a
ny o
ther
sim
ilar
plan
or
prog
ram
her
eina
fter
spo
nsor
ed b
y th
e C
ompa
ny o
r a
subs
idia
ry th
ereo
f.
1.55
"Po
tent
ial P
arac
hute
Pay
men
ts"
- -
see
Sect
ion
5.1.
1.56
"Pr
o-R
ata
Ann
ual B
onus
" m
eans
, in
resp
ect o
f th
e C
ompa
ny's
fis
cal y
ear
duri
ng w
hich
the
Eff
ectiv
e D
ate
(in
the
case
of
a Pr
o-R
ata
Ann
ual B
onus
pay
able
pur
suan
t to
Sect
ion
2.3
here
of)
or th
eT
erm
inat
ion
Dat
e (i
n th
e ca
se o
f a
Pro-
Rat
a A
nnua
l Bon
us p
ayab
le p
ursu
ant t
o
-8-
Art
icle
IV
her
eof)
, as
appl
icab
le, o
ccur
s, a
n am
ount
equ
al to
the
prod
uct o
f E
xecu
tive'
s T
arge
t Ann
ual B
onus
(de
term
ined
as
of th
e E
ffec
tive
Dat
e or
Ter
min
atio
n D
ate,
as
appl
icab
le)
mul
tiplie
d by
afr
actio
n, th
e nu
mer
ator
of
whi
ch e
qual
s th
e nu
mbe
r of
day
s fr
om a
nd in
clud
ing
the
firs
t day
of
such
fis
cal y
ear
thro
ugh
and
incl
udin
g th
e E
ffec
tive
Dat
e or
the
Ter
min
atio
n D
ate,
as
appl
icab
le, a
nd th
ede
nom
inat
or o
f w
hich
equ
als
365.
gp
y
1.57
"Pr
o-R
ata
LT
IP A
war
ds"
mea
ns, w
ith r
espe
ct to
eac
h aw
ard
unde
r an
y lo
ng te
rm in
cent
ive
plan
mai
ntai
ned
by th
e C
ompa
ny th
at is
out
stan
ding
on
the
Eff
ectiv
e D
ate
(an
"LT
IP A
war
d"),
an
amou
nteq
ual t
o th
e pr
oduc
t of
(a)
100%
of
the
amou
nt to
whi
ch E
xecu
tive
wou
ld b
e en
title
d un
der
such
LT
IP A
war
d if
the
perf
orm
ance
goa
ls e
stab
lishe
d w
ith r
espe
ct to
suc
h L
TIP
Aw
ard
wer
e ac
hiev
ed a
t the
100%
leve
l as
of th
e en
d of
the
appl
icab
le p
erfo
rman
ce p
erio
d, m
ultip
lied
by(b
) a
frac
tion,
the
num
erat
or o
f w
hich
equ
als
the
num
ber
of f
ull a
nd f
ract
iona
l mon
ths
from
and
incl
udin
g th
e fi
rst d
ay o
f th
e pe
rfor
man
ce p
erio
d w
ith r
espe
ct to
suc
h L
TIP
Aw
ard
thro
ugh
and
incl
udin
gth
e E
ffec
tive
Dat
e, a
nd th
e de
nom
inat
or o
f w
hich
equ
als
the
tota
l num
ber
of m
onth
s in
suc
h pe
rfor
man
ce p
erio
d.
1.58
"Q
ualif
ied
Plan
" m
eans
any
pla
n, w
hich
mee
ts th
e qu
alif
icat
ion
requ
irem
ents
of
Inte
rnal
Rev
enue
Ser
vice
Cod
e Se
ctio
n 40
1(a)
or
403(
a).
1.59
"SE
C"
mea
ns th
e Se
curi
ties
and
Exc
hang
e C
omm
issi
on.
1.60
"Se
vera
nce
Peri
od"
mea
ns a
per
iod
equa
l to
thre
e ye
ars.
1.61
"Su
rviv
ing
Cor
pora
tion"
mea
ns th
e co
rpor
atio
n re
sulti
ng f
rom
a B
usin
ess
Com
bina
tion
and
any
Pare
nt C
orpo
ratio
n of
suc
h co
rpor
atio
n.
1.62
"T
arge
t Ann
ual B
onus
" as
of
a ce
rtai
n da
te m
eans
the
amou
nt e
qual
to th
e pr
oduc
t of
Bas
e Sa
lary
det
erm
ined
as
of s
uch
date
mul
tiplie
d by
the
perc
enta
ge o
f su
ch B
ase
Sala
ry to
whi
ch E
xecu
tive
wou
ld h
ave
been
ent
itled
imm
edia
tely
pri
or to
suc
h da
te u
nder
any
Bon
us P
lan
for
the
Ann
ual P
erfo
rman
ce P
erio
d fo
r w
hich
the
Ann
ual B
onus
is a
war
ded
if th
e pe
rfor
man
ce g
oals
est
ablis
hed
purs
uant
tosu
ch B
onus
Pla
n w
ere
achi
eved
at t
he 1
00%
leve
l as
of th
e en
d of
the
Ann
ual P
erfo
rman
ce P
erio
d.
1.63
"T
axes
" m
eans
fed
eral
, sta
te, l
ocal
or
othe
r in
com
e or
oth
er ta
xes.
1.64
"T
erm
inat
ion
Dat
e" m
eans
the
date
of
the
rece
ipt o
f th
e N
otic
e of
Ter
min
atio
n by
Exe
cutiv
e (i
f su
ch N
otic
e is
giv
en b
y th
e C
ompa
ny)
or b
y th
e C
ompa
ny (
if s
uch
Not
ice
is g
iven
by
Exe
cutiv
e), o
r an
yla
ter
date
, not
mor
e th
an f
ifte
en (
15)
days
aft
er th
e gi
ving
of
such
Not
ice,
spe
cifi
ed in
suc
h N
otic
e; p
rovi
ded,
how
ever
, tha
t:
(a)
if E
xecu
tive'
s em
ploy
men
t is
term
inat
ed b
y re
ason
of
deat
h or
Dis
abili
ty, t
he T
erm
inat
ion
Dat
e sh
all b
e th
e da
te o
f E
xecu
tive'
s de
ath
or th
e D
isab
ility
Eff
ectiv
e D
ate
(as
defi
ned
in S
ectio
n 3.
1), a
sap
plic
able
; and
(b)
if n
o N
otic
e of
Ter
min
atio
n is
giv
en, t
he T
erm
inat
ion
Dat
e sh
all b
e th
e la
st d
ate
on w
hich
Exe
cutiv
e is
em
ploy
ed b
y th
e C
ompa
ny.
-9-
1.65
"T
erm
inat
ion
of E
mpl
oym
ent"
mea
ns a
ny te
rmin
atio
n of
Exe
cutiv
e's
empl
oym
ent w
ith th
e C
ompa
ny, w
heth
er s
uch
term
inat
ion
is in
itiat
ed b
y th
e C
ompa
ny o
r by
Exe
cutiv
e.
1.66
"V
otin
g Se
curi
ties"
of
a co
rpor
atio
n m
eans
sec
uriti
es o
f su
ch c
orpo
ratio
n th
at a
re e
ntitl
ed to
vot
e ge
nera
lly in
the
elec
tion
of d
irec
tors
of
such
cor
pora
tion,
but
not
incl
udin
g an
y ot
her
clas
s of
secu
ritie
s of
suc
h co
rpor
atio
n th
at m
ay h
ave
votin
g po
wer
by
reas
on o
f th
e oc
curr
ence
of
a co
ntin
genc
y w
hich
con
tinge
ncy
has
not o
ccur
red.
AR
TIC
LE
II.
PO
ST-C
HA
NG
E E
MP
LO
YM
EN
T P
ER
IOD
2.1
Posi
tion
and
Dut
ies.
(a)
Dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
Exe
cutiv
e's
posi
tion
(inc
ludi
ng o
ffic
es, t
itles
, rep
ortin
g re
quir
emen
ts a
nd r
espo
nsib
ilitie
s), a
utho
rity
and
dut
ies
shal
l be
at le
ast c
omm
ensu
rate
in a
llm
ater
ial r
espe
cts
with
the
mos
t sig
nifi
cant
of
thos
e he
ld, e
xerc
ised
and
ass
igne
d at
any
tim
e du
ring
the
90-d
ay p
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e an
d E
xecu
tive'
s se
rvic
es s
hall
be p
erfo
rmed
at
the
loca
tion
whe
re E
xecu
tive
was
em
ploy
ed im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e or
any
oth
er lo
catio
n no
mor
e th
an 3
0 m
iles
from
suc
h fo
rmer
loca
tion.
(b)
Dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod
(oth
er th
an a
ny p
erio
ds o
f va
catio
n, s
ick
leav
e or
dis
abili
ty to
whi
ch E
xecu
tive
is e
ntitl
ed),
Exe
cutiv
e ag
rees
to d
evot
e E
xecu
tive'
s fu
ll at
tent
ion
and
time
toth
e bu
sine
ss a
nd a
ffai
rs o
f th
e C
ompa
ny a
nd, t
o th
e ex
tent
nec
essa
ry to
dis
char
ge th
e du
ties
assi
gned
to E
xecu
tive
in a
ccor
danc
e w
ith th
is A
gree
men
t, to
use
Exe
cutiv
e's
best
eff
orts
to p
erfo
rm s
uch
dutie
s.D
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, E
xecu
tive
may
(i)
ser
ve o
n co
rpor
ate,
civ
ic o
r ch
arita
ble
boar
ds o
r co
mm
ittee
s, (
ii) d
eliv
er le
ctur
es, f
ulfi
ll sp
eaki
ng e
ngag
emen
ts o
r te
ach
at e
duca
tiona
lin
stitu
tions
, and
(iii
) m
anag
e pe
rson
al in
vest
men
ts, s
o lo
ng a
s su
ch a
ctiv
ities
are
con
sist
ent w
ith th
e Po
licie
s of
the
Com
pany
at t
he E
ffec
tive
Dat
e an
d do
not
sig
nifi
cant
ly in
terf
ere
with
the
perf
orm
ance
of
Exe
cutiv
e's
dutie
s un
der
this
Agr
eem
ent.
To
the
exte
nt th
at a
ny s
uch
activ
ities
hav
e be
en c
ondu
cted
by
Exe
cutiv
e im
med
iate
ly p
rior
to th
e E
ffec
tive
Dat
e an
d w
ere
cons
iste
nt w
ith th
e Po
licie
s of
the
Com
pany
at t
he E
ffec
tive
Dat
e, th
e co
ntin
ued
cond
uct o
f su
ch a
ctiv
ities
(or
act
iviti
es s
imila
r in
nat
ure
and
scop
e) a
fter
the
Eff
ectiv
e D
ate
shal
l not
be
deem
ed to
inte
rfer
e w
ith th
e pe
rfor
man
ce o
fE
xecu
tive'
s du
ties
unde
r th
is A
gree
men
t.
2.2
Com
pens
atio
n.
(a)
Bas
e Sa
lary
. Dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
the
Com
pany
sha
ll pa
y or
cau
se to
be
paid
to E
xecu
tive
an a
nnua
l bas
e sa
lary
in c
ash,
whi
ch s
hall
be p
aid
in a
man
ner
cons
iste
nt w
ith th
eC
ompa
ny's
pay
roll
prac
tices
in e
ffec
t im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e, a
t an
annu
al r
ate
not l
ess
than
12
times
the
high
est m
onth
ly b
ase
sala
ry p
aid
or p
ayab
le to
Exe
cutiv
e by
the
Com
pany
in r
espe
ct
gp
y
of th
e 12
-mon
th p
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e (s
uch
annu
al r
ate
sala
ry, t
he "
Bas
e Sa
lary
"). D
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, th
e B
ase
Sala
ry s
hall
be r
evie
wed
at l
east
-10-
annu
ally
and
sha
ll be
incr
ease
d at
any
tim
e an
d fr
om ti
me
to ti
me
as s
hall
be s
ubst
antia
lly c
onsi
sten
t with
incr
ease
s in
bas
e sa
lary
aw
arde
d to
oth
er p
eer
exec
utiv
es o
f th
e C
ompa
ny. A
ny in
crea
se in
Bas
eSa
lary
sha
ll no
t lim
it or
red
uce
any
othe
r ob
ligat
ion
of th
e C
ompa
ny to
Exe
cutiv
e un
der
this
Agr
eem
ent.
Aft
er a
ny s
uch
incr
ease
, the
Bas
e Sa
lary
sha
ll no
t be
redu
ced
and
the
term
"B
ase
Sala
ry"
shal
lth
erea
fter
ref
er to
the
incr
ease
d am
ount
.
(b)
Ann
ual B
onus
. In
addi
tion
to B
ase
Sala
ry, t
he C
ompa
ny s
hall
pay
or c
ause
to b
e pa
id to
Exe
cutiv
e a
bonu
s (t
he "
Ann
ual B
onus
") f
or e
ach
Ann
ual P
erfo
rman
ce P
erio
d w
hich
end
s du
ring
the
Post
-Cha
nge
Em
ploy
men
t Per
iod.
"A
nnua
l Per
form
ance
Per
iod"
mea
ns e
ach
peri
od o
f tim
e de
sign
ated
in a
ccor
danc
e w
ith a
ny a
nnua
l bon
us a
rran
gem
ent (
a "B
onus
Pla
n")
whi
ch is
bas
ed u
pon
perf
orm
ance
and
app
rove
d by
the
Boa
rd o
r an
y co
mm
ittee
of
the
Boa
rd, o
r in
the
abse
nce
of a
ny B
onus
Pla
n or
any
suc
h de
sign
ated
per
iod
of ti
me,
eac
h ca
lend
ar y
ear;
pro
vide
d, h
owev
er, t
hat t
he A
nnua
lB
onus
pai
d to
the
Exe
cutiv
e w
ith r
espe
ct to
the
Com
pany
's f
isca
l yea
r in
whi
ch th
e E
ffec
tive
Dat
e oc
curs
sha
ll be
red
uced
(bu
t not
bel
ow z
ero)
by
the
amou
nt o
f th
e Pr
o-R
ata
Ann
ual B
onus
pai
d to
Exe
cutiv
e pu
rsua
nt to
Sec
tion
2.3.
The
Ann
ual B
onus
sha
ll be
not
less
than
the
Tar
get A
nnua
l Bon
us d
eter
min
ed a
s of
the
Eff
ectiv
e D
ate.
In
addi
tion,
the
perf
orm
ance
goa
ls u
nder
the
Bon
us P
lan
shal
l not
be m
ater
ially
mor
e di
ffic
ult t
o ac
hiev
e th
an th
e pe
rfor
man
ce g
oals
in th
e B
onus
Pla
n (o
r de
sign
ated
by
the
Boa
rd)
in e
ffec
t dur
ing
the
Ann
ual P
erfo
rman
ce P
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
ean
d th
e M
axim
um A
nnua
l Bon
us s
hall
not b
e le
ss th
an th
e m
axim
um b
onus
ach
ieva
ble
unde
r th
e B
onus
Pla
n (o
r de
sign
ated
by
the
Boa
rd)
duri
ng th
e A
nnua
l Per
form
ance
Per
iod
ende
d im
med
iate
ly b
efor
eth
e E
ffec
tive
Dat
e (o
r if
hig
her,
the
Max
imum
Ann
ual B
onus
for
the
Ann
ual P
erfo
rman
ce P
erio
d th
at c
omm
ence
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e).
(c)
Ince
ntiv
e, S
avin
gs a
nd R
etir
emen
t Pla
ns. I
n ad
ditio
n to
Bas
e Sa
lary
and
Ann
ual B
onus
, Exe
cutiv
e sh
all b
e en
title
d to
par
ticip
ate
duri
ng th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d in
all
ince
ntiv
e (i
nclu
ding
long
-ter
m in
cent
ives
), p
rofi
t sha
ring
, ESO
P, 4
01(k
), s
avin
gs a
nd r
etir
emen
t Pla
ns a
pplic
able
to o
ther
pee
r ex
ecut
ives
of
the
Com
pany
, but
in n
o ev
ent s
hall
such
Pla
ns p
rovi
de E
xecu
tive
with
ince
ntiv
e(i
nclu
ding
long
-ter
m in
cent
ives
), p
rofi
t sha
ring
, ESO
P, 4
01(k
), s
avin
gs a
nd r
etir
emen
t ben
efits
dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod
whi
ch, i
n an
y ca
se, a
re m
ater
ially
less
fav
orab
le, i
n th
eag
greg
ate,
than
the
mos
t fav
orab
le o
f th
ose
prov
ided
by
the
Com
pany
for
Exe
cutiv
e un
der
such
Pla
ns a
s in
eff
ect a
t any
tim
e du
ring
the
12-m
onth
per
iod
imm
edia
tely
bef
ore
the
Eff
ectiv
e D
ate.
(d)
Wel
fare
Ben
efit
Plan
s. D
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, E
xecu
tive
and
Exe
cutiv
e's
fam
ily s
hall
be e
ligib
le to
par
ticip
ate
in, a
nd r
ecei
ve a
ll be
nefi
ts u
nder
, wel
fare
ben
efit
Plan
s pr
ovid
ed b
yth
e C
ompa
ny (
incl
udin
g m
edic
al, p
resc
ript
ion,
den
tal,
disa
bilit
y, s
alar
y co
ntin
uanc
e, in
divi
dual
life
, gro
up li
fe, d
epen
dent
life
, acc
iden
tal d
eath
and
trav
el a
ccid
ent i
nsur
ance
Pla
ns)
and
appl
icab
le to
oth
erpe
er e
xecu
tives
of
the
Com
pany
and
thei
r fa
mili
es, b
ut in
no
even
t sha
ll su
ch P
lans
pro
vide
ben
efits
dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod
whi
ch a
re m
ater
ially
less
fav
orab
le, i
n th
e ag
greg
ate,
than
the
mos
t fav
orab
le o
f th
ose
prov
ided
to E
xecu
tive
unde
r su
ch P
lans
as
in e
ffec
t at a
ny ti
me
duri
ng th
e 12
-mon
th p
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e.
-11-
(e)
Frin
ge B
enef
its. D
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, E
xecu
tive
shal
l be
entit
led
to f
ring
e be
nefi
ts in
acc
orda
nce
with
the
mos
t fav
orab
le P
lans
app
licab
le to
pee
r ex
ecut
ives
of
the
Com
pany
,bu
t in
no e
vent
sha
ll su
ch P
lans
pro
vide
fri
nge
bene
fits
whi
ch in
any
cas
e ar
e m
ater
ially
less
fav
orab
le, i
n th
e ag
greg
ate,
than
the
mos
t fav
orab
le o
f th
ose
prov
ided
by
the
Com
pany
to E
xecu
tive
unde
r su
chPl
ans
in e
ffec
t at a
ny ti
me
duri
ng th
e 12
-mon
th p
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e.
(f)
Exp
ense
s. D
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, E
xecu
tive
shal
l be
entit
led
to p
rom
pt r
eim
burs
emen
t of
all r
easo
nabl
e em
ploy
men
t-re
late
d ex
pens
es in
curr
ed b
y E
xecu
tive
upon
the
Com
pany
'sre
ceip
t of
acco
untin
gs in
acc
orda
nce
with
the
mos
t fav
orab
le P
olic
ies
appl
icab
le to
pee
r ex
ecut
ives
of
the
Com
pany
, but
in n
o ev
ent s
hall
such
Pol
icie
s be
mat
eria
lly le
ss f
avor
able
, in
the
aggr
egat
e, th
anth
e m
ost f
avor
able
of
thos
e pr
ovid
ed b
y th
e C
ompa
ny f
or E
xecu
tive
unde
r su
ch P
olic
ies
in e
ffec
t at a
ny ti
me
duri
ng th
e 12
-mon
th p
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e.
(g)
Off
ice
and
Supp
ort S
taff
. Dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
Exe
cutiv
e sh
all b
e en
title
d to
an
offi
ce o
r of
fice
s of
a s
ize
and
with
fur
nish
ings
and
oth
er a
ppoi
ntm
ents
, and
to s
ecre
tari
al a
ndot
her
assi
stan
ce in
acc
orda
nce
with
the
mos
t fav
orab
le P
olic
ies
appl
icab
le to
pee
r ex
ecut
ives
of
the
Com
pany
, but
in n
o ev
ent s
hall
such
Pol
icie
s be
mat
eria
lly le
ss f
avor
able
, in
the
aggr
egat
e, th
an th
e m
ost
favo
rabl
e of
thos
e pr
ovid
ed b
y th
e C
ompa
ny f
or E
xecu
tive
unde
r su
ch P
olic
ies
in e
ffec
t at a
ny ti
me
duri
ng th
e 12
-mon
th p
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e.
(h)
Vac
atio
n. D
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, E
xecu
tive
shal
l be
entit
led
to p
aid
vaca
tion
in a
ccor
danc
e w
ith th
e m
ost f
avor
able
Pol
icie
s ap
plic
able
to p
eer
exec
utiv
es o
f th
e C
ompa
ny, b
ut in
no e
vent
sha
ll su
ch P
olic
ies
be m
ater
ially
less
fav
orab
le, i
n th
e ag
greg
ate,
than
the
mos
t fav
orab
le o
f th
ose
prov
ided
by
the
Com
pany
for
Exe
cutiv
e un
der
such
Pol
icie
s in
eff
ect a
t any
tim
e du
ring
the
12-m
onth
per
iod
imm
edia
tely
bef
ore
the
Eff
ectiv
e D
ate.
2.3
Pro-
Rat
a A
nnua
l Bon
us. W
ithin
thir
ty (
30)
days
aft
er th
e E
ffec
tive
Dat
e, th
e C
ompa
ny s
hall
pay
Exe
cutiv
e a
lum
p-su
m c
ash
paym
ent e
qual
to th
e Pr
o-R
ata
Ann
ual B
onus
det
erm
ined
as
of th
e E
ffec
tive
Dat
e.
2.4
Pro-
Rat
a A
nnua
l LT
IP A
war
ds. W
ithin
thir
ty (
30)
days
aft
er th
e E
ffec
tive
Dat
e, th
e C
ompa
ny s
hall
pay
Exe
cutiv
e, w
ith r
espe
ct to
eac
h L
TIP
Aw
ard
that
is o
utst
andi
ng o
n th
e E
ffec
tive
Dat
e, a
lum
p-su
m c
ash
paym
ent e
qual
to th
e Pr
o-R
ata
LT
IP A
war
d de
term
ined
as
of th
e E
ffec
tive
Dat
e an
d ea
ch s
uch
LT
IP A
war
d sh
all b
e ca
ncel
led.
AR
TIC
LE
III
.
TE
RM
INA
TIO
N O
F E
MP
LO
YM
EN
T
3.1
Dis
abili
ty. D
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, th
e C
ompa
ny m
ay te
rmin
ate
Exe
cutiv
e's
empl
oym
ent b
ecau
se o
f E
xecu
tive'
s D
isab
ility
by
givi
ng E
xecu
tive
or h
is le
gal r
epre
sent
ativ
e, a
s
gp
y
appl
icab
le, (
i) w
ritte
n no
tice
in a
ccor
danc
e w
ith S
ectio
n 10
.8 o
f th
e C
ompa
ny's
inte
ntio
n to
term
inat
e E
xecu
tive'
s em
ploy
men
t pur
suan
t to
this
Sec
tion,
and
(ii)
a
-12-
cert
ific
atio
n of
Exe
cutiv
e's
Dis
abili
ty b
y a
phys
icia
n jo
intly
sel
ecte
d by
the
Com
pany
and
the
Exe
cutiv
e; p
rovi
ded
that
if th
e C
ompa
ny a
nd E
xecu
tive
cann
ot r
each
agr
eem
ent o
n th
e ph
ysic
ian,
the
cert
ific
atio
n sh
all b
e by
a p
anel
of
phys
icia
ns c
onsi
stin
g of
one
phy
sici
an s
elec
ted
by th
e C
ompa
ny, o
ne p
hysi
cian
sel
ecte
d by
the
Exe
cutiv
e an
d a
thir
d ph
ysic
ian
join
tly s
elec
ted
by th
ose
two
phys
icia
ns.
Exe
cutiv
e's
empl
oym
ent s
hall
term
inat
e ef
fect
ive
on th
e 30
th d
ay (
the
"Dis
abili
ty E
ffec
tive
Dat
e")
afte
r E
xecu
tive'
s re
ceip
t of
such
not
ice
unle
ss, b
efor
e th
e D
isab
ility
Eff
ectiv
e D
ate,
Exe
cutiv
e sh
all h
ave
resu
med
the
full-
time
perf
orm
ance
of
Exe
cutiv
e's
dutie
s.
3.2
Dea
th. E
xecu
tive'
s em
ploy
men
t sha
ll te
rmin
ate
auto
mat
ical
ly u
pon
Exe
cutiv
e's
deat
h du
ring
the
Post
-Cha
nge
Em
ploy
men
t Per
iod.
3.3
Cau
se.
(a)
Dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
the
Com
pany
may
term
inat
e E
xecu
tive'
s em
ploy
men
t for
Cau
se s
olel
y in
acc
orda
nce
with
all
of th
e su
bsta
ntiv
e an
d pr
oced
ural
pro
visi
ons
of th
is S
ectio
n.
(b)
The
Com
pany
sha
ll st
rict
ly o
bser
ve e
ach
of th
e fo
llow
ing
proc
edur
es in
con
nect
ion
with
any
Ter
min
atio
n of
Em
ploy
men
t for
Cau
se:
(i)
The
issu
e of
det
erm
inin
g w
heth
er E
xecu
tive'
s ac
ts o
r om
issi
ons
satis
fy th
e de
fini
tion
of "
Cau
se"
as s
et f
orth
inSe
ctio
n 1.
15 a
nd, i
f so
, whe
ther
to te
rmin
ate
Exe
cutiv
e's
empl
oym
ent f
or C
ause
sha
ll be
rai
sed
and
disc
usse
d at
a m
eetin
g of
the
Boa
rd.
(ii)
Not
less
than
thir
ty (
30)
days
pri
or to
the
date
of
such
mee
ting
the
Com
pany
sha
ll pr
ovid
e E
xecu
tive
and
each
mem
ber
of th
e B
oard
wri
tten
notic
e (a
"N
otic
e of
Con
side
ratio
n")
of (
x) a
det
aile
dde
scri
ptio
n of
the
acts
or
omis
sion
s al
lege
d to
con
stitu
te C
ause
, (y)
the
date
, tim
e an
d lo
catio
n of
suc
h m
eetin
g of
the
Boa
rd, a
nd (
z) E
xecu
tive'
s ri
ghts
und
er c
laus
e (i
ii) b
elow
.
(iii)
Exe
cutiv
e sh
all h
ave
the
oppo
rtun
ity to
app
ear
befo
re th
e B
oard
at s
uch
mee
ting
in p
erso
n an
d, a
t Exe
cutiv
e's
optio
n, w
ith le
gal c
ouns
el, a
nd to
pre
sent
to th
e B
oard
a w
ritte
n an
d/or
ora
l res
pons
e to
the
Not
ice
of C
onsi
dera
tion.
(iv)
Exe
cutiv
e's
empl
oym
ent m
ay b
e te
rmin
ated
for
Cau
se o
nly
if (
x) th
e ac
ts o
r om
issi
ons
spec
ifie
d in
the
Not
ice
of C
onsi
dera
tion
did
in f
act o
ccur
and
do
cons
titut
e C
ause
, (y)
the
Boa
rd m
akes
a s
peci
fic
dete
rmin
atio
n to
suc
h ef
fect
and
to th
e ef
fect
that
Exe
cutiv
e's
empl
oym
ent s
houl
d be
term
inat
ed f
or C
ause
, and
(z)
the
Com
pany
ther
eaft
er p
rovi
des
Exe
cutiv
e w
ith a
Not
ice
of T
erm
inat
ion
whi
ch s
peci
fies
in s
peci
fic
deta
il th
e ba
sis
of s
uch
Ter
min
atio
n of
Em
ploy
men
t for
Cau
se a
nd w
hich
Not
ice
shal
l be
base
d up
on o
ne o
r m
ore
of th
e ac
ts o
r om
issi
ons
set f
orth
in th
e N
otic
e of
Con
side
ratio
n. T
he B
oard
'sde
term
inat
ion
spec
ifie
d in
cla
use
(y)
of th
e pr
eced
ing
sent
ence
sha
ll re
quir
e th
e af
firm
ativ
e vo
te o
f at
leas
t 75%
of
the
mem
bers
of
the
Boa
rd.
(v)
In th
e ev
ent t
hat t
he is
sue
of w
heth
er E
xecu
tive
was
pro
perl
y te
rmin
ated
for
Cau
se b
ecom
es a
dis
pute
d is
sue
in a
ny a
ctio
n or
pro
ceed
ing
betw
een
-13-
the
Com
pany
and
Exe
cutiv
e, th
e C
ompa
ny s
hall,
not
with
stan
ding
the
dete
rmin
atio
n re
fere
nced
in c
laus
e (i
v) o
f th
is S
ectio
n 3.
3(b)
, hav
e th
e bu
rden
of
esta
blis
hing
by
clea
r an
d co
nvin
cing
evi
denc
e th
at th
eac
tions
or
omis
sion
s sp
ecif
ied
in th
e N
otic
e of
Ter
min
atio
n di
d in
fac
t occ
ur, d
o co
nstit
ute
Cau
se, w
ere
the
basi
s fo
r E
xecu
tive'
s te
rmin
atio
n an
d th
at th
e C
ompa
ny h
as, i
n ea
ch a
nd e
very
res
pect
, sat
isfi
edth
e pr
oced
ural
req
uire
men
ts o
f th
is S
ectio
n 3.
3(b)
.
3.4
Goo
d R
easo
n.
(a)
Dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
Exe
cutiv
e m
ay te
rmin
ate
his
or h
er e
mpl
oym
ent f
or G
ood
Rea
son
in a
ccor
danc
e w
ith th
e su
bsta
ntiv
e an
d pr
oced
ural
pro
visi
ons
of th
is S
ectio
n.
(b)
In th
e ev
ent E
xecu
tive
dete
rmin
es th
ere
is G
ood
Rea
son
to te
rmin
ate,
Exe
cutiv
e sh
all n
otif
y th
e C
ompa
ny o
f th
e ev
ents
con
stitu
ting
such
Goo
d R
easo
n by
a N
otic
e of
Ter
min
atio
n. A
del
ay in
the
deliv
ery
of s
uch
Not
ice
of T
erm
inat
ion
or a
fai
lure
by
Exe
cutiv
e to
incl
ude
in th
e N
otic
e of
Ter
min
atio
n an
y fa
ct o
r ci
rcum
stan
ce w
hich
con
trib
utes
to a
sho
win
g of
Goo
d R
easo
n sh
all n
ot w
aive
any
rig
htof
Exe
cutiv
e un
der
this
Agr
eem
ent o
r pr
eclu
de E
xecu
tive
from
ass
ertin
g su
ch f
act o
r ci
rcum
stan
ce in
enf
orci
ng r
ight
s un
der
this
Agr
eem
ent;
prov
ided
, tha
t no
act o
r om
issi
on b
y th
e C
ompa
ny s
hall
qual
ify
as G
ood
Rea
son
if E
xecu
tive'
s T
erm
inat
ion
of E
mpl
oym
ent o
ccur
s m
ore
than
12
mon
ths
afte
r E
xecu
tive
firs
t obt
ains
act
ual k
now
ledg
e of
suc
h ac
t or
omis
sion
.
(c)
If th
e T
erm
inat
ion
Dat
e oc
curs
dur
ing
any
port
ion
of a
Pos
t-C
hang
e E
mpl
oym
ent P
erio
d, a
ny r
easo
nabl
e de
term
inat
ion
by E
xecu
tive
that
any
of
the
even
ts s
peci
fied
in th
e de
fini
tion
of G
ood
Rea
son
inSe
ctio
n 1.
33 a
bove
, has
occ
urre
d an
d co
nstit
utes
Goo
d R
easo
n sh
all b
e co
nclu
sive
and
bin
ding
for
all
purp
oses
, unl
ess
the
Com
pany
est
ablis
hes
by c
lear
and
con
vinc
ing
evid
ence
that
Exe
cutiv
e di
d no
tha
ve a
ny r
easo
nabl
e ba
sis
for
such
det
erm
inat
ion.
(d)
In th
e ev
ent t
hat t
he C
ompa
ny c
once
als
any
act o
r om
issi
on b
y th
e C
ompa
ny th
at o
ccur
s du
ring
the
Post
-Cha
nge
Em
ploy
men
t Per
iod
and
qual
ifie
s as
Goo
d R
easo
n, a
ny s
ubse
quen
t Ter
min
atio
n of
Em
ploy
men
t (w
heth
er b
y th
e C
ompa
ny o
r by
Exe
cutiv
e an
d re
gard
less
of
the
circ
umst
ance
s of
suc
h te
rmin
atio
n) th
at o
ccur
s at
any
tim
e af
ter
such
act
or
omis
sion
sha
ll co
nclu
sive
ly b
e de
emed
to b
e a
Ter
min
atio
n of
Em
ploy
men
t by
Exe
cutiv
e fo
r G
ood
Rea
son,
not
with
stan
ding
any
pro
visi
on o
f th
is A
gree
men
t to
the
cont
rary
.
3.5
Del
iver
y of
Non
-Com
petit
ion
and
Rel
ease
Agr
eem
ent.
In th
e ev
ent t
he C
ompa
ny te
rmin
ates
Exe
cutiv
e's
empl
oym
ent f
or a
ny r
easo
n ot
her
than
for
Cau
se o
r D
isab
ility
, the
Com
pany
sha
ll, n
ot la
ter
than
the
date
it d
eliv
ers
the
Not
ice
of T
erm
inat
ion
to E
xecu
tive,
pre
sent
Exe
cutiv
e w
ith a
Non
-Com
petit
ion
and
Rel
ease
Agr
eem
ent f
or e
xecu
tion
by E
xecu
tive.
In
the
even
t Exe
cutiv
e te
rmin
ates
his
gp
y
empl
oym
ent f
or G
ood
Rea
son,
the
Com
pany
sha
ll, n
ot la
ter
than
ten
(10)
bus
ines
s da
ys a
fter
the
Com
pany
rec
eive
s th
e N
otic
e of
Ter
min
atio
n, p
rese
nt E
xecu
tive
with
a N
on-C
ompe
titio
n an
d R
elea
seA
gree
men
t for
exe
cutio
n by
Exe
cutiv
e.
-14-
AR
TIC
LE
IV
.
CO
MP
AN
Y'S
OB
LIG
AT
ION
S U
PO
N A
TE
RM
INA
TIO
N O
F E
MP
LO
YM
EN
T
4.1
If b
y E
xecu
tive
for
Goo
d R
easo
n or
by
the
Com
pany
Oth
er T
han
for
Cau
se o
r D
isab
ility
. If,
dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
(i)
the
Com
pany
term
inat
es E
xecu
tive'
s em
ploy
men
t oth
er th
an f
or C
ause
or
Dis
abili
ty, o
r if
Exe
cutiv
e te
rmin
ates
em
ploy
men
t for
Goo
d R
easo
n, a
nd (
ii) E
xecu
tive
deliv
ers
an e
xecu
ted
Non
-Com
petit
ion
and
Rel
ease
Agr
eem
ent t
o th
e C
ompa
ny (
and
does
not
res
cind
suc
h ag
reem
ent w
ithin
the
resc
issi
on p
erio
d se
t for
th in
suc
hag
reem
ent)
, the
Com
pany
's s
ole
oblig
atio
ns to
Exe
cutiv
e un
der
Art
icle
s II
and
IV
sha
ll be
as
follo
ws:
(a)
The
Com
pany
sha
ll pa
y E
xecu
tive,
in a
dditi
on to
all
vest
ed r
ight
s ar
isin
g fr
om E
xecu
tive'
s em
ploy
men
t as
spec
ifie
d in
Art
icle
II,
a lu
mp-
sum
cas
h am
ount
equ
al to
the
sum
of
the
follo
win
g:
(i)
all A
ccru
ed O
blig
atio
ns;
(ii)
Exe
cutiv
e's
Pro-
Rat
a A
nnua
l Bon
us r
educ
ed (
but n
ot b
elow
zer
o) b
y th
e am
ount
of
any
Ann
ual B
onus
pai
d to
Exe
cutiv
e, w
ith r
espe
ct to
the
Com
pany
's f
isca
l yea
r in
whi
ch th
e T
erm
inat
ion
Dat
eoc
curs
;
(iii)
an
amou
nt e
qual
to:
(A)
the
num
ber
of y
ears
in th
e Se
vera
nce
Peri
od ti
mes
the
sum
of:
(I)
Bas
e Sa
lary
,
(II)
the
Tar
get A
nnua
l Bon
us, a
nd
(III
) E
mpl
oyer
Def
ined
Con
trib
utio
n Pl
an C
ontr
ibut
ion;
each
det
erm
ined
as
of th
e T
erm
inat
ion
Dat
e, p
rovi
ded,
how
ever
, tha
t any
red
uctio
n in
Exe
cutiv
e's
Bas
e Sa
lary
or
Tar
get A
nnua
l Bon
us th
at w
ould
qua
lify
as G
ood
Rea
son
shal
l be
disr
egar
ded
for
purp
oses
of th
is c
laus
e.
Such
lum
p-su
m a
mou
nt s
hall
be p
aid
no m
ore
than
thir
ty (
30)
days
aft
er th
e la
ter
of th
e T
erm
inat
ion
Dat
e or
the
date
on
whi
ch E
xecu
tive
deliv
ers
an e
xecu
ted
Non
-Com
petit
ion
and
Rel
ease
Agr
eem
ent t
oth
e C
ompa
ny.
(b)
Unt
il a
num
ber
of y
ears
sub
sequ
ent t
o th
e T
erm
inat
ion
Dat
e eq
ual t
o th
e le
ngth
of
the
Seve
ranc
e Pe
riod
or
such
late
r da
te a
s an
y Pl
an m
ay s
peci
fy, t
he C
ompa
ny s
hall
cont
inue
to p
rovi
de to
Exe
cutiv
ean
d E
xecu
tive'
s fa
mily
with
med
ical
and
life
insu
ranc
e be
nefi
ts w
hich
are
at l
east
as
favo
rabl
e as
the
mos
t fav
orab
le P
lans
of
the
Com
pany
app
licab
le to
oth
er p
eer
exec
utiv
es a
nd th
eir
fam
ilies
as
of th
eT
erm
inat
ion
Dat
e, b
ut w
hich
are
in n
o ev
ent l
ess
favo
rabl
e th
an th
e m
ost f
avor
able
Pla
ns o
f th
e C
ompa
ny a
pplic
able
to o
ther
pee
r ex
ecut
ives
and
thei
r fa
mili
es d
urin
g th
e 12
-mon
th p
erio
d im
me-
-15-
diat
ely
befo
re th
e E
ffec
tive
Dat
e. T
he c
ost o
f su
ch m
edic
al a
nd li
fe in
sura
nce
bene
fits
to E
xecu
tive
shal
l not
exc
eed
the
cost
of
such
ben
efits
to E
xecu
tive
imm
edia
tely
bef
ore
the
Ter
min
atio
n D
ate
or, i
fle
ss, t
he E
ffec
tive
Dat
e. E
xecu
tive'
s ri
ghts
und
er th
is S
ectio
n sh
all b
e in
add
ition
to, a
nd n
ot in
lieu
of,
any
pos
t-te
rmin
atio
n co
ntin
uatio
n co
vera
ge o
r co
nver
sion
rig
hts
Exe
cutiv
e m
ay h
ave
purs
uant
toap
plic
able
law
, inc
ludi
ng c
ontin
uatio
n co
vera
ge r
equi
red
by S
ectio
n 49
80 o
f th
e C
ode.
Not
with
stan
ding
any
of
the
abov
e, s
uch
med
ical
ben
efits
sha
ll be
sec
onda
ry to
any
sim
ilar
med
ical
ben
efits
pro
vide
dby
Exe
cutiv
e's
subs
eque
nt e
mpl
oyer
.
(c)
Unt
il a
num
ber
of y
ears
sub
sequ
ent t
o th
e T
erm
inat
ion
Dat
e eq
ual t
o th
e le
ngth
of
the
Seve
ranc
e Pe
riod
or
such
late
r da
te a
s an
y Pl
an m
ay s
peci
fy, t
he C
ompa
ny s
hall
cont
inue
to p
rovi
de E
xecu
tive
with
fri
nge
and
othe
r be
nefi
ts w
hich
are
at l
east
as
favo
rabl
e as
the
mos
t fav
orab
le P
lans
of
the
Com
pany
app
licab
le to
oth
er p
eer
exec
utiv
es a
s of
the
Ter
min
atio
n D
ate,
but
whi
ch a
re in
no
even
t les
sfa
vora
ble
than
the
mos
t fav
orab
le P
lans
of
the
Com
pany
app
licab
le to
oth
er p
eer
exec
utiv
es d
urin
g th
e 12
-mon
th p
erio
d im
med
iate
ly b
efor
e th
e E
ffec
tive
Dat
e. N
otw
ithst
andi
ng th
e fo
rego
ing,
in th
e ca
seof
an
Exe
cutiv
e w
ho is
rec
eivi
ng b
enef
its u
nder
the
Com
pany
's s
hort
-ter
m d
isab
ility
pla
n as
of
the
Ter
min
atio
n D
ate,
the
Com
pany
mus
t pro
vide
act
ual l
ong
term
dis
abili
ty b
enef
its o
r a
cash
am
ount
equ
alto
the
amou
nt o
f be
nefi
ts th
at E
xecu
tive
wou
ld h
ave
rece
ived
und
er s
uch
bene
fit p
lans
.
(d)
For
purp
oses
of
dete
rmin
ing
Exe
cutiv
e's
elig
ibili
ty u
nder
the
Com
pany
's P
ost-
Ret
irem
ent M
edic
al P
lan
or a
ny o
ther
pla
n or
arr
ange
men
t pro
vidi
ng r
etir
ee m
edic
al b
enef
its, E
xecu
tive
shal
l be
cred
ited
with
a le
ngth
of
serv
ice
that
incl
udes
bot
h th
e pe
riod
of
Exe
cutiv
e's
actu
al s
ervi
ce a
nd E
xecu
tive'
s Se
vera
nce
Peri
od. E
xecu
tive
shal
l als
o be
trea
ted
for
purp
oses
of
the
Com
pany
's P
ost-
Ret
irem
ent M
edic
alPl
an a
s ha
ving
alr
eady
atta
ined
the
age
that
Exe
cutiv
e w
ill a
ttain
upo
n th
e co
nclu
sion
of
Exe
cutiv
e's
Seve
ranc
e Pe
riod
.
gp
y
(e)
If E
xecu
tive
has
a T
erm
inat
ion
of E
mpl
oym
ent a
nd h
as c
ompl
eted
at l
east
eig
ht (
8) y
ears
of
serv
ice
tow
ards
his
ent
itlem
ent t
o pa
id s
abba
tical
leav
e un
der
the
Com
pany
's p
olic
ies
conc
erni
ng s
abba
tical
leav
e (a
nd h
as n
ot y
et ta
ken
such
sab
batic
al le
ave)
, Exe
cutiv
e sh
all r
ecei
ve a
n ad
ditio
nal a
mou
nt, i
n a
lum
p su
m p
aym
ent,
equa
l to
eigh
t (8)
wee
ks o
f E
xecu
tive'
s B
ase
Sala
ry.
(f)
If E
xecu
tive
is a
par
ticip
ant i
n th
e E
xecu
tive
Ret
entio
n Pl
an th
e E
xecu
tive
will
hav
e th
e ri
ght t
o re
ceiv
e se
vera
nce
bene
fits
und
er e
ither
the
Exe
cutiv
e R
eten
tion
Plan
or
this
Agr
eem
ent.
Exe
cutiv
e's
elec
tion
to r
ecei
ve b
enef
its u
nder
one
arr
ange
men
t will
be
a w
aive
r of
ent
itlem
ent t
o be
nefi
ts u
nder
the
othe
r.
If E
xecu
tive
has
a T
erm
inat
ion
of E
mpl
oym
ent t
hat w
ould
ent
itle
Exe
cutiv
e to
ben
efits
und
er th
is S
ectio
n 4.
1 bu
t Exe
cutiv
e fa
ils to
del
iver
an
exec
uted
Non
-Com
petit
ion
and
Rel
ease
Agr
eem
ent t
o th
eC
ompa
ny (
or h
avin
g de
liver
ed a
n ex
ecut
ed N
on-C
ompe
titio
n an
d R
elea
se A
gree
men
t res
cind
s su
ch a
gree
men
t dur
ing
the
resc
issi
on p
erio
d se
t for
th in
the
Non
-Com
petit
ion
and
Rel
ease
Agr
eem
ent)
, the
Com
pany
's s
ole
oblig
atio
n to
Exe
cutiv
e un
der
Art
icle
s II
and
IV
sha
ll be
to p
ay E
xecu
tive
a lu
mp-
sum
cas
h am
ount
equ
al to
all
Acc
rued
Obl
igat
ions
det
erm
ined
as
of th
e T
erm
inat
ion
Dat
e.
-16-
4.2
If b
y th
e C
ompa
ny f
or C
ause
. If
the
Com
pany
term
inat
es E
xecu
tive'
s em
ploy
men
t for
Cau
se d
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d, th
e C
ompa
ny's
sol
e ob
ligat
ion
to E
xecu
tive
unde
r A
rtic
les
IIan
d IV
sha
ll be
to p
ay E
xecu
tive
a lu
mp-
sum
cas
h am
ount
equ
al to
all
Acc
rued
Obl
igat
ions
det
erm
ined
as
of th
e T
erm
inat
ion
Dat
e.
4.3
If b
y E
xecu
tive
Oth
er T
han
for
Goo
d R
easo
n. I
f E
xecu
tive
term
inat
es e
mpl
oym
ent d
urin
g th
e Po
st-C
hang
e E
mpl
oym
ent P
erio
d ot
her
than
for
Goo
d R
easo
n, D
isab
ility
or
deat
h, th
e C
ompa
ny's
sol
eob
ligat
ion
to E
xecu
tive
unde
r A
rtic
les
II a
nd I
V s
hall
be to
pay
Exe
cutiv
e a
lum
p-su
m c
ash
amou
nt e
qual
to a
ll A
ccru
ed O
blig
atio
ns d
eter
min
ed a
s of
the
Ter
min
atio
n D
ate.
4.4
If b
y th
e C
ompa
ny f
or D
isab
ility
. If
the
Com
pany
term
inat
es E
xecu
tive'
s em
ploy
men
t by
reas
on o
f E
xecu
tive'
s D
isab
ility
dur
ing
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
the
Com
pany
's s
ole
oblig
atio
n to
Exe
cutiv
e un
der
Art
icle
s II
and
IV
sha
ll be
as
follo
ws:
(a)
to p
ay E
xecu
tive
a lu
mp-
sum
cas
h am
ount
equ
al to
all
Acc
rued
Obl
igat
ions
det
erm
ined
as
of th
e T
erm
inat
ion
Dat
e; a
nd
(b)
to p
rovi
de E
xecu
tive
disa
bilit
y an
d ot
her
bene
fits
aft
er th
e T
erm
inat
ion
Dat
e th
at a
re n
ot le
ss th
an th
e m
ost f
avor
able
of
such
ben
efits
then
ava
ilabl
e un
der
Plan
s of
the
Com
pany
to d
isab
led
peer
exec
utiv
es o
f th
e C
ompa
ny o
r, if
mor
e fa
vora
ble,
thos
e su
ch b
enef
its p
rovi
ded
by th
e C
ompa
ny a
t any
tim
e du
ring
the
12-m
onth
per
iod
imm
edia
tely
pre
cedi
ng th
e E
ffec
tive
Dat
e.
4.5
If u
pon
Dea
th. I
f E
xecu
tive'
s em
ploy
men
t is
term
inat
ed b
y re
ason
of
Exe
cutiv
e's
deat
h du
ring
the
Post
-Cha
nge
Em
ploy
men
t Per
iod,
the
Com
pany
's s
ole
oblig
atio
ns to
Exe
cutiv
e un
der
Art
icle
s II
and
IV s
hall
be a
s fo
llow
s:
(a)
to p
ay E
xecu
tive'
s es
tate
or
Ben
efic
iary
a lu
mp-
sum
cas
h am
ount
equ
al to
all
Acc
rued
Obl
igat
ions
; and
(b)
to p
rovi
de E
xecu
tive'
s es
tate
or
Ben
efic
iary
sur
vivo
r an
d ot
her
bene
fits
that
are
not
less
than
the
mos
t fav
orab
le s
urvi
vor
and
othe
r be
nefi
ts th
en a
vaila
ble
unde
r Pl
ans
of th
e C
ompa
ny to
the
esta
tes
orth
e su
rviv
ing
fam
ilies
of
peer
exe
cutiv
es o
f th
e C
ompa
ny o
r, if
mor
e fa
vora
ble,
thos
e su
ch b
enef
its p
rovi
ded
by th
e C
ompa
ny a
t any
tim
e du
ring
the
12-m
onth
per
iod
imm
edia
tely
pre
cedi
ng th
e E
ffec
tive
Dat
e.
AR
TIC
LE
V.
CE
RT
AIN
AD
DIT
ION
AL
PA
YM
EN
TS
BY
TH
E C
OM
PA
NY
5.1
Gro
ss-u
p fo
r C
erta
in T
axes
.
(a)
If it
is d
eter
min
ed (
by th
e re
ason
able
com
puta
tion
of th
e C
ompa
ny's
inde
pend
ent a
udito
rs, w
hich
det
erm
inat
ions
sha
ll be
cer
tifie
d to
by
such
aud
itors
and
set
for
th in
a w
ritte
n ce
rtif
icat
e ("
Com
pany
Cer
tific
ate"
) de
liver
ed to
the
Exe
cutiv
e) th
at a
ny b
enef
it re
ceiv
ed o
r de
emed
rec
eive
d by
the
Exe
cutiv
e fr
om th
e C
ompa
ny p
ursu
ant t
o th
is A
gree
men
t or
othe
rwis
e (c
olle
ctiv
ely,
the
"Pot
entia
l Par
achu
tePa
ymen
ts")
is o
r w
ill b
e-
-17-
com
e su
bjec
t to
any
exci
se ta
x un
der
Sect
ion
4999
of
the
Cod
e or
any
sim
ilar
tax
paya
ble
unde
r an
y U
nite
d St
ates
fed
eral
, sta
te, l
ocal
or
othe
r la
w (
such
exc
ise
tax
and
all s
uch
sim
ilar
taxe
s co
llect
ivel
y,"E
xcis
e T
axes
"), t
hen
the
Com
pany
sha
ll, im
med
iate
ly a
fter
suc
h de
term
inat
ion,
pay
the
Exe
cutiv
e an
am
ount
(th
e "G
ross
-up
Paym
ent"
) eq
ual t
o th
e pr
oduc
t of:
(i)
the
amou
nt o
f su
ch E
xcis
e T
axes
mul
tiplie
d by
(ii)
the
Gro
ss-u
p M
ultip
le (
as d
efin
ed in
Sec
tion
5.4)
.
The
Gro
ss-u
p Pa
ymen
t is
inte
nded
to c
ompe
nsat
e th
e E
xecu
tive
for
the
Exc
ise
Tax
es a
nd a
ny f
eder
al, s
tate
, loc
al o
r ot
her
inco
me
or e
xcis
e ta
xes
or o
ther
taxe
s pa
yabl
e by
the
Exe
cutiv
e w
ith r
espe
ct to
the
Gro
ss-u
p Pa
ymen
t. Fo
r al
l pur
pose
s of
this
Art
icle
V, E
xecu
tive
shal
l be
deem
ed to
be
subj
ect t
o th
e hi
ghes
t eff
ectiv
e m
argi
nal r
ate
of T
axes
.
gp
y
The
Exe
cutiv
e or
the
Com
pany
may
at a
ny ti
me
requ
est t
he p
repa
ratio
n an
d de
liver
y to
the
Exe
cutiv
e of
a C
ertif
icat
e. T
he C
ompa
ny s
hall,
in a
dditi
on to
com
plyi
ng w
ith S
ectio
n 5.
2, c
ause
all
dete
rmin
atio
ns a
nd c
ertif
icat
ions
und
er th
e A
rtic
le to
be
mad
e as
soo
n as
rea
sona
bly
poss
ible
and
in a
dequ
ate
time
to p
erm
it th
e E
xecu
tive
to p
repa
re a
nd f
ile th
e E
xecu
tive'
s in
divi
dual
tax
retu
rns
on a
timel
y ba
sis.
(b)
Lim
itatio
n on
Gro
ss-U
p Pa
ymen
t. N
otw
ithst
andi
ng a
ny o
ther
pro
visi
on o
f th
is A
rtic
le V
, if
the
aggr
egat
e A
fter
-Tax
Am
ount
(de
fine
d be
low
) of
the
Pote
ntia
l Par
achu
te P
aym
ents
and
Gro
ss-u
p Pa
ymen
tth
at, b
ut f
or th
is S
ectio
n (b
), w
ould
be
paya
ble
to E
xecu
tive,
doe
s no
t exc
eed
110%
of
the
Aft
er-T
ax F
loor
Am
ount
(de
fine
d be
low
), th
en n
o G
ross
-up
Paym
ent s
hall
be m
ade
to E
xecu
tive
and
the
aggr
egat
e am
ount
of
Pote
ntia
l Par
achu
te P
aym
ents
pay
able
to E
xecu
tive
shal
l be
redu
ced
(but
not
bel
ow th
e Fl
oor
Am
ount
, def
ined
bel
ow)
to th
e la
rges
t am
ount
whi
ch w
ould
bot
h (i
) no
t cau
se a
ny E
xcis
eT
ax to
be
paya
ble
by E
xecu
tive
and
(ii)
not
cau
se a
ny P
oten
tial P
arac
hute
Pay
men
ts to
bec
ome
nond
educ
tible
by
the
Com
pany
by
reas
on o
fSe
ctio
n 28
0G o
f th
e C
ode
(or
any
succ
esso
r pr
ovis
ion)
.
(c)
For
purp
oses
of
this
Agr
eem
ent:
(i)
"Aft
er-T
ax A
mou
nt"
mea
ns th
e po
rtio
n of
a s
peci
fied
am
ount
that
wou
ld r
emai
n af
ter
paym
ent o
f al
l Tax
es p
aid
or p
ayab
le b
y E
xecu
tive
in r
espe
ct o
f su
ch s
peci
fied
am
ount
;
(ii)
"Fl
oor
Am
ount
" m
eans
the
grea
test
pre
-tax
am
ount
of
Pote
ntia
l Par
achu
te P
aym
ents
that
cou
ld b
e pa
id to
Exe
cutiv
e w
ithou
t cau
sing
Exe
cutiv
e to
bec
ome
liabl
e fo
r an
y E
xcis
e T
axes
in c
onne
ctio
nth
erew
ith; a
nd
(iii)
"A
fter
-Tax
Flo
or A
mou
nt"
mea
ns th
e A
fter
-Tax
Am
ount
of
the
Flo
or A
mou
nt.
-18-
5.2
Det
erm
inat
ion
by th
e E
xecu
tive.
(a)
If th
e C
ompa
ny s
hall
fail
to d
eliv
er a
Cer
tific
ate
to th
e E
xecu
tive
(and
to p
ay to
the
Exe
cutiv
e th
e am
ount
of
the
Gro
ss-u
p Pa
ymen
t, if
any
) w
ithin
fou
rtee
n (1
4) d
ays
afte
r re
ceip
t fro
m th
e E
xecu
tive
of a
wri
tten
requ
est f
or a
Cer
tific
ate,
or
if a
t any
tim
e fo
llow
ing
rece
ipt o
f a
Cer
tific
ate
the
Exe
cutiv
e di
sput
es th
e am
ount
of
the
Gro
ss-u
p Pa
ymen
t set
for
th th
erei
n, th
e E
xecu
tive
may
ele
ct to
dem
and
the
paym
ent o
f th
e am
ount
whi
ch th
e E
xecu
tive,
in a
ccor
danc
e w
ith a
n op
inio
n of
cou
nsel
to th
e E
xecu
tive
("E
xecu
tive
Cou
nsel
Opi
nion
")(a
s de
fine
d in
Sec
tion
5.5,
bel
ow),
det
erm
ines
to b
e th
e G
ross
-up
Paym
ent.
Any
suc
h de
man
d by
the
Exe
cutiv
e sh
all b
e m
ade
by d
eliv
ery
to th
e C
ompa
ny o
f a
wri
tten
notic
e w
hich
spe
cifi
es th
e G
ross
-up
Paym
ent d
eter
min
ed b
y th
e E
xecu
tive
and
an E
xecu
tive
Cou
nsel
Opi
nion
reg
ardi
ng s
uch
Gro
ss-u
p Pa
ymen
t (su
ch w
ritte
n no
tice
and
opin
ion
colle
ctiv
ely,
the
"Exe
cutiv
e's
Gro
ss-U
p D
eter
min
atio
n").
With
in f
ourt
een
(14)
day
s af
ter
deliv
ery
of th
e E
xecu
tive'
s G
ross
-Up
Det
erm
inat
ion
to th
e C
ompa
ny, t
he C
ompa
ny s
hall
eith
er (
1) p
ay th
e E
xecu
tive
the
Gro
ss-u
p Pa
ymen
t set
for
th in
the
Exe
cutiv
e's
Gro
ss-U
p D
eter
min
atio
n (l
ess
the
port
ion
of s
uch
amou
nt, i
f an
y,pr
evio
usly
pai
d to
the
Exe
cutiv
e by
the
Com
pany
) or
(2)
del
iver
to th
e E
xecu
tive
a C
ertif
icat
e sp
ecif
ying
the
Gro
ss-u
p Pa
ymen
t det
erm
ined
by
the
Com
pany
's in
depe
nden
t aud
itors
, tog
ethe
r w
ith a
nop
inio
n of
the
Com
pany
's c
ouns
el (
"Com
pany
Cou
nsel
Opi
nion
" (a
s de
fine
d in
Sec
tion
5.5,
bel
ow))
, and
pay
the
Exe
cutiv
e th
e G
ross
-up
Paym
ent s
peci
fied
in s
uch
Cer
tific
ate.
If
for
any
reas
on th
eC
ompa
ny f
ails
to c
ompl
y w
ith c
laus
e (2
) of
the
prec
edin
g se
nten
ce, t
he G
ross
-up
Paym
ent s
peci
fied
in th
e E
xecu
tive'
s G
ross
-Up
Det
erm
inat
ion
shal
l be
fina
l, bi
ndin
g an
d co
ntro
lling
for
all
purp
oses
.
(b)
If th
e E
xecu
tive
does
not
mak
e a
requ
est f
or, a
nd th
e C
ompa
ny d
oes
not d
eliv
er to
the
Exe
cutiv
e, a
Cer
tific
ate,
the
Com
pany
sha
ll be
dee
med
to h
ave
dete
rmin
ed th
at n
o G
ross
-up
Paym
ent i
s du
e;pr
ovid
ed th
at th
e ab
senc
e of
suc
h re
ques
t by
Exe
cutiv
e or
the
Cer
tific
ate
by th
e C
ompa
ny s
hall
not p
recl
ude
Exe
cutiv
e fr
om m
akin
g su
ch r
eque
st a
t any
fut
ure
date
.
5.3
Add
ition
al G
ross
-up
Am
ount
s. I
f, d
espi
te th
e in
itial
con
clus
ion
of th
e C
ompa
ny a
nd/o
r th
e E
xecu
tive
that
cer
tain
pay
men
ts a
re e
ither
not
sub
ject
to E
xcis
e T
axes
or
not t
o be
cou
nted
in d
eter
min
ing
whe
ther
oth
er p
aym
ents
are
sub
ject
to E
xcis
e T
axes
(an
y su
ch it
em, a
"N
on-P
arac
hute
Ite
m")
, it i
s la
ter
dete
rmin
ed (
purs
uant
to th
e su
bseq
uent
ly-e
nact
ed p
rovi
sion
s of
the
Cod
e, f
inal
reg
ulat
ions
or
publ
ishe
d ru
lings
of
the
IRS,
fin
al ju
dgm
ent o
f a
cour
t of
com
pete
nt ju
risd
ictio
n or
the
Com
pany
's in
depe
nden
t aud
itors
that
any
of
the
Non
-Par
achu
te I
tem
s ar
e su
bjec
t to
Exc
ise
Tax
es, o
r ar
e to
be
coun
ted
in d
eter
min
ing
whe
ther
any
pay
men
ts a
re s
ubje
ct to
Exc
ise
Tax
es, w
ith th
e re
sult
that
the
amou
nt o
f E
xcis
e T
axes
pay
able
by
the
Exe
cutiv
e is
gre
ater
or
the
amou
nt o
f th
e E
xcis
e T
axes
due
are
grea
ter
for
any
othe
r re
ason
than
the
amou
nt d
eter
min
ed b
y th
e C
ompa
ny o
r th
e E
xecu
tive
purs
uant
to S
ectio
n 5.
1 or
5.2
, as
appl
icab
le, t
hen
the
Com
pany
sha
ll pa
y th
e E
xecu
tive
an a
mou
nt (
whi
ch s
hall
also
be
deem
ed a
Gro
ss-u
p Pa
ymen
t) e
qual
to th
e pr
oduc
t of:
(a)
the
sum
of
(1)
such
add
ition
al E
xcis
e T
axes
, and
(2)
any
inte
rest
, fin
es, p
enal
ties,
exp
ense
s or
oth
er c
osts
incu
rred
by
the
Exe
cutiv
e as
a r
esul
t of
havi
ng ta
ken
a po
sitio
n in
acc
orda
nce
with
ade
term
inat
ion
mad
e pu
rsua
nt to
Sec
tion
5.1
-19-
mul
tiplie
d by
(b)
the
Gro
ss-u
p M
ultip
le.
5.4
Gro
ss-u
p M
ultip
le. T
he G
ross
-up
Mul
tiple
sha
ll eq
ual a
fra
ctio
n, th
e nu
mer
ator
of
whi
ch is
one
(1.
0), a
nd th
e de
nom
inat
or o
f w
hich
is o
ne (
1.0)
min
us th
e su
m, e
xpre
ssed
as
a de
cim
al f
ract
ion,
of
the
effe
ctiv
e m
argi
nal r
ates
of
all f
eder
al, s
tate
, loc
al a
nd o
ther
inco
me
and
othe
r ta
xes
and
any
Exc
ise
Tax
es a
pplic
able
to th
e G
ross
-up
Paym
ent;
prov
ided
that
, if
such
sum
exc
eeds
0.8
, it s
hall
be d
eem
ed
gp
y
equa
l to
0.8
for
purp
oses
of
this
com
puta
tion.
(If
dif
fere
nt e
ffec
tive
mar
gina
l rat
es o
f ta
x ar
e ap
plic
able
to v
ario
us p
ortio
ns o
f a
Gro
ss-u
p Pa
ymen
t, th
e w
eigh
ted
aver
age
of s
uch
rate
s sh
all b
e us
ed.)
5.5
Opi
nion
of
Cou
nsel
. "E
xecu
tive
Cou
nsel
Opi
nion
" m
eans
a le
gal o
pini
on o
f na
tiona
lly r
ecog
nize
d ex
ecut
ive
com
pens
atio
n co
unse
l tha
t the
re is
a r
easo
nabl
e ba
sis
to s
uppo
rt a
con
clus
ion
that
the
Gro
ss-u
p Pa
ymen
t det
erm
ined
by
the
Exe
cutiv
e ha
s be
en c
alcu
late
d in
acc
ord
with
this
Art
icle
and
app
licab
le la
w. "
Com
pany
Cou
nsel
Opi
nion
" m
eans
a le
gal o
pini
on o
f na
tiona
lly r
ecog
nize
d ex
ecut
ive
com
pens
atio
n co
unse
l tha
t (a)
ther
e is
a r
easo
nabl
e ba
sis
to s
uppo
rt a
con
clus
ion
that
the
Gro
ss-u
p Pa
ymen
t set
for
th o
f th
e C
ertif
icat
e of
Com
pany
's in
depe
nden
t aud
itors
has
bee
n ca
lcul
ated
in a
ccor
d w
ithth
is A
rtic
le a
nd a
pplic
able
law
, and
(b)
ther
e is
no
reas
onab
le b
asis
for
the
calc
ulat
ion
of th
e G
ross
-up
Paym
ent d
eter
min
ed b
y th
e E
xecu
tive.
5.6
Am
ount
Inc
reas
ed o
r C
onte
sted
. The
Exe
cutiv
e sh
all n
otif
y th
e C
ompa
ny in
wri
ting
of a
ny c
laim
by
the
IRS
or o
ther
taxi
ng a
utho
rity
that
, if
succ
essf
ul, w
ould
req
uire
the
paym
ent b
y th
e C
ompa
ny o
f a
Gro
ss-u
p Pa
ymen
t. Su
ch n
otic
e sh
all i
nclu
de th
e na
ture
of
such
cla
im a
nd th
e da
te o
n w
hich
suc
h cl
aim
is d
ue to
be
paid
. The
Exe
cutiv
e sh
all g
ive
such
not
ice
as s
oon
as p
ract
icab
le, b
ut n
o la
ter
than
ten
(10)
bus
ines
s da
ys, a
fter
the
Exe
cutiv
e fi
rst o
btai
ns a
ctua
l kno
wle
dge
of s
uch
clai
m; p
rovi
ded,
how
ever
, tha
t any
fai
lure
to g
ive
or d
elay
in g
ivin
g su
ch n
otic
e sh
all a
ffec
t the
Com
pany
's o
blig
atio
ns u
nder
this
Art
icle
onl
y if
and
to th
e ex
tent
that
suc
h fa
ilure
res
ults
in a
ctua
l pre
judi
ce to
the
Com
pany
. The
Exe
cutiv
e sh
all n
ot p
ay s
uch
clai
m le
ss th
an th
irty
(30
) da
ys a
fter
the
Exe
cutiv
e gi
ves
such
not
ice
to th
eC
ompa
ny (
or, i
f so
oner
, the
dat
e on
whi
ch p
aym
ent o
f su
ch c
laim
is d
ue).
If
the
Com
pany
not
ifie
s th
e E
xecu
tive
in w
ritin
g be
fore
the
expi
ratio
n of
suc
h pe
riod
that
it d
esir
es to
con
test
suc
h cl
aim
, the
Exe
cutiv
e sh
all:
(a)
give
the
Com
pany
any
info
rmat
ion
that
it r
easo
nabl
y re
ques
ts r
elat
ing
to s
uch
clai
m;
(b)
take
suc
h ac
tion
in c
onne
ctio
n w
ith c
onte
stin
g su
ch c
laim
as
the
Com
pany
rea
sona
bly
requ
ests
in w
ritin
g fr
om ti
me
to ti
me,
incl
udin
g, w
ithou
t lim
itatio
n, a
ccep
ting
lega
l rep
rese
ntat
ion
with
res
pect
tosu
ch c
laim
by
an a
ttorn
ey r
easo
nabl
y se
lect
ed b
y th
e C
ompa
ny;
(c)
coop
erat
e w
ith th
e C
ompa
ny in
goo
d fa
ith to
con
test
suc
h cl
aim
; and
(d)
perm
it th
e C
ompa
ny to
par
ticip
ate
in a
ny p
roce
edin
gs r
elat
ing
to s
uch
clai
m;
-20-
prov
ided
, how
ever
, tha
t the
Com
pany
sha
ll be
ar a
nd p
ay d
irec
tly a
ll co
sts
and
expe
nses
(in
clud
ing
addi
tiona
l int
eres
t and
pen
altie
s) in
curr
ed in
con
nect
ion
with
suc
h co
ntes
t and
sha
ll in
dem
nify
and
hol
dth
e E
xecu
tive
harm
less
, on
an a
fter
-tax
bas
is, f
or a
ny E
xcis
e T
ax o
r in
com
e ta
x, in
clud
ing
rela
ted
inte
rest
and
pen
altie
s, im
pose
d as
a r
esul
t of
such
rep
rese
ntat
ion
and
paym
ent o
f co
sts
and
expe
nses
.W
ithou
t lim
iting
the
fore
goin
g, th
e C
ompa
ny s
hall
cont
rol a
ll pr
ocee
ding
s in
con
nect
ion
with
suc
h co
ntes
t and
, at i
ts s
ole
optio
n, m
ay p
ursu
e or
for
ego
any
and
all a
dmin
istr
ativ
e ap
peal
s, p
roce
edin
gs,
hear
ings
and
con
fere
nces
with
the
taxi
ng a
utho
rity
in r
espe
ct o
f su
ch c
laim
and
may
, at i
ts s
ole
optio
n, e
ither
dir
ect t
he E
xecu
tive
to p
ay th
e ta
x cl
aim
ed a
nd s
ue f
or a
ref
und
or c
onte
st th
e cl
aim
in a
nype
rmis
sibl
e m
anne
r. T
he E
xecu
tive
agre
es to
pro
secu
te s
uch
cont
est t
o a
dete
rmin
atio
n be
fore
any
adm
inis
trat
ive
trib
unal
, in
a co
urt o
f in
itial
juri
sdic
tion
and
in o
ne o
r m
ore
appe
llate
cou
rts,
as
the
Com
pany
sha
ll de
term
ine;
pro
vide
d, h
owev
er, t
hat i
f th
e C
ompa
ny d
irec
ts th
e E
xecu
tive
to p
ay s
uch
clai
m a
nd s
ue f
or a
ref
und,
the
Com
pany
sha
ll ad
vanc
e th
e am
ount
of
such
pay
men
t to
the
Exe
cutiv
e,on
an
inte
rest
-fre
e ba
sis
and
shal
l ind
emni
fy th
e E
xecu
tive,
on
an a
fter
-tax
bas
is, f
or a
ny E
xcis
e T
ax o
r T
axes
, inc
ludi
ng r
elat
ed in
tere
st o
r pe
nalti
es, i
mpo
sed
with
res
pect
to s
uch
adva
nce;
and
fur
ther
prov
ided
that
any
ext
ensi
on o
f th
e st
atut
e of
lim
itatio
ns r
elat
ing
to p
aym
ent o
f T
axes
for
the
taxa
ble
year
of
the
Exe
cutiv
e w
ith r
espe
ct to
whi
ch s
uch
cont
este
d am
ount
is c
laim
ed to
be
due
is li
mite
d so
lely
to s
uch
cont
este
d am
ount
. The
Com
pany
's c
ontr
ol o
f th
e co
ntes
t sha
ll be
lim
ited
to is
sues
with
res
pect
to w
hich
a G
ross
-up
Paym
ent w
ould
be
paya
ble.
The
Exe
cutiv
e sh
all i
n E
xecu
tive'
s di
scre
tion
been
title
d to
set
tle o
r co
ntes
t, as
the
case
may
be,
any
oth
er is
sue
rais
ed b
y th
e IR
S or
oth
er ta
aut
hori
ty.
5.7
Ref
unds
. If,
aft
er th
e re
ceip
t by
the
Exe
cutiv
e of
an
amou
nt p
aid
or a
dvan
ced
by th
e C
ompa
ny p
ursu
ant t
o Se
ctio
n 5.
1, 5
.3 a
nd/o
r 5.
6, th
e E
xecu
tive
beco
mes
ent
itled
to r
ecei
ve a
ny r
efun
d w
ith r
espe
ctto
suc
h cl
aim
or
amou
nt, t
he E
xecu
tive
shal
l (su
bjec
t to
the
Com
pany
's c
ompl
ying
with
the
requ
irem
ents
of
Sect
ion
5.6)
pro
mpt
ly p
ay th
e C
ompa
ny th
e am
ount
of
such
ref
und
(tog
ethe
r w
ith a
ny in
tere
st p
aid
or c
redi
ted
ther
eon
afte
r ta
xes
appl
icab
le th
eret
o). I
f, a
fter
the
rece
ipt b
y th
e E
xecu
tive
of a
n am
ount
pai
dor
adv
ance
d by
the
Com
pany
pur
suan
t to
Sect
ion
5.1,
5.3
and
/or
5.6,
a d
eter
min
atio
n is
mad
e th
at th
e E
xecu
tive
shal
l not
be
entit
led
to a
ny r
efun
d w
ith r
espe
ct to
suc
h cl
aim
and
the
Com
pany
doe
s no
tno
tify
the
Exe
cutiv
e in
wri
ting
of it
s in
tent
to c
onte
st s
uch
dete
rmin
atio
n be
fore
the
earl
ier
of (
a) th
e ex
pira
tion
of th
irty
(30
) da
ys a
fter
suc
h de
term
inat
ion;
or
(b)
the
date
suc
h de
term
inat
ion
beco
mes
fin
alan
d no
n-ap
peal
able
, the
n su
ch a
dvan
ce s
hall
be f
orgi
ven
and
shal
l not
be
requ
ired
to b
e re
paid
and
the
Com
pany
sha
ll pa
y E
xecu
tive
an a
mou
nt s
uffi
cien
t to
prov
ide
Exe
cutiv
e w
ith a
n A
fter
-Tax
Am
ount
equa
l to
any
amou
nt o
f T
axes
and
Exc
ise
Tax
es w
hich
Exe
cutiv
e sh
all i
ncur
with
res
pect
to s
uch
amou
nt b
eing
for
give
n. A
ny c
onte
st o
f a
deni
al o
f re
fund
sha
ll be
con
trol
led
by S
ectio
n 5.
6.
AR
TIC
LE
VI.
EX
PE
NSE
S A
ND
IN
TE
RE
ST
6.1
Leg
al F
ees
and
Oth
er E
xpen
ses.
(a)
If E
xecu
tive
incu
rs le
gal f
ees
or o
ther
exp
ense
s (i
nclu
ding
exp
ert w
itnes
s an
d ac
coun
ting
fees
) on
or
afte
r th
e E
ffec
tive
Dat
e, in
an
effo
rt to
enf
orce
this
Agr
eem
ent,
or to
sec
ure,
pre
serv
e, e
stab
lish
entit
lem
ent t
o, o
r ob
tain
ben
efits
und
er th
is A
gree
men
t (in
clud
ing
the
fees
and
oth
er e
xpen
ses
of E
xecu
tive'
s le
gal c
ouns
el in
con
nec-
-21-
tion
with
the
deliv
ery
of a
n E
xecu
tive
Cou
nsel
Opi
nion
), th
e C
ompa
ny s
hall,
reg
ardl
ess
of th
e ou
tcom
e of
suc
h ef
fort
, rei
mbu
rse
Exe
cutiv
e on
a c
urre
nt b
asis
(in
acc
orda
nce
with
Sec
tion
6.1(
b))
for
such
gp
y
reas
onab
le f
ees
and
expe
nses
, and
sha
ll al
so p
ay E
xecu
tive
an a
dditi
onal
pay
men
t suc
h th
at, a
fter
pay
men
t of
all T
axes
and
Exc
ise
Tax
es o
n su
ch a
mou
nt, t
here
rem
ains
a b
alan
ce s
uffi
cien
t to
pay
all s
uch
fees
and
oth
er e
xpen
ses.
(b)
Rei
mbu
rsem
ent o
f le
gal f
ees
and
expe
nses
and
Gro
ss-u
p Pa
ymen
ts s
hall
be m
ade
mon
thly
with
in te
n (1
0) d
ays
afte
r E
xecu
tive'
s w
ritte
n su
bmis
sion
of
a re
ques
t for
rei
mbu
rsem
ent t
oget
her
with
evid
ence
that
suc
h fe
es a
nd e
xpen
ses
wer
e in
curr
ed.
(c)
If E
xecu
tive
does
not
pre
vail
(aft
er e
xhau
stio
n of
all
avai
labl
e ju
dici
al r
emed
ies)
in r
espe
ct o
f a
clai
m b
y E
xecu
tive
or b
y th
e C
ompa
ny h
ereu
nder
, and
the
Com
pany
est
ablis
hes
befo
re a
cou
rt o
fco
mpe
tent
juri
sdic
tion,
by
clea
r an
d co
nvin
cing
evi
denc
e, th
at E
xecu
tive
had
no r
easo
nabl
e ba
sis
for
his
clai
m h
ereu
nder
, or
for
his
resp
onse
to th
e C
ompa
ny's
cla
im h
ereu
nder
, or
acte
d in
bad
fai
th, n
ofu
rthe
r re
imbu
rsem
ent f
or le
gal f
ees
and
expe
nses
sha
ll be
due
to E
xecu
tive
in r
espe
ct o
f su
ch c
laim
and
Exe
cutiv
e sh
all r
efun
d an
y am
ount
s pr
evio
usly
rei
mbu
rsed
her
eund
er w
ith r
espe
ct to
suc
h cl
aim
.
(d)
If th
ere
is a
dis
pute
bet
wee
n th
e E
xecu
tive
and
the
Com
pany
as
to E
xecu
tive'
s ri
ghts
to r
eim
burs
emen
t of
lega
l or
othe
r fe
es a
nd e
xpen
ses
unde
r th
is A
gree
men
t or
the
amou
nt o
f su
ch r
eim
burs
emen
t,an
y am
ount
of
reim
burs
emen
t req
uest
ed b
y E
xecu
tive
and
acco
mpa
nied
by
lega
l opi
nion
of
natio
nally
rec
ogni
zed
exec
utiv
e co
mpe
nsat
ion
coun
sel t
hat s
uch
amou
nt s
houl
d be
pai
d un
der
the
Agr
eem
ent
shal
l be
fina
l, bi
ndin
g an
d co
ntro
lling
on
the
Com
pany
unl
ess
and
to th
e ex
tent
the
Com
pany
est
ablis
hes
othe
rwis
e by
cle
ar a
nd c
onvi
ncin
g ev
iden
ce.
6.2
Inte
rest
. If
the
Com
pany
doe
s no
t pay
any
am
ount
due
to E
xecu
tive
unde
r th
is A
gree
men
t with
in f
ive
(5)
busi
ness
day
s af
ter
such
am
ount
fir
st b
ecam
e du
e an
d ow
ing,
inte
rest
sha
ll ac
crue
on
such
amou
nt f
rom
the
date
it b
ecam
e du
e an
d ow
ing
until
the
date
of
paym
ent a
t an
annu
al r
ate
equa
l to
200
basi
s po
ints
abo
ve th
e ba
se c
omm
erci
al le
ndin
g ra
te p
ublis
hed
in T
he W
all S
tree
t Jou
rnal
in e
ffec
tfr
om ti
me
to ti
me
duri
ng th
e pe
riod
of
such
non
paym
ent.
AR
TIC
LE
VII
.
NO
SE
T-O
FF
OR
MIT
IGA
TIO
N
7.1
No
Set-
off
by C
ompa
ny. E
xecu
tive'
s ri
ght t
o re
ceiv
e w
hen
due
the
paym
ents
and
oth
er b
enef
its p
rovi
ded
for
unde
r th
is A
gree
men
t is
abso
lute
, unc
ondi
tiona
l and
not
sub
ject
to s
et-o
ff, c
ount
ercl
aim
or
lega
l or
equi
tabl
e de
fens
e. T
ime
is o
f th
e es
senc
e in
the
perf
orm
ance
by
the
Com
pany
of
its o
blig
atio
ns u
nder
this
Agr
eem
ent.
Any
cla
im w
hich
the
Com
pany
may
hav
e ag
ains
t Exe
cutiv
e, w
heth
er f
or a
brea
ch o
f th
is A
gree
men
t or
othe
rwis
e, s
hall
be b
roug
ht in
a s
epar
ate
actio
n or
pro
ceed
ing
and
not a
s pa
rt o
f an
y ac
tion
or p
roce
edin
g br
ough
t by
Exe
cutiv
e to
enf
orce
any
rig
hts
agai
nst t
he C
ompa
ny u
nder
this
Agr
eem
ent.
7.2
No
Miti
gatio
n. E
xecu
tive
shal
l not
hav
e an
y du
ty to
miti
gate
the
amou
nts
paya
ble
by th
e C
ompa
ny u
nder
this
Agr
eem
ent b
y se
ekin
g ne
w e
mpl
oym
ent o
r se
lf-e
mpl
oym
ent
-22-
follo
win
g te
rmin
atio
n. E
xcep
t as
spec
ific
ally
oth
erw
ise
prov
ided
in th
is A
gree
men
t, al
l am
ount
s pa
yabl
e pu
rsua
nt to
this
Agr
eem
ent s
hall
be p
aid
with
out r
educ
tion
rega
rdle
ss o
f an
y am
ount
s of
sal
ary,
com
pens
atio
n or
oth
er a
mou
nts
whi
ch m
ay b
e pa
id o
r pa
yabl
e to
Exe
cutiv
e as
the
resu
lt of
Exe
cutiv
e's
empl
oym
ent b
y an
othe
r em
ploy
er o
r se
lf-e
mpl
oym
ent.
AR
TIC
LE
VII
I.
CO
NF
IDE
NT
IAL
ITY
8.1
Con
fide
ntia
l Inf
orm
atio
n.
(a)
Exe
cutiv
e ac
know
ledg
es th
at it
is th
e po
licy
of th
e C
ompa
ny to
mai
ntai
n as
sec
ret a
nd c
onfi
dent
ial a
ll C
onfi
dent
ial I
nfor
mat
ion,
and
that
Con
fide
ntia
l Inf
orm
atio
n ha
s be
en a
nd w
ill b
e de
velo
ped
atsu
bsta
ntia
l cos
t and
eff
ort t
o th
e C
ompa
ny. E
xecu
tive
ackn
owle
dges
that
he
will
hav
e ac
cess
to C
onfi
dent
ial I
nfor
mat
ion
with
res
pect
to th
e C
ompa
ny w
hich
info
rmat
ion
is a
val
uabl
e an
d un
ique
ass
et o
fth
e C
ompa
ny a
nd th
at d
iscl
osur
e of
suc
h C
onfi
dent
ial I
nfor
mat
ion
wou
ld c
ause
irre
para
ble
dam
age
to th
e C
ompa
ny's
bus
ines
s an
d op
erat
ions
.
(b)
Exe
cutiv
e ac
know
ledg
es th
at (
i) C
onfi
dent
ial I
nfor
mat
ion
is, a
s be
twee
n th
e C
ompa
ny a
nd E
xecu
tive,
the
excl
usiv
e pr
oper
ty o
f th
e C
ompa
ny,
(ii)
wha
teve
r E
xecu
tive
crea
tes
in th
e pe
rfor
man
ce o
f du
ties
in th
e co
urse
of
Exe
cutiv
e's
empl
oym
ent,
incl
udin
g id
eas,
dev
elop
men
ts, w
ritin
gs, i
mpr
ovem
ents
, des
igns
, gra
phic
and
mus
ical
wor
ks (
the
"Wor
k Pr
oduc
t")
is th
e pr
oper
ty o
f th
e C
ompa
ny, a
nd (
iii)
to th
e ex
tent
that
any
of
the
Wor
k Pr
oduc
t is
capa
ble
of p
rote
ctio
n by
cop
yrig
ht, i
t is
crea
ted
with
in th
e sc
ope
of E
xecu
tive'
s em
ploy
men
t and
isw
ork
mad
e fo
r hi
re. T
o th
e ex
tent
that
any
suc
h W
ork
Prod
uct m
ay n
ot b
e a
wor
k m
ade
for
hire
, Exe
cutiv
e he
reby
ass
igns
to th
e C
ompa
ny a
ll ri
ghts
in s
uch
Wor
k Pr
oduc
t. T
o th
e ex
tent
that
any
of
the
Wor
k Pr
oduc
t is
an in
vent
ion,
Exe
cutiv
e he
reby
ass
igns
to th
e C
ompa
ny a
ll ri
ght,
title
, and
inte
rest
in a
nd to
inve
ntio
ns, i
mpr
ovem
ents
, dis
cove
ries
, or
idea
s co
ncei
ved
or in
vent
ed b
y E
xecu
tive
duri
ng th
ete
rm o
f E
xecu
tive'
s em
ploy
men
t (th
e "I
nven
tions
"). T
he C
ompa
ny a
ckno
wle
dges
that
this
Agr
eem
ent d
oes
not a
pply
to a
n in
vent
ion
for
whi
ch n
o eq
uipm
ent,
supp
lies,
fac
ility
, or
trad
e se
cret
info
rmat
ion
of th
e C
ompa
ny w
as u
sed
and
whi
ch w
as d
evel
oped
ent
irel
y on
Exe
cutiv
e's
own
time,
unl
ess
the
Inve
ntio
n (x
) re
late
s to
the
busi
ness
of
the
Com
pany
or
to th
e C
ompa
ny's
act
ual o
r de
mon
stra
bly
antic
ipat
ed r
esea
rch
or d
evel
opm
ent,
or(y
) re
sults
fro
m a
ny w
ork
perf
orm
ed b
y E
xecu
tive
for
the
Com
pany
. Exe
cutiv
e ag
rees
to e
xecu
te a
ny d
ocum
ents
at a
ny ti
me
reas
onab
ly r
equi
red
by th
e C
ompa
ny in
con
nect
ion
with
the
regi
stra
tion
ofco
pyri
ght,
the
assi
gnm
ent o
r se
curi
ng o
f pa
tent
pro
tect
ion
for
any
Inve
ntio
n, o
r ot
her
perf
ectio
n of
the
Com
pany
's o
wne
rshi
p of
the
Wor
k Pr
oduc
t.
(c)
Bot
h du
ring
Exe
cutiv
e's
empl
oym
ent b
y th
e C
ompa
ny a
nd a
t any
tim
e af
ter
the
Ter
min
atio
n D
ate,
Exe
cutiv
e:
gp
y
(i)
shal
l not
, dir
ectly
or
indi
rect
ly, d
ivul
ge, f
urni
sh o
r m
ake
acce
ssib
le to
any
Per
son,
exc
ept:
-23-
(A)
to th
e ex
tent
Exe
cutiv
e re
ason
ably
and
in g
ood
faith
bel
ieve
s th
at s
uch
actio
ns a
re r
elat
ed to
, and
req
uire
d by
, Exe
cutiv
e's
perf
orm
ance
of
his
dutie
s un
der
this
Agr
eem
ent;
or
(B)
as m
ay b
e co
mpe
lled
by a
pplic
able
law
or
adm
inis
trat
ive
regu
latio
n; p
rovi
ded
that
Exe
cutiv
e, to
the
exte
nt n
ot p
rohi
bite
d fr
om d
oing
so
by a
pplic
able
law
or
adm
inis
trat
ive
regu
latio
n, s
hall
give
the
Com
pany
wri
tten
notic
e of
the
info
rmat
ion
to b
e so
dis
clos
ed p
ursu
ant t
o cl
ause
(B
) of
this
sen
tenc
e as
far
in a
dvan
ce o
f its
dis
clos
ure
as is
pra
ctic
able
, sha
ll co
oper
ate
with
the
Com
pany
in it
s ef
fort
s to
prot
ect t
he in
form
atio
n fr
om d
iscl
osur
e, a
nd s
hall
limit
Exe
cutiv
e's
disc
losu
re o
f su
ch in
form
atio
n to
the
min
imum
dis
clos
ure
requ
ired
by
law
or
adm
inis
trat
ive
regu
latio
n (u
nles
s th
e C
ompa
ny a
gree
s in
wri
ting
to a
gre
ater
leve
l of
disc
losu
re);
(ii)
sha
ll no
t use
for
his
ow
n be
nefi
t in
any
man
ner,
any
Con
fide
ntia
l Inf
orm
atio
n;
(iii)
sha
ll no
t cau
se a
ny s
uch
Con
fide
ntia
l Inf
orm
atio
n to
bec
ome
publ
icly
kno
wn;
and
(iv)
sha
ll ta
ke a
ll re
ason
able
ste
ps to
saf
egua
rd s
uch
Con
fide
ntia
l Inf
orm
atio
n an
d to
pro
tect
it a
gain
st d
iscl
osur
e, m
isus
e, lo
ss a
nd th
eft.
(d)
For
purp
oses
of
this
Agr
eem
ent,
Con
fide
ntia
l Inf
orm
atio
n re
pres
ents
trad
e se
cret
s su
bjec
t to
prot
ectio
n un
der
the
Uni
form
Tra
de S
ecre
ts A
ct, o
r to
any
com
para
ble
prot
ectio
n af
ford
ed b
y ot
her
appl
icab
le la
ws.
8.2
Rea
sona
blen
ess
of R
estr
ictiv
e C
oven
ants
.
(a)
Exe
cutiv
e ac
know
ledg
es th
at th
e co
vena
nts
cont
aine
d in
Sec
tion
8.1
are
reas
onab
le in
the
scop
e of
the
activ
ities
res
tric
ted,
and
that
suc
h co
vena
nts
are
reas
onab
ly n
eces
sary
to p
rote
ct th
e C
ompa
ny's
legi
timat
e in
tere
sts
in it
s C
onfi
dent
ial I
nfor
mat
ion.
Exe
cutiv
e fu
rthe
r ac
know
ledg
es s
uch
cove
nant
s ar
e es
sent
ial e
lem
ents
of
this
Agr
eem
ent a
nd th
at, b
ut f
or s
uch
cove
nant
s, th
e C
ompa
ny w
ould
not
hav
een
tere
d in
to th
is A
gree
men
t.
(b)
The
Com
pany
and
Exe
cutiv
e ha
ve e
ach
cons
ulte
d w
ith th
eir
resp
ectiv
e le
gal c
ouns
el a
nd h
ave
been
adv
ised
con
cern
ing
the
reas
onab
lene
ss a
nd p
ropr
iety
of
such
cov
enan
ts.
8.3
Rig
ht to
Inj
unct
ion,
Sur
viva
l of
Und
erta
king
s.
(a)
In r
ecog
nitio
n of
the
conf
iden
tial n
atur
e of
the
Con
fide
ntia
l Inf
orm
atio
n, a
nd in
rec
ogni
tion
of th
e ne
cess
ity o
f th
e lim
ited
rest
rict
ions
impo
sed
by S
ectio
n 8.
1, th
e pa
rtie
s ag
ree
that
it w
ould
be
impo
ssib
le to
mea
sure
sol
ely
in m
oney
the
dam
ages
whi
ch th
e C
ompa
ny w
ould
suf
fer
if E
xecu
tive
wer
e to
bre
ach
any
of h
is o
blig
atio
ns u
nder
suc
h Se
ctio
ns. E
xecu
tive
ackn
owle
dges
that
any
bre
ach
ofan
y pr
ovis
ion
of s
uch
Sect
ion
-24-
wou
ld ir
repa
rabl
y in
jure
the
Com
pany
. Acc
ordi
ngly
, Exe
cutiv
e ag
rees
that
if h
e br
each
es a
ny o
f th
e pr
ovis
ions
of
such
Sec
tion,
the
Com
pany
sha
ll be
ent
itled
, in
addi
tion
to a
ny o
ther
rem
edie
s to
whi
chth
e C
ompa
ny m
ay b
e en
title
d un
der
this
Agr
eem
ent o
r ot
herw
ise,
to a
n in
junc
tion
to b
e is
sued
by
a co
urt o
f co
mpe
tent
juri
sdic
tion,
to r
estr
ain
any
brea
ch, o
r th
reat
ened
bre
ach,
of
such
pro
visi
ons,
and
Exe
cutiv
e he
reby
wai
ves
any
righ
t to
asse
rt a
ny c
laim
or
defe
nse
that
the
Com
pany
has
an
adeq
uate
rem
edy
at la
w f
or a
ny s
uch
brea
ch.
(b)
If a
cou
rt d
eter
min
es th
at a
ny o
f th
e co
vena
nts
incl
uded
in th
is A
rtic
le V
III
is u
nenf
orce
able
in w
hole
or
in p
art,
such
cou
rt s
hall
have
the
pow
er to
mod
ify
the
prov
isio
n, a
s ne
cess
ary,
so
as to
cau
sesu
ch c
oven
ant a
s so
mod
ifie
d to
be
enfo
rcea
ble.
(c)
All
of th
e pr
ovis
ions
of
this
Art
icle
VII
I sh
all s
urvi
ve a
ny T
erm
inat
ion
of E
mpl
oym
ent w
ithou
t reg
ard
to (
i) th
e re
ason
s fo
r su
ch te
rmin
atio
n, o
r (i
i) th
e ex
pira
tion
of th
e A
gree
men
t Ter
m.
8.4
If E
xecu
tive
brea
ches
the
rest
rict
ive
cove
nant
s co
ntai
ned
in th
is A
rtic
le V
III,
suc
h vi
olat
ion
shal
l be
rem
edie
d as
pro
vide
d he
rein
, but
sha
ll no
t aff
ect t
he C
ompa
ny's
obl
igat
ion
to p
ay b
enef
its o
rot
herw
ise
fulf
ill it
s ob
ligat
ions
und
er th
is A
gree
men
t exc
ept a
nd to
the
exte
nt th
at s
uch
viol
atio
n is
the
basi
s fo
r E
xecu
tive'
s T
erm
inat
ion
with
Cau
se.
AR
TIC
LE
IX
.
NO
N-E
XC
LU
SIV
ITY
OF
RIG
HT
S
9.1
Wai
ver
of C
erta
in O
ther
Rig
hts.
To
the
exte
nt th
at p
aym
ents
are
mad
e to
Exe
cutiv
e pu
rsua
nt to
Sec
tion
4.1(
a) o
r 4.
1(b)
, Exe
cutiv
e he
reby
wai
ves
the
righ
t to
rece
ive
seve
ranc
e pa
ymen
ts o
r se
vera
nce
bene
fits
und
er a
ny o
ther
sev
eran
ce P
lan,
agr
eem
ent o
r Po
licy
of th
e C
ompa
ny, i
nclu
ding
but
not
lim
ited
to, a
ny b
enef
its to
whi
ch E
xecu
tive
shal
l bec
ome
entit
led
unde
r an
Exe
cutiv
e R
eten
tion
Agr
eem
ent.
9.2
Oth
er R
ight
s. E
xcep
t as
expr
essl
y pr
ovid
ed in
Sec
tion
9.1,
this
Agr
eem
ent s
hall
not p
reve
nt o
r lim
it E
xecu
tive'
s co
ntin
uing
or
futu
re p
artic
ipat
ion
in a
ny b
enef
it, b
onus
, inc
entiv
e or
oth
er P
lans
prov
ided
by
the
Com
pany
and
for
whi
ch E
xecu
tive
may
qua
lify,
nor
sha
ll th
is A
gree
men
t lim
it or
oth
erw
ise
affe
ct s
uch
righ
ts a
s E
xecu
tive
may
hav
e un
der
any
othe
r ag
reem
ents
with
the
Com
pany
.A
mou
nts
whi
ch a
re v
este
d be
nefi
ts o
r w
hich
Exe
cutiv
e is
oth
erw
ise
entit
led
to r
ecei
ve u
nder
any
Pla
n an
d an
y ot
her
paym
ent o
r be
nefi
t req
uire
d by
law
at o
r af
ter
the
Ter
min
atio
n D
ate
shal
l be
paya
ble
in
gp
y
acco
rdan
ce w
ith s
uch
Plan
or
appl
icab
le la
w e
xcep
t as
expr
essl
y m
odif
ied
by th
is A
gree
men
t.
9.3
Exe
cutiv
e E
mpl
oym
ent C
ontr
act.
It is
not
the
inte
nt o
f th
is A
gree
men
t to
supe
rced
e th
e C
ompa
ny's
Exe
cutiv
e R
eten
tion
Plan
. Upo
n a
Cha
nge
of C
ontr
ol th
at c
ause
s E
xecu
tive
to b
e en
title
d to
seve
ranc
e be
nefi
ts u
nder
this
Agr
eem
ent a
nd u
nder
the
Exe
cutiv
e R
eten
tion
Plan
, Exe
cutiv
e m
ay e
lect
to r
ecei
ve s
ever
ance
ben
efits
und
er e
ither
the
Exe
cutiv
e R
eten
tion
Plan
or
unde
r th
is A
gree
men
t.E
xecu
tive'
s el
ectio
n to
rec
eive
ben
efits
und
er o
ne o
f th
ese
arra
ngem
ents
sha
ll co
nstit
ute
a w
aive
r of
Exe
cutiv
e's
righ
t to
rece
ive
bene
fits
und
er th
e ot
her
arra
ngem
ent.
In th
e ev
ent t
hat E
xecu
tive
term
inat
esfo
r G
ood
Rea
son
as d
efin
ed in
this
-25-
Agr
eem
ent,
such
term
inat
ion
shal
l als
o be
trea
ted
as a
term
inat
ion
with
out c
ause
for
pur
pose
s of
the
Exe
cutiv
e R
eten
tion
Plan
, thu
s pe
rmitt
ing
Exe
cutiv
e to
ele
ct to
rec
eive
sev
eran
ce b
enef
its u
nder
eith
erth
e E
xecu
tive
Ret
entio
n Pl
an f
or a
term
inat
ion
with
out c
ause
or
unde
r th
is A
gree
men
t for
a te
rmin
atio
n fo
r G
ood
Rea
son.
If
Exe
cutiv
e el
ects
to r
ecei
ve s
uch
seve
ranc
e be
nefi
ts u
nder
the
Exe
cutiv
eR
eten
tion
Plan
, the
gol
den
para
chut
e E
xcis
e T
ax g
ross
-up
prov
isio
ns in
Art
icle
V o
f th
is A
gree
men
t sha
ll ap
ply
to p
rovi
de g
ross
-up
prot
ectio
n to
Exe
cutiv
e un
der
the
Exe
cutiv
e R
eten
tion
Plan
.
9.4
Exe
cutiv
e R
eten
tion
Plan
. The
pro
visi
ons
of th
is A
gree
men
t sha
ll co
ntin
ue to
app
ly d
urin
g pe
riod
s w
hen
Exe
cutiv
e is
in th
e "T
rans
ition
Per
iod"
und
er A
rtic
le 4
of
the
Exe
cutiv
e R
eten
tion
Plan
.C
omm
enci
ng o
n th
e da
te th
at E
xecu
tive
begi
ns th
e "C
ontin
ued
Em
ploy
men
t Per
iod"
for
pur
pose
s of
Art
icle
5 o
f th
e E
xecu
tive
Ret
entio
n Pl
an, a
ll of
Exe
cutiv
e's
righ
ts to
fut
ure
seve
ranc
e be
nefi
ts u
nder
this
Agr
eem
ent s
hall
ceas
e an
d E
xecu
tive'
s so
le s
ever
ance
or
sim
ilar
righ
ts s
hall
be th
ose
set f
orth
in th
e E
xecu
tive
Ret
entio
n Pl
an.
AR
TIC
LE
X.
MIS
CE
LL
AN
EO
US
10.1
No
Ass
igna
bilit
y. T
his
Agr
eem
ent i
s pe
rson
al to
Exe
cutiv
e an
d w
ithou
t the
pri
or w
ritte
n co
nsen
t of
the
Com
pany
sha
ll no
t be
assi
gnab
le b
y E
xecu
tive
othe
rwis
e th
an b
y w
ill o
r th
e la
ws
of d
esce
nt a
nddi
stri
butio
n. T
his
Agr
eem
ent s
hall
inur
e to
the
bene
fit o
f an
d be
enf
orce
able
by
Exe
cutiv
e's
lega
l rep
rese
ntat
ives
.
10.2
Suc
cess
ors.
Thi
s A
gree
men
t sha
ll in
ure
to th
e be
nefi
t of
and
be b
indi
ng u
pon
the
Com
pany
and
its
succ
esso
rs a
nd a
ssig
ns. T
he C
ompa
ny w
ill r
equi
re a
ny s
ucce
ssor
(w
heth
er d
irec
t or
indi
rect
, by
purc
hase
, mer
ger,
con
solid
atio
n or
oth
erw
ise)
to a
ll or
sub
stan
tially
all
of th
e bu
sine
ss o
r as
sets
of
the
Com
pany
or
any
Pare
nt C
orpo
ratio
n of
any
suc
cess
or (
whe
ther
dir
ect o
r in
dire
ct)
by p
urch
ase,
mer
ger,
cons
olid
atio
n or
oth
erw
ise
to a
ll or
sub
stan
tially
all
of th
e bu
sine
ss a
sset
s of
the
Com
pany
, to
assu
me
expr
essl
y an
d ag
ree
to p
erfo
rm th
is A
gree
men
t in
the
sam
e m
anne
r an
d to
the
sam
e ex
tent
that
the
Com
pany
wou
ld b
e re
quir
ed to
per
form
it if
no
such
suc
cess
ion
had
take
n pl
ace.
Any
suc
cess
or to
the
busi
ness
or
asse
ts o
f th
e C
ompa
ny w
hich
ass
umes
or
agre
es to
per
form
this
Agr
eem
ent b
y op
erat
ion
of la
w, c
ontr
act,
or o
ther
wis
e sh
all b
e jo
intly
and
sev
eral
ly li
able
with
the
Com
pany
und
er th
is A
gree
men
t as
if s
uch
succ
esso
r w
ere
the
Com
pany
.
10.3
Pay
men
ts to
Ben
efic
iary
. If
Exe
cutiv
e di
es b
efor
e re
ceiv
ing
amou
nts
to w
hich
Exe
cutiv
e is
ent
itled
und
er th
is A
gree
men
t, su
ch a
mou
nts
shal
l be
paid
in a
lum
p su
m to
one
or
mor
e be
nefi
ciar
ies
desi
gnat
ed in
wri
ting
by E
xecu
tive
(eac
h, a
"B
enef
icia
ry")
, or
if n
one
is s
o de
sign
ated
, to
Exe
cutiv
e's
esta
te.
10.4
Non
-Alie
natio
n of
Ben
efits
. Ben
efits
pay
able
und
er th
is A
gree
men
t sha
ll no
t be
subj
ect i
n an
y m
anne
r to
ant
icip
atio
n, a
liena
tion,
sal
e, tr
ansf
er, a
ssig
nmen
t, pl
edge
, enc
umbr
ance
, cha
rge,
gar
nish
men
t,ex
ecut
ion
or le
vy o
f an
y ki
nd, e
ither
vol
unta
ry o
r in
volu
ntar
y, b
efor
e ac
tual
ly b
eing
rec
eive
d by
Exe
cutiv
e, a
nd a
ny s
uch
atte
mpt
to d
ispo
se o
f an
y ri
ght t
o be
nefi
ts p
ayab
le u
nder
this
Agr
eem
ent s
hall
bevo
id.
-26-
10.5
No
Def
eren
ce. U
nles
s ot
herw
ise
expr
essl
y pr
ovid
ed in
this
Agr
eem
ent,
no d
eter
min
atio
n pu
rsua
nt to
, or
inte
rpre
tatio
n of
, thi
s A
gree
men
t mad
e by
the
boar
d of
dir
ecto
rs (
or a
ny c
omm
ittee
ther
eof)
of
the
Com
pany
or
any
Succ
esso
r C
orpo
ratio
n fo
llow
ing
a C
hang
e of
Con
trol
or
Imm
inen
t Cha
nge
Dat
e sh
all b
e en
title
d to
any
pre
sum
ptiv
e va
lidity
or
othe
r de
fere
nce
in c
onne
ctio
n w
ith a
ny ju
dici
al o
rad
min
istr
ativ
e pr
ocee
ding
rel
atin
g to
or
aris
ing
unde
r th
is A
gree
men
t.
10.6
Sev
erab
ility
. If
any
one
or m
ore
Art
icle
s, S
ectio
ns o
r ot
her
port
ions
of
this
Agr
eem
ent a
re d
ecla
red
by a
ny c
ourt
or
gove
rnm
enta
l aut
hori
ty to
be
unla
wfu
l or
inva
lid, s
uch
unla
wfu
lnes
s or
inva
lidity
shal
l not
ser
ve to
inva
lidat
e an
y A
rtic
le, S
ectio
n or
oth
er p
ortio
n no
t so
decl
ared
to b
e un
law
ful o
r in
valid
. Any
Art
icle
, Sec
tion
or o
ther
por
tion
so d
ecla
red
to b
e un
law
ful o
r in
valid
sha
ll be
con
stru
ed s
oas
to e
ffec
tuat
e th
e te
rms
of s
uch
Art
icle
,Se
ctio
n or
oth
er p
ortio
n to
the
fulle
st e
xten
t pos
sibl
e w
hile
rem
aini
ng la
wfu
l and
val
id.
10.7
Am
endm
ents
. Thi
s A
gree
men
t sha
ll no
t be
amen
ded
or m
odif
ied
at a
ny ti
me
exce
pt b
y w
ritte
n in
stru
men
t exe
cute
d by
the
Com
pany
and
Exe
cutiv
e. T
he C
ompa
ny s
hall
not a
men
d or
term
inat
e th
isA
gree
men
t in
any
man
ner
follo
win
g th
e E
ffec
tive
Dat
e or
dur
ing
any
Imm
inen
t Cha
nge
Peri
od w
ithou
t the
pri
or w
ritte
n co
nsen
t of
the
Exe
cutiv
e.
10.8
Not
ices
. All
notic
es a
nd o
ther
com
mun
icat
ions
und
er th
is A
gree
men
t sha
ll be
in w
ritin
g an
d de
liver
ed b
y ha
nd, b
y na
tiona
lly-r
ecog
nize
d de
liver
y se
rvic
e th
at p
rom
ises
ove
rnig
ht d
eliv
ery,
or
byfi
rst-
clas
s re
gist
ered
or
cert
ifie
d m
ail,
retu
rn r
ecei
pt r
eque
sted
, pos
tage
pre
paid
, add
ress
ed a
s fo
llow
s:
If t
o E
xecu
tive
:
at E
xecu
tive'
s m
ost r
ecen
t hom
e ad
dres
s on
file
gp
y
with
the
Com
pany
.
If t
o th
e C
ompa
ny:
McD
onal
d's
Cor
pora
tion
One
McD
onal
d's
Plaz
a
Oak
Bro
ok, I
L 6
0523
Atte
ntio
n: G
ener
al C
ouns
el
or to
suc
h ot
her
addr
ess
as e
ither
par
ty s
hall
have
fur
nish
ed to
the
othe
r in
wri
ting.
Not
ice
and
com
mun
icat
ions
sha
ll be
eff
ectiv
e w
hen
actu
ally
rec
eive
d by
the
addr
esse
e.
10.9
Cou
nter
part
s. T
his
Agr
eem
ent m
ay b
e ex
ecut
ed in
two
or m
ore
coun
terp
arts
, eac
h of
whi
ch s
hall
be d
eem
ed a
n or
igin
al, b
ut a
ll of
whi
ch to
geth
er c
onst
itute
one
and
the
sam
e in
stru
men
t.
10.1
0 G
over
ning
Law
. Thi
s A
gree
men
t sha
ll be
inte
rpre
ted
and
cons
true
d in
acc
orda
nce
with
the
law
s of
the
Stat
e of
Illi
nois
with
out r
egar
d to
its
choi
ce o
f la
w p
rinc
iple
s.
-27-
10.1
1 C
aptio
ns. T
he c
aptio
ns o
f th
is A
gree
men
t are
not
apa
rt o
f th
e pr
ovis
ions
her
eof
and
shal
l hav
e no
for
ce o
r ef
fect
.
10.1
2 N
umbe
r an
d G
ende
r. W
here
ver
appr
opri
ate,
the
sing
ular
sha
ll in
clud
e th
e pl
ural
, the
plu
ral s
hall
incl
ude
the
sing
ular
, and
the
mas
culin
e sh
all i
nclu
de th
e fe
min
ine.
10.1
3 T
ax W
ithho
ldin
g. T
he C
ompa
ny m
ay w
ithho
ld f
rom
any
am
ount
s pa
yabl
e un
der
this
Agr
eem
ent a
ny T
axes
that
are
req
uire
d to
be
with
held
pur
suan
t to
any
appl
icab
le la
w o
r re
gula
tion.
10.1
4 N
o W
aive
r. E
xecu
tive'
s fa
ilure
to in
sist
upo
n st
rict
com
plia
nce
with
any
pro
visi
on o
f th
is A
gree
men
t sha
ll no
t be
deem
ed a
wai
ver
of s
uch
prov
isio
n or
any
oth
er p
rovi
sion
of
this
Agr
eem
ent.
Aw
aive
r of
any
pro
visi
on o
f th
is A
gree
men
t sha
ll no
t be
deem
ed a
wai
ver
of a
ny o
ther
pro
visi
on, a
nd a
ny w
aive
r of
any
def
ault
in a
ny s
uch
prov
isio
n sh
all n
ot b
e de
emed
a w
aive
r of
any
late
r de
faul
t the
reof
or o
f an
y ot
her
prov
isio
n.
10.1
5 E
ntir
e A
gree
men
t. T
his
Agr
eem
ent c
onta
ins
the
entir
e un
ders
tand
ing
of th
e C
ompa
ny a
nd E
xecu
tive
with
res
pect
to it
s su
bjec
t mat
ter.
IN W
ITN
ESS
WH
ER
EO
F, E
xecu
tive
and
the
Com
pany
hav
e ex
ecut
ed th
is C
hang
e of
Con
trol
Em
ploy
men
t Agr
eem
ent a
s of
the
date
fir
st a
bove
wri
tten.
EX
EC
UT
IVE
McD
ON
AL
D'S
CO
RP
OR
AT
ION
By:
___
____
____
____
____
____
____
Titl
e: _
____
____
____
____
____
___
-28-
AN
NE
X A
FO
RM
OF
NO
N-C
OM
PE
TIT
ION
AN
D R
EL
EA
SE A
GR
EE
ME
NT
Thi
s ag
reem
ent,
rele
ase
and
wai
ver
(the
"A
gree
men
t"),
mad
e as
of
the
___
day
of _
____
____
____
___,
___
__, i
s m
ade
by a
nd b
etw
een
McD
onal
d's
Cor
pora
tion
and
(tog
ethe
r w
ith a
ll su
cces
sors
ther
eto,
the
"Com
pany
") a
nd _
____
____
____
__ (
"Exe
cutiv
e").
WH
ER
EA
S, th
e C
ompa
ny a
nd th
e E
xecu
tive
have
pre
viou
sly
ente
red
into
a C
hang
e-of
-Con
trol
Sup
plem
ent a
nd A
men
dmen
t to
Em
ploy
men
t Agr
eem
ent,
date
d as
of
____
____
____
____
_, 2
00_
("C
hang
eof
Con
trol
Agr
eem
ent"
);
gp
y
NO
W T
HE
RE
FOR
E, i
n co
nsid
erat
ion
for
rece
ivin
g be
nefi
ts a
nd s
ever
ance
und
erSe
ctio
n 4.
1 of
the
Cha
nge
of C
ontr
ol A
gree
men
t and
in c
onsi
dera
tion
of th
e re
pres
enta
tions
, cov
enan
ts a
nd m
utua
l pro
mis
es s
et f
orth
in th
is A
gree
men
t, th
e pa
rtie
s ag
ree
as f
ollo
ws:
1. D
efin
ed T
erm
s. W
hen
used
her
ein,
unl
ess
othe
rwis
e sp
ecif
ied,
term
s sh
all h
ave
the
sam
e de
fini
tions
as
prov
ided
in th
e C
hang
e of
Con
trol
Agr
eem
ent.
2. R
elea
se. E
xcep
t with
res
pect
to th
e C
ompa
ny's
obl
igat
ions
und
er th
e C
hang
e of
Con
trol
Agr
eem
ent,
the
Exe
cutiv
e, a
nd E
xecu
tive'
s he
irs,
exe
cuto
rs, a
ssig
ns, r
epre
sent
ativ
es, a
gent
s, le
gal r
epre
sent
ativ
es,
and
pers
onal
rep
rese
ntat
ives
, her
eby
rele
ases
, acq
uits
and
for
ever
dis
char
ges
the
Com
pany
, its
Sub
sidi
arie
s, th
e Su
rviv
ing
Cor
pora
tion
and
thei
r re
spec
tive
dire
ctor
s, o
ffic
ers,
age
nts,
ser
vant
s, e
mpl
oyee
s,at
torn
eys,
sha
reho
lder
s, s
ucce
ssor
s, a
ssig
ns a
nd a
ffili
ates
, of
and
from
any
and
all
clai
ms,
liab
ilitie
s, d
eman
ds, c
ause
s of
act
ion,
cos
ts, e
xpen
ses,
atto
rney
s fe
es, d
amag
es a
nd o
blig
atio
ns o
f ev
ery
kind
and
natu
re, i
n la
w, e
quity
, or
othe
rwis
e, k
now
n an
d un
know
n, s
uspe
cted
and
uns
uspe
cted
, dis
clos
ed a
nd u
ndis
clos
ed, a
risi
ng o
ut o
f or
in a
ny w
ay r
elat
ed to
agr
eem
ents
, eve
nts,
act
s or
con
duct
at a
ny ti
me
prio
rto
the
day
prio
r to
exe
cutio
n of
this
Agr
eem
ent,
incl
udin
g bu
t not
lim
ited
to: a
ny a
nd a
ll su
ch c
laim
s an
d de
man
ds d
irec
tly o
r in
dire
ctly
ari
sing
out
of
or in
any
way
con
nect
ed w
ith th
e E
xecu
tive'
sem
ploy
men
t with
the
Com
pany
; the
Exe
cutiv
e's
term
inat
ion
of e
mpl
oym
ent w
ith th
e C
ompa
ny; c
laim
s or
dem
ands
rel
ated
to s
alar
y, b
onus
es, c
omm
issi
ons,
sto
ck, s
tock
opt
ions
, or
any
othe
r ow
ners
hip
inte
rest
s in
the
Com
pany
, vac
atio
n pa
y, f
ring
e be
nefi
ts, e
xpen
se r
eim
burs
emen
ts, s
abba
tical
ben
efits
, sev
eran
ce b
enef
its, o
r an
y ot
her
form
of
com
pens
atio
n or
equ
ity; c
laim
s pu
rsua
nt to
any
fed
eral
, sta
te,
loca
l law
, sta
tute
, ord
inan
ce o
r ca
use
of a
ctio
n in
clud
ing,
but
not
lim
ited
to, t
he f
eder
al C
ivil
Rig
hts
Act
of
1964
, as
amen
ded;
the
fede
ral A
ge D
iscr
imin
atio
n in
Em
ploy
men
t Act
of
1967
, as
amen
ded;
the
fede
ral A
mer
ican
s w
ith D
isab
ilitie
s A
ct o
f 19
90; t
ort l
aw; c
ontr
act l
aw; w
rong
ful d
isch
arge
; dis
crim
inat
ion;
fra
ud; d
efam
atio
n; h
aras
smen
t; em
otio
nal d
istr
ess;
or
brea
ch o
f th
e im
plie
d co
vena
nt o
f go
odfa
ith a
nd f
air
deal
ing.
Thi
s R
elea
se d
oes
not a
pply
to a
ny c
ompe
nsat
ion
or b
enef
its to
whi
ch th
e E
xecu
tive
may
be
entit
led
unde
r th
is A
gree
men
t or
the
Cha
nge
of C
ontr
ol A
gree
men
t or
to a
ny r
ight
s to
inde
mni
fica
tion
unde
r by
-law
s or
oth
er a
gree
men
ts o
f th
e C
ompa
ny o
r an
y ot
her
Em
ploy
er.
1
3. N
o In
duce
men
t. E
xecu
tive
agre
es th
at n
o pr
omis
e or
indu
cem
ent t
o en
ter
into
this
Agr
eem
ent h
as b
een
offe
red
or m
ade
exce
pt a
s se
t for
th in
this
Agr
eem
ent,
that
the
Exe
cutiv
e is
ent
erin
g in
to th
isA
gree
men
t with
out a
ny th
reat
or
coer
cion
and
with
out r
elia
nce
or a
ny s
tate
men
t or
repr
esen
tatio
n m
ade
on b
ehal
f of
the
Com
pany
or
by a
ny p
erso
n em
ploy
ed b
y or
rep
rese
ntin
g th
e C
ompa
ny, e
xcep
t for
the
wri
tten
prov
isio
ns a
nd p
rom
ises
con
tain
ed in
this
Agr
eem
ent.
4. C
onfi
dent
ial I
nfor
mat
ion.
(a)
Exe
cutiv
e ac
know
ledg
es th
at it
is th
e po
licy
of th
e C
ompa
ny to
mai
ntai
n as
sec
ret a
nd c
onfi
dent
ial a
ll C
onfi
dent
ial I
nfor
mat
ion,
and
that
Con
fide
ntia
l Inf
orm
atio
n ha
s be
en a
nd w
ill b
e de
velo
ped
atsu
bsta
ntia
l cos
t and
eff
ort t
o th
e C
ompa
ny. E
xecu
tive
ackn
owle
dges
that
he
will
hav
e ac
cess
to C
onfi
dent
ial I
nfor
mat
ion
with
res
pect
to th
e C
ompa
ny w
hich
info
rmat
ion
is a
val
uabl
e an
d un
ique
ass
et o
fth
e C
ompa
ny a
nd th
at d
iscl
osur
e of
suc
h C
onfi
dent
ial I
nfor
mat
ion
wou
ld c
ause
irre
para
ble
dam
age
to th
e C
ompa
ny's
bus
ines
s an
d op
erat
ions
.
(b)
Exe
cutiv
e ac
know
ledg
es th
at (
i) C
onfi
dent
ial I
nfor
mat
ion
is, a
s be
twee
n th
e C
ompa
ny a
nd E
xecu
tive,
the
excl
usiv
e pr
oper
ty o
f th
e C
ompa
ny,
(ii)
wha
teve
r E
xecu
tive
crea
tes
in th
e pe
rfor
man
ce o
f du
ties
in th
e co
urse
of
Exe
cutiv
e's
empl
oym
ent,
incl
udin
g id
eas,
dev
elop
men
ts, w
ritin
gs, i
mpr
ovem
ents
, des
igns
, gra
phic
and
mus
ical
wor
ks (
the
"Wor
k Pr
oduc
t")
is th
e pr
oper
ty o
f th
e C
ompa
ny, a
nd (
iii)
to th
e ex
tent
that
any
of
the
Wor
k Pr
oduc
t is
capa
ble
of p
rote
ctio
n by
cop
yrig
ht, i
t is
crea
ted
with
in th
e sc
ope
of E
xecu
tive'
s em
ploy
men
t and
isw
ork
mad
e fo
r hi
re. T
o th
e ex
tent
that
any
suc
h W
ork
Prod
uct m
ay n
ot b
e a
wor
k m
ade
for
hire
, Exe
cutiv
e he
reby
ass
igns
to th
e C
ompa
ny a
ll ri
ghts
in s
uch
Wor
k Pr
oduc
t. T
o th
e ex
tent
that
any
of
the
Wor
k Pr
oduc
t is
an in
vent
ion,
Exe
cutiv
e he
reby
ass
igns
to th
e C
ompa
ny a
ll ri
ght,
title
, and
inte
rest
in a
nd to
inve
ntio
ns, i
mpr
ovem
ents
, dis
cove
ries
, or
idea
s co
ncei
ved
or in
vent
ed b
y E
xecu
tive
duri
ng th
ete
rm o
f E
xecu
tive'
s em
ploy
men
t (th
e "I
nven
tions
"). T
he C
ompa
ny a
ckno
wle
dges
that
this
Agr
eem
ent d
oes
not a
pply
to a
n in
vent
ion
for
whi
ch n
o eq
uipm
ent,
supp
lies,
fac
ility
, or
trad
e se
cret
info
rmat
ion
of th
e C
ompa
ny w
as u
sed
and
whi
ch w
as d
evel
oped
ent
irel
y on
Exe
cutiv
e's
own
time,
unl
ess
the
Inve
ntio
n (x
) re
late
s to
the
busi
ness
of
the
Com
pany
or
to th
e C
ompa
ny's
act
ual o
r de
mon
stra
bly
antic
ipat
ed r
esea
rch
or d
evel
opm
ent,
or(y
) re
sults
fro
m a
ny w
ork
perf
orm
ed b
y E
xecu
tive
for
the
Com
pany
. Exe
cutiv
e ag
rees
to e
xecu
te a
ny d
ocum
ents
at a
ny ti
me
reas
onab
ly r
equi
red
by th
e C
ompa
ny in
con
nect
ion
with
the
regi
stra
tion
ofco
pyri
ght,
the
assi
gnm
ent o
r se
curi
ng o
f pa
tent
pro
tect
ion
for
any
Inve
ntio
n, o
r ot
her
perf
ectio
n of
the
Com
pany
's o
wne
rshi
p of
the
Wor
k Pr
oduc
t.
(c)
Bot
h du
ring
Exe
cutiv
e's
empl
oym
ent b
y th
e C
ompa
ny a
nd a
t any
tim
e af
ter
the
Ter
min
atio
n D
ate,
Exe
cutiv
e:
(i)
shal
l not
, dir
ectly
or
indi
rect
ly, d
ivul
ge, f
urni
sh o
r m
ake
acce
ssib
le to
any
Per
son
conf
iden
tial i
nfor
mat
ion,
exc
ept:
-2-
(A)
to th
e ex
tent
Exe
cutiv
e re
ason
ably
and
in g
ood
faith
bel
ieve
s th
at s
uch
actio
ns a
re r
elat
ed to
, and
req
uire
d by
, Exe
cutiv
e's
perf
orm
ance
of
his
dutie
s un
der
this
Agr
eem
ent;
or
(B)
as m
ay b
e co
mpe
lled
by a
pplic
able
law
or
adm
inis
trat
ive
regu
latio
n; p
rovi
ded
that
Exe
cutiv
e, to
the
exte
nt n
ot p
rohi
bite
d fr
om d
oing
so
by a
pplic
able
law
or
adm
inis
trat
ive
regu
latio
n, s
hall
give
the
Com
pany
wri
tten
notic
e of
the
info
rmat
ion
to b
e so
dis
clos
ed p
ursu
ant t
o cl
ause
(B
) of
this
sen
tenc
e as
far
in a
dvan
ce o
f its
dis
clos
ure
as is
pra
ctic
able
, sha
ll co
oper
ate
with
the
Com
pany
in it
s ef
fort
s to
prot
ect t
he in
form
atio
n fr
om d
iscl
osur
e, a
nd s
hall
limit
Exe
cutiv
e's
disc
losu
re o
f su
ch in
form
atio
n to
the
min
imum
dis
clos
ure
requ
ired
by
law
or
adm
inis
trat
ive
regu
latio
n (u
nles
s th
e C
ompa
ny a
gree
s in
wri
ting
to a
gre
ater
leve
l of
disc
losu
re);
(ii)
sha
ll no
t use
for
his
ow
n be
nefi
t in
any
man
ner,
any
Con
fide
ntia
l Inf
orm
atio
n;
(iii)
sha
ll no
t cau
se a
ny s
uch
Con
fide
ntia
l Inf
orm
atio
n to
bec
ome
publ
icly
kno
wn;
and
gp
y
(iv)
sha
ll ta
ke a
ll re
ason
able
ste
ps to
saf
egua
rd s
uch
Con
fide
ntia
l Inf
orm
atio
n an
d to
pro
tect
it a
gain
st d
iscl
osur
e, m
isus
e, lo
ss a
nd th
eft.
(d)
For
purp
oses
of
this
Agr
eem
ent,
Con
fide
ntia
l Inf
orm
atio
n re
pres
ents
trad
e se
cret
s su
bjec
t to
prot
ectio
n un
der
the
Uni
form
Tra
de S
ecre
ts A
ct, o
r to
any
com
para
ble
prot
ectio
n af
ford
ed b
y ot
her
appl
icab
le la
ws.
5. N
on-S
olic
itatio
n. D
urin
g th
e pe
riod
beg
inni
ng o
n th
e A
gree
men
t Dat
e an
d en
ding
on
the
firs
t ann
iver
sary
of
the
Ter
min
atio
n D
ate,
Exe
cutiv
e sh
all n
ot, d
irec
tly o
r in
dire
ctly
:
(a)
othe
r th
an in
con
nect
ion
with
the
good
-fai
th p
erfo
rman
ce o
f hi
s du
ties
as a
n of
fice
r of
the
Com
pany
, enc
oura
ge a
ny e
mpl
oyee
of
the
Com
pany
and
/or
its S
ubsi
diar
ies
to te
rmin
ate
his
or h
er r
elat
ions
hip
with
the
Com
pany
and
/or
its S
ubsi
diar
ies;
(b)
solic
it th
e em
ploy
men
t or
enga
gem
ent a
s a
cons
ulta
nt o
r ad
vise
r, o
f an
y em
ploy
ee o
f th
e C
ompa
ny a
nd/o
r its
Sub
sidi
arie
s (o
ther
than
by
the
Com
pany
or
its S
ubsi
diar
ies)
, or
caus
e or
enc
oura
ge a
nyPe
rson
to d
o an
y of
the
fore
goin
g;
(c)
esta
blis
h (o
r ta
ke p
relim
inar
y st
eps
to e
stab
lish)
a b
usin
ess
with
, or
enco
urag
e ot
hers
to e
stab
lish
(or
take
pre
limin
ary
step
s to
est
ablis
h) a
bus
ines
s w
ith, a
ny e
mpl
oyee
of
the
Com
pany
and
/or
itsSu
bsid
iari
es; o
r
(d)
inte
rfer
e w
ith th
e re
latio
nshi
p of
the
Com
pany
and
/or
its S
ubsi
diar
ies
with
, or
ende
avor
to e
ntic
e aw
ay f
rom
the
Com
pany
and
/or
its S
ubsi
diar
ies,
any
Per
son
who
or
whi
ch a
t any
tim
e (w
heth
er b
efor
eor
aft
er E
xecu
tive'
s T
erm
inat
ion
Dat
e) w
as o
r is
an
empl
oyee
, cus
tom
er, v
endo
r or
sup
plie
r of
, or
mai
ntai
ned
a bu
sine
ss r
elat
ions
hip
(whe
ther
as
a fr
anch
isee
or
othe
rwis
e) w
ith, t
he C
ompa
ny a
nd/o
r its
Subs
idia
ries
.
-3-
6. N
on-C
ompe
titio
n C
oven
ant.
Exe
cutiv
e co
vena
nts
that
that
dur
ing
the
peri
od b
egin
ning
on
the
Ter
min
atio
n D
ate
and
endi
ng o
n th
e fi
rst a
nniv
ersa
ry o
f th
e T
erm
inat
ion
Dat
e, E
xecu
tive
shal
l not
:
(i)
dire
ctly
or
indi
rect
ly, i
n an
y ca
paci
ty, e
ngag
e or
par
ticip
ate
in, o
r be
com
e em
ploy
ed b
y or
ren
der
advi
sory
or
cons
ultin
g se
rvic
es in
con
nect
ion
with
any
Pro
hibi
ted
Bus
ines
s, p
rovi
ded
that
not
hing
in th
iscl
ause
(i)
sha
ll pr
eclu
de E
xecu
tive
from
per
form
ing
serv
ices
on
beha
lf o
f an
inve
stm
ent b
anki
ng o
r co
mm
erci
al b
anki
ng, a
uditi
ng o
r co
nsul
ting
firm
so
long
as
he o
r sh
e is
not
eng
aged
in r
ende
ring
serv
ices
to o
r so
liciti
ng b
usin
ess
of a
Pro
hibi
ted
Bus
ines
s; o
r
(ii)
mak
e an
y fi
nanc
ial i
nves
tmen
t, w
heth
er in
the
form
of
equi
ty o
r de
bt, o
r ow
n an
y in
tere
st, d
irec
tly o
r in
dire
ctly
, in
any
Proh
ibite
d B
usin
ess,
pro
vide
d th
at n
othi
ng in
this
cla
use
(ii)
sha
ll re
stri
ctE
xecu
tive
from
mak
ing
any
inve
stm
ent n
ot in
exc
ess
of 5
% o
f th
e C
omm
on S
tock
in a
ny c
ompa
ny w
hose
sto
ck is
list
ed o
n a
natio
nal s
ecur
ities
exc
hang
e or
act
ivel
y tr
aded
in th
e ov
er-t
he-c
ount
er m
arke
tif
suc
h in
vest
men
t doe
s no
t giv
e E
xecu
tive
the
righ
t or
abili
ty to
con
trol
or
infl
uenc
e th
e po
licy
deci
sion
s of
any
Pro
hibi
ted
Bus
ines
s.
For
purp
oses
of
this
Sec
tion
"Pro
hibi
ted
Bus
ines
s" s
hall
mea
n an
y Pe
rson
and
any
bra
nche
s, o
ffic
es o
r op
erat
ions
ther
eof,
whi
ch is
a d
irec
t and
mat
eria
l com
petit
or o
f th
e C
ompa
ny o
r an
y of
its
Subs
idia
ries
in a
ny c
ount
ry o
f th
e w
orld
or
in a
ny s
tate
of
the
Uni
ted
Stat
es, w
hich
is o
ne o
f th
e te
n (1
0) o
r fe
wer
Per
sons
des
igna
ted
as a
Pro
hibi
ted
Bus
ines
s on
Exh
ibit
1 to
this
Agr
eem
ent a
t the
tim
e th
isA
gree
men
t is
exec
uted
.
7. R
easo
nabl
enes
s of
Res
tric
tive
Cov
enan
ts.
(a)
Exe
cutiv
e ac
know
ledg
es th
at th
e co
vena
nts
cont
aine
d in
Sec
tions
4, 5
and
6 a
re r
easo
nabl
e in
the
scop
e of
the
activ
ities
res
tric
ted,
the
geog
raph
ic a
rea
cove
red
by th
e re
stri
ctio
ns, a
nd th
e du
ratio
n of
the
rest
rict
ions
, and
that
suc
h co
vena
nts
are
reas
onab
ly n
eces
sary
to p
rote
ct th
e C
ompa
ny's
legi
timat
e in
tere
sts
in it
s C
onfi
dent
ial I
nfor
mat
ion
and
in it
s re
latio
nshi
ps w
ith it
s em
ploy
ees,
cus
tom
ers
and
supp
liers
. Exe
cutiv
e fu
rthe
r ac
know
ledg
es s
uch
cove
nant
s ar
e es
sent
ial e
lem
ents
of
this
Agr
eem
ent a
nd th
at, b
ut f
or s
uch
cove
nant
s, th
e C
ompa
ny w
ould
not
hav
e en
tere
d in
to th
is A
gree
men
t.
(b)
The
Com
pany
and
Exe
cutiv
e ha
ve e
ach
cons
ulte
d w
ith th
eir
resp
ectiv
e le
gal c
ouns
el a
nd h
ave
been
adv
ised
con
cern
ing
the
reas
onab
lene
ss a
nd p
ropr
iety
of
such
cov
enan
ts.
8. R
ight
to I
njun
ctio
n, S
urvi
val o
f U
nder
taki
ngs.
(a)
In r
ecog
nitio
n of
the
conf
iden
tial n
atur
e of
the
Con
fide
ntia
l Inf
orm
atio
n, a
nd in
rec
ogni
tion
of th
e ne
cess
ity o
f th
e lim
ited
rest
rict
ions
impo
sed
by S
ectio
ns 4
, 5 a
nd 6
, the
par
ties
agre
e th
at it
wou
ld b
eim
poss
ible
to m
easu
re s
olel
y in
mon
ey th
e da
mag
es w
hich
the
Com
pany
wou
ld s
uffe
r if
Exe
cutiv
e w
ere
to b
reac
h an
y of
his
obl
igat
ions
und
er s
uch
Sect
ions
. Exe
cutiv
e ac
know
ledg
es th
at a
ny b
reac
h of
any
prov
isio
n of
suc
h Se
ctio
ns w
ould
irre
para
bly
inju
re th
e C
ompa
ny. A
ccor
ding
ly, E
xecu
tive
agre
es th
at if
he
brea
ches
any
of
the
prov
isio
ns o
f su
ch S
ectio
ns, t
he C
ompa
ny s
hall
be e
ntitl
ed, i
n ad
di-
-4-
tion
to a
ny o
ther
rem
edie
s to
whi
ch th
e C
ompa
ny m
ay b
e en
title
d un
der
this
Agr
eem
ent o
r ot
herw
ise,
to a
n in
junc
tion
to b
e is
sued
by
a co
urt o
f co
mpe
tent
juri
sdic
tion,
to r
estr
ain
any
brea
ch, o
r th
reat
ened
brea
ch, o
f su
ch p
rovi
sion
s, a
nd E
xecu
tive
here
by w
aive
s an
y ri
ght t
o as
sert
any
cla
im o
r de
fens
e th
at th
e C
ompa
ny h
as a
n ad
equa
te r
emed
y at
law
for
any
suc
h br
each
.
(b)
If a
cou
rt d
eter
min
es th
at a
ny o
f th
e co
vena
nts
incl
uded
in S
ectio
ns 4
, 5 a
nd 6
is u
nenf
orce
able
in w
hole
or
in p
art b
ecau
se o
f su
ch c
oven
ant's
dur
atio
n or
geo
grap
hica
l or
othe
r sc
ope,
suc
h co
urt s
hall
have
the
pow
er to
mod
ify
the
dura
tion
or s
cope
of
such
pro
visi
on, a
s th
e ca
se m
ay b
e, s
o as
to c
ause
suc
h co
vena
nt a
s so
mod
ifie
d to
be
enfo
rcea
ble.
gp
y
(c)
All
of th
e pr
ovis
ions
of
Sect
ions
4, 5
and
6 s
hall
surv
ive
any
Ter
min
atio
n of
Em
ploy
men
t with
out r
egar
d to
(i)
the
reas
ons
for
such
term
inat
ion
or (
ii) th
e ex
pira
tion
of th
e A
gree
men
t Ter
m.
9. I
f E
xecu
tive
brea
ches
the
rest
rict
ive
cove
nant
s co
ntai
ned
in S
ectio
ns 4
, 5 a
nd 6
, suc
h vi
olat
ion
shal
l be
rem
edie
d as
pro
vide
d he
rein
, but
sha
ll no
t aff
ect t
he C
ompa
ny's
obl
igat
ion
to p
ay b
enef
its o
rot
herw
ise
fulf
ill it
s ob
ligat
ions
und
er th
is A
gree
men
t exc
ept a
nd to
the
exte
nt th
at s
uch
viol
atio
n is
the
basi
s fo
r E
xecu
tive'
s T
erm
inat
ion
with
Cau
se.
10. C
ompl
ianc
e to
Dat
e. E
xecu
tive
here
by c
oven
ants
and
pro
mis
es th
at h
e ha
s no
t tak
en o
r ca
used
to b
e ta
ken,
dur
ing
a pe
riod
of
at le
ast n
inet
y (9
0) d
ays
prio
r to
the
Eff
ectiv
e D
ate,
any
act
ion
that
wou
ldvi
olat
e th
e co
vena
nts
cont
aine
d in
Sec
tions
4, 5
and
6 o
f th
is A
gree
men
t.
11. A
dvic
e of
Cou
nsel
; Tim
e to
Con
side
r; R
evoc
atio
n. E
xecu
tive
ackn
owle
dges
the
follo
win
g:
(i)
Exe
cutiv
e re
ceiv
ed a
cop
y of
this
Agr
eem
ent o
n __
____
____
__, 2
00_.
(ii)
Exe
cutiv
e ha
s re
ad th
is A
gree
men
t, an
d un
ders
tand
s its
lega
l and
bin
ding
eff
ect.
Exe
cutiv
e is
act
ing
volu
ntar
ily a
nd o
f E
xecu
tive'
s ow
n fr
ee w
ill in
exe
cutin
g th
is A
gree
men
t.
(iii)
Exe
cutiv
e ha
s be
en a
dvis
ed to
see
k an
d ha
s ha
d th
e op
port
unity
to s
eek
lega
l cou
nsel
in c
onne
ctio
n w
ith th
is A
gree
men
t.
(iv)
Exe
cutiv
e w
as g
iven
[21
/45]
day
s (t
he "
Con
side
ratio
n Pe
riod
") to
con
side
r th
e te
rms
of th
is A
gree
men
t bef
ore
sign
ing
it.
(v)
If E
xecu
tive
does
not
del
iver
a s
igne
d co
py o
f th
is A
gree
men
t to
the
Com
pany
on
or b
efor
e th
e la
st d
ay o
f th
e C
onsi
dera
tion
Peri
od, t
his
Agr
eem
ent s
hall
be v
oid
and
Exe
cutiv
e w
ill n
ot r
ecei
ve th
ebe
nefi
ts d
escr
ibed
in S
ectio
n 4.
1 of
the
Cha
nge
of C
ontr
ol A
gree
men
t.
Exe
cutiv
e un
ders
tand
s th
at, i
f E
xecu
tive
timel
y si
gns
this
Agr
eem
ent a
nd d
eliv
ers
it to
the
Com
pany
, Exe
cutiv
e m
ay r
esci
nd th
is A
gree
men
t at a
ny ti
me
with
in s
even
(7)
day
s
-5-
afte
r si
gnin
g it
by d
eliv
erin
g a
wri
tten
notic
e to
the
Com
pany
. Exe
cutiv
e un
ders
tand
s th
at th
is A
gree
men
t will
not
be
effe
ctiv
e un
til a
fter
the
seve
n-da
y re
scis
sion
per
iod
has
expi
red.
12. S
ever
abili
ty. I
f al
l or
any
part
of
this
Agr
eem
ent i
s de
clar
ed b
y an
y co
urt o
r go
vern
men
tal a
utho
rity
to b
e un
law
ful o
r in
valid
, suc
h un
law
fuln
ess
or in
valid
ity s
hall
not i
nval
idat
e an
y ot
her
port
ion
ofth
is A
gree
men
t. A
ny s
ectio
n or
a p
art o
f a
sect
ion
decl
ared
to b
e un
law
ful o
r in
valid
sha
ll, if
pos
sibl
e, b
e co
nstr
ued
in a
man
ner
whi
ch w
ill g
ive
effe
ct to
the
term
s of
the
sect
ion
to th
e fu
llest
ext
ent
poss
ible
whi
le r
emai
ning
law
ful a
nd v
alid
.
13. A
men
dmen
t. T
his
Agr
eem
ent s
hall
not b
e al
tere
d, a
men
ded,
or
mod
ifie
d ex
cept
by
wri
tten
inst
rum
ent e
xecu
ted
by th
e C
ompa
ny a
nd th
e E
xecu
tive.
A w
aive
r of
any
por
tion
of th
is A
gree
men
t sha
ll no
tbe
dee
med
a w
aive
r of
any
oth
er p
ortio
n of
this
Agr
eem
ent.
14. C
ount
erpa
rts.
Thi
s A
gree
men
t may
be
exec
uted
in s
ever
al c
ount
erpa
rts,
eac
h of
whi
ch s
hall
be d
eem
ed to
be
an o
rigi
nal,
but a
ll of
whi
ch to
geth
er w
ill c
onst
itute
one
and
the
sam
e in
stru
men
t.
15. H
eadi
ngs.
The
hea
ding
s of
this
Agr
eem
ent a
re n
ot p
art o
f th
e pr
ovis
ions
her
eof
and
shal
l not
hav
e an
y fo
rce
or e
ffec
t.
16. A
pplic
able
Law
. The
pro
visi
ons
of th
is A
gree
men
t sha
ll be
inte
rpre
ted
and
cons
true
d in
acc
orda
nce
with
the
law
s of
the
Stat
e of
Illi
nois
with
out r
egar
d to
its
choi
ce o
f la
w p
rinc
iple
s.
IN W
ITN
ESS
WH
ER
EO
F, th
e pa
rtie
s ha
ve e
xecu
ted
this
Agr
eem
ent a
s of
the
date
s sp
ecif
ied
belo
w.
EX
EC
UT
IVE
DA
TE
: ___
____
____
___
McD
ON
AL
D'S
CO
RP
OR
AT
ION
By:
____
____
____
____
____
____
____
____
____
Titl
e:__
____
____
____
____
____
____
____
___
DA
TE
: ___
____
____
___
-6-
AN
NE
X B
gp
y
FO
RM
OF
EX
HIB
IT 1
TO
NO
N-C
OM
PE
TIT
ION
AN
D R
EL
EA
SE A
GR
EE
ME
NT
PR
OH
IBIT
ED
BU
SIN
ESS
ES
Exh
ibit
10(
l)
The
fol
low
ing
is a
wri
tten
desc
ript
ion
of a
n or
al a
rran
gem
ent e
nter
ed in
to o
n M
arch
21,
200
2 w
ith a
Nam
ed E
xecu
tive
Off
icer
.
"Fol
low
ing
a th
orou
gh a
nnua
l rev
iew
of
the
Com
pany
's le
ader
ship
team
and
the
man
y in
itiat
ives
that
are
in p
lace
to g
row
the
busi
ness
and
incr
ease
sha
reho
lder
val
ue, t
he B
oard
of
Dir
ecto
rs h
as a
sked
Jac
kM
. Gre
enbe
rg to
com
mit
to c
ontin
uing
as
McD
onal
d's
Chi
ef E
xecu
tive
Off
icer
for
at l
east
thre
e m
ore
year
s an
d he
agr
eed
to d
o so
."
76
McD
onal
d's
Cor
pora
tion
Exh
ibit
12. M
cDon
ald'
s C
orpo
ratio
n st
atem
ent R
e: c
ompu
tatio
n of
rat
ios
DOLLARS IN MILLIONS Years ended December 31, 2001 2000 1999
1998 1997
====================================================================================================================================
Earnings available for fixed charges
Income before provision for income taxes $ 2,329.7/(1)/ $2,882.3 $2,884.1
$2,307.4/(3)/ $2,407.3
Minority interest expense (income) in operating
results of majority-owned subsidiaries, including
fixed charges related to redeemable preferred stock,
less equity in undistributed operating results of
less than 50% owned affiliates (15.4) 16.2 21.9
23.7 28.3
Provision for income taxes of 50% owned affiliates
included in consolidated income before
provision for income taxes 51.0 93.7 72.8
99.9 69.0
Portion of rent charges (after reduction for rental
income from subleased properties) considered
to be representative of interest factors* 252.5 207.0 178.5
161.3 145.9
Interest expense, amortization of debt discount
and issuance costs, and depreciation of
capitalized interest* 510.3 470.3 440.1
461.9 424.8
gp
y
------------------------------------------------------------------------------------------------------------------------------------
$ 3,128.1 $3,669.5 $3,597.4
$3,054.2 $3,075.3
====================================================================================================================================
Fixed charges
Portion of rent charges (after reduction for rental
income from subleased properties) considered
to be representative of interest factors* $ 252.5 $ 207.0 $ 178.5 $
161.3 $ 145.9
Interest expense, amortization of debt discount
and issuance costs, and fixed charges related to
redeemable preferred stock* 492.9 457.9 431.3
453.4 426.1
Capitalized interest* 15.4 16.5 14.7
18.3 23.7
------------------------------------------------------------------------------------------------------------------------------------
$ 760.8 $ 681.4 $ 624.5 $
633.0 $ 595.7
====================================================================================================================================
Ratio of earnings to fixed charges 4.11/(2)/ 5.39 5.76
4.82/(4)/ 5.16
====================================================================================================================================
* In
clud
es a
mou
nts
of th
e re
gist
rant
and
its
maj
ority
-ow
ned
subs
idia
ries
, and
one
-hal
f of
the
amou
nts
of 5
0% o
wne
d af
filia
tes.
(1)
Incl
udes
$25
2.9
mill
ion
of s
peci
al it
ems
note
d in
the
foot
note
to th
e ta
ble
on p
age
9.
(2)
Exc
ludi
ng th
e sp
ecia
l ite
ms
in (
1) a
bove
, the
rat
io o
f ea
rnin
gs to
fix
ed c
harg
es f
or th
e ye
ar e
nded
Dec
embe
r 31
, 200
1 w
ould
hav
e be
en 4
.45.
(3)
Incl
udes
$16
1.6
mill
ion
of M
ade
For
You
cos
ts a
nd th
e $1
60.0
mill
ion
spec
ial c
harg
e re
late
d to
the
hom
e of
fice
pro
duct
ivity
initi
ativ
e fo
r a
tota
l of
$321
.6 m
illio
n.
(4)
Exc
ludi
ng M
ade
For
You
cos
ts a
nd th
e sp
ecia
l cha
rge,
the
ratio
of
earn
ings
to f
ixed
cha
rges
for
the
year
end
ed D
ecem
ber
31, 1
998
wou
ld h
ave
been
5.3
3.
McD
onal
d's
Cor
pora
tion
77
Exh
ibit
21. M
cDon
ald'
s C
orpo
ratio
n su
bsid
iari
es o
f th
e re
gist
rant
Nam
e of
Sub
sidi
ary
(Sta
te o
r C
ount
ry o
f In
corp
orat
ion)
DO
ME
STIC
SU
BSI
DIA
RIE
SM
cDon
ald'
s D
euts
chla
nd, I
nc. (
Del
awar
e)M
cDon
ald'
s R
esta
uran
t Ope
ratio
ns I
nc. (
Del
awar
e) M
cG D
evel
opm
ent C
o. (
Del
awar
e)C
hipo
tle M
exic
an G
rill,
Inc
. (D
elaw
are)
Bos
ton
Mar
ket C
orpo
ratio
n (D
elaw
are)
FO
RE
IGN
SU
BSI
DIA
RIE
SM
cDon
ald'
s Fr
anch
ise
Gm
bH (
Aus
tria
)M
cDon
ald'
s A
ustr
alia
Lim
ited
(Aus
tral
ia)
McD
onal
d's
Fran
ce, S
.A. (
Fran
ce)
gp
y
MD
C I
nmob
iliar
ia d
e M
exic
o S.
A. d
e C
.V. (
Mex
ico)
McD
onal
d's
Res
taur
ants
Pte
., L
td (
Sing
apor
e) R
esta
uran
tes
McD
onal
d's
S.A
. (Sp
ain)
McK
im C
ompa
ny L
td. (
Sout
h K
orea
)Sh
in M
ac C
ompa
ny L
td. (
Sout
h K
orea
)M
cDon
ald'
s N
eder
land
B.V
. (N
ethe
rlan
ds)
Mos
cow
-McD
onal
d's
(Can
ada)
McD
onal
d's
Res
taur
ants
Lim
ited
(Uni
ted
Kin
gdom
)
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
---=
The
nam
es o
f ce
rtai
n su
bsid
iari
es h
ave
been
om
itted
as
follo
ws:
(a)
49 w
holly
-ow
ned
subs
idia
ries
of
the
Com
pany
, eac
h of
whi
ch o
pera
tes
one
or m
ore
McD
onal
d's
rest
aura
nts
with
in th
e U
nite
d St
ates
.(b
) A
dditi
onal
sub
sidi
arie
s, in
clud
ing
som
e fo
reig
n, o
ther
than
thos
e m
entio
ned
in (
a), b
ecau
se c
onsi
dere
d in
the
aggr
egat
e as
a s
ingl
e su
bsid
iary
, the
y w
ould
not
con
stitu
te a
sig
nifi
cant
sub
sidi
ary.
78
McD
onal
d's
Cor
pora
tion
Exh
ibit
23. C
onse
nt o
f in
depe
nden
t aud
itors
We
cons
ent t
o th
e in
corp
orat
ion
by r
efer
ence
in th
e fo
llow
ing
Reg
istr
atio
n St
atem
ents
of
McD
onal
d's
Cor
pora
tion
and
in th
e re
late
d pr
ospe
ctus
es o
f ou
r re
port
dat
ed J
anua
ry 2
4, 2
002
with
res
pect
to th
eC
onso
lidat
ed f
inan
cial
sta
tem
ents
of
McD
onal
d's
Cor
pora
tion
incl
uded
in th
is A
nnua
l Rep
ort (
Form
10-
K)
for
the
year
end
ed D
ecem
ber
31, 2
001.
-------------------------------------
Commission File No.
-------------------------------------
Form S-8 Form S-3
-------------------------------------
33-09267 33-00001
33-24958 33-64873
33-49817 333-25899
33-50701 333-59145
33-58840 333-60170
333-03409 333-82920
333-65033
333-36776
333-36778
333-71656
-------------------------------------
ER
NST
& Y
OU
NG
LL
P
Chi
cago
, Illi
nois
Mar
ch 2
5, 2
002
Exh
ibit
99
Inve
stor
Rel
ease
FO
R I
MM
ED
IAT
E R
EL
EA
SE F
OR
MO
RE
IN
FO
RM
AT
ION
CO
NT
AC
T:
03/2
2/02
Inv
esto
rs: M
ary
Hea
ly, 6
30-6
23-6
429
Med
ia: A
nna
Roz
enic
h, 6
30-6
23-7
316
gp
y
McD
ON
AL
D'S
FIR
ST Q
UA
RT
ER
200
2 U
PD
AT
E
OA
K B
RO
OK
, IL
- M
cDon
ald'
s C
orpo
ratio
n ex
pect
s fi
rst q
uart
er 2
002
earn
ings
per
sha
re to
be
$.29
- $
.30
excl
udin
g th
e ch
arge
s no
ted
belo
w. J
ack
Gre
enbe
rg, C
hair
man
and
Chi
ef E
xecu
tive
Off
icer
note
d, "
Bas
ed o
n ex
pect
ed f
irst
qua
rter
res
ults
and
our
out
look
for
the
year
, we
expe
ct a
nnua
l ear
ning
s pe
r sh
are
to b
e to
war
d th
e lo
wer
end
of
our
prev
ious
ly a
nnou
nced
ran
ge o
f $1
.47
- $1
.54
in c
onst
ant
curr
enci
es*,
exc
ludi
ng th
e ch
arge
s no
ted
belo
w. I
f fo
reig
n cu
rren
cy e
xcha
nge
rate
s re
mai
n w
here
they
are
toda
y, w
e ex
pect
ann
ual 2
002
earn
ings
per
sha
re to
be
nega
tivel
y im
pact
ed b
y ab
out 2
cen
ts. I
nth
e fi
rst q
uart
er, w
e ex
pect
the
per
shar
e cu
rren
cy im
pact
to b
e ne
utra
l to
nega
tive
one
cent
."
The
Com
pany
exp
ects
to r
ecor
d a
firs
t qua
rter
non
-cas
h ch
arge
of
appr
oxim
atel
y $4
5 m
illio
n, p
re a
nd a
fter
tax
($.0
3 pe
r sh
are)
, pri
mar
ily r
elat
ed to
the
impa
irm
ent o
f as
sets
in L
atin
Am
eric
a an
d th
ecl
osin
g of
32
unde
rper
form
ing
rest
aura
nts
in T
urke
y, a
s a
resu
lt of
con
tinue
d ec
onom
ic w
eakn
ess.
Inc
ludi
ng th
is $
45 m
illio
n ch
arge
, we
expe
ct f
irst
qua
rter
ear
ning
s pe
r sh
are
to b
e $.
26 -
$.2
7, b
efor
e th
ecu
mul
ativ
e ef
fect
of
the
acco
untin
g ch
ange
des
crib
ed b
elow
.
The
Com
pany
is r
equi
red
to a
dopt
SFA
S N
o. 1
42, "
Goo
dwill
and
Oth
er I
ntan
gibl
e A
sset
s,"
effe
ctiv
e Ja
nuar
y 1,
200
2. S
FAS
142
indi
cate
s th
at g
oodw
ill w
ill n
o lo
nger
be
amor
tized
but
will
be
subj
ect t
oan
nual
impa
irm
ent t
ests
. In
2001
, am
ortiz
atio
n of
goo
dwill
was
app
roxi
mat
ely
$30
mill
ion
afte
r ta
x ($
.02
per
shar
e). W
e ex
pect
the
elim
inat
ion
of g
oodw
ill a
mor
tizat
ion
to b
enef
it 20
02 n
et in
com
e by
asi
mila
r am
ount
. As
a re
sult
of o
ur in
itial
goo
dwill
impa
irm
ent t
ests
, we
expe
ct a
non
-cas
h ch
arge
of
appr
oxim
atel
y $1
00 m
illio
n af
ter
tax
($.0
8 pe
r sh
are)
, in
the
firs
t qua
rter
for
the
cum
ulat
ive
effe
ct o
f th
isac
coun
ting
chan
ge. T
he im
pair
ed g
oodw
ill is
pri
mar
ily in
Lat
in A
mer
ica,
whe
re e
cono
mie
s ha
ve w
eake
ned
sign
ific
antly
ove
r th
e la
st s
ever
al y
ears
.
- 1
-
McD
onal
d's
Syst
emw
ide
sale
s fo
r th
e fi
rst t
wo
mon
ths
of 2
002
wer
e $6
.2 b
illio
n, u
p 3
perc
ent i
n co
nsta
nt c
urre
ncie
s ov
er th
e sa
me
peri
od la
st y
ear.
We
expe
ct s
ales
to im
prov
e as
the
year
pro
gres
ses
and
expe
ct c
onst
ant c
urre
ncy
sale
s to
incr
ease
6 -
7 p
erce
nt f
or th
e ye
ar.
Gre
enbe
rg a
lso
com
men
ted,
"O
ur E
urop
ean
busi
ness
is p
erfo
rmin
g w
ell.
Eur
opea
n sa
les
incr
ease
d 8
perc
ent f
or th
e fi
rst t
wo
mon
ths
of th
e ye
ar in
con
stan
t cur
renc
ies.
We
are
plea
sed
with
the
prog
ress
inE
urop
e an
d ex
pect
hig
h-si
ngle
dig
it in
crea
ses
in th
is s
egm
ent's
con
stan
t cur
renc
y sa
les
and
oper
atin
g in
com
e fo
r th
e fi
rst q
uart
er. F
or th
e ye
ar, E
urop
e's
cons
tant
cur
renc
y sa
les
are
expe
cted
to in
crea
se in
high
-sin
gle
digi
ts w
hile
thei
r co
nsta
nt c
urre
ncy
oper
atin
g in
com
e is
exp
ecte
d to
incr
ease
in h
igh-
sing
le to
low
dou
ble-
digi
ts (
excl
udin
g sp
ecia
l cha
rges
of
$45.
8 m
illio
n in
200
1).
"In
the
U.S
., sa
les
grew
3 p
erce
nt f
or th
e fi
rst t
wo
mon
ths
of 2
002.
Thr
ough
out t
he U
.S.,
the
Com
pany
and
its
owne
r/op
erat
ors
are
focu
sed
on d
eliv
erin
g Q
SC s
uper
iori
ty, v
alue
and
gre
at ta
stin
g fo
od to
cust
omer
s ev
ery
day.
We
belie
ve o
ur U
.S. i
nitia
tives
will
dri
ve th
e bu
sine
ss f
orw
ard,
and
exp
ect s
ales
to in
crea
se in
the
low
-sin
gle
digi
ts f
or th
e qu
arte
r, a
nd m
id-s
ingl
e di
gits
for
the
year
as
we
gain
mom
entu
m. I
n th
e fi
rst q
uart
er, w
e ex
pect
U.S
. ope
ratin
g in
com
e to
dec
line
in th
e lo
w to
mid
-sin
gle
digi
ts, a
s a
resu
lt of
abo
ut $
22 m
illio
n of
pay
men
ts to
ow
ner/
oper
ator
s to
fac
ilita
te th
e in
trod
uctio
n of
afr
ont c
ount
er te
am s
ervi
ce s
yste
m. E
xclu
ding
thes
e pa
ymen
ts, w
e ex
pect
U.S
. ope
ratin
g in
com
e to
incr
ease
in th
e lo
w-s
ingl
e di
gits
for
the
firs
t qua
rter
. For
the
year
, we
expe
ct U
.S. o
pera
ting
inco
me
toin
crea
se in
mid
-sin
gle
digi
ts (
incl
udin
g th
e $2
2 m
illio
n of
pay
men
ts to
ow
ner/
oper
ator
s in
200
2 an
d ex
clud
ing
spec
ial c
harg
es o
f $1
81.0
mill
ion
in 2
001)
.
"Sal
es in
our
Asi
a/Pa
cifi
c/M
iddl
e E
ast/A
fric
a se
gmen
t (A
PME
A)
cont
inue
to b
e af
fect
ed b
y w
eak
econ
omie
s in
sev
eral
mar
kets
. In
addi
tion,
con
cern
s ab
out t
he s
afet
y of
Jap
anes
e be
ef c
ontin
ue to
impa
ctsa
les,
eve
n th
ough
McD
onal
d's
Japa
n on
ly u
ses
beef
fro
m A
ustr
alia
and
New
Zea
land
. APM
EA
's c
onst
ant c
urre
ncy
sale
s de
clin
ed 2
per
cent
for
the
firs
t tw
o m
onth
s of
the
year
. In
the
seco
nd h
alf
of th
eye
ar, w
e ex
pect
impr
ovem
ent i
n th
is s
egm
ent a
s w
e ar
e ho
pefu
l con
sum
er c
once
rns
in J
apan
will
eas
e an
d w
e fa
ce e
asie
r co
mpa
riso
ns."
- 2
-
In L
atin
Am
eric
a, w
hich
con
tinue
s to
be
affe
cted
by
wea
k ec
onom
ies,
con
stan
t cur
renc
y sa
les
decl
ined
3 p
erce
nt f
or th
e fi
rst t
wo
mon
ths
of th
e ye
ar. C
onst
ant c
urre
ncy
sale
s in
Can
ada
incr
ease
d 2
perc
ent
quar
ter-
to-d
ate.
Par
tner
Bra
nds'
sal
es in
crea
sed
11 p
erce
nt q
uart
er-t
o-da
te, p
rim
arily
due
to e
xpan
sion
and
pos
itive
com
para
ble
sale
s.
In c
onju
nctio
n w
ith it
s fi
rst q
uart
er 2
002
inte
rim
upd
ate,
McD
onal
d's
Cor
pora
tion
will
bro
adca
st it
s co
nfer
ence
cal
l with
mem
bers
of
man
agem
ent l
ive
over
the
Inte
rnet
on
Frid
ay, M
arch
22,
200
2 at
10:
00a.
m. C
entr
al T
ime.
Int
eres
ted
part
ies
are
invi
ted
to li
sten
by
logg
ing
on to
http
://w
ww
.mcd
onal
ds.c
om/c
orpo
rate
/inve
stor
and
clic
king
"L
ates
t Inv
esto
r W
ebca
st,"
whi
ch a
ppea
rs b
elow
the
stoc
k qu
ote.
McD
onal
d's
is th
e w
orld
's le
adin
g fo
od s
ervi
ce r
etai
ler
with
ove
r 30
,000
res
taur
ants
in 1
21 c
ount
ries
ser
ving
46
mill
ion
peop
le e
ach
day.
Cer
tain
for
war
d-lo
okin
g st
atem
ents
are
incl
uded
in th
is r
elea
se. T
hey
use
such
wor
ds a
s "m
ay,"
"w
ill,"
"ex
pect
," "
belie
ve,"
"pl
an"
and
othe
r si
mila
r te
rmin
olog
y. T
hese
sta
tem
ents
ref
lect
man
agem
ent's
curr
ent e
xpec
tatio
ns r
egar
ding
fut
ure
even
ts a
nd o
pera
ting
perf
orm
ance
and
spe
ak o
nly
as o
f th
e da
te o
f th
is r
elea
se. T
hese
for
war
d-lo
okin
g st
atem
ents
invo
lve
a nu
mbe
r of
ris
ks a
nd u
ncer
tain
ties.
The
follo
win
g ar
e so
me
of th
e fa
ctor
s th
at c
ould
cau
se a
ctua
l res
ults
to d
iffe
r m
ater
ially
fro
m th
ose
expr
esse
d in
or
unde
rlyi
ng o
ur f
orw
ard-
look
ing
stat
emen
ts: t
he e
ffec
tiven
ess
of o
pera
ting
initi
ativ
es a
ndad
vert
isin
g an
d pr
omot
iona
l eff
orts
, as
wel
l as
chan
ges
in: g
loba
l and
loca
l bus
ines
s an
d ec
onom
ic c
ondi
tions
; cur
renc
y ex
chan
ge a
nd in
tere
st r
ates
; foo
d, la
bor
and
othe
r op
erat
ing
cost
s; p
oliti
cal o
rec
onom
ic in
stab
ility
in lo
cal m
arke
ts; c
ompe
titio
n; c
onsu
mer
pre
fere
nces
, spe
ndin
g pa
ttern
s an
d de
mog
raph
ic tr
ends
; leg
isla
tion
and
gove
rnm
enta
l reg
ulat
ion;
and
acc
ount
ing
polic
ies
and
prac
tices
. The
fore
goin
g lis
t of
impo
rtan
t fac
tors
is n
ot e
xclu
sive
.
The
Com
pany
und
erta
kes
no o
blig
atio
n to
pub
licly
upd
ate
or r
evis
e an
y fo
rwar
d-lo
okin
g st
atem
ents
, whe
ther
as
a re
sult
of n
ew in
form
atio
n, f
utur
e ev
ents
or
othe
rwis
e.
* In
form
atio
n in
con
stan
t cur
renc
ies
excl
udes
the
effe
ct o
f fo
reig
n cu
rren
cy tr
ansl
atio
n on
rep
orte
d re
sults
, exc
ept f
or h
yper
infl
atio
nary
eco
nom
ies,
suc
h as
Rus
sia,
who
se f
unct
iona
l cur
renc
y is
the
U.S
.D
olla
r. C
onst
ant c
urre
ncy
resu
lts a
re c
alcu
late
d by
tran
slat
ing
the
curr
ent y
ear
resu
lts a
t pri
or y
ear
mon
thly
ave
rage
exc
hang
e ra
tes.
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