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

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

Presentation Topics:

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

History of the Corporation:

History of the Corporation 1940: Dick and Mac McDonald opened McDonald’s Bar-B- Que in San Bernardino, California

Key Milestones:

Key Milestones 1948: “Speedee Service System” Key item: 15 cent hamburger 1954: Salesman Ray Kroc Goes West 1955: The McDonald’s Corporation opened the first McDonald’s 1961: Ray Kroc bought all rights to McDonald’s for $2.7 million

Key Milestones—1963:

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

What Is McDonald’s?:

What Is McDonald’s? Headquarters Oak Brook, Illinois Traded in NYSE: MCD Auditing done by Ernst & Young LLP CEO: Jim Skinner McDonald’s is the leading global foodservice retailer with nearly 32,000 local restaurants in more than 100 countries. McDonald's successful “Plan to Win” Large scale efficiency and local flair Serving 58 million customers daily worldwide Revenues in 2008 at record $23.5 billion Returned $5.8 billion to shareholders in 2008

Traditional Products:

Traditional Products

Non-Traditional Products:

Non-Traditional Products

Fast Food Industry Attributes:

Fast Food Industry Attributes Quick Service, Convenience, Inexpensive Industry Worldwide Sales: Over $100 Billion

McDonald’s Attributes:

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

McDonald’s Profitability:

McDonald’s Profitability Net Income Increased to a Record of $4.3 Billion in 2008 Net Income Increased in the last 6 Years (Except for 2007) Latam Transaction Impairment Charges of $1.7 Billion Otherwise, 2007 Net Income $4.1 Billion Worldwide Operating Income 60% Overseas Operating Income

More Cash, Less Assets:

More Cash, Less Assets Sold 1,600 Restaurants in Latin America & Caribbean Focused Resources on Markets to Cash In the Biggest Opportunities Over 71% of Total Assets are Land & Equipment Net Accumulated Depreciation & Amortization Greatly Improved Operations Streamlined Production

Assets Making Money:

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

Smarter Strategies = Growth:

Smarter Strategies = Growth Leveraged Dramatic Growth in Net Income Decrease Non-Operating Income Expense Investment Sale Loss Income Tax Deferment Saving $140.6 Million Improved Impairment from $1,670.3 Million to $6.0 Million Accounts Receivable Dropped Bringing In $122.6 Million in Cash More Cash Spent on Property & Equipment Gained More Cash on Sale of Businesses & Property

2010 Short Term Growth Plans:

2010 Short Term Growth Plans Open 1,000 New Stores Remodel 2,300 Stores Continue Growth Targets 3-5% Sales Growth 6-7% Operating Income Growth Increase Capital Expenditures to $2.4 Billion for Strategic Brand Investments McDonald’s Financial Press Release 11/12/2009

Company Financing:

Company Financing Equal Use of Debt & Equity Long-Term Debt of Bank Loans & Bonds $2 billion Unused C redit L ine

Company Financing:

Company Financing Slowly Increasing its Use of Debt Increasing its Risk

Company Financing – Risk :

Company Financing – Risk Liquidity Current Ratio of 1.39 Ability to Cover D ebt P ayments Times Interest Earned of 14.5 Overall - Moderate Risk

Company Financing – Profitability:

Company Financing – Profitability Financial Leverage – Increasing ROE

Asset Structure – Capital Intensity:

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

Asset Structure - Breakdown:

Asset Structure - Breakdown Very Little Asset Structure Change Investing Activities Show Growth Capital Expenditures of $2.3 Billion Depreciation of $1.2 Billion

Asset Structure - ROA:

Asset Structure - ROA Profit Margin Product Differentiation Efficiency Asset Turnover Cost Leadership Effectiveness

Asset Structure - Risk:

Asset Structure - Risk Significant Operating Leverage 3-Year Trend Revenue ↑ 12.6 % Net Income ↑ 21.7%

Asset Structure - Unrecorded:

Asset Structure - Unrecorded Advertising Expense of +/- $800 Million Significant Local Franchisee Expense

Number 1 Asset—Brand Name:

Number 1 Asset—Brand Name Coca-Cola ($68,734 million) IBM ($60,211 million) Microsoft ($56,647 million) GE ($47,777 million) Nokia ($34,864 million) McDonald's ($32,275 million) Google ($31,980 million) Toyota ($31,330 million) Intel ($30,636 million) Disney ($28,447 million) BusinessWeek’s 2009 Report: 100 Best Global Brand Values as of 09/21/2009

Competitors—Burgers to Burgers:

Competitors—Burgers to Burgers Burger King Holdings Wendy’s International MCD BK Wendy’s ROE 32.2% 20.6% (20%) Dividend payout ratio 42.3% 8.5% 6.3% Stock Price (12/5/09) $61.59 $18.27 $4.12 Current Ratio 139% 76.8% 75.8% ROA 15.35 7.2% 25%

Number of Locations:

Number of Locations

McDonald’s Relative to Major Stock Indices:

McDonald’s Relative to Major Stock Indices

Stock Summary:

Stock Summary Stock Price Grew Consistently Past 3 Years From $24.83 in 2003 to $61.59 today Stock Advisors—Buy!

Questions???:

Questions???

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