“One world, One Burger” McDonald’s Presented: October 13, 2011

AGENDA  Investment Summary  Industry Overview  Company Overview  Comparable Analysis  DCF Analysis  Recommendation

 Purchase 200 shares in March price $52.44 Investment Summary (MCD)

 Unrealized capital gain of 70.31%  Current Price $89.31 Investment Summary (MCD)

MCD Growth VS GDP Growth CoefficientsStandard Errort StatP-value Intercept GDP Growth Rate

Industry Overview -Characteristics Life Cycle Stage: Mature Revenue Volatility: Low Barriers to Entry: Low Capital Intensity: Medium Technology Change: Medium Competition Level: High

 The top four players are expected to have a low market share of under 35% in Industry Overview -Concentration

Industry Overview -Key external drivers Consumption expenditure. Health Concern. Changes in consumer preference Intense competition

Industry Overview -Costs Structure

Profitability MCD VS Industry

Margin MCD VS Industry

 Products: Hamburgers; Chicken sandwiches; Salads; Soft drinks and Desserts.  32,737 restaurants in 117 countries  26,338(80.72%) were franchisee and affiliate operated stores - Initial investment fees - Royalties  6,339 (19.28%) company operated stores Company Overview

Five-Step DuPont Analysis

Geographic Growth

Geographic Growth Drivers US Quarterly Sales increased 4.5% Six months sales increased 3.7% McCafe Europe Quarterly Sales increased 5.9% Six months sales increased 5.8% Ongoing restaurant modernization APMEA Quarterly Sales increased 5.2% Six months sales increased 4.2% Banded affordability & Breakfast

Qualitative outlook  US: - Store remodel (new POS system) - Menu redesign under recession  Europe: - Dominance  APMEA: - Food and labor inflation (WSJ) - Not as much presence as Yum Brands

 COGS up 4-4.5% in US and Europe  SGA expenses down 2%  Interest expense up 8-10% (net issuances of $787 MM debt)  CapEx $2.5 Bn, half invested in opening new restaurants and half in reinvesting in existing restaurants 10-Q Outlook for full year 2011

Valuation Price $81.83 DCF (Weight: 70%) $93.05 WACC 9.65 Multiple (Weight:30%) $70.60

HOLD Recommendation