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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>/in/edgar/work/20000811/0000950131-00-004816/0000950131-00-004816.txt : 20000921
<SEC-HEADER>0000950131-00-004816.hdr.sgml : 20000921
ACCESSION NUMBER:		0000950131-00-004816
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20000630
FILED AS OF DATE:		20000811

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MCDONALDS CORP
		CENTRAL INDEX KEY:			0000063908
		STANDARD INDUSTRIAL CLASSIFICATION:	 [5812
]		IRS NUMBER:				362361282
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	001-05231
			FILM NUMBER:		692835
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		ONE MCDONALD'S PLZ
				CITY:			OAK BROOK
				STATE:			IL
				ZIP:			60523
				BUSINESS PHONE:		6306233000
</BUSINESS-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-Q
<TEXT>

<PAGE>

================================================================================


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                   FORM 10-Q



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 for the quarterly period ended June 30, 2000


                                      OR


[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 for the transition period from __________ to __________

                         Commission File Number 1-5231



                            MCDONALD'S CORPORATION
            (Exact name of registrant as specified in its charter)

              Delaware                                    36-2361282
      (State or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                  Identification No.)

           McDonald's Plaza
         Oak Brook, Illinois                                 60523
 (Address of principal executive offices)                  (Zip Code)



      Registrant's telephone number, including area code: (630) 623-3000
   -------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                   report.)


  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes   X   No _____
    -----


                                 1,320,703,030
                         ----------------------------
                       (Number of shares of common stock
                       outstanding as of June 30, 2000)


================================================================================
<PAGE>

                            McDONALD'S CORPORATION
                            ----------------------

                                     INDEX
                                     -----

<TABLE>
<CAPTION>
                                                                           Page Reference
<S>                                                                        <C>
Part I.   Financial Information

          Item 1 - Financial Statements

              Condensed consolidated balance sheet,
              June 30, 2000 (unaudited) and
              December 31, 1999                                                         3

              Condensed consolidated statement of
              income (unaudited), quarters and six months ended
              June 30, 2000 and 1999                                                    4

              Condensed consolidated statement of
              cash flows (unaudited), quarters and six months ended
              June 30, 2000 and 1999                                                    5

              Financial comments (unaudited)                                            6

          Item 2 - Management's Discussion and
                   Analysis of Financial Condition
                   and Results of Operations                                            8

          Item 3 - Quantitative & Qualitative Disclosures
                   About Market Risk                                                   16

Part II.  Other Information

          Item 4 - Submission of Matters to a Vote of Security Holders                 16

          Item 6 - Exhibits and Reports on Form 8-K                                    17

              (a)  Exhibits
                   The exhibits listed in the
                   accompanying Exhibit Index are
                   filed as part of this report                                        17

              (b)  Reports on Form 8-K                                                 19

          Signature                                                                    20
</TABLE>

                                       2
<PAGE>

                        PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------------------------------------------
                                                                               (unaudited)
In millions                                                                   June 30, 2000      December 31, 1999
- -------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
<S>                                                                       <C>                    <C>
Cash and equivalents                                                                  $   411.1           $   419.5
Accounts and notes receivable                                                             746.9               708.1
Inventories, at cost, not in excess of market                                              85.7                82.7
Prepaid expenses and other current assets                                                 431.4               362.0
- -------------------------------------------------------------------------------------------------------------------
          TOTAL CURRENT ASSETS                                                          1,675.1             1,572.3
- -------------------------------------------------------------------------------------------------------------------

OTHER ASSETS                                                                            2,968.0             3,086.4
PROPERTY AND EQUIPMENT
Property and equipment, at cost                                                        22,901.3            22,450.8
Accumulated depreciation and amortization                                              (6,333.5)           (6,126.3)
- -------------------------------------------------------------------------------------------------------------------
          NET PROPERTY AND EQUIPMENT                                                   16,567.8            16,324.5
- -------------------------------------------------------------------------------------------------------------------

TOTAL ASSETS                                                                          $21,210.9           $20,983.2
===================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable                                                                         $ 1,446.2           $ 1,073.1
Accounts payable                                                                          451.2               585.7
Income taxes                                                                              140.9               117.2
Other taxes                                                                               184.7               160.1
Accrued interest                                                                          122.4               131.4
Other accrued liabilities                                                                 609.7               660.0
Current maturities of long-term debt                                                      735.3               546.8
- -------------------------------------------------------------------------------------------------------------------
          TOTAL CURRENT LIABILITIES                                                     3,690.4             3,274.3
- -------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT                                                                          5,786.3             5,632.4
OTHER LONG-TERM LIABILITIES AND MINORITY INTERESTS                                        548.9               538.4
DEFERRED INCOME TAXES                                                                   1,210.8             1,173.6
COMMON EQUITY PUT OPTIONS                                                                 975.4               725.4
SHAREHOLDERS' EQUITY
Preferred stock, no par value; authorized - 165.0 million shares;
   issued - none
Common stock, $.01 par value; authorized - 3.5 billion shares;
   issued - 1,660.6 million                                                                16.6                16.6
Additional paid-in capital                                                              1,367.7             1,288.3
Unearned ESOP compensation                                                               (126.7)             (133.3)
Retained earnings                                                                      16,539.4            15,562.8
Accumulated other comprehensive income                                                 (1,106.9)             (886.8)
Common stock in treasury, at cost; 339.9 and 309.8 million shares                      (7,691.0)           (6,208.5)
- -------------------------------------------------------------------------------------------------------------------
          TOTAL SHAREHOLDERS' EQUITY                                                    8,999.1             9,639.1
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                            $21,210.9           $20,983.2
===================================================================================================================
</TABLE>

See accompanying Financial comments.

                                       3
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------
                                                                      Quarters ended       Six months ended
In millions, except                                                        June 30               June 30
per common share data                                                  2000       1999       2000       1999
- ------------------------------------------------------------------------------------------------------------
<S>                                                                <C>        <C>        <C>        <C>
REVENUES
Sales by Company-operated restaurants                              $2,582.0   $2,434.1   $5,021.9   $4,613.2
Revenues from franchised and affiliated restaurants                   978.6      973.0    1,882.5    1,829.0
- ------------------------------------------------------------------------------------------------------------
        TOTAL REVENUES                                              3,560.6    3,407.1    6,904.4    6,442.2
- ------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants                                        2,147.0    1,985.2    4,180.1    3,803.2
Franchised restaurants - occupancy expenses                           194.6      180.4      388.4      359.2
Selling, general, and administrative expenses                         393.4      365.5      771.0      705.4
Other operating (income) expense                                      (50.7)      (7.5)     (80.0)     (20.7)
- ------------------------------------------------------------------------------------------------------------
      TOTAL OPERATING COSTS AND EXPENSES                            2,684.3    2,523.6    5,259.5    4,847.1
- ------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                                      876.3      883.5    1,644.9    1,595.1
- ------------------------------------------------------------------------------------------------------------
Interest expense                                                      106.2       97.5      206.6      202.7
Nonoperating (income) expense                                          (2.9)      13.2        2.6       18.9
- ------------------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES                              773.0      772.8    1,435.7    1,373.5
- ------------------------------------------------------------------------------------------------------------
Provision for income taxes                                            247.1      254.7      458.9      452.7
- ------------------------------------------------------------------------------------------------------------
NET INCOME                                                         $  525.9   $  518.1   $  976.8   $  920.8
============================================================================================================
NET INCOME PER COMMON SHARE                                        $   0.40   $   0.37   $   0.73   $   0.68
NET INCOME PER COMMON SHARE - DILUTED                                  0.39       0.37       0.71       0.65
- ------------------------------------------------------------------------------------------------------------
DIVIDENDS PER COMMON SHARE                                         $      -   $ .04875   $      -   $ .09750
- ------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES                                             1,327.1    1,355.5    1,335.3    1,356.4
WEIGHTED AVERAGE SHARES - DILUTED                                   1,365.5    1,405.6    1,374.2    1,407.1
- ------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Financial comments.

                                       4
<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
                                                                       Quarters ended      Six months ended
                                                                           June 30               June 30
In millions                                                             2000      1999        2000       1999
- -------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>       <C>       <C>         <C>
OPERATING ACTIVITIES
Net income                                                           $ 525.9   $ 518.1   $   976.8   $  920.8
Adjustments to reconcile to cash provided by operations
   Depreciation and amortization                                       273.5     237.7       529.3      471.8
   Changes in operating working capital items                         (106.0)    (35.8)     (114.0)      37.1
   Other                                                               (25.6)     45.9       (57.2)      53.1
- -------------------------------------------------------------------------------------------------------------
    CASH PROVIDED BY OPERATIONS                                        667.8     765.9     1,334.9    1,482.8
- -------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment expenditures                                   (475.6)   (417.8)     (854.3)    (754.0)
Purchases and sales of restaurant businesses and
 sales of property                                                     (50.3)     43.4       (41.4)     (43.9)
Other                                                                  (19.9)     54.3       (67.5)    (166.2)
- -------------------------------------------------------------------------------------------------------------
    CASH USED FOR INVESTING ACTIVITIES                                (545.8)   (320.1)     (963.2)    (964.1)
- -------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Notes payable and long-term financing issuances and repayments         584.7    (344.0)      827.3      (27.0)
Treasury stock purchases                                              (715.3)   (283.5)   (1,294.0)    (441.3)
Common stock dividends                                                     -     (66.0)          -     (132.3)
Other                                                                   51.7      95.3        86.6      190.5
- -------------------------------------------------------------------------------------------------------------
     CASH USED FOR FINANCING ACTIVITIES                                (78.9)   (598.2)     (380.1)    (410.1)
- -------------------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS INCREASE (DECREASE)                                43.1    (152.4)       (8.4)     108.6
- -------------------------------------------------------------------------------------------------------------
Cash and equivalents at beginning of period                            368.0     560.2       419.5      299.2
- -------------------------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS AT END OF PERIOD                                $ 411.1   $ 407.8   $   411.1   $  407.8
=============================================================================================================
</TABLE>

See accompanying Financial comments.

                                       5
<PAGE>

- --------------------------------------------------------------------------------
FINANCIAL COMMENTS (UNAUDITED)
- --------------------------------------------------------------------------------

Basis of Presentation

     The accompanying condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements contained in the
Company's 1999 Annual Report to Shareholders. In the opinion of the Company, all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation have been included. The results for the quarter and six months
ended June 30, 2000 do not necessarily indicate the results that may be expected
for the full year.

     The results of operations of restaurant businesses purchased and sold were
not material to the condensed consolidated financial statements for periods
prior to purchase and sale.

Comprehensive Income

     Comprehensive income consists of net income and foreign currency
translation adjustments and totaled $421.9 million and $459.6 million for the
second quarters of 2000 and 1999, respectively, and $756.7 million and $601.7
million for the six months ended June 30, 2000 and 1999, respectively.

Per Common Share Information

     Diluted net income per common share is calculated using net income divided
by weighted average shares on a diluted basis. Weighted average shares on a
diluted basis include weighted average shares outstanding plus the dilutive
effect of stock options, calculated using the treasury stock method, of 38.4
million shares and 50.1 million shares for the second quarters of 2000 and 1999,
respectively, and 38.9 million shares and 50.7 million shares for the six months
ended June 30, 2000 and 1999, respectively.

Common Equity Put Options

     At June 30, 2000, 27.7 million of common equity put options were
outstanding, of which 11.1 million were sold in second quarter 2000. The options
expire at various dates through November 2001, at exercise prices between $30.11
and $42.04. The $975.4 million total exercise price of the options outstanding
was classified in common equity put options at June 30, 2000, and the related
offset was recorded in common stock in treasury, net of premiums received.

New Accounting Standard - Financial Instruments

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, subsequently
amended by Statement No. 137, which is required to be adopted in years beginning
after June 15, 2000. The Statement will require the Company to recognize all
derivatives on the balance sheet at fair value. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of derivatives
will either be offset against the change in fair value of the hedged item
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The Company expects to adopt the new Statement
effective January 1, 2001. Management does not anticipate that the adoption will
have a significant effect on the Company's results of operations or financial
position.

                                       6
<PAGE>

Segment Information

     McDonald's operates primarily in the quick-service hamburger restaurant
business. In addition, the Company operates other restaurant concepts: Aroma
Cafe, Chipotle Mexican Grill, Donatos Pizza and, effective May 26, 2000, Boston
Market. The Other segment includes McDonald's restaurant business operations in
Canada, Africa and the Middle East as well as the other restaurant concepts.

     The following table presents the Company's revenues and operating income by
geographic segment:

<TABLE>
<CAPTION>
                                                            Quarters ended                   Six months ended
                                                                June 30                           June 30
In millions                                              2000             1999            2000               1999
- --------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>           <C>                <C>
REVENUES
     U.S.                                             $1,380.0         $1,379.8        $2,589.6           $2,531.1
     Europe                                            1,190.0          1,237.1         2,361.0            2,393.3
     Asia/Pacific                                        476.5            448.7         1,003.1              870.3
     Latin America                                       225.8            165.8           454.7              329.4
     Other                                               288.3            175.7           496.0              318.1
- --------------------------------------------------------------------------------------------------------------------
         TOTAL REVENUES                               $3,560.6         $3,407.1        $6,904.4           $6,442.2
- --------------------------------------------------------------------------------------------------------------------
OPERATING INCOME
     U.S.                                             $  443.4         $  428.4        $  787.6           $  743.2
     Europe                                              281.5            303.5           543.3              556.3
     Asia/Pacific                                        102.5             93.9           215.9              185.2
     Latin America                                        23.3             25.7            53.1               57.6
     Other                                                25.6             32.0            45.0               52.8
- --------------------------------------------------------------------------------------------------------------------
         TOTAL OPERATING INCOME                       $  876.3         $  883.5        $1,644.9           $1,595.1
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7
<PAGE>

Item 2.  Management's Discussion And Analysis Of Financial Condition And Results
Of Operations

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
- -------------------------------------------------------------------------------------------------------------------------

Dollars in millions, except                                                Quarter ended              Six months ended
per common share data                                                      June 30, 2000               June 30, 2000
- -------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>         <C>             <C>         <C>
                                                                                  % Increase/                 % Increase/
                                                                        Amount     (Decrease)       Amount     (Decrease)
- -------------------------------------------------------------------------------------------------------------------------
SYSTEMWIDE SALES                                                      $10,237.6          3%       $19,744.3          5%
- -------------------------------------------------------------------------------------------------------------------------
REVENUES
Sales by Company-operated restaurants                                   2,582.0          6          5,021.9          9
Revenues from franchised and affiliated restaurants                       978.6          1          1,882.5          3
- -------------------------------------------------------------------------------------------------------------------------
     TOTAL REVENUES                                                     3,560.6          5          6,904.4          7
- -------------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Company-operated restaurants                                            2,147.0          8          4,180.1         10
Franchised restaurants - occupancy costs                                  194.6          8            388.4          8
Selling, general, and administrative expenses                             393.4          8            771.0          9
Other operating (income) expense                                          (50.7)       N/M            (80.0)       N/M
- -------------------------------------------------------------------------------------------------------------------------
     TOTAL OPERATING COSTS AND EXPENSES                                 2,684.3          6          5,259.5          9
- -------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                                          876.3         (1)         1,644.9          3
- -------------------------------------------------------------------------------------------------------------------------
Interest expense                                                          106.2          9            206.6          2
Nonoperating (income) expense                                              (2.9)       N/M              2.6        N/M
- -------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR INCOME TAXES                                  773.0          -          1,435.7          5
- -------------------------------------------------------------------------------------------------------------------------
Provision for income taxes                                                247.1         (3)           458.9          1
- -------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                            $   525.9          2%       $   976.8          6%
=========================================================================================================================
NET INCOME PER COMMON SHARE                                           $    0.40          5%       $    0.73          7%
NET INCOME PER COMMON SHARE-DILUTED                                        0.39          5             0.71          9
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

N/M  Not meaningful

CONSOLIDATED OPERATING RESULTS

McDonald's operates primarily in the quick-service hamburger restaurant
business. In addition, the Company operates other restaurant concepts: Aroma
Cafe, Chipotle Mexican Grill, Donatos Pizza and, effective May 26, 2000, Boston
Market. Collectively these four businesses are referred to as "Other Brands."
Other Brands financial information is included in the Other segment, except
where specifically noted.

     The following table presents the growth rates for reported results and the
results on a constant currency basis for the quarter and six months ended June
30, 2000. Information in constant currencies excludes the effect of foreign
currency translation on reported results, except for hyperinflationary
economies, such as Russia, whose functional currency is the U.S. Dollar.

                                       8
<PAGE>

<TABLE>
<CAPTION>
            ----------------------------------------------------------------------------------------------
            Key highlights - Consolidated                                           Increase/(Decrease)
            ----------------------------------------------------------------------------------------------
                                                                                         As   In Constant
                                                                                   Reported   Currencies*
            ----------------------------------------------------------------------------------------------
            <S>                                                                    <C>         <C>
            Quarters ended June 30, 2000
            ----------------------------------------------------------------------------------------------
            Systemwide sales                                                            3%          5%
            ----------------------------------------------------------------------------------------------
            Total revenues                                                              5           8
            ----------------------------------------------------------------------------------------------
            Operating income                                                           (1)          2
            ----------------------------------------------------------------------------------------------
            Net income                                                                  2           4
            ----------------------------------------------------------------------------------------------
            Net income per common share - diluted                                       5           8
            ----------------------------------------------------------------------------------------------
            Six months ended June 30, 2000
            ----------------------------------------------------------------------------------------------
            Systemwide sales                                                            5%          7%
            ----------------------------------------------------------------------------------------------
            Total revenues                                                              7          10
            ----------------------------------------------------------------------------------------------
            Operating income                                                            3           6
            ----------------------------------------------------------------------------------------------
            Net income                                                                  6           9
            ----------------------------------------------------------------------------------------------
            Net income per common share - diluted                                       9          12
            ----------------------------------------------------------------------------------------------
</TABLE>

             * Excluding the effect of foreign currency translation on reported
               results


Impact of Foreign Currencies on Reported Results

     While changing foreign currencies affect reported results, McDonald's
lessens exposures, where practical, by financing in local currencies, hedging
certain foreign-denominated cash flows and by purchasing goods and services in
local currencies.

     The primary currencies negatively affecting reported results for the
quarter and six months were the Euro, which is the currency in 11 of our
European markets including France and Germany, the Australian Dollar and the
British Pound. This negative effect was partly offset by the stronger Japanese
Yen in both periods.

Systemwide Sales and Revenues

     Systemwide sales represent sales by Company-operated, franchised and
affiliated restaurants. Total revenues include sales by Company-operated
restaurants and fees from restaurants operated by franchisees and affiliates.
These fees include rent, service fees and royalties that are based on a percent
of sales with specified minimum payments along with initial fees.

     On a global basis, the increases in sales and revenues for both periods
were partly due to expansion, and for the six months, also due to positive
comparable sales. Foreign currency translation had a negative effect on the
growth rates for both Systemwide sales and revenues for the quarter and six
months. The stronger Japanese Yen had a greater positive currency translation
effect on sales compared to revenues. This is due to our affiliate structure in
Japan. Under this structure, we record a royalty in revenues based on a
percentage of Japan's sales, whereas all of Japan's sales are included in
Systemwide sales. For this reason, sales were less negatively affected by
foreign currency translation than were revenues.

     On a constant currency basis, revenues increased at a higher rate than
sales in both periods due to the higher unit growth rate of Company-operated
McDonald's restaurants relative to Systemwide restaurants, the addition of Other
Brands and the consolidation of Argentina and Indonesia, for financial reporting
purposes, in the first quarter 2000.

                                       9
<PAGE>

<TABLE>
<CAPTION>
        -----------------------------------------------------------------------------------------------------------
        Systemwide sales
        Dollars in millions                                 2000            1999        Increase/(Decrease)
        -----------------------------------------------------------------------------------------------------------
                                                                                                       In Constant
                                                                                      As Reported      Currencies*
        -----------------------------------------------------------------------------------------------------------
        <S>                                            <C>             <C>           <C>               <C>
        Quarters ended June 30
        -----------------------------------------------------------------------------------------------------------
        U.S.                                           $ 5,192.5        $5,169.9                -          n/a
        -----------------------------------------------------------------------------------------------------------
        Europe                                           2,326.8         2,387.3               (3)%          7%
        -----------------------------------------------------------------------------------------------------------
        Asia/Pacific                                     1,696.3         1,502.3               13            7
        -----------------------------------------------------------------------------------------------------------
        Latin America                                      429.5           402.1                7           10
        -----------------------------------------------------------------------------------------------------------
        Other                                              592.5           458.8               29           30
        -----------------------------------------------------------------------------------------------------------
        Total Systemwide sales                         $10,237.6        $9,920.4                3%           5%
        -----------------------------------------------------------------------------------------------------------
        Six months ended June 30
        -----------------------------------------------------------------------------------------------------------
        U.S.                                           $ 9,697.5        $9,453.1                3%         n/a
        -----------------------------------------------------------------------------------------------------------
        Europe                                           4,632.5         4,649.1                -           10%
        -----------------------------------------------------------------------------------------------------------
        Asia/Pacific                                     3,481.9         3,013.6               16           10
        -----------------------------------------------------------------------------------------------------------
        Latin America                                      863.6           795.7                9           11
        -----------------------------------------------------------------------------------------------------------
        Other                                            1,068.8           831.7               29           28
        -----------------------------------------------------------------------------------------------------------
        Total Systemwide sales                         $19,744.3       $18,743.2                5%           7%
        -----------------------------------------------------------------------------------------------------------
</TABLE>

         *    Excluding the effect of foreign currency translation on reported
              results
         n/a  Not applicable

     U.S. sales were flat for the quarter as expansion was offset by negative
comparable sales. If Teenie Beanie Babies sales had equaled last year's level,
U.S. sales would have increased about five percent for the quarter. For the six
months, U.S. sales increased three percent, due to restaurant expansion and
positive comparable sales.

     In Europe, expansion, partly offset by negative comparable sales, drove the
constant currency sales increase for the quarter, while expansion and positive
comparable sales drove the increase for the six months. Strong performances in
Italy, the Netherlands and Spain drove the increases in both periods. France and
the United Kingdom also contributed significantly to the increases for both
periods. The segment's sales growth rate was negatively impacted by difficult
sales comparisons in Germany as a result of successful non-food promotions in
1999, unusually hot weather and high television viewership of the Euro 2000
Soccer Championship, which reduced eating out activity.

     In Asia/Pacific, the constant currency sales increase for the quarter was
driven by expansion, partly offset by negative comparable sales, while the sales
growth for the six months was driven by expansion and positive comparable sales.
Positive comparable sales in several markets, including double-digit comparable
sales growth in China, and expansion in Japan drove the segment's sales
increases in both periods. Australia's results for the second quarter were
negatively impacted by the announcement of a new goods and services tax,
effective July 1, 2000. We expect this tax to continue to negatively impact
sales in Australia in the near term.

     In Latin America, constant currency sales increases for the quarter and six
months were driven by expansion, partly offset by negative comparable sales.
Contributing to the increases were expansion for both periods and positive
comparable sales in Brazil for the six months, and double-digit comparable sales
in Mexico for both periods.

     In the Other segment, positive comparable sales and expansion in Canada and
South Africa contributed to the increases for both periods. The sales increases
for the quarter and six months included $106.1 million and $149.3 million,
respectively, related to the addition of Other Brands.

                                       10
<PAGE>

Combined Operating Margins

         The following combined operating margin information represents margins
for McDonald's restaurant business only.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Combined operating margins                           Quarters ended             Six months ended
                                                        June 30                      June 30
                                                -------------------------------------------------------
                                                     2000          1999          2000           1999
- -------------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>           <C>           <C>
Dollars in millions
- -------------------------------------------------------------------------------------------------------
Company-operated                               $    428.2      $  448.9      $  831.5       $   810.0
- -------------------------------------------------------------------------------------------------------
Franchised                                          783.6         792.6       1,493.3         1,469.8
- -------------------------------------------------------------------------------------------------------
     Combined operating margins                $  1,211.8      $1,241.5      $2,324.8       $ 2,279.8
- -------------------------------------------------------------------------------------------------------
Percent of sales/revenues
- -------------------------------------------------------------------------------------------------------
Company-operated                                     17.3%         18.4%         17.0%           17.6%
- -------------------------------------------------------------------------------------------------------
Franchised                                           80.1          81.5          79.4            80.4
- -------------------------------------------------------------------------------------------------------
</TABLE>

     Combined operating margin dollars decreased $29.7 million, or two percent,
for the quarter, and increased $45.0 million, or two percent, for the six
months. In constant currencies, combined operating margin dollars increased by
$12.3 million, or one percent for the quarter and $120.7 million, or five
percent for the six months. The U.S. and Europe segments accounted for over 80
percent of the combined margin dollars in both periods.

     As a percent of sales, Company-operated margins decreased for both periods.
Food & paper costs as a percent of sales decreased for the quarter and increased
for the six months, while payroll costs as a percent of sales increased for the
quarter and decreased for the six months. Occupancy and other operating expenses
increased as a percent of sales for both periods.

     In the U.S. and Europe, Company-operated margins decreased as a percent of
sales for the quarter and six months. As a percent of sales in both segments,
food & paper costs decreased, while payroll costs and occupancy & other
operating expenses increased for both periods. In the U.S., approximately one-
half of the second quarter's margin percent decline was due to the comparison to
last year's Teenie Beanie Babies promotion. Germany, which also faced
challenging comparisons due to strong promotions last year, accounted for half
of Europe's margin percent decline for the quarter.

     As a percent of sales, Asia/Pacific's Company-operated margins decreased
for the quarter and increased for the six months. Latin America's Company-
operated margins decreased as a percent of sales for both periods, primarily due
to difficult economic conditions experienced by most markets, partly offset by
the consolidation of Argentina.

     Franchised margins as a percent of applicable revenues decreased for the
quarter and six months. The decrease in the margin as a percent of revenues was
primarily due to higher occupancy costs as a result of our strategy to lease
more sites. By leasing a higher proportion of new sites, we have reduced initial
capital requirements. However, as anticipated, this practice reduces franchised
margins since the financing costs implicit in the lease are included in
occupancy expense, whereas for owned sites, financing costs are reflected in
interest expense.

     For all segments, excluding Other, franchised margins as a percent of
revenues declined for the quarter and the six months primarily due to increased
occupancy costs. In addition, the consolidation of Argentina and Indonesia
contributed to the decline in margins as a percent of revenues in Latin America
and Asia/Pacific, respectively, for both periods.

Selling, General & Administrative Expenses

     Selling, general & administrative expenses increased eight percent for the
quarter and nine percent for the six months. This increase was primarily due to
spending to support the development of Other Brands and the consolidation of
Argentina and Indonesia. Selling, general & administrative expenses included
$14.3 million and $25.2 million related to Other Brands for the quarter and six
months, respectively. Excluding Other Brands and the consolidations, selling,
general & administrative expenses increased two percent for the quarter and four
percent for the six months.

                                       11
<PAGE>

Other Operating Income and Expense

     Other operating income and expense consists of transactions related to
franchising and the food service business. Equity in earnings of unconsolidated
affiliates decreased for the quarter primarily as a result of a gain reported in
1999 on the sale of real estate in a U.S. partnership. The decrease in other
expense was primarily related to lower provisions for property dispositions in
2000 and costs in 1999 related to the write-off of software and the
implementation of our Made For You food preparation system.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
  Other operating income and expense                                           Quarters ended          Six months ended
                                                                                   June 30                  June 30
- ------------------------------------------------------------------------------------------------------------------------
  Dollars in millions                                                         2000         1999        2000         1999
- ------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>          <C>         <C>         <C>
  Gains on sales of restaurant
  Businesses                                                                 $22.3        $11.1       $37.9        $22.4
- ------------------------------------------------------------------------------------------------------------------------
  Equity in earnings of unconsolidated
  Affiliates                                                                  33.5         52.2        59.9         73.9
- ------------------------------------------------------------------------------------------------------------------------
  Other                                                                       (5.1)       (55.8)      (17.8)       (75.6)
- ------------------------------------------------------------------------------------------------------------------------
       Total                                                                 $50.7        $ 7.5       $80.0        $20.7
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

Operating Income

     Consolidated operating income decreased $7.2 million, or one percent, for
the quarter, while increasing two percent in constant currencies. For the six
months, consolidated operating income increased $49.8 million, or three percent;
six percent in constant currencies. The increases, in constant currencies, were
due to higher combined operating margin dollars and higher other operating
income, partly offset by higher selling, general & administrative expenses.
Operating income by segment includes the allocation of corporate selling,
general & administrative expenses.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Operating income                                                                                    Increase/(Decrease)
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                                      As     In Constant
Dollars in millions                                            2000              1999           Reported     Currencies*
- ----------------------------------------------------------------------------------------------------------------------------
Quarters ended June 30
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>                 <C>            <C>
U.S.                                                        $ 443.4          $ 428.4               4 %               n/a
- ----------------------------------------------------------------------------------------------------------------------------
Europe                                                        281.5            303.5              (7)                  3%
- ----------------------------------------------------------------------------------------------------------------------------
Asia/Pacific                                                  102.5             93.9               9                   7
- ----------------------------------------------------------------------------------------------------------------------------
Latin America                                                  23.3             25.7              (9)                 (8)
- ----------------------------------------------------------------------------------------------------------------------------
Other**                                                        25.6             32.0             (20)                (19)
- ----------------------------------------------------------------------------------------------------------------------------
   Total operating income                                   $ 876.3          $ 883.5              (1)%                 2%
- ----------------------------------------------------------------------------------------------------------------------------
Six months ended June 30
- ----------------------------------------------------------------------------------------------------------------------------
U.S.                                                       $  787.6         $  743.2               6 %               n/a
- ----------------------------------------------------------------------------------------------------------------------------
Europe                                                        543.3            556.3              (2)                  8%
- ----------------------------------------------------------------------------------------------------------------------------
Asia/Pacific                                                  215.9            185.2              17                  13
- ----------------------------------------------------------------------------------------------------------------------------
Latin America                                                  53.1             57.6              (8)                 (6)
- ----------------------------------------------------------------------------------------------------------------------------
Other**                                                        45.0             52.8             (15)                (16)
- ----------------------------------------------------------------------------------------------------------------------------
   Total operating income                                  $1,644.9         $1,595.1               3 %                 6%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

  *    Excluding the effect of foreign currency translation on reported results
 **    Includes Other Brands operating losses of $8.8 million and $17.9 million
       for the quarter and six months of 2000, respectively. In 1999, Other
       Brands operating losses were $.6 million and $1.3 million for the quarter
       and six months, respectively.
n/a    Not applicable

     U.S. operating income increased $15.0 million or four percent for the
quarter and $44.4 million or six percent for the six months. The increase for
the quarter was driven by lower selling, general & administrative expenses and
higher other operating income, while for the six months, the increase was due to
higher combined operating margin dollars and higher other operating income.

     Europe's operating income increased three percent for the quarter and eight
percent for the six months in constant currencies. Strong results in France,
Italy, Russia and Spain drove this segment's performance in both periods. Weak
results in Germany had a significant impact on the segment's operating income
growth rate. We expect significant improvement in Europe's results in the second
half of the year.

                                       12
<PAGE>

     Operating income in Asia/Pacific increased seven percent for the quarter
and 13 percent for the six months in constant currencies. This segment benefited
in both periods from strong performances in China and South Korea, while
Australia's challenging comparisons and a drop in retail spending hurt results.
In addition, the partial sale of our Japanese affiliate's ownership in Toys `R'
Us Japan, in connection with an initial public offering of Toys `R' Us Japan,
contributed to the increase. Japan's second quarter 1999 results benefited from
a lower effective tax rate.

     Latin America's operating income decreased eight percent for the quarter
and six percent for the six months in constant currencies. Both periods were
negatively impacted by the difficult economic conditions experienced by most
markets in the region. Increases in Brazil, Mexico and Venezuela, as well as the
consolidation of Argentina, partly offset the decreases in both periods.

     In the Other segment, strong performances in Canada and several other
markets were offset by the investment spending for Other Brands for the quarter
and six months.

INTEREST, NONOPERATING EXPENSE AND INCOME TAXES

For both periods, higher interest expense was primarily due to significantly
higher average debt levels, partly offset by lower average interest rates and
weaker foreign currencies. The higher average debt levels were a result of the
Company using its available credit capacity to fund share repurchases.

     Nonoperating (income) expense reflected a gain related to the sale of a
partial ownership interest in a majority owned subsidiary outside the U.S. and
lower minority interest expense for the quarter and six months. In addition,
nonoperating (income) expense for the quarter reflected translation gains in
2000 compared with translation losses in 1999.

     The effective income tax rate was 32.0 percent for both periods of 2000
compared with 33.0 percent for both periods of 1999.

WEIGHTED AVERAGE SHARES

Weighted average shares outstanding for the second quarter and the six months
were lower compared with the prior year due to shares repurchased. In addition,
outstanding stock options had a less dilutive effect than in the prior year.
During the first six months of 2000, the Company repurchased 35.7 million shares
of its common stock for approximately $1.3 billion.

FINANCIAL POSITION

Free cash flow - cash provided by operations less capital expenditures - for the
six months ended June 30, 2000 decreased $248.2 million to $480.6 million,
primarily due to changes in working capital and other items and higher capital
expenditures. Free cash flow, together with other sources of cash such as
borrowings, was used primarily for share repurchases and debt repayments. The
changes in working capital and other items were primarily due to lower income
tax benefits related to stock option exercises, the timing of income tax
payments and lower non-cash provisions for property dispositions. The capital
expenditure increase of 13% was primarily due to higher McDonald's restaurant
openings, the addition of Other Brands, and the consolidation of Argentina and
Indonesia. The Company expects to add between 1,800 and 1,900 McDonald's
restaurants this year, with about 90 percent in locations outside the U.S.

     In April 2000, the Company announced a $1 billion increase in its share
repurchase program bringing the total program to $4.5 billion through 2001.
Management believes the strength of the Company's business around the world and
its strong cash flow put the Company in a position to increase stock buybacks
while maintaining a strong credit rating. The Company believes that buying back
its stock continues to be an excellent way to provide shareholder value.
Therefore, the Company purchased approximately $1.3 billion, or 35.7 million
shares of its common stock in the first six months of 2000. This brought the
cumulative purchases to $2.5 billion, or 70 million shares under the three-year
share repurchase program.

     In November 1999, the Company announced its intention to pay cash dividends
on an annual, instead of quarterly, basis beginning in 2000. Future dividends
declared at the discretion of the Board of Directors will be paid annually in
December.

NEW ACCOUNTING STANDARD - FINANCIAL INSTRUMENTS

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, subsequently
amended by Statement No. 137, which is required to be adopted in years beginning
after June 15, 2000. The Statement will require the Company to recognize all
derivatives on the balance sheet at fair value. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of derivatives
will either be offset against the change in fair value of the hedged item,
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The Company expects to adopt the new Statement
effective January 1, 2001. Management does not anticipate that the adoption will
have a significant effect on the Company's results of operations or financial
position.

                                       13
<PAGE>

EURO CONVERSION

On January 1, 1999, 11 member countries of the European Union established fixed
conversion rates between their existing currencies ("legacy currencies") and one
common currency, the Euro. The Euro is trading on currency exchanges and may be
used in certain transactions such as electronic payments. Beginning in January
2002, new Euro-denominated notes and coins will be issued, and legacy currencies
will be withdrawn from circulation. The conversion to the Euro has eliminated
currency exchange rate risk for transactions between the member countries, which
for the Company, primarily consist of payments to suppliers. In addition, since
the Company uses foreign-denominated debt and derivatives to meet its financing
requirements and to minimize its foreign currency risks, certain of these
financial instruments are denominated in Euros.

     The Company has restaurants located in all member countries and has been
preparing for the introduction of the Euro for the past several years. The
Company is currently addressing the issues involved with the new currency, which
include converting information technology systems, recalculating currency risk,
recalibrating derivatives and other financial instruments and revising processes
for preparing accounting and taxation records. Based on the work to date, the
Company does not believe the Euro conversion will have a significant impact on
its financial position, results of operations or cash flows.

FORWARD-LOOKING STATEMENTS

Certain forward-looking statements are included in this report. They use such
words as "may," "will," "expect," "believe," "plan" and other similar
terminology. These statements reflect management's current expectations and
involve a number of risks and uncertainties. Actual results could differ
materially due to the effectiveness of operating initiatives and advertising and
promotional efforts, the effects of the Euro conversion, as well as changes in:
global and local business and economic conditions; currency exchange and
interest rates; food, labor and other operating costs; political or economic
instability in local markets; competition; consumer preferences, spending
patterns and demographic trends; legislation and governmental regulation; and
accounting policies and practices.

                                       14
<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
SECOND QUARTER AND SIX MONTHS HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------------

FINANCIAL INFORMATION
                                                                 Quarters ended                   Six Months ended
                                                                     June 30                          June 30
Dollars in millions                                          2000              1999            2000             1999
- ---------------------------------------------------- ----------------- --------------- ----------------- ----------------
<S>                                                  <C>               <C>             <C>               <C>
Systemwide sales by type
     Operated by franchisees                             $6,351.2         $ 6,258.6         $12,129.9       $11,698.5
     Operated by the Company                              2,582.0           2,434.1           5,021.9         4,613.2
     Operated by affiliates                               1,304.4           1,227.7           2,592.5         2,431.5
- ---------------------------------------------------- ----------------- --------------- ----------------- ----------------
         Systemwide sales                               $10,237.6         $ 9,920.4         $19,744.3       $18,743.2
- ---------------------------------------------------- ----------------- --------------- ----------------- ----------------
Restaurant margins*
     Company-operated
     ----------------
     U.S.                                                    17.5%             19.4%             17.1%          18.1%
     Europe                                                  18.6              19.4              18.1           18.5
     Asia/Pacific                                            16.3              16.6              17.1           16.4
     Latin America                                           12.9              13.1              12.7           13.6
     Other                                                   15.4              16.2              14.5           14.8
         Total                                               17.3%             18.4%             17.0%          17.6%

     Franchised
     ----------
     U.S.                                                    81.4%             82.5%             80.3%          81.3%
     Europe                                                  78.2              79.8              77.8           78.5
     Asia/Pacific                                            82.1              83.5              82.4           83.4
     Latin America                                           73.3              77.5              74.5           77.9
     Other                                                   78.9              79.3              78.0           77.9
         Total                                               80.1%             81.5%             79.4%          80.4%
</TABLE>

*Restaurant margin information relates to McDonald's restaurant business only

<TABLE>
<CAPTION>
RESTAURANTS
- --------------------------------------------------------------------------------------------------------------------------
                                                                                   At June 30,  2000               1999
- --------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                             <C>
By type
      Operated by franchisees                                                                  16,608            15,565
      Operated by the Company                                                                   7,281             5,725
      Operated by affiliates                                                                    4,157             4,076
- --------------------------------------------------------------------------------------------------------------------------
         Systemwide restaurants                                                                28,046            25,366
- --------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                   Quarters ended                    Six months ended
                                                                      June 30                            June 30
                                                             2000                1999          2000                1999
- --------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                 <C>           <C>                 <C>
 Additions
     U.S.                                                      34                  28            29                  18
     Europe                                                   121                  88           189                 137
     Asia/Pacific                                             126                 132           176                 206
     Latin America                                             73                 121           134                 149
     Other - McDonald's                                        23                  17            18                  31
     Other Brands                                             673**                 5           694**                 7
- --------------------------------------------------------------------------------------------------------------------------
         Systemwide additions                               1,050                 391         1,240                 548
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

**Primarily relates to the acquisition of Boston Market in second quarter 2000

                                       15
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     There were no material changes to the disclosure made in the Annual Report
on Form 10-K for the year ended December 31, 1999 regarding this matter.

                          PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

(a)  The Annual Meeting of Shareholders was held on May 18, 2000.

(b)  Not Applicable.

(c)  At the Annual Meeting of Shareholders, the shareholders voted on the
     following matters: (1) the election of five directors to serve until the
     2003 Annual Meeting of shareholders, (2) the approval of auditors, (3) a
     shareholder proposal on genetically engineered crops and foods and (4) a
     shareholder proposal to declassify the Board of Directors. The voting
     results were as follows:

(1)  Each nominee was elected by a vote of the shareholders as follows:

         Director                          For                   Withheld
         --------                          ---                   --------
         James R. Cantalupo                1,149,231,757         13,297,703
         Enrique Hernandez, Jr.            1,149,135,798         13,393,662
         Jeanne P. Jackson                 1,148,672,699         13,856,761
         Donald R. Keough                  1,148,163,865         14,365,595
         Michael R. Quinlan                1,146,923,776         15,605,684

     Additional Directors, whose terms of office as Directors continued after
the meeting, are as follows:

         Term Expiring in 2001             Term Expiring in 2002
         ---------------------             ---------------------

         Jack M. Greenberg                 Hall Adams, Jr.
         Donald G. Lubin                   Gordon C. Gray
         Walter E. Massey                  Terry L. Savage
         Andrew J. McKenna                 Fred L. Turner
         Roger W. Stone
         Robert N. Thurston

(2)  The proposal to approve the appointment of independent auditors was
     approved by shareholders as follows:

         For               Against          Abstain
         ---               -------          -------
     1,149,222,866        8,401,409        4,905,185

(3)  The shareholder proposal on genetically engineered crops and foods was not
     approved by shareholders as follows:

         For               Against            Abstain         Non-Votes
         ---               -------            -------         ---------
      19,639,386         884,438,667        43,189,551       215,261,856

(4)  The shareholder proposal to declassify the board was not approved by
     shareholders as follows:


         For               Against            Abstain         Non-Votes
         ---               -------            -------         ---------
      432,963,150        503,573,008        10,731,446       215,261,856

(d)  Not Applicable.

                                       16
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit Number                              Description
- --------------                              -----------

        (3)     (i)  Restated Certificate of Incorporation, effective as of
                     March 24, 1998, incorporated herein by reference from Form
                     8-K dated April 17, 1998.

                (ii) By-Laws, effective as of June 1, 2000, filed herewith.

        (4)     Instruments defining the rights of security holders, including
                Indentures:**

                (a)  Senior Debt Securities Indenture dated as of October 19,
                     1996 incorporated herein by reference from Exhibit 4(a) of
                     Form S-3 Registration Statement (File No. 333-14141).

                     (i)    6 3/8% Debentures due January 8, 2028. Supplemental
                            Indenture No. 1 dated as of January 8, 1998,
                            incorporated herein by reference from Exhibit (4)(a)
                            of Form 8-K dated January 5, 1998.

                     (ii)   5.90% REset Put Securities due 2011. Supplemental
                            Indenture No. 2 dated as of May 11, 1998,
                            incorporated herein by reference from Exhibit 4(a)
                            of Form 8-K dated May 6, 1998.

                     (iii)  6% REset Put Securities due 2012. Supplemental
                            Indenture No. 3 dated as of June 23, 1998,
                            incorporated herein by reference from Exhibit 4(a)
                            of Form 8-K dated June 18, 1998.

                     (iv)   Medium-Term Notes, Series F, due from 1 year to 60
                            years from the Date of Issue. Supplemental Indenture
                            No. 4 incorporated herein by reference from Exhibit
                            (4)(c) of Form S-3 Registration Statement (File No.
                            333-59145), dated July 15, 1998.

                     (v)    Medium-Term Notes, Series F, due from 1 year to 60
                            years from the Date of Issue. Supplemental Indenture
                            No. 5 incorporated herein by reference from Exhibit
                            (4)(c) of Form S-3 Registration Statement (File No.
                            333-59145), dated May 26, 2000.

                (b)  Subordinated Debt Securities Indenture dated as of October
                     18, 1996, incorporated herein by reference from Form 8-K
                     dated October 18, 1996.

                     (i)    7 1/2% Subordinated Deferrable Interest Debentures
                            due 2036. Supplemental Indenture No. 1 dated as of
                            November 5, 1996, incorporated herein by reference
                            from Exhibit (4)(b) of Form 8-K dated October 18,
                            1996.

                     (ii)   7 1/2% Subordinated Deferrable Interest Debentures
                            due 2037. Supplemental Indenture No. 2 dated as of
                            January 14, 1997, incorporated herein by reference
                            from Exhibit (4)(b) of Form 8-K dated January 9,
                            1997.

                     (iii)  7.31% Subordinated Deferrable Interest Debentures
                            due 2027. Supplemental Indenture No. 3 dated
                            September 24, 1997, incorporated herein by reference
                            from Exhibit (4)(b) of Form 8-K dated September 19,
                            1997.

                (c)  Debt Securities. Indenture dated as of March 1, 1987
                     incorporated herein by reference from Exhibit 4(a) of Form
                     S-3 Registration Statement (File No. 33-12364).

                     (i)  Medium-Term Notes, Series B, due from nine months to
                          30 years from Date of Issue. Supplemental Indenture
                          No. 12 incorporated herein by reference from Exhibit
                          (4) of Form 8-K dated August 18, 1989 and Forms of
                          Medium-Term Notes, Series B, incorporated herein by
                          reference from Exhibit (4)(b) of Form 8-K dated
                          September 14, 1989.

                                       17
<PAGE>

Exhibit Number                                       Description
- --------------                                       -----------

                    (ii)   Medium-Term Notes, Series C, due from nine months to
                           30 years from Date of Issue. Form of Supplemental
                           Indenture No. 15 incorporated herein by reference
                           from Exhibit 4(b) of Form S-3 Registration Statement
                           (File No. 33-34762), dated May 14, 1990.

                    (iii)  Medium-Term Notes, Series C, due from nine months
                           (U.S. Issue)/184 days (Euro Issue) to 30 years from
                           Date of Issue. Amended and restated Supplemental
                           Indenture No. 16 incorporated herein by reference
                           from Exhibit (4) of Form 10-Q for the period ended
                           March 31, 1991.

                    (iv)   8-7/8% Debentures due 2011. Supplemental Indenture
                           No. 17 incorporated herein by reference from Exhibit
                           (4) of Form 8-K dated April 22, 1991.

                    (v)    Medium-Term Notes, Series D, due from nine months
                           (U.S. Issue)/184 days (Euro Issue) to 60 years from
                           Date of Issue. Supplemental Indenture No. 18
                           incorporated herein by reference from Exhibit 4(b) of
                           Form S-3 Registration Statement (File No. 33-42642),
                           dated September 10, 1991.

                    (vi)   6-3/4% Notes due February 15, 2003. Form of
                           Supplemental Indenture No. 20 incorporated herein by
                           reference from Exhibit (4) of Form 8-K dated March 1,
                           1993.

                    (vii)  7-3/8% Debentures due July 15, 2033. Form of
                           Supplemental Indenture No. 21 incorporated herein by
                           reference from Exhibit (4)(a) of Form 8-K dated July
                           15, 1993.

                    (viii) Medium-Term Notes, Series E, due from nine months
                           (U.S. Issue)/ 184 days (Euro Issue) to 60 years from
                           the Date of Issue. Supplemental Indenture No. 22
                           incorporated herein by reference from Exhibit 4(b) of
                           Form S-3 Registration Statement (File No. 33-60939),
                           dated July 13, 1995.

                    (ix)   6-5/8% Notes due September 1, 2005. Form of
                           Supplemental Indenture No. 23 incorporated herein by
                           reference from Exhibit (4)(a) of Form 8-K dated
                           September 5, 1995.

                    (x)    7.05% Debentures due 2025. Form of Supplemental
                           Indenture No. 24 incorporated herein by reference
                           from Exhibit (4)(a) of Form 8-K dated November 13,
                           1995.

    (10)    Material Contracts

            (a)   Directors' Stock Plan, as amended and restated, incorporated
                  herein by reference from Exhibit 10(a) of Form 10-Q for the
                  quarter ended September 30, 1997.*

            (b)   Profit Sharing Program, as amended and restated, incorporated
                  herein by reference from Form 10-K for the year ended December
                  31, 1999.*

            (c)   McDonald's Supplemental Employee Benefit Equalization Plan,
                  McDonald's Profit Sharing Program Equalization Plan and
                  McDonald's 1989 Equalization Plan, as amended and restated,
                  incorporated herein by reference from Form 10-K for the year
                  ended December 31, 1995.*

            (d)   1975 Stock Ownership Option Plan, as amended and restated,
                  incorporated herein by reference from Form 10-Q for the
                  quarter ended June 30, 1999.*

            (e)   1992 Stock Ownership Incentive Plan, as amended and restated,
                  incorporated herein by reference on Form 10-Q for the quarter
                  ended March 31, 2000.*

            (f)   McDonald's Corporation Deferred Income Plan, as amended and
                  restated, incorporated herein by reference from Form 10-Q for
                  the quarter ended September 30, 1999.*

            (g)   1999 Non-Employee Director Stock Option Plan, incorporated
                  herein by reference from Form 10-Q for the quarter ended June
                  30, 1999.*

            (h)   Executive Retention Plan, incorporated herein by reference
                  from Form 10-K for the year ended December 31, 1998.*

                                       18
<PAGE>

       (12)  Statement re:  Computation of Ratios

       (27)  Financial Data Schedule


- -------------------------------------
   *Denotes compensatory plan.

  **Other instruments defining the rights of holders of long-term debt of the
    registrant and all of its subsidiaries for which consolidated financial
    statements are required to be filed and which are not required to be
    registered with the Securities and Exchange Commission, are not included
    herein as the securities authorized under these instruments, individually,
    do not exceed 10% of the total assets of the registrant and its subsidiaries
    on a consolidated basis. An agreement to furnish a copy of any such
    instruments to the Securities and Exchange Commission upon request has been
    filed with the Commission.

(b) Reports on Form 8-K

    The following reports on Form 8-K were filed for the last quarter covered by
    this report, and subsequently through August 11, 2000.

                                                        Financial Statements
           Date of Report         Item Number           Required to be Filed
           --------------         -----------           --------------------
               7/25/00              Item 7                      No

                                       19
<PAGE>

                                   SIGNATURE
                             ----------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                           McDONALD'S CORPORATION
                                (Registrant)



                            By /s/ Michael L. Conley
                               ----------------------
                               (Signature)

                                  Michael L. Conley
                                  Executive Vice President,
                                  Chief Financial Officer




August 11, 2000
- ---------------------------

                                       20
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.(II)
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>BY LAWS OF MCDONALDS CORPORATION
<TEXT>

<PAGE>

                                                                  Exhibit 3 (ii)

                                  BY-LAWS OF
                            McDONALD'S CORPORATION
                            ----------------------

                              ARTICLE I - OFFICES
                              -------------------

Section 1 - Registered Office - The registered office of McDonald's Corporation
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shall be maintained at the office of the Corporation's registered agent, in the
City of Dover, in the County of New Castle, in the State of Delaware. The
Corporation's registered agent in Delaware is The Prentice Hall Corporation
System, Inc.

Section 2 - Other Offices - The Corporation may also have an office in the
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Village of Oak Brook, State of Illinois, and may also have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the Corporation may
require.

                     ARTICLE II - MEETINGS OF STOCKHOLDERS
                     -------------------------------------

Section 1- Place of Meetings - The Annual Meeting of Stockholders and any other
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meetings of stockholders shall be held at such place as may from time to time be
determined by the Board of Directors and set forth in a notice thereof.

Section 2 - Presiding Officer, Order of Business - The Chairman of the Board, or
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in his or her absence, such officer as designated in Article IV of these By-
Laws, shall act as chairman of and preside at any meeting of the stockholders.
The chairman shall determine the order of business and the procedure at the
meeting, including the determination of the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at
such meeting and such other regulation of the manner of voting and the conduct
of discussion as he or she determines to be reasonably in order. The chairman
may adjourn any meeting of stockholders, whether pursuant to Section 5 of this
Article II or otherwise, and notice of such adjournment need be given only if
required by law.

Section 3 - Annual Election of Directors - The Annual Meeting of Stockholders
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for the election of Directors and the transaction of other business shall be
held each year on the date determined by the Board of Directors. If this date
shall fall upon a legal holiday, the meeting shall be held on the next
succeeding business day. At each annual meeting, the stockholders entitled to
vote shall elect Directors to succeed those whose terms then expire and may
transact any other proper business. Any previously scheduled meeting of the
stockholders may be postponed by resolution of the Board of Directors upon
public notice given prior to the date previously scheduled for such meeting of
stockholders.

Section 4 - Voting - Each stockholder entitled to vote in accordance with the
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terms of the Certificate of Incorporation and in accordance with the provisions
of these By-Laws shall be entitled to one vote (or such lesser number of votes
as may be provided with respect to holders of any series of Preferred Stock in a
resolution of the Board of Directors adopted pursuant to the Certificate of
Incorporation), in person or by proxy, for each share of stock entitled to vote
held by such stockholder but no proxy shall be voted after three (3) years from
its date unless such proxy provides for a longer period. Any motion brought
before a stockholder meeting must be seconded before a vote will be taken. All
votes by stockholders on proposed amendments to the Certificate of Incorporation
and all elections of Directors, shall be by written ballot. All elections for
Directors shall be decided by a plurality of the votes of the shares present at
the meeting, in person or by proxy, and entitled to vote on the election of
directors; all other questions shall be decided by majority vote of the shares
entitled to vote on the subject matter and present, in person or by proxy, at
the meeting, except as otherwise provided by the Certificate of Incorporation or
the laws of the State of Delaware; and where a separate vote by class is
required, the affirmative vote of the majority of shares of such class present
in person or represented by proxy at the meeting shall be the act of such class.

Section 5 - Quorum - At all meetings of stockholders, except as otherwise
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required by law, by the Certificate of Incorporation, or by these By-Laws, a
majority of the shares entitled to vote, whether present in person or
represented by proxy, shall constitute a quorum. Whether or not there is such a
quorum present at any meeting, the chairman of the meeting or a majority of the
shares so present or represented, shall have power to adjourn the meeting from
time to time. No notice of the time and place of adjourned meetings need be
given except as required by law. At any such adjourned meeting at which the
requisite amount of stock entitled to vote shall be represented, any business
may be transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than thirty (30) days or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

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Section 6 - Special Meetings - Special meetings of the stockholders for any
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purpose or purposes may be called only by the Board of Directors pursuant to a
resolution approved by a majority of the Board of Directors and shall be called
by the Secretary in accordance with any such resolution.

Section 7 - Notice of Meetings - Written or printed notice stating the place,
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date, and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given by the Secretary to each stockholder entitled to vote
thereat at his address as it appears on the records of the Corporation not less
than ten (l0) nor more than sixty (60) days before the date of the meeting.
Business transacted at any special meeting shall be confined to the purpose or
purposes stated in the notice of such special meeting.

Section 8 - No Action Without Meeting - Any action required or permitted to be
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taken by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders.

Section 9 - Nomination and Stockholder Business -
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     (A) Annual Meetings of Stockholders - (1) Nominations of persons for
         -------------------------------
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders at an annual meeting of
stockholders may be made (a) pursuant to the Corporation's notice of meeting,
(b) by or at the direction of the Board of Directors or (c) by any stockholder
of the Corporation who was a stockholder of record at the time of giving of
notice provided for in this Section 9, who is entitled to vote at the meeting
and who complied with the notice procedures set forth in this Section 9.

         (2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this Section 9, such business, as determined by the Chairman of the meeting,
must be a proper subject for stockholder action under Delaware corporation law,
and the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered to the Secretary at the principal executive offices of the Corporation
not less than ninety (90) days nor more than one hundred and twenty (120) days
prior to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced by
more than thirty (30) days or delayed by more than sixty (60) days from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the one hundred and twentieth (120th) day prior to such annual
meeting and not later than the close of business on the later of the ninetieth
(90th) day prior to such annual meeting or the tenth (10th) day following the
date on which public announcement of the date of such meeting is first made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected) and a representation as to whether or not the stockholder intends to
solicit proxies in support of such proposed nominee; (b) as to any other
business that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting, any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made, and a representation as to whether or not the
stockholder intends to solicit proxies in support of such proposal; and (c) as
to the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.

         (3) Notwithstanding anything in the second sentence of paragraph (A)(2)
of this Section 8 to the contrary, in the event that the number of directors to
be elected to the Board of Directors of the Corporation is increased and there
is no public announcement naming all of the nominees for Directors or specifying
the size of the increased Board of Directors made by the Corporation at least
one hundred (100) days prior to the first anniversary of the preceding year's
annual meeting, a stockholder's notice required by this Section 9 shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth (10th) day following the day on which such public
announcement is first made by the Corporation.

     (B) Special Meetings of Stockholders - Only such business shall be
         --------------------------------
conducted at a special meeting of stockholders as shall have been brought before
the meeting of stockholders pursuant to the Corporation's notice of meeting.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which directors are to be elected pursuant to
the Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this Section

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9, who shall be entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 9. Nominations by stockholders of such
persons for election to the Board of Directors may be made at such a special
meeting of stockholders if the stockholder's notice required by paragraph (A)(2)
of this Section 9 shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the one hundred and twentieth
(120th) day prior to such special meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to such special meeting
or the tenth (10th) day following the day on which public announcement is first
made of the date of the special meeting and of the nominees proposed by the
Board of Directors to be elected at such meeting.

     (C) General - (1) Only such persons who are nominated in accordance with
         -------
the procedures set forth in this Section 9 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 9. The Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 9 and, if any proposed nomination or business is not in
compliance with this Section 9 or if the stockholder solicits proxies in support
of such stockholder's proposed nomination or proposed business without such
stockholder having made the representation required by paragraph (A)(2) of this
Section 9, to declare that such defective proposal shall be disregarded.

         (2) For purposes of this Section 9, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

         (3) Notwithstanding the foregoing provisions of this Section 9, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 9. Nothing in this Section 9 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.

                            ARTICLE III - DIRECTORS
                            -----------------------

Section 1 - Number and Term - The number of Directors who shall constitute the
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whole Board of Directors shall be the number fixed from time to time by the
Board of Directors in accordance with the Certificate of Incorporation and shall
in no event be less than eleven (11) nor more than twenty-four (24). The
Directors shall be divided into three classes, as nearly equal in number as
possible. Directors shall be elected for a term of office expiring at the third
succeeding Annual Meeting of Stockholders after their election and until their
successors shall be elected and shall qualify.

Section 2 - Resignations - Any Director or member of a committee of the Board of
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Directors may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein and if no time be specified, at
the time of its receipt by the Secretary. The acceptance of a resignation shall
not be necessary to make it effective.

Section 3 - Newly-Created Directorships and Vacancies - Subject to the rights of
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the holders of any series of Preferred Stock then outstanding, newly-created
directorships resulting from any increase in the authorized number of Directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be filled
by a majority vote of the Directors then in office, though less than a quorum.
Directors so chosen shall hold office for a term expiring at the Annual Meeting
of Stockholders at which the term of the class to which they have been elected
expires and until their successors shall be elected and shall qualify. No
decrease in the number of Directors constituting the Board of Directors shall
shorten the term of any incumbent Director.

Section 4 - Removal - Subject to the rights of the holders of any series of
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Preferred Stock then outstanding, any Director, or the entire Board of
Directors, may be removed from office at any time but only for cause and only by
the affirmative vote of the holders of eighty percent (80%) of the voting power
of all of the shares of the Corporation entitled to vote for the election of
Directors.

Section 5 - Powers - The Board of Directors shall exercise all of the powers of
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the Corporation, except such as are by law or by the Certificate of
Incorporation of the Corporation or by these By-Laws conferred upon or reserved
to the stockholders.

Section 6 - Committees -
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     (A) Committees of the Board - The Board of Directors may, by resolution or
         -----------------------
resolutions passed by a majority of Directors present at any meeting at which
there is a quorum, designate one or more other committees, each committee to
consist of two or more of the Directors of the Corporation which, to the extent
provided in said resolution or resolutions or in these By-Laws shall have and
may exercise the powers of the Board of Directors in the management of the
business

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and affairs of the Corporation and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it.

     (B) Limitation on Committee Authority - No committee shall have the power
         ---------------------------------
or authority of the Board of Directors in reference to (i) approving or
adopting, or recommending to the stockholders, any action or matter expressly
required by the Delaware General Corporation Law to be submitted to stockholders
for approval; or (ii) adopting, amending or repealing the By-Laws of the
Corporation.

     (C) Procedural Provisions - A majority of the members of a committee shall
         ---------------------
constitute a quorum for the transaction of business, and the act of a majority
of such members present at any meeting at which there is a quorum shall be the
act of such committee. If at any meeting of a committee there shall be less than
a quorum present, a majority of those members present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.

The Board of Directors may designate one or more Directors as alternate members
of any committee who may replace any absent or disqualified member at any
meeting of the committee. Such committee or committees shall have such name or
names as may be stated in these By-Laws or as may be determined from time to
time by resolution adopted by the Board of Directors.

Each committee shall keep regular minutes of its proceedings and report its acts
and proceedings to the Board.

Section 7 - Meetings
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Regular meetings of the Board of Directors may be held without notice at such
places, within or without the State of Delaware, and times as shall be
determined from time to time by resolution of the Directors.

Special meetings of the Board of Directors may be called by the Chairman of the
Board or the Chief Executive Officer and shall be called by the Secretary at the
direction of the Chairman of the Board or the Chief Executive Officer or on the
written request of any two (2) Directors on notice to each Director sent at
least twenty-four (24) hours prior to each such meeting. Notice of each such
meeting shall be delivered personally to each Director or sent by telegram,
telex, or electronic mail to such a place as designated from time to time by
each Director or, in the absence of any such designation, to the Director's last
known place of business or residence. Any such meeting shall be held at such
place or places, within or without the State of Delaware, and times as may be
determined by the Directors or as shall be stated in the notice.

Section 8 - Quorum - A majority of the Directors shall constitute a quorum for
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the transaction of business and the act of a majority of the Directors present
at any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically provided by the Certificate
of Incorporation, the laws of the State of Delaware, or these By-Laws. If at any
meeting of the Board of Directors there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to time until a
quorum is obtained and no further notice thereof need be given other than by
announcement at the meeting which shall be so adjourned.

Section 9 - Compensation - No employee of the Corporation shall receive any
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additional compensation or remuneration for serving as a member of the Board of
Directors. By resolution of the Board of Directors, those members of the Board
of Directors who are not otherwise employed by the Corporation may receive a
fixed fee, payable quarterly, together with a fee for attendance at each
meeting. For purposes of this Section, members of the Board of Directors who
serve the Corporation in capacities, such as outside consultants, attorneys, or
business advisors, shall not be considered by virtue of such service as being
employed by the Corporation. Nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity as an
officer, agent, or otherwise and receiving compensation therefor.

Section 10 - Action Without Meeting - Unless otherwise restricted by the
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Certificate of Incorporation or the By-Laws, any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof,
may be taken without a meeting if all members of the Board of Directors, or of
such committee, as the case may be, consent thereto in writing and such written
consent is filed with the minutes of proceedings of the Board of Directors or
committee.

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                             ARTICLE IV - OFFICERS
                             ---------------------

Section 1 - Designation - The Corporation shall have as officers a Chairman of
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the Board and a Chief Executive Officer. In addition, the Corporation shall have
such other officers with such titles and duties as shall be stated in these By-
Laws or in a resolution of the Board of Directors which is not inconsistent with
these By-Laws and as may be necessary to enable it to sign instruments and stock
certificates which comply with the Delaware General Corporation Law ("DGCL").
One of the officers of the Corporation shall have the duty to record the
proceedings of the meetings of the stockholders and Directors in a book to be
kept for that purpose. Officers shall be chosen in such manner and shall hold
their offices for such terms as are prescribed in these By-Laws or determined by
the Board of Directors. None of the officers, except the Chief Executive Officer
and Chairman of the Board need be Directors. One person may hold more than one
office at the same time provided the duties of such officer may be properly and
consistently performed by one person.

Section 2 - Chairman of the Board - The Chairman of the Board shall preside at
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all meetings of the stockholders of the Corporation and of the Board of
Directors; he or she shall see that all orders, resolutions, and policies
adopted or established by the Board of Directors are carried into effect; and he
or she shall do and perform such other duties as from time to time may be
assigned to the Chairman of the Board by the Board of Directors.

Section 3 - Chief Executive Officer - The Chief Executive Officer shall have
- -----------------------------------
responsibility for the general and active management of the business of the
Corporation and shall do and perform such other duties as from time to time may
be assigned to the Chief Executive Officer by the Board of Directors. In the
event of the inability of the Chairman of the Board to act, the Chief Executive
Officer shall preside at all meetings of the stockholders of the Corporation and
of the Board of Directors of the Corporation.

                   ARTICLE V - INDEMNIFICATION AND INSURANCE
                   -----------------------------------------

Section 1 - Right to Indemnification -
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     (A) Indemnified Persons - Each person who was or is made a party or is
         -------------------
threatened to be made a party to or is involved in or called as a witness in any
Proceeding because he or she is an Indemnified Person, shall be indemnified and
held harmless by the Corporation to the fullest extent permitted under the DGCL,
as the same now exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the DGCL permitted the Corporation
to provide prior to such amendment). Such indemnification shall cover all
expenses incurred by an Indemnified Person (including, but not limited to,
attorneys' fees and other expenses of litigation) and all liabilities and losses
(including, but not limited to, judgments, fines, ERISA or other excise taxes or
penalties and amounts paid or to be paid in settlement) incurred by such person
in connection therewith.

     (B) Additional Indemnified Persons - (1) Each Additional Indemnified Person
         ------------------------------
who was or is made a party or is threatened to be made a party to or is involved
in or called as a witness in any Proceeding (other than an action by or in the
right of the Corporation) because he or she is an Additional Indemnified Person
shall be indemnified and held harmless by the Corporation against expenses
(including, but not limited to, attorneys' fees and other expenses of
litigation) and all liabilities and losses (including, but not limited to,
judgments, fines, ERISA or other excise taxes or penalties and amounts paid or
to be paid in settlement) incurred by such person in connection therewith if
such Additional Indemnified Person acted in Good Faith. The termination of any
Proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption that an
Additional Indemnified Person did not act in Good Faith.

         (2) Each Additional Indemnified Person who was or is made a party or is
threatened to be made a party to or is involved in or called as a witness in any
Proceeding brought by or in the right of the Corporation to procure a judgment
in its favor because he or she is an Additional Indemnified Person shall be
indemnified and held harmless by the Corporation against expenses (including,
but not limited to, attorneys' fees and other expenses of litigation) incurred
by such person in connection therewith if such Additional Indemnified Person
acted in Good Faith, except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of such person's duty
to the Corporation unless and only to the extent that the Court of Chancery of
the State of Delaware or the court in which such Proceeding shall have been
brought or is pending shall determine upon application that despite the
adjudication of liability but in view of all the circumstances of the case, such
Additional Indemnified Person is fairly and reasonably entitled to indemnity for
such expenses which such Court of Chancery or such other court shall deem
proper.

         (3) Any indemnification under paragraphs (B)(1) or (B)(2) of this
Section 1 (unless ordered by a court) shall be made by the Corporation unless it
is determined that indemnification of the Additional Indemnified Person is not
proper in

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the circumstances because such person has not met the applicable standard of
conduct set forth in either paragraph (B)(1) or (B)(2) of this Section 1. Such
determination shall be made: (a) by the Board of Directors of the Corporation by
a majority vote of a quorum consisting of Directors who are not parties to such
Proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable if
a quorum of disinterested Directors so directs, by independent legal counsel in
a written opinion. Such determination shall be made within one hundred twenty
(120) days (or such longer period established as set forth in the next sentence)
after receipt by the Board of Directors of written notice from the Additional
Indemnified Person seeking indemnification setting forth in reasonable detail
the facts known to such person concerning the Proceeding. The period during
which the Board of Directors may determine that indemnification is not proper
may be extended to a period established by the Board of Directors by written
notice to the Additional Indemnified Person delivered to such person within one
hundred twenty (120) days after receipt by the Board of Directors of such
person's written notice seeking indemnification.

     (C) Denial of Authorization for Certain Proceedings - Notwithstanding
         -----------------------------------------------
anything to the contrary in this Article V, except with respect to
indemnification of Indemnified Persons specified in Section 3 of this Article V,
the Corporation shall indemnify an Indemnified Person or Additional Indemnified
Person in connection with a Proceeding (or part thereof) initiated by such
person only if (i) authorization for such Proceeding (or part thereof) was not
denied by the Board of Directors of the Corporation prior to the earlier of (x)
sixty (60) days after receipt of notice thereof from such Indemnified Person or
one hundred twenty (120) days after receipt of notice thereof from such
Additional Indemnified Person, as the case may be, or (y) a Change of Control,
and (ii) in the case of a Proceeding initiated by an Additional Indemnified
Person, it is not a Proceeding to enforce rights under this Article V.

     (D) Certain Defined Terms - For purposes of this Article V, the following
         ---------------------
terms shall have the following means (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):

                  (i)    a "Proceeding" is any investigation, action, suit or
                         proceeding, whether civil, criminal, administrative
                         or investigative, and any appeal therefrom;

                  (ii)   an "Indemnified Person" is a person who is, was, or had
                         agreed to become (A) a Director of the Corporation
                         (including, in the case of such person seeking
                         indemnification while serving as a Director who is or
                         was an officer of the Corporation, such person in his
                         capacity as an officer) or (B) an officer, employee or
                         a Delegate, as defined herein, of the Corporation (but,
                         except as included within clause (A), with respect to
                         such officers, employees and Delegates and persons
                         agreeing to become officers, employees or Delegates
                         only as to Proceedings occurring after a Change of
                         Control, as defined herein, arising out of acts, events
                         or omissions occurring prior or subsequent to, or
                         simultaneously with, such Change of Control), or the
                         legal representative or any of the foregoing;

                  (iii)  a "Delegate" is (A) any employee of the Corporation
                         serving as a director or officer (or in a substantially
                         similar capacity) of an entity or enterprise (x) in
                         which the Corporation owns a l0% or greater equity
                         interest or (y) the principal function of which is to
                         service or benefit the Corporation or its licensees;
                         (B) any employee of the Corporation serving as a
                         trustee or fiduciary of an employee benefit plan of the
                         Corporation or any entity or enterprise referred to in
                         clause (A); and (C) any employee serving at the request
                         of the Corporation in any capacity with any entity or
                         enterprise other than the Corporation;

                  (iv)   a "Change of Control" shall be deemed to have occurred
                         if (A) any "Person" (as that term is used in Sections
                         13(d) and 14(d) of the Securities Exchange Act of 1934,
                         as amended) is or becomes (except in a transaction
                         approved in advance by the Board of Directors of the
                         Corporation) the beneficial owner (as defined in Rule
                         13d-3 under such Act), directly or indirectly, of
                         securities of the Corporation representing 20% or more
                         of the combined voting power of the Corporation's then
                         outstanding securities, or (B) during any period of two
                         consecutive years, individuals who at the beginning of
                         such period constitute the Board of Directors of the
                         Corporation cease for any reason to constitute at least
                         a majority thereof unless the election of each Director
                         who was not a Director at the beginning of the period
                         was approved by a vote of at least two-thirds of the
                         Directors then still in office who were Directors at
                         the beginning of the period;

                  (v)    an "Additional Indemnified Person" is a person who is,
                         was, or had agreed to become an officer, Delegate or
                         employee of the Corporation and who is not an
                         Indemnified Person; and

                  (vi)   "Good Faith" shall mean with respect to any Additional
                         Indemnified Person that such person acted in good faith
                         and in a manner such person reasonably believed to be
                         in or not opposed to the best

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<PAGE>

                         interests of the Corporation, and, with respect to any
                         criminal Proceeding, such person had no reasonable
                         cause to believe such conduct was unlawful.

Section 2 - Expenses - Expenses, including attorneys' fees, incurred by a person
- --------------------
indemnified pursuant to Section 1 of this Article V in defending or otherwise
being involved in a Proceeding shall be paid by the Corporation in advance of
the final disposition of such Proceeding, including any appeal therefrom, upon
receipt of an undertaking (the "Undertaking") by or on behalf of such person to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Corporation; provided, that (A) if a Change of
Control has occurred, such person shall be required to deliver to the
Corporation the Undertaking only if such an undertaking is required under the
DGCL then in effect, and (B) in connection with a Proceeding (or part thereof)
initiated by such person, except a Proceeding authorized by Section 3 of this
Article V, the Corporation shall pay said expenses in advance of final
disposition only if authorization for such Proceeding (or part thereof) was not
denied by the Board of Directors of the Corporation prior to the earlier of (i)
sixty (60) days in the case of an Indemnified Person, or one hundred twenty
(120) days in the case of an Additional Indemnified Person, after receipt of a
request for such advancement accompanied by the Undertaking or (ii) a Change of
Control. A person to whom expenses are advanced pursuant hereto shall not be
obligated to repay pursuant to the Undertaking until the final determination of
any pending Proceeding in a court of competent jurisdiction concerning the right
of such person to be indemnified or the obligation of such person to repay such
expenses.

Section 3 - Protection of Rights - If a claim by an Indemnified Person under
- --------------------------------
Section 1 of this Article V is not promptly paid in full by the Corporation
after a written claim has been received by the Corporation or if expenses
pursuant to Section 2 of this Article V have not been promptly advanced after a
written request for such advancement by an Indemnified Person (accompanied by
the Undertaking if required by Section 2 of this Article V) has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim or the advancement of
expenses. If successful, in whole or in part, in such suit, such claimant shall
also be entitled to be paid the reasonable expense thereof. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any Proceeding in advance of its final
disposition where the Undertaking has been tendered to the Corporation (or, if a
Change of Control has occurred, the Undertaking is not required to be tendered
to the Corporation under the DGCL) that indemnification of the claimant is
prohibited by law, but the burden of proving such defense shall be on the
Corporation. If a Change of Control has occurred, a claimant making a claim
under Section 1 of this Article V or seeking to avoid repayment to the
Corporation of expenses advanced pursuant to Section 2 of this Article V shall
have (i) the right, but not the obligation, to have a determination made by
independent legal counsel, at the expense of the Corporation, as to whether
indemnification of the claimant is prohibited by law; and (ii) shall have the
right (A) to select as independent legal counsel to make such determination any
legal counsel designated for such purpose in a resolution adopted by the Board
of Directors that is in full force and effect immediately prior to the Change of
Control or (B), if the Board of Directors has failed to designate any such legal
counsel or all such counsel refuse to make such a determination, to request the
American Arbitration Association, at the expense of the Corporation, to select
an independent legal counsel familiar with matters of the type in dispute to
make such a determination. If a determination has been made in accordance with
the preceding sentence, no determination inconsistent therewith by other legal
counsel, by the Board of Directors, or by stockholders shall be of any force or
effect. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination, if required, prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that indemnification of the claimant is
prohibited, shall be a defense to the action or create a presumption that
indemnification of the claimant is prohibited.

Section 4 - Miscellaneous -
- -------------------------

     (A) Non-Exclusivity of Rights - The rights conferred on any person by this
         -------------------------
Article V shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Law, agreement, vote of stockholders or disinterested
Directors or otherwise. The Board of Directors shall have the authority, by
resolution, to provide for such indemnification of agents of the Corporation or
others and for such other indemnification of Directors, officers, Delegates or
employees, of the Corporation as it shall deem appropriate.

     (B) Insurance, contracts, and funding - The Corporation may maintain
         ---------------------------------
insurance, at its expense, to protect itself and any Director, officer,
Delegate, employee, or agent of, the Corporation against any expenses,
liabilities or losses, whether or not the Corporation would have the power to
indemnify such person against such expenses, liabilities or losses under the
DGCL. The Corporation hereby agrees that, for a period of six (6) years after
any Change of Control, it shall cause to be maintained policies of directors'
and officers' liability insurance providing coverage at least comparable to and
in the same amounts as that provided by any such policies in effect immediately
prior to such Change of Control. The Corporation may enter into contracts with
any Director, officer, Delegate or employee of the Corporation in furtherance of
the provisions of this Article V and may create a trust fund, grant a security
interest or use other means (including, without

                                       7
<PAGE>

limitation, a letter of credit) to ensure the payment of such amounts as may be
necessary to effect the advancing of expenses and indemnification as provided in
this Article V.

     (C) Contractual nature - The provisions of this Article V as amended
         ------------------
effective December 17, 1990 shall be applicable with respect to events, acts and
omissions occurring prior to or subsequent to such Amendment, and shall continue
as to a person who has ceased to be a Director, officer, Delegate or employee
and shall inure to the benefit of the heirs, executors and administrators of
such person. This Article V shall be deemed to be a contract between the
Corporation and each person who, at any time that this Article V as so amended
is in effect, serves or agrees to serve in any capacity which entitles him to
indemnification hereunder and any repeal or other modification of this Article V
or any repeal or modification of the DGCL or any other applicable law shall not
limit any rights of indemnification for Proceedings then existing or arising out
of events, acts or omissions occurring prior to such repeal or modification,
including, without limitation, the right to indemnification for Proceedings
commenced after such repeal or modification to enforce this Article V with
regard to Proceedings arising out of acts, omissions or events arising prior to
such repeal or modification.

     (D) Cooperation - Each Indemnified Person and Additional Indemnified Person
         -----------
shall cooperate with the person, persons or entity making the determination with
respect to such Indemnified Person's or Additional Indemnified Person's
entitlement to indemnification under this Article V, including providing to such
person, persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to such Indemnified Person or Additional
Indemnified Person and reasonably necessary to such determination. Any costs or
expenses (including attorneys' fees and disbursements) incurred by such
Indemnified Person or Additional Indemnified Person in so cooperating with the
person, persons or entity making such determination shall be borne by the
Corporation (irrespective of the determination as to such Indemnified Person's
or Additional Indemnified Person's entitlement to indemnification) and the
Corporation hereby indemnifies and agrees to hold such Indemnified Person or
Additional Indemnified Person harmless therefrom.

     (E) Subrogation - In the event of any payment under this Article V to an
         -----------
Indemnified Person or Additional Indemnified Person, the Corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of
such Indemnified Person or Additional Indemnified Person, who shall execute all
papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Corporation to bring
suit to enforce such rights.

     (F) Severability - If this Article V, or any portion hereof shall be
         ------------
invalidated or held to be unenforceable on any ground by any court of competent
jurisdiction, the decision of which shall not have been reversed on appeal, this
Article V shall be deemed to be modified to the minimum extent necessary to
avoid a violation of law and, as so modified, this Article V and the remaining
provisions hereof shall remain valid and enforceable in accordance with their
terms to the fullest extent permitted by law.

                          ARTICLE VI - MISCELLANEOUS
                          --------------------------

Section 1 - Certificates of Stock - Every holder of stock in the Corporation
- ---------------------------------
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Senior Chairman of the Board or the Chairman of the Board,
Chief Executive Officer or a President or a Vice President and by the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the Corporation. If
such certificate is countersigned (l) by a transfer agent or (2) by a registrar,
any other signature on the certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.

Section 2 - Lost Certificates - A new certificate of stock may be issued in the
- -----------------------------
place of any certificate theretofore issued by the Corporation alleged to have
been lost, stolen, or destroyed; and the Directors may, in their discretion,
require the owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the Corporation a bond in such sum as they may direct
not exceeding double the value of the stock to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate, or the issuance of any such new
certificate.

Section 3 - Transfer of Shares - The shares of stock of the Corporation shall be
- ------------------------------
transferable upon its books by the holders thereof in person or by their duly
authorized attorneys or legal representatives by the surrender of the old
certificates duly endorsed or accompanied by proper evidence of succession,
assignment, or authority to transfer, to the Corporation by the delivery thereof
to the person in charge of the stock and transfer books and ledgers or to such
other person as the Directors may designate, by whom they shall be canceled; and
new certificates shall thereupon be issued. A record shall

                                       8
<PAGE>

be made of each transfer and a duplicate thereof mailed to the Delaware office;
and whenever a transfer shall be made for collateral security, and not
absolutely, it shall be expressed in the entry of the transfer.

Section 4 - Record Date - In order that the Corporation may determine the
- -----------------------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to Corporate action in writing
without a meeting or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date which shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which shall not be more
than sixty (60) nor less than ten (l0) days before the date of such meeting nor
more than sixty (60) days prior to any other action.

Section 5 - Registered Stockholders - The Corporation shall be entitled to
- -----------------------------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends and to vote as such owner and to hold liable for
calls and assessments a person registered on its books as the owner of shares
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.

Section 6 - Dividends - Subject to the provisions of the Certificate of
- ---------------------
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the Corporation as and when they deem expedient. Dividends may be paid
in cash, in property, or in shares of the capital stock of the Corporation; and
in the case of a dividend paid in shares of theretofore unissued capital stock
of the Corporation, the Board of Directors shall, by resolution, direct that
there be designated as capital in respect of such shares an amount not less than
the aggregate par value of such shares and, in the case of shares without par
value, such amount as shall be fixed by the Board of Directors. Before declaring
any dividend, there may be set apart out of any funds of the Corporation
available for dividends, such sum or sums as the Directors from time to time in
their discretion deem proper for working capital or as a reserve fund to meet
contingencies or for such other purposes as the Directors shall deem conducive
to the interests of the Corporation.

Section 7 - Seal - The Corporate seal shall be circular in form and shall
- ----------------
contain the name of the Corporation, the year of its creation, and the words,
"CORPORATE SEAL DELAWARE." Said seal may be used by causing it, or a facsimile
thereof, to be impressed or affixed or reproduced or otherwise.

Section 8 - Fiscal Year - The fiscal year of the Corporation shall begin on the
- -----------------------
first day of January in each year and shall end on the last day of December in
each year.

Section 9 - Checks - All checks, drafts, or other orders for the payment of
- ------------------
money, notes, or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, agent or agents of the
Corporation and in such manner as shall be determined from time to time by
resolution of the Board of Directors.

Section 10 - Notice and Waiver of Notice - Whenever any notice is required by
- ----------------------------------------
these By-Laws to be given, personal notice is not meant unless expressly so
stated. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation. If delivered by facsimile, notice is given when
verification that such notice was sent is received by the sender. Stockholders
not entitled to vote shall not be entitled to receive notice of any meetings
except as otherwise provided by statute.

Whenever any notice whatever is required to be given under the provisions of any
law or under the provisions of the Certificate of Incorporation of the
Corporation or these By-Laws, a waiver thereof in writing signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.

Section 11 - Ratification by Stockholders - Any contract, transaction, or act of
- -----------------------------------------
the Corporation or of the Directors or of any committee which shall be ratified
by the holders of a majority of the shares of stock of the Corporation present
in person or by proxy and voting at any annual meeting or at any special meeting
called for such purpose, shall, insofar as permitted by law or under the
provisions of the Certificate of Incorporation of the Corporation or these By-
Laws, be as valid and binding as though ratified by every stockholder of the
Corporation.

Section 12 - Interested Directors - No contract or transaction between the
- ---------------------------------
Corporation and one or more of its Directors or officers or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its Directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason or solely because the Director or officer is present at or participates
in the meeting of the Board of Directors or committee thereof which authorizes
the contract or transaction or solely because his or her or their votes are
counted for such purpose if:

                                       9
<PAGE>

         (1)   the material facts as to his or her relationship or interest and
               as to the contract or transaction are disclosed or are known to
               the Board of Directors or the committee and the Board or
               committee in good faith authorizes the contract or transaction by
               the affirmative votes of a majority of the disinterested
               directors, even though the disinterested directors be less than a
               quorum; or

         (2)   the material facts as to his or her relationship or interest and
               as to the contract or transaction are disclosed or are known to
               the shareholders entitled to vote thereon, and the contract or
               transaction is specifically approved in good faith by vote of the
               shareholders; or

         (3)   the contract or transaction is fair as to the Corporation as of
               the time it is authorized, approved, or ratified by the Board of
               Directors, a committee thereof, or the shareholders.

Common or interested Directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.

                           ARTICLE VII - AMENDMENTS
                           ------------------------

The By-Laws of this Corporation may be made, altered, amended, or repealed by
the affirmative vote of the holders of two-thirds of the issued and outstanding
shares entitled to vote at any annual or special meeting of the stockholders,
provided that notice of the proposed making, alteration, amendment or repeal is
included in the notice of the meeting at which such action takes place.

The By-Laws of this Corporation may also be made, altered, amended, or repealed
by the affirmative vote of a two-thirds majority of the Board of Directors at
any regular or special meeting of the Board of Directors provided that notice of
the proposed making, alteration, amendment, or repeal to be made is included in
the notice of the meeting at the which such action takes place. No By-Law shall
be made, altered, amended, or repealed so as to make such By-Law inconsistent
with or violative of any provision of the Certificate of Incorporation.

As amended effective June 1, 2000

                                       10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>STATEMENT RE: COMPUTATION OF RATIOS
<TEXT>

<PAGE>

                                                                      Exhibit 12

                            McDONALD'S CORPORATION
                      STATEMENT RE: COMPUTATION OF RATIOS
                              Dollars In Millions


<TABLE>
<CAPTION>
                                                          Six months
                                                        Ended June 30,                      Years ended December 31,
                                                      2000        1999      1999       1998       1997      1996       1995
                                                   ---------------------  ------------------------------------------------------
<S>                                                <C>        <C>         <C>        <C>           <C>       <C>        <C>
EARNINGS AVAILABLE FOR FIXED CHARGES
- - Income before provision for income taxes          $1,435.7   $1,373.5    $2,884.1   $2,307.4/(1)/ $2,407.3  $2,251.0   $2,169.1
- - Minority interest 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                    4.0       11.0        21.9       23.7          28.3      39.6       19.6
- - Provision for income taxes of 50% owned
       affiliates included in consolidated
       income before provision for income taxes         51.8       25.7        72.8       99.9          69.0      73.2       73.3
- - Portion of rent charges (after reduction
       for rental income from subleased
       properties) considered to be
       representative of interest factors*              95.1       86.2       178.5      161.3         145.9     130.9      103.8
- - Interest expense, amortization of debt
       discount and issuance costs, and
       Depreciation of capitalized interest*           229.5      221.5       440.1      461.9         424.8     392.2      388.8
                                                   ---------------------  -------------------------------------------------------
                                                    $1,816.1   $1,717.9    $3,597.4   $3,054.2      $3,075.3  $2,886.9   $2,754.6
                                                   =====================  =======================================================

FIXED CHARGES
- - Portion of rent charges (after reduction
       for rental income from subleased
       properties) considered to be
       representative of interest factors*          $   95.1   $   86.2    $  178.5   $  161.3      $  145.9  $  130.9   $  103.8
- - Interest expense, amortization of debt
       discount and issuance costs, and fixed
       charges related to redeemable preferred
       stock*                                           224.7     217.1       431.3      453.4         426.1     410.4      403.4
- - Capitalized interest*                                   7.5       6.7        14.7       18.3          23.7      23.5       22.8
                                                   ---------------------   ------------------------------------------------------
                                                    $   327.3  $  310.0    $  624.5   $  633.0      $  595.7  $  564.8   $  530.0
                                                   =====================   ======================================================

RATIO OF EARNINGS TO FIXED CHARGES                       5.55      5.54        5.76       4.82/(2)/     5.16      5.11       5.20
                                                   =====================   ======================================================
</TABLE>

* Includes amounts of the Registrant and its majority-owned subsidiaries, and
  one-half of the amounts of 50%-owned affiliates.

(1) Includes $160.0 million pre-tax special charge and $161.6 million of Made
    For You costs for a pre-tax total of $321.6 million.
(2) Excluding the special charge and Made For You costs, the ratio of earnings
    to fixed charges for the year ended December 31, 1998 was 5.33.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000

<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000
<PERIOD-START>                             JAN-01-2000
<PERIOD-END>                               JUN-30-2000
<CASH>                                             411
<SECURITIES>                                         0
<RECEIVABLES>                                      747
<ALLOWANCES>                                         0
<INVENTORY>                                         86
<CURRENT-ASSETS>                                 1,675
<PP&E>                                          22,901
<DEPRECIATION>                                   6,334
<TOTAL-ASSETS>                                  21,211
<CURRENT-LIABILITIES>                            3,690
<BONDS>                                          5,786
<PREFERRED-MANDATORY>                               17
<PREFERRED>                                          0
<COMMON>                                             0
<OTHER-SE>                                      16,674
<TOTAL-LIABILITY-AND-EQUITY>                    21,211
<SALES>                                          5,022
<TOTAL-REVENUES>                                 6,904
<CGS>                                            4,180
<TOTAL-COSTS>                                    4,569
<OTHER-EXPENSES>                                  (80)
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 207
<INCOME-PRETAX>                                  1,436
<INCOME-TAX>                                       459
<INCOME-CONTINUING>                                977
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       977
<EPS-BASIC>                                        .73
<EPS-DILUTED>                                      .71


</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
