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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

McDONALD'S CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

        Indicate by check  ü  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  ý    No  o

Indicate by check  ü  whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes  ý    No  o

McDONALD'S CORPORATION

INDEX

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PART I—FINANCIAL INFORMATION

Item 1.    Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET

See notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

See notes to condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

See notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (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 December 31, 2002 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter and nine months ended September 30, 2003 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

        The following table presents the components of comprehensive income for the quarters and nine months ended September 30, 2003 and 2002:

Restructuring and Restaurant Closing Costs

        In second quarter 2003, the Company recorded a $14.0 million pretax charge in selling, general and administrative expenses for severance and other employee-related costs, in connection with streamlining restaurant development functions.

        In first quarter 2002, the Company recorded $43.0 million (pre and after tax) of asset impairment charges in other operating expense, primarily related to the impairment of assets in certain existing restaurants in Chile and other Latin American markets and the closing of 32 underperforming restaurants in Turkey, as a result of continued economic weakness.

        In fourth quarter 2002, the Company recorded $810.2 million of pretax charges ($656.9 million after tax) primarily related to: restructuring certain markets in the Middle East and Latin America; eliminating approximately 600 positions; reallocating resources and consolidating certain home office facilities; management's decision to close 719 underperforming restaurants primarily in the U.S. and Japan; and the write-off of software development costs.

        The following table presents the activity included in accrued restructuring and restaurant closing costs in the condensed consolidated balance sheet.

Per Common Share Information

        Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of stock options, calculated using the treasury stock

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method, of 9.5 million shares and 7.4 million shares for the third quarter 2003 and 2002, respectively, and 5.0 million shares and 12.3 million shares for the nine months ended September 30, 2003 and 2002, respectively. Stock options that were not included in diluted weighted-average shares because they would have been antidilutive were 159.1 million shares and 168.8 million shares for the third quarter 2003 and 2002, respectively, and 167.1 million shares and 104.0 million shares for the nine months ended September 30, 2003 and 2002, respectively.

Stock-Based Compensation

        The Company accounts for stock options as prescribed by Accounting Principles Board Opinion No. 25 and includes pro forma information, as provided by Statement of Financial Accounting Standards (SFAS) No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation.

        Pro forma net income and net income per common share were determined as if the Company had accounted for its employee stock options under the fair value method of SFAS No. 123. The fair value of these options was estimated at the date of grant using an option pricing model. The model was designed to estimate the fair value of exchange-traded options that, unlike employee stock options, can be traded at any time and are fully transferable. In addition, such models require the input of highly subjective assumptions including the expected volatility of the stock price. For pro forma disclosures, the options' estimated fair value was amortized over their vesting period.

Changes in Accounting Standards

Asset retirement obligations — 2003

        Effective January 1, 2003, the Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations. The Statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, the cost is capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. In first quarter 2003, the Company recorded a charge of $36.8 million after tax ($0.03 per diluted share) related to lease obligations in certain international markets to reflect the cumulative effect of this accounting change. The adoption of the new rule will not have a material effect on the Company's ongoing results of operations or financial position.

Goodwill — 2002

        Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, which eliminates the amortization of goodwill (and intangible assets deemed to have indefinite lives) and instead subjects it to annual impairment tests. The Company performed the initial required goodwill impairment test as of January 1, 2002, and recorded a charge of $98.6 million after tax ($0.08 per diluted share) in first quarter 2002 for the cumulative effect of this accounting change. The impaired goodwill was primarily in Argentina, Uruguay and other markets in Latin America and the Middle East, where economies had weakened significantly.

Segment Information

        The Company operates in the food service industry and primarily operates and franchises quick-service restaurant businesses under the McDonald's brand (McDonald's restaurants). The Company also operates other restaurant concepts under its Partner Brands: Boston Market, Chipotle Mexican Grill and Donatos Pizzeria.

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        The following table presents the Company's revenues and operating income by geographic segment. APMEA represents McDonald's restaurant operations in Asia/Pacific, the Middle East and Africa.

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

OPERATING RESULTS

n/m

Not meaningful

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CONSOLIDATED OPERATING RESULTS

The Company operates in the food service industry and primarily operates and franchises quick-service restaurant businesses under the McDonald's brand (McDonald's restaurants). The Company also operates other restaurant concepts under its Partner Brands.

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. Foreign currency translation had a positive impact on the growth rates of consolidated revenue, operating income and earnings per share for the quarter and nine months, primarily due to the stronger Euro.

        Information in constant currencies excludes the effect of foreign currency translation on reported results. Constant currency results are calculated by translating current year results at prior year average exchange rates. Management reviews and analyzes business results in constant currencies and bases certain compensation plans on these results because it believes these results better represent the Company's underlying business trends.

Net Income and Diluted Net Income Per Common Share

        For the quarter, net income increased $60.7 million or 12%, and diluted net income per common share increased $0.05 or 13%. These results included a benefit from foreign currency translation of $23.4 million in net income and $0.02 in diluted net income per common share.

        For the nine months, income before the cumulative effect of accounting changes increased $46.6 million or 3%, and diluted income per common share before the cumulative effect of accounting changes increased $0.04 or 4%. Net income, including the cumulative effect of the accounting changes, increased $108.4 million or 9% and diluted net income per common share increased $0.09 or 9%. These results included a benefit from foreign currency translation of $83.3 million in net income and $0.06 in diluted net income per common share.

        Diluted weighted average shares outstanding were lower for the nine months compared with the prior year due to a less dilutive effect from outstanding stock options and shares repurchased.

        The Company repurchased $139 million of its common stock during the third quarter.

Cumulative Effect of Accounting Changes

        First quarter 2003 included a charge of $36.8 million after tax ($0.03 per diluted share) for the cumulative effect of an accounting change that impacted lease obligations in certain international markets.

        First quarter 2002 included a charge of $98.6 million after tax ($0.08 per diluted share) to reflect the cumulative effect of an accounting change that impacted goodwill.

        See changes in accounting standards on page 7 for further discussion of these charges.

Revenues and Comparable Sales

        Revenues include sales by Company-operated restaurants and fees from restaurants operated by franchisees or affiliates under joint-venture agreements. These fees include rent, service fees and/or royalties that are based on a percent of sales with specified minimum payments, along with initial fees. For the quarter and nine months ended September 30, 2003, Company-operated restaurants generated about 75% of revenues. See pages 16-17 for additional details regarding revenues.

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*

Information in constant currencies excludes the effect of foreign currency translation on reported results.

n/a

Not applicable

        Comparable sales represent the percent change in constant currency Systemwide sales from the same period in the prior year for all Systemwide restaurants in operation at least thirteen months. Systemwide sales include sales by all restaurants, whether operated by the Company, by franchisees or by affiliates operating under joint-venture agreements. Management believes that Systemwide sales information is useful in analyzing the Company's revenues because fees received from franchisees and affiliates, based on sales from their restaurants, along with sales from Company-operated restaurants are reported as revenues.

        In the U.S., continued strong customer response to the new Premium Salads and McGriddles breakfast sandwiches, popular Happy Meals, extended hours, continued everyday value and focus on improved food taste and service, all contributed to the revenue increases for the quarter and nine months.

        In Europe, expansion in France and a strong performance in Russia were offset by continued negative trends in the U.K. and Germany for the quarter and nine months.

        In APMEA, revenues for the quarter and nine months were impacted by positive comparable sales in Australia, expansion in China and weak results in South Korea and Taiwan. For the nine months, revenues were also affected by concerns about SARS (Severe Acute Respiratory Syndrome).

        In Latin America, revenues increased for both periods in constant currencies primarily due to a higher percentage of Company-operated restaurants in 2003.

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Operating Margins