Pershing Square Activist Presentation Deck
D
A Revised Proposal for Creating Value
at McDonald's
Our Revised Proposal (cont'd)
Step 3: Commence McOpCo
Refranchising Program
► McOpCo commences refranchising 1,000
units in mature markets (U.S., Canada and
U.K.) over the next two to three years
► Proceeds from refranchising can be
redeployed in fast growing, high return
emerging markets (China and Russia)
(1)
Assumes $843mm of dividends paid in FY2005E. FY2005E dividend payout
ratio based on 9/30/2005 Last Twelve Months after-tax free cash flows,
calculated as operating cash flows less cash flows from investing activities.
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Final Revised Proposal.ppt
Step 4: Dividend Increase and
Share buybacks
McDonald's increases its dividend payout to
90% of after-tax free cash flow from
roughly 35% of free cash flow currently (1)
■ Implies a dividend of $1.93 per share in
FY 2006E versus 0.67 per share in 2005
At a recent price of $34 per share,
implies a new dividend yield of 5.7%,
versus current yield of ~ 2%
► McDonald's Corporation initiates
incremental share buybacks using existing
cash on hand and IPO proceeds
► Revised Proposal requires no incremental
debt to be issued over total debt position
as of 9/30/05View entire presentation