Mary Kay Shaw – Vice President Investor Relations James Skinner – Chief Executive Officer Ralph Alvarez – Chief Operating Officer Peter Bensen – Chief Financial Officer

Jeff Farmer – Jefferies Steve West - Stifel Nicolaus Matthew Difrisco – Oppenheimer John Glass – Morgan Stanley David Tarantino – Robert Baird Joseph Buckley – Bank of America David Palmer – UBS Steven Kron – Goldman Sachs Jeffery Bernstein – Barclays Capital Jason West – Deutsche Bank Gregory Badishkanian – Citi Lawrence Miller – RBC John Ivankoe – J.P. Morgan Jeffrey Omohundro – Wachovia Tom Forte – Telsey Advisory Group Mitch Speiser – Buckingham Howard Penny – Research Edge Keith Siegner – Credit Suisse Paul Westra – Cowan and Company Jim Baker – Neuberger Berman John Glass – Morgan Stanley

Welcome to the McDonald's April 22, 2009 investor conference call. (Operator Instructions) I'd like to turn the call over to Miss Mary Kay Shaw, Vice President of Investor Relations for McDonald's Corporation.

Hello everyone and thank you for joining us. With me on our call today are Chief Executive Officer Jim Skinner, Chief Financial Officer Pete Bensen and Chief Operating Officer, Ralph Alvarez. Ralph is joining us via phone from the U.S. Regional Operators Association Meeting. Today's conference call is being webcast live and recorded for replay via phone, webcast and podcast. Before I turn it over to Jim, I want to remind everyone that as always, the forward-looking statements in our earnings release and 8-K filings also apply to our comments. Those documents are available on investor.mcdonalds.com as are reconciliations of any non-GAAP financial measures mentioned on today's call with our corresponding GAAP measures. And now, I'll turn it over to Jim.

Good morning everyone. I'm pleased to report that McDonald's delivered strong first quarter results. Global comparable sales were up 4.3%, operating income increased 5% in constant currency and EPS reached $0.87, a 17% increase in constant currency. Our sales momentum is continuing with April comparable sales trending at least as strong or better than the first quarter in every area of the world. McDonald's is well positioned for continued growth. Our global system is aligned around the right strategies to manage in the current global economic environment and to seize future opportunities. We remain focused on our customers and restaurants through our plan to win. Everyday, customer relevance is job one at McDonald's. We all know the state of today's consumers. They're scaling back and being more discerning about what they purchase. This means a strong value proposition is critical, from price to product, to experience. McDonald's offers strong value across our entire menu board. Our value menus around the world offer predictable, every day affordability and our core menu, including iconic products like the Quarter Pounder provide great value at the mid tier. This tiered pricing across the board value means we are in a position to grow our market share not only in the near term but in the long term as well. In addition to great tasting core menu offerings, we continue to offer the choice in variety our customers want; new sandwiches and beverages from the cafe coffee here in the U.S. to regional burgers like the Parmareg in Italy appeal to our existing customers and bring in new ones. We're able to provide this quality, choice and value because of our global supply chain. The collaborative relationship we have with our suppliers is a true competitive advantage, enabling us to obtain and secure quality and quantity of ingredients we need in a competitive and relatively predictable prices. To deliver the best experience to our customers, we have to get even better at the basics of our business. That's why we continue to strategically invest in our restaurants so we can continually improve both operations and ambience. We know we're making progress. Our customer satisfaction scores are improving in nearly all of our major markets. Additionally, initiatives to make McDonald's even more convenient such as extended and 24 hours drive through enhancements and delivery strengthen our relevance and drive sales. These strategies are playing out successfully in every area of the world. In the United States, we're managing well in spite of the economy. Our convenient locations and extended hours, great tasting food, strong value and continually improving customer experience make us a part of so many consumers every day lives. Our continued emphasis in these areas has served us well. In Europe, we continue to see good sales results in most of our markets despite the negative impact of the Easter shift and one less day due to Leap Year. Of our big four markets, France, the U.K. and Russia remain strong. In Germany, our brand is strong. We have a good management team in place and we continue to gain market share. The sales in this country were soft for the first three months of 2009 primarily as a result of the economy. However, they improved month to month during the quarter. In fact, March was positive despite the Easter holiday shift and the sales trend is even stronger in April. And, I'm confident we will manage through the current European environment as we have in the past. Results remain strong in Asia Pacific, Middle East, Africa and were led by continued strength in Australia where most of our restaurants have been re-imaged and represent our brand very well. In addition, the majority of our Australian restaurants have a McCafe and we continue to have new product news. Japan as you know is also performing well, but we have seen a slow down in China due to the economic environment there. We remain confident however, in the long term growth potential for China and are doing the right things to drive sales and profit today and well into the future. In addition to our Plan to Win strategies around customer relevance, strong financial management contributes to our profitability and returns. Our disciplined approach to controlling costs and investing to grow the business provides flexibility and strength. As a result, we have a healthy balance sheet and the highest credit rating in the industry. This allows us access to capital when we need it and provides our owner operators continued access to the credit necessary to reinvest in their restaurants. Our financial strength is also a positive for our shareholders. We are on track to meet our three year target of $15 billion to $17 billion of cash returned to shareholders by the end of 2009. To date, we've given back $12.9 billion towards this target. In the first quarter, we bought back 14.6 million shares totaling $823 million and paid a dividend of $0.50 per share for an additional $553 million. Looking ahead, I'm confident we will maintain our momentum by continuing to focus on our customers and restaurants and the financial discipline that drives our growth strategy of being better, not just bigger. Thank you. And now I'll introduce Ralph Alvarez, our Chief Operating Officer.

Good morning. We're pleased to report that each area of the world is contributing to our strong business performance and we grew market share in every major country. In the U.S., comparable sales for the quarter were up 4.7% and operating income grew 6% to $725 million. The strong comp sales drove both U.S. company operated and franchise margin improvements. The company operating margin increased 50 basis points and the franchise margin was up 30 basis points. Our McOpCo margin growth benefited from the refranchising strategy partially offset by higher commodity and occupancy costs. Our support of iconic core products continued to deliver results. First quarter advertising focused on the Quarter Pounder with cheese and we are still benefiting from the McNuggets promotion at the end of last year. The emphasis on core products has generated average check growth and increased restaurant profitability. The U.S. business also remains on track with the roll out of McCafe Beverages. This summer, we'll be advertising beverages, core favorites like the Big Mac and strong value offerings like dollar drinks, dollar menu and chicken snack wraps. Our U.S. business has excellent momentum and will continue to deliver results. In Europe, we continue to take market share despite a decline in Europe's informal eating out category. Europe's comp sales for the quarter were up 3.2% despite an almost two point hit from the shift of the Easter holidays and Leap day impact. Their sales have been driven by three and four price tier menus, the mid time food events as well as extended hours. Restaurant re-imaging and a strong focus on drive through execution is improving our brand performance. While Europe's top line has remained solid in most markets, margins have been impacted by several factors. On the franchise side, our re-franchising strategy helped grow franchise margin dollars but negatively impacted the margin percent. This strategy has the opposite effect on company operative margins. It helped the percentage but reduced the dollars. Europe's franchise margin declined 130 basis points in the first quarter with 70 of those points due to the re-franchising strategy. This impact will lessen as the year continues. Higher occupancy costs and sales building incentives also impacted margins. However, this impact will also decline in future quarters. Europe's company operating margin declined 70 basis points. All of this and more was a result of the margin declines in Russia and our Eastern European markets. While their sales were strong, commodity costs were higher because these markets import 30% to 50% of food products denominated in either Euro or U.S. dollars. The net effect of these countries was a 200 basis points impact on Europe's margins. While the currency volatility in Russia and Eastern Europe is challenging, the long term opportunity remains strong. We continue to capture market share and will grow new restaurants at an appropriate pace. In summary, with Europe's strong base line momentum and decelerating commodity costs, we are on track for another strong year. Now, let's turn to Asia Pacific, Middle East and Africa. Comparable sales were up 5.5% for the first quarter and operating income increased 11% in constant currencies. Results were led by strong performances in Australia and Japan. Australia's success was driven by a focus on chicken and Japan's reintroduction of the Quarter Pounder menu contributed to its momentum. In addition, our convenience initiatives of 24 hours, drive through's and kiosks continued to positively impact the business. Markets are also aggressively working to ensure value initiatives are strategic, branded, and support base line growth. In the first quarter, the franchise margin in Asia Pacific, Middle East and Africa improved 120 basis points. This was driven by the relative impact of foreign currency translation and the comp sales growth. Company operating margins decreased 80 basis points primarily due to softer sales in China. Economic weakness in China has impacted our sales and margins, especially in Southern China where many factories have closed. Still, our underlying business remains strong in China. We are confident in this market's long term potential and are ensuring that we maintain traffic momentum through a strong focus on value pricing and strong operations. We will continue to open new restaurants. We opened 62 in the first quarter with an expectation that 140 will be built this year, slightly down from our previous estimate of 175. In closing, our position as a strong market leader in just about every country where we operate is an advantage we continue to leverage. Our business momentum is strong, costs are moderating and we continue to reinvest in our restaurants for long term success. Thank you. And with that, I'll turn it over to our CFO, Pete Bensen.

Good morning. By now our headlines should be pretty clear. McDonald's global business is fundamentally strong. Our better, not just bigger approach continues to deliver higher sales and improved profitability. Against the backdrop of weak global economies, our consumer relevant strategies drove system wide sales up over 6% in constant currencies in the first quarter. This contributed to consolidated restaurant margin dollars reaching nearly $1.9 billion, up 3% in constant currencies. Company operated margin dollars accounted for 30% of this total and declined primarily due to the impact of refranchising. As a percent of sales, company operating margins declined 30 basis points to 16.2% as increases in the U.S. were more than offset by declines in Europe and Asia Pacific. As Ralph said, Europe's decline was primarily due to the impact of importing goods in Russia and Eastern Europe and Asia Pacific's decline was mainly due to China. Franchise margin dollars increased 7% in constant currencies to $1.3 billion representing 70% of total consolidated restaurant margin dollars. This is up from 67% last year and 64% in first quarter 2007, reflecting our evolution toward a more heavily franchised structure. Since 2007, we've refranchised about 770 restaurants including about 90 in the first quarter. The shift explains in part why constant currency franchise margin dollars are growing at a faster rate than company operated margin dollars, a pattern we expect to continue as we refranchise more restaurants. As a percent of revenues, consolidated franchise margins in the first quarter were flat at 81.4% driven by strong global comparable sales offset by the impact of refranchising and operator incentives. Our evolution toward a more heavily franchised structure reduces total revenue dollars. This is because we collect rent and royalty income as a percent of sales from a franchise restaurant instead of 100% of sales from a company operated restaurant. The benefit of such a structure is a more stable and reliable cash flow and improved profitability as measured by combined operating margin. In the first quarter, combined operating margin percent increased 150 basis points to 27.6%, benefiting from refranchising and ongoing G&A control as well as currency translation. G&A declined 2% in constant currencies in the first quarter and is expected to decline for the full year although there will be fluctuations between quarters. We remain committed to G&A discipline and further increasing combined operating margin over time. Next, let me update you on a couple of other topics. Our commodity and currency translation outlooks; while commodity markets remain volatile, the global recession has dampened demand for commodities world wide, creating opportunities to reduce costs. In the U.S., this is beginning to work its way through our suppliers as the quarterly increase in our grocery bill is down sequentially from 10% in the fourth quarter last year to 6.7% in the first quarter this year. We expect the cost increases in our basket of goods in the U.S. to continue to moderate for the remainder of the year. Our full year outlook remains for our basket of goods to be up 5% to 5.5% in the U.S. It's important to remember that we manage our basket like a portfolio, seeking to achieve the best overall results. Our goal here is to remain competitive and predictable. In the last couple of years this strategy resulted in our costs not rising to the same degree as either the commodity markets or the food component of the PPI, and it meant that we could consistently deliver value across our menu while achieving industry leading company operating margins. Consequently, you shouldn't expect to see the same level of decline in our grocery bill this year as you see in the cash markets since our base line is somewhat lower. And the 5% to 5.5% increase is our best estimate today, but opportunities remain within this projection, we're optimistic that we'll be able to finish the year at the low end of this range. Europe's basket of goods increased 9% in the first quarter. Similar to the U.S., we expect the cost pressures to lessen as the year progresses. Our full year outlook remains at 4% to 4.5% increase. These figures represent the weighted average for total Europe. However, with 40 plus countries, a number of different dynamics come into play. This was the case with Russia and Eastern Europe in the first quarter where commodity costs were disproportionately impacted by the significant weakening of local currencies. We've taken a number of steps to mitigate the impact of currency fluctuation including purchasing goods and services in the local currency to the extent possible This helps create a natural hedge. However, due to the local supply chain infrastructure, Russia and many markets in Eastern Europe import 30% to 50% of their products. These purchases, primarily beef and chicken are denominated in either Euro or U.S. dollars. As a result of this, these markets are facing a more challenging commodity cost environment. Our opportunity to effectively hedge these exposures is significantly limited due to high cost and/or lack of an active market. We remain confident in the long term opportunity in Russia and Eastern Europe even as we navigate these short-term economic challenges. In addition to purchasing in the local currency where possible, we work to mitigate the impact of currency translation by financing our businesses locally as well as reinvesting a significant portion of our local earnings back into our international markets through capital expenditures. We also typically hedge a portion of the royalties we receive from our international markets. These efforts help to lessen the economic impact of fluctuating currency rates, but there will always be a financial reporting impact because of the need to translate international revenues and earnings to U.S. dollars. Since last year, the U.S. dollar has appreciated significantly against virtually all foreign currencies and has remained at a relatively high level. This resulted in a negative impact on first quarter earnings of $0.08 per share. The majority of this impact, about $0.06 was due to four currencies; the Euro, the Pound, and the Australian and Canadian dollars. These currencies declined between 13% and 27% versus the U.S. dollar since first quarter 2008. The next most significant impact was the Russia Ruble which was down 29%. The currency markets remain volatile and difficult to predict, but to give you some perspective, at current exchange rates, we project that currency translation will negatively impact both second and third quarter earnings per share by about $0.11 each, dropping to about $0.02 in the fourth quarter. And we know rates will continue to change. However, we hope this gives you some idea of our current expectations. Currencies tend to balance over time. Our focus remains on managing for the long term strength of our business as we navigate short term volatility. In closing, I think our first quarter results are a testament to the strength of our business model and its flexibility to deliver in a variety of environments. I'm confident we can sustain our global momentum and grow our business not only in the current environment but beyond. Thank you. Now I'll turn it over to Mary Kay to begin our Q&A.

Your first question comes from Jeff Farmer – Jefferies Jeff Farmer – Jefferies: As it relates to McCafe, I was looking for a little bit more color on what you've seen in the past when a new product transitions from the pre advertising to local advertising to national advertising phase. Do sales slowly build throughout all three phases? Is it a step by step function or do sales meaningfully accelerate when you go national?

It varies by product and introduction. We have a long history of course of introducing new products both in terms of testing and then rolling out nationally depending on what country you're in and then advertising when we get up to scale and it varies. But it changes based on the marketplace.

We had that modeled in our testing that we do for new product roll outs and usually when we do go to national, like Jim said, it varies by products depending if it’s a completely new product that you're educating the customer or one that they're already familiar and you’re just educating them about our offer at McDonalds. But national ads, there's nothing like national advertising because you get to be in program advertising on prime network TV. That only happens on national and always stronger than what you could replicate locally.

The next question is from Steve West - Stifel Nicolaus. Steve West - Stifel Nicolaus: How many McCafe's do you have right now in the U.S.?

Right now in the United States, we're right about the 10,000 stores and moving toward conclusion sometime in the middle of the year, May, sometime in that time frame. Steve West - Stifel Nicolaus: With China, can you talk a little bit about what you're seeing in the shorter term? You mentioned you've got some pressure there. We're seeing some negative comps in February and March and what is really your short term outlook there for China and the same store sales results there?

We really have a long term outlook for China I think first of all, is the way we're looking at that marketplace with enormous opportunity. We opened our 1,000th restaurant there last November and even though there's a softening of the economy right now, we look at it for the long term and we're opening about 150 restaurants there this year. Our target was 175, but as the marketplaces develop around those additional sites, we'll be opening those as well. But we've opened 62 already this year and we're in it for the long term and managing appropriately relative to the environment we find ourselves in.

The next question is from Matthew Difrisco – Oppenheimer. Matthew Difrisco – Oppenheimer: Can you also talk about, has anything changed with the timing as far as the ice machines, I guess for a lack of a better term, smoothies or what's also going to have the frapachino's or the frozen drinks in there, the timing of that. Would that be still middle of this year starting to see them rolled out in greater scale and also greater testing?

Yes. I think that's whatever we've said about that. I think we remain on track for rolling those additional items out throughout the remainder of the year.

The next question is from John Glass – Morgan Stanley. John Glass – Morgan Stanley: Can you go back to the commentary on the European margins? Should we expect the pressure that you experienced from importing food to Eastern Europe, does that occur until we lap it through the next year or are you able to do something about that, either hedging or getting some alternate supply. And also, you mentioned that you've had some cost for sales building initiatives in Europe. How long are those? When did they start and how long do they persist and what are those initiatives that you are presumably funding for the franchisees?

I'll talk about the company operating margins there and then Ralph will talk a little bit about the franchisee incentives. We expect the costs of those imports to moderate as we move throughout the year. The fourth quarter is when we'll start to see the greatest decline. But as we mentioned, some of those costs are denominated against the Euro and those local currencies actually started depreciating against the Euro throughout the year last year. So it wasn't until late in the year that they started depreciating significantly against the U.S. dollar. So, we're probably seeing the peak of the impact from those imports here in the first quarter, but it will still be with us primarily for the rest of the year but to a lesser degree.

On the franchise side, the operator incentives we have in place, they'll moderate throughout the rest of the year. At the high end, they've been 30 basis points so it's not a significant piece of it, but it’s something that we do with our operators, being in there together to drive new business.

The next question comes from David Tarantino – Robert Baird. David Tarantino – Robert Baird: Could you comment on the breakfast trends that you've seen in the U.S. specifically and maybe a bit more broadly if you've seen any changes in the day part trends that you've been seeing as Q1 unfolded?

Breakfast has continued to contribute to our success here in the United States and wherever we're selling breakfast around the world in the various markets. Ralph do you want to talk a little bit about the breakfast day part?

Our U.S. breakfast business as we've talked about has been very strong for years. It continues to be positive on sales and guest counts this year. We're a leader in that area and if you've seen our advertising focus during the first three, four months, we've been advertising breakfast pretty heavily. So we continue to see growth in that area and it's a very profitable piece of our business.

The next question comes from Joseph Buckley – Bank of America. Joseph Buckley – Bank of America: I'd like to go back to the European margins again with a couple of questions. You mentioned the refranchising activities there pulling down the franchise percent margin in Europe. Could you elaborate a little bit on that? Are you giving incentives to buyers of those properties? Is that what's sort of playing out? And then just go back on the company side, so if I understood what you said correctly, the entire company operating margin decline is related to the Russian, Eastern European pressure and X that you would have been up in other company operated markets in Europe in terms of percent margin?

You interpreted those comments correctly on the company operating margins, that those Russia and Eastern Europe were more than the total decline. And on the franchise margin side, this is really, looking at some of the sales building initiatives that have been successful around the world, things like reimaging and 24 hours, what these incentives typically are, are reduced rent for a period of time to provide additional cash flow for the operators to invest in these initiatives which as you know, build really long term, sustainable sales for the future.

If I may add there, on the refranchising piece, the majority, there's a greater SKU of restaurants we're refranchising that had underlying lease properties versus purchase properties and those have significant lower margin. As those move on to the franchise side, it dilutes the franchise margin percent, so that's what you're seeing. We'll start lapping against some of the large amounts of restaurants we refranchised last year, and that's why you'll see that percent erosion moderate. The net net is significantly higher combined operating margin and a system that has more franchisees running our restaurants which we believe is very healthy for the customers.

The next question is from David Palmer – UBS. David Palmer – UBS: You've had the dollar menu since late '02 and that's seemingly been enough for the value credibility of McDonald's and you've stayed away from discounting your premium items and large degrees of couponing as well. Do you think that might be ending and we'll have to end markets where you see traffic weakening like a Florida, Germany, where you're getting significant traffic pressure? In other words will you choose to defend share versus profit in select places? And secondly, given that competitors such as Wendy's and Burger King will have declining food costs, we believe in the second quarter, are you worried that others will push that discount button more readily heading into driving season?

I don't see our relationship of the every day affordability and the dollar menu and the value across the menu changing relative to our strategy. I think that we have value menus in every country around the world. There are some markets where franchisees decide to do some additional marketing around value orientation of products, depending on what their current environment dictates, but I don't see us dictating any change in strategy around that. And then I don't see necessarily any concern at least on our part relative to what might happen with others and what they decide to do around this because of their declining food costs if you will, even though I don't know the details around that. But I really don't see anything changing in our relationship in terms of how we're going to market our value.

And just adding, Florida, business is very strong in Florida. Don't know about others, but ours is very strong and so we pulled the every day value, predictable every day value equation there now for the last 18 months and we're taking significant market share. And that's kind of what we do in all the areas of the world. Germany, we grew market share. Our business in Germany is high volume and we're making sure that we protect traffic as we deal in these type of environments right now.

The next question is from Steven Kron – Goldman Sachs. Steven Kron – Goldman Sachs: One follow up on the McCafe question. What percentage of the product sales of the McCafe in the U.S. are at the breakfast day part versus other day parts? And then on the U.S. company operating margins, up 50 basis points year-over-year, that if I have my numbers correctly is the first time it's been up year-over-year since December '06 quarter. You mentioned refranchising a contributor to that but you've been refranchising for a couple of years. So if you could just drill down a little bit more as to the contributing factors there. Is there a product mix shift maybe with the double cheese burger or Mc Double or are there levers that you're pulling on controllable costs and the sustainability of that increase?

On the McCafe, it's more than 50% of the coffee happens at breakfast on the McCafe. There is some seasonality relative to McCafe as to the hotter, the cold drinks obviously, but it's definitely more of a breakfast as you would imagine. On the U.S. company operating margins, the switch to Mc Double from double cheeseburger helped the margins. The core menu advertising, non discounted, just our everyday strong values on Quarter Pounder with cheese and Mc Nuggets helped. We still had high commodity costs in the first quarter, so that offset it. That's why the rest of the year we feel very good about McOpCo margins in the U.S. as costs moderates and we have both of these pieces. The refranchising continues to help us. We refranchised around 400 or so restaurants last year in the U.S., and again most of those had underlying leases and so it's just a switch of that lease cost shows up on the franchise margin side not on the company side.

The next question comes from Jeffery Bernstein – Barclays Capital. Jeffery Bernstein – Barclays Capital: Just one follow up on the discounting and then a separate question. Regarding the discounting, I'm just wondering whether you think perhaps casual dining where they're doing significant discounting perhaps would take back some share or whether on the other end you might be losing to food at home where they're reducing prices. I know you're probably still running 4% plus menu pricing, so just curious on the outlook for that. On the balance sheet you mentioned obviously, we're coming close to the end of 2009 and the $15 billion to $17 billion is on target. I know you haven't put out targets beyond that, but I'm hoping you could talk maybe broadly about whether or not those types of levels are sustainable if the markets remain at the current levels? How about maybe debt pay down, just wondering about priorities.

I'll let Pete answer the question on projections, but when you're looking at the indexing of food away from home and the discounting that's going on by people who are selling products relative to food at home, and all of the other indexing that we take a look at relative to our trends in the business and our traffic and guest counts in the business, we're not really seeing any signs of impact relative to our share. As I had mentioned, I think we're, I think we are, we're growing share in every market we're operating in today, or virtually every market in this environment. So we're not seeing any impact of that right at the moment.

Regarding the cash return targets, I think it's premature to give any specific guidance beyond 2009, but I think if you look at our business model, I think we'll continue to generate a significant amount of cash flow. We'll continue to invest significantly in the business at the great returns that we're generating. And the cash flow after that we'll use to pay dividends. We've shown a commitment to dividends and we believe those are important and we'll have some share buy back as well.

Just to reinforce the traffic piece from Jim, every major market in the first quarter grew comparable guest counts if you consider the impact of having one less day, and that's obviously market share is all based on traffic, and we continue to grow market share as Jim has said.

The next question comes from Jason West – Deutsche Bank. Jason West – Deutsche Bank: I just wanted to touch on the international side a bit. I was wondering if you could talk a bit about what's different about the Chinese consumer and what's going on in Germany, what has gone on there versus some of your other international markets that remain very strong. If you could talk about what the differences are and what gives you comfort that you're not going to see this kind of slow down spreading to other places as we move through the year?

Ralph has just been in those markets recently. Ralph, you want to talk a little bit about our consumers in Germany and China?

I'll take China first. In China, we grew traffic on a comparable basis besides the new stores for the first quarter, but we had average check decline and in China there are other convenient alternatives that are less expensive than western QSR and obviously than McDonald's and so that's a unique phenomena. There's very few places in the world where you have that, so we're doing what we need to do to continue our long term traffic building there and as that economy turns around, those are loyal McDonald's customers. So that's unique to China and some other smaller markets, but none of our bigger markets. In Germany, the German consumer, first Germany is the European country of the big three that has had the largest GDP decline and that's impacted the psyche of the consumer there, and obviously their pocket book. So we've increased what's on our one Euro menu there to be more aggressive on that side and we will continue to advertise more heavily those types of items, but it's been again, unique to Germany. That's the way their consumer is. We have high volume there so we just looked at the market share numbers for first quarter and we grew market share in a strong way, but just the IEO market in Germany declined at a pretty strong rate. So that's what we see, we're not seeing the same effect in our other large countries in Europe.

The next question comes from Gregory Badishkanian – Citi. Gregory Badishkanian – Citi: Just keeping on Europe for a moment and Germany, it's a tough macro environment and you're gaining share. What's the competitive landscape? Are other people, other competitors starting to discount a little bit more and would you expect them to in order to keep up their share there?

Again, the issue in Germany is more of a consumer sentiment and what they end up doing. We've got a very strong position in the marketplace there, more than three times bigger than the next competitor on a guest comp basis. So it really is much more about what we're doing and how the consumer is feeling than it is about competitive actions in the marketplace.

The next question comes from Lawrence Miller – RBC. Lawrence Miller – RBC: I have a couple of follow ups on what you were talking about. Why is it that we're not seeing the weakness in the U.K. because consumer sentiment there isn't strong, and also, I think as it goes back to China, you worked on a menu re-engineering in terms of prices. You're saying it's still weak there. Have you seen an improvement in the comp trend? I know it's a lumpy quarter because of the New Year's but I'm just curious if when you lowered those prices if you saw the desired response? And then related to the Angus test market results, it sounds like that's a product that you actually might roll this year. Can you give us a little color about shifting between the burgers on the menu and what the test market read is on that thing?

On the U.K. piece, we had a very strong quarter in the U.K. A couple of things are happening. First, our brand strength there over the last two years, it's the best turn around of our business anywhere. We've got a very strong management team. As you know, the media and the press there were not always on our side. That's changed significantly. We've reimaged a lot of restaurants and there have been some stimulus in the market place from government. They did a temporary reduction of VAT, that 2% reduction that happened in late December. That put a little bit more money out there for those that are spending, and so it helped retail sales and we're benefiting from that and continuing our trend. As I mentioned, we were looking at first quarter market share numbers in the U.K., very strong growth in market share for us. When you look at China and the prices, the reason for what we've done in China is as I mentioned earlier, the early signals there were some trade down from western QSR down to Chinese QSR and their meal prices for Chinese QSR were maybe 30% to 40% below what a traditional western QSR meal prices were. So we want to make sure at lunch that we became close to competitive in that area in order to limit trading out of the category into a different convenient option. So we like what we're seeing with what we've done. It's dilutive to margins obviously and to average check, but this is a long term gain and we're going to continue to make sure that we maintain that type of traffic. And relative to Angus, we will have Angus out in the U.S. market at some point this year We know what it can do from the different marketplaces and what as you've seen that we've done, we significantly increased advertising against our core menu, which has every day great prices on our extra value meals; Big Mac, QPC, Chicken Nuggets, and this is an option for those that are a little bit hungrier and want to spend a few more bucks. But the rest, it will be supplemented by strong value advertising at the same time.

The next question is from John Ivankoe – J.P. Morgan. John Ivankoe – J.P. Morgan: Remaining on China, was the reduction in unit growth a function of less openings in south China, or is there something else that I should read into that given your positive long term view of the market? Are you changing formats, drive through's, what have you. And secondly on China, are you seeing the improvement in April relative to March that you're seeing broadly in the region or is there something different with China?

The slow down on the openings, it's 25 to 35 openings and much of it is in the south because a bunch of factories have been closed there. But it's sort of across the board really when you look at. When you reduce openings from 175 to 150, we're really looking at each of the market places and when the surrounding area is not developing appropriate to maintain pace with the opening, we have a slight pull back there.

Our trends are comparable. They're not stronger in April in China. And then one thing on the China development, it isn't necessarily we're pulling back on any format like drive through, we will actually open less drive through because those are usually in areas where we were counting on more infrastructure growth; homes, roads, etc. and that's where some of the pull back has happened and so there will be less drive through, but it’s because of that, not because of we're changing the format of what we're opening.

The next question is from Jeffrey Omohundro – Wachovia. Jeffrey Omohundro – Wachovia: There's been a lot of discussion around value this morning, but looking at the more premium side of the menu and thinking of the Angus burger opportunity, do you see an opportunity for a bigger push on the premium side, perhaps to capture or further capture a trade down share?

I think the balance is going to remain about the same. As you know, we've been testing the Angus for awhile now in several markets and we held off actually in terms of moving that product to a national roll out. Whenever we decide to go for it, it's really going to continue to be an approach that balances out the menu relative to value across the menu including premium sandwiches and our iconic core sandwiches, and then the tiered pricing that we're using in the value menu. So it's really not a shift in strategy, but a continuation of the strategy.

Your next question is from Tom Forte – Telsey Advisory Group. Tom Forte – Telsey Advisory Group: I was hoping you could update us on the percentage of sales you're getting today from the value menu, from the dollar menu, and then also are you seeing any impact from competitors who rolled out their own dollar menus, Sonic or KFC. And when I think about same store sales for the June quarter, can you talk about how difficult a comparison you have given the roll out last year of Southern Style Chicken for breakfast, lunch and dinner?

On the dollar menu, obviously we've talked before where over 50% of customers stayed with the double cheeseburger at $0.20 more. What's dollar menu has dropped into the 10% range from the 14% type range we had talked before and so that's as I mentioned earlier, that's helped margins and it's maintained traffic. We're not seeing the competitive impact. We look at Crest Data which gives us a pretty good look at what other folks are doing and our value menu is the one with traction and so we continue to advertise it so customers know that their favorites are there and available and need to be top of mind.

Do you want to talk about the projection comparison?

We don't project comps and while we had a successful launch of the Southern Style Chicken last May, we have a tremendous amount of momentum in the U.S. business and we feel comfortable that will continue.

The reality is if you look at our U.S. comp sales last year, they were 3% in the first quarter, 3.5% in the second, 4.5% in the third and 5% in the fourth, slight increases each quarter, but not significantly different. The range is from 3% to 5% and we're really going against very steady base line growth in the U.S., and we're building on that. We had a 4.7% in the first quarter this year even with the Leap Year impact.

The next question comes from Mitch Speiser – Buckingham. Mitch Speiser – Buckingham: It's a question on beverages in general and the McCafe. Relative to that 18.3% company operating margin in the U.S. in the first quarter '09 and about 18.5% for all of '08, will the incremental sales of specialty coffee products improve that margin? And on the allocation of advertising dollars, where do you see that coming from to market, the specialty coffee initiative?

I think if you take a look at the accretion to margins relative to McCafe, there's no question if we sold 100% of our sales were McCafe it would be accretive to the margin in a big way. But we haven't really sorted out the product mix yet relative to what will happen when we go to advertising on a macro basis, so it remains to be seen. The expectation of course would be that beverages would be beneficial to the margins.

The second question was about advertising dollars and obviously we're seeing softness in the advertising markets, not only television but across all media, and we're going to use that as an opportunity to stay aggressive in getting our message out there and use that as an opportunity to do even more advertising. There's been a resetting of the base media cost across the industry and we're taking advantage of that opportunity to look at where our spend can either increase or remain the same and still get additional GRP's and reach to our customers.

To add a couple of things there on the company operated margins, an 18.3% in the first quarter which is obviously winter, is very strong margin in the U.S. and so it was a great performance by our U.S. business. And on the advertising, we are very conscious of making sure that we are strong on our core menu advertising at the time that we're rolling out a new product that we do not get distracted on that, and we're fortunate with the current media environment that we'll be able to do both.

The next question is from Howard Penny – Research Edge. Howard Penny – Research Edge: If you could just add on Angus to that as well in the media question. And then I have a question as to the composition of your comps. When you say your comps are up and changed, and you attribute that to chicken breakfast and beverages, can you provide of that 100% increase, 50% is breakfast, another 25% is beverages and chicken adds the balance. And when you talk about beverages and the cafe being 50% of the mix coming at breakfast, is that included in there when you look at the allocation of breakfast and how well breakfast is doing or do you wholly separate out beverages when you look at what it contributes to your comps?

We don't get into that level of detail in terms of providing the drivers of the U.S. I think it's fair to say that all of those items are working together and as you know, they're consistent with the strategies that the U.S. business has followed because those are areas that we see huge opportunity in. We're going to continue to focus on those and we think together those are going to continue to be big drivers of the U.S. business.

And on the Angus, Angus is much more part of our core offerings. It’s burgers, it's beef. That's who we are, so we look at that as an extension of our burger line and something very close to what McDonald's stands for.

The next question is from Keith Siegner – Credit Suisse. Keith Siegner – Credit Suisse: Just a follow up, one last question on China. Given the weakness that you've seen along the southern regions, does this change at all the strategy for how you approach the country? I think back in December at investor day you talked about going after the top 150 markets. Does this change the focus, broaden out the scope a little, really go for the long term, get into some of the smaller regions and maybe use franchisees a little more heavily as part of the growth? How might you approach that given what you've been seeing?

We at the moment are not changing our strategy. It remains the same and it's, when you look at China, and we're in this for the long term, just opening our 1,000th restaurant, yet it only represents about 2% of our operating income. So the long term strategy there remains. We're looking at the big cities and we're not franchising there yet on a wholesale basis because we're still working on franchise laws and making sure that we have a viable franchisee model before we do that so we continue to be pretty much a company operated system there in China today.

The next question is from Paul Westra – Cowan and Company. Paul Westra – Cowan and Company: I have a follow up question on the U.S. margins. I was hoping to get a little more detailed update on what line items you see as the greatest opportunity to delivery, improved margins over the next year or two, perhaps some specific efforts underway that can try to gauge how much more upside there might be to the McOpCo margin number. In light of the fact that I think that 18.3% number is better than a 20 year high, might theoretically limit upside but on the other hand we're seeing some significant leverage elsewhere in the restaurant industry by other competitors who have significantly worse business trends.

We think our biggest opportunity is to continue to drive comp sales and our focus on the top line is going to give us the most leverage in the U.S. business and with the momentum we're seeing and the pipeline, we're very optimistic around the top line. But structurally as we've said also, we expect commodity costs to moderate as we move throughout the years, so these higher commodities as they work their way through the supply chain will provide us with some additional benefit. We're always looking at ways to be a little bit more productive from a labor side, and probably from a head wind perspective, there are national minimum wage increases coming later in the year. A great majority of our system is already over the minimum wage, so we don't see that as being a huge impact but it is something on the radar screen that we're looking at. But again, driving the top line is going to continue to be our greatest opportunity and we don't see the margins hitting some theoretical peak.

Not much more to add other than we don't expect the inflationary year we had last year. This year, it's not the long term trend, so that will always help in a business where we have a fair amount of fixed costs and get leverage off of sales growth.

We have another question from Joseph Buckley – Bank of America. Joseph Buckley – Bank of America: In China, going back to China for a moment, if the comp was negative for the quarter, I think the sense I got was that January, February on a combined basis were up, so sales can materially worse in March and if so, I'm curious what you think might have driven that? And then going back to the U.S., I guess Europe too, but the U.S. on the food costs side, are you locked in on some costs? Is there a reason you're not going to benefit from declining food costs? Because it seemed like through 2008 the food price inflation numbers kept rising pretty dramatically so you're definitely more susceptible to what was going on in the commodity markets in 2008. I guess I'm wondering why you wouldn't be benefiting from that at some point here in 2009.

I think we did say that we over the course of the year will benefit from it as it passes through our supply chain on the food cost in the United States and yes, we do some out contracts and some hedging as we've communicated in the past. But we expect to see some benefit from it as we move through the year.

Adding to the commodity costs, for one second is, proteins have not moderated in cost and that's a big piece of our menu. They're not growing at the pace that they were but there's less supply out there of beef and chicken and that's not allowing for the benefit that there is in some of the other commodities. That's what you'll see but it will definitely get better throughout the year. In China, March was not as strong as the combination of January and February.

The next question comes from Jim Baker – Neuberger Berman. Jim Baker – Neuberger Berman: I wanted to ask you about the other countries in the corporate line where it seems like you had about a $20 million reduction in restaurant margins and about a $14 million reduction in operating profits. If you could comment on what's happening in Latin America and Canada, particularly also on the corporate expense.

Our Canadian business, we don't have any company operated restaurants in Latin America anymore, but our Canadian business had a good sales and guest count a month. They got impacted by the commodity costs a little bit more up there, and we've been stronger on our value proposition for both breakfast and rest of the day as we're building our traffic. So company operated margins in Canada were dilutive to last year and that's what would show up in that area.

Then also on the corporate side, the corporate G&A expenses are down as we continue to just exercise good G&A discipline and keep a watchful eye over that spend.

The next question comes from John Glass – Morgan Stanley. John Glass – Morgan Stanley: It sounds like going into summer you're going to start nationally advertising the specialty coffee or the McCafe business. Right now five of the seven products or the majority at least of the products are hot beverages and I think last summer you indicated that you'd seen the cuts per week slow down materially in the summer given the hot coffee doesn’t sell well during that period. So the question is, is summer the right time to nationally advertise those products or a better time to wait till fall? Should we at least moderate our expectations of the initial impact of that advertising at the very least or do I have it all wrong?

We're not going to tell you when we're going to start national advertising, proprietary information. But there's never a bad time to nationally advertise a high quality product. So, we'll make that determination as we move through this period and as we get closer to what could be considered the time we would be able to launch this new product.

In addition to that, we've got a strong mix of ice coffee and frappes that are part of the, and the other cold drinks and we're going to be strong on drinks this summer, on cold drink advertising, as we were last summer. And so we'll make sure we strike that right combination, but our business, we definitely don't sell more of the hot items in the summer, but our business is much steadier than the rest because our customers are very regular. So like Jim said, we'll be out there all year when we've got a new product supporting it on a strong basis.

We're out of time so I'll go ahead and turn it over to Jim for a few closing comments.

Thanks everybody for joining us this morning. In closing I want to emphasize that our global business in fundamentally strong and we are well positioned for continued growth. Our financial discipline remains in line with our growth strategy of being better not just bigger, and we are successfully controlling costs and at the same time investing to grow the business. Our systems ongoing alignment around our plan to win is producing measurable results in every area of the world. Customer relevant strategies around food, value, convenience and experience have earned us a place in consumer's daily lives. I'm confident in our ability to sustain our momentum and continue to delivery long term profitable growth for our system and our shareholders. Thank you.