Mary Kay Shaw – VP, IR Jim Skinner – Vice Chairman and CEO Pete Bensen – EVP and CFO Don Thompson – President and COO

David Palmer – UBS David Tarantino – Robert Baird Greg Badishkanian – Citi Jeff Omohundro – Wells Fargo Joe Buckley – BofA\Merrill Lynch Jason West – Deutsche Bank John Glass – Morgan Stanley Jeff Bernstein – Barclays Mitch Speiser – Buckingham Research Keith Siegner – Credit Suisse Larry Miller – RBC Matt Van Vliet – Stifel Nicolaus Howard Penney – Hedgeye Risk Management

Hello and welcome to the McDonald's April 21st 2010 investor conference call. As a request, the McDonald's Corporation, this conference is been recorded. Following today's presentation there will be a question–and–answer session for investors. At that time investors only may ask a question by pressing star one on your touch tone phone. I'd now like to turn the conference over to Miss. Mary Kay Shaw, Vice President of Investor Relations for McDonald's Corporation. Miss Shaw, you may begin.

Thank you. Hello everyone and thank you for joining us. With me on the call today, our Chief Executive Officer Jim Skinner, Chief Financial Officer Pete Bensen, and joining us for Q&A, President and Chief Operating Officer, Don Thompson. 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 forward–looking statements in our earnings release in 8–K filing also applies to our comments. Those documents are available on www.investor.mcdonalds.com. As our reconciliations of any non–GAAP financial measures mentioned on today's call with the corresponding GAAP measures, and now I'll turn it over to Jim.

Thanks Mary Kay. Good morning everybody. I'm joining you from our McDonald's Worldwide Owner/Operator Convention in Orlando. Every two years we bring together our franchisees from around the world and along with a number of our suppliers and company employees we celebrate our success, but mostly we calibrate about our future. But we're in the middle of it now and it's been a tremendous week so far. From the Convention floor to our business meetings, we are focused on operations, menu, reinvestment and building this great brand. ' We're sharing ideas and learning from each other further strengthening our alignment, which I know is critical to our future success. We're energized and confident about what we're doing regarding our business and taking our business to the next level. So as we come together and looked ahead I'm proud of the results we achieved this quarter. Global comparable sales were up 4.2%. Operating income increased 13% in constant currency and earnings per share reached $1, a 9% increase in constant currency. Our success continues to be a system wide effort driven by strong results in each area of the world. In the U.S. comparable sales for the quarter increased 1.5% and operating income grew 12%. Comparable sales in Europe rose 5.2% and operating income grew 14% in constant currencies and in Asia Pacific, Middle East and Africa or APMEA, comp sales grew 5.7% with operating income rising 9% in constant currencies. Our momentum is continuing at April with comparable sales trending positive across all of our geographies. We are now into our seventh year of positive comp sales growth in every part of the world, a feat that underscores the ongoing strength and relevance of our plan to win business strategy. Guided by the plan, we continue to focus on differentiating our brands through common business drivers, mainly a variety of beverage choice, better restaurant operations, convenience in daypart expansion, everyday predictable low prices and ongoing restaurant reinvestment. On all of these fronts we're improving and re–innovating. As a result, we are growing our business in widening our market share lead around the world. Together, we're aligned around these drivers in delivering them in the most locally relevant liege. Regarding menu, we made gains by promoting our iconic core products while delivering new food and beverage news. In the U.S. as growing Olympic theme promotion help ignite our Chicken McNuggets sales and drove sustained sales growth across our entire chicken category. Our new product news included McSnack Wrap with all the great taste of Big Mac and a portable wrap which has helped lift the entire Snack Wrap line or category across the menu. Looking ahead, the U.S. is continuing the expansion of McCafé line with the introduction of Frappes and Smoothies. Frappe is now around about 90% of the U.S. Restaurants, and are already exceeding expectations, and that's without any national advertising, and later this summer we will be launching Wild Berry and Straw Berry Banana Smoothies. With these new additions were becoming even more of the beverage destination serving familiar and popular drinks with the quality convenience and value that only McDonald's can provide. Looking at Europe, we continue to delight customers and drive sales with our fourth tier menu offerings, which deliver a popular option of smaller premium portable sandwiches. Little Tasters in the U.K. and Snack Deluxe in Germany have both delivered solid sales results and our latest line of Petit plaisirs in France has exceeded expectations. Europe is also driving momentum with its premium offerings from the Big Tasty in France and the Chicken Bacon Onion Sandwich in the U.K. to the launch of McKinley Burgers, which have performed strongly across our entire market. In APMEA, Japan has driven sales with its recent line of American theme burgers. In addition the number of markets are rolling out extensive campaigns to elevate our core products including the upcoming launch of our Quarter Pounder in Singapore. We also continue to offer strong value across our menu as consumers everywhere continue to count on McDonalds for branded affordability. In China, we've maintained our popular value lunch which is driving guest counts and sales. In the U.S. we launched our Dollar Menu with breakfast to provide the kind of everyday predictable value our customers expect from us. As a result, we've reinvigorated this vital daypart and experienced strong sales in guest count gross into the first quarter. Meanwhile everyday affordability and pricing from our value menus remains a strong traffic driver across Europe and year–to–date our extra value meals throughout Europe have been extremely robust. Italy saw 30% increases as they supported the Big Mac while France experienced strong extra value meal growth and the U.K, Germany and Spain also achieved strong results. So we're continuing to drive traffic as we connect with consumers through core menus, favorites, new food news and the most relevant value offerings and we're complimenting it with even better all around restaurant experience from how our restaurants look to how they are operated to the convenience they provide in our customers daily lives. As many of you know, we have a system wide effort to re–image and modernize our locations inside and out. Australia and Europe have led the way and our other geographies have seen the benefits and are leveraging these learning's. In the U.S. over the past few years we've refreshed about one third of our restaurants with an emphasis on the interior. This year, the U.S. will re–image 400 to 500 restaurants, concentrating on both the interior and exterior. In China, where we're celebrating our 20th anniversary we have an extensive plan to refresh our current restaurants and still plan to open between 150 to 175 new restaurants this year. Wherever we have critical mass, our re–imaged restaurants were seeing improved perception of our brand and higher sales and returns. As in Australia where many of our brand perception scores have increased over the last three years and we've delivered a three year return on incremental invest in capital of more than 60%. We feel this initiative will set the stage to take the McDonald's brand well into the future. The strength of the brand is also dependent on great service through innovative technology and better training of our people; we will continue to enhance the experience of our customers. APMEA continues to lead the way generating our top customer satisfaction scores year–to–date. In particular, China and Japan are truly differentiating our brand on service with Japan achieving its best satisfaction scores ever earlier this year. The U.S. and Europe have also continued to make great progress on improving their customer satisfaction scores. This is a key measure that we pay very close attention to in order to ensure we are getting better at being better. Key to Europe's results have been nearly full implementation of our bridge operating platform, which creates a better organized kitchen increases capacity and puts less pressure on the crew through simplified operations. Its now a nearly 90% of our European restaurants and it enables us to expand our menu variety at the same time improving our customer service. Finally, we are leveraging greater convenience in daypart expansion to continue to drive growth. In the U.S. more than one third of our restaurants are now open 24 hours, and we know there are opportunities to do more. In addition, nearly 80% of our stores are now open by 5:00 a.m. continuing to add to the comp for that particular daypart. In APMEA, convenience remains a key driver of our business. Our McDonald's Celebrity Service now operates in 19 countries throughout the region and contributed to measurable comp growth in China, Hong Kong and Korea. Our continued expansion of 24 hour service drove sales in Japan and Australia, improvements and drive through execution across all markets erupt a greater capacity in cash flow. Meanwhile we've now made breakfast available in 75% of our restaurants in APMEA, and we are excited about the tremendous opportunity that breakfast provides. So those are a few highlights on how the momentum is continuing this year. We are delivering the food and beverages our customers want, they value they expect and an overall dining experience that is modern, relevant and in step with our customers lives. We are committed to our business plans and our philosophy of financial discipline and enhanced shareholder value. We have a healthy balance sheet and the highest credit rating in the industry allowing us to access capital and help facilitate owner owner/operators to obtain the credit they need to reinvest in their restaurants. We remain committed to returning all of our free cash flow over the long–term to investors through a combination of dividends and share repurchase and in the first quarter we returned $1 billion to shareholders. Overall I'm very pleased by our first quarter performance and confident that we will continue to achieve strong results. What I've experienced at this weeks meeting is encouraging and motivating. Our entire system is determined to get even better and all we deliver to keep McDonalds moving forward. The optimism, confidence and alignment is truly inspiring and will continue. Thank you, and now I'll introduce Pete Bensen, our CFO. Pete Bensen Thanks Jim and hello everyone. As I walk our Convention floor and visit with people this week, it's even more clear to me that the system alignment behind our plan to win is the fuel that continues to drive increased sales, debt counts, cash flow and market share around the world. Owner/operators, suppliers and company employees are focused on satisfying the evolving needs of our customers by delivering unbeatable value, menu choice and convenience in a contemporary environment everyday in our restaurants. These collective efforts resulted in first quarter as reported operating income growth of 20% to nearly $1.7 billion. Every area of the world contributed with top line sales growth, effective management of expenses and strong margin performance. As a result, combined operating margin increased 220 basis points to nearly 30%. U.S. Company operating margins rose 210 basis points to 20.4% primarily due to lower food and paper cost and to a lesser extent, the impact to refranchising. For a perspective, the last time the quarterly U.S. Company operating margin exceeded 20.4% with second quarter 1994 nearly 16 years ago. We continue to experience lower commodity cost in the first quarter as our basket of goods in the U.S. decreased about 5%. This compares to the 6.7% increase in first quarter 2009. For the full–year 2010, our commodity outlook in the U.S. is favorable with cost expected to be down 2% to 3%. Lower food and paper cost have allowed us to continue to grow margins while holding the line on price increases. We remain focused on building traffic, which is critical to growing our market share over the long–term. Regarding Europe, Company operating margins increased 200 basis points in the first quarter to 17.3% down comparable sales in France, Russia, the U.K. and many other markets as well as lower commodity cost were partly offset by higher labor and occupancy cost. Broad currency pressures on imports in Russia and Eastern Europe have eased since last year which also benefited margins. Europe's grocery bill also declined 5% in the quarter and for the full–year we expect commodity costs to be down slightly. In APMEA, company operated margins increased 220 basis points, also driven by lower commodity costs, operating efficiencies and positive comparable sales. Turning to franchise margins, we continue to benefit from a more heavily franchise structure as first quarter franchise margin dollars rose to nearly $1.5 billion, an increase of 8% in constant currency, driven in part by system wide sales growth of 6%. The consolidated franchise margin percent declined slightly, yet remains strong at 81.2%. Our positive global comparable sales were offset by higher depreciation cost in the U.S and the impact of refranchising. In addition the significant strengthening of the Australian dollar in the first quarter of 2010 negatively impacted the mix of APMEA's franchise margins. The final factor in our combined operating margin is G&A control. First quarter G&A increased in total dollars, but improved slightly as a percentage of revenues. This was in line with our internal expectations. As I mentioned on January's call, the timing of the Vancouver Winter Olympics and our biennial Worldwide Owner/Operator Convention will impact quarterly comparisons this year. We still expect full year 2010 G&A to be up slightly on an as reported basis and relatively flat in constant currencies. As a system, we continue to concentrate on initiatives and assets that grow our business over the long–term, where necessary tough decisions are being made to close certain capacity constraint sites. Japan, our 50% owned affiliate decided to close approximately 430 restaurants with lower volumes and returns by mid–year 2011. Accordingly, our first quarter results were negatively impacted by approximately $30 million after tax or $0.03 per share. We expect minimal additional charges for the remainder of the year. So, we are revising downward the total estimate for these costs in 2010 from $40 million to $50 million to less than $40 million. Somewhat offsetting the impairment charges in Japan were about $30 million in gains in our U.S. business from the dissolution of a few of our joint partnerships. These gains were reflected in other operating income. This is a continuation of our broader efforts to optimize our ownership mix, to leverage the entrepreneurial spirit of our proven owner/operators and enhance our portfolio of Company operated restaurants. While pruning underperforming assets in certain markets and continuing ownership optimization certainly makes us stronger. We are also focused on the opportunity to build future returns and enhance long–term shareholder value with new restaurant development and re–imaging of our existing restaurants. Re–imaging as contributed to sustain momentum and outstanding returns in France, Australia and other markets, that have a significant percentage of contemporary restaurants. Fresh new looking restaurants helped to retain existing customers while attracting new ones. They also enhance our ability to introduce more premium offerings. Australia's recent success with the Angus Burger is a testament to that. We believe the timing for expanding our re–imaging efforts is ideal, but simply together with our franchises, we are investing on a scale that cannot be matched. We plan to re–image over 2000 locations this year. About half of those will be in Europe, another 600 in APMEA with the remaining 400 to 500 locations in the U.S. The opportunity to update our brand is significant. Globally, only about 20% of our exteriors reflect our current contemporary look. Approximately twice as many interiors, or about 40% has been updated. Therefore, the majority of our restaurants do not yet have a contemporary look on either the inside or the outside. In general, Europe is farther along than either in the U.S. or APMEA, particularly with interior re–imaging. A combination of both, an exterior and interior re–image produces the most significant sales lease, so that will be our plan going forward. In the U.S. the first 400 to 500 re–image sites will tend to be older higher volume locations, where permitting time is reasonable and we either own the land or have significant lease term remaining. Geographically, we expect them to fairly disperse around the country with about 20 restaurants in each of our 22 regions, and in addition to our re–imaging efforts, we will rebuild over 150 restaurants in the U.S. this year. We are co–investing with our owner/operators on the re–imaging effort in a similar manner as we have in the past. We expect our investment per restaurant will be in the range of $150,000 to $200,000 depending on the scope or the remodel. Our owner/operators will contribute the remaining $250,000 to $500,000. The total re–imaging cost per restaurant will vary considerably depending on the age of the building, whether any previously updating has occurred, maintenance and repair needs and compliance with local zoning requirements such as interior sprinklers, lighting, signage and accessibility. We've seen an average sales lift above overall market performance of at least 6% to 7%. So, we expect returns from re–imaging to be good for both the Company and our owner operators. Lastly, I would like to update you on currency translation. Our currency benefit came in at the low end of expectations that we provided on our call in January. Above the U.S. dollar strengthened against the Euro and the British Pound over the last two months, this was mostly offset by improved operating performance particularly in markets like Australia and Russia, where currencies remain more stable, and having approximately 45% of our total debt denominated in foreign currency also provides a hedge against volatility. Based on current exchange rate in business outlook, we expect the comparisons will begin to turn negative in the second half of the year, but for the full–year, currency translation is expected to provide a slight benefit. We recognize this estimate becomes outdated within days, but at least to give you some perspective at today's rate. McDonald's first quarter numbers are a testament to the alignment of our system around growing both top and bottom line results in a challenging environment. McDonald continues to gain strength and looking ahead my experience this week with the franchises hear their owner/operator convention gives me more confidence that we can do even better as the economy improves. Thank you, now I will turn it over to Mary Kay to begin our Q&A.

Thanks Pete. I will now open the call for analyst and investor questions. (Operator Instructions). First question is from David Palmer at UBS. David Palmer – UBS: Thanks Mary Kay. Hi everybody. In the U.S. and Europe, how does traffic and the check breakdown –– My gut is that checks was under pressure in the first quarter as it was for a lot of players out there, and maybe even that your traffic was above the same store sales number you did particularly in the U.S. and also that included in the sort of gut feeling is that you think that that check can improve through the year through kind of playing the trade up game against the trade down game last year and maybe even a little pricing as the year goes through. How does that thinking sound to you and any color would be helpful? Thanks.

Well good morning David. This is Jim. We have seen a little bit of a fall off in the check because of the way we've been presenting the menus to our consumers particularly around breakfast, but we do see some potential for this down, upside down the road. But you're right. We're not going to get through pricing. We're still holding the lining on pricing, but through some of our initiatives were on the menu. Many Don can talk a little about what that looks like.

Hey David. One of the things that's really great this year is we're seeing an even larger percentage of our sales growth, sales growth is really attributed to guest count growth and particularly to Jim's point, in markets such as the U.S. or Canada when you implement some of the breakfast value pieces that have been implemented, then those things will hit the average check a little bit more. However, the guest counts that we're diving are really tremendous and far exceed any kind of a breakeven. So, when we look at it overall we're really looking, finally I guess you would say as a guest count growth and that's what the focus is.

And David, specifically for Europe, guest count accounted for about 50% of the comp growth there. So we saw the balance as you heard in some of the remarks. We had a lot of success with premium products and more full margin products. So, we had a nice balance of check in, their traffic growth there in Europe.

Thank you. The next question is from David Tarantino at Robert Baird. David Tarantino – Robert Baird: Hi, good morning and congratulations on a great start to the year. My question is on the U.S. business and in particular the acceleration in the comps in March in positive turn related to April. Do you think that the core QSR consumer is starting to feel a little bit better, or do you think that those results are being driven by some of your own sales drivers?

David, this is Jim. I think that the consumer is starting to feel a little bit better. If you see consumer confidence, score is getter better over the last couple of months. We see a little more spending in the market place and yet the stubborn unemployment being at 9.7% is still as a factor I think relative to that overall spending in that confidence. I don't believe that the spending levels are going to get back to pre–recession until people have some confidence over the fact they are going to have a place to go to work and put food on the table at home or away from home. I think that's going to continue to be an issue, and I believe that the results that we are achieving are result of our strategies around the value orientation of our menu. It is absolutely continuing to be the most important thing relative to our customers, and that is everyday affordability and yet of course we continue to grow guest counts during this very difficult time, and have opportunity for them to partake of value across the menu even in our premium sandwiches. So, I think it's as much our strategies as it is the confidence of the QSR consumer.

The next question is from Greg Badishkanian at Citi. Greg Badishkanian – Citi: Great, thanks. Just maybe a little bit on food cost deflation; kind of how that looks towards the back half of the year and does that give you a little bit more maybe ammunition to be a little bit more aggressive on value to drive all your guest counts?

Yes, Greg. As we look at how commodities are going to shake out for us been move throughout the year, specifically here in the U.S.? Greg Badishkanian – Citi: Yes.

It's a pretty favorable environment for us. We've probably seen the best quarter of the year in terms of experience here in the first quarter, but we think we're going to continue to see a favorable environment as we move throughout the year and as you mentioned, that's going to allow us to stay a little bit on the sidelines from a pricing perspective while others may not be as situated as we are with the strategies we have in place to mitigate some of those commodity costs, and then it may feel a little more pressure to have to go to the menu board. We feel pretty comfortable where we're at and our ability to focus on growing the guest counts, even delivered pretty good margins in that environment.

Greg, this is Don. The other thing to Pete's point, we didn’t wait until the commodities had continued to decline. We implemented breakfast value in the U.S. earlier, McSnack Wrap early to beep up the mid–tier and we did those things also at the same time that we had implemented the Angus burger for margin and profitability last year and now Frappes and Smoothies coming forward. So we've had a good mix relative to bringing in the guest counts and then trying to take advantage of that relative to some additional margin growth.

Thank you, the next question is from Jeff Omohundro at Wells Fargo. Jeff Omohundro – Wells Fargo: Thanks. My question is about Asia Pacific and maybe a little bit of an elaboration on the convenience initiatives being pursued there such as delivery and an update on the drive through utilization and outlook in China and perhaps a little bit on the Sinopec relationship? Thanks.

Yes. Jeff, Don just back from Asia. So, he is our resident expert on what they are doing over there.

Hi Jeff. The actually great, great visit to I was in China, Japan here recently, specific to drive through and actually I'll talk a little broader about the development strategy in China first. The one thing that that we are really focused on to your point is beginning to expand drive through, but I think we are learning how to do it even more effectively and being able to develop drive through in the outer range as we call it, where you have a little less density and you have a little bit more car traffic coming into the more urban areas and so the drive through part of that focus is great, big focus around the transportation hubs there, tremendous amount of density and the potential growth to continue to grow the business, and so the combination of those two things really are major part of our strategy and also the building to more free standing restaurants. So, in China, great strategy, we beeped our infrastructure. We are driving stronger margin. We are running better restaurant, some of the lowest customer satisfaction opportunities that we have within the system, which means really great operations and so all of those things are helping us in China and the drive through strategy is continuing. There will be a big growth target for us in China.

Okay. Thanks. The next question is from Joe Buckley from BofA\Merrill Lynch. Joe Buckley – BofA\Merrill Lynch: Thank you. I want to ask one follow–up to the March question and then kind of a related U.S question going forward. The acceleration of March, can you break that down for us a bit? Did you pick up a little bit of check in March or was check still down and how do the dayparts look and how sustainable does that feel to you in the March pickup. And then somewhat related going forward, just an update on the smoothies. It sounds like the frappes are almost done. Will the smoothies be up and running in time for the international advertising over the summer?

Hey Joe its Pete. I'll talk about March a little bit and then Don will talk about the extension in the McCafé beverages. March was a real good month for us. We saw sales and guest count growth across all dayparts. That was for the entire month of March and as we mentioned in the remarks, momentum is continuing into April. So we feel pretty good about where we're at and it wasn’t just one or two things. It was broad based across the items that Jim mentioned and specifically, having frappes in 90% of the system by now is certainly a part of it and Don can probably elaborate on the frappes and smoothies.

Hey Joe. Right now frappes, we've got them in about 9,000 restaurants and the performance expectations at this point are greater than what we would have thought. The reality of it is we're at unit levels now that we felt we'd see once we actually started the marketing and we haven’t started the marketing launch yet. So frappes are performing well and to your point on smoothies, whether or not we'd be ready for the advertising, yes we will. We've already got smoothies in over 2000 restaurants in the U.S. and so those are performing exceptionally well. This morning, Jim mentioned, we were at the worldwide convention. We had a chance to hear from some of our owner/operators who are executing the smoothies and interestingly enough in Michigan and really out performing based upon their execution in the restaurant and so a lot of excitement in the operator community and we're moving forward very effectively in terms of getting those products into the restaurants.

Thank you. The next question is from Jason West at Deutsche Bank. Jason West – Deutsche Bank: Yes. Thanks guys. Just wondering if you could talk a little bit more about the commodity side of things and I'm really more focused on how do you guys manage the costs down so much when we're seeing some inflation across a lot of the proteins and is it something, I think you mentioned something you do differently from competitors. Can you talk a little bit about what that is and how that gives you a pricing advantage over time? That would be great. Thanks.

Yes, Jason. We've got an outstanding group of folks that work in our supply chain at McDonald's. They work with some of our risk management people and ultimately though its our independent suppliers that end up making these final decisions but they –– we do a combination of things. We do some fixed price contracts after looking at markets and trying to anticipate what's going to happen, do some forward buying, some auctions and really through some of the long–term relationships are able to negotiate some pretty favorable pricing and its all about for us trying to provide some stability and predictability in the prices. It's important to be able to go to owner/operators and talk about what promotions we're going to be running six or nine months from now and have them feel confident that they have some idea of what the cost of those items are going to be. So, in times like this when you're starting to see maybe the commodity markets take off a little bit, these tactics allow us to mitigate the impact on our margins and our commodity costs. And again there is no one item in our basket of goods that’s more than 15% of our cost of sales. So its spread amongst a broad base of items where we have the opportunity to be as opportunistic as we can.

You know Jason, in our restaurant level too from an execution perspective, what we decide to promote, it plays a big role. So we've got great value in the restaurants but the ability to again sell an Angus product helps us also in terms of minimizing overall food impact. The product mix does help in Europe, whether it’s the larger lay hamburgers, Reston, Austria, Germany. So we've got some higher margin products as well that support us relative to overall food costs.

Thank you. The next question is from John Glass at Morgan Stanley. John Glass – Morgan Stanley: About the remodel costs, Pete you had thrown out a range, I think if I added correctly between $400,000 and $700,000 and I previously heard $400,000. So it seems like it’s a wider range perhaps. Does that mean the average is in the middle or you think its more at the lower end but your just providing an upper end in special cases and I guess can you talk about the sales lift compared to the prior remodels? It would seem that if the sales lift was about the same in prior remodels but the cost was higher so the returns would be lower, if you can just check me on that. And I can't leave the March comp question alone. You said April was better than the first quarter. Is April also better than March?

All right John, I’m seriously writing down all your questions here. Let me talk about the remodels a little bit. This is the first time that we've officially given guidance on what those costs are going to be. I know there has been some estimates out there and stuff but the range, we wanted to get across the point that there isn’t going to be -- it's going to be hard to come up with an average remodel when you look across 6,000 restaurants in the U.S. system, varying ages, varying sizes and individual owner/operator decisions that they make in terms of what they want to invest in. So there is going to be the specific items that we know are going to really enhance the brand and there can be other items that an operator may take the opportunity to invest in at the time. So, I was visiting with some owner/operators about a month ago and while they were doing the remodel of both the interior and the exterior, they chose to do a replacement of their HVAC and to basically redo their whole parking lot instead of just reseal it because they knew that was coming up in a couple of years anyway and they take the opportunity to do it right now. So, you are going to see a wide range of spending, but ideally I would like to say the average would be in the middle but that's really hard to say. When you look at the sales lift from these, the fact that we do the combination of the interior and the exterior, we're getting a bigger sales lift than if we just did the interior and this is a lift if you think about the environment we're in John. Sales are strong and we're getting a lift above the general market in addition to that. So, as we look at it and pencil it out, even at some of the higher ends of our contributions and the lower end of the sales increases, we're seeing returns in the low double digits as the first year cash–on–cash return that we know will grow from there. So, we feel pretty confident about that and that the level of investment and the sales expectations will warrant this level of investment. For April, what we said in the release was that we expect April to be at least as strong as the quarter on a global basis. So what we're setting there is a floor saying that it won't be any lower than 4.2 is what our expectation is.

Thank you. The next question is from Jeff Bernstein at Barclays. Jeff Bernstein – Barclays: Great. Thank you. Actually just one follow–up question on the U.S and then a separate question. I know you talked about breakfast during your prepared remarks and specifically the dollar menu. I was wondering if you can give a little bit more or whatever color you can give in terms of the mix of the dollar menu, whether it's as a percentage of total breakfast or otherwise, perhaps the impact on margins and what you're seeing from a competitive standpoint. And then separately just in terms of returning cash to shareholders, it looks like $1 billion in the first quarter. I’m just wondering whether you could talk about, I feel like in the past the refranchising with the Smith and contributing to that cash flow. Should we expect that mix to continue to move from the 80% and 90% or might we think about potential leverage for share purchase and obviously to pay down existing near term debt? Thanks.

Jeffery, I'll just start with the return to shareholders and the franchising relationship. We're at 80% now relative to stores in the hands of the franchisees. Our formal process around that 1,500 we talked to about over three years is basically done and I really don’t see for example us getting to the 90th percentile. I do believe though that where we're at now is kind of where you see it will settle out over time. But what we are doing is we're optimizing the ownership portfolio in every market around the world to make sure that we have that rate relative to our system and how we perform best in our business model and then the shareholder return issue is secondary to that. And then Don, perhaps you can talk a little bit about Jeff's other question.

Hi Jeff. Relative to breakfast and the mix in terms of what we're seeing, clearly we are selling more coffee and if you look at the products that are part of that dollar menu its basically a sausage biscuit, a sausage muffin. We've got hash browns in there and then you've got coffee. And then you've got the other products that were already on dollar menu such as a fruit and yogurt parfait. So when you look at it broadly, we're selling more coffee. We're selling more hash browns. We're selling clearly more sandwiches there. You are talking about sandwiches that have a relatively low food and paper cost. So the overall impact is not a large impact from a margin perspective as you can see from the margins that we were able to deliver. So all–in–all we're really pleased. The notion here was to really recapture guest counts and Jim mentioned this earlier. With unemployment at the level it is, our goal was to reach out and pull people out of homes and when you've got food at home still down 2% and you've got food away from home elevated at about 3.5%, we know we can't take a lot of price and so as a result of that, this breakfast menu has been helping us quite a bit to pull people back into the restaurant and we're really happy with the guest count what we're seeing at breakfast.

Thank you. The next question is from Mitch Speiser at Buckingham Research. Mitch Speiser – Buckingham Research: Thanks very much. Can you give us some metrics on the beverage mix? In particular, you've given us how coffee has performed overtime? In general, can you tell us where the beverage mix maybe for all beverages was, maybe three or four years ago, where it is today and maybe what you're thinking over the next couple of years and just separately I'm sure someone will bring it up, but just with the whole healthcare reform moving its way through, can you give us some numbers perhaps on how it might affect the McDonalds system on a corporate level and then perhaps on a franchisee level? Thank you.

Yes, thanks Mitch. This is Jim. I'll start with healthcare and then Don can fill you in on where we are with beverages. First of all as you all know, this is going to be implemented and mandated in 2014. So we've got a few years here to figure out what that direct impact might be to us. We're a federation of small businesses as franchisees as you all know, as I just mentioned and the impacts are going to vary across those franchisees. There are so many moving parts now. When you do the math its difficult to figure out exactly where it might settle because we're just into the implementation process now. It will vary by the number of employees that are full time for each franchisee. And then the bill of course, we have some things in it that have been beneficial for us, where there's a 90 day waiting period before our employers are required to enroll employees which is very important for us because sometimes it takes 90 days for us to realize whether or not a person is going to be a full time employee for us or whether they wouldn't be a full time employee for us. So that will be helpful in the overall invitation. And yet we have taken a shot at the math like a lot of other people and we think in the U.S it might be $10,000 to $30,000 per store. So it will be determined. We don’t really have it sorted out yet. I don’t think anybody really does. Relative to the corporate level, there is really going to be minimal impact for us. You've seen other companies come on who have legacy costs because of retiring health benefits. We don’t have that problem. We have about 100 retirees that are in our program. They pay full premium including prescription rebates and so we don’t have that legacy problem and therefore you wont be seeing any negative impact relative to the overall corporate coffers if you will relative to our overall situation, which is a very good thing. We really are structured in a way with our 401(k)s and our profit sharing and all the other kinds of things. We don't have any of those legacy issues that many companies have and we're very fortunate.

On the other question, just relative to coffee and how it's performing? Just a few things. When we started this back a while ago, our share in coffee was really low as you all know and if you looked at an overall share of coffee, we were somewhere around 2% overall. That is more than triple and if you just really broke it down, in terms of brew coffee, we now sell more brew coffee than anyone. That number has been a large growth opportunity for us. If you look at Espresso base, clearly we've more than doubled since the first part of just 2009. We've doubled our espresso base coffees and then clearly in the ice coffee arena, we've had tremendous growth there as well. So, all of the coffee strategies have been intended to really bring in more customers. We talked earlier about the incremental nature of it and about 40 odd percentile of the customers being incremental. That still holds true even as we move into frappes, which is still a coffee based, espresso based drink. So, all of our measures and metrics in terms of coffee have moved in a positive direction substantially.

And Mitch, the other nice thing about the beverage strategy and specifically with the frappes and the smoothies that are rolling out, only about 25% of the frappes are sold at breakfast time and about 15% of the smoothies. So, it fits nicely with filling other dayparts when we are trying to drive some traffic into the restaurant.

Thanks. The next question is from Keith Siegner, Credit Suisse. Keith Siegner – Credit Suisse: Thanks. Just had a question on Japan. I was wondering if you could give us a little bit more details maybe on the profitability of the stores that are going to be closed over the next year and changed. Maybe if there was any impact of the store closures on the equity income this quarter and any guidance or color you could give us on how we think about the contribution from Japan to equity income assuming all these doors were closed. Any details around figuring that would be very helpful. Thanks.

Yes, Keith, it's Pete. Within the equity pickup line there was no real impact from the closures. So I think about 30 restaurants really got closed this quarter of the ones that were announced and while they were of a lower volume and lower return than the average in the market, just getting 30 of them closed this quarter really didn’t have a significant impact. And really as we go forward, we don’t think there is going to be a tremendous impact on the equity and earnings. They weren’t a significant drag. We'll have some, what we call sales transfer as we close these restaurants. So other restaurants in the market will pick up sales and those are the higher performing operations. So we'll see a slight benefit in our earnings from the ongoing operations there in Japan. But the real benefit of doing that was we had these group of restaurants that were constrained for future growth. They weren’t really representative of where the Japanese team wanted to take the brand in the future and so its really more positive going forward about the state in the group of restaurants that we have which ultimately leads to better operating results and performance.

Keith, this is Don. I just over in Japan a couple of weeks ago and if you looked at these restaurants, the restaurants were to Pete's point really, really size and physical space constrained. So we couldn’t even put full menus in there. So when we look at being able to, last year we shot a Quarter Pounder across the marketplace. It was really a challenge for us to get the operating platforms beefed up enough so to speak to be able to sell Quarter Pounders and so what we're trying to do is close down some of these that were opened up a lot of these street front type retail, high street type sites that were really not benefiting us at all from an income perspective and we just had a bunch of them that we opened over a short period of time back in the early 2000's and so that's really the goal here, close those down. I will tell you this. On April 25th, we are reopening about 13 restaurants in Tokyo. We're going to open on all of them on the exact same day. They will be the re–imaged restaurants that are going to be very iconic in Japan and that is the future of where we want to go there. We're really excited about it. The Japanese team is excited and we will see that market begin to turn in an even more positive way as a result of what we're doing with development. But we've got to get rid of some of these older constraints within our system.

Thank you. The next question is from Larry Miller, RBC. Larry Miller – RBC: Yes. Thanks. I just had a quick follow–up, first on the re–imaging. I think you said you're going to invest $150,000 to $200,000 total. Two things, is that similar structure like the prior investment, i.e, you get paid back either way. Can you talk about that and then will there be as you co–invest, just remind me how it impacts franchise margin? And then I had two quick questions. As you are implementing a lot of these new programs, Don can you talk about anything you're noticing in speed of service and then finally maybe you guys could just discuss in general, the discounting levels that you're seeing today and how they compare with maybe 6, 12 months ago and what you think or at least your best guess what that might look like going forward and then theoretically why would you push your franchises to let up or the whole system and maybe this is more generally to the industry, why would anybody push their franchisees to let up on discounting when you can argue its driving traffic or defending traffic and really those guys bear the margin risks. So if you can talk about that in terms. Thanks.

All right Larry. I'll give it a shot. We have people working feverishly over here to capture all of that but on the first one, investment level, you asked about the older program versus the newest one. Here is the difference. Before what we did was we had a fixed amount, $85,000 that we contributed toward a re–image when we did the whole re–imaging program. What ended up happening was the franchisees actually invested. We thought the investment would be somewhere around $170,000. To the point that was made earlier and Pete made it, the franchisees ended up spending about $250,000 because they saw other things they wanted to invest in. This time this is not a $6 investment. What we're looking at now is somewhere in the neighborhood of 40 percentile of leasehold improvement. So we're talking physical plant type improvements in the restaurant. Now the reason we're able to do that this time is because we already did have a re–imaging program for the interiors before. If a franchisee did not benefit from that then this time they're going to have to put forth some dollars to be able to do the interior of the restaurant and we have a very small contribution there. But the gist of this is the leasehold improvement and so that’s the different between the older program and the newer one. The other thing is and Pete mentioned it but we should reiterate it again, this time there is a broad range. Some restaurants only need to do the exterior. Others will want to do a full interior exterior, the core package change, signage and M&R around equipment. That’s why you see such a broad range. So, very different investment profile on our end. The next one, speed of service wise, we have not seen speed of service hindrances and the reason we haven’t is if you look at when we implemented the combine beverage solution, the biggest part of that, about 80% of our restaurants did we called a full remodel of the beverage sale. What that meant was that they actually put in a built in additional capacity and a drive through. We had additional equipment. We had better spacing in the drive through. We went from five foot, three boots way out over nine feet in many cases and so when you look at what we did in drive through, we built in additional capacity. So, for some of the products we have now, its really flowing well in the restaurants. We have not seen a decrease in service. As a matter of fact in the U.S. they just posted their best quality, service and cleanliness scores for the month of March historically. So, we're doing real well on that end. Discounting level, we don't really look at this as a discounting level and the reason is because we have consistent value across the year is the reason for breakfast value menu, dollar menu, consistent value across the year which allows us then having set that up in the minds of our customers, they know its consistent. Now we can come in with our promotional activity and talk about frappes or smoothie or Angus. It's really important for us. So we're not jumping in and out of quote–unquote discounting. We have a consistent value message across the year.

Hi, Larry, one other point is the impact of the re–imaging. So our co–investing with our franchises because as Don mentioned those are going to be leasehold improvements. Where you see that show up, it will be in additional depreciation on the franchise margin line.

Thank you. The next question is from Steve West, Stifel Nicolaus. Matt Van Vliet – Stifel Nicolaus: Yes. Hi, it's actually Matt Van Vliet on for Steve, but I had a question on the status of the McCafé expansion in Europe and if you're still seeing the same pretty strong sales lifts of those units as that goes in. So just any color on that would be great.

Pretty much I think. Right now Germany has a tremendous amount of McCafé's that have built down in Europe. Our sales performance there is strong. We are containing the McCafé build out. France has quite a few McCafé's built out. Also France as you know has a tremendous amount of our restaurants that have been re–imaged from an interior perspective and now France is doing the exterior in 2010. The rest of Europe, as we continue to move forward with both interior and exterior re–images were appropriate. We will look at the McCafé expansion as well. McCafé is a different occasion in Europe than it is in the U.S. It is a sit down based occasion whereas in the U.S. we're able to executive this through drive through and at the front counter, and so we have even more drive through traffic that are benefiting from espresso based drinks in the U.S. than we do in Europe.

The next question is from Howard Penny, Hedgeye Risk Management. Howard Penney – Hedgeye Risk Management: Thanks very much. As I think back on the seven year run that you've had in (inaudible) decision to back when you sourced it to trying to win was to sort of get back to the core McDonald's and focus on what you do well and over the years we've heard about McGriddles and Snack Wraps with Coffee and now Frappes and all the beverages that you're doing. How do you guard against some of the histories, some the past mistakes that you've made in the past where menu preparation has completely or not completely increased the complexity of the back of the house than the execution of the core business and we don't happen to run into what we saw about seven or eight years ago?

Well thanks for the question Howard. This is Jim. We stay focused on the future. It's mostly how we manage that and our processes today around the food development protocols and the design studios for food and food news, and food relevance and our innovation labs is a very, very deliberate process with a larger test cell than we've ever had in the history of our company and we don't move forward with anything that is not fully deliberated and collaborated with our franchise is relative to the operating side of the business in their restaurants and we are continued to be aggressive around the development of menu and wouldn't expect that will see any failures along the way.

Howard, when Jim and Jim helped us relative to giving us some focus relative to plan and win, one of the things that we first started doing was really reinvesting in the infrastructure and I think there is a big part of that that gets mixed. It's not just about the new products. At one point, we will roll new products without the reinvestment in the infrastructure. So, bridge operating platform in Europe made for you in the U.S. made for you expanding around the globe throughout Japan now. So, when you look at all of those things from an operating platform, they enabled us to better execute when we have additional menu items. The other thing that we are doing is clearly we are much more focused on our ops execution scores, and you inspect what you expect. And as we focus on execution of operations, we have we got much, much better and our customers are telling this day. So all of these kinds of things and making sure that we are not getting ahead of ourselves in marketing and promoting then we have a capability for in terms of operations. The other things that have helped us to execute, but that plan that we have focused that Jim and Jim helped us to fortify in back in the early 2000s is what's helping us today.

Okay, great, looks like we are out of questions. So, thanks I'll go ahead and turn it over to Jim for some closing comments.

Well, thanks everybody for joining us this morning. In closing, I want to emphasize the continued strength of our global business and reiterate my confidence in our system. Our plan to win is delivering significant sustainable success. These latest results mark our 27th consecutive quarter of comparable sales growth. As I have experienced at this weeks Convention, our alignment and plans to deliver a great experience for our customers well into the future is strong and clear. With our entire system aligned and focused I'm confident that we'll continue to satisfy and delight our 60 million customers every day and I'm confident that our best is still yet to come for our system and our shareholders. Thank you so much.

Thank you.