Day 006 - 05 Jul 94 - Page 45


     
     1   Q.   You said it would be absolute rubbish to suggest they are
              carried out for good PR and for tax advantages; is that
     2        right?
              A.  The ethos of McDonald's today (and it has been since
     3        1955) is to put something back into the communities where
              we do business, being a good corporate citizen supporting
     4        the people who live and work in those areas.
 
     5   Q.   Why does McDonald's give back to the community, as you put
              it?
     6        A.  It is good business.
 
     7   Q.   So you would agree then it is basically to drum up your
              profits?
     8        A.  It is good business to put something back into the
              communities where you have had support from the people who
     9        have used your establishment.  I would think that is
              accepted as a rather universal truth.
    10
         Q.   You would agree with the statement that what you give to
    11        the community today will come back in the form of added
              sales tomorrow?
    12        A.  I would hope so.
 
    13   Q.   What about tax relief?  Does McDonald's gets tax relief on
              its charitable activities?
    14        A.  I imagine it does.
 
    15   Q.   You do not know?
              A.  Well, we get tax relief for many things, capital
    16        investments.  There is tax relief available for certain
              forms of giving, I am sure.  Do we get it?  I do not audit
    17        every line of the financial statement.  If it is put in
              and declared, I guess we do.  The time that every employee
    18        spends donating orange bowls to local communities to raise
              funds is not something we put on the tax return for
    19        treatment; some things do, some things do not.
 
    20   MR. JUSTICE BELL:  Do you know whether it saves the company tax
              or just the charity is able to reclaim the tax which the
    21        company has paid?  Do you know which way it works?
              A.  It would be probably a combination of both where we
    22        will do many, many things of a giving nature to a
              community which never find themselves down as a charitable
    23        giving exercise.  They are merely an expense of doing
              business.  There will be instances where we donate a piece
    24        of equipment to a hospital via ronald mcdonald children's
              charities.  I gather that would be treated for tax
    25        purposes in the normal way.  But we do -- if Ronald
              McDonald is appearing at a school for a bike safety 
    26        programme is considered to be putting back into the 
              community and, therefore, somewhat charitable, that would 
    27        not find its way for tax purposes on to our return.  That
              is just a cost of doing business.
    28
         MISS STEEL:  It is right, is it not, that you get a lot of
    29        positive publicity as a result of all this?
              A.  Yes, I think that is fair to say.
    30
         Q.   You do not have to pay for that publicity?

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