Debt Financing

LINE OF CREDIT AGREEMENTS

At December 31, 2011, the Company had a $1.5 billion line of credit agreement expiring in November 2016 with fees of 0.065% per annum on the total commitment, which remained unused. Fees and interest rates on this line are based on the Company’s long-term credit rating assigned by Moody’s and Standard & Poor’s. In addition, the Company, including certain subsidiaries outside the U.S., had unused lines of credit totaling $838.9 million at December 31, 2011; these lines of credit were primarily uncommitted, short-term and denominated in various currencies at local market rates of interest.

The weighted-average interest rate of short-term borrowings was 4.6% at December 31, 2011 (based on $640.3 million of foreign currency bank line borrowings and $250.0 million of commercial paper) and 4.3% at December 31, 2010 (based on $595.0 million of foreign currency bank line borrowings).

DEBT OBLIGATIONS

The Company has incurred debt obligations principally through public and private offerings and bank loans. There are no provisions in the Company’s debt obligations that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business. Certain of the Company’s debt obligations contain cross-acceleration provisions, and restrictions on Company and subsidiary mortgages and the long-term debt of certain subsidiaries. Under certain agreements, the Company has the option to retire debt prior to maturity, either at par or at a premium over par. The Company has no current plans to retire a significant amount of its debt prior to maturity.

In February 2012, the Company issued $250.0 million of 10-year U.S. Dollar-denominated notes at a coupon rate of 2.625%, and $500.0 million of 30-year U.S. Dollar-denominated notes at a coupon rate of 3.7%.

ESOP LOANS

Borrowings related to the leveraged Employee Stock Ownership Plan (ESOP) at December 31, 2011, which include $39.6 million of loans from the Company to the ESOP, are reflected as debt with a corresponding reduction of shareholders’ equity (additional paid-in capital included a balance of $34.4 million and $41.7 million at December 31, 2011 and 2010, respectively). The ESOP is repaying the loans and interest through 2018 using Company contributions and dividends from its McDonald’s common stock holdings. As the principal amount of the borrowings is repaid, the debt and the unearned ESOP compensation (additional paid-in capital) are reduced.

The following table summarizes the Company’s debt obligations. (Interest rates and debt amounts reflected in the table include the effects of interest rate swaps.)


			Interest rates⁽¹⁾ December 31						Amounts outstanding December 31
In millions of U.S. Dollars	Maturity dates		*2011*			2010			*2011*		2010
Fixed				5.1	%		5.4	%	$	6,039.3	$	5,318.0
Floating				2.0			3.0			1,399.9		1,390.0
Total U.S. Dollars		2012-2040								7,439.2		6,708.0
Fixed				4.5			4.8			1,167.0		737.5
Floating				2.8			2.2			719.0		753.4
Total Euro		2012-2021								1,886.0		1,490.9
Fixed				2.9			2.1			162.4		338.7
Floating				0.6			0.5			1,039.4		985.4
Total Japanese Yen		2013-2030								1,201.8		1,324.1
Total British Pounds Sterling-Fixed		2020-2032		6.0			6.0			697.8		700.7
Fixed				2.8			2.5			495.8		451.6
Floating				5.6			4.1			723.9		752.6
Total other currencies⁽²⁾		2012-2021								1,219.7		1,204.2
Debt obligations before fair value adjustments⁽³⁾										12,444.5		11,427.9
Fair value adjustments⁽⁴⁾										55.9		77.4
Total debt obligations⁽⁵⁾									$	12,500.4	$	11,505.3

(1)

Weighted-average effective rate, computed on a semi-annual basis.

(2)

Primarily consists of Swiss Francs, Chinese Renminbi and Korean Won.

(3)

Aggregate maturities for 2011 debt balances, before fair value adjustments, were as follows (in millions): 2012–$366.6; 2013–$1,026.0; 2014–$737.9; 2015–$656.3; 2016–$2,158.6; Thereafter–$7,499.1. These amounts include a reclassification of short-term obligations totaling $1.5 billion to long-term obligations as they are supported by a long-term line of credit agreement expiring in November 2016.

(4)

The carrying value of underlying items in fair value hedges, in this case debt obligations, are adjusted for fair value changes to the extent they are attributable to the risk designated as being hedged. The related hedging instrument is also recorded at fair value in prepaid expenses and other current assets, miscellaneous other assets or other long-term liabilities. A portion ($0.5 million) of the adjustments at December 31, 2011 related to interest rate swaps that were terminated in December 2002 and will amortize as a reduction of interest expense over the remaining life of the debt.

(5)

Includes notes payable, current maturities of long-term debt and long-term debt included on the Consolidated balance sheet. The increase in debt obligations from December 31, 2010 to December 31, 2011 was primarily due to net issuances of $1.0 billion.