beatandraise : SEC Filings Research with AI

��ࡱ�>�� e�� !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcd��Root Entry�� ,��f@Workbook��SummaryInformation(��DocumentSummaryInformation8�� F��\psshxbrlB�a�= ��=�ZL,�8X@�"��1��Tahoma1��Tahoma1��Tahoma1��Tahoma1��Tahoma1��!Tahoma7"$"#,##0_);\( "$"#,##0\ )A"$"#,##0_);[Red]\( "$"#,##0\ )C"$"#,##0.00_);\( "$"#,##0.00\ )M$"$"#,##0.00_);[Red]\( "$"#,##0.00\ )q*6_("$"* #,##0_);_("$"* \( #,##0\ );_("$"* "-"_);_( @_ )_)-_(* #,##0_);_(* \( #,##0\ );_(* "-"_);_( @_ )�,>_("$"* #,##0.00_);_("$"* \( #,##0.00\ );_("$"* "-"??_);_( @_ )o+5_(* #,##0.00_);_(* \( #,##0.00\ );_(* "-"??_);_( @_ )� #,##0;(#,##0)/�$#,##0.##;($#,##0.##)#�$#,##0;($#,##0)+�#,##0.##;(#,##0.##)�� A �� A �� A �� A �� A �� A �� A �� A �� A �� A �� A �� A �� A �� A � � �+�� A �)�� A �,�� A �*�� A � �� A � � �(� �*� �(� � � � (� � � �� `�F��Document and Entity Information�Fh�CONDENSED CONSOLIDATED BALANCE �F��1_CONDENSED CONSOLIDATED BALANC�F�CONDENSED CONSOLIDATED STATEMEN�F��2_CONDENSED CONSOLIDATED STATEM�2�Basis of Presentation�4ݲRestaurant Information�0��Comprehensive Income�@{�Per Common Share Information�6J�Fair Value Measurements�F�Financial Instruments and Hedgi�@�Impairment and Other Charges�<��Gain on Sale of Investment�.��Segment Information�FU�Variable Interest Entities and �*$�Subsequent Events��T�� Document and Entity Information3 Months Ended Mar. 31, 2010 Document Type10-QAmendment FlagfalseDocument Period End Date 2010-03-31Document Fiscal Year FocusDocument Fiscal Period FocusQ1Trading SymbolMCDEntity Registrant NameMCDONALDS CORPEntity Central Index Key 0000063908Current Fiscal Year End Date--12-31Entity Filer CategoryLarge Accelerated Filer'Entity Common Stock, Shares Outstanding,CONDENSED CONSOLIDATED BALANCE SHEET (USD $)In MillionsMar. 31, 2010 Dec. 31, 2009 Current assetsCash and equivalentsAccounts and notes receivable-Inventories, at cost, not in excess of market)Prepaid expenses and other current assetsTotal current assetsOther assets)Investments in and advances to affiliatesGoodwill MiscellaneousTotal other assetsProperty and equipmentProperty and equipment, at cost)Accumulated depreciation and amortizationNet property and equipmentTotal assetsCurrent liabilitiesAccounts payableIncome taxesOther taxesAccrued interest%Accrued payroll and other liabilities$Current maturities of long-term debtTotal current liabilitiesLong-term debtOther long-term liabilitiesDeferred income taxesShareholders' equityOPreferred stock, no par value; authorized - 165.0 million shares; issued - none^Common stock, $.01 par value; authorized - 3.5 billion shares; issued - 1,660.6 million sharesAdditional paid-in capitalRetained earnings&Accumulated other comprehensive incomeACommon stock in treasury, at cost; 584.8 and 583.9 million sharesTotal shareholders' equity*Total liabilities and shareholders' equity<CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $)Preferred stock, par valuePreferred stock, authorizedPreferred stock, issuedCommon stock, par valueCommon stock, authorizedCommon stock, issued Common stock in treasury, shares2CONDENSED CONSOLIDATED STATEMENT OF INCOME (USD $)"In Millions, except Per Share data3 Months Ended Mar. 31, 2009 Revenues%Sales by Company-operated restaurants$Revenues from franchised restaurantsTotal revenuesOperating costs and expenses$Company-operated restaurant expenses+Franchised restaurants - occupancy expenses*Selling, general & administrative expenses+Impairment and other charges (credits), net%Other operating (income) expense, net"Total operating costs and expensesOperating incomeInterest expense"Nonoperating (income) expense, netGain on sale of investment(Income before provision for income taxesProvision for income taxes Net income"Net income per common share-basic:$Net income per common share-diluted:#Dividends declared per common share)Weighted-average shares outstanding-basic+Weighted-average shares outstanding-diluted6CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)Operating activitiesCharges and credits:Depreciation and amortizationShare-based compensationOther Changes in working capital itemsCash provided by operationsInvesting activities#Property and equipment expenditures?Purchases and sales of restaurant businesses and property sales#Proceeds on sale of investment, net"Cash used for investing activitiesFinancing activities>Notes payable and long-term financing issuances and repaymentsTreasury stock purchasesCommon stock dividends$Proceeds from stock option exercises.Excess tax benefit on share-based compensation"Cash used for financing activities5Effect of exchange rates on cash and cash equivalents(Cash and equivalents increase (decrease)+Cash and equivalents at beginning of period%Cash and equivalents at end of periodBasis of Presentation� Basis of Presentation The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Companys December31, 2009 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter ended March31, 2010 do not necessarily indicate the results that may be expected for the full year. The r< esults of operations of McDonalds restaurant businesses purchased and sold were not material, on either an individual or aggregate basis, to the condensed consolidated financial statements for periods prior to purchase and sale. Restaurant Information� Restaurant Information The following table presents restaurant information by ownership type: Restaurants at March31, 2010 2009 Conventional franchised 19,021 18,487 Developmental licensed 3,206 2,957 Affiliated 4,020 4,134 Total Franchised 26,247 25,578 Company-operated 6,241 6,482 Systemwide restaurants 32,488 32,060 Comprehensive Income~ Comprehensive Income The following table presents the components of comprehensive income for the quarters ended March31, 2010 and 2009: QuartersEnded March31, In millions 2010 2009 Net income $ 1,089.8 $ 979.5 Other comprehensive income (loss): Foreign currency translation adjustments (242.8 ) (398.4 ) Deferred hedging adjustments 7.5 (6.8 ) Pension liability adjustment 0.8 0.3 Total other comprehensive income (loss) (234.5 ) (404.9 ) Total comprehensive income $ 855.3 $ 574.6 Per Common Share InformationH Per Common Share Information Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation calculated using the treasury stock method, of 14.1million shares and 14.8million shares for the first quarter 2010 and 2009, respectively. Stock options that were not included in diluted weighted-average shares because they would have been antidilutive were 10.1million shares for the first quarter 2009. Fair Value Measurements� Fair Value Measurements The Company measures certain financial assets and liabilities at fair value on a recurring basis, and certain non-financial assets and liabilities on a nonrecurring basis. The guidance provided by the Financial Accounting Standards Board (FASB) in the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification (ASC) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The guidance also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows: Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market. Level 2 inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability. Certain of the Companys derivatives are valued using various pricing models or discounted cash flow analyses that incorporate observable market parameters, such as interest rate yield curves, option volatilities and currency rates, classified as Level 2 within the valuation hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the counterparty or the Company. Certain Financial Assets and Liabilities Measured at Fair Value The following table presents financial assets and liabilities measured at fair value on a recurring bas< is as of March31,2010 by the valuation hierarchy as defined in the fair value guidance: In millions Level1 Level2 Level3 Carrying Value Cash equivalents $ 292.9 $ 292.9 Investments 119.8 * 119.8 Derivative receivables 85.1 * $ 112.8 197.9 Total assets at fair value $ 497.8 $ 112.8 $ 610.6 Derivative payables $ (2.4 ) $ (2.4 ) Total liabilities at fair value $ (2.4 ) $ (2.4 ) * Includes long-term investments and derivatives that hedge market driven changes in liabilities associated with the Companys supplemental benefit plans. Certain Financial Assets and Liabilities not Measured at Fair Value At March31, 2010, the fair value of the Companys debt obligations was estimated at $11.3 billion, compared to a carrying amount of $10.5 billion. This fair value was estimated using various pricing models or discoun,Financial Instruments and Hedging Activities� Financial Instruments and Hedging Activities The FASB guidance on disclosures in the Derivatives and Hedging Topic of the FASB ASC requires qualitative and quantitative information on how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not use derivatives with a level of complexity or with a risk higher than the exposures to be hedged and does not hold or issue derivatives for trading purposes. The Company documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedging transactions. The Companys derivatives that are designated as hedging instruments consist mainly of interest rate exchange agreements, forward foreign currency exchange agreements and foreign currency options. Interest rate exchange agreements are entered into to manage the interest rate risk associated with the Companys fixed and floating-rate borrowings. Forward foreign currency exchange agreements and foreign currency options are entered into to mitigate the risk that forecasted foreign currency cash flows (such as royalties denominated in foreign currencies) will be adversely affected by changes in foreign currency exchange rates. Certain foreign currency denominated debt is used, in part, to protect the value of the Companys investments in certain foreign subsidiaries and affiliates from changes in foreign currency exchange rates. The Company also enters into certain derivatives that are not designated as hedging instruments. The Company has entered into derivative contracts to hedge market-driven changes in certain of its supplemental benefit plan liabilities. Changes in the fair value of these derivatives are recorded in selling, general administrative expenses. In addition, the Company uses forward foreign currency exchange agreements and foreign currency exchange agreements to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. Since these derivatives are not designated as hedging instruments, the changes in the fair value of these hedges are recognized immediately in nonoperating (income) expense together with the translation gain or loss from the hedged balance sheet position. A portion of the Companys foreign currency options (more fully described in the Cash Flow Hedging Strategy section) are undesignated as hedging instruments as the underlying foreign currency royalties are earned. All derivative instruments designated as hedging instruments are classified as fair value, < cash flow or net investment hedges. All derivatives (including those not designated as hedging instruments) are recognized on the Consolidated balance sheet at fair value and classifie+Impairment and Other Charges (Credits), Net; Impairment and Other Charges (Credits), Net McDonalds Japan (a 50%-owned affiliate) plans to close approximately 430 restaurants by mid-2011 in conjunction with the strategic review of the markets restaurant portfolio. These actions are designed to enhance the customer experience, overall profitability and returns of the market. For the first quarter 2010, the Company recorded after tax impairment charges of $30.0 million related to its share of restaurant closing costs in Japan. These charges primarily consist of asset writeoffs and lease termination costs. Gain on Sale of Investment! Gain on Sale of Investment In 2009, the Company sold its minority ownership interest in Redbox Automated Retail, LLC to Coinstar, Inc. (Coinstar), the majority owner, for total consideration of $139.8 million. In connection with the sale, in first quarter, the Company received initial consideration valued at $51.6 million consisting of 1.5million shares of Coinstar common stock at an agreed to value of $41.6 million and $10 million in cash with the balance of the purchase price deferred. In second quarter 2009, the Company sold all of its holdings in the Coinstar common stock for $46.8 million and received $78.4 million in cash from Coinstar as deferred consideration, and in third quarter, the Company received $9.8 million in cash from Coinstar as final consideration. As a result of the transaction, the Company recognized a nonoperating pretax gain of $76.5 million (after tax$47.4 million or $0.04 per share) for the first quarter 2009 and $94.9 million cumulative gain (after tax$58.8 million or $0.05 per share) for the full year 2009. Segment Information� Segment Information The Company franchises and operates McDonalds restaurants in the food service industry. The following table presents the Companys revenues and operating income by geographic segment. The APMEA segment represents operations in Asia/Pacific, Middle East and Africa. Other Countries Corporate represents operations in Canada and Latin America, as well as Corporate activities. Quarters Ended March31, In millions 2010 2009 Revenues U.S. $ 1,876.7 $ 1,876.4 Europe 2,245.4 1,948.2 APMEA 1,191.3 1,009.1 Other Countries Corporate 296.7 243.7 Total revenues $ 5,610.1 $ 5,077.4 Operating income U.S. $ 809.4 $ 725.5 Europe 601.0 489.9 APMEA 272.1 213.6 Other Countries Corporate (8.4 ) (28.6 ) Total operating income $ 1,674.1 $ 1,400.4 ,Variable Interest Entities and Consolidation� Variable Interest Entities and Consolidation In June 2009, the FASB issued amendments to the guidance on variable interest entities and consolidation, codified primarily in the Consolidation Topic of the FASB ASC. This guidance modifies the method for determining whether an entity is a variable interest entity as well as the methods permitted for determining the primary beneficiary of a variable interest entity. In addition, this guidance requires ongoing reassessments of whether a company is the primary beneficiary of a variable interest entity and enhanced disclosures related to a companys involvement with a variable interest entity. The Company adopted this guidance as of January1, 2010. The Company evaluates its business relationships such as those with franchisees, joint venture partners, developmental licensees, suppliers, and advertising cooperatives to identify potential variable interest entities. Generally, these businesses qualify for a scope exception under the consolidation guidance. The Company has concluded that consolidation of any such entities is not appropriate for the periods presented. As a result, the adoption did not have any impact <ion our consolidated financial statements. Subsequent Events� Subsequent Events The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. 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