McDonald's (MCD) 10-Q 5 Nov 09 2009 Q3 Quarterly report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Millions	Sep. 30, 2009	Dec. 31, 2008
Current assets
Cash and equivalents	$2,201	2063.4
Accounts and notes receivable	879.4	931.2
Inventories, at cost, not in excess of market	106.8	111.5
Prepaid expenses and other current assets	415.6	411.5
Total current assets	3602.8	3517.6
Other assets
Investments in and advances to affiliates	1228.7	1222.3
Goodwill	2408.2	2237.4
Miscellaneous	1482.4	1229.7
Total other assets	5119.3	4689.4
Property and equipment
Property and equipment, at cost	33204.6	31152.4
Accumulated depreciation and amortization	-11854.3	-10897.9
Net property and equipment	21350.3	20254.5
Total assets	30072.4	28461.5
Current liabilities
Accounts payable	515.6	620.4
Dividends payable	591.7	0
Income taxes	136.9	0
Other taxes	270.6	252.7
Accrued interest	172.9	173.8
Accrued payroll and other liabilities	1428.4	1459.2
Current maturities of long-term debt	424.3	31.8
Total current liabilities	3540.4	2537.9
Long-term debt	10657.9	10,186
Other long-term liabilities	1548.5	1410.1
Deferred income taxes	1,136	944.9
Shareholders' equity
Preferred stock, no par value; authorized - 165.0 million shares; issued - none	0	0
Common stock, $.01 par value; authorized - 3.5 billion shares; issued - 1,660.6 million shares	16.6	16.6
Additional paid-in capital	4744.3	4600.2
Retained earnings	30,056	28953.9
Accumulated other comprehensive income	892.1	101.3
Common stock in treasury, at cost; 581.4 and 545.3 million shares	-22519.4	-20289.4
Total shareholders' equity	13189.6	13382.6
Total liabilities and shareholders' equity	30072.4	28461.5

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
	Sep. 30, 2009	Dec. 31, 2008
Preferred stock, par value	$0	$0
Preferred stock, authorized	165,000,000	165,000,000
Preferred stock, issued	0	0
Common stock, par value	0.01	0.01
Common stock, authorized	3,500,000,000	3,500,000,000
Common stock, issued	1,660,600,000	1,660,600,000
Common stock in treasury, shares	581,400,000	545,300,000

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Millions, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Revenues
Sales by Company-operated restaurants	4093.6	4411.1	11428.5	12705.9
Revenues from franchised restaurants	1953.1	1856.2	5342.8	5251.5
Total revenues	6046.7	6267.3	16771.3	17957.4
Operating costs and expenses
Company-operated restaurant expenses	3299.8	3587.2	9379.6	10,462
Franchised restaurants - occupancy expenses	338.6	316.9	953.3	932
Selling, general & administrative expenses	549.6	582.1	1578.4	1733.2
Impairment and other charges (credits), net	-1.5	0	0.9	1
Other operating (income) expense, net	-72.6	-42.6	-155.6	-111.5
Total operating costs and expenses	4113.9	4443.6	11756.6	13016.7
Operating income	1932.8	1823.7	5014.7	4940.7
Interest expense	117.8	131.6	358	406.4
Nonoperating (income) expense, net	(6)	-6.8	-34.4	-66.5
Gain on sale of investment	-0.6	0	-94.9	-160.1
Income before provision for income taxes	1821.6	1698.9	4,786	4760.9
Provision for income taxes	560.6	507.6	1451.8	1,433
Net income	$1,261	1191.3	3334.2	3327.9
Net income per common share-basic:	1.16	1.07	3.04	2.94
Net income per common share-diluted:	1.15	1.05	$3	2.89
Dividends declared per common share	1.05	0.875	2.05	1.625
Weighted-average shares outstanding-basic	1084.5	1116.6	1097.1	1130.3
Weighted-average shares outstanding-diluted	1098.2	1,136	1111.6	1150.4

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Millions	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Operating activities
Net income	$1,261	1191.3	3334.2	3327.9
Charges and credits:
Depreciation and amortization	311.9	311	898.5	930
Deferred income taxes	59.4	17.6	148.5	-3.3
Gain on sale of investment	-0.6	0	-94.9	-160.1
Share-based compensation	25.9	26.4	85.9	87.2
Other	-30.7	14.7	42.3	67.3
Changes in working capital items	195.3	145.4	-41.5	197.9
Cash provided by operations	1822.2	1706.4	4,373	4446.9
Investing activities
Property and equipment expenditures	-470.8	-534.9	-1318.9	(1,422)
Purchases and sales of restaurant businesses and property sales	42.1	45	120.4	226.4
Proceeds on sale of investment, net	9.8	0	144.9	229.4
Other	-22.4	-7.2	-59.2	-22.8
Cash used for investing activities	-441.3	-497.1	-1112.8	(989)
Financing activities
Notes payable and long-term financing issuances and repayments	(99)	-782.3	645	737.6
Treasury stock purchases	-768.7	-1022.9	-2373.7	-3821.3
Common stock dividends	-541.2	-417.7	-1642.4	-1265.7
Proceeds from stock option exercises	40.5	206.6	157.6	453.3
Excess tax benefit on share-based compensation	7.9	51.1	35.8	113.5
Other	-27.6	(3)	(36)	-139.7
Cash used for financing activities	-1388.1	-1968.2	-3213.7	-3922.3
Effect of exchange rates on cash and cash equivalents	47.6	-96.4	91.1	-29.7
Cash and equivalents increase (decrease)	40.4	-855.3	137.6	-494.1
Cash and equivalents at beginning of period	2160.6	2342.5	2063.4	1981.3
Cash and equivalents at end of period	$2,201	1487.2	$2,201	1487.2

Basis of Presentation

Basis of Presentation
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
Basis 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, 2008 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 and nine months ended September30, 2009 do not necessarily indicate the results that may be expected for the full year. The results of operations of McDonalds restaurant businesses purchased and sold were not material to the condensed consolidated financial statements for periods prior to purchase and sale.

Restaurant Information

Restaurant Information
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
Restaurant Information	Restaurant Information The following table presents restaurant information by ownership type: Restaurants at September30, 2009 2008 Conventional franchised 18,799 18,076 Developmental licensed 3,095 2,847 Affiliated 4,081 4,115 Total Franchised 25,975 25,038 Company-operated 6,303 6,639 Systemwide restaurants 32,278 31,677

Comprehensive Income

Comprehensive Income
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
Comprehensive Income	Comprehensive Income The following table presents the components of comprehensive income for the quarters and nine months ended September30, 2009 and 2008: QuartersEnded September30, NineMonthsEnded September30, In millions 2009 2008 2009 2008 Net income $1,261.0 $1,191.3 $3,334.2 $3,327.9 Other comprehensive income: Foreign currency translation adjustments 507.5 (1,074.3 ) 824.7 (599.6 ) Deferred hedging adjustments (10.6 ) 23.1 (34.9 ) 38.1 Pension liability adjustment 1.8 1.0 (12.3 ) Total other comprehensive income 496.9 (1,049.4 ) 790.8 (573.8 ) Total comprehensive income $1,757.9 $141.9 $4,125.0 $2,754.1

Per Common Share Information

Per Common Share Information
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
Per Common Share Information	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 13.7million shares and 19.4million shares for the third quarter 2009 and 2008, respectively, and 14.5million shares and 20.1million shares for the nine months ended September30, 2009 and 2008, respectively. Stock options that were not included in diluted weighted-average shares because they would have been antidilutive were 10.0million shares for the quarter ended September30, 2009 and 10.1million shares and 0.9million shares for the nine months ended September30, 2009 and 2008, respectively.

Fair Value Measurements

Fair Value Measurements
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
Fair Value Measurements	Fair Value Measurements In 2006, the Financial Accounting Standards Board (FASB) issued guidance in the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification (ASC). This guidance defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. This guidance does not require any new fair value measurements; rather, it applies to other accounting pronouncements that require or permit fair value measurements. The provisions of the guidance, as issued, were effective January1, 2008. However, in February 2008, the FASB deferred the effective date for one year for certain non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (i.e., at least annually). The Company adopted the required provisions related to debt and derivatives as of January1, 2008 and adopted the remaining required provisions for non-financialassets and liabilities as of January1, 2009. The effect of adoption was not significant in either period. Fair value is defined 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. The following table presents financial assets and liabilities measured at fair value on a recurring basis as of September30, 2009 by the valuation hierarchy as defined in the fair value guidance: In millions Level1 Level2 Level3 Carrying Value Cash equivalents $ 622.8 $ 622.8 Investments 106.9 * 106.9 Derivative recei

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
Derivative Instruments and Hedging Activities	Derivative Instruments and Hedging Activities In March 2008, the FASB issued guidance on disclosures in the Derivatives and Hedging Topic of the FASB ASC. This guidance amends and expands the previous disclosure requirements surrounding accounting for derivative instruments and hedging activities to provide more 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 adopted the disclosure requirements as of January1, 2009 on a prospective basis; accordingly, disclosures related to interim periods prior to the date of adoption have not been presented. The adoption had no impact on our consolidated financial statements, besides the additional disclosures. 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 formally 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 to mitigate the change in fair value of certain foreign 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 (mo

Gain on Sale of Investment

Gain on Sale of Investment
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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., the majority owner, for total consideration of $139.8 million. In connection with the sale, in February, 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 April, the Company sold all of its holdings in the Coinstar common stock for $46.8 million. In second quarter, the Company 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 $0.6 million in the third quarter 2009 and $94.9 million for the nine months. In second quarter 2008, the Company sold its minority ownership interest in U.K.-based Pret A Manger. As a result of the sale, the Company received cash proceeds of $229.4 million and recognized a nonoperating pretax gain of $160.1 million.

Recently Issued Accounting Stan

Recently Issued Accounting Standards
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
Recently Issued Accounting Standards	Recently Issued Accounting Standards In June 2009, the FASB issued amendments to the guidance on variable interest entities and consolidation. 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 expects to adopt this guidance effective January1, 2010, as required. The Company is currently evaluating the impact of adopting this guidance and does not expect the adoption to have a significant impact to its consolidated financial statements.

Segment Information

Segment Information
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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 September30, Nine Months Ended September30, In millions 2009 2008 2009 2008 Revenues U.S. $ 2,049.7 $ 2,084.4 $ 5,970.3 $ 6,047.2 Europe 2,541.7 2,688.9 6,753.9 7,670.7 APMEA 1,125.9 1,143.3 3,182.9 3,233.6 Other Countries Corporate 329.4 350.7 864.2 1,005.9 Total revenues $ 6,046.7 $ 6,267.3 $ 16,771.3 $ 17,957.4 Operating income U.S. $ 865.6 $ 815.5 $ 2,426.0 $ 2,294.3 Europe 770.9 769.1 1,879.7 2,018.1 APMEA 279.2 234.1 723.4 642.9 Other Countries Corporate 17.1 5.0 (14.4 ) (14.6 ) Total operating income $ 1,932.8 $ 1,823.7 $ 5,014.7 $ 4,940.7

Subsequent Events

Subsequent Events
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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, which was November5, 2009. There were no subsequent events that required recognition or disclosure.

Document Information

Document Information
	9 Months Ended Sep. 30, 2009 USD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-30

Entity Information

Entity Information (USD $)
	9 Months Ended Sep. 30, 2009
Entity [Text Block]
Trading Symbol	MCD
Entity Registrant Name	MCDONALDS CORP
Entity Central Index Key	0000063908
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	1,079,186,614