FORM | ||
10-K |
McDONALD’S CORPORATION | ||
(Exact name of registrant as specified in its charter) | ||
Delaware | 36-2361282 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
Chicago, | Illinois | 60607 | ||
(Address of principal executive offices) |
(Zip code) | ||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common | MCD | New York Stock Exchange |
Page reference | |||
About McDonald's | |||
Business Summary | |||
Management's Discussion and Analysis of Financial Condition and Results of Operations | |||
Outlook | |||
Consolidated Operating Results | |||
Cash Flows | |||
Financial Position and Capital Resources | |||
Other Matters | |||
Market for | |||
Financial Statements and Supplementary Data | |||
Environmental matters |
2016 | 2015 | ||||||||||||||||||
Dollars per share | High | Low | Dividend | High | Low | Dividend | |||||||||||||
Quarter: | |||||||||||||||||||
First | 126.96 | 112.71 | 0.89 | 101.09 | 88.77 | 0.85 | |||||||||||||
Second | 131.96 | 116.08 | 0.89 | 101.08 | 94.02 | 0.85 | |||||||||||||
Third | 128.60 | 113.96 | 1.83 | * | 101.88 | 87.50 | 0.85 | ||||||||||||
Fourth | 124.00 | 110.33 | — | 120.23 | 97.13 | 0.89 | |||||||||||||
Year | 131.96 | 110.33 | 3.61 | 120.23 | 87.50 | 3.44 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) | ||||||||||
October 1-31, 2016 | 5,902,572 | 113.43 | 5,902,572 | $ | 4,571,138,206 | |||||||||
November 1-30, 2016 | 3,076,425 | 116.25 | 3,076,425 | 4,213,514,184 | ||||||||||
December 1-31, 2016 | 2,915,083 | 121.76 | 2,915,083 | 3,858,569,963 | ||||||||||
Total | 11,894,080 | 116.20 | 11,894,080 |
Company/Index | 12/31/2011 | 12/31/2012 | 12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 |
McDonald's Corporation | $100 | $91 | $103 | $103 | $134 | $143 |
S&P 500 Index | 100 | 116 | 154 | 175 | 177 | 198 |
Dow Jones Industrials | 100 | 110 | 143 | 157 | 158 | 184 |
ITEM 6. Selected Financial Data | |||||||||||||||||||||||
6-Year Summary | Years ended December 31, | ||||||||||||||||||||||
In millions, except per share and unit amounts | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||
Consolidated Statement of Income Data | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Sales by Company-operated restaurants | $ | 15,295 | $ | 16,488 | $ | 18,169 | $ | 18,875 | $ | 18,603 | $ | 18,293 | |||||||||||
Revenues from franchised restaurants | 9,327 | 8,925 | 9,272 | 9,231 | 8,964 | 8,713 | |||||||||||||||||
Total revenues | 24,622 | 25,413 | 27,441 | 28,106 | 27,567 | 27,006 | |||||||||||||||||
Operating income | 7,745 | 7,146 | 7,949 | 8,764 | 8,605 | 8,530 | |||||||||||||||||
Net income | 4,687 | 4,529 | 4,758 | 5,586 | 5,465 | 5,503 | |||||||||||||||||
Consolidated Statement of Cash Flows Data | |||||||||||||||||||||||
Cash provided by operations | $ | 6,060 | $ | 6,539 | $ | 6,730 | $ | 7,121 | $ | 6,966 | $ | 7,150 | |||||||||||
Cash used for investing activities | 982 | 1,420 | 2,305 | 2,674 | 3,167 | 2,571 | |||||||||||||||||
Capital expenditures | 1,821 | 1,814 | 2,583 | 2,825 | 3,049 | 2,730 | |||||||||||||||||
Cash used for (provided by) financing activities | 11,262 | (735 | ) | 4,618 | 4,043 | 3,850 | 4,533 | ||||||||||||||||
Treasury stock purchases(1) | 11,142 | 6,182 | 3,175 | 1,810 | 2,605 | 3,373 | |||||||||||||||||
Common stock dividends | 3,058 | 3,230 | 3,216 | 3,115 | 2,897 | 2,610 | |||||||||||||||||
Financial Position | |||||||||||||||||||||||
Total assets | $ | 31,024 | $ | 37,939 | $ | 34,227 | $ | 36,626 | $ | 35,386 | $ | 32,990 | |||||||||||
Total debt | 25,956 | 24,122 | 14,936 | 14,130 | 13,633 | 12,500 | |||||||||||||||||
Total shareholders’ equity (deficit) | (2,204 | ) | 7,088 | 12,853 | 16,010 | 15,294 | 14,390 | ||||||||||||||||
Shares outstanding | 819 | 907 | 963 | 990 | 1,003 | 1,021 | |||||||||||||||||
Per Common Share Data | |||||||||||||||||||||||
Earnings-diluted | $ | 5.44 | $ | 4.80 | $ | 4.82 | $ | 5.55 | $ | 5.36 | $ | 5.27 | |||||||||||
Dividends declared | 3.61 | 3.44 | 3.28 | 3.12 | 2.87 | 2.53 | |||||||||||||||||
Market price at year end | 121.72 | 118.44 | 93.70 | 97.03 | 88.21 | 100.33 | |||||||||||||||||
Restaurant Information and Other Data | |||||||||||||||||||||||
Restaurants at year end | |||||||||||||||||||||||
Company-operated restaurants | 5,669 | 6,444 | 6,714 | 6,738 | 6,598 | 6,435 | |||||||||||||||||
Franchised restaurants | 31,230 | 30,081 | 29,544 | 28,691 | 27,882 | 27,075 | |||||||||||||||||
Total Systemwide restaurants | 36,899 | 36,525 | 36,258 | 35,429 | 34,480 | 33,510 | |||||||||||||||||
Franchised sales(2) | $ | 69,707 | $ | 66,226 | $ | 69,617 | $ | 70,251 | $ | 69,687 | $ | 67,648 |
• | Cash provided by operations was $8.1 billion. |
• | Retaining existing customers - focusing on areas where it already has a strong foothold in the IEO category, including family occasions and food-led breakfast. |
• | Regaining customers who visit less often - recommitting to areas of historic strength, namely food taste and quality, convenience and speed, experience and value. |
• | Converting casual to committed customers- building stronger relationships with customers so they visit more often, by elevating and leveraging the McCafé coffee brand and enhancing snack and treat offerings. |
• | Experience of the Future. The Company is building upon its investments in EOTF, focusing on restaurant modernization in order to transform the restaurant service experience and enhance our brand in the eyes of our customers. The modernization efforts are designed to provide a better customer experience, leading to increased frequency of customer visits and higher average check. As of the end of 2019, EOTF is deployed in over half of the restaurants in our global system, with most of the major markets substantially complete. In 2019, the U.S. converted about 2,000 restaurants to EOTF, resulting in about 70% of the U.S. restaurants now having EOTF. In 2020, the Company will further deploy EOTF around the globe, including converting about 1,800 of the remaining restaurants in the U.S. to EOTF. |
• | Digital.The Company is improving its existing service model with customers through technology. Digital technology is transforming the retail industry, and the Company is using it to transform McDonald’s for our customers at an accelerated pace. By evolving the technology platform, the Company is expanding choices for how customers order, pay and are served their food. The added functionality of the Company’s global mobile app, self-order kiosks, and other technologies enable greater convenience for the customer on their terms. In 2019, the Company built on its digital foundation, acquiring Dynamic Yield, a leader in personalization and decision logic technology. The Company has implemented this technology via outdoor digital menu boards in over 11,000 U.S. drive-thrus, offering customers a more customized experience and producing sales growth through higher average check. This technology is also deployed in nearly all drive-thrus in Australia, and we are looking to deploy across further international markets beginning in 2020. The Company continued to expand its technological capabilities via the acquisition of Apprente, an early-stage leader in conversational interface technology. This technology is expected to provide more efficient and accurate ordering in the drive-thru. In 2020, the Company will continue to utilize more personalized digital initiatives to engage customers, grow awareness and adoption of digital offerings, and support our menu offerings. |
• | Delivery. The Company continues to build momentum with its delivery platform as a way of expanding the convenience for its customers. In 2019, McDonald’s continued to add third-party delivery partners in order to maximize the System’s delivery scale and potential. Across the global system, nearly 25,000 restaurants now offer delivery. Customers are responding positively, as demonstrated by high satisfaction ratings, strong reorder rates, and average checks that are generally two times higher than average non-delivery transactions. Further, in some of our top markets, delivery now represents as much as 10% of sales in those restaurants offering delivery. Consequently, McDonald’s global delivery business has grown to over $4 billion in Systemwide sales in 2019, up from $1 billion in 2016. We continue to see great runway ahead of us to drive awareness and trial of delivery, and are focusing on efforts to encourage frequency and retention in 2020 and beyond. |
• | Based on current interest and foreign currency exchange rates, the Company expects interest expense for the full year 2020 to increase about 4% to 6% due primarily to higher average debt balances. |
• | A significant part of the Company's operating income is generated outside the U.S., and about 40% of its total debt is denominated in foreign currencies. Accordingly, earnings are affected by changes in foreign currency exchange rates, particularly the Euro, British Pound, Australian Dollar and Canadian Dollar. Collectively, these currencies represent approximately 80% of the Company's operating income outside the U.S. If all four of these currencies moved by 10% in the same direction, the Company's annual diluted earnings per share would change by about 35 cents. |
• | The Company expects the effective income tax rate for the full year 2020 to be in the 23% to 25% range. Some volatility may result in a quarterly tax rate outside of the annual range. |
◦ | Systemwide sales growth of 3% to 5%; |
◦ | Operating margin in the mid-40% range; |
◦ | Earnings per share growth in the high-single digits; and |
◦ | Return on incremental invested capital in the mid-20% range. |
Operating results | ||||||||||||||||||||||||||||||||||||||||
2016 | 2015 | 2014 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||
Dollars and shares in millions, except per share data | Amount | Increase/ (decrease) | Amount | Increase/ (decrease) | Amount | Amount | Increase/ (decrease) | Amount | Increase/ (decrease) | Amount | ||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Sales by Company-operated restaurants | $ | 15,295 | (7 | %) | $ | 16,488 | (9 | %) | $ | 18,169 | $ | 9,421 | (6 | %) | $ | 10,013 | (21 | %) | $ | 12,719 | ||||||||||||||||||||
Revenues from franchised restaurants | 9,327 | 5 | 8,925 | (4 | ) | 9,272 | 11,656 | 6 | 11,012 | 9 | 10,101 | |||||||||||||||||||||||||||||
Total revenues | 24,622 | (3 | ) | 25,413 | (7 | ) | 27,441 | 21,077 | 0 | 21,025 | (8 | ) | 22,820 | |||||||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||||||||||
Company-operated restaurant expenses | 12,699 | (9 | ) | 13,977 | (9 | ) | 15,288 | 7,761 | (6 | ) | 8,266 | (21 | ) | 10,410 | ||||||||||||||||||||||||||
Franchised restaurants-occupancy expenses | 1,718 | 4 | 1,647 | (3 | ) | 1,697 | 2,201 | 12 | 1,973 | 10 | 1,789 | |||||||||||||||||||||||||||||
Selling, general & administrative expenses | 2,384 | (2 | ) | 2,434 | (2 | ) | 2,488 | 2,229 | 1 | 2,200 | (1 | ) | 2,231 | |||||||||||||||||||||||||||
Other operating (income) expense, net | 76 | (64 | ) | 209 | n/m | 19 | (184 | ) | 22 | (237 | ) | 80 | (1,163 | ) | ||||||||||||||||||||||||||
Total operating costs and expenses | 16,877 | (8 | ) | 18,267 | (6 | ) | 19,492 | 12,007 | (2 | ) | 12,202 | (8 | ) | 13,267 | ||||||||||||||||||||||||||
Operating income | 7,745 | 8 | 7,146 | (10 | ) | 7,949 | 9,070 | 3 | 8,823 | (8 | ) | 9,553 | ||||||||||||||||||||||||||||
Interest expense | 885 | 39 | 638 | 11 | 576 | 1,122 | 14 | 981 | 7 | 922 | ||||||||||||||||||||||||||||||
Nonoperating (income) expense, net | (6 | ) | 87 | (48 | ) | n/m | 1 | (70 | ) | n/m | 26 | (56 | ) | 58 | ||||||||||||||||||||||||||
Income before provision for income taxes | 6,866 | 5 | 6,556 | (11 | ) | 7,372 | 8,018 | 3 | 7,816 | (9 | ) | 8,573 | ||||||||||||||||||||||||||||
Provision for income taxes | 2,180 | 8 | 2,027 | (22 | ) | 2,614 | 1,993 | 5 | 1,892 | (44 | ) | 3,381 | ||||||||||||||||||||||||||||
Net income | $ | 4,686 | 3 | % | $ | 4,529 | (5 | %) | $ | 4,758 | $ | 6,025 | 2 | % | $ | 5,924 | 14 | % | $ | 5,192 | ||||||||||||||||||||
Earnings per common share—diluted | $ | 5.44 | 13 | % | $ | 4.80 | 0 | % | $ | 4.82 | $ | 7.88 | 5 | % | $ | 7.54 | 18 | % | $ | 6.37 | ||||||||||||||||||||
Weighted-average common shares outstanding— diluted | 861.2 | (9 | %) | 944.6 | (4 | %) | 986.3 | 764.9 | (3 | %) | 785.6 | (4 | %) | 815.5 |
Reported amount | Currency translation benefit/(cost) | Reported amount | Currency translation benefit/(cost) | |||||||||||||||||||||||||||||||||||||||||||||||
In millions, except per share data | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||||
Revenues | $ | 24,622 | $ | 25,413 | $ | 27,441 | $ | (692 | ) | $ | (2,829 | ) | $ | (570 | ) | $ | 21,077 | $ | 21,025 | $ | 22,820 | $ | (606 | ) | $ | 123 | $ | 186 | ||||||||||||||||||||||
Company-operated margins | 2,596 | 2,511 | 2,881 | (89 | ) | (331 | ) | (60 | ) | 1,660 | 1,747 | 2,309 | (51 | ) | 4 | 17 | ||||||||||||||||||||||||||||||||||
Franchised margins | 7,609 | 7,278 | 7,575 | (118 | ) | (626 | ) | (119 | ) | 9,455 | 9,039 | 8,312 | (256 | ) | 57 | 25 | ||||||||||||||||||||||||||||||||||
Selling, general & administrative expenses | 2,384 | 2,434 | 2,488 | 28 | 158 | 21 | 2,229 | 2,200 | 2,231 | 29 | (13 | ) | (10 | ) | ||||||||||||||||||||||||||||||||||||
Operating income | 7,745 | 7,146 | 7,949 | (173 | ) | (771 | ) | (152 | ) | 9,070 | 8,823 | 9,553 | (280 | ) | 56 | 28 | ||||||||||||||||||||||||||||||||||
Net income | 4,686 | 4,529 | 4,758 | (97 | ) | (473 | ) | (114 | ) | 6,025 | 5,924 | 5,192 | (165 | ) | 33 | 2 | ||||||||||||||||||||||||||||||||||
Earnings per common share—diluted | 5.44 | 4.80 | 4.82 | (0.11 | ) | (0.50 | ) | (0.12 | ) | 7.88 | 7.54 | 6.37 | (0.21 | ) | 0.04 | — |
Diluted Earnings Per Common Share Reconciliation | ||||||||||||||||||||||||
Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | ||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
GAAP earnings per share-diluted | $ | 7.88 | $ | 7.54 | $ | 6.37 | 5 | % | 18 | % | 7 | % | 18 | % | ||||||||||
Income tax (benefit) cost, net | (0.11 | ) | 0.10 | 0.82 | ||||||||||||||||||||
Strategic charges | 0.07 | 0.26 | (0.53 | ) | ||||||||||||||||||||
Non-GAAP earnings per share-diluted | $ | 7.84 | $ | 7.90 | $ | 6.66 | (1 | )% | 19 | % | 2 | % | 18 | % |
◦ | $84 million, or $0.11 per share, of income tax benefit due to new regulations issued in the fourth quarter 2019 related to the Tax Act; and |
◦ | $74 million of pre-tax strategic charges, or $0.07 per share, primarily related to impairment associated with the purchase of our joint venture partner's interest in the India Delhi market, partly offset by gains on the sales of property at the former Corporate headquarters. |
◦ | $75 million, or $0.10 per share, of net tax cost associated with the final 2018 adjustments to the provisional amounts recorded in December 2017 under the Tax Act; |
◦ | $140 million of pre-tax, non-cash impairment charges, or $0.17 per share; and |
◦ | $94 million of pre-tax strategic restructuring charges, or $0.09 per share. |
◦ | $700 million of net tax cost associated with the Tax Act, or $0.82 per share; and |
◦ | a pre-tax gain of $850 million on the sale of the Company’s businesses in China and Hong Kong, offset in part by $150 million of restructuring and impairment charges in connection with the Company’s global G&A and refranchising initiatives, for a net benefit of $0.53 per share. |
Revenues | ||||||||||||||||||||||||
Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | ||||||||||||||||||||||
Dollars in millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Company-operated sales: | ||||||||||||||||||||||||
U.S. | $ | 3,743 | $ | 4,198 | $ | 4,351 | (11 | %) | (4 | %) | (11 | %) | (4 | %) | ||||||||||
International Lead Markets | 4,278 | 4,798 | 5,443 | (11 | ) | (12 | ) | (6 | ) | 1 | ||||||||||||||
High Growth Markets | 5,378 | 5,442 | 6,071 | (1 | ) | (10 | ) | 4 | 6 | |||||||||||||||
Foundational Markets & Corporate | 1,896 | 2,050 | 2,304 | (8 | ) | (11 | ) | (5 | ) | 5 | ||||||||||||||
Total | $ | 15,295 | $ | 16,488 | $ | 18,169 | (7 | %) | (9 | %) | (4 | %) | 2 | % | ||||||||||
Franchised revenues: | ||||||||||||||||||||||||
U.S. | $ | 4,510 | $ | 4,361 | $ | 4,300 | 3 | % | 1 | % | 3 | % | 1 | % | ||||||||||
International Lead Markets | 2,945 | 2,817 | 3,101 | 5 | (9 | ) | 8 | 6 | ||||||||||||||||
High Growth Markets | 783 | 731 | 774 | 7 | (5 | ) | 9 | 9 | ||||||||||||||||
Foundational Markets & Corporate | 1,089 | 1,016 | 1,097 | 7 | (7 | ) | 11 | 10 | ||||||||||||||||
Total | $ | 9,327 | $ | 8,925 | $ | 9,272 | 5 | % | (4 | %) | 6 | % | 5 | % | ||||||||||
Total revenues: | ||||||||||||||||||||||||
U.S. | $ | 8,253 | $ | 8,559 | $ | 8,651 | (4 | %) | (1 | %) | (4 | %) | (1 | %) | ||||||||||
International Lead Markets | 7,223 | 7,615 | 8,544 | (5 | ) | (11 | ) | (1 | ) | 3 | ||||||||||||||
High Growth Markets | 6,161 | 6,173 | 6,845 | 0 | (10 | ) | 4 | 6 | ||||||||||||||||
Foundational Markets & Corporate | 2,985 | 3,066 | 3,401 | (3 | ) | (10 | ) | 1 | 7 | |||||||||||||||
Total | $ | 24,622 | $ | 25,413 | $ | 27,441 | (3 | %) | (7 | %) | 0 | % | 3 | % | ||||||||||
Revenues | |||||||||||||||||||||||||
Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | |||||||||||||||||||||||
Dollars in millions | 2019 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Company-operated sales: | |||||||||||||||||||||||||
U.S. | $ | 2,490 | $ | 2,665 | $ | 3,260 | (7 | %) | (18 | %) | (7 | %) | (18 | %) | |||||||||||
International Operated Markets | 6,334 | 6,668 | 6,845 | (5 | ) | (3 | ) | (1 | ) | (3 | ) | ||||||||||||||
International Developmental Licensed Markets & Corporate | 597 | 680 | 2,614 | (12 | ) | (74 | ) | * | (7 | ) | (75 | ) | * | ||||||||||||
Total | $ | 9,421 | $ | 10,013 | $ | 12,719 | (6 | %) | (21 | %) | (3 | %) | (22 | %) | |||||||||||
Franchised revenues: | |||||||||||||||||||||||||
U.S. | $ | 5,353 | $ | 5,001 | $ | 4,746 | 7 | % | 5 | % | 7 | % | 5 | % | |||||||||||
International Operated Markets | 5,064 | 4,839 | 4,271 | 5 | 13 | 10 | 11 | ||||||||||||||||||
International Developmental Licensed Markets & Corporate | 1,239 | 1,172 | 1,084 | 6 | 8 | 10 | 11 | ||||||||||||||||||
Total | $ | 11,656 | $ | 11,012 | $ | 10,101 | 6 | % | 9 | % | 9 | % | 8 | % | |||||||||||
Total revenues: | |||||||||||||||||||||||||
U.S. | $ | 7,843 | $ | 7,666 | $ | 8,006 | 2 | % | (4 | %) | 2 | % | (4 | %) | |||||||||||
International Operated Markets | 11,398 | 11,507 | 11,116 | (1 | ) | 4 | 4 | 2 | |||||||||||||||||
International Developmental Licensed Markets & Corporate | 1,836 | 1,852 | 3,698 | (1 | ) | (50 | ) | * | 4 | (50 | ) | * | |||||||||||||
Total | $ | 21,077 | $ | 21,025 | $ | 22,820 | 0 | % | (8 | %) | 3 | % | (8 | %) |
• | U.S.:Revenues in 2019 and 2018 reflected positive comparable sales. The impact of refranchising partly offset these benefits in 2019 and more than offset these benefits in 2018. |
• | International Operated Markets: In 2019 and 2018, the constant currency increase in revenues reflected positive comparable sales across all markets, partly offset by the impact of refranchising. |
Comparable sales and guest count increases/(decreases) | ||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||
Sales | Guest Counts | Sales | Guest Counts | Sales | Guest Counts | |||||||||||||
U.S. | 1.7 | % | (2.1 | %) | 0.5 | % | (3.0 | %) | (2.1 | %) | (4.1 | %) | ||||||
International Lead Markets | 3.4 | 1.5 | 3.4 | 1.0 | 0.8 | (1.2 | ) | |||||||||||
High Growth Markets | 2.8 | (0.8 | ) | 1.8 | (2.2 | ) | (2.8 | ) | (2.9 | ) | ||||||||
Foundational Markets & Corporate | 10.0 | 1.9 | 0.7 | (3.7 | ) | (0.1 | ) | (4.8 | ) | |||||||||
Total | 3.8 | % | (0.3 | %) | 1.5 | % | (2.3 | %) | (1.0 | %) | (3.6 | %) |
Comparable sales and guest count increases/(decreases) | |||||||||||||||
2019 | 2018 | 2017 | |||||||||||||
Sales | Guest Counts | Sales | Guest Counts | Sales | Guest Counts | ||||||||||
U.S. | 5.0 | % | (1.9 | %) | 2.5 | % | (2.2 | %) | 3.6 | % | 1.0 | % | |||
International Operated Markets | 6.1 | 3.5 | 6.1 | 2.8 | 5.6 | 2.7 | |||||||||
International Developmental Licensed Markets & Corporate** | 7.2 | 2.2 | 5.6 | 1.0 | 8.0 | 2.5 | |||||||||
Total** | 5.9 | % | 1.0 | % | 4.5 | % | 0.2 | % | 5.3 | % | 1.9 | % |
Systemwide sales increases/(decreases) | ||||||||||||
Increase/(decrease) excluding currency translation | ||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
U.S. | 2 | % | 1 | % | 2 | % | 1 | % | ||||
International Lead Markets | 1 | (10 | ) | 5 | 5 | |||||||
High Growth Markets | 3 | (7 | ) | 6 | 8 | |||||||
Foundational Markets & Corporate | 8 | (13 | ) | 11 | 3 | |||||||
Total | 3 | % | (6 | %) | 5 | % | 3 | % |
Systemwide sales increases/(decreases)*** | ||||||||||||
Increase/(decrease) excluding currency translation | ||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
U.S. | 5 | % | 2 | % | 5 | % | 2 | % | ||||
International Operated Markets | 3 | 10 | 8 | 8 | ||||||||
International Developmental Licensed Markets & Corporate | 5 | 6 | 10 | 9 | ||||||||
Total | 4 | % | 6 | % | 7 | % | 6 | % |
Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | ||||||||||||||||||||||||||||||||||||||||||||
Dollars in millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2016 | 2015 | 2019 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||
U.S. | $ | 32,646 | $ | 31,639 | $ | 31,096 | 3 | % | 2 | % | 3 | % | 2 | % | $ | 37,923 | $ | 35,860 | $ | 34,379 | 6 | % | 4 | % | 6 | % | 4 | % | |||||||||||||||||||||
International Lead Markets | 17,049 | 16,313 | 17,921 | 5 | (9 | ) | 8 | 6 | |||||||||||||||||||||||||||||||||||||||||
High Growth Markets | 4,858 | 4,525 | 4,678 | 7 | (3 | ) | 10 | 10 | |||||||||||||||||||||||||||||||||||||||||
Foundational Markets & Corporate | 15,154 | 13,749 | 15,922 | 10 | (14 | ) | 14 | 3 | |||||||||||||||||||||||||||||||||||||||||
International Operated Markets | 28,853 | 27,557 | 24,386 | 5 | 13 | 10 | 11 | ||||||||||||||||||||||||||||||||||||||||||
International Developmental Licensed Markets & Corporate | 23,981 | 22,717 | 19,426 | 6 | 17 | * | 10 | 20 | * | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 69,707 | $ | 66,226 | $ | 69,617 | 5 | % | (5 | %) | 7 | % | 4 | % | $ | 90,757 | $ | 86,134 | $ | 78,191 | 5 | % | 10 | % | 8 | % | 10 | % | |||||||||||||||||||||
Ownership type | |||||||||||||||||||||||||||||||||||||||||||||||||
Conventional franchised | $ | 66,415 | $ | 63,251 | $ | 59,151 | 5 | % | 7 | % | 7 | % | 6 | % | |||||||||||||||||||||||||||||||||||
Developmental licensed | 14,392 | 13,519 | 12,546 | 6 | 8 | 13 | 13 | ||||||||||||||||||||||||||||||||||||||||||
Foreign affiliated | 9,950 | 9,364 | 6,494 | 6 | 44 | * | 7 | 42 | * | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 90,757 | $ | 86,134 | $ | 78,191 | 5 | % | 10 | % | 8 | % | 10 | % |
Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Increase/(decrease) | Increase/(decrease) excluding currency translation | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Increase/(decrease) | Increase/(decrease) excluding currency translation | |||||||||||||||||||||||||||||||||||||||||||
Dollars in millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2016 | 2015 | 2019 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||
U.S. | $ | 3,726 | 82.6 | % | $ | 3,606 | 82.7 | % | $ | 3,572 | 83.1 | % | 3 | % | 1 | % | 3 | % | 1 | % | $ | 4,227 | 79.0 | % | $ | 4,070 | 81.4 | % | $ | 3,913 | 82.4 | % | 4 | % | 4 | % | 4 | % | 4 | % | ||||||||||||||||||
International Lead Markets | 2,363 | 80.2 | 2,254 | 80.0 | 2,486 | 80.1 | 5 | (9 | ) | 8 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||
High Growth Markets | 550 | 70.2 | 520 | 71.1 | 555 | 71.7 | 6 | (6 | ) | 8 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||
Foundational Markets & Corporate | 970 | 89.1 | 898 | 88.3 | 962 | 87.7 | 8 | (7 | ) | 12 | 11 | |||||||||||||||||||||||||||||||||||||||||||||||
International Operated Markets | 4,018 | 79.3 | 3,829 | 79.1 | 3,365 | 78.8 | 5 | 14 | 10 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||
International Developmental Licensed Markets & Corporate | 1,210 | 97.7 | 1,140 | 97.3 | 1,034 | 95.4 | 6 | 10 | 11 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 7,609 | 81.6 | % | $ | 7,278 | 81.5 | % | $ | 7,575 | 81.7 | % | 5 | % | (4 | %) | 6 | % | 4 | % | $ | 9,455 | 81.1 | % | $ | 9,039 | 82.1 | % | $ | 8,312 | 82.3 | % | 5 | % | 9 | % | 7 | % | 8 | % |
• | U.S.: In 2019 and 2018, the decreases in the franchised margin percents were primarily due to higher depreciation costs related to investments in EOTF, partly offset by the benefit from positive comparable sales. 2019 also reflected the impact of the new lease standard. |
• | International Operated Markets: In 2019 and 2018, the increases in the franchised margin percent primarily reflected the benefit from strong comparable sales. |
Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Increase/(decrease) | Increase/(decrease) excluding currency translation | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Increase/(decrease) | Increase/(decrease) excluding currency translation | |||||||||||||||||||||||||||||||||||||||||||
Dollars in millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2016 | 2015 | 2019 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||
U.S. | $ | 618 | 16.5 | % | $ | 632 | 15.1 | % | $ | 756 | 17.4 | % | (2 | %) | (16 | %) | (2 | %) | (16 | %) | $ | 388 | 15.6 | % | $ | 397 | 14.9 | % | $ | 523 | 16.0 | % | (2 | %) | (24 | %) | (2 | %) | (24 | %) | ||||||||||||||||||
International Lead Markets | 886 | 20.7 | 961 | 20.0 | 1,080 | 19.8 | (8 | ) | (11 | ) | (3 | ) | 2 | |||||||||||||||||||||||||||||||||||||||||||||
High Growth Markets | 796 | 14.8 | 659 | 12.1 | 780 | 12.9 | 21 | (16 | ) | 26 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||
Foundational Markets & Corporate | 296 | 15.6 | 259 | 12.7 | 265 | 11.5 | 14 | (2 | ) | 17 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||
International Operated Markets | 1,266 | 20.0 | 1,327 | 19.9 | 1,336 | 19.5 | (5 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||||||||||||||||||||||||||||||||||||
International Developmental Licensed Markets & Corporate | n/m | n/m | n/m | n/m | n/m | n/m | n/m | n/m | n/m | n/m | ||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,596 | 17.0 | % | $ | 2,511 | 15.2 | % | $ | 2,881 | 15.9 | % | 3 | % | (13 | %) | 7 | % | (1 | %) | $ | 1,660 | 17.6 | % | $ | 1,747 | 17.4 | % | $ | 2,309 | 18.2 | % | (5 | %) | (24 | %) | (2 | %) | (25 | %) |
• | U.S.:In 2019, the increase in the Company-operated margin percent primarily reflected the benefit from positive comparable sales, partly offset by higher commodity costs, wages and depreciation expense associated with EOTF deployment. In 2018, the Company-operated margin percent decreased, reflecting the impact of accelerated deployment of EOTF (including the related decrease in labor productivity and higher depreciation expense), and higher wages and commodity costs, which more than offset the benefit from positive comparable sales and refranchising. |
• | International Operated Markets:In 2019 and 2018, the increase in the Company-operated margin percent was primarily due to strong comparable sales partly offset by higher labor and occupancy & other costs. |
Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | ||||||||||||||||||||||
Dollars in millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
U.S. | $ | 741 | $ | 766 | $ | 772 | (3 | %) | (1 | %) | (3 | %) | (1 | %) | ||||||||||
International Lead Markets | 464 | 534 | 621 | (13 | ) | (14 | ) | (10 | ) | (1 | ) | |||||||||||||
High Growth Markets | 294 | 326 | 389 | (10 | ) | (16 | ) | (6 | ) | (5 | ) | |||||||||||||
Foundational Markets & Corporate(1) | 885 | 808 | 706 | 10 | 15 | 10 | 20 | |||||||||||||||||
Total (Selling, General & Administrative Expenses) | $ | 2,384 | $ | 2,434 | $ | 2,488 | (2 | %) | (2 | %) | (1 | %) | 4 | % | ||||||||||
Less: Incentive-Based Compensation(2) | 418 | 317 | 171 | 32 | % | 85 | % | 33 | % | 95 | % | |||||||||||||
Total (Excluding Incentive-Based Compensation) | $ | 1,966 | $ | 2,117 | $ | 2,317 | (7 | %) | (9 | %) | (6 | %) | (3) | (2 | %) | (4) |
Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | ||||||||||||||||||||||
Dollars in millions | 2019 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||
U.S. | $ | 587 | $ | 591 | $ | 624 | (1 | %) | (5 | %) | (1 | %) | (5 | %) | ||||||||||
International Operated Markets | 629 | 641 | 654 | (2 | ) | (2 | ) | 3 | (4 | ) | ||||||||||||||
International Developmental Licensed Markets & Corporate(1) | 1,013 | 968 | 953 | 5 | 2 | 5 | 2 | |||||||||||||||||
Total Selling, General & Administrative Expenses | $ | 2,229 | $ | 2,200 | $ | 2,231 | 1 | % | (1 | %) | 3 | % | (2 | %) | ||||||||||
Less: Incentive-Based Compensation(2) | 289 | 284 | 336 | 2 | % | (16 | %) | 3 | % | (16 | %) | |||||||||||||
Total Excluding Incentive-Based Compensation | $ | 1,940 | $ | 1,916 | $ | 1,895 | 1 | % | 1 | % | 3 | % | 1 | % |
(1) | Included in |
(2) | Includes all cash incentives and share-based compensation expense. |
In millions | 2016 | 2015 | 2014 | 2019 | 2018 | 2017 | ||||||||||||||||
Gains on sales of restaurant businesses | $ | (283 | ) | $ | (146 | ) | $ | (137 | ) | $ | (127 | ) | $ | (304 | ) | $ | (295 | ) | ||||
Equity in (earnings) losses of unconsolidated affiliates | (55 | ) | 147 | 9 | ||||||||||||||||||
Equity in earnings of unconsolidated affiliates | (154 | ) | (152 | ) | (184 | ) | ||||||||||||||||
Asset dispositions and other (income) expense, net | 72 | (27 | ) | 108 | 23 | (13 | ) | 19 | ||||||||||||||
Impairment and other charges (gains), net | 342 | 235 | 39 | 74 | 232 | (703 | ) | |||||||||||||||
Total | $ | 76 | $ | 209 | $ | 19 | $ | (184 | ) | $ | (237 | ) | $ | (1,163 | ) |
Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | Amount | Increase/(decrease) | Increase/(decrease) excluding currency translation | |||||||||||||||||||||||||||||||||||||||||
Dollars in millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2016 | 2015 | 2019 | 2018 | 2017 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
U.S. | $ | 3,769 | $ | 3,612 | $ | 3,523 | 4 | % | 3 | % | 4 | % | 3 | % | $ | 4,069 | $ | 4,016 | $ | 4,023 | 1 | % | 0 | % | 1 | % | 0 | % | ||||||||||||||||||
International Lead Markets | 2,838 | 2,713 | 3,034 | 5 | (11 | ) | 9 | 4 | ||||||||||||||||||||||||||||||||||||||
High Growth Markets | 1,049 | 841 | 934 | 25 | (10 | ) | 29 | 9 | ||||||||||||||||||||||||||||||||||||||
Foundational Markets & Corporate | 89 | (20 | ) | 458 | n/m | n/m | n/m | (74 | ) | |||||||||||||||||||||||||||||||||||||
International Operated Markets | 4,789 | 4,643 | 4,173 | 3 | 11 | 8 | 9 | |||||||||||||||||||||||||||||||||||||||
International Developmental Licensed Markets & Corporate | 212 | 164 | 1,357 | 29 | (88 | ) | 59 | (86 | ) | |||||||||||||||||||||||||||||||||||||
Total | $ | 7,745 | $ | 7,146 | $ | 7,949 | 8 | % | (10 | %) | 11 | % | 0 | % | $ | 9,070 | $ | 8,823 | $ | 9,553 | 3 | % | (8 | %) | 6 | % | (8 | %) |
• | Operating Income: Results for 2019 included $74 million of net impairment and strategic charges. Results for 2018 included $140 million of impairment charges and $94 million of strategic restructuring charges. Results for 2017 included a gain on the Company's sale of its businesses in China and Hong Kong of $850 million, partly offset by $150 million of restructuring and impairment charges. Excluding these current year and prior year items, operating income increased 1% (4% in constant currencies) for 2019 and increased 2% (2% in constant currencies) for 2018. |
• | U.S.: Excluding the 2018 strategic restructuring charge of $85 million, operating income decreased 1% for 2019 and increased 2% for 2018. 2019 results reflected lower gains on sales of restaurant businesses, partly offset by higher franchised margin dollars. 2018 results reflected higher franchised margin dollars and lower G&A costs, partly offset by lower Company-operated margin dollars. |
• | International Operated Markets: In 2019 and 2018, the constant currency operating income increase was primarily due to sales-driven improvements in franchised margin dollars. 2018 results also reflected higher gains on sales of restaurant businesses in the U.K. and Australia compared to 2017. |
• | Operating margin: Operating margin was 43.0% in 2019, 42.0% in 2018 and 41.9% in 2017. Excluding the impact of the current and prior year impairment and strategic charges, as well as the 2017 refranchising gain, operating margin was 43.4%, 43.1% and 38.8% for the years ended 2019, 2018 and 2017, respectively. |
In millions | 2016 | 2015 | 2014 | 2019 | 2018 | 2017 | ||||||||||||||||||
Interest income | $ | (4 | ) | $ | (9 | ) | $ | (20 | ) | $ | (37 | ) | $ | (4 | ) | $ | (7 | ) | ||||||
Foreign currency and hedging activity | (24 | ) | (56 | ) | 20 | (48 | ) | 5 | 26 | |||||||||||||||
Other expense | 22 | 17 | 1 | 15 | 25 | 39 | ||||||||||||||||||
Total | $ | (6 | ) | $ | (48 | ) | $ | 1 | $ | (70 | ) | $ | 26 | $ | 58 |
2016 | 2015 | 2014 | ||||||
U.S. | 14,155 | 14,259 | 14,350 | |||||
International Lead Markets | 6,851 | 6,802 | 6,717 | |||||
High Growth Markets | 5,552 | 5,266 | 5,031 | |||||
Foundational Markets & Corporate | 10,341 | 10,198 | 10,160 | |||||
Total | 36,899 | 36,525 | 36,258 |
2019 | 2018 | 2017 | ||||||
U.S. | 13,846 | 13,914 | 14,036 | |||||
International Operated Markets | 10,465 | 10,263 | 10,098 | |||||
International Developmental Licensed Markets & Corporate | 14,384 | 13,678 | 13,107 | |||||
Total | 38,695 | 37,855 | 37,241 |
In millions | 2016 | 2015 | 2014 | 2019 | 2018 | 2017 | ||||||||||||||||
New restaurants | $ | 674 | $ | 892 | $ | 1,435 | $ | 605 | $ | 488 | $ | 537 | ||||||||||
Existing restaurants | 1,108 | 842 | 1,044 | 1,702 | 2,111 | 1,236 | ||||||||||||||||
Other(1) | 39 | 80 | 104 | 87 | 143 | 81 | ||||||||||||||||
Total capital expenditures | $ | 1,821 | $ | 1,814 | $ | 2,583 | $ | 2,394 | $ | 2,742 | $ | 1,854 | ||||||||||
Total assets | $ | 31,024 | $ | 37,939 | $ | 34,227 | $ | 47,511 | $ | 32,811 | $ | 33,804 |
(1) | Primarily corporate equipment and other office-related expenditures |
In millions, except per share data | 2016 | 2015 | 2014 | ||||||||
Number of shares repurchased | 92.3 | 61.8 | 33.1 | ||||||||
Shares outstanding at year end | 819 | 907 | 963 | ||||||||
Dividends declared per share | $ | 3.61 | $ | 3.44 | $ | 3.28 | |||||
Treasury stock purchases (in Shareholders' equity) | $ | 11,142 | $ | 6,182 | $ | 3,175 | |||||
Dividends paid | 3,058 | 3,230 | 3,216 | ||||||||
Total returned to shareholders | $ | 14,200 | $ | 9,412 | $ | 6,391 |
In millions, except per share data | 2019 | 2018 | 2017 | ||||||||
Number of shares repurchased | 25.0 | 32.2 | 31.4 | ||||||||
Shares outstanding at year end | 746 | 767 | 794 | ||||||||
Dividends declared per share | $ | 4.73 | $ | 4.19 | $ | 3.83 | |||||
Treasury stock purchases (in Shareholders' equity) | $ | 4,980 | $ | 5,247 | $ | 4,651 | |||||
Dividends paid | 3,582 | 3,256 | 3,089 | ||||||||
Total returned to shareholders | $ | 8,562 | $ | 8,503 | $ | 7,740 |
2016 | 2015 | 2014 | ||||||
Fixed-rate debt as a percent of total debt(2,3) | 82 | % | 81 | % | 74 | % | ||
Weighted-average annual interest rate of total debt(3) | 3.5 | 3.8 | 4.0 | |||||
Foreign currency-denominated debt as a percent of total debt(2) | 34 | 29 | 40 | |||||
Total debt as a percent of total capitalization (total debt and total Shareholders' equity)(2) | 109 | 77 | 54 | |||||
Cash provided by operations as a percent of total debt(2) | 23 | 27 | 45 |
2019 | 2018 | 2017 | ||||||
Fixed-rate debt as a percent of total debt(2,3) | 92 | % | 91 | % | 89 | % | ||
Weighted-average annual interest rate of total debt(3) | 3.2 | 3.2 | 3.3 | |||||
Foreign currency-denominated debt as a percent of total debt(2) | 38 | 38 | 42 | |||||
Total debt as a percent of total capitalization (total debt and total Shareholders' equity)(2) | 131 | 125 | 112 | |||||
Cash provided by operations as a percent of total debt(2) | 24 | 22 | 19 |
(1) | All percentages are as of December 31, except for the weighted-average annual interest rate, which is for the year. See reconciliation in Exhibit 12. |
(2) | Based on debt obligations before the effects of fair value hedging adjustments and deferred debt costs. These effects are excluded as they have no impact on the obligation at maturity. See Debt |
(3) | Includes the effect of interest rate |
In millions of U.S. Dollars | 2016 | 2015 | 2019 | 2018 | ||||||||||
Euro | $ | 1,968 | $ | 3,974 | ||||||||||
British Pounds Sterling | 1,340 | 1,333 | $ | 811 | $ | 1,840 | ||||||||
Canadian Dollars | 699 | 684 | ||||||||||||
Russian Ruble | 577 | 631 | ||||||||||||
Australian Dollars | 1,393 | 1,316 | 560 | 1,499 | ||||||||||
Canadian Dollars | 1,190 | 1,096 | ||||||||||||
Japanese Yen | 490 | 363 | ||||||||||||
Polish Zloty | 396 | 340 |
Contractual cash outflows | Contractual cash inflows | Contractual cash outflows | Contractual cash inflows | |||||||||||||||||||||||||
In millions | Operating leases (1) | Debt obligations (2) | Minimum rent under franchise arrangements (3) | Operating leases (1) | Debt obligations (2) | Minimum rent under franchise arrangements | ||||||||||||||||||||||
2017 | $ | 1,303 | $ | 77 | $ | 2,690 | ||||||||||||||||||||||
2018 | 1,200 | 1,756 | 2,617 | |||||||||||||||||||||||||
2019 | 1,103 | 3,933 | 2,540 | |||||||||||||||||||||||||
2020 | 1,001 | 2,396 | 2,426 | $ | 1,147 | $ | 59 | $ | 3,008 | |||||||||||||||||||
2021 | 892 | 1,555 | 2,295 | 1,096 | 2,132 | 2,884 | ||||||||||||||||||||||
2022 | 1,014 | 2,250 | 2,750 | |||||||||||||||||||||||||
2023 | 933 | 6,007 | 2,631 | |||||||||||||||||||||||||
2024 | 854 | 2,819 | 2,541 | |||||||||||||||||||||||||
Thereafter | 6,754 | 16,349 | 18,764 | 7,090 | 21,038 | 20,510 | ||||||||||||||||||||||
Total | $ | 12,253 | $ | 26,066 | $ | 31,332 | $ | 12,134 | $ | 34,305 | $ | 34,324 |
(1) |
(2) | The maturities include reclassifications of short-term obligations to long-term obligations of |
• | Income taxes |
5-Year Summary | Years ended December 31, | ||||||||||||||||||
In millions, except per share and unit amounts | 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||
Consolidated Statement of Income Data | |||||||||||||||||||
Revenues | |||||||||||||||||||
Sales by Company-operated restaurants | $ | 9,421 | $ | 10,013 | $ | 12,719 | $ | 15,295 | $ | 16,488 | |||||||||
Revenues from franchised restaurants | 11,656 | 11,012 | 10,101 | 9,327 | 8,925 | ||||||||||||||
Total revenues | 21,077 | 21,025 | 22,820 | 24,622 | 25,413 | ||||||||||||||
Operating income | 9,070 | 8,823 | 9,553 | 7,745 | 7,146 | ||||||||||||||
Net income | 6,025 | 5,924 | 5,192 | 4,687 | 4,529 | ||||||||||||||
Consolidated Statement of Cash Flows Data | |||||||||||||||||||
Cash provided by operations | $ | 8,122 | $ | 6,967 | $ | 5,551 | $ | 6,060 | $ | 6,539 | |||||||||
Cash used for (provided by) investing activities | 3,071 | 2,455 | (562 | ) | 982 | 1,420 | |||||||||||||
Capital expenditures | 2,394 | 2,742 | 1,854 | 1,821 | 1,814 | ||||||||||||||
Cash used for (provided by) financing activities | 4,995 | 5,950 | 5,311 | 11,262 | (735 | ) | |||||||||||||
Treasury stock purchases(1) | 4,980 | 5,247 | 4,651 | 11,142 | 6,182 | ||||||||||||||
Common stock dividends | 3,582 | 3,256 | 3,089 | 3,058 | 3,230 | ||||||||||||||
Financial Position | |||||||||||||||||||
Total assets(2) | $ | 47,511 | $ | 32,811 | $ | 33,804 | $ | 31,024 | $ | 37,939 | |||||||||
Total debt | 34,177 | 31,075 | 29,536 | 25,956 | 24,122 | ||||||||||||||
Total shareholders’ equity (deficit) | (8,210 | ) | (6,258 | ) | (3,268 | ) | (2,204 | ) | 7,088 | ||||||||||
Shares outstanding | 746 | 767 | 794 | 819 | 907 | ||||||||||||||
Per Common Share Data | |||||||||||||||||||
Earnings-diluted | $ | 7.88 | $ | 7.54 | $ | 6.37 | $ | 5.44 | $ | 4.80 | |||||||||
Dividends declared | 4.73 | 4.19 | 3.83 | 3.61 | 3.44 | ||||||||||||||
Market price at year end | 197.61 | 177.57 | 172.12 | 121.72 | 118.44 | ||||||||||||||
Restaurant Information and Other Data | |||||||||||||||||||
Restaurants at year end | |||||||||||||||||||
Company-operated restaurants | 2,636 | 2,770 | 3,133 | 5,669 | 6,444 | ||||||||||||||
Franchised restaurants | 36,059 | 35,085 | 34,108 | 31,230 | 30,081 | ||||||||||||||
Total Systemwide restaurants | 38,695 | 37,855 | 37,241 | 36,899 | 36,525 | ||||||||||||||
Franchised sales(3) | $ | 90,757 | $ | 86,134 | $ | 78,191 | $ | 69,707 | $ | 66,226 |
(1) | Represents treasury stock purchases as reflected in Shareholders' equity. |
(2) | Total assets increased from 2018 to 2019 primarily due to the Company's right-of-use asset recorded as a result of the adoption of ASC 842. |
(3) | While franchised sales are not recorded as revenues by the Company, management believes they are important in understanding the Company's financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. Franchised restaurants represent 93% of McDonald's restaurants worldwide at December 31, 2019. |
Company/Index | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 |
McDonald's Corporation | $100 | $130 | $139 | $201 | $213 | $242 |
S&P 500 Index | $100 | $101 | $114 | $138 | $132 | $174 |
Dow Jones Industrials | $100 | $100 | $117 | $150 | $144 | $181 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) | ||||||||||
October 1-31, 2019 | 2,393,580 | 208.93 | 2,393,580 | $ | 2,943,051,009 | |||||||||
November 1-30, 2019 | 2,886,335 | 193.60 | 2,886,335 | 2,384,270,449 | ||||||||||
December 1-31, 2019 | 1,787,824 | 195.90 | 1,787,824 | 2,034,034,984 | ||||||||||
Total | 7,067,739 | 199.37 | 7,067,739 |
* | Subject to applicable law, the Company may repurchase shares directly in the open market, in privately negotiated transactions, or pursuant to derivative instruments and plans complying with Rule 10b5-1, among other types of transactions and arrangements. |
(1) | On July 27, 2017, the Company's Board of Directors approved a share repurchase program, effective July 28, 2017 ("2017 Program"), that authorized the purchase of up to $15 billion of the Company's outstanding common stock with no specified expiration date. On December 6, 2019, the Company's Board of Directors terminated the 2017 Program, effective December 31, 2019, and replaced it with a new share repurchase program, effective January 1, 2020 ("2020 Program"), that authorized the purchase of up to $15 billion of the Company's outstanding common stock with no specified expiration date. As of December 31, 2019, no further share repurchases may be made under the 2017 Program; future share repurchases will be made pursuant to the 2020 program. |
▪ | Franchising |
▪ | Suppliers |
▪ | Employees |
▪ | Customers |
▪ | Intellectual Property |
▪ | Government Regulations |
Index to consolidated financial statements | Page reference |
Consolidated statement of income for each of the three years in the period ended December 31, | |
Consolidated statement of comprehensive income for each of the three years in the period ended December 31, | |
Consolidated balance sheet at December 31, | |
Consolidated statement of cash flows for each of the three years in the period ended December 31, | |
Consolidated statement of shareholders’ equity for each of the three years in the period ended December 31, | |
Notes to consolidated financial statements | |
Quarterly results (unaudited) | |
Management’s assessment of internal control over financial reporting | |
Report of independent registered public accounting firm | |
Report of independent registered public accounting firm on internal control over financial reporting | |
In millions, except per share data | Years ended December 31, 2016 | 2015 | 2014 | Years ended December 31, 2019 | 2018 | 2017 | ||||||||||||||||||
REVENUES | REVENUES | REVENUES | ||||||||||||||||||||||
Sales by Company-operated restaurants | Sales by Company-operated restaurants | $ | 15,295.0 | $ | 16,488.3 | $ | 18,169.3 | Sales by Company-operated restaurants | $ | 9,420.8 | $ | 10,012.7 | $ | 12,718.9 | ||||||||||
Revenues from franchised restaurants | Revenues from franchised restaurants | 9,326.9 | 8,924.7 | 9,272.0 | Revenues from franchised restaurants | 11,655.7 | 11,012.5 | 10,101.5 | ||||||||||||||||
Total revenues | Total revenues | 24,621.9 | 25,413.0 | 27,441.3 | Total revenues | 21,076.5 | 21,025.2 | 22,820.4 | ||||||||||||||||
OPERATING COSTS AND EXPENSES | OPERATING COSTS AND EXPENSES | OPERATING COSTS AND EXPENSES | ||||||||||||||||||||||
Company-operated restaurant expenses | Company-operated restaurant expenses | Company-operated restaurant expenses | ||||||||||||||||||||||
Food & paper | Food & paper | 4,896.9 | 5,552.2 | 6,129.7 | Food & paper | 2,980.3 | 3,153.8 | 4,033.5 | ||||||||||||||||
Payroll & employee benefits | Payroll & employee benefits | 4,134.2 | 4,400.0 | 4,756.0 | Payroll & employee benefits | 2,704.4 | 2,937.9 | 3,528.5 | ||||||||||||||||
Occupancy & other operating expenses | Occupancy & other operating expenses | 3,667.7 | 4,024.7 | 4,402.6 | Occupancy & other operating expenses | 2,075.9 | 2,174.2 | 2,847.6 | ||||||||||||||||
Franchised restaurants-occupancy expenses | Franchised restaurants-occupancy expenses | 1,718.4 | 1,646.9 | 1,697.3 | Franchised restaurants-occupancy expenses | 2,200.6 | 1,973.3 | 1,790.0 | ||||||||||||||||
Selling, general & administrative expenses | Selling, general & administrative expenses | 2,384.5 | 2,434.3 | 2,487.9 | Selling, general & administrative expenses | 2,229.4 | 2,200.2 | 2,231.3 | ||||||||||||||||
Other operating (income) expense, net | Other operating (income) expense, net | 75.7 | 209.4 | 18.6 | Other operating (income) expense, net | (183.9 | ) | (236.8 | ) | (1,163.2 | ) | |||||||||||||
Total operating costs and expenses | Total operating costs and expenses | 16,877.4 | 18,267.5 | 19,492.1 | Total operating costs and expenses | 12,006.7 | 12,202.6 | 13,267.7 | ||||||||||||||||
Operating income | Operating income | 7,744.5 | 7,145.5 | 7,949.2 | Operating income | 9,069.8 | 8,822.6 | 9,552.7 | ||||||||||||||||
Interest expense-net of capitalized interest of $7.1, $9.4 and $14.7 | 884.8 | 638.3 | 576.4 | |||||||||||||||||||||
Interest expense-net of capitalized interest of $7.4, $5.6 and $5.3 | Interest expense-net of capitalized interest of $7.4, $5.6 and $5.3 | 1,121.9 | 981.2 | 921.3 | ||||||||||||||||||||
Nonoperating (income) expense, net | Nonoperating (income) expense, net | (6.3 | ) | (48.5 | ) | 0.8 | Nonoperating (income) expense, net | (70.2 | ) | 25.3 | 57.9 | |||||||||||||
Income before provision for income taxes | Income before provision for income taxes | 6,866.0 | 6,555.7 | 7,372.0 | Income before provision for income taxes | 8,018.1 | 7,816.1 | 8,573.5 | ||||||||||||||||
Provision for income taxes | Provision for income taxes | 2,179.5 | 2,026.4 | 2,614.2 | Provision for income taxes | 1,992.7 | 1,891.8 | 3,381.2 | ||||||||||||||||
Net income | Net income | $ | 4,686.5 | $ | 4,529.3 | $ | 4,757.8 | Net income | $ | 6,025.4 | $ | 5,924.3 | $ | 5,192.3 | ||||||||||
Earnings per common share–basic | Earnings per common share–basic | $ | 5.49 | $ | 4.82 | $ | 4.85 | Earnings per common share–basic | $ | 7.95 | $ | 7.61 | $ | 6.43 | ||||||||||
Earnings per common share–diluted | Earnings per common share–diluted | $ | 5.44 | $ | 4.80 | $ | 4.82 | Earnings per common share–diluted | $ | 7.88 | $ | 7.54 | $ | 6.37 | ||||||||||
Dividends declared per common share | Dividends declared per common share | $ | 3.61 | $ | 3.44 | $ | 3.28 | Dividends declared per common share | $ | 4.73 | $ | 4.19 | $ | 3.83 | ||||||||||
Weighted-average shares outstanding–basic | Weighted-average shares outstanding–basic | 854.4 | 939.4 | 980.5 | Weighted-average shares outstanding–basic | 758.1 | 778.2 | 807.4 | ||||||||||||||||
Weighted-average shares outstanding–diluted | Weighted-average shares outstanding–diluted | 861.2 | 944.6 | 986.3 | Weighted-average shares outstanding–diluted | 764.9 | 785.6 | 815.5 |
In millions | Years ended December 31, 2016 | 2015 | 2014 | Years ended December 31, 2019 | 2018 | 2017 | ||||||||||||||||||||
Net income | $ | 4,686.5 | $ | 4,529.3 | $ | 4,757.8 | $ | 6,025.4 | $ | 5,924.3 | $ | 5,192.3 | ||||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||||||
Foreign currency translation adjustments: | ||||||||||||||||||||||||||
Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges | Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges | (272.8 | ) | (1,347.4 | ) | (1,971.6 | ) | Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges | 127.5 | (453.6 | ) | 827.7 | ||||||||||||||
Reclassification of (gain) loss to net income | Reclassification of (gain) loss to net income | 94.0 | 1.3 | 15.2 | Reclassification of (gain) loss to net income | 46.8 | — | 109.3 | ||||||||||||||||||
Foreign currency translation adjustments-net of tax benefit (expense) of $(264.4), $(209.8), and $(196.0) | (178.8 | ) | (1,346.1 | ) | (1,956.4 | ) | ||||||||||||||||||||
Foreign currency translation adjustments-net of tax benefit (expense) of $(55.4), $(90.7), and $453.1 | Foreign currency translation adjustments-net of tax benefit (expense) of $(55.4), $(90.7), and $453.1 | 174.3 | (453.6 | ) | 937.0 | |||||||||||||||||||||
Cash flow hedges: | ||||||||||||||||||||||||||
Gain (loss) recognized in AOCI | Gain (loss) recognized in AOCI | 18.5 | 22.2 | 40.1 | Gain (loss) recognized in AOCI | 17.3 | 46.5 | (48.4 | ) | |||||||||||||||||
Reclassification of (gain) loss to net income | Reclassification of (gain) loss to net income | (15.6 | ) | (33.2 | ) | (6.8 | ) | Reclassification of (gain) loss to net income | (37.7 | ) | 2.4 | 9.0 | ||||||||||||||
Cash flow hedges-net of tax benefit (expense) of $(1.6), $6.2, and $(18.2) | 2.9 | (11.0 | ) | 33.3 | ||||||||||||||||||||||
Cash flow hedges-net of tax benefit (expense) of $6.1, $(14.5), and $22.4 | Cash flow hedges-net of tax benefit (expense) of $6.1, $(14.5), and $22.4 | (20.4 | ) | 48.9 | (39.4 | ) | ||||||||||||||||||||
Defined benefit pension plans: | ||||||||||||||||||||||||||
Gain (loss) recognized in AOCI | Gain (loss) recognized in AOCI | (47.1 | ) | (5.4 | ) | (26.6 | ) | Gain (loss) recognized in AOCI | (24.5 | ) | (27.0 | ) | 16.3 | |||||||||||||
Reclassification of (gain) loss to net income | Reclassification of (gain) loss to net income | 9.9 | 2.4 | 2.4 | Reclassification of (gain) loss to net income | (2.6 | ) | 0.6 | 0.6 | |||||||||||||||||
Defined benefit pension plans-net of tax benefit (expense) of $(10.0), $1.3, and $7.7 | (37.2 | ) | (3.0 | ) | (24.2 | ) | ||||||||||||||||||||
Defined benefit pension plans-net of tax benefit (expense) of $5.2, $4.3, and $(3.9) | Defined benefit pension plans-net of tax benefit (expense) of $5.2, $4.3, and $(3.9) | (27.1 | ) | (26.4 | ) | 16.9 | ||||||||||||||||||||
Total other comprehensive income (loss), net of tax | Total other comprehensive income (loss), net of tax | (213.1 | ) | (1,360.1 | ) | (1,947.3 | ) | Total other comprehensive income (loss), net of tax | 126.8 | (431.1 | ) | 914.5 | ||||||||||||||
Comprehensive income | $ | 4,473.4 | $ | 3,169.2 | $ | 2,810.5 | $ | 6,152.2 | $ | 5,493.2 | $ | 6,106.8 | ||||||||||||||
In millions, except per share data | December 31, 2016 | 2015 | December 31, 2019 | 2018 | ||||||||||||
ASSETS | ASSETS | ASSETS | ||||||||||||||
Current assets | Current assets | Current assets | ||||||||||||||
Cash and equivalents | Cash and equivalents | $ | 1,223.4 | $ | 7,685.5 | Cash and equivalents | $ | 898.5 | $ | 866.0 | ||||||
Accounts and notes receivable | Accounts and notes receivable | 1,474.1 | 1,298.7 | Accounts and notes receivable | 2,224.2 | 2,441.5 | ||||||||||
Inventories, at cost, not in excess of market | Inventories, at cost, not in excess of market | 58.9 | 100.1 | Inventories, at cost, not in excess of market | 50.2 | 51.1 | ||||||||||
Prepaid expenses and other current assets | Prepaid expenses and other current assets | 565.2 | 558.7 | Prepaid expenses and other current assets | 385.0 | 694.6 | ||||||||||
Assets of businesses held for sale | 1,527.0 | — | ||||||||||||||
Total current assets | Total current assets | 4,848.6 | 9,643.0 | Total current assets | 3,557.9 | 4,053.2 | ||||||||||
Other assets | Other assets | Other assets | ||||||||||||||
Investments in and advances to affiliates | Investments in and advances to affiliates | 725.9 | 792.7 | Investments in and advances to affiliates | 1,270.3 | 1,202.8 | ||||||||||
Goodwill | Goodwill | 2,336.5 | 2,516.3 | Goodwill | 2,677.4 | 2,331.5 | ||||||||||
Miscellaneous | Miscellaneous | 1,855.3 | 1,869.1 | Miscellaneous | 2,584.0 | 2,381.0 | ||||||||||
Total other assets | Total other assets | 4,917.7 | 5,178.1 | Total other assets | 6,531.7 | 5,915.3 | ||||||||||
Lease right-of-use asset, net | Lease right-of-use asset, net | 13,261.2 | — | |||||||||||||
Property and equipment | Property and equipment | Property and equipment | ||||||||||||||
Property and equipment, at cost | Property and equipment, at cost | 34,443.4 | 37,692.4 | Property and equipment, at cost | 39,050.9 | 37,193.6 | ||||||||||
Accumulated depreciation and amortization | Accumulated depreciation and amortization | (13,185.8 | ) | (14,574.8 | ) | Accumulated depreciation and amortization | (14,890.9 | ) | (14,350.9 | ) | ||||||
Net property and equipment | Net property and equipment | 21,257.6 | 23,117.6 | Net property and equipment | 24,160.0 | 22,842.7 | ||||||||||
Total assets | Total assets | $ | 31,023.9 | $ | 37,938.7 | Total assets | $ | 47,510.8 | $ | 32,811.2 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | LIABILITIES AND SHAREHOLDERS’ EQUITY | LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
Current liabilities | Current liabilities | Current liabilities | ||||||||||||||
Accounts payable | Accounts payable | $ | 756.0 | $ | 874.7 | Accounts payable | $ | 988.2 | $ | 1,207.9 | ||||||
Lease liability | Lease liability | 621.0 | — | |||||||||||||
Income taxes | Income taxes | 267.2 | 154.8 | Income taxes | 331.7 | 228.3 | ||||||||||
Other taxes | Other taxes | 266.3 | 309.0 | Other taxes | 247.5 | 253.7 | ||||||||||
Accrued interest | Accrued interest | 247.5 | 233.1 | Accrued interest | 337.8 | 297.0 | ||||||||||
Accrued payroll and other liabilities | Accrued payroll and other liabilities | 1,159.3 | 1,378.8 | Accrued payroll and other liabilities | 1,035.7 | 986.6 | ||||||||||
Current maturities of long-term debt | Current maturities of long-term debt | 77.2 | — | Current maturities of long-term debt | 59.1 | — | ||||||||||
Liabilities of businesses held for sale | 694.8 | — | ||||||||||||||
Total current liabilities | Total current liabilities | 3,468.3 | 2,950.4 | Total current liabilities | 3,621.0 | 2,973.5 | ||||||||||
Long-term debt | Long-term debt | 25,878.5 | 24,122.1 | Long-term debt | 34,118.1 | 31,075.3 | ||||||||||
Long-term lease liability | Long-term lease liability | 12,757.8 | — | |||||||||||||
Long-term income taxes | Long-term income taxes | 2,265.9 | 2,081.2 | |||||||||||||
Deferred revenues - initial franchise fees | Deferred revenues - initial franchise fees | 660.6 | 627.8 | |||||||||||||
Other long-term liabilities | Other long-term liabilities | 2,064.3 | 2,074.0 | Other long-term liabilities | 979.6 | 1,096.3 | ||||||||||
Deferred income taxes | Deferred income taxes | 1,817.1 | 1,704.3 | Deferred income taxes | 1,318.1 | 1,215.5 | ||||||||||
Shareholders’ equity (deficit) | Shareholders’ equity (deficit) | Shareholders’ equity (deficit) | ||||||||||||||
Preferred stock, no par value; authorized – 165.0 million shares; issued – none | Preferred stock, no par value; authorized – 165.0 million shares; issued – none | — | — | Preferred 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 shares | Common stock, $.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares | 16.6 | 16.6 | Common stock, $.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares | 16.6 | 16.6 | ||||||||||
Additional paid-in capital | Additional paid-in capital | 6,757.9 | 6,533.4 | Additional paid-in capital | 7,653.9 | 7,376.0 | ||||||||||
Retained earnings | Retained earnings | 46,222.7 | 44,594.5 | Retained earnings | 52,930.5 | 50,487.0 | ||||||||||
Accumulated other comprehensive income | (3,092.9 | ) | (2,879.8 | ) | ||||||||||||
Common stock in treasury, at cost; 841.3 and 753.8 million shares | (52,108.6 | ) | (41,176.8 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | Accumulated other comprehensive income (loss) | (2,482.7 | ) | (2,609.5 | ) | |||||||||||
Common stock in treasury, at cost; 914.3 and 893.5 million shares | Common stock in treasury, at cost; 914.3 and 893.5 million shares | (66,328.6 | ) | (61,528.5 | ) | |||||||||||
Total shareholders’ equity (deficit) | Total shareholders’ equity (deficit) | (2,204.3 | ) | 7,087.9 | Total shareholders’ equity (deficit) | (8,210.3 | ) | (6,258.4 | ) | |||||||
Total liabilities and shareholders’ equity (deficit) | Total liabilities and shareholders’ equity (deficit) | $ | 31,023.9 | $ | 37,938.7 | Total liabilities and shareholders’ equity (deficit) | $ | 47,510.8 | $ | 32,811.2 |
In millions | Years ended December 31, 2016 | 2015 | 2014 | Years ended December 31, 2019 | 2018 | 2017 | ||||||||||||||||||
Operating activities | Operating activities | Operating activities | ||||||||||||||||||||||
Net income | Net income | $ | 4,686.5 | $ | 4,529.3 | $ | 4,757.8 | Net income | $ | 6,025.4 | $ | 5,924.3 | $ | 5,192.3 | ||||||||||
Adjustments to reconcile to cash provided by operations | Adjustments to reconcile to cash provided by operations | Adjustments to reconcile to cash provided by operations | ||||||||||||||||||||||
Charges and credits: | Charges and credits: | Charges and credits: | ||||||||||||||||||||||
Depreciation and amortization | Depreciation and amortization | 1,516.5 | 1,555.7 | 1,644.5 | Depreciation and amortization | 1,617.9 | 1,482.0 | 1,363.4 | ||||||||||||||||
Deferred income taxes | Deferred income taxes | (538.6 | ) | (1.4 | ) | (90.7 | ) | Deferred income taxes | 149.7 | 102.6 | (36.4 | ) | ||||||||||||
Share-based compensation | Share-based compensation | 131.3 | 110.0 | 112.8 | Share-based compensation | 109.6 | 125.1 | 117.5 | ||||||||||||||||
Net gain on sale of restaurant businesses | Net gain on sale of restaurant businesses | (128.2 | ) | (308.8 | ) | (1,155.8 | ) | |||||||||||||||||
Other | Other | 96.9 | 177.6 | 369.5 | Other | 49.2 | 114.2 | 1,050.7 | ||||||||||||||||
Changes in working capital items: | Changes in working capital items: | Changes in working capital items: | ||||||||||||||||||||||
Accounts receivable | Accounts receivable | (159.0 | ) | (180.6 | ) | 27.0 | Accounts receivable | 27.0 | (479.4 | ) | (340.7 | ) | ||||||||||||
Inventories, prepaid expenses and other current assets | Inventories, prepaid expenses and other current assets | 28.1 | 44.9 | (4.9 | ) | Inventories, prepaid expenses and other current assets | 128.8 | (1.9 | ) | (37.3 | ) | |||||||||||||
Accounts payable | Accounts payable | 89.8 | (15.0 | ) | (74.7 | ) | Accounts payable | (26.8 | ) | 129.4 | (59.7 | ) | ||||||||||||
Income taxes | Income taxes | 169.7 | (64.4 | ) | 3.3 | Income taxes | 173.4 | (33.4 | ) | (396.4 | ) | |||||||||||||
Other accrued liabilities | Other accrued liabilities | 38.4 | 383.0 | (14.3 | ) | Other accrued liabilities | (3.9 | ) | (87.4 | ) | (146.4 | ) | ||||||||||||
Cash provided by operations | Cash provided by operations | 6,059.6 | 6,539.1 | 6,730.3 | Cash provided by operations | 8,122.1 | 6,966.7 | 5,551.2 | ||||||||||||||||
Investing activities | Investing activities | Investing activities | ||||||||||||||||||||||
Capital expenditures | Capital expenditures | (1,821.1 | ) | (1,813.9 | ) | (2,583.4 | ) | Capital expenditures | (2,393.7 | ) | (2,741.7 | ) | (1,853.7 | ) | ||||||||||
Purchases of restaurant businesses | (109.5 | ) | (140.6 | ) | (170.5 | ) | ||||||||||||||||||
Purchases of restaurant and other businesses | Purchases of restaurant and other businesses | (540.9 | ) | (101.7 | ) | (77.0 | ) | |||||||||||||||||
Sales of restaurant businesses | Sales of restaurant businesses | 975.6 | 341.1 | 403.1 | Sales of restaurant businesses | 340.8 | 530.8 | 974.8 | ||||||||||||||||
Proceeds from sale of businesses in China and Hong Kong | Proceeds from sale of businesses in China and Hong Kong | — | — | 1,597.0 | ||||||||||||||||||||
Sales of property | Sales of property | 82.9 | 213.1 | 86.8 | Sales of property | 151.2 | 160.4 | 166.8 | ||||||||||||||||
Other | Other | (109.5 | ) | (19.7 | ) | (40.9 | ) | Other | (628.5 | ) | (302.9 | ) | (245.9 | ) | ||||||||||
Cash used for investing activities | (981.6 | ) | (1,420.0 | ) | (2,304.9 | ) | ||||||||||||||||||
Cash provided by (used for) investing activities | Cash provided by (used for) investing activities | (3,071.1 | ) | (2,455.1 | ) | 562.0 | ||||||||||||||||||
Financing activities | Financing activities | Financing activities | ||||||||||||||||||||||
Net short-term borrowings | Net short-term borrowings | (286.2 | ) | 589.7 | 510.4 | Net short-term borrowings | 799.2 | 95.9 | (1,050.3 | ) | ||||||||||||||
Long-term financing issuances | Long-term financing issuances | 3,779.5 | 10,220.0 | 1,540.6 | Long-term financing issuances | 4,499.0 | 3,794.5 | 4,727.5 | ||||||||||||||||
Long-term financing repayments | Long-term financing repayments | (822.9 | ) | (1,054.5 | ) | (548.1 | ) | Long-term financing repayments | (2,061.9 | ) | (1,759.6 | ) | (1,649.4 | ) | ||||||||||
Treasury stock purchases | Treasury stock purchases | (11,171.0 | ) | (6,099.2 | ) | (3,198.6 | ) | Treasury stock purchases | (4,976.2 | ) | (5,207.7 | ) | (4,685.7 | ) | ||||||||||
Common stock dividends | Common stock dividends | (3,058.2 | ) | (3,230.3 | ) | (3,216.1 | ) | Common stock dividends | (3,581.9 | ) | (3,255.9 | ) | (3,089.2 | ) | ||||||||||
Proceeds from stock option exercises | Proceeds from stock option exercises | 299.4 | 317.2 | 235.4 | Proceeds from stock option exercises | 350.5 | 403.2 | 456.8 | ||||||||||||||||
Excess tax benefit on share-based compensation | — | 51.1 | 70.9 | |||||||||||||||||||||
Other | Other | (3.0 | ) | (58.7 | ) | (12.8 | ) | Other | (23.5 | ) | (20.0 | ) | (20.5 | ) | ||||||||||
Cash provided by (used for) financing activities | (11,262.4 | ) | 735.3 | (4,618.3 | ) | |||||||||||||||||||
Cash (used for) financing activities | Cash (used for) financing activities | (4,994.8 | ) | (5,949.6 | ) | (5,310.8 | ) | |||||||||||||||||
Effect of exchange rates on cash and equivalents | Effect of exchange rates on cash and equivalents | (103.7 | ) | (246.8 | ) | (527.9 | ) | Effect of exchange rates on cash and equivalents | (23.7 | ) | (159.8 | ) | 264.0 | |||||||||||
Cash and equivalents increase (decrease) | Cash and equivalents increase (decrease) | (6,288.1 | ) | 5,607.6 | (720.8 | ) | Cash and equivalents increase (decrease) | 32.5 | (1,597.8 | ) | 1,066.4 | |||||||||||||
Cash balance of businesses held for sale at end of year | (174.0 | ) | — | — | ||||||||||||||||||||
Change in cash balances of businesses held for sale | Change in cash balances of businesses held for sale | — | — | 174.0 | ||||||||||||||||||||
Cash and equivalents at beginning of year | Cash and equivalents at beginning of year | 7,685.5 | 2,077.9 | 2,798.7 | Cash and equivalents at beginning of year | 866.0 | 2,463.8 | 1,223.4 | ||||||||||||||||
Cash and equivalents at end of year | Cash and equivalents at end of year | $ | 1,223.4 | $ | 7,685.5 | $ | 2,077.9 | Cash and equivalents at end of year | $ | 898.5 | $ | 866.0 | $ | 2,463.8 | ||||||||||
Supplemental cash flow disclosures | Supplemental cash flow disclosures | Supplemental cash flow disclosures | ||||||||||||||||||||||
Interest paid | Interest paid | $ | 873.5 | $ | 640.8 | $ | 573.2 | Interest paid | $ | 1,066.5 | $ | 959.6 | $ | 885.2 | ||||||||||
Income taxes paid | Income taxes paid | 2,387.5 | 1,985.4 | 2,388.3 | Income taxes paid | 1,589.7 | 1,734.4 | 2,786.3 |
Common stock issued | Accumulated other comprehensive income (loss) | Common stock in treasury | Total shareholders’ equity | Common stock issued | Accumulated other comprehensive income (loss) | Common stock in treasury | Total shareholders’ equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | Retained earnings | Pensions | Cash flow hedges | Foreign currency translation | Additional paid-in capital | Retained earnings | Pensions | Cash flow hedges | Foreign currency translation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In millions, except per share data | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2013 | 1,660.6 | $ | 16.6 | $ | 5,994.1 | $ | 41,751.2 | $ | (142.7 | ) | $ | (2.3 | ) | $ | 572.6 | (670.2 | ) | $ | (32,179.8 | ) | $ | 16,009.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2016 | 1,660.6 | $ | 16.6 | $ | 6,757.9 | $ | 46,222.7 | $ | (207.1 | ) | $ | 22.9 | $ | (2,908.7 | ) | (841.3 | ) | $ | (52,108.6 | ) | $ | (2,204.3 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 4,757.8 | 4,757.8 | 5,192.3 | 5,192.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | (24.2 | ) | 33.3 | (1,956.4 | ) | (1,947.3 | ) | 16.9 | (39.4 | ) | 937.0 | 914.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 2,810.5 | 6,106.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($3.28 per share) | (3,216.1 | ) | (3,216.1 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($3.83 per share) | (3,089.2 | ) | (3,089.2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | (33.1 | ) | (3,175.3 | ) | (3,175.3 | ) | (31.4 | ) | (4,650.5 | ) | (4,650.5 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 112.8 | 112.8 | 117.5 | 117.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises and other (including tax benefits of $70.2) | 132.2 | 1.6 | 5.6 | 178.0 | 311.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2014 | 1,660.6 | 16.6 | 6,239.1 | 43,294.5 | (166.9 | ) | 31.0 | (1,383.8 | ) | (697.7 | ) | (35,177.1 | ) | 12,853.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises and other | 197.0 | 6.2 | 254.7 | 451.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | 1,660.6 | 16.6 | 7,072.4 | 48,325.8 | (190.2 | ) | (16.5 | ) | (1,971.7 | ) | (866.5 | ) | (56,504.4 | ) | (3,268.0 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 4,529.3 | 4,529.3 | 5,924.3 | 5,924.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | (3.0 | ) | (11.0 | ) | (1,346.1 | ) | (1,360.1 | ) | (26.4 | ) | 48.9 | (453.6 | ) | (431.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 3,169.2 | 5,493.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($3.44 per share) | (3,230.3 | ) | (3,230.3 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adoption of ASC 606 (1) | (450.2 | ) | (450.2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adoption of ASU 2016-16 (2) | (57.0 | ) | (57.0 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($4.19 per share) | (3,255.9 | ) | (3,255.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | (61.8 | ) | (6,182.2 | ) | (6,182.2 | ) | (32.2 | ) | (5,247.5 | ) | (5,247.5 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 110.0 | 110.0 | 125.1 | 125.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises and other (including tax benefits of $44.8) | 184.3 | 1.0 | 5.7 | 182.5 | 367.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | 1,660.6 | 16.6 | 6,533.4 | 44,594.5 | (169.9 | ) | 20.0 | (2,729.9 | ) | (753.8 | ) | (41,176.8 | ) | 7,087.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises and other | 178.5 | 5.2 | 223.4 | 401.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 1,660.6 | 16.6 | 7,376.0 | 50,487.0 | (216.6 | ) | 32.4 | (2,425.3 | ) | (893.5 | ) | (61,528.5 | ) | (6,258.4 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 4,686.5 | 4,686.5 | 6,025.4 | 6,025.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | (37.2 | ) | 2.9 | (178.8 | ) | (213.1 | ) | (27.1 | ) | (20.4 | ) | 174.3 | 126.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 4,473.4 | 6,152.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($3.61 per share) | (3,058.2 | ) | (3,058.2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends ($4.73 per share) | (3,581.9 | ) | (3,581.9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury stock purchases | (92.3 | ) | (11,141.5 | ) | (11,141.5 | ) | (25.0 | ) | (4,980.5 | ) | (4,980.5 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 131.3 | 131.3 | 109.6 | 109.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises and other (including tax benefits of $0.6) | 93.2 | (0.1 | ) | 4.8 | 209.7 | 302.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2016 | 1,660.6 | $ | 16.6 | $ | 6,757.9 | $ | 46,222.7 | $ | (207.1 | ) | $ | 22.9 | $ | (2,908.7 | ) | (841.3 | ) | $ | (52,108.6 | ) | $ | (2,204.3 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises and other | 168.3 | 4.2 | 180.4 | 348.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 1,660.6 | $ | 16.6 | $ | 7,653.9 | $ | 52,930.5 | $ | (243.7 | ) | $ | 12.0 | $ | (2,251.0 | ) | (914.3 | ) | $ | (66,328.6 | ) | $ | (8,210.3 | ) |
Notes to Consolidated Financial Statements |
Summary of Significant Accounting Policies |
Restaurants at December 31, | 2019 | 2018 | 2017 | |||||
Conventional franchised | 21,837 | 21,685 | 21,366 | |||||
Developmental licensed | 7,648 | 7,225 | 6,945 | |||||
Foreign affiliated | 6,574 | 6,175 | 5,797 | |||||
Total Franchised | 36,059 | 35,085 | 34,108 | |||||
Company-operated | 2,636 | 2,770 | 3,133 | |||||
Total Systemwide restaurants | 38,695 | 37,855 | 37,241 |
Restaurants at December 31, | 2016 | 2015 | 2014 | |||||
Conventional franchised | 21,559 | 21,147 | 20,774 | |||||
Developmental licensed | 6,300 | 5,529 | 5,228 | |||||
Foreign affiliated | 3,371 | 3,405 | 3,542 | |||||
Franchised | 31,230 | 30,081 | 29,544 | |||||
Company-operated | 5,669 | 6,444 | 6,714 | |||||
Systemwide restaurants | 36,899 | 36,525 | 36,258 |
In millions | U.S. | International Operated Markets | International Developmental Licensed Markets & Corporate | Consolidated | |||||||||||
Balance at December 31, 2018 | $ | 1,276.5 | $ | 1,055.0 | $ | — | $ | 2,331.5 | |||||||
Business acquisitions | 348.8 | — | — | 348.8 | |||||||||||
Net restaurant purchases (sales) | (9.5 | ) | 5.7 | 99.4 | 95.6 | ||||||||||
Impairment losses | — | — | (99.4 | ) | (99.4 | ) | |||||||||
Currency translation | — | 0.9 | — | 0.9 | |||||||||||
Balance at December 31, 2019 | $ | 1,615.8 | $ | 1,061.6 | $ | — | $ | 2,677.4 |
▪ | 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 Financial Assets and Liabilities Measured at Fair Value |
12/31/2019 | |||||||||||||
In millions | Level 1 (1) | Level 2 | Carrying Value | ||||||||||
Derivative assets | $ | 179.1 | $ | 45.6 | $ | 224.7 | |||||||
Derivative liabilities | $ | (11.3 | ) | $ | (11.3 | ) | |||||||
12/31/2018 | |||||||||||||
In millions | Level 1 (1) | Level 2 | Carrying Value | ||||||||||
Derivative assets | $ | 167.1 | $ | 39.2 | $ | 206.3 | |||||||
Derivative liabilities | $ | (16.6 | ) | $ | (16.6 | ) |
(1) | Level 1 is comprised of derivatives that hedge market driven changes in liabilities associated with the Company’s supplemental benefit plans. |
▪ | Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis |
▪ | Certain Financial Assets and Liabilities not Measured at Fair Value |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
In millions | Balance Sheet Classification | 2019 | 2018 | Balance Sheet Classification | 2019 | 2018 | |||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||
Foreign currency | Prepaid expenses and other current assets | $ | 10.0 | $ | 30.9 | Accrued payroll and other liabilities | $ | (5.2 | ) | $ | (0.7 | ) | |||||||
Interest rate | Prepaid expenses and other current assets | Accrued payroll and other liabilities | — | (0.1 | ) | ||||||||||||||
Foreign currency | Miscellaneous other assets | 9.5 | 3.8 | Other long-term liabilities | (1.2 | ) | (1.3 | ) | |||||||||||
Interest rate | Miscellaneous other assets | 12.1 | — | Other long-term liabilities | — | (11.8 | ) | ||||||||||||
Total derivatives designated as hedging instruments | $ | 31.6 | $ | 34.7 | $ | (6.4 | ) | $ | (13.9 | ) | |||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||
Equity | Prepaid expenses and other current assets | $ | 1.6 | $ | 167.1 | Accrued payroll and other liabilities | $ | (0.1 | ) | $ | (2.7 | ) | |||||||
Foreign currency | Prepaid expenses and other current assets | 12.4 | 4.5 | Accrued payroll and other liabilities | (4.8 | ) | — | ||||||||||||
Equity | Miscellaneous other assets | 179.1 | — | ||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 193.1 | $ | 171.6 | (4.9 | ) | $ | (2.7 | ) | ||||||||||
Total derivatives | $ | 224.7 | $ | 206.3 | $ | (11.3 | ) | $ | (16.6 | ) |
Location of Gain or Loss Recognized in Income on Derivative | Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified into Income from AOCI | Gain (Loss) Recognized in Income on Derivative | |||||||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | 22.5 | $ | 60.0 | $ | 50.3 | $ | (2.2 | ) | ||||||||||||||
Interest rate | Interest expense | (1.3 | ) | (1.2 | ) | |||||||||||||||||||
Cash flow hedges | $ | 22.5 | $ | 60.0 | $ | 49.0 | $ | (3.4 | ) | |||||||||||||||
Foreign currency denominated debt | Nonoperating income/expense | $ | 317.3 | $ | 682.9 | |||||||||||||||||||
Foreign currency derivatives | Nonoperating income/expense | 11.8 | 1.3 | |||||||||||||||||||||
Foreign currency derivatives(1) | Interest expense | $ | 11.7 | $ | 4.0 | |||||||||||||||||||
Net investment hedges | $ | 329.1 | $ | 684.2 | $ | 11.7 | $ | 4.0 | ||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | 14.2 | $ | 22.1 | |||||||||||||||||||
Equity | Selling, general & administrative expenses | 71.8 | 0.4 | |||||||||||||||||||||
Undesignated derivatives | $ | 86.0 | $ | 22.5 | ||||||||||||||||||||
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing. |
▪ | 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 Financial Assets and Liabilities Measured at Fair Value |
12/31/2019 | |||||||||||||
In millions | Level 1 (1) | Level 2 | Carrying Value | ||||||||||
Derivative assets | $ | 179.1 | $ | 45.6 | $ | 224.7 | |||||||
Derivative liabilities | $ | (11.3 | ) | $ | (11.3 | ) | |||||||
12/31/2018 | |||||||||||||
In millions | Level 1 (1) | Level 2 | Carrying Value | ||||||||||
Derivative assets | $ | 167.1 | $ | 39.2 | $ | 206.3 | |||||||
Derivative liabilities | $ | (16.6 | ) | $ | (16.6 | ) |
(1) | Level 1 is comprised of derivatives that hedge market driven changes in liabilities associated with the Company’s supplemental benefit plans. |
▪ | Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis |
▪ | Certain Financial Assets and Liabilities not Measured at Fair Value |
In millions, except per share data | 2016 | 2015 | 2014 | ||||||||
Share-based compensation expense | $ | 131.3 | $ | 110.0 | $ | 112.8 | |||||
After tax | $ | 89.6 | $ | 76.0 | $ | 72.8 | |||||
Earnings per common share-diluted | $ | 0.11 | $ | 0.08 | $ | 0.08 |
2016 | 2015 | 2014 | |||||||
Expected dividend yield | 3.0 | % | 3.6 | % | 3.3 | % | |||
Expected stock price volatility | 19.2 | % | 18.8 | % | 20.0 | % | |||
Risk-free interest rate | 1.2 | % | 1.7 | % | 2.0 | % | |||
Expected life of options (in years) | 5.9 | 6.0 | 6.1 | ||||||
Fair value per option granted | $ | 13.65 | $ | 10.43 | $ | 12.23 |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
In millions | Balance Sheet Classification | 2019 | 2018 | Balance Sheet Classification | 2019 | 2018 | |||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||
Foreign currency | Prepaid expenses and other current assets | $ | 10.0 | $ | 30.9 | Accrued payroll and other liabilities | $ | (5.2 | ) | $ | (0.7 | ) | |||||||
Interest rate | Prepaid expenses and other current assets | Accrued payroll and other liabilities | — | (0.1 | ) | ||||||||||||||
Foreign currency | Miscellaneous other assets | 9.5 | 3.8 | Other long-term liabilities | (1.2 | ) | (1.3 | ) | |||||||||||
Interest rate | Miscellaneous other assets | 12.1 | — | Other long-term liabilities | — | (11.8 | ) | ||||||||||||
Total derivatives designated as hedging instruments | $ | 31.6 | $ | 34.7 | $ | (6.4 | ) | $ | (13.9 | ) | |||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||
Equity | Prepaid expenses and other current assets | $ | 1.6 | $ | 167.1 | Accrued payroll and other liabilities | $ | (0.1 | ) | $ | (2.7 | ) | |||||||
Foreign currency | Prepaid expenses and other current assets | 12.4 | 4.5 | Accrued payroll and other liabilities | (4.8 | ) | — | ||||||||||||
Equity | Miscellaneous other assets | 179.1 | — | ||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 193.1 | $ | 171.6 | (4.9 | ) | $ | (2.7 | ) | ||||||||||
Total derivatives | $ | 224.7 | $ | 206.3 | $ | (11.3 | ) | $ | (16.6 | ) |
Location of Gain or Loss Recognized in Income on Derivative | Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified into Income from AOCI | Gain (Loss) Recognized in Income on Derivative | |||||||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | 22.5 | $ | 60.0 | $ | 50.3 | $ | (2.2 | ) | ||||||||||||||
Interest rate | Interest expense | (1.3 | ) | (1.2 | ) | |||||||||||||||||||
Cash flow hedges | $ | 22.5 | $ | 60.0 | $ | 49.0 | $ | (3.4 | ) | |||||||||||||||
Foreign currency denominated debt | Nonoperating income/expense | $ | 317.3 | $ | 682.9 | |||||||||||||||||||
Foreign currency derivatives | Nonoperating income/expense | 11.8 | 1.3 | |||||||||||||||||||||
Foreign currency derivatives(1) | Interest expense | $ | 11.7 | $ | 4.0 | |||||||||||||||||||
Net investment hedges | $ | 329.1 | $ | 684.2 | $ | 11.7 | $ | 4.0 | ||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | 14.2 | $ | 22.1 | |||||||||||||||||||
Equity | Selling, general & administrative expenses | 71.8 | 0.4 | |||||||||||||||||||||
Undesignated derivatives | $ | 86.0 | $ | 22.5 | ||||||||||||||||||||
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing. |
In millions | U.S. | International Lead Markets | High Growth Markets | Foundational Markets & Corporate | Consolidated | ||||||||||||||
Balance at December 31, 2015 | $ | 1,293.4 | $ | 698.1 | $ | 322.4 | $ | 202.4 | $ | 2,516.3 | |||||||||
Net restaurant purchases (sales) | (10.1 | ) | 3.3 | 3.0 | (67.1 | ) | (70.9 | ) | |||||||||||
Impairment losses | — | — | — | (39.9 | ) | (39.9 | ) | ||||||||||||
Currency translation | (20.2 | ) | (7.7 | ) | (4.0 | ) | (31.9 | ) | |||||||||||
Assets of businesses held for sale | — | — | (37.6 | ) | 0.5 | (37.1 | ) | ||||||||||||
Balance at December 31, 2016 | $ | 1,283.3 | $ | 681.2 | $ | 280.1 | $ | 91.9 | $ | 2,336.5 |
▪ | 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 Financial Assets and Liabilities Measured at Fair Value |
December 31, 2016 | ||||||||||||||||||||||||||
12/31/2019 | 12/31/2019 | |||||||||||||||||||||||||
In millions | In millions | Level 1* | Level 2 | Carrying Value | In millions | Level 1 (1) | Level 2 | Carrying Value | ||||||||||||||||||
Derivative assets | Derivative assets | $ | 134.3 | $ | 47.0 | $ | 181.3 | Derivative assets | $ | 179.1 | $ | 45.6 | $ | 224.7 | ||||||||||||
Derivative liabilities | Derivative liabilities | $ | (5.6 | ) | $ | (5.6 | ) | Derivative liabilities | $ | (11.3 | ) | $ | (11.3 | ) | ||||||||||||
December 31, 2015 | ||||||||||||||||||||||||||
12/31/2018 | 12/31/2018 | |||||||||||||||||||||||||
In millions | In millions | Level 1* | Level 2 | Carrying Value | In millions | Level 1 (1) | Level 2 | Carrying Value | ||||||||||||||||||
Derivative assets | Derivative assets | $ | 139.9 | $ | 65.4 | $ | 205.3 | Derivative assets | $ | 167.1 | $ | 39.2 | $ | 206.3 | ||||||||||||
Derivative liabilities | Derivative liabilities | $ | (44.4 | ) | $ | (44.4 | ) | Derivative liabilities | $ | (16.6 | ) | $ | (16.6 | ) |
Level 1 is comprised of derivatives that hedge market driven changes in liabilities associated with the Company’s supplemental benefit plans. |
▪ | Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis |
▪ | Certain Financial Assets and Liabilities not Measured at Fair Value |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
In millions | Balance Sheet Classification | 2019 | 2018 | Balance Sheet Classification | 2019 | 2018 | |||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||
Foreign currency | Prepaid expenses and other current assets | $ | 10.0 | $ | 30.9 | Accrued payroll and other liabilities | $ | (5.2 | ) | $ | (0.7 | ) | |||||||
Interest rate | Prepaid expenses and other current assets | Accrued payroll and other liabilities | — | (0.1 | ) | ||||||||||||||
Foreign currency | Miscellaneous other assets | 9.5 | 3.8 | Other long-term liabilities | (1.2 | ) | (1.3 | ) | |||||||||||
Interest rate | Miscellaneous other assets | 12.1 | — | Other long-term liabilities | — | (11.8 | ) | ||||||||||||
Total derivatives designated as hedging instruments | $ | 31.6 | $ | 34.7 | $ | (6.4 | ) | $ | (13.9 | ) | |||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||
Equity | Prepaid expenses and other current assets | $ | 1.6 | $ | 167.1 | Accrued payroll and other liabilities | $ | (0.1 | ) | $ | (2.7 | ) | |||||||
Foreign currency | Prepaid expenses and other current assets | 12.4 | 4.5 | Accrued payroll and other liabilities | (4.8 | ) | — | ||||||||||||
Equity | Miscellaneous other assets | 179.1 | — | ||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 193.1 | $ | 171.6 | (4.9 | ) | $ | (2.7 | ) | ||||||||||
Total derivatives | $ | 224.7 | $ | 206.3 | $ | (11.3 | ) | $ | (16.6 | ) |
Location of Gain or Loss Recognized in Income on Derivative | Gain (Loss) Recognized in AOCI | Gain (Loss) Reclassified into Income from AOCI | Gain (Loss) Recognized in Income on Derivative | |||||||||||||||||||||
In millions | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | 22.5 | $ | 60.0 | $ | 50.3 | $ | (2.2 | ) | ||||||||||||||
Interest rate | Interest expense | (1.3 | ) | (1.2 | ) | |||||||||||||||||||
Cash flow hedges | $ | 22.5 | $ | 60.0 | $ | 49.0 | $ | (3.4 | ) | |||||||||||||||
Foreign currency denominated debt | Nonoperating income/expense | $ | 317.3 | $ | 682.9 | |||||||||||||||||||
Foreign currency derivatives | Nonoperating income/expense | 11.8 | 1.3 | |||||||||||||||||||||
Foreign currency derivatives(1) | Interest expense | $ | 11.7 | $ | 4.0 | |||||||||||||||||||
Net investment hedges | $ | 329.1 | $ | 684.2 | $ | 11.7 | $ | 4.0 | ||||||||||||||||
Foreign currency | Nonoperating income/expense | $ | 14.2 | $ | 22.1 | |||||||||||||||||||
Equity | Selling, general & administrative expenses | 71.8 | 0.4 | |||||||||||||||||||||
Undesignated derivatives | $ | 86.0 | $ | 22.5 | ||||||||||||||||||||
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing. |
Derivative Assets | Derivative Liabilities | ||||||||||||||||||
In millions | Balance Sheet Classification | 2016 | 2015 | Balance Sheet Classification | 2016 | 2015 | |||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||
Foreign currency | Prepaid expenses and other current assets | $ | 31.7 | $ | 55.0 | Accrued payroll and other liabilities | $ | (2.0 | ) | $ | (22.5 | ) | |||||||
Interest rate | Prepaid expenses and other current assets | 1.0 | — | ||||||||||||||||
Foreign currency | Miscellaneous other assets | 2.5 | 0.6 | Other long-term liabilities | (0.1 | ) | (13.0 | ) | |||||||||||
Interest rate | Miscellaneous other assets | 1.7 | 5.3 | Other long-term liabilities | (1.6 | ) | (3.4 | ) | |||||||||||
Total derivatives designated as hedging instruments | $ | 36.9 | $ | 60.9 | $ | (3.7 | ) | $ | (38.9 | ) | |||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||
Equity | Prepaid expenses and other current assets | $ | 134.3 | $ | 0.3 | Accrued payroll and other liabilities | $ | (1.9 | ) | $ | — | ||||||||
Foreign currency | Prepaid expenses and other current assets | 10.1 | 4.2 | Accrued payroll and other liabilities | — | (5.5 | ) | ||||||||||||
Equity | Miscellaneous other assets | — | 139.9 | ||||||||||||||||
Total derivatives not designated as hedging instruments | $ | 144.4 | $ | 144.4 | $ | (1.9 | ) | $ | (5.5 | ) | |||||||||
Total derivatives | $ | 181.3 | $ | 205.3 | $ | (5.6 | ) | $ | (44.4 | ) |
Derivatives in Hedging Relationships | Gain (Loss) Recognized In Earnings on Hedging Derivative | Gain (Loss) Recognized In Earnings on Hedged Items | ||||||||||||||||
In millions | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
Interest rate | $ | (1.8 | ) | $ | (3.4 | ) | $ | 1.8 | $ | 3.4 |
Gain (Loss) Recognized in AOCI (Effective Portion) | Gain (Loss) Reclassified From AOCI Into Earnings (Effective Portion) | Gain (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing and Ineffective Portion) | |||||||||||||||||||||||||
Derivatives in Hedging Relationships | |||||||||||||||||||||||||||
In millions | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
Foreign currency | $ | 28.6 | $ | 35.3 | $ | 24.6 | $ | 53.0 | $ | — | $ | 22.9 | |||||||||||||||
Interest rate(1) | — | — | (0.5 | ) | (0.5 | ) | — | — | |||||||||||||||||||
$ | 28.6 | $ | 35.3 | $ | 24.1 | $ | 52.5 | $ | — | $ | 22.9 |
Derivatives in Hedging Relationships | Gain (Loss) Recognized in AOCI (Effective Portion) | ||||||||
In millions | 2016 | 2015 | |||||||
Foreign currency denominated debt | $ | 654.9 | $ | 668.1 | |||||
Foreign currency derivatives | 9.9 | 79.1 | |||||||
$ | 664.8 | $ | 747.2 |
Derivatives Not Designated for Hedge Accounting | Gain (Loss) Recognized in Earnings | ||||||||
In millions | 2016 | 2015 | |||||||
Foreign currency | $ | 4.3 | $ | 14.6 | |||||
Equity | 26.0 | 38.9 | |||||||
$ | 30.3 | $ | 53.5 |
In millions, except per share data | 2019 | 2018 | 2017 | ||||||||
Share-based compensation expense | $ | 109.6 | $ | 125.1 | $ | 117.5 | |||||
After tax | $ | 94.2 | $ | 108.1 | $ | 82.0 | |||||
Earnings per common share-diluted | $ | 0.12 | $ | 0.14 | $ | 0.10 |
2019 | 2018 | 2017 | |||||||
Expected dividend yield | 2.7 | % | 2.6 | % | 3.1 | % | |||
Expected stock price volatility | 18.9 | % | 18.7 | % | 18.4 | % | |||
Risk-free interest rate | 2.5 | % | 2.7 | % | 2.2 | % | |||
Expected life of options (in years) | 5.8 | 5.8 | 5.9 | ||||||
Fair value per option granted | $ | 25.60 | $ | 23.80 | $ | 16.10 |
Segment and Geographic Information |
In millions | 2019 | 2018 | 2017 | |||||||||
U.S. | $ | 7,842.7 | $ | 7,665.8 | $ | 8,006.4 | ||||||
International Operated Markets | 11,398.6 | 11,506.7 | 11,115.9 | |||||||||
International Developmental Licensed Markets & Corporate | 1,835.2 | 1,852.7 | 3,698.1 | |||||||||
Total revenues | $ | 21,076.5 | $ | 21,025.2 | $ | 22,820.4 | ||||||
U.S. | $ | 4,068.7 | $ | 4,015.6 | $ | 4,022.4 | ||||||
International Operated Markets | 4,789.0 | 4,643.2 | 4,173.6 | |||||||||
International Developmental Licensed Markets & Corporate | 212.1 | 163.8 | 1,356.7 | |||||||||
Total operating income | $ | 9,069.8 | $ | 8,822.6 | $ | 9,552.7 | ||||||
U.S. | $ | 21,376.9 | $ | 14,483.8 | $ | 12,648.6 | ||||||
International Operated Markets | 22,847.5 | 17,302.3 | 16,254.8 | |||||||||
International Developmental Licensed Markets & Corporate | 3,286.4 | 1,025.1 | 4,900.3 | |||||||||
Total assets * | $ | 47,510.8 | $ | 32,811.2 | $ | 33,803.7 | ||||||
U.S. | $ | 1,480.5 | $ | 1,849.8 | $ | 861.2 | ||||||
International Operated Markets | 886.6 | 762.4 | 808.0 | |||||||||
International Developmental Licensed Markets & Corporate | 26.6 | 129.5 | 184.5 | |||||||||
Total capital expenditures | $ | 2,393.7 | $ | 2,741.7 | $ | 1,853.7 | ||||||
U.S. | $ | 730.2 | $ | 598.4 | $ | 524.1 | ||||||
International Operated Markets | 669.3 | 703.9 | 687.1 | |||||||||
International Developmental Licensed Markets & Corporate | 218.4 | 179.7 | 152.2 | |||||||||
Total depreciation and amortization | $ | 1,617.9 | $ | 1,482.0 | $ | 1,363.4 |
Property and Equipment |
In millions | December 31, 2019 | 2018 | |||||
Land | $ | 6,026.4 | $ | 5,521.4 | |||
Buildings and improvements on owned land | 17,003.7 | 15,377.4 | |||||
Buildings and improvements on leased land | 12,605.9 | 12,863.6 | |||||
Equipment, signs and seating | 2,994.5 | 2,942.6 | |||||
Other | 420.4 | 488.6 | |||||
Property and equipment, at cost | 39,050.9 | 37,193.6 | |||||
Accumulated depreciation and amortization | (14,890.9 | ) | (14,350.9 | ) | |||
Net property and equipment | $ | 24,160.0 | $ | 22,842.7 |
In millions | December 31, 2016 | 2015 | |||||
Land | $ | 5,465.0 | $ | 5,582.5 | |||
Buildings and improvements on owned land | 13,695.2 | 14,011.7 | |||||
Buildings and improvements on leased land | 11,511.9 | 12,892.9 | |||||
Equipment, signs and seating | 3,270.9 | 4,658.5 | |||||
Other | 500.4 | 546.8 | |||||
Property and equipment, at cost (1) | 34,443.4 | 37,692.4 | |||||
Accumulated depreciation and amortization (1) | (13,185.8 | ) | (14,574.8 | ) | |||
Net property and equipment | $ | 21,257.6 | $ | 23,117.6 |
In millions | 2019 | 2018 | 2017 | ||||||||
Rents | $ | 7,500.2 | $ | 7,082.2 | $ | 6,496.3 | |||||
Royalties | 4,107.1 | 3,886.3 | 3,518.7 | ||||||||
Initial fees | 48.4 | 44.0 | 86.5 | ||||||||
Revenues from franchised restaurants | $ | 11,655.7 | $ | 11,012.5 | $ | 10,101.5 |
In millions | Owned sites | Leased sites | Total | |||||||||
2020 | $ | 1,558.5 | $ | 1,449.8 | $ | 3,008.3 | ||||||
2021 | 1,501.4 | 1,382.5 | 2,883.9 | |||||||||
2022 | 1,439.3 | 1,310.5 | 2,749.8 | |||||||||
2023 | 1,384.8 | 1,246.4 | 2,631.2 | |||||||||
2024 | 1,344.4 | 1,196.7 | 2,541.1 | |||||||||
Thereafter | 11,155.2 | 9,354.5 | 20,509.7 | |||||||||
Total minimum payments | $ | 18,383.6 | $ | 15,940.4 | $ | 34,324.0 |
Leasing Arrangements |
In millions | 2019 | 2018 | 2017 | ||||||||
Restaurants | $ | 1,530.4 | $ | 1,433.9 | $ | 1,562.5 | |||||
Other | 76.4 | 87.9 | 82.0 | ||||||||
Total rent expense | $ | 1,606.8 | $ | 1,521.8 | $ | 1,644.5 |
In millions | 2016 | 2015 | 2014 | ||||||||
Gains on sales of restaurant businesses | $ | (283.4 | ) | $ | (145.9 | ) | $ | (137.4 | ) | ||
Equity in (earnings) losses of unconsolidated affiliates | (54.8 | ) | 146.8 | 8.9 | |||||||
Asset dispositions and other (income) expense, net | 72.3 | (26.6 | ) | 108.2 | |||||||
Impairment and other charges (gains), net | 341.6 | 235.1 | 38.9 | ||||||||
Total | $ | 75.7 | $ | 209.4 | $ | 18.6 |
In millions | Total * | ||
2020 | $ | 1,161.9 | |
2021 | 1,132.8 | ||
2022 | 1,091.4 | ||
2023 | 1,052.6 | ||
2024 | 1,010.3 | ||
Thereafter | 13,573.6 | ||
Total lease payments | 19,022.6 | ||
Less: imputed interest | (5,643.8 | ) | |
Present value of lease liability | $ | 13,378.8 |
In millions | Restaurant | Other | Total * | |||||||||
2019 | $ | 1,093.4 | $ | 51.3 | $ | 1,144.7 | ||||||
2020 | 1,032.1 | 51.0 | 1,083.1 | |||||||||
2021 | 955.5 | 45.7 | 1,001.2 | |||||||||
2022 | 873.8 | 35.7 | 909.5 | |||||||||
2023 | 806.0 | 24.6 | 830.6 | |||||||||
Thereafter | 7,132.3 | 164.9 | 7,297.2 | |||||||||
Total minimum payments | $ | 11,893.1 | $ | 373.2 | $ | 12,266.3 |
Contingencies |
In millions | 2016 | 2015 | 2014 | ||||||||
Rents | $ | 6,107.6 | $ | 5,860.6 | $ | 6,106.7 | |||||
Royalties | 3,129.9 | 2,980.7 | 3,085.1 | ||||||||
Initial fees | 89.4 | 83.4 | 80.2 | ||||||||
Revenues from franchised restaurants | $ | 9,326.9 | $ | 8,924.7 | $ | 9,272.0 |
In millions | Owned sites | Leased sites | Total (1) | |||||||||
2017 | $ | 1,319.1 | $ | 1,370.5 | $ | 2,689.6 | ||||||
2018 | 1,290.6 | 1,327.0 | 2,617.6 | |||||||||
2019 | 1,261.0 | 1,279.1 | 2,540.1 | |||||||||
2020 | 1,219.9 | 1,205.9 | 2,425.8 | |||||||||
2021 | 1,167.5 | 1,127.4 | 2,294.9 | |||||||||
Thereafter | 10,018.5 | 8,745.2 | 18,763.7 | |||||||||
Total minimum payments | $ | 16,276.6 | $ | 15,055.1 | $ | 31,331.7 |
In millions | 2019 | 2018 | 2017 | ||||||||
Gains on sales of restaurant businesses | $ | (127.5 | ) | $ | (304.1 | ) | $ | (295.4 | ) | ||
Equity in earnings of unconsolidated affiliates | (153.8 | ) | (151.5 | ) | (183.7 | ) | |||||
Asset dispositions and other (income) expense, net | 23.1 | (12.9 | ) | 18.7 | |||||||
Impairment and other charges (gains), net | 74.3 | 231.7 | (702.8 | ) | |||||||
Total | $ | (183.9 | ) | $ | (236.8 | ) | $ | (1,163.2 | ) |
▪ | Gains on sales of restaurant businesses |
▪ | Equity in earnings of unconsolidated affiliates |
▪ | Asset dispositions and other (income) expense, net |
▪ | Impairment and other charges (gains), net |
In millions | 2016 | 2015 | 2014 | ||||||||
Company-operated restaurants: | |||||||||||
U.S. | $ | 48.6 | $ | 59.2 | $ | 61.3 | |||||
Outside the U.S. | 613.3 | 652.7 | 708.3 | ||||||||
Total | 661.9 | 711.9 | 769.6 | ||||||||
Franchised restaurants: | |||||||||||
U.S. | 471.2 | 463.7 | 446.3 | ||||||||
Outside the U.S. | 589.8 | 565.0 | 610.1 | ||||||||
Total | 1,061.0 | 1,028.7 | 1,056.4 | ||||||||
Other | 91.3 | 98.4 | 106.3 | ||||||||
Total rent expense | $ | 1,814.2 | $ | 1,839.0 | $ | 1,932.3 |
In millions | Restaurant | Other | Total (1) | ||||||||||
2017 | $ | 1,233.6 | $ | 69.4 | $ | 1,303.0 | |||||||
2018 | 1,139.4 | 60.5 | 1,199.9 | ||||||||||
2019 | 1,049.9 | 52.6 | 1,102.5 | ||||||||||
2020 | 957.5 | 43.3 | 1,000.8 | ||||||||||
2021 | 854.6 | 37.3 | 891.9 | ||||||||||
Thereafter | 6,644.1 | 110.3 | 6,754.4 | ||||||||||
Total minimum payments | $ | 11,879.1 | $ | 373.4 | $ | 12,252.5 |
Income Taxes |
In millions | 2019 | 2018 | 2017 | ||||||||
U.S. | $ | 2,159.1 | $ | 2,218.0 | $ | 2,242.0 | |||||
Outside the U.S. | 5,859.0 | 5,598.1 | 6,331.5 | ||||||||
Income before provision for income taxes | $ | 8,018.1 | $ | 7,816.1 | $ | 8,573.5 |
In millions | 2016 | 2015 | 2014 | ||||||||
U.S. | $ | 2,059.4 | $ | 2,597.8 | $ | 2,681.9 | |||||
Outside the U.S. | 4,806.6 | 3,957.9 | 4,690.1 | ||||||||
Income before provision for income taxes | $ | 6,866.0 | $ | 6,555.7 | $ | 7,372.0 |
In millions | 2019 | 2018 | 2017 | ||||||||
U.S. federal | $ | 521.8 | $ | 292.9 | $ | 2,030.8 | |||||
U.S. state | 194.7 | 183.9 | 169.8 | ||||||||
Outside the U.S. | 1,126.5 | 1,312.4 | 1,217.0 | ||||||||
Current tax provision | 1,843.0 | 1,789.2 | 3,417.6 | ||||||||
U.S. federal | 38.5 | 145.7 | (120.1 | ) | |||||||
U.S. state | 20.0 | 18.7 | 12.8 | ||||||||
Outside the U.S. | 91.2 | (61.8 | ) | 70.9 | |||||||
Deferred tax provision | 149.7 | 102.6 | (36.4 | ) | |||||||
Provision for income taxes | $ | 1,992.7 | $ | 1,891.8 | $ | 3,381.2 |
In millions | 2016 | 2015 | 2014 | ||||||||
U.S. federal | $ | 1,046.6 | $ | 1,072.3 | $ | 1,124.8 | |||||
U.S. state | 121.3 | 139.5 | 148.4 | ||||||||
Outside the U.S. | 1,550.2 | 816.0 | 1,431.7 | ||||||||
Current tax provision | 2,718.1 | 2,027.8 | 2,704.9 | ||||||||
U.S. federal | (122.1 | ) | 6.8 | (81.8 | ) | ||||||
U.S. state | 14.1 | (3.9 | ) | (6.2 | ) | ||||||
Outside the U.S. | (430.6 | ) | (4.3 | ) | (2.7 | ) | |||||
Deferred tax provision | (538.6 | ) | (1.4 | ) | (90.7 | ) | |||||
Provision for income taxes | $ | 2,179.5 | $ | 2,026.4 | $ | 2,614.2 |
In millions | December 31, 2019 | 2018 | |||||||
Lease right-of-use asset | $ | 3,296.8 | $ | — | |||||
Property and equipment | 1,316.4 | 1,288.9 | |||||||
Intangible assets | 334.8 | 312.3 | |||||||
Other | 511.1 | 347.9 | |||||||
Total deferred tax liabilities | 5,459.1 | 1,949.1 | |||||||
Lease liability | (3,331.1 | ) | — | ||||||
Intangible assets | (1,051.0 | ) | (1,081.5 | ) | |||||
Property and equipment | (585.6 | ) | (658.9 | ) | |||||
Deferred foreign tax credits | (311.2 | ) | (216.6 | ) | |||||
Employee benefit plans | (192.3 | ) | (213.3 | ) | |||||
Deferred revenue | (145.5 | ) | (138.9 | ) | |||||
Operating loss carryforwards | (81.5 | ) | (45.7 | ) | |||||
Other | (323.6 | ) | (269.2 | ) | |||||
Total deferred tax assets before valuation allowance | (6,021.8 | ) | (2,624.1 | ) | |||||
Valuation allowance | 741.9 | 671.1 | |||||||
Net deferred tax (assets) liabilities | $ | 179.2 | $ | (3.9 | ) | ||||
Balance sheet presentation: | |||||||||
Deferred income taxes | $ | 1,318.1 | $ | 1,215.5 | |||||
Other assets-miscellaneous | (1,138.9 | ) | (1,219.4 | ) | |||||
Net deferred tax (assets) liabilities | $ | 179.2 | $ | (3.9 | ) |
In millions | December 31, 2016 | 2015 | |||||||
Property and equipment | $ | 1,459.8 | $ | 1,751.7 | |||||
Unrealized foreign exchange gains | 630.9 | 455.6 | |||||||
Intangible liabilities | 445.2 | 464.7 | |||||||
Other | 287.6 | 268.5 | |||||||
Total deferred tax liabilities | 2,823.5 | 2,940.5 | |||||||
Property and equipment | (650.2 | ) | (472.7 | ) | |||||
Employee benefit plans | (395.0 | ) | (390.1 | ) | |||||
Intangible assets | (170.7 | ) | (222.6 | ) | |||||
Deferred foreign tax credits | (316.8 | ) | (289.2 | ) | |||||
Operating loss carryforwards | (292.7 | ) | (419.8 | ) | |||||
Other | (338.6 | ) | (297.0 | ) | |||||
Total deferred tax assets before valuation allowance | (2,164.0 | ) | (2,091.4 | ) | |||||
Valuation allowance | 168.0 | 322.4 | |||||||
Net deferred tax liabilities | $ | 827.5 | $ | 1,171.5 | |||||
Balance sheet presentation: | |||||||||
Deferred income taxes | $ | 1,817.1 | $ | 1,704.3 | |||||
Other assets-miscellaneous | (804.0 | ) | (532.8 | ) | |||||
Liabilities of businesses held for sale | (185.6 | ) | — | ||||||
Net deferred tax liabilities | $ | 827.5 | $ | 1,171.5 |
2019 | 2018 | 2017 | ||||||
Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | 35.0 | % | ||
State income taxes, net of related federal income tax benefit | 1.8 | 1.8 | 1.2 | |||||
Foreign income taxed at different rates | 1.6 | 1.5 | (4.6 | ) | ||||
Transition tax | — | 1.0 | 13.7 | |||||
US net deferred tax liability remeasurement | — | — | (6.0 | ) | ||||
Foreign tax credit redetermination regulations | (1.0 | ) | — | — | ||||
Other, net | 1.5 | (1.1 | ) | 0.1 | ||||
Effective income tax rates | 24.9 | % | 24.2 | % | 39.4 | % |
2016 | 2015 | 2014 | ||||||
Statutory U.S. federal income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of related federal income tax benefit | 1.5 | 1.6 | 1.6 | |||||
Foreign income taxed at different rates | (6.5 | ) | (4.9 | ) | (4.8 | ) | ||
Taxes related to unfavorable lower tax court ruling and audit progression in foreign tax jurisdictions | 1.2 | — | 4.1 | |||||
Cash repatriation | — | (2.3 | ) | (1.2 | ) | |||
Other, net | 0.5 | 1.5 | 0.8 | |||||
Effective income tax rates | 31.7 | % | 30.9 | % | 35.5 | % |
In millions | 2016 | 2015 | 2019 | 2018 | ||||||||||
Balance at January 1 | $ | 781.2 | $ | 988.1 | $ | 1,342.8 | $ | 1,180.4 | ||||||
Decreases for positions taken in prior years | (37.1 | ) | (49.9 | ) | (18.3 | ) | (64.1 | ) | ||||||
Increases for positions taken in prior years | 150.1 | 30.5 | 107.1 | 180.8 | ||||||||||
Increases for positions related to the current year | 116.6 | 83.7 | 88.3 | 75.1 | ||||||||||
Settlements with taxing authorities | (17.7 | ) | (258.0 | ) | (68.6 | ) | (24.1 | ) | ||||||
Lapsing of statutes of limitations | (69.0 | ) | (13.2 | ) | (12.2 | ) | (5.3 | ) | ||||||
Balance at December 31(1) | $ | 924.1 | $ | 781.2 | $ | 1,439.1 | $ | 1,342.8 |
(1) | Of this amount, |
Employee Benefit Plans |
In millions | 2016 | 2015 | 2014 | |||||||||
U.S. | $ | 8,252.7 | $ | 8,558.9 | $ | 8,651.0 | ||||||
International Lead Markets | 7,223.4 | 7,614.9 | 8,544.5 | |||||||||
High Growth Markets | 6,160.7 | 6,172.8 | 6,845.2 | |||||||||
Foundational Markets & Corporate | 2,985.1 | 3,066.4 | 3,400.6 | |||||||||
Total revenues | $ | 24,621.9 | $ | 25,413.0 | $ | 27,441.3 | ||||||
U.S. | $ | 3,768.7 | $ | 3,612.0 | $ | 3,522.5 | ||||||
International Lead Markets | 2,838.4 | 2,712.6 | 3,034.5 | |||||||||
High Growth Markets | 1,048.8 | 841.1 | 933.9 | |||||||||
Foundational Markets & Corporate | 88.6 | (20.2 | ) | 458.3 | ||||||||
Total operating income | $ | 7,744.5 | $ | 7,145.5 | $ | 7,949.2 | ||||||
U.S. | $ | 11,960.6 | $ | 11,806.1 | $ | 11,872.1 | ||||||
International Lead Markets | 9,112.5 | 11,136.3 | 12,538.4 | |||||||||
High Growth Markets | 5,208.6 | 5,248.6 | 5,866.0 | |||||||||
Foundational Markets & Corporate | 4,742.2 | 9,747.7 | 3,950.9 | |||||||||
Total assets | $ | 31,023.9 | $ | 37,938.7 | $ | 34,227.4 | ||||||
U.S. | $ | 586.7 | $ | 533.2 | $ | 736.1 | ||||||
International Lead Markets | 635.6 | 596.1 | 792.1 | |||||||||
High Growth Markets | 493.2 | 540.5 | 804.8 | |||||||||
Foundational Markets & Corporate | 105.6 | 144.1 | 250.4 | |||||||||
Total capital expenditures | $ | 1,821.1 | $ | 1,813.9 | $ | 2,583.4 | ||||||
U.S. | $ | 510.3 | $ | 515.2 | $ | 512.2 | ||||||
International Lead Markets | 451.6 | 460.9 | 521.2 | |||||||||
High Growth Markets | 362.0 | 363.9 | 387.8 | |||||||||
Foundational Markets & Corporate | 192.6 | 215.7 | 223.3 | |||||||||
Total depreciation and amortization | $ | 1,516.5 | $ | 1,555.7 | $ | 1,644.5 |
Debt Financing |
Interest rates(1) December 31 | Amounts outstanding December 31 | Interest rates(1) December 31 | Amounts outstanding December 31 | |||||||||||||||||||||||||||||
In millions of U.S. Dollars | Maturity dates | 2016 | 2015 | 2016 | 2015 | Maturity dates | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||
Fixed | 4.0 | % | 4.0 | % | $ | 13,889.7 | $ | 14,190.6 | 4.0 | % | 4.0 | % | $ | 19,340.2 | $ | 18,075.8 | ||||||||||||||||
Floating | 3.4 | 3.3 | 3,249.8 | 3,019.6 | 2.2 | 3.4 | 2,049.3 | 1,349.9 | ||||||||||||||||||||||||
Total U.S. Dollars | 2017-2045 | 17,139.5 | 17,210.2 | |||||||||||||||||||||||||||||
Total U.S. Dollar | 2020-2049 | 21,389.5 | 19,425.7 | |||||||||||||||||||||||||||||
Fixed | 1.7 | 2.4 | 6,127.5 | 3,951.9 | 1.5 | 1.6 | 8,671.8 | 8,069.1 | ||||||||||||||||||||||||
Floating | 0.3 | 0.3 | 1,170.9 | 665.9 | 2.3 | — | 337.0 | 1,264.1 | ||||||||||||||||||||||||
Total Euro | 2017-2029 | 7,298.4 | 4,617.8 | 2020-2031 | 9,008.8 | 9,333.2 | ||||||||||||||||||||||||||
Total British Pounds Sterling - Fixed | 2020-2054 | 5.3 | 5.3 | 921.3 | 1,100.1 | |||||||||||||||||||||||||||
Total Chinese Renminbi - Floating(2) | — | 4.3 | — | 491.8 | ||||||||||||||||||||||||||||
Fixed | 2.9 | 2.9 | 106.9 | 104.0 | 3.4 | — | 771.0 | — | ||||||||||||||||||||||||
Floating | — | 0.3 | — | 208.0 | 2.0 | — | 210.6 | — | ||||||||||||||||||||||||
Total Japanese Yen | 2030 | 106.9 | 312.0 | |||||||||||||||||||||||||||||
Total Australian Dollar | 2024-2029 | 981.6 | — | |||||||||||||||||||||||||||||
Total British Pounds Sterling - Fixed | 2020-2054 | 4.6 | 5.3 | 1,386.3 | 952.3 | |||||||||||||||||||||||||||
Total Canadian Dollar - Fixed | 2021-2025 | 3.1 | 3.1 | 768.6 | 732.0 | |||||||||||||||||||||||||||
Total Japanese Yen - Fixed | 2030 | 2.9 | 2.9 | 115.1 | 114.0 | |||||||||||||||||||||||||||
Fixed | 0.5 | 2.1 | 416.9 | 264.7 | 0.2 | 0.3 | 413.8 | 414.9 | ||||||||||||||||||||||||
Floating | 2.2 | 3.1 | 182.7 | 229.7 | 2.2 | 2.6 | 241.8 | 244.2 | ||||||||||||||||||||||||
Total other currencies(3) | 2017-2056 | 599.6 | 494.4 | |||||||||||||||||||||||||||||
Debt obligations before fair value adjustments and deferred debt costs(4) | 26,065.7 | 24,226.3 | ||||||||||||||||||||||||||||||
Fair value adjustments(5) | — | 1.8 | ||||||||||||||||||||||||||||||
Total other currencies(2) | 2020-2024 | 655.6 | 659.1 | |||||||||||||||||||||||||||||
Debt obligations before fair value adjustments and deferred debt costs(3) | 34,305.5 | 31,216.3 | ||||||||||||||||||||||||||||||
Fair value adjustments(4) | 12.1 | (12.0 | ) | |||||||||||||||||||||||||||||
Deferred debt costs | (110.0 | ) | (106.0 | ) | (140.4 | ) | (129.0 | ) | ||||||||||||||||||||||||
Total debt obligations | $ | 25,955.7 | $ | 24,122.1 | $ | 34,177.2 | $ | 31,075.3 |
(1) | Weighted-average effective rate, computed on a semi-annual basis. |
(2) |
Aggregate maturities for |
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 |
Share-based Compensation |
2019 | 2018 | 2017 | ||||||||||||||||||||||||||||
Options | Shares in millions | Weighted- average exercise price | Weighted- average remaining contractual life in years | Aggregate intrinsic value in millions | Shares in millions | Weighted- average exercise price | Shares in millions | Weighted- average exercise price | ||||||||||||||||||||||
Outstanding at beginning of year | 16.6 | $ | 113.06 | 18.9 | $ | 101.55 | 21.5 | $ | 92.25 | |||||||||||||||||||||
Granted | 2.0 | 175.17 | 2.7 | 157.95 | 4.0 | 128.74 | ||||||||||||||||||||||||
Exercised | (3.6 | ) | 97.70 | (4.5 | ) | 89.31 | (5.6 | ) | 81.77 | |||||||||||||||||||||
Forfeited/expired | (0.4 | ) | 154.65 | (0.5 | ) | 137.08 | (1.0 | ) | 118.38 | |||||||||||||||||||||
Outstanding at end of year | 14.6 | $ | 124.21 | 5.9 | $ | 1,074.6 | 16.6 | $ | 113.06 | 18.9 | $ | 101.55 | ||||||||||||||||||
Exercisable at end of year | 9.2 | $ | 107.51 | 4.7 | $ | 826.4 | 10.0 | 11.3 |
2016 | 2015 | 2014 | ||||||||||||||||||||||||||||
Options | Shares in millions | Weighted- average exercise price | Weighted- average remaining contractual life in years | Aggregate intrinsic value in millions | Shares in millions | Weighted- average exercise price | Shares in millions | Weighted- average exercise price | ||||||||||||||||||||||
Outstanding at beginning of year | 21.9 | $ | 84.76 | 23.4 | $ | 77.99 | 25.1 | $ | 69.15 | |||||||||||||||||||||
Granted | 4.3 | 117.10 | 4.3 | 97.33 | 3.9 | 95.13 | ||||||||||||||||||||||||
Exercised | (4.0 | ) | 75.30 | (5.1 | ) | 62.59 | (5.1 | ) | 46.09 | |||||||||||||||||||||
Forfeited/expired | (0.7 | ) | 106.50 | (0.7 | ) | 96.76 | (0.5 | ) | 94.56 | |||||||||||||||||||||
Outstanding at end of year | 21.5 | $ | 92.25 | 6.2 | $ | 633.9 | 21.9 | $ | 84.76 | 23.4 | $ | 77.99 | ||||||||||||||||||
Exercisable at end of year | 13.4 | $ | 83.80 | 4.9 | $ | 507.5 | 13.4 | 14.4 |
2019 | 2018 | 2017 | |||||||||||||||||||||
RSUs | Shares in millions | Weighted- average grant date fair value | Shares in millions | Weighted- average grant date fair value | Shares in millions | Weighted- average grant date fair value | |||||||||||||||||
Nonvested at beginning of year | 1.5 | $ | 132.56 | 1.6 | $ | 107.34 | 1.9 | $ | 94.13 | ||||||||||||||
Granted | 0.6 | 171.48 | 0.6 | 158.28 | 0.6 | 123.98 | |||||||||||||||||
Vested | (0.6 | ) | 116.42 | (0.6 | ) | 91.20 | (0.7 | ) | 87.18 | ||||||||||||||
Forfeited | (0.1 | ) | 153.58 | (0.1 | ) | 132.14 | (0.2 | ) | 117.24 | ||||||||||||||
Nonvested at end of year | 1.4 | $ | 150.95 | 1.5 | $ | 132.56 | 1.6 | $ | 107.34 |
2016 | 2015 | 2014 | |||||||||||||||||||||
RSUs | Shares in millions | Weighted- average grant date fair value | Shares in millions | Weighted- average grant date fair value | Shares in millions | Weighted- average grant date fair value | |||||||||||||||||
Nonvested at beginning of year | 2.4 | $ | 83.50 | 2.2 | $ | 83.49 | 2.0 | $ | 78.89 | ||||||||||||||
Granted | 0.7 | 109.86 | 0.9 | 87.03 | 0.9 | 85.12 | |||||||||||||||||
Vested | (0.8 | ) | 79.54 | (0.5 | ) | 88.78 | (0.6 | ) | 69.29 | ||||||||||||||
Forfeited | (0.4 | ) | 88.45 | (0.2 | ) | 85.82 | (0.1 | ) | 85.16 | ||||||||||||||
Nonvested at end of year | 1.9 | $ | 94.13 | 2.4 | $ | 83.50 | 2.2 | $ | 83.49 |
Quarterly Results (Unaudited) | |||||||||||||||||||||||||||||||||||
Quarters ended December 31 | Quarters ended September 30 | Quarters ended June 30 | Quarters ended March 31 | ||||||||||||||||||||||||||||||||
In millions, except per share data | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||
Sales by Company-operated restaurants | $ | 2,363.3 | $ | 2,371.2 | $ | 2,416.6 | $ | 2,511.0 | $ | 2,400.4 | $ | 2,594.9 | $ | 2,240.5 | $ | 2,535.6 | |||||||||||||||||||
Revenues from franchised restaurants | 2,985.7 | 2,791.8 | 3,014.0 | 2,858.4 | 2,940.9 | 2,759.0 | 2,715.1 | 2,603.3 | |||||||||||||||||||||||||||
Total revenues | 5,349.0 | 5,163.0 | 5,430.6 | 5,369.4 | 5,341.3 | 5,353.9 | 4,955.6 | 5,138.9 | |||||||||||||||||||||||||||
Company-operated margin | 423.7 | 414.6 | 448.9 | 463.1 | 433.3 | 464.4 | 354.3 | 404.7 | |||||||||||||||||||||||||||
Franchised margin | 2,422.4 | 2,282.1 | 2,454.5 | 2,359.0 | 2,396.2 | 2,275.1 | 2,182.0 | 2,123.0 | |||||||||||||||||||||||||||
Operating income | 2,292.6 | 1,999.5 | 2,409.3 | 2,417.7 | 2,273.9 | 2,262.3 | 2,094.0 | 2,143.1 | |||||||||||||||||||||||||||
Net income | $ | 1,572.2 | $ | 1,415.3 | $ | 1,607.9 | $ | 1,637.3 | $ | 1,516.9 | $ | 1,496.3 | $ | 1,328.4 | $ | 1,375.4 | |||||||||||||||||||
Earnings per common share—basic | $ | 2.10 | $ | 1.84 | $ | 2.13 | $ | 2.12 | $ | 1.99 | $ | 1.92 | $ | 1.74 | $ | 1.74 | |||||||||||||||||||
Earnings per common share—diluted | $ | 2.08 | $ | 1.82 | $ | 2.11 | $ | 2.10 | $ | 1.97 | $ | 1.90 | $ | 1.72 | $ | 1.72 | |||||||||||||||||||
Dividends declared per common share | $ | — | $ | — | $ | 2.41 | (1) | $ | 2.17 | (1) | $ | 1.16 | $ | 1.01 | $ | 1.16 | $ | 1.01 | |||||||||||||||||
Weighted-average common shares—basic | 749.2 | 769.5 | 756.6 | 772.8 | 761.8 | 780.0 | 764.9 | 790.9 | |||||||||||||||||||||||||||
Weighted-average common shares—diluted | 755.6 | 776.6 | 763.9 | 779.6 | 768.7 | 787.1 | 771.6 | 798.7 |
Quarterly Results (Unaudited) | |||||||||||||||||||||||||||||||||||
Quarters ended December 31 | Quarters ended September 30 | Quarters ended June 30 | Quarters ended March 31 | ||||||||||||||||||||||||||||||||
In millions, except per share data | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | (1) | 2015 | ||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||
Sales by Company-operated restaurants | $ | 3,652.8 | $ | 4,030.2 | $ | 3,972.1 | $ | 4,282.9 | $ | 3,916.6 | $ | 4,261.1 | $ | 3,753.5 | $ | 3,914.1 | |||||||||||||||||||
Revenues from franchised restaurants | 2,376.1 | 2,311.1 | 2,452.0 | 2,332.2 | 2,348.4 | 2,236.6 | 2,150.4 | 2,044.8 | |||||||||||||||||||||||||||
Total revenues | 6,028.9 | 6,341.3 | 6,424.1 | 6,615.1 | 6,265.0 | 6,497.7 | 5,903.9 | 5,958.9 | |||||||||||||||||||||||||||
Company-operated margin | 616.9 | 611.6 | 732.6 | 675.2 | 668.5 | 664.8 | 578.2 | 559.8 | |||||||||||||||||||||||||||
Franchised margin | 1,941.3 | 1,894.9 | 2,014.4 | 1,916.1 | 1,917.5 | 1,825.6 | 1,735.3 | 1,641.2 | |||||||||||||||||||||||||||
Operating income | 1,969.0 | 1,880.4 | 2,137.3 | 2,030.3 | 1,857.9 | 1,849.3 | 1,780.3 | 1,385.5 | |||||||||||||||||||||||||||
Net income | $ | 1,193.4 | $ | 1,206.2 | $ | 1,275.4 | $ | 1,309.2 | $ | 1,092.9 | $ | 1,202.4 | $ | 1,124.8 | $ | 811.5 | |||||||||||||||||||
Earnings per common share—basic | $ | 1.45 | $ | 1.32 | $ | 1.52 | $ | 1.41 | $ | 1.27 | $ | 1.26 | $ | 1.27 | $ | 0.84 | |||||||||||||||||||
Earnings per common share—diluted | $ | 1.44 | $ | 1.31 | $ | 1.50 | $ | 1.40 | $ | 1.25 | $ | 1.26 | $ | 1.25 | $ | 0.84 | |||||||||||||||||||
Dividends declared per common share | $ | — | $ | 0.89 | $ | 1.83 | (2) | $ | 0.85 | $ | 0.89 | $ | 0.85 | $ | 0.89 | $ | 0.85 | ||||||||||||||||||
Weighted-average common shares—basic | 823.7 | 914.1 | 841.4 | 930.3 | 864.0 | 953.2 | 888.9 | 960.6 | |||||||||||||||||||||||||||
Weighted-average common shares—diluted | 829.7 | 919.9 | 847.7 | 934.8 | 871.2 | 957.6 | 896.3 | 965.5 | |||||||||||||||||||||||||||
Market price per common share: | |||||||||||||||||||||||||||||||||||
High | $ | 124.00 | $ | 120.23 | $ | 128.60 | $ | 101.88 | $ | 131.96 | $ | 101.08 | $ | 126.96 | $ | 101.09 | |||||||||||||||||||
Low | 110.33 | 97.13 | 113.96 | 87.50 | 116.08 | 94.02 | 112.71 | 88.77 | |||||||||||||||||||||||||||
Close | 121.72 | 118.14 | 115.36 | 98.53 | 120.34 | 95.07 | 125.68 | 97.44 |
Management’s Assessment of Internal Control Over Financial Reporting |
I. | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
II. | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
III. | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
Report of Independent Registered Public Accounting Firm |
Unrecognized Tax Benefits | |
Description of the Matter | As described in the income taxes footnote to the consolidated financial statements, the Company’s unrecognized tax benefits, which includes transfer pricing matters, totaled $1,439million at December 31, 2019. The Company, like other multi-national companies, is regularly audited by federal, state and foreign tax authorities, and tax assessments may arise several years after tax returns have been filed. Accordingly, tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition. For tax positions that meet the more likely than not threshold, a tax liability may still be recorded depending on management’s assessment of how the tax position will ultimately be settled. Auditing the measurement of unrecognized tax benefits related to transfer pricing used in intercompany transactions was challenging because the measurement is based on judgmental interpretations of complex tax laws and legal rulings and because the pricing of the intercompany transactions is based on studies that may produce a range of outcomes (e.g., the price that would be charged in an arm’s-length transaction). |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to assess the technical merits and measure unrecognized tax benefits related to transfer pricing used in intercompany transactions. For example, we tested management’s review of the unrecognized tax benefit calculations, which included evaluation of the comparable transactions used to determine the ranges of outcomes, pricing conclusions reached in management’s transfer pricing studies, and the assessment of other third-party information. With the assistance of our income tax professionals, we performed audit procedures that included, among others, evaluating the technical merits of the Company’s position and testing the measurement of unrecognized tax benefits related to transfer pricing. For example, we assessed the inputs utilized and the pricing conclusions reached in the transfer pricing studies executed by management, and compared the methods used to alternative methods and industry benchmarks. We also reviewed the Company’s communications with the relevant tax authorities and any advice obtained by the Company from third-party advisors. In addition, we used our knowledge of historical settlement activity, income tax laws, and other market information to evaluate the technical merits of the positions and the measurement of unrecognized tax benefits related to transfer pricing. |
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||||||||
Plan category | (a) | (b) | (c) | (a) | (b) | (c) | ||||||||||||||
Equity compensation plans approved by security holders | 23,430,608 | (1) | $ | 92.40 | 34,112,990 | 16,029,240 | (1) | $ | 126.54 | 26,481,096 | ||||||||||
Equity compensation plans not approved by security holders | — | — | — | — | — | — | ||||||||||||||
Total | 23,430,608 | $ | 92.40 | 34,112,990 | 16,029,240 | $ | 126.54 | 26,481,096 |
(1) | Includes |
a. | (1) | All financial statements |
Consolidated financial statements filed as part of this report and are | ||
(2) | Financial statement schedules | |
No schedules are required because either the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or the notes thereto. | ||
b. | Exhibits | |
The exhibits listed in the accompanying index are filed as part of this report. |
McDonald’s Corporation Exhibit Index | ||||
Exhibit Number | Description | |||
(3) | (a) | |||
(b) | ||||
(4) | Instruments defining the rights of security holders, including Indentures:* | |||
(a) | ||||
(b) | ||||
(c) | ||||
(10) | Material Contracts | |||
(a) | ||||
(b) | ||||
(i) | ||||
(c) | ||||
(i) | ||||
(ii) | ||||
(d) | ||||
(i) | ||||
(ii) | ||||
(e) | ||||
(f) | ||||
(h) | |||||
Offer Letter between Christopher Kempczinski and the Company, dated September 23, 2015, incorporated herein by reference from Exhibit 10(u) of Form 10-Q (File No. 001-05231), for the quarter ended June 30, 2016.** | |||||
(j) | |||||
(k) | |||||
(l) | |||||
(m) | |||||
(n) | |||||
(o) | |||||
(p) | |||||
(q) | |||||
(r) | |||||
(12) | |||||
(21) | |||||
(23) | |||||
(24) | |||||
(31.1) | |||||
(31.2) | |||||
(32.1) | |||||
(32.2) | |||||
(101.INS) | XBRL Instance | ||||
(101.SCH) | Inline XBRL Taxonomy Extension Schema Document. | ||||
(101.CAL) | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||
(101.DEF) | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
(101.LAB) | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
(101.PRE) | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
(104) | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |||
* | Other instruments defining the rights of holders of long-term debt of the registrant, and all of its subsidiaries for which consolidated financial statements are required to be filed and which are not required to be registered with the Commission, are not included herein as the securities authorized under these instruments, individually, do not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. An agreement to furnish a copy of any such instruments to the Commission upon request has been filed with the Commission. |
** | Denotes compensatory plan. |
Page reference | |||
Part I | |||
Item 1 | Business | Pages 3-5 | |
Item 1A | Risk Factors and Cautionary Statement Regarding Forward-Looking Statements | Pages 3, 25-30 | |
Item 1B | Unresolved Staff Comments | Not applicable | |
Item 2 | Properties | Page 31 | |
Item 3 | Legal Proceedings | Page 31 | |
Item 4 | Mine Safety Disclosures | Not applicable | |
Additional Item | Information About our Executive Officers | Page 32 | |
Part II | |||
Item 5 | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | Page 24 | |
Item 6 | Selected Financial Data | Page 22 | |
Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | Pages 3-33 | |
Item 7A | Quantitative and Qualitative Disclosures About Market Risk | Pages 17-19 | |
Item 8 | Financial Statements and Supplementary Data | Pages 33-58 | |
Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | Not applicable | |
Item 9A | Controls and Procedures | Page 59 | |
Item 9B | Other Information | Not applicable | |
Part III | |||
Item 10 | Directors, Executive Officers and Corporate Governance | Page 32, (a) | |
Item 11 | Executive Compensation | (a) | |
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters | Page 59 | |
Item 13 | Certain Relationships and Related Transactions, and Director Independence | (a) | |
Item 14 | Principal Accounting Fees and Services | (a) | |
Part IV | |||
Item 15 | Exhibits and Financial Statement Schedules | Pages 60-61 | |
Item 16 | Form 10-K Summary | Not applicable | |
Signatures | Page 63 |
Signatures |
By | /s/ Kevin M. Ozan |
Kevin M. Ozan | |
Corporate Executive Vice President and | |
Chief Financial Officer | |
By | /s/ Lloyd H. Dean | By | /s/ Richard H. Lenny |
Lloyd H. Dean | Richard H. Lenny | ||
Director | Director | ||
By | /s/ Robert A. Eckert | ||
By | /s/ John J. Mulligan | ||
Robert A. Eckert | John J. Mulligan | ||
Director | Director | ||
By | /s/ Catherine M. Engelbert | By | /s/ Kevin M. Ozan |
Catherine M. Engelbert | Kevin M. Ozan | ||
Director | Corporate Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | |||
By | /s/ Margaret H. Georgiadis | By | /s/ Sheila A. Penrose |
Margaret H. Georgiadis | Sheila A. Penrose | ||
Director | Director | ||
By | /s/ Enrique Hernandez, Jr. | By | /s/ John W. Rogers, Jr. |
Enrique Hernandez, Jr. | John W. Rogers, Jr. | ||
Chairman of the Board and Director | Director | ||
By | /s/ Catherine Hoovel | By | /s/ Paul S. Walsh |
Catherine Hoovel | Paul S. Walsh | ||
Corporate Vice President – Chief Accounting Officer | Director | ||
(Principal Accounting Officer) | |||
By | /s/ Christopher J. Kempczinski | By | /s/ Miles D. White |
Christopher J. Kempczinski | Miles D. White | ||
President, Chief Executive Officer and Director | Director | ||
(Principal Executive Officer) | |||