McDonalds 2010 Annual Report Download - page 43

Employee Benefit Plans
The Company’s Profit Sharing and Savings Plan for U.S.-based
employees includes a 401(k) feature, an ESOP feature, and a
discretionary employer profit sharing match. The 401(k) feature
allows participants to make pretax contributions that are partly
matched from shares released under the ESOP. The Profit Shar-
ing and Savings Plan also provides for a discretionary employer
profit sharing match after the end of the year for those partic-
ipants eligible to share in the match who have contributed to the
401(k) feature.
All current account balances and future contributions and
related earnings can be invested in several investment alter-
natives as well as McDonald’s common stock in accordance with
each participant’s elections. Participants’ future contributions to
the 401(k) feature and the discretionary employer matching
contribution feature are limited to 20% investment in McDonald’s
common stock. Participants may choose to make separate
investment choices for current account balances and for future
contributions.
The Company also maintains certain supplemental benefit
plans that allow participants to (i) make tax-deferred contributions
and (ii) receive Company-provided allocations that cannot be
made under the Profit Sharing and Savings Plan because of
Internal Revenue Service limitations. The investment alternatives
and returns are based on certain market-rate investment alter-
natives under the Profit Sharing and Savings Plan. Total liabilities
were $439.3 million at December 31, 2010, and $397.3 million at
December 31, 2009, and were primarily included in other long-
term liabilities on the Consolidated balance sheet.
The Company has entered into derivative contracts to hedge
market-driven changes in certain of the liabilities. At
December 31, 2010, derivatives with a fair value of $104.4 mil-
lion indexed to the Company’s stock were included in prepaid
expenses and other current assets and an investment totaling
$92.7 million indexed to certain market indices was included in
miscellaneous other assets on the Consolidated balance sheet.
All changes in liabilities for these nonqualified plans and in the
fair value of the derivatives are recorded in selling, general &
administrative expenses. Changes in fair value of the derivatives
indexed to the Company’s stock are recorded in the income
statement because the contracts provide the counterparty with a
choice to settle in cash or shares.
Total U.S. costs for the Profit Sharing and Savings Plan,
including nonqualified benefits and related hedging activities,
were (in millions): 2010–$51.4; 2009–$51.3; 2008–$61.2.
Certain subsidiaries outside the U.S. also offer profit sharing,
stock purchase or other similar benefit plans. Total plan costs
outside the U.S. were (in millions): 2010–$57.6; 2009–$45.2;
2008–$55.4.
The total combined liabilities for international retirement plans
were $153.2 million and $183.7 million at December 31, 2010
and 2009, respectively, primarily in the U.K. and Canada.
Other postretirement benefits and post-employment benefits
were immaterial.
McDonald’s Corporation Annual Report 2010 41