McDonalds 2011 Annual Report Download - page 36

PER COMMON SHARE INFORMATION
Diluted earnings per common share is calculated using net
income divided by diluted weighted-average shares. Diluted
weighted-average shares include weighted-average shares out-
standing plus the dilutive effect of share-based compensation
calculated using the treasury stock method, of (in millions of
shares): 2011–12.8; 2010–14.3; 2009–15.2. Stock options that
were not included in diluted weighted-average shares because
they would have been antidilutive were (in millions of shares):
2011–0.0; 2010–0.0; 2009–0.7.
The Company has elected to exclude the pro forma deferred
tax asset associated with share-based compensation in earnings
per share.
STATEMENT OF CASH FLOWS
The Company considers short-term, highly liquid investments with
an original maturity of 90 days or less to be cash equivalents.
SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date the
financial statements were issued and filed with the U.S. Securities
and Exchange Commission (SEC). There were no subsequent
events that required recognition or disclosure except for the debt
issuances in February 2012 (see Debt financing note).
Property and Equipment
Net property and equipment consisted of:
In millions December 31, 2011 2010
Land $ 5,328.3 $ 5,200.5
Buildings and improvements
on owned land 13,079.9 12,399.4
Buildings and improvements
on leased land 12,021.8 11,732.0
Equipment, signs and
seating 4,757.2 4,608.5
Other 550.4 542.0
35,737.6 34,482.4
Accumulated depreciation
and amortization (12,903.1) (12,421.8)
Net property and equipment $ 22,834.5 $ 22,060.6
Depreciation and amortization expense was (in millions): 2011–
$1,329.6; 2010–$1,200.4; 2009–$1,160.8.
Impairment and Other Charges (Credits), Net
In millions, except per share data 2011 2010 2009
Europe $ 0.3 $ 1.6 $ 4.3
APMEA (4.2) 48.5 (0.2)
Other Countries & Corporate (21.0) (65.2)
Total $ (3.9) $ 29.1 $(61.1)
After tax(1) $17.1 $ 24.6 $(91.4)
Earnings per common share-diluted $0.01 $ 0.02 $(0.08)
(1) Certain items were not tax effected.
In 2010, the Company recorded after tax charges of $39.3 million
related to its share of restaurant closing costs in McDonald’s
Japan (a 50%-owned affiliate) in conjunction with the strategic
review of the market’s restaurant portfolio. These actions were
designed to enhance the brand image, overall profitability and
returns of the market. The Company also recorded pretax income
of $21.0 million related to the resolution of certain liabilities
retained in connection with the 2007 Latin America devel-
opmental license transaction.
In 2009, the Company recorded pretax income of $65.2 million
related primarily to the resolution of certain liabilities retained in
connection with the 2007 Latin America developmental license
transaction. The Company also recognized a tax benefit in 2009 in
connection with this income, mainly related to the release of a tax
valuation allowance.
Other Operating (Income) Expense, Net
In millions 2011 2010 2009
Gains on sales of restaurant
businesses $ (81.8) $ (79.4) $(113.3)
Equity in earnings of
unconsolidated affiliates (178.0) (164.3) (167.8)
Asset dispositions and other
expense 26.9 45.5 58.8
Total $(232.9) $(198.2) $(222.3)
• Gains on sales of restaurant businesses
Gains on sales of restaurant businesses include gains from sales
of Company-operated restaurants as well as gains from
exercises of purchase options by franchisees with business facili-
ties lease arrangements (arrangements where the Company
leases the businesses, including equipment, to franchisees who
generally have options to purchase the businesses). The Compa-
ny’s purchases and sales of businesses with its franchisees are
aimed at achieving an optimal ownership mix in each market.
Resulting gains or losses are recorded in operating income
because the transactions are a recurring part of our business.
• Equity in earnings of unconsolidated affiliates
Unconsolidated affiliates and partnerships are businesses in
which the Company actively participates but does not control.
The Company records equity in earnings from these entities
representing McDonald’s share of results. For foreign affiliated
markets—primarily Japan—results are reported after interest
expense and income taxes. McDonald’s share of results for part-
nerships in certain consolidated markets such as the U.S. are
reported before income taxes. These partnership restaurants are
operated under conventional franchise arrangements and, there-
fore, are classified as conventional franchised restaurants.
• Asset dispositions and other expense
Asset dispositions and other expense consists of gains or losses
on excess property and other asset dispositions, provisions for
restaurant closings and uncollectible receivables, asset write-offs
due to restaurant reinvestment, and other miscellaneous income
and expenses.
34 McDonald’s Corporation Annual Report 2011