McDonalds 2014 Annual Report Download - page 45

McDonald’s Corporation 2014 Annual Report 39
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 outstanding plus
the dilutive effect of share-based compensation calculated using
the treasury stock method, of (in millions of shares): 2014–5.8;
2013–7.6; 2012–10.1. Stock options that were not included in
diluted weighted-average shares because they would have been
antidilutive were (in millions of shares): 2014–5.3 ; 2013–4.7;
2012–4.7.
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.
Property and Equipment
Net property and equipment consisted of:
In millions December 31, 2014 2013
Land $ 5,788.4 $ 5,849.3
Buildings and improvements
on owned land 14,322.4 14,715.6
Buildings and improvements
on leased land 13,284.0 13,825.2
Equipment, signs and
seating 5,113.8 5,376.8
Other 617.5 588.7
39,126.1 40,355.6
Accumulated depreciation
and amortization (14,568.6) (14,608.3)
Net property and equipment $ 24,557.5 $ 25,747.3
Depreciation and amortization expense for property and
equipment was (in millions): 2014–$1,539.3; 2013–$1,498.8;
2012–$1,402.2.
Other Operating (Income) Expense, Net
In millions 2014 2013 2012
Gains on sales of restaurant
businesses $ (137.4) $ (199.4) $ (151.5)
Equity in earnings of
unconsolidated affiliates 8.9 (78.2) (143.5)
Asset dispositions and other
expense 147.1 30.4 51.5
Total $ 18.6 $ (247.2) $ (243.5)
Gains on sales of restaurant businesses
The Company’s purchases and sales of businesses with its
franchisees are aimed at achieving an optimal ownership mix in
each market. Resulting gains or losses on sales of restaurant
businesses are recorded in operating income because these
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
partnerships in certain consolidated markets are reported before
income taxes. These partnership restaurants are operated under
conventional franchise arrangements and, therefore, 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.
Contingencies
In the ordinary course of business, the Company is subject to
proceedings, lawsuits and other claims primarily related to
competitors, customers, employees, franchisees, government
agencies, intellectual property, shareholders and suppliers. The
Company is required to assess the likelihood of any adverse
judgments or outcomes to these matters as well as potential
ranges of probable losses. A determination of the amount of
accrual required, if any, for these contingencies is made after
careful analysis of each matter. The required accrual may change
in the future due to new developments in each matter or changes
in approach such as a change in settlement strategy in dealing
with these matters. The Company does not believe that any such
matter currently being reviewed will have a material adverse effect
on its financial condition or results of operations.