McDonalds 2015 Annual Report Download - page 47

McDonald's Corporation 2015 Annual Report 45
Debt Financing
LINE OF CREDIT AGREEMENTS
At December 31, 2015, the Company had a $2.5 billion line of credit agreement expiring in December 2019 with fees of 0.070% per annum
on the total commitment, which remained unused. Fees and interest rates on this line are based on the Company’s long-term credit rating
assigned by Moody’s and Standard & Poor’s. In addition, the Company's subsidiaries had unused lines of credit that were primarily
uncommitted, short-term and denominated in various currencies at local market rates of interest.
The weighted-average interest rate of short-term borrowings was 2.0% at December 31, 2015 (based on $731.6 million of foreign
currency bank line borrowings and $869.6 million of commercial paper) and 4.1% at December 31, 2014 (based on $862.9 million of foreign
currency bank line borrowings and $200.0 million of commercial paper).
DEBT OBLIGATIONS
The Company has incurred debt obligations principally through public and private offerings and bank loans. There are no provisions in the
Company’s debt obligations that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change
in the Company’s business. Certain of the Company’s debt obligations contain cross-acceleration provisions, and restrictions on Company
and subsidiary mortgages and the long-term debt of certain subsidiaries. Under certain agreements, the Company has the option to retire
debt prior to maturity, either at par or at a premium over par. The Company has no current plans to retire a significant amount of its debt
prior to maturity.
The following table summarizes the Company’s debt obligations (interest rates and debt amounts reflected in the table include the
effects of interest rate swaps).
Interest rates(1)
December 31
Amounts outstanding
December 31
In millions of U.S. Dollars Maturity dates 2015 2014 2015 2014
Fixed 4.0% 4.5% $14,190.6 $ 6,604.7
Floating 3.3 3.2 3,019.6 2,450.0
Total U.S. Dollars 2016-2045 17,210.2 9,054.7
Fixed 2.4 3.2 3,951.9 3,014.7
Floating 0.3 2.9 665.9 320.3
Total Euro 2016-2029 4,617.8 3,335.0
Total British Pounds Sterling - Fixed 2020-2054 5.3 5.3 1,100.1 1,163.3
Total Chinese Renminbi - Floating 2016 4.3 5.6 491.8 630.1
Fixed 2.9 2.9 104.0 104.3
Floating 0.3 0.3 208.0 208.6
Total Japanese Yen 2016-2030 312.0 312.9
Fixed 2.1 2.1 264.7 268.3
Floating 3.1 4.0 229.7 220.7
Total other currencies(2) 2016-2056 494.4 489.0
Debt obligations before fair value adjustments and deferred
debt costs(3) 24,226.3 14,985.0
Fair value adjustments(4) 1.8 4.7
Deferred debt costs(5) (106.0) (54.0)
Total debt obligations(6) $24,122.1 $14,935.7
(1) Weighted-average effective rate, computed on a semi-annual basis.
(2) Primarily consists of Swiss Francs and Korean Won.
(3) Aggregate maturities for 2015 debt balances, before fair value adjustments and deferred debt costs, were as follows (in millions): 2016–$0.0; 2017–$1,065.1;
2018–$1,755.3; 2019–$3,844.2; 2020–$2,463.9; Thereafter–$15,097.8. These amounts include a reclassification of short-term obligations totaling $2.4 billion to
long-term obligations as they are supported by a long-term line of credit agreement expiring in December 2019.
(4) 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 instrument is also recorded at fair value in prepaid expenses and other current assets, miscellaneous
other assets or other long-term liabilities.
(5) The FASB issued an Update that requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from
the carrying amount of the debt liability. The Company early adopted this Update and reclassified the prior year amount.
(6) The net increase in 2015 was primarily due to net issuances of $9.7 billion in connection with the Company's plan to optimize its capital structure.