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Mcdonald's CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2010 OR ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-5231 McDONALD’S CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-2361282 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One McDonald’s Plaza Oak Brook, Illinois 60523 (Address of principal executive offices) (Zip code) Registrant’s telephone number, including area code: (630) 623-3000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered Common stock, $.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Act. Yes ‘ No È Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes È No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendmentto this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer È Accelerated filer ‘ Non-accelerated filer ‘ (do not check if a smaller reporting company) Smaller reporting company ‘ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2010 was $70,073,280,631. The number of shares outstanding of the registrant’s common stock as of January 31, 2011 was 1,043,298,941. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Form 10-K incorporates information by reference from the registrant’s 2011 definitive proxy statement which will be filed no later than 120 days after December 31, 2010. McDONALD’S CORPORATION INDEX Page Reference Part I. Item 1 Business ............................................................................................................ 1 Item 1A Risk Factors and Cautionary Statement Regarding Forward-Looking Statements ................................... 3 Item 1B Unresolved Staff Comments ........................................................................................ 5 Item 2 Properties .......................................................................................................... 6 Item 3 Legal Proceedings .................................................................................................. 6 Part II. Item 5 Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities ... 7 Item 6 Selected Financial Data ............................................................................................. 9 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations ..........................10 Item 7A Quantitative and Qualitative Disclosures About Market Risk .........................................................27 Item 8 Financial Statements and Supplementary Data ......................................................................27 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .........................48 Item 9A Controls and Procedures ...........................................................................................48 Item 9B Other Information ...................................................................................................48 Part III. Item 10 Directors, Executive Officers and Corporate Governance ...........................................................48 Item 11 Executive Compensation ............................................................................................48 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ..............48 Item 13 Certain Relationships and Related Transactions, and Director Independence .......................................49 Item 14 Principal Accountant Fees and Services ............................................................................49 Part IV. Item 15 Exhibits and Financial Statement Schedules ........................................................................49 Signatures ...............................................................................................................................52 Exhibits ...................................................................................................................................53 All trademarks used herein are the property of their respective owners and are used with permission. PART I Under a developmental license arrangement, licensees pro- vide capital for the entire business, including the real estate interest. While the Company has no capital invested, it receives a ITEM 1. Business royalty based on a percent of sales, as well as initial fees. The largest of these developmental license arrangements operates McDonald’s Corporation, the registrant, together with its sub- more than 1,750 restaurants across 18 countries in Latin Amer- sidiaries, is referred to herein as the “Company.” ica and the Caribbean. The Company and its franchisees purchase food, packaging, a. General development of business equipment and other goods from numerous independent suppli- During 2010, there have been no material changes to the Compa- ers. The Company has established and strictly enforces high ny’s corporate structure or in its method of conducting business. quality standards and product specifications. The Company has In 2010, the Company has continued the process it began in quality assurance labs around the world to ensure that its high 2005 to realign certain subsidiaries to develop a corporate struc- standards are consistently met. The quality assurance process ture within its geographic segments that better reflects the not only involves ongoing product reviews, but also on-site operation of the McDonald’s worldwide business. inspections of suppliers’ facilities. A quality assurance board, composed of the Company’s technical, safety and supply chain b. Financial information about segments specialists, provides strategic global leadership for all aspects of Segment data for the years ended December 31, 2010, 2009, food quality and safety. In addition, the Company works closely and 2008 are included in Part II, Item 8, page 40 of this with suppliers to encourage innovation, assure best practices and Form 10-K. drive continuous improvement. Leveraging scale, supply chain infrastructure and risk management strategies, the Company also c. Narrative description of business collaborates with suppliers toward a goal of achieving com- • General petitive, predictable food and paper costs over the long term. Independently owned and operated distribution centers, The Company franchises and operates McDonald’s restaurants in approved by the Company, distribute products and supplies to the global restaurant industry. These restaurants serve a varied, most McDonald’s restaurants. In addition, restaurant personnel yet limited, value-priced menu (see Products) in more than are trained in the proper storage, handling and preparation of 100 countries around the world. products and in the delivery of customer service. All restaurants are operated either by the Company or by McDonald’s global brand is well known. Marketing, promo- franchisees, including conventional franchisees under franchise tional and public relations activities are designed to promote arrangements, and foreign affiliated markets and developmental McDonald’s brand image and differentiate the Company from licensees under license agreements. competitors. Marketing and promotional efforts focus on value, The Company’s operations are designed to assure con- food taste, menu choice and the customer experience. The sistency and high quality at every restaurant. When granting Company
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