UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 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 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. Yes No 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 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes 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 amendment to 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer 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 The aggregate market value of common stock held by non-affiliates of the registrant as of June 30, 2015 was $89,518,453,614. The number of shares outstanding of the registrant’s common stock as of January 31, 2016 was 901,607,888. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Form 10-K incorporates information by reference from the registrant’s 2016 definitive proxy statement, which will be filed no later than 120 days after December 31, 2015. 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 . 7 Item 2 Properties . 7 Item 3 Legal Proceedings . 8 Item 4 Mine Safety Disclosures . 8 Additional Item Executive Officers of the Registrant . 9 Part II. Item 5 Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities . 10 Item 6 Selected Financial Data . 12 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations . 13 Item 7A Quantitative and Qualitative Disclosures About Market Risk . 29 Item 8 Financial Statements and Supplementary Data . 29 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . 51 Item 9A Controls and Procedures . 51 Item 9B Other Information . 51 Part III. Item 10 Directors, Executive Officers and Corporate Governance . 51 Item 11 Executive Compensation . 51 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. 51 Item 13 Certain Relationships and Related Transactions, and Director Independence . 52 Item 14 Principal Accountant Fees and Services . 52 Part IV. Item 15 Exhibits and Financial Statement Schedules . 52 Signatures . 55 Exhibits All trademarks used herein are the property of their respective owners. PART I Under a conventional franchise arrangement, the Company owns the land and building or secures a long-term lease for the restaurant location and the franchisee pays for equipment, signs, ITEM 1. Business seating and décor. The Company believes that ownership of real estate, combined with the co-investment by franchisees, enables McDonald’s Corporation, the registrant, together with its sub- us to achieve restaurant performance levels that are among the sidiaries, is referred to herein as the “Company.” highest in the industry. Franchisees are also responsible for reinvesting capital in a. General their businesses over time. In addition, to accelerate Through June 30, 2015, the Company was managed as distinct implementation of certain initiatives, the Company frequently co- geographic segments, comprised of the U.S., Europe, Asia/Pacific, invests with franchisees to fund improvements to their restaurants Middle East and Africa ("APMEA") and Other Countries & or their operating systems. These investments, developed with Corporate, which included Canada and Latin America. Beginning input from McDonald’s with the aim of improving local business July 1, 2015, McDonald’s started operating under a new performance, increase the value of our Brand through the organizational structure that combines markets with similar development of modernized, more attractive and higher revenue characteristics and opportunities for growth. Information about the generating restaurants. Company's new segments is provided in the Overview section of The Company’s typical franchise term is 20 years. The Management's Discussion and Analysis of Financial Condition and Company requires franchisees to meet rigorous standards and Results of Operations in Part II, Item 7, page 13 of this Form 10-K. generally does not work with passive investors. The business relationship with franchisees is designed to assure consistency b. Financial information about segments and high quality at all McDonald’s restaurants. Conventional Segment data for the years ended December 31, 2015, 2014, and franchisees contribute to the Company’s revenue through the 2013 are included in Part II, Item 8, page 44 of this Form 10-K. payment of rent and royalties based upon a percent of sales, with specified minimum rent payments, along with initial fees paid upon c. Narrative description of business the opening of a new restaurant or grant of a new franchise. This structure enables McDonald’s to generate significant levels of General cash flow. The Company operates and franchises McDonald’s restaurants, Under a developmental license arrangement, licensees which serve a locally-relevant menu of quality food and drinks sold provide capital for the entire business, including the real estate at various price points in more than 100 countries. McDonald’s interest. The Company does not invest any capital under a global system is comprised of both Company-owned and developmental license arrangement. The Company receives a franchised restaurants. McDonald’s franchised restaurants are royalty based upon a percent of sales as well as initial fees upon owned and operated under one of the following structures - the opening of a new restaurant or grant of a new license. We use conventional franchise, developmental license or affiliate. The the developmental license ownership structure in over 70 optimal ownership structure for an individual restaurant, trading countries with a total of approximately 5,500 restaurants. The area or market (country) is based on a variety of factors, including largest developmental licensee operates approximately 2,100 the availability of individuals with the entrepreneurial experience restaurants in 19 countries in Latin America and the Caribbean. and financial resources, as well as the local legal and regulatory Finally, the Company also has an equity investment in a environment in critical areas such as property ownership and limited number of foreign affiliated markets, referred to as franchising. We continually review our mix of Company-owned and “affiliates.” In these markets, the Company receives a royalty franchised restaurants to help optimize overall performance, with a based on a percent of sales and records its share of net results in goal to be 95% franchised over the long term. The business Equity in earnings of unconsolidated affiliates. The largest of these relationship between McDonald’s and its independent franchisees affiliates is Japan, where there are nearly 3,000 restaurants. is of fundamental importance to overall performance and to the McDonald’s Brand. This business relationship is supported by an Supply Chain and Quality Assurance agreement that requires adherence to standards and policies The Company and its franchisees purchase food, packaging, essential to protecting our brand. equipment and other goods from numerous independent The Company is primarily a franchisor, with more than 80% of suppliers. The Company has established and enforces high quality McDonald's restaurants owned and operated by independent standards and product specifications. The Company has quality franchisees. Franchising enables an individual to own a restaurant centers around the world designed to ensure that its high business and maintain control over staffing, purchasing, marketing standards are consistently met. The quality assurance process not and pricing decisions, while also benefiting from the strength of only involves ongoing product reviews, but also on-site supplier McDonald’s global brand, operating system and financial visits.