LINE OF CREDIT AGREEMENTS
At December 31, 2013, the Company had a $1.5 billion line of credit agreement expiring in November 2016 with fees of 0.065% 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 5.1% at December 31, 2013 (based on $609.7 million of foreign currency bank line borrowings) and 4.1% at December 31, 2012 (based on $581.3 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.
ESOP LOANS
Borrowings related to the leveraged Employee Stock Ownership Plan ("ESOP") at December 31, 2013, which include $23.2 million of loans from the Company to the ESOP, are reflected as debt with a corresponding reduction of shareholders’ equity (additional paid-in capital included a balance of $19.9 million and $27.2 million at December 31, 2013 and 2012, respectively). The ESOP is repaying the loans and interest through 2018 using Company contributions and dividends from its McDonald’s common stock holdings. As the principal amount of the borrowings is repaid, the debt and the unearned ESOP compensation (additional paid-in capital) are reduced.
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 | | 2013 |
| | 2012 |
| | | 2013 |
| | 2012 |
|
Fixed | | | 4.6 | % | | 4.8 | % | | | $ | 6,460.6 |
| | $ | 7,075.7 |
|
Floating | | | 3.2 |
| | 1.2 |
| | | 1,900.0 |
| | 1,650.0 |
|
Total U.S. Dollars | 2014-2043 | | | | | | | 8,360.6 |
| | 8,725.7 |
|
Fixed | | | 3.3 |
| | 3.7 |
| | | 2,884.9 |
| | 1,847.2 |
|
Floating | | | 2.8 |
| | 2.9 |
| | | 357.2 |
| | 348.0 |
|
Total Euro | 2014-2025 | | | | | | | 3,242.1 |
| | 2,195.2 |
|
Fixed | | | 2.9 |
| | 2.9 |
| | | 118.7 |
| | 144.2 |
|
Floating | | | 0.4 |
| | 0.4 |
| | | 759.8 |
| | 923.3 |
|
Total Japanese Yen | 2014-2030 | | | | | | | 878.5 |
| | 1,067.5 |
|
Total British Pounds Sterling-Fixed | 2020-2032 | | 6.0 |
| | 6.0 |
| | | 744.3 |
| | 730.1 |
|
Fixed | | | — |
| | 3.0 |
| | | — |
| | 32.1 |
|
Floating | | | 5.4 |
| | 5.6 |
| | | 525.1 |
| | 470.8 |
|
Total Chinese Renminbi | 2014 | | | | | | | 525.1 |
| | 502.9 |
|
Fixed | | | 1.9 |
| | 1.9 |
| | | 281.0 |
| | 273.3 |
|
Floating | | | 3.6 |
| | 4.4 |
| | | 85.4 |
| | 95.5 |
|
Total other currencies(2) | 2014-2021 | | | | | | | 366.4 |
| | 368.8 |
|
Debt obligations before fair value adjustments(3) | | | | | | | | 14,117.0 |
| | 13,590.2 |
|
Fair value adjustments(4) | | | | | | | | 12.8 |
| | 42.3 |
|
Total debt obligations(5) | | | | | | | | $ | 14,129.8 |
| | $ | 13,632.5 |
|
| |
(1) | Weighted-average effective rate, computed on a semi-annual basis. |
| |
(2) | Primarily consists of Swiss Francs and Korean Won. |
| |
(3) | Aggregate maturities for 2013 debt balances, before fair value adjustments, were as follows (in millions): 2014–$0.0; 2015–$1,199.2; 2016–$2,094.6; 2017–$1,054.2; 2018–$1,003.9; Thereafter–$8,765.1. These amounts include a reclassification of short-term obligations totaling $1.2 billion to long-term obligations as they are supported by a long-term line of credit agreement expiring in November 2016. |
| |
(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 increase in debt obligations from December 31, 2012 to December 31, 2013 was primarily due to net issuances of $0.5 billion. |
