Debt Financing

LINE OF CREDIT AGREEMENTS

At December 31, 2014, the Company had a $2.5 billion line of credit agreement expiring in December 2019 with fees of 0.060% 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 4.1% at December 31, 2014 (based on $862.9 million of foreign currency bank line borrowings and $200.0 million of commercial paper) and 5.1% at December 31, 2013 (based on $609.7 million of foreign currency bank line borrowings).

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, 2014, which include $16.0 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 $13.7 million and $19.9 million at December 31, 2014 and 2013, 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	2014		2013		2014		2013
Fixed		4.5	%	4.6	%	$	6,604.7	$	6,460.6
Floating		3.2		3.2		2,450.0		1,900.0
Total U.S. Dollars	2015-2043					9,054.7		8,360.6
Fixed		3.2		3.3		3,014.7		2,884.9
Floating		2.9		2.8		320.3		357.2
Total Euro	2015-2029					3,335.0		3,242.1
Total British Pounds Sterling - Fixed	2020-2054	5.3		6.0		1,163.3		744.3
Total Chinese Renminbi - Floating	2015	5.6		5.4		630.1		525.1
Fixed		2.9		2.9		104.3		118.7
Floating		0.3		0.4		208.6		759.8
Total Japanese Yen	2016-2030					312.9		878.5
Fixed		2.1		1.9		268.3		281.0
Floating		4.0		3.6		220.7		85.4
Total other currencies⁽²⁾	2015-2056					489.0		366.4
Debt obligations before fair value adjustments⁽³⁾						14,985.0		14,117.0
Fair value adjustments⁽⁴⁾						4.7		12.8
Total debt obligations⁽⁵⁾						$	14,989.7	$	14,129.8


(1)	Weighted-average effective rate, computed on a semi-annual basis.


(2)	Primarily consists of Swiss Francs and Korean Won.

(3)

Aggregate maturities for 2014 debt balances, before fair value adjustments, were as follows (in millions): 2015–$0.0; 2016–$830.7; 2017–$1,069.1; 2018–$1,005.0; 2019–$2,979.3; Thereafter–$9,100.9. These amounts include a reclassification of short-term obligations totaling $2.2 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 net increase in 2014 was primarily due to net issuances of $1.5 billion partly offset by changes in exchange rates on foreign currency denominated debt of $663 million.