SEC Company Response from MCDONALDS CORP (MCD) (CIK 0000063908) (MCD) — May 2, 2013
MCDONALDS CORP (MCD) (CIK 0000063908)
Date: May 2, 2013 · CIK: 0000063908 · Accession: 0000063908-13-000030
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-05231
Referenced dates: April 25, 2013
Letter
Division of Corporation Finance McDonald's Corporation Form 10-K for the year ended December 31, 2012 Filed February 25, 2013 File No. 001-05231
Dear Ms. Cvrkel:
In reply to your letter dated April 25, 2013, we have the following response to your comment.
Form 10-K
Management's Discussion and Analysis of Financial Condition and Results of Operations, page 10
Consolidated Operating Results, page 14
Restaurant Margins, page 16
Franchise Margins, page 16
1.
Comment
We note the disclosure in the first paragraph on page 17 indicating that the franchised margin in APMEA decreased in 2012 primarily due to Australia which was partly impacted by the 2012 change in classification of certain amounts from revenues to restaurant occupancy expenses. Please tell us the nature and amounts of the items that were reclassified from revenues to occupancy expenses during 2012 and explain why you believe this reclassification was appropriate. Also, please tell us whether you similarly reclassified such amounts for all periods presented in your financial statements. If not, please explain why.
Response
The amount reclassified from revenues to restaurant occupancy expenses represented the amortization expense of intangible assets specifically isolated to certain franchised restaurants in Australia. Consistent with other franchised restaurant costs, such as depreciation and rent expense, we believe the amortization expense related to these intangible assets should have been recorded as a franchised expense and not as a reduction to revenues. The amortization was less than $5 million in each of the three years ending
December 31, 2012 and, therefore, had a 30-40 basis point impact on the APMEA franchised margin percent, but no impact on APMEA franchised margin dollars. The amortization represented less than 0.5% of APMEA franchised revenues. We did not reclassify the amortization for the prior periods presented, as we concluded the effect of the misclassification on prior periods was insignificant.
In connection with this response, the Company acknowledges that (i) the Company is responsible for the adequacy and accuracy of the disclosure in the filing; (ii) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and (iii) the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
We hope that our response adequately addresses your comment. If you have any questions on this letter or need further assistance, please call Kevin Ozan, Corporate Senior Vice President – Controller, at (630) 623-4224 or me at (630) 623-3506.
Sincerely,
/s/ Peter J. Bensen
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CORRESP 1 filename1.htm filename1 McDonald's Corporation 2915 Jorie Boulevard Oak Brook, IL 60523-1900 May 2, 2013 Ms. Linda Cvrkel Branch Chief Division of Corporation Finance U.S. Securities and Exchange Commission Washington, D.C. 20549 RE: McDonald's Corporation Form 10-K for the year ended December 31, 2012 Filed February 25, 2013 File No. 001-05231 Dear Ms. Cvrkel: In reply to your letter dated April 25, 2013, we have the following response to your comment. Form 10-K Management's Discussion and Analysis of Financial Condition and Results of Operations, page 10 Consolidated Operating Results, page 14 Restaurant Margins, page 16 Franchise Margins, page 16 1. Comment We note the disclosure in the first paragraph on page 17 indicating that the franchised margin in APMEA decreased in 2012 primarily due to Australia which was partly impacted by the 2012 change in classification of certain amounts from revenues to restaurant occupancy expenses. Please tell us the nature and amounts of the items that were reclassified from revenues to occupancy expenses during 2012 and explain why you believe this reclassification was appropriate. Also, please tell us whether you similarly reclassified such amounts for all periods presented in your financial statements. If not, please explain why. Response The amount reclassified from revenues to restaurant occupancy expenses represented the amortization expense of intangible assets specifically isolated to certain franchised restaurants in Australia. Consistent with other franchised restaurant costs, such as depreciation and rent expense, we believe the amortization expense related to these intangible assets should have been recorded as a franchised expense and not as a reduction to revenues. The amortization was less than $5 million in each of the three years ending December 31, 2012 and, therefore, had a 30-40 basis point impact on the APMEA franchised margin percent, but no impact on APMEA franchised margin dollars. The amortization represented less than 0.5% of APMEA franchised revenues. We did not reclassify the amortization for the prior periods presented, as we concluded the effect of the misclassification on prior periods was insignificant. In connection with this response, the Company acknowledges that (i) the Company is responsible for the adequacy and accuracy of the disclosure in the filing; (ii) staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and (iii) the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. We hope that our response adequately addresses your comment. If you have any questions on this letter or need further assistance, please call Kevin Ozan, Corporate Senior Vice President – Controller, at (630) 623-4224 or me at (630) 623-3506. Sincerely, /s/ Peter J. Bensen Peter J. Bensen Corporate Executive Vice President and Chief Financial Officer cc: U.S. Securities and Exchange Commission Heather Clark McDonald's Corporation Donald Thompson, President and Chief Executive Officer Kevin Ozan, Corporate Senior Vice President – Controller Gloria Santona, Corporate Executive Vice President, General Counsel and Secretary