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Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2017
Accounting Policies [Abstract]  
NATURE OF BUSINESS NATURE OF BUSINESSThe Company franchises and operates McDonald’s restaurants in the global restaurant industry. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchise arrangements, and developmental licensees and foreign affiliates under license agreements.
CONSOLIDATION CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in affiliates owned 50% or less (primarily McDonald’s Japan and China) are accounted for by the equity method.
On an ongoing basis, the Company evaluates its business relationships such as those with franchisees, joint venture partners, developmental licensees, suppliers, and advertising cooperatives to identify potential variable interest entities. Generally, these businesses qualify for a scope exception under the variable interest entity consolidation guidance. The Company has concluded that consolidation of any such entity is not appropriate for the periods presented.
ESTIMATES IN FINANCIAL STATEMENTS ESTIMATES IN FINANCIAL STATEMENTSThe preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
RECENTLY ISSUED ACCOUNTING STANDARDS RECENTLY ISSUED ACCOUNTING STANDARDS
Measurement Period - Tax Cuts and Jobs Act of 2017
On December 22, 2017, the Securities and Exchange Commission's Office of the Chief Accountant published Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance on reporting for accounting impacts of the recently enacted tax reform legislation. SAB 118 permits the Company to provide reasonable estimates for the income tax effects of the Tax Cuts and Jobs Act of 2017 (“Tax Act”) and to report the effects as provisional amounts in its financial statements during a limited measurement period. Under SAB 118, the measurement period may not extend beyond one year from the enactment of the Tax Act.
Derivatives and Hedging
In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”. ASU 2017-12 expands components of fair value hedging, specifies the
recognition and presentation of the effects of hedging instruments, and eliminates the separate measurement and presentation of hedge ineffectiveness. The Company anticipates it will early adopt ASU 2017-12 in 2018 utilizing the modified retrospective transition method. The Company anticipates the adoption of this standard will not have a material impact on its financial statements.
Intangibles
In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, an impairment charge will be recorded based on the excess of a reporting unit's carrying amount over its fair value. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company has not made a determination on if it will early adopt ASU 2017-04, but it does not expect an impact to the consolidated financial statements from the adoption.
Income Taxes
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” The goal of this update is to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, including interim periods within those annual reporting periods. ASU 2016-16 will impact the Company’s consolidated balance sheet, resulting in a cumulative catch up adjustment within miscellaneous other assets. The adjustment is expected to be less than 1% of retained earnings as of December 31, 2017. The Company expects little to no impact on the consolidated statements of income and cash flows.
Lease Accounting
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted.  The Company will adopt the new standard effective January 1, 2019.
At transition, the Company will recognize and measure leases using the required modified retrospective approach. The Company anticipates ASU 2016-02 will have a material impact to the consolidated balance sheet due to the significance of the Company’s operating lease portfolio as described in Leasing Arrangements. The Company will elect an optional practical expedient to retain the current classification of leases, and, therefore, anticipates a minimal initial impact on the consolidated statement of income. The impact of ASU 2016-02 is non-cash in nature; as such, it will not affect the Company’s cash flows.
REVENUE RECOGNITION REVENUE RECOGNITION
The Company’s revenues consist of sales by Company-operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and foreign affiliates.
Sales by Company-operated restaurants are recognized on a cash basis. The Company presents sales net of sales tax and other sales-related taxes. Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales
with minimum rent payments, and initial fees. Revenues from restaurants licensed to foreign affiliates and developmental licensees include a royalty based on a percent of sales, and may include initial fees. Continuing rent and royalties are recognized in the period earned. For the periods presented, initial fees are recognized upon opening of a restaurant or granting of a new franchise term.
In May 2014, the FASB issued guidance codified in Accounting Standards Codification ("ASC") 606, "Revenue Recognition - Revenue from Contracts with Customers," which amends the guidance in former ASC 605, "Revenue Recognition." The core principle of the standard is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration expected to be received for those goods or services. The standard also calls for additional disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company will adopt the standard effective January 1, 2018.
The standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption ("modified retrospective method"). The Company has selected to apply the modified retrospective method.
The Company has determined that this standard will not impact its recognition of revenue from Company-operated restaurants or its recognition of royalties from restaurants operated by franchisees or licensed to affiliates and developmental licensees, which are based on a percent of sales. The standard will change the manner in which the Company recognizes initial fees from franchisees for new restaurant openings or from new franchise terms.
The Company's accounting policy through December 31, 2017 was to recognize initial franchise fees when a new restaurant opens or at the start of a new franchise term. In accordance with the new guidance, the initial franchise services are not distinct from the continuing rights or services offered during the term of the franchise agreement, and will therefore be treated as a single performance obligation. As such, beginning in January 2018, initial fees received will be recognized over the franchise term, which is generally 20 years.
The cumulative catch-up adjustment to be recorded upon adoption is expected to consist of deferred revenue of approximately $600 million within long-term liabilities and approximately $150 million of additional deferred tax assets within miscellaneous other assets on the consolidated balance sheet. The Company expects the adoption of this standard to negatively impact 2018 consolidated franchised revenues and franchised margins by approximately $50 million. No impact to the Company's consolidated statement of cash flows is expected as the initial fees will continue to be collected upon store opening date or the beginning of a new franchise term.
FOREIGN CURRENCY TRANSLATION FOREIGN CURRENCY TRANSLATIONGenerally, the functional currency of operations outside the U.S. is the respective local currency.
ADVERTISING COSTS ADVERTISING COSTS
Advertising costs included in operating expenses of Company-operated restaurants primarily consist of contributions to advertising cooperatives and were (in millions): 2017–$532.9; 2016–$645.8; 2015–$718.7. Production costs for radio and television advertising are expensed when the commercials are initially aired. These production costs, primarily in the U.S., as well as other marketing-related expenses included in Selling, general & administrative expenses were (in millions): 2017–$100.2; 2016–$88.8; 2015–$113.8. Costs related to the Olympics sponsorship are included in the expenses for 2016. In addition, significant advertising costs are incurred by franchisees through contributions
to advertising cooperatives in individual markets.
SHARE-BASED COMPENSATION SHARE-BASED COMPENSATIONShare-based compensation includes the portion vesting of all share-based awards granted based on the grant date fair value.
PROPERTY AND EQUIPMENT PROPERTY AND EQUIPMENTProperty and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following estimated useful lives: buildings–up to 40 years; leasehold improvements–the lesser of useful lives of assets or lease terms, which generally include certain option periods; and equipment–3 to 12 years.
LONG-LIVED ASSETS LONG-LIVED ASSETS
Long-lived assets are reviewed for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of annually reviewing McDonald’s restaurant assets for potential impairment, assets are initially grouped together in the U.S. at a television market level, and internationally, at a country level. The Company manages its restaurants as a group or portfolio with significant common costs and promotional activities; as such, an individual restaurant’s cash flows are not generally independent of the cash flows of others in a market. If an indicator of impairment exists for any grouping of assets, an estimate of undiscounted future cash flows produced by each individual restaurant within the asset grouping is compared to its carrying value. If an individual restaurant is determined to be impaired, the loss is measured by the excess of the carrying amount of the restaurant over its fair value as determined by an estimate of discounted future cash flows.
Losses on assets held for disposal are recognized when management and the Board of Directors, as required, have approved and committed to a plan to dispose of the assets, the assets are available for disposal and the disposal is probable of occurring within 12 months, and the net sales proceeds are expected to be less than its net book value, among other factors. Generally, such losses related to restaurants that have closed and ceased operations as well as other assets that meet the criteria to be considered “available for sale."
GOODWILL GOODWILL
Goodwill represents the excess of cost over the net tangible assets and identifiable intangible assets of acquired restaurant businesses. The Company's goodwill primarily results from purchases of McDonald's restaurants from franchisees and ownership increases in subsidiaries or affiliates, and it is generally assigned to the reporting unit (defined as each individual country) expected to benefit from the synergies of the combination. If a Company-operated restaurant is sold within 24 months of acquisition, the goodwill associated with the acquisition is written off in its entirety. If a restaurant is sold beyond 24 months from the acquisition, the amount of goodwill written off is based on the relative fair value of the business sold compared to the reporting unit.
The following table presents the 2017 activity in goodwill by segment:
In millions
U.S.

International
Lead Markets
 
High Growth
Markets
 
Foundational Markets
& Corporate
 
Consolidated
 
Balance at December 31, 2016
$
1,283.3

 
$
681.2

 
$
280.1

 
$
91.9

 
$
2,336.5

Net restaurant purchases (sales)
(9.3
)
 
2.5

 
0.7

 
(58.2
)
 
(64.3
)
Currency translation
 
 
66.8

 
35.9

 
4.8

 
107.5

Balance at December 31, 2017
$
1,274.0

 
$
750.5

 
$
316.7

 
$
38.5

 
$
2,379.7


The Company conducts goodwill impairment testing in the fourth quarter of each year or whenever an indicator of impairment exists. If an indicator of impairment exists (e.g., estimated earnings multiple value of a reporting unit is less than its carrying value), the goodwill impairment test compares the fair value of a reporting unit, generally based on discounted future cash flows, with its carrying amount including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is measured as the difference between the implied fair value of the reporting unit's goodwill and the carrying amount of goodwill. Historically, goodwill impairment has not significantly impacted the consolidated financial statements. Accumulated impairment losses on the consolidated balance sheet at December 31, 2017 and 2016 were $14.5 million and $96.6 million, respectively.
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
The Company measures certain financial assets and liabilities at fair value on a recurring basis, and certain non-financial assets and liabilities on a nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs.
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:
▪
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.
▪
Level 2 – inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.
▪
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.
Certain of the Company’s derivatives are valued using various pricing models or discounted cash flow analyses that incorporate observable market parameters, such as interest rate yield curves, option volatilities and currency rates, classified as Level 2 within the valuation hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the counterparty or the Company. 
▪
Certain Financial Assets and Liabilities Measured at Fair Value
The following tables present financial assets and liabilities measured at fair value on a recurring basis by the valuation hierarchy as defined in the fair value guidance: 
December 31, 2017
 
 
 
 
 
 
In millions
Level 1*

 
Level 2

 
Carrying
Value
 
Derivative assets
$
167.3

 
$
0.6

 
 
$
167.9

Derivative liabilities
 
 
$
(45.4
)
 
 
$
(45.4
)
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
In millions
Level 1*

 
Level 2

 
Carrying
Value
 
Derivative assets
$
134.3

 
$
47.0

 
 
$
181.3

Derivative liabilities
 
 
$
(5.6
)
 
 
$
(5.6
)
*
Level 1 is comprised of derivatives that hedge market driven changes in liabilities associated with the Company’s supplemental benefit plans.
▪
Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment). For the year ended December 31, 2017, the Company recorded fair value adjustments to its long-lived assets, primarily to property and equipment, based on Level 3 inputs which includes the use of a discounted cash flow valuation approach.
▪
Certain Financial Assets and Liabilities not Measured at Fair Value
At December 31, 2017, the fair value of the Company’s debt obligations was estimated at $31.8 billion, compared to a carrying amount of $29.5 billion. The fair value was based on quoted market prices, Level 2 within the valuation hierarchy. The carrying amount for both cash equivalents and notes receivable approximate fair value.
FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not hold or issue derivatives for trading purposes.
The Company documents its risk management objective and strategy for undertaking hedging transactions, as well as all relationships between hedging instruments and hedged items. The Company’s derivatives that are designated for hedge accounting consist mainly of interest rate swaps, foreign currency forwards, and cross-currency swaps, and are classified as either fair value, cash flow or net investment hedges. Further details are explained in the "Fair Value," "Cash Flow" and "Net Investment" hedge sections.
The Company also enters into certain derivatives that are not designated for hedge accounting. The Company has entered into equity derivative contracts, including total return swaps, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. Further details are explained in the “Undesignated Derivatives” section.
All derivatives (including those not designated for hedge accounting) are recognized on the consolidated balance sheet at fair value and classified based on the instruments’ maturity dates. Changes in the fair value measurements of the derivative instruments are reflected as adjustments to accumulated other comprehensive income ("AOCI") and/or current earnings.













The following table presents the fair values of derivative instruments included on the consolidated balance sheet as of December 31, 2017 and 2016:
  
Derivative Assets
 
Derivative Liabilities
In millions
Balance Sheet Classification
 
2017

 
2016

 
Balance Sheet Classification
 
2017

 
2016

Derivatives designated as hedging instruments
 
 
 
 
 
 
 
 
Foreign currency
Prepaid expenses and other current assets
 
$
0.5

 
$
31.7

 
Accrued payroll and other liabilities
 
$
(31.0
)
 
$
(2.0
)
Interest rate
Prepaid expenses and other current assets
 
—

 
1.0

 
Prepaid expenses and other current liabilities
 
(0.3
)
 
—

Foreign currency
Miscellaneous other assets
 
0.1

 
2.5

 
Other long-term liabilities
 
(1.4
)
 
(0.1
)
Interest rate
Miscellaneous other assets
 
—

 
1.7

 
Other long-term liabilities
 
(5.9
)
 
(1.6
)
Total derivatives designated as hedging instruments
 
$
0.6

 
$
36.9

 
 
 
$
(38.6
)
 
$
(3.7
)
Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
 
Equity
Prepaid expenses and other current assets
 
$
—

 
$
134.3

 
Accrued payroll and other liabilities
 
$
(6.8
)
 
$
(1.9
)
Foreign currency
Prepaid expenses and other current assets
 
—

 
10.1

 
 
 


 


Equity
Miscellaneous other assets
 
167.3

 
—

 
 
 
 
 
 
Total derivatives not designated as hedging instruments
 
$
167.3

 
$
144.4

 
 
 
$
(6.8
)
 
$
(1.9
)
Total derivatives
 
$
167.9

 
$
181.3

 
 
 
$
(45.4
)
 
$
(5.6
)

Fair Value Hedges
The Company enters into fair value hedges to reduce the exposure to changes in the fair values of certain liabilities. The Company's fair value hedges convert a portion of its fixed-rate debt into floating-rate debt by use of interest rate swaps. At December 31, 2017, $1.8 billion of the Company's outstanding fixed-rate debt was effectively converted. All of the Company’s interest rate swaps meet the shortcut method requirements. Accordingly, changes in the fair value of the interest rate swaps are exactly offset by changes in the fair value of the underlying debt. No ineffectiveness has been recorded to net income related to interest rate swaps designated as fair value hedges for the year ended December 31, 2017.
Derivatives in Hedging
Relationships
 
Gain (Loss)
Recognized In Earnings
on Hedging Derivative
 
Gain (Loss)
Recognized In Earnings
on Hedged Items
 
 
In millions
 
 
2017

 
2016

 
 
2017

 
2016

Interest rate
 
 
$
(6.2
)
 
$
(1.8
)
 
 
$
6.2

 
$
1.8


Cash Flow Hedges
The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. The types of cash flow hedges the Company enters into include interest rate swaps, foreign currency forwards, and cross currency swaps. The effective portion of the change in fair value of the derivatives are reported as a component of AOCI and reclassified into earnings in the same period in which the hedged transaction affects earnings. Ineffectiveness of hedges is recognized immediately in earnings.
 
 
Gain (Loss)
Recognized in AOCI
(Effective Portion)
 
Gain (Loss) Reclassified
From AOCI Into Earnings
(Effective Portion)
 
Gain (Loss)
Recognized in Earnings
(Amount Excluded from
Effectiveness Testing and
Ineffective Portion)
Derivatives in Hedging
Relationships
 
 
 
 
 
 
In millions
 
 
2017

 
2016

 
 
2017

 
2016

 
 
2017

 
2016

Foreign currency
 
 
$
(76.0
)
 
$
28.6

 
 
$
(13.7
)
 
$
24.6

 
 
 
 
 
Interest rate(1)
 
 
—

 
—

 
 
(0.5
)
 
(0.5
)
 
 
 
 
 
 
 
 
$
(76.0
)
 
$
28.6

 
 
$
(14.2
)
 
$
24.1

 
 
$
—

 
$
—

(1)The amount of gain (loss) reclassified from AOCI into earnings is recorded in interest expense.
The Company periodically uses interest rate swaps to effectively convert a portion of floating-rate debt, including forecasted debt issuances, into fixed-rate debt. The agreements are intended to reduce the impact of interest rate changes on future interest expense.
To protect against the reduction in value of forecasted foreign currency cash flows (such as royalties denominated in foreign currencies), the Company uses foreign currency forwards to hedge a portion of anticipated exposures. When the U.S. dollar strengthens against foreign currencies, the decline in value of future foreign denominated royalties is offset by gains in the fair value of the foreign currency forwards. Conversely, when the U.S. dollar weakens, the increase in the value of future foreign denominated royalties is offset by losses in the fair value of the foreign currency forwards. The hedges cover the next 18 months for certain exposures and are denominated in various currencies. As of December 31, 2017, the Company had derivatives outstanding with an equivalent notional amount of $761.7 million that were used to hedge a portion of forecasted foreign currency denominated royalties.
The Company recorded after tax adjustments to the cash flow hedging component of AOCI in shareholders’ equity. The Company recorded a decrease of $39.4 million for the year ended December 31, 2017 and an increase of $2.9 million for the year ended December 31, 2016. Based on interest rates and foreign exchange rates at December 31, 2017, there is $16.5 million in after-tax cumulative cash flow hedging losses, which is not expected to have a significant effect on earnings over the next 12 months.
Net Investment Hedges
The Company primarily uses foreign currency denominated debt (third party and intercompany) to hedge its investments in certain foreign subsidiaries and affiliates. Realized and unrealized translation adjustments from these hedges are included in the foreign currency translation component of AOCI, as well as the offset translation adjustments on the underlying net assets of foreign subsidiaries and affiliates. The cumulative translation gains or losses will remain in AOCI until the foreign subsidiaries and affiliates are liquidated or sold. As of December 31, 2017, $11.9 billion of third party foreign currency denominated debt and $3.6 billion of intercompany foreign currency denominated debt were designated to hedge investments in certain foreign subsidiaries and affiliates.
Derivatives in Hedging
Relationships
 
Gain (Loss)
Recognized in AOCI
(Effective Portion)
 
In millions
 
 
2017

 
2016

Foreign currency denominated debt
 
 
$
(1,599.7
)
 
$
654.9

Foreign currency derivatives
 
 
(8.9
)
 
9.9


 
 
$
(1,608.6
)
 
$
664.8


Undesignated Derivatives
The Company enters into certain derivatives that are not designated for hedge accounting, therefore the changes in the fair value of these derivatives are recognized immediately in earnings together with the gain or loss from the hedged balance sheet position. As an example, the Company enters into equity derivative contracts, including total return swaps, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. Changes in the fair value of these derivatives are recorded in Selling, general & administrative expenses together with the changes in the supplemental benefit plan liabilities. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. The changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net,
along with the currency gain or loss from the hedged balance sheet position.
Derivatives Not Designated
for Hedge Accounting
 
Gain (Loss)
Recognized in Earnings
 
In millions
 
 
2017

 
2016

Foreign currency
 
 
$
(24.2
)
 
$
4.3

Equity
 
 
92.7

 
26.0

 
 
 
$
68.5

 
$
30.3


Credit Risk
The Company is exposed to credit-related losses in the event of non-performance by the counterparties to its hedging instruments. The counterparties to these agreements consist of a diverse group of financial institutions and market participants. The Company continually monitors its positions and the credit ratings of its counterparties and adjusts positions as appropriate. The Company did not have significant exposure to any individual counterparty at December 31, 2017, and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in the financial statements and supplementary data, even for counterparties subject to netting arrangements. Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits. At December 31, 2017, the Company was required to post an immaterial amount of collateral due to negative fair value of certain derivative positions. The Company's counterparties were not required to post collateral on any derivative position, other than on hedges of certain of the Company’s supplemental benefit plan liabilities where the counterparties were required to post collateral on their liability positions.
INCOME TAX UNCERTAINTIES INCOME TAXES
Income Tax Uncertainties
The Company, like other multi-national companies, is regularly audited by federal, state and foreign tax authorities, and tax assessments may arise several years after tax returns have been filed. Accordingly, tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition. For tax positions that meet the more likely than not threshold, a tax liability may still be recorded depending on management’s assessment of how the tax position will ultimately be settled.
The Company records interest and penalties on unrecognized tax benefits in the provision for income taxes.
Accounting for Global Intangible Low-Taxed Income ("GILTI")
The Tax Act requires a U.S. shareholder of a foreign corporation to include GILTI in taxable income. The accounting policy of the Company is to record any tax on GILTI in the provision for income taxes in the year it is incurred.
PER COMMON SHARE INFORMATION PER COMMON SHARE INFORMATIONDiluted earnings per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation calculated using the treasury stock method, of (in millions of shares): 2017–8.1; 2016–6.8; 2015–5.2. Stock options that were not included in diluted weighted-average shares because they would have been antidilutive were (in millions of shares): 2017–0.1; 2016–1.2; 2015–1.0.
CASH AND EQUIVALENTS CASH AND EQUIVALENTSThe Company considers short-term, highly liquid investments with an original maturity of 90 days or less to be cash equivalents.
SUBSEQUENT EVENTS SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date the
financial statements were issued and filed with the U.S. Securities
and Exchange Commission ("SEC"). There were no subsequent
events that required recognition or disclosure.