MCDONALDS CORP 10-Q

Item 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) In millions, except per share data March 31, 2025 December 31, 2024 Assets Current assets Cash and equivalents $ 1,238 $ 1,085 Accounts and notes receivable 2,387 2,383 Inventories, at cost, not in excess of market 51 56 Prepaid expenses and other current assets 1,060 1,074 Total current assets 4,735 4,599 Other assets Investments in affiliates 2,751 2,710 Goodwill 3,186 3,145 Miscellaneous 6,265 6,095 Total other assets 12,202 11,950 Lease right-of-use asset, net 13,642 13,339 Property and equipment Property and equipment, at cost 45,258 44,177 Accumulated depreciation and amortization ( 19,509 ) ( 18,882 ) Net property and equipment 25,749 25,295 Total assets $ 56,329 $ 55,182 Liabilities and shareholders’ equity (deficit) Current liabilities Short-term borrowings and current maturities of long-term debt $ 80 $ — Accounts payable 882 1,029 Lease liability 663 636 Income taxes 556 361 Other taxes 235 224 Accrued interest 401 482 Accrued payroll and other liabilities 1,191 1,129 Total current liabilities 4,008 3,861 Long-term debt 38,845 38,424 Long-term lease liability 13,175 12,888 Long-term income taxes 365 344 Deferred revenues - initial franchise fees 914 778 Other long-term liabilities 755 771 Deferred income taxes 1,721 1,914 Shareholders’ equity (deficit) Preferred stock, no par value; authorized – 165.0 million shares; issued – none — — Common stock, $ 0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares 17 17 Additional paid-in capital 9,423 9,281 Retained earnings 67,436 66,834 Accumulated other comprehensive income (loss) ( 2,557 ) ( 2,553 ) Common stock in treasury, at cost; 945.6 and 945.4 million shares ( 77,773 ) ( 77,375 ) Total shareholders’ equity (deficit) ( 3,454 ) ( 3,797 ) Total liabilities and shareholders’ equity (deficit) $ 56,329 $ 55,182 See Notes to Condensed Consolidated Financial Statements. 3 Table of Contents CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) Quarters Ended March 31, In millions, except per share data 2025 2024 Revenues Revenues from franchised restaurants $ 3,661 $ 3,723 Sales by Company-owned and operated restaurants 2,132 2,355 Other revenues 162 91 Total revenues 5,956 6,169 Operating costs and expenses Franchised restaurants-occupancy expenses 620 627 Company-owned and operated restaurant expenses 1,859 2,035 Other restaurant expenses 140 68 Selling, general & administrative expenses Depreciation and amortization 107 99 Other 575 622 Other operating (income) expense, net 7 ( 17 ) Total operating costs and expenses 3,308 3,433 Operating income 2,648 2,736 Interest expense 376 372 Nonoperating (income) expense, net ( 57 ) ( 45 ) Income before provision for income taxes 2,330 2,409 Provision for income taxes 461 479 Net income $ 1,868 $ 1,929 Earnings per common share-basic $ 2.61 $ 2.67 Earnings per common share-diluted $ 2.60 $ 2.66 Dividends declared per common share $ 1.77 $ 1.67 Weighted-average shares outstanding-basic 714.9 721.8 Weighted-average shares outstanding-diluted 718.2 725.9 See Notes to Condensed Consolidated Financial Statements. 4 Table of Contents CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) Quarters Ended March 31, In millions 2025 2024 Net income $ 1,868 $ 1,929 Other comprehensive income (loss), net of tax Foreign currency translation adjustments: Gain (loss) recognized in accumulated other comprehensive income ("AOCI"), including net investment hedges 70 ( 115 ) Reclassification of (gain) loss to net income — — Foreign currency translation adjustments-net of tax benefit (expense) of $ 136 and $( 93 ) 70 ( 115 ) Cash flow hedges: Gain (loss) recognized in AOCI ( 52 ) 36 Reclassification of (gain) loss to net income ( 15 ) 1 Cash flow hedges-net of tax benefit (expense) of $ 20 and $( 12 ) ( 67 ) 37 Defined benefit pension plans: Gain (loss) recognized in AOCI ( 6 ) 11 Reclassification of (gain) loss to net income ( 1 ) ( 10 ) Defined benefit pension plans-net of tax benefit (expense) of $ 0 and $ 1 ( 7 ) 1 Total other comprehensive income (loss), net of tax ( 4 ) ( 77 ) Comprehensive income $ 1,864 $ 1,852 See Notes to Condensed Consolidated Financial Statements. 5 Table of Contents CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Quarters Ended March 31, In millions 2025 2024 Operating activities Net income $ 1,868 $ 1,929 Adjustments to reconcile to cash provided by operations Charges and credits: Depreciation and amortization 520 510 Deferred income taxes ( 44 ) ( 138 ) Share-based compensation 45 50 Other ( 73 ) ( 31 ) Changes in working capital items 111 70 Cash provided by operations 2,428 2,390 Investing activities Capital expenditures ( 551 ) ( 547 ) Purchases of restaurant businesses ( 75 ) ( 52 ) Purchases of equity method investments — ( 1,820 ) Sales of restaurant businesses 49 42 Sales of property 5 8 Other ( 200 ) ( 124 ) Cash used for investing activities ( 771 ) ( 2,493 ) Financing activities Net short-term borrowings ( 792 ) ( 339 ) Long-term financing issuances 1,498 — Long-term financing repayments ( 693 ) ( 1,285 ) Treasury stock purchases ( 477 ) ( 918 ) Common stock dividends ( 1,266 ) ( 1,206 ) Proceeds from stock option exercises 147 99 Other 40 ( 12 ) Cash used for financing activities ( 1,543 ) ( 3,661 ) Effect of exchange rates on cash and cash equivalents 39 21 Cash and equivalents increase (decrease) 153 ( 3,742 ) Cash and equivalents at beginning of period 1,085 4,579 Cash and equivalents at end of period $ 1,238 $ 838 See Notes to Condensed Consolidated Financial Statements. 6 Table of Contents CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) For the quarter ended March 31, 2024 Common stock issued Accumulated other comprehensive income (loss) Common stock in treasury Total shareholders’ equity (deficit) Additional paid-in capital Retained earnings Pensions Cash flow hedges Foreign currency translation In millions, except per share data Shares Amount Shares Amount Balance at December 31, 2023 1,660.6 $ 17 $ 8,893 $ 63,480 $ ( 367 ) $ ( 6 ) $ ( 2,083 ) ( 937.9 ) $ ( 74,640 ) $ ( 4,707 ) Net income 1,929 1,929 Other comprehensive income (loss), net of tax 1 37 ( 115 ) ( 77 ) Comprehensive income 1,852 Common stock cash dividends ($ 1.67 per share) ( 1,206 ) ( 1,206 ) Treasury stock purchases ( 3.2 ) ( 921 ) ( 921 ) Share-based compensation 50 50 Stock option exercises and other 58 1.2 41 99 Balance at March 31, 2024 1,660.6 $ 17 $ 9,001 $ 64,203 $ ( 367 ) $ 32 $ ( 2,198 ) ( 939.9 ) $ ( 75,520 ) $ ( 4,833 ) For the quarter ended March 31, 2025 Common stock issued Accumulated other comprehensive income (loss) Common stock in treasury Total shareholders’ equity (deficit) Additional paid-in capital Retained earnings Pensions Cash flow hedges Foreign currency translation In millions, except per share data Shares Amount Shares Amount Balance at December 31, 2024 1,660.6 $ 17 $ 9,281 $ 66,834 $ ( 393 ) $ 119 $ ( 2,279 ) ( 945.4 ) $ ( 77,375 ) $ ( 3,797 ) Net income 1,868 1,868 Other comprehensive income (loss), net of tax ( 7 ) ( 67 ) 70 ( 4 ) Comprehensive income 1,864 Common stock cash dividends ($ 1.77 per share) ( 1,266 ) ( 1,266 ) Treasury stock purchases ( 1.5 ) ( 447 ) ( 447 ) Share-based compensation 45 45 Stock option exercises and other 98 1.4 49 147 Balance at March 31, 2025 1,660.6 $ 17 $ 9,423 $ 67,436 $ ( 400 ) $ 52 $ ( 2,209 ) ( 945.6 ) $ ( 77,773 ) $ ( 3,454 ) See Notes to Condensed Consolidated Financial Statements. 7 Table of Contents NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) McDonald’s Corporation, the registrant, together with its subsidiaries, is referred to herein as the "Company." The Company, its franchisees and suppliers, are referred to herein as the "System." Basis of Presentation The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s December 31, 2024 Annual Report on Form 10-K. In the opinion of management, all normal recurring adjustments necessary for a fair presentation have been included. The results for the quarter ended March 31, 2025 do not necessarily indicate the results that may be expected for the full year. Certain columns and rows within the financial statements and tables presented may not add due to rounding. Percentages have been calculated from the underlying whole-dollar amounts for all periods presented. Restaurant Information The following table presents restaurant information by ownership type: Restaurants at March 31, 2025 2024 Conventional franchised 22,126 21,841 Developmental licensed 9,300 8,741 Foreign affiliated 10,294 9,283 Total Franchised 41,720 39,865 Company-owned and operated 2,036 2,153 Total Systemwide restaurants 43,756 42,018 The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either individually or in the aggregate to the accompanying Condensed Consolidated Financial Statements. Per Common Share Information Diluted earnings per common share is calculated as 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 3.3 million shares and 4.1 million shares for the quarters ended March 31, 2025 and March 31, 2024, respectively. Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 2.2 million shares and 2.1 million shares for the quarters ended March 31, 2025 and March 31, 2024, respectively. Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted Income Taxes In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). The pronouncement expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We are currently in the process of determining the impact that ASU 2023-09 will have on the Company's consolidated financial statement disclosures. Disaggregation - Income Statement Expenses In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). The pronouncement expands the disclosure requirements for expenses, specifically by providing more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently in the process of determining the impact that ASU 2024-03 will have on the Company's consolidated financial statement disclosures. 8 Table of Contents Accelerating the Organization In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy included the addition of Restaurant Development to the Company’s growth pillars and an internal effort to modernize ways of working, Accelerating the Organization , both of which are aimed at elevating the Company’s performance. Accelerating the Organization is designed to unlock further growth as the Company focuses on becoming faster, more innovative and more efficient for its customers and people. The Company incurred $ 66 million and $ 44 million of restructuring charges related to Accelerating the Organization in the three months ended March 31, 2025 and 2024, respectively. These restructuring charges were recorded in the Other operating (income) expense, net line within the Condensed Consolidated Statement of Income. There were no significant non-cash impairment charges included in the amounts listed in the table below. The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions): Employee Termination Benefits Costs to Terminate Contracts Professional Services and Other Costs Total 2025 Accrued Balance at Beginning of Year $ 23 $ 4 $ 15 $ 42 Restructuring Costs Incurred 17 — 49 66 Cash Payments ( 5 ) — ( 31 ) ( 36 ) Other Non-Cash Items — — 1 1 Accrued Balance at March 31, 2025 $ 35 $ 4 $ 34 $ 73 Of the $ 66 million of restructuring charges incurred in the three months ended March 31, 2025, $ 48 million was recorded primarily at Corporate and $ 18 million was recorded in the International Operated Markets. Substantially all of the accrued restructuring balance recorded at March 31, 2025, related to the Company's Accelerating the Organization initiative, is expected to be paid out over the next twelve months. The Company continues to evolve its ways of working by driving efficiency and effectiveness across the organization, primarily led by its Global Business Services ("GBS") organization. Transformation efforts under Accelerating the Organization will continue to result in various restructuring charges as the strategy progresses through its anticipated completion during 2027, with $ 537 million of total restructuring charges incurred since the initiative commenced in 2023. The Company currently expects to incur approximately $ 300 million of restructuring charges in 2025, primarily related to professional services costs. 9 Table of Contents Equity Method Investments The Company has various investments accounted for using the equity method. Under the equity method of accounting, the Company records its proportionate share of the net income or loss of each equity method investee, with a corresponding change to the carrying value of the investment. The carrying value of the investment is also adjusted for any dividends received and the effect of foreign exchange. The Company records its proportionate share of net income or loss within the Other operating (income) expense, net line on the Condensed Consolidated Statement of Income. The carrying value of the investments are recorded within the Investments in affiliates line on the Condensed Consolidated Balance Sheet. The Company has elected to record dividends received from its equity method investments under the nature of distribution approach, which provides for the recording of such distributions within the cash provided by operations section of the Condensed Consolidated Statement of Cash Flows to the extent that such distributions are from the normal operating or financing activities of the investee. The Company’s primary equity method investments include partial ownership in Grand Foods Holding, an entity that operates and manages McDonald's business in mainland China, Hong Kong and Macau, and partial ownership in McDonald’s Japan Holdings Co., Ltd, an entity that operates and manages McDonald’s business in Japan. The Company has granted these entities the right to operate the McDonald's business as part of a Master Franchise Agreement. Revenue related to these agreements are accounted for in a manner consistent with the Company’s other franchise arrangements. The following table summarizes the amounts related to the Company’s primary equity method investees during the periods presented. March 31, 2025 December 31, 2024 In Millions Percentage Ownership Fair Value (Level 1) Carrying Amount Percentage Ownership Fair Value (Level 1) Carrying Amount Grand Foods Holding 48 % N/A $ 2,005 48 % N/A $ 1,973 McDonald's Japan Holdings Co., Ltd 35 % $ 1,788 $ 625 35 % $ 1,849 $ 590 As of March 31, 2025, the aggregate carrying amount of the Company's investments in these equity method investees exceeded its proportionate share of the net assets of these equity method investees by $ 1.5 billion. This difference is not amortized. Management has concluded that there are no indicators of impairment related to these investments. The following table summarizes the amounts recorded related to the Company's primary equity method investments during the three months ended March 31, 2025 and March 31, 2024, respectively. Quarters Ended March 31, In Millions 2025 2024 Revenue $ 139 $ 134 Equity in Earnings $ 51 $ 34 Accounts Receivable $ 114 $ 112 Dividends Received $ 15 $ 13 Income Taxes The effective income tax rate was 19.8 % and 19.9 % for the three months ended March 31, 2025 and 2024, respectively. Fair Value Measurements The Company measures certain financial assets and liabilities at fair value. 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 and 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. There were no significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2024 Annual Report on Form 10-K. At March 31, 2025, the fair value of the Company’s debt obligations was estimated at $ 37.2 billion, compared to a carrying amount of $ 38.9 billion. The fair value of debt obligations is based upon quoted market prices, classified as Level 2 within the valuation hierarchy. The carrying amount of cash and equivalents and notes receivable approximate fair value. 10 Table of Contents 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 following table presents the fair values of derivative instruments included on the Condensed Consolidated Balance Sheet: Derivative Assets Derivative Liabilities In millions Balance Sheet Classification March 31, 2025 December 31, 2024 Balance Sheet Classification March 31, 2025 December 31, 2024 Derivatives designated as hedging instruments Foreign currency Prepaid expenses and other current assets $ 33 $ 125 Accrued payroll and other liabilities $ ( 62 ) $ ( 1 ) Interest rate Prepaid expenses and other current assets — 34 Accrued payroll and other liabilities ( 5 ) ( 6 ) Foreign currency Miscellaneous other assets 7 40 Other long-term liabilities ( 29 ) — Interest rate Miscellaneous other assets — — Other long-term liabilities ( 27 ) ( 34 ) Total derivatives designated as hedging instruments $ 40 $ 199 $ ( 123 ) $ ( 41 ) Derivatives not designated as hedging instruments Equity Prepaid expenses and other current assets $ 146 $ 135 Accrued payroll and other liabilities $ — $ — Foreign currency Prepaid expenses and other current assets — — Accrued payroll and other liabilities — — Total derivatives not designated as hedging instruments $ 146 $ 135 $ — $ — Total derivatives $ 186 $ 334 $ ( 123 ) $ ( 41 ) The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the three months ended March 31, 2025 and 2024, respectively: Location of gain or loss recognized in income on derivative Gain (loss) recognized in AOCI Gain (loss) reclassified into income from AOCI Gain (loss) recognized in income on derivative In millions 2025 2024 2025 2024 2025 2024 Foreign currency Nonoperating income/expense $ ( 51 ) $ 43 $ 20 $ ( 2 ) Interest rate Interest expense ( 16 ) 4 — — Cash flow hedges $ ( 67 ) $ 47 $ 20 $ ( 2 ) Foreign currency denominated debt Nonoperating income/expense $ ( 504 ) $ 349 Foreign currency derivatives Nonoperating income/expense ( 86 ) 37 Foreign currency derivatives (1) Interest expense $ 15 $ 7 Net investment hedges $ ( 590 ) $ 386 $ — $ 15 $ 7 Foreign currency Nonoperating income/expense $ ( 5 ) $ 1 Equity Selling, general & administrative expenses 11 ( 9 ) Undesignated derivatives $ 6 $ ( 8 ) (1) The amount of gain (loss) recognized in income related to components excluded from effectiveness testing. Fair Value Hedges The Company enters into fair value hedges to reduce the exposure to changes in fair values of certain liabilities. The Company enters into fair value hedges that convert a portion of its fixed rate debt into floating rate debt by use of interest rate swaps. At March 31, 2025, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $ 793 million, which included a decrease of $ 32 million of cumulative hedging adjustments. For the three months ended March 31, 2025, the Company recognized an $ 8 million gain on the fair value of interest rate swaps, and a corresponding loss on the fair value of the related hedged debt instrument to interest expense. 11 Table of Contents Cash Flow Hedges The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. 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. The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies. As of March 31, 2025, the Company had derivatives outstanding with an equivalent notional amount of $ 2.1 billion that hedged a portion of forecasted foreign currency denominated cash flows. Based on market conditions at March 31, 2025, the $ 52 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on the Company's earnings over the next 12 months. Net Investment Hedges The Company uses foreign currency denominated debt (third-party and intercompany) and foreign currency derivatives to hedge its investments in certain foreign subsidiaries and affiliates. Realized and unrealized translation adjustments from these hedges are included in shareholders' equity in the foreign currency translation component of Other comprehensive income ("OCI") and offset translation adjustments on the underlying net assets of foreign subsidiaries and affiliates, which also are recorded in OCI. As of March 31, 2025, $ 12.9 billion of the Company's third-party foreign currency denominated debt, $ 176 million of the Company's intercompany foreign currency denominated debt and $ 3.3 billion of foreign currency derivatives were designated to hedge investments in certain foreign subsidiaries and affiliates. 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, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. The Company may also use certain investments to hedge changes in these liabilities. Changes in the fair value of these derivatives or investments 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. Credit Risk The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties. The Company did not have significant exposure to any individual counterparty at March 31, 2025 and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in its financial statements and supplementary data, including 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 March 31, 2025, the Company was required to post $ 36 million of collateral due to the negative fair value of certain derivative positions. Franchise Arrangements Revenues from franchised restaurants consisted of: Quarters Ended March 31, In millions 2025 2024 Rents $ 2,313 $ 2,381 Royalties 1,330 1,326 Initial fees 18 15 Revenues from franchised restaurants $ 3,661 $ 3,723 12 Table of Contents Segment Information The Company operates under the following global organizational structure, reflecting how management reviews and evaluates operating performance: • U.S. segment - the Company's largest market. The segment is 95 % franchised as of March 31, 2025. • International Operated Markets segment - comprised of markets or countries in which the Company owns and operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, Poland, Spain and the U.K. The segment is 89 % franchised as of March 31, 2025 . • International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s System, including equity method investments in China and Japan, as well as Corporate activities. The International Developmental Licensed Markets are 99 % franchised as of March 31, 2025. The Company's chief operating decision makers are the President and Chief Executive Officer ("CEO") and the Executive Vice President and Global Chief Financial Officer ("CFO"). Segment performance and resource allocation are evaluated based on one measure of a segment's profit or loss, operating income. All intercompany revenues and expenses are eliminated in computing revenues and operating income. Corporate general and administrative expenses consist of corporate office support costs in areas such as facilities, finance, human resources, information technology, legal, marketing, restaurant operations, supply chain and training. Corporate assets include corporate cash and equivalents, financial instruments and office facilities. 13 Table of Contents Quarters Ended March 31, In millions 2025 2024 U.S. $ 2,494 $ 2,560 International Operated Markets 2,916 2,987 International Developmental Licensed Markets & Corporate 546 621 Total Revenues $ 5,956 $ 6,169 U.S. $ 319 $ 324 International Operated Markets 301 298 International Developmental Licensed Markets & Corporate — 4 Total Franchised restaurants-occupancy expenses $ 620 $ 627 U.S. $ 645 $ 674 International Operated Markets 1,123 1,158 International Developmental Licensed Markets & Corporate 91 203 Total Company-operated restaurant expenses $ 1,859 $ 2,035 U.S. $ 143 $ 141 International Operated Markets 161 161 International Developmental Licensed Markets & Corporate 378 418 Total Selling, general, & administrative expenses $ 682 $ 720 U.S. $ 85 $ 26 International Operated Markets 42 5 International Developmental Licensed Markets & Corporate 20 21 Total Other segment items* $ 147 $ 51 U.S. $ 1,302 $ 1,395 International Operated Markets 1,289 1,365 International Developmental Licensed Markets & Corporate 57 ( 25 ) Total Operating income $ 2,648 $ 2,736 U.S. $ 22,638 $ 22,333 International Operated Markets 24,723 23,521 International Developmental Licensed Markets & Corporate 8,968 7,659 Total Assets $ 56,329 $ 53,513 U.S. $ 225 $ 210 International Operated Markets 322 311 International Developmental Licensed Markets & Corporate 4 25 Total Capital expenditures $ 551 $ 547 U.S. $ 241 $ 247 International Operated Markets 182 177 International Developmental Licensed Markets & Corporate 98 86 Total Depreciation & amortization** $ 520 $ 510 *Other segment items is the difference between revenues less the significant expenses disclosed and operating income. This includes other restaurant expenses and other operating expenses included in the Other operating (income) expense, net line within the Condensed Consolidated Statement of Income. **Total depreciation & amortization is included within the respective expense lines disclosed above, such as Company-operated restaurant expenses, Franchised restaurants-occupancy expenses, and Selling, general & administrative expenses. 14 Table of Contents