What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-06 · 93 added, 88 removed, 629 unchanged (22% of the section changed)

5 unchanged sentences

The Company franchises and owns and operates McDonald's restaurants, which serve a locally relevant menu of quality food and beverages in communities across more than 100 countries.

Of the 44,113 McDonald's restaurants at June 30, 2025, approximately 95% were franchised.

Of the 44,599 McDonald's restaurants at September 30, 2025, approximately 95% were franchised.

The Company's reporting segments are aligned with its strategic priorities and reflect how management reviews and evaluates operating performance.

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Further, the Company plans to grow its annual Systemwide sales to loyalty members to $45.0 billion by the end of 2027.

The Company offers delivery from over 39,000 restaurants across approximately 100 markets, representing nearly 90% of McDonald's restaurants.

The Company offers delivery from approximately 40,000 restaurants across approximately 100 markets, representing nearly 90% of McDonald's restaurants.

The Company is continuing to build on and enhance the delivery experience for customers, including adding the ability to place a delivery order in our mobile app (a feature that is currently available in five of the Company's top markets).

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◦ Drive Thru:

The Company has the most drive thru locations worldwide, with over 28,000 drive thru locations globally, including over 95% of the over 13,500 locations in the U.S.

The Company has the most drive thru locations worldwide, with nearly 29,000 drive thru locations globally, including over 95% of the over 13,500 locations in the U.S.

This channel remains a competitive advantage in meeting customers’ demand for flexibility and choice.

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is supported by a strong global senior leadership team aimed at executing against the MCD growth pillars, further developing our three platforms and driving long-term growth through increasing guest counts and growing industry market share.

Second Quarter and Six Months 2025 Financial Performance

Global comparable sales increased 3.8% for the quarter and increased 1.4% for the six months.

comparable sales increased 2.5% for the quarter and decreased 0.5% for the six months.

Comparable sales results for the quarter were primarily driven by positive check growth, while results for the six months were primarily driven by negative guest counts.

• International Operated Markets comparable sales increased 4.0% for the quarter and 1.6% for the six months.

All markets reflected positive comparable sales for the quarter.

Results for the six months were driven by positive comparable sales in nearly all markets.

• International Developmental Licensed Markets comparable sales increased 5.6% for the quarter and 4.5% for the six months.

Third Quarter and Nine Months 2025 Financial Performance

Global comparable sales increased 3.6% for the quarter and 2.2% for the nine months.

comparable sales increased 2.4% for the quarter and 0.5% for the nine months.

Comparable sales results for both periods were primarily driven by positive check growth.

• International Operated Markets comparable sales increased 4.3% for the quarter and 2.6% for the nine months.

All markets reflected positive comparable sales for the quarter, led by Germany and Australia.

Results for the nine months were driven by positive comparable sales in nearly all markets.

• International Developmental Licensed Markets comparable sales increased 4.7% for the quarter and 4.6% for the nine months.

Positive comparable sales for both periods were led by Japan, with all geographic regions reflecting positive comparable sales.

In addition to the comparable sales results, the Company had the following financial results for the quarter and six months:

• Consolidated revenues increased 5% (4% in constant currencies) for the quarter and 1% (1% in constant currencies) for the six months.

• Systemwide sales increased 8% (6% in constant currencies) for the quarter and 4% (4% in constant currencies) for the six months.

• Consolidated operating income increased 11% (8% in constant currencies) for the quarter and 4% (4% in constant currencies) for the six months.

Excluding current and prior year charges detailed in the Operating Income and Operating Margin section on page 30 of this report, consolidated operating income increased 7% (4% in constant currencies) for the quarter and 2% (2% in constant currencies) for the six months.

• Diluted earnings per share was $ 3.14 for the quarter, an increase of 12% (10% in constant currencies) and $ 5.74 for the six months, an increase of 5% (5% in constant currencies).

Excluding current and prior year charges detailed in the Net Income and Diluted Earnings Per Share section on page 24 of this report, diluted earnings per share for the quarter was $3.19, an increase of 7% (5% in constant currencies) and $5.86, an increase of 4% (3% in constant currencies) for the six months.

In addition to the comparable sales results, the Company had the following financial results for the quarter and nine months:

• Consolidated revenues increased 3% (1% in constant currencies) for the quarter and 2% (1% in constant currencies) for the nine months.

• Systemwide sales increased 8% (6% in constant currencies) for the quarter and 5% (5% in constant currencies) for the nine months.

• Consolidated operating income increased 5% (3% in constant currencies) for the quarter and 4% (3% in constant currencies) for the nine months.

Excluding current and prior year charges detailed in the Operating Income and Operating Margin section on page 30 of this report, consolidated operating income increased 3% (1% in constant currencies) for the quarter and 3% (2% in constant currencies) for the nine months.

• Diluted earnings per share was $ 3.18 for the quarter, an increase of 2% (flat in constant currencies) and $ 8.92 for the nine months, an increase of 4% (3% in constant currencies).

Excluding current and prior year charges detailed in the Net Income and Diluted Earnings Per Share section on page 24 of this report, diluted earnings per share for the quarter was flat at $3.22 (a decrease of 1% in constant currencies) and $9.08, an increase of 2% (1% in constant currencies) for the nine months.

Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other strategic charges and gains, as well as material regulatory and other income tax impacts, and bases incentive compensation plans on these results because the Company believes this better represents underlying business trends.

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Dollars in millions, except per share data

Quarters Ended June 30, 2025 2024 Inc/(Dec)

Quarters Ended September 30, 2025 2024 Inc/(Dec)

Revenues from franchised restaurants $ 4,363 $ 4,094 7 %

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Company-owned and operated restaurant expenses 2,172 2,248 (3)

Other restaurant expenses 149 69 n/m

Other restaurant expenses 135 104 30

Selling, general & administrative expenses

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Other 664 536 24

Other operating (income) expense, net 29 107 (73)

Other operating (income) expense, net ( 37 ) 39 n/m

Total operating costs and expenses 3,721 3,685 1

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Earnings per common share-diluted $ 3.18 $ 3.13 2 %

Six Months Ended June 30, 2025 2024 Inc/(Dec)

Nine Months Ended September 30, 2025 2024 Inc/(Dec)

Revenues from franchised restaurants $ 12,238 $ 11,756 4 %

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Company-owned and operated restaurant expenses 6,109 6,358 (4)

Other restaurant expenses 289 137 n/m

Other restaurant expenses 424 241 76

Selling, general & administrative expenses

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Other 1,834 1,748 5

Other operating (income) expense, net 36 90 (60)

Other operating (income) expense, net ( 1 ) 129 n/m

Total operating costs and expenses 10,639 10,688 —

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The Company’s Systemwide sales and revenue have continued to be negatively impacted by the war in the Middle East, primarily in the International Developmental Licensed Markets, where the majority of restaurants are under a developmental license or affiliate arrangement.

The Company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue until the war concludes and the macroeconomic conditions recover.

The Company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue until macroeconomic conditions recover.

The Company generally does not invest any restaurant capital under a developmental license or affiliate arrangement, and it receives a royalty based on a percent of sales, and generally receives initial fees upon the opening of a new restaurant or grant of a new license.

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Benefit/ (Cost)

Quarters Ended June 30, 2025 2024 2025

Quarters Ended September 30, 2025 2024 2025

Revenues $ 7,078 $ 6,873 $ 151

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Benefit/ (Cost)

Six Months Ended June 30, 2025 2024 2025

Nine Months Ended September 30, 2025 2024 2025

Revenues $ 19,876 $ 19,532 $ 161

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Net Income and Diluted Earnings per Share

For the quarter, net income increased 11% (9% in constant currencies) to $ 2,253 million, and diluted earnings per share increased 12% (10% in constant currencies) to $ 3.14 .

For the quarter, net income increased 1% (flat in constant currencies) to $ 2,278 million, and diluted earnings per share increased 2% (flat in constant currencies) to $ 3.18 .

Foreign currency translation had a positive impact of $0.04 on diluted earnings per share.

For the six months, net income increased 4% (4% in constant currencies) to $ 4,121 million, and diluted earnings per share increased 5% (5% in constant currencies) to $ 5.74 .

For the nine months, net income increased 3% (2% in constant currencies) to $ 6,399 million, and diluted earnings per share increased 4% (3% in constant currencies) to $ 8.92 .

Foreign currency translation had a positive impact of $0.06 on diluted earnings per share.

Results for 2025 included the following:

• Pre-tax charges of $43 million, or $0.05 per share, for the quarter and $109 million, or $0.12 per share, for the six months, primarily related to restructuring charges associated with the Company's internal effort to modernize ways of working ( Accelerating the Organization)

• Net pre-tax charges of $39 million, or $0.04 per share, for the quarter and $148 million, or $0.16 per share, for the nine months, primarily related to restructuring charges associated with the Company's internal effort to modernize ways of working ( Accelerating the Organization)

Results for 2024 included the following:

• Net pre-tax charges of $97 million, or $0.11 per share, for the quarter and $89 million, or $0.10 per share, for the six months, primarily related to non-cash impairment charges associated with the sale of McDonald's business in South Korea

• Pre-tax charges of $57 million, or $0.06 per share, for the quarter and $100 million, or $0.10 per share, for the six months, related to restructuring charges associated with Accelerating the Organization

Excluding the above items, operating income growth for both periods was primarily driven by higher sales-driven Franchised margins.

Results for the six months were partly offset by lower Company-owned and operated margins, driven by the U.S.

During the quarter, the Company paid a dividend of $1.77 per share, or $1.3 billion, resulting in total dividends paid for the six months of $2.5 billion.

Additionally, during the quarter, the Company repurchased 1.7 million shares of stock for $506 million, resulting in total purchases for the six months of 3.2 million shares, or $953 million.

• Net pre-tax charges of $52 million, or $0.05 per share, for the quarter and $142 million, or $0.15 per share, for the nine months, primarily consisted of transaction costs and non-cash impairment charges associated with the sale of McDonald's business in South Korea and transaction costs associated with the acquisition of McDonald's business in Israel

• Pre-tax charges of $46 million, or $0.05 per share, for the quarter and $146 million, or $0.15 per share, for the nine months, related to restructuring charges associated with Accelerating the Organization

Excluding the above items, operating income growth for both periods was primarily driven by higher sales-driven Franchised margins, partly offset by higher Selling, general, and administrative expenses.

During the quarter, the Company paid a dividend of $1.77 per share, or $1,262 million, resulting in total dividends paid for the nine months of $3,792 million.

Additionally, during the quarter, the Company repurchased 1.7 million shares of stock for $503 million, resulting in total purchases for the nine months of 4.8 million shares, or $1,456 million.

NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION

Dollars in millions, except per share data

Quarters Ended June 30,

Quarters Ended September 30,

Net Income Earnings per share - diluted

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Non-GAAP $ 2,308 $ 2,322 (1) % (2) % $ 3.22 $ 3.23 — % (1) %

Six Months Ended June 30,

Nine Months Ended September 30,

Net Income Earnings per share - diluted

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The Company’s Other revenues are primarily comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology and digital platforms and revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand.

Franchised restaurants represented approximately 95% of McDonald's restaurants worldwide at June 30, 2025 .

Franchised restaurants represented approximately 95% of McDonald's restaurants worldwide at September 30, 2025 .

The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.

Dollars in millions

Quarters Ended June 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Quarters Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Franchised revenues

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Total Revenues $ 7,078 $ 6,873 3 % 1 %

Six Months Ended June 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Nine Months Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Franchised revenues

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n/m Not meaningful

• Total Franchised revenues and Company-owned and operated sales increased 4% (2% in constant currencies) for the quarter and were flat (flat in constant currencies) for the six months.

• Total Franchised revenues and Company-owned and operated sales increased 3% (flat in constant currencies) for the quarter and increased 1% (flat in constant currencies) for the nine months.

Both periods benefited from positive sales performance in the International Operated Markets.

In the U.S., the quarter benefited from positive franchised sales performance, while the six months was impacted by negative Company-owned and operated sales performance.

International Developmental Licensed Markets & Corporate revenues for both periods were impacted by the prior year sale of McDonald's business in South Korea, partly offset by the prior year acquisition of McDonald's business in Israel and positive sales performance.

In the U.S., total revenues for the quarter was driven by positive franchised sales performance, while the nine months was driven by negative Company-owned and operated sales performance.

International Developmental Licensed Markets & Corporate revenues for the nine months also reflected the prior year acquisition of McDonald's business in Israel.

Comparable Sales

The following table presents the percent change in comparable sales for the quarters and six months ended June 30, 2025 and 2024:

The following table presents the percent change in comparable sales for the quarters and nine months ended September 30, 2025 and 2024:

Increase/(Decrease)

Quarters Ended June 30, Six Months Ended June 30,

Quarters Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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International Developmental Licensed Markets 4.7 (3.5) 4.6 (1.7)

Total 3.8 % (1.0) % 1.4 % 0.4 %

Total Company 3.6 % (1.5) % 2.2 % (0.2) %

Systemwide Sales and Franchised Sales

The following table presents the percent change in Systemwide sales for the quarter and six months ended June 30, 2025:

The following table presents the percent change in Systemwide sales for the quarter and nine months ended September 30, 2025:

SYSTEMWIDE SALES*

Quarter Ended June 30, 2025 Six Months Ended June 30, 2025

Quarter Ended September 30, 2025 Nine Months Ended September 30, 2025

Inc/ (Dec) Inc/ (Dec)

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International Developmental Licensed Markets 11 10 10 10

Total 8 % 6 % 4 % 4 %

Total Company 8 % 6 % 5 % 5 %

*Unlike comparable sales, the Company has not excluded sales from hyperinflationary markets from Systemwide sales as these sales are the basis on which the Company calculates and records revenues.

Franchised sales are not recorded as revenues by the Company, but are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base.

The following table presents Franchised sales and the related increases/(decreases) for the quarters and six months ended June 30, 2025 and 2024:

The following table presents Franchised sales and the related increases/(decreases) for the quarters and nine months ended September 30, 2025 and 2024:

FRANCHISED SALES

Dollars in millions

Quarters Ended June 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Quarters Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

$ 13,376 $ 12,893 4 % 4 %

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Total $ 34,093 $ 31,333 9 % 7 %

Six Months Ended June 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Nine Months Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

$ 38,378 $ 37,743 2 % 2 %

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Inc/ (Dec) Inc/ (Dec)

Quarters Ended June 30, 2025 2024

Quarters Ended September 30, 2025 2024

$ 1,581 $ 1,525 4 % 4 %

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Inc/ (Dec) Inc/ (Dec)

Six Months Ended June 30, 2025 2024

Nine Months Ended September 30, 2025 2024

$ 4,517 $ 4,444 2 % 2 %

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Franchised margins represented approximately 90% of restaurant margin dollars.

• Company-owned and operated margins for both periods reflected the impact of ongoing inflationary cost pressures and negative sales performance in the U.S., while the International Operated Markets reflected sales-driven growth, partly offset by the impact of ongoing inflationary cost pressures.

• Total restaurant margins included depreciation and amortization expense of $425 million and $401 million for the quarters ended 2025 and 2024, respectively, and $839 million and $813 million for the six months ended 2025 and 2024, respectively.

• Company-owned and operated margins for both periods reflected the impact of ongoing inflationary cost pressures in the U.S.

and the International Operated Markets.

was impacted by negative sales performance, while the International Operated Markets reflected sales-driven growth.

• Total restaurant margins included depreciation and amortization expense of $438 million and $420 million for the quarters ended 2025 and 2024, respectively, and $1.3 billion and $1.2 billion for the nine months ended 2025 and 2024, respectively.

Selling, General & Administrative Expenses

• Selling, general and administrative expenses increased $9 million or 1% (flat in constant currencies) for the quarter and decreased $29 million or 2% (2% in constant currencies) for the six months.

Results for the quarter primarily reflected higher incentive-based compensation, partly offset by the comparison to prior year costs related to the 2024 Worldwide Owner/Operator convention, while the six months primarily reflected the comparison to prior year costs related to the 2024 Worldwide Owner/Operator convention, partly offset by higher incentive-based compensation.

• Selling, general and administrative expenses as a percent of Systemwide sales were 2.1% and 2.2% for the six months ended June 30, 2025 and 2024, respectively.

• Selling, general and administrative expenses increased $137 million or 21% (20% in constant currencies) for the quarter and increased $109 million or 5% (5% in constant currencies) for the nine months.

Results for the quarter primarily reflected increased spend on marketing initiatives, higher incentive-based compensation and investments in digital and technology, as well as transformation efforts, under our Accelerating the Arches strategy.

Results for the nine months primarily reflected higher employee costs, including incentive-based compensation.

• Selling, general and administrative expenses as a percent of Systemwide sales were 2.1% for both the nine months ended September 30, 2025 and 2024, respectively.

Other Operating (Income) Expense, Net

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Dollars in millions

Quarters Ended Six Months Ended

June 30, June 30,

Quarters Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

4 unchanged sentences

Total $ ( 37 ) $ 39 $ ( 1 ) $ 129

• Equity in earnings of unconsolidated affiliates for both periods primarily reflected higher equity in earnings in China as a result of improved operating performance.

• The increase in asset dispositions and other (income) expense, net for both periods reflected higher asset write-offs, higher store closing costs and litigation settlements.

• Impairment and other charges (gains), net reflected pre-tax charges of $43 million and $109 million for the quarter and the six months, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Results for the quarter and six months ended 2024 reflected net pre-tax charges of $97 million and $89 million, respectively, primarily related to non-cash impairment charges associated with the sale of McDonald's business in South Korea and pre-tax charges of $57 million and $100 million for the quarter and six months, respectively, related to restructuring charges associated with Accelerating the Organization .

• Gains on sales of restaurant businesses increased for both periods primarily due to more sales of restaurants in the International Operated Markets and the U.S.

• Equity in earnings of unconsolidated affiliates for both periods primarily reflected higher equity in earnings in China and Japan as a result of improved operating performance.

• The increase in asset dispositions and other (income) expense, net for both periods primarily reflected higher asset write-offs and higher store closing costs.

• Impairment and other charges (gains), net reflected net pre-tax charges of $39 million and $148 million for the quarter and the nine months, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Results for the quarter and nine months ended 2024 reflected net pre-tax charges of $52 million and $142 million, respectively, primarily consisting of transaction costs and non-cash impairment charges associated with the sale of McDonald's business in South Korea and transaction costs associated with the acquisition of McDonald's business in Israel, and pre-tax charges of $46 million and $146 million for the quarter and nine months, respectively, related to restructuring charges associated with Accelerating the Organization .

Operating Income

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Dollars in millions

Quarters Ended June 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Quarters Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

$ 1,498 $ 1,493 — % — %

International Operated Markets 1,761 1,602 10 6

International Developmental Licensed Markets & Corporate 70 (84) n/m n/m

International Developmental Licensed Markets & Corporate 97 93 4 (6)

Total $ 3,357 $ 3,188 5 % 3 %

Six Months Ended June 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

Nine Months Ended September 30, 2025 2024 Inc/ (Dec) Inc/ (Dec)

$ 4,327 $ 4,400 (2) % (2) %

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n/m Not meaningful

• Operating income increased $312 million, or 11% (8% in constant currencies), for the quarter and increased $225 million, or 4% (4% in constant currencies), for the six months.

Results reflected pre-tax charges of $43 million and $109 million for the quarter and the six months, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Results for the quarter and six months ended 2024 reflected net pre-tax charges of $97 million and $89 million, respectively, primarily related to non-cash impairment charges and pre-tax restructuring charges of $57 million and $100 million for the quarter and six months, respectively, related to Accelerating the Organization .

• Operating income increased $168 million, or 5% (3% in constant currencies), for the quarter and increased $393 million, or 4% (3% in constant currencies), for the nine months.

Results reflected net pre-tax charges of $39 million and $148 million for the quarter and the nine months, respectively, primarily related to restructuring charges associated with Accelerating the Organization.

Results for the quarter and nine months ended 2024 reflected net pre-tax charges of $52 million and $142 million, respectively, primarily related to non-cash impairment charges and transaction costs, and pre-tax restructuring charges of $46 million and $146 million for the quarter and nine months, respectively, related to Accelerating the Organization .

OPERATING INCOME & OPERATING MARGIN RECONCILIATION*

Dollars in millions

Quarters Ended June 30, Six Months Ended June 30,

Quarters Ended September 30, Nine Months Ended September 30,

2025 2024 Inc/ (Dec) Inc/ (Dec)

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*Refer to the Impairment and other charges (gains), net line within the Other Operating (Income) Expense, Net section on page 29 for details of the charges in this table.

• Excluding the current and prior year charges shown in the table above, operating income increased 7% (4% in constant currencies) for the quarter and 2% (2% in constant currencies) for the six months.

Results for the quarter primarily reflected positive operating results primarily due to sales-driven growth in Franchised margins across all segments and lower Selling, general, and administrative expenses in International Developmental Licensed Markets & Corporate.

Results for the six months primarily reflected positive operating results in the International Operated Markets, primarily due to sales-driven growth in Franchised margins, and positive operating results in International Developmental Licensed Markets & Corporate, primarily due to sales-driven growth in Franchised margins and lower Selling, general, and administrative expenses, partly offset by lower sales-driven Company-owned and operated margins and lower Other operating income in the U.S.

• Excluding the current and prior year charges shown in the table above, operating income increased 3% (1% in constant currencies) for the quarter and 3% (2% in constant currencies) for the nine months.

Results for the quarter reflected positive operating results, primarily due to higher sales-driven Franchised margins in the International Operated Markets, partly offset by higher Selling, general, and administrative expenses in International Developmental Licensed Markets & Corporate.

Results for the nine months reflected positive operating results, primarily due to higher sales-driven Franchised margins across all segments, partly offset by lower sales-driven Company-owned and operating margins and higher Selling, general, and administrative expenses in the U.S.

• Operating margin is defined as operating income as a percent of total revenues.

1 unchanged sentence

Additionally, temporary restaurant closures, which vary by segment, impact the contribution of each segment to the consolidated operating margin.

The increase in non-GAAP operating margin was primarily due to the prior year sale of McDonald's business in South Korea and lower Selling, general and administrative expenses, partly offset by the prior year acquisition of McDonald's business in Israel.

The increase in non-GAAP operating margin was primarily due to the prior year sale of McDonald's business in South Korea, partly offset by the prior year acquisition of McDonald's business in Israel and higher Selling, general and administrative expenses.

Interest Expense

• Interest expense increased 4% (3% in constant currencies) for the quarter and 3% (3% in constant currencies) for the six months.

Results for both periods reflected higher average debt balances, while the six months also reflected higher average interest rates.

• Interest expense increased 7% (5% in constant currencies) for the quarter and 4% (4% in constant currencies) for the nine months.

Results for both periods reflected higher average debt balances as well as higher average interest rates.

Nonoperating (Income) Expense, Net

1 unchanged sentence

Dollars in millions

Quarters Ended Six Months Ended

June 30, June 30,

Quarters Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

3 unchanged sentences

Total $ 1 $ ( 36 ) $ ( 75 ) $ ( 90 )

• Interest income for the six months decreased due to lower average cash balances and lower average interest rates.

• The effective income tax rate was 21.3 % and 20.9 % for the quarters ended 2025 and 2024, respectively, and 20.6 % and 20.4 % for the six months ended 2025 and 2024, respectively.

• Interest income for the nine months decreased due to lower average cash balances and lower average interest rates.

• The effective income tax rate was 22.8 % and 20.7 % for the quarters ended 2025 and 2024, respectively, and 21.4 % and 20.5 % for the nine months ended 2025 and 2024, respectively.

The effective tax rates for the quarter and nine months ended 2024 reflected discrete income tax benefits related to restructuring initiatives and global audit progression.

• On July 4, 2025, Public Law Number 119-21 (Bill H.R.

3 unchanged sentences

corporations.

The Company is currently assessing the impact of the legislation on its Consolidated Financial Statements.

The Company recorded the impacts of the legislation in the third quarter of 2025, which were not material to the Condensed Consolidated Financial Statements.

The Company has a long history of generating significant cash from operations and has substantial credit capacity to fund operating and discretionary spending to invest in opportunities to grow the business, such as restaurant development, in addition to funding debt service payments, dividends and share repurchases.

Cash provided by operations totaled $4.4 billion and exceeded capital expenditures by $3.1 billion for the six months 2025.

Cash provided by operations slightly increased compared with the six months 2024, in line with operating results.

Cash used for investing activities totaled $1.6 billion for the six months 2025, a decrease of $1.7 billion compared with the six months 2024.

Cash provided by operations totaled $7.9 billion and exceeded capital expenditures by $5.6 billion for the nine months 2025.

Cash provided by operations slightly increased compared with the nine months 2024, in line with operating results.

Cash used for investing activities totaled $2.8 billion for the nine months 2025, a decrease of $1.8 billion compared with the nine months 2024.

The decrease was primarily due to the Company's acquisition of an increased ownership stake in McDonald's China business in the prior year.

Cash used for financing activities totaled $2.1 billion for the six months 2025, a decrease of $2.4 billion compared with the six months 2024.

Cash used for financing activities totaled $3.9 billion for the nine months 2025, a decrease of $1.7 billion compared with the nine months 2024.

The decrease was primarily due to higher bond issuances and lower treasury stock purchases in the current year.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis