What changed in this filing

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Item 1. Financial Statements

2026-05-07 compared with 2025-11-05 · 45 added, 126 removed, 355 unchanged (33% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEET

In millions, except per share data September 30,

In millions, except per share data March 31,

2026 December 31,

17 unchanged sentences

Current liabilities

Short-term borrowings and current maturities of long-term debt $ 1,800 $ —

Accounts payable 1,091 1,149

28 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

Quarters Ended Nine Months Ended

September 30, September 30,

Quarters Ended

In millions, except per share data 2026 2025

25 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

Quarters Ended Nine Months Ended

September 30, September 30,

Quarters Ended

In millions 2026 2025

7 unchanged sentences

benefit (expense) of $( 57 ) and $ 136

( 33 ) 182 274 136

Cash flow hedges:

2 unchanged sentences

Cash flow hedges-net of tax benefit (expense) of $( 11 ) and $ 20

47 ( 46 ) ( 117 ) ( 7 )

Defined benefit pension plans:

3 unchanged sentences

of $( 1 ) and $ 0

2 ( 11 ) ( 18 ) ( 10 )

Total other comprehensive income (loss), net of tax 50 ( 4 )

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

Quarters Ended Nine Months Ended

September 30, September 30,

Quarters Ended

In millions 2026 2025

12 unchanged sentences

Purchases of restaurant businesses ( 79 ) ( 75 )

Purchases of equity method investments — — — ( 1,837 )

Sales of restaurant businesses 72 49

3 unchanged sentences

Financing activities

Net short-term borrowings (repayments) ( 599 ) 474 ( 794 ) 133

Net short-term borrowings ( 791 ) ( 792 )

Long-term financing issuances 1,159 1,498

11 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)

For the nine months ended September 30, 2024

For the quarter ended March 31, 2025

issued Accumulated other

18 unchanged sentences

Stock option exercises and other 98 1.4 49 147

Balance at September 30, 2024 1,660.6 $ 17 $ 9,194 $ 64,819 $ ( 377 ) $ ( 13 ) $ ( 1,947 ) ( 944.0 ) $ ( 76,870 ) $ ( 5,177 )

For the nine months ended September 30, 2025

Balance at March 31, 2025 1,660.6 $ 17 $ 9,423 $ 67,436 $ ( 400 ) $ 52 $ ( 2,209 ) $ ( 945.6 ) $ ( 77,773 ) $ ( 3,454 )

For the quarter ended March 31, 2026

issued Accumulated other

18 unchanged sentences

Stock option exercises and other 91 1.1 37 128

Balance at September 30, 2025 1,660.6 $ 17 $ 9,560 $ 69,440 $ ( 411 ) $ 2 $ ( 2,005 ) ( 948.5 ) $ ( 78,766 ) $ ( 2,163 )

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)

For the quarter ended September 30, 2024

issued Accumulated other

comprehensive income (loss) Common stock in

treasury Total

shareholders’

equity (deficit)

capital Retained

earnings Pensions Cash flow

hedges Foreign

In millions, except per share data Shares Amount Shares Amount

Balance at June 30, 2024 1,660.6 $ 17 $ 9,055 $ 65,026 $ ( 367 ) $ 33 $ ( 2,129 ) ( 943.3 ) $ ( 76,459 ) $ ( 4,824 )

Net income 2,255 2,255

Other comprehensive income (loss),

net of tax ( 11 ) ( 46 ) 182 125

Comprehensive income 2,380

Common stock cash dividends

($ 3.44 per share)

( 2,462 ) ( 2,462 )

Treasury stock purchases ( 1.6 ) ( 443 ) ( 443 )

Share-based compensation 40 40

Stock option exercises and other 100 1.0 33 133

Balance at September 30, 2024 1,660.6 $ 17 $ 9,194 $ 64,819 $ ( 377 ) $ ( 13 ) $ ( 1,947 ) ( 944.0 ) $ ( 76,870 ) $ ( 5,177 )

For the quarter ended September 30, 2025

issued Accumulated other

comprehensive income (loss) Common stock in

treasury Total

shareholders’

equity (deficit)

capital Retained

earnings Pensions Cash flow

hedges Foreign

In millions, except per share data Shares Amount Shares Amount

Balance at June 30, 2025 1,660.6 $ 17 $ 9,500 $ 68,424 $ ( 413 ) $ ( 45 ) $ ( 1,972 ) ( 947.0 ) $ ( 78,271 ) $ ( 2,760 )

Net income 2,278 2,278

Other comprehensive income (loss),

net of tax 2 47 ( 33 ) 16

Comprehensive income 2,294

Common stock cash dividends

($ 1.77 per share)

( 1,262 ) ( 1,262 )

Treasury stock purchases ( 1.7 ) ( 503 ) ( 503 )

Share-based compensation 39 39

Stock option exercises and other 21 0.2 8 29

Balance at September 30, 2025 1,660.6 $ 17 $ 9,560 $ 69,440 $ ( 411 ) $ 2 $ ( 2,005 ) ( 948.5 ) $ ( 78,766 ) $ ( 2,163 )

Balance at March 31, 2026 1,660.6 $ 17 $ 9,792 $ 70,942 $ ( 428 ) $ 50 $ ( 1,986 ) ( 950.2 ) $ ( 79,673 ) $ ( 1,286 )

See Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

In the opinion of management, all normal recurring adjustments necessary for a fair presentation have been included.

The results for the quarter and nine months ended September 30, 2025 do not necessarily indicate the results that may be expected for the full year.

The results for the quarter ended March 31, 2026 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.

2 unchanged sentences

The following table presents restaurant information by ownership type:

Restaurants at September 30, 2025 2024

Restaurants at March 31, 2026 2025

Conventional franchised 22,616 22,126

7 unchanged sentences

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 3.0 million shares and 3.3 million shares for the quarters ended September 30, 2025 and 2024, respectively, and 3.1 million shares and 3.6 million shares for the nine months ended September 30, 2025 and 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 1.8 million shares and 2.0 million shares for the quarters ended September 30, 2025 and 2024, respectively, and 1.8 million shares and 2.0 million shares for the nine months ended September 30, 2025 and 2024, respectively.

Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation, calculated using the treasury stock method, of 2.8 million shares and 3.3 million shares for the quarters ended March 31, 2026 and March 31, 2025, respectively.

Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 3.0 million shares and 2.2 million shares for the quarters ended March 31, 2026 and March 31, 2025, respectively.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

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

16 unchanged sentences

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 $ 152 million and $ 146 million of restructuring charges related to Accelerating the Organization in the nine months ended September 30, 2025 and 2024, respectively.

These charges were recorded in the Other operating (income) expense, net line within the Condensed Consolidated Statement of Income.

The Company incurred $ 47 million and $ 66 million of restructuring charges related to Accelerating the Organization in the three months ended March 31, 2026 and 2025, 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.

6 unchanged sentences

Accrued Balance at March 31, 2026 $ 36 $ 4 $ 15 $ 55

Restructuring Costs Incurred ( 3 ) — 46 43

Cash Payments ( 3 ) ( 1 ) ( 55 ) ( 59 )

Other Non-Cash Items — — 3 3

Accrued Balance at June 30, 2025 $ 29 $ 3 $ 28 $ 60

Restructuring Costs Incurred 4 — 39 43

Cash Payments ( 2 ) — ( 51 ) ( 53 )

Other Non-Cash Items — — — —

Accrued Balance at September 30, 2025 $ 31 $ 3 $ 16 $ 50

Of the $ 152 million of restructuring charges incurred in the nine months ended September 30, 2025, $ 138 million was recorded at Corporate and $ 14 million was recorded in the International Operated Markets.

Substantially all of the accrued restructuring balance recorded at September 30, 2025, related to the Company's Accelerating the Organization initiative, is expected to be paid out over the next twelve months.

Of the $ 47 million of restructuring charges incurred in the three months ended March 31, 2026, $ 46 million was recorded primarily at Corporate and $ 1 million was recorded in the International Operated Markets.

Substantially all of the accrued restructuring balance recorded at March 31, 2026, 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.

3 unchanged sentences

The Company has various investments accounted for using the equity method.

Under the equity method of accounting, the Company records our proportionate share of the net income or loss of each equity method investee, with a corresponding change to the carrying value of the investment.

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 our proportionate share of net income or loss within the Other operating (income) expense, net line on the Condensed Consolidated Statement of Income.

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 our 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 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.

2 unchanged sentences

The following table summarizes the amounts related to the Company’s primary equity method investees during the periods presented.

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

In Millions Percentage Ownership Fair Value (Level 1) Carrying Amount Percentage Ownership Fair Value (Level 1) Carrying Amount

1 unchanged sentence

McDonald's Japan Holdings Co., Ltd 35 % $ 2,444 $ 655 35 % $ 1,915 $ 657

As of September 30, 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.

As of March 31, 2026, 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 $ 1.4 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 nine months ended September 30, 2025 and 2024, respectively.

Nine Months Ended September 30,

The following table summarizes the amounts recorded related to the Company's primary equity method investments during the three months ended March 31, 2026 and 2025, respectively.

Quarters Ended March 31,

In Millions 2026 2025

3 unchanged sentences

Dividends received $ 17 $ 15

The effective income tax rate was 22.8 % and 20.7 % for the quarters ended September 30, 2025 and 2024, respectively, and 21.4 % and 20.5 % for the nine months ended September 30, 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.

The effective income tax rate was 22.0 % and 19.8 % for the three months ended March 31, 2026 and 2025, respectively.

The effective tax rate for the three months ended March 31, 2025 reflected income tax benefits related to restructuring initiatives.

Fair Value Measurements

6 unchanged sentences

There were no significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2025 Annual Report on Form 10-K.

At September 30, 2025, the fair value of the Company’s debt obligations was estimated at $ 40.2 billion, compared to a carrying amount of $ 41.3 billion.

At March 31, 2026, the fair value of the Company’s debt obligations was estimated at $ 38.2 billion, compared to a carrying amount of $ 40.1 billion.

The fair value of debt obligations is based upon quoted market prices, classified as Level 2 within the valuation hierarchy.

6 unchanged sentences

Derivative Assets Derivative Liabilities

In millions Balance Sheet Classification September 30, 2025 December 31, 2024 Balance Sheet Classification September 30, 2025 December 31, 2024

In millions Balance Sheet Classification March 31, 2026 December 31, 2025 Balance Sheet Classification March 31, 2026 December 31, 2025

Derivatives designated as hedging instruments

Foreign currency Prepaid expenses and other current assets $ 37 $ 3 Accrued payroll and other liabilities $ ( 75 ) $ ( 117 )

Interest rate Prepaid expenses and other current assets — 34 Accrued payroll and other liabilities ( 1 ) ( 6 )

Foreign currency Miscellaneous other assets 31 24 Other long-term liabilities ( 7 ) ( 12 )

3 unchanged sentences

Derivatives not designated as hedging instruments

Equity Prepaid expenses and other current assets

$ — $ 135 Accrued payroll and other liabilities $ — $ —

Foreign currency Prepaid expenses and other current assets

— — Accrued payroll and other liabilities ( 3 ) —

Equity Miscellaneous other assets $ 76 $ 104

1 unchanged sentence

Total derivatives $ 144 $ 131 $ ( 96 ) $ ( 145 )

The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the nine months ended September 30, 2025 and 2024, respectively:

The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the three months ended March 31, 2026 and 2025, respectively:

Location of gain or loss

20 unchanged sentences

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 September 30, 2025, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $ 831 million, which included a decrease of $ 20 million of cumulative hedging adjustments.

For the nine months ended September 30, 2025, the Company recognized a $ 20 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.

At March 31, 2026, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $ 486 million, which included a decrease of $ 14 million of cumulative hedging adjustments.

For the three months ended March 31, 2026, the Company recognized an $ 2 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.

Cash Flow Hedges

2 unchanged sentences

The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies.

As of September 30, 2025, the Company had derivatives outstanding with an equivalent notional amount of $ 2.3 billion that hedged a portion of forecasted foreign currency denominated cash flows.

Based on market conditions at September 30, 2025, the $ 2 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.

As of March 31, 2026, the Company had derivatives outstanding with an equivalent notional amount of $ 2.4 billion that hedged a portion of forecasted foreign currency denominated cash flows.

Based on market conditions at March 31, 2026, the $ 37 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

1 unchanged sentence

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 September 30, 2025, $ 15.3 billion of the Company's third-party foreign currency denominated debt, and $ 2.4 billion of foreign currency derivatives were designated to hedge investments in certain foreign subsidiaries and affiliates.

Undesignated Hedges

As of March 31, 2026, $ 16.5 billion of the Company's third-party foreign currency denominated debt, and $ 1.8 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.

6 unchanged sentences

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 September 30, 2025 and has master agreements that contain netting arrangements.

The Company did not have significant exposure to any individual counterparty at March 31, 2026 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 September 30, 2025, the Company was required to post $ 185 million of collateral due to the negative fair value of certain derivative positions.

At March 31, 2026, the Company was required to post $ 88 million of collateral due to the negative fair value of certain derivative positions.

Franchise Arrangements

Revenues from franchised restaurants consisted of:

Quarters Ended Nine Months Ended

September 30, September 30,

Quarters Ended

In millions 2026 2025

4 unchanged sentences

Segment Information

The Company operates under the following global organizational structure, reflecting how management reviews and evaluates operating performance:

The Company operates under the following global organizational structure, which reflects how management reviews and evaluates operating performance:

segment - the Company's largest market.

The segment is 95 % franchised as of September 30, 2025.

The segment is 95 % franchised as of March 31, 2026.

• 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 September 30, 2025.

The segment is 89 % franchised as of March 31, 2026 .

• 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 September 30, 2025.

The International Developmental Licensed Markets are 99 % franchised as of March 31, 2026.

The Company's chief operating decision makers ("CODMs") are the President and Chief Executive Officer ("CEO") and the Executive Vice President and Global Chief Financial Officer ("CFO").

3 unchanged sentences

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.

Quarters Ended Nine Months Ended

September 30, September 30,

Corporate assets include cash and equivalents, financial instruments, deferred tax assets and office facilities.

Quarters Ended

In millions 2026 2025

3 unchanged sentences

Total Revenues $ 6,517 $ 5,956

$ 325 $ 326 $ 968 $ 972

International Operated Markets 353 301

1 unchanged sentence

Total Franchised restaurants-occupancy expenses $ 676 $ 620

$ 701 $ 717 $ 2,040 $ 2,089

International Operated Markets 1,255 1,123

1 unchanged sentence

Total Company-operated restaurant expenses $ 2,032 $ 1,859

$ 185 $ 152 $ 478 $ 429

International Operated Markets 187 161

1 unchanged sentence

Total Selling, general, & administrative expenses $ 759 $ 682

$ 63 $ 51 $ 235 $ 107

International Operated Markets 23 42

5 unchanged sentences

Total Operating income $ 2,953 $ 2,648

$ 400 $ 336 $ 943 $ 813

International Operated Markets 399 322

1 unchanged sentence

Total Capital expenditures $ 682 $ 551

$ 249 $ 247 $ 742 $ 739

International Operated Markets 213 182

1 unchanged sentence

Total Depreciation & amortization** $ 566 $ 520

In millions September 30, 2025 December 31, 2024

In millions March 31, 2026 December 31, 2025

$ 22,992 $ 23,008

6 unchanged sentences

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 1. Financial Statements