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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,DC 20549FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period endedSeptember 30,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHA

2、NGE ACT OF 1934For the transition period from to Commission File Number 1-5231McDONALDS CORPORATION(Exact Name of Registrant as Specified in Its Charter)Delaware 36-2361282(State or Other Jurisdiction ofIncorporation or Organization)(I.R.S.EmployerIdentification No.)110 North Carpenter Street 60607C

3、hicago,Illinois(Address of Principal Executive Offices)(Zip Code)(630)623-3000(Registrants Telephone Number,Including Area Code)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.01 par valueMCDNew Yo

4、rk Stock ExchangeIndicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been sub

5、ject to such filingrequirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant toRule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for s

6、uch shorter period that the registrant was required to submitsuch files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or anemerging growth company.See the definitions of“large accelerated fi

7、ler,”“accelerated filer,”“smaller reporting company,”and emerging growth companyin Rule 12b-2 of the Exchange Act.Large Accelerated FilerAccelerated FilerNon-accelerated FilerSmaller Reporting CompanyEmerging Growth CompanyIf an emerging growth company,indicate by check mark if the registrant has el

8、ected not to use the extendedtransition period for complying with any new or revised financial accounting standards provided pursuant toSection 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No 716,619,686(N

9、umber of shares of common stockoutstanding as of September 30,2024)Table of ContentsMcDONALDS CORPORATION_INDEX_ Page ReferencePart I.Financial InformationItem 1 Financial StatementsCondensed Consolidated Balance Sheet,September 30,2024(unaudited)and December 31,20233Condensed Consolidated Statement

10、 of Income(unaudited),quarters and nine months ended September 30,2024 and20234Condensed Consolidated Statement of Comprehensive Income(unaudited),quarters and nine months ended September30,2024 and 20235Condensed Consolidated Statement of Cash Flows(unaudited),quarters and nine months ended Septemb

11、er 30,2024 and20236Condensed Consolidated Statement of Shareholders Equity(unaudited),quarters and nine months ended September 30,2024 and 20237Notes to Condensed Consolidated Financial Statements(unaudited)9Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations1

12、6Item 3 Quantitative and Qualitative Disclosures About Market Risk39Item 4 Controls and Procedures39Part II.Other InformationItem 1 Legal Proceedings40Item 1A Risk Factors40Item 2 Unregistered Sales of Equity Securities and Use of Proceeds40 Item 5 Other Information42Item 6 Exhibits41Signature43All

13、trademarks used herein are the property of their respective owners and are used with permission.2Table of ContentsPART I FINANCIAL INFORMATIONItem 1.Financial StatementsCONDENSED CONSOLIDATED BALANCE SHEET(unaudited)In millions,except per share dataSeptember 30,2024December 31,2023AssetsCurrent asse

14、tsCash and equivalents$1,221$4,579 Accounts and notes receivable2,460 2,488 Inventories,at cost,not in excess of market54 53 Prepaid expenses and other current assets1,176 866 Total current assets4,912 7,986 Other assetsInvestments in and advances to affiliates2,960 1,080 Goodwill3,220 3,040 Miscell

15、aneous5,673 5,618 Total other assets11,853 9,738 Lease right-of-use asset,net13,632 13,514 Property and equipmentProperty and equipment,at cost45,178 43,570 Accumulated depreciation and amortization(19,403)(18,662)Net property and equipment25,775 24,908 Total assets$56,172$56,147 Liabilities and sha

16、reholders equityCurrent liabilitiesShort-term borrowings and current maturities of long-term debt$596$2,192 Accounts payable944 1,103 Dividend Payable1,265 Lease liability668 688 Income taxes786 705 Other taxes263 268 Accrued interest433 469 Accrued payroll and other liabilities1,353 1,434 Total cur

17、rent liabilities6,308 6,859 Long-term debt38,990 37,153 Long-term lease liability13,157 13,058 Long-term income taxes74 363 Deferred revenues-initial franchise fees800 790 Other long-term liabilities855 950 Deferred income taxes1,166 1,681 Shareholders equity(deficit)Preferred stock,no par value;aut

18、horized 165.0 million shares;issued none Common stock,$0.01 par value;authorized 3.5 billion shares;issued 1,660.6 million shares17 17 Additional paid-in capital9,194 8,893 Retained earnings64,819 63,480 Accumulated other comprehensive income(loss)(2,337)(2,456)Common stock in treasury,at cost;944.0

19、 and 937.9 million shares(76,870)(74,640)Total shareholders equity(deficit)(5,177)(4,707)Total liabilities and shareholders equity(deficit)$56,172$56,147 See Notes to condensed consolidated financial statements.3Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF INCOME(UNAUDITED)Quarters EndedNine

20、 Months Ended September 30,September 30,In millions,except per share data2024202320242023RevenuesSales by Company-owned and operated restaurants$2,656$2,556$7,472$7,267 Revenues from franchised restaurants4,094 4,047 11,756 11,568 Other revenues124 89 304 252 Total revenues6,873 6,692 19,532 19,088

21、Operating costs and expensesCompany-owned and operated restaurant expenses2,248 2,135 6,358 6,149 Franchised restaurants-occupancy expenses646 625 1,902 1,842 Other restaurant expenses104 68 241 188 Selling,general&administrative expensesDepreciation and amortization111 97 311 291 Other536 584 1,748

22、 1,704 Other operating(income)expense,net39(25)129 68 Total operating costs and expenses3,685 3,484 10,688 10,243 Operating income3,188 3,208 8,844 8,845 Interest expense381 341 1,126 1,001 Nonoperating(income)expense,net(36)(56)(90)(163)Income before provision for income taxes2,843 2,924 7,807 8,00

23、7 Provision for income taxes588 606 1,600 1,577 Net income$2,255$2,317$6,207$6,430 Earnings per common share-basic$3.15$3.19$8.63$8.82 Earnings per common share-diluted$3.13$3.17$8.59$8.76 Dividends declared per common share$3.44$1.52$6.78$4.56 Weighted-average shares outstanding-basic716.7 727.2 71

24、9.1 729.2 Weighted-average shares outstanding-diluted720.0 731.6 722.7 733.8 See Notes to condensed consolidated financial statements.4Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(UNAUDITED)Quarters EndedNine Months EndedSeptember 30,September 30,In millions2024202320242

25、023Net income$2,255$2,317$6,207$6,430 Other comprehensive income(loss),net of taxForeign currency translation adjustments:Gain(loss)recognized in accumulated other comprehensiveincome(AOCI),including net investment hedges188(145)101(90)Reclassification of(gain)loss to net income(6)35 Foreign currenc

26、y translation adjustments-net of taxbenefit(expense)of$158,$(98),$36 and$(44)182(145)136(90)Cash flow hedges:Gain(loss)recognized in AOCI(54)50(14)43 Reclassification of(gain)loss to net income8 1 7(12)Cash flow hedges-net of tax benefit(expense)of$15,$(14),$2 and$(8)(46)51(7)31 Defined benefit pens

27、ion plans:Gain(loss)recognized in AOCI(11)4 10 Reclassification of(gain)loss to net income (10)(10)Defined benefit pension plans-net of tax benefit(expense)of$0,$0,$1 and$1(11)4(10)Total other comprehensive income(loss),net of tax125(90)119(59)Comprehensive income$2,380$2,227$6,326$6,371 See Notes t

28、o condensed consolidated financial statements.5Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)Quarters EndedNine Months Ended September 30,September 30,In millions2024202320242023Operating activitiesNet income$2,255$2,317$6,207$6,430 Adjustments to reconcile to cash provid

29、ed by operationsCharges and credits:Depreciation and amortization532 498 1,544 1,481 Deferred income taxes(137)(176)(501)(415)Share-based compensation40 43 128 138 Other(33)(106)(48)(183)Changes in working capital items79 453(514)(328)Cash provided by operations2,736 3,029 6,816 7,123 Investing acti

30、vitiesCapital expenditures(794)(570)(1,968)(1,600)Purchases of restaurant businesses(433)(92)(595)(304)Purchases of equity method investments (1,837)Sales of restaurant businesses54 16 156 96 Sales of property10 14 32 35 Other(103)(301)(392)(572)Cash used for investing activities(1,266)(933)(4,604)(

31、2,345)Financing activitiesNet short-term borrowings(repayments)474 6 133(137)Long-term financing issuances 1,996 1,731 3,050 Long-term financing repayments (1,785)(1,377)Treasury stock purchases(469)(1,054)(2,321)(2,203)Common stock dividends(1,197)(1,105)(3,602)(3,325)Proceeds from stock option exe

32、rcises132 62 253 211 Other(27)(42)(26)(7)Cash used for financing activities(1,087)(137)(5,617)(3,788)Effect of exchange rates on cash and cash equivalents46(89)47(77)Cash and equivalents increase(decrease)429 1,871(3,358)913 Cash and equivalents at beginning of period792 1,626 4,579 2,584 Cash and e

33、quivalents at end of period$1,221$3,496$1,221$3,496 See Notes to condensed consolidated financial statements.6Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY(UNAUDITED)For the nine months ended September 30,2023 Common stockissued Accumulated othercomprehensive income(loss)C

34、ommon stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurrencytranslationIn millions,except per share dataSharesAmountSharesAmountBalance at December 31,20221,660.6$17$8,547$59,544$(298)$31$(2,219)(929.3)$(71,624)$(6,003)Net incom

35、e6,430 6,430 Other comprehensive income(loss),net of tax 31(90)(59)Comprehensive income6,371 Common stock cash dividends ($4.56 per share)(3,325)(3,325)Treasury stock purchases(7.8)(2,246)(2,246)Share-based compensation138 138 Stock option exercises and other140 1.8 71 211 Balance at September 30,20

36、231,660.6$17$8,825$62,649$(298)$62$(2,310)(935.3)$(73,799)$(4,855)For the nine months ended September 30,2024 Common stockissued Accumulated othercomprehensive income(loss)Common stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncur

37、rencytranslationIn millions,except per share dataSharesAmountSharesAmountBalance at December 31,20231,660.6$17$8,893$63,480$(367)$(6)$(2,083)(937.9)$(74,640)$(4,707)Net income 6,207 6,207 Other comprehensive income(loss),net of tax (10)(7)136 119 Comprehensive income 6,326 Common stock cash dividend

38、s ($6.78 per share)(4,867)(4,867)Treasury stock purchases (8.3)(2,310)(2,310)Share-based compensation128 128 Stock option exercises and other173 2.3 81 254 Balance at September 30,20241,660.6$17$9,194$64,819$(377)$(13)$(1,947)(944.0)$(76,870)$(5,177)See Notes to condensed consolidated financial stat

39、ements.7Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY(UNAUDITED)For the quarter ended September 30,2023 Common stockissued Accumulated othercomprehensive income(loss)Common stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash

40、 flowhedgesForeigncurrencytranslationIn millions,except per share dataSharesAmountSharesAmountBalance at June 30,20231,660.6$17$8,736$61,437$(303)$11$(2,164)(931.9)$(72,733)$(4,999)Net income2,317 2,317 Other comprehensive income(loss),net of tax4 51(145)(90)Comprehensive income2,227 Common stock ca

41、sh dividends ($1.52 per share)(1,105)(1,105)Treasury stock purchases(3.6)(1,083)(1,083)Share-based compensation43 43 Stock option exercises and other46 0.2 16 62 Balance at September 30,20231,660.6$17$8,825$62,649$(298)$62$(2,310)(935.3)$(73,799)$(4,855)For the quarter ended September 30,2024 Common

42、 stockissued Accumulated othercomprehensive income(loss)Common stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurrencytranslationIn millions,except per share dataSharesAmountSharesAmountBalance at June 30,20241,660.6$17$9,055$65,

43、026$(367)$33$(2,129)(943.3)$(76,459)$(4,824)Net income2,255 2,255 Other comprehensive income(loss),net of tax(11)(46)182 125 Comprehensive income2,380 Common stock cash dividends ($3.44 per share)(2,462)(2,462)Treasury stock purchases(1.6)(443)(443)Share-based compensation4040Stock option exercises

44、and other100 1.0 33 133 Balance at September 30,20241,660.6$17$9,194$64,819$(377)$(13)$(1,947)(944.0)$(76,870)$(5,177)See Notes to condensed consolidated financial statements.8Table of ContentsNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)McDonalds Corporation,the registrant,togethe

45、r with its subsidiaries,is referred to herein as the Company.The Company,its franchisees andsuppliers,are referred to herein as the System.Basis of PresentationThe accompanying condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements contai

46、ned inthe Companys December 31,2023 Annual Report on Form 10-K.In the opinion of management,all normal recurring adjustments necessary for a fairpresentation have been included.The results for the quarter and nine months ended September 30,2024 do not necessarily indicate the results that may beexpe

47、cted for the full year.Change in PresentationIn the first quarter of 2024,the Company changed its rounding presentation to the nearest whole number in millions of reported amounts,except pershare data or as otherwise designated.The change in rounding presentation has been applied to all prior year a

48、mounts presented.In certain circumstances,thischange adjusted previously reported balances,however,these changes were not significant,and no other changes were made to previously reported financialinformation.Additionally,certain columns and rows within the financial statements and tables presented

49、may not add due to rounding.Percentages have beencalculated from the underlying whole-dollar amounts for all periods presented.Restaurant InformationThe following table presents restaurant information by ownership type:Restaurants at September 30,20242023Conventional franchised21,864 21,761 Developm

50、ental licensed9,077 8,450 Foreign affiliated9,814 8,843 Total Franchised40,755 39,054 Company-owned and operated2,064 2,144 Total Systemwide restaurants42,819 41,198 The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either indivi

51、dually or in theaggregate to the accompanying condensed consolidated financial statements.Per Common Share InformationDiluted earnings per common share is calculated as net income divided by diluted weighted-average shares.Diluted weighted-average shares includeweighted-average shares outstanding pl

52、us the dilutive effect of share-based compensation,calculated using the treasury stock method,of 3.3 million shares and4.4 million shares for the quarters ended 2024 and 2023,respectively,and 3.6 million shares and 4.6 million shares for the nine months ended 2024 and 2023,respectively.Share-based c

53、ompensation awards that would have been antidilutive,and therefore were not included in the calculation of diluted weighted-average shares,totaled 2.0 million shares and 1.2 million shares for the quarters ended 2024 and 2023,respectively,and 2.0 million shares and 2.1 millionshares for the nine mon

54、ths ended 2024 and 2023,respectively.9Table of ContentsRecent Accounting PronouncementsRecent Accounting Pronouncements Not Yet AdoptedSegment ReportingIn November 2023,the Financial Accounting Standards Board(the FASB)issued Accounting Standards Update(ASU)No.2023-07,SegmentReporting(Topic 280):Imp

55、rovements to Reportable Segment Disclosures(ASU 2023-07).The pronouncement expands annual and interim disclosurerequirements for reportable segments,primarily through enhanced disclosures about significant segment expenses.ASU 2023-07 is effective for fiscal yearsbeginning after December 15,2023,and

56、 for interim periods beginning after December 15,2024.We are currently in the process of determining the impact thatASU 2023-07 will have on the Companys consolidated financial statement disclosures.Income TaxesIn December 2023,the FASB issued ASU No.2023-09,Income Taxes(Topic 740):Improvements to I

57、ncome Tax Disclosures(ASU 2023-09).Thepronouncement expands the disclosure requirements for income taxes,specifically related to the rate reconciliation and income taxes paid.ASU 2023-09 iseffective for fiscal years beginning after December 15,2024.We are currently in the process of determining the

58、impact that ASU 2023-09 will have on theCompanys consolidated financial statement disclosures.Accelerating the OrganizationIn January 2023,the Company announced an evolution of its successful Accelerating the Arches strategy.Enhancements to the strategy included theaddition of Restaurant Development

59、 to the Companys growth pillars and an internal effort to modernize ways of working,Accelerating the Organization,bothof which are aimed at elevating the Companys performance.Accelerating the Organization is designed to unlock further growth as the Company focuses onbecoming faster,more innovative a

60、nd more efficient for its customers and people.The Company incurred$146 million of restructuring charges related to Accelerating the Organization in the nine months ended September 30,2024.These charges were recorded in the Other operating(income)expense,net line within the consolidated statement of

61、 income,and primarily recorded within theCorporate segment.For the period presented,restructuring charges primarily consisted of professional services costs.There were no significant non-cashimpairment charges included in the amounts listed in the table below.The following table summarizes the balan

62、ce of accrued expenses related to this strategic initiative(in millions):EmployeeTerminationBenefitsCosts toTerminateContractsProfessionalServices andOther CostsTotal2024Accrued Balance at Beginning of Year$41$11$7$59 Restructuring Costs Incurred 44 44 Cash Payments(14)(5)(44)(63)Other Non-Cash Item

63、s (1)(1)Accrued Balance at March 31,2024$27$6$6$39 Restructuring Costs Incurred(1)58 57 Cash Payments(5)(1)(50)(56)Other Non-Cash Items Accrued Balance at June 30,2024$21$5$14$40 Restructuring Costs Incurred(1)47 46 Cash Payments(3)(1)(41)(45)Other Non-Cash Items 1 1 Accrued Balance at September 30,

64、2024$17$4$21$42 The Company continues to evolve its ways of working by driving efficiency and effectiveness across the organization,primarily led by its GlobalBusiness Services organization.Transformation efforts under Accelerating the Organization will continue to result in various restructuring ch

65、arges as thestrategy progresses through its anticipated completion during 2027.The Company expects to incur approximately$250 million of restructuring charges in2024,primarily related to professional services costs.10Table of ContentsEquity Method InvestmentsThe Company has various investments accou

66、nted for using the equity method.Under the equity method of accounting,the Company records itsproportionate share of the net income or loss of each equity method investee,with a corresponding change to the carrying value of the investment.The carryingvalue of the investment is also adjusted for any

67、dividends received and the effect of foreign exchange.The Company records its proportionate share of netincome or loss within the Other operating(income)expense,net line on the consolidated statement of income.The carrying value of the investments arerecorded within the Investments in and advances t

68、o affiliates line on the consolidated balance sheet.The Companys primary equity method investments include partial ownership in Grand Foods Holding,an entity that operates and manages McDonaldsbusiness in mainland China,Hong Kong and Macau,and partial ownership in McDonalds Japan Holdings Co.,Ltd,an

69、 entity that operates and managesMcDonalds business in Japan.The Company has granted these entities the right to operate the McDonalds business as part of a Master Franchise Agreement.Revenue related to these agreements are accounted for in a manner consistent with the Companys other franchise arran

70、gements.The following table summarizes the amounts related to the Companys primary equity method investees during the periods presented.September 30,2024December 31,2023In MillionsPercentageOwnershipFair Value(Level 1)CarryingAmountPercentageOwnershipFair Value(Level 1)CarryingAmountGrand Foods Hold

71、ing48%N/A$2,140 20%N/A$238 McDonalds Japan Holdings Co.,Ltd35%$2,236$630 35%$2,034$597 On January 30,2024,the Company acquired an additional 28%ownership stake in Grand Foods Holding from the global investment firm Carlyle inexchange for$1.8 billion in cash.The acquisition increased the Companys equ

72、ity ownership to 48%,but did not result in control of the entity.As such,theCompany remains a minority partner and will continue to account for the investment under the equity method.As of September 30,2024,the aggregate carrying amount of the Companys investments in these equity method investees ex

73、ceeded its proportionateshare 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 indicatorsof impairment related to these investments.The following table summarizes the amounts recorded related to the Companys

74、 primary equity method investments during the nine months endedSeptember 30,2024 and September 30,2023,respectively.Nine Months Ended September 30,In Millions20242023Revenue$402$364 Equity in Earnings$107$84 Accounts Receivable$125$114 Dividends Received$13$14 11Table of ContentsIncome TaxesThe effe

75、ctive income tax rate was 20.7%and 20.7%for the quarters ended 2024 and 2023,respectively,and 20.5%and 19.7%for the nine months ended2024 and 2023,respectively.Fair Value MeasurementsThe Company measures certain financial assets and liabilities at fair value.Fair value disclosures are reflected in a

76、 three-level hierarchy,maximizing theuse of observable inputs and minimizing the use of unobservable inputs.The valuation hierarchy is based upon the transparency of inputs to the valuation of anasset or liability on the measurement date and are defined as follows:Level 1 inputs to the valuation met

77、hodology 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 inwhich all significant inputs are observable for substanti

78、ally 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 Companys Dece

79、mber 31,2023 AnnualReport on Form 10-K.At September 30,2024,the fair value of the Companys debt obligations was estimated at$38.8 billion,compared to a carrying amount of$39.6 billion.The fair value of debt obligations is based upon quoted market prices,classified as Level 2 within the valuation hie

80、rarchy.The carrying amount of cash andequivalents and notes receivable approximate fair value.12Table of ContentsFinancial Instruments and Hedging ActivitiesThe Company is exposed to global market risks,including the effect of changes in interest rates and foreign currency fluctuations.The Company u

81、sesforeign currency denominated debt and derivative instruments to mitigate the impact of these changes.The Company does not hold or issue derivatives fortrading purposes.The following table presents the fair values of derivative instruments included on the condensed consolidated balance sheet:Deriv

82、ative AssetsDerivative LiabilitiesIn millionsBalance SheetClassificationSeptember 30,2024December 31,2023Balance SheetClassificationSeptember 30,2024December 31,2023Derivatives designated as hedging instrumentsForeign currencyPrepaid expenses andother current assets$4$9 Accrued payroll and otherliab

83、ilities$(79)$(37)Interest ratePrepaid expenses andother current assets$4$4 Accrued payroll and otherliabilities$(4)Foreign currencyMiscellaneous other assets$2 Other long-term liabilities$(42)$(14)Interest rateMiscellaneous other assets$Other long-term liabilities$(39)$(58)Total derivatives designat

84、ed as hedginginstruments$8$15$(160)$(113)Derivatives not designated as hedging instrumentsEquityPrepaid expenses andother current assets$141$Accrued payroll and otherliabilities$Foreign currencyPrepaid expenses andother current assets$6 Accrued payroll and otherliabilities$(6)$(5)EquityMiscellaneous

85、 other assets$189 Total derivatives not designated as hedginginstruments$141$195$(6)$(5)Total derivatives$149$210$(166)$(118)The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the nine months ended September 30,2024 and2023,respectively:Locatio

86、n of gain or lossrecognized in income onderivativeGain(loss)recognized in AOCIGain(loss)reclassified intoincome from AOCIGain(loss)recognized inincome onderivativeIn millions202420232024202320242023Foreign currencyNonoperating income/expense$(25)$33$(10)$15 Interest rateInterest expense$7$22$1$1 Cas

87、h flow hedges$(18)$55$(9)$16 Foreign currency denominated debtNonoperating income/expense$(133)$157 Foreign currency derivativesNonoperating income/expense$(18)$65 Foreign currency derivativesInterest expense$32$18 Net investment hedges$(151)$222$32$18 Foreign currencyNonoperating income/expense$(10

88、)$7 EquitySelling,general&administrative expenses$(2)$5 Undesignated derivatives$(12)$12 The amount of gain(loss)recognized in income related to components excluded from effectiveness testing.(1)(1)13Table of ContentsFair Value HedgesThe Company enters into fair value hedges to reduce the exposure t

89、o changes in fair values of certain liabilities.The Company enters into fair valuehedges that convert a portion of its fixed rate debt into floating rate debt by use of interest rate swaps.At September 30,2024,the carrying amount of fixed-ratedebt that was effectively converted was an equivalent not

90、ional amount of$795 million,which included a decrease of$39 million of cumulative hedgingadjustments.For the nine months ended September 30,2024,the Company recognized a$22 million gain on the fair value of interest rate swaps,and acorresponding loss on the fair value of the related hedged debt inst

91、rument to interest expense.Cash Flow HedgesThe Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows.To protect against the reduction invalue of forecasted foreign currency cash flows(such as royalties denominated in foreign currencies),the

92、Company uses foreign currency forwards to hedge aportion of anticipated exposures.The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies.As of September30,2024,the Company had derivatives outstanding with an equivalent notional amount of$2.2 billion

93、 that hedged a portion of forecasted foreign currencydenominated cash flows.To protect against the variability of interest rates on anticipated bond issuances,the Company may use treasury locks to hedge a portion of expected future cashflows.As of September 30,2024,the Company had derivatives outsta

94、nding with a notional amount of$500 million that hedge a portion of forecasted cashflows.Based on market conditions at September 30,2024,the$12 million in cumulative cash flow hedging losses,after tax,is not expected to have a significanteffect on the Companys earnings over the next 12 months.Net In

95、vestment HedgesThe Company uses foreign currency denominated debt(third-party and intercompany)and foreign currency derivatives to hedge its investments in certainforeign subsidiaries and affiliates.Realized and unrealized translation adjustments from these hedges are included in shareholders equity

96、 in the foreigncurrency translation component of Other comprehensive income(OCI)and offset translation adjustments on the underlying net assets of foreign subsidiariesand affiliates,which also are recorded in OCI.As of September 30,2024,$14.3 billion of the Companys third-party foreign currency deno

97、minated debt,$560million of the Companys intercompany foreign currency denominated debt and$1.8 billion of foreign currency derivatives were designated to hedgeinvestments in certain foreign subsidiaries and affiliates.Undesignated HedgesThe Company enters into certain derivatives that are not desig

98、nated for hedge accounting.Therefore,the changes in the fair value of these derivatives arerecognized immediately in earnings together with the gain or loss from the hedged balance sheet position.As an example,the Company enters into equityderivative contracts,including total return swaps,to hedge m

99、arket-driven changes in certain of its supplemental benefit plan liabilities.The Company may alsouse 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 chang

100、es in the supplemental benefit plan liabilities.In addition,the Company uses foreign currency forwards tomitigate the change in fair value of certain foreign currency denominated assets and liabilities.The changes in the fair value of these derivatives are recognizedin Nonoperating(income)expense,ne

101、t,along with the currency gain or loss from the hedged balance sheet position.Credit RiskThe Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties.The Company did not have significantexposure to any individual counterparty at September 30,2024 a

102、nd 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 nettingarrangements.Some of these agreements also require each party t

103、o post collateral if credit ratings fall below,or aggregate exposures exceed,certain contractuallimits.At September 30,2024,the Company was required to post$122 million of collateral due to the negative fair value of certain derivative positions.TheCompanys counterparties were not required to post c

104、ollateral on any derivative position,other than on certain hedges of the Companys supplemental benefitplan liabilities where the counterparties were required to post collateral on their liability positions.14Table of ContentsFranchise ArrangementsRevenues from franchised restaurants consisted of:Qua

105、rters EndedNine Months EndedSeptember 30,September 30,In millions2024202320242023Rents$2,609$2,570$7,512$7,348 Royalties1,463 1,462 4,191 4,175 Initial fees22 16 53 45 Revenues from franchised restaurants$4,094$4,047$11,756$11,568 Segment InformationThe Company operates under an organizational struc

106、ture with the following global business segments reflecting how management reviews and evaluatesoperating performance:U.S.-the Companys largest market.The segment is 95%franchised as of September 30,2024.International Operated Markets-comprised of markets or countries in which the Company owns and o

107、perates and franchises restaurants,includingAustralia,Canada,France,Germany,Italy,Poland,Spain and the U.K.The segment is 89%franchised as of September 30,2024.International Developmental Licensed Markets&Corporate-comprised primarily of developmental licensee and affiliate markets in the McDonaldsS

108、ystem,including equity method investments in China and Japan.Corporate activities are also reported in this segment.The segment is 99%franchised as of September 30,2024.The following table presents the Companys revenues and operating income by segment:Quarters EndedNine Months Ended September 30,Sep

109、tember 30,In millions2024202320242023RevenuesU.S.$2,739$2,704$7,997$7,893 International Operated Markets3,309 3,300 9,443 9,251 International Developmental Licensed Markets&Corporate825 688 2,092 1,944 Total revenues$6,873$6,692$19,532$19,088 Operating IncomeU.S.$1,493$1,478$4,400$4,268 Internationa

110、l Operated Markets1,602 1,585 4,459 4,295 International Developmental Licensed Markets&Corporate93 146(15)282 Total operating income$3,188$3,208$8,844$8,845.Subsequent EventsThe Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities an

111、d Exchange Commission(SEC).There were no subsequent events that required recognition or disclosure.15Table of ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsBasis of PresentationThis Managements Discussion and Analysis of Financial Condition and Re

112、sults of Operations(MD&A)should be read in conjunction with theaccompanying condensed consolidated financial statements and the notes thereto,and the audited consolidated financial statements and notes thereto includedin our 2023 Annual Report on Form 10-K.In the first quarter of 2024,the Company ch

113、anged its rounding presentation to the nearest whole number in millions of reported amounts,except pershare data or as otherwise designated.The change in rounding presentation has been applied to all prior year amounts presented.In certain circumstances,thischange adjusted previously reported balanc

114、es,however,these changes were not significant,and no other changes were made to previously reported financialinformation.Additionally,certain columns and rows in financial tables within managements discussion and analysis of financial condition and results ofoperations may not add due to rounding.Pe

115、rcentages have been calculated from the underlying whole-dollar amounts for all periods presented.OverviewThe Company franchises and owns and operates McDonalds restaurants,which serve a locally relevant menu of quality food and beverages incommunities across more than 100 countries.Of the 42,819 Mc

116、Donalds restaurants at September 30,2024,approximately 95%were franchised.The Companys reporting segments are aligned with its strategic priorities and reflect how management reviews and evaluates operating performance.Significant reportable segments include the United States(U.S.)and International

117、Operated Markets.In addition,there is the International DevelopmentalLicensed Markets&Corporate segment,which includes the results of over 75 countries,as well as Corporate activities.McDonalds franchised restaurants are owned and operated under one of the following structures-conventional franchise

118、,developmental license oraffiliate.The optimal ownership structure for an individual restaurant,trading area or market(country)is based on a variety of factors,including theavailability of individuals with entrepreneurial experience and financial resources,as well as the local legal and regulatory e

119、nvironment in critical areas such asproperty ownership and franchising.The business relationship between the Company and its independent franchisees is supported by adhering to standards andpolicies,including McDonalds Global Brand Standards,and is of fundamental importance to overall performance an

120、d to protecting the McDonalds brand.The Company is primarily a franchisor and believes franchising is paramount to delivering great-tasting food,locally relevant customer experiences anddriving profitability.Franchising enables an individual to be their own employer and maintain control over all emp

121、loyment related matters,marketing andpricing decisions,while also benefiting from the strength of McDonalds global brand,operating system and financial resources.Directly operating McDonalds restaurants contributes significantly to the Companys ability to act as a credible franchisor.One of the stre

122、ngths of thefranchising model is that the expertise from Company-owned and operated restaurants allows McDonalds to improve the operations and success of allrestaurants while innovations from franchisees can be tested and,when viable,efficiently implemented across relevant restaurants.Having Company

123、-ownedand operated restaurants provides Company personnel with a venue for restaurant operations training experience.In addition,in our Company-owned andoperated restaurants,and in collaboration with franchisees,the Company is able to further develop and refine operating standards,marketing concepts

124、 andproduct and pricing strategies that will ultimately benefit McDonalds restaurants.The Companys revenues consist of sales by Company-owned and operated restaurants and fees from franchised restaurants owned and operated byconventional franchisees,developmental licensees and affiliates.Fees vary b

125、y type of site,amount of Company investment,if any,and local businessconditions.These fees,along with occupancy and operating rights,are stipulated in franchise/license agreements that generally have 20-year terms.TheCompanys Other revenues are comprised of fees paid by franchisees to recover a port

126、ion of costs incurred by the Company for various technology platformsand revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonalds brand.Conventional FranchiseUnder a conventional franchise arrangement,the Company generally owns or secures a long-term

127、lease on the land and building for the restaurantlocation and the franchisee pays for equipment,signs,seating and dcor.The Company believes that ownership of real estate,combined with the co-investmentby franchisees,enables it to achieve restaurant performance levels that are among the highest in th

128、e industry.Franchisees are responsible for reinvesting capital in their businesses over time.In addition,to accelerate implementation of certain initiatives,theCompany may co-invest with franchisees to fund improvements to their restaurants or operating systems.These investments,developed in collabo

129、ration withfranchisees,are designed to cater to consumer preferences,improve local business performance and increase the value of the McDonalds brand through thedevelopment of modernized,more attractive and higher revenue generating restaurants.16Table of ContentsThe Company requires franchisees to

130、meet rigorous standards and generally does not work with passive investors.The business relationship withfranchisees is designed to facilitate consistency and high quality at all McDonalds restaurants.Conventional franchisees contribute to the Companys revenue,primarily through the payment of rent a

131、nd royalties based upon a percent of sales,with specified minimum rent payments,along with initial fees paid upon theopening of a new restaurant or grant of a new franchise.The Companys heavily franchised business model is designed to generate stable and predictablerevenue,which is largely a functio

132、n of franchisee sales,and resulting cash flow streams.Developmental License or AffiliateUnder a developmental license or affiliate arrangement,licensees are responsible for operating and managing their businesses,providing capital(including the real estate interest)and developing and opening new res

133、taurants.The Company generally does not invest any capital under a developmentallicense 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 orgrant of a new license.While developmental license and aff

134、iliate arrangements are largely the same,affiliate arrangements are used in a limited number of foreign markets(primarily China and Japan)within the International Developmental Licensed Markets&Corporate segment,as well as a limited number of individualrestaurants within the International Operated M

135、arkets segment where the Company also has an equity investment and records its share of net results in equity inearnings of unconsolidated affiliates.Strategic DirectionThe Companys Accelerating the Arches growth strategy(the“Strategy”)encompasses all aspects of McDonalds business as the leading glo

136、bal omni-channel restaurant brand.Our Strategy reflects the Companys purpose,mission and values,as well as growth pillars that build on the Companys competitiveadvantages.Purpose,Mission and ValuesThe following purpose,mission and values underpin the Companys success and are at the heart of our Stra

137、tegy.Through its size and scale,the Company embraces and prioritizes its role in and commitment to the communities in which it operates through its purposeto feed and foster communities,and its mission to make delicious feel-good moments easy for everyone.The Company is guided by five core values th

138、at definewho it is and how it runs its business across the three-legged stool of McDonalds franchisees,suppliers and employees:1.Serve-We put our customers and people first;2.Inclusion-We open our doors to everyone;3.Integrity-We do the right thing;4.Community-We are good neighbors;and5.Family-We ge

139、t better together.The Company believes that its people,all around the world,set it apart and bring these values to life daily.Growth PillarsThe following growth pillars,M-C-D,build on historic strengths and articulate areas of further opportunity.Under our Strategy,the Company will:Maximize our Mark

140、eting by investing in new,culturally relevant approaches,grounded in fan truths,to effectively communicate the story of ourbrand,food and purpose.The Company continues to build relevance with customers through emotional connections and world class creative,whichare central to the brands“Feel-Good Ma

141、rketing”approach.This is exemplified by campaigns that elevate the entire brand and continue to be scaledaround the globe to connect with customers in authentic and relatable ways.Another way McDonalds connects with its customers is throughpersonalized value and digital offers available in our mobil

142、e app.The Company is committed to a marketing strategy that highlights value at every tierof the menu,as providing delicious and affordable menu options remains a cornerstone of the McDonalds brand.This includes everyday low-priceoptions on our menu along with limited-time deals for our customers.Co

143、mmit to the Core menu by tapping into customer demand for the familiar and focusing on serving our iconic products that are beloved bycustomers around the world such as our World Famous Fries,Big Mac,Quarter Pounder and Chicken McNuggets,which are some of our seventeenunique billion-dollar brands.Bu

144、ilding on its foundational strength with burgers,the Company will continue to evolve and innovate its longest-standingmenu item with plans to implement“Best Burger”;a series of operational and formulation changes designed to deliver hotter,juicier,tastier burgers tonearly all markets by the end of 2

145、026.Further,the Company is focused on continuing to gain share in the rapidly growing chicken category,as wecontinue to aggressively expand our chicken brands.This includes plans to offer the McCrispy sandwich in nearly all markets by the end of 2025 andto extend the McCrispy brand into strips and w

146、raps in several markets.These planned innovations and new menu offerings reflect the Companysability to meet evolving customer preferences.The Company also continues to see a significant17Table of Contentsopportunity with coffee,demonstrated by markets leveraging the McCaf brand,customer experience,

147、value and quality to drive long-term growth.Double Down on the 4Ds:Digital,Delivery,Drive Thru and Restaurant Development by continuing to leverage competitive strengths andbuilding a powerful digital experience growth engine to deliver a personalized and convenient customer experience.As another wa

148、y to unlock furthergrowth,the Company plans to continue to accelerate the pace of restaurant openings and technology innovation so that whenever and howevercustomers choose to interact with McDonalds,they can enjoy a fast,easy experience that meets their needs.Digital:The Companys digital experience

149、 is transforming how customers order,pay and receive their food.Through digital tools,customerscan access personalized offers,participate in a loyalty program,order through our mobile app and receive McDonalds food through thechannel of their choice.In the U.S.,we are providing increased convenience

150、 to customers through“Ready on Arrival”:a digital enhancementthat enables crew to begin assembling a customers mobile order prior to arrival at the restaurant to expedite service and elevate customersatisfaction.The Company plans to deploy this initiative across its top six markets by the end of 202

151、5.The Company has successful loyaltyprograms in approximately 50 markets,including its top six markets.McDonalds loyalty customers have proven to be highly engaged,andthe Company plans to increase its 90-day active users to 250 million by 2027.Further,the Company plans to grow its annual Systemwides

152、ales to loyalty members to$45 billion by 2027.Delivery:The Company offers delivery from over 36,000 restaurants across approximately 100 markets,representing over 85%ofMcDonalds restaurants.The Company is continuing to build on and enhance the delivery experience for customers,including adding theab

153、ility to place a delivery order in our mobile app(a feature that is currently available in five of the Companys top markets).The Companycontinues to scale this capability and expects to increase the percentage of Systemwide delivery sales originating from our mobile app to 30%by 2027.The Company als

154、o has long-term strategic partnerships with delivery providers that continue to benefit the Company,customers andfranchisees by optimizing operational efficiencies and creating a seamless customer experience.Drive Thru:The Company has the most drive thru locations worldwide,with more than 27,000 dri

155、ve thru locations globally,including nearly95%of the approximately 13,500 locations in the U.S.This channel remains a competitive advantage in meeting customers demand forflexibility and choice.McDonalds network currently provides unmatched scale and convenience for customers,while also offeringsign

156、ificant growth opportunities,such as adding additional drive thru lanes to increase capacity and improve speed and efficiency.TheCompany continues to build on its drive thru advantage,as the vast majority of new restaurant openings in the U.S.and InternationalOperated Markets will include a drive th

157、ru.Restaurant Development:The Company will continue to accelerate the pace of restaurant openings to attempt to fully capture the demandbeing driven through our Strategy in many of our largest markets.In 2024,the Company plans to open more than 2,100 new restaurantsacross the globe,which will contri

158、bute to nearly 4%new unit growth(net of closures).Further,the Company continues to build on itsindustry-leading development progress by targeting expansion to 50,000 restaurants by the end of 2027,which would make it the fastestperiod of restaurant unit growth in Company history.Foundation and Platf

159、ormsFoundational to our Strategy is keeping the customer and restaurant crew at the center of everything the Company does,along with a relentless focus onrunning great restaurants,empowering its people and continuing to modernize our ways of working.Further,as part of the Companys plans for long ter

160、mgrowth and solidifying McDonalds leadership position,the Company will continue to develop and implement three technology-enabled platforms designed tobuild our competitive advantages,cement our place in culture and stay one step ahead of our customers expectations.Together,our foundation and platfo

161、rmswill extend the Companys leadership position and unlock new growth opportunities and efficiencies for our business over the long-term.Our platforms are:Consumer:The Company is building one of the worlds largest consumer platforms to fuel engagement,which will bring together the best of ourbrand a

162、nd utilize our physical and digital competitive advantages.The consumer platform will enable the Company to accelerate growth in our loyaltyprogram and drive valuable loyalty customers to visit more frequently.Restaurant:The Company is building the easiest and most efficient restaurant operating pla

163、tform which enables franchisees to run restaurantsmore efficiently and utilize the latest cloud-based technology to make it easier for restaurant crew to deliver exceptional customer service.TheCompany intends to deploy new,universal software that all McDonalds restaurants will run on,enabling resta

164、urants to roll out innovation even faster,with less complexity and more stability;and customers will enjoy a more familiar,consistent experience.18Table of ContentsCompany:The Company is building a modern company platform that unlocks speed and innovation throughout the organization,to enablefurther

165、 growth as it modernizes the way it works by focusing on becoming faster,more innovative and more efficient at solving problems for itscustomers and people.Developing and implementing these platforms includes continued investments in digital,innovation and our Global Business Services organization.O

166、ur Strategy is aligned with the Companys capital allocation philosophy of investing in opportunities to grow the business and drive strong returns,forexample through new restaurants and reinvesting in existing restaurants,and returning free cash flow to shareholders over time through dividends and s

167、harerepurchases.The Company believes our Strategy builds on our inherent strengths by harnessing the Companys competitive advantages while leveraging its size,scale,agility and the power of the McDonalds brand to adapt and adjust to meet customer demands in varying economic environments,including th

168、e currentindustry-wide challenges associated with more discerning consumer spending.Our Strategy is supported by a strong global senior leadership team aimed atexecuting against the MCD growth pillars,further developing our three platforms and driving long-term growth,including both guest count-led

169、and industrymarket share growth.Third Quarter and Nine Months 2024 Financial PerformanceGlobal comparable sales decreased 1.5%for the quarter and decreased 0.2%for the nine months.U.S.comparable sales increased 0.3%for the quarter and 0.7%for the nine months.Comparable sales results for both periods

170、 reflect averagecheck growth,partly offset by slightly negative comparable guest counts for the quarter and negative comparable guest counts for the nine months.Effective value and marketing campaigns featuring the core menu,successful restaurant level execution and continued digital and delivery gr

171、owthcontributed to slightly positive comparable sales results for both periods.International Operated Markets segment comparable sales decreased 2.1%for the quarter and 0.3%for the nine months.Segment performance forthe quarter was impacted by negative comparable sales across a number of markets,dri

172、ven by France and the U.K.For the nine months,segmentperformance was driven by negative comparable sales across a number of markets,led by France.International Developmental Licensed Markets segment comparable sales decreased 3.5%for the quarter and 1.7%for the nine months.Thecontinued impact of the

173、 war in the Middle East and negative comparable sales in China more than offset positive comparable sales in LatinAmerica,for both periods.In addition to the comparable sales results,the Company had the following financial results for the quarter and nine months:Consolidated revenues increased 3%(2%

174、in constant currencies)for the quarter and increased 2%(2%in constant currencies)for the nine months.Systemwide sales were flat(flat in constant currencies)for the quarter and increased 1%(1%in constant currencies)for the nine months.Consolidated operating income decreased 1%(1%in constant currencie

175、s)for the quarter and was flat(flat in constant currencies)for the ninemonths.Excluding current and prior year charges detailed in the Operating Income and Operating Margin section on page 29 of this report,consolidated operating income increased 2%(1%in constant currencies)for the quarter and incre

176、ased 1%(1%in constant currencies)for the ninemonths.Diluted earnings per share was$3.13 for the quarter,a decrease of 1%(1%in constant currencies)and$8.59 for the nine months,a decrease of 2%(1%in constant currencies).Excluding current and prior year charges detailed in the Net Income and Diluted Ea

177、rnings Per Share section on page23 of this report,diluted earnings per share for the quarter was$3.23,an increase of 1%(1%in constant currencies)and$8.89,a decrease of 1%(1%in constant currencies)for the nine months.Management reviews and analyzes business results excluding the effect of foreign cur

178、rency 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 betterrepresents underlying business trends.19Table of ContentsThe Following Defini

179、tions Apply to these Terms as Used Throughout this Report:Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior yearaverage exchange rates.Management reviews and analyzes business results excluding the effect of

180、foreign currency translation,impairment andother charges and gains,as well as material regulatory and other income tax impacts,and bases incentive compensation plans on these resultsbecause the Company believes this better represents underlying business trends.Comparable sales and comparable guest c

181、ounts are compared to the same period in the prior year and represent sales and transactions,respectively,at all restaurants,whether owned and operated by the Company or by franchisees,in operation at least thirteen months including those temporarilyclosed.Some of the reasons restaurants may be temp

182、orarily closed include reimaging or remodeling,rebuilding,road construction,naturaldisasters,pandemics and acts of war,terrorism or other hostilities.Comparable sales exclude the impact of currency translation and the sales of anymarket considered hyperinflationary(generally identified as those mark

183、ets whose cumulative inflation rate over a three-year period exceeds 100%),which management believes more accurately reflects the underlying business trends.Comparable sales are driven by changes in guest counts andaverage check,the latter of which is affected by changes in pricing and product mix.S

184、ystemwide sales include sales at all restaurants,whether owned and operated by the Company or by franchisees.Systemwide sales to loyaltymembers is comprised of all sales to customers who self-identify as a loyalty member when transacting with both Company-owned and operatedand franchised restaurants

185、.Systemwide sales to loyalty members are measured across approximately 50 markets with loyalty programs.Systemwide sales to loyalty members represents an aggregation of the prior four quarters of sales to loyalty members active in the last 90 days.While franchised sales are not recorded as revenues

186、by the Company,management believes the information is important in understanding theCompanys financial performance because these sales are the basis on which the Company calculates and records franchised revenues and areindicative of the financial health of the franchisee base.The Companys revenues

187、consist of sales by Company-owned and operated restaurants andfees from franchised restaurants operated by conventional franchisees,developmental licensees and affiliates.Changes in Systemwide sales areprimarily driven by comparable sales and net restaurant unit expansion.Free cash flow,defined as c

188、ash provided by operations less capital expenditures,and free cash flow conversion rate,defined as free cash flowdivided by net income,are measures reviewed by management in order to evaluate the Companys ability to convert net profits into cash resources,after reinvesting in the core business,that

189、can be used to pursue opportunities to enhance shareholder value.20Table of ContentsCONSOLIDATED OPERATING RESULTSDollars in millions,except per share dataQuarters Ended September 30,20242023Inc/(Dec)RevenuesSales by Company-owned and operated restaurants$2,656$2,556 4%Revenues from franchised resta

190、urants4,094 4,047 1 Other revenues124 89 39 Total revenues6,873 6,692 3 Operating costs and expensesCompany-owned and operated restaurant expenses2,248 2,135 5 Franchised restaurants-occupancy expenses646 625 3 Other restaurant expenses104 68 53 Selling,general&administrative expensesDepreciation an

191、d amortization111 97 15 Other536 584(8)Other operating(income)expense,net39(25)n/mTotal operating costs and expenses3,685 3,484 6 Operating income3,188 3,208(1)Interest expense381 341 12 Nonoperating(income)expense,net(36)(56)(36)Income before provision for income taxes2,843 2,924(3)Provision for in

192、come taxes588 606(3)Net income$2,255$2,317(3)%Earnings per common share-basic$3.15$3.19(1)%Earnings per common share-diluted$3.13$3.17(1)%Nine Months Ended September 30,20242023Inc/(Dec)RevenuesSales by Company-owned and operated restaurants$7,472$7,267 3%Revenues from franchised restaurants11,756 1

193、1,568 2 Other revenues304 252 21 Total revenues19,532 19,088 2 Operating costs and expensesCompany-owned and operated restaurant expenses6,358 6,149 3 Franchised restaurants-occupancy expenses1,902 1,842 3 Other restaurant expenses241 188 28 Selling,general&administrative expensesDepreciation and am

194、ortization311 291 7 Other1,748 1,704 3 Other operating(income)expense,net129 68 90Total operating costs and expenses10,688 10,243 4 Operating income8,844 8,845 Interest expense1,126 1,001 13 Nonoperating(income)expense,net(90)(163)(45)Income before provision for income taxes7,807 8,007(2)Provision f

195、or income taxes1,600 1,577 1 Net income$6,207$6,430(3)%Earnings per common share-basic$8.63$8.82(2)%Earnings per common share-diluted$8.59$8.76(2)%n/m Not meaningful21Table of ContentsImpact of the War in the Middle EastThe Companys Systemwide sales and revenue have continued to be negatively impact

196、ed by the war in the Middle East,primarily in the InternationalDevelopmental Licensed Markets&Corporate segment,where the majority of restaurants are under a developmental license or affiliate arrangement.TheCompany is monitoring the evolving situation,which it expects to continue to have a negative

197、 impact on Systemwide sales and revenue as long as the warcontinues.The Company generally does not invest any capital under a developmental license or affiliate arrangement,and it receives a royalty based on apercent of sales,and generally receives initial fees upon the opening of a new restaurant o

198、r grant of a new license.Impact of Foreign Currency TranslationThe impact of foreign currency translation on consolidated operating results for the quarter primarily reflected the strengthening of the Euro and BritishPound.Results for the nine months primarily reflected the weakening of most major c

199、urrencies against the U.S.Dollar,partly offset by the strengthening of theBritish Pound and the Euro.While changes in foreign currency exchange rates affect reported results,McDonalds mitigates exposures,where practical,by purchasing goods andservices in local currencies,financing in local currencie

200、s and hedging certain foreign-denominated cash flows.Results excluding the effect of foreign currencytranslation(referred to as constant currency)are calculated by translating current year results at prior year average exchange rates.IMPACT OF FOREIGN CURRENCY TRANSLATION Dollars in millions,except

201、per share data CurrencyTranslationBenefit/(Cost)Quarters Ended September 30,202420232024Revenues$6,873$6,692$15 Company-owned and operated margins407 421(1)Franchised margins3,447 3,422 9 Selling,general&administrative expenses647 680(1)Operating income3,188 3,208 7 Net income2,255 2,317(3)Earnings

202、per share-diluted$3.13$3.17$(0.01)CurrencyTranslationBenefit/(Cost)Nine Months Ended September 30,202420232024Revenues$19,532$19,088$(22)Company-owned and operated margins1,114 1,118(5)Franchised margins9,855 9,726(9)Selling,general&administrative expenses2,059 1,996(1)Operating income8,844 8,845(17

203、)Net income6,207 6,430(27)Earnings per share-diluted$8.59$8.76$(0.04)22Table of ContentsNet Income and Diluted Earnings per ShareFor the quarter,net income decreased 3%(3%in constant currencies)to$2,255 million,and diluted earnings per share decreased 1%(1%in constantcurrencies)to$3.13.Foreign curre

204、ncy translation had a negative impact of$0.01 on diluted earnings per share.For the nine months,net income decreased 3%(3%in constant currencies)to$6,207 million,and diluted earnings per share decreased 2%(1%inconstant currencies)to$8.59.Foreign currency translation had a negative impact of$0.04 on

205、diluted earnings per share.Results for 2024 included the following: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 primarilyconsisted of transaction costs and non-cash impairment charges associated with the sale of McDonalds b

206、usiness in South Korea andtransaction costs associated with the acquisition of McDonalds business in IsraelPre-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 torestructuring charges associated with the Companys internal effor

207、t to modernize ways of working(Accelerating the Organization)Results for 2023 included the following:Pre-tax charges of$26 million,or$0.02 per share,for the quarter and$224 million,or$0.23 per share,for the nine months related to theCompanys Accelerating the Arches growth strategy,including restruct

208、uring charges associated with Accelerating the OrganizationExcluding the above items,lower Selling,general,and administrative expenses and higher Franchised margins drove positive operating incomeperformance for the quarter.Results for the nine months reflected positive operating income performance

209、driven primarily by higher sales-driven Franchisedmargins,partly offset by higher Selling,general,and administrative expenses.Results for both periods reflected higher interest expense.During the quarter,the Company paid a dividend of$1.67 per share,or$1.2 billion,bringing total dividends paid for t

210、he nine months to$3.6 billion.Additionally,during the quarter,the Company repurchased 1.7 million shares of stock for$444 million,bringing total purchases for the nine months to 8.3million shares,or$2.3 billion.In September 2024,the Company declared a 6%increase in its quarterly cash dividend to$1.7

211、7 per share,payable on December16,2024.NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATIONDollars in millions,except per share dataQuarters Ended September 30,Net IncomeEarnings per share-diluted20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslation20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTra

212、nslationGAAP$2,255$2,317(3)%(3)%$3.13$3.17(1)%(1)%(Gains)/Charges67 20 0.10 0.02 Non-GAAP$2,322$2,337(1)%(1)%$3.23$3.19 1%1%Nine Months Ended September 30,Net IncomeEarnings per share-diluted20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslation20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationG

213、AAP$6,207$6,430(3)%(3)%$8.59$8.76(2)%(1)%(Gains)/Charges218 168 0.30 0.23 Non-GAAP$6,425$6,598(3)%(2)%$8.89$8.99(1)%(1)%RevenuesThe Companys revenues consist of sales by Company-owned and operated restaurants and fees from restaurants owned and operated by franchisees,developmental licensees and aff

214、iliates.Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales with minimumrent payments,and initial fees.Revenues from restaurants licensed to developmental licensees and affiliates include a royalty based on a percent of sales,andgenerally include

215、initial fees.The Companys Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Companyfor various technology platforms and revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonalds brand.23Table of Cont

216、entsFranchised restaurants represented approximately 95%of McDonalds restaurants worldwide at September 30,2024.The Companys heavily franchisedbusiness model is designed to generate stable and predictable revenue,which is largely a function of franchisee sales,and resulting cash flow streams.In theq

217、uarter and nine months,the Company provided an immaterial amount of assistance,including royalty relief and/or deferral of cash collection for certainfranchisees impacted by the war in the Middle East in the International Developmental Licensed Markets&Corporate segment.This assistance may continuea

218、s long as the war continues.REVENUES Dollars in millions Quarters Ended September 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationCompany-owned and operated sales U.S.$822$817 1%1%International Operated Markets1,485 1,520(2)(3)International Developmental Licensed Markets&Corporate349 219 59

219、 62 Total$2,656$2,556 4%4%Franchised revenues U.S.$1,851$1,840 1%1%International Operated Markets1,781 1,738 2 1 International Developmental Licensed Markets&Corporate461 468(2)1 Total$4,094$4,047 1%1%Total Company-owned and operated sales and Franchised revenues U.S.$2,673$2,657 1%1%International O

220、perated Markets3,266 3,258 (1)International Developmental Licensed Markets&Corporate810 687 18 20 Total$6,750$6,603 2%2%Total Other revenues$124$89 39%38%Total Revenues$6,873$6,692 3%2%Nine Months Ended September 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationCompany-owned and operated sal

221、es U.S.$2,417$2,401 1%1%International Operated Markets4,278 4,252 1 1 International Developmental Licensed Markets&Corporate777 614 26 30 Total$7,472$7,267 3%3%Franchised revenues U.S.$5,417$5,350 1%1%International Operated Markets5,039 4,889 3 2 International Developmental Licensed Markets&Corporat

222、e1,300 1,329(2)1 Total$11,756$11,568 2%2%Total Company-owned and operated sales and Franchised revenues U.S.$7,834$7,751 1%1%International Operated Markets9,317 9,141 2 2 International Developmental Licensed Markets&Corporate2,077 1,943 7 10 Total$19,228$18,835 2%2%Total Other revenues$304$252 21%20

223、%Total Revenues$19,532$19,088 2%2%Total Company-owned and operated sales and franchised revenues increased 2%(2%in constant currencies)for the quarter and increased 2%(2%inconstant currencies)for the nine months,with both periods benefiting from sales performance in the U.S.24Table of Contentsand In

224、ternational Operated Markets segment.Revenue growth in the International Developmental Licensed Markets&Corporate segment is primarilydue to the acquisition of McDonalds business in Israel,partly offset by the continued impact of the war in the Middle East,which began in October2023.Comparable Sales

225、The following table presents the percent change in comparable sales for the quarters and nine months ended September 30,2024 and 2023:Increase/(Decrease)Quarters Ended September 30,Nine Months Ended September 30,2024202320242023U.S.0.3%8.1%0.7%10.3%International Operated Markets(2.1)8.3(0.3)10.9 Int

226、ernational Developmental Licensed Markets(3.5)10.5(1.7)12.3 Total(1.5)%8.8%(0.2)%11.0%Systemwide Sales and Franchised SalesThe following table presents the percent change in Systemwide sales for the quarter and nine months ended September 30,2024:SYSTEMWIDE SALES*Quarter Ended September 30,2024Nine

227、Months Ended September 30,2024Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationInc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.1%1%1%1%International Operated Markets1 2 1 International Developmental Licensed Markets(2)(2)2 Total%1%1%*Unlike comparable sales,the Company has not excluded sales from hyp

228、erinflationary markets from Systemwide sales as these sales are the basis on which the Company calculates and recordsrevenues.25Table of ContentsFranchised sales are not recorded as revenues by the Company,but are the basis on which the Company calculates and records franchised revenues andare indic

229、ative of the financial health of the franchisee base.The following table presents Franchised sales and the related increases/(decreases)for the quartersand nine months ended September 30,2024 and 2023:FRANCHISED SALESDollars in millionsQuarters Ended September 30,20242023Inc/(Dec)Inc/(Dec)ExcludingC

230、urrencyTranslationU.S.$12,893$12,794 1%1%International Operated Markets10,334 10,181 1 International Developmental Licensed Markets8,106 8,387(3)(1)Total$31,333$31,362%Ownership typeConventional franchised$23,088$22,852 1%Developmental licensed5,005 5,382(7)(4)Foreign affiliated3,240 3,128 4 4 Total

231、$31,333$31,362%Nine Months Ended September 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.$37,743$37,325 1%1%International Operated Markets29,225 28,564 2 2 International Developmental Licensed Markets23,361 23,917(2)1 Total$90,330$89,806 1%1%Ownership typeConventional franchised$66,63

232、6$65,610 2%2%Developmental licensed14,513 15,171(4)(4)Foreign affiliated9,181 9,025 2 2 Total$90,330$89,806 1%1%26Table of ContentsRestaurant MarginsFranchised restaurant margins are measured as revenues from franchised restaurants less franchised restaurant occupancy costs.Franchised revenuesinclud

233、e rent and royalties based on a percent of sales,and initial fees.Franchised restaurant occupancy costs include lease expense and depreciation,as theCompany generally owns or secures a long-term lease on the land and building for the restaurant location.Company-owned and operated restaurant margins

234、are measured as sales from Company-owned and operated restaurants less costs for food&paper,payroll&employee benefits and occupancy&other operating expenses necessary to run an individual restaurant.Company-owned and operated marginsexclude costs that are not allocated to individual restaurants,prim

235、arily payroll&employee benefit costs of non-restaurant support staff,which are included inSelling,general and administrative expenses.RESTAURANT MARGINSDollars in millionsAmountInc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationQuarters Ended September 30,20242023Franchised U.S.$1,525$1,518%International

236、 Operated Markets1,463 1,440 2 International Developmental Licensed Markets&Corporate459 464(1)1 Total$3,447$3,422 1%Company-owned and operated U.S.$105$122(14)%(14)%International Operated Markets258 286(10)(10)International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$407$421(3)%(3)%To

237、tal restaurant marginsU.S.$1,631$1,640(1)%(1)%International Operated Markets1,722 1,726 (1)International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$3,855$3,843%AmountInc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationNine Months Ended September 30,20242023FranchisedU.S.$4,444$4,390 1%1%Int

238、ernational Operated Markets4,120 4,021 2 2 International Developmental Licensed Markets&Corporate1,290 1,315(2)1 Total$9,855$9,726 1%1%Company-owned and operated U.S.$328$356(8)%(8)%International Operated Markets711 741(4)(4)International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$1,1

239、14$1,118%Total restaurant marginsU.S.$4,773$4,745 1%1%International Operated Markets4,831 4,762 1 1 International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$10,969$10,844 1%1%n/m Not meaningfulFranchised margins in the U.S.and International Operated Markets segment reflected sales-dri

240、ven growth for both periods.Franchised marginsrepresented approximately 90%of restaurant margin dollars.Company-owned and operated margins reflected positive sales performance in the U.S.and negative sales performance in the International OperatedMarkets segment for the quarter while the nine months

241、 benefited from positive sales performance for these two segments.The U.S.and the InternationalOperated Markets segment were impacted by ongoing inflationary cost pressures for both periods.27Table of ContentsTotal restaurant margins included depreciation and amortization expense of$420 million and$

242、1.2 billion for the quarter and nine months,respectively.Selling,General&Administrative ExpensesSelling,general and administrative expenses decreased$33 million,or 5%(5%in constant currencies),for the quarter and increased$63 million,or 3%(3%in constant currencies),for the nine months.Results for th

243、e quarter primarily reflected lower incentive-based compensation,while the nine monthsprimarily reflected investments in digital and technology,including transformation efforts,related to Accelerating the Organization and costs related tothe 2024 Worldwide Owner/Operator convention,partly offset by

244、lower incentive-based compensation.Selling,general and administrative expenses as a percent of Systemwide sales were 2.1%for both the nine months ended 2024 and 2023.Other Operating(Income)Expense,NetOTHER OPERATING(INCOME)EXPENSE,NETDollars in millionsQuarters EndedNine Months EndedSeptember 30,Sep

245、tember 30,2024202320242023Gains on sales of restaurant businesses$(9)$(8)$(22)$(46)Equity in earnings of unconsolidated affiliates(52)(50)(143)(122)Asset dispositions and other(income)expense,net2 7 7 12 Impairment and other charges(gains),net98 26 287 224 Total$39$(25)$129$68 Gains on sales of rest

246、aurant businesses decreased for the nine months,primarily due to fewer sales of restaurants in the International Operated Marketssegment and in the U.S.Equity in earnings of unconsolidated affiliates for the nine months reflected higher equity in earnings in China as a result of the Companys increas

247、edownership in Grand Foods Holding when compared to the same period in 2023 as well as improved operating performance in Japan.Impairment and other charges(gains),net reflected net pre-tax charges of$52 million and$142 million for the quarter and nine months,respectively,primarily consisting of tran

248、saction costs and non-cash impairment charges associated with the sale of McDonalds business in South Korea andtransaction costs associated with the acquisition of McDonalds business in Israel and pre-tax charges of$46 million and$146 million for the quarter andnine months,respectively,related to re

249、structuring charges associated with the Companys internal effort to modernize ways of working(Accelerating theOrganization).Results for the quarter and nine months 2023 reflected$26 million and$224 million,respectively,of pre-tax charges related to the CompanysAccelerating the Arches growth strategy

250、,including restructuring charges associated with Accelerating the Organization.28Table of ContentsOperating IncomeOPERATING INCOME&OPERATING MARGINDollars in millionsQuarters Ended September 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.$1,493$1,4781%1%International Operated Markets1,

251、602 1,5851 International Developmental Licensed Markets&Corporate93 146(36)(29)Total$3,188$3,208(1)%(1)%Nine Months Ended September 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.$4,400$4,2683%3%International Operated Markets4,459 4,2954 3 International Developmental Licensed Markets&C

252、orporate(15)282n/m(92)Total$8,844$8,845%Operating margin45.3%46.3%Operating income decreased$20 million,or 1%(1%in constant currencies),for the quarter and decreased$1 million,or was flat(flat in constantcurrencies),for the nine months.Results reflected net pre-tax charges of$52 million and$142 mill

253、ion for the quarter and nine months,respectively,primarily consisting of transaction costs and non-cash impairment charges associated with the sale of McDonalds business in South Korea andtransaction costs associated with the acquisition of McDonalds business in Israel and pre-tax restructuring char

254、ges of$46 million and$146 million forthe quarter and nine months,respectively,related to Accelerating the Organization.Results for the quarter and nine months 2023 reflected$26 million and$224 million,respectively,of pre-tax charges related to the CompanysAccelerating the Arches growth strategy,incl

255、uding restructuring charges associated with Accelerating the Organization.OPERATING INCOME&OPERATING MARGIN RECONCILIATION*Dollars in millionsQuarters Ended September 30,Nine Months Ended September 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslation20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTr

256、anslationGAAP operating income$3,188$3,208(1)%(1)%$8,844$8,845%(Gains)/Charges98 26 287224Non-GAAP operating income$3,286$3,2342%1%$9,131$9,0691%1%Non-GAAP operating margin46.7%47.5%*Refer to the Impairment and other charges(gains),net line within the Other Operating(Income)Expense,Net section on pa

257、ge 28 for details of the charges in this table.Excluding the current and prior year charges shown in the table above,operating income increased 2%(1%in constant currencies)for the quarter andincreased 1%(1%in constant currencies)for the nine months.Results for the nine months reflected positive oper

258、ating results in the U.S.andInternational Operated Markets segment primarily due to sales-driven growth in Franchised margins,partly offset by higher Selling,general andadministrative expenses in the International Developmental Licensed Markets&Corporate segment.Operating margin is defined as operat

259、ing income as a percent of total revenues.The contributions to operating margin differ by segment due to eachsegments ownership structure,primarily due to the relative percentage of franchised versus Company-owned and operated restaurants.Additionally,temporary restaurant closures,which vary by segm

260、ent,impact the contribution of each segment to the consolidated operating margin.The decrease in non-GAAP operating margin was primarily due to ongoing inflationary cost pressures as well as investments in Selling,general andadministrative expenses.29Table of ContentsInterest ExpenseInterest expense

261、 increased 12%(12%in constant currencies)for the quarter and 13%(12%in constant currencies)for the nine months.Results for bothperiods reflected higher average debt balances as well as higher average interest rates.Nonoperating(Income)Expense,NetNONOPERATING(INCOME)EXPENSE,NETDollars in millionsQuar

262、ters EndedNine Months EndedSeptember 30,September 30,2024202320242023Interest income$(18)$(47)$(85)$(122)Foreign currency and hedging activity10 1 16(19)Other(income)expense,net(27)(9)(21)(22)Total$(36)$(56)$(90)$(163)Interest income for both periods decreased due to lower average cash balances.Inco

263、me TaxesThe effective income tax rate was 20.7%and 20.7%for the quarters ended 2024 and 2023,respectively,and 20.5%and 19.7%for the nine months ended2024 and 2023,respectively.Cash FlowsThe Company has a long history of generating significant cash from operations and has substantial credit capacity

264、to fund operating and discretionaryspending to invest in opportunities to grow the business,such as restaurant development,in addition to funding debt service payments,dividends and sharerepurchases.Cash provided by operations totaled$6.8 billion and exceeded capital expenditures by$4.8 billion for

265、the nine months 2024.Cash provided by operationswas slightly down compared with the nine months 2023,in line with operating results.Cash used for investing activities totaled$4.6 billion for the nine months 2024,an increase of$2.3 billion compared with the nine months 2023.Theincrease was primarily

266、due to the Companys increased ownership stake in McDonalds China business and the acquisition of McDonalds business in Israel.Cash used for financing activities totaled$5.6 billion for the nine months 2024,an increase of$1.8 billion compared with the nine months 2023.Theincrease was primarily due to

267、 lower issuances and higher net repayments of long term financing arrangements in the current year.30Table of ContentsOutlookBased on current conditions,the following is provided to assist in forecasting the Companys future results for 2024.The Company expects net restaurant unit expansion will cont

268、ribute nearly 2%to 2024 Systemwide sales growth,in constant currencies.The Company expects full year 2024 Selling,general and administrative expenses of about 2.2%of Systemwide sales.The Company expects 2024 operating margin percent to be in the mid-to-high 40%range.Based on current interest and for

269、eign currency exchange rates,the Company expects interest expense for the full year 2024 to increaseapproximately 11%driven primarily by higher average interest rates and a higher average debt balance.The Company expects the effective income tax rate for the full year 2024 to be in the 20%to 22%rang

270、e.Some volatility may result in aquarterly tax rate outside of the annual range.The Company expects 2024 capital expenditures to be between$2.5 and$2.7 billion,more than half of which will be directed towards newrestaurant unit expansion across the U.S.and International Operated Markets.Globally,the

271、 Company expects to open more than 2,100restaurants.The Company will open about 500 restaurants in the U.S.and International Operated Markets segments,and developmentallicensees and affiliates will contribute capital towards more than 1,600 restaurant openings in their respective markets.The Company

272、 expectsover 1,600 net restaurant additions in 2024.The Company expects to achieve a free cash flow conversion rate in the 90%range.Recent Accounting PronouncementsRecent accounting pronouncements are discussed in the Recent Accounting Pronouncements section in Part I,Item 1 of this report.31Table o

273、f ContentsCautionary Statement Regarding Forward-Looking StatementsThe information in this report contains forward-looking statements about future events and circumstances and their effects upon revenues,expenses andbusiness opportunities.Generally speaking,any statement in this report not based upo

274、n historical fact is a forward-looking statement.Forward-lookingstatements can also be identified by the use of forward-looking or conditional words,such as“could,”“should,”“can,”“continue,”“estimate,”“forecast,”“intend,”“look,”“may,”“will,”“expect,”“believe,”“anticipate,”“plan,”“remain,”“confident,

275、”“commit,”“enable”and“potential”or similar expressions.Inparticular,statements regarding our plans,strategies,prospects and expectations regarding our business and industry are forward-looking statements.Theyreflect our expectations,are not guarantees of performance and speak only as of the dates th

276、e statements are made.Except as required by law,we do notundertake to update such forward-looking statements.You should not rely unduly on forward-looking statements.Risk FactorsOur business results are subject to a variety of risks,including those that are described below and elsewhere in our filin

277、gs with the SEC.The risksdescribed below are not the only risks we face.Additional risks not currently known to us or that we currently deem to be immaterial may also significantlyadversely affect our business.If any of these risks were to materialize or intensify,our expectations(or the underlying

278、assumptions)may change and ourperformance may be adversely affected.STRATEGY AND BRANDIf we do not successfully evolve and execute against our business strategies,we may not be able to drive business growth.To drive Systemwide sales,operating income and free cash flow growth,our business strategies

279、including the components of our Accelerating theArches growth strategy must be effective in maintaining and strengthening customer appeal and capturing additional market share.Whether these strategiesare successful depends mainly on our Systems continued ability to:capitalize on our global scale,ico

280、nic brand and local market presence to build upon our historic strengths and competitive advantages,including by maximizing our marketing,committing to our core menu items,and doubling down on digital,delivery,drive thru and restaurantdevelopment;innovate and differentiate the McDonalds experience,i

281、ncluding by preparing and serving our food in a way that balances value andconvenience to our customers with profitability;build upon our investments to transform and enhance the customer experience,including building one of the worlds largest consumerplatforms to fuel engagement;run great restauran

282、ts by building the easiest and most efficient restaurant operating platform which enables franchisees to run restaurants moreefficiently and utilize the latest cloud-based technology to make it easier for crews to deliver exceptional customer service;accelerate our existing strategies,including thro

283、ugh growth opportunities and building a modern company platform that unlocks speed andinnovation throughout the organization;andevolve and adjust our strategies in response to,among other things,changing consumer behavior,and other events impacting our results ofoperations and liquidity.If we are de

284、layed or unsuccessful in evolving or executing against our strategies,if the execution of our strategies proves to be more difficult,costly ortime consuming than expected,or if our strategies do not yield the desired results,our business,financial condition and results of operations may suffer.Failu

285、re to preserve the value or relevance of our brand could have an adverse impact on our financial results.To continue to be successful in the future,we believe we must preserve,enhance and leverage the value and relevance of our brand,including ourcorporate purpose,mission and values.Brand value is b

286、ased in part on consumer perceptions,which are affected by a variety of factors,including thenutritional content and preparation of our food,the ingredients we use,the manner in which we source commodities and general business practices across theSystem,including the people practices at McDonalds re

287、staurants.Consumer acceptance of our offerings is subject to change for a variety of reasons,and somechanges can occur rapidly.For example,nutritional,health,environmental and other scientific studies and conclusions,which continuously evolve and mayhave contradictory implications,drive popular opin

288、ion,litigation and regulation(including initiatives intended to drive consumer behavior)in ways that affectthe“informal eating out”(“IEO”)segment or perceptions of our brand,generally or relative to available alternatives.Our business could also be impacted bybusiness incidents or practices,whether

289、actual or perceived,particularly if they receive considerable publicity or result in litigation,as well as by our positionor perceived lack of position on environmental,social responsibility,public policy,geopolitical and similar matters.In addition,we cannot ensure thatfranchisees or business partn

290、ers will not take actions that adversely affect the value and relevance of our brand.Consumer perceptions may also be affected byadverse commentary from third parties,including through social media or conventional media outlets,regarding the quick-service category of the IEO segmentor our brand,cult

291、ure,operations,suppliers or franchisees.If we are unsuccessful in addressing adverse commentary or perceptions,whether or not accurate,our brand and financial results may suffer.32Table of ContentsIf we do not anticipate and address industry trends and evolving consumer preferences and effectively e

292、xecute our pricing,promotional andmarketing plans,our business could suffer.Our continued success depends on our Systems ability to build upon our historic strengths and competitive advantages.In order to do so,we need toanticipate and respond effectively to continuously shifting consumer demographi

293、cs and industry trends in food sourcing,food preparation,food offerings,andconsumer behavior and preferences,including with respect to the use of digital channels and environmental and social responsibility matters.If we are not ableto predict,or quickly and effectively respond to,these changes,or i

294、f our competitors are able to do so more effectively,our financial results could be adverselyimpacted.Our ability to build upon our strengths and advantages also depends on the impact of pricing,promotional and marketing plans across the System,andthe ability to adjust these plans to respond quickly

295、 and effectively to evolving customer behavior and preferences,as well as shifting economic and competitiveconditions.Existing or future pricing strategies and marketing plans,as well as the value proposition they represent,are expected to continue to be importantcomponents of our business strategy.

296、However,they may not be successful,or may not be as successful as the efforts of our competitors,which couldnegatively impact sales,guest counts and market share.Additionally,we operate in a complex and costly advertising environment.Our marketing and advertising programs may not be successful in re

297、achingconsumers in the way we intend.Our success depends in part on whether the allocation of our advertising and marketing resources across different channels,including digital,allows us to reach consumers effectively,efficiently and in ways that are meaningful to them.If our advertising and market

298、ing programs arenot successful,or are not as successful as those of our competitors,our sales,guest counts and market share could decrease.Our investments to transform and enhance the customer experience,including through technology,may not generate the expected results.Our long-term business object

299、ives depend on the successful Systemwide execution of our strategies.We continue to build upon our investments inrestaurant development,technology,digital engagement and delivery in order to transform and enhance the customer experience.As part of these investments,we are continuing to place emphasi

300、s on improving our service model and strengthening relationships with customers,in part through digital channels andloyalty initiatives,mobile ordering and payment systems,and enhancing our drive thru technologies,which efforts may not generate expected results.We alsocontinue to expand and refine o

301、ur delivery initiatives,including through integrating delivery and mobile ordering.Utilizing a third-party delivery service maynot have the same level of profitability as a non-delivery transaction,and may introduce additional food quality,food safety and customer satisfaction risks.Ifthese customer

302、 experience initiatives are not successfully executed,or if we do not fully realize the intended benefits of these significant investments,ourbusiness results may suffer.We face intense competition in our markets,which could hurt our business.We compete primarily in the IEO segment,which is highly c

303、ompetitive.We also face sustained,intense competition from traditional,fast casual andother competitors,which may include many non-traditional market participants such as convenience stores,grocery stores,coffee shops and online retailers.We expect our environment to continue to be highly competitiv

304、e,and our results in any particular reporting period may be impacted by a contracting IEOsegment or by new or continuing actions,product offerings,technologies or consolidation of our competitors and third-party partners,which may have a short-or long-term impact on our results.We compete primarily

305、on the basis of product choice,quality,affordability,service and location.In particular,we believe our ability to competesuccessfully in the current market environment depends on our ability to improve existing products,successfully develop and introduce new products,price ourproducts appropriately,

306、deliver a relevant customer experience,manage the complexity of our restaurant operations,manage our investments in restaurantdevelopment,technology,digital engagement and delivery,and respond effectively to our competitors actions or offerings or to unforeseen disruptive actions.There can be no ass

307、urance these strategies will be effective,and some strategies may be effective at improving some metrics while adversely affecting others,which could have the overall effect of harming our business.We may not be able to adequately protect our intellectual property or adequately ensure that we are no

308、t infringing the intellectual property of others,which could harm the value of the McDonalds brand and our business.Our success depends on our continued ability to use our existing trademarks and service marks in order to increase brand awareness and further developour branded products in both domes

309、tic and international markets.We rely on a combination of trademarks,copyrights,service marks,trade secrets,patents andother intellectual property rights to protect our brand and branded products.We have registered certain trademarks and have other trademark registrations pending in the U.S.and cert

310、ain foreign jurisdictions.The trademarks thatwe currently use have not been,and may never be,registered in all of the countries outside of the U.S.in which we do business or may do business in thefuture.It may be costly and time consuming to protect our intellectual property,particularly in rapidly

311、evolving areas,and the steps we have taken to do so inthe U.S.and foreign countries may not be adequate.In addition,the steps we have taken may not adequately ensure that we do not infringe the intellectualproperty of others,and third parties may claim infringement by us in the future.In particular,

312、we may be involved in intellectual property claims,includingoften aggressive or opportunistic attempts to enforce patents used in information technology systems,which might affect our operations and results.Any claimof infringement,whether33Table of Contentsor not it has merit,could,particularly in

313、rapidly evolving areas,be time consuming,or result in costly litigation and could also have an adverse impact on ourbusiness.In addition,we cannot ensure that franchisees and other third parties who hold licenses to our intellectual property will not take actions that adverselyaffect the value of ou

314、r intellectual property.OPERATIONSThe global scope of our business subjects us to risks that could negatively affect our business.We encounter differing cultural,regulatory,geopolitical and economic environments within and among the more than 100 countries where McDonaldsrestaurants operate,and our

315、ability to achieve our business objectives depends on the Systems success in these environments.Meeting customer expectationsis complicated by the risks inherent in our global operating environment,and our global success is partially dependent on our Systems ability to leverageoperating successes ac

316、ross markets and brand perceptions.Planned initiatives may not have appeal across multiple markets with McDonalds customers andcould drive unanticipated changes in customer perceptions and negatively impact our business results.Disruptions in operations or price volatility in a market can also resul

317、t from governmental actions,such as price,foreign exchange or trade-related tariffsor controls,trade policies and regulations,sanctions and counter sanctions,government-mandated closure of our,our franchisees or our suppliers operations,and asset seizures.Such disruptions or volatility can also resu

318、lt from acts of war,terrorism or other hostilities.The broader impact of acts of war and relatedsanctions,including on macroeconomic conditions,geopolitical tensions,consumer demand and the ability of us and our franchisees to operate in certaingeographic areas,may also have an adverse impact on our

319、 business and financial results.While we may face challenges and uncertainties in any of the markets in which we operate,such challenges and uncertainties are often heightened indeveloping markets,which may entail a relatively higher risk of political instability,economic volatility,crime,corruption

320、 and social and ethnic unrest.Inmany cases,such challenges may be exacerbated by the lack of an independent and experienced judiciary and uncertainty in how local law is applied andenforced,including in areas most relevant to commercial transactions and foreign investment.An inability to manage effe

321、ctively the risks associated with ourinternational operations could adversely affect our business and financial results.Supply chain interruptions may increase costs or reduce revenues.We depend on the effectiveness of our supply chain management to assure a reliable and sufficient supply of quality

322、 products,equipment and othermaterials on favorable terms.Although many of these items are sourced from a wide variety of suppliers in countries around the world,certain items havelimited suppliers,which may increase our reliance on those suppliers.Supply chain interruptions and related price increa

323、ses have in the past and may in thefuture adversely affect us as well as our suppliers and franchisees,whose performance may have a significant impact on our results.Such interruptions andprice increases could be caused by shortages,inflationary pressures,unexpected increases in demand,transportatio

324、n-related issues,labor-related issues,technology-related issues,weather-related events,natural disasters,acts of war,terrorism or other hostilities,or other factors beyond the control of us or oursuppliers or franchisees.Interruptions in our Systems supply chain or ineffective contingency planning c

325、an increase our costs and/or limit the availability ofproducts,equipment and other materials that are critical to our Systems operations or to restaurant development.Our franchise business model presents a number of risks.Our success as a heavily franchised business relies to a large degree on the f

326、inancial success and cooperation of our franchisees,including ourdevelopmental licensees and affiliates.Our restaurant margins arise from two sources:fees from franchised restaurants(e.g.,rent and royalties based on apercentage of sales)and,to a lesser degree,sales from Company-owned and operated re

327、staurants.Our franchisees and developmental licensees manage theirbusinesses independently and therefore are responsible for the day-to-day operation of their restaurants.The revenues we realize from franchised restaurantsare largely dependent on the ability of our franchisees to grow their sales.Bu

328、siness risks affecting our operations also affect our franchisees.If franchisee salestrends worsen,or any of such risks materialize or intensify,our financial results could be negatively affected,which may be material.Our success also relies on the willingness and ability of our independent franchis

329、ees and affiliates to implement major initiatives,which may includefinancial investment,and to remain aligned with us on operating,value/promotional and capital-intensive reinvestment plans.The ability of franchisees tocontribute to the achievement of our plans is dependent in large part on the avai

330、lability to them of funding at reasonable interest rates and may be negativelyimpacted by the financial markets in general,by their or our creditworthiness or by banks lending practices.If our franchisees are unwilling or unable to investin major initiatives or are unable to obtain financing at comm

331、ercially reasonable rates,or at all,our future growth and results of operations could be adverselyaffected.Our operating performance could also be negatively affected if our franchisees experience food safety or other operational problems or project an imageinconsistent with our brand and values,par

332、ticularly if our contractual and other rights and remedies are limited,costly to exercise or subjected to litigation andpotential delays.If franchisees do not successfully operate restaurants in a manner consistent with our required standards,our brands image and reputationcould be harmed,which in t

333、urn could hurt our business and operating results.Our ownership mix also affects our results and financial condition.The decision to own restaurants or to operate under franchise or license agreements isdriven by many factors whose interrelationship is complex.The benefits of our more heavily franchised structure34Table of Contentsdepend on various factors,including whether we have effectively sel