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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 endedJune 30,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE A

2、CT 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 60607Chicag

3、o,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 York St

4、ock 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 subject

5、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 such s

6、horter 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 filer,”

7、“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 elected

8、 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 717,343,247(Number

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

10、dited),quarters and six months ended June 30,2024 and 20234Condensed Consolidated Statement of Comprehensive Income(unaudited),quarters and six months ended June 30,2024and 20235Condensed Consolidated Statement of Cash Flows(unaudited),quarters and six months ended June 30,2024 and 20236Condensed Co

11、nsolidated Statement of Shareholders Equity(unaudited),quarters and six months ended June 30,2024and 20237Notes to Condensed Consolidated Financial Statements(unaudited)9Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations16Item 3 Quantitative and Qualitative D

12、isclosures 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 trademarks used herein are the propert

13、y 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 dataJune 30,2024December 31,2023AssetsCurrent assetsCash and equivalents$792$4,579 Accounts a

14、nd notes receivable2,404 2,488 Inventories,at cost,not in excess of market46 53 Prepaid expenses and other current assets963 866 Total current assets4,205 7,986 Other assetsInvestments in and advances to affiliates2,876 1,080 Goodwill3,048 3,040 Miscellaneous5,627 5,618 Total other assets11,551 9,73

15、8 Lease right-of-use asset,net13,234 13,514 Property and equipmentProperty and equipment,at cost43,846 43,570 Accumulated depreciation and amortization(19,035)(18,662)Net property and equipment24,811 24,908 Total assets$53,801$56,147 Liabilities and shareholders equityCurrent liabilitiesShort-term b

16、orrowings and current maturities of long-term debt$2,192 Accounts payable949 1,103 Lease liability655 688 Income taxes464 705 Other taxes279 268 Accrued interest421 469 Accrued payroll and other liabilities1,142 1,434 Total current liabilities3,910 6,859 Long-term debt38,524 37,153 Long-term lease l

17、iability12,820 13,058 Long-term income taxes85 363 Deferred revenues-initial franchise fees791 790 Other long-term liabilities885 950 Deferred income taxes1,610 1,681 Shareholders equity(deficit)Preferred stock,no par value;authorized 165.0 million shares;issued none Common stock,$0.01 par value;aut

18、horized 3.5 billion shares;issued 1,660.6 million shares17 17 Additional paid-in capital9,055 8,893 Retained earnings65,026 63,480 Accumulated other comprehensive income(loss)(2,463)(2,456)Common stock in treasury,at cost;943.3 and 937.9 million shares(76,459)(74,640)Total shareholders equity(defici

19、t)(4,824)(4,707)Total liabilities and shareholders equity(deficit)$53,801$56,147 See Notes to condensed consolidated financial statements.3Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF INCOME(UNAUDITED)Quarters EndedSix Months Ended June 30,June 30,In millions,except per share data20242023202

20、42023RevenuesSales by Company-owned and operated restaurants$2,461$2,487$4,816$4,711 Revenues from franchised restaurants3,940 3,933 7,663 7,521 Other revenues89 77 180 163 Total revenues6,490 6,498 12,659 12,395 Operating costs and expensesCompany-owned and operated restaurant expenses2,074 2,091 4

21、,109 4,014 Franchised restaurants-occupancy expenses629 618 1,256 1,216 Other restaurant expenses69 57 137 120 Selling,general&administrative expensesDepreciation and amortization101 95 199 194 Other590 567 1,212 1,121 Other operating(income)expense,net107(36)90 93 Total operating costs and expenses

22、3,570 3,393 7,003 6,759 Operating income2,920 3,104 5,655 5,637 Interest expense373 330 746 660 Nonoperating(income)expense,net(9)(43)(54)(107)Income before provision for income taxes2,555 2,817 4,964 5,084 Provision for income taxes533 506 1,013 971 Net income$2,022$2,310$3,951$4,113 Earnings per c

23、ommon share-basic$2.81$3.17$5.49$5.63 Earnings per common share-diluted$2.80$3.15$5.46$5.60 Dividends declared per common share$1.67$1.52$3.34$3.04 Weighted-average shares outstanding-basic718.8 729.6 720.3 730.3 Weighted-average shares outstanding-diluted722.0 734.3 724.0 734.9 See Notes to condens

24、ed consolidated financial statements.4Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(UNAUDITED)Quarters EndedSix Months EndedJune 30,June 30,In millions2024202320242023Net income$2,022$2,310$3,951$4,113 Other comprehensive income(loss),net of taxForeign currency translatio

25、n adjustments:Gain(loss)recognized in accumulated other comprehensiveincome(AOCI),including net investment hedges28 40(87)55 Reclassification of(gain)loss to net income41 41 Foreign currency translation adjustments-net of taxbenefit(expense)of$(29),$18,$(122)and$5469 40(46)55 Cash flow hedges:Gain(l

26、oss)recognized in AOCI4 2 40(7)Reclassification of(gain)loss to net income(2)(4)(1)(13)Cash flow hedges-net of tax benefit(expense)of$(1),$1,$(13)and$52(2)39(20)Defined benefit pension plans:Gain(loss)recognized in AOCI(3)11 5 Reclassification of(gain)loss to net income (10)(10)Defined benefit pensi

27、on plans-net of tax benefit(expense)of$1,$0,$1 and$1(3)1(5)Total other comprehensive income(loss),net of tax71 35(6)30 Comprehensive income$2,093$2,345$3,945$4,143 See Notes to condensed consolidated financial statements.5Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)Quar

28、ters EndedSix Months Ended June 30,June 30,In millions2024202320242023Operating activitiesNet income$2,022$2,310$3,951$4,113 Adjustments to reconcile to cash provided by operationsCharges and credits:Depreciation and amortization502 492 1,012 983 Deferred income taxes(226)(152)(364)(239)Share-based

29、compensation38 45 88 95 Other16(46)(15)(77)Changes in working capital items(663)(976)(593)(781)Cash provided by operations1,689 1,673 4,079 4,094 Investing activitiesCapital expenditures(628)(526)(1,174)(1,030)Purchases of restaurant businesses(110)(114)(162)(212)Purchases of equity method investmen

30、ts(17)(1,837)Sales of restaurant businesses60 59 102 80 Sales of property14 4 22 22 Other(165)(93)(289)(272)Cash used for investing activities(846)(670)(3,338)(1,412)Financing activitiesNet short-term borrowings(repayments)(2)(158)(341)(144)Long-term financing issuances1,731 1,731 1,054 Long-term fi

31、nancing repayments(500)(1,376)(1,785)(1,377)Treasury stock purchases(934)(570)(1,852)(1,148)Common stock dividends(1,199)(1,109)(2,405)(2,220)Proceeds from stock option exercises22 75 121 149 Other13 44 1 34 Cash used for financing activities(869)(3,094)(4,530)(3,652)Effect of exchange rates on cash

32、 and cash equivalents(21)8 1 12 Cash and equivalents increase(decrease)(46)(2,083)(3,787)(958)Cash and equivalents at beginning of period838 3,708 4,579 2,584 Cash and equivalents at end of period$792$1,626$792$1,626 See Notes to condensed consolidated financial statements.6Table of ContentsCONDENSE

33、D CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY(UNAUDITED)For the six months ended June 30,2023 Common stockissued Accumulated othercomprehensive income(loss)Common stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurrencytranslati

34、onIn 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 income4,113 4,113 Other comprehensive income(loss),net of tax(5)(20)55 30 Comprehensive income4,143 Common stock cash dividends ($3.04 per share)(

35、2,220)(2,220)Treasury stock purchases(4.2)(1,163)(1,163)Share-based compensation95 95 Stock option exercises and other94 1.6 55 149 Balance at June 30,20231,660.6$17$8,736$61,437$(303)$11$(2,164)(931.9)$(72,733)$(4,999)For the six months ended June 30,2024 Common stockissued Accumulated othercompreh

36、ensive income(loss)Common stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurrencytranslationIn millions,except per share dataSharesAmountSharesAmountBalance at December 31,20231,660.6$17$8,893$63,480$(367)$(6)$(2,083)(937.9)$(74,

37、640)$(4,707)Net income 3,951 3,951 Other comprehensive income(loss),net of tax 1 39(46)(6)Comprehensive income 3,945 Common stock cash dividends ($3.34 per share)(2,405)(2,405)Treasury stock purchases (6.7)(1,867)(1,867)Share-based compensation88 88 Stock option exercises and other73 1.3 48 121 Bala

38、nce at June 30,20241,660.6$17$9,055$65,026$(367)$33$(2,129)(943.3)$(76,459)$(4,824)See Notes to condensed consolidated financial statements.7Table of ContentsCONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY(UNAUDITED)For the quarter ended June 30,2023 Common stockissued Accumulated othercompr

39、ehensive income(loss)Common stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurrencytranslationIn millions,except per share dataSharesAmountSharesAmountBalance at March 31,20231,660.6$17$8,636$60,235$(299)$14$(2,204)(930.5)$(72,17

40、4)$(5,776)Net income2,310 2,310 Other comprehensive income(loss),net of tax(3)(2)40 35 Comprehensive income2,345 Common stock cash dividends ($1.52 per share)(1,109)(1,109)Treasury stock purchases(2.0)(579)(579)Share-based compensation45 45 Stock option exercises and other55 0.6 20 75 Balance at Jun

41、e 30,20231,660.6$17$8,736$61,437$(303)$11$(2,164)(931.9)$(72,733)$(4,999)For the quarter ended June 30,2024 Common stockissued Accumulated othercomprehensive income(loss)Common stock intreasuryTotalshareholdersequity(deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurre

42、ncytranslationIn millions,except per share dataSharesAmountSharesAmountBalance at March 31,20241,660.6$17$9,001$64,203$(367)$32$(2,198)(939.9)$(75,520)$(4,833)Net income2,022 2,022 Other comprehensive income(loss),net of tax 2 69 71 Comprehensive income2,093 Common stock cash dividends ($1.67 per sh

43、are)(1,199)(1,199)Treasury stock purchases(3.5)(946)(946)Share-based compensation3838Stock option exercises and other15 0.1 7 22 Balance at June 30,20241,660.6$17$9,055$65,026$(367)$33$(2,129)(943.3)$(76,459)$(4,824)See Notes to condensed consolidated financial statements.8Table of ContentsNOTES TO

44、CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)McDonalds Corporation,the registrant,together 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 fi

45、nancial statements should be read in conjunction with the Consolidated Financial Statements contained 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 quart

46、er and six months ended June 30,2024 do not necessarily indicate the results that may be expected forthe 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 o

47、therwise designated.The change in rounding presentation has been applied to all prior year amounts 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

48、.Additionally,certain columns and rows within the financial statements and tables presented 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 owne

49、rship type:Restaurants at June 30,20242023Conventional franchised21,892 21,719 Developmental licensed8,815 8,357 Foreign affiliated9,531 8,598 Total Franchised40,238 38,674 Company-owned and operated2,168 2,127 Total Systemwide restaurants42,406 40,801 The results of operations of restaurant busines

50、ses purchased and sold in transactions with franchisees were not material either individually or in theaggregate to the accompanying condensed consolidated financial statements for the periods prior to purchase and sale.Per Common Share InformationDiluted earnings per common share is calculated as n

51、et income divided by diluted weighted-average shares.Diluted weighted-average shares includeweighted-average shares outstanding plus the dilutive effect of share-based compensation,calculated using the treasury stock method,of 3.2 million shares and4.7 million shares for the quarters ended 2024 and

52、2023,respectively,and 3.7 million shares and 4.6 million shares for the six months ended 2024 and 2023,respectively.Share-based compensation awards that would have been antidilutive,and therefore were not included in the calculation of diluted weighted-average shares,totaled 3.2 million shares and 1

53、.2 million shares for the quarters ended 2024 and 2023,respectively,and 2.2 million shares and 2.1 millionshares for the six months ended 2024 and 2023,respectively.9Table of ContentsRecent Accounting PronouncementsRecent Accounting Pronouncements Not Yet AdoptedSegment ReportingIn November 2023,the

54、 Financial Accounting Standards Board(the FASB)issued Accounting Standards Update(ASU)No.2023-07,SegmentReporting(Topic 280):Improvements to Reportable Segment Disclosures(ASU 2023-07).The pronouncement expands annual and interim disclosurerequirements for reportable segments,primarily through enhan

55、ced disclosures about significant segment expenses.ASU 2023-07 is effective for fiscal yearsbeginning after December 15,2023,and 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 finan

56、cial statement disclosures.Income TaxesIn December 2023,the FASB issued ASU No.2023-09,Income Taxes(Topic 740):Improvements to Income Tax Disclosures(ASU 2023-09).Thepronouncement expands the disclosure requirements for income taxes,specifically related to the rate reconciliation and income taxes pa

57、id.ASU 2023-09 iseffective for fiscal years beginning after December 15,2024.We are currently in the process of determining the impact that ASU 2023-09 will have on theCompanys consolidated financial statement disclosures.Accelerating the OrganizationIn January 2023,the Company announced an evolutio

58、n of its successful Accelerating the Arches strategy.Enhancements to the strategy included theaddition of Restaurant Development 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 performan

59、ce.Accelerating the Organization is designed to unlock further growth as the Company focuses onbecoming faster,more innovative and more efficient for its customers and people.The Company incurred$101 million of charges related to Accelerating the Organization in the six months ended June 30,2024.The

60、se charges wererecorded in the Other operating(income)expense,net line within the consolidated statement of income,and primarily recorded within the Corporate segment.For the period presented,restructuring charges primarily consisted of professional services costs.There were no significant non-cash

61、impairment chargesincluded in the amounts listed in the table below.The following table summarizes the balance of accrued expenses related to this strategic initiative(in millions):EmployeeTerminationBenefitsCosts toTerminateContractsProfessionalServices andOther CostsTotal2024Accrued Balance at Beg

62、inning of Year$41$11$7$59 Restructuring Costs Incurred 44 44 Cash Payments(14)(5)(44)(63)Other Non-Cash Items (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 The Company c

63、ontinues 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 charges as thestrategy progress

64、es 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 accounted for using the equity met

65、hod.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 dividends received and the ef

66、fect 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 net income.The carrying value of the investments arerecorded within the Investments in and advances to affiliates line on the

67、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 entity that operates and

68、 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 arrangements.The following tab

69、le summarizes the amounts related to the Companys primary equity method investees during the periods presented.June 30,2024December 31,2023In MillionsPercentageOwnershipFair Value(Level 1)CarryingAmountPercentageOwnershipFair Value(Level 1)CarryingAmountGrand Foods Holding48%N/A$2,109 20%N/A$238 McD

70、onalds Japan Holdings Co.,Ltd35%$1,851$547 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 equity ownership to 48%,but did n

71、ot 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 June 30,2024,the aggregate carrying amount of the Companys investments in these equity method investees exceeded its proportionate share ofth

72、e net assets of these equity method investees by$1.5 billion.This difference is not amortized.Management has concluded that there are no indicators ofimpairment related to these investments.The following table summarizes the amounts recorded related to the Companys primary equity method investments

73、during the six months ended June30,2024 and June 30,2023,respectively.Six Months Ended June 30,In Millions20242023Revenue$260$235 Equity in Earnings$66$50 Accounts Receivable$135$137 Dividends Received$13$14 11Table of ContentsIncome TaxesThe effective income tax rate was 20.9%and 18.0%for the quart

74、ers ended 2024 and 2023,respectively,and 20.4%and 19.1%for the six months ended2024 and 2023,respectively.The effective tax rate for both periods of 2023 reflected an income tax benefit of$55 million related to the remeasurement of adeferred tax liability.Fair Value MeasurementsThe Company measures

75、certain financial assets and liabilities at fair value.Fair value disclosures are reflected in a 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

76、liability on the measurement date and are defined as follows:Level 1 inputs to the valuation methodology are quoted prices(unadjusted)for an identical asset or liability in an active market.Level 2 inputs to the valuation methodology include quoted prices for a similar asset or liability in an activ

77、e market or model-derived valuations inwhich all significant inputs are observable for substantially the full term of the asset or liability.Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.There were no significant

78、changes to the valuation techniques used to measure fair value as described in the Companys December 31,2023 AnnualReport on Form 10-K.At June 30,2024,the fair value of the Companys debt obligations was estimated at$36.4 billion,compared to a carrying amount of$38.5 billion.Thefair value of debt obl

79、igations is based upon quoted market prices,classified as Level 2 within the valuation hierarchy.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,includi

80、ng the effect of changes in interest rates and foreign currency fluctuations.The Company usesforeign 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 v

81、alues of derivative instruments included on the condensed consolidated balance sheet:Derivative AssetsDerivative LiabilitiesIn millionsBalance SheetClassificationJune 30,2024December 31,2023Balance SheetClassificationJune 30,2024December 31,2023Derivatives designated as hedging instrumentsForeign cu

82、rrencyPrepaid expenses and othercurrent assets$36$9 Accrued payroll and otherliabilities$(11)$(37)Interest ratePrepaid expenses and othercurrent assets$4 Accrued payroll and otherliabilities$(4)Foreign currencyMiscellaneous other assets$29$2 Other long-term liabilities$(1)$(14)Interest rateMiscellan

83、eous other assets$Other long-term liabilities$(58)$(58)Total derivatives designated as hedginginstruments$65$15$(70)$(113)Derivatives not designated as hedging instrumentsEquityPrepaid expenses and othercurrent assets$Accrued payroll and otherliabilities$Foreign currencyPrepaid expenses and othercur

84、rent assets$6 Accrued payroll and otherliabilities$(8)$(5)EquityMiscellaneous other assets$116$189 Total derivatives not designated as hedginginstruments$116$195$(8)$(5)Total derivatives$181$210$(78)$(118)The following table presents the pre-tax amounts from derivative instruments affecting income a

85、nd AOCI for the six months ended June 30,2024 and 2023,respectively:Location of gain or lossrecognized in income onderivativeGain(loss)recognized in AOCIGain(loss)reclassified intoincome from AOCIGain(loss)recognized inincome onderivativeIn millions202420232024202320242023Foreign currencyNonoperatin

86、g income/expense$49$(22)$1$16 Interest rateInterest expense$4$14$1$Cash flow hedges$53$(8)$2$16 Foreign currency denominated debtNonoperating income/expense$421$(294)Foreign currency derivativesNonoperating income/expense$87$46 Foreign currency derivativesInterest expense$18$11 Net investment hedges

87、$508$(248)$18$11 Foreign currencyNonoperating income/expense$(6)$3 EquitySelling,general&administrative expenses$(27)$31 Undesignated derivatives$(33)$34 The amount of gain(loss)recognized in income related to components excluded from effectiveness testing.(1)(1)13Table of ContentsFair Value HedgesT

88、he Company enters into fair value hedges to reduce the exposure to 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 June 30,2024,the carrying amount of fixed-r

89、ate debtthat was effectively converted was an equivalent notional amount of$763 million,which included a decrease of$58 million of cumulative hedgingadjustments.For the six months ended June 30,2024,the Company recognized a$4 million gain on the fair value of interest rate swaps,and a correspondingl

90、oss on the fair value of the related hedged debt instrument 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

91、 as royalties denominated in foreign currencies),the 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 June 30,2024,the Company had derivatives outstanding

92、with an equivalent notional amount of$2.2 billion that hedged a portion of forecasted foreign currencydenominated cash flows.Based on market conditions at June 30,2024,the$33 million in cumulative cash flow hedging gains,after tax,is not expected to have a significant effecton the Companys earnings

93、over the next 12 months.Net Investment 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 i

94、ncluded in shareholders equity 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 June 30,2024,$13.6 billion of the Companys third-pa

95、rty foreign currency denominated debt,$539 millionof the Companys intercompany foreign currency denominated debt and$1.7 billion of foreign currency derivatives were designated to hedge investments incertain foreign subsidiaries and affiliates.Undesignated HedgesThe Company enters into certain deriv

96、atives that are not designated 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 tota

97、l return swaps,to hedge market-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 expense

98、s together with the changes 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 Nonop

99、erating(income)expense,net,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 counterpar

100、ty at June 30,2024 and has master agreements that contain netting arrangements.For financial reporting purposes,theCompany presents gross derivative balances in its financial statements and supplementary data,including for counterparties subject to netting arrangements.Some of these agreements also

101、require each party to post collateral if credit ratings fall below,or aggregate exposures exceed,certain contractual limits.AtJune 30,2024,the Company was required to post$61 million of collateral due to the negative fair value of certain derivative positions.The Companyscounterparties were not requ

102、ired to post collateral on any derivative position,other than on certain hedges of the Companys supplemental benefit planliabilities where the counterparties were required to post collateral on their liability positions.14Table of ContentsFranchise ArrangementsRevenues from franchised restaurants co

103、nsisted of:Quarters EndedSix Months EndedJune 30,June 30,In millions2024202320242023Rents$2,523$2,509$4,904$4,779 Royalties1,402 1,410 2,728 2,713 Initial fees16 14 31 29 Revenues from franchised restaurants$3,940$3,933$7,663$7,521 Segment InformationThe Company operates under an organizational stru

104、cture 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 June 30,2024.International Operated Markets-comprised of markets or countries in which the Company owns and opera

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

106、luding equity method investments in China and Japan.Corporate activities are also reported in this segment.The segment is 98%franchised as of June 30,2024.The following table presents the Companys revenues and operating income by segment:Quarters EndedSix Months Ended June 30,June 30,In millions2024

107、202320242023RevenuesU.S.$2,698$2,701$5,258$5,189 International Operated Markets3,147 3,156 6,134 5,950 International Developmental Licensed Markets&Corporate645 641 1,267 1,256 Total revenues$6,490$6,498$12,659$12,395 Operating IncomeU.S.$1,511$1,495$2,907$2,790 International Operated Markets1,493 1

108、,518 2,858 2,710 International Developmental Licensed Markets&Corporate(84)92(109)136 Total operating income$2,920$3,104$5,655$5,637.Subsequent EventsThe Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and ExchangeCommission.On

109、July 2,2024,the Company completed the acquisition of Alonyal Limited,which owns and operates 228 McDonalds restaurants in Israel.Asa result of this acquisition,McDonalds will now consolidate the financial statements of Alonyal Limited into its results.Revenues from these restaurants willnow be refle

110、cted as Company-owned and operated sales,rather than royalties charged to the former developmental licensee partner based on a percentage ofsales being recorded within Franchised revenue.The Company will continue to report results from this market within the International Developmental LicensedMarke

111、ts&Corporate segment.The Company is currently in the process of accounting for this transaction and expects to complete its preliminary allocation ofthe purchase consideration to the assets acquired and liabilities assumed by the end of the third quarter of 2024.There were no other subsequent events

112、 thatrequired 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 Results of Operations(MD&A)should be read in conjunction with

113、 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 changed its rounding presentation to the nearest whole number

114、 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 balances,however,these changes were not significant,and no other

115、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.Percentages have been calculated from the underlying whole-do

116、llar 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 42,406 McDonalds restaurants at June 30,2024,approximately 95%were f

117、ranchised.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 Operated Markets.In addition,there is the International Developm

118、entalLicensed 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,developmental license oraffiliate.The optimal ownership structu

119、re 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 environment in critical areas such asproperty ownership and franc

120、hising.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 and to protecting the McDonalds brand.The Company is primarily a f

121、ranchisor 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 employment related matters,marketing andpricing decisions,while als

122、o 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 strengths of thefranchising model is that the expertise from Company

123、-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-ownedand operated restaurants provides Company personnel with a

124、 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 andproduct and pricing strategies that will ultimately benefit

125、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 by type of site,amount of Company investment,if any,and local bus

126、inessconditions.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 portion of costs incurred by the Company for various technology plat

127、formsand 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 lease on the land and building for the restaurantlocation and th

128、e 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 the industry.Franchisees are responsible for reinvesting capital i

129、n 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 collaboration withfranchisees,are designed to cater to consumer prefere

130、nces,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 meet rigorous standards and generally does not work with passive

131、 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 and royalties based upon a percent of sales,with specified minimu

132、m 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 function of franchisee sales,and resulting cash flow streams.Developmen

133、tal 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 restaurants.The Company generally does not invest any capital under

134、 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 affiliate arrangements are largely the same,affiliate arrangements

135、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 Markets segment,where the Company also has an equity investment a

136、nd records its share of net results in equityin earnings of unconsolidated affiliates.Strategic DirectionThe Companys Accelerating the Arches growth strategy(the“Strategy”)encompasses all aspects of McDonalds business as the leading global omni-channel restaurant brand.Our Strategy reflects the Comp

137、anys 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 Strategy.Through its size and scale,the Company embraces and priorit

138、izes its role and commitment to the communities in which it operates through its purpose tofeed and foster communities,and its mission to make delicious feel-good moments easy for everyone.The Company is guided by five core values that definewho it is and how it runs its business across the three-le

139、gged 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 get better together.The Company believes that its people,all around t

140、he 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 Marketing by investing in new,culturally relevant approaches,grounded i

141、n 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 Marketing”approach.This is exemplified by campaigns that elevate the

142、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 mobile app.The Company is committed to a marketing strategy that highlig

143、hts 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 other limited-time deals for our customers.Commit to the Core menu by tapping into customer demand for the

144、 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.Building on its foundational strength with burgers,the Company

145、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 2026.Further,the Company is focused on continuing to gain shar

146、e in the rapidly growing chicken category,as wecontinue to aggressively expand our chicken brands.This includes plans to offer McCrispy in nearly all markets by the end of 2025 and to extend theMcCrispy brand into wraps and tenders in several markets.These planned innovations and new menu offerings

147、reflect the Companys ability to testand scale quickly to meet evolving customer preferences.The Company also continues to see a17Table of Contentssignificant opportunity with coffee,demonstrated by markets leveraging the McCaf brand,customer experience,value and quality to drive long-termgrowth.Doub

148、le 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 way to unlock furthergrowth,the Company plans to c

149、ontinue 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 is transforming how customers order,pay and rec

150、eive 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 to customers through“Ready on Arrival”:a digita

151、l 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 2025.The Company has successful loyaltyprograms in

152、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 Systemwidesales to loyalty members to$45 billion by 2027.De

153、livery:The Company offers delivery in over 36,000 restaurants across approximately 100 markets,representing over 85%of McDonaldsrestaurants.The Company is continuing to build on and enhance the delivery experience for customers,including adding the ability to place adelivery order in our mobile app(

154、a feature that is currently available in five of the Companys top markets).The Company continues to scalethis capability and expects to increase the percentage of Systemwide delivery sales originating from our mobile app to 30%by 2027.TheCompany also has long-term strategic partnerships with deliver

155、y providers that continue to benefit the Company,customers and franchiseesby 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 drive thru locations globally,including nearly95%of th

156、e 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 offeringsignificant growth opportunities,such as adding additio

157、nal 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 thru.Restaurant Development:The Company will continue

158、 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 contribute to nearly 4%new unit growth(net of closures).F

159、urther,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 growth in Company history.FoundationFoundational to our Strategy is keeping the customer and restaurant crew at t

160、he 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 termgrowth and solidifying McDonalds leadership position,the Company will continue t

161、o 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.Together,our foundation and platforms will extend theCompanys leadership position and unlock new growth opportunities and effici

162、encies 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 and utilize our physical and digital competitive advantages.The consumer platform will enable t

163、he 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 platform which enables franchisees to run restaurantsmore efficiently and utilize the latest clou

164、d-based technology to make it easier for restaurant crew to deliver exceptional customer service.TheCompany will deploy new,universal software that all McDonalds restaurants will run on,enabling restaurants to roll out innovation even faster,withless complexity and more stability;and customers will

165、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 growth as it modernizes the way it works by focusing on becoming faster,more innovative and more eff

166、icient at solving problems for itscustomers and people.Developing and implementing these platforms includes continued investments in digital,innovation and our Global Business Services organization.Our Strategy is aligned with the Companys capital allocation philosophy of investing in opportunities

167、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 sharerepurchases.The Company believes our Strategy builds on our inherent strengths by harnessing the

168、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 the currentindustry-wide challenges associated with more discerning consumer spending.Our Strategy is s

169、upported by a strong global senior leadership team aimed atexecuting against the MCD growth pillars,further developing our three platforms and driving long-term growth.Second Quarter and Six Months 2024 Financial PerformanceGlobal comparable sales decreased 1.0%for the quarter and increased 0.4%for

170、the six months.U.S.comparable sales decreased 0.7%for the quarter and increased 0.9%for the six months.Comparable sales results for both periods weredriven by average check growth due to strategic menu price increases,successful restaurant level execution and continued digital and deliverygrowth.Res

171、ults for the quarter were more than offset by negative comparable guest counts.International Operated Markets segment comparable sales decreased 1.1%for the quarter and increased 0.7%for the six months.Segmentperformance for the quarter was impacted by negative comparable sales across a number of ma

172、rkets,driven by France.For the six months,segment performance was driven by positive comparable sales in most markets,led by Poland and Germany,partly offset by negative comparablesales in France.International Developmental Licensed Markets segment comparable sales decreased 1.3%for the quarter and

173、0.8%for the six months.Thecontinued impact of the war in the Middle East and negative comparable sales in China more than offset positive comparable sales in LatinAmerica and Japan,for both periods.In addition to the comparable sales results,the Company had the following financial results for the qu

174、arter and six months:Consolidated revenues were flat(increased 1%in constant currencies)for the quarter and increased 2%(2%in constant currencies)for the sixmonths.Systemwide sales decreased 1%(increased 1%in constant currencies)for the quarter and increased 1%(2%in constant currencies)for the sixmo

175、nths.Consolidated operating income decreased 6%(5%in constant currencies)for the quarter and was flat(increased 1%in constant currencies)for thesix months.Excluding current and prior year charges detailed in the Operating Income and Operating Margin section on page 29 of this report,consolidated ope

176、rating income decreased 2%(was flat in constant currencies)for the quarter and was flat(increased 1%in constant currencies)forthe six months.Diluted earnings per share was$2.80 for the quarter,a decrease of 11%(10%in constant currencies)and$5.46 for the six months,a decrease of2%(2%in constant curre

177、ncies).Excluding current and prior year charges detailed in the Net Income and Diluted Earnings Per Share section onpage 23 of this report,diluted earnings per share for the quarter was$2.97,a decrease of 6%(5%in constant currencies)and$5.66,a decrease of2%(2%in constant currencies)for the six month

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

179、is betterrepresents underlying business trends.19Table of ContentsThe Following Definitions 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 ex

180、change rates.Management reviews and analyzes business results excluding the effect of 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 thi

181、s better represents underlying business trends.Comparable sales and comparable guest counts 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 thirtee

182、n months including those temporarilyclosed.Some of the reasons restaurants may be temporarily 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

183、the sales of anymarket considered hyperinflationary(generally identified as those markets 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 an

184、daverage check,the latter of which is affected by changes in pricing and product mix.Systemwide 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

185、member when transacting with both Company-owned and operatedand franchised restaurants.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 m

186、embers active in the last 90 days.While franchised sales are not recorded as revenues 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 a

187、nd areindicative of the financial health of the franchisee base.The Companys revenues 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 dr

188、iven by comparable sales and net restaurant unit expansion.Free cash flow,defined as cash 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 t

189、o convert net profits into cash resources,after reinvesting in the core business,that can be used to pursue opportunities to enhance shareholder value.20Table of ContentsCONSOLIDATED OPERATING RESULTSDollars in millions,except per share dataQuarters Ended June 30,20242023Inc/(Dec)RevenuesSales by Co

190、mpany-owned and operated restaurants$2,461$2,487(1)%Revenues from franchised restaurants3,940 3,933 Other revenues89 77 16 Total revenues6,490 6,498 Operating costs and expensesCompany-owned and operated restaurant expenses2,074 2,091(1)Franchised restaurants-occupancy expenses629 618 2 Other restau

191、rant expenses69 57 21 Selling,general&administrative expensesDepreciation and amortization101 95 6 Other590 567 4 Other operating(income)expense,net107(36)n/mTotal operating costs and expenses3,570 3,393 5 Operating income2,920 3,104(6)Interest expense373 330 13 Nonoperating(income)expense,net(9)(43

192、)(79)Income before provision for income taxes2,555 2,817(9)Provision for income taxes533 506 5 Net income$2,022$2,310(12)%Earnings per common share-basic$2.81$3.17(11)%Earnings per common share-diluted$2.80$3.15(11)%Six Months Ended June 30,20242023Inc/(Dec)RevenuesSales by Company-owned and operate

193、d restaurants$4,816$4,711 2%Revenues from franchised restaurants7,663 7,521 2 Other revenues180 163 10 Total revenues12,659 12,395 2 Operating costs and expensesCompany-owned and operated restaurant expenses4,109 4,014 2 Franchised restaurants-occupancy expenses1,256 1,216 3 Other restaurant expense

194、s137 120 14 Selling,general&administrative expensesDepreciation and amortization199 194 3 Other1,212 1,121 8 Other operating(income)expense,net90 93(3)Total operating costs and expenses7,003 6,759 4 Operating income5,655 5,637 Interest expense746 660 13 Nonoperating(income)expense,net(54)(107)(50)In

195、come before provision for income taxes4,964 5,084(2)Provision for income taxes1,013 971 4 Net income$3,951$4,113(4)%Earnings per common share-basic$5.49$5.63(2)%Earnings per common share-diluted$5.46$5.60(2)%n/m Not meaningful21Table of ContentsImpact of the War in the Middle EastThe Companys System

196、wide sales and revenue have continued to be negatively impacted 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 evolv

197、ing situation,which it expects to continue to have a negative 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

198、 receives initial fees upon the opening of a new restaurant or grant of a new license.Impact of Foreign Currency TranslationThe impact of foreign currency translation on consolidated operating results for both periods primarily reflected the weakening of most major currenciesagainst the U.S.Dollar,p

199、artly offset by the strengthening of the British Pound.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 currencies and hedging certain foreign-denominated cash

200、 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 per share data CurrencyTranslationBenefit/(Cos

201、t)Quarters Ended June 30,202420232024Revenues$6,490$6,498$(55)Company-owned and operated margins387 396(4)Franchised margins3,311 3,315(27)Selling,general&administrative expenses691 663 2 Operating income2,920 3,104(28)Net income2,022 2,310(23)Earnings per share-diluted$2.80$3.15$(0.03)CurrencyTrans

202、lationBenefit/(Cost)Six Months Ended June 30,202420232024Revenues$12,659$12,395$(37)Company-owned and operated margins707 697(4)Franchised margins6,407 6,304(19)Selling,general&administrative expenses1,411 1,315 Operating income5,655 5,637(24)Net income3,951 4,113(23)Earnings per share-diluted$5.46$

203、5.60$(0.03)22Table of ContentsNet Income and Diluted Earnings per ShareFor the quarter,net income decreased 12%(11%in constant currencies)to$2,022 million,and diluted earnings per share decreased 11%(10%in constantcurrencies)to$2.80.Foreign currency translation had a negative impact of$0.03 on dilut

204、ed earnings per share.For the six months,net income decreased 4%(3%in constant currencies)to$3,951 million,and diluted earnings per share decreased 2%(2%in constantcurrencies)to$5.46.Foreign currency translation had a negative impact of$0.03 on diluted earnings per share.Results for 2024 included th

205、e following:Net pre-tax charges of$97 million,or$0.11 per share,for the quarter and$89 million,or$0.10 per share,for the six months,primarilyrelated to non-cash impairment charges associated with the anticipated future sale of McDonalds business in South KoreaPre-tax charges of$57 million,or$0.06 pe

206、r share,for the quarter and$100 million,or$0.10 per share,for the six months,related torestructuring charges associated with the Companys internal effort to modernize ways of working(Accelerating the Organization)Results for 2023 included the following:Pre-tax charges of$18 million,or$0.02 per share

207、,for the quarter and$198 million,or$0.20 per share,for the six months,related to theCompanys Accelerating the Arches growth strategy,including restructuring charges associated with Accelerating the OrganizationExcluding the above items,lower sales performance and higher Selling,general,and administr

208、ative expenses drove negative operating incomeperformance for the quarter.Results for the six months reflected positive operating income performance driven primarily by higher sales-driven Franchisedmargins,partly offset by higher Selling,general,and administrative expenses.Results for both periods

209、reflected higher interest expense and a higher effectivetax rate.During the quarter,the Company paid a dividend of$1.67 per share,or$1.2 billion,bringing total dividends paid for the six months to$2.4 billion.Additionally,during the quarter,the Company repurchased 3.5 million shares of stock for$946

210、 million,bringing total purchases for the six months to 6.7million shares,or$1.9 billion.NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATIONDollars in millions,except per share dataQuarters Ended June 30,Net IncomeEarnings per share-diluted20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslation2

211、0242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationGAAP$2,022$2,310(12)%(11)%$2.80$3.15(11)%(10)%(Gains)/Charges124 14 0.17 0.02 Non-GAAP$2,146$2,324(8)%(7)%$2.97$3.17(6)%(5)%Six Months Ended June 30,Net IncomeEarnings per share-diluted20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslation20242023

212、Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationGAAP$3,951$4,113(4)%(3)%$5.46$5.60(2)%(2)%(Gains)/Charges150 148 0.20 0.20 Non-GAAP$4,101$4,261(4)%(3)%$5.66$5.80(2)%(2)%RevenuesThe Companys revenues consist of sales by Company-owned and operated restaurants and fees from restaurants owned and operated

213、 by franchisees,developmental licensees and affiliates.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 ba

214、sed on a percent of sales,andgenerally include 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

215、goods using the McDonalds brand.Franchised restaurants represented approximately 95%of McDonalds restaurants worldwide at June 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 ca

216、sh flow streams.In thesix months,the Company provided an immaterial amount of assistance,including royalty relief and/23Table of Contentsor deferral of cash collection for certain franchisees impacted by the war in the Middle East in the International Developmental Licensed Markets&Corporatesegment.

217、This assistance may continue as long as the war continues.REVENUES Dollars in millions Quarters Ended June 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationCompany-owned and operated sales U.S.$814$823(1)%(1)%International Operated Markets1,431 1,461(2)(1)International Developmental Licensed

218、 Markets&Corporate215 202 6 11 Total$2,461$2,487(1)%Franchised revenues U.S.$1,837$1,831%International Operated Markets1,673 1,664 1 1 International Developmental Licensed Markets&Corporate430 438(2)2 Total$3,940$3,933%1%Total Company-owned and operated sales and Franchised revenues U.S.$2,651$2,654

219、%International Operated Markets3,104 3,125(1)International Developmental Licensed Markets&Corporate645 640 1 5 Total$6,401$6,420%1%Total Other revenues$89$77 16%17%Total Revenues$6,490$6,498%1%Six Months Ended June 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationCompany-owned and operated s

220、ales U.S.$1,595$1,584 1%1%International Operated Markets2,793 2,732 2 2 International Developmental Licensed Markets&Corporate427 395 8 13 Total$4,816$4,711 2%3%Franchised revenues U.S.$3,565$3,509 2%2%International Operated Markets3,258 3,150 3 3 International Developmental Licensed Markets&Corpora

221、te839 861(3)1 Total$7,663$7,521 2%2%Total Company-owned and operated sales and Franchised revenues U.S.$5,160$5,093 1%1%International Operated Markets6,051 5,882 3 3 International Developmental Licensed Markets&Corporate1,266 1,256 1 4 Total$12,479$12,232 2%2%Total Other revenues$180$163 10%10%Total

222、 Revenues$12,659$12,395 2%2%Total Company-owned and operated sales and franchised revenues were flat(increased 1%in constant currencies)for the quarter and increased 2%(2%in constant currencies)for the six months The quarter was impacted by negative comparable sales performance in the U.S.and Intern

223、ationalOperated Markets segment,while the six months benefited from positive comparable sales performance for these two segments.Revenue growth inthe International Developmental Licensed Markets&Corporate segment continued to be impacted by the war in the Middle East,which began inOctober 2023.24Tab

224、le of ContentsComparable SalesThe following table presents the percent change in comparable sales for the quarters and six months ended June 30,2024 and 2023:Increase/(Decrease)Quarters Ended June 30,Six Months Ended June 30,2024202320242023U.S.(0.7)%10.3%0.9%11.4%International Operated Markets(1.1)

225、11.9 0.7 12.3 International Developmental Licensed Markets(1.3)14.0(0.8)13.3 Total(1.0)%11.7%0.4%12.2%Systemwide Sales and Franchised SalesThe following table presents the percent change in Systemwide sales for the quarter and six months ended June 30,2024:SYSTEMWIDE SALES*Quarter Ended June 30,2024

226、Six Months Ended June 30,2024Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationInc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.%1%1%International Operated Markets 1 3 2 International Developmental Licensed Markets(2)3(2)3 Total(1)%1%1%2%*Unlike comparable sales,the Company has not excluded sales from

227、hyperinflationary 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 in

228、dicative of the financial health of the franchisee base.The following table presents Franchised sales and the related increases/(decreases)for the quartersand six months ended June 30,2024 and 2023:FRANCHISED SALESDollars in millionsQuarters Ended June 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyT

229、ranslationU.S.$12,764$12,789%International Operated Markets9,726 9,715 1 International Developmental Licensed Markets7,691 7,889(3)3 Total$30,180$30,393(1)%1%Ownership typeConventional franchised$22,382$22,412%Developmental licensed4,897 5,069(3)Foreign affiliated2,901 2,912 7 Total$30,180$30,393(1)

230、%1%Six Months Ended June 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.$24,850$24,531 1%1%International Operated Markets18,892 18,383 3 2 International Developmental Licensed Markets15,256 15,529(2)3 Total$58,996$58,444 1%2%Ownership typeConventional franchised$43,547$42,758 2%3%Devel

231、opmental licensed9,508 9,789(3)(2)Foreign affiliated5,941 5,897 1 2 Total$58,996$58,444 1%2%26Table of ContentsRestaurant MarginsFranchised restaurant margins are measured as revenues from franchised restaurants less franchised restaurant occupancy costs.Franchised revenuesinclude rent and royalties

232、 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 are measured as sale

233、s 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,primarily payroll&employ

234、ee benefit costs of non-restaurant support staff,which are included inSelling,general and administrative expenses.RESTAURANT MARGINSDollars in millionsAmountInc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationQuarters Ended June 30,20242023Franchised U.S.$1,515$1,510%International Operated Markets1,370 1,

235、372 1 International Developmental Licensed Markets&Corporate427 433(1)2 Total$3,311$3,315%1%Company-owned and operated U.S.$116$125(7)%(7)%International Operated Markets249 263(5)(4)International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$387$396(2)%(1)%Total restaurant marginsU.S.$1,

236、630$1,635%International Operated Markets1,620 1,635(1)International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$3,698$3,711%1%AmountInc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationSix Months Ended June 30,20242023FranchisedU.S.$2,919$2,872 2%2%International Operated Markets2,657 2,581 3

237、3 International Developmental Licensed Markets&Corporate831 852(2)1 Total$6,407$6,304 2%2%Company-owned and operated U.S.$223$234(5)%(5)%International Operated Markets453 455 International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$707$697 1%2%Total restaurant marginsU.S.$3,142$3,106

238、1%1%International Operated Markets3,110 3,036 2 2 International Developmental Licensed Markets&Corporaten/mn/mn/mn/mTotal$7,114$7,001 2%2%n/m Not meaningfulFranchised margins in the U.S.and International Operated Markets segment were flat for the quarter and reflected sales-driven growth for the six

239、 months.Franchised margins represented approximately 90%of restaurant margin dollars.Company-owned and operated margins in the U.S.and International Operated Markets segment reflected negative sales performance for the quarter andpositive sales performance for the six months.The U.S.and the Internat

240、ional Operated Markets segment were impacted by ongoing inflationary costpressures,for both periods.Total restaurant margins included depreciation and amortization expense of$401 million and$813 million for the quarter and six months,respectively.27Table of ContentsSelling,General&Administrative Exp

241、ensesSelling,general and administrative expenses increased$28 million,or 4%(5%in constant currencies),for the quarter and increased$96 million,or 7%(7%in constant currencies),for the six months.Results for both periods primarily reflected investments in digital and technology,as well astransformatio

242、n efforts,related to Accelerating the Organization and costs related to the 2024 Worldwide Owner/Operator convention.Selling,general and administrative expenses as a percent of Systemwide sales were 2.2%and 2.1%for the six months ended 2024 and 2023,respectively.Other Operating(Income)Expense,NetOTH

243、ER OPERATING(INCOME)EXPENSE,NETDollars in millionsQuarters EndedSix Months EndedJune 30,June 30,2024202320242023Gains on sales of restaurant businesses$(4)$(25)$(13)$(38)Equity in earnings of unconsolidated affiliates(45)(33)(91)(73)Asset dispositions and other(income)expense,net3 5 5 5 Impairment a

244、nd other charges(gains),net154 18 189 198 Total$107$(36)$90$93 Gains on sales of restaurant businesses decreased for both periods,primarily due to fewer sales of restaurants in the International Operated Marketssegment and in the U.S.Equity in earnings of unconsolidated affiliates for both periods r

245、eflected higher equity in earnings in China as a result of the Companys increasedownership 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$97 million and$89 mil

246、lion for the quarter and six months,respectively,primarily related to non-cash impairment charges associated with the anticipated future sale of McDonalds business in South Korea and pre-tax chargesof$57 million and$100 million for the quarter and six months,respectively,related to restructuring cha

247、rges associated with the Companys internal effortto modernize ways of working(Accelerating the Organization).Results for the quarter and six months 2023 reflected$18 million and$198 million,respectively,of pre-tax charges related to the Companys Acceleratingthe Arches growth strategy,including restr

248、ucturing charges associated with Accelerating the Organization.28Table of ContentsOperating IncomeOPERATING INCOME&OPERATING MARGINDollars in millionsQuarters Ended June 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.$1,511$1,4951%1%International Operated Markets1,493 1,518(2)(1)Intern

249、ational Developmental Licensed Markets&Corporate(84)92n/mn/mTotal$2,920$3,104(6)%(5)%Six Months Ended June 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationU.S.$2,907$2,7904%4%International Operated Markets2,858 2,7105 5 International Developmental Licensed Markets&Corporate(109)136n/mn/mTot

250、al$5,655$5,637%1%Operating margin44.7%45.5%Operating Income:Operating income decreased$184 million,or 6%(5%in constant currencies),for the quarter and increased$18 million,or was flat(increased 1%in constant currencies),for the six months.Results for both periods reflected net pre-tax charges of$97

251、million and$89 million for thequarter and six months,respectively,primarily related to non-cash impairment charges and pre-tax restructuring charges of$57 million and$100 millionfor the quarter and six months,respectively,related to Accelerating the Organization.Results for the quarter and six month

252、s 2023 reflected$18 million and$198 million,respectively,of pre-tax charges related to the Companys Acceleratingthe Arches growth strategy,including restructuring charges associated with Accelerating the Organization.OPERATING INCOME&OPERATING MARGIN RECONCILIATION*Dollars in millionsQuarters Ended

253、June 30,Six Months Ended June 30,20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslation20242023Inc/(Dec)Inc/(Dec)ExcludingCurrencyTranslationGAAP operating income$2,920$3,104(6)%(5)%$5,655$5,637%1%(Gains)/Charges154 18 189198Non-GAAP operating income$3,073$3,122(2)%$5,844$5,835%1%Non-GAAP operating

254、margin46.2%47.1%*Refer to the Impairment and other charges(gains),net line within the Other Operating(Income)Expense,Net section on page 28 for details of the charges in this table.Excluding the current and prior year charges shown in the table above,operating income decreased 2%(was flat in constan

255、t currencies),for the quarterand was flat(increased 1%in constant currencies),for the six months.Results for the six months reflected positive operating results in the U.S.andInternational Operated Markets segment primarily due to sales-driven growth in Franchised margins,partly offset by higher Sel

256、ling,general andadministrative expenses in the International Developmental Licensed Markets&Corporate segment.Operating Margin:Operating margin is defined as operating income as a percent of total revenues.The contributions to operating margin differ bysegment due to each segments ownership structur

257、e,primarily due to the relative percentage of franchised versus Company-owned and operatedrestaurants.Additionally,temporary restaurant closures,which vary by segment,impact the contribution of each segment to the consolidated operatingmargin.The decrease in non-GAAP operating margin was primarily d

258、ue to higher Selling,general and administrative expenses as well as ongoing inflationarycost pressures.29Table of ContentsInterest ExpenseInterest expense increased 13%(13%in constant currencies)for both periods.Results for both periods reflected higher average interest rates as well ashigher averag

259、e debt balances.Nonoperating(Income)Expense,NetNONOPERATING(INCOME)EXPENSE,NETDollars in millionsQuarters EndedSix Months EndedJune 30,June 30,2024202320242023Interest income$(20)$(37)$(67)$(75)Foreign currency and hedging activity2(6)6(19)Other(income)expense,net10 1 7(13)Total$(9)$(43)$(54)$(107)I

260、nterest income for both periods decreased due to lower average cash balances.Foreign currency and hedging activity includes net gains or losses on certain hedges that reduce the exposure to variability on certain intercompanyforeign currency cash flow streams.Income TaxesThe effective income tax rat

261、e was 20.9%and 18.0%for the quarters ended 2024 and 2023,respectively,and 20.4%and 19.1%for the six months ended2024 and 2023,respectively.The effective tax rate for both periods of 2023 reflected an income tax benefit of$55 million related to the remeasurement ofa deferred tax liability.Cash FlowsT

262、he Company has a long history of generating significant cash from operations and has substantial credit capacity 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 share

263、repurchases.Cash provided by operations totaled$4.1 billion and exceeded capital expenditures by$2.9 billion for the six months 2024.Cash provided by operationswas relatively flat compared with the six months 2023,primarily as a result of lower operating results.Cash used for investing activities to

264、taled$3.3 billion for the six months 2024,an increase of$1.9 billion compared with the six months 2023.Theincrease was primarily due to the Companys increased ownership stake in McDonalds China business.Cash used for financing activities totaled$4.5 billion for the six months 2024,an increase of$878

265、 million compared with the six months 2023.Theincrease was primarily due to higher treasury stock purchases 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 restau

266、rant unit expansion will contribute 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.Base

267、d on current interest and foreign currency exchange rates,the Company expects interest expense for the full year 2024 to increase between9%and 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 20

268、24 to be in the 20%to 22%range.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

269、Operated Markets.Globally,the 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 r

270、espective markets.The Company 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,It

271、em 1 of this report.31Table of 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

272、 in this report not based upon 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

273、,”“plan,”“remain,”“confident,”“commit”and“potential”or similar expressions.In particular,statements regarding our plans,strategies,prospects and expectations regarding our business and industry are forward-looking statements.They reflect ourexpectations,are not guarantees of performance and speak on

274、ly as of the dates the statements are made.Except as required by law,we do not undertake toupdate 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 e

275、lsewhere in our filings 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 expectatio

276、ns(or the underlying 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

277、 business strategies 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

278、 our global scale,iconic 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 M

279、cDonalds experience,including 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 engagemen

280、t;run great restaurants 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 stra

281、tegies,including through 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 l

282、iquidity.If we are delayed 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 operat

283、ions may suffer.Failure 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 va

284、lues.Brand value is based 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 prac

285、tices at McDonalds restaurants.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 implicatio

286、ns,drive popular opinion,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

287、or practices,whether 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 thatfranchis

288、ees or business partners 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 seg

289、mentor our brand,culture,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 preferen

290、ces and effectively execute 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 shiftin

291、g consumer demographics 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

292、to,these changes,or if 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 pla

293、ns to respond quickly 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 o

294、ur business strategy.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 no

295、t be successful in reachingconsumers 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 a

296、dvertising and marketing 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

297、-term business objectives 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 contin

298、uing to place emphasis 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 t

299、o expand and refine our 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 r

300、isks.Ifthese customer 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 segm

301、ent,which is highly competitive.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

302、 be highly competitive,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.

303、We compete primarily 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 ourpr

304、oducts appropriately,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 action

305、s.There can be no assurance 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

306、ensure that we are not 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 p

307、roducts in both domestic 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 pendin

308、g in the U.S.and certain 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,par

309、ticularly in rapidly 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

310、future.In particular,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,c

311、ould,particularly in 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 adverselya

312、ffect the value of our 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 McDonaldsrestaur

313、ants operate,and our 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 leverageo

314、perating successes across 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

315、market can also result 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 vol

316、atility can also result 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

317、adverse impact on our 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 volati

318、lity,crime,corruption 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 ina

319、bility to manage effectively 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 suffici

320、ent supply of quality 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

321、 related price increases 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

322、 demand,transportation-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 c

323、ontingency planning can 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

324、large degree on the financial 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-

325、owned and operated restaurants.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 t

326、o grow their sales.Business 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

327、 independent franchisees 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 l

328、arge part on the availability 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 obt

329、ain financing at commercially 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

330、 brand and values,particularly 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

331、 be harmed,which in turn 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 ou

332、r more heavily franchised structure34Table of Contentsdepend on various factors,including whether we have effectively selected franchisees,licensees and/or affiliates that meet our rigorous standards,whether weare able to successfully integrate them into our structure and whether their performance a

333、nd the resulting ownership mix supports our brand and financialobjectives.Continued challenges with respect to labor,including availability and cost,could adversely impact our business and results of operations.Our success depends in part on our Systems ability to effectively attract,recruit,develop,motivate and retain qualified individuals to work inMcDonalds restaurants and to maintain appropria