Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET
						(unaudited)
In millions, except per share data						September 30, 2025									December 31, 2024
Assets
Current assets
Cash and equivalents						$	2,413								$	1,085
Accounts and notes receivable						2,579									2,383
Inventories, at cost, not in excess of market						55									56
Prepaid expenses and other current assets						1,032									1,074
Total current assets						6,079									4,599
Other assets
Investments in affiliates						2,864									2,710
Goodwill						3,306									3,145
Miscellaneous						6,588									6,095
Total other assets						12,758									11,950
Lease right-of-use asset, net						14,285									13,339
Property and equipment
Property and equipment, at cost						48,215									44,177
Accumulated depreciation and amortization						(20,729)									(18,882)
Net property and equipment						27,486									25,295
Total assets						$	60,608								$	55,182
Liabilities and shareholders’ equity (deficit)
Current liabilities
Short-term borrowings and current maturities of long-term debt						$	1,800								$	—
Accounts payable						972									1,029
Lease liability						698									636
Income taxes						367									361
Other taxes						242									224
Accrued interest						471									482
Accrued payroll and other liabilities						1,529									1,129
Total current liabilities						6,079									3,861
Long-term debt						39,483									38,424
Long-term lease liability						13,837									12,888
Long-term income taxes						285									344
Deferred revenues - initial franchise fees						936									778
Other long-term liabilities						694									771
Deferred income taxes						1,457									1,914
Shareholders’ equity (deficit)
Preferred stock, no par value; authorized – 165.0 million shares; issued – none						—									—
Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares						17									17
Additional paid-in capital						9,560									9,281
Retained earnings						69,440									66,834
Accumulated other comprehensive income (loss)						(2,414)									(2,553)
Common stock in treasury, at cost; 948.5 and 945.4 million shares						(78,766)									(77,375)
Total shareholders’ equity (deficit)						(2,163)									(3,797)
Total liabilities and shareholders’ equity (deficit)						$	60,608								$	55,182

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
						Quarters Ended																		Nine Months Ended
						September 30,																		September 30,
In millions, except per share data						2025									2024									2025									2024
Revenues
Revenues from franchised restaurants						$	4,363								$	4,094								$	12,238								$	11,756
Sales by Company-owned and operated restaurants						2,563									2,656									7,154									7,472
Other revenues						151									124									485									304
Total revenues						7,078									6,873									19,876									19,532
Operating costs and expenses
Franchised restaurants-occupancy expenses						666									646									1,940									1,902
Company-owned and operated restaurant expenses						2,172									2,248									6,109									6,358
Other restaurant expenses						135									104									424									241
Selling, general & administrative expenses
Depreciation and amortization						121									111									333									311
Other						664									536									1,834									1,748
Other operating (income) expense, net						(37)									39									(1)									129
Total operating costs and expenses						3,721									3,685									10,639									10,688
Operating income						3,357									3,188									9,237									8,844
Interest expense						406									381									1,172									1,126
Nonoperating (income) expense, net						1									(36)									(75)									(90)
Income before provision for income taxes						2,949									2,843									8,140									7,807
Provision for income taxes						671									588									1,740									1,600
Net income						$	2,278								$	2,255								$	6,399								$	6,207
Earnings per common share-basic						$	3.20								$	3.15								$	8.96								$	8.63
Earnings per common share-diluted						$	3.18								$	3.13								$	8.92								$	8.59
Dividends declared per common share						$	1.77								$	3.44								$	5.31								$	6.78
Weighted-average shares outstanding-basic						712.9									716.7									714.1									719.1
Weighted-average shares outstanding-diluted						715.9									720.0									717.2									722.7

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
						Quarters Ended																		Nine Months Ended
						September 30,																		September 30,
In millions						2025									2024									2025									2024
Net income						$	2,278								$	2,255								$	6,399								$	6,207
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments:
Gain (loss) recognized in accumulated other comprehensive income ("AOCI"), including net investment hedges						(28)									188									279									101
Reclassification of (gain) loss to net income						(5)									(6)									(5)									35
Foreign currency translation adjustments-net of tax benefit (expense) of $(34), $158, $411 and $36						(33)									182									274									136
Cash flow hedges:
Gain (loss) recognized in AOCI						23									(54)									(135)									(14)
Reclassification of (gain) loss to net income						24									8									18									7
Cash flow hedges-net of tax benefit (expense) of $(14), $15, $35 and $2						47									(46)									(117)									(7)
Defined benefit pension plans:
Gain (loss) recognized in AOCI						2									(11)									(17)									—
Reclassification of (gain) loss to net income						—									—									(1)									(10)
Defined benefit pension plans-net of tax benefit (expense) of $0, $0, $(1) and $1						2									(11)									(18)									(10)
Total other comprehensive income (loss), net of tax						16									125									139									119
Comprehensive income						$	2,294								$	2,380								$	6,538								$	6,326

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
						Quarters Ended												Nine Months Ended
						September 30,												September 30,
In millions						2025						2024						2025						2024
Operating activities
Net income						$	2,278					$	2,255					$	6,399					$	6,207
Adjustments to reconcile to cash provided by operations
Charges and credits:
Depreciation and amortization						559						532						1,623						1,544
Deferred income taxes						35						(137)						(49)						(501)
Share-based compensation						39						40						128						128
Other						(53)						(33)						(197)						(48)
Changes in working capital items						570						79						(50)						(514)
Cash provided by operations						3,428						2,736						7,854						6,816
Investing activities
Capital expenditures						(1,011)						(794)						(2,306)						(1,968)
Purchases of restaurant businesses						(109)						(433)						(240)						(595)
Purchases of equity method investments						—						—						—						(1,837)
Sales of restaurant businesses						102						54						185						156
Sales of property						22						10						38						32
Other						(116)						(103)						(430)						(392)
Cash used for investing activities						(1,112)						(1,266)						(2,753)						(4,604)
Financing activities
Net short-term borrowings (repayments)						(599)						474						(794)						133
Long-term financing issuances						1,833						—						4,734						1,731
Long-term financing repayments						(1,251)						—						(2,644)						(1,785)
Treasury stock purchases						(501)						(469)						(1,483)						(2,321)
Common stock dividends						(1,262)						(1,197)						(3,792)						(3,602)
Proceeds from stock option exercises						29						132						216						253
Other						(35)						(27)						(121)						(26)
Cash used for financing activities						(1,786)						(1,087)						(3,884)						(5,617)
Effect of exchange rates on cash and cash equivalents						6						46						110						47
Cash and equivalents increase (decrease)						537						429						1,328						(3,358)
Cash and equivalents at beginning of period						1,876						792						1,085						4,579
Cash and equivalents at end of period						$	2,413					$	1,221					$	2,413					$	1,221

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
For the nine months ended September 30, 2024
			Common stock issued																								Accumulated other comprehensive income (loss)																		Common stock in treasury									Total shareholders’ equity (deficit)
Additional paid-in capital									Retained earnings			Pensions						Cash flow hedges						Foreign currency translation
In millions, except per share data			Shares			Amount						Shares						Amount
Balance at December 31, 2023			1,660.6						$	17					$	8,893					$	63,480					$	(367)					$	(6)					$	(2,083)					(937.9)						$	(74,640)					$	(4,707)
Net income																					6,207																																				6,207
Other comprehensive income (loss), net of tax																											(10)						(7)						136																		119
Comprehensive income																																																									6,326
Common stock cash dividends ($6.78 per share)																					(4,867)																																				(4,867)
Treasury stock purchases																																													(8.3)						(2,310)						(2,310)
Share-based compensation															128																																										128
Stock option exercises and other															173																														2.3						81						254
Balance at September 30, 2024			1,660.6						$	17					$	9,194					$	64,819					$	(377)					$	(13)					$	(1,947)					(944.0)						$	(76,870)					$	(5,177)

For the nine months ended September 30, 2025
			Common stock issued																								Accumulated other comprehensive income (loss)																		Common stock in treasury									Total shareholders’ equity (deficit)
Additional paid-in capital									Retained earnings			Pensions						Cash flow hedges						Foreign currency translation
In millions, except per share data			Shares			Amount						Shares						Amount
Balance at December 31, 2024			1,660.6						$	17					$	9,281					$	66,834					$	(393)					$	119					$	(2,279)					(945.4)						$	(77,375)					$	(3,797)
Net income																					6,399																																				6,399
Other comprehensive income (loss), net of tax																											(18)						(117)						274																		139
Comprehensive income																																																									6,538
Common stock cash dividends ($5.31 per share)																					(3,792)																																				(3,792)
Treasury stock purchases																																													(4.9)						(1,456)						(1,456)
Share-based compensation															128																																										128
Stock option exercises and other															151																														1.8						65						216
Balance at September 30, 2025			1,660.6						$	17					$	9,560					$	69,440					$	(411)					$	2					$	(2,005)					(948.5)						$	(78,766)					$	(2,163)

See Notes to Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
For the quarter ended September 30, 2024
			Common stock issued																								Accumulated other comprehensive income (loss)																		Common stock in treasury									Total shareholders’ equity (deficit)
Additional paid-in capital									Retained earnings			Pensions						Cash flow hedges						Foreign currency translation
In millions, except per share data			Shares			Amount						Shares						Amount
Balance at June 30, 2024			1,660.6						$	17					$	9,055					$	65,026					$	(367)					$	33					$	(2,129)					(943.3)						$	(76,459)					$	(4,824)
Net income																					2,255																																				2,255
Other comprehensive income (loss), net of tax																											(11)						(46)						182																		125
Comprehensive income																																																									2,380
Common stock cash dividends ($3.44 per share)																					(2,462)																																				(2,462)
Treasury stock purchases																																													(1.6)						(443)						(443)
Share-based compensation															40																																										40
Stock option exercises and other															100																														1.0						33						133
Balance at September 30, 2024			1,660.6						$	17					$	9,194					$	64,819					$	(377)					$	(13)					$	(1,947)					(944.0)						$	(76,870)					$	(5,177)

For the quarter ended September 30, 2025
			Common stock issued																								Accumulated other comprehensive income (loss)																		Common stock in treasury									Total shareholders’ equity (deficit)
Additional paid-in capital									Retained earnings			Pensions						Cash flow hedges						Foreign currency translation
In millions, except per share data			Shares			Amount						Shares						Amount
Balance at June 30, 2025			1,660.6						$	17					$	9,500					$	68,424					$	(413)					$	(45)					$	(1,972)					(947.0)						$	(78,271)					$	(2,760)
Net income																					2,278																																				2,278
Other comprehensive income (loss), net of tax																											2						47						(33)																		16
Comprehensive income																																																									2,294
Common stock cash dividends ($1.77 per share)																					(1,262)																																				(1,262)
Treasury stock purchases																																													(1.7)						(503)						(503)
Share-based compensation															39																																										39
Stock option exercises and other															21																														0.2						8						29
Balance at September 30, 2025			1,660.6						$	17					$	9,560					$	69,440					$	(411)					$	2					$	(2,005)					(948.5)						$	(78,766)					$	(2,163)

See Notes to Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

McDonald’s Corporation, the registrant, together with its subsidiaries, is referred to herein as the "Company." The Company, its franchisees and suppliers, are referred to herein as the "System."

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s December 31, 2024 Annual Report on Form 10-K. In the opinion of management, all normal recurring adjustments necessary for a fair presentation have been included. The results for the quarter and nine months ended September 30, 2025 do not necessarily indicate the results that may be expected for the full year.

Certain columns and rows within the financial statements and tables presented may not add due to rounding. Percentages have been calculated from the underlying whole-dollar amounts for all periods presented.

Restaurant Information

The following table presents restaurant information by ownership type:

Restaurants at September 30,			2025									2024
Conventional franchised			22,280									21,864
Developmental licensed			9,459									9,077
Foreign affiliated			10,807									9,814
Total Franchised			42,546									40,755
Company-owned and operated			2,053									2,064
Total Systemwide restaurants			44,599									42,819

The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either individually or in the aggregate to the accompanying Condensed Consolidated Financial Statements.

Per Common Share Information

Diluted earnings per common share is calculated as net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation, calculated using the treasury stock method, of 3.0 million shares and 3.3 million shares for the quarters ended September 30, 2025 and 2024, respectively, and 3.1 million shares and 3.6 million shares for the nine months ended September 30, 2025 and 2024, respectively. Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 1.8 million shares and 2.0 million shares for the quarters ended September 30, 2025 and 2024, respectively, and 1.8 million shares and 2.0 million shares for the nine months ended September 30, 2025 and 2024, respectively.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

Income Taxes

In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). The pronouncement expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We are currently in the process of determining the impact that ASU 2023-09 will have on the Company's consolidated financial statement disclosures.

Disaggregation - Income Statement Expenses

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). The pronouncement expands the disclosure requirements for expenses, specifically by providing more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently in the process of determining the impact that ASU 2024-03 will have on the Company's consolidated financial statement disclosures.

Internal-Use Software

In September 2025, the FASB issued ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"). The pronouncement modernizes the accounting guidance for internal-use software costs by removing the various stages of a software development project to accommodate different software development methods. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. We are currently in the process of determining the impact that ASU 2025-06 will have on the Company's Consolidated Financial Statements.

Accelerating the Organization

In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy included the addition of Restaurant Development to the Company’s growth pillars and an internal effort to modernize ways of working, Accelerating the Organization, both of which are aimed at elevating the Company’s performance. Accelerating the Organization is designed to unlock further growth as the Company focuses on becoming faster, more innovative and more efficient for its customers and people.

The Company incurred $152 million and $146 million of restructuring charges related to Accelerating the Organization in the nine months ended September 30, 2025 and 2024, respectively. These charges were recorded in the Other operating (income) expense, net line within the Condensed Consolidated Statement of Income. There were no significant non-cash impairment charges included in the amounts listed in the table below.

The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions):

			Employee Termination Benefits			Costs to Terminate Contracts			Professional Services and Other Costs			Total
2025
Accrued Balance at Beginning of Year			$	23		$	4		$	15		$	42
Restructuring Costs Incurred			17			—			49			66
Cash Payments			(5)			—			(31)			(36)
Other Non-Cash Items			—			—			1			1
Accrued Balance at March 31, 2025			$	35		$	4		$	34		$	73
Restructuring Costs Incurred			(3)			—			46			43
Cash Payments			(3)			(1)			(55)			(59)
Other Non-Cash Items			—			—			3			3
Accrued Balance at June 30, 2025			$	29		$	3		$	28		$	60
Restructuring Costs Incurred			4			—			39			43
Cash Payments			(2)			—			(51)			(53)
Other Non-Cash Items			—			—			—			—
Accrued Balance at September 30, 2025			$	31		$	3		$	16		$	50

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

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

The Company continues to evolve its ways of working by driving efficiency and effectiveness across the organization, primarily led by its Global Business Services ("GBS") organization. Transformation efforts under Accelerating the Organization will continue to result in various restructuring charges as the strategy progresses through its anticipated completion during 2027, with $623 million of total restructuring charges incurred since the initiative commenced in 2023. The Company currently expects to incur approximately $250 million of restructuring charges in 2025, primarily related to professional services costs.

Equity Method Investments

The Company has various investments accounted for using the equity method. Under the equity method of accounting, the Company records our proportionate share of the net income or loss of each equity method investee, with a corresponding change to the carrying value of the investment. The carrying value of the investment is also adjusted for any dividends received and the effect of foreign exchange. The Company records our proportionate share of net income or loss within the Other operating (income) expense, net line on the Condensed Consolidated Statement of Income. The carrying value of the investments are recorded within the Investments in affiliates line on the Condensed Consolidated Balance Sheet. The Company has elected to record dividends received from our equity method investments under the nature of distribution approach, which provides for the recording of such distributions within the cash provided by operations section of the Condensed Consolidated Statement of Cash Flows to the extent that such distributions are from the normal operating or financing activities of the investee.

The Company’s primary equity method investments include partial ownership in Grand Foods Holding, an entity that operates and manages McDonald's business in mainland China, Hong Kong and Macau, and partial ownership in McDonald’s Japan Holdings Co., Ltd, an entity that operates and manages McDonald’s business in Japan. The Company has granted these entities the right to operate the McDonald's business as part of a Master Franchise Agreement. Revenue related to these agreements are accounted for in a manner consistent with the Company’s other franchise arrangements.

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

			September 30, 2025																		December 31, 2024
In Millions			Percentage Ownership						Fair Value (Level 1)						Carrying Amount						Percentage Ownership						Fair Value (Level 1)						Carrying Amount
Grand Foods Holding			48		%				N/A						$	2,063					48		%				N/A						$	1,973
McDonald's Japan Holdings Co., Ltd			35		%				$	1,972					$	677					35		%				$	1,849					$	590

As of September 30, 2025, the aggregate carrying amount of the Company's investments in these equity method investees exceeded its proportionate share of the net assets of these equity method investees by $1.5 billion. This difference is not amortized. Management has concluded that there are no indicators of impairment related to these investments.

The following table summarizes the amounts recorded related to the Company's primary equity method investments during the nine months ended September 30, 2025 and 2024, respectively.

			Nine Months Ended September 30,
In Millions			2025						2024
Revenue			$	433					$	402
Equity in Earnings			$	146					$	107
Accounts Receivable			$	96					$	125
Dividends Received			$	15					$	13

Income Taxes

The effective income tax rate was 22.8% and 20.7% for the quarters ended September 30, 2025 and 2024, respectively, and 21.4% and 20.5% for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rates for the quarter and nine months ended 2024 reflected discrete income tax benefits related to restructuring initiatives and global audit progression.

Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value. Fair value disclosures are reflected in a three-level hierarchy, maximizing the use of observable inputs and minimizing the use of unobservable inputs. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date and are defined as follows:

• Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market.

• Level 2 – inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability.

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability.

There were no significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2024 Annual Report on Form 10-K.

At September 30, 2025, the fair value of the Company’s debt obligations was estimated at $40.2 billion, compared to a carrying amount of $41.3 billion. The fair value of debt obligations is based upon quoted market prices, classified as Level 2 within the valuation hierarchy. The carrying amount of cash and equivalents and notes receivable approximate fair value.

Financial Instruments and Hedging Activities

The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not hold or issue derivatives for trading purposes.

The following table presents the fair values of derivative instruments included on the Condensed Consolidated Balance Sheet:

			Derivative Assets																		Derivative Liabilities
In millions			Balance Sheet Classification						September 30, 2025						December 31, 2024						Balance Sheet Classification						September 30, 2025						December 31, 2024
Derivatives designated as hedging instruments
Foreign currency			Prepaid expenses and other current assets						$	5					$	125					Accrued payroll and other liabilities						$	(152)					$	(1)
Interest rate			Prepaid expenses and other current assets						—						34						Accrued payroll and other liabilities						(1)						(6)
Foreign currency			Miscellaneous other assets						4						40						Other long-term liabilities						(16)						—
Interest rate			Miscellaneous other assets						—						—						Other long-term liabilities						(19)						(34)
Total derivatives designated as hedging instruments									$	9					$	199											$	(188)					$	(41)
Derivatives not designated as hedging instruments
Equity			Prepaid expenses and other current assets						$	—					$	135					Accrued payroll and other liabilities						$	—					$	—
Foreign currency			Prepaid expenses and other current assets						—						—						Accrued payroll and other liabilities						(3)						—
Equity			Miscellaneous other assets						103						—
Total derivatives not designated as hedging instruments									$	103					$	135											$	(3)					$	—
Total derivatives									$	112					$	334											$	(191)					$	(41)

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

			Location of gain or loss recognized in income on derivative									Gain (loss) recognized in AOCI															Gain (loss) reclassified into income from AOCI															Gain (loss) recognized in income on derivative
In millions												2025									2024									2025									2024									2025									2024
Foreign currency			Nonoperating income/expense									$	(165)								$	(25)								$	(24)								$	(10)
Interest rate			Interest expense									(10)									7									1									1
Cash flow hedges												$	(175)								$	(18)								$	(23)								$	(9)
Foreign currency denominated debt			Nonoperating income/expense									$	(1,562)								$	(133)
Foreign currency derivatives			Nonoperating income/expense									(225)									(18)
Foreign currency derivatives(1)			Interest expense																																													$	46								$	32
Net investment hedges												$	(1,787)								$	(151)																										$	46								$	32
Foreign currency			Nonoperating income/expense																																													$	(9)								$	(10)
Equity			Selling, general & administrative expenses																																													10									(2)
Undesignated derivatives																																																$	1								$	(12)
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.

Fair Value Hedges

The Company enters into fair value hedges to reduce the exposure to changes in fair values of certain liabilities. The Company enters into fair value hedges that convert a portion of its fixed rate debt into floating rate debt by use of interest rate swaps. At September 30, 2025, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $831 million, which included a decrease of $20 million of cumulative hedging adjustments. For the nine months ended September 30, 2025, the Company recognized a $20 million gain on the fair value of interest rate swaps, and a corresponding loss on the fair value of the related hedged debt instrument to interest expense.

Cash Flow Hedges

The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. To protect against the reduction in value of forecasted foreign currency cash flows (such as royalties denominated in foreign currencies), the Company uses foreign currency forwards to hedge a portion of anticipated exposures. The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies. As of September 30, 2025, the Company had derivatives outstanding with an equivalent notional amount of $2.3 billion that hedged a portion of forecasted foreign currency denominated cash flows.

Based on market conditions at September 30, 2025, the $2 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on the Company's earnings over the next 12 months.

Net Investment Hedges

The Company uses foreign currency denominated debt (third-party and intercompany) and foreign currency derivatives to hedge its investments in certain foreign subsidiaries and affiliates. Realized and unrealized translation adjustments from these hedges are included in shareholders' equity in the foreign currency translation component of Other comprehensive income ("OCI") and offset translation adjustments on the underlying net assets of foreign subsidiaries and affiliates, which also are recorded in OCI. As of September 30, 2025, $15.3 billion of the Company's third-party foreign currency denominated debt, and $2.4 billion of foreign currency derivatives were designated to hedge investments in certain foreign subsidiaries and affiliates.

Undesignated Hedges

The Company enters into certain derivatives that are not designated for hedge accounting. Therefore, the changes in the fair value of these derivatives are recognized immediately in earnings together with the gain or loss from the hedged balance sheet position. As an example, the Company enters into equity derivative contracts, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. The Company may also use certain investments to hedge changes in these liabilities. Changes in the fair value of these derivatives or investments are recorded in selling, general & administrative expenses together with the changes in the supplemental benefit plan liabilities. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. The changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net, along with the currency gain or loss from the hedged balance sheet position.

Credit Risk

The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties. The Company did not have significant exposure to any individual counterparty at September 30, 2025 and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in its financial statements and supplementary data, including for counterparties subject to netting arrangements. Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits. At September 30, 2025, the Company was required to post $185 million of collateral due to the negative fair value of certain derivative positions.

Franchise Arrangements

Revenues from franchised restaurants consisted of:

			Quarters Ended												Nine Months Ended
			September 30,												September 30,
In millions			2025						2024						2025						2024
Rents			$	2,762					$	2,609					$	7,752					$	7,512
Royalties			1,582						1,463						4,429						4,191
Initial fees			20						22						56						53
Revenues from franchised restaurants			$	4,363					$	4,094					$	12,238					$	11,756

Segment Information

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

• U.S. segment - the Company's largest market. The segment is 95% franchised as of September 30, 2025.

• International Operated Markets segment - comprised of markets or countries in which the Company owns and operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, Poland, Spain and the U.K. The segment is 89% franchised as of September 30, 2025.

• International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s System, including equity method investments in China and Japan, as well as Corporate activities. The International Developmental Licensed Markets are 99% franchised as of September 30, 2025.

The Company's chief operating decision makers ("CODMs") are the President and Chief Executive Officer ("CEO") and the Executive Vice President and Global Chief Financial Officer ("CFO"). Segment performance is evaluated based on one measure of a segment's profit or loss, operating income, which is used to allocate resources in the annual planning process. Throughout the year, the CODMs consider forecast to actual operating income results and variances against plan to evaluate segment performance and priorities related to allocation of capital and resources supporting organizational objectives.

All intercompany revenues and expenses are eliminated in computing revenues and operating income. Corporate general and administrative expenses consist of corporate office support costs in areas such as facilities, finance, human resources, information technology, legal, marketing, restaurant operations, supply chain and training. Corporate assets include corporate cash and equivalents, financial instruments and office facilities.

			Quarters Ended												Nine Months Ended
			September 30,												September 30,
In millions			2025						2024						2025						2024
U.S.			$	2,772					$	2,739					$	8,048					$	7,997
International Operated Markets			3,658						3,309						10,035						9,443
International Developmental Licensed Markets & Corporate			648						825						1,793						2,092
Total Revenues			$	7,078					$	6,873					$	19,876					$	19,532
U.S.			$	325					$	326					$	968					$	972
International Operated Markets			341						318						971						919
International Developmental Licensed Markets & Corporate			—						2						1						11
Total Franchised restaurants-occupancy expenses			$	666					$	646					$	1,940					$	1,902
U.S.			$	701					$	717					$	2,040					$	2,089
International Operated Markets			1,357						1,227						3,765						3,567
International Developmental Licensed Markets & Corporate			115						305						304						702
Total Company-operated restaurant expenses			$	2,172					$	2,248					$	6,109					$	6,358
U.S.			$	185					$	152					$	478					$	429
International Operated Markets			170						147						505						457
International Developmental Licensed Markets & Corporate			429						348						1,185						1,172
Total Selling, general, & administrative expenses			$	785					$	647					$	2,167					$	2,059
U.S.			$	63					$	51					$	235					$	107
International Operated Markets			28						15						108						40
International Developmental Licensed Markets & Corporate			7						76						80						223
Total Other segment items*			$	98					$	143					$	423					$	370
U.S.			$	1,498					$	1,493					$	4,327					$	4,400
International Operated Markets			1,761						1,602						4,686						4,459
International Developmental Licensed Markets & Corporate			97						93						224						(15)
Total Operating income			$	3,357					$	3,188					$	9,237					$	8,844
U.S.			$	400					$	336					$	943					$	813
International Operated Markets			607						455						1,347						1,109
International Developmental Licensed Markets & Corporate			3						3						16						46
Total Capital expenditures			$	1,011					$	794					$	2,306					$	1,968
U.S.			$	249					$	247					$	742					$	739
International Operated Markets			201						188						579						542
International Developmental Licensed Markets & Corporate			109						97						303						262
Total Depreciation & amortization**			$	559					$	532					$	1,623					$	1,544

In millions			September 30, 2025						December 31, 2024
U.S.			$	22,840					$	22,547
International Operated Markets			27,504						23,491
International Developmental Licensed Markets & Corporate			10,265						9,143
Total Assets			$	60,608					$	55,182

*Other segment items is the difference between revenues less the significant expenses disclosed and operating income. This includes other restaurant expenses and other operating expenses included in the Other operating (income) expense, net line within the Condensed Consolidated Statement of Income.

**Total depreciation & amortization is included within the respective expense lines disclosed above, such as Company-operated restaurant expenses, Franchised restaurants-occupancy expenses, and Selling, general & administrative expenses.