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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
    
Commission File Number 1-5231
McDONALD’S CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-2361282
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
110 North Carpenter Street 60607
Chicago,Illinois
(Address of Principal Executive Offices) (Zip Code)
(630) 623-3000
(Registrant’s 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 registered
Common Stock, $0.01 par valueMCDNew York Stock Exchange
Indicate 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 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements 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 to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such 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 an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 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  
725,342,030
(Number of shares of common stock
outstanding as of September 30, 2023)


McDONALD’S CORPORATION
___________________________
INDEX
_______
 
 
 Page Reference
Item 1A – Risk Factors
 Item 5 – Other Information
Item 6 – Exhibits
All trademarks used herein are the property of their respective owners and are used with permission.
2

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
In millions, except per share dataSeptember 30,
2023
December 31,
2022
Assets
Current assets
Cash and equivalents$3,496.3 $2,583.8 
Accounts and notes receivable2,247.1 2,115.0 
Inventories, at cost, not in excess of market47.6 52.0 
Prepaid expenses and other current assets1,059.0 673.4 
Total current assets6,850.0 5,424.2 
Other assets
Investments in and advances to affiliates1,037.9 1,064.5 
Goodwill2,965.2 2,900.4 
Miscellaneous5,062.6 4,707.2 
Total other assets9,065.7 8,672.1 
Lease right-of-use asset, net12,249.5 12,565.7 
Property and equipment
Property and equipment, at cost41,967.0 41,037.6 
Accumulated depreciation and amortization(18,042.9)(17,264.0)
Net property and equipment23,924.1 23,773.6 
Total assets$52,089.3 $50,435.6 
Liabilities and shareholders’ equity
Current liabilities
Accounts payable$862.4 $980.2 
Lease liability 668.1 661.1 
Income taxes535.3 274.9 
Other taxes242.2 255.1 
Accrued interest346.4 393.4 
Accrued payroll and other liabilities1,348.3 1,237.4 
Total current liabilities4,002.7 3,802.1 
Long-term debt37,274.6 35,903.5 
Long-term lease liability11,807.2 12,134.4 
Long-term income taxes490.6 791.9 
Deferred revenues - initial franchise fees767.6 757.8 
Other long-term liabilities984.2 1,051.8 
Deferred income taxes1,617.2 1,997.5 
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
16.6 16.6 
Additional paid-in capital8,824.5 8,547.1 
Retained earnings62,649.0 59,543.9 
Accumulated other comprehensive income (loss)(2,545.7)(2,486.6)
Common stock in treasury, at cost; 935.3 and 929.3 million shares
(73,799.2)(71,624.4)
Total shareholders’ equity (deficit)(4,854.8)(6,003.4)
Total liabilities and shareholders’ equity (deficit)$52,089.3 $50,435.6 
See Notes to condensed consolidated financial statements.
3

CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Quarters EndedNine Months Ended
 September 30,September 30,
In millions, except per share data2023202220232022
Revenues
Sales by Company-operated restaurants$2,556.2 $2,124.8 $7,267.5 $6,540.0 
Revenues from franchised restaurants4,047.1 3,671.2 11,567.9 10,460.8 
Other revenues88.9 76.1 252.1 255.3 
Total revenues6,692.2 5,872.1 19,087.5 17,256.1 
Operating costs and expenses
Company-operated restaurant expenses2,135.0 1,779.6 6,149.4 5,508.6 
Franchised restaurants-occupancy expenses625.4 589.0 1,841.9 1,761.6 
Other restaurant expenses68.1 57.4 187.9 187.6 
Selling, general & administrative expenses
Depreciation and amortization96.7 93.3291.2 279.0 
Other583.5 576.41,704.3 1,771.9 
Other operating (income) expense, net(24.8)12.5 68.0 959.1 
Total operating costs and expenses3,483.9 3,108.2 10,242.7 10,467.8 
Operating income3,208.3 2,763.9 8,844.8 6,788.3 
Interest expense340.7 306.21,000.6 884.1
Nonoperating (income) expense, net(55.9)(78.5)(163.0)417.7
Income before provision for income taxes2,923.5 2,536.2 8,007.2 5,486.5 
Provision for income taxes606.4 554.6 1,577.4 1,212.5 
Net income$2,317.1 $1,981.6 $6,429.8 $4,274.0 
Earnings per common share-basic$3.19 $2.70 $8.82 $5.79 
Earnings per common share-diluted$3.17 $2.68 $8.76 $5.75 
Dividends declared per common share$1.52 $1.38 $4.56 $4.14 
Weighted-average shares outstanding-basic727.2734.9729.2738.3
Weighted-average shares outstanding-diluted731.6739.5733.8743.0
See Notes to condensed consolidated financial statements.
4

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Quarters EndedNine Months Ended
September 30,September 30,
In millions2023202220232022
Net income$2,317.1 $1,981.6 $6,429.8 $4,274.0 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments:
Gain (loss) recognized in accumulated other comprehensive
income ("AOCI"), including net investment hedges
(145.3)(369.5)(90.5)(644.3)
Reclassification of (gain) loss to net income   504.1 
Foreign currency translation adjustments-net of tax
benefit (expense) of $(97.5), $(198.7), $(43.7) and $(435.7)
(145.3)(369.5)(90.5)(140.2)
Cash flow hedges:
Gain (loss) recognized in AOCI50.0 101.4 43.1 231.8 
Reclassification of (gain) loss to net income0.5 (42.5)(12.1)(70.9)
Cash flow hedges-net of tax benefit (expense) of $(13.7), $(16.9), $(8.4) and $(46.2)
50.5 58.9 31.0 160.9 
Defined benefit pension plans:
Gain (loss) recognized in AOCI4.7 (0.7)9.9 (0.6)
Reclassification of (gain) loss to net income (2.0)(9.5)(6.1)
Defined benefit pension plans-net of tax benefit (expense)
of $0.1, $0.0, $1.2 and $0.1
4.7 (2.7)0.4 (6.7)
Total other comprehensive income (loss), net of tax(90.1)(313.3)(59.1)14.0 
Comprehensive income$2,227.0 $1,668.3 $6,370.7 $4,288.0 
See Notes to condensed consolidated financial statements.
5

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Quarters EndedNine Months Ended
 September 30,September 30,
In millions2023202220232022
Operating activities
Net income$2,317.1 $1,981.6 $6,429.8 $4,274.0 
Adjustments to reconcile to cash provided by operations
Charges and credits:
Depreciation and amortization498.0 465.6 1,480.7 1,407.5 
Deferred income taxes(176.2)(196.3)(414.8)(383.1)
Share-based compensation42.9 38.3 137.8 130.9 
Other(105.9)(45.6)(183.1)260.6 
Changes in working capital items453.1 190.3 (327.4)(504.6)
Cash provided by operations3,029.0 2,433.9 7,123.0 5,185.3 
Investing activities
Capital expenditures(570.3)(531.2)(1,600.1)(1,370.3)
Purchases of restaurant businesses(91.9)(152.3)(303.5)(349.5)
Sales of restaurant and other businesses15.8 33.1 95.8 401.3 
Sales of property13.6 11.1 35.3 22.3 
Other(300.5)(93.8)(572.6)(310.6)
Cash used for investing activities(933.3)(733.1)(2,345.1)(1,606.8)
Financing activities
Net short-term borrowings6.9 (305.4)(137.4)10.7 
Long-term financing issuances1,996.1 1,500.0 3,050.4 3,374.5 
Long-term financing repayments(0.5)(0.4)(1,377.4)(2,201.8)
Treasury stock purchases(1,054.4)(869.2)(2,202.5)(3,406.9)
Common stock dividends(1,104.7)(1,014.7)(3,324.7)(3,056.7)
Proceeds from stock option exercises62.2 62.4 210.9 168.3 
Other(41.8)80.9 (7.7)48.7 
Cash used for financing activities(136.2)(546.4)(3,788.4)(5,063.2)
Effect of exchange rates on cash and cash equivalents(88.8)(198.6)(77.0)(396.2)
Cash and equivalents increase (decrease)1,870.7 955.8 912.5 (1,880.9)
Cash and equivalents at beginning of period1,625.6 1,872.5 2,583.8 4,709.2 
Cash and equivalents at end of period$3,496.3 $2,828.3 $3,496.3 $2,828.3 
See Notes to condensed consolidated financial statements.
6

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
For the nine months ended September 30, 2022
 Common stock
issued
 Accumulated other
comprehensive income (loss)
Common stock in
treasury
Total
shareholders’
equity (deficit)
Additional
paid-in
capital
Retained
earnings
PensionsCash flow
hedges
Foreign
currency
translation
In millions, except per share dataSharesAmountSharesAmount
Balance at December 31, 20211,660.6 $16.6 $8,231.6 $57,534.7 $(179.5)$(24.8)$(2,369.4)(915.8)$(67,810.2)$(4,601.0)
Net income4,274.0 4,274.0 
Other comprehensive income (loss),
    net of tax
(6.7)160.9 (140.2)14.0 
Comprehensive income4,288.0 
Common stock cash dividends
    ($4.14 per share)
(3,056.7)(3,056.7)
Treasury stock purchases(14.1)(3,486.8)(3,486.8)
Share-based compensation130.9 130.9 
Stock option exercises and other97.6 1.7 61.8 159.4 
Balance at September 30, 20221,660.6 $16.6 $8,460.1 $58,752.0 $(186.2)$136.1 $(2,509.6)(928.2)$(71,235.2)$(6,566.2)

For the nine months ended September 30, 2023
 Common stock
issued
 Accumulated other
comprehensive income (loss)
Common stock in
treasury
Total
shareholders’
equity (deficit)
Additional
paid-in
capital
Retained
earnings
PensionsCash flow
hedges
Foreign
currency
translation
In millions, except per share dataSharesAmountSharesAmount
Balance at December 31, 20221,660.6 $16.6 $8,547.1 $59,543.9 $(298.2)$30.7 $(2,219.1)(929.3)$(71,624.4)$(6,003.4)
Net income 6,429.8      6,429.8 
Other comprehensive income (loss),
    net of tax
    0.4 31.0 (90.5)  (59.1)
Comprehensive income         6,370.7 
Common stock cash dividends
    ($4.56 per share)
 (3,324.7)     (3,324.7)
Treasury stock purchases     (7.8)(2,246.1)(2,246.1)
Share-based compensation137.8       137.8 
Stock option exercises and other139.6    1.8 71.3 210.9 
Balance at September 30, 20231,660.6 $16.6 $8,824.5 $62,649.0 $(297.8)$61.7 $(2,309.6)(935.3)$(73,799.2)$(4,854.8)

See Notes to condensed consolidated financial statements.

7

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
For the quarter ended September 30, 2022
 Common stock
issued
 Accumulated other
comprehensive income (loss)
Common stock in
treasury
Total
shareholders’
equity (deficit)
Additional
paid-in
capital
Retained
earnings
PensionsCash flow
hedges
Foreign
currency
translation
In millions, except per share dataSharesAmountSharesAmount
Balance at June 30, 20221,660.6 $16.6 $8,378.7 $57,785.1 $(183.5)$77.2 $(2,140.1)(924.9)$(70,303.8)$(6,369.8)
Net income1,981.6 1,981.6 
Other comprehensive income (loss),
    net of tax
(2.7)58.9 (369.5)(313.3)
Comprehensive income1,668.3 
Common stock cash dividends
    ($1.38 per share)
(1,014.7)(1,014.7)
Treasury stock purchases(3.7)(949.1)(949.1)
Share-based compensation38.3 38.3 
Stock option exercises and other43.1 0.4 17.7 60.8 
Balance at September 30, 20221,660.6 $16.6 $8,460.1 $58,752.0 $(186.2)$136.1 $(2,509.6)(928.2)$(71,235.2)$(6,566.2)

For the quarter ended September 30, 2023
 Common stock
issued
 Accumulated other
comprehensive income (loss)
Common stock in
treasury
Total
shareholders’
equity (deficit)
Additional
paid-in
capital
Retained
earnings
PensionsCash flow
hedges
Foreign
currency
translation
In millions, except per share dataSharesAmountSharesAmount
Balance at June 30, 20231,660.6 $16.6 $8,735.8 $61,436.6 $(302.5)$11.2 $(2,164.3)(931.9)$(72,732.5)$(4,999.1)
Net income2,317.1 2,317.1 
Other comprehensive income (loss),
    net of tax
4.7 50.5 (145.3)(90.1)
Comprehensive income2,227.0 
Common stock cash dividends
    ($1.52 per share)
(1,104.7)(1,104.7)
Treasury stock purchases(3.6)(1,083.1)(1,083.1)
Share-based compensation42.942.9
Stock option exercises and other45.8 0.2 16.4 62.2 
Balance at September 30, 20231,660.6 $16.6 $8,824.5 $62,649.0 $(297.8)$61.7 $(2,309.6)(935.3)$(73,799.2)$(4,854.8)

See Notes to condensed consolidated financial statements.




8

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, 2022 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter and nine months ended September 30, 2023 do not necessarily indicate the results that may be expected for the full year.

Restaurant Information
The following table presents restaurant information by ownership type:
Restaurants at September 30,20232022
Conventional franchised21,761 21,641 
Developmental licensed8,450 8,144 
Foreign affiliated8,843 8,145 
Total Franchised39,054 37,930 
Company-operated2,144 2,050 
Total Systemwide restaurants41,198 39,980 

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 for the periods prior to purchase and sale.

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 4.4 million shares and 4.6 million shares for the quarters ended 2023 and 2022, respectively, and 4.6 million shares and 4.7 million shares for the nine months ended 2023 and 2022, respectively. Share-based compensation awards that would have been antidilutive, and therefore were not included in the calculation of diluted weighted-average shares, totaled 1.2 million shares and 1.5 million shares for the quarters ended 2023 and 2022, respectively, and 2.1 million shares and 1.5 million shares for the nine months ended 2023 and 2022, respectively.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements
There have been no recent accounting pronouncements or changes in accounting pronouncements during the quarter and nine months ended September 30, 2023 that are of significance or potential significance to the Company.


9

Accelerating the Organization
In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy include 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 the benefit of our customers and people.
The Company expects to incur about $250 million of costs related to Accelerating the Organization in 2023, of which $220 million was incurred in the nine months ended September 30, 2023. These costs were recorded in the Other operating (income) expense, net line within the consolidated statement of income. Restructuring costs primarily consist of employee termination benefits, costs to terminate contracts, including lease terminations, and professional services and other costs. Professional services and other costs primarily relate to expenses incurred for legal and consulting activities. There were no significant non-cash impairment charges included in the amounts listed in the table below.
The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions):
Employee Termination BenefitsCosts to Terminate ContractsOther Related CostsTotal
2023
Beginning Balance$ $ $ $ 
Restructuring Costs Incurred110.3 26.9 43.3 180.5 
Cash Payments(1.5)(1.4)(0.3)(3.2)
Other Non-Cash Items  (14.1)(14.1)
Accrued Balance at March 31, 2023$108.8 $25.5 $28.9 $163.2 
Restructuring Costs Incurred(8.8)5.6 21.9 18.7 
Cash Payments(27.7)(11.7)(46.8)(86.2)
Other Non-Cash Items  (2.5)(2.5)
Accrued Balance at June 30, 2023$72.3 $19.4 $1.5 $93.2 
Restructuring Costs Incurred(0.9) 21.4 20.5 
Cash Payments(13.0)(7.4)(15.3)(35.7)
Other Non-Cash Items(2.5) 0.1 (2.4)
Accrued Balance at September 30, 2023$55.9 $12.0 $7.7 $75.6 
Of the $220 million of restructuring costs incurred in the nine months ended September 30, 2023, $62 million was recorded in the U.S., $71 million was recorded in the International Operated Markets segment and $87 million was recorded in the International Developmental Licensed Markets & Corporate segment, the majority of which was recorded at Corporate.
Substantially all of the accrued restructuring balance recorded at September 30, 2023, related to the Company’s Accelerating the Organization initiative, is expected to be paid out over the next twelve months.
As part of Accelerating the Organization, the Company is also in the initial stages of developing a strategy that will utilize an enterprise-wide Global Business Services model to deliver business services at scale with greater efficiency. The Company has started to incur costs associated with this strategy and additional costs will be incurred as the strategy progresses; however, at this point in time these future costs cannot be estimated. The expectation is that the Company will complete the majority of its Global Business Services strategy by the end of 2027.

10

Income Taxes
The effective income tax rate was 20.7% and 21.9% for the quarters ended 2023 and 2022, respectively, and 19.7% and 22.1% for the nine months ended 2023 and 2022, respectively.
The effective tax rate for the nine months 2022 reflected $239 million of net tax benefits related to the sale of the Company’s Russia and Dynamic Yield businesses and the unfavorable impact of the non-deductible $537 million of nonoperating expense related to the settlement of a tax audit in France.

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. There were no significant changes to the valuation techniques used to measure fair value as described in the Company's December 31, 2022 Annual Report on Form 10-K.
At September 30, 2023, the fair value of the Company’s debt obligations was estimated at $34.0 billion, compared to a carrying amount of $37.3 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.
11

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 AssetsDerivative Liabilities
In millionsBalance Sheet ClassificationSeptember 30, 2023December 31, 2022Balance Sheet ClassificationSeptember 30, 2023December 31, 2022
Derivatives designated as hedging instruments
Foreign currencyPrepaid expenses and other current assets$47.2 $53.3 Accrued payroll and other liabilities$(4.9)$(17.9)
Interest ratePrepaid expenses and other current assets11.7  Accrued payroll and other liabilities(5.8) 
Foreign currencyMiscellaneous other assets19.7 28.7 Other long-term liabilities(0.1)(30.7)
Interest rateMiscellaneous other assets
  Other long-term liabilities(80.0)(91.5)
Total derivatives designated as hedging instruments$78.6 $82.0  $(90.8)$(140.1)
Derivatives not designated as hedging instruments
EquityPrepaid expenses and other current assets

$ $200.5 Accrued payroll and other liabilities$ $ 
Foreign currencyPrepaid expenses and other current assets

5.1  Accrued payroll and other liabilities (1.6)
EquityMiscellaneous other assets166.5    
Total derivatives not designated as hedging instruments$171.6 $200.5  $ $(1.6)
Total derivatives$250.2 $282.5  $(90.8)$(141.7)
    The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the nine months ended September 30, 2023 and 2022, 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 millions202320222023202220232022
Foreign currencyNonoperating income/expense$32.8 $214.5 $14.9 $94.4 
Interest rateInterest expense22.0 83.9 0.5 (3.0)
Cash flow hedges$54.8 $298.4 $15.4 $91.4 
Foreign currency denominated debtNonoperating income/expense$157.2 $1,917.0 
Foreign currency derivativesNonoperating income/expense64.9 37.1 
Foreign currency derivatives(1)
Interest expense$18.4 $6.6 
Net investment hedges$222.1 $1,954.1 $18.4 $6.6 
Foreign currencyNonoperating income/expense$6.7 $15.9 
EquitySelling, general & administrative expenses$4.6 $(50.4)
Undesignated derivatives$11.3 $(34.5)
(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.





12

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 the use of interest rate swaps. At September 30, 2023, the carrying amount of fixed-rate debt that was effectively converted was an equivalent notional amount of $1.0 billion, which included a decrease of $85.8 million of cumulative hedging adjustments. For the nine months ended September 30, 2023, the Company recognized a $5.7 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, 2023, the Company had foreign currency derivatives outstanding with an equivalent notional amount of $1.6 billion that hedged a portion of forecasted foreign currency denominated cash flows.
To protect against the variability of interest rates on anticipated bond issuances, the Company may use treasury locks to hedge a portion of expected future cash flows. As of September 30, 2023, the Company had derivatives outstanding with a notional amount of $150.0 million that hedge a portion of forecasted cash flows.
Based on market conditions at September 30, 2023, the $61.7 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, 2023, $12.7 billion of the Company's third-party foreign currency denominated debt, $359.6 million of the Company's intercompany foreign currency denominated debt and $572.6 million 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, including total return swaps, 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. Changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net, together 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, 2023 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, 2023, the Company was required to post $103.6 million of collateral due to the negative fair value of certain derivative positions. The Company's counterparties were not required to post collateral on any derivative position, other than on certain hedges of the Company’s supplemental benefit plan liabilities where the counterparties were required to post collateral on their liability positions.
13

Franchise Arrangements
Revenues from franchised restaurants consisted of:
Quarters EndedNine Months Ended
September 30,September 30,
In millions2023202220232022
Rents$2,569.6 $2,357.5 $7,348.2 $6,713.8 
Royalties1,461.9 1,300.7 4,175.2 3,709.0 
Initial fees15.6 13.0 44.5 38.0 
Revenues from franchised restaurants$4,047.1 $3,671.2 $11,567.9 $10,460.8 

Segment Information
The Company operates under an organizational structure with the following global business segments reflecting how management reviews and evaluates operating performance:
U.S. - the Company's largest market. The segment is 95% franchised as of September 30, 2023.
International Operated Markets - comprised of markets or countries in which the Company 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, 2023. During the second quarter of 2022, the Company completed the sale of its business in Russia, resulting in a total exit from the market.
International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s System. Corporate activities are also reported in this segment. The segment is 98% franchised as of September 30, 2023.

The following table presents the Company’s revenues and operating income by segment:
Quarters EndedNine Months Ended
  
September 30,September 30,
In millions2023202220232022
Revenues
U.S.$2,704.0 $2,456.6 $7,892.9 $7,042.2 
International Operated Markets3,300.5 2,817.8 9,250.8 8,487.4 
International Developmental Licensed Markets & Corporate687.7 597.7 1,943.8 1,726.5 
Total revenues$6,692.2 $5,872.1 $19,087.5 $17,256.1 
Operating Income
U.S.$1,477.8 $1,326.6 $4,267.8 $3,797.5 
International Operated Markets1,584.5 1,374.4 4,294.7 2,639.9 
International Developmental Licensed Markets & Corporate146.0 62.9 282.3 350.9 
Total operating income*$3,208.3 $2,763.9 $8,844.8 $6,788.3 
* Results for the quarter and nine months 2023 reflected pre-tax charges of $26 million and $224 million, respectively, primarily related to restructuring costs associated with Accelerating the Organization. Results for the nine months 2022 reflected $1,281 million of pre-tax charges related to the sale of the Company's business in Russia and a pre-tax gain of $271 million related to the Company's sale of its Dynamic Yield business.
.

Subsequent Events
The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. There were no subsequent events that required recognition or disclosure.
14

Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Company franchises and operates McDonald’s restaurants, which serve a locally relevant menu of quality food and beverages in communities across more than 100 countries. Of the 41,198 McDonald's restaurants at September 30, 2023, approximately 95% were franchised.
The Company’s 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 Developmental Licensed Markets & Corporate segment, which includes the results of over 75 countries, as well as Corporate activities.
McDonald’s franchised restaurants are owned and operated under one of the following structures - conventional franchise, developmental license or affiliate. The optimal ownership structure for an individual restaurant, trading area or market (country) is based on a variety of factors, including the availability of individuals with entrepreneurial experience and financial resources, as well as the local legal and regulatory environment in critical areas such as property ownership and franchising. The business relationship between the Company and its independent franchisees is supported by adhering to standards and policies, including McDonald's Global Brand Standards, and is of fundamental importance to overall performance and to protecting the McDonald’s brand.
The Company is primarily a franchisor and believes franchising is paramount to delivering great-tasting food, locally relevant customer experiences and driving profitability. Franchising enables an individual to be their own employer and maintain control over all employment related matters, marketing and pricing decisions, while also benefiting from the strength of McDonald’s global brand, operating system and financial resources.
Directly operating McDonald’s restaurants contributes significantly to the Company's ability to act as a credible franchisor. One of the strengths of the franchising model is that the expertise from operating Company-owned restaurants allows McDonald’s to improve the operations and success of all restaurants while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants. Having Company-owned and operated restaurants provides Company personnel with a venue for restaurant operations training experience. In addition, in our Company-owned and operated restaurants, and in collaboration with franchisees, the Company is able to further develop and refine operating standards, marketing concepts and product and pricing strategies that will ultimately benefit McDonald’s restaurants.
The Company’s revenues consist of sales by Company-operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Fees vary by type of site, amount of Company investment, if any, and local business conditions. These fees, along with occupancy and operating rights, are stipulated in franchise/license agreements that generally have 20-year terms. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology platforms, revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand and, for periods prior to its sale on April 1, 2022, third-party revenues for the Company's Dynamic Yield business.
Conventional Franchise
Under a conventional franchise arrangement, the Company generally owns or secures a long-term lease on the land and building for the restaurant location and the franchisee pays for equipment, signs, seating and décor. The Company believes that ownership of real estate, combined with the co-investment by franchisees, enables it to achieve restaurant performance levels that are among the highest in the industry.
Franchisees are responsible for reinvesting capital in their businesses over time. In addition, to accelerate implementation of certain initiatives, the Company may co-invest with franchisees to fund improvements to their restaurants or operating systems. These investments, developed in collaboration with franchisees, are designed to cater to consumer preferences, improve local business performance and increase the value of the McDonald's brand through the development of modernized, more attractive and higher revenue generating restaurants.
The Company requires franchisees to meet rigorous standards and generally does not work with passive investors. The business relationship with franchisees is designed to facilitate consistency and high quality at all McDonald’s restaurants. Conventional franchisees contribute to the Company’s revenue, primarily through the payment of rent and royalties based upon a percent of sales, with specified minimum rent payments, along with initial fees paid upon the opening of a new restaurant or grant of a new franchise. The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.
Developmental License or Affiliate
Under 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
15

any capital under a developmental license or affiliate arrangement, and it receives a royalty based on a percent of sales, and generally receives initial fees upon the opening of a new restaurant or grant of a new license.
While developmental license and affiliate arrangements are largely the same, affiliate arrangements are used in a limited number of foreign markets (primarily China and Japan) within the International Developmental Licensed Markets segment as well as a limited number of individual restaurants within the International Operated Markets segment, where the Company also has an equity investment and records its share of net results in equity in earnings of unconsolidated affiliates.

Strategic Direction
The Company’s growth strategy, Accelerating the Arches (the “Strategy”), encompasses all aspects of McDonald’s business as the leading global omni-channel restaurant brand. The Strategy reflects the Company’s purpose, mission and values, as well as growth pillars that build on the Company’s competitive advantages.

Purpose, Mission and Values

The following purpose, mission and values underpin the Company’s success and are at the heart of the Strategy.
Through its size and scale, the Company embraces and prioritizes its role and commitment to the communities in which it operates through its purpose to feed and foster communities, and its mission to create delicious feel-good moments for everyone. The Company is guided by five core values that define who it is and how it runs its business across the three-legged stool of 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; and
5.Family - We get better together.

The Company believes that its people, all around the world, set it apart and bring these values to life on a daily basis.

Growth Pillars

The following growth pillars, M-C-D, build on the Company’s historic strengths and articulate areas of further opportunity. Under the Strategy, the Company will:

Maximize our Marketing by investing in new, culturally relevant approaches, grounded in fan truths, to effectively communicate the story of the Company’s brand, food and purpose. This is exemplified by campaigns that elevate the entire brand and continue to be repeated and scaled around the globe, connecting with customers in authentic and relatable ways. The Company is committed to a marketing strategy that highlights value at every tier of the menu, as affordability remains a cornerstone of the McDonald’s brand and is especially important to customers in uncertain economic environments.

Commit to the Core menu by tapping into customer demand for the familiar and focusing on serving the Company’s iconic products, such as its World Famous Fries, the Big Mac, Chicken McNuggets and the McFlurry. Globally, the Company possesses over 10 of these "billion-dollar brand equities." The Company continues to improve on its classics, including by implementing a series of operational and formulation changes designed to deliver hotter, juicer, tastier burgers around the globe. While leaning into core icons like Chicken McNuggets, the Company will continue to focus on scaling emerging equities such as the McSpicy and McCrispy Chicken Sandwiches. The Company also continues to see a significant opportunity with coffee, demonstrated by markets leveraging the McCafé brand, customer experience, value and quality to drive long-term growth.

Double Down on the 4D's: Digital, Delivery, Drive Thru and, the recently added, Restaurant Development by leveraging the Company’s competitive strengths and building a powerful digital experience growth engine to deliver a personalized and convenient customer experience. To unlock further growth, the Company expects to continue to accelerate the pace of restaurant openings and technology innovation so that whenever and however customers choose to interact with McDonald’s, they can enjoy a fast, easy experience that meets their needs. In the third quarter of 2023, digital channels (the mobile app, delivery and kiosk) comprised over 40% of Systemwide sales in the Company’s top six markets, representing nearly $9 billion in digital Systemwide sales.

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Digital: The Company’s digital experience growth engine — “MyMcDonald’s” — is transforming its offerings across drive thru, takeaway, delivery, curbside pick-up and dine-in. Through the digital tools, customers can access personalized offers, participate in a loyalty program, order through the mobile app and receive McDonald's food through the channel of their choice. In the U.S., we are piloting a digital enhancement that enables crew to begin assembling a customer’s mobile order prior to their arrival at the restaurant to expedite service and elevate customer satisfaction. Additionally, the Company has successful loyalty programs in over 50 markets around the world, including all of its top six markets. The Company’s loyalty customers have proven to be highly engaged, with over 57 million active loyalty members across the Company’s top six markets during the third quarter of 2023, including over 33 million in the U.S.

Delivery: Delivery is offered in over 35,000 restaurants across about 100 markets, representing over 85% of McDonald’s restaurants. The Company is continuing to build on and enhance the delivery experience for customers, including by adding the ability to place a delivery order on the McDonald's mobile app (a feature that is available in some of the Company’s largest markets, including the U.S., the U.K., Canada and Australia). The Company has also put in place long-term strategic partnerships with delivery providers that continue to benefit the Company, customers and franchisees by optimizing operational efficiencies and creating a seamless customer experience.

Drive Thru: The Company has drive thru locations in over 27,000 restaurants globally, including nearly 95% of the approximately 13,500 locations in the U.S. This channel remains a competitive advantage in meeting customers’ demand for flexibility and choice. The Company continues to build on its drive thru advantage, as the vast majority of new restaurant openings in the U.S. and International Operated Markets will include a drive thru.

Restaurant Development: The Company expects to continue to accelerate the pace of restaurant openings, with plans to open approximately 2,000 new restaurants across the globe in 2023, which will contribute to nearly 4% unit growth (net of closures). The Company believes there is opportunity for further growth in many of its largest markets and to explore new formats under the McDonald’s brand over the coming years.

Foundation
Foundational to the Strategy is keeping the customer and restaurant crew at the center of everything the Company does, along with a relentless focus on running great restaurants, empowering its people and continuing to modernize our ways of working through Accelerating the Organization.
These efforts include continued investments in digital, innovation and the Global Business Services organization, which are designed to enhance the customer experience and deliver long-term profitable growth for all stakeholders. The Strategy is aligned with the Company’s capital allocation philosophy of investing in opportunities to grow the business, for example through new restaurants and reinvesting in existing restaurants, and returning free cash flow to shareholders over time through dividends and share repurchases.
The Company believes the Strategy builds on its inherent strengths by harnessing its competitive advantages while leveraging its size, scale, agility and power of the McDonald's brand to adapt and adjust to an uncertain macroenvironment to meet customer demands. The Strategy is supported by a strong global senior leadership team aimed at executing against the MCD growth pillars and accelerating the Company’s broad-based business momentum.
Third Quarter and Nine Months 2023 Financial Performance
Global comparable sales increased 8.8% for the quarter and 11.0% for the nine months.
U.S. comparable sales increased 8.1% for the quarter and 10.3% for the nine months. Comparable sales results for both periods benefited from strategic menu price increases. Successful restaurant level execution, culturally relevant brand and marketing campaigns and continued digital and delivery growth contributed to strong comparable sales results.
International Operated Markets segment comparable sales increased 8.3% for the quarter and 10.9% for the nine months. Segment performance in both periods was driven by strong comparable sales in most markets, led by the U.K., Germany and Canada.
International Developmental Licensed Markets segment comparable sales increased 10.5% for the quarter and 12.3% for the nine months. Both periods reflected strong comparable sales in all geographic regions.
In addition to the comparable sales results, the Company had the following financial results for the quarter and nine months:
Consolidated revenues increased 14% (11% in constant currencies) for the quarter and 11% (11% in constant currencies) for the nine months.
Systemwide sales increased 11% (10% in constant currencies) for the quarter and 11% (12% in constant currencies) for the nine months.
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Consolidated operating income increased 16% (13% in constant currencies) for the quarter and 30% (31% in constant currencies) for the nine months. Excluding current and prior year charges and gains detailed in the Operating Income and Operating Margin section on page 29 of this report, consolidated operating income increased 16% (17% in constant currencies) for the nine months.
Diluted earnings per share was $3.17 for the quarter, an increase of 18% (15% in constant currencies) and $8.76 for the nine months, an increase of 52% (53% in constant currencies). Excluding current and prior year items detailed in the Net Income and Diluted Earnings Per Share section on page 22 of this report, diluted earnings per share for the nine months was $8.99, an increase of 20% (20% in constant currencies).
Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other strategic charges and gains, as well as material regulatory and other income tax impacts, and bases incentive compensation plans on these results because the Company believes this better represents underlying business trends.
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The 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 year average exchange rates. Management reviews and analyzes business results excluding the effect of foreign currency translation, impairment and other charges and gains, as well as material regulatory and other income tax impacts, and bases incentive compensation plans on these results because the Company believes this better represents underlying business trends.
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 operated by the Company or by franchisees, in operation at least thirteen months including those temporarily closed. Some of the reasons restaurants may be temporarily closed include reimaging or remodeling, rebuilding, road construction, natural disasters, pandemics and acts of war, terrorism or other hostilities. Restaurants in Russia were treated as permanently closed as of April 1, 2022 and therefore excluded from the calculation of comparable sales and comparable guest counts beginning in the second quarter of 2022. Comparable sales exclude the impact of currency translation and the sales of any market 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. Beginning in the first quarter of 2023, McDonald's excluded results from Argentina and Lebanon in the calculation of comparable sales due to hyperinflation (Venezuela continues to be excluded). Comparable sales are driven by changes in guest counts and average check, the latter of which is affected by changes in pricing and product mix.
Systemwide sales include sales at all restaurants, whether operated by the Company or by franchisees. This includes sales from digital channels, which are comprised of the mobile app, delivery and kiosk at both Company-operated and franchised restaurants. While franchised sales are not recorded as revenues by the Company, management believes the information is important in understanding the Company's financial performance because these sales are the basis on which the Company calculates and records franchised revenues and are indicative of the financial health of the franchisee base. The Company's revenues consist of sales by Company-operated restaurants and fees from franchised restaurants operated by conventional franchisees, developmental licensees and affiliates. Changes in Systemwide sales are primarily driven 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 flow divided by net income, are measures reviewed by management in order to evaluate the Company’s ability to convert net profits into cash resources, after reinvesting in the core business, that can be used to pursue opportunities to enhance shareholder value.

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CONSOLIDATED OPERATING RESULTS
Quarter EndedNine Months Ended
Dollars in millions, except per share dataSeptember 30, 2023September 30, 2023
 AmountIncrease/
(Decrease)
AmountIncrease/
(Decrease)
Revenues
Sales by Company-operated restaurants$2,556.2 20 %$7,267.5 11 %
Revenues from franchised restaurants4,047.1 10 11,567.9 11 
Other revenues88.9 17 252.1 (1)
Total revenues6,692.2 14 19,087.5 11 
Operating costs and expenses
Company-operated restaurant expenses2,135.0 20 6,149.4 12 
Franchised restaurants-occupancy expenses625.4 1,841.9 
Other restaurant expenses68.1 19 187.9 — 
Selling, general & administrative expenses
Depreciation and amortization96.7 291.2 
Other583.5 1,704.3 (4)
Other operating (income) expense, net(24.8)n/m68.0 (93)
Total operating costs and expenses3,483.9 12 10,242.7 (2)
Operating income3,208.3 16 8,844.8 30 
Interest expense340.7 11 1,000.6 13 
Nonoperating (income) expense, net(55.9)(29)(163.0)n/m
Income before provision for income taxes2,923.5 15 8,007.2 46 
Provision for income taxes606.4 1,577.4 30 
Net income$2,317.1 17 %$6,429.8 50 %
Earnings per common share-basic$3.19 18 %$8.82 52 %
Earnings per common share-diluted$3.17 18 %$8.76 52 %
n/m Not meaningful
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Impact of Foreign Currency Translation
The impact of foreign currency translation on consolidated operating results for the quarter primarily reflected the strengthening of the Euro and British Pound. Results for the nine months reflected the weakening of most major currencies against the U.S. Dollar, partly offset by the strengthening of the Euro.
While changes in foreign currency exchange rates affect reported results, McDonald's mitigates exposures, where practical, by purchasing goods and services in local currencies, financing in local currencies and hedging certain foreign-denominated cash flows. Results excluding the effect of foreign currency translation (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   
Currency
Translation
Benefit/ (Cost)
Quarters Ended September 30,202320222023
Revenues$6,692.2 $5,872.1 $152.1 
Company-operated margins421.2 345.2 10.2 
Franchised margins3,421.7 3,082.1 70.3 
Selling, general & administrative expenses680.2 669.7 (6.7)
Operating income3,208.3 2,763.9 73.4 
Net income2,317.1 1,981.6 55.0 
Earnings per share-diluted$3.17 $2.68 $0.08 
Currency
Translation
Benefit/ (Cost)
Nine Months Ended September 30,202320222023
Revenues$19,087.5 $17,256.1 $(111.5)
Company-operated margins1,118.1 1,031.4 (7.7)
Franchised margins9,726.0 8,699.1 (36.6)
Selling, general & administrative expenses1,995.5 2,050.9 2.9 
Operating income8,844.8 6,788.3 (43.9)
Net income6,429.8 4,274.0 (18.1)
Earnings per share-diluted$8.76 $5.75 $(0.03)














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Net Income and Diluted Earnings per Share
For the quarter, net income increased 17% (14% in constant currencies) to $2,317.1 million, and diluted earnings per share increased 18% (15% in constant currencies) to $3.17. Foreign currency translation had a positive impact of $0.08 on diluted earnings per share.
For the nine months, net income increased 50% (51% in constant currencies) to $6,429.8 million, and diluted earnings per share increased 52% (53% in constant currencies) to $8.76. Foreign currency translation had a negative impact of $0.03 on diluted earnings per share.

Results for 2023 included the following:
Pre-tax charges of $26 million, or $0.02 per share, for the quarter and $224 million, or $0.23 per share, for the nine months, primarily related to restructuring costs associated with Accelerating the Organization
Results for 2022 included the following:
Pre-tax charges of $1,281 million, or $1.44 per share, for the nine months, related to the sale of the Company's business in Russia
Pre-tax gain of $271 million, or $0.40 per share, for the nine months, related to the Company's sale of its Dynamic Yield business
$537 million, or $0.72 per share, for the nine months, of nonoperating expense related to the settlement of a tax audit in France
Excluding the above items, results for both periods reflected strong operating performance driven primarily by higher sales-driven Franchised margins.
During the quarter, the Company repurchased 3.8 million shares of stock for $1.1 billion, bringing total purchases for the nine months to 7.9 million shares, or $2.2 billion. Additionally, the Company paid a quarterly dividend of $1.52 per share, or $1.1 billion, bringing total dividends paid for the nine months to $3.3 billion. In October 2023, the Company declared a 10% increase in its quarterly
cash dividend to $1.67 per share, payable on December 15, 2023.

NET INCOME AND EARNINGS PER SHARE-DILUTED RECONCILIATION
Dollars in millions, except per share data
Quarters Ended September 30,
Net IncomeEarnings per share - diluted
20232022Inc/ (Dec)Inc/ (Dec)
Excluding
Currency
Translation
20232022Inc/ (Dec)Inc/ (Dec)
Excluding
Currency
Translation
GAAP$2,317.1 $1,981.6 17 %14 %$3.17 $2.68 18 %15 %
(Gains)/charges20.0 — 0.02 — 
Tax Settlement— — — — 
Non-GAAP$2,337.1 $1,981.6 18 %15 %$3.19 $2.68 19 %16 %
Nine Months Ended September 30,
Net IncomeEarnings per share - diluted
20232022Inc/ (Dec)Inc/ (Dec)
Excluding
Currency
Translation
20232022Inc/ (Dec)Inc/ (Dec)
Excluding
Currency
Translation
GAAP$6,429.8 $4,274.0 50 %51 %$8.76 $5.75 52 %53 %
(Gains)/charges168.1 770.7 0.23 1.04 
Tax Settlement— 537.2 — 0.72 
Non-GAAP$6,597.9 $5,581.9 18 %19 %$8.99 $7.51 20 %20 %
















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Revenues
The Company's revenues consist of sales by Company-operated restaurants and fees from restaurants operated by franchisees, developmental licensees and affiliates. Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales with minimum rent payments, and initial fees. Revenues from restaurants licensed to developmental licensees and affiliates include a royalty based on a percent of sales, and generally include initial fees. The Company’s Other revenues are comprised of fees paid by franchisees to recover a portion of costs incurred by the Company for various technology platforms, revenues from brand licensing arrangements to market and sell consumer packaged goods using the McDonald’s brand and, for periods prior to its sale on April 1, 2022, third-party revenues for the Company's Dynamic Yield business.
Franchised restaurants represented approximately 95% of McDonald's restaurants worldwide at September 30, 2023. The Company's heavily franchised business model is designed to generate stable and predictable revenue, which is largely a function of franchisee sales, and resulting cash flow streams.
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REVENUES    
Dollars in millions    
Quarters Ended September 30,20232022Inc/ (Dec)Inc/ (Dec)
Excluding
Currency
Translation
Company-operated sales    
U.S.$816.8 $713.6