UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022


☐			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: 001-36787

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP

(Exact Name of Registrant as Specified in its Charter)


Canada						98-1206431
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)


130 King Street West, Suite 300		M5X 1E1
Toronto,	Ontario
(Address of Principal Executive Offices)		(Zip Code)

(905) 339-6011

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Class B exchangeable limited partnership units

QSP

Toronto 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 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 ☐

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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 ☒

As of October ~~18, 2021,~~28, 2022, there were ~~145,269,936~~143,298,599 Class B exchangeable limited partnership units and 202,006,067 Class A common units outstanding.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

TABLE OF CONTENTS



		Page

PART I – Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5052
Item 4.	Controls and Procedures	5152

PART II – Other Information
Item 1.	Legal Proceedings	5253
Item 1A.	Risk Factors	5254
Item 6.	Exhibits	5355
	Signatures	5456

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PART I — Financial Information

Item 1. Financial Statements

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In millions of U.S. dollars, except unit data)

(Unaudited)


		As of					As of
		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,773	$	1,560	Cash and cash equivalents	$	946	$	1,087
Accounts and notes receivable, net of allowance of $18 and $42, respectively		537		536
Accounts and notes receivable, net of allowance of $26 and $18, respectively						Accounts and notes receivable, net of allowance of $26 and $18, respectively	598		547
Inventories, net	Inventories, net	96		96		Inventories, net	129		96
Prepaids and other current assets	Prepaids and other current assets	178		72		Prepaids and other current assets	251		86
Total current assets	Total current assets	2,584		2,264		Total current assets	1,924		1,816
Property and equipment, net of accumulated depreciation and amortization of $963 and $879, respectively		2,013		2,031
Property and equipment, net of accumulated depreciation and amortization of $1,022 and $979, respectively						Property and equipment, net of accumulated depreciation and amortization of $1,022 and $979, respectively	1,913		2,035
Operating lease assets, net	Operating lease assets, net	1,118		1,152		Operating lease assets, net	1,056		1,130
Intangible assets, net	Intangible assets, net	10,652		10,701		Intangible assets, net	10,831		11,417
Goodwill	Goodwill	5,743		5,739		Goodwill	5,605		6,006
Net investment in property leased to franchisees	Net investment in property leased to franchisees	79		66		Net investment in property leased to franchisees	83		80
Other assets, net	Other assets, net	739		824		Other assets, net	1,145		762
Total assets	Total assets	$	22,928	$	22,777	Total assets	$	22,557	$	23,246
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts and drafts payable	Accounts and drafts payable	$	592	$	464	Accounts and drafts payable	$	696	$	614
Other accrued liabilities	Other accrued liabilities	910		835		Other accrued liabilities	959		947
Gift card liability	Gift card liability	137		191		Gift card liability	148		221
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	113		111		Current portion of long-term debt and finance leases	117		96
Total current liabilities	Total current liabilities	1,752		1,601		Total current liabilities	1,920		1,878
Long-term debt, net of current portion	Long-term debt, net of current portion	12,379		12,397		Long-term debt, net of current portion	12,853		12,916
Finance leases, net of current portion	Finance leases, net of current portion	328		315		Finance leases, net of current portion	310		333
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,056		1,082		Operating lease liabilities, net of current portion	1,003		1,070
Other liabilities, net	Other liabilities, net	1,898		2,236		Other liabilities, net	1,044		1,822
Deferred income taxes, net	Deferred income taxes, net	1,407		1,425		Deferred income taxes, net	1,388		1,374
Total liabilities	Total liabilities	18,820		19,056		Total liabilities	18,518		19,393
Partners’ capital:	Partners’ capital:					Partners’ capital:
Class A common units; 202,006,067 issued and outstanding at September 30, 2021 and December 31, 2020		8,731		7,994
Partnership exchangeable units; 145,269,936 issued and outstanding at September 30, 2021; 155,113,338 issued and outstanding at December 31, 2020		(3,536)		(3,002)
Class A common units; 202,006,067 issued and outstanding at September 30, 2022 and December 31, 2021						Class A common units; 202,006,067 issued and outstanding at September 30, 2022 and December 31, 2021	8,570		8,421
Partnership exchangeable units; 143,298,599 issued and outstanding at September 30, 2022; 144,993,458 issued and outstanding at December 31, 2021						Partnership exchangeable units; 143,298,599 issued and outstanding at September 30, 2022; 144,993,458 issued and outstanding at December 31, 2021	(3,508)		(3,547)
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,089)		(1,275)		Accumulated other comprehensive income (loss)	(1,025)		(1,024)
Total Partners’ capital	Total Partners’ capital	4,106		3,717		Total Partners’ capital	4,037		3,850
Noncontrolling interests	Noncontrolling interests	2		4		Noncontrolling interests	2		3
Total equity	Total equity	4,108		3,721		Total equity	4,039		3,853
Total liabilities and equity	Total liabilities and equity	$	22,928	$	22,777	Total liabilities and equity	$	22,557	$	23,246

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In millions of U.S. dollars, except per unit data)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues:	Revenues:									Revenues:
Sales	Sales	$	621	$	541	$	1,718	$	1,450	Sales	$	759	$	621	$	2,076	$	1,718
Franchise and property revenues	Franchise and property revenues	639		577		1,801		1,552		Franchise and property revenues	698		635		1,989		1,795
Advertising revenues		235		219		674		608
Advertising revenues and other services										Advertising revenues and other services	269		239		751		680
Total revenues	Total revenues	1,495		1,337		4,193		3,610		Total revenues	1,726		1,495		4,816		4,193
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of sales	Cost of sales	490		418		1,358		1,156		Cost of sales	615		490		1,693		1,358
Franchise and property expenses	Franchise and property expenses	121		125		358		380		Franchise and property expenses	137		121		392		358
Advertising expenses		237		209		711		638
Advertising expenses and other services										Advertising expenses and other services	276		245		782		725
General and administrative expenses	General and administrative expenses	123		96		341		292		General and administrative expenses	156		115		435		327
(Income) loss from equity method investments	(Income) loss from equity method investments	7		18		12		36		(Income) loss from equity method investments	8		7		30		12
Other operating expenses (income), net	Other operating expenses (income), net	(16)		54		(50)		59		Other operating expenses (income), net	(27)		(16)		(68)		(50)
Total operating costs and expenses	Total operating costs and expenses	962		920		2,730		2,561		Total operating costs and expenses	1,165		962		3,264		2,730
Income from operations	Income from operations	533		417		1,463		1,049		Income from operations	561		533		1,552		1,463
Interest expense, net	Interest expense, net	128		129		378		376		Interest expense, net	133		128		389		378
Loss on early extinguishment of debt	Loss on early extinguishment of debt	11		—		11		—		Loss on early extinguishment of debt	—		11		—		11
Income before income taxes	Income before income taxes	394		288		1,074		673		Income before income taxes	428		394		1,163		1,074
Income tax expense		65		65		83		62
Income tax expense (benefit)										Income tax expense (benefit)	(102)		65		17		83
Net income	Net income	329		223		991		611		Net income	530		329		1,146		991
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	1		—		3		1		Net income attributable to noncontrolling interests	1		1		3		3
Net income attributable to common unitholders	Net income attributable to common unitholders	$	328	$	223	$	988	$	610	Net income attributable to common unitholders	$	529	$	328	$	1,143	$	988
Earnings per unit - basic and diluted	Earnings per unit - basic and diluted									Earnings per unit - basic and diluted
Class A common units	Class A common units	$	1.09	$	0.72	$	3.26	$	1.96	Class A common units	$	1.78	$	1.09	$	3.86	$	3.26
Partnership exchangeable units	Partnership exchangeable units	$	0.71	$	0.48	$	2.14	$	1.31	Partnership exchangeable units	$	1.18	$	0.71	$	2.53	$	2.14
Weighted average units outstanding - basic and diluted
Weighted average units outstanding - basic and diluted (in millions):										Weighted average units outstanding - basic and diluted (in millions):
Class A common units	Class A common units	202		202		202		202		Class A common units	202		202		202		202
Partnership exchangeable units	Partnership exchangeable units	151		162		154		164		Partnership exchangeable units	143		151		144		154

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions of U.S. dollars)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income	Net income	$	329	$	223	$	991	$	611	Net income	$	530	$	329	$	1,146	$	991

Foreign currency translation adjustment	Foreign currency translation adjustment	(257)		239		(62)		(170)		Foreign currency translation adjustment	(727)		(257)		(1,015)		(62)
Net change in fair value of net investment hedges, net of tax of $(31), $40, $10 and $(12)		143		(198)		101		39
Net change in fair value of cash flow hedges, net of tax of $(4), $7, $(32) and $99		13		(17)		68		(268)
Amounts reclassified to earnings of cash flow hedges, net of tax of $(9), $(8), $(21) and $(18)		24		22		77		51
Net change in fair value of net investment hedges, net of tax of $(87), $(31), $(100) and $10										Net change in fair value of net investment hedges, net of tax of $(87), $(31), $(100) and $10	384		143		575		101
Net change in fair value of cash flow hedges, net of tax of $(55), $(4), $(145) and $(32)										Net change in fair value of cash flow hedges, net of tax of $(55), $(4), $(145) and $(32)	150		13		394		68
Amounts reclassified to earnings of cash flow hedges, net of tax of $(2), $(9), $(15) and $(21)										Amounts reclassified to earnings of cash flow hedges, net of tax of $(2), $(9), $(15) and $(21)	5		24		42		77
Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0	Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0	—		—		2		—		Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0	1		—		3		2
Other comprehensive income (loss)	Other comprehensive income (loss)	(77)		46		186		(348)		Other comprehensive income (loss)	(187)		(77)		(1)		186
Comprehensive income (loss)	Comprehensive income (loss)	252		269		1,177		263		Comprehensive income (loss)	343		252		1,145		1,177
Comprehensive income (loss) attributable to noncontrolling interests	Comprehensive income (loss) attributable to noncontrolling interests	1		—		3		1		Comprehensive income (loss) attributable to noncontrolling interests	1		1		3		3
Comprehensive income (loss) attributable to common unitholders	Comprehensive income (loss) attributable to common unitholders	$	251	$	269	$	1,174	$	262	Comprehensive income (loss) attributable to common unitholders	$	342	$	251	$	1,142	$	1,174

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidated ~~Statements~~Statement of Equity

(In millions of U.S. dollars, except units)

(Unaudited)


		Class A Common Units			Partnership Exchangeable Units			Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total			Class A Common Units			Partnership Exchangeable Units			Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total
		Units	Amount		Units	Amount									Units	Amount		Units	Amount
Balances at December 31, 2020		202,006,067	$	7,994	155,113,338	$	(3,002)	$	(1,275)	$	4	$	3,721
Distributions declared on Class A common units ($0.81 per unit)		—	(163)		—	—		—		—		(163)
Distributions declared on partnership exchangeable units ($0.53 per unit)		—	—		—	(82)		—		—		(82)
Exchange of Partnership exchangeable units for RBI common shares		—	5		(72,671)	(5)		—		—		—
Capital contribution from RBI		—	51		—	—		—		—		51
Restaurant VIE contributions (distributions)		—	—		—	—		—		1		1
Net income		—	179		—	91		—		1		271
Other comprehensive income (loss)		—	—		—	—		203		—		203
Balances at March 31, 2021		202,006,067	$	8,066	155,040,667	$	(2,998)	$	(1,072)	$	6	$	4,002
Distributions declared on Class A common units ($0.81 per unit)		—	(164)		—	—		—		—		(164)
Distributions declared on partnership exchangeable units ($0.53 per unit)		—	—		—	(82)		—		—		(82)
Exchange of Partnership exchangeable units for RBI common shares		—	6		(87,767)	(6)		—		—		—
Capital contribution from RBI		—	55		—	—		—		—		55
Restaurant VIE contributions (distributions)		—	—		—	—		—		(3)		(3)
Net income		—	259		—	131		—		1		391
Other comprehensive income (loss)		—	—		—	—		60		—		60
Balances at June 30, 2021		202,006,067	$	8,222	154,952,900	$	(2,955)	$	(1,012)	$	4	$	4,259
Balances at December 31, 2021														Balances at December 31, 2021	202,006,067	$	8,421	144,993,458	$	(3,547)	$	(1,024)	$	3	$	3,853
Distributions declared on Class A common units ($0.83 per unit)	Distributions declared on Class A common units ($0.83 per unit)	—	(167)		—	—		—		—		(167)		Distributions declared on Class A common units ($0.83 per unit)	—	(167)		—	—		—		—		(167)
Distributions declared on partnership exchangeable units ($0.53 per unit)		—	—		—	(77)		—		—		(77)
Distributions declared on partnership exchangeable units ($0.54 per unit)														Distributions declared on partnership exchangeable units ($0.54 per unit)	—	—		—	(78)		—		—		(78)
Exchange of Partnership exchangeable units for RBI common shares	Exchange of Partnership exchangeable units for RBI common shares	—	611		(9,682,964)	(611)		—		—		—		Exchange of Partnership exchangeable units for RBI common shares	—	84		(1,525,900)	(84)		—		—		—
Distribution to RBI for repurchase of RBI common shares	Distribution to RBI for repurchase of RBI common shares	—	(182)		—	—		—		—		(182)		Distribution to RBI for repurchase of RBI common shares	—	(161)		—	—		—		—		(161)
Capital contribution from RBI	Capital contribution from RBI	—	26		—	—		—		—		26		Capital contribution from RBI	—	40		—	—		—		—		40
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—	—		—		(3)		(3)		Restaurant VIE contributions (distributions)	—	—		—	—		—		(1)		(1)
Net income	Net income	—	221		—	107		—		1		329		Net income	—	183		—	86		—		1		270
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		(77)		—		(77)		Other comprehensive income (loss)	—	—		—	—		205		—		205
Balances at September 30, 2021		202,006,067	$	8,731	145,269,936	$	(3,536)	$	(1,089)	$	2	$	4,108
Balances at March 31, 2022														Balances at March 31, 2022	202,006,067	$	8,400	143,467,558	$	(3,623)	$	(819)	$	3	$	3,961
Distributions declared on Class A common units ($0.82 per unit)														Distributions declared on Class A common units ($0.82 per unit)	—	(166)		—	—		—		—		(166)
Distributions declared on partnership exchangeable units ($0.54 per unit)														Distributions declared on partnership exchangeable units ($0.54 per unit)	—	—		—	(77)		—		—		(77)
Exchange of Partnership exchangeable units for RBI common shares														Exchange of Partnership exchangeable units for RBI common shares	—	8		(151,154)	(8)		—		—		—
Distribution to RBI for repurchase of RBI common shares														Distribution to RBI for repurchase of RBI common shares	—	(165)		—	—		—		—		(165)
Capital contribution from RBI														Capital contribution from RBI	—	30		—	—		—		—		30
Restaurant VIE contributions (distributions)														Restaurant VIE contributions (distributions)	—	—		—	—		—		(1)		(1)
Net income														Net income	—	236		—	109		—		1		346
Other comprehensive income (loss)														Other comprehensive income (loss)	—	—		—	—		(19)		—		(19)
Balances at June 30, 2022														Balances at June 30, 2022	202,006,067	$	8,343	143,316,404	$	(3,599)	$	(838)	$	3	$	3,909
Distributions declared on Class A common units ($0.82 per unit)														Distributions declared on Class A common units ($0.82 per unit)	—	(165)		—	—		—		—		(165)
Distributions declared on partnership exchangeable units ($0.54 per unit)														Distributions declared on partnership exchangeable units ($0.54 per unit)	—	—		—	(77)		—		—		(77)
Exchange of Partnership exchangeable units for RBI common shares														Exchange of Partnership exchangeable units for RBI common shares	—	1		(17,805)	(1)		—		—		—

Capital contribution from RBI														Capital contribution from RBI	—	31		—	—		—		—		31
Restaurant VIE contributions (distributions)														Restaurant VIE contributions (distributions)	—	—		—	—		—		(2)		(2)
Net income														Net income	—	360		—	169		—		1		530
Other comprehensive income (loss)														Other comprehensive income (loss)	—	—		—	—		(187)		—		(187)
Balances at September 30, 2022														Balances at September 30, 2022	202,006,067	$	8,570	143,298,599	$	(3,508)	$	(1,025)	$	2	$	4,039

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidated ~~Statements~~Statement of Equity

(In millions of U.S. dollars, except units)

(Unaudited)


		Class A Common Units			Partnership Exchangeable Units			Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total			Class A Common Units			Partnership Exchangeable Units			Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total
		Units	Amount		Units	Amount									Units	Amount		Units	Amount
Balances at December 31, 2019		202,006,067	$	7,786	165,507,199	$	(2,353)	$	(1,178)	$	4	$	4,259

Distributions declared on Class A common units ($0.77 per unit)		—	(156)		—	—		—		—		(156)
Distributions declared on partnership exchangeable units ($0.52 per unit)		—	—		—	(86)		—		—		(86)
Balances at December 31, 2020														Balances at December 31, 2020	202,006,067	$	7,994	155,113,338	$	(3,002)	$	(1,275)	$	4	$	3,721
Distributions declared on Class A common units ($0.81 per unit)														Distributions declared on Class A common units ($0.81 per unit)	—	(163)		—	—		—		—		(163)
Distributions declared on partnership exchangeable units ($0.53 per unit)														Distributions declared on partnership exchangeable units ($0.53 per unit)	—	—		—	(82)		—		—		(82)
Exchange of Partnership exchangeable units for RBI common shares	Exchange of Partnership exchangeable units for RBI common shares	—	11		(178,046)	(11)		—		—		—		Exchange of Partnership exchangeable units for RBI common shares	—	5		(72,671)	(5)		—		—		—
Capital contribution from RBI	Capital contribution from RBI	—	55		—	—		—		—		55		Capital contribution from RBI	—	51		—	—		—		—		51
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—	—		—		(1)		(1)		Restaurant VIE contributions (distributions)	—	—		—	—		—		1		1
Net income	Net income	—	144		—	80		—		—		224		Net income	—	179		—	91		—		1		271
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		(543)		—		(543)		Other comprehensive income (loss)	—	—		—	—		203		—		203
Balances at March 31, 2020		202,006,067	$	7,840	165,329,153	$	(2,370)	$	(1,721)	$	3	$	3,752
Distributions declared on Class A common units ($0.78 per unit)		—	(158)		—	—		—		—		(158)
Distributions declared on partnership exchangeable units ($0.52 per unit)		—	—		—	(85)		—		—		(85)
Balances at March 31, 2021														Balances at March 31, 2021	202,006,067	$	8,066	155,040,667	$	(2,998)	$	(1,072)	$	6	$	4,002
Distributions declared on Class A common units ($0.81 per unit)														Distributions declared on Class A common units ($0.81 per unit)	—	(164)		—	—		—		—		(164)
Distributions declared on partnership exchangeable units ($0.53 per unit)														Distributions declared on partnership exchangeable units ($0.53 per unit)	—	—		—	(82)		—		—		(82)
Exchange of Partnership exchangeable units for RBI common shares	Exchange of Partnership exchangeable units for RBI common shares	—	128		(2,494,854)	(128)		—		—		—		Exchange of Partnership exchangeable units for RBI common shares	—	6		(87,767)	(6)		—		—		—
Capital contribution from RBI	Capital contribution from RBI	—	31		—	—		—		—		31		Capital contribution from RBI	—	55		—	—		—		—		55
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—	—		—		(1)		(1)		Restaurant VIE contributions (distributions)	—	—		—	—		—		(3)		(3)
Net income	Net income	—	106		—	57		—		1		164		Net income	—	259		—	131		—		1		391
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		149		—		149		Other comprehensive income (loss)	—	—		—	—		60		—		60
Balances at June 30, 2020		202,006,067	$	7,947	162,834,299	$	(2,526)	$	(1,572)	$	3	$	3,852
Distributions declared on Class A common units ($0.78 per unit)		—	(158)		—	—		—		—		(158)
Distributions declared on partnership exchangeable units ($0.52 per unit)		—	—		—	(84)		—		—		(84)
Balances at June 30, 2021														Balances at June 30, 2021	202,006,067	$	8,222	154,952,900	$	(2,955)	$	(1,012)	$	4	$	4,259
Distributions declared on Class A common units ($0.83 per unit)														Distributions declared on Class A common units ($0.83 per unit)	—	(167)		—	—		—		—		(167)
Distributions declared on partnership exchangeable units ($0.53 per unit)														Distributions declared on partnership exchangeable units ($0.53 per unit)	—	—		—	(77)		—		—		(77)
Exchange of Partnership exchangeable units for RBI common shares	Exchange of Partnership exchangeable units for RBI common shares	—	36		(622,068)	(36)		—		—		—		Exchange of Partnership exchangeable units for RBI common shares	—	611		(9,682,964)	(611)		—		—		—
Distribution to RBI for repurchase of RBI common shares														Distribution to RBI for repurchase of RBI common shares	—	(182)		—	—		—		—		(182)
Capital contribution from RBI	Capital contribution from RBI	—	35		—	—		—		—		35		Capital contribution from RBI	—	26		—	—		—		—		26
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—	—		—		1		1		Restaurant VIE contributions (distributions)	—	—		—	—		—		(3)		(3)
Net income	Net income	—	145		—	78		—		—		223		Net income	—	221		—	107		—		1		329
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		46		—		46		Other comprehensive income (loss)	—	—		—	—		(77)		—		(77)
Balances at September 30, 2020		202,006,067	$	8,005	162,212,231	$	(2,568)	$	(1,526)	$	4	$	3,915
Balances at September 30, 2021														Balances at September 30, 2021	202,006,067	$	8,731	145,269,936	$	(3,536)	$	(1,089)	$	2	$	4,108

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions of U.S. dollars)

(Unaudited)

Nine Months Ended September 30,
2021 2020
Cash flows from operating activities:
Net income $ 991 $ 611
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 150 139
Premiums paid and non-cash loss on early extinguishment of debt 11 —
Amortization of deferred financing costs and debt issuance discount 20 19
(Income) loss from equity method investments 12 36
(Gain) loss on remeasurement of foreign denominated transactions (58) 54
Net (gains) losses on derivatives 65 14
Share-based compensation expense 62 55
Deferred income taxes 35 (120)
Other (14) 23
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable 11 (83)
Inventories and prepaids and other current assets (3) (21)
Accounts and drafts payable 129 (110)
Other accrued liabilities and gift card liability (78) (12)
Tenant inducements paid to franchisees (5) (7)
Other long-term assets and liabilities (73) (5)
Net cash provided by operating activities 1,255 593
Cash flows from investing activities:
Payments for property and equipment (70) (71)
Net proceeds from disposal of assets, restaurant closures, and refranchisings 14 9
Settlement/sale of derivatives, net 2 29
Other investing activities, net (15) —
Net cash (used for) provided by investing activities (69) (33)
Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt 802 1,585
Repayments of revolving line of credit, long-term debt and finance leases (865) (1,071)
Payment of financing costs (7) (10)
Distributions on Class A common and Partnership exchangeable units (730) (716)
Distribution to RBI for repurchase of RBI common shares (182) —
Capital contribution from RBI 60 60
(Payments) proceeds from derivatives (45) (29)
Other financing activities, net (3) (1)
Net cash (used for) provided by financing activities (970) (182)
Effect of exchange rates on cash and cash equivalents (3) (7)
Increase (decrease) in cash and cash equivalents 213 371
Cash and cash equivalents at beginning of period 1,560 1,533
Cash and cash equivalents at end of period $ 1,773 $ 1,904
Supplemental cash flow disclosures:
Interest paid $ 281 $ 315
Income taxes paid $ 189 $ 163

~~Table of Contents~~


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	1,146	$	991
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	143		150
Premiums paid and non-cash loss on early extinguishment of debt	—		11
Amortization of deferred financing costs and debt issuance discount	21		20
(Income) loss from equity method investments	30		12
(Gain) loss on remeasurement of foreign denominated transactions	(82)		(58)
Net (gains) losses on derivatives	17		65
Share-based compensation and non-cash incentive compensation expense	93		71
Deferred income taxes	(29)		35
Other	8		(14)
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	(93)		11
Inventories and prepaids and other current assets	(67)		(3)
Accounts and drafts payable	113		129
Other accrued liabilities and gift card liability	(74)		(87)
Tenant inducements paid to franchisees	(13)		(5)
Other long-term assets and liabilities	(146)		(73)
Net cash provided by operating activities	1,067		1,255
Cash flows from investing activities:
Payments for property and equipment	(52)		(70)
Net proceeds from disposal of assets, restaurant closures, and refranchisings	11		14
Net payments in connection with purchase of Firehouse Subs	(12)		—
Settlement/sale of derivatives, net	22		2
Other investing activities, net	(35)		(15)
Net cash (used for) provided by investing activities	(66)		(69)
Cash flows from financing activities:
Proceeds from long-term debt	2		802
Repayments of long-term debt and finance leases	(71)		(865)
Payment of financing costs	—		(7)
Distributions on Class A common and Partnership exchangeable units	(728)		(730)
Distribution to RBI for repurchase of RBI common shares	(326)		(182)
Capital contribution from RBI	7		60
(Payments) proceeds from derivatives	8		(45)
Other financing activities, net	(3)		(3)
Net cash (used for) provided by financing activities	(1,111)		(970)
Effect of exchange rates on cash and cash equivalents	(31)		(3)
Increase (decrease) in cash and cash equivalents	(141)		213
Cash and cash equivalents at beginning of period	1,087		1,560
Cash and cash equivalents at end of period	$	946	$	1,773
Supplemental cash flow disclosures:
Interest paid	$	318	$	281
Income taxes paid	$	177	$	189

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Organization

Restaurant Brands International Limited Partnership (“Partnership”, “we”, “us” or “our”) is a Canadian limited partnership. We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons® brand (“Tim Hortons” or “TH”), fast food hamburgers principally under the Burger King® brand (“Burger King” or “BK”), ~~and~~ chicken principally under the Popeyes® brand (“Popeyes” or “PLK”) and sandwiches under the Firehouse Subs® brand (“Firehouse” or “FHS”). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of September 30, ~~2021,~~2022, we franchised or owned ~~5,137~~5,405 Tim Hortons restaurants, ~~18,923~~19,401 Burger King restaurants, 3,928 Popeyes restaurants and ~~3,607 Popeyes~~1,234 Firehouse Subs restaurants, for a total of ~~27,667~~29,968 restaurants, and operate in more than 100 countries. Approximately 100% of current system-wide restaurants are franchised.

We are a subsidiary of Restaurant Brands International Inc. (“RBI”). RBI is our sole general partner, and as such, RBI has the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership in accordance with the partnership agreement of Partnership (“partnership agreement”) and applicable laws.

All references to “$” or “dollars” are to the currency of the United States unless otherwise indicated. All references to “Canadian dollars” or “C$” are to the currency of Canada unless otherwise indicated.

Note 2. Basis of Presentation and Consolidation

We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February 23, ~~2021.~~2022.

The Financial Statements include our accounts and the accounts of entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. ~~All material intercompany balances and transactions have been eliminated in consolidation.~~ Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method. All material intercompany balances and transactions have been eliminated in consolidation.

We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. Our maximum exposure to loss resulting from involvement with VIEs is attributable to accounts and notes receivable balances, outstanding loan guarantees and future lease payments, where applicable.

As our franchise and master franchise arrangements provide the franchise and master franchise entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE.

Tim Hortons has historically entered into certain arrangements in which an operator acquires the right to operate a restaurant, but Tim Hortons owns the restaurant’s assets. We perform an analysis to determine if the legal entity in which operations are conducted is a VIE and consolidate a VIE entity if we also determine Tim Hortons is the entity’s primary beneficiary (“Restaurant VIEs”). As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we determined that we are the primary beneficiary of 4944 and 3846 Restaurant VIEs, respectively, and accordingly, have consolidated the results of operations, assets and liabilities, and cash flows of these Restaurant VIEs in our Financial Statements. Material intercompany accounts and transactions have been eliminated in consolidation.

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In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year.

The preparation of consolidated financial statements in conformity with U.S. GAAP and related rules and regulations of the SEC requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates.

The carrying amounts for cash and cash equivalents, accounts and notes receivable and accounts and drafts payable approximate fair value based on the short-term nature of these amounts.

Certain prior year amounts in the accompanying Financial Statements and notes to the Financial Statements have been reclassified in order to be comparable with the current year ~~classifications.~~classification. These consist of the ~~quarter and year to date September 30, 2020~~ reclassification of ~~advertising fund contributions~~technology fee revenues from Franchise and property revenues to Advertising revenues and ~~advertising fund expenses from Selling, general~~other services of $4 million and ~~administrative expenses to Advertising expenses, with General and administrative expenses now presented separately. Depreciation and amortization expenses related to the advertising funds~~$6 million for the three and nine months ended September 30, ~~2020 have also been reclassified~~2021 and technology expenses from ~~Franchise~~General and ~~property~~administrative expenses to Advertising ~~expenses.~~expenses and other services of $8 million and $14 million for the three and nine months ended September 30, 2021, respectively. These reclassifications did not arise as a result of any changes to accounting policies and relate entirely to presentation with no effect on previously reported net income.

Note 3. New Accounting Pronouncements

~~Simplifying the Accounting for Income Taxes~~ – In December 2019, the FASB issued guidance which simplifies the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance applicable to accounting for income taxes. ~~The amendment is effective commencing in 2021 with early adoption permitted. The adoption of this new guidance in 2021 did not have a material impact on our Financial Statements.~~

Accounting Relief for the Transition Away from LIBOR and Certain other Reference Rates – In March 2020 and as clarified in January 2021, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This amendment is effective as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by this new guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationships. During the third quarter of 2021, we adopted certain of the expedients as it relates to hedge accounting as certain of our debt agreements and hedging relationships bear interest at variable rates, primarily USU.S. dollar LIBOR. The adoption of and future elections under this new guidance did not and are not expected to have a material impact on our Financial Statements. We will continue to monitor the discontinuance of LIBOR on our debt agreements and hedging relationships.

Lessors—Certain Leases with Variable Lease Payments – In July 2021, the FASB issued guidance that requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (a) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with lease classification criteria and (b) the lessor would have otherwise recognized a day-one loss. This amendment is effective in 2022 with early adoption permitted. This guidance may be applied either retrospectively to leases that commenced or were modified on or after the adoption of lease guidance we adopted in 2019 or prospectively to leases that commence or are modified on or after the date that this new guidance is applied. The adoption of this new guidance during the first quarter of 2022 did not have a material impact on our Financial Statements.

Liabilities—Supplier Finance Programs – In September 2022, the FASB issued guidance that requires buyers in a supplier finance program to disclose sufficient information about the program to allow investors to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. These disclosures would include the key terms of the program, as well as the obligation amount that the buyer has confirmed as valid to the third party that is outstanding at the end of the reporting period, a rollforward of that amount, and a description of where that amount is presented in the balance sheet. This amendment is effective in 2023, except for the amendment on rollforward information which is effective in 2024, with early adoption permitted. This guidance should be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. We are currently evaluating the impact ~~but do not expect~~ that the adoption of this new guidance will have ~~a material impact~~ on our Financial ~~Statements.~~

Statements and will add necessary disclosures upon adoption.

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Note 4. Firehouse Acquisition

We acquired Firehouse Subs on December 15, 2021 (the “Firehouse Acquisition”) which complements RBI's existing portfolio. Like RBI's other brands, the Firehouse Subs brand is managed independently, while benefiting from the global scale and resources of RBI. The Firehouse Acquisition was accounted for as a business combination using the acquisition method of accounting.

Total consideration in connection with the Firehouse Acquisition was $1,016 million. The consideration was funded through cash on hand and $533 million of incremental borrowings under our senior secured term loan facility.

Fees and expenses related to the Firehouse Acquisition and related financings totaled approximately $1 million during the nine months ended September 30, 2022, consisting of professional fees and compensation related expenses which are classified as general and administrative expenses in the accompanying condensed consolidated statements of operations.

During the nine months ended September 30, 2022, we adjusted our preliminary estimate of the fair value of net assets acquired. The preliminary allocation of consideration to the net tangible and intangible assets acquired is presented in the table below (in millions):


	December 15, 2021
Total current assets	$	21
Property and equipment	4
Firehouse Subs brand	816
Franchise agreements	19
Operating lease assets	9
Total liabilities	(48)
Total identifiable net assets	821
Goodwill	195
Total consideration	$	1,016

The adjustments to the preliminary estimate of net assets acquired and a decrease in total consideration resulted in a corresponding decrease in estimated goodwill due to the following changes to preliminary estimates of fair values and allocation of purchase price (in millions):


	Increase (Decrease) in Goodwill
Change in:
Operating lease assets	$	(9)
Firehouse Subs brand	(48)
Franchise agreements	(19)
Total liabilities	35
Total consideration	(17)
Total decrease in goodwill	$	(58)

The purchase price allocation reflects preliminary fair value estimates based on management's analysis, including preliminary work performed by third-party valuation specialists. We will continue to obtain information to assist in determining the fair value of net assets acquired during the measurement period.

The Firehouse Subs brand has been assigned an indefinite life and, therefore, will not be amortized, but rather tested annually for impairment. Franchise agreements have a weighted average amortization period of 18 years. Goodwill attributable to the Firehouse Acquisition will be amortized and deductible for tax purposes. Goodwill is considered to represent the value associated with the workforce and synergies anticipated to be realized as a combined company. We have not yet allocated goodwill related to the Firehouse Acquisition to reporting units for goodwill impairment testing purposes. Goodwill will be allocated to reporting units when the purchase price allocation is finalized during the measurement period.

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The results of operations of Firehouse Subs have been included in our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022. The Firehouse Acquisition is not material to our unaudited condensed consolidated financial statements, and therefore, supplemental pro forma financial information for 2021 related to the acquisition is not included herein.

Note 5. Leases

Property revenues consist primarily of lease income from operating leases and earned income on direct financing leases and sales-type leases with franchisees as follows (in millions):

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Lease income - operating leases
Minimum lease payments $ 113 $ 112 $ 343 $ 333
Variable lease payments 91 82 241 191
Amortization of favorable and unfavorable income lease contracts, net 1 1 3 4
Subtotal - lease income from operating leases 205 195 587 528
Earned income on direct financing and sales-type leases 1 1 4 4
Total property revenues $ 206 $ 196 $ 591 $ 532


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Lease income - operating leases
Minimum lease payments	$	100	$	113	$	314	$	343
Variable lease payments	112		91		291		241
Amortization of favorable and unfavorable income lease contracts, net	—		1		1		3
Subtotal - lease income from operating leases	212		205		606		587
Earned income on direct financing and sales-type leases	2		1		5		4
Total property revenues	$	214	$	206	$	611	$	591

Note 5.6. Revenue Recognition

Contract Liabilities

Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees paid by franchisees, as well as upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the underlying agreement. We may recognize unamortized franchise fees and upfront fees when a contract with a franchisee or master franchisee is modified and is accounted for as a termination of the existing contract. We classify these contract liabilities as Other liabilities, net in our condensed consolidated balance sheets. The following table reflects the change in contract liabilities between December 31, ~~2020~~2021 and September 30, ~~2021~~2022 (in millions):


Contract Liabilities	Contract Liabilities	TH		BK		PLK		Consolidated		Contract Liabilities	TH		BK		PLK		FHS		Consolidated
Balance at December 31, 2020		$	62	$	427	$	39	$	528
Balance at December 31, 2021										Balance at December 31, 2021	$	65	$	410	$	56	$	—	$	531
Effect of business combination										Effect of business combination	—		—		—		8		8
Recognized during period and included in the contract liability balance at the beginning of the year	Recognized during period and included in the contract liability balance at the beginning of the year	(7)		(30)		(2)		(39)		Recognized during period and included in the contract liability balance at the beginning of the year	(8)		(29)		(4)		(1)		(42)
Increase, excluding amounts recognized as revenue during the period	Increase, excluding amounts recognized as revenue during the period	8		24		14		46		Increase, excluding amounts recognized as revenue during the period	9		23		11		1		44
Impact of foreign currency translation	Impact of foreign currency translation	—		(10)		—		(10)		Impact of foreign currency translation	(3)		(24)		—		—		(27)
Balance at September 30, 2021		$	63	$	411	$	51	$	525
Balance at September 30, 2022										Balance at September 30, 2022	$	63	$	380	$	63	$	8	$	514

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The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, ~~2021~~2022 (in millions):

Contract liabilities expected to be recognized in TH BK PLK Consolidated
Remainder of 2021 $ 3 $ 9 $ 1 $ 13
2022 9 34 4 47
2023 9 33 3 45
2024 8 32 3 43
2025 7 32 3 42
Thereafter 27 271 37 335
Total $ 63 $ 411 $ 51 $ 525

~~Table of Contents~~


Contract liabilities expected to be recognized in	TH		BK		PLK		FHS		Consolidated
Remainder of 2022	$	3	$	9	$	1	$	—	$	13
2023	10		33		4		2		49
2024	9		32		4		1		46
2025	8		31		4		1		44
2026	7		30		4		1		42
Thereafter	26		245		46		3		320
Total	$	63	$	380	$	63	$	8	$	514

Disaggregation of Total Revenues

Total revenues consist of the following (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Sales	Sales	$	621	$	541	$	1,718	$	1,450	Sales	$	759	$	621	$	2,076	$	1,718
Royalties	Royalties	412		362		1,149		968		Royalties	451		414		1,292		1,149
Property revenues	Property revenues	206		196		591		532		Property revenues	214		206		611		591
Franchise fees and other revenue	Franchise fees and other revenue	21		19		61		52		Franchise fees and other revenue	33		15		86		55
Advertising revenues		235		219		674		608
Advertising revenues and other services										Advertising revenues and other services	269		239		751		680
Total revenues	Total revenues	$	1,495	$	1,337	$	4,193	$	3,610	Total revenues	$	1,726	$	1,495	$	4,816	$	4,193

Note 6.7. Earnings per Unit

Partnership uses the two-class method in the computation of earnings per unit. Pursuant to the terms of the partnership agreement, RBI, as the holder of the Class A common units, is entitled to receive distributions from Partnership in an amount equal to the aggregate dividends payable by RBI to holders of RBI common shares, and the holders of Class B exchangeable limited partnership units (the “Partnership exchangeable units”) are entitled to receive distributions from Partnership in an amount per unit equal to the dividends payable by RBI on each RBI common share. Partnership’s net income available to common unitholders is allocated between the Class A common units and Partnership exchangeable units on a fully-distributed basis and reflects residual net income after noncontrolling interests. Basic and diluted earnings per Class A common unit is determined by dividing net income allocated to Class A common unit holders by the weighted average number of Class A common units outstanding for the period. Basic and diluted earnings per Partnership exchangeable unit is determined by dividing net income allocated to the Partnership exchangeable units by the weighted average number of Partnership exchangeable units outstanding during the period.

There are no dilutive securities for Partnership as RBI equity awards will not affect the number of Class A common units or Partnership exchangeable units outstanding. However, the issuance of shares by RBI in future periods will affect the allocation of net income attributable to common unitholders between Partnership’s Class A common units and Partnership exchangeable units.

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The following table summarizes the basic and diluted earnings per unit calculations (in millions, except per unit amounts):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Allocation of net income among partner interests:	Allocation of net income among partner interests:									Allocation of net income among partner interests:
Net income allocated to Class A common unitholders	Net income allocated to Class A common unitholders	$	221	$	145	$	659	$	395	Net income allocated to Class A common unitholders	$	360	$	221	$	779	$	659
Net income allocated to Partnership exchangeable unitholders	Net income allocated to Partnership exchangeable unitholders	107		78		329		215		Net income allocated to Partnership exchangeable unitholders	169		107		364		329
Net income attributable to common unitholders	Net income attributable to common unitholders	$	328	$	223	$	988	$	610	Net income attributable to common unitholders	$	529	$	328	$	1,143	$	988

Denominator - basic and diluted partnership units:	Denominator - basic and diluted partnership units:									Denominator - basic and diluted partnership units:
Weighted average Class A common units	Weighted average Class A common units	202		202		202		202		Weighted average Class A common units	202		202		202		202
Weighted average Partnership exchangeable units	Weighted average Partnership exchangeable units	151		162		154		164		Weighted average Partnership exchangeable units	143		151		144		154

Earnings per unit - basic and diluted:	Earnings per unit - basic and diluted:									Earnings per unit - basic and diluted:
Class A common units (a)	Class A common units (a)	$	1.09	$	0.72	$	3.26	$	1.96	Class A common units (a)	$	1.78	$	1.09	$	3.86	$	3.26
Partnership exchangeable units (a)	Partnership exchangeable units (a)	$	0.71	$	0.48	$	2.14	$	1.31	Partnership exchangeable units (a)	$	1.18	$	0.71	$	2.53	$	2.14

(a) Earnings per unit may not recalculate exactly as it is calculated based on unrounded numbers.

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Note 7.8. Intangible Assets, net and Goodwill

Intangible assets, net and goodwill consist of the following (in millions):


		As of													As of
		September 30, 2021						December 31, 2020							September 30, 2022						December 31, 2021
		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net			Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Identifiable assets subject to amortization:	Identifiable assets subject to amortization:													Identifiable assets subject to amortization:
Franchise agreements	Franchise agreements	$	725	$	(283)	$	442	$	735	$	(264)	$	471	Franchise agreements	$	705	$	(298)	$	407	$	722	$	(290)	$	432
Favorable leases	Favorable leases	106		(63)		43		117		(66)		51		Favorable leases	90		(56)		34		104		(63)		41
Subtotal	Subtotal	831		(346)		485		852		(330)		522		Subtotal	795		(354)		441		826		(353)		473
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:													Indefinite-lived intangible assets:
Tim Hortons brand	Tim Hortons brand	$	6,675	$	—	$	6,675	$	6,650	$	—	$	6,650	Tim Hortons brand	$	6,182	$	—	$	6,182	$	6,695	$	—	$	6,695
Burger King brand	Burger King brand	2,137		—		2,137		2,174		—		2,174		Burger King brand	2,037		—		2,037		2,126		—		2,126
Popeyes brand	Popeyes brand	1,355		—		1,355		1,355		—		1,355		Popeyes brand	1,355		—		1,355		1,355		—		1,355
Firehouse Subs brand														Firehouse Subs brand	816		—		816		768		—		768
Subtotal	Subtotal	10,167		—		10,167		10,179		—		10,179		Subtotal	10,390		—		10,390		10,944		—		10,944
Intangible assets, net	Intangible assets, net					$	10,652					$	10,701	Intangible assets, net					$	10,831					$	11,417

Goodwill	Goodwill													Goodwill
Tim Hortons segment	Tim Hortons segment	$	4,293					$	4,279					Tim Hortons segment	$	3,991					$	4,306
Burger King segment	Burger King segment	604						614						Burger King segment	576						601
Popeyes segment	Popeyes segment	846						846						Popeyes segment	846						846
Firehouse Subs segment														Firehouse Subs segment	192						253
Total	Total	$	5,743					$	5,739					Total	$	5,605					$	6,006

Amortization expense on intangible assets totaled ~~$10~~$9 million and ~~$11~~$10 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Amortization expense on intangible assets totaled ~~$31~~$29 million and ~~$33~~$31 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The change in the franchise agreements, brands and goodwill balances ~~during the nine months ended September 30, 2021 was due to the impact of foreign currency translation.~~

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during the nine months ended September 30, 2022 was due to the impact of foreign currency translation and the impact of adjustments to the preliminary allocation of consideration to the net tangible and intangible assets acquired in the Firehouse Acquisition.

Note 8.9. Equity Method Investments

The aggregate carrying ~~amount~~amounts of our equity method investments ~~was $199~~were $179 million and ~~$205~~$194 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and isare included as a component of Other assets, net in our accompanying condensed consolidated balance sheets.

Except for the following equity method investments, no quoted market prices are available for our other equity method investments. The aggregate market value of our ~~15.4%~~15% equity interest in Carrols Restaurant Group, Inc. ~~(“Carrols”)~~ based on the quoted market price on September 30, ~~2021~~2022 was approximately ~~$34~~$15 million. The aggregate market value of our 9.4% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on September 30, ~~2021~~2022 was approximately ~~$39~~$33 million. The aggregate market value of our 8% equity interest in TH International Limited based on the quoted market price on September 30, 2022 was approximately $71 million. We have evaluated recent declines in the market value of these equity method investments and concluded they are not other than temporary and as such no impairments have been recognized ~~at September 30, 2021.~~in the current period.

We have equity interests in entities that own or franchise Tim Hortons, Burger King and Popeyes restaurants. ~~Franchise~~Sales, franchise and property revenues recognized from franchisees that are owned or franchised by entities in which we have an equity interest consist of the following (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues from affiliates:	Revenues from affiliates:									Revenues from affiliates:
Royalties	Royalties	$	111	$	68	$	254	$	171	Royalties	$	92	$	111	$	266	$	254
Advertising revenues		22		14		50		38
Advertising revenues and other services										Advertising revenues and other services	20		22		54		50
Property revenues	Property revenues	8		8		24		24		Property revenues	8		8		23		24
Franchise fees and other revenue	Franchise fees and other revenue	4		4		12		10		Franchise fees and other revenue	3		4		12		12
Sales										Sales	4		2		12		7
Total	Total	$	145	$	94	$	340	$	243	Total	$	127	$	147	$	367	$	347

At September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$39~~$41 million and ~~$52~~$48 million, respectively, of accounts receivable, net from our equity method investments which were recorded in Accounts and notes receivable, net in our condensed consolidated balance sheets.

With respect to our TH business, the most significant equity method investment is our 50% joint venture interest with The Wendy’s Company (the “TIMWEN Partnership”), which jointly holds real estate underlying Canadian combination restaurants. Distributions received from this joint venture were $3$5 million and $2$3 million during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Distributions received from this joint venture were $9$10 million and $6$9 million during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

WeAssociated with the TIMWEN Partnership, we recognized $5 million ~~and $4 million~~ of rent expense ~~associated with the TIMWEN Partnership~~ during the three months ended September 30, 2022 and 2021, and ~~2020, respectively. We~~ recognized ~~$13~~$14 million and ~~$11~~$13 million of rent expense ~~associated with the TIMWEN Partnership~~ during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

(Income) loss from equity method investments reflects our share of investee net income or loss and non-cash dilution gains or losses from changes in our ownership interests in equity ~~investees and basis difference amortization.~~investees.

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Note 9.10. Other Accrued Liabilities and Other Liabilities, net

Other accrued liabilities (current) and Other liabilities, net (noncurrent) consist of the following (in millions):


		As of					As of
		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Current:	Current:					Current:
Distribution payable	Distribution payable	$	244	$	239	Distribution payable	$	243	$	241
Interest payable	Interest payable	86		66		Interest payable	96		63
Accrued compensation and benefits	Accrued compensation and benefits	77		78		Accrued compensation and benefits	90		99
Taxes payable	Taxes payable	164		122		Taxes payable	150		106
Deferred income	Deferred income	51		42		Deferred income	57		48
Accrued advertising expenses	Accrued advertising expenses	55		59		Accrued advertising expenses	45		43
Restructuring and other provisions	Restructuring and other provisions	17		12		Restructuring and other provisions	20		90
Current portion of operating lease liabilities	Current portion of operating lease liabilities	137		137		Current portion of operating lease liabilities	134		140
Other	Other	79		80		Other	124		117
Other accrued liabilities	Other accrued liabilities	$	910	$	835	Other accrued liabilities	$	959	$	947
Noncurrent:	Noncurrent:					Noncurrent:
Taxes payable	Taxes payable	$	553	$	626	Taxes payable	$	360	$	533
Contract liabilities	Contract liabilities	525		528		Contract liabilities	514		531
Derivatives liabilities	Derivatives liabilities	618		865		Derivatives liabilities	—		575
Unfavorable leases	Unfavorable leases	68		81		Unfavorable leases	52		65
Accrued pension	Accrued pension	66		70		Accrued pension	46		47

Deferred income	Deferred income	33		28		Deferred income	45		37
Other	Other	35		38		Other	27		34
Other liabilities, net	Other liabilities, net	$	1,898	$	2,236	Other liabilities, net	$	1,044	$	1,822

Note 11. Long-Term Debt

Long-term debt consists of the following (in millions):


	As of
	September 30, 2022		December 31, 2021
Term Loan B	$	5,203	$	5,243
Term Loan A	1,250		1,250

3.875% First Lien Senior Notes due 2028	1,550		1,550
3.50% First Lien Senior Notes due 2029	750		750
5.75% First Lien Senior Notes due 2025	500		500
4.375% Second Lien Senior Notes due 2028	750		750
4.00% Second Lien Senior Notes due 2030	2,900		2,900
TH Facility and other	154		173
Less: unamortized deferred financing costs and deferred issue discount	(118)		(138)
Total debt, net	12,939		12,978
Less: current maturities of debt	(86)		(62)
Total long-term debt	$	12,853	$	12,916

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~~Note 10. Long-Term Debt~~

~~Long-term debt consists of the following (in millions):~~

As of
September 30,
2021 December 31,
2020
Term Loan B (due November 19, 2026) $ 5,256 $ 5,297
Term Loan A (due October 7, 2024) 717 731
2017 4.25% Senior Notes (due May 15, 2024) — 775
3.875% First Lien Senior Notes (due January 15, 2028) 1,550 750
2020 5.75% Senior Notes (due April 15, 2025) 500 500
2020 3.50% Senior Notes (due February 15, 2029) 750 750
2019 4.375% Senior Notes (due January 15, 2028) 750 750
2020 4.00% Senior Notes (due October 15, 2030) 2,900 2,900
TH Facility and other 175 178
Less: unamortized deferred financing costs and deferred issue discount (138) (155)
Total debt, net 12,460 12,476
Less: current maturities of debt (81) (79)
Total long-term debt $ 12,379 $ 12,397

Revolving Credit Facility

As of September 30, ~~2021,~~2022, we had no amounts outstanding under our senior secured revolving credit facility (the “Revolving Credit Facility”), had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability under our Revolving Credit Facility was $998 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or RBI share repurchases or repurchases of Class B exchangeable limited partnership units, fund acquisitions or capital expenditures and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit.

TH Facility

~~NaN~~One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by 4four of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of September 30, ~~2021,~~2022, we had approximately C$205 million outstanding ~~C$217 million~~ under the TH Facility with a weighted average interest rate of ~~1.83%~~5.10%.

~~First Lien Senior Notes~~RE Facility

~~On July 6, 2021, 2~~One of our subsidiaries (the “Borrowers”) issued $800 million of 3.875% first lien senior secured notes due January 15, 2028 (the “Additional Notes”). No principal payments are due until maturity and interest is paid semi-annually. The Additional Notes were issued as additional notes under the indenture, dated as of September 24, 2019, (the “2019 3.875% Senior Notes Indenture”) pursuant to which the Borrowers previously issued $750 millionentered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of ~~3.875% first lien senior secured notes due January 15,~~$50 million with a maturity date of October 12, 2028 ~~during 2019~~ (the ~~“2019 3.875% Senior Notes” and together with the Additional Notes, the “3.875% First Lien Senior Notes”~~“RE Facility”). The ~~Additional Notes are treated~~interest rate applicable to the RE Facility is, at our option, either (i) a base rate, subject to a floor of0.50%, plus an applicable margin of 0.50% or (ii) Adjusted Term SOFR (Adjusted Term SOFR is calculated as Term SOFR plus a ~~single series with the 2019 3.875% Senior Notes and have the same terms for all purposes under the 2019 3.875% Senior Notes Indenture, including waivers, amendments, redemptions and offers~~margin based on duration), subject to ~~purchase. The Additional Notes were priced at 100.250%~~a floor of ~~their face value. The net proceeds from the offering~~0.00%, plus an applicable margin of the Additional Notes were used to redeem the remaining $775 million principal amount outstanding of the 2017 4.25% Senior Notes on July 15, 2021, plus any accrued and unpaid interest thereon, and pay related redemption premiums, fees and expenses. In connection with the issuance of the Additional Notes, we capitalized approximately $7 million in debt issuance costs. In connection with the redemption of the remaining $775 million principal amount outstanding of the 2017 4.25% Senior Notes, we recorded a loss on early extinguishment of debt of $11 million that primarily reflects the payment of redemption premiums and the write-off of unamortized debt issuance costs.

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1.50%. Obligations under the ~~3.875% First Lien Senior Notes~~RE Facility are guaranteed onby four of our subsidiaries, and amounts borrowed under the RE Facility are secured by certain parcels of real estate. As of September 30, 2022, we had approximately $2 million outstanding under the RE Facility with a ~~senior secured basis, jointly and severally, by the Borrowers and substantially all~~weighted average interest rate of the Borrower's Canadian and U.S. subsidiaries, including The TDL Group Corp., Burger King Corporation, Popeyes Louisiana Kitchen, Inc. and substantially all of their respective Canadian and U.S. subsidiaries (the “Note Guarantors”)4.05%. The 3.875% First Lien Senior Notes are first lien senior secured obligations and rank equal in right of payment with all of the existing and future first lien senior debt of the Borrowers and Note Guarantors, including borrowings and guarantees under our senior secured term loan facilities and Revolving Credit Facility (together the “Credit Facilities”).

The 3.875% First Lien Senior notes may be redeemed in whole or in part, on or after September 15, 2022, at the redemption prices set forth in the 2019 3.875% Senior Notes Indenture, plus accrued and unpaid interest, if any, at the date of redemption. The 2019 3.875% Senior Notes Indenture also contains optional redemption provisions related to tender offers, change of control and equity offerings, among others.

Restrictions and Covenants

As of September 30, ~~2021,~~2022, we were in compliance with all applicable financial debt covenants under our senior secured term loan facilities and Revolving Credit Facility (together the "Credit Facilities"), the TH Facility, the RE Facility, and the indentures governing our Senior Notes.

Fair Value Measurement

The following table presents the fair value of our variable rate term debt and senior notes, estimated using inputs based on bid and offer prices that are Level 2 inputs, and principal carrying amount (in millions):

As of
September 30,
2021 December 31,
2020
Fair value of our variable term debt and senior notes $ 12,391 $ 12,477
Principal carrying amount of our variable term debt and senior notes 12,423 12,453


	As of
	September 30, 2022		December 31, 2021
Fair value of our variable term debt and senior notes	$	11,568	$	12,851
Principal carrying amount of our variable term debt and senior notes	12,903		12,943

Interest Expense, net

Interest expense, net consists of the following (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Debt (a)	$	124	$	117	$	357	$	345
Finance lease obligations	4		5		14		15
Amortization of deferred financing costs and debt issuance discount	7		7		21		20
Interest income	(2)		(1)		(3)		(2)
Interest expense, net	$	133	$	128	$	389	$	378

Three Months Ended September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Debt (a) $ 117 $ 119 $ 345 $ 351
Finance lease obligations 5 4 15 14
Amortization of deferred financing costs and debt issuance discount 7 7 20 19
Interest income (1) (1) (2) (8)
Interest expense, net $ 128 $ 129 $ 378 $ 376

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(a)Amount includes ~~$11~~$17 million and ~~$15~~$11 million benefit during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$34~~$40 million and ~~$56~~$34 million benefit during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, related to the quarterly net settlements of our cross-currency rate swaps and amortization of the Excluded Component as defined in Note ~~13,~~14, Derivatives.

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Note ~~11.~~12. Income Taxes

Our effective tax rate was (23.8)% and 1.5% for the three and nine months ended September 30, 2022, respectively. The effective tax rate during these periods included a net decrease in tax reserves of $171 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 39.9% and 14.7% for the three and nine months ended September 30, 2022, respectively. The effective tax rate during these periods also reflects the mix of income from multiple tax jurisdictions, the impact of internal financing arrangements and favorable structural changes.

Our effective tax rate was 16.7% and 7.7% for the three and nine months ended September 30, 2021, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions and the impact of internal financing arrangements. Additionally, the effective tax rate for the nine months ended September 30, 2021 included a net decrease in tax reserves of $87 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 8.1%.

~~Our~~On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (“IRA”) which contains provisions effective January 1, 2023, including a 15% corporate alternative minimum tax ~~rate was 22.6% and 9.2% for~~based on adjusted financial statement income. While we do not currently expect the ~~three and nine months ended September 30, 2020, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions and the~~IRA to have a material impact of internal financing arrangements. Additionally, the effective tax rate during the nine months ended September 30, 2020 reflects a $64 million increase in deferred tax assets which decreased the effective tax rate by 9.5% during this period. Based on ~~the analysis of final~~our Financial Statements, we will continue to evaluate its effect as further guidance ~~related to the Tax Cuts and Jobs Act (the “Tax Act”) received during the nine months ended September 30, 2020, a deferred tax asset was recorded.~~becomes available.

Note ~~12.~~13. Equity

During the nine months ended September 30, ~~2021,~~2022, Partnership exchanged ~~9,843,402~~1,694,859 Partnership exchangeable units pursuant to exchange notices received. In accordance with the terms of the partnership agreement, Partnership satisfied the exchange notices by exchanging these Partnership exchangeable units for the same number of newly issued RBI common shares. The issuances of shares were accounted for as capital contributions by RBI to Partnership. The exchanges of Partnership exchangeable units were recorded as increases to the Class A common units balance within partners’ capital in our consolidated balance sheet in an amount equal to the market value of the newly issued RBI common shares and a reduction to the Partnership exchangeable units balance within partners’ capital of our consolidated balance sheet in an amount equal to the cash paid by Partnership, if any, and the market value of the newly issued RBI common shares. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit is automatically deemed cancelled concurrently with the exchange.

Distribution to RBI to Repurchase RBI Common Shares

During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, Partnership distributed to RBI ~~$182~~$326 million to repurchase RBI common shares.

Accumulated Other Comprehensive Income (Loss)

The following table displays the changes in the components of accumulated other comprehensive income (loss) (“AOCI”) (in millions):


		Derivatives		Pensions		Foreign Currency Translation		Accumulated Other Comprehensive Income (Loss)			Derivatives		Pensions		Foreign Currency Translation		Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2020		$	(107)	$	(45)	$	(1,123)	$	(1,275)
Balance at December 31, 2021										Balance at December 31, 2021	$	196	$	(30)	$	(1,190)	$	(1,024)
Foreign currency translation adjustment	Foreign currency translation adjustment	—		—		(62)		(62)		Foreign currency translation adjustment	—		—		(1,015)		(1,015)
Net change in fair value of derivatives, net of tax	Net change in fair value of derivatives, net of tax	169		—		—		169		Net change in fair value of derivatives, net of tax	969		—		—		969
Amounts reclassified to earnings of cash flow hedges, net of tax	Amounts reclassified to earnings of cash flow hedges, net of tax	77		—		—		77		Amounts reclassified to earnings of cash flow hedges, net of tax	42		—		—		42
Gain (loss) recognized on other, net of tax	Gain (loss) recognized on other, net of tax	—		2		—		2		Gain (loss) recognized on other, net of tax	—		3		—		3
Balance at September 30, 2021		$	139	$	(43)	$	(1,185)	$	(1,089)
Balance at September 30, 2022										Balance at September 30, 2022	$	1,207	$	(27)	$	(2,205)	$	(1,025)

2019

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Note ~~13.~~14. Derivative Instruments

Disclosures about Derivative Instruments and Hedging Activities

We enter into derivative instruments for risk management purposes, including derivatives designated as cash flow hedges and derivatives designated as net investment ~~hedges and those utilized as economic~~ hedges. We use derivatives to manage our exposure to fluctuations in interest rates and currency exchange rates.

Interest Rate Swaps

At September 30, ~~2021,~~2022, we had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $3,500 million to hedge the variability in the interest payments on a portion of our senior secured term loan facilities (the “Term Loan Facilities”), including any subsequent refinancing or replacement of the Term Loan Facilities, beginning August 31, 2021 through the termination date of October 31, 2028. Additionally, at September 30, ~~2021,~~2022, we also had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $500 million to hedge the variability in the interest payments on a portion of our Term Loan Facilities effective September 30, 2019 through the termination date of September 30, 2026. At inception, all of these interest rate swaps were designated as cash flow hedges for hedge accounting. The unrealized changes in market value are recorded in AOCI, net of tax, and reclassified into interest expense during the period in which the hedged forecasted transaction affects earnings.

~~During 2021, we extended the maturity of our $3,500 million receive-variable, pay-fixed interest rate swaps.~~ The extension of the term resulted in a de-designation and re-designation of the interest rate swaps and the swaps continue to be accounted for as a cash flow hedge for hedge accounting. In connection with the de-designation, we recognized a net ~~unrealized loss of $143 million in AOCI and this amount gets reclassified into Interest expense, net as the original forecasted transaction affects earnings. The~~ amount of pre-tax ~~losses~~gains in connection with ~~this~~these net unrealized ~~loss~~gains in AOCI as of September 30, ~~2021~~2022 that we expect to be reclassified into interest expense within the next 12 months is ~~$28 million.~~

We had previously extended the term of our $3,500 million receive-variable, pay-fixed interest rate swaps in 2019 to align the maturity date of the interest rate swaps with the new maturity date of our Term Loan B. The extension of the term resulted in a de-designation and re-designation of the interest rate swaps and the swaps continue to be accounted for as a cash flow hedge for hedge accounting. In connection with the de-designation, we recognized a net unrealized loss of $213 million in AOCI and this amount gets reclassified into Interest expense, net as the original forecasted transaction affects earnings. The amount of pre-tax losses in connection with this net unrealized loss in AOCI as of September 30, 2021 that we expect to be reclassified into interest expense within the next 12 months is $50$69 million.

Cross-Currency Rate Swaps

To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, we hedge a portion of our net investment in one or more of our foreign subsidiaries by using cross-currency rate swaps. At September 30, ~~2021,~~2022, we had outstanding cross-currency rate swap contracts between the Canadian dollar and U.S. dollar and the Euro and U.S. dollar that have been designated as net investment hedges of a portion of our equity in foreign operations in those currencies. The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates are economically partly offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period with changes in fair value reported in AOCI, net of tax. Such amounts will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying foreign operations.

At September 30, ~~2021,~~2022, we had U.S. dollar notional amount of $5,000 million outstanding ~~fixed-to-fixed~~ cross-currency rate swaps to partially hedge the net investment in our Canadian ~~subsidiaries. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as net investment hedges. These swaps are~~subsidiaries (the “CAD swaps”). We have contracts to exchange quarterly fixed-rate interest payments we make on the Canadian dollar notional amount of C$6,754 million for quarterly fixed-rate interest payments we receive on the U.S. dollar notional amount of $5,000 million through the maturity date of June 30, 2023, of which only $2,500 million of notional amount are designated as a hedge and are accounted for as net investment hedges as of September 30, 2022. We also entered into contracts in September 2022 in which we receive quarterly fixed-rate interest payments on the U.S. dollar notional amount of $2,500 million through the maturity date of September 30, 2028, all of which have been designated as a hedge and are accounted for as net investment hedges as of September 30, 2022.

In October 2022, we entered into new cross-currency rate swaps in which we receive quarterly fixed-rate interest payments on the U.S. dollar aggregate notional amount of $2,500 million through the maturity date of September 30, 2028. At inception, these cross-currency rate swaps were designated as hedges and are accounted for as net investment hedges. At all times, we have had $5,000 million of notional amount designated as hedges.

In connection with our CAD swaps entered during September 2022 and October 2022, we de-designated existing hedges of $2,500 million of notional amount in September 2022 and de-designated the remaining $2,500 million of notional amount in October 2022 for hedge accounting. As a result of these de-designations, changes in fair value of these un-designated hedges will be recognized in earnings through the maturity date of June 30, 2023. Concurrently with these de-designations and to offset the changes in fair value recognized in earnings, we entered into off-setting cross-currency rate swaps, with a total notional amount of $5,000 million and a maturity date of June 30, 2023, that were not designated as a hedge for hedge accounting and as such changes in fair value are recognized in earnings. The balances in AOCI associated with the de-designated $2,500 million CAD swaps in September 2022 and the de-designated $2,500 million CAD swaps in October 2022 will remain in AOCI and will only be reclassified into earnings if and when the net investment in our Canadian subsidiaries is sold or substantially sold.

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At September 30, ~~2021,~~2022, the fair values of the CAD swaps that were de-designated in September 2022 and October 2022 were included within Prepaids and other current assets and the fair value of the off-setting cross-currency rate swaps was included within Other accrued liabilities as all of these instruments were cash settled in October 2022 for approximately $35 million in net proceeds.

At September 30, 2022, we had outstanding cross-currency rate swaps in which we pay quarterly fixed-rate interest payments on the Euro notional value of €1,108 million and receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $1,200 million. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge. During 2018, we extended the term of the swaps from March 31, 2021 to the maturity date of February 17, 2024. The extension of the term resulted in a re-designation of the hedge and the swaps continue to be accounted for as a net investment hedge. Additionally, at September 30, ~~2021,~~2022, we also had outstanding cross-currency rate swaps in which we receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $400 million, entered during 2018, and

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~~$500~~ $500 million, entered during 2019, through the maturity date of February 17, ~~2024.~~2024 and $150 million, entered during 2021, through the maturity date of October 31, 2028. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge.

The fixed-to-fixed cross-currency rate swaps hedging Canadian dollar and Euro net investments utilized the forward method of effectiveness assessment prior to March 15, 2018. On March 15, 2018, we de-designated and subsequently re-designated the outstanding fixed to fixed cross-currency rate swaps to prospectively use the spot method of hedge effectiveness assessment. Additionally, as a result of adopting new hedge accounting guidance during 2018, we elected to exclude the interest component (the “Excluded Component”) from the accounting hedge without affecting net investment hedge accounting and elected to amortize the Excluded Component over the life of the derivative instrument. The amortization of the Excluded Component is recognized in Interest expense, net in the condensed consolidated statement of operations. The change in fair value that is not related to the Excluded Component is recorded in AOCI and will be reclassified to earnings when the foreign subsidiaries are sold or substantially liquidated.

Foreign Currency Exchange Contracts

We use foreign exchange derivative instruments to manage the impact of foreign exchange fluctuations on U.S. dollar purchases and payments, such as coffee purchases made by our Canadian Tim Hortons operations. At September 30, ~~2021,~~2022, we had outstanding forward currency contracts to manage this risk in which we sell Canadian dollars and buy U.S. dollars with a notional value of ~~$148~~$202 million with maturities to November ~~2022.~~2023. We have designated these instruments as cash flow hedges, and as such, the unrealized changes in market value of effective hedges are recorded in AOCI and are reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.

Credit Risk

By entering into derivative contracts, we are exposed to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to us, which creates credit risk for us. We attempt to minimize this risk by selecting counterparties with investment grade credit ratings and regularly monitoring our market position with each counterparty.

Credit-Risk Related Contingent Features

Our derivative instruments do not contain any credit-risk related contingent features.

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Quantitative Disclosures about Derivative Instruments and Fair Value Measurements

The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions):


		Gain or (Loss) Recognized in Other Comprehensive Income (Loss)									Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Derivatives designated as cash flow hedges(1)	Derivatives designated as cash flow hedges(1)									Derivatives designated as cash flow hedges(1)
Interest rate swaps	Interest rate swaps	$	15	$	(22)	$	100	$	(370)	Interest rate swaps	$	191	$	15	$	521	$	100
Forward-currency contracts	Forward-currency contracts	$	2	$	(2)	$	—	$	3	Forward-currency contracts	$	14	$	2	$	18	$	—
Derivatives designated as net investment hedges	Derivatives designated as net investment hedges									Derivatives designated as net investment hedges
Cross-currency rate swaps	Cross-currency rate swaps	$	174	$	(238)	$	91	$	51	Cross-currency rate swaps	$	471	$	174	$	675	$	91

(1) We did not exclude any components from the cash flow hedge relationships presented in this table.


	Location of Gain or (Loss) Reclassified from AOCI into Earnings	Gain or (Loss) Reclassified from AOCI into Earnings
		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Derivatives designated as cash flow hedges
Interest rate swaps	Interest expense, net	$	(8)	$	(31)	$	(60)	$	(92)
Forward-currency contracts	Cost of sales	$	1	$	(2)	$	3	$	(6)

	Location of Gain or (Loss) Recognized in Earnings	Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Derivatives designated as net investment hedges
Cross-currency rate swaps	Interest expense, net	$	17	$	11	$	40	$	34

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Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from
AOCI into Earnings
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Derivatives designated as cash flow hedges
Interest rate swaps Interest expense, net $ (31) $ (30) $ (92) $ (71)
Forward-currency contracts Cost of sales $ (2) $ — $ (6) $ 2
Location of Gain or (Loss) Recognized in Earnings Gain or (Loss) Recognized in Earnings
(Amount Excluded from Effectiveness Testing)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Derivatives designated as net investment hedges
Cross-currency rate swaps Interest expense, net $ 11 $ 15 $ 34 $ 56

Fair Value as of
September 30,
2021 December 31, 2020 Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Foreign currency $ 2 $ — Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency 16 — Other assets, net
Total assets at fair value $ 18 $ —
Liabilities:
Derivatives designated as cash flow hedges
Interest rate $ 265 $ 430 Other liabilities, net
Foreign currency 1 5 Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency 353 434 Other liabilities, net
Total liabilities at fair value $ 619 $ 869

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	Fair Value as of
	September 30, 2022		December 31, 2021		Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate	$	314	$	—	Other assets, net
Foreign currency	16		2		Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency	261		23		Other assets, net
Foreign currency	56		$	—	Prepaids and other current assets
Derivatives not designated as hedging instruments
Foreign currency	56		—		Prepaids and other current assets
Total assets at fair value	$	703	$	25

Liabilities:
Derivatives designated as cash flow hedges
Interest rate	$	—	$	220	Other liabilities, net

Derivatives designated as net investment hedges
Foreign currency	—		355		Other liabilities, net
Derivatives not designated as hedging instruments
Foreign currency	30		—		Other accrued liabilities
Total liabilities at fair value	$	30	$	575

Note ~~14.~~15. Other Operating Expenses (Income), net

Other operating expenses (income), net consist of the following (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	2	$	4	$	1	$	2	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	1	$	2	$	2	$	1
Litigation settlements (gains) and reserves, net	Litigation settlements (gains) and reserves, net	4		4		7		5		Litigation settlements (gains) and reserves, net	—		4		3		7
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange	(23)		44		(58)		54		Net losses (gains) on foreign exchange	(30)		(23)		(82)		(58)
Other, net	Other, net	1		2		—		(2)		Other, net	2		1		9		—
Other operating expenses (income), net	Other operating expenses (income), net	$	(16)	$	54	$	(50)	$	59	Other operating expenses (income), net	$	(27)	$	(16)	$	(68)	$	(50)

Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to restaurant closures and refranchisings. Gains and losses recognized in the current period may reflect certain costs related to closures and refranchisings that occurred in previous periods.

Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and ~~liabilities.~~liabilities, primarily those denominated in Euros and Canadian dollars.

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Note ~~15.~~16. Commitments and Contingencies

Litigation

From time to time, we are involved in legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees and customers, as well as disputes over our intellectual property.

On October 5, 2018, a class action complaint was filed against Burger King Worldwide, Inc. (“BKW”) and Burger King Corporation (“BKC”) in the U.S. District Court for the Southern District of Florida by Jarvis Arrington, individually and on behalf of all others similarly situated. On October 18, 2018, a second class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Monique Michel, individually and on behalf of all others similarly situated. On October 31, 2018, a third class action complaint was filed against BKC and BKW in the U.S. District Court for the Southern District of Florida by Geneva Blanchard and Tiffany Miller, individually and on behalf of all others similarly situated. On November 2, 2018, a fourth class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Sandra Muster, individually and on behalf of all others similarly situated. These complaints have been consolidated and allege that the defendants violated Section 1 of the Sherman Act by incorporating an employee no-solicitation and no-hiring clause in the standard form franchise agreement all Burger King franchisees are required to sign. Each plaintiff seeks injunctive relief and damages for himself or herself and other members of the class. On March 24, 2020, the Court granted BKC’s motion to dismiss for failure to state a claim and on April 20, 2020 the plaintiffs filed a motion for leave to amend their complaint. On April 27, 2020, BKC filed a motion opposing the motion for leave to amend. The court denied the plaintiffs motion for leave to amend their complaint in August 2020 and the plaintiffs appealed this ruling. ~~Oral arguments~~In August 2022, the federal appellate court reversed the lower court's decision to dismiss the case and remanded the case to the lower court for ~~the appeal were heard in September 2021 and the parties await a ruling on the appeal.~~further proceedings. While we currently believe these claims are without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.

In July 2019, a class action complaint was filed against The TDL Group Corp. (“TDL”) in the Supreme Court of British Columbia by Samir Latifi, individually and on behalf of all others similarly situated. The complaint alleges that TDL violated the Canadian Competition Act by incorporating an employee no-solicitation and no-hiring clause in the standard form franchise agreement all Tim Hortons franchisees are required to sign. The plaintiff seeks damages and restitution, on behalf of himself and other members of the class. In February 2021, TDL filed and served an application to strike which was heard in May 2021. While we currently believe this claim is without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.

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On June 30, 2020, a class action complaint was filed against ~~Restaurant Brands International Inc., Restaurant Brands International Limited~~RBI, Partnership and The TDL Group Corp. in the Quebec Superior Court by Steve Holcman, individually and on behalf of all Quebec residents who downloaded the Tim Hortons mobile application. On July 2, 2020, a Notice of Action related to a second class action complaint was filed against ~~Restaurant Brands International Inc.,~~RBI, in the Ontario Superior Court by Ashley Sitko and Ashley Cadeau, individually and on behalf of all Canadian residents who downloaded the Tim Hortons mobile application. On August 31, 2020, a notice of claim was filed against ~~Restaurant Brands International Inc.~~RBI in the Supreme Court of British Columbia by Wai Lam Jacky Law on behalf of all persons in Canada who downloaded the Tim Hortons mobile application or the Burger King mobile application. On September 30, 2020, a notice of action was filed against ~~Restaurant Brands International Inc., Restaurant Brands International Limited~~RBI, Partnership, The TDL Group Corp., ~~Burger King Worldwide, Inc.~~BKW and Popeyes Louisiana Kitchen, Inc. in the Ontario Superior Court of Justice by William Jung on behalf of a to be determined class. All of the complaints allege that the defendants violated the plaintiff’s privacy rights, the Personal Information Protection and Electronic Documents Act, consumer protection and competition laws or app-based undertakings to users, in each case in connection with the collection of geolocation data through the Tim Hortons mobile application, and in certain cases, the Burger King and Popeyes mobile applications. Each plaintiff seeks injunctive relief and monetary damages for himself or herself and other members of the class. ~~These~~The parties have reached a national settlement of all cases, ~~are~~subject to court approval, pursuant to which The TDL Group Corp. will provide each member of the class one hot beverage and one baked good and will pay plaintiffs legal fees, in ~~preliminary stages~~an amount which we believe will be immaterial. On September 22, 2022, the Quebec Court issued a judgment approving the settlement in the Holcman case. The British Columbia Courts have dismissed the Law case and ~~we intend to vigorously defend against these lawsuits, but we are unable to predict~~ the ~~ultimate outcome~~settlement will be effective upon the Ontario Courts dismissing or permanently staying the Sitko and Jung actions.

Table of ~~any of these cases or estimate the range of possible loss, if any.~~Contents

On October 26, 2020, City of Warwick Municipal Employees Pension Fund, a purported stockholder of ~~Restaurant Brands International Inc.,~~RBI, individually and putatively on behalf of all other stockholders similarly situated, filed a lawsuit in the Supreme Court of the State of New York County of New York naming RBI and certain of its officers, directors and shareholders as defendants alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with certain offerings of securities by an affiliate in August and September 2019. The complaint alleges that the shelf registration statement used in connection with such offering contained certain false and/or misleading statements or omissions. The complaint seeks, among other relief, class certification of the lawsuit, unspecified compensatory damages, rescission, pre-judgement and post-judgement interest, costs and expenses. On December 18, 2020 the plaintiffs filed an amended complaint and on February 16, 2021 RBI filed a motion to dismiss the complaint. The plaintiffs filed a brief in opposition to the motion on April 19, 2021 and RBI filed a reply in May 2021. The motion to dismiss ~~is scheduled to be~~was heard in ~~December 2021.~~April 2022 and the motion to dismiss was denied in May 2022. On June 6, 2022, we filed an answer to the complaint and on July 8, 2022, we filed an appeal of the denial of the motion to dismiss. Oral arguments were heard on the appeal in September 2022 and the parties await a ruling on the appeal. We intend to vigorously defend. While we believe these claims are without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.

~~On February 5, 2021, Paul J. Graney, a~~In April 2022, BKC was served with two separate purported ~~shareholder~~class action complaints relating to per- and polyfluoroalkyl (“PFAS”) in packaging. Hussain vs. BKC was filed on April 13, 2022 in the U.S. District Court for the Northern District of ~~Restaurant Brands International, individually~~California, and ~~putatively~~Cooper v. BKC was filed on ~~behalf of all other stockholders similarly situated, filed a lawsuit~~April 14, 2022 in the U.S. District Court for the Southern District of ~~Florida naming RBI~~Florida. Both complaints allege that certain food products sold by BKC are not safe for human consumption due to the packaging containing allegedly unsafe PFAS and ~~certain of its current or former officers as defendants. This lawsuit alleged violations of Sections 10~~that consumers were misled by the labelling, marketing and ~~20(a)~~packaging claims asserted by BKC regarding the safety and sustainability of the ~~Securities Exchange Act~~packaging and are seeking compensatory, statutory and punitive damages, injunctive relief, corrective action, and attorneys’ fees. Hussain voluntarily dismissed the case on August 22, 2022. In June 2022, Cooper voluntarily dismissed the case and then refiled their complaint in state court only on behalf of ~~1934, as amended, in connection with certain statements made beginning in April 2019. On April 26, 2021, the lead plaintiff~~Florida consumers. We filed a ~~stipulation voluntarily dismissing~~motion to dismiss on October 17, 2022. While we currently believe this claim is without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.

Other Disputes

In early 2022, we entered into negotiations to resolve business disputes that arose during 2021 with counterparties to the master franchise agreements for Burger King and Popeyes in China. Based on these discussions, we have paid approximately $100 million, $72 million of which was recorded as Litigation settlements and reserves, net in 2021. The majority of this amount relates to Popeyes, resolves our disputes and allows us to move forward in the ~~Court so ordered on April 27, 2021.~~

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market with a new master franchisee. Additionally, pursuant to this agreement we and our partner have made equity contributions to the Burger King business in China.

Note ~~16.~~17. Segment Reporting

As stated in Note 1, Description of Business and Organization, we manage 3four brands. Under the Tim Hortons brand, we operate in the donut/coffee/tea category of the quick service segment of the restaurant industry. Under the Burger King brand, we operate in the fast food hamburger restaurant category of the quick service segment of the restaurant industry. Under the Popeyes brand, we operate in the chicken category of the quick service segment of the restaurant industry. Under the Firehouse Subs brand, we operate in the specialty subs category of the quick service segment of the restaurant industry. Our business generates revenue from the following sources: (i) franchise and advertising revenues and other services, consisting primarily of royalties and advertising fund contributions based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers. We manage each of our brands as an operating segment and each operating segment represents a reportable segment.

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The following tables present revenues, by segment and by country (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues by operating segment:	Revenues by operating segment:									Revenues by operating segment:
TH	TH	$	885	$	762	$	2,426	$	2,028	TH	$	1,033	$	885	$	2,830	$	2,426
BK	BK	467		433		1,333		1,168		BK	491		467		1,407		1,333
PLK	PLK	143		142		434		414		PLK	164		143		477		434
FHS										FHS	38		—		102		—
Total revenues	Total revenues	$	1,495	$	1,337	$	4,193	$	3,610	Total revenues	$	1,726	$	1,495	$	4,816	$	4,193


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues by country (a):	Revenues by country (a):									Revenues by country (a):
Canada	Canada	$	808	$	691	$	2,200	$	1,837	Canada	$	940	$	808	$	2,565	$	2,200
United States	United States	500		499		1,493		1,392		United States	587		500		1,679		1,493
Other	Other	187		147		500		381		Other	199		187		572		500
Total revenues	Total revenues	$	1,495	$	1,337	$	4,193	$	3,610	Total revenues	$	1,726	$	1,495	$	4,816	$	4,193

(a)Only Canada and the United States represented 10% or more of our total revenues in each period presented.

Our measure of segment income is Adjusted EBITDA. Adjusted EBITDA represents earnings (net income or loss) before interest expense, net, loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization, adjusted to exclude (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net and, (iv) income/expenses from non-recurring projects and non-operating activities. For the periods referenced, ~~this~~income/expenses from non-recurring projects and non-operating activities included (i) non-recurring fees and expense incurred in connection with the Firehouse Acquisition consisting of professional fees, compensation-related expenses and integration costs ~~incurred~~(“FHS Transaction costs”); and (ii) costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including services related to significant tax reform legislation, regulations and related restructuring initiatives (“Corporate restructuring and tax advisory fees”).

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Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management’s assessment of our operating ~~business.~~performance. A reconciliation of segment income to net income consists of the following (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Segment income:	Segment income:									Segment income:
TH	TH	$	278	$	258	$	738	$	594	TH	$	305	$	278	$	810	$	738
BK	BK	272		245		755		605		BK	262		272		761		755
PLK	PLK	57		58		171		164		PLK	62		57		179		171
FHS										FHS	13		—		40		—
Adjusted EBITDA	Adjusted EBITDA	607		561		1,664		1,363		Adjusted EBITDA	642		607		1,790		1,664
Share-based compensation and non-cash incentive compensation expense	Share-based compensation and non-cash incentive compensation expense	25		19		71		63		Share-based compensation and non-cash incentive compensation expense	34		25		93		71

FHS Transaction costs										FHS Transaction costs	3		—		8		—
Corporate restructuring and tax advisory fees	Corporate restructuring and tax advisory fees	4		3		8		11		Corporate restructuring and tax advisory fees	12		4		21		8

Impact of equity method investments (a)	Impact of equity method investments (a)	11		20		22		42		Impact of equity method investments (a)	13		11		41		22
Other operating expenses (income), net	Other operating expenses (income), net	(16)		54		(50)		59		Other operating expenses (income), net	(27)		(16)		(68)		(50)
EBITDA	EBITDA	583		465		1,613		1,188		EBITDA	607		583		1,695		1,613
Depreciation and amortization	Depreciation and amortization	50		48		150		139		Depreciation and amortization	46		50		143		150
Income from operations	Income from operations	533		417		1,463		1,049		Income from operations	561		533		1,552		1,463
Interest expense, net	Interest expense, net	128		129		378		376		Interest expense, net	133		128		389		378
Loss on early extinguishment of debt	Loss on early extinguishment of debt	11		—		11		—		Loss on early extinguishment of debt	—		11		—		11
Income tax expense		65		65		83		62
Income tax expense (benefit)										Income tax expense (benefit)	(102)		65		17		83
Net income	Net income	$	329	$	223	$	991	$	611	Net income	$	530	$	329	$	1,146	$	991

(a)Represents (i) (income) loss from equity method investments and (ii) cash distributions received from our equity method investments. Cash distributions received from our equity method investments are included in segment income.

Note ~~17.~~18. Supplemental Financial Information

~~On February 17, 2017,~~ 1011778 B.C. Unlimited Liability Company (the “Parent Issuer”) and New Red Finance Inc. (the “Co-Issuer” and together with the Parent Issuer, the “Issuers”) entered into an amended credit agreement, as amended from time to time, that provides for obligations under the Credit Facilities. ~~On November 9, 2020, the~~The Issuers entered into the 2020 3.50% Senior Notes Indenture with respect to the 2020 3.50% Senior Notes. On October 5, 2020, the Issuers entered into the 2020 4.00% Senior Notes Indenture with respect to the 2020 4.00% Senior Notes. On April 7, 2020, the Issuers entered into the 2020 5.75% Senior Notes Indenture with respect to the 2020 5.75% Senior Notes. On November 19, 2019, the Issuers entered into the 2019 4.375% Senior Notes Indenture with respect to the 2019 4.375% Senior Notes. On September 24, 2019, the Issuers entered into the 2019 3.875% First Lien Senior Notes Indenture with respect to the 3.875% First Lien Senior ~~Notes. On May 17, 2017, the~~Notes due 2028. The Issuers entered into the ~~2017 4.25%~~3.500% First Lien Senior Notes Indenture with respect to the ~~2017 4.250%~~3.500% First Lien Senior ~~Notes.~~Notes due 2029. The Issuers entered into the 5.750% First Lien Senior Notes Indenture with respect to the 5.750% First Lien Senior Notes due 2025. The Issuers entered into the 4.375% Second Lien Senior Notes Indenture with respect to the 4.375% Second Lien Senior Notes due 2028. The Issuers entered into the 4.000% Second Lien Senior Notes Indenture with respect to the 4.000% Second Lien Senior Notes due 2030.

The agreement governing our Credit Facilities, the ~~2020 3.50%~~3.875% First Lien Senior Notes Indenture, the ~~2020 4.00%~~3.500% First Lien Senior Notes Indenture, the ~~2020 5.75%~~5.750% First Lien Senior Notes Indenture, the ~~2019~~ 4.375% ~~Senior Notes Indenture, the 2019 3.875%~~Second Lien Senior Notes Indenture and the ~~2017 4.25%~~4.000% Second Lien Senior Notes Indenture allow the financial reporting obligation of the Parent Issuer to be satisfied through the reporting of Partnership’s consolidated financial information, provided that the consolidated financial information of the Parent Issuer and its restricted subsidiaries is presented on a standalone basis.

The following represents the condensed consolidating financial information for the Parent Issuer and its restricted subsidiaries (“Consolidated Borrowers”) on a consolidated basis, together with eliminations, as of and for the periods indicated. The condensed consolidating financial information of Partnership is combined with the financial information of its wholly-owned subsidiaries that are also parent entities of the Parent Issuer and presented in a single column under the heading “RBILP”. The consolidating financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the Issuers and Partnership operated as independent entities.

Table of Contents

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Balance Sheets

(In millions of U.S. dollars)

As of September 30, ~~2021~~2022


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
ASSETS	ASSETS									ASSETS
Current assets:	Current assets:									Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,773	$	—	$	—	$	1,773	Cash and cash equivalents	$	946	$	—	$	—	$	946
Accounts and notes receivable, net	Accounts and notes receivable, net	537		—		—		537		Accounts and notes receivable, net	598		—		—		598
Inventories, net	Inventories, net	96		—		—		96		Inventories, net	129		—		—		129
Prepaids and other current assets	Prepaids and other current assets	178		—		—		178		Prepaids and other current assets	251		—		—		251
Total current assets	Total current assets	2,584		—		—		2,584		Total current assets	1,924		—		—		1,924
Property and equipment, net	Property and equipment, net	2,013		—		—		2,013		Property and equipment, net	1,913		—		—		1,913
Operating lease assets, net	Operating lease assets, net	1,118		—		—		1,118		Operating lease assets, net	1,056		—		—		1,056
Intangible assets, net	Intangible assets, net	10,652		—		—		10,652		Intangible assets, net	10,831		—		—		10,831
Goodwill	Goodwill	5,743		—		—		5,743		Goodwill	5,605		—		—		5,605
Net investment in property leased to franchisees	Net investment in property leased to franchisees	79		—		—		79		Net investment in property leased to franchisees	83		—		—		83
Intercompany receivable	Intercompany receivable	—		244		(244)		—		Intercompany receivable	—		243		(243)		—
Investment in subsidiaries	Investment in subsidiaries	—		4,108		(4,108)		—		Investment in subsidiaries	—		4,039		(4,039)		—
Other assets, net	Other assets, net	739		—		—		739		Other assets, net	1,145		—		—		1,145
Total assets	Total assets	$	22,928	$	4,352	$	(4,352)	$	22,928	Total assets	$	22,557	$	4,282	$	(4,282)	$	22,557
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY									LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:									Current liabilities:
Accounts and drafts payable	Accounts and drafts payable	$	592	$	—	$	—	$	592	Accounts and drafts payable	$	696	$	—	$	—	$	696
Other accrued liabilities	Other accrued liabilities	666		244		—		910		Other accrued liabilities	716		243		—		959
Gift card liability	Gift card liability	137		—		—		137		Gift card liability	148		—		—		148
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	113		—		—		113		Current portion of long-term debt and finance leases	117		—		—		117
Total current liabilities	Total current liabilities	1,508		244		—		1,752		Total current liabilities	1,677		243		—		1,920
Long-term debt, net of current portion	Long-term debt, net of current portion	12,379		—		—		12,379		Long-term debt, net of current portion	12,853		—		—		12,853
Finance leases, net of current portion	Finance leases, net of current portion	328		—		—		328		Finance leases, net of current portion	310		—		—		310
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,056		—		—		1,056		Operating lease liabilities, net of current portion	1,003		—		—		1,003
Other liabilities, net	Other liabilities, net	1,898		—		—		1,898		Other liabilities, net	1,044		—		—		1,044
Payables to affiliates	Payables to affiliates	244		—		(244)		—		Payables to affiliates	243		—		(243)		—
Deferred income taxes, net	Deferred income taxes, net	1,407		—		—		1,407		Deferred income taxes, net	1,388		—		—		1,388
Total liabilities	Total liabilities	18,820		244		(244)		18,820		Total liabilities	18,518		243		(243)		18,518
Partners’ capital:	Partners’ capital:									Partners’ capital:
Class A common units	Class A common units	—		8,731		—		8,731		Class A common units	—		8,570		—		8,570
Partnership exchangeable units	Partnership exchangeable units	—		(3,536)		—		(3,536)		Partnership exchangeable units	—		(3,508)		—		(3,508)
Common shares	Common shares	2,976		—		(2,976)		—		Common shares	2,410		—		(2,410)		—
Retained earnings	Retained earnings	2,219		—		(2,219)		—		Retained earnings	2,652		—		(2,652)		—
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,089)		(1,089)		1,089		(1,089)		Accumulated other comprehensive income (loss)	(1,025)		(1,025)		1,025		(1,025)
Total Partners' capital/shareholders' equity	Total Partners' capital/shareholders' equity	4,106		4,106		(4,106)		4,106		Total Partners' capital/shareholders' equity	4,037		4,037		(4,037)		4,037
Noncontrolling interests	Noncontrolling interests	2		2		(2)		2		Noncontrolling interests	2		2		(2)		2
Total equity	Total equity	4,108		4,108		(4,108)		4,108		Total equity	4,039		4,039		(4,039)		4,039
Total liabilities and equity	Total liabilities and equity	$	22,928	$	4,352	$	(4,352)	$	22,928	Total liabilities and equity	$	22,557	$	4,282	$	(4,282)	$	22,557

Table of Contents

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Balance Sheets

(In millions of U.S. dollars)

As of December 31, ~~2020~~2021


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
ASSETS	ASSETS									ASSETS
Current assets:	Current assets:									Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,560	$	—	$	—	$	1,560	Cash and cash equivalents	$	1,087	$	—	$	—	$	1,087
Accounts and notes receivable, net	Accounts and notes receivable, net	536		—		—		536		Accounts and notes receivable, net	547		—		—		547
Inventories, net	Inventories, net	96		—		—		96		Inventories, net	96		—		—		96
Prepaids and other current assets	Prepaids and other current assets	72		—		—		72		Prepaids and other current assets	86		—		—		86
Total current assets	Total current assets	2,264		—		—		2,264		Total current assets	1,816		—		—		1,816
Property and equipment, net	Property and equipment, net	2,031		—		—		2,031		Property and equipment, net	2,035		—		—		2,035
Operating lease assets. net	Operating lease assets. net	1,152		—		—		1,152		Operating lease assets. net	1,130		—		—		1,130
Intangible assets, net	Intangible assets, net	10,701		—		—		10,701		Intangible assets, net	11,417		—		—		11,417
Goodwill	Goodwill	5,739		—		—		5,739		Goodwill	6,006		—		—		6,006
Net investment in property leased to franchisees	Net investment in property leased to franchisees	66		—		—		66		Net investment in property leased to franchisees	80		—		—		80
Intercompany receivable	Intercompany receivable	—		239		(239)		—		Intercompany receivable	—		241		(241)		—
Investment in subsidiaries	Investment in subsidiaries	—		3,721		(3,721)		—		Investment in subsidiaries	—		3,853		(3,853)		—
Other assets, net	Other assets, net	824		—		—		824		Other assets, net	762		—		—		762
Total assets	Total assets	$	22,777	$	3,960	$	(3,960)	$	22,777	Total assets	$	23,246	$	4,094	$	(4,094)	$	23,246
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY									LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:									Current liabilities:
Accounts and drafts payable	Accounts and drafts payable	$	464	$	—	$	—	$	464	Accounts and drafts payable	$	614	$	—	$	—	$	614
Other accrued liabilities	Other accrued liabilities	596		239		—		835		Other accrued liabilities	706		241		—		947
Gift card liability	Gift card liability	191		—		—		191		Gift card liability	221		—		—		221
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	111		—		—		111		Current portion of long-term debt and finance leases	96		—		—		96
Total current liabilities	Total current liabilities	1,362		239		—		1,601		Total current liabilities	1,637		241		—		1,878
Long-term debt, net of current portion	Long-term debt, net of current portion	12,397		—		—		12,397		Long-term debt, net of current portion	12,916		—		—		12,916
Finance leases, net of current portion	Finance leases, net of current portion	315		—		—		315		Finance leases, net of current portion	333		—		—		333
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,082		—		—		1,082		Operating lease liabilities, net of current portion	1,070		—		—		1,070
Other liabilities, net	Other liabilities, net	2,236		—		—		2,236		Other liabilities, net	1,822		—		—		1,822
Payables to affiliates	Payables to affiliates	239		—		(239)		—		Payables to affiliates	241		—		(241)		—
Deferred income taxes, net	Deferred income taxes, net	1,425		—		—		1,425		Deferred income taxes, net	1,374		—		—		1,374
Total liabilities	Total liabilities	19,056		239		(239)		19,056		Total liabilities	19,393		241		(241)		19,393
Partners’ capital:	Partners’ capital:									Partners’ capital:
Class A common units	Class A common units	—		7,994		—		7,994		Class A common units	—		8,421		—		8,421
Partnership exchangeable units	Partnership exchangeable units	—		(3,002)		—		(3,002)		Partnership exchangeable units	—		(3,547)		—		(3,547)
Common shares	Common shares	3,026		—		(3,026)		—		Common shares	2,635		—		(2,635)		—
Retained earnings	Retained earnings	1,966		—		(1,966)		—		Retained earnings	2,239		—		(2,239)		—
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,275)		(1,275)		1,275		(1,275)		Accumulated other comprehensive income (loss)	(1,024)		(1,024)		1,024		(1,024)
Total Partners' capital/shareholders' equity	Total Partners' capital/shareholders' equity	3,717		3,717		(3,717)		3,717		Total Partners' capital/shareholders' equity	3,850		3,850		(3,850)		3,850
Noncontrolling interests	Noncontrolling interests	4		4		(4)		4		Noncontrolling interests	3		3		(3)		3
Total equity	Total equity	3,721		3,721		(3,721)		3,721		Total equity	3,853		3,853		(3,853)		3,853
Total liabilities and equity	Total liabilities and equity	$	22,777	$	3,960	$	(3,960)	$	22,777	Total liabilities and equity	$	23,246	$	4,094	$	(4,094)	$	23,246

Table of Contents

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Three Months Ended September 30, ~~2021~~2022

Consolidated Borrowers RBILP Eliminations Consolidated
Revenues:
Sales $ 621 $ — $ — $ 621
Franchise and property revenues 639 — — 639
Advertising revenues 235 — — 235
Total revenues 1,495 — — 1,495
Operating costs and expenses:
Cost of sales 490 — — 490
Franchise and property expenses 121 — — 121
Advertising expenses 237 — — 237
General and administrative expenses 123 — — 123
(Income) loss from equity method investments 7 — — 7
Other operating expenses (income), net (16) — — (16)
Total operating costs and expenses 962 — — 962
Income from operations 533 — — 533
Interest expense, net 128 — — 128
Loss on early extinguishment of debt 11 — — 11
Income before income taxes 394 — — 394
Income tax expense 65 — — 65
Net income 329 — — 329
Equity in earnings of consolidated subsidiaries — 329 (329) —
Net income (loss) 329 329 (329) 329
Net income (loss) attributable to noncontrolling interests 1 1 (1) 1
Net income (loss) attributable to common unitholders $ 328 $ 328 $ (328) $ 328
Comprehensive income (loss) $ 252 $ 252 $ (252) $ 252


	Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:
Sales	$	759	$	—	$	—	$	759
Franchise and property revenues	698		—		—		698
Advertising revenues and other services	269		—		—		269
Total revenues	1,726		—		—		1,726
Operating costs and expenses:
Cost of sales	615		—		—		615
Franchise and property expenses	137		—		—		137
Advertising expenses and other services	276		—		—		276
General and administrative expenses	156		—		—		156
(Income) loss from equity method investments	8		—		—		8
Other operating expenses (income), net	(27)		—		—		(27)
Total operating costs and expenses	1,165		—		—		1,165
Income from operations	561		—		—		561
Interest expense, net	133		—		—		133

Income before income taxes	428		—		—		428
Income tax expense (benefit)	(102)		—		—		(102)
Net income	530		—		—		530
Equity in earnings of consolidated subsidiaries	—		530		(530)		—
Net income (loss)	530		530		(530)		530
Net income (loss) attributable to noncontrolling interests	1		1		(1)		1
Net income (loss) attributable to common unitholders	$	529	$	529	$	(529)	$	529
Comprehensive income (loss)	$	343	$	343	$	(343)	$	343

Table of Contents

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Nine Months Ended September 30, ~~2021~~2022


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:	Revenues:									Revenues:
Sales	Sales	$	1,718	$	—	$	—	$	1,718	Sales	$	2,076	$	—	$	—	$	2,076
Franchise and property revenues	Franchise and property revenues	1,801		—		—		1,801		Franchise and property revenues	1,989		—		—		1,989
Advertising revenues		674		—		—		674
Advertising revenues and other services										Advertising revenues and other services	751		—		—		751
Total revenues	Total revenues	4,193		—		—		4,193		Total revenues	4,816		—		—		4,816
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of sales	Cost of sales	1,358		—		—		1,358		Cost of sales	1,693		—		—		1,693
Franchise and property expenses	Franchise and property expenses	358		—		—		358		Franchise and property expenses	392		—		—		392
Advertising expenses		711		—		—		711
Advertising expenses and other services										Advertising expenses and other services	782		—		—		782
General and administrative expenses	General and administrative expenses	341		—		—		341		General and administrative expenses	435		—		—		435
(Income) loss from equity method investments	(Income) loss from equity method investments	12		—		—		12		(Income) loss from equity method investments	30		—		—		30
Other operating expenses (income), net	Other operating expenses (income), net	(50)		—		—		(50)		Other operating expenses (income), net	(68)		—		—		(68)
Total operating costs and expenses	Total operating costs and expenses	2,730		—		—		2,730		Total operating costs and expenses	3,264		—		—		3,264
Income from operations	Income from operations	1,463		—		—		1,463		Income from operations	1,552		—		—		1,552
Interest expense, net	Interest expense, net	378		—		—		378		Interest expense, net	389		—		—		389
Loss on early extinguishment of debt		11		—		—		11

Income before income taxes	Income before income taxes	1,074		—		—		1,074		Income before income taxes	1,163		—		—		1,163
Income tax expense		83		—		—		83
Income tax expense (benefit)										Income tax expense (benefit)	17		—		—		17
Net income	Net income	991		—		—		991		Net income	1,146		—		—		1,146
Equity in earnings of consolidated subsidiaries	Equity in earnings of consolidated subsidiaries	—		991		(991)		—		Equity in earnings of consolidated subsidiaries	—		1,146		(1,146)		—
Net income (loss)	Net income (loss)	991		991		(991)		991		Net income (loss)	1,146		1,146		(1,146)		1,146
Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	3		3		(3)		3		Net income (loss) attributable to noncontrolling interests	3		3		(3)		3
Net income (loss) attributable to common unitholders	Net income (loss) attributable to common unitholders	$	988	$	988	$	(988)	$	988	Net income (loss) attributable to common unitholders	$	1,143	$	1,143	$	(1,143)	$	1,143
Comprehensive income (loss)	Comprehensive income (loss)	$	1,177	$	1,177	$	(1,177)	$	1,177	Comprehensive income (loss)	$	1,145	$	1,145	$	(1,145)	$	1,145

Table of Contents

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Three Months Ended September 30, ~~2020~~2021


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:	Revenues:									Revenues:
Sales	Sales	$	541	$	—	$	—	$	541	Sales	$	621	$	—	$	—	$	621
Franchise and property revenues	Franchise and property revenues	577		—		—		577		Franchise and property revenues	635		—		—		635
Advertising revenues		219		—		—		219
Advertising revenues and other services										Advertising revenues and other services	239		—		—		239
Total revenues	Total revenues	1,337		—		—		1,337		Total revenues	1,495		—		—		1,495
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of sales	Cost of sales	418		—		—		418		Cost of sales	490		—		—		490
Franchise and property expenses	Franchise and property expenses	125		—		—		125		Franchise and property expenses	121		—		—		121
Advertising expenses		209		—		—		209
Advertising expenses and other services										Advertising expenses and other services	245		—		—		245
General and administrative expenses	General and administrative expenses	96		—		—		96		General and administrative expenses	115		—		—		115
(Income) loss from equity method investments	(Income) loss from equity method investments	18		—		—		18		(Income) loss from equity method investments	7		—		—		7
Other operating expenses (income), net	Other operating expenses (income), net	54		—		—		54		Other operating expenses (income), net	(16)		—		—		(16)
Total operating costs and expenses	Total operating costs and expenses	920		—		—		920		Total operating costs and expenses	962		—		—		962
Income from operations	Income from operations	417		—		—		417		Income from operations	533		—		—		533
Interest expense, net	Interest expense, net	129		—		—		129		Interest expense, net	128		—		—		128

Loss on early extinguishment of debt										Loss on early extinguishment of debt	11		—		—		11
Income before income taxes	Income before income taxes	288		—		—		288		Income before income taxes	394		—		—		394
Income tax expense		65		—		—		65
Income tax expense (benefit)										Income tax expense (benefit)	65		—		—		65
Net income	Net income	223		—		—		223		Net income	329		—		—		329
Equity in earnings of consolidated subsidiaries	Equity in earnings of consolidated subsidiaries	—		223		(223)		—		Equity in earnings of consolidated subsidiaries	—		329		(329)		—
Net income (loss)	Net income (loss)	223		223		(223)		223		Net income (loss)	329		329		(329)		329
Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	—		—		—		—		Net income (loss) attributable to noncontrolling interests	1		1		(1)		1
Net income (loss) attributable to common unitholders	Net income (loss) attributable to common unitholders	$	223	$	223	$	(223)	$	223	Net income (loss) attributable to common unitholders	$	328	$	328	$	(328)	$	328
Comprehensive income (loss)	Comprehensive income (loss)	$	269	$	269	$	(269)	$	269	Comprehensive income (loss)	$	252	$	252	$	(252)	$	252

Table of Contents

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Nine Months Ended September 30, ~~2020~~2021


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:	Revenues:									Revenues:
Sales	Sales	$	1,450	$	—	$	—	$	1,450	Sales	$	1,718	$	—	$	—	$	1,718
Franchise and property revenues	Franchise and property revenues	1,552		—		—		1,552		Franchise and property revenues	1,795		—		—		1,795
Franchise contributions for advertising		608		0		0		608
Advertising revenues and other services										Advertising revenues and other services	680						680
Total revenues	Total revenues	3,610		—		—		3,610		Total revenues	4,193		—		—		4,193
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of sales	Cost of sales	1,156		—		—		1,156		Cost of sales	1,358		—		—		1,358
Franchise and property expenses	Franchise and property expenses	380		—		—		380		Franchise and property expenses	358		—		—		358
Franchise advertising and related expenses		638		—		—		638
Selling, general and administrative expenses		292		—		—		292
Advertising expenses and other services										Advertising expenses and other services	725		—		—		725
General and administrative expenses										General and administrative expenses	327		—		—		327
(Income) loss from equity method investments	(Income) loss from equity method investments	36		—		—		36		(Income) loss from equity method investments	12		—		—		12
Other operating expenses (income), net	Other operating expenses (income), net	59		—		—		59		Other operating expenses (income), net	(50)		—		—		(50)
Total operating costs and expenses	Total operating costs and expenses	2,561		—		—		2,561		Total operating costs and expenses	2,730		—		—		2,730
Income from operations	Income from operations	1,049		—		—		1,049		Income from operations	1,463		—		—		1,463
Interest expense, net	Interest expense, net	376		—		—		376		Interest expense, net	378		—		—		378

Loss on early extinguishment of debt										Loss on early extinguishment of debt	11		—		—		11
Income before income taxes	Income before income taxes	673		—		—		673		Income before income taxes	1,074		—		—		1,074
Income tax expense		62		—		—		62
Income tax expense (benefit)										Income tax expense (benefit)	83		—		—		83
Net income	Net income	611		—		—		611		Net income	991		—		—		991
Equity in earnings of consolidated subsidiaries	Equity in earnings of consolidated subsidiaries	—		611		(611)		—		Equity in earnings of consolidated subsidiaries	—		991		(991)		—
Net income (loss)	Net income (loss)	611		611		(611)		611		Net income (loss)	991		991		(991)		991
Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	1		1		(1)		1		Net income (loss) attributable to noncontrolling interests	3		3		(3)		3
Net income (loss) attributable to common unitholders	Net income (loss) attributable to common unitholders	$	610	$	610	$	(610)	$	610	Net income (loss) attributable to common unitholders	$	988	$	988	$	(988)	$	988
Comprehensive income (loss)	Comprehensive income (loss)	$	263	$	263	$	(263)	$	263	Comprehensive income (loss)	$	1,177	$	1,177	$	(1,177)	$	1,177

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

(In millions of U.S. dollars)

Nine months ended September 30, ~~2021~~2022


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Cash flows from operating activities:	Cash flows from operating activities:									Cash flows from operating activities:
Net income	Net income	$	991	$	991	$	(991)	$	991	Net income	$	1,146	$	1,146	$	(1,146)	$	1,146
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:									Adjustments to reconcile net income to net cash provided by operating activities:
Equity in loss (earnings) of consolidated subsidiaries	Equity in loss (earnings) of consolidated subsidiaries	—		(991)		991		—		Equity in loss (earnings) of consolidated subsidiaries	—		(1,146)		1,146		—
Depreciation and amortization	Depreciation and amortization	150		—		—		150		Depreciation and amortization	143		—		—		143
Premiums paid and non-cash loss on early extinguishment of debt		11		—		—		11

Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount	20		—		—		20		Amortization of deferred financing costs and debt issuance discount	21		—		—		21
(Income) loss from equity method investments	(Income) loss from equity method investments	12		—		—		12		(Income) loss from equity method investments	30		—		—		30
(Gain) loss on remeasurement of foreign denominated transactions	(Gain) loss on remeasurement of foreign denominated transactions	(58)		—		—		(58)		(Gain) loss on remeasurement of foreign denominated transactions	(82)		—		—		(82)
Net (gains) losses on derivatives	Net (gains) losses on derivatives	65		—		—		65		Net (gains) losses on derivatives	17		—		—		17
Share-based compensation expense		62		—		—		62
Share-based compensation and non-cash incentive compensation expense										Share-based compensation and non-cash incentive compensation expense	93		—		—		93
Deferred income taxes	Deferred income taxes	35		—		—		35		Deferred income taxes	(29)		—		—		(29)
Other	Other	(14)		—		—		(14)		Other	8		—		—		8
Changes in current assets and liabilities, excluding acquisitions and dispositions:	Changes in current assets and liabilities, excluding acquisitions and dispositions:									Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	Accounts and notes receivable	11		—		—		11		Accounts and notes receivable	(93)		—		—		(93)
Inventories and prepaids and other current assets	Inventories and prepaids and other current assets	(3)		—		—		(3)		Inventories and prepaids and other current assets	(67)		—		—		(67)
Accounts and drafts payable	Accounts and drafts payable	129		—		—		129		Accounts and drafts payable	113		—		—		113
Other accrued liabilities and gift card liability	Other accrued liabilities and gift card liability	(78)		—		—		(78)		Other accrued liabilities and gift card liability	(74)		—		—		(74)
Tenant inducements paid to franchisees	Tenant inducements paid to franchisees	(5)		—		—		(5)		Tenant inducements paid to franchisees	(13)		—		—		(13)
Other long-term assets and liabilities	Other long-term assets and liabilities	(73)		—		—		(73)		Other long-term assets and liabilities	(146)		—		—		(146)
Net cash provided by operating activities	Net cash provided by operating activities	1,255		—		—		1,255		Net cash provided by operating activities	1,067		—		—		1,067
Cash flows from investing activities:	Cash flows from investing activities:									Cash flows from investing activities:
Payments for property and equipment	Payments for property and equipment	(70)		—		—		(70)		Payments for property and equipment	(52)		—		—		(52)
Net proceeds from disposal of assets, restaurant closures, and refranchisings	Net proceeds from disposal of assets, restaurant closures, and refranchisings	14		—		—		14		Net proceeds from disposal of assets, restaurant closures, and refranchisings	11		—		—		11

Net payments in connection with purchase of Firehouse Subs										Net payments in connection with purchase of Firehouse Subs	(12)		—		—		(12)
Settlement/sale of derivatives, net	Settlement/sale of derivatives, net	2		—		—		2		Settlement/sale of derivatives, net	22		—		—		22
Other investing activities, net	Other investing activities, net	(15)		—		—		(15)		Other investing activities, net	(35)		—		—		(35)
Net cash (used for) provided by investing activities	Net cash (used for) provided by investing activities	(69)		—		—		(69)		Net cash (used for) provided by investing activities	(66)		—		—		(66)
Cash flows from financing activities:	Cash flows from financing activities:									Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt		802		—		—		802
Proceeds from long-term debt										Proceeds from long-term debt	2		—		—		2
Repayments of long-term debt and finance leases	Repayments of long-term debt and finance leases	(865)		—		—		(865)		Repayments of long-term debt and finance leases	(71)		—		—		(71)
Payment of financing costs		(7)		—		—		(7)

Distributions on Class A common and Partnership exchangeable units	Distributions on Class A common and Partnership exchangeable units	—		(730)		—		(730)		Distributions on Class A common and Partnership exchangeable units	—		(728)		—		(728)
Distribution to RBI for repurchase of RBI common shares	Distribution to RBI for repurchase of RBI common shares	—		(182)		—		(182)		Distribution to RBI for repurchase of RBI common shares	—		(326)		—		(326)
Capital contribution from RBI	Capital contribution from RBI	60		—		—		60		Capital contribution from RBI	7		—		—		7
Distributions from subsidiaries	Distributions from subsidiaries	(912)		912		—		—		Distributions from subsidiaries	(1,054)		1,054		—		—
(Payments) proceeds from derivatives	(Payments) proceeds from derivatives	(45)		—		—		(45)		(Payments) proceeds from derivatives	8		—		—		8
Other financing activities, net	Other financing activities, net	(3)		—		—		(3)		Other financing activities, net	(3)		—		—		(3)
Net cash (used for) provided by financing activities	Net cash (used for) provided by financing activities	(970)		—		—		(970)		Net cash (used for) provided by financing activities	(1,111)		—		—		(1,111)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(3)		—		—		(3)		Effect of exchange rates on cash and cash equivalents	(31)		—		—		(31)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	213		—		—		213		Increase (decrease) in cash and cash equivalents	(141)		—		—		(141)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,560		—		—		1,560		Cash and cash equivalents at beginning of period	1,087		—		—		1,087
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,773	$	—	$	—	$	1,773	Cash and cash equivalents at end of period	$	946	$	—	$	—	$	946

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

(In millions of U.S. dollars)

Nine Months Ended September 30, ~~2020~~2021


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Cash flows from operating activities:	Cash flows from operating activities:									Cash flows from operating activities:
Net income	Net income	$	611	$	611	$	(611)	$	611	Net income	$	991	$	991	$	(991)	$	991
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:									Adjustments to reconcile net income to net cash provided by operating activities:
Equity in loss (earnings) of consolidated subsidiaries	Equity in loss (earnings) of consolidated subsidiaries	—		(611)		611		—		Equity in loss (earnings) of consolidated subsidiaries	—		(991)		991		—
Depreciation and amortization	Depreciation and amortization	139		—		—		139		Depreciation and amortization	150		—		—		150

Premiums paid and non-cash loss on extinguishment of debt										Premiums paid and non-cash loss on extinguishment of debt	11		—		—		11
Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount	19		—		—		19		Amortization of deferred financing costs and debt issuance discount	20		—		—		20
(Income) loss from equity method investments	(Income) loss from equity method investments	36		—		—		36		(Income) loss from equity method investments	12		—		—		12
(Gain) loss on remeasurement of foreign denominated transactions	(Gain) loss on remeasurement of foreign denominated transactions	54		—		—		54		(Gain) loss on remeasurement of foreign denominated transactions	(58)		—		—		(58)
Net (gains) losses on derivatives	Net (gains) losses on derivatives	14		—		—		14		Net (gains) losses on derivatives	65		—		—		65
Share-based compensation expense		55		—		—		55
Share-based compensation and non-cash incentive compensation expense										Share-based compensation and non-cash incentive compensation expense	71		—		—		71
Deferred income taxes	Deferred income taxes	(120)		—		—		(120)		Deferred income taxes	35		—		—		35
Other	Other	23		—		—		23		Other	(14)		—		—		(14)
Changes in current assets and liabilities, excluding acquisitions and dispositions:	Changes in current assets and liabilities, excluding acquisitions and dispositions:									Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	Accounts and notes receivable	(83)		—		—		(83)		Accounts and notes receivable	11		—		—		11
Inventories and prepaids and other current assets	Inventories and prepaids and other current assets	(21)		—		—		(21)		Inventories and prepaids and other current assets	(3)		—		—		(3)
Accounts and drafts payable	Accounts and drafts payable	(110)		—		—		(110)		Accounts and drafts payable	129		—		—		129
Other accrued liabilities and gift card liability	Other accrued liabilities and gift card liability	(12)		—		—		(12)		Other accrued liabilities and gift card liability	(87)		—		—		(87)
Tenant inducements paid to franchisees	Tenant inducements paid to franchisees	(7)		—		—		(7)		Tenant inducements paid to franchisees	(5)		—		—		(5)
Other long-term assets and liabilities	Other long-term assets and liabilities	(5)		—		—		(5)		Other long-term assets and liabilities	(73)		—		—		(73)
Net cash provided by operating activities	Net cash provided by operating activities	593		—		—		593		Net cash provided by operating activities	1,255		—		—		1,255
Cash flows from investing activities:	Cash flows from investing activities:									Cash flows from investing activities:
Payments for property and equipment	Payments for property and equipment	(71)		—		—		(71)		Payments for property and equipment	(70)		—		—		(70)
Net proceeds from disposal of assets, restaurant closures, and refranchisings	Net proceeds from disposal of assets, restaurant closures, and refranchisings	9		—		—		9		Net proceeds from disposal of assets, restaurant closures, and refranchisings	14		—		—		14

Settlement/sale of derivatives, net	Settlement/sale of derivatives, net	29		—		—		29		Settlement/sale of derivatives, net	2		—		—		2

Other investing activities, net										Other investing activities, net	(15)		—		—		(15)
Net cash (used for) provided by investing activities	Net cash (used for) provided by investing activities	(33)		—		—		(33)		Net cash (used for) provided by investing activities	(69)		—		—		(69)
Cash flows from financing activities:	Cash flows from financing activities:									Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt	Proceeds from revolving line of credit and long-term debt	1,585		—		—		1,585		Proceeds from revolving line of credit and long-term debt	802		—		—		802
Repayments of revolving line of credit, long-term debt and finance leases		(1,071)		—		—		(1,071)
Repayments of long-term debt and finance leases										Repayments of long-term debt and finance leases	(865)		—		—		(865)
Payment of financing costs	Payment of financing costs	(10)		—		—		(10)		Payment of financing costs	(7)		—		—		(7)
Distributions on Class A common and Partnership exchangeable units	Distributions on Class A common and Partnership exchangeable units	—		(716)		—		(716)		Distributions on Class A common and Partnership exchangeable units	—		(730)		—		(730)
Distribution to RBI for repurchase of RBI common shares										Distribution to RBI for repurchase of RBI common shares	—		(182)		—		(182)
Capital contribution from RBI	Capital contribution from RBI	60		—		—		60		Capital contribution from RBI	60		—		—		60
Distributions from subsidiaries	Distributions from subsidiaries	(716)		716		—		—		Distributions from subsidiaries	(912)		912		—		—
(Payments) proceeds from derivatives	(Payments) proceeds from derivatives	(29)		—		—		(29)		(Payments) proceeds from derivatives	(45)		—		—		(45)
Other financing activities, net	Other financing activities, net	(1)		—		—		(1)		Other financing activities, net	(3)		—		—		(3)
Net cash (used for) provided by financing activities	Net cash (used for) provided by financing activities	(182)		—		—		(182)		Net cash (used for) provided by financing activities	(970)		—		—		(970)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(7)		—		—		(7)		Effect of exchange rates on cash and cash equivalents	(3)		—		—		(3)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	371		—		—		371		Increase (decrease) in cash and cash equivalents	213		—		—		213
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,533		—		—		1,533		Cash and cash equivalents at beginning of period	1,560		—		—		1,560
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,904	$	—	$	—	$	1,904	Cash and cash equivalents at end of period	$	1,773	$	—	$	—	$	1,773

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Note ~~18.~~19. Subsequent Events

Cash Distributions/Dividends

On October 5, ~~2021,~~2022, RBI paid a cash dividend of ~~$0.53~~$0.54 per RBI common share to common shareholders of record on September 21, ~~2021.~~2022. Partnership made a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares and also made a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.53~~$0.54 per exchangeable unit to holders of record on September 21, ~~2021.~~2022.

Subsequent to September 30, ~~2021,~~2022, the RBI board of directors declared a cash dividend of ~~$0.53~~$0.54 per RBI common share, which will be paid on January ~~5, 2022~~4, 2023 to RBI common shareholders of record on December 21, ~~2021.~~2022. Partnership will make a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.53~~$0.54 per Partnership exchangeable unit, and the record date and payment date for such distribution will be the same as the record date and payment date for the cash dividend per RBI common share set forth above.

Derivatives

We executed various derivative transactions during October 2022 as detailed in Note 14 – Derivative Instruments.

*****

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes thereto included in Part I, Item 1 “Financial Statements” of this report.

The following discussion includes information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws as described in further detail under “Special Note Regarding Forward-Looking Statements” set forth below. Actual results may differ materially from the results discussed in the forward-looking statements. Please refer to the risks and further discussion in the “Special Note Regarding Forward-Looking Statements” below.

We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”). However, this Management’s Discussion and Analysis of Financial Condition and Results of Operations also contains certain non-GAAP financial measures to assist readers in understanding our performance. Non-GAAP financial measures either exclude or include amounts that are not reflected in the most directly comparable measure calculated and presented in accordance with GAAP. Where non-GAAP financial measures are used, we have provided the most directly comparable measures calculated and presented in accordance with U.S. GAAP, a reconciliation to GAAP measures and a discussion of the reasons why management believes this information is useful to it and may be useful to investors.

Operating results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for the fiscal year and our key business measures, as discussed below, may decrease for any future period. Unless the context otherwise requires, all references in this section to “Partnership”, “we”, “us” or “our” are to Restaurant Brands International Limited Partnership and its subsidiaries, collectively.

Overview

We are one of the world’s largest quick service restaurant (“QSR”) companies with ~~approximately $34~~over $35 billion in annual system-wide sales and over ~~27,000~~29,000 restaurants in more than 100 countries as of September 30, ~~2021.~~2022. Our Tim Hortons®, Burger King®, Popeyes®,and ~~Popeyes®~~Firehouse Subs® brands have similar franchised business models with complementary daypart mixes and product platforms. Our ~~three~~four iconic brands are managed independently while benefiting from global scale and sharing of best practices.

Tim Hortons restaurants are quick service restaurants with a menu that includes premium blend coffee, tea, espresso-based hot and cold specialty drinks, fresh baked goods, including donuts, Timbits®, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups, and more. Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken, and other specialty sandwiches, french fries, soft drinks, and other affordably-priced food items. Popeyes restaurants are quick service restaurants featuring a unique “Louisiana” style menu that includes fried chicken, fried shrimp and other seafood, red beans and rice, and other regional items. Firehouse Subs restaurants are quick service restaurants featuring hot and hearty subs piled high with quality meats and cheese as well as chopped salads, chili and soups, signature and other sides, soft drinks and local specialties.

WeCommencing upon the acquisition of Firehouse Subs in December 2021, we have ~~three~~four operating and reportable segments: (1) Tim Hortons (“TH”); (2) Burger King (“BK”); ~~and~~ (3) Popeyes Louisiana Kitchen (“PLK”); and (4) Firehouse Subs (“FHS”). Our business generates revenue from the following sources: (i) franchise and advertising revenues and other services, consisting primarily of royalties and advertising fund contributions based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing, and distribution, as well as sales to retailers.

In September 2021, we announced targets to reduce greenhouse gas emissions by 50% by 2030, as approved by the Science Based Targets initiative, as well as a commitment to achieving net-zero emissions by 2050. While most of the impact is from scope 3 emissions that are not under our direct control, reaching these targets will require us to devote resources to support changes by suppliers and franchisees.

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~~COVID-19~~

~~The global crisis resulting from the spread of coronavirus (“COVID-19”) impacted our global restaurant operations for the three and nine months ended September 30, 2021 and 2020.~~

While the impact of COVID-19 on system-wide sales growth, system-wide sales, comparable sales and net restaurant growth was significant for the three and nine months ended September 30, 2020, in the 2021 periods these metrics were affected to a lesser extent, with variations among brands and regions. During 2020 and the nine months ended September 30, 2021, substantially all TH, BK and PLK restaurants remained open in the U.S. and Canada, some with limited operations, such as drive-thru, takeout and delivery (where applicable), reduced, if any, dine-in capacity, and/or restrictions on hours of operation. During the three months ended September 30, 2021, on average 97% of our restaurants were open worldwide, including approximately 98% of our restaurants in the U.S. and Canada and approximately 96% of our restaurants in the rest of the world. By contrast, during the three months ended September 30, 2020, on average 94% of our restaurants were open worldwide, including approximately 97% of our restaurants in the U.S. and Canada and approximately 91% of our restaurants in the rest of the world. During the nine months ended September 30, 2020, a number of markets required temporary complete closures while implementing lockdown orders. While many regions have since eased restrictions, certain markets continue to be impacted and re-imposed restrictions in the nine months ended September 30, 2021. We expect local conditions to continue to dictate limitations on restaurant operations, capacity, and hours of operation.

During the three and nine months ended September 30, 2021, COVID-19 contributed to labor challenges, which in some regions resulted in reduced operating hours and service modes at select restaurants as well as supply chain pressures.

With the pandemic affecting consumer behavior, the importance of digital sales, including delivery, has grown. We expect to continue to support enhancements of our digital and marketing capabilities. While we do not know the full future impact COVID-19 will have on our business, we expect to see a continued impact from COVID-19 on our results in 2021.

Operating Metrics

We evaluate our restaurants and assess our business based on the following operating metrics:

•System-wide sales growth refers to the percentage change in sales at all franchise restaurants and Company restaurants (referred to as system-wide sales) in one period from the same period in the prior year.

•Comparable sales refers to the percentage change in restaurant sales in one period from the same prior year period for restaurants that have been open for 13 months or longer for TH, BK and BKFHS and 17 months or longer for PLK. Additionally, if a restaurant is closed for a significant portion of a month, the restaurant is excluded from the monthly comparable sales calculation.

•System-wide sales growth and comparable sales are measured on a constant currency basis, which means the results exclude the effect of foreign currency translation (“FX Impact”). For system-wide sales growth and comparable sales, we calculate the FX Impact by translating prior year results at current year monthly average exchange rates.

•Unless otherwise stated, system-wide sales growth, system-wide sales and comparable sales are presented on a system-wide basis, which means they include franchise restaurants and Company restaurants. System-wide results are driven by our franchise restaurants, as approximately 100% of system-wide restaurants are franchised. Franchise sales represent sales at all franchise restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and advertising fund contributions are calculated based on a percentage of franchise sales.

•Net restaurant growth refers to the net increase in restaurant count (openings, net of permanent closures) over a trailing twelve month period, divided by the restaurant count at the beginning of the trailing twelve month period.

These metrics are important indicators of the overall direction of our business, including trends in sales and the effectiveness of each brand’s marketing, operations and growth initiatives.

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	Three Months Ended September 30,						Nine Months Ended September 30,
Key Business Metrics	2022			2021			2022			2021
System-wide sales growth
TH	13.4		%	11.1		%	14.2		%	12.0		%
BK	14.5		%	12.3		%	15.2		%	16.0		%
PLK	12.3		%	4.4		%	8.8		%	7.3		%
Consolidated (a)	14.0		%	10.8		%	14.0		%	13.8		%
FHS (b)	3.8		%	19.3		%	4.4		%	27.6		%
System-wide sales (in US$ millions)
TH	$	1,945		$	1,774		$	5,339		$	4,790
BK	$	6,668		$	6,212		$	18,930		$	17,268
PLK	$	1,532		$	1,392		$	4,418		$	4,122
FHS	$	289		$	—		$	853		$	—
Consolidated (a)	$	10,434		$	9,378		$	29,540		$	26,180
FHS (b)	$	—		$	278		$	—		$	818
Comparable sales
TH	9.8		%	8.9		%	10.2		%	10.7		%
BK	10.3		%	7.9		%	10.2		%	8.5		%
PLK	3.1		%	(2.4)		%	0.5		%	(0.5)		%
Consolidated (a)	9.1		%	6.5		%	8.7		%	7.4		%
FHS (b)	0.0		%	14.9		%	0.8		%	23.1		%

							As of September 30,
							2022			2021
Net restaurant growth
TH							5.2		%	4.1		%
BK							2.5		%	1.3		%
PLK							8.9		%	5.5		%
Consolidated (a)							3.9		%	2.4		%
FHS (b)							2.5		%	2.0		%
Restaurant count
TH							5,405			5,137
BK							19,401			18,923
PLK							3,928			3,607
FHS							1,234			—
Consolidated							29,968			27,667
FHS (b)							—			1,204

(a) Consolidated system-wide sales growth, consolidated net restaurant growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented. Consolidated system-wide sales do not include the results of Firehouse Subs for 2021.

(b) 2021 Firehouse Subs figures are shown for informational purposes only, consistent with its fiscal calendar.

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War in Ukraine

During the first quarter of 2022, we shared a number of actions that we have taken to date as a result of the events related to Russia's military invasion of Ukraine. Burger King is our only brand with restaurants in Russia, all of which are operated under a master franchise arrangement. We suspended all corporate support for the Russian market, including operations, marketing, and supply chain support in addition to refusing approvals for new investment and expansion. While we currently include results from our franchised restaurants in Russia within reported key business metrics, we do not expect to generate any profits from restaurants in Russia in 2022.

Below are the RBI consolidated and BK segment operational highlights excluding the results from Russia for the three and nine months ended September 30, 2022 and 2021.


	Three Months Ended September 30,						Nine Months Ended September 30,
Key Business Metrics (excluding Russia)	2022			2021			2022			2021
System-wide sales growth
BK	13.6		%	11.7		%	14.3		%	15.2		%
Consolidated (a)	13.4		%	10.4		%	13.4		%	13.3		%
System-wide sales (in US$ millions)
BK	$	6,346		$	6,017		$	18,127		$	16,730
Consolidated (a)	$	10,112		$	9,182		$	28,737		$	25,642
Comparable sales
BK	9.6		%	7.4		%	9.4		%	7.9		%
Consolidated (a)	8.6		%	6.1		%	8.1		%	7.0		%

							As of September 30,
							2022			2021
Net restaurant growth
BK							2.5		%	1.3		%
Consolidated (a)							3.9		%	2.4		%
Restaurant count
BK							18,581			18,131
Consolidated							29,148			26,875

(a)Consolidated system-wide sales growth, consolidated net restaurant growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented. Consolidated system-wide sales do not include the results of Firehouse Subs for 2021.

COVID-19 and Macro Economic Environment

The global crisis resulting from the spread of coronavirus (“COVID-19”) impacted our global restaurant operations for the three and nine months ended September 30, 2022 and 2021, though in 2022 the impact was more modest than in the prior year. During the three and nine months ended September 30, 2022 and 2021, substantially all restaurants remained open, some with limited operations, such as drive-thru, takeout and delivery (where applicable), reduced, if any, dine-in capacity, and/or restrictions on hours of operation. Certain markets periodically required temporary closures while implementing government mandated lockdown orders. For example, while most regions have eased restrictions, increases in cases and new variants caused certain markets, including China, to re-impose temporary restrictions as a result of government mandates. We expect local conditions to continue to dictate limitations on restaurant operations, capacity, and hours of operation. COVID-19 has also contributed to labor challenges, which in some regions resulted in reduced operating hours and service modes at select restaurants as well as supply chain pressures.

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In addition, during 2022, there have been increases in commodity, labor, and energy costs partially due to the macroeconomic impact of both COVID-19 and the War in Ukraine. Further significant increases in inflation could affect the global, Canadian and U.S. economies, resulting in foreign exchange pressures and rising interest rates which could have an adverse impact on our business and results of operations if we and our franchisees are not able to adjust prices sufficiently to offset the effect of cost increases without negatively impacting consumer demand.

Results of Operations for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

Tabular amounts in millions of U.S. dollars unless noted otherwise. Segment income may not calculate exactly due to rounding.


Consolidated	Consolidated	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Consolidated	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2021		2020		Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)							2022		2021		Favorable / (Unfavorable)						2022		2021		Favorable / (Unfavorable)
Revenues:	Revenues:																					Revenues:
Sales	Sales	$	621	$	541	$	80	$	25	$	55	$	1,718	$	1,450	$	268	$	92	$	176	Sales	$	759	$	621	$	138	$	(19)	$	157	$	2,076	$	1,718	$	358	$	(38)	$	396
Franchise and property revenues	Franchise and property revenues	639		577		62		13		49		1,801		1,552		249		52		197		Franchise and property revenues	698		635		63		(26)		89		1,989		1,795		194		(54)		248
Advertising revenues		235		219		16		3		13		674		608		66		11		55
Advertising revenues and other services																						Advertising revenues and other services	269		239		30		(3)		33		751		680		71		(6)		77
Total revenues	Total revenues	1,495		1,337		158		41		117		4,193		3,610		583		155		428		Total revenues	1,726		1,495		231		(48)		279		4,816		4,193		623		(98)		721
Operating costs and expenses:	Operating costs and expenses:																					Operating costs and expenses:
Cost of sales	Cost of sales	490		418		(72)		(19)		(53)		1,358		1,156		(202)		(73)		(129)		Cost of sales	615		490		(125)		15		(140)		1,693		1,358		(335)		30		(365)
Franchise and property expenses	Franchise and property expenses	121		125		4		(5)		9		358		380		22		(20)		42		Franchise and property expenses	137		121		(16)		3		(19)		392		358		(34)		6		(40)
Advertising expenses		237		209		(28)		(3)		(25)		711		638		(73)		(13)		(60)
Advertising expenses and other services																						Advertising expenses and other services	276		245		(31)		4		(35)		782		725		(57)		7		(64)
General and administrative expenses	General and administrative expenses	123		96		(27)		(1)		(26)		341		292		(49)		(8)		(41)		General and administrative expenses	156		115		(41)		3		(44)		435		327		(108)		7		(115)
(Income) loss from equity method investments	(Income) loss from equity method investments	7		18		11		—		11		12		36		24		—		24		(Income) loss from equity method investments	8		7		(1)		—		(1)		30		12		(18)		—		(18)
Other operating expenses (income), net	Other operating expenses (income), net	(16)		54		70		(2)		72		(50)		59		109		(2)		111		Other operating expenses (income), net	(27)		(16)		11		(4)		15		(68)		(50)		18		(6)		24
Total operating costs and expenses	Total operating costs and expenses	962		920		(42)		(30)		(12)		2,730		2,561		(169)		(116)		(53)		Total operating costs and expenses	1,165		962		(203)		21		(224)		3,264		2,730		(534)		44		(578)
Income from operations	Income from operations	533		417		116		11		105		1,463		1,049		414		39		375		Income from operations	561		533		28		(27)		55		1,552		1,463		89		(54)		143
Interest expense, net	Interest expense, net	128		129		1		—		1		378		376		(2)		(1)		(1)		Interest expense, net	133		128		(5)		—		(5)		389		378		(11)		—		(11)
Loss on early extinguishment of debt	Loss on early extinguishment of debt	11		—		(11)		—		(11)		11		—		(11)		—		(11)		Loss on early extinguishment of debt	—		11		11		—		11		—		11		11		—		11
Income before income taxes	Income before income taxes	394		288		106		11		95		1,074		673		401		38		363		Income before income taxes	428		394		34		(27)		61		1,163		1,074		89		(54)		143
Income tax expense		65		65		—		2		(2)		83		62		(21)		2		(23)
Income tax expense (benefit)																						Income tax expense (benefit)	(102)		65		167		—		167		17		83		66		2		64
Net income	Net income	$	329	$	223	$	106	$	13	$	93	$	991	$	611	$	380	$	40	$	340	Net income	$	530	$	329	$	201	$	(27)	$	228	$	1,146	$	991	$	155	$	(52)	$	207

(a)We calculate the FX Impact by translating prior year results at current year monthly average exchange rates. We analyze these results on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements.

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TH Segment	TH Segment	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		TH Segment	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2021		2020		Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)							2022		2021		Favorable / (Unfavorable)						2022		2021		Favorable / (Unfavorable)
Revenues:	Revenues:																					Revenues:
Sales	Sales	$	592	$	506	$	86	$	25	$	61	$	1,621	$	1,345	$	276	$	92	$	184	Sales	$	710	$	592	$	118	$	(19)	$	137	$	1,937	$	1,621	$	316	$	(38)	$	354
Franchise and property revenues	Franchise and property revenues	230		205		25		11		14		639		547		92		38		54		Franchise and property revenues	250		230		20		(7)		27		694		639		55		(15)		70
Advertising revenues		63		51		12		3		9		166		136		30		9		21
Advertising revenues and other services																						Advertising revenues and other services	73		63		10		(2)		12		199		166		33		(4)		37
Total revenues	Total revenues	885		762		123		39		84		2,426		2,028		398		139		259		Total revenues	1,033		885		148		(28)		176		2,830		2,426		404		(57)		461
Cost of sales	Cost of sales	462		388		(74)		(19)		(55)		1,266		1,061		(205)		(73)		(132)		Cost of sales	568		462		(106)		15		(121)		1,558		1,266		(292)		30		(322)
Franchise and property expenses	Franchise and property expenses	84		80		(4)		(5)		1		251		242		(9)		(18)		9		Franchise and property expenses	87		84		(3)		3		(6)		252		251		(1)		6		(7)
Advertising expenses		67		46		(21)		(2)		(19)		197		154		(43)		(11)		(32)
Advertising expenses and other services																						Advertising expenses and other services	73		68		(5)		3		(8)		211		198		(13)		5		(18)
Segment G&A	Segment G&A	27		20		(7)		(1)		(6)		77		65		(12)		(4)		(8)		Segment G&A	31		27		(4)		—		(4)		92		77		(15)		1		(16)
Segment depreciation and amortization (b)	Segment depreciation and amortization (b)	31		28		(3)		(2)		(1)		94		82		(12)		(6)		(6)		Segment depreciation and amortization (b)	26		31		5		1		4		83		94		11		2		9
Segment income (c)	Segment income (c)	278		258		20		13		7		738		594		144		39		105		Segment income (c)	305		278		27		(9)		36		810		738		72		(18)		90

(b)Segment depreciation and amortization consists of depreciation and amortization included in cost of sales, franchise and property expenses and advertising ~~expenses.~~expenses and other services.

(c)TH segment income includes $3$5 million and $2$3 million of cash distributions received from equity method investments for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. TH segment income includes $9$11 million and $6$9 million of cash distributions received from equity method investments for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

BK Segment Three Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact Nine Months Ended September 30, Variance FX Impact (a) Variance Excluding FX Impact
2021 2020 Favorable / (Unfavorable) 2021 2020 Favorable / (Unfavorable)
Revenues:
Sales $ 16 $ 17 $ (1) $ — $ (1) $ 49 $ 49 $ — $ — $ —
Franchise and property revenues 337 305 32 2 30 950 811 139 14 125
Advertising revenues 114 111 3 — 3 334 308 26 2 24
Total revenues 467 433 34 2 32 1,333 1,168 165 16 149
Cost of sales 16 16 — — — 49 49 — — —
Franchise and property expenses 34 42 8 — 8 100 129 29 (2) 31
Advertising expenses 110 105 (5) (1) (4) 337 318 (19) (2) (17)
Segment G&A 47 37 (10) — (10) 128 104 (24) (2) (22)
Segment depreciation and amortization (b) 12 13 1 — 1 36 37 1 — 1
Segment income 272 245 27 2 25 755 605 150 11 139


BK Segment	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
	2022		2021		Favorable / (Unfavorable)						2022		2021		Favorable / (Unfavorable)
Revenues:
Sales	$	19	$	16	$	3	$	—	$	3	$	52	$	49	$	3	$	—	$	3
Franchise and property revenues	349		333		16		(18)		34		1,002		944		58		(37)		95
Advertising revenues and other services	123		118		5		(1)		6		353		340		13		(2)		15
Total revenues	491		467		24		(19)		43		1,407		1,333		74		(39)		113
Cost of sales	19		16		(3)		—		(3)		55		49		(6)		—		(6)
Franchise and property expenses	46		34		(12)		—		(12)		125		100		(25)		—		(25)
Advertising expenses and other services	130		118		(12)		1		(13)		372		351		(21)		2		(23)
Segment G&A	45		38		(7)		1		(8)		130		114		(16)		3		(19)
Segment depreciation and amortization (b)	11		12		1		1		—		35		36		1		1		—
Segment income	262		272		(10)		(16)		6		761		755		6		(34)		40

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PLK Segment	PLK Segment	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		PLK Segment	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2021		2020		Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)							2022		2021		Favorable / (Unfavorable)						2022		2021		Favorable / (Unfavorable)
Revenues:	Revenues:																					Revenues:
Sales	Sales	$	13	$	18	$	(5)	$	—	$	(5)	$	48	$	56	$	(8)	$	—	$	(8)	Sales	$	21	$	13	$	8	$	—	$	8	$	58	$	48	$	10	$	—	$	10
Franchise and property revenues	Franchise and property revenues	72		67		5		—		5		212		194		18		—		18		Franchise and property revenues	78		72		6		(1)		7		230		212		18		(2)		20
Advertising revenues		58		57		1		—		1		174		164		10		—		10
Advertising revenues and other services																						Advertising revenues and other services	65		58		7		—		7		189		174		15		—		15
Total revenues	Total revenues	143		142		1		—		1		434		414		20		—		20		Total revenues	164		143		21		(1)		22		477		434		43		(2)		45
Cost of sales	Cost of sales	12		14		2		—		2		43		46		3		—		3		Cost of sales	19		12		(7)		—		(7)		54		43		(11)		—		(11)
Franchise and property expenses	Franchise and property expenses	3		3		—		—		—		7		9		2		—		2		Franchise and property expenses	2		3		1		—		1		9		7		(2)		—		(2)
Advertising expenses		60		58		(2)		—		(2)		177		166		(11)		—		(11)
Advertising expenses and other services																						Advertising expenses and other services	66		59		(7)		—		(7)		191		176		(15)		—		(15)
Segment G&A	Segment G&A	15		12		(3)		—		(3)		42		35		(7)		—		(7)		Segment G&A	16		15		(1)		—		(1)		48		42		(6)		—		(6)
Segment depreciation and amortization (b)	Segment depreciation and amortization (b)	2		2		—		—		—		5		6		1		—		1		Segment depreciation and amortization (b)	2		1		(1)		—		(1)		5		5		—		—		—
Segment income	Segment income	57		58		(1)		—		(1)		171		164		7		—		7		Segment income	62		57		5		(1)		6		179		171		8		(2)		10

Three Months Ended
September 30, Nine Months Ended
September 30,
Key Business Metrics 2021 2020 2021 2020
System-wide sales growth
    TH 11.1 % (13.7) % 12.0 % (19.1) %
    BK 12.3 % (7.9) % 16.0 % (12.1) %
    PLK 4.4 % 21.5 % 7.3 % 25.7 %
    Consolidated 10.8 % (5.4) % 13.8 % (8.9) %
System-wide sales
    TH $ 1,774 $ 1,520 $ 4,790 $ 4,010
    BK $ 6,212 $ 5,484 $ 17,268 $ 14,610
    PLK $ 1,392 $ 1,331 $ 4,122 $ 3,836
    Consolidated $ 9,378 $ 8,335 $ 26,180 $ 22,456
Comparable sales
    TH 8.9 % (12.5) % 10.7 % (17.2) %
    BK 7.9 % (7.0) % 8.5 % (7.9) %
    PLK (2.4) % 17.4 % (0.5) % 22.5 %
As of September 30,
2021 2020
Net restaurant growth
    TH 4.1 % 1.0 %
    BK 1.3 % 2.4 %
    PLK 5.5 % 7.1 %
    Consolidated 2.4 % 2.7 %
Restaurant count
    TH 5,137 4,934
    BK 18,923 18,675
    PLK 3,607 3,418
    Consolidated 27,667 27,027


FHS Segment	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Revenues:
Sales	$	9	$	29
Franchise and property revenues	21		63
Advertising revenues and other services	8		10
Total revenues	38		102
Cost of sales	9		26
Franchise and property expenses	2		6
Advertising expenses and other services	7		8
Segment G&A	9		25
Segment depreciation and amortization (b)	1		2
Segment income	13		40

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Comparable Sales

~~For~~ TH ~~and BK, restaurant operations~~comparable sales were ~~less impacted by COVID-19~~9.8% during the three months ended September 30, ~~2021 than in the same period in 2020, resulting in significant increases in system-wide sales growth and~~2022, including Canada comparable sales of 11.1%. TH comparable sales were 10.2% during the ~~three and~~ nine months ended September 30, ~~2021.~~2022, including Canada comparable sales of 11.9%.

THBK comparable sales were ~~8.9%~~10.3% during the three months ended September 30, ~~2021, including Canada comparable sales of 9.5%. TH comparable sales were 10.7% during the nine months ended September 30, 2021, including Canada comparable sales of 10.6%.~~

~~BK comparable sales were 7.9% during the three months ended September 30, 2021,~~2022, including rest of the world comparable sales of ~~16.2%~~15.2% and U.S. comparable sales of ~~(1.6)%~~4.0%. BK comparable sales were ~~8.5%~~10.2% during the nine months ended September 30, ~~2021,~~2022, including rest of the world comparable sales of ~~11.3%~~17.7% and U.S. comparable sales of ~~5.7%~~1.3%.

PLK comparable sales were ~~(2.4)%~~3.1% during the three months ended September 30, ~~2021,~~2022, including U.S. comparable sales of ~~(4.5)%~~1.3%. PLK comparable sales were ~~(0.5)%~~0.5% during the nine months ended September 30, ~~2021,~~2022, including U.S. comparable sales of ~~(2.1)~~(1.1)%.

FHS comparable sales were flat during the three months ended September 30, 2022, including U.S. comparable sales of 0.3%. FHS comparable sales were 0.8% during the nine months ended September 30, 2022, including U.S. comparable sales of 1.1%.

Sales and Cost of Sales

Sales include TH supply chain sales and sales from Company restaurants. TH supply chain sales represent sales of products, supplies and restaurant equipment, as well as sales to retailers. Sales from Company restaurants, including sales by our consolidated TH Restaurant VIEs, represent restaurant-level sales to our guests.

Cost of sales includes costs associated with the management of our TH supply chain, including cost of goods, direct labor and depreciation, as well as the cost of products sold to retailers. Cost of sales also includes food, paper and labor costs of Company restaurants, including our consolidated TH Restaurants VIEs.

During the three months ended September 30, ~~2021,~~2022, the increase in sales was driven by an increase of ~~$61~~$137 million in our TH segment, ~~and a favorable FX Impact~~the inclusion of ~~$25~~FHS of $9 million, ~~partially offset by a decrease~~an increase of $5$8 million in our PLK segment, and ~~a decrease~~an increase of $1$3 million in our BK ~~segment.~~segment, partially offset by an unfavorable FX Impact of $19 million. The increase in our TH segment was ~~driven by an increase in supply chain sales due to an increase in system-wide sales.~~

During the nine months ended September 30, 2021, the increase in sales was driven by an increase of $184 million in our TH segment and a favorable FX Impact of $92 million, partially offset by a decrease of $8 million in our PLK segment. The increase in our TH segment wasprimarily driven by an increase in supply chain sales due to an increase in system-wide sales as well as increases in commodity prices passed on to franchisees and an increase in sales to retailers.

During the nine months ended September 30, 2022, the increase in sales was driven by an increase of $354 million in our TH segment, the inclusion of FHS of $29 million, an increase of $10 million in our PLK segment, and an increase of $3 million in our BK segment, partially offset by an unfavorable FX Impact of $38 million. The increase in our TH segment was primarily driven by an increase in supply chain sales due to an increase in system-wide sales as well as increases in commodity prices passed on to franchisees and an increase in sales to retailers.

During the three months ended September 30, ~~2021,~~2022, the increase in cost of sales was driven by an increase of ~~$55~~$121 million in our TH segment, the inclusion of FHS of $9 million, an increase of $7 million in our PLK segment, and an ~~unfavorable FX Impact~~increase of ~~$19~~$3 million in our BK segment, partially offset by a ~~decrease~~favorable FX Impact of ~~$2 million in our PLK segment.~~$15 million. The increase in our TH segment was primarily driven by an increase in supply chain ~~sales.~~sales, increases in commodity prices and an increase in sales to retailers.

During the nine months ended September 30, ~~2021,~~2022, the increase in cost of sales was driven by an increase of ~~$132~~$322 million in our TH segment, the inclusion of FHS of $26 million, an increase of $11 million in our PLK segment, and an ~~unfavorable FX Impact~~increase of ~~$73~~$6 million in our BK segment, partially offset by a ~~decrease~~favorable FX Impact of ~~$3 million in our PLK segment.~~$30 million. The increase in our TH segment was primarily driven by an increase in supply chain sales, increases in commodity prices and an increase in sales to ~~retailers, partially offset by a decrease in bad debt expense.~~retailers.

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Franchise and Property

Franchise and property revenues consist primarily of royalties earned on franchise sales, rents from real estate leased or subleased to franchisees, franchise fees, and other revenue. Franchise and property expenses consist primarily of depreciation of properties leased to franchisees, rental expense associated with properties subleased to franchisees, amortization of franchise agreements, and bad debt expense (recoveries).

During the three months ended September 30, ~~2021,~~2022, the increase in franchise and property revenues was driven by an increase of ~~$30~~$34 million in our BK segment, an increase of ~~$14~~$27 million in our TH segment, the inclusion of FHS of $21 million, and an increase of $5$7 million in our PLK segment, ~~and a favorable~~partially offset by an unfavorable FX Impact of ~~$13~~$26 million. The increases were primarily driven by increases in royalties in ~~all of~~ our BK, TH and PLK segments and increases in rent in our TH segment, as a result of increases in system-wide sales.

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During the nine months ended September 30, ~~2021,~~2022, the increase in franchise and property revenues was driven by an increase of ~~$125~~$95 million in our BK segment, an increase of ~~$54~~$70 million in our TH segment, the inclusion of FHS of $63 million, and an increase of ~~$18~~$20 million in our PLK segment, ~~and a favorable~~partially offset by an unfavorable FX Impact of ~~$52~~$54 million. The increases were primarily driven by increases in royalties in ~~all of~~ our BK, TH and PLK segments and increases in rent in our TH segment, as a result of increases in system-wide ~~sales and decreases in rent relief provided to eligible franchisees.~~sales.

During the three months ended September 30, ~~2021,~~2022, the ~~decrease~~increase in franchise and property expenses was driven by ~~a decrease~~an increase of $8$12 million in our BK segment, an increase of $6 million in our TH segment, and the inclusion of FHS of $2 million, partially offset by a favorable FX Impact of $3 million and a decrease of $1 million in our ~~TH segment, partially offset by an unfavorable FX Impact of $5 million.~~PLK segment. The ~~decrease~~increase in our BK segment was primarily related to ~~a decrease~~the timing of convention expenses, which were offset by convention revenues and incurred in ~~property expenses~~the third quarter in 2022 compared to the fourth quarter in 2021, and bad debt ~~recoveries~~expense in the current year compared to bad debt ~~expense~~recoveries in the prior year. The increase in our TH segment was primarily related to convention expenses in the current year, which were mostly offset by convention revenues, with no convention expenses incurred in the prior year.

During the nine months ended September 30, ~~2021,~~2022, the ~~decrease~~increase in franchise and property expenses was driven by ~~a decrease~~an increase of ~~$31~~$25 million in our BK segment, ~~a decrease~~an increase of $9$7 million in our TH segment, the inclusion of FHS of $6 million, and ~~a decrease~~an increase of $2 million in our PLK segment, partially offset by ~~an unfavorable~~a favorable FX ~~Impact~~impact of ~~$20~~$6 million. The ~~decrease~~increase in our BK segment was primarily related to bad debt ~~recoveries~~expenses in the current year, primarily related to Russia, compared to bad debt ~~expense~~recoveries in the prior year and the timing of convention expenses, which were offset by convention revenues and incurred in the third quarter in 2022 compared to the fourth quarter in 2021. The increase in our TH segment was primarily related to convention expenses in the current year, which were mostly offset by convention revenues, with no convention expenses incurred in the prior year.

Advertising and Other Services

Advertising revenues and other services consist primarily of advertising contributions earned on franchise sales and are based on a percentage of ~~system-wide~~ sales reported by franchise restaurants and intended to fund advertising expenses. Other services consist primarily of fees from digital sales that partially offset expenses related to technology initiatives. Advertising expenses and other services consist primarily of expenses relating to marketing, advertising and promotion, including market research, production, advertising costs, sales promotions, social media campaigns, technology initiatives, depreciation and amortization and other related support functions for the respective brands. We generally manage advertising expenses to equal advertising revenues in the long term, however in some periods there may be a mismatch in the timing of revenues and ~~expense.~~expense or higher expenses due to our support initiatives behind the marketing programs.

During the three months ended September 30, ~~2021,~~2022, the increase in advertising revenues and other services was driven by an increase of $9$12 million in our TH segment, the inclusion of FHS of $8 million, an increase of ~~$3 million in our BK segment, an increase of $1~~$7 million in our PLK segment, and ~~a favorable~~an increase of $6 million in our BK segment, partially offset by an unfavorable FX Impact of $3 million. The increases in ~~all of~~ our TH, PLK and BK segments were primarily driven by increases in system-wide sales.

During the nine months ended September 30, ~~2021,~~2022, the increase in advertising revenues and other services was driven by an increase of ~~$24~~$37 million in our TH segment, an increase of $15 million in our BK segment, an increase of ~~$21 million in our TH segment, an increase of $10~~$15 million in our PLK segment, and ~~a favorable~~the inclusion of FHS of $10 million, partially offset by an unfavorable FX Impact of ~~$11~~$6 million. The increases in ~~all of~~ our TH, BK and PLK segments were primarily driven by increases in system-wide sales.

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During the three months ended September 30, ~~2021,~~2022, the increase in advertising expenses and other services was driven by an increase of ~~$19~~$13 million in our BK segment, an increase of $8 million in our TH segment, an increase of ~~$4 million in our BK segment, an increase of $2~~$7 million in our PLK segment, and ~~an unfavorable~~the inclusion of FHS of $7 million, partially offset by a favorable FX Impact of $3$4 million. The ~~increase~~increases in ~~all of~~ our BK, TH and PLK segments ~~was~~were driven primarily ~~driven~~ by ~~an increase~~increases in advertising revenues and ~~for~~other services. Additionally, our BK segment reflects increases in expenses related to technology initiatives and bad debt expenses in the current year compared to bad debt recoveries in the prior year and our TH segment ~~also driven by~~reflects the non-recurrence of our support behind the prior year marketing program in Canada.

During the nine months ended September 30, ~~2021,~~2022, the increase in advertising expenses and other services was driven by an increase of ~~$32~~$23 million in our BK segment, an increase of $18 million in our TH segment, an increase of ~~$17 million in our BK segment, an increase of $11~~$15 million in our PLK segment, and ~~an unfavorable~~the inclusion of FHS of $8 million, partially offset by a favorable FX Impact of ~~$13~~$7 million. The ~~increase~~increases in ~~all of~~ our BK, TH and PLK segments ~~was~~were driven primarily ~~driven~~ by ~~an increase~~increases in advertising revenues and ~~for~~other services. Additionally, our BK segment reflects increases in expenses related to technology initiatives and bad debt expenses in the current year compared to bad debt recoveries in the prior year and our TH segment ~~also driven by~~reflects the non-recurrence of our support behind the prior year marketing program in Canada.

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General and Administrative Expenses

Our general and administrative expenses consisted of the following:


		Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance						Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance
							$			%								$			%									$			%								$			%
				2021			2020			Favorable / (Unfavorable)					2021			2020			Favorable / (Unfavorable)						2022			2021			Favorable / (Unfavorable)					2022			2021			Favorable / (Unfavorable)
Segment G&A:	Segment G&A:																							Segment G&A:
TH	TH	$	27		$	20		$	(7)		(35.0)	%	$	77		$	65		$	(12)		(18.5)	%	TH	$	31		$	27		$	(4)		(14.8)	%	$	92		$	77		$	(15)		(19.5)	%
BK	BK	47			37			(10)			(27.0)	%	128			104			(24)			(23.1)	%	BK	45			38			(7)			(18.4)	%	130			114			(16)			(14.0)	%
PLK	PLK	15			12			(3)			(25.0)	%	42			35			(7)			(20.0)	%	PLK	16			15			(1)			(6.7)	%	48			42			(6)			(14.3)	%
FHS																								FHS	9			—			(9)			NM		25			—			(25)			NM
Share-based compensation and non-cash incentive compensation expense	Share-based compensation and non-cash incentive compensation expense	25			19			(6)			(31.6)	%	71			63			(8)			(12.7)	%	Share-based compensation and non-cash incentive compensation expense	34			25			(9)			(36.0)	%	93			71			(22)			(31.0)	%
Depreciation and amortization	Depreciation and amortization	5			5			—			—	%	15			14			(1)			(7.1)	%	Depreciation and amortization	6			6			—			—	%	18			15			(3)			(20.0)	%
FHS Transaction costs																								FHS Transaction costs	3			—			(3)			NM		8			—			(8)			NM
Corporate restructuring and tax advisory fees	Corporate restructuring and tax advisory fees	4			3			(1)			(33.3)	%	8			11			3			27.3	%	Corporate restructuring and tax advisory fees	12			4			(8)			(200.0)	%	21			8			(13)			(162.5)	%

General and administrative expenses	General and administrative expenses	$	123		$	96		$	(27)		(28.1)	%	$	341		$	292		$	(49)		(16.8)	%	General and administrative expenses	$	156		$	115		$	(41)		(35.7)	%	$	435		$	327		$	(108)		(33.0)	%

NM - not meaningful

Segment general and administrative expenses (“Segment G&A”) consist primarily of salary and employee-related costs for non-restaurant employees, professional fees, information technology systems, and general overhead for our corporate offices. Segment G&A excludes share-based compensation and non-cash incentive compensation expense, depreciation and amortization, FHS Transaction costs and Corporate restructuring and tax advisory fees. ~~The increase in Segment G&A for all segments during~~

During the three and nine months ended September 30, ~~2021 was~~2022, the increases in Segment G&A for our TH, BK and PLK segments were primarily driven by higher salary and employee-related costs for non-restaurant employees, largely a result of hiring across a number of key areas including operations and ~~ongoing investments in digital and technology. In addition, the year over year change in Segment G&A at TH and BK was impacted by unfavorable FX movements.~~franchising.

During the three and nine months ended September 30, ~~2021,~~2022, the increase in share-based compensation and non-cash incentive compensation expense was primarily due to an increase in equity awards granted during 2022, shorter vesting periods for equity awards granted in 2022 and 2021, and for the nine months ended September 30, 2022 the non-recurrence of equity award forfeitures during 2021.

~~Corporate restructuring~~In connection with the Firehouse Subs acquisition, we incurred certain non-recurring fees and ~~tax advisory~~expenses (“FHS Transaction costs”) consisting of professional fees, ~~arise primarily from professional advisory~~compensation related expenses and ~~consulting services associated~~integration costs. We expect to incur additional FHS Transaction costs during the remainder of 2022 and early 2023.

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In connection with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movement within our structure, including services related to significant tax reform legislation, regulations and related restructuring ~~initiatives.~~initiatives, we incurred expenses primarily from professional advisory and consulting services (“Corporate restructuring and tax advisory fees”). We expect to incur additional Corporate restructuring and tax advisory fees during the remainder of 2022 and 2023.

(Income) Loss from Equity Method Investments

(Income) loss from equity method investments reflects our share of investee net income or loss and non-cash dilution gains or losses from changes in our ownership interests in equity method ~~investees, and basis difference amortization.~~investees.

The change in (income) loss from equity method investments during the three and nine months ended September 30, ~~2021~~2022 was primarily driven by ~~a decrease~~an increase in equity method investment net losses that we recognized during the current year.

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Other Operating Expenses (Income), net

Our other operating expenses (income), net ~~were comprised~~consisted of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	2	$	4	$	1	$	2	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	1	$	2	$	2	$	1
Litigation settlements (gains) and reserves, net	Litigation settlements (gains) and reserves, net	4		4		7		5		Litigation settlements (gains) and reserves, net	—		4		3		7
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange	(23)		44		(58)		54		Net losses (gains) on foreign exchange	(30)		(23)		(82)		(58)
Other, net	Other, net	1		2		—		(2)		Other, net	2		1		9		—
Other operating expenses (income), net	Other operating expenses (income), net	$	(16)	$	54	$	(50)	$	59	Other operating expenses (income), net	$	(27)	$	(16)	$	(68)	$	(50)

Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and ~~liabilities.~~liabilities, primarily those denominated in Euros and Canadian dollars.

Interest Expense, net

Our interest expense, net and the weighted average interest rate on our long-term debt were as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021			2020			2021			2020				2022			2021			2022			2021
Interest expense, net	Interest expense, net	$	128		$	129		$	378		$	376		Interest expense, net	$	133		$	128		$	389		$	378
Weighted average interest rate on long-term debt	Weighted average interest rate on long-term debt	4.2		%	4.5		%	4.2		%	4.6		%	Weighted average interest rate on long-term debt	4.5		%	4.2		%	4.2		%	4.2		%

During the three months ended September 30, 2022, interest expense, net increased primarily due to an increase in the weighted average interest rate driven by increases in interest rates and an increase in long-term debt. During the nine months ended September 30, ~~2021,~~2022, interest expense, net ~~was consistent year-over-year.~~increased primarily due to an increase in long-term debt. We expect interest rates to continue to increase during the remainder of 2022 and into 2023.

Income Tax Expense (Benefit)

Our effective tax rate was ~~16.7%~~(23.8)% and ~~22.6%~~16.7% for the three months ended September 30, 2022 and 2021, ~~and 2020,~~ respectively. The effective tax rate for the three months ended September 30, 2022 included a net decrease in tax reserves of $171 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 39.9%. Our effective tax rate was unfavorably impacted by changes to the relative mix of our income from multiple tax jurisdictions and ~~the impact of internal financing arrangements.~~lower excess tax benefits from equity-based compensation, partially offset by favorable structural changes. There may continue to be some quarter-to-quarter volatility of our effective tax rate as our mix of income from multiple tax jurisdictions

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and related income forecasts change due to recent macroeconomic events such as the ~~effects~~COVID-19 pandemic, the war in Ukraine and higher levels of ~~COVID-19.~~inflation.

Our effective tax rate was ~~7.7%~~1.5% and ~~9.2%~~7.7% for the nine months ended September 30, 2022 and 2021, respectively. The effective tax rate for the nine months ended September 30, 2022 included a net decrease in tax reserves of $171 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 14.7%. Our effective tax rate was favorably impacted by structural changes, partially offset by unfavorable changes to the relative mix of our income from multiple tax jurisdictions and ~~2020, respectively.~~lower excess tax benefits from equity-based compensation. The effective tax rate for the nine months ended September 30, 2021 included a net decrease in tax reserves of $87 million related primarily to expiring statutes of ~~limitations~~limitation for certain prior tax years which decreased the effective tax rate by 8.1%. ~~The effective tax rate for~~

On December 28, 2021, the U.S. Treasury Department released final regulations (T.D. 9959, published in the Federal Register on January 4, 2022) restricting the ability to credit certain foreign taxes, applicable prospectively starting January 1, 2022. Due to these new regulations, we released discretely during the three and nine months ended September 30, ~~2020 reflects~~2022 a ~~$64 million benefit due to an increase in deferred~~portion of the valuation allowance on our foreign tax ~~assets which decreased the effective tax rate by 9.5%.~~credit carryforwards. Based on our current analysis, we do not expect these regulations to have a material, ongoing impact as we anticipate being in an excess credit position prospectively.

On August 16, 2022, President Biden signed into law the ~~analysis~~Inflation Reduction Act of ~~final~~2022 (“IRA”) which contains provisions effective January 1, 2023, including a 15% corporate alternative minimum tax based on adjusted financial statement income. While we do not currently expect the IRA to have a material impact on our consolidated financial statements, we will continue to evaluate its effect as further guidance related to the Tax Cuts and Jobs Act (the "Tax Act") received during the 2020 period, a deferred tax asset was recorded. Our effective tax rate was also impacted by changes to the relative mix of our income from multiple tax jurisdictions, the impact of internal financing arrangements and the impact of excess tax benefits from equity-based compensation.

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becomes available.

Net Income

We reported net income of $530 million for the three months ended September 30, 2022, compared to net income of $329 million for the three months ended September 30, ~~2021, compared to net income of $223 million for the three months ended September 30, 2020.~~2021. The increase in net income is primarily due to ~~a $70~~an income tax benefit of $102 million ~~favorable change~~ in the ~~results from other operating expenses (income),~~current year compared to an income tax expense of $65 million in the prior year, a $27 ~~million increase in BK segment income, a $20~~ million increase in TH segment income, ~~net, a $9 million favorable change from~~ the ~~impact~~inclusion of equity method investments, and a $1 million decrease in interest expense, net. These factors were partially offset by an $11 million loss on early extinguishment of debt in the current quarter, a $6 million increase in share-based compensation and non-cash incentive compensation, a $2 million increase in depreciation and amortization, a $1 million decrease in PLKFHS segment ~~income, and a $1 million increase in Corporate restructuring and tax advisory fees. Amounts above include a total favorable FX Impact to net~~ income of $13 ~~million.~~

~~We reported net income of $991~~ million, ~~for the nine months ended September 30, 2021, compared to net income of $611 million for the nine months ended September 30, 2020. The increase in net income is primarily due to~~ a ~~$150 million increase in BK segment income, a $144 million increase in TH segment income, a $109~~$11 million favorable change in the results from other operating expenses (income), net, the non-recurrence of $11 million of loss on early extinguishment of debt, a ~~$20 million favorable change from the impact of equity method investments, a $7~~$5 million increase in PLK segment income, and a $3$4 million decrease in ~~Corporate restructuring~~depreciation and ~~tax advisory fees.~~amortization. These factors were partially offset by a ~~$21~~$10 million ~~increase~~decrease in BK segment income, ~~tax expense, an $11 million loss on early extinguishment of debt in the current year, an $11 million increase in depreciation and amortization, an $8~~a $9 million increase in share-based compensation and non-cash incentive compensation expense, an $8 million increase in Corporate restructuring and tax advisory fees, a $2$5 million increase in interest expense, ~~net.~~net, $3 million of FHS transaction costs and a $2 million unfavorable change from the impact of equity method investments. Amounts above include a total ~~favorable~~unfavorable FX Impact to net income of $27 million.

We reported net income of $1,146 million for the nine months ended September 30, 2022, compared to net income of $991 million for the nine months ended September 30, 2021. The increase in net income is primarily due to a $72 million increase in TH segment income, a $66 million decrease in income tax expense, the inclusion of FHS segment income of $40 million, a $18 million favorable change in the results from other operating expenses (income), net, the non-recurrence of $11 million of loss on early extinguishment of debt, an $8 million increase in PLK segment income, a $7 million decrease in depreciation and amortization, and a $6 million increase in BK segment income. These factors were partially offset by a $22 million increase in share-based compensation and non-cash incentive compensation expense, a $19 million unfavorable change from the impact of equity method investments, a $13 million increase in Corporate restructuring and tax advisory fees, an $11 million increase in interest expense, net, and $8 million of FHS transaction costs. Amounts above include a total unfavorable FX Impact to net income of $52 million.

Non-GAAP Reconciliations

The table below contains information regarding EBITDA and Adjusted EBITDA, which are non-GAAP measures. These non-GAAP measures do not have a standardized meaning under U.S. GAAP and may differ from similar captioned measures of other companies in our industry. We believe that these non-GAAP measures are useful to investors in assessing our operating performance, as they provide them with the same tools that management uses to evaluate our performance and is responsive to questions we receive from both investors and analysts. By disclosing these non-GAAP measures, we intend to provide investors with a consistent comparison of our operating results and trends for the periods presented. EBITDA is defined as earnings (net income or loss) before interest expense, net, loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA excluding (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net and, (iv) income/expenses from non-recurring projects and

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non-operating activities. For the periods referenced, ~~this~~income/expenses from non-recurring projects and non-operating activities included (i) non-recurring fees and expense incurred in connection with the Firehouse Acquisition consisting of professional fees, compensation related expenses and integration costs; and (ii) costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including services related to significant tax reform legislation, regulations and related restructuring initiatives. Management believes that these types of expenses are either not related to our underlying profitability drivers or not likely to re-occur in the foreseeable future and the varied timing, size and nature of these projects may cause volatility in our results unrelated to the performance of our core business that does not reflect trends of our core operations.

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Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management’s assessment of our operating ~~business.~~performance. Adjusted EBITDA, as defined above, also represents our measure of segment income for each of our ~~three~~four operating segments.


		Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance						Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance
							$			%								$			%									$			%								$			%
				2021			2020			Favorable / (Unfavorable)					2021			2020			Favorable / (Unfavorable)						2022			2021			Favorable / (Unfavorable)					2022			2021			Favorable / (Unfavorable)
Segment income:	Segment income:																							Segment income:
TH	TH	$	278		$	258		$	20		7.6	%	$	738		$	594		$	144		24.1	%	TH	$	305		$	278		$	27		9.6	%	$	810		$	738		$	72		9.7	%
BK	BK	272			245			27			10.8	%	755			605			150			24.7	%	BK	262			272			(10)			(3.8)	%	761			755			6			0.8	%
PLK	PLK	57			58			(1)			(2.6)	%	171			164			7			4.2	%	PLK	62			57			5			10.4	%	179			171			8			5.0	%
FHS																								FHS	13			—			13			NM		40			—			40			NM
Adjusted EBITDA	Adjusted EBITDA	607			561			46			8.0	%	1,664			1,363			301			22.0	%	Adjusted EBITDA	642			607			35			5.8	%	1,790			1,664			126			7.6	%
Share-based compensation and non-cash incentive compensation expense	Share-based compensation and non-cash incentive compensation expense	25			19			(6)			(31.6)	%	71			63			(8)			(12.7)	%	Share-based compensation and non-cash incentive compensation expense	34			25			(9)			(36.0)	%	93			71			(22)			(31.0)	%
FHS Transaction costs																								FHS Transaction costs	3			—			(3)			NM		8			—			(8)			NM
Corporate restructuring and tax advisory fees	Corporate restructuring and tax advisory fees	4			3			(1)			(33.3)	%	8			11			3			27.3	%	Corporate restructuring and tax advisory fees	12			4			(8)			(200.0)	%	21			8			(13)			(162.5)	%
Impact of equity method investments (a)	Impact of equity method investments (a)	11			20			9			45.0	%	22			42			20			47.6	%	Impact of equity method investments (a)	13			11			(2)			(18.2)	%	41			22			(19)			(86.4)	%
Other operating expenses (income), net	Other operating expenses (income), net	(16)			54			70			129.6	%	(50)			59			109			NM		Other operating expenses (income), net	(27)			(16)			11			NM		(68)			(50)			18			(36.0)	%
EBITDA	EBITDA	583			465			118			25.4	%	1,613			1,188			425			35.8	%	EBITDA	607			583			24			4.1	%	1,695			1,613			82			5.1	%
Depreciation and amortization	Depreciation and amortization	50			48			(2)			(4.2)	%	150			139			(11)			(7.9)	%	Depreciation and amortization	46			50			4			8.0	%	143			150			7			4.7	%
Income from operations	Income from operations	533			417			116			27.8	%	1,463			1,049			414			39.5	%	Income from operations	561			533			28			5.3	%	1,552			1,463			89			6.1	%
Interest expense, net	Interest expense, net	128			129			1			0.8	%	378			376			(2)			(0.5)	%	Interest expense, net	133			128			(5)			(3.9)	%	389			378			(11)			(2.9)	%
Loss on early extinguishment of debt	Loss on early extinguishment of debt	11			—			(11)			NM		11			—			(11)			NM		Loss on early extinguishment of debt	—			11			11			NM		—			11			11			NM
Income tax expense		65			65			—			—	%	83			62			(21)			NM
Income tax expense (benefit)																								Income tax expense (benefit)	(102)			65			167			256.9	%	17			83			66			79.5	%
Net income	Net income	$	329		$	223		$	106		47.5	%	$	991		$	611		$	380		62.2	%	Net income	$	530		$	329		$	201		61.1	%	$	1,146		$	991		$	155		15.6	%

NM - not meaningful

The increase in Adjusted EBITDA for the three months ended September 30, ~~2021~~2022 reflects the increases in segment income in our BKTH and THPLK segments, and the inclusion of FHS, partially offset by athe decrease in segment income in our ~~PLK segment, and includes a favorable FX Impact of $15 million.~~

BK segment. The increase in Adjusted EBITDA for the nine months ended September 30, ~~2021~~2022 reflects the increases in segment income in ~~all of~~ our TH, PLK and BK segments and the inclusion of FHS. The increase in Adjusted EBITDA includes ~~a favorable~~an unfavorable FX Impact of ~~$50 million.~~

~~The increase in EBITDA~~$26 million and $54 million for the three and nine months ended September 30, ~~2021~~2022, respectively.

The increase in EBITDA for the three months ended September 30, 2022 is primarily due to increases in segment income in our BKTH and THPLK segments, the inclusion of FHS, and a favorable ~~impact~~change from other operating expenses (income), net, partially offset by the decrease in segment income for our BK segment and increases in share-based compensation and non-cash incentive compensation expense and Corporate restructuring and tax advisory fees. The increase in EBITDA for the nine months ended September 30, 2022 is primarily due to increases in segment income in our TH, PLK and BK segments, the inclusion of FHS, and a favorable ~~decrease~~change from ~~the impact of equity method investments,~~other operating expenses (income) net, partially offset by an increase in share-based compensation and non-cash incentive compensation ~~expense.~~expense, an unfavorable change from the impact of equity method

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investments, and an increase in Corporate restructuring and tax advisory fees. The increase in EBITDA includes ~~a favorable~~an unfavorable FX Impact of ~~$13~~$29 million and ~~$45~~$57 million for the three and nine months ended September 30, ~~2021,~~2022, respectively.

Liquidity and Capital Resources

Our primary sources of liquidity are cash on hand, cash generated by operations, and borrowings available under our Revolving Credit Facility (as defined below). We have used, and may in the future use, our liquidity to make required interest and/or principal payments, to make distributions to RBI for RBI to repurchase its common shares, to repurchase Class B exchangeable limited partnership units of Partnership (“Partnership exchangeable units”), to voluntarily prepay and repurchase our or one of our affiliate’s outstanding debt, to fund ~~our~~acquisitions such as the Firehouse Acquisition and other investing activities, such as capital expenditures and joint ventures, and to make distributions on Class A common units and distributions on the Partnership exchangeable units. As a result of our borrowings, we are highly leveraged. Our liquidity requirements are significant, primarily due to debt service requirements.

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As of September 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$1,773 million, working capital of $832~~$946 million and borrowing availability of $998 million under our senior secured revolving credit facility (the “Revolving Credit Facility”). On July 6, 2021, two of our subsidiaries (the “Borrowers”) issued $800 million of 3.875% first lien senior secured notes due January 15, 2028 (the “Additional Notes”). No principal payments are due until maturity and interest is paid semi-annually. The Additional Notes were issued as additional notes under the indenture, dated as of September 24, 2019, (the “2019 3.875% Senior Notes Indenture”) pursuant to which the Borrowers previously issued $750 million in aggregate principal amount of 3.875% first lien senior secured notes due January 15, 2028 during 2019 (the “2019 3.875% First Lien Senior Notes” and together with the Additional Notes, the “3.875% First Lien Senior Notes”). The Additional Notes are treated as a single series with the 2019 3.875% First Lien Senior Notes and have the same terms for all purposes under the 2019 3.875% Senior Notes Indenture, including waivers, amendments, redemptions and offers to purchase. The Additional Notes were priced at 100.250% of their face value. The net proceeds from the offering of the Additional Notes were used to redeem the remaining $775 million principal amount outstanding of the 2017 4.25% Senior Notes on July 15, 2021, plus any accrued and unpaid interest thereon, and pay related redemption premiums, fees and expenses. Based on our current level of operations and available cash, we believe our cash flow from operations, combined with our availability under our Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, debt service requirements and capital spending over the next twelve months.

In ~~March 2021, we announced our~~September 2022, Burger King shared the details of its “Reclaim the Flame” plan to ~~spend C$80~~accelerate sales growth and drive franchisee profitability. As part of the plan, we will enhance ongoing franchisee investments by investing $400 million over the next two years, comprising $150 million in ~~2021 to support increased~~ advertising and digital ~~advancements at the TH business~~investments and ~~supplement advertising fund amounts contributed by franchisees. Most of our support has been spent as of September 30, 2021,~~$250 million in restaurant technology, kitchen equipment, building enhancements, and ~~we are on track to spend the entire amount by the end of 2021.~~high-quality remodels and relocations.

On July 28, 2021, the RBI board of directors approved a share repurchase authorization wherein RBI may purchase up to $1,000 million of RBI common shares until August 10, 2023. Repurchases under RBI’s authorization will be made in the open market or through privately negotiated transactions. If RBI repurchases any RBI common shares, pursuant to the partnership agreement, Partnership will, immediately prior to such repurchase, make a distribution to RBI on its Class A common units in an amount sufficient for RBI to fund such repurchase. During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, RBI repurchased ~~2,843,562~~6,101,364 RBI common shares on the open market for ~~$182~~$326 million and Partnership made a distribution to RBI in an amount sufficient for RBI to fund these repurchases. As of September 30, ~~2021,~~2022, RBI had ~~$818~~$123 million remaining under its share repurchase authorization.

We generally provide applicable deferred taxes based on the tax liability or withholding taxes that would be due upon repatriation of cash associated with unremitted earnings. We will continue to monitor our plans for such cash and related foreign earnings but our expectation is to continue to provide taxes on unremitted ~~earnings.~~earnings that we expect to distribute.

Debt Instruments and Debt Service Requirements

As of September 30, ~~2021,~~2022, our long-term debt consists primarily of borrowings under our Credit Facilities, ~~(defined below),~~ amounts outstanding under our 3.875% First Lien Senior Notes ~~(as defined above), 2020~~due 2028, 5.75% First Lien Senior Notes ~~2020~~due 2025, 3.50% First Lien Senior Notes ~~2019~~due 2029, 4.375% Second Lien Senior Notes ~~2020~~due 2028, 4.00% Second Lien Senior Notes ~~and~~due 2030 (together, the “Senior Notes”), TH Facility, ~~(each as defined below),~~RE Facility, and obligations under finance leases. For further information about our long-term debt, see Note 1011 to the accompanying unaudited condensed consolidated financial statements included in this report.

~~Credit Facilities~~

As of September 30, ~~2021,~~2022, there was ~~$5,973~~$6,453 million outstanding principal amount under our senior secured term loan facilities (the “Term Loan Facilities” and together with the Revolving Credit Facility, the “Credit Facilities”) with a weighted average interest rate of ~~1.78%~~4.69%. Based on the amounts outstanding under the Term Loan Facilities and LIBOR as of September 30, 2021, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately $107 million in interest payments and $72 million in principal payments. In addition, based on LIBOR as of September 30, 2021, net cash settlements that we expect to pay on our $4,000 million interest rate swap are estimated to be approximately $55 million for the next twelve months.

On April 2, 2020, the Borrowers entered into a fifth amendment (the “Fifth Amendment”) to the credit agreement (the “Credit Agreement”) governing our Term Loan Facilities and Revolving Credit Facility. The Fifth Amendment provides the Borrowers with the option to comply with a $1,000 million minimum liquidity covenant in lieu of the 6.50:1.00 net first lien senior secured leverage ratio financial maintenance covenant for the period after June 30, 2020 and prior to September 30, 2021. Additionally, for the periods ending September 30, 2021 and December 31, 2021, to determine compliance with the net first lien senior secured leverage ratio, we are permitted to annualize the Adjusted EBITDA (as defined in the Credit Agreement) for the three months ending September 30, 2021 and six months ending December 31, 2021, respectively, in lieu of calculating the ratio based on Adjusted EBITDA for the prior four quarters. There were no other material changes to the terms of the Credit Agreement.

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The interest rate applicable to borrowings under our Term Loan A and Revolving Credit Facility is, at our option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin varying from 0.00% to 0.50%, or (ii) Adjusted Term SOFR (Adjusted Term SOFR is calculated as Term SOFR plus a ~~Eurocurrency rate,~~0.10% adjustment), subject to a floor of 0.00%, plus an applicable margin varying between 0.75% to 1.50%, in each case, determined by reference to a net first lien leverage based pricing grid. The interest rate applicable to borrowings under our Term Loan B is, at our option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin of 0.75% or (ii) a Eurocurrency rate, subject to a floor of 0.00%, plus an applicable margin of 1.75%.

AsBased on the amounts outstanding under the Term Loan Facilities and LIBOR/SOFR (Secured Overnight Financing Rate) as of September 30, ~~2021,~~2022, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately $311 million in interest payments and $77 million in principal payments. In addition, based on LIBOR as of September 30, 2022, net cash settlements that we ~~had no amounts outstanding under~~expect to receive on our ~~Revolving Credit Facility, had $2~~$4,000 million interest rate swaps are estimated to be

Table of ~~letters of credit issued against~~Contents

approximately $56 million for the Revolving Credit Facility, and our borrowing availability was $998 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or equity repurchases, fund acquisitions or capital expenditures, and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit.

~~Senior Notes~~

The Borrowers are party to (i) the 2019 3.875% Senior Notes Indenture in connection with the issuance of the 3.875% First Lien Senior Notes, (ii) an indenture (the “5.75% Senior Notes Indenture”) in connection with the issuance of $500 million of 5.75% first lien senior notes due April 15, 2025 (the “2020 5.75% Senior Notes”), (iii) an indenture (the “3.50% Senior Notes Indenture”) in connection with the issuance of $750 million of 3.50% first lien senior notes due February 15, 2029 (the “2020 3.50% Senior Notes”), (iv) an indenture (the “4.375% Senior Notes Indenture”) in connection with the issuance of $750 million of 4.375% second lien senior notes due January 15, 2028 (the “2019 4.375% Senior Notes”), and (v) an indenture (the “4.00% Senior Notes Indenture”) in connection with the issuance of $2,900 million of 4.00% second lien senior notes due October 15, 2030 (the “2020 4.00% Senior Notes”). No principal payments are due on the 3.875% First Lien Senior Notes, 2020 5.75% Senior Notes, 2020 3.50% Senior Notes, 2019 4.375% Senior Notes and 2020 4.00% Senior Notes until maturity and interest is paid semi-annually.

next twelve months. Based on the amounts outstanding at September 30, ~~2021,~~2022, required debt service for the next twelve months on all of the Senior Notes outstanding is approximately $264 million in interest payments.

~~TH Facility~~

One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by four of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of September 30, 2021, we had outstanding C$217 million under the TH Facility with a weighted average interest rate of 1.83%.

Based on the amounts outstanding under the TH Facility as of September 30, ~~2021,~~2022, required debt service for the next twelve months is estimated to be approximately $3$7 million in interest payments and $9 million in principal payments. Based on the amounts outstanding under the RE Facility as of September 30, 2022, required debt service for the next twelve months is not material.

Restrictions and Covenants

As of September 30, ~~2021,~~2022, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH Facility, RE Facility and the indentures governing our Senior ~~Notes Indentures.~~Notes.

Cash Distributions/Dividends

During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, RBI repurchased ~~2,843,562~~6,101,364 RBI common shares on the open market for ~~$182~~$326 million and Partnership made a distribution to RBI in an amount sufficient for RBI to fund these repurchases.

On October 5, ~~2021,~~2022, RBI paid a cash dividend of ~~$0.53~~$0.54 per RBI common share. Partnership made a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares and also made a distribution of ~~$0.53~~$0.54 in respect of each Partnership exchangeable unit.

The RBI board of directors has declared a cash dividend of ~~$0.53~~$0.54 per RBI common share, which will be paid on January ~~5, 2022~~4, 2023 to RBI common shareholders of record on December 21, ~~2021.~~2022. Partnership will make a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.53~~$0.54 per Partnership exchangeable unit, and the record date and payment date for such distribution will be the same as the record date and payment date for the cash dividend per RBI common share set forth above.

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In addition, because we are a holding company, our ability to pay cash distributions on our Partnership exchangeable units may be limited by restrictions under our debt agreements.

Outstanding Security Data

As of October ~~18, 2021,~~28, 2022, we had outstanding 202,006,067 Class A common units issued to RBI and ~~145,269,936~~143,298,599 Partnership exchangeable units. During the nine months ended September 30, ~~2021,~~2022, Partnership exchanged ~~9,843,402~~1,694,859 Partnership exchangeable units pursuant to exchange notices received.

One special voting share of RBI is held by a trustee, entitling the trustee to that number of votes on matters on which holders of RBI common shares are entitled to vote equal to the number of Partnership exchangeable units outstanding. The trustee is required to cast such votes in accordance with voting instructions provided by holders of Partnership exchangeable units. At any shareholder meeting of RBI, holders of RBI common shares vote together as a single class with the special voting share except as otherwise provided by law. For information on RBI's share-based compensation and its outstanding equity awards, see Note 1314 to the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC and Canadian securities regulatory authorities on February 23, ~~2021.~~2022.

Since December 12, 2015, the holders of Partnership exchangeable units have had the right to require Partnership to exchange all or any portion of such holder’s Partnership exchangeable units for RBI common shares at a ratio of one share for each Partnership exchangeable unit, subject to RBI’s right as the general partner of Partnership to determine to settle any such exchange for a cash payment in lieu of RBI common shares.

Comparative Cash Flows

Operating Activities

Cash provided by operating activities was ~~$1,255~~$1,067 million for the nine months ended September 30, ~~2021,~~2022, compared to ~~$593~~$1,255 million during the same period in the prior year. The ~~increase~~decrease in cash provided by operating activities was driven by ~~cash provided by working capital~~an increase in ~~the current year compared to~~ cash used for working capital ~~in the prior year,~~and an increase ~~in segment income in all of our segments, and a decrease~~ in interest payments, partially offset by an increase in segment income in our TH, BK and PLK segments, the inclusion of FHS segment income and a decrease in income tax payments.

Investing Activities

Cash used for investing activities was ~~$69~~$66 million for the nine months ended September 30, ~~2021,~~2022, compared to ~~$33~~$69 million during the same period in the prior year. ~~The~~This change ~~in cash used for investing activities~~ was driven primarily by a decrease in payments for property and

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equipment and an increase in proceeds from settlement of derivatives, ~~and cash used in other investing activities during the current period,~~ partially offset by net payments in connection with the purchase of Firehouse Subs in the current year and an increase in ~~net proceeds from disposal of assets, restaurant closures, and refranchisings.~~payments for other investing activities.

Financing Activities

Cash used for financing activities was ~~$970~~$1,111 million for the nine months ended September 30, ~~2021,~~2022, compared to ~~$182~~$970 million during the same period in the prior year. The change in cash used for financing activities was driven primarily by a decrease in proceeds from the issuance of debt, ~~and distribution to RBI~~an increase in cash used to repurchase RBI common shares and a decrease in ~~the current year. These factors were~~proceeds from stock option exercises, partially offset by a decrease in repayments of debt and finance ~~leases.~~leases and proceeds from derivatives in the current year compared to payments for derivatives in the prior year.

Critical Accounting Policies and Estimates

For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, ~~2021.~~2022.

New Accounting Pronouncements

See Note 3 – New Accounting Pronouncements in the notes to the accompanying unaudited condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the nine months ended September 30, ~~2021~~2022 to the disclosures made in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC and Canadian securities regulatory authorities on February 23, ~~2021.~~

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2022.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was conducted under the supervision and with the participation of management of RBI, as the general partner of Partnership, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of RBI, of the effectiveness of Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and Exchange Act Rules 15d-15(e)) as of September 30, ~~2021.~~2022. Based on that evaluation, the CEO and CFO of RBI concluded that Partnership’s disclosure controls and procedures were effective as of such date.

Changes in Internal Controls

We are in the process of integrating Firehouse Subs into our overall internal control over financial reporting processes.

Internal Control Over Financial Reporting

The management of RBI, as general partner of Partnership, including the CEO and CFO, confirm there were no changes in Partnership’s internal control over financial reporting during the three months ended September 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, Partnership’s internal control over financial reporting.

Special Note Regarding Forward-Looking Statements

Certain information contained in this report, including information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws. We refer to all of these as forward-looking statements. Forward-looking statements are forward-looking in nature and, accordingly, are subject to risks and uncertainties. These forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “target”, “potential” and other similar expressions and include, without limitation, statements regarding our expectations or beliefs regarding (i) the effects and continued impact of the COVID-19 pandemic, the war in Ukraine and related macro-economic pressures, such as inflation, rising interest rates and currency fluctuations on our results of operations, business, liquidity, prospects and restaurant operations and those of our franchisees, including local conditions and

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government-imposed limitations and restrictions; (ii) our digital and marketing initiatives and ~~the expected amount of and timing for planned~~expectations regarding further expenditures relating to these ~~initiatives;~~initiatives, including as a result of our plan to accelerate sales growth and drive franchisee profitability at Burger King; (iii) our discontinuation of operations in and financial results from Russia; (iv) the incurrence and timing of future FHS Transaction costs and Corporate restructuring and tax advisory fees; (v) our future financial obligations, including annual debt service requirements, capital expenditures and ~~dividend~~distribution payments, our ability to meet such obligations and the source of funds used to satisfy such obligations; ~~(iv)~~(vi) our goals with respect to reduction in greenhouse gas emissions; ~~(v)~~(vii) the effects of current and future legislation, regulations and interpretations relating to joint employer status and other labor matters; (viii) the impact of the resolutions of the dispute in China on our future growth prospects in that market; (ix) certain tax matters, including our estimates with respect to tax matters and their impact on future periods; ~~(vi)~~(x) the amount of net cash settlements we expect to pay or receive on our derivative instruments; and ~~(vii)~~(xi) certain accounting matters.

Our forward-looking statements, included in this report and elsewhere, represent management’s expectations as of the date that they are made. Our forward-looking statements are based on assumptions and analyses made by Partnership in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, these forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, among other things, risks related to: (1) our substantial indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our obligations; (2) global economic or other business conditions that may affect the desire or ability of our customers to purchase our products, such as the effects of the COVID-19 pandemic, inflationary pressures, high unemployment levels, declines in median income growth, consumer confidence and consumer discretionary spending and changes in consumer perceptions of dietary health and food safety; (3) our relationship with, and the success of, our franchisees and risks related to our fully franchised business ~~model;~~model, including as a result of current and future legislation, regulations and interpretations relating to joint employer status and other labor matters; (4) our franchisees’ financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising and digital programs and franchisee support of these programs; (8) significant and rapid fluctuations in interest rates and in the currency exchange markets and the effectiveness of our hedging activity; (9) our ability to successfully implement our domestic and international growth strategy for each of our brands and risks related to our international operations; (10) our reliance on franchisees, including subfranchisees, to accelerate restaurant growth; (11) our ability to resolve disputes with master franchisees; (12) the ability of the counterparties to our credit facilities and derivatives to fulfill their commitments and/or obligations; and ~~(12)~~(13) changes in applicable tax laws or interpretations thereof, and our ability to accurately interpret and predict the impact of such changes or interpretations on our financial condition and results.

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We operate in a very competitive and rapidly changing environment and our inability to successfully manage any of the above risks may permit our competitors to increase their market share and may decrease our profitability. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC and Canadian securities regulatory authorities on February 23, ~~2021,~~2022, as well as other materials that we from time to time file with, or furnish to, the SEC or file with Canadian securities regulatory authorities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this section and elsewhere in this report. Other than as required under securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

Part II – Other Information

Item 1. Legal Proceedings

See Part I, Notes to Condensed Consolidated Financial Statements, Note ~~15,~~16, ~~Commitment~~Commitments and ~~Contingencies~~Contingencies.

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Item 1A. Risk Factors

The below updates the risk factors included in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the ~~"SEC"~~“SEC”) on February 23, ~~2021.~~2022.

~~Climate change~~If we are liable as a joint employer, our business could be adversely affected.

Joint employer status is a developing area of franchise and ~~our inability~~labor and employment law that could be subject to ~~effectively~~changes in legislation, administrative agency interpretation or jurisprudential developments that may increase franchisor liability in the future. A governmental authority may adopt and implement ~~measures~~a broader standard for determining when two or more otherwise unrelated employers may be found to ~~address climate change~~be a joint employer of the same employees under laws such as the National Labor Relations Act, Fair Labor Standards Act, or any other federal employment statutes interpreted by a federal agency in a manner that is applied generally to franchise relationships (which broader standards in the past have been adopted by U.S. governmental agencies such as the National Labor Relations Board and the Department of Labor). On September 6, 2022, the NLRB proposed a new rule that would allow a party asserting a joint-employment relationship to establish joint-employer status by using evidence of indirect and reserved forms of control bearing on an employee’s essential terms and conditions of employment. If this broader standard were to be adopted, which is likely, we could potentially be liable for unfair labor practices and other ~~sustainable~~violations by franchisees or we could be required to conduct collective bargaining negotiations regarding employees of franchisees, who are independent employers. In such event, our operating costs may increase as a result of required modifications to business practices, increased litigation, governmental investigations or proceedings, administrative enforcement actions, fines and civil liability.

Employee claims that are brought against us as a result of joint employer standards and status may also, in addition to legal and financial liability, create negative publicity that could ~~negatively~~adversely affect our brands and divert financial and management resources. A significant increase in the number of these claims, or an increase in the number of successful claims, could adversely impact our brand’s reputation, which may cause significant harm.

Recent and future legislation may increase labor costs and adversely affect our business ~~or damage~~and our ~~reputation.~~franchisees’ results of operations.

~~Climate change may have~~In September 2022, California passed legislation establishing a ~~negative effect~~council to set sector-wide standards on ~~agricultural productivity which may result in decreased availability or less favorable pricing for certain commodities used in our products, such as beef, chicken, coffee beans~~wages, hours and ~~dairy. In addition, climate change may also increase~~working conditions related to the ~~frequency or severity~~health, safety and welfare of ~~natural disasters~~fast food restaurant workers. This law and other ~~extreme weather conditions, which~~labor related laws enacted at the federal, state, provincial or local level could ~~disrupt~~increase our ~~supply chain or impact demand for~~and our ~~products. Also, concern over climate change~~franchisees’ labor costs and other sustainable business practices may result in new or increased legal and regulatory requirements or generally accepted business practices, which could significantly increase costs. In addition, any failure to achieve our goals with respect to reducing greenhouse gas emissions and other sustainable business practices or perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change or other sustainable business practices can lead to adverse publicity, diminish the value of our brands and result in an adverse effect on our business.decrease profitability.

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Item 6. Exhibits



Exhibit Number						Description

31.1						Certification of Chief Executive Officer of Restaurant Brands International Inc., as general partner of Restaurant Brands International Limited Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer of Restaurant Brands International Inc., as general partner of Restaurant Brands International Limited Partnership, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer of Restaurant Brands International Inc., as general partner of Restaurant Brands International Limited Partnership, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer of Restaurant Brands International Inc., as general partner of Restaurant Brands International Limited Partnership, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP

By:

Restaurant Brands International Inc., its general partner

Date: ~~October 25, 2021~~November 3, 2022

By:

/s/ Matthew Dunnigan

Name:

Matthew Dunnigan

Title:

Chief Financial Officer of Restaurant Brands International Inc.
(principal financial officer)
(duly authorized officer)

5456


Contract liabilities expected to be recognized in	TH		BK		PLK		Consolidated
Remainder of 2021	$	3	$	9	$	1	$	13
2022	9		34		4		47
2023	9		33		3		45
2024	8		32		3		43
2025	7		32		3		42
Thereafter	27		271		37		335
Total	$	63	$	411	$	51	$	525