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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 March 31,June 30, 2020

☐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)
Canada98-1206431
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)

Canada98-1206431
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)

130 King Street West, Suite 300M5X 1E1
Toronto,Ontario
(Address of Principal Executive Offices)(Zip Code)
(905) (905) 845-6511
(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 classTrading SymbolsName of each exchange on which registered
Class B exchangeable limited partnership unitsQSPToronto 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 April 24,July 31, 2020, there were 164,935,193162,426,062 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
Page
PART I – Financial Information
Item 1.
3
Item 2.
3034
Item 3.
4248
Item 4.
4248
PART II – Other Information
Item 1A.1.
4550
Item 5.1A.
4650
Item 6.
4752
4853


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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
 June 30,
2020		December 31,
2019
ASSETS
Current assets:
Cash and cash equivalents$1,540  $1,533  
Accounts and notes receivable, net of allowance of $41 and $13, respectively520  527  
Inventories, net96  84  
Prepaids and other current assets71  52  
Total current assets2,227  2,196  
Property and equipment, net of accumulated depreciation and amortization of $793 and $746, respectively1,958  2,007  
Operating lease assets, net1,117  1,176  
Intangible assets, net10,288  10,563  
Goodwill5,498  5,651  
Net investment in property leased to franchisees62  48  
Other assets, net866  719  
Total assets$22,016  $22,360  
LIABILITIES AND EQUITY
Current liabilities:
Accounts and drafts payable$470  $644  
Other accrued liabilities596  790  
Gift card liability112  168  
Current portion of long-term debt and finance leases106  101  
Total current liabilities1,284  1,703  
Long-term debt, net of current portion12,310  11,759  
Finance leases, net of current portion299  288  
Operating lease liabilities, net of current portion1,046  1,089  
Other liabilities, net1,810  1,698  
Deferred income taxes, net1,415  1,564  
Total liabilities18,164  18,101  
Partners’ capital:
Class A common units; 202,006,067 issued and outstanding at June 30, 2020 and December 31, 20197,947  7,786  
Partnership exchangeable units; 162,834,299 issued and outstanding at June 30, 2020; 165,507,199 issued and outstanding at December 31, 2019(2,526) (2,353) 
Accumulated other comprehensive income (loss)(1,572) (1,178) 
Total Partners’ capital3,849  4,255  
Noncontrolling interests3  4  
Total equity3,852  4,259  
Total liabilities and equity$22,016  $22,360  
 As of
 March 31,
2020		 December 31,
2019
ASSETS   
Current assets:   
Cash and cash equivalents$2,498
 $1,533
Accounts and notes receivable, net of allowance of $16 and $13, respectively414
 527
Inventories, net85
 84
Prepaids and other current assets62
 52
Total current assets3,059
 2,196
Property and equipment, net of accumulated depreciation and amortization of $751 and $746, respectively1,939
 2,007
Operating lease assets, net1,115
 1,176
Intangible assets, net10,085
 10,563
Goodwill5,376
 5,651
Net investment in property leased to franchisees49
 48
Other assets, net1,006
 719
Total assets$22,629
 $22,360
LIABILITIES AND EQUITY   
Current liabilities:   
Accounts and drafts payable$484
 $644
Other accrued liabilities779
 790
Gift card liability106
 168
Current portion of long-term debt and finance leases103
 101
Total current liabilities1,472
 1,703
Long-term debt, net of current portion12,822
 11,759
Finance leases, net of current portion283
 288
Operating lease liabilities, net of current portion1,039
 1,089
Other liabilities, net1,774
 1,698
Deferred income taxes, net1,487
 1,564
Total liabilities18,877
 18,101
Partners’ capital:   
Class A common units; 202,006,067 issued and outstanding at March 31, 2020 and December 31, 20197,840
 7,786
Partnership exchangeable units; 165,329,153 issued and outstanding at March 31, 2020; 165,507,199 issued and outstanding at December 31, 2019(2,370) (2,353)
Accumulated other comprehensive income (loss)(1,721) (1,178)
Total Partners’ capital3,749
 4,255
Noncontrolling interests3
 4
Total equity3,752
 4,259
Total liabilities and equity$22,629
 $22,360

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
March 31,		 Three Months Ended
June 30,		Six Months Ended
June 30,
2020 2019 2020201920202019
Revenues:   Revenues:
Sales$503
 $522
Sales$406  $589  $909  $1,111  
Franchise and property revenues722
 744
Franchise and property revenues642  811  1,364  1,555  
Total revenues1,225
 1,266
Total revenues1,048  1,400  2,273  2,666  
Operating costs and expenses:   Operating costs and expenses:
Cost of sales399
 406
Cost of sales339  453  738  859  
Franchise and property expenses126
 133
Franchise and property expenses134  135  260  268  
Selling, general and administrative expenses325
 312
Selling, general and administrative expenses295  316  620  628  
(Income) loss from equity method investments2
 (2)(Income) loss from equity method investments16  2  18  —  
Other operating expenses (income), net(16) (17)Other operating expenses (income), net21  3  5  (14) 
Total operating costs and expenses836
 832
Total operating costs and expenses805  909  1,641  1,741  
Income from operations389
 434
Income from operations243  491  632  925  
Interest expense, net119
 132
Interest expense, net128  137  247  269  
Income before income taxes270
 302
Income before income taxes115  354  385  656  
Income tax expense46
 56
Income tax (benefit) expenseIncome tax (benefit) expense(49) 97  (3) 153  
Net income224
 246
Net income164  257  388  503  
Net income attributable to noncontrolling interests—
 —
Net income attributable to noncontrolling interests1  —  1  —  
Net income attributable to common unitholders$224
 $246
Net income attributable to common unitholders$163  $257  $387  $503  
Earnings per unit - basic and diluted   Earnings per unit - basic and diluted
Class A common units$0.71
 $0.67
Class A common units$0.52  $0.70  $1.24  $1.37  
Partnership exchangeable units$0.48
 $0.53
Partnership exchangeable units$0.35  $0.55  $0.83  $1.09  
Weighted average units outstanding - basic and diluted   Weighted average units outstanding - basic and diluted
Class A common units202
 202
Class A common units202  202  202  202  
Partnership exchangeable units165
 208
Partnership exchangeable units164  207  165  207  
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 March 31, Three Months Ended June 30,Six Months Ended June 30,
2020 2019 2020201920202019
Net income$224
 $246
Net income$164  $257  $388  $503  
   
Foreign currency translation adjustment(751) 159
Foreign currency translation adjustment342  199  (409) 358  
Net change in fair value of net investment hedges, net of tax of $(106) and $26411
 (76)
Net change in fair value of cash flow hedges, net of tax of $79 and $12(214) (34)
Amounts reclassified to earnings of cash flow hedges, net of tax of $(4) and $011
 (1)
Net change in fair value of net investment hedges, net of tax of $54, $13, $(52) and $39Net change in fair value of net investment hedges, net of tax of $54, $13, $(52) and $39(174) (40) 237  (116) 
Net change in fair value of cash flow hedges, net of tax of $13, $22, $92 and $34Net change in fair value of cash flow hedges, net of tax of $13, $22, $92 and $34(37) (57) (251) (91) 
Amounts reclassified to earnings of cash flow hedges, net of tax of $(6), $(1), $(10) and $(1)Amounts reclassified to earnings of cash flow hedges, net of tax of $(6), $(1), $(10) and $(1)18  3  29  2  
Other comprehensive income (loss)(543) 48
Other comprehensive income (loss)149  105  (394) 153  
Comprehensive income (loss)(319) 294
Comprehensive income (loss)313  362  (6) 656  
Comprehensive income (loss) attributable to noncontrolling interests—
 —
Comprehensive income (loss) attributable to noncontrolling interests1  —  1  —  
Comprehensive income (loss) attributable to common unitholders$(319) $294
Comprehensive income (loss) attributable to common unitholders$312  $362  $(7) $656  
See accompanying notes to condensed consolidated financial statements.


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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidated Statements 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
 Units Amount Units Amount 
Balances at December 31, 2019202,006,067
 $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)
Exchange of Partnership exchangeable units for RBI common shares—
 11
 (178,046) (11) —
 —
 —
Capital contribution from RBI Inc.—
 55
 —
 —
 —
 —
 55
Restaurant VIE contributions (distributions)—
 —
 —
 —
 —
 (1) (1)
Net income—
 144
 —
 80
 —
 —
 224
Other comprehensive income (loss)—
 —
 —
 —
 (543) —
 (543)
Balances at March 31, 2020202,006,067
 $7,840
 165,329,153
 $(2,370) $(1,721) $3
 $3,752


 Class A Common
Units		 Partnership
Exchangeable Units		 Accumulated 
Other
Comprehensive
Income (Loss)		 Noncontrolling
Interest		 Total
 Units Amount Units Amount 
Balances at December 31, 2018202,006,067
 $4,323
 207,523,591
 $730
 $(1,437) $2
 $3,618
Cumulative effect adjustment—
 12
 —
 9
 —
 —
 21
Distributions declared on Class A common units ($0.63 per unit)—
 (127) —
 —
 —
 —
 (127)
Distributions declared on partnership exchangeable units ($0.50 per unit)—
 —
 —
 (104) —
 —
 (104)
Exchange of Partnership exchangeable units for RBI common shares—
 9
 (141,190) (9) —
 —
 —
Capital contribution from RBI Inc.—
 71
 —
 —
 —
 —
 71
Net income—
 135
 —
 111
 —
 —
 246
Other comprehensive income (loss)—
 —
 —
 —
 48
 —
 48
Balances at March 31, 2019202,006,067
 $4,423
 207,382,401
 $737
 $(1,389) $2
 $3,773
 Class A Common
Units		Partnership
Exchangeable Units		Accumulated 
Other
Comprehensive
Income (Loss)		Noncontrolling
Interest		Total
 UnitsAmountUnitsAmount
Balances at December 31, 2019202,006,067  $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) 
Exchange of Partnership exchangeable units for RBI common shares—  11  (178,046) (11) —  —  —  
Capital contribution from RBI—  55  —  —  —  —  55  
Restaurant VIE contributions (distributions)—  —  —  —  —  (1) (1) 
Net income—  144  —  80  —  —  224  
Other comprehensive income (loss)—  —  —  —  (543) —  (543) 
Balances at March 31, 2020202,006,067  $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) 
Exchange of Partnership exchangeable units for RBI common shares—  128  (2,494,854) (128) —  —  —  
Capital contribution from RBI—  31  —  —  —  —  31  
Restaurant VIE contributions (distributions)—  —  —  —  —  (1) (1) 
Net income—  106  —  57  —  1  164  
Other comprehensive income (loss)—  —  —  —  149  —  149  
Balances at June 30, 2020202,006,067  $7,947  162,834,299  $(2,526) $(1,572) $3  $3,852  
See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidated Statements 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
 UnitsAmountUnitsAmount
Balances at December 31, 2018202,006,067  $4,323  207,523,591  $730  $(1,437) $2  $3,618  
Cumulative effect adjustment—  12  —  9  —  —  21  
Distributions declared on Class A common units ($0.63 per unit)—  (127) —  —  —  —  (127) 
Distributions declared on partnership exchangeable units ($0.50 per unit)—  —  —  (104) —  —  (104) 
Exchange of Partnership exchangeable units for RBI common shares—  9  (141,190) (9) —  —  —  
Capital contribution from RBI—  71  —  —  —  —  71  
Net income—  135  —  111  —  —  246  
Other comprehensive income (loss)—  —  —  —  48  —  48  
Balances at March 31, 2019202,006,067  $4,423  207,382,401  $737  $(1,389) $2  $3,773  
Distributions declared on Class A common units ($0.63 per unit)—  (128) —  —  —  —  (128) 
Distributions declared on partnership exchangeable units ($0.50 per unit)—  —  —  (103) —  —  (103) 
Exchange of Partnership exchangeable units for RBI common shares—  3  (45,325) (3) —  —  —  
Capital contribution from RBI—  55  —  —  —  —  55  
Restaurant VIE contributions (distributions)—  —  —  —  —  1  1  
Net income—  142  —  115  —  —  257  
Other comprehensive income (loss)—  —  —  —  105  —  105  
Balances at June 30, 2019202,006,067  $4,495  207,337,076  $746  $(1,284) $3  $3,960  
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)
Three Months Ended March 31, Six Months Ended June 30,
2020 2019 20202019
Cash flows from operating activities:   Cash flows from operating activities:
Net income$224
 $246
Net income$388  $503  
Adjustments to reconcile net income to net cash provided by operating activities:   Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization45
 47
Depreciation and amortization91  92  
Amortization of deferred financing costs and debt issuance discount6
 7
Amortization of deferred financing costs and debt issuance discount12  15  
(Income) loss from equity method investments2
 (2)(Income) loss from equity method investments18  —  
(Gain) loss on remeasurement of foreign denominated transactions(8) (15)(Gain) loss on remeasurement of foreign denominated transactions10  (3) 
Net (gains) losses on derivatives(6) (20)Net (gains) losses on derivatives(1) (34) 
Share-based compensation expense19
 22
Share-based compensation expense39  39  
Deferred income taxes(31) 38
Deferred income taxes(131) 23  
Other(4) 3
Other20  (3) 
Changes in current assets and liabilities, excluding acquisitions and dispositions:   Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable94
 14
Accounts and notes receivable(36) (16) 
Inventories and prepaids and other current assets(13) (13)Inventories and prepaids and other current assets(28) (10) 
Accounts and drafts payable(136) (69)Accounts and drafts payable(158) (40) 
Other accrued liabilities and gift card liability(67) (126)Other accrued liabilities and gift card liability(13) (166) 
Tenant inducements paid to franchisees(3) —
Tenant inducements paid to franchisees(5) (8) 
Other long-term assets and liabilities14
 22
Other long-term assets and liabilities(10) 83  
Net cash provided by operating activities136
 154
Net cash provided by operating activities196  475  
Cash flows from investing activities:   Cash flows from investing activities:
Payments for property and equipment(19) (5)Payments for property and equipment(39) (14) 
Net proceeds from disposal of assets, restaurant closures, and refranchisings4
 4
Net proceeds from disposal of assets, restaurant closures, and refranchisings5  22  
Settlement/sale of derivatives, net12
 11
Settlement/sale of derivatives, net22  15  
Other investing activities, net—
 1
Net cash (used for) provided by investing activities(3) 11
Net cash (used for) provided by investing activities(12) 23  
Cash flows from financing activities:   Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt1,085
 —
Proceeds from revolving line of credit and long-term debt1,585  —  
Repayments of long-term debt and finance leases(25) (23)
Repayments of revolving line of credit, long-term debt and finance leasesRepayments of revolving line of credit, long-term debt and finance leases(1,045) (48) 
Payment of financing costsPayment of financing costs(10) —  
Distributions on Class A common and Partnership exchangeable units(232) (207)Distributions on Class A common and Partnership exchangeable units(716) (437) 
Capital contribution from RBI Inc.30
 42
Capital contribution from RBICapital contribution from RBI41  80  
(Payments) proceeds from derivatives(2) 5
(Payments) proceeds from derivatives(14) 11  
Other financing activities, net(1) 1
Other financing activities, net(2) (1) 
Net cash provided by (used for) financing activities855
 (182)
Net cash used for financing activitiesNet cash used for financing activities(161) (395) 
Effect of exchange rates on cash and cash equivalents(23) 6
Effect of exchange rates on cash and cash equivalents(16) 12  
Increase (decrease) in cash and cash equivalents965
 (11)Increase (decrease) in cash and cash equivalents7  115  
Cash and cash equivalents at beginning of period1,533
 913
Cash and cash equivalents at beginning of period1,533  913  
Cash and cash equivalents at end of period$2,498
 $902
Cash and cash equivalents at end of period$1,540  $1,028  
Supplemental cash flow disclosures:   Supplemental cash flow disclosures:
Interest paid$104
 $140
Interest paid$234  $292  
Income taxes paid$48
 $45
Income taxes paid$60  $127  
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”) was formed on August 25, 2014 as a general partnership and was registered on October 27, 2014 as a limited partnership in accordance with the laws of the Province of Ontario. 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 under the Popeyes® brand (“Popeyes” or “PLK”). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of March 31,June 30, 2020, we franchised or owned 4,9254,934 Tim Hortons restaurants, 18,84818,756 Burger King restaurants, and 3,3363,369 Popeyes restaurants, for a total of 27,10927,059 restaurants, and operate in more than 100 countries and U.S. territories. 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.
COVID-19
The global crisis resulting from the spread of coronavirus (COVID-19) has had a substantial impact on our global restaurant operations for the three and six months ended March 31,June 30, 2020, which is expected to continue with the timing of recovery uncertain. During the three and six months ended March 31,June 30, 2020, many TH, BK and PLK restaurants were temporarily closed in certain countries and many of the restaurants that remained open had limited operations, such as Drive-thru, Takeout and Delivery (where applicable). This has continued into the secondthird quarter of 2020.
Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The financial impact of COVID-19 has had, and is expected to continue to have, an adverse effect on many of our franchisees’ liquidity and we are working closely with our franchisees to monitor and assist them with access to appropriate sources of liquidity in order to sustain their businesses throughout this crisis, such as the initiation of rent relief programs for eligible franchisees who lease property from us. See Note 4, Leases, for further information about the rent relief programs. Additionally, beginning induring the second quarter of 2020, we are providingprovided cash flow support by extending loans to eligible BK franchisees in the U.S. and advancing certain cash payments to eligible TH franchisees in Canada.
We cannot currentlyDuring the three and six months ended June 30, 2020, we recorded bad debt expense of $24 million and $28 million, respectively, compared to $4 million and $5 million during the three and six months ended June 30, 2019. While all receivables remain contractually due and payable to us, the certainty of the amount and timing of payments has been impacted by the COVID-19 pandemic. Therefore, our bad debt expense during the three and six months ended June 30, 2020 reflects an adjustment to our historical collections experience to incorporate an estimate of the impact of current economic conditions resulting from the COVID-19 pandemic. Actual collections may be materially higher or lower than this estimate reflects since it is reasonably possible the duration orand future negative financial impact of the COVID-19 pandemic on our business however, we expect that the COVID-19 pandemic will impactor our results of operations for the three months ending June 30, 2020 more significantly than during the three months ended March 31, 2020.franchisees may differ from our assumptions. Ongoing material adverse effects of the COVID-19 pandemic on our franchisees for an extended period could negatively affect our operating results, including reductions in revenue and cash flow and could impact our impairment assessments of accounts receivable, intangible assets, long-lived assets or goodwill.
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 21, 2020.
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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

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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.
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 March 31,June 30, 2020 and December 31, 2019, we determined that we are the primary beneficiary of 3133 and 35 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.
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.
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. These reclassifications had no effect on previously reported net income.
Note 3. New Accounting Pronouncements
Credit Losses – In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance that requires companies to measure and recognize lifetime expected credit losses for certain financial instruments, including trade accounts receivable and net investments in direct financing and sales-type leases. Expected credit losses are estimated using relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This amendment was effective commencing in 2020, using a modified retrospective approach. The adoption of this new guidance did not have a material impact on our Financial Statements.
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. We are currently evaluating the impact that the adoption of this new guidance will have on our Financial Statements.
Accounting Relief for the Transition Away from LIBOR and Certain other Reference Rates – In March 2020, the 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
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elected certain optional expedients for and that are retained through the end of the hedging relationships. We are currently evaluating the impact that the adoption of this new guidance will have on our Financial Statements.

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Note 4. Leases
During the threesix months ended March 31,June 30, 2020, we initiated a rent relief program for eligible TH franchisees in Canada who lease property from us (the “TH rent relief program”) and also initiated a rent relief program effective April 1, 2020 for eligible BK franchisees in the U.S. and Canada who lease property from us (the "BK rent relief program" and together with the TH rent relief program, the “rent relief programs”). Under the rent relief programs, we temporarily converted the rent structure from a combination of fixed plus variable rent to 100% variable rent. While in effect, these programs will result in a reduction in our property revenues.
In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Accounting Standards Codification Topic 842, Leases ("ASC 842"), as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee.
We have elected to apply this interpretive guidance to the rent relief programs, and have assumed that enforceable rights and obligations for those concessions exist in the lease contract. As such, starting on the effective dates indicated above, we began recognizing reductions in rents arising from the rent relief programs as reductions in variable lease payments.payments, as the rent reductions did not result in a substantial increase in the rights of the lessor or the obligations of the lessee. This election will continue while our rent relief program is in effect.
Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Lease income - operating leases
Minimum lease payments$109  $112  $221  $223  
Variable lease payments46  97  109  181  
Amortization of favorable and unfavorable income lease contracts, net1  2  3  4  
Subtotal - lease income from operating leases156  211  333  408  
Earned income on direct financing leases2  3  3  5  
Total property revenues$158  $214  $336  $413  
  Three months ended March 31, 2020 Three months ended March 31, 2019
Lease income - operating leases    
Minimum lease payments $112
 $111
Variable lease payments 63
 84
Amortization of favorable and unfavorable income lease contracts, net 2
 2
Subtotal - lease income from operating leases 177
 197
Earned income on direct financing leases 1
 2
Total property revenues $178
 $199



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Note 5. 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 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, 2019 and March 31,June 30, 2020 (in millions):
Contract Liabilities TH BK PLK Consolidated
Balance at December 31, 2019 $64
 $449
 $28
 $541
Recognized during period and included in the contract liability balance at the beginning of the year (2) (30) (1) (33)
Increase, excluding amounts recognized as revenue during the period 2
 6
 3
 11
Impact of foreign currency translation (3) (4) —
 (7)
Balance at March 31, 2020 $61
 $421
 $30
 $512

Contract LiabilitiesTHBKPLKConsolidated
Balance at December 31, 2019$64  $449  $28  $541  
Recognized during period and included in the contract liability balance at the beginning of the year(4) (41) (1) (46) 
Increase, excluding amounts recognized as revenue during the period3  9  5  17  
Impact of foreign currency translation(2) —  —  (2) 
Balance at June 30, 2020$61  $417  $32  $510  
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 March 31,June 30, 2020 (in millions):
Contract liabilities expected to be recognized in TH BK PLK Consolidated
Remainder of 2020 $6
 $26
 $2
 $34
2021 8
 33
 2
 43
2022 7
 32
 2
 41
2023 7
 31
 2
 40
2024 6
 30
 2
 38
Thereafter 27
 269
 20
 316
Total $61
 $421
 $30
 $512

Contract liabilities expected to be recognized inTHBKPLKConsolidated
Remainder of 2020$4  $17  $1  $22  
20218  33  2  43  
20227  32  2  41  
20237  31  2  40  
20247  30  2  39  
Thereafter28  274  23  325  
Total$61  $417  $32  $510  
Disaggregation of Total Revenues
Total revenues consist of the following (in millions):
 Three Months Ended
March 31,
 2020 2019
Sales$503
 $522
Royalties526
 528
Property revenues178
 199
Franchise fees and other revenue18
 17
Total revenues$1,225
 $1,266


Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Sales$406  $589  $909  $1,111  
Royalties469  576  995  1,104  
Property revenues158  214  336  413  
Franchise fees and other revenue15  21  33  38  
Total revenues$1,048  $1,400  $2,273  $2,666  
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Note 6. 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 and Partnership preferred unit distributions. 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.
The following table summarizes the basic and diluted earnings per unit calculations (in millions, except per unit amounts):

 Three Months Ended March 31,
 2020 2019
Allocation of net income among partner interests:   
Net income allocated to Class A common unitholders$144
 $135
Net income allocated to Partnership exchangeable unitholders80
 111
Net income attributable to common unitholders$224
 $246
    
Denominator - basic and diluted partnership units:   
Weighted average Class A common units202
 202
Weighted average Partnership exchangeable units165
 208
    
Earnings per unit - basic and diluted:   
Class A common units (a)$0.71
 $0.67
Partnership exchangeable units (a)$0.48
 $0.53

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Allocation of net income among partner interests:
Net income allocated to Class A common unitholders$106  $142  $250  $277  
Net income allocated to Partnership exchangeable unitholders57  115  137  226  
Net income attributable to common unitholders$163  $257  $387  $503  
Denominator - basic and diluted partnership units:
Weighted average Class A common units202  202  202  202  
Weighted average Partnership exchangeable units164  207  165  207  
Earnings per unit - basic and diluted:
Class A common units (a)$0.52  $0.70  $1.24  $1.37  
Partnership exchangeable units (a)$0.35  $0.55  $0.83  $1.09  
(a) Earnings per unit may not recalculate exactly as it is calculated based on unrounded numbers.

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Note 7. Intangible Assets, net and Goodwill
Intangible assets, net and goodwill consist of the following (in millions):

 As of
 March 31, 2020 December 31, 2019
 Gross Accumulated Amortization Net Gross Accumulated Amortization Net
Identifiable assets subject to amortization:           
   Franchise agreements$706
 $(230) $476
 $720
 $(225) $495
   Favorable leases119
 (62) 57
 127
 (65) 62
      Subtotal825
 (292) 533
 847
 (290) 557
Indefinite lived intangible assets:           
   Tim Hortons brand
$6,090
 $—
 $6,090
 $6,534
 $—
 $6,534
   Burger King brand
2,107
 —
 2,107
 2,117
 —
 2,117
   Popeyes brand
1,355
 —
 1,355
 1,355
 —
 1,355
      Subtotal9,552
 —
 9,552
 10,006
 —
 10,006
Intangible assets, net    $10,085
     $10,563
            
Goodwill           
   Tim Hortons segment$3,935
     $4,207
    
   Burger King segment595
     598
    
   Popeyes segment846
     846
    
      Total$5,376
     $5,651
    

As of
June 30, 2020December 31, 2019
GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Identifiable assets subject to amortization:
   Franchise agreements$717  $(240) $477  $720  $(225) $495  
   Favorable leases118  (64) 54  127  (65) 62  
      Subtotal835  (304) 531  847  (290) 557  
Indefinite-lived intangible assets:
   Tim Hortons brand
$6,284  $—  $6,284  $6,534  $—  $6,534  
   Burger King brand
2,118  —  2,118  2,117  —  2,117  
   Popeyes brand
1,355  —  1,355  1,355  —  1,355  
      Subtotal9,757  —  9,757  10,006  —  10,006  
Intangible assets, net$10,288  $10,563  
Goodwill
   Tim Hortons segment$4,054  $4,207  
   Burger King segment598  598  
   Popeyes segment846  846  
      Total$5,498  $5,651  
Amortization expense on intangible assets totaled $11 million and $10 million for the three months ended March 31,June 30, 2020 and 2019.2019, respectively, and $22 million and $21 million for the six months ended June 30, 2020 and 2019, respectively. The change in the brands and goodwill balances during the threesix months ended March 31,June 30, 2020 was due to the impact of foreign currency translation.

Note 8. Equity Method Investments
The aggregate carrying amount of our equity method investments was $234$216 million and $266 million as of March 31,June 30, 2020 and December 31, 2019, respectively, and is included as a component of Other assets, net in our accompanying condensed consolidated balance sheets. TH and BK both have equity method investments. PLK does not have any equity method investments.
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 $2 million and $5 million during the three months ended March 31,June 30, 2020 and 2019.2019, respectively. Distributions received from this joint venture were $4 million and $7 million during the six months ended June 30, 2020 and 2019, respectively.
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%15.2% equity interest in Carrols Restaurant Group, Inc. (“Carrols”) based on the quoted market price on March 31,June 30, 2020 was approximately $17$46 million. The aggregate market value of our 9.8% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on March 31,June 30, 2020 was approximately $39$47 million. We have evaluated recent declines in the market value of these equity method investments as a result of COVID-19 and weCOVID-19. We concluded these declines are not other than temporary and as such 0 impairments have been recognized at March 31,June 30, 2020. No quoted market prices are available for our other equity method investments.

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We have equity interests in entities that own or franchise Tim Hortons or Burger King restaurants. 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):


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 Three Months Ended March 31,
 2020 2019
Revenues from affiliates:   
Royalties$73
 $78
Property revenues8
 8
Franchise fees and other revenue3
 3
Total$84
 $89

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Revenues from affiliates:
Royalties$54  $87  $127  $165  
Property revenues8  9  16  17  
Franchise fees and other revenue3  3  6  6  
Total$65  $99  $149  $188  
We recognized $4$3 million and $5 million of rent expense associated with the TIMWEN Partnership during the three months ended March 31,June 30, 2020 and 2019.2019, respectively. We recognized $7 million and $9 million of rent expense associated with the TIMWEN Partnership during the six months ended June 30, 2020 and 2019, respectively.
At March 31,June 30, 2020 and December 31, 2019, we had $42$64 million and $47 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.

Note 9. Other Accrued Liabilities and Other Liabilities, net
Other accrued liabilities (current) and other liabilities, net (noncurrent) consist of the following (in millions):

 As of
 March 31,
2020		 December 31,
2019
Current:   
Dividend payable$242
 $232
Interest payable93
 71
Accrued compensation and benefits36
 57
Taxes payable147
 126
Deferred income28
 35
Accrued advertising expenses47
 40
Restructuring and other provisions8
 8
Current portion of operating lease liabilities120
 126
Other58
 95
Other accrued liabilities$779
 $790
Noncurrent:   
Taxes payable$575
 $579
Contract liabilities512
 541
Derivatives liabilities461
 341
Unfavorable leases91
 103
Accrued pension64
 65
Deferred income30
 25
Other41
 44
Other liabilities, net$1,774
 $1,698

As of
June 30,
2020		December 31,
2019
Current:
Dividend payable$—  $232  
Interest payable79  71  
Accrued compensation and benefits47  57  
Taxes payable184  126  
Deferred income35  35  
Accrued advertising expenses59  40  
Restructuring and other provisions9  8  
Current portion of operating lease liabilities123  126  
Other60  95  
Other accrued liabilities$596  $790  
Noncurrent:
Taxes payable$591  $579  
Contract liabilities510  541  
Derivatives liabilities492  341  
Unfavorable leases87  103  
Accrued pension61  65  
Deferred income29  25  
Other40  44  
Other liabilities, net$1,810  $1,698  


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Note 10. Long-Term Debt
Long-term debt consists of the following (in millions):
 As of
 March 31,
2020		 December 31,
2019
Term Loan B (due November 19, 2026)$5,337
 $5,350
Term Loan A (due October 7, 2024)745
 750
Revolving Credit Facility (due October 7, 2024)995
 —
2017 4.25% Senior Notes (due May 15, 2024)1,500
 1,500
2019 3.875% Senior Notes (due January 15, 2028)750
 750
2017 5.00% Senior Notes (due October 15, 2025)2,800
 2,800
2019 4.375% Senior Notes (due January 15, 2028)750
 750
TH Facility and other163
 81
Less: unamortized deferred financing costs and deferred issue discount(142) (148)
Total debt, net12,898
 11,833
    Less: current maturities of debt(76) (74)
Total long-term debt$12,822
 $11,759

As of
June 30,
2020		December 31,
2019
Term Loan B (due November 19, 2026)$5,323  $5,350  
Term Loan A (due October 7, 2024)741  750  
2017 4.25% Senior Notes (due May 15, 2024)1,500  1,500  
2019 3.875% Senior Notes (due January 15, 2028)750  750  
2020 5.75% Senior Notes (due April 15, 2025)500  —  
2017 5.00% Senior Notes (due October 15, 2025)2,800  2,800  
2019 4.375% Senior Notes (due January 15, 2028)750  750  
TH Facility and other169  81  
Less: unamortized deferred financing costs and deferred issue discount(145) (148) 
Total debt, net12,388  11,833  
    Less: current maturities of debt(78) (74) 
Total long-term debt$12,310  $11,759  
Credit Facilities
During the three months endedIn March 31, 2020, we drew $995 million on our senior secured revolving credit facility (the "Revolving Credit Facility") and, as, which we repaid in June 2020. As of March 31,June 30, 2020, we had $995 million0 amounts outstanding under our Revolving Credit Facility, with an interest rate of 2.05%,had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability under our Revolving Credit Facility was $3$998 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or RBI share 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.
On April 2, 2020, two of our subsidiaries (the "Borrowers") entered into a fifth amendment (the "Fifth Amendment") to the credit agreement (the "Credit Agreement") governing our senior secured term loan facilities (the "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.
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 threefour of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. During the threesix months ended March 31,June 30, 2020, we drew down the remaining availability of C$125 million under the TH Facility and, as of March 31,June 30, 2020, we had outstanding C$225 million under the TH Facility with a weighted average interest rate of 3.06%1.93%.
2020 Senior Notes
On April 7, 2020, the Borrowers entered into an indenture (the "2020 5.75% Senior Notes Indenture") in connection with the issuance of $500 million of 5.75% first lien notes due April 15, 2025 (the "2020 5.75% Senior Notes"). NaN principal payments are due until maturity and interest is paid semi-annually. The net proceeds from the offering of the 2020 5.75% Senior Notes will bewere used for general corporate purposes. In connection with the issuance of the 2020 5.75% Senior Notes, we capitalized approximately $9 million in debt issuance costs.
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Obligations under the 2020 5.75% Senior Notes are guaranteed on a senior secured basis, jointly and severally, by the Borrowers and substantially all of the Borrowers' Canadian and U.S. subsidiaries, including The TDL Group Corp., Burger King Worldwide, Inc., Popeyes Louisiana Kitchen, Inc. and substantially all of their respective Canadian and U.S. subsidiaries (the "Note Guarantors"). The 2020 5.75% Senior Notes are first lien senior secured obligations and rank equal in right of

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payment with all of the existing and future first lien senior debt of the Borrowers and Note Guarantors, including borrowings and guarantees of the Credit Facilities.
Our 2020 5.75% Senior Notes may be redeemed in whole or in part, on or after April 15, 2022 at the redemption prices set forth in the 2020 5.75% Senior Notes Indenture, plus accrued and unpaid interest, if any, at the date of redemption. The 2020 5.75% 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 March 31,June 30, 2020, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH 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
 March 31,
2020		 December 31,
2019
Fair value of our variable term debt and senior notes$12,148
 $12,075
Principal carrying amount of our variable term debt and senior notes12,877
 11,900

As of
June 30,
2020		December 31,
2019
Fair value of our variable term debt and senior notes$12,152  $12,075  
Principal carrying amount of our variable term debt and senior notes12,364  11,900  
Interest Expense, net
Interest expense, net consists of the following (in millions):
Three Months Ended June 30,Six Months Ended
June 30,
2020201920202019
Debt (a)$119  $128  $232  $252  
Finance lease obligations5  6  10  11  
Amortization of deferred financing costs and debt issuance discount6  8  12  15  
Interest income(2) (5) (7) (9) 
    Interest expense, net$128  $137  $247  $269  
(a)Amount includes $20 million and $19 million benefit during the three months ended June 30, 2020 and 2019, respectively, and $41 million and $37 million benefit during the six months ended June 30, 2020 and 2019, respectively, related to the amortization of the Excluded Component as defined in Note 13, Derivatives.

 Three Months Ended
March 31,
 2020 2019
Debt (a)$113
 $124
Finance lease obligations5
 5
Amortization of deferred financing costs and debt issuance discount6
 7
Interest income(5) (4)
    Interest expense, net$119
 $132
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(a)
Amount includes $21 million and $18 million benefit during the three months ended March 31, 2020 and 2019, respectively, related to the amortization of the Excluded Component as defined in Note 13, Derivatives.
Note 11. Income Taxes
Our effective tax rate was 16.8%(42.3)% and (0.9)% for the three and six months ended March 31, 2020.June 30, 2020, respectively. The effective tax rate during this periodthese periods reflects a $64 million increase in deferred tax assets which decreased the amounteffective tax rate by (55.2)% and (16.5)% during the three and six months ended June 30, 2020, respectively. Based on the analysis of final guidance related to the Tax Cuts and Jobs Act (the “Tax Act”) received during these periods, a deferred tax asset was recorded. The effective tax rate during these periods also reflects the mix of income from multiple tax jurisdictions and the impact of internal financing arrangements.
Our effective tax rate was 18.7%27.4% and 23.4% for the three and six months ended March 31, 2019.June 30, 2019, respectively. The effective tax rate during these periods reflects a $37 million increase in the provision for this period was primarilyunrecognized tax benefits related to a result ofprior restructuring transaction that is not applicable to ongoing operations which increased the effective tax rate by 10.4% and 5.6% during the three and six months ended June 30, 2019, respectively. The effective tax rate during these periods also reflects the mix of income from multiple tax jurisdictions, and the impact of internal financing arrangements and stock option exercises. Benefits from stock option exercises reduced the effective tax rate by 4.0% and 4.1% for the three and six months ended March 31, 2019.June 30, 2019, respectively.


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Note 12. Equity
During the threesix months ended March 31,June 30, 2020, Partnership exchanged 178,0462,672,900 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 was cancelled concurrently with the exchange.
Accumulated Other Comprehensive Income (Loss)
The following table displays the changes in the components of accumulated other comprehensive income (loss) (“AOCI”) (in millions):
DerivativesPensionsForeign Currency TranslationAccumulated Other Comprehensive Income (Loss)
Balance at December 31, 2019$306  $(29) $(1,455) $(1,178) 
Foreign currency translation adjustment—  —  (409) (409) 
Net change in fair value of derivatives, net of tax(14) —  —  (14) 
Amounts reclassified to earnings of cash flow hedges, net of tax29  —  —  29  
Balance at June 30, 2020$321  $(29) $(1,864) $(1,572) 
 Derivatives Pensions Foreign Currency Translation Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2019$306
 $(29) $(1,455) $(1,178)
Foreign currency translation adjustment—
 —
 (751) (751)
Net change in fair value of derivatives, net of tax197
 —
 —
 197
Amounts reclassified to earnings of cash flow hedges, net of tax11
 —
 —
 11
Balance at March 31, 2020$514
 $(29) $(2,206) $(1,721)

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Note 13. 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, 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 March 31,June 30, 2020, 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") beginning October 31, 2019 through the termination date of November 19, 2026. Additionally, at March 31,June 30, 2020, 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 and reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.
During 2019, we extended the term of our previous $3,500 million receive-variable, pay-fixed interest rate swaps to align the maturity date of the new 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 AOCI as of March 31,June 30, 2020 that we expect to be reclassified into interest expense within the next 12 months is $51 million.
During 2015, we settled certain interest rate swaps and recognized a net unrealized loss of $85 million in AOCI at the date of settlement. This amount gets reclassified into Interest expense, net as the original hedged forecasted transaction affects earnings. The amount of pre-tax losses in AOCI as of March 31,June 30, 2020 that we expect to be reclassified into interest expense within the next 12 months is $12 million.

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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 March 31,June 30, 2020, 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 March 31,June 30, 2020, we had 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 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.
At March 31,June 30, 2020, 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 March 31,June 30, 2020, 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 $500 million, entered during 2019, through the maturity date of February 17, 2024. 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
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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 March 31,June 30, 2020, 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 $83$84 million with maturities to AprilJuly 2021. 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)
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Derivatives designated as cash flow hedges(1)
Interest rate swaps$(48) $(77) $(348) $(121) 
Forward-currency contracts$(2) $(2) $5  $(4) 
Derivatives designated as net investment hedges
Cross-currency rate swaps$(228) $(53) $289  $(155) 
(1)We did not exclude any components from the cash flow hedge relationships presented in this table.
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Location of Gain or (Loss) Reclassified from AOCI into EarningsGain or (Loss) Reclassified from
AOCI into Earnings
Gain or (Loss) Recognized in Other Comprehensive Income (Loss)Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended March 31,2020201920202019
2020 2019
Derivatives designated as cash flow hedges(1)
   
Derivatives designated as cash flow hedgesDerivatives designated as cash flow hedges
Interest rate swaps$(300) $(44)Interest rate swapsInterest expense, net$(26) $(6) $(41) $(7) 
Forward-currency contracts$7
 $(2)Forward-currency contractsCost of sales$2  $2  $2  $4  
Location of Gain or (Loss) Recognized in EarningsGain or (Loss) Recognized in Earnings
(Amount Excluded from Effectiveness Testing)
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Derivatives designated as net investment hedges   Derivatives designated as net investment hedges
Cross-currency rate swaps$517
 $(102)Cross-currency rate swapsInterest expense, net$20  $19  $41  $37  
(1)We did not exclude any components from the cash flow hedge relationships presented in this table.
Fair Value as of
June 30,
2020		December 31, 2019Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate$—  $7  Other assets, net
Foreign currency2  —  Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency155  22  Other assets, net
Total assets at fair value$157  $29  
Liabilities:
Derivatives designated as cash flow hedges
Interest rate$490  $175  Other liabilities, net
Foreign currency—  2  Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency2  166  Other liabilities, net
Total liabilities at fair value$492  $343  
  Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from AOCI into Earnings
   Three Months Ended March 31,
    2020 2019
Derivatives designated as cash flow hedges      
Interest rate swaps Interest expense, net $(15) $(1)
Forward-currency contracts Cost of sales $—
 $2
       
  Location of Gain or (Loss) Recognized in Earnings 
Gain or (Loss) Recognized in Earnings
(Amount Excluded from Effectiveness Testing)
   Three Months Ended March 31,
    2020 2019
Derivatives designated as net investment hedges      
Cross-currency rate swaps Interest expense, net $21
 $18


 Fair Value as of    
 March 31, 2020 December 31, 2019 Balance Sheet Location
Assets:     
Derivatives designated as cash flow hedges     
Interest rate$—
 $7
 Other assets, net
Foreign currency$5
 $—
 Prepaids and other current assets
Derivatives designated as net investment hedges     
Foreign currency377
 22
 Other assets, net
Total assets at fair value$382
 $29
  
      
Liabilities:     
Derivatives designated as cash flow hedges     
Interest rate$461
 $175
 Other liabilities, net
Foreign currency—
 2
 Other accrued liabilities
Derivatives designated as net investment hedges     
Foreign currency—
 166
 Other liabilities, net
Total liabilities at fair value$461
 $343
  
21


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Note 14. Other Operating Expenses (Income), net
Other operating expenses (income), net consist of the following (in millions):
 Three Months Ended March 31,
 2020 2019
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings$(2) $3
Net losses (gains) on foreign exchange(8) (15)
Other, net(6) (5)
     Other operating expenses (income), net$(16) $(17)

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings$—  $(10) $(2) $(7) 
Litigation settlements (gains) and reserves, net1  —  1  —  
Net losses (gains) on foreign exchange18  12  10  (3) 
Other, net2  1  (4) (4) 
     Other operating expenses (income), net$21  $3  $5  $(14) 
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.
Note 15. 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. While we currently believe these claims are without merit, we are unable to predict the ultimate outcome of these cases 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.
While we currently believe these claims arethis claim is without merit, we are unable to predict the ultimate outcome of these casesthis case or estimate the range of possible loss, if any.


On June 30, 2020, a class action complaint was filed against Restaurant Brands International Inc., Restaurant Brands International Limited Partnership and TDL 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., 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. Both of the complaints allege that the defendants violated the plaintiffs’ 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
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connection with the collection of geolocation data through the Tim Hortons mobile application. Each plaintiff seeks injunctive relief and monetary damages for himself or herself and other members of the class. These cases are in preliminary stages and we intend to vigorously defend against these lawsuits, but we are unable to predict the ultimate outcome of either case or estimate the range of possible loss, if any.
Note 16. Segment Reporting
As stated in Note 1, Description of Business and Organization, we manage 3 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. Our business generates revenue from the following sources: (i) franchise revenues, consisting primarily of royalties 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.
The following tables present revenues, by segment and by country (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Revenues by operating segment:
     TH$567  $842  $1,266  $1,591  
     BK347  447  735  858  
     PLK134  111  272  217  
Total revenues$1,048  $1,400  $2,273  $2,666  
 Three Months Ended
March 31,
 2020 2019
Revenues by operating segment:   
     TH$699
 $749
     BK388
 411
     PLK138
 106
Total revenues$1,225
 $1,266


Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Revenues by country (a):
     Canada$514  $764  $1,146  $1,440  
     United States443  479  893  923  
     Other91  157  234  303  
Total revenues$1,048  $1,400  $2,273  $2,666  

 Three Months Ended
March 31,
 2020 2019
Revenues by country (a):   
     Canada$632
 $676
     United States450
 444
     Other143
 146
Total revenues$1,225
 $1,266

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

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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, and(ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, as well as(iii) other operating expenses (income), net. Other specifically identified costs associated withnet and, (iv) income/expenses from non-recurring projects are also excluded from Adjusted EBITDA, including Corporate restructuring and tax advisory fees related tonon-operating activities. For the interpretation and implementation of comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act enacted by the U.S. government on December 22, 2017, including Treasury regulations issued and proposed between 2018 and 2020, and non-operational Office centralization and relocationperiods referenced, this included costs incurred in connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively. respectively and corporate restructuring and related tax advisory fees, including those arising as a result of the adoption of the Tax Act and the implementing regulations thereunder.

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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 performance or the performance of an acquired business. A reconciliation of segment income to net income consists of the following (in millions):

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Segment income:
     TH$147  $287  $336  $524  
     BK160  252  360  474  
     PLK51  41  106  82  
          Adjusted EBITDA358  580  802  1,080  
Share-based compensation and non-cash incentive compensation expense23  19  44  44  
Corporate restructuring and tax advisory fees7  11  8  17  
Office centralization and relocation costs—  2  —  6  
Impact of equity method investments (a)18  9  22  10  
Other operating expenses (income), net21  3  5  (14) 
          EBITDA289  536  723  1,017  
Depreciation and amortization46  45  91  92  
          Income from operations243  491  632  925  
Interest expense, net128  137  247  269  
Income tax (benefit) expense(49) 97  (3) 153  
          Net income$164  $257  $388  $503  
(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.
 Three Months Ended March 31,
 2020 2019
Segment income:   
     TH$189
 $237
     BK200
 222
     PLK55
 41
          Adjusted EBITDA444
 500
Share-based compensation and non-cash incentive compensation expense21
 25
Corporate restructuring and tax advisory fees1
 6
Office centralization and relocation costs—
 4
Impact of equity method investments (a)4
 1
Other operating expenses (income), net(16) (17)
          EBITDA434
 481
Depreciation and amortization45
 47
          Income from operations389
 434
Interest expense, net119
 132
Income tax expense46
 56
          Net income$224
 $246
(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. 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 April 7, 2020, the Issuers entered into the 2020 5.750% Senior Notes Indenture with respect to the 2020 5.750% 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% Senior Notes Indenture with respect to the 2019 3.875% Senior Notes. On August 28, 2017, the Issuers entered into the 2017 5.000% Senior Notes Indenture with respect to the 2017 5.000% Senior Notes. On May 17, 2017, the Issuers entered into the 2017 4.25% Senior Notes Indenture with respect to the 2017 4.250% Senior Notes.
The agreement governing our Credit Facilities, the 2020 5.750% Senior Notes Indenture, the 2019 4.375% Senior Notes Indenture, the 2019 3.875% Senior Notes Indenture, the 2017 5.000% Senior Notes Indenture, and the 2017 4.25% 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.

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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.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Balance Sheets
(In millions of U.S. dollars)
As of March 31,June 30, 2020
 Consolidated BorrowersRBILPEliminationsConsolidated
ASSETS
Current assets:
Cash and cash equivalents$1,540  $—  $—  $1,540  
Accounts and notes receivable, net520  —  —  520  
Inventories, net96  —  —  96  
Prepaids and other current assets71  —  —  71  
Total current assets2,227  —  —  2,227  
Property and equipment, net1,958  —  —  1,958  
Operating lease assets, net1,117  —  —  1,117  
Intangible assets, net10,288  —  —  10,288  
Goodwill5,498  —  —  5,498  
Net investment in property leased to franchisees62  —  —  62  
Investment in subsidiaries—  3,852  (3,852) —  
Other assets, net866  —  —  866  
Total assets$22,016  $3,852  $(3,852) $22,016  
LIABILITIES AND EQUITY
Current liabilities:
Accounts and drafts payable$470  $—  $—  $470  
Other accrued liabilities596  —  —  596  
Gift card liability112  —  —  112  
Current portion of long-term debt and finance leases106  —  —  106  
Total current liabilities1,284  —  —  1,284  
Long-term debt, net of current portion12,310  —  —  12,310  
Finance leases, net of current portion299  —  —  299  
Operating lease liabilities, net of current portion1,046  —  —  1,046  
Other liabilities, net1,810  —  —  1,810  
Deferred income taxes, net1,415  —  —  1,415  
Total liabilities18,164  —  —  18,164  
Partners’ capital:
Class A common units—  7,947  —  7,947  
Partnership exchangeable units—  (2,526) —  (2,526) 
Common shares3,334  —  (3,334) —  
Retained Earnings2,087  —  (2,087) —  
Accumulated other comprehensive income (loss)(1,572) (1,572) 1,572  (1,572) 
Total Partners' capital/shareholders' equity3,849  3,849  (3,849) 3,849  
Noncontrolling interests3  3  (3) 3  
Total equity3,852  3,852  (3,852) 3,852  
Total liabilities and equity$22,016  $3,852  $(3,852) $22,016  
25
 Consolidated Borrowers RBILP Eliminations Consolidated
ASSETS       
Current assets:       
Cash and cash equivalents$2,498
 $—
 $—
 $2,498
Accounts and notes receivable, net414
 —
 —
 414
Inventories, net85
 —
 —
 85
Prepaids and other current assets62
 —
 —
 62
Total current assets3,059
 —
 —
 3,059
Property and equipment, net1,939
 —
 —
 1,939
Operating lease assets, net1,115
 —
 —
 1,115
Intangible assets, net10,085
 —
 —
 10,085
Goodwill5,376
 —
 —
 5,376
Net investment in property leased to franchisees49
 —
 —
 49
Intercompany receivable—
 242
 (242) —
Investment in subsidiaries—
 3,752
 (3,752) —
Other assets, net1,006
 —
 —
 1,006
Total assets$22,629
 $3,994
 $(3,994) $22,629
LIABILITIES AND EQUITY       
Current liabilities:       
Accounts and drafts payable$484
 $—
 $—
 $484
Other accrued liabilities537
 242
 —
 779
Gift card liability106
 —
 —
 106
Current portion of long term-debt and finance leases103
 —
 —
 103
Total current liabilities1,230
 242
 —
 1,472
Long-term debt, net of current portion12,822
 —
 —
 12,822
Finance leases, net of current portion283
 —
 —
 283
Operating lease liabilities, net of current portion1,039
 —
 —
 1,039
Other liabilities, net1,774
 —
 —
 1,774
Payables to affiliates242
 —
 (242) —
Deferred income taxes, net1,487
 —
 —
 1,487
Total liabilities18,877
 242
 (242) 18,877
Partners’ capital:       
Class A common units—
 7,840
 —
 7,840
Partnership exchangeable units—
 (2,370) —
 (2,370)
Common shares3,303
 —
 (3,303) —
Retained Earnings2,167
 —
 (2,167) —
Accumulated other comprehensive income (loss)(1,721) (1,721) 1,721
 (1,721)
Total Partners' capital/shareholders' equity3,749
 3,749
 (3,749) 3,749
Noncontrolling interests3
 3
 (3) 3
Total equity3,752
 3,752
 (3,752) 3,752
Total liabilities and equity$22,629
 $3,994
 $(3,994) $22,629

23


RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Balance Sheets
(In millions of U.S. dollars)
As of December 31, 2019
 Consolidated BorrowersRBILPEliminationsConsolidated
ASSETS
Current assets:
Cash and cash equivalents$1,533  $—  $—  $1,533  
Accounts and notes receivable, net527  —  —  527  
Inventories, net84  —  —  84  
Prepaids and other current assets52  —  —  52  
Total current assets2,196  —  —  2,196  
Property and equipment, net2,007  —  —  2,007  
Operating lease assets. net1,176  —  —  1,176  
Intangible assets, net10,563  —  —  10,563  
Goodwill5,651  —  —  5,651  
Net investment in property leased to franchisees48  —  —  48  
Intercompany receivable—  232  (232) —  
Investment in subsidiaries—  4,259  (4,259) —  
Other assets, net719  —  —  719  
Total assets$22,360  $4,491  $(4,491) $22,360  
LIABILITIES AND EQUITY
Current liabilities:
Accounts and drafts payable$644  $—  $—  $644  
Other accrued liabilities558  232  —  790  
Gift card liability168  —  —  168  
Current portion of long-term debt and finance leases101  —  —  101  
Total current liabilities1,471  232  —  1,703  
Long-term debt, net of current portion11,759  —  —  11,759  
Finance leases, net of current portion288  —  —  288  
Operating lease liabilities, net of current portion1,089  —  —  1,089  
Other liabilities, net1,698  —  —  1,698  
Payables to affiliates232  —  (232) —  
Deferred income taxes, net1,564  —  —  1,564  
Total liabilities18,101  232  (232) 18,101  
Partners’ capital:
Class A common units—  7,786  —  7,786  
Partnership exchangeable units—  (2,353) —  (2,353) 
Common shares3,248  —  (3,248) —  
Retained Earnings2,185  —  (2,185) —  
Accumulated other comprehensive income (loss)(1,178) (1,178) 1,178  (1,178) 
Total Partners' capital/shareholders' equity4,255  4,255  (4,255) 4,255  
Noncontrolling interests4  4  (4) 4  
Total equity4,259  4,259  (4,259) 4,259  
Total liabilities and equity$22,360  $4,491  $(4,491) $22,360  
26
 Consolidated Borrowers RBILP Eliminations Consolidated
ASSETS       
Current assets:       
Cash and cash equivalents$1,533
 $—
 $—
 $1,533
Accounts and notes receivable, net527
 —
 —
 527
Inventories, net84
 —
 —
 84
Prepaids and other current assets52
 —
 —
 52
Total current assets2,196
 —
 —
 2,196
Property and equipment, net2,007
 —
 —
 2,007
Operating lease assets. net1,176
 —
 —
 1,176
Intangible assets, net10,563
 —
 —
 10,563
Goodwill5,651
 —
 —
 5,651
Net investment in property leased to franchisees48
 —
 —
 48
Intercompany receivable—
 232
 (232) —
Investment in subsidiaries—
 4,259
 (4,259) —
Other assets, net719
 —
 —
 719
Total assets$22,360
 $4,491
 $(4,491) $22,360
LIABILITIES AND EQUITY       
Current liabilities:       
Accounts and drafts payable$644
 $—
 $—
 $644
Other accrued liabilities558
 232
 —
 790
Gift card liability168
 —
 —
 168
Current portion of long-term debt and finance leases101
 —
 —
 101
Total current liabilities1,471
 232
 —
 1,703
Long-term debt, net of current portion11,759
 —
 —
 11,759
Finance leases, net of current portion288
 —
 —
 288
Operating lease liabilities, net of current portion1,089
 —
 —
 1,089
Other liabilities, net1,698
 —
 —
 1,698
Payables to affiliates232
 —
 (232) —
Deferred income taxes, net1,564
 —
 —
 1,564
Total liabilities18,101
 232
 (232) 18,101
Partners’ capital:       
Class A common units—
 7,786
 —
 7,786
Partnership exchangeable units—
 (2,353) —
 (2,353)
Common shares3,248
 —
 (3,248) —
Retained Earnings2,185
 —
 (2,185) —
Accumulated other comprehensive income (loss)(1,178) (1,178) 1,178
 (1,178)
Total Partners' capital/shareholders' equity4,255
 4,255
 (4,255) 4,255
Noncontrolling interests4
 4
 (4) 4
Total equity4,259
 4,259
 (4,259) 4,259
Total liabilities and equity$22,360
 $4,491
 $(4,491) $22,360


24


RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Statements of Operations
(In millions of U.S. dollars)
Three Months Ended March 31,June 30, 2020
Consolidated BorrowersRBILPEliminationsConsolidated
Revenues:
Sales$406  $—  $—  $406  
Franchise and property revenues642  —  —  642  
Total revenues1,048  —  —  1,048  
Operating costs and expenses:
Cost of sales339  —  —  339  
Franchise and property expenses134  —  —  134  
Selling, general and administrative expenses295  —  —  295  
(Income) loss from equity method investments16  —  —  16  
Other operating expenses (income), net21  —  —  21  
Total operating costs and expenses805  —  —  805  
Income from operations243  —  —  243  
Interest expense, net128  —  —  128  
Income before income taxes115  —  —  115  
Income tax (benefit) expense(49) —  —  (49) 
Net income164  —  —  164  
Equity in earnings of consolidated subsidiaries—  164  (164) —  
Net income (loss)164  164  (164) 164  
Net income (loss) attributable to noncontrolling interests1  1  (1) 1  
Net income (loss) attributable to common unitholders$163  $163  $(163) $163  
Comprehensive income (loss)$313  $313  $(313) $313  


27
 Consolidated Borrowers RBILP Eliminations Consolidated
Revenues:       
Sales$503
 $—
 $—
 $503
Franchise and property revenues722
 —
 —
 722
Total revenues1,225
 —
 —
 1,225
Operating costs and expenses:       
Cost of sales399
 —
 —
 399
Franchise and property expenses126
 —
 —
 126
Selling, general and administrative expenses325
 —
 —
 325
(Income) loss from equity method investments2
 —
 —
 2
Other operating expenses (income), net(16) —
 —
 (16)
Total operating costs and expenses836
 —
 —
 836
Income from operations389
 —
 —
 389
Interest expense, net119
 —
 —
 119
Income before income taxes270
 —
 —
 270
Income tax expense46
 —
 —
 46
Net income224
 —
 —
 224
Equity in earnings of consolidated subsidiaries—
 224
 (224) —
Net income (loss)224
 224
 (224) 224
Net income (loss) attributable to noncontrolling interests—
 —
 —
 —
Net income (loss) attributable to common unitholders$224
 $224
 $(224) $224
Comprehensive income (loss)$(319) $(319) $319
 $(319)




25


RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Statements of Operations
(In millions of U.S. dollars)
Six Months Ended June 30, 2020
Consolidated BorrowersRBILPEliminationsConsolidated
Revenues:
Sales$909  $—  $—  $909  
Franchise and property revenues1,364  —  —  1,364  
Total revenues2,273  —  —  2,273  
Operating costs and expenses:
Cost of sales738  —  —  738  
Franchise and property expenses260  —  —  260  
Selling, general and administrative expenses620  —  —  620  
(Income) loss from equity method investments18  —  —  18  
Other operating expenses (income), net5  —  —  5  
Total operating costs and expenses1,641  —  —  1,641  
Income from operations632  —  —  632  
Interest expense, net247  —  —  247  
Income before income taxes385  —  —  385  
Income tax (benefit) expense(3) —  —  (3) 
Net income388  —  —  388  
Equity in earnings of consolidated subsidiaries—  388  (388) —  
Net income (loss)388  388  (388) 388  
Net income (loss) attributable to noncontrolling interests1  1  (1) 1  
Net income (loss) attributable to common unitholders$387  $387  $(387) $387  
Comprehensive income (loss)$(6) $(6) $6  $(6) 


28
RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Statements of Operations
(In millions of U.S. dollars)
Three Months Ended March 31,June 30, 2019
Consolidated BorrowersRBILPEliminationsConsolidated
Revenues:
Sales$589  $—  $—  $589  
Franchise and property revenues811  —  —  811  
Total revenues1,400  —  —  1,400  
Operating costs and expenses:
Cost of sales453  —  —  453  
Franchise and property expenses135  —  —  135  
Selling, general and administrative expenses316  —  —  316  
(Income) loss from equity method investments2  —  —  2  
Other operating expenses (income), net3  —  —  3  
Total operating costs and expenses909  —  —  909  
Income from operations491  —  —  491  
Interest expense, net137  —  —  137  
Income before income taxes354  —  —  354  
Income tax expense97  —  —  97  
Net income257  —  —  257  
Equity in earnings of consolidated subsidiaries—  257  (257) —  
Net income (loss)257  257  (257) 257  
Net income (loss) attributable to noncontrolling interests—  —  —  —  
Net income (loss) attributable to common unitholders$257  $257  $(257) $257  
Comprehensive income (loss)$362  $362  $(362) $362  


29
 Consolidated Borrowers RBILP Eliminations Consolidated
Revenues:       
Sales$522
 $—
 $—
 $522
Franchise and property revenues744
 —
 —
 744
Total revenues1,266
 —
 —
 1,266
Operating costs and expenses:       
Cost of sales406
 —
 —
 406
Franchise and property expenses133
 —
 —
 133
Selling, general and administrative expenses312
 —
 —
 312
(Income) loss from equity method investments(2) —
 —
 (2)
Other operating expenses (income), net(17) —
 —
 (17)
Total operating costs and expenses832
 —
 —
 832
Income from operations434
 —
 —
 434
Interest expense, net132
 —
 —
 132
Income before income taxes302
 —
 —
 302
Income tax expense56
 —
 —
 56
Net income246
 —
 —
 246
Equity in earnings of consolidated subsidiaries—
 246
 (246) —
Net income (loss)246
 246
 (246) 246
Net income (loss) attributable to noncontrolling interests—
 —
 —
 —
Net income (loss) attributable to common unitholders$246
 $246
 $(246) $246
Comprehensive income (loss)$294
 $294
 $(294) $294




26

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Statements of Operations
(In millions of U.S. dollars)
Six Months Ended June 30, 2019
Consolidated BorrowersRBILPEliminationsConsolidated
Revenues:
Sales$1,111  $—  $—  $1,111  
Franchise and property revenues1,555  —  —  1,555  
Total revenues2,666  —  —  2,666  
Operating costs and expenses:
Cost of sales859  —  —  859  
Franchise and property expenses268  —  —  268  
Selling, general and administrative expenses628  —  —  628  
(Income) loss from equity method investments—  —  —  —  
Other operating expenses (income), net(14) —  —  (14) 
Total operating costs and expenses1,741  —  —  1,741  
Income from operations925  —  —  925  
Interest expense, net269  —  —  269  
Income before income taxes656  —  —  656  
Income tax expense153  —  —  153  
Net income503  —  —  503  
Equity in earnings of consolidated subsidiaries—  503  (503) —  
Net income (loss)503  503  (503) 503  
Net income (loss) attributable to noncontrolling interests—  —  —  —  
Net income (loss) attributable to common unitholders$503  $503  $(503) $503  
Comprehensive income (loss)$656  $656  $(656) $656  


30
RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Statements of Cash Flows
(In millions of U.S. dollars)
ThreeSix months ended March 31,June 30, 2020
Consolidated BorrowersRBILPEliminationsConsolidated
Cash flows from operating activities:
Net income$388  $388  $(388) $388  
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Equity in loss (earnings) of consolidated subsidiaries—  (388) 388  —  
Depreciation and amortization91  —  —  91  
Amortization of deferred financing costs and debt issuance discount12  —  —  12  
(Income) loss from equity method investments18  —  —  18  
(Gain) loss on remeasurement of foreign denominated transactions10  —  —  10  
Net (gains) losses on derivatives(1) —  —  (1) 
Share-based compensation expense39  —  —  39  
Deferred income taxes(131) —  —  (131) 
Other20  —  —  20  
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable(36) —  —  (36) 
Inventories and prepaids and other current assets(28) —  —  (28) 
Accounts and drafts payable(158) —  —  (158) 
Other accrued liabilities and gift card liability(13) —  —  (13) 
Tenant inducements paid to franchisees(5) —  —  (5) 
Other long-term assets and liabilities(10) —  —  (10) 
Net cash provided by (used for) operating activities196  —  —  196  
Cash flows from investing activities:
Payments for property and equipment(39) —  —  (39) 
Net proceeds from disposal of assets, restaurant closures, and refranchisings5  —  —  5  
Settlement/sale of derivatives, net22  —  —  22  
Net cash provided by (used for) investing activities(12) —  —  (12) 
Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt1,585  —  —  1,585  
Repayments of revolving line of credit, long-term debt and finance leases(1,045) —  —  (1,045) 
Payment of financing costs(10) —  —  (10) 
Distributions on Class A common and Partnership exchangeable units—  (716) —  (716) 
Capital contribution from RBI41  —  —  41  
Distributions from subsidiaries(716) 716  —  —  
(Payments) proceeds from derivatives(14) —  —  (14) 
Other financing activities, net(2) —  —  (2) 
Net cash provided by (used for) financing activities(161) —  —  (161) 
Effect of exchange rates on cash and cash equivalents(16) —  —  (16) 
Increase (decrease) in cash and cash equivalents7  —  —  7  
Cash and cash equivalents at beginning of period1,533  —  —  1,533  
Cash and cash equivalents at end of period$1,540  $—  $—  $1,540  
31
 Consolidated Borrowers RBILP Eliminations Consolidated
Cash flows from operating activities:       
Net income$224
 $224
 $(224) $224
Adjustments to reconcile net income to net cash (used for) provided by operating activities:       
Equity in loss (earnings) of consolidated subsidiaries—
 (224) 224
 —
Depreciation and amortization45
 —
 —
 45
Amortization of deferred financing costs and debt issuance discount6
 —
 —
 6
(Income) loss from equity method investments2
 —
 —
 2
(Gain) loss on remeasurement of foreign denominated transactions(8) —
 —
 (8)
Net (gains) losses on derivatives(6) —
 —
 (6)
Share-based compensation expense19
 —
 —
 19
Deferred income taxes(31) —
 —
 (31)
Other(4) —
 —
 (4)
Changes in current assets and liabilities, excluding acquisitions and dispositions:       
Accounts and notes receivable94
 —
 —
 94
Inventories and prepaids and other current assets(13) —
 —
 (13)
Accounts and drafts payable(136) —
 —
 (136)
Other accrued liabilities and gift card liability(67) —
 —
 (67)
Tenant inducements paid to franchisees(3) —
 —
 (3)
Other long-term assets and liabilities14
 —
 —
 14
Net cash provided by (used for) operating activities136
 —
 —
 136
Cash flows from investing activities:       
Payments for property and equipment(19) —
 —
 (19)
Net proceeds from disposal of assets, restaurant closures, and refranchisings4
 —
 —
 4
Settlement/sale of derivatives, net12
 —
 —
 12
Net cash provided by (used for) investing activities(3) —
 —
 (3)
Cash flows from financing activities:       
Proceeds from revolving line of credit and long-term debt1,085
 —
 —
 1,085
Repayments of long-term debt and finance leases(25) —
 —
 (25)
Distributions on Class A common and Partnership exchangeable units—
 (232) —
 (232)
Capital contribution from RBI Inc.30
 —
 —
 30
Distributions from subsidiaries(232) 232
 —
 —
(Payments) proceeds from derivatives(2) —
 —
 (2)
Other financing activities, net(1) —
 —
 (1)
Net cash provided by (used for) financing activities855
 —
 —
 855
Effect of exchange rates on cash and cash equivalents(23) —
 —
 (23)
Increase (decrease) in cash and cash equivalents965
 —
 —
 965
Cash and cash equivalents at beginning of period1,533
 —
 —
 1,533
Cash and cash equivalents at end of period$2,498
 $—
 $—
 $2,498

27


RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES
Condensed Consolidating Statements of Cash Flows
(In millions of U.S. dollars)
ThreeSix Months Ended March 31,June 30, 2019
Consolidated BorrowersRBILPEliminationsConsolidated
Cash flows from operating activities:
Net income$503  $503  $(503) $503  
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Equity in loss (earnings) of consolidated subsidiaries—  (503) 503  —  
Depreciation and amortization92  —  —  92  
Amortization of deferred financing costs and debt issuance discount15  —  —  15  
(Gain) loss on remeasurement of foreign denominated transactions(3) —  —  (3) 
Net (gains) losses on derivatives(34) —  —  (34) 
Share-based compensation expense39  —  —  39  
Deferred income taxes23  —  —  23  
Other(3) —  —  (3) 
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable(16) —  —  (16) 
Inventories and prepaids and other current assets(10) —  —  (10) 
Accounts and drafts payable(40) —  —  (40) 
Other accrued liabilities and gift card liability(166) —  —  (166) 
Tenant inducements paid to franchisees(8) —  —  (8) 
Other long-term assets and liabilities83  —  —  83  
Net cash provided by (used for) operating activities475  —  —  475  
Cash flows from investing activities:
Payments for property and equipment(14) —  —  (14) 
Net proceeds from disposal of assets, restaurant closures, and refranchisings22  —  —  22  
Settlement/sale of derivatives, net15  —  —  15  
Net cash provided by (used for) investing activities23  —  —  23  
Cash flows from financing activities:
Repayments of long-term debt and finance leases(48) —  —  (48) 
Distributions on Class A common and Partnership exchangeable units—  (437) —  (437) 
Capital contribution from RBI80  —  —  80  
Distributions from subsidiaries(437) 437  —  —  
(Payments) proceeds from derivatives11  —  —  11  
Other financing activities, net(1) —  —  (1) 
Net cash (used for) provided by financing activities(395) —  —  (395) 
Effect of exchange rates on cash and cash equivalents12  —  —  12  
Increase (decrease) in cash and cash equivalents115  —  —  115  
Cash and cash equivalents at beginning of period913  —  —  913  
Cash and cash equivalents at end of period$1,028  $—  $—  $1,028  
 Consolidated Borrowers RBILP Eliminations Consolidated
Cash flows from operating activities:       
Net income$246
 $246
 $(246) $246
Adjustments to reconcile net income to net cash (used for) provided by operating activities:       
Equity in loss (earnings) of consolidated subsidiaries—
 (246) 246
 —
Depreciation and amortization47
 —
 —
 47
Amortization of deferred financing costs and debt issuance discount7
 —
 —
 7
(Income) loss from equity method investments(2) —
 —
 (2)
(Gain) loss on remeasurement of foreign denominated transactions(15) —
 —
 (15)
Net (gains) losses on derivatives(20) —
 —
 (20)
Share-based compensation expense22
 —
 —
 22
Deferred income taxes38
 —
 —
 38
Other3
 —
 —
 3
Changes in current assets and liabilities, excluding acquisitions and dispositions:       
Accounts and notes receivable14
 —
 —
 14
Inventories and prepaids and other current assets(13) —
 —
 (13)
Accounts and drafts payable(69) —
 —
 (69)
Other accrued liabilities and gift card liability(126) —
 —
 (126)
Other long-term assets and liabilities22
 —
 —
 22
Net cash provided by (used for) operating activities154
 —
 —
 154
Cash flows from investing activities:       
Payments for property and equipment(5) —
 —
 (5)
Net proceeds from disposal of assets, restaurant closures, and refranchisings4
 —
 —
 4
Settlement/sale of derivatives, net11
 —
 —
 11
Other investing activities, net1
 —
 —
 1
Net cash provided by (used for) investing activities11
 —
 —
 11
Cash flows from financing activities:       
Repayments of long-term debt and finance leases(23) —
 —
 (23)
Distributions on Class A common and Partnership exchangeable units—
 (207) —
 (207)
Capital contribution from RBI Inc.42
 —
 —
 42
Distributions from subsidiaries(207) 207
 —
 —
(Payments) proceeds from derivatives5
 —
 —
 5
Other financing activities, net1
 —
 —
 1
Net cash (used for) provided by financing activities(182) —
 —
 (182)
Effect of exchange rates on cash and cash equivalents6
 —
 —
 6
Increase (decrease) in cash and cash equivalents(11) —
 —
 (11)
Cash and cash equivalents at beginning of period913
 —
 —
 913
Cash and cash equivalents at end of period$902
 $—
 $—
 $902
32

28

Note 18. Subsequent Events
Cash Distributions/Dividends
On April 3, 2020, RBI paid a cash dividend of $0.52 per RBI common share to common shareholders of record on March 16, 2020. 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 $0.52 per exchangeable unit to holders of record on March 16, 2020.
Subsequent to March 31,June 30, 2020, the RBI board of directors declared a cash dividend of $0.52 per RBI common share, which will be paid on June 30,October 2, 2020 to RBI common shareholders of record on June 17,September 18, 2020. 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 $0.52 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.
Fifth Amendment to the Credit Agreement and Issuance of 2020 Senior Notes
As discussed in Note 10, Long-Term Debt, on April 2, 2020, the Borrowers entered into the Fifth Amendment to the Credit Agreement and on April 7, 2020, the Borrowers entered into the 2020 5.75% Senior Notes Indenture in connection with the issuance of the 2020 5.75% Senior Notes.
*****

33
29

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$32 billion in annual system-wide sales and over 27,000 restaurants in more than 100 countries and U.S. territories as of March 31,June 30, 2020. Our Tim Hortons®, Burger King®, and Popeyes® brands have similar franchised business models with complementary daypart mixes and product platforms. Our three 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, chicken tenders, fried shrimp, and other seafood, red beans and rice, and other regional items.
We have three operating and reportable segments: (1) Tim Hortons (“TH”); (2) Burger King (“BK”); and (3) Popeyes Louisiana Kitchen (“PLK”). Our business generates revenue from the following sources: (i) franchise revenues, consisting primarily of royalties 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.
COVID-19
The global crisis resulting from the spread of coronavirus (COVID-19) has had a substantial impact on our global restaurant operations for the three and six months ended March 31,June 30, 2020, which is expected to continue with the timing of recovery uncertain. System-wide sales growth, system-wide sales and comparable sales were also negatively impacted for the three and six months ended March 31,June 30, 2020 as a result of the impact of COVID-19. During the first quarter,and second quarters, substantially all TH, BK and PLK restaurants remained open in North America with limited operations, such as Drive-thru, Takeout and Delivery (where applicable) and that currently remains the case. In Latin America and in Asia Pacific, someWhile certain markets have opened for dine-in guests, the capacity may be limited, and local conditions may lead to closures or increased limitations. Some international markets temporarily closed most or all restaurants and the restaurants that remainremained open across the regionor have reopened may have limited operations. However, Asia Pacific markets started temporarily closingAs of the end of July, in Asia-Pacific substantially all of the restaurants earlier in the quarter and a number of those restaurants have been able to reopen, including in China. Inare open; Europe, the Middle EastMiddle-East and Africa several major markets including Italy, Spain, France and the United Kingdom have closed restaurants, and the restaurants that remain open across the region may have limited operations. Recently, in some European markets a small number of restaurants are also beginning to reopennow more than 90% open and approximately 80% of the Latin America restaurants are open, in many cases with limited operations.

3034


Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The financial impact of COVID-19 has had, and is expected to continue to have, an adverse effect on many of our franchisees’ liquidity and we are working closely with our franchisees around the world to monitor and assist them with access to appropriate sources of liquidity in order to sustain their businesses throughout this crisis. During the threesix months ended March 31,June 30, 2020, we initiated a rent relief programprograms for eligible TH franchisees in Canada who lease property from us and also initiated rent relief programs effective April 1, 2020 for eligible BK franchisees in the U.S. and Canada who lease property from us. While in effect, these programs will provide working capital support to franchisees and will result in a reduction in our property revenues. See Note 4 to the accompanying unaudited Condensed Consolidated Financial Statements.
Beginning in AprilDuring the second quarter of 2020, we are providingprovided cash flow support by extending loans to eligible BK franchisees in the U.S. and advancing certain cash payments to eligible TH franchisees in Canada. We have also temporarily deferred franchisee capital investment commitments for restaurant renovations and new restaurant development globally, based on the individual circumstances of relevant markets and will consider when to restart these as circumstances unfold.restaurant owners. In addition, we have dedicated resources across all three of our brands to work one-on-one with restaurant owners and provide guidance and support to franchisees.
WeDuring the three and six months ended June 30, 2020, we recorded higher bad debt expense than the periods ended June 30, 2019. While all receivables remain contractually due and payable to us, the certainty of the amount and timing of payments has been impacted by the COVID-19 pandemic. Therefore, our bad debt expense during the three and six months ended June 30, 2020 reflects an adjustment to our historical collections experience to incorporate an estimate of the impact of current economic conditions resulting from the COVID-19 pandemic. Actual collections may be materially higher or lower than this estimate reflects since it is reasonably possible the duration and future impact of the COVID-19 pandemic on our business or our franchisees may differ from our assumptions.
While we cannot currently estimate the duration or future negative financial impact of the COVID-19 pandemic on our business however,or our franchisees, we expect that the COVID-19 pandemic will impact our system-wide sales growth, system-wide sales, comparable sales, results of operations and cash flows fornegative effects to continue into the three months ending June 30, 2020 more significantly than in the firstthird quarter of 2020.
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 and BK 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 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.

35
Recent Events and Factors Affecting Comparability
Tax Reform
In December 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) that significantly revised the U.S. tax code generally effective January 1, 2018 by, among other changes, lowering the federal corporate income tax rate from 35% to 21%, limiting deductibility of interest expense and performance based incentive compensation and implementing a modified territorial tax system. As a Canadian entity, we generally would be classified as a foreign entity (and, therefore, a non-U.S. tax resident) under general rules of U.S. federal income taxation. However, we have subsidiaries subject to U.S. federal income taxation and therefore the Tax Act impacted our consolidated results of operations in 2019 and the current period, and is expected to continue to impact our consolidated results of operations in future periods.

31

We recorded $1$7 million and $6$11 million of costs during the three months ended March 31,June 30, 2020 and 2019, respectively, and $8 million and $17 million of costs during the six months ended June 30, 2020 and 2019, respectively, which are classified as selling, general and administrative expenses in our condensed consolidated statements of operations, arising primarily from professional advisory and consulting services associated with interpretation, analysis and corporate restructuring initiatives related to recently issued, final and proposed regulations and guidance issued by the U.S. Treasury, the IRS and state tax authorities in their ongoing efforts to interpret and implement the Tax Act and related state and local tax implications (“Corporate restructuring and tax advisory fees”).
In early AprilDuring the three months ended June 30, 2020, various final and proposed regulations wereguidance was issued by the U.S. Treasury relating to the Tax Act. We are still reviewing theseAfter review of such guidance, we recorded a deferred tax asset of approximately $64 million related to certain tax attribute carryforwards, which we now expect to be able to deduct in future years under recently issued regulations and their potential effect.implementing the Tax Act.
Office Centralization and Relocation Costs
In connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively, we incurred certain non-operational expenses ("Office centralization and relocation costs") totaling $4$2 million and $6 million during the three and six months ended March 31,June 30, 2019 consisting primarily of moving costs and relocation-driven compensation expenses, which are classified as selling, general and administrative expenses in our condensed consolidated statements of operations. We did not incur any Office centralization and relocation costs during the three months ended March 31, 2020 and do not expect to incur any additional Office centralization and relocation costs during 2020.
36
Results of Operations for the Three and Six Months Ended March 31,June 30, 2020 and 2019
Tabular amounts in millions of U.S. dollars unless noted otherwise. Segment income may not calculate exactly due to rounding.
ConsolidatedThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20202019 Favorable / (Unfavorable)20202019 Favorable / (Unfavorable)
Revenues:
Sales$406  $589  $(183) $(17) $(166) $909  $1,111  $(202) $(22) $(180) 
Franchise and property revenues642  811  (169) (18) (151) 1,364  1,555  (191) (27) (164) 
Total revenues1,048  1,400  (352) (35) (317) 2,273  2,666  (393) (49) (344) 
Operating costs and expenses:
Cost of sales339  453  114  13  101  738  859  121  17  104  
Franchise and property expenses134  135  1  3  (2) 260  268  8  4  4  
Selling, general and administrative expenses295  316  21  3  18  620  628  8  5  3  
(Income) loss from equity method investments16  2  (14) —  (14) 18  —  (18) (1) (17) 
Other operating expenses (income), net21  3  (18) —  (18) 5  (14) (19) (1) (18) 
Total operating costs and expenses805  909  104  19  85  1,641  1,741  100  24  76  
Income from operations243  491  (248) (16) (232) 632  925  (293) (25) (268) 
Interest expense, net128  137  9  —  9  247  269  22  —  22  
Income before income taxes115  354  (239) (16) (223) 385  656  (271) (25) (246) 
Income tax (benefit) expense(49) 97  146  1  145  (3) 153  156  1  155  
Net income$164  $257  $(93) $(15) $(78) $388  $503  $(115) $(24) $(91) 
ConsolidatedThree Months Ended March 31, Variance FX Impact (a) Variance Excluding FX Impact
 2020 2019  Favorable / (Unfavorable)
Revenues:         
Sales$503
 $522
 $(19) $(5) $(14)
Franchise and property revenues722
 744
 (22) (9) (13)
Total revenues1,225
 1,266
 (41) (14) (27)
Operating costs and expenses:         
Cost of sales399
 406
 7
 4
 3
Franchise and property expenses126
 133
 7
 1
 6
Selling, general and administrative expenses325
 312
 (13) 2
 (15)
(Income) loss from equity method investments2
 (2) (4) (1) (3)
Other operating expenses (income), net(16) (17) (1) (1) —
Total operating costs and expenses836
 832
 (4) 5
 (9)
Income from operations389
 434
 (45) (9) (36)
Interest expense, net119
 132
 13
 —
 13
Income before income taxes270
 302
 (32) (9) (23)
Income tax expense46
 56
 10
 —
 10
Net income$224
 $246
 $(22) $(9) $(13)
(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.
(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.

TH SegmentThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20202019 Favorable / (Unfavorable)20202019 Favorable / (Unfavorable)
Revenues:
Sales$374  $551  $(177) $(17) $(160) $839  $1,034  $(195) $(22) $(173) 
Franchise and property revenues193  291  (98) (9) (89) 427  557  (130) (11) (119) 
Total revenues567  842  (275) (26) (249) 1,266  1,591  (325) (33) (292) 
Cost of sales307  420  113  13  100  673  792  119  17  102  
Franchise and property expenses83  90  7  3  4  167  177  10  4  6  
Segment SG&A61  77  16  2  14  148  159  11  3  8  
Segment depreciation and amortization (b)28  26  (2) 1  (3) 54  52  (2) 1  (3) 
Segment income (c)147  287  (140) (9) (131) 336  524  (188) (11) (177) 
(b)Segment depreciation and amortization consists of depreciation and amortization included in cost of sales and franchise and property expenses.
(c)TH segment income includes $2 million and $5 million of cash distributions received from equity method investments for the three months ended June 30, 2020 and 2019, respectively. TH segment income includes $4 million and $8 million of cash distributions received from equity method investments for the six months ended June 30, 2020 and 2019, respectively.

32
37

BK SegmentThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20202019 Favorable / (Unfavorable)20202019 Favorable / (Unfavorable)
Revenues:
Sales$15  $19  $(4) $—  $(4) $32  $38  $(6) $—  $(6) 
Franchise and property revenues332  428  (96) (9) (87) 703  820  (117) (16) (101) 
Total revenues347  447  (100) (9) (91) 735  858  (123) (16) (107) 
Cost of sales16  17  1  —  1  33  35  2  —  2  
Franchise and property expenses48  42  (6) —  (6) 87  85  (2) —  (2) 
Segment SG&A135  149  14  —  14  280  290  10  1  9  
Segment depreciation and amortization (b)12  12  —  —  —  24  25  1  —  1  
Segment income (d)160  252  (92) (9) (83) 360  474  (114) (15) (99) 
(d)BK segment income includes $1 million and $2 million of cash distributions received from equity method investments for the three and six months ended June 30, 2019, respectively. No significant amounts were received for the three and six months ended June 30, 2020.

PLK SegmentThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20202019 Favorable / (Unfavorable)20202019 Favorable / (Unfavorable)
Revenues:
Sales$17  $19  $(2) $—  $(2) $38  $39  $(1) $—  $(1) 
Franchise and property revenues117  92  25  —  25  234  178  56  —  56  
Total revenues134  111  23  —  23  272  217  55  —  55  
Cost of sales16  16  —  —  —  32  32  —  —  —  
Franchise and property expenses3  3  —  —  —  6  6  —  —  —  
Segment SG&A65  54  (11) —  (11) 131  103  (28) —  (28) 
Segment depreciation and amortization (b)2  3  1  —  1  4  6  2  —  2  
Segment income51  41  10  —  10  106  82  24  —  24  
38
TH SegmentThree Months Ended March 31, Variance FX Impact (a) Variance Excluding FX Impact
 2020 2019  Favorable / (Unfavorable)
Revenues:         
Sales$465
 $483
 $(18) $(5) $(13)
Franchise and property revenues234
 266
 (32) (2) (30)
Total revenues699
 749
 (50) (7) (43)
Cost of sales366
 372
 6
 4
 2
Franchise and property expenses84
 87
 3
 1
 2
Segment SG&A87
 82
 (5) 1
 (6)
Segment depreciation and amortization (b)26
 26
 —
 —
 —
Segment income (c)189
 237
 (48) (2) (46)
(b)Segment depreciation and amortization consists of depreciation and amortization included in cost of sales and franchise and property expenses.
(c)TH segment income includes $2 million and $3 million of cash distributions received from equity method investments for the three months ended March 31, 2020 and 2019, respectively.

BK SegmentThree Months Ended March 31, Variance FX Impact (a) Variance Excluding FX Impact
 2020 2019  Favorable / (Unfavorable)
Revenues:         
Sales$17
 $19
 $(2) $—
 $(2)
Franchise and property revenues371
 392
 (21) (7) (14)
Total revenues388
 411
 (23) (7) (16)
Cost of sales17
 18
 1
 —
 1
Franchise and property expenses39
 43
 4
 —
 4
Segment SG&A145
 141
 (4) 1
 (5)
Segment depreciation and amortization (b)12
 13
 1
 —
 1
Segment income (d)200
 222
 (22) (6) (16)
(d)BK segment income includes $1 million of cash distributions received from equity method investments for the three months ended March 31, 2019. No significant amounts were received for the three months ended March 31, 2020.

PLK SegmentThree Months Ended March 31, Variance FX Impact (a) Variance Excluding FX Impact
 2020 2019  Favorable / (Unfavorable)
Revenues:         
Sales$21
 $20
 $1
 $—
 $1
Franchise and property revenues117
 86
 31
 —
 31
Total revenues138
 106
 32
 —
 32
Cost of sales16
 16
 —
 —
 —
Franchise and property expenses3
 3
 —
 —
 —
Segment SG&A66
 49
 (17) —
 (17)
Segment depreciation and amortization (b)2
 3
 1
 —
 1
Segment income55
 41
 14
 —
 14



33


Three Months Ended
March 31,		Three Months Ended
June 30,		Six Months Ended
June 30,
Key Business Metrics2020 2019Key Business Metrics2020201920202019
System-wide sales growth   System-wide sales growth
TH(9.9)% 0.5 % TH(33.4)%1.6 %(22.1)%1.1 %
BK(3.0)% 8.2 % BK(25.2)%9.8 %(14.5)%9.0 %
PLK32.3 % 6.8 % PLK24.0 %8.8 %28.1 %7.8 %
Consolidated0.0 % 6.4 % Consolidated(20.9)%7.9 %(10.8)%7.2 %
System-wide sales   System-wide sales
TH$1,382
 $1,547
 TH$1,108  $1,716  $2,490  $3,263  
BK$4,999
 $5,289
 BK$4,127  $5,717  $9,126  $11,006  
PLK$1,258
 $955
 PLK$1,247  $1,012  $2,505  $1,967  
Consolidated$7,639
 $7,791
 Consolidated$6,482  $8,445  $14,121  $16,236  
Comparable sales   Comparable sales
TH(10.3)% (0.6)% TH(29.3)%0.5 %(19.9)%— %
BK(3.7)% 2.2 % BK(13.4)%3.6 %(8.4)%2.9 %
PLK26.2 % 0.6 % PLK24.8 %3.0 %25.5 %1.8 %
   
As of March 31,As of June 30,
2020 201920202019
Net restaurant growth   Net restaurant growth
TH1.2 % 1.9 % TH1.3 %1.6 %
BK5.8 % 5.7 % BK4.2 %5.8 %
PLK6.9 % 6.6 % PLK6.7 %6.1 %
Consolidated5.0 % 5.1 % Consolidated3.9 %5.0 %
Restaurant count   Restaurant count
TH4,925
 4,866
 TH4,934  4,872  
BK18,848
 17,823
 BK18,756  18,008  
PLK3,336
 3,120
 PLK3,369  3,156  
Consolidated27,109
 25,809
 Consolidated27,059  26,036  
Comparable Sales
TH comparable sales were (10.3)(29.3)% during the three months ended March 31,June 30, 2020, including Canada comparable sales of (10.8)(29.9)%. TH comparable sales were (19.9)% during the six months ended June 30, 2020, including Canada comparable sales of (20.5)%.
BK comparable sales were (3.7)(13.4)% during the three months ended March 31,June 30, 2020, including U.S. comparable sales of (6.5)(9.9)%. BK comparable sales were (8.4)% during the six months ended June 30, 2020, including U.S. comparable sales of (8.2)%.
PLK comparable sales were 26.2%24.8% during the three months ended March 31,June 30, 2020, including U.S. comparable sales of 29.2%28.5%.




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28.8%.
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.
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During the three months ended March 31,June 30, 2020, the decrease in sales was driven primarily by a decrease of $13$160 million in our TH segment, a decrease of $4 million in our BK segment, a decrease of $2 million in our BKPLK segment, and an unfavorable FX Impact of $5 million, partially offset by an increase of $1 million in our PLK segment.$17 million. The decrease in our TH segment was driven by a $21decrease in supply chain sales due to the decrease in system-wide sales, net of an increase in sales to retailers.
During the six months ended June 30, 2020, the decrease in sales was driven primarily by a decrease of $173 million in our TH segment, a decrease of $6 million in our BK segment, a decrease of $1 million in our PLK segment, and an unfavorable FX Impact of $22 million. The decrease in our TH segment was driven by a $183 million decrease in supply chain sales due to the decrease in system-wide sales, net of an increase in sales to retailers. The decrease in supply chain sales was partially offset by an increase of $8$10 million in Company restaurant revenue due to an increase in the number of Company restaurants. We
While we cannot currently expect thatestimate the duration or future negative impact of the COVID-19 pandemic will impacton our system-wide sales and sales revenue, forwe expect the three months ending June 30, 2020 more significantly than innegative effects to continue into the three months ended March 31,third quarter of 2020. 
During the three months ended March 31,June 30, 2020, the decrease in cost of sales was driven primarily by a decrease of $2$100 million in our TH segment, a decrease of $1 million in our BK segment, and a $4$13 million favorable FX Impact. The decrease in our TH segment was driven primarily by a decrease of $9$103 million in supply chain cost of sales due to a decrease in system-wide sales, net of an increase in sales to retailers and a $3 million charge to write-off paper cup inventory for the 2020 Roll Up the Rim promotion due to COVID-19.an increase in bad debt expense. The decrease in supply chain cost of sales was partially offset by a $7$3 million increase in Company restaurant cost of sales due to an increase in the number of Company restaurants.
During the six months ended June 30, 2020, the decrease in cost of sales was driven primarily by a decrease of $102 million in our TH segment, a decrease of $2 million in our BK segment, and a $17 million favorable FX Impact. The decrease in our TH segment was driven primarily by a decrease of $112 million in supply chain cost of sales due to a decrease in system-wide sales, net of an increase in sales to retailers and an increase in bad debt expense. The decrease in supply chain cost of sales was partially offset by a $10 million increase in Company restaurant cost of sales due to an increase in the number of Company restaurants.
Franchise and Property
Franchise and property revenues consist primarily of royalties earned on franchise sales (including advertising fund revenues), 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 March 31,June 30, 2020, the decrease in franchise and property revenues was driven by a decrease of $30$89 million in our TH segment, a decrease of $14$87 million in our BK segment, and a $9$18 million unfavorable FX Impact, partially offset by an increase of $31$25 million in our PLK segment. The decreasedecreases in our TH segment wasand BK segments were primarily driven by a decreasedecreases in royalties and rent and royalties from a decreasedecreases in system-wide sales and rent relief provided to eligible TH franchisees during the current period. The decrease in our BK segment was primarily driven by a decrease in royalties as a result of a decrease in system-wide sales. The increase in our PLK segment was primarily driven by an increase in royalties as a result of an increase in system-wide sales.
During the six months ended June 30, 2020, the decrease in franchise and property revenues was driven by a decrease of $119 million in our TH segment, a decrease of $101 million in our BK segment, and a $27 million unfavorable FX Impact, partially offset by an increase of $56 million in our PLK segment. The decreases in our TH and BK segments were primarily driven by decreases in royalties and rent from decreases in system-wide sales and rent relief provided to eligible franchisees during the current period. The increase in our PLK segment was primarily driven by an increase in royalties as a result of an increase in system-wide sales.
We cannot currently expect thatestimate the duration or future negative impact of the COVID-19 pandemic will impacton our system-wide sales and, along with rent concessions provided to eligible TH and BK franchisees as a result of COVID-19, willthe impact on our franchise and property revenue forrevenues. We expect these negative effects to continue into the three months ending June 30, 2020 more significantly than in the three months ended March 31,third quarter of 2020.
During the three months ended March 31,June 30, 2020, the decrease in franchise and property expenses was driven by a decrease of $2$4 million in our TH segment and a decrease$3 million favorable FX Impact, partially offset by an increase of $4$6 million in our BK segment. Overall, the decrease was driven by a decrease in property expenses partially offset by an increase in bad debt expense.
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During the six months ended June 30, 2020, the decrease in franchise and property expenses was driven by a decrease of $6 million in our TH segment and a $1$4 million favorable FX Impact.



35

$2 million in our BK segment. Overall, the decrease was driven by a decrease in property expenses partially offset by an increase in bad debt expense.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses were comprised of the following:

 Three Months Ended March 31, Variance
  $ %
 2020 2019 Favorable / (Unfavorable)
Segment SG&A:       
TH$87
 $82
 $(5) (6.1)%
BK145
 141
 (4) (2.8)%
PLK66
 49
 (17) (34.7)%
Share-based compensation and non-cash incentive compensation expense21
 25
 4
 16.0 %
Depreciation and amortization5
 5
 —
 — %
Corporate restructuring and tax advisory fees1
 6
 5
 83.3 %
Office centralization and relocation costs—
 4
 4
 100.0 %
Selling, general and administrative expenses$325
 $312
 $(13) (4.2)%
NM - not meaningful
Three Months Ended June 30,VarianceSix Months Ended June 30,Variance
$%$%
20202019Favorable / (Unfavorable)20202019Favorable / (Unfavorable)
Segment SG&A:
TH$61  $77  $16  20.8 %$148  $159  $11  6.9 %
BK135  149  14  9.4 %280  290  10  3.4 %
PLK65  54  (11) (20.4)%131  103  (28) (27.2)%
Share-based compensation and non-cash incentive compensation expense23  19  (4) (21.1)%44  44  —  — %
Depreciation and amortization4  4  —  — %9  9  —  — %
Corporate restructuring and tax advisory fees7  11  4  36.4 %8  17  9  52.9 %
Office centralization and relocation costs—  2  2  100.0 %—  6  6  100.0 %
Selling, general and administrative expenses$295  $316  $21  6.6 %$620  $628  $8  1.3 %
Segment selling, general and administrative expenses (“Segment SG&A”) include segment selling expenses, which consist primarily of advertising fund expenses, and segment general and administrative expenses, which are comprised primarily of salary and employee-related costs for non-restaurant employees, professional fees, information technology systems, and general overhead for our corporate offices. Segment SG&A excludes share-based compensation and non-cash incentive compensation expense, depreciation and amortization, Corporate restructuring and tax advisory fees, and Office centralization and relocation costs.
During the three and six months ended March 31,June 30, 2020, the decrease in Segment SG&A in our TH and BK segments is primarily due to a decrease in advertising fund expenses. During the three and six months ended June 30, 2020, the increase in Segment SG&A in our PLK segment is primarily due to an increase in advertising fund expenses resulting from an increase in advertising fund revenue.
During the three months ended March 31,June 30, 2020, the decreaseincrease in share-based compensation and non-cash incentive compensation expense was primarily due to a decrease associated withan increase in equity award modifications fromand an increase in the number of equity awards granted during 2020. During the six months ended June 30, 2020, share-based compensation and non-cash incentive compensation expense was consistent with prior year.
(Income) Loss from Equity Method Investments
(Income) loss from equity method investments reflects our share of investee net income or loss, non-cash dilution gains or losses from changes in our ownership interests in equity method investees, and basis difference amortization.
The change in (income) loss from equity method investments during the three and six months ended March 31,June 30, 2020 was primarily driven by a decreasean increase in equity method investment net incomelosses that we recognized during the current year.



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41


Other Operating Expenses (Income), net
Our other operating expenses (income), net were comprised of the following:
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
2020 20192020201920202019
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings$(2) $3
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings$—  $(10) $(2) $(7) 
Litigation settlements (gains) and reserves, netLitigation settlements (gains) and reserves, net1  —  1  —  
Net losses (gains) on foreign exchange(8) (15)Net losses (gains) on foreign exchange18  12  10  (3) 
Other, net(6) (5)Other, net2  1  (4) (4) 
Other operating expenses (income), net$(16) $(17) Other operating expenses (income), net$21  $3  $5  $(14) 
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.
Interest Expense, net
Our interest expense, net and the weighted average interest rate on our long-term debt were as follows:
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
2020 20192020201920202019
Interest expense, net$119
 $132
Interest expense, net$128  $137  $247  $269  
Weighted average interest rate on long-term debt4.6% 5.0%Weighted average interest rate on long-term debt4.3 %5.2 %4.8 %5.1 %
During the three and six months ended March 31,June 30, 2020, interest expense, net decreased primarily due to a decrease in the weighted average interest rate in the current year driven by the decrease in interest rates and the 2019 refinancing of our senior secured debt, partially offset by an increase in long-term debt.
Income Tax Expense
Our effective tax rate was 16.8%(42.3)% and 18.7%27.4% for the three months ended March 31,June 30, 2020 and 2019, respectively. The decrease in our effective tax rate for the three months ended June 30, 2020 reflects a $64 million benefit due to an increase in deferred tax assets which decreased the effective tax rate by (55.2)%. Based on the analysis of final guidance related to the Tax Act received during the current quarter, a deferred tax asset was recorded. Our effective tax rate was also lower primarily relatesdue to changes to the relative amount and mix of our income from multiple tax jurisdictions and the impact of internal financing arrangements partly offset by a lower tax benefit from stock option exercises in the current quarter.arrangements. The effective tax rate was reduced by 0.1% and 4.1% for the three months ended March 31,June 30, 2019 included a non-recurring $37 million increase in the provision for unrecognized tax benefits related to a prior restructuring transaction that was not applicable to ongoing operations which increased the effective tax rate by 10.4%.
Our effective tax rate was (0.9)% and 23.4% for the six months ended June 30, 2020 and 2019, respectively, asrespectively. The effective tax rate for the six months ended June 30, 2020 reflects a result$64 million benefit discussed above which decreased the effective tax rate by (16.5)%. Our effective tax rate was also lower primarily due to changes to the relative mix of benefitsour income from stock option exercises. Additionally, theremultiple tax jurisdictions and the impact of internal financing arrangements. The effective tax rate for the six months ended June 30, 2019 included a non-recurring $37 million increase in the provision discussed above which increased the effective tax rate by 5.6% during the period.
There may be some quarter-to-quarter volatility of our effective tax rate in future quarters as our mix of income from multiple tax jurisdictions and related income forecasts change due to the potential effects of COVID-19.

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Net Income
We reported net income of $224$164 million for the three months ended March 31,June 30, 2020, compared to net income of $246$257 million for the three months ended March 31,June 30, 2019. The decrease in net income is primarily due to a $48$140 million decrease in TH segment income, a $22$92 million decrease in BK segment income, a $3 million unfavorable change from the impact of equity method investments and a $1an $18 million unfavorable change in the results from other operating expenses (income), net. These factors were partially offset by a $14 million increase in PLK segment income, a $13 million decrease in interest expense, net, a $10$9 million decrease in income tax expense, a $5 million decrease in Corporate restructuring and tax advisory fees,unfavorable change from the impact of equity method investments, a $4 million decrease in Office Centralization and relocation costs, a $4 million decreaseincrease in share-based compensation and non-cash incentive compensation expense, and a $1 million increase in depreciation and amortization. These factors were partially offset by a $146 million favorable change in income taxes, a $10 million increase in PLK segment income, a $9 million decrease in interest expense, net, a $4 million decrease in Corporate restructuring and tax advisory fees, and the non-recurrence of $2 million in Office Centralization and relocation costs. Amounts above include a total unfavorable FX Impact to net income of $15 million.
We reported net income of $388 million for the six months ended June 30, 2020, compared to net income of $503 million for the six months ended June 30, 2019. The decrease in net income is primarily due to a $188 million decrease in TH segment income, a $114 million decrease in BK segment income, a $19 million unfavorable change in the results from other operating expenses (income), net, and a $12 million unfavorable change from the impact of equity method investments. These factors were partially offset by a $156 million favorable change in income taxes, a $24 million increase in PLK segment income, a $22 million decrease in interest expense, net, a $9 million decrease in Corporate restructuring and tax advisory fees, the non-recurrence of $6 million in Office Centralization and relocation costs, and a $1 million decrease in depreciation and amortization. Amounts above include a total unfavorable FX Impact to net income of $9$24 million. We
While we cannot currently expect thatestimate the duration or future negative impact of the COVID-19 pandemic will impacton our net income, forwe expect the three months ending June 30, 2020 more significantly thannegative effects to continue into the three months ended March 31,third quarter of 2020.

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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, and(ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, as well as(iii) other operating expenses (income), net. Other specifically identified costs associated withnet and, (iv) income/expenses from non-recurring projects are also excluded from Adjusted EBITDA, including Corporate restructuring and tax advisory fees related tonon-operating activities. For the interpretation and implementation of the Tax Act, including Treasury regulations proposed and issued between 2018 and 2020, and non-operational Office centralization and relocationperiods referenced, this included costs incurred in connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively. respectively and corporate restructuring and related tax advisory fees, including those arising as a result of the adoption of the Tax Act and the implementing regulations thereunder. 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.
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 performance or the performance of an acquired business. Adjusted EBITDA, as defined above, also represents our measure of segment income for each of our three operating segments.
43
Three Months Ended March 31, VarianceThree Months Ended June 30,VarianceSix Months Ended June 30,Variance
 $ %$%$%
2020 2019 Favorable / (Unfavorable)20202019Favorable / (Unfavorable)20202019Favorable / (Unfavorable)
Segment income:       Segment income:
TH$189
 $237
 $(48) (20.1)%TH$147  $287  $(140) (48.9)%$336  $524  $(188) (35.8)%
BK200
 222
 (22) (10.0)%BK160  252  (92) (36.7)%360  474  (114) (24.1)%
PLK55
 41
 14
 34.2 %PLK51  41  10  23.9 %106  82  24  28.9 %
Adjusted EBITDA444
 500
 (56) (11.2)%Adjusted EBITDA358  580  (222) (38.3)%802  1,080  (278) (25.8)%
Share-based compensation and non-cash incentive compensation expense21
 25
 4
 16.0 %Share-based compensation and non-cash incentive compensation expense23  19  (4) (21.1)%44  44  —  — %
Corporate restructuring and tax advisory fees1
 6
 5
 83.3 %Corporate restructuring and tax advisory fees7  11  4  36.4 %8  17  9  52.9 %
Office centralization and relocation costs—
 4
 4
 100.0 %Office centralization and relocation costs—  2  2  100.0 %—  6  6  100.0 %
Impact of equity method investments (a)4
 1
 (3) NM
Impact of equity method investments (a)18  9  (9) (100.0)%22  10  (12) (120.0)%
Other operating expenses (income), net(16) (17) (1) (5.9)%Other operating expenses (income), net21  3  (18) (600.0)%5  (14) (19) (135.7)%
EBITDA434
 481
 (47) (9.8)%EBITDA289  536  (247) (46.1)%723  1,017  (294) (28.9)%
Depreciation and amortization45
 47
 2
 4.3 %Depreciation and amortization46  45  (1) (2.2)%91  92  1  1.1 %
Income from operations389
 434
 (45) (10.4)%Income from operations243  491  (248) (50.5)%632  925  (293) (31.7)%
Interest expense, net119
 132
 13
 9.8 %Interest expense, net128  137  9  6.6 %247  269  22  8.2 %
Income tax expense46
 56
 10
 17.9 %
Income tax (benefit) expenseIncome tax (benefit) expense(49) 97  146  150.5 %(3) 153  156  102.0 %
Net income$224
 $246
 $(22) (8.9)%Net income$164  $257  $(93) (36.2)%$388  $503  $(115) (22.9)%
NM - not meaningful(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.
(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.
The decrease in Adjusted EBITDA for the three and six months ended June 30, 2020 reflects the decreases in segment income in our TH and BK segments, which includes $20decreases of $12 million and $32 million for the three and six months ended June 30, 2020, respectively, related to the timing of advertising fund revenue and expenses, partially offset by an increase in segment income in our PLK segment.
The decrease in EBITDA for the three and six months ended March 31,June 30, 2020 is primarily due to decreases in segment income in our TH and BK segments, and unfavorable results from the impact of equity method investments and other operating expenses (income), net, and an increase in share-based compensation and non-cash incentive compensation expense in the current period, partially offset by an increase in segment income in our PLK segment, a decrease in Corporate restructuring and tax advisory fees, a decrease in share-based compensation and non-cash incentive compensation expense, and the non-recurrence of Office centralization and relocation costs in the current period.

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We currently expect that the COVID-19 pandemic will impacton our segment income, Adjusted EBITDA and EBITDA, forwe expect the three months ending June 30, 2020 more significantly than innegative effects to continue into the three months ended March 31,third quarter of 2020.
Liquidity and Capital Resources
Our primary sources of liquidity are cash on hand, and cash generated by operations.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 investing activities, 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.
As of March 31,June 30, 2020, we had cash and cash equivalents of $2,498$1,540 million, working capital of $1,587$943 million and borrowing availability of $3$998 million under our senior secured revolving credit facility (the "Revolving Credit Facility"). During the three months ended March 31,first quarter of 2020, we drew down $995 million on our Revolving Credit Facility, andwhich we repaid during the second quarter of 2020. During the first quarter of 2020, we also drew down the remaining availability of C$125 million under the TH Facility (defined below). Additionally, on April 7, 2020, two of our subsidiaries (the "Borrowers") entered into an indenture (the "2020 5.75% Senior Notes Indenture") in connection with the issuance of $500 million of 5.75% first lien notes due April 15, 2025 (the
44
(the "2020 5.75% Senior Notes"). No principal payments are due until maturity and interest is paid semi-annually. The net proceeds from the offering of the 2020 5.75% Senior Notes will bewere used for general corporate purposes and are not reflected in cash and cash equivalents of $2,498 million as of March 31, 2020.purposes. 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.
Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The financial impact of COVID-19 has had, and is expected to continue for an uncertain period to have, an adverse effect on our franchisees’ liquidity and we are working closely with our franchisees around the world to monitor and assist them with access to appropriate sources of liquidity in order to sustain their businesses throughout this crisis. Beginning in AprilDuring the second quarter of 2020, we are providingprovided cash flow support by extending loans to eligible BK franchisees in the U.S. and advancing certain cash payments to eligible TH franchisees in Canada. During the threesix months ended March 31,June 30, 2020, we initiated a rent relief program for eligible TH franchisees in Canada and extended payment terms for eligible TH franchisees in Canada and the U.S. who lease property from us and also initiated rent relief programs and extended payment terms effective April 1 for eligible BK franchisees in the U.S. and Canada who lease property from us. We have also temporarily deferred franchisee capital investment commitments for restaurant renovations and new restaurant development.development globally, based on individual circumstances of relevant markets and restaurant owners. These actions are expected to adversely affect our cash flow and financial results at least through the secondthird quarter of 2020. In addition to these actions, we may decide to take additional steps to assist in the financial stabilization of our franchisees, which could impact our liquidity and our financial results.
On August 2, 2016, the RBI board of directors approved a share repurchase authorization wherein RBI may purchase up to $300 million of RBI common shares through July 2021. 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.
Prior to the Tax Act, we provided deferred taxes on certain undistributed foreign earnings. Under our transition to a modified territorial tax system whereby all previously untaxed undistributed foreign earnings were subject to a transition tax charge at reduced rates and future repatriations of foreign earnings generally will be exempt from U.S. tax, we wrote off the existing deferred tax liability on undistributed foreign earnings and recorded the impact of the new transition tax charge on foreign earnings during the fourth quarter of 2017. We will continue to monitor available evidence and our plans for foreign earnings and expect to continue to provide any applicable deferred taxes based on the tax liability or withholding taxes that would be due upon repatriation of amounts not considered permanently reinvested.
Debt Instruments and Debt Service Requirements
As of March 31,June 30, 2020, our long-term debt consists primarily of borrowings under our Credit Facilities, amounts outstanding under our 2017 4.25% Senior Notes, 2019 3.875% Senior Notes, 2020 5.75% Senior Notes, 2017 5.00% Senior Notes, 2019 4.375% Senior Notes and TH Facility (each as defined below), and obligations under finance leases. For further information about our long-term debt, see Note 10 to the accompanying unaudited condensed consolidated financial statements included in this report.

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Credit Facilities
As of March 31,June 30, 2020, there was $6,082$6,064 million outstanding principal amount under our senior secured term loan facilities (the "Term Loan Facilities") with a weighted average interest rate of 2.68%1.84%. Based on the amounts outstanding under the Term Loan Facilities and LIBOR as of March 31,June 30, 2020, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately $164$112 million in interest payments and $72 million in principal payments. In addition, based on LIBOR as of March 31,June 30, 2020, net cash settlements that we expect to pay on our $4,000 million interest rate swap are estimated to be approximately $57$89 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) a Eurocurrency rate, 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%.
As of March 31,June 30, 2020, we had $995 millionno amounts outstanding under our Revolving Credit Facility, with an interest rate of 2.05%, had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability was $3$998 million. No principal payments are due on the Revolving Credit Facility until maturity. Based on the amounts outstanding under the Revolving Credit Facility and LIBOR as of March 31, 2020, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately $23 million in interest payments. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt, make distributions to RBI for RBI to repurchase its common shares, repurchase Partnership exchangeable 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.
Senior Notes
The Borrowers are party to (i) an indenture (the “2017 4.25% Senior Notes Indenture”) in connection with the issuance of $1,500 million of 4.25% first lien senior notes due May 15, 2024 (the “2017 4.25% Senior Notes”), (ii) an indenture (the “2019 3.875% Senior Notes Indenture”) in connection with the issuance of $750 million of 3.875% first lien senior notes due January 15, 2028 (the “2019 3.875% Senior Notes”), (iii) an indenture (the “2017 5.00% Senior Notes Indenture”) in connection with the issuance of $2,800 million of 5.00% second lien senior notes due October 15, 2025 (the “2017 5.00% Senior Notes”), and (iv) an indenture (the “2019 4.375% Senior Notes Indenture” and together with the above indentures the "Senior Notes Indentures") 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) the 2020 5.75% Senior Notes Indenture described above. No principal payments are due on the 2017 4.25% Senior Notes, 2019 3.875% Senior Notes, 2017 5.00% Senior Notes, and 2019 4.375% Senior Notes and 2020 5.75% Senior Notes until maturity and interest is paid semi-annually.
Based on the amounts outstanding at March 31,June 30, 2020, required debt service for the next twelve months on all of the Senior Notes outstanding is approximately $266$294 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 threefour of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of March 31,June 30, 2020, we had outstanding C$225 million under the TH Facility with a weighted average interest rate of 3.06%1.93%.
Based on the amounts outstanding under the TH Facility as of March 31,June 30, 2020, required debt service for the next twelve months is estimated to be approximately $5$3 million in interest payments and $4 million in principal payments.

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Restrictions and Covenants
As of March 31,June 30, 2020, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH Facility, and the Senior Notes Indentures.
Cash Distributions/Dividends
On April 3, 2020, RBI paid a cash dividend of $0.52 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 in respect of each Partnership exchangeable unit in the amount of $0.52 per exchangeable unit.
The RBI board of directors has declared a cash dividend of $0.52 per RBI common share, which will be paid on June 30,October 2, 2020 to RBI common shareholders of record on June 17,September 18, 2020. 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 $0.52 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.
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.

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Outstanding Security Data
As of April 24,July 31, 2020, we had outstanding 202,006,067 Class A common units issued to RBI and 164,935,193162,426,062 Partnership exchangeable units. During the threesix months ended March 31,June 30, 2020, Partnership exchanged 178,0462,672,900 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 15 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, 2019, filed with the SEC and Canadian securities regulatory authorities on February 21, 2020.
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 $136$196 million for the threesix months ended March 31,June 30, 2020, compared to $154$475 million during the same period in the prior year. The decrease in cash provided by operating activities was driven by a decrease in TH segment income, and a decrease in BK segment income.income and an increase in cash used for working capital. These factors were partially offset by a decrease in income tax payments, a decrease in interest payments and an increase in PLK segment income.
Investing Activities
Cash used for investing activities was $3$12 million for the threesix months ended March 31,June 30, 2020, compared to $11$23 million of cash provided from investing activities during the same period in the prior year. The change in investing activities was driven by an increase in capital expenditures during the current period.period and a decrease in net proceeds from disposal of assets, restaurant closures and refranchisings.
Financing Activities
Cash provided byused for financing activities was $855$161 million for the threesix months ended March 31,June 30, 2020, compared to $182$395 million of cash used for financing activities during the same period in the prior year. The change in financing activities was driven primarily by proceeds from the draw down on our Revolving Credit Facilityissuance of the 2020 5.75% Senior Notes and proceeds from the draw down on the remaining availability under the TH Facility, partially offset by an increase in RBI common share dividends and distributions on Partnership exchangeable units and a decrease in proceedscapital contribution from stock option exercises.RBI.

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Contractual Obligations and Commitments
Except as described herein, there were no material changes to our contractual obligations, which are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC and Canadian securities regulatory authorities on February 21, 2020, other than the following.
During the three months ended March 31,first quarter of 2020, we drew down $995 million on our Revolving Credit Facility and we also drew down the remaining availability of C$125 million under the TH Facility. Additionally, on April 7, 2020, we obtained the proceeds from the 2020 5.75% Senior Notes. Each of these terms is defined and described above. The following table provides contractual obligations as of March 31, 2020 and an update as of April 7, 2020, which reflects all of the debt transactions disclosed above, of the contractual obligations under our Credit Facilities, senior notes and other long term debt presented inas of June 30, 2020, which reflects all of the debt transactions disclosed above.
 Payment Due by Period as of June 30, 2020
Contractual ObligationsTotalLess Than
1 Year		1-3 Years3-5 YearsMore Than
5 Years
 (In millions)
Credit Facilities, including interest (a)$6,750  $186  $383  $989  $5,192  
Senior Notes, including interest (b)7,891  294  589  2,511  4,497  
Other long term debt183  7  23  36  117  
(a)We have estimated our Annual Reportinterest payments through the maturity of our Credit Facilities based on Form 10-KLIBOR as of June 30, 2020.
(b)Amounts included herein for the year ended December 31, 2019.Senior Notes exclude amounts for the Tim Hortons Notes.
   Payment Due by Period as of April 7, 2020
Contractual Obligations
Total as of
March 31, 2020
 Total Less Than
1 Year		 1-3 Years 3-5 Years More Than
5 Years
   (In millions)
Credit Facilities, including interest (a)$8,203
 $8,203
 $259
 $522
 $2,124
 $5,298
Senior Notes, including interest (b)7,320
 7,965
 294
 589
 2,033
 5,049
Other long term debt186
 186
 9
 24
 36
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(a)We have estimated our interest payments through the maturity of our Credit Facilities based on LIBOR as of March 31, 2020.
(b)Amounts included herein for the Senior Notes exclude amounts for the Tim Hortons Notes.
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 21, 2020. Additionally, see the “COVID-19” section of Note 1 to the accompanying unaudited Condensed Consolidated Financial Statements for a discussion about the potential impact of the COVID-19 pandemic on asset impairment assessments.
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 threesix months ended March 31,June 30, 2020 to the disclosures made in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC and Canadian securities regulatory authorities on February 21, 2020.
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 March 31,June 30, 2020. Based on that evaluation, the CEO and CFO of RBI concluded that Partnership’s disclosure controls and procedures were effective as of such date.

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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 March 31,June 30, 2020 that have materially affected, or are reasonably likely to materially affect, Partnership’s internal control over financial reporting.

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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 of the COVID-19 pandemic on our results of operations, business, liquidity and prospects and those of our franchisees, (ii) our future financial obligations, including annual debt service requirements, capital expenditures and dividend payments, our ability to meet such obligations and the source of funds used to satisfy such obligations; (iii) our efforts to assist restaurant owners in maintaining liquidity; (iv) the amount and timing of additional Corporate restructuring and tax advisory fees related to the Tax Act and Office centralization and relocation costs; (v) certain tax matters, including the impact of the Tax Act on future periods; (vi) the amount of net cash settlements we expect to pay on our derivative instruments; and (vii) 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 and supply chain, 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; (4) our franchisees’ financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing and advertising 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 our brands and risks related to our international operations; (10) our reliance on master franchisees and subfranchisees to accelerate restaurant growth; (11) the ability of the counterparties to our credit facilities and derivatives to fulfill their commitments and/or obligations; and (12) changes in applicable tax laws or interpretations thereof, and risks related to the complexity of the Tax Act and our ability to accurately interpret and predict its impact on our financial condition and results.
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, 2019 filed with the SEC and Canadian securities regulatory authorities on February 21, 2020, 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

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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.


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Part II – Other Information
Item 1. Legal Proceedings
On June 30, 2020, a class action complaint was filed against Restaurant Brands International Inc., Restaurant Brands International Limited 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., 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. Both 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. Each plaintiff seeks injunctive relief and monetary damages for himself or herself and other members of the class. We intend to vigorously defend against these lawsuits, but we are unable to predict the ultimate outcome of either case.
Item 1A. Risk Factors
The below updates the risk factor included in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 21, 2020.
Our results can be adversely affected by unforeseen events, such as adverse weather conditions, natural disasters, terrorist attacks or threats, pandemics, such as the COVID-19 pandemic, or other catastrophic events.
Unforeseen events, such as adverse weather conditions, natural disasters or catastrophic events, can adversely impact restaurant sales. Natural disasters such as earthquakes, hurricanes, and severe adverse weather conditions and health pandemics whether occurring in Canada, the United States or abroad, can keep customers in the affected area from dining out, cause damage to or closure of restaurants and result in lost opportunities for our restaurants.
In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread of COVID-19. These measures have adversely affected workforces, customers, consumer sentiment, economies and financial markets, and, along with decreased consumer spending, have led to an economic downturn in many of our markets. As a result of COVID-19, we and our franchisees have experienced significant store closures and instances of reduced store-level operations, including reduced operating hours and dining-room closures. As of the end of AprilDuring 2020, our restaurants in the U.S. and Canada have closed dine-in operations, continuing to offer drive-thru, delivery and take-out where possible, sometimes with limited hours, several markets in Asia, Europe (including France, Italy, Spain and the United Kingdom) haveLatin America closed all restaurants, and many other international markets also have limited operations. As of the end of July, restaurants in most markets have reopened, often with limited operations. While certain markets have opened for dine-in guests, the capacity may be limited, and local conditions may lead to closures or increased limitations. As a result of COVID-19, restaurant traffic and system-wide sales have been significantly negatively impacted.
Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The impact of COVID-19 has, and is expected to continue to have, an adverse effect on our franchisees’ liquidity. As a result, we are providing cash flow support by extending loans to eligible BK franchisees in the U.S. and advancing certain cash payments to eligible TH franchisees in Canada. For approximately 3,700 eligible locations where we have property control at Tim Hortons in Canada and Burger King in the United States and Canada, we have temporarily converted our rent structure from a combination of fixed plus variable rent to 100% variable rent, which provides relief in the face of declining sales. In addition, we have deferred rent payments for up to 45 days for certain other franchisees. These actions are expected to continue to adversely affect our cash flow and financial results in the upcoming quarters.quarter. In addition to these actions, we may decide to take additional steps to assist in the financial stabilization of our franchisees, which could impact our liquidity and our financial results. In addition, we are delaying the capital expenditure obligations of our franchisees relating to new restaurants, remodels and significant equipment deployments, which could adversely affect our growth once the COVID-19 pandemic has passed. To the extent that our franchisees experience financial distress, it could negatively affect (i) our operating results as a result of delayed or reduced payments of royalties, advertising fund contributions and rents for properties we lease to them or claims under our lease guarantees, (ii) our future revenue, earnings and cash flow growth and (iii) our financial condition.
COVID-19 or other events could lead to delays or interruptions in the delivery of food or other supplies to our franchised restaurants arising from delays or restrictions on shipping and/or manufacturing, closures of supplier or distributor facilities or financial distress or insolvency of suppliers or distributors and also could lead to difficulties in maintaining appropriate staffing of restaurants. Food distributors and suppliers often operate with thin margins and therefore may be more vulnerable to governmental actions which result in significantly reduced activity or to general economic downturns. As of December 31,
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2019, four distributors serviced approximately 92% of BK restaurants in the U.S. and five distributors serviced approximately 85% of PLK restaurants in the U.S. Consequently, our operations could be adversely affected if any of these distributors were unable to fulfill their responsibilities and we were unable to locate a substitute distributor in a timely manner. In addition, as COVID-19 may be transmitted through human contact, the risk or perceived risk of contracting COVID-19 could adversely affect the ability, or the cost, of staffing restaurants, which could be exacerbated to the extent that we or our franchisees have employees who test positive for the virus.
We cannot predict the duration or scope of the COVID-19 pandemic or when operations will cease to be affected by it. Furthermore, we cannot predict the effects that actual or threatened armed conflicts, terrorist attacks, efforts to combat terrorism or heightened security requirements will have on our future operations. Because a significant portion of our restaurant operating costs are fixed or semi-fixed in nature, the loss of sales during these periods hurts our and our franchisees’ operating margins and can result in restaurant operating losses and our loss of royalties. We expect the COVID-19 pandemic to negatively impact our financial results and based on the duration and scope, such impact could be material.













































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Table of Contents



Item 5. Other Information

Item 5.02 Departure of Directors or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(e)
On January 21, 2020, the Compensation Committee of the RBI Board of Directors (the “Compensation Committee”) approved an increase in the base salary of Matthew Dunnigan, RBI's Chief Financial Officer, from $480,000 to $550,000.

On January 21, 2020, the Compensation Committee approved the 2020 Annual Bonus Program on substantially the same terms as the 2018 Annual Bonus Program, as described in RBI's quarterly report on Form 10-Q for the three months ended March 31, 2018.

Pursuant to RBI’s Bonus Swap Program, RBI provides eligible employees, including its named executive officers, or NEOs, the ability to invest 25% or 50% of their net cash bonus into RBI common shares (“Investment Shares”) and leverage the investment through the issuance of matching restricted share units (“RSUs”). The terms of the 2019 Bonus Swap Program are substantially the same as the terms of the 2015 Bonus Swap Program, which are described in our quarterly report on Form 10-Q for the three months ended March 31, 2016. All of RBI’s NEOs elected to participate in the 2019 Bonus Swap Program at the 50% level. The matching RSUs will cliff vest on December 31, 2024. All of the matching RSUs will be forfeited if an NEO’s service (including service on the Board of Directors of RBI) is terminated for any reason (other than death or disability) prior to December 31, 2021. If an NEO sells more than 50% of the Investment Shares before the vesting date, he or she will forfeit 100% of the matching RSUs. An NEO who sells 50% or less of the Investment Shares before the vesting date will forfeit 50% of the matching RSUs and a proportional amount of the remaining matching RSUs.

On January 21, 2020, the Compensation Committee approved a grant of 50,000 RBI stock options to Matthew Dunnigan, RBI's Chief Financial Officer and 25,000 RBI stock options to Jill Granat, RBI's General Counsel. The RBI stock options cliff vest on February 21, 2025 and the exercise price is $66.31.

On January 21, 2020, the Compensation Committee approved discretionary awards of 250,000, 200,000, 50,000 and 25,000 performance based RSUs, or “PBRSUs”, to Messrs. Cil, Kobza, and Dunnigan and Ms. Granat, respectively. The performance measure for purposes of determining the number of units earned by Messrs. Cil and Kobza is Tim Hortons Canada’s annual year over year growth of same store sales for 2020 and 2021. If at the end of the two-year performance period, the threshold performance has not been achieved, the performance period will be extended for an additional year, and a 20% reduction to the payout will apply. The Compensation Committee established a 50% performance threshold below which no shares are earned and a 200% maximum performance level. If achievement falls between the threshold level and the target level or between the target level and the maximum level, the number of shares earned by Messrs. Cil, and Kobza would be calculated on a linear basis. Once earned, the PBRSUs will cliff vest on February 21, 2025. In addition, if an executive’s service to RBI is terminated (other than due to death or disability) prior to February 21, 2023, he or she will forfeit the entire award. A copy of the form of Performance Award Agreement between RBI and each of the NEOs is filed herewith as Exhibit 10.73. This summary is qualified in its entirety to the full text of the Performance Award Agreement.

The performance measure for purposes of determining the number of units earned by Mr. Dunnigan and Ms. Granat is the same as the PBRSUs granted in February 2019 as described in RBI's quarterly report on Form 10-Q for the three months ended March 31, 2019.

Jose Cil, RBI's Chief Executive Officer, has voluntarily elected to forgo half of his salary compensation for the six months ending September 30, 2020.  RBI will redirect his forgone salary to be contributed among the foundations established by each of our brands to assist with COVID-19 relief.

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Item 6. Exhibits

Exhibit
Number
Description
10.73
Form of Performance Award Agreement (TH) under the Amended and Restated 2014 Omnibus Plan (incorporated herein by reference to Exhibit 10.73 to the Form 10-Q of Restaurant Brands International Inc. filed on May 1, 2020)
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.
101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover 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: May 1,August 6, 2020By:/s/ Matthew Dunnigan
Name:Matthew Dunnigan
Title:
Chief Financial Officer of Restaurant Brands International Inc.

(principal financial officer)

(duly authorized officer)

4853