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,~~September 30, 2021


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

For the transition period from to

Commission file number: 001-36787

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP

(Exact Name of Registrant as Specified in its Charter)


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


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

(905) 339-6011

(Registrant’s telephone number, including area code)

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

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

Title of each class

Trading Symbols

Name of each exchange on which registered

Class B exchangeable limited partnership units

QSP

Toronto Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April 23,~~October 18, 2021, there were ~~155,040,582~~145,269,936 Class B exchangeable limited partnership units and 202,006,067 Class A common units outstanding.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

TABLE OF CONTENTS



		Page

PART I – Financial Information
Item 1.	Financial Statements	34
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3037
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4150
Item 4.	Controls and Procedures	4151

PART II – Other Information
Item 1.	Legal Proceedings	4352
Item 1A.	Risk Factors	52
Item 6.	Exhibits	4353
	Signatures	4454

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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
March 31,
2021 December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents $ 1,563 $ 1,560
Accounts and notes receivable, net of allowance of $30 and $42, respectively 519 536
Inventories, net 98 96
Prepaids and other current assets 111 72
Total current assets 2,291 2,264
Property and equipment, net of accumulated depreciation and amortization of $915 and $879, respectively 2,028 2,031
Operating lease assets, net 1,140 1,152
Intangible assets, net 10,742 10,701
Goodwill 5,781 5,739
Net investment in property leased to franchisees 67 66
Other assets, net 808 824
Total assets $ 22,857 $ 22,777
LIABILITIES AND EQUITY
Current liabilities:
Accounts and drafts payable $ 488 $ 464
Other accrued liabilities 805 835
Gift card liability 147 191
Current portion of long-term debt and finance leases 112 111
Total current liabilities 1,552 1,601
Long-term debt, net of current portion 12,386 12,397
Finance leases, net of current portion 318 315
Operating lease liabilities, net of current portion 1,075 1,082
Other liabilities, net 2,089 2,236
Deferred income taxes, net 1,435 1,425
Total liabilities 18,855 19,056
Partners’ capital:
Class A common units; 202,006,067 issued and outstanding at March 31, 2021 and December 31, 2020 8,066 7,994
Partnership exchangeable units; 155,040,667 issued and outstanding at March 31, 2021; 155,113,338 issued and outstanding at December 31, 2020 (2,998) (3,002)
Accumulated other comprehensive income (loss) (1,072) (1,275)
Total Partners’ capital 3,996 3,717
Noncontrolling interests 6 4
Total equity 4,002 3,721
Total liabilities and equity $ 22,857 $ 22,777


	As of
	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	1,773	$	1,560
Accounts and notes receivable, net of allowance of $18 and $42, respectively	537		536
Inventories, net	96		96
Prepaids and other current assets	178		72
Total current assets	2,584		2,264
Property and equipment, net of accumulated depreciation and amortization of $963 and $879, respectively	2,013		2,031
Operating lease assets, net	1,118		1,152
Intangible assets, net	10,652		10,701
Goodwill	5,743		5,739
Net investment in property leased to franchisees	79		66
Other assets, net	739		824
Total assets	$	22,928	$	22,777
LIABILITIES AND EQUITY
Current liabilities:
Accounts and drafts payable	$	592	$	464
Other accrued liabilities	910		835
Gift card liability	137		191
Current portion of long-term debt and finance leases	113		111
Total current liabilities	1,752		1,601
Long-term debt, net of current portion	12,379		12,397
Finance leases, net of current portion	328		315
Operating lease liabilities, net of current portion	1,056		1,082
Other liabilities, net	1,898		2,236
Deferred income taxes, net	1,407		1,425
Total liabilities	18,820		19,056
Partners’ capital:
Class A common units; 202,006,067 issued and outstanding at September 30, 2021 and December 31, 2020	8,731		7,994
Partnership exchangeable units; 145,269,936 issued and outstanding at September 30, 2021; 155,113,338 issued and outstanding at December 31, 2020	(3,536)		(3,002)
Accumulated other comprehensive income (loss)	(1,089)		(1,275)
Total Partners’ capital	4,106		3,717
Noncontrolling interests	2		4
Total equity	4,108		3,721
Total liabilities and equity	$	22,928	$	22,777

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 September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Revenues:	Revenues:							Revenues:
Sales	Sales		$	507		$	503	Sales	$	621	$	541	$	1,718	$	1,450
Franchise and property revenues	Franchise and property revenues		548			525		Franchise and property revenues	639		577		1,801		1,552
Advertising revenues	Advertising revenues		205			197		Advertising revenues	235		219		674		608
Total revenues	Total revenues		1,260			1,225		Total revenues	1,495		1,337		4,193		3,610
Operating costs and expenses:	Operating costs and expenses:							Operating costs and expenses:
Cost of sales	Cost of sales		401			399		Cost of sales	490		418		1,358		1,156
Franchise and property expenses	Franchise and property expenses		116			123		Franchise and property expenses	121		125		358		380
Advertising expenses	Advertising expenses		236			226		Advertising expenses	237		209		711		638
General and administrative expenses	General and administrative expenses		105			102		General and administrative expenses	123		96		341		292
(Income) loss from equity method investments	(Income) loss from equity method investments		2			2		(Income) loss from equity method investments	7		18		12		36
Other operating expenses (income), net	Other operating expenses (income), net		(42)			(16)		Other operating expenses (income), net	(16)		54		(50)		59
Total operating costs and expenses	Total operating costs and expenses		818			836		Total operating costs and expenses	962		920		2,730		2,561
Income from operations	Income from operations		442			389		Income from operations	533		417		1,463		1,049
Interest expense, net	Interest expense, net		124			119		Interest expense, net	128		129		378		376

Loss on early extinguishment of debt								Loss on early extinguishment of debt	11		—		11		—
Income before income taxes	Income before income taxes		318			270		Income before income taxes	394		288		1,074		673
Income tax expense	Income tax expense		47			46		Income tax expense	65		65		83		62
Net income	Net income		271			224		Net income	329		223		991		611
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests		1			0		Net income attributable to noncontrolling interests	1		—		3		1
Net income attributable to common unitholders	Net income attributable to common unitholders		$	270		$	224	Net income attributable to common unitholders	$	328	$	223	$	988	$	610
Earnings per unit - basic and diluted	Earnings per unit - basic and diluted							Earnings per unit - basic and diluted
Class A common units	Class A common units		$	0.89		$	0.71	Class A common units	$	1.09	$	0.72	$	3.26	$	1.96
Partnership exchangeable units	Partnership exchangeable units		$	0.59		$	0.48	Partnership exchangeable units	$	0.71	$	0.48	$	2.14	$	1.31
Weighted average units outstanding - basic and diluted	Weighted average units outstanding - basic and diluted							Weighted average units outstanding - basic and diluted
Class A common units	Class A common units		202			202		Class A common units	202		202		202		202
Partnership exchangeable units	Partnership exchangeable units		155			165		Partnership exchangeable units	151		162		154		164

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 September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Net income	Net income	$	271	$	224		Net income	$	329	$	223	$	991	$	611

Foreign currency translation adjustment	Foreign currency translation adjustment	54		(751)			Foreign currency translation adjustment	(257)		239		(62)		(170)
Net change in fair value of net investment hedges, net of tax of $20 and $(106)		29		411
Net change in fair value of cash flow hedges, net of tax of $(33) and $79		95		(214)
Amounts reclassified to earnings of cash flow hedges, net of tax of $(8) and $(4)		24		11
Gain (loss) recognized on other, net of tax of $0 and $0		1		0
Net change in fair value of net investment hedges, net of tax of $(31), $40, $10 and $(12)							Net change in fair value of net investment hedges, net of tax of $(31), $40, $10 and $(12)	143		(198)		101		39
Net change in fair value of cash flow hedges, net of tax of $(4), $7, $(32) and $99							Net change in fair value of cash flow hedges, net of tax of $(4), $7, $(32) and $99	13		(17)		68		(268)
Amounts reclassified to earnings of cash flow hedges, net of tax of $(9), $(8), $(21) and $(18)							Amounts reclassified to earnings of cash flow hedges, net of tax of $(9), $(8), $(21) and $(18)	24		22		77		51
Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0							Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0	—		—		2		—
Other comprehensive income (loss)	Other comprehensive income (loss)	203		(543)			Other comprehensive income (loss)	(77)		46		186		(348)
Comprehensive income (loss)	Comprehensive income (loss)	474		(319)			Comprehensive income (loss)	252		269		1,177		263
Comprehensive income (loss) attributable to noncontrolling interests	Comprehensive income (loss) attributable to noncontrolling interests	1		0			Comprehensive income (loss) attributable to noncontrolling interests	1		—		3		1
Comprehensive income (loss) attributable to common unitholders	Comprehensive income (loss) attributable to common unitholders	$	473	$	(319)		Comprehensive income (loss) attributable to common unitholders	$	251	$	269	$	1,174	$	262

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, 2020 202,006,067 $ 7,994 155,113,338 $ (3,002) $ (1,275) $ 4 $ 3,721
Distributions declared on Class A common units ($0.81 per unit) — (163) — — — — (163)
Distributions declared on partnership exchangeable units ($0.53 per unit) — — — (82) — — (82)
Exchange of Partnership exchangeable units for RBI common shares — 5 (72,671) (5) — — 0
Capital contribution from RBI — 51 — — — — 51
Restaurant VIE contributions (distributions) — — — — — 1 1
Net income — 179 — 91 — 1 271
Other comprehensive income (loss) — — — — 203 — 203
Balances at March 31, 2021 202,006,067 $ 8,066 155,040,667 $ (2,998) $ (1,072) $ 6 $ 4,002


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

Distributions declared on Class A common units ($0.77 per unit)		—	(156)		—	—		—		—		(156)
Distributions declared on partnership exchangeable units ($0.52 per unit)		—	—		—	(86)		—		—		(86)
Balances at December 31, 2020														Balances at December 31, 2020	202,006,067	$	7,994	155,113,338	$	(3,002)	$	(1,275)	$	4	$	3,721
Distributions declared on Class A common units ($0.81 per unit)														Distributions declared on Class A common units ($0.81 per unit)	—	(163)		—	—		—		—		(163)
Distributions declared on partnership exchangeable units ($0.53 per unit)														Distributions declared on partnership exchangeable units ($0.53 per unit)	—	—		—	(82)		—		—		(82)
Exchange of Partnership exchangeable units for RBI common shares	Exchange of Partnership exchangeable units for RBI common shares	—	11		(178,046)	(11)		—		—		0		Exchange of Partnership exchangeable units for RBI common shares	—	5		(72,671)	(5)		—		—		—
Capital contribution from RBI	Capital contribution from RBI	—	55		—	—		—		—		55		Capital contribution from RBI	—	51		—	—		—		—		51
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—	—		—		(1)		(1)		Restaurant VIE contributions (distributions)	—	—		—	—		—		1		1
Net income	Net income	—	144		—	80		—		—		224		Net income	—	179		—	91		—		1		271
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—	—		(543)		—		(543)		Other comprehensive income (loss)	—	—		—	—		203		—		203
Balances at March 31, 2020		202,006,067	$	7,840	165,329,153	$	(2,370)	$	(1,721)	$	3	$	3,752

Balances at March 31, 2021														Balances at March 31, 2021	202,006,067	$	8,066	155,040,667	$	(2,998)	$	(1,072)	$	6	$	4,002
Distributions declared on Class A common units ($0.81 per unit)														Distributions declared on Class A common units ($0.81 per unit)	—	(164)		—	—		—		—		(164)
Distributions declared on partnership exchangeable units ($0.53 per unit)														Distributions declared on partnership exchangeable units ($0.53 per unit)	—	—		—	(82)		—		—		(82)
Exchange of Partnership exchangeable units for RBI common shares														Exchange of Partnership exchangeable units for RBI common shares	—	6		(87,767)	(6)		—		—		—
Capital contribution from RBI														Capital contribution from RBI	—	55		—	—		—		—		55
Restaurant VIE contributions (distributions)														Restaurant VIE contributions (distributions)	—	—		—	—		—		(3)		(3)
Net income														Net income	—	259		—	131		—		1		391
Other comprehensive income (loss)														Other comprehensive income (loss)	—	—		—	—		60		—		60
Balances at June 30, 2021														Balances at June 30, 2021	202,006,067	$	8,222	154,952,900	$	(2,955)	$	(1,012)	$	4	$	4,259
Distributions declared on Class A common units ($0.83 per unit)														Distributions declared on Class A common units ($0.83 per unit)	—	(167)		—	—		—		—		(167)
Distributions declared on partnership exchangeable units ($0.53 per unit)														Distributions declared on partnership exchangeable units ($0.53 per unit)	—	—		—	(77)		—		—		(77)
Exchange of Partnership exchangeable units for RBI common shares														Exchange of Partnership exchangeable units for RBI common shares	—	611		(9,682,964)	(611)		—		—		—
Distribution to RBI for repurchase of RBI common shares														Distribution to RBI for repurchase of RBI common shares	—	(182)		—	—		—		—		(182)
Capital contribution from RBI														Capital contribution from RBI	—	26		—	—		—		—		26
Restaurant VIE contributions (distributions)														Restaurant VIE contributions (distributions)	—	—		—	—		—		(3)		(3)
Net income														Net income	—	221		—	107		—		1		329
Other comprehensive income (loss)														Other comprehensive income (loss)	—	—		—	—		(77)		—		(77)
Balances at September 30, 2021														Balances at September 30, 2021	202,006,067	$	8,731	145,269,936	$	(3,536)	$	(1,089)	$	2	$	4,108

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidated Statements of 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, 2019	202,006,067	$	7,786	165,507,199	$	(2,353)	$	(1,178)	$	4	$	4,259

Distributions declared on Class A common units ($0.77 per unit)	—	(156)		—	—		—		—		(156)
Distributions declared on partnership exchangeable units ($0.52 per unit)	—	—		—	(86)		—		—		(86)
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, 2020	202,006,067	$	7,840	165,329,153	$	(2,370)	$	(1,721)	$	3	$	3,752
Distributions declared on Class A common units ($0.78 per unit)	—	(158)		—	—		—		—		(158)
Distributions declared on partnership exchangeable units ($0.52 per unit)	—	—		—	(85)		—		—		(85)
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, 2020	202,006,067	$	7,947	162,834,299	$	(2,526)	$	(1,572)	$	3	$	3,852
Distributions declared on Class A common units ($0.78 per unit)	—	(158)		—	—		—		—		(158)
Distributions declared on partnership exchangeable units ($0.52 per unit)	—	—		—	(84)		—		—		(84)
Exchange of Partnership exchangeable units for RBI common shares	—	36		(622,068)	(36)		—		—		—
Capital contribution from RBI	—	35		—	—		—		—		35
Restaurant VIE contributions (distributions)	—	—		—	—		—		1		1
Net income	—	145		—	78		—		—		223
Other comprehensive income (loss)	—	—		—	—		46		—		46
Balances at September 30, 2020	202,006,067	$	8,005	162,212,231	$	(2,568)	$	(1,526)	$	4	$	3,915

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,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	271	$	224	Net income	$	991	$	611
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	49		45		Depreciation and amortization	150		139

Premiums paid and non-cash loss on early extinguishment of debt						Premiums paid and non-cash loss on early extinguishment of debt	11		—
Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount	7		6		Amortization of deferred financing costs and debt issuance discount	20		19
(Income) loss from equity method investments	(Income) loss from equity method investments	2		2		(Income) loss from equity method investments	12		36
(Gain) loss on remeasurement of foreign denominated transactions	(Gain) loss on remeasurement of foreign denominated transactions	(43)		(8)		(Gain) loss on remeasurement of foreign denominated transactions	(58)		54
Net (gains) losses on derivatives	Net (gains) losses on derivatives	20		(6)		Net (gains) losses on derivatives	65		14
Share-based compensation expense	Share-based compensation expense	22		19		Share-based compensation expense	62		55
Deferred income taxes	Deferred income taxes	14		(31)		Deferred income taxes	35		(120)
Other	Other	(8)		(4)		Other	(14)		23
Changes in current assets and liabilities, excluding acquisitions and dispositions:	Changes in current assets and liabilities, excluding acquisitions and dispositions:					Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	Accounts and notes receivable	24		94		Accounts and notes receivable	11		(83)
Inventories and prepaids and other current assets	Inventories and prepaids and other current assets	(4)		(13)		Inventories and prepaids and other current assets	(3)		(21)
Accounts and drafts payable	Accounts and drafts payable	19		(136)		Accounts and drafts payable	129		(110)
Other accrued liabilities and gift card liability	Other accrued liabilities and gift card liability	(113)		(67)		Other accrued liabilities and gift card liability	(78)		(12)
Tenant inducements paid to franchisees	Tenant inducements paid to franchisees	—		(3)		Tenant inducements paid to franchisees	(5)		(7)
Other long-term assets and liabilities	Other long-term assets and liabilities	6		14		Other long-term assets and liabilities	(73)		(5)
Net cash provided by operating activities	Net cash provided by operating activities	266		136		Net cash provided by operating activities	1,255		593
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Payments for property and equipment	Payments for property and equipment	(15)		(19)		Payments for property and equipment	(70)		(71)
Net proceeds from disposal of assets, restaurant closures, and refranchisings	Net proceeds from disposal of assets, restaurant closures, and refranchisings	11		4		Net proceeds from disposal of assets, restaurant closures, and refranchisings	14		9

Settlement/sale of derivatives, net	Settlement/sale of derivatives, net	2		12		Settlement/sale of derivatives, net	2		29
Other investing activities, net	Other investing activities, net	(5)		0		Other investing activities, net	(15)		—
Net cash (used for) provided by investing activities	Net cash (used for) provided by investing activities	(7)		(3)		Net cash (used for) provided by investing activities	(69)		(33)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt	Proceeds from revolving line of credit and long-term debt	0		1,085		Proceeds from revolving line of credit and long-term debt	802		1,585
Repayments of revolving line of credit, long-term debt and finance leases	Repayments of revolving line of credit, long-term debt and finance leases	(27)		(25)		Repayments of revolving line of credit, long-term debt and finance leases	(865)		(1,071)

Payment of financing costs						Payment of financing costs	(7)		(10)
Distributions on Class A common and Partnership exchangeable units	Distributions on Class A common and Partnership exchangeable units	(239)		(232)		Distributions on Class A common and Partnership exchangeable units	(730)		(716)
Distribution to RBI for repurchase of RBI common shares						Distribution to RBI for repurchase of RBI common shares	(182)		—
Capital contribution from RBI	Capital contribution from RBI	20		30		Capital contribution from RBI	60		60
(Payments) proceeds from derivatives	(Payments) proceeds from derivatives	(16)		(2)		(Payments) proceeds from derivatives	(45)		(29)
Other financing activities, net	Other financing activities, net	1		(1)		Other financing activities, net	(3)		(1)
Net cash (used for) provided by financing activities	Net cash (used for) provided by financing activities	(261)		855		Net cash (used for) provided by financing activities	(970)		(182)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	5		(23)		Effect of exchange rates on cash and cash equivalents	(3)		(7)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	3		965		Increase (decrease) in cash and cash equivalents	213		371
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,560		1,533		Cash and cash equivalents at beginning of period	1,560		1,533
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,563	$	2,498	Cash and cash equivalents at end of period	$	1,773	$	1,904
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:					Supplemental cash flow disclosures:
Interest paid	Interest paid	$	72	$	104	Interest paid	$	281	$	315
Income taxes paid	Income taxes paid	$	96	$	48	Income taxes paid	$	189	$	163

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See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Organization

Restaurant Brands International Limited Partnership (“Partnership”, “we”, “us” or “our”) is a Canadian limited partnership. We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons® brand (“Tim Hortons” or “TH”), fast food hamburgers principally under the Burger King® brand (“Burger King” or “BK”), and chicken 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,~~September 30, 2021, we franchised or owned ~~4,987~~5,137 Tim Hortons restaurants, ~~18,691~~18,923 Burger King restaurants, and ~~3,495~~3,607 Popeyes restaurants, for a total of ~~27,173~~27,667 restaurants, and operate in more than 100 countries. Approximately 100% of current system-wide restaurants are franchised.

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

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

Note 2. Basis of Presentation and Consolidation

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

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

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,~~September 30, 2021 and December 31, 2020, we determined that we are the primary beneficiary of 5149 and 38 Restaurant VIEs, respectively, and accordingly, have consolidated the results of operations, assets and liabilities, and cash flows of these Restaurant VIEs in our Financial Statements. Material intercompany accounts and transactions have been eliminated in consolidation.

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

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

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

Certain prior year amounts in the accompanying Financial Statements and notes to the Financial Statements have been reclassified in order to be comparable with the current year classifications. These consist of the quarter and year to date ~~March 31,~~September 30, 2020 reclassification of advertising fund contributions from Franchise and property revenues to Advertising revenues and advertising fund expenses from Selling, general and administrative expenses to Advertising expenses, with General and administrative expenses now presented separately. Depreciation and amortization expenses related to the advertising funds for the three and nine months ended ~~March 31,~~September 30, 2020 have also been reclassified from Franchise and property expenses to Advertising expenses. These reclassifications did not arise as a result of any changes to accounting policies and relate entirely to presentation with no effect on previously reported net income.

Note 3. New Accounting Pronouncements

Simplifying the Accounting for Income Taxes – In December 2019, the FASB issued guidance which simplifies the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance applicable to accounting for income taxes. The amendment is effective commencing in 2021 with early adoption permitted. The adoption of this new guidance ~~during the three months ended March 31,~~in 2021 did not have a material impact on our Financial Statements.

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

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

Table of ~~the transition relief available under the new guidance as of March 31, 2021.~~Contents

Note 4. Leases

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Lease income - operating leases	Lease income - operating leases							Lease income - operating leases
Minimum lease payments	Minimum lease payments		$	113		$	112	Minimum lease payments	$	113	$	112	$	343	$	333
Variable lease payments	Variable lease payments		66			63		Variable lease payments	91		82		241		191
Amortization of favorable and unfavorable income lease contracts, net	Amortization of favorable and unfavorable income lease contracts, net		1			2		Amortization of favorable and unfavorable income lease contracts, net	1		1		3		4
Subtotal - lease income from operating leases	Subtotal - lease income from operating leases		180			177		Subtotal - lease income from operating leases	205		195		587		528
Earned income on direct financing and sales-type leases	Earned income on direct financing and sales-type leases		2			1		Earned income on direct financing and sales-type leases	1		1		4		4
Total property revenues	Total property revenues		$	182		$	178	Total property revenues	$	206	$	196	$	591	$	532

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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, 2020 and ~~March 31,~~September 30, 2021 (in millions):


Contract Liabilities	Contract Liabilities	TH		BK		PLK		Consolidated		Contract Liabilities	TH		BK		PLK		Consolidated
Balance at December 31, 2020	Balance at December 31, 2020	$	62	$	427	$	39	$	528	Balance at December 31, 2020	$	62	$	427	$	39	$	528
Recognized during period and included in the contract liability balance at the beginning of the year	Recognized during period and included in the contract liability balance at the beginning of the year	(2)		(12)		(1)		(15)		Recognized during period and included in the contract liability balance at the beginning of the year	(7)		(30)		(2)		(39)
Increase, excluding amounts recognized as revenue during the period	Increase, excluding amounts recognized as revenue during the period	2		9		7		18		Increase, excluding amounts recognized as revenue during the period	8		24		14		46
Impact of foreign currency translation	Impact of foreign currency translation	0		(7)		0		(7)		Impact of foreign currency translation	—		(10)		—		(10)
Balance at March 31, 2021		$	62	$	417	$	45	$	524
Balance at September 30, 2021										Balance at September 30, 2021	$	63	$	411	$	51	$	525

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,~~September 30, 2021 (in millions):


Contract liabilities expected to be recognized in	Contract liabilities expected to be recognized in	TH		BK		PLK		Consolidated		Contract liabilities expected to be recognized in	TH		BK		PLK		Consolidated
Remainder of 2021	Remainder of 2021	$	7	$	26	$	2	$	35	Remainder of 2021	$	3	$	9	$	1	$	13
2022	2022	9		33		3		45		2022	9		34		4		47
2023	2023	8		32		3		43		2023	9		33		3		45
2024	2024	8		31		3		42		2024	8		32		3		43
2025	2025	6		31		3		40		2025	7		32		3		42
Thereafter	Thereafter	24		264		31		319		Thereafter	27		271		37		335
Total	Total	$	62	$	417	$	45	$	524	Total	$	63	$	411	$	51	$	525

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Disaggregation of Total Revenues

Total revenues consist of the following (in millions):

Three Months Ended
March 31,
2021 2020
Sales $ 507 $ 503
Royalties 346 329
Property revenues 182 178
Franchise fees and other revenue 20 18
Advertising revenues 205 197
Total revenues $ 1,260 $ 1,225


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Sales	$	621	$	541	$	1,718	$	1,450
Royalties	412		362		1,149		968
Property revenues	206		196		591		532
Franchise fees and other revenue	21		19		61		52
Advertising revenues	235		219		674		608
Total revenues	$	1,495	$	1,337	$	4,193	$	3,610

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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.~~interests. Basic and diluted earnings per Class A common unit is determined by dividing net income allocated to Class A common unit holders by the weighted average number of Class A common units outstanding for the period. Basic and diluted earnings per Partnership exchangeable unit is determined by dividing net income allocated to the Partnership exchangeable units by the weighted average number of Partnership exchangeable units outstanding during the period.

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

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Allocation of net income among partner interests:	Allocation of net income among partner interests:							Allocation of net income among partner interests:
Net income allocated to Class A common unitholders	Net income allocated to Class A common unitholders		$	179		$	144	Net income allocated to Class A common unitholders	$	221	$	145	$	659	$	395
Net income allocated to Partnership exchangeable unitholders	Net income allocated to Partnership exchangeable unitholders		91			80		Net income allocated to Partnership exchangeable unitholders	107		78		329		215
Net income attributable to common unitholders	Net income attributable to common unitholders		$	270		$	224	Net income attributable to common unitholders	$	328	$	223	$	988	$	610

Denominator - basic and diluted partnership units:	Denominator - basic and diluted partnership units:							Denominator - basic and diluted partnership units:
Weighted average Class A common units	Weighted average Class A common units		202			202		Weighted average Class A common units	202		202		202		202
Weighted average Partnership exchangeable units	Weighted average Partnership exchangeable units		155			165		Weighted average Partnership exchangeable units	151		162		154		164

Earnings per unit - basic and diluted:	Earnings per unit - basic and diluted:							Earnings per unit - basic and diluted:
Class A common units (a)	Class A common units (a)		$	0.89		$	0.71	Class A common units (a)	$	1.09	$	0.72	$	3.26	$	1.96
Partnership exchangeable units (a)	Partnership exchangeable units (a)		$	0.59		$	0.48	Partnership exchangeable units (a)	$	0.71	$	0.48	$	2.14	$	1.31

(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													As of
		March 31, 2021						December 31, 2020							September 30, 2021						December 31, 2020
		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net			Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Identifiable assets subject to amortization:	Identifiable assets subject to amortization:													Identifiable assets subject to amortization:
Franchise agreements	Franchise agreements	$	729	$	(269)	$	460	$	735	$	(264)	$	471	Franchise agreements	$	725	$	(283)	$	442	$	735	$	(264)	$	471
Favorable leases	Favorable leases	116		(67)		49		117		(66)		51		Favorable leases	106		(63)		43		117		(66)		51
Subtotal	Subtotal	845		(336)		509		852		(330)		522		Subtotal	831		(346)		485		852		(330)		522
Indefinite-lived intangible assets:	Indefinite-lived intangible assets:													Indefinite-lived intangible assets:
Tim Hortons brand	Tim Hortons brand	$	6,732	$	—	$	6,732	$	6,650	$	—	$	6,650	Tim Hortons brand	$	6,675	$	—	$	6,675	$	6,650	$	—	$	6,650
Burger King brand	Burger King brand	2,146		—		2,146		2,174		—		2,174		Burger King brand	2,137		—		2,137		2,174		—		2,174
Popeyes brand	Popeyes brand	1,355		—		1,355		1,355		—		1,355		Popeyes brand	1,355		—		1,355		1,355		—		1,355
Subtotal	Subtotal	10,233		—		10,233		10,179		—		10,179		Subtotal	10,167		—		10,167		10,179		—		10,179
Intangible assets, net	Intangible assets, net					$	10,742					$	10,701	Intangible assets, net					$	10,652					$	10,701

Goodwill	Goodwill													Goodwill
Tim Hortons segment	Tim Hortons segment	$	4,329					$	4,279					Tim Hortons segment	$	4,293					$	4,279
Burger King segment	Burger King segment	606						614						Burger King segment	604						614
Popeyes segment	Popeyes segment	846						846						Popeyes segment	846						846
Total	Total	$	5,781					$	5,739					Total	$	5,743					$	5,739

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

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Note 8. Equity Method Investments

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

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

We have equity interests in entities that own or franchise Tim Hortons, Burger King and Popeyes 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):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues from affiliates:
Royalties	$	111	$	68	$	254	$	171
Advertising revenues	22		14		50		38
Property revenues	8		8		24		24
Franchise fees and other revenue	4		4		12		10
Total	$	145	$	94	$	340	$	243

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

With respect to our TH business, the most significant equity method investment is our 50% joint venture interest with The Wendy’s Company (the “TIMWEN Partnership”), which jointly holds real estate underlying Canadian combination restaurants. Distributions received from this joint venture were $3 million and $2 million during the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Distributions received from this joint venture were $9 million and $6 million during the nine months ended September 30, 2021 and 2020, 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 15.2% equity interest in Carrols Restaurant Group, Inc. (“Carrols”) based on the quoted market price on March 31, 2021 was approximately $56 million. The aggregate market value of our 9.4% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on March 31, 2021 was approximately $44 million.

~~Table of Contents~~

Three Months Ended March 31,
2021 2020
Revenues from affiliates:
Royalties $ 65 $ 61
Advertising revenues 13 12
Property revenues 8 8
Franchise fees and other revenue 4 3
Total $ 90 $ 84

We recognized $5 million and $4 million of rent expense associated with the TIMWEN Partnership during the three months ended ~~March 31,~~September 30, 2021 and ~~2020.~~

~~At March 31,~~2020, respectively. We recognized $13 million and $11 million of rent expense associated with the TIMWEN Partnership during the nine months ended September 30, 2021 and ~~December 31,~~ 2020, we had $46 million and $52 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.respectively.

(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 investees and basis difference amortization.

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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					As of
		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Current:	Current:					Current:
Distribution payable	Distribution payable	$	245	$	239	Distribution payable	$	244	$	239
Interest payable	Interest payable	94		66		Interest payable	86		66
Accrued compensation and benefits	Accrued compensation and benefits	42		78		Accrued compensation and benefits	77		78
Taxes payable	Taxes payable	96		122		Taxes payable	164		122
Deferred income	Deferred income	44		42		Deferred income	51		42
Accrued advertising expenses	Accrued advertising expenses	62		59		Accrued advertising expenses	55		59
Restructuring and other provisions	Restructuring and other provisions	13		12		Restructuring and other provisions	17		12
Current portion of operating lease liabilities	Current portion of operating lease liabilities	136		137		Current portion of operating lease liabilities	137		137
Other	Other	73		80		Other	79		80
Other accrued liabilities	Other accrued liabilities	$	805	$	835	Other accrued liabilities	$	910	$	835
Noncurrent:	Noncurrent:					Noncurrent:
Taxes payable	Taxes payable	$	632	$	626	Taxes payable	$	553	$	626
Contract liabilities	Contract liabilities	524		528		Contract liabilities	525		528
Derivatives liabilities	Derivatives liabilities	715		865		Derivatives liabilities	618		865
Unfavorable leases	Unfavorable leases	77		81		Unfavorable leases	68		81
Accrued pension	Accrued pension	69		70		Accrued pension	66		70

Deferred income	Deferred income	34		28		Deferred income	33		28
Other	Other	38		38		Other	35		38
Other liabilities, net	Other liabilities, net	$	2,089	$	2,236	Other liabilities, net	$	1,898	$	2,236

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Note 10. Long-Term Debt

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


		As of					As of
		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Term Loan B (due November 19, 2026)	Term Loan B (due November 19, 2026)	$	5,283	$	5,297	Term Loan B (due November 19, 2026)	$	5,256	$	5,297
Term Loan A (due October 7, 2024)	Term Loan A (due October 7, 2024)	727		731		Term Loan A (due October 7, 2024)	717		731

2017 4.25% Senior Notes (due May 15, 2024)	2017 4.25% Senior Notes (due May 15, 2024)	775		775		2017 4.25% Senior Notes (due May 15, 2024)	—		775
2019 3.875% Senior Notes (due January 15, 2028)		750		750
3.875% First Lien Senior Notes (due January 15, 2028)						3.875% First Lien Senior Notes (due January 15, 2028)	1,550		750
2020 5.75% Senior Notes (due April 15, 2025)	2020 5.75% Senior Notes (due April 15, 2025)	500		500		2020 5.75% Senior Notes (due April 15, 2025)	500		500
2020 3.50% Senior Notes (due February 15, 2029)	2020 3.50% Senior Notes (due February 15, 2029)	750		750		2020 3.50% Senior Notes (due February 15, 2029)	750		750
2019 4.375% Senior Notes (due January 15, 2028)	2019 4.375% Senior Notes (due January 15, 2028)	750		750		2019 4.375% Senior Notes (due January 15, 2028)	750		750
2020 4.00% Senior Notes (due October 15, 2030)	2020 4.00% Senior Notes (due October 15, 2030)	2,900		2,900		2020 4.00% Senior Notes (due October 15, 2030)	2,900		2,900
TH Facility and other	TH Facility and other	179		178		TH Facility and other	175		178
Less: unamortized deferred financing costs and deferred issue discount	Less: unamortized deferred financing costs and deferred issue discount	(148)		(155)		Less: unamortized deferred financing costs and deferred issue discount	(138)		(155)
Total debt, net	Total debt, net	12,466		12,476		Total debt, net	12,460		12,476
Less: current maturities of debt	Less: current maturities of debt	(80)		(79)		Less: current maturities of debt	(81)		(79)
Total long-term debt	Total long-term debt	$	12,386	$	12,397	Total long-term debt	$	12,379	$	12,397

Revolving Credit ~~Facilities~~Facility

As of ~~March 31,~~September 30, 2021, we had 0no amounts outstanding under our senior secured revolving credit facility (the “Revolving Credit Facility”), had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability under our Revolving Credit Facility was $998 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or RBI share repurchases or repurchases of Class B exchangeable limited partnership units, fund acquisitions or capital expenditures and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit.

TH Facility

~~One~~NaN of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by ~~four~~4 of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of ~~March 31,~~September 30, 2021, we had outstanding C$~~221~~217 million under the TH Facility with a weighted average interest rate of ~~1.84%~~1.83%.

First Lien Senior Notes

On July 6, 2021, 2 of our subsidiaries (the “Borrowers”) issued $800 million of 3.875% first lien senior secured notes due January 15, 2028 (the “Additional Notes”). No principal payments are due until maturity and interest is paid semi-annually. The Additional Notes were issued as additional notes under the indenture, dated as of September 24, 2019, (the “2019 3.875% Senior Notes Indenture”) pursuant to which the Borrowers previously issued $750 million in aggregate principal amount of 3.875% first lien senior secured notes due January 15, 2028 during 2019 (the “2019 3.875% Senior Notes” and together with the Additional Notes, the “3.875% First Lien Senior Notes”). The Additional Notes are treated as a single series with the 2019 3.875% Senior Notes and have the same terms for all purposes under the 2019 3.875% Senior Notes Indenture, including waivers, amendments, redemptions and offers to purchase. The Additional Notes were priced at 100.250% of their face value. The net proceeds from the offering of the Additional Notes were used to redeem the remaining $775 million principal amount outstanding of the 2017 4.25% Senior Notes on July 15, 2021, plus any accrued and unpaid interest thereon, and pay related redemption premiums, fees and expenses. In connection with the issuance of the Additional Notes, we capitalized approximately $7 million in debt issuance costs. In connection with the redemption of the remaining $775 million principal amount outstanding of the 2017 4.25% Senior Notes, we recorded a loss on early extinguishment of debt of $11 million that primarily reflects the payment of redemption premiums and the write-off of unamortized debt issuance costs.

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Obligations under the 3.875% First Lien Senior Notes are guaranteed on a senior secured basis, jointly and severally, by the Borrowers and substantially all of the Borrower's Canadian and U.S. subsidiaries, including The TDL Group Corp., Burger King Corporation, Popeyes Louisiana Kitchen, Inc. and substantially all of their respective Canadian and U.S. subsidiaries (the “Note Guarantors”). The 3.875% First Lien Senior Notes are first lien senior secured obligations and rank equal in right of payment with all of the existing and future first lien senior debt of the Borrowers and Note Guarantors, including borrowings and guarantees under our senior secured term loan facilities and Revolving Credit Facility (together the “Credit Facilities”).

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

Restrictions and Covenants

As of ~~March 31,~~September 30, 2021, we were in compliance with all applicable financial debt covenants under our senior secured term loan facilities and Revolving Credit Facility (together the "Credit Facilities"), the TH Facility, 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,
2021 December 31,
2020
Fair value of our variable term debt and senior notes $ 12,265 $ 12,477
Principal carrying amount of our variable term debt and senior notes 12,435 12,453

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

Interest Expense, net

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Debt (a)	Debt (a)		$	113		$	113	Debt (a)	$	117	$	119	$	345	$	351
Finance lease obligations	Finance lease obligations		5			5		Finance lease obligations	5		4		15		14
Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount		7			6		Amortization of deferred financing costs and debt issuance discount	7		7		20		19
Interest income	Interest income		(1)			(5)		Interest income	(1)		(1)		(2)		(8)
Interest expense, net	Interest expense, net		$	124		$	119	Interest expense, net	$	128	$	129	$	378	$	376

(a)Amount includes ~~$12~~$11 million and ~~$21~~$15 million benefit during the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively, and $34 million and $56 million benefit during the nine months ended September 30, 2021 and 2020, respectively, related to the quarterly net settlements of our cross-currency rate swaps and amortization of the Excluded Component as defined in Note 13, Derivatives.

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Note 11. Income Taxes

Our effective tax rate was ~~14.7%~~16.7% and 7.7% for the three and nine months ended ~~March 31, 2021.~~September 30, 2021, respectively. The effective tax rate during ~~this period~~these periods reflects the ~~mix of income from multiple tax jurisdictions, the impact of internal financing arrangements and the excess tax benefits from equity-based compensation.~~

~~Our effective tax rate was 16.8% for the three months ended March 31, 2020. The effective tax rate during this period reflects the amount and~~ mix of income from multiple tax jurisdictions and the impact of internal financing arrangements. Additionally, the effective tax rate for the nine months ended September 30, 2021 included a net decrease in tax reserves of $87 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 8.1%.

Our effective tax rate was 22.6% and 9.2% for the three and nine months ended September 30, 2020, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions and the impact of internal financing arrangements. Additionally, the effective tax rate during the nine months ended September 30, 2020 reflects a $64 million increase in deferred tax assets which decreased the effective tax rate by 9.5% during this period. Based on the analysis of final guidance related to the Tax Cuts and Jobs Act (the “Tax Act”) received during the nine months ended September 30, 2020, a deferred tax asset was recorded.

Note 12. Equity

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, Partnership exchanged ~~72,671~~9,843,402 Partnership exchangeable units pursuant to exchange notices received. In accordance with the terms of the partnership agreement, Partnership satisfied the exchange notices by exchanging these Partnership exchangeable units for the same number of newly issued RBI common shares. The issuances of shares were accounted for as capital contributions by RBI to Partnership. The exchanges of Partnership exchangeable units were recorded as increases to the Class A common units balance within partners’ capital in our consolidated balance sheet in an amount equal to the market value of the newly issued RBI common shares and a reduction to the Partnership exchangeable units balance within partners’ capital of our consolidated balance sheet in an amount equal to the cash paid by Partnership, if any, and the market value of the newly issued RBI common shares. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit is automatically deemed cancelled concurrently with the exchange.

Distribution to RBI to Repurchase RBI Common Shares

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

Accumulated Other Comprehensive Income (Loss)

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

Derivatives Pensions Foreign Currency Translation Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2020 $ (107) $ (45) $ (1,123) $ (1,275)
Foreign currency translation adjustment — — 54 54
Net change in fair value of derivatives, net of tax 124 — — 124
Amounts reclassified to earnings of cash flow hedges, net of tax 24 — — 24
Pension and post-retirement benefit plans, net of tax — 1 — 1
Balance at March 31, 2021 $ 41 $ (44) $ (1,069) $ (1,072)


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

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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,~~September 30, 2021, we had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $3,500 million to hedge the variability in the interest payments on a portion of our senior secured term loan facilities (the “Term Loan Facilities”), including any subsequent refinancing or replacement of the Term Loan Facilities, beginning ~~October~~August 31, ~~2019~~2021 through the termination date of ~~November 19, 2026.~~October 31, 2028. Additionally, at ~~March 31,~~September 30, 2021, 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~~interest expense during the period in which the hedged forecasted transaction affects earnings.

During ~~2019,~~2021, we extended the maturity of our $3,500 million receive-variable, pay-fixed interest rate swaps. The extension of the term resulted in a de-designation and re-designation of the interest rate swaps and the swaps continue to be accounted for as a cash flow hedge for hedge accounting. In connection with the de-designation, we recognized a net unrealized loss of $143 million in AOCI and this amount gets reclassified into Interest expense, net as the original forecasted transaction affects earnings. The amount of pre-tax losses in connection with this net unrealized loss in AOCI as of September 30, 2021 that we expect to be reclassified into interest expense within the next 12 months is $28 million.

We had previously extended the term of our ~~previous~~ $3,500 million receive-variable, pay-fixed interest rate swaps in 2019 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 connection with this net unrealized loss in AOCI as of ~~March 31,~~September 30, 2021 that we expect to be reclassified into interest expense within the next 12 months is $50 ~~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, 2021 that we expect to be reclassified into interest expense within the next 12 months is $8 million.

Cross-Currency Rate Swaps

To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, we hedge a portion of our net investment in one or more of our foreign subsidiaries by using cross-currency rate swaps. At ~~March 31,~~September 30, 2021, 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,~~September 30, 2021, 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,~~September 30, 2021, 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,~~September 30, 2021, 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~~

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$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~~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,~~September 30, 2021, 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 ~~$124~~$148 million with maturities to ~~May~~November 2022. We have designated these instruments as cash flow hedges, and as such, the unrealized changes in market value of effective hedges are recorded in AOCI and are reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.

Credit Risk

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

Credit-Risk Related Contingent Features

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

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Quantitative Disclosures about Derivative Instruments and Fair Value Measurements

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


			Gain or (Loss) Recognized in Other Comprehensive Income (Loss)						Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Derivatives designated as cash flow hedges(1)	Derivatives designated as cash flow hedges(1)							Derivatives designated as cash flow hedges(1)
Interest rate swaps	Interest rate swaps		$	129		$	(300)	Interest rate swaps	$	15	$	(22)	$	100	$	(370)
Forward-currency contracts	Forward-currency contracts		$	(1)		$	7	Forward-currency contracts	$	2	$	(2)	$	—	$	3
Derivatives designated as net investment hedges	Derivatives designated as net investment hedges							Derivatives designated as net investment hedges
Cross-currency rate swaps	Cross-currency rate swaps		$	9		$	517	Cross-currency rate swaps	$	174	$	(238)	$	91	$	51

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

Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from
AOCI into Earnings
Three Months Ended March 31,
2021 2020
Derivatives designated as cash flow hedges
Interest rate swaps Interest expense, net $ (30) $ (15)
Forward-currency contracts Cost of sales $ (2) $ 0
Location of Gain or (Loss) Recognized in Earnings Gain or (Loss) Recognized in Earnings
(Amount Excluded from Effectiveness Testing)
Three Months Ended March 31,
2021 2020
Derivatives designated as net investment hedges
Cross-currency rate swaps Interest expense, net $ 12 $ 21

Fair Value as of
March 31,
2021 December 31, 2020 Balance Sheet Location
Assets:
Derivatives designated as net investment hedges
Foreign currency $ 13 $ 0 Other assets, net
Total assets at fair value $ 13 $ 0
Liabilities:
Derivatives designated as cash flow hedges
Interest rate $ 279 $ 430 Other liabilities, net
Foreign currency 4 5 Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency 436 434 Other liabilities, net
Total liabilities at fair value $ 719 $ 869

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	Location of Gain or (Loss) Reclassified from AOCI into Earnings	Gain or (Loss) Reclassified from AOCI into Earnings
		Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Derivatives designated as cash flow hedges
Interest rate swaps	Interest expense, net	$	(31)	$	(30)	$	(92)	$	(71)
Forward-currency contracts	Cost of sales	$	(2)	$	—	$	(6)	$	2

	Location of Gain or (Loss) Recognized in Earnings	Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Derivatives designated as net investment hedges
Cross-currency rate swaps	Interest expense, net	$	11	$	15	$	34	$	56


	Fair Value as of
	September 30, 2021		December 31, 2020		Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges

Foreign currency	$	2	$	—	Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency	16		—		Other assets, net
Total assets at fair value	$	18	$	—

Liabilities:
Derivatives designated as cash flow hedges
Interest rate	$	265	$	430	Other liabilities, net
Foreign currency	1		5		Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency	353		434		Other liabilities, net
Total liabilities at fair value	$	619	$	869

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Note 14. Other Operating Expenses (Income), net

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings		$	(2)		$	(2)	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	2	$	4	$	1	$	2
Litigation settlements (gains) and reserves, net	Litigation settlements (gains) and reserves, net		2			0		Litigation settlements (gains) and reserves, net	4		4		7		5
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange		(43)			(8)		Net losses (gains) on foreign exchange	(23)		44		(58)		54
Other, net	Other, net		1			(6)		Other, net	1		2		—		(2)
Other operating expenses (income), net	Other operating expenses (income), net		$	(42)		$	(16)	Other operating expenses (income), net	$	(16)	$	54	$	(50)	$	59

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. The court denied the plaintiffs motion for leave to amend their complaint in August 2020 and the plaintiffs ~~are appealing~~appealed this ruling. Oral arguments for the appeal were heard in September 2021 and the parties await a ruling on the appeal. While we currently believe these claims are without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.

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

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On June 30, 2020, a class action complaint was filed against Restaurant Brands International Inc., Restaurant Brands International Limited 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. On August 31, 2020, a notice of claim was filed against Restaurant Brands International Inc. in the Supreme

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Court of British Columbia by Wai Lam Jacky Law on behalf of all persons in Canada who downloaded the Tim Hortons mobile application or the Burger King mobile application. On September 30, 2020, a notice of action was filed against Restaurant Brands International Inc., Restaurant Brands International Limited Partnership, The TDL Group Corp., Burger King Worldwide, Inc. and Popeyes Louisiana Kitchen, Inc. in the Ontario Superior Court of Justice by William Jung on behalf of a to be determined class. All of the complaints allege that the defendants violated the plaintiff’s privacy rights, the Personal Information Protection and Electronic Documents Act, consumer protection and competition laws or app-based undertakings to users, in each case in connection with the collection of geolocation data through the Tim Hortons mobile application, and in certain cases, the Burger King and Popeyes mobile applications. Each plaintiff seeks injunctive relief and monetary damages for himself or herself and other members of the class. These cases are in preliminary stages and we intend to vigorously defend against these lawsuits, but we are unable to predict the ultimate outcome of any of these cases or estimate the range of possible loss, if any.

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

On February 5, 2021, Paul J. Graney, a purported shareholder of Restaurant Brands International, individually and putatively on behalf of all other stockholders similarly situated, filed a lawsuit in the U.S. District Court for the Southern District of Florida naming RBI and certain of its current or former officers as defendants. This lawsuit alleged violations of Sections 10 and 20(a) of the Securities Exchange Act of 1934, as amended, in connection with certain statements made beginning in April 2019. On April 26, 2021, the lead plaintiff filed a stipulation voluntarily dismissing the case, which the Court so ordered on April 27, 2021.

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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 and advertising revenues, consisting primarily of royalties and advertising fund contributions based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers. We manage each of our brands as an operating segment and each operating segment represents a reportable segment.

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Revenues by operating segment:	Revenues by operating segment:							Revenues by operating segment:
TH	TH		$	710		$	699	TH	$	885	$	762	$	2,426	$	2,028
BK	BK		407			388		BK	467		433		1,333		1,168
PLK	PLK		143			138		PLK	143		142		434		414
Total revenues	Total revenues		$	1,260		$	1,225	Total revenues	$	1,495	$	1,337	$	4,193	$	3,610


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Revenues by country (a):	Revenues by country (a):							Revenues by country (a):
Canada	Canada		$	638		$	632	Canada	$	808	$	691	$	2,200	$	1,837
United States	United States		478			450		United States	500		499		1,493		1,392
Other	Other		144			143		Other	187		147		500		381
Total revenues	Total revenues		$	1,260		$	1,225	Total revenues	$	1,495	$	1,337	$	4,193	$	3,610

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

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

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Segment income:	Segment income:							Segment income:
TH	TH		$	207		$	189	TH	$	278	$	258	$	738	$	594
BK	BK		217			200		BK	272		245		755		605
PLK	PLK		56			55		PLK	57		58		171		164
Adjusted EBITDA	Adjusted EBITDA		480			444		Adjusted EBITDA	607		561		1,664		1,363
Share-based compensation and non-cash incentive compensation expense	Share-based compensation and non-cash incentive compensation expense		26			21		Share-based compensation and non-cash incentive compensation expense	25		19		71		63

Corporate restructuring and tax advisory fees	Corporate restructuring and tax advisory fees		1			1		Corporate restructuring and tax advisory fees	4		3		8		11

Impact of equity method investments (a)	Impact of equity method investments (a)		4			4		Impact of equity method investments (a)	11		20		22		42
Other operating expenses (income), net	Other operating expenses (income), net		(42)			(16)		Other operating expenses (income), net	(16)		54		(50)		59
EBITDA	EBITDA		491			434		EBITDA	583		465		1,613		1,188
Depreciation and amortization	Depreciation and amortization		49			45		Depreciation and amortization	50		48		150		139
Income from operations	Income from operations		442			389		Income from operations	533		417		1,463		1,049
Interest expense, net	Interest expense, net		124			119		Interest expense, net	128		129		378		376

Loss on early extinguishment of debt								Loss on early extinguishment of debt	11		—		11		—
Income tax expense	Income tax expense		47			46		Income tax expense	65		65		83		62
Net income	Net income		$	271		$	224	Net income	$	329	$	223	$	991	$	611

(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 November 9, 2020, the Issuers entered into the 2020 3.50% Senior Notes Indenture with respect to the 2020 3.50% Senior Notes. On October 5, 2020, the Issuers entered into the 2020 4.00% Senior Notes Indenture with respect to the 2020 4.00% Senior Notes. On April 7, 2020, the Issuers entered into the 2020 5.75% Senior Notes Indenture with respect to the 2020 5.75% Senior Notes. On November 19, 2019, the Issuers entered into the 2019 4.375% Senior Notes Indenture with respect to the 2019 4.375% Senior Notes. On September 24, 2019, the Issuers entered into the 2019 3.875% Senior Notes Indenture with respect to the ~~2019~~ 3.875% First Lien 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 3.50% Senior Notes Indenture, the 2020 4.00% Senior Notes Indenture, the 2020 5.75% Senior Notes Indenture, the 2019 4.375% Senior Notes Indenture, the 2019 3.875% 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. 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,~~September 30, 2021


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
ASSETS	ASSETS									ASSETS
Current assets:	Current assets:									Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,563	$	0	$	0	$	1,563	Cash and cash equivalents	$	1,773	$	—	$	—	$	1,773
Accounts and notes receivable, net	Accounts and notes receivable, net	519		0		0		519		Accounts and notes receivable, net	537		—		—		537
Inventories, net	Inventories, net	98		0		0		98		Inventories, net	96		—		—		96
Prepaids and other current assets	Prepaids and other current assets	111		0		0		111		Prepaids and other current assets	178		—		—		178
Total current assets	Total current assets	2,291		0		0		2,291		Total current assets	2,584		—		—		2,584
Property and equipment, net	Property and equipment, net	2,028		0		0		2,028		Property and equipment, net	2,013		—		—		2,013
Operating lease assets, net	Operating lease assets, net	1,140		0		0		1,140		Operating lease assets, net	1,118		—		—		1,118
Intangible assets, net	Intangible assets, net	10,742		0		0		10,742		Intangible assets, net	10,652		—		—		10,652
Goodwill	Goodwill	5,781		0		0		5,781		Goodwill	5,743		—		—		5,743
Net investment in property leased to franchisees	Net investment in property leased to franchisees	67		0		0		67		Net investment in property leased to franchisees	79		—		—		79
Intercompany receivable	Intercompany receivable	0		245		(245)		0		Intercompany receivable	—		244		(244)		—
Investment in subsidiaries	Investment in subsidiaries	0		4,002		(4,002)		0		Investment in subsidiaries	—		4,108		(4,108)		—
Other assets, net	Other assets, net	808		0		0		808		Other assets, net	739		—		—		739
Total assets	Total assets	$	22,857	$	4,247	$	(4,247)	$	22,857	Total assets	$	22,928	$	4,352	$	(4,352)	$	22,928
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY									LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:									Current liabilities:
Accounts and drafts payable	Accounts and drafts payable	$	488	$	0	$	0	$	488	Accounts and drafts payable	$	592	$	—	$	—	$	592
Other accrued liabilities	Other accrued liabilities	560		245		0		805		Other accrued liabilities	666		244		—		910
Gift card liability	Gift card liability	147		0		0		147		Gift card liability	137		—		—		137
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	112		0		0		112		Current portion of long-term debt and finance leases	113		—		—		113
Total current liabilities	Total current liabilities	1,307		245		0		1,552		Total current liabilities	1,508		244		—		1,752
Long-term debt, net of current portion	Long-term debt, net of current portion	12,386		0		0		12,386		Long-term debt, net of current portion	12,379		—		—		12,379
Finance leases, net of current portion	Finance leases, net of current portion	318		0		0		318		Finance leases, net of current portion	328		—		—		328
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,075		0		0		1,075		Operating lease liabilities, net of current portion	1,056		—		—		1,056
Other liabilities, net	Other liabilities, net	2,089		0		0		2,089		Other liabilities, net	1,898		—		—		1,898
Payables to affiliates	Payables to affiliates	245		0		(245)		0		Payables to affiliates	244		—		(244)		—
Deferred income taxes, net	Deferred income taxes, net	1,435		0		0		1,435		Deferred income taxes, net	1,407		—		—		1,407
Total liabilities	Total liabilities	18,855		245		(245)		18,855		Total liabilities	18,820		244		(244)		18,820
Partners’ capital:	Partners’ capital:									Partners’ capital:
Class A common units	Class A common units	0		8,066		0		8,066		Class A common units	—		8,731		—		8,731
Partnership exchangeable units	Partnership exchangeable units	0		(2,998)		0		(2,998)		Partnership exchangeable units	—		(3,536)		—		(3,536)
Common shares	Common shares	3,077		0		(3,077)		0		Common shares	2,976		—		(2,976)		—
Retained Earnings		1,991		0		(1,991)		0
Retained earnings										Retained earnings	2,219		—		(2,219)		—
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,072)		(1,072)		1,072		(1,072)		Accumulated other comprehensive income (loss)	(1,089)		(1,089)		1,089		(1,089)
Total Partners' capital/shareholders' equity	Total Partners' capital/shareholders' equity	3,996		3,996		(3,996)		3,996		Total Partners' capital/shareholders' equity	4,106		4,106		(4,106)		4,106
Noncontrolling interests	Noncontrolling interests	6		6		(6)		6		Noncontrolling interests	2		2		(2)		2
Total equity	Total equity	4,002		4,002		(4,002)		4,002		Total equity	4,108		4,108		(4,108)		4,108
Total liabilities and equity	Total liabilities and equity	$	22,857	$	4,247	$	(4,247)	$	22,857	Total liabilities and equity	$	22,928	$	4,352	$	(4,352)	$	22,928

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Balance Sheets

(In millions of U.S. dollars)

As of December 31, 2020


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
ASSETS	ASSETS									ASSETS
Current assets:	Current assets:									Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,560	$	0	$	0	$	1,560	Cash and cash equivalents	$	1,560	$	—	$	—	$	1,560
Accounts and notes receivable, net	Accounts and notes receivable, net	536		0		0		536		Accounts and notes receivable, net	536		—		—		536
Inventories, net	Inventories, net	96		0		0		96		Inventories, net	96		—		—		96
Prepaids and other current assets	Prepaids and other current assets	72		0		0		72		Prepaids and other current assets	72		—		—		72
Total current assets	Total current assets	2,264		0		0		2,264		Total current assets	2,264		—		—		2,264
Property and equipment, net	Property and equipment, net	2,031		0		0		2,031		Property and equipment, net	2,031		—		—		2,031
Operating lease assets. net	Operating lease assets. net	1,152		0		0		1,152		Operating lease assets. net	1,152		—		—		1,152
Intangible assets, net	Intangible assets, net	10,701		0		0		10,701		Intangible assets, net	10,701		—		—		10,701
Goodwill	Goodwill	5,739		0		0		5,739		Goodwill	5,739		—		—		5,739
Net investment in property leased to franchisees	Net investment in property leased to franchisees	66		0		0		66		Net investment in property leased to franchisees	66		—		—		66
Intercompany receivable	Intercompany receivable	0		239		(239)		0		Intercompany receivable	—		239		(239)		—
Investment in subsidiaries	Investment in subsidiaries	0		3,721		(3,721)		0		Investment in subsidiaries	—		3,721		(3,721)		—
Other assets, net	Other assets, net	824		0		0		824		Other assets, net	824		—		—		824
Total assets	Total assets	$	22,777	$	3,960	$	(3,960)	$	22,777	Total assets	$	22,777	$	3,960	$	(3,960)	$	22,777
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY									LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:									Current liabilities:
Accounts and drafts payable	Accounts and drafts payable	$	464	$	0	$	0	$	464	Accounts and drafts payable	$	464	$	—	$	—	$	464
Other accrued liabilities	Other accrued liabilities	596		239		0		835		Other accrued liabilities	596		239		—		835
Gift card liability	Gift card liability	191		0		0		191		Gift card liability	191		—		—		191
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	111		0		0		111		Current portion of long-term debt and finance leases	111		—		—		111
Total current liabilities	Total current liabilities	1,362		239		0		1,601		Total current liabilities	1,362		239		—		1,601
Long-term debt, net of current portion	Long-term debt, net of current portion	12,397		0		0		12,397		Long-term debt, net of current portion	12,397		—		—		12,397
Finance leases, net of current portion	Finance leases, net of current portion	315		0		0		315		Finance leases, net of current portion	315		—		—		315
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,082		0		0		1,082		Operating lease liabilities, net of current portion	1,082		—		—		1,082
Other liabilities, net	Other liabilities, net	2,236		0		0		2,236		Other liabilities, net	2,236		—		—		2,236
Payables to affiliates	Payables to affiliates	239		0		(239)		0		Payables to affiliates	239		—		(239)		—
Deferred income taxes, net	Deferred income taxes, net	1,425		0		0		1,425		Deferred income taxes, net	1,425		—		—		1,425
Total liabilities	Total liabilities	19,056		239		(239)		19,056		Total liabilities	19,056		239		(239)		19,056
Partners’ capital:	Partners’ capital:									Partners’ capital:
Class A common units	Class A common units	0		7,994		0		7,994		Class A common units	—		7,994		—		7,994
Partnership exchangeable units	Partnership exchangeable units	0		(3,002)		0		(3,002)		Partnership exchangeable units	—		(3,002)		—		(3,002)
Common shares	Common shares	3,026		0		(3,026)		0		Common shares	3,026		—		(3,026)		—
Retained Earnings		1,966		0		(1,966)		0
Retained earnings										Retained earnings	1,966		—		(1,966)		—
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(1,275)		(1,275)		1,275		(1,275)		Accumulated other comprehensive income (loss)	(1,275)		(1,275)		1,275		(1,275)
Total Partners' capital/shareholders' equity	Total Partners' capital/shareholders' equity	3,717		3,717		(3,717)		3,717		Total Partners' capital/shareholders' equity	3,717		3,717		(3,717)		3,717
Noncontrolling interests	Noncontrolling interests	4		4		(4)		4		Noncontrolling interests	4		4		(4)		4
Total equity	Total equity	3,721		3,721		(3,721)		3,721		Total equity	3,721		3,721		(3,721)		3,721
Total liabilities and equity	Total liabilities and equity	$	22,777	$	3,960	$	(3,960)	$	22,777	Total liabilities and equity	$	22,777	$	3,960	$	(3,960)	$	22,777

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Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Three Months Ended ~~March 31,~~September 30, 2021


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:	Revenues:									Revenues:
Sales	Sales	$	507	$	0	$	0	$	507	Sales	$	621	$	—	$	—	$	621
Franchise and property revenues	Franchise and property revenues	548		0		0		548		Franchise and property revenues	639		—		—		639
Advertising revenues	Advertising revenues	205		0		0		205		Advertising revenues	235		—		—		235
Total revenues	Total revenues	1,260		0		0		1,260		Total revenues	1,495		—		—		1,495
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of sales	Cost of sales	401		0		0		401		Cost of sales	490		—		—		490
Franchise and property expenses	Franchise and property expenses	116		0		0		116		Franchise and property expenses	121		—		—		121
Advertising expenses	Advertising expenses	236		0		0		236		Advertising expenses	237		—		—		237
General and administrative expenses	General and administrative expenses	105		0		0		105		General and administrative expenses	123		—		—		123
(Income) loss from equity method investments	(Income) loss from equity method investments	2		0		0		2		(Income) loss from equity method investments	7		—		—		7
Other operating expenses (income), net	Other operating expenses (income), net	(42)		0		0		(42)		Other operating expenses (income), net	(16)		—		—		(16)
Total operating costs and expenses	Total operating costs and expenses	818		0		0		818		Total operating costs and expenses	962		—		—		962
Income from operations	Income from operations	442		0		0		442		Income from operations	533		—		—		533
Interest expense, net	Interest expense, net	124		0		0		124		Interest expense, net	128		—		—		128

Loss on early extinguishment of debt										Loss on early extinguishment of debt	11		—		—		11
Income before income taxes	Income before income taxes	318		0		0		318		Income before income taxes	394		—		—		394
Income tax expense	Income tax expense	47		0		0		47		Income tax expense	65		—		—		65
Net income	Net income	271		0		0		271		Net income	329		—		—		329
Equity in earnings of consolidated subsidiaries	Equity in earnings of consolidated subsidiaries	0		271		(271)		0		Equity in earnings of consolidated subsidiaries	—		329		(329)		—
Net income (loss)	Net income (loss)	271		271		(271)		271		Net income (loss)	329		329		(329)		329
Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	1		1		(1)		1		Net income (loss) attributable to noncontrolling interests	1		1		(1)		1
Net income (loss) attributable to common unitholders	Net income (loss) attributable to common unitholders	$	270	$	270	$	(270)	$	270	Net income (loss) attributable to common unitholders	$	328	$	328	$	(328)	$	328
Comprehensive income (loss)	Comprehensive income (loss)	$	474	$	474	$	(474)	$	474	Comprehensive income (loss)	$	252	$	252	$	(252)	$	252

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Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Nine Months Ended September 30, 2021


	Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:
Sales	$	1,718	$	—	$	—	$	1,718
Franchise and property revenues	1,801		—		—		1,801
Advertising revenues	674		—		—		674
Total revenues	4,193		—		—		4,193
Operating costs and expenses:
Cost of sales	1,358		—		—		1,358
Franchise and property expenses	358		—		—		358
Advertising expenses	711		—		—		711
General and administrative expenses	341		—		—		341
(Income) loss from equity method investments	12		—		—		12
Other operating expenses (income), net	(50)		—		—		(50)
Total operating costs and expenses	2,730		—		—		2,730
Income from operations	1,463		—		—		1,463
Interest expense, net	378		—		—		378
Loss on early extinguishment of debt	11		—		—		11
Income before income taxes	1,074		—		—		1,074
Income tax expense	83		—		—		83
Net income	991		—		—		991
Equity in earnings of consolidated subsidiaries	—		991		(991)		—
Net income (loss)	991		991		(991)		991
Net income (loss) attributable to noncontrolling interests	3		3		(3)		3
Net income (loss) attributable to common unitholders	$	988	$	988	$	(988)	$	988
Comprehensive income (loss)	$	1,177	$	1,177	$	(1,177)	$	1,177

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Three Months Ended ~~March 31,~~September 30, 2020


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:	Revenues:									Revenues:
Sales	Sales	$	503	$	0	$	0	$	503	Sales	$	541	$	—	$	—	$	541
Franchise and property revenues	Franchise and property revenues	525		0		0		525		Franchise and property revenues	577		—		—		577
Advertising revenues	Advertising revenues	197		0		0		197		Advertising revenues	219		—		—		219
Total revenues	Total revenues	1,225		0		0		1,225		Total revenues	1,337		—		—		1,337
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of sales	Cost of sales	399		0		0		399		Cost of sales	418		—		—		418
Franchise and property expenses	Franchise and property expenses	123		0		0		123		Franchise and property expenses	125		—		—		125
Advertising expenses	Advertising expenses	226		0		0		226		Advertising expenses	209		—		—		209
General and administrative expenses	General and administrative expenses	102		0		0		102		General and administrative expenses	96		—		—		96
(Income) loss from equity method investments	(Income) loss from equity method investments	2		0		0		2		(Income) loss from equity method investments	18		—		—		18
Other operating expenses (income), net	Other operating expenses (income), net	(16)		0		0		(16)		Other operating expenses (income), net	54		—		—		54
Total operating costs and expenses	Total operating costs and expenses	836		0		0		836		Total operating costs and expenses	920		—		—		920
Income from operations	Income from operations	389		0		0		389		Income from operations	417		—		—		417
Interest expense, net	Interest expense, net	119		0		0		119		Interest expense, net	129		—		—		129

Income before income taxes	Income before income taxes	270		0		0		270		Income before income taxes	288		—		—		288
Income tax expense	Income tax expense	46		0		0		46		Income tax expense	65		—		—		65
Net income	Net income	224		0		0		224		Net income	223		—		—		223
Equity in earnings of consolidated subsidiaries	Equity in earnings of consolidated subsidiaries	0		224		(224)		0		Equity in earnings of consolidated subsidiaries	—		223		(223)		—
Net income (loss)	Net income (loss)	224		224		(224)		224		Net income (loss)	223		223		(223)		223
Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	0		0		0		0		Net income (loss) attributable to noncontrolling interests	—		—		—		—
Net income (loss) attributable to common unitholders	Net income (loss) attributable to common unitholders	$	224	$	224	$	(224)	$	224	Net income (loss) attributable to common unitholders	$	223	$	223	$	(223)	$	223
Comprehensive income (loss)	Comprehensive income (loss)	$	(319)	$	(319)	$	319	$	(319)	Comprehensive income (loss)	$	269	$	269	$	(269)	$	269

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Operations

(In millions of U.S. dollars)

Nine Months Ended September 30, 2020


	Consolidated Borrowers		RBILP		Eliminations		Consolidated
Revenues:
Sales	$	1,450	$	—	$	—	$	1,450
Franchise and property revenues	1,552		—		—		1,552
Franchise contributions for advertising	608		0		0		608
Total revenues	3,610		—		—		3,610
Operating costs and expenses:
Cost of sales	1,156		—		—		1,156
Franchise and property expenses	380		—		—		380
Franchise advertising and related expenses	638		—		—		638
Selling, general and administrative expenses	292		—		—		292
(Income) loss from equity method investments	36		—		—		36
Other operating expenses (income), net	59		—		—		59
Total operating costs and expenses	2,561		—		—		2,561
Income from operations	1,049		—		—		1,049
Interest expense, net	376		—		—		376

Income before income taxes	673		—		—		673
Income tax expense	62		—		—		62
Net income	611		—		—		611
Equity in earnings of consolidated subsidiaries	—		611		(611)		—
Net income (loss)	611		611		(611)		611
Net income (loss) attributable to noncontrolling interests	1		1		(1)		1
Net income (loss) attributable to common unitholders	$	610	$	610	$	(610)	$	610
Comprehensive income (loss)	$	263	$	263	$	(263)	$	263

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

(In millions of U.S. dollars)

~~Three~~Nine months ended ~~March 31,~~September 30, 2021


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Cash flows from operating activities:	Cash flows from operating activities:									Cash flows from operating activities:
Net income	Net income	$	271	$	271	$	(271)	$	271	Net income	$	991	$	991	$	(991)	$	991
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:										Adjustments to reconcile net income to net cash provided by operating activities:
Equity in loss (earnings) of consolidated subsidiaries	Equity in loss (earnings) of consolidated subsidiaries	0		(271)		271		0		Equity in loss (earnings) of consolidated subsidiaries	—		(991)		991		—
Depreciation and amortization	Depreciation and amortization	49		0		0		49		Depreciation and amortization	150		—		—		150

Premiums paid and non-cash loss on early extinguishment of debt										Premiums paid and non-cash loss on early extinguishment of debt	11		—		—		11
Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount	7		0		0		7		Amortization of deferred financing costs and debt issuance discount	20		—		—		20
(Income) loss from equity method investments	(Income) loss from equity method investments	2		0		0		2		(Income) loss from equity method investments	12		—		—		12
(Gain) loss on remeasurement of foreign denominated transactions	(Gain) loss on remeasurement of foreign denominated transactions	(43)		0		0		(43)		(Gain) loss on remeasurement of foreign denominated transactions	(58)		—		—		(58)
Net (gains) losses on derivatives	Net (gains) losses on derivatives	20		0		0		20		Net (gains) losses on derivatives	65		—		—		65
Share-based compensation expense	Share-based compensation expense	22		0		0		22		Share-based compensation expense	62		—		—		62
Deferred income taxes	Deferred income taxes	14		0		0		14		Deferred income taxes	35		—		—		35
Other	Other	(8)		0		0		(8)		Other	(14)		—		—		(14)
Changes in current assets and liabilities, excluding acquisitions and dispositions:	Changes in current assets and liabilities, excluding acquisitions and dispositions:									Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	Accounts and notes receivable	24		0		0		24		Accounts and notes receivable	11		—		—		11
Inventories and prepaids and other current assets	Inventories and prepaids and other current assets	(4)		0		0		(4)		Inventories and prepaids and other current assets	(3)		—		—		(3)
Accounts and drafts payable	Accounts and drafts payable	19		0		0		19		Accounts and drafts payable	129		—		—		129
Other accrued liabilities and gift card liability	Other accrued liabilities and gift card liability	(113)		0		0		(113)		Other accrued liabilities and gift card liability	(78)		—		—		(78)

Tenant inducements paid to franchisees										Tenant inducements paid to franchisees	(5)		—		—		(5)
Other long-term assets and liabilities	Other long-term assets and liabilities	6		0		0		6		Other long-term assets and liabilities	(73)		—		—		(73)
Net cash provided by (used for) operating activities		266		0		0		266
Net cash provided by operating activities										Net cash provided by operating activities	1,255		—		—		1,255
Cash flows from investing activities:	Cash flows from investing activities:									Cash flows from investing activities:
Payments for property and equipment	Payments for property and equipment	(15)		0		0		(15)		Payments for property and equipment	(70)		—		—		(70)
Net proceeds from disposal of assets, restaurant closures, and refranchisings	Net proceeds from disposal of assets, restaurant closures, and refranchisings	11		0		0		11		Net proceeds from disposal of assets, restaurant closures, and refranchisings	14		—		—		14

Settlement/sale of derivatives, net	Settlement/sale of derivatives, net	2		0		0		2		Settlement/sale of derivatives, net	2		—		—		2
Other investing activities, net	Other investing activities, net	(5)		0		0		(5)		Other investing activities, net	(15)		—		—		(15)
Net cash provided by (used for) investing activities		(7)		0		0		(7)
Net cash (used for) provided by investing activities										Net cash (used for) provided by investing activities	(69)		—		—		(69)
Cash flows from financing activities:	Cash flows from financing activities:									Cash flows from financing activities:

Proceeds from revolving line of credit and long-term debt										Proceeds from revolving line of credit and long-term debt	802		—		—		802
Repayments of long-term debt and finance leases	Repayments of long-term debt and finance leases	(27)		0		0		(27)		Repayments of long-term debt and finance leases	(865)		—		—		(865)

Payment of financing costs										Payment of financing costs	(7)		—		—		(7)
Distributions on Class A common and Partnership exchangeable units	Distributions on Class A common and Partnership exchangeable units	0		(239)		0		(239)		Distributions on Class A common and Partnership exchangeable units	—		(730)		—		(730)
Distribution to RBI for repurchase of RBI common shares										Distribution to RBI for repurchase of RBI common shares	—		(182)		—		(182)
Capital contribution from RBI	Capital contribution from RBI	20		0		0		20		Capital contribution from RBI	60		—		—		60
Distributions from subsidiaries	Distributions from subsidiaries	(239)		239		0		0		Distributions from subsidiaries	(912)		912		—		—
(Payments) proceeds from derivatives	(Payments) proceeds from derivatives	(16)		0		0		(16)		(Payments) proceeds from derivatives	(45)		—		—		(45)
Other financing activities, net	Other financing activities, net	1		0		0		1		Other financing activities, net	(3)		—		—		(3)
Net cash provided by (used for) financing activities		(261)		0		0		(261)
Net cash (used for) provided by financing activities										Net cash (used for) provided by financing activities	(970)		—		—		(970)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	5		0		0		5		Effect of exchange rates on cash and cash equivalents	(3)		—		—		(3)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	3		0		0		3		Increase (decrease) in cash and cash equivalents	213		—		—		213
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,560		0		0		1,560		Cash and cash equivalents at beginning of period	1,560		—		—		1,560
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,563	$	0	$	0	$	1,563	Cash and cash equivalents at end of period	$	1,773	$	—	$	—	$	1,773

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RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES

Condensed Consolidating Statements of Cash Flows

(In millions of U.S. dollars)

~~Three~~Nine Months Ended ~~March 31,~~September 30, 2020


		Consolidated Borrowers		RBILP		Eliminations		Consolidated			Consolidated Borrowers		RBILP		Eliminations		Consolidated
Cash flows from operating activities:	Cash flows from operating activities:									Cash flows from operating activities:
Net income	Net income	$	224	$	224	$	(224)	$	224	Net income	$	611	$	611	$	(611)	$	611
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:										Adjustments to reconcile net income to net cash provided by operating activities:
Equity in loss (earnings) of consolidated subsidiaries	Equity in loss (earnings) of consolidated subsidiaries	0		(224)		224		0		Equity in loss (earnings) of consolidated subsidiaries	—		(611)		611		—
Depreciation and amortization	Depreciation and amortization	45		0		0		45		Depreciation and amortization	139		—		—		139

Amortization of deferred financing costs and debt issuance discount	Amortization of deferred financing costs and debt issuance discount	6		0		0		6		Amortization of deferred financing costs and debt issuance discount	19		—		—		19
(Income) loss from equity method investments	(Income) loss from equity method investments	2		0		0		2		(Income) loss from equity method investments	36		—		—		36
(Gain) loss on remeasurement of foreign denominated transactions	(Gain) loss on remeasurement of foreign denominated transactions	(8)		0		0		(8)		(Gain) loss on remeasurement of foreign denominated transactions	54		—		—		54
Net (gains) losses on derivatives	Net (gains) losses on derivatives	(6)		0		0		(6)		Net (gains) losses on derivatives	14		—		—		14
Share-based compensation expense	Share-based compensation expense	19		0		0		19		Share-based compensation expense	55		—		—		55
Deferred income taxes	Deferred income taxes	(31)		0		0		(31)		Deferred income taxes	(120)		—		—		(120)
Other	Other	(4)		0		0		(4)		Other	23		—		—		23
Changes in current assets and liabilities, excluding acquisitions and dispositions:	Changes in current assets and liabilities, excluding acquisitions and dispositions:									Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable	Accounts and notes receivable	94		0		0		94		Accounts and notes receivable	(83)		—		—		(83)
Inventories and prepaids and other current assets	Inventories and prepaids and other current assets	(13)		0		0		(13)		Inventories and prepaids and other current assets	(21)		—		—		(21)
Accounts and drafts payable	Accounts and drafts payable	(136)		0		0		(136)		Accounts and drafts payable	(110)		—		—		(110)
Other accrued liabilities and gift card liability	Other accrued liabilities and gift card liability	(67)		0		0		(67)		Other accrued liabilities and gift card liability	(12)		—		—		(12)
Tenant inducements paid to franchisees	Tenant inducements paid to franchisees	(3)		0		0		(3)		Tenant inducements paid to franchisees	(7)		—		—		(7)
Other long-term assets and liabilities	Other long-term assets and liabilities	14		0		0		14		Other long-term assets and liabilities	(5)		—		—		(5)
Net cash provided by (used for) operating activities		136		0		0		136
Net cash provided by operating activities										Net cash provided by operating activities	593		—		—		593
Cash flows from investing activities:	Cash flows from investing activities:									Cash flows from investing activities:
Payments for property and equipment	Payments for property and equipment	(19)		0		0		(19)		Payments for property and equipment	(71)		—		—		(71)
Net proceeds from disposal of assets, restaurant closures, and refranchisings	Net proceeds from disposal of assets, restaurant closures, and refranchisings	4		0		0		4		Net proceeds from disposal of assets, restaurant closures, and refranchisings	9		—		—		9

Settlement/sale of derivatives, net	Settlement/sale of derivatives, net	12		0		0		12		Settlement/sale of derivatives, net	29		—		—		29

Net cash provided by (used for) investing activities		(3)		0		0		(3)
Net cash (used for) provided by investing activities										Net cash (used for) provided by investing activities	(33)		—		—		(33)
Cash flows from financing activities:	Cash flows from financing activities:									Cash flows from financing activities:
Proceeds from revolving line of credit and long-term debt	Proceeds from revolving line of credit and long-term debt	1,085		0		0		1,085		Proceeds from revolving line of credit and long-term debt	1,585		—		—		1,585
Repayments of revolving line of credit, long-term debt and finance leases	Repayments of revolving line of credit, long-term debt and finance leases	(25)		0		0		(25)		Repayments of revolving line of credit, long-term debt and finance leases	(1,071)		—		—		(1,071)

Payment of financing costs										Payment of financing costs	(10)		—		—		(10)
Distributions on Class A common and Partnership exchangeable units	Distributions on Class A common and Partnership exchangeable units	0		(232)		0		(232)		Distributions on Class A common and Partnership exchangeable units	—		(716)		—		(716)
Capital contribution from RBI	Capital contribution from RBI	30		0		0		30		Capital contribution from RBI	60		—		—		60
Distributions from subsidiaries	Distributions from subsidiaries	(232)		232		0		0		Distributions from subsidiaries	(716)		716		—		—
(Payments) proceeds from derivatives	(Payments) proceeds from derivatives	(2)		0		0		(2)		(Payments) proceeds from derivatives	(29)		—		—		(29)
Other financing activities, net	Other financing activities, net	(1)		0		0		(1)		Other financing activities, net	(1)		—		—		(1)
Net cash provided by (used for) financing activities		855		0		0		855
Net cash (used for) provided by financing activities										Net cash (used for) provided by financing activities	(182)		—		—		(182)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	(23)		0		0		(23)		Effect of exchange rates on cash and cash equivalents	(7)		—		—		(7)
Increase (decrease) in cash and cash equivalents	Increase (decrease) in cash and cash equivalents	965		0		0		965		Increase (decrease) in cash and cash equivalents	371		—		—		371
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,533		0		0		1,533		Cash and cash equivalents at beginning of period	1,533		—		—		1,533
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	2,498	$	0	$	0	$	2,498	Cash and cash equivalents at end of period	$	1,904	$	—	$	—	$	1,904

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Note 18. Subsequent Events

Cash Distributions/Dividends

On ~~April 6,~~October 5, 2021, RBI paid a cash dividend of $0.53 per RBI common share to common shareholders of record on ~~March 23,~~September 21, 2021. Partnership made a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares and also made a distribution in respect of each Partnership exchangeable unit in the amount of $0.53 per exchangeable unit to holders of record on ~~March 23,~~September 21, 2021.

Subsequent to ~~March 31,~~September 30, 2021, the RBI board of directors declared a cash dividend of $0.53 per RBI common share, which will be paid on ~~July 7, 2021~~January 5, 2022 to RBI common shareholders of record on ~~June 23,~~December 21, 2021. Partnership will make a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of $0.53 per Partnership exchangeable unit, and the record date and payment date for such distribution will be the same as the record date and payment date for the cash dividend per RBI common share set forth above.

*****

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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 ~~$31~~$34 billion in annual system-wide sales and over 27,000 restaurants in more than 100 countries as of ~~March 31,~~September 30, 2021. 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 and advertising revenues, consisting primarily of royalties and advertising fund contributions based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing, and distribution, as well as sales to retailers.

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

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COVID-19

The global crisis resulting from the spread of coronavirus (“COVID-19”) ~~had a substantial impact on~~impacted our global restaurant operations for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020.

While the impact of COVID-19 on system-wide sales growth, system-wide sales, comparable sales and net restaurant growth was ~~severe~~significant for the ~~last few weeks of the quarter~~three and nine months ended ~~March 31,~~September 30, 2020, in the 2021 ~~period~~periods these metrics were affected to a lesser extent, ~~for the entire period,~~ with variations among brands and regions. During 2020 and the ~~three~~nine months ended ~~March 31,~~September 30, 2021, substantially all TH, BK and PLK restaurants remained open in ~~North America,~~the U.S. and Canada, some with limited operations, such as drive-thru, takeout and delivery (where applicable), reduced, if any, dine-in capacity, and/or restrictions on hours of operation. ~~As of~~During the ~~end of March~~three months ended September 30, 2021, ~~95%~~on average 97% of our restaurants were open worldwide, including ~~substantially all~~approximately 98% of our restaurants in ~~North America~~the U.S. and ~~Asia Pacific~~Canada and approximately ~~92% and 84%~~96% of our restaurants in ~~Europe, Middle East and Africa and Latin America, respectively.~~the rest of the world. By contrast, ~~at March 31,~~during the three months ended September 30, 2020, ~~the~~on average 94% of our restaurants were open ~~were~~worldwide, including approximately ~~94% in North America, 83% in Asia Pacific, 40% in Europe, Middle East and Africa and 47% in Latin America. Certain jurisdictions, such as Canada, Europe, and Brazil, that had eased~~

~~Table~~97% of ~~Contents~~

~~restrictions during 2020, re-imposed lockdowns and curfews~~our restaurants in the ~~quarter~~U.S. and Canada and approximately 91% of our restaurants in the rest of the world. During the nine months ended ~~March 31, 2021. In comparison, during the quarter ended March 31,~~September 30, 2020, a number of ~~other~~ markets required temporary complete closures while implementing ~~lock-down~~lockdown orders. While many regions have since eased restrictions, certain markets continue to be impacted and re-imposed restrictions in the nine months ended September 30, 2021. We expect local conditions to continue to dictate limitations on restaurant operations, capacity, and hours of operation.

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

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

Operating Metrics

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

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

•Comparable sales refers to the percentage change in restaurant sales in one period from the same prior year period for restaurants that have been open for 13 months or longer for TH 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 and advertising fund contributions are calculated based on a percentage of franchise sales.

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

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

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Results of Operations for the Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020

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


Consolidated	Consolidated		Three Months Ended March 31,			Variance		FX Impact (a)			Variance Excluding FX Impact		Consolidated	Three Months Ended September 30,						Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2021	2020	Favorable / (Unfavorable)						2021				2020				Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)
Revenues:	Revenues:																Revenues:
Sales	Sales			$	507	$	503	$	4		$	24			$	(20)	Sales	$	621	$	541	$	80	$	25	$	55	$	1,718	$	1,450	$	268	$	92	$	176
Franchise and property revenues	Franchise and property revenues			548		525		23			15				8		Franchise and property revenues	639		577		62		13		49		1,801		1,552		249		52		197
Advertising revenues	Advertising revenues			205		197		8			3				5		Advertising revenues	235		219		16		3		13		674		608		66		11		55
Total revenues	Total revenues			1,260		1,225		35			42				(7)		Total revenues	1,495		1,337		158		41		117		4,193		3,610		583		155		428
Operating costs and expenses:	Operating costs and expenses:																Operating costs and expenses:
Cost of sales	Cost of sales			401		399		(2)			(19)				17		Cost of sales	490		418		(72)		(19)		(53)		1,358		1,156		(202)		(73)		(129)
Franchise and property expenses	Franchise and property expenses			116		123		7			(5)				12		Franchise and property expenses	121		125		4		(5)		9		358		380		22		(20)		42
Advertising expenses	Advertising expenses			236		226		(10)			(4)				(6)		Advertising expenses	237		209		(28)		(3)		(25)		711		638		(73)		(13)		(60)
General and administrative expenses	General and administrative expenses			105		102		(3)			(3)				—		General and administrative expenses	123		96		(27)		(1)		(26)		341		292		(49)		(8)		(41)
(Income) loss from equity method investments	(Income) loss from equity method investments			2		2		—			—				—		(Income) loss from equity method investments	7		18		11		—		11		12		36		24		—		24
Other operating expenses (income), net	Other operating expenses (income), net			(42)		(16)		26			1				25		Other operating expenses (income), net	(16)		54		70		(2)		72		(50)		59		109		(2)		111
Total operating costs and expenses	Total operating costs and expenses			818		836		18			(30)				48		Total operating costs and expenses	962		920		(42)		(30)		(12)		2,730		2,561		(169)		(116)		(53)
Income from operations	Income from operations			442		389		53			12				41		Income from operations	533		417		116		11		105		1,463		1,049		414		39		375
Interest expense, net	Interest expense, net			124		119		(5)			—				(5)		Interest expense, net	128		129		1		—		1		378		376		(2)		(1)		(1)

Loss on early extinguishment of debt																	Loss on early extinguishment of debt	11		—		(11)		—		(11)		11		—		(11)		—		(11)
Income before income taxes	Income before income taxes			318		270		48			12				36		Income before income taxes	394		288		106		11		95		1,074		673		401		38		363
Income tax expense	Income tax expense			47		46		(1)			(1)				—		Income tax expense	65		65		—		2		(2)		83		62		(21)		2		(23)
Net income	Net income			$	271	$	224	$	47		$	11			$	36	Net income	$	329	$	223	$	106	$	13	$	93	$	991	$	611	$	380	$	40	$	340

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

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TH Segment	TH Segment		Three Months Ended March 31,			Variance		FX Impact (a)			Variance Excluding FX Impact		TH Segment	Three Months Ended September 30,						Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2021	2020	Favorable / (Unfavorable)						2021				2020				Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)
Revenues:	Revenues:																Revenues:
Sales	Sales			$	473	$	465	$	8		$	24			$	(16)	Sales	$	592	$	506	$	86	$	25	$	61	$	1,621	$	1,345	$	276	$	92	$	184
Franchise and property revenues	Franchise and property revenues			190		188		2			10				(8)		Franchise and property revenues	230		205		25		11		14		639		547		92		38		54
Advertising revenues	Advertising revenues			47		46		1			2				(1)		Advertising revenues	63		51		12		3		9		166		136		30		9		21
Total revenues	Total revenues			710		699		11			36				(25)		Total revenues	885		762		123		39		84		2,426		2,028		398		139		259
Cost of sales	Cost of sales			370		366		(4)			(19)				15		Cost of sales	462		388		(74)		(19)		(55)		1,266		1,061		(205)		(73)		(132)
Franchise and property expenses	Franchise and property expenses			81		81		—			(4)				4		Franchise and property expenses	84		80		(4)		(5)		1		251		242		(9)		(18)		9
Advertising expenses	Advertising expenses			62		65		3			(4)				7		Advertising expenses	67		46		(21)		(2)		(19)		197		154		(43)		(11)		(32)
Segment G&A	Segment G&A			24		25		1			(1)				2		Segment G&A	27		20		(7)		(1)		(6)		77		65		(12)		(4)		(8)
Segment depreciation and amortization (b)	Segment depreciation and amortization (b)			31		26		(5)			(1)				(4)		Segment depreciation and amortization (b)	31		28		(3)		(2)		(1)		94		82		(12)		(6)		(6)
Segment income (c)	Segment income (c)			207		189		18			9				9		Segment income (c)	278		258		20		13		7		738		594		144		39		105

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

(c)TH segment income includes $3 million and $2 million of cash distributions received from equity method investments for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. TH segment income includes $9 million and $6 million of cash distributions received from equity method investments for the nine months ended September 30, 2021 and 2020, respectively.


BK Segment	BK Segment		Three Months Ended March 31,			Variance		FX Impact (a)			Variance Excluding FX Impact		BK Segment	Three Months Ended September 30,						Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2021	2020	Favorable / (Unfavorable)						2021				2020				Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)
Revenues:	Revenues:																Revenues:
Sales	Sales			$	16	$	17	$	(1)		$	—			$	(1)	Sales	$	16	$	17	$	(1)	$	—	$	(1)	$	49	$	49	$	—	$	—	$	—
Franchise and property revenues	Franchise and property revenues			289		273		16			5				11		Franchise and property revenues	337		305		32		2		30		950		811		139		14		125
Advertising revenues	Advertising revenues			102		98		4			1				3		Advertising revenues	114		111		3		—		3		334		308		26		2		24
Total revenues	Total revenues			407		388		19			6				13		Total revenues	467		433		34		2		32		1,333		1,168		165		16		149
Cost of sales	Cost of sales			16		17		1			—				1		Cost of sales	16		16		—		—		—		49		49		—		—		—
Franchise and property expenses	Franchise and property expenses			33		39		6			(1)				7		Franchise and property expenses	34		42		8		—		8		100		129		29		(2)		31
Advertising expenses	Advertising expenses			117		108		(9)			—				(9)		Advertising expenses	110		105		(5)		(1)		(4)		337		318		(19)		(2)		(17)
Segment G&A	Segment G&A			36		37		1			(1)				2		Segment G&A	47		37		(10)		—		(10)		128		104		(24)		(2)		(22)
Segment depreciation and amortization (b)	Segment depreciation and amortization (b)			12		12		—			—				—		Segment depreciation and amortization (b)	12		13		1		—		1		36		37		1		—		1
Segment income ~~(d)~~	Segment income ~~(d)~~			217		200		17			4				13		Segment income ~~(d)~~	272		245		27		2		25		755		605		150		11		139

~~(d)No significant cash distributions were received from equity method investments during the three months ended March 31, 2021 and 2020.~~

PLK Segment Three Months Ended March 31, Variance FX Impact (a) Variance Excluding FX Impact
2021 2020 Favorable / (Unfavorable)
Revenues:
Sales $ 18 $ 21 $ (3) $ — $ (3)
Franchise and property revenues 69 64 5 — 5
Advertising revenues 56 53 3 — 3
Total revenues 143 138 5 — 5
Cost of sales 15 16 1 — 1
Franchise and property expenses 2 3 1 — 1
Advertising expenses 57 53 (4) — (4)
Segment G&A 14 13 (1) — (1)
Segment depreciation and amortization (b) 2 2 — — —
Segment income 56 55 1 — 1

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Three Months Ended
March 31,
Key Business Metrics 2021 2020
System-wide sales growth
    TH (4.9) % (9.9) %
    BK 1.8 % (3.0) %
    PLK 7.0 % 32.3 %
    Consolidated 1.4 % 0.0 %
System-wide sales
    TH $ 1,379 $ 1,382
    BK $ 5,173 $ 4,999
    PLK $ 1,344 $ 1,258
    Consolidated $ 7,896 $ 7,639
Comparable sales
    TH (2.3) % (10.3) %
    BK 0.7 % (3.7) %
    PLK 1.5 % 26.2 %
As of March 31,
2021 2020
Net restaurant growth
    TH 1.3 % 1.2 %
    BK (0.8) % 5.8 %
    PLK 4.8 % 6.9 %
    Consolidated 0.2 % 5.0 %
Restaurant count
    TH 4,987 4,925
    BK 18,691 18,848
    PLK 3,495 3,336
    Consolidated 27,173 27,109


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

~~Comparable Sales~~

~~TH comparable sales were (2.3)% during the three months ended March 31, 2021, including Canada comparable sales of (3.3)%.~~

~~BK comparable sales were 0.7% during the three months ended March 31, 2021, including U.S. comparable sales of 6.6%.~~

~~PLK comparable sales were 1.5% during the three months ended March 31, 2021, including U.S. comparable sales of 0.9%.~~


	Three Months Ended September 30,						Nine Months Ended September 30,
Key Business Metrics	2021			2020			2021			2020
System-wide sales growth
TH	11.1		%	(13.7)		%	12.0		%	(19.1)		%
BK	12.3		%	(7.9)		%	16.0		%	(12.1)		%
PLK	4.4		%	21.5		%	7.3		%	25.7		%
Consolidated	10.8		%	(5.4)		%	13.8		%	(8.9)		%
System-wide sales
TH	$	1,774		$	1,520		$	4,790		$	4,010
BK	$	6,212		$	5,484		$	17,268		$	14,610
PLK	$	1,392		$	1,331		$	4,122		$	3,836
Consolidated	$	9,378		$	8,335		$	26,180		$	22,456
Comparable sales
TH	8.9		%	(12.5)		%	10.7		%	(17.2)		%
BK	7.9		%	(7.0)		%	8.5		%	(7.9)		%
PLK	(2.4)		%	17.4		%	(0.5)		%	22.5		%

							As of September 30,
							2021			2020
Net restaurant growth
TH							4.1		%	1.0		%
BK							1.3		%	2.4		%
PLK							5.5		%	7.1		%
Consolidated							2.4		%	2.7		%
Restaurant count
TH							5,137			4,934
BK							18,923			18,675
PLK							3,607			3,418
Consolidated							27,667			27,027

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Comparable Sales

For TH and BK, restaurant operations were less impacted by COVID-19 during the three months ended September 30, 2021 than in the same period in 2020, resulting in significant increases in system-wide sales growth and comparable sales during the three and nine months ended September 30, 2021.

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

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

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

Sales and Cost of Sales

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

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

During the three months ended ~~March 31,~~September 30, 2021, the increase in sales was driven ~~primarily~~ by an increase of $61 million in our TH segment and a favorable FX Impact of ~~$24~~$25 million, partially offset by a decrease of ~~$16 million in our TH segment, a decrease of $3~~$5 million in our PLK segment and a decrease of $1 million in our BK segment. The ~~decrease~~increase in our TH segment was driven by ~~a decrease~~an increase in supply chain sales due to an increase in system-wide sales.

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

During the three months ended ~~March 31,~~September 30, 2021, the increase in cost of sales was driven ~~primarily~~ by an increase of $55 million in our TH segment and an unfavorable FX Impact of $19 million, partially offset by a decrease of ~~$15 million in our TH segment, a decrease of $1 million in our BK segment, and a decrease of $1~~$2 million in our PLK segment. The ~~decrease~~increase in our TH segment was driven by ~~a decrease~~an increase in supply chain sales.

During the nine months ended September 30, 2021, the increase in cost of sales ~~due to~~was driven by an increase of $132 million in our TH segment and an unfavorable FX Impact of $73 million, partially offset by a decrease ~~in system-wide sales excluding FX Impact and the non-recurrence~~ of a $3 million ~~charge~~ in ~~the prior year to write-off paper cup inventory for the 2020 Roll Up the Rim promotion due to COVID-19, partially offset~~our PLK segment. The increase in our TH segment was driven by an increase in supply chain sales and an increase in sales to ~~retailers.~~retailers, partially offset by a decrease in bad debt expense.

Franchise and Property

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

During the three months ended ~~March 31,~~September 30, 2021, the increase in franchise and property revenues was driven by ~~a favorable FX Impact of $15 million,~~ an increase of ~~$11~~$30 million in our BK segment, ~~and~~an increase of $14 million in our TH segment, an increase of $5 million in our PLK segment ~~partially offset~~and a favorable FX Impact of $13 million. The increases were primarily driven by increases in royalties in all of our segments, and increases in rent in our TH segment, as a ~~decrease~~result of $8increases in system-wide sales.

Table of Contents

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

During the three months ended ~~March 31,~~September 30, 2021, the decrease in franchise and property expenses was driven by a decrease of $7$8 million in our BK ~~segment, a decrease of $4 million in our TH~~ segment and a decrease of $1 million in our ~~PLK~~TH segment, partially offset by an unfavorable FX Impact of $5 million. The decrease in our BK segment was primarily related to a decrease in property expenses and bad debt recoveries in the current year compared to bad debt expense in the prior year.

During the nine months ended September 30, 2021, the decrease in franchise and property expenses was driven by a decrease of $31 million in our BK segment, a decrease of $9 million in our TH ~~segments~~segment, and a decrease of $2 million in our PLK segment, partially offset by an unfavorable FX Impact of $20 million. The decrease in our BK segment was primarily related to bad debt recoveries in the current year compared to bad debt expense in the prior year.

Advertising

Advertising revenues consist primarily of advertising contributions earned on franchise ~~sales.~~sales and are based on a percentage of system-wide sales and intended to fund advertising expenses. Advertising expenses consist primarily of expenses relating to marketing, advertising and promotion, including market research, production, advertising costs, sales promotions, social media campaigns, technology initiatives, depreciation and amortization and other related support functions for the respective brands. We manage advertising expenses to equal advertising revenues in the long term, however in some periods there may be a mismatch in the timing of revenues and expense.

During the three months ended ~~March 31,~~September 30, 2021, the increase in advertising revenues was driven by ~~a favorable FX Impact~~an increase of $3$9 million in our TH segment, an increase of $3 million in our BK segment, ~~and~~ an increase of $3$1 million in our PLK segment ~~partially offset~~and a favorable FX Impact of $3 million. The increases in all of our segments were primarily driven by ~~a decrease~~increases in system-wide sales.

During the nine months ended September 30, 2021, the increase in advertising revenues was driven by an increase of $1$24 million in our BK segment, an increase of $21 million in our TH ~~segment. The~~segment, an increase of $10 million in our BKPLK segment and ~~PLK~~a favorable FX Impact of $11 million. The increases in all of our segments ~~was~~were primarily driven by ~~an increase~~increases in system-wide sales. ~~The decrease in our TH segment was primarily driven by a decrease in system-wide sales excluding FX Impact.~~

During the three months ended ~~March 31,~~September 30, 2021, the increase in advertising expenses was driven by an increase of $9$19 million in our TH segment, an increase of $4 million in our BK segment, an increase of $4$2 million in our PLK segment, and an unfavorable FX Impact of ~~$4 million, partially offset by a decrease of $7 million in our TH segment.~~$3 million. The increase in all of our ~~BK segment was primarily driven by the timing of advertising expenses and an increase in advertising revenues. The increase in our PLK segment~~segments was primarily driven by an increase in advertising ~~revenues. The decrease~~revenues, and for our TH segment, also driven by our support behind the marketing program in Canada.

During the nine months ended September 30, 2021, the increase in advertising expenses was driven by an increase of $32 million in our TH segment, an increase of $17 million in our BK segment, an increase of $11 million in our PLK segment, and an unfavorable FX Impact of $13 million. The increase in all of our segments was primarily driven by an increase in advertising revenues, and for our TH segment, also driven by our support behind the ~~timing of advertising expenses.~~marketing program in Canada.

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General and Administrative Expenses

Our general and administrative expenses ~~were comprised~~consisted of the following:


		Three Months Ended March 31,		Variance					Three Months Ended September 30,										Variance								Nine Months Ended September 30,								Variance
				$		%		Three Months Ended September 30,											$				%			Nine Months Ended September 30,									$				%
			2021	2020		Favorable / (Unfavorable)							2021			2020						Favorable / (Unfavorable)							2021		2020				Favorable / (Unfavorable)
Segment G&A:	Segment G&A:																		Segment G&A:
TH	TH			$	24	$	25				$	1			4.0		%	TH		$	27			$	20				$	(7)			(35.0)	%			$	77			$	65			$	(12)			(18.5)	%
BK	BK			36		37				1				2.7		%	BK		47				37				(10)				(27.0)	%			128				104				(24)				(23.1)	%
PLK	PLK			14		13				(1)				(7.7)		%	PLK		15				12				(3)				(25.0)	%			42				35				(7)				(20.0)	%
Share-based compensation and non-cash incentive compensation expense	Share-based compensation and non-cash incentive compensation expense			26		21				(5)				(23.8)		%	Share-based compensation and non-cash incentive compensation expense		25				19				(6)				(31.6)	%			71				63				(8)				(12.7)	%
Depreciation and amortization	Depreciation and amortization			4		5				1				20.0		%	Depreciation and amortization		5				5				—				—	%			15				14				(1)				(7.1)	%
Corporate restructuring and tax advisory fees	Corporate restructuring and tax advisory fees			1		1				—				—		%	Corporate restructuring and tax advisory fees		4				3				(1)				(33.3)	%			8				11				3				27.3	%

General and administrative expenses	General and administrative expenses			$	105	$	102			$	(3)			(2.9)		%	General and administrative expenses		$	123			$	96			$	(27)			(28.1)	%			$	341			$	292			$	(49)			(16.8)	%

Segment general and administrative expenses (“Segment G&A”) ~~are comprised~~consist primarily of salary and employee-related costs for non-restaurant employees, professional fees, information technology systems, and general overhead for our corporate offices. Segment G&A excludes share-based compensation and non-cash incentive compensation expense, depreciation and amortization, and Corporate restructuring and tax advisory fees. The increase in Segment G&A for all segments during the three and nine months ended September 30, 2021 was primarily driven by higher salary and employee-related costs for non-restaurant employees, largely a result of hiring across a number of key areas, and ongoing investments in digital and technology. In addition, the year over year change in Segment G&A at TH and BK was impacted by unfavorable FX movements.

During the three and nine months ended September 30, 2021, the increase in share-based compensation and non-cash incentive compensation expense was primarily due to an increase in equity awards granted during 2021.

Corporate restructuring and tax advisory fees arise primarily from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movement within our structure, including ~~consulting~~ services related to ~~the interpretation of final and proposed~~significant tax reform legislation, regulations and guidance issued by the U.S. Treasury, the IRS and state tax authorities in their ongoing efforts to interpret and implement comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) and related ~~state and local tax implications.~~restructuring initiatives.

(Income) Loss from Equity Method Investments

~~There was no significant~~The change in (income) loss from equity method investments during the three and nine months ended ~~March 31,~~September 30, 2021 ~~compared to~~was primarily driven by a decrease in equity method investment net losses that we recognized during the ~~prior~~current year.

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Other Operating Expenses (Income), net

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


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2021			2020			2021		2020		2021		2020
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings		$	(2)		$	(2)	Net losses (gains) on disposal of assets, restaurant closures, and refranchisings	$	2	$	4	$	1	$	2
Litigation settlements (gains) and reserves, net	Litigation settlements (gains) and reserves, net		2			—		Litigation settlements (gains) and reserves, net	4		4		7		5
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange		(43)			(8)		Net losses (gains) on foreign exchange	(23)		44		(58)		54
Other, net	Other, net		1			(6)		Other, net	1		2		—		(2)
Other operating expenses (income), net	Other operating expenses (income), net		$	(42)		$	(16)	Other operating expenses (income), net	$	(16)	$	54	$	(50)	$	59

Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities.

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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 September 30,								Nine Months Ended September 30,
			2021				2020				2021			2020			2021			2020
Interest expense, net	Interest expense, net		$	124			$	119		Interest expense, net	$	128		$	129		$	378		$	376
Weighted average interest rate on long-term debt	Weighted average interest rate on long-term debt		4.2		%		4.6		%	Weighted average interest rate on long-term debt	4.2		%	4.5		%	4.2		%	4.6		%

During the three and nine months ended ~~March 31,~~September 30, 2021, interest expense, net increased primarily due to lower benefits related to the quarterly net settlements of our cross-currency rate swaps as result of changes in foreign currency exchange rates and lower interest income due to a decrease in interest rates, partially offset by a decrease in the weighted average interest rate on long-term debt. Refer to Note 13, ~~Derivative Instruments, to the accompanying unaudited condensed consolidated financial statements for further details on our cross-currency rate swaps.~~was consistent year-over-year.

Income Tax Expense

Our effective tax rate was ~~14.7%~~16.7% and ~~16.8%~~22.6% for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively. Our effective tax rate was ~~lower primarily due~~impacted by changes to ~~higher benefits from equity-based compensation offset by increases due to changes in our~~the relative mix of our income from multiple tax ~~jurisdictions. The effective tax rate was reduced by 2.1%~~jurisdictions and ~~0.1% for~~ the ~~three months ended March 31, 2021 and 2020, respectively, as a result~~impact of ~~excess tax benefits from equity-based compensation.~~internal financing arrangements. There may continue to be some quarter-to-quarter volatility of our effective tax rate as our mix of income from multiple tax jurisdictions and related income forecasts change due to the effects of COVID-19.

Our effective tax rate was 7.7% and 9.2% for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate for the nine months ended September 30, 2021 included a net decrease in tax reserves of $87 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 8.1%. The effective tax rate for the nine months ended September 30, 2020 reflects a $64 million benefit due to an increase in deferred tax assets which decreased the effective tax rate by 9.5%. Based on the analysis of final guidance related to the Tax Cuts and Jobs Act (the "Tax Act") received during the 2020 period, a deferred tax asset was recorded. Our effective tax rate was also impacted by changes to the relative mix of our income from multiple tax jurisdictions, the impact of internal financing arrangements and the impact of excess tax benefits from equity-based compensation.

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Net Income

We reported net income of ~~$271~~$329 million for the three months ended ~~March 31,~~September 30, 2021, compared to net income of ~~$224~~$223 million for the three months ended ~~March 31,~~September 30, 2020. The increase in net income is primarily due to a ~~$26~~$70 million favorable change in the results from other operating expenses (income), a $27 million increase in BK segment income, a $20 million increase in TH segment income, net, a $9 million favorable change from the impact of equity method investments, and a $1 million decrease in interest expense, net. These factors were partially offset by an $11 million loss on early extinguishment of debt in the current quarter, a $6 million increase in share-based compensation and non-cash incentive compensation, a $2 million increase in depreciation and amortization, a $1 million decrease in PLK segment income, and a $1 million increase in Corporate restructuring and tax advisory fees. Amounts above include a total favorable FX Impact to net income of $13 million.

We reported net income of $991 million for the nine months ended September 30, 2021, compared to net income of $611 million for the nine months ended September 30, 2020. The increase in net income is primarily due to a $150 million increase in BK segment income, a $144 million increase in TH segment income, a $109 million favorable change in the results from other operating expenses (income), net, a ~~$18~~$20 million ~~increase in TH segment income,~~favorable change from the impact of equity method investments, a ~~$17 million increase in BK segment income, and a $1~~$7 million increase in PLK segment ~~income.~~income, and a $3 million decrease in Corporate restructuring and tax advisory fees. These factors were partially offset by a $5$21 million increase in income tax expense, an $11 million loss on early extinguishment of debt in the current year, an $11 million increase in depreciation and amortization, an $8 million increase in share-based compensation and non-cash incentive compensation expense, and a $5$2 million increase in interest expense, ~~net, a $4 million increase in depreciation and amortization and a $1 million increase in income tax expense.~~net. Amounts above include a total favorable FX Impact to net income of ~~$11~~$40 million.

Non-GAAP Reconciliations

The table below contains information regarding EBITDA and Adjusted EBITDA, which are non-GAAP measures. These non-GAAP measures do not have a standardized meaning under U.S. GAAP and may differ from similar captioned measures of other companies in our industry. We believe that these non-GAAP measures are useful to investors in assessing our operating performance, as they provide them with the same tools that management uses to evaluate our performance and is responsive to questions we receive from both investors and analysts. By disclosing these non-GAAP measures, we intend to provide investors with a consistent comparison of our operating results and trends for the periods presented. EBITDA is defined as earnings (net income or loss) before interest expense, net, loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA excluding (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net and, (iv) income/expenses from non-recurring projects and non-operating activities. For the periods referenced, this included costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including ~~consulting~~ services related to ~~the interpretation of final and proposed~~significant tax reform legislation, regulations and ~~guidance under the Tax Act.~~related restructuring initiatives. Management believes that these types of expenses are either not related to our underlying profitability drivers or not likely to re-occur in the foreseeable future and the varied timing, size and nature of these projects may cause volatility in our results unrelated to the performance of our core business that does not reflect trends of our core operations.

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


		Three Months Ended March 31,		Variance					Three Months Ended September 30,										Variance								Nine Months Ended September 30,								Variance
				$		%		Three Months Ended September 30,											$				%			Nine Months Ended September 30,									$				%
			2021	2020		Favorable / (Unfavorable)							2021			2020						Favorable / (Unfavorable)							2021		2020				Favorable / (Unfavorable)
Segment income:	Segment income:																		Segment income:
TH	TH			$	207	$	189				$	18			9.3		%	TH		$	278			$	258				$	20			7.6	%			$	738			$	594			$	144			24.1	%
BK	BK			217		200				17				8.5		%	BK		272				245				27				10.8	%			755				605				150				24.7	%
PLK	PLK			56		55				1				2.8		%	PLK		57				58				(1)				(2.6)	%			171				164				7				4.2	%
Adjusted EBITDA	Adjusted EBITDA			480		444				36				8.2		%	Adjusted EBITDA		607				561				46				8.0	%			1,664				1,363				301				22.0	%
Share-based compensation and non-cash incentive compensation expense	Share-based compensation and non-cash incentive compensation expense			26		21				(5)				(23.8)		%	Share-based compensation and non-cash incentive compensation expense		25				19				(6)				(31.6)	%			71				63				(8)				(12.7)	%
Corporate restructuring and tax advisory fees	Corporate restructuring and tax advisory fees			1		1				—				—		%	Corporate restructuring and tax advisory fees		4				3				(1)				(33.3)	%			8				11				3				27.3	%
Impact of equity method investments (a)	Impact of equity method investments (a)			4		4				—				—		%	Impact of equity method investments (a)		11				20				9				45.0	%			22				42				20				47.6	%
Other operating expenses (income), net	Other operating expenses (income), net			(42)		(16)				26				(162.5)		%	Other operating expenses (income), net		(16)				54				70				129.6	%			(50)				59				109				NM
EBITDA	EBITDA			491		434				57				13.1		%	EBITDA		583				465				118				25.4	%			1,613				1,188				425				35.8	%
Depreciation and amortization	Depreciation and amortization			49		45				(4)				(8.9)		%	Depreciation and amortization		50				48				(2)				(4.2)	%			150				139				(11)				(7.9)	%
Income from operations	Income from operations			442		389				53				13.6		%	Income from operations		533				417				116				27.8	%			1,463				1,049				414				39.5	%
Interest expense, net	Interest expense, net			124		119				(5)				(4.2)		%	Interest expense, net		128				129				1				0.8	%			378				376				(2)				(0.5)	%

Loss on early extinguishment of debt																	Loss on early extinguishment of debt		11				—				(11)				NM				11				—				(11)				NM
Income tax expense	Income tax expense			47		46				(1)				(2.2)		%	Income tax expense		65				65				—				—	%			83				62				(21)				NM
Net income	Net income			$	271	$	224			$	47			21.0		%	Net income		$	329			$	223			$	106			47.5	%			$	991			$	611			$	380			62.2	%

NM - not meaningful

The increase in Adjusted EBITDA for the three months ended ~~March 31,~~September 30, 2021 reflects the increases in segment income in our ~~TH,~~ BK and TH segments, partially offset by a decrease in our PLK segment, and includes a favorable FX Impact of $15 million.

The increase in Adjusted EBITDA for the nine months ended September 30, 2021 reflects the increases in segment income in all of our segments and includes a favorable FX Impact of ~~$13~~$50 million.

The increase in EBITDA for the three and nine months ended ~~March 31,~~September 30, 2021 is primarily due to increases in segment income in our ~~TH,~~ BK and ~~PLK~~TH segments, ~~and~~ favorable ~~results~~impact from other operating expenses (income), net, and favorable decrease from the impact of equity method investments, partially offset by an increase in share-based compensation and non-cash incentive compensation expense. The increase in EBITDA includes a favorable FX Impact of ~~$14 million.~~$13 million and $45 million for the three and nine months ended September 30, 2021, respectively.

Liquidity and Capital Resources

Our primary sources of liquidity are cash on hand, cash generated by operations, and borrowings available under our Revolving Credit Facility (as defined below). We have used, and may in the future use, our liquidity to make required interest and/or principal payments, to make distributions to RBI for RBI to repurchase its common shares, to repurchase Class B exchangeable limited partnership units of Partnership (“Partnership exchangeable units”), to voluntarily prepay and repurchase our or one of our affiliate’s outstanding debt, to fund our 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.

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As of ~~March 31,~~September 30, 2021, we had cash and cash equivalents of ~~$1,563~~$1,773 million, working capital of ~~$739~~$832 million and borrowing availability of $998 million under our senior secured revolving credit facility (the “Revolving Credit Facility”). On July 6, 2021, two of our subsidiaries (the “Borrowers”) issued $800 million of 3.875% first lien senior secured notes due January 15, 2028 (the “Additional Notes”). No principal payments are due until maturity and interest is paid semi-annually. The Additional Notes were issued as additional notes under the indenture, dated as of September 24, 2019, (the “2019 3.875% Senior Notes Indenture”) pursuant to which the Borrowers previously issued $750 million in aggregate principal amount of 3.875% first lien senior secured notes due January 15, 2028 during 2019 (the “2019 3.875% First Lien Senior Notes” and together with the Additional Notes, the “3.875% First Lien Senior Notes”). The Additional Notes are treated as a single series with the 2019 3.875% First Lien Senior Notes and have the same terms for all purposes under the 2019 3.875% Senior Notes Indenture, including waivers, amendments, redemptions and offers to purchase. The Additional Notes were priced at 100.250% of their face value. The net proceeds from the offering of the Additional Notes were used to redeem the remaining $775 million principal amount outstanding of the 2017 4.25% Senior Notes on July 15, 2021, plus any accrued and unpaid interest thereon, and pay related redemption premiums, fees and expenses. Based on our current level of operations and available cash, we believe our cash flow from operations, combined with our availability under our Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, debt service requirements and capital spending over the next twelve months.

In March 2021, we announced our plan to spend C$80 million in 2021 to support increased advertising and digital advancements at the TH business and supplement advertising fund amounts contributed by franchisees. Most of our support has been spent as of September 30, 2021, and we are on track to spend the entire amount by the end of 2021.

On ~~August 2, 2016,~~July 28, 2021, the RBI board of directors approved a share repurchase authorization wherein RBI may purchase up to ~~$300~~$1,000 million of RBI common shares ~~through July 2021.~~until August 10, 2023. Repurchases under RBI’s authorization will be made in the open

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market or through privately negotiated transactions. If RBI repurchases any RBI common shares, pursuant to the partnership agreement, Partnership will, immediately prior to such repurchase, make a distribution to RBI on its Class A common units in an amount sufficient for RBI to fund such repurchase. During the three and nine months ended September 30, 2021, RBI repurchased 2,843,562 RBI common shares on the open market for $182 million and Partnership made a distribution to RBI in an amount sufficient for RBI to fund these repurchases. As of September 30, 2021, RBI had $818 million remaining under its share repurchase authorization.

We provide applicable deferred taxes based on the tax liability or withholding taxes that would be due upon repatriation of unremitted earnings. We will continue to monitor our plans for foreign earnings but our expectation is to continue to provide taxes on unremitted earnings.

Debt Instruments and Debt Service Requirements

As of ~~March 31,~~September 30, 2021, our long-term debt consists primarily of borrowings under our Credit Facilities (defined below), amounts outstanding under our ~~2017 4.25%~~3.875% First Lien Senior Notes ~~2019 3.875% Senior Notes,~~(as defined above), 2020 5.75% Senior Notes, 2020 3.50% Senior Notes, 2019 4.375% Senior Notes, 2020 4.00% 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.

Credit Facilities

As of ~~March 31,~~September 30, 2021, there was ~~$6,010~~$5,973 million outstanding principal amount under our senior secured term loan facilities (the “Term Loan Facilities” and together with the Revolving Credit Facility, the “Credit Facilities”) with a weighted average interest rate of ~~1.83%~~1.78%. Based on the amounts outstanding under the Term Loan Facilities and LIBOR as of ~~March 31,~~September 30, 2021, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately ~~$111~~$107 million in interest payments and $72 million in principal payments. In addition, based on LIBOR as of ~~March 31,~~September 30, 2021, net cash settlements that we expect to pay on our $4,000 million interest rate swap are estimated to be approximately ~~$92~~$55 million for the next twelve months.

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

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The interest rate applicable to borrowings under our Term Loan A and Revolving Credit Facility is, at our option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin varying from 0.00% to 0.50%, or (ii) 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,~~September 30, 2021, we had no amounts outstanding under our Revolving Credit Facility, had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability was $998 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or ~~RBI share repurchases or PEU~~equity repurchases, fund acquisitions or capital expenditures, and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit.

Senior Notes

The Borrowers are party to (i) ~~an indenture (the “2017 4.25%~~the 2019 3.875% Senior Notes ~~Indenture”)~~Indenture in connection with the issuance of ~~$775 million of 4.25% first lien senior notes due May 15, 2024 (the “2017 4.25%~~the 3.875% First Lien Senior ~~Notes”),~~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 “2020 5.75%“5.75% Senior Notes Indenture”) in connection with the issuance of $500 million of 5.75% first lien senior notes due April 15, 2025 (the “2020 5.75% Senior Notes”), ~~(iv)~~(iii) an indenture (the ~~“2020 3.50%~~“3.50% Senior Notes Indenture”) in connection with the issuance of $750 million of 3.50% first lien senior notes due February 15, 2029 (the “2020 3.50% Senior Notes”), ~~(v)~~(iv) an indenture (the ~~“2019 4.375%~~“4.375% Senior Notes Indenture”) in connection with the issuance of $750 million of 4.375% second lien senior notes due January 15, 2028 (the “2019 4.375% Senior Notes”), and ~~(vi)~~(v) an indenture (the ~~“2020 4.00%~~“4.00% Senior Notes Indenture”) in connection with the issuance of $2,900 million of 4.00% second lien senior notes due October 15, 2030 (the “2020 4.00% Senior Notes”). No principal payments are

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due on the ~~2017 4.25% Senior Notes, 2019~~ 3.875% First Lien Senior Notes, 2020 5.75% Senior Notes, 2020 3.50% Senior Notes, 2019 4.375% Senior Notes and 2020 4.00% Senior Notes until maturity and interest is paid semi-annually.

Based on the amounts outstanding at ~~March 31,~~September 30, 2021, required debt service for the next twelve months on all of the Senior Notes outstanding is approximately ~~$266~~$264 million in interest payments.

TH Facility

One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by four of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of ~~March 31,~~September 30, 2021, we had outstanding C$~~221~~217 million under the TH Facility with a weighted average interest rate of ~~1.84%~~1.83%.

Based on the amounts outstanding under the TH Facility as of ~~March 31,~~September 30, 2021, required debt service for the next twelve months is estimated to be approximately $3 million in interest payments and $8$9 million in principal payments.

Restrictions and Covenants

As of ~~March 31,~~September 30, 2021, 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

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

On ~~April 6,~~October 5, 2021, RBI paid a cash dividend of $0.53 per RBI common share. Partnership made a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares and also made a distribution of $0.53 in respect of each Partnership exchangeable unit.

The RBI board of directors has declared a cash dividend of $0.53 per RBI common share, which will be paid on ~~July 7, 2021~~January 5, 2022 to RBI common shareholders of record on ~~June 23,~~December 21, 2021. Partnership will make a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of $0.53 per Partnership exchangeable unit, and the record date and payment date for such distribution will be the same as the record date and payment date for the cash dividend per RBI common share set forth above.

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

Outstanding Security Data

As of ~~April 23,~~October 18, 2021, we had outstanding 202,006,067 Class A common units issued to RBI and ~~155,040,582~~145,269,936 Partnership exchangeable units. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, Partnership exchanged ~~72,671~~9,843,402 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 13 to the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and Canadian securities regulatory authorities on February 23, 2021.

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.

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Comparative Cash Flows

Operating Activities

Cash provided by operating activities was ~~$266~~$1,255 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to ~~$136~~$593 million during the same period in the prior year. The increase in cash provided by operating activities was driven by ~~a decrease~~cash provided by working capital in the current year compared to cash used for working capital in the prior year, an increase in segment income in all of our segments, and a decrease in interest ~~payments. These factors were~~payments, partially offset by an increase in income tax ~~payments and a decrease in cash provided by other long-term assets and liabilities.~~payments.

Investing Activities

Cash used for investing activities was $7$69 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to $3$33 million ~~of cash used for investing activities~~ during the same period in the prior year. The change in cash used for investing activities was driven by a decrease in proceeds from derivatives and cash used in other investing activities during the current period, partially offset by an increase in net proceeds from disposal of assets, restaurant closures, and ~~refranchisings and a decrease in capital expenditures during the current period.~~refranchisings.

Financing Activities

Cash used for financing activities was ~~$261~~$970 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, compared to ~~$855~~$182 million ~~of cash provided by financing activities~~ during the same period in the prior year. The change in cash used for financing activities was driven primarily by a decrease in proceeds from the ~~draw down on our Revolving Credit Facility in 2020, which was fully repaid~~issuance of debt and distribution to RBI to repurchase RBI common shares in the ~~second quarter~~current year. These factors were partially offset by a decrease in repayments of ~~2020,~~debt and ~~proceeds from the draw down on the remaining availability under the TH Facility in 2020.~~finance leases.

Critical Accounting Policies and Estimates

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

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 ~~three~~nine months ended ~~March 31,~~September 30, 2021 to the disclosures made in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC and Canadian securities regulatory authorities on February 23, 2021.

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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,~~September 30, 2021. Based on that evaluation, the CEO and CFO of RBI concluded that Partnership’s disclosure controls and procedures were effective as of such date.

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,~~September 30, 2021 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 and continued impact of the COVID-19 pandemic on our results of operations, business, liquidity, prospects and restaurant operations and those of our franchisees, including local conditions and government-imposed limitations and restrictions; (ii) our digital and marketing initiatives and the expected amount of and timing for planned expenditures relating to these initiatives; (iii) 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; (iv) ~~expected timing of debt refinancing transactions;~~our goals with respect to reduction in greenhouse gas emissions; (v) ~~our efforts to assist restaurant owners in maintaining liquidity and the impact of these programs on our future cash flow and financial results; (vi)~~ certain tax matters, including our estimates with respect to tax matters and their impact on future periods; ~~(vii)~~(vi) the amount of net cash settlements we expect to pay on our derivative instruments; and ~~(viii)~~(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, 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) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising and digital programs and franchisee support of these programs; (8) significant and rapid fluctuations in interest rates and in the currency exchange markets and the effectiveness of our hedging activity; (9) our ability to successfully implement our domestic and international growth strategy for each of our brands and risks related to our international operations; (10) our reliance on franchisees, including subfranchisees, to accelerate restaurant growth; (11) 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 our ability to accurately interpret and predict the impact of such changes or interpretations on our financial condition and results.

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

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

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Part II – Other Information

Item 1. Legal Proceedings

See Part I, Notes to Condensed Consolidated Financial Statements, Note 15, Commitment and Contingencies

Item 1A. Risk Factors

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

Climate change and our inability to effectively implement measures to address climate change and other sustainable business practices could negatively affect our business or damage our reputation.

Climate change may have a negative effect on agricultural productivity which may result in decreased availability or less favorable pricing for certain commodities used in our products, such as beef, chicken, coffee beans and dairy. In addition, climate change may also increase the frequency or severity of natural disasters and other extreme weather conditions, which could disrupt our supply chain or impact demand for our products. Also, concern over climate change and other sustainable business practices may result in new or increased legal and regulatory requirements or generally accepted business practices, which could significantly increase costs. In addition, any failure to achieve our goals with respect to reducing greenhouse gas emissions and other sustainable business practices or perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change or other sustainable business practices can lead to adverse publicity, diminish the value of our brands and result in an adverse effect on our business.

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Item 6. Exhibits



Exhibit Number						Description

~~10.77~~						Offer Letter dated February 26, 2021 between The TDL Group Corp. and Axel Schwan (incorporated herein by reference to Exhibit 10.77 to the Form 10-Q of Restaurant Brands International Inc. filed on April 30, 2021).

~~10.78~~						Tax Equalization Agreement dated December 21, 2020 between Popeyes Louisiana Kitchen, Inc. and Sami Siddiqui (incorporated herein by reference to Exhibit 10.78 to the Form 10-Q of Restaurant Brands International Inc. filed on April 30, 2021).

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

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

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

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

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

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

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

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SIGNATURES

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

RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP

By:

Restaurant Brands International Inc., its general partner

Date: ~~April 30,~~October 25, 2021

By:

/s/ Matthew Dunnigan

Name:

Matthew Dunnigan

Title:

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

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