UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended September 30, ~~2020~~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: 001-36786

RESTAURANT BRANDS INTERNATIONAL INC.

(Exact Name of Registrant as Specified in its Charter)



Canada		98-1202754
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

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

(905) ~~845-6511~~339-6011

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Shares, without par value

QSR

New York Stock Exchange

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 ☐

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.

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Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of October ~~20, 2020,~~18, 2021, there were ~~303,902,641~~315,071,796 common shares of the Registrant outstanding.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

TABLE OF CONTENTS

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PART I — Financial Information

Item 1. Financial Statements

RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

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

(Unaudited)


		As of					As of
		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,919	$	1,533	Cash and cash equivalents	$	1,773	$	1,560
Accounts and notes receivable, net of allowance of $37 and $13, respectively		589		527
Accounts and notes receivable, net of allowance of $18 and $42, respectively						Accounts and notes receivable, net of allowance of $18 and $42, respectively	537		536
Inventories, net	Inventories, net	87		84		Inventories, net	96		96
Prepaids and other current assets	Prepaids and other current assets	85		52		Prepaids and other current assets	178		72
Total current assets	Total current assets	2,680		2,196		Total current assets	2,584		2,264
Property and equipment, net of accumulated depreciation and amortization of $831 and $746, respectively		1,975		2,007
Property and equipment, net of accumulated depreciation and amortization of $963 and $879, respectively						Property and equipment, net of accumulated depreciation and amortization of $963 and $879, respectively	2,013		2,031
Operating lease assets, net	Operating lease assets, net	1,122		1,176		Operating lease assets, net	1,118		1,152
Intangible assets, net	Intangible assets, net	10,415		10,563		Intangible assets, net	10,652		10,701
Goodwill	Goodwill	5,571		5,651		Goodwill	5,743		5,739
Net investment in property leased to franchisees	Net investment in property leased to franchisees	63		48		Net investment in property leased to franchisees	79		66
Other assets, net	Other assets, net	707		719		Other assets, net	739		824
Total assets	Total assets	$	22,533	$	22,360	Total assets	$	22,928	$	22,777
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts and drafts payable	Accounts and drafts payable	$	523	$	644	Accounts and drafts payable	$	592	$	464
Other accrued liabilities	Other accrued liabilities	883		790		Other accrued liabilities	910		835
Gift card liability	Gift card liability	108		168		Gift card liability	137		191
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	107		101		Current portion of long-term debt and finance leases	113		111
Total current liabilities	Total current liabilities	1,621		1,703		Total current liabilities	1,752		1,601
Long-term debt, net of current portion	Long-term debt, net of current portion	12,300		11,759		Long-term debt, net of current portion	12,379		12,397
Finance leases, net of current portion	Finance leases, net of current portion	304		288		Finance leases, net of current portion	328		315
Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	1,054		1,089		Operating lease liabilities, net of current portion	1,056		1,082
Other liabilities, net	Other liabilities, net	1,917		1,698		Other liabilities, net	1,898		2,236
Deferred income taxes, net	Deferred income taxes, net	1,422		1,564		Deferred income taxes, net	1,407		1,425
Total liabilities	Total liabilities	18,618		18,101		Total liabilities	18,820		19,056
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Common shares, 0 par value; Unlimited shares authorized at September 30, 2020 and December 31, 2019; 303,877,203 shares issued and outstanding at September 30, 2020; 298,281,081 shares issued and outstanding at December 31, 2019		2,648		2,478
Common shares, no par value; Unlimited shares authorized at September 30, 2021 and December 31, 2020; 315,065,839 shares issued and outstanding at September 30, 2021; 304,718,749 shares issued and outstanding at December 31, 2020						Common shares, no par value; Unlimited shares authorized at September 30, 2021 and December 31, 2020; 315,065,839 shares issued and outstanding at September 30, 2021; 304,718,749 shares issued and outstanding at December 31, 2020	2,490		2,399
Retained earnings	Retained earnings	692		775		Retained earnings	779		622
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(997)		(763)		Accumulated other comprehensive income (loss)	(753)		(854)
Total Restaurant Brands International Inc. shareholders’ equity	Total Restaurant Brands International Inc. shareholders’ equity	2,343		2,490		Total Restaurant Brands International Inc. shareholders’ equity	2,516		2,167
Noncontrolling interests	Noncontrolling interests	1,572		1,769		Noncontrolling interests	1,592		1,554
Total shareholders’ equity	Total shareholders’ equity	3,915		4,259		Total shareholders’ equity	4,108		3,721
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	22,533	$	22,360	Total liabilities and shareholders’ equity	$	22,928	$	22,777

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

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

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues:	Revenues:									Revenues:
Sales	Sales	$	541	$	624	$	1,450	$	1,735	Sales	$	621	$	541	$	1,718	$	1,450
Franchise and property revenues	Franchise and property revenues	796		834		2,160		2,389		Franchise and property revenues	639		577		1,801		1,552
Advertising revenues										Advertising revenues	235		219		674		608
Total revenues	Total revenues	1,337		1,458		3,610		4,124		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	418		475		1,156		1,334		Cost of sales	490		418		1,358		1,156
Franchise and property expenses	Franchise and property expenses	128		133		388		401		Franchise and property expenses	121		125		358		380
Selling, general and administrative expenses		302		320		922		948
Advertising expenses										Advertising expenses	237		209		711		638
General and administrative expenses										General and administrative expenses	123		96		341		292
(Income) loss from equity method investments	(Income) loss from equity method investments	18		(11)		36		(11)		(Income) loss from equity method investments	7		18		12		36
Other operating expenses (income), net	Other operating expenses (income), net	54		(30)		59		(44)		Other operating expenses (income), net	(16)		54		(50)		59
Total operating costs and expenses	Total operating costs and expenses	920		887		2,561		2,628		Total operating costs and expenses	962		920		2,730		2,561
Income from operations	Income from operations	417		571		1,049		1,496		Income from operations	533		417		1,463		1,049
Interest expense, net	Interest expense, net	129		137		376		406		Interest expense, net	128		129		378		376
Loss on early extinguishment of debt	Loss on early extinguishment of debt	0		4		0		4		Loss on early extinguishment of debt	11		—		11		—
Income before income taxes	Income before income taxes	288		430		673		1,086		Income before income taxes	394		288		1,074		673
Income tax expense	Income tax expense	65		79		62		232		Income tax expense	65		65		83		62
Net income	Net income	223		351		611		854		Net income	329		223		991		611
Net income attributable to noncontrolling interests (Note 12)	Net income attributable to noncontrolling interests (Note 12)	78		150		216		376		Net income attributable to noncontrolling interests (Note 12)	108		78		332		216
Net income attributable to common shareholders	Net income attributable to common shareholders	$	145	$	201	$	395	$	478	Net income attributable to common shareholders	$	221	$	145	$	659	$	395
Earnings per common share	Earnings per common share									Earnings per common share
Basic	Basic	$	0.48	$	0.76	$	1.31	$	1.85	Basic	$	0.71	$	0.48	$	2.14	$	1.31
Diluted	Diluted	$	0.47	$	0.75	$	1.30	$	1.82	Diluted	$	0.70	$	0.47	$	2.12	$	1.30
Weighted average shares outstanding	Weighted average shares outstanding									Weighted average shares outstanding
Basic	Basic	303		267		301		258		Basic	311		303		308		301
Diluted	Diluted	470		470		469		469		Diluted	465		470		465		469

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions of U.S. dollars)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net income	Net income	$	223	$	351	$	611	$	854	Net income	$	329	$	223	$	991	$	611

Foreign currency translation adjustment	Foreign currency translation adjustment	239		(173)		(170)		185		Foreign currency translation adjustment	(257)		239		(62)		(170)
Net change in fair value of net investment hedges, net of tax of $40, $(37), $(12) and $2		(198)		143		39		27
Net change in fair value of cash flow hedges, net of tax of $7, $9, $99 and $43		(17)		(25)		(268)		(116)
Amounts reclassified to earnings of cash flow hedges, net of tax of $(8), $(2), $(18) and $(3)		22		5		51		7

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)	46		(50)		(348)		103		Other comprehensive income (loss)	(77)		46		186		(348)
Comprehensive income (loss)	Comprehensive income (loss)	269		301		263		957		Comprehensive income (loss)	252		269		1,177		263
Comprehensive income (loss) attributable to noncontrolling interests	Comprehensive income (loss) attributable to noncontrolling interests	94		129		91		424		Comprehensive income (loss) attributable to noncontrolling interests	83		94		395		91
Comprehensive income (loss) attributable to common shareholders	Comprehensive income (loss) attributable to common shareholders	$	175	$	172	$	172	$	533	Comprehensive income (loss) attributable to common shareholders	$	169	$	175	$	782	$	172

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(In millions of U.S. dollars, except shares and per share data)

(Unaudited)


		Issued Common Shares			Retained Earnings				Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total				Issued Common Shares					Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total
		Shares	Amount								Shares							Amount
Balances at December 31, 2019		298,281,081	$	2,478			$	775						(763)			$	1,769		$	4,259
Balances at December 31, 2020																		Balances at December 31, 2020	304,718,749			$	2,399		$	622		$	(854)		$	1,554		$	3,721
Stock option exercises	Stock option exercises	1,053,264	30		—				—			—			30			Stock option exercises	530,963			20		—			—			—			20
Share-based compensation	Share-based compensation	—	19		—				—			—			19			Share-based compensation	—			22		—			—			—			22
Issuance of shares	Issuance of shares	255,325	6		—				—			—			6			Issuance of shares	1,636,858			9		—			—			—			9
Dividends declared ($0.52 per share)		—	—		(156)				—			—			(156)
Dividends declared ($0.53 per share)																		Dividends declared ($0.53 per share)	—			—		(163)			—			—			(163)
Dividend equivalents declared on restricted stock units	Dividend equivalents declared on restricted stock units	—	2		(2)				—			—			0			Dividend equivalents declared on restricted stock units	—			3		(3)			—			—			—
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)		—	—		—				—			(86)			(86)
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)																		Distributions declared by Partnership 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	178,046	2		—				—			(2)			0			Exchange of Partnership exchangeable units for RBI common shares	72,671			1		—			—			(1)			—
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			—			92			271
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				(350)			(193)			(543)			Other comprehensive income (loss)	—			—		—			135			68			203
Balances at March 31, 2020		299,767,716	$	2,537	$	761			$	(1,113)		$	1,567		$	3,752
Balances at March 31, 2021																		Balances at March 31, 2021	306,959,241			$	2,454	$	635		$	(719)		$	1,632		$	4,002
Stock option exercises	Stock option exercises	316,172	11		—				—			—			11			Stock option exercises	958,671			37		—			—			—			37
Share-based compensation	Share-based compensation	—	20		—				—			—			20			Share-based compensation	—			18		—			—			—			18
Issuance of shares	Issuance of shares	45,071	0		—				—			—			0			Issuance of shares	34,858			—		—			—			—			—
Dividends declared ($0.52 per share)		—	—		(158)				—			—			(158)
Dividends declared ($0.53 per share)																		Dividends declared ($0.53 per share)	—			—		(164)			—			—			(164)
Dividend equivalents declared on restricted stock units	Dividend equivalents declared on restricted stock units	—	1		(1)				—			—			0			Dividend equivalents declared on restricted stock units	—			2		(2)			—			—			—
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)		—	—		—				—			(85)			(85)
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)																		Distributions declared by Partnership 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	2,494,854	33		—				(9)			(24)			0			Exchange of Partnership exchangeable units for RBI common shares	87,767			1		—			—			(1)			—
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—				—			(1)			(1)			Restaurant VIE contributions (distributions)	—			—		—			—			(3)			(3)
Net income	Net income	—	—		106				—			58			164			Net income	—			—		259			—			132			391
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				97			52			149			Other comprehensive income (loss)	—			—		—			40			20			60
Balances at June 30, 2020		302,623,813	$	2,602	$	708			$	(1,025)		$	1,567		$	3,852
Balances at June 30, 2021																		Balances at June 30, 2021	308,040,537			$	2,512	$	728		$	(679)		$	1,698		$	4,259
Stock option exercises	Stock option exercises	567,636	19		—				—			—			19			Stock option exercises	93,012			4		—			—			—			4
Share-based compensation	Share-based compensation	—	16		—				—			—			16			Share-based compensation	—			22		—			—			—			22
Issuance of shares	Issuance of shares	63,686	—		—				—			—			—			Issuance of shares	92,888			—		—			—			—			—
Dividends declared ($0.52 per share)		—	—		(158)				—			—			(158)
Dividends declared ($0.53 per share)																		Dividends declared ($0.53 per share)	—			—		(167)			—			—			(167)
Dividend equivalents declared on restricted stock units	Dividend equivalents declared on restricted stock units	—	3		(3)				—			—			—			Dividend equivalents declared on restricted stock units	—			3		(3)			—			—			—
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)		—	—		—				—			(84)			(84)
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)																		Distributions declared by Partnership 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	622,068	8		—				(2)			(6)			—			Exchange of Partnership exchangeable units for RBI common shares	9,682,964			131		—			(22)			(109)			—
Repurchase of RBI common shares																		Repurchase of RBI common shares	(2,843,562)			(182)		—			—			—			(182)
Restaurant VIE contributions (distributions)	Restaurant VIE contributions (distributions)	—	—		—				—			1			1			Restaurant VIE contributions (distributions)	—			—		—			—			(3)			(3)
Net income	Net income	—	—		145				—			78			223			Net income	—			—		221			—			108			329
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				30			16			46			Other comprehensive income (loss)	—			—		—			(52)			(25)			(77)
Balances at September 30, 2020		303,877,203	$	2,648	$	692			$	(997)		$	1,572		$	3,915
Balances at September 30, 2021																		Balances at September 30, 2021	315,065,839			$	2,490	$	779		$	(753)		$	1,592		$	4,108

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(In millions of U.S. dollars, except shares and per share data)

(Unaudited)

Issued Common Shares Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Noncontrolling
Interest Total
Shares Amount
Balances at December 31, 2018 251,532,493 $ 1,737 $ 674 $ (800) $ 2,007 $ 3,618
Cumulative effect adjustment — — 12 — 9 21
Stock option exercises 2,019,620 42 — — — 42
Share-based compensation — 22 — — — 22
Issuance of shares 134,809 7 — — — 7
Dividends declared ($0.50 per share) — — (127) — — (127)
Dividend equivalents declared on restricted stock units — 2 (2) — — 0
Distributions declared by Partnership on Partnership exchangeable units ($0.50 per unit) — — — — (104) (104)
Exchange of Partnership exchangeable units for RBI common shares 141,190 2 — (1) (1) 0
Net income — — 135 — 111 246
Other comprehensive income (loss) — — — 26 22 48
Balances at March 31, 2019 253,828,112 $ 1,812 $ 692 $ (775) $ 2,044 $ 3,773
Stock option exercises 1,697,488 38 — — — 38
Share-based compensation — 17 — — — 17
Issuance of shares 59,970 0 — — — 0
Dividends declared ($0.50 per share) — — (128) — — (128)
Dividend equivalents declared on restricted stock units — 2 (2) — — 0
Distributions declared by Partnership on Partnership exchangeable units ($0.50 per unit) — — — — (103) (103)
Exchange of Partnership exchangeable units for RBI common shares 45,325 1 — — (1) 0
Restaurant VIE contributions (distributions) — — — — 1 1
Net income — — 142 — 115 257
Other comprehensive income (loss) — — — 58 47 105
Balances at June 30, 2019 255,630,895 $ 1,870 $ 704 $ (717) $ 2,103 $ 3,960
Stock option exercises 636,918 19 — — — 19
Share-based compensation — 17 — — — 17
Issuance of shares 20,700 — — — — 0
Dividends declared ($0.50 per share) — — (141) — — (141)
Dividend equivalents declared on restricted stock units — 2 (2) — — 0
Distributions declared by Partnership on Partnership exchangeable units ($0.50 per unit) — — — — (92) (92)
Exchange of Partnership exchangeable units for RBI common shares 41,807,254 552 — (118) (434) 0
Restaurant VIE contributions (distributions) — — — — (1) (1)
Net income — — 201 — 150 351
Other comprehensive income (loss) — — — (29) (21) (50)
Balances at September 30, 2019 298,095,767 $ 2,460 $ 762 $ (864) $ 1,705 $ 4,063


	Issued Common Shares			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total
	Shares	Amount
Balances at December 31, 2019	298,281,081	$	2,478	$	775	$	(763)	$	1,769	$	4,259
Stock option exercises	1,053,264	30		—		—		—		30
Share-based compensation	—	19		—		—		—		19
Issuance of shares	255,325	6		—		—		—		6
Dividends declared ($0.52 per share)	—	—		(156)		—		—		(156)
Dividend equivalents declared on restricted stock units	—	2		(2)		—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)	—	—		—		—		(86)		(86)
Exchange of Partnership exchangeable units for RBI common shares	178,046	2		—		—		(2)		—
Restaurant VIE contributions (distributions)	—	—		—		—		(1)		(1)
Net income	—	—		144		—		80		224
Other comprehensive income (loss)	—	—		—		(350)		(193)		(543)
Balances at March 31, 2020	299,767,716	$	2,537	$	761	$	(1,113)	$	1,567	$	3,752
Stock option exercises	316,172	11		—		—		—		11
Share-based compensation	—	20		—		—		—		20
Issuance of shares	45,071	—		—		—		—		—
Dividends declared ($0.52 per share)	—	—		(158)		—		—		(158)
Dividend equivalents declared on restricted stock units	—	1		(1)		—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)	—	—		—		—		(85)		(85)
Exchange of Partnership exchangeable units for RBI common shares	2,494,854	33		—		(9)		(24)		—
Restaurant VIE contributions (distributions)	—	—		—		—		(1)		(1)
Net income	—	—		106		—		58		164
Other comprehensive income (loss)	—	—		—		97		52		149
Balances at June 30, 2020	302,623,813	$	2,602	$	708	$	(1,025)	$	1,567	$	3,852
Stock option exercises	567,636	19		—		—		—		19
Share-based compensation	—	16		—		—		—		16
Issuance of shares	63,686	—		—		—		—		—
Dividends declared ($0.52 per share)	—	—		(158)		—		—		(158)
Dividend equivalents declared on restricted stock units	—	3		(3)		—		—		—
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)	—	—		—		—		(84)		(84)
Exchange of Partnership exchangeable units for RBI common shares	622,068	8		—		(2)		(6)		—
Restaurant VIE contributions (distributions)	—	—		—		—		1		1
Net income	—	—		145		—		78		223
Other comprehensive income (loss)	—	—		—		30		16		46
Balances at September 30, 2020	303,877,203	$	2,648	$	692	$	(997)	$	1,572	$	3,915

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions of U.S. dollars)

(Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	611	$	854	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	139		139		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	0		4		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	19		22		Amortization of deferred financing costs and debt issuance discount	20		19
(Income) loss from equity method investments	(Income) loss from equity method investments	36		(11)		(Income) loss from equity method investments	12		36
(Gain) loss on remeasurement of foreign denominated transactions	(Gain) loss on remeasurement of foreign denominated transactions	54		(38)		(Gain) loss on remeasurement of foreign denominated transactions	(58)		54
Net (gains) losses on derivatives	Net (gains) losses on derivatives	14		(43)		Net (gains) losses on derivatives	65		14
Share-based compensation expense	Share-based compensation expense	55		56		Share-based compensation expense	62		55
Deferred income taxes	Deferred income taxes	(120)		(16)		Deferred income taxes	35		(120)
Other	Other	23		1		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	(83)		(7)		Accounts and notes receivable	11		(83)
Inventories and prepaids and other current assets	Inventories and prepaids and other current assets	(21)		(34)		Inventories and prepaids and other current assets	(3)		(21)
Accounts and drafts payable	Accounts and drafts payable	(110)		(15)		Accounts and drafts payable	129		(110)
Other accrued liabilities and gift card liability	Other accrued liabilities and gift card liability	(12)		(85)		Other accrued liabilities and gift card liability	(78)		(12)
Tenant inducements paid to franchisees	Tenant inducements paid to franchisees	(7)		(13)		Tenant inducements paid to franchisees	(5)		(7)
Other long-term assets and liabilities	Other long-term assets and liabilities	10		97		Other long-term assets and liabilities	(73)		10
Net cash provided by operating activities	Net cash provided by operating activities	608		911		Net cash provided by operating activities	1,255		608
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Payments for property and equipment	Payments for property and equipment	(71)		(32)		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	9		22		Net proceeds from disposal of assets, restaurant closures, and refranchisings	14		9

Settlement/sale of derivatives, net	Settlement/sale of derivatives, net	29		17		Settlement/sale of derivatives, net	2		29

Other investing activities, net						Other investing activities, net	(15)		—
Net cash (used for) provided by investing activities	Net cash (used for) provided by investing activities	(33)		7		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	1,585		750		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	(1,071)		(290)		Repayments of revolving line of credit, long-term debt and finance leases	(865)		(1,071)
Payment of financing costs	Payment of financing costs	(10)		(13)		Payment of financing costs	(7)		(10)
Payment of dividends on common shares and distributions on Partnership exchangeable units	Payment of dividends on common shares and distributions on Partnership exchangeable units	(716)		(669)		Payment of dividends on common shares and distributions on Partnership exchangeable units	(730)		(716)

Repurchase of common shares						Repurchase of common shares	(182)		—
Proceeds from stock option exercises	Proceeds from stock option exercises	60		99		Proceeds from stock option exercises	60		60
(Payments) proceeds from derivatives	(Payments) proceeds from derivatives	(29)		17		(Payments) proceeds from derivatives	(45)		(29)
Other financing activities, net	Other financing activities, net	(1)		0		Other financing activities, net	(3)		(1)
Net cash used for financing activities		(182)		(106)
Net cash (used for) provided by financing activities						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	(7)		7		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	386		819		Increase (decrease) in cash and cash equivalents	213		386
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,533		913		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	$	1,919	$	1,732	Cash and cash equivalents at end of period	$	1,773	$	1,919
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:					Supplemental cash flow disclosures:
Interest paid	Interest paid	$	315	$	433	Interest paid	$	281	$	315
Income taxes paid	Income taxes paid	$	163	$	171	Income taxes paid	$	189	$	163

See accompanying notes to condensed consolidated financial statements.

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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business and Organization

Restaurant Brands International Inc. (the “Company”, “RBI”, “we”, “us” or “our”) ~~was formed on August 25, 2014 and continued under the laws of Canada. The Company~~is a Canadian corporation that serves as the sole general partner of Restaurant Brands International Limited Partnership (“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 September 30, ~~2020,~~2021, we franchised or owned ~~4,934~~5,137 Tim Hortons restaurants, ~~18,675~~18,923 Burger King restaurants, and ~~3,418~~3,607 Popeyes restaurants, for a total of ~~27,027~~27,667 restaurants, and operate in more than 100 ~~countries and U.S. territories.~~countries. Approximately 100% of current system-wide restaurants are franchised.

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

~~COVID-19~~

~~The global crisis resulting from the spread of coronavirus (~~“~~COVID-19~~”) has had a substantial impact on our global restaurant operations for the three and nine months ended September 30, 2020, which is expected to continue with the timing of recovery uncertain. During the three and nine months ended September 30, 2020, some TH, BK and PLK restaurants were temporarily closed in certain countries and many of the restaurants that remained open had limited operations, such as Drive-thru, Takeout and Delivery (where applicable). This has continued into the fourth quarter of 2020.

Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The financial impact of COVID-19 has had, and is expected to continue for an uncertain period to have, an adverse effect on many of our franchisees’ liquidity and we have worked closely with our franchisees to monitor and assist them with access to appropriate sources of liquidity in order to sustain their businesses throughout this crisis, such as offering rent relief programs for eligible franchisees who lease property from us. See Note 4, ~~Leases~~, for further information about the rent relief programs. Additionally, we provided cash flow support by extending loans to eligible BK franchisees in the U.S. during the second and third quarters of 2020, and by advancing certain cash payments to eligible TH franchisees in Canada during the second quarter of 2020.

During the nine months ended September 30, 2020, we recorded bad debt expense of $27 million compared to $3 million during the nine months ended September 30, 2019. While these receivables remain contractually due and payable to us, the certainty of the amount and timing of payments has been impacted by the COVID-19 pandemic. Therefore, our bad debt expense during the nine months ended September 30, 2020 reflects an adjustment to our historical collections experience to incorporate an estimate of the impact of current economic conditions resulting from the COVID-19 pandemic. Actual collections may be materially higher or lower than this estimate reflects since it is reasonably possible the duration and future impact of the COVID-19 pandemic on our business or our franchisees may differ from our assumptions. Ongoing material adverse effects of the COVID-19 pandemic on our franchisees for an extended period could negatively affect our operating results, including reductions in revenue and cash flow and could impact our impairment assessments of accounts receivable, intangible assets, long-lived assets or goodwill.

Note 2. Basis of Presentation and Consolidation

We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February ~~21, 2020.~~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.

~~Table of Contents~~

We are the sole general partner of Partnership and, as such we have 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, subject to the terms of the amended and restated limited partnership agreement of Partnership (the “partnership agreement”) and applicable laws. As a result, we consolidate the results of Partnership and record a noncontrolling interest in our consolidated balance sheets and statements of operations with respect to the remaining economic interest in Partnership we do not hold.

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

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

Tim Hortons has historically entered into certain arrangements in which an operator acquires the right to operate a restaurant, but Tim Hortons owns the restaurant’s assets. We perform an analysis to determine if the legal entity in which operations are conducted is a VIE and consolidate a VIE entity if we also determine Tim Hortons is the entity’s primary beneficiary (“Restaurant VIEs”). As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we determined that we are the primary beneficiary of 4049 and 3538 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 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 September 30, 2020 have also been reclassified from Franchise and property expenses to Advertising expenses. These reclassifications ~~had~~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

~~Credit Losses~~ – In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that requires companies to measure and recognize lifetime expected credit losses for certain financial instruments, including trade accounts receivable and net investments in direct financing and sales-type leases. Expected credit losses are estimated using relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This amendment was effective commencing in 2020, using a modified retrospective approach. The adoption of this new guidance did not have a material impact on our Financial Statements.

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

~~Table of Contents~~

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 September 30, 2020.~~Contents

Note 4. Leases

During the nine months ended September 30, 2020, we offered a rent relief program for eligible TH franchisees in Canada who lease property from us (the “TH rent relief program”) and a rent relief program for eligible BK franchisees in the U.S. and Canada who lease property from us (the “BK rent relief program” and together with the TH rent relief program, the “rent relief programs”), a portion of which concluded during the three months ended September 30, 2020. Under the rent relief programs, we temporarily converted the rent structure from a combination of fixed plus variable rent to 100% variable rent. While in effect, these programs result in a reduction in our property revenues.

In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Accounting Standards Codification Topic 842, Leases (“ASC 842”), as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity is not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

We have elected to apply this interpretive guidance to the rent relief programs while in effect and have assumed that enforceable rights and obligations for those concessions exist in the lease contract. As such, we recognize reductions in rents arising from the rent relief programs as reductions in variable lease payments, as the rent reductions did not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Lease income - operating leases	Lease income - operating leases									Lease income - operating leases
Minimum lease payments	Minimum lease payments	$	112	$	112	$	333	$	335	Minimum lease payments	$	113	$	112	$	343	$	333
Variable lease payments	Variable lease payments	82		100		191		281		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		1		4		5		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	195		213		528		621		Subtotal - lease income from operating leases	205		195		587		528
Earned income on direct financing leases		1		2		4		7
Earned income on direct financing and sales-type leases										Earned income on direct financing and sales-type leases	1		1		4		4
Total property revenues	Total property revenues	$	196	$	215	$	532	$	628	Total property revenues	$	206	$	196	$	591	$	532

~~Table of Contents~~

Note 5. Revenue Recognition

Contract Liabilities

Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees paid by franchisees, as well as upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the underlying agreement. We may recognize unamortized upfront fees when a contract with a franchisee or master franchisee is modified and is accounted for as a termination of the existing contract. We classify these contract liabilities as Other liabilities, net in our condensed consolidated balance sheets. The following table reflects the change in contract liabilities between December 31, ~~2019~~2020 and September 30, ~~2020~~2021 (in millions):


Contract Liabilities	Contract Liabilities	TH		BK		PLK		Consolidated		Contract Liabilities	TH		BK		PLK		Consolidated
Balance at December 31, 2019		$	64	$	449	$	28	$	541
Balance at December 31, 2020										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	(7)		(50)		(2)		(59)		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	5		15		9		29		Increase, excluding amounts recognized as revenue during the period	8		24		14		46
Impact of foreign currency translation	Impact of foreign currency translation	(1)		7		0		6		Impact of foreign currency translation	—		(10)		—		(10)
Balance at September 30, 2020		$	61	$	421	$	35	$	517
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 September 30, ~~2020~~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 2020		$	2	$	9	$	1	$	12
2021		8		34		2		44
Remainder of 2021										Remainder of 2021	$	3	$	9	$	1	$	13
2022	2022	8		33		2		43		2022	9		34		4		47
2023	2023	7		32		2		41		2023	9		33		3		45
2024	2024	7		31		2		40		2024	8		32		3		43
2025										2025	7		32		3		42
Thereafter	Thereafter	29		282		26		337		Thereafter	27		271		37		335
Total	Total	$	61	$	421	$	35	$	517	Total	$	63	$	411	$	51	$	525

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Disaggregation of Total Revenues

Total revenues consist of the following (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Sales	Sales	$	541	$	624	$	1,450	$	1,735	Sales	$	621	$	541	$	1,718	$	1,450
Royalties	Royalties	581		602		1,576		1,706		Royalties	412		362		1,149		968
Property revenues	Property revenues	196		215		532		628		Property revenues	206		196		591		532
Franchise fees and other revenue	Franchise fees and other revenue	19		17		52		55		Franchise fees and other revenue	21		19		61		52
Advertising revenues										Advertising revenues	235		219		674		608
Total revenues	Total revenues	$	1,337	$	1,458	$	3,610	$	4,124	Total revenues	$	1,495	$	1,337	$	4,193	$	3,610

~~Table of Contents~~

Note 6. Earnings per Share

An economic interest in Partnership common equity is held by the holders of Class B exchangeable limited partnership units (the “Partnership exchangeable units”), which is reflected as a noncontrolling interest in our equity. See Note 12, Shareholders’ Equity.

Basic and diluted earnings per share is computed using the weighted average number of shares outstanding for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by outstanding equity awards, unless the effect of their inclusion is anti-dilutive. The diluted earnings per share calculation assumes conversion of 100% of the Partnership exchangeable units under the “if converted” method. Accordingly, the numerator is also adjusted to include the earnings allocated to the holders of noncontrolling interests.

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Numerator:	Numerator:									Numerator:
Net income attributable to common shareholders - basic	Net income attributable to common shareholders - basic	$	145	$	201	$	395	$	478	Net income attributable to common shareholders - basic	$	221	$	145	$	659	$	395
Add: Net income attributable to noncontrolling interests	Add: Net income attributable to noncontrolling interests	78		150		215		376		Add: Net income attributable to noncontrolling interests	107		78		329		215
Net income available to common shareholders and noncontrolling interests - diluted	Net income available to common shareholders and noncontrolling interests - diluted	$	223	$	351	$	610	$	854	Net income available to common shareholders and noncontrolling interests - diluted	$	328	$	223	$	988	$	610

Denominator:	Denominator:									Denominator:
Weighted average common shares - basic	Weighted average common shares - basic	303		267		301		258		Weighted average common shares - basic	311		303		308		301
Exchange of noncontrolling interests for common shares (Note 12)	Exchange of noncontrolling interests for common shares (Note 12)	162		197		164		204		Exchange of noncontrolling interests for common shares (Note 12)	151		162		154		164
Effect of other dilutive securities	Effect of other dilutive securities	5		6		4		7		Effect of other dilutive securities	3		5		3		4
Weighted average common shares - diluted	Weighted average common shares - diluted	470		470		469		469		Weighted average common shares - diluted	465		470		465		469

Basic earnings per share (a)	Basic earnings per share (a)	$	0.48	$	0.76	$	1.31	$	1.85	Basic earnings per share (a)	$	0.71	$	0.48	$	2.14	$	1.31
Diluted earnings per share (a)	Diluted earnings per share (a)	$	0.47	$	0.75	$	1.30	$	1.82	Diluted earnings per share (a)	$	0.70	$	0.47	$	2.12	$	1.30
Anti-dilutive securities outstanding	Anti-dilutive securities outstanding	8		3		8		3		Anti-dilutive securities outstanding	5		8		5		8

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

1413

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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
		September 30, 2020						December 31, 2019							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	$	724	$	(252)	$	472	$	720	$	(225)	$	495	Franchise agreements	$	725	$	(283)	$	442	$	735	$	(264)	$	471
Favorable leases	Favorable leases	116		(63)		53		127		(65)		62		Favorable leases	106		(63)		43		117		(66)		51
Subtotal	Subtotal	840		(315)		525		847		(290)		557		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	$	6,390	$	—	$	6,390	$	6,534	$	—	$	6,534	Tim Hortons brand	$	6,675	$	—	$	6,675	$	6,650	$	—	$	6,650
Burger King brand	Burger King brand	2,145		—		2,145		2,117		—		2,117		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	9,890		—		9,890		10,006		—		10,006		Subtotal	10,167		—		10,167		10,179		—		10,179
Intangible assets, net	Intangible assets, net					$	10,415					$	10,563	Intangible assets, net					$	10,652					$	10,701

Goodwill	Goodwill													Goodwill
Tim Hortons segment	Tim Hortons segment	$	4,119					$	4,207					Tim Hortons segment	$	4,293					$	4,279
Burger King segment	Burger King segment	606						598						Burger King segment	604						614
Popeyes segment	Popeyes segment	846						846						Popeyes segment	846						846
Total	Total	$	5,571					$	5,651					Total	$	5,743					$	5,739

Amortization expense on intangible assets totaled ~~$11~~$10 million and ~~$12~~$11 million for the three months ended September 30, 2021 and 2020, ~~and 2019, respectively, and $33~~respectively. Amortization expense on intangible assets totaled $31 million and $33 million for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The change in the brands and goodwill balances during the nine months ended September 30, ~~2020~~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 ~~$198~~$199 million and ~~$266~~$205 million as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and is included as a component of Other assets, net in our accompanying condensed consolidated balance sheets. ~~TH and BK both have~~

Except for the following equity method investments, no quoted market prices are available for our other equity method investments. ~~PLK does not~~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 ~~any~~evaluated recent declines in the market value of these equity method ~~investments.~~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 $2$3 million and $3$2 million during the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Distributions received from this joint venture were $6$9 million and ~~$10~~$6 million during the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

Except for the following equity method investments, no quoted market prices are available for our other equity method investments. The aggregate market value of our 15.2% equity interest in Carrols Restaurant Group, Inc. (“Carrols”) based on the quoted market price on September 30, 2020 was approximately $61 million. The aggregate market value of our 9.8% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on September 30, 2020 was approximately $43 million.

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

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Revenues from affiliates:
Royalties $ 82 $ 89 $ 209 $ 254
Property revenues 8 8 24 25
Franchise fees and other revenue 4 1 10 7
Total $ 94 $ 98 $ 243 $ 286

We recognized $4$5 million and $5$4 million of rent expense associated with the TIMWEN Partnership during the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. We recognized ~~$11~~$13 million and ~~$14~~$11 million of rent expense associated with the TIMWEN Partnership during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

~~At September 30, 2020 and December 31, 2019, we had $72 million and $47 million, respectively, of accounts receivable, net~~(Income) loss from ~~our~~ equity method investments ~~which were recorded in Accounts and notes receivable,~~reflects our share of investee net income or loss, non-cash dilution gains or losses from changes in our ~~condensed consolidated balance sheets.~~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~~Other liabilities, net (noncurrent) consist of the following (in millions):

As of
September 30,
2020 December 31,
2019
Current:
Dividend payable $ 243 $ 232
Interest payable 106 71
Accrued compensation and benefits 62 57
Taxes payable 157 126
Deferred income 41 35
Accrued advertising expenses 65 40
Restructuring and other provisions 12 8
Current portion of operating lease liabilities 128 126
Other 69 95
Other accrued liabilities $ 883 $ 790
Noncurrent:
Taxes payable $ 604 $ 579
Contract liabilities 517 541
Derivatives liabilities 592 341
Unfavorable leases 83 103
Accrued pension 55 65
Deferred income 26 25
Other 40 44
Other liabilities, net $ 1,917 $ 1,698


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

Deferred income	33		28
Other	35		38
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
		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
Term Loan B (due November 19, 2026)	Term Loan B (due November 19, 2026)	$	5,310	$	5,350	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)	736		750		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)	1,500		1,500		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		0		2020 5.75% Senior Notes (due April 15, 2025)	500		500
2017 5.00% Senior Notes (due October 15, 2025)		2,800		2,800
2020 3.50% Senior Notes (due February 15, 2029)						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
TH Facility and other	TH Facility and other	171		81		TH Facility and other	175		178
Less: unamortized deferred financing costs and deferred issue discount	Less: unamortized deferred financing costs and deferred issue discount	(139)		(148)		Less: unamortized deferred financing costs and deferred issue discount	(138)		(155)
Total debt, net	Total debt, net	12,378		11,833		Total debt, net	12,460		12,476
Less: current maturities of debt	Less: current maturities of debt	(78)		(74)		Less: current maturities of debt	(81)		(79)
Total long-term debt	Total long-term debt	$	12,300	$	11,759	Total long-term debt	$	12,379	$	12,397

Revolving Credit ~~Facilities~~Facility

~~In March 2020,~~As of September 30, 2021, we ~~drew $995 million on~~had no amounts outstanding under our senior secured revolving credit facility (the “Revolving Credit Facility”), ~~which we repaid in June 2020. As of September 30, 2020, we had 0 amounts outstanding under our 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 ~~share~~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.

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

TH Facility

~~One~~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. ~~During the nine months ended September 30, 2020, we drew down the remaining availability of C$125 million under the TH Facility and, as~~As of September 30, ~~2020,~~2021, we had outstanding C$~~224~~217 million under the TH Facility with a weighted average interest rate of ~~1.88%~~1.83%.

~~2020~~ First Lien Senior Notes

On ~~April 7, 2020, the Borrowers entered into an indenture~~July 6, 2021, 2 of our subsidiaries (the ~~“2020 5.75% Senior Notes Indenture”~~“Borrowers”) ~~in connection with the issuance of $500~~issued $800 million of ~~5.75%~~3.875% first lien senior secured notes due ~~April~~January 15, ~~2025~~2028 (the ~~“2020 5.75% Senior~~“Additional Notes”). ~~NaN~~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 ~~2020 5.75% Senior~~Additional Notes were used ~~for general corporate purposes.~~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 ~~2020 5.75% Senior~~Additional Notes, we capitalized approximately $9$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 ~~2020 5.75%~~3.875% First Lien Senior Notes are guaranteed on a senior secured basis, jointly and severally, by the Borrowers and substantially all of the ~~Borrowers'~~Borrower's Canadian and U.S. subsidiaries, including The TDL Group Corp., Burger King ~~Worldwide, Inc.,~~Corporation, Popeyes Louisiana Kitchen, Inc. and substantially all of their respective Canadian and U.S. subsidiaries (the “Note Guarantors”). The ~~2020 5.75%~~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 ofunder our senior secured term loan facilities and Revolving Credit Facility (together the ~~Credit Facilities.~~“Credit Facilities”).

~~Our 2020 5.75%~~The 3.875% First Lien Senior ~~Notes~~notes may be redeemed in whole or in part, on or after ~~April~~September 15, 2022, at the redemption prices set forth in the ~~2020 5.75%~~2019 3.875% Senior Notes Indenture, plus accrued and unpaid interest, if any, at the date of redemption. The ~~2020 5.75%~~2019 3.875% Senior Notes Indenture also contains optional redemption provisions related to tender offers, change of control and equity offerings, among others.

~~2020 Second Lien Senior Notes~~

On October 5, 2020, the Borrowers entered into an indenture (the “2020 4.00% Senior Notes Indenture”) in connection with the issuance of $1,400 million of 4.00% second lien notes due October 15, 2030 (the “October 2020 4.00% Senior Notes”). NaN principal payments are due until maturity and interest is paid semi-annually. On October 16, 2020, the proceeds from the offering of the October 2020 4.00% Senior Notes were used to redeem $1,350 million of the outstanding aggregate principal amount of our existing $2,800 million 2017 5.00% Senior Notes (due October 15, 2025) and pay related redemption premiums, fees and expenses.

On October 14, 2020, the Borrowers entered into a purchase agreement relating to the sale of $1,500 million in aggregate principal amount of 4.00% second lien notes due October 15, 2030 (the “November 2020 4.00% Senior Notes” and together with the October 2020 4.00% Senior Notes, the “2020 4.00% Senior Notes”), which will be issued as additional notes under the 2020 4.00% Senior Notes Indenture. The closing of the offering of the November 2020 4.00% Senior Notes is expected to occur on or about November 2, 2020, subject to customary closing conditions. The November 2020 4.00% Senior Notes are treated as a single series with the October 2020 4.00% Senior Notes and have the same terms for all purposes under the 2020 4.00% Senior Notes Indenture, including waivers, amendments, redemptions and offers to purchase. The net proceeds from the offering of the November 2020 4.00% Senior Notes will be used to redeem the remaining $1,450 million principal amount outstanding of the 2017 5.00% Senior Notes on or about November 13, 2020 and pay related redemption premiums, fees and expenses.

Obligations under the 2020 4.00% Senior Notes are guaranteed on a senior secured basis, jointly and severally, by the Borrowers and Note Guarantors. The 2020 4.00% Senior Notes are second lien senior secured obligations and rank equal in right of payment will all of the existing and future senior debt of the Borrowers and Note Guarantors and effectively subordinated to all of the existing and future first lien senior debt of the Borrowers and Note Guarantors.

Our 2020 4.00% Senior Notes may be redeemed in whole or in part, on or after October 15, 2025 at the redemption prices set forth in the 2020 4.00% Senior Notes Indenture, plus accrued and unpaid interest, if any, at the date of redemption. The 2020 4.00% Senior Notes Indenture also contains optional redemption provisions related to tender offers, change of control and equity offerings, among others.

~~2020 3.50% First Lien Notes~~

~~On October 20, 2020, the Borrowers entered into a purchase agreement relating to the sale of~~ ~~$750 million~~ in aggregate principal amount of 3.50% first lien notes due February 15, 2029 (the “2020 3.50% Senior Notes”). The closing of the offering of the 2020 3.50% Senior Notes is expected to occur on or about November 9, 2020, subject to customary closing conditions. The net proceeds from the offering of the 2020 3.50% Senior Notes will be used to redeem ~~$725 million~~ ~~of our 4.25% first lien notes due 2024 and pay related redemption premiums, fees and expenses.~~

Restrictions and Covenants

As of September 30, ~~2020,~~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,~~"Credit Facilities"), the TH Facility, and the indentures governing our Senior Notes.

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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					As of
		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
Fair value of our variable term debt and senior notes	Fair value of our variable term debt and senior notes	$	12,283	$	12,075	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	Principal carrying amount of our variable term debt and senior notes	12,346		11,900		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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Debt (a)	Debt (a)	$	119	$	130	$	351	$	382	Debt (a)	$	117	$	119	$	345	$	351
Finance lease obligations	Finance lease obligations	4		5		14		16		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		7		19		22		Amortization of deferred financing costs and debt issuance discount	7		7		20		19
Interest income	Interest income	(1)		(5)		(8)		(14)		Interest income	(1)		(1)		(2)		(8)
Interest expense, net	Interest expense, net	$	129	$	137	$	376	$	406	Interest expense, net	$	128	$	129	$	378	$	376

(a)Amount includes ~~$15~~$11 million and ~~$16~~$15 million benefit during the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$56~~$34 million and ~~$53~~$56 million benefit during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~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 16.7% and 7.7% for the three and nine months ended September 30, 2021, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions and the impact of internal financing arrangements. Additionally, the effective tax rate for the nine months ended September 30, 2021 included a net decrease in tax reserves of $87 million related primarily to expiring statutes of limitations for certain prior tax years which decreased the effective tax rate by 8.1%.

Our 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)%~~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 ~~this period,~~the nine months ended September 30, 2020, a deferred tax asset was recorded.

Our effective tax rate was 18.3% and 21.4% for the three and nine months ended September 30, 2019, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions, the impact of internal financing arrangements and stock option exercises. Additionally, the effective tax rate during the nine months ended September 30, 2019 reflects a $37 million increase in the provision for unrecognized tax benefits related to a prior restructuring transaction that is not applicable to ongoing operations which increased the effective tax rate by 3.4% during this period. Benefits from stock option exercises reduced the effective tax rate by 1.2% and 2.9% for the three and nine months ended September 30, 2019, respectively.

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Note 12. Shareholders’ Equity

Noncontrolling Interests

The holders of Partnership exchangeable units held an economic interest of approximately ~~34.8%~~31.6% and ~~35.7%~~33.7% in Partnership common equity through the ownership of ~~162,212,231~~145,269,936 and ~~165,507,199~~155,113,338 Partnership exchangeable units as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

During the nine months ended September 30, ~~2020,~~2021, Partnership exchanged ~~3,294,968~~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. ~~See Note 17,~~ ~~Subsequent Events, for detail of Partnership exchangeable units repurchased for cash on October 2, 2020.~~ The exchanges represented increases in our ownership interest in Partnership and were accounted for as equity transactions, with no gain or loss recorded in the accompanying condensed consolidated statement of operations. 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.

Share Repurchases

On July 28, 2021, our Board of Directors approved a share repurchase program that allows us to purchase up to $1,000 million of our common shares until August 10, 2023. For the three and nine months ended September 30, 2021, we repurchased and cancelled 2,843,562 of common shares for $182 million.

Accumulated Other Comprehensive Income (Loss)

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


		Derivatives		Pensions		Foreign Currency Translation		Accumulated Other Comprehensive Income (Loss)			Derivatives		Pensions		Foreign Currency Translation		Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2019		$	199	$	(19)	$	(943)	$	(763)
Balance at December 31, 2020										Balance at December 31, 2020	$	(69)	$	(30)	$	(755)	$	(854)
Foreign currency translation adjustment	Foreign currency translation adjustment	—		—		(170)		(170)		Foreign currency translation adjustment	—		—		(62)		(62)
Net change in fair value of derivatives, net of tax	Net change in fair value of derivatives, net of tax	(229)		—		—		(229)		Net change in fair value of derivatives, net of tax	169		—		—		169
Amounts reclassified to earnings of cash flow hedges, net of tax	Amounts reclassified to earnings of cash flow hedges, net of tax	51		—		—		51		Amounts reclassified to earnings of cash flow hedges, net of tax	77		—		—		77

Gain (loss) recognized on other, net of tax										Gain (loss) recognized on other, net of tax	—		2		—		2
Amounts attributable to noncontrolling interests	Amounts attributable to noncontrolling interests	64		—		50		114		Amounts attributable to noncontrolling interests	(80)		(2)		(3)		(85)
Balance at September 30, 2020		$	85	$	(19)	$	(1,063)	$	(997)
Balance at September 30, 2021										Balance at September 30, 2021	$	97	$	(30)	$	(820)	$	(753)

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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 September 30, ~~2020,~~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 September 30, ~~2020,~~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 September 30, ~~2020~~2021 that we expect to be reclassified into interest expense within the next 12 months is ~~$51 million.~~

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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 September 30, 2020 that we expect to be reclassified into interest expense within the next 12 months is $12$50 million.

Cross-Currency Rate Swaps

To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, we hedge a portion of our net investment in one or more of our foreign subsidiaries by using cross-currency rate swaps. At September 30, ~~2020,~~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 September 30, ~~2020,~~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 September 30, ~~2020,~~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 September 30, ~~2020,~~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 assessment. Additionally, as a result of adopting new hedge accounting guidance during 2018, we elected to exclude the interest component (the “Excluded Component”) from the accounting hedge without affecting net investment hedge accounting and elected to amortize the Excluded Component over the life of the derivative instrument. The amortization of the Excluded Component is recognized in Interest expense, net in the condensed consolidated statement of operations. The change in fair value that is not related to the Excluded Component is recorded in AOCI and will be reclassified to earnings when the foreign subsidiaries are sold or substantially liquidated.

Foreign Currency Exchange Contracts

We use foreign exchange derivative instruments to manage the impact of foreign exchange fluctuations on U.S. dollar purchases and payments, such as coffee purchases made by our Canadian Tim Hortons operations. At September 30, ~~2020,~~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 ~~$98~~$148 million with maturities to November ~~2021.~~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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			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	$	(22)	$	(35)	$	(370)	$	(156)	Interest rate swaps	$	15	$	(22)	$	100	$	(370)
Forward-currency contracts	Forward-currency contracts	$	(2)	$	1	$	3	$	(3)	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	$	(238)	$	180	$	51	$	25	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 September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Derivatives designated as cash flow hedges
Interest rate swaps Interest expense, net $ (30) $ (7) $ (71) $ (14)
Forward-currency contracts Cost of sales $ 0 $ 0 $ 2 $ 4
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,
2020 2019 2020 2019
Derivatives designated as net investment hedges
Cross-currency rate swaps Interest expense, net $ 15 $ 16 $ 56 $ 53

2221

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Fair Value as of
September 30,
2020 December 31, 2019 Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate $ 0 $ 7 Other assets, net
Derivatives designated as net investment hedges
Foreign currency 18 22 Other assets, net
Total assets at fair value $ 18 $ 29
Liabilities:
Derivatives designated as cash flow hedges
Interest rate $ 490 $ 175 Other liabilities, net
Foreign currency 1 2 Other accrued liabilities
Derivatives designated as net investment hedges
Foreign currency 102 166 Other liabilities, net
Total liabilities at fair value $ 593 $ 343


	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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			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	$	4	$	6	$	2	$	(1)	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	4		1		5		1		Litigation settlements (gains) and reserves, net	4		4		7		5
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange	44		(35)		54		(38)		Net losses (gains) on foreign exchange	(23)		44		(58)		54
Other, net	Other, net	2		(2)		(2)		(6)		Other, net	1		2		—		(2)
Other operating expenses (income), net	Other operating expenses (income), net	$	54	$	(30)	$	59	$	(44)	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.

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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 ~~these cases~~this case or estimate the range of possible loss, if any.

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

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

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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 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 our 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 our 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.

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues by operating segment:	Revenues by operating segment:									Revenues by operating segment:
TH	TH	$	762	$	881	$	2,028	$	2,472	TH	$	885	$	762	$	2,426	$	2,028
BK	BK	433		457		1,168		1,315		BK	467		433		1,333		1,168
PLK	PLK	142		120		414		337		PLK	143		142		434		414
Total revenues	Total revenues	$	1,337	$	1,458	$	3,610	$	4,124	Total revenues	$	1,495	$	1,337	$	4,193	$	3,610


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues by country (a):	Revenues by country (a):									Revenues by country (a):
Canada	Canada	$	691	$	805	$	1,837	$	2,245	Canada	$	808	$	691	$	2,200	$	1,837
United States	United States	499		489		1,392		1,412		United States	500		499		1,493		1,392
Other	Other	147		164		381		467		Other	187		147		500		381
Total revenues	Total revenues	$	1,337	$	1,458	$	3,610	$	4,124	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 ~~in connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively, and~~ 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~~related restructuring initiatives (“Corporate restructuring and ~~Jobs Act (the “Tax Act”~~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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Segment income:	Segment income:									Segment income:
TH	TH	$	258	$	301	$	594	$	825	TH	$	278	$	258	$	738	$	594
BK	BK	245		254		605		728		BK	272		245		755		605
PLK	PLK	58		47		164		129		PLK	57		58		171		164
Adjusted EBITDA	Adjusted EBITDA	561		602		1,363		1,682		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	19		18		63		62		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	3		5		11		22		Corporate restructuring and tax advisory fees	4		3		8		11
Office centralization and relocation costs		0		0		0		6

Impact of equity method investments (a)	Impact of equity method investments (a)	20		(9)		42		1		Impact of equity method investments (a)	11		20		22		42
Other operating expenses (income), net	Other operating expenses (income), net	54		(30)		59		(44)		Other operating expenses (income), net	(16)		54		(50)		59
EBITDA	EBITDA	465		618		1,188		1,635		EBITDA	583		465		1,613		1,188
Depreciation and amortization	Depreciation and amortization	48		47		139		139		Depreciation and amortization	50		48		150		139
Income from operations	Income from operations	417		571		1,049		1,496		Income from operations	533		417		1,463		1,049
Interest expense, net	Interest expense, net	129		137		376		406		Interest expense, net	128		129		378		376
Loss on early extinguishment of debt	Loss on early extinguishment of debt	0		4		0		4		Loss on early extinguishment of debt	11		—		11		—
Income tax expense	Income tax expense	65		79		62		232		Income tax expense	65		65		83		62
Net income	Net income	$	223	$	351	$	611	$	854	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.

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Note 17. Subsequent Events

~~Exchange of Partnership Exchangeable Units~~

In September 2020 Partnership received an exchange notice for 6,757,692 Partnership exchange units (the “Exchangeable Units”). In accordance with the terms of the partnership agreement, Partnership chose to satisfy the exchange by repurchasing all of these Exchangeable Units on October 2, 2020 for approximately $380 million with available cash on hand. The exchange represented an increase in our ownership interest in Partnership and will be accounted for as an equity transaction, with no gain or loss recorded in the condensed consolidated statement of operations. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit is automatically deemed cancelled.

Dividends

On October ~~2, 2020,~~5, 2021, we paid a cash dividend of ~~$0.52~~$0.53 per common share to common shareholders of record on September ~~18, 2020.~~21, 2021. On such date, Partnership also made a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.52~~$0.53 per exchangeable unit to holders of record on September ~~18, 2020.~~21, 2021.

Subsequent to September 30, ~~2020,~~2021, our board of directors declared a cash dividend of ~~$0.52~~$0.53 per common share, which will be paid on January 5, ~~2021~~2022 to common shareholders of record on December 21, ~~2020.~~2021. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.52~~$0.53 per Partnership exchangeable unit, and the record date and payment date for distributions on Partnership exchangeable units are the same as the record date and payment date set forth above.

~~Issuance of Senior Notes and Redemption of Senior Notes~~

~~As discussed in Note 10,~~ ~~Long-Term Debt~~, on October 5, 2020, the Borrowers entered into the 2020 4.00% Senior Notes Indenture in connection with the issuance of the October 2020 4.00% Senior Notes. The proceeds from the offering of the October 2020 4.00% Senior Notes were used to redeem $1,350 million of the outstanding aggregate principal amount of our existing $2,800 million 2017 5.00% Senior Notes (due October 15, 2025) on October 16, 2020 and pay related redemption premiums, fees and expenses.

~~Also as discussed in Note 10,~~ ~~Long-Term Debt~~, on October 14, 2020, the Borrowers entered into a purchase agreement relating to the sale of the November 2020 4.00% Senior Notes, which will be issued as additional notes under the 2020 4.00% Senior Notes Indenture. The closing of the offering of the November 2020 4.00% Senior Notes is expected to occur on or about November 2, 2020, subject to customary closing conditions. The net proceeds from the offering of the November 2020 4.00% Senior Notes will be used to redeem the remaining $1,450 million principal amount outstanding of the 2017 5.00% Senior Notes and pay related redemption premiums, fees and expenses.

~~As additionally discussed in Note 10,~~ ~~Long-Term Debt,~~ onOctober 20, 2020, the Borrowers entered into a purchase agreement relating to the sale of the 2020 3.50% Senior Notes. The closing of the offering of the 2020 3.50% Senior Notes is expected to occur on or about November 9, 2020, subject to customary closing conditions. The net proceeds from the offering of the 2020 3.50% Senior Notes will be used to redeem $725 million of our 4.25% first lien notes due 2024 and pay related redemption premiums, fees and expenses.

During the three months ending December 31, 2020, we will record a loss on early extinguishment of debt that will include the redemption premiums paid as well as the write-off of unamortized debt issuance costs in connection with the redemption of the notes discussed above.

~~Litigation~~

On October 26, 2020, City of Warwick Municipal Employees Pension Fund, a purported stockholder of Restaurant Brands International, individually and 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 the Company and certain of its officers, directors and selling shareholders as defendants alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with the offering of securities by an affiliate of 3G Capital Partners Ltd. 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. The Company is currently evaluating the lawsuit, but believes that the claims are without merit and intends to vigorously defend. While we believe these

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~~claims are 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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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 “RBI”, the “Company”, “we”, “us” or “our” are to Restaurant Brands International Inc. 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 ~~approximately~~over 27,000 restaurants in more than 100 countries ~~and U.S. territories~~ as of September 30, ~~2020.~~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~~”(“COVID-19”) ~~has had a substantial impact on~~impacted our global restaurant operations for the three and nine months ended September 30, ~~2020, which is expected to continue with~~2021 and 2020.

While the ~~timing~~impact of ~~recovery uncertain. System-wide~~COVID-19 on system-wide sales growth, system-wide sales, ~~and~~ comparable sales ~~were also negatively impacted~~and net restaurant growth was significant for the three and nine months ended September 30, 2020, asin the 2021 periods these metrics were affected to a ~~result of~~lesser extent, with variations among brands and regions. During 2020 and the ~~impact of COVID-19. During the first~~ nine months ~~of 2020,~~ended 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~~drive-thru, takeout and ~~Delivery~~delivery (where applicable) ~~and that currently remains~~, reduced, if any, dine-in capacity, and/or restrictions on hours of operation. During the case. While certain markets have opened for dine-in guests, the capacity may be limited, and local conditions may lead to closures or increased limitations. Some international markets temporarily closed most or all restaurants and the restaurants that remained open or have reopened may have limited operations. As of the end ofthree months ended September ~~96%~~30, 2021, on average 97% of our restaurants were open worldwide, including ~~substantially all~~approximately 98% of our restaurants in ~~North America, Asia Pacific~~the U.S. and ~~Europe, Middle East and Africa~~Canada and approximately ~~92%~~96% of our restaurants in ~~Latin America.~~

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Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The financial impact of COVID-19 has had, and is expected to continue to have, an adverse effectthe world. By contrast, during the three months ended September 30, 2020, on ~~many~~average 94% of our ~~franchisees’ liquidity~~restaurants were open worldwide, including approximately 97% of our restaurants in the U.S. and ~~we have worked closely with~~Canada and approximately 91% of our ~~franchisees around~~restaurants in the ~~world to monitor and assist them with access to appropriate sources~~rest of ~~liquidity in order to sustain their businesses throughout this crisis.~~the world. During the nine months ended September 30, 2020, ~~we offered rent relief programs~~a number of markets required temporary complete closures while implementing lockdown orders. While many regions have since eased restrictions, certain markets continue to ~~eligible TH franchisees~~be impacted and re-imposed restrictions in Canada and eligible BK franchisees in the U.S. and Canada who lease property from us, a portion of which concluded during the third quarter. While in effect, these programs provide working capital support to franchisees and result in a reduction in our property revenues. See Note 4 to the accompanying unaudited condensed consolidated financial statements.

We also provided cash flow support by extending loans to eligible BK franchisees in the U.S. during the second and third quarters of 2020, and by advancing certain cash payments to eligible TH franchisees in Canada during the second quarter of 2020. Additionally, we temporarily deferred franchisee capital investment commitments for restaurant renovations and new restaurant development globally, based on the individual circumstances of relevant markets and restaurant owners.

~~During~~ the nine months ended September 30, ~~2020, we recorded higher bad debt expense than~~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, ~~2019. While these receivables remain contractually due~~2021, COVID-19 contributed to labor challenges, which in some regions resulted in reduced operating hours and ~~payable~~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 ~~us, the certainty~~continue to support enhancements of ~~the amount~~our digital and timing of payments has been impacted by the COVID-19 pandemic. Therefore, our bad debt expense during the nine months ended September 30, 2020 reflects an adjustment to our historical collections experience to incorporate an estimate of the impact of current economic conditions resulting from the COVID-19 pandemic. Actual collections may be materially higher or lower than this estimate reflects since it is reasonably possible the duration and future impact of the COVID-19 pandemic on our business or our franchisees may differ from our assumptions.

marketing capabilities. While we do not know the full future impact COVID-19 will have on our business, ~~or when our business will fully return to normal operations,~~ we expect to see a continued impact from COVID-19 on our results in ~~the fourth quarter.~~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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~~Recent Events and Factors Affecting Comparability~~

~~Tax Restructuring and Reform~~

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

We recorded $3 million and $5 million of costs during the three months ended September 30, 2020 and 2019, respectively, and $11 million and $22 million of costs during the nine months ended September 30, 2020 and 2019, respectively, which are classified as selling, general and administrative expenses in our condensed consolidated statements of operations, arising primarily from professional advisory and consulting services associated with 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 regulations and guidance issued by the U.S. Treasury, the IRS and state tax authorities in their ongoing efforts to interpret and implement the Tax Act and related state and local tax implications (“Corporate restructuring and tax advisory fees”).

During the nine months ended September 30, 2020, various guidance was issued by the U.S. Treasury relating to the Tax Act. After review of such guidance, we recorded a deferred tax asset of approximately $64 million during the nine months ended September 30, 2020 related to certain tax attribute carryforwards, which we now expect to be able to deduct in future years under recently issued regulations implementing the Tax Act.

~~Office Centralization and Relocation Costs~~

In connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively, we incurred certain non-operational expenses (“Office centralization and relocation costs”) totaling $6 million during the nine months ended September 30, 2019 consisting primarily of moving costs and relocation-driven compensation expenses, which are classified as selling, general and administrative expenses in our condensed consolidated statements of operations. We did not incur any Office centralization and relocation costs during the three months ended September 30, 2019 and during 2020 and do not expect to incur any additional Office centralization and relocation costs during 2020.

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Results of Operations for the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~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 September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Consolidated	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2020		2019		Favorable / (Unfavorable)						2020		2019		Favorable / (Unfavorable)							2021		2020		Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)
Revenues:	Revenues:																					Revenues:
Sales	Sales	$	541	$	624	$	(83)	$	(4)	$	(79)	$	1,450	$	1,735	$	(285)	$	(26)	$	(259)	Sales	$	621	$	541	$	80	$	25	$	55	$	1,718	$	1,450	$	268	$	92	$	176
Franchise and property revenues	Franchise and property revenues	796		834		(38)		(6)		(32)		2,160		2,389		(229)		(33)		(196)		Franchise and property revenues	639		577		62		13		49		1,801		1,552		249		52		197
Advertising revenues																						Advertising revenues	235		219		16		3		13		674		608		66		11		55
Total revenues	Total revenues	1,337		1,458		(121)		(10)		(111)		3,610		4,124		(514)		(59)		(455)		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	418		475		57		3		54		1,156		1,334		178		20		158		Cost of sales	490		418		(72)		(19)		(53)		1,358		1,156		(202)		(73)		(129)
Franchise and property expenses	Franchise and property expenses	128		133		5		—		5		388		401		13		4		9		Franchise and property expenses	121		125		4		(5)		9		358		380		22		(20)		42
Selling, general and administrative expenses		302		320		18		—		18		922		948		26		5		21
Advertising expenses																						Advertising expenses	237		209		(28)		(3)		(25)		711		638		(73)		(13)		(60)
General and administrative expenses																						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	18		(11)		(29)		1		(30)		36		(11)		(47)		—		(47)		(Income) loss from equity method investments	7		18		11		—		11		12		36		24		—		24
Other operating expenses (income), net	Other operating expenses (income), net	54		(30)		(84)		1		(85)		59		(44)		(103)		—		(103)		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	920		887		(33)		5		(38)		2,561		2,628		67		29		38		Total operating costs and expenses	962		920		(42)		(30)		(12)		2,730		2,561		(169)		(116)		(53)
Income from operations	Income from operations	417		571		(154)		(5)		(149)		1,049		1,496		(447)		(30)		(417)		Income from operations	533		417		116		11		105		1,463		1,049		414		39		375
Interest expense, net	Interest expense, net	129		137		8		—		8		376		406		30		—		30		Interest expense, net	128		129		1		—		1		378		376		(2)		(1)		(1)
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		4		4		—		4		—		4		4		—		4		Loss on early extinguishment of debt	11		—		(11)		—		(11)		11		—		(11)		—		(11)
Income before income taxes	Income before income taxes	288		430		(142)		(5)		(137)		673		1,086		(413)		(30)		(383)		Income before income taxes	394		288		106		11		95		1,074		673		401		38		363
Income tax expense	Income tax expense	65		79		14		—		14		62		232		170		1		169		Income tax expense	65		65		—		2		(2)		83		62		(21)		2		(23)
Net income	Net income	$	223	$	351	$	(128)	$	(5)	$	(123)	$	611	$	854	$	(243)	$	(29)	$	(214)	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.

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
2020 2019 Favorable / (Unfavorable) 2020 2019 Favorable / (Unfavorable)
Revenues:
Sales $ 506 $ 584 $ (78) $ (4) $ (74) $ 1,345 $ 1,618 $ (273) $ (26) $ (247)
Franchise and property revenues 256 297 (41) (3) (38) 683 854 (171) (14) (157)
Total revenues 762 881 (119) (7) (112) 2,028 2,472 (444) (40) (404)
Cost of sales 388 441 53 3 50 1,061 1,233 172 20 152
Franchise and property expenses 83 91 8 — 8 250 268 18 4 14
Segment SG&A 63 77 14 — 14 211 236 25 3 22
Segment depreciation and amortization (b) 28 28 — — — 82 80 (2) 1 (3)
Segment income (c) 258 301 (43) (2) (41) 594 825 (231) (13) (218)

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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)
Revenues:
Sales	$	592	$	506	$	86	$	25	$	61	$	1,621	$	1,345	$	276	$	92	$	184
Franchise and property revenues	230		205		25		11		14		639		547		92		38		54
Advertising revenues	63		51		12		3		9		166		136		30		9		21
Total revenues	885		762		123		39		84		2,426		2,028		398		139		259
Cost of sales	462		388		(74)		(19)		(55)		1,266		1,061		(205)		(73)		(132)
Franchise and property expenses	84		80		(4)		(5)		1		251		242		(9)		(18)		9
Advertising expenses	67		46		(21)		(2)		(19)		197		154		(43)		(11)		(32)
Segment G&A	27		20		(7)		(1)		(6)		77		65		(12)		(4)		(8)
Segment depreciation and amortization (b)	31		28		(3)		(2)		(1)		94		82		(12)		(6)		(6)
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, ~~and~~ franchise and property expenses and advertising expenses.

(c)TH segment income includes $2$3 million and $3$2 million of cash distributions received from equity method investments for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. TH segment income includes $6$9 million and ~~$11~~$6 million of cash distributions received from equity method investments for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively.


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

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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
PLK Segment																						PLK Segment	Three Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact		Nine Months Ended September 30,				Variance		FX Impact (a)		Variance Excluding FX Impact
		2020		2019		Favorable / (Unfavorable)						2020		2019		Favorable / (Unfavorable)							2021		2020		Favorable / (Unfavorable)						2021		2020		Favorable / (Unfavorable)
Revenues:	Revenues:																					Revenues:
Sales	Sales	$	17	$	19	$	(2)	$	—	$	(2)	$	49	$	57	$	(8)	$	—	$	(8)	Sales	$	13	$	18	$	(5)	$	—	$	(5)	$	48	$	56	$	(8)	$	—	$	(8)
Franchise and property revenues	Franchise and property revenues	416		438		(22)		(2)		(20)		1,119		1,258		(139)		(18)		(121)		Franchise and property revenues	72		67		5		—		5		212		194		18		—		18
Advertising revenues																						Advertising revenues	58		57		1		—		1		174		164		10		—		10
Total revenues	Total revenues	433		457		(24)		(2)		(22)		1,168		1,315		(147)		(18)		(129)		Total revenues	143		142		1		—		1		434		414		20		—		20
Cost of sales	Cost of sales	16		18		2		—		2		49		53		4		—		4		Cost of sales	12		14		2		—		2		43		46		3		—		3
Franchise and property expenses	Franchise and property expenses	42		39		(3)		—		(3)		129		124		(5)		—		(5)		Franchise and property expenses	3		3		—		—		—		7		9		2		—		2
Segment SG&A		142		159		17		—		17		422		449		27		1		26
Advertising expenses																						Advertising expenses	60		58		(2)		—		(2)		177		166		(11)		—		(11)
Segment G&A																						Segment G&A	15		12		(3)		—		(3)		42		35		(7)		—		(7)
Segment depreciation and amortization (b)	Segment depreciation and amortization (b)	13		12		(1)		—		(1)		37		37		—		—		—		Segment depreciation and amortization (b)	2		2		—		—		—		5		6		1		—		1
Segment income (d)		245		254		(9)		(2)		(7)		605		728		(123)		(17)		(106)
Segment income																						Segment income	57		58		(1)		—		(1)		171		164		7		—		7

~~(d)~~No cash distributions were received from equity method investments for the three months ended September 30, 2020 and 2019 and no significant amounts of cash distributions were received during the nine months ended September 30, 2020. BK segment income includes $2 million of cash distributions received from equity method investments for the nine months ended September 30, 2019.


	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

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
2020 2019 Favorable / (Unfavorable) 2020 2019 Favorable / (Unfavorable)
Revenues:
Sales $ 18 $ 21 $ (3) $ — $ (3) $ 56 $ 60 $ (4) $ — $ (4)
Franchise and property revenues 124 99 25 (1) 26 358 277 81 (1) 82
Total revenues 142 120 22 (1) 23 414 337 77 (1) 78
Cost of sales 14 16 2 — 2 46 48 2 — 2
Franchise and property expenses 3 3 — — — 9 9 — — —
Segment SG&A 70 56 (14) — (14) 201 159 (42) — (42)
Segment depreciation and amortization (b) 2 2 — — — 6 8 2 — 2
Segment income 58 47 11 (1) 12 164 129 35 (1) 36

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Three Months Ended
September 30, Nine Months Ended
September 30,
Key Business Metrics 2020 2019 2020 2019
System-wide sales growth
    TH (13.7) % (0.1) % (19.1) % 0.6 %
    BK (7.9) % 10.7 % (12.1) % 9.6 %
    PLK 21.5 % 15.6 % 25.7 % 10.5 %
    Consolidated (5.4) % 8.9 % (8.9) % 7.8 %
System-wide sales
    TH $ 1,520 $ 1,774 $ 4,010 $ 5,037
    BK $ 5,484 $ 6,010 $ 14,610 $ 17,016
    PLK $ 1,331 $ 1,103 $ 3,836 $ 3,070
    Consolidated $ 8,335 $ 8,887 $ 22,456 $ 25,123
Comparable sales
    TH (12.5) % (1.4) % (17.2) % (0.5) %
    BK (7.0) % 4.8 % (7.9) % 3.6 %
    PLK 17.4 % 9.7 % 22.5 % 4.5 %
As of September 30,
2020 2019
Net restaurant growth
    TH 1.0 % 1.7 %
    BK 2.4 % 5.8 %
    PLK 7.1 % 5.6 %
    Consolidated 2.7 % 5.0 %
Restaurant count
    TH 4,934 4,887
    BK 18,675 18,232
    PLK 3,418 3,192
    Consolidated 27,027 26,311

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 ~~(12.5)~~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, ~~2020,~~2021, including ~~Canada~~U.S. comparable sales of ~~(13.7)~~(4.5)%. THPLK comparable sales were ~~(17.2)~~(0.5)% during the nine months ended September 30, ~~2020, including Canada comparable sales of (18.0)%.~~

~~BK comparable sales were (7.0)% during the three months ended September 30, 2020,~~2021, including U.S. comparable sales of ~~(3.2)~~(2.1)%~~. BK comparable sales were (7.9)% during the nine months ended September 30, 2020, including U.S. comparable sales of (6.5)%.~~

PLK comparable sales were 17.4% during the three months ended September 30, 2020, including U.S. comparable sales of 19.7%. PLK comparable sales were 22.5% during the nine months ended September 30, 2020, including U.S. comparable sales of 25.6%.

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.~~

~~Table of Contents~~

restaurants, including our consolidated TH Restaurants VIEs.

During the three months ended September 30, ~~2020,~~2021, the ~~decrease~~increase in sales was driven ~~primarily~~ by ~~a decrease~~an increase of ~~$74~~$61 million in our TH segment and a favorable FX Impact of $25 million, partially offset by a decrease of ~~$2 million in our BK segment, a decrease of $3~~$5 million in our PLK segment and ~~an unfavorable FX Impact~~a decrease of ~~$4 million.~~$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 ~~net of~~and an increase in sales to retailers.

During the ~~nine~~three months ended September 30, ~~2020,~~2021, the ~~decrease~~increase in cost of sales was driven ~~primarily~~ by ~~a decrease~~an increase of ~~$247~~$55 million in our TH ~~segment, a decrease of $8 million in our BK segment, a decrease of $4 million in our PLK~~ segment and an unfavorable FX Impact of ~~$26 million. The decrease in our TH segment was driven by a $255~~$19 million, ~~decrease in supply chain sales due to the decrease in system-wide sales, net of an increase in sales to retailers. The decrease in supply chain sales was~~ partially offset by ~~an increase of $8 million in Company restaurant revenue due to an increase in the number of Company restaurants.~~

While we cannot currently estimate the duration or future negative impact of the COVID-19 pandemic on our system-wide sales and sales revenue, we expect the negative effects to continue into the fourth quarter of 2020.

~~During the three months ended September 30, 2020, the decrease in cost of sales was driven primarily by a decrease of $50 million in our TH segment, a decrease of $2 million in our BK segment,~~ a decrease of $2 million in our PLK ~~segment and a $3 million favorable FX Impact.~~segment. The ~~decrease~~increase in our TH segment was driven by ~~a decrease~~an increase in supply chain ~~cost of sales due to the decrease in system-wide sales, net of an increase in sales to retailers.~~sales.

During the nine months ended September 30, ~~2020,~~2021, the ~~decrease~~increase in cost of sales was driven ~~primarily~~ by ~~a decrease~~an increase of ~~$152~~$132 million in our TH segment and an unfavorable FX Impact of $73 million, partially offset by a decrease of ~~$4 million in our BK segment, a decrease of $2~~$3 million in our PLK ~~segment and a $20 million favorable FX Impact.~~segment. The ~~decrease~~increase in our TH segment was driven ~~primarily~~ by ~~a decrease of $161 million~~an increase in supply chain ~~cost of~~ sales ~~due to the decrease in system-wide sales, net of~~and an increase in sales to retailers, ~~and an increase~~partially offset by a decrease in bad debt expense. ~~The decrease in supply chain cost of sales was partially offset by a $9 million increase in Company restaurant cost of sales due to an increase in the number of Company restaurants.~~

Franchise and Property

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

During the three months ended September 30, ~~2020,~~2021, the ~~decrease~~increase in franchise and property revenues was driven by ~~a decrease~~an increase of ~~$38~~$30 million in our BK segment, an increase of $14 million in our TH segment, ~~a decrease of $20 million in our BK segment, and a $6 million unfavorable FX Impact, partially offset by~~ an increase of ~~$26~~$5 million in our PLK ~~segment.~~segment and a favorable FX Impact of $13 million. The ~~decrease~~increases were primarily driven by increases in royalties in all of our segments, and increases in rent in our TH segment, was primarily driven by decreases in royalties and rent from decreases in system-wide sales and rent relief provided to eligible franchisees during the current period. The decrease in our BK segment was primarily driven by a decrease in royalties as a result of ~~a decrease~~increases in system-wide sales. ~~The increase in our PLK segment was primarily driven by an increase in royalties as a result~~

Table of ~~an increase in system-wide sales.~~Contents

During the nine months ended September 30, ~~2020,~~2021, the ~~decrease~~increase in franchise and property revenues was driven by ~~a decrease~~an increase of ~~$157~~$125 million in our BK segment, an increase of $54 million in our TH segment, ~~a decrease of $121 million in our BK segment, and a $33 million unfavorable FX Impact, partially offset by~~ an increase of ~~$82~~$18 million in our PLK ~~segment.~~segment and a favorable FX Impact of $52 million. The ~~decrease~~increases were primarily driven by increases in royalties in all of our segments, and increases in rent in our TH segment, ~~was primarily driven by decreases in royalties and rent from decreases~~as a result of increases in system-wide sales and decreases in rent relief provided to eligible franchisees during the current period. The decrease in our BK segment was primarily driven by a decrease in royalties as a result of a decrease in system-wide sales. The increase in our PLK segment was primarily driven by an increase in royalties as a result of an increase in system-wide sales.

We cannot currently estimate the duration or future negative impact of the COVID-19 pandemic on our system-wide sales and, along with rent concessions remaining in place to eligible franchisees as a result of COVID-19, the impact on our franchise and property revenues. We expect these negative effects to continue into the fourth quarter of 2020.franchisees.

During the three months ended September 30, ~~2020,~~2021, the decrease in franchise and property expenses was driven by a decrease of $8 million in our BK segment and a decrease of $1 million in our TH segment, partially offset by an ~~increase~~unfavorable FX Impact of ~~$3 million~~$5 million. The decrease in our BK ~~segment.~~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, ~~2020,~~2021, the decrease in franchise and property expenses was driven by a decrease of ~~$14~~$31 million in our BK segment, a decrease of $9 million in our TH segment, and a $4decrease of $2 million ~~favorable FX Impact,~~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 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 September 30, 2021, the increase in advertising revenues was driven by an increase of $5$9 million in our TH segment, an increase of $3 million in our BK segment, an increase of $1 million in our PLK segment and a favorable FX Impact of $3 million. The increases in all of our segments were primarily driven by increases in system-wide sales.

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

During the three months ended September 30, 2021, the increase in advertising expenses was driven by an increase of $19 million in our TH segment, an increase of $4 million in our BK segment, an increase of $2 million in our PLK segment, and an unfavorable FX Impact of $3 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 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 marketing program in Canada.

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~~in our BK segment. Overall, the decrease was driven by a decrease in property expenses partially offset by an increase in bad debt expense.~~

~~Selling,~~ General and Administrative Expenses

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


		Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance						Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance
							$			%								$			%									$			%								$			%
				2020			2019			Favorable / (Unfavorable)					2020			2019			Favorable / (Unfavorable)						2021			2020			Favorable / (Unfavorable)					2021			2020			Favorable / (Unfavorable)
Segment SG&A:
Segment G&A:																								Segment G&A:
TH	TH	$	63		$	77		$	14		18.2	%	$	211		$	236		$	25		10.6	%	TH	$	27		$	20		$	(7)		(35.0)	%	$	77		$	65		$	(12)		(18.5)	%
BK	BK	142			159			17			10.7	%	422			449			27			6.0	%	BK	47			37			(10)			(27.0)	%	128			104			(24)			(23.1)	%
PLK	PLK	70			56			(14)			(25.0)	%	201			159			(42)			(26.4)	%	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	19			18			(1)			(5.6)	%	63			62			(1)			(1.6)	%	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	5			5			—			—	%	14			14			—			—	%	Depreciation and amortization	5			5			—			—	%	15			14			(1)			(7.1)	%
Corporate restructuring and tax advisory fees	Corporate restructuring and tax advisory fees	3			5			2			40.0	%	11			22			11			50.0	%	Corporate restructuring and tax advisory fees	4			3			(1)			(33.3)	%	8			11			3			27.3	%
Office centralization and relocation costs		—			—			—			—	%	—			6			6			100.0	%
Selling, general and administrative expenses		$	302		$	320		$	18		5.6	%	$	922		$	948		$	26		2.7	%

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

Segment ~~selling,~~ general and administrative expenses (“Segment SGG&A”) ~~include segment selling expenses, which~~ consist ~~primarily of advertising fund expenses, and segment general and administrative expenses, which are comprised~~ primarily of salary and employee-related costs for non-restaurant employees, professional fees, information technology systems, and general overhead for our corporate offices. Segment SGG&A excludes share-based compensation and non-cash incentive compensation expense, depreciation and amortization, and Corporate restructuring and tax advisory ~~fees,~~fees. The increase in Segment G&A for all segments during the three and ~~Office centralization~~nine months ended September 30, 2021 was primarily driven by higher salary and ~~relocation costs.~~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, ~~2020, the decrease in Segment SG&A in our TH and BK segments was primarily due to a decrease in advertising fund expenses. During the three and nine months ended September 30, 2020,~~2021, the increase in ~~Segment SG&A in our PLK segment was primarily due to an increase in advertising fund expenses resulting from an increase in advertising fund revenue.~~

~~During the three and nine months ended September 30, 2020,~~ share-based compensation and non-cash incentive compensation expense was ~~consistent~~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 ~~prior year.~~certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movement within our structure, including services related to significant tax reform legislation, regulations and related restructuring initiatives.

(Income) Loss from Equity Method Investments

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

The change in (income) loss from equity method investments during the three and nine months ended September 30, ~~2020~~2021 was primarily driven by ~~an increase~~a decrease in equity method investment net losses that we recognized during the current year, driven by the negative impact of the COVID-19 pandemic, and the non-recurrence of an $11 million non-cash dilution gain during 2019 from the issuance of additional shares in connection with a merger by one of our equity method investees.

year.

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Other Operating Expenses (Income), net

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			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	$	4	$	6	$	2	$	(1)	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	4		1		5		1		Litigation settlements (gains) and reserves, net	4		4		7		5
Net losses (gains) on foreign exchange	Net losses (gains) on foreign exchange	44		(35)		54		(38)		Net losses (gains) on foreign exchange	(23)		44		(58)		54
Other, net	Other, net	2		(2)		(2)		(6)		Other, net	1		2		—		(2)
Other operating expenses (income), net	Other operating expenses (income), net	$	54	$	(30)	$	59	$	(44)	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.

Interest Expense, net

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


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2020			2019			2020			2019				2021			2020			2021			2020
Interest expense, net	Interest expense, net	$	129		$	137		$	376		$	406		Interest expense, net	$	128		$	129		$	378		$	376
Weighted average interest rate on long-term debt	Weighted average interest rate on long-term debt	4.5		%	5.1		%	4.6		%	5.1		%	Weighted average interest rate on long-term debt	4.2		%	4.5		%	4.2		%	4.6		%

During the three and nine months ended September 30, ~~2020,~~2021, interest expense, net decreased primarily due to a decrease in the weighted average interest rate in the current year driven by the decrease in interest rates and the 2019 refinancing of our senior secured debt, partially offset by an increase in long-term debt.was consistent year-over-year.

Income Tax Expense

Our effective tax rate was ~~22.6%~~16.7% and ~~18.3%~~22.6% for the three months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively. Our effective tax rate was ~~higher primarily due~~impacted by changes to ~~changes in our~~the relative mix of our income from multiple tax jurisdictions ~~unfavorable movements in foreign exchange rates related to unremitted earnings~~ and ~~lower benefits from stock option exercises for~~ the ~~quarter.~~impact of 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 ~~9.2%~~7.7% and ~~21.4%~~9.2% for the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ 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)%~~9.5%. Based on the analysis of final guidance related to the Tax Cuts and Jobs Act (the "Tax Act") received during ~~this~~the 2020 period, a deferred tax asset was recorded. ~~The~~Our effective tax rate ~~for~~was also impacted by changes to the ~~nine months ended September 30, 2019 included a $37 million increase in~~relative mix of our income from multiple tax jurisdictions, the ~~provision for unrecognized~~impact of internal financing arrangements and the impact of excess tax benefits ~~related to a prior restructuring transaction that was not applicable to ongoing operations which increased the effective tax rate by 3.4% during the period.~~from equity-based compensation.

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Net Income

We reported net income of $329 million for the three months ended September 30, 2021, compared to net income of $223 million for the three months ended September 30, ~~2020, compared to net income of $351 million for the three months ended September 30, 2019.~~2020. The ~~decrease~~increase in net income is primarily due to a $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 ~~$84~~$11 million ~~unfavorable~~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 ~~$29~~$20 million ~~unfavorable~~favorable change from the impact of equity method investments, a ~~$43~~$7 million increase in PLK segment income, and a $3 million decrease in ~~TH segment~~Corporate restructuring and tax advisory fees. These factors were partially offset by a $21 million increase in income ~~a $9~~tax expense, an $11 million ~~decrease~~loss on early extinguishment of debt in ~~BK segment income, a $1~~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 $1$2 million increase in ~~depreciation and amortization. These factors were partially offset by a $14 million decrease in income tax expense, an $11 million increase in PLK segment income, an $8 million decrease in~~ interest expense, ~~net, the non-recurrence of $4 million in loss on early extinguishment of debt, and a $2 million decrease in Corporate restructuring and tax advisory fees.~~net. Amounts above include a total ~~unfavorable~~favorable FX Impact to net income of $5$40 million.

We reported net income of $611 million for the nine months ended September 30, 2020, compared to net income of $854 million for the nine months ended September 30, 2019. The decrease in net income is primarily due to a $231 million decrease in TH segment income, a $123 million decrease in BK segment income, a $103 million unfavorable change in the results from other operating expenses (income), net, a $41 million unfavorable change from the impact of equity method investments and a $1 million increase in share-based compensation and non-cash incentive compensation expense. These factors were partially offset by a $170 million decrease in income tax expense, a $35 million increase in PLK segment income, a $30 million decrease in interest expense, net, an $11 million decrease in Corporate restructuring and tax advisory fees, the non-recurrence of $6 million in Office Centralization and relocation costs, and the non-recurrence of $4 million in loss on early extinguishment of debt. Amounts above include a total unfavorable FX Impact to net income of $29 million.

~~While we cannot currently estimate the duration or future negative impact of the COVID-19 pandemic on our net income, we expect the negative effects to continue into the fourth quarter of 2020.~~

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 ~~incurred in connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively, and~~ 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 September 30,						Variance					Nine Months Ended September 30,						Variance						Three Months Ended September 30,						Variance					Nine Months Ended September 30,						Variance
							$			%								$			%									$			%								$			%
				2020			2019			Favorable / (Unfavorable)					2020			2019			Favorable / (Unfavorable)						2021			2020			Favorable / (Unfavorable)					2021			2020			Favorable / (Unfavorable)
Segment income:	Segment income:																							Segment income:
TH	TH	$	258		$	301		$	(43)		(14.1)	%	$	594		$	825		$	(231)		(27.9)	%	TH	$	278		$	258		$	20		7.6	%	$	738		$	594		$	144		24.1	%
BK	BK	245			254			(9)			(3.3)	%	605			728			(123)			(16.9)	%	BK	272			245			27			10.8	%	755			605			150			24.7	%
PLK	PLK	58			47			11			23.4	%	164			129			35			26.9	%	PLK	57			58			(1)			(2.6)	%	171			164			7			4.2	%
Adjusted EBITDA	Adjusted EBITDA	561			602			(41)			(6.6)	%	1,363			1,682			(319)			(18.9)	%	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	19			18			(1)			(5.6)	%	63			62			(1)			(1.6)	%	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	3			5			2			40.0	%	11			22			11			50.0	%	Corporate restructuring and tax advisory fees	4			3			(1)			(33.3)	%	8			11			3			27.3	%
Office centralization and relocation costs		—			—			—			NM		—			6			6			100.0	%
Impact of equity method investments (a)	Impact of equity method investments (a)	20			(9)			(29)			NM		42			1			(41)			NM		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	54			(30)			(84)			NM		59			(44)			(103)			NM		Other operating expenses (income), net	(16)			54			70			129.6	%	(50)			59			109			NM
EBITDA	EBITDA	465			618			(153)			(24.8)	%	1,188			1,635			(447)			(27.3)	%	EBITDA	583			465			118			25.4	%	1,613			1,188			425			35.8	%
Depreciation and amortization	Depreciation and amortization	48			47			(1)			(2.1)	%	139			139			—			—	%	Depreciation and amortization	50			48			(2)			(4.2)	%	150			139			(11)			(7.9)	%
Income from operations	Income from operations	417			571			(154)			(27.0)	%	1,049			1,496			(447)			(29.9)	%	Income from operations	533			417			116			27.8	%	1,463			1,049			414			39.5	%
Interest expense, net	Interest expense, net	129			137			8			5.8	%	376			406			30			7.4	%	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	—			4			4			NM		—			4			4			NM		Loss on early extinguishment of debt	11			—			(11)			NM		11			—			(11)			NM
Income tax expense	Income tax expense	65			79			14			17.7	%	62			232			170			73.3	%	Income tax expense	65			65			—			—	%	83			62			(21)			NM
Net income	Net income	$	223		$	351		$	(128)		(36.5)	%	$	611		$	854		$	(243)		(28.5)	%	Net income	$	329		$	223		$	106		47.5	%	$	991		$	611		$	380		62.2	%

NM - ~~Not Meaningful~~not meaningful

The ~~decrease~~increase in Adjusted EBITDA for the three and nine months ended September 30, 2020 reflects the decreases in segment income in our TH and BK segments, partially offset by an increase in segment income in our PLK segment. Segment income in our TH and BK segments for the three months ended September 30, ~~2020~~2021 reflects the increases in segment income in our BK and TH segments, partially offset by a decrease in our PLK segment, and includes ana favorable FX Impact of $15 million.

The increase ~~of $14 million and~~in Adjusted EBITDA for the nine months ended September 30, ~~2020~~2021 reflects the increases in segment income in all of our segments and includes a ~~decrease~~favorable FX Impact of ~~$18 million, related to the timing of advertising fund revenue and expenses.~~$50 million.

The ~~decrease~~increase in EBITDA for the three and nine months ended September 30, ~~2020~~2021 is primarily due to ~~decreases~~increases in segment income in our BK and TH ~~and BK~~ segments, ~~and unfavorable results~~favorable impact from other operating expenses (income), net, and favorable decrease from the impact of equity method investments, partially offset by an increase in ~~segment income~~share-based compensation and non-cash incentive compensation expense. The increase in ~~our PLK segment,~~EBITDA includes a ~~decrease in Corporate restructuring~~favorable FX Impact of $13 million and ~~tax advisory fees,~~$45 million for the three and ~~the non-recurrence of Office centralization and relocation costs in the~~ nine months ~~period.~~

While we cannot currently estimate the duration or future negative impact of the COVID-19 pandemic on our segment income, Adjusted EBITDA and EBITDA, we expect the negative effects to continue into the fourth quarter of 2020.

ended September 30, 2021, respectively.

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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 repurchase our 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 pay dividends on our common shares and make distributions on the Partnership exchangeable units. As a result of our borrowings, we are highly leveraged. Our liquidity requirements are significant, primarily due to debt service requirements.

As of September 30, ~~2020,~~2021, we had cash and cash equivalents of ~~$1,919~~$1,773 million, working capital of ~~$1,059~~$832 million and borrowing availability of $998 million under our senior secured revolving credit facility (the “Revolving Credit Facility”). ~~During the first quarter of 2020, we drew down the remaining availability of C$125 million under the TH Facility (defined below).~~ On ~~April 7, 2020,~~July 6, 2021, two of our subsidiaries (the “Borrowers”) ~~entered into an indenture (the “2020 5.75% Senior Notes Indenture”) in connection with the issuance of $500~~issued $800 million of ~~5.75%~~3.875% first lien senior secured notes due ~~April~~January 15, ~~2025~~2028 (the ~~“2020 5.75% Senior~~“Additional Notes”). No principal payments are due until maturity and interest is paid semi-annually. The ~~net proceeds from the offering of the 2020 5.75% Senior~~Additional Notes were ~~used for general corporate purposes.~~

~~Additionally, on October 5, 2020,~~issued as additional notes under the ~~Borrowers entered into an~~ indenture, dated as of September 24, 2019, (the ~~“2020 4.00%~~“2019 3.875% Senior Notes Indenture”) in connection with the issuance of $1,400 million of 4.00% second lien notes due October 15, 2030 (the “October 2020 4.00% Senior Notes”). No principal payments are due until maturity and interest is paid semi-annually. On October 16, 2020 the proceeds from the offering of the October 2020 4.00% Senior Notes were usedpursuant to ~~redeem $1,350 million of our existing $2,800 million 2017 5.00% Senior Notes (due October 15, 2025) and pay related redemption premiums, fees and expenses.~~

~~On October 14, 2020,~~which the Borrowers ~~entered into a purchase agreement relating to the sale of $1,500~~previously issued $750 million in aggregate principal amount of ~~4.00% second~~3.875% first lien senior secured notes due ~~October~~January 15, ~~2030~~2028 during 2019 (the ~~"November 2020 4.00%~~“2019 3.875% First Lien Senior ~~Notes"~~Notes” and together with the ~~October 2020 4.00% Senior~~Additional Notes, the ~~"2020 4.00%~~“3.875% First Lien Senior ~~Notes"~~Notes”)~~, which will be issued as additional notes under the 2020 4.00% Senior Notes Indenture.~~. The ~~closing of the offering of the November 2020 4.00% Senior Notes is expected to occur on or about November 2, 2020, subject to customary closing conditions. The November 2020 4.00% Senior~~Additional Notes are treated as a single series with the ~~October 2020 4.00%~~2019 3.875% First Lien Senior Notes and have the same terms for all purposes under the ~~2020 4.00%~~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 ~~November 2020 4.00% Senior~~Additional Notes ~~will be~~were used to redeem the remaining ~~$1,450~~$775 million principal amount outstanding of the 2017 ~~5.00%~~4.25% Senior Notes on July 15, 2021, plus any accrued and unpaid interest thereon, and pay related redemption premiums, fees and expenses.

On October 20, 2020, the Borrowers entered into a purchase agreement relating to the sale of $750 million in aggregate principal amount of 3.50% first lien notes due February 15, 2029 (the “2020 3.50% Senior Notes”). The closing of the offering of the 2020 3.50% Senior Notes is expected to occur on or about November 9, 2020, subject to customary closing conditions. The net proceeds from the offering of the 2020 3.50% Senior Notes will be used to redeem $725 million of our 4.25% first lien notes due 2024 and pay related redemption premiums, fees and expenses.

In September 2020, Partnership received an exchange notice for 6,757,692 Partnership exchange units (the “Exchangeable Units”). In accordance with the terms of the partnership agreement, Partnership chose to satisfy the exchange by repurchasing all of these Exchangeable Units on October 2, 2020 for approximately $380 million with available cash on hand. The cash and cash equivalents balance as of September 30, 2020 does not reflect (i) the issuance of the October 2020 4.00% Senior Notes on October 5, 2020, (ii) the redemption of $1,350 million of our existing $2,800 million 2017 5.00% Senior Notes on October 16, 2020, (iii) the repurchase of the Exchangeable Units on October 2, 2020, (iv) the expected issuance and use of proceeds of the November 2020 4.00% Senior Notes in November 2020, and (v) the expected issuance and use of proceeds of the 2020 3.50% Senior Notes in November 2020. Based on our current level of operations and available cash, we believe our cash flow from operations, combined with our availability under our Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, debt service requirements and capital spending over the next twelve months.

~~Our operating results substantially depend upon~~In March 2021, we announced our ~~franchisees’ sales volumes, restaurant profitability,~~plan to spend C$80 million in 2021 to support increased advertising and ~~financial stability. The financial impact~~digital advancements at the TH business and supplement advertising fund amounts contributed by franchisees. Most of ~~COVID-19~~our support has ~~had, and is expected to continue for an uncertain period to have, an adverse effect on our franchisees’ liquidity~~been spent as of September 30, 2021, and we ~~have worked closely with our franchisees around~~are on track to spend the ~~world to monitor and assist them with access to appropriate sources~~entire amount by the end of liquidity in order to sustain their businesses throughout this crisis. We provided cash flow support by extending loans to eligible BK franchisees in the U.S. during the second and third quarters of 2020 and by advancing certain cash payments to eligible TH franchisees in Canada during the second quarter of 2020. Also, during the nine months ended September 30, 2020, we offered a rent relief program for eligible TH franchisees in Canada and extended payment terms for eligible TH franchisees in Canada and the U.S. who lease property from us and also offered rent relief programs and extended payment terms for eligible BK franchisees in the U.S. and Canada who lease property from us. A2021.

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portion of these rent relief programs concluded during the three months ended September 30, 2020. We also temporarily deferred franchisee capital investment commitments for restaurant renovations and new restaurant development globally, based on individual circumstances of relevant markets and restaurant owners. These actions are expected to adversely affect our cash flow and financial results at least through the fourth quarter of 2020. In addition to these actions, we may decide to take additional steps to assist in the financial stabilization of our franchisees, which could impact our liquidity and our financial results.

On ~~August 2, 2016,~~July 28, 2021, our board of directors approved a share repurchase authorization that allows us to purchase up to ~~$300~~$1,000 million of our common shares ~~through July 2021. Repurchases under the Company’s authorization will be made in the open market or through privately negotiated transactions.~~ until August 10, 2023. On August 6, ~~2020,~~2021, we announced that the Toronto Stock Exchange (the “TSX”) had accepted the notice of our intention to renew the normal course issuer bid. Under this normal course issuer bid, we are permitted to repurchase up to ~~30,000,015~~30,382,519 common shares for the ~~one-year~~12-month period commencing on August ~~8, 2020~~10, 2021 and ending on August ~~7, 2021,~~9, 2022, or earlier if we complete the repurchases prior to such date. Share repurchases under the normal course issuer bid will be made through the facilities of the TSX, the New York Stock Exchange (the “NYSE”) and/or other exchanges and alternative Canadian or foreign trading systems, if eligible, or by such other means as may be permitted by the TSX and/or the NYSE under applicable law. Shareholders may obtain a copy of the prior notice, free of charge, by contacting us. During the three and nine months ended September 30, 2021, we repurchased and cancelled 2,843,562 RBI common shares on the open market for $182 million and as of September 30, 2021 had $818 million remaining under the authorization. Repurchases under the Company’s authorization will be made in the open market or through privately negotiated transactions.

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 September 30, ~~2020,~~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, ~~2017 5.00%~~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 September 30, ~~2020,~~2021, there was ~~$6,046~~$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

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average interest rate of ~~1.84%~~1.78%. Based on the amounts outstanding under the Term Loan Facilities and LIBOR as of September 30, ~~2020,~~2021, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately ~~$112~~$107 million in interest payments and $72 million in principal payments. In addition, based on LIBOR as of September 30, ~~2020,~~2021, net cash settlements that we expect to pay on our $4,000 million interest rate swap are estimated to be approximately ~~$91~~$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.

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 September 30, ~~2020,~~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 ~~share~~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.

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Senior Notes

The Borrowers are party to (i) the 2019 3.875% Senior Notes Indenture in connection with the issuance of the 3.875% First Lien Senior Notes, (ii) an indenture (the ~~“2017 4.25%~~“5.75% Senior Notes Indenture”) in connection with the issuance of ~~$1,500~~$500 million of ~~4.25%~~5.75% first lien senior notes due ~~May~~April 15, ~~2024~~2025 (the ~~“2017 4.25%~~“2020 5.75% Senior Notes”), ~~(ii)~~(iii) an indenture (the ~~“2019 3.875%~~“3.50% Senior Notes Indenture”) in connection with the issuance of $750 million of ~~3.875%~~3.50% first lien senior notes due ~~January~~February 15, ~~2028~~2029 (the “2019 3.875% Senior Notes”), (iii) an indenture (the “2017 5.00% Senior Notes Indenture”) in connection with the issuance of $2,800 million of 5.00% second lien senior notes due October 15, 2025 (the “2017 5.00%“2020 3.50% Senior Notes”), (iv) an indenture (the ~~“2019 4.375%~~“4.375% Senior Notes Indenture” ~~and together with the above indentures the "Senior Notes Indentures"~~) in connection with the issuance of $750 million of 4.375% second lien senior notes due January 15, 2028 (the “2019 4.375% Senior Notes”), and (v) ~~the 2020 5.75%~~an indenture (the “4.00% Senior Notes ~~Indenture described above.~~Indenture”) in connection with the issuance of $2,900 million of 4.00% second lien senior notes due October 15, 2030 (the “2020 4.00% Senior Notes”). No principal payments are due on the ~~2017 4.25%~~3.875% First Lien Senior Notes, ~~2019 3.875%~~2020 5.75% Senior Notes, ~~2017 5.00%~~2020 3.50% Senior Notes, 2019 4.375% Senior Notes and 2020 ~~5.75%~~4.00% Senior Notes until maturity and interest is paid semi-annually.

Based on the amounts outstanding at September 30, ~~2020,~~2021, required debt service for the next twelve months on all of the Senior Notes outstanding is approximately ~~$294~~$264 million in interest payments.

TH Facility

One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by four of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of September 30, ~~2020,~~2021, we had outstanding C$~~224~~217 million under the TH Facility with a weighted average interest rate of ~~1.88%~~1.83%.

Based on the amounts outstanding under the TH Facility as of September 30, ~~2020,~~2021, required debt service for the next twelve months is estimated to be approximately $3 million in interest payments and $4$9 million in principal payments.

Restrictions and Covenants

As of September 30, ~~2020,~~2021, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH Facility, and the Senior Notes Indentures.

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Cash Dividends

On October ~~2, 2020,~~5, 2021, we paid a dividend of ~~$0.52~~$0.53 per common share and Partnership made a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.52~~$0.53 per Partnership exchangeable unit.

Our board of directors has declared a cash dividend of ~~$0.52~~$0.53 per common share, which will be paid on January 5, ~~2021~~2022 to common shareholders of record on December 21, ~~2020.~~2021. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of ~~$0.52~~$0.53 per Partnership exchangeable unit, and the record date and payment date for distributions on Partnership exchangeable units are the same as the record date and payment date set forth above.

In addition, because we are a holding company, our ability to pay cash dividends on our common shares may be limited by restrictions under our debt agreements. Although we do not have a formal dividend policy, our board of directors may, subject to compliance with the covenants contained in our debt agreements and other considerations, determine to pay dividends in the future. We expect to pay all dividends from cash generated from our operations.

Outstanding Security Data

As of October ~~20, 2020,~~18, 2021, we had outstanding ~~303,902,641~~315,071,796 common shares and one special voting share. The special voting share is held by a trustee, entitling the trustee to that number of votes on matters on which holders of 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 the Company, holders of our common shares vote together as a single class with the special voting share except as otherwise provided by law. For information on our share-based compensation and our outstanding equity awards, see Note 1513 to the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the SEC and Canadian securities regulatory authorities on February ~~21, 2020.~~23, 2021.

There were ~~155,453,689~~145,269,936 Partnership exchangeable units outstanding as of October ~~20, 2020.~~18, 2021. During the nine months ended September 30, ~~2020,~~2021, Partnership exchanged ~~3,294,968~~9,843,402 Partnership exchangeable units pursuant to exchange notices received. Since December 12, 2015, the holders of Partnership exchangeable units have had the right to require Partnership to

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exchange all or any portion of such holder’s Partnership exchangeable units for our common shares at a ratio of one share for each Partnership exchangeable unit, subject to our right as the general partner of Partnership to determine to settle any such exchange for a cash payment in lieu of our common shares.

Comparative Cash Flows

Operating Activities

Cash provided by operating activities was ~~$608~~$1,255 million for the nine months ended September 30, ~~2020,~~2021, compared to ~~$911~~$608 million during the same period in the prior year. The ~~decrease~~increase in cash provided by operating activities was driven by ~~a decrease in TH segment income, a decrease in BK segment income, a decrease in~~ cash provided by ~~other long term assets and liabilities and an increase~~working capital in the current year compared to cash used for working ~~capital. These factors were partially offset by~~capital in the prior year, an increase in segment income in all of our segments, and a decrease in interest payments, partially offset by an increase ~~in PLK segment income, and a decrease~~ in income tax payments.

Investing Activities

Cash used for investing activities was ~~$33~~$69 million for the nine months ended September 30, ~~2020,~~2021, compared to $7$33 million ~~of cash provided from 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 ~~capital expenditures during the current period.~~net proceeds from disposal of assets, restaurant closures, and refranchisings.

Financing Activities

Cash used for financing activities was ~~$182~~$970 million for the nine months ended September 30, ~~2020,~~2021, compared to ~~$106~~$182 million during the same period in the prior year. The change in cash used for financing activities was driven primarily by a decrease in proceeds from the issuance of ~~Senior Notes, an increase in~~debt and cash used to repurchase RBI common ~~share dividends and distributions on Partnership exchangeable units, payments from derivatives~~shares in ~~2020 compared to proceeds from derivatives in 2019, and~~the current year. These factors were partially offset by a decrease in ~~proceeds from stock option exercises, partially offset by proceeds from the draw down on the remaining availability under the TH Facility in 2020~~repayments of debt and ~~the non-recurrence of the Term Loan B prepayments in 2019.~~

~~Contractual Obligations and Commitments~~

Except as described herein, there were no material changes to our contractual obligations, which are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC and Canadian securities regulatory authorities on February 21, 2020, other than the following.

During the first quarter of 2020, we drew down the remaining availability of C$125 million under the TH Facility. Additionally, on April 7, 2020, we obtained the proceeds from the 2020 5.75% Senior Notes. Also, on October 5, 2020, we issued the October 2020 4.00% Senior Notes and used the net proceeds to redeemed $1,350 million of our existing $2,800 million 2017 5.00% Senior Notes on October 16, 2020. Each of these terms is defined and described above. The following table provides contractual obligations under our Credit Facilities, senior notes and other long term debt as of September 30, 2020 and October 16, 2020, which reflects all of the debt transactions disclosed above but does not reflect the expected issuance of the November 2020 4.00% Senior Notes and the 2020 3.50% Senior Notes or redemption of the remaining $1,450 million principal amount outstanding of the 2017 5.00% Senior Notes and $725 million of the 4.25% First Lien Notes due 2024, which transactions have not closed as of the date of this report.

Payment Due by Period as of October 16, 2020
Contractual Obligations Total as of
September 30, 2020 Total Less Than
1 Year 1-3 Years 3-5 Years More Than
5 Years
(In millions)
Credit Facilities, including interest (a) $ 6,700 $ 6,700 $ 186 $ 386 $ 976 $ 5,152
Senior Notes, including interest (b) 7,818 8,092 285 566 2,465 4,776
Other long term debt 184 184 9 24 37 114

~~(a)We have estimated our interest payments through the maturity of our Credit Facilities based on LIBOR as of September 30, 2020.~~

~~(b)Amounts included herein for the Senior Notes exclude amounts for the Tim Hortons Notes.~~

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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 ~~21, 2020. Additionally, see the “COVID-19” section~~23, 2021.

Table of ~~Note 1 to the accompanying unaudited condensed consolidated financial statements for a discussion about the potential impact of the COVID-19 pandemic on asset impairment assessments.~~Contents

New Accounting Pronouncements

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes during the nine months ended September 30, ~~2020~~2021 to the disclosures made in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the SEC and Canadian securities regulatory authorities on February ~~21, 2020.~~

23, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was conducted under the supervision and with the participation of management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and Exchange Act Rules 15d-15(e)) as of September 30, ~~2020.~~2021. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of such date.

Internal Control Over Financial Reporting

The Company’s management, including the CEO and CFO, confirm there were no changes in the Company’s internal control over financial reporting during the three months ended September 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Special Note Regarding Forward-Looking Statements

Certain information contained in this report, including information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws. We refer to all of these as forward-looking statements. Forward-looking statements are forward-looking in nature and, accordingly, are subject to risks and uncertainties. These forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “target”, “potential” and other similar expressions and include, without limitation, statements regarding our expectations or beliefs regarding (i) the effects and continued impact of the COVID-19 pandemic on our results of operations, business, liquidity, prospects and ~~prospects~~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; ~~(iii) expected timing of debt refinancing transactions;~~ (iv) our ~~efforts~~goals with respect to ~~assist restaurant owners~~reduction in ~~maintaining liquidity and the impact of these programs on our future cash flow and financial results;~~greenhouse gas emissions; (v) ~~the amount and timing of additional Corporate restructuring and tax advisory fees related to the Tax Act and Office centralization and relocation costs; (vi)~~ certain tax matters, including ~~the~~our estimates with respect to tax matters and their impact ~~of the Tax Act~~ 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 the Company 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

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risks and uncertainties and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, among other things, risks related to: (1) our substantial indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our obligations; (2) global economic or other business conditions that may affect the desire or ability of our customers to purchase our products, ~~and supply chain,~~ such as the effects of the COVID-19 pandemic, inflationary pressures, high unemployment levels, declines in median income growth, consumer confidence and consumer discretionary spending and changes in consumer perceptions of dietary health and food safety; (3) our relationship with, and the success of, our franchisees and risks related to our fully franchised business model; (4) our franchisees’ financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising

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and ~~advertising~~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 ~~master~~ franchisees, ~~and~~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 ~~risks related to the complexity of the Tax Act and~~ our ability to accurately interpret and predict ~~its~~the impact of such changes or interpretations on our financial condition and results.

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

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the SEC and Canadian securities regulatory authorities on February ~~21, 2020,~~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

~~On June 30, 2020, a class action complaint was filed against Restaurant Brands International Inc., Restaurant Brands International Limited Partnership~~See Part I, Notes to Condensed Consolidated Financial Statements, Note 15, Commitment 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 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. We intend to vigorously defend against these lawsuits, but we are unable to predict the ultimate outcome of any of these cases.

Item 1A. Risk Factors

The below updates the risk ~~factor~~factors included in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the ~~“SEC”~~"SEC") on February ~~21, 2020.~~23, 2021.

~~Our results can be adversely affected by unforeseen events,~~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 ~~adverse~~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, ~~natural disasters, terrorist attacks~~which could disrupt our supply chain or ~~threats, pandemics, such as~~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 ~~COVID-19 pandemic,~~environment or to effectively respond to regulatory requirements concerning climate change or other ~~catastrophic events.~~

~~Unforeseen events, such as~~sustainable business practices can lead to adverse weather conditions, natural disasters or catastrophic events, can adversely impact restaurant sales. Natural disasters such as earthquakes, hurricanes, and severe adverse weather conditions and health pandemics whether occurring in Canada,publicity, diminish the ~~United States or abroad, can keep customers in the affected area from dining out, cause damage to or closure~~value of ~~restaurants~~our brands and result in ~~lost opportunities for~~an adverse effect on our ~~restaurants.~~

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread of COVID-19. These measures have adversely affected workforces, customers, consumer sentiment, economies and financial markets, and, along with decreased consumer spending, have led to an economic downturn in many of our markets. As a result of COVID-19, we and our franchisees have experienced significant store closures and instances of reduced store-level operations, including reduced operating hours and dining-room closures. During 2020, our restaurants in the U.S. and Canada closed dine-in operations, continuing to offer drive-thru, delivery and take-out where possible, sometimes with limited hours, several markets in Asia, Europe and Latin America closed all restaurants, and many other international markets also limited operations. As of the end of September, restaurants in most markets have reopened, many with limited operations. While certain markets have opened for dine-in guests, the capacity may be limited, and local conditions may lead to closures or increased limitations. As a result of COVID-19, restaurant traffic and system-wide sales have been significantly negatively impacted.business.

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~~Our operating results substantially depend upon~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Following are our ~~franchisees’ sales volumes, restaurant profitability,~~monthly share repurchases for the third quarter of fiscal year 2021:


Period	Total Number of Shares Purchased	Total Dollar Value of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs

July 1, 2021 - July 31, 2021	—	$	—	$	—	—	$	1,000,000,000
August 1, 2021 - August 31, 2021	1,828,884	117,255,898		64.11		1,828,884	882,744,102
September 1, 2021 - September 30, 2021	1,014,678	64,580,248		63.65		1,014,678	818,163,854
	2,843,562	$	181,836,146			2,843,562

(1)In August 2016, our Board of Directors authorized the repurchase of up to $300 million outstanding common shares for five years, none of which had been utilized. In July 2021, the Board of Directors extended and ~~financial stability. The impact~~expanded the authorization to repurchases of ~~COVID-19 has,~~up to $1.0 billion common shares through August 10, 2023 and ~~is expected to continue to have, an adverse effect on our franchisees’ liquidity.As a result, we provided cash flow support by extending loans to eligible BK franchisees~~the open market repurchases of the common shares listed in the ~~U.S. and advancing certain cash payments~~table above were made pursuant to eligible TH franchisees in Canada. For approximately 3,700 eligible locations where we have property control at Tim Hortons in Canada and Burger King in the United States and Canada, we temporarily converted our rent structure from a combination of fixed plus variable rent to 100% variable rent, which provides relief in the face of declining sales. In addition, we deferred rent payments for up to 45 days for certain other franchisees. These actions are expected to continue to adversely affect our cash flow and financial results in the upcoming quarter. In addition to these actions, we may decide to take additional steps to assist in the financial stabilization of our franchisees, which could impact our liquidity and our financial results. In addition, we delayed the capital expenditure obligations of our franchisees relating to new restaurants, remodels and significant equipment deployments, which could adversely affect our growth once the COVID-19 pandemic has passed. To the extent that our franchisees experience financial distress, it could negatively affect (i) our operating results as a result of delayed or reduced payments of royalties, advertising fund contributions and rents for properties we lease to them or claims under our lease guarantees, (ii) our future revenue, earnings and cash flow growth and (iii) our financial condition.

COVID-19 or other events could lead to delays or interruptions in the delivery of food or other supplies to our franchised restaurants arising from delays or restrictions on shipping and/or manufacturing, closures of supplier or distributor facilities or financial distress or insolvency of suppliers or distributors and also could lead to difficulties in maintaining appropriate staffing of restaurants. Food distributors and suppliers often operate with thin margins and therefore may be more vulnerable to governmental actions which result in significantly reduced activity or to general economic downturns. As of December 31, 2019, four distributors serviced approximately 92% of BK restaurants in the U.S. and five distributors serviced approximately 85% of PLK restaurants in the U.S. Consequently, our operations could be adversely affected if any of these distributors were unable to fulfill their responsibilities and we were unable to locate a substitute distributor in a timely manner. In addition, as COVID-19 may be transmitted through human contact, the risk or perceived risk of contracting COVID-19 could adversely affect the ability, or the cost, of staffing restaurants, which could be exacerbated to the extent that we or our franchisees have employees who test positive for the virus.

We cannot predict the duration or scope of the COVID-19 pandemic or when operations will cease to be affected by it. Furthermore, we cannot predict the effects that actual or threatened armed conflicts, terrorist attacks, efforts to combat terrorism or heightened security requirements will have on our future operations. Because a significant portion of our restaurant operating costs are fixed or semi-fixed in nature, the loss of sales during these periods hurts our and our franchisees’ operating margins and can result in restaurant operating losses and our loss of royalties. We expect the COVID-19 pandemic to negatively impact our financial results and based on the duration and scope, such impact could be material.

authorization.

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Item 6. Exhibits



Exhibit Number						Description

~~10.74~~						Purchase Agreement, dated as of September 16, 2020, among Morgan Stanley & Co., LLC, as representative of the Initial Purchaser (as defined therein), the Issuers (as defined therein) and the Guarantors (as defined therein).

~~10.75~~						Purchase Agreement, dated as of October 14, 2020, among Morgan Stanley & Co., LLC, as representative of the Initial Purchaser (as defined therein), the Issuers (as defined therein) and the Guarantors (as defined therein).

31.1						Certification of Chief Executive Officer of Restaurant Brands International Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Chief Financial Officer of Restaurant Brands International Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of Chief Executive Officer of Restaurant Brands International Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2						Certification of Chief Financial Officer of Restaurant Brands International Inc. 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 INC.

(Registrant)

Date: October ~~28, 2020~~25, 2021

By:

/s/ Matthew Dunnigan

Name:

Matthew Dunnigan

Title:

Chief Financial Officer
(principal financial officer)
(duly authorized officer)

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		Page

PART I – Financial Information
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2927
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4441
Item 4.	Controls and Procedures	4441

PART II – Other Information
Item 1.	Legal Proceedings	4642
Item 1A.	Risk Factors	4642
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	4844
	Signatures	4945


			Payment Due by Period as of October 16, 2020
Contractual Obligations	Total as of September 30, 2020		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
			(In millions)
Credit Facilities, including interest (a)	$	6,700	$	6,700	$	186	$	386	$	976	$	5,152
Senior Notes, including interest (b)	7,818		8,092		285		566		2,465		4,776
Other long term debt	184		184		9		24		37		114