Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 22, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | QSP | |
Entity Registrant Name | Restaurant Brands International Limited Partnership | |
Entity Central Index Key | 0001618755 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Partnership Exchangeable Units | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 207,380,043 | |
Class A common units | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 202,006,067 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 902 | $ 913 | $ 913 | $ 821 | $ 1,097 |
Accounts and notes receivable, net of allowance of $14 and $14, respectively | 441 | 452 | 452 | ||
Inventories, net | 74 | 75 | 75 | ||
Prepaids and other current assets | 63 | 60 | 60 | ||
Total current assets | 1,480 | 1,500 | 1,500 | ||
Property and equipment, net of accumulated depreciation and amortization of $645 and $704, respectively | 2,011 | 2,022 | 1,996 | ||
Operating lease assets | 1,148 | 1,143 | |||
Intangible assets, net | 10,427 | 10,330 | 10,463 | ||
Goodwill | 5,555 | 5,486 | 5,486 | ||
Net investment in property leased to franchisees | 50 | 54 | 54 | ||
Other assets, net | 622 | 642 | 642 | ||
Total assets | 21,293 | 21,177 | 20,141 | ||
Current liabilities: | |||||
Accounts and drafts payable | 451 | 513 | 513 | ||
Other accrued liabilities | 689 | 637 | |||
Gift card liability | 112 | 167 | 167 | ||
Current portion of long term debt and finance leases | 94 | 91 | 91 | ||
Total current liabilities | 1,346 | 1,522 | 1,408 | ||
Term debt, net of current portion | 11,747 | 11,758 | 11,823 | ||
Finance leases, net of current portion | 287 | 288 | |||
Finance leases, net of current portion | 226 | ||||
Operating lease liabilities, net of current portion | 1,046 | 1,028 | |||
Other liabilities, net | 1,531 | 1,415 | 1,547 | ||
Deferred income taxes, net | 1,563 | 1,527 | 1,519 | ||
Total liabilities | 17,520 | 17,538 | 16,523 | ||
Partners’ capital: | |||||
Accumulated other comprehensive income (loss) | (1,389) | (1,437) | (1,437) | ||
Total Partners’ capital | 3,771 | 3,616 | |||
Noncontrolling interests | 2 | 2 | 2 | ||
Total equity | 3,773 | 3,639 | 3,618 | 4,242 | 4,561 |
Total liabilities and equity | 21,293 | 21,177 | 20,141 | ||
Class A common units | |||||
Partners’ capital: | |||||
Class A common units; 202,006,067 issued and outstanding at March 31, 2019 and December 31, 2018 | 4,423 | 4,323 | |||
Total equity | 4,423 | 4,323 | 4,118 | 4,168 | |
Partnership Exchangeable Units | |||||
Partners’ capital: | |||||
Partnership exchangeable units; 207,382,401 issued and outstanding at March 31, 2019; 207,523,591 issued and outstanding at December 31, 2018 | 737 | $ 739 | 730 | ||
Total equity | $ 737 | $ 730 | $ 1,189 | $ 1,276 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance for accounts and notes receivable | $ 14 | $ 14 |
Property and equipment, accumulated depreciation and amortization | $ 645 | $ 704 |
Class A common units | ||
Class A common units, issued (shares) | 202,006,067 | 202,006,067 |
Class A common units, outstanding (shares) | 202,006,067 | 202,006,067 |
Partnership Exchangeable Units | ||
Partnership exchangeable units, issued (shares) | 207,382,401 | 207,523,591 |
Partnership exchangeable units, outstanding (shares) | 207,382,401 | 207,523,591 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Revenues | $ 1,266 | $ 1,254 |
Operating costs and expenses: | ||
Cost of sales | 406 | 429 |
Franchise and property expenses | 133 | 104 |
Selling, general and administrative expenses | 312 | 301 |
(Income) loss from equity method investments | (2) | (14) |
Other operating expenses (income), net | (17) | 13 |
Total operating costs and expenses | 832 | 833 |
Income from operations | 434 | 421 |
Interest expense, net | 132 | 140 |
Income before income taxes | 302 | 281 |
Income tax expense | 56 | 2 |
Net income | 246 | 279 |
Net income attributable to noncontrolling interests | 0 | 0 |
Net income attributable to common unitholders | 246 | 279 |
Class A common units | ||
Operating costs and expenses: | ||
Net income | 135 | 148 |
Net income attributable to common unitholders | $ 135 | $ 148 |
Earnings per unit - basic and diluted | ||
Earnings per unit - basic and diluted (in usd per share) | $ 0.67 | $ 0.73 |
Weighted average units outstanding - basic and diluted | ||
Weighted average units outstanding - basic and diluted (shares) | 202 | 202 |
Partnership Exchangeable Units | ||
Operating costs and expenses: | ||
Net income | $ 111 | $ 131 |
Net income attributable to common unitholders | $ 111 | $ 131 |
Earnings per unit - basic and diluted | ||
Earnings per unit - basic and diluted (in usd per share) | $ 0.53 | $ 0.60 |
Weighted average units outstanding - basic and diluted | ||
Weighted average units outstanding - basic and diluted (shares) | 208 | 218 |
Sales | ||
Revenues: | ||
Sales | $ 522 | $ 548 |
Royalty, Property Revenue, and Franchisor | ||
Revenues: | ||
Revenues | $ 744 | $ 706 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 246 | $ 279 |
Foreign currency translation adjustment | 159 | (217) |
Net change in fair value of net investment hedges, net of tax of $26 and $(9) | (76) | 3 |
Net change in fair value of cash flow hedges, net of tax of $12 and $(9) | (34) | 25 |
Amounts reclassified to earnings of cash flow hedges, net of tax of $0 and $(2) | (1) | 6 |
Other comprehensive income (loss) | 48 | (183) |
Comprehensive income (loss) | 294 | 96 |
Comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Comprehensive income (loss) attributable to common unitholders | $ 294 | $ 96 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Tax effect on change in fair value of investment hedges | $ 26 | $ (9) |
Tax effect of changes in fair value of cash flow hedges | 12 | (9) |
Tax effect on amounts reclassified to earnings of cash flow hedges | $ 0 | $ (2) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity - USD ($) $ in Millions | Total | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Class A common units | Partnership Exchangeable Units |
Beginning Balance Class A, shares at Dec. 31, 2017 | 202,006,067 | ||||
Beginning balances at Dec. 31, 2017 | $ 4,561 | $ (884) | $ 1 | $ 4,168 | $ 1,276 |
Beginning Balance Partnership exchangeable units, shares at Dec. 31, 2017 | 217,708,924 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Distributions declared on Class A common units ($0.63 per unit) | (112) | (112) | |||
Distributions declared on partnership exchangeable units ($0.50 per unit) | (98) | $ (98) | |||
Exchange of Partnership exchangeable units for RBI common shares | 0 | 2 | $ (2) | ||
Exchange of Partnership exchangeable units for RBI common shares, shares | (29,432) | ||||
Capital contribution from RBI Inc. | 44 | 44 | |||
Restaurant VIE contributions (distributions) | 1 | 1 | |||
Net income | 279 | 0 | $ 148 | $ 131 | |
Other comprehensive income (loss) | (183) | (183) | |||
Ending Balance Class A, shares at Mar. 31, 2018 | 202,006,067 | ||||
Ending balances at Mar. 31, 2018 | 4,242 | (1,067) | 2 | $ 4,118 | $ 1,189 |
Ending Balance Partnership exchangeable units, shares at Mar. 31, 2018 | 217,679,492 | ||||
Beginning Balance Class A, shares at Dec. 31, 2018 | 202,006,067 | ||||
Beginning balances at Dec. 31, 2018 | 3,618 | (1,437) | 2 | $ 4,323 | $ 730 |
Beginning balances (Accounting Standards Update 2016-02) at Dec. 31, 2018 | 21 | ||||
Beginning Balance Partnership exchangeable units, shares at Dec. 31, 2018 | 207,523,591 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Distributions declared on Class A common units ($0.63 per unit) | (127) | (127) | |||
Distributions declared on partnership exchangeable units ($0.50 per unit) | (104) | $ (104) | |||
Exchange of Partnership exchangeable units for RBI common shares | 0 | 9 | $ (9) | ||
Exchange of Partnership exchangeable units for RBI common shares, shares | (141,190) | ||||
Capital contribution from RBI Inc. | 71 | 71 | |||
Net income | 246 | 0 | $ 135 | $ 111 | |
Other comprehensive income (loss) | 48 | 48 | |||
Ending Balance Class A, shares at Mar. 31, 2019 | 202,006,067 | ||||
Ending balances at Mar. 31, 2019 | $ 3,773 | $ (1,389) | $ 2 | $ 4,423 | $ 737 |
Ending Balance Partnership exchangeable units, shares at Mar. 31, 2019 | 207,382,401 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends per common share (in dollars per share) | $ 0.63 | $ 0.55 |
Distributions declared on Partnership exchangeable units (in dollars per share) | $ 0.50 | $ 0.45 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 246 | $ 279 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Depreciation and amortization | 47 | 47 |
Amortization of deferred financing costs and debt issuance discount | 7 | 7 |
(Income) loss from equity method investments | (2) | (14) |
Loss (gain) on remeasurement of foreign denominated transactions | (15) | 16 |
Net (gains) losses on derivatives | (20) | 2 |
Share-based compensation expense | 22 | 13 |
Deferred income taxes | 38 | (19) |
Other | 3 | 4 |
Changes in current assets and liabilities, excluding acquisitions and dispositions: | ||
Accounts and notes receivable | 14 | 15 |
Inventories and prepaids and other current assets | (13) | (7) |
Accounts and drafts payable | (69) | (73) |
Other accrued liabilities and gift card liability | (126) | (374) |
Tenant inducements paid to franchisees | 0 | (2) |
Other long-term assets and liabilities | 22 | (36) |
Net cash provided by (used for) operating activities | 154 | (142) |
Cash flows from investing activities: | ||
Payments for property and equipment | (5) | (7) |
Net proceeds from disposal of assets, restaurant closures, and refranchisings | 4 | 2 |
Settlement/sale of derivatives, net | 11 | 3 |
Other investing activities, net | 1 | 4 |
Net cash provided by (used for) investing activities | 11 | 2 |
Cash flows from financing activities: | ||
Repayments of long-term debt and finance leases | (23) | (22) |
Distributions on Class A common and Partnership exchangeable units | (207) | (97) |
Distributions to RBI for payments in connection with redemption of preferred shares | 0 | (34) |
Capital contribution from RBI Inc. | 42 | 25 |
Other financing activities, net | 6 | 0 |
Net cash (used for) provided by financing activities | (182) | (128) |
Effect of exchange rates on cash and cash equivalents | 6 | (8) |
Increase (decrease) in cash and cash equivalents | (11) | (276) |
Cash and cash equivalents at beginning of period | 913 | 1,097 |
Cash and cash equivalents at end of period | 902 | 821 |
Supplemental cash flow disclosures: | ||
Interest paid | 140 | 129 |
Income taxes paid | $ 45 | $ 304 |
Basis of Presentation and Conso
Basis of Presentation and Consolidation | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | 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 22, 2019. The Financial Statements include our accounts and the accounts of entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. All material intercompany balances and transactions have been eliminated in consolidation. Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method. We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. Our maximum exposure to loss resulting from involvement with VIEs is attributable to accounts and notes receivable balances, outstanding loan guarantees and future lease payments, where applicable. As our franchise and master franchise arrangements provide the franchise and master franchise entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE. Tim Hortons has historically entered into certain arrangements in which an operator acquires the right to operate a restaurant, but Tim Hortons owns the restaurant’s assets. We perform an analysis to determine if the legal entity in which operations are conducted is a VIE and consolidate a VIE entity if we also determine Tim Hortons is the entity’s primary beneficiary (“Restaurant VIEs”). As of March 31, 2019 and December 31, 2018 , we determined that we are the primary beneficiary of 18 and 17 Restaurant VIEs, respectively, and accordingly, have consolidated the results of operations, assets and liabilities, and cash flows of these Restaurant VIEs in our Financial Statements. Material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The preparation of consolidated financial statements in conformity with U.S. GAAP and related rules and regulations of the SEC requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. Certain prior year amounts in the accompanying Financial Statements and notes to the Financial Statements have been reclassified in order to be comparable with the current year classifications. These consist of the reclassification of $2 million from changes in Other long-term assets and liabilities in the Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2018 to Tenant inducements paid to franchisees. These reclassifications had no effect on previously reported net income. |
Description of Business and Org
Description of Business and Organization | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Organization | Description of Business and Organization Restaurant Brands International Limited Partnership (“Partnership”, “we”, “us” or “our”) was formed on August 25, 2014 as a general partnership and was registered on October 27, 2014 as a limited partnership in accordance with the laws of the Province of Ontario. We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons ® brand (“Tim Hortons” or “TH”), fast food hamburgers principally under the Burger King ® brand (“Burger King” or “BK”), and chicken under the Popeyes ® brand (“Popeyes” or “PLK”). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of March 31, 2019 , we franchised or owned 4,866 Tim Hortons restaurants, 17,823 Burger King restaurants, and 3,120 Popeyes restaurants, for a total of 25,809 restaurants, and operate in more than 100 countries and U.S. territories. Approximately 100% of current system-wide restaurants are franchised. We are a subsidiary of Restaurant Brands International Inc. (“RBI”). RBI is our sole general partner, and as such, RBI has the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership in accordance with the partnership agreement of Partnership (“partnership agreement”) and applicable laws. All references to “$” or “dollars” are to the currency of the United States unless otherwise indicated. All references to “Canadian dollars” or “C$” are to the currency of Canada unless otherwise indicated. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Lease Accounting – In February 2016, the Financial Accounting Standard Board (the “FASB”) issued new guidance on leases. We adopted this new guidance on January 1, 2019. See Note 4, Leases , for further information about our transition to this new lease accounting standard. Goodwill Impairment – In January 2017, the FASB issued guidance to simplify how an entity measures goodwill impairment by removing the second step of the two-step quantitative goodwill impairment test. An entity will no longer be required to perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured at the amount by which the carrying value exceeds the fair value of a reporting unit; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendment requires prospective adoption and is effective commencing in 2020 with early adoption permitted. The adoption of this new guidance will not have a material impact on our Financial Statements. Reclassification of Certain Tax Effects – In February 2018, the FASB issued guidance which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for the tax effects of certain items within accumulated other comprehensive income (loss). The amendment is effective commencing in 2019 with early adoption permitted. The adoption of this new guidance did not have a material impact on our Financial Statements. Share-based payment arrangements with nonemployees – In June 2018, the FASB issued guidance which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendment is effective commencing in 2019 with early adoption permitted. The adoption of this new guidance did not have a material impact on our Financial Statements. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases As of March 31, 2019 , we leased or subleased 5,339 restaurant properties to franchisees and 155 non-restaurant properties to third parties under operating leases and direct financing leases where we are the lessor. Initial lease terms generally range from 10 to 20 years. Most leases to franchisees provide for fixed monthly payments and many provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent, determined as a percentage of sales, generally when annual sales exceed specified levels. Lessees typically bear the cost of maintenance, insurance and property taxes. We lease land, buildings, equipment, office space and warehouse space. Land and building leases generally have an initial term of 10 to 30 years, while land-only lease terms can extend longer, and most leases provide for fixed monthly payments. Many of these leases provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent payments, determined as a percentage of sales, generally when annual sales exceed specified levels. Most leases also obligate us to pay the cost of maintenance, insurance and property taxes. We transitioned to FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), from ASC Topic 840, Leases (the “Previous Standard”) on January 1, 2019 on a modified retrospective basis using the effective date transition method. Our Financial Statements reflect the application of ASC 842 guidance beginning in 2019, while our consolidated financial statements for prior periods were prepared under the guidance of the Previous Standard. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than 12 months, amends various other aspects of accounting for leases by lessees and lessors, and requires enhanced disclosures. Our transition to ASC 842 resulted in the gross presentation of property tax and maintenance expenses and related lessee reimbursements as franchise and property expenses and franchise and property revenues, respectively. These expenses and reimbursements were presented on a net basis under the Previous Standard. In connection with our transition to ASC 842, we elected the package of practical expedients under which we did not reassess the classification of our existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. We also elected lessee and lessor practical expedients to not separate non-lease components comprised of maintenance from lease components for real estate leases that commenced prior to our transition to ASC 842, as well as for leases that commence or that are modified subsequent to our transition to ASC 842. We did not elect the practical expedient that permitted a reassessment of lease terms for existing leases. Financial Statement Impact of Transition to ASC 842 Transition Impact on January 1, 2019 Condensed Consolidated Balance Sheet Our transition to ASC 842 represents a change in accounting principle. The $21 million cumulative effect of our transition to ASC 842 is reflected as an adjustment to January 1, 2019 Partners' capital. Our transition to ASC 842 resulted in the following adjustments to our condensed consolidated balance sheet as of January 1, 2019 (in millions): As Reported Total Adjusted December 31, 2018 Adjustments January 1, 2019 ASSETS Current assets: Cash and cash equivalents $ 913 $ — $ 913 Accounts and notes receivable, net 452 — 452 Inventories, net 75 — 75 Prepaids and other current assets 60 — 60 Total current assets 1,500 — 1,500 Property and equipment, net 1,996 26 (a) 2,022 Operating lease assets — 1,143 (b) 1,143 Intangible assets, net 10,463 (133 ) (c) 10,330 Goodwill 5,486 — 5,486 Net investment in property leased to franchisees 54 — 54 Other assets, net 642 — 642 Total assets $ 20,141 $ 1,036 $ 21,177 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 513 $ — $ 513 Other accrued liabilities 637 114 (e) 751 Gift card liability 167 — 167 Current portion of long term debt and finance leases 91 — 91 Total current liabilities 1,408 114 1,522 Term debt, net of current portion 11,823 (65 ) (f) 11,758 Finance leases, net of current portion 226 62 (f) 288 Operating lease liabilities, net of current portion — 1,028 (g) 1,028 Other liabilities, net 1,547 (132 ) (d) 1,415 Deferred income taxes, net 1,519 8 (h) 1,527 Total liabilities 16,523 1,015 17,538 Partners' capital: Class A common units 4,323 12 (i) 4,335 Partnership exchangeable units 730 9 (i) 739 Accumulated other comprehensive income (loss) (1,437 ) — (1,437 ) Total Partners' capital 3,616 21 3,637 Noncontrolling interests 2 — 2 Total equity 3,618 21 3,639 Total liabilities and equity $ 20,141 $ 1,036 $ 21,177 (a) Represents the net change in assets recorded in connection with build-to-suit leases. (b) Represents the capitalization of operating lease right-of-use (“ROU”) assets equal to the amount of recognized operating lease liability, adjusted by the net carrying amounts of related favorable lease assets and unfavorable lease liabilities in which we are the lessee and straight-line rent accruals, which were reclassified to operating lease ROU assets. (c) Represents the net carrying amount of favorable lease assets associated with leases in which we are the lessee, which have been reclassified to operating lease ROU assets. (d) Represents the net carrying amount of unfavorable lease liabilities associated with leases in which we are the lessee and $64 million of straight-line rent accruals which have been reclassified to operating lease ROU assets. (e) Represents the current portion of operating lease liabilities. (f) Represents the net change in liabilities recorded in connection with build-to-suit leases. (g) Represents the recognition of operating lease liabilities, net of current portion. (h) Represents the net tax effects of the adjustments noted above, with a corresponding adjustment to Partners' capital. (i) Represents net change in assets and liabilities recorded in connection with built-to-suit leases and the tax effects of adjustments noted above. Changes to Lease Accounting Significant Accounting Policies Under ASC 842 In all leases, whether we are the lessor or lessee, we define lease term as the noncancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of the economic factors relevant to the lessee. The noncancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract. Lessor Accounting We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term and property revenue is presented net of any related sales tax. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. We account for reimbursements of maintenance and property tax costs paid to us by lessees as variable lease payment property revenue. We also have net investments in properties leased to franchisees, which met the criteria of direct financing leases under the Previous Standard. Investments in direct financing leases are recorded on a net basis, consisting of the gross investment and estimated residual value in the lease, less unearned income. Unearned income on direct financing leases is recognized over the lease term yielding a constant periodic rate of return on the net investment in the lease. We do not remeasure the net investment in a direct financing lease unless the lease is modified and that modification is not accounted for as a separate contract. We recognize variable lease payment income for operating and direct financing leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Lessee Accounting In leases where we are the lessee, we recognize a ROU asset and lease liability at lease commencement, which is measured by discounting lease payments using our incremental borrowing rate applicable to the lease term and currency of the lease as the discount rate. Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term. A finance lease ROU asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. ROU assets are assessed for impairment in accordance with our long-lived asset impairment policy. We reassess lease classification and remeasure ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate contract or upon certain other events that require reassessment in accordance with ASC 842. Maintenance and property tax expenses are accounted for on an accrual basis as variable lease cost. We recognize variable lease cost for operating and finance leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Partnership as Lessor Assets leased to franchisees and others under operating leases where we are the lessor and which are included within our property and equipment, net are as follows (in millions): As of March 31, 2019 Land $ 912 Buildings and improvements 1,127 Restaurant equipment 18 2,057 Accumulated depreciation and amortization (415 ) Property and equipment leased, net $ 1,642 Our net investment in direct financing leases is as follows (in millions): As of March 31, 2019 Future rents to be received: Future minimum lease receipts $ 57 Contingent rents (a) 25 Estimated unguaranteed residual value 16 Unearned income (32 ) 66 Current portion included within accounts receivables (16 ) Net investment in property leased to franchisees $ 50 (a) Amounts represent estimated contingent rents recorded in connection with the acquisition method of accounting. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three months ended March 31, 2019 Lease income - operating leases Minimum lease payments $ 111 Variable lease payments 84 Amortization of favorable and unfavorable income lease contracts, net 2 Subtotal - lease income from operating leases 197 Earned income on direct financing leases 2 Total property revenues $ 199 Partnership as Lessee Lease cost and other information associated with these lease commitments is as follows (in millions): Lease Cost (Income) Three months ended March 31, 2019 Operating lease cost $ 53 Operating lease variable lease cost 50 Finance lease cost: Amortization of right-of-use assets 7 Interest on lease liabilities 5 Sublease income (155 ) Total lease cost (income) $ (40 ) Lease Term and Discount Rate Weighted-average remaining lease term (in years): Operating leases 11.3 years Finance leases 11.2 years Weighted-average discount rate: Operating leases 7.6 % Finance leases 6.6 % Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 47 Operating cash flows from finance leases $ 5 Financing cash flows from finance leases $ 7 Right-of-use assets obtained in exchange for new finance lease obligations $ 1 Right-of-use assets obtained in exchange for new operating lease obligations $ 30 Maturity Analysis As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. As of December 31, 2018, future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating 2019 $ 14 $ 416 $ 38 $ 183 2020 10 388 36 172 2021 7 360 34 158 2022 5 331 33 145 2023 5 306 30 130 Thereafter 19 1,704 201 831 Total minimum receipts / payments $ 60 $ 3,505 372 $ 1,619 Less amount representing interest (125 ) Present value of minimum finance lease payments 247 Current portion of finance lease obligation (21 ) Long-term portion of finance lease obligation $ 226 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,290 million due in the future under non-cancelable subleases. |
Leases | Leases As of March 31, 2019 , we leased or subleased 5,339 restaurant properties to franchisees and 155 non-restaurant properties to third parties under operating leases and direct financing leases where we are the lessor. Initial lease terms generally range from 10 to 20 years. Most leases to franchisees provide for fixed monthly payments and many provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent, determined as a percentage of sales, generally when annual sales exceed specified levels. Lessees typically bear the cost of maintenance, insurance and property taxes. We lease land, buildings, equipment, office space and warehouse space. Land and building leases generally have an initial term of 10 to 30 years, while land-only lease terms can extend longer, and most leases provide for fixed monthly payments. Many of these leases provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent payments, determined as a percentage of sales, generally when annual sales exceed specified levels. Most leases also obligate us to pay the cost of maintenance, insurance and property taxes. We transitioned to FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), from ASC Topic 840, Leases (the “Previous Standard”) on January 1, 2019 on a modified retrospective basis using the effective date transition method. Our Financial Statements reflect the application of ASC 842 guidance beginning in 2019, while our consolidated financial statements for prior periods were prepared under the guidance of the Previous Standard. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than 12 months, amends various other aspects of accounting for leases by lessees and lessors, and requires enhanced disclosures. Our transition to ASC 842 resulted in the gross presentation of property tax and maintenance expenses and related lessee reimbursements as franchise and property expenses and franchise and property revenues, respectively. These expenses and reimbursements were presented on a net basis under the Previous Standard. In connection with our transition to ASC 842, we elected the package of practical expedients under which we did not reassess the classification of our existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. We also elected lessee and lessor practical expedients to not separate non-lease components comprised of maintenance from lease components for real estate leases that commenced prior to our transition to ASC 842, as well as for leases that commence or that are modified subsequent to our transition to ASC 842. We did not elect the practical expedient that permitted a reassessment of lease terms for existing leases. Financial Statement Impact of Transition to ASC 842 Transition Impact on January 1, 2019 Condensed Consolidated Balance Sheet Our transition to ASC 842 represents a change in accounting principle. The $21 million cumulative effect of our transition to ASC 842 is reflected as an adjustment to January 1, 2019 Partners' capital. Our transition to ASC 842 resulted in the following adjustments to our condensed consolidated balance sheet as of January 1, 2019 (in millions): As Reported Total Adjusted December 31, 2018 Adjustments January 1, 2019 ASSETS Current assets: Cash and cash equivalents $ 913 $ — $ 913 Accounts and notes receivable, net 452 — 452 Inventories, net 75 — 75 Prepaids and other current assets 60 — 60 Total current assets 1,500 — 1,500 Property and equipment, net 1,996 26 (a) 2,022 Operating lease assets — 1,143 (b) 1,143 Intangible assets, net 10,463 (133 ) (c) 10,330 Goodwill 5,486 — 5,486 Net investment in property leased to franchisees 54 — 54 Other assets, net 642 — 642 Total assets $ 20,141 $ 1,036 $ 21,177 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 513 $ — $ 513 Other accrued liabilities 637 114 (e) 751 Gift card liability 167 — 167 Current portion of long term debt and finance leases 91 — 91 Total current liabilities 1,408 114 1,522 Term debt, net of current portion 11,823 (65 ) (f) 11,758 Finance leases, net of current portion 226 62 (f) 288 Operating lease liabilities, net of current portion — 1,028 (g) 1,028 Other liabilities, net 1,547 (132 ) (d) 1,415 Deferred income taxes, net 1,519 8 (h) 1,527 Total liabilities 16,523 1,015 17,538 Partners' capital: Class A common units 4,323 12 (i) 4,335 Partnership exchangeable units 730 9 (i) 739 Accumulated other comprehensive income (loss) (1,437 ) — (1,437 ) Total Partners' capital 3,616 21 3,637 Noncontrolling interests 2 — 2 Total equity 3,618 21 3,639 Total liabilities and equity $ 20,141 $ 1,036 $ 21,177 (a) Represents the net change in assets recorded in connection with build-to-suit leases. (b) Represents the capitalization of operating lease right-of-use (“ROU”) assets equal to the amount of recognized operating lease liability, adjusted by the net carrying amounts of related favorable lease assets and unfavorable lease liabilities in which we are the lessee and straight-line rent accruals, which were reclassified to operating lease ROU assets. (c) Represents the net carrying amount of favorable lease assets associated with leases in which we are the lessee, which have been reclassified to operating lease ROU assets. (d) Represents the net carrying amount of unfavorable lease liabilities associated with leases in which we are the lessee and $64 million of straight-line rent accruals which have been reclassified to operating lease ROU assets. (e) Represents the current portion of operating lease liabilities. (f) Represents the net change in liabilities recorded in connection with build-to-suit leases. (g) Represents the recognition of operating lease liabilities, net of current portion. (h) Represents the net tax effects of the adjustments noted above, with a corresponding adjustment to Partners' capital. (i) Represents net change in assets and liabilities recorded in connection with built-to-suit leases and the tax effects of adjustments noted above. Changes to Lease Accounting Significant Accounting Policies Under ASC 842 In all leases, whether we are the lessor or lessee, we define lease term as the noncancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of the economic factors relevant to the lessee. The noncancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract. Lessor Accounting We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term and property revenue is presented net of any related sales tax. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. We account for reimbursements of maintenance and property tax costs paid to us by lessees as variable lease payment property revenue. We also have net investments in properties leased to franchisees, which met the criteria of direct financing leases under the Previous Standard. Investments in direct financing leases are recorded on a net basis, consisting of the gross investment and estimated residual value in the lease, less unearned income. Unearned income on direct financing leases is recognized over the lease term yielding a constant periodic rate of return on the net investment in the lease. We do not remeasure the net investment in a direct financing lease unless the lease is modified and that modification is not accounted for as a separate contract. We recognize variable lease payment income for operating and direct financing leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Lessee Accounting In leases where we are the lessee, we recognize a ROU asset and lease liability at lease commencement, which is measured by discounting lease payments using our incremental borrowing rate applicable to the lease term and currency of the lease as the discount rate. Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term. A finance lease ROU asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. ROU assets are assessed for impairment in accordance with our long-lived asset impairment policy. We reassess lease classification and remeasure ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate contract or upon certain other events that require reassessment in accordance with ASC 842. Maintenance and property tax expenses are accounted for on an accrual basis as variable lease cost. We recognize variable lease cost for operating and finance leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Partnership as Lessor Assets leased to franchisees and others under operating leases where we are the lessor and which are included within our property and equipment, net are as follows (in millions): As of March 31, 2019 Land $ 912 Buildings and improvements 1,127 Restaurant equipment 18 2,057 Accumulated depreciation and amortization (415 ) Property and equipment leased, net $ 1,642 Our net investment in direct financing leases is as follows (in millions): As of March 31, 2019 Future rents to be received: Future minimum lease receipts $ 57 Contingent rents (a) 25 Estimated unguaranteed residual value 16 Unearned income (32 ) 66 Current portion included within accounts receivables (16 ) Net investment in property leased to franchisees $ 50 (a) Amounts represent estimated contingent rents recorded in connection with the acquisition method of accounting. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three months ended March 31, 2019 Lease income - operating leases Minimum lease payments $ 111 Variable lease payments 84 Amortization of favorable and unfavorable income lease contracts, net 2 Subtotal - lease income from operating leases 197 Earned income on direct financing leases 2 Total property revenues $ 199 Partnership as Lessee Lease cost and other information associated with these lease commitments is as follows (in millions): Lease Cost (Income) Three months ended March 31, 2019 Operating lease cost $ 53 Operating lease variable lease cost 50 Finance lease cost: Amortization of right-of-use assets 7 Interest on lease liabilities 5 Sublease income (155 ) Total lease cost (income) $ (40 ) Lease Term and Discount Rate Weighted-average remaining lease term (in years): Operating leases 11.3 years Finance leases 11.2 years Weighted-average discount rate: Operating leases 7.6 % Finance leases 6.6 % Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 47 Operating cash flows from finance leases $ 5 Financing cash flows from finance leases $ 7 Right-of-use assets obtained in exchange for new finance lease obligations $ 1 Right-of-use assets obtained in exchange for new operating lease obligations $ 30 Maturity Analysis As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. As of December 31, 2018, future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating 2019 $ 14 $ 416 $ 38 $ 183 2020 10 388 36 172 2021 7 360 34 158 2022 5 331 33 145 2023 5 306 30 130 Thereafter 19 1,704 201 831 Total minimum receipts / payments $ 60 $ 3,505 372 $ 1,619 Less amount representing interest (125 ) Present value of minimum finance lease payments 247 Current portion of finance lease obligation (21 ) Long-term portion of finance lease obligation $ 226 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,290 million due in the future under non-cancelable subleases. |
Leases | Leases As of March 31, 2019 , we leased or subleased 5,339 restaurant properties to franchisees and 155 non-restaurant properties to third parties under operating leases and direct financing leases where we are the lessor. Initial lease terms generally range from 10 to 20 years. Most leases to franchisees provide for fixed monthly payments and many provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent, determined as a percentage of sales, generally when annual sales exceed specified levels. Lessees typically bear the cost of maintenance, insurance and property taxes. We lease land, buildings, equipment, office space and warehouse space. Land and building leases generally have an initial term of 10 to 30 years, while land-only lease terms can extend longer, and most leases provide for fixed monthly payments. Many of these leases provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent payments, determined as a percentage of sales, generally when annual sales exceed specified levels. Most leases also obligate us to pay the cost of maintenance, insurance and property taxes. We transitioned to FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), from ASC Topic 840, Leases (the “Previous Standard”) on January 1, 2019 on a modified retrospective basis using the effective date transition method. Our Financial Statements reflect the application of ASC 842 guidance beginning in 2019, while our consolidated financial statements for prior periods were prepared under the guidance of the Previous Standard. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than 12 months, amends various other aspects of accounting for leases by lessees and lessors, and requires enhanced disclosures. Our transition to ASC 842 resulted in the gross presentation of property tax and maintenance expenses and related lessee reimbursements as franchise and property expenses and franchise and property revenues, respectively. These expenses and reimbursements were presented on a net basis under the Previous Standard. In connection with our transition to ASC 842, we elected the package of practical expedients under which we did not reassess the classification of our existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. We also elected lessee and lessor practical expedients to not separate non-lease components comprised of maintenance from lease components for real estate leases that commenced prior to our transition to ASC 842, as well as for leases that commence or that are modified subsequent to our transition to ASC 842. We did not elect the practical expedient that permitted a reassessment of lease terms for existing leases. Financial Statement Impact of Transition to ASC 842 Transition Impact on January 1, 2019 Condensed Consolidated Balance Sheet Our transition to ASC 842 represents a change in accounting principle. The $21 million cumulative effect of our transition to ASC 842 is reflected as an adjustment to January 1, 2019 Partners' capital. Our transition to ASC 842 resulted in the following adjustments to our condensed consolidated balance sheet as of January 1, 2019 (in millions): As Reported Total Adjusted December 31, 2018 Adjustments January 1, 2019 ASSETS Current assets: Cash and cash equivalents $ 913 $ — $ 913 Accounts and notes receivable, net 452 — 452 Inventories, net 75 — 75 Prepaids and other current assets 60 — 60 Total current assets 1,500 — 1,500 Property and equipment, net 1,996 26 (a) 2,022 Operating lease assets — 1,143 (b) 1,143 Intangible assets, net 10,463 (133 ) (c) 10,330 Goodwill 5,486 — 5,486 Net investment in property leased to franchisees 54 — 54 Other assets, net 642 — 642 Total assets $ 20,141 $ 1,036 $ 21,177 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 513 $ — $ 513 Other accrued liabilities 637 114 (e) 751 Gift card liability 167 — 167 Current portion of long term debt and finance leases 91 — 91 Total current liabilities 1,408 114 1,522 Term debt, net of current portion 11,823 (65 ) (f) 11,758 Finance leases, net of current portion 226 62 (f) 288 Operating lease liabilities, net of current portion — 1,028 (g) 1,028 Other liabilities, net 1,547 (132 ) (d) 1,415 Deferred income taxes, net 1,519 8 (h) 1,527 Total liabilities 16,523 1,015 17,538 Partners' capital: Class A common units 4,323 12 (i) 4,335 Partnership exchangeable units 730 9 (i) 739 Accumulated other comprehensive income (loss) (1,437 ) — (1,437 ) Total Partners' capital 3,616 21 3,637 Noncontrolling interests 2 — 2 Total equity 3,618 21 3,639 Total liabilities and equity $ 20,141 $ 1,036 $ 21,177 (a) Represents the net change in assets recorded in connection with build-to-suit leases. (b) Represents the capitalization of operating lease right-of-use (“ROU”) assets equal to the amount of recognized operating lease liability, adjusted by the net carrying amounts of related favorable lease assets and unfavorable lease liabilities in which we are the lessee and straight-line rent accruals, which were reclassified to operating lease ROU assets. (c) Represents the net carrying amount of favorable lease assets associated with leases in which we are the lessee, which have been reclassified to operating lease ROU assets. (d) Represents the net carrying amount of unfavorable lease liabilities associated with leases in which we are the lessee and $64 million of straight-line rent accruals which have been reclassified to operating lease ROU assets. (e) Represents the current portion of operating lease liabilities. (f) Represents the net change in liabilities recorded in connection with build-to-suit leases. (g) Represents the recognition of operating lease liabilities, net of current portion. (h) Represents the net tax effects of the adjustments noted above, with a corresponding adjustment to Partners' capital. (i) Represents net change in assets and liabilities recorded in connection with built-to-suit leases and the tax effects of adjustments noted above. Changes to Lease Accounting Significant Accounting Policies Under ASC 842 In all leases, whether we are the lessor or lessee, we define lease term as the noncancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of the economic factors relevant to the lessee. The noncancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract. Lessor Accounting We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term and property revenue is presented net of any related sales tax. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. We account for reimbursements of maintenance and property tax costs paid to us by lessees as variable lease payment property revenue. We also have net investments in properties leased to franchisees, which met the criteria of direct financing leases under the Previous Standard. Investments in direct financing leases are recorded on a net basis, consisting of the gross investment and estimated residual value in the lease, less unearned income. Unearned income on direct financing leases is recognized over the lease term yielding a constant periodic rate of return on the net investment in the lease. We do not remeasure the net investment in a direct financing lease unless the lease is modified and that modification is not accounted for as a separate contract. We recognize variable lease payment income for operating and direct financing leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Lessee Accounting In leases where we are the lessee, we recognize a ROU asset and lease liability at lease commencement, which is measured by discounting lease payments using our incremental borrowing rate applicable to the lease term and currency of the lease as the discount rate. Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term. A finance lease ROU asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. ROU assets are assessed for impairment in accordance with our long-lived asset impairment policy. We reassess lease classification and remeasure ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate contract or upon certain other events that require reassessment in accordance with ASC 842. Maintenance and property tax expenses are accounted for on an accrual basis as variable lease cost. We recognize variable lease cost for operating and finance leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Partnership as Lessor Assets leased to franchisees and others under operating leases where we are the lessor and which are included within our property and equipment, net are as follows (in millions): As of March 31, 2019 Land $ 912 Buildings and improvements 1,127 Restaurant equipment 18 2,057 Accumulated depreciation and amortization (415 ) Property and equipment leased, net $ 1,642 Our net investment in direct financing leases is as follows (in millions): As of March 31, 2019 Future rents to be received: Future minimum lease receipts $ 57 Contingent rents (a) 25 Estimated unguaranteed residual value 16 Unearned income (32 ) 66 Current portion included within accounts receivables (16 ) Net investment in property leased to franchisees $ 50 (a) Amounts represent estimated contingent rents recorded in connection with the acquisition method of accounting. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three months ended March 31, 2019 Lease income - operating leases Minimum lease payments $ 111 Variable lease payments 84 Amortization of favorable and unfavorable income lease contracts, net 2 Subtotal - lease income from operating leases 197 Earned income on direct financing leases 2 Total property revenues $ 199 Partnership as Lessee Lease cost and other information associated with these lease commitments is as follows (in millions): Lease Cost (Income) Three months ended March 31, 2019 Operating lease cost $ 53 Operating lease variable lease cost 50 Finance lease cost: Amortization of right-of-use assets 7 Interest on lease liabilities 5 Sublease income (155 ) Total lease cost (income) $ (40 ) Lease Term and Discount Rate Weighted-average remaining lease term (in years): Operating leases 11.3 years Finance leases 11.2 years Weighted-average discount rate: Operating leases 7.6 % Finance leases 6.6 % Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 47 Operating cash flows from finance leases $ 5 Financing cash flows from finance leases $ 7 Right-of-use assets obtained in exchange for new finance lease obligations $ 1 Right-of-use assets obtained in exchange for new operating lease obligations $ 30 Maturity Analysis As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. As of December 31, 2018, future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating 2019 $ 14 $ 416 $ 38 $ 183 2020 10 388 36 172 2021 7 360 34 158 2022 5 331 33 145 2023 5 306 30 130 Thereafter 19 1,704 201 831 Total minimum receipts / payments $ 60 $ 3,505 372 $ 1,619 Less amount representing interest (125 ) Present value of minimum finance lease payments 247 Current portion of finance lease obligation (21 ) Long-term portion of finance lease obligation $ 226 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,290 million due in the future under non-cancelable subleases. |
Leases | Leases As of March 31, 2019 , we leased or subleased 5,339 restaurant properties to franchisees and 155 non-restaurant properties to third parties under operating leases and direct financing leases where we are the lessor. Initial lease terms generally range from 10 to 20 years. Most leases to franchisees provide for fixed monthly payments and many provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent, determined as a percentage of sales, generally when annual sales exceed specified levels. Lessees typically bear the cost of maintenance, insurance and property taxes. We lease land, buildings, equipment, office space and warehouse space. Land and building leases generally have an initial term of 10 to 30 years, while land-only lease terms can extend longer, and most leases provide for fixed monthly payments. Many of these leases provide for future rent escalations and renewal options. Certain leases also include provisions for variable rent payments, determined as a percentage of sales, generally when annual sales exceed specified levels. Most leases also obligate us to pay the cost of maintenance, insurance and property taxes. We transitioned to FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), from ASC Topic 840, Leases (the “Previous Standard”) on January 1, 2019 on a modified retrospective basis using the effective date transition method. Our Financial Statements reflect the application of ASC 842 guidance beginning in 2019, while our consolidated financial statements for prior periods were prepared under the guidance of the Previous Standard. The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than 12 months, amends various other aspects of accounting for leases by lessees and lessors, and requires enhanced disclosures. Our transition to ASC 842 resulted in the gross presentation of property tax and maintenance expenses and related lessee reimbursements as franchise and property expenses and franchise and property revenues, respectively. These expenses and reimbursements were presented on a net basis under the Previous Standard. In connection with our transition to ASC 842, we elected the package of practical expedients under which we did not reassess the classification of our existing leases, reevaluate whether any expired or existing contracts are or contain leases or reassess initial direct costs under the new guidance. We also elected lessee and lessor practical expedients to not separate non-lease components comprised of maintenance from lease components for real estate leases that commenced prior to our transition to ASC 842, as well as for leases that commence or that are modified subsequent to our transition to ASC 842. We did not elect the practical expedient that permitted a reassessment of lease terms for existing leases. Financial Statement Impact of Transition to ASC 842 Transition Impact on January 1, 2019 Condensed Consolidated Balance Sheet Our transition to ASC 842 represents a change in accounting principle. The $21 million cumulative effect of our transition to ASC 842 is reflected as an adjustment to January 1, 2019 Partners' capital. Our transition to ASC 842 resulted in the following adjustments to our condensed consolidated balance sheet as of January 1, 2019 (in millions): As Reported Total Adjusted December 31, 2018 Adjustments January 1, 2019 ASSETS Current assets: Cash and cash equivalents $ 913 $ — $ 913 Accounts and notes receivable, net 452 — 452 Inventories, net 75 — 75 Prepaids and other current assets 60 — 60 Total current assets 1,500 — 1,500 Property and equipment, net 1,996 26 (a) 2,022 Operating lease assets — 1,143 (b) 1,143 Intangible assets, net 10,463 (133 ) (c) 10,330 Goodwill 5,486 — 5,486 Net investment in property leased to franchisees 54 — 54 Other assets, net 642 — 642 Total assets $ 20,141 $ 1,036 $ 21,177 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 513 $ — $ 513 Other accrued liabilities 637 114 (e) 751 Gift card liability 167 — 167 Current portion of long term debt and finance leases 91 — 91 Total current liabilities 1,408 114 1,522 Term debt, net of current portion 11,823 (65 ) (f) 11,758 Finance leases, net of current portion 226 62 (f) 288 Operating lease liabilities, net of current portion — 1,028 (g) 1,028 Other liabilities, net 1,547 (132 ) (d) 1,415 Deferred income taxes, net 1,519 8 (h) 1,527 Total liabilities 16,523 1,015 17,538 Partners' capital: Class A common units 4,323 12 (i) 4,335 Partnership exchangeable units 730 9 (i) 739 Accumulated other comprehensive income (loss) (1,437 ) — (1,437 ) Total Partners' capital 3,616 21 3,637 Noncontrolling interests 2 — 2 Total equity 3,618 21 3,639 Total liabilities and equity $ 20,141 $ 1,036 $ 21,177 (a) Represents the net change in assets recorded in connection with build-to-suit leases. (b) Represents the capitalization of operating lease right-of-use (“ROU”) assets equal to the amount of recognized operating lease liability, adjusted by the net carrying amounts of related favorable lease assets and unfavorable lease liabilities in which we are the lessee and straight-line rent accruals, which were reclassified to operating lease ROU assets. (c) Represents the net carrying amount of favorable lease assets associated with leases in which we are the lessee, which have been reclassified to operating lease ROU assets. (d) Represents the net carrying amount of unfavorable lease liabilities associated with leases in which we are the lessee and $64 million of straight-line rent accruals which have been reclassified to operating lease ROU assets. (e) Represents the current portion of operating lease liabilities. (f) Represents the net change in liabilities recorded in connection with build-to-suit leases. (g) Represents the recognition of operating lease liabilities, net of current portion. (h) Represents the net tax effects of the adjustments noted above, with a corresponding adjustment to Partners' capital. (i) Represents net change in assets and liabilities recorded in connection with built-to-suit leases and the tax effects of adjustments noted above. Changes to Lease Accounting Significant Accounting Policies Under ASC 842 In all leases, whether we are the lessor or lessee, we define lease term as the noncancellable term of the lease plus any renewals covered by renewal options that are reasonably certain of exercise based on our assessment of the economic factors relevant to the lessee. The noncancellable term of the lease commences on the date the lessor makes the underlying property in the lease available to the lessee, irrespective of when lease payments begin under the contract. Lessor Accounting We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term and property revenue is presented net of any related sales tax. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. We account for reimbursements of maintenance and property tax costs paid to us by lessees as variable lease payment property revenue. We also have net investments in properties leased to franchisees, which met the criteria of direct financing leases under the Previous Standard. Investments in direct financing leases are recorded on a net basis, consisting of the gross investment and estimated residual value in the lease, less unearned income. Unearned income on direct financing leases is recognized over the lease term yielding a constant periodic rate of return on the net investment in the lease. We do not remeasure the net investment in a direct financing lease unless the lease is modified and that modification is not accounted for as a separate contract. We recognize variable lease payment income for operating and direct financing leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Lessee Accounting In leases where we are the lessee, we recognize a ROU asset and lease liability at lease commencement, which is measured by discounting lease payments using our incremental borrowing rate applicable to the lease term and currency of the lease as the discount rate. Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term. A finance lease ROU asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. ROU assets are assessed for impairment in accordance with our long-lived asset impairment policy. We reassess lease classification and remeasure ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate contract or upon certain other events that require reassessment in accordance with ASC 842. Maintenance and property tax expenses are accounted for on an accrual basis as variable lease cost. We recognize variable lease cost for operating and finance leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. Partnership as Lessor Assets leased to franchisees and others under operating leases where we are the lessor and which are included within our property and equipment, net are as follows (in millions): As of March 31, 2019 Land $ 912 Buildings and improvements 1,127 Restaurant equipment 18 2,057 Accumulated depreciation and amortization (415 ) Property and equipment leased, net $ 1,642 Our net investment in direct financing leases is as follows (in millions): As of March 31, 2019 Future rents to be received: Future minimum lease receipts $ 57 Contingent rents (a) 25 Estimated unguaranteed residual value 16 Unearned income (32 ) 66 Current portion included within accounts receivables (16 ) Net investment in property leased to franchisees $ 50 (a) Amounts represent estimated contingent rents recorded in connection with the acquisition method of accounting. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three months ended March 31, 2019 Lease income - operating leases Minimum lease payments $ 111 Variable lease payments 84 Amortization of favorable and unfavorable income lease contracts, net 2 Subtotal - lease income from operating leases 197 Earned income on direct financing leases 2 Total property revenues $ 199 Partnership as Lessee Lease cost and other information associated with these lease commitments is as follows (in millions): Lease Cost (Income) Three months ended March 31, 2019 Operating lease cost $ 53 Operating lease variable lease cost 50 Finance lease cost: Amortization of right-of-use assets 7 Interest on lease liabilities 5 Sublease income (155 ) Total lease cost (income) $ (40 ) Lease Term and Discount Rate Weighted-average remaining lease term (in years): Operating leases 11.3 years Finance leases 11.2 years Weighted-average discount rate: Operating leases 7.6 % Finance leases 6.6 % Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 47 Operating cash flows from finance leases $ 5 Financing cash flows from finance leases $ 7 Right-of-use assets obtained in exchange for new finance lease obligations $ 1 Right-of-use assets obtained in exchange for new operating lease obligations $ 30 Maturity Analysis As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. As of December 31, 2018, future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating 2019 $ 14 $ 416 $ 38 $ 183 2020 10 388 36 172 2021 7 360 34 158 2022 5 331 33 145 2023 5 306 30 130 Thereafter 19 1,704 201 831 Total minimum receipts / payments $ 60 $ 3,505 372 $ 1,619 Less amount representing interest (125 ) Present value of minimum finance lease payments 247 Current portion of finance lease obligation (21 ) Long-term portion of finance lease obligation $ 226 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,290 million due in the future under non-cancelable subleases. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 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 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, 2018 and March 31, 2019 (in millions): Contract Liabilities TH BK PLK Consolidated Balance at December 31, 2018 $ 62 $ 405 $ 19 $ 486 Revenue recognized that was included in the contract liability balance at the beginning of the year (2 ) (9 ) — (11 ) Increase, excluding amounts recognized as revenue during the period 2 5 1 8 Impact of foreign currency translation 1 (4 ) — (3 ) Balance at March 31, 2019 $ 63 $ 397 $ 20 $ 480 The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2019 (in millions): Contract liabilities expected to be recognized in TH BK PLK Consolidated Remainder of 2019 $ 6 $ 22 $ 1 $ 29 2020 7 28 2 37 2021 7 28 1 36 2022 7 27 1 35 2023 6 27 1 34 Thereafter 30 265 14 309 Total $ 63 $ 397 $ 20 $ 480 Disaggregation of Total Revenues Total revenues consist of the following (in millions): Three Months Ended March 31, 2019 2018 Sales $ 522 $ 548 Royalties 528 510 Property revenues 199 178 Franchise fees and other revenue 17 18 Total revenues $ 1,266 $ 1,254 |
Earnings per Unit
Earnings per Unit | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Unit | Earnings per Unit Partnership uses the two-class method in the computation of earnings per unit. Pursuant to the terms of the partnership agreement, RBI, as the holder of the Class A common units, is entitled to receive distributions from Partnership in an amount equal to the aggregate dividends payable by RBI to holders of RBI common shares, and the holders of Class B exchangeable limited partnership units (the “Partnership exchangeable units”) are entitled to receive distributions from Partnership in an amount per unit equal to the dividends payable by RBI on each RBI common share. Partnership’s net income available to common unitholders is allocated between the Class A common units and Partnership exchangeable units on a fully-distributed basis and reflects residual net income after noncontrolling interests and Partnership preferred unit distributions. Basic and diluted earnings per Class A common unit is determined by dividing net income allocated to Class A common unit holders by the weighted average number of Class A common units outstanding for the period. Basic and diluted earnings per Partnership exchangeable unit is determined by dividing net income allocated to the Partnership exchangeable units by the weighted average number of Partnership exchangeable units outstanding during the period. There are no dilutive securities for Partnership as RBI equity awards will not affect the number of Class A common units or Partnership exchangeable units outstanding. However, the issuance of shares by RBI in future periods will affect the allocation of net income attributable to common unitholders between Partnership’s Class A common units and Partnership exchangeable units. The following table summarizes the basic and diluted earnings per unit calculations (in millions, except per unit amounts): Three Months Ended March 31, 2019 2018 Allocation of net income among partner interests: Net income allocated to Class A common unitholders $ 135 $ 148 Net income allocated to Partnership exchangeable unitholders 111 131 Net income attributable to common unitholders $ 246 $ 279 Denominator - basic and diluted partnership units: Weighted average Class A common units 202 202 Weighted average Partnership exchangeable units 208 218 Earnings per unit - basic and diluted: Class A common units (a) $ 0.67 $ 0.73 Partnership exchangeable units (a) $ 0.53 $ 0.60 (a) Earnings per unit may not recalculate exactly as it is calculated based on unrounded numbers. |
Intangible Assets, net and Good
Intangible Assets, net and Goodwill | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net and Goodwill | Intangible Assets, net and Goodwill Intangible assets, net and goodwill consist of the following (in millions): As of March 31, 2019 December 31, 2018 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Identifiable assets subject to amortization: Franchise agreements $ 706 $ (200 ) $ 506 $ 705 $ (194 ) $ 511 Favorable leases (a) 133 (62 ) 71 407 (200 ) 207 Subtotal 839 (262 ) 577 1,112 (394 ) 718 Indefinite lived intangible assets: Tim Hortons brand $ 6,378 $ — $ 6,378 $ 6,259 $ — $ 6,259 Burger King brand 2,117 — 2,117 2,131 — 2,131 Popeyes brand 1,355 — 1,355 1,355 — 1,355 Subtotal 9,850 — 9,850 9,745 — 9,745 Intangible assets, net $ 10,427 $ 10,463 Goodwill Tim Hortons segment $ 4,111 $ 4,038 Burger King segment 598 602 Popeyes segment 846 846 Total $ 5,555 $ 5,486 (a) The decrease in favorable leases reflects the reclassification of favorable leases where we are the lessee to operating lease right-of-use assets in connection with our transition to ASC 842. See Note 4, Leases . Amortization expense on intangible assets totaled $11 million for the three months ended March 31, 2019 and $18 million for the same period in the prior year. The change in the brands and goodwill balances during the three months ended March 31, 2019 was due to the impact of foreign currency translation. |
Equity Method Investments
Equity Method Investments | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments The aggregate carrying amount of our equity method investments was $256 million and $259 million as of March 31, 2019 and December 31, 2018 , respectively, and is included as a component of Other assets, net in our accompanying condensed consolidated balance sheets. TH and BK both have equity method investments. PLK does not have any equity method investments. With respect to our TH business, the most significant equity method investment is our 50% joint venture interest with The Wendy’s Company (the “TIMWEN Partnership”), which jointly holds real estate underlying Canadian combination restaurants. Distributions received from this joint venture were $2 million and $3 million during the three months ended March 31, 2019 and 2018 , respectively. The aggregate market value of our 20.5% equity interest in Carrols Restaurant Group, Inc. (“Carrols”) based on the quoted market price on March 31, 2019 was approximately $94 million . The aggregate market value of our 10.1% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on March 31, 2019 was approximately $127 million . No quoted market prices are available for our other equity method investments. 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 March 31, 2019 2018 Revenues from affiliates: Royalties $ 78 $ 68 Property revenues 8 9 Franchise fees and other revenue 3 2 Total $ 89 $ 79 We recognized $4 million and $5 million of rent expense associated with the TIMWEN Partnership during the three months ended March 31, 2019 and 2018 , respectively. At March 31, 2019 and December 31, 2018 , we had $33 million and $41 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. (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. During the three months ended March 31, 2019 we did not record a non-cash dilution gain. During the three months ended March 31, 2018 we recorded an increase to the carrying value of our equity method investment balance and a non-cash dilution gain of $20 million on the initial public offering by one of our equity method investees. |
Other Accrued Liabilities and O
Other Accrued Liabilities and Other Liabilities, net | 3 Months Ended |
Mar. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Other Accrued Liabilities and Other Liabilities, net | Other Accrued Liabilities and Other Liabilities, net Other accrued liabilities (current) and other liabilities, net (noncurrent) consist of the following (in millions): As of March 31, December 31, Current: Dividend payable $ 231 $ 207 Interest payable 92 87 Accrued compensation and benefits 41 69 Taxes payable 66 113 Deferred income 37 27 Accrued advertising expenses 11 30 Restructuring and other provisions 9 11 Current portion of operating lease liabilities (a) 119 — Other 83 93 Other accrued liabilities $ 689 $ 637 Noncurrent: Taxes payable $ 512 $ 493 Contract liabilities, net 480 486 Unfavorable leases (b) 118 192 Derivatives liabilities 278 179 Accrued pension 64 64 Accrued lease straight-lining liability (b) — 69 Deferred income 32 22 Other 47 42 Other liabilities, net $ 1,531 $ 1,547 (a) Represents the current portion of operating lease liabilities recognized in connection with our transition to ASC 842. See Note 4, Leases . (b) The decrease in unfavorable leases and accrued lease straight-lining liability reflects the reclassification of unfavorable leases and lease straight-lining liability where we are the lessee in the underlying operating lease to the right-of-use assets recorded for the underlying lease in connection with our transition to ASC 842. See Note 4, Leases . |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following (in millions): As of March 31, December 31, Term Loan Facility (due February 17, 2024) $ 6,322 $ 6,338 2017 4.25% Senior Notes (due May 15, 2024) 1,500 1,500 2015 4.625% Senior Notes (due January 15, 2022) 1,250 1,250 2017 5.00% Senior Notes (due October 15, 2025) 2,800 2,800 Other (a) 81 150 Less: unamortized deferred financing costs and deferred issue discount (138 ) (145 ) Total debt, net 11,815 11,893 Less: current maturities of debt (68 ) (70 ) Total long-term debt $ 11,747 $ 11,823 (a) The decrease in Other reflects the de-recognition of obligations associated with build-to-suit leases recorded under the Previous Standard. Liabilities associated with build-to-suit leases were remeasured and recorded as finance lease liabilities in conjunction with our transition to ASC 842. Revolving Credit Facility As of March 31, 2019 , we had no amounts outstanding under our senior secured revolving credit facility (the "Revolving Credit Facility"). Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or RBI share repurchases, fund acquisitions or capital expenditures and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit. As of March 31, 2019 , we had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability was $498 million . TH Facility During 2018, one of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$100 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 three of our subsidiaries, and amounts borrowed under the TH Facility are and will be secured by certain parcels of real estate. As of March 31, 2019 , we had drawn down the entire C$100 million available under the TH Facility with a weighted average interest rate of 3.37% . 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 billions): As of March 31, December 31, Fair value of our variable term debt and senior notes $ 12 $ 11 Principal carrying amount of our variable term debt and senior notes 12 12 Interest Expense, net Interest expense, net consists of the following (in millions): Three Months Ended March 31, 2019 2018 Debt (a) $ 124 $ 130 Finance lease obligations 5 6 Amortization of deferred financing costs and debt issuance discount 7 7 Interest income (4 ) (3 ) Interest expense, net $ 132 $ 140 (a) Amount includes $18 million and $4 million benefit during the three months ended March 31, 2019 and 2018 , respectively, from our adoption of a new hedge accounting standard in 2018. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rate was 18.7% for the three months ended March 31, 2019 . The effective tax rate for this period was primarily a result of the mix of income from multiple tax jurisdictions and the impact of internal financing arrangements and stock option exercises. Our effective tax rate was 0.6% for the three months ended March 31, 2018 . The effective tax rate during this period was primarily a result of the mix of income from multiple tax jurisdictions and the favorable impact from stock option exercises and reserve releases from audit settlements. Specifically, the benefit associated with stock option exercises reduced the effective tax rate by 22.7% . |
Equity
Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Equity | Equity During the three months ended March 31, 2019 , Partnership exchanged 141,190 Partnership exchangeable units pursuant to exchange notices received. In accordance with the terms of the partnership agreement, Partnership satisfied the exchange notices by exchanging these Partnership exchangeable units for the same number of newly issued RBI common shares. The issuances of shares was accounted for as a capital contribution by RBI to Partnership. The exchanges of Partnership exchangeable units were recorded as increases to the Class A common units balance within partner’s capital in our consolidated balance sheet in an amount equal to the market value of the newly issued RBI common shares and a reduction to the Partnership exchangeable units balance within partner’s capital of our consolidated balance sheet in an amount equal to the cash paid by Partnership and the market value of the newly issued RBI common shares. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit was cancelled concurrently with the exchange. Accumulated Other Comprehensive Income (Loss) The following table displays the changes in the components of accumulated other comprehensive income (loss) (“AOCI”) (in millions): Derivatives Pensions Foreign Currency Translation Accumulated Other Comprehensive Income (Loss) Balances at December 31, 2018 $ 454 $ (27 ) $ (1,864 ) $ (1,437 ) Foreign currency translation adjustment — — 159 159 Net change in fair value of derivatives, net of tax (110 ) — — (110 ) Amounts reclassified to earnings of cash flow hedges, net of tax (1 ) — — (1 ) Balances at March 31, 2019 $ 343 $ (27 ) $ (1,705 ) $ (1,389 ) |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | 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 During 2018, we entered into a series of receive-variable, pay-fixed interest rate swaps with a notional value of $3,500 million to hedge the variability in the interest payments on a portion of our senior secured term loan facility (the "Term Loan Facility") beginning March 29, 2018 through the expiration of the final swap on February 17, 2024 , resetting each March. At inception, these interest rate swaps were designated as cash flow hedges for hedge accounting. The unrealized changes in market value are recorded in AOCI and reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. During 2015, we entered into a series of receive-variable, pay- fixed interest rate swaps with a notional value of $2,500 million to hedge the variability in the interest payments on a portion of our Term Loan Facility beginning May 28, 2015. All of these interest rate swaps were settled on April 26, 2018 for an insignificant cash receipt. At inception, these interest rate swaps were designated as cash flow hedges for hedge accounting. The unrealized changes in market value were recorded in AOCI and reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. During 2015, we settled certain interest rate swaps and recognized a net unrealized loss of $85 million in AOCI at the date of settlement. This amount gets reclassified into Interest expense, net as the original hedged forecasted transaction affects earnings. The amount of pre-tax losses in AOCI as of March 31, 2019 that we expect to be reclassified into interest expense within the next 12 months is $12 million . Cross-Currency Rate Swaps To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, we hedge a portion of our net investment in one or more of our foreign subsidiaries by using cross-currency rate swaps. At March 31, 2019 , 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 offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period with changes in fair value reported in AOCI, net of tax. Such amounts will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying foreign operations. At March 31, 2019 , we had outstanding fixed-to-fixed cross-currency rate swaps to partially hedge the net investment in our Canadian subsidiaries. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as net investment hedges. These swaps are contracts to exchange quarterly fixed-rate interest payments we make on the Canadian dollar notional amount of C$6,754 million for quarterly fixed-rate interest payments we receive on the U.S. dollar notional amount of $5,000 million through the maturity date of June 30, 2023 . At March 31, 2019 , we also 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, during 2018 we entered into cross-currency rate swaps in which we receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $400 million through the maturity date of February 17, 2024. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge. The fixed to fixed cross-currency rate swaps hedging Canadian dollar and Euro net investments utilized the forward method of effectiveness assessment prior to March 15, 2018. On March 15, 2018, we dedesignated and subsequently redesignated 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 March 31, 2019 , 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 $130 million with maturities to May 2020 . 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. Quantitative Disclosures about Derivative Instruments and Fair Value Measurements The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions): Gain or (Loss) Recognized in Other Comprehensive Income (Loss) Three Months Ended March 31, 2019 2018 Derivatives designated as cash flow hedges (1) Interest rate swaps $ (44 ) $ 29 Forward-currency contracts $ (2 ) $ 5 Derivatives designated as net investment hedges Cross-currency rate swaps $ (102 ) $ 11 (1) We did not exclude any components from the cash flow hedge relationships presented in this table. Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from AOCI into Earnings Three Months Ended March 31, 2019 2018 Derivatives designated as cash flow hedges Interest rate swaps Interest expense, net $ (1 ) $ (6 ) Forward-currency contracts Cost of sales $ 2 $ (2 ) Location of Gain or (Loss) Recognized in Earnings Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing) Three Months Ended March 31, 2019 2018 Derivatives designated as net investment hedges Cross-currency rate swaps Interest expense, net $ 18 $ 4 Fair Value as of March 31, 2019 December 31, 2018 Balance Sheet Location Assets: Derivatives designated as cash flow hedges Foreign currency $ 3 $ 7 Prepaids and other current assets Derivatives designated as net investment hedges Foreign currency 17 58 Other assets, net Total assets at fair value $ 20 $ 65 Liabilities: Derivatives designated as cash flow hedges Interest rate $ 118 $ 72 Other liabilities, net Derivatives designated as net investment hedges Foreign currency 160 107 Other liabilities, net Total liabilities at fair value $ 278 $ 179 |
Other Operating Expenses (Incom
Other Operating Expenses (Income), net | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Other Operating Expenses (Income), net | Other Operating Expenses (Income), net Other operating expenses (income), net consist of the following (in millions): Three Months Ended March 31, 2019 2018 Net losses (gains) on disposal of assets, restaurant closures, and refranchisings $ 3 $ 2 Litigation settlements (gains) and reserves, net — (6 ) Net losses (gains) on foreign exchange (15 ) 16 Other, net (5 ) 1 Other operating expenses (income), net $ (17 ) $ 13 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. Litigation settlements (gains) and reserves, net primarily reflects accruals and proceeds received in connection with litigation matters. Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. In March 2019, Partnership settled the two class action lawsuits filed in the Ontario Superior Court of Justice against The TDL Group Corp., a subsidiary of Partnership (“TDL”), and certain other defendants, as described in Partnership’s Annual Report on Form 10-K filed with the SEC on February 22, 2019. Under the terms of the settlement, TDL will contribute C$10 million to the Tim Hortons Advertising Fund in Canada over two years , such amount to be spent on marketing activities. In addition, TDL will pay C$2 million for legal and administrative expenses. The court approved the settlement on April 29, 2019. These amounts were accrued by TDL during 2018. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting As stated in Note 1, Description of Business and Organization , we manage three brands. Under the Tim Hortons brand, we operate in the donut/coffee/tea category of the quick service segment of the restaurant industry. Under the Burger King brand, we operate in the fast food hamburger restaurant category of the quick service segment of the restaurant industry. Under the Popeyes brand, we operate in the chicken category of the quick service segment of the restaurant industry. Our business generates revenue from the following sources: (i) franchise revenues, consisting primarily of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us ("Company restaurants"). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers. We manage each of our brands as an operating segment and each operating segment represents a reportable segment. The following tables present revenues, by segment and by country (in millions): Three Months Ended March 31, 2019 2018 Revenues by operating segment: TH $ 749 $ 763 BK 411 390 PLK 106 101 Total revenues $ 1,266 $ 1,254 Three Months Ended March 31, 2019 2018 Revenues by country (a): Canada $ 676 $ 692 United States 444 421 Other 146 141 Total revenues $ 1,266 $ 1,254 (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, (gain) loss on early extinguishment of debt, income tax expense, and depreciation and amortization, adjusted to exclude the non-cash impact of share-based compensation and non-cash incentive compensation expense and (income) loss from equity method investments, net of cash distributions received from equity method investments, as well as other operating expenses (income), net. Other specifically identified costs associated with non-recurring projects are also excluded from Adjusted EBITDA, including fees and expenses associated with the Popeyes Acquisition (“PLK Transaction costs”), Corporate restructuring and tax advisory fees related to the interpretation and implementation of comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act enacted by the U.S. government on December 22, 2017 and non-operational 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. 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 operating performance or the performance of an acquired business. A reconciliation of segment income to net income (loss) consists of the following (in millions): Three Months Ended March 31, 2019 2018 Segment income: TH $ 237 $ 245 BK 222 214 PLK 41 39 Adjusted EBITDA 500 498 Share-based compensation and non-cash incentive compensation expense 25 15 PLK Transaction costs — 5 Corporate restructuring and tax advisory fees 6 7 Office centralization and relocation costs 4 — Impact of equity method investments (a) 1 (10 ) Other operating expenses (income), net (17 ) 13 EBITDA 481 468 Depreciation and amortization 47 47 Income from operations 434 421 Interest expense, net 132 140 Income tax expense 56 2 Net income $ 246 $ 279 (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. |
Supplemental Financial Informat
Supplemental Financial Information | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | Supplemental Financial Information On February 17, 2017, 1011778 B.C. Unlimited Liability Company (the “Parent Issuer”) and New Red Finance Inc. (the “Co-Issuer” and together with the Parent Issuer, the “Issuers”) entered into an amended credit agreement that provides for obligations under the Credit Facilities. On August 28, 2017, the Issuers entered into the 2017 5.00% Senior Notes Indenture with respect to the 2017 5.00% Senior Notes. On May 17, 2017, the Issuers entered into the 2017 4.25% Senior Notes Indenture with respect to the 2017 4.25% Senior Notes. On May 22, 2015, the Issuers entered into the 2015 4.625% Senior Notes Indenture with respect to the 2015 4.625% Senior Notes. The agreement governing our Credit Facilities, the 2017 5.00% Senior Notes Indenture, the 2017 4.25% Senior Notes Indenture and the 2015 4.625% Senior Notes Indenture allow the financial reporting obligation of the Parent Issuer to be satisfied through the reporting of Partnership’s consolidated financial information, provided that the consolidated financial information of the Parent Issuer and its restricted subsidiaries is presented on a standalone basis. The following represents the condensed consolidating financial information for the Parent Issuer and its restricted subsidiaries (“Consolidated Borrowers”) on a consolidated basis, together with eliminations, as of and for the periods indicated. The condensed consolidating financial information of Partnership is combined with the financial information of its wholly-owned subsidiaries that are also parent entities of the Parent Issuer and presented in a single column under the heading “RBILP”. The consolidating financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the Issuers and Partnership operated as independent entities. RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Balance Sheets (In millions of U.S. dollars) As of March 31, 2019 Consolidated Borrowers RBILP Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 902 $ — $ — $ 902 Accounts and notes receivable, net 441 — — 441 Inventories, net 74 — — 74 Prepaids and other current assets 63 — — 63 Total current assets 1,480 — — 1,480 Property and equipment, net 2,011 — — 2,011 Operating lease assets 1,148 — — 1,148 Intangible assets, net 10,427 — — 10,427 Goodwill 5,555 — — 5,555 Net investment in property leased to franchisees 50 — — 50 Intercompany receivable — 231 (231 ) — Investment in subsidiaries — 3,773 (3,773 ) — Other assets, net 622 — — 622 Total assets $ 21,293 $ 4,004 $ (4,004 ) $ 21,293 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 451 $ — $ — $ 451 Other accrued liabilities 458 231 — 689 Gift card liability 112 — — 112 Current portion of long term debt and finance leases 94 — — 94 Total current liabilities 1,115 231 — 1,346 Term debt, net of current portion 11,747 — — 11,747 Finance leases, net of current portion 287 — — 287 Operating lease liabilities, net of current portion 1,046 — — 1,046 Other liabilities, net 1,531 — — 1,531 Payables to affiliates 231 — (231 ) — Deferred income taxes, net 1,563 — — 1,563 Total liabilities 17,520 231 (231 ) 17,520 Partners’ capital: Class A common units — 4,423 — 4,423 Partnership exchangeable units — 737 — 737 Common shares 3,142 — (3,142 ) — Retained Earnings 2,018 — (2,018 ) — Accumulated other comprehensive income (loss) (1,389 ) (1,389 ) 1,389 (1,389 ) Total Partners' capital/shareholders' equity 3,771 3,771 (3,771 ) 3,771 Noncontrolling interests 2 2 (2 ) 2 Total equity 3,773 3,773 (3,773 ) 3,773 Total liabilities and equity $ 21,293 $ 4,004 $ (4,004 ) $ 21,293 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Balance Sheets (In millions of U.S. dollars) As of December 31, 2018 Consolidated Borrowers RBILP Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 913 $ — $ — $ 913 Accounts and notes receivable, net 452 — — 452 Inventories, net 75 — — 75 Prepaids and other current assets 60 — — 60 Total current assets 1,500 — — 1,500 Property and equipment, net 1,996 — — 1,996 Intangible assets, net 10,463 — — 10,463 Goodwill 5,486 — — 5,486 Net investment in property leased to franchisees 54 — — 54 Intercompany receivable — 207 (207 ) — Investment in subsidiaries — 3,618 (3,618 ) — Other assets, net 642 — — 642 Total assets $ 20,141 $ 3,825 $ (3,825 ) $ 20,141 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 513 $ — $ — $ 513 Other accrued liabilities 430 207 — 637 Gift card liability 167 — — 167 Current portion of long term debt and capital leases 91 — — 91 Total current liabilities 1,201 207 — 1,408 Term debt, net of current portion 11,823 — — 11,823 Capital leases, net of current portion 226 — — 226 Other liabilities, net 1,547 — — 1,547 Payables to affiliates 207 — (207 ) — Deferred income taxes, net 1,519 — — 1,519 Total liabilities 16,523 207 (207 ) 16,523 Partners’ capital: Class A common units — 4,323 — 4,323 Partnership exchangeable units — 730 — 730 Common shares 3,071 — (3,071 ) — Retained Earnings 1,982 — (1,982 ) — Accumulated other comprehensive income (loss) (1,437 ) (1,437 ) 1,437 (1,437 ) Total Partners' capital/shareholders' equity 3,616 3,616 (3,616 ) 3,616 Noncontrolling interests 2 2 (2 ) 2 Total equity 3,618 3,618 (3,618 ) 3,618 Total liabilities and equity $ 20,141 $ 3,825 $ (3,825 ) $ 20,141 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Operations (In millions of U.S. dollars) Three Months Ended March 31, 2019 Consolidated Borrowers RBILP Eliminations Consolidated Revenues: Sales $ 522 $ — $ — $ 522 Franchise and property revenues 744 — — 744 Total revenues 1,266 — — 1,266 Operating costs and expenses: Cost of sales 406 — — 406 Franchise and property expenses 133 — — 133 Selling, general and administrative expenses 312 — — 312 (Income) loss from equity method investments (2 ) — — (2 ) Other operating expenses (income), net (17 ) — — (17 ) Total operating costs and expenses 832 — — 832 Income from operations 434 — — 434 Interest expense, net 132 — — 132 Income before income taxes 302 — — 302 Income tax expense 56 — — 56 Net income 246 — — 246 Equity in earnings of consolidated subsidiaries — 246 (246 ) — Net income (loss) 246 246 (246 ) 246 Net income (loss) attributable to noncontrolling interests — — — — Net income (loss) attributable to common unitholders $ 246 $ 246 $ (246 ) $ 246 Comprehensive income (loss) $ 294 $ 294 $ (294 ) $ 294 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Operations (In millions of U.S. dollars) Three Months Ended March 31, 2018 Consolidated Borrowers RBILP Eliminations Consolidated Revenues: Sales $ 548 $ — $ — $ 548 Franchise and property revenues 706 — — 706 Total revenues 1,254 — — 1,254 Operating costs and expenses: Cost of sales 429 — — 429 Franchise and property expenses 104 — — 104 Selling, general and administrative expenses 301 — — 301 (Income) loss from equity method investments (14 ) — — (14 ) Other operating expenses (income), net 13 — — 13 Total operating costs and expenses 833 — — 833 Income from operations 421 — — 421 Interest expense, net 140 — — 140 Income before income taxes 281 — — 281 Income tax expense 2 — — 2 Net income 279 — — 279 Equity in earnings of consolidated subsidiaries — 279 (279 ) — Net income (loss) 279 279 (279 ) 279 Net income (loss) attributable to noncontrolling interests — — — — Net income (loss) attributable to common unitholders $ 279 $ 279 $ (279 ) $ 279 Comprehensive income (loss) $ 96 $ 96 $ (96 ) $ 96 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Cash Flows (In millions of U.S. dollars) Three months ended March 31, 2019 Consolidated Borrowers RBILP Eliminations Consolidated Cash flows from operating activities: Net income $ 246 $ 246 $ (246 ) $ 246 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Equity in loss (earnings) of consolidated subsidiaries — (246 ) 246 — Depreciation and amortization 47 — — 47 Amortization of deferred financing costs and debt issuance discount 7 — — 7 (Income) loss from equity method investments (2 ) — — (2 ) Loss (gain) on remeasurement of foreign denominated transactions (15 ) — — (15 ) Net (gains) losses on derivatives (20 ) — — (20 ) Share-based compensation expense 22 — — 22 Deferred income taxes 38 — — 38 Other 3 — — 3 Changes in current assets and liabilities, excluding acquisitions and dispositions: Accounts and notes receivable 14 — — 14 Inventories and prepaids and other current assets (13 ) — — (13 ) Accounts and drafts payable (69 ) — — (69 ) Other accrued liabilities and gift card liability (126 ) — — (126 ) Other long-term assets and liabilities 22 — — 22 Net cash provided by (used for) operating activities 154 — — 154 Cash flows from investing activities: Payments for property and equipment (5 ) — — (5 ) Proceeds from disposal of assets, restaurant closures, and refranchisings 4 — — 4 Settlement/sale of derivatives, net 11 — — 11 Other investing activities, net 1 — — 1 Net cash provided by (used for) investing activities 11 — — 11 Cash flows from financing activities: Repayments of long-term debt and finance leases (23 ) — — (23 ) Distributions on Class A common, preferred and Partnership exchangeable units — (207 ) — (207 ) Capital contribution from RBI Inc. 42 — — 42 Distributions from subsidiaries (207 ) 207 — — Other financing activities, net 6 — — 6 Net cash provided by (used for) financing activities (182 ) — — (182 ) Effect of exchange rates on cash and cash equivalents 6 — — 6 Increase (decrease) in cash and cash equivalents (11 ) — — (11 ) Cash and cash equivalents at beginning of period 913 — — 913 Cash and cash equivalents at end of period $ 902 $ — $ — $ 902 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Cash Flows (In millions of U.S. dollars) Three Months Ended March 31, 2018 Consolidated Borrowers RBILP Eliminations Consolidated Cash flows from operating activities: Net income $ 279 $ 279 $ (279 ) $ 279 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Equity in loss (earnings) of consolidated subsidiaries — (279 ) 279 — Depreciation and amortization 47 — — 47 Amortization of deferred financing costs and debt issuance discount 7 — — 7 (Income) loss from equity method investments (14 ) — — (14 ) Loss (gain) on remeasurement of foreign denominated transactions 16 — — 16 Net (gains) losses on derivatives 2 — — 2 Share-based compensation expense 13 — — 13 Deferred income taxes (19 ) — — (19 ) Other 4 — — 4 Changes in current assets and liabilities, excluding acquisitions and dispositions: Accounts and notes receivable 15 — — 15 Inventories and prepaids and other current assets (7 ) — — (7 ) Accounts and drafts payable (73 ) — — (73 ) Other accrued liabilities and gift card liability (374 ) — — (374 ) Tenant inducements paid to franchisees (2 ) — — (2 ) Other long-term assets and liabilities (36 ) — — (36 ) Net cash (used for) provided by operating activities (142 ) — — (142 ) Cash flows from investing activities: Payments for property and equipment (7 ) — — (7 ) Proceeds from disposal of assets, restaurant closures, and refranchisings 2 — — 2 Settlement/sale of derivatives, net 3 — — 3 Other investing activities, net 4 — — 4 Net cash provided by (used for) investing activities 2 — — 2 Cash flows from financing activities: Repayments of long-term debt and finance leases (22 ) — — (22 ) Distributions on Class A common, preferred and Partnership exchangeable units — (97 ) — (97 ) Distributions to RBI for payments in connections with redemption of preferred shares — (34 ) — (34 ) Capital contribution from RBI Inc. 25 — — 25 Distributions from subsidiaries (131 ) 131 — — Net cash provided by (used for) financing activities (128 ) — — (128 ) Effect of exchange rates on cash and cash equivalents (8 ) — — (8 ) Increase (decrease) in cash and cash equivalents (276 ) — — (276 ) Cash and cash equivalents at beginning of period 1,097 — — 1,097 Cash and cash equivalents at end of period $ 821 $ — $ — $ 821 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Cash Distributions/Dividends On April 3, 2019 , RBI paid a cash dividend of $0.50 per RBI common share to common shareholders of record on March 15, 2019 . Partnership made a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares and also made a distribution in respect of each Partnership exchangeable unit in the amount of $0.50 per exchangeable unit to holders of record on March 15, 2019 . The RBI board of directors has declared a cash dividend of $0.50 per RBI common share, which will be paid on July 3, 2019 to RBI common shareholders of record on June 17, 2019 . Partnership will make a distribution to RBI as holder of Class A common units in the amount of the aggregate dividends declared and paid by RBI on RBI common shares. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of $0.50 per Partnership exchangeable unit, and the record date and payment date for such distribution will be the same as the record date and payment date for the cash dividend per RBI common share set forth above. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Lease Accounting – In February 2016, the Financial Accounting Standard Board (the “FASB”) issued new guidance on leases. We adopted this new guidance on January 1, 2019. See Note 4, Leases , for further information about our transition to this new lease accounting standard. Goodwill Impairment – In January 2017, the FASB issued guidance to simplify how an entity measures goodwill impairment by removing the second step of the two-step quantitative goodwill impairment test. An entity will no longer be required to perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, impairment will be measured at the amount by which the carrying value exceeds the fair value of a reporting unit; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendment requires prospective adoption and is effective commencing in 2020 with early adoption permitted. The adoption of this new guidance will not have a material impact on our Financial Statements. Reclassification of Certain Tax Effects – In February 2018, the FASB issued guidance which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for the tax effects of certain items within accumulated other comprehensive income (loss). The amendment is effective commencing in 2019 with early adoption permitted. The adoption of this new guidance did not have a material impact on our Financial Statements. Share-based payment arrangements with nonemployees – In June 2018, the FASB issued guidance which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendment is effective commencing in 2019 with early adoption permitted. The adoption of this new guidance did not have a material impact on our Financial Statements. |
Lessor Accounting | Lessor Accounting We recognize lease payments for operating leases as property revenue on a straight-line basis over the lease term and property revenue is presented net of any related sales tax. Lease incentive payments we make to lessees are amortized as a reduction in property revenue over the lease term. We account for reimbursements of maintenance and property tax costs paid to us by lessees as variable lease payment property revenue. We also have net investments in properties leased to franchisees, which met the criteria of direct financing leases under the Previous Standard. Investments in direct financing leases are recorded on a net basis, consisting of the gross investment and estimated residual value in the lease, less unearned income. Unearned income on direct financing leases is recognized over the lease term yielding a constant periodic rate of return on the net investment in the lease. We do not remeasure the net investment in a direct financing lease unless the lease is modified and that modification is not accounted for as a separate contract. We recognize variable lease payment income for operating and direct financing leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. |
Lessee Accounting | Lessee Accounting In leases where we are the lessee, we recognize a ROU asset and lease liability at lease commencement, which is measured by discounting lease payments using our incremental borrowing rate applicable to the lease term and currency of the lease as the discount rate. Subsequent amortization of the ROU asset and accretion of the lease liability for an operating lease is recognized as a single lease cost, on a straight-line basis, over the lease term. A finance lease ROU asset is depreciated on a straight-line basis over the lesser of the useful life of the leased asset or lease term. Interest on each finance lease liability is determined as the amount that results in a constant periodic discount rate on the remaining balance of the liability. ROU assets are assessed for impairment in accordance with our long-lived asset impairment policy. We reassess lease classification and remeasure ROU assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate contract or upon certain other events that require reassessment in accordance with ASC 842. Maintenance and property tax expenses are accounted for on an accrual basis as variable lease cost. We recognize variable lease cost for operating and finance leases in the period when changes in facts and circumstances on which the variable lease payments are based occur. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of new accounting pronouncements and adjustments | resulted in the following adjustments to our condensed consolidated balance sheet as of January 1, 2019 (in millions): As Reported Total Adjusted December 31, 2018 Adjustments January 1, 2019 ASSETS Current assets: Cash and cash equivalents $ 913 $ — $ 913 Accounts and notes receivable, net 452 — 452 Inventories, net 75 — 75 Prepaids and other current assets 60 — 60 Total current assets 1,500 — 1,500 Property and equipment, net 1,996 26 (a) 2,022 Operating lease assets — 1,143 (b) 1,143 Intangible assets, net 10,463 (133 ) (c) 10,330 Goodwill 5,486 — 5,486 Net investment in property leased to franchisees 54 — 54 Other assets, net 642 — 642 Total assets $ 20,141 $ 1,036 $ 21,177 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 513 $ — $ 513 Other accrued liabilities 637 114 (e) 751 Gift card liability 167 — 167 Current portion of long term debt and finance leases 91 — 91 Total current liabilities 1,408 114 1,522 Term debt, net of current portion 11,823 (65 ) (f) 11,758 Finance leases, net of current portion 226 62 (f) 288 Operating lease liabilities, net of current portion — 1,028 (g) 1,028 Other liabilities, net 1,547 (132 ) (d) 1,415 Deferred income taxes, net 1,519 8 (h) 1,527 Total liabilities 16,523 1,015 17,538 Partners' capital: Class A common units 4,323 12 (i) 4,335 Partnership exchangeable units 730 9 (i) 739 Accumulated other comprehensive income (loss) (1,437 ) — (1,437 ) Total Partners' capital 3,616 21 3,637 Noncontrolling interests 2 — 2 Total equity 3,618 21 3,639 Total liabilities and equity $ 20,141 $ 1,036 $ 21,177 (a) Represents the net change in assets recorded in connection with build-to-suit leases. (b) Represents the capitalization of operating lease right-of-use (“ROU”) assets equal to the amount of recognized operating lease liability, adjusted by the net carrying amounts of related favorable lease assets and unfavorable lease liabilities in which we are the lessee and straight-line rent accruals, which were reclassified to operating lease ROU assets. (c) Represents the net carrying amount of favorable lease assets associated with leases in which we are the lessee, which have been reclassified to operating lease ROU assets. (d) Represents the net carrying amount of unfavorable lease liabilities associated with leases in which we are the lessee and $64 million of straight-line rent accruals which have been reclassified to operating lease ROU assets. (e) Represents the current portion of operating lease liabilities. (f) Represents the net change in liabilities recorded in connection with build-to-suit leases. (g) Represents the recognition of operating lease liabilities, net of current portion. (h) Represents the net tax effects of the adjustments noted above, with a corresponding adjustment to Partners' capital. (i) Represents net change in assets and liabilities recorded in connection with built-to-suit leases and the tax effects of adjustments noted above. |
Schedule of assets leased to franchisees | Assets leased to franchisees and others under operating leases where we are the lessor and which are included within our property and equipment, net are as follows (in millions): As of March 31, 2019 Land $ 912 Buildings and improvements 1,127 Restaurant equipment 18 2,057 Accumulated depreciation and amortization (415 ) Property and equipment leased, net $ 1,642 |
Schedule of net investment in direct financing leases | As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. Our net investment in direct financing leases is as follows (in millions): As of March 31, 2019 Future rents to be received: Future minimum lease receipts $ 57 Contingent rents (a) 25 Estimated unguaranteed residual value 16 Unearned income (32 ) 66 Current portion included within accounts receivables (16 ) Net investment in property leased to franchisees $ 50 (a) Amounts represent estimated contingent rents recorded in connection with the acquisition method of accounting. |
Schedule of property revenues | Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three months ended March 31, 2019 Lease income - operating leases Minimum lease payments $ 111 Variable lease payments 84 Amortization of favorable and unfavorable income lease contracts, net 2 Subtotal - lease income from operating leases 197 Earned income on direct financing leases 2 Total property revenues $ 199 |
Schedule of lease cost and other information | Lease cost and other information associated with these lease commitments is as follows (in millions): Lease Cost (Income) Three months ended March 31, 2019 Operating lease cost $ 53 Operating lease variable lease cost 50 Finance lease cost: Amortization of right-of-use assets 7 Interest on lease liabilities 5 Sublease income (155 ) Total lease cost (income) $ (40 ) Lease Term and Discount Rate Weighted-average remaining lease term (in years): Operating leases 11.3 years Finance leases 11.2 years Weighted-average discount rate: Operating leases 7.6 % Finance leases 6.6 % Other Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 47 Operating cash flows from finance leases $ 5 Financing cash flows from finance leases $ 7 Right-of-use assets obtained in exchange for new finance lease obligations $ 1 Right-of-use assets obtained in exchange for new operating lease obligations $ 30 |
Schedule of future minimum lease receipts, operating leases | As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. |
Schedule of future minimum lease commitments, finance leases | As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. |
Schedule of future minimum lease commitments, operating leases | As of March 31, 2019 , future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating Remainder of 2019 $ 11 $ 314 $ 35 $ 143 2020 10 396 45 183 2021 7 371 43 171 2022 5 346 42 158 2023 5 324 39 144 Thereafter 19 1,821 264 909 Total minimum receipts / payments $ 57 $ 3,572 468 1,708 Less amount representing interest (b) (155 ) (543 ) Present value of minimum lease payments 313 1,165 Current portion of lease obligations (26 ) (119 ) Long-term portion of lease obligations $ 287 $ 1,046 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,332 million due in the future under non-cancelable subleases. (b) Calculated using the interest rate for each lease. |
Schedule of future minimum lease receipts and commitments | As of December 31, 2018, future minimum lease receipts and commitments are as follows (in millions): Lease Receipts Lease Commitments (a) Direct Operating Finance Operating 2019 $ 14 $ 416 $ 38 $ 183 2020 10 388 36 172 2021 7 360 34 158 2022 5 331 33 145 2023 5 306 30 130 Thereafter 19 1,704 201 831 Total minimum receipts / payments $ 60 $ 3,505 372 $ 1,619 Less amount representing interest (125 ) Present value of minimum finance lease payments 247 Current portion of finance lease obligation (21 ) Long-term portion of finance lease obligation $ 226 (a) Minimum lease payments have not been reduced by minimum sublease rentals of $2,290 million due in the future under non-cancelable subleases. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Change in contract liabilities | The following table reflects the change in contract liabilities between December 31, 2018 and March 31, 2019 (in millions): Contract Liabilities TH BK PLK Consolidated Balance at December 31, 2018 $ 62 $ 405 $ 19 $ 486 Revenue recognized that was included in the contract liability balance at the beginning of the year (2 ) (9 ) — (11 ) Increase, excluding amounts recognized as revenue during the period 2 5 1 8 Impact of foreign currency translation 1 (4 ) — (3 ) Balance at March 31, 2019 $ 63 $ 397 $ 20 $ 480 |
Schedule of estimated revenues expected to be recognized | The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2019 (in millions): Contract liabilities expected to be recognized in TH BK PLK Consolidated Remainder of 2019 $ 6 $ 22 $ 1 $ 29 2020 7 28 2 37 2021 7 28 1 36 2022 7 27 1 35 2023 6 27 1 34 Thereafter 30 265 14 309 Total $ 63 $ 397 $ 20 $ 480 |
Disaggregation of total revenues | Total revenues consist of the following (in millions): Three Months Ended March 31, 2019 2018 Sales $ 522 $ 548 Royalties 528 510 Property revenues 199 178 Franchise fees and other revenue 17 18 Total revenues $ 1,266 $ 1,254 |
Earnings per Unit (Tables)
Earnings per Unit (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Unit | The following table summarizes the basic and diluted earnings per unit calculations (in millions, except per unit amounts): Three Months Ended March 31, 2019 2018 Allocation of net income among partner interests: Net income allocated to Class A common unitholders $ 135 $ 148 Net income allocated to Partnership exchangeable unitholders 111 131 Net income attributable to common unitholders $ 246 $ 279 Denominator - basic and diluted partnership units: Weighted average Class A common units 202 202 Weighted average Partnership exchangeable units 208 218 Earnings per unit - basic and diluted: Class A common units (a) $ 0.67 $ 0.73 Partnership exchangeable units (a) $ 0.53 $ 0.60 (a) Earnings per unit may not recalculate exactly as it is calculated based on unrounded numbers. |
Intangible Assets, net and Go_2
Intangible Assets, net and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets, Net and Goodwill | Intangible assets, net and goodwill consist of the following (in millions): As of March 31, 2019 December 31, 2018 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Identifiable assets subject to amortization: Franchise agreements $ 706 $ (200 ) $ 506 $ 705 $ (194 ) $ 511 Favorable leases (a) 133 (62 ) 71 407 (200 ) 207 Subtotal 839 (262 ) 577 1,112 (394 ) 718 Indefinite lived intangible assets: Tim Hortons brand $ 6,378 $ — $ 6,378 $ 6,259 $ — $ 6,259 Burger King brand 2,117 — 2,117 2,131 — 2,131 Popeyes brand 1,355 — 1,355 1,355 — 1,355 Subtotal 9,850 — 9,850 9,745 — 9,745 Intangible assets, net $ 10,427 $ 10,463 Goodwill Tim Hortons segment $ 4,111 $ 4,038 Burger King segment 598 602 Popeyes segment 846 846 Total $ 5,555 $ 5,486 (a) The decrease in favorable leases reflects the reclassification of favorable leases where we are the lessee to operating lease right-of-use assets in connection with our transition to ASC 842. See Note 4, Leases . |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Franchise and Property Revenues | 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 March 31, 2019 2018 Revenues from affiliates: Royalties $ 78 $ 68 Property revenues 8 9 Franchise fees and other revenue 3 2 Total $ 89 $ 79 |
Other Accrued Liabilities and_2
Other Accrued Liabilities and Other Liabilities, net (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Accrued Liabilities (Current) and Other Liabilities (NonCurrent), Net | Other accrued liabilities (current) and other liabilities, net (noncurrent) consist of the following (in millions): As of March 31, December 31, Current: Dividend payable $ 231 $ 207 Interest payable 92 87 Accrued compensation and benefits 41 69 Taxes payable 66 113 Deferred income 37 27 Accrued advertising expenses 11 30 Restructuring and other provisions 9 11 Current portion of operating lease liabilities (a) 119 — Other 83 93 Other accrued liabilities $ 689 $ 637 Noncurrent: Taxes payable $ 512 $ 493 Contract liabilities, net 480 486 Unfavorable leases (b) 118 192 Derivatives liabilities 278 179 Accrued pension 64 64 Accrued lease straight-lining liability (b) — 69 Deferred income 32 22 Other 47 42 Other liabilities, net $ 1,531 $ 1,547 (a) Represents the current portion of operating lease liabilities recognized in connection with our transition to ASC 842. See Note 4, Leases . (b) The decrease in unfavorable leases and accrued lease straight-lining liability reflects the reclassification of unfavorable leases and lease straight-lining liability where we are the lessee in the underlying operating lease to the right-of-use assets recorded for the underlying lease in connection with our transition to ASC 842. See Note 4, Leases . |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt | Long-term debt consists of the following (in millions): As of March 31, December 31, Term Loan Facility (due February 17, 2024) $ 6,322 $ 6,338 2017 4.25% Senior Notes (due May 15, 2024) 1,500 1,500 2015 4.625% Senior Notes (due January 15, 2022) 1,250 1,250 2017 5.00% Senior Notes (due October 15, 2025) 2,800 2,800 Other (a) 81 150 Less: unamortized deferred financing costs and deferred issue discount (138 ) (145 ) Total debt, net 11,815 11,893 Less: current maturities of debt (68 ) (70 ) Total long-term debt $ 11,747 $ 11,823 (a) The decrease in Other reflects the de-recognition of obligations associated with build-to-suit leases recorded under the Previous Standard. Liabilities associated with build-to-suit leases were remeasured and recorded as finance lease liabilities in conjunction with our transition to ASC 842. |
Summary of 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 billions): As of March 31, December 31, Fair value of our variable term debt and senior notes $ 12 $ 11 Principal carrying amount of our variable term debt and senior notes 12 12 |
Schedule of Interest Expense, Net | Interest expense, net consists of the following (in millions): Three Months Ended March 31, 2019 2018 Debt (a) $ 124 $ 130 Finance lease obligations 5 6 Amortization of deferred financing costs and debt issuance discount 7 7 Interest income (4 ) (3 ) Interest expense, net $ 132 $ 140 (a) Amount includes $18 million and $4 million benefit during the three months ended March 31, 2019 and 2018 , respectively, from our adoption of a new hedge accounting standard in 2018. |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Summary of Changes in the Components of 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) Balances at December 31, 2018 $ 454 $ (27 ) $ (1,864 ) $ (1,437 ) Foreign currency translation adjustment — — 159 159 Net change in fair value of derivatives, net of tax (110 ) — — (110 ) Amounts reclassified to earnings of cash flow hedges, net of tax (1 ) — — (1 ) Balances at March 31, 2019 $ 343 $ (27 ) $ (1,705 ) $ (1,389 ) |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Quantitative Disclosures of Derivative Instruments Including Estimated Fair Values | The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions): Gain or (Loss) Recognized in Other Comprehensive Income (Loss) Three Months Ended March 31, 2019 2018 Derivatives designated as cash flow hedges (1) Interest rate swaps $ (44 ) $ 29 Forward-currency contracts $ (2 ) $ 5 Derivatives designated as net investment hedges Cross-currency rate swaps $ (102 ) $ 11 (1) We did not exclude any components from the cash flow hedge relationships presented in this table. Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from AOCI into Earnings Three Months Ended March 31, 2019 2018 Derivatives designated as cash flow hedges Interest rate swaps Interest expense, net $ (1 ) $ (6 ) Forward-currency contracts Cost of sales $ 2 $ (2 ) Location of Gain or (Loss) Recognized in Earnings Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing) Three Months Ended March 31, 2019 2018 Derivatives designated as net investment hedges Cross-currency rate swaps Interest expense, net $ 18 $ 4 |
Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | Fair Value as of March 31, 2019 December 31, 2018 Balance Sheet Location Assets: Derivatives designated as cash flow hedges Foreign currency $ 3 $ 7 Prepaids and other current assets Derivatives designated as net investment hedges Foreign currency 17 58 Other assets, net Total assets at fair value $ 20 $ 65 Liabilities: Derivatives designated as cash flow hedges Interest rate $ 118 $ 72 Other liabilities, net Derivatives designated as net investment hedges Foreign currency 160 107 Other liabilities, net Total liabilities at fair value $ 278 $ 179 |
Other Operating Expenses (Inc_2
Other Operating Expenses (Income), net (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | |
Other Operating Expenses (Income), Net | Other operating expenses (income), net consist of the following (in millions): Three Months Ended March 31, 2019 2018 Net losses (gains) on disposal of assets, restaurant closures, and refranchisings $ 3 $ 2 Litigation settlements (gains) and reserves, net — (6 ) Net losses (gains) on foreign exchange (15 ) 16 Other, net (5 ) 1 Other operating expenses (income), net $ (17 ) $ 13 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Revenues by Geographic Segment | The following tables present revenues, by segment and by country (in millions): Three Months Ended March 31, 2019 2018 Revenues by operating segment: TH $ 749 $ 763 BK 411 390 PLK 106 101 Total revenues $ 1,266 $ 1,254 Three Months Ended March 31, 2019 2018 Revenues by country (a): Canada $ 676 $ 692 United States 444 421 Other 146 141 Total revenues $ 1,266 $ 1,254 (a) Only Canada and the United States represented 10% or more of our total revenues in each period presented. |
Reconciliation of Segment Income to Net Income (Loss) | A reconciliation of segment income to net income (loss) consists of the following (in millions): Three Months Ended March 31, 2019 2018 Segment income: TH $ 237 $ 245 BK 222 214 PLK 41 39 Adjusted EBITDA 500 498 Share-based compensation and non-cash incentive compensation expense 25 15 PLK Transaction costs — 5 Corporate restructuring and tax advisory fees 6 7 Office centralization and relocation costs 4 — Impact of equity method investments (a) 1 (10 ) Other operating expenses (income), net (17 ) 13 EBITDA 481 468 Depreciation and amortization 47 47 Income from operations 434 421 Interest expense, net 132 140 Income tax expense 56 2 Net income $ 246 $ 279 (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. |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Condensed Consolidating Financial Statements | The following represents the condensed consolidating financial information for the Parent Issuer and its restricted subsidiaries (“Consolidated Borrowers”) on a consolidated basis, together with eliminations, as of and for the periods indicated. The condensed consolidating financial information of Partnership is combined with the financial information of its wholly-owned subsidiaries that are also parent entities of the Parent Issuer and presented in a single column under the heading “RBILP”. The consolidating financial information may not necessarily be indicative of the financial position, results of operations or cash flows had the Issuers and Partnership operated as independent entities. RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Balance Sheets (In millions of U.S. dollars) As of March 31, 2019 Consolidated Borrowers RBILP Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 902 $ — $ — $ 902 Accounts and notes receivable, net 441 — — 441 Inventories, net 74 — — 74 Prepaids and other current assets 63 — — 63 Total current assets 1,480 — — 1,480 Property and equipment, net 2,011 — — 2,011 Operating lease assets 1,148 — — 1,148 Intangible assets, net 10,427 — — 10,427 Goodwill 5,555 — — 5,555 Net investment in property leased to franchisees 50 — — 50 Intercompany receivable — 231 (231 ) — Investment in subsidiaries — 3,773 (3,773 ) — Other assets, net 622 — — 622 Total assets $ 21,293 $ 4,004 $ (4,004 ) $ 21,293 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 451 $ — $ — $ 451 Other accrued liabilities 458 231 — 689 Gift card liability 112 — — 112 Current portion of long term debt and finance leases 94 — — 94 Total current liabilities 1,115 231 — 1,346 Term debt, net of current portion 11,747 — — 11,747 Finance leases, net of current portion 287 — — 287 Operating lease liabilities, net of current portion 1,046 — — 1,046 Other liabilities, net 1,531 — — 1,531 Payables to affiliates 231 — (231 ) — Deferred income taxes, net 1,563 — — 1,563 Total liabilities 17,520 231 (231 ) 17,520 Partners’ capital: Class A common units — 4,423 — 4,423 Partnership exchangeable units — 737 — 737 Common shares 3,142 — (3,142 ) — Retained Earnings 2,018 — (2,018 ) — Accumulated other comprehensive income (loss) (1,389 ) (1,389 ) 1,389 (1,389 ) Total Partners' capital/shareholders' equity 3,771 3,771 (3,771 ) 3,771 Noncontrolling interests 2 2 (2 ) 2 Total equity 3,773 3,773 (3,773 ) 3,773 Total liabilities and equity $ 21,293 $ 4,004 $ (4,004 ) $ 21,293 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Balance Sheets (In millions of U.S. dollars) As of December 31, 2018 Consolidated Borrowers RBILP Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 913 $ — $ — $ 913 Accounts and notes receivable, net 452 — — 452 Inventories, net 75 — — 75 Prepaids and other current assets 60 — — 60 Total current assets 1,500 — — 1,500 Property and equipment, net 1,996 — — 1,996 Intangible assets, net 10,463 — — 10,463 Goodwill 5,486 — — 5,486 Net investment in property leased to franchisees 54 — — 54 Intercompany receivable — 207 (207 ) — Investment in subsidiaries — 3,618 (3,618 ) — Other assets, net 642 — — 642 Total assets $ 20,141 $ 3,825 $ (3,825 ) $ 20,141 LIABILITIES AND EQUITY Current liabilities: Accounts and drafts payable $ 513 $ — $ — $ 513 Other accrued liabilities 430 207 — 637 Gift card liability 167 — — 167 Current portion of long term debt and capital leases 91 — — 91 Total current liabilities 1,201 207 — 1,408 Term debt, net of current portion 11,823 — — 11,823 Capital leases, net of current portion 226 — — 226 Other liabilities, net 1,547 — — 1,547 Payables to affiliates 207 — (207 ) — Deferred income taxes, net 1,519 — — 1,519 Total liabilities 16,523 207 (207 ) 16,523 Partners’ capital: Class A common units — 4,323 — 4,323 Partnership exchangeable units — 730 — 730 Common shares 3,071 — (3,071 ) — Retained Earnings 1,982 — (1,982 ) — Accumulated other comprehensive income (loss) (1,437 ) (1,437 ) 1,437 (1,437 ) Total Partners' capital/shareholders' equity 3,616 3,616 (3,616 ) 3,616 Noncontrolling interests 2 2 (2 ) 2 Total equity 3,618 3,618 (3,618 ) 3,618 Total liabilities and equity $ 20,141 $ 3,825 $ (3,825 ) $ 20,141 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Operations (In millions of U.S. dollars) Three Months Ended March 31, 2019 Consolidated Borrowers RBILP Eliminations Consolidated Revenues: Sales $ 522 $ — $ — $ 522 Franchise and property revenues 744 — — 744 Total revenues 1,266 — — 1,266 Operating costs and expenses: Cost of sales 406 — — 406 Franchise and property expenses 133 — — 133 Selling, general and administrative expenses 312 — — 312 (Income) loss from equity method investments (2 ) — — (2 ) Other operating expenses (income), net (17 ) — — (17 ) Total operating costs and expenses 832 — — 832 Income from operations 434 — — 434 Interest expense, net 132 — — 132 Income before income taxes 302 — — 302 Income tax expense 56 — — 56 Net income 246 — — 246 Equity in earnings of consolidated subsidiaries — 246 (246 ) — Net income (loss) 246 246 (246 ) 246 Net income (loss) attributable to noncontrolling interests — — — — Net income (loss) attributable to common unitholders $ 246 $ 246 $ (246 ) $ 246 Comprehensive income (loss) $ 294 $ 294 $ (294 ) $ 294 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Operations (In millions of U.S. dollars) Three Months Ended March 31, 2018 Consolidated Borrowers RBILP Eliminations Consolidated Revenues: Sales $ 548 $ — $ — $ 548 Franchise and property revenues 706 — — 706 Total revenues 1,254 — — 1,254 Operating costs and expenses: Cost of sales 429 — — 429 Franchise and property expenses 104 — — 104 Selling, general and administrative expenses 301 — — 301 (Income) loss from equity method investments (14 ) — — (14 ) Other operating expenses (income), net 13 — — 13 Total operating costs and expenses 833 — — 833 Income from operations 421 — — 421 Interest expense, net 140 — — 140 Income before income taxes 281 — — 281 Income tax expense 2 — — 2 Net income 279 — — 279 Equity in earnings of consolidated subsidiaries — 279 (279 ) — Net income (loss) 279 279 (279 ) 279 Net income (loss) attributable to noncontrolling interests — — — — Net income (loss) attributable to common unitholders $ 279 $ 279 $ (279 ) $ 279 Comprehensive income (loss) $ 96 $ 96 $ (96 ) $ 96 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Cash Flows (In millions of U.S. dollars) Three months ended March 31, 2019 Consolidated Borrowers RBILP Eliminations Consolidated Cash flows from operating activities: Net income $ 246 $ 246 $ (246 ) $ 246 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Equity in loss (earnings) of consolidated subsidiaries — (246 ) 246 — Depreciation and amortization 47 — — 47 Amortization of deferred financing costs and debt issuance discount 7 — — 7 (Income) loss from equity method investments (2 ) — — (2 ) Loss (gain) on remeasurement of foreign denominated transactions (15 ) — — (15 ) Net (gains) losses on derivatives (20 ) — — (20 ) Share-based compensation expense 22 — — 22 Deferred income taxes 38 — — 38 Other 3 — — 3 Changes in current assets and liabilities, excluding acquisitions and dispositions: Accounts and notes receivable 14 — — 14 Inventories and prepaids and other current assets (13 ) — — (13 ) Accounts and drafts payable (69 ) — — (69 ) Other accrued liabilities and gift card liability (126 ) — — (126 ) Other long-term assets and liabilities 22 — — 22 Net cash provided by (used for) operating activities 154 — — 154 Cash flows from investing activities: Payments for property and equipment (5 ) — — (5 ) Proceeds from disposal of assets, restaurant closures, and refranchisings 4 — — 4 Settlement/sale of derivatives, net 11 — — 11 Other investing activities, net 1 — — 1 Net cash provided by (used for) investing activities 11 — — 11 Cash flows from financing activities: Repayments of long-term debt and finance leases (23 ) — — (23 ) Distributions on Class A common, preferred and Partnership exchangeable units — (207 ) — (207 ) Capital contribution from RBI Inc. 42 — — 42 Distributions from subsidiaries (207 ) 207 — — Other financing activities, net 6 — — 6 Net cash provided by (used for) financing activities (182 ) — — (182 ) Effect of exchange rates on cash and cash equivalents 6 — — 6 Increase (decrease) in cash and cash equivalents (11 ) — — (11 ) Cash and cash equivalents at beginning of period 913 — — 913 Cash and cash equivalents at end of period $ 902 $ — $ — $ 902 RESTAURANT BRANDS INTERNATIONAL LIMITED PARTNERSHIP AND SUBSIDIARIES Condensed Consolidating Statements of Cash Flows (In millions of U.S. dollars) Three Months Ended March 31, 2018 Consolidated Borrowers RBILP Eliminations Consolidated Cash flows from operating activities: Net income $ 279 $ 279 $ (279 ) $ 279 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Equity in loss (earnings) of consolidated subsidiaries — (279 ) 279 — Depreciation and amortization 47 — — 47 Amortization of deferred financing costs and debt issuance discount 7 — — 7 (Income) loss from equity method investments (14 ) — — (14 ) Loss (gain) on remeasurement of foreign denominated transactions 16 — — 16 Net (gains) losses on derivatives 2 — — 2 Share-based compensation expense 13 — — 13 Deferred income taxes (19 ) — — (19 ) Other 4 — — 4 Changes in current assets and liabilities, excluding acquisitions and dispositions: Accounts and notes receivable 15 — — 15 Inventories and prepaids and other current assets (7 ) — — (7 ) Accounts and drafts payable (73 ) — — (73 ) Other accrued liabilities and gift card liability (374 ) — — (374 ) Tenant inducements paid to franchisees (2 ) — — (2 ) Other long-term assets and liabilities (36 ) — — (36 ) Net cash (used for) provided by operating activities (142 ) — — (142 ) Cash flows from investing activities: Payments for property and equipment (7 ) — — (7 ) Proceeds from disposal of assets, restaurant closures, and refranchisings 2 — — 2 Settlement/sale of derivatives, net 3 — — 3 Other investing activities, net 4 — — 4 Net cash provided by (used for) investing activities 2 — — 2 Cash flows from financing activities: Repayments of long-term debt and finance leases (22 ) — — (22 ) Distributions on Class A common, preferred and Partnership exchangeable units — (97 ) — (97 ) Distributions to RBI for payments in connections with redemption of preferred shares — (34 ) — (34 ) Capital contribution from RBI Inc. 25 — — 25 Distributions from subsidiaries (131 ) 131 — — Net cash provided by (used for) financing activities (128 ) — — (128 ) Effect of exchange rates on cash and cash equivalents (8 ) — — (8 ) Increase (decrease) in cash and cash equivalents (276 ) — — (276 ) Cash and cash equivalents at beginning of period 1,097 — — 1,097 Cash and cash equivalents at end of period $ 821 $ — $ — $ 821 |
Basis of Presentation and Con_2
Basis of Presentation and Consolidation - Additional Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019USD ($)Restaurant | Mar. 31, 2018USD ($) | Dec. 31, 2018Restaurant | |
Summary Of Accounting Policies [Line Items] | |||
Investment in other affiliates (or less) | 50.00% | ||
Tenant inducements paid to franchisees | $ | $ 0 | $ (2) | |
Restaurant VIEs | |||
Summary Of Accounting Policies [Line Items] | |||
Number of VIE consolidated restaurants | Restaurant | 18 | 17 |
Description of Business and O_2
Description of Business and Organization - Additional Information (Details) | Mar. 31, 2019RestaurantCountry |
Basis Of Presentation [Line Items] | |
Number of franchised or owned restaurants | 25,809 |
Number of countries in which company and franchise restaurants operated (more than) | Country | 100 |
Percentage of franchised Tim Hortons, Burger King, and Popeyes restaurants | 100.00% |
Tim Hortons brand | |
Basis Of Presentation [Line Items] | |
Number of franchised or owned restaurants | 4,866 |
Burger King brand | |
Basis Of Presentation [Line Items] | |
Number of franchised or owned restaurants | 17,823 |
Popeyes brand | |
Basis Of Presentation [Line Items] | |
Number of franchised or owned restaurants | 3,120 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | Mar. 31, 2019RestaurantProperty | Jan. 01, 2019USD ($) |
Lessor, Lease, Description [Line Items] | ||
Restaurant properties to franchisees leased or subleased | Restaurant | 5,339 | |
Non-restaurant properties to third parties under operating leases and direct financing leases | Property | 155 | |
Accounting Standards Update 2016-02 | ||
Lessor, Lease, Description [Line Items] | ||
Cumulative effect adjustment | $ | $ 21 | |
Minimum | ||
Lessor, Lease, Description [Line Items] | ||
Lessor, operating lease, term of contract | 10 years | |
Lessee, finance lease, term of contract | 10 years | |
Lessor, direct financing lease, term of contract | 10 years | |
Maximum | ||
Lessor, Lease, Description [Line Items] | ||
Lessor, operating lease, term of contract | 20 years | |
Lessee, finance lease, term of contract | 30 years | |
Lessor, direct financing lease, term of contract | 20 years |
Leases - Adjustments to balance
Leases - Adjustments to balance sheet due to Topic 842 (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cash and cash equivalents | $ 902 | $ 913 | $ 913 | $ 821 | $ 1,097 |
Accounts and notes receivable, net of allowance of $14 and $14, respectively | 441 | 452 | 452 | ||
Inventories, net | 74 | 75 | 75 | ||
Prepaids and other current assets | 63 | 60 | 60 | ||
Total current assets | 1,480 | 1,500 | 1,500 | ||
Property and equipment, net of accumulated depreciation and amortization of $645 and $704, respectively | 2,011 | 2,022 | 1,996 | ||
Operating lease assets | 1,148 | 1,143 | |||
Intangible assets, net | 10,427 | 10,330 | 10,463 | ||
Goodwill | 5,555 | 5,486 | 5,486 | ||
Net investment in property leased to franchisees | 50 | 54 | 54 | ||
Other assets, net | 622 | 642 | 642 | ||
Total assets | 21,293 | 21,177 | 20,141 | ||
Accounts and drafts payable | 451 | 513 | 513 | ||
Other accrued liabilities | 689 | 751 | 637 | ||
Gift card liability | 112 | 167 | 167 | ||
Current portion of long term debt and finance leases | 94 | 91 | 91 | ||
Total current liabilities | 1,346 | 1,522 | 1,408 | ||
Term debt, net of current portion | 11,747 | 11,758 | 11,823 | ||
Finance leases, net of current portion | 226 | ||||
Finance leases, net of current portion | 287 | 288 | |||
Operating lease liabilities, net of current portion | 1,046 | 1,028 | |||
Other liabilities, net | 1,531 | 1,415 | 1,547 | ||
Deferred income taxes, net | 1,563 | 1,527 | 1,519 | ||
Total liabilities | 17,520 | 17,538 | 16,523 | ||
Common shares | 0 | 0 | |||
Accumulated other comprehensive income (loss) | (1,389) | (1,437) | (1,437) | ||
Total Partners' capital | 3,637 | 3,616 | |||
Noncontrolling interests | 2 | 2 | 2 | ||
Total equity | 3,773 | 3,639 | 3,618 | 4,242 | 4,561 |
Total liabilities and equity | 21,293 | 21,177 | 20,141 | ||
Accrued lease straight-lining liability | 0 | 69 | |||
Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cash and cash equivalents | 0 | ||||
Accounts and notes receivable, net of allowance of $14 and $14, respectively | 0 | ||||
Inventories, net | 0 | ||||
Prepaids and other current assets | 0 | ||||
Total current assets | 0 | ||||
Property and equipment, net of accumulated depreciation and amortization of $645 and $704, respectively | 26 | ||||
Operating lease assets | 1,143 | ||||
Intangible assets, net | (133) | ||||
Goodwill | 0 | ||||
Net investment in property leased to franchisees | 0 | ||||
Other assets, net | 0 | ||||
Total assets | 1,036 | ||||
Accounts and drafts payable | 0 | ||||
Other accrued liabilities | 114 | ||||
Gift card liability | 0 | ||||
Current portion of long term debt and finance leases | 0 | ||||
Total current liabilities | 114 | ||||
Term debt, net of current portion | (65) | ||||
Finance leases, net of current portion | 62 | ||||
Operating lease liabilities, net of current portion | 1,028 | ||||
Other liabilities, net | (132) | ||||
Deferred income taxes, net | 8 | ||||
Total liabilities | 1,015 | ||||
Accumulated other comprehensive income (loss) | 0 | ||||
Total Partners' capital | 21 | ||||
Noncontrolling interests | 0 | ||||
Total equity | 21 | ||||
Total liabilities and equity | 1,036 | ||||
Accrued lease straight-lining liability | 64 | ||||
Class A common units | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Common shares | 4,335 | 4,323 | |||
Total equity | 4,423 | 4,323 | 4,118 | 4,168 | |
Class A common units | Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Common shares | 12 | ||||
Partnership exchangeable units | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Partnership exchangeable units | 737 | $ 739 | 730 | ||
Total equity | $ 737 | 730 | $ 1,189 | $ 1,276 | |
Partnership exchangeable units | Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Partnership exchangeable units | $ 9 |
Leases - Assets leased to franc
Leases - Assets leased to franchises (Details) $ in Millions | Mar. 31, 2019USD ($) |
Property, Plant and Equipment [Line Items] | |
Property and equipment leased, gross | $ 2,057 |
Accumulated depreciation and amortization | (415) |
Property and equipment leased, net | 1,642 |
Land | |
Property, Plant and Equipment [Line Items] | |
Property and equipment leased, gross | 912 |
Buildings and improvements | |
Property, Plant and Equipment [Line Items] | |
Property and equipment leased, gross | 1,127 |
Restaurant equipment | |
Property, Plant and Equipment [Line Items] | |
Property and equipment leased, gross | $ 18 |
Leases - Net investment in dire
Leases - Net investment in direct financing leases (Details) $ in Millions | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
Future minimum lease receipts | $ 57 |
Contingent rents | 25 |
Estimated unguaranteed residual value | 16 |
Unearned income | (32) |
Net investment in property leased to franchisees | 66 |
Current portion included within accounts receivables | (16) |
Net investment in property leased to franchisees, noncurrent | $ 50 |
Leases - Property revenues (Det
Leases - Property revenues (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Lease income - operating leases | |
Minimum lease payments | $ 111 |
Variable lease payments | 84 |
Amortization of favorable and unfavorable income lease contracts, net | 2 |
Subtotal - lease income from operating leases | 197 |
Earned income on direct financing leases | 2 |
Total property revenues | $ 199 |
Leases - Lease cost (Details)
Leases - Lease cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Leases [Abstract] | ||
Operating lease cost | $ 53 | |
Operating lease variable lease cost | 50 | |
Finance lease cost: | ||
Amortization of right-of-use assets | 7 | |
Interest on lease liabilities | 5 | $ 6 |
Sublease income | (155) | |
Total lease cost (income) | $ (40) |
Leases - Lease term and discoun
Leases - Lease term and discount rate (Details) | Mar. 31, 2019 |
Leases [Abstract] | |
Weighted-average remaining lease term (in years): Operating leases | 11 years 3 months |
Weighted-average remaining lease term (in years): Finance leases | 11 years 2 months |
Weighted-average discount rate: Operating leases | 7.60% |
Weighted-average discount rate: Finance leases | 6.60% |
Leases - Other information asso
Leases - Other information associated with leases (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating cash flows from operating leases | $ 47 |
Operating cash flows from finance leases | 5 |
Financing cash flows from finance leases | 7 |
Right-of-use assets obtained in exchange for new finance lease obligations | 1 |
Right-of-use assets obtained in exchange for new operating lease obligations | $ 30 |
Leases - Future minimum lease r
Leases - Future minimum lease receipts and commitments (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Lease Receipts, Direct Financing Leases | |||
2019 | $ 11 | ||
2020 | 10 | ||
2021 | 7 | ||
2022 | 5 | ||
2023 | 5 | ||
Thereafter | 19 | ||
Total minimum receipts | 57 | ||
Lease Receipts, Operating Leases | |||
2019 | 314 | ||
2020 | 396 | ||
2021 | 371 | ||
2022 | 346 | ||
2023 | 324 | ||
Thereafter | 1,821 | ||
Total minimum receipts | 3,572 | ||
Lease Commitments, Finance Leases | |||
2019 | 35 | ||
2020 | 45 | ||
2021 | 43 | ||
2022 | 42 | ||
2023 | 39 | ||
Thereafter | 264 | ||
Total minimum payments | 468 | ||
Less amount representing interest | (155) | ||
Present value of minimum finance lease payments | 313 | ||
Current portion of finance lease obligation | (26) | ||
Long-term portion of finance lease obligation | 287 | $ 288 | |
Lease Commitments, Operating Leases | |||
2019 | 143 | ||
2020 | 183 | ||
2021 | 171 | ||
2022 | 158 | ||
2023 | 144 | ||
Thereafter | 909 | ||
Total minimum payments | 1,708 | ||
Less amount representing interest | (543) | ||
Present value of minimum operating lease payments | 1,165 | ||
Current portion of operating lease obligation | (119) | $ 0 | |
Operating lease liabilities, net of current portion | 1,046 | $ 1,028 | |
Minimum sublease rentals | $ 2,332 | ||
Lease Receipts, Direct Financing Leases | |||
2019 | 14 | ||
2020 | 10 | ||
2021 | 7 | ||
2022 | 5 | ||
2023 | 5 | ||
Thereafter | 19 | ||
Total minimum receipts | 60 | ||
Lease Receipts, Operating Leases | |||
2019 | 416 | ||
2020 | 388 | ||
2021 | 360 | ||
2022 | 331 | ||
2023 | 306 | ||
Thereafter | 1,704 | ||
Total minimum receipts | 3,505 | ||
Lease Commitments, Finance Leases | |||
2019 | 38 | ||
2020 | 36 | ||
2021 | 34 | ||
2022 | 33 | ||
2023 | 30 | ||
Thereafter | 201 | ||
Total minimum payments | 372 | ||
Less amount representing interest | (125) | ||
Present value of minimum finance lease payments | 247 | ||
Current portion of finance lease obligation | (21) | ||
Finance leases, net of current portion | 226 | ||
Lease Commitments, Operating Leases | |||
2019 | 183 | ||
2020 | 172 | ||
2021 | 158 | ||
2022 | 145 | ||
2023 | 130 | ||
Thereafter | 831 | ||
Total minimum payments | 1,619 | ||
Minimum sublease rentals | $ 2,290 |
Revenue Recognition - Change in
Revenue Recognition - Change in contract liabilities (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |
Contract liabilities expected to be recognized in | $ 480 |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | 486 |
Revenue recognized that was included in the contract liability balance at the beginning of the year | (11) |
Increase, excluding amounts recognized as revenue during the period | 8 |
Impact of foreign currency translation | (3) |
Ending balance | 480 |
Tim Hortons brand | |
Segment Reporting Information [Line Items] | |
Contract liabilities expected to be recognized in | 63 |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | 62 |
Revenue recognized that was included in the contract liability balance at the beginning of the year | (2) |
Increase, excluding amounts recognized as revenue during the period | 2 |
Impact of foreign currency translation | 1 |
Ending balance | 63 |
Burger King brand | |
Segment Reporting Information [Line Items] | |
Contract liabilities expected to be recognized in | 397 |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | 405 |
Revenue recognized that was included in the contract liability balance at the beginning of the year | (9) |
Increase, excluding amounts recognized as revenue during the period | 5 |
Impact of foreign currency translation | (4) |
Ending balance | 397 |
Popeyes brand | |
Segment Reporting Information [Line Items] | |
Contract liabilities expected to be recognized in | 20 |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | 19 |
Revenue recognized that was included in the contract liability balance at the beginning of the year | 0 |
Increase, excluding amounts recognized as revenue during the period | 1 |
Impact of foreign currency translation | 0 |
Ending balance | $ 20 |
Revenue Recognition - Estimated
Revenue Recognition - Estimated revenue recognition (Details) $ in Millions | Mar. 31, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 480 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 29 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 37 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 36 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 35 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 34 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 309 |
Tim Hortons brand | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 63 |
Tim Hortons brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 6 |
Tim Hortons brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 7 |
Tim Hortons brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 7 |
Tim Hortons brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 7 |
Tim Hortons brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 6 |
Tim Hortons brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 30 |
Burger King brand | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 397 |
Burger King brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 22 |
Burger King brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 28 |
Burger King brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 28 |
Burger King brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 27 |
Burger King brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 27 |
Burger King brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 265 |
Popeyes brand | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 20 |
Popeyes brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 1 |
Popeyes brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 2 |
Popeyes brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 1 |
Popeyes brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 1 |
Popeyes brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 1 |
Popeyes brand | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 14 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of total revenues (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Property revenues | $ 199 | $ 178 |
Revenues | 1,266 | 1,254 |
Sales | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Revenues | 522 | 548 |
Royalties | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Revenues | 528 | 510 |
Franchise fees and other revenue | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Revenues | $ 17 | $ 18 |
Earnings per Unit - Basic and D
Earnings per Unit - Basic and Diluted Earnings Per Unit (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Allocation of net income among partner interests: | ||
Net income attributable to common unitholders | $ 246 | $ 279 |
Class A common units | ||
Allocation of net income among partner interests: | ||
Net income attributable to common unitholders | $ 135 | $ 148 |
Denominator - basic and diluted partnership units: | ||
Total weighted average basic and diluted units outstanding (shares) | 202 | 202 |
Earnings per unit - basic and diluted: | ||
Earnings per unit - basic and diluted (in usd per share) | $ 0.67 | $ 0.73 |
Partnership Exchangeable Units | ||
Allocation of net income among partner interests: | ||
Net income attributable to common unitholders | $ 111 | $ 131 |
Denominator - basic and diluted partnership units: | ||
Total weighted average basic and diluted units outstanding (shares) | 208 | 218 |
Earnings per unit - basic and diluted: | ||
Earnings per unit - basic and diluted (in usd per share) | $ 0.53 | $ 0.60 |
Intangible Assets, net and Go_3
Intangible Assets, net and Goodwill - Schedule of Intangible Assets, net and Goodwill (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Identifiable assets, Gross | $ 839 | $ 1,112 | |
Identifiable assets, Accumulated Amortization | (262) | (394) | |
Identifiable assets, Net | 577 | 718 | |
Intangible assets, net | 10,427 | $ 10,330 | 10,463 |
Goodwill | 5,555 | $ 5,486 | 5,486 |
Trade names | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Indefinite lived intangible assets: | 9,850 | 9,745 | |
Tim Hortons brand | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Goodwill | 4,111 | 4,038 | |
Tim Hortons brand | Trade names | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Indefinite lived intangible assets: | 6,378 | 6,259 | |
Burger King brand | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Goodwill | 598 | 602 | |
Burger King brand | Trade names | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Indefinite lived intangible assets: | 2,117 | 2,131 | |
Popeyes brand | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Goodwill | 846 | 846 | |
Popeyes brand | Trade names | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Indefinite lived intangible assets: | 1,355 | 1,355 | |
Franchise agreements | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Identifiable assets, Gross | 706 | 705 | |
Identifiable assets, Accumulated Amortization | (200) | (194) | |
Identifiable assets, Net | 506 | 511 | |
Favorable leases | |||
Finite And Indefinite Lived Intangible Assets [Line Items] | |||
Identifiable assets, Gross | 133 | 407 | |
Identifiable assets, Accumulated Amortization | (62) | (200) | |
Identifiable assets, Net | $ 71 | $ 207 |
Intangible Assets, net and Go_4
Intangible Assets, net and Goodwill - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense on intangible assets | $ 11 | $ 18 |
Equity Method Investments - Add
Equity Method Investments - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Schedule of Equity Method Investments [Line Items] | |||
Investment in subsidiaries | $ 0 | $ 0 | |
Joint-venture interest | 50.00% | ||
Increase to carrying value of equity method investment | $ 20 | ||
Equity Method Investee | |||
Schedule of Equity Method Investments [Line Items] | |||
Accounts receivable from equity method investments | $ 33 | 41 | |
Wendy's Company TIMWEN Partnership | Tim Hortons brand | |||
Schedule of Equity Method Investments [Line Items] | |||
Cash distributions | 2 | 3 | |
Contingent rent expense | 4 | $ 5 | |
Carrols Restaurant Group, Inc. | |||
Schedule of Equity Method Investments [Line Items] | |||
Quoted market price | $ 94 | ||
BK Brasil | |||
Schedule of Equity Method Investments [Line Items] | |||
Joint-venture interest | 10.10% | ||
Quoted market price | $ 127 | ||
Other assets | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment in subsidiaries | $ 256 | $ 259 | |
Canada | Wendy's Company TIMWEN Partnership | |||
Schedule of Equity Method Investments [Line Items] | |||
Joint-venture interest | 50.00% | ||
United States | Carrols Restaurant Group, Inc. | |||
Schedule of Equity Method Investments [Line Items] | |||
Joint-venture interest | 20.50% |
Equity Method Investments - Sum
Equity Method Investments - Summary of Franchise and Property Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues from affiliates: | ||
Property revenues | $ 199 | $ 178 |
Revenues | 1,266 | 1,254 |
Affiliates | ||
Revenues from affiliates: | ||
Property revenues | 8 | 9 |
Revenues | 89 | 79 |
Royalties | ||
Revenues from affiliates: | ||
Revenues | 528 | 510 |
Royalties | Affiliates | ||
Revenues from affiliates: | ||
Revenues | 78 | 68 |
Franchise fees and other revenue | ||
Revenues from affiliates: | ||
Revenues | 17 | 18 |
Franchise fees and other revenue | Affiliates | ||
Revenues from affiliates: | ||
Revenues | $ 3 | $ 2 |
Other Accrued Liabilities and_3
Other Accrued Liabilities and Other Liabilities, net - Schedule of Other Accrued Liabilities (Current) and Other Liabilities (NonCurrent), Net (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Current: | |||
Dividend payable | $ 231 | $ 207 | |
Interest payable | 92 | 87 | |
Accrued compensation and benefits | 41 | 69 | |
Taxes payable | 66 | 113 | |
Deferred income | 37 | 27 | |
Accrued advertising expenses | 11 | 30 | |
Restructuring and other provisions | 9 | 11 | |
Current portion of operating lease liabilities | 119 | 0 | |
Other | 83 | 93 | |
Other accrued liabilities | 689 | $ 751 | 637 |
Noncurrent: | |||
Taxes payable | 512 | 493 | |
Contract liabilities, net | 480 | 486 | |
Unfavorable leases | 118 | 192 | |
Derivatives liabilities | 278 | 179 | |
Accrued pension | 64 | 64 | |
Accrued lease straight-lining liability | 0 | 69 | |
Deferred income | 32 | 22 | |
Other | 47 | 42 | |
Other liabilities, net | $ 1,531 | $ 1,415 | $ 1,547 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | |||
Other | $ 81 | $ 150 | |
Less: unamortized deferred financing costs and deferred issue discount | (138) | (145) | |
Total debt, net | 11,815 | 11,893 | |
Less: current maturities of debt | (68) | (70) | |
Total long-term debt | 11,747 | $ 11,758 | 11,823 |
Term Loan Facility (due February 17, 2024) | |||
Debt Instrument [Line Items] | |||
Term Loan Facility (due February 17, 2024) | 6,322 | 6,338 | |
2017 4.25% Senior Notes (due May 15, 2024) | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 1,500 | 1,500 | |
Stated interest rate (as a percent) | 4.25% | ||
2015 4.625% Senior Notes (due January 15, 2022) | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 1,250 | 1,250 | |
Stated interest rate (as a percent) | 4.625% | ||
2017 5.00% Senior Notes (due October 15, 2025) | |||
Debt Instrument [Line Items] | |||
Senior notes | $ 2,800 | $ 2,800 | |
Stated interest rate (as a percent) | 5.00% |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility - Additional Information (Details) - Revolving Credit Facility | Mar. 31, 2019USD ($) |
Line of Credit Facility [Line Items] | |
Amount outstanding under credit facility | $ 0 |
Letter of credit sublimit as part of revolving credit facility | 125,000,000 |
Letters of credit issued against credit facility | 2,000,000 |
Remaining borrowing capacity | $ 498,000,000 |
Long-Term Debt - TH facility -
Long-Term Debt - TH facility - Additional Information (Details) - TH Facility - CAD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Line of Credit Facility [Line Items] | ||
Aggregate principal amount outstanding | $ 100 | |
Proceeds from lines of credit | $ 100 | |
Interest rate | 3.37% | |
Canadian Bankers' Acceptance Rate | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 1.40% | |
Prime Rate | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 0.40% |
Long-Term Debt - Schedule of Fa
Long-Term Debt - Schedule of Fair Value Measurement (Details) - USD ($) $ in Billions | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Fair value of our variable term debt and senior notes | $ 12 | $ 11 |
Principal carrying amount of our variable term debt and senior notes | $ 12 | $ 12 |
Long-Term Debt - Schedule of In
Long-Term Debt - Schedule of Interest Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Debt | $ 124 | $ 130 |
Finance lease obligations | 5 | 6 |
Amortization of deferred financing costs and debt issuance discount | 7 | 7 |
Interest income | (4) | (3) |
Interest expense, net | 132 | 140 |
Accounting Standards Update 2017-12 | ||
Debt Instrument [Line Items] | ||
Gain (loss) reclassified to earnings, net investment hedge | $ 18 | $ 4 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 18.70% | 0.60% |
Effective income tax rate reconciliation, stock option exercises | 22.70% |
Equity - Additional Information
Equity - Additional Information (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Partnership Exchangeable Units | ||
Stockholders Equity [Line Items] | ||
BKW reorganization into Partnership, Shares | 141,190 | 29,432 |
Equity - Summary of Changes in
Equity - Summary of Changes in the Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balances | $ 3,618 | $ 4,561 |
Foreign currency translation adjustment | 159 | (217) |
Amounts reclassified to earnings of cash flow hedges, net of tax | (1) | 6 |
Ending balances | 3,773 | 4,242 |
Derivatives | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balances | 454 | |
Net change in fair value of derivatives, net of tax | (110) | |
Amounts reclassified to earnings of cash flow hedges, net of tax | (1) | |
Ending balances | 343 | |
Pensions | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balances | (27) | |
Ending balances | (27) | |
Foreign Currency Translation | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balances | (1,864) | |
Foreign currency translation adjustment | 159 | |
Ending balances | (1,705) | |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balances | (1,437) | (884) |
Foreign currency translation adjustment | 159 | |
Net change in fair value of derivatives, net of tax | (110) | |
Amounts reclassified to earnings of cash flow hedges, net of tax | (1) | |
Ending balances | $ (1,389) | $ (1,067) |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2019USD ($) | Dec. 31, 2015USD ($) | Mar. 31, 2019CAD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2019EUR (€) | Dec. 31, 2018USD ($) | Aug. 31, 2018USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Amount of pre-tax losses in AOCI expect to be reclassified into interest expense | $ (12,000,000) | ||||||
Maximum | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional value | $ 130,000,000 | ||||||
Interest rate swaps | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional value | $ 2,500,000,000 | $ 3,500,000,000 | |||||
Interest rate swaps | Interest expense, net | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Net unrealized loss recognized at settlement | $ 85,000,000 | ||||||
Cross Currency Interest Rate Contract | Fixed Income Interest Rate | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional value | $ 6,754 | 5,000,000,000 | $ 400,000,000 | ||||
Cross Currency Interest Rate Contract | Fixed Income Interest Rate | Hedge Funds | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Notional value | $ 1,200,000,000 | € 1,108 |
Derivative Instruments - Quanti
Derivative Instruments - Quantitative Disclosures of Derivative Instruments Including Estimated Fair Values (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest rate swaps | Derivatives designated as cash flow hedges | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain or (Loss) Recognized in Other Comprehensive Income (Loss) | $ (44) | $ 29 |
Forward-currency contracts | Derivatives designated as cash flow hedges | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain or (Loss) Recognized in Other Comprehensive Income (Loss) | (2) | 5 |
Cross-currency rate swaps | Derivatives designated as net investment hedges | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain or (Loss) Recognized in Other Comprehensive Income (Loss) | (102) | 11 |
Interest expense, net | Interest rate swaps | Derivatives designated as cash flow hedges | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain or (Loss) Reclassified from AOCI into Earnings | (1) | (6) |
Interest expense, net | Cross-currency rate swaps | Derivatives designated as net investment hedges | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing) | 18 | 4 |
Cost of sales | Forward-currency contracts | Derivatives designated as cash flow hedges | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Gain or (Loss) Reclassified from AOCI into Earnings | $ 2 | $ (2) |
Derivative Instruments - Summar
Derivative Instruments - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives assets | $ 20 | $ 65 |
Derivatives liabilities | 278 | 179 |
Derivatives designated as cash flow hedges | Foreign currency | Prepaids and other current assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives assets | 3 | 7 |
Derivatives designated as cash flow hedges | Interest rate | Other liabilities, net | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives liabilities | 118 | 72 |
Derivatives designated as net investment hedges | Foreign currency | Other assets, net | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives assets | 17 | 58 |
Derivatives designated as net investment hedges | Foreign currency | Other liabilities, net | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives liabilities | $ 160 | $ 107 |
Other Operating Expenses (Inc_3
Other Operating Expenses (Income), net - Other Operating Expenses (Income), Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Other Income and Expenses [Abstract] | ||
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings | $ 3 | $ 2 |
Litigation settlements (gains) and reserves, net | 0 | (6) |
Net losses (gains) on foreign exchange | (15) | 16 |
Other, net | (5) | 1 |
Other operating expenses (income), net | $ (17) | $ 13 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - TDL Group Corp - The TDL Group Corp. vs Tim Hortons Advertising Fund - Settled Litigation $ in Millions | Feb. 22, 2019CAD ($)claim |
Loss Contingencies [Line Items] | |
Number of lawsuits settled | claim | 2 |
Amount of contribution to be paid | $ 10 |
Term of amount to be contributed | 2 years |
Legal and administrative expenses | $ 2 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) Segment in Millions | 3 Months Ended |
Mar. 31, 2019SegmentBrand | |
Segment Reporting [Abstract] | |
Number of brands | Brand | 3 |
Number of operating segments | 3 |
Number of reportable segments | 3 |
Segment Reporting - Revenues by
Segment Reporting - Revenues by Operating Segment and Country (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue, Major Customer [Line Items] | ||
Total revenues | $ 1,266 | $ 1,254 |
Canada | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 676 | 692 |
United States | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 444 | 421 |
Other | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 146 | 141 |
Tim Hortons brand | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 749 | 763 |
Burger King brand | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | 411 | 390 |
Popeyes brand | ||
Revenue, Major Customer [Line Items] | ||
Total revenues | $ 106 | $ 101 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Segment Income to Net Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Adjusted EBITDA | $ 500 | $ 498 |
Impact of equity method investments | (2) | (14) |
Other operating expenses (income), net | (17) | 13 |
EBITDA | 481 | 468 |
Depreciation and amortization | 47 | 47 |
Income from operations | 434 | 421 |
Interest expense, net | 132 | 140 |
Income tax expense | 56 | 2 |
Net income | 246 | 279 |
Popeyes Acquisition | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
PLK Transaction costs | 0 | 5 |
Unallocated Management G&A | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Share-based compensation and non-cash incentive compensation expense | 25 | 15 |
Corporate restructuring and tax advisory fees | 6 | 7 |
Office centralization and relocation costs | 4 | 0 |
Impact of equity method investments | 1 | (10) |
Other operating expenses (income), net | (17) | 13 |
Tim Hortons brand | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Adjusted EBITDA | 237 | 245 |
Burger King brand | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Adjusted EBITDA | 222 | 214 |
Popeyes brand | Operating Segments | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Adjusted EBITDA | $ 41 | $ 39 |
Supplemental Financial Inform_3
Supplemental Financial Information - Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 902 | $ 913 | $ 913 | $ 821 | $ 1,097 |
Accounts and notes receivable, net | 441 | 452 | 452 | ||
Inventories, net | 74 | 75 | 75 | ||
Prepaids and other current assets | 63 | 60 | 60 | ||
Total current assets | 1,480 | 1,500 | 1,500 | ||
Property and equipment, net | 2,011 | 2,022 | 1,996 | ||
Operating lease assets | 1,148 | 1,143 | |||
Intangible assets, net | 10,427 | 10,330 | 10,463 | ||
Goodwill | 5,555 | 5,486 | 5,486 | ||
Net investment in property leased to franchisees | 50 | 54 | 54 | ||
Intercompany receivable | 0 | 0 | |||
Investment in subsidiaries | 0 | 0 | |||
Other assets, net | 622 | 642 | 642 | ||
Total assets | 21,293 | 21,177 | 20,141 | ||
Current liabilities: | |||||
Accounts and drafts payable | 451 | 513 | 513 | ||
Other accrued liabilities | 689 | 637 | |||
Gift card liability | 112 | 167 | 167 | ||
Current portion of long term debt and finance leases | 94 | 91 | 91 | ||
Total current liabilities | 1,346 | 1,522 | 1,408 | ||
Term debt, net of current portion | 11,747 | 11,758 | 11,823 | ||
Finance leases, net of current portion | 287 | 288 | |||
Capital leases, net of current portion | 226 | ||||
Operating lease liabilities, net of current portion | 1,046 | 1,028 | |||
Other liabilities, net | 1,531 | 1,415 | 1,547 | ||
Payables to affiliates | 0 | 0 | |||
Deferred income taxes, net | 1,563 | 1,527 | 1,519 | ||
Total liabilities | 17,520 | 17,538 | 16,523 | ||
Partners’ capital: | |||||
Common shares | 0 | 0 | |||
Retained Earnings | 0 | 0 | |||
Accumulated other comprehensive income (loss) | (1,389) | (1,437) | (1,437) | ||
Total Partners’ capital | 3,771 | 3,616 | |||
Noncontrolling interests | 2 | 2 | 2 | ||
Total equity | 3,773 | 3,639 | 3,618 | 4,242 | 4,561 |
Total liabilities and equity | 21,293 | 21,177 | 20,141 | ||
Class A common units | |||||
Partners’ capital: | |||||
Class A common units | 4,423 | 4,323 | |||
Common shares | 4,335 | 4,323 | |||
Total equity | 4,423 | 4,323 | 4,118 | 4,168 | |
Partnership exchangeable units | |||||
Partners’ capital: | |||||
Partnership exchangeable units | 737 | $ 739 | 730 | ||
Total equity | 737 | 730 | 1,189 | 1,276 | |
Eliminations | |||||
Current assets: | |||||
Cash and cash equivalents | 0 | 0 | 0 | 0 | |
Accounts and notes receivable, net | 0 | 0 | |||
Inventories, net | 0 | 0 | |||
Prepaids and other current assets | 0 | 0 | |||
Total current assets | 0 | 0 | |||
Property and equipment, net | 0 | 0 | |||
Operating lease assets | 0 | ||||
Intangible assets, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Net investment in property leased to franchisees | 0 | 0 | |||
Intercompany receivable | (231) | (207) | |||
Investment in subsidiaries | (3,773) | (3,618) | |||
Other assets, net | 0 | 0 | |||
Total assets | (4,004) | (3,825) | |||
Current liabilities: | |||||
Accounts and drafts payable | 0 | 0 | |||
Other accrued liabilities | 0 | 0 | |||
Gift card liability | 0 | 0 | |||
Current portion of long term debt and finance leases | 0 | 0 | |||
Total current liabilities | 0 | 0 | |||
Term debt, net of current portion | 0 | 0 | |||
Finance leases, net of current portion | 0 | ||||
Capital leases, net of current portion | 0 | ||||
Operating lease liabilities, net of current portion | 0 | ||||
Other liabilities, net | 0 | 0 | |||
Payables to affiliates | (231) | (207) | |||
Deferred income taxes, net | 0 | 0 | |||
Total liabilities | (231) | (207) | |||
Partners’ capital: | |||||
Common shares | (3,142) | (3,071) | |||
Retained Earnings | (2,018) | (1,982) | |||
Accumulated other comprehensive income (loss) | 1,389 | 1,437 | |||
Total Partners’ capital | (3,771) | (3,616) | |||
Noncontrolling interests | (2) | (2) | |||
Total equity | (3,773) | (3,618) | |||
Total liabilities and equity | (4,004) | (3,825) | |||
Eliminations | Class A common units | |||||
Partners’ capital: | |||||
Class A common units | 0 | 0 | |||
Eliminations | Partnership exchangeable units | |||||
Partners’ capital: | |||||
Partnership exchangeable units | 0 | 0 | |||
Consolidated Borrowers | Reportable Legal Entities | |||||
Current assets: | |||||
Cash and cash equivalents | 902 | 913 | 821 | 1,097 | |
Accounts and notes receivable, net | 441 | 452 | |||
Inventories, net | 74 | 75 | |||
Prepaids and other current assets | 63 | 60 | |||
Total current assets | 1,480 | 1,500 | |||
Property and equipment, net | 2,011 | 1,996 | |||
Operating lease assets | 1,148 | ||||
Intangible assets, net | 10,427 | 10,463 | |||
Goodwill | 5,555 | 5,486 | |||
Net investment in property leased to franchisees | 50 | 54 | |||
Intercompany receivable | 0 | 0 | |||
Investment in subsidiaries | 0 | 0 | |||
Other assets, net | 622 | 642 | |||
Total assets | 21,293 | 20,141 | |||
Current liabilities: | |||||
Accounts and drafts payable | 451 | 513 | |||
Other accrued liabilities | 458 | 430 | |||
Gift card liability | 112 | 167 | |||
Current portion of long term debt and finance leases | 94 | 91 | |||
Total current liabilities | 1,115 | 1,201 | |||
Term debt, net of current portion | 11,747 | 11,823 | |||
Finance leases, net of current portion | 287 | ||||
Capital leases, net of current portion | 226 | ||||
Operating lease liabilities, net of current portion | 1,046 | ||||
Other liabilities, net | 1,531 | 1,547 | |||
Payables to affiliates | 231 | 207 | |||
Deferred income taxes, net | 1,563 | 1,519 | |||
Total liabilities | 17,520 | 16,523 | |||
Partners’ capital: | |||||
Common shares | 3,142 | 3,071 | |||
Retained Earnings | 2,018 | 1,982 | |||
Accumulated other comprehensive income (loss) | (1,389) | (1,437) | |||
Total Partners’ capital | 3,771 | 3,616 | |||
Noncontrolling interests | 2 | 2 | |||
Total equity | 3,773 | 3,618 | |||
Total liabilities and equity | 21,293 | 20,141 | |||
Consolidated Borrowers | Reportable Legal Entities | Class A common units | |||||
Partners’ capital: | |||||
Class A common units | 0 | 0 | |||
Consolidated Borrowers | Reportable Legal Entities | Partnership exchangeable units | |||||
Partners’ capital: | |||||
Partnership exchangeable units | 0 | 0 | |||
RBILP | Reportable Legal Entities | |||||
Current assets: | |||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 | |
Accounts and notes receivable, net | 0 | 0 | |||
Inventories, net | 0 | 0 | |||
Prepaids and other current assets | 0 | 0 | |||
Total current assets | 0 | 0 | |||
Property and equipment, net | 0 | 0 | |||
Operating lease assets | 0 | ||||
Intangible assets, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Net investment in property leased to franchisees | 0 | 0 | |||
Intercompany receivable | 231 | 207 | |||
Investment in subsidiaries | 3,773 | 3,618 | |||
Other assets, net | 0 | 0 | |||
Total assets | 4,004 | 3,825 | |||
Current liabilities: | |||||
Accounts and drafts payable | 0 | 0 | |||
Other accrued liabilities | 231 | 207 | |||
Gift card liability | 0 | 0 | |||
Current portion of long term debt and finance leases | 0 | 0 | |||
Total current liabilities | 231 | 207 | |||
Term debt, net of current portion | 0 | 0 | |||
Finance leases, net of current portion | 0 | ||||
Capital leases, net of current portion | 0 | ||||
Operating lease liabilities, net of current portion | 0 | ||||
Other liabilities, net | 0 | 0 | |||
Payables to affiliates | 0 | 0 | |||
Deferred income taxes, net | 0 | 0 | |||
Total liabilities | 231 | 207 | |||
Partners’ capital: | |||||
Common shares | 0 | 0 | |||
Retained Earnings | 0 | 0 | |||
Accumulated other comprehensive income (loss) | (1,389) | (1,437) | |||
Total Partners’ capital | 3,771 | 3,616 | |||
Noncontrolling interests | 2 | 2 | |||
Total equity | 3,773 | 3,618 | |||
Total liabilities and equity | 4,004 | 3,825 | |||
RBILP | Reportable Legal Entities | Class A common units | |||||
Partners’ capital: | |||||
Class A common units | 4,423 | 4,323 | |||
RBILP | Reportable Legal Entities | Partnership exchangeable units | |||||
Partners’ capital: | |||||
Partnership exchangeable units | $ 737 | $ 730 |
Supplemental Financial Inform_4
Supplemental Financial Information - Condensed Consolidating Statements of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Franchise and property revenues | $ 744 | $ 706 |
Revenues | 1,266 | 1,254 |
Operating costs and expenses: | ||
Cost of sales | 406 | 429 |
Franchise and property expenses | 133 | 104 |
Selling, general and administrative expenses | 312 | 301 |
(Income) loss from equity method investments | (2) | (14) |
Other operating expenses (income), net | (17) | 13 |
Total operating costs and expenses | 832 | 833 |
Income from operations | 434 | 421 |
Interest expense, net | 132 | 140 |
Income before income taxes | 302 | 281 |
Income tax expense | 56 | 2 |
Net income | 246 | 279 |
Equity in earnings of consolidated subsidiaries | 0 | 0 |
Net income | 246 | 279 |
Comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Net income attributable to common unitholders | 246 | 279 |
Comprehensive income (loss) | 294 | 96 |
Eliminations | ||
Revenues: | ||
Franchise and property revenues | 0 | 0 |
Revenues | 0 | 0 |
Operating costs and expenses: | ||
Cost of sales | 0 | 0 |
Franchise and property expenses | 0 | 0 |
Selling, general and administrative expenses | 0 | 0 |
(Income) loss from equity method investments | 0 | 0 |
Other operating expenses (income), net | 0 | 0 |
Total operating costs and expenses | 0 | 0 |
Income from operations | 0 | 0 |
Interest expense, net | 0 | 0 |
Income before income taxes | 0 | 0 |
Income tax expense | 0 | 0 |
Net income | 0 | 0 |
Equity in earnings of consolidated subsidiaries | (246) | (279) |
Net income | (246) | (279) |
Comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Net income attributable to common unitholders | (246) | (279) |
Comprehensive income (loss) | (294) | (96) |
Consolidated Borrowers | Reportable Legal Entities | ||
Revenues: | ||
Franchise and property revenues | 744 | 706 |
Revenues | 1,266 | 1,254 |
Operating costs and expenses: | ||
Cost of sales | 406 | 429 |
Franchise and property expenses | 133 | 104 |
Selling, general and administrative expenses | 312 | 301 |
(Income) loss from equity method investments | (2) | (14) |
Other operating expenses (income), net | (17) | 13 |
Total operating costs and expenses | 832 | 833 |
Income from operations | 434 | 421 |
Interest expense, net | 132 | 140 |
Income before income taxes | 302 | 281 |
Income tax expense | 56 | 2 |
Net income | 246 | 279 |
Equity in earnings of consolidated subsidiaries | 0 | 0 |
Net income | 246 | 279 |
Comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Net income attributable to common unitholders | 246 | 279 |
Comprehensive income (loss) | 294 | 96 |
RBILP | Reportable Legal Entities | ||
Revenues: | ||
Franchise and property revenues | 0 | 0 |
Revenues | 0 | 0 |
Operating costs and expenses: | ||
Cost of sales | 0 | 0 |
Franchise and property expenses | 0 | 0 |
Selling, general and administrative expenses | 0 | 0 |
(Income) loss from equity method investments | 0 | 0 |
Other operating expenses (income), net | 0 | 0 |
Total operating costs and expenses | 0 | 0 |
Income from operations | 0 | 0 |
Interest expense, net | 0 | 0 |
Income before income taxes | 0 | 0 |
Income tax expense | 0 | 0 |
Net income | 0 | 0 |
Equity in earnings of consolidated subsidiaries | 246 | 279 |
Net income | 246 | 279 |
Comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 |
Net income attributable to common unitholders | 246 | 279 |
Comprehensive income (loss) | 294 | 96 |
Sales | ||
Revenues: | ||
Sales | 522 | 548 |
Sales | Eliminations | ||
Revenues: | ||
Sales | 0 | 0 |
Sales | Consolidated Borrowers | Reportable Legal Entities | ||
Revenues: | ||
Sales | 522 | 548 |
Sales | RBILP | Reportable Legal Entities | ||
Revenues: | ||
Sales | $ 0 | $ 0 |
Supplemental Financial Inform_5
Supplemental Financial Information - Condensed Consolidating Statements of Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 246 | $ 279 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Equity in loss (earnings) of consolidated subsidiaries | 0 | 0 |
Depreciation and amortization | 47 | 47 |
Amortization of deferred financing costs and debt issuance discount | 7 | 7 |
(Income) loss from equity method investments | (2) | (14) |
Loss (gain) on remeasurement of foreign denominated transactions | (15) | 16 |
Net (gains) losses on derivatives | (20) | 2 |
Share-based compensation expense | 22 | 13 |
Deferred income taxes | 38 | (19) |
Other | 3 | 4 |
Changes in current assets and liabilities, excluding acquisitions and dispositions: | ||
Accounts and notes receivable | 14 | 15 |
Inventories and prepaids and other current assets | (13) | (7) |
Accounts and drafts payable | (69) | (73) |
Other accrued liabilities and gift card liability | (126) | (374) |
Tenant inducements paid to franchisees | 0 | (2) |
Other long-term assets and liabilities | 22 | (36) |
Net cash provided by (used for) operating activities | 154 | (142) |
Cash flows from investing activities: | ||
Payments for property and equipment | (5) | (7) |
Proceeds from disposal of assets, restaurant closures, and refranchisings | 4 | 2 |
Settlement/sale of derivatives, net | 11 | 3 |
Other investing activities, net | 1 | 4 |
Net cash provided by (used for) investing activities | 11 | 2 |
Cash flows from financing activities: | ||
Repayments of long-term debt and finance leases | (23) | (22) |
Distributions on Class A common, preferred and Partnership exchangeable units | (207) | (97) |
Distributions to RBI for payments in connections with redemption of preferred shares | 0 | (34) |
Capital contribution from RBI Inc. | 42 | 25 |
Distributions from subsidiaries | 0 | 0 |
Other financing activities, net | 6 | 0 |
Net cash (used for) provided by financing activities | (182) | (128) |
Effect of exchange rates on cash and cash equivalents | 6 | (8) |
Increase (decrease) in cash and cash equivalents | (11) | (276) |
Cash and cash equivalents at beginning of period | 913 | 1,097 |
Cash and cash equivalents at end of period | 902 | 821 |
Eliminations | ||
Cash flows from operating activities: | ||
Net income | (246) | (279) |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Equity in loss (earnings) of consolidated subsidiaries | 246 | 279 |
Depreciation and amortization | 0 | 0 |
Amortization of deferred financing costs and debt issuance discount | 0 | 0 |
(Income) loss from equity method investments | 0 | 0 |
Loss (gain) on remeasurement of foreign denominated transactions | 0 | 0 |
Net (gains) losses on derivatives | 0 | 0 |
Share-based compensation expense | 0 | 0 |
Deferred income taxes | 0 | 0 |
Other | 0 | 0 |
Changes in current assets and liabilities, excluding acquisitions and dispositions: | ||
Accounts and notes receivable | 0 | 0 |
Inventories and prepaids and other current assets | 0 | 0 |
Accounts and drafts payable | 0 | 0 |
Other accrued liabilities and gift card liability | 0 | 0 |
Tenant inducements paid to franchisees | 0 | |
Other long-term assets and liabilities | 0 | 0 |
Net cash provided by (used for) operating activities | 0 | 0 |
Cash flows from investing activities: | ||
Payments for property and equipment | 0 | 0 |
Proceeds from disposal of assets, restaurant closures, and refranchisings | 0 | 0 |
Settlement/sale of derivatives, net | 0 | 0 |
Other investing activities, net | 0 | 0 |
Net cash provided by (used for) investing activities | 0 | 0 |
Cash flows from financing activities: | ||
Repayments of long-term debt and finance leases | 0 | 0 |
Distributions on Class A common, preferred and Partnership exchangeable units | 0 | 0 |
Distributions to RBI for payments in connections with redemption of preferred shares | 0 | |
Capital contribution from RBI Inc. | 0 | 0 |
Distributions from subsidiaries | 0 | 0 |
Other financing activities, net | 0 | |
Net cash (used for) provided by financing activities | 0 | 0 |
Effect of exchange rates on cash and cash equivalents | 0 | 0 |
Increase (decrease) in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents at beginning of period | 0 | 0 |
Cash and cash equivalents at end of period | 0 | 0 |
Consolidated Borrowers | Reportable Legal Entities | ||
Cash flows from operating activities: | ||
Net income | 246 | 279 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Equity in loss (earnings) of consolidated subsidiaries | 0 | 0 |
Depreciation and amortization | 47 | 47 |
Amortization of deferred financing costs and debt issuance discount | 7 | 7 |
(Income) loss from equity method investments | (2) | (14) |
Loss (gain) on remeasurement of foreign denominated transactions | (15) | 16 |
Net (gains) losses on derivatives | (20) | 2 |
Share-based compensation expense | 22 | 13 |
Deferred income taxes | 38 | (19) |
Other | 3 | 4 |
Changes in current assets and liabilities, excluding acquisitions and dispositions: | ||
Accounts and notes receivable | 14 | 15 |
Inventories and prepaids and other current assets | (13) | (7) |
Accounts and drafts payable | (69) | (73) |
Other accrued liabilities and gift card liability | (126) | (374) |
Tenant inducements paid to franchisees | (2) | |
Other long-term assets and liabilities | 22 | (36) |
Net cash provided by (used for) operating activities | 154 | (142) |
Cash flows from investing activities: | ||
Payments for property and equipment | (5) | (7) |
Proceeds from disposal of assets, restaurant closures, and refranchisings | 4 | 2 |
Settlement/sale of derivatives, net | 11 | 3 |
Other investing activities, net | 1 | 4 |
Net cash provided by (used for) investing activities | 11 | 2 |
Cash flows from financing activities: | ||
Repayments of long-term debt and finance leases | (23) | (22) |
Distributions on Class A common, preferred and Partnership exchangeable units | 0 | 0 |
Distributions to RBI for payments in connections with redemption of preferred shares | 0 | |
Capital contribution from RBI Inc. | 42 | 25 |
Distributions from subsidiaries | (207) | (131) |
Other financing activities, net | 6 | |
Net cash (used for) provided by financing activities | (182) | (128) |
Effect of exchange rates on cash and cash equivalents | 6 | (8) |
Increase (decrease) in cash and cash equivalents | (11) | (276) |
Cash and cash equivalents at beginning of period | 913 | 1,097 |
Cash and cash equivalents at end of period | 902 | 821 |
RBILP | Reportable Legal Entities | ||
Cash flows from operating activities: | ||
Net income | 246 | 279 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Equity in loss (earnings) of consolidated subsidiaries | (246) | (279) |
Depreciation and amortization | 0 | 0 |
Amortization of deferred financing costs and debt issuance discount | 0 | 0 |
(Income) loss from equity method investments | 0 | 0 |
Loss (gain) on remeasurement of foreign denominated transactions | 0 | 0 |
Net (gains) losses on derivatives | 0 | 0 |
Share-based compensation expense | 0 | 0 |
Deferred income taxes | 0 | 0 |
Other | 0 | 0 |
Changes in current assets and liabilities, excluding acquisitions and dispositions: | ||
Accounts and notes receivable | 0 | 0 |
Inventories and prepaids and other current assets | 0 | 0 |
Accounts and drafts payable | 0 | 0 |
Other accrued liabilities and gift card liability | 0 | 0 |
Tenant inducements paid to franchisees | 0 | |
Other long-term assets and liabilities | 0 | 0 |
Net cash provided by (used for) operating activities | 0 | 0 |
Cash flows from investing activities: | ||
Payments for property and equipment | 0 | 0 |
Proceeds from disposal of assets, restaurant closures, and refranchisings | 0 | 0 |
Settlement/sale of derivatives, net | 0 | 0 |
Other investing activities, net | 0 | 0 |
Net cash provided by (used for) investing activities | 0 | 0 |
Cash flows from financing activities: | ||
Repayments of long-term debt and finance leases | 0 | 0 |
Distributions on Class A common, preferred and Partnership exchangeable units | (207) | (97) |
Distributions to RBI for payments in connections with redemption of preferred shares | (34) | |
Capital contribution from RBI Inc. | 0 | 0 |
Distributions from subsidiaries | 207 | 131 |
Other financing activities, net | 0 | |
Net cash (used for) provided by financing activities | 0 | 0 |
Effect of exchange rates on cash and cash equivalents | 0 | 0 |
Increase (decrease) in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents at beginning of period | 0 | 0 |
Cash and cash equivalents at end of period | $ 0 | $ 0 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - $ / shares | Apr. 03, 2019 | Apr. 29, 2019 | Mar. 31, 2019 | Mar. 31, 2018 |
Subsequent Event [Line Items] | ||||
Cash dividend declared by board (in usd per share) | $ 0.63 | $ 0.55 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Cash dividend paid per common share (in usd per share) | $ 0.50 | |||
Cash dividend declared by board (in usd per share) | $ 0.5 | |||
Partnership Exchangeable Units | Restaurant Brands International Limited Partnership | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Cash dividend paid per exchangeable unit (in usd per share) | $ 0.5 | $ 0.5 |
Uncategorized Items - qsr-20190
Label | Element | Value |
Accounting Standards Update 2016-02 [Member] | Common Class A [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 12,000,000 |
Accounting Standards Update 2016-02 [Member] | Partnerships With Exchangeable Units [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 9,000,000 |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (250,000,000) |
Accounting Standards Update 2014-09 [Member] | Common Class A [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (132,000,000) |
Accounting Standards Update 2014-09 [Member] | Partnerships With Exchangeable Units [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (118,000,000) |