Companies: 10,660     total market cap: $140.341 T
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Restaurant Brands International
QSR
#761
Rank
$32.40 B
Marketcap
๐Ÿ‡จ๐Ÿ‡ฆ Canada
Country
$70.90
Share price
0.80%
Change (1 day)
12.61%
Change (1 year)
๐Ÿ” Restaurant chains๐Ÿด Food
Categories
Restaurant Brands International Inc. or RBI for short is a Canadian-US multinational fast food holding company. The holding has in its protfolio the food restaurant chains Burger King, Tim Hortons, and Popeyes Louisiana Kitchen.
  1. Restaurant Brands International
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2022 Q2

Restaurant Brands International - 10-Q quarterly report FY2022 Q2


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-36786
 
 RESTAURANT BRANDS INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)


Canada 98-1202754
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
130 King Street West, Suite 300 M5X 1E1
Toronto, Ontario
(Address of Principal Executive Offices) (Zip Code)
(905) 339-6011
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class Trading SymbolsName of each exchange on which registered
Common Shares, without par value QSRNew York Stock Exchange
 Toronto Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒  Accelerated filer ☐
Non-accelerated filer ☐  Smaller reporting company ☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of July 29, 2022, there were 305,789,100 common shares of the Registrant outstanding.


RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 
  Page
PART I – Financial Information
Item 1.
4
Item 2.
26
Item 3.
41
Item 4.
41
PART II – Other Information
Item 1.
42
Item 2.
44
Item 6.
44
45
3
PART I — Financial Information
Item 1. Financial Statements
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
 As of
June 30,
2022		December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$838 $1,087 
Accounts and notes receivable, net of allowance of $21 and $18, respectively
551 547 
Inventories, net114 96 
Prepaids and other current assets65 86 
Total current assets1,568 1,816 
Property and equipment, net of accumulated depreciation and amortization of $1,027 and $979, respectively
1,984 2,035 
Operating lease assets, net1,113 1,130 
Intangible assets, net11,296 11,417 
Goodwill5,866 6,006 
Net investment in property leased to franchisees82 80 
Other assets, net845 762 
Total assets$22,754 $23,246 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and drafts payable$705 $614 
Other accrued liabilities783 947 
Gift card liability163 221 
Current portion of long-term debt and finance leases112 96 
Total current liabilities1,763 1,878 
Long-term debt, net of current portion12,881 12,916 
Finance leases, net of current portion326 333 
Operating lease liabilities, net of current portion1,053 1,070 
Other liabilities, net1,477 1,822 
Deferred income taxes, net1,345 1,374 
Total liabilities18,845 19,393 
Shareholders’ equity:
Common shares, no par value; Unlimited shares authorized at June 30, 2022 and December 31, 2021; 305,743,537 shares issued and outstanding at June 30, 2022; 309,025,068 shares issued and outstanding at December 31, 2021
1,929 2,156 
Retained earnings871 791 
Accumulated other comprehensive income (loss)(586)(710)
Total Restaurant Brands International Inc. shareholders’ equity2,214 2,237 
Noncontrolling interests1,695 1,616 
Total shareholders’ equity3,909 3,853 
Total liabilities and shareholders’ equity$22,754 $23,246 
See accompanying notes to condensed consolidated financial statements.
4
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except per share data)
(Unaudited)

Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Revenues:
Sales$708 $590 $1,317 $1,097 
Franchise and property revenues676 612 1,291 1,160 
Advertising revenues and other services255 236 482 441 
Total revenues1,639 1,438 3,090 2,698 
Operating costs and expenses:
Cost of sales584 467 1,078 868 
Franchise and property expenses125 121 255 237 
Advertising expenses and other services259 243 506 480 
General and administrative expenses146 108 279 212 
(Income) loss from equity method investments9 3 22 5 
Other operating expenses (income), net(25)8 (41)(34)
Total operating costs and expenses1,098 950 2,099 1,768 
Income from operations541 488 991 930 
Interest expense, net129 126 256 250 
Income before income taxes412 362 735 680 
Income tax expense (benefit)66 (29)119 18 
Net income346 391 616 662 
Net income attributable to noncontrolling interests (Note 13)110 132 197 224 
Net income attributable to common shareholders$236 $259 $419 $438 
Earnings per common share
Basic$0.77 $0.84 $1.36 $1.43 
Diluted$0.76 $0.84 $1.35 $1.42 
Weighted average shares outstanding (in millions):
Basic308 307 308 307 
Diluted455 466 456 465 
See accompanying notes to condensed consolidated financial statements.

5
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions of U.S. dollars)
(Unaudited)

Three Months Ended
June 30,		Six Months Ended
June 30,
 2022202120222021
Net income$346 $391 $616 $662 
Foreign currency translation adjustment(345)141 (288)195 
Net change in fair value of net investment hedges, net of tax of $(38), $21, $(13) and $41
226 (71)191 (42)
Net change in fair value of cash flow hedges, net of tax of $(30), $5, $(90) and $(28)
83 (40)244 55 
Amounts reclassified to earnings of cash flow hedges, net of tax of $(6), $(4), $(13) and $(12)
16 29 37 53 
Gain (loss) recognized on other, net of tax of $0, $0, $0 and $0
1 1 2 2 
Other comprehensive income (loss)(19)60 186 263 
Comprehensive income (loss)327 451 802 925 
Comprehensive income (loss) attributable to noncontrolling interests104 152 256 312 
Comprehensive income (loss) attributable to common shareholders$223 $299 $546 $613 
See accompanying notes to condensed consolidated financial statements.

6
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
 Issued Common SharesRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Noncontrolling
Interest		Total
 SharesAmount
Balances at December 31, 2021309,025,068 $2,156 $791 $(710)$1,616 $3,853 
Stock option exercises87,177 3 — — — 3 
Share-based compensation— 24 — — — 24 
Issuance of shares906,260 13 — — — 13 
Dividends declared ($0.54 per share)
— — (167)— — (167)
Dividend equivalents declared on restricted stock units— 3 (3)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)
— — — — (78)(78)
Exchange of Partnership exchangeable units for RBI common shares1,525,900 21 — (3)(18)— 
Repurchase of RBI common shares(2,860,002)(161)— — — (161)
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 183 — 87 270 
Other comprehensive income (loss)— — — 140 65 205 
Balances at March 31, 2022308,684,403 $2,059 $804 $(573)$1,671 $3,961 
Stock option exercises25,277 1 — — — 1 
Share-based compensation— 29 — — — 29 
Issuance of shares124,065 — — — — — 
Dividends declared ($0.54 per share)
— — (166)— — (166)
Dividend equivalents declared on restricted stock units— 3 (3)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.54 per unit)
— — — — (77)(77)
Exchange of Partnership exchangeable units for RBI common shares151,154 2 — — (2)— 
Repurchase of RBI common shares(3,241,362)(165)— — — (165)
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 236 — 110 346 
Other comprehensive income (loss)— — — (13)(6)(19)
Balances at June 30, 2022305,743,537 $1,929 $871 $(586)$1,695 $3,909 
See accompanying notes to condensed consolidated financial statements.


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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
Issued Common SharesRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Noncontrolling
Interest		Total
SharesAmount
Balances at December 31, 2020304,718,749 $2,399 $622 $(854)$1,554 $3,721 
Stock option exercises530,963 20 — — — 20 
Share-based compensation— 22 — — — 22 
Issuance of shares1,636,858 9 — — — 9 
Dividends declared ($0.53 per share)
— — (163)— — (163)
Dividend equivalents declared on restricted stock units— 3 (3)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (82)(82)
Exchange of Partnership exchangeable units for RBI common shares72,671 1 — — (1)— 
Restaurant VIE contributions (distributions)— — — — 1 1 
Net income— — 179 — 92 271 
Other comprehensive income (loss)— — — 135 68 203 
Balances at March 31, 2021306,959,241 $2,454 $635 $(719)$1,632 $4,002 
Stock option exercises958,671 37 — — — 37 
Share-based compensation— 18 — — — 18 
Issuance of shares34,858 — — — — — 
Dividends declared ($0.53 per share)
— — (164)— — (164)
Dividend equivalents declared on restricted stock units— 2 (2)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.53 per unit)
— — — — (82)(82)
Exchange of Partnership exchangeable units for RBI common shares87,767 1 — — (1)— 
Restaurant VIE contributions (distributions)— — — — (3)(3)
Net income— — 259 — 132 391 
Other comprehensive income (loss)— — — 40 20 60 
Balances at June 30, 2021308,040,537 $2,512 $728 $(679)$1,698 $4,259 
See accompanying notes to condensed consolidated financial statements.
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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)
 Six Months Ended June 30,
 20222021
Cash flows from operating activities:
Net income$616 $662 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization97 100 
Amortization of deferred financing costs and debt issuance discount14 13 
(Income) loss from equity method investments22 5 
(Gain) loss on remeasurement of foreign denominated transactions(52)(35)
Net (gains) losses on derivatives27 42 
Share-based compensation and non-cash incentive compensation expense59 46 
Deferred income taxes— 24 
Other2 (12)
Changes in current assets and liabilities, excluding acquisitions and dispositions:
Accounts and notes receivable4 17 
Inventories and prepaids and other current assets(27)(5)
Accounts and drafts payable99 103 
Other accrued liabilities and gift card liability(199)(129)
Tenant inducements paid to franchisees(6)(1)
Other long-term assets and liabilities13 (85)
Net cash provided by operating activities669 745 
Cash flows from investing activities:
Payments for property and equipment(28)(46)
Net proceeds from disposal of assets, restaurant closures, and refranchisings10 14 
Net payments in connection with purchase of Firehouse Subs(12)— 
Settlement/sale of derivatives, net9 1 
Other investing activities, net(25)(5)
Net cash (used for) provided by investing activities(46)(36)
Cash flows from financing activities:
Proceeds from long-term debt2 — 
Repayments of long-term debt and finance leases(47)(54)
Payment of dividends on common shares and distributions on Partnership exchangeable units(485)(484)
Repurchase of common shares(326)— 
Proceeds from stock option exercises4 56 
(Payments) proceeds from derivatives(6)(32)
Other financing activities, net(2)(2)
Net cash (used for) provided by financing activities(860)(516)
Effect of exchange rates on cash and cash equivalents(12)9 
Increase (decrease) in cash and cash equivalents(249)202 
Cash and cash equivalents at beginning of period1,087 1,560 
Cash and cash equivalents at end of period$838 $1,762 
Supplemental cash flow disclosures:
Interest paid$209 $198 
Income taxes paid$120 $142 
See accompanying notes to condensed consolidated financial statements.
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RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Description of Business and Organization
Restaurant Brands International Inc. (the “Company”, “RBI”, “we”, “us” or “our”) is a Canadian corporation that serves as the sole general partner of Restaurant Brands International Limited Partnership (“Partnership”). We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons® brand (“Tim Hortons” or “TH”), fast food hamburgers principally under the Burger King® brand (“Burger King” or “BK”), chicken principally under the Popeyes® brand (“Popeyes” or “PLK”) and sandwiches under the Firehouse Subs® brand (“Firehouse” or “FHS”). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of June 30, 2022, we franchised or owned 5,352 Tim Hortons restaurants, 19,311 Burger King restaurants, 3,851 Popeyes restaurants and 1,233 Firehouse Subs restaurants, for a total of 29,747 restaurants, and operate in more than 100 countries. Approximately 100% of current system-wide restaurants are franchised.
All references to “$” or “dollars” are to the currency of the United States unless otherwise indicated. All references to “Canadian dollars” or “C$” are to the currency of Canada unless otherwise indicated.
Note 2. Basis of Presentation and Consolidation
We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February 23, 2022.
The Financial Statements include our accounts and the accounts of entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method. All material intercompany balances and transactions have been eliminated in consolidation.
We are the sole general partner of Partnership and, as such we have the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership, subject to the terms of the amended and restated limited partnership agreement of Partnership (the “partnership agreement”) and applicable laws. As a result, we consolidate the results of Partnership and record a noncontrolling interest in our condensed consolidated balance sheets and statements of operations with respect to the remaining economic interest in Partnership we do not hold.
We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. Our maximum exposure to loss resulting from involvement with VIEs is attributable to accounts and notes receivable balances, outstanding loan guarantees and future lease payments, where applicable.
As our franchise and master franchise arrangements provide the franchise and master franchise entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE.
Tim Hortons has historically entered into certain arrangements in which an operator acquires the right to operate a restaurant, but Tim Hortons owns the restaurant’s assets. We perform an analysis to determine if the legal entity in which operations are conducted is a VIE and consolidate a VIE entity if we also determine Tim Hortons is the entity’s primary beneficiary (“Restaurant VIEs”). As of June 30, 2022 and December 31, 2021, we determined that we are the primary beneficiary of 45 and 46 Restaurant VIEs, respectively, and accordingly, have consolidated the results of operations, assets and
10
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.
The carrying amounts for cash and cash equivalents, accounts and notes receivable and accounts and drafts payable approximate fair value based on the short-term nature of these amounts.
Certain prior year amounts in the accompanying Financial Statements and notes to the Financial Statements have been reclassified in order to be comparable with the current year classification. These consist of the reclassification of technology fee revenues from Franchise and property revenues to Advertising revenues and other services of $2 million for the three and six months ended June 30, 2021 and technology expenses from General and administrative expenses to Advertising expenses and other services of $5 million and $6 million for the three and six months ended June 30, 2021, respectively. These reclassifications did not arise as a result of any changes to accounting policies and relate entirely to presentation with no effect on previously reported net income.
Note 3. New Accounting Pronouncements
Accounting Relief for the Transition Away from LIBOR and Certain other Reference Rates – In March 2020 and as clarified in January 2021, the Financial Accounting Standards Board (“FASB”) issued guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This amendment is effective as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by this new guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationships. During the third quarter of 2021, we adopted certain of the expedients as it relates to hedge accounting as certain of our debt agreements and hedging relationships bear interest at variable rates, primarily U.S. dollar LIBOR. The adoption of and future elections under this new guidance did not and are not expected to have a material impact on our Financial Statements. We will continue to monitor the discontinuance of LIBOR on our debt agreements and hedging relationships.
Lessors—Certain Leases with Variable Lease Payments – In July 2021, the FASB issued guidance that requires lessors to classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if (a) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with lease classification criteria and (b) the lessor would have otherwise recognized a day-one loss. This amendment is effective in 2022 with early adoption permitted. This guidance may be applied either retrospectively to leases that commenced or were modified on or after the adoption of lease guidance we adopted in 2019 or prospectively to leases that commence or are modified on or after the date that this new guidance is applied. The adoption of this new guidance during the first quarter of 2022 did not have a material impact on our Financial Statements.
Note 4. Firehouse Acquisition
We acquired Firehouse Subs on December 15, 2021 (the “Firehouse Acquisition”) which complements RBI's existing portfolio. Like RBI's other brands, the Firehouse Subs brand is managed independently, while benefiting from the global scale and resources of RBI. The Firehouse Acquisition was accounted for as a business combination using the acquisition method of accounting.
Total consideration in connection with the Firehouse Acquisition was $1,016 million. The consideration was funded through cash on hand and $533 million of incremental borrowings under our senior secured term loan facility.
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Fees and expenses related to the Firehouse Acquisition and related financings totaled approximately $1 million during the six months ended June 30, 2022, consisting of professional fees and compensation related expenses which are classified as general and administrative expenses in the accompanying condensed consolidated statements of operations.
During the six months ended June 30, 2022, we adjusted our preliminary estimate of the fair value of net assets acquired. The preliminary allocation of consideration to the net tangible and intangible assets acquired is presented in the table below (in millions):
December 15, 2021
Total current assets$21 
Property and equipment4 
Firehouse Subs brand
816 
Franchise agreements19 
Operating lease assets9 
Total liabilities(48)
Total identifiable net assets821 
Goodwill195 
Total consideration$1,016 
The adjustments to the preliminary estimate of net assets acquired and a decrease in total consideration resulted in a corresponding decrease in estimated goodwill due to the following changes to preliminary estimates of fair values and allocation of purchase price (in millions):
Increase (Decrease) in Goodwill
Change in:
Operating lease assets$(9)
Firehouse Subs brand
(48)
Franchise agreements(19)
Total liabilities35 
Total consideration(17)
   Total decrease in goodwill$(58)
The purchase price allocation reflects preliminary fair value estimates based on management's analysis, including preliminary work performed by third-party valuation specialists. We will continue to obtain information to assist in determining the fair value of net assets acquired during the measurement period.
The Firehouse Subs brand has been assigned an indefinite life and, therefore, will not be amortized, but rather tested annually for impairment. Franchise agreements have a weighted average amortization period of 18 years. Goodwill attributable to the Firehouse Acquisition will be amortized and deductible for tax purposes. Goodwill is considered to represent the value associated with the workforce and synergies anticipated to be realized as a combined company. We have not yet allocated goodwill related to the Firehouse Acquisition to reporting units for goodwill impairment testing purposes. Goodwill will be allocated to reporting units when the purchase price allocation is finalized during the measurement period.
The results of operations of Firehouse Subs have been included in our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022. The Firehouse Acquisition is not material to our unaudited condensed consolidated financial statements, and therefore, supplemental pro forma financial information for 2021 related to the acquisition is not included herein.
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Note 5. Leases
Property revenues consist primarily of lease income from operating leases and earned income on direct financing leases and sales-type leases with franchisees as follows (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Lease income - operating leases
Minimum lease payments$101 $117 $214 $230 
Variable lease payments106 84 179 150 
Amortization of favorable and unfavorable income lease contracts, net1 1 1 2 
Subtotal - lease income from operating leases208 202 394 382 
Earned income on direct financing and sales-type leases1 1 3 3 
Total property revenues$209 $203 $397 $385 
Note 6. Revenue Recognition
Contract Liabilities
Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees paid by franchisees, as well as upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the underlying agreement. We may recognize unamortized upfront fees when a contract with a franchisee or master franchisee is modified and is accounted for as a termination of the existing contract. We classify these contract liabilities as Other liabilities, net in our condensed consolidated balance sheets. The following table reflects the change in contract liabilities between December 31, 2021 and June 30, 2022 (in millions):
Contract LiabilitiesTHBKPLKFHSConsolidated
Balance at December 31, 2021$65 $410 $56 $— $531 
Effect of business combination— — — 8 8 
Recognized during period and included in the contract liability balance at the beginning of the year(5)(21)(2)(1)(29)
Increase, excluding amounts recognized as revenue during the period6 15 6 1 28 
Impact of foreign currency translation(1)(13)— — (14)
Balance at June 30, 2022$65 $391 $60 $8 $524 
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 June 30, 2022 (in millions):
Contract liabilities expected to be recognized inTHBKPLKFHSConsolidated
Remainder of 2022$5 $17 $2 $1 $25 
202310 33 4 2 49 
20249 32 4 1 46 
20258 31 4 1 44 
20267 30 4 1 42 
Thereafter26 248 42 2 318 
Total$65 $391 $60 $8 $524 

13
Disaggregation of Total Revenues
Total revenues consist of the following (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Sales$708 $590 $1,317 $1,097 
Royalties438 389 841 735 
Property revenues209 203 397 385 
Franchise fees and other revenue29 20 53 40 
Advertising revenues and other services255 236 482 441 
Total revenues$1,639 $1,438 $3,090 $2,698 
Note 7. Earnings per Share
An economic interest in Partnership common equity is held by the holders of Class B exchangeable limited partnership units (the “Partnership exchangeable units”), which is reflected as a noncontrolling interest in our equity. See Note 13, Shareholders’ Equity.
Basic and diluted earnings per share is computed using the weighted average number of shares outstanding for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by outstanding equity awards, unless the effect of their inclusion is anti-dilutive. The diluted earnings per share calculation assumes conversion of 100% of the Partnership exchangeable units under the “if converted” method. Accordingly, the numerator is also adjusted to include the earnings allocated to the holders of noncontrolling interests.
The following table summarizes the basic and diluted earnings per share calculations (in millions, except per share amounts):

Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Numerator:
Net income attributable to common shareholders - basic$236 $259 $419 $438 
Add: Net income attributable to noncontrolling interests109 131 195 222 
Net income available to common shareholders and noncontrolling interests - diluted$345 $390 $614 $660 
Denominator:
Weighted average common shares - basic308 307 308 307 
Exchange of noncontrolling interests for common shares (Note 13)143 155 144 155 
Effect of other dilutive securities4 4 4 3 
Weighted average common shares - diluted455 466 456 465 
Basic earnings per share (a)$0.77 $0.84 $1.36 $1.43 
Diluted earnings per share (a)$0.76 $0.84 $1.35 $1.42 
Anti-dilutive securities outstanding5 5 5 5 
(a) Earnings per share may not recalculate exactly as it is calculated based on unrounded numbers.
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Note 8. Intangible Assets, net and Goodwill
Intangible assets, net and goodwill consist of the following (in millions):

As of
June 30, 2022December 31, 2021
GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Identifiable assets subject to amortization:
   Franchise agreements$724 $(298)$426 $722 $(290)$432 
   Favorable leases94 (57)37 104 (63)41 
      Subtotal818 (355)463 826 (353)473 
Indefinite-lived intangible assets:
   Tim Hortons brand
$6,586 $— $6,586 $6,695 $— $6,695 
   Burger King brand
2,076 — 2,076 2,126 — 2,126 
   Popeyes brand
1,355 — 1,355 1,355 — 1,355 
   Firehouse Subs brand
816 — 816 768 — 768 
      Subtotal10,833 — 10,833 10,944 — 10,944 
Intangible assets, net$11,296 $11,417 
Goodwill
   Tim Hortons segment$4,239 $4,306 
   Burger King segment587 601 
   Popeyes segment846 846 
   Firehouse Subs segment 194 253 
      Total$5,866 $6,006 
Amortization expense on intangible assets totaled $10 million and $11 million for the three months ended June 30, 2022 and 2021, respectively. Amortization expense on intangible assets totaled $20 million and $21 million for the six months ended June 30, 2022 and 2021, respectively. The change in the franchise agreements, brands and goodwill balances during the six months ended June 30, 2022 was due to the impact of foreign currency translation and the impact of adjustments to the preliminary allocation of consideration to the net tangible and intangible assets acquired in the Firehouse Acquisition.
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Note 9. Equity Method Investments
The aggregate carrying amounts of our equity method investments were $189 million and $194 million as of June 30, 2022 and December 31, 2021, respectively, and are included as a component of Other assets, net in our accompanying condensed consolidated balance sheets.
Except for the following equity method investments, no quoted market prices are available for our other equity method investments. The aggregate market value of our 15% equity interest in Carrols Restaurant Group, Inc. based on the quoted market price on June 30, 2022 was approximately $19 million. The aggregate market value of our 9.4% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on June 30, 2022 was approximately $27 million. We have evaluated recent declines in the market value of these equity method investments and concluded they are not other than temporary and as such no impairments have been recognized in the current period.
We have equity interests in entities that own or franchise Tim Hortons, Burger King and Popeyes restaurants. Franchise and property revenues recognized from franchisees that are owned or franchised by entities in which we have an equity interest consist of the following (in millions):

Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Revenues from affiliates:
Royalties$86 $78 $174 $143 
Advertising revenues and other services18 15 34 28 
Property revenues8 8 15 16 
Franchise fees and other revenue5 4 9 8 
Total$117 $105 $232 $195 
At June 30, 2022 and December 31, 2021, we had $38 million and $48 million, respectively, of accounts receivable, net from our equity method investments which were recorded in Accounts and notes receivable, net in our condensed consolidated balance sheets.
With respect to our TH business, the most significant equity method investment is our 50% joint venture interest with The Wendy’s Company (the “TIMWEN Partnership”), which jointly holds real estate underlying Canadian combination restaurants. Distributions received from this joint venture were $2 million and $3 million during the three months ended June 30, 2022 and 2021, respectively. Distributions received from this joint venture were $5 million and $6 million during the six months ended June 30, 2022 and 2021, respectively.
Associated with the TIMWEN Partnership, we recognized $5 million and $4 million of rent expense during the three months ended June 30, 2022 and 2021, respectively, and recognized $9 million and $8 million of rent expense during the six months ended June 30, 2022 and 2021, respectively.
(Income) loss from equity method investments reflects our share of investee net income or loss and non-cash dilution gains or losses from changes in our ownership interests in equity investees.
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Note 10. Other Accrued Liabilities and Other Liabilities, net
Other accrued liabilities (current) and Other liabilities, net (noncurrent) consist of the following (in millions):

As of
June 30,
2022		December 31,
2021
Current:
Dividend payable$243 $241 
Interest payable68 63 
Accrued compensation and benefits67 99 
Taxes payable88 106 
Deferred income47 48 
Accrued advertising expenses30 43 
Restructuring and other provisions20 90 
Current portion of operating lease liabilities141 140 
Other79 117 
Other accrued liabilities$783 $947 
Noncurrent:
Taxes payable$541 $533 
Contract liabilities524 531 
Derivatives liabilities234 575 
Unfavorable leases58 65 
Accrued pension47 47 
Deferred income46 37 
Other27 34 
Other liabilities, net$1,477 $1,822 

Note 11. Long-Term Debt
Long-term debt consists of the following (in millions):
As of
June 30,
2022		December 31,
2021
Term Loan B$5,216 $5,243 
Term Loan A1,250 1,250 
3.875% First Lien Senior Notes due 2028
1,550 1,550 
3.50% First Lien Senior Notes due 2029
750 750 
5.75% First Lien Senior Notes due 2025
500 500 
4.375% Second Lien Senior Notes due 2028
750 750 
4.00% Second Lien Senior Notes due 2030
2,900 2,900 
TH Facility and other168 173 
Less: unamortized deferred financing costs and deferred issue discount(125)(138)
Total debt, net12,959 12,978 
    Less: current maturities of debt(78)(62)
Total long-term debt$12,881 $12,916 

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Revolving Credit Facility
As of June 30, 2022, we had no amounts outstanding under our senior secured revolving credit facility (the “Revolving Credit Facility”), had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability under our Revolving Credit Facility was $998 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or equity repurchases, fund acquisitions or capital expenditures and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit.
TH Facility
One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by four of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. As of June 30, 2022, we had approximately C$208 million outstanding under the TH Facility with a weighted average interest rate of 4.00%.
RE Facility
One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of $50 million with a maturity date of October 12, 2028 (the “RE Facility”). The interest rate applicable to the RE Facility is, at our option, either (i) a base rate, subject to a floor of 0.50%, plus an applicable margin of 0.50% or (ii) Adjusted Term SOFR (Adjusted Term SOFR is calculated as Term SOFR plus a margin based on duration), subject to a floor of 0.00%, plus an applicable margin of 1.50%. Obligations under the RE Facility are guaranteed by four of our subsidiaries, and amounts borrowed under the RE Facility are secured by certain parcels of real estate. As of June 30, 2022, we had approximately $2 million outstanding under the RE Facility with a weighted average interest rate of 2.59%.
Restrictions and Covenants
As of June 30, 2022, we were in compliance with all applicable financial debt covenants under our senior secured term loan facilities and Revolving Credit Facility (together the "Credit Facilities"), the TH Facility, the RE Facility, and the indentures governing our Senior Notes.
Fair Value Measurement
The following table presents the fair value of our variable rate term debt and senior notes, estimated using inputs based on bid and offer prices that are Level 2 inputs, and principal carrying amount (in millions):
As of
June 30,
2022		December 31,
2021
Fair value of our variable term debt and senior notes$11,697 $12,851 
Principal carrying amount of our variable term debt and senior notes12,916 12,943 
Interest Expense, net
Interest expense, net consists of the following (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Debt (a)$118 $115 $233 $228 
Finance lease obligations5 5 10 10 
Amortization of deferred financing costs and debt issuance discount7 6 14 13 
Interest income(1)— (1)(1)
    Interest expense, net$129 $126 $256 $250 
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(a)Amount includes $12 million and $11 million benefit during the three months ended June 30, 2022 and 2021, respectively, and $23 million benefit during the six months ended June 30, 2022 and 2021, related to the quarterly net settlements of our cross-currency rate swaps and amortization of the Excluded Component as defined in Note 14, Derivatives.
Note 12. Income Taxes
Our effective tax rate was 15.9% and 16.2% for the three and six months ended June 30, 2022, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions, the impact of internal financing arrangements and favorable structural changes.
Our effective tax rate was (8.1)% and 2.6% for the three and six months ended June 30, 2021, respectively. The effective tax rate was primarily the result of net reserve releases of $89 million and $87 million during the three and six months ended June 30, 2021, respectively, related to expiring statutes of limitation for certain prior tax years which reduced our effective tax rate by approximately 24.7% and 12.8% for the three and six months ended June 30, 2021, respectively. The effective tax rate during these periods also reflects the mix of income from multiple tax jurisdictions and the impact of internal financing arrangements.
Note 13. Shareholders’ Equity
Noncontrolling Interests
The holders of Partnership exchangeable units held an economic interest of approximately 31.9% in Partnership common equity through the ownership of 143,316,404 and 144,993,458 Partnership exchangeable units as of June 30, 2022 and December 31, 2021, respectively.
During the six months ended June 30, 2022, Partnership exchanged 1,677,054 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 exchanges represented increases in our ownership interest in Partnership and were accounted for as equity transactions, with no gain or loss recorded in the accompanying condensed consolidated statement of operations. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit is automatically deemed cancelled concurrently with the exchange.
Share Repurchases
On July 28, 2021, our Board of Directors approved a share repurchase program that allows us to purchase up to $1,000 million of our common shares until August 10, 2023. For the six months ended June 30, 2022, we repurchased and cancelled 6,101,364 of common shares for $326 million and as of June 30, 2022 had $123 million remaining under the authorization.
Accumulated Other Comprehensive Income (Loss)
The following table displays the changes in the components of accumulated other comprehensive income (loss) (“AOCI”) (in millions):
DerivativesPensionsForeign Currency TranslationAccumulated Other Comprehensive Income (Loss)
Balance at December 31, 2021$136 $(21)$(825)$(710)
Foreign currency translation adjustment— — (288)(288)
Net change in fair value of derivatives, net of tax435 — — 435 
Amounts reclassified to earnings of cash flow hedges, net of tax37 — — 37 
Gain (loss) recognized on other, net of tax— 2 — 2 
Amounts attributable to noncontrolling interests(149)(1)88 (62)
Balance at June 30, 2022$459 $(20)$(1,025)$(586)
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Note 14. Derivative Instruments
Disclosures about Derivative Instruments and Hedging Activities
We enter into derivative instruments for risk management purposes, including derivatives designated as cash flow hedges and derivatives designated as net investment hedges. We use derivatives to manage our exposure to fluctuations in interest rates and currency exchange rates.
Interest Rate Swaps
At June 30, 2022, we had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $3,500 million to hedge the variability in the interest payments on a portion of our senior secured term loan facilities (the “Term Loan Facilities”), including any subsequent refinancing or replacement of the Term Loan Facilities, beginning August 31, 2021 through the termination date of October 31, 2028. Additionally, at June 30, 2022, we also had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $500 million to hedge the variability in the interest payments on a portion of our Term Loan Facilities effective September 30, 2019 through the termination date of September 30, 2026. At inception, all of these interest rate swaps were designated as cash flow hedges for hedge accounting. The unrealized changes in market value are recorded in AOCI and reclassified into interest expense during the period in which the hedged forecasted transaction affects earnings. The net amount of pre-tax gains in connection with these net unrealized gains in AOCI as of June 30, 2022 that we expect to be reclassified into interest expense within the next 12 months is $23 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 June 30, 2022, we had outstanding cross-currency rate swap contracts between the Canadian dollar and U.S. dollar and the Euro and U.S. dollar that have been designated as net investment hedges of a portion of our equity in foreign operations in those currencies. The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates are economically partly offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period with changes in fair value reported in AOCI, net of tax. Such amounts will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying foreign operations.
At June 30, 2022, 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 June 30, 2022, we had outstanding cross-currency rate swaps in which we pay quarterly fixed-rate interest payments on the Euro notional value of €1,108 million and receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $1,200 million. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge. During 2018, we extended the term of the swaps from March 31, 2021 to the maturity date of February 17, 2024. The extension of the term resulted in a re-designation of the hedge and the swaps continue to be accounted for as a net investment hedge. Additionally, at June 30, 2022, we also had outstanding cross-currency rate swaps in which we receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $400 million, entered during 2018, and $500 million, entered during 2019, through the maturity date of February 17, 2024 and $150 million, entered during 2021, through the maturity date of October 31, 2028. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge.
The fixed-to-fixed cross-currency rate swaps hedging Canadian dollar and Euro net investments utilized the forward method of effectiveness assessment prior to March 15, 2018. On March 15, 2018, we de-designated and subsequently re-designated the outstanding fixed to fixed cross-currency rate swaps to prospectively use the spot method of hedge effectiveness assessment. Additionally, as a result of adopting new hedge accounting guidance during 2018, we elected to exclude the interest component (the “Excluded Component”) from the accounting hedge without affecting net investment hedge accounting and elected to amortize the Excluded Component over the life of the derivative instrument. The amortization of the Excluded Component is recognized in Interest expense, net in the condensed consolidated statement of operations. The change in fair value that is not related to the Excluded Component is recorded in AOCI and will be reclassified to earnings when the foreign subsidiaries are sold or substantially liquidated.
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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 June 30, 2022, we had outstanding forward currency contracts to manage this risk in which we sell Canadian dollars and buy U.S. dollars with a notional value of $210 million with maturities to August 2023. We have designated these instruments as cash flow hedges, and as such, the unrealized changes in market value of effective hedges are recorded in AOCI and are reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.
Credit Risk
By entering into derivative contracts, we are exposed to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to us, which creates credit risk for us. We attempt to minimize this risk by selecting counterparties with investment grade credit ratings and regularly monitoring our market position with each counterparty.
Credit-Risk Related Contingent Features
Our derivative instruments do not contain any credit-risk related contingent features.
Quantitative Disclosures about Derivative Instruments and Fair Value Measurements
The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions):
Gain or (Loss) Recognized in Other Comprehensive Income (Loss)
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Derivatives designated as cash flow hedges(1)
Interest rate swaps$107 $(44)$330 $85 
Forward-currency contracts$6 $(1)$4 $(2)
Derivatives designated as net investment hedges
Cross-currency rate swaps$264 $(92)$204 $(83)
(1) We did not exclude any components from the cash flow hedge relationships presented in this table.
Location of Gain or (Loss) Reclassified from AOCI into EarningsGain or (Loss) Reclassified from
AOCI into Earnings
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Derivatives designated as cash flow hedges
Interest rate swapsInterest expense, net$(23)$(31)$(52)$(61)
Forward-currency contractsCost of sales$1 $(2)$2 $(4)
Location of Gain or (Loss) Recognized in EarningsGain or (Loss) Recognized in Earnings
(Amount Excluded from Effectiveness Testing)
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Derivatives designated as net investment hedges
Cross-currency rate swapsInterest expense, net$12 $11 $23 $23 
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Fair Value as of
June 30,
2022		December 31, 2021Balance Sheet Location
Assets:
Derivatives designated as cash flow hedges
Interest rate$131 $— Other assets, net
Foreign currency4 2 Prepaids and other current assets
Derivatives designated as net investment hedges
Foreign currency107 23 Other assets, net
Total assets at fair value$242 $25 
Liabilities:
Derivatives designated as cash flow hedges
Interest rate$— $220 Other liabilities, net
Derivatives designated as net investment hedges
Foreign currency234 355 Other liabilities, net
Total liabilities at fair value$234 $575 

Note 15. Other Operating Expenses (Income), net
Other operating expenses (income), net consist of the following (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings$(1)$1 $1 $(1)
Litigation settlements (gains) and reserves, net2 1 3 3 
Net losses (gains) on foreign exchange(31)8 (52)(35)
Other, net5 (2)7 (1)
     Other operating expenses (income), net$(25)$8 $(41)$(34)
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to restaurant closures and refranchisings. Gains and losses recognized in the current period may reflect certain costs related to closures and refranchisings that occurred in previous periods.
Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities.

Note 16. Commitments and Contingencies
Litigation
From time to time, we are involved in legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees and customers, as well as disputes over our intellectual property.
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On October 5, 2018, a class action complaint was filed against Burger King Worldwide, Inc. (“BKW”) and Burger King Corporation (“BKC”) in the U.S. District Court for the Southern District of Florida by Jarvis Arrington, individually and on behalf of all others similarly situated. On October 18, 2018, a second class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Monique Michel, individually and on behalf of all others similarly situated. On October 31, 2018, a third class action complaint was filed against BKC and BKW in the U.S. District Court for the Southern District of Florida by Geneva Blanchard and Tiffany Miller, individually and on behalf of all others similarly situated. On November 2, 2018, a fourth class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Sandra Muster, individually and on behalf of all others similarly situated. These complaints have been consolidated and allege that the defendants violated Section 1 of the Sherman Act by incorporating an employee no-solicitation and no-hiring clause in the standard form franchise agreement all Burger King franchisees are required to sign. Each plaintiff seeks injunctive relief and damages for himself or herself and other members of the class. On March 24, 2020, the Court granted BKC’s motion to dismiss for failure to state a claim and on April 20, 2020 the plaintiffs filed a motion for leave to amend their complaint. On April 27, 2020, BKC filed a motion opposing the motion for leave to amend. The court denied the plaintiffs motion for leave to amend their complaint in August 2020 and the plaintiffs appealed this ruling. Oral arguments for the appeal were heard in September 2021 and the parties await a ruling on the appeal. While we currently believe these claims are without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.
On June 30, 2020, a class action complaint was filed against RBI, Partnership and The TDL Group Corp. in the Quebec Superior Court by Steve Holcman, individually and on behalf of all Quebec residents who downloaded the Tim Hortons mobile application. On July 2, 2020, a Notice of Action related to a second class action complaint was filed against RBI, in the Ontario Superior Court by Ashley Sitko and Ashley Cadeau, individually and on behalf of all Canadian residents who downloaded the Tim Hortons mobile application. On August 31, 2020, a notice of claim was filed against RBI in the Supreme Court of British Columbia by Wai Lam Jacky Law on behalf of all persons in Canada who downloaded the Tim Hortons mobile application or the Burger King mobile application. On September 30, 2020, a notice of action was filed against RBI, Partnership, The TDL Group Corp., BKW and Popeyes Louisiana Kitchen, Inc. in the Ontario Superior Court of Justice by William Jung on behalf of a to be determined class. All of the complaints allege that the defendants violated the plaintiff’s privacy rights, the Personal Information Protection and Electronic Documents Act, consumer protection and competition laws or app-based undertakings to users, in each case in connection with the collection of geolocation data through the Tim Hortons mobile application, and in certain cases, the Burger King and Popeyes mobile applications. Each plaintiff seeks injunctive relief and monetary damages for himself or herself and other members of the class. The parties have reached a national settlement of all cases, subject to court approval at a hearing scheduled for September 6, 2022, pursuant to which The TDL Group Corp. will provide each member of the class one hot beverage and one baked good and will pay plaintiffs legal fees, in an amount which we believe will be immaterial.
On October 26, 2020, City of Warwick Municipal Employees Pension Fund, a purported stockholder of RBI, individually and putatively on behalf of all other stockholders similarly situated, filed a lawsuit in the Supreme Court of the State of New York County of New York naming RBI and certain of our officers, directors and shareholders as defendants alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with certain offerings of securities by an affiliate in August and September 2019. The complaint alleges that the shelf registration statement used in connection with such offering contained certain false and/or misleading statements or omissions. The complaint seeks, among other relief, class certification of the lawsuit, unspecified compensatory damages, rescission, pre-judgement and post-judgement interest, costs and expenses. On December 18, 2020 the plaintiffs filed an amended complaint and on February 16, 2021 RBI filed a motion to dismiss the complaint. The plaintiffs filed a brief in opposition to the motion on April 19, 2021 and RBI filed a reply in May 2021. The motion to dismiss was heard in April 2022 and the motion to dismiss was denied in May 2022. On June 6, 2022, we filed an answer to the complaint and on July 8, 2022, we filed an appeal of the denial of the motion to dismiss. We intend to vigorously defend. While we believe these claims are without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any.
In April 2022, BKC was served with two separate purported class action complaints relating to per- and polyfluoroalkyl (“PFAS”) in packaging. Hussain vs. BKC was filed on April 13, 2022 in the U.S. District Court for the Northern District of California, and Cooper v. BKC was filed on April 14, 2022 in the U.S. District Court for the Southern District of Florida. Both complaints allege that certain food products sold by BKC are not safe for human consumption due to the packaging containing allegedly unsafe PFAS and that consumers were misled by the labelling, marketing and packaging claims asserted by BKC regarding the safety and sustainability of the packaging and are seeking compensatory, statutory and punitive damages, injunctive relief, corrective action, and attorneys’ fees. Hussain filed an amended complaint on June 27, 2022 to assert a California-only class. We have filed a motion to dismiss. In June 2022, Cooper voluntarily dismissed the case and then refiled their complaint in state court only on behalf of Florida consumers. While we currently believe these claims are without merit, we are unable to predict the ultimate outcome of these cases or estimate the range of possible loss, if any.
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Other Disputes
In early 2022, we entered into negotiations to resolve business disputes that arose during 2021 with counterparties to the master franchise agreements for Burger King and Popeyes in China. Based on these discussions, we have paid approximately $100 million, $72 million of which was recorded as Litigation settlements and reserves, net in 2021. The majority of this amount relates to Popeyes, resolves our disputes and allows us to move forward in the market with a new master franchisee. Additionally, pursuant to this agreement we and our partner have made equity contributions to the Burger King business in China.

Note 17. Segment Reporting
As stated in Note 1, Description of Business and Organization, we manage four brands. Under the Tim Hortons brand, we operate in the donut/coffee/tea category of the quick service segment of the restaurant industry. Under the Burger King brand, we operate in the fast food hamburger restaurant category of the quick service segment of the restaurant industry. Under the Popeyes brand, we operate in the chicken category of the quick service segment of the restaurant industry. Under the Firehouse Subs brand, we operate in the specialty subs category of the quick service segment of the restaurant industry. Our business generates revenue from the following sources: (i) franchise and advertising revenues and other services, consisting primarily of royalties and advertising fund contributions based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers. We manage each of our brands as an operating segment and each operating segment represents a reportable segment.
The following tables present revenues, by segment and by country (in millions):
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Revenues by operating segment:
     TH$968 $831 $1,797 $1,541 
     BK473 459 916 866 
     PLK165 148 313 291 
     FHS33 — 64 — 
Total revenues$1,639 $1,438 $3,090 $2,698 

Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Revenues by country (a):
     Canada$878 $754 $1,625 $1,392 
     United States571 515 1,092 993 
     Other190 169 373 313 
Total revenues$1,639 $1,438 $3,090 $2,698 

(a)Only Canada and the United States represented 10% or more of our total revenues in each period presented.
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Our measure of segment income is Adjusted EBITDA. Adjusted EBITDA represents earnings (net income or loss) before interest expense, net, loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization, adjusted to exclude (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net and, (iv) income/expenses from non-recurring projects and non-operating activities. For the periods referenced, income/expenses from non-recurring projects and non-operating activities included (i) non-recurring fees and expense incurred in connection with the Firehouse Acquisition consisting of professional fees, compensation related expenses and integration costs (“FHS Transaction costs”); and (ii) costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including services related to significant tax reform legislation, regulations and related restructuring initiatives (“Corporate restructuring and tax advisory fees”).
Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management’s assessment of our operating performance. A reconciliation of segment income to net income consists of the following (in millions):

Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Segment income:
     TH$274 $253 $505 $460 
     BK270 266 499 483 
     PLK61 58 117 114 
     FHS13 — 27 — 
          Adjusted EBITDA618 577 1,148 1,057 
Share-based compensation and non-cash incentive compensation expense32 20 59 46 
FHS Transaction costs4 — 5 — 
Corporate restructuring and tax advisory fees6 3 9 4 
Impact of equity method investments (a)12 7 28 11 
Other operating expenses (income), net(25)8 (41)(34)
          EBITDA589 539 1,088 1,030 
Depreciation and amortization48 51 97 100 
          Income from operations541 488 991 930 
Interest expense, net129 126 256 250 
Income tax expense66 (29)119 18 
          Net income$346 $391 $616 $662 
(a)Represents (i) (income) loss from equity method investments and (ii) cash distributions received from our equity method investments. Cash distributions received from our equity method investments are included in segment income.
Note 18. Subsequent Events
Dividends
On July 6, 2022, we paid a cash dividend of $0.54 per common share to common shareholders of record on June 22, 2022. On such date, Partnership also made a distribution in respect of each Partnership exchangeable unit in the amount of $0.54 per exchangeable unit to holders of record on June 22, 2022.
Subsequent to June 30, 2022, our board of directors declared a cash dividend of $0.54 per common share, which will be paid on October 5, 2022 to common shareholders of record on September 21, 2022. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of $0.54 per Partnership exchangeable unit, and the record date and payment date for distributions on Partnership exchangeable units are the same as the record date and payment date set forth above.
*****
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes thereto included in Part I, Item 1 “Financial Statements” of this report.
The following discussion includes information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws as described in further detail under “Special Note Regarding Forward-Looking Statements” set forth below. Actual results may differ materially from the results discussed in the forward-looking statements. Please refer to the risks and further discussion in the “Special Note Regarding Forward-Looking Statements” below.
We prepare our financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”). However, this Management’s Discussion and Analysis of Financial Condition and Results of Operations also contains certain non-GAAP financial measures to assist readers in understanding our performance. Non-GAAP financial measures either exclude or include amounts that are not reflected in the most directly comparable measure calculated and presented in accordance with GAAP. Where non-GAAP financial measures are used, we have provided the most directly comparable measures calculated and presented in accordance with U.S. GAAP, a reconciliation to GAAP measures and a discussion of the reasons why management believes this information is useful to it and may be useful to investors.
Operating results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for the fiscal year and our key business measures, as discussed below, may decrease for any future period. Unless the context otherwise requires, all references in this section to “RBI”, the “Company”, “we”, “us” or “our” are to Restaurant Brands International Inc. and its subsidiaries, collectively and all references in this section to “Partnership” are to Restaurant Brands International Limited Partnership and its subsidiaries, collectively.
Overview
We are one of the world’s largest quick service restaurant (“QSR”) companies with over $35 billion in annual system-wide sales and over 29,000 restaurants in more than 100 countries as of June 30, 2022. Our Tim Hortons®, Burger King®, Popeyes®, and Firehouse Subs® brands have similar franchised business models with complementary daypart mixes and product platforms. Our four iconic brands are managed independently while benefiting from global scale and sharing of best practices.
Tim Hortons restaurants are quick service restaurants with a menu that includes premium blend coffee, tea, espresso-based hot and cold specialty drinks, fresh baked goods, including donuts, Timbits®, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups, and more. Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken, and other specialty sandwiches, french fries, soft drinks, and other affordably-priced food items. Popeyes restaurants are quick service restaurants featuring a unique “Louisiana” style menu that includes fried chicken, fried shrimp and other seafood, red beans and rice, and other regional items. Firehouse Subs restaurants are quick service restaurants featuring hot and hearty subs piled high with quality meats and cheese as well as chopped salads, chili and soups, signature and other sides, soft drinks and local specialties.
Commencing upon the acquisition of Firehouse Subs in December 2021, we have four operating and reportable segments: (1) Tim Hortons (“TH”); (2) Burger King (“BK”); (3) Popeyes Louisiana Kitchen (“PLK”); and (4) Firehouse Subs (“FHS”). Our business generates revenue from the following sources: (i) franchise and advertising revenues and other services, consisting primarily of royalties and advertising fund contributions based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing, and distribution, as well as sales to retailers.
In September 2021, we announced targets to reduce greenhouse gas emissions by 50% by 2030, as approved by the Science Based Targets initiative, as well as a commitment to achieving net-zero emissions by 2050. While most of the impact is from scope 3 emissions that are not under our direct control, reaching these targets will require us to devote resources to support changes by suppliers and franchisees.

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Operating Metrics
We evaluate our restaurants and assess our business based on the following operating metrics:
•System-wide sales growth refers to the percentage change in sales at all franchise restaurants and Company restaurants (referred to as system-wide sales) in one period from the same period in the prior year.
•Comparable sales refers to the percentage change in restaurant sales in one period from the same prior year period for restaurants that have been open for 13 months or longer for TH, BK and FHS and 17 months or longer for PLK. Additionally, if a restaurant is closed for a significant portion of a month, the restaurant is excluded from the monthly comparable sales calculation.
•System-wide sales growth and comparable sales are measured on a constant currency basis, which means the results exclude the effect of foreign currency translation (“FX Impact”). For system-wide sales growth and comparable sales, we calculate the FX Impact by translating prior year results at current year monthly average exchange rates.
•Unless otherwise stated, system-wide sales growth, system-wide sales and comparable sales are presented on a system-wide basis, which means they include franchise restaurants and Company restaurants. System-wide results are driven by our franchise restaurants, as approximately 100% of system-wide restaurants are franchised. Franchise sales represent sales at all franchise restaurants and are revenues to our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and advertising fund contributions are calculated based on a percentage of franchise sales.
•Net restaurant growth refers to the net increase in restaurant count (openings, net of permanent closures) over a trailing twelve month period, divided by the restaurant count at the beginning of the trailing twelve month period.
These metrics are important indicators of the overall direction of our business, including trends in sales and the effectiveness of each brand’s marketing, operations and growth initiatives.
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Three Months Ended
June 30,		Six Months Ended
June 30,
Key Business Metrics2022202120222021
System-wide sales growth
    TH16.3 %33.0 %14.7 %12.5 %
    BK14.6 %37.9 %15.5 %18.2 %
    PLK9.9 %10.5 %7.1 %8.8 %
    Consolidated (a)14.2 %31.9 %14.0 %15.5 %
    FHS (b)2.2 %37.9 %4.7 %32.6 %
System-wide sales (in US$ millions)
    TH$1,838 $1,637 $3,394 $3,016 
    BK$6,444 $5,883 $12,262 $11,056 
    PLK$1,503 $1,386 $2,886 $2,730 
    FHS$292 $— $564 $— 
    Consolidated (a)$10,077 $8,906 $19,106 $16,802 
    FHS (b)$— $286 $— $540 
Comparable sales
    TH12.2 %27.6 %10.4 %11.8 %
    BK10.0 %18.2 %10.1 %8.9 %
    PLK1.4 %(0.3)%(0.8)%0.6 %
    Consolidated (a)9.0 %16.5 %8.4 %8.0 %
    FHS (b)(1.4)%31.2 %1.3 %27.8 %
As of June 30,
20222021
Net restaurant growth
    TH5.7 %2.7 %
    BK2.8 %0.1 %
    PLK8.1 %5.7 %
    Consolidated (a)4.1 %1.3 %
    FHS (b)2.5 %2.5 %
Restaurant count
    TH5,352 5,065 
    BK19,311 18,776 
    PLK3,851 3,562 
    FHS1,233 — 
    Consolidated29,747 27,403 
    FHS (b)— 1,203 
    
(a) Consolidated system-wide sales growth, consolidated net restaurant growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented. Consolidated system-wide sales do not include the results of Firehouse Subs for 2021.
(b) 2021 Firehouse Subs figures are shown for informational purposes only, consistent with its fiscal calendar.


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War in Ukraine
During the first quarter of 2022, we shared a number of actions that we have taken to date as a result of the events related to Russia's military invasion of Ukraine. As a reminder, Burger King is our only brand with restaurants in Russia, all of which are operated under a master franchise arrangement. We suspended all corporate support for the Russian market, including operations, marketing, and supply chain support in addition to refusing approvals for new investment and expansion. While we currently include results from our franchised restaurants in Russia within reported key business metrics, we do not expect to generate any profits from restaurants in Russia in 2022.
Below are the RBI consolidated and BK segment operational highlights excluding the results from Russia for the three and six months ended June 30, 2022 and 2021.
Three Months Ended
June 30,		Six Months Ended
June 30,
Key Business Metrics (excluding Russia)2022202120222021
System-wide sales growth
    BK13.2 %35.8 %14.7 %17.3 %
    Consolidated (a)13.3 %30.5 %13.4 %14.9 %
System-wide sales (in US$ millions)
    BK$6,134 $5,701 $11,781 $10,713 
    Consolidated (a)$9,767 $8,724 $18,625 $16,459 
Comparable sales
    BK8.7 %16.8 %9.3 %8.3 %
    Consolidated (a)7.9 %15.6 %7.6 %7.6 %
As of June 30,
20222021
Net restaurant growth
    BK2.7 %0.1 %
    Consolidated (a)4.0 %1.3 %
Restaurant count
    BK18,491 17,999 
    Consolidated28,927 26,626 
(a)Consolidated system-wide sales growth, consolidated net restaurant growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented. Consolidated system-wide sales do not include the results of Firehouse Subs for 2021.
COVID-19 and Macro Economic Environment
The global crisis resulting from the spread of coronavirus (“COVID-19”) impacted our global restaurant operations for the three and six months ended June 30, 2022 and 2021, though in 2022 the impact was more modest than in the prior year. During the three and six months ended June 30, 2022 and 2021, substantially all restaurants remained open, some with limited operations, such as drive-thru, takeout and delivery (where applicable), reduced, if any, dine-in capacity, and/or restrictions on hours of operation. Certain markets periodically required temporary closures while implementing government mandated lockdown orders. For example, while most regions have eased restrictions, increases in cases and new variants caused certain markets, including China, to re-impose temporary restrictions as a result of government mandates. We expect local conditions to continue to dictate limitations on restaurant operations, capacity, and hours of operation. COVID-19 has also contributed to labor challenges, which in some regions resulted in reduced operating hours and service modes at select restaurants as well as supply chain pressures.

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

Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021
Tabular amounts in millions of U.S. dollars unless noted otherwise. Segment income may not calculate exactly due to rounding.
ConsolidatedThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20222021 Favorable / (Unfavorable)20222021 Favorable / (Unfavorable)
Revenues:
Sales$708 $590 $118 $(19)$137 $1,317 $1,097 $220 $(19)$239 
Franchise and property revenues676 612 64 (20)84 1,291 1,160 131 (28)159 
Advertising revenues and other services255 236 19 (3)22 482 441 41 (3)44 
Total revenues1,639 1,438 201 (42)243 3,090 2,698 392 (50)442 
Operating costs and expenses:
Cost of sales584 467 (117)15 (132)1,078 868 (210)15 (225)
Franchise and property expenses125 121 (4)3 (7)255 237 (18)3 (21)
Advertising expenses and other services259 243 (16)3 (19)506 480 (26)3 (29)
General and administrative expenses146 108 (38)3 (41)279 212 (67)4 (71)
(Income) loss from equity method investments9 3 (6)— (6)22 5 (17)— (17)
Other operating expenses (income), net(25)8 33 1 32 (41)(34)7 (2)9 
Total operating costs and expenses1,098 950 (148)25 (173)2,099 1,768 (331)23 (354)
Income from operations541 488 53 (17)70 991 930 61 (27)88 
Interest expense, net129 126 (3)— (3)256 250 (6)— (6)
Income before income taxes412 362 50 (17)67 735 680 55 (27)82 
Income tax expense (benefit)66 (29)(95)1 (96)119 18 (101)2 (103)
Net income$346 $391 $(45)$(16)$(29)$616 $662 $(46)$(25)$(21)
(a)We calculate the FX Impact by translating prior year results at current year monthly average exchange rates. We analyze these results on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements.

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TH SegmentThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20222021 Favorable / (Unfavorable)20222021 Favorable / (Unfavorable)
Revenues:
Sales$661 $556 $105 $(19)$124 $1,227 $1,029 $198 $(19)$217 
Franchise and property revenues238 219 19 (8)27 444 409 35 (8)43 
Advertising revenues and other services69 56 13 (2)15 126 103 23 (2)25 
Total revenues968 831 137 (29)166 1,797 1,541 256 (29)285 
Cost of sales537 434 (103)15 (118)990 804 (186)15 (201)
Franchise and property expenses84 86 2 3 (1)165 167 2 3 (1)
Advertising expenses and other services71 68 (3)2 (5)138 130 (8)2 (10)
Segment G&A32 26 (6)1 (7)61 50 (11)1 (12)
Segment depreciation and amortization (b)28 32 4 1 3 57 63 6 1 5 
Segment income (c)274 253 21 (9)30 505 460 45 (9)54 
(b)Segment depreciation and amortization consists of depreciation and amortization included in cost of sales, franchise and property expenses and advertising expenses and other services.
(c)TH segment income includes $3 million of cash distributions received from equity method investments for the three months ended June 30, 2022 and 2021. TH segment income includes $6 million of cash distributions received from equity method investments for the six months ended June 30, 2022 and 2021.
BK SegmentThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20222021 Favorable / (Unfavorable)20222021 Favorable / (Unfavorable)
Revenues:
Sales$17 $17 $— $— $— $33 $33 $— $— $— 
Franchise and property revenues335 322 13 (11)24 653 611 42 (19)61 
Advertising revenues and other services121 120 1 (1)2 230 222 8 (1)9 
Total revenues473 459 14 (12)26 916 866 50 (20)70 
Cost of sales19 17 (2)— (2)36 33 (3)— (3)
Franchise and property expenses34 33 (1)— (1)79 66 (13)— (13)
Advertising expenses and other services123 115 (8)1 (9)242 233 (9)1 (10)
Segment G&A40 41 1 1 — 85 76 (9)2 (11)
Segment depreciation and amortization (b)12 12 — — — 24 24 — — — 
Segment income270 266 4 (11)15 499 483 16 (18)34 

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PLK SegmentThree Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX ImpactSix Months Ended June 30,VarianceFX Impact (a)Variance Excluding FX Impact
20222021 Favorable / (Unfavorable)20222021 Favorable / (Unfavorable)
Revenues:
Sales$20 $17 $3 $— $3 $37 $35 $2 $— $2 
Franchise and property revenues81 71 10 (1)11 152 140 12 (1)13 
Advertising revenues and other services64 60 4 — 4 124 116 8 — 8 
Total revenues165 148 17 (1)18 313 291 22 (1)23 
Cost of sales19 16 (3)— (3)35 31 (4)— (4)
Franchise and property expenses5 2 (3)— (3)7 4 (3)— (3)
Advertising expenses and other services64 60 (4)— (4)125 117 (8)— (8)
Segment G&A17 13 (4)— (4)32 27 (5)— (5)
Segment depreciation and amortization (b)1 2 1 — 1 3 4 1 — 1 
Segment income61 58 3 (1)4 117 114 3 (1)4 

FHS SegmentThree Months Ended June 30, 2022Six Months Ended June 30, 2022
Revenues:
Sales$10 $20 
Franchise and property revenues22 42 
Advertising revenues and other services1 2 
Total revenues33 64 
Cost of sales9 17 
Franchise and property expenses2 4 
Advertising expenses and other services1 1 
Segment G&A8 16 
Segment depreciation and amortization (b)1 1 
Segment income13 27 

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Comparable Sales
TH comparable sales were 12.2% during the three months ended June 30, 2022, including Canada comparable sales of 14.2%. TH comparable sales were 10.4% during the six months ended June 30, 2022, including Canada comparable sales of 12.3%.
BK comparable sales were 10.0% during the three months ended June 30, 2022, including rest of the world comparable sales of 18.4% and U.S. comparable sales of 0.4%. BK comparable sales were 10.1% during the six months ended June 30, 2022, including rest of the world comparable sales of 19.2% and flat U.S. comparable sales.
PLK comparable sales were 1.4% during the three months ended June 30, 2022, including relatively flat U.S. comparable sales. PLK comparable sales were (0.8)% during the six months ended June 30, 2022, including U.S. comparable sales of (2.3)%.
FHS comparable sales were (1.4)% during the three months ended June 30, 2022, including U.S. comparable sales of (1.2)%. FHS comparable sales were 1.3% during the six months ended June 30, 2022, including U.S. comparable sales of 1.5%.
Sales and Cost of Sales
Sales include TH supply chain sales and sales from Company restaurants. TH supply chain sales represent sales of products, supplies and restaurant equipment, as well as sales to retailers. Sales from Company restaurants, including sales by our consolidated TH Restaurant VIEs, represent restaurant-level sales to our guests.
Cost of sales includes costs associated with the management of our TH supply chain, including cost of goods, direct labor and depreciation, as well as the cost of products sold to retailers. Cost of sales also includes food, paper and labor costs of Company restaurants, including our consolidated TH Restaurants VIEs.
During the three months ended June 30, 2022, the increase in sales was driven by an increase of $124 million in our TH segment, the inclusion of FHS of $10 million, and an increase of $3 million in our PLK segment, partially offset by an unfavorable FX Impact of $19 million. The increase in our TH segment was primarily driven by an increase in supply chain sales due to an increase in system-wide sales as well as increases in commodity prices passed on to franchisees and an increase in sales to retailers.
During the six months ended June 30, 2022, the increase in sales was driven by an increase of $217 million in our TH segment, the inclusion of FHS of $20 million, and an increase of $2 million in our PLK segment, partially offset by an unfavorable FX Impact of $19 million. The increase in our TH segment was primarily driven by an increase in supply chain sales due to an increase in system-wide sales as well as increases in commodity prices passed on to franchisees and an increase in sales to retailers.
During the three months ended June 30, 2022, the increase in cost of sales was driven by an increase of $118 million in our TH segment, the inclusion of FHS of $9 million, an increase of $3 million in our PLK segment, and an increase of $2 million in our BK segment, partially offset by a favorable FX Impact of $15 million. The increase in our TH segment was primarily driven by an increase in supply chain sales as well as increases in commodity prices and an increase in sales to retailers.
During the six months ended June 30, 2022, the increase in cost of sales was driven by an increase of $201 million in our TH segment, the inclusion of FHS of $17 million, an increase of $4 million in our PLK segment, and an increase of $3 million in our BK segment, partially offset by a favorable FX Impact of $15 million. The increase in our TH segment was primarily driven by an increase in supply chain sales as well as increases in commodity prices and an increase in sales to retailers.

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Franchise and Property
Franchise and property revenues consist primarily of royalties earned on franchise sales, rents from real estate leased or subleased to franchisees, franchise fees, and other revenue. Franchise and property expenses consist primarily of depreciation of properties leased to franchisees, rental expense associated with properties subleased to franchisees, amortization of franchise agreements, and bad debt expense (recoveries).
During the three months ended June 30, 2022, the increase in franchise and property revenues was driven by an increase of $27 million in our TH segment, an increase of $24 million in our BK segment, the inclusion of FHS of $22 million, and an increase of $11 million in our PLK segment, partially offset by an unfavorable FX Impact of $20 million. The increases were primarily driven by increases in royalties in our TH, BK and PLK segments and increases in rent in our TH segment, as a result of increases in system-wide sales.
During the six months ended June 30, 2022, the increase in franchise and property revenues was driven by an increase of $61 million in our BK segment, an increase of $43 million in our TH segment, the inclusion of FHS of $42 million, and an increase of $13 million in our PLK segment, partially offset by an unfavorable FX Impact of $28 million. The increases were primarily driven by increases in royalties in our TH, BK and PLK segments and increases in rent in our TH segment, as a result of increases in system-wide sales.
During the three months ended June 30, 2022, the increase in franchise and property expenses was driven by an increase of $3 million in our PLK segment, the inclusion of FHS of $2 million, and an increase of $1 million in our BK segment, partially offset by a favorable FX Impact of $3 million.
During the six months ended June 30, 2022, the increase in franchise and property expenses was driven by an increase of $13 million in our BK segment, the inclusion of FHS of $4 million, and an increase of $3 million in our PLK segment, partially offset by a favorable FX impact of $3 million. The increase in our BK segment was primarily related to bad debt expenses in the current year, primarily related to Russia, compared to bad debt recoveries in the prior year.
Advertising and other services
Advertising revenues and other services consist primarily of advertising contributions earned on franchise sales and are based on a percentage of sales reported by franchise restaurants and intended to fund advertising expenses. Other services consist primarily of fees from digital sales that partially offset expenses related to technology initiatives. Advertising expenses and other services consist primarily of expenses relating to marketing, advertising and promotion, including market research, production, advertising costs, sales promotions, social media campaigns, technology initiatives, depreciation and amortization and other related support functions for the respective brands. We manage advertising expenses to equal advertising revenues in the long term, however in some periods there may be a mismatch in the timing of revenues and expense.
During the three months ended June 30, 2022, the increase in advertising revenues and other services was driven by an increase of $15 million in our TH segment, an increase of $4 million in our PLK segment, an increase of $2 million in our BK segment, and the inclusion of FHS of $1 million, partially offset by an unfavorable FX Impact of $3 million. The increases in our TH, BK and PLK segments were primarily driven by increases in system-wide sales.
During the six months ended June 30, 2022, the increase in advertising revenues and other services was driven by an increase of $25 million in our TH segment, an increase of $9 million in our BK segment, an increase of $8 million in our PLK segment, and the inclusion of FHS of $2 million, partially offset by an unfavorable FX Impact of $3 million. The increases in our TH, BK and PLK segments were primarily driven by increases in system-wide sales.
During the three months ended June 30, 2022, the increase in advertising expenses and other services was driven by an increase of $9 million in our BK segment, an increase of $4 million in our PLK segment, an increase of $5 million in our TH segment, and the inclusion of FHS of $1 million, partially offset by a favorable FX Impact of $3 million. The increases in our BK, PLK and TH segments were driven by increases in advertising revenues and other services and for our BK segment also as a result of increases in expenses related to technology initiatives.
During the six months ended June 30, 2022, the increase in advertising expenses and other services was driven by an increase of $10 million in our BK segment, an increase of $10 million in our TH segment, an increase of $8 million in our PLK segment, and the inclusion of FHS of $1 million, partially offset by a favorable FX Impact of $3 million. The increases in our BK, PLK and TH segments were driven by increases in advertising revenues and other services and for our BK segment also as a result of increases in expenses related to technology initiatives.
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General and Administrative Expenses
Our general and administrative expenses consisted of the following:
Three Months Ended June 30,VarianceSix Months Ended June 30,Variance
$%$%
20222021Favorable / (Unfavorable)20222021Favorable / (Unfavorable)
Segment G&A:
TH$32 $26 $(6)(23.1)%$61 $50 $(11)(22.0)%
BK40 41 1 2.4 %85 76 (9)(11.8)%
PLK17 13 (4)(30.8)%32 27 (5)(18.5)%
FHS8 — (8)NM16 — (16)NM
Share-based compensation and non-cash incentive compensation expense32 20 (12)(60.0)%59 46 (13)(28.3)%
Depreciation and amortization7 5 (2)(40.0)%12 9 (3)(33.3)%
FHS Transaction costs4 — (4)NM5 — (5)NM
Corporate restructuring and tax advisory fees6 3 (3)(100.0)%9 4 (5)(125.0)%
General and administrative expenses$146 $108 $(38)(35.2)%$279 $212 $(67)(31.6)%
NM - not meaningful
Segment general and administrative expenses (“Segment G&A”) consist primarily of salary and employee-related costs for non-restaurant employees, professional fees, information technology systems, and general overhead for our corporate offices. Segment G&A excludes share-based compensation and non-cash incentive compensation expense, depreciation and amortization, FHS Transaction costs and Corporate restructuring and tax advisory fees.
During the three and six months ended June 30, 2022, the increases in Segment G&A for our TH and PLK segments and during the six months ended June 30, 2022 the increase in Segment G&A for our BK segment, were primarily driven by higher salary and employee-related costs for non-restaurant employees, largely a result of hiring across a number of key areas.
During the three and six months ended June 30, 2022, the increase in share-based compensation and non-cash incentive compensation expense was primarily due to an increase in equity awards granted during 2022, shorter vesting periods for equity awards granted in 2022 and 2021, as well as the non-recurrence of equity award forfeitures during 2021.
In connection with the Firehouse Subs acquisition, we incurred certain non-recurring fees and expenses (“FHS Transaction costs”) consisting of professional fees, compensation related expenses and integration costs. We expect to incur additional FHS Transaction costs during the remainder of 2022.
In connection with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movement within our structure, including services related to significant tax reform legislation, regulations and related restructuring initiatives, we incurred expenses primarily from professional advisory and consulting services (“Corporate restructuring and tax advisory fees”). We expect to incur additional Corporate restructuring and tax advisory fees during the remainder of 2022.
(Income) Loss from Equity Method Investments
(Income) loss from equity method investments reflects our share of investee net income or loss and non-cash dilution gains or losses from changes in our ownership interests in equity method investees.
The change in (income) loss from equity method investments during the three and six months ended June 30, 2022 was primarily driven by an increase in equity method investment net losses that we recognized during the current year.

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Other Operating Expenses (Income), net
Our other operating expenses (income), net consisted of the following:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings$(1)$1 $1 $(1)
Litigation settlements (gains) and reserves, net2 1 3 3 
Net losses (gains) on foreign exchange(31)8 (52)(35)
Other, net5 (2)7 (1)
     Other operating expenses (income), net$(25)$8 $(41)$(34)
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to restaurant closures and refranchisings. Gains and losses recognized in the current period may reflect certain costs related to closures and refranchisings that occurred in previous periods.
Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities.
Interest Expense, net
Our interest expense, net and the weighted average interest rate on our long-term debt were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Interest expense, net$129 $126 $256 $250 
Weighted average interest rate on long-term debt4.2 %4.2 %4.1 %4.2 %
During the three and six months ended June 30, 2022, interest expense, net was consistent year-over-year.
Income Tax Expense (Benefit)
Our effective tax rate was 15.9% and (8.1)% for the three months ended June 30, 2022 and 2021, respectively. Our effective tax rate was unfavorably impacted by changes to the relative mix of our income from multiple tax jurisdictions and lower excess tax benefits from equity-based compensation, partially offset by favorable structural changes. The effective tax rate for the three months ended June 30, 2021 included a net decrease in tax reserves of $89 million related primarily to expiring statutes of limitation for certain prior tax years which decreased the effective tax rate by 24.7%. There may continue to be some quarter-to-quarter volatility of our effective tax rate as our mix of income from multiple tax jurisdictions and related income forecasts change due to recent macroeconomic events such as the COVID-19 pandemic, the war in Ukraine and higher levels of inflation.
Our effective tax rate was 16.2% and 2.6% for the six months ended June 30, 2022 and 2021, respectively. Our effective tax rate was unfavorably impacted by changes to the relative mix of our income from multiple tax jurisdictions and lower excess tax benefits from equity-based compensation, partially offset by favorable structural changes. The effective tax rate for the six months ended June 30, 2021 included a net decrease in tax reserves of $87 million related primarily to expiring statutes of limitation for certain prior tax years which decreased the effective tax rate by 12.8%.
On December 28, 2021, the U.S. Treasury Department released final regulations (T.D. 9959, published in the Federal Register on January 4, 2022) restricting the ability to credit certain foreign taxes, applicable prospectively starting January 1, 2022. Due to these new regulations, we released discretely during the three and six months ended June 30, 2022 a portion of the valuation allowance on our foreign tax credit carryforwards. Based on our current analysis, we do not expect these regulations to have a material, ongoing impact as we anticipate being in an excess credit position prospectively.

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Net Income
We reported net income of $346 million for the three months ended June 30, 2022, compared to net income of $391 million for the three months ended June 30, 2021. The decrease in net income is primarily due to a $95 million increase in income tax expense, a $12 million increase in share-based compensation and non-cash incentive compensation expense, a $5 million unfavorable change from the impact of equity method investments, $4 million of FHS transaction costs, a $3 million increase in interest expense, net, and a $3 million increase in Corporate restructuring and tax advisory fees. These factors were partially offset by a $33 million favorable change in the results from other operating expenses (income), net, a $21 million increase in TH segment income, the inclusion of FHS segment income of $13 million, a $4 million increase in BK segment income, a $3 million increase in PLK segment income, and a $3 million decrease in depreciation and amortization. Amounts above include a total unfavorable FX Impact to net income of $16 million.
We reported net income of $616 million for the six months ended June 30, 2022, compared to net income of $662 million for the six months ended June 30, 2021. The decrease in net income is primarily due to a $101 million increase in income tax expense, a $17 million unfavorable change from the impact of equity method investments, a $13 million increase in share-based compensation and non-cash incentive compensation expense, a $6 million increase in interest expense, net, a $5 million increase in Corporate restructuring and tax advisory fees, and $5 million of FHS transaction costs. These factors were partially offset by a $45 million increase in TH segment income, the inclusion of FHS segment income of $27 million, a $16 million increase in BK segment income, a $7 million favorable change in the results from other operating expenses (income), net, a $3 million increase in PLK segment income, and a $3 million decrease in depreciation and amortization. Amounts above include a total unfavorable FX Impact to net income of $25 million.
Non-GAAP Reconciliations
The table below contains information regarding EBITDA and Adjusted EBITDA, which are non-GAAP measures. These non-GAAP measures do not have a standardized meaning under U.S. GAAP and may differ from similar captioned measures of other companies in our industry. We believe that these non-GAAP measures are useful to investors in assessing our operating performance, as they provide them with the same tools that management uses to evaluate our performance and is responsive to questions we receive from both investors and analysts. By disclosing these non-GAAP measures, we intend to provide investors with a consistent comparison of our operating results and trends for the periods presented. EBITDA is defined as earnings (net income or loss) before interest expense, net, loss on early extinguishment of debt, income tax (benefit) expense, and depreciation and amortization and is used by management to measure operating performance of the business. Adjusted EBITDA is defined as EBITDA excluding (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net and, (iv) income/expenses from non-recurring projects and non-operating activities. For the periods referenced, income/expenses from non-recurring projects and non-operating activities included (i) non-recurring fees and expense incurred in connection with the Firehouse Acquisition consisting of professional fees, compensation related expenses and integration costs; and (ii) costs from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including services related to significant tax reform legislation, regulations and related restructuring initiatives. Management believes that these types of expenses are either not related to our underlying profitability drivers or not likely to re-occur in the foreseeable future and the varied timing, size and nature of these projects may cause volatility in our results unrelated to the performance of our core business that does not reflect trends of our core operations.
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Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management’s assessment of our operating performance. Adjusted EBITDA, as defined above, also represents our measure of segment income for each of our four operating segments.
Three Months Ended June 30,VarianceSix Months Ended June 30,Variance
$%$%
20222021Favorable / (Unfavorable)20222021Favorable / (Unfavorable)
Segment income:
TH$274 $253 $21 8.4 %$505 $460 $45 9.9 %
BK270 266 4 1.6 %499 483 16 3.4 %
PLK61 58 3 4.4 %117 114 3 2.4 %
FHS13 — 13 NM27 — 27 NM
Adjusted EBITDA618 577 41 7.1 %1,148 1,057 91 8.6 %
Share-based compensation and non-cash incentive compensation expense32 20 (12)(60.0)%59 46 (13)(28.3)%
FHS Transaction costs4 — (4)NM5 — (5)NM
Corporate restructuring and tax advisory fees6 3 (3)(100.0)%9 4 (5)(125.0)%
Impact of equity method investments (a)12 7 (5)(71.4)%28 11 (17)(154.5)%
Other operating expenses (income), net(25)8 33 NM(41)(34)7 (20.6)%
EBITDA589 539 50 9.3 %1,088 1,030 58 5.6 %
Depreciation and amortization48 51 3 5.9 %97 100 3 3.0 %
Income from operations541 488 53 10.9 %991 930 61 6.6 %
Interest expense, net129 126 (3)(2.4)%256 250 (6)(2.4)%
Income tax expense (benefit)66 (29)(95)NM119 18 (101)NM
Net income$346 $391 $(45)(11.5)%$616 $662 $(46)(6.9)%
NM - not meaningful
(a)Represents (i) (income) loss from equity method investments and (ii) cash distributions received from our equity method investments. Cash distributions received from our equity method investments are included in segment income.
The increase in Adjusted EBITDA for the three and six months ended June 30, 2022 reflects the increases in segment income in our TH, BK and PLK segments and the inclusion of FHS. The increase in Adjusted EBITDA includes an unfavorable FX Impact of $21 million and $28 million for the three and six months ended June 30, 2022, respectively.
The increase in EBITDA for the three and six months ended June 30, 2022 is primarily due to increases in segment income in our TH, BK and PLK segments, the inclusion of FHS, and a favorable change from other operating expenses (income) net, partially offset by an increase in share-based compensation and non-cash incentive compensation expense and an unfavorable change from the impact of equity method investments. The increase in EBITDA includes an unfavorable FX Impact of $19 million and $29 million for the three and six months ended June 30, 2022, respectively.
Liquidity and Capital Resources
Our primary sources of liquidity are cash on hand, cash generated by operations and borrowings available under our Revolving Credit Facility (as defined below). We have used, and may in the future use, our liquidity to make required interest and/or principal payments, to repurchase our common shares, to repurchase Class B exchangeable limited partnership units of Partnership (“Partnership exchangeable units”), to voluntarily prepay and repurchase our or one of our affiliate’s outstanding debt, to fund acquisitions such as the Firehouse Acquisition and other investing activities, such as capital expenditures and joint ventures, and to pay dividends on our common shares and make distributions on the Partnership exchangeable units. As a result of our borrowings, we are highly leveraged. Our liquidity requirements are significant, primarily due to debt service requirements.
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As of June 30, 2022, we had cash and cash equivalents of $838 million and borrowing availability of $998 million under our senior secured revolving credit facility (the “Revolving Credit Facility”). Based on our current level of operations and available cash, we believe our cash flow from operations, combined with our availability under our Revolving Credit Facility, will provide sufficient liquidity to fund our current obligations, debt service requirements and capital spending over the next twelve months.
On July 28, 2021, our board of directors approved a share repurchase authorization that allows us to purchase up to $1,000 million of our common shares until August 10, 2023. As a public company operating in Canada, we must file a notice of intention to make a normal course issuer bid with the stock exchanges we are listed on and receive their approval before proceeding with a share repurchase. On August 6, 2021, we announced that the Toronto Stock Exchange (the “TSX”) had accepted the notice of our intention to renew the normal course issuer bid. Under this normal course issuer bid, we are permitted to repurchase up to 30,382,519 common shares for the 12-month period commencing on August 10, 2021 and ending on August 9, 2022, or earlier if we complete the repurchases prior to such date. We plan to submit a new normal course issuer bid, subject to TSX approval, to be effective following expiration of the current one. Share repurchases under the normal course issuer bid will be made through the facilities of the TSX, the New York Stock Exchange (the “NYSE”) and/or other exchanges and alternative Canadian or foreign trading systems, if eligible, or by such other means as may be permitted by the TSX and/or the NYSE under applicable law. Shareholders may obtain a copy of the prior notice, free of charge, by contacting us. During the six months ended June 30, 2022, we repurchased and cancelled 6,101,364 RBI common shares on the open market for $326 million and as of June 30, 2022 had $123 million remaining under the authorization and 15,340,291 shares remaining under the normal course issuer bid. Repurchases under the Company’s authorization will be made in the open market or through privately negotiated transactions.
We generally provide applicable deferred taxes based on the tax liability or withholding taxes that would be due upon repatriation of cash associated with unremitted earnings. We will continue to monitor our plans for such cash and related foreign earnings but our expectation is to continue to provide taxes on unremitted earnings that we expect to distribute.
Debt Instruments and Debt Service Requirements
As of June 30, 2022, our long-term debt consists primarily of borrowings under our Credit Facilities, amounts outstanding under our 3.875% First Lien Senior Notes due 2028, 5.75% First Lien Senior Notes due 2025, 3.50% First Lien Senior Notes due 2029, 4.375% Second Lien Senior Notes due 2028, 4.00% Second Lien Senior Notes due 2030 (together, the “Senior Notes”), TH Facility, RE Facility, and obligations under finance leases. For further information about our long-term debt, see Note 11 to the accompanying unaudited condensed consolidated financial statements included in this report.
As of June 30, 2022, there was $6,466 million outstanding principal amount under our senior secured term loan facilities (the “Term Loan Facilities” and together with the Revolving Credit Facility, the “Credit Facilities”) with a weighted average interest rate of 3.34%. The interest rate applicable to borrowings under our Term Loan A and Revolving Credit Facility is, at our option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin varying from 0.00% to 0.50%, or (ii) Adjusted Term SOFR (Adjusted Term SOFR is calculated as Term SOFR plus a 0.10% adjustment), subject to a floor of 0.00%, plus an applicable margin varying between 0.75% to 1.50%, in each case, determined by reference to a net first lien leverage based pricing grid. The interest rate applicable to borrowings under our Term Loan B is, at our option, either (i) a base rate, subject to a floor of 1.00%, plus an applicable margin of 0.75% or (ii) a Eurocurrency rate, subject to a floor of 0.00%, plus an applicable margin of 1.75%.
Based on the amounts outstanding under the Term Loan Facilities and LIBOR/SOFR (Secured Overnight Financing Rate) as of June 30, 2022, subject to a floor of 0.00%, required debt service for the next twelve months is estimated to be approximately $218 million in interest payments and $69 million in principal payments. In addition, based on LIBOR as of June 30, 2022, net cash settlements that we expect to receive on our $4,000 million interest rate swaps are estimated to be approximately $1 million for the next twelve months. Based on the amounts outstanding at June 30, 2022, required debt service for the next twelve months on all of the Senior Notes outstanding is approximately $264 million in interest payments. Based on the amounts outstanding under the TH Facility as of June 30, 2022, required debt service for the next twelve months is estimated to be approximately $6 million in interest payments and $9 million in principal payments. Based on the amounts outstanding under the RE Facility as of June 30, 2022, required debt service for the next twelve months is insignificant.
Restrictions and Covenants
As of June 30, 2022, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH Facility, RE Facility and the indentures governing our Senior Notes.

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Cash Dividends
On July 6, 2022, we paid a dividend of $0.54 per common share and Partnership made a distribution in respect of each Partnership exchangeable unit in the amount of $0.54 per Partnership exchangeable unit.
Our board of directors has declared a cash dividend of $0.54 per common share, which will be paid on October 5, 2022 to common shareholders of record on September 21, 2022. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of $0.54 per Partnership exchangeable unit, and the record date and payment date for distributions on Partnership exchangeable units are the same as the record date and payment date set forth above.
In addition, because we are a holding company, our ability to pay cash dividends on our common shares may be limited by restrictions under our debt agreements. Although we do not have a formal dividend policy, our board of directors may, subject to compliance with the covenants contained in our debt agreements and other considerations, determine to pay dividends in the future. We expect to pay all dividends from cash generated from our operations.
Outstanding Security Data
As of July 29, 2022, we had outstanding 305,789,100 common shares and one special voting share. The special voting share is held by a trustee, entitling the trustee to that number of votes on matters on which holders of common shares are entitled to vote equal to the number of Partnership exchangeable units outstanding. The trustee is required to cast such votes in accordance with voting instructions provided by holders of Partnership exchangeable units. At any shareholder meeting of the Company, holders of our common shares vote together as a single class with the special voting share except as otherwise provided by law. For information on our share-based compensation and our outstanding equity awards, see Note 14 to the audited consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC and Canadian securities regulatory authorities on February 23, 2022.
There were 143,316,404 Partnership exchangeable units outstanding as of July 29, 2022. During the six months ended June 30, 2022, Partnership exchanged 1,677,054 Partnership exchangeable units pursuant to exchange notices received. Since December 12, 2015, the holders of Partnership exchangeable units have had the right to require Partnership to exchange all or any portion of such holder’s Partnership exchangeable units for our common shares at a ratio of one share for each Partnership exchangeable unit, subject to our right as the general partner of Partnership to determine to settle any such exchange for a cash payment in lieu of our common shares.
Comparative Cash Flows
Operating Activities
Cash provided by operating activities was $669 million for the six months ended June 30, 2022, compared to $745 million during the same period in the prior year. The decrease in cash provided by operating activities was driven by an increase in cash used for working capital, partially offset by an increase in segment income in our TH, BK and PLK segments, the inclusion of FHS segment income and a decrease in income tax payments.
Investing Activities
Cash used for investing activities was $46 million for the six months ended June 30, 2022, compared to $36 million during the same period in the prior year. This change was driven primarily by an increase in payments from other investing activities and net payments in connection with the purchase of Firehouse Subs in the current year, partially offset by a decrease in payments for property and equipment.
Financing Activities
Cash used for financing activities was $860 million for the six months ended June 30, 2022, compared to $516 million during the same period in the prior year. The change in cash used for financing activities was driven primarily by cash used to repurchase RBI common shares in the current year and a decrease in proceeds from stock option exercises.
Critical Accounting Policies and Estimates
For information regarding our Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, 2022.

40
New Accounting Pronouncements
See Note 3 – New Accounting Pronouncements in the notes to the accompanying unaudited condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There were no material changes during the six months ended June 30, 2022 to the disclosures made in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC and Canadian securities regulatory authorities on February 23, 2022.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was conducted under the supervision and with the participation of management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and Exchange Act Rules 15d-15(e)) as of June 30, 2022. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of such date.
Changes in Internal Controls
We are in the process of integrating Firehouse Subs into our overall internal control over financial reporting processes.
Internal Control Over Financial Reporting
The Company’s management, including the CEO and CFO, confirm there were no changes in the Company’s internal control over financial reporting during the three months ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Special Note Regarding Forward-Looking Statements
Certain information contained in this report, including information regarding future financial performance and plans, targets, aspirations, expectations, and objectives of management, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of Canadian securities laws. We refer to all of these as forward-looking statements. Forward-looking statements are forward-looking in nature and, accordingly, are subject to risks and uncertainties. These forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “target”, “potential” and other similar expressions and include, without limitation, statements regarding our expectations or beliefs regarding (i) the effects and continued impact of the COVID-19 pandemic, the war in Ukraine and related macro-economic pressures on our results of operations, business, liquidity, prospects and restaurant operations and those of our franchisees, including local conditions and government-imposed limitations and restrictions; (ii) our digital and marketing initiatives and expectations regarding further expenditures relating to these initiatives; (iii) our discontinuation of operations in and financial results from Russia; (iv) the incurrence and timing of future FHS Transaction costs and Corporate restructuring and tax advisory fees; (v) our future financial obligations, including annual debt service requirements, capital expenditures and dividend payments, our ability to meet such obligations and the source of funds used to satisfy such obligations; (vi) our goals with respect to reduction in greenhouse gas emissions; (vii) the impact of the resolutions of the dispute in China on our future growth prospects in that market; (viii) certain tax matters, including our estimates with respect to tax matters and their impact on future periods; (ix) the amount of net cash settlements we expect to pay on our derivative instruments; and (x) certain accounting matters.
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Our forward-looking statements, included in this report and elsewhere, represent management’s expectations as of the date that they are made. Our forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, these forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, among other things, risks related to: (1) our substantial indebtedness, which could adversely affect our financial condition and prevent us from fulfilling our obligations; (2) global economic or other business conditions that may affect the desire or ability of our customers to purchase our products, such as the effects of the COVID-19 pandemic, inflationary pressures, high unemployment levels, declines in median income growth, consumer confidence and consumer discretionary spending and changes in consumer perceptions of dietary health and food safety; (3) our relationship with, and the success of, our franchisees and risks related to our fully franchised business model; (4) our franchisees’ financial stability and their ability to access and maintain the liquidity necessary to operate their businesses; (5) our supply chain operations; (6) our ownership and leasing of real estate; (7) the effectiveness of our marketing, advertising and digital programs and franchisee support of these programs; (8) significant and rapid fluctuations in interest rates and in the currency exchange markets and the effectiveness of our hedging activity; (9) our ability to successfully implement our domestic and international growth strategy for each of our brands and risks related to our international operations; (10) our reliance on franchisees, including subfranchisees, to accelerate restaurant growth; (11) our ability to resolve disputes with master franchisees; (12) the ability of the counterparties to our credit facilities and derivatives to fulfill their commitments and/or obligations; and (13) changes in applicable tax laws or interpretations thereof, and our ability to accurately interpret and predict the impact of such changes or interpretations on our financial condition and results.
We operate in a very competitive and rapidly changing environment and our inability to successfully manage any of the above risks may permit our competitors to increase their market share and may decrease our profitability. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC and Canadian securities regulatory authorities on February 23, 2022, as well as other materials that we from time to time file with, or furnish to, the SEC or file with Canadian securities regulatory authorities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this section and elsewhere in this report. Other than as required under securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

Part II – Other Information

Item 1. Legal Proceedings
See Part I, Notes to Condensed Consolidated Financial Statements, Note 16, Commitments and Contingencies.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Following are our monthly share repurchases for the second quarter of Fiscal year 2022:
PeriodTotal Number of Shares PurchasedTotal Dollar Value of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs
April 1, 2022 - April 30, 2022— $— $— — $288,424,528 
May 1, 2022 - May 31, 20222,349,362 120,678,618 51.37 2,349,362 167,745,910 
June 1, 2022 - June 30, 2022892,000 44,325,718 49.69 892,000 123,420,192 
3,241,362 $165,004,336 3,241,362 
(1)In July 2021, the Board of Directors authorized repurchases of up to $1.0 billion common shares through August 10, 2023 and the open market repurchases of the common shares listed in the table above were made pursuant to that authorization.
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Table of Contents
Item 6. Exhibits
Exhibit
Number
Description
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)
44

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

  
RESTAURANT BRANDS INTERNATIONAL INC.
(Registrant)
Date: August 4, 2022  By: /s/ Matthew Dunnigan
   Name: Matthew Dunnigan
   Title: Chief Financial Officer
(principal financial officer)
(duly authorized officer)
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