McDonald's Corporation: 10-K Risk Factor Changes

Long-lived assets are reviewed for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of annually reviewing McDonald’s restaurant assets for potential impairment, assets are initially grouped together in the U.S. at a field office level, and internationally, at a market level. The Company manages its restaurants as a group or portfolio with significant common costs and promotional activities; as such, an individual restaurant’s cash flows are not generally independent of the cash flows of others in a market. If an indicator of impairment exists for any grouping of assets, an estimate of undiscounted future cash flows produced by each individual restaurant within the asset grouping is compared to its carrying value. If an individual restaurant is determined to be impaired, the loss is measured by the excess of the carrying amount of the restaurant over its fair value as determined by an estimate of discounted future cash flows. Losses on assets held for disposal are recognized when management and the Company's Board of Directors, as required, have approved and committed to a plan to dispose of the assets, the assets are available for disposal and the disposal is probable of occurring McDonald's Corporation 2023 Annual Report 44 McDonald's Corporation 2023 Annual Report 44 McDonald's Corporation 2023 Annual Report 44 within 12 months, and the net sales proceeds are expected to be less than its net book value, among other factors. Generally, such losses are related to restaurants that have closed and ceased operations as well as other assets that meet the criteria to be considered “held for sale." GOODWILL Goodwill represents the excess of cost over the net tangible assets and identifiable intangible assets of acquired restaurants and other businesses, and it is generally assigned to the reporting unit (defined as each individual market) expected to benefit from the synergies of the combination. The Company's goodwill primarily results from purchases of McDonald's restaurants from franchisees or transactions in which the Company obtains a controlling interest in subsidiaries or affiliates. When purchasing restaurants from a franchisee, the Company generally uses a discounted cash flow methodology (Level 3 inputs within the valuation hierarchy), which determines the fair value of restaurants acquired based on their expected profitability and cash flows. If a Company-operated restaurant is sold within 24 months of acquisition, the goodwill associated with the acquisition is written off in its entirety. If a Company-operated restaurant is sold beyond 24 months from the acquisition, the amount of goodwill written off is based on the relative fair value of the business sold compared to the reporting unit. Goodwill represents the excess of cost over the net tangible assets and identifiable intangible assets of acquired restaurants and other businesses, and it is generally assigned to the reporting unit (defined as each individual market) expected to benefit from the synergies of the combination. The Company's goodwill primarily results from purchases of McDonald's restaurants from franchisees or transactions in which the Company obtains a controlling interest in subsidiaries or affiliates. When purchasing restaurants from a franchisee, the Company generally uses a discounted cash flow methodology (Level 3 inputs within the valuation hierarchy), which determines the fair value of restaurants acquired based on their expected profitability and cash flows. If a Company-operated restaurant is sold within 24 months of acquisition, the goodwill associated with the acquisition is written off in its entirety. If a Company-operated restaurant is sold beyond 24 months from the acquisition, the amount of goodwill written off is based on the relative fair value of the business sold compared to the reporting unit. The following table presents the 2023 activity in goodwill by segment: In millionsU.S.InternationalOperated MarketsInternational Developmental Licensed Markets & CorporateConsolidatedBalance at December 31, 2022$1,815.2 $1,085.2 $— $2,900.4 Net restaurant purchases (sales)17.7 89.7 — 107.4 Currency translation— 32.6 — 32.6 Balance at December 31, 2023$1,832.9 $1,207.5 $— $3,040.4 The Company conducts goodwill impairment testing in the fourth quarter of each year or whenever indicators of impairment exist. If an indicator of impairment exists, the goodwill impairment test compares the fair value of a reporting unit, generally based on discounted future cash flows, with its carrying amount including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. In the current period, the Company performed a qualitative assessment and did not identify any indicators of impairment. Historically, goodwill impairment has not significantly impacted the consolidated financial statements. Goodwill on the Consolidated Balance Sheet reflects accumulated impairment losses of $14.5 million as of December 31, 2023 and 2022.

Long-lived assets are reviewed for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of annually reviewing McDonald’s restaurant assets for potential impairment, assets are initially grouped together in the U.S. at a field office level, and internationally, at a market level. The Company manages its restaurants as a group or portfolio with significant common costs and promotional activities; as such, an individual restaurant’s cash flows are not generally independent of the cash flows of others in a market. If an indicator of impairment exists for any grouping of assets, an estimate of undiscounted future cash flows produced by each individual restaurant within the asset grouping is compared to its carrying value. If an individual restaurant is determined to be impaired, the loss is measured by the excess of the carrying amount of the restaurant over its fair value as determined by an estimate of discounted future cash flows. Losses on assets held for disposal are recognized when management and the Company's Board of Directors, as required, have approved and committed to a plan to dispose of the assets, the assets are available for disposal and the disposal is probable of occurring within 12 months, and the net sales proceeds are expected to be less than its net book value, among other factors. Generally, such losses are related to restaurants that have closed and ceased operations as well as other assets that meet the criteria to be considered “held for sale." GOODWILL Goodwill represents the excess of cost over the net tangible assets and identifiable intangible assets of acquired restaurants and other businesses, and it is generally assigned to the reporting unit (defined as each individual market) expected to benefit from the synergies of the combination. The Company's goodwill primarily results from purchases of McDonald's restaurants from franchisees or transactions in which the Company obtains a controlling interest in subsidiaries or affiliates. When purchasing restaurants from a franchisee, the Company generally uses a discounted cash flow methodology (Level 3 inputs within the valuation hierarchy), which determines the fair value of restaurants acquired based on their expected profitability and cash flows. During 2022, the Company acquired restaurants from franchisees in order to expand its Company-operated restaurant footprint in key growth areas and to support key strategic franchising initiatives. In conjunction with these purchases, the Company recorded approximately $75 million of net tangible assets, $525 million of identifiable intangible assets (primarily consisting of reacquired franchise rights) and $190 million of goodwill. These acquisitions did not have a material impact on the amount of recorded revenues or net income of the Company. If a Company-operated restaurant is sold within 24 months of acquisition, the goodwill associated with the acquisition is written off in its entirety. If a Company-operated restaurant is sold beyond 24 months months from the acquisition, the amount of goodwill written off is based on the relative fair value of the business sold compared to the reporting unit. The following table presents the 2022 activity in goodwill by segment: In millionsU.S.InternationalOperated MarketsInternational Developmental Licensed Markets & CorporateConsolidatedBalance at December 31, 2021$1,673.4 $1,109.1 $— $2,782.5 Net restaurant purchases (sales)141.8 47.0 — 188.8 Currency translation— (70.9)— (70.9)Balance at December 31, 2022$1,815.2 $1,085.2 $— $2,900.4 The Company conducts goodwill impairment testing in the fourth quarter of each year or whenever indicators of impairment exist. If an indicator of impairment exists, the goodwill impairment test compares the fair value of a reporting unit, generally based on discounted future cash flows, with its carrying amount including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. In the current period, the Company performed a qualitative assessment and did not identify any indicators of impairment. Historically, goodwill impairment has not significantly impacted the consolidated financial statements. Goodwill on the Consolidated Balance Sheet reflects accumulated impairment losses of $14.5 million as of December 31, 2022 and 2021.

The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties. The Company did not have significant exposure to any individual counterparty at December 31, 2023 and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in its financial statements and supplementary data, including for counterparties subject to netting arrangements. Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits. At December 31, 2023, the Company was required to post $82.8 million of collateral due to the negative fair value of certain derivative positions. The Company's counterparties were not required to post collateral on any derivative position, other than on certain hedges of the Company’s supplemental benefit plan liabilities where the counterparties were required to post collateral on their liability positions.

The Company is exposed to credit-related losses in the event of non-performance by its derivative counterparties. The Company did not have significant exposure to any individual counterparty at December 31, 2022 and has master agreements that contain netting arrangements. For financial reporting purposes, the Company presents gross derivative balances in the financial statements and supplementary data, including for counterparties subject to netting arrangements. Some of these agreements also require each party to post collateral if credit ratings fall below, or aggregate exposures exceed, certain contractual limits. At December 31, 2022, the Company was required to post $78 million of collateral due to the negative fair value of certain derivative positions. The Company's counterparties were not required to post collateral on any derivative position, other than on certain hedges of the Company’s supplemental benefit plan liabilities where the counterparties were required to post collateral on their liability positions. McDonald's Corporation 2022 Annual Report 46 McDonald's Corporation 2022 Annual Report 46 McDonald's Corporation 2022 Annual Report 46

Property and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following estimated useful lives: buildings–up to 40 years; leasehold improvements–the lesser of useful lives of assets or lease terms, which generally include certain option periods; and equipment–3 to 12 years. The Company periodically reviews these lives relative to physical factors, economic factors and industry trends. If there are changes in the planned use of property and equipment, or if technological changes occur more rapidly than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the accelerated recognition of depreciation and amortization expense or write-offs in future periods. The Company may share in the cost of certain restaurant improvements with its franchisees. Since McDonald's manages the project and provides up front funding in these instances, during the project the Company estimates which costs are the responsibility of McDonald's and which are the responsibility of the franchisee, and allocates the corresponding costs between Property and equipment and Accounts receivable. Upon the completion of the project, the allocation of costs is finalized and may result in immaterial adjustments to the balances and associated depreciation expense. Refer to the Property and Equipment footnote on page 50 of this Form 10-K for additional information. LEASING The Company is the lessee in a significant real estate portfolio, primarily through ground leases (the Company leases the land and generally owns the building) and through improved leases (the Company leases the land and buildings). The Lease right-of-use asset and Lease liability reflect the present value of the Company’s estimated future minimum lease payments over the lease term, which includes options that are reasonably assured of being exercised, discounted using the rate implicit in each lease, if determinable, or a collateralized incremental borrowing rate considering the term of the lease and particular currency environment. Leases with an initial term of 12 months or less, primarily related to leases of office equipment, are not included in the Lease right-or-use asset or Lease liability and continue to be recognized in the Consolidated Statement of Income on a straight-line basis over the lease term. The Company has elected not to separate non-lease components from lease components in its lessee portfolio. To the extent that occupancy costs, such as site maintenance, are included in the asset and liability, the impact is immaterial and is generally limited to Company-owned restaurant locations. For franchised locations, which represent the majority of the restaurant portfolio, the related occupancy costs including property taxes, insurance and site maintenance are generally required to be paid by the franchisees as part of the franchise arrangement. In addition, the Company is the lessee under non-restaurant related leases such as office buildings, vehicles and office equipment. These leases are not a material subset of the Company’s lease portfolio.

Property and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following estimated useful lives: buildings–up to 40 years; leasehold improvements–the lesser of useful lives of assets or lease terms, which generally include certain option periods; and equipment–3 to 12 years. The Company periodically reviews these lives relative to physical factors, economic factors and industry trends. If there are changes in the planned use of property and equipment, or if technological changes occur more rapidly than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the accelerated recognition of depreciation and amortization expense or write-offs in future periods. The Company may share in the cost of certain restaurant improvements with its franchisees, primarily in the U.S. Since McDonald's manages the project and provides up front funding in these instances, during the project the Company estimates which costs are the responsibility of McDonald's and which are the responsibility of the franchisee, and allocates the corresponding costs between Property and equipment and Accounts receivable. Upon the completion of the project, the allocation of costs is finalized and may result in immaterial adjustments to the balances and associated depreciation expense. Refer to the Property and Equipment footnote on page 49 of this Form 10-K for additional information. LEASING The Company is the lessee in a significant real estate portfolio, primarily through ground leases (the Company leases the land and generally owns the building) and through improved leases (the Company leases the land and buildings). The Lease right-of-use asset and Lease liability reflect the present value of the Company’s estimated future minimum lease payments over the lease term, which includes options that are reasonably assured of being exercised, discounted using the rate implicit in each lease, if determinable, or a collateralized incremental borrowing rate considering the term of the lease and particular currency environment. Leases with an initial term of 12 months or less, primarily related to leases of office equipment, are not included in the Lease right-or-use asset or Lease liability and continue to be recognized in the Consolidated Statement of Income on a straight-line basis over the lease term. The Company has elected not to separate non-lease components from lease components in its lessee portfolio. To the extent that occupancy costs, such as site maintenance, are included in the asset and liability, the impact is immaterial and is generally limited to Company-owned restaurant locations. For franchised locations, which represent the majority of the restaurant portfolio, the related occupancy costs including property taxes, insurance and site maintenance are generally required to be paid by the franchisees as part of the franchise arrangement. In addition, the Company is the lessee under non-restaurant related leases such as office buildings, vehicles and office equipment. These leases are not a material subset of the Company’s lease portfolio. In 2020, the Company elected the practical expedient to account for COVID-19 related rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. This was elected for the Company’s entire lessee and lessor portfolio for any rent deferrals or rent abatements. For the lessee portfolio, the Company elected not to remeasure the Lease right- of-use asset and Lease liability if a rent deferral or a rent abatement was granted. Refer to the Leasing Arrangements footnote on page 50 of this Form 10-K for additional information on the Lease right-of-use asset and Lease liability. Rental income includes both minimum rent payments and variable rent payments based on a percent of sales. Refer to the Franchise Arrangements footnote on page 49 of this Form 10-K for additional information on deferred collections of rental income as well as royalties. McDonald's Corporation 2022 Annual Report 42 McDonald's Corporation 2022 Annual Report 42 McDonald's Corporation 2022 Annual Report 42

At December 31, 2023, the fair value of the Company’s debt obligations was estimated at $38.4 billion, compared to a carrying amount of $39.3 billion. The fair value of debt obligations is based upon quoted market prices, classified as Level 2 within the valuation hierarchy. The carrying amount of cash and equivalents and notes receivable approximate fair value.

At December 31, 2022, the fair value of the Company’s debt obligations was estimated at $33.5 billion, compared to a carrying amount of $35.9 billion. The fair value was based on quoted market prices, Level 2 within the valuation hierarchy. The carrying amount of cash and equivalents and notes receivable approximate fair value.

The Company enters into certain derivatives that are not designated for hedge accounting. Therefore, the changes in the fair value of these derivatives are recognized immediately in earnings together with the gain or loss from the hedged balance sheet position. As an example, the Company enters into equity derivative contracts, including total return swaps, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. The Company may also use certain investments to hedge changes in these liabilities. Changes in the fair value of these derivatives or investments are recorded in Selling, general & administrative expenses together with the changes in the supplemental benefit plan liabilities. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. The changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net, along with the currency gain or loss from the hedged balance sheet position.

The Company enters into certain derivatives that are not designated for hedge accounting. Therefore, the changes in the fair value of these derivatives are recognized immediately in earnings together with the gain or loss from the hedged balance sheet position. As an example, the Company enters into equity derivative contracts, including total return swaps, to hedge market-driven changes in certain of its supplemental benefit plan liabilities. Changes in the fair value of these derivatives are recorded in Selling, general & administrative expenses together with the changes in the supplemental benefit plan liabilities. In addition, the Company uses foreign currency forwards to mitigate the change in fair value of certain foreign currency denominated assets and liabilities. The changes in the fair value of these derivatives are recognized in Nonoperating (income) expense, net, along with the currency gain or loss from the hedged balance sheet position.

We encounter differing cultural, regulatory, geopolitical and economic environments within and among the more than 100 countries where McDonald’s restaurants operate, and our ability to achieve our business objectives depends on the System’s success in these environments. Meeting customer expectations is complicated by the risks inherent in our global operating environment, and our global success is partially dependent on our System’s ability to leverage operating successes across markets and brand perceptions. Planned initiatives may not have appeal across multiple markets with McDonald’s customers and could drive unanticipated changes in customer perceptions and market share. Disruptions in operations or price volatility in a market can also result from governmental actions, such as price, foreign exchange or trade-related tariffs or controls, trade policies and regulations, sanctions and counter sanctions, government-mandated closure of our, our franchisees’ or our suppliers’ operations, and asset seizures. Such disruptions or volatility can also result from acts of war, terrorism or other hostilities. For example, the wars in Ukraine and the Middle East have resulted in unpredictable conditions in regions throughout the world. The impacts of these wars on already-volatile macroeconomic conditions, geopolitical tensions, supply chain availability, consumer demand and the ability of us and our franchisees to operate in certain geographic areas, may also continue to have an adverse impact on our business and financial results. While we may face challenges and uncertainties in any of the markets in which we operate, such challenges and uncertainties are often heightened in developing markets, which may entail a relatively higher risk of political instability, economic volatility, crime, corruption McDonald's Corporation 2023 Annual Report 29 McDonald's Corporation 2023 Annual Report 29 McDonald's Corporation 2023 Annual Report 29 and social and ethnic unrest. In many cases, such challenges may be exacerbated by the lack of an independent and experienced judiciary and uncertainty in how local law is applied and enforced, including in areas most relevant to commercial transactions and foreign investment. An inability to manage effectively the risks associated with our international operations could adversely affect our business and financial results.

We encounter differing cultural, regulatory, geopolitical and economic environments within and among the more than 100 countries where McDonald’s restaurants operate, and our ability to achieve our business objectives depends on the System’s success in these environments. Meeting customer expectations is complicated by the risks inherent in our global operating environment, and our global success is partially dependent on our System’s ability to leverage operating successes across markets and brand perceptions. Planned initiatives may not have appeal across multiple markets with McDonald’s customers and could drive unanticipated changes in customer perceptions and market share. Disruptions in operations or price volatility in a market can also result from governmental actions, such as price, foreign exchange or trade-related tariffs or controls, trade policies and regulations, sanctions and counter sanctions, government-mandated closure of our, our franchisees’ or our suppliers’ operations, and asset seizures. Such disruptions or volatility can also result from acts of war, terrorism or other hostilities. For example, the war between Russia and Ukraine has resulted in volatile and unpredictable conditions throughout the region, exacerbated volatile macroeconomic conditions and increased pressure on our supply chain and the availability and costs of commodities, including energy, which we expect to continue to impact our financial results. The broader impacts of the war and related sanctions, including on macroeconomic conditions, geopolitical tensions, consumer demand and the ability of us and our franchisees to operate in certain geographic areas, may also continue to have an adverse impact on our business and financial results. While we may face challenges and uncertainties in any of the markets in which we operate, such challenges and uncertainties are often heightened in developing markets, which may entail a relatively higher risk of political instability, economic volatility, crime, corruption and social and ethnic unrest. In many cases, such challenges may be exacerbated by the lack of an independent and experienced judiciary and uncertainty in how local law is applied and enforced, including in areas most relevant to commercial transactions and foreign investment. An inability to manage effectively the risks associated with our international operations could adversely affect our business and financial results. McDonald's Corporation 2022 Annual Report 28 McDonald's Corporation 2022 Annual Report 28 McDonald's Corporation 2022 Annual Report 28

Stock options to purchase common stock are granted with an exercise price equal to the closing market price of the Company’s stock on the date of grant. Substantially all of the options become exercisable in four equal installments, beginning a year from the date of the grant, and generally expire 10 years from the grant date. The following table presents the weighted-average assumptions used in the option pricing model for the 2023, 2022 and 2021 stock option grants. The expected life of the options represents the period of time the options are expected to be outstanding and is based on historical trends. Expected stock price volatility is generally based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected dividend yield is based on the Company’s most recent annual dividend rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term equal to the expected life. Weighted-average assumptions 202320222021Expected dividend yield2.3 %2.2 %2.4 %Expected stock price volatility21.6 %21.3 %21.8 %Risk-free interest rate3.9 %1.9 %0.7 %Expected life of options (in years)5.85.75.7Fair value per option granted$54.35 $42.12 $30.91 Expected life of options (in years) Intrinsic value for stock options is defined as the difference between the current market value of the Company’s stock and the exercise price. During 2023, 2022 and 2021, the total intrinsic value of stock options exercised was $304.0 million, $242.2 million and $302.0 million, respectively. Cash received from stock options exercised during 2023 was $259.8 million and the tax benefit realized from stock options exercised totaled $69.2 million. The Company uses treasury shares purchased under the Company’s share repurchase program to satisfy share-based exercises. A summary of the status of the Company’s stock option grants as of December 31, 2023, 2022 and 2021, and changes during the years then ended, is presented in the following table: 202320222021OptionsShares inmillionsWeighted-averageexercisepriceWeighted-averageremainingcontractuallife in yearsAggregateintrinsicvalue inmillionsShares inmillionsWeighted-averageexercisepriceShares inmillionsWeighted-averageexercisepriceOutstanding at beginning of year11.4 $172.27 12.0 $156.13 13.4 $139.44 Granted1.2 266.70 1.6 252.97 2.1 215.73 Exercised(2.0)133.76 (1.9)128.08 (2.4)115.29 Forfeited/expired(0.1)244.95 (0.3)225.93 (1.1)160.50 Outstanding at end of year10.5 $189.78 5.5$1,116.1 11.4 $172.27 12.0 $156.13 Exercisable at end of year7.2 $165.22 4.4$951.7 7.7 7.8 McDonald's Corporation 2023 Annual Report 59 McDonald's Corporation 2023 Annual Report 59 McDonald's Corporation 2023 Annual Report 59 RSUs RSUs generally vest 100% on the third anniversary of the grant and are payable in either shares of the Company’s common stock or cash, at the Company’s discretion. The fair value of each RSU granted is equal to the market price of the Company’s stock at date of grant. Separately, Company officers have been awarded RSUs that vest based on Company performance. For performance-based RSUs, the Company includes a relative TSR modifier to determine the number of shares earned at the end of the performance period. The fair value of performance-based RSUs that include the TSR modifier is determined using a Monte Carlo valuation model. A summary of the Company’s RSU activity during the years ended December 31, 2023, 2022 and 2021 is presented in the following table: 202320222021RSUsShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueNonvested at beginning of year1.2 $222.32 1.3 $197.10 1.3 $176.81 Granted0.5 255.14 0.5 242.82 0.6 206.92 Vested(0.4)210.03 (0.4)173.31 (0.4)153.55 Forfeited(0.1)244.58 (0.2)205.61 (0.2)168.38 Nonvested at end of year1.2 $238.21 1.2 $222.32 1.3 $197.10 The total fair value of RSUs vested during 2023, 2022 and 2021 was $127.2 million, $110.3 million and $80.0 million, respectively. The tax benefit realized from RSUs vested during 2023 was $25.1 million.

Stock options to purchase common stock are granted with an exercise price equal to the closing market price of the Company’s stock on the date of grant. Substantially all of the options become exercisable in four equal installments, beginning a year from the date of the grant, and generally expire 10 years from the grant date. The following table presents the weighted-average assumptions used in the option pricing model for the 2022, 2021 and 2020 stock option grants. The expected life of the options represents the period of time the options are expected to be outstanding and is based on historical trends. Expected stock price volatility is generally based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected dividend yield is based on the Company’s most recent annual dividend rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term equal to the expected life. Weighted-average assumptions 202220212020Expected dividend yield2.2 %2.4 %2.3 %Expected stock price volatility21.3 %21.8 %19.1 %Risk-free interest rate1.9 %0.7 %1.4 %Expected life of options (in years)5.75.75.7Fair value per option granted$42.12 $30.91 $29.40 Expected life of options (in years) Intrinsic value for stock options is defined as the difference between the current market value of the Company’s stock and the exercise price. During 2022, 2021 and 2020, the total intrinsic value of stock options exercised was $242.2 million, $302.0 million and $290.4 million, respectively. Cash received from stock options exercised during 2022 was $248.2 million and the tax benefit realized from stock options exercised totaled $48.3 million. The Company uses treasury shares purchased under the Company’s share repurchase program to satisfy share-based exercises. A summary of the status of the Company’s stock option grants as of December 31, 2022, 2021 and 2020, and changes during the years then ended, is presented in the following table: 202220212020OptionsShares inmillionsWeighted-averageexercisepriceWeighted-averageremainingcontractuallife in yearsAggregateintrinsicvalue inmillionsShares inmillionsWeighted-averageexercisepriceShares inmillionsWeighted-averageexercisepriceOutstanding at beginning of year12.0 $156.13 13.4 $139.44 14.6 $124.21 Granted1.6 252.97 2.1 215.73 1.8 214.18 Exercised(1.9)128.08 (2.4)115.29 (2.8)104.58 Forfeited/expired(0.3)225.93 (1.1)160.50 (0.2)184.69 Outstanding at end of year11.4 $172.27 5.6$1,041.6 12.0 $156.13 13.4 $139.44 Exercisable at end of year7.7 $145.87 4.4$904.2 7.8 8.8 McDonald's Corporation 2022 Annual Report 56 McDonald's Corporation 2022 Annual Report 56 McDonald's Corporation 2022 Annual Report 56 RSUs RSUs generally vest 100% on the third anniversary of the grant and are payable in either shares of the Company’s common stock or cash, at the Company’s discretion. The fair value of each RSU granted is equal to the market price of the Company’s stock at date of grant. Separately, Company officers have been awarded RSUs that vest based on Company performance. For performance-based RSUs, the Company includes a relative TSR modifier to determine the number of shares earned at the end of the performance period. The fair value of performance-based RSUs that include the TSR modifier is determined using a Monte Carlo valuation model. A summary of the Company’s RSU activity during the years ended December 31, 2022, 2021 and 2020 is presented in the following table: 202220212020RSUsShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueNonvested at beginning of year1.3 $197.10 1.3 $176.81 1.4 $150.95 Granted0.5 242.82 0.6 206.92 0.6 201.92 Vested(0.4)173.31 (0.4)153.55 (0.6)127.99 Forfeited(0.2)205.61 (0.2)168.38 (0.1)172.45 Nonvested at end of year1.2 $222.32 1.3 $197.10 1.3 $176.81 The total fair value of RSUs vested during 2022, 2021 and 2020 was $110.3 million, $80.0 million and $119.4 million, respectively. The tax benefit realized from RSUs vested during 2022 was $18.5 million.

The Company is in process of implementing a comprehensive, multi-year technology and operating model transformation across multiple areas of the business in an effort to modernize our processes and create efficiencies. This technology transformation will include the implementation of certain new systems. Operating model transformation will include centralizing or outsourcing certain more routine functions. The Company is performing this implementation in the ordinary course of business to increase efficiency and to modernize the tools and technology used in its key financial processes. This is not in response to any identified deficiency or weakness in the Company's internal control over financial reporting. As the phased implementation of the systems continues, the Company has modified certain processes and procedures to enhance the quality of internal control over financial reporting. The Company will continue to monitor and modify, as needed, the design and operating effectiveness of key control activities to align with the updated business processes and capabilities of the new financial systems. Except for these changes, the Company’s management, including the CEO and CFO, confirm there has been no change in the Company's internal control over financial reporting during the fiscal year ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

The Company is in the process of implementing a comprehensive, multi-year finance and technology transformation initiative to migrate its general ledger, financial close and consolidation processes onto new financial systems. The Company is performing the implementation in the ordinary course of business to increase efficiency and to modernize the tools and technology used in its key financial processes. This is not in response to any identified deficiency or weakness in the Company's internal control over financial reporting. As the phased implementation of the systems continues, the Company has modified certain processes and procedures to enhance the quality of internal control over financial reporting. The Company will continue to monitor and modify, as needed, the design and operating effectiveness of key control activities to align with the updated business processes and capabilities of the new financial systems. Except for these changes, the Company’s management, including the CEO and CFO, confirm there has been no change in the Company's internal control over financial reporting during the fiscal year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

The Company has incurred debt obligations principally through public and private offerings and bank loans. There are no provisions in the Company’s debt obligations that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business. Certain of the Company’s debt obligations contain cross-acceleration provisions, and restrictions on Company and subsidiary mortgages and the long-term debt of certain subsidiaries. Under certain agreements, the Company has the option to retire debt prior to maturity, either at par or at a premium over par. The Company has no current plans to retire a significant amount of its debt prior to maturity, but continues to look for ways to optimize its debt portfolio. The following table summarizes the Company’s debt obligations (interest rates and debt amounts reflected in the table include the effects of interest rate swaps used to hedge debt). Interest rates(1)December 31Amounts outstandingDecember 31In millions of U.S. DollarsMaturity dates2023202220232022Fixed4.2 %4.0 %$23,382.6 $22,382.0 Floating6.9 6.6 1,097.5 750.0 Total U.S. Dollar2024-205324,480.1 23,132.0 Fixed2.4 1.6 10,780.6 8,704.1 Floating6.6 5.1 331.2 321.2 Total Euro2024-203511,111.8 9,025.3 Fixed3.4 3.4 748.8 748.7 Floating5.5 4.3 204.4 204.4 Total Australian Dollar2024-2029953.2 953.1 Total British Pounds Sterling - Fixed2032-20544.1 4.1 1,585.1 1,504.1 Total Canadian Dollar - Fixed20253.1 3.1 754.9 737.3 Total Japanese Yen - Fixed20302.9 2.9 88.6 95.3 Fixed0.2 0.2 475.4 432.6 Floating4.9 5.2 118.0 262.7 Total other currencies(2)2024593.4 695.3 Debt obligations before fair value adjustments and deferred debt costs(3)39,567.1 36,142.4 Fair value adjustments(4)(61.8)(91.5)Deferred debt costs(160.0)(147.4)Total debt obligations$39,345.3 $35,903.5 Interest rates(1) December 31 Total other currencies(2) Debt obligations before fair value adjustments and deferred debt costs(3) Fair value adjustments(4) (1)Weighted-average effective rate, computed on a semi-annual basis. Weighted-average effective rate, computed on a semi-annual basis. (2)Consists of Swiss Francs and Korean Won. (3)Aggregate maturities for 2023 debt balances, before fair value adjustments and deferred debt costs, are as follows (in millions): 2024–$2,192.4; 2025–$3,092.7; 2026–$2,436.3; 2027–$3,113.0; 2028–$4,293.4; Thereafter-$24,439.3. These amounts include a reclassification of short-term obligations totaling $1.1 billion to long-term obligations as they are supported by a long-term line of credit agreement expiring in June 2028. (4)The carrying value of underlying items in fair value hedges, in this case debt obligations, are adjusted for fair value changes to the extent they are attributable to the risk designated as being hedged. The related hedging instruments are also recorded at fair value on the Consolidated Balance Sheet. The carrying value of underlying items in fair value hedges, in this case debt obligations, are adjusted for fair value changes to the extent they are attributable to the risk designated as being hedged. The related hedging instruments are also recorded at fair value on the Consolidated Balance Sheet. McDonald's Corporation 2023 Annual Report 58 McDonald's Corporation 2023 Annual Report 58 McDonald's Corporation 2023 Annual Report 58 Share-based Compensation The Company maintains a share-based compensation plan, which authorizes the granting of various equity-based incentives including stock options and RSUs to employees and nonemployee directors. The number of shares of common stock reserved for issuance under the plan was 32.1 million at December 31, 2023, including 20.4 million available for future grants. Share-based compensation expense and the effect on diluted earnings per common share were as follows: In millions, except per share data202320222021Share-based compensation expense$175.2 $166.7 $139.2 After tax$155.4 $145.9 $120.4 Earnings per common share-diluted$0.21 $0.20 $0.16 As of December 31, 2023, there was $176.5 million of total unrecognized compensation cost related to nonvested share-based compensation that is expected to be recognized over a weighted-average period of 2.0 years.

The Company has incurred debt obligations principally through public and private offerings and bank loans. There are no provisions in the Company’s debt obligations that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business. Certain of the Company’s debt obligations contain cross-acceleration provisions, and restrictions on Company and subsidiary mortgages and the long-term debt of certain subsidiaries. Under certain agreements, the Company has the option to retire debt prior to maturity, either at par or at a premium over par. The Company has no current plans to retire a significant amount of its debt prior to maturity, but continues to look for ways to optimize its debt portfolio. The following table summarizes the Company’s debt obligations (interest rates and debt amounts reflected in the table include the effects of interest rate swaps used to hedge debt). Interest rates(1)December 31Amounts outstandingDecember 31In millions of U.S. DollarsMaturity dates2022202120222021Fixed4.0 %3.9 %$22,382.0 $21,833.7 Floating6.6 1.6 750.0 1,150.0 Total U.S. Dollar2023-205223,132.0 22,983.7 Fixed1.6 1.4 8,704.1 8,682.3 Floating5.1 2.1 321.2 341.1 Total Euro2023-20349,025.3 9,023.4 Fixed3.4 3.4 748.7 797.9 Floating4.3 1.2 204.4 217.9 Total Australian Dollar2024-2029953.1 1,015.8 Total British Pounds Sterling - Fixed2032-20544.1 4.2 1,504.1 1,145.0 Total Canadian Dollar - Fixed20253.1 3.1 737.3 790.6 Total Japanese Yen - Fixed20302.9 2.9 95.3 108.6 Fixed0.2 0.2 432.6 438.2 Floating5.2 2.4 262.7 257.1 Total other currencies(2)2023-2024695.3 695.3 Debt obligations before fair value adjustments and deferred debt costs(3)36,142.4 35,762.4 Fair value adjustments(4)(91.5)4.8 Deferred debt costs(147.4)(144.5)Total debt obligations$35,903.5 $35,622.7 Interest rates(1) December 31 Total other currencies(2) Debt obligations before fair value adjustments and deferred debt costs(3) Fair value adjustments(4) (1)Weighted-average effective rate, computed on a semi-annual basis. (2)Consists of Swiss Francs and Korean Won. (3)Aggregate maturities for 2022 debt balances, before fair value adjustments and deferred debt costs, are as follows (in millions): 2023-$0.0; 2024–$5,472.9; 2025–$3,060.5; 2026–$2,418.7; 2027–$2,487.2; Thereafter–$22,703.1. These amounts include a reclassification of short-term obligations totaling $2.7 billion to long-term obligations as they are supported by a long-term line of credit agreement expiring in December 2024. (4)The carrying value of underlying items in fair value hedges, in this case debt obligations, are adjusted for fair value changes to the extent they are attributable to the risk designated as being hedged. The related hedging instruments are also recorded at fair value on the Consolidated Balance Sheet. McDonald's Corporation 2022 Annual Report 55 McDonald's Corporation 2022 Annual Report 55 McDonald's Corporation 2022 Annual Report 55 Share-based Compensation The Company maintains a share-based compensation plan, which authorizes the granting of various equity-based incentives including stock options and RSUs to employees and nonemployee directors. The number of shares of common stock reserved for issuance under the plan was 34.4 million at December 31, 2022, including 21.8 million available for future grants. Share-based compensation expense and the effect on diluted earnings per common share were as follows: In millions, except per share data202220212020Share-based compensation expense$166.7 $139.2 $92.4 After tax$145.9 $120.4 $78.3 Earnings per common share-diluted$0.20 $0.16 $0.10 As of December 31, 2022, there was $161.1 million of total unrecognized compensation cost related to nonvested share-based compensation that is expected to be recognized over a weighted-average period of 2.0 years.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates. McDonald's Corporation 2023 Annual Report 62 McDonald's Corporation 2023 Annual Report 62 McDonald's Corporation 2023 Annual Report 62 Measurement of Unrecognized Tax BenefitsDescription of the MatterAs described in the Income Taxes footnote to the consolidated financial statements, the Company’s unrecognized tax benefits, which includes transfer pricing matters, totaled $587.7 million at December 31, 2023. The Company, like other multi-national companies, is regularly audited by federal, state and foreign tax authorities, and tax assessments may arise several years after tax returns have been filed. Accordingly, tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition. For tax positions that meet the more likely than not threshold, a tax liability may still be recorded depending on management’s assessment of how the tax position will ultimately be settled. Auditing the measurement of unrecognized tax benefits related to transfer pricing used in intercompany transactions was challenging because the measurement is based on interpretations of complex tax laws and because the pricing of the intercompany transactions is based on studies that may produce a range of outcomes (e.g., the price that would be charged in an arm’s-length transaction). How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to assess the technical merits and measurement of these unrecognized tax benefits. For example, we tested management’s review of the unrecognized tax benefit calculations, which included evaluation of the comparable transactions used to determine the ranges of outcomes, pricing conclusions reached in management’s transfer pricing studies and the assessment of other third-party information.With the assistance of our income tax professionals, we performed audit procedures that included, among others, evaluating the technical merits of the Company’s position and assessing the recognition and measurement of unrecognized tax benefits related to transfer pricing. For example, we assessed the inputs utilized and the pricing conclusions reached in the Company’s transfer pricing studies and compared the methods used to industry benchmarks. In addition, we used our knowledge of historical settlement activity, income tax laws and other market information to evaluate the technical merits of the Company’s positions. We also independently verified our understanding of the status of income tax examinations with the Company’s external legal counsel. As described in the Income Taxes footnote to the consolidated financial statements, the Company’s unrecognized tax benefits, which includes transfer pricing matters, totaled $587.7 million at December 31, 2023. The Company, like other multi-national companies, is regularly audited by federal, state and foreign tax authorities, and tax assessments may arise several years after tax returns have been filed. Accordingly, tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition. For tax positions that meet the more likely than not threshold, a tax liability may still be recorded depending on management’s assessment of how the tax position will ultimately be settled. Auditing the measurement of unrecognized tax benefits related to transfer pricing used in intercompany transactions was challenging because the measurement is based on interpretations of complex tax laws and because the pricing of the intercompany transactions is based on studies that may produce a range of outcomes (e.g., the price that would be charged in an arm’s-length transaction). We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to assess the technical merits and measurement of these unrecognized tax benefits. For example, we tested management’s review of the unrecognized tax benefit calculations, which included evaluation of the comparable transactions used to determine the ranges of outcomes, pricing conclusions reached in management’s transfer pricing studies and the assessment of other third-party information. With the assistance of our income tax professionals, we performed audit procedures that included, among others, evaluating the technical merits of the Company’s position and assessing the recognition and measurement of unrecognized tax benefits related to transfer pricing. For example, we assessed the inputs utilized and the pricing conclusions reached in the Company’s transfer pricing studies and compared the methods used to industry benchmarks. In addition, we used our knowledge of historical settlement activity, income tax laws and other market information to evaluate the technical merits of the Company’s positions. We also independently verified our understanding of the status of income tax examinations with the Company’s external legal counsel. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1964. Chicago, Illinois February 22, 2024 McDonald's Corporation 2023 Annual Report 63 McDonald's Corporation 2023 Annual Report 63 McDonald's Corporation 2023 Annual Report 63 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting The Board of Directors and Shareholders of McDonald’s Corporation

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates. McDonald's Corporation 2022 Annual Report 59 McDonald's Corporation 2022 Annual Report 59 McDonald's Corporation 2022 Annual Report 59 Valuation of Unrecognized Tax Benefits and Related Regulatory ActionsDescription of the MatterAs described in the Income Taxes footnote to the consolidated financial statements, the Company’s unrecognized tax benefits, which includes transfer pricing matters, totaled $647.0 million at December 31, 2022. The Company, like other multi-national companies, is regularly audited by federal, state and foreign tax authorities, and tax assessments may arise several years after tax returns have been filed. Accordingly, tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition. For tax positions that meet the more likely than not threshold, a tax liability may still be recorded depending on management’s assessment of how the tax position will ultimately be settled. The Company may also be subject to regulatory actions related to these tax matters. The Company accrues liabilities for regulatory actions when a loss is probable and the amount or range of loss is reasonably estimable. Auditing the measurement of unrecognized tax benefits and liabilities arising from regulatory actions related to transfer pricing used in intercompany transactions was challenging because the measurement is based on judgmental interpretations of complex tax laws and legal rulings and because the pricing of the intercompany transactions is based on studies that may produce a range of outcomes (e.g., the price that would be charged in an arm’s-length transaction). How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to assess the technical merits and measurement of these unrecognized tax benefits and related regulatory liabilities. For example, we tested management’s review of the unrecognized tax benefit calculations, which included evaluation of the comparable transactions used to determine the ranges of outcomes, pricing conclusions reached in management’s transfer pricing studies, the assessment of other third-party information, and settlement agreements with relevant tax and regulatory authorities. With the assistance of our income tax professionals, we performed audit procedures that included, among others, evaluating the technical merits of the Company’s position and assessing the recognition and measurement of unrecognized tax benefits and liabilities resulting from regulatory actions related to transfer pricing. For example, we assessed the inputs utilized and the pricing conclusions reached in the transfer pricing studies executed by management, and compared the methods used to alternative methods and industry benchmarks. We reviewed advice obtained by the Company from third-party advisors. In addition, we used our knowledge of historical settlement activity, income tax laws, and other market information to evaluate the technical merits of the Company’s positions. For positions settled or effectively settled in the current year, we reviewed the Company's communications and agreements with the relevant tax and regulatory authorities. Where applicable, we requested and received an external legal counsel confirmation letter to independently verify our understanding of settlement agreements. As described in the Income Taxes footnote to the consolidated financial statements, the Company’s unrecognized tax benefits, which includes transfer pricing matters, totaled $647.0 million at December 31, 2022. The Company, like other multi-national companies, is regularly audited by federal, state and foreign tax authorities, and tax assessments may arise several years after tax returns have been filed. Accordingly, tax liabilities are recorded when, in management’s judgment, a tax position does not meet the more likely than not threshold for recognition. For tax positions that meet the more likely than not threshold, a tax liability may still be recorded depending on management’s assessment of how the tax position will ultimately be settled. The Company may also be subject to regulatory actions related to these tax matters. The Company accrues liabilities for regulatory actions when a loss is probable and the amount or range of loss is reasonably estimable. Auditing the measurement of unrecognized tax benefits and liabilities arising from regulatory actions related to transfer pricing used in intercompany transactions was challenging because the measurement is based on judgmental interpretations of complex tax laws and legal rulings and because the pricing of the intercompany transactions is based on studies that may produce a range of outcomes (e.g., the price that would be charged in an arm’s-length transaction). We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to assess the technical merits and measurement of these unrecognized tax benefits and related regulatory liabilities. For example, we tested management’s review of the unrecognized tax benefit calculations, which included evaluation of the comparable transactions used to determine the ranges of outcomes, pricing conclusions reached in management’s transfer pricing studies, the assessment of other third-party information, and settlement agreements with relevant tax and regulatory authorities. With the assistance of our income tax professionals, we performed audit procedures that included, among others, evaluating the technical merits of the Company’s position and assessing the recognition and measurement of unrecognized tax benefits and liabilities resulting from regulatory actions related to transfer pricing. For example, we assessed the inputs utilized and the pricing conclusions reached in the transfer pricing studies executed by management, and compared the methods used to alternative methods and industry benchmarks. We reviewed advice obtained by the Company from third-party advisors. In addition, we used our knowledge of historical settlement activity, income tax laws, and other market information to evaluate the technical merits of the Company’s positions. For positions settled or effectively settled in the current year, we reviewed the Company's communications and agreements with the relevant tax and regulatory authorities. Where applicable, we requested and received an external legal counsel confirmation letter to independently verify our understanding of settlement agreements. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1964. Chicago, Illinois February 24, 2023 McDonald's Corporation 2022 Annual Report 60 McDonald's Corporation 2022 Annual Report 60 McDonald's Corporation 2022 Annual Report 60 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting The Board of Directors and Shareholders of McDonald’s Corporation

The Company is subject to the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and therefore files periodic reports, proxy statements and other information with the SEC. Such information may be obtained by visiting the SEC's website at www.sec.gov. The Company also uses its investor website at www.investor.mcdonalds.com as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information. The Company makes available on such website, free of charge, copies of its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing or furnishing such material to the SEC. Copies of such information and reports are also available free of charge by calling (800) 228-9623. The Company also posts the following documents on the “Corporate Governance” section of its investor website: the Company’s Corporate Governance Principles; the charters for each standing committee of the Company's Board of Directors, including the Audit & Finance Committee, Compensation Committee, Governance Committee, Public Policy & Strategy Committee, and Sustainability & Corporate Responsibility Committee; the Code of Conduct for the Company’s Board of Directors; and the Company’s Standards of Business Conduct, which applies to all officers and employees. Copies of these documents are also available free of charge by calling (800) 228-9623. The Company intends to satisfy the disclosure requirements regarding any applicable amendment to, or waiver from, a provision of its Standards of Business Conduct by disclosing such information at the website address specified above. The websites included in this Form 10-K, including those of the Company and the SEC, are provided for convenience only. Information contained on or accessible through such websites is not incorporated herein and does not constitute a part of this Form 10-K or the Company's other filings with the SEC. Financial Statements and Supplementary DataIndex to consolidated financial statementsPage referenceConsolidated statement of income for each of the three years in the period ended December 31, 202338Consolidated statement of comprehensive income for each of the three years in the period ended December 31, 202339Consolidated balance sheet at December 31, 2023 and 202240Consolidated statement of cash flows for each of the three years in the period ended December 31, 202341Consolidated statement of shareholders’ equity for each of the three years in the period ended December 31, 202342Notes to consolidated financial statements43Management’s assessment of internal control over financial reporting61Report of independent registered public accounting firm-PCAOB ID:4262Report of independent registered public accounting firm on internal control over financial reporting64 Financial Statements and Supplementary Data 38 39 40 41 42 43 61 Report of independent registered public accounting firm-PCAOB ID:42 62 64 McDonald's Corporation 2023 Annual Report 37 McDonald's Corporation 2023 Annual Report 37 McDonald's Corporation 2023 Annual Report 37 Consolidated Statement of Income In millions, except per share dataYears ended December 31, 202320222021REVENUESSales by Company-operated restaurants$9,741.6 $8,748.4 $9,787.4 Revenues from franchised restaurants15,436.5 14,105.8 13,085.4 Other revenues315.6 328.4 350.1 Total revenues25,493.7 23,182.6 23,222.9 OPERATING COSTS AND EXPENSESCompany-operated restaurant expensesFood & paper3,039.0 2,737.3 3,096.8 Payroll & employee benefits2,885.8 2,617.4 2,677.2 Occupancy & other operating expenses2,299.3 2,026.2 2,273.3 Franchised restaurants-occupancy expenses2,474.6 2,349.7 2,335.0 Other restaurant expenses232.5 244.8 260.4 Selling, general & administrative expensesDepreciation and amortization381.7 370.4 329.7 Other2,435.2 2,492.2 2,377.8 Other operating (income) expense, net98.9 973.6 (483.3)Total operating costs and expenses13,847.0 13,811.6 12,866.9 Operating income11,646.7 9,371.0 10,356.0 Interest expense-net of capitalized interest of $14.5, $9.5 and $6.81,360.8 1,207.0 1,185.8 Nonoperating (income) expense, net(236.3)338.6 42.3 Income before provision for income taxes10,522.2 7,825.4 9,127.9 Provision for income taxes2,053.4 1,648.0 1,582.7 Net income$8,468.8 $6,177.4 $7,545.2 Earnings per common share–basic$11.63 $8.39 $10.11 Earnings per common share–diluted$11.56 $8.33 $10.04 Dividends declared per common share$6.23 $5.66 $5.25 Weighted-average shares outstanding–basic727.9 736.5 746.3 Weighted-average shares outstanding–diluted732.3 741.3 751.8 Years ended December 31, 2023 Interest expense-net of capitalized interest of $14.5, $9.5 and $6.8 See Notes to consolidated financial statements. McDonald's Corporation 2023 Annual Report 38 McDonald's Corporation 2023 Annual Report 38 McDonald's Corporation 2023 Annual Report 38 Consolidated Statement of Comprehensive IncomeIn millionsYears ended December 31, 202320222021Net income$8,468.8 $6,177.4 $7,545.2 Other comprehensive income (loss), net of taxForeign currency translation adjustments:Gain (loss) recognized in accumulated other comprehensiveincome (AOCI), including net investment hedges136.1 (354.1)(216.2)Reclassification of (gain) loss to net income— 504.4 34.7 Foreign currency translation adjustments-net of taxbenefit (expense) of $94.1, $(207.6), and $(186.5)136.1 150.3 (181.5)Cash flow hedges:Gain (loss) recognized in AOCI(19.8)160.3 57.6 Reclassification of (gain) loss to net income(16.6)(104.8)28.9 Cash flow hedges-net of tax benefit (expense) of $9.8, $(16.0), and $(24.9)(36.4)55.5 86.5 Defined benefit pension plans:Gain (loss) recognized in AOCI(69.5)(118.7)108.1 Reclassification of (gain) loss to net income0.4 — — Defined benefit pension plans-net of tax benefit (expense)of $22.2, $43.2, and $(36.6)(69.1)(118.7)108.1 Total other comprehensive income (loss), net of tax30.6 87.1 13.1 Comprehensive income$8,499.4 $6,264.5 $7,558.3 Years ended December 31, 2023 Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges

The Company is subject to the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and therefore files periodic reports, proxy statements and other information with the SEC. Such information may be obtained by visiting the SEC's website at www.sec.gov. The Company also uses its investor website at www.investor.mcdonalds.com as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information. The Company makes available on such website, free of charge, copies of its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing or furnishing such material to the SEC. Copies of such information and reports are also available free of charge by calling (800) 228-9623. The Company also posts the following documents on the “Corporate Governance” section of its investor website: the Company’s Corporate Governance Principles; the charters for each standing committee of the Company's Board of Directors, including the Audit & Finance Committee, Compensation Committee, Governance Committee, Public Policy & Strategy Committee, and Sustainability & Corporate Responsibility Committee; the Code of Conduct for the Company’s Board of Directors; and the Company’s Standards of Business Conduct, which applies to all officers and employees. Copies of these documents are also available free of charge by calling (800) 228-9623. The Company intends to satisfy the disclosure requirements regarding any applicable amendment to, or waiver from, a provision of its Standards of Business Conduct by disclosing such information at the website address specified above. The websites included in this Form 10-K, including those of the Company and the SEC, are provided for convenience only. Information contained on or accessible through such websites is not incorporated herein and does not constitute a part of this Form 10-K or the Company's other filings with the SEC. Financial Statements and Supplementary DataIndex to consolidated financial statementsPage referenceConsolidated statement of income for each of the three years in the period ended December 31, 202236Consolidated statement of comprehensive income for each of the three years in the period ended December 31, 202237Consolidated balance sheet at December 31, 2022 and 202138Consolidated statement of cash flows for each of the three years in the period ended December 31, 202239Consolidated statement of shareholders’ equity for each of the three years in the period ended December 31, 202240Notes to consolidated financial statements41Management’s assessment of internal control over financial reporting58Report of independent registered public accounting firm-PCAOB ID: 4259Report of independent registered public accounting firm on internal control over financial reporting61 Financial Statements and Supplementary Data 36 37 38 39 40 41 58 59 61 McDonald's Corporation 2022 Annual Report 35 McDonald's Corporation 2022 Annual Report 35 McDonald's Corporation 2022 Annual Report 35 Consolidated Statement of Income In millions, except per share dataYears ended December 31, 202220212020REVENUESSales by Company-operated restaurants$8,748.4 $9,787.4 $8,139.2 Revenues from franchised restaurants14,105.8 13,085.4 10,726.1 Other revenues328.4 350.1 342.5 Total revenues23,182.6 23,222.9 19,207.8 OPERATING COSTS AND EXPENSESCompany-operated restaurant expensesFood & paper2,737.3 3,096.8 2,564.2 Payroll & employee benefits2,617.4 2,677.2 2,416.4 Occupancy & other operating expenses2,026.2 2,273.3 2,000.6 Franchised restaurants-occupancy expenses2,349.7 2,335.0 2,207.5 Other restaurant expenses244.8 260.4 267.0 Selling, general & administrative expensesDepreciation and amortization370.4 329.7 300.6 Other2,492.2 2,377.8 2,245.0 Other operating (income) expense, net973.6 (483.3)(117.5)Total operating costs and expenses13,811.6 12,866.9 11,883.8 Operating income9,371.0 10,356.0 7,324.0 Interest expense-net of capitalized interest of $9.5, $6.8 and $6.01,207.0 1,185.8 1,218.1 Nonoperating (income) expense, net338.6 42.3 (34.8)Income before provision for income taxes7,825.4 9,127.9 6,140.7 Provision for income taxes1,648.0 1,582.7 1,410.2 Net income$6,177.4 $7,545.2 $4,730.5 Earnings per common share–basic$8.39 $10.11 $6.35 Earnings per common share–diluted$8.33 $10.04 $6.31 Dividends declared per common share$5.66 $5.25 $5.04 Weighted-average shares outstanding–basic736.5 746.3 744.6 Weighted-average shares outstanding–diluted741.3 751.8 750.1 Years ended December 31, 2022 Interest expense-net of capitalized interest of $9.5, $6.8 and $6.0 See Notes to consolidated financial statements. McDonald's Corporation 2022 Annual Report 36 McDonald's Corporation 2022 Annual Report 36 McDonald's Corporation 2022 Annual Report 36 Consolidated Statement of Comprehensive Income In millionsYears ended December 31, 202220212020Net income$6,177.4 $7,545.2 $4,730.5 Other comprehensive income (loss), net of taxForeign currency translation adjustments:Gain (loss) recognized in accumulated other comprehensiveincome (AOCI), including net investment hedges(354.1)(216.2)46.0 Reclassification of (gain) loss to net income504.4 34.7 17.1 Foreign currency translation adjustments-net of taxbenefit (expense) of $(207.6), $(186.5), and $204.8150.3 (181.5)63.1 Cash flow hedges:Gain (loss) recognized in AOCI160.3 57.6 (129.1)Reclassification of (gain) loss to net income(104.8)28.9 5.8 Cash flow hedges-net of tax benefit (expense) of $(16.0), $(24.9), and $36.655.5 86.5 (123.3)Defined benefit pension plans:Gain (loss) recognized in AOCI(118.7)108.1 (43.5)Reclassification of (gain) loss to net income— — (0.4)Defined benefit pension plans-net of tax benefit (expense)of $43.2, $(36.6), and $9.3(118.7)108.1 (43.9)Total other comprehensive income (loss), net of tax87.1 13.1 (104.1)Comprehensive income$6,264.5 $7,558.3 $4,626.4 Years ended December 31, 2022 Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges

The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. To protect against the reduction in value of forecasted foreign currency cash flows (such as royalties denominated in foreign currencies), the Company uses foreign currency forwards to hedge a portion of anticipated exposures. The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies. As of December 31, 2023, the Company had derivatives outstanding with an equivalent notional amount of $1.9 billion that hedged a portion of forecasted foreign currency denominated cash flows. To protect against the variability of interest rates on anticipated bond issuances, the Company may use treasury locks to hedge a portion of expected future cash flows. As of December 31, 2023, the Company had derivatives outstanding with a notional amount of $150.0 million that hedge a portion of forecasted cash flows. Based on market conditions at December 31, 2023, the $5.6 million in cumulative cash flow hedging losses, after tax, is not expected to have a significant effect on earnings over the next 12 months. McDonald's Corporation 2023 Annual Report 47 McDonald's Corporation 2023 Annual Report 47 McDonald's Corporation 2023 Annual Report 47

The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. To protect against the reduction in value of forecasted foreign currency cash flows (such as royalties denominated in foreign currencies), the Company uses foreign currency forwards to hedge a portion of anticipated exposures. The hedges cover up to the next 18 months for certain exposures and are denominated in various currencies. As of December 31, 2022, the Company had derivatives outstanding with an equivalent notional amount of $1.5 billion that hedged a portion of forecasted foreign currency denominated cash flows. Based on market conditions at December 31, 2022, the $30.7 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on earnings over the next 12 months.

The following tables present financial assets and liabilities measured at fair value on a recurring basis by the valuation hierarchy as defined in the fair value guidance: December 31, 2023In millionsLevel 1 (1)Level 2Total CarryingValueInvestments$191.5 $191.5 Derivative assets$188.6 $20.7 $209.3 Derivative liabilities$(118.2)$(118.2)December 31, 2022In millionsLevel 1 (1)Level 2 Total CarryingValueDerivative assets$200.5 $82.0 $282.5 Derivative liabilities$(141.7)$(141.7) Level 1 (1) Level 1 (1) (1) Level 1 is comprised of derivatives and investments that hedge market driven changes in liabilities associated with the Company’s supplemental benefit plans.

The following tables present financial assets and liabilities measured at fair value on a recurring basis by the valuation hierarchy as defined in the fair value guidance: December 31, 2022In millionsLevel 1 (1)Level 2Total CarryingValueDerivative assets$200.5 $82.0 $282.5 Derivative liabilities$(141.7)$(141.7)December 31, 2021In millionsLevel 1 (1)Level 2 Total CarryingValueDerivative assets$209.8 $79.8 $289.6 Derivative liabilities$(7.9)$(7.9) Level 1 (1) Level 1 (1) (1) Level 1 is comprised of derivatives that hedge market driven changes in liabilities associated with the Company’s supplemental benefit plans. McDonald's Corporation 2022 Annual Report 44 McDonald's Corporation 2022 Annual Report 44 McDonald's Corporation 2022 Annual Report 44

Advertising costs included in operating expenses of Company-operated restaurants primarily consist of contributions to advertising cooperatives based upon a percent of sales, and were (in millions): 2023–$347.2; 2022–$334.5; 2021–$377.6. In addition, significant advertising costs are incurred by conventional franchisees through contributions to advertising cooperatives in individual markets that are also based upon a percent of sales. In the markets that make up the vast majority of the Systemwide advertising spend, including the U.S., McDonald’s is not the primary beneficiary of these entities, and therefore has concluded that consolidation would not be appropriate, as the Company does not have the power through voting or similar rights to direct the activities of the cooperatives that most significantly impact their economic performance. Production costs for radio and television advertising are expensed when the commercials are initially aired. These production costs, primarily in the U.S., as well as other marketing-related expenses are included in Selling, general & administrative expenses and were (in millions): 2023–$41.7; 2022–$63.8; 2021–$82.9.

Advertising costs included in operating expenses of Company-operated restaurants primarily consist of contributions to advertising cooperatives based upon a percent of sales, and were (in millions): 2022–$334.5; 2021–$377.6; 2020–$325.5. The decrease in 2022 is primarily due to lower sales in the International Operated Markets as a result of the sale of the Company's business in Russia and the temporary restaurant closures in Ukraine. In addition, significant advertising costs are incurred by conventional franchisees through contributions to advertising cooperatives in individual markets that are also based upon a percent of sales. In the markets that make up the vast majority of the Systemwide advertising spend, including the U.S., McDonald’s is not the primary beneficiary of these entities, and therefore has concluded that consolidation would not be appropriate, as the Company does not have the power through voting or similar rights to direct the activities of the cooperatives that most significantly impact their economic performance. McDonald's Corporation 2022 Annual Report 43 McDonald's Corporation 2022 Annual Report 43 McDonald's Corporation 2022 Annual Report 43 Production costs for radio and television advertising are expensed when the commercials are initially aired. These production costs, primarily in the U.S., as well as other marketing-related expenses are included in Selling, general & administrative expenses and were (in millions): 2022–$63.8; 2021–$82.9; 2020–$329.2. Results for 2020 included about $175 million of incremental marketing contributions by the Company to the System's advertising cooperative arrangements across the U.S. and International Operated Markets, as well as higher investments in brand communications.

The Company considers short-term, highly liquid investments with an original maturity of 90 days or less to be cash equivalents. As of December 31, 2023, Cash and equivalents was $4.6 billion of which $4.0 billion consisted of certificates of deposit. McDonald's Corporation 2023 Annual Report 48 McDonald's Corporation 2023 Annual Report 48 McDonald's Corporation 2023 Annual Report 48 Segment and Geographic Information McDonald’s operates under an organizational structure with the following global business segments reflecting how management reviews and evaluates operating performance: •U.S. - the Company’s largest market. The segment is 95% franchised as of December 31, 2023. •International Operated Markets - comprised of markets, or countries in which the Company operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, Poland, Spain and the U.K. The segment is 89% franchised as of December 31, 2023. •International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s system. Corporate activities are also reported in this segment. The segment is 98% franchised as of December 31, 2023. In December 2021 and April 2022, the Company completed the divestitures of Apprente (McD Tech Labs) and Dynamic Yield, respectively. Additionally, in June 2022, the Company sold its business in Russia. Prior to their respective dates of sale, financial performance relating to Dynamic Yield and McD Tech Labs is reflected within the International Developmental Licensed Markets & Corporate segment and financial performance relating to Russia is reflected in the International Operated Markets segment. All intercompany revenues and expenses are eliminated in computing revenues and operating income. Corporate general and administrative expenses consist of corporate office support costs in areas such as facilities, finance, human resources, information technology, legal, marketing, restaurant operations, supply chain and training. Corporate assets include corporate cash and equivalents, financial instruments and office facilities. In millions202320222021U.S.$10,568.4 $9,588.4 $8,865.0 International Operated Markets12,382.0 11,297.0 12,219.8 International Developmental Licensed Markets & Corporate2,543.3 2,297.2 2,138.1 Total revenues$25,493.7 $23,182.6 $23,222.9 U.S.$5,694.4 $5,136.4 $4,754.7 International Operated Markets5,831.5 3,926.0 5,130.6 International Developmental Licensed Markets & Corporate120.8 308.6 470.7 Total operating income $11,646.7 $9,371.0 $10,356.0 U.S.$22,477.0 $21,793.0 $21,280.3 International Operated Markets23,946.9 21,979.3 24,186.1 International Developmental Licensed Markets & Corporate9,722.9 6,663.3 8,387.9 Total assets$56,146.8 $50,435.6 $53,854.3 U.S.$962.5 $860.0 $940.7 International Operated Markets1,340.5 1,015.2 1,050.6 International Developmental Licensed Markets & Corporate54.4 24.0 48.7 Total capital expenditures$2,357.4 $1,899.2 $2,040.0 U.S.$968.9 $912.4 $840.7 International Operated Markets679.5 640.6 726.4 International Developmental Licensed Markets & Corporate329.8 317.6 301.0 Total depreciation and amortization$1,978.2 $1,870.6 $1,868.1 Total long-lived assets, primarily property and equipment and the Company's Lease right-of-use asset, were (in millions)–Consolidated: 2023–$39,477.8; 2022–$37,403.0; U.S. based: 2023–$19,943.9; 2022–$19,416.3. McDonald's Corporation 2023 Annual Report 49 McDonald's Corporation 2023 Annual Report 49 McDonald's Corporation 2023 Annual Report 49 Property and Equipment Net property and equipment consisted of: In millions'December 31, 20232022Land$7,081.3 $6,686.3 Buildings and improvements on owned land 20,059.3 18,934.2 Buildings and improvements on leased land 13,322.3 12,492.0 Equipment, signs and seating2,692.7 2,498.6 Other414.4 426.5 Property and equipment, at cost 43,570.0 41,037.6 Accumulated depreciation and amortization(18,662.4)(17,264.0)Net property and equipment$24,907.6 $23,773.6 'December 31, 2023 Depreciation and amortization expense for property and equipment was (in millions): 2023–$1,501.5; 2022–$1,454.0; 2021–$1,530.7. The increase in Net property and equipment was primarily driven by higher capital expenditures as a result of the addition of Restaurant Development to the Company’s growth pillars under its Accelerating the Arches strategy. Franchise Arrangements Conventional franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and royalties to the Company based upon a percent of sales with minimum rent payments. Minimum rent payments are based on the Company's underlying investment in owned sites and parallel the Company’s underlying leases and escalations on properties that are leased. Under the franchise arrangement, franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. At the end of the 20-year franchise arrangement, the Company maintains control of the underlying real estate and building and can either enter into a new 20-year franchise arrangement with the existing franchisee or a different franchisee, or close the restaurant. Franchisees generally pay related occupancy costs including property taxes, insurance and site maintenance. Developmental licensees and affiliates operating under license agreements pay a royalty to the Company based upon a percent of sales, and generally pay initial fees. McDonald’s has elected to allocate consideration in the franchise contract among lease and non-lease components in the same manner that it has historically: rental income (lease), royalty income (non-lease) and initial fee income (non-lease). This disaggregation and presentation of revenue is based on the nature, amount, timing and certainty of the revenue and cash flows. The allocation has been determined based on a mix of both observable and estimated standalone selling prices (the price at which an entity would sell a promised good or service separately to a customer). Revenues from franchised restaurants consisted of: In millions202320222021Rents$9,840.0 $9,045.7 $8,381.1 Royalties5,530.9 5,005.6 4,645.1 Initial fees65.6 54.5 59.2 Revenues from franchised restaurants$15,436.5 $14,105.8 $13,085.4 Future gross minimum rent payments due to the Company under existing conventional franchise arrangements are: In millionsOwned sitesLeased sitesTotal 2024$1,511.7 $1,468.6 $2,980.3 20251,470.4 1,407.6 2,878.0 20261,417.3 1,350.5 2,767.8 20271,370.9 1,294.1 2,665.0 20281,312.3 1,223.5 2,535.8 Thereafter9,108.3 8,227.2 17,335.5 Total minimum payments$16,190.9 $14,971.5 $31,162.4 At December 31, 2023, net property and equipment under franchise arrangements totaled $20.1 billion (including land of $6.2 billion) after deducting accumulated depreciation and amortization of $14.5 billion. McDonald's Corporation 2023 Annual Report 50 McDonald's Corporation 2023 Annual Report 50 McDonald's Corporation 2023 Annual Report 50 Leasing Arrangements The Company is the lessee in a significant real estate portfolio, primarily through ground leases (the Company leases the land and generally owns the building) and through improved leases (the Company leases the land and buildings). The Company determines whether an arrangement is a lease at inception. Lease terms for most restaurants, where market conditions allow, are generally for 20 years and, in many cases, provide for rent escalations and renewal options. Renewal options are typically solely at the Company’s discretion. Escalation terms vary by market with examples including fixed-rent escalations, escalations based on an inflation index and fair-value market adjustments. The timing of these escalations generally range from annually to every five years. The following table provides detail of rent expense: In millions202320222021Restaurants$1,491.0 $1,416.4 $1,486.3 Other51.3 59.7 74.0 Total rent expense$1,542.3 $1,476.1 $1,560.3 Rent expense included percent rents in excess of minimum rents (in millions) as follows–Company-operated restaurants: 2023–$56.1; 2022–$39.6; 2021–$69.2. Franchised restaurants: 2023–$261.4; 2022–$209.0; 2021–$160.0. These variable rent payments are based on a percent of sales. The Lease right-of-use asset and Lease liability reflect the present value of the Company's estimated future minimum lease payments over the lease term, which includes options that are reasonably certain of being exercised, discounted using a collateralized incremental borrowing rate. Typically, renewal options are considered reasonably certain of being exercised if the associated asset lives of the building or leasehold improvements exceed that of the initial lease term, and the sales performance of the restaurant remains strong. Therefore, the Lease right-of-use asset and Lease liability include an assumption on renewal options that have not yet been exercised by the Company, and are not currently a future obligation. In light of the introduction of Restaurant Development as a growth pillar in 2023 and as part of the Company’s ongoing evaluation of its estimates, the Company refined its assumption on renewal options that have not yet been exercised to reflect the expected increase in renewal option exercises under this new growth pillar. This was the primary driver of the increase in the Lease right-of-use asset and Lease liability. The following table details amounts related to operating and finance leases recorded within the Company’s Consolidated Balance Sheet. December 31, 2023In millionsOperatingFinanceTotalLease right-of use asset, net11,724.2 1,790.2 13,514.4 Current lease liability642.6 45.5 688.1 Long-term lease liability11,527.7 1,530.0 13,057.7 December 31, 2022In millionsOperatingFinanceTotalLease right-of use asset, net11,052.1 1,513.6 12,565.7 Current lease liability639.6 21.5 661.1 Long-term lease liability10,834.1 1,300.2 12,134.4 As the rate implicit in each lease is not readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease within a particular currency environment. The following table summarizes the weighted average remaining lease term and discount rate used for leases as of December 31, 2023 and 2022: 20232022Weighted-average remaining lease term - operating leases17 years18 yearsWeighted-average remaining lease term - finance leases28 years29 yearsWeighted-average discount rate - operating leases4.0 %3.6 %Weighted-average discount rate - finance leases3.6 %3.0 % The Company makes cash payments related to its operating and finance lease liabilities, of which the majority are recorded within operating activities on the Consolidated Statement of Cash Flows. For each of the three years reflected within its cash flow statement, the Company made total payments of approximately $1.5 billion. Of these total payments, approximately 3% related to the Company’s repayment of the principal portion of finance lease liabilities, and were recorded within financing activities on the Consolidated Statement of Cash Flows. Lease right-of-use assets obtained in exchange for operating and finance lease liabilities totaled approximately $1.0 billion and $0.3 billion, respectively, during the year ended December 31, 2023. McDonald's Corporation 2023 Annual Report 51 McDonald's Corporation 2023 Annual Report 51 McDonald's Corporation 2023 Annual Report 51 As of December 31, 2023, maturities of lease liabilities for the Company's lease portfolio were as follows: In millionsOperatingFinanceTotal*2024$1,126.3 $78.0 $1,204.3 20251,093.7 79.3 1,173.0 20261,046.2 80.0 1,126.2 20271,018.1 80.6 1,098.7 2028981.1 81.2 1,062.3 Thereafter12,132.2 2,083.1 14,215.3 Total lease payments$17,397.6 $2,482.2 $19,879.8 Less: imputed interest5,227.3 906.7 6,134.0 Present value of lease liability$12,170.3 $1,575.5 $13,745.8 Present value of lease liability * Total lease payments include option periods that are reasonably certain of being exercised. The increase in the present value of the lease liability since December 31, 2022 is approximately $950 million. The lease liability will continue to be impacted by new leases, lease modifications, lease terminations, reevaluation of lease terms, and foreign currency. McDonald's Corporation 2023 Annual Report 52 McDonald's Corporation 2023 Annual Report 52 McDonald's Corporation 2023 Annual Report 52 Contingencies In the ordinary course of business, the Company is subject to proceedings, lawsuits and other claims primarily related to competitors, customers, employees, franchisees, government agencies, intellectual property, shareholders and suppliers. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each matter. The required accrual may change in the future due to new developments in a particular matter or changes in approach such as a change in settlement strategy in dealing with these matters. The Company does not believe that any such matter currently being reviewed will have a material adverse effect on its financial condition or results of operations. Other Operating (Income) Expense, Net In millions202320222021Gains on sales of restaurant businesses$(103.2)$(59.8)$(96.6)Equity in earnings of unconsolidated affiliates(153.4)(113.2)(176.7)Asset dispositions and other (income) expense, net(6.8)136.8 75.4 Impairment and other charges (gains), net362.3 1,009.8 (285.4)Total$98.9 $973.6 $(483.3)

The Company considers short-term, highly liquid investments with an original maturity of 90 days or less to be cash equivalents. As of December 31, 2022, Cash and equivalents was $2.6 billion of which $1.8 billion consisted of certificates of deposit. McDonald's Corporation 2022 Annual Report 47 McDonald's Corporation 2022 Annual Report 47 McDonald's Corporation 2022 Annual Report 47 Segment and Geographic Information McDonald’s operates under an organizational structure with the following global business segments reflecting how management reviews and evaluates operating performance: •U.S. - the Company’s largest market. The segment is 95% franchised as of December 31, 2022. •International Operated Markets - comprised of markets, or countries in which the Company operates and franchises restaurants, including Australia, Canada, France, Germany, Italy, the Netherlands, Spain and the U.K. The segment is 89% franchised as of December 31, 2022. •International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s system. Corporate activities are also reported in this segment. The segment is 98% franchised as of December 31, 2022. In December 2021 and April 2022, the Company completed the divestitures of Apprente (McD Tech Labs) and Dynamic Yield, respectively. Additionally, in June 2022, the Company sold its business in Russia. Prior to their respective dates of sale, financial performance relating to Dynamic Yield and McD Tech Labs is reflected within the International Developmental Licensed Markets & Corporate segment and financial performance relating to Russia is reflected in the International Operated Markets segment. All intercompany revenues and expenses are eliminated in computing revenues and operating income. Corporate general and administrative expenses consist of home office support costs in areas such as facilities, finance, human resources, information technology, legal, marketing, restaurant operations, supply chain and training. Corporate assets include corporate cash and equivalents, asset portions of financial instruments and home office facilities. In millions202220212020U.S.$9,588.4 $8,865.0 $7,828.5 International Operated Markets11,297.0 12,219.8 9,570.7 International Developmental Licensed Markets & Corporate2,297.2 2,138.1 1,808.6 Total revenues$23,182.6 $23,222.9 $19,207.8 U.S.$5,136.4 $4,754.7 $3,789.1 International Operated Markets3,926.0 5,130.6 3,315.1 International Developmental Licensed Markets & Corporate308.6 470.7 219.8 Total operating income $9,371.0 $10,356.0 $7,324.0 U.S.$21,793.0 $21,280.3 $21,010.0 International Operated Markets21,979.3 24,186.1 24,744.0 International Developmental Licensed Markets & Corporate6,663.3 8,387.9 6,872.8 Total assets$50,435.6 $53,854.3 $52,626.8 U.S.$860.0 $940.7 $890.4 International Operated Markets1,015.2 1,050.6 731.5 International Developmental Licensed Markets & Corporate24.0 48.7 18.9 Total capital expenditures$1,899.2 $2,040.0 $1,640.8 U.S.$912.4 $840.7 $813.8 International Operated Markets640.6 726.4 678.5 International Developmental Licensed Markets & Corporate317.6 301.0 259.1 Total depreciation and amortization$1,870.6 $1,868.1 $1,751.4 International Developmental Licensed Markets & Corporate Total revenues International Developmental Licensed Markets & Corporate International Developmental Licensed Markets & Corporate International Developmental Licensed Markets & Corporate Total capital expenditures International Developmental Licensed Markets & Corporate Total depreciation and amortization Total long-lived assets, primarily property and equipment and the Company's Lease right-of-use asset, were (in millions)–Consolidated: 2022–$37,403.0; 2021–$39,267.0; U.S. based: 2022–$19,416.3; 2021–$19,600.1. McDonald's Corporation 2022 Annual Report 48 McDonald's Corporation 2022 Annual Report 48 McDonald's Corporation 2022 Annual Report 48 Property and Equipment Net property and equipment consisted of: In millions'December 31, 20222021Land$6,686.3 $6,487.6 Buildings and improvements on owned land 18,934.2 18,666.0 Buildings and improvements on leased land 12,492.0 13,283.3 Equipment, signs and seating2,498.6 3,032.0 Other426.5 447.7 Property and equipment, at cost 41,037.6 41,916.6 Accumulated depreciation and amortization(17,264.0)(17,196.0)Net property and equipment$23,773.6 $24,720.6 'December 31, 2022 Depreciation and amortization expense for property and equipment was (in millions): 2022–$1,454.0; 2021–$1,530.7; 2020–$1,469.4. The decrease in both Buildings and improvements on leased land and Equipment, signs and seating from 2021 to 2022 was primarily driven by the Company's sale of the business in Russia. Franchise Arrangements Conventional franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and royalties to the Company based upon a percent of sales with minimum rent payments. Minimum rent payments are based on the Company's underlying investment in owned sites and parallel the Company’s underlying leases and escalations on properties that are leased. Under the franchise arrangement, franchisees are granted the right to operate a restaurant using the McDonald’s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. At the end of the 20-year franchise arrangement, the Company maintains control of the underlying real estate and building and can either enter into a new 20-year franchise arrangement with the existing franchisee or a different franchisee, or close the restaurant. Franchisees generally pay related occupancy costs including property taxes, insurance and site maintenance. Developmental licensees and affiliates operating under license agreements pay a royalty to the Company based upon a percent of sales, and generally pay initial fees. McDonald’s has elected to allocate consideration in the franchise contract among lease and non-lease components in the same manner that it has historically: rental income (lease), royalty income (non-lease) and initial fee income (non-lease). This disaggregation and presentation of revenue is based on the nature, amount, timing and certainty of the revenue and cash flows. The allocation has been determined based on a mix of both observable and estimated standalone selling prices (the price at which an entity would sell a promised good or service separately to a customer). Revenues from franchised restaurants consisted of: In millions202220212020Rents$9,045.7 $8,381.1 $6,844.7 Royalties5,005.6 4,645.1 3,831.5 Initial fees54.5 59.2 49.9 Revenues from franchised restaurants$14,105.8 $13,085.4 $10,726.1 Revenues from franchised restaurants As rent and royalties are based upon a percent of sales, government restrictions as a result of COVID-19 had a more significant negative impact on revenues in 2020. The Company granted the deferrals of cash collection for certain rent and royalties earned from franchisees in substantially all markets primarily in the first half of 2020. In total, the Company deferred collection of approximately $1 billion and has collected all of these deferrals as of December 31, 2022. Future gross minimum rent payments due to the Company under existing conventional franchise arrangements are: In millionsOwned sitesLeased sitesTotal 2023$1,512.5 $1,458.0 $2,970.5 20241,471.5 1,394.8 2,866.3 20251,425.9 1,332.1 2,758.0 20261,375.0 1,275.5 2,650.5 20271,328.2 1,218.9 2,547.1 Thereafter9,533.6 8,454.3 17,987.9 Total minimum payments$16,646.7 $15,133.6 $31,780.3 At December 31, 2022, net property and equipment under franchise arrangements totaled $20.2 billion (including land of $5.9 billion) after deducting accumulated depreciation and amortization of $14.3 billion. McDonald's Corporation 2022 Annual Report 49 McDonald's Corporation 2022 Annual Report 49 McDonald's Corporation 2022 Annual Report 49 Leasing Arrangements The Company is the lessee in a significant real estate portfolio, primarily through ground leases (the Company leases the land and generally owns the building) and through improved leases (the Company leases the land and buildings). The Company determines whether an arrangement is a lease at inception. Lease terms for most restaurants, where market conditions allow, are generally for 20 years and, in many cases, provide for rent escalations and renewal options. Renewal options are typically solely at the Company’s discretion. Escalation terms vary by market with examples including fixed-rent escalations, escalations based on an inflation index and fair-value market adjustments. The timing of these escalations generally range from annually to every five years. The following table provides detail of rent expense: In millions202220212020Restaurants$1,416.4 $1,486.3 $1,399.5 Other59.7 74.0 79.8 Total rent expense$1,476.1 $1,560.3 $1,479.3 Rent expense included percent rents in excess of minimum rents (in millions) as follows–Company-operated restaurants: 2022–$39.6; 2021–$69.2; 2020–$53.7. Franchised restaurants: 2022–$209.0; 2021–$160.0; 2020–$136.5. These variable rent payments are based on a percent of sales. The Lease right-of-use asset and Lease liability reflect the present value of the Company's estimated future minimum lease payments over the lease term, which includes options that are reasonably assured of being exercised, discounted using a collateralized incremental borrowing rate. Typically, renewal options are considered reasonably assured of being exercised if the associated asset lives of the building or leasehold improvements exceed that of the initial lease term, and the sales performance of the restaurant remains strong. Therefore, the Lease right-of-use asset and Lease liability include an assumption on renewal options that have not yet been exercised by the Company, and are not currently a future obligation. The Company's lease portfolio includes both operating and finance leases, however as of December 31, 2022, the vast majority of the portfolio was classified as operating leases. As the rate implicit in each lease is not readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease within a particular currency environment. The weighted average discount rate used for leases was 3.5% as of December 31, 2022 and 3.7% as of December 31, 2021. As of December 31, 2022, maturities of lease liabilities for the Company's lease portfolio were as follows: In millionsTotal *2023$1,161.6 20241,134.4 20251,096.2 20261,041.8 20271,003.3 Thereafter12,799.5 Total lease payments18,236.8 Less: imputed interest(5,441.3)Present value of lease liability$12,795.5 * Total lease payments include option periods that are reasonably assured of being exercised. The decrease in the present value of the lease liability since December 31, 2021 is approximately $(0.9) billion. The lease liability will continue to be impacted by new leases, lease modifications, lease terminations, reevaluation of lease terms, and foreign currency. The Weighted Average Lease Term remaining that is included in the maturities of lease liabilities was 19 years as of December 31, 2022 and 20 years as of December 31, 2021. McDonald's Corporation 2022 Annual Report 50 McDonald's Corporation 2022 Annual Report 50 McDonald's Corporation 2022 Annual Report 50 Contingencies In the ordinary course of business, the Company is subject to proceedings, lawsuits and other claims primarily related to competitors, customers, employees, franchisees, government agencies, intellectual property, shareholders and suppliers. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each matter. The required accrual may change in the future due to new developments in a particular matter or changes in approach such as a change in settlement strategy in dealing with these matters. The Company does not believe that any such matter currently being reviewed will have a material adverse effect on its financial condition or results of operations. Other Operating (Income) Expense, NetIn millions202220212020Gains on sales of restaurant businesses$(59.8)$(96.6)$(23.3)Equity in earnings of unconsolidated affiliates(113.2)(176.7)(117.4)Asset dispositions and other (income) expense, net136.8 75.4 290.7 Impairment and other charges (gains), net1,009.8 (285.4)(267.5)Total$973.6 $(483.3)$(117.5)

The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission. On January 30, 2024, the Company completed the acquisition of an additional 28% ownership stake in the strategic partnership that operates and manages McDonald’s business in mainland China, Hong Kong, and Macau. After acquiring the additional ownership from the global investment firm Carlyle for $1.8 billion, McDonald’s will remain a minority partner while increasing its ownership stake from 20% to 48%. The CITIC Consortium, mainly through its equity affiliate CITIC Capital, will maintain its controlling ownership stake of 52%. McDonald’s will continue to account for its investment under the equity method and will not consolidate the financial statements of the strategic partnership into its results. There were no other subsequent events that required recognition or disclosure. McDonald's Corporation 2023 Annual Report 60 McDonald's Corporation 2023 Annual Report 60 McDonald's Corporation 2023 Annual Report 60 Management’s Assessment of Internal Control Over Financial Reporting The financial statements were prepared by management, which is responsible for their integrity and objectivity and for establishing and maintaining adequate internal controls over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: I.pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; II.provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and III.provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time. Management assessed the design and effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013 Framework). Based on management’s assessment using those criteria, as of December 31, 2023, management believes that the Company’s internal control over financial reporting is effective. Ernst & Young, LLP, independent registered public accounting firm, has audited the financial statements of the Company for the fiscal years ended December 31, 2023, 2022 and 2021 and the Company’s internal control over financial reporting as of December 31, 2023. Their reports are presented on the following pages. The independent registered public accountants and internal auditors advise management of the results of their audits, and make recommendations to improve the system of internal controls. Management evaluates the audit recommendations and takes appropriate action. McDONALD’S CORPORATION February 22, 2024 McDonald's Corporation 2023 Annual Report 61 McDonald's Corporation 2023 Annual Report 61 McDonald's Corporation 2023 Annual Report 61 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of McDonald’s Corporation

On January 6, 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements include the additions of Restaurant Development to the Company's growth pillars and an internal effort to modernize ways of working, Accelerating the Organization, both of which are aimed at elevating the Company’s performance. The Company is currently evaluating the impact this will have on its business. McDonald's Corporation 2022 Annual Report 57 McDonald's Corporation 2022 Annual Report 57 McDonald's Corporation 2022 Annual Report 57 Management’s Assessment of Internal Control Over Financial Reporting The financial statements were prepared by management, which is responsible for their integrity and objectivity and for establishing and maintaining adequate internal controls over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: I.pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; II.provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and III.provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal controls may vary over time. Management assessed the design and effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013 Framework). Based on management’s assessment using those criteria, as of December 31, 2022, management believes that the Company’s internal control over financial reporting is effective. Ernst & Young, LLP, independent registered public accounting firm, has audited the financial statements of the Company for the fiscal years ended December 31, 2022, 2021 and 2020 and the Company’s internal control over financial reporting as of December 31, 2022. Their reports are presented on the following pages. The independent registered public accountants and internal auditors advise management of the results of their audits, and make recommendations to improve the system of internal controls. Management evaluates the audit recommendations and takes appropriate action. McDONALD’S CORPORATION February 24, 2023 McDonald's Corporation 2022 Annual Report 58 McDonald's Corporation 2022 Annual Report 58 McDonald's Corporation 2022 Annual Report 58 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of McDonald’s Corporation

By/s/ Ian F. BordenBy/s/ Catherine HoovelIan F. BordenCatherine HoovelExecutive Vice President and Global Chief Financial OfficerSenior Vice President - Corporate Controller(Principal Financial Officer)(Principal Accounting Officer)By/s/ Anthony G. CapuanoBy/s/ Christopher J. KempczinskiAnthony G. CapuanoChristopher J. KempczinskiDirectorPresident, Chief Executive Officer and Director(Principal Executive Officer)By/s/ Kareem DanielBy/s/ John J. MulliganKareem DanielJohn J. MulliganDirectorDirectorBy/s/ Lloyd H. DeanBy/s/ Jennifer L. TaubertLloyd H. DeanJennifer L. TaubertDirectorDirectorBy/s/ Catherine M. EngelbertBy/s/ Paul S. WalshCatherine M. EngelbertPaul S. WalshDirectorDirectorBy/s/ Margaret H. GeorgiadisBy/s/ Amy E. WeaverMargaret H. GeorgiadisAmy E. WeaverDirectorDirectorBy/s/ Enrique Hernandez, Jr.By/s/ Miles D. WhiteEnrique Hernandez, Jr.Miles D. WhiteChairman of the Board and DirectorDirector McDonald's Corporation 2023 Annual Report 69 McDonald's Corporation 2023 Annual Report 69 McDonald's Corporation 2023 Annual Report 69

By/s/ Ian F. BordenBy/s/ Christopher J. KempczinskiIan F. BordenChristopher J. KempczinskiCorporate Executive Vice President and Chief Financial OfficerPresident, Chief Executive Officer and Director(Principal Financial Officer)(Principal Executive Officer)By/s/ Anthony G. CapuanoBy/s/ Richard H. LennyAnthony G. CapuanoRichard H. LennyDirectorDirectorBy/s/ Kareem DanielBy/s/ John J. MulliganKareem DanielJohn J. MulliganDirectorDirectorBy/s/ Lloyd H. DeanBy/s/ John W. Rogers, Jr.Lloyd H. DeanJohn W. Rogers, Jr.DirectorDirectorBy/s/ Robert A. EckertBy/s/ Jennifer L. TaubertRobert A. EckertJennifer L. TaubertDirectorDirectorBy/s/ Catherine M. EngelbertBy/s/ Paul S. WalshCatherine M. EngelbertPaul S. WalshDirectorDirectorBy/s/ Margaret H. GeorgiadisBy/s/ Amy E. WeaverMargaret H. GeorgiadisAmy E. WeaverDirectorDirectorBy/s/ Enrique Hernandez, Jr.By/s/ Miles D. WhiteEnrique Hernandez, Jr.Miles D. WhiteChairman of the Board and DirectorDirectorBy/s/ Catherine HoovelCatherine HoovelCorporate Senior Vice President - Corporate Controller(Principal Accounting Officer) McDonald's Corporation 2022 Annual Report 66 McDonald's Corporation 2022 Annual Report 66 McDonald's Corporation 2022 Annual Report 66

See Notes to consolidated financial statements. McDonald's Corporation 2023 Annual Report 39 McDonald's Corporation 2023 Annual Report 39 McDonald's Corporation 2023 Annual Report 39 Consolidated Balance Sheet In millions, except per share dataDecember 31, 20232022ASSETSCurrent assetsCash and equivalents$4,579.3 $2,583.8 Accounts and notes receivable2,488.0 2,115.0 Inventories, at cost, not in excess of market52.8 52.0 Prepaid expenses and other current assets866.3 673.4 Total current assets7,986.4 5,424.2 Other assetsInvestments in and advances to affiliates1,080.2 1,064.5 Goodwill3,040.4 2,900.4 Miscellaneous5,617.8 4,707.2 Total other assets9,738.4 8,672.1 Lease right-of-use asset, net13,514.4 12,565.7 Property and equipmentProperty and equipment, at cost43,570.0 41,037.6 Accumulated depreciation and amortization(18,662.4)(17,264.0)Net property and equipment24,907.6 23,773.6 Total assets$56,146.8 $50,435.6 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)Current liabilitiesShort-term borrowings and current maturities of long-term debt$2,192.4 $— Accounts payable1,102.9 980.2 Lease liability688.1 661.1 Income taxes705.1 274.9 Other taxes268.0 255.1 Accrued interest468.9 393.4 Accrued payroll and other liabilities1,433.6 1,237.4 Total current liabilities6,859.0 3,802.1 Long-term debt37,152.9 35,903.5 Long-term lease liability13,057.7 12,134.4 Long-term income taxes363.2 791.9 Deferred revenues - initial franchise fees790.1 757.8 Other long-term liabilities949.7 1,051.8 Deferred income taxes1,680.9 1,997.5 Shareholders’ equity (deficit)Preferred stock, no par value; authorized – 165.0 million shares; issued – none— — Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares16.6 16.6 Additional paid-in capital8,892.9 8,547.1 Retained earnings63,479.9 59,543.9 Accumulated other comprehensive income (loss)(2,456.0)(2,486.6)Common stock in treasury, at cost; 937.9 and 929.3 million shares(74,640.1)(71,624.4)Total shareholders’ equity (deficit)(4,706.7)(6,003.4)Total liabilities and shareholders’ equity (deficit)$56,146.8 $50,435.6 December 31, 2023 Preferred stock, no par value; authorized – 165.0 million shares; issued – none Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares Common stock in treasury, at cost; 937.9 and 929.3 million shares See Notes to consolidated financial statements. McDonald's Corporation 2023 Annual Report 40 McDonald's Corporation 2023 Annual Report 40 McDonald's Corporation 2023 Annual Report 40 Consolidated Statement of Cash Flows In millionsYears ended December 31, 202320222021Operating activitiesNet income$8,468.8 $6,177.4 $7,545.2 Adjustments to reconcile to cash provided by operationsCharges and credits:Depreciation and amortization 1,978.2 1,870.6 1,868.1 Deferred income taxes(686.4)(345.7)(428.3)Share-based compensation175.2 166.7 139.2 Net (gain) loss on sale of restaurant and other businesses(103.2)732.7 (97.8)Other(112.7)(570.4)(339.1)Changes in working capital items:Accounts receivable(161.0)(264.1)309.9 Inventories, prepaid expenses and other current assets16.7 5.6 (62.2)Accounts payable50.4 31.3 225.0 Income taxes(220.3)(546.7)(302.5)Other accrued liabilities206.2 129.3 284.0 Cash provided by operations9,611.9 7,386.7 9,141.5 Investing activitiesCapital expenditures(2,357.4)(1,899.2)(2,040.0)Purchases of restaurant businesses(441.2)(807.0)(374.2)Sales of restaurant and other businesses195.3 445.9 196.2 Sales of property94.9 38.9 106.2 Other(676.1)(456.7)(53.9)Cash used for investing activities(3,184.5)(2,678.1)(2,165.7)Financing activitiesNet short-term borrowings212.8 25.5 15.1 Long-term financing issuances5,221.1 3,374.5 1,154.4 Long-term financing repayments(2,441.1)(2,202.4)(2,240.0)Treasury stock purchases(3,054.3)(3,896.0)(845.5)Common stock dividends(4,532.8)(4,168.2)(3,918.6)Proceeds from stock option exercises259.8 248.2 285.7 Other(39.6)38.2 (46.7)Cash used for financing activities(4,374.1)(6,580.2)(5,595.6)Effect of exchange rates on cash and equivalents(57.8)(253.8)(120.1)Cash and equivalents increase (decrease)1,995.5 (2,125.4)1,260.1 Cash and equivalents at beginning of year2,583.8 4,709.2 3,449.1 Cash and equivalents at end of year$4,579.3 $2,583.8 $4,709.2 Supplemental cash flow disclosuresInterest paid$1,286.9 $1,183.5 $1,197.3 Income taxes paid2,992.9 3,023.5 2,403.9 Years ended December 31, 2023 See Notes to consolidated financial statements. McDonald's Corporation 2023 Annual Report 41 McDonald's Corporation 2023 Annual Report 41 McDonald's Corporation 2023 Annual Report 41 Consolidated Statement of Shareholders’ Equity (Deficit) Common stockissued Accumulated othercomprehensive income (loss)Common stock intreasuryTotalshareholders’equity (deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurrencytranslationIn millions, except per share dataSharesAmountSharesAmountBalance at December 31, 20201,660.6 $16.6 $7,903.6 $53,908.1 $(287.6)$(111.3)$(2,187.9)(915.2)$(67,066.4)$(7,824.9)Net income7,545.2 7,545.2 Other comprehensive income (loss), net of tax108.1 86.5 (181.5)13.1 Comprehensive income7,558.3 Common stock cash dividends ($5.25 per share)(3,918.6)(3,918.6)Treasury stock purchases(3.4)(845.5)(845.5)Share-based compensation139.2 139.2 Stock option exercises and other188.8 2.8 101.7 290.5 Balance at December 31, 20211,660.6 16.6 8,231.6 57,534.7 (179.5)(24.8)(2,369.4)(915.8)(67,810.2)(4,601.0)Net income 6,177.4 6,177.4 Other comprehensive income (loss),net of tax (118.7)55.5 150.3 87.1 Comprehensive income 6,264.5 Common stock cash dividends ($5.66 per share) (4,168.2) (4,168.2)Treasury stock purchases (15.8)(3,896.0)(3,896.0)Share-based compensation 166.7 166.7 Stock option exercises and other 148.8 2.3 81.8 230.6 Balance at December 31, 20221,660.6 16.6 8,547.1 59,543.9 (298.2)30.7 (2,219.1)(929.3)(71,624.4)(6,003.4)Net income 8,468.8 8,468.8 Other comprehensive income (loss),net of tax (69.1)(36.4)136.1 30.6 Comprehensive income 8,499.4 Common stock cash dividends ($6.23 per share) (4,532.8) (4,532.8)Treasury stock purchases (11.1)(3,105.1)(3,105.1)Share-based compensation 175.2 175.2 Stock option exercises and other 170.6 2.5 89.4 260.0 Balance at December 31, 20231,660.6 $16.6 $8,892.9 $63,479.9 $(367.3)$(5.7)$(2,083.0)(937.9)$(74,640.1)$(4,706.7) Comprehensive income Common stock cash dividends ($5.25 per share) Other comprehensive income (loss), net of tax Comprehensive income Common stock cash dividends ($5.66 per share) Other comprehensive income (loss), net of tax Comprehensive income Common stock cash dividends ($6.23 per share) See Notes to consolidated financial statements. McDonald's Corporation 2023 Annual Report 42 McDonald's Corporation 2023 Annual Report 42 McDonald's Corporation 2023 Annual Report 42 Notes to Consolidated Financial Statements Summary of Significant Accounting Policies

See Notes to consolidated financial statements. McDonald's Corporation 2022 Annual Report 37 McDonald's Corporation 2022 Annual Report 37 McDonald's Corporation 2022 Annual Report 37 Consolidated Balance Sheet In millions, except per share dataDecember 31, 20222021ASSETSCurrent assetsCash and equivalents$2,583.8 $4,709.2 Accounts and notes receivable2,115.0 1,872.4 Inventories, at cost, not in excess of market52.0 55.6 Prepaid expenses and other current assets673.4 511.3 Total current assets5,424.2 7,148.5 Other assetsInvestments in and advances to affiliates1,064.5 1,201.2 Goodwill2,900.4 2,782.5 Miscellaneous4,707.2 4,449.5 Total other assets8,672.1 8,433.2 Lease right-of-use asset, net12,565.7 13,552.0 Property and equipmentProperty and equipment, at cost41,037.6 41,916.6 Accumulated depreciation and amortization(17,264.0)(17,196.0)Net property and equipment23,773.6 24,720.6 Total assets$50,435.6 $53,854.3 LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilitiesAccounts payable$980.2 $1,006.8 Lease liability661.1 705.5 Income taxes274.9 360.7 Other taxes255.1 236.7 Accrued interest393.4 363.3 Accrued payroll and other liabilities1,237.4 1,347.0 Total current liabilities3,802.1 4,020.0 Long-term debt35,903.5 35,622.7 Long-term lease liability12,134.4 13,020.9 Long-term income taxes791.9 1,896.8 Deferred revenues - initial franchise fees757.8 738.3 Other long-term liabilities1,051.8 1,081.0 Deferred income taxes1,997.5 2,075.6 Shareholders’ equity (deficit)Preferred stock, no par value; authorized – 165.0 million shares; issued – none— — Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares16.6 16.6 Additional paid-in capital8,547.1 8,231.6 Retained earnings59,543.9 57,534.7 Accumulated other comprehensive income (loss)(2,486.6)(2,573.7)Common stock in treasury, at cost; 929.3 and 915.8 million shares(71,624.4)(67,810.2)Total shareholders’ equity (deficit)(6,003.4)(4,601.0)Total liabilities and shareholders’ equity (deficit)$50,435.6 $53,854.3 December 31, 2022 Preferred stock, no par value; authorized – 165.0 million shares; issued – none Common stock, $0.01 par value; authorized – 3.5 billion shares; issued – 1,660.6 million shares Common stock in treasury, at cost; 929.3 and 915.8 million shares See Notes to consolidated financial statements. McDonald's Corporation 2022 Annual Report 38 McDonald's Corporation 2022 Annual Report 38 McDonald's Corporation 2022 Annual Report 38 Consolidated Statement of Cash Flows In millionsYears ended December 31, 202220212020Operating activitiesNet income$6,177.4 $7,545.2 $4,730.5 Adjustments to reconcile to cash provided by operationsCharges and credits:Depreciation and amortization 1,870.6 1,868.1 1,751.4 Deferred income taxes(345.7)(428.3)6.4 Share-based compensation166.7 139.2 92.4 Net (gain) loss on sale of restaurant and other businesses732.7 (97.8)(28.2)Other(570.4)(339.1)(75.2)Changes in working capital items:Accounts receivable(264.1)309.9 (6.8)Inventories, prepaid expenses and other current assets5.6 (62.2)(68.6)Accounts payable31.3 225.0 (137.5)Income taxes(546.7)(302.5)(43.6)Other accrued liabilities129.3 284.0 44.4 Cash provided by operations7,386.7 9,141.5 6,265.2 Investing activitiesCapital expenditures(1,899.2)(2,040.0)(1,640.8)Purchases of restaurant businesses(807.0)(374.2)(66.1)Sales of restaurant and other businesses445.9 196.2 76.3 Sales of property38.9 106.2 27.4 Other(456.7)(53.9)57.4 Cash used for investing activities(2,678.1)(2,165.7)(1,545.8)Financing activitiesNet short-term borrowings25.5 15.1 (893.1)Long-term financing issuances3,374.5 1,154.4 5,543.0 Long-term financing repayments(2,202.4)(2,240.0)(2,411.7)Treasury stock purchases(3,896.0)(845.5)(907.8)Common stock dividends(4,168.2)(3,918.6)(3,752.9)Proceeds from stock option exercises248.2 285.7 295.5 Other38.2 (46.7)(122.0)Cash used for financing activities(6,580.2)(5,595.6)(2,249.0)Effect of exchange rates on cash and equivalents(253.8)(120.1)80.2 Cash and equivalents increase (decrease)(2,125.4)1,260.1 2,550.6 Cash and equivalents at beginning of year4,709.2 3,449.1 898.5 Cash and equivalents at end of year$2,583.8 $4,709.2 $3,449.1 Supplemental cash flow disclosuresInterest paid$1,183.5 $1,197.3 $1,136.0 Income taxes paid3,023.5 2,403.9 1,441.9 Years ended December 31, 2022 See Notes to consolidated financial statements. McDonald's Corporation 2022 Annual Report 39 McDonald's Corporation 2022 Annual Report 39 McDonald's Corporation 2022 Annual Report 39 Consolidated Statement of Shareholders’ Equity Common stockissued Accumulated othercomprehensive income (loss)Common stock intreasuryTotalshareholders’equity (deficit)Additionalpaid-incapitalRetainedearningsPensionsCash flowhedgesForeigncurrencytranslationIn millions, except per share dataSharesAmountSharesAmountBalance at December 31, 20191,660.6 16.6 7,653.9 52,930.5 (243.7)12.0 (2,251.0)(914.3)(66,328.6)(8,210.3)Net income4,730.5 4,730.5 Other comprehensive income (loss), net of tax(43.9)(123.3)63.1 (104.1)Comprehensive income4,626.4 Common stock cash dividends ($5.04 per share)(3,752.9)(3,752.9)Treasury stock purchases(4.3)(874.1)(874.1)Share-based compensation92.4 92.4 Stock option exercises and other157.3 3.4 136.3 293.6 Balance at December 31, 20201,660.6 16.6 7,903.6 53,908.1 (287.6)(111.3)(2,187.9)(915.2)(67,066.4)(7,824.9)Net income 7,545.2 7,545.2 Other comprehensive income (loss),net of tax 108.1 86.5 (181.5) 13.1 Comprehensive income 7,558.3 Common stock cash dividends ($5.25 per share) (3,918.6) (3,918.6)Treasury stock purchases (3.4)(845.5)(845.5)Share-based compensation 139.2 139.2 Stock option exercises and other 188.8 2.8 101.7 290.5 Balance at December 31, 20211,660.6 16.6 8,231.6 57,534.7 (179.5)(24.8)(2,369.4)(915.8)(67,810.2)(4,601.0)Net income 6,177.4 6,177.4 Other comprehensive income (loss),net of tax (118.7)55.5 150.3 87.1 Comprehensive income 6,264.5 Common stock cash dividends ($5.66 per share) (4,168.2) (4,168.2)Treasury stock purchases (15.8)(3,896.0)(3,896.0)Share-based compensation 166.7 166.7 Stock option exercises and other 148.8 2.3 81.8 230.6 Balance at December 31, 20221,660.6 $16.6 $8,547.1 $59,543.9 $(298.2)$30.7 $(2,219.1)(929.3)$(71,624.4)$(6,003.4) Comprehensive income Common stock cash dividends ($5.04 per share) Other comprehensive income (loss), net of tax Comprehensive income Common stock cash dividends ($5.25 per share) Other comprehensive income (loss), net of tax Comprehensive income Common stock cash dividends ($5.66 per share) See Notes to consolidated financial statements. McDonald's Corporation 2022 Annual Report 40 McDonald's Corporation 2022 Annual Report 40 McDonald's Corporation 2022 Annual Report 40 Notes to Consolidated Financial Statements Summary of Significant Accounting Policies

Impairment and other charges (gains), net includes losses that result from the write down of goodwill and long-lived assets from their carrying value to their fair value, charges associated with strategic initiatives, such as refranchising and restructuring activities, as well as realized gains/losses from the divestiture of ownership percentages of subsidiaries. In 2023 this category reflected $290 million of pre-tax charges related to the Company's Accelerating the Arches growth strategy, including restructuring costs associated with Accelerating the Organization, and $72 million of pre-tax charges related to the write-off of impaired software no longer in use. In 2022 this category included $1.3 billion of pre-tax charges related to the sale of the Company's business in Russia and a pre-tax gain of $271 million related to the Company's sale of its Dynamic Yield business. Additionally, in 2021 this category reflected pre-tax gains on the sale of McDonald's Japan stock, which reduced the Company's ownership in McDonald's Japan to 35%. Impairment and other charges (gains), net includes losses that result from the write down of goodwill and long-lived assets from their carrying value to their fair value, charges associated with strategic initiatives, such as refranchising and restructuring activities, as well as realized gains/losses from the divestiture of ownership percentages of subsidiaries. In 2023 this category reflected $290 million of pre-tax charges related to the Company's Accelerating the Arches growth strategy, including restructuring costs associated with Accelerating the Organization, McDonald's Corporation 2023 Annual Report 53 McDonald's Corporation 2023 Annual Report 53 McDonald's Corporation 2023 Annual Report 53 Accelerating the Organization In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy include the addition of Restaurant Development to the Company’s growth pillars and an internal effort to modernize ways of working, Accelerating the Organization, both of which are aimed at elevating the Company’s performance. Accelerating the Organization is designed to unlock further growth as the Company focuses on becoming faster, more innovative and more efficient for its customers and people. The Company incurred $249.7 million of costs related to Accelerating the Organization for the year ended December 31, 2023. These costs were recorded in the Other operating (income) expense, net line within the consolidated statement of income. Restructuring costs primarily consist of employee termination benefits, costs to terminate contracts, including lease terminations, and professional services and other costs. Professional services and other costs primarily relate to expenses incurred for legal and consulting activities. There were no significant non-cash impairment charges included in the amounts listed in the table below. Other operating (income) expense The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions): Employee Termination BenefitsCosts to Terminate ContractsOther Related CostsTotal2023Beginning Balance$— $— $— $— Restructuring Costs Incurred110.3 26.9 43.3 180.5 Cash Payments(1.5)(1.4)(0.3)(3.2)Other Non-Cash Items— — (14.1)(14.1)Accrued Balance at March 31, 2023$108.8 $25.5 $28.9 $163.2 Restructuring Costs Incurred(8.8)5.6 21.9 18.7 Cash Payments(27.7)(11.7)(46.8)(86.2)Other Non-Cash Items— — (2.5)(2.5)Accrued Balance at June 30, 2023$72.3 $19.4 $1.5 $93.2 Restructuring Costs Incurred(0.9)— 21.4 20.5 Cash Payments(13.0)(7.4)(15.3)(35.7)Other Non-Cash Items(2.5)— 0.1 (2.4)Accrued Balance at September 30, 2023$55.9 $12.0 $7.7 $75.6 Restructuring Costs Incurred(5.0)— 35.0 30.0 Cash Payments(9.6)(0.8)(36.2)(46.6)Other Non-Cash Items— — 0.5 0.5 Accrued Balance at December 31, 2023$41.3 $11.2 $7.0 $59.5 Of the $249.7 million of restructuring costs incurred for the year ended December 31, 2023, $62.4 million was recorded in the U.S., $65.6 million was recorded in the International Operated Markets segment and $121.7 million was recorded in the International Developmental Licensed Markets & Corporate segment, the majority of which was recorded at Corporate. Substantially all of the accrued restructuring balance recorded at December 31, 2023, related to the Company’s Accelerating the Organization initiative, is expected to be paid out over the next twelve months. As the Company furthers its operating model and technology transformation, primarily through its Global Businesses Services strategy, under Accelerating the Organization it will continue to incur various restructuring costs as the strategy progresses through its anticipated end date of 2027. Restructuring costs in 2024 are expected to be similar to what was incurred in 2023, and are expected to primarily consist of professional service fees. As the Company furthers its operating model and technology transformation, primarily through its Global Businesses Services strategy, under Accelerating the Organization McDonald's Corporation 2023 Annual Report 54 McDonald's Corporation 2023 Annual Report 54 McDonald's Corporation 2023 Annual Report 54 Income Taxes Income Taxes Income before provision for income taxes, classified by source of income, was as follows: In millions202320222021U.S.$3,665.0 $1,845.6 $2,413.9 Outside the U.S.6,857.2 5,979.8 6,714.0 Income before provision for income taxes *$10,522.2 $7,825.4 $9,127.9 *Income before provision for income taxes increased in 2023 primarily due to strong operating performance and prior year net charges detailed in the Net Income and Diluted Earnings Per Share section on page 13 of this Form 10-K. The provision for income taxes, classified by the timing and location of payment, was as follows: In millions202320222021U.S. federal$1,340.0 $517.3 $887.6 U.S. state262.7 246.3 228.1 Outside the U.S.1,137.1 1,230.1 895.3 Current tax provision2,739.8 1,993.7 2,011.0 U.S. federal(146.0)(80.0)(177.4)U.S. state(29.6)(46.2)(24.1)Outside the U.S.(510.8)(219.5)(226.8)Deferred tax provision(686.4)(345.7)(428.3)Provision for income taxes$2,053.4 $1,648.0 $1,582.7 Net deferred tax (assets) liabilities consisted of: In millionsDecember 31, 20232022Lease right-of-use asset$3,322.5 $3,045.0 Property and equipment1,668.5 1,706.3 Intangible assets264.0 296.7 Other284.8 595.4 Total deferred tax liabilities5,539.8 5,643.4 Lease liability(3,384.0)(3,099.9)Intangible assets(3,018.2)(2,658.9)Property and equipment(641.8)(676.3)Deferred foreign tax credits(81.6)(74.5)Employee benefit plans(191.6)(180.6)Deferred revenue(166.9)(165.8)Operating loss carryforwards(266.5)(76.6)Other(281.0)(267.4)Total deferred tax assets before valuation allowance(8,031.6)(7,200.0)Valuation allowance1,149.8 1,077.1 Net deferred tax (assets) liabilities$(1,342.0)$(479.5)Balance sheet presentation:Deferred income taxes$1,680.9 $1,997.5 Other assets-miscellaneous(3,022.9)(2,477.0)Net deferred tax (assets) liabilities$(1,342.0)$(479.5) At December 31, 2023, the Company had net operating loss carryforwards of $1,112.8 million, of which $924.8 million has an indefinite carryforward. The remainder will expire at various dates from 2024 to 2040. McDonald's Corporation 2023 Annual Report 55 McDonald's Corporation 2023 Annual Report 55 McDonald's Corporation 2023 Annual Report 55 The statutory U.S. federal income tax rate reconciles to the effective income tax rates as follows: 202320222021Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %State income taxes, net of related federal income tax benefit1.8 2.0 1.8 Foreign income taxed at different rates1.9 1.1 0.9 Tax impact of intercompany transactions(0.7)0.2 0.1 Global intangible low-tax income ("GILTI") 0.5 0.4 0.3 Foreign-derived intangible income ("FDII")(2.7)(4.2)(2.6)U.S./Foreign tax law changes— — (3.9)Nonoperating expense related to France audit settlement— 1.4 — Other, net(2.3)(0.8)(0.3)Effective income tax rates19.5 %21.1 %17.3 % Results for 2022 reflected $239 million of net tax benefits related to the sale of the Company’s Russia and Dynamic Yield businesses and the unfavorable impact of the non-deductible $537 million of non-operating expense related to the settlement of the tax audit in France. In 2021, U.S./Foreign tax law changes included a $364 million income tax benefit related to the remeasurement of deferred taxes as a result of a change in the U.K. statutory income tax rate. As of December 31, 2023 and 2022, the Company’s gross unrecognized tax benefits totaled $587.7 million and $647.0 million, respectively. After considering the deferred tax accounting impact, it is expected that about $588 million of the total as of December 31, 2023 would favorably affect the effective tax rate if resolved in the Company’s favor. The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits: In millions20232022Balance at January 1$647.0 $1,504.9 Decreases for positions taken in prior years(82.1)(579.4)Increases for positions taken in prior years27.5 49.8 Increases for positions related to the current year40.5 100.3 Settlements with taxing authorities(45.2)(428.1)Lapsing of statutes of limitations— (0.5)Balance at December 31(1)$587.7 $647.0 Balance at December 31(1) (1)Of this amount, $318.5 million and $619.6 million are included in Long-term income taxes for 2023 and 2022, respectively, and $269.2 million and $27.3 million are included in Income taxes for 2023 and 2022, respectively, on the Consolidated Balance Sheet. (1) Of this amount, $318.5 million and $619.6 million are included in Long-term income taxes for 2023 and 2022, respectively, and $269.2 million and $27.3 million are included in Income taxes for 2023 and 2022, respectively, on the Consolidated Balance Sheet. The Company is currently under audit with the U.S. Internal Revenue Service (the "IRS") for tax years 2011 through 2018. In February 2023, the Company finalized a settlement agreement with the IRS appeals team related to the disagreed transfer pricing matters for the years 2009 and 2010. All results of this settlement have been reported in the Company's financial statements. As of December 31, 2023, the IRS examination for tax years 2011 and 2012 are awaiting final resolution with the IRS appeals team. The Company has reflected anticipated settlement results in the financial statements. In 2023, the IRS issued a Revenue Agent's Report for the 2013 through 2015 examination period, and the Company's results reflect expected resolution. Examination years 2016 through 2018 remain open as of the end of the period. The Company is also under audit in multiple foreign tax jurisdictions, primarily related to transfer pricing, as well as multiple state tax jurisdictions. While the Company cannot estimate the impact to the effective tax rate, it is reasonably possible that the total amount of unrecognized tax benefits could decrease up to $262 million within the next 12 months. This would be due to the possible resolution of the aforementioned U.S. Federal, foreign and U.S. state tax audits and the expiration of the statute of limitations in multiple tax jurisdictions. During 2023, the Company finalized and settled certain tax examinations and remeasured other income tax reserves based on audit progression. It is reasonably possible that, as a result of audit progression in both the U.S. and foreign tax audits within the next 12 months, there may be new information that causes the Company to reassess the total amount of unrecognized tax benefits recorded. While the Company cannot estimate the impact that new information may have on the unrecognized tax benefit balance, it believes that the liabilities recorded are appropriate and adequate. The Company operates within multiple tax jurisdictions and is subject to audit in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2009. The Company accrued $24.9 million and $24.7 million for interest and penalties related to tax matters at December 31, 2023 and 2022, respectively. Costs recognized for interest and penalties related to tax matters in 2023 were immaterial and were $90.5 million and $24.4 million in 2022 and 2021, respectively. These amounts are included in the provision for income taxes. As of December 31, 2023, the Company has accumulated undistributed earnings generated by its foreign subsidiaries, which were predominantly taxed in the U.S. as a result of the transition tax provisions enacted under the Tax Cuts and Jobs Act of 2017. Management does not assert that these previously-taxed unremitted earnings are indefinitely reinvested in operations outside the U.S. Accordingly, the Company has provided deferred taxes for the tax effects incremental to the transition tax. The Company has not provided for deferred taxes on outside basis differences in its investments in its foreign subsidiaries that are unrelated to these accumulated undistributed earnings, as these outside basis differences are indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of the outside basis differences is not practicable. McDonald's Corporation 2023 Annual Report 56 McDonald's Corporation 2023 Annual Report 56 McDonald's Corporation 2023 Annual Report 56 Employee Benefit Plans The Company's 401(k) Plan is maintained for U.S.-based employees and includes a 401(k) feature, as well as an employer match. The 401(k) feature allows eligible participants to make pre-tax contributions that are matched each pay period (with an annual true-up) through cash contributions. All current account balances, future contributions and related earnings can be invested in nine investment alternatives (including a target date fund series), as well as McDonald’s stock in accordance with each participant’s investment elections. Future participant contributions are limited to 20% investment in McDonald’s stock and participants may not transfer their existing account balance into McDonald’s stock if the transfer would cause the value of their interest in the fund to exceed 20% of their total 401(k) Plan account balance. Participants may choose to make separate investment choices for current account balances and future contributions. The Company also maintains certain unfunded nonqualified supplemental benefit plans that allow participants to (i) make tax-deferred contributions and (ii) receive an annual Company-match allocation that cannot be made under the 401(k) Plan because of IRS limitations. The investment alternatives and returns are based on certain market-rate investment alternatives under the 401(k) Plan, net of expenses. Total liabilities were $402.7 million and $380.0 million at December 31, 2023 and 2022, respectively, and were primarily included in Other long-term liabilities on the Consolidated Balance Sheet. The Company has entered into contracts to hedge market-driven changes in certain of the liabilities. At December 31, 2023, derivatives with a fair value of $188.6 million indexed to the Company’s stock were included in Miscellaneous other assets and an investment totaling $191.5 million indexed to certain market indices was included in Prepaid expenses and other current assets on the Consolidated Balance Sheet. Changes in liabilities for these nonqualified plans and in the fair value of the derivatives and investment are recorded primarily in Selling, general & administrative expenses. Changes in fair value of the derivatives indexed to the Company’s stock are recorded in the income statement because the contracts provide the counterparty with a choice to settle in cash or shares. Total U.S. costs for the 401(k) Plan and nonqualified benefits were immaterial to the Consolidated Income Statement. All other post-retirement benefits and post-employment benefits, both in the U.S. and at our international subsidiaries, were also immaterial to the Consolidated Income Statement. McDonald's Corporation 2023 Annual Report 57 McDonald's Corporation 2023 Annual Report 57 McDonald's Corporation 2023 Annual Report 57 Debt Financing

Impairment and other charges (gains), net includes losses that result from the write down of goodwill and long-lived assets from their carrying value to their fair value, as well as charges associated with strategic initiatives, such as refranchising and restructuring activities. The realized gains/losses from the divestiture of ownership percentages of subsidiaries are reflected in this category, including the gains on sale of McDonald's Japan stock in 2020 and 2021, which reduced the Company's ownership in McDonald's Japan from 49% to 35%. Additionally, in 2022 this category includes $1.3 billion of charges related to the sale of the Company's business in Russia and a gain of $271 million related to the Company's sale of its Dynamic Yield business. McDonald's Corporation 2022 Annual Report 51 McDonald's Corporation 2022 Annual Report 51 McDonald's Corporation 2022 Annual Report 51 Income Taxes Income Taxes Income before provision for income taxes, classified by source of income, was as follows: In millions202220212020U.S.$1,845.6 $2,413.9 $1,390.4 Outside the U.S.5,979.8 6,714.0 4,750.3 Income before provision for income taxes *$7,825.4 $9,127.9 $6,140.7 *Income before provision for income taxes decreased in 2022 primarily due to current and prior year charges and gains detailed in the Net Income and Diluted Earnings Per Share section on page 12 of this Form 10-K, which offset strong operating performance. The provision for income taxes, classified by the timing and location of payment, was as follows: In millions202220212020U.S. federal$517.3 $887.6 $554.1 U.S. state246.3 228.1 119.1 Outside the U.S.1,230.1 895.3 730.6 Current tax provision1,993.7 2,011.0 1,403.8 U.S. federal(80.0)(177.4)870.3 U.S. state(46.2)(24.1)73.3 Outside the U.S.(219.5)(226.8)(937.2)Deferred tax provision(345.7)(428.3)6.4 Provision for income taxes$1,648.0 $1,582.7 $1,410.2 Current tax provision Deferred tax provision Net deferred tax (assets) liabilities consisted of: In millionsDecember 31, 20222021Lease right-of-use asset$3,045.0 $3,462.7 Property and equipment1,706.3 1,648.6 Intangible assets296.7 696.0 Other595.4 490.8 Total deferred tax liabilities5,643.4 6,298.1 Lease liability(3,099.9)(3,516.9)Intangible assets(2,658.9)(2,524.6)Property and equipment(676.3)(647.1)Deferred foreign tax credits(74.5)(311.5)Employee benefit plans(180.6)(153.6)Deferred revenue(165.8)(121.4)Operating loss carryforwards(76.6)(96.1)Other(267.4)(284.4)Total deferred tax assets before valuation allowance(7,200.0)(7,655.6)Valuation allowance1,077.1 1,076.1 Net deferred tax (assets) liabilities$(479.5)$(281.4)Balance sheet presentation:Deferred income taxes$1,997.5 $2,075.6 Other assets-miscellaneous(2,477.0)(2,357.0)Net deferred tax (assets) liabilities$(479.5)$(281.4) Total deferred tax liabilities Total deferred tax assets before valuation allowance McDonald's Corporation 2022 Annual Report 52 McDonald's Corporation 2022 Annual Report 52 McDonald's Corporation 2022 Annual Report 52 At December 31, 2022, the Company had net operating loss carryforwards of $407.5 million, of which $174.6 million has an indefinite carryforward. The remainder will expire at various dates from 2023 to 2040. The statutory U.S. federal income tax rate reconciles to the effective income tax rates as follows: 202220212020Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %State income taxes, net of related federal income tax benefit2.0 1.8 1.8 Foreign income taxed at different rates1.1 0.9 0.4 Tax impact of intercompany transactions0.2 0.1 2.1 Global intangible low-tax income ("GILTI") 0.4 0.3 1.2 Foreign-derived intangible income ("FDII")(4.2)(2.6)(3.4)U.S./Foreign tax law changes— (3.9)(1.8)Nonoperating expense related to France audit settlement1.4 — — Other, net(0.8)(0.3)1.7 Effective income tax rates21.1 %17.3 %23.0 % Foreign income taxed at different rates The 2022 effective income tax rate reflected the tax impact of $537 million of non-operating expense related to the settlement of the tax audit in France. In 2021, U.S./Foreign tax law changes included a $364 million income tax benefit related to the remeasurement of deferred taxes as a result of a change in the U.K. statutory income tax rate. As of December 31, 2022 and 2021, the Company’s gross unrecognized tax benefits totaled $647.0 million and $1,504.9 million, respectively. After considering the deferred tax accounting impact, it is expected that about $410 million of the total as of December 31, 2022 would favorably affect the effective tax rate if resolved in the Company’s favor. The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits: In millions20222021Balance at January 1$1,504.9 $1,479.2 Decreases for positions taken in prior years(579.4)(31.9)Increases for positions taken in prior years49.8 26.1 Increases for positions related to the current year100.3 60.7 Settlements with taxing authorities(428.1)(16.8)Lapsing of statutes of limitations(0.5)(12.4)Balance at December 31(1)$647.0 $1,504.9 Balance at January 1 Decreases for positions taken in prior years Increases for positions taken in prior years Increases for positions related to the current year Settlements with taxing authorities Lapsing of statutes of limitations Balance at December 31(1) (1)Of this amount, $619.6 million and $1,157.5 million are included in Long-term income taxes for 2022 and 2021, respectively, and $27.3 million and $332.0 million are included in Prepaid expenses and other current assets for 2022 and 2021, respectively, on the Consolidated Balance Sheet. The remainder is included in Deferred income taxes on the Consolidated Balance Sheet. In 2015, the U.S. Internal Revenue Service (the "IRS") issued a Revenue Agent Report (“RAR”) that included certain disagreed transfer pricing adjustments related to the Company’s U.S. Federal income tax returns for 2009 and 2010. Also in 2015, the Company filed a protest with the IRS related to these disagreed transfer pricing matters. During 2017, the Company received a response to its protest, and beginning in December 2018 the Company met with the IRS Appeals team regarding settlement of these issues. In February 2023, the Company finalized a settlement agreement with the IRS Appeals team related to the disagreed transfer pricing matters for the years 2009-2010. In 2017, the IRS completed its examination of the Company’s U.S. Federal income tax returns for 2011 and 2012. In 2018, the IRS issued a RAR for these years. As expected, the RAR included the same disagreed transfer pricing matters as the 2009 and 2010 RAR. Also in 2018, the Company filed a protest with the IRS related to these disagreed transfer pricing matters. The Company continues to meet with the IRS Appeals team regarding the settlement of these issues. The Company is also under audit in multiple foreign tax jurisdictions for matters primarily related to transfer pricing, and the Company is under audit in multiple state tax jurisdictions. While the Company cannot estimate the impact to the effective tax rate, it is reasonably possible that the total amount of unrecognized tax benefits could decrease up to $70 million within the next 12 months. This would be due to the possible settlement of the IRS transfer pricing matters, completion of the aforementioned foreign and state tax audits and the expiration of the statute of limitations in multiple tax jurisdictions. In 2022, the Company settled an income tax audit with France, which resulted in $537 million of nondeductible non-operating expense and conclusion of income tax matters related to transfer pricing for the years 2009-2020. During 2022, the Company finalized and settled certain tax examinations and remeasured other income tax reserves based on audit progression. It is reasonably possible that, as a result of audit progression in both the U.S. and foreign tax audits within the next 12 months, there may be new information that causes the Company to reassess the total amount of unrecognized tax benefits recorded. While the Company cannot estimate the impact that new information may have on the unrecognized tax benefit balance, it believes that the liabilities recorded are appropriate and adequate. The Company operates within multiple tax jurisdictions and is subject to audit in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2009. The Company had $24.7 million and $183.6 million accrued for interest and penalties related to tax matters at December 31, 2022 and 2021, respectively. The Company recognized interest and penalties related to tax matters of $90.5 million in 2022, $24.4 million in 2021, and $32.4 million in 2020, which are included in the provision for income taxes. McDonald's Corporation 2022 Annual Report 53 McDonald's Corporation 2022 Annual Report 53 McDonald's Corporation 2022 Annual Report 53 As of December 31, 2022, the Company has accumulated undistributed earnings generated by its foreign subsidiaries, which were predominantly taxed in the U.S. as a result of the transition tax provisions enacted under the Tax Cuts and Jobs Act of 2017. Management does not assert that these previously-taxed unremitted earnings are indefinitely reinvested in operations outside the U.S. Accordingly, the Company has provided deferred taxes for the tax effects incremental to the transition tax. The Company has not provided for deferred taxes on outside basis differences in its investments in its foreign subsidiaries that are unrelated to these accumulated undistributed earnings, as these outside basis differences are indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of the outside basis differences is not practicable. Employee Benefit Plans The Company's 401(k) Plan is maintained for U.S.-based employees and includes a 401(k) feature, as well as an employer match. The 401(k) feature allows eligible participants to make pre-tax contributions that are matched each pay period (with an annual true-up) through cash contributions. All current account balances, future contributions and related earnings can be invested in nine investment alternatives (including a target date fund series), as well as McDonald’s stock in accordance with each participant’s investment elections. Future participant contributions are limited to 20% investment in McDonald’s stock and participants may not transfer their existing account balance into McDonald’s stock if the transfer would cause the value of their interest in the fund to exceed 20% of their total 401(k) Plan account balance. Participants may choose to make separate investment choices for current account balances and future contributions. The Company also maintains certain unfunded nonqualified supplemental benefit plans that allow participants to (i) make tax-deferred contributions and (ii) receive an annual Company-match allocation that cannot be made under the 401(k) Plan because of IRS limitations. The investment alternatives and returns are based on certain market-rate investment alternatives under the 401(k) Plan, net of expenses. Total liabilities were $380.0 million and $456.8 million at December 31, 2022 and 2021, respectively, and were primarily included in Other long-term liabilities on the Consolidated Balance Sheet. The Company has entered into derivative contracts to hedge market-driven changes in certain of the liabilities. At December 31, 2022, derivatives with a fair value of $200.5 million indexed to the Company's stock and a total return swap with a notional amount of $164.4 million indexed to certain market indices were included at their fair value in Prepaid expenses and other current assets on the Consolidated Balance Sheet. Changes in liabilities for these nonqualified plans and in the fair value of the derivatives are recorded primarily in Selling, general & administrative expenses. Changes in fair value of the derivatives indexed to the Company’s stock are recorded in the income statement because the contracts provide the counterparty with a choice to settle in cash or shares. Total U.S. costs for the 401(k) Plan and nonqualified benefits and related hedging activities, were (in millions): 2022–$54.2; 2021–$39.5; 2020–$37.0. Certain subsidiaries outside the U.S. also offer profit sharing, stock purchase or other similar benefit plans. Total plan costs outside the U.S. were (in millions): 2022–$44.4; 2021–$41.8; 2020–$36.6. The total combined liabilities for international retirement plans were $36.6 million and $41.7 million at December 31, 2022 and 2021, respectively. Other post-retirement benefits and post-employment benefits were immaterial to the Consolidated Income Statement. McDonald's Corporation 2022 Annual Report 54 McDonald's Corporation 2022 Annual Report 54 McDonald's Corporation 2022 Annual Report 54 Debt Financing

The Company franchises and operates McDonald’s restaurants in the global restaurant industry. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchised arrangements, and developmental licensees or affiliates under license agreements. The following table presents restaurant information by ownership type: Restaurants at December 31,202320222021Conventional franchised21,818 21,720 21,607 Developmental licensed8,684 8,229 7,913 Foreign affiliated9,178 8,220 7,775 Total Franchised39,680 38,169 37,295 Company-operated2,142 2,106 2,736 Total Systemwide restaurants41,822 40,275 40,031 The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either individually or in the aggregate to the consolidated financial statements for periods prior to purchase and sale.

The Company franchises and operates McDonald’s restaurants in the global restaurant industry. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchised arrangements, and developmental licensees or affiliates under license agreements. The following table presents restaurant information by ownership type: Restaurants at December 31,202220212020Conventional franchised21,720 21,607 21,712 Developmental licensed8,229 7,913 7,663 Foreign affiliated8,220 7,775 7,146 Total Franchised38,169 37,295 36,521 Company-operated2,106 2,736 2,677 Total Systemwide restaurants40,275 40,031 39,198 The results of operations of restaurant businesses purchased and sold in transactions with franchisees were not material either individually or in the aggregate to the consolidated financial statements for periods prior to purchase and sale.

By/s/ Ian F. BordenIan F. BordenCorporate Executive Vice President and Chief Financial OfficerFebruary 24, 2023

In recent years, there has been an increasing focus by stakeholders – including employees, franchisees, customers, suppliers, governmental and non-governmental organizations and investors – on environmental and social impact matters. A failure, whether real or perceived, to address environmental and social impact matters or to achieve progress on our environmental and social impact initiatives on the anticipated timing or at all, could adversely affect our business, including by heightening other risks disclosed in these Risk Factors, such as those related to consumer behavior, consumer perceptions of our brand, labor availability and costs, supply chain interruptions, commodity costs, and legal and regulatory complexity. Conversely, our taking a position, whether real or perceived, on environmental and social impact, public policy, geopolitical and similar matters could also adversely impact our business. The standards we set for ourselves regarding environmental and social impact matters, and our ability to meet such standards, may also impact our business. For example, we are working to manage risks and costs to our System related to climate change, greenhouse gases, and diminishing energy and water resources, and we have announced initiatives relating to, among other things, climate action, sustainability, and responsible sourcing. In addition, we are engaging in social impact initiatives, including community engagement and philanthropy; as well as diversity, equity and inclusion efforts. We have faced increased scrutiny related to reporting on and achieving these initiatives, as well as continued public focus on similar matters, such as packaging and waste, animal health and welfare, deforestation and land use. We have also experienced increased pressure from stakeholders to provide expanded disclosure and establish additional commitments, targets or goals, and take actions to meet them, which could expose us to additional market, operational, execution and reputational costs and risks. Moreover, addressing environmental and social impact matters requires Systemwide as well as third party coordination and alignment, over which we do not have complete control and which may be unpredictable. The standards by which certain environmental and social impact matters are measured are also evolving and subject to assumptions that could change over time.

In recent years, there has been an increasing focus by stakeholders – including employees, franchisees, customers, suppliers, governmental and non-governmental organizations and investors – on ESG matters. A failure, whether real or perceived, to address ESG matters or to achieve progress on our ESG initiatives on the anticipated timing or at all, could adversely affect our business, including by heightening other risks disclosed in these Risk Factors, such as those related to consumer behavior, consumer perceptions of our brand, labor availability and costs, supply chain interruptions, commodity costs, and legal and regulatory complexity. Conversely, our taking a position, whether real or perceived, on ESG, public policy, geopolitical and similar matters could also adversely impact our business. The standards we set for ourselves regarding ESG matters, and our ability to meet such standards, may also impact our business. For example, we are working to manage risks and costs to our System related to climate change, greenhouse gases, and diminishing energy and water resources, and we have announced initiatives relating to, among other things, climate action, sustainability, responsible sourcing and increasing diverse representation across our System. We have faced increased scrutiny related to reporting on and achieving these initiatives, as well as continued public focus on similar matters, such as packaging and waste, animal health and welfare, deforestation and land use. We have also experienced increased pressure from stakeholders to provide expanded disclosure and establish additional commitments, targets or goals, and take actions to meet them, which could expose us to additional market, operational, execution and reputational costs and risks. Moreover, addressing ESG matters requires Systemwide coordination and alignment, and the standards by which certain ESG matters are measured are evolving and subject to assumptions that could change over time.