McDonald's Corporation: 10-K Risk Factor Changes

Long-lived assets are reviewed for impairment indicators 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. If a Company-owned and operated restaurant is sold within 24 months of acquisition, the goodwill associated with the acquisition is written off in its entirety. If a Company-owned and 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 2025 activity in goodwill: In millionsU.S.InternationalOperated MarketsInternational DevelopmentalLicensed Markets &CorporateConsolidatedBalance at December 31, 2024$1,851 $1,132 $162 $3,145 Net restaurant purchases (sales)(1)70 — 69 Currency translation— 117 23 140 Balance at December 31, 2025$1,850 $1,319 $185 $3,354 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. McDonald's Corporation 2025 Annual Report 46 McDonald's Corporation 2025 Annual Report 46 McDonald's Corporation 2025 Annual Report 46

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 2024, the Company acquired restaurants from franchisees (including 228 restaurants in Israel, which are presented within the International Developmental Licensed Markets & Corporate segment) in order to support key franchising initiatives. Total restaurant acquisitions for the year resulted in the Company recording approximately $150 million of net tangible assets, $270 million of identifiable intangible assets (primarily consisting of reacquired franchise rights) and $240 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-owned and operated restaurant is sold within 24 months of acquisition, the goodwill associated with the acquisition is written off in its entirety. If a Company-owned and 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 2024 activity in goodwill by segment: In millionsU.S.InternationalOperated MarketsInternational DevelopmentalLicensed Markets &CorporateConsolidatedBalance at December 31, 2023$1,833 $1,207 $— $3,040 Net restaurant purchases (sales)18 3 158 179 Currency translation— (78)4 (74)Balance at December 31, 2024$1,851 $1,132 $162 $3,145 McDonald's Corporation 2024 Annual Report 47 McDonald's Corporation 2024 Annual Report 47 McDonald's Corporation 2024 Annual Report 47 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 $1 million and $15 million as of December 31, 2024 and 2023, respectively.

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 & Finance 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 2025 Annual Report 65 McDonald's Corporation 2025 Annual Report 65 McDonald's Corporation 2025 Annual Report 65 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 certain transfer pricing matters, totaled $414 million at December 31, 2025. 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 certain 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 certain intercompany transactions are 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 benefits, including management's evaluation of new information obtained during the period.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 certain unrecognized tax benefits related to transfer pricing. For example, we assessed the inputs utilized and the calculations. 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 certain transfer pricing matters, totaled $414 million at December 31, 2025. 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 certain 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 certain intercompany transactions are 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 benefits, including management's evaluation of new information obtained during the period. 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 certain unrecognized tax benefits related to transfer pricing. For example, we assessed the inputs utilized and the calculations. 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 24, 2026 McDonald's Corporation 2025 Annual Report 66 McDonald's Corporation 2025 Annual Report 66 McDonald's Corporation 2025 Annual Report 66 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting To the Shareholders and the Board of Directors 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 & Finance 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 2024 Annual Report 66 McDonald's Corporation 2024 Annual Report 66 McDonald's Corporation 2024 Annual Report 66 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 $461 million at December 31, 2024. 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 $461 million at December 31, 2024. 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 25, 2025 McDonald's Corporation 2024 Annual Report 67 McDonald's Corporation 2024 Annual Report 67 McDonald's Corporation 2024 Annual Report 67 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting To the Shareholders and the Board of Directors of McDonald’s Corporation

By/s/ Ian F. BordenIan F. BordenExecutive Vice President and Global Chief Financial OfficerFebruary 25, 2025

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, 2025In millionsLevel 1 (1)Level 2Total CarryingValueInvestments$247 $247 Derivative assets$— $131 $131 Derivative liabilities$(145)$(145)December 31, 2024In millionsLevel 1 (1)Level 2 Total CarryingValueInvestments$226 $226 Derivative assets$135 $199 $334 Derivative liabilities$(41)$(41) 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, 2024In millionsLevel 1 (1)Level 2Total CarryingValueInvestments$226 $226 Derivative assets$135 $199 $334 Derivative liabilities$(41)$(41)December 31, 2023In millionsLevel 1 (1)Level 2 Total CarryingValueInvestments$192 $192 Derivative assets$189 $21 $210 Derivative liabilities$(118)$(118) 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 Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not hold or issue derivatives for trading purposes. The Company documents its risk management objective and strategy for undertaking hedging transactions, as well as all relationships between hedging instruments and hedged items. The Company’s derivatives that are designated for hedge accounting consist mainly of interest rate swaps, foreign currency forwards, and cross-currency interest rate swaps, and are classified as either fair value, cash flow or net investment hedges. Further details are explained in the "Fair Value," "Cash Flow" and "Net Investment" hedge sections. The Company enters into certain derivatives that are not designated for hedge accounting. The Company has entered into equity derivative contracts to hedge market-driven changes in certain of its 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. Further details are explained in the “Undesignated Derivatives” section. All derivatives (including those not designated for hedge accounting) are recognized on the Consolidated Balance Sheet at fair value and classified based on the instruments’ maturity dates. Changes in the fair value measurements of the derivative instruments are reflected as adjustments to AOCI and/or current earnings. The following table presents the fair values of derivative instruments included on the Consolidated Balance Sheet as of December 31, 2025 and 2024: Derivative AssetsDerivative LiabilitiesIn millionsBalance Sheet Classification20252024Balance Sheet Classification20252024Derivatives designated as hedging instrumentsForeign currencyPrepaid expenses and other current assets$3 $125 Accrued payroll and other liabilities$(117)$(1)Interest ratePrepaid expenses and other current assets— 34 Accrued payroll and other liabilities— (6)Foreign currencyMiscellaneous other assets24 40 Other long-term liabilities(12)— Interest rateMiscellaneous other assets— — Other long-term liabilities(16)(34)Total derivatives designated as hedging instruments$27 $199 $(145)$(41)Derivatives not designated as hedging instrumentsEquityPrepaid expenses and other current assets$— $135 EquityMiscellaneous other assets104 — Total derivatives not designated as hedging instruments$104 $135 $— $— Total derivatives$131 $334 $(145)$(41) Prepaid expenses and other current assets Accrued payroll and other liabilities Prepaid expenses and other current assets Accrued payroll and other liabilities McDonald's Corporation 2025 Annual Report 48 McDonald's Corporation 2025 Annual Report 48 McDonald's Corporation 2025 Annual Report 48 The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the year ended December 31, 2025 and 2024, respectively: Location of gain or lossrecognized in income onderivativeGain (loss)recognized in AOCIGain (loss) reclassifiedinto income from AOCIGain (loss) recognized inincome on derivativeIn millions202520242025202420252024Foreign currencyNonoperating income/expense$(165)$126 $(39)$(1)Interest rateInterest expense(10)38 2 1 Cash flow hedges$(175)$164 $(37)$— Foreign currency denominated debtNonoperating income/expense$(1,599)$891 Foreign currency derivativesNonoperating income/expense(194)114 Foreign currency derivatives(1)Interest expense$59 $45 Net investment hedges$(1,793)$1,005 $59 $45 Foreign currencyNonoperating income/expense$(12)$(3)EquitySelling, general & administrative expenses11 (9)Undesignated derivatives$(1)$(12)(1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing. Foreign currency derivatives(1) (1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.

The Company is exposed to global market risks, including the effect of changes in interest rates and foreign currency fluctuations. The Company uses foreign currency denominated debt and derivative instruments to mitigate the impact of these changes. The Company does not hold or issue derivatives for trading purposes. The Company documents its risk management objective and strategy for undertaking hedging transactions, as well as all relationships between hedging instruments and hedged items. The Company’s derivatives that are designated for hedge accounting consist mainly of interest rate swaps, foreign currency forwards, and cross-currency interest rate swaps, and are classified as either fair value, cash flow or net investment hedges. Further details are explained in the "Fair Value," "Cash Flow" and "Net Investment" hedge sections. The Company enters into certain derivatives that are not designated for hedge accounting. The Company has entered into equity derivative contracts to hedge market-driven changes in certain of its 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. Further details are explained in the “Undesignated Derivatives” section. All derivatives (including those not designated for hedge accounting) are recognized on the Consolidated Balance Sheet at fair value and classified based on the instruments’ maturity dates. Changes in the fair value measurements of the derivative instruments are reflected as adjustments to AOCI and/or current earnings. McDonald's Corporation 2024 Annual Report 49 McDonald's Corporation 2024 Annual Report 49 McDonald's Corporation 2024 Annual Report 49 The following table presents the fair values of derivative instruments included on the Consolidated Balance Sheet as of December 31, 2024 and 2023: Derivative AssetsDerivative LiabilitiesIn millionsBalance Sheet Classification20242023Balance Sheet Classification20242023Derivatives designated as hedging instrumentsForeign currencyPrepaid expenses and other current assets$125 $9 Accrued payroll and other liabilities$(1)$(37)Interest ratePrepaid expenses and other current assets34 4 Accrued payroll and other liabilities(6)(4)Foreign currencyMiscellaneous other assets40 2 Other long-term liabilities— (14)Interest rateMiscellaneous other assets— — Other long-term liabilities(34)(58)Total derivatives designated as hedging instruments$199 $15 $(41)$(113)Derivatives not designated as hedging instrumentsEquityPrepaid expenses and other current assets$135 $— Foreign currencyPrepaid expenses and other current assets— 6 Accrued payroll and other liabilities$— $(5)EquityMiscellaneous other assets— 189 Total derivatives not designated as hedging instruments$135 $195 $— $(5)Total derivatives$334 $210 $(41)$(118) Prepaid expenses and other current assets Accrued payroll and other liabilities Prepaid expenses and other current assets Accrued payroll and other liabilities Accrued payroll and other liabilities The following table presents the pre-tax amounts from derivative instruments affecting income and AOCI for the year ended December 31, 2024 and 2023, respectively: Location of gain or lossrecognized in income onderivativeGain (loss)recognized in AOCIGain (loss) reclassifiedinto income from AOCIGain (loss) recognized inincome on derivativeIn millions202420232024202320242023Foreign currencyNonoperating income/expense$126 $(40)$(1)$20 Interest rateInterest expense38 15 1 1 Cash flow hedges$164 $(25)$— $21 Foreign currency denominated debtNonoperating income/expense$891 $(435)Foreign currency derivativesNonoperating income/expense114 40 Foreign currency derivatives(1)Interest expense$45 $26 Net investment hedges$1,005 $(395)$45 $26 Foreign currencyNonoperating income/expense$(3)$4 EquitySelling, general & administrative expenses(9)27 Undesignated derivatives$(12)$31 (1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing. Foreign currency derivatives(1) (1)The amount of gain (loss) recognized in income related to components excluded from effectiveness testing.

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 2025 this category reflected $229 million of net pre-tax restructuring charges primarily related to Accelerating the Organization. In 2024 this category reflected $221 million of pre-tax restructuring charges primarily related to Accelerating the Organization and net pre-tax charges of $70 million primarily consisting of property sale gains, transaction costs and non-cash impairment charges associated with the sale of McDonald's business in South Korea and transaction costs associated with the acquisition of McDonald's business in Israel. In 2023 this category included $290 million of pre-tax charges related to the Company's Accelerating the Arches growth strategy, including restructuring charges associated with Accelerating the Organization, and $72 million of pre-tax charges related to the write-off of impaired software no longer in use. McDonald's Corporation 2025 Annual Report 55 McDonald's Corporation 2025 Annual Report 55 McDonald's Corporation 2025 Annual Report 55 Accelerating the Organization In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy included 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 $226 million, $221 million, and $250 million of restructuring charges related to Accelerating the Organization in the years ended December 31, 2025, 2024, and 2023, respectively. These restructuring charges were recorded in the Other operating (income) expense, net line within the Consolidated Statement of Income. There were no significant non-cash impairment charges included in the amounts listed in the table below. Other operating (income) expense The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions): Employee Termination BenefitsCosts to Terminate ContractsProfessional Services and Other CostsTotal2023Accrued Balance at Beginning of Year$— $— $— $— Restructuring Costs Incurred96 32 122 250 Cash Payments(52)(21)(99)(172)Other Non-Cash Items(3)— (16)(19)Accrued Balance at December 31, 2023$41 $11 $7 $59 2024Accrued Balance at Beginning of Year$41 $11 $7 $59 Restructuring Costs Incurred6 1 214 221 Cash Payments(24)(8)(205)(237)Other Non-Cash Items— — (1)(1)Accrued Balance at December 31, 2024$23 $4 $15 $42 2025Accrued Balance at Beginning of Year$23 $4 $15 $42 Restructuring Costs Incurred32 1 193 226 Cash Payments(21)(1)(197)(219)Other Non-Cash Items— — 4 4 Accrued Balance at December 31, 2025$34 $4 $15 $53 Of the $226 million of restructuring charges incurred for the year ended December 31, 2025, $201 million was recorded at Corporate, and $25 million was recorded in the International Operated Markets. Substantially all of the accrued restructuring balance recorded at December 31, 2025, related to the Company’s Accelerating the Organization initiative, is expected to be paid out over the next twelve months. The Company continues to evolve its ways of working by driving efficiency and effectiveness across the organization, primarily led by its Global Business Services ("GBS") organization. Transformation efforts under Accelerating the Organization will continue to result in various restructuring charges as the strategy progresses through its anticipated completion during 2027, with $697 million of total restructuring charges incurred since the initiative commenced in 2023. The Company currently expects to incur approximately $250 million of restructuring charges in 2026, primarily related to professional services costs. McDonald's Corporation 2025 Annual Report 56 McDonald's Corporation 2025 Annual Report 56 McDonald's Corporation 2025 Annual Report 56 Equity Method Investments The Company has various investments accounted for using the equity method. Under the equity method of accounting, the Company records its proportionate share of the net income or loss of each equity method investee, with a corresponding change to the carrying value of the investment. The carrying value of the investment is also adjusted for any dividends received and the effect of foreign exchange. The Company records its proportionate share of net income or loss within the Other operating (income) expense, net line on the Consolidated Statement of Income. The carrying value of the investments are recorded within the Investments in and advances to affiliates line on the Consolidated Balance Sheet. The Company has elected to record dividends received from its equity method investments under the nature of distribution approach, which provides for the recording of such distributions within the cash provided by operations section of the Consolidated Statement of Cash Flows to the extent that such distributions are from the normal operating or financing activities of the investee. The Company’s primary equity method investments include partial ownership in Grand Foods Holding, an entity that operates and manages McDonald's business in mainland China, Hong Kong and Macau, and partial ownership in McDonald’s Japan Holdings Co., Ltd, an entity that operates and manages McDonald’s business in Japan. The Company has granted these entities the right to operate the McDonald's business as part of a Master Franchise Agreement. Revenue related to these agreements are accounted for in a manner consistent with the Company’s other franchise arrangements. The following table summarizes the amounts related to the Company’s primary equity method investees during the periods presented. December 31, 2025December 31, 2024In MillionsPercentage OwnershipFair Value (Level 1)Carrying AmountPercentage OwnershipFair Value (Level 1)Carrying AmountGrand Foods Holding48 %N/A$2,048 48 %N/A$1,973 McDonald's Japan Holdings Co., Ltd35 %$1,915 $657 35 %$1,849 $590 As of December 31, 2025, the aggregate carrying amount of the Company's investments in these equity method investees exceeded its proportionate share of the net assets of these equity method investees by $1.4 billion. This difference is not amortized. Management has concluded that there are no indicators of impairment related to these investments. The following table summarizes the amounts recorded related to the Company's primary equity method investments during the year ended December 31, 2025 and December 31, 2024, respectively. Year Ended December 31,In Millions20252024Revenue$579 $538 Equity in Earnings146 113 Accounts Receivable89 157 Dividends Received15 157 McDonald's Corporation 2025 Annual Report 57 McDonald's Corporation 2025 Annual Report 57 McDonald's Corporation 2025 Annual Report 57 Income Taxes Income Taxes Income before provision for income taxes, classified by source of income, was as follows: In millions202520242023U.S.$3,291 $3,282 $3,665 Outside the U.S.7,606 7,062 6,857 Income before provision for income taxes $10,897 $10,345 $10,522 The provision for income taxes, classified by the timing and location of payment, was as follows: In millions202520242023U.S. federal$1,085 $1,412 $1,340 U.S. state198 269 263 Outside the U.S.1,177 1,014 1,137 Current tax provision2,460 2,695 2,740 U.S. federal(349)(76)(146)U.S. state(84)(20)(30)Outside the U.S.307 (478)(511)Deferred tax (benefit) provision(126)(574)(686)Provision for income taxes$2,334 $2,121 $2,053 Income taxes paid (net of refunds), classified by location of payment, were as follows: In millions2025Federal(1)$1,326 State252 ForeignUnited Kingdom 357 France156 Other foreign jurisdictions597 Total income taxes paid, net$2,688 Federal(1) (1)Included in the income taxes paid amount is $429 million related to the purchase of Federal transferrable energy credits. Income taxes paid, net, was $3.0 billion for the years ended December 31, 2024 and 2023. Net deferred tax (assets) liabilities consisted of: In millions'December 31, 20252024Lease right-of-use asset$3,533 $3,213 Property and equipment1,588 1,568 Intangible assets91 187 Other25 437 Total deferred tax liabilities5,237 5,405 Lease liability(3,615)(3,292)Intangible assets(3,582)(3,495)Property and equipment(488)(469)Deferred foreign tax credits(69)(50)Employee benefit plans(168)(168)Deferred revenue(141)(113)Operating loss carryforwards(197)(195)Other(155)(170)Total deferred tax assets before valuation allowance(8,415)(7,951)Valuation allowance960 917 Net deferred tax (assets) liabilities$(2,218)$(1,629)Balance sheet presentation:Deferred income taxes$1,038 $1,914 Other assets-miscellaneous(3,256)(3,543)Net deferred tax (assets) liabilities$(2,218)$(1,629) 'December 31, 2025 At December 31, 2025, the Company had net operating loss carryforwards of $878 million, of which $764 million has an indefinite carryforward. The remainder will expire at various dates from 2026 to 2046. McDonald's Corporation 2025 Annual Report 58 McDonald's Corporation 2025 Annual Report 58 McDonald's Corporation 2025 Annual Report 58 The statutory U.S. federal income tax rate reconciles to the effective income tax rates as follows: 2025Dollars in millionsAmountPercentStatutory U.S. federal income tax rate$2,288 21.0 %State income taxes, net of related federal income tax benefit(1)149 1.4 Foreign tax effects226 2.1 Effect of changes in tax laws or rates enacted in the current period— — Effect of cross-border tax lawsGlobal intangible low-tax income ("GILTI") 103 0.9 Foreign-derived intangible income ("FDII")(131)(1.2) Other33 0.3 Tax credits(43)(0.4)Changes in valuation allowances64 0.6 Nontaxable or nondeductible items— — Changes in unrecognized tax benefits(1)— Other adjustments Tax impact of intercompany transactions(314)(2.9) Other(40)(0.4)Effective income tax rate$2,334 21.4 % 2,288 State income taxes, net of related federal income tax benefit(1) (1)State income taxes in California and Illinois make up the majority (greater than 50%) of the tax effect in this category. 20242023Statutory U.S. federal income tax rate21.0 %21.0 %State income taxes, net of related federal income tax benefit1.9 1.8 Foreign income taxed at different rates2.4 1.9 Tax impact of intercompany transactions(1.1)(0.7)Global intangible low-tax income ("GILTI") 0.5 0.5 Foreign-derived intangible income ("FDII")(3.4)(2.7)Other, net(0.8)(2.3)Effective income tax rates20.5 %19.5 % Results for 2023 reflected income tax benefits primarily related to global audit progression and deferred tax adjustments. As of December 31, 2025 and 2024, the Company’s gross unrecognized tax benefits totaled $414 million and $461 million, respectively. After considering the deferred tax accounting impact, it is expected that about $402 million of the total as of December 31, 2025 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 millions20252024Balance at January 1$461 $588 Decreases for positions taken in prior years(67)(133)Increases for positions taken in prior years19 131 Increases for positions related to the current year46 47 Settlements with taxing authorities(31)(172)Lapsing of statutes of limitations(14)— Balance at December 31(1)$414 $461 Balance at December 31(1) (1)Of this amount, $353 million and $421 million are included in Long-term income taxes for 2025 and 2024, respectively, and $62 million and $40 million are included in Income taxes for 2025 and 2024, respectively, on the Consolidated Balance Sheet. (1) Of this amount, $353 million and $421 million are included in Long-term income taxes for 2025 and 2024, respectively, and $62 million and $40 million are included in Income taxes for 2025 and 2024, 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 2012 and 2016 through 2021. As of December 31, 2025, the IRS examination for tax years 2011 and 2012 are awaiting final resolution with the IRS appeals team. Examination years 2016 through 2021 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. 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. During 2025, 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 benefits balance, it believes that the liabilities recorded are appropriate and adequate. McDonald's Corporation 2025 Annual Report 59 McDonald's Corporation 2025 Annual Report 59 McDonald's Corporation 2025 Annual Report 59 The Company accrued $18 million and $17 million for interest and penalties related to tax matters at December 31, 2025 and 2024, respectively. Costs recognized for interest and penalties related to tax matters in 2025, 2024 and 2023 were immaterial. These amounts are included in the provision for income taxes. As of December 31, 2025, 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 and Roth 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 $421 million and $413 million at December 31, 2025 and 2024, 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, 2025, derivatives with a fair value of $104 million indexed to the Company’s stock were included in Miscellaneous other assets and an investment totaling $247 million indexed to certain market indices were 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 Consolidated Statement of Income 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 Statement of Income. 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 Statement of Income. McDonald's Corporation 2025 Annual Report 60 McDonald's Corporation 2025 Annual Report 60 McDonald's Corporation 2025 Annual Report 60 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, 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 2024 this category reflected $221 million of pre-tax restructuring charges primarily related to Accelerating the Organization and net pre-tax charges of $70 million primarily consisting of property sale gains, transaction costs and non-cash impairment charges associated with the sale of McDonald's business in South Korea and transaction costs associated with the acquisition of McDonald's business in Israel. In 2023 this category included $290 million of pre-tax charges related to the Company's Accelerating the Arches growth strategy, including restructuring charges 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. 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 2024 this category reflected $221 million of pre-tax restructuring charges primarily related to Accelerating the Organization and net pre-tax charges of $70 million primarily consisting of property sale gains, transaction costs and non-cash impairment charges associated with the sale of McDonald's business in South Korea and transaction costs associated with the acquisition of McDonald's business in Israel. In 2023 this category included $290 million of pre-tax charges related to the Company's Accelerating the Arches growth strategy, including restructuring charges associated with Accelerating the Organization, McDonald's Corporation 2024 Annual Report 56 McDonald's Corporation 2024 Annual Report 56 McDonald's Corporation 2024 Annual Report 56 Accelerating the Organization In January 2023, the Company announced an evolution of its successful Accelerating the Arches strategy. Enhancements to the strategy included 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 $221 million of restructuring charges related to Accelerating the Organization for the year ended December 31, 2024, which brings total restructuring charges to $471 million since the initiative commenced. These restructuring charges were recorded in the Other operating (income) expense, net line within the Consolidated Statement of Income. For the current year, restructuring charges primarily consisted of professional services costs. There were no significant non-cash impairment charges included in the amounts listed in the table below. Other operating (income) expense The following table summarizes the balance of accrued expenses related to this strategic initiative (in millions): Employee Termination BenefitsCosts to Terminate ContractsProfessional Services and Other CostsTotal2023Accrued Balance at Beginning of Year$— $— $— $— Restructuring Costs Incurred96 32 122 250 Cash Payments(52)(21)(99)(172)Other Non-Cash Items(3)— (16)(19)Accrued Balance at December 31, 2023$41 $11 $7 $59 2024Accrued Balance at Beginning of Year$41 $11 $7 $59 Restructuring Costs Incurred6 1 214 221 Cash Payments(24)(8)(205)(237)Other Non-Cash Items— — (1)(1)Accrued Balance at December 31, 2024$23 $4 $15 $42 Of the $221 million of restructuring charges incurred for the year ended December 31, 2024, $218 million was recorded in the International Developmental Licensed Markets & Corporate segment, the majority of which was recorded at Corporate, $2 million was recorded in the International Operated Markets segment and $1 million was recorded in the U.S. Substantially all of the accrued restructuring balance recorded at December 31, 2024, related to the Company’s Accelerating the Organization initiative, is expected to be paid out over the next twelve months. The Company continues to evolve its ways of working by driving efficiency and effectiveness across the organization, primarily led by its GBS organization. Transformation efforts under Accelerating the Organization will continue to result in various restructuring charges as the strategy progresses through its anticipated completion during 2027. The Company currently expects to incur approximately $300 million of restructuring charges in 2025, primarily related to professional services costs. The Company continues to evolve its ways of working by driving efficiency and effectiveness across the organization, primarily led by its GBS organization. Transformation efforts under Accelerating the Organization McDonald's Corporation 2024 Annual Report 57 McDonald's Corporation 2024 Annual Report 57 McDonald's Corporation 2024 Annual Report 57 Equity Method Investments The Company has various investments accounted for using the equity method. Under the equity method of accounting, the Company records its proportionate share of the net income or loss of each equity method investee, with a corresponding change to the carrying value of the investment. The carrying value of the investment is also adjusted for any dividends received and the effect of foreign exchange. The Company records its proportionate share of net income or loss within the Other operating (income) expense, net line on the Consolidated Statement of Income. The carrying value of the investments are recorded within the Investments in and advances to affiliates line on the Consolidated Balance Sheet. The Company has elected to record dividends received from its equity method investments under the nature of distribution approach, which provides for the recording of such distributions within the cash provided by operations section of the Consolidated Statement of Cash Flows to the extent that such distributions are from the normal operating or financing activities of the investee. The Company’s primary equity method investments include partial ownership in Grand Foods Holding, an entity that operates and manages McDonald's business in mainland China, Hong Kong and Macau, and partial ownership in McDonald’s Japan Holdings Co., Ltd, an entity that operates and manages McDonald’s business in Japan. The Company has granted these entities the right to operate the McDonald's business as part of a Master Franchise Agreement. Revenue related to these agreements are accounted for in a manner consistent with the Company’s other franchise arrangements. The following table summarizes the amounts related to the Company’s primary equity method investees during the periods presented. December 31, 2024December 31, 2023In MillionsPercentage OwnershipFair Value (Level 1)Carrying AmountPercentage OwnershipFair Value (Level 1)Carrying AmountGrand Foods Holding48 %N/A$1,973 20 %N/A$238 McDonald's Japan Holdings Co., Ltd35 %$1,849 $590 35 %$2,034 $597 On January 30, 2024, the Company acquired an additional 28% ownership stake in Grand Foods Holding from the global investment firm Carlyle in exchange for $1.8 billion in cash. The acquisition increased the Company's equity ownership to 48%, but did not result in control of the entity. As such, the Company remains a minority partner and will continue to account for the investment under the equity method. As of December 31, 2024, the aggregate carrying amount of the Company's investments in these equity method investees exceeded its proportionate share of the net assets of these equity method investees by $1.5 billion. This difference is not amortized. Management has concluded that there are no indicators of impairment related to these investments. The following table summarizes the amounts recorded related to the Company's primary equity method investments during the year ended December 31, 2024 and December 31, 2023, respectively. Year Ended December 31,In Millions20242023Revenue$538 $481 Equity in Earnings113 97 Accounts Receivable157 155 Dividends Received157 14 McDonald's Corporation 2024 Annual Report 58 McDonald's Corporation 2024 Annual Report 58 McDonald's Corporation 2024 Annual Report 58 Income Taxes Income Taxes Income before provision for income taxes, classified by source of income, was as follows: In millions202420232022U.S.$3,282 $3,665 $1,846 Outside the U.S.7,062 6,857 5,980 Income before provision for income taxes $10,345 $10,522 $7,825 The provision for income taxes, classified by the timing and location of payment, was as follows: In millions202420232022U.S. federal$1,412 $1,340 $517 U.S. state269 263 246 Outside the U.S.1,014 1,137 1,230 Current tax provision2,695 2,740 1,994 U.S. federal(76)(146)(80)U.S. state(20)(30)(46)Outside the U.S.(478)(511)(220)Deferred tax (benefit) provision(574)(686)(346)Provision for income taxes$2,121 $2,053 $1,648 Net deferred tax (assets) liabilities consisted of: In millionsDecember 31, 20242023Lease right-of-use asset$3,213 $3,323 Property and equipment1,568 1,669 Intangible assets187 264 Other437 285 Total deferred tax liabilities5,405 5,541 Lease liability(3,292)(3,384)Intangible assets(3,495)(3,018)Property and equipment(469)(642)Deferred foreign tax credits(50)(82)Employee benefit plans(168)(192)Deferred revenue(113)(167)Operating loss carryforwards(195)(267)Other(170)(281)Total deferred tax assets before valuation allowance(7,951)(8,033)Valuation allowance917 1,150 Net deferred tax (assets) liabilities$(1,629)$(1,342)Balance sheet presentation:Deferred income taxes$1,914 $1,681 Other assets-miscellaneous(3,543)(3,023)Net deferred tax (assets) liabilities$(1,629)$(1,342) At December 31, 2024, the Company had net operating loss carryforwards of $819 million, of which $762 million has an indefinite carryforward. The remainder will expire at various dates from 2025 to 2041. The statutory U.S. federal income tax rate reconciles to the effective income tax rates as follows: 202420232022Statutory U.S. federal income tax rate21.0 %21.0 %21.0 %State income taxes, net of related federal income tax benefit1.9 1.8 2.0 Foreign income taxed at different rates2.4 1.9 1.1 Tax impact of intercompany transactions(1.1)(0.7)0.2 Global intangible low-tax income ("GILTI") 0.5 0.5 0.4 Foreign-derived intangible income ("FDII")(3.4)(2.7)(4.2)Nonoperating expense related to France audit settlement— — 1.4 Other, net(0.8)(2.3)(0.8)Effective income tax rates20.5 %19.5 %21.1 % McDonald's Corporation 2024 Annual Report 59 McDonald's Corporation 2024 Annual Report 59 McDonald's Corporation 2024 Annual Report 59 Results for 2023 reflected income tax benefits primarily related to global audit progression and deferred tax adjustments. 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 a tax audit in France. As of December 31, 2024 and 2023, the Company’s gross unrecognized tax benefits totaled $461 million and $588 million, respectively. After considering the deferred tax accounting impact, it is expected that about $425 million of the total as of December 31, 2024 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 millions20242023Balance at January 1$588 $647 Decreases for positions taken in prior years(133)(82)Increases for positions taken in prior years131 28 Increases for positions related to the current year47 41 Settlements with taxing authorities(172)(45)Lapsing of statutes of limitations— — Balance at December 31(1)$461 $588 Balance at December 31(1) (1)Of this amount, $421 million and $319 million are included in Long-term income taxes for 2024 and 2023, respectively, and $40 million and $269 million are included in Income taxes for 2024 and 2023, respectively, on the Consolidated Balance Sheet. (1) Of this amount, $421 million and $319 million are included in Long-term income taxes for 2024 and 2023, respectively, and $40 million and $269 million are included in Income taxes for 2024 and 2023, 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 2012 and 2016 through 2021. As of December 31, 2024, the IRS examination for tax years 2011 and 2012 are awaiting final resolution with the IRS appeals team. Examination years 2016 through 2021 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 $45 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. 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. During 2024, 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 accrued $17 million and $25 million for interest and penalties related to tax matters at December 31, 2024 and 2023, respectively. Costs recognized for interest and penalties related to tax matters in 2024 and 2023 were immaterial and $91 million in 2022. These amounts are included in the provision for income taxes. As of December 31, 2024, 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 2024 Annual Report 60 McDonald's Corporation 2024 Annual Report 60 McDonald's Corporation 2024 Annual Report 60 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 and Roth 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 $413 million and $403 million at December 31, 2024 and 2023, 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, 2024, derivatives with a fair value of $135 million indexed to the Company’s stock and an investment totaling $226 million indexed to certain market indices were 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 Consolidated Statement of Income 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 Statement of Income. 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 Statement of Income. McDonald's Corporation 2024 Annual Report 61 McDonald's Corporation 2024 Annual Report 61 McDonald's Corporation 2024 Annual Report 61 Debt Financing

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 2025, 2024 and 2023 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 202520242023Expected dividend yield2.3 %2.3 %2.3 %Expected stock price volatility21.5 %21.2 %21.6 %Risk-free interest rate4.5 %4.1 %3.9 %Expected life of options (in years)5.85.85.8Fair value per option granted$66.69 $59.82 $54.35 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 2025, 2024 and 2023, the total intrinsic value of stock options exercised was $240 million, $269 million and $304 million, respectively. Cash received from stock options exercised during 2025 was $285 million and the tax benefit realized from stock options exercised totaled $44 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, 2025, 2024 and 2023, and changes during the years then ended, is presented in the following table: 202520242023OptionsShares inmillionsWeighted-averageexercisepriceWeighted-averageremainingcontractuallife in yearsAggregateintrinsicvalue inmillionsShares inmillionsWeighted-averageexercisepriceShares inmillionsWeighted-averageexercisepriceOutstanding at beginning of year9.5 $208.72 10.5 $189.78 11.4 $172.27 Granted1.1 307.62 1.2 288.92 1.2 266.70 Exercised(1.7)163.31 (1.9)151.37 (2.0)133.76 Forfeited/expired(0.1)278.07 (0.3)262.34 (0.1)244.95 Outstanding at end of year8.8 $228.19 5.3$682 9.5 $208.72 10.5 $189.78 Exercisable at end of year6.3 $203.92 4.1$638 6.7 7.2 McDonald's Corporation 2025 Annual Report 62 McDonald's Corporation 2025 Annual Report 62 McDonald's Corporation 2025 Annual Report 62 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, 2025, 2024 and 2023 is presented in the following table: 202520242023RSUsShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueNonvested at beginning of year1.2 $275.37 1.2 $238.21 1.2 $222.32 Granted0.6 309.59 0.6 277.36 0.5 255.14 Vested(0.5)262.66 (0.6)220.87 (0.4)210.03 Forfeited(0.1)295.00 0.0 273.70 (0.1)244.58 Nonvested at end of year1.2 $295.22 1.2 $275.37 1.2 $238.21 The total fair value of RSUs vested during 2025, 2024 and 2023 was $145 million, $173 million and $127 million, respectively. The tax benefit realized from RSUs vested during 2025 was $28 million. McDonald's Corporation 2025 Annual Report 63 McDonald's Corporation 2025 Annual Report 63 McDonald's Corporation 2025 Annual Report 63 Management’s Assessment of Internal Control Over Financial ReportingThe 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, 2025. 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, 2025, 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, 2025, 2024 and 2023 and the Company’s internal control over financial reporting as of December 31, 2025. 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, 2026 McDonald's Corporation 2025 Annual Report 64 McDonald's Corporation 2025 Annual Report 64 McDonald's Corporation 2025 Annual Report 64 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of McDonald’s Corporation

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 2024, 2023 and 2022 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 202420232022Expected dividend yield2.3 %2.3 %2.2 %Expected stock price volatility21.2 %21.6 %21.3 %Risk-free interest rate4.1 %3.9 %1.9 %Expected life of options (in years)5.85.85.7Fair value per option granted$59.82 $54.35 $42.12 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 2024, 2023 and 2022, the total intrinsic value of stock options exercised was $269 million, $304 million and $242 million, respectively. Cash received from stock options exercised during 2024 was $328 million and the tax benefit realized from stock options exercised totaled $50 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, 2024, 2023 and 2022, and changes during the years then ended, is presented in the following table: 202420232022OptionsShares inmillionsWeighted-averageexercisepriceWeighted-averageremainingcontractuallife in yearsAggregateintrinsicvalue inmillionsShares inmillionsWeighted-averageexercisepriceShares inmillionsWeighted-averageexercisepriceOutstanding at beginning of year10.5 $189.78 11.4 $172.27 12.0 $156.13 Granted1.2 288.92 1.2 266.70 1.6 252.97 Exercised(1.9)151.37 (2.0)133.76 (1.9)128.08 Forfeited/expired(0.3)262.34 (0.1)244.95 (0.3)225.93 Outstanding at end of year9.5 $208.72 5.4$773 10.5 $189.78 11.4 $172.27 Exercisable at end of year6.7 $184.29 4.2$706 7.2 7.7 McDonald's Corporation 2024 Annual Report 63 McDonald's Corporation 2024 Annual Report 63 McDonald's Corporation 2024 Annual Report 63 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, 2024, 2023 and 2022 is presented in the following table: 202420232022RSUsShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueShares inmillionsWeighted-averagegrant datefair valueNonvested at beginning of year1.2 $238.21 1.2 $222.32 1.3 $197.10 Granted0.6 277.36 0.5 255.14 0.5 242.82 Vested(0.6)220.87 (0.4)210.03 (0.4)173.31 Forfeited0.0 273.70 (0.1)244.58 (0.2)205.61 Nonvested at end of year1.2 $275.37 1.2 $238.21 1.2 $222.32 The total fair value of RSUs vested during 2024, 2023 and 2022 was $173 million, $127 million and $110 million, respectively. The tax benefit realized from RSUs vested during 2024 was $34 million. McDonald's Corporation 2024 Annual Report 64 McDonald's Corporation 2024 Annual Report 64 McDonald's Corporation 2024 Annual Report 64 Management’s Assessment of Internal Control Over Financial ReportingThe 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, 2024. 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, 2024, 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, 2024, 2023 and 2022 and the Company’s internal control over financial reporting as of December 31, 2024. 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 25, 2025 McDonald's Corporation 2024 Annual Report 65 McDonald's Corporation 2024 Annual Report 65 McDonald's Corporation 2024 Annual Report 65 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of McDonald’s Corporation

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, 2025, Cash and equivalents was $774 million of which $228 million consisted of certificates of deposit. McDonald's Corporation 2025 Annual Report 50 McDonald's Corporation 2025 Annual Report 50 McDonald's Corporation 2025 Annual Report 50 Segment and Geographic Information The Company operates under the following global organizational structure, which reflects how management reviews and evaluates operating performance: •U.S. segment - the Company’s largest market. The segment is 95% franchised as of December 31, 2025. •International Operated Markets segment - comprised of markets, or countries in which the Company owns and 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, 2025. •International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s System, including equity method investments in China and Japan, as well as Corporate activities. The International Developmental Licensed Markets are 99% franchised as of December 31, 2025. The Company's chief operating decision makers ("CODMs") are the President and Chief Executive Officer ("CEO") and the Executive Vice President and Global Chief Financial Officer ("CFO"). Segment performance is evaluated based on one measure of a segment's profit or loss, operating income, which is used to allocate resources in the annual planning process. Throughout the year, the CODMs consider forecast to actual operating income results and variances against plan to evaluate segment performance and priorities related to allocation of capital and resources supporting organizational objectives. 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, deferred tax assets and office facilities. McDonald's Corporation 2025 Annual Report 51 McDonald's Corporation 2025 Annual Report 51 McDonald's Corporation 2025 Annual Report 51 In millions202520242023U.S.$10,825 $10,631 $10,568 International Operated Markets13,633 12,628 12,382 International Developmental Licensed Markets & Corporate2,427 2,661 2,543 Total Revenues$26,885 $25,920 $25,494 U.S.$1,293 $1,294 $1,286 International Operated Markets1,324 1,231 1,170 International Developmental Licensed Markets & Corporate1 11 19 Total Franchised restaurants-occupancy expenses$2,618 $2,536 $2,475 U.S.$2,755 $2,780 $2,732 International Operated Markets5,101 4,765 4,707 International Developmental Licensed Markets & Corporate413 790 785 Total Company-operated restaurant expenses$8,268 $8,334 $8,224 U.S.$653 $654 $661 International Operated Markets705 631 635 International Developmental Licensed Markets & Corporate1,682 1,573 1,521 Total Selling, general & administrative expenses$3,039 $2,858 $2,817 U.S.$316 $170 $195 International Operated Markets122 55 39 International Developmental Licensed Markets & Corporate128 254 97 Total Other segment items*$566 $480 $331 U.S.$5,808 $5,733 $5,694 International Operated Markets6,382 5,946 5,831 International Developmental Licensed Markets & Corporate203 33 121 Total Operating income$12,393 $11,712 $11,647 U.S.$23,008 $22,547 $22,477 International Operated Markets27,487 23,491 23,947 International Developmental Licensed Markets & Corporate9,020 9,143 9,723 Total Assets$59,515 $55,182 $56,147 U.S.$1,277 $1,055 $963 International Operated Markets2,048 1,661 1,340 International Developmental Licensed Markets & Corporate40 58 54 Total Capital expenditures$3,365 $2,775 $2,357 U.S.$995 $980 $969 International Operated Markets789 730 679 International Developmental Licensed Markets & Corporate415 387 330 Total Depreciation & amortization**$2,199 $2,097 $1,978 *Other segment items is the difference between revenues less the significant expenses disclosed and operating income. This includes other restaurant expenses and other operating expenses detailed in the Other operating (income) expense, net footnote on page 55 of this Form 10-K. **Total depreciation & amortization is included within the respective expense lines disclosed above, such as Company-operated restaurant expenses, Franchised restaurants-occupancy expenses, and Selling, general & administrative expenses. Total long-lived assets, primarily property and equipment and lease right-of-use asset, were (in billions)–Consolidated: 2025–$44.0; 2024–$39.6; U.S. based: 2025–$20.8; 2024–$20.2. McDonald's Corporation 2025 Annual Report 52 McDonald's Corporation 2025 Annual Report 52 McDonald's Corporation 2025 Annual Report 52 Property and Equipment Net property and equipment consisted of: In millions'December 31, 20252024Land$8,169 $7,253 Buildings and improvements on owned land 22,202 20,487 Buildings and improvements on leased land 15,506 13,417 Equipment, signs and seating2,954 2,586 Other459 434 Property and equipment, at cost 49,290 44,177 Accumulated depreciation and amortization(21,049)(18,882)Net property and equipment$28,241 $25,295 'December 31, 2025 Depreciation and amortization expense for property and equipment was $1.6 billion for the year ended December 31, 2025, and $1.5 billion for the years ended December 31, 2024 and 2023. The increase in Net property and equipment was primarily driven by higher capital expenditures as a result of the Company's Restaurant Development growth pillar under its Accelerating the Arches strategy. Depreciation and amortization expense for property and equipment was $1.6 billion for the year ended December 31, 2025, and $1.5 billion for the years ended December 31, 2024 and 2023. The increase in Net property and equipment was primarily driven by higher capital expenditures as a result of the Company's Restaurant Development growth pillar under its Accelerating the Arches 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 millions202520242023Rents$10,442 $10,017 $9,840 Royalties6,018 5,606 5,531 Initial fees88 92 66 Revenues from franchised restaurants$16,548 $15,715 $15,437 Future gross minimum rent payments due to the Company under existing conventional franchise arrangements are: In millionsOwned sitesLeased sitesTotal 2026$1,509 $1,536 $3,045 20271,465 1,478 2,943 20281,409 1,403 2,812 20291,334 1,325 2,659 20301,271 1,256 2,527 Thereafter8,855 8,610 17,465 Total minimum payments$15,843 $15,608 $31,451 At December 31, 2025, net property and equipment under franchise arrangements totaled $22.8 billion (including land of $7.1 billion) after deducting accumulated depreciation and amortization of $16.9 billion. McDonald's Corporation 2025 Annual Report 53 McDonald's Corporation 2025 Annual Report 53 McDonald's Corporation 2025 Annual Report 53 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 millions202520242023Restaurants$1,573 $1,531 $1,491 Other58 51 51 Total rent expense$1,631 $1,582 $1,542 Rent expense included variable lease payments in excess of minimum rents (in millions) as follows–Company-owned and operated restaurants: 2025–$46; 2024–$55; 2023–$56. Franchised restaurants: 2025–$285; 2024–$271; 2023–$261. These variable lease payments are primarily 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. The following table details amounts related to operating and finance leases recorded within the Company’s Consolidated Balance Sheet. December 31, 2025In millionsOperatingFinanceTotalLease right-of use asset, net$12,438 $2,168 $14,606 Current lease liability671 23 694 Long-term lease liability11,817 2,329 14,147 December 31, 2024In millionsOperatingFinanceTotalLease right-of use asset, net$11,319 $2,020 $13,339 Current lease liability625 11 636 Long-term lease liability11,118 1,770 12,888 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, 2025 and 2024: 20252024Weighted-average remaining lease term - operating leases16 years17 yearsWeighted-average remaining lease term - finance leases28 years28 yearsWeighted-average discount rate - operating leases4.2 %4.1 %Weighted-average discount rate - finance leases4.4 %4.0 % 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 $1.7 billion. Of these total payments, approximately 4% 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 $765 million and $468 million, respectively, during the year ended December 31, 2025. McDonald's Corporation 2025 Annual Report 54 McDonald's Corporation 2025 Annual Report 54 McDonald's Corporation 2025 Annual Report 54 As of December 31, 2025, maturities of lease liabilities for the Company's lease portfolio were as follows: In millionsOperatingFinanceTotal*2026$1,200 $120 $1,321 20271,166 123 1,289 20281,115 124 1,239 20291,076 125 1,201 20301,029 127 1,156 Thereafter10,977 3,443 14,420 Total lease payments$16,564 $4,062 $20,626 Less: imputed interest4,075 1,710 5,785 Present value of lease liability$12,488 $2,352 $14,840 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, 2024 is approximately $1.3 billion. The lease liability will continue to be impacted by new leases, lease modifications, lease terminations, reevaluation of lease terms, and foreign currency. Contingencies In the ordinary course of business, the Company is subject to proceedings, lawsuits and other claims primarily related to competitors, customers, employees, franchisees, government agencies, intellectual property, shareholders and suppliers. The Company is required to assess the likelihood of adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each matter. The required accrual may change in the future due to new developments in a particular matter or changes in approach such as a change in settlement strategy in dealing with these matters. The Company does not believe that any such matter currently being reviewed will have a material adverse effect on its financial condition or results of operations. Other Operating (Income) Expense, Net In millions202520242023Gains on sales of restaurant businesses$(133)$(94)$(103)Equity in earnings of unconsolidated affiliates(190)(157)(153)Asset dispositions and other (income) expense, net97 100 (7)Impairment and other charges (gains), net229 291 362 Total$2 $139 $99

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, 2024, Cash and equivalents was $1.1 billion of which $451 million consisted of certificates of deposit. McDonald's Corporation 2024 Annual Report 51 McDonald's Corporation 2024 Annual Report 51 McDonald's Corporation 2024 Annual Report 51 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, 2024. •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, 2024. •International Developmental Licensed Markets & Corporate - comprised primarily of developmental licensee and affiliate markets in the McDonald’s system, including equity method investments in China and Japan. Corporate activities are also reported in this segment. The segment is 99% franchised as of December 31, 2024. In April 2022, the Company completed the divestiture of Dynamic Yield. Prior to this date, financial performance relating to Dynamic Yield is reflected within the International Developmental Licensed Markets & Corporate segment. The Company's chief operating decision makers are the President and CEO and the Executive Vice President and Global Chief Financial Officer ("CFO"). Segment performance and resource allocation are evaluated based on one measure of a segment's profit or loss, operating income. 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. McDonald's Corporation 2024 Annual Report 52 McDonald's Corporation 2024 Annual Report 52 McDonald's Corporation 2024 Annual Report 52 In millions202420232022U.S.$10,631 $10,568 $9,588 International Operated Markets12,628 12,382 11,297 International Developmental Licensed Markets & Corporate2,661 2,543 2,297 Total Revenues$25,920 $25,494 $23,183 U.S.$1,294 $1,286 $1,244 International Operated Markets1,231 1,170 1,086 International Developmental Licensed Markets & Corporate11 19 20 Total Franchised restaurants-occupancy expenses$2,536 $2,475 $2,350 U.S.$2,780 $2,732 $2,406 International Operated Markets4,765 4,707 4,266 International Developmental Licensed Markets & Corporate790 785 709 Total Company-operated restaurant expenses$8,334 $8,224 $7,381 U.S.$654 $661 $692 International Operated Markets631 635 629 International Developmental Licensed Markets & Corporate1,573 1,521 1,541 Total Selling, general & administrative expenses$2,858 $2,817 $2,863 U.S.$170 $195 $110 International Operated Markets55 39 1,390 International Developmental Licensed Markets & Corporate254 97 (282)Total Other segment items*$480 $331 $1,218 U.S.$5,733 $5,694 $5,136 International Operated Markets5,946 5,831 3,926 International Developmental Licensed Markets & Corporate33 121 309 Total Operating income$11,712 $11,647 $9,371 U.S.$22,547 $22,477 $21,793 International Operated Markets23,491 23,947 21,979 International Developmental Licensed Markets & Corporate9,143 9,723 6,663 Total Assets$55,182 $56,147 $50,436 U.S.$1,055 $963 $860 International Operated Markets1,661 1,340 1,015 International Developmental Licensed Markets & Corporate58 54 24 Total Capital expenditures$2,775 $2,357 $1,899 U.S.$980 $969 $912 International Operated Markets730 679 641 International Developmental Licensed Markets & Corporate387 330 318 Total Depreciation & amortization**$2,097 $1,978 $1,871 *Other segment items is the difference between revenues less the significant expenses disclosed and operating income. This includes other restaurant expenses and other operating expenses detailed in the Other operating (income) expense, net footnote on page 56 of this Form 10-K. **Total depreciation & amortization is included within the respective expense lines disclosed above, such as Company-operated restaurant expenses, Franchised restaurants-occupancy expenses, and Selling, general & administrative expenses. Total long-lived assets, primarily property and equipment and the Company's Lease right-of-use asset, were (in billions)–Consolidated: 2024–$39.6; 2023–$39.5; U.S. based: 2024–$20.2; 2023–$19.9. McDonald's Corporation 2024 Annual Report 53 McDonald's Corporation 2024 Annual Report 53 McDonald's Corporation 2024 Annual Report 53 Property and Equipment Net property and equipment consisted of: In millions'December 31, 20242023Land$7,253 $7,081 Buildings and improvements on owned land 20,487 20,059 Buildings and improvements on leased land 13,417 13,322 Equipment, signs and seating2,586 2,693 Other434 414 Property and equipment, at cost 44,177 43,570 Accumulated depreciation and amortization(18,882)(18,662)Net property and equipment$25,295 $24,908 'December 31, 2024 Depreciation and amortization expense for property and equipment was $1.5 billion for the years ended December 31, 2024, 2023 and 2022. The increase in Net property and equipment was primarily driven by higher capital expenditures as a result of the Company's Restaurant Development growth pillar under its Accelerating the Arches strategy. Depreciation and amortization expense for property and equipment was $1.5 billion for the years ended December 31, 2024, 2023 and 2022. The increase in Net property and equipment was primarily driven by higher capital expenditures as a result of the Company's Restaurant Development growth pillar under its Accelerating the Arches 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 millions202420232022Rents$10,017 $9,840 $9,046 Royalties5,606 5,531 5,006 Initial fees92 66 54 Revenues from franchised restaurants$15,715 $15,437 $14,106 Future gross minimum rent payments due to the Company under existing conventional franchise arrangements are: In millionsOwned sitesLeased sitesTotal 2025$1,455 $1,425 $2,880 20261,401 1,361 2,762 20271,353 1,301 2,654 20281,298 1,236 2,534 20291,227 1,166 2,393 Thereafter8,462 7,913 16,375 Total minimum payments$15,196 $14,402 $29,598 At December 31, 2024, net property and equipment under franchise arrangements totaled $20.6 billion (including land of $6.4 billion) after deducting accumulated depreciation and amortization of $14.9 billion. McDonald's Corporation 2024 Annual Report 54 McDonald's Corporation 2024 Annual Report 54 McDonald's Corporation 2024 Annual Report 54 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 millions202420232022Restaurants$1,531 $1,491 $1,416 Other51 51 60 Total rent expense$1,582 $1,542 $1,476 Rent expense included variable lease payments in excess of minimum rents (in millions) as follows–Company-owned and operated restaurants: 2024–$55; 2023–$56; 2022–$40. Franchised restaurants: 2024–$271; 2023–$261; 2022–$209. These variable lease payments are primarily 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. The following table details amounts related to operating and finance leases recorded within the Company’s Consolidated Balance Sheet. December 31, 2024In millionsOperatingFinanceTotalLease right-of use asset, net$11,319 $2,020 $13,339 Current lease liability625 11 636 Long-term lease liability11,118 1,770 12,888 December 31, 2023In millionsOperatingFinanceTotalLease right-of use asset, net$11,724 $1,790 $13,514 Current lease liability643 45 688 Long-term lease liability11,528 1,530 13,058 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, 2024 and 2023: 20242023Weighted-average remaining lease term - operating leases17 years17 yearsWeighted-average remaining lease term - finance leases28 years28 yearsWeighted-average discount rate - operating leases4.1 %4.0 %Weighted-average discount rate - finance leases4.0 %3.6 % 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 $626 million and $297 million, respectively, during the year ended December 31, 2024. McDonald's Corporation 2024 Annual Report 55 McDonald's Corporation 2024 Annual Report 55 McDonald's Corporation 2024 Annual Report 55 As of December 31, 2024, maturities of lease liabilities for the Company's lease portfolio were as follows: In millionsOperatingFinanceTotal*2025$1,087 $91 $1,178 20261,042 93 1,135 20271,013 94 1,107 2028972 95 1,067 2029939 96 1,035 Thereafter10,897 2,543 13,440 Total lease payments$15,950 $3,012 $18,962 Less: imputed interest4,206 1,232 5,438 Present value of lease liability$11,744 $1,780 $13,524 Present value of lease liability * Total lease payments include option periods that are reasonably certain of being exercised. The decrease in the present value of the lease liability since December 31, 2023 is approximately $222 million. The lease liability will continue to be impacted by new leases, lease modifications, lease terminations, reevaluation of lease terms, and foreign currency. Contingencies In the ordinary course of business, the Company is subject to proceedings, lawsuits and other claims primarily related to competitors, customers, employees, franchisees, government agencies, intellectual property, shareholders and suppliers. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each matter. The required accrual may change in the future due to new developments in a particular matter or changes in approach such as a change in settlement strategy in dealing with these matters. The Company does not believe that any such matter currently being reviewed will have a material adverse effect on its financial condition or results of operations. Other Operating (Income) Expense, Net In millions202420232022Gains on sales of restaurant businesses$(94)$(103)$(60)Equity in earnings of unconsolidated affiliates(157)(153)(113)Asset dispositions and other (income) expense, net100 (7)137 Impairment and other charges (gains), net291 362 1,010 Total$139 $99 $974

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 dates2025202420252024Fixed4.4 %4.2 %$23,233 $24,134 Floating5.1 5.7 1,298 1,290 Total U.S. Dollar2027-205324,531 25,424 Fixed2.6 2.5 11,486 8,875 Floating— 5.3 — 311 Total Euro2026-203511,486 9,186 Fixed3.7 3.7 400 371 Floating— — — Total Australian Dollar2026-2029400 371 Total British Pounds Sterling - Fixed2032-20544.1 4.1 1,679 1,559 Total Canadian Dollar - Fixed2031-20324.5 4.0 1,275 1,390 Total Japanese Yen - Fixed20302.9 2.9 80 79 Fixed1.2 1.2 694 605 Floating— 0.7 2 Total other currencies(2)2028-2032694 607 Debt obligations before fair value adjustments and deferred debt costs(3)40,145 38,616 Fair value adjustments(4)(15)(40)Deferred debt costs(157)(152)Total debt obligations$39,973 $38,424 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. (3)Aggregate maturities for 2025 debt balances, before fair value adjustments and deferred debt costs, are as follows (in millions): 2026–$0; 2027–$3,201; 2028–$5,166; 2029–$3,637; 2030–$3,011; Thereafter-$25,130. These amounts include a reclassification of short-term obligations totaling $1.5 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 2025 Annual Report 61 McDonald's Corporation 2025 Annual Report 61 McDonald's Corporation 2025 Annual Report 61 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 27.8 million at December 31, 2025, including 17.8 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 data202520242023Share-based compensation expense$165 $172 $175 After tax$146 $136 $155 Earnings per common share-diluted$0.21 $0.19 $0.21 As of December 31, 2025, there was $198 million of total unrecognized compensation cost related to nonvested share-based compensation that is expected to be recognized over a weighted-average period of 1.5 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 dates2024202320242023Fixed4.2 %4.2 %$24,134 $23,383 Floating5.7 6.9 1,290 1,097 Total U.S. Dollar2025-205325,424 24,480 Fixed2.5 2.4 8,875 10,781 Floating5.3 6.6 311 331 Total Euro2025-20359,186 11,112 Fixed3.7 3.4 371 749 Floating— 5.5 — 204 Total Australian Dollar2026-2029371 953 Total British Pounds Sterling - Fixed2032-20544.1 4.1 1,559 1,585 Total Canadian Dollar - Fixed2025-20314.0 3.1 1,390 755 Total Japanese Yen - Fixed20302.9 2.9 79 89 Fixed1.2 0.2 605 475 Floating0.7 4.9 2 118 Total other currencies(2)2025-2032607 593 Debt obligations before fair value adjustments and deferred debt costs(3)38,616 39,567 Fair value adjustments(4)(40)(62)Deferred debt costs(152)(160)Total debt obligations$38,424 $39,345 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 Polish Zloty. (3)Aggregate maturities for 2024 debt balances, before fair value adjustments and deferred debt costs, are as follows (in millions): 2025–$0; 2026–$2,392; 2027–$3,036; 2028–$7,221; 2029–$3,394; Thereafter-$22,573. These amounts include a reclassification of short-term obligations totaling $3.8 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 2024 Annual Report 62 McDonald's Corporation 2024 Annual Report 62 McDonald's Corporation 2024 Annual Report 62 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 29.7 million at December 31, 2024, including 19.1 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 data202420232022Share-based compensation expense$172 $175 $167 After tax$136 $155 $146 Earnings per common share-diluted$0.19 $0.21 $0.20 As of December 31, 2024, there was $187 million of total unrecognized compensation cost related to nonvested share-based compensation that is expected to be recognized over a weighted-average period of 1.4 years.

We are increasingly reliant upon technology systems, such as point-of-sale, that support our business operations, including our digital and delivery solutions, and technologies that facilitate communication and collaboration with affiliated entities, customers, employees, franchisees, suppliers, service providers or other independent third parties, whether developed and maintained by us or provided by third parties. Any failure or interruption of these systems could significantly impact our or our franchisees’ operations, or our customers’ experiences and perceptions. Security incidents and breaches have occurred from time to time and may occur in the future involving our systems, the systems of the parties with whom we communicate or collaborate (including franchisees) or the systems of third-party providers. Additionally, cybersecurity threats continue to become more sophisticated, including AI-enabled attacks and deepfake technology. Incidents may include unauthorized access, phishing attacks, account takeovers, denial of service, computer viruses, deepfakes and other malicious uses of artificial intelligence, introduction of malware or ransomware, other disruptive problems caused by hackers or unintentional events. Certain of these technology systems contain personal, confidential, financial and other information of our customers, employees, franchisees and their employees, suppliers and other third parties, as well as financial, proprietary and other confidential information related to our business. Despite response procedures and measures in place in the event an incident occurs, an event could result in disruptions, shutdowns, or a security breach including the theft or unauthorized disclosure of certain of the above-described information. The actual or alleged occurrence of any of these types of incidents could result in mitigation costs, reputational damage, adverse publicity, loss of consumer confidence, reduced sales and profits, complications in executing our growth initiatives and regulatory and legal risk, including administrative fines, criminal or civil penalties or civil liabilities. McDonald's Corporation 2025 Annual Report 30 McDonald's Corporation 2025 Annual Report 30 McDonald's Corporation 2025 Annual Report 30 Despite the implementation of business continuity measures, any of these technology systems could become vulnerable to damage, disability or failures due to fire, power loss, telecommunications failure or other catastrophic events. Certain technology systems may also become vulnerable, unreliable or inefficient in cases where technology vendors limit or terminate product support and/or maintenance. Our increasing reliance on third-party systems also subjects us to risks faced by those third-party businesses, including operational, security and credit risks. Further, the technology systems of third parties upon which we rely to conduct our business could be compromised in a manner that adversely affects us and our technology systems, information and business continuity. If technology systems were to fail or otherwise be unavailable, or if business continuity or disaster recovery plans were not effective, and we were unable to recover in a timely manner, we could experience an interruption in our or our franchisees’ operations. While we maintain insurance coverage designed to address certain aspects of cybersecurity risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise. In addition, the AI tools we are incorporating into certain aspects of our business may not generate the intended efficiencies, may increase our exposure to risks (both known and unknown), and could adversely impact our business results. These risks include potential operational disruptions, data integrity issues, and unintended consequences from algorithmic decision-making. Further, emerging global and U.S. regulations governing AI use – including requirements for responsible use, transparency, bias mitigation, accountability, and explainability – may impose significant compliance obligations and increase reputational risk. Failure to comply with these standards or to effectively manage associated risks, including ethical considerations such as fairness, non-discrimination, and responsible deployment, could result in regulatory penalties, litigation, operational setbacks, or adverse brand perceptions.

We are increasingly reliant upon technology systems, such as point-of-sale, that support our business operations, including our digital and delivery solutions, and technologies that facilitate communication and collaboration with affiliated entities, customers, employees, franchisees, suppliers, service providers or other independent third parties to conduct our business, whether developed and maintained by us or provided by third parties. Any failure or interruption of these systems could significantly impact our or our franchisees’ operations, or our customers’ experiences and perceptions. In addition, the artificial intelligence tools we are incorporating into certain aspects of our business may not generate the intended efficiencies and may impact our business results. Security incidents and breaches have from time to time occurred and may in the future occur involving our systems, the systems of the parties with whom we communicate or collaborate (including franchisees) or the systems of third-party providers. These may include such things as unauthorized access, phishing attacks, account takeovers, denial of service, computer viruses, deepfakes and other malicious uses of artificial intelligence, introduction of malware or ransomware, other disruptive problems caused by hackers or unintentional events. Certain of these technology systems contain personal, confidential, financial and other information of our customers, employees, franchisees and their employees, suppliers and other third parties, as well as financial, proprietary and other confidential information related to our business. Despite response procedures and measures in place in the event an incident occurs, it could result in disruptions, shutdowns, or a security breach including the theft or unauthorized disclosure of certain of the above-described information. The actual or alleged occurrence of any of these types of incidents could result in mitigation costs, reputational damage, adverse publicity, loss of consumer confidence, reduced sales and profits, complications in executing our growth initiatives and regulatory and legal risk, including administrative fines, criminal or civil penalties or civil liabilities. Despite the implementation of business continuity measures, any of these technology systems could become vulnerable to damage, disability or failures due to fire, power loss, telecommunications failure or other catastrophic events. Certain technology systems may also become vulnerable, unreliable or inefficient in cases where technology vendors limit or terminate product support and/or maintenance. Our increasing reliance on third-party systems also subjects us to risks faced by those third-party businesses, including operational, security and credit risks. Further, the technology systems of third parties upon which we rely to conduct our business could be compromised in a manner that adversely affects us and our technology systems, information and business continuity. If technology systems were to fail or otherwise be unavailable, or if business continuity or disaster recovery plans were not effective, and we were unable to recover in a timely manner, we could experience an interruption in our or our franchisees’ operations. While we maintain insurance coverage designed to address certain aspects of cybersecurity risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise.

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, 2025 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, 2025, the Company was required to post $79 million of collateral due to the negative fair value of certain derivative positions. McDonald's Corporation 2025 Annual Report 49 McDonald's Corporation 2025 Annual Report 49 McDonald's Corporation 2025 Annual Report 49

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, 2024 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, 2024, the Company was required to post $21 million of collateral due to the negative fair value of certain derivative positions.

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, 2025, the Company had derivatives outstanding with an equivalent notional amount of $2.0 billion that hedged a portion of forecasted foreign currency denominated cash flows. Based on market conditions at December 31, 2025, the $13 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 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, 2024, the Company had derivatives outstanding with an equivalent notional amount of $2.0 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, 2024, the Company had derivatives outstanding with a notional amount of $500 million that hedge a portion of forecasted cash flows. Based on market conditions at December 31, 2024, the $119 million in cumulative cash flow hedging gains, after tax, is not expected to have a significant effect on earnings over the next 12 months. McDonald's Corporation 2024 Annual Report 50 McDonald's Corporation 2024 Annual Report 50 McDonald's Corporation 2024 Annual Report 50

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 maintains a website at www.mcd.com, with a specific page dedicated to investor relations (ir.mcd.com), which the Company uses as a channel for disclosing key information to its investors. Some of the information posted to our website may be material and previously non-public information. Copies of the Company's 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 are available on the investor relations page, free of charge, 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, and 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, 202539Consolidated statement of comprehensive income for each of the three years in the period ended December 31, 202540Consolidated balance sheet at December 31, 2025 and 202441Consolidated statement of cash flows for each of the three years in the period ended December 31, 202542Consolidated statement of shareholders’ equity for each of the three years in the period ended December 31, 202543Notes to Consolidated Financial Statements44Management’s assessment of internal control over financial reporting64Report of independent registered public accounting firm-PCAOB ID:4265Report of independent registered public accounting firm on internal control over financial reporting67 Financial Statements and Supplementary Data 39 40 41 42 43 44 64 Report of independent registered public accounting firm-PCAOB ID:42 65 67 McDonald's Corporation 2025 Annual Report 38 McDonald's Corporation 2025 Annual Report 38 McDonald's Corporation 2025 Annual Report 38 Consolidated Statement of Income In millions, except per share dataYears ended December 31, 202520242023REVENUESRevenues from franchised restaurants$16,548 $15,715 $15,437 Sales by Company-owned and operated restaurants9,690 9,782 9,742 Other revenues647 423 316 Total revenues26,885 25,920 25,494 OPERATING COSTS AND EXPENSESFranchised restaurants-occupancy expenses2,618 2,536 2,475 Company-owned and operated restaurant expensesFood & paper3,006 2,995 3,039 Payroll & employee benefits2,905 2,959 2,886 Occupancy & other operating expenses2,358 2,381 2,299 Other restaurant expenses564 339 232 Selling, general & administrative expensesDepreciation and amortization457 447 382 Other2,583 2,412 2,435 Other operating (income) expense, net2 139 99 Total operating costs and expenses14,492 14,208 13,847 Operating income12,393 11,712 11,647 Interest expense-net of capitalized interest of $29, $22 and $141,582 1,506 1,361 Nonoperating (income) expense, net(87)(139)(236)Income before provision for income taxes10,897 10,345 10,522 Provision for income taxes2,334 2,121 2,053 Net income$8,563 $8,223 $8,469 Earnings per common share–basic$12.00 $11.45 $11.63 Earnings per common share–diluted$11.95 $11.39 $11.56 Dividends declared per common share$7.17 $6.78 $6.23 Weighted-average shares outstanding–basic713.4 718.3 727.9 Weighted-average shares outstanding–diluted716.4 721.9 732.3 Years ended December 31, 2025 Interest expense-net of capitalized interest of $29, $22 and $14 See Notes to Consolidated Financial Statements. McDonald's Corporation 2025 Annual Report 39 McDonald's Corporation 2025 Annual Report 39 McDonald's Corporation 2025 Annual Report 39 Consolidated Statement of Comprehensive IncomeIn millions202520242023Net income$8,563 $8,223 $8,469 Other comprehensive income (loss), net of taxForeign currency translation adjustments:Gain (loss) recognized in accumulated other comprehensiveincome (AOCI), including net investment hedges289 (231)136 Reclassification of (gain) loss to net income(5)35 — Foreign currency translation adjustments-net of taxbenefit (expense) of $412, $(241), and $94284 (196)136 Cash flow hedges:Gain (loss) recognized in AOCI(135)125 (20)Reclassification of (gain) loss to net income29 — (17)Cash flow hedges-net of tax benefit (expense) of $32, $(39), and $10(106)125 (37)Defined benefit pension plans:Gain (loss) recognized in AOCI(38)(15)(69)Reclassification of (gain) loss to net income(1)(10)— Defined benefit pension plans-net of tax benefit (expense)of $(1), $1, and $22(39)(25)(69)Total other comprehensive income (loss), net of tax139 (96)30 Comprehensive income$8,702 $8,127 $8,499 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, and 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, 202440Consolidated statement of comprehensive income for each of the three years in the period ended December 31, 202441Consolidated balance sheet at December 31, 2024 and 202342Consolidated statement of cash flows for each of the three years in the period ended December 31, 202443Consolidated statement of shareholders’ equity for each of the three years in the period ended December 31, 202444Notes to consolidated financial statements45Management’s assessment of internal control over financial reporting65Report of independent registered public accounting firm-PCAOB ID:4266Report of independent registered public accounting firm on internal control over financial reporting68 Financial Statements and Supplementary Data 40 41 42 43 44 45 65 Report of independent registered public accounting firm-PCAOB ID:42 66 68 McDonald's Corporation 2024 Annual Report 39 McDonald's Corporation 2024 Annual Report 39 McDonald's Corporation 2024 Annual Report 39 Consolidated Statement of Income In millions, except per share dataYears ended December 31, 202420232022REVENUESRevenues from franchised restaurants$15,715 $15,437 $14,106 Sales by Company-owned and operated restaurants9,782 9,742 8,748 Other revenues423 316 328 Total revenues25,920 25,494 23,183 OPERATING COSTS AND EXPENSESFranchised restaurants-occupancy expenses2,536 2,475 2,350 Company-owned and operated restaurant expensesFood & paper2,995 3,039 2,737 Payroll & employee benefits2,959 2,886 2,617 Occupancy & other operating expenses2,381 2,299 2,026 Other restaurant expenses339 232 245 Selling, general & administrative expensesDepreciation and amortization447 382 370 Other2,412 2,435 2,492 Other operating (income) expense, net139 99 974 Total operating costs and expenses14,208 13,847 13,812 Operating income11,712 11,647 9,371 Interest expense-net of capitalized interest of $22, $14 and $91,506 1,361 1,207 Nonoperating (income) expense, net(139)(236)339 Income before provision for income taxes10,345 10,522 7,825 Provision for income taxes2,121 2,053 1,648 Net income$8,223 $8,469 $6,177 Earnings per common share–basic$11.45 $11.63 $8.39 Earnings per common share–diluted$11.39 $11.56 $8.33 Dividends declared per common share$6.78 $6.23 $5.66 Weighted-average shares outstanding–basic718.3 727.9 736.5 Weighted-average shares outstanding–diluted721.9 732.3 741.3 Years ended December 31, 2024 Interest expense-net of capitalized interest of $22, $14 and $9 See Notes to consolidated financial statements. McDonald's Corporation 2024 Annual Report 40 McDonald's Corporation 2024 Annual Report 40 McDonald's Corporation 2024 Annual Report 40 Consolidated Statement of Comprehensive IncomeIn millionsYears ended December 31, 202420232022Net income$8,223 $8,469 $6,177 Other comprehensive income (loss), net of taxForeign currency translation adjustments:Gain (loss) recognized in accumulated other comprehensiveincome (AOCI), including net investment hedges(231)136 (354)Reclassification of (gain) loss to net income35 — 504 Foreign currency translation adjustments-net of taxbenefit (expense) of $(241), $94, and $(208)(196)136 150 Cash flow hedges:Gain (loss) recognized in AOCI125 (20)161 Reclassification of (gain) loss to net income— (17)(105)Cash flow hedges-net of tax benefit (expense) of $(39), $10, and $(16)125 (37)56 Defined benefit pension plans:Gain (loss) recognized in AOCI(15)(69)(119)Reclassification of (gain) loss to net income(10)— — Defined benefit pension plans-net of tax benefit (expense)of $1, $22, and $43(25)(69)(119)Total other comprehensive income (loss), net of tax(96)30 87 Comprehensive income$8,127 $8,499 $6,264 Years ended December 31, 2024 Gain (loss) recognized in accumulated other comprehensive income (AOCI), including net investment hedges

By/s/ Ian F. BordenBy/s/ Margaret H. GeorgiadisIan F. BordenMargaret H. GeorgiadisExecutive Vice President and Global Chief Financial OfficerDirector(Principal Financial Officer)By/s/ Anthony G. CapuanoBy/s/ Michael D. HsuAnthony G. CapuanoMichael D. HsuDirectorDirectorBy/s/ Kareem DanielBy/s/ Christopher J. KempczinskiKareem DanielChristopher J. KempczinskiDirectorChairman of the Board of Directors, President, andChief Executive Officer(Principal Executive Officer)By/s/ Lloyd H. DeanBy/s/ Jennifer L. TaubertLloyd H. DeanJennifer L. TaubertDirectorDirectorBy/s/ Lauren B. EltingBy/s/ Paul S. WalshLauren B. EltingPaul S. WalshVice President - Chief Accounting Officer andDirectorCorporate Controller(Principal Accounting Officer)By/s/ Catherine M. EngelbertBy/s/ Amy E. WeaverCatherine M. EngelbertAmy E. WeaverDirectorDirectorBy/s/ James D. Farley, Jr.By/s/ Miles D. WhiteJames D. Farley, Jr.Miles D. WhiteDirectorDirector McDonald's Corporation 2025 Annual Report 73 McDonald's Corporation 2025 Annual Report 73 McDonald's Corporation 2025 Annual Report 73

By/s/ Ian F. BordenBy/s/ Michael D. HsuIan F. BordenMichael D. HsuExecutive Vice President and Global Chief Financial OfficerDirector(Principal Financial Officer)By/s/ Anthony G. CapuanoBy/s/ Christopher J. KempczinskiAnthony G. CapuanoChristopher J. KempczinskiDirectorChairman of the Board of Directors, President, andChief Executive Officer(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/ Lauren EltingBy/s/ Paul S. WalshLauren EltingPaul S. WalshVice President - Chief Accounting Officer andDirectorCorporate Controller(Principal Accounting Officer)By/s/ Catherine M. EngelbertBy/s/ Amy E. WeaverCatherine M. EngelbertAmy E. WeaverDirectorDirectorBy/s/ Margaret H. GeorgiadisBy/s/ Miles D. WhiteMargaret H. GeorgiadisMiles D. WhiteDirectorDirector McDonald's Corporation 2024 Annual Report 73 McDonald's Corporation 2024 Annual Report 73 McDonald's Corporation 2024 Annual Report 73

See Notes to Consolidated Financial Statements. McDonald's Corporation 2025 Annual Report 40 McDonald's Corporation 2025 Annual Report 40 McDonald's Corporation 2025 Annual Report 40 Consolidated Balance Sheet In millions, except per share dataDecember 31, 20252024ASSETSCurrent assetsCash and equivalents$774 $1,085 Accounts and notes receivable2,466 2,383 Inventories, at cost, not in excess of market61 56 Prepaid expenses and other current assets863 1,074 Total current assets4,163 4,599 Other assetsInvestments in and advances to affiliates2,820 2,710 Goodwill3,354 3,145 Miscellaneous6,331 6,095 Total other assets12,505 11,950 Lease right-of-use asset, net14,606 13,339 Property and equipmentProperty and equipment, at cost49,290 44,177 Accumulated depreciation and amortization(21,049)(18,882)Net property and equipment28,241 25,295 Total assets$59,515 $55,182 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)Current liabilitiesAccounts payable$1,149 $1,029 Lease liability694 636 Income taxes250 361 Other taxes247 224 Accrued interest533 482 Accrued payroll and other liabilities1,488 1,129 Total current liabilities4,361 3,861 Long-term debt39,973 38,424 Long-term lease liability14,147 12,888 Long-term income taxes139 344 Deferred revenues - initial franchise fees945 778 Other long-term liabilities704 771 Deferred income taxes1,038 1,914 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 shares17 17 Additional paid-in capital9,641 9,281 Retained earnings70,282 66,834 Accumulated other comprehensive income (loss)(2,414)(2,553)Common stock in treasury, at cost; 950.0 and 945.4 million shares(79,316)(77,375)Total shareholders’ equity (deficit)(1,791)(3,797)Total liabilities and shareholders’ equity (deficit)$59,515 $55,182 December 31, 2025 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; 950.0 and 945.4 million shares See Notes to Consolidated Financial Statements. McDonald's Corporation 2025 Annual Report 41 McDonald's Corporation 2025 Annual Report 41 McDonald's Corporation 2025 Annual Report 41 Consolidated Statement of Cash Flows In millionsYears ended December 31, 202520242023Operating activitiesNet income$8,563 $8,223 $8,469 Adjustments to reconcile to cash provided by operationsCharges and credits:Depreciation and amortization 2,199 2,097 1,978 Deferred income taxes(126)(574)(686)Share-based compensation165 172 175 Net (gain) loss on sale of restaurant and other businesses(149)(37)(103)Other(207)3 (113)Changes in working capital items:Accounts receivable231 10 (161)Inventories, prepaid expenses and other current assets(140)71 17 Accounts payable100 (10)50 Income taxes(239)(292)(220)Other accrued liabilities154 (217)206 Cash provided by operations10,551 9,447 9,612 Investing activitiesCapital expenditures(3,365)(2,775)(2,357)Purchases of restaurant businesses(354)(669)(441)Purchases of equity method investments— (1,837)— Sales of restaurant and other businesses346 311 195 Sales of property130 122 95 Other(579)(498)(676)Cash used for investing activities(3,822)(5,346)(3,185)Financing activitiesNet short-term borrowings6 326 213 Long-term financing issuances4,724 2,380 5,221 Long-term financing repayments(4,802)(2,777)(2,441)Treasury stock purchases(2,056)(2,824)(3,054)Common stock dividends(5,115)(4,870)(4,533)Proceeds from stock option exercises285 328 260 Other(167)(56)(40)Cash used for financing activities(7,125)(7,495)(4,374)Effect of exchange rates on cash and equivalents86 (101)(58)Cash and equivalents increase (decrease)(311)(3,494)1,996 Cash and equivalents at beginning of year1,085 4,579 2,584 Cash and equivalents at end of year$774 $1,085 $4,579 Supplemental cash flow disclosuresInterest paid$1,555 $1,523 $1,287 Years ended December 31, 2025 See Notes to Consolidated Financial Statements. McDonald's Corporation 2025 Annual Report 42 McDonald's Corporation 2025 Annual Report 42 McDonald's Corporation 2025 Annual Report 42 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, 20221,660.6 $17 $8,547 $59,544 $(298)$31 $(2,219)(929.3)$(71,624)$(6,003)Net income8,469 8,469 Other comprehensive income (loss), net of tax(69)(37)136 30 Comprehensive income8,499 Common stock cash dividends ($6.23 per share)(4,533)(4,533)Treasury stock purchases(11.1)(3,105)(3,105)Share-based compensation175 175 Stock option exercises and other171 2.5 89 260 Balance at December 31, 20231,660.6 17 8,893 63,480 (367)(6)(2,083)(937.9)(74,640)(4,707)Net income 8,223 8,223 Other comprehensive income (loss),net of tax (25)125 (196) (96)Comprehensive income 8,127 Common stock cash dividends ($6.78 per share) (4,870) (4,870)Treasury stock purchases (10.1)(2,826)(2,826)Share-based compensation 172 172 Stock option exercises and other 216 2.5 91 307 Balance at December 31, 20241,660.6 17 9,281 66,834 (393)119 (2,279)(945.4)(77,375)(3,797)Net income 8,563 8,563 Other comprehensive income (loss),net of tax (39)(106)284 139 Comprehensive income 8,702 Common stock cash dividends ($7.17 per share) (5,115) (5,115)Treasury stock purchases (6.7)(2,016)(2,016)Share-based compensation 165 165 Stock option exercises and other 195 2.1 75 270 Balance at December 31, 20251,660.6 $17 $9,641 $70,282 $(432)$13 $(1,995)(950.0)$(79,316)$(1,791) Comprehensive income Common stock cash dividends ($6.23 per share) Other comprehensive income (loss), net of tax Comprehensive income Common stock cash dividends ($6.78 per share) Other comprehensive income (loss), net of tax Comprehensive income Common stock cash dividends ($7.17 per share) See Notes to Consolidated Financial Statements. McDonald's Corporation 2025 Annual Report 43 McDonald's Corporation 2025 Annual Report 43 McDonald's Corporation 2025 Annual Report 43 Notes to Consolidated Financial Statements Summary of Significant Accounting Policies

See Notes to consolidated financial statements. McDonald's Corporation 2024 Annual Report 41 McDonald's Corporation 2024 Annual Report 41 McDonald's Corporation 2024 Annual Report 41 Consolidated Balance Sheet In millions, except per share dataDecember 31, 20242023ASSETSCurrent assetsCash and equivalents$1,085 $4,579 Accounts and notes receivable2,383 2,488 Inventories, at cost, not in excess of market56 53 Prepaid expenses and other current assets1,074 866 Total current assets4,599 7,986 Other assetsInvestments in and advances to affiliates2,710 1,080 Goodwill3,145 3,040 Miscellaneous6,095 5,618 Total other assets11,950 9,738 Lease right-of-use asset, net13,339 13,514 Property and equipmentProperty and equipment, at cost44,177 43,570 Accumulated depreciation and amortization(18,882)(18,662)Net property and equipment25,295 24,908 Total assets$55,182 $56,147 LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)Current liabilitiesShort-term borrowings and current maturities of long-term debt$— $2,192 Accounts payable1,029 1,103 Lease liability636 688 Income taxes361 705 Other taxes224 268 Accrued interest482 469 Accrued payroll and other liabilities1,129 1,434 Total current liabilities3,861 6,859 Long-term debt38,424 37,153 Long-term lease liability12,888 13,058 Long-term income taxes344 363 Deferred revenues - initial franchise fees778 790 Other long-term liabilities771 950 Deferred income taxes1,914 1,681 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 shares17 17 Additional paid-in capital9,281 8,893 Retained earnings66,834 63,480 Accumulated other comprehensive income (loss)(2,553)(2,456)Common stock in treasury, at cost; 945.4 and 937.9 million shares(77,375)(74,640)Total shareholders’ equity (deficit)(3,797)(4,707)Total liabilities and shareholders’ equity (deficit)$55,182 $56,147 December 31, 2024 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; 945.4 and 937.9 million shares See Notes to consolidated financial statements. McDonald's Corporation 2024 Annual Report 42 McDonald's Corporation 2024 Annual Report 42 McDonald's Corporation 2024 Annual Report 42 Consolidated Statement of Cash Flows In millionsYears ended December 31, 202420232022Operating activitiesNet income$8,223 $8,469 $6,177 Adjustments to reconcile to cash provided by operationsCharges and credits:Depreciation and amortization 2,097 1,978 1,871 Deferred income taxes(574)(686)(346)Share-based compensation172 175 167 Net (gain) loss on sale of restaurant and other businesses(37)(103)733 Other3 (113)(570)Changes in working capital items:Accounts receivable10 (161)(264)Inventories, prepaid expenses and other current assets71 17 6 Accounts payable(10)50 31 Income taxes(292)(220)(547)Other accrued liabilities(217)206 129 Cash provided by operations9,447 9,612 7,387 Investing activitiesCapital expenditures(2,775)(2,357)(1,899)Purchases of restaurant businesses(669)(441)(807)Purchases of equity method investments(1,837)— — Sales of restaurant and other businesses311 195 446 Sales of property122 95 39 Other(498)(676)(457)Cash used for investing activities(5,346)(3,185)(2,678)Financing activitiesNet short-term borrowings326 213 26 Long-term financing issuances2,380 5,221 3,374 Long-term financing repayments(2,777)(2,441)(2,202)Treasury stock purchases(2,824)(3,054)(3,896)Common stock dividends(4,870)(4,533)(4,168)Proceeds from stock option exercises328 260 248 Other(56)(40)38 Cash used for financing activities(7,495)(4,374)(6,580)Effect of exchange rates on cash and equivalents(101)(58)(254)Cash and equivalents increase (decrease)(3,494)1,996 (2,126)Cash and equivalents at beginning of year4,579 2,584 4,709 Cash and equivalents at end of year$1,085 $4,579 $2,584 Supplemental cash flow disclosuresInterest paid$1,523 $1,287 $1,184 Income taxes paid2,974 2,993 3,024 Years ended December 31, 2024 See Notes to consolidated financial statements. McDonald's Corporation 2024 Annual Report 43 McDonald's Corporation 2024 Annual Report 43 McDonald's Corporation 2024 Annual Report 43 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, 20211,660.6 $17 $8,232 $57,535 $(180)$(25)$(2,369)(915.8)$(67,810)$(4,601)Net income6,177 6,177 Other comprehensive income (loss), net of tax(119)56 150 87 Comprehensive income6,264 Common stock cash dividends ($5.66 per share)(4,168)(4,168)Treasury stock purchases(15.8)(3,896)(3,896)Share-based compensation167 167 Stock option exercises and other149 2.3 82 231 Balance at December 31, 20221,660.6 17 8,547 59,544 (298)31 (2,219)(929.3)(71,624)(6,003)Net income 8,469 8,469 Other comprehensive income (loss),net of tax (69)(37)136 30 Comprehensive income 8,499 Common stock cash dividends ($6.23 per share) (4,533) (4,533)Treasury stock purchases (11.1)(3,105)(3,105)Share-based compensation 175 175 Stock option exercises and other 171 2.5 89 260 Balance at December 31, 20231,660.6 17 8,893 63,480 (367)(6)(2,083)(937.9)(74,640)(4,707)Net income 8,223 8,223 Other comprehensive income (loss),net of tax (25)125 (196) (96)Comprehensive income 8,127 Common stock cash dividends ($6.78 per share) (4,870) (4,870)Treasury stock purchases (10.1)(2,826)(2,826)Share-based compensation 172 172 Stock option exercises and other 216 2.5 91 307 Balance at December 31, 20241,660.6 $17 $9,281 $66,834 $(393)$119 $(2,279)(945.4)$(77,375)$(3,797) 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) Other comprehensive income (loss), net of tax Comprehensive income Common stock cash dividends ($6.78 per share) See Notes to consolidated financial statements. McDonald's Corporation 2024 Annual Report 44 McDonald's Corporation 2024 Annual Report 44 McDonald's Corporation 2024 Annual Report 44 Notes to Consolidated Financial Statements Summary of Significant Accounting Policies

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. Investments in affiliates owned 50% or less (primarily McDonald’s China and Japan) are accounted for by the equity method. On an ongoing basis, the Company evaluates its business relationships such as those with franchisees, joint venture partners, developmental licensees, suppliers and advertising cooperatives to identify potential variable interest entities. Generally, these businesses qualify for a scope exception under the variable interest entity consolidation guidance. The Company has concluded that consolidation of such entities is not appropriate for the periods presented. Certain columns and rows within the financial statements and tables presented may not add due to rounding. Percentages have been calculated from the underlying whole-dollar amounts for all periods presented.

The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in affiliates owned 50% or less (primarily McDonald’s China and Japan) are accounted for by the equity method. On an ongoing basis, the Company evaluates its business relationships such as those with franchisees, joint venture partners, developmental licensees, suppliers and advertising cooperatives to identify potential variable interest entities. Generally, these businesses qualify for a scope exception under the variable interest entity consolidation guidance. The Company has concluded that consolidation of such entities is not appropriate for the periods presented. In the first quarter of 2024, the Company changed its rounding presentation to the nearest whole number in millions of reported amounts, except per share data or as otherwise designated. The change in rounding presentation has been applied to all prior year amounts presented. In certain circumstances, this change adjusted previously reported balances, however, these changes were not significant, and no other changes were made to previously reported financial information. Additionally, certain columns and rows within the financial statements and tables presented may not add due to rounding. Percentages have been calculated from the underlying whole-dollar amounts for all periods presented.

The Company franchises and operates McDonald’s restaurants in the global restaurant industry. All restaurants are either owned and operated 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 31,202520242023Conventional franchised22,570 22,077 21,818 Developmental licensed9,675 9,247 8,684 Foreign affiliated11,072 10,108 9,178 Total Franchised43,317 41,432 39,680 Company-owned and operated2,039 2,045 2,142 Total Systemwide restaurants45,356 43,477 41,822 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 accompanying Consolidated Financial Statements.

The Company franchises and operates McDonald’s restaurants in the global restaurant industry. All restaurants are either owned and operated 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 31,202420232022Conventional franchised22,077 21,818 21,720 Developmental licensed9,247 8,684 8,229 Foreign affiliated10,108 9,178 8,220 Total Franchised41,432 39,680 38,169 Company-owned and operated2,045 2,142 2,106 Total Systemwide restaurants43,477 41,822 40,275 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 accompanying consolidated financial statements.

Disaggregation - Income Statement Expenses In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). The pronouncement expands the disclosure requirements for expenses, specifically by providing more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently in the process of determining the impact that ASU 2024-03 will have on the Company's consolidated financial statement disclosures. Internal-Use Software In September 2025, the FASB issued ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025-06"). The pronouncement modernizes the accounting guidance for internal-use software costs by removing the various stages of a software development project to accommodate different software development methods. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. We are currently in the process of determining the impact that ASU 2025-06 will have on the Company's Consolidated Financial Statements.

Income Taxes In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). The pronouncement expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We are currently in the process of determining the impact that ASU 2023-09 will have on the Company's consolidated financial statement disclosures. Disaggregation - Income Statement Expenses In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). The pronouncement expands the disclosure requirements for expenses, specifically by providing more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently in the process of determining the impact that ASU 2024-03 will have on the Company's consolidated financial statement disclosures.

Generally, the functional currency of operations outside the U.S. is the respective local currency. McDonald's Corporation 2024 Annual Report 45 McDonald's Corporation 2024 Annual Report 45 McDonald's Corporation 2024 Annual Report 45

Income Taxes In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). The pronouncement expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted the new standard in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Refer to the Income Tax footnote on page 47 of this Form 10-K for the enhanced disclosures added as a result of the adoption of ASU 2023-09.

Segment Reporting In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). The pronouncement expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The Company adopted the new standard in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. Refer to the Segment footnote on page 52 of this Form 10-K for the enhanced disclosures added as a result of the adoption of ASU 2023-07.