Segment Reporting

As stated in Note 1, Description of Business and Organization, we manage three brands. Under the Tim Hortons brand, we operate in the donut/coffee/tea category of the quick service segment of the restaurant industry. Under the Burger King brand, we operate in the fast food hamburger restaurant category of the quick service segment of the restaurant industry. Under the Popeyes brand, we operate in the chicken category of the quick service segment of the restaurant industry. Our business generates revenue from the following sources: (i) franchise revenues, consisting primarily of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at Company restaurants. In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers.

Each brand is managed by a brand president that reports directly to our Chief Executive Officer, who is our Chief Operating Decision Maker. Therefore, we have three operating segments: (1) TH, which includes all operations of our Tim Hortons brand, (2) BK, which includes all operations of our Burger King brand, and (3) PLK, which includes all operations of our Popeyes brand. Our three operating segments represent our reportable segments.

As stated in Note 4, Revenue Recognition, we transitioned to ASC 606 on January 1, 2018 using the modified retrospective transition method. Our Financial Statements reflect the application of ASC 606 guidance beginning in 2018, while our Financial Statements for prior periods were prepared under the guidance of the Previous Standards. For comparability purposes, we have disclosed 2018 total revenues by operating segment under the Previous Standards as well as segment income with a reconciliation to net income under the Previous Standards. See Note 4, Revenue Recognition, for further details of the effects of this change in accounting principle on total revenues and net income.

PLK revenues and segment income from the acquisition date of March 27, 2017 through September 30, 2017 are included in our condensed consolidated statement of operations for the nine months ended September 30, 2017. The following table presents revenues, by segment and by country (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018 As Reported		2018 Amounts Under Previous Standards		2017		2018 As Reported		2018 Amounts Under Previous Standards		2017
Revenues by operating segment:
TH	$	853.9	$	796.5	$	827.0	$	2,440.4	$	2,278.6	$	2,332.9
BK	416.4		315.5		313.6		1,224.4		914.5		874.3
PLK	105.0		70.0		68.0		307.7		205.0		134.7
Total revenues	$	1,375.3	$	1,182.0	$	1,208.6	$	3,972.5	$	3,398.1	$	3,341.9



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Revenues by country (a):
Canada	$	776.6	$	748.7	$	2,214.3	$	2,093.6
United States	447.4		310.5		1,318.9		856.1
Other	151.3		149.4		439.3		392.2
Total revenues	$	1,375.3	$	1,208.6	$	3,972.5	$	3,341.9


(a)	Only Canada and the United States represented 10% or more of our total revenues in each period presented.

Our measure of segment income is Adjusted EBITDA. Adjusted EBITDA represents earnings (net income or loss) before interest expense, net, (gain) loss on early extinguishment of debt, income tax expense, and depreciation and amortization, adjusted to exclude the non-cash impact of share-based compensation and non-cash incentive compensation expense and (income) loss from equity method investments, net of cash distributions received from equity method investments, as well as other operating expenses (income), net. Other specifically identified costs associated with non-recurring projects are also excluded from Adjusted EBITDA, including fees and expenses associated with the Popeyes Acquisition (“PLK Transaction costs”), Corporate restructuring and tax advisory fees related to the interpretation and implementation of comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act enacted by the U.S. government on December 22, 2017 and non-operational Office centralization and relocation costs in connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively. Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management’s assessment of operating performance or the performance of an acquired business. A reconciliation of segment income to net income (loss) consists of the following (in millions):



	Three Months Ended September 30,									Nine Months Ended September 30,
	2018 As Reported			2018 Amounts Under Previous Standards			2017			2018 As Reported			2018 Amounts Under Previous Standards			2017
Segment income:
TH	$	298.9		$	294.1		$	294.4		$	829.6		$	833.2		$	831.7
BK	231.0			237.6			233.9			681.5			684.6			637.8
PLK	41.5			44.0			36.8			120.2			127.3			70.0
Adjusted EBITDA	571.4			575.7			565.1			1,631.3			1,645.1			1,539.5
Share-based compensation and non-cash incentive compensation expense	13.8			13.6			12.5			44.6			44.4			42.9
PLK Transaction costs	—			—			6.9			9.7			9.7			49.8
Corporate restructuring and tax advisory fees	5.5			5.5			—			19.0			19.0			—
Office centralization and relocation costs	4.1			4.1			—			16.5			16.5			—
Impact of equity method investments (a)	(0.3		)	(1.4		)	(1.3		)	(5.9		)	(10.6		)	(0.1		)
Other operating expenses (income), net	26.1			26.2			21.5			9.4			9.5			82.1
EBITDA	522.2			527.7			525.5			1,538.0			1,556.6			1,364.8
Depreciation and amortization	45.0			44.8			46.2			137.5			137.1			134.9
Income from operations	477.2			482.9			479.3			1,400.5			1,419.5			1,229.9
Interest expense, net	134.9			134.2			136.0			404.8			405.3			375.4
Loss on early extinguishment of debt	—			—			58.2			—			—			78.6
Income tax expense	92.5			93.4			38.3			152.9			157.0			119.0
Net income	$	249.8		$	255.3		$	246.8		$	842.8		$	857.2		$	656.9


(a)	Represents (i) (income) loss from equity method investments and (ii) cash distributions received from our equity method investments. Cash distributions received from our equity method investments are included in segment income.