What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-07-31 compared with 2020-05-21 · 464 added, 399 removed, 501 unchanged (63% of the section changed)

2 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA, UNAUDITED)

MARCH 29, 2020

DECEMBER 29, 2019

JUNE 28, 2020 DECEMBER 29, 2019

Current assets

Cash and cash equivalents $ 181,432 $ 67,145

Restricted cash and cash equivalents 1,099 —

Inventories 63,563 86,861

Other current assets, net 81,489 186,462

2 unchanged sentences

Operating lease right-of-use assets 1,212,916 1,266,548

Goodwill 271,395 288,439

Intangible assets, net 463,036 470,615

1 unchanged sentence

Other assets, net 99,106 117,110

Total assets $ 3,433,575 $ 3,592,683

LIABILITIES AND STOCKHOLDERS’ EQUITY

14 unchanged sentences

Preferred stock, $ 0.01 par value, 25,000,000 shares authorized;

no shares issued and outstanding as of March 29, 2020 and December 29, 2019

no shares issued and outstanding as of June 28, 2020 and December 29, 2019

Common stock, $ 0.01 par value, 475,000,000 shares authorized;

87,416,867 and 86,945,869 shares issued and outstanding as of March 29, 2020 and December 29, 2019, respectively

87,533,599 and 86,945,869 shares issued and outstanding as of June 28, 2020 and December 29, 2019, respectively

Additional paid-in capital 1,123,613 1,094,338

9 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)

THIRTEEN WEEKS ENDED

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Restaurant sales $ 576,261 $ 1,005,687 $ 1,572,498 $ 2,117,329

10 unchanged sentences

(Loss) income from operations ( 111,912 ) 43,460 ( 153,480 ) 125,954

Other expense, net

Loss on modification of debt ( 237 ) — ( 237 ) —

Other income (expense), net 581 12 ( 212 ) ( 156 )

Interest expense, net ( 16,639 ) ( 12,448 ) ( 28,347 ) ( 23,629 )

2 unchanged sentences

Net (loss) income ( 92,428 ) 29,809 ( 126,842 ) 95,458

net income attributable to noncontrolling interests

net (loss) income attributable to noncontrolling interests ( 172 ) 788 25 2,137

Net (loss) income attributable to Bloomin’ Brands

( 92,256 ) 29,021 ( 126,867 ) 93,321

Redemption of preferred stock in excess of carrying value — — ( 3,496 ) —

9 unchanged sentences

(Loss) earnings per share attributable to common stockholders:

Basic $ ( 1.05 ) $ 0.32 $ ( 1.49 ) $ 1.03

Diluted $ ( 1.05 ) $ 0.32 $ ( 1.49 ) $ 1.02

Weighted average common shares outstanding:

Basic 87,496 90,194 87,312 90,805

Diluted 87,496 90,953 87,312 91,807

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

BLOOMIN’ BRANDS, INC.

ADDITIONAL PAID-IN CAPITAL

ULATED DEFICIT

ACCUMULATED OTHER

COMPREHENSIVE LOSS

NON-CONTROLLING INTERESTS

COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUM-

ULATED DEFICIT ACCUMULATED OTHER

COMPREHENSIVE LOSS NON-CONTROLLING INTERESTS TOTAL

SHARES AMOUNT

Balance, March 29, 2020 87,417 $ 874 $ 1,074,081 $ ( 793,992 ) $ ( 189,013 ) $ 8,193 $ 100,143

Net loss — — — ( 92,256 ) — ( 172 ) ( 92,428 )

Other comprehensive loss, net of tax — — — — ( 28,117 ) — ( 28,117 )

Stock-based compensation — — 5,071 — — — 5,071

Common stock issued under stock plans (1) 117 1 ( 356 ) — — — ( 355 )

Distributions to noncontrolling interests — — — — — ( 27 ) ( 27 )

Contributions from noncontrolling interests — — — — — 94 94

Equity component value of convertible note issuance, net of tax of $ 650

— — 64,367 — — — 64,367

Sale of common stock warrant — — 46,690 — — — 46,690

Purchase of convertible note hedge — — ( 66,240 ) — — — ( 66,240 )

Balance, June 28, 2020 87,534 $ 875 $ 1,123,613 $ ( 886,248 ) $ ( 217,130 ) $ 8,088 $ 29,198

Balance, December 29, 2019 86,946 $ 869 $ 1,094,338 $ ( 755,089 ) $ ( 169,776 ) $ 7,139 $ 177,481

3 unchanged sentences

Cash dividends declared, $ 0.20 per common share

— — ( 17,480 ) — — — ( 17,480 )

Stock-based compensation — — 8,360 — — — 8,360

4 unchanged sentences

Contributions from noncontrolling interests — — — — — 147 147

Balance, March 29, 2020

Equity component value of convertible note issuance, net of tax of $ 650

— — 64,367 — — — 64,367

Sale of common stock warrant — — 46,690 — — — 46,690

Purchase of convertible note hedge — — ( 66,240 ) — — — ( 66,240 )

Balance, June 28, 2020 87,534 $ 875 $ 1,123,613 $ ( 886,248 ) $ ( 217,130 ) $ 8,088 $ 29,198

BLOOMIN’ BRANDS, INC.

ADDITIONAL PAID-IN CAPITAL

ULATED DEFICIT

ACCUMULATED OTHER

COMPREHENSIVE LOSS

NON-CONTROLLING INTERESTS

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)

BLOOMIN’ BRANDS, INC.

COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUM-

ULATED DEFICIT ACCUMULATED OTHER

COMPREHENSIVE LOSS NON-CONTROLLING INTERESTS TOTAL

SHARES AMOUNT

Balance, March 31, 2019 91,647 $ 916 $ 1,099,346 $ ( 714,425 ) $ ( 141,653 ) $ 8,179 $ 252,363

Net income — — — 29,021 — 788 29,809

Other comprehensive (loss) income, net of tax — — — — ( 15,727 ) 142 ( 15,585 )

Cash dividends declared, $ 0.10 per common share

— — ( 9,227 ) — — — ( 9,227 )

Repurchase and retirement of common stock ( 5,469 ) ( 55 ) — ( 106,937 ) — — ( 106,992 )

Stock-based compensation — — 5,137 — — — 5,137

Common stock issued under stock plans (1) 649 7 4,499 — — — 4,506

Purchase of noncontrolling interests — — ( 157 ) — 34 82 ( 41 )

Distributions to noncontrolling interests — — — — — ( 1,578 ) ( 1,578 )

Contributions from noncontrolling interests — — — — — 201 201

Balance, June 30, 2019 86,827 $ 868 $ 1,099,598 $ ( 792,341 ) $ ( 157,346 ) $ 7,814 $ 158,593

Balance, December 30, 2018 91,272 $ 913 $ 1,107,582 $ ( 920,010 ) $ ( 142,755 ) $ 9,087 $ 54,817

Cumulative-effect from a change in accounting principle, net of tax — — — 141,285 — — 141,285

Other comprehensive income (loss), net of tax

Net income — — — 93,321 — 2,137 95,458

Other comprehensive (loss) income, net of tax — — — — ( 14,625 ) 50 ( 14,575 )

Cash dividends declared, $ 0.20 per common share

— — ( 18,367 ) — — — ( 18,367 )

Repurchase and retirement of common stock ( 5,469 ) ( 55 ) — ( 106,937 ) — — ( 106,992 )

Stock-based compensation — 9,130 — — — 9,130

Common stock issued under stock plans (1) 1,024 10 1,410 — — — 1,420

Purchase of noncontrolling interests — — ( 157 ) — 34 82 ( 41 )

Distributions to noncontrolling interests — — — — — ( 4,007 ) ( 4,007 )

Contributions from noncontrolling interests — — — — — 465 465

Balance, March 31, 2019

Balance, June 30, 2019 86,827 $ 868 $ 1,099,598 $ ( 792,341 ) $ ( 157,346 ) $ 7,814 $ 158,593

________________

4 unchanged sentences

(DOLLARS IN THOUSANDS, UNAUDITED)

THIRTEEN WEEKS ENDED

MARCH 29, 2020

MARCH 31, 2019

Cash flows provided by operating activities:

TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019

Cash flows (used in) provided by operating activities:

Net (loss) income $ ( 126,842 ) $ 95,458

Adjustments to reconcile Net (loss) income to cash provided by operating activities:

Adjustments to reconcile Net (loss) income to cash (used in) provided by operating activities:

Depreciation and amortization 94,052 99,270

Amortization of deferred discounts and issuance costs

Amortization of debt discounts and issuance costs 2,966 1,255

Amortization of deferred gift card sales commissions 11,592 14,089

6 unchanged sentences

Loss on sale of a business or subsidiary — 214

Loss on modification of debt 237 —

Loss on disposal of property, fixtures and equipment 1,014 328

Other, net ( 1,228 ) ( 4,627 )

Change in assets and liabilities ( 51,253 ) ( 127,075 )

Net cash provided by operating activities

Net cash (used in) provided by operating activities ( 3,313 ) 132,443

Cash flows used in investing activities:

Proceeds from disposal of property, fixtures and equipment 422 1,717

Proceeds from sale-leaseback transactions, net — 3,052

Capital expenditures ( 53,205 ) ( 80,773 )

5 unchanged sentences

(DOLLARS IN THOUSANDS, UNAUDITED)

THIRTEEN WEEKS ENDED

MARCH 29, 2020

MARCH 31, 2019

TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019

Cash flows provided by (used in) financing activities:

Repayments of long-term debt

Repayments of long-term debt and finance lease obligations $ ( 13,242 ) $ ( 14,031 )

Proceeds from borrowings on revolving credit facilities, net 505,000 408,000

Repayments of borrowings on revolving credit facilities ( 489,000 ) ( 321,200 )

Payments of taxes from share-based compensation, net

Financing fees ( 3,096 ) —

Proceeds from issuance of convertible senior notes 230,000 —

Proceeds from issuance of warrants 46,690 —

Purchase of convertible note hedge ( 66,240 ) —

Issuance costs related to convertible senior notes ( 8,416 ) —

(Payments of taxes) proceeds from share-based compensation, net ( 2,862 ) 1,420

Distributions to noncontrolling interests ( 338 ) ( 4,007 )

2 unchanged sentences

Payments for partner equity plan ( 9,976 ) ( 8,662 )

Repurchase of common stock — ( 106,992 )

Cash dividends paid on common stock ( 17,480 ) ( 18,367 )

2 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 2,955 ) ( 157 )

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash 115,386 ( 4,983 )

Cash, cash equivalents and restricted cash as of the beginning of the period 67,145 71,823

22 unchanged sentences

Risks and Uncertainties - In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide.

During the thirteen weeks ended March 29, 2020 , the negative effect of COVID-19 on the Company’s business was significant.

The Company experienced an initial decline in restaurant revenue that began in early March 2020 as business travel decreased and public anxiety about the spread of COVID-19 increased.

Government agencies began strongly discouraging or prohibiting people from visiting restaurants and instructed citizens to shelter in place to reduce the spread of COVID-19.

In response to these conditions, the Company temporarily closed restaurant dining rooms in the U.S.

on March 20, 2020 and shifted operations to provide only take-out and delivery service.

See Note 2 - COVID-19 Impact for details regarding the financial impact of the COVID-19 pandemic on the Company’s financial results during the thirteen weeks ended March 29, 2020 .

In response to COVID-19, the Company temporarily closed all restaurant dining rooms in the U.S.

as of March 20, 2020 and shifted operations to provide only take-out and delivery service, resulting in significantly reduced traffic in its restaurants.

In early May 2020, the Company began to reopen its restaurant dining rooms with limited seating capacity in compliance with state and local regulations and as of June 28, 2020 had reopened substantially all of its restaurant dining rooms with limited seating capacity.

The temporary closure of the Company’s dining rooms and the limitations on seating capacity in its reopened dining rooms have resulted in significantly reduced traffic in the Company’s restaurants.

The negative effect of COVID-19 on the Company’s business was significant during the thirteen and twenty-six weeks ended June 28, 2020.

See Note 2 - COVID-19 Charges for details regarding the financial impact of the COVID-19 pandemic on the Company’s financial results.

The duration and severity of the COVID-19 pandemic and its long-term impact on the Company’s business are uncertain at this time.

Given the daily evolution of the pandemic and the global responses to curb its spread, the Company may not be able to accurately estimate the effects of the pandemic on its results of operations, financial condition, or liquidity for the foreseeable future.

Given the daily evolution of the pandemic and the global responses to curb its spread, the Company may be unable to accurately estimate the effects of the pandemic on its results of operations, financial condition, or liquidity for the foreseeable future.

Recently Adopted Financial Accounting Standards - On December 30, 2019, the Company adopted Accounting Standards Update (“ASU”) No.

1 unchanged sentence

Measurement of Credit Losses on Financial Instruments,” (“ASU No.

2016-13”), which requires measurement and recognition of losses for financial instruments under the current expected credit loss model versus incurred losses under current guidance.

2016-13”), which requires measurement and recognition of losses for financial instruments under the current expected credit loss model versus incurred losses under previous guidance.

The Company’s adoption of ASU No.

2016-13 and its related amendments (“the new credit loss standard”) resulted in cumulative-effect debit adjustment to the beginning balance of Accumulated deficit of $ 4.3 million , including $ 4.8 million of contingent lease liabilities related to lease guarantees and $ 1.0 million of incremental reserve for credit losses, net of the $ 1.5 million net increase in related deferred tax assets.

2016-13 and its related amendments (“the new credit loss standard”) resulted in a cumulative-effect debit adjustment to the beginning balance of Accumulated deficit of $ 4.3 million, including $ 4.8 million of contingent lease liabilities related to lease guarantees and $ 1.0 million of incremental reserve for credit losses, net of the $ 1.5 million net increase in related deferred tax assets.

Measurement processes and related controls have been implemented by the Company to ensure compliance with the new credit loss standard.

See Note 18 - Allowance for Expected Credit Losses for additional details regarding the Company’s allowance for expected credit losses.

On December 30, 2019, the Company also adopted ASU No.

On December 30, 2019, the Company adopted ASU No.

2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” (“ ASU No.

2018-15 ”), which clarifies the accounting for implementation costs in cloud computing arrangements.

The Company contracts with 3rd party information technology providers for

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

(UNAUDITED) - Continued

various service arrangements including software, platform and information technology infrastructure.

Arrangement That Is a Service Contract,” (“ASU No.

2018-15”), which clarifies the accounting for implementation costs in cloud computing arrangements.

Under ASU No.

2018-15, implementation costs incurred by customers in cloud computing arrangements are deferred and recognized over the term of the arrangement similar to internal-use software guidance.

The Company contracts with 3 rd party information technology providers for various service arrangements including software, platform and information technology infrastructure.

The capitalized implementation costs are recorded within Other assets, net on the Company’s Consolidated Balance Sheets and are amortized on a straight-line basis over the term of the hosting arrangements, including reasonably certain renewal periods, within the same financial statement line as the related hosting fees.

The amortization of the Company’s current arrangements is recorded in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

The Company’s prospective adoption of ASU No.

2018-15 did not have a material effect on its consolidated financial statements.

Recently Issued Financial Accounting Standards Not Yet Adopted - In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

2 unchanged sentences

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

2020-04 is currently effective and upon adoption may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

The Company is currently evaluating its contracts and the optional expedients provided by the new standard.

2020-04 was effective beginning March 12, 2020 and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

The Company has elected to apply the hedge accounting expedients related to hedge effectiveness for future LIBOR-indexed cash flows, which enables the Company to continue to apply hedge accounting to hedging relationships impacted by reference rate reform.

Application of these expedients allows for presentation of derivatives consistent with the Company’s historical presentation.

The Company continues to evaluate the impact of the guidance and may apply other elections, as applicable.

Recently Issued Financial Accounting Standards Not Yet Adopted - Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

Reclassifications - The Company reclassified certain items in the accompanying consolidated financial statements for prior periods to be comparable with the classification for the current period.

These reclassifications had no effect on previously reported net income.

COVID-19 Impact

Following is a summary of the charges recorded in connection with the COVID-19 pandemic for the period indicated below (dollars in thousands):

CONSOLIDATED INCOME STATEMENT CLASSIFICATION

THIRTEEN WEEKS ENDED

MARCH 29, 2020

Inventory obsolescence and spoilage (1)

Cost of sales

Compensation for idle employees (2)

Labor and other related

Lease guarantee contingent liabilities (3)

General and administrative

Allowance for expected credit losses (4)

General and administrative

Other charges

General and administrative

Right-of-use asset impairment (5)

Provision for impaired assets and restaurant closings

Fixed asset impairment (5)

Provision for impaired assets and restaurant closings

Goodwill and other impairment (6)

Provision for impaired assets and restaurant closings

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

COVID-19 Charges

Following is a summary of the charges recorded in connection with the COVID-19 pandemic for the periods indicated below (dollars in thousands):

CHARGES CONSOLIDATED INCOME STATEMENT CLASSIFICATION THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 28, 2020

Inventory obsolescence and spoilage (1) Cost of sales $ 1,163 $ 7,345

Compensation for idle employees (2) Labor and other related 11,388 27,574

Other operating charges Other restaurant operating 2,467 2,467

Lease guarantee contingent liabilities (3) General and administrative — 4,188

Allowance for expected credit losses (4) General and administrative — 3,334

Other charges General and administrative 1,216 1,789

Right-of-use asset impairment (5) Provision for impaired assets and restaurant closings 5,273 25,757

Fixed asset impairment (5) Provision for impaired assets and restaurant closings 19,611 31,339

Goodwill and other impairment (6) Provision for impaired assets and restaurant closings 611 2,999

$ 41,729 $ 106,792

Includes the write-off of value added tax credits related to the purchase of inventory by the Company’s Brazil subsidiary.

Represents relief pay for hourly employees impacted by the closure of dining rooms.

________________

(1) Includes the write-off of value added tax credits in the twenty-six weeks ended June 28, 2020 related to the purchase of inventory by the Company’s Brazil subsidiary.

(2) Represents relief pay for hourly employees impacted by the closure of dining rooms, net of $ 13.7 million of employee retention tax credits earned during the thirteen and twenty-six weeks ended June 28, 2020.

(3) Represents additional contingent liabilities recorded for lease guarantees related to certain former restaurant locations now operated by franchisees or other third parties.

(4) Includes additional reserves based on the Company’s increase in expected credit losses, primarily related to franchise receivables.

Includes impairments resulting from the remeasurement of assets utilizing projected future cash flows revised for current economic conditions and the closure of certain restaurants.

Includes impairment of goodwill for the Company’s Hong Kong subsidiary.

(5) Includes impairments resulting from the remeasurement of assets utilizing projected future cash flows revised for current economic conditions, restructuring charges and the closure of certain restaurants.

See Note 4 - Impairments, Exit Costs and Disposals for details regarding COVID-19 Restructuring costs.

(6) Includes impairment of goodwill for the Company’s Hong Kong subsidiary during the twenty-six weeks ended June 28, 2020.

See Note 9 - Goodwill and Intangible Assets, Net for details regarding impairment of goodwill.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Revenue Recognition

The following table includes the categories of revenue included in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Restaurant sales $ 576,261 $ 1,005,687 $ 1,572,498 $ 2,117,329

4 unchanged sentences

Total revenues $ 578,459 $ 1,021,930 $ 1,586,796 $ 2,150,061

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The following tables include the disaggregation of Restaurant sales and Franchise revenue, by restaurant concept and major international market, for the periods indicated:

THIRTEEN WEEKS ENDED

MARCH 29, 2020

MARCH 31, 2019

(dollars in thousands)

RESTAURANT SALES

FRANCHISE REVENUE

RESTAURANT SALES

FRANCHISE REVENUE

JUNE 28, 2020 JUNE 30, 2019

(dollars in thousands) RESTAURANT SALES FRANCHISE REVENUE RESTAURANT SALES FRANCHISE REVENUE

Outback Steakhouse $ 346,553 $ 136 $ 527,049 $ 9,586

2 unchanged sentences

Fleming’s Prime Steakhouse & Wine Bar 31,156 — 74,397 —

Other 1,576 — 1,105 —

total $ 536,767 $ 147 $ 900,616 $ 10,412

International

Outback Steakhouse Brazil $ 24,003 $ — $ 83,985 $ —

Other (1) 15,491 1,804 21,086 2,380

International total $ 39,494 $ 1,804 $ 105,071 $ 2,380

Total $ 576,261 $ 1,951 $ 1,005,687 $ 12,792

________________

Brazil Restaurant sales are reported on a one-month lag and are presented on a calendar basis.

Restaurant sales for Brazil during the first fiscal quarter of 2020 (through February 29, 2020) do not include any material impact from the COVID-19 pandemic.

(1) Includes Restaurant sales for the Company’s Abbraccio concept in Brazil.

TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019

(dollars in thousands) RESTAURANT SALES FRANCHISE REVENUE RESTAURANT SALES FRANCHISE REVENUE

Outback Steakhouse $ 877,238 $ 6,677 $ 1,113,820 $ 20,187

Carrabba’s Italian Grill 240,613 468 323,475 797

Bonefish Grill 198,816 140 304,499 410

Fleming’s Prime Steakhouse & Wine Bar 102,116 — 157,423 —

Other 2,873 — 2,212 —

total $ 1,421,656 $ 7,285 $ 1,901,429 $ 21,394

International

Outback Steakhouse Brazil $ 115,593 $ — $ 173,550 $ —

Other (1) 35,249 4,215 42,350 5,160

International total $ 150,842 $ 4,215 $ 215,900 $ 5,160

Total $ 1,572,498 $ 11,500 $ 2,117,329 $ 26,554

________________

(1) Includes Restaurant sales for the Company’s Abbraccio concept in Brazil.

BLOOMIN’ BRANDS, INC.

2 unchanged sentences

The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance Sheets as of the periods indicated:

(dollars in thousands)

MARCH 29, 2020

DECEMBER 29, 2019

(dollars in thousands) JUNE 28, 2020 DECEMBER 29, 2019

Other current assets, net

7 unchanged sentences

Deferred franchise fees - non-current $ 4,278 $ 4,599

________________

(1) During the twenty-six weeks ended June 28, 2020, the Company extended the expiration dates of certain awards under its Dine Rewards program to June 30, 2020 in response to the interruption COVID-19 had to the Company’s business.

The following table is a rollforward of deferred gift card sales commissions for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Balance, beginning of period $ 13,049 $ 11,195 $ 18,554 $ 16,431

1 unchanged sentence

Deferred gift card sales commissions capitalization 3,142 5,399 7,466 9,232

Other ( 65 ) ( 424 ) ( 804 ) ( 1,086 )

Balance, end of period $ 13,624 $ 10,488 $ 13,624 $ 10,488

The following table is a rollforward of unearned gift card revenue for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Balance, beginning of period $ 277,518 $ 240,923 $ 358,757 $ 333,794

8 unchanged sentences

The components of Provision for impaired assets and restaurant closings are as follows for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Impairment losses

$ 23,741 $ 165 $ 54,713 $ 3,629

International (1) 296 1,767 3,468 1,785

Corporate ( 119 ) — 6,161 —

Total impairment losses $ 23,918 $ 1,932 $ 64,342 $ 5,414

Restaurant closure expenses

$ 1,041 $ 8 $ 1,762 $ 95

International — — 173 17

2 unchanged sentences

________________

Includes goodwill impairment charges of $ 2.0 million during the thirteen weeks ended March 29, 2020 .

(1) Includes goodwill impairment charges of $ 2.0 million during the twenty-six weeks ended June 28, 2020.

See Note 9 - Goodwill and Intangible Assets, Net for details regarding impairment of goodwill.

During the thirteen weeks ended March 29, 2020 , the Company recognized asset impairment and closure charges related to the COVID-19 pandemic of $ 31.3 million in the U.S.

segment and $ 3.3 million in the international segment.

The Company also recognized asset impairment charges related to transformational initiatives of $ 6.3 million , which were not allocated to its operating segments.

The remaining impairment and closing charges for the periods presented resulted primarily from locations identified for remodel, relocation or closure and certain other assets.

Accrued Facility Closure and Other Costs Rollforward - The following table summarizes the Company’s accrual activity related to facility closure and other costs, associated with certain closure initiatives, for the period indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

During the thirteen and twenty-six weeks ended June 28, 2020, the Company recognized asset impairment and closure charges related to the COVID-19 pandemic of $ 25.0 million and $ 56.3 million, respectively, in the U.S.

segment (including charges related to the COVID-19 Restructuring discussed below) and $ 0.3 million and $ 3.6 million, respectively, in the international segment.

The Company also recognized asset impairment charges related to transformational initiatives of $ 6.3 million during the twenty-six weeks ended June 28, 2020, which were not allocated to its operating segments.

COVID-19 Restructuring - During the thirteen and twenty-six weeks ended June 28, 2020, the Company recognized pre-tax asset impairments and closure costs in connection with the closure of 22 restaurants and from the update of certain cash flow assumptions, including lease renewal considerations (the “COVID-19 Restructuring”).

Following is a summary of the COVID-19 Restructuring charges recognized in the Consolidated Statements of Operations and Comprehensive (Loss) Income for the period indicated (in thousands):

LOCATION OF CHARGE IN THE CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME THIRTEEN AND TWENTY-SIX WEEKS ENDED

DESCRIPTION JUNE 28, 2020

Property, fixtures and equipment impairments Provision for impaired assets and restaurant closings $ 16,932

Lease right-of-use asset impairments and closing costs Provision for impaired assets and restaurant closings 3,920

Severance and other expenses General and administrative 1,160

The remaining impairment and closing charges during the periods presented resulted primarily from locations identified for remodel, relocation or closure and certain other assets.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Accrued Facility Closure and Other Costs Rollforward - The following table summarizes the Company’s accrual activity related to certain closure and restructuring initiatives, for the period indicated:

TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020

Balance, beginning of the period $ 14,542

Additions 2,103

Cash payments ( 1,994 )

Accretion 566

Adjustments 723

Balance, end of the period (1) $ 15,940

________________

As of March 29, 2020 , the Company had exit-related accruals related to certain closure initiatives of $ 3.2 million recorded in Accrued and other current liabilities and $ 11.1 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

(1) As of June 28, 2020 , the Company had exit-related accruals related to certain closure and restructuring initiatives of $ 4.8 million recorded in Accrued and other current liabilities and $ 11.1 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

Refranchising - During the thirteen weeks ended March 31, 2019, the Company completed the sale of 18 of its existing U.S.

Company-owned Carrabba’s Italian Grill locations to an existing franchisee for cash proceeds of $ 3.6 million, net of certain purchase price adjustments.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The Company remains contingently liable on certain real estate lease agreements assigned to the buyer.

See Note 20 - Commitments and Contingencies for additional details regarding lease guarantees .

(Loss) Earnings Per Share

The following table presents the computation of basic and diluted (loss) earnings per share attributable to common stockholders for the periods indicated:

THIRTEEN WEEKS ENDED

(in thousands, except per share data)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(in thousands, except per share data) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Net (loss) income attributable to Bloomin’ Brands

$ ( 92,256 ) $ 29,021 $ ( 126,867 ) $ 93,321

Redemption of preferred stock in excess of carrying value (1) — — ( 3,496 ) —

9 unchanged sentences

________________

Consideration paid in excess of carrying value for the redemption of preferred stock is considered a deemed dividend and, for purposes of calculating earnings per share, reduces net income attributable to common stockholders for the thirteen weeks ended March 29, 2020 .

See Note 12 - Stockholders’ Equity for additional details regarding the redemption of preferred stock of the Company’s Abbraccio subsidiary.

Securities outstanding not included in the computation of (loss) earnings per share attributable to common stockholders because their effect was antidilutive were as follows, for the periods indicated:

THIRTEEN WEEKS ENDED

(shares in thousands)

MARCH 29, 2020

MARCH 31, 2019

(1) Consideration paid in excess of carrying value for the redemption of preferred stock is considered a deemed dividend and, for purposes of calculating earnings per share, reduces net income attributable to common stockholders for the twenty-six weeks ended June 28, 2020.

See Note 14 - Stockholders’ Equity for additional details.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Weighted-average securities outstanding not included in the computation of (loss) earnings per share attributable to common stock holders because their effect was antidilutive were as follows, for the periods indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(shares in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Stock options 5,352 4,214 5,009 3,799

1 unchanged sentence

Nonvested performance-based share units 624 330 578 295

Convertible senior notes and warrants 23,388 — 11,694 —

There are approximately 19.348 million shares of the Company’s common stock that underlie its senior convertible notes based on the initial conversion rate and full principal amount.

The conversion spread on the Company’s convertible senior notes will have a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period exceeds the conversion price of $ 11.89 per share of common stock.

The Company expects to settle the principal amount of its outstanding convertible senior notes in cash and any excess in shares.

As a result, upon conversion of the convertible senior notes, only the amounts in excess of the principal amount are considered in diluted earnings per share under the treasury stock method, if applicable.

For the thirteen and twenty-six weeks ended June 28, 2020, the convertible senior notes have been excluded from the computation of diluted earnings per share as the effect would be antidilutive given the Company’s net loss, and also since the conversion price of the convertible senior notes exceeded the average market price of the Company’s common stock.

Warrants to purchase approximately 19.348 million shares of the Company’s common shares at $ 16.64 per share were outstanding as of June 28, 2020 but were excluded from the computation of diluted earnings per share since the warrants’ strike price was greater than the average market price of the Company’s common stock during the period.

See Note 12 - Convertible Senior Notes for additional information regarding the Company’s convertible senior notes.

Stock-based Compensation Plans

The Company recognized stock-based compensation expense as follows for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Stock options $ 1,038 $ 1,413 $ 1,870 $ 2,572

1 unchanged sentence

Performance-based share units 1,693 1,254 2,392 2,257

During the thirteen weeks ended March 29, 2020 , the Company made grants of 0.1 million stock options, 0.3 million time-based restricted stock units and 0.5 million performance-based share units.

$ 5,071 $ 5,077 $ 8,285 $ 8,988

During the twenty-six weeks ended June 28, 2020, the Company made grants of 0.1 million stock options, 0.4 million time-based restricted stock units and 0.5 million performance-based share units.

BLOOMIN’ BRANDS, INC.

2 unchanged sentences

Assumptions used in the Black-Scholes option pricing model and the weighted-average fair value of option awards granted were as follows for the periods indicated:

THIRTEEN WEEKS ENDED

MARCH 29, 2020

MARCH 31, 2019

TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019

Weighted-average risk-free interest rate (1) 0.90 % 2.39 %

Dividend yield (2) 4.34 % 1.92 %

Expected term (3)

Expected term (3) 5.5 years 4.7 years

Weighted-average volatility (4) 30.43 % 30.96 %

7 unchanged sentences

(4) Based on the historical volatility of the Company’s stock.

The following represents unrecognized stock compensation expense and the remaining weighted-average vesting period as of March 29, 2020 :

The following represents unrecognized stock compensation expense and the remaining weighted-average vesting period as of June 28, 2020 :

UNRECOGNIZED COMPENSATION EXPENSE

(dollars in thousands)

REMAINING WEIGHTED-AVERAGE VESTING PERIOD (in years)

(dollars in thousands) REMAINING WEIGHTED-AVERAGE VESTING PERIOD (in years)

Stock options $ 5,085 1.6

3 unchanged sentences

Other current assets, net, consisted of the following as of the periods indicated:

(dollars in thousands)

MARCH 29, 2020

DECEMBER 29, 2019

(dollars in thousands) JUNE 28, 2020 DECEMBER 29, 2019

Prepaid expenses $ 21,729 $ 20,218

7 unchanged sentences

$ 81,489 $ 186,462

Includes $ 10.0 million of Company-owned life insurance policies as of March 29, 2020 transferred to current assets during the thirteen weeks ended March 29, 2020 for planned payment of deferred compensation obligations.

________________

(1) Includes $ 3.7 million of Company-owned life insurance policies as of June 28, 2020 transferred to Other current assets, net during the twenty-six weeks ended June 28, 2020 for planned payment of deferred compensation obligations.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

(UNAUDITED) - Continued

Property, Fixtures and Equipment, Net

Property, fixtures and equipment, net, consisted of the following as of the periods indicated:

(dollars in thousands) JUNE 28, 2020 DECEMBER 29, 2019

Land $ 41,298 $ 42,570

Buildings 1,153,329 1,202,434

Furniture and fixtures 447,195 458,169

Equipment 617,961 665,815

Construction in progress 21,543 24,477

accumulated depreciation ( 1,351,294 ) ( 1,357,388 )

$ 930,032 $ 1,036,077

Goodwill and Intangible Assets, Net

Goodwill - The following table is a rollforward of goodwill:

(dollars in thousands)

INTERNATIONAL

(dollars in thousands) U.S.

INTERNATIONAL CONSOLIDATED

Balance as of December 29, 2019 $ 170,657 $ 117,782 $ 288,439

1 unchanged sentence

Impairment charges — ( 1,973 ) ( 1,973 )

Balance as of March 29, 2020

T he COVID-19 outbreak was considered a triggering event, indicating that the carrying amount of goodwill may not be recoverable.

Balance as of June 28, 2020 $ 170,657 $ 100,738 $ 271,395

T he COVID-19 outbreak was considered a triggering event in the thirteen weeks ended March 29, 2020, indicating that the carrying amount of goodwill may not be recoverable.

As a result, the Company performed a quantitative assessment for all reporting units to determine whether a reporting unit was impaired.

1 unchanged sentence

Impairment was not recorded for any of the Company’s other reporting units as a result the quantitative assessment.

Annual Goodwill and Intangible Asset Impairment Assessment - The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets as of the first day of its second fiscal quarter.

Since the Company performed a quantitative assessment on the last day of the first fiscal quarter in 2020, as described above, the Company utilized the same assumptions and analysis in performing a quantitative annual assessment in its second fiscal quarter and concluded that no additional impairment was required.

In 2019, the Company performed a qualitative assessment and did no t record any impairment charges.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Other Assets, Net

Other assets, net, consisted of the following as of the periods indicated:

(dollars in thousands)

MARCH 29, 2020

DECEMBER 29, 2019

(dollars in thousands) JUNE 28, 2020 DECEMBER 29, 2019

Company-owned life insurance (1) $ 49,908 $ 60,126

1 unchanged sentence

Liquor licenses 24,250 24,289

Other assets 19,039 27,802

$ 99,106 $ 117,110

During the thirteen weeks ended March 29, 2020 , the Company reclassified $ 10.0 million of Company-owned life insurance policies to current assets for planned payment of deferred compensation obligations.

Net of accumulated amortization of $ 7.2 million and $ 6.8 million as of March 29, 2020 and December 29, 2019 , respectively.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

________________

(1) During the twenty-six weeks ended June 28, 2020, the Company reclassified $ 9.1 million of Company-owned life insurance policies to current assets in anticipation of settlement of such policies to pay deferred compensation obligations.

(2) Net of accumulated amortization of $ 7.7 million and $ 6.8 million as of June 28, 2020 and December 29, 2019, respectively.

Long-term Debt, Net

Following is a summary of outstanding long-term debt, as of the periods indicated:

MARCH 29, 2020

DECEMBER 29, 2019

(dollars in thousands)

OUTSTANDING BALANCE

INTEREST RATE

OUTSTANDING BALANCE

INTEREST RATE

JUNE 28, 2020 DECEMBER 29, 2019

(dollars in thousands) OUTSTANDING BALANCE INTEREST RATE OUTSTANDING BALANCE INTEREST RATE

Senior Secured Credit Facility:

2 unchanged sentences

Total Senior Secured Credit Facility $ 1,052,500 $ 1,049,000

Convertible Senior Notes (2) 230,000 5.00 % —

Finance lease liabilities 1,957 2,308

Other — 50 2.18 %

unamortized debt discount and issuance costs ( 73,665 ) ( 2,654 )

4 unchanged sentences

(1) Interest rate represents the weighted-average interest rate for the respective periods.

Amended Credit Agreement - On May 4, 2020 , the Company and its wholly-owned subsidiary OSI Restaurant Partners, LLC (“OSI”), as co-borrowers, entered into an amendment to its existing credit agreement, dated November 30, 2017 (the “Amended Credit Agreement”), which provides relief for the financial covenant to maintain a specified quarterly Total Net Leverage Ratio (“TNLR”).

(2) See Note 12 - Convertible Senior Notes for details regarding the convertible senior notes and related hedge and warrant transactions .

Amended Credit Agreement - On May 4, 2020, the Company and its wholly-owned subsidiary OSI Restaurant Partners, LLC (“OSI”), as co-borrowers, entered into an amendment to the existing credit agreement, dated November 30, 2017 (the “Amended Credit Agreement”), which provides relief for the financial covenant to maintain a specified quarterly Total Net Leverage Ratio (“TNLR”).

Without such amendment, violation of financial covenants under the original credit agreement could have resulted in default.

TNLR is the ratio of Consolidated Total Debt (Current portion of long-term debt and Long-term debt, net of cash) to Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the Amended Credit Agreement).

TNLR is the ratio of Consolidated Total Debt (Current portion of long-term debt and Long-term debt, net of cash, excluding the convertible senior notes) to Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the Amended Credit Agreement).

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The Amended Credit Agreement waives the TNLR requirement for the remainder of fiscal year 2020 and requires a TNLR based on a seasonally annualized calculation of Consolidated EBITDA not to exceed the following thresholds for the periods indicated:

QUARTERLY PERIOD ENDED

MAXIMUM RATIO

March 28, 2021 (1)

June 27, 2021 (2)

September 26, 2021 and thereafter (3)

QUARTERLY PERIOD ENDED MAXIMUM RATIO

March 28, 2021 (1) 5.50 to 1.00

June 27, 2021 (2) 5.00 to 1.00

September 26, 2021 and thereafter (3) 4.50 to 1.00

________________

2 unchanged sentences

(3) Seasonally annualized Consolidated EBITDA calculated as Consolidated EBITDA for the three consecutive quarters ending September 26, 2021 divided by 77.0 %.

Under the terms of the Amended Credit Agreement, the Company is also required to meet a minimum monthly liquidity threshold of $ 125.0 million through March 28, 2021 , calculated as the sum of available capacity under the Company’s revolving credit facility, unrestricted domestic cash on hand and up to $ 25.0 million of unrestricted cash held by foreign subsidiaries.

The Company is also required to meet a minimum monthly liquidity threshold of $ 125.0 million through March 28, 2021, calculated as the sum of available capacity under the Company’s revolving credit facility, unrestricted domestic cash on hand and up to $ 25.0 million of unrestricted cash held by foreign subsidiaries.

Under the Amended Credit Agreement, the Company is limited to $ 100.0 million of aggregate capital expenditures for the four fiscal quarters through March 28, 2021.

The Company is also prohibited from making certain restricted payments, investments or acquisitions until after September 26, 2021, with an exception for investments in the Company’s foreign subsidiaries which are capped at $ 27.5 million.

Repurchasing shares of the Company’s outstanding common stock and paying dividends are also restricted until after September 26, 2021 and the Company is compliant with its financial covenants under the terms of the Amended Credit Agreement.

Interest rates under the Amended Credit Agreement are 275 and 175 basis points above the Eurocurrency Rate and Base Rate, respectively, and letter of credit fees and fees for the daily unused availability under the revolving credit facility are 2.75 % and 0.40 %, respectively, subject to reversion to rates under the original credit agreement when the Company is in compliance with the TNLR covenant for the test period ending September 26, 2021.

The Company is also subject to a 0 % Eurocurrency floor under the Amended Credit Agreement.

Deferred Financing Fees - The Company deferred $ 2.9 million of financing costs incurred in connection with the Amended Credit Agreement.

Deferred financing fees of $ 2.0 million associated with the revolving credit facility portion of the Amended Credit Agreement were recorded in Other assets, net and all other deferred financing fees were recorded in Long-term debt, net.

As of June 28, 2020 and December 29, 2019, the Company was in compliance with its debt covenants.

Convertible Senior Notes

Convertible Senior Notes - On May 8, 2020, the Company completed a $ 200.0 million principal amount private offering of 5.00 % convertible senior notes due 2025 and on May 12, 2020, issued an additional $ 30.0 million principal amount in connection with the option granted to the initial purchasers as part of the offering (collectively, the “2025 Notes”).

The 2025 Notes are governed by the terms of an indenture between the Company and Wells Fargo Bank, National Association, as the Trustee.

The 2025 Notes will mature on May 1, 2025 , unless earlier converted, redeemed or purchased by the Company.

The 2025 Notes bear cash interest at an annual rate of 5.00 %, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

(UNAUDITED) - Continued

Interest rates under the Amended Credit Agreement are 275 and 175 basis points above the Eurocurrency Rate and Base Rate, respectively, and letter of credit fees and fees for the daily unused availability under the revolving credit facility are 2.75 % and 0.40 % , respectively, subject to reversion to rates under the original credit agreement when the Company is in compliance with the TNLR covenant for the test period ending September 26, 2021 .

The Company is also subject to a 0 % Eurocurrency floor under the Amended Credit Agreement.

As of the date of this filing, the Company’s accounting for the impact of the Amended Credit Agreement was still ongoing.

Any impact will be reflected in the Company’s consolidated financial statements during the thirteen weeks ended June 28, 2020.

As of March 29, 2020 and December 29, 2019 , the Company was in compliance with its debt covenants.

The 2025 Notes are unsecured obligations and do not contain any financial covenants or restrictions on incurring additional indebtedness, paying dividends or issuing or repurchasing any securities.

Events of default under the indenture for the 2025 Notes include, among other things, a default in the payment when due of the principal of, or the redemption price for, any note and a default for 30 days in the payment when due of interest on any note.

If an event of default, the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding will immediately become due and payable.

The initial conversion rate applicable to the 2025 Notes is 84.122 shares of common stock per $ 1,000 principal amount of 2025 Notes, or a total of approximately 19.348 million shares for the total $ 230.0 million principal amount.

This initial conversion rate is equivalent to an initial conversion price of approximately $ 11.89 per share.

The conversion rate will be subject to adjustment upon the occurrence of certain specified events.

Noteholders may convert their notes at their option only in the circumstances described in the indenture.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate.

Net proceeds from the 2025 Notes offering were approximately $ 221.6 million, after deducting the initial purchaser’s discounts and commissions and the Company’s offering expenses.

Upon issuance, the principal amount was separated into a liability and an equity component, such that interest expense reflects the Company’s nonconvertible debt interest rate.

The initial carrying value of the 2025 Notes, excluding the discounts upon original issuance and third party offering costs allocated to the liability, and recorded during the thirteen weeks ended June 28, 2020, is as follows (in thousands):

Liability component

Principal $ 230,000

Debt discount (1) ( 66,137 )

Debt issuance costs (1) ( 5,996 )

Net carrying amount $ 157,867

Equity component (2) $ 64,367

________________

(1) Debt discount and issuance costs are amortized to interest expense using the effective interest method over the expected life of the 2025 Notes.

(2) Recorded in Additional paid-in capital on the Consolidated Balance Sheet.

Includes $ 2.4 million of equity issuance costs and net deferred tax assets of $ 0.6 million.

Convertible Note Hedge and Warrant Transactions - In connection with the offering of the 2025 Notes , the Company entered into convertible note hedge transactions (the “Convertible Note Hedge Transactions”) with certain of the initial purchasers of the 2025 Notes and/or their respective affiliates and other financial institutions (in this capacity, the “Hedge Counterparties”).

Concurrently with the Company’s entry into the Convertible Note Hedge Transactions, the Company also entered into separate, warrant transactions with the Hedge Counterparties collectively relating to the same number of shares of the Company’s common stock, subject to customary anti-dilution adjustments, and for which the Company received proceeds that partially offset the cost of entering into the Convertible Note Hedge Transactions (the “Warrant Transactions”).

The Convertible Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the 2025 Notes , and are expected generally to reduce the potential equity dilution, and/or offset any cash payments in excess of the principal amount due, as the case may be, upon conversion of the 2025 Notes .

The Warrant Transactions could have a dilutive effect on the Company’s

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

common stock to the extent that the price of its common stock exceeds the strike price of the Warrant Transactions.

The strike price will initially be $ 16.64 per share and is subject to certain adjustments under the terms of the Warrant Transactions.

The portion of the net proceeds to the Company from the offering of the 2025 Notes that was used to pay the premium on the Convertible Note Hedge Transactions, net of the proceeds to the Company from the Warrant Transactions, was approximately $ 19.6 million.

The net costs incurred in connection with the Convertible Note Hedge Transactions and Warrant Transactions were recorded as a reduction to Additional paid-in capital on the Company’s Consolidated Balance Sheet during the thirteen weeks ended June 28, 2020.

As these transactions meet certain accounting criteria, the Convertible Note Hedge Transactions and Warrant Transactions were recorded in stockholders’ equity, not accounted for as derivatives and are not remeasured each reporting period.

Other Long-term Liabilities, Net

Other long-term liabilities, net, consisted of the following, as of the periods indicated:

(dollars in thousands)

MARCH 29, 2020

DECEMBER 29, 2019

(dollars in thousands) JUNE 28, 2020 DECEMBER 29, 2019

Accrued insurance liability $ 32,740 $ 33,818

Chef and Restaurant Managing Partner deferred compensation obligations and deposits

Chef and Restaurant Managing Partner deferred compensation obligations 38,187 47,831

Other long-term liabilities (1) 91,971 56,411

$ 162,898 $ 138,060

The increase in Other long-term liabilities during the thirteen weeks ended March 29, 2020 , preliminary relates to $ 9.9 million of additional interest rate swap liabilities and $ 8.7 million of additional contingent lease liabilities.

See Note 13 - Derivative Instruments and Hedging Activities and Note 18 - Commitments and Contingencies , respectively, for details regarding these increases.

________________

(1) The increase in Other long-term liabilities during the twenty-six weeks ended June 28, 2020, primarily relates to $ 16.9 million related to deferred payroll tax liabilities (as allowed for in the Coronavirus, Aid, Relief and Economic Security Act), $ 8.6 million of additional contingent lease liabilities subsequent to the adoption of ASU No.

2016-13 and $ 7.3 million of additional interest rate swap liabilities.

See Note 19 - Income Taxes , Note 20 - Commitments and Contingencies and Note 15 - Derivative Instruments and Hedging Activities , respectively, for details regarding these increases.

Stockholders’ Equity

Share Repurchases - The Company did not repurchase any shares of its outstanding common stock during the thirteen weeks ended March 29, 2020 .

Under the terms of the Amended Credit Agreement, repurchasing shares of the Company’s outstanding common stock is restricted until after September 26, 2021.

Dividends - The Company declared and paid dividends per share during fiscal year 2020 as follows:

(in thousands, except per share data)

DIVIDENDS PER SHARE

(in thousands, except per share data) DIVIDENDS PER SHARE AMOUNT

First fiscal quarter $ 0.20 $ 17,480

Redeemable Preferred Stock - In connection with the development of its Abbraccio Cucina Italiana (“ Abbraccio ”) concept in 2015, the Company entered into an investment agreement (the “ Abbraccio Investment Agreement ”) to sell preferred shares of its Abbraccio subsidiary (“ Abbraccio Shares ”) to certain investors (“ Abbraccio Partners ”).

Redeemable Preferred Stock - In connection with the development of its Abbraccio Cucina Italiana (“Abbraccio”) concept in 2015, the Company entered into an investment agreement (the “Abbraccio Investment Agreement”) to sell preferred shares of its Abbraccio subsidiary (“Abbraccio Shares”) to certain investors.

The Abbraccio Investment Agreement included a call option for the purchase of the Abbraccio Shares (the “Abbraccio Call Option”).

4 unchanged sentences

Accumulated Other Comprehensive Loss (“AOCL”) - Following are the components of AOCL as of the periods indicated:

(dollars in thousands)

MARCH 29, 2020

DECEMBER 29, 2019

(dollars in thousands) JUNE 28, 2020 DECEMBER 29, 2019

Foreign currency translation adjustment $ ( 188,474 ) $ ( 152,031 )

1 unchanged sentence

Accumulated other comprehensive loss $ ( 217,130 ) $ ( 169,776 )

Following are the components of Other comprehensive (loss) income attributable to Bloomin’ Brands for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

Following are the components of Other comprehensive loss attributable to Bloomin’ Brands for the periods indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Foreign currency translation adjustment $ ( 29,146 ) $ ( 8,584 ) $ ( 36,443 ) $ ( 2,737 )

Unrealized loss on derivatives, net of tax (1) $ ( 1,556 ) $ ( 7,239 ) $ ( 14,892 ) $ ( 11,620 )

Reclassification of adjustments for loss (gain) on derivatives included in Net income, net of tax (2)

Total unrealized loss on derivatives, net of tax

Other comprehensive (loss) income attributable to Bloomin’ Brands

Reclassification of adjustments for loss (gain) on derivatives included in Net (loss) income, net of tax (2) 2,585 130 3,981 ( 234 )

Total unrealized gain (loss) on derivatives, net of tax $ 1,029 $ ( 7,109 ) $ ( 10,911 ) $ ( 11,854 )

Other comprehensive loss attributable to Bloomin’ Brands $ ( 28,117 ) $ ( 15,693 ) $ ( 47,354 ) $ ( 14,591 )

________________

Unrealized loss on derivatives is net of tax of $( 4.6 ) million and $( 1.5 ) million for the thirteen weeks ended March 29, 2020 and March 31, 2019 , respectively.

(1) Unrealized loss on derivatives is net of tax of $ 0.5 million and $ 2.5 million for the thirteen weeks ended June 28, 2020 and June 30, 2019 and $ 5.2 million and $ 4.0 million for the twenty-six weeks ended June 28, 2020 and June 30, 2019, respectively.

(2) Reclassifications of adjustments for loss (gain) on derivatives are net of tax.

7 unchanged sentences

The following table presents the fair value and classification of the Company’s swap agreements, as of the periods indicated :

(dollars in thousands)

MARCH 29, 2020

DECEMBER 29, 2019

CONSOLIDATED BALANCE SHEET CLASSIFICATION

Interest rate swaps - liability

Accrued and other current liabilities

Interest rate swaps - liability

Other long-term liabilities, net

(dollars in thousands) JUNE 28, 2020 DECEMBER 29, 2019 CONSOLIDATED BALANCE SHEET CLASSIFICATION

Interest rate swaps - liability $ 14,555 $ 7,174 Accrued and other current liabilities

Interest rate swaps - liability 24,152 16,835 Other long-term liabilities, net

Total fair value of derivative instruments - liabilities (1) $ 38,707 $ 24,009

Accrued interest

Accrued and other current liabilities

Accrued interest $ 1,356 $ 632 Accrued and other current liabilities

____________________

(1) See Note 17 - Fair Value Measurements for fair value discussion of the interest rate swaps.

On May 4, 2020 , concurrent with entering into the Amended Credit Agreement, the Company elected to de-designate its interest rate swap hedge relationships and modify its interest rate swaps to more closely align with certain terms of the Amended Credit Agreement.

On May 6, 2020, the Company re-designated the cash flow hedge relationship for the

On May 4, 2020 , concurrent with entering into the Amended Credit Agreement, the Company de-designated its interest rate swap hedge relationship and modified its hedge documentation to more closely align with certain terms

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

(UNAUDITED) - Continued

original $ 550.0 million notional amount, resulting in no impact to the Company’s consolidated financial statements as a result of the hedge activity.

of the Amended Credit Agreement.

On May 6, 2020, the Company re-designated the cash flow hedge relationship for the original $ 550.0 million notional amount, resulting in no impact to the Company’s consolidated financial statements as a result of the hedge activity.

The following table summarizes the effects of the swap agreements on Net (loss) income for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Interest rate swap (expense) income recognized in Interest expense, net $ ( 3,482 ) $ ( 175 ) $ ( 5,362 ) $ 316

Income tax benefit (expense) recognized in Provision for income taxes

Income tax benefit (expense) recognized in (Benefit) provision for income taxes 897 45 1,381 ( 82 )

Total effects of the interest rate swaps on Net (loss) income $ ( 2,585 ) $ ( 130 ) $ ( 3,981 ) $ 234

2 unchanged sentences

The Company continually assesses the creditworthiness of its counterparties.

As of March 29, 2020 , all counterparties to the interest rate swaps had performed in accordance with their contractual obligations.

As of June 28, 2020 , all counterparties to the interest rate swaps had performed in accordance with their contractual obligations.

The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if the repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on indebtedness.

As of March 29, 2020 and December 29, 2019 , the fair value of the Company’s interest rate swaps was in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk, of $ 41.0 million and $ 24.8 million , respectively.

As of March 29, 2020 and December 29, 2019 , the Company has not posted any collateral related to these agreements.

If the Company had breached any of these provisions as of March 29, 2020 and December 29, 2019 , it could have been required to settle its obligations under the agreements at their termination value of $ 41.0 million and $ 24.8 million , respectively.

As of June 28, 2020 and December 29, 2019 , the fair value of the Company’s interest rate swaps was in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk, of $ 40.5 million and $ 24.8 million, respectively.

As of June 28, 2020 and December 29, 2019 , the Company has not posted any collateral related to these agreements.

If the Company had breached any of these provisions as of June 28, 2020 and December 29, 2019 , it could have been required to settle its obligations under the agreements at their termination value of $ 40.5 million and $ 24.8 million, respectively.

In April 2020, the FASB issued a question and answer document focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19 (the “Lease Modification Q&A”).

The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease when the total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease.

The Company elected this practical expedient for COVID-19-related rent concessions, primarily rent deferrals or rent abatements, and has elected not to remeasure the related lease liability and right-of-use asset for those leases.

Rent deferrals are accrued with no impact to straight-line rent expense.

Rent abatements are recognized as a reduction of variable rent expense in the month they occur.

This election will continue while these concessions are in effect.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheets as of the periods indicated:

(dollars in thousands)

CONSOLIDATED BALANCE SHEET CLASSIFICATION

MARCH 29, 2020

DECEMBER 29, 2019

Operating lease right-of-use assets

Finance lease right-of-use assets (1)

Property, fixtures and equipment, net

(dollars in thousands) CONSOLIDATED BALANCE SHEET CLASSIFICATION JUNE 28, 2020 DECEMBER 29, 2019

Operating lease right-of-use assets Operating lease right-of-use assets $ 1,212,916 $ 1,266,548

Finance lease right-of-use assets (1) Property, fixtures and equipment, net 1,729 2,036

Total lease assets, net $ 1,214,645 $ 1,268,584

Current operating lease liabilities (2)

Accrued and other current liabilities

Current finance lease liabilities

Current portion of long-term debt

Non-current operating lease liabilities

Non-current finance lease liabilities

Long-term debt, net

Current operating lease liabilities (2) Accrued and other current liabilities $ 177,236 $ 171,866

Current finance lease liabilities Current portion of long-term debt 1,104 1,361

Non-current operating lease liabilities Non-current operating lease liabilities 1,248,941 1,279,051

Non-current finance lease liabilities Long-term debt, net 853 947

Total lease liabilities $ 1,428,134 $ 1,453,225

________________

Net of accumulated amortization of $ 1.6 million and $ 1.3 million as of March 29, 2020 and December 29, 2019 , respectively.

Excludes accrued contingent percentage rent.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

(1) Net of accumulated amortization of $ 1.8 million and $ 1.3 million as of June 28, 2020 and December 29, 2019, respectively.

(2) Excludes COVID-19-related deferred rent accruals of $ 18.3 million as of June 28, 2020 and accrued contingent percentage rent of $ 2.7 million and $ 2.4 million, as of June 28, 2020 and December 29, 2019, respectively.

Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for the periods indicated:

CONSOLIDATED INCOME STATEMENT CLASSIFICATION

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

Operating leases (1)

Other restaurant operating

Variable lease cost

Other restaurant operating

CONSOLIDATED INCOME STATEMENT CLASSIFICATION THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Operating leases (1) Other restaurant operating $ 42,776 $ 45,079 $ 88,658 $ 90,312

Variable lease cost Other restaurant operating ( 1,046 ) 746 74 1,565

Finance leases

Amortization of leased assets

Depreciation and amortization

Interest on lease liabilities

Interest expense, net

Sublease revenue (2)

Franchise and other revenues

Amortization of leased assets Depreciation and amortization 315 360 657 684

Interest on lease liabilities Interest expense, net 37 72 83 145

Sublease revenue (2) Franchise and other revenues ( 109 ) ( 1,792 ) ( 1,786 ) ( 3,106 )

Lease costs, net $ 41,973 $ 44,465 $ 87,686 $ 89,600

________________

Excludes rent expense for office facilities and Company-owned closed or subleased properties for the thirteen weeks ended March 29, 2020 and March 31, 2019 of $ 3.6 million , which is included in General and administrative expense and certain supply chain related rent expense of $ 0.3 million , which is included in Cost of sales .

Excludes rental income from Company-owned properties for the thirteen weeks ended March 29, 2020 and March 31, 2019 of $ 0.2 million and $ 0.7 million , respectively.

(1) Excludes rent expense for office facilities and Company-owned closed or subleased properties of $ 3.3 million and $ 3.7 million for the thirteen weeks ended June 28, 2020 and June 30, 2019, respectively, and $ 6.9 million and $ 7.2 million for the twenty-six weeks ended June 28, 2020 and June 30, 2019, respectively, which is included in General and administrative expense.

Also excludes certain supply chain related rent expense of $ 0.3 million for the thirteen weeks ended June 28, 2020 and June 30, 2019 and $ 0.6 million for the twenty-six weeks ended June 28, 2020 and June 30, 2019, which is included in Cost of sales.

(2) Excludes rental income from Company-owned properties of $ 0.1 million and $ 0.7 million for the thirteen weeks ended June 28, 2020 and June 30, 2019, respectively, and $ 0.3 million and $ 1.4 million for the twenty-six weeks ended June 28, 2020 and June 30, 2019, respectively.

The following table is a summary of other impacts to the Company’s Consolidated Financial Statements related to its leases for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019

Cash flows from operating activities:

Cash paid for amounts included in the measurement of operating lease liabilities $ 75,688 $ 95,532

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Fair Value Measurements

2 unchanged sentences

Unadjusted quoted market prices in active markets for identical assets or liabilities

Observable inputs available at measurement date other than quoted prices included in Level 1

Unobservable inputs that cannot be corroborated by observable market data

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Level 2 Observable inputs available at measurement date other than quoted prices included in Level 1

Level 3 Unobservable inputs that cannot be corroborated by observable market data

Fair Value Measurements on a Recurring Basis - The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:

MARCH 29, 2020

DECEMBER 29, 2019

(dollars in thousands)

JUNE 28, 2020 DECEMBER 29, 2019

(dollars in thousands) TOTAL LEVEL 1 LEVEL 2 TOTAL LEVEL 1 LEVEL 2

Cash equivalents:

1 unchanged sentence

Money market funds 9,595 9,595 — 12,752 12,752 —

Restricted cash equivalents:

Money market funds 1,099 1,099 — — — —

Total asset recurring fair value measurements $ 17,261 $ 17,261 $ — $ 13,789 $ 13,789 $ —

5 unchanged sentences

Fair value of each class of financial instrument is determined based on the following:

FINANCIAL INSTRUMENT

METHODS AND ASSUMPTIONS

Fixed income funds and Money market funds

Carrying value approximates fair value because maturities are less than three months.

Derivative instruments

The Company’s derivative instruments include interest rate swaps.

FINANCIAL INSTRUMENT METHODS AND ASSUMPTIONS

Fixed income funds and Money market funds Carrying value approximates fair value because maturities are less than three months.

Derivative instruments The Company’s derivative instruments include interest rate swaps.

Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs.

1 unchanged sentence

The Company also considers its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

As of March 29, 2020 and December 29, 2019, the Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

As of June 28, 2020 and December 29, 2019, the Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

BLOOMIN’ BRANDS, INC.

5 unchanged sentences

THIRTEEN WEEKS ENDED

MARCH 29, 2020

MARCH 31, 2019

(dollars in thousands)

CARRYING VALUE

TOTAL IMPAIRMENT

CARRYING VALUE

TOTAL IMPAIRMENT

JUNE 28, 2020 JUNE 30, 2019

(dollars in thousands) CARRYING VALUE TOTAL IMPAIRMENT CARRYING VALUE TOTAL IMPAIRMENT

Operating lease right-of-use assets (1)

$ 32,404 $ 4,028 $ 114 $ 1,770

Property, fixtures and equipment (2)

9,992 19,595 466 162

Goodwill and other assets (3) 748 295 — —

$ 43,144 $ 23,918 $ 580 $ 1,932

TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019

(dollars in thousands) CARRYING VALUE TOTAL IMPAIRMENT CARRYING VALUE TOTAL IMPAIRMENT

Assets held for sale (4)

$ 1,182 $ 75 $ 2,149 $ 215

Operating lease right-of-use assets (1)

85,537 23,591 2,356 2,366

Property, fixtures and equipment (2)

28,390 37,993 956 2,833

Goodwill and other assets (3) 748 2,683 — —

$ 115,857 $ 64,342 $ 5,461 $ 5,414

Assets generally measured using third-party market appraisals or executed sales contracts (Level 2).

Carrying values measured using Level 3 inputs to estimate fair value totaled $ 55.6 million and $ 2.0 million during the thirteen weeks ended March 29, 2020 and March 31, 2019 , respectively.

____________________

(1) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 0.2 million during the twenty-six weeks ended June 30, 2019.

All other assets were valued using Level 3 inputs.

Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value.

Carrying values measured using Level 3 inputs to estimate fair value totaled $ 19.2 million and $ 0.5 million during the thirteen weeks ended March 29, 2020 and March 31, 2019 , respectively.

(2) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 0.5 million and $ 2.2 million during the thirteen and twenty-six weeks ended June 28, 2020, respectively.

All other assets were valued using Level 3 inputs.

1 unchanged sentence

(3) All assets measured using the quoted market value of comparable assets (Level 2).

See Note 4 - Impairments, Exit Costs and Disposals for information regarding impairment charges resulting from the fair value measurement performed on a nonrecurring basis during the thirteen weeks ended March 29, 2020 .

(4) Assets generally measured using third-party market appraisals or executed sales contracts (Level 2).

Projected future cash flows, including discount rate and growth rate assumptions, are derived from current economic conditions, expectations of management and projected trends of current operating results.

4 unchanged sentences

In order to calculate the present value of those future cash flows, the Company discounted cash flow estimates at its weighted-average cost of capital applicable to the country in which the measured assets reside.

The following table presents quantitative information related to certain unobservable inputs used in the Company’s Level 3 fair value measurements of Operating lease right-of-use assets and Property, fixtures and equipment for the impairment losses incurred during the period indicated:

THIRTEEN WEEKS ENDED

UNOBSERVABLE INPUTS

MARCH 29, 2020

Weighted-average cost of capital

Long-term growth rate

Interim Disclosures about Fair Value of Financial Instruments - The Company’s non-derivative financial instruments consist of cash equivalents, accounts receivable, accounts payable and current and long-term debt.

The fair values of

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

(UNAUDITED) - Continued

cash equivalents, accounts receivable and accounts payable approximate their carrying amounts reported on its Consolidated Balance Sheets due to their short duration.

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

UNOBSERVABLE INPUTS JUNE 28, 2020 JUNE 28, 2020

Weighted-average cost of capital 10.9 % 10.4 % to 10.9 %

Long-term growth rate 1.5 % to 2.0 % 1.5 % to 2.0 %

The fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts reported on its Consolidated Balance Sheets due to their short duration.

Debt is carried at amortized cost;

1 unchanged sentence

The following table includes the carrying value and fair value of the Company’s debt by hierarchy level as of the periods indicated:

MARCH 29, 2020

DECEMBER 29, 2019

CARRYING VALUE

FAIR VALUE LEVEL 2

CARRYING VALUE

FAIR VALUE LEVEL 2

JUNE 28, 2020 DECEMBER 29, 2019

CARRYING VALUE FAIR VALUE LEVEL 2 CARRYING VALUE FAIR VALUE LEVEL 2

(dollars in thousands)

Senior Secured Credit Facility:

Term loan A $ 437,500 $ 424,375 $ 450,000 $ 450,563

Revolving credit facility $ 615,000 $ 577,319 $ 599,000 $ 599,000

Convertible Senior Notes $ 230,000 $ 246,100 $ — $ —

Allowance for Expected Credit Losses

The following is a rollforward of the allowance for trade receivable expected credit losses for the period indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

The following is a rollforward of the allowance for trade receivable expected credit losses for the periods indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 28, 2020

Allowance for credit losses, beginning of period $ 4,551 $ 199

Adjustment for adoption of ASU No.

2016-13 — 1,018

Provision for expected credit losses 15 3,349

3 unchanged sentences

Amounts due from franchisees consist of initial franchise fees, royalty income, and advertising fees.

See Note 7 - Other Current Assets, Net for disclosure of trades receivables by category as of March 29, 2020 and December 29, 2019 .

Credit card receivables in the U.S.

are recorded within Cash and cash equivalents based on their short duration and reasonably assured settlement.

See Note 7 - Other Current Assets, Net for disclosure of trades receivables by category as of June 28, 2020 and December 29, 2019.

Domestic credit card receivables are recorded within Cash and cash equivalents based on their short duration and reasonably assured settlement.

The Company evaluates the collectability of trade receivables based on historical loss experience and risk pool and records periodic adjustments for factors such as deterioration of economic conditions, specific customer circumstances and changes in the aging of accounts receivable balances.

1 unchanged sentence

Losses are charged off in the period in which they are determined to be uncollectable.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The financial condition of the Company’s franchisees is largely dependent on the underlying business trends of its brands and market conditions within the casual dining restaurant industry.

In March 2020, the Company fully reserved substantially all of its outstanding franchise receivables in response to the economic impact of the COVID-19 pandemic.

See Note 2 - COVID-19 Impact for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

See Note 2 - COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

The Company is also exposed to credit losses from off-balance sheet lease guarantees primarily related to the divestiture of certain formerly Company-owned restaurant sites.

See Note 20 - Commitments and Contingencies for details regarding these lease guarantees.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

(Loss) income before (benefit) provision for income taxes $ ( 128,207 ) $ 31,024 $ ( 182,276 ) $ 102,169

2 unchanged sentences

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).

Accordingly, the applicable provisions of the CARES Act have been reflected in the Company’s tax provision for the thirteen weeks ended March 29, 2020 .

Accordingly, the applicable provisions of the CARES Act have been reflected in the Company’s tax provision for the thirteen and twenty-six weeks ended June 28, 2020.

The CARES Act, among other items, includes U.S.

corporate tax provisions related to the deferment of employer social security payments, net operating loss (“ NOL ”) carryback periods, alternative minimum tax credits, modifications to interest deduction limitations and technical corrections on tax depreciation methods for qualified improvement property (“ QIP ”).

The effective income tax rate for the thirteen weeks ended March 29, 2020 increased by 28.7 percentage points as compared to the thirteen weeks ended March 31, 2019 .

The increase was primarily due to the benefit of the five-year carryback of the forecasted 2020 NOL under the CARES Act and favorable discrete items recorded in the thirteen weeks ended March 29, 2020 .

corporate tax provisions related to the deferment of employer social security payments, employee retention credits, net operating loss (“NOL”) carryback periods, alternative minimum tax credits, modifications to interest deduction limitations and technical corrections on tax depreciation methods for qualified improvement property (“QIP”).

The effective income tax rate for the thirteen and twenty-six weeks ended June 28, 2020 increased by 24.0 and 23.8 percentage points as compared to the thirteen and twenty-six weeks ended June 30, 2019.

These increases were primarily due to the benefit of the tax credits for FICA taxes on certain employees’ tips and the forecasted 2020 pre-tax book loss.

As of December 29, 2019, the Company had $ 128.6 million in general business tax credits carryforwards, which have a 20-year carryforward period and are utilized on a first-in, first-out basis.

The Company expects to increase its general business credit carryforwards in 2020 by approximately $ 50 million to $ 80 million as a result of the carryback of the forecasted 2020 NOL , additional credits generated in 2020 and the application of the QIP technical correction enacted as part of the CARES Act .

The Company currently expects to utilize these tax credit carryforwards within a seven to nine year period.

The Company expects to increase its general business credit carryforwards in 2020 by approximately $ 30 million to $ 40 million as a result of additional credits generated in 2020 and the application of the QIP technical correction enacted as part of the CARES Act.

The Company currently expects to utilize these tax credit carryforwards within a 10 year period.

However, the Company’s ability to utilize these tax credits could be adversely impacted by, among other items, a future “ownership change” as defined under Section 382 of the Internal Revenue Code.

The Company has a blended federal and state statutory rate of approximately 26 %.

The effective income tax rate for the thirteen weeks ended March 29, 2020 was higher than the statutory rate primarily due to the benefit of the five-year carryback of the forecasted 2020 NOL under the CARES Act and tax credits for FICA taxes on certain employees’ tips.

The effective income tax rate for the thirteen and twenty-six weeks ended June 28, 2020 was higher than the statutory rate primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips.

Deferred Taxes - During the twenty-six weeks ended June 28, 2020, Deferred income tax assets, net increased by $ 56.1 million primarily as a result of losses incurred during the period and tax credits for FICA taxes on certain employees’ tips.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Commitments and Contingencies

Litigation and Other Matters - The Company had $ 3.3 million and $ 3.0 million of liabilities recorded for various legal matters as of March 29, 2020 and December 29, 2019 , respectively.

Litigation and Other Matters - The Company had $ 4.2 million and $ 3.0 million of liabilities recorded for various legal matters as of June 28, 2020 and December 29, 2019, respectively.

The Company is subject to legal proceedings, claims and liabilities, such as liquor liability, slip and fall cases, wage-and-hour and other employment-related litigation, which arise in the ordinary course of business and are generally covered by insurance if they exceed specified retention or deductible amounts.

2 unchanged sentences

These leases have varying terms, the latest of which expires in 2032 .

As of March 29, 2020 , the undiscounted payments that the Company could be required to make in the event of non-payment by the primary lessees was approximately $ 31.3 million .

The present value of these potential payments discounted at the Company’s incremental borrowing rate as of

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

March 29, 2020 was approximately $ 24.9 million .

As of June 28, 2020, the undiscounted payments that the Company could be required to make in the event of non-payment by the primary lessees was approximately $ 32.6 million .

The present value of these potential payments discounted at the Company’s incremental borrowing rate as of June 28, 2020 was approximately $ 20.5 million .

In the event of default, the indemnity clauses in the Company’s purchase and sale agreements govern its ability to pursue and recover damages incurred.

In March 2020, the Company recorded $ 4.2 million of additional contingent lease liability in response to the economic impact of the COVID-19 pandemic.

As of March 29, 2020 , the Company’s recorded contingent lease liability was $ 9.7 million .

See Note 2 - COVID-19 Impact for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

As of June 28, 2020, the Company’s recorded contingent lease liability was $ 9.6 million.

See Note 2 - COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

Segment Reporting

7 unchanged sentences

The following is a summary of reporting segments:

REPORTABLE SEGMENT (1)

GEOGRAPHIC LOCATION

Outback Steakhouse

United States of America

REPORTABLE SEGMENT (1) CONCEPT GEOGRAPHIC LOCATION

Outback Steakhouse United States of America

Carrabba’s Italian Grill

1 unchanged sentence

Fleming’s Prime Steakhouse & Wine Bar

International

Outback Steakhouse

Brazil, Hong Kong/China

Carrabba’s Italian Grill (Abbraccio)

International Outback Steakhouse Brazil, Hong Kong/China

Carrabba’s Italian Grill (Abbraccio) Brazil

_________________

4 unchanged sentences

and international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based compensation expenses and certain bonus expenses.

During the thirteen weeks ended March 29, 2020 , the Company recorded $ 22.2 million of pre-tax charges as a part of transformational initiatives implemented in connection with its previously announced review of strategic alternatives.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

During the thirteen and twenty-six weeks ended June 28, 2020, the Company recorded $ 2.4 million and $ 24.6 million, respectively, of pre-tax charges as a part of transformational initiatives implemented in connection with its previously announced review of strategic alternatives.

These costs were primarily recorded within General and administrative expense and Provision for impaired assets and restaurant closings and were not allocated to the Company’s segments since the Company’s CODM does not consider the impact of transformational initiatives when assessing segment performance.

The following table is a summary of Total revenue by segment, for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Total revenues

$ 537,080 $ 914,219 $ 1,431,577 $ 1,928,726

International 41,379 107,711 155,219 221,335

Total revenues $ 578,459 $ 1,021,930 $ 1,586,796 $ 2,150,061

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

The following table is a reconciliation of Segment income from operations to (Loss) income before (benefit) provision for income taxes , for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

Segment income from operations

The following table is a reconciliation of Segment (loss) income from operations to (Loss) income before (benefit) provision for income taxes, for the periods indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Segment (loss) income from operations

$ ( 62,921 ) $ 78,814 $ ( 51,542 ) $ 191,849

International ( 17,070 ) 6,909 ( 10,283 ) 20,629

Total segment income from operations

Total segment (loss) income from operations ( 79,991 ) 85,723 ( 61,825 ) 212,478

Unallocated corporate operating expense ( 31,921 ) ( 42,263 ) ( 91,655 ) ( 86,524 )

Total (loss) income from operations ( 111,912 ) 43,460 ( 153,480 ) 125,954

Other expense, net

Loss on modification of debt ( 237 ) — ( 237 ) —

Other income (expense), net 581 12 ( 212 ) ( 156 )

Interest expense, net ( 16,639 ) ( 12,448 ) ( 28,347 ) ( 23,629 )

1 unchanged sentence

The following table is a summary of Depreciation and amortization expense by segment for the periods indicated:

THIRTEEN WEEKS ENDED

(dollars in thousands)

MARCH 29, 2020

MARCH 31, 2019

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in thousands) JUNE 28, 2020 JUNE 30, 2019 JUNE 28, 2020 JUNE 30, 2019

Depreciation and amortization

$ 37,308 $ 38,916 $ 74,948 $ 77,702

International 5,884 6,749 12,642 13,205

Corporate 2,592 4,123 6,462 8,363

Total depreciation and amortization $ 45,784 $ 49,788 $ 94,052 $ 99,270

Subsequent Events

Convertible Notes - On May 8, 2020 , the Company completed a $ 200.0 million principal amount private offering of 5.00 % convertible senior notes due 2025 and on May 12, 2020 , issued an additional $ 30.0 million principal amount in connection with the overallotment option granted to the initial purchasers as part of the offering (collectively, the “ 2025 Notes ”).

The 2025 Notes are governed by the terms of an indenture between the Company and Wells Fargo Bank, National Association, as the Trustee.

The 2025 Notes will mature on May 1, 2025 , unless earlier converted, redeemed or purchased by the Company.

The 2025 Notes bear cash interest at an annual rate of 5.00 % , payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020 .

The 2025 Notes are unsecured obligations and do not contain any financial covenants or restrictions on incurring additional indebtedness, paying dividends or issuing or repurchasing any securities.

If an event of default, the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding will immediately become due and payable.

The initial conversion rate applicable to the 2025 Notes is 84.122 shares of common stock per $ 1,000 principal amount of 2025 Notes , or a total of approximately 19.348 million shares for the total $ 230.0 million principal amount.

This initial conversion rate is equivalent to an initial conversion price of approximately $ 11.89 per share.

The conversion rate will be subject to adjustment upon the occurrence of certain specified events.

Noteholders may convert their notes at their option only in the circumstances described in the indenture.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

Net proceeds from this offering were approximately $ 221.4 million , after deducting the initial purchaser’s discounts and commissions and the Company’s offering expenses.

The Company intends to use the net proceeds of this offering for general corporate purposes.

Upon issuance, the principal amount is separated into a liability and an equity component, such that interest expense reflects the Company’s nonconvertible debt interest rate.

Debt issuance costs related to the 2025 Notes were comprised of discounts upon original issuance of $ 6.9 million and estimated third party offering costs of $ 1.7 million .

In accounting for the debt issuance costs related to the issuance of the 2025 Notes , the Company allocated the total amount incurred to the liability and equity components based on their relative values.

Debt issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the expected life of the 2025 Notes , and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity.

Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2025 balance on the consolidated balance sheets.

Convertible Note Hedge and Warrant Transactions - In connection with the offering of the 2025 Notes , the Company entered into convertible note hedge transactions (the “ Convertible Note Hedge Transactions ”) with certain of the initial purchasers of the 2025 Notes and/or their respective affiliates and other financial institutions (in this capacity, the “ Hedge Counterparties ”).

Concurrently with the Company’s entry into the Convertible Note Hedge Transactions , the Company also entered into separate, warrant transactions with the Hedge Counterparties collectively relating to the same number of shares of the Company’s common stock, subject to customary anti-dilution adjustments, and for which the Company received premiums that partially offset the cost of entering into the Convertible Note Hedge Transactions (the “ Warrant Transactions ”).

The Convertible Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that will initially underlie the 2025 Notes , and are expected generally to reduce the potential equity dilution, and/or offset any cash payments in excess of the principal amount due, as the case may be, upon conversion of the 2025 Notes .

The Warrant Transactions could have a dilutive effect on the Company’s common stock to the extent that the price of its common stock exceeds the strike price of the Warrant Transactions .

The strike price will initially be $ 16.64 per share and is subject to certain adjustments under the terms of the Warrant Transactions .

The portion of the net proceeds to the Company from the offering of the 2025 Notes that was used to pay the premium on the Convertible Note Hedge Transactions (calculated after taking into account the proceeds to the Company from the Warrant Transactions ) was approximately $ 19.6 million .

The net costs incurred in connection with the Convertible Note Hedge Transactions and Warrant Transactions will be recorded as a reduction to additional paid-in capital on the Company’s Consolidated Balance Sheet during the thirteen weeks ended June 28, 2020.

As of the date of this filing, the Company’s accounting for the 2025 Notes , Convertible Note Hedge Transactions and Warrant Transactions was still ongoing.

Any impact will be reflected in the Company’s consolidated financial statements during the thirteen weeks ended June 28, 2020.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements