What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-10-30 compared with 2020-07-31 · 248 added, 211 removed, 475 unchanged (49% of the section changed)

31 unchanged sentences

(xvi) Such other factors as discussed in Part I, Item IA.

Risk Factors of our Annual Report on Form 10-K for the year ended December 29, 2019.

Risk Factors of our Annual Report on Form 10-K for the year ended December 29, 2019 and Part I, Item IA.

Risk Factors in this Report.

In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements.

5 unchanged sentences

We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts.

As of June 28, 2020, we owned and operated 1,151 restaurants and franchised 309 restaurants across 47 states, Puerto Rico, Guam and 20 countries.

As of September 27, 2020, we owned and operated 1,152 restaurants and franchised 312 restaurants across 47 states, Puerto Rico, Guam and 20 countries.

We have four founder-inspired concepts:

1 unchanged sentence

Executive Summary

Our financial results for the thirteen weeks ended June 28, 2020 (“second quarter of 2020”) include the following:

• A decrease in Total revenues of 43.4% in the second quarter of 2020, as compared to the second quarter of 2019, primarily due to:

(i) significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic, (ii) the net impact of restaurant closures and openings, (iii) lower franchise revenue and (iv) the effect of foreign currency translation of the Brazil Real relative to the U.S.

• Loss from operations of $(111.9) million in the second quarter of 2020, as compared to income from operations of $43.5 million in the second quarter of 2019, was primarily due to:

(i) significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including asset impairment charges, incremental delivery related costs and relief pay (net of tax credits) and (ii) higher labor costs and commodity inflation.

Our financial results for the thirteen weeks ended September 27, 2020 (“third quarter of 2020”) include the following:

• A decrease in Total revenues of 20.3% in the third quarter of 2020, as compared to the third quarter of 2019, primarily due to:

(i) significantly lower comparable restaurant sales and franchise revenues principally attributable to the COVID-19 pandemic, (ii) the net impact of restaurant closures and openings and (iii) the effect of foreign currency translation of the Brazil Real relative to the U.S.

• Loss from operations of $(14.3) million in the third quarter of 2020, as compared to income from operations of $22.0 million in the third quarter of 2019, was primarily due to:

(i) significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including incremental delivery related costs, and (ii) certain costs incurred in connection with our transformation initiatives.

These decreases are partially offset by:

(i) reduced operating, advertising and utilities expense, (ii) cost savings from our restructuring and transformation initiatives and (iii) cost savings from waste reduction initiatives.

(i) reduced advertising, utilities and operating expenses, (ii) a reduction in prep labor hours, offset by higher labor costs, and (iii) cost savings from waste reduction initiatives.

Recent Developments - COVID-19

2 unchanged sentences

to carry-out and delivery only beginning March 20, 2020.

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

In early May 2020, we began to reopen our restaurant dining rooms with limited seating capacity in compliance with state and local regulations.

As of September 27, 2020, our restaurant dining rooms have reopened but many are still subject to seating capacity restrictions.

The temporary closure of our dining rooms and the limitations on seating capacity in our reopened dining rooms has resulted in significantly reduced traffic in our restaurants.

Recently, there has been a significant increase in reported COVID-19 cases in certain states, including Florida and Texas.

This has resulted in some local governments responding by taking additional measures, including implementing a further reduction of in-restaurant capacity in certain locations.

Although this is a developing situation, to this point these capacity reductions have had a minimal impact on overall sales trends.

When we are able to increase the capacity of our reopened dining rooms, it is uncertain whether customer traffic will return to levels prior to the outbreak of COVID-19.

Even if consumer demand recovers, governmental restrictions may again limit the capacity of our dining rooms or services we may provide in the future.

As a result, we expect our results for the foreseeable future will be significantly adversely impacted.

It remains uncertain whether customer traffic will return to levels prior to the outbreak of COVID-19.

Even if consumer demand fully recovers, governmental restrictions may continue to limit the capacity of our dining rooms or services we may provide in the future.

As a result, our results for the foreseeable future may be significantly adversely impacted.

In response to the pandemic, we have tightly managed expenses while taking steps to secure our liquidity position .

10 unchanged sentences

Restaurant-level operating margin is widely regarded in the industry as a useful metric to evaluate restaurant level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments.

Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Cost of sales, Labor and other related and Other restaurant operating (including advertising expenses) represent, in each case as such items are reflected in our Consolidated Statements of Operations.

Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Food and beverage costs, Labor and other related and Other restaurant operating (including advertising expenses) represent, in each case as such items are reflected in our Consolidated Statements of Operations.

The following categories of our revenue and operating expenses are not included in restaurant-level operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period:

18 unchanged sentences

Number of restaurants (at end of the period):

JUNE 28, 2020 JUNE 30, 2019

SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Outback Steakhouse

23 unchanged sentences

____________________

(1) The restaurant counts for Brazil are reported as of May 31, 2020 and 2019, respectively, to correspond with the balance sheet dates of this subsidiary.

(2) As of June 30, 2019, we had 11 international “dark kitchen” locations that offer delivery and carryout only.

(1) The restaurant counts for Brazil are reported as of August 31, 2020 and 2019, respectively, to correspond with the balance sheet dates of this subsidiary.

(2) As of September 27, 2020, we had 14 international “dark kitchen” locations that offer delivery and carry-out only.

One of these locations was included within Company-owned Other and 13 were included in Franchised Outback Steakhouse - South Korea.

(3) Includes two and one fast-casual Aussie Grill locations as of June 28, 2020 and June 30, 2019, respectively.

(3) Includes three and two fast-casual Aussie Grill locations as of September 27, 2020 and September 29, 2019, respectively.

BLOOMIN’ BRANDS, INC.

3 unchanged sentences

The following table sets forth, for the periods indicated, the percentages of certain items in our Consolidated Statements of Operations in relation to Total revenues or Restaurant sales, as indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Restaurant sales 99.4 % 98.4 % 99.2 % 98.5 %

2 unchanged sentences

Costs and expenses

Cost of sales (1) 31.4 31.1 31.8 31.4

Food and beverage costs (1) 30.1 31.6 31.3 31.4

Labor and other related (1) 32.2 30.3 32.6 29.6

19 unchanged sentences

Following is a summary of the change in Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

For the periods ended June 30, 2019 $ 1,005.7 $ 2,117.3

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 29, 2019 $ 951.8 $ 3,069.1

Comparable restaurant sales (157.6) (661.3)

3 unchanged sentences

Restaurant openings 2.4 15.8

For the periods ended June 28, 2020 $ 576.3 $ 1,572.5

The decrease in Restaurant sales during the thirteen weeks ended June 28, 2020 was primarily due to:

(i) significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic, (ii) the closure of 43 restaurants since March 31, 2019 and (iii) the effect of foreign currency translation of the Brazilian Real

For the periods ended September 27, 2020 $ 766.5 $ 2,339.0

The decrease in Restaurant sales during the thirteen weeks ended September 27, 2020 was primarily due to:

(i) significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic, (ii) the closure

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

relative to the U.S.

The decrease in Restaurant sales was partially offset by the opening of 26 new restaurants not included in our comparable restaurant sales base.

The decrease in Restaurant sales during the twenty-six weeks ended June 28, 2020 was primarily due to:

of 43 restaurants since June 30, 2019 and (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

The decrease in Restaurant sales during the thirty-nine weeks ended September 27, 2020 was primarily due to:

(i) significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic, (ii) the closure of 51 restaurants since December 30, 2018, (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S.

3 unchanged sentences

Following is a summary of the average restaurant unit volumes and operating weeks, for the periods indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Average restaurant unit volumes (weekly):

13 unchanged sentences

____________________

(1) Translated at average exchange rates of 5.15 and 3.91 for the thirteen weeks ended June 28, 2020 and June 30, 2019, respectively, and 4.39 and 3.85 for the twenty-six weeks ended June 28, 2020 and June 30, 2019, respectively.

(1) Translated at average exchange rates of 5.34 and 3.88 for the thirteen weeks ended September 27, 2020 and September 29, 2019, respectively, and 4.60 and 3.86 for the thirty-nine weeks ended September 27, 2020 and September 29, 2019, respectively.

BLOOMIN’ BRANDS, INC.

3 unchanged sentences

Following is a summary of comparable restaurant sales, traffic and average check per person increases (decreases), for the periods indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Year over year percentage change:

31 unchanged sentences

Bonefish Grill and Combined U.S.

traffic for the twenty-six weeks ended June 28, 2020 were calculated using the entrée count methodology for Bonefish Grill as if the new methodology was in effect at the start of the fiscal year, which would have increased traffic for Bonefish Grill and Combined U.S.

traffic for the thirty-nine weeks ended September 27, 2020 were calculated using the entrée count methodology for Bonefish Grill as if the new methodology was in effect at the start of the fiscal year, which would have increased traffic for Bonefish Grill and Combined U.S.

for the thirteen weekend ended March 29, 2020 by 3.1% and 0.5%, respectively.

4 unchanged sentences

Franchise and other revenues

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Franchise revenues (1) $ 4.2 $ 12.4 $ 15.7 $ 39.0

3 unchanged sentences

(1) Represents franchise royalties, advertising fees and initial franchise fees.

Franchise revenues declined during the thirteen and thirty-nine weeks ended September 27, 2020 primarily due to lower franchise sales and deferral of certain royalties and advertising fees.

COSTS AND EXPENSES

Cost of sales

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in millions) JUNE 28, 2020 JUNE 30, 2019 Change JUNE 28, 2020 JUNE 30, 2019 Change

Cost of sales $ 180.8 $ 312.7 $ 500.5 $ 664.8

Food and beverage costs

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

Food and beverage costs $ 230.5 $ 300.4 $ 731.0 $ 965.2

% of Restaurant sales 30.1 % 31.6 % (1.5) % 31.3 % 31.4 % (0.1) %

Cost of sales increased as a percentage of Restaurant sales during the thirteen weeks ended June 28, 2020 as compared to the thirteen weeks ended June 30, 2019 primarily due to 0.7% from commodity cost inflation and 0.5% related to a reduction in rebates from our vendors, partially offset by a decrease as a percentage of Restaurant sales of 0.7% from cost savings attributable to waste reduction initiatives and 0.2% from increases in average check per person.

Cost of sales increased as a percentage of Restaurant sales during the twenty-six weeks ended June 28, 2020 as compared to the twenty-six weeks ended June 30, 2019 primarily due to 0.4% from commodity cost inflation and 0.2% related to a reduction in rebates from our vendors, partially offset by a decrease as a percentage of Restaurant sales of 0.4% from increases in average check per person.

Food and beverage costs decreased as a percentage of Restaurant sales during the thirteen weeks ended September 27, 2020 as compared to the thirteen weeks ended September 29, 2019 primarily due to 0.9% from increases in average check per person and 0.8% from cost savings attributable to waste reduction initiatives.

Food and beverage costs decreased as a percentage of Restaurant sales during the thirty-nine weeks ended September 27, 2020 as compared to the thirty-nine weeks ended September 29, 2019 primarily due to 0.4% from increases in average check per person and 0.3% from cost savings attributable to waste reduction initiatives, partially offset by an increase as a percentage of Restaurant sales of 0.3% from commodity inflation and 0.2% related to a reduction in vendor rebates.

Labor and other related expenses

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in millions) JUNE 28, 2020 JUNE 30, 2019 Change JUNE 28, 2020 JUNE 30, 2019 Change

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

Labor and other related $ 246.9 $ 288.6 $ 761.7 $ 908.8

% of Restaurant sales 32.2 % 30.3 % 1.9 % 32.6 % 29.6 % 3.0 %

Labor and other related expenses increased as a percentage of Restaurant sales during the thirteen weeks ended June 28, 2020 as compared to the thirteen weeks ended June 30, 2019 primarily due to:

Labor and other related expenses increased as a percentage of Restaurant sales during the thirteen weeks ended September 27, 2020 as compared to the thirteen weeks ended September 29, 2019 primarily due to:

(i) 2.6% from decreased restaurant sales, (ii) 0.6% from higher labor costs and (iii) 0.3% from employee benefits in response to COVID-19.

These increases were partially offset by a decrease as a percentage of Restaurant sales of 1.8% from lower prep labor hours.

Labor and other related expenses increased as a percentage of Restaurant sales during the thirty-nine weeks ended September 27, 2020 as compared to the thirty-nine weeks ended September 29, 2019 primarily due to:

(i) 3.1% from decreased restaurant sales, (ii) 1.2% from relief pay primarily for hourly employees impacted by the closure of dining rooms due to COVID-19, offset by employee retention tax credits, and (iii) 0.5% from higher labor costs.

These increases were partially offset by a decrease as a percentage of Restaurant sales of 0.4% due to reduced workers’ compensation expense.

Labor and other related expenses increased as a percentage of Restaurant sales during the twenty-six weeks ended June 28, 2020 as compared to the twenty-six weeks ended June 30, 2019 primarily due to:

(i) 1.7% from relief pay primarily for hourly employees impacted by the closure of dining rooms due to COVID-19, offset by employee retention tax credits, (ii) 1.6% from decreased restaurant sales and (iii) 0.4% from higher labor costs.

These increases were partially offset by a decrease as a percentage of Restaurant sales of 1.7% from lower prep labor hours.

BLOOMIN’ BRANDS, INC.

2 unchanged sentences

Other restaurant operating expenses

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in millions) JUNE 28, 2020 JUNE 30, 2019 Change JUNE 28, 2020 JUNE 30, 2019 Change

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

Other restaurant operating $ 207.3 $ 240.4 $ 631.7 $ 732.1

% of Restaurant sales 27.0 % 25.3 % 1.7 % 27.0 % 23.9 % 3.1 %

Other restaurant operating expenses increased as a percentage of Restaurant sales during the thirteen weeks ended June 28, 2020 as compared to the thirteen weeks ended June 30, 2019 primarily due to the impact of shifting to an off-premise only operational model in March 2020 including, 7.2% from decreased restaurant sales and 3.8% from incremental delivery related costs.

These increases were partially offset by a decrease as a percentage of Restaurant sales of 3.8% from reduced operating, advertising and utilities expense and 0.3% from the write-off of straight-line rent in connection with the COVID-19 Restructuring.

Other restaurant operating expenses increased as a percentage of Restaurant sales during the twenty-six weeks ended June 28, 2020 as compared to the twenty-six weeks ended June 30, 2019 primarily due to the impact of shifting to an off-premise only operational model in March 2020 including, 3.2% from decreased restaurant sales and 1.9% from incremental delivery related costs.

These increases were partially offset by a decrease as a percentage of Restaurant sales of 1.1% from reduced utilities, advertising and operating expense.

Other restaurant operating expenses increased as a percentage of Restaurant sales during the thirteen weeks ended September 27, 2020 as compared to the thirteen weeks ended September 29, 2019 primarily due to:

(i) the impact of dining room seating capacity restrictions as a result of the COVID-19 pandemic including, 2.5% from decreased restaurant sales and 1.9% from incremental delivery related costs, (ii) 0.5% from gains on the sale of certain U.S.

surplus properties in 2019 and (iii) 0.2% from menu printing costs.

These increases were partially offset by a decrease as a percentage of Restaurant sales of 3.3% from reduced advertising, utilities and operating expenses.

Other restaurant operating expenses increased as a percentage of Restaurant sales during the thirty-nine weeks ended September 27, 2020 as compared to the thirty-nine weeks ended September 29, 2019 primarily due to the impact of shifting to an off-premise only operational model in March 2020 and dining room seating capacity restrictions as a result of the COVID-19 pandemic including, 3.0% from decreased restaurant sales and 1.9% from incremental delivery related costs.

These increases were partially offset by a decrease as a percentage of Restaurant sales of 1.8% from reduced advertising, utilities and operating expenses.

Depreciation and amortization

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in millions) JUNE 28, 2020 JUNE 30, 2019 Change JUNE 28, 2020 JUNE 30, 2019 Change

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

Depreciation and amortization $ 43.4 $ 47.9 $ (4.5) $ 137.5 $ 147.2 $ (9.7)

Depreciation and amortization expense decreased during the thirteen and twenty-six weeks ended June 28, 2020 as compared to the thirteen and twenty-six weeks ended June 30, 2019 primarily due to impairment related to COVID-19 and transformational initiatives and the effect of foreign currency translation.

Depreciation and amortization expense decreased during the periods presented primarily due to impairment and the effect of foreign currency translation.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

General and administrative

General and administrative expense includes salaries and benefits, management incentive programs, related payroll tax and benefits, other employee-related costs and professional services.

Following is a summary of the change in General and administrative expense for the periods indicated below:

(dollars in millions) THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

For the periods ended June 30, 2019 $ 72.0 $ 142.5

Travel and entertainment (1) (7.9) (7.5)

Following is a summary of the change in General and administrative expense for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 29, 2019 $ 66.6 $ 209.1

Compensation, benefits and payroll tax (3.6) (9.6)

Legal and professional fees (1.7) (5.7)

Deferred compensation (2.4) (3.5)

Foreign currency exchange (1.3) (3.0)

Severance (0.8) 4.5

Travel and entertainment (1) (0.5) (8.0)

Expected credit losses and contingent lease liabilities — 7.4

Transformational costs (2) 1.1 8.6

Severance 0.5 5.3

Deferred compensation 0.2 (3.3)

Other (2.6) (2.3)

For the periods ended June 28, 2020 $ 55.5 $ 140.3

For the periods ended September 27, 2020 $ 57.4 $ 197.7

_________________

(1) Includes decreases of $5.4 million and $3.7 million for managing partner conference costs, net of cancellation fees during the thirteen and twenty-six weeks ended June 28, 2020, respectively.

(2) Primarily consist of consulting fees incurred in connection with our transformation initiative.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(1) Includes managing partner conference costs.

(2) Primarily consists of consulting fees incurred in connection with our transformation initiatives.

Provision for impaired assets and restaurant closings

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in millions) JUNE 28, 2020 JUNE 30, 2019 Change JUNE 28, 2020 JUNE 30, 2019 Change

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

Provision for impaired assets and restaurant closings $ (0.1) $ 1.4 $ (1.5) $ 66.2 $ 6.9 $ 59.3

During the thirteen and twenty-six weeks ended June 28, 2020, we 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 the COVID-19 Restructuring) and $0.3 million and $3.6 million, respectively, in the international segment.

We 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 our operating segments.

COVID-19 Restructuring - During the thirteen and twenty-six weeks ended June 28, 2020, we recognized pre-tax asset impairments and closure costs of $20.9 million in connection with the closure of 22 restaurants and from the update of certain cash flow assumptions, including lease renewal considerations.

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

During the thirty-nine weeks ended September 27, 2020, we recognized asset impairment and closure charges of $56.4 million and $3.6 million within the U.S.

and international segments, respectively, primarily related to the COVID-19 pandemic.

Included in the amount for the thirty-nine weeks ended September 27, 2020 were pre-tax asset impairments and closure costs of $20.9 million in connection with the closure of 22 restaurants and from the update of certain cash flow assumptions, including lease renewal considerations.

We also recognized asset impairment charges during the thirty-nine weeks ended September 27, 2020 of $6.2 million which were not allocated to our operating segments, primarily related to transformational initiatives.

Impairment and closure charges during the thirteen and thirty-nine weeks ended September 29, 2019 resulted primarily from locations identified for remodel, relocation or closure and certain other assets.

See Note 4 - Impairments, Exit Costs and Disposals of the Notes to Consolidated Financial Statements for further information.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

(Loss) income from operations

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in millions) JUNE 28, 2020 JUNE 30, 2019 Change JUNE 28, 2020 JUNE 30, 2019 Change

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

(Loss) income from operations $ (14.3) $ 22.0 $ (36.3) $ (167.7) $ 147.9 $ (315.6)

% of Total revenues (1.8) % 2.3 % (4.1) % (7.1) % 4.7 % (11.8) %

Loss from operations generated during the thirteen weeks ended June 28, 2020, as compared to income from operations during the thirteen weeks ended June 30, 2019 was primarily due to:

Loss from operations generated during the thirteen weeks ended September 27, 2020, as compared to income from operations during the thirteen weeks ended September 29, 2019 was primarily due to:

These losses were partially offset by:

(i) reduced operating, advertising and utilities expense, (ii) cost savings from our restructuring and transformation initiatives and (iii) cost savings from waste reduction initiatives.

Loss from operations generated during the twenty-six weeks ended June 28, 2020, as compared to income from operations during the twenty-six weeks ended June 30, 2019 was primarily d ue to:

(i) significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including asse t impairment charges, incremental delivery related costs and relief pay (net of tax credits) and (ii) higher labor costs and commodity inflation.

These losses were partially offset by reduced utilities, advertising and operating expense.

(i) reduced advertising, utilities and operating expenses, (ii) a reduction in prep labor hours, offset by higher labor costs, and (iii) cost savings from waste reduction initiatives.

Loss from operations generated during the thirty-nine weeks ended September 27, 2020, as compared to income from operations during the thirty-nine weeks ended September 29, 2019 was primarily d ue to:

These losses were partially offset by:

(i) reduced advertising, utilities and operating expenses, (ii) a reduction in prep labor hours, offset by higher labor costs, and (iii) cost savings from waste reduction initiatives.

Interest expense, net

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

(dollars in millions) JUNE 28, 2020 JUNE 30, 2019 Change JUNE 28, 2020 JUNE 30, 2019 Change

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

Interest expense, net $ 18.3 $ 13.3 $ 5.0 $ 46.6 $ 36.9 $ 9.7

The increase in Interest expense, net for the thirteen and twenty-six weeks ended June 28, 2020 as compared to the thirteen and twenty-six weeks ended June 30, 2019 was primarily due to higher interest expense from issuance of

The increase in Interest expense, net for the thirteen weeks ended September 27, 2020 as compared to the thirteen weeks ended September 29, 2019 was primarily due to interest expense from our convertible senior notes issued in May 2020, partially offset by lower outstanding revolving credit facility borrowings and lower interest rates on our unhedged variable rate debt balances.

The increase in Interest expense, net for the thirty-nine weeks ended September 27, 2020 as compared to the thirty-nine weeks ended September 29, 2019 was primarily due to interest expense from our convertible senior notes issued in May 2020 and additional draws on our revolving credit facility, partially offset by lower interest rates on our unhedged variable rate debt balances.

(Benefit) provision for income taxes

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 Change

Effective income tax rate 45.4 % (7.6) % 53.0 % 32.7 % 5.5 % 27.2 %

The effective income tax rate for the thirteen and thirty-nine weeks ended September 27, 2020 increased by 53.0 and 27.2 percentage points as compared to the thirteen and thirty-nine weeks ended September 29, 2019.

These increases were primarily due to the benefit of the tax credits for FICA taxes on certain employees’ tips, the forecasted 2020 pre-tax book loss and changes to the estimate of the forecasted full-year effective tax rate relative to prior quarters in 2020.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

our convertible senior notes and additional draws on our revolving credit facility, partially offset by lower interest rates on our unhedged variable rate debt balances.

(Benefit) provision for income taxes

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

Effective income tax rate 27.9 % 3.9 % 24.0 % 30.4 % 6.6 % 23.8 %

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.

SEGMENT PERFORMANCE

17 unchanged sentences

Revenues for both segments include only transactions with customers and exclude intersegment revenues.

Excluded from (Loss) income from operations for U.S.

Excluded from Income (loss) from operations for U.S.

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

During the thirteen and thirty-nine weeks ended September 27, 2020, we recorded $4.2 million and $28.8 million, respectively, of pre-tax charges as a part of transformational initiatives implemented in connection with our 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 our segments since our CODM does not consider the impact of transformational initiatives when assessing segment performance.

Refer to Note 21 - Segment Reporting of the Notes to Consolidated Financial Statements for a reconciliation of segment (loss) income from operations to the consolidated operating results.

Refer to Note 21 - Segment Reporting of the Notes to Consolidated Financial Statements for a reconciliation of segment income (loss) from operations to the consolidated operating results.

Restaurant-level operating margin is widely regarded in the industry as a useful metric to evaluate restaurant-level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments.

See the Overview-Key Performance Indicators section of

See the Overview-Key Performance Indicators section of Management’s Discussion and Analysis for additional details regarding the calculation of restaurant-level operating margin.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Management’s Discussion and Analysis for additional details regarding the calculation of restaurant-level operating margin.

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Restaurant sales $ 719,406 $ 835,753 $ 2,141,062 $ 2,737,182

2 unchanged sentences

Restaurant-level operating margin 11.4 % 12.0 % 9.4 % 14.5 %

(Loss) income from operations $ (62,921) $ 78,814 $ (51,542) $ 191,849

Operating (loss) income margin (11.7) % 8.6 % (3.6) % 9.9 %

Income (loss) from operations $ 29,574 $ 50,318 $ (21,968) $ 242,167

Operating income (loss) margin 4.1 % 5.9 % (1.0) % 8.7 %

Restaurant sales

1 unchanged sentence

segment Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

For the periods ended June 30, 2019 $ 900.6 $ 1,901.4

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 29, 2019 $ 835.8 $ 2,737.2

Comparable restaurant sales (101.0) (550.0)

Restaurant closures (16.9) (39.8)

Restaurant openings (0.4) 3.4

Divestiture of restaurants through refranchising transactions — (11.2)

For the periods ended June 28, 2020 $ 536.8 $ 1,421.7

Restaurant openings 1.5 4.9

For the periods ended September 27, 2020 $ 719.4 $ 2,141.1

The decrease in U.S.

Restaurant sales during the thirteen weeks ended June 28, 2020 was primarily due to significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic and the closure of 34 restaurants since March 31, 2019.

Restaurant sales during the thirteen weeks ended September 27, 2020 was primarily due to significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic and the closure of 34 restaurants since June 30, 2019.

The decrease in U.S.

Restaurant sales during the twenty-six weeks ended June 28, 2020 was primarily due to:

(i) significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic, (ii) the closure of 40 restaurants since December 30, 2018 and (iii) refranchising of certain Company-owned restaurants.

The decrease in Restaurant sales was partially offset by the opening of eight new restaurants not included in our comparable restaurant sales base.

Income from operations

Th e decrease in U.S.

income from operations generated during the thirteen weeks ended June 28, 2020 as compared to the thirteen weeks ended June 30, 2019, was primarily due to:

These losses were partially offset by:

(i) reduced operating, advertising and utilities expense and (ii) cost savings from waste reduction initiatives.

Restaurant sales during the thirty-nine weeks ended September 27, 2020 was primarily due to:

(i) significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic, (ii) the closure of 42 restaurants since December 30, 2018 and (iii) the refranchising of certain Company-owned restaurants.

The decrease in U.S.

income from operations generated during the twenty-six weeks ended June 28, 2020, as compared to income from operations during the twenty-six weeks ended June 30, 2019 was primarily due to:

(i) significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic,

Restaurant sales was partially offset by the opening of nine new restaurants not included in our comparable restaurant sales base.

Income (loss) from operations

The decrease in U.S.

income from operations generated during the thirteen weeks ended September 27, 2020 as compared to the thirteen weeks ended September 29, 2019, was primarily due to significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including incremental delivery related costs.

These losses were partially offset by:

(i) reduced advertising, operating and utilities expenses, (ii) a reduction in prep labor hours, offset by higher labor costs, and (iii) cost savings from waste reduction initiatives.

loss from operations generated during the thirty-nine weeks ended September 27, 2020, as compared to income from operations during the thirty-nine weeks ended September 29, 2019, was primarily due to:

These losses were partially offset by:

(i) reduced advertising, utilities and operating expenses, (ii) a reduction in prep labor hours, offset by higher labor costs, and (iii) cost savings from waste reduction initiatives.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

including asset impairment charges, incremental delivery related costs and relief pay (net of tax credits) and (ii) higher labor costs and commodity inflation.

These losses were partially offset by reduced operating, utilities and advertising expense.

International Segment

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Restaurant sales $ 47,081 $ 116,063 $ 197,923 $ 331,963

6 unchanged sentences

Following is a summary of the change in international segment Restaurant sales for the periods indicated:

(dollars in millions) THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

For the periods ended June 30, 2019 $ 105.1 $ 215.9

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

For the periods ended September 29, 2019 $ 116.0 $ 331.9

Comparable restaurant sales (56.6) (111.3)

2 unchanged sentences

Restaurant openings 0.9 10.9

For the periods ended June 28, 2020 $ 39.5 $ 150.8

The decrease in international Restaurant sales during the thirteen weeks ended June 28, 2020 was primarily due to significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic and the effect of foreign currency translation of the Brazilian Real relative to the U.S.

The decrease in Restaurant sales was partially offset by the opening of 18 new restaurants not included in our comparable restaurant sales base.

The decrease in international Restaurant sales during the twenty-six weeks ended June 28, 2020 was primarily due to significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic and the effect of foreign currency translation of the Brazilian Real relative to the U.S.

For the periods ended September 27, 2020 $ 47.1 $ 197.9

The decrease in international Restaurant sales during the thirteen weeks ended September 27, 2020 was primarily due to significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic and the effect of foreign currency translation of the Brazilian Real relative to the U.S.

The decrease in international Restaurant sales during the thirty-nine weeks ended September 27, 2020 was primarily due to significantly lower comparable restaurant sales principally attributable to the COVID-19 pandemic and the effect of foreign currency translation of the Brazilian Real relative to the U.S.

The decrease in Restaurant sales was partially offset by the opening of 22 new restaurants not included in our comparable restaurant sales base.

Income from operations

The decrease in international income from operations during the thirteen weeks ended June 28, 2020 as compared to the thirteen weeks ended June 30, 2019 was primarily due to:

(Loss) income from operations

International loss from operations generated during the thirteen weeks ended September 27, 2020, as compared to income from operations during the thirteen weeks ended September 29, 2019, was primarily due to:

(i) significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including incremental delivery related costs, and (ii) commodity inflation.

These decreases were partially offset by reduced utilities, operating and advertising expenses and lower labor costs.

International loss from operations generated during the thirty-nine weeks ended September 27, 2020, as compared to income from operations during the thirty-nine weeks ended September 29, 2019, was primarily due to:

(i) significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including incremental delivery related costs and inventory obsolescence, and (ii) commodity inflation.

These decreases were partially offset by reduced utility, operating, rent and advertising expense and lower labor costs.

The decrease in international income from operations during the twenty-six weeks ended June 28, 2020 as compared to the twenty-six weeks ended June 30, 2019 was primarily due to:

(i) significantly lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including inventory obsolescence

These decreases were partially offset by reduced utilities, operating and advertising expenses and lower labor costs.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

and incremental delivery related costs and (ii) commodity inflation.

These decreases were partially offset by reduced advertising, utility and rent expense and lower labor costs.

Non-GAAP Financial Measures

5 unchanged sentences

Franchise sales within this table do not represent our sales and are presented only as an indicator of changes in the restaurant system, which management believes is important information regarding the health of our restaurant concepts and in determining our royalties and/or service fees.

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Outback Steakhouse $ 76 $ 118 $ 250 $ 381

13 unchanged sentences

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted restaurant-level operating margin - The following table shows the percentages of certain operating cost financial statement line items in relation to Restaurant sales:

Adjusted restaurant-level operating margin - The following tables show the percentages of certain operating cost financial statement line items in relation to Restaurant sales:

THIRTEEN WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019

SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

GAAP ADJUSTED U.S.

1 unchanged sentence

Restaurant sales 100.0 % 100.0 % 100.0 % 100.0 %

Cost of sales 31.4 % 31.2 % 31.1 % 31.1 %

Food and beverage costs 30.1 % 30.1 % 31.6 % 31.6 %

Labor and other related 32.2 % 32.2 % 30.3 % 30.3 %

1 unchanged sentence

Restaurant-level operating margin 10.7 % 10.7 % 12.9 % 12.5 %

TWENTY-SIX WEEKS ENDED

JUNE 28, 2020 JUNE 30, 2019

THIRTY-NINE WEEKS ENDED

SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

GAAP ADJUSTED (1) U.S.

1 unchanged sentence

Restaurant sales 100.0 % 100.0 % 100.0 % 100.0 %

Cost of sales 31.8 % 31.4 % 31.4 % 31.4 %

Food and beverage costs 31.3 % 30.9 % 31.4 % 31.4 %

Labor and other related 32.6 % 32.6 % 29.6 % 29.6 %

3 unchanged sentences

(1) Includes unfavorable (favorable) adjustments recorded in Other restaurant operating expense (unless otherwise noted below) for the following activities, as described in the Adjusted (loss) income from operations, Adjusted net (loss) income and Adjusted diluted (loss) earnings per share table below for the periods indicated:

THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED

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

THIRTEEN WEEKS ENDED

SEPTEMBER 29, 2019 THIRTY-NINE WEEKS ENDED

(dollars in millions) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Restaurant and asset impairments and closing costs $ 3.8 $ 2.8 $ 4.0

3 unchanged sentences

_________________

(1) Includes $1.2 million and $7.3 million of adjustments for the thirteen and twenty-six weeks ended June 28, 2020, respectively, recorded in Cost of sales.

(1) Includes $7.3 million of adjustments recorded in Food and beverage costs.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Restaurant-level operating margin - The following tables reconcile consolidated and segment (Loss) income from operations and the corresponding margins to Restaurant-level operating income and the corresponding margins for the periods indicated:

Consolidated THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

(Loss) income from operations $ (14,255) $ 21,958 $ (167,735) $ 147,912

Operating (loss) income margin (1.8) % 2.3 % (7.1) % 4.7 %

Franchise and other revenues 4,773 15,328 19,071 48,060

Depreciation and amortization 43,417 47,926 137,469 147,196

General and administrative 57,443 66,570 197,732 209,114

Provision for impaired assets and restaurant closings (54) 1,391 66,223 6,917

Restaurant-level operating income $ 81,778 $ 122,517 $ 214,618 $ 463,079

Restaurant-level operating margin 10.7 % 12.9 % 9.2 % 15.1 %

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Income (loss) from operations $ 29,574 $ 50,318 $ (21,968) $ 242,167

Operating income (loss) margin 4.1 % 5.9 % (1.0) % 8.7 %

Franchise and other revenues 2,332 12,691 12,253 39,988

Depreciation and amortization 35,057 36,670 110,005 114,372

General and administrative 19,732 24,405 68,955 77,078

Provision for impaired assets and restaurant closings (86) 1,351 56,389 3,503

Restaurant-level operating income $ 81,945 $ 100,053 $ 201,128 $ 397,132

Restaurant-level operating margin 11.4 % 12.0 % 9.4 % 14.5 %

International THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

(Loss) income from operations $ (7,926) $ 10,550 $ (18,209) $ 31,179

Operating (loss) income margin (16.0) % 8.9 % (8.9) % 9.2 %

Franchise and other revenues 2,441 2,637 6,818 8,072

Depreciation and amortization 5,672 7,201 18,314 20,406

General and administrative 4,011 6,542 14,413 20,311

Provision for impaired assets and restaurant closings — 39 3,640 1,840

Restaurant-level operating (loss) income $ (684) $ 21,695 $ 11,340 $ 65,664

Restaurant-level operating margin (1.5) % 18.7 % 5.7 % 19.8 %

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted (loss) income from operations, Adjusted net (loss) income and Adjusted diluted (loss) earnings per share

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED

(in thousands, except per share data) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019 SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

(Loss) income from operations $ (14,255) $ 21,958 $ (167,735) $ 147,912

Operating (loss) income margin (1.8) % 2.3 % (7.1) % 4.7 %

COVID-19 related costs (1) 30,342 — 79,218 —

Severance and other transformational costs (1) 4,200 1,908 28,847 5,511

COVID-19 related costs (2) — — 79,218 —

Restaurant relocations and related costs (3) — 477 592 2,461

1 unchanged sentence

Restaurant and asset impairments and closing costs (4) — (3,072) (2,797) 1,098

Total income from operations adjustments $ 32,757 $ 3,739 $ 101,838 $ 9,757

Total (loss) income from operations adjustments $ 4,200 $ 128 $ 106,038 $ 9,885

Adjusted (loss) income from operations $ (10,055) $ 22,086 $ (61,697) $ 157,797

12 unchanged sentences

_________________

(1) Represents costs incurred in connection with the economic impact of the COVID-19 pandemic, primarily consisting of fixed asset and right-of-use asset impairments, restructuring charges, inventory obsolescence and spoilage, contingent lease liabilities and current expected credit losses.

See Note 2 - COVID-19 Charges of the Notes to Consolidated Financial Statements for additional details regarding the impact of the COVID-19 pandemic on our financial results.

(2) Relates to severance and other costs incurred as a result of transformational and restructuring activities.

(3) Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program.

(4) Includes a lease termination gain of $2.8 million during the twenty-six weeks ended June 28, 2020 and asset impairment charges and related costs primarily related to approved closure and restructuring initiatives in 2019.

(5) Represents the amortization of the debt discount related to the issuance of the 2025 Notes.

(1) Severance and other costs incurred as a result of transformational and restructuring activities.

(2) Costs incurred in connection with the economic impact of the COVID-19 pandemic, primarily consisting of fixed asset and right-of-use asset impairments, restructuring charges, inventory obsolescence and spoilage, contingent lease liabilities and current expected credit losses.

See Note 2 - COVID-19 Charges of the Notes to Consolidated Financial Statements for additional details regarding the impact of certain COVID-19 pandemic related charges on our financial results.

(3) Asset impairment charges and accelerated depreciation incurred in connection with our relocation program.

(4) Includes a lease termination gain of $2.8 million during the thirty-nine weeks ended September 27, 2020 and asset impairment charges and related costs primarily related to approved closure and restructuring initiatives during 2019.

Amount also includes gains on the sale of certain surplus properties of $3.8 million during 2019.

(5) Amortization of the debt discount related to the issuance of the 2025 Notes.

See Note 12 - Convertible Senior Notes of the Notes to Consolidated Financial Statements for details.

(6) Represents income tax effect of the adjustments for the periods presented.

(7) Represents consideration paid in excess of the carrying value for the redemption of preferred stock of our Abbraccio subsidiary.

(8) Due to the net loss, the effect of dilutive securities was excluded from the calculation of diluted (loss) earnings per share for the thirteen and twenty-six weeks ended June 28, 2020.

(6) Income tax effect of the adjustments for the periods presented.

(7) Consideration paid in excess of the carrying value for the redemption of preferred stock of our Abbraccio subsidiary.

(8) Due to the net loss, the effect of dilutive securities was excluded from the calculation of diluted and adjusted diluted loss per share for the thirteen and thirty-nine weeks ended September 27, 2020.

BLOOMIN’ BRANDS, INC.

3 unchanged sentences

Typically, cash flows generated from operating activities and availability under our revolving credit facility are our principal sources of liquidity, which we use for operating expenses, payments on our debt, remodeling or relocating older restaurants, obligations related to our deferred compensation plans and investment in technology.

Substantially all of our restaurants are currently operating at reduced capacities or, in some cases, off-premises only due to the COVID-19 pandemic which has negatively impacted our operating cashflows.

In response to the COVID-19 pandemic, we have tightly managed expenses while prioritizing supporting our workforce and our off-premises business.

During 2020, the temporary closure of our dining rooms and the limitations on seating capacity due to the COVID-19 pandemic has resulted in significantly reduced traffic in our restaurants which has negatively impacted our operating cashflows.

In response to the COVID-19 pandemic, we have tightly managed expenses while prioritizing support of our workforce, off-premises business and the safe reopening of our restaurant dining rooms.

In addition, we have taken several precautionary measures to preserve liquidity, including the following:

• we suspended our quarterly cash dividend and stock repurchases;

• we significantly reduced marketing and tightly managed other expenses;

• we substantially limited capital expenditures to facility maintenance in support of our off-premises business;

• we engaged in constructive dialogue with our landlords regarding rent abatements and deferrals.

• suspended our quarterly cash dividend and stock repurchases;

• significantly reduced marketing and tightly managed other expenses;

• substantially limited capital expenditures to facility maintenance in support of our off-premises business and safe reopening of our restaurant dining rooms;

• engaged in constructive dialogue with our landlords regarding rent abatements and deferrals.

The above actions are in addition to the significant cost cutting measures for fiscal 2020 that we announced and implemented earlier in the year.

3 unchanged sentences

See “ 2025 Notes” below for additional details regarding the convertible senior notes.

In June 2020, we repaid $360.0 million on our revolving credit facility with cash on hand, a portion of which was proceeds from the 2025 Notes.

Cash and Cash Equivalents - As of June 28, 2020, we had $181.4 million in cash and cash equivalents, of which $26.7 million was held by foreign affiliates.

In June and August 2020, we repaid $360.0 million and $60.0 million, respectively, on our revolving credit facility with cash on hand, a portion of which was proceeds from the 2025 Notes.

Subsequent to September 27, 2020, we repaid $23.0 million on our revolving credit facility.

Cash and Cash Equivalents - As of September 27, 2020, we had $160.0 million in cash and cash equivalents, of which $26.7 million was held by foreign affiliates.

The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit repatriation.

As of June 28, 2020, we had aggregate accumulated foreign earnings of approximately $54.8 million.

As of September 27, 2020, we had aggregate accumulated foreign earnings of approximately $40.0 million.

This amount consisted primarily of historical earnings from 2017 and prior that were previously taxed in the U.S.

4 unchanged sentences

Closure and Restructuring Initiatives - Total aggregate future undiscounted cash expenditures of $11.0 million to $13.5 million related to lease liabilities for certain closure and restructuring initiatives are expected to occur over the remaining lease terms through January 2029.

Capital Expenditures - We estimate that our capital expenditures will total approxim ately $100.0 million to $110.0 million in 2020.

The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things, including restrictions imposed by our borrowing

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

arrangements.

Capital Expenditures - We estimate that our capital expenditures will total approxim atel y $100.0 million to $110.0 million in 2020.

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

Credit Facilities - As of June 28, 2020, we had $1.3 billion of outstanding borrowings under our Senior Secured Credit Facility and 2025 Notes.

Credit Facilities - As of September 27, 2020, we had $1.2 billion of outstanding borrowings under our Senior Secured Credit Facility and 2025 Notes.

Following is a summary of our outstanding credit facilities as of the dates indicated and principal payments and debt issuance during the period indicated:

4 unchanged sentences

2020 payments (18,750) (549,000) — (567,750)

Balance as of June 28, 2020 $ 437,500 $ 615,000 $ 230,000 $ 1,282,500

Weighted-average interest rate, as of June 28, 2020 2.90 % 2.89 % 5.00 %

Balance as of September 27, 2020 (1) $ 431,250 $ 555,000 $ 230,000 $ 1,216,250

Weighted-average interest rate, as of September 27, 2020 2.89 % 2.88 % 5.00 %

Principal maturity date November 2022 November 2022 May 2025

As of June 28, 2020, we had $364.8 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $20.2 million.

________________

(1) Subsequent to September 27, 2020, we made a payment of $23.0 million on our revolving credit facility.

As of September 27, 2020, we had $425.8 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of $19.2 million.

Amended Credit Agreement - On May 4, 2020, we and OSI, as co-borrowers, entered into the Amended Credit Agreement which provides relief for the financial covenant to maintain a specified quarterly TNLR.

11 unchanged sentences

We are also prohibited from making certain restricted payments, investments or acquisitions until after September 26, 2021, with an exception for investments in our foreign subsidiaries which are capped at $27.5 million.

Repurchasing shares of our outstanding common stock and paying dividends are also restricted until after September 26, 2021 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 we

Repurchasing shares of our outstanding common stock and paying dividends are also restricted until after September 26, 2021.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

are in compliance with the TNLR covenant for the test period ending September 26, 2021.

We are also subject to a 0% Eurocurrency floor under the Amended Credit Agreement.

1 unchanged sentence

The amount outstanding required to be prepaid may vary based on our leverage ratio and year end results.

Other than the annual required minimum amortization premiums of $31.3 million, we do not anticipate any other payments will be required through June 27, 2021.

As of June 28, 2020 and December 29, 2019, we were in compliance with our debt covenants.

We believe that we will remain in compliance with our debt cov enants during the next 12 months.

Other than the annual required minimum amortization premiums of $34.4 million, we do not anticipate any other payments will be required through September 26, 2021.

As of September 27, 2020 and December 29, 2019, we were in compliance with our debt covenants.

We believe that we will remain in compliance with our debt covenants during the next 12 months.

2025 Notes - On May 8, 2020, we 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.

14 unchanged sentences

SUMMARY OF CASH FLOWS

The following table presents a summary of our cash flows (used in) provided by operating, investing and financing activities for the periods indicated:

TWENTY-SIX WEEKS ENDED

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

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

The following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for the periods indicated:

THIRTY-NINE WEEKS ENDED

(dollars in thousands) SEPTEMBER 27, 2020 SEPTEMBER 29, 2019

Net cash provided by operating activities $ 54,971 $ 180,926

Net cash used in investing activities (56,162) (93,710)

2 unchanged sentences

Net increase (decrease) in cash, cash equivalents and restricted cash $ 95,369 $ (20,415)

Operating activities - Net cash (used in) provided by operating ac tivities decreased du ring the twenty-six weeks ended June 28, 2020, as compared to the twenty-six weeks ended June 30, 2019 primarily due to a decrease in net restaurant sales and relief payments made to employees, net of employee retention tax credits as a result of the COVID-19 pandemic.

Operating activities - Net cash provided by operating activities decreased du ring the thirty-nine weeks ended September 27, 2020, as compared to the thirty-nine weeks ended September 29, 2019 primarily due to a decrease in net restaurant sales and relief payments made to employees, net of employee retention tax credits as a result of the COVID-19 pandemic.

These decreases were partially offset by:

(i) decreased variable operating costs as a result of lower net restaurant sales, (ii) decreased rent payments, (iii) the timing of collections of receivables, (iv) deferral of payroll tax payments as a result of the CARES Act, (v) lower inventory purchases and (vi) lower income tax and interest payments.

Investing activities - Net cash used in investing activities during the twenty-six weeks ended June 28, 2020 primarily consisted of capital expenditures, partially offset by withdrawals from company-owned life insurance policies.

Net cash used in investing activities during the twenty-six weeks ended June 30, 2019 primarily consisted of capital expenditures, partially offset by proceeds from sale-leasebac k transactions.

Financing activities - Net cash provided by financing activities during the twenty-six weeks ended June 28, 2020 primarily consisted of proceeds from issuance of convertible senior notes and related warrants transactions and drawdowns on our revolving credit facility, net of repayments, partially offset by:

(i) premium payments for Convertible Note Hedge Transactions, (ii) payment of cash dividends on our common stock, (iii) the repayment of long-term debt, (iv) issuance costs and financing fees in connection with our 2025 Notes and Amended Credit Agreement and (v) partner equity plan payments.

Net cash used in financing activities during the twenty-six weeks ended June 30, 2019 primarily consisted of:

(i) decreased variable operating costs as a result of lower net restaurant sales, (ii) deferral of payroll tax payments as a result of the CARES Act, (iii) the timing of collections of receivables and payments made, (iv) lower inventory purchases and (v) lower income tax payments.

Investing activities - Net cash used in investing activities during the thirty-nine weeks ended September 27, 2020 primarily consisted of capital expenditures, partially offset by withdrawals from Company-owned life insurance policies.

Net cash used in investing activities during the thirty-nine weeks ended September 29, 2019 primarily consisted of capital expenditures, partially offset by proceeds from the disposal of property, fixtures and equipment and proceeds from sale-leasebac k transactions.

Financing activities - Net cash provided by financing activities during the thirty-nine weeks ended September 27, 2020 primarily consisted of proceeds from issuance of convertible senior notes and related warrants transactions partially offset by:

(i) premium payments for Convertible Note Hedge Transactions, (ii) repayments on our revolving credit facility, net of drawdowns, (iii) the repayments of long-term debt, (iv) payment of cash dividends on our common stock, (v) partner equity plan payments and (vi) issuance costs and financing fees in connection with our 2025 Notes and Amended Credit Agreement.

Net cash used in financing activities during the thirty-nine weeks ended September 29, 2019 primarily consisted of:

(i) the repurchase of common stock, (ii) payment of cash dividends on our common stock, (iii) the repayment of long-term debt and (iv) partner equity plan payments.

Net cash used in financing activities was partially offset by drawdowns on our revolving credit facility, net of repayments.

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

FINANCIAL CONDITION

Following is a summary of our current assets, current liabilities and working capital (deficit) as of the periods indicated:

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

(dollars in thousands) SEPTEMBER 27, 2020 DECEMBER 29, 2019

Current assets $ 298,195 $ 340,468

1 unchanged sentence

Working capital (deficit) $ (540,778) $ (621,553)

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The change in net working capital (deficit) during the twenty-six weeks ended June 28, 2020 is primarily due to:

(i) cash proceeds from the issuance of the 2025 Notes, (ii) a decrease in Accounts payable due to lower vendor activity and capital expenditures in connection with COVID-19 and (iii) a decrease in Unearned revenue related to the seasonal fluctuation of the sale and redemption of gift cards.

Working capital (deficit) includes:

(i) Unearned revenue primarily from unredeemed gift cards of $293.6 million and $369.3 million as of June 28, 2020 and December 29, 2019, respectively, and (ii) current operating lease liabilities of $177.2 million and $171.9 million as of June 28, 2020 and December 29, 2019, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets.

(i) Unearned revenue primarily from unredeemed gift cards of $280.1 million and $369.3 million as of September 27, 2020 and December 29, 2019, respectively, and (ii) current operating lease liabilities of $177.7 million and $171.9 million as of September 27, 2020 and December 29, 2019, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets.

We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies).

1 unchanged sentence

Additionally, ongoing cash flows from restaurant operations and gift card sales are typically used to service debt obligations and to make capital expenditures.

Deferred Compensation Programs - The deferred compensation obligation due to managing and chef partners was $35.5 million and $49.0 million as of June 28, 2020 and December 29, 2019, respectively.

Deferred Compensation Programs - The deferred compensation obligation due to managing and chef partners was $32.7 million and $49.0 million as of September 27, 2020 and December 29, 2019, respectively.

We invest in various corporate-owned life insurance policies (“COLI assets”), which are held within an irrevocable grantor or “rabbi” trust account for settlement of our obligations under the deferred compensation plans.

The rabbi trust is funded through our voluntary contributions.

The unfunded obligation for managing and chef partners’ deferred compensation was $0.1 million as of June 28, 2020.

We use capital to fund the deferred compensation plans and currently expect cash funding of $9.0 million to $11.0 million for 2020.

We will also fund a portion of our 2020 obligation with $9.1 million expected to be withdrawn from our COLI assets in 2020.

Through June 28, 2020 we have withdrawn $5.4 million of COLI assets to fund deferred compensation plan obligations.

The obligation for managing and chef partners’ deferred compensation was fully funded as of September 27, 2020.

We use capital to fund deferred compensation obligations and currently expect cash funding of $9.5 million to $11.5 million for 2020.

We also funded a portion of our 2020 obligation with $9.3 million withdrawn from our COLI assets.

Actual funding of the deferred compensation obligations and future funding requirements may vary significantly depending on the actual performance compared to targets, timing of deferred payments of partner contracts, forfeiture rates, number of partner participants, growth of partner investments and our funding strategy.

2 unchanged sentences

DIVIDENDS AND SHARE REPURCHASES

We did not pay dividends or repurchase any shares of our outstanding common stock during the thirteen weeks ended June 28, 2020.

We did not pay dividends or repurchase any shares of our outstanding common stock during the thirteen weeks ended September 27, 2020.

The terms of our Amended Credit Agreement contain certain restrictions on cash dividends and share repurchases until after September 26, 2021 and we are compliant with our financial covenants.

2 unchanged sentences

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Following is a summary of our dividends and share repurchases from fiscal year 2015 through June 28, 2020:

Following is a summary of our dividends and share repurchases from fiscal year 2015 through September 27, 2020:

(dollars in thousands) DIVIDENDS PAID SHARE REPURCHASES (1) TOTAL

9 unchanged sentences

Recently Issued Financial Accounting Standards

For a description of recently issued Financial Accounting Standards that we adopted during the twenty-six weeks ended June 28, 2020 and, that are applicable to us and likely to have material effect on our consolidated financial statements, but have not yet been adopted, see Note 1 - Description of the Business and Basis of Presentation of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

For a description of recently issued Financial Accounting Standards that we adopted during the thirty-nine weeks ended September 27, 2020 and, that are applicable to us and likely to have material effect on our consolidated financial statements, but have not yet been adopted, see Note 1 - Description of the Business and Basis of Presentation of the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

BLOOMIN’ BRANDS, INC.

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 2. Management’s Discussion and Analysis