What changed in this filing

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Item 1A. Risk Factors

2021-02-24 compared with 2020-02-26 · 218 added, 231 removed, 127 unchanged (78% of the section changed)

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Risks Related to Our Business and Industry

There can be no assurance that our review of strategic alternatives or any initiatives or transactions that we pursue will result in additional shareholder value or that the process or any actions that we take will not have an adverse impact on our business.

In November 2019, we announced an exploration and evaluation of strategic alternatives that have the potential to maximize value for our shareholders.

Although we have announced certain initiatives that we are taking as a result of the strategic review process to date, the strategic review process is not completed.

The process of reviewing strategic alternatives has been and may continue to be time consuming and disruptive to our business operations and, if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely affected.

We have incurred and could continue to incur substantial expenses associated with evaluating potential strategic

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alternatives.

This process could also increase our exposure to potential litigation.

There can be no assurance that the recently announced initiatives with respect to our organizational structure, cost saving measures and capital allocation policies, or any other potential initiative or transaction that we may pursue, will provide greater value to our shareholders than that reflected in the current price of our common stock or otherwise be successfully implemented.

Until the review process is concluded, perceived uncertainties related to our future may result in volatility in the market price of our common stock and may make it more difficult for us to attract and retain qualified personnel and business partners.

There are risks and uncertainties associated with the recently announced changes to our organizational structure and streamlining of our corporate support functions.

We recently announced certain initiatives resulting from our strategic review process to date.

These include consolidating the leadership and organizational structure of our casual dining brands and streamlining corporate support functions.

These actions are designed to generate significant cost savings over the next couple of years, while maintaining our top priority of driving profitable sales.

However, these initiatives involve significant changes to our organization and operations and could be more complicated, time consuming and costly to implement than we currently anticipate.

There can be no assurance that we will be able to achieve the targeted cost savings, in a timely manner or at all, or that our actions will not have unforeseen or underestimated adverse effects on our sales or results of operations.

In addition, various factors that are outside of our control and are difficult to predict, including general market conditions and industry trends, may affect whether we are able to successfully implement these initiatives.

Food safety and food-borne illness concerns in our restaurants or throughout the industry or supply chain may have an adverse effect on our business by reducing demand and increasing costs.

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The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, resulting in higher costs and lower margins.

The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, and could continue to materially and adversely affect our business, revenues, financial condition and results of operations for an extended period of time.

The COVID-19 pandemic and related preventative and protective measures have negatively impacted, and are expected to continue to impact, our business globally.

In the United States and in foreign countries in which we operate, individuals are encouraged to practice social distancing, and numerous jurisdictions have imposed on a temporary or on-going basis, and others in the future may impose or reinstate, restrictions from gathering in groups, shelter-in-place orders and similar governmental orders and restrictions for residents to control the spread of COVID-19, all of which impacts our ability to operate our business.

These preventative and protective measures, which vary significantly across the jurisdictions where our restaurants are located, create a rapidly changing and complicated system for ensuring compliance and predicting our revenues and cost structure.

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In response to the COVID-19 pandemic and these changing conditions, we modified work hours for our team members, identified and implemented cost savings measures throughout our operations, shifted the majority of our corporate employees to remote working and temporarily limited our services in the U.S.

to carry-out and delivery only from March 2020 through early May 2020.

As of December 27, 2020, 85% of our restaurant dining rooms remain open with many still subject to seating capacity restrictions, which together with temporary closures has resulted in significantly reduced traffic in our restaurants.

Even with our restaurant dining rooms mostly open for on-premises dining there can be no assurance that sales will return to prior levels given capacity restrictions, continued uncertainties surrounding the economic and public health impact of the COVID-19 pandemic and the possibility of additional closures or limitations on our capacity or services.

If we revert to solely or primarily off-premises sales, there can be no assurance that our off-premises sales will grow or remain at levels experienced while our dining rooms were previously closed.

We entered into an amended credit agreement (the “Amended Credit Agreement”) relating to our senior secured credit facilities (the “Senior Secured Credit Facility”) and obtained covenant relief to address liquidity challenges faced at the onset of the pandemic.

There can be no assurance that we can continue to comply with the revised covenants during the relief period or thereafter when they revert to prior levels if the COVID-19 pandemic lasts longer than expected or our business does not quickly recover afterward.

If the business interruptions caused by COVID-19 last longer than we expect or our assumptions regarding liquidity needs prove inaccurate, we may need to seek other sources of liquidity.

There can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 pandemic lasts.

In an effort to preserve liquidity, we have and may continue to take certain actions with respect to some or all of our leases, including negotiating lease amendments with landlords to obtain more favorable lease terms.

We can provide no assurances that our lease amendment negotiations will be successful, or that, following the COVID-19 pandemic, we will be able to continue restaurant operations on the current or amended terms of our existing leases, any of which could have an adverse effect on our business and results.

We have also paused most activities with respect to new locations, remodels and relocations, limited capital spending to maintenance necessary to support off-premises business, and closed certain restaurants, any of which may affect our ability to grow our business, particularly if these measures are in place for a significant amount of time.

Our restaurant operations could be further disrupted if any of our employees are diagnosed with COVID-19, since this could require further restaurant closures or require some or all of a restaurant’s employees to self-quarantine.

We have taken certain compensation and benefit relief actions to support our restaurant team members during COVID-19 business interruptions, but those actions may be insufficient to compensate our team members for the entire duration of any business interruption resulting from COVID-19, and our team members might seek and find other employment during that interruption, which could adversely affect our ability to properly staff and reopen our restaurants with experienced team members when the business interruptions caused by COVID-19 abate or end.

If our customers become ill, a significant percentage of our or our suppliers’ or distributors’ workforce is unable to work, or if there are similar disruptions in the supply chain generally for certain products, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, we could face disruptions to restaurant operations, cost increases and shortages of food or other supplies, or reputational harm or negative publicity directed at our brands that causes customers to avoid our restaurants, potentially materially adversely affecting our operations and sales.

In addition, the operations of our franchisees are subject to the same risks discussed above with respect to our business, and the COVID-19 pandemic has and may continue to cause financial distress to our franchisees.

We have deferred or permanently waived certain of our franchisees’ payment obligations as a result, which deferments or waived payments may not be sufficient if financial distress continues.

In some cases, we are contingently liable for franchisee lease obligations, and a failure by a franchisee to perform its obligations under such lease could result in direct payment obligations for us.

In addition, we have and could continue to experience other material impacts as a result of COVID-19, including, but not limited to, impairment charges.

We cannot accurately predict the amount and timing of any further impairment of assets.

A significant amount of judgment is involved in determining if an indication of impairment

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exists and the COVID-19 pandemic has made developing forecasts for, and the accounting of, valuation of goodwill and certain other assets slower and more difficult.

Should the value of goodwill or other intangible or long-lived assets become further impaired, there could be an adverse effect on our financial condition and consolidated results of operations.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this Report.

We are subject to various federal and state employment and labor laws and regulations.

Various employment and labor laws and regulations govern our relationships with our employees throughout the world and affect operating costs.

These laws and regulations relate to matters including employment discrimination, minimum wage requirements, overtime, tip credits, unemployment tax rates, workers’ compensation rates, working conditions, immigration status, tax reporting and other wage and benefit requirements.

Any significant additional government regulations and new laws governing our relationships with employees, including minimum wage increases, mandated benefits or other requirements that impose additional obligations on us, including any temporary or permanent measures implemented in response to COVID-19, could increase our costs and adversely affect our business and results of operations.

As a significant number of our food service and preparation personnel are paid at rates related to the applicable minimum wage, federal, state and local proposals related to minimum wage requirements or similar matters could, to the extent implemented, materially increase our labor and other costs.

As minimum wage increases continue to be implemented in states in which we operate, we expect our labor costs will continue to increase.

In addition, President Biden has called for an increase in the federal minimum wage from $7.25 per hour to $15.00 per hour.

Our distributors and suppliers could also be affected by higher minimum wage, benefit standards and compliance costs, which could result in higher costs for goods and services supplied to us.

In addition, we rely on our employees to accurately disclose the full amount of their tip income, and we base our FICA tax reporting on the disclosures provided to us by such tipped employees.

Inaccurate employee FICA tax reporting could subject us to monetary liabilities, which could harm our business, results of operations and financial condition.

The restaurant industry is highly competitive and consumer options for other prepared food offerings continue to expand.

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For example, our competitors may more successfully implement menu or technology initiatives, such as remote ordering, social media or mobile technology platforms that expedite or enhance the customer experience.

In addition, our competitors may more successfully implement delivery and off-site initiatives.

In addition, our competitors may more successfully implement delivery and off-site initiatives or implement other measures to better address COVID-related business risks.

Further, we face growing competition from quick service and fast-casual restaurants, the supermarket industry and meal kit and food delivery providers, with the improvement of prepared food offerings and the trend towards convergence in grocery, deli, retail and restaurant services.

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We are subject to various federal and state employment and labor laws and regulations.

Various federal and state employment and labor laws and regulations govern our relationships with our employees and affect operating costs, and similar laws and regulations apply to our operations outside of the U.S.

Any significant additional government regulations and new laws governing our relationships with employees, including minimum wage increases, mandated benefits or other requirements that impose additional obligations on us, could increase our costs and adversely affect our business and results of operations.

Several states in which we operate have recently approved minimum wage increases.

As minimum wage increases are implemented in these states or any other states in which we operate in the future, we expect our labor costs will continue to increase.

Our ability to respond to minimum wage increases by increasing menu prices depends on the responses of our competitors and consumers.

Our distributors and suppliers could also be affected by higher minimum wage, benefit standards and compliance costs, which could result in higher costs for goods and services supplied to us.

We rely on our employees to accurately disclose the full amount of their tip income, and we base our FICA tax reporting on the disclosures provided to us by such tipped employees.

Inaccurate employee FICA tax reporting could subject us to monetary liabilities, which could harm our business, results of operations and financial condition.

Challenging economic conditions may have a negative effect on our business and financial results.

Challenging economic conditions may negatively impact consumer spending and thus cause a decline in our financial results.

For example, international, domestic and regional economic conditions, consumer income levels, financial market volatility, social unrest, governmental, political and budget matters and a slow or stagnant pace of economic growth generally may have a negative effect on consumer confidence and discretionary spending, which the restaurant industry depends upon.

In addition, it is difficult to predict what impact, if any, the U.S.

presidential election in 2020 and its outcome could have on consumer confidence and discretionary spending.

Challenging economic, political and social conditions may have a negative effect on our business and financial results.

Challenging economic, political and social conditions may negatively impact consumer spending and thus cause a decline in our financial results.

For example, international, domestic and regional economic conditions, consumer income levels, financial market volatility, social unrest, governmental, political and budget matters and a slow or stagnant pace of economic recovery and growth generally may have a negative effect on consumer confidence and discretionary spending, which the restaurant industry depends upon.

In recent years, we believe these factors and conditions may have affected consumer traffic and comparable restaurant sales for us and throughout our industry and may continue to contribute to a challenging sales environment in the casual dining sector.

A decline in economic conditions or negative developments with respect to any of the other factors mentioned above, or a perception that such decline or negative developments are imminent, generally or in particular markets in which we operate, and our consumers’ reactions to these trends could result in increased pressure with respect to our pricing, traffic levels, commodity and other costs and the continuation of our innovation and productivity initiatives, which could negatively impact our business and results of operations.

These factors could also cause us to, among other things, reduce the number and frequency of new restaurant openings, close restaurants or delay remodeling of our existing restaurant locations.

Protests, demonstrations, riots, civil disturbance, disobedience, insurrection, or social and other political unrest, such as those seen in 2020 and early 2021, have and may continue to result in restrictions, curfews, or other actions and give rise to significant changes in regional and global economic conditions.

If such events or disruptions persist for a prolonged period of time, our overall business and results of operations may be adversely affected.

In addition, it is difficult to predict what impact, if any, changes in federal policy, including tax policies, as a result of recent U.S.

federal elections will have on our industry, the economy as a whole, consumer confidence and discretionary spending.

As a result, the nature, timing and impact on our business of potential changes to the current legal and regulatory frameworks are uncertain.

It is also difficult to predict what the long-term economic impacts of the ongoing COVID-19 pandemic may be.

A decline in economic, political or social conditions or negative developments with respect to any of the other factors mentioned above, or a perception that such decline or negative developments are imminent, generally or in particular markets in which we operate, and our consumers’ reactions to these trends could result in increased pressure with respect to our pricing, traffic levels, commodity and other costs and the continuation of our innovation and productivity initiatives, which could negatively impact our business and results of operations.

Further, poor economic conditions may force nearby businesses to shut down, which could cause our restaurant locations to be less attractive.

Failure to recruit, train and retain high-quality leadership, restaurant-level management and team members may inhibit our ability to operate and grow successfully.

Our success will continue to depend, to a significant extent, on our leadership team and other key management personnel.

If we are unable to attract and retain sufficiently experienced and capable management personnel, our business and financial results may suffer.

Our restaurant-level management and team members are largely responsible for the quality of our service.

Our guests may be dissatisfied and our sales may decline if we fail to recruit, train and retain managers and team members that effectively implement our business strategy and provide high quality guest service.

There is active competition for quality management personnel and hourly team members.

If we experience high turnover, we may experience higher labor costs and have a shortage of adequate management personnel required for future growth.

Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could have a material adverse impact on our business.

Social media allows individuals to access a broad audience of consumers and other interested persons.

The availability of information on social media platforms is virtually immediate as is its impact, and users can post information often without filters or checks on the accuracy of the content posted.

Adverse or inaccurate information concerning our company or concepts may be posted at any time, and such information can quickly reach a wide audience.

Social media has also been utilized to target specific companies or brands as a result of a variety of actions or inactions, or perceived actions or inactions, and such campaigns can rapidly accelerate and impact consumer behavior.

The harm may be immediate without affording us an opportunity for redress or correction, and it is challenging to monitor, anticipate and promptly respond to such developments.

These factors could have a

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material adverse effect on our business.

Regardless of its basis or validity, any unfavorable publicity could adversely affect public perception of our brands.

Our failure to use social media responsibly in our marketing efforts may further expose us to these risks.

As part of our marketing efforts, we rely on search engine marketing and social media platforms to attract and retain guests.

We need to continuously innovate and develop our social media strategies in order to maintain broad appeal with guests and brand relevance.

We also continue to invest in other digital marketing initiatives that allow us to reach our guests across multiple digital channels and build their awareness of, engagement with, and loyalty to our brands.

These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues, increased employee engagement or brand recognition.

In addition, a variety of risks are associated with the use of social media, including the improper disclosure of proprietary or personal information and negative publicity.

The inappropriate use of social media vehicles by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

Cyber security breaches of confidential consumer, personal employee and other material information and other threats to our technological systems may adversely affect our business.

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The majority of our restaurant sales are by credit or debit cards, and we maintain certain personal information regarding our employees and confidential information about our customers, franchisees and suppliers.

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effectiveness of our security measures with oversight by our Audit Committee, there are no assurances that such programs will prevent or detect all potential cyber security breaches or technological failures.

Although we segment our card data environment and employ a cyber security protection program based upon industry frameworks, as well as scan and improve our environment for any vulnerabilities, perform penetration testing and engage third parties to assess effectiveness of our security measures with oversight by our Audit Committee, there are no assurances that such programs will prevent or detect all potential cyber security breaches or technological failures.

Our operations and corporate functions rely heavily on information systems, including point-of-sale processing in our restaurants, management of our supply chain, payment of obligations, collection of cash, data warehousing to support analytics, finance and accounting systems, mobile technologies to enhance the customer experience and other various processes and procedures, some of which are handled by third parties.

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The California Consumer Privacy Act, for example, became effective January 1, 2020 and provides a new private right of action to California residents related to data breaches and imposes new disclosure and other requirements on companies with respect to their data collection, use and sharing practices as they relate to California residents.

A claim or investigation resulting from a cyber or other security threat to our systems and data may have a material adverse effect on our business and the potential of incurring significant remediation costs.

A claim or investigation resulting from a cyber or other security threat to our systems and data

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may have a material adverse effect on our business and the potential of incurring significant remediation costs.

As cyber security risk and applicable laws and regulations evolve, we may incur significant additional costs in technology, third-party services and personnel to maintain systems designed to anticipate and prevent cyber-attacks.

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As a result, these events, combined with other more general economic and demographic conditions, could impact our pricing and negatively affect our sales and profit margins.

Our failure to comply with government regulation related to our restaurant operations, and the costs of compliance or non-compliance, could adversely affect our business.

We are subject to various federal, state, local and foreign laws affecting our business.

Each of our restaurants is subject to licensing and regulation by a number of governmental authorities, which may include, among others, alcoholic beverage control, food safety, nutritional menu labeling, health care, environmental and fire agencies in the state, municipality or country in which the restaurant is located.

Our suppliers are also subject to regulation in some of these areas.

Any difficulties or inabilities to retain or renew licenses, or increased compliance costs due to changed regulations, could adversely affect operations at existing restaurants.

Additionally, difficulties in obtaining or failing to obtain the required licenses or approvals could delay or prevent the development of new restaurants.

We are subject to various U.S.

federal, state and international laws and regulations related to the offer and sale of franchises.

Failure to comply with these laws could adversely affect the results we generate from franchises or otherwise impose costs on us.

We have a limited number of suppliers for our major products.

If our suppliers or custom distributors are unable to fulfill their obligations under their contracts or we are unable to develop or maintain relationships with these or new suppliers or distributors, if needed, we could encounter supply shortages and incur higher costs.

We depend on frequent deliveries of fresh food products that meet our specifications, and we have a limited number of suppliers for our major products, such as beef.

In 2020, we purchased:

(i) approximately 97% of our U.S.

beef raw materials from four beef suppliers that represent more than 80% of the total beef marketplace in the U.S and (ii) approximately 84% of our Brazil beef raw materials from two beef suppliers that represent approximately 40% of the total Brazil beef marketplace.

Due to the nature of our industry, we expect to continue to purchase a substantial amount of our beef from a small number of suppliers.

We also primarily use one supplier in the U.S.

and Brazil, respectively, to process beef raw materials to our specifications and we use one distribution company to provide distribution services in the U.S and Brazil, respectively.

If any of these suppliers or distributors were unable to fulfill their responsibilities or we were unable to maintain current purchasing terms or ensure service availability and we were unable to locate substitutes in a timely manner, especially given the effects of COVID-19, we may encounter supply shortages, lose consumers and experience an increase in costs in seeking alternative supplier or distribution services.

The failure to develop and maintain supplier and distributor relationships and any resulting disruptions to the provision of food and other supplies to our restaurant locations could adversely affect our operating results.

We face a variety of risks associated with doing business in foreign markets that could have a negative impact on our financial performance.

We have a significant number of restaurants outside of the United States, and we intend to continue our efforts to grow internationally.

There is no assurance that international operations will be profitable or international growth will continue.

In addition, if we have a significant concentration of restaurants in a foreign market the impact of any negative local conditions can have a sizable impact on our results.

Our foreign operations are subject to all of the same risks as our U.S.

restaurants, as well as additional risks including, among others, international economic, political, social and legal conditions and the possibility of instability and unrest, differing cultures and consumer preferences, diverse government regulations and tax systems, corruption, anti-American sentiment, the ability to source high quality ingredients and other commodities in a cost-effective manner, uncertain or differing interpretations of rights and obligations in connection with international franchise agreements and the collection of ongoing royalties from international franchisees, the availability and costs of land, construction and financing, and the availability of experienced management, appropriate franchisees and area operating partners.

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Alcoholic beverage sales represent 14% of our consolidated restaurant sales and are subject to extensive state and local licensing and other regulations.

The failure of a restaurant to obtain or retain a liquor license would adversely affect that restaurant’s operations.

In addition, we are subject to “dram shop” statutes in certain states.

These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

Local or regional events or conditions in our international markets could affect our results.

For example, during 2019, Hong Kong political protests led to violence and disrupted business operations.

During 2018, unrest surrounding the presidential election in Brazil led to protests and a lengthy truckers strike that negatively impacted the Brazilian economy, causing supply shortages and transportation gridlock that resulted in lost operating days for many businesses, including our restaurants.

In 2020, there were protests in cities throughout the U.S.

as well as globally, including in Hong Kong, in connection with civil rights, liberties, and social and governmental reform.

Currency regulations and fluctuations in exchange rates could also affect our performance.

We have operations in many foreign countries, including direct investments in restaurants in Brazil and Hong Kong/China, as well as international franchises.

As a result, we may experience losses from fluctuations in foreign currency exchange rates or any hedging arrangements that we enter into to offset such fluctuations, and such losses could adversely affect our overall sales and earnings.

We are subject to governmental regulation of our foreign operations, including antitrust and tax requirements, anti-boycott regulations, import/export/customs regulations and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act.

Any new regulatory or trade initiatives could impact our operations in certain countries.

Failure to comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could harm our business, results of operations and financial condition.

Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes we pay and our profitability.

We are subject to income and other taxes in the United States and numerous foreign jurisdictions.

Our effective income tax rate and other taxes in the future could be adversely affected by a number of factors, including changes in the mix of earnings in countries with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws or other legislative changes and the outcome of income tax audits.

Although we believe our tax estimates are reasonable, the final determination of tax audits could be materially different from our historical income tax provisions and accruals.

The results of a tax audit could have a material effect on our results of operations or cash flows in the period or periods for which that determination is made.

In addition, our effective income tax rate and our results may be impacted by our ability to realize deferred tax benefits, including our FICA tip credit carryforwards, and by any increases or decreases of our valuation allowances applied to our existing deferred tax assets.

Additional tax regulations and interpretations of the Tax Cuts and Jobs Act could be issued, and no assurance can be made that future guidance will not adversely affect our business or financial condition.

The food service industry is affected by consumer preferences and perceptions.

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For instance, if prevailing health or dietary preferences cause consumers to avoid steak and other products we offer in any of our concepts in favor of foods or ingredients that are perceived as healthier or otherwise reflect popular demand, our business and operating results would be harmed.

Various factors such as:

(i) the Food and Drug Administration’s menu labeling rules, (ii) nutritional guidelines issued by the United States Department of Agriculture and issuance of similar guidelines or statistical information by state or local municipalities and (iii) academic studies, may impact consumer choice and cause consumers to select foods other than those that are offered by our restaurants.

Various factors such as menu labeling rules, nutritional guidelines and academic studies may impact consumer choice and cause consumers to select foods other than those that are offered by our restaurants.

If we are unable to anticipate or successfully respond to changes in consumer preferences, our results of operations could be adversely affected, generally or in particular concepts or markets.

Our relationships with third party delivery services and ability to grow sales through delivery orders are subject to risks.

We maintain relationships with various third-party delivery apps and services, and we have granted exclusive third-party delivery service rights to DoorDash with respect to our Outback Steakhouse restaurants.

We maintain relationships with various third-party delivery apps and services.

Our sales may be negatively affected if these platforms are damaged or interrupted through technological failures or otherwise.

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Our sales through these services may also depend on the availability of delivery drivers, who are generally independent contractors.

If our delivery service providers are not able to effectively compete with other third-party delivery services, our delivery sales may be adversely impacted.

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Our relationships with these third-party delivery services are relatively new, and the level of sales they may generate and overall customer experience provided through such services remain uncertain.

Our sales and brand reputation could be harmed as a result, and these orders could discourage potentially more profitable in-restaurant or carryout sales.

Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes we pay and our profitability.

We are subject to income and other taxes in the United States and numerous foreign jurisdictions.

Although we believe our tax estimates are reasonable, the final determination of tax audits could be materially different from our historical income tax provisions and accruals.

The results of a tax audit could have a material effect on our results of operations or cash flows in the period or periods for which that determination is made.

Additional tax regulations and interpretations of the Tax Cuts and Jobs Act are expected to be issued, and no assurance can be made that future guidance will not adversely affect our business or financial condition.

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Our failure to comply with government regulation related to our restaurant operations, and the costs of compliance or non-compliance, could adversely affect our business.

We are subject to various federal, state, local and foreign laws affecting our business.

Our suppliers are also subject to regulation in some of these areas.

Any difficulties or inabilities to retain or renew licenses, or increased compliance costs due to changed regulations, could adversely affect operations at existing restaurants.

Additionally, difficulties in obtaining or failing to obtain the required licenses or approvals could delay or prevent the development of new restaurants.

We are subject to various U.S.

federal, state and international laws and regulations related to the offer and sale of franchises.

Failure to comply with these laws could adversely affect the results we generate from franchises or otherwise impose costs on us.

Alcoholic beverage sales represent nine percent of our consolidated restaurant sales and are subject to extensive state and local licensing and other regulations.

The failure of a restaurant to obtain or retain a liquor license would adversely affect that restaurant’s operations.

In addition, we are subject to “dram shop” statutes in certain states.

These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

We may also incur costs as a result of compliance with measures implemented in response to COVID-19, such as requirements for physical barriers or other preventative measures in restaurants.

Risks associated with our remodeling, relocation and expansion plans may have adverse effects on our operating results.

As part of our business strategy, we intend to continue to remodel, relocate and expand our current portfolio of restaurants.

Our 2020 development schedule calls for nine U.S.

Outback Steakhouse relocations and the construction of approximately 25 new system-wide locations, with the majority in Brazil.

A variety of factors could cause the actual results and outcome of those plans to differ from the anticipated results, including among other things:

the availability of attractive sites for new or relocated restaurants;

acquiring or leasing those sites at acceptable prices and other terms;

funding or financing our development, given competing priorities for use of capital;

obtaining all required permits, approvals and licenses on a timely basis;

recruiting and training skilled management and restaurant employees and retaining those employees on acceptable terms;

weather, natural disasters and other events or factors beyond our control resulting in construction or other delays;

consumer tastes in new geographic regions and acceptance of our restaurant concepts and awareness of our brands in those regions.

It is difficult to estimate the performance of newly opened restaurants.

Earnings achieved by restaurants open for less than two years may not be indicative of future operating results.

If new restaurants do not meet targeted performance, it could have a material adverse effect on our operating results, including any impairment losses that we may be required to recognize.

There is also the possibility that new restaurants may attract consumers away from other restaurants we own, thereby reducing the revenues of those existing restaurants, or that we will incur unrecoverable costs in the event a development project is abandoned prior to completion.

Our 2021 development schedule calls for the construction of approximately 20 to 25 new system-wide locations, with most in Brazil.

A variety of factors could cause the actual results and outcome of those plans to differ from the anticipated results, including among other things, the availability and terms on which we can lease attractive sites for new or relocated restaurants, availability and terms of funding, recruiting, training and retaining skilled management and restaurant employees, construction or other delays and consumer tastes and acceptance of our restaurant concepts and awareness of our brands in new regions.

It is difficult to estimate the performance of newly opened restaurants and whether they may attract customers away from other restaurants we own.

If new or nearby existing restaurants do not meet targeted performance, it could have a material adverse effect on our operating results, including any impairment losses that we may be required to recognize.

Some of the challenges described above could be more significant in international markets in which we have more limited experience, either generally or with a particular brand.

Those markets are likely to have different competitive conditions, consumer tastes, discretionary spending patterns and brand awareness, which may cause our new restaurants to be less successful than restaurants in our existing markets or make it more difficult to estimate the performance of new restaurants.

In addition, in an effort to increase same-restaurant sales and improve our operating performance, we continue to make improvements to our facilities through our remodeling and relocation programs.

We also close underperforming restaurants from time to time in order to improve the performance of our brands.

As demographic and economic patterns change or there are declines in neighborhoods where our restaurants are located or adverse economic conditions in local areas, current locations may not continue to be attractive or profitable.

Because we lease a significant majority of our restaurants, we incur significant lease termination expenses when we close or relocate a restaurant and are often obligated to continue rent and other lease related payments after restaurant closure.

We also incur significant asset impairment and other charges in connection with closures and relocations.

If the expenses associated with remodels, relocations or closures are higher than anticipated, we cannot find suitable locations or remodeled or relocated restaurants do not perform as expected, these programs may not yield the desired return on investment, which could have a negative effect on our operating results.

We face a variety of risks associated with doing business in foreign markets that could have a negative impact on our financial performance.

We have a significant number of restaurants outside of the United States, and we intend to continue our efforts to grow internationally.

There is no assurance that international operations will be profitable or international growth will continue.

In addition, if we have a significant concentration of restaurants in a foreign market the impact of any negative local conditions can have a sizable impact on our results.

In addition, in an effort to increase same-restaurant sales and improve our operating performance, we continue to make improvements to our facilities through our remodeling and relocation programs and close underperforming restaurants.

We incur significant lease termination or continuation expenses and asset impairment and other charges when we close or relocate a restaurant.

If the expenses associated with remodels, relocations or closures are higher than anticipated, we cannot find suitable locations or remodeled or relocated restaurants do not perform as expected,

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Our foreign operations are subject to all of the same risks as our U.S.

Local or regional events or conditions in our international markets could affect our results.

For example, during 2019, Hong Kong political protests led to violence and disrupted business operations.

It is too early to assess the impact the coronavirus outbreak recently identified in Wuhan, China will have on consumer behavior in affected regions where we or our franchisees operate.

Currency regulations and fluctuations in exchange rates could also affect our performance.

We have operations in many foreign countries, including direct investments in restaurants in Brazil and Hong Kong/China, as well as international franchises.

Any new regulatory or trade initiatives could impact our operations in certain countries.

Failure to comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could harm our business, results of operations and financial condition.

Loss of key management personnel could hurt our business and inhibit our ability to operate and grow successfully.

Our success will continue to depend, to a significant extent, on our leadership team and other key management personnel.

If we are unable to attract and retain sufficiently experienced and capable management personnel, our business and financial results may suffer.

Failure to recruit, train and retain high-quality restaurant management and team members may result in lower guest satisfaction and lower sales and profitability.

Our restaurant-level management and team members are largely responsible for the quality of our service.

There is active competition for quality management personnel and hourly team members.

If we experience high turnover, we may experience higher labor costs and have a shortage of adequate management personnel required for future growth.

these programs may not yield the desired return on investment, which could have a negative effect on our operating results.

Failure to achieve our projected cost savings from our efficiency initiatives could adversely affect our results of operations and eliminate potential funding for growth opportunities.

In recent years, we have identified strategies and taken steps to reduce operating costs and free up resources to reinvest in our business.

These strategies include improved supply chain management, implementing labor scheduling tools and integrating restaurant information systems across our brands.

In addition, during 2020, we implemented certain measures to reduce costs and preserve liquidity in response to the impacts of COVID-19, which measures may not be sustainable or may be detrimental to continued operations over a longer term.

We continue to evaluate and implement further cost-saving initiatives.

However, the ability to reduce our operating costs through these initiatives is subject to risks and uncertainties, such as our ability to obtain improved supply pricing and the reliability of any new suppliers or technology, and we cannot assure that these activities, or any other activities that we may undertake in the future, will achieve the desired cost savings and efficiencies.

Failure to achieve such desired savings could adversely affect our results of operations and financial condition and curtail investment in growth opportunities.

There are risks and uncertainties associated with initiatives that we may implement.

From time to time, we consider various initiatives in order to grow and evolve our business and brands and improve our operating results.

These initiatives could include, among other things, acquisitions, development or dispositions of restaurants or brands, new joint ventures, new franchise arrangements, restaurant closures and changes to our operating model.

There can be no assurance that any such actions or initiatives will be successful or deliver their anticipated benefits.

We may be exposed to new and unforeseen risks and challenges, particularly if we enter into markets or engage in activities with which we have no or limited prior experience, and it may be difficult to predict the success of such endeavors.

If we incur significant expenses or divert management, financial and other resources to any initiative that is unsuccessful or does not meet our expectations, our results of operations and financial condition would be adversely affected.

We may also incur significant asset impairment and other charges in connection with any such initiative.

Regardless of the ultimate success of any initiative, the implementation and integration of new business or operational processes could be disruptive to our current operations.

Even if we test and evaluate an initiative on a limited basis, the diversion of management time and resources could have an adverse effect on our business.

Our success depends substantially on the value of our brands and our ability to execute innovative marketing and consumer relationship initiatives to maintain brand relevance and drive profitable sales growth.

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Brand value and reputation is based in large part on consumer perceptions, which are driven by both our actions and by actions beyond our control, such as new brand strategies or their implementation, business incidents, ineffective advertising or marketing efforts, or unfavorable mainstream or social media publicity involving us, our industry, our franchisees, or our suppliers.

A failure to innovate and extend our brands in ways that are relevant to consumers and occasions in order to generate sustainable same-restaurant traffic growth, and produce non-traditional sales and earnings growth opportunities, could have an adverse effect on our

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results of operations.

Additionally, insufficient focus on our competition or failure to adequately address declines in the casual dining industry, could adversely impact results of operations.

If our competitors increase their spending on advertising, promotions and loyalty programs, if our advertising, media or marketing expenses increase, or if our advertising, promotions and loyalty programs become less effective than those of our competitors, or if we do not adequately leverage technology and data analytic capabilities needed to generate concise competitive insight, our results of operations could be materially and adversely effected.

Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could have a material adverse impact on our business.

There has been a marked increase in the use of social media platforms and similar devices that allow individuals to access a broad audience of consumers and other interested persons.

Adverse or inaccurate information concerning our company or concepts may be posted on such platforms at any time, and such information can quickly reach a wide audience.

Social media has also increasingly been utilized to target specific companies or brands as a result of a variety of actions or inactions, or perceived actions or inactions, that are disfavored by interest groups and such campaigns can rapidly accelerate and impact consumer behavior.

The harm may be immediate without affording us an opportunity for redress or correction, and it is challenging to monitor and anticipate developments on social media in order to respond in an effective and timely manner.

We could also be exposed to these risks if we fail to use social media responsibly in our marketing efforts.

These factors could have a material adverse effect on our business.

Regardless of its basis or validity, any unfavorable publicity could adversely affect public perception of our brands.

Although search engine marketing, social media and other new technological platforms offer great opportunities to increase awareness of and engagement with our brands, a failure to use social media responsibly in our marketing efforts may further expose us to these risks.

Many of our competitors are expanding their use of social media and new social media platforms are rapidly being developed, potentially making more traditional social media platforms obsolete.

As a result, we need to continuously innovate and develop our social media strategies in order to maintain broad appeal with guests and brand relevance.

As part of our marketing efforts, we rely on search engine marketing and social media platforms to attract and retain guests.

These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues, increased employee engagement or brand recognition.

In addition, a variety of risks are associated with the use of social media, including the improper disclosure of proprietary information, negative comments about us, exposure of personally identifiable information, fraud, or out-of-date information.

The inappropriate use of social media vehicles by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

An impairment in the carrying value of our goodwill or other intangible or long-lived assets could adversely affect our financial condition and results of operations.

Along with other intangible assets, we test goodwill for impairment annually and whenever events or changes in circumstances indicate that its carrying value may not be recoverable.

We also evaluate long-lived assets on a quarterly basis or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

We cannot accurately predict the amount and timing of any impairment of assets.

A significant amount of judgment is involved in determining if an indication of impairment exists.

Should the value of goodwill or other intangible or long-lived assets become impaired, there could be an adverse effect on our financial condition and consolidated results of operations.

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During periods of declining sales and profitability of franchisees, the incidence of franchisee defaults for these lease payments may increase and we may be required to make lease payments and seek recourse against the franchisee or agree to repayment terms.

We have a limited number of suppliers for our major products and rely on one custom distribution company for our national distribution programs in the U.S.

We depend on frequent deliveries of fresh food products that meet our specifications, and we have a limited number of suppliers for our major products, such as beef.

In 2019 , we purchased:

(i) approximately 95% of our U.S.

beef raw materials from four beef suppliers that represent more than 80% of the total beef marketplace in the U.S and (ii) approximately 90% of our Brazil beef raw materials from two beef suppliers that represent approximately 45% of the total Brazil beef marketplace.

Due to the nature of our industry, we expect to continue to purchase a substantial amount of our beef from a small number of suppliers.

We also primarily use one supplier in the U.S.

and Brazil, respectively, to process beef raw materials to our specifications and we use one distribution company to provide distribution services in the U.S and Brazil, respectively.

Although we have not experienced significant problems with our suppliers or distributors, if our suppliers or distributors are unable to fulfill their obligations under their contracts, we could encounter supply shortages and incur higher costs.

In addition, if we are unable to maintain current purchasing terms or ensure service availability with our suppliers and distributors, we may lose consumers and experience an increase in costs in seeking alternative supplier or distribution services.

Failure to achieve our projected cost savings from our efficiency initiatives could adversely affect our results of operations and eliminate potential funding for growth opportunities.

In recent years, we have identified strategies and taken steps to reduce operating costs and free up resources to reinvest in our business.

These strategies include improved supply chain management, implementing labor scheduling tools and integrating restaurant information systems across our brands.

We continue to evaluate and implement further cost-saving initiatives.

Failure to achieve such desired savings could adversely affect our results of operations and financial condition and curtail investment in growth opportunities.

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There are risks and uncertainties associated with initiatives that we may implement.

From time to time, we consider various initiatives in order to grow and evolve our business and brands and improve our operating results.

There can be no assurance that any such actions or initiatives will be successful or deliver their anticipated benefits.

We may also incur significant asset impairment and other charges in connection with any such initiative.

Regardless of the ultimate success of any initiative, the implementation and integration of new business or operational processes could be disruptive to our current operations.

Even if we test and evaluate an initiative on a limited basis, the diversion of management time and resources could have an adverse effect on our business.

Our business is subject to seasonal and periodic fluctuations, and past results are not indicative of future results.

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Holidays may also affect sales volumes seasonally in some of the markets in which we operate.

The COVID-19 pandemic may also have an impact on consumer behaviors and customer traffic that may result in temporary changes in the seasonal fluctuations of our business.

In addition, our quarterly results have been and will continue to be affected by the timing of new restaurant openings and their associated pre-opening costs, as well as restaurant closures and exit-related costs, debt extinguishment and modification costs and impairments of goodwill, intangible assets and property, fixtures and equipment.

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Temporary and prolonged restaurant closures may occur and consumer traffic may decline due to the actual or perceived effects from these events.

For example, severe winter weather conditions and hurricanes have impacted our traffic, and that of our franchises, and results of operations in recent years.

It is too early to assess the impact the coronavirus outbreak recently identified in Wuhan, China will have on consumer behavior in affected regions where we or our franchisees operate.

For example, the COVID-19 pandemic, severe winter weather conditions and hurricanes have impacted our traffic, and that of our franchises, and results of operations in recent years.

Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand.

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Furthermore, our ability to protect trademarks and other proprietary rights may be more limited in certain international markets where we operate.

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Litigation could have a material adverse impact on our business and our financial performance.

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These matters typically involve claims by consumers and others regarding issues such as food borne illness, food safety, premises liability, “dram shop” statute liability, promotional advertising and other operational issues common to the food service industry, as well as contract disputes and intellectual property infringement matters.

We are also subject to employee claims against us based on, among other things, discrimination, harassment, wrongful termination,

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disability, or violation of wage and labor laws.

We are also subject to employee claims against us based on, among other things, discrimination, harassment, wrongful termination, disability, or violation of wage and labor laws.

We are also subject to the risk of being named a joint employer of workers of our franchisees for alleged violations of labor and wage laws.

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Significant legal fees and costs in complex class action litigation or an adverse judgment or settlement that is not insured or is in excess of insurance coverage could have a material adverse effect on our financial position and results of operations.

Our insurance policies may not provide adequate levels of coverage against all claims, and fluctuating insurance requirements and costs could negatively impact our profitability.

We carry insurance programs with specific retention levels or high per-claim deductibles for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, liquor liability, employment practices liability, property, health benefits, cyber security and other insurable risks.

However, there are types of losses we may incur that cannot be insured against or that we believe are not commercially reasonable to insure.

These losses, if they occur, could have a material and adverse effect on our business and results of operations.

Additionally, if our insurance costs increase, there can be no assurance that we will be able to successfully offset the effect of such increases and our results of operations may be adversely affected.

Failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures could adversely affect our business and financial results.

Effective internal control over financial reporting is necessary for us to provide accurate financial information.

If we are unable to adequately maintain effective internal control over financial reporting, we may not be able to accurately report our financial results, which could cause investors to lose confidence in our reported financial information and negatively affect the trading price of our common stock.

Furthermore, we cannot be certain that our internal control over financial reporting and disclosure controls and procedures will prevent all possible error and fraud, including through cyber attacks.

Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, in our company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake, which could have an adverse impact on our business.

A significant financial reporting failure or material weakness in internal control over financial reporting could cause a loss of investor confidence and decline in the market price of our common stock, increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

Future changes to existing accounting rules, accounting standards, new pronouncements and varying interpretations of pronouncements, or the questioning of current accounting practices may adversely affect our reported financial results.

Additionally, our assumptions, estimates and judgments related to complex accounting matters could significantly affect our financial results.

Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations with regard to a wide range of matters that are relevant to our business, including but not limited to, revenue recognition, impairment of long-lived assets, leases and related economic transactions, derivatives, intangibles, self-insurance, income taxes, property and equipment, unclaimed property laws and litigation, and stock-based compensation are highly complex and involve many subjective assumptions, estimates and judgments by us.

Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by us could significantly change our reported or expected financial performance.

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Risks Related to Our Indebtedness

We may not be able to generate sufficient cash to service all of our indebtedness and operating lease obligations, and we may be forced to take other actions to satisfy our obligations under our indebtedness and operating lease obligations, which may not be successful.

If we fail to meet these obligations, we would be in default under our debt agreements and the lenders could elect to declare all amounts outstanding under them to be immediately due and payable and terminate all commitments to extend further credit.

Our ability to make scheduled payments on our debt obligations and to satisfy our operating lease obligations depends upon our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to financial, business and other factors, many of which are beyond our control.

We cannot be certain that we will maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, or to pay our operating lease obligations.

If our cash flow and capital resources are insufficient to fund our debt service obligations and operating lease obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness.

These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations or take other actions to meet our debt service and other obligations.

Our debt agreements restrict our ability to dispose of assets and how we may use the proceeds from the disposition.

We may not be able to consummate those dispositions or to obtain the proceeds that we could otherwise realize from such dispositions and any such proceeds that are realized may not be adequate to meet any debt service obligations then due.

The failure to meet our debt service obligations or the failure to remain in compliance with the financial covenants under our debt agreements would constitute an event of default under those agreements and the lenders could elect to declare all amounts outstanding under them to be immediately due and payable and terminate all commitments to extend further credit.

Our substantial leverage and our ability to refinance our indebtedness in the future could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and expose us to interest rate risk in connection with our variable-rate debt.

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As of December 27, 2020, our total indebtedness was $1.0 billion and we had $533.7 million in available unused borrowing capacity under our revolving credit facility, net of undrawn letters of credit of $19.3 million.

In May 2020, we issued $230.0 million of 5.00% convertible senior notes due in 2025 (the “2025 Notes”), in part to protect our financial condition and preserve liquidity given the uncertainties of the impact of COVID-19.

Based on the daily closing prices of our stock during the quarter ended December 27, 2020 , holders of the 2025 Notes are eligible to convert their 2025 Notes during the first quarter of 2021.

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Our high degree of leverage could have important consequences, including:

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• increasing our vulnerability to general economic, industry and competitive conditions and the various risks we face in our business;

increasing our cost of borrowing;

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, dividend payments, share repurchases and future business opportunities;

exposing us to the risk of increased interest rates because certain of our borrowings are at variable rates of interest;

restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

limiting our ability to obtain additional financing for working capital, capital expenditures, restaurant development, debt service requirements, acquisitions and general corporate or other purposes;

• increasing our cost of borrowing or limiting our ability to obtain additional financing if needed;

• reducing our ability to use our cash flow to fund our operations, capital expenditures, dividend payments, and future business and strategic opportunities;

• limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who may not be as highly leveraged.

We may incur substantial additional indebtedness in the future, subject to the restrictions contained in our senior secured credit facilities (the “Senior Secured Credit Facility”).

We may incur substantial additional indebtedness in the future, subject to the restrictions contained in our Senior Secured Credit Facility.

If new indebtedness is added to our current debt levels, the related risks that we now face could increase.

As of December 29, 2019 , we had $1.0 billion of variable-rate debt outstanding under our Senior Secured Credit Facility, which matures on November 2022.

We also have variable-to-fixed interest rate swap agreements with various counterparties to hedge a portion of the cash flows of our variable rate debt.

Our active swap agreements have an aggregate notional amount of $550.0 million and mature on November 30, 2022 .

While this agreement limits our exposure to higher interest rates, an increase in the floating rate could nonetheless cause a material increase in our interest expense due to the total amount of our outstanding variable rate indebtedness.

Our Senior Secured Credit Facility allows us to incur variable debt that is indexed to the London Inter-Bank Offered Rate (“LIBOR”).

On July 27, 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.

These reforms may cause LIBOR to cease to exist, new methods of calculating LIBOR to be established or the establishment of an alternative reference rate(s).

As a result, our interest expense may increase and our available cash flow may be adversely affected.

As of December 27, 2020, we had $872.0 million of variable-rate debt outstanding under our Senior Secured Credit Facility, of which $550.0 million is hedged under variable-to-fixed interest rate swap agreements with various counterparties.

An increase in the floating rate could cause a material increase in our interest expense due to the total amount of our outstanding variable rate indebtedness.

We cannot be certain that our financial condition or credit and other market conditions will be favorable when our Senior Secured Credit Facility matures in 2022, or at any earlier time we may seek to refinance our debt.

If we are unable to refinance our indebtedness on favorable terms, our financial condition and results of operations would be adversely affected.

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Our debt agreements contain restrictions that limit our flexibility in operating our business.

Certain of our debt agreements limit our and our subsidiaries’ abilities to, among other things, incur or guarantee additional indebtedness, pay dividends on, redeem or repurchase our capital stock, make certain acquisitions or investments, incur or permit to exist certain liens, enter into transactions with affiliates or sell our assets to, merge or consolidate with or into, another company.

Our Amended Credit Agreement prohibits us from making certain restricted payments (including dividends), investments or acquisitions until after September 26, 2021.

Our debt agreements require us to satisfy certain financial tests and ratios.

Our ability to satisfy such tests and ratios may be affected by events outside of our control.

While we obtained covenant relief to address liquidity challenges faced at the onset of the COVID-19 pandemic under our Amended Credit Agreement, there can be no assurance that we can continue to comply with the revised covenants during the relief period or thereafter when they revert to prior levels if the COVID-19 pandemic lasts longer than expected or our business does not quickly recover afterward.

If we breach the covenants under our debt agreements, the lenders could elect to declare all amounts outstanding under the agreements to be immediately due and payable and terminate all commitments to extend further credit.

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If our lenders accelerate the repayment of borrowings, we cannot be certain that we will have sufficient assets to repay them.

These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

Our debt agreements restrict our ability to dispose of assets and how we may use the proceeds from the disposition.

Risks Related to Our Common Stock

Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements.

Our business and operations may consume resources faster than we anticipate.

In the future, we may need to raise additional funds through the issuance of new equity securities, debt or a combination of both.

Additional financing may not be available on favorable terms or at all.

If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements.

If we issue new debt securities, the debt holders would have rights

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senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock.

If we issue additional equity securities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our common stock.

Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.

Thus, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

Our stock price is subject to volatility.

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The price of our common stock could be subject to wide fluctuations in response to a number of factors, some of which may be beyond our control.

These factors include actual or anticipated fluctuations in our operating results, changes in or our ability to achieve estimates of our operating results by analysts, investors or management, analysts’ recommendations regarding our stock or our competitors’ stock, sales of substantial amounts of our common stock by our stockholders, actions or announcements by us or our competitors, the maintenance and growth of the value of our brands, litigation, legislation or other regulatory developments affecting us or our industry, natural disasters, cyber attacks, terrorist acts, war or other calamities and changes in general market and economic conditions.

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If we are unable to continue to pay dividends or repurchase our stock, investment in our common stock may decline in value.

As part of our recently announced initiatives resulting from the strategic review process to date, we announced a more balanced capital allocation policy that included doubling our quarterly cash dividend and a focus on debt reduction, while continuing to opportunistically repurchase shares of our common stock.

The continuation of these programs, at all or consistent with past levels, will require the generation of sufficient cash flows and the existence of surplus earnings.

If we are not able to maintain the increased dividend at our targeted payout ratio, or reduce or eliminate our dividend, the price of our common stock may fall.

In addition, we have repurchased a significant amount of our common stock in the past few years and there can be no assurance that reduced repurchasing activity under our more balanced capital allocation policy will not have an adverse effect on the price of our common stock.

Any decisions to declare and pay dividends and continue stock repurchase programs in the future will be made at the discretion of our Board of Directors and will depend on, among other things, our results of operations, financial condition, cash requirements, borrowing capacity, contractual restrictions including debt covenants and other factors that our Board of Directors may deem relevant at the time.

Provisions in our certificate of incorporation and bylaws, our Senior Secured Credit Facility and Delaware law may discourage, delay or prevent a change of control of our company or changes in our management and, therefore, may depress the trading price of our stock.

Our certificate of incorporation and bylaws include certain provisions that could have the effect of discouraging, delaying or preventing a change of control of our company or changes in our management.

In addition, our Senior Secured Credit Facility includes change of control provisions that require that no stockholder or “group” within the meaning of Sections 13(d) and 14(d) of the Exchange Act has obtained more than 40% of our voting power.

These factors include actual or anticipated fluctuations in our operating results, changes in or our ability to achieve estimates of our operating results by analysts, investors or management, analysts’ recommendations regarding our stock or our competitors’ stock, sales of substantial amounts of our common stock by our stockholders, actions or announcements by us or our competitors, the maintenance and growth of the value of our brands, litigation, legislation or other regulatory developments affecting us or our industry, widespread/pandemic illness, natural disasters, cyber attacks, terrorist acts, war or other calamities and changes in general market and economic conditions.

Provisions in our certificate of incorporation and bylaws and Delaware law may discourage, delay or prevent a change of control of our company or changes in our management and, therefore, may depress the trading price of our stock.

Our certificate of incorporation and bylaws include certain provisions (including provisions related to our classified board structure and supermajority voting requirements) that could have the effect of discouraging, delaying or preventing a change of control of our company or changes in our management.

These provisions may discourage, delay or prevent a transaction involving a change in control of the Company that is in the best interests of our stockholders.

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Although we have elected in our certificate of incorporation not to be subject to Section 203 of the Delaware General Corporation Law our certificate of incorporation contains provisions that have the same effect as Section 203, except that they provide that our former private equity sponsors will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.

Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements.

Our business and operations may consume resources faster than we anticipate.

In the future, we may need to raise additional funds through the issuance of new equity securities, debt or a combination of both.

Additional financing may not be available on favorable terms or at all.

If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements.

If we issue new debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock.

If we issue additional equity securities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our common stock.

Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control,

General Risk Factors

An impairment in the carrying value of our goodwill or other intangible or long-lived assets could adversely affect our financial condition and results of operations.

Along with other intangible assets, we test goodwill for impairment annually and whenever events or changes in circumstances indicate that its carrying value may not be recoverable.

We also evaluate long-lived assets on a quarterly basis or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

We cannot accurately predict the amount and timing of any impairment of assets.

A significant amount of judgment is involved in determining if an indication of impairment exists.

Should the value of goodwill or other intangible or long-lived assets become impaired, there could be an adverse effect on our financial condition and consolidated results of operations.

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we cannot predict or estimate the amount, timing or nature of our future offerings.

Thus, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

Failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures could adversely affect our business and financial results.

Effective internal control over financial reporting is necessary for us to provide accurate financial information.

If we are unable to adequately maintain effective internal control over financial reporting, we may not be able to accurately report our financial results.

Furthermore, we cannot be certain that our internal control over financial reporting and disclosure controls and procedures will prevent all possible error and fraud, including through cyber attacks.

A significant financial reporting failure or a lack of sufficient internal control over financial reporting could cause a loss of investor confidence and decline in the market price of our common stock, increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

Additionally, our assumptions, estimates and judgments related to complex accounting matters could significantly affect our financial results.

Changes in these rules or their interpretation or changes in underlying assumptions, estimates or judgments by us could significantly change our reported or expected financial performance.

Our insurance policies may not provide adequate levels of coverage against all claims, and fluctuating insurance requirements and costs could negatively impact our profitability.

However, there are types of losses we may incur that cannot be insured against or that we believe are not commercially reasonable to insure.

These losses, if they occur, could have a material and adverse effect on our business and results of operations.

Unresolved Staff Comments

Not applicable.

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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-K

Item 1A. Risk Factors