What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-24 compared with 2020-02-26 · 801 added, 596 removed, 851 unchanged (62% of the section changed)

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Consolidated Balance Sheets — December 2 7 , 20 20 and December 29 , 2 019

Consolidated Statements of Operations and Comprehensive Income —

Consolidated Statements of Operations and Comprehensive (Loss) Income —

For Fiscal Years 20 2 0 , 201 9 and 20 18

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We have audited the accompanying consolidated balance sheets of Bloomin’ Brands, Inc.

and its subsidiaries (the “Company”) as of December 29, 2019 and December 30, 2018 , and the related consolidated statements of operations and comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 29, 2019 , including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 27, 2020 and December 29, 2019, and the related consolidated statements of operations and comprehensive (loss) income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 27, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 27, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

This matter is also discussed below as a critical audit matter.

Basis for Opinions

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Adoption of the Leases Accounting Standard - Estimation of the Lease Liability Lease Term

As described above as a change in accounting principle and in Notes 2 and 17 to the consolidated financial statements, the Company adopted the new leases accounting standard effective December 31, 2018.

Upon adoption, the Company recognized right-of-use (ROU) assets of $1.3 billion and corresponding lease liabilities of $1.5 billion .

As disclosed by management, the Company uses judgment to determine the reasonably certain lease term, which in turn, impacts the applicable incremental borrowing rate (IBR) used to calculate the initial lease liability for each portfolio of leases.

Management determined the present value of the lease liabilities by using a country specific IBR and applying a single rate to the respective portfolio of leases based on term, regardless of the underlying asset type.

The reasonably certain lease term used in the evaluation of existing leases at transition and new leases after adoption of the new lease standard includes renewal option periods only in instances in which the exercise of the renewal option is reasonably certain because failure to exercise such an option would result in an economic penalty.

Management gives consideration to market data as well as publicly available data for instruments with similar characteristics when calculating the IBR.

The principal considerations for our determination that performing procedures relating to the adoption of the leases accounting standard - estimation of the lease liability lease term is a critical audit matter are there was significant judgment by management when determining the lease term, which is utilized to determine the applicable IBR used to calculate the lease liability for the respective portfolio of leases, which in turn led to significant auditor judgment and subjectivity in performing procedures to evaluate management’s conclusions related to the lease term and applicable IBR.

Also, there was significant audit effort in performing procedures due to the large volume of contracts that management evaluated under the new accounting standard and the significance of the ROU asset and lease liability balance recorded at the adoption date.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls

BLOOMIN’ BRANDS, INC.

relating to the adoption of the leases accounting standard and management’s review of the reasonably certain lease term in determining the appropriate IBR to apply.

These procedures also included, among others, evaluating the reasonableness of assumptions used by management, including the lease term and applicable IBR.

Evaluating the reasonableness of management’s assumption relating to the terms of the leases involved evaluating a sample of contracts and assessing any extension or termination clauses, evaluating whether the lease terms determined by management were consistent with management’s plans or past experience, and whether management’s evaluation of the certainty related to extending or terminating the lease is consistent with evidence obtained in other areas of the audit.

Evaluating the reasonableness of management’s assumption relating to the IBR involved evaluating the consistency with the rates of interest on similar debt arrangements.

Insurance Reserves

As described in Notes 2 and 20 to the consolidated financial statements, the Company’s consolidated insurance reserve balance was $54.3 million as of December 29, 2019 .

Valuation of Insurance Reserves

As described in Notes 2 and 22 to the consolidated financial statements, the Company’s consolidated discounted insurance reserves balance was $52.8 million as of December 27, 2020.

The Company carries insurance programs with specific retention levels or high per-claim deductibles for a significant portion of expected losses under its workers’ compensation, general or liquor liability, health, property and management liability insurance programs.

The Company records a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost that falls below its specified retention levels or per-claim deductible amounts.

In establishing reserves, management considers certain actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims, claim development history and settlement practices.

In establishing reserves, management considers certain actuarial assumptions and judgments regarding economic conditions and the frequency and severity of claims.

Reserves recorded for workers’ compensation and general liability claims are discounted using the average of the one-year and five-year risk-free rate of monetary assets that have comparable maturities.

The principal considerations for our determination that performing procedures relating to the valuation of insurance reserves is a critical audit matter are there was significant judgment by management when developing the estimated reserves, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures relating to certain actuarial assumptions and judgments used to estimate incurred but not reported claims, including claim development history, economic conditions, and discount rate.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

The principal considerations for our determination that performing procedures relating to the valuation of insurance reserves is a critical audit matter are (i) the significant judgment by management when developing the estimated reserves, which in turn led to (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the actuarial assumptions related to economic conditions and the frequency and severity of claims, and (iii) the audit effort included the involvement of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the valuation of insurance reserves.

These procedures also included, among others, evaluating management’s process for developing the insurance reserves including actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims, and settlement practices and testing the claim development history.

Evaluating the assumptions related to estimated claims involved evaluating whether the assumptions used were reasonable considering claim history, economic conditions, and consistency with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in testing the appropriateness of management’s actuarial methods in determining the insurance reserves and evaluating the reasonableness of assumptions related to economic conditions and discount rate.

These procedures also included, among others (i) evaluating management’s process for developing the insurance reserves, (ii) evaluating the appropriateness of management’s actuarial methods used, (iii) evaluating the reasonableness of the actuarial assumptions related to economic conditions and the frequency and severity of claims, and (iv) testing the completeness and accuracy of underlying

BLOOMIN’ BRANDS, INC.

data used in the valuation.

Evaluating the actuarial assumptions related to economic conditions and the frequency and severity of claims involved evaluating whether the assumptions were reasonable considering inflation and the environment and whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s actuarial methods used in determining the insurance reserves and evaluating the reasonableness of assumptions related to economic conditions.

Goodwill Interim Impairment Assessment of One International Reporting Unit

As described in Notes 2 and 10 to the consolidated financial statements, the Company’s consolidated goodwill balance was $271.2 million as of December 27, 2020 and $282.6 million as of March 29, 2020, and the goodwill associated with one international reporting unit was $69.3 million as of March 29, 2020.

The Company conducts an impairment test annually, in the second fiscal quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The COVID-19 outbreak was considered a triggering event during the first quarter of 2020, and management performed a quantitative assessment for four U.S.

and three international reporting units as of March 29, 2020.

As a result of this test, management determined the fair value of each reporting unit was more than 100% in excess of its carrying value with the exception of (i) one international reporting unit, which had a goodwill carrying value of $69.3 million and a reporting unit fair value approximately 39% in excess of its reporting unit carrying value;

and (ii) the Hong Kong reporting unit, for which management recorded a full impairment.

Management utilized a discounted cash flow model to estimate fair value of the reporting units.

Determining the fair value of the one international reporting unit involved the use of significant assumptions with respect to the calculation of projected future cash flows, including operating margins.

The principal considerations for our determination that performing procedures relating to the goodwill interim impairment assessment of one international reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement of the reporting unit, which in turn led to (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to operating margins, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of one of the Company’s international reporting units.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the reporting unit, (ii) evaluating the appropriateness of the discounted cash flow model, (iii) testing the completeness and accuracy of underlying data used in the model, and (iv) evaluating the significant assumptions used by management related to operating margins.

Evaluating management’s assumptions related to operating margins involved evaluating whether the assumptions were reasonable considering the current and past performance of the reporting unit, the consistency with external market and industry data, and whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the Company’s discounted cash flow model.

/s/ PricewaterhouseCoopers LLP

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(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

DECEMBER 27, 2020 DECEMBER 29, 2019

Current assets

Cash and cash equivalents $ 109,980 $ 67,145

Restricted cash and cash equivalents 428 —

Inventories 61,928 86,861

Other current assets, net 151,518 186,462

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Operating lease right-of-use assets 1,172,910 1,266,548

Goodwill 271,164 288,439

Intangible assets, net 459,983 470,615

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Other assets, net 92,626 117,110

Total assets $ 3,362,107 $ 3,592,683

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Non-current operating lease liabilities 1,217,921 1,279,051

Deferred rent

Deferred income tax liabilities

Deferred income tax liabilities, net — 13,777

Long-term debt, net 997,770 1,022,293

Long-term portion of deferred gain on sale-leaseback transactions, net

Other long-term liabilities, net 185,355 138,060

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

2020 2019 2018

Restaurant sales $ 3,144,636 $ 4,075,014 $ 4,060,871

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Costs and expenses

Cost of sales

Food and beverage costs 982,702 1,277,824 1,295,588

Labor and other related 1,005,295 1,207,289 1,197,297

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Total costs and expenses 3,345,534 3,948,299 3,981,160

Income from operations

Loss on extinguishment and modification of debt

Other (expense) income, net

(Loss) income from operations ( 174,973 ) 191,090 145,253

Loss on modification of debt ( 237 ) — —

Other income (expense), net 131 ( 143 ) ( 11 )

Interest expense, net ( 64,442 ) ( 49,257 ) ( 44,937 )

Income before Provision (benefit) for income taxes

Provision (benefit) for income taxes

net income attributable to noncontrolling interests

Net income attributable to Bloomin’ Brands

Other comprehensive income:

(Loss) income before (benefit) provision for income taxes ( 239,521 ) 141,690 100,305

(Benefit) provision for income taxes ( 80,726 ) 7,573 ( 9,233 )

Net (loss) income ( 158,795 ) 134,117 109,538

net (loss) income attributable to noncontrolling interests ( 80 ) 3,544 2,440

Net (loss) income attributable to Bloomin’ Brands

( 158,715 ) 130,573 107,098

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

Net (loss) income attributable to common stockholders $ ( 162,211 ) $ 130,573 $ 107,098

Net (loss) income $ ( 158,795 ) $ 134,117 $ 109,538

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 37,516 ) ( 16,625 ) ( 36,132 )

Unrealized (loss) gain on derivatives, net of tax

Reclassification of adjustment for loss on derivatives included in Net income, net of tax

Comprehensive income

comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Bloomin’ Brands

Earnings per share:

Unrealized loss on derivatives, net of tax ( 14,741 ) ( 11,944 ) ( 7,100 )

Reclassification of adjustment for loss on derivatives included in Net (loss) income, net of tax 9,923 1,805 120

Comprehensive (loss) income ( 201,129 ) 107,353 66,426

comprehensive (loss) income attributable to noncontrolling interests ( 744 ) 3,801 2,884

Comprehensive (loss) income attributable to Bloomin’ Brands $ ( 200,385 ) $ 103,552 $ 63,542

(Loss) earnings per share attributable to common stockholders:

Basic $ ( 1.85 ) $ 1.47 $ 1.16

Diluted $ ( 1.85 ) $ 1.45 $ 1.14

Weighted average common shares outstanding:

Basic 87,468 88,839 92,042

Diluted 87,468 89,777 94,075

Cash dividends declared per common share $ 0.20 $ 0.40 $ 0.36

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BLOOMIN’ BRANDS

ADDITIONAL PAID-IN CAPITAL

ULATED DEFICIT

ACCUMULATED OTHER

COMPREHENSIVE LOSS

NON-CONTROLLING INTERESTS

COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUM-

ULATED DEFICIT ACCUMULATED OTHER

COMPREHENSIVE LOSS NON-CONTROLLING INTERESTS TOTAL

SHARES AMOUNT

Balance, December 31, 2017 91,913 $ 919 $ 1,081,813 $ ( 913,191 ) $ ( 99,199 ) $ 10,889 $ 81,231

Cumulative-effect from a change in accounting principle

Other comprehensive income (loss), net of tax

Net income — — — 107,098 — 2,770 109,868

Other comprehensive (loss) income, net of tax — — — — ( 43,556 ) 444 ( 43,112 )

Cash dividends declared, $ 0.36 per common share

— — ( 33,312 ) — — — ( 33,312 )

Repurchase and retirement of common stock ( 5,062 ) ( 50 ) — ( 113,917 ) — — ( 113,967 )

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Purchase of noncontrolling interests, net of tax of $ 75

— — ( 216 ) — — ( 110 ) ( 326 )

Change in the redemption value of redeemable interests — — ( 330 ) — — — ( 330 )

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

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

Net income — — — 130,573 — 3,544 134,117

Other comprehensive (loss) income, net of tax — — — — ( 27,055 ) 291 ( 26,764 )

Cash dividends declared, $ 0.40 per common share

— — ( 35,734 ) — — — ( 35,734 )

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

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Common stock issued under stock plans (1) 1,143 11 2,696 — — — 2,707

Purchase of noncontrolling interests, net of tax of $75

Change in the redemption value of redeemable interests

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

Distributions to noncontrolling interests — — — — — ( 7,214 ) ( 7,214 )

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BLOOMIN’ BRANDS

ADDITIONAL PAID-IN CAPITAL

ULATED DEFICIT

ACCUMULATED OTHER

COMPREHENSIVE LOSS

NON-CONTROLLING INTERESTS

COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUM-

ULATED DEFICIT ACCUMULATED OTHER

COMPREHENSIVE LOSS NON-CONTROLLING INTERESTS TOTAL

SHARES AMOUNT

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

Cumulative-effect from a change in accounting principle, net of tax — — — ( 4,292 ) — — ( 4,292 )

Other comprehensive (loss) income, net of tax

Net loss — — — ( 158,715 ) — ( 80 ) ( 158,795 )

Other comprehensive loss, net of tax — — — — ( 42,187 ) ( 147 ) ( 42,334 )

Cash dividends declared, $ 0.20 per common share

Repurchase and retirement of common stock

— — ( 17,480 ) — — — ( 17,480 )

Stock-based compensation — — 14,802 — — — 14,802

Consideration for preferred stock in excess of carrying value, net of tax — — ( 3,496 ) — 517 1,261 ( 1,718 )

Common stock issued under stock plans (1) 910 10 ( 17 ) — — — ( 7 )

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Contributions from noncontrolling interests — — — — — 451 451

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

— — 64,367 — — — 64,367

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

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

Balance, December 27, 2020 87,856 $ 879 $ 1,132,808 $ ( 918,096 ) $ ( 211,446 ) $ 6,812 $ 10,957

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(IN THOUSANDS)

2020 2019 2018

Cash flows provided by operating activities:

Adjustments to reconcile Net income to cash provided by operating activities:

Net (loss) income $ ( 158,795 ) $ 134,117 $ 109,538

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

Depreciation and amortization 180,261 196,811 201,593

Amortization of deferred discounts and issuance costs

Amortization of debt discounts and issuance costs 10,142 2,517 2,561

Amortization of deferred gift card sales commissions 20,927 26,094 27,227

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Non-cash operating lease costs 74,436 73,357 —

Provision for expected credit losses and contingent lease liabilities 7,225 — —

Inventory obsolescence and spoilage 10,169 — —

Stock-based and other non-cash compensation expense 14,802 24,651 27,433

Deferred income tax benefit ( 88,256 ) ( 25,890 ) ( 29,490 )

Loss on extinguishment and modification of debt

Loss (gain) on sale of a business or subsidiary

Loss on sale of a business or subsidiary — 206 —

Loss on modification of debt 237 — —

Recognition of deferred gain on sale-leaseback transactions — — ( 12,336 )

(Gain) loss on disposal of property, fixtures and equipment

Loss (gain) on disposal of property, fixtures and equipment 1,261 ( 2,984 ) ( 585 )

Other, net ( 5,193 ) ( 10,471 ) 4,943

Change in assets and liabilities:

(Increase) decrease in inventories

Increase in other current assets

Increase in other assets

Decrease (increase) in inventories 19,857 ( 15,388 ) ( 24,707 )

Decrease (increase) in other current assets 14,392 ( 40,519 ) ( 25,405 )

Decrease (increase) in other assets 3,688 ( 890 ) ( 3,190 )

Decrease in operating right-of-use assets, net 412 391 —

(Decrease) increase in accounts payable and accrued and other current liabilities

Decrease in accounts payable and accrued and other current liabilities ( 61,638 ) ( 23,497 ) ( 39,871 )

Increase in deferred rent — — 8,737

Increase (decrease) in unearned revenue

Increase in unearned revenue

10,569 26,676 12,199

Decrease in operating lease liabilities ( 50,626 ) ( 69,886 ) —

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Proceeds from sale-leaseback transactions, net — 7,085 16,160

Proceeds from sale of a business, net of cash divested

Capital expenditures ( 87,842 ) ( 161,926 ) ( 208,224 )

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(IN THOUSANDS)

2020 2019 2018

Cash flows used in financing activities:

Proceeds from issuance of long-term debt, net $ — $ — $ 1,637

Extinguishment and modification of debt

Repayments of long-term debt

Repayments of long-term debt and finance lease obligations ( 26,326 ) ( 27,259 ) ( 26,686 )

Proceeds from borrowings on revolving credit facilities, net 505,000 670,800 476,829

Repayments of borrowings on revolving credit facilities ( 657,000 ) ( 671,300 ) ( 478,500 )

Proceeds from failed sale-leaseback transactions, net

Proceeds from share-based compensation, net

Financing fees ( 3,096 ) — —

Proceeds from issuance of convertible senior notes 230,000 — —

Proceeds from issuance of warrants 46,690 — —

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

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

(Payments of taxes) proceeds from share-based compensation, net ( 7 ) 2,707 36,612

Distributions to noncontrolling interests ( 1,908 ) ( 7,214 ) ( 6,943 )

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Cash dividends paid on common stock ( 17,480 ) ( 35,734 ) ( 33,312 )

Redemption of subsidiary preferred stock ( 1,475 ) — —

Net cash used in financing activities ( 16,773 ) ( 189,359 ) ( 164,352 )

Effect of exchange rate changes on cash and cash equivalents ( 2,174 ) ( 1,631 ) ( 4,146 )

Net decrease in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash 43,263 ( 4,678 ) ( 57,720 )

Cash, cash equivalents and restricted cash as of the beginning of the period 67,145 71,823 129,543

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Leased assets obtained in exchange for new finance lease liabilities 1,367 208 —

(Decrease) increase in liabilities from the acquisition of property, fixtures and equipment or capital leases

Increase (decrease) in liabilities from the acquisition of property, fixtures and equipment 1,152 ( 2,899 ) 2,699

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

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Bloomin’ Brands, Inc.

(“Bloomin’ Brands” or the “Company”) is one of the largest casual dining restaurant companies in the world, with a portfolio of leading, differentiated restaurant concepts.

(“Bloomin’ Brands” or the “Company”), a holding company that conducts its operations through its subsidiaries, is one of the largest casual dining restaurant companies in the world, with a portfolio of leading, differentiated restaurant concepts.

OSI Restaurant Partners, LLC (“OSI”) is the Company’s primary operating entity.

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There were no intervening events that would materially affect the Company’s consolidated financial position, results of operations or cash flows as of and for the year ended December 27, 2020.

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

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

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

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

As of December 27, 2020, 85 % of the Company’s restaurant dining rooms were open with many still subject to seating capacity restrictions.

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

The negative effect of COVID-19 on the Company’s business was significant during 2020.

See Note 3 - COVID-19 Charges for details regarding certain charges resulting from the COVID-19 pandemic.

Principles of Consolidation - All intercompany accounts and transactions have been eliminated in consolidation.

The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities’ operations.

The Company is a franchisor of 300 restaurants as of December 29, 2019 , but does not possess any ownership interests in its franchisees and does not provide material financial support to its franchisees.

The Company is a franchisor of 317 restaurants as of December 27, 2020, but does not possess any ownership interests in its franchisees and does not provide material direct financial support to its franchisees.

These franchise relationships are not deemed variable interest entities and are not consolidated.

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The additional week in a 53 week fiscal year is added to the fourth quarter.

Fiscal year 2017 consisted of 53 weeks and fiscal years 2019 and 2018 consisted of 52 weeks.

Use of Estimates - The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Fiscal years 2020, 2019 and 2018 consisted of 52 weeks.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimated.

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Cash and cash equivalents include $ 37.1 million and $ 44.8 million, as of December 27, 2020 and December 29, 2019, respectively, for amounts in transit from credit card companies since settlement is reasonably assured.

Concentrations of Credit and Counterparty Risk - Financial instruments that potentially subject the Company to a concentration of credit risk are gift card, vendor and other receivables.

Concentrations of Credit and Counterparty Risk - Financial instruments that potentially subject the Company to a concentration of credit risk and credit losses are through credit card receivables and trade accounts receivable consisting primarily of amounts due for gift card, vendor, franchise and other receivables.

Gift card, vendor and other receivables consist primarily of amounts due from gift card resellers and vendor rebates.

The Company considers the concentration of credit risk for gift card, vendor and other receivables to be minimal due to the payment histories and general financial condition of its gift card resellers and vendors.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

See Note 8 - Other Current Assets, Net for disclosure of trade receivables by category as of December 27, 2020 and December 29, 2019.

Financial instruments that potentially subject the Company to concentrations of counterparty risk are cash and cash equivalents, restricted cash and derivatives.

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See Note 17 - Derivative Instruments and Hedging Activities for a discussion of the Company’s use of derivative instruments and management of credit risk inherent in derivative instruments.

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

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

See Note 20 - Allowance for Expected Credit Losses for a discussion of the Company’s allowance for expected credit losses.

The Company assigned its interest, and is contingently liable, under certain real estate leases, primarily related to divested restaurant properties.

Contingent lease liabilities related to these guarantees are calculated based on management’s estimate of exposure to losses which includes historical analysis of credit losses, including known instances of default, and existing economic conditions.

See Note 22 - Commitments and Contingencies for a discussion of the Company’s contingent lease liabilities.

In instances where there was no established loss history, S&P speculative-grade default rates are utilized as an estimated expected credit loss rate.

Fair Value - Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date.

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

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

Unobservable inputs that cannot be corroborated by observable market data

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

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

Inventories - Inventories consist of food and beverages and are stated at the lower of cost (first-in, first-out) or net realizable value.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Restricted Cash - From time to time, the Company may have short-term restricted cash balances consisting of amounts pledged for settlement of deferred compensation plan obligations.

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Estimated useful lives by major asset category are generally as follows:

Buildings (1)

5 to 30 years

Furniture and fixtures

Computer equipment and software

Buildings (1) 5 to 30 years

Furniture and fixtures 5 to 7 years

Equipment 2 to 7 years

Computer equipment and software 3 to 7 years

____________________

(1) Includes improvements to leased properties which are depreciated over the shorter of their useful life or the reasonably certain lease term, including renewal periods that are reasonably certain.

Estimated useful lives are periodically reviewed and, where appropriate, changes are made prospectively.

Effective September 30, 2019, the Company changed the estimated useful life of its leasehold improvements from 20 years to 30 years (or the reasonably certain lease term) for leasehold improvements associated with ground leases placed in service on or after that date.

The change in useful life was adopted based on historical experience related to the use of leasehold improvements and the expectation of future usability considering the Company’s revised site selection strategy in recent years to focus on securing prime locations and ground leases for restaurant development and relocations.

The change in estimated useful life did not have a material impact on the Company’s consolidated financial statements.

Repair and maintenance costs that maintain the appearance and functionality of the restaurant, but do not extend the useful life of any restaurant asset are expensed as incurred.

The Company suspends depreciation and amortization for assets held for sale.

The cost and related accumulated depreciation of assets sold or disposed of are removed from the Company’s Consolidated Balance Sheets , and any resulting gain or loss is generally recognized in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive Income .

The cost and related accumulated depreciation of assets sold or disposed of are removed from the Company’s Consolidated Balance Sheets, and any resulting gain or loss is generally recognized in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive (Loss) Income.

The Company capitalizes direct and indirect internal costs associated with the acquisition, development, design and construction of Company-owned restaurant locations as these costs have a future benefit to the Company.

1 unchanged sentence

Internal costs of $ 2.7 million, $ 6.4 million and $ 6.9 million were capitalized during 2020, 2019 and 2018, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

For 2020 and 2019, computer equipment and software costs of $ 1.4 million and $ 7.4 million, respectively, were capitalized.

1 unchanged sentence

Goodwill and Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is assigned to the reporting unit in which the acquired business will operate.

The Company’s indefinite-lived intangible assets consist of trade names.

The Company’s indefinite-lived intangible assets consist of trade names and are recorded at fair value as of the date of acquisition.

Goodwill and indefinite-lived intangible assets are tested for impairment annually, as of the first day of the second fiscal quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

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The carrying value of the reporting unit is compared to its estimated fair value, with any excess of carrying value over fair value deemed to be an indicator of impairment.

Definite-lived intangible assets, which consist primarily of trademarks, franchise agreements and reacquired franchise rights, are amortized over their estimated useful lives and are tested for impairment, using the discounted cash flow method, whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Definite-lived intangible assets, which consist primarily of trademarks and reacquired franchise rights, are recorded at fair value as of the date of acquisition, amortized over their estimated useful lives and tested for impairment, using the relief from royalty method, whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Derivatives - The Company records all derivatives on the balance sheet at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

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The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement.

Deferred Financing Fees - For fees associated with its revolving credit facility, the Company records deferred financing fees related to the issuance of debt obligations in Other assets, net on its Consolidated Balance Sheets .

Deferred Financing Fees - For its revolving credit facility, the Company records deferred financing fees related to the issuance of debt obligations in Other assets, net on its Consolidated Balance Sheets.

For fees associated with all other debt obligations, the Company records deferred financing fees as a reduction of Long-term debt, net.

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The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in Other assets, net on the Company’s Consolidated Balance Sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Insurance Reserves - The Company carries insurance programs with specific retention levels or high per-claim deductibles for a significant portion of expected losses under its workers’ compensation, general or liquor liability, health, property and management liability insurance programs.

In establishing reserves, the Company considers actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims, claim development history and settlement practices.

In establishing reserves, the Company considers actuarial assumptions and judgments regarding economic conditions, and the frequency and severity of claims.

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Revenue Recognition - The Company records food and beverage revenues, net of discounts and taxes, upon delivery to the customer.

Franchise-related revenues are included in Franchise and other revenues in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Royalties, which are a percentage of net sales of the franchisee, are recognized as revenue in the period which the sales are reported to have occurred.

Franchise-related revenues are included in Franchise and other revenues in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

Royalties, which are a percentage of net sales of the franchisee, are recognized as revenue in the period which the sales are reported to have occurred provided collectability is reasonably assured.

Proceeds from the sale of gift cards, which do not have expiration dates, are recorded as deferred revenue and recognized as revenue upon redemption by the customer.

The Company applies the portfolio approach practical expedient to account for gift card contracts and performance obligations.

Gift card breakage, the amount of gift cards which will not be redeemed, is recognized using estimates based on historical redemption patterns.

If actual redemptions vary from the estimated breakage, gift card breakage income may differ from the amount recorded.

Gift card breakage, the amount of gift

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

cards which will not be redeemed, is recognized using estimates based on historical redemption patterns.

If actual redemptions vary from assumptions used to estimate breakage, gift card breakage income may differ from the amount recorded.

The Company periodically updates its estimates used for breakage.

Breakage revenue is recorded as a component of Restaurant sales in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Breakage revenue is recorded as a component of Restaurant sales in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

Approximately 84 % of deferred gift card revenue is expected to be recognized within 12 months of inception.

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See Note 4 - Revenue Recognition for rollforwards of deferred gift card sales commissions and unearned gift card revenue.

Advertising fees charged to franchisees are recognized as Franchise revenue in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Advertising fees charged to franchisees are recognized in Franchise and other revenues in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income provided collectability is reasonably assured.

Initial franchise and renewal fees are recognized over the term of the franchise agreement and renewal period, respectively.

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The Company applies the practical expedient to exclude disclosures regarding loyalty program remaining performance obligations, which have original expected durations of less than one year.

The Company collects and remits sales, food and beverage, alcoholic beverage and hospitality taxes on transactions with customers and reports revenue net of taxes in its Consolidated Statements of Operations and Comprehensive Income .

Leases - Effective December 31, 2018, the Company’s lease accounting policies changed in conjunction with its adoption of Accounting Standards Update (“ASU”) No.

Leases (Topic 842) (“ASU No.

2016-02”), ASU No.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

2018-01, “Leases (Topic 842):

Land Easement Practical Expedient for Transitioning to Topic 842,” (“ASU No.

2018-01”) and ASU No.

Leases (Topic 842):

Targeted Improvements (“ASU No.

See discussion of ASU No.

2016-02, ASU No.

2018-01 and ASU No.

2018-11 in Recently Adopted Financial Accounting Standards below.

The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement conveys the right to use and control specific property or equipment.

Leases - The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement conveys the right to use and control specific property or equipment.

The Company leases restaurant and office facilities and certain equipment under operating leases primarily having initial terms between one and 20 years.

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Subsequent changes in the index are recorded as variable rental payments.

Variable rental payments are expensed as incurred in the Company’s Consolidated Statements of Operations and Comprehensive Income and future variable rent obligations are not included within the lease liabilities on the Consolidated Balance Sheet.

Variable rental payments are expensed as incurred in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income and future variable rent obligations are not included within the lease liabilities on the Consolidated Balance Sheets.

The depreciable life of lease assets and leasehold improvements are limited by the expected lease term.

None of the Company’s leases contain any material residual value guarantees or material restrictive covenants.

For restaurant facility leases executed subsequent to the adoption of ASU No.

2016-02, the Company accounts for fixed lease and non-lease components as a single lease component.

The Company accounts for fixed lease and non-lease components of a restaurant facility lease as a single lease component.

Additionally, for certain equipment leases, the Company applies a portfolio approach to account for the lease assets and liabilities.

Leases with an initial term of 12 months or less are not recorded on its Consolidated Balance Sheet, they are recognized on a straight-line basis over the lease term within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Leases with an initial term of 12 months or less are not recorded on its Consolidated Balance Sheets, and are recognized on a straight-line basis over the lease term within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Rent expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease and may include rent holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably certain.

Rent expense is recorded in Other restaurant operating in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Rent expense is recorded in Other restaurant operating in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

Payments received from landlords as incentives for leasehold improvements are recorded as a reduction of the right-of-use asset and amortized on a straight-line basis over the term of the lease as a reduction of rent expense.

Pre-Opening Expenses - Non-capital expenditures associated with opening new restaurants are expensed as incurred and are included in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

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

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

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

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

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

This election will continue while these concessions are in effect.

Consideration Received from Vendors - The Company receives consideration for a variety of vendor-sponsored programs, such as volume rebates, promotions and advertising allowances.

Advertising allowances are intended to offset the Company’s costs of promoting and selling menu items in its restaurants.

Vendor consideration is recorded as a reduction of Cost of sales or Other restaurant operating expense when recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Vendor consideration is recorded as a reduction of Food and beverage costs or Other restaurant operating expense when recognized in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

Impairment of Long-Lived Assets and Costs Associated with Exit Activities - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

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Fair value is generally estimated using a discounted cash flow model.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Restaurant closure costs, including lease termination fees, are expensed as incurred.

1 unchanged sentence

Any subsequent adjustment to that liability as a result of lease termination or changes in estimates of cost recovery is recorded in the period incurred.

The associated expense is recorded in Provision for impaired assets and restaurant closings in the Company’s Consolidated Statements of Operations and Comprehensive Income .

The associated expense is recorded in Provision for impaired assets and restaurant closings in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

Restaurant sites and certain other assets to be sold are included in assets held for sale when certain criteria are met, including the requirement that the likelihood of selling the assets within one year is probable.

1 unchanged sentence

All other advertising costs are expensed in the period in which the costs are incurred.

Advertising expense of $ 146.1 million , $ 147.8 million and $ 151.4 million for 2019 , 2018 and 2017 , respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Advertising expense of $ 67.3 million, $ 146.1 million and $ 147.8 million for 2020, 2019 and 2018, respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Legal Costs - Settlement costs are accrued when they are deemed probable and reasonably estimable.

Legal fees are recognized as incurred and are reported in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Research and Development Expenses (“R&D”) - R&D is expensed as incurred in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Legal fees are recognized as incurred and are reported in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

Research and Development Expenses (“R&D”) - R&D is expensed as incurred in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

R&D primarily consists of payroll and benefit costs.

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Monthly Payments and deferred compensation expenses for U.S.

Partners are included in Labor and other related expenses and Monthly Payments and bonus expense for Area Operating Partners are included in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Stock-based Compensation - Stock-based compensation awards are measured at fair value at the date of grant and expensed over their vesting or service periods.

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Forfeitures of share-based compensation awards are recognized as they occur.

Basic and Diluted (Loss) Earnings per Share - The Company computes basic earnings per share based on the weighted average number of common shares that were outstanding during the period.

Except where the result would be antidilutive, diluted earnings per share includes the dilutive effect of common stock equivalents, consisting of restricted stock units, performance-based share units and stock options, and the Company’s convertible senior notes and related warrants, using the treasury stock method.

Performance-based share units are considered dilutive when the related performance criterion has been met.

As of December 27, 2020, the Company expected to settle the principal amount of its outstanding convertible senior notes in cash and any excess in shares.

As a result, only the amounts in excess of the principal amount, if applicable, were considered in diluted earnings per share under the treasury stock method.

On December 28, 2020, the Company adopted Accounting Standards Update (“ASU”) No.

2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” (“ASU No.

2020-06”) and transitioned to the “if-converted” method for calculating diluted earnings per share required under the new standard beginning in 2021.

The “if-converted” method requires inclusion in diluted earnings per share the full number of common shares issuable upon conversion, unless settlement is required to be

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

paid in cash upon conversion.

See Recently Adopted Financial Accounting Standards below for additional details regarding the impact of adopting ASU No.

Foreign Currency Translation and Transactions - For non-U.S.

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Foreign currency denominated assets and liabilities are translated into U.S.

dollars using the exchange rates in effect at the balance sheet date with the translation adjustments recorded in Accumulated other comprehensive loss in the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Company’s Consolidated Statements of Changes in Stockholders’ Equity .

dollars using the exchange rates in effect at the balance sheet date with the translation adjustments recorded in Accumulated other comprehensive loss in the Company’s Consolidated Statements of Changes in Stockholders’ Equity.

Results of operations are translated using the average exchange rates for the reporting period.

Foreign currency exchange transaction losses are recorded in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Foreign currency exchange transaction losses are recorded in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

Income Taxes - Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.

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Recently Adopted Financial Accounting Standards - On December 28, 2020, the Company adopted ASU No.

2020-06, which removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature.

2020-06 also requires the application of the “if-converted” method for calculating diluted earnings per share and the treasury stock method is no longer available.

The Company adopted ASU No.

2020-06 using the modified retrospective approach which resulted in a cumulative-effect adjustment that increased (decreased) the following Consolidated Balance Sheet accounts during the first quarter of 2021:

ADJUSTMENT CONSOLIDATED BALANCE SHEET CLASSIFICATION AMOUNT

(in millions)

Deferred tax impact of cumulative-effect adjustment Deferred income tax assets, net $ 14.9

Debt discount reclassification Long-term debt, net $ 59.9

Equity issuance costs reclassification Long-term debt, net $ ( 2.1 )

Debt discount amortization reclassification, net of tax Accumulated deficit $ 4.4

Net impact of cumulative-effect adjustment Additional paid-in capital $ ( 47.3 )

After adopting ASU No.

2020-06, the Company’s convertible senior notes will be reflected entirely as a liability since the embedded conversion feature is no longer separately presented within stockholders’ equity.

During 2020, the Company recognized debt discount amortization of $ 6.3 million within Interest expense, net related to its convertible senior notes.

In February 2021, the Company made an irrevocable election under the indenture to require the principal portion of its convertible senior notes to be settled in cash and any excess in shares.

Following the irrevocable notice, only the amounts settled in excess of the principal will be considered in diluted earnings per share under the “if-converted” method.

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

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

Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (“ASU No.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The new guidance provides optional expedients and exceptions for applying U.S.

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

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

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

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

The application of expedients allowable under ASU No.

2020-04 did not have a material effect on the Company’s financial statements.

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

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

2016-13, “Financial Instruments – Credit Losses (Topic 326):

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

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

The Company’s adoption of ASU No.

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

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

See Note 20 - Allowance for Expected Credit Losses for additional details regarding the Company’s allowance for expected credit losses.

On December 31, 2018, the Company adopted ASU No.

Leases (Topic 842) (“ASU No.

2016-02”), ASU No.

2018-01, “Leases (Topic 842):

Land Easement Practical Expedient for Transitioning to Topic 842,” (“ASU No.

2018-01”) and ASU No.

Leases (Topic 842):

Targeted Improvements (“ASU No.

2016-02 requires the lease rights and obligations arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on the balance sheet.

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In preparation for adoption, the Company implemented a new lease accounting system.

Adoption resulted in the following, as of December 31, 2018:

recording of right-of-use assets of $ 1.3 billion and lease liabilities of $ 1.5 billion ;

a credit to the beginning balance of Accumulated deficit of $ 190.4 million to derecognize deferred gains on sale-leaseback transactions and a debit to the beginning balance of Accumulated deficit of $ 49.2 million to derecognize the related deferred tax assets;

derecognition of existing debt obligations of $ 19.6 million and existing fixed assets of $ 16.1 million related to restaurant properties sold and leased back from third parties that previously did not qualify for sale accounting, with gains or losses associated with this change recognized in Accumulated deficit .

Other restaurant operating expense increased during 2019 from the adoption of ASU No.

2016-02 since the Company no longer recognizes the benefit of deferred gains on sale-leaseback transactions through its statements of operations over the corresponding lease term.

During 2018 and 2017, the Company recognized $ 12.3 million and $ 11.9 million , respectively, of sale-leaseback deferred gain amortization.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As a result of adoption of ASU No.

2016-02, the Company recorded reclassification adjustments to certain balances that were recorded under Accounting Standards Codification Topic 840, “Leases” (“ASC 840”) on its Consolidated Balance Sheet as of December 30, 2018 .

The following table summarizes accounts with material reclassification adjustments which impacted Operating lease right-of-use assets as a part of the adoption of ASU No.

CONSOLIDATED BALANCE SHEET CLASSIFICATION UNDER ASC 840

Favorable leases

Intangible assets, net

Deferred rent

Unfavorable leases

Other long-term liabilities, net

Exit-related lease accruals

Other long-term liabilities, net

In addition, rent payments that were recorded within prepaid assets under ASC 840 are now recorded as a reduction of the current portion of operating lease liabilities.

Recently Issued Financial Accounting Standards Not Yet Adopted - In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-13, “Financial Instruments – Credit Losses (Topic 326):

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

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

The Company’s allowance for credit losses will generally increase under the CECL model .

The Company’s adoption of ASU No.

2016-13 and its related amendments (“the new credit loss standard”) on December 30, 2019 did not have a material effect on the Company’s consolidated financial statements.

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

In August 2018, the FASB issued ASU No.

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

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

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

Under ASU No.

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

The Company’s prospective adoption of ASU No.

2018-15 on December 30, 2019 did not have a material effect on its consolidated financial statements.

The Company will defer and recognize allowable implementation costs for future cloud computing projects which may be material to future reporting periods.

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

These reclassifications had no effect on previously reported net income.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

COVID-19 Charges

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

CHARGES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME CLASSIFICATION FISCAL YEAR

Inventory obsolescence and spoilage Food and beverage costs $ 10,450

Compensation for idle employees (1) Labor and other related 29,993

Other operating charges Other restaurant operating 3,219

Lease guarantee contingent liabilities (2) General and administrative 4,188

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

Other charges General and administrative 2,719

Right-of-use asset impairment (4) Provision for impaired assets and restaurant closings 32,992

Fixed asset impairment (4) Provision for impaired assets and restaurant closings 34,423

Goodwill and other impairment (5) Provision for impaired assets and restaurant closings 3,190

________________

(1) Represents relief pay for hourly employees impacted by the closure of dining rooms, net of $ 14.9 million of employee retention tax credits.

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

(3) Includes additional reserves to reflect an increase in expected credit losses, primarily related to franchise receivables.

(4) Includes impairments resulting from the remeasurement of assets utilizing projected future cash flows revised for current economic conditions, restructuring charges, the closure of certain restaurants and in connection with the Out West Resolution Agreement.

See Note 5 - Impairments, Exit Costs and Disposals and Note 4 - Revenue Recognition , for details regarding COVID-19 Restructuring costs and the Out West Resolution Agreement, respectively.

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

See Note 10 - Goodwill and Intangible Assets, Net for details regarding impairment of goodwill.

Revenue Recognition

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

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

(dollars in thousands) 2020 2019 2018

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

(dollars in thousands)

RESTAURANT SALES

FRANCHISE REVENUE

RESTAURANT SALES

FRANCHISE REVENUE

RESTAURANT SALES

FRANCHISE REVENUE

2020 2019 2018

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

Outback Steakhouse $ 1,760,071 $ 9,898 $ 2,135,776 $ 38,614 $ 2,098,696 $ 40,422

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Fleming’s Prime Steakhouse & Wine Bar 209,564 — 307,199 — 304,064 —

Other 6,507 — 4,658 — 5,845 —

total $ 2,869,547 $ 11,553 $ 3,634,668 $ 41,513 $ 3,634,198 $ 41,856

International

Outback Steakhouse Brazil $ 206,280 $ — $ 355,837 $ — $ 348,394 $ —

Other (2) 68,809 9,642 84,509 10,634 78,279 11,050

International total $ 275,089 $ 9,642 $ 440,346 $ 10,634 $ 426,673 $ 11,050

Total $ 3,144,636 $ 21,195 $ 4,075,014 $ 52,147 $ 4,060,871 $ 52,906

____________________

(1) In 2019, the Company sold 18 Carrabba’s Italian Grill restaurants.

In 2017, the Company sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill restaurant.

These restaurants are now operated as franchises.

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

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

(dollars in thousands)

DECEMBER 29, 2019

DECEMBER 30, 2018

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

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

Other current assets, net

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Deferred gift card sales commissions capitalization 22,923 29,894 28,980

Other ( 1,250 ) ( 1,677 ) ( 1,553 )

Balance, end of period $ 19,300 $ 18,554 $ 16,431

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Balance, end of period $ 373,048 $ 358,757 $ 333,794

Refranchising - During 2019, the Company completed the sale of 18 of its existing U.S.

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

In 2017, the Company completed the sale of 54 of its existing U.S.

Company-owned Outback Steakhouse and Carrabba’s Italian Grill restaurants to two of its existing franchisees (the “ Buyers ”) for aggregate cash proceeds of $ 36.2 million , net of certain closing adjustments.

The transactions resulted in an aggregate net gain of $ 7.4 million , recorded within Other (expense) income, net , in the Consolidated Statements of Operations and Comprehensive Income , and is net of an impairment of $ 1.7 million related to certain Company-owned assets leased to the Buyers .

Included in the cash proceeds are initial franchise fees of $ 2.2 million that were recorded within Franchise and other revenues in the Consolidated Statements of Operations and Comprehensive Income .

The restaurants in the transactions above are now operated as franchises and the Company remains contingently liable on certain real estate lease agreements assigned to the franchisees.

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

Surplus Property Disposals - During 2019 , the Company completed the sale of five of its U.S.

surplus properties to a franchisee for cash proceeds of $ 12.7 million , net of certain purchase price adjustments.

The transaction resulted in a net gain of $ 3.6 million , recorded within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Other Disposals - During 2017, the Company closed and completed the sale of one U.S.

Company-owned Carrabba’s Italian Grill restaurant for a purchase price of $ 9.9 million , net of closing costs.

The sale resulted in a net gain of $ 8.4 million , recorded in Other (expense) income, net , in the Company’s Consolidated Statements of Operations and Comprehensive Income .

Franchisee Deferred Payment Agreement - On December 27, 2020, the Company entered into an agreement (the “Resolution Agreement”) with Cerca Trova Southwest Restaurant Group, LLC (d/b/a Out West Restaurant Group) and certain of its affiliates (collectively, “Out West”), a franchisee of approximately 90 Outback Steakhouse restaurants in the western United States, primarily in California.

The Resolution Agreement ends on December 31, 2023 or upon the earlier occurrence of certain specified events, including the sale of all or substantially all of the assets or equity of Out West, bankruptcy or a liquidation event (“Qualifying Event”) (the “Forbearance Period”).

Prior to the Resolution Agreement, Out West was in default of its franchise agreements for nonpayment of certain amounts due, and simultaneously in default of its credit agreement with its lenders primarily due to the significant impact of the COVID-19 pandemic.

Under the terms of the Resolution Agreement, the Company agreed to:

• not call upon any previous default under the existing franchise agreements during the Forbearance Period;

• reduce future advertising fees to 2.25 % of gross sales during the Forbearance Period;

• permanently waive unpaid royalty and advertising fees for the period of February 24, 2020 to July 26, 2020;

• allow for closure of four restaurants and certain sublease modifications (the “Property Concessions”);

• allow for closure of up to ten additional restaurants during the first 12 months of the Resolution Agreement, without imposition of any penalties or accelerated royalties;

• defer all non-waived past due royalties and advertising fees through November 22, 2020, and for certain permitted restaurant closings in connection with the Property Concessions, defer accelerated rent and royalties that otherwise would have been due under the terms and conditions of the respective franchise agreements and leases or subleases (the “Initial Deferred Balance”), and

• defer all past due rents through December 27, 2020 on subleased properties totaling $ 3.6 million until April 2021 when the balance will be repaid over an 18-month period.

In connection with the Property Concessions, the Company recognized $ 4.7 million of lease right-of-use asset impairment during the thirteen weeks ended December 27, 2020, within the U.S.

No deferred or previously waived amounts have been recorded as revenue, with the exception of a $ 3.1 million receivable balance that had been previously fully reserved.

Collections of deferred amounts, and any future amounts due under the Resolution Agreement or the Company’s franchise agreements after November 22, 2020, will be recognized when collectability is reasonably assured.

Out West also entered into a Forbearance Agreement and Second Amendment to Credit and Guaranty Agreement (“Forbearance Agreement”) with its lenders that, in conjunction with the Resolution Agreement, provides, among other things, for a pre-determined calculation of available monthly cash (“Available Cash”) that Out West may use to settle its obligations due to the Company and its lenders.

Available Cash is calculated net of operating expenses, including local marketing expenditures required under the Resolution Agreement.

Under the Resolution Agreement, if Out West is unable to satisfy monthly royalty or advertising fees with Available Cash, such amounts will automatically increase the Initial Deferred Balance.

The entire deferred balance will become collectible upon any Qualifying Event.

If the Qualifying Event is the sale of all or substantially all of the assets or equity of Out West, the sale proceeds will be applied, between the Company and Out West’s lenders, in accordance with the payment priority established in the Resolution Agreement and Forbearance Agreement;

if the sales proceeds are insufficient to satisfy the deferred balance due to the Company, then the Company agreed to permanently waive any remaining deferred balance due to the Company.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Impairments and Exit Costs

Impairments, Exit Costs and Disposals

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

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Impairment losses

(1) $ 65,129 $ 6,381 $ 15,342

International (1) (2) 3,468 2,026 11,457

Corporate (3) 6,226 727 —

Total impairment losses $ 74,823 $ 9,134 $ 26,799

Restaurant closure expenses

International

Total restaurant closure expenses

Provision for impaired assets and restaurant closings

Closure Initiative and Restructuring Costs - Following is a summary of expenses related to the 2017 Closure Initiative and the Bonefish Restructuring (the “Closure Initiatives”), recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income for the periods indicated:

(dollars in thousands)

Impairment, facility closure and other expenses

2017 Closure Initiative (1)

Bonefish Restructuring (2)

Impairment, facility closure and other expenses - Provision for impaired assets and restaurant closings

Severance and other expenses

2017 Closure Initiative (1)

Bonefish Restructuring (2)

Severance and other expenses - General and administrative expense

Reversal of deferred rent liability

2017 Closure Initiative (1)

Bonefish Restructuring (2)

Reversal of deferred rent liability - Other restaurant operating expense

Restaurant closure expenses (benefits)

(1) $ 1,358 $ ( 105 ) $ 6,536

On February 15, 2017 and August 28, 2017 , the Company decided to close 43 underperforming restaurants in the U.S.

and two Abbraccio restaurants outside of the core markets of São Paulo and Rio de Janeiro in Brazil (the “2017 Closure Initiative”).

Most of these restaurants were closed in 2017, with the balance mostly closing as leases and certain operating covenants expired or were amended or waived.

In connection with the 2017 Closure Initiative, the Company recognized impairments and closure costs of $ 1.7 million , $ 0.6 million and $ 17.9 million within the U.S.

segment for 2019 , 2018 and 2017 , respectively, and $ 1.1 million and $ 2.5 million within the international segment for 2018 and 2017 , respectively.

On February 12, 2016, the Company decided to close 14 Bonefish Grill restaurants (the “Bonefish Restructuring”).

Expenses related to the Bonefish Restructuring are recognized within the U.S.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Cumulative Closure Initiative and Restructuring Costs - Following is a summary of cumulative expenses related to the Closure Initiatives incurred through December 29, 2019 (dollars in thousands):

LOCATION OF CHARGE IN THE CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CLOSURE INITIATIVES AND RESTRUCTURING

Impairments, facility closure and other expenses

International (1) 173 56 3,528

Total restaurant closure expenses (benefits) $ 1,531 $ ( 49 ) $ 10,064

Provision for impaired assets and restaurant closings $ 76,354 $ 9,085 $ 36,863

Severance and other expenses

General and administrative

Reversal of deferred rent liability

Other restaurant operating

____________________

The 2017 Closure Initiative expenses included $ 64.2 million and $ 2.2 million within the U.S.

and international segment, respectively.

International Restructuring - The Company recognized asset impairment and closure charges of $ 2.0 million , $ 13.9 million and $ 6.3 million during 2019 , 2018 and 2017 , respectively, related to restructuring of certain international markets, including Puerto Rico and China, within the international segment.

and international impairment and closure charges during 2020 primarily relate to the COVID-19 pandemic, including charges related to the COVID-19 Restructuring discussed below and the Out West Resolution Agreement.

See Note 3 - COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

(2) Includes goodwill impairment charges of $ 2.0 million during 2020.

See Note 10 - Goodwill and Intangible Assets, Net for details regarding impairment of goodwill.

(3) Corporate impairment charges during 2020 primarily relate to transformational initiatives.

COVID-19 Restructuring - During 2020, the Company recognized pre-tax asset impairments and closure charges in connection with the closure of 22 U.S.

restaurants and from the update of certain cash flow assumptions, including lease renewal considerations (the “COVID-19 Restructuring”).

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME CLASSIFICATION FISCAL YEAR

DESCRIPTION 2020

Property, fixtures and equipment impairments Provision for impaired assets and restaurant closings $ 18,766

Lease right-of-use asset impairments and closure charges Provision for impaired assets and restaurant closings 5,003

Severance and other expenses General and administrative 1,097

International Restructuring - The Company recognized asset impairment and closure charges of $ 2.0 million and $ 13.9 million during 2019 and 2018, respectively, related to restructuring of certain international markets, including Puerto Rico and China, within the international segment.

Express Concept Restructuring - In 2018, the Company recognized asset impairment charges of $ 7.4 million related to the restructuring of its Express concept, within the U.S.

As a part of the restructuring, three Express locations closed during 2019.

Refranchising - In connection with the sale of certain existing U.S.

Company-owned Carrabba’s Italian Grill restaurants , the Company recognized asset impairment charges of $ 5.5 million in 2018, within the U.S.

Surplus Properties - The Company owns certain U.S.

restaurant properties and assets that are no longer utilized to operate its restaurant concepts (“surplus properties”).

Surplus properties primarily consist of closed properties, which include land and a building, and liquor licenses no longer needed for operations.

Surplus properties may be classified on the Consolidated Balance Sheets as assets held for sale or as assets held and used when the Company does not expect to sell these assets within the next 12 months.

Following is a summary of the carrying value and number of surplus properties as of the periods indicated:

(dollars in thousands)

CONSOLIDATED BALANCE SHEET CLASSIFICATION

DECEMBER 29, 2019

DECEMBER 30, 2018

Surplus properties - assets held for sale

Other current assets, net

Surplus properties - assets held and used

Property, fixtures and equipment, net

Total surplus properties

Number of surplus properties owned

During 2017, the Company recognized asset impairment charges of $ 10.7 million in connection with the remeasurement of certain surplus properties, within the U.S.

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

Refranchising - During 2019, the Company completed the sale of 18 of its existing U.S.

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

In connection with this, sale the Company recognized asset impairment charges of $ 5.5 million in 2018, within the U.S.

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Accrued Facility Closure and Other Cost Rollforward - The following table summarizes the Company’s rollforward of closed facility lease liabilities and other accrued costs associated with the Closure Initiatives for the period indicated:

Accrued Facility Closure and Other Cost Rollforward - The following table is a rollforward of the Company’s closed facility lease liabilities and other accrued costs associated with the closure and restructuring initiatives for the period indicated:

(dollars in thousands) 2020

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Cash payments ( 4,572 )

Accretion 1,129

Adjustments ( 678 )

End of the year (1) $ 12,879

________________

Includes closure initiative related lease liabilities recognized as a result of the adoption of ASU No.

As of December 29, 2019 , the Company had exit-related accruals related to the Closure Initiatives of $ 3.3 million recorded in Accrued and other current liabilities and $ 11.2 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

Earnings Per Share

The Company computes basic earnings per share based on the weighted average number of common shares that were outstanding during the period.

Diluted earnings per share includes the dilutive effect of common stock equivalents consisting of restricted stock, restricted stock units, performance-based share units and stock options, using the treasury stock method.

Performance-based share units are considered dilutive when the related performance criterion has been met.

The following table presents the computation of basic and diluted earnings per share for the periods indicated:

(1) As of December 27, 2020, the Company had exit-related accruals of $ 4.3 million recorded in Accrued and other current liabilities and $ 8.6 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

Surplus Property Disposals - During 2019 , the Company completed the sale of five of its U.S.

surplus properties to a franchisee for cash proceeds of $ 12.7 million, net of certain purchase price adjustments.

The transaction resulted in a net gain of $ 3.6 million, recorded within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

(Loss) Earnings Per Share

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

(in thousands, except per share data) 2020 2019 2018

Net income attributable to Bloomin’ Brands

Net (loss) income attributable to Bloomin’ Brands

$ ( 158,715 ) $ 130,573 $ 107,098

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

Net (loss) income attributable to common stockholders $ ( 162,211 ) $ 130,573 $ 107,098

Basic weighted average common shares outstanding 87,468 88,839 92,042

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Stock options — 571 1,595

Nonvested restricted stock and restricted stock units

Nonvested restricted stock units — 295 397

Nonvested performance-based share units — 72 41

Diluted weighted average common shares outstanding 87,468 89,777 94,075

Basic earnings per share

Diluted earnings per share

Securities outstanding not included in the computation of earnings per share because their effect was antidilutive were as follows, for the periods indicated:

Basic (loss) earnings per share attributable to common stockholders $ ( 1.85 ) $ 1.47 $ 1.16

Diluted (loss) earnings per share attributable to common stockholders $ ( 1.85 ) $ 1.45 $ 1.14

________________

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

See Note 16 - Stockholders’ Equity for additional details.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Share-based compensation-related weighted-average securities outstanding not included in the computation of net (loss) earnings per share attributable to common stockholders because their effect was antidilutive were as follows, for the periods indicated:

(shares in thousands) 2020 2019 2018

Stock options 5,155 4,003 2,879

Nonvested restricted stock and restricted stock units

Nonvested restricted stock units 682 158 99

Nonvested performance-based share units 514 277 201

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

For 2020, dilutive excess shares, if applicable, have been excluded from the computation of diluted earnings per share as the effect would be antidilutive given the Company’s net loss.

Warrants to purchase approximately 19.348 million shares of the Company’s common shares at $ 16.64 per share were outstanding as of December 27, 2020 but were also excluded from the computation of diluted earnings per share given the Company’s net loss.

Had the Company been in a net income position, the dilutive effect of its convertible senior notes and related warrants on 2020 earnings per share would have been approximately 1.8 million shares, assuming settlement of the principal in cash.

See Note 14 - Convertible Senior Notes for additional information regarding the Company’s convertible senior notes.

Stock-based and Deferred Compensation Plans

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Stock options $ 3,743 $ 5,270 $ 6,378

Restricted stock and restricted stock units

Restricted stock units 8,559 8,949 9,143

Performance-based share units 2,414 5,471 6,911

$ 14,716 $ 19,690 $ 22,432

Stock Options - Stock options generally vest and become exercisable over a period of four years in an equal number of shares each year.

2 unchanged sentences

The following table presents a summary of the Company’s stock option activity:

(in thousands, except exercise price and contractual life)

(in thousands, except exercise price and contractual life) OPTIONS WEIGHTED-

PRICE WEIGHTED-

LIFE (YEARS) AGGREGATE

Outstanding as of December 29, 2019 6,099 $ 19.40 6.0 $ 18,961

Granted 100 $ 18.45

Exercised ( 374 ) $ 12.38

Forfeited or expired ( 403 ) $ 20.82

1 unchanged sentence

Exercisable as of December 27, 2020 4,287 $ 19.61 4.4 $ 6,147

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

2020 2019 2018

Weighted-average risk-free interest rate (1) 0.90 % 2.34 % 2.66 %

Dividend yield (2) 4.34 % 1.94 % 1.50 %

Expected term (3)

Expected term (3) 5.5 years 4.8 years 5.8 years

Weighted-average volatility (4) 30.43 % 31.05 % 32.76 %

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(2) Dividend yield is the level of dividends expected to be paid on the Company’s common stock over the expected term of the option.

The dividend yield during 2020 relates to options granted prior the Company’s Amended Credit Agreement which restricts the payment of dividends.

See Note 13 - Long-term Debt, Net for dividend restriction details.

(3) Expected term represents the period of time that the options are expected to be outstanding.

1 unchanged sentence

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following represents stock option compensation information for the periods indicated:

5 unchanged sentences

Unrecognized stock option expense $ 3,014

Remaining weighted-average vesting period

Remaining weighted-average vesting period 1.3 years

________________

Includes excess tax benefits for tax deductions related to the exercise of stock options of $ 0.2 million , $ 8.0 million and $ 2.9 million for fiscal years 2019 , 2018 and 2017 , respectively.

Restricted Stock and Restricted Stock Units - Restricted stock units granted prior to 2019 generally vest over a period of four years and restricted stock units granted after 2018 generally vest over a period of three years , in an equal number of shares each year.

(1) Includes excess tax benefits for tax deductions related to the exercise of stock options of $ 0.3 million, $ 0.2 million and $ 8.0 million during 2020, 2019 and 2018, respectively.

Restricted Stock Units - Beginning in 2019, restricted stock units granted generally vest over a period of three years and restricted stock units granted prior to 2019 generally vest over a period of four years , in an equal number of shares each year.

Following is a summary of the Company’s restricted stock unit activity:

(shares in thousands)

NUMBER OF RESTRICTED STOCK UNIT AWARDS

WEIGHTED-AVERAGE

(shares in thousands) NUMBER OF RESTRICTED STOCK UNIT AWARDS WEIGHTED-AVERAGE

FAIR VALUE PER AWARD

Outstanding as of December 29, 2019 1,188 $ 18.91

Granted 484 $ 16.66

Vested ( 492 ) $ 18.25

Forfeited ( 146 ) $ 19.27

Outstanding as of December 27, 2020 1,034 $ 18.12

The following represents restricted stock and restricted stock unit compensation information for the periods indicated:

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following represents restricted stock unit compensation information for the periods indicated:

(dollars in thousands) 2020 2019 2018

2 unchanged sentences

Unrecognized restricted stock expense $ 11,437

Remaining weighted-average vesting period

Remaining weighted-average vesting period 1.8 years

Performance-based Share Units (“PSUs”) - The number of PSUs that vest is determined for each year based on the achievement of certain performance criteria as set forth in the award agreement and may range from zero to 200 % of the annual target grant.

2 unchanged sentences

Compensation expense for PSUs is recognized over the vesting period when it is probable the performance criteria will be achieved.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table presents a summary of the Company’s PSU activity:

(shares in thousands)

PERFORMANCE-BASED SHARE UNITS

WEIGHTED-AVERAGE

(shares in thousands) PERFORMANCE-BASED SHARE UNITS WEIGHTED-AVERAGE

FAIR VALUE PER AWARD

Outstanding as of December 29, 2019 532 $ 19.42

Granted 522 $ 19.14

Vested ( 291 ) $ 16.51

Forfeited ( 90 ) $ 20.13

Outstanding as of December 27, 2020 673 $ 20.37

3 unchanged sentences

Unrecognized PSU expense $ 7,601

Remaining weighted-average vesting period (1)

Remaining weighted-average vesting period (1) 1.6 years

________________

(1) PSUs typically vest after three years .

As of December 29, 2019 , the maximum number of shares of common stock available for issuance pursuant to the 2016 Omnibus Incentive Plan was 3,310,887 .

As of December 27, 2020, the maximum number of shares of common stock available for issuance pursuant to the 2020 Omnibus Incentive Compensation Plan was 9,464,074 .

Deferred Compensation Plans

4 unchanged sentences

Partners under these plans was $ 28.1 million and $ 49.0 million as of December 27, 2020 and December 29, 2019, respectively.

The rabbi trust is funded through the Company’s voluntary contributions.

The unfunded obligation for U.S.

Partners deferred compensation was $ 9.1 million and $ 26.3 million as of December 29, 2019 and December 30, 2018 , respectively.

The rabbi trust is funded through the Company’s voluntary contributions and was fully funded as of December 27, 2020.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Other Compensation Programs - Certain U.S.

5 unchanged sentences

The deferred compensation plan is unsecured and funded through the Company’s voluntary contributions.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Other Current Assets, Net

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

(dollars in thousands)

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

Prepaid expenses $ 12,148 $ 20,218

6 unchanged sentences

Other current assets, net 12,756 3,261

$ 151,518 $ 186,462

________________

(1) See Note 20 - Allowance for Expected Credit Losses for a rollforward of the related allowance for expected credit losses.

Property, Fixtures and Equipment, Net

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

(dollars in thousands)

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

Land $ 40,498 $ 42,570

Buildings 1,158,257 1,202,434

Furniture and fixtures 450,508 458,169

Equipment 623,982 665,815

Construction in progress 27,102 24,477

accumulated depreciation ( 1,412,660 ) ( 1,357,388 )

$ 887,687 $ 1,036,077

Surplus Properties - The Company owns certain U.S.

restaurant properties and assets that are no longer utilized to operate its restaurants (“surplus properties”).

Surplus properties primarily consist of closed properties, which include land and a building, and liquor licenses no longer needed for operations.

Surplus properties may be classified on the Consolidated Balance Sheets as assets held for sale or as assets held and used when the Company

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

does not expect to sell these assets within the next 12 months.

Following is a summary of the carrying value and number of surplus properties as of the periods indicated:

(dollars in thousands) CONSOLIDATED BALANCE SHEET CLASSIFICATION DECEMBER 27, 2020 DECEMBER 29, 2019

Surplus properties - assets held for sale Other current assets, net $ 3,831 $ 3,317

Surplus properties - assets held and used Property, fixtures and equipment, net 7,955 18,188

Total surplus properties $ 11,786 $ 21,505

Number of surplus properties owned 12 20

Depreciation and repair and maintenance expense are as follows for the periods indicated:

4 unchanged sentences

Goodwill - The following table is a rollforward of goodwill:

(dollars in thousands)

INTERNATIONAL

(dollars in thousands) U.S.

INTERNATIONAL CONSOLIDATED

Balance as of December 30, 2018 $ 170,657 $ 124,770 $ 295,427

Translation adjustments — ( 6,988 ) ( 6,988 )

Transfer to Assets held for sale

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

Translation adjustments — ( 15,302 ) ( 15,302 )

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

Balance as of December 27, 2020 $ 170,657 $ 100,507 $ 271,164

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table is a summary of the Company’s gross goodwill balances and accumulated impairments as of the periods indicated:

DECEMBER 29, 2019

DECEMBER 30, 2018

DECEMBER 31, 2017

(dollars in thousands)

GROSS CARRYING AMOUNT

ACCUMULATED IMPAIRMENTS

GROSS CARRYING AMOUNT

ACCUMULATED IMPAIRMENTS

GROSS CARRYING AMOUNT

ACCUMULATED IMPAIRMENTS

DECEMBER 27, 2020 DECEMBER 29, 2019 DECEMBER 30, 2018

(dollars in thousands) GROSS CARRYING AMOUNT ACCUMULATED IMPAIRMENTS GROSS CARRYING AMOUNT ACCUMULATED IMPAIRMENTS GROSS CARRYING AMOUNT ACCUMULATED IMPAIRMENTS

$ 838,827 $ ( 668,170 ) $ 838,827 $ ( 668,170 ) $ 838,827 $ ( 668,170 )

International 220,390 ( 119,883 ) 235,692 ( 117,910 ) 242,680 ( 117,910 )

Total goodwill $ 1,059,217 $ ( 788,053 ) $ 1,074,519 $ ( 786,080 ) $ 1,081,507 $ ( 786,080 )

T he COVID-19 outbreak was considered a triggering event during the first quarter of 2020, indicating that the carrying amount of goodwill may not be recoverable.

As a result, the Company performed a quantitative assessment for its four U.S.

and three international reporting units to determine whether a reporting unit was impaired.

Based on this assessment, which utilized a discounted cash flow analysis, the Company recorded full impairment of goodwill related to its Hong Kong reporting unit of $ 2.0 million, within the international segment, during the first quarter of 2020.

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

The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets each year during the second quarter.

The Company’s 2019 and 2017 assessments utilized a qualitative assessment and its 2018 assessment utilized a quantitative approach.

As a result of these assessments, the Company did not record any goodwill asset impairment charges during the periods presented.

Since the Company performed a quantitative assessment on the last day of the first quarter of 2020, as described above, the Company utilized the same assumptions and analysis in

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

performing a quantitative annual assessment in its second quarter and concluded that no additional impairment was required.

The Company’s 2019 assessment utilized a qualitative assessment and its 2018 assessment utilized a quantitative approach.

As a result of these assessments, the Company did no t record any goodwill asset impairment charges during 2019 or 2018.

Intangible Assets, net - Intangible assets, net, consisted of the following as of the periods indicated:

WEIGHTED AVERAGE AMORTIZATION PERIOD

DECEMBER 29, 2019

DECEMBER 30, 2018

(dollars in thousands)

GROSS CARRYING VALUE

ACCUMULATED AMORTIZATION

NET CARRYING VALUE

GROSS CARRYING VALUE

ACCUMULATED AMORTIZATION

NET CARRYING VALUE

Favorable leases

WEIGHTED AVERAGE REMAINING AMORTIZATION PERIOD

(IN YEARS) DECEMBER 27, 2020 DECEMBER 29, 2019

(dollars in thousands) GROSS CARRYING VALUE ACCUMULATED AMORTIZATION NET CARRYING VALUE GROSS CARRYING VALUE ACCUMULATED AMORTIZATION NET CARRYING VALUE

Trade names Indefinite $ 414,716 $ 414,716 $ 414,616 $ 414,616

Trademarks 8 81,951 $ ( 51,797 ) 30,154 81,381 $ ( 47,882 ) 33,499

Franchise agreements 0 14,881 ( 14,881 ) — 14,881 ( 14,356 ) 525

1 unchanged sentence

Total intangible assets 9 $ 545,068 $ ( 85,085 ) $ 459,983 $ 553,268 $ ( 82,653 ) $ 470,615

The Company did not record any indefinite-lived intangible asset impairment charges during the periods presented.

The Company did no t record any indefinite-lived intangible asset impairment charges during the periods presented.

Definite-lived intangible assets are amortized on a straight-line basis.

3 unchanged sentences

________________

Amortization expense is recorded in Depreciation and amortization for fiscal year 2019 and Depreciation and amortization and Other restaurant operating expense for fiscal years 2018 and 2017 in the Company’s Consolidated Statements of Operations and Comprehensive Income .

(1) Amortization expense is recorded in Depreciation and amortization for fiscal years 2020 and 2019 and Depreciation and amortization and Other restaurant operating expense for fiscal year 2018 in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income.

The following table presents expected annual amortization of intangible assets as of December 27, 2020:

4 unchanged sentences

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

(dollars in thousands)

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

Company-owned life insurance (1) $ 44,814 $ 60,126

Deferred financing fees (1)

Deferred debt issuance costs (2) 4,694 4,893

Liquor licenses 24,250 24,289

Other assets 18,868 27,802

$ 92,626 $ 117,110

________________

(1) During 2020, the Company withdrew $ 9.7 million from its Company-owned life insurance policies to pay deferred compensation obligations.

(2) Net of accumulated amortization of $ 9.0 million and $ 6.8 million as of December 27, 2020 and December 29, 2019, respectively.

1 unchanged sentence

Accrued and other current liabilities consisted of the following as of the periods indicated:

(dollars in thousands)

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

Accrued rent and current operating lease liabilities (1) $ 192,369 $ 174,287

2 unchanged sentences

Other current liabilities 96,013 95,574

$ 388,321 $ 391,451

________________

(1) Includes COVID-19-related deferred rent accruals of $ 12.8 million as of December 27, 2020.

Long-term Debt, Net

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

DECEMBER 29, 2019

DECEMBER 30, 2018

(dollars in thousands)

OUTSTANDING BALANCE

INTEREST RATE

OUTSTANDING BALANCE

INTEREST RATE

DECEMBER 27, 2020 DECEMBER 29, 2019

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

Senior Secured Credit Facility:

2 unchanged sentences

Total Senior Secured Credit Facility 872,000 1,049,000

Convertible Senior Notes (3) 230,000 5.00 % —

Finance lease liabilities 2,405 2,495

Financing obligations

7.58% to 7.82%

0.00% to 2.18%

Other — 50 2.18 %

unamortized debt discount and issuance costs ( 67,704 ) ( 2,654 )

finance lease interest ( 221 ) ( 187 )

Total debt, net 1,036,480 1,048,704

2 unchanged sentences

________________

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

Subsequent to December 29, 2019 , the Company made payments of $ 65.0 million , net of borrowings, on its revolving credit facility.

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

(2) Subsequent to December 27, 2020, the Company made payments of $ 92.0 million on its revolving credit facility.

(3) See Note 14 - Convertible Senior Notes for details regarding the convertible senior notes.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Bloomin’ Brands, Inc.

is a holding company and conducts its operations through its subsidiaries, certain of which have incurred indebtedness as described below.

Credit Agreement - On November 30, 2017 , the Company and OSI, as co-borrowers, entered into a credit agreement (the “ Credit Agreement ”) with a syndicate of institutional lenders, providing for senior secured financing of up to

Amended Credit Agreement - On November 30, 2017, the Company and OSI, as co-borrowers, entered into a credit agreement (the “Credit Agreement”) with a syndicate of institutional lenders, providing for senior secured financing of up to $ 1.5 billion consisting of a $ 500.0 million Term loan A and a $ 1.0 billion revolving credit facility, including a letter of credit and swing line loan sub-facilities (the “Senior Secured Credit Facility”).

The Senior Secured Credit Facility matures on November 30, 2022.

Borrowings under the Company’s Senior Secured Credit Facility are subject to various covenants that limit its ability to:

incur additional indebtedness;

make significant payments;

pay dividends and other restricted payments;

acquire certain assets;

effect mergers and similar transactions;

and effect certain other transactions with affiliates.

On May 4, 2020, the Company and its wholly-owned subsidiary OSI, as co-borrowers, entered into an amendment to the Credit Agreement (the “Amended Credit Agreement”), which provides relief for the Senior Secured Credit Facility financial covenant to maintain a specified quarterly Total Net Leverage Ratio (“TNLR”).

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

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

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

QUARTERLY PERIOD ENDED MAXIMUM RATIO

March 28, 2021 (1) 5.50 to 1.00

June 27, 2021 (2) 5.00 to 1.00

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

________________

(1) Seasonally annualized Consolidated EBITDA calculated as Consolidated EBITDA for the fiscal quarter ending March 28, 2021 divided by 34.1 %.

(2) Seasonally annualized Consolidated EBITDA calculated as Consolidated EBITDA for the two consecutive quarters ending June 27, 2021 divided by 58.5 %.

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

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

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

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

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

Interest rates under the Amended Credit Agreement are 275 and 175 basis points above the Eurocurrency Rate and Base Rate, respectively, and letter of credit fees and fees for the daily unused availability under the revolving credit facility are 2.75 % and 0.40 %, respectively.

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

$ 1.5 billion consisting of a $ 500.0 million Term loan A and a $ 1.0 billion revolving credit facility, including a letter of credit and swing line loan sub-facilities (the “ Senior Secured Credit Facility ”).

The Senior Secured Credit Facility matures on November 30, 2022 .

The Company may elect an interest rate for the Credit Agreement at each reset period based on the Alternate Base Rate or the Eurocurrency Rate.

Once in compliance with the TNLR covenant for the test period ending September 26, 2021, the Company may elect an interest rate at each reset period based on the Alternate Base Rate or the Eurocurrency Rate.

The Alternate Base Rate option is the highest of:

(i) the prime rate of Wells Fargo Bank, National Association, (ii) the federal funds effective rate plus 0.5 of 1.0% or (iii) the Eurocurrency rate with a one-month interest period plus 1.0 % (the “Base Rate”).

The Eurocurrency Rate option is the seven , 30 , 60 , 90 or 180-day Eurocurrency rate (“Eurocurrency Rate”).

The Eurocurrency Rate option is the seven, 30, 60, 90 or 180-day Eurocurrency rate (the “Eurocurrency Rate”).

The interest rates are as follows:

BASE RATE ELECTION

EUROCURRENCY RATE ELECTION

Term loan A and revolving credit facility

50 to 100 basis points over Base Rate

BASE RATE ELECTION EUROCURRENCY RATE ELECTION

Term loan A and revolving credit facility 50 to 100 basis points over the Base Rate

150 to 200 basis points over the Eurocurrency Rate

Fees on letters of credit and the daily unused availability under the revolving credit facility as of December 29, 2019 were 1.88 % and 0.30 % , respectively.

Interest rates under the Senior Secured Credit Facility are indexed to the London Inter-Bank Offered Rate (“LIBOR”).

During 2017, regulatory authorities that oversee financial markets announced that after 2021 they would no longer compel banks currently reporting information used to set LIBOR.

As a result, beginning in 2022, LIBOR will no longer be available as a reference rate.

Under the terms of the Amended Credit Agreement, in the event of the discontinuance of LIBOR, a mutually agreed-upon alternative benchmark rate will be established to replace LIBOR, which may include the Secured Overnight Financing Rate.

The Company does not anticipate the discontinuance of the LIBOR will materially impact its liquidity or financial position.

As of December 27, 2020, $ 19.3 million of the revolving credit facility was committed for the issuance of letters of credit and not available for borrowing.

The Senior Secured Credit Facility is guaranteed by each of the Company’s current and future domestic subsidiaries and is secured by substantially all now owned or later acquired assets of the Company and OSI, including the Company’s domestic subsidiaries.

Debt Covenants and Other Restrictions - Borrowings under the Company’s debt agreements are subject to various covenants that limit its ability to:

incur additional indebtedness;

make significant payments;

pay dividends and other restricted payments;

acquire certain assets;

effect mergers and similar transactions;

and effect certain other transactions with affiliates.

The Senior Secured Credit Facility has a financial covenant to maintain a specified quarterly Total Net Leverage Ratio (“TNLR”).

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

The TNLR may not exceed 4.50 to 1.00.

The Company’s TNLR as of December 29, 2019 does not limit the Company’s ability to draw on its revolving credit facility.

The Senior Secured Credit Facility permits regular quarterly dividend payments, subject to certain restrictions.

As of December 27, 2020 and December 29, 2019, the Company was in compliance with its debt covenants.

Maturities - Following is a summary of principal payments of the Company’s total consolidated debt outstanding:

(dollars in thousands)

Deferred Debt Issuance Costs - The Company deferred $ 2.9 million of debt issuance costs incurred in connection with the Amended Credit Agreement.

Deferred debt issuance costs of $ 2.0 million associated with the revolving credit facility portion of the Amended Credit Agreement were recorded in Other assets, net and all other deferred debt issuance costs were recorded in Long-term debt, net during 2020.

Maturities - Following is a summary of principal payments of the Company’s total consolidated debt outstanding as of the period indicated:

(dollars in thousands) DECEMBER 27, 2020

2021 $ 38,750

Total payments $ 1,104,405

unamortized debt discount and issuance costs ( 67,704 )

finance lease interest ( 221 )

3 unchanged sentences

The following is a summary of required amortization payments for the Term loan A (dollars in thousands):

SCHEDULED QUARTERLY PAYMENT DATES

March 29, 2020 through December 27, 2020

SCHEDULED QUARTERLY PAYMENT DATES TERM LOAN A

March 28, 2021 through December 26, 2021 $ 9,375

March 27, 2022 through September 25, 2022 $ 12,500

The Senior Secured Credit Facility contains mandatory prepayment requirements for Term loan A.

The Company is required to prepay outstanding amounts under these loans with 50 % of its annual excess cash flow, as defined in the Credit Agreement.

The Amended Credit Agreement contains mandatory prepayment requirements for Term loan A.

The Company is required to prepay outstanding amounts under these loans with 50 % of its annual excess cash flow, as defined in the Amended Credit Agreement.

The amount of outstanding loans required to be prepaid in accordance with the debt covenants may vary based on the Company’s leverage ratio and year end results.

Convertible Senior Notes

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

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

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

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

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

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

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

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

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

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

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

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table includes the outstanding principal amount and carrying value of the 2025 Notes as of the period indicated:

(dollars in thousands) DECEMBER 27, 2020

Liability component

Principal $ 230,000

Debt discount (1) ( 59,862 )

Debt issuance costs (1) ( 5,427 )

Net carrying amount $ 164,711

Equity component (2) $ 64,367

________________

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

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

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

The effective rate of the 2025 Notes over their expected life is 13.73 %.

Following is a summary of interest expense for the 2025 Notes, by component, for the period indicated:

(dollars in thousands) 2020

Coupon interest $ 7,443

Deferred discount amortization 6,275

Deferred issuance cost amortization 569

Total interest expense $ 14,287

During any calendar quarter preceding November 1, 2024 in which the closing price of the Company’s common stock exceeds 130 % of the applicable conversion price of the 2025 Notes on at least 20 of the last 30 consecutive trading days of the quarter, holders may in the immediate quarter following, convert all or a portion of their 2025 Notes .

Based on the daily closing prices of the Company’s 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.

When a conversion notice is received, the Company has the option to pay or deliver cash, shares of the Company’s common stock, or a combination thereof.

Accordingly, as of December 27, 2020 the Company could not be required to settle the 2025 Notes in cash and, therefore, the 2025 Notes are classified as long-term debt.

As of December 27, 2020, the if-converted value of the 2025 Notes was approximately $ 366.6 million, which is $ 136.6 million higher than the initial principal amount.

In February 2021, the Company provided the trustee of the 2025 Notes notice of its irrevocable election under the indenture to settle the principal portion of the 2025 Notes in cash and any excess in shares.

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

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

be, upon conversion of the 2025 Notes .

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

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

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

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

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

Other Long-term Liabilities, Net

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

(dollars in thousands)

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

Accrued insurance liability $ 32,128 $ 33,818

Unfavorable leases (1)

Chef and Restaurant Managing Partner deferred compensation obligations and deposits

Chef and Restaurant Managing Partner deferred compensation obligations 32,306 47,831

Deferred payroll tax liabilities (1) 55,204 —

Other long-term liabilities (2) 65,717 56,411

$ 185,355 $ 138,060

Net of accumulated amortization of $ 36.2 million as of December 30, 2018 .

_______________

(1) Deferred payroll tax liabilities as allowed for in the Coronavirus, Aid, Relief and Economic Security Act.

See Note 21 - Income Taxes for details.

(2) The increase in Other long-term liabilities during 2020 primarily relates to $ 8.9 million of additional contingent lease liabilities subsequent to the adoption of ASU No.

See Note 22 - Commitments and Contingencies for details regarding this increase.

Stockholders’ Equity

Share Repurchases - Following is a summary of the Company’s share repurchase programs as of December 29, 2019 (dollars in thousands):

SHARE REPURCHASE PROGRAM

BOARD APPROVAL DATE

December 12, 2014

August 3, 2015

February 12, 2016

July 26, 2016

April 21, 2017

February 16, 2018

February 12, 2019

Total share repurchase programs

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Following is a summary of the shares repurchased under the Company’s share repurchase programs for the periods presented:

NUMBER OF SHARES

AVERAGE REPURCHASE PRICE PER SHARE

(in thousands, except per share data)

First fiscal quarter

Share Repurchases - Following is a summary of the shares repurchased under the Company’s share repurchase program for the period presented:

(dollars in thousands, except per share data) NUMBER OF SHARES AVERAGE REPURCHASE PRICE PER SHARE AMOUNT

Second fiscal quarter 5,469 $ 19.56 $ 106,992

Third fiscal quarter

Fourth fiscal quarter

Total common stock repurchases

Dividends - The Company declared and paid dividends per share during the periods presented as follows:

DIVIDENDS PER SHARE

(in thousands, except per share data)

DIVIDENDS PER SHARE AMOUNT

(dollars in thousands, except per share data) 2020 2019 2020 2019

First fiscal quarter $ 0.20 $ 0.10 $ 17,480 $ 9,140

3 unchanged sentences

Total cash dividends declared and paid $ 0.20 $ 0.40 $ 17,480 $ 35,734

In February 2020 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.20 per share, payable on March 13, 2020 to shareholders of record at the close of business on February 28, 2020 .

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

During 2020, the Company exercised the Abbraccio Call Option to purchase all outstanding Abbraccio Shares for $ 1.0 million and recorded a reduction to Accumulated deficit and an increase in Net loss applicable to common stockholders of $ 3.5 million for the consideration paid in excess of the Abbraccio Shares’ carrying value.

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

(dollars in thousands)

DECEMBER 29, 2019

DECEMBER 30, 2018

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

Foreign currency translation adjustment $ ( 188,883 ) $ ( 152,031 )

1 unchanged sentence

Accumulated other comprehensive loss $ ( 211,446 ) $ ( 169,776 )

Following are the components of Other comprehensive (loss) income for the periods indicated:

Following are the components of Other comprehensive loss for the periods indicated:

(dollars in thousands) 2020 2019 2018

1 unchanged sentence

Foreign currency translation adjustment $ ( 36,852 ) $ ( 16,882 ) $ ( 36,576 )

Unrealized (loss) gain on derivatives, net of tax (1)

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

Total unrealized (loss) gain on derivatives, net of tax

Other comprehensive (loss) income attributable to Bloomin’ Brands

Unrealized loss on derivatives, net of tax (1) $ ( 14,741 ) $ ( 11,944 ) $ ( 7,100 )

Reclassification of adjustments for loss on derivatives included in Net (loss) income, net of tax (2) 9,923 1,805 120

Total unrealized loss on derivatives, net of tax $ ( 4,818 ) $ ( 10,139 ) $ ( 6,980 )

Other comprehensive loss attributable to Bloomin’ Brands $ ( 41,670 ) $ ( 27,021 ) $ ( 43,556 )

________________

Unrealized (loss) gain on derivatives is net of tax of $( 4.1 ) million , $( 2.5 ) million and $ 0.5 million for 2019 , 2018 and 2017 , respectively.

(1) Unrealized loss on derivatives is net of tax of $ 5.1 million, $ 4.1 million and $ 2.5 million for 2020, 2019 and 2018, respectively.

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

See Note 17 - Derivative Instruments and Hedging Activities for discussion of the tax impact of reclassifications.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Derivative Instruments and Hedging Activities

6 unchanged sentences

Under the terms of the 2014 Swap Agreements, the Company paid a weighted-average fixed rate of 2.02 % on the notional amount and received payments from the counterparties based on the 30-day LIBOR rate.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

On October 24, 2018 and October 25, 2018 , the Company entered into variable-to-fixed interest rate swap agreements with 12 counterparties to hedge a portion of the cash flows of the Company’s variable rate debt (the “2018 Swap Agreements”).

4 unchanged sentences

The following table presents the fair value of the Company’s interest rate swaps as well as their classification on the Company’s Consolidated Balance Sheets as of the periods indicated :

(dollars in thousands)

CONSOLIDATED BALANCE SHEET CLASSIFICATION

Interest rate swaps - asset (1)

Other current assets, net

Interest rate swaps - liability

Accrued and other current liabilities

Interest rate swaps - liability

Other long-term liabilities, net

(dollars in thousands) DECEMBER 27, 2020 DECEMBER 29, 2019 CONSOLIDATED BALANCE SHEET CLASSIFICATION

Interest rate swaps - liability $ 14,855 $ 7,174 Accrued and other current liabilities

Interest rate swaps - liability 15,640 16,835 Other long-term liabilities, net

Total fair value of derivative instruments - liabilities (1) $ 30,495 $ 24,009

Interest receivable

Other current assets, net

Accrued interest

Accrued and other current liabilities

Accrued interest $ 1,237 $ 632 Accrued and other current liabilities

____________________

(1) See Note 19 - Fair Value Measurements for fair value discussion of the interest rate swaps.

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

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

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

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

(dollars in thousands) 2020 2019 2018

Interest rate swap expense recognized in Interest expense, net $ ( 13,370 ) $ ( 2,436 ) $ ( 161 )

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

Total effects of the interest rate swaps on Net income

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Income tax benefit recognized in (Benefit) provision for income taxes 3,447 631 41

Total effects of the interest rate swaps on Net (loss) income $ ( 9,923 ) $ ( 1,805 ) $ ( 120 )

The Company records its derivatives on its Consolidated Balance Sheets on a gross balance basis.

6 unchanged sentences

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of December 27, 2020 and December 29, 2019, the fair value of the Company’s interest rate swaps was in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk, of $ 32.2 million and $ 24.8 million, respectively.

1 unchanged sentence

If the Company had breached any of these provisions as of December 27, 2020 and December 29, 2019, it could have been required to settle its obligations under the agreements at their termination value of $ 32.2 million and $ 24.8 million, respectively.

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

(dollars in thousands)

CONSOLIDATED BALANCE SHEET CLASSIFICATION

DECEMBER 29, 2019

Operating lease right-of-use assets

Finance lease right-of-use assets (1)

Property, fixtures and equipment, net

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

(dollars in thousands) CONSOLIDATED BALANCE SHEET CLASSIFICATION DECEMBER 27, 2020 DECEMBER 29, 2019

Operating lease right-of-use assets Operating lease right-of-use assets $ 1,172,910 $ 1,266,548

Finance lease right-of-use assets (1) Property, fixtures and equipment, net 1,947 2,036

Total lease assets, net $ 1,174,857 $ 1,268,584

Current operating lease liabilities (2)

Accrued and other current liabilities

Current finance lease liabilities

Current portion of long-term debt

Non-current operating lease liabilities

Non-current finance lease liabilities

Long-term debt, net

Current operating lease liabilities (2) Accrued and other current liabilities $ 176,791 $ 171,866

Current finance lease liabilities Current portion of long-term debt 1,210 1,361

Non-current operating lease liabilities (3) Non-current operating lease liabilities 1,216,666 1,279,051

Non-current finance lease liabilities Long-term debt, net 974 947

Total lease liabilities $ 1,395,641 $ 1,453,225

________________

Net of accumulated amortization of $ 1.3 million .

Excludes accrued contingent percentage rent.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statement of Operations and Comprehensive Income for the period indicated:

CONSOLIDATED INCOME STATEMENT CLASSIFICATION

(1) Net of accumulated amortization of $ 2.3 million and $ 1.3 million as December 27, 2020 and December 29, 2019, respectively.

(2) Excludes COVID-19-related current deferred rent accruals of $ 12.8 million as of December 27, 2020 and accrued contingent percentage rent of $ 2.7 million and $ 2.4 million, as of December 27, 2020 and December 29, 2019, respectively.

(3) Excludes COVID-19-related non-current deferred rent accruals of $ 1.2 million as of December 27, 2020.

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME CLASSIFICATION FISCAL YEAR

(dollars in thousands) 2020 2019

Operating leases (1)

Other restaurant operating

Variable lease cost

Other restaurant operating

Operating leases (1) Other restaurant operating $ 178,740 $ 181,397

Variable lease cost (2) Other restaurant operating ( 2,326 ) 3,504

Finance leases

Amortization of leased assets

Depreciation and amortization

Interest on lease liabilities

Interest expense, net

Sublease revenue (2)

Franchise and other revenues

Amortization of leased assets Depreciation and amortization 1,248 1,400

Interest on lease liabilities Interest expense, net 160 264

Sublease revenue (3) Franchise and other revenues ( 3,121 ) ( 6,542 )

Lease costs, net (4) $ 174,701 $ 180,023

________________

Excludes rent expense for office facilities and Company-owned closed or subleased properties for 2019 of $ 14.6 million , which is included in General and administrative expense and certain supply chain related rent expenses of $ 1.3 million , which is included in Cost of sales .

Excludes rental income from Company-owned properties for the fiscal year ended December 29, 2019 of $ 2.2 million .

During 2018 and 2017, the Company recorded rent expense of $ 185.4 million and $ 188.2 million , including variable rent expense of $ 4.5 million and $ 4.3 million , and sublease revenue of $ 5.6 million and $ 4.5 million , respectively.

(1) Excludes rent expense for office facilities and Company-owned closed or subleased properties of $ 13.8 million and $ 14.6 million for 2020 and 2019, respectively, which is included in General and administrative expense and certain supply chain-related rent expenses of $ 1.3 million for 2020 and 2019, which is included in Food and beverage costs.

(2) Includes COVID-19-related rent abatements for 2020, which are recognized as a reduction to variable rent expense in the month they occur.

(3) Excludes rental income from Company-owned properties of $ 0.5 million and $ 2.2 million for 2020 and 2019, respectively.

(4) During 2018, the Company recorded rent expense of $ 185.4 million, including variable rent expense of $ 4.5 million, and sublease revenue of $ 5.6 million.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of December 27, 2020, future minimum lease payments and sublease revenues under non-cancelable leases are as follows:

(dollars in thousands)

OPERATING LEASES

FINANCE LEASES

SUBLEASE REVENUES

(dollars in thousands) OPERATING LEASES (1) FINANCE LEASES SUBLEASE REVENUES

2021 (2) $ 196,616 $ 1,202 $ ( 5,832 )

2022 190,072 517 ( 5,714 )

2023 185,500 209 ( 5,576 )

2024 180,459 184 ( 5,351 )

2025 168,937 184 ( 5,055 )

Thereafter 1,588,417 109 ( 48,724 )

Total minimum lease payments (receipts) (3) $ 2,510,001 $ 2,405 $ ( 76,252 )

Interest ( 1,102,560 ) ( 221 )

Present value of future lease payments $ 1,407,441 $ 2,184

____________________

(1) Includes COVID-19-related current and non-current deferred rent accruals of $ 12.8 million and $ 1.2 million, respectively, as of December 27, 2020

(2) Net of operating lease prepaid rent of $ 6.4 million.

(3) Includes $ 1.0 billion related to lease renewal options that are reasonably certain of exercise and excludes $ 74.7 million of signed operating leases that have not yet commenced.

The following table is a summary of the weighted-average remaining lease terms and weighted-average discount rates of the Company’s leases as of the period indicated:

DECEMBER 29, 2019

The following table is a summary of the weighted-average remaining lease terms and weighted-average discount rates of the Company’s leases as of the periods indicated:

DECEMBER 27, 2020 DECEMBER 29, 2019

Weighted-average remaining lease term (1):

Operating leases

Finance leases

Operating leases 14.0 years 14.5 years

Finance leases 2.7 years 1.8 years

Weighted-average discount rate (2):

4 unchanged sentences

(2) Based on the Company’s incremental borrowing rate at lease commencement.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table is a summary of other impacts to the Company’s consolidated financial statements related to its leases for the period indicated:

The following table is a summary of other impacts to the Company’s consolidated financial statements related to its leases for the periods indicated:

(dollars in thousands) 2020 2019

2 unchanged sentences

Properties Leased to Third Parties - The Company leases certain owned land and buildings to third parties, generally related to closed or refranchised restaurants.

The following table is a summary of assets leased to third parties as of the period indicated:

(dollars in thousands)

DECEMBER 29, 2019

The following table is a summary of assets leased to third parties as of the periods indicated:

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

Land $ 9,341 $ 9,885

Buildings $ 10,172 $ 12,823

accumulated depreciation ( 6,181 ) ( 6,400 )

Buildings, net $ 3,991 $ 6,423

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Sale-leaseback Transactions - The following is a summary of sale-leaseback transactions with third-parties for the periods indicated:

4 unchanged sentences

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

DECEMBER 29, 2019

DECEMBER 30, 2018

(dollars in thousands)

DECEMBER 27, 2020 DECEMBER 29, 2019

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

Cash equivalents:

1 unchanged sentence

Money market funds 16,494 16,494 — 12,752 12,752 —

Other current assets, net:

Derivative instruments - interest rate swaps

Restricted cash equivalents:

Money market funds 428 428 — — — —

Total asset recurring fair value measurements $ 32,326 $ 32,326 $ — $ 13,789 $ 13,789 $ —

4 unchanged sentences

Total liability recurring fair value measurements $ 30,495 $ — $ 30,495 $ 24,009 $ — $ 24,009

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

FINANCIAL INSTRUMENT

METHODS AND ASSUMPTIONS

FINANCIAL INSTRUMENT METHODS AND ASSUMPTIONS

Fixed income funds and

1 unchanged sentence

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

Derivative instruments

The Company’s derivative instruments include interest rate swaps.

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

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

3 unchanged sentences

Fair Value Measurements on a Nonrecurring Basis - Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to property, fixtures and equipment, operating lease right-of-use assets, goodwill and other intangible assets, which are remeasured when carrying value exceeds fair value.

Carrying value after impairment approximates fair value.

Carrying value after

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

impairment approximates fair value.

The following table summarizes the Company’s assets measured at fair value by hierarchy level on a nonrecurring basis, for the periods indicated:

(dollars in thousands)

CARRYING VALUE

TOTAL IMPAIRMENT

CARRYING VALUE

TOTAL IMPAIRMENT

CARRYING VALUE

TOTAL IMPAIRMENT

2020 2019 2018

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

Assets held for sale (1) $ 1,934 $ 123 $ 2,049 $ 315 $ 8,590 $ 5,276

1 unchanged sentence

Property, fixtures and equipment (3) 26,311 41,077 3,915 4,535 6,464 21,523

Goodwill and other assets (4) 748 2,683 — — — —

$ 101,608 $ 74,823 $ 12,561 $ 9,134 $ 15,054 $ 26,799

All assets are measured using third-party market appraisals or executed sales contracts (Level 2).

Refer to Note 4 - Disposals for discussion of impairments related to Carrabba’s Italian Grill in 2018.

Carrying values for Operating lease right-of-use assets measured using Level 3 inputs to estimate fair value totaled $ 6.4 million for 2019 .

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

Carrying values for Property, fixtures and equipment measured using Level 3 inputs to estimate fair value totaled $ 1.6 million and $ 1.9 million for 2019 and 2018 , respectively.

Carrying values for Property, fixtures and equipment measured using level 2 inputs to estimate fair value totaled $ 2.3 million , $ 4.6 million and $ 19.2 million for 2019 , 2018 and 2017 , respectively.

________________

(1) Carrying values measured using Level 3 inputs to estimate fair value totaled $ 1.2 million during 2020.

All other assets were valued using Level 2 inputs.

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

(2) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 0.2 million during 2019.

All other assets were valued using Level 3 inputs.

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

Refer to Note 5 - Impairments, Exit Costs and Disposals for a more detailed discussion of impairments.

(3) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 2.2 million, $ 2.3 million and $ 4.6 million for 2020 2019 and 2018, respectively.

All other assets were valued using Level 3 inputs.

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

Refer to Note 5 - Impairments and Exit Costs for a more detailed discussion of impairments.

Other primarily includes goodwill related to the Company’s China subsidiary within the international segment in 2017.

All assets measured using market appraisals (Level 2) to estimate the fair value.

Refer to Note 5 - Impairments, Exit Costs and Disposals for a more detailed discussion of impairments.

(4) Other assets generally measured using the quoted market value of comparable assets (Level 2).

See Note 5 - Impairments, Exit Costs and Disposals for information regarding impairment charges resulting from the fair value measurement performed on a nonrecurring basis during 2020.

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

As a result, the Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.

In assessment of impairment for operating locations, the Company determined the fair values of individual operating locations using an income approach, which required discounting projected future cash flows.

When determining the stream of projected future cash flows associated with an individual operating location, management made assumptions, including highest and best use and inputs from restaurant operations, where necessary, and about key variables including the following unobservable inputs:

revenue growth rates, controllable and uncontrollable expenses, and asset residual values.

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

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

UNOBSERVABLE INPUTS 2020

Weighted-average cost of capital 10.4 % to 11.3 %

Long-term growth rate 1.5 % to 2.0 %

Fair Value of Financial Instruments - The Company’s non-derivative financial instruments as of December 27, 2020 and December 29, 2019 consist of cash equivalents, accounts receivable, accounts payable and current and long-term debt.

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Debt is carried at amortized cost;

1 unchanged sentence

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

DECEMBER 29, 2019

DECEMBER 30, 2018

CARRYING VALUE

DECEMBER 27, 2020 DECEMBER 29, 2019

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

(dollars in thousands)

Senior Secured Credit Facility:

Term loan A $ 425,000 $ 412,250 $ 450,000 $ 450,563

Revolving credit facility $ 447,000 $ 419,612 $ 599,000 $ 599,000

Convertible Senior Notes $ 230,000 $ 413,818 $ — $ —

Allowance for Expected Credit Losses

The following table is a rollforward of the Company’s trade receivables allowance for expected credit losses for the period indicated:

(dollars in thousands) 2020

Allowance for expected credit losses, beginning of period $ 199

Adjustment for adoption of ASU No.

2016-13 1,018

Provision for expected credit losses 3,472

Charge-off of accounts ( 594 )

Allowance for expected credit losses, end of period $ 4,095

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

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

See Note 3 - COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results and Note 4 - Revenue Recognition for details regarding the Company’s reserved franchise receivables.

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

See Note 22 - Commitments and Contingencies for details regarding these lease guarantees.

The following table presents the domestic and foreign components of (Loss) income before (benefit) provision for income taxes for the periods indicated:

(dollars in thousands) 2020 2019 2018

Domestic $ ( 206,941 ) $ 129,826 $ 109,965

Foreign ( 32,580 ) 11,864 ( 9,660 )

$ ( 239,521 ) $ 141,690 $ 100,305

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table presents the domestic and foreign components of Income before provision (benefit) for income taxes for the periods indicated:

(dollars in thousands)

Provision (benefit) for income taxes consisted of the following for the periods indicated:

(Benefit) provision for income taxes consisted of the following for the periods indicated:

(dollars in thousands) 2020 2019 2018

Current provision:

Federal $ 2,606 $ 13,265 $ 11,089

State 2,301 9,696 6,763

Foreign 2,623 10,502 2,405

$ 7,530 $ 33,463 $ 20,257

Deferred (benefit) provision:

Provision (benefit) for income taxes

Federal $ ( 66,498 ) $ ( 21,407 ) $ ( 28,772 )

State ( 12,527 ) ( 1,986 ) ( 1,335 )

Foreign ( 9,231 ) ( 2,497 ) 617

$ ( 88,256 ) $ ( 25,890 ) $ ( 29,490 )

(Benefit) provision for income taxes $ ( 80,726 ) $ 7,573 $ ( 9,233 )

Effective Income Tax Rate - The reconciliation of income taxes calculated at the United States federal tax statutory rate to the Company’s effective income tax rate is as follows for the periods indicated.

Due to the pre-tax book loss for the year ended December 27, 2020, a positive percentage change for such year in the effective tax rate table reflects a favorable income tax benefit, whereas a negative percentage change in the effective tax rate table reflects an unfavorable income tax expense:

2020 2019 2018

Income taxes at federal statutory rate 21.0 % 21.0 % 21.0 %

1 unchanged sentence

Employment-related credits, net 9.9 ( 24.7 ) ( 34.6 )

Net changes in deferred tax valuation allowances

Net life insurance (benefit) expense

Foreign tax rate differential 1.1 3.2 ( 0.7 )

Net life insurance expense (benefit) 0.3 ( 0.7 ) 0.6

Enhanced charitable contributions deduction 0.1 ( 0.6 ) ( 1.3 )

Noncontrolling interests

Excess tax benefits from stock-based compensation arrangements

Nondeductible expenses ( 1.4 ) 3.9 5.0

Foreign tax rate differential

Net changes in deferred tax valuation allowances ( 0.6 ) ( 1.6 ) 3.9

Domestic manufacturing deduction — — ( 0.3 )

Cumulative effect of the Tax Act

Cumulative effect of the Tax Cuts and Jobs Act — — 0.2

Noncontrolling interests — ( 0.6 ) ( 0.9 )

Excess tax benefits from stock-based compensation arrangements — ( 0.3 ) ( 7.1 )

Other, net — 1.3 ( 0.5 )

Total 33.7 % 5.3 % ( 9.2 ) %

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

Accordingly, the applicable provisions of the CARES Act have been reflected in the Company’s tax provision for fiscal year 2020.

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

corporate tax provisions related to the deferment of employer social security payments, employee retention credits, modifications to interest deduction limitations and technical corrections on tax depreciation methods for qualified improvement property.

The net increase in the effective income tax rate in 2020 as compared to 2019 was primarily due to the benefit of the tax credits for FICA taxes on certain employees’ tips in 2020 and the 2020 pre-tax book loss.

BLOOMIN’ BRANDS, INC.

2 unchanged sentences

These increases were partially offset by a decrease in valuation allowances recorded against deferred income tax assets in 2019.

The net decrease in the effective income tax rate in 2018 as compared to 2017 was primarily due to the reduction in the U.S.

federal corporate tax rate from 35 % to 21 % as part of the Tax Cuts and Jobs Act (the “Tax Act”).

The remaining decrease was primarily due to employment-related credits being a higher percentage of net income in 2018 and excess tax benefits from equity-based compensation arrangements recorded in 2018.

These decreases were partially offset by the domestic manufacturing deduction and the cumulative effect of the Tax Act recorded in 2017.

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

The effective income tax rate for 2020 was higher than the blended federal and state statutory rate primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips.

The effective income tax rate for fiscal year 2019 was lower than the blended federal and state statutory rate primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips.

Deferred Tax Assets and Liabilities - The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows as of the periods indicated:

(dollars in thousands)

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

Deferred income tax assets:

Operating lease liabilities $ 360,690 $ 378,518

Deferred rent

Insurance reserves 13,695 13,722

4 unchanged sentences

Partner deposits and accrued partner obligations 3,403 4,449

Other, net 24,838 13,706

Gross deferred income tax assets 640,784 584,996

valuation allowance ( 18,509 ) ( 14,922 )

Net deferred income tax assets

Deferred income tax assets, net of valuation allowance 622,275 570,074

Deferred income tax liabilities:

2 unchanged sentences

intangible asset basis differences ( 113,280 ) ( 118,855 )

Net deferred income tax assets

The net change in deferred tax valuation allowance in 2019 was primarily attributable to changes in tax rates and the expiration of net operating loss carryforwards in certain foreign jurisdictions with full valuation allowances recorded.

These decreases were partially offset by an increase in the valuation allowances in certain foreign jurisdictions where the realization of deferred tax assets does not meet the more likely than not to be realized threshold.

Deferred income tax assets, net $ 153,883 $ 59,649

The net change in deferred tax valuation allowance in 2020 was primarily attributable to net operating losses in certain foreign jurisdictions with full valuation allowances recorded and a full valuation allowance recorded against deferred tax assets recognized in the acquisition of the remaining equity interests of a foreign subsidiary during 2020 that are not more likely than not to be realized.

These increases were partially offset by the expiration of net operating loss carryforwards in certain foreign jurisdictions with full valuation allowances recorded.

Undistributed Earnings - As of December 27, 2020, the Company had aggregate accumulated foreign earnings of approximately $ 40.2 million.

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

under the Tax Act and post-2017 foreign earnings, which the Company may repatriate to the U.S.

under the Tax Cuts and Jobs Act and post-2017 foreign earnings, which the Company may repatriate to the U.S.

without additional material U.S.

3 unchanged sentences

The Company has not recorded a deferred tax liability on the financial statement carrying amount over the tax basis of its investments in foreign subsidiaries because the Company continues to assert that it is indefinitely reinvested in its underlying investments in foreign subsidiaries.

The determination of any unrecorded deferred tax liability on this amount in not practicable due to the uncertainty of how these investments would be recovered.

The determination of any unrecorded deferred tax liability on this amount is not practicable due to the uncertainty of how these investments would be recovered.

BLOOMIN’ BRANDS, INC.

1 unchanged sentence

Tax Carryforwards - The amount and expiration dates of tax loss carryforwards and credit carryforwards as of December 27, 2020 are as follows:

(dollars in thousands)

EXPIRATION DATE

(dollars in thousands) EXPIRATION DATE AMOUNT

Federal tax credit carryforwards 2026 - 2040 $ 158,279

Foreign loss carryforwards

Foreign tax credit carryforwards

Foreign loss carryforwards (1) 2021 - Indefinite $ 73,082

Foreign tax credit carryforwards Indefinite $ 864

________________

(1) The Company has a valuation allowance against the foreign loss carryforwards for which it has determined it is more likely than not that some portion or all may not be realized.

As of December 27, 2020, the Company had $ 155.3 million in general business tax credit carryforwards, which have a 20-year carryforward period and are utilized on a first-in, first-out basis.

The Company currently expects to utilize all of these tax credit carryforwards within a four to six year period.

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

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

The Company anticipates generating additional business tax credits in future years.

The Company anticipates generating additional business tax credits in the future years.

The amount of business tax credits expected to be generated in 2021 is approximately $ 30 million to $ 40 million.

11 unchanged sentences

Balance as of end of year $ 25,524 $ 27,201 $ 25,190

The Company had approximately $ 1.9 million and $ 1.5 million accrued for the payment of interest and penalties as of December 29, 2019 and December 30, 2018 , respectively.

The Company recognized immaterial interest and penalties related to uncertain tax positions in the Provision (benefit) for income taxes , for all periods presented.

The Company had approximately $ 1.9 million accrued for the payment of interest and penalties as of December 27, 2020 and December 29, 2019.

The Company recognized immaterial interest and penalties related to uncertain tax positions in the (Benefit) provision for income taxes, for all periods presented.

In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by relevant taxable authorities.

6 unchanged sentences

United States - state 2001 - 2019

Foreign 2013 - 2019

Commitments and Contingencies

4 unchanged sentences

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

As of December 29, 2019 , the Company recorded a contingent lease liability of $ 0.8 million .

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

As of December 27, 2020, the Company’s recorded contingent lease liability was $ 9.6 million.

See Note 3 - COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

During the third quarter of 2020, the Company received notices of default pertaining to three leases of divested restaurant properties in circumstances where the Company is contingently liable for the unpaid rent of the current operators.

The Company is in active discussions with the respective landlords and believes its recorded reserve is reasonable.

Purchase Obligations - Purchase obligations were $ 230.6 million and $ 312.0 million as of December 27, 2020 and December 29, 2019, respectively.

These purchase obligations are primarily due within five years , however, commitments with various vendors extend through January 2028.

Outstanding commitments consist primarily of food and beverage products related to normal business operations, advertising, restaurant-level service contracts and technology.

Outstanding commitments consist primarily of food and beverage products related to normal business operations, technology, advertising and restaurant-level service contracts.

In 2020, the Company purchased approximately 97 % of its U.S.

1 unchanged sentence

Litigation and Other Matters - In relation to various legal matters, the Company had $ 4.6 million and $ 3.0 million of liability recorded as of December 27, 2020 and December 29, 2019, respectively.

During 2019 , 2018 and 2017 , the Company recognized $ 1.3 million , $ 1.6 million and $ 1.2 million , respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income for certain legal settlements.

During 2020, 2019 and 2018, the Company recognized $ 2.3 million, $ 1.3 million and $ 1.6 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income for certain legal settlements.

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

In the opinion of management, the amount of ultimate liability with respect to those actions will not have a material adverse impact on the Company’s financial position or results of operations and cash flows.

Insurance - As of December 29, 2019 , the future undiscounted payments the Company expects for workers’ compensation, general liability and health insurance claims are:

(dollars in thousands)

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following is a reconciliation of the expected aggregate undiscounted reserves to the discounted reserves for insurance claims recognized on the Company’s Consolidated Balance Sheets as of the periods indicated:

Insurance - As of December 27, 2020, the future undiscounted payments the Company expects for workers’ compensation, general liability and health insurance claims are:

(dollars in thousands)

2021 $ 20,669

Thereafter 10,255

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

Undiscounted reserves $ 53,217 $ 56,953

Discount (1) ( 441 ) ( 2,635 )

Discounted reserves $ 52,776 $ 54,318

Discounted reserves recognized in the Company’s Consolidated Balance Sheets:

Discounted reserves recognized on the Company’s Consolidated Balance Sheets:

Accrued and other current liabilities $ 20,648 $ 20,500

1 unchanged sentence

$ 52,776 $ 54,318

____________________

(1) Discount rates of 0.26 % and 1.61 % were used for December 27, 2020 and December 29, 2019, respectively.

1 unchanged sentence

The Company considers its restaurant concepts and international markets as operating segments, which reflects how the Company manages its business, reviews operating performance and allocates resources.

Resources are allocated and performance is assessed by the Company’s Chief Executive Officer, whom the Company has determined to be its Chief Operating Decision Maker.

Resources are allocated and performance is assessed by the Company’s Chief Executive Officer, whom the Company has determined to be its Chief Operating Decision Maker (“CODM”).

The Company aggregates its operating segments into two reportable segments, U.S.

4 unchanged sentences

The following is a summary of reporting segments as of December 27, 2020:

REPORTABLE SEGMENT (1)

GEOGRAPHIC LOCATION

Outback Steakhouse

United States of America

REPORTABLE SEGMENT (1) CONCEPT GEOGRAPHIC LOCATION

Outback Steakhouse United States of America

Carrabba’s Italian Grill

1 unchanged sentence

Fleming’s Prime Steakhouse & Wine Bar

International

Outback Steakhouse

Brazil, Hong Kong/China

Carrabba’s Italian Grill (Abbraccio)

International Outback Steakhouse Brazil, Hong Kong/China

Carrabba’s Italian Grill (Abbraccio) Brazil

_________________

2 unchanged sentences

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

Excluded from Income 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.

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

and international are certain legal and corporate costs not

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

directly related to the performance of the segments, most stock-based compensation expenses and certain bonus expenses.

During 2020, the Company recorded $ 32.4 million of pre-tax charges as a part of transformational initiatives implemented in connection with its previously announced review of strategic alternatives.

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

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

1 unchanged sentence

Total revenues

$ 2,885,542 $ 3,687,918 $ 3,687,239

International 285,019 451,471 439,174

Total revenues $ 3,170,561 $ 4,139,389 $ 4,126,413

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

(dollars in thousands) 2020 2019 2018

Segment income from operations

Segment (loss) income from operations

$ ( 1,630 ) $ 311,666 $ 288,959

International ( 13,479 ) 44,428 22,001

Total segment income from operations

Total segment (loss) income from operations ( 15,109 ) 356,094 310,960

Unallocated corporate operating expense ( 159,864 ) ( 165,004 ) ( 165,707 )

Total income from operations

Loss on extinguishment and modification of debt

Other (expense) income, net

Total (loss) income from operations ( 174,973 ) 191,090 145,253

Loss on modification of debt ( 237 ) — —

Other income (expense), net 131 ( 143 ) ( 11 )

Interest expense, net ( 64,442 ) ( 49,257 ) ( 44,937 )

Income before provision (benefit) for income taxes

(Loss) income before (benefit) provision for income taxes $ ( 239,521 ) $ 141,690 $ 100,305

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

1 unchanged sentence

Depreciation and amortization

$ 144,298 $ 152,881 $ 158,307

International 23,723 27,491 26,304

Corporate 12,240 16,439 16,982

Total depreciation and amortization $ 180,261 $ 196,811 $ 201,593

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table is a summary of capital expenditures by segment for the periods indicated:

1 unchanged sentence

Capital expenditures

$ 64,516 $ 121,646 $ 162,207

International 18,542 28,496 36,962

Corporate 5,936 8,885 11,754

Total capital expenditures $ 88,994 $ 159,027 $ 210,923

The following table sets forth Total assets by segment as of the periods indicated:

(dollars in thousands)

DECEMBER 29, 2019

DECEMBER 30, 2018

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

$ 2,672,778 $ 2,941,831

International 410,322 462,308

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Corporate 279,007 188,544

Total assets $ 3,362,107 $ 3,592,683

Geographic areas — International assets are defined as assets residing in a country other than the U.S.

The following table details long-lived assets, excluding goodwill, operating lease right-of-use assets, intangible assets and deferred tax assets, by major geographic area as of the periods indicated:

(dollars in thousands)

DECEMBER 29, 2019

DECEMBER 30, 2018

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

$ 879,392 $ 1,023,146

International

Brazil 83,041 113,795

Other 17,880 16,246

Total assets $ 980,313 $ 1,153,187

International revenues are defined as revenues generated from restaurant sales originating in a country other than the U.S.

1 unchanged sentence

(dollars in thousands) 2020 2019 2018

$ 2,885,542 $ 3,687,918 $ 3,687,239

International

Brazil 222,283 393,700 376,317

Other 62,736 57,771 62,857

Total revenues $ 3,170,561 $ 4,139,389 $ 4,126,413

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Selected Quarterly Financial Data (Unaudited)

2020 FISCAL QUARTERS

(dollars in thousands, except per share data)

(dollars in thousands, except per share data) FIRST (1) SECOND (1) THIRD (1) FOURTH (1)

Total revenues $ 1,008,337 $ 578,459 $ 771,260 $ 812,505

Income from operations

Net income attributable to Bloomin’ Brands

Earnings per share:

Loss from operations ( 41,568 ) ( 111,912 ) ( 14,255 ) ( 7,238 )

Net loss ( 34,414 ) ( 92,428 ) ( 17,778 ) ( 14,175 )

Net loss attributable to common stockholders ( 38,107 ) ( 92,256 ) ( 17,637 ) ( 14,211 )

Loss per share attributable to common stockholders:

Basic $ ( 0.44 ) $ ( 1.05 ) $ ( 0.20 ) $ ( 0.16 )

Diluted $ ( 0.44 ) $ ( 1.05 ) $ ( 0.20 ) $ ( 0.16 )

2019 FISCAL QUARTERS

(dollars in thousands, except per share data)

(dollars in thousands, except per share data) FIRST (2) SECOND (2) THIRD (2) FOURTH (2)

Total revenues $ 1,128,131 $ 1,021,930 $ 967,144 $ 1,022,184

Income from operations 82,494 43,460 21,958 43,178

Net income 65,649 29,809 9,373 29,286

Net income attributable to Bloomin’ Brands 64,300 29,021 9,248 28,004

Earnings per share:

Basic $ 0.70 $ 0.32 $ 0.11 $ 0.32

Diluted $ 0.69 $ 0.32 $ 0.11 $ 0.32

____________________

Income from operations in the first, second, third and fourth quarters include expense of $ 6.0 million , $ 3.7 million , $ 3.9 million and $ 4.0 million , respectively, for impairments, closing costs and severance related to certain restructuring activities and the relocation of certain restaurants.

(1) Loss from operations in the first, second, third and fourth quarters include expense of $ 69.1 million, $ 32.8 million, $ 4.2 million and $ 18.2 million, respectively, for impairments and closure charges, primarily in connection with the COVID-19 pandemic, and severance and other costs related to transformational and restructuring activities.

Net loss in the second, third and fourth quarters include expense of $ 1.4 million, $ 2.4 million and $ 2.5 million, respectively, for amortization of the debt discount related to the issuance of the 2025 Notes.

(2) Income from operations in the first, second, third and fourth quarters include expense of $ 6.0 million, $ 3.7 million, $ 3.9 million and $ 4.0 million, respectively, for impairments, closure charges and severance related to certain restructuring activities and the relocation of certain restaurants.

Income from operations in the third and fourth quarters also include $ 3.8 million of gains related to the sale of certain surplus properties and $ 6.0 million of benefit from the recognition of certain value-added tax credits in Brazil, respectively.

Income from operations in the first, second, third and fourth quarters include expense of $ 4.5 million , $ 9.5 million , $ 6.9 million and $ 21.8 million , respectively, for impairments, closing costs and severance related to certain restructuring activities and the relocation of certain restaurants.

BLOOMIN’ BRANDS, INC.

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What changed 10-K

Item 8. Financial Statements and Supplementary Data