What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-24 · 444 added, 484 removed, 1168 unchanged (44% of the section changed)

2 unchanged sentences

Management’s Annual Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets — December 2 6 , 202 1 and December 2 7 , 2 0 20

Consolidated Statements of Operations and Comprehensive (Loss) Income —

Consolidated Statements of Operations and Comprehensive Income (Loss) —

For Fiscal Years 202 1 , 20 20 and 20 19

21 unchanged sentences

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

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”).

and its subsidiaries (the “Company”) as of December 26, 2021 and December 27, 2020, and the related consolidated statements of operations and comprehensive income (loss), of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 26, 2021, 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 26, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 26, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

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

Changes in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible instruments and contracts in an entity’s own equity in 2021 and the manner in which it accounts for leases in 2019.

Basis for Opinions

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

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.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Insurance Reserves

12 unchanged sentences

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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Non-current operating lease liabilities 1,179,447 1,217,921

Deferred income tax liabilities, net — 13,777

Long-term debt, net 782,107 997,770

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BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

11 unchanged sentences

Total costs and expenses 3,813,427 3,345,534 3,948,299

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

Loss on modification of debt ( 237 ) — —

Income (loss) from operations 308,958 ( 174,973 ) 191,090

Loss on extinguishment and modification of debt ( 2,073 ) ( 237 ) —

Other income (expense), net 26 131 ( 143 )

Interest expense, net ( 57,614 ) ( 64,442 ) ( 49,257 )

(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

Income (loss) before provision (benefit) for income taxes 249,297 ( 239,521 ) 141,690

Provision (benefit) for income taxes 26,384 ( 80,726 ) 7,573

Net income (loss) 222,913 ( 158,795 ) 134,117

net income (loss) attributable to noncontrolling interests 7,358 ( 80 ) 3,544

Net income (loss) attributable to Bloomin’ Brands

215,555 ( 158,715 ) 130,573

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:

Net income (loss) attributable to common stockholders $ 215,555 $ ( 162,211 ) $ 130,573

Net income (loss) $ 222,913 $ ( 158,795 ) $ 134,117

Other comprehensive income (loss):

Foreign currency translation adjustment ( 6,597 ) ( 37,516 ) ( 16,625 )

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:

Unrealized gain (loss) on derivatives, net of tax 86 ( 14,741 ) ( 11,944 )

Reclassification of adjustments for loss on derivatives included in Net income (loss), net of tax 7,392 9,923 1,805

Amortization of terminated interest rate swaps, net of tax 4,576 — —

Comprehensive income (loss) 228,370 ( 201,129 ) 107,353

comprehensive income (loss) attributable to noncontrolling interests 7,358 ( 744 ) 3,801

Comprehensive income (loss) attributable to Bloomin’ Brands $ 221,012 $ ( 200,385 ) $ 103,552

Earnings (loss) per share attributable to common stockholders:

Basic $ 2.42 $ ( 1.85 ) $ 1.47

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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

5 unchanged sentences

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

Purchase of noncontrolling interests, net of tax of $ 75

— — ( 216 ) — — ( 110 ) ( 326 )

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

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

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

Contributions from noncontrolling interests — — — — — 1,349 1,349

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

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 )

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

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

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

— — ( 17,480 ) — — — ( 17,480 )

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

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 )

2 unchanged sentences

Contributions from noncontrolling interests — — — — — 451 451

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

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

— — 64,367 — — — 64,367

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

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

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

(CONTINUED...)

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SHARES AMOUNT

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

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

Cumulative-effect from a change in accounting principle, net of tax — — ( 47,323 ) 4,370 — — ( 42,953 )

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

— — ( 17,480 ) — — — ( 17,480 )

Net income — — — 215,555 — 7,358 222,913

Other comprehensive income, net of tax — — — — 5,457 — 5,457

Stock-based compensation — — 24,405 — — — 24,405

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) 1,397 14 9,836 — — — 9,850

2 unchanged sentences

Contributions from noncontrolling interests — — — — — 1,347 1,347

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 26, 2021 89,253 $ 893 $ 1,119,728 $ ( 698,171 ) $ ( 205,989 ) $ 6,389 $ 222,850

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Cash flows 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:

Net income (loss) $ 222,913 $ ( 158,795 ) $ 134,117

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

Depreciation and amortization 163,391 180,261 196,811

2 unchanged sentences

Provision for impaired assets and restaurant closings 13,737 76,354 9,085

Amortization of unrealized loss on terminated interest rate swaps 6,160 — —

Non-cash operating lease costs 78,272 74,436 73,357

3 unchanged sentences

Deferred income tax benefit ( 3,346 ) ( 88,256 ) ( 25,890 )

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 )

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

(Gain) loss on disposal of property, fixtures and equipment ( 1,322 ) 1,261 ( 2,984 )

Other, net 1,516 ( 4,956 ) ( 10,265 )

Change in assets and liabilities:

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 )

(Increase) decrease in inventories ( 18,210 ) 19,857 ( 15,388 )

(Increase) decrease in other current assets ( 58,397 ) 14,392 ( 40,519 )

(Increase) decrease in other assets ( 2,073 ) 3,688 ( 890 )

Decrease in operating right-of-use assets, net 160 412 391

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 accounts payable and accrued and other current liabilities 25,619 ( 61,638 ) ( 23,497 )

Increase in unearned revenue

1 unchanged sentence

Decrease in operating lease liabilities ( 90,387 ) ( 50,626 ) ( 69,886 )

Increase (decrease) in other long-term liabilities 58,625 13,223 ( 7,436 )

(Decrease) increase in other long-term liabilities ( 8,660 ) 58,625 13,223

Net cash provided by operating activities 402,455 138,849 317,603

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Cash flows used in financing activities:

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

Proceeds from issuance of long-term debt $ 200,000 $ — $ —

Repayments of long-term debt and finance lease obligations ( 431,166 ) ( 26,326 ) ( 27,259 )

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

Proceeds from borrowings on revolving credit facilities 470,000 505,000 670,800

Repayments of borrowings on revolving credit facilities ( 837,000 ) ( 657,000 ) ( 671,300 )

Financing fees ( 5,868 ) ( 3,096 ) —

Proceeds from issuance of senior notes 300,000 — —

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

1 unchanged sentence

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

Issuance costs related to senior notes ( 5,546 ) ( 8,416 ) —

Proceeds (payments of taxes) from share-based compensation, net 9,850 ( 7 ) 2,707

Distributions to noncontrolling interests ( 9,123 ) ( 1,908 ) ( 7,214 )

7 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 1,642 ) ( 2,174 ) ( 1,631 )

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

Net (decrease) increase in cash, cash equivalents and restricted cash ( 21,351 ) 43,263 ( 4,678 )

Cash, cash equivalents and restricted cash as of the beginning of the period 110,408 67,145 71,823

22 unchanged sentences

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 26, 2021.

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.

COVID-19 Pandemic - In March 2020, the Company temporarily closed all restaurant dining rooms to comply with state and local regulations in response to the COVID-19 pandemic (“COVID-19”).

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.

The temporary closure of the Company’s dining rooms and the limitations on seating capacity due to the COVID-19 pandemic resulted in significantly reduced traffic in its restaurants which negatively impacted its operating results during 2020.

See Note 3 - 2020 COVID-19 Charges for details regarding certain charges resulting from the COVID-19 pandemic.

During 2021, the recovery of in-restaurant dining continued as COVID-19 capacity restrictions were eased or eliminated.

Concerns over the variants of COVID-19 impacted this recovery, however, the Company continued to retain a significant portion of the incremental off-premises volume achieved while its dining rooms were closed last year.

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 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.

The Company is a franchisor of 329 full-service restaurants and off-premises kitchens as of December 26, 2021, 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.

3 unchanged sentences

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

Fiscal years 2020, 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

All periods presented 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.

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.

Actual results could differ from those estimated.

1 unchanged sentence

Cash and cash equivalents include $ 41.3 million and $ 37.1 million, as of December 26, 2021 and December 27, 2020, 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 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.

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 and trade receivables 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.

13 unchanged sentences

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.

In instances where there is 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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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 (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.

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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 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.

The Company amortizes deferred financing fees to interest expense over the term of the respective financing arrangement, primarily using the effective interest method.

The Company amortized deferred financing fees of $ 3.9 million, $ 2.5 million and $ 2.6 million to interest expense for 2020, 2019 and 2018, respectively.

Deferred Debt Issuance Costs - For its revolving credit facility, the Company records deferred debt issuance costs 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 debt issuance costs as a reduction of Long-term debt, net.

The Company amortizes deferred debt issuance costs to interest expense over the term of the respective financing arrangement, primarily using the effective interest method.

The Company amortized deferred debt issuance costs of $ 4.5 million, $ 3.9 million and $ 2.5 million to Interest expense, net for 2021, 2020 and 2019, respectively.

Liquor Licenses - The fees from obtaining non-transferable liquor licenses directly issued by local government agencies for nominal fees are expensed as incurred.

7 unchanged sentences

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 (Loss) Income.

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

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

The Company applies the portfolio approach practical

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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 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 (Loss) Income.

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

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

Gift card sales that are accompanied by a bonus gift card to be used by the customer at a future visit result in a separate deferral of a portion of the original gift card sale.

Revenue is recorded when the bonus card is redeemed or expires at the estimated fair market value of the bonus card.

Gift card sales commissions paid to third-party providers are capitalized and subsequently amortized to Other restaurant operating expense based on historical gift card redemption patterns.

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 in Franchise and other revenues in the Company’s Consolidated Statements of Operations and Comprehensive (Loss) Income provided collectability is reasonably assured.

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

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

The weighted average remaining term of franchise agreements and renewal periods was approximately 12 years as of December 26, 2021.

The Company maintains a customer loyalty program, Dine Rewards, in the U.S., where customers have the ability to earn a reward after a number of qualified visits.

The Company has developed an estimated value of the partial reward earned from each qualified visit, which is recorded as deferred revenue.

Each reward has a maximum value and must be redeemed within three months of earning such reward.

The revenue associated with the fair value of the qualified visit is recognized upon the earlier of redemption or expiration of the reward.

The Company maintains a customer loyalty program, Dine Rewards, in the U.S., where customers earn a reward after attaining qualified spend amounts.

The Company’s estimate of the value of the reward is recorded as deferred revenue.

Each reward must be redeemed within specified time limits of earning such reward.

The revenue associated with the fair value of the reward is recognized upon the earlier of redemption or expiration of the reward.

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 (Loss) Income.

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.

5 unchanged sentences

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 (Loss) Income and future variable rent obligations are not included within the lease liabilities on the Consolidated Balance Sheets.

Variable rental payments are expensed as incurred in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) 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.

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

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 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.

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 Income (Loss).

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Consolidated Statements of Operations and Comprehensive Income (Loss).

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.

5 unchanged sentences

This election will continue while these concessions are in effect.

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 (Loss) Income.

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

When the Company ceases using the property rights under a non-cancelable operating lease, it records a liability for the net present value of any remaining non-rent lease-related obligations as a result of lease termination, less the estimated subtenant cost recovery that can reasonably be obtained for the property.

When the Company ceases using the property rights under a non-cancelable operating lease, it records a liability for the net present value of any remaining non-rent lease-related obligations, less the estimated subtenant cost recovery that can reasonably be obtained for the property.

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 (Loss) Income.

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

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.

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

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.

Advertising expense of $ 59.7 million, $ 67.3 million and $ 146.1 million for 2021, 2020 and 2019, respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).

BLOOMIN’ BRANDS, INC.

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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 (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.

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 (Loss).

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 (Loss) 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.

During 2021, the Company issued performance-based share units (“PSUs”) that included a relative total shareholder return (“Relative TSR”) modifier to the final payout outcome, which can adjust the payout percentage based on the achieved performance metric.

The Relative TSR is measured by comparing the Company’s Relative TSR to that of the constituents of the S&P 1500 Restaurants index.

Basic and Diluted Earnings (Loss) per Share - The Company computes basic earnings (loss) 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 stock options, restricted stock units and performance-based share units, measured using the treasury stock method, and the Company’s convertible senior notes and related warrants, measured using the if-converted 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

The Company has provided the trustee of the 2025 Notes notice of its irrevocable election under the 2025 Notes indenture to settle the principal portion of the 2025 Notes upon conversion in cash and any excess in shares.

As a result, only the amounts in excess of the principal amount, if applicable, are considered in diluted earnings per share.

BLOOMIN’ BRANDS, INC.

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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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 (Loss) Income.

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

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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Liabilities for unrecognized tax benefits, including penalties and interest, are recorded in Accrued and other current liabilities and Other long-term liabilities, net on the Company’s Consolidated Balance Sheets.

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

Recently Adopted Financial Accounting Standards - 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”) which removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature.

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

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

Reversal of separated equity component, net of tax 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.

BLOOMIN’ BRANDS, INC.

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.

2020-06, the Company’s convertible senior notes due 2025 (the “2025 Notes”) are 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 2025 Notes.

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

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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.

2018-01 allows an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the Company’s adoption of ASU No.

2018-01 allows an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Company’s adoption of ASU No.

2018-11 allows for an additional transition method, which permits use of the effective date of adoption as the date of initial application of ASU No.

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The Company adopted ASU No.

2016-02 using December 31, 2018 as the date of initial application.

2016-02 using December 31, 2018 as the date of initial application and recorded a reduction in Accumulated deficit of $ 141.3 million primarily related to the derecognition of deferred gains on sale-leaseback transactions, net of related deferred tax assets.

Consequently, financial information and the disclosures required under the new standard were not provided for dates and periods before December 31, 2018.

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These reclassifications had no effect on previously reported net income.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

2020 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

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

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

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________________

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

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

(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.

(4) Includes impairments resulting from the remeasurement of assets utilizing projected future cash flows revised for then-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.

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Revenue Recognition

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

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

(dollars in thousands) 2021 2020 2019

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Franchise and other revenues

Franchise revenue $ 21,195 $ 52,147 $ 52,906

Other revenue 4,730 12,228 12,636

Franchise revenues 45,520 21,195 52,147

Other revenues (1) 15,772 4,730 12,228

Total Franchise and other revenues 61,292 25,925 64,375

Total revenues $ 4,122,385 $ 3,170,561 $ 4,139,389

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(1) For 2021, includes a $ 3.1 million benefit from the recognition of recoverable Program of Social Integration (“PIS”) and Contribution for the Financing of Social Security (“COFINS”) taxes within other revenues in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base.

The amount recognized primarily represents refundable PIS and COFINS taxes for prior years, including accrued interest, and will be recovered by offsetting future PIS and COFINS taxes due.

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

2021 2020 2019

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

Outback Steakhouse $ 2,175,909 $ 29,725 $ 1,760,071 $ 9,898 $ 2,135,776 $ 38,614

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____________________

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

These restaurants are now operated as franchises.

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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 26, 2021 DECEMBER 27, 2020

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Deferred franchise fees - current 443 469

Other 1,021 73

Total Unearned revenue $ 398,795 $ 381,616

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Balance, end of period $ 17,793 $ 19,300 $ 18,554

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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Balance, end of period $ 387,945 $ 373,048 $ 358,757

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.

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”), who currently franchises approximately 80 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”).

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

• 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.

At the time of the Resolution Agreement, no deferred or previously waived amounts had 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.

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Total impairment losses 13,401 74,823 9,134

Restaurant closure expenses (benefits)

Restaurant closure charges (benefits)

(1) 422 1,358 ( 105 )

International (1) ( 86 ) 173 56

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

Total restaurant closure charges (benefits) 336 1,531 ( 49 )

Provision for impaired assets and restaurant closings $ 13,737 $ 76,354 $ 9,085

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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

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

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

DESCRIPTION 2020

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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 - 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.

The remaining impairment and closure charges during the periods presented resulted primarily from locations identified for closure or relocation.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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:

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

(dollars in thousands) 2021

Beginning of the year $ 12,879

Additions 2,458

Cash payments ( 4,739 )

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________________

(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.

(1) As of December 26, 2021, the Company had exit-related accruals associated with closure and restructuring initiatives of $ 2.9 million recorded in Accrued and other current liabilities and $ 5.6 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:

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 (Loss).

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.

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

Earnings (Loss) Per Share

The dilutive effect of the 2025 Notes is calculated using the if-converted method.

To the extent the Company has ability to settle its 2025 Notes in shares of its common stock, the principal and conversion spread on the 2025 Notes will have a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period exceeds the conversion price of $ 11.89 per share of common stock.

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

As a result, subsequent to the election, only the amounts in excess of the principal amount are considered in diluted earnings per share under the if-converted method.

In connection with the offering of the 2025 Notes, the Company entered into the Convertible Note Hedge Transactions and Warrant Transactions described in Note 14 - Convertible Senior Notes.

However, the Convertible Note Hedge Transactions are not considered when calculating dilutive shares given their anti-dilutive impact as an offset to dilution of shares underlying the 2025 Notes.

The Warrant Transactions have a dilutive effect on the Company’s common stock to the extent the price of its common stock exceeds the $ 16.64 strike price of the Warrant Transactions.

See Note 14 - Convertible Senior Notes for additional information regarding the 2025 Notes, Convertible Note Hedge Transactions and Warrant Transactions .

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(in thousands, except per share data) 2021 2020 2019

Net (loss) income attributable to Bloomin’ Brands

Net income (loss) attributable to Bloomin’ Brands

$ 215,555 $ ( 158,715 ) $ 130,573

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

Net income (loss) attributable to common stockholders 215,555 ( 162,211 ) 130,573

Convertible senior notes if-converted method interest adjustment, net of tax (2) 345 — —

Diluted net income (loss) attributable to common stockholders $ 215,900 $ ( 162,211 ) $ 130,573

Basic weighted average common shares outstanding 88,981 87,468 88,839

Effect of diluted securities:

Effect of dilutive securities:

Stock options 779 — 571

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Nonvested performance-based share units 61 — 72

Convertible senior notes (2)(3) 11,377 — —

Warrants (3) 6,250 — —

Diluted weighted average common shares outstanding 107,803 87,468 89,777

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

Basic earnings (loss) per share attributable to common stockholders $ 2.42 $ ( 1.85 ) $ 1.47

Diluted earnings (loss) per share attributable to common stockholders $ 2.00 $ ( 1.85 ) $ 1.45

________________

(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.

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

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:

(2) Adjustment for interest related to the 2025 Notes weighted for the portion of the period prior to the Company’s election under the 2025 Notes indenture to settle the principal portion of its 2025 Notes in cash.

Effective with the Company’s election, there will be no further numerator adjustments for interest or denominator adjustments for shares required to settle the principal portion.

(3) Due to the Company’s net loss during 2020, dilutive excess shares, if applicable, and warrants were excluded from the computation of diluted earnings per share as their effect would be antidilutive.

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

(shares in thousands) 2021 2020 2019

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Nonvested performance-based share units 377 514 277

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.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Stock-based and Deferred Compensation Plans

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$ 24,291 $ 14,716 $ 19,690

________________

(1) For 2021, includes a cumulative life-to-date adjustment for PSUs granted in fiscal years 2019, 2020 and 2021 based on revised Company performance projections of performance criteria set forth in the award agreements.

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

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Outstanding as of December 27, 2020 5,422 $ 19.76 5.1 $ 6,575

Granted 100 $ 18.45

Exercised ( 936 ) $ 15.98

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Exercisable as of December 26, 2021 3,905 $ 20.36 4.4 $ 7,032

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 %

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

Risk-free interest rate (1) 2.34 %

Dividend yield (2) 1.94 %

Expected term (3) 5.5 years 4.8 years 5.8 years

Expected term (3) 4.8 years

Weighted average volatility (4) 31.05 %

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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.

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(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:

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Remaining weighted average vesting period 0.6 years

________________

(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.

7 unchanged sentences

Outstanding as of December 26, 2021 730 $ 21.16

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

4 unchanged sentences

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.

Performance-based Share Units - 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.

The PSUs are settled in shares of common stock, with holders receiving one share of common stock for each performance-based share unit that vests.

1 unchanged sentence

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:

6 unchanged sentences

Outstanding as of December 26, 2021 759 $ 23.11

In February 2021, the Company granted 0.3 million PSUs with a three-year cliff vesting period and adjusted diluted earnings per share performance metric.

These grants include a Relative TSR modifier to the final payout outcome, which can adjust the payout by 75 %, 100 % or 125 % of the achieved performance metric, with the overall payout capped at 200 % of the annual target grant.

The fair value of PSUs granted was estimated using the Monte Carlo simulation model.

The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that the market conditions will be achieved and is applied to the trading price of the Company’s common stock on the date of the grant.

Assumptions used in the Monte Carlo simulation model and the grant date fair value of PSUs granted were as follows for the period indicated:

Risk-free interest rate (1) 0.20 %

Volatility (2) 48.45 %

Grant date fair value per unit (3) $ 29.73

________________

(1) Risk-free interest rate is the U.S.

Treasury yield curve in effect as of the grant date for the performance period of the unit.

(2) Based on the historical volatility of the Company’s stock over the last seven years.

(3) Represents a 14.3 % premium above the per share value of the Company’s common stock as of the grant date.

The following represents PSU compensation information for the periods indicated:

5 unchanged sentences

(1) PSUs typically vest after three years .

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 .

As of December 26, 2021, the maximum number of shares of common stock available for issuance for equity instruments pursuant to the 2020 Omnibus Incentive Compensation Plan was 8,910,835 .

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Deferred Compensation Plans

5 unchanged sentences

The rabbi trust is funded through the Company’s voluntary contributions and was fully funded as of December 26, 2021.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Other Compensation Programs - Certain U.S.

Partners participate in a non-qualified long-term compensation program that the Company funds as the obligation for each participant becomes due.

401(k) Plan - The Company has a qualified defined contribution plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended.

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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

Surplus properties may be

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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:

14 unchanged sentences

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

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

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

Translation adjustments — ( 2,720 ) ( 2,720 )

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

Balance as of December 26, 2021 $ 170,657 $ 97,787 $ 268,444

11 unchanged sentences

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

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

The Company’s 2021 and 2019 assessments utilized a qualitative

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 2021 or 2019.

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

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

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

The following table presents the aggregate expense related to the amortization of the Company’s trademarks, favorable leases, franchise agreements and reacquired franchise rights for the periods indicated:

The following table presents the aggregate expense related to the amortization of the Company’s trademarks, franchise agreements and reacquired franchise rights for the periods indicated:

(dollars in thousands) 2021 2020 2019

Amortization expense $ 6,005 $ 6,919 $ 8,621

________________

(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 26, 2021:

(dollars in thousands)

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Other Assets, Net

9 unchanged sentences

(2) Net of accumulated amortization of $ 8.5 million and $ 9.0 million as of December 26, 2021 and December 27, 2020, respectively.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Accrued and Other Current Liabilities

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________________

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

(1) During 2021, accrued payroll and other compensation increased primarily due to an increase in incentive compensation as a result of increased restaurant sales in 2021 due to the impact of COVID-19 during 2020.

Long-term Debt, Net

6 unchanged sentences

Total Senior Secured Credit Facility 275,000 —

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

Former Credit Facility:

Term loan A (1) — 425,000 2.88 %

Revolving credit facility (1) — 447,000 2.88 %

Total Former Credit Facility — 872,000

2025 Notes (3) 230,000 5.00 % 230,000 5.00 %

2029 Notes 300,000 5.13 % —

Finance lease liabilities 2,376 2,405

Other — 50 2.18 %

unamortized debt discount and issuance costs (4) ( 14,157 ) ( 67,704 )

4 unchanged sentences

________________

(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

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

(2) Interest rate represents the Base Rate option elected in anticipation of impending repayment.

Subsequent to December 26, 2021, the Company repaid the remaining $ 80.0 million balance on its revolving credit facility.

(3) See Note 14 - Convertible Senior Notes for details regarding the 2025 Notes and related hedge and warrant transactions.

(4) In connection with the adoption of ASU No.

2020-06, debt discount of $ 59.9 million related to the 2025 Notes was derecognized and $ 2.1 million of equity issuance costs were reclassified as debt issuance costs during 2021.

Bloomin’ Brands, Inc.

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

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.

2029 Notes - On April 16, 2021, the Company and its wholly-owned subsidiary OSI, as co-issuers, issued $ 300.0 million aggregate principal amount of senior unsecured notes due 2029 (the “2029 Notes”).

The 2029 Notes were issued pursuant to an Indenture, dated April 16, 2021 (the “Indenture”), by and among the Company, the guarantors named therein, and Wells Fargo Bank, National Association, as trustee.

The 2029 Notes

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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:

are guaranteed by each of the Company’s existing and future domestic restricted subsidiaries (other than OSI) that are guarantors or borrowers under its Senior Secured Credit Facility (as defined below) or certain other indebtedness.

The 2029 Notes mature on April 15, 2029 , unless earlier redeemed or purchased by the Company.

The 2029 Notes bear cash interest at an annual rate of 5.125 % payable semi-annually in arrears on April 15 and October 15 of each year.

The Company may redeem some or all of the 2029 Notes at any time on or after April 15, 2024, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest.

The Company may also redeem up to 40 % of the 2029 Notes in an amount not greater than the proceeds of certain equity offerings completed before April 15, 2024, at a redemption price equal to 105.125 % of the principal amount thereof, plus accrued and unpaid interest.

In addition, at any time prior to April 15, 2024, the Company may redeem some or all of the 2029 Notes at a price equal to 100 % of the principal amount, plus a make-whole premium, plus accrued and unpaid interest.

The Indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness or issue certain preferred stock;

pay dividends, redeem stock or make other distributions;

make certain investments;

create restrictions on the ability of the Company’s restricted subsidiaries to pay dividends or make other payments to the Company;

create certain liens;

transfer or sell certain assets;

merge or consolidate;

enter into certain transactions with the Company’s affiliates;

and designate subsidiaries as unrestricted subsidiaries.

These covenants are subject to a number of exceptions and qualifications as set forth in the Indenture.

The Indenture contains customary events of default, including, without limitation, failure to make required payments, failure to comply with certain agreements or covenants, cross-acceleration to certain other indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, and failure to pay certain judgments.

The net proceeds from the 2029 Notes offering were approximately $ 294.5 million, after deducting the initial purchaser’s discount and the Company’s offering expenses.

The net proceeds were used to repay a portion of the Company’s outstanding Term loan A and revolving credit facility in conjunction with the refinancing of its Former Credit Facility.

Credit Agreement - On April 16, 2021, the Company and OSI, as co-borrowers, entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”), which provides for senior secured financing of up to $ 1.0 billion consisting of a $ 200.0 million Term loan A and an $ 800.0 million revolving credit facility (the “Senior Secured Credit Facility”).

The Senior Secured Credit Facility matures on April 16, 2026 and replaced the Company’s prior senior secured financing of up to $ 1.5 billion (the “Former Credit Facility”).

The commitments under the Senior Secured Credit Facility may be increased in an aggregate principal amount of up to:

(i) $ 425.0 million or (ii) at the Company’s option, up to an unlimited amount of incremental facilities, so long as the Consolidated Senior Secured Net Leverage Ratio (“CSSNLR”), as defined in the Credit Agreement, is no more than 3.00 to 1.00 as of the last day of the most recent period of four consecutive fiscal quarters ended.

The Company may elect an interest rate at each reset period based on the Base Rate or the Eurocurrency Rate, plus an applicable spread.

The 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 (the “Eurocurrency Rate”).

The Eurocurrency Rate option is the seven, 30, 60, 90 or 180-day Eurocurrency rate, subject to a 0 % floor (the “Eurocurrency Rate”).

The interest rates are as follows:

2 unchanged sentences

150 to 250 basis points over the Eurocurrency Rate

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.

Fees on letters of credit and daily unused availability under the revolving credit facility are 150 to 250 basis points and 25 to 40 basis points, respectively.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

SCHEDULED QUARTERLY PAYMENT DATES TERM LOAN A

March 27, 2022 through June 30, 2024 $ 2,500

September 29, 2024 through June 29, 2025 $ 3,750

September 28, 2025 and December 28, 2025 $ 5,000

The Senior Secured Credit Facility contains mandatory prepayment requirements for the Term loan A, including the requirement that the Company prepay outstanding amounts under these loans with 50 % of its annual excess cash flow, as defined in the Credit Agreement, commencing with the fiscal year ending December 25, 2022.

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

Total Net Leverage Ratio (“TNLR”) is the ratio of Consolidated Total Debt (Current portion of long-term debt and Long-term debt, net of cash, excluding the 2025 Notes) to Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the Credit Agreement).

The Credit Agreement requires a TNLR not to exceed 4.50 to 1.00.

The Credit Agreement limits, subject to certain exceptions, the Company’s ability and the ability of its subsidiaries to:

incur additional indebtedness;

make significant payments;

pay dividends and other restricted payments;

make certain investments;

acquire certain assets;

effect mergers and similar transactions;

and effect certain other transactions with affiliates.

The Company was also limited to $ 200.0 million of aggregate capital expenditures during the year ended December 26, 2021.

As of December 26, 2021 and December 27, 2020, the Company was in compliance with its debt covenants.

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:

1 unchanged sentence

2022 $ 10,976

Thereafter 300,000

Total payments 807,376

2 unchanged sentences

Total principal payments $ 793,065

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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 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.

Debt Issuance Costs - During 2021, the Company deferred $ 5.5 million and $ 5.9 million of financing costs incurred in connection with the 2029 Notes and Credit Agreement, respectively.

Debt issuance costs of $ 3.7 million associated with the revolving credit facility portion of the Credit Agreement were recorded in Other assets, net and all other debt issuance costs were recorded in Long-term debt, net.

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”).

2025 Notes - In May 2020, the Company completed a $ 230.0 million principal amount private offering of 5.00 % convertible senior unsecured notes due in 2025.

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 2025 Notes mature on May 1, 2025 ,

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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.

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.

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.

1 unchanged sentence

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.

Prior to the close of business on the business day immediately preceding November 1, 2024, holders may convert all or a portion of their 2025 Notes under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(ii) during the five consecutive business days immediately after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of the Company’s common stock and the conversion rate on each such trading day;

(iii) upon the occurrence of specified corporate events or distributions on the Company’s common stock;

(iv) if the Company calls the 2025 Notes for redemption, and (v) at any time from, and including November 1, 2024 until the close of business on the second scheduled trading day immediately before the maturity date.

The 2025 Notes will be redeemable by the Company, in whole or in part, at the Company’s option at any time, and from time to time, on or after May 1, 2023 and on or before the 40 th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on:

(i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (ii) the trading day immediately before the date the Company sends such notice.

In addition, calling any of the 2025 Notes for redemption will constitute a make-whole fundamental change with respect to that note, in which case the conversion rate applicable to the conversion of the 2025 Notes will be increased in certain circumstances if it is converted after it is called for redemption.

If a fundamental change occurs prior to the maturity date, holders may require the Company to repurchase all or a portion of their 2025 Notes for cash at a price equal to 100 % of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest.

Holders of 2025 Notes who convert their 2025 Notes in connection with a notice of a redemption or a make-whole fundamental change may be entitled to a premium in the form of an increase in the conversion rate of the 2025 Notes .

Based on the daily closing prices of the Company’s stock during the quarter ended December 26, 2021, holders of the 2025 Notes are eligible to convert their 2025 Notes during the first quarter of 2022.

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

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

(dollars in thousands) DECEMBER 26, 2021 DECEMBER 27, 2020

Long-term debt, net

Principal $ 230,000 $ 230,000

4 unchanged sentences

________________

(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:

(1) In connection with the adoption of ASU No.

2020-06, debt discount and the equity component of the 2025 Notes were derecognized and $ 2.1 million of issuance costs that were previously allocated to the equity component were reclassified as debt issuance costs during 2021.

(2) Debt issuance costs are amortized to Interest expense, net using the effective interest method over the 2025 Notes’ expected life.

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

(dollars in thousands) 2021 2020

3 unchanged sentences

Total interest expense (1) $ 13,057 $ 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.

________________

(1) The effective rate of the 2025 Notes over their expected life was 5.85 % and 13.73 % for 2021 and 2020, respectively .

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 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 in excess of the principal amount due upon conversion of the 2025 Notes .

The Warrant Transactions 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 is initially $ 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.

The Convertible Note Hedge Transactions are exercisable upon conversion of the 2025 Notes.

The Convertible Note Hedge Transactions expire upon maturity of the 2025 Notes.

The Warrant Transactions are exercisable on the expiration dates included in the related forms of confirmation.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Other Long-term Liabilities, Net

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_______________

(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.

(1) During 2021, the Company made a payment of $ 27.3 million related to payroll taxes deferred under the Coronavirus, Aid, Relief and Economic Security Act.

(2) The Company’s hedge liability decreased by $ 15.6 million during 2021 primarily from the termination of certain interest rate swaps.

See Note 17 - Derivative Instruments and Hedging Activities for additional details.

Stockholders’ Equity

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

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

DIVIDENDS PER SHARE AMOUNT

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

Share Repurchases - On February 8, 2022, the Company’s Board of Directors (the “Board”) approved a share repurchase program (the “2022 Share Repurchase Program”) under which the Company was authorized to repurchase up to $ 125.0 million of its outstanding common stock.

The 2022 Share Repurchase Program will expire on August 9, 2023.

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

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

First fiscal quarter $ 0.20 $ 17,480

Second fiscal quarter — 0.10 — 9,227

Third fiscal quarter — 0.10 — 8,674

Fourth fiscal quarter — 0.10 — 8,693

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

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.

In February 2022, the Board declared a quarterly cash dividend of $ 0.14 per share, payable on March 16, 2022 to shareholders of record at the close of business on March 2, 2022 .

Redeemable Preferred Stock - In connection with the development of its Abbraccio Cucina Italiana (“Abbraccio”) concept in 2015, the Company sold preferred shares of its Abbraccio concept (“Abbraccio Shares”) to certain investors.

During 2020, the Company exercised a 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:

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Accumulated other comprehensive loss $ ( 205,989 ) $ ( 211,446 )

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(dollars in thousands) 2021 2020 2019

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Foreign currency translation adjustment $ ( 6,597 ) $ ( 36,852 ) $ ( 16,882 )

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 gain (loss) on derivatives, net of tax (1) 86 ( 14,741 ) ( 11,944 )

Reclassification of adjustments for loss on derivatives included in Net income (loss), net of tax (2) 7,392 9,923 1,805

Amortization of terminated interest rate swaps, net of tax 4,576 — —

Total unrealized gain (loss) on derivatives, net of tax 12,054 ( 4,818 ) ( 10,139 )

Other comprehensive income (loss) attributable to Bloomin’ Brands $ 5,457 $ ( 41,670 ) $ ( 27,021 )

________________

(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.

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

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

Derivative Instruments and Hedging Activities

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Designated Hedges

Cash Flow Hedges of Interest Rate Risk - On September 9, 2014 , the Company entered into variable-to-fixed interest rate swap agreements with eight counterparties to hedge a portion of the cash flows of the Company’s variable rate debt (the “2014 Swap Agreements”).

The 2014 Swap Agreements had an aggregate notional amount of $ 400.0 million and matured on May 16, 2019 .

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.

Cash Flow Hedges of Interest Rate Risk - In October 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”).

The 2018 Swap Agreements have an aggregate notional amount of $ 550.0 million and mature on November 30, 2022 .

Under the terms of the 2018 Swap Agreements, the Company pays a weighted average fixed rate of 3.04 % on the notional amount and receives payments from the counterparties based on the one-month London Inter-Bank Offered Rate (“LIBOR”) rate.

In connection with the refinancing of its Former Credit Facility, on April 16, 2021 the Company terminated its variable-to-fixed interest rate swap agreements with seven counterparties having an aggregate notional amount of $ 275.0 million for a payment of approximately $ 13.3 million, including accrued interest.

Following these terminations, $ 13.4 million of unrealized losses related to the terminated swap agreements included in AOCL will be amortized on a straight-line basis to Interest expense, net over the remaining original term of the terminated swaps.

As a result of the Company’s anticipated decrease in variable rate debt balances due to significant voluntary debt payments, on December 9, 2021 the Company terminated its variable-to-fixed interest rate swap agreements with three counterparties having an aggregate notional amount of $ 150.0 million for a payment of approximately $ 4.1 million, including accrued interest.

Following these terminations, $ 4.1 million of unrealized losses related to the terminated swap agreements included in AOCL will be amortized to Interest expense, net during 2022.

The Company’s swap agreements have been designated and qualify as cash flow hedges, are recognized on its Consolidated Balance Sheets at fair value and are classified based on the instruments’ maturity dates.

As of December 26, 2021, the Company estimated $ 14.4 million will be reclassified to Interest expense, net through the November 2022 maturity date of the swaps, including interest expense related to the terminated swap agreements discussed above.

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”).

The 2018 Swap Agreements have an aggregate notional amount of $ 550.0 million, a start date of May 16, 2019 (the maturity date of the 2014 Swap Agreements), and mature on November 30, 2022 .

Under the terms of the 2018 Swap Agreements, the Company pays a weighted-average fixed rate of 3.04 % on the notional amount and receives payments from the counterparties based on the one-month LIBOR rate.

The Company estimates $ 16.1 million will be reclassified to interest expense over the next 12 months related to the 2018 Swap Agreements.

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 :

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

(dollars in thousands) DECEMBER 26, 2021 DECEMBER 27, 2020 CONSOLIDATED BALANCE SHEET CLASSIFICATION

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

On May 4, 2020 , concurrent with entering into the Amended Credit Agreement, the Company 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:

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

(dollars in thousands) 2021 2020 2019

Interest rate swap expense recognized in Interest expense, net $ ( 9,951 ) $ ( 13,370 ) $ ( 2,436 )

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 )

Income tax benefit recognized in Provision (benefit) for income taxes 2,559 3,447 631

Total effects on Net income (loss) $ ( 7,392 ) $ ( 9,923 ) $ ( 1,805 )

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 26, 2021 and December 27, 2020, 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 $ 3.3 million and $ 32.2 million, respectively.

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If the Company had breached any of these provisions as of December 26, 2021 and December 27, 2020, it could have been required to settle its obligations under the agreements at their termination value of $ 3.3 million and $ 32.2 million, respectively.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

10 unchanged sentences

(1) Net of accumulated amortization of $ 3.3 million and $ 2.3 million as December 26, 2021 and December 27, 2020, 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

(2) Excludes COVID-19-related deferred rent accruals of $ 1.1 million and $ 12.8 million as of December 26, 2021 and December 27, 2020, respectively, and accrued contingent percentage rent of $ 3.5 million and $ 2.7 million, as of December 26, 2021 and December 27, 2020, respectively.

(3) Excludes COVID-19-related non-current deferred rent accruals of $ 0.4 million and $ 1.2 million as of December 26, 2021 and December 27, 2020, respectively.

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

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

(dollars in thousands) 2021 2020 2019

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________________

(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.

(1) Excludes rent expense for office facilities and Company-owned closed or subleased properties of $ 12.9 million, $ 13.8 million and $ 14.6 million for 2021, 2020 and 2019, respectively, which is included in General and administrative expense.

Also excludes certain immaterial supply chain related rent expense included in Food and beverage costs.

(2) Includes COVID-19-related rent abatements for 2021 and 2020.

BLOOMIN’ BRANDS, INC.

39 unchanged sentences

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:

(dollars in thousands) 2019 2018

Gross proceeds from sale-leaseback transactions $ 7,337 $ 17,294

Number of restaurant properties sold and leased back 2 6

Fair Value Measurements

23 unchanged sentences

As of December 26, 2021 and December 27, 2020, the Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

impairment approximates fair value.

Carrying value after 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:

20 unchanged sentences

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.

Projected future cash flows, including discount rate and growth rate assumptions, are derived from then-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.

3 unchanged sentences

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

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

UNOBSERVABLE INPUTS 2020

1 unchanged sentence

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.

Fair Value of Financial Instruments - The Company’s non-derivative financial instruments as of December 26, 2021 and December 27, 2020 consist of cash equivalents, accounts receivable, accounts payable and current and

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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.

Debt is carried at amortized cost;

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Revolving credit facility $ 80,000 $ 76,926 $ — $ —

Convertible Senior Notes $ 230,000 $ 413,818 $ — $ —

Former Credit Facility:

Term loan A $ — $ — $ 425,000 $ 412,250

Revolving credit facility $ — $ — $ 447,000 $ 419,612

2025 Notes $ 230,000 $ 447,615 $ 230,000 $ 413,818

2029 Notes $ 300,000 $ 304,395 $ — $ —

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:

The following table is a rollforward of the Company’s trade receivables allowance for expected credit losses for the periods indicated:

(dollars in thousands) 2021 2020

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Allowance for expected credit losses, end of period $ 4,050 $ 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.

________________

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

See Note 3 - 2020 COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

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

See Note 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:

The following table presents the domestic and foreign components of Income (loss) before provision (benefit) for income taxes for the periods indicated:

(dollars in thousands) 2021 2020 2019

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Benefit) provision for income taxes consisted of the following for the periods indicated:

Provision (benefit) for income taxes consisted of the following for the periods indicated:

(dollars in thousands) 2021 2020 2019

9 unchanged sentences

( 3,346 ) ( 88,256 ) ( 25,890 )

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

Provision (benefit) for income taxes $ 26,384 $ ( 80,726 ) $ 7,573

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:

2021 2020 (1) 2019

2 unchanged sentences

Employment-related credits, net ( 13.2 ) 9.9 ( 24.7 )

Tax settlements and related adjustments ( 1.7 ) 0.1 —

Net changes in deferred tax valuation allowances ( 0.7 ) ( 0.6 ) ( 1.6 )

Foreign tax rate differential ( 0.2 ) 1.1 3.2

Net life insurance expense (benefit) 0.3 ( 0.7 ) 0.6

Enhanced charitable contributions deduction 0.1 ( 0.6 ) ( 1.3 )

Nondeductible expenses 2.3 ( 1.4 ) 3.9

Net changes in deferred tax valuation allowances ( 0.6 ) ( 1.6 ) 3.9

Domestic manufacturing deduction — — ( 0.3 )

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 ( 0.7 ) 0.3 ( 0.9 )

Total 10.6 % 33.7 % 5.3 %

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.

________________

(1) Due to the pre-tax book loss, a positive percentage change in the effective income tax rate table reflects a favorable income tax benefit, whereas a negative percentage change in the effective income tax rate table reflects an unfavorable income tax expense.

The net decrease in the effective income tax rate in 2021 as compared to 2020 was primarily due to the benefit of FICA tax credits on certain employees’ tips reducing the effective income tax rate in 2021 as a result of pre-tax book income as compared to increasing the effective income tax rate in 2020 as a result of pre-tax book loss.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The net increase in the effective income tax rate in 2019 as compared to 2018 was primarily due to employment-related credits being a lower percentage of net income in 2019, excess tax benefits from equity-based compensation arrangements recorded in 2018 and an increase in the foreign tax rate differential in 2019.

These increases were partially offset by a decrease in valuation allowances recorded against deferred income tax assets in 2019.

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

The effective income tax rate for 2021 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.

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.

On December 28, 2021, the U.S.

Treasury and the Internal Revenue Service released final regulations that, among other things, provide guidance on several aspects of the foreign tax credit rules.

These regulations are applicable for years beginning on or after December 28, 2021 and were issued after the Company’s 52-53 week year end.

The impact, if any, of these highly technical regulations is being evaluated and will be reflected in the Company’s 2022 tax provision.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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:

7 unchanged sentences

Federal tax credit carryforwards 146,734 142,055

Partner deposits and accrued partner obligations 3,403 4,449

Other, net (1) 21,222 28,241

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Deferred income tax assets, net $ 168,068 $ 153,883

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.

________________

(1) As of December 26, 2021 and December 27, 2020, the Company maintained deferred tax liabilities for state income taxes on historical earnings of $ 0.2 million.

As of December 26, 2021, valuation allowances against deferred tax assets in the U.S.

and in certain foreign jurisdictions totaled $ 3.2 million and $ 13.8 million, respectively.

The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more likely than not the deferred tax assets will be realized.

The net change in the deferred tax valuation allowance in 2021 is primarily attributable to net operating loss carryforwards in certain foreign jurisdictions with full valuation allowances recorded that expired or are no longer available to the Company.

The Company has considered the impact of the COVID-19 pandemic on the Company’s Brazilian operating subsidiary, including assessing the realizability of Brazilian deferred tax assets.

As part of the Company’s evaluation of positive and negative evidence, management considered whether there has been cumulative income or loss in the past three years, the impact of non-deductible amounts, the scheduled reversal of deferred tax assets and liabilities, projected future taxable income and the state of the Company’s business in Brazil.

As of December 26, 2021, the Company has concluded that no valuation allowance is required against the deferred tax assets of its Brazilian operating subsidiary.

Although management uses the best information available, it is reasonably possible that the estimates used by the Company could be materially different from the actual results.

These differences could result in a material adjustment to the Company’s valuation allowance in a future reporting period.

Undistributed Earnings - As of December 26, 2021, the Company had aggregate accumulated foreign earnings of approximately $ 28.8 million.

4 unchanged sentences

These amounts are no longer considered indefinitely reinvested in the Company’s foreign subsidiaries.

As of December 27, 2020, the Company maintained a deferred tax liability for state income taxes on historical earnings of $ 0.2 million.

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.

6 unchanged sentences

Foreign loss carryforwards 2022 - Indefinite $ 71,724

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.

Foreign credit carryforwards Indefinite $ 864

As of December 26, 2021, the Company had $ 155.7 million in general business tax credit carryforwards, which have a 20-year carryforward period and are utilized on a first-in, first-out basis.

1 unchanged sentence

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 the future years.

The amount of business tax credits expected to be generated in 2021 is approximately $ 30 million to $ 40 million.

Unrecognized Tax Benefits - As of December 26, 2021 and December 27, 2020, the liability for unrecognized tax benefits was $ 19.2 million and $ 25.5 million, respectively.

Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $ 25.5 million and $ 27.0 million, respectively, if recognized, would impact the Company’s effective tax rate.

Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $ 18.8 million and $ 25.5 million, respectively, if recognized, would impact the Company’s effective income tax rate.

The following table summarizes the activity related to the Company’s unrecognized tax benefits for the periods indicated:

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Balance as of end of year $ 19,238 $ 25,524 $ 27,201

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.

The Company had approximately $ 0.9 million and $ 1.9 million accrued for the payment of interest and penalties as of December 26, 2021 and December 27, 2020, respectively.

The Company recognized immaterial interest and penalties related to uncertain tax positions in the Provision (benefit) 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.

Based on the outcome of these examinations, or a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related recorded unrecognized tax benefits for tax positions taken on previously filed tax returns will change by approximately $ 1.0 million to $ 2.0 million within the next twelve months.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Open Tax Years - Following is a summary of the open audit years by jurisdiction as of December 26, 2021:

3 unchanged sentences

Foreign 2015 - 2020

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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.

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.

As of December 26, 2021 and December 27, 2020, the Company’s recorded contingent lease liability was $ 8.7 million and $ 9.6 million, respectively,

Purchase Obligations - Purchase obligations were $ 206.6 million and $ 230.6 million as of December 26, 2021 and December 27, 2020, 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, technology, advertising and restaurant-level service contracts.

In 2020, the Company purchased approximately 97 % of its U.S.

These purchase obligations are primarily due within five years , however, commitments with various vendors extend through December 2030.

Outstanding commitments consist primarily of food and beverage products related to normal business operations, technology, restaurant-level service contracts and advertising.

In 2021, the Company purchased more than 90 % of its U.S.

beef raw materials from four beef suppliers that represent more than 80 % of the total beef marketplace in the U.S.

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 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.

Litigation and Other Matters - 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.

A reserve is recorded when it is both:

(i) probable that a loss has occurred and (ii) the amount of loss can be reasonably estimated.

There may be instances in which an exposure to loss exceeds the recorded reserve.

The Company evaluates, on a quarterly basis, developments in legal proceedings that could cause an increase or decrease in the amount of the reserve that has been previously recorded, or a revision to the disclosed estimated range of possible losses, as applicable.

The Company’s legal proceedings range from cases brought by a single plaintiff to threatened class actions with many putative class members.

While some matters pending against the Company specify the damages claimed by the plaintiff or class, many seek unspecified amounts or are at very early stages of the legal process.

Even when the amount of damages claimed against the Company are stated, the claimed amount may be exaggerated, unsupported or unrelated to possible outcomes, and as such, are not meaningful indicators of the Company’s potential liability or financial exposure.

As a result, some matters have not yet progressed sufficiently through discovery or development of important factual information and legal issues to enable the Company to estimate an amount of loss or a range of possible loss.

The Company recorded reserves of $ 7.1 million and $ 4.6 million for certain of its outstanding legal proceedings as of December 26, 2021 and December 27, 2020, respectively, within Accrued and other current liabilities and Other long-term liabilities on its Consolidated Balance Sheets.

While the Company believes that additional losses beyond these accruals are reasonably possible, it cannot estimate a possible loss contingency or range of reasonably possible loss contingencies beyond these accruals.

During 2021, 2020 and 2019, the Company recognized $ 5.4 million, $ 2.3 million and $ 1.3 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for certain legal settlements.

The Company intends to defend itself in legal matters.

Some of these matters may be covered, at least in part, by insurance if they exceed specified retention or deductible amounts.

However, it is possible that claims may be denied by the Company’s insurance carriers, the Company may be required by its insurance carriers to contribute to the payment of claims, or the Company’s insurance coverage may not continue to be available on acceptable terms or in sufficient amounts.

The Company records receivables from third party insurers when recovery has been determined to be probable.

The Company believes that the ultimate determination of liability in connection with legal claims pending against the Company, if any, in excess of amounts already provided for such matters in the consolidated financial statements, will not have a material adverse effect on its business, annual results of operations, liquidity or financial position.

However, it is possible that the Company’s business, results of operations,

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Insurance - As of December 27, 2020, the future undiscounted payments the Company expects for workers’ compensation, general liability and health insurance claims are:

liquidity, or financial condition could be materially affected in a particular future reporting period by the unfavorable resolution of one or more matters or contingencies during such period.

Royalty Termination - On August 2, 2021, wholly-owned subsidiaries of the Company entered into the Purchase and Sale of Royalty Payment Stream and Termination of Royalty Agreement (the “Royalty Termination Agreement”) with the Carrabba’s Italian Grill founders (the “Carrabba’s Founders”), pursuant to which the Company’s obligation to pay future royalties on U.S.

Carrabba’s Italian Grill restaurant sales and lump sum royalty fees on Carrabba’s Italian Grill (and Abbraccio) restaurants opened outside the U.S.

was terminated.

Upon execution of the Royalty Termination Agreement, the Company made a cash payment of $ 61.9 million to the Carrabba’s Founders, which was recorded in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive Income (Loss) during 2021.

Insurance - As of December 26, 2021, the future undiscounted payments the Company expects for workers’ compensation, general liability and health insurance claims are as follows:

(dollars in thousands)

14 unchanged sentences

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 (“CODM”).

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.

The Company aggregates its operating segments into two reportable segments, U.S.

3 unchanged sentences

are included in the international segment.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following is a summary of reporting segments as of December 26, 2021:

10 unchanged sentences

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

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.

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

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

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

4 unchanged sentences

Total revenues $ 4,122,385 $ 3,170,561 $ 4,139,389

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:

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

(dollars in thousands) 2021 2020 2019

Segment (loss) income from operations

Segment income (loss) from operations

$ 443,887 $ ( 1,630 ) $ 311,666

International 16,657 ( 13,479 ) 44,428

Total segment (loss) income from operations ( 15,109 ) 356,094 310,960

Total segment income (loss) from operations 460,544 ( 15,109 ) 356,094

Unallocated corporate operating expense (1) ( 151,586 ) ( 159,864 ) ( 165,004 )

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

Loss on modification of debt ( 237 ) — —

Total income (loss) from operations 308,958 ( 174,973 ) 191,090

Loss on extinguishment and modification of debt ( 2,073 ) ( 237 ) —

Other income (expense), net 26 131 ( 143 )

Interest expense, net ( 57,614 ) ( 64,442 ) ( 49,257 )

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

Income (loss) before provision (benefit) for income taxes $ 249,297 $ ( 239,521 ) $ 141,690

____________________

(1) Includes $ 32.4 million of charges for 2020 that were not allocated to the Company’s segments related to its transformational initiatives, primarily recorded within General and administrative expense and Provision for impaired assets and restaurant closings .

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

5 unchanged sentences

Total depreciation and amortization $ 163,391 $ 180,261 $ 196,811

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table is a summary of capital expenditures by segment for the periods indicated:

28 unchanged sentences

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Selected Quarterly Financial Data (Unaudited)

2020 FISCAL QUARTERS

(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

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) 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

____________________

(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.

BLOOMIN’ BRANDS, INC.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data