What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-22 compared with 2022-02-23 · 426 added, 408 removed, 1204 unchanged (41% of the section changed)

32 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 25, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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.

Change in Accounting Principle

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.

Basis for Opinions

100 unchanged sentences

Loss on extinguishment and modification of debt ( 107,630 ) ( 2,073 ) ( 237 )

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

Loss on fair value adjustment of derivatives, net ( 17,685 ) — —

Other (expense) income, net ( 23 ) 26 131

Interest expense, net ( 53,176 ) ( 57,614 ) ( 64,442 )

12 unchanged sentences

Reclassification of adjustments for loss on derivatives included in Net income (loss), net of tax 954 7,392 9,923

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

Impact of terminated interest rate swaps included in Net income (loss), net of tax 8,982 4,576 —

Comprehensive income (loss) 129,881 228,370 ( 201,129 )

17 unchanged sentences

SHARES AMOUNT

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

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

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

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

Cash dividends declared, $ 0.40 per common share

— — ( 35,734 ) — — — ( 35,734 )

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

Stock-based compensation — — 19,951 — — — 19,951

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

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

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

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

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

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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 income — — — 215,555 — 7,358 222,913

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

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

Common stock issued under stock plans (1) 1,397 14 9,836 — — — 9,850

Purchase of noncontrolling interests — — 2 — — ( 5 ) ( 3 )

Distributions to noncontrolling interests — — — — — ( 9,123 ) ( 9,123 )

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

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

(CONTINUED...)

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

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

Net income — — — 101,907 — 7,296 109,203

Other comprehensive income, net of tax — — — 100 20,678 — 20,778

Cash dividends declared, $ 0.56 per common share

— — ( 49,736 ) — — — ( 49,736 )

Repurchase and retirement of common stock ( 5,429 ) ( 54 ) — ( 109,945 ) — — ( 109,999 )

Stock-based compensation — — 16,514 — — — 16,514

Common stock issued under stock plans (1) 1,559 15 12,940 — — — 12,955

Purchase of noncontrolling interests — — 2 — — ( 5 ) ( 3 )

Purchase of noncontrolling interests, net of tax of $ 489

— — ( 1,415 ) — — ( 3,400 ) ( 4,815 )

Distributions to noncontrolling interests — — — — — ( 9,127 ) ( 9,127 )

Contributions from noncontrolling interests — — — — — 1,382 1,382

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

Retirement of convertible senior note hedges — — 112,956 — — — 112,956

Retirement of warrants — — ( 97,617 ) — — — ( 97,617 )

Issuance of common stock from repurchase of convertible senior notes 2,313 23 48,542 — — — 48,565

December 25, 2022 87,696 $ 877 $ 1,161,912 $ ( 706,109 ) $ ( 185,311 ) $ 2,540 $ 273,909

________________

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Provision for impaired assets and restaurant closings 5,964 13,737 76,354

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

Non-cash interest expense from terminated interest rate swaps 12,215 6,160 —

Non-cash operating lease costs 83,254 78,272 74,436

Provision for expected credit losses and contingent lease liabilities 946 7,225 —

(Benefit) provision for expected credit losses and contingent lease liabilities ( 1,117 ) 946 7,225

Inventory obsolescence and spoilage — — 10,169

Stock-based and other non-cash compensation expense 16,514 24,405 14,802

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

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

Deferred income tax expense (benefit) 13,748 ( 3,346 ) ( 88,256 )

Loss on extinguishment and modification of debt 107,630 2,073 237

Loss on fair value adjustment of derivatives, net 17,685 — —

Other, net 3,186 ( 1,879 ) ( 3,932 )

Change in assets and liabilities:

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

Decrease (increase) in inventories 1,036 ( 18,210 ) 19,857

(Increase) decrease in other current assets ( 40,370 ) ( 58,397 ) 14,392

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Decrease in operating right-of-use assets, net 277 160 412

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

Increase in unearned revenue

(Decrease) increase in accounts payable and accrued and other current liabilities ( 40,679 ) 25,619 ( 61,638 )

(Decrease) increase in unearned revenue

( 4,638 ) 17,225 10,569

4 unchanged sentences

Proceeds from disposal of property, fixtures and equipment 1,634 9,322 2,178

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

Proceeds received from company-owned life insurance 16,092 9,270 9,695

Capital expenditures ( 219,691 ) ( 122,830 ) ( 87,842 )

13 unchanged sentences

Proceeds from issuance of senior notes — 300,000 —

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

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

Proceeds from issuance of warrants — 46,690 —

Repurchase of convertible senior notes ( 196,919 ) — —

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

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

Proceeds from retirement of convertible senior note hedges 131,869 — —

Proceeds from issuance of warrants — — 46,690

Payments for retirement of warrants ( 114,825 ) — —

Proceeds (payments of taxes) from share-based compensation, net 12,955 9,850 ( 7 )

1 unchanged sentence

Contributions from noncontrolling interests 1,382 1,347 451

Purchase of limited partnership and noncontrolling interests ( 3 ) ( 60 ) ( 41 )

Purchase of noncontrolling interests ( 5,004 ) ( 3 ) ( 60 )

Payments for partner equity plan ( 9,292 ) ( 9,910 ) ( 16,906 )

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Leased assets obtained in exchange for new finance lease liabilities $ 4,066 $ 1,238 $ 1,367

Increase (decrease) in liabilities from the acquisition of property, fixtures and equipment $ 2,344 $ 1,152 $ ( 2,899 )

Increase in liabilities from the acquisition of property, fixtures and equipment $ 12,762 $ 2,344 $ 1,152

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Description of Business

Description of the Business

Bloomin’ Brands, Inc.

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There were no intervening events that would materially affect the Company’s consolidated financial position, results of operations or cash flows as of and for the year ended December 25, 2022.

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.

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.

COVID-19 Pandemic - As a result of the COVID-19 pandemic (“COVID-19”), traffic was significantly reduced in the Company’s restaurants which negatively impacted its operating results during 2020.

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

During 2021, the recovery of in-restaurant dining continued while the Company retained a significant portion of the incremental off-premises volume it achieved during 2020.

Internationally, COVID-19-related capacity constraints continued in 2021 during periods of increased case counts and new variants until the middle of 2022 when in-restaurant dining was operating without COVID-19-related capacity constraints.

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

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

Investments in entities the Company does not control, but where the Company’s interest is generally between 20 % and 50 % and the Company has the ability to exercise significant influence over the entity, are accounted for under the equity method.

Investments in entities the Company does not control, but where the Company’s interest is between 20 % and 50 % and the Company has the ability to exercise significant influence over the entity, are accounted for under the equity method.

Fiscal Year - The Company utilizes a 52-53-week year ending on the last Sunday in December.

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All periods presented 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

Use of Estimates - The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimated.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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.

Cash and Cash Equivalents - Cash equivalents consist of investments that are readily convertible to cash with an original maturity date of three months or less.

Cash and cash equivalents include $ 41.5 million and $ 41.3 million, as of December 25, 2022 and December 26, 2021, respectively, for amounts in transit from credit card companies since settlement is reasonably assured.

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

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.

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

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

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

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

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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Property, Fixtures and Equipment - Property, fixtures and equipment are stated at cost, net of accumulated depreciation.

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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.

Upon restaurant opening, these costs are depreciated and charged to depreciation and amortization expense.

Upon restaurant opening, these costs are depreciated and charged to Depreciation and amortization expense over the reasonably certain lease term.

Internal costs of $ 4.1 million, $ 3.7 million and $ 2.7 million were capitalized during 2022, 2021 and 2020, respectively.

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If the qualitative assessment is not performed or if the Company determines that it is not more likely than not that the fair value of the reporting unit exceeds the carrying value, the fair value of the reporting unit is calculated.

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

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

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

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

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

If the derivative qualifies for hedge accounting treatment, any gain or loss on the derivative instrument is recognized in equity as a change to Accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements, foreign currency exchange rate movements, changes in energy prices and other identified risks.

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

Share Repurchase - Shares repurchased are retired.

The par value of the repurchased shares is deducted from common stock and the excess of the purchase price over the par value of the shares is recorded to Accumulated deficit.

Share Repurchase - The par value of the repurchased shares is deducted from common stock and the excess of the purchase price over the par value of the shares is recorded to Accumulated deficit.

All shares of common stock acquired through share repurchase programs are retired and restored to authorized but unissued shares of common stock.

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

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

Royalties, which are generally a percentage of net sales of the franchisee, are recognized as revenue in the period in 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

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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.

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.

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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.

The Company accounts for U.S.

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.

1 unchanged sentence

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

Operating lease rent expense for open Company-owned restaurants is recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).

Payments received from landlords as incentives for leasehold improvements are recorded as a

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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.

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.

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

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

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

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

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

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Advertising expense of $ 94.0 million, $ 59.7 million and $ 67.3 million for 2022, 2021 and 2020, respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

1 unchanged sentence

R&D was $ 2.7 million, $ 2.6 million and $ 2.4 million for 2022, 2021 and 2020, respectively.

Partner Compensation - In addition to base salary, Area Operating Partners, Restaurant Managing Partners and Chef Partners generally receive performance-based bonuses for providing management and supervisory services to their restaurants, certain of which may be based on a percentage of their restaurants’ monthly operating results or cash flows and/or total controllable income (“Monthly Payments”).

Partner Compensation - In addition to base salary, Market Vice Presidents, Area Operating Partners, Restaurant Managing Partners and Chef Partners generally receive performance-based bonuses for providing management and supervisory services to their restaurants, certain of which may be based on a percentage of their restaurants’ monthly operating results or cash flows and/or total controllable income (“Monthly Payments”).

Certain Restaurant Managing Partners and Chef Partners in the U.S.

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

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.

Beginning in 2021, performance-based share units (“PSUs”) issued by the Company include 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.

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.

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, performance-based share units and warrants, measured using the treasury stock method, and the Company’s convertible senior notes, measured using the if-converted method.

PSUs are considered dilutive when the related performance criterion has been met.

The Company has provided the trustee of the Company’s convertible senior notes due 2025 (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

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

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

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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 Accounting Standards Update (“ASU”) No.

Recently Adopted Financial Accounting Standards - During the thirteen weeks ended December 25, 2022, the Company adopted Accounting Standards Update (“ASU”) No.

2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance”, which requires financial statement footnote disclosure regarding government assistance accounted for by applying a grant or contribution accounting model by analogy.

See Note 3 - COVID-19 for information regarding COVID-19-related government assistance.

On December 28, 2020, the Company adopted 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):

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

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

2020-06 also requires the application of the if-converted method for calculating the diluted earnings per share impact of the 2025 Notes.

The Company adopted ASU No.

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After adopting ASU No.

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.

Leases (Topic 842) (“ASU No.

2016-02”), ASU No.

2018-01, “Leases (Topic 842):

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

2018-01”) and ASU No.

Leases (Topic 842):

Targeted Improvements (“ASU No.

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

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

2020-06, the 2025 Notes are reflected entirely as a liability since the embedded conversion feature is no longer separately presented within stockholders’ equity.

Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

Reclassifications - The Company reclassified certain items in the accompanying consolidated financial statements for prior periods to be comparable with the classification for the current period, including, but not limited to, presentation of certain items within the condensed consolidated statements of cash flows and certain notes to the consolidated financial statements.

These reclassifications had no effect on previously reported net income.

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.

2016-02 without restating comparative period financial statements and provides entities with a practical expedient that allows entities to elect not to separate lease and non-lease components when certain conditions are met.

The Company adopted ASU No.

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.

The Company also elected a transition package including practical expedients that permitted it not to reassess the classification and initial direct costs of expired or existing contracts and leases, to not separate lease and non-lease components of restaurant facility leases executed subsequent to adoption, and to not evaluate land easements that exist or expired before the adoption.

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

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

These reclassifications had no effect on previously reported net income.

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):

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 INCOME (LOSS) CLASSIFICATION FISCAL YEAR

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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 earned.

(1) Represents relief pay for U.S.

hourly employees impacted by the closure of dining rooms, net of employee retention tax credits earned.

See COVID-19 Government Assistance below for further discussion regarding employee retention 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.

1 unchanged sentence

(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.

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

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

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

COVID-19 Government Assistance - During 2020, the Company recorded $ 19.6 million of COVID-19-related government assistance primarily in connection with the Employee Retention Credit (“ERC”) provided under the Coronavirus, Aid, Relief and Economic Security (“CARES”) Act, substantially all of which was recorded in Labor and other related expenses in its Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company filed ERC claims for relief pay paid to employees impacted by government mandated dining room closures or capacity restrictions and quarantine pay.

The Company also received subsidies from the Hong Kong government primarily provided to help offset the cost of retaining employees.

During 2022 and 2021, the Company recognized immaterial government assistance in connection with payments received for these programs.

As there was no authoritative guidance under U.S.

GAAP on accounting for government assistance provided to for-profit business entities, the Company accounted for government assistance by analogy to International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance.

The Company recognized assistance under each program when it met the program terms for assistance and receipt of assistance was reasonably assured.

Government assistance is generally recorded as a deduction to the related expenses or losses that the grants are intended to compensate.

During the periods presented, the Company did no t receive any Paycheck Protection Program loans, a program under the CARES Act providing loans to assist entities with paying their payroll and other costs.

BLOOMIN’ BRANDS, INC.

11 unchanged sentences

(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 amount recognized primarily represents refundable PIS and COFINS taxes for prior years, including accrued interest.

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

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____________________

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

(1) Includes Restaurant sales for the Company-owned Outback Steakhouse restaurants outside of Brazil and Abbraccio restaurants in Brazil.

Franchise revenues primarily include revenues from franchised Outback Steakhouse restaurants.

BLOOMIN’ BRANDS, INC.

14 unchanged sentences

(dollars in thousands) 2022 2021 2020

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

Balance, beginning of the period $ 17,793 $ 19,300 $ 18,554

Deferred gift card sales commissions amortization ( 24,091 ) ( 26,012 ) ( 20,927 )

1 unchanged sentence

Other ( 2,690 ) ( 2,120 ) ( 1,250 )

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

Balance, end of the period $ 17,755 $ 17,793 $ 19,300

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

(dollars in thousands) 2022 2021 2020

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

Balance, beginning of the period $ 387,945 $ 373,048 $ 358,757

Gift card sales 326,603 330,841 306,016

1 unchanged sentence

Gift card breakage ( 18,036 ) ( 17,547 ) ( 14,050 )

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”), who currently franchises approximately 80 Outback Steakhouse restaurants in the western United States, primarily in California.

Balance, end of the period $ 386,495 $ 387,945 $ 373,048

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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 79 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”);

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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.

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.

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

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

At the time of the Resolution Agreement, no amounts previously waived or reflected in the Initial Deferred Balance had been recorded as a receivable or revenue, with the exception of a $ 3.1 million receivable balance that had been previously fully reserved.

Collections of the Initial Deferred Balance, and any future amounts due under the Resolution Agreement or the Company’s franchise agreements after November 22, 2020, will be recognized if collectability is reasonably assured which is typically upon receipt of cash.

Since the execution of the Resolution Agreement, all current royalties and obligated amounts were collected, with the exception of $ 3.0 million of royalties during the thirteen weeks ended December 25, 2022 which were in excess of Out West’s calculation of Available Cash under the Forbearance Agreement.

The Company recorded an allowance for expected credit losses against a portion of these uncollected amounts during the thirteen weeks ended December 25, 2022.

See Note 20 - Allowance for Expected Credit Losses for additional details.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Impairments, Exit Costs and Disposals

Impairments and Exit Costs

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

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International (1) — ( 86 ) 173

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

Total restaurant closure charges 478 336 1,531

Provision for impaired assets and restaurant closings $ 5,964 $ 13,737 $ 76,354

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

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

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

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

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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:

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 the closure and restructuring initiatives for the period indicated:

(dollars in thousands) 2022

Beginning of the year $ 12,879

Balance, beginning of the period $ 8,485

Cash payments ( 3,296 )

1 unchanged sentence

Adjustments ( 271 )

End of the year (1) $ 8,485

Balance, end of the period (1) $ 5,476

________________

(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 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.

(1) As of December 25, 2022, the Company had exit-related accruals related to certain closure and restructuring initiatives of $ 1.3 million recorded in Accrued and other current liabilities and $ 4.2 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

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.

To the extent the Company has the 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, which was initially $ 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.

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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.

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

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

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________________

(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.

(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 (loss) per share, reduces net income attributable to common stockholders.

See Note 16 - Stockholders’ Equity for additional details.

(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.

(3) During 2022, the Company repurchased $ 125.0 million of the 2025 Notes and retired the corresponding portion of the related warrants.

See Note 14 - Convertible Senior Notes for additional details.

Due to the Company’s net loss during 2020, dilutive excess shares, if applicable, and warrants were excluded from the computation of diluted loss 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:

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(dollars in thousands) 2022 2021 2020

Stock options $ 2,286 $ 3,743 $ 5,270

Restricted stock units 8,184 8,559 8,949

Performance-based share units (1) $ 8,176 $ 13,821 $ 2,414

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

Restricted stock units 7,687 8,184 8,559

Stock options 503 2,286 3,743

$ 16,366 $ 24,291 $ 14,716

(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.

Stock options have an exercisable life of no more than ten years from the date of grant.

The Company settles stock option exercises with authorized but unissued shares of the Company’s common stock.

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

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

PRICE WEIGHTED

LIFE (YEARS) AGGREGATE

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

Exercised ( 936 ) $ 15.98

Forfeited or expired ( 210 ) $ 23.34

Outstanding as of December 26, 2021 4,276 $ 20.42 4.7 $ 7,304

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

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) 4.8 years

Weighted average volatility (4) 31.05 %

Weighted average grant date fair value per option $ 5.07

________________

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

Treasury yield curve in effect as of the grant date for periods within the expected term of the option.

(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.

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

The Company estimates the expected term based on historical exercise experience for its stock options.

(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:

(dollars in thousands) 2021 2020 2019

Intrinsic value of options exercised $ 8,419 $ 2,201 $ 7,929

Cash received from option exercises, net of tax withholding $ 14,951 $ 4,609 $ 6,501

Fair value of stock options vested $ 19,246 $ 16,468 $ 18,136

Tax benefits for stock option compensation expense $ 1,942 $ 535 $ 1,932

Unrecognized stock option expense $ 525

Remaining weighted average vesting period 0.6 years

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

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

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

FAIR VALUE PER AWARD

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

Granted 319 $ 25.93

Vested ( 508 ) $ 18.57

Forfeited ( 115 ) $ 18.47

Outstanding as of December 26, 2021 730 $ 21.16

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

(dollars in thousands) 2021 2020 2019

Fair value of restricted stock vested $ 9,434 $ 8,973 $ 8,200

Tax benefits for restricted stock compensation expense $ 1,592 $ 1,614 $ 1,672

Unrecognized restricted stock expense $ 9,315

Remaining weighted average vesting period 1.8 years

(1) For 2022, includes a cumulative life-to-date adjustment to decrease expense for PSUs granted in fiscal year 2020 based on Company performance against criteria set forth in the award agreements.

For 2021, includes a cumulative life-to-date adjustment to increase expense for PSUs granted in fiscal years 2019, 2020 and 2021 based on Company performance against criteria set forth in the award agreements.

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.

The fair value of PSUs is based on the closing price of the Company’s common stock on the grant date.

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

FAIR VALUE PER AWARD

(in thousands, except per unit data) PERFORMANCE-BASED SHARE UNITS WEIGHTED AVERAGE

FAIR VALUE PER UNIT AGGREGATE INTRINSIC VALUE (1)

Outstanding as of December 26, 2021 759 $ 23.11 $ 15,896

Granted 313 $ 26.10

Performance Adjustment (2) 169 $ 19.69

Vested ( 338 ) $ 19.69

1 unchanged sentence

Outstanding as of December 25, 2022 874 $ 24.83 $ 18,323

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:

Expected to vest as of December 25, 2022 1,275 $ 26,715

________________

(1) Based on the $ 20.95 and $ 20.96 share price of the Company’s common stock on December 23, 2021 and 2022, the last trading day of 2022 and 2021, respectively.

(2) Represents adjustment to 200 % payout for PSUs granted during 2019.

Prior to 2021, the fair value of PSUs was based on the closing price of the Company’s common stock on the grant date.

During 2022 and 2021, the Company granted PSUs subject to final payout modification by a Relative TSR modifier.

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

These PSUs have a three-year cliff vesting period and their fair value 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 closing price of the Company’s common stock on the date of the grant.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Risk-free interest rate (1) 1.64 % 0.20 %

Dividend yield (2) 2.31 % — %

Volatility (3) 49.11 % 48.45 %

Grant date fair value per unit (3) $ 29.73

________________

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

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

(3) 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:

(dollars in thousands) 2021 2020 2019

(dollars in thousands, except grant date fair value data) 2022 2021 2020

Weighted average grant date fair value for PSUs granted (1) $ 26.10 $ 29.73 $ 19.96

Intrinsic value for PSUs vested $ 7,626 $ 3,768 $ 6,550

Fair value of PSUs vested $ 6,646 $ 3,401 $ 4,809

Tax benefits for PSU compensation expense $ 348 $ 134 $ 1,570

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________________

(1) Represents a premium above the per share value of the Company’s common stock for the Relative TSR modifier as of the grant date of 7.9 % and 14.3 % for grants during 2022 and 2021, respectively.

(2) PSUs typically vest after three years .

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 .

Restricted Stock Units (“RSUs”) - RSUs generally vest over a period of three years in an equal number of shares each year.

Following is a summary of the Company’s RSU activity:

(in thousands, except per unit data) RESTRICTED STOCK UNITS WEIGHTED AVERAGE

FAIR VALUE PER UNIT AGGREGATE INTRINSIC VALUE (1)

Outstanding as of December 26, 2021 730 $ 21.16 $ 15,298

Granted 364 $ 21.59

Vested ( 396 ) $ 20.27

Forfeited ( 41 ) $ 24.69

Outstanding as of December 25, 2022 (2) 657 $ 21.72 $ 13,776

________________

(1) Based on the $ 20.95 and $ 20.96 share price of the Company’s common stock on December 23, 2021 and 2022, the last trading day of 2022 and 2021, respectively.

(2) All RSUs outstanding as of December 25, 2022 are expected to vest.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following represents RSU compensation information for the periods indicated:

(dollars in thousands, except grant date fair value data) 2022 2021 2020

Weighted average grant date fair value for RSUs granted (1) $ 21.59 $ 25.93 $ 16.66

Intrinsic value of RSUs vested $ 9,070 $ 13,482 $ 8,183

Fair value of RSUs vested $ 8,025 $ 9,434 $ 8,973

Tax benefits for RSU compensation expense $ 1,113 $ 1,592 $ 1,614

Unrecognized RSU expense $ 8,389

Remaining weighted average vesting period 1.8 years

________________

(1) The weighted average dividend yield was 2.43 % and 2.11 % for 2022 and 2020, respectively.

There were no dividends in 2021.

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

Stock options have an exercisable life of no more than ten years from the date of grant.

The Company settles stock option exercises with authorized but unissued shares of the Company’s common stock.

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

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

PRICE WEIGHTED

LIFE (YEARS) AGGREGATE

Outstanding as of December 26, 2021 4,276 $ 20.42 4.7 $ 7,304

Exercised ( 1,044 ) $ 17.15

Forfeited or expired ( 44 ) $ 24.89

Outstanding as of December 25, 2022 (1) 3,188 $ 21.43 4.0 $ 3,337

Exercisable as of December 25, 2022 3,149 $ 21.46 4.0 $ 3,244

________________

(1) No stock options were granted during 2022.

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

(dollars in thousands) 2022 2021 2020

Intrinsic value of options exercised $ 6,367 $ 8,419 $ 2,201

Cash received from option exercises, net of tax withholding $ 17,888 $ 14,951 $ 4,609

Fair value of stock options vested $ 7,645 $ 19,246 $ 16,468

Tax benefits for stock option compensation expense $ 1,495 $ 1,942 $ 535

As of December 25, 2022, the maximum number of shares of common stock available for issuance for equity instruments pursuant to the 2020 Omnibus Incentive Compensation Plan was 7,935,988 .

Deferred Compensation Plans

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The deferred compensation obligation due to U.S.

Partners under these plans was $ 15.5 million and $ 28.1 million as of December 26, 2021 and December 27, 2020, respectively.

Partners under these plans was $ 3.5 million and $ 15.5 million as of December 25, 2022 and

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

December 26, 2021, respectively.

The rabbi trust is funded through the Company’s voluntary contributions and was fully funded as of December 25, 2022.

13 unchanged sentences

Deferred gift card sales commissions 17,755 17,793

Assets held for sale 100 3,831

Company-owned life insurance (2) — 17,244

Other current assets, net 4,671 5,297

2 unchanged sentences

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

(2) During 2022, the Company withdrew the current portion of its Company-owned life insurance policies to pay deferred compensation obligations.

Property, Fixtures and Equipment, Net

8 unchanged sentences

$ 914,142 $ 842,012

Surplus Properties - The Company owns certain U.S.

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

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

Surplus properties may be

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

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

Surplus properties - assets held for sale Other current assets, net $ 100 $ 3,831

Surplus properties - assets held and used Property, fixtures and equipment, net 4,505 7,955

Total surplus properties $ 4,605 $ 11,786

Number of surplus properties owned 6 12

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

2 unchanged sentences

Repair and maintenance expense $ 116,318 $ 104,209 $ 88,829

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Goodwill and Intangible Assets, Net

Goodwill - The following table is a rollforward of goodwill:

Goodwill - The following table is a rollforward of goodwill for the periods indicated:

(dollars in thousands) U.S.

2 unchanged sentences

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

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

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

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

The Company’s 2021 and 2019 assessments utilized a qualitative

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company’s 2022 and 2021 assessments utilized a qualitative approach.

As a result of these assessments, the Company did no t record any goodwill asset impairment charges during 2022 or 2021.

6 unchanged sentences

Trademarks 6 81,952 $ ( 59,675 ) 22,277 81,951 $ ( 55,736 ) 26,215

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

Reacquired franchise rights 8 34,602 ( 23,269 ) 11,333 31,944 ( 19,463 ) 12,481

1 unchanged sentence

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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, 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 and reacquired franchise rights for the periods indicated:

(dollars in thousands) 2022 2021 2020

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________________

(1) During 2021, the Company withdrew $ 9.1 million from its Company-owned life insurance policies to pay deferred compensation obligations.

(1) Net of accumulated amortization of $ 10.1 million and $ 8.5 million as of December 25, 2022 and December 26, 2021, respectively.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Accrued and Other Current Liabilities

7 unchanged sentences

________________

(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.

(1) During 2022, accrued payroll and other compensation decreased primarily due to payment of deferred compensation obligations and a decrease in incentive compensation.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Long-term Debt, Net

6 unchanged sentences

Total Senior Secured Credit Facility 430,000 275,000

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) 105,000 5.00 % 230,000 5.00 %

7 unchanged sentences

________________

(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.

(1) Interest rate represents the weighted average interest rate.

(2) Interest rate represents the weighted average interest rate as of December 25, 2022 and the base rate option elected in anticipation of impending repayment as of December 26, 2021.

Subsequent to December 25, 2022, the Company repaid $ 80.0 million on its revolving credit facility.

(3) During 2022, the Company repurchased $ 125.0 million of the 2025 Notes.

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.

(4) In connection with the Amended Credit Agreement and the partial repurchase of the 2025 Notes, $ 5.7 million of debt issuance costs were written off during 2022.

See Note 14 - Convertible Senior Notes for details regarding the partial repurchase of the 2025 Notes.

Bloomin’ Brands, Inc.

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

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

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”).

On April 26, 2022, the Company and OSI entered into the First Amendment to the Second Amended and Restated Credit Agreement and Incremental Amendment (the “Amended Credit Agreement”), which included an increase of the Company’s existing revolving credit facility from $ 800.0 million to $ 1.0 billion and a transition from the London Inter-Bank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) as the benchmark rate for purposes of calculating interest under the Senior Secured Credit Facility.

At closing, an incremental $ 192.5 million was drawn on the revolving credit facility to fully repay the outstanding balance of Term loan A.

The total indebtedness of the Company remained unchanged as a result of the Amended Credit Agreement.

Under the Amended Credit Agreement, the Company may elect an interest rate at each reset period based on the Base Rate or Adjusted Term SOFR, 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 Adjusted Term SOFR with a one-month interest period plus 1.0 % (the “Base Rate”).

The Adjusted Term SOFR option is the 30, 90 or 180-day SOFR, plus a term SOFR adjustment of 0.10 %, subject to a 0 % floor (the “Adjusted Term SOFR”).

The interest rate spreads are as follows:

BASE RATE ELECTION ADJUSTED TERM SOFR ELECTION

Revolving credit facility 50 to 150 basis points over the Base Rate

150 to 250 basis points over the Adjusted Term SOFR

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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 transition to SOFR did not materially impact the interest rate applied to the Company’s borrowings.

No other material changes were made to the terms of the Company’s Credit Agreement as a result of the Amended Credit Agreement.

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.

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

(i) $ 225.0 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, as defined in the Amended 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 Amended 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.

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 Amended Credit Agreement).

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

As of December 25, 2022 and December 26, 2021, the Company was in compliance with its debt covenants.

The 2029 Notes 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 or certain other indebtedness.

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

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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.

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, subject to a 0 % floor (the “Eurocurrency Rate”).

The interest rates are as follows:

BASE RATE ELECTION EUROCURRENCY RATE ELECTION

Term loan A and revolving credit facility 50 to 150 basis points over the Base Rate

150 to 250 basis points over the Eurocurrency Rate

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.

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.

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.

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

(dollars in thousands) DECEMBER 25, 2022

2022 $ 10,976

Thereafter 301,442

3 unchanged sentences

Total principal payments $ 833,292

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

1 unchanged sentence

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 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 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.

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.

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

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

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

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

4 unchanged sentences

(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.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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:

3 unchanged sentences

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 .

Holders of 2025 Notes who convert their 2025 Notes in connection with a notice of 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 25, 2022, holders of the 2025 Notes are eligible to convert their 2025 Notes during the first quarter of 2023.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

On May 25, 2022, the Company entered into exchange agreements (the “Exchange Agreements”) with certain holders (the “Noteholders”) of the 2025 Notes.

The Noteholders agreed to exchange $ 125.0 million in aggregate principal amount of the Company’s outstanding 2025 Notes for $ 196.9 million in cash, plus accrued interest, and approximately 2.3 million shares of the Company’s common stock (the “2025 Notes Partial Repurchase”).

Under the Exchange Agreements, the total amount of cash paid and number of shares of common stock issued by the Company were based upon the volume-weighted average price per share of the Company’s common stock during a ten-trading day averaging period ending on June 14, 2022.

Upon entering into the Exchange Agreements, the conversion feature related to the 2025 Notes repurchased, as well as the settlements of the related convertible senior note hedges and warrants, were subject to derivative accounting.

In connection with the 2025 Notes Partial Repurchase, the Company recognized a loss on extinguishment of debt of $ 104.7 million and a loss on fair value adjustment of derivatives, net of $ 17.7 million, and recorded a $ 48.5 million increase to Additional paid-in capital during 2022.

In connection with dividends paid during 2022, the conversion rate for the remaining 2025 Notes decreased to approximately $ 11.59 per share, which represents 86.267 shares of common stock per $ 1,000 principal amount of the 2025 Notes, or a total of approximately 9.058 million shares.

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

2 unchanged sentences

Principal $ 105,000 $ 230,000

debt discount (1) — ( 59,862 )

debt issuance costs (1) ( 1,939 ) ( 5,898 )

Net carrying amount $ 103,061 $ 224,102

Equity component (1) $ — $ 64,367

________________

(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.

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

During 2022, the Company wrote off $ 2.8 million of debt issuance costs as a result of the 2025 Notes Partial Repurchase.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

2 unchanged sentences

Deferred discount amortization — — 6,275

Deferred issuance cost amortization 1,557 569

Debt issuance cost amortization 1,156 1,557 569

Total interest expense (1) $ 9,236 $ 13,057 $ 14,287

________________

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

(1) The effective rate of the 2025 Notes over their expected life was 5.85 % for 2022 and 2021 and 13.73 % for 2020.

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”).

2 unchanged sentences

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 strike price was 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.

3 unchanged sentences

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

In connection with the 2025 Notes Partial Repurchase, the Company entered into partial unwind agreements with certain financial institutions relating to a portion of the convertible note hedge transactions (the “Note Hedge Early Termination Agreements”) and a portion of the Warrant Transactions (the “Warrant Early Termination Agreements”) that were previously entered into by the Company in connection with the issuance of the 2025 Notes.

Upon settlement, the Company received $ 131.9 million for the Note Hedge Early Termination Agreements and paid $ 114.8 million for the Warrant Early Termination Agreements.

In connection with the Note Hedge Early Termination Agreements and the Warrant Early Termination Agreements the Company recorded a $ 113.0 million increase and a $ 97.6 million decrease, respectively, to Additional paid-in capital during 2022.

The remaining 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.

In connection with dividends paid during 2022, the strike price for the remaining Warrant Transactions decreased to $ 16.23 .

BLOOMIN’ BRANDS, INC.

4 unchanged sentences

Accrued insurance liability $ 28,133 $ 31,517

Chef and Restaurant Managing Partner deferred compensation obligations 13,971 32,306

Deferred payroll tax liabilities (1) — 27,302

Deferred compensation obligations 31,608 37,514

Other long-term liabilities 27,645 28,909

1 unchanged sentence

_______________

(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.

(1) During 2022, the Company made a payment of $ 27.3 million related to payroll taxes deferred under the CARES Act.

Stockholders’ Equity

1 unchanged sentence

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

As of December 25, 2022, $ 15.0 million remained available for repurchase under the 2022 Share Repurchase Program.

Following is a summary of the shares repurchased under the 2022 Share Repurchase Program during fiscal year 2022:

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

First fiscal quarter 551 $ 21.26 $ 11,702

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 .

Second fiscal quarter 1,761 $ 20.30 35,749

Third fiscal quarter 1,746 $ 19.21 33,549

Fourth fiscal quarter 1,371 $ 21.15 28,999

Total common stock repurchases (1) 5,429 $ 20.26 $ 109,999

________________

(1) Subsequent to December 25, 2022, the Company repurchased 644 thousand shares of its common stock for $ 15.0 million under a Rule 10b5-1 plan.

On February 7, 2023, the Company’s Board approved a new $ 125.0 million authorization (the “2023 Share Repurchase Program”).

The 2023 Share Repurchase Program will expire on August 7, 2024.

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

DIVIDENDS PER SHARE AMOUNT

FISCAL YEAR FISCAL YEAR

(dollars in thousands, except per share data) 2022 2020 2022 2020

First fiscal quarter $ 0.14 $ 0.20 $ 12,559 $ 17,480

Second fiscal quarter 0.14 — 12,418 —

Third fiscal quarter 0.14 — 12,475 —

Fourth fiscal quarter 0.14 — 12,284 —

Total cash dividends declared and paid $ 0.56 $ 0.20 $ 49,736 $ 17,480

On February 7, 2023, the Board declared a quarterly cash dividend of $ 0.24 per share, payable on March 15, 2023 to shareholders of record at the close of business on March 1, 2023 .

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 sold preferred shares of its Abbraccio concept (“Abbraccio Shares”) to certain investors.

5 unchanged sentences

Accumulated other comprehensive loss $ ( 185,311 ) $ ( 205,989 )

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) 2022 2021 2020

Bloomin’ Brands:

Foreign currency translation adjustment $ 10,169 $ ( 6,597 ) $ ( 36,852 )

1 unchanged sentence

Reclassification of adjustments for loss on derivatives included in Net income (loss), net of tax (2) 954 7,392 9,923

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 )

Impact of terminated interest rate swaps included in Net income (loss), net of tax (2) 8,982 4,576 —

Total gain (loss) on derivatives, net of tax 10,509 12,054 ( 4,818 )

Other comprehensive income (loss) attributable to Bloomin’ Brands $ 20,678 $ 5,457 $ ( 41,670 )

________________

(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 the tax impact of reclassifications.

(1) Unrealized loss on derivatives during 2020 is net of tax of $ 5.1 million.

(2) See Note 17 - Derivative Instruments and Hedging Activities for the tax impact of reclassifications and the terminated swaps.

Derivative Instruments and Hedging Activities

4 unchanged sentences

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.

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

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

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

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Following these terminations, $ 4.1 million of unrealized losses related to the terminated swap agreements included in AOCL were amortized to Interest expense, net over the remaining original term of the terminated swaps.

In connection with the Amended Credit Agreement, on April 26, 2022 the Company terminated its remaining variable-to-fixed interest rate swap agreements.

Following these terminations, the unrealized losses related to the terminated swap agreements included in Accumulated other comprehensive loss were amortized to Interest expense, net over the remaining original term of the terminated swaps.

The Company’s swap agreements were designated and qualified as cash flow hedges, recognized on its Consolidated Balance Sheet at fair value as of December 26, 2021 and classified based on the instruments’ maturity dates.

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

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

Interest rate swaps - liability (1) $ 3,056 Accrued and other current liabilities

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

Total fair value of derivative instruments - liabilities (1) $ 3,056 $ 30,495

Accrued interest $ 276 Accrued and other current liabilities

1 unchanged sentence

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

The Company’s interest rate swaps were subject to master netting arrangements.

As of December 26, 2021, the Company did not have more than one derivative between the same counterparties and as such, there was no netting.

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

(dollars in thousands) 2022 2021 2020

Interest rate swap agreements:

Interest rate swap expense recognized in Interest expense, net $ ( 1,284 ) $ ( 9,951 ) $ ( 13,370 )

Income tax benefit recognized in Provision (benefit) for income taxes 330 2,559 3,447

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.

The Company’s interest rate swaps are subject to master netting arrangements.

As of December 26, 2021, the Company did not have more than one derivative between the same counterparties and as such, there was no netting.

By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract.

To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratings and other factors.

The Company continually assesses the creditworthiness of its counterparties.

As of December 26, 2021 and December 27, 2020, all counterparties to the interest rate swaps had performed in accordance with their contractual obligations.

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

As of 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.

As of December 26, 2021 and December 27, 2020, the Company has not posted any collateral related to these agreements.

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.

Net effects of interest rate swap agreements $ ( 954 ) $ ( 7,392 ) $ ( 9,923 )

Terminated interest rate swap agreements:

Terminated interest rate swap expense recognized in Interest expense, net $ ( 12,115 ) $ ( 6,160 ) $ —

Income tax benefit recognized in Provision (benefit) for income taxes 3,133 1,584 —

Net effects of terminated interest rate swap agreements $ ( 8,982 ) $ ( 4,576 ) $ —

Total net effects on Net income (loss) $ ( 9,936 ) $ ( 11,968 ) $ ( 9,923 )

By utilizing the interest rate swaps, the Company was exposed to credit-related losses in the event that the counterparty failed to perform under the terms of the derivative contract.

To mitigate this risk, the Company entered into derivative contracts with major financial institutions based upon credit ratings and other factors.

The Company continually assessed the creditworthiness of its counterparties.

As of December 26, 2021, all counterparties to the interest rate swaps performed in accordance with their contractual obligations.

BLOOMIN’ BRANDS, INC.

12 unchanged sentences

(1) Net of accumulated amortization of $ 3.6 million and $ 3.3 million as December 25, 2022 and December 26, 2021, respectively.

(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:

(2) Excludes current accrued contingent percentage rent of $ 3.4 million and $ 3.5 million, as of December 25, 2022 and December 26, 2021, respectively, and immaterial current and non-current COVID-19-related deferred rent accruals.

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

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

9 unchanged sentences

(1) Excludes rent expense for office facilities and Company-owned closed or subleased properties of $ 12.2 million, $ 12.9 million and $ 13.8 million for 2022, 2021 and 2020, respectively, which is included in General and administrative expense.

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

Also excludes certain immaterial supply chain related rent expense included in Food and beverage costs for 2021 and 2020.

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

13 unchanged sentences

____________________

(1) Includes COVID-19-related current and non-current deferred rent accruals of $ 1.1 million and $ 0.4 million, respectively, as of December 26, 2021.

(1) Includes immaterial current and non-current COVID-19-related deferred rent accruals as of December 25, 2022.

(2) Net of operating lease prepaid rent of $ 4.6 million.

(3) Includes $ 1.0 billion related to lease renewal options that are reasonably certain of exercise and excludes $ 80.9 million of signed operating leases that have not yet commenced.

(3) Includes $ 919.7 million related to operating lease renewal options that are reasonably certain of exercise and excludes $ 172.9 million of signed operating leases that have not yet commenced.

The following table is a summary of the weighted average remaining lease terms and weighted average discount rates of the Company’s leases as of the periods indicated:

8 unchanged sentences

(1) Includes lease renewal options that are reasonably certain of exercise.

(2) Based on the Company’s incremental borrowing rate at lease commencement.

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

(2) Based on the Company’s incremental borrowing rate at lease commencement or lease remeasurement.

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

(dollars in thousands) 2022 2021 2020

13 unchanged sentences

DECEMBER 25, 2022 DECEMBER 26, 2021

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

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

Cash equivalents:

6 unchanged sentences

Derivative instruments - interest rate swaps $ — $ — $ 3,056 $ — $ 3,056

Other long-term liabilities:

Derivative instruments - interest rate swaps — — — 15,640 — 15,640

Total liability recurring fair value measurements $ 3,056 $ — $ 3,056 $ 30,495 $ — $ 30,495

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

FINANCIAL INSTRUMENT METHODS AND ASSUMPTIONS

Fixed income funds and

Money market funds

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

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

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

The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads.

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

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.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Derivative instruments Historically, the Company’s derivative instruments included interest rate swaps.

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

The interest rate swaps were valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads.

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

As of December 26, 2021, the Company determined that the credit valuation adjustments were 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.

12 unchanged sentences

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

(2) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 0.2 million during 2019.

All other assets were valued using Level 3 inputs.

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

Refer to Note 5 - Impairments, Exit Costs and Disposals for a more detailed discussion of impairments.

(3) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 1.4 million, $ 2.2 million and $ 2.3 million for 2021, 2020 and 2019, respectively.

(2) Carrying values measured using discounted cash flow models (Level 3).

Refer to Note 5 - Impairments and Exit Costs for a more detailed discussion of impairments.

(3) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 1.4 million and $ 2.2 million for 2021 and 2020, respectively.

All other assets were valued using Level 3 inputs.

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

Refer to Note 5 - Impairments, Exit Costs and Disposals for a more detailed discussion of impairments.

(4) Other assets generally measured using the quoted market value of comparable assets (Level 2).

See Note 5 - Impairments, Exit Costs and Disposals for information regarding impairment charges resulting from the fair value measurement performed on a nonrecurring basis during 2020.

Refer to Note 5 - Impairments and Exit Costs for a more detailed discussion of impairments.

(4) Other assets were generally measured using the quoted market value of comparable assets (Level 2).

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

See Note 5 - Impairments and Exit Costs 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 then-current economic conditions, expectations of management and projected trends of current operating results.

8 unchanged sentences

Long-term growth rate 1.5 % to 2.0 %

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.

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

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

8 unchanged sentences

Revolving credit facility $ 430,000 $ 430,000 $ 80,000 $ 76,926

Former Credit Facility:

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

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

2025 Notes $ 105,000 $ 198,843 $ 230,000 $ 447,615

2029 Notes $ 300,000 $ 260,265 $ 300,000 $ 304,395

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Allowance for Expected Credit Losses

1 unchanged sentence

(dollars in thousands) 2022 2021 2020

Allowance for expected credit losses, beginning of period $ 4,095 $ 199

Allowance for expected credit losses, beginning of the period $ 4,050 $ 4,095 $ 199

Adjustment for adoption of ASU No.

2 unchanged sentences

Charge-off of accounts ( 146 ) ( 109 ) ( 594 )

Allowance for expected credit losses, end of period $ 4,050 $ 4,095

Allowance for expected credit losses, end of the period $ 5,451 $ 4,050 $ 4,095

________________

(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.

See Note 3 - COVID-19 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.

4 unchanged sentences

Foreign 17,442 ( 8,905 ) ( 32,580 )

$ 249,297 $ ( 239,521 ) $ 141,690

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Income (loss) before provision (benefit) for income taxes $ 151,907 $ 249,297 $ ( 239,521 )

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

5 unchanged sentences

28,956 29,730 7,530

Deferred (benefit) provision:

Deferred provision (benefit):

Federal 5,172 ( 2,057 ) ( 66,498 )

3 unchanged sentences

Provision (benefit) for income taxes $ 42,704 $ 26,384 $ ( 80,726 )

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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:

2 unchanged sentences

State and local income taxes, net of federal benefit 7.3 3.8 3.3

Non-deductible loss on 2025 Notes Partial Repurchase 18.0 — —

Non-deductible expenses 2.8 2.3 ( 1.4 )

Foreign tax rate differential 2.3 ( 0.2 ) 1.1

tax on foreign earnings - GILTI 1.6 — —

Brazil tax legislation 0.2 — —

Employment-related credits, net ( 22.4 ) ( 13.2 ) 9.9

Tax settlements and related adjustments ( 1.7 ) 0.1 —

Net changes in deferred tax valuation allowances ( 2.8 ) ( 0.7 ) ( 0.6 )

Foreign tax rate differential ( 0.2 ) 1.1 3.2

Nondeductible expenses 2.3 ( 1.4 ) 3.9

Tax settlements and related adjustments ( 0.1 ) ( 1.7 ) 0.1

Other, net 0.2 ( 0.7 ) 0.3

2 unchanged sentences

(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 increase in the effective income tax rate in 2022 as compared to 2021 was primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during 2022.

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.

A restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain tipped wages (the “FICA tax credit”).

The level of FICA tax credits is primarily driven by U.S.

Restaurant sales and is not impacted by costs incurred that may reduce pre-tax income.

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 2022 was higher than the blended federal and state statutory rate primarily due to the non-deductible losses associated with the 2025 Notes Partial Repurchase recorded during 2022, partially offset by the benefit of FICA tax credits on certain employees’ tips.

The effective income tax rate for 2021 was lower than the blended federal and state statutory rate primarily due to the benefit of FICA tax credits 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.

As part of the guidance issued, these regulations change longstanding foreign tax credit regulations that now make foreign taxes paid to certain countries no longer creditable in the United States.

The Company expects that a portion of post-2022 foreign taxes paid will not be creditable in the United States.

Furthermore, the impact of these regulations will result in the utilization of existing prior year foreign tax credit carryforwards for which the Company had previously recorded a valuation allowance.

The valuation allowance related to the credits expected to be utilized was released during 2022.

BLOOMIN’ BRANDS, INC.

18 unchanged sentences

Deferred income tax assets, net $ 151,334 $ 168,068

Deferred income tax assets $ 153,118 $ 168,068

Deferred income tax liabilities (included in Other long-term liabilities, net) ( 1,784 ) —

Net deferred tax assets $ 151,334 $ 168,068

________________

(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.

(1) As of December 25, 2022 and December 26, 2021, the Company maintained deferred tax liabilities for state income taxes on historical foreign earnings of $ 0.3 million and $ 0.2 million, respectively.

As of December 25, 2022, valuation allowances against deferred tax assets in the U.S.

1 unchanged sentence

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 net change in the deferred tax valuation allowance in 2022 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 and the release of the valuation allowance recorded against foreign tax credits that are now more likely than not to be realized.

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.

As of December 25, 2022 and 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.

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

under the Tax Cuts and Jobs Act and post-2017 foreign earnings, which the Company may repatriate to the U.S.

In September 2022, the Company’s Brazilian subsidiary received a preliminary injunction authorizing it to benefit from the exemptions enacted by Law 14,148/2021 which provides for emergency and temporary actions that would grant certain industries a 100 % exemption from income tax (IRPJ and CSLL) and federal value added taxes (PIS and COFINS) for a five-year period.

The injunction was issued as part of an ongoing lawsuit initiated by the

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Company’s Brazilian subsidiary due to the uncertainty regarding the restaurant industry’s eligibility for the exemptions under this legislation.

During the thirteen weeks ended December 25, 2022, the Company concluded that it is more likely than not eligible for benefits under this legislation.

The Company will continue to evaluate and assess the exemptions, the status of its preliminary injunction and all other available evidence in future periods.

The benefits of the Brazil tax legislation include an increase in revenues as a result of not being required to remit certain PIS and COFINS during the exemption period.

The increase in revenues is partially offset by higher costs in several financial statement line items that were previously reduced by PIS and COFINS tax credits that will not be generated during the exemption period.

Benefits of this legislation also include a reduction in the Brazilian income tax rate from 34 % to 0 % for a period of five years on certain income earned in Brazil.

Benefits began in the thirteen weeks ended December 25, 2022 and end in the first quarter of 2027 with a return to full statutory income tax rates.

The Company’s 2022 Net income and Earnings per share were not materially impacted by the overall income tax impacts of the Brazil tax legislation which included revaluing Brazilian deferred tax assets and liabilities that are expected to reverse during the exemption period.

Undistributed Earnings - As of December 25, 2022, the Company had aggregate undistributed foreign earnings of approximately $ 23.2 million.

These earnings may be repatriated to the U.S.

without additional material U.S.

federal income taxes.

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

federal income tax.

These amounts are not considered indefinitely reinvested in the Company’s foreign subsidiaries.

The Company has not recorded a deferred tax liability on the financial statement carrying amount over the tax basis of its investments in foreign subsidiaries because the Company continues to assert that it is indefinitely reinvested in its underlying investments in foreign subsidiaries.

The determination of any unrecorded deferred tax liability on this amount is not practicable due to the uncertainty of how these investments would be recovered.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Tax Carryforwards - The amount and expiration dates of tax loss carryforwards and credit carryforwards as of December 25, 2022 are as follows:

8 unchanged sentences

Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $ 17.9 million and $ 18.8 million, respectively, if recognized, would impact the Company’s effective income tax rate.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(dollars in thousands) 2022 2021 2020

Balance as of beginning of year $ 25,524 $ 27,201 $ 25,190

Balance, beginning of the period $ 19,238 $ 25,524 $ 27,201

Additions for tax positions taken during a prior period 114 166 1,061

4 unchanged sentences

Translation adjustments 6 ( 7 ) ( 29 )

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

Balance, end of the period $ 18,258 $ 19,238 $ 25,524

The Company had approximately $ 0.8 million and $ 0.9 million accrued for the payment of interest and penalties as of December 25, 2022 and December 26, 2021, respectively.

7 unchanged sentences

Foreign 2016 - 2021

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Commitments and Contingencies

6 unchanged sentences

Purchase Obligations - Purchase obligations were $ 226.6 million and $ 206.6 million as of December 25, 2022 and December 26, 2021, respectively.

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.

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

Outstanding commitments consist primarily of inventory, kitchen equipment, technology, advertising and restaurant-level service contracts.

In 2022, the Company purchased more than 95 % 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.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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.

7 unchanged sentences

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.

Certain subsidiaries of the Company have been named in collective actions alleging violations of the Fair Labor Standards Act and state wage and hour laws.

The Company believes its employees were properly paid and is defending these matters vigorously.

During the thirteen weeks ended December 25, 2022, the Company accrued $ 5.9 million within Accrued and other current liabilities on its Consolidated Balance Sheet for these matters.

The Company intends to defend itself in legal matters.

3 unchanged sentences

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

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.

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

Including the matters discussed above, the Company recorded reserves of $ 15.1 million and $ 7.1 million for certain of its outstanding legal proceedings as of December 25, 2022 and December 26, 2021, respectively, within Accrued and other current liabilities and Other long-term liabilities on its Consolidated Balance Sheets.

During 2022, 2021 and 2020, the Company recognized $ 9.4 million, $ 5.4 million and $ 2.3 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) for certain legal reserves and settlements.

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.

2 unchanged sentences

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.

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Insurance - As of December 25, 2022, the future undiscounted payments the Company expects for workers’ compensation, general liability and health insurance claims are as follows:

14 unchanged sentences

Segment Reporting

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.

The Company considers each of 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.

4 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 25, 2022:

11 unchanged sentences

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.

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, certain insurance expenses and certain bonus expenses.

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

13 unchanged sentences

Loss on extinguishment and modification of debt ( 107,630 ) ( 2,073 ) ( 237 )

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

Loss on fair value adjustment of derivatives, net ( 17,685 ) — —

Other (expense) income, net ( 23 ) 26 131

Interest expense, net ( 53,176 ) ( 57,614 ) ( 64,442 )

2 unchanged sentences

(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:

12 unchanged sentences

Total capital expenditures $ 236,519 $ 126,412 $ 88,994

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table sets forth Total assets by segment as of the periods indicated:

11 unchanged sentences

Other 10,938 15,342

Total assets $ 920,682 $ 980,313

Total long-lived assets $ 996,289 $ 920,682

International revenues are defined as revenues generated from restaurant sales originating in a country other than the U.S.

9 unchanged sentences

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