Bloomin' Brands, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL INFORMATION PAGE NO. Management’s Annual Report on Internal Control over Financial Reporting 60 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 61 Consolidated Balance Sheets — December 31 , 202 3 and December 2 5 , 20 2 2 64 Consolidated Statements of Operations and Comprehensive Income — For Fiscal Years 202 3 , 202 2 and 20 21 65 Consolidated Statements of Changes in Stockholders’ Equity — For Fiscal Years 202 3 , 202 2 and 20 21 66 Consolidated Statements of Cash Flows — For Fiscal Years 202 3 , 202 2 and 20 21 68 Notes to Consolidated Financial Statements 70 59 Table of Contents BLOOMIN’ BRANDS, INC. Management’s Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023 using the criteria described in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (“COSO”). Based upon our evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2023. The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein. 60 Table of Contents BLOOMIN’ BRANDS, INC. Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Bloomin’ Brands, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Bloomin’ Brands, Inc. and its subsidiaries (the “Company”) as of December 31, 2023 and December 25, 2022, and the related consolidated statements of operations and comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and December 25, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible instruments and contracts in an entity’s own equity in 2021. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 61 Table of Contents BLOOMIN’ BRANDS, INC. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Insurance Reserves As described in Notes 2 and 21 to the consolidated financial statements, the Company’s consolidated discounted insurance reserves balance was $45.9 million as of December 31, 2023. The Company carries insurance programs with specific retention levels or high per-claim deductibles for a significant portion of expected losses under its workers’ compensation, general or liquor liability, health, property and management liability insurance programs. The Company records a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves, management considers certain actuarial assumptions and judgments regarding economic conditions and the frequency and severity of claims. Reserves recorded for workers’ compensation and general liability claims are discounted using the average of the one-year and five-year risk-free rate of monetary assets that have comparable maturities. The principal considerations for our determination that performing procedures relating to the valuation of insurance reserves is a critical audit matter are (i) the significant judgment by management when developing the estimated reserves, which in turn led to (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the actuarial assumptions related to economic conditions and the frequency and severity of claims, and (iii) the audit effort included the involvement of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of insurance reserves. These procedures also included, among others, (i) evaluating management’s process for developing the insurance reserves, (ii) evaluating the appropriateness of management’s actuarial methods used, (iii) evaluating the reasonableness of the actuarial assumptions related to economic conditions and the frequency and severity of claims, and (iv) testing the completeness and accuracy of underlying 62 Table of Contents BLOOMIN’ BRANDS, INC. data used in the valuation. Evaluating the actuarial assumptions related to economic conditions and the frequency and severity of claims involved evaluating whether the assumptions were reasonable considering inflation and the environment, and whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of management’s actuarial methods used in determining the insurance reserves and evaluating the reasonableness of assumptions related to economic c onditions. /s/ PricewaterhouseCoopers LLP Tampa, Florida February 28, 2024 We have served as the Company’s audit or since 1998. 63 Table of Contents BLOOMIN’ BRANDS, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) DECEMBER 31, 2023 DECEMBER 25, 2022 ASSETS Current assets Cash and cash equivalents $ 111,519 $ 84,735 Restricted cash and cash equivalents 2,854 — Inventories 75,939 78,124 Other current assets, net 153,002 183,718 Total current assets 343,314 346,577 Property, fixtures and equipment, net 1,031,922 914,142 Operating lease right-of-use assets 1,084,951 1,103,083 Goodwill 276,317 273,032 Intangible assets, net 442,985 448,326 Deferred income tax assets, net 159,405 153,118 Other assets, net 85,187 82,147 Total assets $ 3,424,081 $ 3,320,425 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 189,202 $ 183,715 Current operating lease liabilities 175,442 183,510 Accrued and other current liabilities 255,814 217,427 Unearned revenue 381,877 394,215 Total current liabilities 1,002,335 978,867 Non-current operating lease liabilities 1,131,639 1,148,607 Long-term debt, net 780,719 828,507 Other long-term liabilities, net 97,385 90,535 Total liabilities 3,012,078 3,046,516 Commitments and contingencies (Note 21) Stockholders’ equity Bloomin’ Brands stockholders’ equity Preferred stock, $ 0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2023 and December 25, 2022 — — Common stock, $ 0.01 par value, 475,000,000 shares authorized; 86,968,536 and 87,696,200 shares issued and outstanding as of December 31, 2023 and December 25, 2022, respectively 870 877 Additional paid-in capital 1,115,387 1,161,912 Accumulated deficit ( 528,831 ) ( 706,109 ) Accumulated other comprehensive loss ( 178,304 ) ( 185,311 ) Total Bloomin’ Brands stockholders’ equity 409,122 271,369 Noncontrolling interests 2,881 2,540 Total stockholders’ equity 412,003 273,909 Total liabilities and stockholders’ equity $ 3,424,081 $ 3,320,425 The accompanying notes are an integral part of these consolidated financial statements. 64 Table of Contents BLOOMIN’ BRANDS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) FISCAL YEAR 2023 2022 2021 Revenues Restaurant sales $ 4,607,408 $ 4,352,695 $ 4,061,093 Franchise and other revenues 64,062 63,813 61,292 Total revenues 4,671,470 4,416,508 4,122,385 Costs and expenses Food and beverage 1,409,649 1,383,632 1,229,689 Labor and other related 1,325,339 1,226,460 1,154,623 Other restaurant operating 1,126,123 1,065,662 1,006,371 Depreciation and amortization 191,171 169,617 163,391 General and administrative 260,470 234,752 245,616 Provision for impaired assets and restaurant closings 33,574 5,964 13,737 Total costs and expenses 4,346,326 4,086,087 3,813,427 Income from operations 325,144 330,421 308,958 Loss on extinguishment and modification of debt — ( 107,630 ) ( 2,073 ) Loss on fair value adjustment of derivatives, net — ( 17,685 ) — Interest expense, net ( 52,169 ) ( 53,199 ) ( 57,588 ) Income before provision for income taxes 272,975 151,907 249,297 Provision for income taxes 18,561 42,704 26,384 Net income 254,414 109,203 222,913 Less: net income attributable to noncontrolling interests 7,028 7,296 7,358 Net income attributable to Bloomin’ Brands $ 247,386 $ 101,907 $ 215,555 Net income $ 254,414 $ 109,203 $ 222,913 Other comprehensive income: Foreign currency translation adjustment 7,622 10,169 ( 6,597 ) Net (loss) gain on derivatives, including the impact of terminated swap agreements, net of tax ( 615 ) 10,509 12,054 Comprehensive income 261,421 129,881 228,370 Less: comprehensive income attributable to noncontrolling interests 7,028 7,296 7,358 Comprehensive income attributable to Bloomin’ Brands $ 254,393 $ 122,585 $ 221,012 Earnings per share: Basic $ 2.84 $ 1.15 $ 2.42 Diluted $ 2.56 $ 1.03 $ 2.00 Weighted average common shares outstanding: Basic 87,230 88,846 88,981 Diluted 96,453 98,512 107,803 Cash dividends declared per common share $ 0.96 $ 0.56 $ — The accompanying notes are an integral part of these consolidated financial statements. 65 Table of Contents BLOOMIN’ BRANDS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (IN THOUSANDS, EXCEPT PER SHARE DATA) BLOOMIN’ BRANDS COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUM- ULATED DEFICIT ACCUMULATED OTHER COMPREHENSIVE LOSS NON-CONTROLLING INTERESTS TOTAL SHARES AMOUNT Balance, 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 Balance, December 26, 2021 89,253 $ 893 $ 1,119,728 $ ( 698,171 ) $ ( 205,989 ) $ 6,389 $ 222,850 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, 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 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 Balance, December 25, 2022 87,696 $ 877 $ 1,161,912 $ ( 706,109 ) $ ( 185,311 ) $ 2,540 $ 273,909 (CONTINUED...) 66 Table of Contents BLOOMIN’ BRANDS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (IN THOUSANDS, EXCEPT PER SHARE DATA) BLOOMIN’ BRANDS COMMON STOCK ADDITIONAL PAID-IN CAPITAL ACCUM- ULATED DEFICIT ACCUMULATED OTHER COMPREHENSIVE LOSS NON-CONTROLLING INTERESTS TOTAL SHARES AMOUNT Balance, December 25, 2022 87,696 $ 877 $ 1,161,912 $ ( 706,109 ) $ ( 185,311 ) $ 2,540 $ 273,909 Net income — — — 247,386 — 7,028 254,414 Other comprehensive income, net of tax — — — — 7,007 — 7,007 Cash dividends declared, $ 0.96 per common share — — ( 83,742 ) — — — ( 83,742 ) Repurchase and retirement of common stock, including excise tax of $ 136 ( 2,807 ) ( 28 ) — ( 70,108 ) — — ( 70,136 ) Stock-based compensation — — 11,911 — — — 11,911 Common stock issued under stock plans (1) 2,080 21 25,306 — — — 25,327 Distributions to noncontrolling interests — — — — — ( 8,684 ) ( 8,684 ) Contributions from noncontrolling interests — — — — — 1,997 1,997 Balance, December 31, 2023 86,969 $ 870 $ 1,115,387 $ ( 528,831 ) $ ( 178,304 ) $ 2,881 $ 412,003 ________________ (1) Net of shares withheld for employee taxes. The accompanying notes are an integral part of these consolidated financial statements. 67 Table of Contents BLOOMIN’ BRANDS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) FISCAL YEAR 2023 2022 2021 Cash flows provided by operating activities: Net income $ 254,414 $ 109,203 $ 222,913 Adjustments to reconcile Net income to cash provided by operating activities: Depreciation and amortization 191,171 169,617 163,391 Amortization of debt discounts and issuance costs 3,115 3,538 4,494 Amortization of deferred gift card sales commissions 23,695 24,091 26,012 Provision for impaired assets and restaurant closings 33,574 5,964 13,737 Non-cash interest expense from terminated interest rate swaps — 12,215 6,160 Non-cash operating lease costs 84,104 83,254 78,272 (Benefit) provision for expected credit losses and contingent lease liabilities ( 864 ) ( 1,117 ) 946 Stock-based compensation expense 11,911 16,514 24,405 Deferred income tax (benefit) expense ( 7,823 ) 13,748 ( 3,346 ) Loss on extinguishment and modification of debt — 107,630 2,073 Loss on fair value adjustment of derivatives, net — 17,685 — Other, net ( 2,933 ) 3,186 ( 1,879 ) Change in assets and liabilities: Decrease (increase) in inventories 2,361 1,036 ( 18,210 ) Decrease (increase) in other current assets 9,572 ( 40,370 ) ( 58,397 ) Increase in other assets ( 1,177 ) ( 6,670 ) ( 2,073 ) Decrease in operating right-of-use assets, net — 277 160 Increase (decrease) in accounts payable and accrued and other current liabilities 26,688 ( 40,679 ) 25,619 (Decrease) increase in unearned revenue ( 12,401 ) ( 4,638 ) 17,225 Decrease in operating lease liabilities ( 93,576 ) ( 82,540 ) ( 90,387 ) Increase (decrease) in other long-term liabilities 10,590 ( 1,022 ) ( 8,660 ) Net cash provided by operating activities 532,421 390,922 402,455 Cash flows used in investing activities: Proceeds from disposal of property, fixtures and equipment 2,515 1,634 9,322 Proceeds received from company-owned life insurance 3,460 16,092 9,270 Capital expenditures ( 324,255 ) ( 219,691 ) ( 122,830 ) Other investments, net 1,174 827 ( 507 ) Net cash used in investing activities $ ( 317,106 ) $ ( 201,138 ) $ ( 104,745 ) (CONTINUED...) 68 Table of Contents BLOOMIN’ BRANDS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) FISCAL YEAR 2023 2022 2021 Cash flows used in financing activities: Proceeds from issuance of long-term debt $ — $ — $ 200,000 Repayments of long-term debt and finance lease obligations ( 1,862 ) ( 196,447 ) ( 431,166 ) Proceeds from borrowings on revolving credit facilities 1,079,000 1,239,500 470,000 Repayments of borrowings on revolving credit facilities ( 1,128,000 ) ( 889,500 ) ( 837,000 ) Financing fees — ( 1,205 ) ( 5,868 ) Proceeds from issuance of senior notes — — 300,000 Issuance costs related to senior notes — — ( 5,546 ) Principal settlements and repurchase of convertible senior notes ( 214 ) ( 196,919 ) — Proceeds from retirement of convertible senior note hedges — 131,869 — Payments for retirement of warrants — ( 114,825 ) — Proceeds from share-based compensation, net 25,327 12,955 9,850 Distributions to noncontrolling interests ( 8,684 ) ( 9,127 ) ( 9,123 ) Contributions from noncontrolling interests 1,997 1,382 1,347 Purchase of noncontrolling interests ( 100 ) ( 5,004 ) ( 3 ) Payments for partner equity plan — ( 9,292 ) ( 9,910 ) Repurchase of common stock ( 70,847 ) ( 109,152 ) — Cash dividends paid on common stock ( 83,742 ) ( 49,736 ) — Net cash used in financing activities ( 187,125 ) ( 195,501 ) ( 317,419 ) Effect of exchange rate changes on cash and cash equivalents 1,448 1,395 ( 1,642 ) Net increase (decrease) in cash, cash equivalents and restricted cash 29,638 ( 4,322 ) ( 21,351 ) Cash, cash equivalents and restricted cash as of the beginning of the period 84,735 89,057 110,408 Cash, cash equivalents and restricted cash as of the end of the period $ 114,373 $ 84,735 $ 89,057 Supplemental disclosures of cash flow information: Cash paid for interest $ 50,931 $ 39,126 $ 47,036 Cash paid for income taxes, net of refunds $ 27,750 $ 35,450 $ 36,336 Supplemental disclosures of non-cash investing and financing activities: Leased assets obtained in exchange for new operating lease liabilities $ 74,539 $ 54,271 $ 43,363 Leased assets obtained in exchange for new finance lease liabilities $ 6,480 $ 4,066 $ 1,238 Increase in liabilities from the acquisition of property, fixtures and equipment $ 3,428 $ 12,762 $ 2,344 The accompanying notes are an integral part of these consolidated financial statements. 69 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of the Business Bloomin’ Brands, Inc. (“Bloomin’ Brands” or the “Company”), a holding company that conducts its operations through its subsidiaries, is one of the largest casual dining restaurant companies in the world, with a portfolio of leading, differentiated restaurant concepts. OSI Restaurant Partners, LLC (“OSI”) is the Company’s primary operating entity. The Company owns and operates casual, upscale casual and fine dining restaurants. The Company’s restaurant portfolio has four concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment are operated under franchise agreements. 2. Summary of Significant Accounting Policies Basis of Presentation - The Company’s consolidated financial statements include the accounts and operations of Bloomin’ Brands and its subsidiaries. To ensure timely reporting, the Company consolidates the results of its Brazil operations on a one-month calendar lag. 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 31, 2023. During 2021, the recovery of in-restaurant dining from the COVID-19 pandemic (“COVID-19”) 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. The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities’ operations. The Company is a franchisor of 291 restaurants as of December 31, 2023, but does not possess any ownership interests in its franchisees and does not provide material direct financial support to its franchisees. These franchise relationships are not deemed variable interest entities and are not consolidated. 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. In a 52-week fiscal year, each quarterly period is comprised of 13 weeks. The additional week in a 53-week fiscal year is added to the fourth quarter. Fiscal year 2023 consisted of 53 weeks and fiscal years 2022 and 2021 consisted of 52 weeks. The additional operating week of 2023 resulted in increases of $ 83.5 million of Total revenues and $ 0.15 of GAAP diluted earnings per share in the Consolidated Statements of Operations and Comprehensive Income. Use of Estimates - The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. 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 $ 56.2 million and $ 41.5 million, as 70 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued of December 31, 2023 and December 25, 2022, 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. Gift card, vendor and other receivables consist primarily of amounts due from gift card resellers and vendor rebates. The Company considers the concentration of credit risk for gift card, vendor and other receivables to be minimal due to the payment histories and general financial condition of its gift card resellers and vendors. Amounts due from franchisees consist of initial franchise fees, royalty income and advertising fees. See Note 7 - Other Current Assets, Net for disclosure of trade receivables by category as of December 31, 2023 and December 25, 2022. Financial instruments that potentially subject the Company to concentrations of counterparty risk are cash and cash equivalents and derivatives. The Company attempts to limit its counterparty risk by investing in certificates of deposit, money market funds, noninterest-bearing accounts and other highly rated investments. Whenever possible, the Company selects investment grade counterparties and rated money market funds in order to mitigate its counterparty risk. At times, cash balances may be in excess of FDIC insurance limits. See Note 16 - Derivative Instruments and Hedging Activities for a discussion of the Company’s use of derivative instruments and management of credit risk inherent in derivative instruments. Allowance for Expected Credit Losses - The Company evaluates the collectability of credit card and trade receivables based on historical loss experience by risk pool and records periodic adjustments for factors such as deterioration of economic conditions, specific customer circumstances and changes in the aging of accounts receivable balances. Losses are charged off in the period in which they are determined to be uncollectible. See Note 19 - 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. Contingent lease liabilities related to these guarantees are calculated based on management’s estimate of exposure to losses which includes historical analysis of credit losses, including known instances of default, and existing economic conditions. See Note 21 - Commitments and Contingencies for a discussion of the Company’s contingent lease liabilities. 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. Fair value is categorized into one of the following three levels based on the lowest level of significant input: Level 1 Unadjusted quoted market prices in active markets for identical assets or liabilities Level 2 Observable inputs available at measurement date other than quoted prices included in Level 1 Level 3 Unobservable inputs that cannot be corroborated by observable market data Inventories - Inventories consist of food and beverages and are stated at the lower of cost (first-in, first-out) or net realizable value. 71 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Property, Fixtures and Equipment - Property, fixtures and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful life of the assets. Estimated useful lives by major asset category are generally as follows: Buildings (1) 5 to 30 years Furniture and fixtures 5 to 7 years Equipment 2 to 7 years Computer equipment and software 2 to 7 years ____________________ (1) Includes improvements to leased properties which are depreciated over the shorter of their useful life or the reasonably certain lease term, including renewal periods that are reasonably certain. Repair and maintenance costs that maintain the appearance and functionality of the restaurant, but do not extend the useful life of any restaurant asset, are expensed as incurred. The Company suspends depreciation and amortization for assets held for sale. The cost and related accumulated depreciation of assets sold or disposed of are removed from the Company’s Consolidated Balance Sheets, and any resulting gain or loss is generally recognized in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive Income. The 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 over the reasonably certain lease term. Internal costs of $ 5.4 million, $ 4.1 million and $ 3.7 million were capitalized during 2023, 2022 and 2021, respectively. For 2023 and 2022, computer equipment and software costs of $ 12.4 million and $ 9.2 million, respectively, were capitalized. As of December 31, 2023 and December 25, 2022, there was $ 14.3 million and $ 10.1 million, respectively, of unamortized computer equipment and software included in Property, fixtures and equipment, net on the Company’s Consolidated Balance Sheets. Goodwill and Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is assigned to the reporting unit in which the acquired business will operate. The Company’s indefinite-lived intangible assets consist of trade names and are recorded at fair value as of the date of acquisition. Goodwill and indefinite-lived intangible assets are tested for impairment annually, as of the first day of the second fiscal quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. 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 calculated fair value, with any excess of carrying value over fair value deemed to be an impairment. Definite-lived intangible assets, which consist 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 and discounted cash flows model, respectively, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Derivatives - The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. 72 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 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. Unrealized gains or losses on the Company’s interest rate swaps are reclassified to Interest expense, net as interest payments are made on the hedged portion of the Company’s revolving credit facility. The Company has elected to record cash flows from interest rate swaps within operating activities, the same category as the items being hedged, in its Consolidated Statements of Cash Flows. 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. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. The Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement. Deferred Debt Issuance Costs - For its revolving credit facility, the Company records deferred debt issuance costs related to the issuance of debt obligations in Other assets, net on its Consolidated Balance Sheets. For fees associated with all other debt obligations, the Company records deferred debt issuance costs as a reduction of Long-term debt, net. The Company amortizes deferred debt issuance costs to interest expense over the term of the respective financing arrangement, primarily using the effective interest method. The Company amortized deferred debt issuance costs of $ 3.1 million, $ 3.5 million and $ 4.5 million to Interest expense, net for 2023, 2022 and 2021, respectively. Liquor Licenses - The fees from obtaining non-transferable liquor licenses directly issued by local government agencies for nominal fees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in Other assets, net on the Company’s Consolidated Balance Sheets. Liquor licenses are reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. Insurance Reserves - The Company carries insurance programs with specific retention levels or high per-claim deductibles for a significant portion of expected losses under its workers’ compensation, general or liquor liability, health, property and management liability insurance programs. The Company records a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves, the Company considers actuarial assumptions and judgments regarding economic conditions, and the frequency and severity of claims. Reserves recorded for workers’ compensation and general liability claims are discounted using the average of the one-year and five-year risk-free rate of monetary assets that have comparable maturities. 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, including broker commissions and excises taxes, 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. The Company has elected to record excise taxes in connection with share repurchases within operating activities in its Consolidated Statements of Cash Flows. 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 73 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Consolidated Statements of Operations and Comprehensive Income. 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 expedient to account for gift card contracts and performance obligations. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized using estimates based on historical redemption patterns. If actual redemptions vary from assumptions used to estimate breakage, gift card breakage income may differ from the amount recorded. The Company periodically updates its estimates used for breakage. Breakage revenue is recorded as a component of Restaurant sales in the Company’s Consolidated Statements of Operations and Comprehensive Income. Approximately 84 % of deferred gift card revenue is expected to be recognized within 12 months of inception. Gift card sales commissions paid to third-party providers are capitalized and subsequently amortized to Other restaurant operating expense based on historical gift card redemption patterns. See Note 3 - Revenue Recognition for rollforwards of deferred gift card sales commissions and unearned gift card revenue. Advertising fees charged to franchisees are recognized in Franchise and other revenues in the Company’s Consolidated Statements of Operations and Comprehensive Income provided collectability is reasonably assured. Initial franchise and renewal fees are recognized over the term of the franchise agreement and renewal period, respectively. The weighted average remaining term of franchise agreements and renewal periods was approximately 11 years as of December 31, 2023. The Company maintains a customer loyalty program, Dine Rewards, in the U.S., where customers earn a reward after attaining qualified spend amounts. The Company’s estimate of the fair value of the reward is recorded as deferred revenue. Each reward must be redeemed within specified time limits of earning such reward. Revenue is recorded upon redemption and breakage for unredeemed rewards is recorded proportional to historical redemption patterns. The Company applies the practical expedient to exclude disclosures regarding loyalty program remaining performance obligations, which have original expected durations of less than one year. The Company collects and remits sales, food and beverage, alcoholic beverage and hospitality taxes on transactions with customers and reports revenue net of taxes in its Consolidated Statements of Operations and Comprehensive Income. Leases - The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement conveys the right to use and control specific property or equipment. The Company leases restaurant and office facilities and certain equipment under operating leases primarily having initial terms between one and 20 years. Restaurant facility leases generally have renewal periods totaling five to 30 years, exercisable at the option of the Company. Contingent rentals represent payment of variable lease obligations based on a percentage of gross revenues, as defined by the terms of the applicable lease agreement for certain restaurant facility leases. The Company also has certain leases which reset periodically based on a specified index. Such leases are recorded using the index that existed at lease commencement. Subsequent changes in the index are recorded as variable rental payments. Variable rental payments are expensed as incurred in the Company’s Consolidated Statements of Operations and Comprehensive Income and future variable rent obligations are not included within the lease liabilities on the Consolidated Balance Sheets. The depreciable life of lease assets and leasehold improvements are limited by the expected lease term. None of the Company’s leases contain any material residual value guarantees or restrictive covenants. Upon the 2019 adoption of ASC Topic 842 - Leases , the Company elected the practical expedient to not separate U.S. lease and non-lease components for real estate leases entered into after adoption. Additionally, for certain equipment leases, the Company applies a portfolio approach to account for the lease assets and liabilities. Leases 74 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued with an initial term of 12 months or less are not recorded on its Consolidated Balance Sheets and are recognized on a straight-line basis over the lease term within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income. 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. 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. Payments received from landlords as incentives for leasehold improvements are recorded as a reduction of the right-of-use asset and amortized on a straight-line basis over the term of the lease as a reduction of rent expense. Pre-Opening Expenses - Non-capital expenditures associated with opening new restaurants are expensed as incurred and are included in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income. Consideration Received from Vendors - The Company receives consideration for a variety of vendor-sponsored programs, such as volume rebates, promotions and advertising allowances. Advertising allowances are intended to offset the Company’s costs of promoting and selling menu items in its restaurants. Vendor consideration is recorded as a reduction of Food and beverage cost or Other restaurant operating expense when recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income. Impairment of Long-Lived Assets and Costs Associated with Exit Activities - Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows independent of other assets. For long-lived assets deployed at its restaurants, the Company reviews for impairment at the individual restaurant level. When evaluating for impairment, the total future undiscounted cash flows expected to be generated by the asset are compared to the carrying amount. If the total future undiscounted cash flows of the asset are less than its carrying amount, recoverability is measured by comparing the fair value of the assets to the carrying amount. An impairment loss is recognized in earnings when the asset’s carrying value exceeds its estimated fair value. Fair value is generally estimated using a discounted cash flow model. Restaurant closure costs, including lease termination fees, are expensed as incurred. When the Company ceases using the property rights under a non-cancelable operating lease, it records a liability for the net present value of any remaining non-rent lease-related obligations, less the estimated subtenant cost recovery that can reasonably be obtained for the property. Any subsequent adjustment to that liability as a result of lease termination or changes in estimates of cost recovery is recorded in the period incurred. The associated expense is recorded in Provision for impaired assets and restaurant closings in the Company’s Consolidated Statements of Operations and Comprehensive Income. Restaurant sites and certain other assets to be sold are included in assets held for sale when certain criteria are met, including the requirement that the likelihood of selling the assets within one year is probable. Advertising Costs - Advertising production costs are expensed in the period when the advertising first occurs. All other advertising costs are expensed in the period in which the costs are incurred. Advertising expense of $ 115.6 million, $ 94.0 million and $ 59.7 million for 2023, 2022 and 2021, respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income. Legal Costs - Settlement costs for employment litigation are recorded to Other restaurant operating expense 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. 75 Table of Contents 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. R&D primarily consists of payroll and benefit costs. R&D was $ 3.5 million, $ 2.7 million and $ 2.6 million for 2023, 2022 and 2021, respectively. Partner Compensation - In addition to base salary, field-level operators and multi-unit supervisors receive performance-based bonuses for providing management and supervisory services to their restaurants, certain of which may be based on their restaurants’ monthly operating results or cash flows. The Company accrues for these obligations using current and historical restaurant performance information. Most field-level compensation is recorded in Labor and other related expense, with compensation for multi-unit supervisors recorded in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income. Many of the Company’s international operators are given the option to purchase participation interests in the cash distributions of the restaurants they manage. The amount, terms and availability vary by country. Stock-based Compensation - Stock-based compensation awards are measured at fair value at the date of grant and expensed over their vesting or service periods. Stock-based compensation expense is recognized only for those awards expected to vest. The expense, net of forfeitures, is recognized using the straight-line method. Forfeitures of share-based compensation awards are recognized as they occur. 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 per Share - The Company computes basic earnings per share based on the weighted average number of common shares that were outstanding during the period. Except where the result would be antidilutive, diluted earnings per share includes the dilutive effect of common stock equivalents, consisting of stock options, restricted stock units, PSUs 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. Foreign Currency Translation and Transactions - For non-U.S. operations, the functional currency is the local currency. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date with the translation adjustments recorded in Accumulated other comprehensive loss in the Company’s Consolidated Statements of Changes in Stockholders’ Equity. Results of operations are translated using the average exchange rates for the reporting period. Foreign currency exchange transaction losses are recorded in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income. Income Taxes - Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in the tax rate is recognized within income in the period that includes the enactment date of the rate change. A valuation allowance may reduce deferred income tax assets to the amount that is more likely than not to be realized. 76 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The Company records a tax benefit for an uncertain tax position using the highest cumulative tax benefit that is more likely than not to be realized. The Company adjusts its liability for unrecognized tax benefits in the period in which it determines the issue is effectively settled, the statute of limitations expires or when more information becomes available. Liabilities for unrecognized tax benefits are recorded as a reduction of Deferred income tax assets, net and within Other long-term liabilities, net, with related interest and penalties recorded in Other long-term liabilities, net, on the Company’s Consolidated Balance Sheets. Interest and penalties recognized on liabilities for unrecognized tax benefits are included in Provision for income taxes. Recently Adopted Financial Accounting Standards - On December 28, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” (“ASU No. 2020-06”) which removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. ASU No. 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. 2020-06 using the modified retrospective approach which resulted in a cumulative-effect adjustment that increased (decreased) the following Consolidated Balance Sheet accounts during the first quarter of 2021: ADJUSTMENT CONSOLIDATED BALANCE SHEET CLASSIFICATION AMOUNT (dollars in millions) Deferred tax impact of cumulative-effect adjustment Deferred income tax assets, net $ 14.9 Debt discount reclassification Long-term debt, net $ 59.9 Equity issuance costs reclassification Long-term debt, net $ ( 2.1 ) Debt discount amortization reclassification, net of tax Accumulated deficit $ 4.4 Reversal of separated equity component, net of tax Additional paid-in capital $ ( 47.3 ) After adopting ASU No. 2020-06, the 2025 Notes are reflected entirely as a liability since the embedded conversion feature is no longer separately presented within stockholders’ equity. Recently Issued Financial Accounting Standards Not Yet Adopted - In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” (“ASU No. 2023-07”) which requires disclosure of significant segment expenses regularly provided to the Company’s chief operating decision-maker (“CODM”). ASU No. 2023-07 also allows for multiple measures of segment profit (loss) if the CODM utilizes such measures to allocate resources or assess performance. ASU No. 2023-07 is effective for the Company beginning with the 2024 Form 10-K, with early adoption permitted. The Company is currently evaluating the impact ASU No. 2023-07 will have on its disclosures. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” (“ASU No. 2023-09”) which expands existing income tax disclosures, including disaggregation of the Company’s effective income tax rate reconciliation table and income taxes paid disclosures. ASU No. 2023-09 is effective for the Company beginning with the 2025 Form 10-K, with early adoption permitted. The Company is currently evaluating the impact ASU No. 2023-09 will have on its disclosures. 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: (i) finance lease liabilities presented within other liabilities that were formerly presented within long-term debt, (ii) the separate presentation of current operating lease liabilities on the face of the Consolidated Balance Sheets, (iii) amounts previously reported in Other (expense) income, net, on the face the Consolidated Statements of Operations and Comprehensive Income were combined with Interest expense, net and (iv) the combined presentation of the 77 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Other comprehensive income impact of interest rate swaps on the face of the Consolidated Statements of Operations and Comprehensive Income. These reclassifications had no effect on previously reporte d net income. 3. Revenue Recognition The following table includes the disaggregation of Restaurant sales and franchise revenues by restaurant concept and major international market for the periods indicated: FISCAL YEAR 2023 2022 2021 (dollars in thousands) RESTAURANT SALES FRANCHISE REVENUES RESTAURANT SALES FRANCHISE REVENUES RESTAURANT SALES FRANCHISE REVENUES U.S. Outback Steakhouse $ 2,316,449 $ 32,289 $ 2,240,432 $ 31,418 $ 2,175,909 $ 29,725 Carrabba’s Italian Grill 721,946 3,036 676,467 2,938 653,231 2,439 Bonefish Grill 570,578 505 559,583 662 544,068 641 Fleming’s Prime Steakhouse & Wine Bar 382,729 — 374,388 — 332,607 — Other 13,351 78 12,146 49 9,033 9 U.S. total 4,005,053 35,908 3,863,016 35,067 3,714,848 32,814 International Outback Steakhouse - Brazil (1) 501,128 — 405,866 — 258,997 — Other (1)(2) 101,227 15,163 83,813 14,620 87,248 12,706 International total 602,355 15,163 489,679 14,620 346,245 12,706 Total $ 4,607,408 $ 51,071 $ 4,352,695 $ 49,687 $ 4,061,093 $ 45,520 ____________________ (1) Restaurant sales in Brazil includes $ 30.2 million and $ 7.7 million during 2023 and 2022, respectively, in connection with value added tax exemptions resulting from tax legislation. See Note 20 - Income Taxes for details regarding the Brazil tax legislation. (2) Includes Restaurant sales for Company-owned Outback Steakhouse restaurants outside of Brazil and Abbraccio restaurants in Brazil. Franchise revenues primarily include revenues from franchised Outback Steakhouse restaurants. The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance Sheets as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Other current assets, net Deferred gift card sales commissions $ 18,081 $ 17,755 Unearned revenue Deferred gift card revenue $ 374,274 $ 386,495 Deferred loyalty revenue 5,664 5,628 Deferred franchise fees - current 473 460 Other 1,466 1,632 Total Unearned revenue $ 381,877 $ 394,215 Other long-term liabilities, net Deferred franchise fees - non-current $ 4,036 $ 4,126 78 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The following table is a rollforward of deferred gift card sales commissions for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Balance, beginning of the period $ 17,755 $ 17,793 $ 19,300 Deferred gift card sales commissions amortization ( 23,695 ) ( 24,091 ) ( 26,012 ) Deferred gift card sales commissions capitalization 26,706 26,743 26,625 Other ( 2,685 ) ( 2,690 ) ( 2,120 ) Balance, end of the period $ 18,081 $ 17,755 $ 17,793 The following table is a rollforward of unearned gift card revenue for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Balance, beginning of the period $ 386,495 $ 387,945 $ 373,048 Gift card sales 328,307 326,603 330,841 Gift card redemptions ( 321,057 ) ( 310,017 ) ( 298,397 ) Gift card breakage ( 19,471 ) ( 18,036 ) ( 17,547 ) Balance, end of the period $ 374,274 $ 386,495 $ 387,945 Franchisee Deferred Payment Agreement - Effective December 31, 2023, the Company entered into an Amended & Restated Holistic Resolution Agreement (the “2023 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 operate 78 franchised Outback Steakhouse restaurants in the western United States, primarily in California. The 2023 Resolution Agreement ends on December 27, 2026 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. The 2023 Resolution Agreement amends and supersedes the original Holistic Resolution Agreement dated December 27, 2020 (the “Original Resolution Agreement”). The terms of the 2023 Resolution Agreement are materially consistent with the Original Resolution Agreement and include similar agreements between Out West and its lenders prioritizing rents, royalties, national advertising fees and local marketing expenditures, and provides a mechanism to settle its obligations with its lenders and provide for capital expenditures, within certain limitations. 4. Impairments and Exit Costs The components of Provision for impaired assets and restaurant closings are as follows for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Impairment losses U.S. $ 39,812 $ 3,942 $ 11,945 International 600 1,537 1,186 Corporate — 7 270 Total impairment losses 40,412 5,486 13,401 Restaurant closure (benefit) charges U.S. ( 7,143 ) 478 422 International 305 — ( 86 ) Total restaurant closure (benefit) charges ( 6,838 ) 478 336 Provision for impaired assets and restaurant closings $ 33,574 $ 5,964 $ 13,737 79 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 2023 Closure Initiative - During the fourteen weeks ended December 31, 2023, the Company recognized asset impairments and closure charges in connection with the closure of three U.S. and two international Aussie Grill restaurants and the decision to close 36 predominantly older, underperforming U.S. restaurants (the “2023 Closure Initiative”). All remaining restaurant closures under the 2023 Closure Initiative were completed in February 2024, with an estimated $ 8 million to $ 11 million of related severance and closure charges to be recorded during the thirteen weeks ended March 31, 2024. Following is a summary of the 2023 Closure Initiative charges recognized in the Consolidated Statements of Operations and Comprehensive Income for the periods indicated (dollars in thousands): DESCRIPTION CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME CLASSIFICATION FOURTEEN WEEKS AND FISCAL YEAR ENDED DECEMBER 31, 2023 Property, fixtures and equipment impairments Provision for impaired assets and restaurant closings $ 23,934 Lease right-of-use asset impairments and closure charges Provision for impaired assets and restaurant closings 10,266 Severance and other expenses General and administrative 622 Lease remeasurement gains Other restaurant operating ( 2,450 ) $ 32,372 During 2023, the Company recognized a lease termination gain of $ 6.7 million, net of related asset impairments, in connection with the closure of one U.S. restaurant. The remaining impairment and closure charges during the periods presented resulted primarily from locations identified for closure or relocation. Accrued Closed Facility Liabilities Rollforward - The following table is a rollforward of the Company’s closed facility lease-related liabilities and other accrued costs associated with closure and restructuring initiatives for the period indicated: FISCAL YEAR (dollars in thousands) 2023 Balance, beginning of the period $ 5,476 Additions 3,340 Cash payments ( 1,142 ) Accretion 317 Adjustments ( 1,737 ) Balance, end of the period $ 6,254 5. Earnings Per Share 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 of average market price of the Company’s common stock exceeding conversion price is to be settled in shares. As a result, subsequent to the election, only the amounts in excess of the principal amount are considered in diluted earnings per share. In connection with the offering of the 2025 Notes, the Company entered into the Convertible Note Hedge Transactions and Warrant Transactions described in Note 13 - Convertible Senior Notes. However, the Convertible Note Hedge Transactions are not considered when calculating dilutive shares given their antidilutive 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 strike price of the Warrant Transactions. See Note 13 - Convertible Senior Notes for additional information regarding the 2025 Notes, Convertible Note Hedge Transactions and Warrant Transactions. 80 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The following table presents the computation of basic and diluted earnings per share for the periods indicated: FISCAL YEAR (in thousands, except per share data) 2023 2022 2021 Net income attributable to Bloomin’ Brands $ 247,386 $ 101,907 $ 215,555 Convertible senior notes if-converted method interest adjustment, net of tax (1) — — 345 Diluted net income attributable to Bloomin’ Brands $ 247,386 $ 101,907 $ 215,900 Basic weighted average common shares outstanding 87,230 88,846 88,981 Effect of dilutive securities: Stock options 381 261 779 Nonvested restricted stock units 203 182 355 Nonvested performance-based share units 183 180 61 Convertible senior notes (1)(2) 5,067 6,089 11,377 Warrants (2) 3,389 2,954 6,250 Diluted weighted average common shares outstanding 96,453 98,512 107,803 Basic earnings per share $ 2.84 $ 1.15 $ 2.42 Diluted earnings per share $ 2.56 $ 1.03 $ 2.00 ________________ (1) 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 the 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. (2) During 2022, the Company repurchased $ 125.0 million of the 2025 Notes and settled the corresponding portion of the related warrants. See Note 13 - Convertible Senior Notes for additional details. Share-based compensation-related weighted average securities outstanding not included in the computation of earnings per share because their effect was antidilutive were as follows for the periods indicated: FISCAL YEAR (shares in thousands) 2023 2022 2021 Stock options 521 1,849 751 Nonvested restricted stock units 35 192 128 Nonvested performance-based share units 368 461 377 6. Stock-based and Deferred Compensation Plans Stock-based Compensation Plans The Company recognized stock-based compensation expense, net of capitalized expense, as follows for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Performance-based share units (1) $ 3,089 $ 8,176 $ 13,821 Restricted stock units 7,910 7,687 8,184 Stock options 835 503 2,286 Total stock-based compensation expense, net of capitalized expense $ 11,834 $ 16,366 $ 24,291 ________________ (1) For 2023 and 2022, includes a cumulative life-to-date adjustment to decrease expense for PSUs granted in fiscal years 2022 and 2020, respectively, based on revised Company projections of performance 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. 81 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 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. Compensation expense for PSUs is recognized over the vesting period when it is probable the performance criteria will be achieved. The following table presents a summary of the Company’s PSU activity: (in thousands, except per unit data) PERFORMANCE-BASED SHARE UNITS WEIGHTED AVERAGE GRANT DATE FAIR VALUE PER UNIT AGGREGATE INTRINSIC VALUE (1) Outstanding as of December 25, 2022 874 $ 24.83 $ 18,323 Granted 301 $ 29.01 Performance adjustment (2) 154 $ 19.84 Vested ( 470 ) $ 19.84 Forfeited ( 41 ) $ 26.48 Outstanding as of December 31, 2023 818 $ 26.92 $ 23,026 Expected to vest as of December 31, 2023 (3) 765 $ 21,410 ________________ (1) Based on the $ 20.96 and $ 28.15 share price of the Company’s common stock on December 23, 2022 and December 29, 2023, the last trading day of 2022 and 2023, respectively. (2) Represents adjustment to 148 % payout for PSUs granted during 2020. (3) Estimated number of units to be issued upon the vesting of outstanding PSUs based on Company performance projections of performance criteria set forth in the 2021, 2022 and 2023 PSU award agreements. The Company grants 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. Assumptions used in the Monte Carlo simulation model and the grant date fair value of PSUs granted were as follows for the periods indicated: FISCAL YEAR 2023 2022 2021 Assumptions: Risk-free interest rate (1) 4.26 % 1.64 % 0.20 % Dividend yield (2) 3.47 % 2.31 % — % Volatility (3) 51.02 % 49.11 % 48.45 % Grant date fair value per unit (4) $ 29.01 $ 26.10 $ 29.73 ________________ (1) Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for the performance period of the unit. (2) 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. (4) Represents a premium above the grant date per share value of the Company’s common stock for the Relative TSR modifier of 2.7 %, 7.9 % and 14.3 % for grants during 2023, 2022 and 2021, respectively. 82 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The following represents PSU compensation information for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Intrinsic value for PSUs vested $ 12,908 $ 7,626 $ 3,768 Grant date fair value of PSUs vested $ 9,332 $ 6,646 $ 3,401 Tax benefits for PSU compensation expense $ 745 $ 348 $ 134 Unrecognized PSU expense $ 6,520 Remaining weighted average vesting period 1.2 years 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 GRANT DATE FAIR VALUE PER UNIT AGGREGATE INTRINSIC VALUE (1) Outstanding as of December 25, 2022 657 $ 21.72 $ 13,776 Granted 406 $ 24.18 Vested ( 393 ) $ 21.02 Forfeited ( 39 ) $ 24.15 Outstanding as of December 31, 2023 (2) 631 $ 23.58 $ 17,757 ________________ (1) Based on the $ 20.96 and $ 28.15 share price of the Company’s common stock on December 23, 2022 and December 29, 2023, the last trading day of 2022 and 2023, respectively. (2) All RSUs outstanding as of December 31, 2023 are expected to vest. The following represents RSU compensation information for the periods indicated: FISCAL YEAR (dollars in thousands, except grant date fair value data) 2023 2022 2021 Weighted average grant date fair value for RSUs granted (1) $ 24.18 $ 21.59 $ 25.93 Intrinsic value of RSUs vested $ 10,275 $ 9,070 $ 13,482 Grant date fair value of RSUs vested $ 8,257 $ 8,025 $ 9,434 Tax benefits for RSU compensation expense $ 1,528 $ 1,113 $ 1,592 Unrecognized RSU expense $ 9,315 Remaining weighted average vesting period 1.9 years ________________ (1) The weighted average dividend yield was 3.63 % and 2.43 % for 2023 and 2022, 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. 83 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The following table presents a summary of the Company’s stock option activity: (in thousands, except exercise price and contractual life data) OPTIONS WEIGHTED AVERAGE EXERCISE PRICE WEIGHTED AVERAGE REMAINING CONTRACTUAL LIFE (YEARS) AGGREGATE INTRINSIC VALUE Outstanding as of December 25, 2022 3,188 $ 21.43 4.0 $ 3,337 Exercised ( 1,455 ) $ 21.86 Forfeited or expired ( 8 ) $ 25.35 Outstanding and exercisable as of December 31, 2023 (1) 1,725 $ 21.04 3.2 $ 12,263 ________________ (1) No stock options were granted during 2023. The following represents stock option compensation information for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Intrinsic value of options exercised $ 6,200 $ 6,367 $ 8,419 Cash received from option exercises, net of tax withholding $ 31,778 $ 17,888 $ 14,951 Grant date fair value of stock options vested $ 1,037 $ 7,645 $ 19,246 Tax benefits for stock option compensation expense $ 757 $ 1,495 $ 1,942 As of December 31, 2023, the maximum number of shares of common stock available for issuance for equity instruments pursuant to the 2020 Omnibus Incentive Compensation Plan was 6,925,256 . Deferred Compensation Plans 401(k) Plan - The Company has a qualified defined contribution plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended. The Company incurred contribution costs of $ 5.6 million, $ 5.6 million and $ 6.1 million for the 401(k) Plan for 2023, 2022 and 2021, respectively. Highly Compensated Employee Plan - The Company provides a deferred compensation plan for its highly compensated employees who are not eligible to participate in the 401(k) Plan. The deferred compensation plan allows these employees to contribute a percentage of their base salary and cash bonus on a pre-tax basis. The deferred compensation plan is unsecured and funded through the Company’s voluntary contributions. 7. Other Current Assets, Net Other current assets, net, consisted of the following as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Prepaid expenses $ 26,674 $ 29,343 Accounts receivable - gift cards, net (1) 67,424 85,606 Accounts receivable - vendors, net (1) 13,648 25,385 Accounts receivable - franchisees, net (1) 3,671 2,550 Accounts receivable - other, net (1) 18,100 18,408 Deferred gift card sales commissions 18,081 17,755 Other current assets, net 5,404 4,671 $ 153,002 $ 183,718 ________________ (1) See Note 19 - Allowance for Expected Credit Losses for a rollforward of the related allowance for expected credit losses. 84 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 8. Property, Fixtures and Equipment, Net Property, fixtures and equipment, net, consisted of the following as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Land $ 34,654 $ 37,596 Buildings 1,269,214 1,223,403 Furniture and fixtures 526,192 489,895 Equipment 830,644 739,136 Construction in progress 78,949 41,723 Less: accumulated depreciation ( 1,707,731 ) ( 1,617,611 ) $ 1,031,922 $ 914,142 Depreciation and repair and maintenance expense are as follows for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Depreciation expense $ 185,187 $ 163,445 $ 157,386 Repair and maintenance expense $ 125,492 $ 116,318 $ 104,209 9. Goodwill and Intangible Assets, Net Goodwill - The following table is a rollforward of goodwill for the periods indicated: (dollars in thousands) U.S. INTERNATIONAL CONSOLIDATED Balance as of December 26, 2021 $ 170,657 $ 97,787 $ 268,444 Translation adjustments — 4,588 4,588 Balance as of December 25, 2022 170,657 102,375 273,032 Translation adjustments — 3,285 3,285 Balance as of December 31, 2023 $ 170,657 $ 105,660 $ 276,317 The following table is a summary of the Company’s gross goodwill balances and accumulated impairments as of the periods indicated: DECEMBER 31, 2023 DECEMBER 25, 2022 DECEMBER 26, 2021 (dollars in thousands) GROSS CARRYING AMOUNT ACCUMULATED IMPAIRMENTS GROSS CARRYING AMOUNT ACCUMULATED IMPAIRMENTS GROSS CARRYING AMOUNT ACCUMULATED IMPAIRMENTS U.S. $ 838,827 $ ( 668,170 ) $ 838,827 $ ( 668,170 ) $ 838,827 $ ( 668,170 ) International 225,543 ( 119,883 ) 222,258 ( 119,883 ) 217,670 ( 119,883 ) Total goodwill $ 1,064,370 $ ( 788,053 ) $ 1,061,085 $ ( 788,053 ) $ 1,056,497 $ ( 788,053 ) 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 2023 assessment was quantitative and the 2022 and 2021 assessments were qualitative. As a result of these assessments, the Company did no t record any goodwill asset impairment charges during 2023, 2022 or 2021. 85 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Intangible Assets, net - Intangible assets, net, consisted of the following as of the periods indicated: WEIGHTED AVERAGE REMAINING AMORTIZATION PERIOD (in years) DECEMBER 31, 2023 DECEMBER 25, 2022 (dollars in thousands) GROSS CARRYING VALUE ACCUMULATED AMORTIZATION NET CARRYING VALUE GROSS CARRYING VALUE ACCUMULATED AMORTIZATION NET CARRYING VALUE Trade names Indefinite $ 414,716 $ 414,716 $ 414,716 $ 414,716 Trademarks 5 81,952 $ ( 63,752 ) 18,200 81,952 $ ( 59,675 ) 22,277 Reacquired franchise rights (1) 8 36,506 ( 26,437 ) 10,069 34,602 ( 23,269 ) 11,333 Total intangible assets 6 $ 533,174 $ ( 90,189 ) $ 442,985 $ 531,270 $ ( 82,944 ) $ 448,326 ________________ (1) Included within Outback Steakhouse - Brazil. The Company did no t record any intangible asset impairment charges during the periods presented. The following table presents goodwill, trade names and trademarks balances by reporting unit as of the periods indicated: DECEMBER 31, 2023 DECEMBER 25, 2022 (dollars in thousands) GOODWILL TRADE NAMES TRADEMARKS GOODWILL TRADE NAMES TRADEMARKS Outback Steakhouse $ 123,188 $ 287,000 $ — $ 123,188 $ 287,000 $ — Carrabba’s Italian Grill 18,826 69,000 — 18,826 69,000 — Bonefish Grill 28,188 — 9,788 28,188 — 12,618 Fleming’s Prime Steakhouse & Wine Bar 455 — 8,412 455 — 9,407 U.S. total 170,657 356,000 18,200 170,657 356,000 22,025 Outback Steakhouse - Brazil 62,994 — — 59,709 — 252 International - Franchise 42,666 58,716 — 42,666 58,716 — International total 105,660 58,716 — 102,375 58,716 252 Total $ 276,317 $ 414,716 $ 18,200 $ 273,032 $ 414,716 $ 22,277 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 and reacquired franchise rights for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Amortization expense $ 5,984 $ 6,172 $ 6,005 The following table presents expected annual amortization of intangible assets as of December 31, 2023: (dollars in thousands) 2024 $ 5,738 2025 $ 5,470 2026 $ 5,374 2027 $ 3,624 2028 $ 2,076 86 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 10. Other Assets, Net Other assets, net, consisted of the following as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Company-owned life insurance $ 28,018 $ 27,789 Deferred debt issuance costs - revolving credit facility (1) 3,813 5,505 Liquor licenses 23,125 23,454 Other assets 30,231 25,399 $ 85,187 $ 82,147 ________________ (1) Net of accumulated amortization of $ 11.7 million and $ 10.1 million as of December 31, 2023 and December 25, 2022, respectively. 11. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Accrued payroll and other compensation $ 98,903 $ 84,075 Accrued insurance 19,310 20,932 Other current liabilities (1) 137,601 112,420 $ 255,814 $ 217,427 ________________ (1) During 2023, other current liabilities increased primarily due to increased accrued advertising expense. 12. Long-term Debt, Net Following is a summary of outstanding long-term debt, net, as of the periods indicated: DECEMBER 31, 2023 DECEMBER 25, 2022 (dollars in thousands) OUTSTANDING BALANCE INTEREST RATE OUTSTANDING BALANCE INTEREST RATE Senior secured credit facility - revolving credit facility (1) $ 381,000 6.96 % $ 430,000 5.79 % 2025 Notes 104,786 5.00 % 105,000 5.00 % 2029 Notes 300,000 5.13 % 300,000 5.13 % Less: unamortized debt discount and issuance costs ( 5,067 ) ( 6,493 ) Long-term debt, net $ 780,719 $ 828,507 ________________ (1) Interest rate represents the weighted average interest rate as of the respective periods. Bloomin’ Brands, Inc. is a holding company and conducts its operations through its subsidiaries, certain of which have incurred indebtedness as described below. Credit Agreement - On 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 . 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 87 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued $ 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 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; sell assets; pay dividends above certain thresholds and other restricted payments; make certain investments; acquire certain assets; effect mergers and similar transactions; and effect certain other transactions with affiliates. The Amended Credit Agreement requires a Total Net Leverage Ratio (“TNLR”) not to exceed 4.50 to 1.00. 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). As of December 31, 2023 and December 25, 2022, the Company was in compliance with its debt covenants. 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 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. The 2029 Notes bear cash interest at an annual rate of 5.125 % payable semi-annually in arrears on April 15 and October 15 of each year. The Company may redeem some or all of the 2029 Notes at any time on or after April 15, 2024, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest. The Company may also redeem up to 40 % of the 2029 Notes in an amount not greater than the proceeds of certain equity offerings completed before April 15, 2024, at a redemption price equal to 105.125 % of the principal amount thereof, plus accrued and unpaid interest. In 88 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued addition, at any time prior to April 15, 2024, the Company may redeem some or all of the 2029 Notes at a price equal to 100 % of the principal amount, plus a make-whole premium, plus accrued and unpaid interest. The Indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness or issue certain preferred stock; pay dividends above certain thresholds, redeem stock or make other distributions; make certain investments; create restrictions on the ability of the Company’s restricted subsidiaries to pay dividends or make other payments to the Company; create certain liens; transfer or sell certain assets; merge or consolidate; enter into certain transactions with the Company’s affiliates; and designate subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions and qualifications as set forth in the Indenture. The Indenture contains customary events of default, including, without limitation, failure to make required payments, failure to comply with certain agreements or covenants, cross-acceleration to certain other indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, and failure to pay certain judgments. The net proceeds 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 31, 2023 2024 $ — 2025 104,786 2026 381,000 2027 — 2028 — Thereafter 300,000 Total payments 785,786 Less: unamortized debt discount and issuance costs ( 5,067 ) Total principal payments $ 780,719 13. Convertible Senior Notes 2025 Notes - In May 2020, the Company completed a $ 230.0 million principal amount private offering of 5.00 % convertible senior unsecured notes due in 2025. The 2025 Notes are governed by the terms of an indenture between the Company and Wells Fargo Bank, National Association, as the Trustee. The 2025 Notes 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. 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. Prior to the close of business on the business day immediately preceding November 1, 2024, holders may convert all or a portion of their 2025 Notes under the following circumstances: (i) during any calendar quarter if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount 89 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued of 2025 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of the Company’s common stock and the conversion rate on each such trading day; (iii) upon the occurrence of specified corporate events or distributions on the Company’s common stock; (iv) if the Company calls the 2025 Notes for redemption and (v) at any time from, and including November 1, 2024 until the close of business on the second scheduled trading day immediately before the maturity date. The 2025 Notes are redeemable by the Company, in whole or in part, at the Company’s option at any time, and from time to time, on or before the 40 th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on: (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any of the 2025 Notes for redemption will constitute a make-whole fundamental change with respect to that note, in which case the conversion rate applicable to the conversion of the 2025 Notes will be increased in certain circumstances if it is converted after it is called for redemption. If a fundamental change occurs prior to the maturity date, holders may require the Company to repurchase all or a portion of their 2025 Notes for cash at a price equal to 100 % of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest. Holders of 2025 Notes who convert their 2025 Notes in connection with a notice of 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 31, 2023, holders of the 2025 Notes are eligible to convert their 2025 Notes during the first quarter of 2024. 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. 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 2023, the conversion rate for the remaining 2025 Notes decreased to approximately $ 11.14 per share, which represents 89.730 shares of common stock per $ 1,000 principal amount of the 2025 Notes, or a total of approximately 9.402 million shares. 90 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The following table includes the outstanding principal amount and carrying value of the 2025 Notes as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Principal $ 104,786 $ 105,000 Less: unamortized debt issuance costs ( 1,138 ) ( 1,939 ) Net carrying amount $ 103,648 $ 103,061 Following is a summary of interest expense for the 2025 Notes, by component for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Coupon interest $ 5,242 $ 8,080 $ 11,500 Debt issuance cost amortization 798 1,156 1,557 Total interest expense (1) $ 6,040 $ 9,236 $ 13,057 ________________ (1) The effective rate of the 2025 Notes over their expected life is 5.85 %. Convertible Note Hedge and Warrant Transactions - In connection with the offering of the 2025 Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedge Transactions”) with certain of the initial purchasers of the 2025 Notes and/or their respective affiliates and other financial institutions (in this capacity, the “Hedge Counterparties”). Concurrently with the Company’s entry into the Convertible Note Hedge Transactions, the Company also entered into separate, warrant transactions with the Hedge Counterparties collectively relating to the same number of shares of the Company’s common stock, subject to customary anti-dilution adjustments, and for which the Company received proceeds that partially offset the cost of entering into the Convertible Note Hedge Transactions (the “Warrant Transactions”). The Convertible Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the 2025 Notes, and are expected generally to reduce the potential equity dilution in excess of the principal amount due upon conversion of the 2025 Notes. The Warrant Transactions have a dilutive effect on the Company’s common stock to the extent that the price of its common stock exceeds the strike price of the Warrant Transactions. The strike price was initially $ 16.64 per share and is subject to certain adjustments under the terms of the Warrant Transactions. The Convertible Note Hedge Transactions are exercisable upon conversion of the 2025 Notes. The Convertible Note Hedge Transactions expire upon maturity of the 2025 Notes. The Warrant Transactions are exercisable on the expiration dates included in the related forms of confirmation. 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 2023, the strike price for the remaining Warrant Transactions decreased to $ 15.60 . 91 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 14. Other Long-term Liabilities, Net Other long-term liabilities, net, consisted of the following as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Accrued insurance liability $ 26,616 $ 28,133 Deferred compensation obligations 34,800 31,608 Other long-term liabilities 35,969 30,794 $ 97,385 $ 90,535 15. Stockholders’ Equity Share Repurchases - On February 7, 2023, the Company’s Board of Directors (the “Board”) approved a share repurchase program (the “2023 Share Repurchase Program”) under which the Company is authorized to repurchase up to $ 125.0 million of its outstanding common stock. The 2023 Share Repurchase Program will expire on August 7, 2024. As of December 31, 2023, $ 70.0 million remained available for repurchase under the 2023 Share Repurchase Program. Following is a summary of the shares repurchased during fiscal year 2023: (in thousands, except per share data) NUMBER OF SHARES AVERAGE REPURCHASE PRICE PER SHARE AMOUNT First fiscal quarter 863 $ 23.92 $ 20,645 Second fiscal quarter 619 $ 25.11 15,539 Third fiscal quarter 590 $ 27.03 15,956 Fourth fiscal quarter 735 $ 24.29 17,860 Total common stock repurchases (1) 2,807 $ 24.93 $ 70,000 ________________ (1) Excludes $ 0.1 million of excise tax on share repurchases. Subsequent to December 31, 2023, the Company repurchased 473 thousand shares of its common stock for $ 12.5 million under the 2023 Share Repurchase Program under a Rule 10b5-1 plan. In February 2024, the Company’s Board canceled the remaining $ 57.5 million of authorization under the 2023 Share Repurchase Program and approved a new $ 350.0 million authorization (the “2024 Share Repurchase Program”). The 2024 Share Repurchase Program includes capacity above the Company’s normal repurchase activity to provide flexibility in retiring the 2025 Notes at or prior to their May 2025 maturity. The 2024 Share Repurchase Program will expire on August 13, 2025. 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) 2023 2022 2023 2022 First fiscal quarter $ 0.24 $ 0.14 $ 21,014 $ 12,559 Second fiscal quarter 0.24 0.14 20,990 12,418 Third fiscal quarter 0.24 0.14 20,901 12,475 Fourth fiscal quarter 0.24 0.14 20,837 12,284 Total cash dividends declared and paid $ 0.96 $ 0.56 $ 83,742 $ 49,736 In February 2024, the Board declared a quarterly cash dividend of $ 0.24 per share, payable on March 20, 2024 to shareholders of record at the close of business on March 6, 2024 . 92 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Accumulated Other Comprehensive Loss (“AOCL”) - Following are the components of AOCL as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Foreign currency translation adjustment $ ( 177,689 ) $ ( 185,311 ) Unrealized loss on derivatives, net of tax ( 615 ) — Accumulated other comprehensive loss $ ( 178,304 ) $ ( 185,311 ) Following are the components of Other comprehensive income attributable to Bloomin’ Brands for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Foreign currency translation adjustment $ 7,622 $ 10,169 $ ( 6,597 ) Change in fair value of derivatives, net of tax ( 606 ) 573 86 Reclassification realized in Net income, net of tax (1) ( 9 ) 954 7,392 Impact of terminated interest rate swaps included in Net income, net of tax (1) — 8,982 4,576 (Loss) gain on derivatives, net of tax ( 615 ) 10,509 12,054 Other comprehensive income attributable to Bloomin’ Brands $ 7,007 $ 20,678 $ 5,457 ________________ (1) See Note 16 - Derivative Instruments and Hedging Activities for the tax impact of reclassifications and the terminated swaps. 16. Derivative Instruments and Hedging Activities Interest Rate Risk - The Company manages economic risks, including interest rate variability, primarily by managing the amount, sources and duration of its debt funding and through the use of derivative financial instruments. The Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps. Designated Hedges 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 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. During 2021 and 2022, Company terminated its 2018 Swap Agreements for aggregate payments of approximately $ 18.3 million, excluding accrued interest. Following these terminations, 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. On December 5, 2023, OSI entered into six interest rate swap agreements with five counterparties (the “2023 Swap Transactions”) to manage its exposure to fluctuations in variable interest rates. The 2023 Swap Transactions have an aggregate notional amount of $ 200.0 million and include one and two -year tenors with the following terms: NOTIONAL AMOUNT WEIGHTED AVERAGE FIXED INTEREST RATE (1) EFFECTIVE DATE TERMINATION DATE $ 100,000,000 4.92 % December 29, 2023 December 31, 2024 $ 100,000,000 4.34 % December 29, 2023 December 31, 2025 ____________________ (1) The weighted averaged fixed interest rate excludes the term SOFR adjustment and interest rate spread described below. 93 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued In connection with the 2023 Swap Transactions, the Company effectively converted $ 200 million of its outstanding indebtedness from the SOFR, plus a term SOFR adjustment of 0.10 % and a spread of 150 to 250 basis points to the weighted average fixed interest rates within the table above, plus a term SOFR adjustment of 0.10 % and a spread of 150 to 250 basis points. The 2023 Swap Transactions have an emb edded floor of minus 0.10 %. The 2023 Swap Transactions were designated and qualified as cash flow hedges, recognized on the Company’s Consolidated Balance Sheet at fair value as of December 31, 2023 and classified based on the instruments’ maturity dates. As of December 31, 2023, the Company estimated $ 0.1 million of interest income will be reclassified to Interest expense, net over the next 12 months related to the 2023 Swap Transactions. The following table presents the fair value and classification of the Company’s swap agreements as of the period indicated: (dollars in thousands) DECEMBER 31, 2023 CONSOLIDATED BALANCE SHEET CLASSIFICATION Interest rate swaps - asset (1) $ 320 Other current assets, net Interest rate swaps - liability $ 253 Accrued and other current liabilities Interest rate swaps - liability 893 Other long-term liabilities, net Total fair value of derivative instruments - liability (1) $ 1,146 ____________________ (1) See Note 18 - Fair Value Measurements for fair value discussion of the interest rate swaps. The Company’s interest rate swaps are subject to master netting arrangements. As of December 31, 2023, the Company elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement. The following table summarizes the effects of the swap agreements on Net income for the periods indicated: FISCAL YEAR (dollars in thousands) 2022 2021 Interest rate swap agreements: Interest rate swap expense recognized in Interest expense, net $ ( 1,284 ) $ ( 9,951 ) Income tax benefit recognized in Provision for income taxes 330 2,559 Net effects of interest rate swap agreements $ ( 954 ) $ ( 7,392 ) 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 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 $ ( 9,936 ) $ ( 11,968 ) 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 31, 2023, all counterparties to the interest rate swaps 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. 94 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued As of December 31, 2023, 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 $ 0.8 million. As of December 31, 2023, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions as of December 31, 2023, it could have been required to settle its obligations under the agreements at their termination valu e of $ 0.8 million. 17. Leases The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheets as of the periods indicated: (dollars in thousands) CONSOLIDATED BALANCE SHEET CLASSIFICATION DECEMBER 31, 2023 DECEMBER 25, 2022 Operating lease right-of-use assets Operating lease right-of-use assets $ 1,084,951 $ 1,103,083 Finance lease right-of-use assets (1) Property, fixtures and equipment, net 9,941 4,679 Total lease assets, net $ 1,094,892 $ 1,107,762 Current operating lease liabilities Current operating lease liabilities $ 175,442 $ 183,510 Current finance lease liabilities Accrued and other current liabilities 3,197 1,636 Non-current operating lease liabilities (2) Non-current operating lease liabilities 1,131,639 1,148,379 Non-current finance lease liabilities Other long-term liabilities, net 7,414 3,149 Total lease liabilities $ 1,317,692 $ 1,336,674 ________________ (1) Net of accumulated amortization of $ 4.7 million and $ 3.6 million as December 31, 2023 and December 25, 2022, respectively. (2) For 2022, excludes immaterial 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 for the periods indicated: CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME CLASSIFICATION FISCAL YEAR (dollars in thousands) 2023 2022 2021 Operating lease cost (1) Other restaurant operating $ 182,361 $ 182,091 $ 178,733 Variable lease cost (2) Other restaurant operating 7,467 6,508 4,350 Finance lease costs: Amortization of leased assets Depreciation and amortization 2,252 1,420 1,079 Interest on lease liabilities Interest expense, net 694 172 129 Sublease revenue Franchise and other revenues ( 7,665 ) ( 9,016 ) ( 9,396 ) Lease costs, net $ 185,109 $ 181,175 $ 174,895 ________________ (1) Excludes rent expense for office facilities and Company-owned closed or subleased properties of $ 12.3 million, $ 12.2 million and $ 12.9 million for 2023, 2022 and 2021, respectively, which is included in General and administrative expense. Also excludes certain immaterial supply chain related rent expense included in Food and beverage costs for 2021. (2) Includes COVID-19-related rent abatements in 2021. 95 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued As of December 31, 2023, future minimum lease payments and sublease revenues under non-cancelable leases are as follows: (dollars in thousands) OPERATING LEASES FINANCE LEASES SUBLEASE REVENUES 2024 (1) $ 182,732 $ 3,311 $ ( 5,893 ) 2025 185,309 1,859 ( 5,421 ) 2026 183,345 1,392 ( 5,356 ) 2027 174,157 1,275 ( 5,362 ) 2028 166,173 697 ( 5,416 ) Thereafter 1,397,122 7,393 ( 33,888 ) Total minimum lease payments (receipts) (2) 2,288,838 15,927 $ ( 61,336 ) Less: Interest ( 981,757 ) ( 5,316 ) Present value of future lease payments $ 1,307,081 $ 10,611 ____________________ (1) Net of operating lease prepaid rent of $ 15.2 million. (2) Includes $ 945.4 million related to operating lease renewal options that are reasonably certain of exercise and excludes $ 216.7 million of signed operating leases that have not yet commenced. The following table is a summary of the weighted average remaining lease terms and weighted average discount rates of the Company’s leases as of the periods indicated: DECEMBER 31, 2023 DECEMBER 25, 2022 Weighted average remaining lease term (1): Operating leases 13.1 years 13.2 years Finance leases 9.5 years 5.4 years Weighted average discount rate (2): Operating leases 8.50 % 8.44 % Finance leases 8.11 % 6.63 % ____________________ (1) Includes lease renewal options that are reasonably certain of exercise. (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: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Cash flows from operating activities: Cash paid for amounts included in the measurement of operating lease liabilities $ 197,394 $ 193,822 $ 205,253 96 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 18. Fair Value Measurements Fair Value Measurements on a Recurring Basis - The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated: DECEMBER 31, 2023 DECEMBER 25, 2022 (dollars in thousands) TOTAL LEVEL 1 LEVEL 2 TOTAL LEVEL 1 Assets: Cash equivalents: Fixed income funds $ 12,837 $ 12,837 $ — $ 3,301 $ 3,301 Money market funds 11,083 11,083 — 4,786 4,786 Restricted cash equivalents: Money market funds 2,854 2,854 — — — Other current assets, net: Derivative instruments - interest rate swaps 320 — 320 — — Total asset recurring fair value measurements $ 27,094 $ 26,774 $ 320 $ 8,087 $ 8,087 Liabilities: Accrued and other current liabilities: Derivative instruments - interest rate swaps $ 253 $ — $ 253 $ — $ — Other long-term liabilities: Derivative instruments - interest rate swaps 893 — 893 — — Total liability recurring fair value measurements $ 1,146 $ — $ 1,146 $ — $ — Fair value of each class of financial instruments 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 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 considered its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. As of December 31, 2023, the Company determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. 97 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Fair Value Measurements on a Nonrecurring Basis - Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to property, fixtures and equipment, operating lease right-of-use assets, goodwill and other intangible assets, which are remeasured when carrying value exceeds fair value. Carrying value after impairment approximates fair value. The following table summarizes the Company’s assets measured at fair value by hierarchy level on a nonrecurring basis for the periods indicated: 2023 2022 2021 (dollars in thousands) REMAINING CARRYING VALUE TOTAL IMPAIRMENT REMAINING CARRYING VALUE TOTAL IMPAIRMENT REMAINING CARRYING VALUE TOTAL IMPAIRMENT Operating lease right-of-use assets (1) $ 4,057 $ 10,210 $ 2,219 $ 1,233 $ 8,647 $ 3,950 Property, fixtures and equipment (2) 4,623 30,202 2,807 4,253 11,647 8,445 Goodwill and other assets (3) — — — — — 1,006 $ 8,680 $ 40,412 $ 5,026 $ 5,486 $ 20,294 $ 13,401 ________________ (1) Carrying values measured using discounted cash flow models (Level 3). Refer to Note 4 - Impairments and Exit Costs for a more detailed discussion of impairments. (2) Carrying values measured using Level 2 inputs to estimate fair value totaled $ 1.2 million and $ 1.4 million for 2023 and 2021, 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 4 - Impairments and Exit Costs for a more detailed discussion of impairments. (3) Other assets were generally measured using the quoted market value of comparable assets (Level 2). Fair Value of Financial Instruments - The Company’s non-derivative financial instruments consist of cash equivalents, accounts receivable, accounts payable 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. Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The following table includes the carrying value and fair value of the Company’s debt by hierarchy level as of the periods indicated: DECEMBER 31, 2023 DECEMBER 25, 2022 CARRYING VALUE FAIR VALUE LEVEL 2 CARRYING VALUE FAIR VALUE LEVEL 2 (dollars in thousands) Senior secured credit facility - revolving credit facility $ 381,000 $ 381,000 $ 430,000 $ 430,000 2025 Notes $ 104,786 $ 265,896 $ 105,000 $ 198,843 2029 Notes $ 300,000 $ 277,809 $ 300,000 $ 260,265 19. Allowance for Expected Credit Losses The following table is a rollforward of the Company’s trade receivables allowance for expected credit losses for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Allowance for expected credit losses, beginning of the period $ 5,451 $ 4,050 $ 4,095 Provision for expected credit losses — 1,547 64 Charge-off of accounts ( 147 ) ( 146 ) ( 109 ) Allowance for expected credit losses, end of the period $ 5,304 $ 5,451 $ 4,050 The Company is also exposed to credit losses from off-balance sheet lease guarantees primarily related to the divestiture of certain formerly Company-owned restaurant sites. See Note 21 - Commitments and Contingencies for details regarding these lease guarantees. 98 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 20. Income Taxes The following table presents the domestic and foreign components of Income before provision for income taxes for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Domestic $ 235,357 $ 134,465 $ 258,202 Foreign 37,618 17,442 ( 8,905 ) Income before provision for income taxes $ 272,975 $ 151,907 $ 249,297 Provision for income taxes consisted of the following for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Current provision (benefit): Federal $ 17,514 $ 13,026 $ 16,951 State 10,788 10,576 10,917 Foreign ( 1,918 ) 5,354 1,862 26,384 28,956 29,730 Deferred (benefit) provision: Federal ( 2,787 ) 5,172 ( 2,057 ) State 944 3,470 1,194 Foreign ( 5,980 ) 5,106 ( 2,483 ) ( 7,823 ) 13,748 ( 3,346 ) Provision for income taxes $ 18,561 $ 42,704 $ 26,384 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: FISCAL YEAR 2023 2022 2021 Income taxes at federal statutory rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal benefit 3.4 7.3 3.8 Employment-related credits, net ( 13.5 ) ( 22.4 ) ( 13.2 ) Brazil tax legislation ( 7.7 ) 0.2 — Income tax exemption on certain Brazil state value added tax benefits ( 1.8 ) — — Net changes in deferred tax valuation allowances ( 0.8 ) ( 2.8 ) ( 0.7 ) Non-deductible loss on 2025 Notes Partial Repurchase — 18.0 — Non-deductible expenses 2.7 2.8 2.3 Foreign tax rate differential 2.1 2.3 ( 0.2 ) U.S. tax on foreign earnings - GILTI 1.8 1.6 — Tax settlements and related adjustments 0.1 ( 0.1 ) ( 1.7 ) Other, net ( 0.5 ) 0.2 ( 0.7 ) Total 6.8 % 28.1 % 10.6 % The net decrease in the effective income tax rate in 2023 as compared to 2022 was primarily a result of the 2022 non-deductible losses associated with the 2025 Notes Partial Repurchase and the 2023 benefits of Brazil tax legislation, which includes a temporary reduction in the Brazilian income tax rate from 34 % to 0 %. 99 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 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. In the U.S., 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 Income before provision for income taxes. The Company has a blended federal and state statutory rate of approximately 26 %. The effective income tax rate for 2023 was lower than the blended federal and state statutory rate primarily due to the benefit of FICA tax credits on certain tipped wages and benefits of Brazil tax legislation, which includes a temporary reduction in the Brazilian income tax rate from 34 % to 0 %. Deferred Tax Assets and Liabilities - The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Deferred income tax assets: Operating lease liabilities $ 339,783 $ 346,482 Insurance reserves 14,184 15,695 Unearned revenue 55,746 52,366 Deferred compensation 12,210 14,726 Net operating loss carryforwards 12,729 14,277 Federal tax credit carryforwards 177,775 165,411 Other, net (1) 14,334 12,248 Gross deferred income tax assets 626,761 621,205 Less: valuation allowance ( 10,583 ) ( 12,664 ) Deferred income tax assets, net of valuation allowance 616,178 608,541 Deferred income tax liabilities: Less: operating lease right-of-use asset basis differences ( 277,376 ) ( 284,701 ) Less: property, fixtures and equipment basis differences ( 66,370 ) ( 63,344 ) Less: intangible asset basis differences ( 113,027 ) ( 109,162 ) Deferred income tax assets, net $ 159,405 $ 151,334 Reported as: Deferred income tax assets $ 159,405 $ 153,118 Deferred income tax liabilities (included in Other long-term liabilities, net) — ( 1,784 ) Net deferred tax assets $ 159,405 $ 151,334 ________________ (1) As of December 31, 2023 and December 25, 2022, the Company maintained deferred tax liabilities for state income taxes on historical foreign earnings o f $ 0.5 million and $ 0.3 million, respectively. As of December 31, 2023, valuation allowances against deferred tax assets in the U.S. and in certain foreign jurisdictions totaled $ 0.4 million and $ 10.2 million, respectively. The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more likely than not the deferred tax assets will be realized. The net change in the deferred tax valuation allowance in 2023 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. 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 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 Company’s 100 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Brazilian subsidiary due to the uncertainty regarding the restaurant industry’s eligibility for the exemptions under this legislation. 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 were generated during the exemption period. Benefits of this legislation also initially included 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. The tax benefit attributable to the Brazil tax legislation, including both income tax and PIS and COFINS, was appro ximately $ 23.6 million for the year ended December 31, 2023. The benefit of the Brazil tax legislation on GAAP diluted earnings per share was approximately $ 0.25 for the year ended December 31, 2023. In May 2023, Brazil enacted tax legislation that prospectively limits the Company’s ability to benefit from the 100 % exemption from income tax (IRPJ and CSLL) and federal value added taxes (PIS and COFINS) for the full five-year period (the “May 2023 Brazil tax legislation”). As a result of this legislation, the Company is subject to PIS and COFINS and CSLL beginning in the fourth quarter of 2023 and IRPJ beginning in 2024. On January 24, 2024, the Company’s Brazilian subsidiary received an unfavorable second level court ruling related to its ongoing litigation regarding its eligibility for tax exemptions under the Brazil tax legislation. The Company will appeal this ruling and in connection with the appeal anticipates making a cash judicial deposit of approximately $ 45.0 million to $ 50.0 million during the first half of 2024, which includes the disputed amounts through December 31, 2023. The judicial deposit will be recorded in Other assets, net, on the Company’s Consolidated Balance Sheet. The Company believes that it will more likely than not prevail in this appeal and accordingly has not recorded any expense or liability for the disputed amounts. Undistributed Earnings - As of December 31, 2023, the Company had aggregate undistributed foreign earnings of approximately $ 42.6 million. These earnings may be repatriated to the U.S. without additional material U.S. 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. Tax Carryforwards - The amount and expiration dates of tax loss carryforwards and credit carryforwards as of December 31, 2023 are as follows: (dollars in thousands) EXPIRATION DATE AMOUNT Federal tax credit carryforwards 2026 - 2043 $ 190,169 Foreign loss carryforwards 2024 - Indefinite $ 55,794 Foreign credit carryforwards Indefinite $ 864 As of December 31, 2023, the Company had $ 188.3 million in general business tax credit carryforwards, which have a 20-year carryforward period and are utilized on a first-in, first-out basis. The Company currently expects to utilize these tax credit carryforwards within a 10 -yea r period. However, the Company’s ability to utilize these tax credits could be adversely impacted by, among other items, a future “ownership change” as defined under Section 382 of the Internal Revenue Code. Unrecognized Tax Benefits - As of December 31, 2023 and December 25, 2022, the liability for unrecognized tax benefits was $ 17.2 million and $ 18.3 million, respectively. Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $ 16.7 million and $ 17.9 million, respectively, if recognized, would impact the Company’s effective income tax rate. 101 Table of Contents 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: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Balance, beginning of the period $ 18,258 $ 19,238 $ 25,524 Additions for tax positions taken during a prior period 42 114 166 Reductions for tax positions taken during a prior period ( 601 ) ( 401 ) ( 4,209 ) Additions for tax positions taken during the current period 1,507 1,100 1,292 Settlements with taxing authorities — ( 375 ) ( 2,674 ) Lapses in the applicable statutes of limitations ( 2,037 ) ( 1,424 ) ( 854 ) Translation adjustments 3 6 ( 7 ) Balance, end of the period $ 17,172 $ 18,258 $ 19,238 The Company had approximately $ 0.5 million and $ 0.8 million accrued for the payment of interest and penalties as of December 31, 2023 and December 25, 2022, respectively. The Company recognized immaterial interest and penalties related to uncertain tax positions in the Provision for income taxes, for all periods presented. In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by relevant taxable authorities. Based on the outcome of these examinations, or a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related recorded unrecognized tax benefits for tax positions taken on previously filed tax returns will change by approximately $ 0.5 million to $ 1.0 million within the next 12 months. Open Tax Years - Following is a summa ry of the open audit years by jurisdiction as of December 31, 2023: OPEN AUDIT YEARS United States - federal 2007 - 2022 United States - state 2009 - 2022 Foreign 2015 - 2022 21. Commitments and Contingencies Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases have varying terms, the latest of which expires in 2032. As of December 31, 2023, the undiscounted payments the Company could be required to make in the event of non-payment by the primary lessees was approximately $ 19.7 million. The present value of these potential payments discounted at the Company’s incremental borrowing rate as of December 31, 2023 was approximately $ 15.0 million. In the event of default, the indemnity clauses in the Company’s purchase and sale agreements govern its ability to pursue and recover damages incurred. As of December 31, 2023 and December 25, 2022, the Company’s recorded contingent lease liability was $ 5.3 million and $ 6.2 million, respectively. Purchase Obligations - Purchase obligations were $ 196.8 million and $ 226.6 million as of December 31, 2023 and December 25, 2022, respectively. These purchase obligations are primarily due within three years , however commitments with various vendors extend through December 2030. Outstanding commitments consist primarily of inventory, fixtures and equipment and technology. In 2023, the Company purchased: (i) more than 95 % of its U.S. beef raw materials from four beef suppliers that represent a significant portion of the total beef marketplace in the U.S and (ii) more than 80 % of its Brazil pork raw materials from four pork suppliers that represent more than 45 % of the total pork marketplace in Brazil. 102 Table of Contents 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. A reserve is recorded when it is both: (i) probable that a loss has occurred and (ii) the amount of loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal proceedings that could cause an increase or decrease in the amount of the reserve that has been previously recorded, or a revision to the disclosed estimated range of possible losses, as applicable. The Company’s legal proceedings range from cases brought by a single plaintiff to threatened class actions with many putative class members. While some matters pending against the Company specify the damages claimed by the plaintiff or class, many seek unspecified amounts or are at very early stages of the legal process. Even when the amount of damages claimed against the Company are stated, the claimed amount may be exaggerated, unsupported or unrelated to possible outcomes, and as such, are not meaningful indicators of the Company’s potential liability or financial exposure. As a result, some matters have not yet progressed sufficiently through discovery or development of important factual information and legal issues to enable the Company to estimate an amount of loss or a range of possible loss. The Company intends to defend itself in legal matters. Some of these matters may be covered, at least in part, by insurance if they exceed specified retention or deductible amounts. However, it is possible that claims may be denied by the Company’s insurance carriers, the Company may be required by its insurance carriers to contribute to the payment of claims, or the Company’s insurance coverage may not continue to be available on acceptable terms or in sufficient amounts. The Company records receivables from third party insurers when recovery has been determined to be probable. The Company believes that the ultimate determination of liability in connection with legal claims pending against the Company, if any, in excess of amounts already provided for such matters in the consolidated financial statements, will not have a material adverse effect on its business, annual results of operations, liquidity or financial position. However, it is possible that the Company’s business, results of operations, 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. In recent years, certain subsidiaries of the Company were named in collective actions alleging violations of the Fair Labor Standards Act and state wage and hour laws. For these and other matters, the Company recorded reserves of $ 13.3 million and $ 15.1 million for certain of its outstanding legal proceedings as of December 31, 2023 and December 25, 2022, respectively, within Accrued and other current 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 2023, 2022 and 2021, the Company recognized ($ 0.2 ) million, $ 9.4 million and $ 5.4 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income 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. Carrabba’s Italian Grill restaurant sales and lump sum royalty fees on Carrabba’s Italian Grill (and Abbraccio) restaurants opened outside the U.S. was terminated. Upon execution of the Royalty Termination Agreement, the Company made a cash payment of $ 61.9 million to the Carrabba’s Founders, which was recorded in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive Income during 2021. 103 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Insurance - As of December 31, 2023, the future undiscounted payments the Company expects for workers’ compensation, general liability and health insurance claims are as follows: (dollars in thousands) 2024 $ 19,689 2025 11,105 2026 7,546 2027 4,154 2028 2,285 Thereafter 7,715 $ 52,494 The following is a reconciliation of the expected aggregate undiscounted reserves to the discounted reserves for insurance claims recognized on the Company’s Consolidated Balance Sheets as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Undiscounted reserves $ 52,494 $ 55,364 Discount (1) ( 6,568 ) ( 6,299 ) Discounted reserves $ 45,926 $ 49,065 Discounted reserves recognized on the Company’s Consolidated Balance Sheets: Accrued and other current liabilities $ 19,310 $ 20,932 Other long-term liabilities, net 26,616 28,133 $ 45,926 $ 49,065 ____________________ (1) Discount rates of 5.13 % and 4.47 % were used for December 31, 2023 and December 25, 2022 , respectively. 22. Segment Reporting 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 CODM. The Company aggregates its operating segments into two reportable segments, U.S. and international. The U.S. segment includes all restaurants operating in the U.S. while restaurants operating outside the U.S. are included in the international segment. The following is a summary of reporting segments: REPORTABLE SEGMENT (1) CONCEPT GEOGRAPHIC LOCATION U.S. Outback Steakhouse United States of America Carrabba’s Italian Grill Bonefish Grill Fleming’s Prime Steakhouse & Wine Bar International Outback Steakhouse Brazil, Hong Kong/China Carrabba’s Italian Grill (Abbraccio) Brazil _________________ (1) Includes franchise locations. Segment accounting policies are the same as those described in Note 2 - Summary of Significant Accounting Policies . Revenues for all segments include only transactions with customers and exclude intersegment revenues. Excluded from Income from operations for U.S. and international are certain legal and corporate costs not directly 104 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued related to the performance of the segments, most stock-based compensation expenses, a portion of insurance expenses and certain bonus expenses. The following table details Total revenues by segment and major geographic area for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 U.S. $ 4,053,599 $ 3,911,870 $ 3,759,981 International (1) Brazil 529,670 448,411 297,167 Other 88,201 56,227 65,237 Total revenues $ 4,671,470 $ 4,416,508 $ 4,122,385 _________________ (1) International revenues are defined as revenues generated from restaurant sales originating in a country other than the U.S. The following table is a summary of Depreciation and amortization expense by segment for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Depreciation and amortization U.S. $ 157,878 $ 139,170 $ 134,243 International 25,430 23,397 22,649 Corporate 7,863 7,050 6,499 Total depreciation and amortization $ 191,171 $ 169,617 $ 163,391 The following table is a reconciliation of segment income from operations to Income before provision for income taxes for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Segment income from operations U.S. $ 377,534 $ 407,860 $ 443,887 International 83,948 57,333 16,657 Total segment income from operations 461,482 465,193 460,544 Unallocated corporate operating expense ( 136,338 ) ( 134,772 ) ( 151,586 ) Total income from operations 325,144 330,421 308,958 Loss on extinguishment and modification of debt — ( 107,630 ) ( 2,073 ) Loss on fair value adjustment of derivatives, net — ( 17,685 ) — Interest expense, net ( 52,169 ) ( 53,199 ) ( 57,588 ) Income before provision for income taxes $ 272,975 $ 151,907 $ 249,297 The following table is a summary of capital expenditures by segment for the periods indicated: FISCAL YEAR (dollars in thousands) 2023 2022 2021 Capital expenditures U.S. $ 276,660 $ 196,163 $ 103,303 International 45,542 28,647 14,074 Corporate 11,961 11,709 9,035 Total capital expenditures $ 334,163 $ 236,519 $ 126,412 105 Table of Contents BLOOMIN’ BRANDS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The following table sets forth Total assets by segment as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 Assets U.S. $ 2,703,751 $ 2,669,953 International 457,692 400,052 Corporate 262,638 250,420 Total assets $ 3,424,081 $ 3,320,425 Geographic areas — International assets are defined as assets residing in a country other than the U.S. The following table details long-lived assets, excluding goodwill, operating lease right-of-use assets, intangible assets and deferred tax assets, by major geographic area as of the periods indicated: (dollars in thousands) DECEMBER 31, 2023 DECEMBER 25, 2022 U.S. $ 980,731 $ 891,379 International Brazil 128,854 93,972 Other 7,524 10,938 Total long-lived assets $ 1,117,109 $ 996,289 106 Table of Contents BLOOMIN’ BRANDS, INC. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.