UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
~~[X]~~☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~September 24, 2017~~	March 29, 2020
	or
~~[ ]~~☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ______ to ______

Commission File Number: 001-35625

BLOOMIN’ BRANDS, INC.

(Exact name of registrant as specified in its charter)



Delaware		20-8023465
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2202 North West Shore Boulevard, Suite 500, Tampa, Florida33607

(Address of principal executive offices) (Zip Code)

~~(813)~~ (813) 282-1225

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock	$0.01 par value	BLMN	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~YES~~ x NO oYes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ~~YES~~ x NO oYes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerx ☒Accelerated filer o ☐Non-accelerated filer o ~~(Do not check if a smaller reporting company)~~☐

Smaller reporting company o ☐Emerging growth company o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~YES~~ o NO xYes ☐No ☒

As of ~~October 31, 2017, 91,269,593~~May 18, 2020, 87,486,017 shares of common stock of the registrant were outstanding.

Table of Contents

BLOOMIN’ BRANDS, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended ~~September 24, 2017~~March 29, 2020

(Unaudited)

TABLE OF CONTENTS



	PART I — FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements (Unaudited)	3

	Consolidated Financial Statements:

	Consolidated Balance Sheets — ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016~~29, 2019	3

	Consolidated Statements of Operations and Comprehensive (Loss) Income — For the Thirteen ~~and Thirty-Nine~~ Weeks Ended ~~September 24, 2017~~March 29, 2020 and ~~September 25, 2016~~March 31, 2019	4

	Consolidated Statements of Changes in Stockholders’ Equity — For the Thirteen Weeks Ended March 29, 2020 and March 31, 2019	5

	Condensed Consolidated Statements of ~~Changes in Stockholders’ Equity~~Cash Flows — For the ~~Thirty-Nine~~Thirteen Weeks Ended ~~September 24, 2017~~March 29, 2020 and ~~September 25, 2016~~March 31, 2019	6

	~~Condensed~~Notes to Consolidated Financial Statements ~~of Cash Flows —~~ ~~For the Thirty-Nine Weeks Ended September 24, 2017 and September 25, 2016~~	8

	~~Notes to Consolidated Financial Statements~~	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5349

Item 4.	Controls and Procedures	49

	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 5.	Other Information	52

Item 6.	Exhibits	53

	~~PART II — OTHER INFORMATION~~
~~Item 1.~~	~~Legal Proceedings~~Signature	54

~~Item 1A.~~	~~Risk Factors~~	54

~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	54

~~Item 6.~~	~~Exhibits~~	55

	~~Signature~~	56

Table of Contents

BLOOMIN’ BRANDS, INC.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA, UNAUDITED)


	SEPTEMBER 24, 2017		DECEMBER 25, 2016		MARCH 29, 2020			DECEMBER 29, 2019
ASSETS
Current Assets
Current assets
Cash and cash equivalents	$	98,697	$	127,176	$	403,395		$	67,145
Current portion of restricted cash and cash equivalents	3,735		7,886
Inventories	51,017		65,231		68,087			86,861
Other current assets, net	105,261		190,226		100,964			186,462
Total current assets	258,710		390,519		572,446			340,468
Restricted cash	—		1,124
Property, fixtures and equipment, net	1,184,251		1,237,148		996,091			1,036,077
Operating lease right-of-use assets					1,249,750			1,266,548
Goodwill	315,264		310,055		282,628			288,439
Intangible assets, net	527,743		535,523		468,082			470,615
Deferred income tax assets	59,801		38,764
Deferred income tax assets, net					95,870			73,426
Other assets, net	127,185		129,146		101,734			117,110
Total assets	$	2,472,954	$	2,642,279	$	3,766,601		$	3,592,683
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable					$	141,221		$	174,877
Accrued and other current liabilities					378,357			391,451
Unearned revenue					289,085			369,282
Current portion of long-term debt					29,367			26,411
Total current liabilities					838,030			962,021
Non-current operating lease liabilities					1,281,372			1,279,051
Deferred income tax liabilities					9,151			13,777
Long-term debt, net					1,389,273			1,022,293
Other long-term liabilities, net					148,632			138,060
Total liabilities					3,666,458			3,415,202
Commitments and contingencies (Note 18)
Stockholders’ equity
Bloomin’ Brands stockholders’ equity
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of March 29, 2020 and December 29, 2019					—			—
Common stock, $0.01 par value, 475,000,000 shares authorized; 87,416,867 and 86,945,869 shares issued and outstanding as of March 29, 2020 and December 29, 2019, respectively					874			869
Additional paid-in capital					1,074,081			1,094,338
Accumulated deficit					(793,992		)	(755,089		)
Accumulated other comprehensive loss					(189,013		)	(169,776		)
Total Bloomin’ Brands stockholders’ equity					91,950			170,342
Noncontrolling interests					8,193			7,139
Total stockholders’ equity					100,143			177,481
Total liabilities and stockholders’ equity					$	3,766,601		$	3,592,683

	(CONTINUED...)

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

Table of Contents

BLOOMIN’ BRANDS, INC.

~~CONSOLIDATED BALANCE SHEETS~~

~~(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA, UNAUDITED)~~

SEPTEMBER 24, 2017 DECEMBER 25, 2016
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable $ 183,439
$ 195,371
Accrued and other current liabilities 225,870
204,415
Unearned revenue 248,627
388,543
Current portion of long-term debt 58,826
35,079
Total current liabilities 716,762
823,408
Deferred rent 156,962
151,130
Deferred income tax liabilities 17,764
16,709
Long-term debt, net 1,141,866
1,054,406
Deferred gain on sale-leaseback transactions, net 188,363
181,696
Other long-term liabilities, net 214,026
219,030
Total liabilities 2,435,743
2,446,379
Commitments and contingencies (Note 15)

Mezzanine Equity
Redeemable noncontrolling interests 577
547
Stockholders’ Equity
Bloomin’ Brands Stockholders’ Equity
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of September 24, 2017 and December 25, 2016 —
—
Common stock, $0.01 par value, 475,000,000 shares authorized; 91,164,470 and 103,922,110 shares issued and outstanding as of September 24, 2017 and December 25, 2016, respectively 912
1,039
Additional paid-in capital 1,077,607
1,079,583
Accumulated deficit (961,318 ) (786,780 )
Accumulated other comprehensive loss (91,547 ) (111,143 )
Total Bloomin’ Brands stockholders’ equity 25,654
182,699
Noncontrolling interests 10,980
12,654
Total stockholders’ equity 36,634
195,353
Total liabilities, mezzanine equity and stockholders’ equity $ 2,472,954
$ 2,642,279

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

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)


	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED						THIRTEEN WEEKS ENDED
	SEPTEMBER 24, 2017			SEPTEMBER 25, 2016			SEPTEMBER 24, 2017			SEPTEMBER 25, 2016			MARCH 29, 2020			MARCH 31, 2019
Revenues
Restaurant sales	$	937,852		$	998,806		$	3,093,297		$	3,229,377		$	996,237		$	1,111,642
Franchise and other revenues	11,047			6,581			32,407			18,786			12,100			16,489
Total revenues	948,899			1,005,387			3,125,704			3,248,163			1,008,337			1,128,131
Costs and expenses
Cost of sales	296,632			322,080			984,510			1,044,179			319,693			352,111
Labor and other related	285,325			290,032			907,580			921,992			309,269			319,015
Other restaurant operating	231,293			243,175			723,357			747,189			246,555			250,854
Depreciation and amortization	47,826			48,551			142,479			145,206			48,268			49,482
General and administrative	66,063			65,072			215,059			208,663			84,802			70,589
Provision for impaired assets and restaurant closings	18,578			4,743			38,253			49,183			41,318			3,586
Total costs and expenses	945,717			973,653			3,011,238			3,116,412			1,049,905			1,045,637
Income from operations	3,182			31,734			114,466			131,751
Loss on defeasance, extinguishment and modification of debt	—			(418		)	(260		)	(26,998		)
Other income, net	7,531			2,079			14,761			2,059
(Loss) income from operations													(41,568		)	82,494
Other expense, net													(793		)	(168		)
Interest expense, net	(10,705		)	(10,217		)	(29,389		)	(33,394		)	(11,708		)	(11,181		)
Income before (benefit) provision for income taxes	8			23,178			99,578			73,418
(Loss) income before (benefit) provision for income taxes													(54,069		)	71,145
(Benefit) provision for income taxes	(4,038		)	1,950			14,280			24,372			(19,655		)	5,496
Net income	4,046			21,228			85,298			49,046
Less: net (loss) income attributable to noncontrolling interests	(290		)	495			1,422			3,015
Net income attributable to Bloomin’ Brands	$	4,336		$	20,733		$	83,876		$	46,031
Net (loss) income													(34,414		)	65,649
Less: net income attributable to noncontrolling interests													197			1,349
Net (loss) income attributable to Bloomin’ Brands													(34,611		)	64,300
Redemption of preferred stock in excess of carrying value													(3,496		)	—
Net (loss) income attributable to common stockholders													$	(38,107	)	$	64,300

Net income	$	4,046		$	21,228		$	85,298		$	49,046
Other comprehensive income:
Net (loss) income													$	(34,414	)	$	65,649
Other comprehensive (loss) income:
Foreign currency translation adjustment	6,399			45,471			17,770			58,151			(7,961		)	5,755
Unrealized gain (loss) on derivatives, net of tax	370			672			(139		)	(4,250		)
Reclassification of adjustment for loss on derivatives included in Net income, net of tax	492			947			1,919			2,902
Comprehensive income	11,307			68,318			104,848			105,849
Unrealized loss on derivatives, net of tax													(13,336		)	(4,381		)
Reclassification of adjustment for loss (gain) on derivatives included in Net (loss) income, net of tax													1,396			(364		)
Comprehensive (loss) income													(54,315		)	66,659
Less: comprehensive (loss) income attributable to noncontrolling interests	(306		)	2,509			1,376			7,435			(467		)	1,257
Comprehensive income attributable to Bloomin’ Brands	$	11,613		$	65,809		$	103,472		$	98,414
Comprehensive (loss) income attributable to Bloomin’ Brands													$	(53,848	)	$	65,402

Earnings per share:
(Loss) earnings per share attributable to common stockholders:
Basic	$	0.05		$	0.19		$	0.85		$	0.41		$	(0.44	)	$	0.70
Diluted	$	0.05		$	0.18		$	0.83		$	0.40		$	(0.44	)	$	0.69
Weighted average common shares outstanding:
Basic	92,485			109,399			98,137			113,553			87,129			91,415
Diluted	95,655			112,430			101,497			116,516			87,129			92,661

Cash dividends declared per common share	$	0.08		$	0.07		$	0.24		$	0.21

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

Table of Contents

BLOOMIN’ BRANDS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)

BLOOMIN’ BRANDS, INC.

COMMON STOCK
ADDITIONAL
PAID-IN
CAPITAL ACCUM-ULATED
DEFICIT
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
NON-
CONTROLLING
INTERESTS
TOTAL
SHARES AMOUNT
Balance, December 25, 2016 103,922
$ 1,039
$ 1,079,583
$ (786,780 ) $ (111,143 ) $ 12,654
$ 195,353
Net income —
—
—
83,876
—
1,594
85,470
Other comprehensive income (loss), net of tax —
—
—
—
19,596
(76 ) 19,520
Cash dividends declared, $0.24 per common share —
—
(23,677 ) —
—
—
(23,677 )
Repurchase and retirement of common stock (13,807 ) (138 ) —
(272,598 ) —
—
(272,736 )
Stock-based compensation —
—
17,969
—
—
—
17,969
Common stock issued under stock plans (1) 1,049
11
4,617
(180 ) —
—
4,448
Change in the redemption value of redeemable interests —
—
(172 ) —
—
—
(172 )
Purchase of noncontrolling interests, net of tax of $45 —
—
(713 ) —
—
(180 ) (893 )
Distributions to noncontrolling interests —
—
—
—
—
(4,158 ) (4,158 )
Contributions from noncontrolling interests —
—
—
—
—
727
727
Cumulative-effect from a change in accounting principle —
—
—
14,364
—
—
14,364
Other —
—
—
—
—
419
419
Balance, September 24, 2017 91,164
$ 912
$ 1,077,607
$ (961,318 ) $ (91,547 ) $ 10,980
$ 36,634

(CONTINUED...)

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~(IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)~~



	BLOOMIN’ BRANDS, INC.
	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
	SHARES	AMOUNT		ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
Balance, December 29, 2019	86,946	$	869	$	1,094,338		$	(755,089	)	$	(169,776	)	$	7,139		$	177,481
Cumulative-effect from a change in accounting principle, net of tax	—	—		—			(4,292		)	—			—			(4,292		)
Net (loss) income	—	—		—			(34,611		)	—			197			(34,414		)
Other comprehensive loss, net of tax	—	—		—			—			(19,754		)	(147		)	(19,901		)
Cash dividends declared, $0.20 per common share	—	—		(17,480		)	—			—			—			(17,480		)
Stock-based compensation	—	—		3,289			—			—			—			3,289
Consideration for preferred stock in excess of carrying value, net of tax	—	—		(3,496		)	—			517			1,261			(1,718		)
Common stock issued under stock plans (1)	471	5		(2,513		)	—			—			—			(2,508		)
Purchase of noncontrolling interests	—	—		(57		)	—			—			—			(57		)
Distributions to noncontrolling interests	—	—		—			—			—			(310		)	(310		)
Contributions from noncontrolling interests	—	—		—			—			—			53			53
Balance, March 29, 2020	87,417	$	874	$	1,074,081		$	(793,992	)	$	(189,013	)	$	8,193		$	100,143

BLOOMIN’ BRANDS, INC.
COMMON STOCK ADDITIONAL
PAID-IN
CAPITAL ACCUM-ULATED
DEFICIT ACCUMULATED
OTHER
COMPREHENSIVE
LOSS NON-
CONTROLLING
INTERESTS TOTAL
SHARES AMOUNT
Balance, December 27, 2015 119,215
$ 1,192
$ 1,072,861
$ (518,360 ) $ (147,367 ) $ 13,574
$ 421,900
Net income —
—
—
46,031
—
2,420
48,451
Other comprehensive income (loss), net of tax ��
—
—
—
52,383
(89 ) 52,294
Cash dividends declared, $0.21 per common share —
—
(23,981 ) —
—
—
(23,981 )
Repurchase and retirement of common stock (14,831 ) (148 ) —
(274,744 ) —
—
(274,892 )
Stock-based compensation —

18,390
—
—
—
18,390
Tax shortfall from stock-based compensation —
—
(410 ) —
—
—
(410 )
Common stock issued under stock plans (1) 811
8
3,654
(399 ) —
—
3,263
Change in the redemption value of redeemable interests —
—
(1,349 ) —
—
—
(1,349 )
Purchase of noncontrolling interests, net of tax of $1,504 —
—
(1,000 ) —
—
581
(419 )
Distributions to noncontrolling interests —
—
—
—
—
(4,245 ) (4,245 )
Contributions from noncontrolling interests —
—
—
—
—
556
556
Balance, September 25, 2016 105,195
$ 1,052
$ 1,068,165
$ (747,472 ) $ (94,984 ) $ 12,797
$ 239,558



	BLOOMIN’ BRANDS, INC.
	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
	SHARES	AMOUNT		ADDITIONAL PAID-IN CAPITAL			ACCUM- ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON-CONTROLLING INTERESTS			TOTAL
Balance, December 30, 2018	91,272	$	913	$	1,107,582		$	(920,010	)	$	(142,755	)	$	9,087		$	54,817
Cumulative-effect from a change in accounting principle, net of tax	—	—		—			141,285			—			—			141,285
Net income	—	—		—			64,300			—			1,349			65,649
Other comprehensive income (loss), net of tax	—	—		—			—			1,102			(92		)	1,010
Cash dividends declared, $0.10 per common share	—	—		(9,140		)	—			—			—			(9,140		)
Stock-based compensation	—			3,993			—			—			—			3,993
Common stock issued under stock plans (1)	375	3		(3,089		)	—			—			—			(3,086		)
Distributions to noncontrolling interests	—	—		—			—			—			(2,429		)	(2,429		)
Contributions from noncontrolling interests	—	—		—			—			—			264			264
Balance, March 31, 2019	91,647	$	916	$	1,099,346		$	(714,425	)	$	(141,653	)	$	8,179		$	252,363

________________


(1)	Net of forfeitures and shares withheld for employee taxes.

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

Table of Contents

BLOOMIN’ BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS, UNAUDITED)

THIRTY-NINE WEEKS ENDED
SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Cash flows provided by operating activities:
Net income $ 85,298
$ 49,046
Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 142,479
145,206
Amortization of deferred discounts and issuance costs 2,240
3,862
Amortization of deferred gift card sales commissions 18,530
21,146
Provision for impaired assets and restaurant closings 38,253
49,183
Stock-based and other non-cash compensation expense 19,775
17,646
Deferred income tax (benefit) expense (212 ) 1,764
Gain on sale of a business or subsidiary (15,787 ) (2,084 )
Loss on defeasance, extinguishment and modification of debt 260
26,998
Recognition of deferred gain on sale-leaseback transactions (8,836 ) (3,353 )
Excess tax benefit from stock-based compensation —
(1,214 )
Other non-cash items, net 4,690
(1,516 )
Change in assets and liabilities (63,675 ) (83,124 )
Net cash provided by operating activities 223,015
223,560
Cash flows (used in) provided by investing activities:

Proceeds from sale-leaseback transactions, net 83,866
320,287
Proceeds from sale of a business, net of cash divested 38,980
23,009
Capital expenditures (183,820 ) (185,581 )
Other investments, net (1,561 ) (3,813 )
Net cash (used in) provided by investing activities $ (62,535 ) $ 153,902

(CONTINUED...)



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020			MARCH 31, 2019
Cash flows provided by operating activities:
Net (loss) income	$	(34,414	)	$	65,649
Adjustments to reconcile Net (loss) income to cash provided by operating activities:
Depreciation and amortization	48,268			49,482
Amortization of deferred discounts and issuance costs	634			634
Amortization of deferred gift card sales commissions	9,090			8,407
Provision for impaired assets and restaurant closings	41,318			3,586
Non-cash operating lease costs	19,253			17,814
Provision for expected credit losses and contingent lease liabilities	7,522			—
Inventory obsolescence and spoilage	5,291			—
Stock-based and other non-cash compensation expense	3,289			6,035
Deferred income tax benefit	(10,940		)	(501		)
Loss on sale of a business or subsidiary	—			167
Loss on disposal of property, fixtures and equipment	796			7
Other, net	1,655			(667		)
Change in assets and liabilities	(63,471		)	(66,730		)
Net cash provided by operating activities	28,291			83,883
Cash flows used in investing activities:
Capital expenditures	(34,229		)	(44,710		)
Other investments, net	(569		)	2,690
Net cash used in investing activities	$	(34,798	)	$	(42,020	)

	(CONTINUED...)

Table of Contents

BLOOMIN’ BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS, UNAUDITED)


	THIRTY-NINE WEEKS ENDED						THIRTEEN WEEKS ENDED
	SEPTEMBER 24, 2017			SEPTEMBER 25, 2016			MARCH 29, 2020			MARCH 31, 2019
Cash flows used in financing activities:
Proceeds from issuance of long-term debt, net	$	124,443		$	364,211
Defeasance, extinguishment and modification of debt	—			(478,906		)
Cash flows provided by (used in) financing activities:
Repayments of long-term debt	(64,578		)	(221,266		)	$	(6,657	)	$	(7,428	)
Proceeds from borrowings on revolving credit facilities, net	467,500			591,500			505,000			148,200
Repayments of borrowings on revolving credit facilities	(417,000		)	(377,500		)	(129,000		)	(152,300		)
Proceeds from failed sale-leaseback transactions, net	5,942			��
Proceeds from the exercise of share-based compensation	4,628			3,662
Payments of taxes from share-based compensation, net							(2,508		)	(3,086		)
Distributions to noncontrolling interests	(4,158		)	(4,245		)	(310		)	(2,429		)
Contributions from noncontrolling interests	727			556			53			264
Purchase of limited partnership and noncontrolling interests	(5,354		)	(10,778		)	(57		)	—
Repayments of partner deposits and accrued partner obligations	(11,763		)	(14,985		)
Repurchase of common stock	(272,916		)	(275,291		)
Excess tax benefit from stock-based compensation	—			1,214
Payments for partner equity plan							(5,701		)	(5,460		)
Cash dividends paid on common stock	(23,677		)	(23,981		)	(17,480		)	(9,140		)
Net cash used in financing activities	(196,206		)	(445,809		)
Redemption of subsidiary preferred stock							(1,007		)	—
Net cash provided by (used in) financing activities							342,333			(31,379		)
Effect of exchange rate changes on cash and cash equivalents	1,972			5,250			424			459
Net decrease in cash, cash equivalents and restricted cash	(33,754		)	(63,097		)
Net increase in cash, cash equivalents and restricted cash							336,250			10,943
Cash, cash equivalents and restricted cash as of the beginning of the period	136,186			155,374			67,145			71,823
Cash, cash equivalents and restricted cash as of the end of the period	$	102,432		$	92,277		$	403,395		$	82,766
Supplemental disclosures of cash flow information:
Cash paid for interest	$	27,897		$	32,726		$	10,682		$	13,637
Cash paid for income taxes, net of refunds	28,134			51,833			5,408			4,255
Supplemental disclosures of non-cash investing and financing activities:
Change in acquisition of property, fixtures and equipment included in accounts payable or capital lease liabilities	$	6,375		$	17,174
Purchase of noncontrolling interest included in accrued and other current liabilities	—			1,414
Leased assets obtained in exchange for new operating lease liabilities							$	21,514		$	17,618
Leased assets obtained in exchange for new finance lease liabilities							473			76
Decrease in liabilities from the acquisition of property, fixtures and equipment							(1,950		)	(6,066		)

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

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Description of the Business and Basis of Presentation

Description of the Business - Bloomin’ Brands ~~Inc., through its subsidiaries~~ (“Bloomin’ Brands” or the “Company”), owns and operates casual, upscale casual and fine dining restaurants. The Company’s restaurant portfolio has ~~four~~4 concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. ~~Each of the Company’s concepts has additional~~Additional Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants in which itthe Company has no direct investment ~~and~~ are operated under franchise agreements.

Basis of Presentation - The accompanying interim unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange ~~Commission.~~Commission (“SEC”). Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States (“U.S. ~~GAAP”~~GAAP”) for complete financial statements. In the opinion of the Company, all adjustments necessary for fair financial statement presentation for the periods presented have been included and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December ~~25, 2016.~~29, 2019.

Risks and Uncertainties - In March 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. During the thirteen weeks ended March 29, 2020, the negative effect of COVID-19 on the Company’s business was significant. The Company experienced an initial decline in restaurant revenue that began in early March 2020 as business travel decreased and public anxiety about the spread of COVID-19 increased. Government agencies began strongly discouraging or prohibiting people from visiting restaurants and instructed citizens to shelter in place to reduce the spread of COVID-19. In response to these conditions, the Company temporarily closed restaurant dining rooms in the U.S. on March 20, 2020 and shifted operations to provide only take-out and delivery service. See Note 2 - COVID-19 Impact for details regarding the financial impact of the COVID-19 pandemic on the Company’s financial results during the thirteen weeks ended March 29, 2020.

The duration and severity of the COVID-19 pandemic and its long-term impact on the Company’s business are uncertain at this time. Given the daily evolution of the pandemic and the global responses to curb its spread, the Company may not be able to accurately estimate the effects of the pandemic on its results of operations, financial condition, or liquidity for the foreseeable future.

Recently Adopted Financial Accounting Standards - ~~Effective~~On December ~~26, 2016,~~30, 2019, the Company adopted Accounting Standards Update (“~~ASU”~~ASU”) ~~2016-09: “Compensation - Stock Compensation~~No. 2016-13, “Financial Instruments – Credit Losses (Topic ~~718)~~326): ~~Improvements to Employee Share-Based Payment Accounting”~~Measurement of Credit Losses on Financial Instruments,” (“ASU No. ~~2016-09”~~2016-13”)~~. ASU No. 2016-09 simplifies several aspects related to the accounting~~, which requires measurement and recognition of losses for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements and classification on the statement of cash flows. Upon adoption, the Company made an accounting policy election to recognize forfeitures as they occur. Using the modified retrospective transition method requiredfinancial instruments under the ~~standard, the Company recorded a cumulative-effect adjustment for the~~current expected credit loss model versus incurred losses under current guidance. The Company’s adoption of ASU No. ~~2016-09~~2016-13 and its related amendments (“the new credit loss standard”) resulted in cumulative-effect debit adjustment to the beginning balance of ~~$14.4~~Accumulated deficit of $4.3 million, including $4.8 million of contingent lease liabilities related to lease guarantees and $1.0 million of incremental reserve for ~~previously unrecognized excess~~credit losses, net of the $1.5 million net increase in related deferred tax ~~benefits, which increased Deferred tax assets~~assets. Measurement processes and ~~reduced Accumulated deficit. The recognition of excess tax benefits~~related controls have been implemented by the Company to ensure compliance with the new credit loss standard. See Note 16 - Allowance for Expected Credit Losses for additional details regarding the Company’s allowance for expected credit losses.

On December 30, 2019, the Company also adopted ASU No. 2018-15, “Intangibles-Goodwill and ~~tax shortfalls~~Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in ~~the income statement and presentation of excess tax benefits on the statement of cash flows were adopted prospectively, with no adjustments made to prior periods. The remaining provisions of~~ a Cloud Computing Arrangement That Is a Service Contract,” (“ASU No. ~~2016-09 did not have a material impact on~~2018-15”), which clarifies the ~~Company’s Consolidated Financial Statements.~~accounting for implementation costs in cloud computing arrangements. The Company contracts with 3rd party information technology providers for

Effective June 26, 2017, the Company adopted ASU No. 2016-18, “Statement of Cash Flows (Topic 230), Restricted Cash” (“ASU No. 2016-18”). ASU No. 2016-18 provides guidance on the presentation of restricted cash and restricted cash equivalents, which are now included with cash and cash equivalents when reconciling the beginning and ending cash amounts shown on the statements of cash flows. Using the retrospective transition method required under the standard, the Company has adjusted the presentation of its Condensed Consolidated Statements of Cash Flows for all periods presented. The adoption of ASU No. 2016-18 did not have any other impact on the Company’s Consolidated Financial Statements.

108

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

various service arrangements including software, platform and information technology infrastructure. The ~~following table provides additional details by~~Company’s prospective adoption of ASU No. 2018-15 did not have a material effect on its consolidated financial ~~statement line item of the adjusted presentation in the Company’s Condensed Consolidated Statement of Cash Flows for the thirty-nine weeks ended September 25, 2016:~~statements.

THIRTY-NINE WEEKS ENDED SEPTEMBER 25, 2016
(dollars in thousands) AS REPORTED 2016-18 IMPACT ADJUSTED
Cash flows provided by investing activities:
Decrease in restricted cash $ 40,977
$ (40,977 ) $ —
Increase in restricted cash (18,739 ) 18,739
—
Net cash provided by investing activities $ 176,140
$ (22,238 ) $ 153,902

Net decrease in cash, cash equivalents and restricted cash $ (40,863 ) $ (22,234 ) $ (63,097 )
Cash, cash equivalents and restricted cash as of the beginning of the period 132,337
23,037
155,374
Cash, cash equivalents and restricted cash as of the end of the period $ 91,474
$ 803
$ 92,277

Recently Issued Financial Accounting Standards Not Yet Adopted - In ~~May 2014,~~March 2020, the Financial Accounting Standards Board (“~~the~~ FASB”) issued ASU No. ~~2014-09 “Revenue Recognition~~2020-04, “Reference Rate Reform (Topic 606), Revenue from Contracts with Customers” (“ASU No. 2014-09”). ASU No. 2014-09 provides a single source of guidance for revenue arising from contracts with customers and supersedes current revenue recognition standards. Under ASU No. 2014-09, revenue is recognized in an amount that reflects the consideration an entity expects to receive for the transfer of goods and services. The standard also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company continues to assess the overall impact848): Facilitation of the ~~adoption~~Effects of ~~ASU No. 2014-09~~Reference Rate Reform on ~~its Consolidated~~ Financial ~~Statements and related disclosures, and anticipates testing new controls and processes designed to comply with ASU No. 2014-09 throughout the remainder of 2017 to permit adoption on January 1, 2018.~~

While the Company continues to assess all potential impacts of the standard, it currently believes the most significant impact relates to accounting for gift card breakage and advertising fees charged to franchisees. Under the new standard, the Company expects to recognize gift card breakage proportional to actual gift card redemptions. Advertising fees charged to franchisees, which are currently recorded as a reduction to Other restaurant operating expenses, will be recognized as revenue. In addition, initial franchise fees will be recognized over the term of the franchise agreement, which is not expected to have a material impact on the Company’s Consolidated Financial Statements.

The Company intends to adopt ASU No. 2014-09 using the full retrospective transition method, which will result in restating each prior reporting period presented in the year of adoption. Additionally, a cumulative effect adjustment will be recorded to the opening balance of accumulated deficit as of the first day of fiscal year 2016, the earliest period presented. Adoption of ASU No. 2014-09 will also have a significant impact on the Company’s disclosures.

~~In February 2016, the FASB issued ASU No. 2016-02: “Leases (Topic 842)~~Reporting,” (“ASU No. ~~2016-02”~~2020-04”). The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU No. ~~2016-02 requires the lease rights~~2020-04 is currently effective and ~~obligations arising from lease contracts, including existing~~upon adoption may be applied prospectively to contract modifications made and ~~new arrangements, to be recognized as assets and liabilities~~hedging relationships entered into or evaluated on ~~the balance sheet. ASU No. 2016-02 is effective for the Company in fiscal year 2019 and must be adopted using a modified retrospective approach.~~or before December 31, 2022. The Company is currently evaluating its contracts and the ~~impact that~~optional expedients provided by the ~~adoption of ASU No. 2016-02 will have on its Consolidated Financial Statements.~~new standard.

~~In August 2016,~~ ~~the FASB issued~~ ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU No. 2016-15”) which provides guidance on the statement of cash flows presentation of certain transactions where diversity in practice exists. ASU No. 2016-15 will be effect~~ive for the Company in fiscal year 2018, and early adoption is permitted. The Company does not expect ASU No. 2016-15 to have a material impact on its~~ ~~Consolidated Financial Statements.~~

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (“ASU No. 2017-04”). ASU No. 2017-04 eliminates the second step of goodwill impairment, which requires a hypothetical purchase price allocation. Under ASU No. 2017-04, goodwill impairment will be calculated as the amount a reporting unit’s carrying value exceeds its calculated fair value. ASU No. 2017-04 will be applied prospectively and is effective for the Company in fiscal year 2020, with early adoption permitted. The Company does not expect the adoption of ASU No. 2017-04 to have a material impact on its Consolidated Financial Statements.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (“ASU No. 2017-12”) which provides guidance for reporting the economic results of hedging activities and to simplify the disclosures of risk exposures and hedging strategies. ASU No. 2017-12 will be effective for the Company in fiscal year 2019, with early adoption permitted. The Company is currently evaluating the impact of ASU No. 2017-12 on its Consolidated Financial Statements.

Reclassifications - The Company reclassified certain items in the accompanying ~~Consolidated Financial Statements~~consolidated financial statements for prior periods to be comparable with the classification for the current period. These reclassifications had no effect on previously reported net income.

2. ~~Disposals~~COVID-19 Impact

~~Refranchising~~ ~~- During the thirteen weeks ended June 25, 2017, the Company completed the sale of~~ 54 ~~of its existing U.S. Company-owned Outback Steakhouse and Carrabba’s Italian Grill locations to~~ ~~two~~ ~~of its existing franchisees (the “Buyers”) for aggregate cash proceeds of~~ ~~$36.2 million~~, net of certain closing adjustments. The transactions resulted in an aggregate net gain of $7.4 million, recorded within Other income, net, in the Consolidated Statements of Operations and Other Comprehensive Income, and is net of an impairment of $1.7 million related to certain Company-owned assets leased to the Buyers. Included in the cash proceeds are initial franchise fees of $2.2 million that are recorded within Franchise and other revenues in the Consolidated Statements of Operations and Other Comprehensive Income.

~~These restaurants are now operated as franchises by the Buyers and the Company remains contingently liable on certain real estate lease agreements assigned to the Buyers. See Note~~ ~~15 -~~ ~~Commitments and Contingencies~~ ~~for additional details regarding lease guarantees.~~

~~Other~~ ~~- During the thirteen weeks ended September 24, 2017, the Company closed and completed the sale of one U.S. Company-owned Carrabba’s Italian Grill location for a purchase price of $9.9 million~~, ~~net of closing costs. The sale resulted in a net gain of $8.4 million, recorded within Other income, net, in the Consolidated Statements of Operations and Other Comprehensive Income.~~

~~Outback Steakhouse South Korea~~ ~~- In 2016, the Company completed the sale of its Outback Steakhouse subsidiary in South Korea (“Outback Steakhouse South Korea”).~~ Following is a summary of the ~~Income (loss) before income taxes of Outback Steakhouse South Korea included~~charges recorded in connection with the ~~Consolidated Statements of Operations and Comprehensive Income~~COVID-19 pandemic for the ~~periods indicated:~~period indicated below (dollars in thousands):

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 25, 2016 SEPTEMBER 25, 2016
Income (loss) before income taxes (1) $ 2,246
$ (32,348 )



CHARGES	CONSOLIDATED INCOME STATEMENT CLASSIFICATION	THIRTEEN WEEKS ENDED
CHARGES	CONSOLIDATED INCOME STATEMENT CLASSIFICATION	MARCH 29, 2020
Inventory obsolescence and spoilage (1)	Cost of sales	$	6,182
Compensation for idle employees (2)	Labor and other related	16,186
Lease guarantee contingent liabilities (3)	General and administrative	4,188
Allowance for expected credit losses (4)	General and administrative	3,334
Other charges	General and administrative	573
Right-of-use asset impairment (5)	Provision for impaired assets and restaurant closings	20,484
Fixed asset impairment (5)	Provision for impaired assets and restaurant closings	11,728
Goodwill and other impairment (6)	Provision for impaired assets and restaurant closings	2,388
		$	65,063

________________


(1)	Includes the write-off of value added tax credits related to the purchase of inventory by the Company’s Brazil subsidiary.


(2)	Represents relief pay for hourly employees impacted by the closure of dining rooms.


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


(4)	Includes additional reserves based on the Company’s increase in expected credit losses, primarily related to franchise receivables.


(5)	Includes impairments resulting from the remeasurement of assets utilizing projected future cash flows revised for current economic conditions and the closure of certain restaurants.

(6)

Includes impairment ~~charges~~ of ~~$39.6 million for Assets held for sale during the thirty-nine weeks ended September 25, 2016. Includes a gain of $2.1 million on the sale of Outback Steakhouse South Korea~~goodwill for the ~~thirteen~~Company’s Hong Kong subsidiary. See Note 8 - Goodwill and ~~thirty-nine weeks ended September 25, 2016~~.Intangible Assets, Net for details regarding impairment of goodwill.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

3. Revenue Recognition

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020		MARCH 31, 2019
Revenues
Restaurant sales	$	996,237	$	1,111,642
Franchise and other revenues
Franchise revenue	$	9,549	$	13,762
Other revenue	2,551		2,727
Total Franchise and other revenues	$	12,100	$	16,489
Total revenues	$	1,008,337	$	1,128,131

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



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020				MARCH 31, 2019
(dollars in thousands)	RESTAURANT SALES		FRANCHISE REVENUE		RESTAURANT SALES		FRANCHISE REVENUE
U.S.
Outback Steakhouse	$	530,685	$	6,541	$	586,771	$	10,601
Carrabba’s Italian Grill	146,875		461		173,475		171
Bonefish Grill	135,072		136		156,434		210
Fleming’s Prime Steakhouse & Wine Bar	70,960		—		83,026		—
Other	1,297		—		1,107		—
U.S. total	$	884,889	$	7,138	$	1,000,813	$	10,982
International
Outback Steakhouse Brazil (1)	$	91,590	$	—	$	89,565	$	—
Other (1)(2)	19,758		2,411		21,264		2,780
International total	$	111,348	$	2,411	$	110,829	$	2,780
Total	$	996,237	$	9,549	$	1,111,642	$	13,762

________________


(1)	Brazil Restaurant sales are reported on a one-month lag and are presented on a calendar basis. Restaurant sales for Brazil during the first fiscal quarter of 2020 (through February 29, 2020) do not include any material impact from the COVID-19 pandemic.


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

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

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



(dollars in thousands)	MARCH 29, 2020		DECEMBER 29, 2019
Other current assets, net
Deferred gift card sales commissions	$	13,049	$	18,554

Unearned revenue
Deferred gift card revenue	$	277,518	$	358,757
Deferred loyalty revenue	11,076		10,034
Deferred franchise fees - current	491		491
Total Unearned revenue	$	289,085	$	369,282

Other long-term liabilities, net
Deferred franchise fees - non-current	$	4,453	$	4,599

The following table is a rollforward of deferred gift card sales commissions for the periods indicated:



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Balance, beginning of period	$	18,554		$	16,431
Deferred gift card sales commissions amortization	(9,090		)	(8,407		)
Deferred gift card sales commissions capitalization	4,324			3,833
Other	(739		)	(662		)
Balance, end of period	$	13,049		$	11,195

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Balance, beginning of period	$	358,757		$	333,794
Gift card sales	58,439			55,472
Gift card redemptions	(133,181		)	(141,459		)
Gift card breakage	(6,497		)	(6,884		)
Balance, end of period	$	277,518		$	240,923

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

4. Impairments, ~~and~~ Exit Costs and Disposals

The components of Provision for impaired assets and restaurant closings are as ~~follows:~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Impairment losses
U.S. $ 12,339
$ 5,267
$ 13,272
$ 5,348
International 1,903
—
1,903
39,636
Total impairment losses $ 14,242
$ 5,267
$ 15,175
$ 44,984
Restaurant closure expenses
U.S. $ 4,336
$ (524 ) $ 23,078
$ 4,325
International —
—
—
(126 )
Total restaurant closure expenses $ 4,336
$ (524 ) $ 23,078
$ 4,199
Provision for impaired assets and restaurant closings $ 18,578
$ 4,743
$ 38,253
$ 49,183

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020		MARCH 31, 2019
Impairment losses
U.S.	$	30,972	$	3,464
International (1)	3,172		18
Corporate	6,280		—
Total impairment losses	$	40,424	$	3,482
Restaurant closure expenses
U.S.	$	721	$	87
International	173		17
Total restaurant closure expenses	$	894	$	104
Provision for impaired assets and restaurant closings	$	41,318	$	3,586

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Impairment, facility closure and other expenses
2017 Closure Initiative (1) $ 1,848
$ —
$ 19,051
$ —
Bonefish Restructuring (2) 1,924
(685 ) 2,733
3,695
Provision for impaired assets and restaurant closings $ 3,772
$ (685 ) $ 21,784
$ 3,695
Severance and other expenses
2017 Closure Initiative (1) $ —
$ —
$ 2,948
$ —
Bonefish Restructuring (2) —
—
—
601
General and administrative $ —
$ —
$ 2,948
$ 601
Reversal of deferred rent liability
2017 Closure Initiative (1) $ —
$ —
$ (4,761 ) $ —
Bonefish Restructuring (2) —
(609 ) —
(3,410 )
Other restaurant operating $ —
$ (609 ) $ (4,761 ) $ (3,410 )
$ 3,772
$ (1,294 ) $ 19,971
$ 886

________________

(1)

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

Includes goodwill impairment charges of the core markets of São Paulo and Rio de Janeiro in Brazil (the “2017 Closure Initiative”). Most of these restaurants were closed in 2017 to date, with the balance mostly closing as leases and certain operating covenants expire or are amended or waived. Expenses of $1.9$2.0 million ~~related to the 2017 Closure Initiative for~~during the thirteen ~~and thirty-nine~~ weeks ended ~~September 24, 2017 were recognized within the International segment, with all other expenses recognized within the U.S. segment.~~

~~(2)~~

On February 12, 2016, the Company decided to close 14 Bonefish Grill restaurants (the “Bonefish Restructuring”). The Company expects to substantially complete these restaurant closings through the first quarterMarch 29, 2020. See Note 8 - Goodwill and Intangible Assets, Net for details regarding impairment of ~~2019. Expenses related to the Bonefish Restructuring are recognized within the U.S. segment.~~goodwill.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

~~Surplus Properties -~~ The Company owns certain U.S. restaurant properties and assets that are no longer utilized to operate its restaurant concepts (“surplus properties”). Surplus properties primarily consist of closed properties which include land and a building, and liquor licenses not needed for operations. Surplus properties may be classified in the Consolidated Balance Sheets as assets held for sale or as assets held and used when the Company does not expect to sell these assets within the next 12 months. Following is a summary of the carrying value and number of surplus properties as of the dates indicated:

(dollars in thousands) CONSOLIDATED BALANCE SHEET CLASSIFICATION SEPTEMBER 24, 2017 DECEMBER 25, 2016
Surplus properties - assets held for sale Other current assets, net $ 3,690
$ 676
Surplus properties - assets held and used Property, fixtures and equipment, net 23,599
34,501
Total surplus properties $ 27,289
$ 35,177

Number of surplus properties owned 21
18

During the thirteen ~~and thirty-nine~~ weeks ended ~~September 24, 2017,~~March 29, 2020, the Company recognized asset impairment and closure charges related to the COVID-19 pandemic of $31.3 million in the U.S. segment and $3.3 million in the international segment. The Company also recognized asset impairment charges related to transformational initiatives of ~~$9.5~~$6.3 million, ~~in connection with the remeasurement of certain held and used surplus properties currently leased~~which were not allocated to ~~the owners of~~ its ~~former restaurant concepts.~~operating segments.

~~Other Impairments -~~ ~~During the thirteen and thirty-nine weeks ended September 25, 2016, the Company recognized impairment charges of $3.2 million for its Puerto Rico subsidiary, within the U.S. segment.~~

The remaining ~~restaurant~~ impairment and closing charges for the periods presented resulted primarily from ~~the carrying value of a restaurant’s assets exceeding its estimated fair market value, primarily due to~~ locations identified for ~~relocation.~~remodel, relocation or closure and certain other assets.

~~Projected Future Expenses and Cash Expenditures~~ - The Company currently expects to incur additional charges for the Closure Initiatives over the next two years, including costs associated with lease obligations, employee terminations and other closure-related obligations. Following is a summary of remaining estimated pre-tax expense by type as of September 24, 2017:

Estimated future expense (dollars in millions)
2017 CLOSURE INITIATIVE BONEFISH RESTRUCTURING
Lease related liabilities, net of subleases $ 3.2
to $ 4.1
$ 2.2
to $ 5.1
Employee severance and other obligations 0.4
to 0.8
0.3
to 0.5
Total estimated future expense $ 3.6
to $ 4.9
$ 2.5
to $ 5.6

Total estimated future cash expenditures (dollars in millions) $ 25.3
to $ 29.5
$ 10.1
to $ 12.3

Total future undiscounted cash expenditures for the 2017 Closure Initiative and Bonefish Restructuring, primarily related to lease liabilities, are expected to occur over the remaining lease terms with the final term ending in January 2029 and October 2024, respectively.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

Accrued Facility Closure and Other Costs Rollforward - The following table summarizes the Company’s accrual activity related to facility closure and other costs, ~~primarily~~ associated with certain closure initiatives, for the ~~Closure Initiatives, during the thirty-nine weeks ended September 24, 2017:~~period indicated:


	THIRTY-NINE WEEKS ENDED			THIRTEEN WEEKS ENDED
(dollars in thousands)	SEPTEMBER 24, 2017			MARCH 29, 2020
Beginning of the period	$	6,557
Charges	24,426
Balance, beginning of the period				$	14,542
Cash payments	(7,963		)	(925		)
Accretion				281
Adjustments	(1,348		)	428
End of the period (1)	$	21,672
Balance, end of the period (1)				$	14,326

________________


(1)	As of ~~September 24, 2017,~~March 29, 2020, the Company had exit-related accruals related to certain closure initiatives of ~~$6.4~~$3.2 million recorded in Accrued and other current liabilities and ~~$15.3~~$11.1 million recorded in ~~Other long-term~~Non-current operating lease liabilities ~~net in the~~on its Consolidated Balance Sheet.

Refranchising - During the thirteen weeks ended March 31, 2019, the Company completed the sale of 18 of its existing U.S. Company-owned Carrabba’s Italian Grill locations to an existing franchisee for cash proceeds of $3.6 million, net of certain purchase price adjustments.

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

5. (Loss) Earnings Per Share

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



	THIRTEEN WEEKS ENDED
(in thousands, except per share data)	MARCH 29, 2020			MARCH 31, 2019
Net (loss) income attributable to Bloomin’ Brands	$	(34,611	)	$	64,300
Redemption of preferred stock in excess of carrying value (1)	(3,496		)	—
Net (loss) income attributable to common stockholders	$	(38,107	)	$	64,300

Basic weighted average common shares outstanding	87,129			91,415

Effect of diluted securities:
Stock options	—			792
Nonvested restricted stock units	—			358
Nonvested performance-based share units	—			96
Diluted weighted average common shares outstanding	87,129			92,661

Basic (loss) earnings per share attributable to common stockholders	$	(0.44	)	$	0.70
Diluted (loss) earnings per share attributable to common stockholders	$	(0.44	)	$	0.69

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(in thousands, except per share data) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Net income attributable to Bloomin’ Brands $ 4,336
$ 20,733
$ 83,876
$ 46,031

Basic weighted average common shares outstanding 92,485
109,399
98,137
113,553

Effect of diluted securities:
Stock options 2,781
2,720
2,948
2,719
Nonvested restricted stock and restricted stock units 389
311
392
242
Nonvested performance-based share units —
—
20
2
Diluted weighted average common shares outstanding 95,655
112,430
101,497
116,516

Basic earnings per share $ 0.05
$ 0.19
$ 0.85
$ 0.41
Diluted earnings per share $ 0.05
$ 0.18
$ 0.83
$ 0.40
________________

(1)

Consideration paid in excess of carrying value for the redemption of preferred stock is considered a deemed dividend and, for purposes of calculating earnings per share, reduces net income attributable to common stockholders for the thirteen weeks ended March 29, 2020. See Note 12 - Stockholders’ Equity for additional details regarding the redemption of preferred stock of the Company’s Abbraccio subsidiary.

~~Dilutive securities~~Securities outstanding not included in the computation of (loss) earnings per share attributable to common stockholders because their effect was antidilutive were as ~~follows:~~follows, for the periods indicated:



	THIRTEEN WEEKS ENDED
(shares in thousands)	MARCH 29, 2020	MARCH 31, 2019
Stock options	4,665	3,384
Nonvested restricted stock units	651	222
Nonvested performance-based share units	533	260

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(shares in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Stock options 6,065
5,530
5,663
5,079
Nonvested restricted stock and restricted stock units 179
103
174
285
Nonvested performance-based share units 134
130
256
99

6. Stock-based Compensation Plans

The Company recognized stock-based compensation expense as follows for the periods indicated:



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020		MARCH 31, 2019
Stock options	$	832	$	1,159
Restricted stock units	1,683		1,749
Performance-based share units	699		1,003
	$	3,214	$	3,911

During the thirteen weeks ended March 29, 2020, the Company made grants of 0.1 million stock options, 0.3 million time-based restricted stock units and 0.5 million performance-based share units.

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

~~5. Stock-based Compensation Plans~~

~~The Company recognized stock-based compensation expense as follows:~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Stock options $ 2,705
$ 2,929
$ 8,404
$ 8,971
Restricted stock and restricted stock units 2,527
2,322
7,769
6,901
Performance-based share units (235 ) 21
1,001
1,773
$ 4,997
$ 5,272
$ 17,174
$ 17,645

During the thirty-nine weeks ended September 24, 2017, the Company made grants to its employees of 1.3 million stock options, 0.6 million time-based restricted stock units and 0.4 million performance-based share units.

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


	THIRTY-NINE WEEKS ENDED						THIRTEEN WEEKS ENDED
	SEPTEMBER 24, 2017			SEPTEMBER 25, 2016			MARCH 29, 2020			MARCH 31, 2019
Assumptions:
Weighted-average risk-free interest rate (1)	1.92		%	1.32		%	0.90		%	2.51		%
Dividend yield (2)	1.84		%	1.59		%	4.34		%	1.89		%
Expected term (3)	6.3 years			6.1 years			5.5 years			5.5 years
Weighted-average volatility (4)	33.72		%	35.18		%	30.43		%	31.87		%

Weighted-average grant date fair value per option	$	5.09		$	5.28		$	3.12		$	5.76

________________


(1)	Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for periods within the expected term of the option.


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


(3)	Expected term represents the period of time that the options are expected to be outstanding. The ~~simplified method of estimating~~Company estimates the expected term ~~is used since the Company does not have significant~~based on historical exercise experience for its stock options.


(4)	~~Volatility is based~~Based on the historical ~~volatilities~~volatility of the Company’s stock.

The following represents unrecognized stock compensation expense and the remaining weighted-average vesting period as of ~~September 24, 2017:~~March 29, 2020:



	UNRECOGNIZED COMPENSATION EXPENSE (dollars in thousands)		REMAINING WEIGHTED-AVERAGE VESTING PERIOD (in years)
Stock options	$	6,127	1.8
Restricted stock units	$	16,967	2.2
Performance-based share units	$	14,016	2.3

UNRECOGNIZED COMPENSATION EXPENSE
(dollars in thousands) REMAINING WEIGHTED-AVERAGE VESTING PERIOD
(in years)
Stock options $ 17,189
2.4
Restricted stock and restricted stock units $ 22,588
2.6
Performance-based share units $ 1,733
1.9

As7. Other Current Assets, Net

Other current assets, net, consisted of ~~September 24, 2017,~~ the ~~maximum number~~following as of ~~shares of common stock available for issuance pursuant to~~ the ~~Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan was 3,991,216.~~

periods indicated:



(dollars in thousands)	MARCH 29, 2020		DECEMBER 29, 2019
Prepaid expenses	$	27,716	$	20,218
Accounts receivable - gift cards, net	9,851		104,591
Accounts receivable - vendors, net	10,407		13,465
Accounts receivable - franchisees, net	435		1,322
Accounts receivable - other, net	19,414		21,734
Deferred gift card sales commissions	13,049		18,554
Assets held for sale	5,640		3,317
Other current assets, net (1)	14,452		3,261
	$	100,964	$	186,462

________________


(1)	Includes $10.0 million of Company-owned life insurance policies as of March 29, 2020 transferred to current assets during the thirteen weeks ended March 29, 2020 for planned payment of deferred compensation obligations.

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

~~6. Other Current Assets, Net~~

~~Other current assets, net, consisted of the following:~~

(dollars in thousands) SEPTEMBER 24, 2017 DECEMBER 25, 2016
Prepaid expenses $ 36,481
$ 35,298
Accounts receivable - gift cards, net 11,588
102,664
Accounts receivable - vendors, net 4,677
10,107
Accounts receivable - franchisees, net 3,345
1,677
Accounts receivable - other, net 32,274
20,497
Assets held for sale 4,055
1,331
Other current assets, net 12,841
18,652
$ 105,261
$ 190,226

~~7. Property, Fixtures and Equipment, Net~~

During the thirty-nine weeks ended September 24, 2017, the Company entered into sale-leaseback transactions with third-parties in which it sold 26 restaurant properties at fair market value for gross proceeds of $92.5 million. In connection with the sale-leaseback transactions, the Company recorded deferred gains of $19.4 million, which are amortized to Other restaurant operating expense in the Consolidated Statements of Operations and Comprehensive Income over the initial term of each lease, ranging from 10 to 20 years.

8. Goodwill and Intangible Assets, Net

Goodwill - The following table is a rollforward of goodwill:



(dollars in thousands)	U.S.		INTERNATIONAL			CONSOLIDATED
Balance as of December 29, 2019	$	170,657	$	117,782		$	288,439
Translation adjustments	—		(3,838		)	(3,838		)
Impairment charges	—		(1,973		)	(1,973		)
Balance as of March 29, 2020	$	170,657	$	111,971		$	282,628

The COVID-19 outbreak was considered a triggering event, indicating that the carrying amount of goodwill may not be recoverable. As a result, the Company performed a quantitative assessment for all reporting units to determine whether a reporting unit was impaired. Based on this assessment, which utilized a discounted cash flow analysis, the Company recorded full impairment of goodwill related to its Hong Kong reporting unit of $2.0 million, within the international segment, during the thirteen weeks ended March 29, 2020. Impairment was not recorded for any of the Company’s other reporting units as a result the quantitative assessment.

9. Other Assets, Net

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

(dollars in thousands) U.S. INTERNATIONAL CONSOLIDATED
Balance as of December 25, 2016 $ 172,424
$ 137,631
$ 310,055
Translation adjustments —
6,866
6,866
Divestitures (1) (1,657 ) —
(1,657 )
Balance as of September 24, 2017 $ 170,767
$ 144,497
$ 315,264



(dollars in thousands)	MARCH 29, 2020		DECEMBER 29, 2019
Company-owned life insurance (1)	$	46,534	$	60,126
Deferred financing fees (2)	4,476		4,893
Liquor licenses	24,224		24,289
Other assets	26,500		27,802
	$	101,734	$	117,110

________________


(1)	During the ~~thirty-nine~~thirteen weeks ended ~~September 24, 2017,~~March 29, 2020, the Company ~~disposed~~reclassified $10.0 million of ~~Goodwill in connection with the sale~~Company-owned life insurance policies to current assets for planned payment of 54deferred compensation obligations.


(2)	Net of ~~its U.S. Company-owned Outback Steakhouse~~accumulated amortization of $7.2 million and ~~Carrabba’s Italian Grill locations to existing franchisees.~~$6.8 million as of March 29, 2020 and December 29, 2019, respectively.

The Company performed its annual assessment for impairment of goodwill and other indefinite-lived intangible assets during the fiscal second quarters of 2017 and 2016. In connection with these assessments, the Company did not record any goodwill or indefinite-lived intangible impairment charges.

1715

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

9.10. Long-term Debt, Net

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


	SEPTEMBER 24, 2017					DECEMBER 25, 2016					MARCH 29, 2020					DECEMBER 29, 2019
(dollars in thousands)	OUTSTANDING BALANCE			INTEREST RATE		OUTSTANDING BALANCE			INTEREST RATE		OUTSTANDING BALANCE			INTEREST RATE		OUTSTANDING BALANCE			INTEREST RATE
Senior Secured Credit Facility:
Term loan A (1)	$	247,500		3.23	%	$	258,750		2.63	%	$	443,750		3.02	%	$	450,000		3.40	%
Term loan A-1	135,000			3.20	%	140,625			2.70	%
Term loan A-2	125,000			3.20	%	—			—	%
Revolving credit facility (1)	672,500			3.21	%	622,000			2.67	%	975,000			3.29	%	599,000			3.44	%
Total Senior Secured Credit Facility	$	1,180,000				$	1,021,375				$	1,418,750				$	1,049,000
PRP Mortgage Loan	—			—	%	47,202			3.21	%
Financing obligations	19,583			7.45% to 7.60%		19,595			7.45% to 7.60%
Capital lease obligations	2,138					2,364
Other notes payable	944			0.00% to 2.18%		1,776			0.00% to 7.00%
Finance lease liabilities											2,328					2,308
Other											—			—	%	50			2.18	%
Less: unamortized debt discount and issuance costs	(1,973		)			(2,827		)			(2,438		)			(2,654		)
	$	1,200,692				$	1,089,485
Total debt, net											$	1,418,640				$	1,048,704
Less: current portion of long-term debt	(58,826		)			(35,079		)			(29,367		)			(26,411		)
Long-term debt, net	$	1,141,866				$	1,054,406				$	1,389,273				$	1,022,293

________________


(1)	~~Represents~~Interest rate represents the weighted-average interest rate for the respective ~~period.~~periods.

Amended Credit Agreement ~~Amendment~~ - On May ~~22, 2017,~~4, 2020, the Company and its wholly-owned subsidiary OSI Restaurant Partners, LLC (“OSI”), ~~a wholly-owned subsidiary of the Company,~~as co-borrowers, entered into an amendment ~~(the “Amendment”)~~ to its existing credit agreement, dated ~~October 26, 2012 (as previously amended,~~November 30, 2017 (the “Amended Credit Agreement”), which provides relief for the ~~“Credit Agreement”~~financial covenant to maintain a specified quarterly Total Net Leverage Ratio (“TNLR”). Without such amendment, violation of financial covenants under the original credit agreement could have resulted in default. TNLR is the ratio of Consolidated Total Debt (Current portion of long-term debt and Long-term debt, net of cash) to Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other adjustments as defined in the Amended Credit Agreement). The ~~Amendment provided an incremental Term loan A-2 in an aggregate principal amount~~Amended Credit Agreement waives the TNLR requirement for the remainder of ~~$125.0 million. No other material changes were made~~fiscal year 2020 and requires a TNLR based on a seasonally annualized calculation of Consolidated EBITDA not to exceed the following thresholds for the periods indicated:



QUARTERLY PERIOD ENDED	MAXIMUM RATIO
March 28, 2021 (1)	5.50	to	1.00
June 27, 2021 (2)	5.00	to	1.00
September 26, 2021 and thereafter (3)	4.50	to	1.00

________________


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


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


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

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

~~The following~~Under the Amended Credit Agreement, the Company is ~~a summary~~limited to $100.0 million of ~~required principal payments~~aggregate capital expenditures for the ~~Amendment (dollars~~four fiscal quarters through March 28, 2021. The Company is also prohibited from making certain restricted payments, investments or acquisitions until after September 26, 2021, with an exception for investments in ~~thousands):~~

SCHEDULED QUARTERLY PAYMENT DATES TERM LOAN A-2
September 30, 2017 through June 30, 2018 $ 2,344
September 30, 2018 through March 31, 2019 $ 3,125

~~Maturities -~~ ~~Following is a summary of principal payments of~~ the Company’s ~~total consolidated debt outstanding as of September 24, 2017:~~foreign subsidiaries which are capped at $27.5 million.

(dollars in thousands) SEPTEMBER 24, 2017
Year 1 $ 58,826
Year 2 1,121,102
Year 3 519
Year 4 458
Year 5 310
Thereafter 19,477
Total $ 1,200,692

1816

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

~~Debt Covenants -~~ Interest rates under the Amended Credit Agreement are 275 and 175 basis points above the Eurocurrency Rate and Base Rate, respectively, and letter of credit fees and fees for the daily unused availability under the revolving credit facility are 2.75% and 0.40%, respectively, subject to reversion to rates under the original credit agreement when the Company is in compliance with the TNLR covenant for the test period ending September 26, 2021. The Company is also subject to a 0% Eurocurrency floor under the Amended Credit Agreement.

As of ~~September 24, 2017~~the date of this filing, the Company’s accounting for the impact of the Amended Credit Agreement was still ongoing. Any impact will be reflected in the Company’s consolidated financial statements during the thirteen weeks ended June 28, 2020.

As of March 29, 2020 and December ~~25, 2016,~~29, 2019, the Company was in compliance with its debt covenants.

~~10. Redeemable Noncontrolling Interests~~11. Other Long-term Liabilities, Net

~~The Company consolidates subsidiaries in which it has noncontrolling interests that are permitted to deliver subsidiary shares in exchange for cash at a future date. The~~Other long-term liabilities, net, consisted of the following, ~~table presents a rollforward~~as of ~~Redeemable noncontrolling interests during~~ the periods indicated:



(dollars in thousands)	MARCH 29, 2020		DECEMBER 29, 2019
Accrued insurance liability	$	33,490	$	33,818
Chef and Restaurant Managing Partner deferred compensation obligations and deposits	41,824		47,831
Other long-term liabilities (1)	73,318		56,411
	$	148,632	$	138,060

THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Balance, beginning of period $ 547
$ 23,526
Change in redemption value of Redeemable noncontrolling interests 172
1,349
Foreign currency translation attributable to Redeemable noncontrolling interests 30
4,509
Net (loss) income attributable to Redeemable noncontrolling interests (172 ) 595
Purchase of Redeemable noncontrolling interests —
(3,887 )
Balance, end of period $ 577
$ 26,092
________________


(1)	The increase in Other long-term liabilities during the thirteen weeks ended March 29, 2020, preliminary relates to $9.9 million of additional interest rate swap liabilities and $8.7 million of additional contingent lease liabilities. See Note 13 - Derivative Instruments and Hedging Activities and Note 18 - Commitments and Contingencies, respectively, for details regarding these increases.


~~11.~~12.	Stockholders’ Equity

Share Repurchases - ~~On July 26, 2016,~~The Company did not repurchase any shares of its outstanding common stock during the thirteen weeks ended March 29, 2020. Under the terms of the Amended Credit Agreement, repurchasing shares of the Company’s Board of Directors (“the Board”) approved a $300.0 million authorization (the “July 2016 Share Repurchase Program”). On April 21, 2017, the Board canceled the remaining $52.3 million of authorization under the July 2016 Share Repurchase Program and approved a new $250.0 million authorization (the “2017 Share Repurchase Program”). The 2017 Share Repurchase Program will expire on October 21, 2018. As ofoutstanding common stock is restricted until after September 24, 2017, $55.0 million remained available for repurchase under the 2017 Share Repurchase Program. Following is a summary of the shares repurchased under the Company’s share repurchase programs during fiscal year 2017:26, 2021.

NUMBER OF SHARES
(in thousands) AVERAGE REPURCHASE PRICE PER SHARE AMOUNT
(dollars in thousands)
First fiscal quarter 2,887
$ 18.37
$ 53,053
Second fiscal quarter 7,030
$ 20.72
145,675
Third fiscal quarter 3,890
$ 19.03
74,008
Total common stock repurchases 13,807
$ 19.75
$ 272,736

Dividends - The Company declared and paid dividends per share during fiscal year ~~2017~~2020 as follows:



(in thousands, except per share data)	DIVIDENDS PER SHARE		AMOUNT
First fiscal quarter	$	0.20	$	17,480

DIVIDENDS PER SHARE AMOUNT
(dollars in thousands)
First fiscal quarter $ 0.08
$ 8,254
Second fiscal quarter 0.08
8,054
Third fiscal quarter 0.08
7,369
Total cash dividends declared and paid $ 0.24
$ 23,677

Redeemable Preferred Stock - In connection with the development of its Abbraccio Cucina Italiana (“Abbraccio”) concept in 2015, the Company entered into an investment agreement (the “Abbraccio Investment Agreement”) to sell preferred shares of its Abbraccio subsidiary (“Abbraccio Shares”) to certain investors (“Abbraccio Partners”). The Abbraccio Investment Agreement included a call option for the purchase of the Abbraccio Shares (the “Abbraccio Call Option”).

~~In October 2017,~~

During the ~~Board declared~~thirteen weeks ended March 29, 2020, the Company exercised the Abbraccio Call Option to purchase all outstanding Abbraccio Shares for $1.0 million and recorded a ~~quarterly cash dividend~~reduction to Accumulated deficit and an increase in Net loss applicable to common stockholders of ~~$0.08 per share, payable on November 22, 2017, to shareholders~~$3.5 million for the consideration paid in excess of ~~record at~~ the ~~close of business on November 13, 2017.~~Abbraccio Shares’ carrying value.

1917

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

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



(dollars in thousands)	MARCH 29, 2020			DECEMBER 29, 2019
Foreign currency translation adjustment	$	(159,328	)	$	(152,031	)
Unrealized loss on derivatives, net of tax	(29,685		)	(17,745		)
Accumulated other comprehensive loss	$	(189,013	)	$	(169,776	)

(dollars in thousands) SEPTEMBER 24, 2017 DECEMBER 25, 2016
Foreign currency translation adjustment $ (89,693 ) $ (107,509 )
Unrealized losses on derivatives, net of tax (1,854 ) (3,634 )
Accumulated other comprehensive loss $ (91,547 ) $ (111,143 )

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

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Bloomin’ Brands:
Foreign currency translation adjustment $ 6,415
$ 43,457
$ 17,816
$ 53,731

Unrealized gain (loss) on derivatives, net of tax (1) $ 370
$ 672
$ (139 ) $ (4,250 )
Reclassification of adjustment for loss on derivatives included in Net income, net of tax (2) 492
947
1,919
2,902
Total unrealized gain (loss) on derivatives, net of tax $ 862
$ 1,619
$ 1,780
$ (1,348 )
Other comprehensive income attributable to Bloomin’ Brands $ 7,277
$ 45,076
$ 19,596
$ 52,383

Non-controlling interests:
Foreign currency translation adjustment $ (38 ) $ (65 ) $ (76 ) $ (89 )
Other comprehensive loss attributable to Non-controlling interests $ (38 ) $ (65 ) $ (76 ) $ (89 )

Redeemable non-controlling interests:
Foreign currency translation adjustment $ 22
$ 2,079
$ 30
$ 4,509
Other comprehensive income attributable to Redeemable non-controlling interests $ 22
$ 2,079
$ 30
$ 4,509



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Foreign currency translation adjustment	$	(7,297	)	$	5,847

Unrealized loss on derivatives, net of tax (1)	$	(13,336	)	$	(4,381	)
Reclassification of adjustments for loss (gain) on derivatives included in Net income, net of tax (2)	1,396			(364		)
Total unrealized loss on derivatives, net of tax	$	(11,940	)	$	(4,745	)
Other comprehensive (loss) income attributable to Bloomin’ Brands	$	(19,237	)	$	1,102

________________


(1)	Unrealized ~~gain (loss)~~loss on derivatives is net of tax ~~(benefit)~~ of ~~$0.2~~$(4.6) million and ~~$0.4~~$(1.5) million for the thirteen weeks ended ~~September 24, 2017~~March 29, 2020 and ~~September 25, 2016, respectively, and ($0.1) million and ($2.7) million for the thirty-nine weeks ended September 24, 2017 and September 25, 2016,~~March 31, 2019, respectively.

(2)

Reclassifications of adjustments for ~~losses~~loss (gain) on derivatives are net of ~~tax of $0.3 million~~tax. See Note 13 - Derivative Instruments and ~~$0.6 million~~Hedging Activities for the thirteen weeks ended September 24, 2017 and September 25, 2016, respectively, and $1.2 million and $1.9 million for the thirty-nine weeks ended September 24, 2017 and September 25, 2016, respectively.tax impact of reclassifications.

~~12.~~ 13. Derivative Instruments and Hedging Activities

~~Interest Rate Risk~~ - The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate risk, 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, primarily interest rate swaps, are to add stability to interest expense and to manage its exposure to interest rate movements.

~~Currency Exchange Rate Risk~~ - The Company is exposed to foreign currency exchange rate risk arising from transactions and balances denominated in currencies other than the U.S. dollar. The Company may use foreign currency forward contracts to manage certain foreign currency exposures.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

~~DESIGNATED HEDGES~~

Cash Flow Hedges of Interest Rate Risk -On ~~September 9, 2014,~~October 24, 2018 and October 25, 2018, the Company entered into variable-to-fixed interest rate swap agreements with ~~eight~~12counterparties to hedge a portion of the cash flows of the Company’s variable rate debt. The swap agreements have an aggregate notional amount of ~~$400.0~~$550.0 million~~, a start date of~~ ~~June 30, 2015~~, and mature on ~~May 16, 2019~~November 30, 2022. Under the terms of the swap agreements, the Company pays a weighted-average fixed rate of ~~2.02%~~3.04% on the ~~$400.0 million~~ notional amount and receives payments from the counterparty based on the ~~30-day~~one-month LIBOR rate.

The ~~interest rate swaps, which~~Company’s swap agreements have been designated and qualify as a cash flow ~~hedge,~~hedges, are recognized on ~~the Company’s~~its Consolidated Balance Sheets at fair value and are classified based on the instruments’maturity dates. Fair value changes in the interest rate swaps are recognized in AOCL for all effective portions. Balances in AOCL are subsequently reclassified to earnings in the same period that the hedged interest payments affect earnings. The Company estimates ~~$2.3~~$14.7 millionwill be reclassified to interest expense over the next ~~twelve~~12 fiscal months.

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


(dollars in thousands)	SEPTEMBER 24, 2017		DECEMBER 25, 2016		CONSOLIDATED BALANCE SHEET CLASSIFICATION	MARCH 29, 2020		DECEMBER 29, 2019		CONSOLIDATED BALANCE SHEET CLASSIFICATION
Interest rate swaps - liability	$	2,127	$	3,968	Accrued and other current liabilities	$	13,335	$	7,174	Accrued and other current liabilities
Interest rate swaps - liability	951		1,999		Other long-term liabilities, net	26,758		16,835		Other long-term liabilities, net
Total fair value of derivative instruments (1)	$	3,078	$	5,967
Total fair value of derivative instruments - liabilities (1)						$	40,093	$	24,009

Accrued interest	$	217	$	408	Accrued and other current liabilities	$	679	$	632	Accrued and other current liabilities

____________________


(1)	See Note 1315 - Fair Value Measurements for fair value discussion of the interest rate swaps.

On May 4, 2020, concurrent with entering into the Amended Credit Agreement, the Company elected to de-designate its interest rate swap hedge relationships and modify its interest rate swaps to more closely align with certain terms of the Amended Credit Agreement. On May 6, 2020, the Company re-designated the cash flow hedge relationship for the

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

original $550.0 million notional amount, resulting in no impact to the Company’s consolidated financial statements as a result of the hedge activity.

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Interest rate swap (expense) income recognized in Interest expense, net	$	(1,880	)	$	491
Income tax benefit (expense) recognized in Provision for income taxes	484			(127		)
Total effects of the interest rate swaps on Net (loss) income	$	(1,396	)	$	364

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Interest rate swap expense recognized in Interest expense, net (1) $ (804 ) $ (1,545 ) $ (3,105 ) $ (4,756 )
Income tax benefit recognized in (Benefit) provision for income taxes 312
598
1,186
1,854
Total effects of the interest rate swaps on Net income $ (492 ) $ (947 ) $ (1,919 ) $ (2,902 )

~~____________________~~


~~(1)~~	~~During the thirteen and thirty-nine weeks ended September 24, 2017 and September 25, 2016, the Company did not recognize~~ ~~any~~ ~~gain or loss as a result of hedge ineffectiveness.~~

The Company records its derivatives on the Consolidated Balance Sheets on a gross balance basis. The Company’s derivatives are subject to master netting arrangements. As of September 24, 2017, the Company did not have more than one derivative between the same counterparties and as such, there was no netting.

By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of ~~September 24, 2017,~~March 29, 2020, all counterparties to the interest rate swaps had performed in accordance with their contractual obligations.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

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

As of~~September 24, 2017~~March 29, 2020andDecember ~~25, 2016,~~29, 2019, the fair value of the ~~Company’s~~Company’s interest rate swaps was in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk, ~~was $3.3~~of $41.0 million and ~~$6.4~~$24.8 million, respectively. As of ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016,~~29, 2019, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions as of ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016,~~29, 2019, it could have been required to settle its obligations under the agreements at their termination value of ~~$3.3~~$41.0 million and ~~$6.4~~$24.8 million, respectively.

~~13.~~14. 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	MARCH 29, 2020		DECEMBER 29, 2019
Operating lease right-of-use assets	Operating lease right-of-use assets	$	1,249,750	$	1,266,548
Finance lease right-of-use assets (1)	Property, fixtures and equipment, net	2,076		2,036
Total lease assets, net		$	1,251,826	$	1,268,584

Current operating lease liabilities (2)	Accrued and other current liabilities	$	185,278	$	171,866
Current finance lease liabilities	Current portion of long-term debt	1,242		1,361
Non-current operating lease liabilities	Non-current operating lease liabilities	1,281,372		1,279,051
Non-current finance lease liabilities	Long-term debt, net	1,086		947
Total lease liabilities		$	1,468,978	$	1,453,225

________________


(1)	Net of accumulated amortization of $1.6 million and $1.3 million as of March 29, 2020 and December 29, 2019, respectively.


(2)	Excludes accrued contingent percentage rent.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

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



	CONSOLIDATED INCOME STATEMENT CLASSIFICATION	THIRTEEN WEEKS ENDED
(dollars in thousands)	CONSOLIDATED INCOME STATEMENT CLASSIFICATION	MARCH 29, 2020			MARCH 31, 2019
Operating leases (1)	Other restaurant operating	$	45,882		$	45,233
Variable lease cost	Other restaurant operating	1,120			819
Finance leases
Amortization of leased assets	Depreciation and amortization	342			324
Interest on lease liabilities	Interest expense, net	46			73
Sublease revenue (2)	Franchise and other revenues	(1,677		)	(1,314		)
Lease costs, net		$	45,713		$	45,135

________________


(1)	Excludes rent expense for office facilities and Company-owned closed or subleased properties for the thirteen weeks ended March 29, 2020 and March 31, 2019 of $3.6 million, which is included in General and administrative expense and certain supply chain related rent expense of $0.3 million, which is included in Cost of sales.


(2)	Excludes rental income from Company-owned properties for the thirteen weeks ended March 29, 2020 and March 31, 2019 of $0.2 million and $0.7 million, respectively.

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020		MARCH 31, 2019
Cash flows from operating activities:
Cash paid for amounts included in the measurement of operating lease liabilities	$	48,492	$	47,649

15. Fair Value Measurements

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

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

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 ~~dates~~periods indicated:



	MARCH 29, 2020						DECEMBER 29, 2019
(dollars in thousands)	TOTAL		LEVEL 1		LEVEL 2		TOTAL		LEVEL 1		LEVEL 2
Assets:
Cash equivalents:
Fixed income funds	$	2,324	$	2,324	$	—	$	1,037	$	1,037	$	—
Money market funds	7,046		7,046		—		12,752		12,752		—
Total asset recurring fair value measurements	$	9,370	$	9,370	$	—	$	13,789	$	13,789	$	—

Liabilities:
Accrued and other current liabilities:
Derivative instruments - interest rate swaps	$	13,335	$	—	$	13,335	$	7,174	$	—	$	7,174
Other long-term liabilities:
Derivative instruments - interest rate swaps	26,758		—		26,758		16,835		—		16,835
Total liability recurring fair value measurements	$	40,093	$	—	$	40,093	$	24,009	$	—	$	24,009

SEPTEMBER 24, 2017 DECEMBER 25, 2016
(dollars in thousands) TOTAL LEVEL 1 LEVEL 2 TOTAL LEVEL 1 LEVEL 2
Assets:
Cash equivalents:
Fixed income funds $ 42
$ 42
$ —
$ 90
$ 90
$ —
Money market funds 20,751
20,751
—
18,607
18,607
—
Restricted cash equivalents:
Fixed income funds —
—
—
552
552
—
Money market funds 3,735
3,735
—
2,518
2,518
—
Total asset recurring fair value measurements $ 24,528
$ 24,528
$ —
$ 21,767
$ 21,767
$ —

Liabilities:
Accrued and other current liabilities:
Derivative instruments - interest rate swaps $ 2,127
$ —
$ 2,127
$ 3,968
$ —
$ 3,968
Derivative instruments - commodities 52
—
52
157
—
157
Other long-term liabilities:
Derivative instruments - interest rate swaps 951
—
951
1,999
—
1,999
Total liability recurring fair value measurements $ 3,130
$ —
$ 3,130
$ 6,124
$ —
$ 6,124

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

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



FINANCIAL INSTRUMENT		METHODS AND ASSUMPTIONS
Fixed income funds and Money market funds		Carrying value approximates fair value because maturities are less than three months.
Derivative instruments		The Company’s derivative instruments include interest rate ~~swaps and commodities.~~swaps. Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads. The Company also considers its own nonperformance risk and the respective counterparty’s nonperformance risk ~~when performing~~in the fair value measurements. As of ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016,~~29, 2019, the Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - 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:~~basis, for the periods indicated:



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020				MARCH 31, 2019
(dollars in thousands)	CARRYING VALUE		TOTAL IMPAIRMENT		CARRYING VALUE		TOTAL IMPAIRMENT
Assets held for sale (1)	$	1,182	$	75	$	2,149	$	215
Operating lease right-of-use assets (2)	55,644		19,563		2,242		596
Property, fixtures and equipment (3)	21,693		18,398		490		2,671
Goodwill and other assets (4)	1,044		2,388		—		—
	$	79,563	$	40,424	$	4,881	$	3,482

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 24, 2017 SEPTEMBER 24, 2017
(dollars in thousands) CARRYING VALUE (1) TOTAL IMPAIRMENT CARRYING VALUE (1) TOTAL IMPAIRMENT
Assets held for sale $ 470
$ 249
$ 470
$ 320
Property, fixtures and equipment 13,935
13,993
15,002
14,855
$ 14,405
$ 14,242
$ 15,472
$ 15,175

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 25, 2016 SEPTEMBER 25, 2016
(dollars in thousands) CARRYING VALUE (2) TOTAL IMPAIRMENT CARRYING VALUE (2) TOTAL IMPAIRMENT
Assets held for sale $ 1,356
$ 3,209
$ 45,351
$ 42,926
Property, fixtures and equipment 12,064
2,058
12,064
2,058
$ 13,420
$ 5,267
$ 57,415
$ 44,984

~~________________~~____________________


(1)	~~Carrying value approximates fair value with all assets~~Assets generally measured using third-party market appraisals or executed sales contracts (Level 2).


(2)	Carrying ~~value approximates~~values measured using Level 3 inputs to estimate fair value ~~with all~~totaled $55.6 million and $2.0 million during the thirteen weeks ended March 29, 2020 and March 31, 2019, respectively. All other assets were valued using Level 2 inputs. Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value.


(3)	Carrying values measured using Level 3 inputs to estimate fair value totaled $19.2 million and $0.5 million during the thirteen weeks ended March 29, 2020 and March 31, 2019, respectively. All other assets were valued using Level 2 inputs. Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value.


(4)	All assets measured using ~~executed sales contracts~~the quoted market value of comparable assets (Level 2).

See Note 4 - Impairments, Exit Costs and Disposals for information regarding impairment charges resulting from the fair value measurement performed on a nonrecurring basis during the thirteen weeks ended March 29, 2020. Projected future cash flows, including discount rate and growth rate assumptions, are derived from current economic conditions, expectations of management and projected trends of current operating results. As a result, the Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.

In assessment of impairment for operating locations, the Company determined the fair values of individual operating locations using an income approach, which required discounting projected future cash flows. When determining the stream of projected future cash flows associated with an individual operating location, management made assumptions, including highest and best use and inputs from restaurant operations, where necessary, and about key variables including the following unobservable inputs: revenue growth rates, controllable and uncontrollable expenses, and asset residual values. In order to calculate the present value of those future cash flows, the Company discounted cash flow estimates at its weighted-average cost of capital applicable to the country in which the measured assets reside.

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



	THIRTEEN WEEKS ENDED
UNOBSERVABLE INPUTS	MARCH 29, 2020
Weighted-average cost of capital	10.4%
Long-term growth rate	1.5%	to	2.0%

Interim Disclosures about Fair Value of Financial Instruments - The Company’s non-derivative financial instruments consist of cash equivalents, ~~restricted cash,~~ accounts receivable, accounts payable and current and long-term debt. The fair values of

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

cash equivalents, ~~restricted cash,~~ accounts receivable and accounts payable approximate their carrying amounts reported ~~in the~~on its Consolidated Balance Sheets due to their short duration.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

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 ~~dates~~periods indicated:



	MARCH 29, 2020				DECEMBER 29, 2019
	CARRYING VALUE		FAIR VALUE LEVEL 2		CARRYING VALUE		FAIR VALUE LEVEL 2
(dollars in thousands)	CARRYING VALUE		FAIR VALUE LEVEL 2		CARRYING VALUE		FAIR VALUE LEVEL 2
Senior Secured Credit Facility:
Term loan A	$	443,750	$	397,156	$	450,000	$	450,563
Revolving credit facility	$	975,000	$	832,777	$	599,000	$	599,000

SEPTEMBER 24, 2017 DECEMBER 25, 2016
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
(dollars in thousands) LEVEL 2 LEVEL 3 LEVEL 2 LEVEL 3
Senior Secured Credit Facility:
Term loan A $ 247,500
$ 246,881
$ —
$ 258,750
$ 257,780
$ —
Term loan A-1 135,000
134,663
—
140,625
140,098
—
Term loan A-2 125,000
124,688
—
—
—
—
Revolving credit facility 672,500
668,297
—
622,000
617,335
—
PRP Mortgage Loan —
—
—
47,202
—
47,202
Other notes payable 944
—
926
1,776
—
1,659

~~Fair value of debt is determined based on the following:~~



~~DEBT FACILITY~~		~~METHODS AND ASSUMPTIONS~~
~~Senior Secured Credit Facility~~		~~Quoted market prices in inactive markets.~~
~~PRP Mortgage Loan~~		~~Assumptions derived from current conditions in the real estate and credit markets, changes in the underlying collateral and expectations of management.~~
~~Other notes payable~~		~~Discounted cash flow approach. Discounted cash flow inputs primarily include cost of debt rates, which are used to derive the present value factors for the determination of fair value.~~

~~14. Income Taxes~~16. Allowance for Expected Credit Losses

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
(Benefit) provision for income taxes $ (4,038 ) $ 1,950
$ 14,280
$ 24,372
Effective income tax rate (NM)
8.4 % 14.3 % 33.2 %

~~____________________~~

~~NM Not meaningful.~~

The ~~decrease~~following is a rollforward of the allowance for trade receivable expected credit losses for the period indicated:



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020
Allowance for credit losses, beginning of period	$	199
Adjustment for adoption of ASU No. 2016-13	1,018
Provision for expected credit losses	3,334
Allowance for credit losses, end of period	$	4,551

The Company is exposed to credit losses through its trade accounts receivable consisting primarily of amounts due for gift card, credit card, vendor, franchise and other receivables. Gift card, vendor and other receivables consist primarily of amounts due from gift card resellers and vendor rebates. Amounts due from franchisees consist of initial franchise fees, royalty income, and advertising fees. See Note 7 - Other Current Assets, Net for disclosure of trades receivables by category as of March 29, 2020 and December 29, 2019. Credit card receivables in the U.S. are recorded within Cash and cash equivalents based on their short duration and reasonably assured settlement.

The Company evaluates the collectability of trade receivables based on historical loss experience and 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. For risk pools where there was no established loss history, S&P speculative-grade default rates are utilized to calculate an estimated loss rate. Losses are charged off in the period in which they are determined to be uncollectable.

The financial condition of the Company’s franchisees is largely dependent on the underlying business trends of its brands and market conditions within the casual dining restaurant industry. In March 2020, the Company fully reserved substantially all of its outstanding franchise receivables in response to the economic impact of the COVID-19 pandemic. See Note 2 - COVID-19 Impact for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

The Company is also exposed to credit losses from off-balance sheet lease guarantees primarily related to the divestiture of certain formerly Company-owned restaurant sites. See Note 18 - Commitments and Contingencies for details regarding these lease guarantees.

Table of Contents

BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

17. Income Taxes



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
(Loss) income before (benefit) provision for income taxes	$	(54,069	)	$	71,145
(Benefit) provision for income taxes	$	(19,655	)	$	5,496
Effective income tax rate	36.4		%	7.7		%

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Accordingly, the applicable provisions of the CARES Act have been reflected in the Company’s tax provision for the thirteen weeks ended March 29, 2020. The CARES Act, among other items, includes U.S. corporate tax provisions related to the deferment of employer social security payments, net operating loss (“NOL”) carryback periods, alternative minimum tax credits, modifications to interest deduction limitations and technical corrections on tax depreciation methods for qualified improvement property (“QIP”).

The effective income tax rate for the thirteen weeks ended ~~September 24, 2017~~March 29, 2020 increased by 28.7 percentage points as compared to the thirteen weeks ended March 31, 2019. The increase was primarily due to the benefit of ~~employment-related credits relative to lower~~the five-year carryback of the forecasted ~~pre-tax income for~~2020 NOL under the ~~2017 tax year. The benefit for income taxes~~CARES Act and favorable discrete items recorded ~~for~~in the thirteen weeks ended ~~September 24, 2017 includes~~March 29, 2020.

As of December 29, 2019, the ~~impact~~Company had $128.6 million in general business tax credits carryforwards, which have a 20-year carryforward period and are utilized on a first-in, first-out basis. The Company expects to increase its general business credit carryforwards in 2020 by approximately $50 million to $80 million as a result of ~~changes to~~ the ~~estimate~~carryback of the forecasted ~~full-year effective~~2020 NOL, additional credits generated in 2020 and the application of the QIP technical correction enacted as part of the CARES Act. The Company currently expects to utilize these tax ~~rate relative~~credit carryforwards within a seven to ~~prior quarters in 2017.~~ nine year period. However, the Company’s ability to utilize these tax credits could be adversely impacted by, among other items, a future “ownership change” as defined under Section 382 of the Internal Revenue Code.

The effective income tax rate for the thirty-nine weeks ended September 24, 2017 decreased 18.9% as compared to the thirty-nine weeks ended September 25, 2016. Approximately 13.5% of this net decrease was due to impairment and additional tax liabilities recorded in connection with the sale of Outback Steakhouse South Korea in 2016. The remaining decrease was primarily due to the impact of certain favorable discrete tax items recorded in 2017 and lower forecasted pre-tax book income for the 2017 tax year.

The Company has a blended federal and state statutory rate of approximately ~~39%~~26%. The effective income tax rate for the thirteen weeks ended ~~September 24, 2017~~March 29, 2020 was ~~lower~~higher than the statutory rate primarily due to the benefit of ~~changes to~~ the ~~estimate~~five-year carryback of the forecasted ~~full-year effective tax rate relative to prior quarters in 2017~~2020 NOL under the CARES Act and ~~employment-related tax credits. The effective income tax rate for the thirty-nine weeks ended September 24, 2017 was lower than the~~

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

~~statutory rate primarily due to the benefit of employment-related~~ tax credits ~~and~~for FICA taxes on certain ~~favorable discrete tax items recorded in 2017.~~employees’ tips.

~~15.~~ 18. Commitments and Contingencies

Litigation and Other Matters - The Company had ~~$3.7~~$3.3 million and ~~$3.5~~$3.0 million of liabilities recorded for various legal matters as of ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016,~~29, 2019, respectively.

In November 2015, David Sears and Elizabeth Thomas, two former Outback Steakhouse managers (“Manager Plaintiffs”), sent a demand letter seeking unpaid overtime compensation on behalf of all managers and kitchen managers employed at Outback Steakhouse restaurants from November 2012 to present. The Manager Plaintiffs claim that managers were not assigned sufficient management duties to qualify as exempt from overtime. In December 2016, the Company agreed to a tentative class settlement for eligible kitchen managers and during the second quarter of 2017, the class period closed and the Company made final payment to the class of $2.3 million.

The Company is subject to legal proceedings, claims and liabilities, such as liquor liability, slip and fall cases, wage-and-hour and other employment-related litigation, which arise in the ordinary course of business and are generally covered by insurance if they exceed specified retention or deductible ~~amounts, with the exception of wage-and-hour cases which are not covered by insurance.~~amounts. In the opinion of management, the amount of ultimate liability with respect to those actions will not have a material adverse impact on the Company’s financial position or results of operations and cash flows.

Lease Guarantees - ~~As a result of the~~The Company ~~assigning~~assigned its interest, ~~in obligations under real estate leases in connection with the sale of certain restaurants, the Company~~and is contingently liable, onunder certain ~~lease agreements.~~real estate leases. These leases have varying terms, the latest of which expires in 2032. As of ~~September 24, 2017,~~March 29, 2020, the undiscounted payments that the Company could be required to make in the event of non-payment by the primary lessees was approximately ~~$26.9~~$31.3 million. The present value of these potential payments discounted at the Company’s incremental borrowing rate as of ~~September~~

24 ~~2017~~

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

March 29, 2020 was approximately ~~$17.2~~$24.9 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. ~~The~~

In March 2020, the Company ~~believes~~recorded $4.2 million of additional contingent lease liability in response to the ~~financial strength and operating history~~economic impact of the ~~buyers significantly reduces~~COVID-19 pandemic. As of March 29, 2020, the ~~risk that it will be required to make payments under these leases. Accordingly, no~~Company’s recorded contingent lease liability ~~has been recorded.~~was $9.7 million. See Note 2 - COVID-19 Impact for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

~~16.~~ 19. Segment Reporting

The Company ~~has two reportable~~considers its restaurant concepts and international markets as operating segments, ~~U.S. and International,~~ which reflects how the Company manages its business, reviews operating performance and allocates resources. ~~The U.S. segment includes all brands operating in the U.S. while brands operating outside the U.S. are included in the International segment.~~ Resources are allocated and performance is assessed by the Company’s Chief Executive Officer (“~~CEO”~~CEO”), whom the Company has determined to be its Chief Operating Decision Maker (“~~CODM”~~CODM”). ~~Following~~The Company aggregates its operating segments into 2 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,~~ Kong/China
International	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 in the Company’s Annual Report on Form 10-K for the year ended December ~~25, 2016.~~29, 2019. Revenues for all segments

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~~BLOOMIN’ BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED) - Continued~~

include only transactions with customers and ~~include no~~exclude intersegment revenues. Excluded from ~~net income~~Income from operations for U.S. and ~~International~~international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based compensation expenses and certain bonus expenses.

During the thirteen weeks ended March 29, 2020, the Company recorded $22.2 million of pre-tax charges as a part of transformational initiatives implemented in connection with its previously announced review of strategic alternatives. These costs were primarily recorded within General and administrative expense and Provision for impaired assets and restaurant closings and were not allocated to the Company’s segments since the Company’s CODM does not consider the impact of transformational initiatives when assessing segment performance.

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020		MARCH 31, 2019
Total revenues
U.S.	$	894,497	$	1,014,507
International	113,840		113,624
Total revenues	$	1,008,337	$	1,128,131

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Total revenues
U.S. $ 832,073
$ 893,906
$ 2,782,060

$ 2,896,666
International 116,826
111,481
343,644
351,497
Total revenues $ 948,899
$ 1,005,387
$ 3,125,704
$ 3,248,163

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Segment income from operations
U.S.	$	11,379		$	113,035
International	6,787			13,720
Total segment income from operations	18,166			126,755
Unallocated corporate operating expense	(59,734		)	(44,261		)
Total (loss) income from operations	(41,568		)	82,494
Other expense, net	(793		)	(168		)
Interest expense, net	(11,708		)	(11,181		)
(Loss) income before (benefit) provision for income taxes	$	(54,069	)	$	71,145

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Segment income (loss) from operations
U.S. $ 28,139
$ 61,905
$ 204,153
$ 268,754
International 8,442
8,277
26,923
(14,947 )
Total segment income from operations 36,581
70,182
231,076
253,807
Unallocated corporate operating expense (33,399 ) (38,448 ) (116,610 ) (122,056 )
Total income from operations 3,182
31,734
114,466
131,751
Loss on defeasance, extinguishment and modification of debt —
(418 ) (260 ) (26,998 )
Other income, net 7,531
2,079
14,761
2,059
Interest expense, net (10,705 ) (10,217 ) (29,389 ) (33,394 )
Income before (benefit) provision for income taxes $ 8
$ 23,178
$ 99,578
$ 73,418

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



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020		MARCH 31, 2019
Depreciation and amortization
U.S.	$	37,640	$	38,786
International	6,758		6,456
Corporate	3,870		4,240
Total depreciation and amortization	$	48,268	$	49,482

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017
SEPTEMBER 25, 2016
Depreciation and amortization
U.S. $ 37,186
$ 39,346
$ 111,192
$ 116,508
International 7,036
5,978
20,550
19,479
Corporate 3,604
3,227
10,737
9,219
Total depreciation and amortization $ 47,826
$ 48,551
$ 142,479
$ 145,206

20. Subsequent Events

Convertible Notes - On May 8, 2020, the Company completed a $200.0 million principal amount private offering of 5.00% convertible senior notes due 2025 and on May 12, 2020, issued an additional $30.0 million principal amount in connection with the overallotment option granted to the initial purchasers as part of the offering (collectively, the “2025 Notes”). The 2025 Notes are governed by the terms of an indenture between the Company and Wells Fargo Bank, National Association, as the Trustee. The 2025 Notes will mature on May 1, 2025, unless earlier converted, redeemed or purchased by the Company. The 2025 Notes bear cash interest at an annual rate of 5.00%, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020.

The 2025 Notes are unsecured obligations and do not contain any financial covenants or restrictions on incurring additional indebtedness, paying dividends or issuing or repurchasing any securities. Events of default under the indenture for the 2025 Notes include, among other things, a default in the payment when due of the principal of, or the redemption price for, any note and a default for 30 days in the payment when due of interest on any note. If an event of default, the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding will immediately become due and payable.

The initial conversion rate applicable to the 2025 Notes is 84.122 shares of common stock per $1,000 principal amount of 2025 Notes, or a total of approximately 19.348 million shares for the total $230.0 million principal amount. This initial conversion rate is equivalent to an initial conversion price of approximately $11.89 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events. Noteholders may convert their notes at their option only in the circumstances described in the indenture.

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BLOOMIN’ BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) - Continued

~~Geographic areas~~ ~~— International revenues~~The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate.

Net proceeds from this offering were approximately $221.4 million, after deducting the initial purchaser’s discounts and commissions and the Company’s offering expenses. The Company intends to use the net proceeds of this offering for general corporate purposes. Upon issuance, the principal amount is separated into a liability and an equity component, such that interest expense reflects the Company’s nonconvertible debt interest rate.

Debt issuance costs related to the 2025 Notes were comprised of discounts upon original issuance of $6.9 million and estimated third party offering costs of $1.7 million. In accounting for the debt issuance costs related to the issuance of the 2025 Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component are ~~defined~~amortized to interest expense using the effective interest method over the expected life of the 2025 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity.

Discounts and third party offering costs attributable to the liability component are recorded as ~~revenues generated~~a contra-liability and are presented net against the convertible senior notes due 2025 balance on the consolidated balance sheets.

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 premiums 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 will initially underlie the 2025 Notes, and are expected generally to reduce the potential equity dilution, and/or offset any cash payments in excess of the principal amount due, as the case may be, upon conversion of the 2025 Notes. The Warrant Transactions could have a dilutive effect on the Company’s common stock to the extent that the price of its common stock exceeds the strike price of the Warrant Transactions. The strike price will initially be $16.64 per share and is subject to certain adjustments under the terms of the Warrant Transactions.

The portion of the net proceeds to the Company from ~~restaurant sales originating~~the offering of the 2025 Notes that was used to pay the premium on the Convertible Note Hedge Transactions (calculated after taking into account the proceeds to the Company from the Warrant Transactions) was approximately $19.6 million. The net costs incurred in connection with the Convertible Note Hedge Transactions and Warrant Transactions will be recorded as a ~~country other than~~reduction to additional paid-in capital on the ~~U.S. The following table details Total revenues by major geographic area:~~Company’s Consolidated Balance Sheet during the thirteen weeks ended June 28, 2020.

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
U.S. $ 832,073
$ 893,906
$ 2,782,060
$ 2,896,666
International
Brazil 108,503
87,188
308,384
228,197
Other 8,323
24,293
35,260
123,300
Total revenues

$ 948,899
$ 1,005,387
$ 3,125,704
$ 3,248,163
As of the date of this filing, the Company’s accounting for the 2025 Notes, Convertible Note Hedge Transactions and Warrant Transactions was still ongoing. Any impact will be reflected in the Company’s consolidated financial statements during the thirteen weeks ended June 28, 2020.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes. Unless the context otherwise indicates, as used in this report, the term the “Company,” “we,” “us,” “our” and other similar terms mean Bloomin’ Brands, Inc. and its subsidiaries.

Cautionary Statement

This Quarterly Report on Form 10-Q (the “Report”) includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “feels,” “seeks,” “forecasts,” “projects,” “intends,” “plans,” “may,” “will,” “should,” “could” or “would” or, in each case, their negative or other variations or comparable terminology, although not all forward-looking statements are accompanied by such terms. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause actual results to differ materially from statements made or suggested by forward-looking statements include, but are not limited to, the following:


(i)	The severity, extent and duration of the COVID-19 pandemic, its impacts on our business and results of operations, financial condition and liquidity, including any adverse impact on our stock price and on the other factors listed below, and the responses of domestic and foreign federal, state and local governments to the pandemic;


(ii)	Consumer reactions to public health and food safety issues;


~~(ii)~~(iii)	Our ability to compete in the highly competitive restaurant industry with many well-established competitors and new market entrants;


~~(iii)~~(iv)	Minimum wage increases and additional mandated employee benefits;


~~(iv)~~(v)	Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability of credit and interest rates;


(vi)	Our ability to protect our information technology systems from interruption or security breach, including cyber security threats, and to protect consumer data and personal employee information;

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued


(vii)	Fluctuations in the price and availability of commodities;


(viii)	Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and the effects of changes to applicable laws and regulations, including tax laws and unanticipated liabilities;


~~(v)~~(ix)	~~Economic conditions and their effects on consumer confidence and discretionary spending,~~Our ability to effectively respond to changes in patterns of consumer traffic, ~~the cost~~consumer tastes and ~~availability of credit and interest rates;~~dietary habits;


~~(vi)~~	~~Fluctuations in the price and availability of commodities;~~


~~(vii)~~(x)	Our ability to implement our ~~expansion,~~ remodeling, relocation and ~~relocation~~expansion plans due to uncertainty in locating and acquiring attractive sites on acceptable terms, obtaining required permits and approvals, recruiting and training necessary personnel, obtaining adequate financing and estimating the performance of newly opened, remodeled or relocated restaurants;

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~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~necessary personnel, obtaining adequate financing and estimating the performance of newly opened, remodeled or relocated restaurants;~~


~~(viii)~~	~~Our ability to protect our information technology systems from interruption or security breach and to protect consumer data and personal employee information;~~


~~(ix)~~(xi)	The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreign currency exchange rates;


~~(x)~~(xii)	Our ability to preserve and grow the reputation and value of our ~~brands;~~brands, particularly in light of changes in consumer engagement with social media platforms;


~~(xi)~~(xiii)	Any impairment in the carrying value of our goodwill or other intangible or long-lived assets and its effect on our financial condition and results of operations;


(xiv)	Seasonal and periodic fluctuations in our results and the effects of significant adverse weather conditions and other disasters or unforeseen events;


~~(xii)~~	~~Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits;~~


~~(xiii)~~	~~Strategic actions, including acquisitions and dispositions, and our success in integrating any newly acquired or newly created businesses;~~


~~(xiv)~~(xv)	The effects of our substantial leverage and restrictive covenants in our various credit facilities on our ability to raise additional capital to fund our operations, to make capital expenditures to invest in new or renovate restaurants and to react to changes in the economy or our industry, and our exposure to interest rate risk in connection with our variable-rate debt;


~~(xv)~~(xvi)	The adequacy of our cash flow and earnings and other conditions which may affect our ability to pay dividends and repurchase shares of our common stock; and


~~(xvi)~~(xvii)	Such other factors as discussed in Part I, Item IA. Risk Factors of our Annual Report on Form 10-K for the year ended December ~~25, 2016.~~29, 2019.

In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this Report speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

As previously disclosed in the Current Report on Form 8-K filed by the Company with the SEC on May 5, 2020, the filing of the Company’s Quarterly Report on Form 10-Q for the period ended March 29, 2020 (the “Form 10-Q”), was delayed due to circumstances related to the COVID-19 pandemic. The COVID-19 pandemic has had a material and adverse effect on our business operations. Forecasting our operations and financial results has grown increasingly complex due to the various uncertainties presented by the COVID-19 pandemic. In particular, the COVID-19 pandemic has made developing forecasts for, and the accounting of, valuation of goodwill and certain other assets slower and more difficult. In addition, our management has had to devote significant time and attention to the Amended Credit

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Agreement and 2025 Notes offering discussed in this Report, which has diverted resources from the preparation of the Form 10-Q.

In consideration of the impacts of COVID-19, described above, we were unable to compile and review certain information required in order to timely file the Form 10-Q by May 8, 2020, the original filing deadline of the Form 10-Q. We relied on the SEC’s Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies, SEC Release No. 34-88465, dated March 25, 2020, to delay the filing of this Form 10-Q.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Overview

We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. As of ~~September 24, 2017,~~March 29, 2020, we owned and operated ~~1,197~~1,172 restaurants and franchised ~~294~~300 restaurants across 48 states, Puerto Rico, Guam and 1920 countries. We have four founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.

Executive Summary

Our financial results for the thirteen weeks ended ~~September 24, 2017~~March 29, 2020 (“~~third~~first quarter of ~~2017”~~2020”) include the following:

A decrease in Total revenues of ~~5.6% to $948.9 million~~10.6% in the ~~third~~first quarter of ~~2017,~~2020, as compared to the ~~third~~first quarter of ~~2016,~~2019, primarily due to: (i) lower U.S. comparable restaurant sales, (ii) domestic refranchising, (iii) foreign currency translation of the Brazil Real relative to ~~refranchising internationally~~the U.S. dollar and ~~domestically and~~(iv) a decrease in franchise revenues driven by the COVID-19 pandemic, partially offset by the net impact of restaurant ~~closings~~openings and ~~new restaurant openings, partially offset by an increase in franchise and other revenues.~~closures.

~~Income~~Loss from operations of ~~$3.2~~$41.6 million in the ~~third~~first quarter of ~~2017,~~2020, as compared to ~~$31.7~~income from operations of $82.5 million in the ~~third~~first quarter of ~~2016, decreased~~2019, was primarily due toto: (i) lower ~~operating margin at the restaurant-level~~comparable restaurant sales and ~~certain impairment charges and restaurant closing~~ costs ~~partially offset by increases primarily in franchise and other revenues.~~

~~Following is a summary of significant actions we have taken and other factors that impacted our operating results and liquidity to date in 2017:~~

~~Surplus Properties~~ - ~~During the thirteen and thirty-nine weeks ended September 24, 2017,~~ we ~~recognized impairment charges of $9.5 million~~incurred in connection with the ~~remeasurement~~COVID-19 pandemic, including asset impairment charges, relief pay, inventory obsolescence and incremental operating costs, (ii) the impact of ~~certain held~~restructuring and ~~used surplus properties currently leased~~transformation initiatives and (iii) commodity and labor inflation.

Recent Developments - COVID-19

In response to the ~~owners~~COVID-19 pandemic, governmental authorities have taken dramatic action in an effort to slow down the spread of the disease. Along with many other restaurant businesses across the country, we temporarily limited our services in the U.S. to carry-out and delivery only, effective March 20, 2020. This has resulted in significantly reduced traffic in our restaurants.

We have reopened a significant portion of our ~~former~~ restaurant ~~concepts. See Note 3 -~~ ~~Impairments~~dining rooms in compliance with state and ~~Exit Costs~~ local regulations and plan to continue to do so as conditions and regulations allow. When we are able to reopen more of our ~~Notes~~dining rooms, it is uncertain whether customer traffic will return to ~~Consolidated Financial Statements~~levels prior to the outbreak of COVID-19. Even if consumer demand recovers, governmental restrictions may limit the capacity of our dining rooms or services we may provide. As a result, we expect our results for ~~additional details regarding surplus properties.~~the foreseeable future will be significantly adversely impacted. Due to these unprecedented conditions, we have withdrawn our financial guidance for 2020.

~~Sale~~In response to the pandemic, we have tightly managed expenses while taking steps to secure our liquidity position. See the subsection below entitled “Liquidity and Capital Resources” for further details.

Strategic Alternatives Review Update

In November 2019, we announced that we were exploring and evaluating strategic alternatives that have the potential to maximize value for our stockholders. In February 2020, in connection with our year-end earnings release and conference call, we provided an update on that process and discussed certain actions that we planned to take. While we have implemented the 2020 cost savings measures described at the time and remain committed to our plan to support a growth-focused, operations centric organization over the long term, we have suspended further activity with respect to the strategic review process as we prioritize our response to the COVID-19 pandemic. This includes a suspension of ~~Carrabba’s Italian Grill Restaurant~~ ~~- During the thirteen weeks ended September 24, 2017, we closed and completed the~~discussions with interested parties with respect to a sale of ~~one U.S. Company-owned Carrabba’s Italian Grill location for a purchase price of $9.9 million~~, ~~net of closing costs. The sale resulted in a net gain of $8.4 million, recorded within Other income, net, in the Consolidated Statements of Operations and Other Comprehensive Income.~~our Brazil business.

~~Sale-leaseback Transactions~~ - During the thirty-nine weeks ended September 24, 2017, we entered into sale-leaseback transactions with third-parties in which we sold 26 restaurant properties at fair market value for gross proceeds of $92.5 million.

~~Refranchising~~ ~~- During the thirteen weeks ended June 25, 2017, we completed the sale of~~ 54 ~~of our existing U.S. Company-owned Outback Steakhouse and Carrabba’s Italian Grill locations for aggregate cash proceeds of~~ ~~$36.2 million~~, net of certain closing adjustments. The transactions resulted in an aggregate net gain of $7.4 million within Other income, net, in the Consolidated Statements of Operations and Other Comprehensive Income. ~~See Note 2 -~~ ~~Disposals~~ ~~of our Notes to Consolidated Financial Statements for additional details.~~

~~2017 Closure Initiative~~ - On February 15, 2017, we decided to close 43 underperforming restaurants. Most of these restaurants were closed in 2017 to date, with the balance closing as leases and certain operating covenants expire or are amended or waived. See Note 3 - ~~Impairments and Exit Costs~~ ~~of our Notes to Consolidated Financial Statements for additional details regarding the 2017 Closure Initiative.~~

~~Credit Agreement Amendment~~ - On May 22, 2017, OSI entered into an Amendment to its existing Credit Agreement, dated October 26, 2012. The Amendment provided an incremental Term loan A-2 in an aggregate principal amount of $125.0 million, a portion of which was used to repay outstanding borrowings under our revolving credit facility. See

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

~~Note 9 -~~ ~~Long-term Debt, Net~~ ~~of our Notes to Consolidated Financial Statements for additional details regarding the Amendment to the Credit Agreement.~~

~~Share Repurchase Programs -~~ We repurchased 13.8 million shares of common stock year-to-date for a total of $272.7 million and had $55.0 million remaining available for repurchase under the 2017 Share Repurchase Program, through the date of this filing.

Key Performance Indicators

Key measures that we use in evaluating our restaurants and assessing our business include the following:


•	Average restaurant unit volumes—average sales (excluding gift card breakage) per restaurant to measure changes in customer traffic, pricing and development of the brand;


•	Comparable restaurant sales—year-over-year comparison of sales volumes (excluding gift card breakage) for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;

~~Average restaurant unit volumes—average sales per restaurant to measure changes in customer traffic, pricing and development of the brand;~~


•	System-wide sales—total restaurant sales volume for all Company-owned and franchise restaurants, regardless of ownership, to interpret the overall health of our brands;


•	Restaurant-level operating margin, Income from operations, Net income and Diluted earnings per share — financial measures utilized to evaluate our operating performance.

~~Comparable restaurant sales~~—year-over-year comparison of sales for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants;

~~System-wide sales—total restaurant sales volume for all Company-owned and franchise restaurants, regardless of ownership, to interpret the overall health of our brands;~~

~~Restaurant-level operating margin, Income from operations, Net income and Diluted earnings per share~~ ~~— financial measures utilized to evaluate our operating performance.~~

Restaurant-level operating margin is widely regarded in the industry as a useful metric to evaluate restaurant level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments. Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales that Cost of sales, Labor and other related and Other restaurant operating (including advertising expenses) represent, in each case as such items are reflected in our Consolidated ~~Statement~~Statements of Operations. The following categories of our revenue and operating expenses are not included in restaurant-level operating margin because we do not consider them reflective of operating performance at the restaurant-level within a period:


(i)	Franchise and other revenues which are earned primarily from franchise royalties and other non-food and beverage revenue streams, such as rental and sublease income.


(ii)	Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical sunk costs rather than cash outlays for the restaurants.


(iii)	General and administrative expense which includes primarily non-restaurant-level costs associated with support of the restaurants and other activities at our corporate offices.


(iv)	Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant performance in a period.

Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operations of our restaurants and may materially impact our Consolidated Statement of Operations. As a result, restaurant-level operating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to, and not a substitute for, ~~net~~Net income or ~~income~~Income from operations. In addition, our presentation of ~~restaurant~~restaurant-level operating margin may not be comparable to similarly titled measures used by other companies in our industry;

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~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Adjusted restaurant-level operating margin, Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share~~—non-GAAP financial measures utilized to evaluate our operating performance, and for which definitions, usefulness and reconciliations are described in more detail in the “Non-GAAP Financial Measures” section below; and

~~Customer satisfaction scores—measurement of our customers’ experiences in a variety of key areas.~~

~~Selected Operating Data~~

~~The table below presents the number of our restaurants in operation at the end of the periods indicated:~~

Number of restaurants (at end of the period): SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
U.S.
Outback Steakhouse
Company-owned (1) 584
651
Franchised (1) 156
105
Total 740
756
Carrabba’s Italian Grill
Company-owned (1) 226
243
Franchised (1) 3
2
Total 229
245
Bonefish Grill
Company-owned 195
204
Franchised 7
6
Total 202
210
Fleming’s Prime Steakhouse & Wine Bar
Company-owned 68
67
Express
Company-owned 1
—
International
Company-owned
Outback Steakhouse - Brazil (2) 87
81
Other 36
24
Franchised

Outback Steakhouse - South Korea 74
72
Other 54
52
Total 251
229
System-wide total 1,491
1,507

~~____________________~~


~~(1)~~•	~~In April 2017, we sold 53 Outback Steakhouse restaurants~~Adjusted restaurant-level operating margin, Adjusted income from operations, Adjusted net income and ~~one Carrabba’s Italian Grill restaurant which are now operated as franchises under agreements with the Buyers.~~


~~(2)~~	~~The restaurant counts for Brazil are reported as of August 31, 2017 and 2016, respectively,~~Adjusted diluted earnings per share—non-GAAP financial measures utilized to ~~correspond with the balance sheet dates of this subsidiary.~~

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Results of Operations~~

The following table sets forth, for the periods indicated, the percentages of certain items in our Consolidated Statements of Operations and Comprehensive Income in relation to Total revenues or Restaurant sales, as indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Revenues

Restaurant sales 98.8 % 99.3 % 99.0 % 99.4 %
Franchise and other revenues 1.2
0.7
1.0
0.6
Total revenues 100.0
100.0
100.0
100.0
Costs and expenses

Cost of sales (1) 31.6
32.2
31.8
32.3
Labor and other related (1) 30.4
29.0
29.3
28.6
Other restaurant operating (1) 24.7
24.3
23.4
23.1
Depreciation and amortization 5.0
4.8
4.6
4.5
General and administrative 7.0
6.5
6.9
6.4
Provision for impaired assets and restaurant closings 2.0
0.5
1.2
1.5
Total costs and expenses 99.7
96.8
96.3
95.9
Income from operations 0.3
3.2
3.7
4.1
Loss on defeasance, extinguishment and modification of debt —
(*)
(*)
(0.8 )
Other income, net 0.8
0.2
0.4
*
Interest expense, net (1.1 ) (1.1 ) (0.9 ) (1.0 )
Income before (benefit) provision for income taxes *
2.3
3.2
2.3
(Benefit) provision for income taxes (0.4 ) 0.2
0.5
0.8
Net income 0.4
2.1
2.7
1.5
Less: net (loss) income attributable to noncontrolling interests (*)
*
*
0.1
Net income attributable to Bloomin’ Brands 0.4 % 2.1 % 2.7 % 1.4 %

~~________________~~


~~(1)~~	~~As a percentage of Restaurant sales.~~


*	~~Less than 1/10~~^th ~~of one percent of Total revenues.~~evaluate our operating performance.

~~RESTAURANT SALES~~

~~Following is a summary of the change in Restaurant sales for the thirteen and thirty-nine weeks ended September 24, 2017:~~

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
For the period ended September 25, 2016 $ 998.8
$ 3,229.4
Change from:
Divestiture of restaurants through refranchising transactions (56.3 ) (167.0 )
Restaurant closings (21.6 ) (62.0 )
Comparable restaurant sales (3.8 ) 1.2
Restaurant openings 18.3
58.7
Effect of foreign currency translation 2.5
33.0
For the period ended September 24, 2017 $ 937.9
$ 3,093.3

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~The decrease in Restaurant sales in the thirteen weeks ended September 24, 2017 was primarily attributable to: (i) refranchising internationally and domestically~~ ~~and~~ ~~(ii) the closing of 46 restaurants since June 26, 2016, partially offset by the opening of 46 new restaurants not included in our comparable restaurant sales base.~~

~~The decrease in Restaurant sales in the thirty-nine weeks ended September 24, 2017 was primarily attributable to: (i) refranchising internationally and domestically~~ ~~and~~ (ii) the closing of 55 restaurants since December 27, 2015. The decrease in restaurant sales was partially offset by: (i) the opening of 65 new restaurants not included in our comparable restaurant sales base and (ii) the effect of foreign currency translation, due to appreciation of the Brazil Real.

~~Average Restaurant Unit Volumes and Operating Weeks~~

~~Following is a summary of the average restaurant unit volumes and operating weeks:~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Average restaurant unit volumes:
U.S.
Outback Steakhouse $ 62,733
$ 61,588
$ 67,112
$ 65,845
Carrabba’s Italian Grill $ 51,226
$ 51,374
$ 56,016
$ 55,974
Bonefish Grill $ 53,666
$ 55,125
$ 58,727
$ 59,365
Fleming’s Prime Steakhouse & Wine Bar $ 68,761
$ 68,510
$ 79,300
$ 79,561
International
Outback Steakhouse - Brazil (1) $ 83,856
$ 79,133
$ 85,214
$ 72,022
Operating weeks:

U.S.
Outback Steakhouse 7,592
8,463
23,785
25,347
Carrabba’s Italian Grill 2,950
3,163
8,974
9,507
Bonefish Grill 2,542
2,652
7,690
8,014
Fleming’s Prime Steakhouse & Wine Bar 875
871
2,624
2,587
International
Outback Steakhouse - Brazil 1,137
1,042
3,310
3,026

~~____________________~~


~~(1)~~	Translated at an average exchange rate of 3.22 and 3.30 for the thirteen weeks ended September 24, 2017 and September 25, 2016, respectively and 3.20 and 3.59 for the thirty-nine weeks ended September 24, 2017 and September 25, 2016, respectively.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Comparable Restaurant Sales, Traffic and Average Check Per Person Increases (Decreases)~~

~~Following is a summary of comparable restaurant sales, traffic and average check per person increases (decreases):~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Year over year percentage change:
Comparable restaurant sales (stores open 18 months or more) (1):

U.S.
Outback Steakhouse 0.6 % (0.7 )% 0.8 % (1.6 )%
Carrabba’s Italian Grill (2.8 )% (2.1 )% (2.1 )% (2.9 )%
Bonefish Grill (4.3 )% 1.7 % (2.4 )% (0.1 )%
Fleming’s Prime Steakhouse & Wine Bar (1.0 )% (1.9 )% (1.8 )% (0.3 )%
Combined U.S. (2) (1.0 )% (0.7 )% (0.5 )% (1.5 )%
International
Outback Steakhouse - Brazil (3) 4.8 % 7.3 % 6.9 % 6.9 %

Traffic:

U.S.
Outback Steakhouse 0.1 % (6.5 )% (1.1 )% (5.1 )%
Carrabba’s Italian Grill (4.2 )% (4.5 )% (4.5 )% (2.5 )%
Bonefish Grill (5.7 )% (2.0 )% (3.5 )% (3.3 )%
Fleming’s Prime Steakhouse & Wine Bar (6.5 )% (2.9 )% (6.6 )% (1.6 )%
Combined U.S. (1.9 )% (5.4 )% (2.3 )% (4.2 )%
International
Outback Steakhouse - Brazil (1.5 )% 1.4 % (0.1 )% 0.2 %

Average check per person increases (decreases) (4):
U.S.
Outback Steakhouse 0.5 % 5.8 % 1.9 % 3.5 %
Carrabba’s Italian Grill 1.4 % 2.4 % 2.4 % (0.4 )%
Bonefish Grill 1.4 % 3.7 % 1.1 % 3.2 %
Fleming’s Prime Steakhouse & Wine Bar 5.5 % 1.0 % 4.8 % 1.3 %
Combined U.S. 0.9 % 4.7 % 1.8 % 2.7 %
International
Outback Steakhouse - Brazil 6.2 % 6.0 % 6.8 % 6.6 %

~~____________________~~


~~(1)~~	Comparable restaurant sales exclude the effect of fluctuations in foreign currency rates. Relocated international restaurants closed more than 30 days and relocated U.S. restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.


~~(2)~~	~~Combined U.S. comparable restaurant sales for the thirteen weeks ended September 24, 2017 includes an estimated (1.0%) impact related to hurricanes that occurred during the quarter.~~


~~(3)~~	~~Includes trading day impact from calendar period reporting.~~


~~(4)~~	~~Increases (decreases) in average check per person includes the impact of menu pricing changes, product mix and discounts.~~

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Franchise and other revenues~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Franchise revenues (1) $ 7.9
$ 5.2
$ 23.7
$ 14.2
Other revenues 3.1
1.4
8.7
4.6
Franchise and other revenues $ 11.0
$ 6.6
$ 32.4
$ 18.8

~~____________________~~


~~(1)~~	~~Represents franchise royalties and initial franchise fees.~~

~~COSTS AND EXPENSES~~

~~Cost of sales~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Cost of sales $ 296.6
$ 322.1
$ 984.5
$ 1,044.2

% of Restaurant sales 31.6 % 32.2 % (0.6 )% 31.8 % 32.3 % (0.5 )%

Cost of sales, consisting of food and beverage costs, decreased as a percentage of Restaurant sales in the thirteen weeks ended September 24, 2017 as compared to the thirteen weeks ended September 25, 2016. The decrease as a percentage of Restaurant sales was primarily due to 0.7% from the impact of certain cost saving initiatives and 0.5% in lower beef costs, partially offset by an increase primarily attributable to 0.6% for other commodity costs.

~~Cost of sales decreased as a percentage of Restaurant sales in the thirty-nine weeks ended September 24, 2017~~as compared to the thirty-nine weeks ended September 25, 2016. The decrease as a percentage of Restaurant sales was primarily due to: (i) 0.5% from increases in average check per person, (ii) 0.4% lower beef costs and (iii) 0.3% from the impact of certain cost saving initiatives. These decreases were partially offset by increases as a percentage of Restaurant sales primarily attributable to: (i) 0.5% for other commodity costs and (ii) 0.2% for product investments at Outback Steakhouse.

~~In fiscal year 2018, we expect low single digit commodity cost inflation.~~

~~Labor and other related expenses~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Labor and other related $ 285.3
$ 290.0
$ 907.6
$ 922.0

% of Restaurant sales 30.4 % 29.0 % 1.4 % 29.3 % 28.6 % 0.7 %

Labor and other related expenses increased as a percentage of Restaurant sales in the thirteen weeks ended September 24, 2017 as compared to the thirteen weeks ended September 25, 2016. The increase as a percentage of Restaurant sales was primarily due to 1.4% of higher kitchen and service labor costs due to wage rate increases and 0.2% of costs related to hurricanes that occurred during the quarter. The increase was offset by a decrease as a percentage of Restaurant sales primarily due to 0.2% from increases in average check per person.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

Labor and other related expenses increased as a percentage of Restaurant sales in the thirty-nine weeks ended September 24, 2017 as compared to the thirty-nine weeks ended September 25, 2016. The increase as a percentage of Restaurant sales was primarily due to 1.5% of higher kitchen and service labor costs due to wage rate increases and investments in our service model. The increase was partially offset by decreases as a percentage of Restaurant sales primarily due to: (i) 0.5% from increases in average check per person and (ii) 0.2% impact from the sale of Outback Steakhouse South Korea in 2016.

~~In fiscal year 2018, we anticipate approximately 4.0% of labor cost inflation.~~

~~Other restaurant operating expenses~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Other restaurant operating $ 231.3
$ 243.2
$ 723.4
$ 747.2

% of Restaurant sales 24.7 % 24.3 % 0.4 % 23.4 % 23.1 % 0.3 %

Other restaurant operating expenses increased as a percentage of Restaurant sales in the thirteen weeks ended September 24, 2017 as compared to the thirteen weeks ended September 25, 2016. The increase as a percentage of Restaurant sales was primarily due to: (i) 0.9% from operating expense inflation and (ii) 0.6% from higher rent expense due to the sale-leaseback of certain properties. These increases were partially offset by decreases as a percentage of Restaurant sales primarily due to: (i) 0.7% from higher advertising expense in 2016, (ii) 0.3% from the impact of certain cost saving initiatives and (iii) 0.2% from increases in average check per person.

Other restaurant operating expenses increased as a percentage of Restaurant sales in the thirty-nine weeks ended September 24, 2017 as compared to the thirty-nine weeks ended September 25, 2016. The increase as a percentage of Restaurant sales was primarily due to: (i) 0.5% from higher rent expense due to the sale-leaseback of certain properties and (ii) 0.4% from operating expense inflation. These increases were partially offset by decreases as a percentage of Restaurant sales primarily due to: (i) 0.6% from higher advertising expense in 2016 and (ii) 0.2% from the impact of certain cost saving initiatives.

~~Depreciation and amortization~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Depreciation and amortization $ 47.8
$ 48.6
$ (0.8 ) $ 142.5
$ 145.2
$ (2.7 )

Depreciation and amortization expense decreased in the thirteen and thirty-nine weeks ended September 24, 2017 as compared to the thirteen and thirty-nine weeks ended September 25, 2016. The decrease was primarily due to: (i) disposal of assets related to the sale-leaseback of certain properties, (ii) refranchising internationally and domestically and (iii) assets impaired in connection with the 2017 Closure Initiative, partially offset by additional depreciation expense related to the opening of new restaurants and the relocation or remodel of existing restaurants.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~General and administrative~~

General and administrative expense includes salaries and benefits, management incentive programs, related payroll tax and benefits, other employee-related costs and professional services. Following is a summary of the change in general and administrative expense for the thirteen and thirty-nine weeks ended September 24, 2017:

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
For the period ended September 25, 2016 $ 65.1
$ 208.7
Change from:
Life insurance and deferred compensation 1.1
1.6
Computer expense 1.1
1.5
Legal and professional fees 0.5
2.8
Incentive compensation (2.2 ) (0.4 )
Foreign currency exchange (0.1 ) 2.5
Compensation, benefits and payroll tax —
(4.6 )
Other 0.6
3.0
For the period ended September 24, 2017 $ 66.1
$ 215.1

~~Provision for impaired assets and restaurant closings~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Provision for impaired assets and restaurant closings $ 18.6
$ 4.7
$ 13.9
$ 38.3
$ 49.2
$ (10.9 )

~~Sale of Outback Steakhouse South Korea~~ - On July 25, 2016, we completed the sale of Outback Steakhouse South Korea. In connection with the decision to sell Outback Steakhouse South Korea, we recognized an impairment charge of $39.6 million during thirty-nine weeks ended September 25, 2016.

~~Closure Initiatives~~ - Following is a summary of expenses related to the Closure Initiatives recognized in Provision for impaired assets and restaurant closings in our Consolidated Statements of Operations and Comprehensive Income for the periods indicated:

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Impairment, facility closure and other expenses
2017 Closure Initiative (1) $ 1.8
$ —
$ 19.1
$ —
Bonefish Restructuring (1) $ 1.9
$ (0.7 ) $ 2.7
$ 3.7

~~________________~~


~~(1)~~	We expect to incur additional charges of approximately $3.2 million to $4.1 million for the 2017 Closure Initiative and $2.2 million to $5.1 million for the Bonefish Restructuring, respectively, over the next two years, including costs associated with lease obligations.

~~Surplus Properties~~ ~~- During the thirteen and thirty-nine weeks ended September 24, 2017,~~ we ~~recognized impairment charges of $9.5 million in connection with the remeasurement of certain held and used surplus properties currently leased to the owners of our former restaurant concepts.~~

~~Other Impairments~~ ~~- During the thirteen and thirty-nine weeks ended September 25, 2016, we recognized impairment charges of $3.2 million for our Puerto Rico subsidiary.~~

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

The remaining restaurant impairment and closing charges resulted primarily from the carrying value of a restaurant’s assets exceeding its estimated fair market value, primarily due to locations identified for relocation.

~~See Note 3 -~~ ~~Impairments and Exit Costs~~ ~~of the Notes to Consolidated Financial Statements for further information.~~

~~Income from operations~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Income from operations $ 3.2
$ 31.7
$ (28.5 ) $ 114.5
$ 131.8
$ (17.3 )
% of Total revenues 0.3 % 3.2 % (2.9 )% 3.7 % 4.1 % (0.4 )%

The decrease in income from operations generated in the thirteen weeks ended September 24, 2017 as compared to the thirteen weeks ended September 25, 2016 was primarily due to: (i) a decrease in restaurant-level operating margin and (ii) certain impairment charges and restaurant closing costs. These decreases were partially offset by increases primarily in franchise and other revenues.

The decrease in income from operations generated in the thirty-nine weeks ended September 24, 2017 as compared to the thirty-nine weeks ended September 25, 2016 was primarily due to: (i) a decrease in restaurant-level operating margin, (ii) certain impairment charges and restaurant closing costs and (iii) higher general and administrative expense. These decreases were partially offset by increases primarily due to: (i) increases in franchise and other revenues and (ii) impairment related to the sale of Outback Steakhouse South Korea in 2016.

~~Loss on defeasance, extinguishment and modification of debt~~

In connection with the PRP Mortgage Loan Amendment in July 2016 and the defeasance of our 2012 CMBS loan in February 2016, we recognized a loss on defeasance, extinguishment and modification of debt of $0.4 million and $27.0 million for the thirteen and thirty-nine weeks ended September 25, 2016, respectively.

~~Other income, net~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Other income, net $ 7.5
$ 2.1
$ 5.4
$ 14.8
$ 2.1
$ 12.7

Other income, net, includes items deemed to be non-operating based on management’s assessment of the nature of the item in relation to our core operations. Other income, net, for the thirteen weeks ended September 24, 2017 includes a net gain of $8.4 million from the sale ~~of one U.S. Company-owned Carrabba’s Italian Grill location, and for the~~ ~~thirty-nine weeks ended September 24, 2017 an aggregate net gain~~ ~~of $7.4 million~~ ~~in connection with~~ ~~the sale of~~ 54 ~~of our U.S. Company-owned locations to two of our existing franchisees during the second quarter of 2017.~~ ~~We recorded a gain of $2.1 million from the sale of Outback Steakhouse South Korea within Other income, net,~~ ~~during the~~ ~~thirteen and thirty-nine weeks ended September 25, 2016.~~

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Interest expense, net~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in millions) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Interest expense, net $ 10.7
$ 10.2
$ 0.5
$ 29.4
$ 33.4
$ (4.0 )

The change in Interest expense, net was primarily due to decreases related to the February 2016 refinancing and subsequent repayment of the PRP Mortgage loan in April 2017 and increases related to additional draws on our revolving credit facility and our May 2017 incremental Term loan A-2.

~~(Benefit) provision for income taxes~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 Change
Effective income tax rate (NM) 8.4 % (NM) 14.3 % 33.2 % (18.9 )%

~~____________________~~

~~NM Not meaningful.~~

The decrease in the effective tax rate for the thirteen weeks ended September 24, 2017 was primarily due to the benefit of employment-related credits relative to lower forecasted pre-tax income for the 2017 tax year. The benefit for income taxes recorded for the thirteen weeks ended September 24, 2017 includes the impact of changes to the estimate of the forecasted full-year effective tax rate relative to prior quarters in 2017.

~~SEGMENT PERFORMANCE~~

We have two reportable segments, U.S. and International, which reflects how we manage our business, review operating performance and allocate resources. The U.S. segment includes all brands operating in the U.S. while brands operating outside the U.S. are included in the International segment. Resources are allocated and performance is assessed by our CEO, whom we have determined to be our CODM. Following is a summary of reporting segments:



~~SEGMENT~~	~~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~~
~~International~~	~~Carrabba’s Italian Grill (Abbraccio)~~	~~Brazil~~

Revenues for both segments include only transactions with customers and include no intersegment revenues. Excluded from net income from operations for U.S. and International are legal and certain corporate costs not directly related to the performance of the segments, certain stock-based compensation expenses and certain bonus expenses.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Following is a reconciliation of segment income (loss) from operations to the consolidated operating results:~~

~~U.S. Segment~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Revenues
Restaurant sales $ 823,916
$ 889,350
$ 2,758,165
$ 2,882,091
Franchise and other revenues 8,157
4,556
23,895
14,575
Total revenues $ 832,073
$ 893,906
$ 2,782,060
$ 2,896,666
Restaurant-level operating margin 12.2 % 14.1 % 14.7 % 15.7 %
Income from operations $ 28,139
$ 61,905
$ 204,153
$ 268,754
Operating income margin 3.4 % 6.9 % 7.3 % 9.3 %

~~Restaurant sales~~

~~Following is a summary of the change in U.S. segment Restaurant sales for the thirteen and thirty-nine weeks ended September 24, 2017:~~

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
For the period ended September 25, 2016 $ 889.4
$ 2,882.1
Change from:
Divestiture of restaurants through refranchising transactions (44.6 ) (76.5 )
Restaurant closings (21.2 ) (60.7 )
Comparable restaurant sales (6.9 ) (12.2 )
Restaurant openings 7.3
25.5
For the period ended September 24, 2017 $ 824.0
$ 2,758.2

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~The decrease in U.S. Restaurant sales in the thirteen weeks ended September 24, 2017 was primarily attributable to: (i)~~ ~~the refranchising of certain U.S. Company-owned~~ ~~restaurants~~ in ~~April 2017,~~(ii) the closing of 44 restaurants since June 26, 2016 and (iii) lower comparable restaurant sales, partially offset by the opening of 12 new restaurants not included in our comparable restaurant sales base.

~~The decrease in U.S. Restaurant sales in the thirty-nine weeks ended September 24, 2017 was primarily attributable to: (i)~~ ~~the refranchising of certain U.S. Company-owned~~ ~~restaurants~~ ~~in April 2017, (ii)~~ the closing of 52 restaurants since December 27, 2015 and (iii) lower comparable restaurant sales, partially offset by the opening of 18 new restaurants not included in our comparable restaurant sales base.

~~Restaurant-level operating margin~~

The decrease in U.S. restaurant-level operating margin in the thirteen weeks ended September 24, 2017 as compared to the thirteen weeks ended September 25, 2016, was primarily due to: (i) higher labor costs, (ii) operating expense inflation and (iii) higher net rent expense due to the sale-leaseback of certain properties. These decreases were partially offset by the impact of certain cost saving initiatives and lower advertising expense.

The decrease in U.S. restaurant-level operating margin in the thirty-nine weeks ended September 24, 2017 as compared to the thirty-nine weeks ended September 25, 2016, was primarily due to: (i) higher labor costs, (ii) operating expense inflation and (iii) higher net rent expense due to the sale-leaseback of certain properties. These decreases were partially offset by: (i) increases in average check per person, (ii) lower advertising expense and (iii) the impact of certain cost saving initiatives.

~~Income from operations~~

The decreases in U.S. income from operations generated in the thirteen and thirty-nine weeks ended September 24, 2017 as compared to the thirteen and thirty-nine weeks ended September 25, 2016, was primarily due to: (i) lower operating margin at the restaurant-level and (ii) certain impairment charges and restaurant closing costs. These decreases were partially offset by increases primarily in franchise and other revenues.

~~International Segment~~

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
(dollars in thousands) SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
Revenues
Restaurant sales $ 113,936
$ 109,456
$ 335,132
$ 347,286
Franchise and other revenues 2,890
2,025
8,512
4,211
Total revenues $ 116,826
$ 111,481
$ 343,644
$ 351,497
Restaurant-level operating margin 20.7 % 18.2 % 20.7 % 17.9 %
Income (loss) from operations $ 8,442
$ 8,277
$ 26,923
$ (14,947 )
Operating income (loss) margin 7.2 % 7.4 % 7.8 % (4.3 )%

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Restaurant sales~~

~~Following is a summary of the change in International segment Restaurant sales for the thirteen and thirty-nine weeks ended September 24, 2017:~~

(dollars in millions) THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
For the period ended September 25, 2016 $ 109.5
$ 347.3
Change from:
Restaurant openings 11.0
33.2
Comparable restaurant sales 3.1
13.4
Effect of foreign currency translation 2.5
33.0
Refranchising of Outback Steakhouse South Korea (11.7 ) (90.5 )
Restaurant closings (0.4 ) (1.3 )
For the period ended September 24, 2017 $ 114.0
$ 335.1

The increase in Restaurant sales in the thirteen weeks ended September 24, 2017 was primarily attributable to (i) the opening of 34 new restaurants not included in our comparable restaurant sales base, (ii) an increase in comparable restaurant sales and (iii) the effect of foreign currency translation of the Brazil Real relative to the U.S. dollar, partially offset by the refranchising of Outback Steakhouse South Korea in 2016.

The decrease in Restaurant sales in the thirty-nine weeks ended September 24, 2017 was primarily attributable to the refranchising of Outback Steakhouse South Korea in 2016, partially offset by: (i) the opening of 47 new restaurants not included in our comparable restaurant sales base, (ii) the effect of foreign currency translation of the Brazil Real relative to the U.S. dollar and (iii) an increase in comparable restaurant sales.

~~Restaurant-level operating margin~~

The increase in International restaurant-level operating margin in the thirteen weeks ended September 24, 2017 as compared to the thirteen weeks ended September 25, 2016 was primarily due to: (i) increases in average check per person and (ii) the impact of the sale of Outback Steakhouse South Korea in 2016. These increases were partially offset by: (i) higher labor and commodity inflation and (ii) operating expense inflation.

The increase in International restaurant-level operating margin in the thirty-nine weeks ended September 24, 2017 as compared to the thirty-nine weeks ended September 25, 2016 was primarily due to: (i) increases in average check per person, (ii) the impact of the sale of Outback Steakhouse South Korea in 2016 and (iii) the impact of certain cost saving initiatives. These increases were partially offset by higher labor and commodity inflation.

~~Income from operations~~

The increase in International income from operations in the thirteen weeks ended September 24, 2017 as compared to the thirteen weeks ended September 25, 2016 was primarily due to higher operating margin at the restaurant-level, partially offset by certain impairment charges.

The increase in International income from operations in the thirty-nine weeks ended September 24, 2017 as compared to the thirty-nine weeks ended September 25, 2016 was primarily due to: (i) impairment related to the sale of Outback Steakhouse South Korea in 2016, (ii) higher operating margin at the restaurant-level and (iii) an increase in franchise and other revenues, partially offset by higher General and administrative expense. General and administrative expense for the International segment increased primarily from the effects of foreign currency exchange.

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~Non-GAAP Financial Measures~~

In addition to the results provided in accordance with U.S. GAAP, we provide certain non-GAAP measures, which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP and include the following: (i) system-wide sales, (ii) Adjusted restaurant-level operating margins, (iii) Adjusted income from operations and the corresponding margins, (iv) Adjusted net income and (v) Adjusted diluted earnings per share.

We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on U.S. GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. However, our inclusion

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of Directors (the “Board”) evaluate our operating performance, allocate resources and administer employee incentive ~~plans.~~plans; and


•	Customer satisfaction scores—measurement of our customers’ experiences in a variety of key areas.

These non-GAAP financial measures are not intended to replace U.S. GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. We maintain internal guidelines with respect toSelected Operating Data

The table below presents the ~~types of adjustments we include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains and expenses that are reflective~~number of our ~~core operations~~restaurants in a period, and those that may vary from period to period without correlation to our core performance in that period. However, implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed by, or changes to, our guidelines will be considered by our disclosure committee. Refer to the reconciliations of non-GAAP measures for descriptionsoperation as of the ~~actual adjustments made in the current~~ periods ~~and the corresponding prior periods.~~

As previously announced, based on a review of our non-GAAP presentations, we determined that, commencing with our results for the first fiscal quarter of 2017, when presenting the non-GAAP measures Adjusted income from operations and the corresponding margins, Adjusted net income and Adjusted diluted earnings per share, we will no longer adjust for expenses incurred in connection with our remodel program or intangible amortization recorded as a result of the acquisition of our Brazil operations. We recast historical comparable periods to conform to the revised presentation.

indicated:



Number of restaurants (at end of the period):	MARCH 29, 2020	MARCH 31, 2019
U.S.
Outback Steakhouse
Company-owned	575	579
Franchised	145	153
Total	720	732
Carrabba’s Italian Grill
Company-owned	204	205
Franchised	21	21
Total	225	226
Bonefish Grill
Company-owned	190	189
Franchised	7	7
Total	197	196
Fleming’s Prime Steakhouse & Wine Bar
Company-owned	67	70
Other
Company-owned	4	2
U.S. total	1,213	1,226
International
Company-owned
Outback Steakhouse - Brazil (1)	103	95
Other	29	34
Franchised
Outback Steakhouse - South Korea	72	72
Other	55	54
International total	259	255
System-wide total	1,472	1,481

____________________


(1)	The restaurant counts for Brazil are reported as of February 29, 2020 and February 28, 2019, respectively, to correspond with the balance sheet dates of this subsidiary.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Results of Operations

The following table sets forth, for the periods indicated, the percentages of certain items in our Consolidated Statements of Operations in relation to Total revenues or Restaurant sales, as indicated:



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020		MARCH 31, 2019
Revenues
Restaurant sales	98.8	%	98.5	%
Franchise and other revenues	1.2		1.5
Total revenues	100.0		100.0
Costs and expenses
Cost of sales (1)	32.1		31.7
Labor and other related (1)	31.0		28.7
Other restaurant operating (1)	24.7		22.6
Depreciation and amortization	4.8		4.4
General and administrative	8.4		6.3
Provision for impaired assets and restaurant closings	4.1		0.3
Total costs and expenses	104.1		92.7
(Loss) income from operations	(4.1	)	7.3
Other expense, net	(0.1	)	(*)
Interest expense, net	(1.2	)	(1.0	)
(Loss) income before (benefit) provision for income taxes	(5.4	)	6.3
(Benefit) provision for income taxes	(2.0	)	0.5
Net (loss) income	(3.4	)	5.8
Less: net income attributable to noncontrolling interests	*		0.1
Net (loss) income attributable to Bloomin’ Brands	(3.4	)%	5.7	%

________________


(1)	As a percentage of Restaurant sales.


*	Less than 1/10^th of one percent of Total revenues.

RESTAURANT SALES

Following is a summary of the change in Restaurant sales for the period indicated:



(dollars in millions)	THIRTEEN WEEKS ENDED
For the period ended March 31, 2019	$	1,111.6
Change from:
Comparable restaurant sales	(99.3		)
Divestiture of restaurants through refranchising transactions	(11.2		)
Effect of foreign currency translation	(10.4		)
Restaurant closures	(6.6		)
Restaurant openings	12.1
For the period ended March 29, 2020	$	996.2

The decrease in Restaurant sales during the thirteen weeks ended March 29, 2020 was primarily due to: (i) lower U.S. comparable restaurant sales, (ii) domestic refranchising, (iii) the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar and (iv) the closing of 24 restaurants since December 30, 2018. The decrease in Restaurant sales was partially offset by the opening of 24 new restaurants not included in our comparable restaurant sales base.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Comparable Restaurant Sales, Traffic and Average Check Per Person Increases (Decreases)

Following is a summary of comparable restaurant sales, traffic and average check per person increases (decreases), for the periods indicated:



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020		MARCH 31, 2019
Year over year percentage change:
Comparable restaurant sales (stores open 18 months or more):
U.S. (1)
Outback Steakhouse	(9.5	)%	3.5	%
Carrabba’s Italian Grill	(8.7	)%	0.3	%
Bonefish Grill	(13.9	)%	1.9	%
Fleming’s Prime Steakhouse & Wine Bar	(13.2	)%	0.6	%
Combined U.S.	(10.4	)%	2.4	%
International
Outback Steakhouse - Brazil (2)(3)	6.8	%	3.7	%

Traffic:
U.S.
Outback Steakhouse	(10.4	)%	(0.5	)%
Carrabba’s Italian Grill	(6.2	)%	(1.3	)%
Bonefish Grill	(15.1	)%	(1.9	)%
Fleming’s Prime Steakhouse & Wine Bar	(13.6	)%	(1.6	)%
Combined U.S.	(10.4	)%	(0.9	)%
International
Outback Steakhouse - Brazil (3)	8.4	%	(2.4	)%

Average check per person (4):
U.S.
Outback Steakhouse	0.9	%	4.0	%
Carrabba’s Italian Grill	(2.5	)%	1.6	%
Bonefish Grill	1.2	%	3.8	%
Fleming’s Prime Steakhouse & Wine Bar	0.4	%	2.2	%
Combined U.S.	—	%	3.3	%
International
Outback Steakhouse - Brazil (3)	(2.7	)%	6.5	%

____________________


(1)	Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.


(2)	Excludes the effect of fluctuations in foreign currency rates. Includes trading day impact from calendar period reporting.


(3)	Outback Steakhouse Brazil results are reported on a one-month lag and are presented on a calendar basis. Restaurant sales for Brazil during the first fiscal quarter of 2020 (through February 29, 2020) do not include any material impact from the COVID-19 pandemic.


(4)	Average check per person includes the impact of menu pricing changes, product mix and discounts.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Average Restaurant Unit Volumes and Operating Weeks

Following is a summary of the average restaurant unit volumes and operating weeks, for the periods indicated:



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020		MARCH 31, 2019
Average restaurant unit volumes (weekly):
U.S.
Outback Steakhouse	$	70,071	$	77,198
Carrabba’s Italian Grill	$	55,383	$	59,940
Bonefish Grill	$	54,685	$	63,654
Fleming’s Prime Steakhouse & Wine Bar	$	80,649	$	91,238
International
Outback Steakhouse - Brazil (1)	$	70,300	$	74,878
Operating weeks:
U.S.
Outback Steakhouse	7,499		7,527
Carrabba’s Italian Grill	2,652		2,894
Bonefish Grill	2,470		2,458
Fleming’s Prime Steakhouse & Wine Bar	880		910
International
Outback Steakhouse - Brazil	1,303		1,196

____________________


(1)	Translated at average exchange rates of 4.19 and 3.79 for the thirteen weeks ended March 29, 2020 and March 31, 2019, respectively.

Franchise and other revenues



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020		MARCH 31, 2019
Franchise revenues (1)	$	9.5	$	13.8
Other revenues	2.6		2.7
Franchise and other revenues	$	12.1	$	16.5

____________________


(1)	Represents franchise royalties, advertising fees and initial franchise fees.

COSTS AND EXPENSES

Cost of sales



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020			MARCH 31, 2019			Change
Cost of sales	$	319.7		$	352.1
% of Restaurant sales	32.1		%	31.7		%	0.4	%

Cost of sales increased as a percentage of Restaurant sales during the thirteen weeks ended March 29, 2020as compared to the thirteen weeks ended March 31, 2019 primarily due to 0.6% from inventory obsolescence and spoilage costs associated with COVID-19 and 0.3% from commodity cost inflation, partially offset by an increase as a percentage of Restaurant sales of 0.5% from increases in average check per person.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Labor and other related expenses



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020			MARCH 31, 2019			Change
Labor and other related	$	309.3		$	319.0
% of Restaurant sales	31.0		%	28.7		%	2.3	%

Labor and other related expenses increased as a percentage of Restaurant sales during the thirteen weeks ended March 29, 2020 as compared to the thirteen weeks ended March 31, 2019 primarily due to: (i) 1.6% from relief pay primarily for hourly employees impacted by the closure of dining rooms due to COVID-19, (ii) 0.5% from decreased restaurant sales primarily due to shifting to an off-premises only operational model in March 2020 and (iii) 0.3% from higher labor costs due to wage rate increases.

Other restaurant operating expenses



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020			MARCH 31, 2019			Change
Other restaurant operating	$	246.6		$	250.9
% of Restaurant sales	24.7		%	22.6		%	2.1	%

Other restaurant operating expenses increased as a percentage of Restaurant sales during the thirteen weeks ended March 29, 2020 as compared to the thirteen weeks ended March 31, 2019 primarily due to: (i) the impact of shifting to an off-premise only operational model in March 2020 including, 1.1% from additional operating expenses and 0.9% from decreased restaurant sales, (ii) 0.2% from increased gift card fees from a larger percentage of on-line gift card sales and (iii) 0.2% from operating expense inflation. These increases were partially offset by a decrease as a percentage of Restaurant sales of 0.2% from certain cost savings initiatives.

General and administrative

General and administrative expense includes salaries and benefits, management incentive programs, related payroll tax and benefits, other employee-related costs and professional services. Following is a summary of the change in General and administrative expense for the period indicated below:



(dollars in millions)	THIRTEEN WEEKS ENDED
For the period ended March 31, 2019	$	70.6
Change from:
Expected credit losses and contingent lease liabilities	7.5
Transformational costs	5.4
Severance	4.8
Compensation, benefits and payroll tax	(1.5		)
Legal and professional fees	(1.5		)
Deferred compensation	(1.1		)
Other	0.6
For the period ended March 29, 2020	$	84.8

Provision for impaired assets and restaurant closings



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020		MARCH 31, 2019		Change
Provision for impaired assets and restaurant closings	$	41.3	$	3.6	$	37.7

Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

During the thirteen weeks ended March 29, 2020, we recognized asset impairment and closure charges related to the COVID-19 pandemic, including $31.3 million in the U.S. segment and $3.3 million in the international segment. We also recognized asset impairment charges related to transformational initiatives of $6.3 million, which were not allocated to our operating segments.

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

See Note 4 - Impairments, Exit Costs and Disposalsof the Notes to Consolidated Financial Statements for further information.

(Loss) income from operations



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020			MARCH 31, 2019			Change
(Loss) income from operations	$	(41.6	)	$	82.5		$	(124.1	)
% of Total revenues	(4.1		)%	7.3		%	(11.4		)%

Loss from operations generated during the thirteen weeks ended March 29, 2020, as compared to income from operations during the thirteen weeks ended March 31, 2019 was primarily due to: (i) lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including asset impairment charges, relief pay, inventory obsolescence and incremental operating costs, (ii) the impact of restructuring and transformational initiatives and (iii) commodity and labor inflation.

Interest expense, net



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020		MARCH 31, 2019		Change
Interest expense, net	$	11.7	$	11.2	$	0.5

The increase in Interest expense, net for the thirteen weeks ended March 29, 2020 as compared to the thirteen weeks ended March 31, 2019 was primarily due to higher interest expense from our derivative instruments partially offset by lower interest rates.

(Benefit) provision for income taxes



	THIRTEEN WEEKS ENDED
	MARCH 29, 2020		MARCH 31, 2019		Change
Effective income tax rate	36.4	%	7.7	%	28.7	%

The effective income tax rate for the thirteen weeks ended March 29, 2020 increased by 28.7 percentage points as compared to the thirteen weeks ended March 31, 2019. The increase was primarily due to the benefit of the five-year carryback of the forecasted 2020 NOL under the CARES Act and favorable discrete items recorded in the thirteen weeks ended March 29, 2020.

Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

SEGMENT PERFORMANCE

We consider our restaurant concepts and international markets as operating segments, which reflects how we manage our business, review operating performance and allocate resources. Resources are allocated and performance is assessed by our CEO, whom we have determined to be our CODM. We aggregate our 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
International	Carrabba’s Italian Grill (Abbraccio)	Brazil

_________________


(1)	Includes franchise locations.

Revenues for both segments include only transactions with customers and exclude intersegment revenues. Excluded from Income from operations for U.S. and international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based compensation expenses and certain bonus expenses.

During the thirteen weeks ended March 29, 2020, we recorded $22.2 million of pre-tax charges as a part of transformational initiatives implemented in connection with its previously announced review of strategic alternatives. These costs were primarily recorded within General and administrative expense and Provision for impaired assets and restaurant closings and were not allocated to our segments since our CODM does not consider the impact of transformational initiatives when assessing segment performance.

Refer to Note 19 - Segment Reportingof the Notes to Consolidated Financial Statements for a reconciliation of segment income from operations to the consolidated operating results.

Restaurant-level operating margin is widely regarded in the industry as a useful metric to evaluate restaurant-level operating efficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularly within our two segments. See the Overview-Key Performance Indicators section of Management’s Discussion and Analysis for additional details regarding the calculation of restaurant-level operating margin.

U.S. Segment



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Revenues
Restaurant sales	$	884,889		$	1,000,813
Franchise and other revenues	9,608			13,694
Total revenues	$	894,497		$	1,014,507
Restaurant-level operating margin	11.5		%	16.7		%
Income from operations	$	11,379		$	113,035
Operating income margin	1.3		%	11.1		%

Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Restaurant sales

Following is a summary of the change in U.S. segment Restaurant sales for the period indicated:



(dollars in millions)	THIRTEEN WEEKS ENDED
For the period ended March 31, 2019	$	1,000.8
Change from:
Comparable restaurant sales	(102.7		)
Divestiture of restaurants through refranchising transactions	(11.2		)
Restaurant closures	(5.7		)
Restaurant openings	3.7
For the period ended March 29, 2020	$	884.9

The decrease in U.S. Restaurant sales during the thirteen weeks ended March 29, 2020 was primarily due to: (i) lower comparable restaurant sales, (ii) refranchising of certain Company-owned restaurants and (iii) the closing of 16 restaurants since December 30, 2018. The decrease in Restaurant sales was partially offset by the opening of six new restaurants not included in our comparable restaurant sales base.

Income from operations

The decrease in U.S. income from operations generated during the thirteen weeks ended March 29, 2020 as compared to the thirteen weeks ended March 31, 2019, was primarily due to: (i) lower comparable restaurant sales and costs incurred in connection with the COVID-19 pandemic, including asset impairment charges, relief pay, inventory obsolescence and incremental operating costs and (ii) labor and commodity inflation.

International Segment



	THIRTEEN WEEKS ENDED
(dollars in thousands)	MARCH 29, 2020			MARCH 31, 2019
Revenues
Restaurant sales	$	111,348		$	110,829
Franchise and other revenues	2,492			2,795
Total revenues	$	113,840		$	113,624
Restaurant-level operating margin	18.5		%	22.3		%
Income from operations	$	6,787		$	13,720
Operating income margin	6.0		%	12.1		%

Restaurant sales

Following is a summary of the change in international segment Restaurant sales for the period indicated:



(dollars in millions)	THIRTEEN WEEKS ENDED
For the period ended March 31, 2019	$	110.8
Change from:
Restaurant openings	8.4
Comparable restaurant sales	3.4
Effect of foreign currency translation	(10.4		)
Restaurant closures	(0.9		)
For the period ended March 29, 2020	$	111.3

Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The slight increase in international Restaurant sales during the thirteen weeks ended March 29, 2020 was primarily due to the opening of 18 new restaurants not included in our comparable restaurant sales base and higher comparable restaurant sales. The increase in Restaurant sales was partially offset by the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar.

Outback Steakhouse Brazil results are reported on a one-month lag and are presented on a calendar basis. Restaurant sales for Brazil during the first fiscal quarter of 2020 (through February 29, 2020) do not include any material impact from the COVID-19 pandemic.

Income from operations

The decrease in international income from operations during the thirteen weeks ended March 29, 2020 as compared to the thirteen weeks ended March 31, 2019 was primarily due to: (i) costs incurred in connection with the COVID-19 pandemic, including asset impairment and other charges, (ii) lower comparable restaurant sales in Hong Kong as a result of COVID-19, (iii) changes in product mix in Brazil and (iv) commodity inflation. These decreases were partially offset by higher comparable restaurant sales and lower advertising expense in Brazil.

Non-GAAP Financial Measures

System-Wide Sales

- System-wide sales is a non-GAAP financial measure that includes sales of all restaurants operating under our brand names, whether we own them or not. Management uses this information to make decisions about future plans for the development of additional restaurants and new concepts, as well as evaluation of current operations. System-wide sales comprise sales of Company-owned and franchised restaurants. ~~Following is~~For a summary of sales of Company-owned ~~restaurants:~~restaurants, refer to Note 3 - Revenue Recognitionof the Notes to Consolidated Financial Statements.

THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
COMPANY-OWNED RESTAURANT SALES
(dollars in millions)
SEPTEMBER 24, 2017 SEPTEMBER 25, 2016 SEPTEMBER 24, 2017 SEPTEMBER 25, 2016
U.S.
Outback Steakhouse (1) $ 476
$ 521
$ 1,596
$ 1,668
Carrabba’s Italian Grill (1) 151
162
502
532
Bonefish Grill 137
147
452
476
Fleming’s Prime Steakhouse & Wine Bar 60
60
208
206
Total $ 824
$ 890
$ 2,758
$ 2,882
International
Outback Steakhouse-Brazil $ 95
$ 83
$ 282
$ 218
Outback Steakhouse-South Korea (2) —
11
—
90
Other 19
15
53
39
Total $ 114
$ 109
$ 335
$ 347
Total Company-owned restaurant sales $ 938
$ 999
$ 3,093
$ 3,229

~~_____________________~~


~~(1)~~	~~In April 2017, we sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill restaurant which are now operated as franchises under agreements with the Buyers.~~


~~(2)~~	~~On July 25, 2016, we sold our restaurant locations in South Korea, converting all restaurants in that market to franchised locations.~~

The following table provides a summary of sales of franchised restaurants, which are not included in our consolidated financial ~~results, and our income from the royalties and/or service fees that franchisees pay us based generally on a percentage of sales. The following~~results. Franchise sales within this table ~~does~~do not represent our sales and isare presented only as an indicator of changes in the restaurant system, which management believes is important information regarding the health of our restaurant concepts and in determining our royalties and/or service fees.


	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED				THIRTEEN WEEKS ENDED
FRANCHISE SALES (dollars in millions) (1)	SEPTEMBER 24, 2017		SEPTEMBER 25, 2016		SEPTEMBER 24, 2017		SEPTEMBER 25, 2016
(dollars in millions)									MARCH 29, 2020		MARCH 31, 2019
U.S.
Outback Steakhouse ~~(2)~~	$	123	$	85	$	327	$	260	$	116	$	138
Carrabba's Italian Grill (2)	3		3		7		9
Carrabba’s Italian Grill (1)									11		3
Bonefish Grill	3		3		11		10		3		4
Total	129		91		345		279
U.S. total									$	130	$	145
International
Outback Steakhouse-South Korea ~~(3)~~	43		30		127		30		$	54	$	57
Other	28		28		85		84		22		27
Total	71		58		212		114
International total									$	76	$	84
Total franchise sales ~~(1)~~(2)	$	200	$	149	$	557	$	393	$	206	$	229
Income from franchise sales (4)	$	8	$	5	$	24	$	14

_____________________


(1)	In March 2019, we sold 18 Carrabba’s Italian Grill locations, which are now operated as franchises.


(2)	Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive (Loss) Income.


~~(2)~~	~~In April 2017, we sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill restaurant which are now operated as franchises under agreements with the Buyers.~~

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued


~~(3)~~	~~On July 25, 2016, we sold our restaurant locations in South Korea, converting all restaurants in that market to franchised locations.~~


~~(4)~~	~~Represents franchise royalties and initial franchise fees included in the Consolidated Statements of Operations and Comprehensive Income in Franchise and other revenues.~~

Adjusted restaurant-level operating margin

- The following table shows the percentages of certain operating cost financial statement line items in relation to Restaurant sales:


	THIRTEEN WEEKS ENDED								THIRTEEN WEEKS ENDED
	SEPTEMBER 24, 2017				SEPTEMBER 25, 2016				MARCH 29, 2020				MARCH 31, 2019
	U.S. GAAP		ADJUSTED		U.S. GAAP		ADJUSTED (1)		U.S. GAAP		ADJUSTED (1)		U.S. GAAP		ADJUSTED
Restaurant sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

Cost of sales	31.6	%	31.6	%	32.2	%	32.2	%	32.1	%	31.5	%	31.7	%	31.7	%
Labor and other related	30.4	%	30.4	%	29.0	%	29.0	%	31.0	%	31.0	%	28.7	%	28.7	%
Other restaurant operating	24.7	%	24.7	%	24.3	%	24.4	%	24.7	%	25.0	%	22.6	%	22.6	%

Restaurant-level operating margin	13.3	%	13.3	%	14.4	%	14.3	%	12.1	%	12.5	%	17.1	%	17.1	%

	THIRTY-NINE WEEKS ENDED
	SEPTEMBER 24, 2017				SEPTEMBER 25, 2016
	U.S. GAAP		ADJUSTED (2)		U.S. GAAP		ADJUSTED (3)
Restaurant sales	100.0	%	100.0	%	100.0	%	100.0	%

Cost of sales	31.8	%	31.8	%	32.3	%	32.3	%
Labor and other related	29.3	%	29.3	%	28.6	%	28.6	%
Other restaurant operating	23.4	%	23.6	%	23.1	%	23.2	%

Restaurant-level operating margin	15.4	%	15.3	%	16.0	%	15.9	%

_________________

(1)

Includes unfavorable (favorable) adjustments ~~for the write-off of $0.2 million of deferred rent liabilities associated with our relocation program,~~ recorded in Other restaurant ~~operating.~~operating expense (unless otherwise noted below) for the following activities, as described in the Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share table below for the period indicated:



	THIRTEEN WEEKS ENDED
(dollars in millions)	MARCH 29, 2020
Restaurant and asset impairments and closing costs	$	2.8
Restaurant relocations and related costs	(0.1		)
COVID-19 related costs (1)	(6.2		)
	$	(3.5	)

_________________


~~(2)~~(1)	~~Includes adjustments for the write-off of $5.5 million of deferred rent liabilities associated with the 2017 Closure Initiative and our relocation program,~~Adjustments recorded in ~~Other restaurant operating.~~


~~(3)~~	~~Includes adjustments for the write-off~~Cost of ~~$1.9 million of deferred rent liabilities, primarily associated with the Bonefish Restructuring, recorded in Other restaurant operating.~~ sales.

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BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share


	THIRTEEN WEEKS ENDED						THIRTY-NINE WEEKS ENDED						THIRTEEN WEEKS ENDED
(in thousands, except per share data)	SEPTEMBER 24, 2017			SEPTEMBER 25, 2016			SEPTEMBER 24, 2017			SEPTEMBER 25, 2016			MARCH 29, 2020			MARCH 31, 2019
Income from operations	$	3,182		$	31,734		$	114,466		$	131,751
Operating income margin	0.3		%	3.2		%	3.7		%	4.1		%
(Loss) income from operations													$	(41,568	)	$	82,494
Operating (loss) income margin													(4.1		)%	7.3		%
Adjustments:
Asset impairments and related costs (1)	10,566			3,208			10,566			43,231
Restaurant impairments and closing costs (2)	4,726			(685		)	20,925			1,435
COVID-19 related costs (1)													48,876			—
Severance and other transformational costs (2)													22,232			2,855
Restaurant relocations and related costs (3)	3,743			1,141			8,101			2,047			592			1,032
Severance (4)	1,015			—			1,015			1,872
Transaction-related expenses (5)	—			1,047			1,447			1,513
Legal and contingent matters													178			—
Restaurant and asset impairments and closing costs (4)													(2,797		)	2,131
Total income from operations adjustments	20,050			4,711			42,054			50,098			$	69,081		$	6,018
Adjusted income from operations	$	23,232		$	36,445		$	156,520		$	181,849		$	27,513		$	88,512
Adjusted operating income margin	2.4		%	3.6		%	5.0		%	5.6		%	2.7		%	7.8		%

Net income attributable to Bloomin’ Brands	$	4,336		$	20,733		$	83,876		$	46,031
Net (loss) income attributable to common stockholders													$	(38,107	)	$	64,300
Adjustments:
Income from operations adjustments	20,050			4,711			42,054			50,098			69,081			6,018
Gain on disposal of business and other costs (6)	(7,570		)	(2,084		)	(14,854		)	(2,084		)
Loss on defeasance, extinguishment and modification of debt (7)	—			418			260			26,998
Total adjustments, before income taxes	12,480			3,045			27,460			75,012			69,081			6,018
Adjustment to provision for income taxes (8)	(5,074		)	(2,338		)	(14,018		)	(9,382		)
Adjustment to provision for income taxes (5)													(21,995		)	(819		)
Redemption of preferred stock in excess of carrying value (6)													3,496			—
Net adjustments	7,406			707			13,442			65,630			50,582			5,199
Adjusted net income	$	11,742		$	21,440		$	97,318		$	111,661		$	12,475		$	69,499

Diluted earnings per share	$	0.05		$	0.18		$	0.83		$	0.40
Diluted (loss) earnings per share attributable to common stockholders													$	(0.44	)	$	0.69
Adjusted diluted earnings per share	$	0.12		$	0.19		$	0.96		$	0.96		$	0.14		$	0.75

Basic weighted average common shares outstanding													87,129			91,415
Diluted weighted average common shares outstanding(7)	95,655			112,430			101,497			116,516			87,963			92,661

_________________

(1)

Represents costs incurred in connection with the economic impact of the COVID-19 pandemic, primarily consisting of fixed asset ~~impairment charges~~ and ~~related costs primarily associated with: (i)~~right-of-use asset impairments, inventory obsolescence and spoilage, contingent lease liabilities and current expected credit losses. See Note 2 - COVID-19 Impact of the ~~remeasurement~~Notes to Consolidated Financial Statement for additional details regarding the impact of ~~certain surplus properties in 2017, (ii)~~the COVID-19 pandemic on our ~~Puerto Rico subsidiary in 2016 and (iii) the decision to sell Outback Steakhouse South Korea in 2016.~~financial results.


(2)	~~Represents expenses~~Relates to severance and other costs incurred ~~for approved closure~~as a result of transformational and restructuring ~~initiatives.~~activities.


(3)	Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program.


(4)	~~Relates~~Includes a lease termination gain of $2.8 million in 2020 and asset impairment charges and related costs primarily related to ~~severance expense incurred primarily as a result of: (i)~~approved closure and restructuring ~~of certain functions~~initiatives in ~~2017 and (ii) the relocation of our Fleming’s operations center to the corporate home office in 2016.~~2019.


(5)	Relates primarily to the following: (i) professional fees related to certain income tax items in which the associated tax benefit is adjusted in Adjustments to provision for income taxes in 2017, as described in footnote 8 to this table, and (ii) costs incurred in connection with our sale-leaseback initiative in 2017 and 2016.


~~(6)~~	Primarily relates to: (i) the sale of 54 U.S. Company-owned restaurants to existing franchisees in the second quarter of 2017, (ii) a gain of the sale of one Carrabba's Italian Grill restaurant during the third quarter of 2017, (iii) expenses related to certain surplus properties during the third quarter of 2017 and (iv) the sale of Outback Steakhouse South Korea during the third quarter of 2016.


~~(7)~~	~~Relates to modification of our Credit Agreement in 2017 and amendments of the PRP Mortgage loan and the defeasance of the 2012 CMBS loan in 2016.~~


~~(8)~~	Represents income tax effect of the adjustments for the periods presented.


(6)	Represents consideration paid in excess of the carrying value for the redemption of preferred stock of our Abbraccio subsidiary.

(7)

Due to the GAAP net loss, the effect of dilutive securities was excluded from the calculation of GAAP diluted (loss) earnings per share for the thirteen ~~and thirty-nine~~ weeks ended ~~September 24, 2017 and September 25, 2016. Adjustments include~~March 29, 2020. For adjusted diluted earnings per share, the ~~impact of excluding $4.6 million of discrete income tax items~~calculation includes 834 dilutive shares for the ~~thirty-nine~~thirteen weeks ended ~~September 24, 2017.~~March 29, 2020.

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Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Liquidity and Capital Resources

LIQUIDITY

~~Our~~Typically, cash flows generated from operating activities are our principal source of liquidity, ~~sources consist of cash flow from our operations, cash and cash equivalents and credit capacity under our credit facilities. We expect to~~which we use ~~cash primarily~~ for ~~general~~ operating expenses, ~~share repurchases and dividend~~ payments on our debt, remodeling or relocating older restaurants, ~~development of new restaurants and new markets, principal and interest payments on our debt,~~ obligations related to our deferred compensation plans and investments in technology. All of our restaurants are currently operating at reduced capacities or off-premises only due to the COVID-19 pandemic and may not be able to generate sufficient cash from operations to cover all of our projected expenditures.

~~We believe that~~In response to the COVID-19 pandemic, we have tightly managed expenses while prioritizing supporting our ~~expected~~workforce and our off-premises business. In addition, we have taken several precautionary measures to preserve liquidity, ~~sources are adequate to fund debt service requirements, operating lease obligations,~~including the following:

we suspended our quarterly cash dividend and stock repurchases;

we significantly reduced marketing and tightly managed other expenses;

we deferred nearly all capital expenditures other than maintenance to support off-premises business;

we engaged in constructive dialogue with our landlords regarding rent abatements and ~~working capital obligations~~deferrals; and


•	our CEO has agreed to forego substantially all base salary and our Board has agreed to forego all cash retainers until further notice.

The above actions are in addition to the significant cost cutting measures for ~~at least~~fiscal 2020 that we announced and implemented earlier in the ~~next 12 months. However,~~year.

In addition, on March 16, 2020, in order to increase our ~~ability to continue to meet these requirements~~cash position and ~~obligations will depend on, among other things,~~preserve financial flexibility, we drew down substantially all remaining availability under our ~~ability to achieve anticipated levels~~revolving credit facility.

In May 2020, we issued $230.0 million aggregate principal amount of ~~revenue~~5.00% convertible senior notes due 2025. Net proceeds from this offering were approximately $221.4 million, after deducting the initial purchaser’s discounts and ~~cash flow~~commissions and our ~~ability~~offering expenses. We intend to ~~manage costs and working capital successfully.~~use the net proceeds of this offering for general corporate purposes. See “Convertible Notes” below for additional details regarding the convertible senior notes.

Cash and Cash Equivalents - As of ~~September 24, 2017,~~March 29, 2020, we had ~~$98.7~~$403.4 million in cash and cash equivalents, of which ~~$36.8~~$32.2 million was held by foreign ~~affiliates, a portion of which would be subject to additional taxes if repatriated to the United States.~~affiliates. The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit repatriation. On April 21, 2020 we made a $12.5 million cash distribution to our Brazil subsidiary for general operational purposes.

As of March 29, 2020, we had aggregate accumulated foreign earnings of approximately $81.1 million. This amount consisted primarily of historical earnings from 2017 and prior that were previously taxed in the ~~repatriation of cash~~U.S. under the 2017 Tax Cuts and ~~cash equivalents.~~

~~Refranchising~~ ~~- In April 2017, we completed the sale of 54 of our existing Outback Steakhouse~~Jobs Act and ~~Carrabba’s Italian Grill locations for aggregate cash proceeds of $36.2 million, net of certain closing adjustments. After completion of the sale, these restaurant locations are operated as franchises under an agreement with the Buyers.~~

~~Sale-Leaseback Transactions -~~ ~~During the thirty-nine weeks ended September 24, 2017, we entered into sale-leaseback transactions with third-parties in~~post-2017 foreign earnings, which we ~~sold 26 restaurant properties at fair market value for gross proceeds of $92.5 million. With a portion of~~may repatriate to the ~~proceeds from these transactions, we repaid the remaining balance of~~U.S. without additional U.S. federal income tax. These amounts are no longer considered indefinitely reinvested in our ~~PRP Mortgage Loan in April 2017.~~foreign subsidiaries.

Closure Initiatives - Total aggregate future undiscounted cash expenditures of ~~$35.4~~$11.9 million to ~~$41.8~~$14.5 million ~~for the Closure Initiatives, primarily~~ related to lease liabilities for certain closure initiatives are expected to occur over the remaining lease terms with the final term ending in January 2029.

Capital Expenditures - We estimate that our capital expenditures will total ~~between $260.0~~approximately $100.0 million ~~and $280.0~~to $110.0 million in ~~2017.~~2020. The amount of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things, including restrictions imposed by our borrowing arrangements.

4844

Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

Credit Facilities - As of ~~September 24, 2017,~~March 29, 2020, we had ~~$1.2~~$1.4 billion of outstanding borrowings under our Senior Secured Credit Facility. ~~Following is a summary of principal payments and debt issuance from December 25, 2016 to September 24, 2017:~~

SENIOR SECURED CREDIT FACILITY PRP MORTGAGE LOAN TOTAL CREDIT FACILITIES
TERM LOANS REVOLVING FACILITY
(dollars in thousands) A A-1 A-2
Balance as of December 25, 2016 $ 258,750
$ 140,625
$ —
$ 622,000
$ 47,202
$ 1,068,577
2017 new debt (1) —
—
125,000
467,500
—
592,500
2017 payments (11,250 ) (5,625 ) —
(417,000 ) (47,202 ) (481,077 )
Balance as of September 24, 2017 $ 247,500
$ 135,000
$ 125,000
$ 672,500
$ —
$ 1,180,000

~~________________~~


~~(1)~~	On May 22, 2017, OSI entered into an Amendment to its Credit Agreement which provided an incremental Term loan A-2 in an aggregate principal amount of $125.0 million. A portion of the proceeds from Term loan A-2 were used to repay $25.0 million of our outstanding revolving credit facility.

We continue to evaluate whether we will make further payments of our outstanding debt ahead of scheduled maturities. Following is a summary of our outstanding credit facilities as of the dates indicated and principal payments and debt issuance during the period indicated:

INTEREST RATE
SEPTEMBER 24, 2017 ORIGINAL FACILITY PRINCIPAL MATURITY DATE OUTSTANDING
(dollars in thousands) SEPTEMBER 24, 2017 DECEMBER 25, 2016
Term loan A, net of discount of $0.8 million (1) 3.23 % $ 300,000
May 2019 $ 247,500
$ 258,750
Term loan A-1 3.20 % 150,000
May 2019 135,000
140,625
Term loan A-2 3.20 % 125,000
May 2019 125,000
—
Revolving credit facility (1) 3.21 % 825,000
May 2019 672,500
622,000
Total Senior Secured Credit Facility $ 1,400,000
$ 1,180,000
$ 1,021,375
PRP Mortgage Loan $ 369,512
$ —
$ 47,202
Total credit facilities $ 1,769,512
$ 1,180,000
$ 1,068,577



	SENIOR SECURED CREDIT FACILITY						TOTAL CREDIT FACILITIES
(dollars in thousands)	TERM LOAN A			REVOLVING FACILITY			TOTAL CREDIT FACILITIES
Balance as of December 29, 2019	$	450,000		$	599,000		$	1,049,000
2020 new debt	—			505,000			505,000
2020 payments	(6,250		)	(129,000		)	(135,250		)
Balance as of March 29, 2020	$	443,750		$	975,000		$	1,418,750

Weighted-average interest rate, as of March 29, 2020	3.02		%	3.29		%
Principal maturity date	November 2022			November 2022

~~________________~~


~~(1)~~	~~Represents the weighted-average interest rate.~~

~~Credit Agreement~~ - On May 22, 2017, OSI entered into an Amendment to its Credit Agreement which provided an incremental Term loan A-2 in an aggregate principal amount of $125.0 million. Proceeds from Term loan A-2 were used for general business purposes and to repay a portion of our outstanding revolving credit facility. As of ~~September 24, 2017,~~March 29, 2020, we had ~~$128.3~~$4.8 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of ~~$24.2~~$20.2 million.

Amended Credit Agreement - On May 4, 2020, we and OSI, as co-borrowers, entered into the Amended Credit Agreement which provides relief for the financial covenant to maintain a specified quarterly TNLR. Without such amendment, violation of financial covenants under the original credit agreement could have resulted in default. The Amended Credit Agreement waives the TNLR requirement for the remainder of fiscal year 2020 and requires a TNLR based on a seasonally annualized calculation of Consolidated EBITDA not to exceed the following thresholds for the periods indicated:



QUARTERLY PERIOD ENDED	MAXIMUM RATIO
March 28, 2021 (1)	5.50	to	1.00
June 27, 2021 (2)	5.00	to	1.00
September 26, 2021 and thereafter (3)	4.50	to	1.00

________________


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


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


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

Under the terms of the Amended Credit Agreement, we are required to meet minimum monthly liquidity threshold of $125.0 million through March 28, 2021, calculated as the sum of available capacity under our revolving credit facility, unrestricted domestic cash on hand and up to $25.0 million of unrestricted cash held by foreign subsidiaries. We are also prohibited from making certain restricted payments, investments or acquisitions until after September 26, 2021, with an exception for investments in our foreign subsidiaries which are capped at $27.5 million.

Interest rates under the Amended Credit Agreement are 275 and 175 basis points above the Eurocurrency Rate and Base Rate, respectively, and letter of credit fees and fees for the daily unused availability under the revolving credit facility are 2.75% and 0.40%, respectively, subject to reversion to rates under the original credit agreement when we are in compliance with the TNLR covenant for the test period ending September 26, 2021. We are also subject to a 0% Eurocurrency floor under the Amended Credit Agreement.

Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The Amended Credit Agreement contains term loan mandatory prepayment requirements of 50% of our annual excess cash flow as(as defined in the Amended Credit ~~Agreement.~~Agreement) after December 27, 2020. The amount outstanding required to be prepaid may vary based on our leverage ratio and year end results. Other than the annual required minimum amortization premiums of ~~$57.5~~$28.1 million, we do not anticipate any other payments will be required through ~~September 30, 2018.~~March 28, 2021.

~~We are currently exploring options to address the 2019 maturity of our Senior Secured Credit Facility.~~

~~Debt Covenants~~ - Our Credit Agreement contains various financial and non-financial covenants. A violation of these covenants could negatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and cause an acceleration of the amounts due under the credit facilities. See Note 11 - ~~Long-term Debt, Net~~ ~~in our Annual Report on Form 10-K for the year ended December 25, 2016 for further information.~~

~~Table of Contents~~

~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

As of ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016,~~29, 2019, we were in compliance with our debt covenants. We believe that we will remain in compliance with our debt covenants during the next 12 months.

~~Cash Flow Hedges~~Convertible Notes - On May 8, 2020, we completed a $200.0 million principal amount private offering of ~~Interest Rate Risk~~ 5.00% convertible senior notes due 2025 and on May 12, 2020, issued an additional $30.0 million principal amount in connection with the overallotment option granted to the initial purchasers as part of the offering. The 2025 Notes will mature on May 1, 2025, unless earlier converted, redeemed or purchased by us. The 2025 Notes bear cash interest at an annual rate of 5.00%, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2020.

The initial conversion rate applicable to the 2025 Notes is 84.122 shares of common stock per $1,000 principal amount of 2025 Notes, or a total of approximately 19.348 million shares for the total $230.0 million principal amount. This initial conversion rate is equivalent to an initial conversion price of approximately $11.89 per share. We will settle conversions by paying or delivering, as applicable, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on the applicable conversion rate.

Net proceeds from this offering were approximately $221.4 million, after deducting the initial purchaser’s discounts and commissions and our offering expenses. We intend to use the net proceeds of this offering for general corporate purposes.

Convertible Note Hedge and Warrant Transactions -In ~~September 2014,~~connection with the offering of the 2025 Notes, we entered into ~~variable-to-fixed interest rate swap agreements~~Convertible Note Hedge Transactions with ~~eightcounterparties~~the Hedge Counterparties. Concurrently with our entry into the Convertible Note Hedge Transactions, we also entered into separate, Warrant Transactions with the Hedge Counterparties collectively relating to ~~hedge a~~the same number of shares of our common stock.

The portion of the ~~cash flows of~~net proceeds from our ~~variable rate debt. The swap agreements have an aggregate notional amount of $400.0 million, a start date of June 30, 2015, and mature on May 16, 2019. Under the terms~~offering of the ~~swap agreements, we~~2025 Notes that was used to pay ~~a weighted-average fixed rate of 2.02%~~the premium on the ~~$400.0 million notional amount and receive payments~~Convertible Note Hedge Transactions (calculated after taking into account our proceeds from the ~~counterparty based on the 30-day LIBOR rate. We estimate $2.3 millionwill be reclassified to interest expense over the next twelve months.~~ Warrant Transactions) was approximately $19.6 million.

See Note 1220 - ~~Derivative Instruments and Hedging Activities~~ Subsequent Eventsof the Notes to Consolidated Financial Statements for ~~further information.~~additional details regarding the convertible senior notes and related hedge and warrant transactions.

Table of Contents

BLOOMIN’ BRANDS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

SUMMARY OF CASH FLOWS

The following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for the periods indicated:


	THIRTY-NINE WEEKS ENDED						THIRTEEN WEEKS ENDED
(dollars in thousands)	SEPTEMBER 24, 2017			SEPTEMBER 25, 2016			MARCH 29, 2020			MARCH 31, 2019
Net cash provided by operating activities	$	223,015		$	223,560		$	28,291		$	83,883
Net cash (used in) provided by investing activities	(62,535		)	153,902
Net cash used in financing activities	(196,206		)	(445,809		)
Net cash used in investing activities							(34,798		)	(42,020		)
Net cash provided by (used in) financing activities							342,333			(31,379		)
Effect of exchange rate changes on cash and cash equivalents	1,972			5,250			424			459
Net decrease in cash, cash equivalents and restricted cash	$	(33,754	)	$	(63,097	)
Net increase in cash, cash equivalents and restricted cash							$	336,250		$	10,943

Operating activities - Net cash provided by operating activities ~~was flat~~decreased during the ~~thirty-nine~~thirteen weeks ended ~~September 24, 2017,~~March 29, 2020, as compared to the ~~thirty-nine~~thirteen weeks ended ~~September 25, 2016~~March 31, 2019 primarily due to a decrease in net restaurant sales as a result of the COVID-19 pandemic and relief payments made to employees. These decreases ~~from:~~were partially offset by the following: (i) the timing of payments, (ii) the timing of collections of receivables and ~~(ii) the timing of payments. These decreases were offset by: (i)~~(iii) lower ~~income tax payments and (ii) lower cash interest payments.~~inventory purchases.

Investing activities - Net cash used in investing activities ~~for~~during the ~~thirty-nine~~thirteen weeks ended ~~September 24, 2017~~March 29, 2020 and March 31, 2019 primarily consisted ~~primarily~~ of capital ~~expenditures, partially offset by: (i) proceeds from sale-leaseback transactions and (ii) proceeds from refranchising transactions.~~expenditures.

Financing activities - Net cash provided by ~~investing~~financing activities ~~for~~during the ~~thirty-nine~~thirteen weeks ended ~~September 25, 2016~~March 29, 2020 primarily consisted ~~primarily of: (i) proceeds from sale-leaseback transactions and (ii) proceeds from the sale~~ of ~~Outback Steakhouse South Korea, partially offset by capital expenditures.~~

~~Financing activities -~~ Net cash used in financing activities for the thirty-nine weeks ended September 24, 2017 was primarily attributable to the following: (i) the repurchase of common stock, (ii) repayments on our PRP Mortgage Loan, (iii) payment of cash dividends on our common stock, (iv) repayments of partner deposits and accrued partner obligations and (v) the purchase of outstanding limited partnership interests in certain restaurants. Net cash used in financing activities was partially offset by proceeds from: (i) net proceeds from the incremental Term loan A-2, (ii) drawdowns on our revolving credit facility, net of repayments, ~~and (iii)~~partially offset by the ~~sale of a property that did not qualify for sale-leaseback accounting.~~following:

~~Net cash used in financing activities for the thirty-nine weeks ended September 25, 2016 was primarily attributable to the following:~~ (i) ~~the defeasance of the 2012 CMBS loan and payments on our revolving credit facility and PRP Mortgage Loan, (ii) the repurchase of common stock, (iii)~~ payment of cash dividends on our common stock, ~~(iv) repayments~~(ii) the repayment of long-term debt and (iii) partner ~~deposits and accrued partner obligations and (v) the purchase of outstanding limited partnership~~equity plan payments.

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~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

~~interests in certain restaurants.~~ Net cash used in financing activities ~~was partially offset by proceeds from~~during the ~~PRP Mortgage loan.~~thirteen weeks ended March 31, 2019 primarily consisted of the following: (i) payment of cash dividends on our common stock, (ii) the repayment of long-term debt, (iii) partner equity plan payments, (iv) repayments of our revolving credit facility, net of drawdowns and (v) tax payments related to share-based compensation.

FINANCIAL CONDITION

Following is a summary of our current assets, current liabilities and working capital (deficit): as of the periods indicated:


(dollars in thousands)	SEPTEMBER 24, 2017			DECEMBER 25, 2016			MARCH 29, 2020			DECEMBER 29, 2019
Current assets	$	258,710		$	390,519		$	572,446		$	340,468
Current liabilities	716,762			823,408			838,030			962,021
Working capital (deficit)	$	(458,052	)	$	(432,889	)	$	(265,584	)	$	(621,553	)

The change in net working capital (deficit) during the thirteen weeks ended March 29, 2020 is primarily due to cash proceeds from borrowings on our revolving credit facility with the corresponding liability recorded as Long-term debt, net on our Balance Sheet. Working capital (deficit) ~~included~~includes: (i) Unearned revenue primarily from unredeemed gift cards of ~~$248.6~~$289.1 million and ~~$388.5~~$369.3 million as of ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016, respectively.~~29, 2019, respectively, and (ii) current operating lease liabilities of $185.3 million and $171.9 million as of March 29, 2020 and December 29, 2019, respectively, with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheets. We have, and in the future may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collected on restaurant sales isare typically received before payment is due on our current liabilities, and our inventory turnover rates require

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are typically used to service debt obligations and to make capital expenditures.

Deferred Compensation Programs - The deferred compensation obligation due to managing and chef partners was ~~$98.2~~$39.8 million and ~~$113.0~~$49.0 million as of ~~September 24, 2017~~March 29, 2020 and December ~~25, 2016,~~29, 2019, respectively. We invest in various corporate-owned life insurance policies (“COLI assets”), which are held within an irrevocable grantor or “rabbi” trust account for settlement of our obligations under the deferred compensation plans. The rabbi trust is funded through our voluntary contributions. The unfunded obligation for managing and chef partners’ deferred compensation was ~~$36.0~~$0.3 million as of ~~September 24, 2017.~~March 29, 2020.

We use capital to fund the deferred compensation plans and currently expect ~~annual~~ cash funding of ~~$16.0~~$9.0 million to ~~$18.0 million.~~$11.0 million for 2020. We will also fund a portion of our 2020 obligation with $10.0 million withdrawn from our COLI assets. Actual funding of the deferred compensation obligations and future funding requirements may vary significantly depending on the actual performance compared to targets, timing of deferred payments of partner contracts, forfeiture rates, number of partner participants, growth of partner investments and our funding strategy.

Other Compensation Programs - Certain U.S. partners participate in a non-qualified long-term compensation program that we fund as the obligation for each participant becomes due.

DIVIDENDS AND SHARE REPURCHASES

Dividends- In ~~October 2017,~~February 2020, the Board declared a quarterly cash dividend of ~~$0.08~~$0.20 per share, payable on ~~November 22, 2017. Future dividend payments are dependent on~~March 13, 2020.

Share Repurchases - We did not repurchase any shares of our ~~earnings, financial condition, capital expenditure requirements, surplus and other factors that~~outstanding common stock during the ~~Board considers relevant.~~thirteen weeks ended March 29, 2020.

~~Share Repurchases~~ - On April 21, 2017, the Board approved the 2017 Share Repurchase Program, a new $250.0 million authorization which will expire on October 21, 2018. We had $55.0 million remaining available for repurchase under the 2017 Share Repurchase Program, as of the date of this filing.

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~~BLOOMIN’ BRANDS, INC.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued~~

Following is a summary of our dividends and share repurchases from ~~December~~fiscal year 2015 through March 29, ~~2014 through September 24, 2017:~~2020:


(dollars in thousands)	DIVIDENDS PAID		SHARE REPURCHASES		TAXES RELATED TO SETTLEMENT OF EQUITY AWARDS		TOTAL		DIVIDENDS PAID		SHARE REPURCHASES (1)		TOTAL
Fiscal year 2015	$	29,332	$	169,999	$	770	$	200,101	$	29,332	$	169,999	$	199,331
Fiscal year 2016	31,379		309,887		447		341,713		31,379		309,887		341,266
First fiscal quarter 2017	8,254		53,053		143		61,450
Second fiscal quarter 2017	8,054		145,675		—		153,729
Third fiscal quarter 2017	7,369		74,008		37		81,414
Fiscal year 2017									30,988		272,736		303,724
Fiscal year 2018									33,312		113,967		147,279
Fiscal year 2019									35,734		106,992		142,726
First fiscal quarter 2020									17,480		—		17,480
Total	$	84,388	$	752,622	$	1,397	$	838,407	$	178,225	$	973,581	$	1,151,806

________________


(1)	Excludes share repurchases for the settlement of taxes related to equity awards of $180, $447, and $770 for fiscal years 2017, 2016 and 2015, respectively.

The terms of our Amended Credit Agreement contain certain restrictions on cash dividends and share repurchases until after September 26, 2021.

Recently Issued Financial Accounting Standards

For a description of recently issued Financial Accounting Standards that we adopted during the thirteen weeks ended March 29, 2020 and, that are applicable to us and likely to have material effect on our consolidated financial statements, but have not yet been adopted, see Note 1 - Description of the Business and Basis of Presentation of the Notes to ~~the~~ Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates, changes in foreign currency exchange rates and changes in commodity prices. We believe that there have been no material changes in our market risk since December ~~25, 2016.~~29, 2019, except as set forth below. See Part II, Item 7A., “Quantitative and Qualitative Disclosures about Market Risk,” in our Annual Report on Form 10-K for the year ended December ~~25, 2016~~29, 2019 for further information regarding market risk.

Foreign Currency Exchange Rate Risk

We are subject to foreign currency exchange risk for our restaurants operating in foreign countries. Our exposure to foreign currency exchange risk is primarily related to fluctuations in the Brazilian Real relative to the U.S. dollar. Our operations in other markets consist of Company-owned restaurants on a smaller scale than Brazil. If foreign currency exchange rates depreciate in the countries in which we operate, we may experience declines in our operating results. For the thirteen weeks ended March 29, 2020, a 10% change in average foreign currency rates against the U.S. dollar would have increased or decreased our Total revenues and Net (loss) income for our consolidated foreign entities by $12.4 million and $0.2 million, respectively. Currently, we do not enter into currency forward exchange or option contracts to hedge foreign currency exposures.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial ~~and Administrative~~ Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial ~~and Administrative~~ Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial ~~and Administrative~~ Officer concluded that our disclosure controls and procedures were effective as of ~~September 24, 2017.~~March 29, 2020.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the thirteen weeks ended ~~September 24, 2017~~March 29, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our legal proceedings, see Note 1518 - Commitments and Contingencies, of the Notes to ~~the~~ Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

In addition to the other information discussed in this report, please consider the factors described in Part I, Item 1A., “Risk Factors” in our ~~2016~~2019 Form 10-K which could materially affect our business, financial condition or future results. ~~There~~Other than the risk factor discussed below, there have not been any material changes to the risk factors described in our ~~2016~~2019 Form 10-K, but these are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operating results.

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

COVID-19 was first detected in Wuhan, China in late 2019, and in March 2020, the World Health Organization declared COVID-19 a global pandemic. Governmental authorities around the world have since implemented measures to reduce the spread of COVID-19, and COVID-19 and related preventative and protective measures have impacted, and are expected to continue to impact, our business globally, including through restaurant closures, reductions in operating hours and decreased restaurant traffic. In the United States and in foreign countries in which we operate, individuals are encouraged to practice social distancing, restricted from gathering in groups and, in some areas, placed on complete restriction from non-essential movements outside of their homes. Numerous jurisdictions have imposed, and others in the future may impose, shelter-in-place orders, quarantines, executive orders and similar governmental orders and restrictions for residents to control the spread of COVID-19.

In response to the COVID-19 pandemic and these changing conditions, we have modified work hours for our team members, identified and implemented cost savings measures throughout our operations, shifted the majority of our corporate employees to remote working and temporarily closed all of our dining rooms, a number of which remain closed as of the date of this Form 10-Q, and there is significant uncertainty as to when we will be able to reopen those dining rooms. Although we continue to operate take-out and/or delivery services at substantially all of our locations and have experienced an increase in off-premises sales, there can be no assurance that our off-premises sales will grow or remain at recent levels. In the normal course of business, the majority of our sales are generated through on-premises dining in our restaurants, and the COVID-19 pandemic has affected and will continue to adversely affect our guest traffic, sales and operating costs. We have reopened a significant portion of our restaurant dining rooms for on-premises dining, however there can be no assurances that on-premises sales will return to prior levels given continued uncertainties surrounding the economic and public health impact of the COVID-19 pandemic, or that any of the restaurants we have reopened, or any additional restaurants we may reopen in the future, will not be subject to additional closures. When we are able to open additional dining rooms, governmental regulations may limit our capacity or the services we may provide. We are unable to accurately predict with certainty the ultimate impact that COVID-19 will have on our operations going forward due to uncertainties including the currently unknowable duration of the COVID-19 pandemic and impact of further governmental regulations that might be imposed in response to the pandemic. The longer our restaurants remain closed to the public for on-premises dining, however, the greater impact we expect it will have on our financial results.

The COVID-19 outbreak has also adversely affected our ability to open new restaurants and remodel and relocate existing restaurants. Due to the uncertainty in the economy and to preserve liquidity, we have paused activities with respect to new locations, remodels and relocations, and limited capital spending to maintenance necessary to support

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our off-premises business. These changes may materially adversely affect our ability to grow our business, particularly if these pauses are in place for a significant amount of time.

In order to increase our cash position and preserve financial flexibility, we recently drew down substantially all remaining availability under our revolving credit facility and issued $230.0 million of convertible senior notes. Our resulting aggregate debt levels have significantly increased from levels prior to COVID-19. Given the uncertainty of the severity, extent and duration of the COVID-19 pandemic and its impacts on our business and results of operations, the general risks associated with increased debt levels are exacerbated. In addition, although we entered into an Amended Credit Agreement and obtained covenant relief, there can be no assurance we can continue to comply with the revised covenants during the relief period or thereafter when they revert to prior levels if the COVID-19 pandemic lasts longer than expected or our business does not quickly recover afterward.

Our business is sensitive to changes in macroeconomic conditions that impact consumer spending. The rapid and diffuse spread of COVID-19 has had severe negative impacts on, among other things, real GDP growth, consumer confidence, financial markets, liquidity, economic conditions, employment levels, interest rates, tax rates, foreign currency exchange rate fluctuations, supply chain related costs and other macroeconomic trends and could continue to do so or could worsen for an unknown period of time. If the business interruptions caused by COVID-19 last longer than we expect or our assumptions regarding liquidity needs prove inaccurate, we may need to seek other sources of liquidity. The COVID-19 pandemic is adversely affecting the availability of liquidity generally in the credit markets, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 pandemic lasts. In an effort to preserve liquidity, we have and may continue to take certain actions with respect to some or all of our leases, including negotiating with landlords to obtain rent abatement or deferrals, terminating certain leases or discontinuing payment. We can provide no assurances that forbearance of any lease obligations will be provided to us, or that, following the COVID-19 pandemic, we will be able to continue restaurant operations on the current terms of our existing leases, any of which could have an adverse effect on our business and results.

Our restaurant operations could be further disrupted if any of our employees are diagnosed with COVID-19, since this could require further restaurant closures and some or all of a restaurant’s employees to self-quarantine. If the employees of any of our third-party delivery service providers are diagnosed with COVID-19, or if the operations of these service providers are otherwise significantly impaired, our off-premises sales would also be adversely impacted. Our supply chain could similarly be adversely impacted. If a significant percentage of our or our suppliers’ or distributors’ workforce is unable to work, or if there are similar disruptions in the supply chain generally for certain products, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, we could face disruptions to restaurant operations, cost increases and shortages of food or other supplies, potentially materially adversely affecting our operations and sales. This is particularly true given our reliance on a small number of suppliers and distributors for the beef we serve in our U.S. and Brazil restaurants. In 2019, we purchased approximately 95% of our U.S. beef raw materials from four beef suppliers that represent more than 80% of the total beef marketplace in the U.S., and approximately 90% of our Brazil beef raw materials from two beef suppliers that represent approximately 45% of the total Brazil beef marketplace. We also primarily use one supplier in the U.S. and Brazil, respectively, to process beef raw materials to our specifications and we use one distribution company to provide distribution services in the U.S and Brazil, respectively. Consequently, our operations could be adversely affected if any of these suppliers or distributors were unable to fulfill their responsibilities and we were unable to locate substitutes in a timely manner. Although we have not experienced material adverse impacts to date, additional or prolonged closures of meat processing facilities that have occurred due to the effects of COVID-19 could adversely impact our supply chain and the products that we offer.

In addition to decisions we have made and may make in the future relating to the compensation and benefits of our employees, additional government regulations or legislation as a result of COVID-19 could also have an adverse effect on our business. We cannot predict the types of government regulations or legislation that may be passed relating to employee compensation or benefits as a result of the COVID-19 pandemic. In order to support our off-premises business and ensure we are prepared to re-open our restaurants to on-premises dining when permitted, we have retained our restaurant management across all of our brands. We have taken and continue to evaluate compensation and benefit

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actions to support our restaurant team members during the COVID-19 business interruption, including relief pay to hourly employees and continued payments to employees who have been quarantined or who had a personal illness related to COVID-19. Those actions may be insufficient to compensate our team members for the entire duration of any business interruption resulting from COVID-19, and our team members might seek and find other employment during that interruption, which could adversely affect our ability to properly staff and reopen our restaurants with experienced team members when the business interruptions caused by COVID-19 abate or end.

In addition, the operations of our franchisees are subject to the same risks discussed above with respect to our business, and the COVID-19 pandemic could cause financial distress for the franchisees that have been or will be impacted. As a result of this distress, we have deferred certain of their payment obligations and, even with these actions, our franchisees may not be able to meet or will defer payment of their financial obligations as they come due, including the payment of royalties, rent or other amounts due to the Company. In addition, our franchisees may not be able to make payments to landlords and key suppliers, as well as payments to service any debt they have outstanding. In some cases, we are contingently liable for franchisee lease obligations, and a failure by a franchisee to perform its obligations under such lease could result in direct payment obligations for us.

In addition, we could experience other material impacts as a result of COVID-19, including, but not limited to, impairment charges. We cannot accurately predict the amount and timing of any impairment of assets. A significant amount of judgment is involved in determining if an indication of impairment exists and the COVID-19 pandemic has made developing forecasts for, and the accounting of, valuation of goodwill and certain other assets slower and more difficult. Should the value of goodwill or other intangible or long-lived assets become impaired, there could be an adverse effect on our financial condition and consolidated results of operations. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in “Risk Factors” under Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” under Item 7 of our Annual Report on Form 10-K that we filed with the SEC on February 26, 2020, including without limitation risks relating to competition in the restaurant industry, consumer preferences and perceptions, our level of indebtedness, availability of adequate capital, our ability to execute business plans related to remodeling, relocation and expansions, our lease obligations, our franchisees, disruptions to our supply chain and third-party delivery service providers, foreign currency exchange rates, regulatory restrictions and compliance, government proceedings or litigation arising out of claims from our customers, employees, business partners and stockholders, vulnerability of our data systems and volatility in the price of our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of equity securities during the ~~third~~first quarter of ~~2017~~2020 that were not registered under the Securities Act of 1933.

~~The following table provides information regarding~~We did not repurchase any shares of our ~~purchases of~~outstanding common stock during the thirteen weeks ended ~~September 24, 2017:~~March 29, 2020.

Item 5. Other Information

On May 20, 2020, the Company entered into a consulting agreement with Joseph J. Kadow, one of its former executive officers, effective June 1, 2020 through May 31, 2021. Under the terms of the agreement, Mr. Kadow will be paid $0.4 million in equal installments on the first day of each month for the duration of the agreement.

REPORTING PERIOD TOTAL NUMBER OF SHARES PURCHASED AVERAGE PRICE PAID PER SHARE TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (1)
June 26, 2017 through July 23, 2017 1,614,740
$ 21.06
1,614,740
$ 95,000,099
July 24, 2017 through August 20, 2017 1,584,850
$ 17.48
1,584,754
$ 67,300,395
August 21, 2017 through September 24, 2017 692,124
$ 17.82
690,010
$ 55,000,223
Total (2) 3,891,714
3,889,504

~~____________________~~


~~(1)~~	On April 21, 2017, the Board of Directors authorized the repurchase of $250.0 million of our outstanding common stock as announced in our press release issued on April 26, 2017 (the “2017 Share Repurchase Program”). The 2017 Share Repurchase Program will expire on October 21, 2018.


~~(2)~~	Common stock repurchased during the thirteen weeks ended September 24, 2017 represent shares repurchased under the 2017 Share Repurchase Program and 2,210 shares withheld for tax payments due upon vesting of employee restricted stock awards.

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Item 6. Exhibits



EXHIBIT NUMBER	DESCRIPTION OF EXHIBITS	FILINGS REFERENCED FOR INCORPORATION BY REFERENCE

10.1*	Severance Agreement, dated as of January 14, 2020, by and between Donagh H. Herlihy and OS Management, Inc.	December 29, 2019 Form 10-K, Exhibit 10.38

10.2*	Resignation Agreement, effective March 6, 2020, by and between Elizabeth A. Smith and Bloomin’ Brands, Inc.	December 29, 2019 Form 10-K, Exhibit 10.39

10.3*	Employment Offer Letter Agreement, dated as of February 14, 2020, between Bloomin’ Brands, Inc. and Gregg Scarlett	December 29, 2019 Form 10-K, Exhibit 10.40

10.4*	Amendment to Officer Employment Agreement, dated as of April 6, 2020, between Bloomin’ Brands, Inc. and David J. Deno	Filed herewith

10.5	First Amendment to Amended and Restated Credit Agreement, dated as of May 4, 2020, among Bloomin’ Brands, Inc., OSI Restaurant Partners, LLC, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent	May 5, 2020 Form 8-K, Exhibit 10.1

10.6	Consulting Agreement effective June 1, 2020, by and between Bloomin’ Brands, Inc. and Joseph J. Kadow	Filed herewith

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification of Chief Financial ~~and Administrative~~ Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)	~~Filed~~Furnished herewith

32.2	Certification of Chief Financial ~~and Administrative~~ Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1)	~~Filed~~Furnished herewith

101.INS	XBRL Instance Document	Filed herewith

101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith

101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith

* Management contract or compensatory plan or arrangement required to be filed as an exhibit.

(1) These certifications are not deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. These certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates them by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date:	~~November 3, 2017~~May 21, 2020	BLOOMIN’ BRANDS, INC.
		(Registrant)

		By: /s/ ~~David J. Deno~~Christopher Meyer
		~~David J. Deno~~Christopher Meyer Executive Vice President and Chief Financial ~~and~~ ~~Administrative~~ Officer (Principal Financial and Accounting Officer)

[Remainder of page intentionally left blank]



	SEPTEMBER 24, 2017			DECEMBER 25, 2016
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	183,439		$	195,371
Accrued and other current liabilities	225,870			204,415
Unearned revenue	248,627			388,543
Current portion of long-term debt	58,826			35,079
Total current liabilities	716,762			823,408
Deferred rent	156,962			151,130
Deferred income tax liabilities	17,764			16,709
Long-term debt, net	1,141,866			1,054,406
Deferred gain on sale-leaseback transactions, net	188,363			181,696
Other long-term liabilities, net	214,026			219,030
Total liabilities	2,435,743			2,446,379
Commitments and contingencies (Note 15)
Mezzanine Equity
Redeemable noncontrolling interests	577			547
Stockholders’ Equity
Bloomin’ Brands Stockholders’ Equity
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of September 24, 2017 and December 25, 2016	—			—
Common stock, $0.01 par value, 475,000,000 shares authorized; 91,164,470 and 103,922,110 shares issued and outstanding as of September 24, 2017 and December 25, 2016, respectively	912			1,039
Additional paid-in capital	1,077,607			1,079,583
Accumulated deficit	(961,318		)	(786,780		)
Accumulated other comprehensive loss	(91,547		)	(111,143		)
Total Bloomin’ Brands stockholders’ equity	25,654			182,699
Noncontrolling interests	10,980			12,654
Total stockholders’ equity	36,634			195,353
Total liabilities, mezzanine equity and stockholders’ equity	$	2,472,954		$	2,642,279

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



	BLOOMIN’ BRANDS, INC.
	COMMON STOCK					ADDITIONAL PAID-IN CAPITAL			ACCUM-ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON- CONTROLLING INTERESTS			TOTAL
	SHARES		AMOUNT			ADDITIONAL PAID-IN CAPITAL			ACCUM-ULATED DEFICIT			ACCUMULATED OTHER COMPREHENSIVE LOSS			NON- CONTROLLING INTERESTS			TOTAL
Balance, December 25, 2016	103,922		$	1,039		$	1,079,583		$	(786,780	)	$	(111,143	)	$	12,654		$	195,353
Net income	—		—			—			83,876			—			1,594			85,470
Other comprehensive income (loss), net of tax	—		—			—			—			19,596			(76		)	19,520
Cash dividends declared, $0.24 per common share	—		—			(23,677		)	—			—			—			(23,677		)
Repurchase and retirement of common stock	(13,807	)	(138		)	—			(272,598		)	—			—			(272,736		)
Stock-based compensation	—		—			17,969			—			—			—			17,969
Common stock issued under stock plans (1)	1,049		11			4,617			(180		)	—			—			4,448
Change in the redemption value of redeemable interests	—		—			(172		)	—			—			—			(172		)
Purchase of noncontrolling interests, net of tax of $45	—		—			(713		)	—			—			(180		)	(893		)
Distributions to noncontrolling interests	—		—			—			—			—			(4,158		)	(4,158		)
Contributions from noncontrolling interests	—		—			—			—			—			727			727
Cumulative-effect from a change in accounting principle	—		—			—			14,364			—			—			14,364
Other	—		—			—			—			—			419			419
Balance, September 24, 2017	91,164		$	912		$	1,077,607		$	(961,318	)	$	(91,547	)	$	10,980		$	36,634

															(CONTINUED...)



	THIRTY-NINE WEEKS ENDED SEPTEMBER 25, 2016
(dollars in thousands)	AS REPORTED			2016-18 IMPACT			ADJUSTED
Cash flows provided by investing activities:
Decrease in restricted cash	$	40,977		$	(40,977	)	$	—
Increase in restricted cash	(18,739		)	18,739			—
Net cash provided by investing activities	$	176,140		$	(22,238	)	$	153,902

Net decrease in cash, cash equivalents and restricted cash	$	(40,863	)	$	(22,234	)	$	(63,097	)
Cash, cash equivalents and restricted cash as of the beginning of the period	132,337			23,037			155,374
Cash, cash equivalents and restricted cash as of the end of the period	$	91,474		$	803		$	92,277



Estimated future expense (dollars in millions)	2017 CLOSURE INITIATIVE					BONEFISH RESTRUCTURING
Lease related liabilities, net of subleases	$	3.2	to	$	4.1	$	2.2	to	$	5.1
Employee severance and other obligations	0.4		to	0.8		0.3		to	0.5
Total estimated future expense	$	3.6	to	$	4.9	$	2.5	to	$	5.6

Total estimated future cash expenditures (dollars in millions)	$	25.3	to	$	29.5	$	10.1	to	$	12.3



SCHEDULED QUARTERLY PAYMENT DATES	TERM LOAN A-2
September 30, 2017 through June 30, 2018	$	2,344
September 30, 2018 through March 31, 2019	$	3,125



(dollars in thousands)	SEPTEMBER 24, 2017
Year 1	$	58,826
Year 2	1,121,102
Year 3	519
Year 4	458
Year 5	310
Thereafter	19,477
Total	$	1,200,692



	NUMBER OF SHARES (in thousands)	AVERAGE REPURCHASE PRICE PER SHARE		AMOUNT (dollars in thousands)
First fiscal quarter	2,887	$	18.37	$	53,053
Second fiscal quarter	7,030	$	20.72	145,675
Third fiscal quarter	3,890	$	19.03	74,008
Total common stock repurchases	13,807	$	19.75	$	272,736



	THIRTEEN WEEKS ENDED				THIRTY-NINE WEEKS ENDED
COMPANY-OWNED RESTAURANT SALES (dollars in millions)	SEPTEMBER 24, 2017		SEPTEMBER 25, 2016		SEPTEMBER 24, 2017		SEPTEMBER 25, 2016
U.S.
Outback Steakhouse (1)	$	476	$	521	$	1,596	$	1,668
Carrabba’s Italian Grill (1)	151		162		502		532
Bonefish Grill	137		147		452		476
Fleming’s Prime Steakhouse & Wine Bar	60		60		208		206
Total	$	824	$	890	$	2,758	$	2,882
International
Outback Steakhouse-Brazil	$	95	$	83	$	282	$	218
Outback Steakhouse-South Korea (2)	—		11		—		90
Other	19		15		53		39
Total	$	114	$	109	$	335	$	347
Total Company-owned restaurant sales	$	938	$	999	$	3,093	$	3,229



	INTEREST RATE SEPTEMBER 24, 2017		ORIGINAL FACILITY		PRINCIPAL MATURITY DATE	OUTSTANDING
(dollars in thousands)	INTEREST RATE SEPTEMBER 24, 2017		ORIGINAL FACILITY		PRINCIPAL MATURITY DATE	SEPTEMBER 24, 2017		DECEMBER 25, 2016
Term loan A, net of discount of $0.8 million (1)	3.23	%	$	300,000	May 2019	$	247,500	$	258,750
Term loan A-1	3.20	%	150,000		May 2019	135,000		140,625
Term loan A-2	3.20	%	125,000		May 2019	125,000		—
Revolving credit facility (1)	3.21	%	825,000		May 2019	672,500		622,000
Total Senior Secured Credit Facility			$	1,400,000		$	1,180,000	$	1,021,375
PRP Mortgage Loan			$	369,512		$	—	$	47,202
Total credit facilities			$	1,769,512		$	1,180,000	$	1,068,577



REPORTING PERIOD	TOTAL NUMBER OF SHARES PURCHASED	AVERAGE PRICE PAID PER SHARE		TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS	APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR PROGRAMS (1)
June 26, 2017 through July 23, 2017	1,614,740	$	21.06	1,614,740	$	95,000,099
July 24, 2017 through August 20, 2017	1,584,850	$	17.48	1,584,754	$	67,300,395
August 21, 2017 through September 24, 2017	692,124	$	17.82	690,010	$	55,000,223
Total (2)	3,891,714			3,889,504