Bloomin' Brands Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K(Mark One) [X]Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: December 30, 2018 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: 001-35625BLOOMIN’ BRANDS, INC.(Exact name of registrant as specified in its charter) Delaware 20-8023465(State or other jurisdiction of incorporation ororganization) (I.R.S. EmployerIdentification No.)2202 North West Shore Boulevard, Suite 500, Tampa, Florida 33607(Address of principal executive offices) (Zip Code)(813) 282-1225(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Stock, $0.01 par value The Nasdaq Stock Market LLC(Nasdaq Global Select Market) Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ý NO oIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO ýIndicate 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 1934during 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 filingrequirements for the past 90 days. YES ý NO oIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).YES ý NO oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or anemerging 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 filer ý Accelerated filer o Non-accelerated filer oSmaller reporting company o Emerging growth company oIf 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 orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. oIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO ýThe aggregate market value of common stock held by non-affiliates (based on the closing price on the last business day of the registrant’s most recentlycompleted second fiscal quarter as reported on the Nasdaq Global Select Market) was $1.8 billion.As of February 22, 2019, 91,399,452 shares of common stock of the registrant were outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement for its 2019 Annual Meeting of Stockholders, expected to be held on April 30, 2019, are incorporatedby reference into Part III, Items 10-14 of this Annual Report on Form 10-K. Table of ContentsBLOOMIN’ BRANDS, INC.INDEX TO ANNUAL REPORT ON FORM 10-KFor Fiscal Year 2018TABLE OF CONTENTS PAGE NO.PART I Item 1. Business5Item 1A. Risk Factors15Item 1B. Unresolved Staff Comments27Item 2. Properties28Item 3. Legal Proceedings28Item 4. Mine Safety Disclosures28PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities29Item 6. Selected Financial Data32Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations33Item 7A. Quantitative and Qualitative Disclosures About Market Risk61Item 8. Financial Statements and Supplementary Data63Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure111Item 9A. Controls and Procedures111Item 9B. Other Information111PART III Item 10. Directors, Executive Officers and Corporate Governance112Item 11. Executive Compensation112Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters112Item 13. Certain Relationships and Related Transactions, and Director Independence112Item 14. Principal Accounting Fees and Services113PART IV Item 15. Exhibits and Financial Statement Schedules114Item 16. Form 10-K Summary117Signatures1182Table of ContentsBLOOMIN’ BRANDS, INC.PART ICautionary StatementThis Annual Report on Form 10-K (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-lookingstatements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities ExchangeAct of 1934, as amended (the “Exchange Act”). 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 comparableterminology, although not all forward-looking statements are accompanied by such terms. These forward-looking statements include allmatters that are not historical facts. They appear in a number of places throughout this Report and include statements regarding ourintentions, 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 circumstancesthat may or may not occur in the future. Although we base these forward-looking statements on assumptions that we believe arereasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actualresults of operations, financial condition and liquidity, and industry developments may differ materially from statements made in orsuggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial conditionand liquidity, and industry developments are consistent with the forward-looking statements contained in this Report, those results ordevelopments may not be indicative of results or developments in subsequent periods. Important factors that could cause actual resultsto differ materially from statements made or suggested by forward-looking statements include, but are not limited to, those described inthe “Risk Factors” section of this Report and the following:(i)Consumer reactions to public health and food safety issues;(ii)Our ability to compete in the highly competitive restaurant industry with many well-established competitors and new marketentrants;(iii)Minimum wage increases and additional mandated employee benefits;(iv)Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost andavailability of credit and interest rates;(v)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;(vi)Fluctuations in the price and availability of commodities;(vii)Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and theeffects of changes to applicable laws and regulations, including tax laws and unanticipated liabilities;(viii)Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits;(ix)Our ability to implement our remodeling, relocation and expansion plans due to uncertainty in locating and acquiring attractivesites on acceptable terms, obtaining required permits and approvals, recruiting and training necessary personnel, obtainingadequate financing and estimating the performance of newly opened, remodeled or relocated restaurants;3Table of ContentsBLOOMIN’ BRANDS, INC.(x)The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreigncurrency exchange rates;(xi)Our ability to preserve and grow the reputation and value of our brands, particularly in light of changes in consumerengagement with social media platforms;(xii)Any impairment in the carrying value of our goodwill or other intangible or long-lived assets and its effect on our financialcondition and results of operations;(xiii)Strategic actions, including acquisitions and dispositions, and our success in implementing these initiatives or integrating anyacquired or newly created businesses;(xiv)Seasonal and periodic fluctuations in our results and the effects of significant adverse weather conditions and other disasters orunforeseen events;(xv)The effects of our substantial leverage and restrictive covenants in our various credit facilities on our ability to raise additionalcapital to fund our operations, to make capital expenditures to invest in new or renovate restaurants and to react to changes inthe economy or our industry, and our exposure to interest rate risk in connection with our variable-rate debt; and(xvi)The adequacy of our cash flow and earnings and other conditions which may affect our ability to pay dividends and repurchaseshares of our common stock.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 updateany forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events ordevelopments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications offuture performance, unless specifically expressed as such, and should only be viewed as historical data.4Table of ContentsBLOOMIN’ BRANDS, INC.Item 1. BusinessGeneral and History - Bloomin’ Brands, Inc. (“Bloomin’ Brands,” the “Company,” “we,” “us,” and “our” and similar terms meanBloomin’ Brands, Inc. and its subsidiaries except where the context otherwise requires) is one of the largest casual dining restaurantcompanies in the world, with a portfolio of leading, differentiated restaurant concepts. We have four founder-inspired concepts:Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Our restaurant conceptsrange in price point and degree of formality from casual (Outback Steakhouse and Carrabba’s Italian Grill) to upscale casual (BonefishGrill) and fine dining (Fleming’s Prime Steakhouse & Wine Bar).As of December 30, 2018, we owned and operated 1,193 restaurants and franchised 297 restaurants across 48 states, Puerto Rico,Guam and 20 countries.The first Outback Steakhouse restaurant opened in 1988 and in 1996, we expanded the Outback Steakhouse concept internationally.OSI Restaurant Partners, LLC (“OSI”), a wholly-owned subsidiary of Bloomin’ Brands, is our primary operating entity.Our Segments - We consider our restaurant concepts and international markets to be operating segments, which reflects how wemanage our business, review operating performance and allocate resources. We aggregate our operating segments into two reportablesegments, U.S. and International. The U.S. segment includes all restaurants operating in the U.S., and restaurants operating outside theU.S. are included in the International segment. Following is a summary of reportable segments as of December 30, 2018:REPORTABLE SEGMENT (1) CONCEPT GEOGRAPHIC LOCATIONU.S. Outback Steakhouse United States of America Carrabba’s Italian Grill Bonefish Grill Fleming’s Prime Steakhouse & Wine Bar International Outback Steakhouse Brazil, Hong Kong/China Carrabba’s Italian Grill (Abbraccio) Brazil_________________(1)Includes franchise locations. See Item 2 - Properties for disclosure of our restaurant count by state, territory and country.U.S. SegmentAs of December 30, 2018, in our U.S. segment, we owned and operated 1,068 restaurants and franchised 164 restaurants across 48states.Outback Steakhouse - Outback Steakhouse is a casual steakhouse restaurant concept focused on steaks, signature flavors and Australiandecor. The Outback Steakhouse menu offers seasoned and seared or wood-fire grilled steaks, chops, chicken, seafood, pasta, salads andseasonal specials. The menu also includes several specialty appetizers, including our signature Bloomin’ Onion®, and desserts, togetherwith full bar service.Carrabba’s Italian Grill - Offering authentic Italian cuisine passed down from its founders’ family recipes, Carrabba’s Italian Grill useshigh quality ingredients to prepare fresh and handmade dishes cooked to order in a lively exhibition kitchen. Featuring a wood-burninggrill inspired by the many tastes of Italy, guests can enjoy signature dishes such as our Chicken Bryan and Pollo Rosa Maria, wood-firegrilled steaks and chops, small plates and classic Italian pasta dishes in a welcoming, contemporary atmosphere.Bonefish Grill - Bonefish Grill specializes in market-fresh fish from around the world, savory wood-grilled specialties and hand-craftedcocktails. Guests are guided through an innovative, seasonal menu, with unique specials and locally-created “Neighborhood Catch”dishes as well as beef and chicken entrées, featuring high quality and fresh ingredients.5Table of ContentsBLOOMIN’ BRANDS, INC.The Bonefish Grill experience helps guests “Escape the Ordinary,” and is based on the premise of simplicity, consistency and a strongcommitment to excellence at every level.Fleming’s Prime Steakhouse & Wine Bar - Fleming’s Prime Steakhouse & Wine Bar is a contemporary steakhouse concept featuringprime cuts of beef, chops, fresh fish, seafood and poultry, salads and side dishes. Guests will find a passion for steak and wine,reflected in an exceptional menu of hand-cut steaks, an award-winning list of wines by the glass, and seasonal menu selectionsshowcasing locally-inspired chef dishes. The steak selection features USDA Prime corn-fed beef, both wet- and dry-aged for flavor andtexture, in a variety of sizes and cuts.International SegmentWe have cross-functional, local management to support and grow restaurants in each of the countries where we have Company-ownedoperations. Our international operations are integrated with our corporate headquarters to leverage enterprise-wide capabilities,including marketing, finance, real estate, information technology, legal, human resources, supply chain management and productivity.As of December 30, 2018, in our International segment, we owned and operated 125 restaurants and franchised 131 restaurants across20 countries, Puerto Rico and Guam.Outback Steakhouse - Our international Outback Steakhouse restaurants have a menu similar to our U.S. menu with additional varietyto meet local taste preferences. In addition to the traditional Outback Special sirloin, a typical international menu may feature local beefcuts such as the Aussie Grilled Picanha in Brazil.Carrabba’s Italian Grill (Abbraccio Cucina Italiana) - Abbraccio Cucina Italiana, our Carrabba’s Italian Grill restaurant concept inBrazil, offers a blend of traditional and modern Italian dishes. The menu varies, with additional pasta and pizza menu offerings, toaccount for local tastes and customs. Abbraccio Cucina Italiana also has a range of beverage options, including classically inspiredcocktails and local favorites with an Italian twist.Restaurant OverviewSelected Sales Data - Following is sales mix by product type and average check per person for Company-owned restaurants during2018: U.S. INTERNATIONAL OutbackSteakhouse Carrabba’sItalian Grill Bonefish Grill Fleming’s Prime Steakhouse & Wine Bar OutbackSteakhouseBrazilFood & non-alcoholic beverage90% 85% 78% 74% 84%Alcoholic beverage10% 15% 22% 26% 16% 100% 100% 100% 100% 100% Average check per person ($USD)$23 $23 $27 $83 $16Average check per person (R$) R$58Delivery - During 2017, we completed the rollout of delivery to 240 Outback Steakhouse and Carrabba’s Italian Grill restaurants. In thesecond half of 2018, we completed the rollout of delivery to more than 200 additional Outback Steakhouse and Carrabba’s Italian Grillrestaurants and had over 450 restaurants offering delivery at the end of 2018.6Table of ContentsBLOOMIN’ BRANDS, INC.System-wide Restaurant Summary - Following is a system-wide rollforward of restaurants in operation during 2018: DECEMBER 31, 2017 2018 ACTIVITY DECEMBER 30, 2018 U.S. STATE OPENED CLOSED COUNTNumber of restaurants: U.S. Outback Steakhouse Company-owned585 — (6) 579 Franchised155 2 (3) 154 Total740 2 (9) 733 48Carrabba’s Italian Grill Company-owned225 — (1) 224 Franchised3 — — 3 Total228 — (1) 227 31Bonefish Grill Company-owned194 — (4) 190 Franchised7 — — 7 Total201 — (4) 197 32Fleming’s Prime Steakhouse & Wine Bar Company-owned69 1 — 70 28Other Company-owned2 3 — 5 1U.S. Total1,240 6 (14) 1,232 International Company-owned Outback Steakhouse - Brazil (1)87 5 — 92 Other37 6 (10) 33 Franchised Outback Steakhouse - South Korea72 10 (6) 76 Other53 3 (1) 55 International Total249 24 (17) 256 System-wide total1,489 30 (31) 1,488 ____________________(1)The restaurant counts for Brazil are reported as of November 30, 2018 and 2017, respectively, to correspond with the balance sheet dates of this subsidiary.RESTAURANT DESIGN AND DEVELOPMENTSite Design - We generally construct freestanding buildings on leased properties, although certain leased sites are also located in stripshopping centers. Construction of a new restaurant typically takes 60 to 180 days from the date the location is leased or under contractand fully permitted. In the majority of cases, future restaurant development will result from the lease of existing third-party retail space.We typically design the interior of our restaurants in-house, utilizing outside architects to develop construction documents. We have anongoing remodel program across all of our concepts to maintain the relevance of our restaurants’ ambiance. During 2018, weremodeled the exterior of 42 Outback Steakhouse restaurants and we are currently testing prototypes for our new Outback Steakhouseinterior remodel program. Once the prototype is finalized, we expect to substantially complete the Outback Steakhouse interior remodelprogram over a three-year period, including approximately 35 in 2019.Site Selection Process - We have a central site selection team comprised of real estate development, property/lease management anddesign and construction personnel. This site selection team also utilizes a combination of existing field operations managers, internaldevelopment personnel and outside real estate brokers to identify and qualify potential sites.7Table of ContentsBLOOMIN’ BRANDS, INC.We have a relocation initiative in process, primarily related to the U.S. Outback Steakhouse brand. This multi-year relocation plan isfocused on driving additional traffic to our restaurants by moving legacy restaurants to prime locations within the same trade area.During 2018, we relocated 14 U.S. Outback Steakhouse restaurants and we plan to relocate another 11 U.S. Outback Steakhouserestaurants in 2019.Restaurant DevelopmentWe utilize the ownership structure and market entry strategy that best fits the needs for a particular market, including Company-ownedunits, joint ventures and franchises, as determined by demand, cost structure and economic conditions.International Development - We continue to pursue international expansion opportunities, leveraging established equity and franchisemarkets in South America and Asia, and in strategically selected emerging and high-growth developed markets, with a focus on Brazil.See Item 2 - Properties for disclosure of our international restaurant count by country.U.S. Development - We opportunistically pursue unit growth across our concepts through existing geography fill-in and marketexpansion opportunities based on current location mix.RESEARCH & DEVELOPMENT / INNOVATIONWe utilize a global core menu policy to ensure consistency and quality in our menu offerings. Before we add an item to the core menu,our research and development (“R&D”) team performs a thorough review of the item, including conducting consumer research.Internationally, we have teams in our developed markets that tailor our menus to address the preferences of local consumers.We continuously evolve our product offerings based on consumer trends and feedback. We have a 12-month pipeline of new menu andpromotional items across all concepts that allows us to quickly make adjustments in response to market demands, when necessary. Inaddition, we continue to focus on productivity across the portfolio. For new menu items and significant product changes, we have atesting process that includes direct consumer feedback on the product and its pricing.Menu innovation and simplification remains a high priority across all concepts. In recent years, we increased certain portion sizes atOutback Steakhouse and Carrabba’s Italian Grill, and introduced a new center-cut sirloin at Outback Steakhouse. At Bonefish Grill, weresumed sourcing fresh fish specials locally and rolled out a new brunch menu in 2018. During 2018, Fleming’s Prime Steakhouse &Wine Bar began localizing menu selections to differentiate the brand from the traditional high-end steakhouse.INFORMATION SYSTEMSWe leverage technology to support customer engagement, labor and food productivity initiatives and restaurant operations.To drive customer engagement, we continue to invest in technology infrastructure, including brand websites, online ordering andmobile apps. To increase customer convenience, we are leveraging our existing online ordering infrastructure to facilitate expanded off-premises dining. Additionally, we developed systems to support our new customer loyalty program with a focus on increasing traffic toour restaurants. Investments are also being made in a global supply chain management system to provide better inventory forecastingand replenishment to our restaurants, which will help manage food quality and specifications. We also continue to invest in a range oftools and infrastructure to support risk management and cyber security.Our integrated point-of-sale system allows us to transact business in our restaurants and communicate sales data through a securecorporate network to our enterprise resource planning system and data warehouse. Our Company-owned restaurants, and most of ourfranchised restaurants, are connected through a portal that provides our employees and8Table of ContentsBLOOMIN’ BRANDS, INC.franchise partners with access to business information and tools that allow them to collaborate, communicate, train and shareinformation.ADVERTISING AND MARKETINGWe advertise through a diverse set of media channels including but not limited to national/spot television, radio, social media, searchengines and other digital tactics. Our concepts have active public relations programs and also rely on national promotions, site visibility,local marketing, digital marketing, direct mail, billboards and point-of-sale materials to promote our restaurants. Recently, we increasedour focus on data segmentation and personalization, customer relationship management and digital advertising to be more efficient andrelevant with our advertising expenditures. Internationally, we have teams in our developed markets that engage local agencies to tailoradvertising to each market and develop relevant and timely promotions based on local consumer demand.Our multi-branded loyalty program, Dine Rewards, is designed to drive incremental traffic and provide data for customer segmentationand personalization opportunities. Additionally, to help maintain consumer interest and relevance, each concept leverages limited-timeoffers featuring seasonal specials. We promote limited-time offers through integrated marketing programs that utilize all of ouradvertising resources.RESTAURANT OPERATIONSManagement and Employees - The restaurant management staff varies by concept and restaurant size. Our restaurants employ primarilyhourly employees, many of whom work part-time. The Restaurant Managing Partner has primary responsibility for the day-to-dayoperation of the restaurant and is required to follow Company-established operating standards. Area Operating Partners for our casualdining concepts are typically responsible for overseeing the operations of six to 12 restaurants and Restaurant Managing Partners withina specific region.Area Operating Partner, Restaurant Managing Partner and Chef Partner Programs - In addition to base salary, Area OperatingPartners, Restaurant Managing Partners and Chef Partners generally receive performance-based bonuses for providing management andsupervisory services to their restaurants, certain of which may be based on a percentage of their restaurants’ monthly operating resultsor cash flows and/or total controllable income.Restaurant Managing Partners and Chef Partners in the U.S. may participate in deferred compensation programs and are eligible toreceive payments upon completion of their five-year employment agreement. Others receive performance-based bonuses payable uponcompletion of their five-year employment agreement. To fund deferred compensation arrangements, we may invest in corporate-ownedlife insurance policies, which are held within an irrevocable grantor or “rabbi” trust account for settlement of certain of our obligationsunder the deferred compensation plans. Also, on the fifth anniversary of the opening of each new U.S. Company-owned restaurant, theArea Operating Partner supervising the restaurant during the first five years of operation receives an additional performance-basedbonus.Many of our International Restaurant Managing Partners are given the option to purchase participation interests in the cash distributionsof the restaurants they manage. The amount, terms and availability vary by country.Supervision and Training - We require our Area Operating Partners and Restaurant Managing Partners to have significant experience inthe full-service restaurant industry. All Area Operating Partners and Restaurant Managing Partners are required to complete acomprehensive training program that emphasizes our operating strategy, procedures and standards. The Restaurant Managing Partnersand Area Operating Partners, together with our Presidents, Regional Vice Presidents, Vice Presidents of Training and Directors ofTraining, are responsible for selecting and training the employees for each new restaurant.Service - In order to better assess and improve our performance, we use third-party research firms to conduct ongoing satisfactionmeasurement programs that provide us with industry benchmarking information for our Company-owned and franchise locations in theU.S. We have a similar consumer satisfaction measurement program for our international Company-owned and certain internationalfranchise locations and we obtain industry benchmarking information for9Table of ContentsBLOOMIN’ BRANDS, INC.the international markets in which we operate, when available. These programs measure satisfaction across a wide range of experienceelements.SOURCING AND SUPPLYSourcing and Supply - We take a global approach to procurement and supply chain management, with our corporate team serving allU.S. and international concepts. In addition, we have dedicated supply chain management personnel for our international operations inSouth America and Asia. The supply chain management organization is responsible for all food and operating supply purchases as wellas a large percentage of purchases of field and corporate services.We address the end-to-end costs associated with the products and goods we purchase by utilizing a combination of global, regional andlocal suppliers to capture efficiencies and economies of scale. This “total cost of ownership” (“TCO”) approach focuses on the initialpurchase price, coupled with the cost structure underlying the procurement and order fulfillment process. The TCO approach includesmonitoring commodity markets and trends to execute product purchases at the most advantageous times.We have a distribution program that includes food, beverage, smallwares and packaging goods in all major markets. This program ismanaged by a custom distribution company that only provides products approved for our system. This customized relationship alsoenables our staff to effectively manage and prioritize our supply chain.Beef represents the majority of purchased proteins and of our overall global commodity procurement. In 2018, we primarily purchasedour U.S. beef raw materials from four beef suppliers and our Brazil beef raw materials from two beef suppliers. Due to the nature of ourindustry, we expect to continue purchasing a substantial amount of our beef from a small number of suppliers. Other major commoditycategories purchased include produce, dairy, bread and pasta, and energy sources to operate our restaurants, such as natural gas andelectricity.Quality Control - Our R&D facility is located in Tampa, Florida and serves as a global test kitchen and vendor product qualificationsite. Our quality assurance team manages internal auditors responsible for supplier evaluations and external third parties who inspectsupplier adherence to quality, food safety and product specification. We have a program that ensures suppliers comply with quality,food safety and other specifications. Our suppliers also utilize third-party labs for food safety and quality verification. We developsourcing strategies for all commodity categories based on the dynamics of each category. In addition, we require our supplier partnersto meet or exceed our quality assurance standards.Our operational teams have multiple touch points in the restaurants ensuring food safety, quality and freshness throughout all phases ofthe preparation process. In addition, we employ third-party auditors to verify our standards of food safety, training and sanitation.RESTAURANT OWNERSHIP STRUCTURESWe generate our revenues from our Company-owned restaurants and through ongoing royalties from our franchised restaurants andsales of franchise rights.Company-owned Restaurants - Company-owned restaurants are restaurants wholly-owned by us or in which we have a majorityownership. Our cash flows from entities in which we have a majority ownership are limited to the portion of our ownership. The resultsof operations of Company-owned restaurants are included in our consolidated operating results and the portion of income or lossattributable to the noncontrolling interests is eliminated in our Consolidated Statements of Operations and Comprehensive Income.We pay royalties that range from 0.5% to 1.5% of U.S. sales on the majority of our Carrabba’s Italian Grill restaurants, pursuant toagreements we entered into with the Carrabba’s Italian Grill founders (“Carrabba’s Founders”). Each Carrabba’s Italian Grill restaurantlocated outside the U.S. pays a one-time lump sum fee to the Carrabba’s Founders,10Table of ContentsBLOOMIN’ BRANDS, INC.which varies depending on the size of the restaurant. No continuing royalty fee is paid to the Carrabba’s Founders for Carrabba’s ItalianGrill restaurants located outside the U.S.Unaffiliated Franchise Program - Our unaffiliated franchise agreements grant third parties rights to establish and operate a restaurantusing one of our concepts. Franchised restaurants are required to be operated in accordance with the franchise agreement and incompliance with their respective concept’s standards and specifications.Under our franchise agreements, each of our franchisees is required to pay an initial franchise fee and monthly royalties based on apercentage of gross restaurant sales. Initial franchise fees are generally $40,000 for U.S. franchisees and range between $40,000 and$75,000 for international franchisees, depending on the market. Some franchisees may also pay administration fees based on apercentage of gross restaurant sales. Following is a summary of royalty fee percentages based on our existing unaffiliated franchiseagreements:(as a % of gross Restaurant sales)MONTHLY ROYALTY FEEPERCENTAGEU.S. franchisees (1)3.50% - 5.75%International franchisees (2)3.00% - 6.00%_________________(1)U.S. franchisees must also contribute a percentage of gross sales for national marketing programs and also spend a certain percentage of gross sales on local advertising.For U.S. franchisees, there is a maximum of 8.0% of gross restaurant sales for combined national marketing and local advertising.(2)International franchisees must also spend a certain percentage of gross sales on local advertising, which varies depending on the market.COMPETITIONThe restaurant industry is highly competitive with a substantial number of restaurant operators that compete directly and indirectly withus in respect to price, service, location and food quality, and there are other well-established competitors with significant financial andother resources. There is also active competition for management personnel, attractive suitable real estate sites, supplies and restaurantemployees. In addition, competition is influenced strongly by marketing and brand reputation. At an aggregate level, all major U.S.casual dining restaurants and casual dining restaurants in the international markets in which we operate would be consideredcompetitors of our concepts. Further, we face growing competition from the supermarket industry and home delivery services, withimproved selections of prepared meals, and from quick service and fast casual restaurants, as a result of higher-quality food andbeverage offerings. Internationally, we face increasing competition due to an increase in the number of casual dining restaurant optionsin the markets in which we operate.GOVERNMENT REGULATIONWe are subject to various federal, state, local and international laws affecting our business. Each of our restaurants is subject tolicensing and regulation by a number of governmental authorities, which may include, among others, alcoholic beverage control, healthand safety, nutritional menu labeling, health care, environmental and fire agencies in the state, municipality or country in which therestaurant is located.U.S. - Alcoholic beverage sales represent 14% of our U.S. restaurant sales. Alcoholic beverage control regulations require each of ourrestaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license or permit to sell alcoholicbeverages on the premises and to provide service for extended hours and on Sundays.Our restaurant operations are also subject to federal and state laws for such matters as:•immigration, employment, minimum wages, overtime, tip credits, worker conditions and health care;•nutritional labeling, nutritional content, menu labeling and food safety;•the Americans with Disabilities Act, which, among other things, requires our restaurants to meet federally mandatedrequirements for the disabled; and•information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud.11Table of ContentsBLOOMIN’ BRANDS, INC.International - Our restaurants outside of the U.S. are subject to similar local laws and regulations as our U.S. restaurants, includinglabor, food safety and information security. In addition, we are subject to anti-bribery and anti-corruption laws and regulations.See Item 1A - Risk Factors for a discussion of risks relating to federal, state, local and international regulation of our business.EXECUTIVE OFFICERS OF THE REGISTRANTBelow is a list of the names, ages, positions and a brief description of the business experience of each of our executive officers as ofFebruary 15, 2019.NAME AGE POSITIONElizabeth A. Smith 55 Chairman of the Board of Directors and Chief Executive OfficerDavid J. Deno 61 Executive Vice President and Chief Financial and Administrative OfficerJeffrey Carcara 48 Executive Vice President and President of Bonefish GrillDonagh M. Herlihy 55 Executive Vice President and Chief Information OfficerJoseph J. Kadow 62 Executive Vice President and Chief Legal OfficerMichael Kappitt 49 Executive Vice President and President of Carrabba’s Italian GrillGregg Scarlett 57 Executive Vice President and President of Outback SteakhouseSukhdev Singh 55 Executive Vice President and Chief Development Officer - International and FranchisingElizabeth A. Smith was appointed Chairman in January 2012. Since November 2009, Ms. Smith has served as Chief Executive Officerand as a member of our Board of Directors. Ms. Smith is a member of the Board of Directors of Hilton Worldwide Holdings, Inc. andwas previously a member of the Board of Directors of Staples, Inc. from September 2008 to June 2014.David J. Deno has served as Executive Vice President and Chief Financial and Administrative Officer since October 2013 andpreviously served as Executive Vice President and Chief Financial Officer from May 2012 to October 2013. From December 2009 toMay 2012, Mr. Deno served as Chief Financial Officer of the international division of Best Buy Co. Inc. Mr. Deno previously served asPresident and later Chief Executive Officer of Quiznos and Chief Financial Officer and later Chief Operating Officer of YUM! Brands,Inc.Jeffrey Carcara has served as Executive Vice President and President of Bonefish Grill since February 2019. Prior to joining Bloomin’Brands, Mr. Carcara served as Chief Executive Officer of Emerging Brands at Del Frisco’s Restaurant Group from June 2018 to January2019; Chief Executive Officer at Barteca Restaurant Group from August 2015 to June 2018; and Chief Operating Officer at Del Frisco’sRestaurant Group from November 2012 to August 2015.Donagh M. Herlihy has served as Executive Vice President and Chief Information Officer since April 2018. Mr. Herlihy previouslyserved as Executive Vice President and Chief Technology Officer from January 2018 to April 2018 and Executive Vice President,Digital and Chief Information Officer from September 2014 to January 2018. Prior to joining Bloomin’ Brands, Mr. Herlihy was SeniorVice President, Chief Information Officer and eCommerce of Avon Products, Inc. from March 2008 to August 2014.Joseph J. Kadow has served as Executive Vice President and Chief Legal Officer since April 2005 and has served as AssistantSecretary since February 2016. Mr. Kadow previously served as Secretary from April 1994 to February 2016.Michael Kappitt has served as Executive Vice President and President of Carrabba’s Italian Grill since February 2016. Mr. Kappittserved as Senior Vice President and Chief Marketing Officer of Bloomin’ Brands from December 2013 to February 2016 and ChiefMarketing Officer of Outback Steakhouse from March 2011 to December 2013.12Table of ContentsBLOOMIN’ BRANDS, INC.Gregg Scarlett has served as Executive Vice President and President of Outback Steakhouse since July 2016. Mr. Scarlett previouslyserved as Executive Vice President and President of Bonefish Grill from April 2015 to July 2016; Senior Vice President, Casual DiningRestaurant Operations from January 2013 to April 2015; and Senior Vice President of Operations for Outback Steakhouse from March2010 to January 2013.Sukhdev Singh has served as Executive Vice President and Chief Development Officer - International and Franchising since April2018. Mr. Singh previously served as Executive Vice President and Chief Development Officer and Franchising from May 2015 toApril 2018 and Senior Vice President, Chief Development Officer from January 2014 to May 2015. Prior to joining Bloomin’ Brands,Mr. Singh was Chief Development Officer for Darden Restaurants, Inc. from July 2006 to January 2014.EMPLOYEESAs of December 30, 2018, we employed approximately 93,000 persons, of which approximately 800 are corporate personnel,including 200 in international markets. None of our U.S. employees are covered by a collective bargaining agreement. Variousjurisdictional industry-wide labor agreements apply to certain of our employees in Brazil. We consider our employee relations to be ingood standing.TRADEMARKSWe regard our Outback®, Outback Steakhouse®, Carrabba’s Italian Grill®, Bonefish Grill®, and Fleming’s Prime Steakhouse & WineBar® service marks and our Bloomin’ Onion® trademark as having significant value and as being important factors in the marketing ofour restaurants. We have also obtained trademarks for several of our other menu items and for various advertising slogans. We areaware of names and marks similar to the service marks of ours used by other persons in certain geographic areas in which we haverestaurants. However, we believe such uses will not adversely affect us. Our policy is to pursue registration of our marks wheneverpossible and to oppose vigorously any infringement of our marks.We license the use of our registered trademarks to franchisees and third parties through franchise arrangements and licenses. Thefranchise and license arrangements restrict franchisees’ and licensees’ activities with respect to the use of our trademarks, and imposequality control standards in connection with goods and services offered in connection with the trademarks.SEASONALITY AND QUARTERLY RESULTSOur business is subject to seasonal fluctuations. Historically, customer traffic patterns for our established U.S. restaurants are generallyhighest in the first quarter of the year and lowest in the third quarter of the year. International customer traffic patterns vary by market.For example, Brazil historically experiences minimal seasonal traffic fluctuations. Additionally, holidays and severe weather may affectsales volumes seasonally in some of our markets.Quarterly results have been and will continue to be significantly affected by general economic conditions, the timing of new restaurantopenings and their associated pre-opening costs, restaurant closures and exit-related costs and impairments of goodwill, definite andindefinite-lived intangible assets and property, fixtures and equipment. As a result of these and other factors, our financial results forany given quarter may not be indicative of the results that may be achieved for a full year.ADDITIONAL INFORMATIONWe make available, free of charge, through our internet website www.bloominbrands.com, our Annual Report on Form 10-K, QuarterlyReports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant toSection 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after electronically filing such material with the Securitiesand Exchange Commission (“SEC”). Our reports and other materials filed with the SEC are also available at www.sec.gov. Thereference to these website addresses does not13Table of ContentsBLOOMIN’ BRANDS, INC.constitute incorporation by reference of the information contained on the websites and should not be considered part of this Report.14Table of ContentsBLOOMIN’ BRANDS, INC.Item 1A. Risk FactorsThe risk factors set forth below should be carefully considered. The risks described below are those that we believe could materiallyand adversely affect our business, financial condition or results of operations, however, they are not the only risks facing us. Additionalrisks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affectour business, financial condition or results of operations.Risks Related to Our Business and IndustryFood safety and food-borne illness concerns in our restaurants or throughout the industry or supply chain may have an adverse effecton our business by reducing demand and increasing costs.Regardless of the source or cause, any report of food-borne illnesses and other food safety issues, whether at one of our restaurants orin the industry or supply chain generally, could have a negative impact on our traffic and sales and adversely affect the reputation ofour brands. Food safety issues could be caused by suppliers or distributors and, as a result, be out of our control. Health concerns oroutbreaks of disease in a food product could also reduce demand for particular menu offerings. Even instances of food-borne illness,food tampering or food contamination occurring solely at restaurants of other companies could result in negative publicity about thefood service industry generally and adversely impact our sales. Social media has dramatically increased the rate at which negativepublicity, including as it relates to food-borne illnesses, can be disseminated before there is any meaningful opportunity to respond oraddress an issue. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability ofaffected ingredients, resulting in higher costs and lower margins.The restaurant industry is highly competitive and consumer options for other prepared food offerings continue to expand. Ourinability to compete effectively could adversely affect our business, financial condition and results of operations.A substantial number of restaurant operators compete directly and indirectly with us with respect to price, service, location and foodquality, some of which are well-established with significant resources. There is also active competition for management and otherpersonnel, and attractive suitable real estate sites. Consumer tastes, nutritional and dietary trends, traffic patterns and the type, numberand location of competing restaurants often affect the restaurant business, and our competitors may react more efficiently, creativelyand effectively to those conditions. In addition, our competitors may generate or better implement business strategies that improve thevalue and relevance of their brands and reputation, relative to ours. For example, our competitors may more successfully implementmenu or technology initiatives, such as remote ordering, social media or mobile technology platforms that expedite or enhance thecustomer experience. Further, we face growing competition from quick service and fast casual restaurants, the supermarket industry andmeal kit and food delivery providers, with the improvement of prepared food offerings and the trend towards convergence in grocery,deli, retail and restaurant services. We believe all of the above factors have increased competitive pressures in the casual dining sectorin recent periods and we believe they will continue to present a challenging competitive environment in future periods. If we are unableto continue to compete effectively, our traffic, sales and margins could decline and our business, financial condition and results ofoperations would be adversely affected.We are subject to various federal and state employment and labor laws and regulations.Various federal and state employment and labor laws and regulations govern our relationships with our employees and affect operatingcosts, and similar laws and regulations apply to our operations outside of the U.S. These laws and regulations relate to matters includingemployment discrimination, minimum wage requirements, overtime, tip credits, unemployment tax rates, workers’ compensation rates,working conditions, immigration status, tax reporting and other wage and benefit requirements. Any significant additional governmentregulations and new laws governing our relationships with employees, including minimum wage increases, mandated benefits or otherrequirements that impose additional obligations on us, could increase our costs and adversely affect our business and results ofoperations.15Table of ContentsBLOOMIN’ BRANDS, INC.As a significant number of our food service and preparation personnel are paid at rates related to the applicable minimum wage, federal,state and local proposals related to minimum wage requirements or similar matters could, to the extent implemented, materially increaseour labor and other costs. Several states in which we operate have recently approved minimum wage increases. As minimum wageincreases are implemented in these states or any other states in which we operate in the future, we expect our labor costs will continueto increase. Our ability to respond to minimum wage increases by increasing menu prices depends on the responses of our competitorsand consumers. Our distributors and suppliers could also be affected by higher minimum wage, benefit standards and compliance costs,which could result in higher costs for goods and services supplied to us.We rely on our employees to accurately disclose the full amount of their tip income, and we base our FICA tax reporting on thedisclosures provided to us by such tipped employees. Inaccurate employee FICA tax reporting could subject us to monetary liabilities,which could harm our business, results of operations and financial condition.Challenging economic conditions may have a negative effect on our business and financial results.Challenging economic conditions may negatively impact consumer spending and thus cause a decline in our financial results. Forexample, international, domestic and regional economic conditions, consumer income levels, financial market volatility, social unrest,governmental, political and budget matters and a slow or stagnant pace of economic growth generally may have a negative effect onconsumer confidence and discretionary spending, which the restaurant industry depends upon. In recent years, we believe these factorsand conditions may have affected consumer traffic and comparable restaurant sales for us and throughout our industry and maycontinue to contribute to a challenging sales environment in the casual dining sector. A decline in economic conditions or negativedevelopments with respect to any of the other factors mentioned above, generally or in particular markets in which we operate, and ourconsumers’ reactions to these trends could result in increased pressure with respect to our pricing, traffic levels, commodity and othercosts and the continuation of our innovation and productivity initiatives, which could negatively impact our business and results ofoperations. These factors could also cause us to, among other things, reduce the number and frequency of new restaurant openings,close restaurants or delay remodeling of our existing restaurant locations. Further, poor economic conditions may force nearbybusinesses to shut down, which could cause our restaurant locations to be less attractive.Cyber security breaches of confidential consumer, personal employee and other material information may adversely affect ourbusiness.A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our informationresources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorizedaccess to systems to disrupt operations, corrupt data or the theft or exposure of confidential information or intellectual property. A cyberincident that compromises the information of our consumers or employees could result in widespread negative publicity, damage to thereputation of our brands, a loss of consumers, an interruption of our business and legal liabilities.The majority of our restaurant sales are by credit or debit cards. We also maintain certain personal information regarding our employeesand confidential information about our customers, franchisees and suppliers. We segment our card data environment and employ acyber security protection program, which is based upon proven industry frameworks. This program includes but is not limited to cybersecurity techniques, tactics and procedures including the deployment of a robust set of security controls, continuous monitoring anddetection programs, network protections, stringent vendor selection criteria, secure software development programs and ongoingemployee training, awareness and incident response preparedness. In addition, we continuously scan and improve our environment forany vulnerabilities, perform penetration testing, engage third parties to assess effectiveness of our security measures and collaboratewith members of the cyber security community. Our cyber security protection program is headed by our Chief Information SecurityOfficer, who briefs our Audit Committee quarterly on cyber security measures in place. However, there are no assurances that suchprograms will prevent or detect cyber security breaches.16Table of ContentsBLOOMIN’ BRANDS, INC.Despite our security measures, our technology systems may be vulnerable to damage, disability or failures due to physical theft, fire,power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, employeeerror or malfeasance, denial of service attacks, viruses, worms and other disruptive problems. From time to time we have been, andlikely will continue to be, the target of attempted cyber and other security threats. In recent years our reliance on technology hasincreased, and consequently so have the scope and severity of risks posed to our systems from cyber threats. Malicious attacks andintrusion efforts are continuous and evolving, and are perpetuated by many different parties with varying motives, including identitythieves, contractors, vendors, employees, competitors, prospective insider traders, so-called “hacktivists,” terrorists and others. Wecontinuously monitor and develop our information technology networks and infrastructure to prevent, detect, address and mitigate therisk of unauthorized access, misuse, computer viruses and other events that could have a security impact.Our operations and corporate functions rely heavily on information systems, including point-of-sale processing in our restaurants,management of our supply chain, payment of obligations, collection of cash, data warehousing to support analytics, finance andaccounting systems, mobile technologies to enhance the customer experience and other various processes and procedures, some ofwhich are handled by third parties. Our ability to efficiently and effectively manage our business depends significantly on the reliabilityand capacity of these systems. The failure of these systems to operate effectively, system maintenance problems, upgrading ortransitioning to new platforms, or any cyber incident relating to these systems could expose our systems or information to cyber threats,result in delays in consumer service, reduced efficiency in our operations or result in negative publicity. For example, a weakness invendor’s systems or software products may provide a mechanism for a cyber threat. In recent years, certain retailers have experiencedsecurity breaches in which customer information was stolen through vendor access channels. While we select our third-party supplierscarefully, cyber attacks and security breaches at a supplier could compromise confidential information or adversely affect our ability todeliver products and services to our customers. These problems could negatively affect our results of operations, and remediation couldresult in significant, unplanned capital investments.As a merchant and service provider of point-of-sale related services, we are subject to the Payment Card Industry Data SecurityStandard (“PCI DSS”), issued by the Payment Card Industry Council. PCI DSS contains compliance guidelines and standards withregard to our security surrounding the physical and electronic storage, processing and transmission of individual cardholder data.Despite our information security measures and our efforts to comply with PCI DSS guidelines, we cannot be certain that all of ourinformation technology systems are able to prevent, contain or detect any cyber incidents from known malware or malware that may bedeveloped in the future.We may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual oralleged theft of our consumers’ credit or debit card information or if consumer or employee information is obtained by unauthorizedpersons or used inappropriately. Any such claim or proceeding, or any adverse publicity resulting from such an event, may have amaterial adverse effect on our business and the potential of incurring significant remediation costs.Increased commodity, energy and other costs could decrease our profit margins or cause us to limit or otherwise modify our menusor increase prices, which could adversely affect our business.The performance of our restaurants depends on our ability to anticipate and react to changes in the price and availability of foodcommodities. Our business also incurs significant costs for energy, insurance, labor, marketing and real estate. Prices may be affectedby supply, market changes, increased competition, the general risk of inflation, changes in laws, shortages or interruptions in supplydue to weather, disease or other conditions beyond our control, or other reasons. Increased prices or shortages could affect the cost andquality of the items we buy or require us to raise prices, limit our menu options or implement alternative processes or products. As aresult, these events, combined with other more general economic and demographic conditions, could impact our pricing and negativelyaffect our sales and profit margins.17Table of ContentsBLOOMIN’ BRANDS, INC.Our failure to comply with government regulation related to our restaurant operations, and the costs of compliance or non-compliance, could adversely affect our business.We are subject to various federal, state, local and foreign laws affecting our business. Each of our restaurants is subject to licensing andregulation by a number of governmental authorities, which may include, among others, alcoholic beverage control, food safety,nutritional menu labeling, health care, environmental and fire agencies in the state, municipality or country in which the restaurant islocated. Our suppliers are also subject to regulation in some of these areas. Any difficulties or inabilities to retain or renew licenses, orincreased compliance costs due to changed regulations, could adversely affect operations at existing restaurants. Additionally,difficulties in obtaining or failing to obtain the required licenses or approvals could delay or prevent the development of newrestaurants.Alcoholic beverage sales represent 14% of our consolidated restaurant sales and are subject to extensive state and local licensing andother regulations. The failure of a restaurant to obtain or retain a liquor license would adversely affect that restaurant’s operations. Inaddition, we are subject to “dram shop” statutes in certain states. These statutes generally provide a person injured by an intoxicatedperson the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.The food service industry is affected by consumer preferences and perceptions. Changes in these preferences and perceptions maylessen the demand for our products, which would reduce sales and harm our business.Food service businesses are affected by changes in consumer tastes and demographic trends. For instance, if prevailing health or dietarypreferences cause consumers to avoid steak and other products we offer in any of our concepts in favor of foods or ingredients that areperceived as healthier or otherwise reflect popular demand, our business and operating results would be harmed. Various factors suchas: (i) the Food and Drug Administration’s menu labeling rules, (ii) nutritional guidelines issued by the United States Department ofAgriculture and issuance of similar guidelines or statistical information by state or local municipalities, and (iii) academic studies, mayimpact consumer choice and cause consumers to select foods other than those that are offered by our restaurants. If we are unable toanticipate or successfully respond to changes in consumer preferences, our results of operations could be adversely affected, generallyor in particular concepts or markets.Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes we pay and our profitability.We are subject to income and other taxes in the United States and numerous foreign jurisdictions. Our effective income tax rate andother taxes in the future could be adversely affected by a number of factors, including changes in the mix of earnings in countries withdifferent statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws or other legislativechanges, including the Tax Cuts and Jobs Act (the “Tax Act”) and the Base Erosion Profit Shifting initiative being conducted by theOrganization for Economic Co-operation and Development, and the outcome of income tax audits. Although we believe our taxestimates are reasonable, the final determination of tax audits could be materially different from our historical income tax provisionsand accruals. The results of a tax audit could have a material effect on our results of operations or cash flows in the period or periodsfor which that determination is made. In addition, our effective income tax rate and our results may be impacted by our ability to realizedeferred tax benefits, including our FICA tip credit carryforwards, and by any increases or decreases of our valuation allowancesapplied to our existing deferred tax assets. Additional tax regulations and interpretations of the Tax Act are expected to be issued, andno assurance can be made that future guidance will not adversely affect our business or financial condition.18Table of ContentsBLOOMIN’ BRANDS, INC.Risks associated with our remodeling, relocation and expansion plans may have adverse effects on our operating results.As part of our business strategy, we intend to continue to remodel, relocate and expand our current portfolio of restaurants. Our 2019development schedule calls for approximately 35 Outback Steakhouse interior remodels, 11 U.S. Outback Steakhouse relocations andthe construction of approximately 20 new system-wide locations. A variety of factors could cause the actual results and outcome ofthose plans to differ from the anticipated results, including among other things:•the availability of attractive sites for new or relocated restaurants;•acquiring or leasing those sites at acceptable prices and other terms;•funding or financing our development, given competing priorities for use of capital;•obtaining all required permits, approvals and licenses on a timely basis;•recruiting and training skilled management and restaurant employees and retaining those employees on acceptable terms;•weather, natural disasters and other events or factors beyond our control resulting in construction or other delays; and•consumer tastes in new geographic regions and acceptance of our restaurant concepts and awareness of our brands in thoseregions.It is difficult to estimate the performance of newly opened restaurants. Earnings achieved to date by restaurants open for less than twoyears may not be indicative of future operating results. If new restaurants do not meet targeted performance, it could have a materialadverse effect on our operating results, including as a result of any impairment losses that we may be required to recognize. There isalso the possibility that new restaurants may attract consumers away from other restaurants we own, thereby reducing the revenues ofthose existing restaurants, or that we will incur unrecoverable costs in the event a development project is abandoned prior tocompletion.Some of the challenges described above could be more significant in international markets in which we have more limited experience,either generally or with a particular brand. Those markets are likely to have different competitive conditions, consumer tastes,discretionary spending patterns and brand awareness, which may cause our new restaurants to be less successful than restaurants in ourexisting markets or make it more difficult to estimate the performance of new restaurants.In addition, in an effort to increase same-restaurant sales and improve our operating performance, we continue to make improvementsto our facilities through our remodeling and relocation programs. We also close underperforming restaurants from time to time in orderto improve the performance of our brands. As demographic and economic patterns change or there are declines in neighborhoodswhere our restaurants are located or adverse economic conditions in local areas, current locations may not continue to be attractive orprofitable. Because we lease a significant majority of our restaurants, we incur significant lease termination expenses when we close orrelocate a restaurant and are often obligated to continue rent and other lease related payments after restaurant closure. We also incursignificant asset impairment and other charges in connection with closures and relocations. If the expenses associated with remodels,relocations or closures are higher than anticipated, we cannot find suitable locations or remodeled or relocated restaurants do notperform as expected, these programs may not yield the desired return on investment, which could have a negative effect on ouroperating results.We face a variety of risks associated with doing business in foreign markets that could have a negative impact on our financialperformance.We have a significant number of restaurants outside of the United States, and we intend to continue our efforts to grow internationally.There is no assurance that international operations will be profitable or international growth will continue. In addition, if we have asignificant concentration of restaurants in a foreign market the impact of any negative local conditions can have a sizable impact on ourresults.19Table of ContentsBLOOMIN’ BRANDS, INC.Our foreign operations are subject to all of the same risks as our U.S. restaurants, as well as additional risks including, among others,international economic, political, social and legal conditions and the possibility of instability and unrest, differing cultures andconsumer preferences, diverse government regulations and tax systems, corruption, anti-American sentiment, the ability to source highquality ingredients and other commodities in a cost-effective manner, uncertain or differing interpretations of rights and obligations inconnection with international franchise agreements and the collection of ongoing royalties from international franchisees, theavailability and costs of land, construction and financing, and the availability of experienced management, appropriate franchisees andarea operating partners.During 2018, unrest surrounding the presidential election in Brazil led to protests and a lengthy truckers strike that negatively impactedthe Brazilian economy, causing supply shortages and transportation gridlock that resulted in lost operating days for many businesses,including our restaurants.Currency regulations and fluctuations in exchange rates could also affect our performance. We have operations in many foreigncountries, including direct investments in restaurants in Brazil and Hong Kong/China, as well as international franchises. Brazil is ourlargest international market and will continue to be our top international development priority. As a result, we may experience lossesfrom fluctuations in foreign currency exchange rates or any hedging arrangements that we enter into to offset such fluctuations, andsuch losses could adversely affect our overall sales and earnings.We are subject to governmental regulation of our foreign operations, including antitrust and tax requirements, anti-boycott regulations,import/export/customs regulations and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act.Any new regulatory or trade initiatives could impact our operations in certain countries. Failure to comply with any such legalrequirements could subject us to monetary liabilities and other sanctions, which could harm our business, results of operations andfinancial condition.Loss of key management personnel could hurt our business and inhibit our ability to operate and grow successfully.Our success will continue to depend, to a significant extent, on our leadership team and other key management personnel. If we areunable to attract and retain sufficiently experienced and capable management personnel, our business and financial results may suffer.Failure to recruit, train and retain high-quality restaurant management and team members may result in lower guest satisfaction andlower sales and profitability.Our restaurant-level management and team members are largely responsible for the quality of our service. Our guests may bedissatisfied and our sales may decline if we fail to recruit, train and retain managers and team members that effectively implement ourbusiness strategy and provide high quality guest service. There is active competition for quality management personnel and hourly teammembers. If we experience high turnover, we may experience higher labor costs and have a shortage of adequate managementpersonnel required for future growth.Our success depends substantially on the value of our brands and our ability to execute innovative marketing and consumerrelationship initiatives to maintain brand relevance and drive profitable sales growth.Our success depends on our ability to preserve and grow our brands. Our brand value and reputation are especially important todifferentiate our concepts in the highly competitive casual dining sector to achieve sustainable same-restaurant sales growth and warrantnew unit growth. Brand value and reputation is based in large part on consumer perceptions, which are driven by both our actions andby actions beyond our control, such as new brand strategies or their implementation, business incidents, ineffective advertising ormarketing efforts, or unfavorable mainstream or social media publicity involving us, our industry, our franchisees, or our suppliers. Afailure to innovate and extend our brands in ways that are relevant to consumers and occasions in order to generate sustainable same-restaurant traffic growth, and produce non-traditional sales and earnings growth opportunities, could have an adverse effect on ourresults of operations. Additionally, insufficient focus on our competition or failure to adequately address declines in the casual diningindustry, could adversely impact results of operations.20Table of ContentsBLOOMIN’ BRANDS, INC.If our competitors increase their spending on advertising, promotions and loyalty programs, if our advertising, media or marketingexpenses increase, or if our advertising, promotions and loyalty programs become less effective than those of our competitors, or if wedo not adequately leverage technology and data analytic capabilities needed to generate concise competitive insight, our results ofoperations could be materially and adversely effected.Our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could have a materialadverse impact on our business.There has been a marked increase in the use of social media platforms and similar devices that allow individuals to access a broadaudience of consumers and other interested persons. The availability of information on social media platforms is virtually immediate asis its impact, and users can post information often without filters or checks on the accuracy of the content posted. Adverse or inaccurateinformation concerning our company or concepts may be posted on such platforms at any time, and such information can quickly reacha wide audience. The harm may be immediate without affording us an opportunity for redress or correction, and it is challenging tomonitor and anticipate developments on social media in order to respond in an effective and timely manner. We could also be exposedto these risks if we fail to use social media responsibly in our marketing efforts. These factors could have a material adverse effect onour business. Regardless of its basis or validity, any unfavorable publicity could adversely affect public perception of our brands.Although search engine marketing, social media and other new technological platforms offer great opportunities to increase awarenessof and engagement with our brands, a failure to use social media responsibly in our marketing efforts may further expose us to theserisks. Many of our competitors are expanding their use of social media and new social media platforms are rapidly being developed,potentially making more traditional social media platforms obsolete. As a result, we need to continuously innovate and develop oursocial media strategies in order to maintain broad appeal with guests and brand relevance. As part of our marketing efforts, we rely onsearch engine marketing and social media platforms to attract and retain guests. We also continue to invest in other digital marketinginitiatives that allow us to reach our guests across multiple digital channels and build their awareness of, engagement with, and loyaltyto our brands. These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues, increasedemployee engagement or brand recognition. In addition, a variety of risks are associated with the use of social media, including theimproper disclosure of proprietary information, negative comments about us, exposure of personally identifiable information, fraud, orout-of-date information. The inappropriate use of social media vehicles by our guests or employees could increase our costs, lead tolitigation or result in negative publicity that could damage our reputation.An impairment in the carrying value of our goodwill or other intangible or long-lived assets could adversely affect our financialcondition and results of operations.Along with other intangible assets, we test goodwill for impairment annually and whenever events or changes in circumstances indicatethat its carrying value may not be recoverable. We also evaluate long-lived assets on a quarterly basis or whenever events or changes incircumstances indicate that the carrying value may not be recoverable. We cannot accurately predict the amount and timing of anyimpairment of assets. A significant amount of judgment is involved in determining if an indication of impairment exists. Should thevalue of goodwill or other intangible or long-lived assets become impaired, there could be an adverse effect on our financial conditionand consolidated results of operations.We have limited control with respect to the operations of our franchisees, which could have a negative impact on our business. Our franchisees are contractually obligated to operate their restaurants in accordance with our standards and we provide training andsupport to franchisees. However, franchisees are independent third parties that we do not control, and these franchisees own, operateand oversee the daily operations of their restaurants. As a result, the ultimate success and quality of any franchise restaurant rests withthe franchisee. If franchisees do not successfully operate restaurants21Table of ContentsBLOOMIN’ BRANDS, INC.in a manner consistent with our product and service quality standards and contractual requirements, our image and reputation could beharmed, which in turn could adversely affect our business and operating results.We have a limited number of suppliers for our major products and rely on one custom distribution company for our nationaldistribution programs in the U.S. and Brazil. If our suppliers or custom distributors are unable to fulfill their obligations under theircontracts or we are unable to develop or maintain relationships with these or new suppliers or distributors, if needed, we couldencounter supply shortages and incur higher costs.We depend on frequent deliveries of fresh food products that meet our specifications, and we have a limited number of suppliers for ourmajor products, such as beef. In 2018, we purchased: (i) more than 90% of our U.S. beef raw materials from four beef suppliers thatrepresent more than 80% of the total beef marketplace in the U.S and (ii) more than 90% of our Brazil beef raw materials from two beefsuppliers that represent approximately 40% of the total Brazil beef marketplace. Due to the nature of our industry, we expect tocontinue to purchase a substantial amount of our beef from a small number of suppliers. 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 distributionservices in the U.S and Brazil, respectively. Although we have not experienced significant problems with our suppliers or distributors, ifour suppliers or distributors are unable to fulfill their obligations under their contracts, we could encounter supply shortages and incurhigher costs.In addition, if we are unable to maintain current purchasing terms or ensure service availability with our suppliers and distributors, wemay lose consumers and experience an increase in costs in seeking alternative supplier or distribution services. The failure to developand maintain supplier and distributor relationships and any resulting disruptions to the provision of food and other supplies to ourrestaurant locations could adversely affect our operating results.Failure to achieve our projected cost savings from our efficiency initiatives could adversely affect our results of operations andeliminate potential funding for growth opportunities.In recent years, we have identified strategies and taken steps to reduce operating costs and free up resources to reinvest in our business.These strategies include improved supply chain management, implementing labor scheduling tools and integrating restaurantinformation systems across our brands. We continue to evaluate and implement further cost-saving initiatives. However, the ability toreduce our operating costs through these initiatives is subject to risks and uncertainties, such as our ability to obtain improved supplypricing and the reliability of any new suppliers or technology, and we cannot assure that these activities, or any other activities that wemay undertake in the future, will achieve the desired cost savings and efficiencies. Failure to achieve such desired savings couldadversely affect our results of operations and financial condition and curtail investment in growth opportunities.There are risks and uncertainties associated with strategic actions and initiatives that we may implement.From time to time, we consider various strategic actions and initiatives in order to grow and evolve our business and brands andimprove our operating results. These actions and initiatives could include, among other things, acquisitions or dispositions ofrestaurants or brands, new joint ventures, new franchise arrangements, restaurant closures and changes to our operating model. Therecan be no assurance that any such actions or initiatives will be successful or deliver their anticipated benefits. We may be exposed tonew and unforeseen risks and challenges, particularly if we enter into markets or engage in activities with which we have no or limitedprior experience, and it may be difficult to predict the success of such endeavors. If we incur significant expenses or divertmanagement, financial and other resources to a strategic initiative that is unsuccessful or does not meet our expectations, our results ofoperations and financial condition would be adversely affected. We may also incur significant asset impairment and other charges inconnection with any such initiative. Regardless of the ultimate success of a strategic initiative, the implementation and integration ofnew business or operational processes could be disruptive to our current operations. Even if we test and evaluate an initiative on alimited basis, the diversion of management time and resources could have an adverse effect on our business.22Table of ContentsBLOOMIN’ BRANDS, INC.Our business is subject to seasonal and periodic fluctuations, and past results are not indicative of future results.Historically, consumer traffic patterns for our established restaurants are generally highest in the first quarter of the year and lowest inthe third quarter of the year. Holidays may also affect sales volumes seasonally in some of the markets in which we operate. In addition,our quarterly results have been and will continue to be affected by the timing of new restaurant openings and their associatedpreopening costs, as well as restaurant closures and exit-related costs, debt extinguishment and modification costs and impairments ofgoodwill, intangible assets and property, fixtures and equipment. As a result of these and other factors, our financial results for anyquarter may not be indicative of the results that may be achieved for a full year.Significant adverse weather conditions and other disasters or unforeseen events could negatively impact our results of operations.Adverse weather conditions and natural disasters and other unforeseen events, such as winter storms, severe temperatures,thunderstorms, floods, hurricanes and earthquakes, terrorist attacks, war and widespread/pandemic illness, and the effects of suchevents on economic conditions and consumer spending patterns, could negatively impact our results of operations. Temporary andprolonged restaurant closures may occur and consumer traffic may decline due to the actual or perceived effects from these events. Forexample, severe winter weather conditions and hurricanes have impacted our traffic, and that of our franchises, and results ofoperations in recent years.Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or thevalue of our brand.Our trademarks, including Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse & Wine Bar andBloomin’ Onion, and other proprietary rights are important to our success and our competitive position. The protective actions that wetake may not be sufficient to prevent unauthorized usage or imitation by others, which could harm our image, brand or competitiveposition. Furthermore, our ability to protect trademarks and other proprietary rights may be more limited in certain international marketswhere we operate.Litigation could have a material adverse impact on our business and our financial performance.We are subject to lawsuits, administrative proceedings and claims that arise in the regular course of business. These matters typicallyinvolve claims by consumers and others regarding issues such as food borne illness, food safety, premises liability, “dram shop” statuteliability, promotional advertising and other operational issues common to the food service industry, as well as contract disputes andintellectual property infringement matters. We are also subject to employee claims against us based on, among other things,discrimination, harassment, wrongful termination, disability, or violation of wage and labor laws. These claims may divert our financialand management resources that would otherwise be used to benefit our operations. The ongoing expense of any resulting lawsuits, andany substantial settlement payment or damage award against us, could adversely affect our business and results of operations.Significant legal fees and costs in complex class action litigation or an adverse judgment or settlement that is not insured or is in excessof insurance coverage could have a material adverse effect on our financial position and results of operations.Our insurance policies may not provide adequate levels of coverage against all claims, and fluctuating insurance requirements andcosts could negatively impact our profitability.We carry insurance programs with specific retention levels or high per-claim deductibles for a significant portion of our risks andassociated liabilities with respect to workers’ compensation, general liability, liquor liability, employment practices liability, property,health benefits, cyber security and other insurable risks. However, there are types of losses we may incur that cannot be insured againstor that we believe are not commercially reasonable to insure. These losses, if they occur, could have a material and adverse effect onour business and results of operations. Additionally, if our insurance costs increase, there can be no assurance that we will be able tosuccessfully offset the effect of such increases and our results of operations may be adversely affected.23Table of ContentsBLOOMIN’ BRANDS, INC.Failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures couldadversely affect our business and financial results.Effective internal control over financial reporting is necessary for us to provide accurate financial information. If we are unable toadequately maintain effective internal control over financial reporting, we may not be able to accurately report our financial results,which could cause investors to lose confidence in our reported financial information and negatively affect the trading price of ourcommon stock. Furthermore, we cannot be certain that our internal control over financial reporting and disclosure controls andprocedures will prevent all possible error and fraud, including through cyber attacks. Because of inherent limitations in all controlsystems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, in ourcompany have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and thatbreakdowns can occur because of simple error or mistake, which could have an adverse impact on our business. A significant financialreporting failure or material weakness in internal control over financial reporting could cause a loss of investor confidence and declinein the market price of our common stock, increase our costs, lead to litigation or result in negative publicity that could damage ourreputation.Future changes to existing accounting rules, accounting standards, new pronouncements and varying interpretations ofpronouncements, or the questioning of current accounting practices may adversely affect our reported financial results. Additionally,our assumptions, estimates and judgments related to complex accounting matters could significantly affect our financial results.Generally accepted accounting principles and related accounting pronouncements, implementation guidelines and interpretations withregard to a wide range of matters that are relevant to our business, including but not limited to, revenue recognition, impairment oflong-lived assets, leases and related economic transactions, derivatives, intangibles, self-insurance, income taxes, property andequipment, unclaimed property laws and litigation, and stock-based compensation are highly complex and involve many subjectiveassumptions, estimates and judgments by us. Changes in these rules or their interpretation or changes in underlying assumptions,estimates or judgments by us could significantly change our reported or expected financial performance.Risks Related to Our IndebtednessOur substantial leverage and our ability to refinance our indebtedness in the future could adversely affect our ability to raiseadditional capital to fund our operations, limit our ability to react to changes in the economy or our industry and expose us to interestrate risk in connection with our variable-rate debt.We are highly leveraged. As of December 30, 2018, our total indebtedness was $1.1 billion and we had $378.5 million in availableunused borrowing capacity under our revolving credit facility, net of undrawn letters of credit of $22.0 million.Our high degree of leverage could have important consequences, including:•making it more difficult for us to make payments on indebtedness;•increasing our vulnerability to general economic, industry and competitive conditions and the various risks we face in ourbusiness;•increasing our cost of borrowing;•requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on ourindebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, dividend payments,share repurchases and future business opportunities;•exposing us to the risk of increased interest rates because certain of our borrowings are at variable rates of interest;•restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;•limiting our ability to obtain additional financing for working capital, capital expenditures, restaurant development, debt servicerequirements, acquisitions and general corporate or other purposes; and•limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to ourcompetitors who may not be as highly leveraged.24Table of ContentsBLOOMIN’ BRANDS, INC.We may incur substantial additional indebtedness in the future, subject to the restrictions contained in our senior secured credit facilities(the “Senior Secured Credit Facility”). If new indebtedness is added to our current debt levels, the related risks that we now face couldincrease.We had $1.1 billion of variable-rate debt outstanding under our Senior Secured Credit Facility as of December 30, 2018. We also havevariable-to-fixed interest rate swap agreements with various counterparties to hedge a portion of the cash flows of our variable rate debt.Our active swap agreements have an aggregate notional amount of $400.0 million and mature on May 16, 2019. In October 2018, weentered into new swap agreements that have an aggregate notional amount of $550.0 million, a forward start date of May 16, 2019 andmature on November 30, 2022. While these agreements limit our exposure to higher interest rates, an increase in the floating rate couldnonetheless cause a material increase in our interest expense due to the total amount of our outstanding variable rate indebtedness.We cannot be certain that our financial condition or credit and other market conditions will be favorable when our Senior SecuredCredit Facility matures in 2022, or at any earlier time we may seek to refinance our debt. If we are unable to refinance our indebtednesson favorable terms, our financial condition and results of operations would be adversely affected.Our debt agreements contain restrictions that limit our flexibility in operating our business.Certain of our debt agreements limit our and our subsidiaries’ abilities to, among other things, incur or guarantee additionalindebtedness, pay dividends on, redeem or repurchase our capital stock, make certain acquisitions or investments, incur or permit toexist certain liens, enter into transactions with affiliates or sell our assets to, merge or consolidate with or into, another company. Ourdebt agreements require us to satisfy certain financial tests and ratios. Our ability to satisfy such tests and ratios may be affected byevents outside of our control.If we breach the covenants under our debt agreements, the lenders could elect to declare all amounts outstanding under the agreementsto be immediately due and payable and terminate all commitments to extend further credit. If we are unable to repay those amounts, thelenders could proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assetsas collateral under our debt agreement. If our lenders accelerate the repayment of borrowings, we cannot be certain that we will havesufficient assets to repay them.We may not be able to generate sufficient cash to service all of our indebtedness and operating lease obligations, and we may beforced to take other actions to satisfy our obligations under our indebtedness and operating lease obligations, which may not besuccessful. If we fail to meet these obligations, we would be in default under our debt agreements and the lenders could elect todeclare all amounts outstanding under them to be immediately due and payable and terminate all commitments to extend furthercredit.Our ability to make scheduled payments on our debt obligations and to satisfy our operating lease obligations depends upon ourfinancial condition and operating performance, which is subject to prevailing economic and competitive conditions and to financial,business and other factors, many of which are beyond our control. We cannot be certain that we will maintain a level of cash flow fromoperating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, or to pay ouroperating lease obligations. If our cash flow and capital resources are insufficient to fund our debt service obligations and operatinglease obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure orrefinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debtservice obligations. In the absence of sufficient operating results and resources, we could face substantial liquidity problems and mightbe required to dispose of material assets or operations or take other actions to meet our debt service and other obligations. Our debtagreements restrict our ability to dispose of assets and how we may use the proceeds from the disposition. We may not be able toconsummate those dispositions or to obtain the proceeds that we could otherwise realize from such dispositions and any such proceedsthat are realized may not be adequate to meet any debt service obligations then due. The failure to meet our debt service obligations orthe failure to remain in compliance with the financial covenants under our debt agreements would constitute an event of default underthose agreements and the lenders25Table of ContentsBLOOMIN’ BRANDS, INC.could elect to declare all amounts outstanding under them to be immediately due and payable and terminate all commitments to extendfurther credit.Risks Related to Our Common StockOur stock price is subject to volatility.The stock market in general is highly volatile. As a result, the market price of our common stock is similarly volatile. The price of ourcommon stock could be subject to wide fluctuations in response to a number of factors, some of which may be beyond our control.These factors include actual or anticipated fluctuations in our operating results, changes in or our ability to achieve estimates of ouroperating results by analysts, investors or management, analysts’ recommendations regarding our stock or our competitors’ stock, salesof substantial amounts of our common stock by our stockholders, actions or announcements by us or our competitors, the maintenanceand growth of the value of our brands, litigation, legislation or other regulatory developments affecting us or our industry, naturaldisasters, cyber attacks, terrorist acts, war or other calamities and changes in general market and economic conditions.If we are unable to continue to pay dividends or repurchase our stock, your investment in our common stock may decline in value.In 2015, we initiated a quarterly dividend program. Our Board of Directors has also authorized several stock repurchase programscommencing in late 2014 and we have repurchased a significant amount of our stock since that time. The continuation of theseprograms, at all or consistent with past levels, will require the generation of sufficient cash flows and the existence of surplus earnings.Any decisions to declare and pay dividends and continue stock repurchase programs in the future will be made at the discretion of ourBoard of Directors and will depend on, among other things, our results of operations, financial condition, cash requirements, borrowingcapacity, contractual restrictions including debt covenants and other factors that our Board of Directors may deem relevant at the time.If we discontinue our dividend or stock repurchase programs, or reduce the amount of the dividends we pay or stock that werepurchase, the price of our common stock may fall. As a result, you may not be able to resell your shares at or above the price youpaid for them.Provisions in our certificate of incorporation and bylaws, our Senior Secured Credit Facility and Delaware law may discourage, delayor prevent a change of control of our company or changes in our management and, therefore, may depress the trading price of ourstock.Our certificate of incorporation and bylaws include certain provisions that could have the effect of discouraging, delaying or preventinga change of control of our company or changes in our management.In addition, our Senior Secured Credit Facility includes change of control provisions that require that no stockholder or “group” withinthe meaning of Sections 13(d) and 14(d) of the Exchange Act has obtained more than 40% of our voting power.These provisions may discourage, delay or prevent a transaction involving a change in control of the Company that is in the bestinterests of our stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect theprevailing market price of our common stock if they are viewed as discouraging future takeover attempts.Section 203 of the Delaware General Corporation Law may affect the ability of an “interested stockholder” to engage in certainbusiness combinations, including mergers, consolidations or acquisitions of additional shares, for a period of three years following thetime that the stockholder becomes an “interested stockholder.” An “interested stockholder” is defined to include persons owningdirectly or indirectly 15% or more of the outstanding voting stock of a corporation. Although we have elected in our certificate ofincorporation not to be subject to Section 203 of the Delaware General Corporation Law our certificate of incorporation containsprovisions that have the same effect as Section 203, except26Table of ContentsBLOOMIN’ BRANDS, INC.that they provide that our former private equity sponsors will not be deemed to be “interested stockholders,” regardless of thepercentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.Our ability to raise capital in the future may be limited, which could make us unable to fund our capital requirements.Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional fundsthrough the issuance of new equity securities, debt or a combination of both. Additional financing may not be available on favorableterms or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. If we issuenew debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms ofany debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equitysecurities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our commonstock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond ourcontrol, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of ourfuture securities offerings reducing the market price of our common stock and diluting their interest.Item 1B. Unresolved Staff CommentsNot applicable.27Table of ContentsBLOOMIN’ BRANDS, INC.Item 2. PropertiesWe lease substantially all of our restaurant sites from third parties. We had 1,490 system-wide restaurants located across the followingstates, territories or countries as of December 30, 2018:COMPANY-OWNEDU.S. INTERNATIONALAlabama19 Kentucky17 Ohio48 Brazil (1)112Arizona13 Louisiana23 Oklahoma11 China (Mainland)1Arkansas11 Maryland40 Pennsylvania45 Hong Kong12California14 Massachusetts15 Rhode Island3 Colorado14 Michigan34 South Carolina37 Connecticut11 Minnesota8 South Dakota1 Delaware4 Mississippi1 Tennessee36 Florida222 Missouri13 Texas69 Georgia48 Nebraska7 Utah1 Hawaii6 Nevada6 Vermont1 Illinois25 New Hampshire3 Virginia60 Indiana23 New Jersey39 West Virginia8 Iowa7 New York41 Wisconsin12 Kansas7 North Carolina65 Total U.S. company-owned1,068 Total International company-owned125FRANCHISEU.S. INTERNATIONALAlabama1 Montana3 Australia8 Malaysia2Alaska1 Nevada10 Bahamas1 Mexico5Arizona14 New Mexico5 Brazil1 Philippines4California60 Oregon6 Canada2 Puerto Rico4Colorado16 South Dakota1 Costa Rica1 Qatar1Florida1 Tennessee3 Dominican Republic2 Saudi Arabia5Georgia1 Utah5 Ecuador1 Singapore1Idaho6 Virginia1 Guam1 South Korea76Kentucky1 Washington20 Indonesia4 Thailand1Mississippi7 Wyoming2 Japan10 Turks and Caicos1Total U.S. franchise 164 Total International franchise131____________________(1)The restaurant count for Brazil is reported as of November 30, 2018 to correspond with the balance sheet date of this subsidiary.Following is a summary of the location and leased square footage for our corporate offices as of December 30, 2018:LOCATION USE SQUARE FEET LEASE EXPIRATIONTampa, Florida Corporate Headquarters 168,000 1/31/2025São Paulo, Brazil Brazil Operations Center 17,000 7/31/2021Item 3. Legal ProceedingsFor a description of our legal proceedings, see Note 19 - Commitments and Contingencies of the Notes to Consolidated FinancialStatements of this Report.Item 4. Mine Safety DisclosuresNot applicable.28Table of ContentsBLOOMIN’ BRANDS, INC.PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMARKET INFORMATION AND DIVIDENDSOur common stock is listed on the Nasdaq Global Select Market under the symbol “BLMN”.In 2014, our Board of Directors (our “Board”) adopted a dividend policy under which we have paid quarterly cash dividends on sharesof our common stock since 2015. Future dividend payments will depend on earnings, financial condition, capital expenditurerequirements, surplus and other factors that our Board considers relevant. The terms of our debt agreements permit regular quarterlydividend payments, subject to certain restrictions.HOLDERSAs of February 15, 2019, there were 10 holders of record of our common stock. The number of registered holders does not includeholders who are beneficial owners whose shares are held in street name by brokers and other nominees.SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANSThe following table presents the securities authorized for issuance under our equity compensation plans as of December 30, 2018:(shares in thousands) (a) (b) (c)PLAN CATEGORY NUMBER OF SECURITIESTO BE ISSUED UPONEXERCISE OFOUTSTANDING OPTIONS,WARRANTS AND RIGHTS WEIGHTED-AVERAGEEXERCISE PRICE OFOUTSTANDING OPTIONS,WARRANTS AND RIGHTS NUMBER OF SECURITIESREMAINING AVAILABLEFOR FUTURE ISSUANCEUNDER EQUITYCOMPENSATION PLANS(EXCLUDING SECURITIESREFLECTED IN COLUMN(a)) (1)Equity compensation plans approved by security holders 6,190 $18.30 4,635____________________(1)The shares remaining available for issuance may be issued in the form of stock options, restricted stock, restricted stock units or other stock awards under the 2016Omnibus Incentive Compensation Plan.29Table of ContentsBLOOMIN’ BRANDS, INC.STOCK PERFORMANCE GRAPHThe following graph depicts total return to stockholders from December 31, 2013 through December 30, 2018, relative to theperformance of the Standard & Poor’s 500 Index and the Standard & Poor’s 500 Consumer Discretionary Sector, a peer group. Thegraph assumes an investment of $100 in our common stock and in each index on December 31, 2013 and the reinvestment ofdividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future priceperformance.DECEMBER 31, 2013 DECEMBER 28, 2014DECEMBER 27, 2015DECEMBER 25, 2016DECEMBER 31, 2017DECEMBER 30, 2018Bloomin’ Brands, Inc.(BLMN)$100.00 $98.92$72.04$78.18$92.95$77.93Standard & Poor’s 500100.00 115.29116.17130.42157.17148.98Standard & Poor’sConsumer Discretionary100.00 109.75121.21129.76157.47157.0330Table of ContentsBLOOMIN’ BRANDS, INC.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSThe following table provides information regarding our purchases of common stock during the thirteen weeks ended December 30,2018:PERIOD TOTAL NUMBER OFSHARES PURCHASED AVERAGE PRICEPAID PER SHARE TOTAL NUMBER OFSHARES PURCHASEDAS PART OF PUBLICLYANNOUNCED PLANS ORPROGRAMS APPROXIMATE DOLLARVALUE OF SHARESTHAT MAY YET BEPURCHASED UNDERTHE PLANS ORPROGRAMS (1)October 1, 2018 through October 28, 2018 — $— — $51,032,265October 29, 2018 through November 25, 2018 691,066 $21.71 691,066 $36,032,538November 26, 2018 through December 30, 2018 — $— — $36,032,538Total 691,066 691,066 ____________________(1)On February 16, 2018, our Board of Directors authorized the repurchase of $150.0 million of our outstanding common stock as announced in our press release issued onFebruary 22, 2018 (the “2018 Share Repurchase Program”). On February 12, 2019, our Board of Directors canceled the remaining $36.0 million of authorization underthe 2018 Share Repurchase Program and approved a new $150.0 million authorization (the “2019 Share Repurchase Program”), as announced in our press release issuedon February 14, 2019. The 2019 Share Repurchase Program will expire on August 12, 2020.31Table of ContentsBLOOMIN’ BRANDS, INC.Item 6. Selected Financial Data FISCAL YEAR 2018 2017 2016 2015 2014(in thousands, except share and per share data) (Restated) (1) (Restated) (1) Operating Results: Revenues Restaurant sales$4,060,871 $4,164,063 $4,221,920 $4,349,921 $4,415,783Franchise and other revenues65,542 59,073 38,753 27,755 26,928Total revenues (2)$4,126,413 $4,223,136 $4,260,673 $4,377,676 $4,442,711Income from operations (3)$145,253 $138,686 $123,750 $230,925 $191,964Net income including noncontrolling interests (3) (4)$109,538 $103,608 $43,987 $131,560 $95,926Net income attributable to Bloomin’ Brands (3) (4)$107,098 $101,293 $39,388 $127,327 $91,090Basic earnings per share$1.16 $1.05 $0.35 $1.04 $0.73Diluted earnings per share (5)$1.14 $1.02 $0.34 $1.01 $0.71Cash dividends declared per common share$0.36 $0.32 $0.28 $0.24 $—Balance Sheet Data: Total assets$2,464,774 $2,561,894 $2,622,810 $3,032,569 $3,338,240Total debt, net$1,094,775 $1,118,104 $1,089,485 $1,316,864 $1,309,797Total stockholders’ equity (1)(6)$54,817 $81,231 $226,063 $454,970 $556,449Common stock outstanding (6)91,272 91,913 103,922 119,215 125,950Cash Flow Data: Investing activities: Capital expenditures$(208,224) $(260,589) $(260,578) $(210,263) $(237,868)Proceeds from sale-leaseback transactions, net16,160 98,840 530,684 — —Financing activities: Repurchase of common stock (6)$(113,967) $(272,916) $(310,334) $(170,769) $(930)____________________Note: This selected consolidated financial data should be read in conjunction with the consolidated financial statements and notes thereto, included in Item 8 of this Report andManagement’s Discussion and Analysis of Financial Condition and Results of Operations, included in Item 7 of this Report.(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing AccountingStandards Update No. 2014-09 “Revenue Recognition (Topic 606), Revenue from Contracts with Customers (“ASU No. 2014-09”).(2)There were 53 operating weeks in 2017, versus 52 operating weeks for all other periods presented. This additional week resulted in an increase in Total revenues of $80.4million during 2017. Due to the change in our fiscal year end in 2014, Total revenues for 2015 include $24.3 million of higher restaurant sales and Total revenues in 2014include $46.0 million of lower restaurant sales.(3)2018 includes: (i) $29.5 million of asset impairments and closing costs primarily related to the restructuring of certain international markets, including Puerto Rico andChina, certain approved closure and restructuring initiatives, reclassification of assets to held for sale in connection with refranchising certain restaurants and therestructuring of our Express concept, (ii) $8.6 million of asset impairments and restaurant closing costs related to the relocation of certain restaurants and (iii) $3.5 millionof severance expense from the restructuring of certain functions. 2017 results include: (i) $42.8 million of asset impairments and closing costs primarily related to certainclosure and restructuring initiatives, the remeasurement of certain surplus properties and for our China subsidiary, (ii) $12.5 million of asset impairments and restaurantclosing costs related to the relocation of certain restaurants and (iii) $11.0 million of severance expense incurred as a result of a restructuring event. 2016 results include:(i) $51.4 million of asset impairments and closing costs related to certain closure and restructuring initiatives, (ii) $43.1 million of asset impairments related to therefranchising of Outback Steakhouse South Korea and for our Puerto Rico subsidiary, (iii) $7.2 million of asset impairments and restaurant closing costs related to therelocation of certain restaurants and (iv) $5.5 million of severance expense as a result of a restructuring event and the relocation of our Fleming’s operations center to thecorporate home office. 2015 includes: $4.9 million of higher income from operations due to a change in our fiscal year end and $31.8 million of asset impairments andrestaurant closing costs related to certain closure and restructuring initiatives. 2014 includes: (i) $9.2 million of lower income from operations due to a change in our fiscalyear end, (ii) $26.8 million of asset impairments due to certain closure and restructuring initiatives, (iii) $24.0 million of asset impairments related to our Roy’s conceptand corporate airplanes and (iv) $9.0 million of severance related to our organizational realignment.(4)Includes $27.0 million in 2016 and $11.1 million in 2014 of loss on defeasance, extinguishment and modification of debt.(5)Fiscal year 2017 includes $0.11 of additional diluted earnings per share from a 53rd operating week.(6)During 2018, 2017, 2016 and 2015, we repurchased 5.1 million, 13.8 million, 16.6 million and 7.6 million shares, respectively, of our outstanding common stock. During2018, we issued 4.0 million shares of our common stock through the exercise of stock options.32Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONSItem 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsManagement’s discussion and analysis of financial condition and results of operations should be read in conjunction with ourconsolidated financial statements and the related notes.OverviewWe are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts.As of December 30, 2018, we owned and operated 1,193 restaurants and franchised 297 restaurants across 48 states, Puerto Rico,Guam and 20 countries. We have four founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill andFleming’s Prime Steakhouse & Wine Bar.Executive SummaryOur 2018 financial results include:•A decrease in total revenues of 2.3% to $4.1 billion in 2018 as compared to 2017, driven primarily by restaurant sales duringthe 53rd week of 2017, domestic refranchising and the effect of foreign currency translation. This decrease was partiallyoffset by higher comparable restaurant sales and the net impact of restaurant openings and closures.•Income from operations increased to $145.3 million in 2018 as compared to $138.7 million in 2017, primarily due toincreases in average check per person, productivity initiatives, lower general and administrative expense, and lowerimpairment charges and restaurant closing costs. These increases were partially offset by commodity, labor and operatingexpense inflation, the impact of the 53rd week in 2017, increased rent expense and increased depreciation and amortizationexpense.Following is a summary of factors that impacted our operating results and liquidity in 2018 and significant actions we have takenduring the year:International Restructuring - During the thirteen weeks and fiscal year ended December 30, 2018, we recognized asset impairment andclosure charges of $4.8 million and $13.9 million, respectively, related to restructuring of certain international markets, including PuertoRico and China.Express Concept Restructuring - During the thirteen weeks and fiscal year ended December 30, 2018, we recognized asset impairmentof $7.4 million related to the restructuring of our Express concept. As a part of the restructuring, three Express locations closed inJanuary 2019.Assets Held for Sale - In December 2018, we signed a purchase agreement with a buyer to sell 18 of our existing U.S. Company-ownedCarrabba’s Italian Grill locations for $3.6 million, less certain purchase price adjustments. In connection with the decision to sell theserestaurants, we recognized impairment charges of $5.5 million. After the expected completion of the sale in the first half of 2019, theserestaurant locations will be operated as franchises. See Note 4 - Disposals of the Notes to the Consolidated Financial Statements forfurther information.Share Repurchase Programs and Dividends - We repurchased 5.1 million shares of common stock during 2018 for a total of $114.0million and paid $33.3 million of dividends. On February 12, 2019, our Board canceled the remaining $36.0 million of authorizationunder the 2018 Share Repurchase Program and approved a new $150.0 million authorization. The 2019 Share Repurchase Program willexpire on August 12, 2020.33Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedImpact of Political Unrest in BrazilRecently, unrest in Brazil ahead of the October presidential election, including a truckers strike, resulted in lost operating days for manybusinesses, including our restaurants. We have already seen stronger trends in Brazil, including positive comparable restaurant sales inthe fourth quarter of 2018 and believe consumer confidence will resume an upward trend in 2019.Fiscal YearWe utilize a 52-53 week year ending on the last Sunday in December. In a 52 week fiscal year, each of our quarterly periods comprise13 weeks. The additional operating week in a 53 week fiscal year is added to the fourth quarter. Fiscal year 2017 consisted of 53 weeksand fiscal years 2018 and 2016 consisted of 52 weeks. The additional operating week during fiscal year 2017 resulted in increases of$80.4 million of Total revenues and $0.11 of diluted earnings per share.Business StrategiesIn 2019, our key business strategies include:•Enhance the 360-Degree Customer Experience. We plan to continue to make investments to enhance our core guestexperience, increase off-premises dining occasions, remodel and relocate restaurants, invest in digital marketing and datapersonalization and utilize the Dine Rewards loyalty program and multimedia marketing campaigns to drive traffic.•Maximize International Opportunity. We continue to focus on existing geographic regions in South America, with strategicexpansion in Brazil, and pursue global franchise opportunities.•Drive Long-Term Shareholder Value. We plan to drive long-term shareholder value by reinvesting operational cash flow intoour business, improving our credit profile and returning excess cash to shareholders through share repurchases anddividends.•Enrich Engagement Among Stakeholders. We take the responsibility to our people, customers and communities seriously andcontinue to invest in programs that support the wellbeing of those engaged with us.We intend to fund our business strategies, drive revenue growth and margin improvement, in part by reinvesting savings generated byproductivity initiatives across our businesses.34Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedKey Performance IndicatorsKey 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 inconsumer 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 comparingthe 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 — financialmeasures utilized to evaluate our operating performance.Restaurant-level operating margin is widely regarded in the industry as a useful metric to evaluate restaurant level operatingefficiency and performance of ongoing restaurant-level operations, and we use it for these purposes, overall and particularlywithin our two segments. Our restaurant-level operating margin is expressed as the percentage of our Restaurant sales thatCost of sales, Labor and other related and Other restaurant operating expense (including advertising expenses) represent, ineach case as such items are reflected in our Consolidated Statement of Operations. The following categories of our revenueand operating expenses are not included in restaurant-level operating margin because we do not consider them reflective ofoperating 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 beveragerevenue streams, such as rental and sublease income.(ii)Depreciation and amortization which, although substantially all is related to restaurant-level assets, represent historicalsunk costs rather than cash outlays for the restaurants.(iii)General and administrative expense which includes primarily non-restaurant-level costs associated with support of therestaurants and other activities at our corporate offices.(iv)Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant performance in aperiod.Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operationsof our restaurants and may materially impact our Consolidated Statement of Operations. As a result, restaurant-leveloperating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to,and not a substitute for, net income or income from operations. In addition, our presentation of restaurant operating marginmay not be comparable to similarly titled measures used by other companies in our industry;•Adjusted restaurant-level operating margin, Adjusted income from operations, Adjusted net income, Adjusted dilutedearnings per share—non-GAAP financial measures utilized to evaluate our operating performance, which definitions,usefulness and reconciliations are described in more detail in the “Non-GAAP Financial Measures” section below; and•Consumer satisfaction scores—measurement of our consumers’ experiences in a variety of key areas.35Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedSelected Operating DataThe table below presents the number of our restaurants in operation at the end of the periods indicated: DECEMBER 30, 2018 DECEMBER 31, 2017 DECEMBER 25, 2016Number of restaurants (at end of the period): U.S. Outback Steakhouse Company-owned (1)579 585 650Franchised (1)154 155 105Total733 740 755Carrabba’s Italian Grill Company-owned (1)224 225 242Franchised (1)3 3 2Total227 228 244Bonefish Grill Company-owned190 194 204Franchised7 7 6Total197 201 210Fleming’s Prime Steakhouse & Wine Bar Company-owned70 69 68Other Company-owned5 2 —U.S. Total1,232 1,240 1,277International Company-owned Outback Steakhouse - Brazil (2)92 87 83Other33 37 29Franchised Outback Steakhouse - South Korea76 72 73Other55 53 54International Total256 249 239System-wide total1,488 1,489 1,516____________________(1)In 2017, we sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill restaurant, which are now operated as franchises.(2)The restaurant counts for Brazil are reported as of November 30, 2018, 2017 and 2016, respectively, to correspond with the balance sheet dates of this subsidiary.36Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedResults of OperationsThe following table sets forth, for the periods indicated, the percentages of certain items in our Consolidated Statements of Operationsin relation to Total revenues or Restaurant sales, as indicated: FISCAL YEAR 2018 2017 (1) 2016 (1)Revenues Restaurant sales98.4 % 98.6 % 99.1 %Franchise and other revenues1.6 1.4 0.9Total revenues100.0 100.0 100.0Costs and expenses Cost of sales (2)31.9 31.6 32.1Labor and other related (2)29.5 29.3 28.7Other restaurant operating (2)23.8 23.9 23.8Depreciation and amortization4.9 4.6 4.5General and administrative6.9 7.3 6.3Provision for impaired assets and restaurant closings0.9 1.2 2.5Total costs and expenses96.5 96.7 97.1Income from operations3.5 3.3 2.9Loss on defeasance, extinguishment and modification of debt— (*) (0.6)Other (expense) income, net(*) 0.4 *Interest expense, net(1.1) (1.1) (1.1)Income before benefit for income taxes2.4 2.6 1.2(Benefit) provision for income taxes(0.3) 0.1 0.2Net income2.7 2.5 1.0Less: net income attributable to noncontrolling interests0.1 0.1 0.1Net income attributable to Bloomin’ Brands2.6 % 2.4 % 0.9 %____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.(2)As a percentage of Restaurant sales.*Less than 1/10th of one percent of Total revenues.37Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedRevenuesRESTAURANT SALES Following is a summary of the change in Restaurant sales for the periods indicated: FISCAL YEAR(dollars in millions):2018 2017 (1)For fiscal years 2017 and 2016 (1)$4,164.1 $4,221.9Change from: Impact of the 53rd week in 2017(79.9) 79.9Divestiture of restaurants through refranchising transactions(64.4) (209.4)Effect of foreign currency translation(43.7) 36.0Restaurant closings(42.7) (84.3)Comparable restaurant sales (2)68.3 45.9Restaurant openings (2)59.2 74.1For fiscal years 2018 and 2017$4,060.9 $4,164.1____________________(1)Restaurant sales have been restated for 2017 and 2016. See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements fordetails of the impact of implementing ASU No. 2014-09.(2)Summation of quarterly changes for restaurant openings and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of acomparable restaurant will differ each period based on when the restaurant opened.The decrease in Restaurant sales in 2018 as compared to 2017 was primarily due to: (i) restaurant sales during the 53rd week of 2017,(ii) domestic refranchising in 2017, (iii) the effect of foreign currency translation, due to the depreciation of the Brazilian Real and (iv)the closing of 65 restaurants since December 25, 2016. The decrease in Restaurant sales was partially offset by higher comparablerestaurant sales and sales from 49 new restaurants not included in our comparable restaurant sales base.The decrease in Restaurant sales in 2017 as compared to 2016 was primarily due to refranchising internationally and domestically andthe closing of 57 restaurants since December 27, 2015. The decrease in Restaurant sales was partially offset by: (i) restaurant salesduring the 53rd week of 2017, (ii) sales from 69 new restaurants not included in our comparable restaurant sales base, (iii) highercomparable restaurant sales and (iv) the effect of foreign currency translation, due to the appreciation of the Brazilian Real.38Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedAverage Restaurant Unit Volumes and Operating WeeksFollowing is a summary of the average restaurant unit volumes and operating weeks, for the periods indicated: FISCAL YEAR 2018 2017 2016(dollars in thousands) (Restated) (1) (Restated) (1)Average restaurant unit volumes: U.S. Outback Steakhouse$3,580 $3,514 $3,329Carrabba’s Italian Grill$2,887 $2,946 $2,845Bonefish Grill$3,012 $3,058 $2,991Fleming’s Prime Steakhouse & Wine Bar$4,358 $4,390 $4,221International Outback Steakhouse - Brazil (2)$3,856 $4,429 $3,856 Operating weeks: U.S. Outback Steakhouse30,265 31,969 33,812Carrabba’s Italian Grill11,660 12,125 12,658Bonefish Grill9,981 10,411 10,667Fleming’s Prime Steakhouse & Wine Bar3,628 3,585 3,469International Outback Steakhouse - Brazil4,711 4,441 4,096____________________(1)Restaurant sales have been restated for 2017 and 2016. See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements fordetails of the impact of implementing ASU No. 2014-09.(2)Translated at average exchange rates of 3.59, 3.20 and 3.50 for 2018, 2017 and 2016, respectively.39Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedComparable 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 periodsindicated: FISCAL YEAR 2018 (1) 2017 (2) 2016Year over year percentage change: Comparable restaurant sales (stores open 18 months or more) (3): U.S. Outback Steakhouse4.0 % 1.8 % (2.3)%Carrabba’s Italian Grill0.2 % (1.2)% (2.7)%Bonefish Grill0.5 % (1.7)% (0.5)%Fleming’s Prime Steakhouse & Wine Bar0.8 % (0.4)% (0.2)%Combined U.S.2.5 % 0.5 % (1.9)%International Outback Steakhouse - Brazil (4)(1.5)% 6.3 % 6.7 % Traffic: U.S. Outback Steakhouse0.9 % 0.3 % (5.7)%Carrabba’s Italian Grill(4.1)% (4.2)% (2.7)%Bonefish Grill(2.6)% (2.8)% (3.7)%Fleming’s Prime Steakhouse & Wine Bar(4.3)% (5.5)% (2.2)%Combined U.S.(0.8)% (1.3)% (4.7)%International Outback Steakhouse - Brazil(4.4)% (0.2)% 0.2 % Average check per person increases (5): U.S. Outback Steakhouse3.1 % 1.5 % 3.4 %Carrabba’s Italian Grill4.3 % 3.0 % — %Bonefish Grill3.1 % 1.1 % 3.2 %Fleming’s Prime Steakhouse & Wine Bar5.1 % 5.1 % 2.0 %Combined U.S.3.3 % 1.8 % 2.8 %International Outback Steakhouse - Brazil2.8 % 6.3 % 6.5 %____________________(1)For 2018, U.S. comparable restaurant sales compare the 52 weeks from January 1, 2018 through December 30, 2018 to the 52 weeks from January 2, 2017 throughDecember 31, 2017.(2)For 2017, U.S. comparable restaurant sales compare the 53 weeks from December 26, 2016 through December 31, 2017 to the 53 weeks from December 28, 2015through January 1, 2017.(3)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.(4)Includes trading day impact from calendar period reporting.(5)Average check per person increases includes the impact of menu pricing changes, product mix and discounts.40Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedFranchise and other revenues FISCAL YEAR 2018 2017 2016(dollars in millions) (Restated) (1) (Restated) (1)Franchise revenues (2)$52.9 $47.0 $32.3Other revenues12.6 12.1 6.5Franchise and other revenues$65.5 $59.1 $38.8____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.(2)Represents franchise royalties, advertising fees and initial franchise fees.COSTS AND EXPENSESCost of sales FISCAL YEAR FISCAL YEAR (dollars in millions):2018 2017 Change 2017 2016 ChangeCost of sales$1,295.6 $1,317.1 $1,317.1 $1,354.9 % of Restaurant sales31.9% 31.6% 0.3% 31.6% 32.1% (0.5)%Cost of sales, consisting of food and beverage costs, increased as a percentage of Restaurant sales in 2018 as compared to 2017primarily due to 0.8% from higher beef and other commodity costs, partially offset by decreases as a percentage of Restaurant salesprimarily due to 0.7% from increases in average check per person.Cost of sales decreased as a percentage of Restaurant sales in 2017 as compared to 2016 was primarily due to: (i) 0.4% from increasesin average check per person, (ii) 0.4% from lower beef costs and (iii) 0.3% from the impact of certain cost savings initiatives. Thesedecreases were partially offset by increases as a percentage of Restaurant sales primarily due to 0.5% from higher other commoditycosts.In 2019, we expect commodity costs to increase approximately 2%.Labor and other related expenses FISCAL YEAR FISCAL YEAR (dollars in millions):2018 2017 Change 2017 2016 ChangeLabor and other related$1,197.3 $1,219.6 $1,219.6 $1,211.3 % of Restaurant sales29.5% 29.3% 0.2% 29.3% 28.7% 0.6%Labor and other related expenses include all direct and indirect labor costs incurred in operations, including distribution expense toRestaurant Managing Partners, costs related to field deferred compensation plans and other field incentive compensation expenses.Labor and other related expenses increased as a percentage of Restaurant sales for 2018 as compared to 2017 primarily due to 1.0%from wage rate increases. This increase was partially offset by decreases as a percentage of Restaurant sales primarily due to 0.5% fromincreases in average check per person and 0.3% impact from certain cost savings initiatives.Labor and other related expenses increased as a percentage of Restaurant sales for 2017 as compared to 2016 primarily due to 1.5% ofhigher kitchen and service labor costs due to higher wage rates and investments in our service model. This increase was partially offsetby decreases as a percentage of Restaurant sales primarily due to 0.6% from increases in average check per person and 0.2% impactfrom the refranchising of Outback Steakhouse South Korea in 2016.41Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedIn 2019, we anticipate approximately 4% labor cost inflation.Other restaurant operating expenses FISCAL YEAR FISCAL YEAR 2018 2017 2017 2016 (dollars in millions): (Restated) (1) Change (Restated) (1) (Restated) (1) ChangeOther restaurant operating$967.1 $996.2 $996.2 $1,004.4 % of Restaurant sales23.8% 23.9% (0.1)% 23.9% 23.8% 0.1%____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.Other restaurant operating expenses include certain unit-level operating costs such as operating supplies, rent, repairs and maintenance,advertising expenses, utilities, pre-opening costs and other occupancy costs. A substantial portion of these expenses is fixed orindirectly variable. Other restaurant operating expenses decreased as a percentage of Restaurant sales for 2018 as compared to 2017primarily due to: (i) 0.3% from the impact of certain cost savings initiatives, (ii) 0.2% from increases in average check per person and(iii) 0.1% from lower advertising expense. These decreases were partially offset by increases as a percentage of Restaurant salesprimarily due to 0.3% from operating expense inflation and 0.2% from higher rent expense.Other restaurant operating expenses increased for 2017 as compared to 2016 and was the result of increases as a percentage ofRestaurant sales primarily due to 0.5% from operating expense inflation and 0.3% from higher rent expense due to the sale-leasebackof certain properties. These increases were partially offset by a decrease as a percentage of Restaurant sales primarily due to 0.6% fromlower advertising expenses and 0.2% from the impact of certain cost savings initiatives.Depreciation and amortization FISCAL YEAR FISCAL YEAR (dollars in millions):2018 2017 Change 2017 2016 ChangeDepreciation and amortization$201.6 $192.3 $9.3 $192.3 $193.8 $(1.5)Depreciation and amortization increased for 2018 as compared to 2017 primarily due to additional depreciation expense related torestaurant openings and relocations, and technology projects. These increases were partially offset by the impact of: (i) fewer remodeledrestaurants, (ii) domestic refranchising and (iii) assets impaired in connection with international restructuring in 2017.Depreciation and amortization decreased for 2017 as compared to 2016 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 2017Closure Initiative (as defined below), partially offset by additional depreciation expense related to the opening of new restaurants andthe relocation or remodel of our existing restaurants.42Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedGeneral and administrative expensesGeneral 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 changes in General and administrative expensefor the periods indicated below: FISCAL YEAR(dollars in millions):2018 2017For fiscal years 2017 and 2016$307.0 $268.0Change from: Compensation, benefits and payroll tax(8.7) (4.9)Severance(7.2) 4.4Incentive compensation (1)(6.9) 23.0Foreign currency exchange(2.6) 2.6Computer expense3.0 1.7Life insurance and deferred compensation0.7 2.8Legal and professional fees0.5 5.9Other(3.1) 3.5For fiscal years 2018 and 2017$282.7 $307.0____________________(1)Includes retention compensation and excludes stock-based compensation.Provision for impaired assets and restaurant closings FISCAL YEAR FISCAL YEAR (dollars in millions):2018 2017 Change 2017 2016 ChangeProvision for impaired assets andrestaurant closings$36.9 $52.3 $(15.4) $52.3 $104.6 $(52.3)Restructuring and Closure Initiatives - Following is a summary of expenses related to the 2017 Closure Initiative and BonefishRestructuring (the “Closure Initiatives”) recognized in Provision for impaired assets and restaurant closings in our ConsolidatedStatements of Operations and Comprehensive Income for the periods indicated: FISCAL YEAR(dollars in millions)2018 2017 2016Impairment, facility closure and other expenses 2017 Closure Initiative (1)$1.7 $20.4 $46.5Bonefish Restructuring (2)1.4 3.8 4.9Impairment, facility closure and other expenses for Closure Initiatives$3.1 $24.2 $51.4________________(1)In February and August 2017, we decided to close 43 underperforming restaurants in the U.S. and two Abbraccio restaurants outside of the core markets of São Pauloand Rio de Janeiro in Brazil (the “2017 Closure Initiative”).(2)In February 2016, we decided to close 14 Bonefish restaurants (the “Bonefish Restructuring”).International Restructuring - During the thirteen weeks and fiscal year ended December 30, 2018, we recognized asset impairment andclosure charges of $4.8 million and $13.9 million, respectively, related to restructuring of certain international markets, including PuertoRico and China, within the International segment. During 2017, we recognized asset impairment and closure charges of $6.3 millionrelated to restructuring of our China subsidiary, within the International segment.43Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedExpress Concept Restructuring - During the thirteen weeks and fiscal year ended December 30, 2018, we recognized asset impairmentof $7.4 million related to the restructuring of our Express concept, within the U.S. segment. As a part of the restructuring, three Expresslocations closed in January 2019.Refranchising - In December 2018, we entered into an agreement to sell certain existing U.S. Company-owned Carrabba’s Italian Grilllocations. In connection with the decision to sell these restaurants, we recognized impairment charges of $5.5 million during the thirteenweeks and fiscal year ended December 30, 2018, within the U.S. segment.Surplus Properties - During 2017, we recognized impairment charges of $10.7 million in connection with the remeasurement of certainsurplus properties currently leased to the owners of our former restaurant concepts, within the U.S. segment.Sale of Outback Steakhouse South Korea - In connection with the decision to sell Outback Steakhouse South Korea, we recognized animpairment charge of $39.6 million during 2016, within the International segment.Other Impairments - During 2016, we recognized impairment charges of $3.5 million for our Puerto Rico subsidiary, within the U.S.segment.The remaining restaurant impairment and closing charges primarily resulted from locations identified for remodel, relocation, sale orclosure and lease liabilities. Income from operations FISCAL YEAR FISCAL YEAR 2018 2017 2017 2016 (dollars in millions): (Restated) (1) Change (Restated) (1) (Restated) (1) ChangeIncome from operations$145.3 $138.7 $138.7 $123.8 % of Total revenues3.5% 3.3% 0.2% 3.3% 2.9% 0.4%____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.The increase in income from operations during 2018 as compared to 2017 was primarily due to: (i) increases in average check perperson, (ii) the impact of certain cost saving initiatives, (iii) lower general and administrative expense and (iv) lower impairment chargesand restaurant closing costs. These increases were partially offset by: (i) commodity, labor and operating expense inflation, (ii) theimpact of the 53rd week in 2017, (iii) increased rent expense and (iv) higher depreciation and amortization expense.The increase in income from operations during 2017 as compared to 2016 was primarily due to lower impairment charges, primarilyrelated to the 2017 Closure Initiative and refranchising of Outback Steakhouse South Korea in 2016, the impact of the 53rd week in2017, increases in franchise and other revenues and increases in average check per person. These increases were partially offset byhigher general and administrative expense and labor costs.Loss on defeasance, extinguishment and modification of debtWe recognized losses on defeasance, extinguishment and modification of debt in connection with defeasance of the 2012 CMBS loanin 2016, the amendment of our mortgage loan in 2016 and refinancing of our Senior Secured Credit Facility in 2017. 44Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedOther (expense) income, netOther (expense) income, net, includes items deemed to be non-operating based on management’s assessment of the nature of the itemin relation to our core operations. We recorded Other (expense) income primarily in connection with gains on sale of 55 of our U.S.Company-owned locations in 2017 and gain on refranchising of Outback Steakhouse South Korea in 2016.We continue to pursue refranchising opportunities in select markets as we look to further optimize our restaurant portfolio. As a resultof these transactions, we may record future net gains or losses, impairment charges and transaction related expenses.Interest expense, net FISCAL YEAR FISCAL YEAR (dollars in millions):2018 2017 Change 2017 2016 ChangeInterest expense, net$44.9 $41.4 $3.5 $41.4 $45.7 $(4.3)The increase in Interest expense, net in 2018 as compared to 2017 was primarily due to: (i) additional draws on our revolving creditfacility, (ii) our May 2017 incremental term loan borrowing and (iii) higher interest rates. These increases were partially offset by lowerinterest expense from our derivative instruments and repayment of our mortgage loan in 2017.The decrease in Interest expense, net in 2017 as compared to 2016 was primarily due to refinancing of the 2012 CMBS loan inFebruary 2016 and subsequent repayment of our mortgage loan in April 2017, partially offset by additional draws on our revolvingcredit facility and increasing interest rates.(Benefit) provision for income taxes FISCAL YEAR FISCAL YEAR 2018 2017 (1) Change 2017 (1) 2016 (1) ChangeEffective income tax rate(9.2)% 6.8% (16.0)% 6.8% 16.4% (9.6)%____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.The net decrease in the effective income tax rate in 2018 as compared to 2017 was primarily due to the reduction in the U.S. federalcorporate tax rate from 35% to 21% as part of the Tax Act. The remaining decrease was primarily due to employment-related creditsbeing a higher percentage of net income in 2018 and excess tax benefits from equity-based compensation arrangements recorded in2018. These decreases were partially offset by the domestic manufacturing deduction and the cumulative effect of the Tax Act recordedin 2017.The net decrease in the effective income tax rate in 2017 as compared to 2016 was primarily due to impairment and additional taxliabilities recorded in connection with the refranchising of Outback Steakhouse South Korea in 2016. The remaining decrease wasprimarily due to a domestic manufacturing deduction and excess tax benefits from equity-based compensation arrangements recordedin 2017. These decreases were mostly offset by employment-related credits being a lower percentage of net income in 2017 relative to2016 and the impact of implementing the Tax Act.The effective income tax rate for 2018 was lower than the blended federal and state statutory rate of approximately 26%, primarily dueto the benefit of tax credits for FICA taxes on certain employees’ tips and excess tax benefits from equity-based compensationarrangements. The effective income tax rate for 2017 was lower than the blended federal and state statutory rate of approximately 39%,primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips and the cumulative effective of the Tax Act. Theeffective income tax rate for 2016 was lower than the45Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continuedblended federal and state statutory rate of approximately 39%, primarily due to the benefit of tax credits for FICA taxes on certainemployees’ tips.SegmentsWe consider our restaurant concepts and international markets to be operating segments, which reflects how we manage our business,review operating performance and allocate resources. Resources are allocated and performance is assessed by our Chief ExecutiveOfficer, whom we have determined to be our Chief Operating Decision Maker. We aggregate our operating segments into tworeportable segments, U.S. and International. The U.S. segment includes all restaurants operating in the U.S. while restaurants operatingoutside the U.S. are included in the International segment.Revenues for both segments include only transactions with customers and excludes intersegment revenues. Excluded from income fromoperations for U.S. and International are legal and certain corporate costs not directly related to the performance of the segments, moststock-based compensation expenses and certain bonus expenses.Refer to Note 20 - Segment Reporting of the Notes to Consolidated Financial Statements for a reconciliation of segment income (loss)from operations to the consolidated operating results.U.S. Segment FISCAL YEAR 2018 2017 2016(dollars in thousands) (Restated) (1) (Restated) (1)Revenues Restaurant sales$3,634,198 $3,713,666 $3,773,770Franchise and other revenues53,041 47,201 31,865Total revenues$3,687,239 $3,760,867 $3,805,635Restaurant-level operating margin14.2% 14.5% 15.0%Income from operations$288,959 $289,971 $282,791Operating income margin7.8% 7.7% 7.4%____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.46Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedRestaurant salesFollowing is a summary of the change in U.S. segment Restaurant sales for the periods indicated: FISCAL YEAR(dollars in millions)2018 2017 (1)For fiscal years 2017 and 2016 (1)$3,713.7 $3,773.8Change from: Impact of the 53rd week in 2017(79.9) 79.9Divestiture of restaurants through refranchising transactions(64.4) (118.9)Restaurant closings(31.4) (81.2)Comparable restaurant sales (2)74.9 28.0Restaurant openings (2)21.3 32.1For fiscal years 2018 and 2017$3,634.2 $3,713.7____________________(1)Restaurant sales have been restated for 2017 and 2016. See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements fordetails of the impact of implementing ASU No. 2014-09.(2)Summation of quarterly changes for restaurant openings and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of acomparable restaurant will differ each period based on when the restaurant opened.The decrease in U.S. Restaurant sales in 2018 as compared to 2017 was primarily due to: (i) restaurant sales during the 53rd week of2017, (ii) the refranchising of certain Company-owned restaurants during 2017 and (iii) the closing of 52 restaurants sinceDecember 25, 2016. The decrease in U.S. Restaurant sales was partially offset by higher comparable restaurant sales and sales from 15new restaurants not included in our comparable restaurant sales base.The decrease in U.S. Restaurant sales in 2017 as compared to 2016 was primarily due to the refranchising of certain Company-ownedrestaurants during 2017 and the closing of 52 restaurants since December 27, 2015. The decrease in U.S. Restaurant sales was partiallyoffset by: (i) restaurant sales during the 53rd week of 2017, (ii) sales from 21 new restaurants not included in our comparable restaurantsales base and (iii) higher comparable restaurant sales.Income from operationsThe decrease in U.S. income from operations generated in 2018 as compared to 2017 was primarily due to: (i) labor, commodity andoperating expense inflation, (ii) the impact of the 53rd week in 2017, (iii) increased rent expense and (iv) higher depreciation andamortization expense. These decreases were partially offset by: (i) increases in average check per person, (ii) the impact of certain costsaving initiatives and (iii) lower impairment and restaurant closing costs, primarily related to the Closure Initiatives and theremeasurement of certain surplus properties in 2017.The increase in U.S. income from operations generated in 2017 as compared to 2016 was primarily due to: (i) increases in averagecheck per person, (ii) lower impairment and restaurant closing costs, primarily related to the 2017 Closure Initiative in 2016, (iii) theimpact of the 53rd week in 2017, (iv) lower advertising expense, (v) the impact of certain cost saving initiatives and (vi) increases infranchise and other revenues. These increases were partially offset by: (i) higher kitchen and service labor costs due to higher wagerates and investments in our service model, (ii) an increase in operating expense due to inflation and timing and (iii) higher net rentexpense due to the sale-leaseback of certain properties.47Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedInternational Segment FISCAL YEAR 2018 2017 2016(dollars in thousands) (Restated) (1) (Restated) (1)Revenues Restaurant sales$426,673 $450,397 $448,150Franchise and other revenues12,501 11,872 6,888Total revenues$439,174 $462,269 $455,038Restaurant-level operating margin18.8% 20.6% 18.8 %Income from operations$22,001 $28,798 $(5,918)Operating income margin5.0% 6.2% (1.3)%____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.Restaurant salesFollowing is a summary of the change in International Segment Restaurant sales for the periods indicated: FISCAL YEAR(dollars in millions)2018 2017For fiscal years 2017 and 2016$450.4 $448.2Change from: Effect of foreign currency translation(43.7) 36.0Restaurant closings(11.3) (3.1)Comparable restaurant sales (1)(6.6) 17.9Restaurant openings (1)37.9 41.9Refranchising of Outback Steakhouse South Korea— (90.5)For fiscal years 2018 and 2017$426.7 $450.4____________________(1)Summation of quarterly changes for restaurant openings and comparable restaurant sales will not total to annual amounts as the restaurants that meet the definition of acomparable restaurant will differ each period based on when the restaurant opened.The decrease in Restaurant sales in 2018 as compared to 2017 was primarily due to: (i) the effect of foreign currency translation due todepreciation of the Brazilian Real, (ii) the closing of 13 restaurants since December 25, 2016 and (iii) lower comparable restaurantsales. The decrease in Restaurant sales was partially offset by sales from 34 new restaurants not included in our comparable restaurantsales base.The increase in Restaurant sales in 2017 as compared to 2016 was primarily due to: (i) sales from 48 new restaurants not included inour comparable restaurant sales base, (ii) the effect of foreign currency translation due to appreciation of the Brazilian Real and (iii)higher comparable restaurant sales. The increase in Restaurant sales was partially offset by the refranchising of 72 Outback SteakhouseSouth Korea restaurants in July 2016.Income from operationsThe decrease in International income from operations in 2018 as compared to 2017 was primarily due to: (i) labor, operating expenseand commodity inflation, (ii) impairment charges and restaurant closing costs in connection with restructuring of certain markets,including Puerto Rico and China, (iii) changes in product mix and (iv) higher advertising expense. These decreases were partially offsetby an increase in average check per person and lower general and administrative expense, primarily related to foreign currencytranslation and lower incentive compensation.48Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedThe increase in International income from operations in 2017 as compared to 2016 was primarily due to: (i) lower impairment chargesand operating costs, related to the refranchising of Outback Steakhouse South Korea in 2016, (ii) increases in average check per person,(iii) increases in franchise and other revenues and (iv) the impact of certain cost saving initiatives. These increases were partially offsetby labor, commodity and operating expense inflation and higher general and administrative expense. General and administrativeexpense for the International segment increased primarily from the effects of foreign currency translation.Non-GAAP Financial MeasuresIn addition to the results provided in accordance with U.S. GAAP, we provide certain non-GAAP measures, which present operatingresults on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance withU.S. GAAP and include the following: (i) system-wide sales, (ii) Adjusted restaurant-level operating margins, (iii) Adjusted incomefrom 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 relativeto our performance based on U.S. GAAP results and relative to other companies within the restaurant industry by isolating the effects ofcertain items that may vary from period to period without correlation to core operating performance or that vary widely among similarcompanies. However, our inclusion of these adjusted measures should not be construed as an indication that our future results will beunaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will notrecur. We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how ourmanagement team and Board of Directors evaluate our operating performance, allocate resources and establish employee incentiveplans.These non-GAAP financial measures are not intended to replace U.S. GAAP financial measures, and they are not necessarilystandardized or comparable to similarly titled measures used by other companies. We maintain internal guidelines with respect to thetypes of adjustments we include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains andexpenses that are reflective of our core operations in a period, and those that may vary from period to period without correlation to ourcore performance in that period. However, implementation of these guidelines necessarily involves the application of judgment, and thetreatment of any items not directly addressed by, or changes to, our guidelines will be considered by our disclosure committee. Refer tothe reconciliations of non-GAAP measures for descriptions of the actual adjustments made in the current period and the correspondingprior period.System-Wide Sales - System-wide sales is a non-GAAP financial measure that includes sales of all restaurants operating under our brandnames, whether we own them or not. Management uses this information to make decisions about future plans for the development ofadditional restaurants and new concepts, as well as evaluation of current operations. System-wide sales comprise sales of Company-owned and franchised restaurants. For a summary of sales of Company-owned restaurants, refer to Note 3 - Revenue Recognition of theNotes to Consolidated Financial Statements.49Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedThe following table provides a summary of sales of franchised restaurants, which are not included in our consolidated financial results.Franchise sales within this table do not represent our sales and are 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 royaltiesand/or service fees. FISCAL YEARFRANCHISE SALES (dollars in millions):2018 2017 2016U.S. Outback Steakhouse (1)$513 $459 $334Carrabba’s Italian Grill (1)12 10 11Bonefish Grill14 14 13U.S. Total$539 $483 $358International Outback Steakhouse-South Korea (2)$208 $186 $74Other112 115 111International Total$320 $301 $185Total franchise sales (3)$859 $784 $543____________________(1)In 2017, we sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill restaurant, which are now operated as franchises.(2)In 2016, we sold our restaurant locations in South Korea, converting all restaurants in that market to franchised locations.(3)Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive Income.Adjusted restaurant-level operating margin - Restaurant-level operating margin is calculated as Restaurant sales after deduction of themain restaurant-level operating costs, which includes Cost of sales, Labor and other related and Other restaurant operating expense.Adjusted restaurant-level operating margin is Restaurant-level operating margin adjusted for certain items, as noted below. Thefollowing tables show the percentages of certain operating cost financial statement line items in relation to Restaurant sales on both aU.S. GAAP basis and an adjusted basis, as indicated: FISCAL YEAR 2018 2017 2016 U.S. GAAP ADJUSTED (1) U.S. GAAP ADJUSTED (1) U.S. GAAP ADJUSTED (1)Restaurant sales100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of sales31.9% 31.9% 31.6% 31.6% 32.1% 32.1%Labor and other related29.5% 29.5% 29.3% 29.3% 28.7% 28.7%Other restaurant operating23.8% 23.9% 23.9% 24.1% 23.8% 23.9% Restaurant-level operating margin14.8% 14.7% 15.2% 15.0% 15.4% 15.4%_________________(1)Includes adjustments recorded in Other restaurant operating expense for the following activities, as described in the Adjusted income from operations, Adjusted netincome and Adjusted diluted earnings per share table below: FISCAL YEAR(dollars in millions)2018 2017 2016Restaurant and asset impairments and closing costs$3.4 $4.8 $4.9Restaurant relocations and related costs0.7 0.9 0.7Legal and contingent matters— — (2.3) $4.1 $5.7 $3.350Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedAdjusted income from operations, Adjusted net income and Adjusted diluted earnings per share - The following table reconcilesAdjusted income from operations and the corresponding margins, Adjusted net income and Adjusted diluted earnings per share to theirrespective most comparable U.S. GAAP measures for the periods indicated: FISCAL YEAR(in thousands, except share and per share data)2018 2017 2016Income from operations (1)$145,253 $138,686 $123,750Operating income margin (1)3.5% 3.3% 2.9%Adjustments: Restaurant and asset impairments and closing costs (2)$29,542 $42,767 $90,486Restaurant relocations and related costs (3)8,647 12,539 8,971Severance (4)3,493 11,006 5,463Legal and contingent matters (5)1,068 553 2,340Transaction-related expenses (6)— 1,447 1,910Total income from operations adjustments$42,750 $68,312 $109,170Adjusted income from operations$188,003 $206,998 $232,920Adjusted operating income margin4.6% 4.9% 5.5% Net income attributable to Bloomin’ Brands (1)$107,098 $101,293 $39,388Adjustments: Income from operations adjustments42,750 68,312 109,170Loss on defeasance, extinguishment and modification of debt (7)— 1,069 26,998Gain on disposal of business and other costs (8)— (14,854) (1,632)Total adjustments, before income taxes$42,750 $54,527 $134,536Adjustment to provision for income taxes (1)(9)(8,944) (24,513) (33,100)Net adjustments$33,806 $30,014 $101,436Adjusted net income$140,904 $131,307 $140,824 Diluted earnings per share$1.14 $1.02 $0.34Adjusted diluted earnings per share$1.50 $1.32 $1.23 Diluted weighted average common shares outstanding94,075 99,707 114,311_________________(1)Income from operations and Net income attributable to Bloomin’ Brands for 2017 and 2016 have been restated. See Note 2 - Summary of Significant Accounting Policiesof the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09. Adjustment to provision for income taxes for 2017 hasbeen restated to include the $5.6 million benefit from the enactment of the Tax Act on the adoption of ASU No. 2014-09, consisting of the re-measurement of additionaldeferred tax balances related to the adoption.(2)Represents asset impairment charges and related costs primarily related to: (i) approved closure and restructuring initiatives, (ii) the restructuring of certain internationalmarkets in 2018 and 2017, (iii) the restructuring of our Express concept in 2018, (iv) reclassification of assets to held for sale in connection with refranchising certainrestaurants in 2018, (v) the remeasurement of certain surplus properties in 2017, (vi) the decision to sell Outback Steakhouse South Korea in 2016 and (vii) our PuertoRico subsidiary in 2016.(3)Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program.(4)Relates to severance expense incurred primarily as a result of restructuring of certain functions and the relocation of our Fleming’s operations center to the corporate homeoffice in 2016.(5)Represents fees and expenses related to certain legal and contingent matters, including the Sears litigation in 2016.(6)Relates primarily to professional fees related to certain income tax items in which the associated tax benefit is adjusted in Adjustments to provision for income taxes in2017 and costs incurred in connection with our sale-leaseback initiative.(7)Relates to: (i) refinancing of our Senior Secured Credit Facility in 2017, (ii) modification of our Credit Agreement (as defined below) in 2017 and (iii) amendment of ourmortgage loan and defeasance of the 2012 CMBS loan in 2016.(8)Primarily relates to: (i) gains on the sale of 55 U.S. Company-owned restaurants in 2017, (ii) expenses related to certain surplus properties in 2017 and (iii) a gain on therefranchising of Outback Steakhouse South Korea during 2016.(9)Includes the impact of the Tax Act, including the benefit from the adoption of ASU No. 2014-09 discussed in footnote 1 above, other discretionary tax adjustments andthe income tax effect of non-GAAP adjustments.51Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedLiquidity and Capital ResourcesLIQUIDITYOur liquidity sources consist of cash flow from operations, cash and cash equivalents and credit capacity under our credit facilities. Weexpect to use cash primarily for general operating expenses, share repurchases and dividend payments, principal and interest paymentson our debt, remodeling or relocating older restaurants, obligations related to our deferred compensation plans and investments intechnology.We believe that our expected liquidity sources are adequate to fund debt service requirements, lease obligations, capital expendituresand working capital obligations during the 12 months following this filing and beyond. However, our ability to continue to meet theserequirements and obligations will depend on, among other things, our ability to achieve anticipated levels of revenue and cash flow andour ability to manage costs and working capital successfully.Cash and Cash Equivalents - As of December 30, 2018, we had $71.8 million in cash and cash equivalents, of which $27.5 million washeld by foreign affiliates. The international jurisdictions in which we have significant cash do not have any known restrictions thatwould prohibit the repatriation of cash and cash equivalents.As of December 30, 2018, we had aggregate accumulated foreign earnings of approximately $88.3 million. This amount consistsmainly of historical earnings (2017 and prior) previously taxed in the U.S. under the Tax Act and post-2017 foreign earnings that wemay repatriate to the U.S. without additional U.S. federal income tax. These amounts are no longer considered indefinitely reinvested inour foreign subsidiaries. See Note 18 - Income Taxes of the Notes to the Consolidated Financial Statements for further informationregarding the Tax Act and our indefinite reinvestment assertion.Closure Initiatives - Total aggregate future undiscounted cash expenditures of $15.7 million to $19.2 million for the Closure Initiatives,primarily related to lease liabilities, 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 approximately $175 million to $200 million in 2019. Theamount 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.52Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedCredit Facilities - As of December 30, 2018, we had $1.1 billion of outstanding borrowings under our Senior Secured Credit Facility.We continue to evaluate whether we will make further payments of our outstanding debt ahead of scheduled maturities. See Note 13 -Long-term Debt, Net of the Notes to Consolidated Financial Statements for further information. Following is a summary of principalpayments and debt issuance from December 25, 2016 to December 30, 2018: FORMER CREDIT FACILITY SENIOR SECURED CREDIT FACILITY MORTGAGE LOAN TOTALCREDITFACILITIES TERMLOANS REVOLVINGFACILITY TERM LOAN A REVOLVINGFACILITY (dollars in thousands) Balance as of December 25, 2016$399,375 $622,000 $— $— $47,202 $1,068,5772017 new debt125,000 654,500 500,000 697,000 — 1,976,5002017 payments(524,375) (1,276,500) — (97,000) (47,202) (1,945,077)Balance as of December 31, 2017— — 500,000 600,000 — 1,100,0002018 new debt— — — 478,000 — 478,0002018 payments— — (25,000) (478,500) — (503,500)Balance as of December 30, 2018$— $— $475,000 $599,500 $— $1,074,500 Weighted-average interest rate, as ofDecember 30, 2018 4.14% 4.17% Principal maturity date November 2022 November 2022 Credit Agreement - On November 30, 2017, we and OSI, as co-borrowers, entered into a credit agreement (the “Credit Agreement”)with a syndicate of institutional lenders, providing for senior secured financing of up to $1.5 billion, consisting of a $500.0 millionTerm loan A and a $1.0 billion revolving credit facility (the “Senior Secured Credit Facility”), including letter of credit and swing lineloan sub-facilities. As of December 30, 2018, we had $378.5 million in available unused borrowing capacity under our revolving creditfacility, net of letters of credit of $22.0 million.The Credit Agreement contains mandatory prepayment requirements of 50% of our annual excess cash flow, as defined in the CreditAgreement. The amount outstanding required to be prepaid may vary based on our leverage ratio and year end results. Other than therequired minimum amortization premiums of $25.0 million, we do not anticipate any other payments will be required throughDecember 29, 2019.Debt Covenants - Our Credit Agreement contains various financial and non-financial covenants. A violation of these covenants couldnegatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and cause an acceleration of theamounts due under the credit facilities. See Note 13 - Long-term Debt, Net of the Notes to our Consolidated Financial Statements forfurther information.As of December 30, 2018 and December 31, 2017, we were in compliance with our debt covenants. We believe thatwe will remain in compliance with our debt covenants during the next 12 months and beyond.Cash Flow Hedges of Interest Rate Risk - We have variable-to-fixed interest rate swap agreements with eight counterparties to hedge aportion of the cash flows of our variable rate debt that have an aggregate notional amount of $400.0 million and mature on May 16,2019 (the “2014 Swap Agreements”). We pay a weighted-average fixed rate of 2.02% on the $400.0 million notional amount andreceive payments from the counterparties based on the 30-day LIBOR rate.In October 2018, we entered into variable-to-fixed interest rate swap agreements with 12 counterparties to hedge a portion of the cashflows of our variable rate debt (the “2018 Swap Agreements”). The 2018 Swap Agreements have an aggregate notional amount of$550.0 million, a forward start date of May 16, 2019 (the maturity date of the 2014 Swap Agreements), and mature on November 30,2022. Under the terms of the 2018 Swap Agreements, we will pay a weighted-average fixed rate of 3.04% on the notional amount andreceive payments from the counterparties based53Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continuedon the one-month LIBOR rate. See Note 16 - Derivative Instruments and Hedging Activities of the Notes to Consolidated FinancialStatements for further information.SUMMARY OF CASH FLOWSThe following table presents a summary of our cash flows provided by (used in) operating, investing and financing activities for theperiods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Net cash provided by operating activities$288,074 $409,002 $340,587Net cash (used in) provided by investing activities(177,296) (123,115) 295,248Net cash used in financing activities(164,352) (293,505) (657,978)Effect of exchange rate changes on cash and cash equivalents(4,146) 975 2,955Net decrease in cash, cash equivalents and restricted cash$(57,720) $(6,643) $(19,188)Operating activities - Net cash provided by operating activities decreased in 2018 as compared to 2017 primarily as a result of thefollowing: (i) the timing of collections of receivables, (ii) higher inventory payments, (iii) the timing of payments of accounts payableand other accrued liabilities and (iv) an increase in incentive compensation payments. These decreases were partially offset by lowerincome tax payments.Net cash provided by operating activities increased in 2017 as compared to 2016 primarily as a result of lower income tax paymentsand the timing of collections of holiday gift card sales from third party vendors. These increases were partially offset by lower gift cardsales and the timing of purchases of inventory.Investing activities - Net cash used in investing activities during 2018 consisted primarily of capital expenditures, partially offset byproceeds from sale-leaseback transactions and proceeds from the disposal of property, fixtures and equipment.Net cash used in investing activities during 2017 consisted primarily of capital expenditures, partially offset by proceeds from sale-leaseback transactions and proceeds from refranchising transactions.Net cash provided by investing activities during 2016 consisted primarily of proceeds from sale-leaseback transactions and proceedsfrom the refranchising of Outback Steakhouse South Korea, partially offset by capital expenditures.Financing activities - Net cash used in financing activities during 2018 was primarily attributable to the following: (i) the repurchase ofcommon stock, (ii) payment of cash dividends on our common stock, (iii) the net repayment of long-term debt and (iv) repayments ofpartner deposits and accrued partner obligations. Net cash used in financing activities was partially offset by net proceeds from share-based compensation.Net cash used in financing activities during 2017 was primarily attributable to the following: (i) repayments due to the refinancing ofour former credit facility, (ii) repayment of our mortgage loan, (iii) voluntary repayments of our revolving credit facility, net ofdrawdowns and (iv) the repurchase of common stock. Net cash used in financing activities was partially offset by proceeds from ournew Senior Secured Credit Facility.Net cash used in financing activities during 2016 was primarily attributable to the following: (i) the defeasance of the 2012 CMBS loanand payments on our mortgage loan, (ii) the repurchase of common stock, (iii) the purchase of outstanding noncontrolling interests andlimited partnership interests in certain restaurants, (iv) payment of cash dividends on our common stock and (v) repayments of partnerdeposits and accrued partner obligations. Net cash used in financing activities was partially offset by the following: (i) proceeds fromthe mortgage loan, (ii) drawdowns on54Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continuedour revolving credit facility, net of repayments and (iii) proceeds from the sale of certain properties, which are considered financingobligations.FINANCIAL CONDITIONFollowing is a summary of our current assets, current liabilities and working capital (deficit) as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Current assets$335,483 $360,209Current liabilities791,039 813,392Working capital (deficit)$(455,556) $(453,183)Working capital (deficit) included Unearned revenue primarily from unredeemed gift cards of $342.7 million and $330.8 million as ofDecember 30, 2018 and December 31, 2017, respectively. We have, and in the future may continue to have, negative working capitalbalances (as is common for many restaurant companies). We operate successfully with negative working capital because cash collectedon restaurant sales is typically received before payment is due on our current liabilities, and our inventory turnover rates requirerelatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift card sales are used toservice debt obligations and make capital expenditures.Deferred Compensation Programs - Certain Restaurant Managing Partners and Chef Partners in the U.S. (“U.S. Partners”) participate indeferred compensation programs that are subject to the rules of section 409(a) of the Internal Revenue Code. The deferredcompensation obligations due under these plans was $69.6 million and $96.3 million as of December 30, 2018 and December 31,2017, respectively. We invest in various corporate-owned life insurance policies, which are held within an irrevocable grantor or“rabbi” trust account for settlement of our obligations under these deferred compensation plans. The rabbi trust is funded through ourvoluntary contributions and the unfunded obligations were $26.3 million and $36.6 million as of December 30, 2018 andDecember 31, 2017, respectively.We use capital to fund the deferred compensation plans and currently expect annual cash funding of $14.0 million to $16.0 million for2019. Actual funding of the deferred compensation obligations and future funding requirements may vary significantly depending onthe actual performance compared to targets, timing of deferred payments of partner contracts, forfeiture rates, number of partnerparticipants, 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 asthe obligation for each participant becomes due.DIVIDENDS AND SHARE REPURCHASESDividends - In 2018, 2017 and 2016, we declared and paid quarterly cash dividends of $0.09, $0.08 and $0.07 per share, respectively.In February 2019, our Board declared a quarterly cash dividend of $0.10 per share, payable on March 8, 2019. Future dividendpayments are dependent on our earnings, financial condition, capital expenditure requirements, surplus and other factors that our Boardconsiders relevant.55Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedShare Repurchases - On February 12, 2019, our Board canceled the remaining $36.0 million of authorization under the 2018 ShareRepurchase Program and approved a new $150.0 million authorization. The 2019 Share Repurchase Program will expire on August 12,2020. Following is a summary of our share repurchase programs as of December 30, 2018 (dollars in thousands):SHARE REPURCHASEPROGRAM BOARD APPROVALDATE AUTHORIZED REPURCHASED CANCELED REMAINING2014 December 12, 2014 $100,000 $100,000 $— $—2015 August 3, 2015 $100,000 69,999 $30,001 $—2016 February 12, 2016 $250,000 139,892 $110,108 $—July 2016 July 26, 2016 $300,000 247,731 $52,269 $—2017 April 21, 2017 $250,000 195,000 $55,000 $—2018 February 16, 2018 $150,000 113,967 $— $36,033Total Share Repurchase Programs $866,589 The following table presents our dividends and share repurchases for the periods indicated:(dollars in thousands)DIVIDENDS PAID SHARE REPURCHASES(1) TOTALFiscal year 2018$33,312 $113,967 $147,279Fiscal year 201730,988 272,736 303,724Fiscal year 201631,379 309,887 341,266Fiscal year 201529,332 169,999 199,331Total$125,011 $866,589 $991,600________________(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.Our ability to pay dividends and make share repurchases is dependent on our ability to obtain funds from our subsidiaries, have accessto our revolving credit facility and the existence of surplus. Based on our Credit Agreement, restricted dividend payments can be madeon an unlimited basis provided we are compliant with our debt covenants.OFF-BALANCE SHEET ARRANGEMENTSNone.56Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedOTHER MATERIAL COMMITMENTSOur contractual obligations, debt obligations and commitments as of December 30, 2018 are summarized in the table below: PAYMENTS DUE BY PERIOD LESS THAN 1-3 3-5 MORE THAN(dollars in thousands)TOTAL 1 YEAR YEARS YEARS 5 YEARSRecorded Contractual Obligations Long-term debt (1)$1,094,775 $27,190 $64,425 $983,742 $19,418Deferred compensation and other partner obligations (2)85,632 20,866 37,254 17,011 10,501Other recorded contractual obligations (3)38,037 7,876 9,719 6,637 13,805Unrecorded Contractual Obligations Interest (4)213,706 49,447 99,189 45,465 19,605Operating leases (5)1,663,941 188,803 342,777 273,672 858,689Purchase obligations (6)364,250 264,798 48,659 40,815 9,978Total contractual obligations$3,460,341 $558,980 $602,023 $1,367,342 $931,996____________________(1)Includes capital lease obligations. Amount is net of unamortized debt issuance costs and discount of $3.5 million.(2)Includes deferred compensation obligations, deposits and other accrued obligations due to our restaurant partners. Timing and amounts of payments may varysignificantly based on employee turnover, return of deposits and changes to buyout values.(3)Includes other long-term liabilities, primarily consisting of non-partner deferred compensation obligations and restaurant closing cost liabilities. As of December 30, 2018,unrecognized tax benefits of $25.2 million were excluded from the table since it is not possible to estimate when these future payments will occur.(4)Projected future interest payments on long-term debt are based on interest rates in effect as of December 30, 2018 and assume only scheduled principal payments.Estimated interest expense includes the impact of financing obligations and our variable-to-fixed interest rate swap agreements.(5)Amounts represent undiscounted future minimum rental commitments under non-cancelable operating leases, excluding unexercised renewal terms.(6)Purchase obligations include agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms, including fixed or minimumquantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. We have purchase obligations with variousvendors that consist primarily of inventory, restaurant-level service contracts, advertising and technology.Critical Accounting Policies and EstimatesOur discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,which have been prepared in accordance with U.S. GAAP. The preparation of these accompanying consolidated financial statementsrequires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and relateddisclosure of contingent assets and liabilities during the reporting period. We base our estimates on historical experience and on variousother assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgmentsabout the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from theseestimates under different assumptions or conditions. We consider an accounting estimate to be critical if it requires assumptions to bemade and changes in these assumptions could have a material impact on our consolidated financial condition or results of operations.Impairment or Disposal of Long-Lived Assets - Long-lived assets are reviewed for impairment whenever events or changes incircumstances indicate that the carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiablecash flows independent of other assets. For long-lived assets deployed at our restaurants, we review for impairment at the individualrestaurant level.When evaluating for impairment, the total future undiscounted cash flows expected to be generated by the assets are compared to thecarrying amount. If the total future undiscounted cash flows expected to be generated by the assets57Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continuedare less than the carrying amount, this may be an indicator of impairment. An impairment loss is recognized in earnings when theasset’s carrying value exceeds its estimated fair value. Fair value is generally estimated using a discounted cash flow model. The keyestimates and assumptions used in this model are future cash flow estimates, with material changes generally driven by changes inexpected use, and the discount rate.Goodwill and Indefinite-Lived Intangible Assets - Goodwill and indefinite-lived intangible assets are tested for impairment annually inthe second fiscal quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.We may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. Inconsidering the qualitative approach, we evaluate factors including, but not limited to, macro-economic conditions, market and industryconditions, commodity cost fluctuations, competitive environment, share price performance, results of prior impairment tests,operational stability and the overall financial performance of the reporting units.If the qualitative assessment is not performed or if we determine that it is not more likely than not that the fair value of the reporting unitexceeds the carrying value, the fair value of the reporting unit is calculated. Fair value of a reporting unit is the price a willing buyerwould pay for the reporting unit and is estimated by utilizing a weighted average of the income approach, using a discounted cash flowmodel, and the market approach including the guideline public company method and guideline transaction method. The key estimatesand assumptions used in these models are future cash flow estimates, which are heavily influenced by revenue growth rates, operatingmargins and capital expenditures. The fair value of the trade name is determined through a relief from royalty method.The carrying value of the reporting unit is compared to its estimated fair value, with any excess of carrying value over fair valuedeemed to be an indicator of impairment.The carrying value of goodwill as of December 30, 2018 was $295.4 million, which related to our U.S. and International reportingunits. We performed our annual impairment test in the second quarter of 2018 by utilizing the quantitative approach and determinedthat the excess of fair value over carrying value of our reporting units was substantial. Sales declines at our restaurants, unplanned increases in commodity or labor costs, deterioration in overall economic conditions andchallenges in the restaurant industry may result in future impairment charges. It is possible that changes in circumstances or changes inour judgments, assumptions and estimates could result in an impairment charge of a portion or all of our goodwill or other intangibleassets.Insurance Reserves - We carry insurance programs with specific retention levels or high per-claim deductibles for a significant portionof expected losses under our workers’ compensation, general or liquor liability, health, property and management liability insuranceprograms. For some programs, we maintain stop-loss coverage to limit the exposure relating to certain risks.We record a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost that fallsbelow our specified retention levels or per-claim deductible amounts. Our liability for insurance claims was $55.8 million and $59.4million as of December 30, 2018 and December 31, 2017, respectively. In establishing our reserves, we consider certain actuarialassumptions and judgments regarding economic conditions, the frequency and severity of claims and claim development history andsettlement practices. Reserves recorded for workers’ compensation and general or liquor liability claims are discounted using theaverage of the one-year and five-year risk-free rate of monetary assets that have comparable maturities.We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to calculateour insurance claim liabilities. However, if actual results are not consistent with our estimates or58Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continuedassumptions, we may be exposed to losses or gains that could be material. A 50 basis point change in the discount rate in our insuranceclaim liabilities as of December 30, 2018, would have affected net earnings by $0.7 million in 2018.Stock-Based Compensation - We have a stock-based compensation plan that permits the grant of stock options, stock appreciationrights, restricted stock, restricted stock units, performance awards and other stock-based awards to our management and other keyemployees. We account for our stock-based employee compensation using a fair value-based method of accounting.We use the Black-Scholes option pricing model to estimate the weighted-average grant date fair value of stock optionsgranted. Expected volatility is based on historical volatility of our stock. The expected term of options granted represents the period oftime that options granted are expected to be outstanding. Expected term is estimated based on historical exercise experience of ourstock options. Dividend yield is the level of dividends expected to be paid on our common stock over the expected term of our options.The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect as of the grantdate. Forfeitures of share-based compensation awards are recognized as they occur.Estimates and assumptions are based upon information currently available, including historical experience and current business andeconomic conditions. A simultaneous 10% change in our volatility, forfeiture rate, weighted-average risk-free interest rate, dividendrate and term of grant in our stock option pricing model for 2018 would not have a material effect on net income.Our performance-based share units (“PSUs”) require assumptions regarding the likelihood of achieving certain Company performancecriteria set forth in the award agreements. Assumptions used in our assessment are consistent with our internal forecasts and operatingplans.If we assumed that the PSU performance conditions for stock-based awards were not met, stock-based compensation expense wouldhave decreased by $6.9 million for 2018. If we assumed that all granted PSU share awards met or will meet their maximum threshold,expense would have increased by $6.0 million for 2018.Income Taxes - Deferred tax assets and liabilities are recognized based on the differences between the financial statement carryingamounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the tax rates, basedon certain judgments regarding enacted tax laws and published guidance, in effect in the years in which we expect those temporarydifferences to reverse. As of December 30, 2018, tax loss carryforwards and credit carryforwards that do not have a valuationallowance are expected to be recoverable within the applicable statutory expiration periods.We currently expect to utilize generalbusiness tax credit carryforwards within a four to six year period. However, our ability to utilize these tax credits could be adverselyimpacted by, among other items, a future “ownership change” as defined under Section 382 of the Internal Revenue Code. A valuationallowance is established against the deferred tax assets when it is more likely than not that some portion or all of the deferred taxes maynot be realized. Changes in assumptions regarding our level and composition of earnings, tax laws or the deferred tax valuationallowance and the results of tax audits, may materially impact the effective income tax rate.Our income tax returns, like those of most companies, are periodically audited by U.S. and foreign tax authorities. In determiningtaxable income, income or loss before taxes is adjusted for differences between local tax laws and generally accepted accountingprinciples. A tax benefit from an uncertain position is recognized only if it is more likely than not that the position is sustainable basedon its technical merits. For uncertain tax positions that do not meet this threshold, we recognize a liability. The liability for unrecognizedtax benefits requires significant management judgment regarding exposures about our various tax positions. These assumptions andprobabilities are periodically reviewed and updated based upon new information. An unfavorable tax settlement generally requires theuse of cash and an increase in the amount of income tax expense we recognize.59Table of ContentsBLOOMIN’ BRANDS, INC.MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS - ContinuedRevenue Recognition - We sell gift cards to customers in our restaurants, through our websites and through select third parties. Aliability is initially established for the value of the gift card when sold. We recognize revenue from gift cards when the card is redeemedby the customer. There is uncertainty when calculating gift card breakage, the amount of gift cards which will not be redeemed,because management is required to make assumptions and to apply judgment regarding the effects of future events. We recognize giftcard breakage revenue using estimates based on historical redemption patterns. If actual redemptions vary from the estimated breakage,gift card breakage revenue may differ from the amount recorded. We periodically update our estimates used for breakage and applythat rate to gift card redemptions. A change in our breakage rate estimates by 50 basis points would have resulted in an adjustment inour breakage revenue of $2.1 million for 2018.Recently Issued Financial Accounting StandardsFor a description of recently issued Financial Accounting Standards that we adopted in 2018 and, that are applicable to us and likely tohave material effect on our consolidated financial statements, but have not yet been adopted, see Note 2 - Summary of SignificantAccounting Policies of the Notes to the Consolidated Financial Statements of this Report.60Table of ContentsBLOOMIN’ BRANDS, INC.Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe are exposed to market risk from changes in interest rates on debt, changes in foreign currency exchange rates and changes incommodity prices.Interest Rate RiskWe are exposed to market risk from fluctuations in interest rates, which could affect our consolidated balance sheet, earnings and cashflows. Stockholders’ equity can be adversely affected by changing interest rates, as after-tax changes in the fair value of interest rateswaps designated as cash flow hedges are reflected as increases and decreases to a component of stockholders’ equity.We manage our exposure to market risk through regular operating and financing activities and when deemed appropriate, through theuse of derivative financial instruments. We use derivative financial instruments as risk management tools and not for speculativepurposes. See Note 16 - Derivative Instruments and Hedging Activities of the Notes to our Consolidated Financial Statements for furtherinformation.As of December 30, 2018, our interest rate risk was primarily from variable interest rate changes on our Senior Secured Credit Facility.To manage the risk of fluctuations in variable interest rate debt, we have interest rate swaps for an aggregate notional amount of $400.0million that mature on May 16, 2019. In October 2018, we entered into interest rate swaps for an aggregate notional amount of $550.0million with a forward start date of May 16, 2019 (the maturity date of the 2014 Swap Agreements) and a maturity date of November30, 2022.We utilize valuation models to estimate the effects of changing interest rates. The following table summarizes the changes to fair valueand interest expense under a shock scenario. This analysis assumes that interest rates change suddenly, as an interest rate “shock” andcontinue to increase or decrease at a consistent level above or below the LIBOR curve. DECEMBER 30, 2018(dollars in thousands)INCREASE DECREASEChange in fair value (1): Interest rate swap$19,243 $(20,127) Change in annual interest expense (2): Variable rate debt$5,714 $(5,714)________________(1)The potential change from a hypothetical 100 basis point increase (decrease) in short-term interest rates.(2)The potential change from a hypothetical 100 basis point increase (decrease) in short-term interest rates based on the LIBOR curve. The curve ranges from our currentinterest rate of 251 basis points to 257 basis points.Foreign Currency Exchange Rate RiskWe are subject to foreign currency exchange risk for our restaurants operating in foreign countries. Our exposure to foreign currencyexchange risk is primarily related to fluctuations in the Brazilian Real relative to the U.S. dollar. Our operations in other markets consistof Company-owned restaurants on a smaller scale than Brazil. If foreign currency exchange rates depreciate in the countries in whichwe operate, we may experience declines in our operating results.For 2018, 10.6% of our revenue was generated in foreign currencies. A 10% change in average foreign currency rates against the U.S.dollar would have increased or decreased our Total revenues and Net income for our foreign entities by $47.4 million and $1.5 million,respectively.61Table of ContentsBLOOMIN’ BRANDS, INC.Commodity Pricing RiskMany of the ingredients used in the products sold in our restaurants are commodities that are subject to unpredictable price volatility.Although we attempt to minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients,there are no established fixed price markets for certain commodities such as produce and wild fish, and we are subject to prevailingmarket conditions when purchasing those types of commodities. Other commodities are purchased based upon negotiated price rangesestablished with vendors with reference to the fluctuating market prices. The related agreements may contain contractual features thatlimit the price paid by establishing certain price floors and caps. Extreme changes in commodity prices or long-term changes couldaffect our financial results adversely. We expect that in most cases increased commodity prices could be passed through to ourcustomers through increases in menu prices. However, if there is a time lag between the increasing commodity prices and our ability toincrease menu prices, or if we believe the commodity price increase to be short in duration and we choose not to pass on the costincreases, our short-term financial results could be negatively affected. Additionally, from time to time, competitive circumstancescould limit menu price flexibility, and in those cases margins would be negatively impacted by increased commodity prices.Our restaurants are dependent upon energy to operate and are impacted by changes in energy prices, including natural gas. In 2017 and2016, we utilized derivative instruments to mitigate some of our overall exposure to material increases in natural gas prices. Mark-to-market changes in the fair value of our natural gas derivative instruments recorded in earnings and the related assets and liabilities werenot material for 2017 and 2016.In addition to the market risks identified above, we are subject to business risk as our U.S. beef supply is highly dependent upon alimited number of vendors. If these vendors were unable to fulfill their obligations under their contracts, we could encounter supplyshortages and incur higher costs to secure adequate supplies. See Note 19 - Commitments and Contingencies of the Notes toConsolidated Financial Statements for further details.This market risk discussion contains forward-looking statements. Actual results may differ materially from the discussion based upongeneral market conditions and changes in U.S. and global financial markets.62Table of ContentsBLOOMIN’ BRANDS, INC.Item 8. Financial Statements and Supplementary DataINDEX TO FINANCIAL INFORMATION PAGE NO. Management’s Annual Report on Internal Control over Financial Reporting64 Report of Independent Registered Public Accounting Firm65 Consolidated Balance Sheets — December 30, 2018 and December 31, 201767 Consolidated Statements of Operations and Comprehensive Income —For Fiscal Years 2018, 2017 and 201668 Consolidated Statements of Changes in Stockholders’ Equity —For Fiscal Years 2018, 2017 and 201669 Consolidated Statements of Cash Flows —For Fiscal Years 2018, 2017 and 201671 Notes to Consolidated Financial Statements7363Table of ContentsBLOOMIN’ BRANDS, INC.Management’s Annual Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is definedin Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting includes those policies and procedures that (i)pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assetsof the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are beingmade only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have amaterial effect on the financial statements.Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate.Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial andAdministrative Officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as ofDecember 30, 2018 using the criteria described in Internal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (2013 Framework) (“COSO”). Based upon our evaluation, management concluded that ourinternal control over financial reporting was effective as of December 30, 2018.The effectiveness of our internal control over financial reporting as of December 30, 2018 has been audited by PricewaterhouseCoopersLLP, an independent registered public accounting firm, as stated in their report which is included herein.64Table of ContentsBLOOMIN’ BRANDS, INC.Report of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Bloomin’ Brands, Inc.Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated balance sheets of Bloomin’ Brands, Inc. and its subsidiaries (the “Company”) as ofDecember 30, 2018 and December 31, 2017, and the related consolidated statements of operations and comprehensive income, ofchanges in stockholders’ equity and of cash flows for each of the three years in the period ended December 30, 2018, including therelated notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal controlover financial reporting as of December 30, 2018, based on criteria established in Internal Control - Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of December 30, 2018 and December 31, 2017, and the results of its operations and its cash flows for each of the threeyears in the period ended December 30, 2018 in conformity with accounting principles generally accepted in the United States ofAmerica. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as ofDecember 30, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.Change in Accounting PrincipleAs discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for revenuerecognition in 2018.Basis for OpinionsThe Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanyingManagement’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’sconsolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a publicaccounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to beindependent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsto obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due toerror or fraud, and whether effective internal control over financial reporting was maintained in all material respects.Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of theconsolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as wellas evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reportingincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, andtesting and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also includedperforming such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonablebasis for our opinions.65Table of ContentsBLOOMIN’ BRANDS, INC.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effecton the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPTampa, FloridaFebruary 27, 2019We have served as the Company’s auditor since 1998.66Table of ContentsBLOOMIN’ BRANDS, INC.CONSOLIDATED BALANCE SHEETS(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) DECEMBER 30, 2018 DECEMBER 31, 2017ASSETS Current assets Cash and cash equivalents$71,823 $128,263Current portion of restricted cash and cash equivalents— 1,280Inventories72,812 51,264Other current assets, net190,848 179,402Total current assets335,483 360,209Property, fixtures and equipment, net1,115,929 1,173,414Goodwill295,427 310,234Intangible assets, net503,972 522,290Deferred income tax assets, net92,990 60,486Other assets, net120,973 135,261Total assets$2,464,774 $2,561,894LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable$174,488 $185,461Accrued and other current liabilities246,653 270,840Unearned revenue342,708 330,756Current portion of long-term debt27,190 26,335Total current liabilities791,039 813,392Deferred rent167,027 160,047Deferred income tax liabilities14,790 16,926Long-term debt, net1,067,585 1,091,769Long-term portion of deferred gain on sale-leaseback transactions, net177,983 188,086Other long-term liabilities, net191,533 210,443Total liabilities2,409,957 2,480,663Commitments and contingencies (Note 19) Stockholders’ equity Bloomin’ Brands stockholders’ equity Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of December 30,2018 and December 31, 2017— —Common stock, $0.01 par value, 475,000,000 shares authorized; 91,271,825 and 91,912,546 shares issued andoutstanding as of December 30, 2018 and December 31, 2017, respectively913 919Additional paid-in capital1,107,582 1,081,813Accumulated deficit(920,010) (913,191)Accumulated other comprehensive loss(142,755) (99,199)Total Bloomin’ Brands stockholders’ equity45,730 70,342Noncontrolling interests9,087 10,889Total stockholders’ equity54,817 81,231Total liabilities and stockholders’ equity$2,464,774 $2,561,894 The accompanying notes are an integral part of these consolidated financial statements.67Table of ContentsBLOOMIN’ BRANDS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(IN THOUSANDS, EXCEPT PER SHARE DATA) FISCAL YEAR 2018 2017 2016Revenues Restaurant sales$4,060,871 $4,164,063 $4,221,920Franchise and other revenues65,542 59,073 38,753Total revenues4,126,413 4,223,136 4,260,673Costs and expenses Cost of sales1,295,588 1,317,110 1,354,853Labor and other related1,197,297 1,219,593 1,211,250Other restaurant operating967,099 996,180 1,004,374Depreciation and amortization201,593 192,282 193,838General and administrative282,720 306,956 267,981Provision for impaired assets and restaurant closings36,863 52,329 104,627Total costs and expenses3,981,160 4,084,450 4,136,923Income from operations145,253 138,686 123,750Loss on defeasance, extinguishment and modification of debt— (1,069) (26,998)Other (expense) income, net(11) 14,912 1,609Interest expense, net(44,937) (41,392) (45,726)Income before benefit for income taxes100,305 111,137 52,635(Benefit) provision for income taxes(9,233) 7,529 8,648Net income109,538 103,608 43,987Less: net income attributable to noncontrolling interests2,440 2,315 4,599Net income attributable to Bloomin’ Brands$107,098 $101,293 $39,388 Net income$109,538 $103,608 $43,987Other comprehensive income: Foreign currency translation adjustment(36,132) 8,959 37,075Unrealized (loss) gain on derivatives, net of tax(7,100) 627 (1,250)Reclassification of adjustment for loss on derivatives included in Net income, net of tax120 2,381 3,807Comprehensive income66,426 115,575 83,619Less: comprehensive income attributable to noncontrolling interests2,884 2,338 8,008Comprehensive income attributable to Bloomin’ Brands$63,542 $113,237 $75,611 Earnings per share: Basic$1.16 $1.05 $0.35Diluted$1.14 $1.02 $0.34Weighted average common shares outstanding: Basic92,042 96,365 111,381Diluted94,075 99,707 114,311 Cash dividends declared per common share$0.36 $0.32 $0.28The accompanying notes are an integral part of these consolidated financial statements.68Table of ContentsBLOOMIN’ BRANDS, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(IN THOUSANDS, EXCEPT PER SHARE DATA) BLOOMIN’ BRANDS COMMON STOCK ADDITIONALPAID-INCAPITAL ACCUM-ULATEDDEFICIT ACCUMULATED OTHERCOMPREHENSIVE LOSS NON-CONTROLLINGINTERESTS TOTAL SHARES AMOUNT Balance, December 27, 2015119,215 $1,192 $1,072,861 $(485,290) $(147,367) $13,574 $454,970Net income— — — 39,388 — 3,622 43,010Other comprehensive income(loss), net of tax— — — — 36,224 (43) 36,181Cash dividends declared, $0.28per common share— — (31,379) — — — (31,379)Repurchase and retirement ofcommon stock(16,647) (166) (309,721) — — (309,887)Stock-based compensation— — 23,539 — — — 23,539Excess tax benefit on stock-basedcompensation— — 454 — — — 454Common stock issued understock plans (1)1,354 13 6,831 (447) — — 6,397Purchase of noncontrollinginterests, net of tax of $1,504— — 9,301 — — 581 9,882Change in the redemption valueof redeemable interests— — (2,024) — — — (2,024)Distributions to noncontrollinginterests— — — — — (5,818) (5,818)Contributions fromnoncontrolling interests— — — — — 738 738Balance, December 25, 2016103,922 $1,039 $1,079,583 $(756,070) $(111,143) $12,654 $226,063Cumulative-effect from a changein accounting principle— — — 14,364 — — 14,364Net income— — — 101,293 — 3,099 104,392Other comprehensive income(loss), net of tax— — — — 11,944 (3) 11,941Cash dividends declared, $0.32per common share— — (30,988) — — — (30,988)Repurchase and retirement ofcommon stock(13,807) (138) — (272,598) — — (272,736)Stock-based compensation— 23,721 — — — 23,721Common stock issued understock plans (1)1,798 18 10,421 (180) — — 10,259Purchase of noncontrollinginterests, net of tax of $45— — (713) — — (180) (893)Change in the redemption valueof redeemable interests— — (211) — — — (211)Distributions to noncontrollinginterests— — — — — (5,973) (5,973)Contributions fromnoncontrolling interests— — — — — 873 873Other— — — — — 419 419Balance, December 31, 201791,913 $919 $1,081,813 $(913,191) $(99,199) $10,889 $81,231 (CONTINUED...) 69Table of ContentsBLOOMIN’ BRANDS, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(IN THOUSANDS, EXCEPT PER SHARE DATA) BLOOMIN’ BRANDS COMMON STOCK ADDITIONALPAID-INCAPITAL ACCUM-ULATEDDEFICIT ACCUMULATEDOTHERCOMPREHENSIVE LOSS NON-CONTROLLINGINTERESTS TOTAL SHARES AMOUNT Balance, December 31, 201791,913 $919 $1,081,813 $(913,191) $(99,199) $10,889 $81,231Net income— — — 107,098 — 2,770 109,868Other comprehensive (loss)income, net of tax— — — — (43,556) 444 (43,112)Cash dividends declared, $0.36per common share— — (33,312) — — — (33,312)Repurchase and retirement ofcommon stock(5,062) (50) — (113,917) — — (113,967)Stock-based compensation— — 23,059 — — — 23,059Common stock issued understock plans (1)4,421 44 36,568 — — — 36,612Purchase of noncontrollinginterests, net of tax of $75— — (216) — — (110) (326)Change in the redemption valueof redeemable interests— — (330) — — — (330)Distributions to noncontrollinginterests— — — — — (6,943) (6,943)Contributions fromnoncontrolling interests— — — — — 2,037 2,037Balance, December 30, 201891,272 $913 $1,107,582 $(920,010) $(142,755) $9,087 $54,817________________(1)Net of forfeitures and shares withheld for employee taxes.The accompanying notes are an integral part of these consolidated financial statements.70Table of ContentsBLOOMIN’ BRANDS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS) FISCAL YEAR 2018 2017 2016Cash flows provided by operating activities: Net income$109,538 $103,608 $43,987Adjustments to reconcile Net income to cash provided by operating activities: Depreciation and amortization201,593 192,282 193,838Amortization of deferred discounts and issuance costs2,561 2,868 7,857Amortization of deferred gift card sales commissions27,227 26,751 28,045Provision for impaired assets and restaurant closings36,863 52,329 104,627Stock-based and other non-cash compensation expense27,433 25,938 21,522Deferred income tax benefit(29,490) (28,051) (76,845)Loss on defeasance, extinguishment and modification of debt— 1,069 26,998Gain on sale of a business or subsidiary— (15,632) (1,633)Recognition of deferred gain on sale-leaseback transactions(12,336) (11,872) (5,981)Excess tax benefit from stock-based compensation— — (2,252)Other, net4,358 5,412 830Change in assets and liabilities: (Increase) decrease in inventories(24,707) 11,065 15,053Increase in other current assets(25,405) (12,262) (22,778)(Increase) decrease in other assets(3,190) (1,585) 5,752(Decrease) increase in accounts payable and accrued and other current liabilities(39,871) 53,880 (8,222)Increase in deferred rent8,737 12,079 12,426Increase (decrease) in unearned revenue12,199 (5,855) 11,948Decrease in other long-term liabilities(7,436) (3,022) (14,585)Net cash provided by operating activities288,074 409,002 340,587Cash flows (used in) provided by investing activities: Proceeds from sale-leaseback transactions, net16,160 98,840 530,684Proceeds from sale of a business, net of cash divested— 39,196 28,635Capital expenditures(208,224) (260,589) (260,578)Proceeds from disposal of property, fixtures and equipment14,041 1,020 1,726Other investments, net727 (1,582) (5,219)Net cash (used in) provided by investing activities$(177,296) $(123,115) $295,248 (CONTINUED...) 71Table of ContentsBLOOMIN’ BRANDS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS) FISCAL YEAR 2018 2017 2016Cash flows used in financing activities: Proceeds from issuance of long-term debt, net$1,637 $621,603 $364,211Defeasance, extinguishment and modification of debt— (1,193,719) (478,906)Repayments of long-term debt(26,686) (75,528) (355,616)Proceeds from borrowings on revolving credit facilities, net476,829 1,345,761 729,500Repayments of borrowings on revolving credit facilities(478,500) (676,500) (539,500)Proceeds from failed sale-leaseback transactions, net— 5,942 18,246Proceeds from share-based compensation, net36,612 10,439 6,843Distributions to noncontrolling interests(6,943) (5,973) (5,818)Contributions from noncontrolling interests2,037 873 738Purchase of limited partnership and noncontrolling interests(2,112) (5,713) (39,476)Repayments of partner deposits and accrued partner obligations(19,947) (16,786) (18,739)Repurchase of common stock(113,967) (272,916) (310,334)Excess tax benefit from stock-based compensation— — 2,252Cash dividends paid on common stock(33,312) (30,988) (31,379)Net cash used in financing activities(164,352) (293,505) (657,978)Effect of exchange rate changes on cash and cash equivalents(4,146) 975 2,955Net decrease in cash, cash equivalents and restricted cash(57,720) (6,643) (19,188)Cash, cash equivalents and restricted cash as of the beginning of the period129,543 136,186 155,374Cash, cash equivalents and restricted cash as of the end of the period$71,823 $129,543 $136,186Supplemental disclosures of cash flow information: Cash paid for interest$41,681 $40,475 $41,645Cash paid for income taxes, net of refunds15,839 33,392 88,823Supplemental disclosures of non-cash investing and financing activities: Purchase of noncontrolling interest included in accrued and other current liabilities$— $— $1,414Increase (decrease) in liabilities from the acquisition of property, fixtures and equipment orcapital leases2,699 (4,747) 9,610Deferred tax effect of purchase of noncontrolling interests— — 1,504 The accompanying notes are an integral part of these consolidated financial statements.72Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Description of BusinessBloomin’ Brands, Inc. (“Bloomin’ Brands” or the “Company”) is one of the largest casual dining restaurant companies in the world,with a portfolio of leading, differentiated restaurant concepts. OSI Restaurant Partners, LLC (“OSI”) is the Company’s primaryoperating entity.The Company owns and operates casual, upscale casual and fine dining restaurants. The Company’s restaurant portfolio has fourconcepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. AdditionalOutback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment areoperated under franchise agreements.2. Summary of Significant Accounting PoliciesBasis of Presentation - The Company’s consolidated financial statements include the accounts and operations of Bloomin’ Brands andits subsidiaries.To ensure timely reporting, the Company consolidates the results of its Brazil operations on a one-month calendar lag. There were nointervening events that would materially affect the Company’s consolidated financial position, results of operations or cash flows as ofand for the year ended December 30, 2018.Principles of Consolidation - All intercompany accounts and transactions have been eliminated in consolidation.The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of thoseentities’ operations. The Company is a franchisor of 295 restaurants as of December 30, 2018, but does not possess any ownershipinterests in its franchisees and does not provide financial support to its franchisees. These franchise relationships are not deemedvariable interest entities and are not consolidated.Investments in entities the Company does not control, but where the Company’s interest is generally between 20% and 50% and theCompany has the ability to exercise significant influence over the entity, are accounted for under the equity method.Fiscal Year - The Company utilizes a 52-53 week year ending on the last Sunday in December. In a 52 week fiscal year, each quarterlyperiod is comprised of 13 weeks. The additional week in a 53 week fiscal year is added to the fourth quarter. Fiscal year 2017 consistedof 53 weeks and fiscal years 2018 and 2016 consisted of 52 weeks.Use of Estimates - The preparation of the accompanying consolidated financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from those estimated.Cash and Cash Equivalents - Cash equivalents consist of investments that are readily convertible to cash with an original maturity dateof three months or less. Cash and cash equivalents include $47.1 million and $51.6 million, as of December 30, 2018 andDecember 31, 2017, respectively, for amounts in transit from credit card companies since settlement is reasonably assured.Concentrations of Credit and Counterparty Risk - Financial instruments that potentially subject the Company to a concentration ofcredit risk are gift card, vendor and other receivables. Gift card, vendor and other receivables consist primarily of amounts due from giftcard resellers and vendor rebates. The Company considers the concentration of credit risk for gift card, vendor and other receivables tobe minimal due to the payment histories and general financial condition of its gift card resellers and vendors.73Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedFinancial instruments that potentially subject the Company to concentrations of counterparty risk are cash and cash equivalents,restricted cash and derivatives. The Company attempts to limit its counterparty risk by investing in certificates of deposit, money marketfunds, noninterest-bearing accounts and other highly rated investments. Whenever possible, the Company selects investment gradecounterparties and rated money market funds in order to mitigate its counterparty risk. At times, cash balances may be in excess ofFDIC insurance limits. See Note 16 - Derivative Instruments and Hedging Activities for a discussion of the Company’s use of derivativeinstruments and management of credit risk inherent in derivative instruments.Fair Value - Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderlytransaction between market participants on the measurement date. Fair value is categorized into one of the following three levels basedon the lowest level of significant input:Level 1Unadjusted quoted market prices in active markets for identical assets or liabilitiesLevel 2Observable inputs available at measurement date other than quoted prices included in Level 1Level 3Unobservable inputs that cannot be corroborated by observable market dataInventories - Inventories consist of food and beverages and are stated at the lower of cost (first-in, first-out) or net realizable value.Restricted Cash - From time to time, the Company may have short-term restricted cash balances consisting of amounts pledged forsettlement of deferred compensation plan obligations.Property, Fixtures and Equipment - Property, fixtures and equipment are stated at cost, net of accumulated depreciation. Depreciation iscomputed on the straight-line method over the estimated useful life of the assets. Improvements to leased properties are depreciatedover the shorter of their useful life or the lease term, which includes renewal periods that are reasonably assured. Estimated useful livesby major asset category are generally as follows:Buildings and building improvements20 to 30 yearsFurniture and fixtures5 to 7 yearsEquipment2 to 7 yearsLeasehold improvements5 to 20 yearsComputer equipment and software3 to 7 yearsRepair and maintenance costs that maintain the appearance and functionality of the restaurant, but do not extend the useful life of anyrestaurant asset are expensed as incurred. The Company suspends depreciation and amortization for assets held for sale. The cost andrelated accumulated depreciation of assets sold or disposed of are removed from the Company’s Consolidated Balance Sheets, and anyresulting gain or loss is generally recognized in Other restaurant operating expense in its Consolidated Statements of Operations andComprehensive Income.The Company capitalizes direct and indirect internal costs associated with the acquisition, development, design and construction ofCompany-owned restaurant locations as these costs have a future benefit to the Company. Upon restaurant opening, these costs aredepreciated and charged to depreciation and amortization expense. Internal costs of $6.9 million, $9.1 million and $7.6 million werecapitalized during 2018, 2017 and 2016, respectively.For 2018 and 2017, computer equipment and software costs of $13.5 million and $19.1 million, respectively, were capitalized. As ofDecember 30, 2018 and December 31, 2017, there was $33.2 million and $31.4 million, respectively, of unamortized computerequipment and software included in Property, fixtures and equipment, net on the Company’s Consolidated Balance Sheets.Goodwill and Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of net assets acquired inbusiness combinations and is assigned to the reporting unit in which the acquired business will operate. The Company’s indefinite-livedintangible assets consist of trade names. Goodwill and indefinite-lived intangible74Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continuedassets are tested for impairment annually, as of the first day of the second fiscal quarter, or whenever events or changes incircumstances indicate that the carrying amount may not be recoverable.The Company may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit isimpaired. If the qualitative assessment is not performed or if the Company determines that it is not more likely than not that the fairvalue of the reporting unit exceeds the carrying value, the fair value of the reporting unit is calculated. The carrying value of thereporting unit is compared to its estimated fair value, with any excess of carrying value over fair value deemed to be an indicator ofimpairment.Definite-lived intangible assets, which consist primarily of trademarks, franchise agreements, reacquired franchise rights and favorableleases, are amortized over their estimated useful lives and are tested for impairment, using the discounted cash flow method, wheneverevents or changes in circumstances indicate that the carrying value may not be recoverable.Derivatives - The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value ofderivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedgingrelationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedgeaccounting.Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types offorecasted transactions, are considered cash flow hedges. If the derivative qualifies for hedge accounting treatment, any gain or loss onthe derivative instrument is recognized in equity as a change to Accumulated other comprehensive loss and reclassified into earnings inthe same period or periods during which the hedged transaction affects earnings.The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedgeaccounting does not apply or the Company elects not to apply hedge accounting. Derivatives not designated as hedges are notspeculative and are used to manage the Company’s exposure to interest rate movements, foreign currency exchange rate movements,changes in energy prices and other identified risks. Changes in the fair value of derivatives not designated in hedging relationships arerecorded directly in earnings. The Company has elected not to offset derivative positions in the balance sheet with the samecounterparty under the same agreement.Deferred Financing Fees - For fees associated with its revolving credit facility, the Company records deferred financing fees related tothe issuance of debt obligations in Other assets, net on its Consolidated Balance Sheets. For fees associated with all other debtobligations, the Company records deferred financing fees as a reduction of Long-term debt, net.The Company amortizes deferred financing fees to interest expense over the term of the respective financing arrangement, primarilyusing the effective interest method. The Company amortized deferred financing fees of $2.6 million, $2.9 million and $7.1 million tointerest expense for 2018, 2017 and 2016, respectively.Liquor Licenses - The fees from obtaining non-transferable liquor licenses directly issued by local government agencies for nominalfees are expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limitednumber of authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in Other assets, net on theCompany’s Consolidated Balance Sheets.Insurance Reserves - The Company carries insurance programs with specific retention levels or high per-claim deductibles for asignificant portion of expected losses under its workers’ compensation, general or liquor liability, health, property and managementliability insurance programs. The Company records a liability for all unresolved claims and for an estimate of incurred but not reportedclaims at the anticipated cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves, theCompany considers certain actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims,claim development history and settlement practices. Reserves recorded for workers’ compensation and general liability claims are75Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continueddiscounted using the average of the one-year and five-year risk-free rate of monetary assets that have comparable maturities.Share Repurchase - Shares repurchased are retired. The par value of the repurchased shares is deducted from common stock and theexcess of the purchase price over the par value of the shares is recorded to Accumulated deficit.Revenue Recognition - The Company records food and beverage revenues, net of discounts and taxes, upon delivery to the customer.Franchise-related revenues are included in Franchise and other revenues in the Company’s Consolidated Statements of Operations andComprehensive Income. Royalties, which are a percentage of net sales of the franchisee, are recognized as revenue in the period whichthe sales are reported to have occurred.Proceeds from the sale of gift cards, which do not have expiration dates, are recorded as deferred revenue and recognized as revenueupon redemption by the customer. The Company applies the portfolio approach practical expedient to account for gift card contractsand performance obligations. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized using estimatesbased on historical redemption patterns. If actual redemptions vary from the estimated breakage, gift card breakage income may differfrom the amount recorded. The Company periodically updates its estimates used for breakage. Breakage revenue is recorded as acomponent of Restaurant sales in the Company’s Consolidated Statements of Operations and Comprehensive Income. Approximately86% of the current deferred gift card revenue is expected to be recognized over the next 12 months. Gift card sales that areaccompanied by a bonus gift card to be used by the customer at a future visit result in a separate deferral of a portion of the original giftcard sale. Revenue is recorded when the bonus card is redeemed at the estimated fair market value of the bonus card.Gift card sales commissions paid to third-party providers are capitalized and subsequently amortized to Other restaurant operatingexpense based on historical gift card redemption patterns. See Note 3 - Revenue Recognition for rollforwards of deferred gift card salescommissions and unearned gift card revenue.Advertising fees charged to franchisees are recognized as Franchise revenue in the Company’s Consolidated Statements of Operationsand Comprehensive Income. Initial franchise and renewal fees are recognized over the term of the franchise agreement and renewalperiod, respectively. The weighted average remaining term of franchise agreements and renewal periods was approximately 14 years asof December 30, 2018.The Company maintains a customer loyalty program, Dine Rewards, in the U.S., where customers have the ability to earn a reward aftera number of qualified visits. The Company has developed an estimated value of the partial reward earned from each qualified visit,which is recorded as deferred revenue. Each reward has a maximum value and must be redeemed within three months of earning suchreward. The revenue associated with the fair value of the qualified visit is recognized upon the earlier of redemption or expiration of thereward. The Company applies the practical expedient to exclude disclosures regarding loyalty program remaining performanceobligations, which have original expected durations of less than one year.The Company collects and remits sales, food and beverage, alcoholic beverage and hospitality taxes on transactions with customers andreports revenue net of taxes in its Consolidated Statements of Operations and Comprehensive Income.Operating Leases - Rent expense for the Company’s operating leases, which generally have escalating rentals over the term of the leaseand may include rent holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that arereasonably assured. The difference between rent expense and rent paid is recorded as deferred rent and is included in the Company’sConsolidated Balance Sheets. Rent expense is recorded in Other restaurant operating expense in the Company’s ConsolidatedStatements of Operations and Comprehensive Income. Payments received from landlords as incentives for leasehold improvements arerecorded as deferred rent and amortized on a straight-line basis over the term of the lease as a reduction of rent expense. Favorable andunfavorable lease assets and liabilities are amortized on a straight-line basis to rent expense over the remaining lease term.76Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedEffective December 31, 2018, the Company’s lease accounting policies will change in conjunction with its adoption of AccountingStandards Update (“ASU”) No. 2016-02: Leases (Topic 842) (“ASU No. 2016-02”), ASU No. 2018-01, “Leases (Topic 842): LandEasement Practical Expedient for Transitioning to Topic 842,” (“ASU No. 2018-01”) and ASU No. 2018-11: Leases (Topic 842):Targeted Improvements (“ASU No. 2018-11”). See discussion of ASU No. 2016-02, ASU No. 2018-01 and ASU No. 2018-11 inRecently Issued Financial Accounting Standards Not Yet Adopted below.Pre-Opening Expenses - Non-capital expenditures associated with opening new restaurants are expensed as incurred and are includedin Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income.Consideration Received from Vendors - The Company receives consideration for a variety of vendor-sponsored programs, such asvolume rebates, promotions and advertising allowances. Advertising allowances are intended to offset the Company’s costs ofpromoting and selling menu items in its restaurants. Vendor consideration is recorded as a reduction of Cost of sales or Other restaurantoperating expense when recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income.Impairment of Long-Lived Assets and Costs Associated with Exit Activities - Long-lived assets are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying value may not be recoverable. The evaluation is performed at the lowestlevel of identifiable cash flows independent of other assets. For long-lived assets deployed at its restaurants, the Company reviews forimpairment at the individual restaurant level. When evaluating for impairment, the total future undiscounted cash flows expected to begenerated by the asset are compared to the carrying amount. If the total future undiscounted cash flows of the asset are less than itscarrying amount, recoverability is measured by comparing the fair value of the assets to the carrying amount. An impairment loss isrecognized in earnings when the asset’s carrying value exceeds its estimated fair value. Fair value is generally estimated using adiscounted cash flow model.Restaurant closure costs, including lease termination fees, are expensed as incurred. When the Company ceases using the propertyrights under a non-cancelable operating lease, it records a liability for the net present value of any remaining lease obligations as aresult of lease termination, less the estimated sublease income that can reasonably be obtained for the property. Any subsequentadjustment to that liability as a result of lease termination or changes in estimates of sublease income is recorded in the period incurred.The associated expense is recorded in Provision for impaired assets and restaurant closings in the Company’s Consolidated Statementsof Operations and Comprehensive Income.Restaurant sites and certain other assets to be sold are included in assets held for sale when certain criteria are met, including therequirement that the likelihood of selling the assets within one year is probable.Advertising Costs - Advertising production costs are expensed in the period when the advertising first occurs. All other advertising costsare expensed in the period in which the costs are incurred. Advertising expense of $147.8 million, $151.4 million and $173.0 millionfor 2018, 2017 and 2016, respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statementsof Operations and Comprehensive Income. Advertising expense for 2017 and 2016 has been restated for the reclassification offranchise advertising fees, which are presented within Franchise and other revenues, upon adoption of ASU No. 2014-09 “RevenueRecognition (Topic 606), Revenue from Contracts with Customers” (“ASU No. 2014-09”). See Recently Adopted Financial AccountingStandards below for further details of the impact of implementing ASU No. 2014-09.Legal Costs - Settlement costs are accrued when they are deemed probable and reasonably estimable. Legal fees are recognized asincurred and are reported in General and administrative expense in the Company’s Consolidated Statements of Operations andComprehensive Income.77Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedResearch and Development Expenses (“R&D”) - R&D is expensed as incurred in General and administrative expense in the Company’sConsolidated Statements of Operations and Comprehensive Income. R&D primarily consists of payroll and benefit costs. R&D was$3.8 million, $3.9 million and $5.2 million for 2018, 2017 and 2016, respectively.Partner Compensation - In addition to base salary, Area Operating Partners, Restaurant Managing Partners and Chef Partners generallyreceive performance-based bonuses for providing management and supervisory services to their restaurants, certain of which may bebased on a percentage of their restaurants’ monthly operating results or cash flows and/or total controllable income (“MonthlyPayments”). The expense associated with the Monthly Payments for Restaurant Managing Partners and Chef Partners is included inLabor and other related expenses, and the expense associated with Monthly Payments for Area Operating Partners is included inGeneral and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income.Certain Restaurant Managing Partners and Chef Partners in the U.S. (“U.S. Partners”) may participate in deferred compensationprograms that are subject to the rules of section 409(a) of the Internal Revenue Code and are eligible to receive payments uponcompletion of their five-year employment agreement. Others receive performance-based bonuses payable upon completion of theirfive-year employment agreement. Also, on the fifth anniversary of the opening of each new U.S. Company-owned restaurant, the AreaOperating Partner supervising the restaurant during the first five years of operation receives an additional performance-based bonus.The Company may invest in corporate-owned life insurance policies, which are held within an irrevocable grantor or “rabbi” trustaccount for settlement of certain of the Company’s obligations under the deferred compensation plans.Many of the Company’s International Restaurant Managing Partners are given the option to purchase participation interests in the cashdistributions of the restaurants they manage. The amount, terms and availability vary by country.The Company estimates future bonuses and deferred compensation obligations to U.S. Partners and Area Operating Partners, usingcurrent and historical information on restaurant performance and records the long-term portion of partner obligations in Other long-termliabilities, net on its Consolidated Balance Sheets. Deferred compensation expenses for U.S. Partners are included in Labor and otherrelated expenses and bonus expense for Area Operating Partners is included in General and administrative expense in the Company’sConsolidated Statements of Operations and Comprehensive Income.Stock-based Compensation - Stock-based compensation awards are measured at fair value at the date of grant and expensed over theirvesting or service periods. Stock-based compensation expense is recognized only for those awards expected to vest. The expense, netof forfeitures, is recognized using the straight-line method. Forfeitures of share-based compensation awards are recognized as theyoccur.Foreign Currency Translation and Transactions - For non-U.S. operations, the functional currency is the local currency. Foreigncurrency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet datewith the translation adjustments recorded in Accumulated other comprehensive loss in the Company’s Consolidated Statements ofChanges in Stockholders’ Equity. Results of operations are translated using the average exchange rates for the reporting period. Foreigncurrency exchange transaction losses are recorded in General and administrative expense in the Company’s Consolidated Statements ofOperations and Comprehensive Income.Income Taxes - Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred income taxassets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporarydifferences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in the tax rate isrecognized in income in the period that includes the enactment date of the rate change. A valuation allowance may reduce deferredincome tax assets to the amount that is more likely than not to be realized.78Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe Company records a tax benefit for an uncertain tax position using the highest cumulative tax benefit that is more likely than not tobe realized. The Company adjusts its liability for unrecognized tax benefits in the period in which it determines the issue is effectivelysettled, the statute of limitations expires or when more information becomes available. Liabilities for unrecognized tax benefits,including penalties and interest, are recorded in Accrued and other current liabilities and Other long-term liabilities, net on theCompany’s Consolidated Balance Sheets.Recently Adopted Financial Accounting Standards - On January 1, 2018, the Company adopted ASU No. 2017-04, “Intangibles -Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (“ASU No. 2017-04”) on a prospective basis. ASUNo. 2017-04 eliminates the second step of goodwill impairment, which requires a hypothetical purchase price allocation. Under ASUNo. 2017-04, goodwill impairment is calculated as the amount a reporting unit’s carrying value exceeds its calculated fair value. Theadoption of ASU No. 2017-04 did not impact the Company’s consolidated financial statements. Goodwill and indefinite-livedintangible assets are tested for impairment annually, as of the first day of the second fiscal quarter, or whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. See Note 10 - Goodwill and Intangible Assets, Net for detailsregarding the Company’s annual impairment assessment.On January 1, 2018, the Company adopted ASU No. 2014-09 using the full retrospective transition method. ASU No. 2014-09provides a single source of guidance for revenue arising from contracts with customers. Under ASU No. 2014-09, revenue isrecognized in an amount that reflects the consideration an entity expects to receive for the transfer of goods and services. The standardalso requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts withcustomers. Under the new standard, the Company recognizes gift card breakage proportional to redemptions, which are highest in theCompany’s first fiscal quarter. Previously, under the remote method, the majority of breakage revenue was recorded in the Company’sfourth fiscal quarter corresponding with the timing of the original gift card sale. Advertising fees charged to franchisees, which werepreviously recorded as a reduction to Other restaurant operating expense, are recognized as Franchise revenue. In addition, initialfranchise and renewal fees are recognized over the term of the franchise agreements. In connection with the adoption of ASU No.2014-09, a cumulative effect adjustment of $33.1 million, net of tax, was recorded as a credit to the ending balance of Accumulateddeficit as of December 27, 2015.The following table includes a restatement of the Company’s Consolidated Statement of Operations for the retrospective adoption ofASU No. 2014-09 during the periods indicated: FISCAL YEAR 2017 2016(dollars in thousands, except per share data)AS REPORTED 2014-09IMPACT AS RESTATED AS REPORTED 2014-09IMPACT AS RESTATEDRevenues Restaurant sales$4,168,658 $(4,595) $4,164,063 $4,226,057 $(4,137) $4,221,920Franchise and other revenues44,688 14,385 59,073 26,255 12,498 38,753Total revenues$4,213,346 $9,790 $4,223,136 $4,252,312 $8,361 $4,260,673Costs and expenses Other restaurant operating$978,984 $17,196 $996,180 $992,157 $12,217 $1,004,374Income from operations$146,092 $(7,406) $138,686 $127,606 $(3,856) $123,750Income before benefit for income taxes$118,543 $(7,406) $111,137 $56,491 $(3,856) $52,635Provision for income taxes$15,985 $(8,456) $7,529 $10,144 $(1,496) $8,648Net income$102,558 $1,050 $103,608 $46,347 $(2,360) $43,987Net income attributable to Bloomin’ Brands$100,243 $1,050 $101,293 $41,748 $(2,360) $39,388 Basic earnings per share$1.04 $0.01 $1.05 $0.37 $(0.02) $0.35Diluted earnings per share$1.01 $0.01 $1.02 $0.37 $(0.02) $0.3479Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe following table includes a restatement of the Company’s Consolidated Balance Sheet as of December 31, 2017 for the retrospectiveadoption of ASU No. 2014-09: DECEMBER 31, 2017(dollars in thousands)AS REPORTED 2014-09 IMPACT AS RESTATEDASSETS Deferred income tax assets, net$71,499 $(11,013) $60,486Total assets$2,572,907 $(11,013) $2,561,894LIABILITIES AND STOCKHOLDERS’ EQUITY Unearned revenue Deferred gift card revenue$371,455 $(47,827) $323,628Deferred loyalty revenue6,667 — 6,667Deferred franchise fees - current105 356 461Total Unearned revenue$378,227 $(47,471) $330,756Total current liabilities$860,863 $(47,471) $813,392Other long-term liabilities, net (1)$205,745 $4,698 $210,443Total liabilities$2,523,436 $(42,773) $2,480,663Bloomin’ Brands stockholders’ equity Accumulated deficit$(944,951) $31,760 $(913,191)Total Bloomin’ Brands stockholders’ equity$38,582 $31,760 $70,342Total stockholders’ equity$49,471 $31,760 $81,231Total liabilities and stockholders’ equity$2,572,907 $(11,013) $2,561,894____________________(1)Includes the non-current portion of deferred franchise fees.See Note 3 - Revenue Recognition for required disclosures under ASU No. 2014-09.Effective July 2, 2018, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements toAccounting for Hedging Activities (“ASU No. 2017-12”), which provides guidance for reporting the economic results of hedgingactivities and simplifies the disclosures of risk exposures and hedging strategies. Upon adoption, the Company revised its accountingpolicies and certain disclosures, however there was no impact on its consolidated financial statements. For derivatives that qualify forhedge accounting, any gain or loss on the derivative instrument is recognized in equity as a change to Accumulated othercomprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.See Note 16 - Derivative Instruments and Hedging Activities for required disclosures under ASU No. 2017-12.Recently Issued Financial Accounting Standards Not Yet Adopted - In February 2016, the Financial Accounting Standards Board(“FASB”) issued ASU No. 2016-02, which requires the lease rights and obligations arising from lease contracts, including existing andnew arrangements, to be recognized as assets and liabilities on the balance sheet. In January 2018, the FASB issued ASU No. 2018-01, which allows an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired beforethe Company’s adoption of ASU No. 2016-02. In July 2018, the FASB issued ASU No. 2018-11 that allows for an additional transitionmethod, which permits use of the effective date of adoption as the date of initial application of ASU No. 2016-02 without restatingcomparative period financial statements and provides entities with a practical expedient that allows entities to elect not to separate leaseand non-lease components when certain conditions are met.ASU No. 2016-02, ASU No. 2018-01 and ASU No. 2018-11 are effective for the Company beginning on December 31, 2018 and theCompany will adopt ASU No. 2016-02 using the effective date as the date of initial application. Consequently, financial informationwill not be updated, and the disclosures required under the new standard will not be provided for dates and periods beforeDecember 31, 2018. The Company also plans to elect a transition package including practical expedients that permits it not to reassessthe classification and initial direct costs of expired or80Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continuedexisting contracts and leases. In addition, the Company plans to elect the practical expedients to not separate lease and non-leasecomponents of its restaurant facility leases executed subsequent to adoption, and to not evaluate land easements that exist or expiredbefore the adoption. In preparation for adoption, the Company implemented a new lease accounting system.Adoption of ASU No. 2016-02 is expected to have a material impact on the Company’s consolidated financial statements. While theCompany continues to assess all the effects of adoption, it currently believes the most significant effects relate to: (i) recognition ofright-of-use assets and lease liabilities related to real estate and equipment under operating lease agreements, (ii) derecognition ofexisting assets and liabilities for certain sale-leaseback transactions and (iii) providing significant new disclosures about its leasingactivities.Adoption of ASU No. 2016-02 is expected to result in the following, as of December 31, 2018:(i)recording of right-of-use assets of $1.1 billion to $1.5 billion and lease liabilities of $1.3 billion to $1.7 billion;(ii)a credit to the beginning balance of Accumulated Deficit of $190.4 million to derecognize deferred gains on sale-leasebacktransactions and a debit to the beginning balance of Accumulated Deficit of $49.2 million to derecognize the related deferredtax assets; and(iii)derecognition of existing debt obligations of $19.6 million and existing fixed assets of $16.1 million related to restaurantproperties sold and leased back from to third parties that currently do not qualify for sale accounting, with gains or lossesassociated with this change recognized in Accumulated Deficit.Other restaurant operating expense will increase in future periods since the Company will not recognize the benefit of deferred gains onsale-leaseback transactions through its statements of operations over the corresponding lease term. During 2018, the Company recorded$12.3 million of sale-leaseback deferred gain amortization.Reclassifications - The Company reclassified certain items in the accompanying consolidated financial statements for prior periods to becomparable with the classification for the current period. These reclassifications had no effect on previously reported net income.3. Revenue RecognitionThe following table includes the categories of revenue included in the Company’s Consolidated Statements of Operations andComprehensive Income for the periods indicated: FISCAL YEAR 2018 2017 2016(dollars in thousands) (Restated) (1) (Restated) (1)Revenues Restaurant sales$4,060,871 $4,164,063 $4,221,920Franchise and other revenues: Franchise revenue$52,906 $47,021 $32,281Other revenue12,636 12,052 6,472Total Franchise and other revenues$65,542 $59,073 $38,753Total revenues$4,126,413 $4,223,136 $4,260,673____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.81Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe following table includes the disaggregation of Restaurant sales and Franchise revenue, by restaurant concept and majorinternational market, for the periods indicated: FISCAL YEAR 2018 2017 2016(dollars in thousands)RESTAURANTSALES FRANCHISEREVENUE RESTAURANTSALES FRANCHISEREVENUE RESTAURANTSALES FRANCHISEREVENUEU.S. (Restated) (1) (Restated) (1) (Restated) (1) (Restated) (1)Outback Steakhouse (2)$2,098,696 $40,422 $2,141,506 $34,978 $2,186,052 $24,222Carrabba’s Italian Grill (2)647,454 601 673,872 553 692,631 534Bonefish Grill578,139 833 600,717 925 613,499 854Fleming’s Prime Steakhouse & Wine Bar304,064 — 296,982 — 281,572 —Other5,845 — 589 — 16 —U.S. Total$3,634,198 $41,856 $3,713,666 $36,456 $3,773,770 $25,610International Outback Steakhouse-Brazil$348,394 $— $377,158 $— $302,856 $—Other78,279 11,050 73,239 10,565 145,294 6,671International Total$426,673 $11,050 $450,397 $10,565 $448,150 $6,671Total$4,060,871 $52,906 $4,164,063 $47,021 $4,221,920 $32,281____________________(1)See Note 2 - Summary of Significant Accounting Policies for details of the impact of implementing ASU No. 2014-09.(2)In 2017, the Company sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill restaurant, which are now operated as franchises.The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s ConsolidatedBalance Sheets as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Other current assets, net Deferred gift card sales commissions$16,431 $16,231 Unearned revenue Deferred gift card revenue (1)$333,794 $323,628Deferred loyalty revenue8,424 6,667Deferred franchise fees - current (1)490 461Total Unearned revenue$342,708 $330,756 Other long-term liabilities, net Deferred franchise fees - non-current (1)$4,531 $4,698____________________(1)See Note 2 - Summary of Significant Accounting Policies for details of the impact of implementing ASU No. 2014-09 on the Company’s Consolidated Balance Sheet asof December 31, 2017.The following table is a rollforward of deferred gift card sales commissions for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Balance, beginning of period$16,231 $15,584 $16,073Deferred gift card sales commissions amortization(27,227) (26,751) (28,045)Deferred gift card sales commissions capitalization28,980 29,412 27,556Other(1,553) (2,014) —Balance, end of period$16,431 $16,231 $15,58482Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe following table is a rollforward of unearned gift card revenue for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Balance, beginning of period$323,628 $331,803 $325,202Gift card sales419,172 440,946 439,233Gift card redemptions(388,954) (426,174) (410,616)Gift card breakage (1)(20,052) (22,947) (22,016)Balance, end of period$333,794 $323,628 $331,803____________________(1)See Note 2 - Summary of Significant Accounting Policies for details of the impact of implementing ASU No. 2014-09 for fiscal years 2017 and 2016.4. DisposalsRefranchising - In 2017, the Company completed the sale of 54 of its existing U.S. Company-owned Outback Steakhouse andCarrabba’s Italian Grill locations to two of its existing franchisees (the “Buyers”) for aggregate cash proceeds of $36.2 million, net ofcertain closing adjustments. The transactions resulted in an aggregate net gain of $7.4 million, recorded within Other (expense) income,net, in the Consolidated Statements of Operations and Other Comprehensive Income, and is net of an impairment of $1.7 million relatedto certain Company-owned assets leased to the Buyers. Included in the cash proceeds are initial franchise fees of $2.2 million that wererecorded within Franchise and other revenues in the Consolidated Statements of Operations and Other Comprehensive Income.These restaurants are now operated as franchises and the Company remains contingently liable on certain real estate lease agreementsassigned to the Buyers. See Note 19 - Commitments and Contingencies for additional details regarding lease guarantees.Other Disposals - During 2017, the Company closed and completed the sale of one U.S. Company-owned Carrabba’s Italian Grilllocation for a purchase price of $9.9 million, net of closing costs. The sale resulted in a net gain of $8.4 million, recorded in Other(expense) income, net, in the Company’s Consolidated Statements of Operations and 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”) for a purchase price of $50.0 million, converting all restaurants in that market to franchisedlocations. Following is the Loss before income taxes of Outback Steakhouse South Korea included in the Consolidated Statements ofOperations and Comprehensive Income for the period indicated: FISCAL YEAR(dollars in thousands)2016Restaurant sales$90,455Loss before income taxes (1)$(32,348)________________(1)Includes impairment charges of $39.6 million for Assets held for sale and a gain on sale of $2.1 million in 2016.Assets Held for Sale - In December 2018, the Company signed a purchase agreement with a buyer to sell 18 of its existing U.S.Company-owned Carrabba’s Italian Grill locations for $3.6 million, less certain purchase price adjustments. In connection with thedecision to sell these restaurants, the Company recognized an impairment charge of $5.5 million, including impairment of $0.7 millionfor certain Company-owned assets that will be leased to the buyers. After the expected completion of the sale during the first half of2019, these restaurant locations will be operated as franchises.83Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedFollowing are the assets and liabilities related to the 18 Carrabba’s Italian Grill locations classified as held for sale as of the periodindicated:(dollars in thousands)DECEMBER 30, 2018Assets Cash and cash equivalents$18Inventory515Other current assets, net16Property, fixtures and equipment, net9,454Goodwill110Other assets, net114Total assets$10,227Impairment on carrying value of assets held for sale(4,809)Total assets, net of impairment$5,418 Liabilities Accrued and other current liabilities$51Unearned revenue124Deferred rent1,435Other long-term liabilities, net619Total liabilities$2,2295. Impairments and Exit CostsThe components of Provision for impaired assets and restaurant closings are as follows for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Impairment losses U.S.$15,342 $15,325 $57,464International11,457 10,124 41,599Total impairment losses$26,799 $25,449 $99,063Restaurant closure expenses U.S.$6,536 $26,749 $5,596International3,528 131 (32)Total restaurant closure expenses$10,064 $26,880 $5,564Provision for impaired assets and restaurant closings$36,863 $52,329 $104,62784Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedClosure Initiative and Restructuring Costs - Following is a summary of expenses related to the 2017 Closure Initiative and the BonefishRestructuring (the “Closure Initiatives”), recognized in the Company’s Consolidated Statements of Operations and ComprehensiveIncome for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Impairment, facility closure and other expenses 2017 Closure Initiative (1)$1,662 $20,352 $46,500Bonefish Restructuring (2)1,405 3,783 4,859Impairment, facility closure and other expenses - Provision for impaired assets and restaurantclosings$3,067 $24,135 $51,359Severance and other expenses 2017 Closure Initiative (1)$434 $3,299 $—Bonefish Restructuring (2)136 67 601Severance and other expenses - General and administrative expense$570 $3,366 $601Reversal of deferred rent liability 2017 Closure Initiative (1)$(469) $(4,755) $(3,271)Bonefish Restructuring (2)(147) — (3,410)Reversal of deferred rent liability - Other restaurant operating expense$(616) $(4,755) $(6,681) $3,021 $22,746 $45,279________________(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 of the coremarkets of São Paulo and Rio de Janeiro in Brazil (the “2017 Closure Initiative”). Most of these restaurants were closed in 2017, with the balance mostly closing as leasesand certain operating covenants expire or are amended or waived. In connection with the 2017 Closure Initiative, the Company recognized impairments and closure costsof $0.6 million, $17.9 million and $45.6 million within the U.S. segment and $1.1 million, $2.5 million and $0.9 million within the International segment for 2018, 2017and 2016, respectively.(2)On February 12, 2016, the Company decided to close 14 Bonefish Grill restaurants (the “Bonefish Restructuring”). Expenses related to the Bonefish Restructuring arerecognized within the U.S. segment.Cumulative Closure Initiative and Restructuring Costs - Following is a summary of cumulative expenses related to the ClosureInitiatives incurred through December 30, 2018 (dollars in thousands):DESCRIPTION LOCATION OF CHARGE IN THECONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME CLOSURE INITIATIVES AND RESTRUCTURING 2017 BONEFISH TOTALImpairments, facility closure and otherexpenses Provision for impaired assets and restaurant closings $68,514 $34,251 $102,765Severance and other expenses General and administrative 3,733 947 4,680Reversal of deferred rent liability Other restaurant operating (8,495) (3,704) (12,199) $63,752 $31,494 $95,246International Restructuring - During the thirteen weeks and fiscal year ended December 30, 2018, the Company recognized assetimpairment and closure charges of $4.8 million and $13.9 million, respectively, related to restructuring of certain international markets,including Puerto Rico and China, within the International segment. During 2017, the Company recognized asset impairment andclosure charges of $6.3 million related to restructuring of its China subsidiary, within the International segment.Express Concept Restructuring - During the thirteen weeks and fiscal year ended December 30, 2018, the Company recognized assetimpairment of $7.4 million related to the restructuring of its Express concept, within the U.S. segment. As a part of the restructuring,three Express locations closed in January 2019.85Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedRefranchising - In December 2018, the Company entered into an agreement to sell certain existing U.S. Company-owned Carrabba’sItalian Grill locations. In connection with the decision, the Company recognized impairment charges of $5.5 million during the thirteenweeks and fiscal year ended December 30, 2018, within the U.S. segment.Surplus Properties - The Company owns certain U.S. restaurant properties and assets that are no longer utilized to operate its restaurantconcepts (“surplus properties”). Surplus properties primarily consist of closed properties, which include land and a building, and liquorlicenses no longer needed for operations. Surplus properties may be classified in the Consolidated Balance Sheets as assets held for saleor as assets held and used when the Company does not expect to sell these assets within the next 12 months. Following is a summary ofthe carrying value and number of surplus properties as of the periods indicated:(dollars in thousands)CONSOLIDATED BALANCE SHEETCLASSIFICATION DECEMBER 30, 2018 DECEMBER 31, 2017Surplus properties - assets held for saleOther current assets, net $4,594 $6,217Surplus properties - assets held and usedProperty, fixtures and equipment, net 15,254 21,611Total surplus properties $19,848 $27,828 Number of surplus properties owned 16 22During 2017, the Company recognized impairment charges of $10.7 million in connection with the remeasurement of certain surplusproperties, within the U.S. segment.Sale of Outback Steakhouse South Korea - In connection with the decision to sell Outback Steakhouse South Korea, the Companyrecognized an impairment charge of $39.6 million during 2016, within the International segment.Other Impairment - During 2016, the Company recognized impairment charges of $3.5 million for its Puerto Rico subsidiary, within theU.S. segment.The remaining restaurant impairment and closing charges resulted primarily from locations identified for remodel, relocation or closureand lease liabilities.Accrued Facility Closure and Other Cost Rollforward - The following table summarizes the Company’s accrual activity related tofacility closure and other costs, primarily associated with the Closure Initiatives, for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017Beginning of the year$22,709 $6,557Charges15,771 29,393Cash payments(14,830) (10,728)Adjustments(5,707) (2,513)End of the year (1)$17,943 $22,709________________(1)The Company had exit-related accruals of $4.0 million and $6.7 million, recorded in Accrued and other current liabilities and $13.9 million and $16.0 million, recorded inOther long-term liabilities, net, as of December 30, 2018 and December 31, 2017, respectively.6. Earnings Per ShareThe Company computes basic earnings per share based on the weighted average number of common shares that were outstandingduring the period. Diluted earnings per share includes the dilutive effect of common stock equivalents consisting of restricted stock,restricted stock units, performance-based share units and stock options, using the treasury stock method. Performance-based share unitsare considered dilutive when the related performance criterion has been met.86Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe following table presents the computation of basic and diluted earnings per share for the periods indicated: FISCAL YEAR 2018 2017 2016(in thousands, except per share data) (Restated) (1) (Restated) (1)Net income attributable to Bloomin’ Brands$107,098 $101,293 $39,388 Basic weighted average common shares outstanding92,042 96,365 111,381 Effect of diluted securities: Stock options1,595 2,895 2,659Nonvested restricted stock and restricted stock units397 421 260Nonvested performance-based share units41 26 11Diluted weighted average common shares outstanding94,075 99,707 114,311 Basic earnings per share$1.16 $1.05 $0.35Diluted earnings per share$1.14 $1.02 $0.34____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.Dilutive securities outstanding not included in the computation of earnings per share because their effect was antidilutive were asfollows, for the periods indicated: FISCAL YEAR(shares in thousands)2018 2017 2016Stock options2,879 5,555 5,151Nonvested restricted stock and restricted stock units99 128 219Nonvested performance-based share units201 222 927. Stock-based and Deferred Compensation PlansStock-based Compensation PlansThe Company recognized stock-based compensation expense as follows for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Stock options$6,378 $10,423 $11,926Restricted stock and restricted stock units9,143 9,933 9,275Performance-based share units6,911 2,227 1,393 $22,432 $22,583 $22,594Stock Options - Stock options generally vest and become exercisable over a period of four years in an equal number of shares eachyear. Stock options have an exercisable life of no more than ten years from the date of grant. The Company settles stock optionexercises with authorized but unissued shares of the Company’s common stock.87Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe following table presents a summary of the Company’s stock option activity:(in thousands, except exercise price and contractual life)OPTIONS WEIGHTED-AVERAGEEXERCISEPRICE WEIGHTED-AVERAGEREMAININGCONTRACTUALLIFE (YEARS) AGGREGATEINTRINSICVALUEOutstanding as of December 31, 201710,051 $14.89 5.2 $71,373Granted488 24.01 Exercised(3,994) 10.14 Forfeited or expired(355) 21.38 Outstanding as of December 30, 20186,190 $18.30 5.7 $11,439Exercisable as of December 30, 20184,080 $17.67 4.5 $10,963Assumptions used in the Black-Scholes option pricing model and the weighted-average fair value of option awards granted were asfollows for the periods indicated: FISCAL YEAR 2018 2017 2016Assumptions: Weighted-average risk-free interest rate (1)2.66% 1.92% 1.32%Dividend yield (2)1.50% 1.84% 1.59%Expected term (3)5.8 years 6.3 years 6.1 yearsWeighted-average volatility (4)32.76% 33.72% 35.18% Weighted-average grant date fair value per option$7.23 $5.09 $5.28________________(1)Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for periods within the expected term of the option.(2)Dividend yield is the level of dividends expected to be paid on the Company’s common stock over the expected term of the option.(3)Expected term represents the period of time that the options are expected to be outstanding. The Company estimates the expected term based on historical exerciseexperience for its stock options.(4)Based on the historical volatility of the Company’s stock.The following represents stock option compensation information for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Intrinsic value of options exercised$52,247 $15,139 $10,792Cash received from option exercises, net of tax withholding$40,501 $13,329 $8,998Fair value of stock options vested$34,316 $28,085 $19,431Tax benefits for stock option compensation expense (1)$13,085 $5,889 $4,177 Unrecognized stock option expense$8,077 Remaining weighted-average vesting period2.3 years ________________(1)Includes excess tax benefits for tax deductions related to the exercise of stock options of $8.0 million, $2.9 million and $2.1 million for fiscal years 2018, 2017 and 2016,respectively.88Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedRestricted Stock and Restricted Stock Units - Restricted stock units generally vest over a period of four years and become exercisable inan equal number of shares each year. Following is a summary of the Company’s restricted stock unit activity:(shares in thousands)NUMBER OFRESTRICTED STOCKUNIT AWARDS WEIGHTED-AVERAGEGRANT DATEFAIR VALUE PERAWARDOutstanding as of December 31, 20171,392 $17.54Granted390 22.00Vested(530) 18.32Forfeited(96) 17.94Outstanding as of December 30, 20181,156 $18.65The following represents restricted stock and restricted stock unit compensation information for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Fair value of restricted stock vested$9,705 $10,182 $7,752Tax benefits for restricted stock compensation expense$2,938 $3,664 $2,513 Unrecognized restricted stock expense$14,786 Remaining weighted-average vesting period2.4 years Performance-based Share Units (“PSUs”) - The number of PSUs that vest is determined for each year based on the achievement ofcertain performance criteria as set forth in the award agreement and may range from zero to 200% of the annual target grant. The PSUsare settled in shares of common stock, with holders receiving one share of common stock for each performance-based share unit thatvests. The fair value of PSUs is based on the closing price of the Company’s common stock on the grant date. Compensation expensefor PSUs is recognized over the vesting period when it is probable the performance criteria will be achieved.The following table presents a summary of the Company’s PSU activity:(shares in thousands)PERFORMANCE-BASEDSHARE UNITS WEIGHTED-AVERAGEGRANT DATEFAIR VALUE PERAWARDOutstanding as of December 31, 2017499 $16.72Granted190 22.70Vested(68) 16.85Forfeited(46) 17.31Outstanding as of December 30, 2018575 $18.54The following represents PSU compensation information for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Tax benefits for PSU compensation expense$406 $501 $910Unrecognized PSU expense$7,093 Remaining weighted-average vesting period (1)1.1 years ________________(1)PSUs typically vest after three years.89Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedAs of December 30, 2018, the maximum number of shares of common stock available for issuance pursuant to the 2016 OmnibusIncentive Plan was 4,635,443.Deferred Compensation PlansU.S. Partner Deferred Compensations Plans - Certain U.S. Partners may participate in deferred compensation programs that are subjectto the rules of section 409(a) of the Internal Revenue Code. The Company may invest in corporate-owned life insurance policies, whichare held within an irrevocable grantor or “rabbi” trust account for settlement of certain of the obligations under the deferredcompensation plans. The deferred compensation obligation due to U.S. Partners under these plans was $69.6 million and $96.3 millionas of December 30, 2018 and December 31, 2017, respectively. The rabbi trust is funded through the Company’s voluntarycontributions. The unfunded obligation for U.S. Partners deferred compensation was $26.3 million and $36.6 million as ofDecember 30, 2018 and December 31, 2017, respectively.Other Compensation Programs - Certain U.S. Partners participate in a non-qualified long-term compensation program that theCompany funds as the obligation for each participant becomes due.401(k) Plan - The Company has a qualified defined contribution plan that qualifies under Section 401(k) of the Internal Revenue Codeof 1986, as amended. The Company incurred contribution costs of $5.3 million, $3.3 million and $3.2 million for the 401(k) Plan for2018, 2017 and 2016, respectively.Highly Compensated Employee Plan - The Company provides a deferred compensation plan for its highly compensated employees whoare not eligible to participate in the 401(k) Plan. The deferred compensation plan allows these employees to contribute a percentage oftheir base salary and cash bonus on a pre-tax basis. The deferred compensation plan is unsecured and funded through the Company’svoluntary contributions.8. Other Current Assets, NetOther current assets, net, consisted of the following as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Prepaid expenses$38,117 $40,688Accounts receivable - gift cards, net91,242 66,361Accounts receivable - vendors, net10,029 19,483Accounts receivable - franchisees, net1,303 2,017Accounts receivable - other, net19,688 22,808Deferred gift card sales commissions16,431 16,231Assets held for sale5,143 6,217Other current assets, net8,895 5,597 $190,848 $179,40290Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued9. Property, Fixtures and Equipment, NetProperty, fixtures and equipment, net, consisted of the following as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Land$59,973 $74,228Buildings and building improvements645,920 653,246Furniture and fixtures428,676 410,792Equipment634,459 600,977Leasehold improvements542,815 534,875Construction in progress48,949 40,740Less: accumulated depreciation(1,244,863) (1,141,444) $1,115,929 $1,173,414Sale-leaseback Transactions - The following is a summary of sale-leaseback transactions with third-parties for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Gross proceeds from sale-leaseback transactions$17,294 $108,010 $541,937Sale-leaseback transaction, deferred gain, gross (1)$2,393 $22,315 $163,434Number of restaurant properties sold and leased back6 31 153_______________(1)Deferred gains are amortized to Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income over the initialterm of each lease, ranging from 10 to 20 years.During 2016, the Company sold six restaurant properties to third parties for aggregate proceeds of $18.5 million that did not qualify forsale accounting. The book value of the buildings and land for these restaurant properties remains on the Company’s ConsolidatedBalance Sheets. See Note 13 - Long-term Debt, Net and Note 19 - Commitments and Contingencies for additional details regarding therelated financing obligation.Properties Leased to Third Parties - As of December 30, 2018, the Company leased $14.8 million and $22.4 million of certainCompany-owned land and buildings, respectively. These leased building assets are included in Property, fixtures and equipment, net ofAccumulated depreciation of $9.7 million as of December 30, 2018.Depreciation and repair and maintenance expense are as follows for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Depreciation expense$192,099 $182,254 $183,049Repair and maintenance expense102,409 111,926 108,94091Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued10. Goodwill and Intangible Assets, NetGoodwill - The following table is a rollforward of goodwill:(dollars in thousands)U.S. INTERNATIONAL CONSOLIDATEDBalance as of December 25, 2016$172,424 $137,631 $310,055Translation adjustments— 3,280 3,280Impairments (1)— (1,444) (1,444)Divestitures (2)(1,657) — (1,657)Balance as of December 31, 2017$170,767 $139,467 $310,234Translation adjustments— (14,697) (14,697)Transfer to Assets held for sale(110) — (110)Balance as of December 30, 2018$170,657 $124,770 $295,427________________(1)During 2017, the Company recognized $1.4 million goodwill impairment related to its China subsidiary in Provision for impaired assets and restaurant closings within itsConsolidated Statements of Operations and Comprehensive Income.(2)During 2017, the Company disposed of Goodwill in connection with the sale of 54 of its U.S. Company-owned Outback Steakhouse and Carrabba’s Italian Grilllocations to existing franchisees.The following table is a summary of the Company’s gross goodwill balances and accumulated impairments as of the periods indicated: DECEMBER 30, 2018 DECEMBER 31, 2017 DECEMBER 25, 2016(dollars inthousands)GROSS CARRYINGAMOUNT ACCUMULATEDIMPAIRMENTS GROSS CARRYINGAMOUNT ACCUMULATEDIMPAIRMENTS GROSS CARRYINGAMOUNT ACCUMULATEDIMPAIRMENTSU.S.$838,827 $(668,170) $838,937 $(668,170) $840,594 $(668,170)International242,680 (117,910) 257,377 (117,910) 254,097 (116,466)Total goodwill$1,081,507 $(786,080) $1,096,314 $(786,080) $1,094,691 $(784,636)The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets each year duringthe second quarter. As a result of this assessment, the Company did not record any goodwill asset impairment charges during theperiods presented.Intangible Assets, net - Intangible assets, net, consisted of the following as of the periods indicated: WEIGHTEDAVERAGEAMORTIZATIONPERIOD(IN YEARS) DECEMBER 30, 2018 DECEMBER 31, 2017(dollars inthousands) GROSSCARRYINGVALUE ACCUMULATEDAMORTIZATION NETCARRYINGVALUE GROSSCARRYINGVALUE ACCUMULATEDAMORTIZATION NETCARRYINGVALUETrade namesIndefinite $414,516 $414,516 $414,141 $414,141Trademarks10 81,381 $(44,057) 37,324 81,381 $(40,233) 41,148Favorable leases8 64,307 (41,447) 22,860 66,338 (39,259) 27,079Franchiseagreements2 14,881 (13,212) 1,669 14,881 (12,067) 2,814Reacquiredfranchise rights12 46,446 (18,843) 27,603 55,071 (17,963) 37,108Total intangibleassets9 $621,531 $(117,559) $503,972 $631,812 $(109,522) $522,290The Company did not record any indefinite-lived intangible asset impairment charges during the periods presented.92Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedDefinite-lived intangible assets are amortized on a straight-line basis. The following table presents the aggregate expense related to theamortization of the Company’s trademarks, favorable leases, franchise agreements, reacquired franchise rights and other intangibles forthe periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Amortization expense (1)$13,377 $14,191 $15,666________________(1)Amortization expense is recorded in Depreciation and amortization and Other restaurant operating expense in the Company’s Consolidated Statements of Operations andComprehensive Income.The following table presents expected annual amortization of intangible assets as of December 30, 2018:(dollars in thousands) 2019$12,301202010,73620219,55920229,14320238,88811. Other Assets, NetOther assets, net, consisted of the following as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Company-owned life insurance$61,233 $73,818Deferred financing fees (1)6,563 8,232Liquor licenses24,153 24,659Other assets29,024 28,552 $120,973 $135,261________________(1)Net of accumulated amortization of $5.1 million and $4.1 million as of December 30, 2018 and December 31, 2017, respectively.12. Accrued and Other Current LiabilitiesAccrued and other current liabilities consisted of the following as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Accrued payroll and other compensation$101,249 $113,636Accrued insurance22,055 23,482Other current liabilities123,349 133,722 $246,653 $270,84093Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued13. Long-term Debt, NetFollowing is a summary of outstanding long-term debt, as of the periods indicated: DECEMBER 30, 2018 DECEMBER 31, 2017(dollars in thousands)OUTSTANDINGBALANCE INTEREST RATE OUTSTANDINGBALANCE INTEREST RATESenior Secured Credit Facility: Term loan A (1)$475,000 4.14% $500,000 3.27%Revolving credit facility (1)599,500 4.17% 600,000 3.26%Total Senior Secured Credit Facility1,074,500 1,100,000 Financing obligations19,562 7.58% to 7.82% 19,579 7.52% to 7.82%Capital lease obligations3,297 2,015 Other notes payable918 0.00% to 2.18% 904 0.00% to 2.18%Less: unamortized debt discount and issuance costs(3,502) (4,394) Total debt, net1,094,775 1,118,104 Less: current portion of long-term debt(27,190) (26,335) Long-term debt, net$1,067,585 $1,091,769 ________________(1)Represents the weighted-average interest rate for the respective period.Bloomin’ Brands, Inc. is a holding company and conducts its operations through its subsidiaries, certain of which have incurredindebtedness as described below.Credit Agreement - On November 30, 2017, the Company and OSI, as co-borrowers, entered into a credit agreement (the “CreditAgreement”) with a syndicate of institutional lenders, providing for senior secured financing of up to $1.5 billion consisting of a $500.0million Term loan A and a $1.0 billion revolving credit facility, including a letter of credit and swing line loan sub-facilities (the “SeniorSecured Credit Facility”). The Senior Secured Credit Facility matures on November 30, 2022.The Company may elect an interest rate for the Credit Agreement at each reset period based on the Alternate Base Rate or theEurocurrency Rate. The Alternate Base Rate option is the highest of: (i) the prime rate of Wells Fargo Bank, National Association, (ii)the federal funds effective rate plus 0.5 of 1.0% or (iii) the Eurocurrency rate with a one-month interest period plus 1.0% (the “BaseRate”). The Eurocurrency Rate option is the seven, 30, 60, 90 or 180-day Eurocurrency rate (“Eurocurrency Rate”). The interest ratesare as follows: BASE RATE ELECTION EUROCURRENCY RATE ELECTIONTerm loan A and revolving credit facility50 to 100 basis points over Base Rate 150 to 200 basis points over the Eurocurrency RateFees on letters of credit and the daily unused availability under the revolving credit facility as of December 30, 2018 were 1.88% and0.30%, respectively. As of December 30, 2018, $22.0 million of the revolving credit facility was committed for the issuance of lettersof credit and not available for borrowing.The Senior Secured Credit Facility is guaranteed by each of the Company’s current and future domestic subsidiaries and is secured bysubstantially all now owned or later acquired assets of the Company and OSI, including the Company’s domestic subsidiaries.Financing Obligation - During 2016, the Company sold six restaurant properties to third parties for aggregate proceeds of $18.5 millionand the Company entered into lease agreements under which the Company agreed to lease back each of the properties for an initialterm of 20 years. As the Company had continuing involvement in these restaurant properties, the sale of the properties did not qualifyfor sale accounting. As a result, the aggregate proceeds were recorded as a financing obligation on its Consolidated Balance Sheet. Assuch, the lease payments are recognized as94Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continuedinterest expense. See Note 19 - Commitments and Contingencies for additional details regarding the financing obligation.Debt Covenants and Other Restrictions - Borrowings under the Company’s debt agreements are subject to various covenants that limitits ability to: incur additional indebtedness; make significant payments; sell assets; pay dividends and other restricted payments; acquirecertain assets; effect mergers and similar transactions; and effect certain other transactions with affiliates. The Senior Secured CreditFacility has a financial covenant to maintain a specified quarterly Total Net Leverage Ratio (“TNLR”). TNLR is the ratio ofConsolidated Total Debt (Current portion of long-term debt and Long-term debt, net of cash) to Consolidated EBITDA (earnings beforeinterest, taxes, depreciation and amortization and certain other adjustments as defined in the Credit Agreement). The TNLR may notexceed 4.50 to 1.00. The Company’s TNLR as of December 30, 2018 does not limit the Company’s ability to draw on its revolvingcredit facility.The Senior Secured Credit Facility permits regular quarterly dividend payments, subject to certain restrictions.As of December 30, 2018 and December 31, 2017, the Company was in compliance with its debt covenants.Loss on Defeasance, Extinguishment and Modification of Debt - Following is a summary of loss on defeasance, extinguishment andmodification of debt recorded in the Company’s Consolidated Statements of Operations and Comprehensive Income for the periodsindicated: FISCAL YEAR(dollars in thousands)2017 2016Refinancing of Senior Secured Credit Facility$809 $—Modification of the former credit facility260 —Defeasance of 2012 CMBS loan (1)— 26,580Modification of mortgage loan— 418Loss on defeasance, extinguishment and modification of debt$1,069 $26,998________________(1)The loss was comprised primarily of a penalty of $23.2 million.Deferred financing fees - The Company deferred $9.7 million of financing costs incurred in connection with the refinancing of itsCredit Agreement in 2017, including fees of $6.9 million associated with the revolving credit facility recorded in Other Assets, net andfees of $2.8 million associated with Term loan A recorded in Long-term debt, net.Maturities - Following is a summary of principal payments of the Company’s total consolidated debt outstanding:(dollars in thousands)DECEMBER 30, 2018Year 1$27,190Year 226,161Year 338,264Year 4983,696Year 546Thereafter19,418Total$1,094,77595Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe following is a summary of required amortization payments for the Term loan A:SCHEDULED QUARTERLY PAYMENT DATES (dollars in thousands) TERM LOAN AMarch 31, 2019 through December 27, 2020 $6,250March 28, 2021 through December 26, 2021 $9,375March 27, 2022 through September 25, 2022 $12,500The Senior Secured Credit Facility contains mandatory prepayment requirements for Term loan A. The Company is required to prepayoutstanding amounts under these loans with 50% of its annual excess cash flow, as defined in the Credit Agreement. The amount ofoutstanding loans required to be prepaid in accordance with the debt covenants may vary based on the Company’s leverage ratio andyear end results. Other than the required minimum amortization premiums of $25.0 million, the Company does not anticipate any otherpayments will be required through December 29, 2019.14. Other Long-term Liabilities, NetOther long-term liabilities, net, consisted of the following as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Accrued insurance liability$33,771 $35,945Unfavorable leases (1)32,120 36,661Chef and Restaurant Managing Partner deferred compensation obligations and deposits64,766 81,083Other long-term liabilities (2)60,876 56,754 $191,533 $210,443_______________(1)Net of accumulated amortization of $36.2 million and $34.0 million as of December 30, 2018 and December 31, 2017, respectively.(2)See Note 2 - Summary of Significant Accounting Policies for details of the impact of implementing ASU No. 2014-09 on the Company’s Consolidated Balance Sheet asof December 31, 2017.15. Stockholders’ Equity Share Repurchases - Following is a summary of the Company’s share repurchase programs as of December 30, 2018 (dollars inthousands):SHARE REPURCHASEPROGRAM BOARD APPROVALDATE AUTHORIZED REPURCHASED CANCELED REMAINING2014 December 12, 2014 $100,000 $100,000 $— $—2015 August 3, 2015 $100,000 69,999 $30,001 $—2016 February 12, 2016 $250,000 139,892 $110,108 $—July 2016 July 26, 2016 $300,000 247,731 $52,269 $—2017 April 21, 2017 $250,000 195,000 $55,000 $—2018 February 16, 2018 $150,000 113,967 $— $36,033Total Share Repurchase Programs $866,589 96Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedFollowing is a summary of the shares repurchased under the Company’s share repurchase programs for the periods presented: NUMBER OF SHARES (in thousands) AVERAGE REPURCHASEPRICE PER SHARE AMOUNT(in thousands) 2018 2017 2018 2017 2018 2017First fiscal quarter2,116 2,887 $24.10 $18.37 $50,996 $53,053Second fiscal quarter1,287 7,030 $23.31 $20.72 30,004 145,675Third fiscal quarter968 3,890 $18.57 $19.03 17,968 74,008Fourth fiscal quarter691 — $21.71 $— 14,999 —Total common stock repurchases5,062 13,807 $22.52 $19.75 $113,967 $272,736On February 12, 2019, the Company’s Board of Directors (the “Board”) canceled the remaining $36.0 million of authorization underthe 2018 Share Repurchase Program and approved a new $150.0 million authorization (the “2019 Share Repurchase Program”). The2019 Share Repurchase Program will expire on August 12, 2020.Dividends - The Company declared and paid dividends per share during the periods presented as follows: DIVIDENDS PER SHARE AMOUNT(in thousands) 2018 2017 2018 2017First fiscal quarter$0.09 $0.08 $8,371 $8,254Second fiscal quarter0.09 0.08 8,363 8,054Third fiscal quarter0.09 0.08 8,344 7,369Fourth fiscal quarter0.09 0.08 8,234 7,311Total cash dividends declared and paid$0.36 $0.32 $33,312 $30,988In February 2019, the Board declared a quarterly cash dividend of $0.10 per share, payable on March 8, 2019 to shareholders of recordat the close of business on February 25, 2019.Acquisition of Limited Partnership Interests - During 2016, the Company purchased the remaining partnership interests in certain of theCompany’s limited partnerships for five Outback Steakhouse restaurants for an aggregate purchase price of $3.4 million. Thesetransactions resulted in a reduction of $2.5 million, net of tax, in Additional paid-in capital in the Company’s Consolidated Statement ofChanges in Stockholders’ Equity.The following table sets forth the effect of the acquisition of the limited partnership interests on stockholders’ equity attributable toBloomin’ Brands for the periods indicated: NET INCOME ATTRIBUTABLE TO BLOOMIN’ BRANDSAND TRANSFERS TO NONCONTROLLING INTERESTS FISCAL YEAR(dollars in thousands)2018 2017 2016Net income attributable to Bloomin’ Brands$107,098 $101,293 $39,388Transfers to noncontrolling interests: Decrease in Bloomin’ Brands additional paid-in capital for purchase of limited partnership interests(216) (713) (2,475)Change from net income attributable to Bloomin’ Brands and transfers to noncontrolling interests$106,882 $100,580 $36,91397Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedAccumulated Other Comprehensive Loss - Following are the components of Accumulated other comprehensive loss (“AOCL”) as of theperiods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Foreign currency translation adjustment$(135,149) $(98,573)Unrealized loss on derivatives, net of tax(7,606) (626)Accumulated other comprehensive loss$(142,755) $(99,199)Following are the components of Other comprehensive (loss) income for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Bloomin’ Brands: Foreign currency translation adjustment$(36,576) $8,936 $33,667 Unrealized (loss) gain on derivatives, net of tax (1)$(7,100) $627 $(1,250)Reclassification of adjustments for loss on derivatives included in Net income, net of tax (2)120 2,381 3,807Total unrealized (loss) gain on derivatives, net of tax$(6,980) $3,008 $2,557Other comprehensive (loss) income attributable to Bloomin’ Brands$(43,556) $11,944 $36,224 Non-controlling interests: Foreign currency translation adjustment$444 $(3) $(43)Other comprehensive income (loss) attributable to Non-controlling interests$444 $(3) $(43) Redeemable non-controlling interests: Foreign currency translation adjustment$— $26 $3,451Other comprehensive income attributable to Redeemable non-controlling interests$— $26 $3,451________________(1)Unrealized (loss) gain on derivatives is net of tax of ($2.5) million, $0.5 million and ($0.8) million for 2018, 2017 and 2016, respectively.(2)Reclassifications of adjustments for losses on derivatives are net of tax. See Note 16 - Derivative Instruments and Hedging Activities for discussion of the tax impact ofreclassifications.Redeemable Noncontrolling Interests - In 2013, the Company, through its wholly-owned subsidiary, Outback Steakhouse RestaurantesBrasil S.A. (“OB Brasil”), completed the acquisition of a controlling interest in PGS Consultoria e Serviços Ltda. (the “Brazil JointVenture”). The purchase agreement provided certain former equity holders of the Brazil Joint Venture with options to sell theirremaining interests to OB Brasil and provided OB Brasil with options to purchase such remaining interests (the “Options”).In 2016, the former equity holders exercised Options to sell their interests in the Brazil Joint Venture to the Company for total cashconsideration of $27.3 million. This transaction resulted in a reduction of $29.4 million of Mezzanine equity and an increase of $2.1million of Additional paid-in capital during 2016. The Company also recognized a cumulative translation adjustment of $9.6 million,which resulted in an increase to Additional paid-in capital and a decrease to Accumulated other comprehensive loss during 2016. As aresult of these transactions, the Company owns 100% of the Brazil Joint Venture.16. Derivative Instruments and Hedging ActivitiesInterest Rate Risk - The Company manages economic risks, including interest rate variability, primarily by managing the amount,sources and duration of its debt funding and through the use of derivative financial instruments. The Company’s objectives in usinginterest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interestrate swaps.98Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedDESIGNATED HEDGESCash Flow Hedges of Interest Rate Risk - On September 9, 2014, the Company entered into variable-to-fixed interest rate swapagreements with eight counterparties to hedge a portion of the cash flows of the Company’s variable rate debt (the “2014 SwapAgreements”). The 2014 Swap Agreements have an aggregate notional amount of $400.0 million and mature on May 16, 2019. Underthe terms of the 2014 Swap Agreements, the Company pays a weighted-average fixed rate of 2.02% on the notional amount andreceives payments from the counterparties based on the 30-day LIBOR rate.On October 24, 2018 and October 25, 2018, the Company entered into variable-to-fixed interest rate swap agreements with 12counterparties to hedge a portion of the cash flows of the Company’s variable rate debt (the “2018 Swap Agreements”). The 2018 SwapAgreements have an aggregate notional amount of $550.0 million, a forward start date of May 16, 2019 (the maturity date of the 2014Swap Agreements), and mature on November 30, 2022. Under the terms of the 2018 Swap Agreements, the Company will pay aweighted-average fixed rate of 3.04% on the notional amount and receive payments from the counterparties based on the one-monthLIBOR rate.The Company’s interest rate swaps, which have been designated and qualify as cash flow hedges, are recognized on its ConsolidatedBalance Sheets at fair value and are classified based on the instruments’ maturity dates. The Company estimates $1.6 million will bereclassified to interest expense over the next twelve months related to the 2018 Swap Agreements.The following table presents the fair value of the Company’s interest rate swaps as well as their classification on the Company’sConsolidated Balance Sheets as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017 CONSOLIDATED BALANCE SHEETCLASSIFICATIONInterest rate swaps - asset (1)$765 $— Other current assets, netInterest rate swaps - asset (1)— 67 Other assets, netTotal fair value of derivative instruments - assets$765 $67 Interest rate swaps - liability (1)$1,393 $1,010 Accrued and other current liabilitiesInterest rate swaps - liability (1)9,723 — Other long-term liabilities, netTotal fair value of derivative instruments - liabilities$11,116 $1,010 Interest receivable$112 $— Other current assets, netAccrued interest$— $15 Accrued and other current liabilities____________________(1) See Note 17 - Fair Value Measurements for fair value discussion of the interest rate swaps.The following table summarizes the effects of the interest rate swaps on Net income for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Interest rate swap expense recognized in Interest expense, net$(161) $(3,908) $(6,241)Income tax benefit recognized in (Benefit) provision for income taxes41 1,527 2,434Total effects of the interest rate swaps on Net income$(120) $(2,381) $(3,807)The Company records its derivatives on its Consolidated Balance Sheets on a gross balance basis. The Company’s interest rate swapsare subject to master netting arrangements. As of December 30, 2018, the Company did not have more than one derivative with thesame maturity date, between the same counterparties and as such, there was no netting.99Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe Company is exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivativecontract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon credit ratingsand other factors. The Company continually assesses the creditworthiness of its counterparties. As of December 30, 2018 andDecember 31, 2017, all counterparties to the interest rate swaps had performed in accordance with their contractual obligations.The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declaredin default on its derivative obligations if the repayment of the underlying indebtedness is accelerated by the lender due to theCompany’s default on indebtedness.As of December 30, 2018 and December 31, 2017, the fair value of the Company’s interest rate swaps in a net liability position, whichincludes accrued interest but excludes any adjustment for nonperformance risk, was $10.5 million and $1.0 million, respectively. As ofDecember 30, 2018 and December 31, 2017, the Company has not posted any collateral related to these agreements. If the Companyhad breached any of these provisions as of December 30, 2018 and December 31, 2017, it could have been required to settle itsobligations under the agreements at their termination value of $10.5 million and $1.0 million, respectively.17. Fair Value MeasurementsFair Value Measurements on a Recurring Basis - The following table presents the Company’s financial assets and liabilities measuredat fair value by hierarchy level on a recurring basis as of the periods indicated: DECEMBER 30, 2018 DECEMBER 31, 2017(dollars in thousands)TOTAL LEVEL 1 LEVEL 2 TOTAL LEVEL 1 LEVEL 2Assets: Cash equivalents: Fixed income funds$627 $627 $— $1,830 $1,830 $—Money market funds17,827 17,827 — 24,656 24,656 —Restricted cash equivalents: Money market funds— — — 1,280 1,280 —Other current assets, net: Derivative instruments - interest rate swaps765 — 765 — — —Other assets, net: Derivative instruments - interest rate swaps— — — 67 — 67Total asset recurring fair value measurements$19,219 $18,454 $765 $27,833 $27,766 $67 Liabilities: Accrued and other current liabilities: Derivative instruments - interest rate swaps$1,393 $— $1,393 $1,010 $— $1,010Other long-term liabilities: Derivative instruments - interest rate swaps9,723 — 9,723 — — —Total liability recurring fair value measurements$11,116 $— $11,116 $1,010 $— $1,010100Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedFair value of each class of financial instrument is determined based on the following:FINANCIAL INSTRUMENT METHODS AND ASSUMPTIONSFixed income funds andMoney market funds Carrying value approximates fair value because maturities are less than three months.Derivative instruments The Company’s derivative instruments include interest rate swaps. Fair value measurements are based on the contractual terms of thederivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on theexpected cash flows of each derivative using observable inputs including interest rate curves and credit spreads. The Company alsoconsiders its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. As ofDecember 30, 2018 and December 31, 2017, the Company has determined that the credit valuation adjustments are not significant to theoverall valuation of its derivatives.Fair Value Measurements on a Nonrecurring Basis - Assets and liabilities that are measured at fair value on a nonrecurring basis relateprimarily to property, fixtures and equipment, goodwill and other intangible assets, which are remeasured when carrying value exceedsfair value. The following table summarizes the fair value measurements for Assets held for sale, Property, fixtures and equipment andother assets, aggregated by the level in the fair value hierarchy within which those measurements fall as of and for the periodsindicated: 2018 2017 2016(dollars in thousands)CARRYINGVALUE TOTALIMPAIRMENT CARRYINGVALUE TOTALIMPAIRMENT CARRYINGVALUE TOTALIMPAIRMENTAssets held for sale (1)$8,590 $5,276 $870 $467 $45,901 $44,729Property, fixtures and equipment (2)6,464 21,523 19,222 23,539 21,450 53,136Other (3)— — — 1,444 39 1,198 $15,054 $26,799 $20,092 $25,450 $67,390 $99,063________________(1)Carrying value approximates fair value with all assets measured using Level 2 inputs (third-party market appraisals or executed sales contracts) to estimate the fair value.Refer to Note 4 - Disposals for discussion of impairments related to Carrabba’s Italian Grill in 2018 and Outback Steakhouse South Korea in 2016.(2)Carrying value approximates fair value. Carrying values for assets measured using Level 2 inputs totaled $4.6 million, $19.2 million and $20.3 million for 2018, 2017 and2016, respectively. Assets measured using Level 3 inputs, had a carrying value of $1.9 million and $1.2 million for 2018 and 2016, respectively. Third-party marketappraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate the fair value. Refer to Note 5 - Impairments and Exit Costs for a more detaileddiscussion of impairments.(3)Other primarily includes: (i) goodwill in 2017 and (ii) investment in unconsolidated affiliates and intangible assets in 2016. Carrying value approximates fair value with allassets measured using market appraisals (Level 2) to estimate the fair value.Fair Value of Financial Instruments - The Company’s non-derivative financial instruments as of December 30, 2018 and December 31,2017 consist of cash equivalents, restricted cash, accounts receivable, accounts payable and current and long-term debt, the fair valuesof which approximate their carrying amounts reported in its Consolidated Balance Sheets due to their short duration.Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The following tableincludes the carrying value and fair value of the Company’s debt, aggregated by the level in the fair value hierarchy in which thosemeasurements fall as of the periods indicated: DECEMBER 30, 2018 DECEMBER 31, 2017 CARRYINGVALUE FAIR VALUE (1) CARRYINGVALUE FAIR VALUE (1)(dollars in thousands) LEVEL 2 LEVEL 2Senior Secured Credit Facility: Term loan A$475,000 $464,906 $500,000 $502,500Revolving credit facility$599,500 $590,508 $600,000 $598,500________________(1)Fair value of debt is determined based on quoted market prices in inactive markets.101Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued18. Income TaxesOn December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and JobsAct (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code that impacted the Company’s 2017 provisionfor income taxes.The Company has applied guidance under SEC Staff Accounting Bulletin No. 118 (“SAB 118”), which allows for a measurementperiod up to one year after the December 22, 2017 enactment date of the Tax Act to complete the accounting requirements. Inaccordance with the expiration of the SAB 118 measurement period, the Company completed the assessment of the income tax effectsof the Tax Act in the fourth quarter of 2018 with immaterial adjustments made to the provisional amounts.Below is a summary of the amounts the Company has recorded in connection with the Tax Act:•A $1.9 million net tax expense was recorded during 2017 related to the transition tax on accumulated foreign earnings,remeasurement of the Company’s deferred tax assets and liabilities, the recording of a valuation allowance against foreign taxcredit carryforwards and the write-off of certain deferred tax assets that will no longer be realized;•In January 2018, the Company recorded a $5.6 million income tax benefit for 2017 from the impact of the Tax Act on theretrospective adoption of ASU No. 2014-09; and•During 2018, the Company made immaterial adjustments to the initial provisional amounts in association with the filing of its2017 federal income tax return and the completion of the assessment of the income tax effects of the Tax Act.The Tax Act includes a provision designed to currently tax global intangible low-taxed income (“GILTI”) starting in 2018. TheCompany has elected, as permitted in FASB Staff Q&A - Topic 740 - No. 5, to treat any future GILTI tax liabilities as period costs andwill expense those liabilities in the period incurred. The Company therefore has not recorded deferred taxes associated with the GILTIprovision of the Tax Act.The Company has a blended federal and state statutory rate of approximately 26%. The effective income tax rate for 2018 was lowerthan the blended federal and state statutory rate primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips andexcess tax benefits from equity-based compensation arrangements. The effective income tax rate for the 2017 was lower than theblended federal and state statutory rate of approximately 39%, primarily due to the benefit of tax credits for FICA taxes on certainemployees’ tips and the cumulative effect of the Tax Act. The effective income tax rate for the 2016 was lower than the blended federaland state statutory rate of approximately 39%, primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips.The following table presents the domestic and foreign components of Income before provision for income taxes for the periodsindicated: FISCAL YEAR 2018 2017 2016(dollars in thousands) Restated (1) Restated (1)Domestic$109,965 $112,226 $66,625Foreign(9,660) (1,089) (13,990) $100,305 $111,137 $52,635____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.102Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedProvision (benefit) for income taxes consisted of the following for the periods indicated: FISCAL YEAR 2018 2017 2016(dollars in thousands) Restated (1) Restated (1)Current provision: Federal$11,089 $18,384 $43,071State6,763 8,155 28,033Foreign2,405 9,041 14,389 20,257 35,580 85,493Deferred (benefit) provision: Federal(28,772) (24,248) (55,143)State(1,335) (3,850) (21,316)Foreign617 47 (386) (29,490) (28,051) (76,845)(Benefit) provision for income taxes$(9,233) $7,529 $8,648____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.Effective Income Tax Rate - The reconciliation of income taxes calculated at the United States federal tax statutory rate to theCompany’s effective income tax rate is as follows for the periods indicated: FISCAL YEAR 2018 2017 2016 Restated (1) Restated (1)Income taxes at federal statutory rate21.0 % 35.0 % 35.0 %State and local income taxes, net of federal benefit5.5 2.2 8.5Employment-related credits, net(34.6) (27.2) (57.4)Excess tax benefits from stock-based compensation arrangements (2)(7.1) (2.2) —Enhanced charitable contributions deduction(1.3) (1.7) (4.2)Noncontrolling interests(0.9) (1.4) (3.0)Foreign rate differential(0.7) 1.7 0.8Domestic manufacturing deduction(0.3) (4.6) —Nondeductible expenses5.0 3.6 3.4Valuation allowance on deferred income tax assets3.9 3.3 6.5Net life insurance expense0.6 (0.7) (2.9)Cumulative effect of the Tax Act0.2 (3.3) —Refranchising of Outback Steakhouse South Korea— — 29.4Other, net(0.5) 2.1 0.3Total(9.2)% 6.8 % 16.4 %____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.(2)During 2018 and 2017, excess tax benefits from share-based award activity are reflected as a reduction to the provision for income taxes as a result of the adoption ofASU No. 2016-09.The net decrease in the effective income tax rate in 2018 as compared to 2017 was primarily due to the reduction in the U.S. federalcorporate tax rate from 35% to 21% as part of the Tax Act. The remaining decrease was primarily due to employment-related creditsbeing a higher percentage of net income in 2018 and excess tax benefits from equity-based compensation arrangements recorded in2018. These decreases were partially offset by the domestic manufacturing deduction and the cumulative effect of the Tax Act recordedin 2017.103Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe net decrease in the effective income tax rate in 2017 as compared to 2016 was primarily due to impairment and additional taxliabilities recorded in connection with the refranchising of Outback Steakhouse South Korea in 2016. The remaining decrease wasprimarily due to a domestic manufacturing deduction and excess tax benefits from equity-based compensation arrangements recordedin 2017. These decreases were mostly offset by employment-related credits being a lower percentage of net income in 2017 relative to2016 and the impact of the Tax Act.Deferred Tax Assets and Liabilities - The income tax effects of temporary differences that give rise to significant portions of deferredincome tax assets and liabilities are as follows as of the periods indicated: DECEMBER 30, 2018 DECEMBER 31, 2017(dollars in thousands) Restated (1)Deferred income tax assets: Deferred rent$42,550 $40,504Insurance reserves14,232 15,788Unearned revenue12,590 4,007Deferred compensation30,864 38,273Net operating loss carryforwards10,279 8,003Federal tax credit carryforwards99,591 75,661Partner deposits and accrued partner obligations4,389 4,326Other, net17,885 15,342Gross deferred income tax assets232,380 201,904Less: valuation allowance(17,535) (15,925)Net deferred income tax assets214,845 185,979Deferred income tax liabilities: Less: property, fixtures and equipment basis differences(19,445) (18,814)Less: intangible asset basis differences(117,200) (116,425)Less: deferred gain on extinguishment of debt— (7,180)Net deferred income tax assets$78,200 $43,560____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.Undistributed Earnings - The Company had aggregate accumulated foreign earnings of approximately $88.3 million. This amountconsists mainly of historical earnings (2017 and prior) that were previously taxed in the U.S. under the Tax Act and post-2017 foreignearnings that can be distributed back to the Company’s U.S. entities without additional U.S. federal income tax and for which theCompany is no longer asserting that it is indefinitely reinvested.As of December 30, 2018, the Company maintained a deferred tax liability for state income taxes on historical and future earnings of$0.1 million. The Company has not recorded a deferred tax liability on the financial statement carrying amount over the tax basis of itsinvestments in foreign subsidiaries because the Company continues to assert that it is indefinitely reinvested in its underlyinginvestments in foreign subsidiaries. The determination of any unrecorded deferred tax liability on this amount in not practicable due tothe uncertainty of how these investments would be recovered.Tax Carryforwards - The amount and expiration dates of tax loss carryforwards and credit carryforwards as of December 30, 2018 areas follows:(dollars in thousands)EXPIRATION DATE AMOUNTFederal tax credit carryforwards2026-2038 $114,924Foreign loss carryforwards2019-Indefinite $37,438Foreign tax credit carryforwardsIndefinite $574104Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedAs of December 30, 2018, the Company had $112.2 million in general business tax credit carryforwards, which have a 20-yearcarryforward period and are utilized on a first-in, first-out basis. The Company currently expects to utilize all of these tax creditcarryforwards within a four to six year period. However, the Company’s ability to utilize these tax credits could be adversely impactedby, among other items, a future “ownership change” as defined under Section 382 of the Internal Revenue Code.The Company anticipates generating additional business tax credits in future years. The amount of business tax credits expected to begenerated in 2019 is approximately $40 million to $45 million.Unrecognized Tax Benefits - As of December 30, 2018 and December 31, 2017, the liability for unrecognized tax benefits was $25.2million and $23.7 million, respectively. Of the total amount of unrecognized tax benefits, including accrued interest and penalties,$25.0 million and $24.0 million, respectively, if recognized, would impact the Company’s effective tax rate.The following table summarizes the activity related to the Company’s unrecognized tax benefits for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Balance as of beginning of year$23,663 $19,583 $19,430Additions for tax positions taken during a prior period2,461 4,149 476Reductions for tax positions taken during a prior period(826) (1,009) (430)Additions for tax positions taken during the current period2,017 1,822 2,472Settlements with taxing authorities(682) — (391)Lapses in the applicable statutes of limitations(1,390) (945) (2,230)Translation adjustments(53) 63 256Balance as of end of year$25,190 $23,663 $19,583The Company had approximately $1.5 million and $1.8 million accrued for the payment of interest and penalties as of December 30,2018 and December 31, 2017, respectively. The Company recognized immaterial interest and penalties related to uncertain taxpositions in the (Benefit) provision for income taxes, for all periods presented.In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by relevant taxableauthorities. Based on the outcome of these examinations, or a result of the expiration of the statute of limitations for specificjurisdictions, it is reasonably possible that the related recorded unrecognized tax benefits for tax positions taken on previously filed taxreturns will change by approximately $1.0 million to $2.0 million within the next twelve months.Open Tax Years - Following is a summary of the open audit years by jurisdiction as of December 30, 2018: OPEN AUDIT YEARSUnited States - federal2007-2017United States - state2001-2017Foreign2009-2017The Company was previously under examination by tax authorities in South Korea for the 2008 to 2012 tax years. In connection withthe examination, the Company was assessed and paid $6.7 million of tax obligations. During the third quarter of 2018, the Companyreceived final confirmation of relief from double taxation through competent authority. No material modifications were made toamounts previously recorded.105Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued19. Commitments and ContingenciesOperating Leases - The Company leases restaurant and office facilities and certain equipment under operating leases mainly havinginitial terms expiring between 2019 and 2036. The restaurant facility leases have renewal clauses primarily from five to 20 years,exercisable at the option of the Company. Certain of these leases require the payment of contingent rentals leased on a percentage ofgross revenues, as defined by the terms of the applicable lease agreement.Total rent expense and sublease rental income is as follows for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Rent expense (1)$185,385 $188,205 $173,507Sublease revenues$5,551 $4,472 $853____________________(1)Includes contingent rent expense of $4.5 million, $4.3 million and $5.9 million, for fiscal years 2018, 2017 and 2016, respectively.As of December 30, 2018, future minimum rental payments and sublease revenues under non-cancelable operating leases are asfollows:(dollars in thousands)LEASE PAYMENTS(1) SUBLEASE REVENUES2019$188,803 $5,1892020179,541 5,1422021163,236 5,2042022145,896 5,0242023127,776 5,014Thereafter858,689 54,964Total minimum lease payments$1,663,941 $80,537____________________(1)Minimum lease payments have not been reduced by minimum sublease rentals and exclude unexercised renewal terms.Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases havevarying terms, the latest of which expires in 2032. As of December 30, 2018, the undiscounted payments the Company could berequired to make in the event of non-payment by the primary lessees was approximately $30.0 million. The present value of thesepotential payments discounted at the Company’s incremental borrowing rate as of December 30, 2018 was approximately $22.4million. In the event of default, the indemnity clauses in the Company’s purchase and sale agreements govern its ability to pursue andrecover damages incurred. The Company believes the financial strength and operating history of the lessees significantly reduces therisk that it will be required to make payments under these leases. Accordingly, no contingent liability has been recorded.Financing Obligation - Following is a summary of the Company’s minimum financing payments, including interest, during the initialterm of the various leases:(dollars in thousands)DECEMBER 30, 20182019$1,34620201,37020211,39820221,42320231,446Thereafter20,773Total (1)$27,756____________________(1)Refer to Note 13 - Long-term Debt, Net for additional details regarding the Company’s financing obligation.106Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedPurchase Obligations - Purchase obligations were $364.3 million and $446.0 million as of December 30, 2018 and December 31,2017, respectively. These purchase obligations are primarily due within five years, however, commitments with various vendors extendthrough January 2028. Outstanding commitments consist primarily of food and beverage products related to normal business operationsand contracts for restaurant level service contracts, advertising and technology. In 2018, the Company purchased more than 90% of itsU.S. beef raw materials from four beef suppliers that represent more than 80% of the total beef marketplace in the U.S.Litigation and Other Matters - In relation to various legal matters, the Company had $2.8 million and $4.3 million of liability recordedas of December 30, 2018 and December 31, 2017, respectively. During 2018, 2017 and 2016, the Company recognized $1.6 million,$1.2 million and $4.0 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements ofOperations and Comprehensive Income for certain legal settlements.The Company is subject to legal proceedings, claims and liabilities, such as liquor liability, slip and fall cases, wage-and-hour and otheremployment-related litigation, which arise in the ordinary course of business and are generally covered by insurance if they exceedspecified retention or deductible amounts. In the opinion of management, the amount of ultimate liability with respect to those actionswill not have a material adverse impact on the Company’s financial position or results of operations and cash flows.Insurance - As of December 30, 2018, the future payments the Company expects for workers’ compensation, general liability andhealth insurance claims are:(dollars in thousands) 2019$22,295202012,09320217,91520224,45620232,565Thereafter11,149 $60,473The following is a reconciliation of the expected aggregate undiscounted reserves to the discounted reserves for insurance claimsrecognized on the Company’s Consolidated Balance Sheets as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017Undiscounted reserves$60,473 $63,426Discount (1)(4,647) (3,999)Discounted reserves$55,826 $59,427 Discounted reserves recognized in the Company’s Consolidated Balance Sheets: Accrued and other current liabilities$22,055 $23,482Other long-term liabilities, net33,771 35,945 $55,826 $59,427____________________(1)Discount rates of 2.77% and 1.88% were used for December 30, 2018 and December 31, 2017, respectively.20. Segment ReportingThe Company considers its restaurant concepts and international markets to be operating segments, which reflects how the Companymanages its business, reviews operating performance and allocates resources. Resources are allocated and performance is assessed bythe Company’s Chief Executive Officer, whom the Company has determined to be its Chief Operating Decision Maker. The Companyaggregates its operating segments into two reportable segments, U.S.107Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continuedand International. The U.S. segment includes all restaurants operating in the U.S. while restaurants operating outside the U.S. areincluded in the International segment.The following is a summary of reporting segments as of December 30, 2018:REPORTABLE SEGMENT (1) CONCEPT GEOGRAPHIC LOCATIONU.S. Outback Steakhouse United States of America Carrabba’s Italian Grill Bonefish Grill Fleming’s Prime Steakhouse & Wine Bar International Outback Steakhouse Brazil, Hong Kong/China Carrabba’s Italian Grill (Abbraccio) Brazil_________________(1)Includes franchise locations.Segment accounting policies are the same as those described in Note 2 - Summary of Significant Accounting Policies. Revenues for allsegments 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-basedcompensation expenses and certain bonus expenses.The following table is a summary of Total revenue by segment, for the periods indicated: FISCAL YEAR 2018 2017 2016(dollars in thousands) (Restated) (1) (Restated) (1)Total revenues U.S.$3,687,239 $3,760,867 $3,805,635International439,174 462,269 455,038Total revenues$4,126,413 $4,223,136 $4,260,673____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.The following table is a reconciliation of Segment income (loss) from operations to Income before (benefit) provision for income taxes,for the periods indicated: FISCAL YEAR 2018 2017 2016(dollars in thousands) (Restated) (1) (Restated) (1)Segment income (loss) from operations U.S.$288,959 $289,971 $282,791International22,001 28,798 (5,918)Total segment income from operations310,960 318,769 276,873Unallocated corporate operating expense(165,707) (180,083) (153,123)Total income from operations145,253 138,686 123,750Loss on defeasance, extinguishment and modification of debt— (1,069) (26,998)Other (expense) income, net(11) 14,912 1,609Interest expense, net(44,937) (41,392) (45,726)Income before (benefit) provision for income taxes$100,305 $111,137 $52,635____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.108Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedThe following table is a summary of Depreciation and amortization expense by segment for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Depreciation and amortization U.S.$158,307 $149,976 $155,434International26,304 27,796 26,013Corporate16,982 14,510 12,391Total depreciation and amortization$201,593 $192,282 $193,838The following table is a summary of capital expenditures by segment for the periods indicated: FISCAL YEAR(dollars in thousands)2018 2017 2016Capital expenditures U.S.$162,207 $209,260 $211,855International36,962 33,302 40,662Corporate11,754 13,280 17,671Total capital expenditures$210,923 $255,842 $270,188The following table sets forth Total assets by segment as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018 DECEMBER 31, 2017(1)Assets U.S.$1,841,482 $1,856,406International401,557 450,974Corporate221,735 254,514Total assets$2,464,774 $2,561,894____________________(1)See Note 2 - Summary of Significant Accounting Policies for details of the impact of implementing ASU No. 2014-09 on the Company’s Consolidated Balance Sheet asof December 31, 2017.Geographic areas — International assets are defined as assets residing in a country other than the U.S. The following table details long-lived assets, excluding goodwill, intangible assets and deferred tax assets, by major geographic area as of the periods indicated:(dollars in thousands)DECEMBER 30, 2018DECEMBER 31, 2017U.S.$1,107,679 $1,164,322International Brazil115,560 126,341Other13,663 18,012Total assets$1,236,902 $1,308,675109Table of ContentsBLOOMIN’ BRANDS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ContinuedInternational revenues are defined as revenues generated from restaurant sales originating in a country other than the U.S. Thefollowing table details Total revenues by major geographic area for the periods indicated: FISCAL YEAR 2018 2017 2016(dollars in thousands) (Restated) (1) (Restated) (1)U.S.$3,687,239 $3,760,867 $3,805,635International Brazil376,317 410,249 318,881Other62,857 52,020 136,157Total revenue$4,126,413 $4,223,136 $4,260,673____________________(1)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.21. Selected Quarterly Financial Data (Unaudited)2018 FISCAL QUARTERS(dollars in thousands, except per share data)FIRST (1) SECOND (1) THIRD (1) FOURTH (1)Total revenues$1,116,465 $1,031,814 $965,021 $1,013,113Income from operations78,371 32,924 12,537 21,421Net income66,137 26,723 4,253 12,425Net income attributable to Bloomin’ Brands65,398 26,721 4,072 10,907Earnings per share: Basic$0.71 $0.29 $0.04 $0.12Diluted$0.68 $0.28 $0.04 $0.122017 FISCAL QUARTERS(dollars in thousands, except per share data)FIRST (2) SECOND (2) THIRD (2) FOURTH (2)Total revenues$1,154,711 $1,036,458 $955,587 $1,076,380Income from operations76,834 41,342 5,219 15,290Net income49,638 35,832 5,293 12,845Net income attributable to Bloomin’ Brands48,625 35,133 5,583 11,952Earnings per share: Basic$0.47 $0.36 $0.06 $0.13Diluted$0.46 $0.34 $0.06 $0.13____________________(1)Income from operations in the first, second, third and fourth quarters include expense of $4.5 million, $9.5 million, $6.9 million and $21.8 million, respectively, forimpairments, closing costs and severance related to: (i) the restructuring of certain international markets, including Puerto Rico and China, the restructuring of theCompany’s Express concept, reclassification of assets to held for sale in connection with refranchising certain restaurants and approved closure and restructuringinitiatives, (ii) the relocation of certain restaurants and (iii) the restructuring of certain functions.(2)See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of the impact of implementing ASU No. 2014-09.Total revenues for the fourth quarter include an increase of $80.4 million for the 53rd week. Income from operations in the first, second, third and fourth quarters includeexpense of $17.6 million, $3.0 million, $20.0 million and $25.7 million, respectively, for impairments, closing costs and severance related to: (i) approved closure andrestructuring initiatives, (ii) the relocation of certain restaurants, (iii) the remeasurement of certain surplus properties, (iv) a restructuring event and (v) the Company’sChina subsidiary. Net income for the second and third quarters includes gains on the sale of certain restaurants of $7.4 million and $8.4 million, respectively. Includes$0.11 of additional earnings per share from a 53rd operating week in 2017.110Table of ContentsBLOOMIN’ BRANDS, INC.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresWe have established and maintain disclosure controls and procedures that are designed to ensure that information required to bedisclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed,summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and thatsuch information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial andAdministrative Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under thesupervision and with the participation of our management, including our Chief Executive Officer and Chief Financial andAdministrative 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 disclosurecontrols and procedures were effective as of December 30, 2018.Management’s Annual Report on Internal Control over Financial ReportingManagement’s report on our internal control over financial reporting and the attestation report of PricewaterhouseCoopers LLP, ourindependent registered certified public accounting firm, on our internal control over financial reporting are included in Item 8, FinancialStatements and Supplementary Data, of this Annual Report on Form 10-K.Changes in Internal Control over Financial ReportingDuring the most recent quarter ended December 30, 2018, we completed implementation of a new lease accounting system, includingthe integration of our lease accounting system with our general ledger, in preparation for our adoption of the new lease accountingstandard in the first quarter of 2019. Internal controls and processes have been designed to address changes in the business applicationsand financial processes as a result of this implementation. Those changes will continue to be evaluated by management. Thisimplementation presents transitional risks to maintaining adequate internal controls over financial reporting.There have been no other changes in our internal control over financial reporting during our most recent quarter ended December 30,2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other InformationNone.111Table of ContentsBLOOMIN’ BRANDS, INC.PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item relating to our directors and nominees will be included under the captions “Proposal No. 1:Election of Directors—Nominees for Election at this Annual Meeting” and “—Directors Continuing in Office” in our definitive ProxyStatement for the 2019 Annual Meeting of Stockholders (“Definitive Proxy Statement”) and is incorporated herein by reference.The information required by this item relating to our executive officers is included under the caption “Executive Officers of theRegistrant” in Part I of this Report on Form 10-K.The information required by this item regarding compliance with Section 16(a) of the Securities Act of 1934 will be included under thecaption “Ownership of Securities—Section 16(a) Beneficial Ownership Reporting Compliance” in our Definitive Proxy Statement and isincorporated herein by reference.We have adopted a Business Conduct and Code of Ethics that applies to all employees. A copy of our Business Conduct and Code ofEthics is available on our website, free of charge. The Internet address for our website is www.bloominbrands.com, and the BusinessConduct and Code of Ethics may be found on our main webpage by clicking first on “Investors” and then on “Corporate Governance”and next on “Code of Business Conduct and Ethics.”We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provisionof this code of ethics by posting such information on our website, on the webpage found by clicking through to “Code of BusinessConduct and Ethics” as specified above.The information required by this item regarding our Audit Committee will be included under the caption “Proposal No. 1: Election ofDirectors—Board Committees and Meetings” in our Definitive Proxy Statement and is incorporated herein by reference.Item 11. Executive CompensationThe information required by this item will be included under the captions “Proposal No. 1: Election of Directors—DirectorCompensation” and “Executive Compensation and Related Information” in our Definitive Proxy Statement and is incorporated hereinby reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item will be included under the caption “Ownership of Securities” in our Definitive Proxy Statementand is incorporated herein by reference.The information relating to securities authorized for issuance under equity compensation plans is included under the caption“SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS” in Item 5 of this Report on Form 10-K.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item relating to transactions with related persons will be included under the caption “CertainRelationships and Related Party Transactions,” and the information required by this item relating to director independence will beincluded under the caption “Proposal No. 1: Election of Directors—Independent Directors,” in each case in our Definitive ProxyStatement, and is incorporated herein by reference.112Table of ContentsBLOOMIN’ BRANDS, INC.Item 14. Principal Accounting Fees and ServicesThe information required by this item will be included under the captions “Proposal No. 2: Ratification of Independent RegisteredCertified Public Accounting Firm—Principal Accountant Fees and Services” and “—Policy on Audit Committee Pre-Approval of Auditand Permissible Non-Audit Services of Independent Auditor” in our Definitive Proxy Statement and is incorporated herein by reference.113Table of ContentsBLOOMIN’ BRANDS, INC.PART IVItem 15. Exhibits and Financial Statement Schedules.(a)(1) LISTING OF FINANCIAL STATEMENTSThe following consolidated financial statements of the Company and subsidiaries are included in Item 8 of this Report:•Consolidated Balance Sheets - December 30, 2018 and December 31, 2017•Consolidated Statements of Operations and Comprehensive Income – Fiscal years 2018, 2017, and 2016•Consolidated Statements of Changes in Stockholders’ Equity – Fiscal years 2018, 2017, and 2016•Consolidated Statements of Cash Flows – Fiscal years 2018, 2017, and 2016•Notes to Consolidated Financial Statements(a)(2) FINANCIAL STATEMENT SCHEDULESAll financial statement schedules have been omitted, since the required information is not applicable or is not present in amountssufficient to require submission of the schedule, or because the information required is included in the consolidated financial statementsand notes thereto included in this Report.(a)(3) EXHIBITSEXHIBITNUMBER DESCRIPTION OF EXHIBITS FILINGS REFERENCED FOR INCORPORATION BY REFERENCE 3.1 Second Amended and Restated Certificate of Incorporation of Bloomin’Brands, Inc. Registration Statement on Form S-8, FileNo. 333-183270, filed on August 13,2012, Exhibit 4.1 3.2 Third Amended and Restated Bylaws of Bloomin’ Brands, Inc. December 7, 2018 Form 8-K, Exhibit 3.1 4.1 Form of Common Stock Certificate Amendment No. 4 to RegistrationStatement on Form S-1, File No. 333-180615, filed on July 18, 2012, Exhibit4.1 10.1 Credit Agreement dated as of November 30, 2017, among Bloomin’ Brands,Inc., OSI Restaurant Partners, LLC, the lenders party thereto, and Wells FargoBank, National Association, as administrative agent December 31, 2017 Form 10-K, Exhibit10.38 10.2 Royalty Agreement dated April 1995 among Carrabba’s Italian Grill, Inc.,Outback Steakhouse, Inc., Mangia Beve, Inc., Carrabba, Inc., CarrabbaWoodway, Inc., John C. Carrabba, III, Damian C. Mandola, and John C.Carrabba, Jr., as amended by First Amendment to Royalty Agreement datedJanuary 1997 and Second Amendment to Royalty Agreement made andentered into effective April 7, 2010 by and among Carrabba’s Italian Grill,LLC, OSI Restaurant Partners, LLC, Mangia Beve, Inc., Mangia Beve II, Inc.,Original, Inc., Voss, Inc., John C. Carrabba, III, Damian C. Mandola, andJohn C. Carrabba, Jr. Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.6 10.3 Third Amendment to Royalty Agreement made and entered into effectiveJune 1, 2014, by and among Carrabba’s Italian Grill, LLC, OSI RestaurantPartners, LLC, Mangia Beve, Inc., Mangia Beve II, Inc., Original, Inc., Voss,Inc., John C. Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr. June 29, 2014 Form 10-Q, Exhibit 10.6114Table of ContentsBLOOMIN’ BRANDS, INC.EXHIBITNUMBER DESCRIPTION OF EXHIBITS FILINGS REFERENCED FOR INCORPORATION BY REFERENCE 10.4 Fourth Amendment to Royalty Agreement made and entered into effectiveMay 1, 2017, by and among Carrabba’s Italian Grill, LLC, OSI RestaurantPartners, LLC, Mangia Beve, Inc., Mangia Beve II, Inc., Original, Inc., Voss,Inc., John C. Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr. June 25, 2017 Form 10-Q, Exhibit 10.1 10.5 Amended and Restated Operating Agreement for OSI/Fleming’s, LLC madeas of June 4, 2010 by and among OS Prime, LLC, a wholly-owned subsidiaryof OSI Restaurant Partners, LLC, FPSH Limited Partnership and AWA IIISteakhouses, Inc. Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.8 10.6 Lease, dated January 21, 2014, between OS Southern, LLC and MVP LRS,LLC December 31, 2013 Form 10-K, Exhibit10.28 10.7* OSI Restaurant Partners, LLC HCE Deferred Compensation Plan effectiveOctober 1, 2007 Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.46 10.8* Kangaroo Holdings, Inc. 2007 Equity Incentive Plan, as amended Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.1 10.9* Form of Option Agreement for Options under the Kangaroo Holdings, Inc.2007 Equity Incentive Plan Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.42 10.10* Bloomin’ Brands, Inc. 2012 Incentive Award Plan Amendment No. 4 to RegistrationStatement on Form S-1, File No. 333-180615, filed on July 18, 2012, Exhibit10.2 10.11* Form of Nonqualified Stock Option Award Agreement for options grantedunder the Bloomin’ Brands, Inc. 2012 Incentive Award Plan December 7, 2012 Form 8-K, Exhibit10.2 10.12* Form of Restricted Stock Award Agreement for restricted stock granted todirectors under the Bloomin’ Brands, Inc. 2012 Incentive Award Plan December 7, 2012 Form 8-K, Exhibit10.3 10.13* Form of Restricted Stock Award Agreement for restricted stock granted toemployees and consultants under the Bloomin’ Brands, Inc. 2012 IncentiveAward Plan December 7, 2012 Form 8-K, Exhibit10.4 10.14* Form of Restricted Stock Unit Award Agreement for restricted stock grantedto directors under the Bloomin’ Brands, Inc. 2012 Incentive Award Plan September 30, 2013 Form 10-Q, Exhibit10.1 10.15* Form of Restricted Stock Unit Award Agreement for restricted stock grantedto employees and consultants under the Bloomin’ Brands, Inc. 2012 IncentiveAward Plan September 30, 2013 Form 10-Q, Exhibit10.2 10.16* Form of Performance Unit Award Agreement for performance units grantedunder the Bloomin’ Brands, Inc. 2012 Incentive Award Plan December 7, 2012 Form 8-K, Exhibit10.5 10.17* Form of Bloomin’ Brands, Inc. Indemnification Agreement by and betweenBloomin’ Brands, Inc. and each member of its Board of Directors and each ofits executive officers Amendment No. 4 to RegistrationStatement on Form S-1, File No. 333-180615, filed on July 18, 2012, Exhibit10.39 10.18* Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan March 11, 2016 Definitive ProxyStatement115Table of ContentsBLOOMIN’ BRANDS, INC.EXHIBITNUMBER DESCRIPTION OF EXHIBITS FILINGS REFERENCED FOR INCORPORATION BY REFERENCE 10.19* Form of Nonqualified Stock Option Award Agreement for options granted toexecutive management under the Bloomin’ Brands, Inc. 2016 OmnibusIncentive Compensation Plan June 26, 2016 Form 10-Q, Exhibit 10.2 10.20* Form of Restricted Stock Unit Award Agreement for restricted stock grantedto directors under the Bloomin’ Brands, Inc. 2016 Omnibus IncentiveCompensation Plan June 26, 2016 Form 10-Q, Exhibit 10.3 10.21* Form of Restricted Stock Unit Award Agreement for restricted stock grantedto executive management under the Bloomin’ Brands, Inc. 2016 OmnibusIncentive Compensation Plan June 26, 2016 Form 10-Q, Exhibit 10.4 10.22* Form of Performance Award Agreement for performance units granted underthe Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan June 26, 2016 Form 10-Q, Exhibit 10.5 10.23* Form of Restricted Cash Award Agreement for cash awards granted under theBloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan March 26, 2017 Form 10-Q, Exhibit 10.1 10.24* Bloomin’ Brands, Inc. Executive Change in Control Plan, effective December6, 2012 December 7, 2012 Form 8-K, Exhibit10.1 10.25* Amended and Restated Employment Agreement made and entered intoSeptember 4, 2012 by and between Elizabeth A. Smith and Bloomin’ Brands,Inc. June 30, 2012 Form 10-Q, Exhibit 10.1 10.26* Option Agreement, dated November 16, 2009, by and between KangarooHoldings, Inc. and Elizabeth A. Smith, as amended December 31, 2009 Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.40 10.27* Option Agreement, dated July 1, 2011, by and between Kangaroo Holdings,Inc. and Elizabeth A. Smith Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.41 10.28* Officer Employment Agreement, made and entered into effective May 7,2012, by and among David Deno and OSI Restaurant Partners, LLC Amendment No. 1 to RegistrationStatement on Form S-1, File No. 333-180615, filed on May 17, 2012, Exhibit10.53 10.29* Amendment, dated July 16, 2014, to the Officer Employment Agreement,made and entered into effective May 7, 2012, by and among David Deno andOSI Restaurant Partners, LLC June 29, 2014 Form 10-Q, Exhibit 10.7 10.30* Amended and Restated Employment Agreement dated June 14, 2007,between Joseph J. Kadow and OSI Restaurant Partners, LLC, as amended onJanuary 1, 2009, June 12, 2009, December 30, 2010 and December 16, 2011 Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.29 10.31* Split-Dollar Agreement dated August 12, 2008 and effective March 30, 2006,by and between OSI Restaurant Partners, LLC (formerly known as OutbackSteakhouse, Inc.) and Joseph J. Kadow Registration Statement on Form S-1, FileNo. 333-180615, filed on April 6, 2012,Exhibit 10.48 10.32* Employment Offer Letter Agreement, dated as of July 30, 2014, betweenBloomin’ Brands, Inc. and Donagh HerlihyDecember 28, 2014 Form 10-K, Exhibit10.58 10.33* Employment Offer Letter Agreement, dated as of May 4, 2015, betweenBloomin’ Brands, Inc. and Sukhdev Singh December 27, 2015 Form 10-K, Exhibit10.57116Table of ContentsBLOOMIN’ BRANDS, INC.EXHIBITNUMBER DESCRIPTION OF EXHIBITS FILINGS REFERENCED FOR INCORPORATION BY REFERENCE 10.34* Employment Offer Letter Agreement, dated as of February 12, 2016, betweenBloomin’ Brands, Inc. and Michael Kappitt March 27, 2016 Form 10-Q, Exhibit 10.3 10.35* Employment Offer Letter Agreement, dated as of July 29, 2016, betweenBloomin’ Brands, Inc. and Gregg Scarlett September 25, 2016 Form 10-Q, Exhibit10.2 10.36* Employment Offer Letter Agreement, dated as of July 29, 2016, betweenBloomin’ Brands, Inc. and David Schmidt September 25, 2016 Form 10-Q, Exhibit10.3 10.37 Registration Rights Agreement among Bloomin’ Brands, Inc. and certainstockholders of Bloomin’ Brands, Inc. made as of April 29, 2014 May 1, 2014 Form 8-K, Exhibit 10.3 10.38* Separation Agreement and General Release, dated as of December 31, 2017,by and between Christopher Brandt and Bloomin’ Brands, Inc. December 31, 2017 Form 10-K, Exhibit10.39 10.39* Separation Agreement and General Release, dated as of December 31, 2017,by and between Patrick Murtha and Bloomin’ Brands, Inc. December 31, 2017 Form 10-K, Exhibit10.40 21.1 List of Subsidiaries Filed herewith 23.1 Consent of PricewaterhouseCoopers LLP Filed herewith 31.1 Certification of Chief Executive Officer pursuant to Section 302 of theSarbanes-Oxley Act of 2002 Filed herewith 31.2 Certification of Chief Financial and Administrative Officer pursuant to Section302 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 20021 Filed herewith 32.2 Certification of Chief Financial and Administrative Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 20021 Filed 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 exhibit1These certifications are not deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability ofthat section. These certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or theExchange Act, except to the extent that the registrant specifically incorporates them by reference.Item 16. Form 10-K SummaryNone.117Table of ContentsBLOOMIN’ BRANDS, INC.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned, thereunto duly authorized. Date:February 27, 2019Bloomin’ Brands, Inc. By: /s/ Elizabeth A. Smith Elizabeth A. SmithChief Executive Officer(Principal Executive Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.Signature Title Date /s/ Elizabeth A. Smith Chief Executive Officer and Director(Principal Executive Officer) Elizabeth A. Smith February 27, 2019 /s/ David J. Deno Executive Vice President and Chief Financial and AdministrativeOfficer(Principal Financial and Accounting Officer) David J. Deno February 27, 2019 /s/ James R. Craigie James R. Craigie Director February 27, 2019 /s/ David R. Fitzjohn David R. Fitzjohn Director February 27, 2019 /s/ Mindy Grossman Mindy Grossman Director February 27, 2019 /s/ Tara Walpert Levy Tara Walpert Levy Director February 27, 2019 /s/ John J. Mahoney John J. Mahoney Director February 27, 2019 /s/ R. Michael Mohan R. Michael Mohan Director February 27, 2019 /s/ Wendy A. Beck Wendy A. Beck Director February 27, 2019Exhibit 21.1SUBSIDIARY NAME STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATIONAnnapolis Outback, Inc. MDBBI International Holdings, Inc. FLBBI Ristorante Italiano, LLC FLBel Air Outback, Inc. MDBFG Nebraska, Inc. FLBFG New Jersey Services, Limited Partnership FLBFG Oklahoma, Inc. FLBFG Pennsylvania Services, Ltd FLBFG/FPS of Marlton Partnership FLBloom Brands Holdings I C.V. NLBloom Brands Holdings II C.V. NLBloom Group Holdings B.V. NLBloom Group Holdings II, B.V. NLBloom Group Holdings III C.V. NLBloom Group Korea, LLC KRBloom Group Restaurants, B.V. NLBloom Group Restaurants, LLC FLBloom No.1 Limited HKBloom No.2 Limited HKBloom Participações, Ltda. BRBloom Restaurantes Brasil S.A. BRBloomin’ Brands Gift Card Services, LLC FLBloomin’ Brands International, LLC FLBloomin Hong Kong Limited HKBloomin Puerto Rico L.P. CIBonefish Baltimore County, LLC MDBonefish Beverages, LLC TXBonefish Brandywine, LLC MDBonefish Designated Partner, LLC DEBonefish Grill International, LLC FLBonefish Grill, LLC FLBonefish Holdings, LLC TXBonefish Kansas LLC KSBonefish of Bel Air, LLC MDBonefish of Gaithersburg, Inc. MDBonefish/Anne Arundel, LLC MDBonefish/Asheville, Limited Partnership FLBonefish/Carolinas, Limited Partnership FLBonefish/Centreville, Limited Partnership FLBonefish/Columbus-I, Limited Partnership FLBonefish/Crescent Springs, Limited Partnership FLBonefish/Fredericksburg, Limited Partnership FLBonefish/Glen Burnie, LLC MDBonefish/Greensboro, Limited Partnership FLBonefish/Hyde Park, Limited Partnership FLBonefish/Newport News, Limited Partnership FLBonefish/Richmond, Limited Partnership FLBonefish/Southern Virginia, Limited Partnership FLBonefish/Virginia, Limited Partnership FLCarrabba’s Designated Partner, LLC DESUBSIDIARY NAME STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATIONCarrabba’s Italian Grill of Howard County, Inc. MDCarrabba’s Italian Grill of Overlea, Inc. MDCarrabba’s Italian Grill, LLC FLCarrabba’s Kansas LLC KSCarrabba’s of Bowie, LLC MDCarrabba’s of Germantown, Inc. MDCarrabba’s of Ocean City, Inc. MDCarrabba’s of Pasadena, Inc. MDCarrabba’s of Waldorf, Inc. MDCarrabba’s/Birmingham 280, Limited Partnership FLCarrabba’s/DC-I, Limited Partnership FLCIGI Beverages of Texas, LLC TXCIGI Florida Services, Ltd FLCIGI Holdings, LLC TXCIGI Nebraska, Inc. FLCIGI Oklahoma, Inc. FLCIGI/BFG of East Brunswick Partnership FLDoorSide, LLC FLDutch Holdings I, LLC FLDutch Holdings II, LLC FLFleming’s Beverages, LLC TXFleming’s International, LLC FLFleming’s of Baltimore, LLC MDFlemings Restaurantes do Brasil Ltda. BRFleming’s/Outback Holdings, LLC TXFPS NEBRASKA, INC. FLFPS Oklahoma, Inc. FLFrederick Outback, Inc. MDHagerstown Outback, Inc. MDNew Private Restaurant Properties, LLC DEOBTex Holdings, LLC TXOcean City Outback, Inc. MDOS Management, Inc. FLOS Niagara Falls, LLC FLOS Prime, LLC FLOS Realty, LLC FLOS Restaurant Services, LLC FLOS Southern, LLC FLOS Tropical, LLC FLOSF Arkansas Services, Ltd FLOSF Florida Services, Ltd FLOSF Maryland Services, Ltd FLOSF Nebraska, Inc. FLOSF New Jersey Services, Limited Partnership FLOSF New York Services, Limited Partnership FLOSF North Carolina Services, Ltd FLOSF Oklahoma, Inc. FLOSF Pennsylvania Services, Ltd FLOSF South Carolina Services, Ltd FLOSF Virginia Services, Limited Partnership FLOSF/BFG of Deptford Partnership FLSUBSIDIARY NAME STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATIONOSF/BFG of Lawrenceville Partnership FLOSF/CIGI of Evesham Partnership FLOSI China Venture CIOSI HoldCo, Inc. DEOSI HoldCo I, Inc. DEOSI HoldCo II, Inc. DEOSI International, LLC FLOSI Restaurant Partners, LLC DEOSI/Fleming’s, LLC DEOutback & Carrabba’s of New Mexico, Inc. NMOutback Alabama, Inc. ALOutback Beverages of Texas, LLC TXOutback Designated Partner, LLC DEOutback Kansas LLC KSOutback of Aspen Hill, Inc. MDOutback of Calvert County, Inc. MDOutback of Conway, Inc. AROutback of Germantown, Inc. MDOutback of La Plata, Inc. MDOutback of Laurel, LLC MDOutback of Waldorf, Inc. MDOutback Philippines Development Holdings Corporation PIOutback Puerto Rico Designated Partner, LLC DEOutback Steakhouse International Investments, Co. CIOutback Steakhouse International Services, LLC FLOutback Steakhouse International, L.P. GAOutback Steakhouse International, LLC FLOutback Steakhouse of Bowie, Inc. MDOutback Steakhouse of Canton, Inc. MDOutback Steakhouse of Florida, LLC FLOutback Steakhouse of Howard County, Inc. MDOutback Steakhouse of Jonesboro, Inc. AROutback Steakhouse of Salisbury, Inc. MDOutback Steakhouse of St. Mary’s County, Inc. MDOutback Steakhouse Restaurantes Brasil, S.A. (f/k/a Bloom Holdco) BROutback Steakhouse West Virginia, Inc. WVOutback/Carrabba’s Partnership FLOutback/Fleming’s Designated Partner, LLC DEOutback/Hampton, Limited Partnership FLOutback/Stone-II, Limited Partnership FLOutback-Carrabba’s of Hunt Valley, Inc. MDOwings Mills Incorporated MDPerry Hall Outback, Inc. MDPrince George’s County Outback, Inc. MDPrivate Restaurant Master Lessee, LLC DESnyderman Restaurant Group Inc NJWilliamsburg Square Joint Venture PAXuanmei Food and Beverage (Shanghai) Co., Ltd. CNExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on S-8 (Nos. 333-183270, 333-187035, 333-194261, 333-202259, 333-209691 and 333-210868) of Bloomin’ Brands, Inc. of our report dated February 27, 2019 relating to thefinancial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLPTampa, FloridaFebruary 27, 2019Exhibit 31.1CERTIFICATIONI, Elizabeth A. Smith, certify that:1.I have reviewed this Annual Report on Form 10-K of Bloomin’ Brands, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as definedin Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and reportfinancial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date:February 27, 2019/s/ Elizabeth A. Smith Elizabeth A. Smith Chief Executive Officer(Principal Executive Officer)Exhibit 31.2CERTIFICATIONI, David J. Deno, certify that:1.I have reviewed this Annual Report on Form 10-K of Bloomin’ Brands, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as definedin Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this report isbeing prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that hasmaterially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and reportfinancial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting. Date:February 27, 2019/s/ David J. Deno David J. Deno Executive Vice President and Chief Financial and Administrative Officer(Principal Financial Officer)Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Bloomin’ Brands, Inc. (the “Company”) on Form 10-K for the year ended December 30, 2018as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elizabeth A. Smith, Chief Executive Officerof the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002, to the best of my knowledge, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company for the dates and periods covered by the Report.Date:February 27, 2019/s/ Elizabeth A. Smith Elizabeth A. Smith Chief Executive Officer(Principal Executive Officer)A signed original of this written statement required by Section 906 has been provided to, and will be retained by, Bloomin’ Brands, Inc.and furnished to the Securities and Exchange Commission or its staff upon request.Exhibit 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Bloomin’ Brands, Inc. (the “Company”) on Form 10-K for the year ended December 30, 2018as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Deno, Executive Vice President andChief Financial and Administrative Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company for the dates and periods covered by the Report.Date:February 27, 2019/s/ David J. Deno David J. Deno Executive Vice President and Chief Financial and Administrative Officer(Principal Financial Officer)A signed original of this written statement required by Section 906 has been provided to, and will be retained by, Bloomin’ Brands, Inc.and furnished to the Securities and Exchange Commission or its staff upon request.

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