Bloomin' Brands, Inc. Annual Report 2019

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FY2019 Annual Report · Bloomin' Brands, Inc.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended

December 29, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-35625

BLOOMIN’ BRANDS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

20-8023465
(I.R.S. Employer
Identification No.)

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

Common Stock $0.01 par value

Trading Symbol(s)

BLMN

Name of each exchange on which registered

The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐

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

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐
Smaller Reporting Company ☐ Emerging Growth Company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The 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 recently
completed second fiscal quarter as reported on the Nasdaq Global Select Market) was $1.6 billion.

As of February 21, 2020, 87,030,130 shares of common stock of the registrant were outstanding.

Portions of the registrant’s definitive Proxy Statement for its 2020 Annual Meeting of Stockholders are incorporated by reference into Part III, Items 10-14 of
this Annual Report on Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE

Table of Contents

BLOOMIN’ BRANDS, INC.

INDEX TO ANNUAL REPORT ON FORM 10-K
For Fiscal Year 2019

TABLE OF CONTENTS

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

PART I

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

Signatures

PART IV

PAGE NO.

101

102

103

104

107

108

Table of Contents

PART I

Cautionary Statement

BLOOMIN’ BRANDS, INC.

This 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-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended (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 comparable terminology, although not all forward-looking
statements are accompanied by such terms. These forward-looking statements include all matters that are not historical facts. They appear in a
number of places throughout this Report and include statements regarding our intentions, beliefs or current expectations concerning, among
other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

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

(i)

The outcome of our review of strategic alternatives, including the impact on our ongoing business, our stock price and our ability to
successfully implement any alternatives that we pursue;

(ii)

Consumer reactions to public health and food safety issues;

(iii)

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

(iv)

Minimum wage increases and additional mandated employee benefits;

(v)

(vi)

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

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;

(vii)

Fluctuations in the price and availability of commodities;

(viii) Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and the effects

of changes to applicable laws and regulations, including tax laws and unanticipated liabilities;

(ix)

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

(x)

Our ability to implement our remodeling, relocation and expansion plans due to uncertainty in locating and acquiring attractive sites on
acceptable terms, obtaining required permits and approvals, recruiting and training

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BLOOMIN’ BRANDS, INC.

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

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

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

(xi)

(xii)

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

and results of operations;

(xiv)

(xv)

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

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

(xvi)

The adequacy of our cash flow and earnings and other conditions which may affect our ability to pay dividends and repurchase shares
of our common stock.

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

Table of Contents

Item 1. Business

BLOOMIN’ BRANDS, INC.

General and History - Bloomin’ Brands, Inc. (“Bloomin’ Brands,” the “Company,” “we,” “us,” and “our” and similar terms mean Bloomin’
Brands, Inc. and its subsidiaries except where the context otherwise requires) is one of the largest casual dining restaurant companies 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 concepts range in price point and degree of formality
from casual (Outback Steakhouse and Carrabba’s Italian Grill) to upscale casual (Bonefish Grill) and fine dining (Fleming’s Prime Steakhouse
& Wine Bar).

As of December 29, 2019, we owned and operated 1,173 restaurants and franchised 300 restaurants across 48 states, Puerto Rico, Guam and 21
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 we manage our
business, review operating performance and allocate resources. We aggregate our operating segments into two reportable segments, U.S. and
international. The U.S. segment includes all restaurants operating in the U.S. while restaurants operating outside the U.S. are included in the
international segment. Following is a summary of reportable segments as of December 29, 2019:

REPORTABLE SEGMENT (1)

U.S.

CONCEPT
Outback Steakhouse

Carrabba’s Italian Grill

Bonefish Grill

International

Outback Steakhouse

Carrabba’s Italian Grill (Abbraccio)

Fleming’s Prime Steakhouse & Wine Bar

GEOGRAPHIC LOCATION

United States of America

Brazil, Hong Kong/China

Brazil

_________________
(1)

Includes franchise locations. See Item 2. Properties for disclosure of our restaurant count by country and territory.

U.S. Segment

As of December 29, 2019, in our U.S. segment, we owned and operated 1,045 restaurants and franchised 173 restaurants across 48 states.

Outback Steakhouse - Outback Steakhouse is a casual steakhouse restaurant concept focused on steaks, bold flavors and Australian decor. The
Outback Steakhouse menu offers seasoned and seared or wood-fire grilled steaks, chops, chicken, seafood, pasta, salads and seasonal specials.
The menu also includes several specialty appetizers, including our signature Bloomin’ Onion®, and desserts, together with full bar service.

Carrabba’s Italian Grill - Offering authentic Italian cuisine passed down from its founders’ family recipes, Carrabba’s Italian Grill uses high
quality ingredients to prepare fresh and handmade dishes cooked to order in a lively exhibition kitchen. Featuring a wood-burning grill inspired
by the many tastes of Italy, guests can enjoy signature dishes such as Chicken Bryan and Pollo Rosa Maria, wood-fire grilled 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-crafted
cocktails. 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.

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BLOOMIN’ BRANDS, INC.

The Bonefish Grill experience helps guests “Escape the Ordinary,” and is based on the premise of simplicity, consistency and a strong
commitment to excellence at every level.

Fleming’s Prime Steakhouse & Wine Bar - Fleming’s Prime Steakhouse & Wine Bar is a contemporary steakhouse concept featuring prime 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 selections showcasing locally-inspired chef dishes.
The steak selection features USDA Prime corn-fed beef, both wet- and dry-aged for flavor and texture, in a variety of sizes and cuts.

International Segment

We have cross-functional, local management to support and grow restaurants in each of the countries where we have Company-owned
operations. 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 29, 2019, in our international segment, we owned and operated 128 restaurants and franchised 127 restaurants across 21
countries, Puerto Rico and Guam.

Outback Steakhouse - Our international Outback Steakhouse restaurants have a menu similar to our U.S. menu with additional variety to meet
local taste preferences. In addition to the traditional Outback Special sirloin, a typical international menu may feature local beef cuts 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 in Brazil,
offers a blend of traditional and modern Italian dishes. The menu varies, with additional pasta and pizza menu offerings, to account for local
tastes and customs. Abbraccio Cucina Italiana also has a range of beverage options, including classically inspired cocktails and local favorites
with an Italian twist.

Restaurant Overview

Selected Sales Data - Following is sales mix by product type and average check per person for Company-owned restaurants during 2019:

Food & non-alcoholic beverage

Alcoholic beverage

U.S.

Outback
Steakhouse

Carrabba’s
Italian Grill

Bonefish Grill

91%

100%

86%

14%

100%

78%

22%

100%

Average check per person ($USD)

Average check per person (R$)

Fleming’s
Prime Steakhouse
& Wine Bar

INTERNATIONAL

Outback
Steakhouse
Brazil

74%

26%

100%

85%

15%

100%

Delivery - During 2019, we completed the rollout of in-house delivery to substantially all Outback Steakhouse and the majority of Carrabba’s
Italian Grill Company-owned restaurants. In addition, in September 2019 Outback Steakhouse expanded its delivery platform through an
exclusive third-party partnership with DoorDash, a national on-demand provider of door-to-door delivery services. The rollout of DoorDash
delivery was completed in October 2019.

Carrabba’s Italian Grill and certain Bonefish Grill restaurants also offer third-party delivery through leading national delivery services.

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BLOOMIN’ BRANDS, INC.

System-wide Restaurant Summary - Following is a system-wide rollforward of restaurants in operation during 2019:

DECEMBER 30,
2018

2019 ACTIVITY

OPENINGS

CLOSURES

OTHER

DECEMBER 29,
2019

U.S. STATE

COUNT

Number of restaurants:

U.S.

Outback Steakhouse

Company-owned

Franchised

Total

Carrabba’s Italian Grill

Company-owned (1)

Franchised (1)

Total

Bonefish Grill

Company-owned

Franchised

Total

Fleming’s Prime Steakhouse & Wine Bar

Company-owned

Other

Company-owned

U.S. Total

International

Company-owned

Outback Steakhouse - Brazil (2)

Other

Franchised

Outback Steakhouse - South Korea

Other

International Total

System-wide total

579

154

733

224

227

190

197

1,232

256

1,488

—

(3)

(9)

(12)

(2)

—

(2)

(1)

—

(1)

(2)

(3)

(20)

—

(8)

(9)

(5)

(22)

(42)

—

(18)

—

579

145

724

204

225

190

197

1,218

255

1,473

____________________
(1)
(2)

In 2019, we sold 18 Carrabba’s Italian Grill locations, which are now operated as franchises.
The restaurant counts for Brazil are reported as of November 30, 2019 and 2018, respectively, to correspond with the balance sheet dates of this subsidiary.

RESTAURANT DESIGN AND DEVELOPMENT

Site Design - We generally construct freestanding buildings on leased properties, although certain leased sites are also located in strip shopping
centers. Construction of a new restaurant typically takes 60 to 180 days from the date the location is leased or under contract and 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 an ongoing remodel
program across all of our concepts to maintain the relevance of our restaurants’ ambiance.

Site Selection Process - We have a central site selection team comprised of real estate development, property/lease management and design and
construction personnel. This site selection team also utilizes a combination of existing field operations managers, internal development
personnel and outside real estate brokers to identify and qualify potential sites.

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BLOOMIN’ BRANDS, INC.

We have a relocation initiative in process, primarily related to the U.S. Outback Steakhouse brand. This multi-year relocation plan is focused on
driving additional traffic to our restaurants by moving legacy restaurants to prime locations within the same trade area. During 2019, we
relocated 11 U.S. Outback Steakhouse restaurants and plan to relocate another nine U.S. Outback Steakhouse restaurants in 2020.

Restaurant Development

We utilize the ownership structure and market entry strategy that best fits the needs for a particular market, including Company-owned units,
joint ventures and franchises, as determined by demand, cost structure and economic conditions.

U.S. Development - We opportunistically pursue unit growth across our concepts through existing geography fill-in and market expansion
opportunities based on current location mix.

International Development - We continue to pursue international expansion opportunities, leveraging established equity and franchise markets
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 and territory.

RESEARCH & DEVELOPMENT / INNOVATION

We 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 and
promotional items across all concepts that allows us to quickly make adjustments in response to market demands, when necessary. In addition,
we continue to focus on productivity across the portfolio. For new menu items and significant product changes, we have a testing 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 at Outback
Steakhouse and Carrabba’s Italian Grill and introduced a new center-cut filet at Outback Steakhouse. At Bonefish Grill, we source fresh fish
specials locally with our “Neighborhood Catch” dishes. During 2019, Fleming’s Prime Steakhouse & Wine Bar began offering selections
through its “Chef’s Table” which features chef driven local menu selections to differentiate the brand from the traditional high-end steakhouse.

INFORMATION SYSTEMS

We leverage technology to support such areas as digital marketing and customer engagement, business analytics and decision support,
restaurant operations and productivity initiatives related to optimizing our staffing, food waste management and supply chain efficiency.

To drive customer engagement, we continue to invest in data and technology infrastructure, including brand websites, digital marketing, online
ordering and mobile apps. To increase customer convenience, we are leveraging our online ordering infrastructure to facilitate expanded off-
premises dining including our own delivery fleet and systems. Additionally, we developed systems to support our customer loyalty program
with a focus on increasing traffic to our restaurants. In recent years, investments have also been made in a global supply chain management
system to provide better inventory forecasting and replenishment to our restaurants, which helps us manage food quality and cost. We also
continue to invest in a range of tools 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 secure corporate
network to our enterprise resource planning system and data warehouse. Our Company-owned

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BLOOMIN’ BRANDS, INC.

restaurants, and most of our franchised restaurants, are connected through a portal that provides our employees and franchise partners with
access to business information and tools that allow them to collaborate, communicate, train and share information.

We maintain a robust system to ensure network security and safeguard against data loss. See Item 1A. Risk Factors for additional discussion of
our cyber security measures.

ADVERTISING AND MARKETING

We advertise through a diverse set of media channels including but not limited to national/spot television, radio, social media, search engines
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 increased our focus on
data segmentation and personalization, customer relationship management and digital advertising to be more efficient and relevant with our
advertising expenditures. Internationally, we have teams in our developed markets that engage local agencies to tailor advertising 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 segmentation and
personalization opportunities. Additionally, to help maintain consumer interest and relevance, each concept leverages limited-time offers
featuring seasonal specials. We promote limited-time offers through integrated marketing programs that utilize all of our advertising resources.

RESTAURANT OPERATIONS

Management and Employees - The restaurant management staff varies by concept and restaurant size. Our restaurants employ primarily hourly
employees, many of whom work part-time. The Restaurant Managing Partner has primary responsibility for the day-to-day operation of the
restaurant and is required to follow Company-established operating standards. Area Operating Partners for our casual dining concepts are
typically responsible for overseeing the operations of six to 12 restaurants and Restaurant Managing Partners within a specific region.

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

Restaurant Managing Partners and Chef Partners in the U.S. may also participate in deferred compensation and other performance-based
compensation programs. To fund deferred compensation arrangements, we may invest in corporate-owned life insurance policies, which are
held within an irrevocable grantor or “rabbi” trust account for settlement of certain of our obligations under the deferred compensation plans.

Many of our international Restaurant Managing Partners are given the option to purchase participation interests in the cash distributions of the
restaurants they manage. The amount, terms and availability vary by country.

Supervision and Training - We require our Area Operating Partners and Restaurant Managing Partners to have significant experience in the
full-service restaurant industry. All Area Operating Partners and Restaurant Managing Partners are required to complete a comprehensive
training program that emphasizes our operating strategy, procedures and standards. The Restaurant Managing Partners and Area Operating
Partners, together with our Presidents, Regional Vice Presidents, Vice Presidents of Training and Directors of Training, are responsible for
selecting and training the employees for each new restaurant.

Service - In order to better assess and improve our performance, we utilize satisfaction measurement programs that provide us with industry
benchmarking information for our Company-owned locations in the U.S. For all other locations, we use various customer satisfaction measures
to assess and improve our performance.

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SOURCING AND SUPPLY

BLOOMIN’ BRANDS, INC.

Sourcing and Supply - We take a global approach to procurement and supply chain management, with our corporate team serving all U.S. and
international concepts. In addition, we have dedicated supply chain management personnel for our international operations in South America
and Asia. The supply chain management organization is responsible for all food and operating supply purchases as well as 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 and local
suppliers to capture efficiencies and economies of scale. This “total cost of ownership” (“TCO”) approach focuses on the initial purchase price,
coupled with the cost structure underlying the procurement and order fulfillment process. The TCO approach includes monitoring 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 is managed
by a custom distribution company that only provides products approved for our system. This customized relationship also enables our staff to
effectively manage and prioritize our supply chain.

Beef represents the majority of purchased proteins. In 2019, we primarily purchased our U.S. beef raw materials from four beef suppliers and
our Brazil beef raw materials from two beef suppliers. Due to the nature of our industry, we expect to continue purchasing a substantial amount
of beef from a small number of suppliers. Other major commodity categories purchased include produce, dairy, bread and pasta, and energy
sources to operate our restaurants, such as natural gas and electricity.

Quality Control - Our R&D facility is located in Tampa, Florida and serves as a global test kitchen and vendor product qualification site. Our
quality assurance team manages internal auditors responsible for supplier evaluations and external third parties who inspect supplier 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 develop sourcing strategies for all
commodity categories based on the dynamics of each category. In addition, we require our supplier partners to 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 of the
preparation process. In addition, we employ third-party auditors to verify our standards of food safety, training and sanitation.

RESTAURANT OWNERSHIP STRUCTURES

We generate our revenues from our Company-owned restaurants and through ongoing royalties from our franchised restaurants and sales of
franchise rights.

Company-owned Restaurants - Company-owned restaurants are restaurants wholly-owned by us or in which we have a majority ownership.
Our cash flows from entities in which we have a majority ownership are limited to the portion of our ownership. The results of operations of
Company-owned restaurants are included in our consolidated operating results and the portion of income or loss attributable 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 to agreements
we entered into with the Carrabba’s Italian Grill founders (“Carrabba’s Founders”). Each Carrabba’s Italian Grill restaurant located outside the
U.S. pays a one-time lump sum fee to the Carrabba’s Founders, which varies depending on the size of the restaurant. No continuing royalty fee
is paid to the Carrabba’s Founders for Carrabba’s Italian Grill restaurants located outside the U.S.

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BLOOMIN’ BRANDS, INC.

Unaffiliated Franchise Program - Our unaffiliated franchise agreements grant third parties rights to establish and operate a restaurant using one
of our concepts. Franchised restaurants are required to be operated in accordance with the franchise agreement and in compliance with their
respective concept’s standards and specifications.

Under our franchise agreements, each franchisee is required to pay an initial franchise fee and monthly royalties based on a percentage of gross
restaurant sales. Initial franchise fees are generally $40,000 for U.S. franchisees and range between $30,000 and $75,000 for international
franchisees, depending on the market. Some franchisees may also pay administration fees based on a percentage of gross restaurant sales.
Following is a summary of royalty fee percentages based on our existing unaffiliated franchise agreements:

MONTHLY ROYALTY FEE
PERCENTAGE

3.50% - 5.75%

2.75% - 6.00%

(as a % of gross Restaurant sales)

U.S. franchisees (1)

International franchisees (2)
_________________
(1)

U.S. franchisees must also contribute a percentage of gross sales for national marketing programs and spend a certain percentage of gross sales on local advertising.
For most U.S. franchisees, there is a maximum of 8.0% of gross restaurant sales for combined national marketing and local advertising.
International franchisees must also spend a certain percentage of gross sales on local advertising, which varies depending on the market.

(2)

COMPETITION

The restaurant industry is highly competitive with a substantial number of restaurant operators that compete directly and indirectly with us in
respect to price, service, location and food quality, and there are other well-established competitors with significant financial and other
resources. There is also active competition for management personnel, attractive suitable real estate sites, supplies and restaurant employees. In
addition, competition is influenced strongly by marketing and brand reputation. At an aggregate level, all major casual dining restaurants in
markets in which we operate would be considered competitors of our concepts. We also face growing competition from the supermarket
industry which offers expanded selections of prepared meals. In addition, improving product offerings and convenience options from quick
service and fast casual restaurants and the expansion of home delivery services, together with negative economic conditions, could cause
consumers to choose less expensive alternatives. Internationally, we face increasing competition due to an increase in the number of casual
dining restaurant options in the markets in which we operate.

GOVERNMENT REGULATION

We are subject to various federal, state, local and international laws affecting our business. Each of our restaurants is subject to licensing and
regulation by a number of governmental authorities, which may include, among others, alcoholic beverage control, health and safety agencies,
environmental and fire agencies in the state, municipality or country in which the restaurant is located.

U.S. - Alcoholic beverage sales represent 14% of our U.S. restaurant sales. Alcoholic beverage control regulations require each of our
restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license or permit to sell alcoholic
beverages on the premises and, where applicable, a permit 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;

•
• menu labeling and food safety;
•

the Americans with Disabilities Act, which, among other things, requires our restaurants to meet federally mandated requirements for
the disabled; and
information security, privacy, cashless payments and gift cards.

•

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International - Our restaurants outside of the U.S. are subject to similar local laws and regulations as our U.S. restaurants, including labor, 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.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Below is a list of the names, ages, positions and a brief description of the business experience of each of our executive officers as of
February 14, 2020.

NAME

David J. Deno

Christopher Meyer

Kelly Lefferts

Gregg Scarlett

Michael Stutts

AGE

POSITION
Chief Executive Officer

Executive Vice President, Chief Financial Officer

Executive Vice President, Chief Legal Officer and Secretary

Executive Vice President, Chief Operating Officer, Casual Dining Restaurants

Executive Vice President, Chief Customer Officer

David J. Deno has served as Chief Executive Officer and as a member of our Board of Directors since April 2019. Mr. Deno previously served
as Executive Vice President and Chief Financial and Administrative Officer from October 2013 to April 2019 and as Executive Vice President
and Chief Financial Officer from May 2012 to October 2013. Prior to joining Bloomin’ Brands, Mr. Deno was Chief Financial Officer of the
international division of Best Buy Co. Inc. from December 2009 to May 2012. Mr. Deno has also previously served as President and later Chief
Executive Officer of Quiznos and Chief Financial Officer and later Chief Operating Officer of YUM! Brands, Inc.

Christopher Meyer has served as Executive Vice President, Chief Financial Officer since April 2019. Mr. Meyer previously served as Group
Vice President, Finance, Treasury and Accounting from November 2017 to April 2019 and Group Vice President, Financial Planning &
Analysis and Investor Relations from September 2014 to November 2017.

Kelly Lefferts has served as Executive Vice President, Chief Legal Officer since July 2019. Ms. Lefferts served as Group Vice President and
U.S. General Counsel of Bloomin’ Brands from September 2015 to July 2019 and Vice President and Assistant General Counsel of Bloomin’
Brands from January 2008 to September 2015. She has also served as Secretary of Bloomin’ Brands since February 2016.

Gregg Scarlett has served as Executive Vice President, Chief Operating Officer, Casual Dining Restaurants since February 2020. Mr. Scarlett
previously served as Executive Vice President, President of Outback Steakhouse from July 2016 to February 2020; Executive Vice President,
President of Bonefish Grill from April 2015 to July 2016; Senior Vice President, Casual Dining Restaurant Operations from January 2013 to
April 2015; and Senior Vice President of Operations for Outback Steakhouse from March 2010 to January 2013.

Michael Stutts has served as Executive Vice President, Chief Customer Officer since June 2019. Prior to joining Bloomin’ Brands, Mr. Stutts
served as a Partner and Managing Director at Boston Consulting Group, from September 2008 to December 2018.

EMPLOYEES

As of December 29, 2019, we employed approximately 94,000 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. Various jurisdictional industry-wide labor
agreements apply to certain of our employees in Brazil. We consider our employee relations to be in good standing.

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TRADEMARKS

BLOOMIN’ BRANDS, INC.

We regard our Outback®, Outback Steakhouse®, Carrabba’s Italian Grill®, Bonefish Grill® and Fleming’s Prime Steakhouse & Wine Bar®
service marks and our Bloomin’ Onion® trademark as having significant value and as being important factors in the marketing of our
restaurants. We have also obtained trademarks and service marks for these and several of our other menu items and various advertising slogans
both in the U.S. and in countries where we operate. We are aware of names and marks similar to the service marks of ours used by other
persons in certain geographic areas in which we have restaurants. However, we believe such uses will not adversely affect us. Our policy is to
pursue registration of our marks in countries where we operate whenever possible and to vigorously oppose any infringement of our marks. We
also have registered domain names for each of our concepts.

We license the use of our registered trademarks to franchisees and third parties through franchise and license arrangements. The franchise and
license arrangements restrict franchisees’ and licensees’ activities with respect to the use of our trademarks and impose quality control
standards in connection with goods and services offered in connection with the trademarks.

SEASONALITY

Our business is subject to seasonal fluctuations. Historically, customer traffic patterns for our established U.S. restaurants are generally highest
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 affect sales volumes
seasonally in some of our markets.

See Item 1A. Risk Factors for discussion of risks related to seasonal and periodic fluctuations.

ADDITIONAL INFORMATION

We make available, free of charge, through our internet website www.bloominbrands.com, our Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and amendments to those reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Exchange Act, as soon as reasonably practicable after electronically filing such material with the Securities and Exchange
Commission (“SEC”). Our reports and other materials filed with the SEC are also available at www.sec.gov. The reference to these website
addresses does not constitute incorporation by reference of the information contained on the websites and should not be considered part of this
Report.

Item 1A.Risk Factors

The risk factors set forth below should be carefully considered. The risks described below are those that we believe could materially and
adversely affect our business, financial condition or results of operations, however, they are not the only risks facing us. Additional risks and
uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business,
financial condition or results of operations.

Risks Related to Our Business and Industry

There can be no assurance that our review of strategic alternatives or any initiatives or transactions that we pursue will result in additional
shareholder value or that the process or any actions that we take will not have an adverse impact on our business.

In November 2019, we announced an exploration and evaluation of strategic alternatives that have the potential to maximize value for our
shareholders. Although we have announced certain initiatives that we are taking as a result of the strategic review process to date, the strategic
review process is not completed. The process of reviewing strategic alternatives has been and may continue to be time consuming and
disruptive to our business operations and, if we are unable to effectively manage the process, our business, financial condition and results of
operations could be adversely affected. We have incurred and could continue to incur substantial expenses associated with evaluating potential
strategic

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alternatives. This process could also increase our exposure to potential litigation. There can be no assurance that the recently announced
initiatives with respect to our organizational structure, cost saving measures and capital allocation policies, or any other potential initiative or
transaction that we may pursue, will provide greater value to our shareholders than that reflected in the current price of our common stock or
otherwise be successfully implemented. Until the review process is concluded, perceived uncertainties related to our future may result in
volatility in the market price of our common stock and may make it more difficult for us to attract and retain qualified personnel and business
partners.

There are risks and uncertainties associated with the recently announced changes to our organizational structure and streamlining of our
corporate support functions.

We recently announced certain initiatives resulting from our strategic review process to date. These include consolidating the leadership and
organizational structure of our casual dining brands and streamlining corporate support functions. These actions are designed to generate
significant cost savings over the next couple of years, while maintaining our top priority of driving profitable sales. However, these initiatives
involve significant changes to our organization and operations and could be more complicated, time consuming and costly to implement than
we currently anticipate. There can be no assurance that we will be able to achieve the targeted cost savings, in a timely manner or at all, or that
our actions will not have unforeseen or underestimated adverse effects on our sales or results of operations. In addition, various factors that are
outside of our control and are difficult to predict, including general market conditions and industry trends, may affect whether we are able to
successfully implement these initiatives.

Food safety and food-borne illness concerns in our restaurants or throughout the industry or supply chain may have an adverse effect on
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 or in the
industry or supply chain generally, could have a negative impact on our traffic and sales and adversely affect the reputation of our brands. Food
safety issues could be caused by suppliers or distributors and, as a result, be out of our control. Health concerns or outbreaks 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 the food service industry generally and
adversely impact our sales. Social media has dramatically increased the rate at which negative publicity, including as it relates to food-borne
illnesses, can be disseminated before there is any meaningful opportunity to respond or address an issue. The occurrence of food-borne illnesses
or food safety issues could also adversely affect the price and availability of affected 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. Our inability 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 food quality,
some of which are well-established with significant resources. There is also active competition for management and other personnel, and
attractive suitable real estate sites. Consumer tastes, nutritional and dietary trends, traffic patterns and the type, number and location of
competing restaurants often affect the restaurant business, and our competitors may react more efficiently, creatively and effectively to those
conditions. In addition, our competitors may generate or better implement business strategies that improve the value and relevance of their
brands and reputation, relative to ours. For example, our competitors may more successfully implement menu or technology initiatives, such as
remote ordering, social media or mobile technology platforms that expedite or enhance the customer experience. In addition, our competitors
may more successfully implement delivery and off-site initiatives. Further, we face growing competition from quick service and fast casual
restaurants, the supermarket industry and meal 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 sector in recent periods and we believe they will continue to present a challenging competitive environment in future periods.
If we are unable to continue to compete effectively, our traffic, sales and margins could decline and our business, financial condition and results
of operations would be adversely affected.

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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 operating costs,
and similar laws and regulations apply to our operations outside of the U.S. These laws and regulations relate to matters including employment
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 government regulations and new laws
governing our relationships with employees, including minimum wage increases, mandated benefits or other requirements that impose
additional obligations on us, could increase our costs and adversely affect our business and results of operations.

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 increase our labor
and other costs. Several states in which we operate have recently approved minimum wage increases. As minimum wage increases are
implemented in these states or any other states in which we operate in the future, we expect our labor costs will continue to increase. Our ability
to respond to minimum wage increases by increasing menu prices depends on the responses of our competitors and 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 the disclosures
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. For example,
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 on consumer confidence and
discretionary spending, which the restaurant industry depends upon. In addition, it is difficult to predict what impact, if any, the U.S.
presidential election in 2020 and its outcome could have on consumer confidence and discretionary spending. In recent years, we believe these
factors and conditions may have affected consumer traffic and comparable restaurant sales for us and throughout our industry and may continue
to contribute to a challenging sales environment in the casual dining sector. A decline in economic conditions or negative developments with
respect to any of the other factors mentioned above, or a perception that such decline or negative developments are imminent, generally or in
particular markets in which we operate, and our consumers’ reactions to these trends could result in increased pressure with respect to our
pricing, traffic levels, commodity and other costs and the continuation of our innovation and productivity initiatives, which could negatively
impact our business and results of operations. 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 nearby businesses 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 and other threats to our technological
systems may adversely affect our business.

A cyber incident that compromises the information of our consumers or employees, whether affecting our technological systems or those of
third-party service providers that we rely on, could result in widespread negative publicity, damage to the reputation 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, and we maintain certain personal information regarding our employees and
confidential information about our customers, franchisees and suppliers. Although we segment our card data environment and employ a cyber
security protection program based upon industry frameworks, as well as scan and improve our environment for any vulnerabilities, perform
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effectiveness of our security measures with oversight by our Audit Committee, there are no assurances that such programs will prevent or
detect all potential cyber security breaches or technological failures.

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 and accounting systems, mobile
technologies to enhance the customer experience and other various processes and procedures, some of which are handled by third parties. Our
ability to efficiently and effectively manage our business depends significantly on the reliability and capacity of these systems. The failure of
these systems to operate effectively, system maintenance problems, upgrading or transitioning 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. 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, employee error or malfeasance, denial of service and ransomware attacks, viruses, worms and other disruptive problems.

From time to time we have been, and likely will continue to be, the target of attempted cyber and other security threats, including those
common to most industries and those targeting us due to the confidential consumer information we obtain through our electronic processing of
credit and debit card transactions. A security breach or even a perceived security breach or failure to appropriately respond to a cyber incident
could result in litigation or governmental investigation, as well as damage to our reputation and brands. We are subject to a variety of
continuously evolving laws and regulations regarding privacy, data protection and data security at federal, state and international levels. The
California Consumer Privacy Act, for example, became effective January 1, 2020 and provides a new private right of action to California
residents related to data breaches and imposes new disclosure and other requirements on companies with respect to their data collection, use
and sharing practices as they relate to California residents. A claim or investigation resulting from a cyber or other security threat to our
systems and data may have a material adverse effect on our business and the potential of incurring significant remediation costs. As cyber
security risk and applicable laws and regulations evolve, we may incur significant additional costs in technology, third-party services and
personnel to maintain systems designed to anticipate and prevent cyber-attacks.

Increased commodity, energy and other costs could decrease our profit margins or cause us to limit or otherwise modify our menus or
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 food commodities.
Our business also incurs significant costs for energy, insurance, labor, marketing and real estate. Prices may be affected by supply, market
changes, increased competition, the general risk of inflation, changes in laws, shortages or interruptions in supply due to weather, disease or
other conditions beyond our control, or other reasons. Increased prices or shortages could affect the cost and quality of the items we buy or
require us to raise prices, limit our menu options or implement alternative processes or products. As a result, these events, combined with other
more general economic and demographic conditions, could impact our pricing and negatively affect our sales and profit margins.

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 and
regulation 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 is located. Our
suppliers are also subject to regulation in some of these areas. Any difficulties or inabilities to retain or renew licenses, or increased 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 new restaurants. We are subject to various U.S. federal,
state and international laws and regulations related to the offer and sale of franchises. Failure to comply with these laws could adversely affect
the results we generate from franchises or otherwise impose costs on us.

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Alcoholic beverage sales represent 14% of our consolidated restaurant sales and are subject to extensive state and local licensing and other
regulations. The failure of a restaurant to obtain or retain a liquor license would adversely affect that restaurant’s operations. In addition, we are
subject to “dram shop” statutes in certain states. These statutes generally provide a person injured by an intoxicated person 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 may lessen
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 dietary
preferences cause consumers to avoid steak and other products we offer in any of our concepts in favor of foods or ingredients that are
perceived as healthier or otherwise reflect popular demand, our business and operating results would be harmed. Various factors such as: (i) the
Food and Drug Administration’s menu labeling rules, (ii) nutritional guidelines issued by the United States Department of Agriculture and
issuance of similar guidelines or statistical information by state or local municipalities and (iii) academic studies, may impact consumer choice
and cause consumers to select foods other than those that are offered by our restaurants. If we are unable to anticipate or successfully respond to
changes in consumer preferences, our results of operations could be adversely affected, generally or in particular concepts or markets.

Our relationships with third party delivery services and ability to grow sales through delivery orders are subject to risks.

We maintain relationships with various third-party delivery apps and services, and we have granted exclusive third-party delivery service rights
to DoorDash with respect to our Outback Steakhouse restaurants. Our sales may be negatively affected if these platforms are damaged or
interrupted through technological failures or otherwise. The drivers fulfilling third-party delivery orders may make errors or fail to make timely
deliveries such that our food or brands are poorly represented. This could cause reputational harm or adversely impact sales and customer
satisfaction. Our sales through these services may also depend on the availability of delivery drivers, who are generally independent
contractors.

If our delivery service providers are not able to effectively compete with other third-party delivery services, our delivery sales may be adversely
impacted. Our relationships with these third-party delivery services are relatively new, and the level of sales they may generate and overall
customer experience provided through such services remain uncertain. Our sales and brand reputation could be harmed as a result, and these
orders could discourage potentially more profitable in-restaurant or carryout sales.

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 and other taxes
in the future could be adversely affected by a number of factors, including changes in the mix of earnings in countries with different statutory
tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws or other legislative changes and the outcome of
income tax audits. Although we believe our tax estimates are reasonable, the final determination of tax audits could be materially different from
our historical income tax provisions and accruals. The results of a tax audit could have a material effect on our results of operations or cash
flows in the period or periods for which that determination is made. In addition, our effective income tax rate and our results may be impacted
by our ability to realize deferred tax benefits, including our FICA tip credit carryforwards, and by any increases or decreases of our valuation
allowances applied to our existing deferred tax assets. Additional tax regulations and interpretations of the Tax Cuts and Jobs Act are expected
to be issued, and no assurance can be made that future guidance will not adversely affect our business or financial condition.

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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 2020
development schedule calls for nine U.S. Outback Steakhouse relocations and the construction of approximately 25 new system-wide locations,
with the majority in Brazil. A variety of factors could cause the actual results and outcome of those 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 those regions.

It is difficult to estimate the performance of newly opened restaurants. Earnings achieved by restaurants open for less than two years may not
be indicative of future operating results. If new restaurants do not meet targeted performance, it could have a material adverse effect on our
operating results, including any impairment losses that we may be required to recognize. There is also the possibility that new restaurants may
attract consumers away from other restaurants we own, thereby reducing the revenues of those existing restaurants, or that we will incur
unrecoverable costs in the event a development project is abandoned prior to completion.

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 our existing 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 improvements to our
facilities through our remodeling and relocation programs. We also close underperforming restaurants from time to time in order to improve the
performance of our brands. As demographic and economic patterns change or there are declines in neighborhoods where our restaurants are
located or adverse economic conditions in local areas, current locations may not continue to be attractive or profitable. Because we lease a
significant majority of our restaurants, we incur significant lease termination expenses when we close or relocate a restaurant and are often
obligated to continue rent and other lease related payments after restaurant closure. We also incur significant 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 not perform as expected, these programs may not yield
the desired return on investment, which could have a negative effect on our operating results.

We face a variety of risks associated with doing business in foreign markets that could have a negative impact on our financial
performance.

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 a significant
concentration of restaurants in a foreign market the impact of any negative local conditions can have a sizable impact on our results.

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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 and consumer
preferences, diverse government regulations and tax systems, corruption, anti-American sentiment, the ability to source high quality ingredients
and other commodities in a cost-effective manner, uncertain or differing interpretations of rights and obligations in connection with
international franchise agreements and the collection of ongoing royalties from international franchisees, the availability and costs of land,
construction and financing, and the availability of experienced management, appropriate franchisees and area operating partners.

Local or regional events or conditions in our international markets could affect our results. For example, during 2019, Hong Kong political
protests led to violence and disrupted business operations. During 2018, unrest surrounding the presidential election in Brazil led to protests and
a lengthy truckers strike that negatively impacted the Brazilian economy, causing supply shortages and transportation gridlock that resulted in
lost operating days for many businesses, including our restaurants. It is too early to assess the impact the coronavirus outbreak recently
identified in Wuhan, China will have on consumer behavior in affected regions where we or our franchisees operate.

Currency regulations and fluctuations in exchange rates could also affect our performance. We have operations in many foreign countries,
including direct investments in restaurants in Brazil and Hong Kong/China, as well as international franchises. As a result, we may experience
losses from fluctuations in foreign currency exchange rates or any hedging arrangements that we enter into to offset such fluctuations, and such
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 legal requirements could
subject us to monetary liabilities and other sanctions, which could harm our business, results of operations and financial 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 are unable 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 and lower
sales and profitability.

Our restaurant-level management and team members are largely responsible for the quality of our service. Our guests may be dissatisfied and
our sales may decline if we fail to recruit, train and retain managers and team members that effectively implement our business strategy and
provide high quality guest service. There is active competition for quality management personnel and hourly team members. If we experience
high turnover, we may experience higher labor costs and have a shortage of adequate management personnel required for future growth.

Our success depends substantially on the value of our brands and our ability to execute innovative marketing and consumer relationship
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 to differentiate
our concepts in the highly competitive casual dining sector to achieve sustainable same-restaurant sales growth and warrant new unit growth.
Brand value and reputation is based in large part on consumer perceptions, which are driven by both our actions and by actions beyond our
control, such as new brand strategies or their implementation, business incidents, ineffective advertising or marketing efforts, or unfavorable
mainstream or social media publicity involving us, our industry, our franchisees, or our suppliers. A failure 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 our

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results of operations. Additionally, insufficient focus on our competition or failure to adequately address declines in the casual dining industry,
could adversely impact results of operations.

If our competitors increase their spending on advertising, promotions and loyalty programs, if our advertising, media or marketing expenses
increase, or if our advertising, promotions and loyalty programs become less effective than those of our competitors, or if we do not adequately
leverage technology and data analytic capabilities needed to generate concise competitive insight, our results of operations 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 material
adverse 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 broad audience of
consumers and other interested persons. The availability of information on social media platforms is virtually immediate as is its impact, and
users can post information often without filters or checks on the accuracy of the content posted. Adverse or inaccurate information concerning
our company or concepts may be posted on such platforms at any time, and such information can quickly reach a wide audience. Social media
has also increasingly been utilized to target specific companies or brands as a result of a variety of actions or inactions, or perceived actions or
inactions, that are disfavored by interest groups and such campaigns can rapidly accelerate and impact consumer behavior. The harm may be
immediate without affording us an opportunity for redress or correction, and it is challenging to monitor and anticipate developments on social
media in order to respond in an effective and timely manner. We could also be exposed to these risks if we fail to use social media responsibly
in our marketing efforts. These factors could have a material adverse effect on our 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 awareness of and
engagement with our brands, a failure to use social media responsibly in our marketing efforts may further expose us to these risks. 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 our social media strategies in order to
maintain broad appeal with guests and brand relevance. As part of our marketing efforts, we rely on search engine marketing and social media
platforms to attract and retain guests. We also continue to invest in other digital marketing initiatives that allow us to reach our guests across
multiple digital channels and build their awareness of, engagement with, and loyalty to our brands. These initiatives may not be successful,
resulting in expenses incurred without the benefit of higher revenues, increased employee engagement or brand recognition. In addition, a
variety of risks are associated with the use of social media, including the improper disclosure of proprietary information, negative comments
about us, exposure of personally identifiable information, fraud, or out-of-date information. The inappropriate use of social media vehicles by
our guests or employees could increase our costs, lead to litigation 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 financial condition
and results of operations.

Along with other intangible assets, we test goodwill for impairment annually and whenever events or changes in circumstances indicate that its
carrying value may not be recoverable. We also evaluate long-lived assets on a quarterly basis or whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. We cannot accurately predict the amount and timing of any impairment of assets. A
significant amount of judgment is involved in determining if an indication of impairment exists. Should the value of goodwill or other
intangible or long-lived assets become impaired, there could be an adverse effect on our financial condition and consolidated results of
operations.

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BLOOMIN’ BRANDS, INC.

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 and support to
franchisees. However, franchisees are independent third parties that we do not control, and these franchisees own, operate and oversee the daily
operations of their restaurants. As a result, the ultimate success and quality of any franchise restaurant rests with the franchisee. If franchisees
do not successfully operate restaurants in a manner consistent with our product and service quality standards and contractual requirements, our
image and reputation could be harmed, which in turn could adversely affect our business and operating results.

A significant portion of our financial results are dependent upon the operational and financial success of our franchisees. If sales trends or
economic conditions worsen for franchisees, their financial results may worsen and our royalty, rent and other fee revenues may decline. In
addition, we may also incur expenses in connection with supporting franchise restaurants that are underperforming. When Company-owned
restaurants are sold to a franchisee, one of our subsidiaries is often required to remain responsible for lease payments for the sold restaurants to
the extent the purchasing franchisees defaults on their leases. During periods of declining sales and profitability of franchisees, the incidence of
franchisee defaults for these lease payments may increase and we may be required to make lease payments and seek recourse against the
franchisee or agree to repayment terms.

We have a limited number of suppliers for our major products and rely on one custom distribution company for our national distribution
programs in the U.S. and Brazil. If our suppliers or custom distributors are unable to fulfill their obligations under their contracts or we are
unable to develop or maintain relationships with these or new suppliers or distributors, if needed, we could encounter 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 our major
products, such as beef. In 2019, we purchased: (i) approximately 95% of our U.S. beef raw materials from four beef suppliers that represent
more than 80% of the total beef marketplace in the U.S and (ii) approximately 90% of our Brazil beef raw materials from two beef suppliers
that represent approximately 45% of the total Brazil beef marketplace. Due to the nature of our industry, we expect to continue 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 distribution services in the U.S and Brazil,
respectively. Although we have not experienced significant problems with our suppliers or distributors, if our suppliers or distributors are
unable to fulfill their obligations under their contracts, we could encounter supply shortages and incur higher costs.

In addition, if we are unable to maintain current purchasing terms or ensure service availability with our suppliers and distributors, we may lose
consumers and experience an increase in costs in seeking alternative supplier or distribution services. The failure to develop and maintain
supplier and distributor relationships and any resulting disruptions to the provision of food and other supplies to our restaurant 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 and eliminate
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 restaurant information systems
across our brands. We continue to evaluate and implement further cost-saving initiatives. However, the ability to reduce our operating costs
through these initiatives is subject to risks and uncertainties, such as our ability to obtain improved supply pricing and the reliability of any new
suppliers or technology, and we cannot assure that these activities, or any other activities that we may undertake in the future, will achieve the
desired cost savings and efficiencies. Failure to achieve such desired savings could adversely affect our results of operations and financial
condition and curtail investment in growth opportunities.

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BLOOMIN’ BRANDS, INC.

There are risks and uncertainties associated with initiatives that we may implement.

From time to time, we consider various initiatives in order to grow and evolve our business and brands and improve our operating results.
These initiatives could include, among other things, acquisitions, development or dispositions of restaurants or brands, new joint ventures, new
franchise arrangements, restaurant closures and changes to our operating model. There can be no assurance that any such actions or initiatives
will be successful or deliver their anticipated benefits. We may be exposed to new and unforeseen risks and challenges, particularly if we enter
into markets or engage in activities with which we have no or limited prior experience, and it may be difficult to predict the success of such
endeavors. If we incur significant expenses or divert management, financial and other resources to any initiative that is unsuccessful or does not
meet our expectations, our results of operations and financial condition would be adversely affected. We may also incur significant asset
impairment and other charges in connection with any such initiative. Regardless of the ultimate success of any initiative, the implementation
and integration of new business or operational processes could be disruptive to our current operations. Even if we test and evaluate an initiative
on a limited basis, the diversion of management time and resources could have an adverse effect on our business.

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 in the 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 associated pre-opening costs, as well as
restaurant closures and exit-related costs, debt extinguishment and modification costs and impairments of goodwill, intangible assets and
property, fixtures and equipment. As a result of these and other factors, our financial results for any quarter 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 such events on economic
conditions and consumer spending patterns, could negatively impact our results of operations. Temporary and prolonged restaurant closures
may occur and consumer traffic may decline due to the actual or perceived effects from these events. For example, severe winter weather
conditions and hurricanes have impacted our traffic, and that of our franchises, and results of operations in recent years. It is too early to assess
the impact the coronavirus outbreak recently identified in Wuhan, China will have on consumer behavior in affected regions where we or our
franchisees operate.

Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of
our brand.

Our trademarks, including Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse & Wine Bar and
Bloomin’ Onion, and other proprietary rights are important to our success and our competitive position. The protective actions that we take
may not be sufficient to prevent unauthorized usage or imitation by others, which could harm our image, brand or competitive position.
Furthermore, our ability to protect trademarks and other proprietary rights may be more limited in certain international markets where 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 typically involve
claims by consumers and others regarding issues such as food borne illness, food safety, premises liability, “dram shop” statute liability,
promotional advertising and other operational issues common to the food service industry, as well as contract disputes and intellectual property
infringement matters. We are also subject to employee claims against us based on, among other things, discrimination, harassment, wrongful
termination,

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BLOOMIN’ BRANDS, INC.

disability, or violation of wage and labor laws. We are also subject to the risk of being named a joint employer of workers of our franchisees for
alleged violations of labor and wage laws. These claims may divert our financial and management resources that would otherwise be used to
benefit our operations. The ongoing expense of any resulting lawsuits, and any 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 excess of 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 and costs
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 and associated
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 against or that we believe are
not commercially reasonable to insure. These losses, if they occur, could have a material and adverse effect on our business and results of
operations. Additionally, if our insurance costs increase, there can be no assurance that we will be able to successfully offset the effect of such
increases and our results of operations may be adversely affected.

Failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures could adversely
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 to adequately
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 our common stock. Furthermore, we
cannot be certain that our internal control over financial reporting and disclosure controls and procedures will prevent all possible error and
fraud, including through cyber attacks. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of error or fraud, if any, in our company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake, which could
have an adverse impact on our business. A significant financial reporting failure or material weakness in internal control over financial
reporting could cause a loss of investor confidence and decline in the market price of our common stock, increase our costs, lead to litigation or
result in negative publicity that could damage our reputation.

Future changes to existing accounting rules, accounting standards, new pronouncements and varying interpretations of pronouncements, 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 with regard to a wide range of matters that are relevant to
our business, including but not limited to, revenue recognition, impairment of long-lived assets, leases and related economic transactions,
derivatives, intangibles, self-insurance, income taxes, property and equipment, unclaimed property laws and litigation, and stock-based
compensation are highly complex and involve many subjective assumptions, 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.

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Risks Related to Our Indebtedness

BLOOMIN’ BRANDS, INC.

Our substantial leverage and our ability to refinance our indebtedness in the future could adversely affect our ability to raise additional
capital to fund our operations, limit our ability to react to changes in the economy or our industry and expose us to interest rate risk in
connection with our variable-rate debt.

We are highly leveraged. As of December 29, 2019, our total indebtedness was $1.0 billion and we had $380.8 million in available unused
borrowing capacity under our revolving credit facility, net of undrawn letters of credit of $20.2 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 our business;
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 our
indebtedness, 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 service
requirements, 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 our competitors
who may not be as highly leveraged.

•
•
•

•

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 could increase.

As of December 29, 2019, we had $1.0 billion of variable-rate debt outstanding under our Senior Secured Credit Facility, which matures on
November 2022. We also have variable-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 $550.0 million and mature on November 30, 2022.
While this agreement limits our exposure to higher interest rates, an increase in the floating rate could nonetheless cause a material increase in
our interest expense due to the total amount of our outstanding variable rate indebtedness.

Our Senior Secured Credit Facility allows us to incur variable debt that is indexed to the London Inter-Bank Offered Rate (“LIBOR”). On July
27, 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit
LIBOR rates after 2021. These reforms may cause LIBOR to cease to exist, new methods of calculating LIBOR to be established or the
establishment of an alternative reference rate(s). As a result, our interest expense may increase and our available cash flow may be adversely
affected.

We cannot be certain that our financial condition or credit and other market conditions will be favorable when our Senior Secured Credit
Facility matures in 2022, or at any earlier time we may seek to refinance our debt. If we are unable to refinance our indebtedness on favorable
terms, our financial condition and results of operations would be adversely affected.

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BLOOMIN’ BRANDS, INC.

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 additional indebtedness, pay
dividends on, redeem or repurchase our capital stock, make certain acquisitions or investments, incur or permit to exist certain liens, enter into
transactions with affiliates or sell our assets to, merge or consolidate with or into, another company. Our debt agreements require us to satisfy
certain financial tests and ratios. Our ability to satisfy such tests and ratios may be affected by events outside of our control.

If we breach the covenants under our debt agreements, the lenders could elect to declare all amounts outstanding under the agreements to be
immediately due and payable and terminate all commitments to extend further credit. If we are unable to repay those amounts, the lenders could
proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assets as collateral under our
debt agreement. If our lenders accelerate the repayment of borrowings, we cannot be certain that we will have sufficient 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 be forced to
take other actions to satisfy our obligations under our indebtedness and operating lease obligations, which may not be successful. If we fail
to meet these obligations, we would be in default under our debt agreements and the lenders could elect to declare all amounts outstanding
under them to be immediately due and payable and terminate all commitments to extend further credit.

Our ability to make scheduled payments on our debt obligations and to satisfy our operating lease obligations depends upon our financial
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 from operating activities
sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, or to pay our operating lease obligations. If our
cash flow and capital resources are insufficient to fund our debt service obligations and operating lease obligations, we may be forced to reduce
or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may
not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of sufficient operating results and
resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations or take other actions to
meet our debt service and other obligations. Our debt agreements restrict our ability to dispose of assets and how we may use the proceeds from
the disposition. We may not be able to consummate those dispositions or to obtain the proceeds that we could otherwise realize from such
dispositions and any such proceeds that are realized may not be adequate to meet any debt service obligations then due. The failure to meet our
debt service obligations or the failure to remain in compliance with the financial covenants under our debt agreements would constitute an
event of default under those agreements and the lenders could elect to declare all amounts outstanding under them to be immediately due and
payable and terminate all commitments to extend further credit.

Risks Related to Our Common Stock

Our 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 our common
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 our operating results by analysts,
investors or management, analysts’ recommendations regarding our stock or our competitors’ stock, sales of substantial amounts of our
common stock by our stockholders, actions or announcements by us or our competitors, the maintenance and growth of the value of our brands,
litigation, legislation or other regulatory developments affecting us or our industry, natural disasters, cyber attacks, terrorist acts, war or other
calamities and changes in general market and economic conditions.

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BLOOMIN’ BRANDS, INC.

If we are unable to continue to pay dividends or repurchase our stock, investment in our common stock may decline in value.

As part of our recently announced initiatives resulting from the strategic review process to date, we announced a more balanced capital
allocation policy that included doubling our quarterly cash dividend and a focus on debt reduction, while continuing to opportunistically
repurchase shares of our common stock. The continuation of these programs, at all or consistent with past levels, will require the generation of
sufficient cash flows and the existence of surplus earnings. If we are not able to maintain the increased dividend at our targeted payout ratio, or
reduce or eliminate our dividend, the price of our common stock may fall. In addition, we have repurchased a significant amount of our
common stock in the past few years and there can be no assurance that reduced repurchasing activity under our more balanced capital allocation
policy will not have an adverse effect on the price of our common stock.

Any decisions to declare and pay dividends and continue stock repurchase programs in the future will be made at the discretion of our Board of
Directors and will depend on, among other things, our results of operations, financial condition, cash requirements, borrowing capacity,
contractual restrictions including debt covenants and other factors that our Board of Directors may deem relevant at the time.

Provisions in our certificate of incorporation and bylaws, our Senior Secured Credit Facility and Delaware law may discourage, delay or
prevent a change of control of our company or changes in our management and, therefore, may depress the trading price of our stock.

Our certificate of incorporation and bylaws include certain provisions that could have the effect of discouraging, delaying or preventing a
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” within the
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 best interests of our
stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing 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 certain business
combinations, including mergers, consolidations or acquisitions of additional shares, for a period of three years following the time that the
stockholder becomes an “interested stockholder.” An “interested stockholder” is defined to include persons owning directly or indirectly 15%
or more of the outstanding voting stock of a corporation. Although we have elected in our certificate of incorporation not to be subject to
Section 203 of the Delaware General Corporation Law our certificate of incorporation contains provisions that have the same effect as Section
203, except that they provide that our former private equity sponsors will not be deemed to be “interested stockholders,” regardless of the
percentage 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 funds through the
issuance of new equity securities, debt or a combination of both. Additional financing may not be available on favorable terms or at all. If
adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. If we issue new debt securities, the
debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our
operations, including our ability to pay dividends on our common stock. If we issue additional equity securities, existing stockholders may
experience dilution, and the new equity securities could have rights senior to those of our common stock. Because our decision to issue
securities in any future offering will depend on market conditions and other factors beyond our control,

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BLOOMIN’ BRANDS, INC.

we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future securities
offerings reducing the market price of our common stock and diluting their interest.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2.Properties

We had 1,473 system-wide restaurants located across 48 states, Puerto Rico, Guam and 21 countries as of December 29, 2019. The following is
a summary of our restaurant locations by country and territory as of December 29, 2019:

COMPANY-OWNED

United States

International:

Brazil (1)

China (Mainland)

Hong Kong

Total international Company-owned

Total Company-owned

1,045 United States

International:

111 Argentina

1 Australia

16 Bahamas
128 Brazil
Canada
Costa Rica

Dominican Republic

Ecuador

Guam

Indonesia

Japan

Total international franchise

1,173 Total franchise

FRANCHISE

173

1 Malaysia

8 Mexico

Philippines

Puerto Rico

1
1
2 Qatar
1

Saudi Arabia

Singapore

South Korea

Thailand

Turks and Caicos

4
10

127

300

____________________
(1)

The restaurant count for Brazil is reported as of November 30, 2019 to correspond with the balance sheet date of this subsidiary.

We lease substantially all of our restaurant properties from third parties. As of December 29, 2019, our Company-owned restaurants were
located on the following sites by segment:

Company-owned sites

Leased sites:

Land, ground and building leases

Space and in-line leases

Total Company-owned restaurant sites

We also lease corporate offices in Tampa, Florida and São Paulo, Brazil.

Item 3. Legal Proceedings

U.S.

INTERNATIONAL

TOTAL

PERCENTAGE OF
TOTAL

689

329

1,045

—

128

689

457

1,173

59%

39%

100%

For a description of our legal proceedings, see Note 20 - Commitments and Contingencies of the Notes to Consolidated Financial Statements of
this Report.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

BLOOMIN’ BRANDS, INC.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

MARKET INFORMATION AND DIVIDENDS

Our common stock is listed on the Nasdaq Global Select Market under the symbol “BLMN”.

We have paid quarterly cash dividends on shares of our common stock since 2015. Future dividend payments will depend on earnings, financial
condition, capital expenditure requirements, surplus and other factors that our Board of Directors (our “Board”) considers relevant. The terms
of our debt agreements permit dividend payments, subject to certain restrictions.

HOLDERS

As of February 21, 2020, there were 42 holders of record of our common stock. The number of registered holders does not include holders who
are beneficial owners whose shares are held in street name by brokers and other nominees.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table presents the securities authorized for issuance under our equity compensation plans as of December 29, 2019:

(shares in thousands)

(a)

(b)

(c)

PLAN CATEGORY

NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS

WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
19.40

6,099 $

NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
COMPENSATION PLANS
(EXCLUDING SECURITIES
REFLECTED IN COLUMN
(a)) (1)

3,311

Equity compensation plans approved by security holders
____________________
(1)

The shares remaining available for issuance may be issued in the form of stock options, restricted stock units or other stock awards under the 2016 Omnibus
Incentive Compensation Plan.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On February 12, 2019, the Board of Directors authorized the repurchase of $150.0 million of our outstanding common stock as announced in
our press release issued on February 14, 2019 (the “2019 Share Repurchase Program”). The 2019 Share Repurchase Program will expire on
August 12, 2020. We did not repurchase any shares of our outstanding common stock during the thirteen weeks ended December 29, 2019.

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STOCK PERFORMANCE GRAPH

BLOOMIN’ BRANDS, INC.

The following graph depicts total return to stockholders from December 26, 2014 through December 29, 2019, relative to the performance of
the Standard & Poor’s 500 Index and the Standard & Poor’s 500 Consumer Discretionary Sector, a peer group. The graph assumes an
investment of $100 in our common stock and in each index on December 26, 2014 (the last business day of the fiscal year of investment) and
the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price
performance.

DECEMBER 26,
2014

DECEMBER 27,
2015

DECEMBER 25,
2016

DECEMBER 31,
2017

DECEMBER 30,
2018

DECEMBER 29,
2019

Bloomin’ Brands, Inc.
(BLMN)

Standard & Poor’s 500

Standard & Poor’s
Consumer Discretionary

100.00 $

100.00

72.83

79.03

93.96

78.78

100.76

110.45

113.12

118.24

136.32

143.48

129.22

143.09

98.98

171.82

186.12

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Item 6. Selected Financial Data

(in thousands, except share and per share data)
Operating Results:

Revenues

Restaurant sales

Franchise and other revenues

Total revenues (1)

Income from operations (2)

Net income including noncontrolling interests (2) (3)

Net income attributable to Bloomin’ Brands (2) (3)

Basic earnings per share

Diluted earnings per share (4)

Cash dividends declared per common share

Balance Sheet Data:

Total assets (5)

Total operating lease liabilities (5)

Total debt, net

Total stockholders’ equity (6)

Common stock outstanding (6)

Cash Flow Data:

Investing activities:

Capital expenditures

Proceeds from sale-leaseback transactions, net

Financing activities:

Repurchase of common stock (6)

BLOOMIN’ BRANDS, INC.

2019

2018

2017

2016

2015

FISCAL YEAR

4,075,014 $

4,060,871 $

4,164,063 $

4,221,920 $

4,349,921

64,375

65,542

59,073

38,753

27,755

4,139,389 $

4,126,413 $

4,223,136 $

4,260,673 $

4,377,676

191,090 $

134,117 $

130,573 $

1.47 $

1.45 $

0.40 $

145,253 $

109,538 $

107,098 $

1.16 $

1.14 $

0.36 $

138,686 $

103,608 $

101,293 $

1.05 $

1.02 $

0.32 $

123,750 $

43,987 $

39,388 $

0.35 $

0.34 $

0.28 $

230,925

131,560

127,327

1.04

1.01

0.24

3,592,683 $

2,464,774 $

2,561,894 $

2,622,810 $

3,032,569

1,450,917 $

— $

—

1,048,704 $

1,094,775 $

1,118,104 $

1,089,485 $

1,316,864

177,481 $

86,946

54,817 $

91,272

81,231 $

226,063 $

91,913

103,922

454,970

119,215

(161,926) $

(208,224) $

(260,589) $

(260,578) $

(210,263)

7,085 $

16,160 $

98,840 $

530,684 $

—

(106,992) $

(113,967) $

(272,916) $

(310,334) $

(170,769)

____________________
Note: This selected consolidated financial data should be read in conjunction with the consolidated financial statements and notes thereto, included in Item 8 and
Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Item 7 of this Report.

(1)

(2)

(3)
(4)
(5)

(6)

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
$80.4 million during 2017. Due to the change in our fiscal year end in 2014, Total revenues for 2015 includes $24.3 million of higher Restaurant sales.
2019 includes: (i) $10.6 million of asset impairments and closing costs primarily related to the restructuring of certain international markets, including Puerto Rico
and China, certain approved closure and restructuring initiatives and the relocation of certain restaurants, (ii) $5.5 million of severance expense from the restructuring
of certain functions, (iii) $3.8 million of gains related to the sale of certain surplus properties and (iv) $6.0 million of gains from the recognition of certain value-
added tax credits in Brazil. 2018 includes: (i) $29.5 million of asset impairments and closing costs primarily related to the restructuring of certain international
markets, including Puerto Rico and China, certain approved closure and restructuring initiatives, reclassification of assets to held for sale in connection with
refranchising certain restaurants and the restructuring 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 million of severance expense from the restructuring of certain functions. 2017 includes: (i) $42.8 million of asset
impairments and closing costs primarily related to certain closure and restructuring initiatives, the remeasurement of certain surplus properties and for our China
subsidiary, (ii) $12.5 million of asset impairments and restaurant closing 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 includes: (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 the refranchising of Outback Steakhouse South Korea and for our Puerto Rico subsidiary,
(iii) $7.2 million of asset impairments and restaurant closing costs related to the relocation 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 the corporate 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 and restaurant closing costs related to certain closure and restructuring
initiatives.
Includes $27.0 million of loss on defeasance, extinguishment and modification of debt in 2016.
Fiscal year 2017 includes $0.11 of additional diluted earnings per share from a 53rd operating week.
On December 31, 2019, we recorded $1.3 billion of right-of-use assets and $1.5 billion of lease liabilities upon adoption of the new lease standard discussed in Note
2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements.
In 2019, 2018, 2017, 2016 and 2015, we repurchased 5.5 million, 5.1 million, 13.8 million, 16.6 million and 7.6 million shares, respectively, of our outstanding
common stock. During 2018, we issued 4.0 million shares of our common stock through the exercise of stock options.

Table of Contents

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated
financial statements and the related notes. For discussion of our consolidated and segment-level results of operations, non-GAAP measures, and
liquidity and capital resources for fiscal year 2017, see our Annual Report on Form 10-K for the year ended December 30, 2018, filed with the
SEC on February 27, 2019.

Overview

We are one of the largest casual dining restaurant companies in the world with a portfolio of leading, differentiated restaurant concepts. As of
December 29, 2019, we owned and operated 1,173 restaurants and franchised 300 restaurants across 48 states, Puerto Rico, Guam and 21
countries. We have four founder-inspired concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime
Steakhouse & Wine Bar.

Executive Summary

Our 2019 financial results include:

• An increase in Total revenues of 0.3% to $4.1 billion in 2019 as compared to 2018, driven primarily by higher comparable
restaurant sales and the net impact of restaurant openings and closures. These increases were partially offset by the effect of foreign
currency translation and domestic refranchising.

•

Income from operations increased to $191.1 million in 2019 as compared to $145.3 million in 2018, primarily due to higher
comparable restaurant sales, the impact of certain cost savings initiatives and lower impairment charges and restaurant closing costs.
These increases were partially offset by labor, commodity and operating expense inflation, delivery rollout costs and the impact of
deferred gain amortization no longer recognized upon adoption of the new lease standard.

Following is a summary of factors that impacted our operating results and liquidity in 2019 and significant actions we have taken during the
year:

Refranchising - During 2019, we completed the sale of 18 of our U.S. Company-owned Carrabba’s Italian Grill restaurants to an existing
franchisee for cash proceeds of $3.6 million, net of certain purchase price adjustments. See Note 4 - Disposals of the Notes to Consolidated
Financial Statements for additional details.

Surplus Property Disposals - During 2019, we completed the sale of five of our U.S. surplus properties to a franchisee for cash proceeds of
$12.7 million, net of certain purchase price adjustments. The transaction resulted in a net gain of $3.6 million, recorded within Other restaurant
operating expense in our Consolidated Statements of Operations and Comprehensive Income.

Share Repurchase Programs and Dividends - We repurchased 5.5 million shares of common stock during 2019 for a total of $107.0 million and
paid $35.7 million of dividends.

Table of Contents

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Business Strategies

In 2020, our key business strategies include:

•

Enhance the 360-Degree Customer Experience to Drive Sustainable Healthy Sales Growth. We plan to continue to make
investments to enhance our core guest experience, increase off-premises dining occasions, remodel and relocate restaurants, invest
in digital marketing and data personalization and utilize the Dine Rewards loyalty program and multimedia marketing campaigns to
drive sales.

• Drive Long-Term Shareholder Value. We plan to drive long-term shareholder value by reinvesting operational cash flow into our

business, improving our credit profile and returning excess cash to shareholders through dividends and share repurchases.

•

Enrich Engagement Among Stakeholders. We take the responsibility to our people, customers and communities seriously and
continue to invest in programs that support the well-being of those engaged with us.

• Maximize International Opportunity. We continue to focus on existing geographic regions in South America, with strategic

expansion in Brazil, and pursue global franchise opportunities.

We intend to fund our business strategies, drive revenue growth and margin improvement, in part by reinvesting savings generated by
anticipated cost savings discussed below and productivity initiatives across our businesses.

Strategic Alternatives Review Update

In November 2019, we announced that we are exploring and evaluating strategic alternatives that have the potential to maximize value for our
shareholders, including but not limited to, a possible sale of the Company. Since then, management has been actively working with the Board
of Directors and its financial and legal advisors to review all aspects of the business and available opportunities.

Concurrently, we have built a plan that supports a growth-focused, operations centric organization. The pillars of this plan are as follows:

• Aligned leadership, resources and structure to prioritize growth, efficiency and scale.

•

Simplified our corporate support functions to enable a more agile and operations-focused organization.

• Rebalanced capital allocation policy, including doubling our dividend, while maintaining flexibility to pay down debt, repurchase

shares and reinvest back in our business.

We are confident that these actions, coupled with our ongoing focus on driving sustainable healthy sales growth in our restaurants, will increase
total shareholder return in 2020 and beyond.

Table of Contents

Key Performance Indicators

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

•

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

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

•

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

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

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

(i) Franchise and other revenues which are earned primarily from franchise royalties and other non-food and beverage revenue

streams, such as rental and sublease income.

(ii) Depreciation and amortization which, although substantially all is related to restaurant-level assets, represent historical sunk costs

rather than cash outlays for the restaurants.

(iii) General and administrative expense which includes primarily non-restaurant-level costs associated with support of the restaurants

and other activities at our corporate offices.

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

Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operations of our
restaurants and may materially impact our Consolidated Statements of Operations and Comprehensive Income. As a result, restaurant-
level operating margin is not indicative of our consolidated results of operations and is presented exclusively as a supplement to, and
not a substitute for, net income or income from operations. In addition, our presentation of restaurant operating margin may 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 diluted earnings 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.

Table of Contents

Selected Operating Data

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The table below presents the number of our restaurants in operation as of the periods indicated:

DECEMBER 29,
2019

DECEMBER 30,
2018

Number of restaurants (at end of the period):

U.S.

Outback Steakhouse

Company-owned

Franchised

Total

Carrabba’s Italian Grill

Company-owned (1)

Franchised (1)

Total

Bonefish Grill

Company-owned

Franchised

Total

Fleming’s Prime Steakhouse & Wine Bar

Company-owned

Other

Company-owned

U.S. Total

International

Company-owned

Outback Steakhouse - Brazil (2)

Other

Franchised

Outback Steakhouse - South Korea

Other

International Total

System-wide total

579

145

724

204

225

190

197

1,218

255

1,473

579

154

733

224

227

190

197

1,232

256

1,488

____________________
(1)
(2)

In 2019, we sold 18 Carrabba’s Italian Grill restaurants, which are now operated as franchises.
The restaurant counts for Brazil are reported as of November 30, 2019 and 2018, respectively, to correspond with the balance sheet dates of this subsidiary.

Table of Contents

Results of Operations

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

Revenues

Restaurant sales

Franchise and other revenues

Total revenues

Costs and expenses

Cost of sales (1)

Labor and other related (1)

Other restaurant operating (1)

Depreciation and amortization

General and administrative

Provision for impaired assets and restaurant closings

Total costs and expenses

Income from operations

Other expense, net

Interest expense, net

Income before Provision (benefit) for income taxes

Provision (benefit) for income taxes

Net income

Less: net income attributable to noncontrolling interests

Net income attributable to Bloomin’ Brands

____________________
(1)
*

As a percentage of Restaurant sales.
Less than 1/10th of one percent of Total revenues.

FISCAL YEAR

2019

2018

98.4 %

1.6

100.0

98.4 %

1.6

100.0

31.4

29.6

24.1

4.8

6.6

0.2

95.4

4.6

(*)

(1.2)

3.4

0.2

3.2

31.9

29.5

23.8

4.9

6.9

0.9

96.5

3.5

(*)

(1.1)

2.4

(0.3)

2.7

0.1

3.2 %

2.6 %

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Table of Contents

Revenues

RESTAURANT SALES

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

(dollars in millions)

For fiscal year 2018

Change from:

Comparable restaurant sales (1)

Restaurant openings (1)

Effect of foreign currency translation

Divestiture of restaurants through refranchising transactions

Restaurant closings

For fiscal year 2019

FISCAL YEAR
2019

4,060.9

62.5

50.1

(35.9)

(32.0)

(30.6)

4,075.0

____________________
(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
a comparable restaurant will differ each period based on when the restaurant opened.

The increase in Restaurant sales in 2019 as compared to 2018 was primarily due to higher comparable restaurant sales and sales from 40 new
restaurants not included in our comparable restaurant sales base. The increase in Restaurant sales was partially offset by: (i) the effect of foreign
currency translation of the Brazilian Real relative to the U.S. dollar, (ii) domestic refranchising and (iii) the closing of 40 restaurants since
December 31, 2017.

Average Restaurant Unit Volumes and Operating Weeks

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

(dollars in thousands)
Average restaurant unit volumes:

U.S.

Outback Steakhouse

Carrabba’s Italian Grill

Bonefish Grill

Fleming’s Prime Steakhouse & Wine Bar

International

Outback Steakhouse - Brazil (1)

Operating weeks:

U.S.

Outback Steakhouse

Carrabba’s Italian Grill

Bonefish Grill

Fleming’s Prime Steakhouse & Wine Bar

International

Outback Steakhouse - Brazil

____________________
(1)

Translated at average exchange rates of 3.93 and 3.59 for 2019 and 2018, respectively.

FISCAL YEAR

2019

2018

3,663 $

2,934 $

3,026 $

4,422 $

3,684 $

30,119

10,864

9,865

3,613

5,037

3,580

2,887

3,012

4,358

3,856

30,265

11,660

9,981

3,628

4,711

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

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

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

FISCAL YEAR

2019

2018 (1)

Year over year percentage change:

Comparable restaurant sales (stores open 18 months or more):

U.S. (2)

Outback Steakhouse

Carrabba’s Italian Grill

Bonefish Grill

Fleming’s Prime Steakhouse & Wine Bar

Combined U.S.

International

Outback Steakhouse - Brazil (3)

Traffic:

U.S.

Outback Steakhouse

Carrabba’s Italian Grill

Bonefish Grill

Fleming’s Prime Steakhouse & Wine Bar

Combined U.S.

International

Outback Steakhouse - Brazil

Average check per person (4):

U.S.

Outback Steakhouse

Carrabba’s Italian Grill

Bonefish Grill

Fleming’s Prime Steakhouse & Wine Bar

Combined U.S.

International

Outback Steakhouse - Brazil

2.0 %

0.1 %

0.7 %

1.2 %

5.8 %

(0.7)%

0.2 %

(1.7)%

0.1 %

(0.6)%

3.9 %

2.7 %

(0.1)%

1.8 %

0.6 %

1.8 %

4.0 %

0.2 %

0.5 %

0.8 %

2.5 %

(1.5)%

0.9 %

(4.1)%

(2.6)%

(4.3)%

(0.8)%

(4.4)%

3.1 %

4.3 %

3.1 %

5.1 %

3.3 %

2.8 %

____________________
(1)

For 2018, U.S. comparable restaurant sales and traffic compare the 52 weeks from January 1, 2018 through December 30, 2018 to the 52 weeks from January 2, 2017
through December 31, 2017.
Relocated restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening.
Excludes the effect of fluctuations in foreign currency rates. Includes trading day impact from calendar period reporting.
Average check per person increases (decreases) include the impact of menu pricing changes, product mix and discounts.

(2)
(3)
(4)

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Table of Contents

Franchise and other revenues

(dollars in millions)

Franchise revenues (1)

Other revenues

Franchise and other revenues

____________________
(1)

Represents franchise royalties, advertising fees and initial franchise fees.

COSTS AND EXPENSES

Cost of sales

(dollars in millions)
Cost of sales

% of Restaurant sales

FISCAL YEAR

2019

2018

52.2 $

12.2

64.4 $

52.9

12.6

65.5

FISCAL YEAR

2019

2018

Change

1,277.8

31.4%

1,295.6

31.9%

(0.5)%

Cost of sales, consisting of food and beverage costs, decreased as a percentage of Restaurant sales in 2019 as compared to 2018 primarily due
to 0.6% from increases in average check per person and 0.4% from the impact of certain cost saving initiatives, partially offset by an increase as
a percentage of Restaurant sales of 0.6% from commodity cost inflation.

In 2020, we expect commodity costs to increase approximately 2%.

Labor and other related expenses

(dollars in millions)
Labor and other related

% of Restaurant sales

FISCAL YEAR

2019

2018

Change

1,207.3

29.6%

1,197.3

29.5%

0.1%

Labor and other related expenses include all direct and indirect labor costs incurred in operations, including distribution expense to Restaurant
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 in 2019 as compared to 2018 primarily due to 0.6% from wage rate increases, offset by
decreases as a percentage of Restaurant sales of 0.4% from increases in average check per person and 0.2% from the impact of certain cost
savings initiatives.

In 2020, we anticipate approximately 3.5% labor cost inflation.

Other restaurant operating expenses

(dollars in millions)
Other restaurant operating

% of Restaurant sales

FISCAL YEAR

2019

2018

Change

982.1

24.1%

967.1

23.8%

0.3%

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 or indirectly
variable. Other restaurant operating expenses increased as a percentage of

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Restaurant sales in 2019 as compared to 2018 primarily due to: (i) 0.5% from additional expense related to the rollout of delivery services, (ii)
0.4% from operating expense inflation and (iii) 0.3% from the impact of deferred gains on sale-leaseback transactions no longer recognized in
2019 as a result of adoption of the new lease accounting standard. These increases were partially offset by decreases as a percentage of
Restaurant sales of 0.5% from the impact of certain cost savings initiatives and 0.3% from increases in average check per person.

Depreciation and amortization

(dollars in millions)
Depreciation and amortization

FISCAL YEAR

2019

2018

Change

196.8 $

201.6 $

(4.8)

Depreciation and amortization decreased in 2019 as compared to 2018 primarily due to: (i) disposal of assets related to the sale-leaseback of
certain properties, (ii) store closures and domestic refranchising and (iii) the effect of foreign currency translation. These decreases were
partially offset by additional depreciation expense related to restaurant openings, relocations and remodels.

General and administrative expenses

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

(dollars in millions)

For fiscal year 2018

Change from:

Incentive compensation

Foreign currency exchange

Legal and professional fees

Severance

Other

For fiscal year 2019

FISCAL YEAR
2019

282.7

(4.2)

(2.5)

(2.9)

1.8

0.3

275.2

Provision for impaired assets and restaurant closings

(dollars in millions)

Provision for impaired assets and restaurant closings

FISCAL YEAR

2019

2018

Change

9.1 $

36.9 $

(27.8)

International Restructuring - We recognized asset impairment and closure charges of $2.0 million and $13.9 million during 2019 and 2018,
respectively, related to restructuring of certain international markets, including Puerto Rico and China, within the international segment.

Express Concept Restructuring - In 2018, we recognized asset impairment charges of $7.4 million related to the restructuring of our Express
concept, within the U.S. segment. As a part of the restructuring, three Express locations closed during 2019.

Table of Contents

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Refranchising - During 2019, we completed the sale of 18 of our U.S. Company-owned Carrabba’s Italian Grill restaurants to an existing
franchisee. In connection with the sale of these restaurants, we recognized asset impairment charges of $5.5 million in 2018, within the U.S.
segment.

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

We continue to pursue refranchising opportunities in select markets as we look to further optimize our restaurant portfolio. As a result of these
transactions, we may record future net gains or losses, impairment charges and transaction related expenses.

Income from operations

(dollars in millions)
Income from operations

% of Total revenues

FISCAL YEAR

2019

2018

Change

191.1

4.6%

145.3

3.5%

1.1%

The increase in Income from operations during 2019 as compared to 2018 was primarily due to: (i) higher comparable restaurant sales, (ii) the
impact of certain cost saving initiatives and (iii) lower impairment charges and restaurant closing costs. These increases were partially offset
by: (i) labor, commodity and operating expense inflation, (ii) additional expense related to the rollout of delivery services and (iii) the impact of
deferred gain amortization no longer recognized upon adoption of the new lease standard.

Interest expense, net

(dollars in millions)
Interest expense, net

FISCAL YEAR

2019

2018

Change

49.3 $

44.9 $

4.4

The increase in Interest expense, net during 2019 as compared to 2018 was primarily due to a higher fixed rate on the notional amount of our
derivative instruments and higher average interest rates and borrowings outstanding, partially offset from the derecognition of certain lease-
related debt obligations due to adoption of the new lease accounting standard.

Provision (benefit) for income taxes

Effective income tax rate

FISCAL YEAR

2019

2018

Change

5.3%

(9.2)%

14.5%

The net increase in the effective income tax rate in 2019 as compared to 2018 was primarily due to employment-related credits being a lower
percentage of net income in 2019, excess tax benefits from equity-based compensation arrangements recorded in 2018 and an increase in the
foreign tax rate differential in 2019. These increases were partially offset by a decrease in valuation allowances recorded against deferred
income tax assets in 2019.

The effective income tax rate for 2019 was lower than the blended federal and state statutory rate of approximately 26%, primarily due to the
benefit of tax credits for FICA taxes on certain employees’ tips. The effective income tax rate for 2018 was lower than the blended federal and
state statutory rate of approximately 26%, primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips and excess tax
benefits from equity-based compensation arrangements.

Table of Contents

Segments

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

We consider our restaurant concepts and international markets as operating segments, which reflects how we manage our business, review
operating performance and allocate resources. Resources are allocated and performance is assessed by our Chief Executive Officer, whom we
have determined to be our Chief Operating Decision Maker. We aggregate our operating segments into two reportable segments, U.S. and
international. The U.S. segment includes all restaurants operating in the U.S. while restaurants operating outside the U.S. are included in the
international segment.

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

Refer to Note 21 - Segment Reporting of the Notes to Consolidated Financial Statements for a reconciliation of segment income from
operations to the consolidated operating results.

U.S. Segment

(dollars in thousands)

Revenues

Restaurant sales

Franchise and other revenues

Total revenues

Restaurant-level operating margin

Income from operations

Operating income margin

Restaurant sales

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

(dollars in millions)

For fiscal year 2018

Change from:

Comparable restaurant sales (1)

Restaurant openings (1)

Divestiture of restaurants through refranchising transactions

Restaurant closures

For fiscal year 2019

FISCAL YEAR

2019

2018

3,634,668

53,250

3,687,918

14.2%

311,666

8.5%

3,634,198

53,041

3,687,239

14.2%

288,959

7.8%

FISCAL YEAR
2019

3,634.2

42.8

13.7

(32.0)

(24.1)

3,634.6

____________________
(1)

U.S. Restaurant sales in 2019 were flat as compared to 2018 primarily due to higher comparable restaurant sales and sales from 12 new
restaurants not included in our comparable restaurant sales base, offset by domestic refranchising and the closing of 22 restaurants since
December 31, 2017.

Table of Contents

Income from operations

BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

The increase in U.S. Income from operations generated in 2019 as compared to 2018 was primarily due to: (i) higher comparable restaurant
sales, (ii) the impact of certain cost savings initiatives and (iii) lower impairment charges and restaurant closing costs. These increases were
partially offset by: (i) labor, commodity and operating expense inflation, (ii) additional expense related to the rollout of delivery services and
(iii) the impact of deferred gain amortization no longer recognized upon adoption of the new lease standard.

International Segment

(dollars in thousands)

Revenues

Restaurant sales

Franchise and other revenues

Total revenues

Restaurant-level operating margin

Income from operations

Operating income margin

Restaurant sales

FISCAL YEAR

2019

2018

440,346

11,125

451,471

20.3%

44,428

9.8%

426,673

12,501

439,174

18.8%

22,001

5.0%

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

(dollars in millions)

For fiscal year 2018

Change from:

Restaurant openings

Comparable restaurant sales

Effect of foreign currency translation

Restaurant closures

For fiscal year 2019

FISCAL YEAR
2019

426.7

36.3

19.7

(35.9)

(6.5)

440.3

The increase in international Restaurant sales in 2019 as compared to 2018 was primarily due to sales from 28 new restaurants not included in
our comparable restaurant sales base and higher comparable restaurant sales. The increase in international Restaurant sales was partially offset
by the effect of foreign currency translation of the Brazilian Real relative to the U.S. dollar and the closing of 18 restaurants since
December 31, 2017.

Income from operations

The increase in international Income from operations in 2019 as compared to 2018 was primarily due to: (i) lower impairment and restaurant
closing costs, (ii) the impact of certain cost savings initiatives, (iii) higher comparable restaurant sales, (iv) improved operating performance by
our Abbraccio concept and (v) lower General and administrative expense, primarily from lower severance costs. These increases were partially
offset by labor, operating and commodity expense inflation.

Non-GAAP Financial Measures

In addition to the results provided in accordance with U.S. GAAP, we provide certain non-GAAP measures, which present operating results on
an adjusted basis. These are supplemental measures of performance that are not required

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

by or presented in accordance with U.S. GAAP and include the following: (i) system-wide sales, (ii) Adjusted restaurant-level operating
margins, (iii) Adjusted income from operations and the corresponding margins, (iv) Adjusted net income and (v) Adjusted diluted earnings per
share.

We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our
performance based on U.S. GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items
that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. However,
our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or
infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. We believe that the
disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and Board of
Directors evaluate our operating performance, allocate resources and establish employee incentive plans.

These non-GAAP financial measures are not intended to replace U.S. GAAP financial measures, and they are not necessarily standardized or
comparable to similarly titled measures used by other companies. We maintain internal guidelines with respect to the types of adjustments we
include in our non-GAAP measures. These guidelines endeavor to differentiate between types of gains and expenses that are reflective of our
core operations in a period, and those that may vary from period to period without correlation to our core performance in that period. However,
implementation of these guidelines necessarily involves the application of judgment, and the treatment of any items not directly addressed by,
or changes to, our guidelines will be considered by our disclosure committee. Refer to the reconciliations of non-GAAP measures for
descriptions of the actual adjustments made in the current period and the corresponding prior period.

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

The 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 royalties and/or service
fees.

(dollars in millions)

U.S.

Outback Steakhouse

Carrabba’s Italian Grill (1)

Bonefish Grill

U.S. Total

International

Outback Steakhouse-South Korea

Other

International Total

Total franchise sales (2)

FISCAL YEAR

2019

2018

500 $

553 $

215 $

105

320 $

873 $

513

539

208

112

320

859

____________________
(1)
(2)

In 2019, we sold 18 Carrabba’s Italian Grill restaurants, which are now operated as franchises.
Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive Income.

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted restaurant-level operating margin - Restaurant-level operating margin is calculated as Restaurant sales after deduction of the main
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. The following tables show the
percentages of certain operating cost financial statement line items in relation to Restaurant sales:

Restaurant sales

Cost of sales

Labor and other related

Other restaurant operating

FISCAL YEAR

2019

2018

U.S. GAAP

ADJUSTED (1)

U.S. GAAP

ADJUSTED (1)

100.0%

31.4%

29.6%

24.1%

31.4%

29.6%

24.2%

31.9%

29.5%

23.8%

31.9%

29.5%

23.9%

14.7%

Restaurant-level operating margin

14.9%

14.7%

14.8%

_________________
(1)

Includes unfavorable (favorable) adjustments recorded in Other restaurant operating expense (unless otherwise noted below) for the following activities, as described
in the Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share table below for the periods indicated:

(dollars in millions)

Legal and other matters (1)

Restaurant and asset impairments and closing costs

Restaurant relocations and related costs

FISCAL YEAR

2019

2018

4.6 $

4.3

(0.6)

8.3 $

—

3.4

0.7

4.1

(1)

Includes adjustments of $2.7 million and $1.9 million recorded in Cost of sales and Other restaurant operating expense, respectively.

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share - The following table reconciles Adjusted
income from operations and the corresponding margins, Adjusted net income and Adjusted diluted earnings per share to their respective most
comparable U.S. GAAP measures for the periods indicated:

(in thousands, except share and per share data)

Income from operations

Operating income margin

Adjustments:

Severance (1)

Restaurant and asset impairments and closing costs (2)

Restaurant relocations and related costs (3)

Legal and other matters (4)

Total income from operations adjustments

Adjusted income from operations

Adjusted operating income margin

Net income attributable to Bloomin’ Brands

Adjustments:

Income from operations adjustments

Total adjustments, before income taxes

Adjustment to provision for income taxes (5)

Net adjustments

Adjusted net income

Diluted earnings per share

Adjusted diluted earnings per share

FISCAL YEAR

2019

2018

191,090

145,253

4.6%

3.5%

5,511

3,550

3,208

(2,996)

9,273

200,363

3,493

29,542

8,647

1,068

42,750

188,003

4.8%

4.6%

130,573

107,098

9,273

(1,263)

8,010

138,583

1.45

1.54

42,750

(8,944)

33,806

140,904

1.14

1.50

Diluted weighted average common shares outstanding

89,777

94,075

_________________
(1)
(2)

Relates to severance expense incurred as a result of restructuring activities.
Represents asset impairment charges and related costs primarily related to: (i) approved closure and restructuring initiatives, (ii) the restructuring of certain
international markets, (iii) the restructuring of our Express concept in 2018 and (iv) reclassification of assets to held for sale in connection with refranchising certain
restaurants in 2018. Also includes gains on the sale of certain surplus properties of $3.8 million in 2019.
Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program.
Amount includes the recognition of certain value-added tax credits in Brazil of $4.6 million related to prior years offset by fees and expenses related to certain legal
matters in 2019.
Represents income tax effect of the adjustments for the periods presented.

(3)
(4)

(5)

Liquidity and Capital Resources

LIQUIDITY

Our liquidity sources consist of cash flow from operations, cash and cash equivalents and credit capacity under our credit facilities. We expect
to use cash primarily for general operating expenses, lease payments, share repurchases and dividend payments, payments on our debt,
remodeling or relocating older restaurants, obligations related to our deferred compensation plans and investments in technology.

We believe that our expected liquidity sources are adequate to fund debt service requirements, lease obligations, capital expenditures and
working capital obligations during the 12 months following this filing and beyond. However, our

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

ability to continue to meet these requirements and obligations will depend on, among other things, our ability to achieve anticipated levels of
revenue and cash flow and our ability to manage costs and working capital successfully.

Cash and Cash Equivalents - As of December 29, 2019, we had $67.1 million in cash and cash equivalents, of which $21.1 million was held by
foreign affiliates. The international jurisdictions in which we have significant cash do not have any known restrictions that would prohibit
repatriation.

As of December 29, 2019, we had aggregate accumulated foreign earnings of approximately $84.4 million. This amount primarily consists of
historical earnings from 2017 and prior that were previously taxed in the U.S. under the 2017 Tax Cuts and Jobs Act and post-2017 foreign
earnings, which we may repatriate to the U.S. without additional material U.S. federal income taxes. These amounts are no longer considered
indefinitely reinvested in our foreign subsidiaries. See Note 19 - Income Taxes of the Notes to Consolidated Financial Statements for further
information regarding our indefinite reinvestment assertion.

Closure Initiatives - Total aggregate future undiscounted cash expenditures of $11.3 million to $13.8 million related to lease liabilities for
certain closure initiatives are expected to occur over the remaining lease terms with the final term ending in January 2029.

Capital Expenditures - We estimate that our capital expenditures will total approximately $175 million to $190 million in 2020. The amount of
actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other things,
including restrictions imposed by our borrowing arrangements.

Credit Facilities - As of December 29, 2019, we had $1.0 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 our outstanding credit facilities
as of the dates indicated and principal payments and debt issuance during the periods indicated:

(dollars in thousands)

Balance as of December 31, 2017

2018 new debt

2018 payments

Balance as of December 30, 2018

2019 new debt

2019 payments

Balance as of December 29, 2019 (1)

Weighted-average interest rate, as of December 29, 2019

Principal maturity date
________________
(1)

SENIOR SECURED CREDIT FACILITY

TERM LOAN A

REVOLVING FACILITY

500,000

600,000

—

(25,000)

475,000

—

(25,000)

478,000

(478,500)

599,500

670,800

(671,300)

450,000

599,000

TOTAL CREDIT
FACILITIES

1,100,000

478,000

(503,500)

1,074,500

670,800

(696,300)

1,049,000

3.40%

3.44%

November 2022

Subsequent to December 29, 2019, we made payments of $65.0 million, net of borrowings, on our revolving credit facility.

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 million Term loan A and a
$1.0 billion revolving credit facility (the “Senior Secured Credit Facility”), including letter of credit and swing line loan sub-facilities. As of
December 29, 2019, we had $380.8 million in available unused borrowing capacity under our revolving credit facility, net of letters of credit of
$20.2 million.

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Our Credit Agreement contains mandatory prepayment requirements of 50% of our annual excess cash flow, as defined in the Credit
Agreement. The amount outstanding required to be prepaid may vary based on our leverage ratio and year end results. Other than the required
minimum amortization premiums of $25.0 million, we do not anticipate any other payments will be required through December 27, 2020.

Debt Covenants - Our Credit Agreement contains various financial and non-financial covenants. A violation of these covenants could
negatively impact our liquidity by restricting our ability to borrow under the revolving credit facility and cause an acceleration of the amounts
due under the credit facilities. See Note 13 - Long-term Debt, Net of the Notes to Consolidated Financial Statements for further information.

As of December 29, 2019 and December 30, 2018, we were in compliance with our debt covenants. We believe that
we will remain in compliance with our debt covenants during the next 12 months and beyond.

Cash Flow Hedges of Interest Rate Risk - We have variable-to-fixed interest rate swap agreements with 12 counterparties to hedge a portion of
the cash flows of our variable rate debt. The swap agreements have an aggregate notional amount of $550.0 million and mature on
November 30, 2022. We pay a weighted-average fixed rate of 3.04% on the notional amount and receive payments from the counterparties
based on the one-month LIBOR rate. See Note 16 - Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial
Statements for further information.

SUMMARY OF CASH FLOWS

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

(dollars in thousands)
Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash, cash equivalents and restricted cash

FISCAL YEAR

2019

2018

317,603 $

(131,291)

(189,359)

(1,631)

(4,678) $

288,074

(177,296)

(164,352)

(4,146)

(57,720)

Operating activities - Net cash provided by operating activities increased during 2019 as compared to 2018 primarily due to: (i) the timing of
collections of receivables, (ii) the timing of payments and (iii) lower purchases of inventory. Net cash provided by operating activities was
partially offset by higher income tax and interest payments.

Investing activities - Net cash used in investing activities during 2019 primarily consisted of capital expenditures, partially offset by proceeds
from the disposal of property, fixtures and equipment and proceeds from sale-leaseback transactions.

Net cash used in investing activities during 2018 primarily consisted of capital expenditures, partially offset by proceeds from sale-leaseback
transactions and proceeds from the disposal of property, fixtures and equipment.

Financing activities - Net cash used in financing activities during 2019 primarily consisted of the following: (i) the repurchase of common
stock, (ii) payment of cash dividends on our common stock, (iii) the net repayment of long-term debt and (iv) partner equity plan payments.

Net cash used in financing activities during 2018 primarily consisted of the following: (i) the repurchase of common stock, (ii) payment of cash
dividends on our common stock, (iii) the net repayment of long-term debt and (iv) partner

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

equity plan payments. Net cash used in financing activities was partially offset by net proceeds from share-based compensation.

FINANCIAL CONDITION

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

(dollars in thousands)

Current assets

Current liabilities

Working capital (deficit) (1)

DECEMBER 29,
2019

DECEMBER 30,
2018

340,468 $

962,021

(621,553) $

335,483

791,039

(455,556)

_________________
(1)

During fiscal year 2019, net working capital (deficit) was negatively impacted by the recognition of approximately $170 million of current lease liabilities as a result
of the adoption of the new lease accounting standard.

Working capital (deficit) includes: (i) Unearned revenue primarily from unredeemed gift cards of $369.3 million and $342.7 million as of
December 29, 2019 and December 30, 2018, respectively and (ii) current operating lease liabilities of $171.9 million as of December 29, 2019,
with the corresponding operating right-of-use assets recorded as non-current on our Consolidated Balance Sheet. We have, and in the future
may continue to have, negative working capital balances (as is common for many restaurant companies). We operate successfully with negative
working capital because cash collected on restaurant sales is typically received before payment is due on our current liabilities, and our
inventory turnover rates require relatively low investment in inventories. Additionally, ongoing cash flows from restaurant operations and gift
card sales are used to service debt obligations and make capital expenditures.

Deferred Compensation Programs - Certain Restaurant Managing Partners and Chef Partners in the U.S. (“U.S. Partners”) participate in
deferred compensation programs that are subject to the rules of Section 409A of the Internal Revenue Code. The deferred compensation
obligation due under these plans was $49.0 million and $69.6 million as of December 29, 2019 and December 30, 2018, 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 our voluntary contributions. The unfunded obligation
was $9.1 million and $26.3 million as of December 29, 2019 and December 30, 2018, respectively.

We use working capital to fund the deferred compensation plans and currently expect annual cash funding of $9.0 million to $11.0 million in
2020. Actual funding of the deferred compensation obligations and future funding requirements may vary significantly depending on the actual
performance compared to targets, timing of deferred payments of partner contracts, forfeiture rates, number of partner participants, growth of
partner investments and our funding strategy.

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

DIVIDENDS AND SHARE REPURCHASES

Dividends - In 2019 and 2018, we declared and paid quarterly cash dividends of $0.10 and $0.09 per share, respectively.

In February 2020, our Board declared a quarterly cash dividend of $0.20 per share, payable on March 13, 2020. Future dividend payments are
dependent on our earnings, financial condition, capital expenditure requirements, surplus and other factors that our Board considers relevant.

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Share Repurchases - Following is a summary of our share repurchase programs as of December 29, 2019 (dollars in thousands):

SHARE REPURCHASE
PROGRAM

BOARD APPROVAL
DATE

AUTHORIZED

REPURCHASED

CANCELED

REMAINING

2014

2015

2016

July 2016

2017

2018

2019

Total share repurchase programs

December 12, 2014

August 3, 2015

February 12, 2016

July 26, 2016

April 21, 2017

February 16, 2018

February 12, 2019

100,000 $

100,000

250,000

300,000

250,000

150,000

100,000 $

69,999 $

139,892 $

247,731 $

195,000 $

113,967 $

106,992 $

973,581

— $

30,001 $

110,108 $

52,269 $

55,000 $

36,033 $

— $

The following table presents our dividends and share repurchases for the periods indicated:

(dollars in thousands)

Fiscal year 2019

Fiscal year 2018

Fiscal year 2017

Fiscal year 2016

Fiscal year 2015

Total

DIVIDENDS PAID

SHARE REPURCHASES
(1)

TOTAL

35,734 $

106,992 $

33,312

30,988

31,379

29,332

113,967

272,736

309,887

169,999

160,745 $

973,581 $

1,134,326

________________
(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 access to our
revolving credit facility and the existence of surplus. Based on our Credit Agreement, restricted dividend payments can be made on an
unlimited basis provided we are compliant with our debt covenants.

OFF-BALANCE SHEET ARRANGEMENTS

None.

—

43,008

142,726

147,279

303,724

341,266

199,331

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

OTHER MATERIAL COMMITMENTS

Our operating lease obligations, debt obligations, contractual obligations and commitments as of December 29, 2019 are summarized in the
following table:

(dollars in thousands)
Recorded Contractual Obligations

Operating leases (1)

Long-term debt (2)

Deferred compensation and other partner obligations (3)

Other recorded contractual obligations (4)

Unrecorded Contractual Obligations

Interest (5)

Purchase obligations (6)

PAYMENTS DUE BY PERIOD

LESS THAN

TOTAL

1 YEAR

1-3

YEARS

3-5

YEARS

MORE THAN

5 YEARS

2,643,642 $

179,168 $

381,854 $

364,911 $

1,717,709

1,048,891

70,270

23,640

26,462

22,440

4,559

1,022,429

30,201

4,267

128,150

312,033

44,764

217,668

83,386

55,858

—

9,466

1,963

—

35,540

—

8,163

12,851

—

2,967

Total contractual obligations

4,226,626 $

495,061 $

1,577,995 $

411,880 $

1,741,690

____________________
(1)

(2)
(3)

(4)

(5)

(6)

Amounts represent undiscounted future minimum rental commitments under non-cancelable operating leases. Includes $1.0 billion related to lease renewal options
that are reasonably certain of exercise.
Includes finance lease obligations. Amount is net of unamortized debt issuance costs and discount of $2.7 million.
Includes deferred compensation obligations, deposits and other accrued obligations due to our restaurant partners. Timing and amounts of payments may vary
significantly based on employee turnover, return of deposits and changes to buyout values.
Includes other long-term liabilities, primarily consisting of non-partner deferred compensation obligations. Unrecognized tax benefits are excluded from this table
since it is not possible to estimate when these future payments will occur.
Projected future interest payments on long-term debt are based on interest rates in effect as of December 29, 2019 and assume only scheduled principal payments.
Estimated interest expense includes the impact of our variable-to-fixed interest rate swap agreements.
Purchase obligations include agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms, including fixed or
minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. We have purchase obligations with
various vendors that consist primarily of inventory, advertising, restaurant-level service contracts and technology.

Critical Accounting Policies and Estimates

Our 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 statements requires us to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities during the reporting period. We base our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or
conditions. We consider an accounting estimate to be critical if it requires assumptions to be made 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 in circumstances
indicate that the carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows independent
of other assets. For long-lived assets deployed at our restaurants, we review for impairment at the individual restaurant level.

When evaluating for impairment, the total future undiscounted cash flows expected to be generated by the assets are compared to the carrying
amount. If the total future undiscounted cash flows expected to be generated by the assets are less than the carrying amount, this may be an
indicator of impairment. An impairment loss is recognized in earnings

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

when the asset’s carrying value exceeds its estimated fair value. Fair value is generally estimated using a discounted cash flow model. The key
estimates and assumptions used in this model are future cash flow estimates, with material changes generally driven by changes in expected
use, and the discount rate.

Goodwill and Indefinite-Lived Intangible Assets - Goodwill and indefinite-lived intangible assets are tested for impairment annually in the
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. In
considering the qualitative approach, we evaluate factors including, but not limited to, macro-economic conditions, market and industry
conditions, 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 unit
exceeds the carrying value, the fair value of the reporting unit is calculated. Fair value of a reporting unit is the price a willing buyer would pay
for the reporting unit and is estimated by utilizing a weighted average of the income approach, using a discounted cash flow model, and the
market approach including the guideline public company method and guideline transaction method. The key estimates and assumptions used in
these models are future cash flow estimates, which are heavily influenced by revenue growth rates, operating margins 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 value deemed to be
an indicator of impairment.

The carrying value of goodwill as of December 29, 2019 was $288.4 million, which related to our U.S. and international reporting units. We
performed our annual impairment test in the second quarter of 2019 by utilizing the qualitative approach and determined that there were no
events or circumstances to indicate that it was more likely than not that the fair value of our reporting units was less than their carrying values.

Sales declines at our restaurants, unplanned increases in commodity or labor costs, deterioration in overall economic conditions and challenges
in the restaurant industry may result in future impairment charges. It is possible that changes in circumstances or changes in our judgments,
assumptions and estimates could result in an impairment charge of a portion or all of our goodwill or other intangible assets.

Leases - On December 31, 2018, we adopted Accounting Standards Update (“ASU”) No. 2016-02: Leases (Topic 842) (“ASU No. 2016-02”)
and its applicable amendments (the “new lease standard”), as described in detail within Note 2 - Summary of Significant Accounting Policies of
the Notes to Consolidated Financial Statements. Upon adoption, we recognized right-of-use assets of $1.3 billion and corresponding lease
liabilities of $1.5 billion.

We use judgment to determine the reasonably certain lease term, which in turn, impacts the applicable incremental borrowing rate (“IBR”) used
to calculate the initial lease liability for each portfolio of leases. We determined the present value of the lease liabilities by using a country
specific IBR and applying a single rate to the respective portfolio of leases based on term, regardless of the underlying asset type.

The reasonably certain lease term used in the evaluation of existing leases at transition and new leases after adoption of the new lease standard
includes renewal option periods only in instances in which the exercise of the renewal option is reasonably certain because failure to exercise
such an option would result in an economic penalty. Such an economic penalty would typically result from having to abandon a building or
equipment with remaining economic value upon vacating a property.

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

We use our estimated IBR, which is derived from information available at the lease commencement date, in determining the present value of
lease payments. We give consideration to market data as well as publicly available data for instruments with similar characteristics when
calculating our IBR.

At the inception of each lease, we evaluate the property and the lease to determine whether the lease is an operating lease or a financing lease.
This lease accounting evaluation may require significant judgment in determining the fair value and useful life of the leased property and the
appropriate reasonably certain lease term. These judgments may produce materially different amounts of rent expense in a given reporting
period than would be reported if different assumed lease terms were used.

Insurance Reserves - We carry insurance programs with specific retention levels or high per-claim deductibles for a significant portion of
expected losses under our workers’ compensation, general or liquor liability, health, property and management liability insurance programs. 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 falls below our
specified retention levels or per-claim deductible amounts. Our liability for insurance claims was $54.3 million and $55.8 million as of
December 29, 2019 and December 30, 2018, respectively. In establishing our reserves, we consider certain actuarial assumptions and
judgments regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices.
Reserves recorded for workers’ compensation and general or liquor liability claims are discounted using the average of the one-year and five-
year risk-free rate of monetary assets that have comparable maturities.

If actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material. A 50 basis
point change in the discount rate in our insurance claim liabilities as of December 29, 2019, would have affected net earnings by $0.8 million in
2019.

Stock-Based Compensation - We have a stock-based compensation plan that permits the grant of stock options, stock appreciation rights,
restricted stock units, performance awards and other stock-based awards to our management and other key employees. 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 options granted. Expected
volatility is based on historical volatility of our stock. The expected term of options granted represents the period of time that options granted
are expected to be outstanding. Expected term is estimated based on historical exercise experience of our stock 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 grant date. 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 and economic
conditions. A simultaneous 10% change in our volatility, forfeiture rate, weighted-average risk-free interest rate, dividend rate and term of grant
in our stock option pricing model for 2019 would not have a material effect on net income.

Our performance-based share units (“PSUs”) require assumptions regarding the likelihood of achieving certain Company performance criteria
set forth in the award agreements. Assumptions used in our assessment are consistent with our internal forecasts and operating plans.

If we assumed that the PSU performance conditions for stock-based awards were not met, stock-based compensation expense would have
decreased by $10.5 million for 2019, including reversal of expense recorded in prior years. If we

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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

assumed that all granted PSU share awards met or will meet their maximum threshold, expense would have increased by $1.7 million for 2019.

Income Taxes - Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts of
assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the tax rates, based on certain
judgments regarding enacted tax laws and published guidance, in effect in the years in which we expect those temporary differences to reverse.
As of December 29, 2019, tax loss carryforwards and credit carryforwards that do not have a valuation allowance are expected to be
recoverable within the applicable statutory expiration periods. We currently expect to utilize general business tax credit carryforwards within a
four to six year period. However, our ability to utilize these tax credits could be adversely impacted by, among other items, a future “ownership
change” as defined under Section 382 of the Internal Revenue Code. A valuation allowance is established against the deferred tax assets when
it is more likely than not that some portion or all of the deferred taxes may not be realized. Changes in assumptions regarding our level and
composition of earnings, tax laws or the deferred tax valuation allowance 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 determining taxable
income, income or loss before taxes is adjusted for differences between local tax laws and generally accepted accounting principles. A tax
benefit from an uncertain position is recognized only if it is more likely than not that the position is sustainable based on its technical merits.
For uncertain tax positions that do not meet this threshold, we recognize a liability. The liability for unrecognized tax benefits requires
significant management judgment regarding exposures about our various tax positions. These assumptions and probabilities are reviewed and
updated based upon new information. An unfavorable tax settlement generally requires the use of cash and an increase in the amount of income
tax expense we recognize.

Revenue Recognition - We sell gift cards to customers in our restaurants, through our websites and through select third parties. A liability is
initially established for the value of the gift card when sold. We recognize revenue from gift cards when the card is redeemed by 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 gift card 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 apply that rate to gift card redemptions. A change in our
breakage rate estimates by 50 basis points would have resulted in an adjustment in our breakage revenue of $2.0 million for 2019.

Recently Issued Financial Accounting Standards

For a description of recently issued Financial Accounting Standards that we adopted in 2019 and, that are applicable to us and likely to have
material effect on our consolidated financial statements, but have not yet been adopted, see Note 2 - Summary of Significant Accounting
Policies of the Notes to Consolidated Financial Statements of this Report.

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BLOOMIN’ BRANDS, INC.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates on debt, changes in foreign currency exchange rates and changes in commodity
prices.

Interest Rate Risk

We are exposed to market risk from fluctuations in interest rates, which could affect our consolidated balance sheet, earnings and cash flows.
Stockholders’ equity can be adversely affected by changing interest rates, as after-tax changes in the fair value of interest rate swaps 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 the use of
derivative financial instruments. We use derivative financial instruments as risk management tools and not for speculative purposes. See Note
16 - Derivative Instruments and Hedging Activities of the Notes to Consolidated Financial Statements for further information.

As of December 29, 2019, 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 $550.0 million
that mature on November 30, 2022.

We utilize valuation models to estimate the effects of changing interest rates. The following table summarizes the changes to fair value and
interest expense under a shock scenario. This analysis assumes that interest rates change suddenly, as an interest rate “shock” and continue to
increase or decrease at a consistent level above or below the LIBOR curve.

DECEMBER 29, 2019

INCREASE

DECREASE

15,210 $

(15,746)

4,896 $

(4,896)

(dollars in thousands)

Change in fair value (1):

Interest rate swap

Change in annual interest expense (2):

Variable rate debt
________________
(1)
(2)

The potential change from a hypothetical 100 basis point increase (decrease) in short-term interest rates.
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
interest rate of 151 basis points to 168 basis points.

Foreign Currency Exchange Rate Risk

We are subject to foreign currency exchange risk for our restaurants operating in foreign countries. Our exposure to foreign currency exchange
risk is primarily related to fluctuations in the Brazilian Real relative to the U.S. dollar. Our operations in other markets consist of Company-
owned restaurants on a smaller scale than Brazil. If foreign currency exchange rates depreciate in the countries in which we operate, we may
experience declines in our operating results.

For 2019, 10.9% 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 $49.0 million and $3.4 million, respectively.

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Commodity Pricing Risk

BLOOMIN’ BRANDS, INC.

Many 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 prevailing market conditions when
purchasing those types of commodities. Other commodities are purchased based upon negotiated price ranges established with vendors with
reference to the fluctuating market prices. The related agreements may contain contractual features that limit the price paid by establishing
certain price floors and caps. Extreme changes in commodity prices or long-term changes could affect our financial results adversely. We
expect that in most cases increased commodity prices could be passed through to our customers through increases in menu prices. However, if
there is a time lag between the increasing commodity prices and our ability to increase menu prices, or if we believe the commodity price
increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected.
Additionally, from time to time, competitive circumstances could limit menu price flexibility, and in those cases, margins would be negatively
impacted by increased commodity prices.

Historically, we have utilized derivative instruments to mitigate some of our overall exposure to material increases in natural gas prices. As of
December 29, 2019 and December 30, 2018, no derivatives were included in our consolidated financial statements.

In addition to the market risks identified above, we are subject to business risk as our U.S. beef supply is highly dependent upon a limited
number of vendors. If these vendors were unable to fulfill their obligations under their contracts, we could encounter supply shortages and incur
higher costs to secure adequate supplies. See Note 20 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for
further details.

This market risk discussion contains forward-looking statements. Actual results may differ materially from the discussion based upon general
market conditions and changes in U.S. and global financial markets.

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BLOOMIN’ BRANDS, INC.

Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL INFORMATION

Management’s Annual Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets — December 29, 2019 and December 30, 2018

Consolidated Statements of Operations and Comprehensive Income —
For Fiscal Years 2019, 2018 and 2017

Consolidated Statements of Changes in Stockholders’ Equity —
For Fiscal Years 2019, 2018 and 2017

Consolidated Statements of Cash Flows —
For Fiscal Years 2019, 2018 and 2017

Notes to Consolidated Financial Statements

PAGE NO.

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BLOOMIN’ BRANDS, INC.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its
inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we carried
out an evaluation of the effectiveness of our internal control over financial reporting as of December 29, 2019 using the criteria described in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
Framework) (“COSO”). Based upon our evaluation, management concluded that our internal control over financial reporting was effective as
of December 29, 2019.

The effectiveness of our internal control over financial reporting as of December 29, 2019 has been audited by PricewaterhouseCoopers LLP,
an independent registered public accounting firm, as stated in their report which is included herein.

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BLOOMIN’ BRANDS, INC.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Bloomin’ Brands, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Bloomin’ Brands, Inc. and its subsidiaries (the “Company”) as of
December 29, 2019 and December 30, 2018, and the related consolidated statements of operations and comprehensive income, of changes in
stockholders’ equity and of cash flows for each of the three years in the period ended December 29, 2019, including the related notes
(collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial
reporting as of December 29, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 29, 2019 and December 30, 2018, and the results of its operations and its cash flows for each of the three years in the
period ended December 29, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 29, 2019, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019. This
matter is also discussed below as a critical audit matter.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial
statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and
whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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BLOOMIN’ BRANDS, INC.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that
were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the
consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to
which they relate.

Adoption of the Leases Accounting Standard - Estimation of the Lease Liability Lease Term

As described above as a change in accounting principle and in Notes 2 and 17 to the consolidated financial statements, the Company adopted
the new leases accounting standard effective December 31, 2018. Upon adoption, the Company recognized right-of-use (ROU) assets of $1.3
billion and corresponding lease liabilities of $1.5 billion. As disclosed by management, the Company uses judgment to determine the
reasonably certain lease term, which in turn, impacts the applicable incremental borrowing rate (IBR) used to calculate the initial lease liability
for each portfolio of leases. Management determined the present value of the lease liabilities by using a country specific IBR and applying a
single rate to the respective portfolio of leases based on term, regardless of the underlying asset type. The reasonably certain lease term used in
the evaluation of existing leases at transition and new leases after adoption of the new lease standard includes renewal option periods only in
instances in which the exercise of the renewal option is reasonably certain because failure to exercise such an option would result in an
economic penalty. Management gives consideration to market data as well as publicly available data for instruments with similar characteristics
when calculating the IBR.

The principal considerations for our determination that performing procedures relating to the adoption of the leases accounting standard -
estimation of the lease liability lease term is a critical audit matter are there was significant judgment by management when determining the
lease term, which is utilized to determine the applicable IBR used to calculate the lease liability for the respective portfolio of leases, which in
turn led to significant auditor judgment and subjectivity in performing procedures to evaluate management’s conclusions related to the lease
term and applicable IBR. Also, there was significant audit effort in performing procedures due to the large volume of contracts that
management evaluated under the new accounting standard and the significance of the ROU asset and lease liability balance recorded at the
adoption date.

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BLOOMIN’ BRANDS, INC.

relating to the adoption of the leases accounting standard and management’s review of the reasonably certain lease term in determining the
appropriate IBR to apply. These procedures also included, among others, evaluating the reasonableness of assumptions used by management,
including the lease term and applicable IBR. Evaluating the reasonableness of management’s assumption relating to the terms of the leases
involved evaluating a sample of contracts and assessing any extension or termination clauses, evaluating whether the lease terms determined by
management were consistent with management’s plans or past experience, and whether management’s evaluation of the certainty related to
extending or terminating the lease is consistent with evidence obtained in other areas of the audit. Evaluating the reasonableness of
management’s assumption relating to the IBR involved evaluating the consistency with the rates of interest on similar debt arrangements.

Insurance Reserves

As described in Notes 2 and 20 to the consolidated financial statements, the Company’s consolidated insurance reserve balance was $54.3
million as of December 29, 2019. The Company carries insurance programs with specific retention levels or high per-claim deductibles for a
significant portion of expected losses under its workers’ compensation, general or liquor liability, health, property and management liability
insurance programs. The Company records a liability for all unresolved claims and for an estimate of incurred but not reported claims at the
anticipated cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves, management considers
certain actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims, claim development history
and settlement practices. Reserves recorded for workers’ compensation and general liability claims are discounted using the average of the one-
year and five-year risk-free rate of monetary assets that have comparable maturities.

The principal considerations for our determination that performing procedures relating to the valuation of insurance reserves is a critical audit
matter are there was significant judgment by management when developing the estimated reserves, which in turn led to significant auditor
judgment, subjectivity, and effort in performing procedures relating to certain actuarial assumptions and judgments used to estimate incurred
but not reported claims, including claim development history, economic conditions, and discount rate. In addition, the audit effort involved the
use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of insurance reserves.
These procedures also included, among others, evaluating management’s process for developing the insurance reserves including actuarial
assumptions and judgments regarding economic conditions, the frequency and severity of claims, and settlement practices and testing the claim
development history. Evaluating the assumptions related to estimated claims involved evaluating whether the assumptions used were
reasonable considering claim history, economic conditions, and consistency with evidence obtained in other areas of the audit. Professionals
with specialized skill and knowledge were used to assist in testing the appropriateness of management’s actuarial methods in determining the
insurance reserves and evaluating the reasonableness of assumptions related to economic conditions and discount rate.

/s/ PricewaterhouseCoopers LLP

Tampa, Florida
February 26, 2020

We have served as the Company’s auditor since 1998.

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BLOOMIN’ BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

ASSETS

Current assets

Cash and cash equivalents

Inventories

Other current assets, net

Total current assets

Property, fixtures and equipment, net

Operating lease right-of-use assets

Goodwill

Intangible assets, net

Deferred income tax assets, net

Other assets, net

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable

Accrued and other current liabilities

Unearned revenue

Current portion of long-term debt

Total current liabilities

Non-current operating lease liabilities

Deferred rent

Deferred income tax liabilities

Long-term debt, net

Long-term portion of deferred gain on sale-leaseback transactions, net

Other long-term liabilities, net

Total liabilities

Commitments and contingencies (Note 20)

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 29,
2019 and December 30, 2018

Common stock, $0.01 par value, 475,000,000 shares authorized; 86,945,869 and 91,271,825 shares issued and
outstanding as of December 29, 2019 and December 30, 2018, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Total Bloomin’ Brands stockholders’ equity

Noncontrolling interests

Total stockholders’ equity

DECEMBER 29,
2019

DECEMBER 30,
2018

67,145 $

86,861

186,462

340,468

1,036,077

1,266,548

288,439

470,615

73,426

117,110

71,823

72,812

190,848

335,483

1,115,929

—

295,427

503,972

92,990

120,973

3,592,683 $

2,464,774

174,877 $

391,451

369,282

26,411

962,021

1,279,051

—

13,777

1,022,293

—

138,060

3,415,202

—

869

1,094,338

(755,089)

(169,776)

170,342

7,139

177,481

174,488

246,653

342,708

27,190

791,039

—

167,027

14,790

1,067,585

177,983

191,533

2,409,957

—

913

1,107,582

(920,010)

(142,755)

45,730

9,087

54,817

Total liabilities and stockholders’ equity

3,592,683 $

2,464,774

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

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BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

FISCAL YEAR

2019

2018

2017

Revenues

Restaurant sales

Franchise and other revenues

Total revenues

Costs and expenses

Cost of sales

Labor and other related

Other restaurant operating

Depreciation and amortization

General and administrative

Provision for impaired assets and restaurant closings

Total costs and expenses

Income from operations

Loss on extinguishment and modification of debt

Other (expense) income, net

Interest expense, net

Income before Provision (benefit) for income taxes

Provision (benefit) for income taxes

Net income

Less: net income attributable to noncontrolling interests

Net income attributable to Bloomin’ Brands

Net income

Other comprehensive income:

Foreign currency translation adjustment

Unrealized (loss) gain on derivatives, net of tax

Reclassification of adjustment for loss on derivatives included in Net income, net of tax

Comprehensive income

Less: comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Bloomin’ Brands

Earnings per share:

Basic

Diluted

Weighted average common shares outstanding:

Basic

Diluted

Cash dividends declared per common share

4,075,014 $

4,060,871 $

64,375

4,139,389

1,277,824

1,207,289

982,051

196,811

275,239

9,085

3,948,299

191,090

—

(143)

(49,257)

141,690

7,573

134,117

3,544

65,542

4,126,413

1,295,588

1,197,297

967,099

201,593

282,720

36,863

3,981,160

145,253

—

(11)

(44,937)

100,305

(9,233)

109,538

2,440

130,573 $

107,098 $

4,164,063

59,073

4,223,136

1,317,110

1,219,593

996,180

192,282

306,956

52,329

4,084,450

138,686

(1,069)

14,912

(41,392)

111,137

7,529

103,608

2,315

101,293

134,117 $

109,538 $

103,608

(16,625)

(11,944)

1,805

107,353

3,801

(36,132)

(7,100)

120

66,426

2,884

103,552 $

63,542 $

1.47 $

1.45 $

88,839

89,777

1.16 $

1.14 $

92,042

94,075

8,959

627

2,381

115,575

2,338

113,237

1.05

1.02

96,365

99,707

0.40 $

0.36 $

0.32

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

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BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

BLOOMIN’ BRANDS

COMMON STOCK

AMOUNT

ADDITIONAL
PAID-IN CAPITAL

ACCUM-
ULATED
DEFICIT

ACCUMULATED
OTHER
COMPREHENSIVE
LOSS

NON-
CONTROLLING
INTERESTS

TOTAL

Balance, December 25, 2016

103,922 $

1,039 $

1,079,583 $

(756,070) $

(111,143) $

12,654 $ 226,063

Cumulative-effect from a change
in accounting principle

Net income

Other comprehensive income
(loss), net of tax

Cash dividends declared, $0.32
per common share

Repurchase and retirement of
common stock

Stock-based compensation

Common stock issued under stock
plans (1)

Purchase of noncontrolling
interests, net of tax of $45

Change in the redemption value
of redeemable interests

Distributions to noncontrolling
interests

Contributions from noncontrolling
interests

Other

—

(13,807)

—

1,798

—

(138)

—

(30,988)

14,364

101,293

—

(272,598)

23,721

10,421

(713)

(211)

—

(180)

—

14,364

3,099

104,392

11,944

(3)

11,941

—

(30,988)

—

(272,736)

23,721

—

10,259

(180)

(893)

—

(211)

(5,973)

873

419

873

419

Balance, December 31, 2017

91,913 $

919 $

1,081,813 $

(913,191) $

(99,199) $

10,889 $

81,231

107,098

—

2,770

109,868

(43,556)

444

(43,112)

Net income

Other comprehensive (loss)
income, net of tax

Cash dividends declared, $0.36
per common share

Repurchase and retirement of
common stock

Stock-based compensation

Common stock issued under stock
plans (1)

Purchase of noncontrolling
interests, net of tax of $75

Change in the redemption value
of redeemable interests

Distributions to noncontrolling
interests

Contributions from noncontrolling
interests

Balance, December 30, 2018

—

(5,062)

—

4,421

—

(50)

—

(33,312)

—

23,059

36,568

(216)

(330)

—

(113,917)

—

91,272 $

913 $

1,107,582 $

(920,010) $

(142,755) $

—

(33,312)

—

(113,967)

23,059

—

36,612

(110)

(326)

—

(330)

(6,943)

2,037

9,087 $

54,817

(CONTINUED...)

Table of Contents

BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

BLOOMIN’ BRANDS

COMMON STOCK

AMOUNT

ADDITIONAL
PAID-IN CAPITAL

ACCUM-
ULATED
DEFICIT

ACCUMULATED
OTHER
COMPREHENSIVE
LOSS

NON-
CONTROLLING
INTERESTS

TOTAL

Balance, December 30, 2018

91,272 $

913 $

1,107,582 $

(920,010) $

(142,755) $

9,087 $

54,817

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

Net income

Other comprehensive (loss)
income, net of tax

Cash dividends declared, $0.40
per common share

Repurchase and retirement of
common stock

Stock-based compensation

Common stock issued under stock
plans (1)

Purchase of noncontrolling
interests

Distributions to noncontrolling
interests

Contributions from noncontrolling
interests

Balance, December 29, 2019

—

(5,469)

—

1,143

—

(55)

—

(35,734)

141,285

130,573

—

(106,937)

19,951

2,696

(157)

—

3,544

141,285

134,117

(27,055)

291

(26,764)

—

(35,734)

—

(106,992)

19,951

—

2,707

(41)

(7,214)

1,349

7,139 $ 177,481

86,946 $

869 $

1,094,338 $

(755,089) $

(169,776) $

________________
(1)

Net of forfeitures and shares withheld for employee taxes.

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

Table of Contents

BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

Cash flows provided by operating activities:

Net income

Adjustments to reconcile Net income to cash provided by operating activities:

Depreciation and amortization

Amortization of deferred discounts and issuance costs

Amortization of deferred gift card sales commissions

Provision for impaired assets and restaurant closings

Non-cash operating lease costs

Stock-based and other non-cash compensation expense

Deferred income tax benefit

Loss on extinguishment and modification of debt

Loss (gain) on sale of a business or subsidiary

Recognition of deferred gain on sale-leaseback transactions

(Gain) loss on disposal of property, fixtures and equipment

Other, net

Change in assets and liabilities:

(Increase) decrease in inventories

Increase in other current assets

Increase in other assets

Decrease in operating right-of-use assets, net

(Decrease) increase in accounts payable and accrued and other current liabilities

Increase in deferred rent

Increase (decrease) in unearned revenue

Decrease in operating lease liabilities

Increase (decrease) in other long-term liabilities

Net cash provided by operating activities

Cash flows used in investing activities:

Proceeds from disposal of property, fixtures and equipment

Proceeds from sale-leaseback transactions, net

Proceeds from sale of a business, net of cash divested

Capital expenditures

Other investments, net

FISCAL YEAR

2019

2018

2017

134,117 $

109,538 $

103,608

196,811

2,517

26,094

9,085

73,357

24,651

(25,890)

—

206

—

(2,984)

(10,471)

(15,388)

(40,519)

(890)

391

(23,497)

—

26,676

(69,886)

13,223

317,603

18,291

7,085

—

(161,926)

5,259

201,593

2,561

27,227

36,863

—

27,433

(29,490)

—

(12,336)

(585)

4,943

(24,707)

(25,405)

(3,190)

—

(39,871)

8,737

12,199

—

(7,436)

288,074

14,041

16,160

—

(208,224)

727

192,282

2,868

26,751

52,329

—

25,938

(28,051)

1,069

(15,632)

(11,872)

2,461

2,951

11,065

(12,262)

(1,585)

—

53,880

12,079

(5,855)

—

(3,022)

409,002

1,020

98,840

39,196

(260,589)

(1,582)

(123,115)

Net cash used in investing activities

(131,291) $

(177,296) $

(CONTINUED...)

Table of Contents

BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

Cash flows used in financing activities:

Proceeds from issuance of long-term debt, net

Extinguishment and modification of debt

Repayments of long-term debt

Proceeds from borrowings on revolving credit facilities, net

Repayments of borrowings on revolving credit facilities

Proceeds from failed sale-leaseback transactions, net

Proceeds from share-based compensation, net

Distributions to noncontrolling interests

Contributions from noncontrolling interests

Purchase of limited partnership and noncontrolling interests

Payments for partner equity plan

Repurchase of common stock

Cash dividends paid on common stock

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash as of the beginning of the period

Cash, cash equivalents and restricted cash as of the end of the period

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for income taxes, net of refunds

Supplemental disclosures of non-cash investing and financing activities:

Leased assets obtained in exchange for new operating lease liabilities

Leased assets obtained in exchange for new finance lease liabilities

FISCAL YEAR

2019

2018

2017

— $

—

1,637 $

—

(27,259)

670,800

(671,300)

—

2,707

(7,214)

1,349

(41)

(15,675)

(106,992)

(35,734)

(189,359)

(1,631)

(4,678)

71,823

(26,686)

476,829

(478,500)

—

36,612

(6,943)

2,037

(2,112)

(19,947)

(113,967)

(33,312)

(164,352)

(4,146)

(57,720)

129,543

67,145 $

71,823 $

47,893 $

23,995

67,955 $

208

41,681 $

15,839

— $

—

621,603

(1,193,719)

(75,528)

1,345,761

(676,500)

5,942

10,439

(5,973)

873

(5,713)

(16,786)

(272,916)

(30,988)

(293,505)

975

(6,643)

136,186

129,543

40,475

33,392

—

(Decrease) increase in liabilities from the acquisition of property, fixtures and equipment or
capital leases

(2,899)

2,699

(4,747)

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

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

Bloomin’ 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 primary operating entity.

The Company owns and operates casual, upscale casual and fine dining restaurants. The Company’s restaurant portfolio has four concepts:
Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Additional Outback Steakhouse,
Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment are operated under franchise agreements.

2. Summary of Significant Accounting Policies

Basis of Presentation - The Company’s consolidated financial statements include the accounts and operations of Bloomin’ Brands and its
subsidiaries.

To ensure timely reporting, the Company consolidates the results of its Brazil operations on a one month calendar lag. There were no
intervening events that would materially affect the Company’s consolidated financial position, results of operations or cash flows as of and for
the year ended December 29, 2019.

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

The Company consolidates variable interest entities where it has been determined that the Company is the primary beneficiary of those entities’
operations. The Company is a franchisor of 300 restaurants as of December 29, 2019, but does not possess any ownership interests in its
franchisees and does not provide material financial support to its franchisees. These franchise relationships are not deemed variable interest
entities and are not consolidated.

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

Fiscal Year - The Company utilizes a 52-53 week year ending on the last Sunday in December. In a 52 week fiscal year, each quarterly period is
comprised of 13 weeks. The additional week in a 53 week fiscal year is added to the fourth quarter. Fiscal year 2017 consisted of 53 weeks and
fiscal years 2019 and 2018 consisted of 52 weeks.

Use of Estimates - The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimated.

Cash and Cash Equivalents - Cash equivalents consist of investments that are readily convertible to cash with an original maturity date of three
months or less. Cash and cash equivalents include $44.8 million and $47.1 million, as of December 29, 2019 and December 30, 2018,
respectively, for amounts in transit from credit card companies since settlement is reasonably assured.

Concentrations of Credit and Counterparty Risk - Financial instruments that potentially subject the Company to a concentration of credit risk
are gift card, vendor and other receivables. Gift card, vendor and other receivables consist primarily of amounts due from gift card resellers and
vendor rebates. The Company considers the concentration of credit risk for gift card, vendor and other receivables to be minimal due to the
payment histories and general financial condition of its gift card resellers and vendors.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Financial 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 market funds, noninterest-
bearing accounts and other highly rated investments. Whenever possible, the Company selects investment grade counterparties and rated
money market funds in order to mitigate its counterparty risk. At times, cash balances may be in excess of FDIC insurance limits. See Note 16 -
Derivative Instruments and Hedging Activities for a discussion of the Company’s use of derivative instruments and management of credit risk
inherent in derivative instruments.

Fair Value - Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction
between market participants on the measurement date. Fair value is categorized into one of the following three levels based on the lowest level
of significant input:

Level 1

Level 2

Level 3

Unadjusted quoted market prices in active markets for identical assets or liabilities

Observable inputs available at measurement date other than quoted prices included in Level 1

Unobservable inputs that cannot be corroborated by observable market data

Inventories - Inventories consist of food and beverages and are stated at the lower of cost (first-in, first-out) or net realizable value.

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

Property, Fixtures and Equipment - Property, fixtures and equipment are stated at cost, net of accumulated depreciation. Depreciation is
computed on the straight-line method over the estimated useful life of the assets. Estimated useful lives by major asset category are generally as
follows:

Buildings (1)

Furniture and fixtures

Equipment

Computer equipment and software

5 to 30 years

5 to 7 years

2 to 7 years

3 to 7 years

____________________
(1)

Includes improvements to leased properties which are depreciated over the shorter of their useful life or the reasonably certain lease term, including renewal periods
that are reasonably certain.

Estimated useful lives are periodically reviewed and, where appropriate, changes are made prospectively. Effective September 30, 2019, the
Company changed the estimated useful life of its leasehold improvements from 20 years to 30 years (or the reasonably certain lease term) for
leasehold improvements associated with ground leases placed in service on or after that date. The change in useful life was adopted based on
historical experience related to the use of leasehold improvements and the expectation of future usability considering the Company’s revised
site selection strategy in recent years to focus on securing prime locations and ground leases for restaurant development and relocations. The
change in estimated useful life did not have a material impact on the Company’s consolidated financial statements.

Repair and maintenance costs that maintain the appearance and functionality of the restaurant, but do not extend the useful life of any restaurant
asset are expensed as incurred. The Company suspends depreciation and amortization for assets held for sale. The cost and related accumulated
depreciation of assets sold or disposed of are removed from the Company’s Consolidated Balance Sheets, and any resulting gain or loss is
generally recognized in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive Income.

The Company capitalizes direct and indirect internal costs associated with the acquisition, development, design and construction of Company-
owned restaurant locations as these costs have a future benefit to the Company. Upon restaurant opening, these costs are depreciated and
charged to depreciation and amortization expense. Internal costs of $6.4 million, $6.9 million and $9.1 million were capitalized during 2019,
2018 and 2017, respectively.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

For 2019 and 2018, computer equipment and software costs of $7.4 million and $13.5 million, respectively, were capitalized. As of
December 29, 2019 and December 30, 2018, there was $25.7 million and $33.2 million, respectively, of unamortized computer equipment and
software included in Property, fixtures and equipment, net on the Company’s Consolidated Balance Sheets.

Goodwill and Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business
combinations and is assigned to the reporting unit in which the acquired business will operate. The Company’s indefinite-lived intangible assets
consist of trade names. Goodwill and indefinite-lived intangible assets are tested for impairment annually, as of the first day of the second fiscal
quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Company may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If
the qualitative assessment is not performed or if the Company determines that it is not more likely than not that the fair value of the reporting
unit exceeds the carrying value, the fair value of the reporting unit is calculated. The carrying value of the reporting unit is compared to its
estimated fair value, with any excess of carrying value over fair value deemed to be an indicator of impairment.

Definite-lived intangible assets, which consist primarily of trademarks, franchise agreements and reacquired franchise rights, are amortized
over their estimated useful lives and are tested for impairment, using the discounted cash flow method, whenever events or changes in
circumstances indicate that the carrying value may not be recoverable.

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

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted
transactions, are considered cash flow hedges. If the derivative qualifies for hedge accounting treatment, any gain or loss on the derivative
instrument is recognized in equity as a change to Accumulated other comprehensive loss and reclassified into earnings in the same period or
periods during which the hedged transaction affects earnings.

The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting
does not apply or the Company elects not to apply hedge accounting. Derivatives not designated as hedges are not speculative and are used to
manage the Company’s exposure to interest rate movements, foreign currency exchange rate movements, changes in energy prices and other
identified risks. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. The Company
has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement.

Deferred Financing Fees - For fees associated with its revolving credit facility, the Company records deferred financing fees related to the
issuance of debt obligations in Other assets, net on its Consolidated Balance Sheets. For fees associated with all other debt obligations, the
Company records deferred financing fees as a reduction of Long-term debt, net.

The Company amortizes deferred financing fees to interest expense over the term of the respective financing arrangement, primarily using the
effective interest method. The Company amortized deferred financing fees of $2.5 million, $2.6 million and $2.9 million to interest expense for
2019, 2018 and 2017, respectively.

Liquor Licenses - The fees from obtaining non-transferable liquor licenses directly issued by local government agencies for nominal fees are
expensed as incurred. The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of
authorized liquor licenses are capitalized as indefinite-lived intangible assets and included in Other assets, net on the Company’s Consolidated
Balance Sheets.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Insurance Reserves - The Company carries insurance programs with specific retention levels or high per-claim deductibles for a significant
portion of expected losses under its workers’ compensation, general or liquor liability, health, property and management liability insurance
programs. The Company records a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated
cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves, the Company considers actuarial
assumptions and judgments regarding economic conditions, the frequency and severity of claims, claim development history and settlement
practices. Reserves recorded for workers’ compensation and general liability claims are discounted using the average of the one-year and five-
year risk-free rate of monetary assets that have comparable maturities.

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

Revenue Recognition - The Company records food and beverage revenues, net of discounts and taxes, upon delivery to the customer. Franchise-
related revenues are included in Franchise and other revenues in the Company’s Consolidated Statements of Operations and Comprehensive
Income. Royalties, which are a percentage of net sales of the franchisee, are recognized as revenue in the period which the sales are reported to
have occurred.

Proceeds from the sale of gift cards, which do not have expiration dates, are recorded as deferred revenue and recognized as revenue upon
redemption by the customer. The Company applies the portfolio approach practical expedient to account for gift card contracts and performance
obligations. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized using estimates based on historical
redemption patterns. If actual redemptions vary from the estimated breakage, gift card breakage income may differ from the amount recorded.
The Company periodically updates its estimates used for breakage. Breakage revenue is recorded as a component of Restaurant sales in the
Company’s Consolidated Statements of Operations and Comprehensive Income. Approximately 85% of deferred gift card revenue is expected
to be recognized within 12 months of inception. Gift card sales that are accompanied by a bonus gift card to be used by the customer at a future
visit result in a separate deferral of a portion of the original gift card sale. Revenue is recorded when the bonus card is redeemed or expires at
the estimated fair market value of the bonus card.

Gift card sales commissions paid to third-party providers are capitalized and subsequently amortized to Other restaurant operating expense
based on historical gift card redemption patterns. See Note 3 - Revenue Recognition for rollforwards of deferred gift card sales commissions
and unearned gift card revenue.

Advertising fees charged to franchisees are recognized as Franchise revenue in the Company’s Consolidated Statements of Operations and
Comprehensive Income. Initial franchise and renewal fees are recognized over the term of the franchise agreement and renewal period,
respectively. The weighted average remaining term of franchise agreements and renewal periods was approximately 14 years as of
December 29, 2019.

The Company maintains a customer loyalty program, Dine Rewards, in the U.S., where customers have the ability to earn a reward after a
number of qualified visits. The Company has developed an estimated value of the partial reward earned from each qualified visit, which is
recorded as deferred revenue. Each reward has a maximum value and must be redeemed within three months of earning such reward. The
revenue associated with the fair value of the qualified visit is recognized upon the earlier of redemption or expiration of the reward. The
Company applies the practical expedient to exclude disclosures regarding loyalty program remaining performance obligations, which have
original expected durations of less than one year.

The Company collects and remits sales, food and beverage, alcoholic beverage and hospitality taxes on transactions with customers and reports
revenue net of taxes in its Consolidated Statements of Operations and Comprehensive Income.

Leases - Effective December 31, 2018, the Company’s lease accounting policies changed in conjunction with its adoption of Accounting
Standards Update (“ASU”) No. 2016-02: Leases (Topic 842) (“ASU No. 2016-02”), ASU No.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

2018-01, “Leases (Topic 842): Land Easement 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 in Recently Adopted Financial Accounting Standards below.

The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement conveys the
right to use and control specific property or equipment. The Company leases restaurant and office facilities and certain equipment under
operating leases primarily having initial terms between one and 20 years. Restaurant facility leases generally have renewal periods totaling five
to 30 years, exercisable at the option of the Company. Contingent rentals represent payment of variable lease obligations based on a percentage
of gross revenues, as defined by the terms of the applicable lease agreement for certain restaurant facility leases. The Company also has certain
leases, which reset periodically based on a specified index. Such leases are recorded using the index that existed at lease commencement.
Subsequent changes in the index are recorded as variable rental payments. Variable rental payments are expensed as incurred in the Company’s
Consolidated Statements of Operations and Comprehensive Income and future variable rent obligations are not included within the lease
liabilities on the Consolidated Balance Sheet. The depreciable life of lease assets and leasehold improvements are limited by the expected lease
term. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants.

For restaurant facility leases executed subsequent to the adoption of ASU No. 2016-02, the Company accounts for fixed lease and non-lease
components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to account for
the lease assets and liabilities. Leases with an initial term of 12 months or less are not recorded on its Consolidated Balance Sheet, they are
recognized on a straight-line basis over the lease term within Other restaurant operating expense in the Company’s Consolidated Statements of
Operations and Comprehensive Income.

Rent expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease and may include rent
holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably certain. Rent expense is
recorded in Other restaurant operating in the Company’s Consolidated Statements of Operations and Comprehensive Income. Payments
received from landlords as incentives for leasehold improvements are recorded as a reduction of the right-of-use asset and amortized on a
straight-line basis over the term of the lease as a reduction of rent expense.

Pre-Opening Expenses - Non-capital expenditures associated with opening new restaurants are expensed as incurred and are included in Other
restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income.

Consideration Received from Vendors - The Company receives consideration for a variety of vendor-sponsored programs, such as volume
rebates, promotions and advertising allowances. Advertising allowances are intended to offset the Company’s costs of promoting and selling
menu items in its restaurants. Vendor consideration is recorded as a reduction of Cost of sales or Other restaurant operating expense when
recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income.

Impairment of Long-Lived Assets and Costs Associated with Exit Activities - Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiable
cash flows independent of other assets. For long-lived assets deployed at its restaurants, the Company reviews for impairment at the individual
restaurant level. When evaluating for impairment, the total future undiscounted cash flows expected to be generated by the asset are compared
to the carrying amount. If the total future undiscounted cash flows of the asset are less than its carrying amount, recoverability is measured by
comparing the fair value of the assets to the carrying amount. An impairment loss is recognized in earnings when the asset’s carrying value
exceeds its estimated fair value. Fair value is generally estimated using a discounted cash flow model.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Restaurant closure costs, including lease termination fees, are expensed as incurred. When the Company ceases using the property rights under
a non-cancelable operating lease, it records a liability for the net present value of any remaining non-rent lease related obligations as a result of
lease termination, less the estimated subtenant cost recovery that can reasonably be obtained for the property. Any subsequent adjustment to
that liability as a result of lease termination or changes in estimates of cost recovery is recorded in the period incurred. The associated expense
is recorded in Provision for impaired assets and restaurant closings in the Company’s Consolidated Statements of Operations and
Comprehensive Income.

Restaurant sites and certain other assets to be sold are included in assets held for sale when certain criteria are met, including the requirement
that the likelihood of selling the assets within one year is probable.

Advertising Costs - Advertising production costs are expensed in the period when the advertising first occurs. All other advertising costs are
expensed in the period in which the costs are incurred. Advertising expense of $146.1 million, $147.8 million and $151.4 million for 2019,
2018 and 2017, respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations and
Comprehensive Income.

Legal Costs - Settlement costs are accrued when they are deemed probable and reasonably estimable. Legal fees are recognized as incurred and
are reported in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income.

Research and Development Expenses (“R&D”) - R&D is expensed as incurred in General and administrative expense in the Company’s
Consolidated Statements of Operations and Comprehensive Income. R&D primarily consists of payroll and benefit costs. R&D was $3.4
million, $3.8 million and $3.9 million for 2019, 2018 and 2017, respectively.

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

Certain Restaurant Managing Partners and Chef Partners in the U.S. (“U.S. Partners”) may also participate in deferred compensation programs
and other performance-based compensation programs. The Company may invest in corporate-owned life insurance policies, which are held
within an irrevocable grantor or “rabbi” trust account 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 cash
distributions 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, using current and
historical information on restaurant performance and records the long-term portion of partner obligations in Other long-term liabilities, net on
its Consolidated Balance Sheets. Monthly Payments and deferred compensation expenses for U.S. Partners are included in Labor and other
related expenses and Monthly Payments and bonus expense for Area Operating Partners are included in General and administrative expense in
the Company’s Consolidated Statements of Operations and Comprehensive Income.

Stock-based Compensation - Stock-based compensation awards are measured at fair value at the date of grant and expensed over their vesting
or service periods. Stock-based compensation expense is recognized only for those awards expected to vest. The expense, net of forfeitures, is
recognized using the straight-line method. Forfeitures of share-based compensation awards are recognized as they occur.

Foreign Currency Translation and Transactions - For non-U.S. operations, the functional currency is the local currency. Foreign currency
denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date with the translation
adjustments recorded in Accumulated other comprehensive loss in the

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Company’s Consolidated Statements of Changes in Stockholders’ Equity. Results of operations are translated using the average exchange rates
for the reporting period. Foreign currency exchange transaction losses are recorded in General and administrative expense in the Company’s
Consolidated Statements of Operations and Comprehensive Income.

Income Taxes - Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred income tax assets and liabilities of a change in the tax rate is recognized in income in the period that
includes the enactment date of the rate change. A valuation allowance may reduce deferred income tax assets to the amount that is more likely
than not to be realized.

The Company records a tax benefit for an uncertain tax position using the highest cumulative tax benefit that is more likely than not to be
realized. The Company adjusts its liability for unrecognized tax benefits in the period in which it determines the issue is effectively settled, the
statute of limitations expires or when more information becomes available. Liabilities for unrecognized tax benefits, including penalties and
interest, are recorded in Accrued and other current liabilities and Other long-term liabilities, net on the Company’s Consolidated Balance
Sheets.

Recently Adopted Financial Accounting Standards - On December 31, 2018, the Company adopted ASU No. 2016-02, ASU No. 2018-01, and
ASU No. 2018-11. ASU No. 2016-02 requires the lease rights and obligations arising from lease contracts, including existing and new
arrangements, to be recognized as assets and liabilities on the balance sheet. ASU No. 2018-01 allows an entity to elect an optional transition
practical expedient to not evaluate land easements that exist or expired before the Company’s adoption of ASU No. 2016-02. ASU No. 2018-11
allows for an additional transition method, which permits use of the effective date of adoption as the date of initial application of ASU No.
2016-02 without restating comparative period financial statements and provides entities with a practical expedient that allows entities to elect
not to separate lease and non-lease components when certain conditions are met.

The Company adopted ASU No. 2016-02 using December 31, 2018 as the date of initial application. Consequently, financial information and
the disclosures required under the new standard were not provided for dates and periods before December 31, 2018. The Company also elected
a transition package including practical expedients that permitted it not to reassess the classification and initial direct costs of expired or
existing contracts and leases, to not separate lease and non-lease components of restaurant facility leases executed subsequent to adoption, and
to not evaluate land easements that exist or expired before the adoption. In preparation for adoption, the Company implemented a new lease
accounting system.

Adoption resulted in the following, as of December 31, 2018:

(i)
(ii)

recording of right-of-use assets of $1.3 billion and lease liabilities of $1.5 billion;
a credit to the beginning balance of Accumulated deficit of $190.4 million to derecognize deferred gains on sale-leaseback transactions
and a debit to the beginning balance of Accumulated deficit of $49.2 million to derecognize the related deferred tax assets; and

(iii) derecognition of existing debt obligations of $19.6 million and existing fixed assets of $16.1 million related to restaurant properties
sold and leased back from third parties that previously did not qualify for sale accounting, with gains or losses associated with this
change recognized in Accumulated deficit.

Other restaurant operating expense increased during 2019 from the adoption of ASU No. 2016-02 since the Company no longer recognizes the
benefit of deferred gains on sale-leaseback transactions through its statements of operations over the corresponding lease term. During 2018
and 2017, the Company recognized $12.3 million and $11.9 million, respectively, of sale-leaseback deferred gain amortization.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As a result of adoption of ASU No. 2016-02, the Company recorded reclassification adjustments to certain balances that were recorded under
Accounting Standards Codification Topic 840, “Leases” (“ASC 840”) on its Consolidated Balance Sheet as of December 30, 2018. The
following table summarizes accounts with material reclassification adjustments which impacted Operating lease right-of-use assets as a part of
the adoption of ASU No. 2016-02:

ACCOUNT

CONSOLIDATED BALANCE SHEET CLASSIFICATION UNDER ASC 840

Favorable leases

Deferred rent

Unfavorable leases

Exit-related lease accruals

Intangible assets, net

Deferred rent

Other long-term liabilities, net

In addition, rent payments that were recorded within prepaid assets under ASC 840 are now recorded as a reduction of the current portion of
operating lease liabilities.

Recently Issued Financial Accounting Standards Not Yet Adopted - In June 2016, the Financial Accounting Standards Board (“FASB”) issued
ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” (“ASU No.
2016-13”), which requires measurement and recognition of losses for financial instruments under the current expected credit loss model
(“CECL model”) versus incurred losses under current guidance. The Company’s allowance for credit losses will generally increase under the
CECL model. The Company’s adoption of ASU No. 2016-13 and its related amendments (“the new credit loss standard”) on December 30,
2019 did not have a material effect on the Company’s consolidated financial statements. Measurement processes and related controls have been
implemented by the Company to ensure compliance with the new credit loss standard.

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s
Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” (“ASU No. 2018-15”), which
clarifies the accounting for implementation costs in cloud computing arrangements. Under ASU No. 2018-15, implementation costs incurred by
customers in cloud computing arrangements are deferred and recognized over the term of the arrangement similar to internal-use software
guidance. The Company’s prospective adoption of ASU No. 2018-15 on December 30, 2019 did not have a material effect on its consolidated
financial statements. The Company will defer and recognize allowable implementation costs for future cloud computing projects which may be
material to future reporting periods.

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

3. Revenue Recognition

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

(dollars in thousands)

Revenues

Restaurant sales

Franchise and other revenues

Franchise revenue

Other revenue

Total Franchise and other revenues

Total revenues

FISCAL YEAR

2019

2018

2017

4,075,014 $

4,060,871 $

4,164,063

52,147 $

12,228

64,375 $

52,906 $

12,636

65,542 $

47,021

12,052

59,073

4,139,389 $

4,126,413 $

4,223,136

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(dollars in thousands)

U.S.

Outback Steakhouse (1)

Carrabba’s Italian Grill (1)

Bonefish Grill

Fleming’s Prime Steakhouse & Wine Bar

Other

U.S. total

International

Outback Steakhouse Brazil

Other (2)

International total

Total

2019

FISCAL YEAR

2018

2017

RESTAURANT
SALES

FRANCHISE
REVENUE

RESTAURANT
SALES

FRANCHISE
REVENUE

RESTAURANT
SALES

FRANCHISE
REVENUE

2,135,776 $

38,614 $

2,098,696 $

40,422 $

2,141,506 $

34,978

613,031

574,004

307,199

4,658

2,112

787

—

647,454

578,139

304,064

5,845

601

833

—

673,872

600,717

296,982

589

553

925

—

3,634,668 $

41,513 $

3,634,198 $

41,856 $

3,713,666 $

36,456

355,837 $

84,509

440,346 $

4,075,014 $

— $

348,394 $

— $

377,158 $

10,634

10,634 $

52,147 $

78,279

426,673 $

4,060,871 $

11,050

11,050 $

52,906 $

73,239

450,397 $

4,164,063 $

—

10,565

47,021

____________________
(1)

In 2019, the Company sold 18 Carrabba’s Italian Grill restaurants. In 2017, the Company sold 53 Outback Steakhouse restaurants and one Carrabba’s Italian Grill
restaurant. These restaurants are now operated as franchises.
Includes Restaurant sales for the Company’s Abbraccio concept in Brazil.

(2)

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

(dollars in thousands)

Other current assets, net

Deferred gift card sales commissions

Unearned revenue

Deferred gift card revenue

Deferred loyalty revenue

Deferred franchise fees - current

Total Unearned revenue

Other long-term liabilities, net

Deferred franchise fees - non-current

DECEMBER 29, 2019

DECEMBER 30, 2018

18,554 $

16,431

358,757 $

10,034

491

369,282 $

333,794

8,424

490

342,708

4,599 $

4,531

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

(dollars in thousands)

Balance, beginning of period

Deferred gift card sales commissions amortization

Deferred gift card sales commissions capitalization

Other

Balance, end of period

FISCAL YEAR

2019

2018

2017

16,431 $

16,231 $

(26,094)

29,894

(1,677)

(27,227)

28,980

(1,553)

18,554 $

16,431 $

15,584

(26,751)

29,412

(2,014)

16,231

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(dollars in thousands)

Balance, beginning of period

Gift card sales

Gift card redemptions

Gift card breakage

Balance, end of period

4. Disposals

FISCAL YEAR

2019

2018

2017

333,794 $

323,628 $

420,229

(376,477)

(18,789)

419,172

(388,954)

(20,052)

358,757 $

333,794 $

331,803

440,946

(426,174)

(22,947)

323,628

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

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

The restaurants in the transactions above are now operated as franchises and the Company remains contingently liable on certain real estate
lease agreements assigned to the franchisees. See Note 20 - Commitments and Contingencies for additional details regarding lease guarantees.

Surplus Property Disposals - During 2019, the Company completed the sale of five of its U.S. surplus properties to a franchisee for cash
proceeds of $12.7 million, net of certain purchase price adjustments. The transaction resulted in a net gain of $3.6 million, recorded within
Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income.

Other Disposals - During 2017, the Company closed and completed the sale of one U.S. Company-owned Carrabba’s Italian Grill restaurant 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 Comprehensive Income.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

5. Impairments and Exit Costs

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

(dollars in thousands)

Impairment losses

U.S.

International

Corporate

Total impairment losses

Restaurant closure expenses

U.S.

International

Total restaurant closure expenses

Provision for impaired assets and restaurant closings

FISCAL YEAR

2019

2018

2017

6,381 $

2,026

727

9,134 $

(105) $

(49) $

9,085 $

15,342 $

11,457

—

26,799 $

6,536 $

3,528

10,064 $

36,863 $

15,325

10,124

—

25,449

26,749

131

26,880

52,329

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

(dollars in thousands)

Impairment, facility closure and other expenses

2017 Closure Initiative (1)

Bonefish Restructuring (2)

Impairment, facility closure and other expenses - Provision for impaired assets and restaurant
closings

Severance and other expenses

2017 Closure Initiative (1)

Bonefish Restructuring (2)

Severance and other expenses - General and administrative expense

Reversal of deferred rent liability

2017 Closure Initiative (1)

Bonefish Restructuring (2)

Reversal of deferred rent liability - Other restaurant operating expense

FISCAL YEAR

2019

2018

2017

1,717 $

(19)

1,662 $

1,405

1,698 $

3,067 $

1,108 $

—

1,108 $

(96) $

—

(96) $

2,710 $

434 $

136

570 $

(469) $

(147)

(616) $

3,021 $

20,352

3,783

24,135

3,299

3,366

(4,755)

—

(4,755)

22,746

________________
(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
core markets 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 leases and certain operating covenants expired or were amended or waived. In connection with the 2017 Closure Initiative, the Company recognized impairments
and closure costs of $1.7 million, $0.6 million and $17.9 million within the U.S. segment for 2019, 2018 and 2017, respectively, and $1.1 million and $2.5 million
within the international segment for 2018 and 2017, respectively.
On February 12, 2016, the Company decided to close 14 Bonefish Grill restaurants (the “Bonefish Restructuring”). Expenses related to the Bonefish Restructuring
are recognized within the U.S. segment.

(2)

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Cumulative Closure Initiative and Restructuring Costs - Following is a summary of cumulative expenses related to the Closure Initiatives
incurred through December 29, 2019 (dollars in thousands):

LOCATION OF CHARGE IN THE CONSOLIDATED
STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME

CLOSURE INITIATIVES AND RESTRUCTURING

2017

BONEFISH

TOTAL (1)

DESCRIPTION

Impairments, facility closure and other
expenses

Provision for impaired assets and restaurant closings

70,231 $

34,232 $

Severance and other expenses

Reversal of deferred rent liability

General and administrative

Other restaurant operating

4,841

(8,591)

947

(3,704)

66,481 $

31,475 $

________________
(1)

The 2017 Closure Initiative expenses included $64.2 million and $2.2 million within the U.S. and international segment, respectively.

104,463

5,788

(12,295)

97,956

International Restructuring - The Company recognized asset impairment and closure charges of $2.0 million, $13.9 million and $6.3 million
during 2019, 2018 and 2017, respectively, related to restructuring of certain international markets, including Puerto Rico and China, within the
international segment.

Express Concept Restructuring - In 2018, the Company recognized asset impairment charges of $7.4 million related to the restructuring of its
Express concept, within the U.S. segment. As a part of the restructuring, three Express locations closed during 2019.

Refranchising - In connection with the sale of certain existing U.S. Company-owned Carrabba’s Italian Grill restaurants, the Company
recognized asset impairment charges of $5.5 million in 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 restaurant
concepts (“surplus properties”). Surplus properties primarily consist of closed properties, which include land and a building, and liquor licenses
no longer needed for operations. Surplus properties may be classified on the Consolidated Balance Sheets as assets held for sale or as assets
held and used when the Company does not expect to sell these assets within the next 12 months. Following is a summary of the carrying value
and number of surplus properties as of the periods indicated:

(dollars in thousands)

CONSOLIDATED BALANCE SHEET
CLASSIFICATION

Surplus properties - assets held for sale

Other current assets, net

Surplus properties - assets held and used

Property, fixtures and equipment, net

Total surplus properties

Number of surplus properties owned

DECEMBER 29, 2019 DECEMBER 30, 2018
3,317 $
$

4,594

18,188

21,505 $

15,254

19,848

During 2017, the Company recognized asset impairment charges of $10.7 million in connection with the remeasurement of certain surplus
properties, within the U.S. segment.

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

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Accrued Facility Closure and Other Cost Rollforward - The following table summarizes the Company’s rollforward of closed facility lease
liabilities and other accrued costs associated with the Closure Initiatives for the period indicated:

(dollars in thousands)

Beginning of the year

Additions (1)

Cash payments

Accretion

Adjustments

End of the year (2)

FISCAL YEAR
2019

18,094

1,288

(5,538)

1,253

(555)

14,542

________________
(1)
(2)

Includes closure initiative related lease liabilities recognized as a result of the adoption of ASU No. 2016-02.
As of December 29, 2019, the Company had exit-related accruals related to the Closure Initiatives of $3.3 million recorded in Accrued and other current liabilities
and $11.2 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

6. Earnings Per Share

The Company computes basic earnings per share based on the weighted average number of common shares that were outstanding during the
period. 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 units are considered dilutive when
the related performance criterion has been met.

The following table presents the computation of basic and diluted earnings per share for the periods indicated:

(in thousands, except per share data)
Net income attributable to Bloomin’ Brands

FISCAL YEAR

2019

2018

2017

130,573 $

107,098 $

101,293

Basic weighted average common shares outstanding

88,839

92,042

96,365

Effect of diluted securities:

Stock options

Nonvested restricted stock and restricted stock units

Nonvested performance-based share units

Diluted weighted average common shares outstanding

571

295

89,777

1,595

397

94,075

Basic earnings per share

Diluted earnings per share

1.47 $

1.45 $

1.16 $

1.14 $

2,895

421

99,707

1.05

1.02

Securities outstanding not included in the computation of earnings per share because their effect was antidilutive were as follows, for the
periods indicated:

(shares in thousands)

Stock options

Nonvested restricted stock and restricted stock units

Nonvested performance-based share units

FISCAL YEAR

2019

2018

2017

4,003

158

277

2,879

201

5,555

128

222

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

7. Stock-based and Deferred Compensation Plans

Stock-based Compensation Plans

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

(dollars in thousands)

Stock options

Restricted stock and restricted stock units

Performance-based share units

FISCAL YEAR

2019

2018

2017

5,270 $

8,949

5,471

19,690 $

6,378 $

9,143

6,911

22,432 $

10,423

9,933

2,227

22,583

Stock Options - Stock options generally vest and become exercisable over a period of four years in an equal number of shares each year. Stock
options have an exercisable life of no more than ten years from the date of grant. The Company settles stock option exercises with authorized
but unissued shares of the Company’s common stock.

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

(in thousands, except exercise price and contractual life)
Outstanding as of December 30, 2018

Granted

Exercised

Forfeited or expired

Outstanding as of December 29, 2019

Exercisable as of December 29, 2019

WEIGHTED-
AVERAGE
EXERCISE
PRICE

WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
LIFE (YEARS)

OPTIONS

6,190 $

1,237

(721)

(607)

6,099 $

3,846 $

18.30

20.59

9.11

22.76

19.40

19.06

AGGREGATE
INTRINSIC
VALUE

5.7 $

11,439

6.0 $

4.7 $

18,961

14,405

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

Assumptions:

Weighted-average risk-free interest rate (1)

Dividend yield (2)

Expected term (3)

Weighted-average volatility (4)

FISCAL YEAR

2019

2018

2017

2.34%

1.94%

4.8 years

31.05%

2.66%

1.50%

5.8 years

32.76%

1.92%

1.84%

6.3 years

33.72%

Weighted-average grant date fair value per option

5.07

7.23

5.09

________________
(1)
(2)
(3)

(4)

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.
Dividend yield is the level of dividends expected to be paid on the Company’s common stock over the expected term of the option.
Expected term represents the period of time that the options are expected to be outstanding. The Company estimates the expected term based on historical exercise
experience for its stock options.
Based on the historical volatility of the Company’s stock.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(dollars in thousands)

Intrinsic value of options exercised

Cash received from option exercises, net of tax withholding

Fair value of stock options vested

Tax benefits for stock option compensation expense (1)

Unrecognized stock option expense

Remaining weighted-average vesting period

FISCAL YEAR

2019

2018

2017

7,929 $

6,501 $

18,136 $

1,932 $

7,669

1.9 years

52,247 $

40,501 $

34,316 $

13,085 $

15,139

13,329

28,085

5,889

________________
(1)

Includes excess tax benefits for tax deductions related to the exercise of stock options of $0.2 million, $8.0 million and $2.9 million for fiscal years 2019, 2018 and
2017, respectively.

Restricted Stock and Restricted Stock Units - Restricted stock units granted prior to 2019 generally vest over a period of four years and
restricted stock units granted after 2018 generally vest over a period of three years, in an equal number of shares each year. Following is a
summary of the Company’s restricted stock unit activity:

(shares in thousands)
Outstanding as of December 30, 2018

Granted

Vested

Forfeited

Outstanding as of December 29, 2019

NUMBER OF
RESTRICTED STOCK
UNIT AWARDS

WEIGHTED-AVERAGE
GRANT DATE
FAIR VALUE PER
AWARD

1,156 $

610

(443)

(135)

1,188 $

18.65

19.15

18.50

19.17

18.91

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

(dollars in thousands)

Fair value of restricted stock vested

Tax benefits for restricted stock compensation expense

Unrecognized restricted stock expense

Remaining weighted-average vesting period

FISCAL YEAR

2019

2018

2017

8,200 $

1,672 $

9,705 $

2,938 $

10,182

3,664

14,800

2.1 years

Performance-based Share Units (“PSUs”) - The number of PSUs that vest is determined for each year based on the achievement of certain
performance criteria as set forth in the award agreement and may range from zero to 200% of the annual target grant. The PSUs are settled in
shares of common stock, with holders receiving one share of common stock for each performance-based share unit that vests. The fair value of
PSUs is based on the closing price of the Company’s common stock on the grant date. Compensation expense for PSUs is recognized over the
vesting period when it is probable the performance criteria will be achieved.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(shares in thousands)

Outstanding as of December 30, 2018

Granted

Vested

Forfeited

Outstanding as of December 29, 2019

The following represents PSU compensation information for the periods indicated:

(dollars in thousands)

Tax benefits for PSU compensation expense

Unrecognized PSU expense

Remaining weighted-average vesting period (1)

________________
(1)

PSUs typically vest after three years.

PERFORMANCE-
BASED SHARE UNITS

WEIGHTED-AVERAGE
GRANT DATE
FAIR VALUE PER
AWARD

575 $

237

(161)

(119)

532 $

18.54

20.00

18.61

17.42

19.42

FISCAL YEAR

2019

2018

2017

857 $

8,000

1.2 years

406 $

501

As of December 29, 2019, the maximum number of shares of common stock available for issuance pursuant to the 2016 Omnibus Incentive
Plan was 3,310,887.

Deferred Compensation Plans

U.S. Partner Deferred Compensations Plans - Certain U.S. Partners may participate in deferred compensation programs that are subject to the
rules of Section 409A of the Internal Revenue Code. The Company may invest in corporate-owned life insurance policies, which are held
within an irrevocable grantor or “rabbi” trust account for settlement of certain of the obligations under the deferred compensation plans. The
deferred compensation obligation due to U.S. Partners under these plans was $49.0 million and $69.6 million as of December 29, 2019 and
December 30, 2018, respectively. The rabbi trust is funded through the Company’s voluntary contributions. The unfunded obligation for U.S.
Partners deferred compensation was $9.1 million and $26.3 million as of December 29, 2019 and December 30, 2018, respectively.

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

401(k) Plan - The Company has a qualified defined contribution plan that qualifies under Section 401(k) of the Internal Revenue Code of 1986,
as amended. The Company incurred contribution costs of $5.4 million, $5.3 million and $3.3 million for the 401(k) Plan for 2019, 2018 and
2017, respectively.

Highly Compensated Employee Plan - The Company provides a deferred compensation plan for its highly compensated employees who are not
eligible to participate in the 401(k) Plan. The deferred compensation plan allows these employees to contribute a percentage of their base salary
and cash bonus on a pre-tax basis. The deferred compensation plan is unsecured and funded through the Company’s voluntary contributions.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

8. Other Current Assets, Net

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

(dollars in thousands)
Prepaid expenses

Accounts receivable - gift cards, net

Accounts receivable - vendors, net

Accounts receivable - franchisees, net

Accounts receivable - other, net

Deferred gift card sales commissions

Assets held for sale

Other current assets, net

9. Property, Fixtures and Equipment, Net

Property, fixtures and equipment, net, consisted of the following as of the periods indicated:

(dollars in thousands)
Land

Buildings

Furniture and fixtures

Equipment

Construction in progress

Less: accumulated depreciation

DECEMBER 29,
2019

DECEMBER 30,
2018

20,218 $

104,591

13,465

1,322

21,734

18,554

3,317

3,261

38,117

91,242

10,029

1,303

19,688

16,431

5,143

8,895

186,462 $

190,848

DECEMBER 29,
2019

DECEMBER 30,
2018

42,570 $

1,202,434

458,169

665,815

24,477

(1,357,388)

1,036,077 $

59,973

1,188,735

428,676

634,459

48,949

(1,244,863)

1,115,929

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

(dollars in thousands)

Depreciation expense

Repair and maintenance expense

10. Goodwill and Intangible Assets, Net

Goodwill - The following table is a rollforward of goodwill:

(dollars in thousands)

Balance as of December 31, 2017

Translation adjustments

Transfer to Assets held for sale

Balance as of December 30, 2018

Translation adjustments

Balance as of December 29, 2019

FISCAL YEAR

2019

2018

2017

188,190 $

106,943

192,099 $

102,409

182,254

111,926

U.S.

INTERNATIONAL

CONSOLIDATED

170,767 $

—

(110)

170,657 $

—

170,657 $

139,467 $

(14,697)

—

124,770 $

(6,988)

117,782 $

310,234

(14,697)

(110)

295,427

(6,988)

288,439

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table is a summary of the Company’s gross goodwill balances and accumulated impairments as of the periods indicated:

(dollars in
thousands)

U.S.

International

Total goodwill

DECEMBER 29, 2019

DECEMBER 30, 2018

DECEMBER 31, 2017

GROSS CARRYING
AMOUNT

ACCUMULATED
IMPAIRMENTS

GROSS CARRYING
AMOUNT

ACCUMULATED
IMPAIRMENTS

GROSS CARRYING
AMOUNT

ACCUMULATED
IMPAIRMENTS

838,827 $

235,692

1,074,519 $

(668,170) $

(117,910)

(786,080) $

838,827 $

242,680

1,081,507 $

(668,170) $

(117,910)

(786,080) $

838,937 $

257,377

1,096,314 $

(668,170)

(117,910)

(786,080)

The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets each year during the
second quarter. The Company’s 2019 and 2017 assessments utilized a qualitative assessment and its 2018 assessment utilized a quantitative
approach. As a result of these assessments, the Company did not record any goodwill asset impairment charges during the periods presented.

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

(dollars in
thousands)

Trade names

Trademarks

Favorable leases

Franchise
agreements

Reacquired
franchise rights

Total intangible
assets

WEIGHTED AVERAGE
AMORTIZATION
PERIOD
(IN YEARS)

GROSS
CARRYING
VALUE

DECEMBER 29, 2019

ACCUMULATED
AMORTIZATION

NET
CARRYING
VALUE

GROSS
CARRYING
VALUE

DECEMBER 30, 2018

ACCUMULATED
AMORTIZATION

Indefinite

414,616

414,616 $

414,516

NET
CARRYING
VALUE

414,516

81,381 $

—

14,881

42,390

(47,882)

—

33,499

—

81,381 $

64,307

(44,057)

(41,447)

37,324

22,860

(14,356)

525

14,881

(13,212)

1,669

(20,415)

21,975

46,446

(18,843)

27,603

553,268 $

(82,653) $

470,615 $

621,531 $

(117,559) $

503,972

The Company did not record any indefinite-lived intangible asset impairment charges during the periods presented.

Definite-lived intangible assets are amortized on a straight-line basis. The following table presents the aggregate expense related to the
amortization of the Company’s trademarks, favorable leases, franchise agreements and reacquired franchise rights for the periods indicated:

FISCAL YEAR

2019

2018

2017

8,621 $

13,377 $

14,191

(dollars in thousands)

Amortization expense (1)
________________
(1)

Amortization expense is recorded in Depreciation and amortization for fiscal year 2019 and Depreciation and amortization and Other restaurant operating expense for
fiscal years 2018 and 2017 in the Company’s Consolidated Statements of Operations and Comprehensive Income.

The following table presents expected annual amortization of intangible assets as of December 29, 2019:

(dollars in thousands)
2020

2021

2022

2023

2024

7,213

6,374

6,304

6,217

6,046

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

11. Other Assets, Net

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

(dollars in thousands)
Company-owned life insurance

Deferred financing fees (1)

Liquor licenses

Other assets

DECEMBER 29,
2019

DECEMBER 30,
2018

60,126 $

4,893

24,289

27,802

117,110 $

61,233

6,563

24,153

29,024

120,973

________________
(1)

Net of accumulated amortization of $6.8 million and $5.1 million as of December 29, 2019 and December 30, 2018, respectively.

12. Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following as of the periods indicated:

(dollars in thousands)
Accrued rent and current operating lease liabilities

Accrued payroll and other compensation

Accrued insurance

Other current liabilities

DECEMBER 29,
2019

DECEMBER 30,
2018

174,287 $

101,090

20,500

95,574

391,451 $

2,850

101,249

22,055

120,499

246,653

13. Long-term Debt, Net

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

(dollars in thousands)

Senior Secured Credit Facility:

Term loan A (1)

Revolving credit facility (1) (2)

Total Senior Secured Credit Facility

Finance lease liabilities

Financing obligations

Other

Less: unamortized debt discount and issuance costs

Total debt, net

Less: current portion of long-term debt

Long-term debt, net

DECEMBER 29, 2019

DECEMBER 30, 2018

OUTSTANDING
BALANCE

INTEREST RATE

OUTSTANDING
BALANCE

INTEREST RATE

450,000

599,000

1,049,000

2,308

—

(2,654)

1,048,704

(26,411)

1,022,293

4.14%

4.17%

7.58% to 7.82%

0.00% to 2.18%

3.40% $

3.44%

2.18%

475,000

599,500

1,074,500

3,297

19,562

918

(3,502)

1,094,775

(27,190)

1,067,585

________________
(1)
(2)

Interest rate represents the weighted-average interest rate for the respective periods.
Subsequent to December 29, 2019, the Company made payments of $65.0 million, net of borrowings, on its revolving credit facility.

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

Credit Agreement - On November 30, 2017, the Company and OSI, as co-borrowers, entered into a credit agreement (the “Credit Agreement”)
with a syndicate of institutional lenders, providing for senior secured financing of up to

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

$1.5 billion consisting of a $500.0 million Term loan A and a $1.0 billion revolving credit facility, including a letter of credit and swing line
loan sub-facilities (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility matures on November 30, 2022.

The Company may elect an interest rate for the Credit Agreement at each reset period based on the Alternate Base Rate or the Eurocurrency
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 “Base Rate”). The Eurocurrency
Rate option is the seven, 30, 60, 90 or 180-day Eurocurrency rate (“Eurocurrency Rate”). The interest rates are as follows:

Term loan A and revolving credit facility

50 to 100 basis points over Base Rate

150 to 200 basis points over the Eurocurrency Rate

BASE RATE ELECTION

EUROCURRENCY RATE ELECTION

Fees on letters of credit and the daily unused availability under the revolving credit facility as of December 29, 2019 were 1.88% and 0.30%,
respectively. As of December 29, 2019, $20.2 million of the revolving credit facility was committed for the issuance of letters of credit and not
available for borrowing.

The Senior Secured Credit Facility is guaranteed by each of the Company’s current and future domestic subsidiaries and is secured by
substantially all now owned or later acquired assets of the Company and OSI, including the Company’s domestic subsidiaries.

Debt Covenants and Other Restrictions - Borrowings under the Company’s debt agreements are subject to various covenants that limit its
ability to: incur additional indebtedness; make significant payments; sell assets; pay dividends and other restricted payments; acquire certain
assets; effect mergers and similar transactions; and effect certain other transactions with affiliates. The Senior Secured Credit Facility has a
financial covenant to maintain a specified quarterly Total Net Leverage Ratio (“TNLR”). TNLR is the ratio of Consolidated Total Debt (Current
portion of long-term debt and Long-term debt, net of cash) to Consolidated EBITDA (earnings before interest, taxes, depreciation and
amortization and certain other adjustments as defined in the Credit Agreement). The TNLR may not exceed 4.50 to 1.00. The Company’s
TNLR as of December 29, 2019 does not limit the Company’s ability to draw on its revolving credit facility.

The Senior Secured Credit Facility permits regular quarterly dividend payments, subject to certain restrictions.

As of December 29, 2019 and December 30, 2018, the Company was in compliance with its debt covenants.

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

(dollars in thousands)

2020

2021

2022

2023

2024

Thereafter

Total payments

Less: finance lease interest

Total principal payments

DECEMBER 29,
2019

26,462

38,399

984,030

—

1,048,891

(187)

1,048,704

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

SCHEDULED QUARTERLY PAYMENT DATES

March 29, 2020 through December 27, 2020

March 28, 2021 through December 26, 2021

March 27, 2022 through September 25, 2022

TERM LOAN A

6,250

9,375

12,500

The Senior Secured Credit Facility contains mandatory prepayment requirements for Term loan A. The Company is required to prepay
outstanding amounts under these loans with 50% of its annual excess cash flow, as defined in the Credit Agreement. The amount of outstanding
loans required to be prepaid in accordance with the debt covenants may vary based on the Company’s leverage ratio and year end results.

14. Other Long-term Liabilities, Net

Other long-term liabilities, net, consisted of the following as of the periods indicated:

(dollars in thousands)
Accrued insurance liability

Unfavorable leases (1)

Chef and Restaurant Managing Partner deferred compensation obligations and deposits

Other long-term liabilities

_______________
(1)

Net of accumulated amortization of $36.2 million as of December 30, 2018.

DECEMBER 29,
2019

DECEMBER 30,
2018

33,818 $

—

47,831

56,411

138,060 $

33,771

32,120

64,766

60,876

191,533

15. Stockholders’ Equity
Share Repurchases - Following is a summary of the Company’s share repurchase programs as of December 29, 2019 (dollars in thousands):

SHARE REPURCHASE
PROGRAM

BOARD APPROVAL
DATE

AUTHORIZED

REPURCHASED

CANCELED

REMAINING

2014

2015

2016

July 2016

2017

2018

2019

December 12, 2014

August 3, 2015

February 12, 2016

July 26, 2016

April 21, 2017

February 16, 2018

February 12, 2019

Total share repurchase programs

100,000 $

100,000

250,000

300,000

250,000

150,000

100,000 $

69,999 $

139,892 $

247,731 $

195,000 $

113,967 $

106,992 $

973,581

— $

30,001 $

110,108 $

52,269 $

55,000 $

36,033 $

— $

—

43,008

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Following is a summary of the shares repurchased under the Company’s share repurchase programs for the periods presented:

(in thousands, except per share data)

2019

2018

2019

2018

2019

2018

NUMBER OF SHARES

AVERAGE REPURCHASE
PRICE PER SHARE

AMOUNT

First fiscal quarter

Second fiscal quarter

Third fiscal quarter

Fourth fiscal quarter

—

5,469

—

2,116 $

1,287 $

968 $

691 $

— $

24.10 $

— $

19.56 $

— $

23.31

18.57

21.71

106,992

—

50,996

30,004

17,968

14,999

Total common stock repurchases

5,469

5,062 $

19.56 $

22.52 $

106,992 $

113,967

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

(in thousands, except per share data)

First fiscal quarter

Second fiscal quarter

Third fiscal quarter

Fourth fiscal quarter

Total cash dividends declared and paid

DIVIDENDS PER SHARE

AMOUNT

2019

2018

2019

2018

0.10 $

0.09 $

9,140 $

0.10

0.09

9,227

8,674

8,693

8,371

8,363

8,344

8,234

0.40 $

0.36 $

35,734 $

33,312

In February 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share, payable on March 13, 2020 to
shareholders of record at the close of business on February 28, 2020.

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

(dollars in thousands)

Foreign currency translation adjustment

Unrealized loss on derivatives, net of tax

Accumulated other comprehensive loss

DECEMBER 29, 2019

DECEMBER 30, 2018

(152,031) $

(17,745)

(169,776) $

(135,149)

(7,606)

(142,755)

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

(dollars in thousands)

Bloomin’ Brands:

Foreign currency translation adjustment

Unrealized (loss) gain on derivatives, net of tax (1)

Reclassification of adjustments for loss on derivatives included in Net income, net of tax (2)

Total unrealized (loss) gain on derivatives, net of tax

Other comprehensive (loss) income attributable to Bloomin’ Brands

FISCAL YEAR

2019

2018

2017

(16,882) $

(36,576) $

8,936

(11,944) $

1,805

(10,139) $

(27,021) $

(7,100) $

120

(6,980) $

(43,556) $

627

2,381

3,008

11,944

________________
(1)
(2)

Unrealized (loss) gain on derivatives is net of tax of $(4.1) million, $(2.5) million and $0.5 million for 2019, 2018 and 2017, respectively.
Reclassifications of adjustments for loss on derivatives are net of tax. See Note 16 - Derivative Instruments and Hedging Activities for discussion of the tax impact of
reclassifications.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

16. Derivative Instruments and Hedging Activities

Interest Rate Risk - The Company manages economic risks, including interest rate variability, primarily by managing the amount, sources and
duration of its debt funding and through the use of derivative financial instruments. The Company’s objectives in using interest rate derivatives
are to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps.

DESIGNATED HEDGES

Cash Flow Hedges of Interest Rate Risk - On September 9, 2014, the Company entered into variable-to-fixed interest rate swap agreements
with eight counterparties to hedge a portion of the cash flows of the Company’s variable rate debt (the “2014 Swap Agreements”). The 2014
Swap Agreements had an aggregate notional amount of $400.0 million and matured on May 16, 2019. Under the terms of the 2014 Swap
Agreements, the Company paid a weighted-average fixed rate of 2.02% on the notional amount and received payments from the counterparties
based on the 30-day LIBOR rate.

On October 24, 2018 and October 25, 2018, the Company entered into variable-to-fixed interest rate swap agreements with 12 counterparties to
hedge a portion of the cash flows of the Company’s variable rate debt (the “2018 Swap Agreements”). The 2018 Swap Agreements have an
aggregate notional amount of $550.0 million, a start date of May 16, 2019 (the maturity date of the 2014 Swap Agreements), and mature on
November 30, 2022. Under the terms of the 2018 Swap Agreements, the Company pays a weighted-average fixed rate of 3.04% on the notional
amount and receives payments from the counterparties based on the one-month LIBOR rate.

The Company’s swap agreements have been designated and qualify as cash flow hedges, are recognized on its Consolidated Balance Sheets at
fair value and are classified based on the instruments’ maturity dates. The Company estimates $7.9 million will be reclassified to interest
expense over the next 12 months related to the 2018 Swap Agreements.

The following table presents the fair value of the Company’s interest rate swaps as well as their classification on the Company’s Consolidated
Balance Sheets as of the periods indicated:

(dollars in thousands)

Interest rate swaps - asset (1)

Interest rate swaps - liability

Total fair value of derivative instruments - liabilities (1)

Interest receivable

DECEMBER 29,
2019

DECEMBER 30,
2018

CONSOLIDATED BALANCE SHEET
CLASSIFICATION

— $

765 Other current assets, net

7,174 $

16,835

24,009 $

1,393 Accrued and other current liabilities

9,723 Other long-term liabilities, net

11,116

— $

112 Other current assets, net

Accrued interest
____________________
(1) See Note 18 - Fair Value Measurements for fair value discussion of the interest rate swaps.

632 $

— Accrued and other current liabilities

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

(dollars in thousands)

Interest rate swap expense recognized in Interest expense, net

Income tax benefit recognized in Provision (benefit) for income taxes

Total effects of the interest rate swaps on Net income

FISCAL YEAR

2019

2018

2017

(2,436) $

631

(1,805) $

(161) $

(120) $

(3,908)

1,527

(2,381)

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company records its derivatives on its Consolidated Balance Sheets on a gross balance basis. The Company’s interest rate swaps are
subject to master netting arrangements. As of December 29, 2019, the Company did not have more than one derivative between the same
counterparties and as such, there was no netting.

By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under the
terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based upon
credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of December 29, 2019 and
December 30, 2018, all counterparties to the interest rate swaps had performed in accordance with their contractual obligations.

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

As of December 29, 2019 and December 30, 2018, the fair value of the Company’s interest rate swaps was in a net liability position, including
accrued interest but excluding any adjustment for nonperformance risk, of $24.8 million and $10.5 million, respectively. As of December 29,
2019 and December 30, 2018, the Company has not posted any collateral related to these agreements. If the Company had breached any of
these provisions as of December 29, 2019 and December 30, 2018, it could have been required to settle its obligations under the agreements at
their termination value of $24.8 million and $10.5 million, respectively.

17. Leases

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

(dollars in thousands)
Operating lease right-of-use assets

Finance lease right-of-use assets (1)

Total lease assets, net

Current operating lease liabilities (2)

Current finance lease liabilities

Non-current operating lease liabilities

Non-current finance lease liabilities

Total lease liabilities

________________
(1)
(2)

Net of accumulated amortization of $1.3 million.
Excludes accrued contingent percentage rent.

CONSOLIDATED BALANCE SHEET CLASSIFICATION

DECEMBER 29, 2019

Operating lease right-of-use assets

Property, fixtures and equipment, net

Accrued and other current liabilities

Current portion of long-term debt

Non-current operating lease liabilities

Long-term debt, net

1,266,548

2,036

1,268,584

171,866

1,361

1,279,051

947

1,453,225

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Following is a summary of expenses and income related to leases recognized in the Company’s Consolidated Statement of Operations and
Comprehensive Income for the period indicated:

(dollars in thousands)

Operating leases (1)

Variable lease cost

Finance leases

Amortization of leased assets

Interest on lease liabilities

Sublease revenue (2)

Lease costs, net (3)

CONSOLIDATED INCOME STATEMENT CLASSIFICATION

FISCAL YEAR

2019

Other restaurant operating

Depreciation and amortization

Interest expense, net

Franchise and other revenues

181,397

3,504

1,400

264

(6,542)

180,023

________________
(1)

(2)
(3)

Excludes rent expense for office facilities and Company-owned closed or subleased properties for 2019 of $14.6 million, which is included in General and
administrative expense and certain supply chain related rent expenses of $1.3 million, which is included in Cost of sales.
Excludes rental income from Company-owned properties for the fiscal year ended December 29, 2019 of $2.2 million.
During 2018 and 2017, the Company recorded rent expense of $185.4 million and $188.2 million, including variable rent expense of $4.5 million and $4.3 million,
and sublease revenue of $5.6 million and $4.5 million, respectively.

As of December 29, 2019, future minimum lease payments and sublease revenues under non-cancelable leases are as follows:

(dollars in thousands)

2020 (1)

2021

2022

2023

2024

Thereafter

Total minimum lease payments (receipts) (2)

Less: Interest

Present value of future lease payments

OPERATING
LEASES

FINANCE
LEASES

SUBLEASE
REVENUES

179,168 $

1,412 $

193,102

188,752

185,238

179,673

1,717,709

2,643,642 $

(1,192,725)

1,450,917 $

898

185

—

2,495 $

(187)

2,308

(6,191)

(6,232)

(6,131)

(6,012)

(5,856)

(63,512)

(93,934)

____________________
(1)
(2)

Net of operating lease prepaid rent of $14.7 million.
Includes $1.0 billion related to lease renewal options that are reasonably certain of exercise and excludes $111.9 million of signed operating leases that have not yet
commenced.

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

Weighted-average remaining lease term (1):

Operating leases

Finance leases

Weighted-average discount rate (2):

Operating leases

Finance leases

____________________
(1)
(2)

Includes lease renewal options that are reasonably certain of exercise.
Based on the Company’s incremental borrowing rate at lease commencement.

DECEMBER 29, 2019

14.5 years

1.8 years

8.52%

9.01%

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following table is a summary of other impacts to the Company’s consolidated financial statements related to its leases for the period
indicated:

(dollars in thousands)

Cash flows from operating activities:

FISCAL YEAR
2019

Cash paid for amounts included in the measurement of operating lease liabilities

191,855

Properties Leased to Third Parties - The Company leases certain owned land and buildings to third parties, generally related to closed or
refranchised restaurants. The following table is a summary of assets leased to third parties as of the period indicated:

(dollars in thousands)

Land

Buildings

Less: accumulated depreciation

Buildings, net

DECEMBER 29, 2019

9,885

12,823

(6,400)

6,423

Sale-leaseback Transactions - The following is a summary of sale-leaseback transactions with third-parties for the periods indicated:

(dollars in thousands)

Gross proceeds from sale-leaseback transactions

Number of restaurant properties sold and leased back

18. Fair Value Measurements

FISCAL YEAR

2019

2018

2017

7,337 $

17,294 $

108,010

Fair Value Measurements on a Recurring Basis - The following table summarizes the Company’s financial assets and liabilities measured at
fair value by hierarchy level on a recurring basis as of the periods indicated:

(dollars in thousands)

Assets:

Cash equivalents:

Fixed income funds

Money market funds

Other current assets, net:

Derivative instruments - interest rate swaps

Total asset recurring fair value measurements

Liabilities:

Accrued and other current liabilities:

Derivative instruments - interest rate swaps

Other long-term liabilities:

Derivative instruments - interest rate swaps

Total liability recurring fair value measurements

DECEMBER 29, 2019

DECEMBER 30, 2018

TOTAL

LEVEL 1

LEVEL 2

TOTAL

LEVEL 1

LEVEL 2

1,037 $

12,752

—

13,789 $

— $

—

— $

627 $

17,827

765

—

19,219 $

18,454 $

—

765

7,174 $

— $

7,174 $

1,393 $

— $

1,393

16,835

24,009 $

—

— $

16,835

9,723

24,009 $

11,116 $

—

— $

9,723

11,116

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

FINANCIAL INSTRUMENT

METHODS AND ASSUMPTIONS

Fixed income funds and
Money market funds

Derivative instruments

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

The Company’s derivative instruments include interest rate swaps. Fair value measurements are based on the contractual terms of the
derivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the
expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads. The Company also
considers its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. As of
December 29, 2019 and December 30, 2018, the Company has determined that the credit valuation adjustments are not significant to the
overall valuation of its derivatives.

Fair Value Measurements on a Nonrecurring Basis - Assets and liabilities that are measured at fair value on a nonrecurring basis relate
primarily to property, fixtures and equipment, operating lease right-of-use assets, goodwill and other intangible assets, which are remeasured
when carrying value exceeds fair value. Carrying value after impairment approximates fair value. The following table summarizes the
Company’s assets measured at fair value by hierarchy level on a nonrecurring basis, for the periods indicated:

(dollars in thousands)

Assets held for sale (1)

Operating lease right-of-use assets (2)

Property, fixtures and equipment (3)

Other (4)

2019

2018

2017

CARRYING
VALUE

TOTAL
IMPAIRMENT

CARRYING
VALUE

TOTAL
IMPAIRMENT

CARRYING
VALUE

TOTAL
IMPAIRMENT

2,049 $

315 $

8,590 $

5,276 $

6,597

3,915

—

4,284

4,535

—

6,464

—

21,523

—

870 $

—

19,222

—

12,561 $

9,134 $

15,054 $

26,799 $

20,092 $

467

—

23,539

1,444

25,450

________________
(1)

(2)

(3)

(4)

All assets are measured using third-party market appraisals or executed sales contracts (Level 2). Refer to Note 4 - Disposals for discussion of impairments related to
Carrabba’s Italian Grill in 2018.
Carrying values for Operating lease right-of-use assets measured using Level 3 inputs to estimate fair value totaled $6.4 million for 2019. Third-party market
appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate the fair value.
Carrying values for Property, fixtures and equipment measured using Level 3 inputs to estimate fair value totaled $1.6 million and $1.9 million for 2019 and 2018,
respectively. Carrying values for Property, fixtures and equipment measured using level 2 inputs to estimate fair value totaled $2.3 million, $4.6 million and $19.2
million for 2019, 2018 and 2017, respectively. Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate the fair
value. Refer to Note 5 - Impairments and Exit Costs for a more detailed discussion of impairments.
Other primarily includes goodwill related to the Company’s China subsidiary within the international segment in 2017. All assets 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 29, 2019 and December 30, 2018
consist of cash equivalents, accounts receivable, accounts payable and current and long-term debt. The fair values of cash equivalents, accounts
receivable and accounts payable approximate their carrying amounts reported on its Consolidated Balance Sheets due to their short duration.

Debt is carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The following table includes
the carrying value and fair value of the Company’s debt by hierarchy level as of the periods indicated:

(dollars in thousands)

Senior Secured Credit Facility:

Term loan A

Revolving credit facility

DECEMBER 29, 2019

DECEMBER 30, 2018

CARRYING VALUE

LEVEL 2

FAIR VALUE

CARRYING
VALUE

FAIR VALUE

LEVEL 2

450,000 $

599,000 $

450,563 $

599,000 $

475,000 $

599,500 $

464,906

590,508

Table of Contents

19. Income Taxes

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(dollars in thousands)
Domestic

Foreign

FISCAL YEAR

2019

2018

2017

129,826 $

11,864

141,690 $

109,965 $

(9,660)

100,305 $

112,226

(1,089)

111,137

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

(dollars in thousands)
Current provision:

Federal

State

Foreign

Deferred (benefit) provision:

Federal

State

Foreign

FISCAL YEAR

2019

2018

2017

13,265 $

11,089 $

9,696

10,502

33,463

(21,407)

(1,986)

(2,497)

(25,890)

6,763

2,405

20,257

(28,772)

(1,335)

617

(29,490)

Provision (benefit) for income taxes

7,573 $

(9,233) $

18,384

8,155

9,041

35,580

(24,248)

(3,850)

(28,051)

7,529

Effective Income Tax Rate - The reconciliation of income taxes calculated at the United States federal tax statutory rate to the Company’s
effective income tax rate is as follows for the periods indicated:

Income taxes at federal statutory rate

State and local income taxes, net of federal benefit

Employment-related credits, net

Net changes in deferred tax valuation allowances

Net life insurance (benefit) expense

Enhanced charitable contributions deduction

Noncontrolling interests

Excess tax benefits from stock-based compensation arrangements

Nondeductible expenses

Foreign tax rate differential

Domestic manufacturing deduction

Cumulative effect of the Tax Act

Other, net

Total

FISCAL YEAR

2019

2018

2017

21.0 %

4.4

(24.7)

(1.6)

(0.7)

(0.6)

(0.3)

3.9

3.2

—

1.3

5.3 %

21.0 %

5.5

(34.6)

3.9

0.6

(1.3)

(0.9)

(7.1)

5.0

(0.7)

(0.3)

0.2

(0.5)

35.0 %

2.2

(27.2)

3.3

(0.7)

(1.7)

(1.4)

(2.2)

3.6

1.7

(4.6)

(3.3)

2.1

(9.2)%

6.8 %

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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. federal corporate
tax rate from 35% to 21% as part of the Tax Cuts and Jobs Act (the “Tax Act”). The remaining decrease was primarily due to employment-
related credits being a higher percentage of net income in 2018 and excess tax benefits from equity-based compensation arrangements recorded
in 2018. These decreases were partially offset by the domestic manufacturing deduction and the cumulative effect of the Tax Act recorded in
2017.

Deferred Tax Assets and Liabilities - The income tax effects of temporary differences that give rise to significant portions of deferred income
tax assets and liabilities are as follows as of the periods indicated:

(dollars in thousands)
Deferred income tax assets:

Operating lease liabilities

Deferred rent

Insurance reserves

Unearned revenue

Deferred compensation

Net operating loss carryforwards

Federal tax credit carryforwards

Partner deposits and accrued partner obligations

Other, net

Gross deferred income tax assets

Less: valuation allowance

Net deferred income tax assets

Deferred income tax liabilities:

Less: operating lease right-of-use asset basis differences

Less: property, fixtures and equipment basis differences

Less: intangible asset basis differences

Net deferred income tax assets

DECEMBER 29,
2019

DECEMBER 30,
2018

378,518 $

—

13,722

22,230

27,222

9,876

115,273

4,449

13,706

584,996

(14,922)

570,074

(326,166)

(65,404)

(118,855)

59,649 $

—

42,550

14,232

12,590

30,864

10,279

99,591

4,389

17,885

232,380

(17,535)

214,845

—

(19,445)

(117,200)

78,200

The net change in deferred tax valuation allowance in 2019 was primarily attributable to changes in tax rates and the expiration of net operating
loss carryforwards in certain foreign jurisdictions with full valuation allowances recorded. These decreases were partially offset by an increase
in the valuation allowances in certain foreign jurisdictions where the realization of deferred tax assets does not meet the more likely than not to
be realized threshold.

Undistributed Earnings - As of December 29, 2019, the Company had aggregate accumulated foreign earnings of approximately $84.4 million.
This amount consisted primarily of historical earnings from 2017 and prior that were previously taxed in the U.S. under the Tax Act and post-
2017 foreign earnings, which the Company may repatriate to the U.S. without additional material U.S. federal income taxes. These amounts are
no longer considered indefinitely reinvested in the Company’s foreign subsidiaries.

As of December 29, 2019, the Company maintained a deferred tax liability for state income taxes on historical earnings of $0.2 million. The
Company has not recorded a deferred tax liability on the financial statement carrying amount over the tax basis of its investments in foreign
subsidiaries because the Company continues to assert that it is indefinitely reinvested in its underlying investments in foreign subsidiaries. The
determination of any unrecorded deferred tax liability on this amount in not practicable due to the uncertainty of how these investments would
be recovered.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Tax Carryforwards - The amount and expiration dates of tax loss carryforwards and credit carryforwards as of December 29, 2019 are as
follows:

(dollars in thousands)

Federal tax credit carryforwards

Foreign loss carryforwards

Foreign tax credit carryforwards

EXPIRATION DATE

AMOUNT

2026 - 2039

2020 -

Indefinite

131,201

41,406

809

As of December 29, 2019, the Company had $128.6 million in general business tax credit carryforwards, which have a 20-year carryforward
period and are utilized on a first-in, first-out basis. The Company currently expects to utilize all of these tax credit carryforwards within a four
to six year period. However, the Company’s ability to utilize these tax credits could be adversely impacted by, among other items, a future
“ownership change” as defined under Section 382 of the Internal Revenue Code.

The Company anticipates generating additional business tax credits in future years. The amount of business tax credits expected to be generated
in 2020 is approximately $40 million to $45 million.

Unrecognized Tax Benefits - As of December 29, 2019 and December 30, 2018, the liability for unrecognized tax benefits was $27.2 million
and $25.2 million, respectively. Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $27.0 million and
$25.0 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:

(dollars in thousands)

Balance as of beginning of year

Additions for tax positions taken during a prior period

Reductions for tax positions taken during a prior period

Additions for tax positions taken during the current period

Settlements with taxing authorities

Lapses in the applicable statutes of limitations

Translation adjustments

Balance as of end of year

FISCAL YEAR

2019

2018

2017

25,190 $

23,663 $

869

(255)

2,237

(44)

(749)

(47)

2,461

(826)

2,017

(682)

(1,390)

(53)

27,201 $

25,190 $

19,583

4,149

(1,009)

1,822

—

(945)

23,663

The Company had approximately $1.9 million and $1.5 million accrued for the payment of interest and penalties as of December 29, 2019 and
December 30, 2018, respectively. The Company recognized immaterial interest and penalties related to uncertain tax positions in the Provision
(benefit) for income taxes, for all periods presented.

In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by relevant taxable authorities.
Based on the outcome of these examinations, or a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably
possible that the related recorded unrecognized tax benefits for tax positions taken on previously filed tax returns will change by approximately
$2.0 million to $3.0 million within the next twelve months.

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Open Tax Years - Following is a summary of the open audit years by jurisdiction as of December 29, 2019:

United States - federal

United States - state

Foreign

20. Commitments and Contingencies

OPEN AUDIT YEARS

2007 - 2018

2001 - 2018

2013 - 2018

Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases have varying
terms, the latest of which expires in 2032. As of December 29, 2019, the undiscounted payments the Company could be required to make in the
event of non-payment by the primary lessees was approximately $31.2 million. The present value of these potential payments discounted at the
Company’s incremental borrowing rate as of December 29, 2019 was approximately $24.7 million. In the event of default, the indemnity
clauses in the Company’s purchase and sale agreements govern its ability to pursue and recover damages incurred. As of December 29, 2019,
the Company recorded a contingent lease liability of $0.8 million.

Purchase Obligations - Purchase obligations were $312.0 million and $364.3 million as of December 29, 2019 and December 30, 2018,
respectively. These purchase obligations are primarily due within five years, however, commitments with various vendors extend through
January 2028. Outstanding commitments consist primarily of food and beverage products related to normal business operations, advertising,
restaurant-level service contracts and technology. In 2019, the Company purchased approximately 95% of its U.S. beef raw materials from four
beef suppliers that represent more than 80% of the total beef marketplace in the U.S.

Litigation and Other Matters - In relation to various legal matters, the Company had $3.0 million and $2.8 million of liability recorded as of
December 29, 2019 and December 30, 2018, respectively. During 2019, 2018 and 2017, the Company recognized $1.3 million, $1.6 million
and $1.2 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of Operations 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 other
employment-related litigation, which arise in the ordinary course of business and are generally covered by insurance if they exceed specified
retention or deductible amounts. In the opinion of management, the amount of ultimate liability with respect to those actions will not have a
material adverse impact on the Company’s financial position or results of operations and cash flows.

Insurance - As of December 29, 2019, the future undiscounted payments the Company expects for workers’ compensation, general liability and
health insurance claims are:

(dollars in thousands)
2020

2021

2022

2023

2024

Thereafter

20,468

11,316

7,341

4,216

2,392

11,220

56,953

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The following is a reconciliation of the expected aggregate undiscounted reserves to the discounted reserves for insurance claims recognized on
the Company’s Consolidated Balance Sheets as of the periods indicated:

(dollars in thousands)

Undiscounted reserves

Discount (1)

Discounted reserves

Discounted reserves recognized in the Company’s Consolidated Balance Sheets:

Accrued and other current liabilities

Other long-term liabilities, net

DECEMBER 29,
2019

DECEMBER 30,
2018

56,953 $

(2,635)

54,318 $

20,500 $

33,818

54,318 $

60,473

(4,647)

55,826

22,055

33,771

55,826

____________________
(1)

Discount rates of 1.61% and 2.77% were used for December 29, 2019 and December 30, 2018, respectively.

21. Segment Reporting

The Company considers its restaurant concepts and international markets as operating segments, which reflects how the Company manages its
business, reviews operating performance and allocates resources. Resources are allocated and performance is assessed by the Company’s Chief
Executive Officer, whom the Company has determined to be its Chief Operating Decision Maker. The Company aggregates its operating
segments into two reportable segments, U.S. and international. The U.S. segment includes all restaurants operating in the U.S. while restaurants
operating outside the U.S. are included in the international segment.

The following is a summary of reporting segments as of December 29, 2019:

REPORTABLE SEGMENT (1)

U.S.

CONCEPT
Outback Steakhouse

Carrabba’s Italian Grill

Bonefish Grill

International

Outback Steakhouse

Carrabba’s Italian Grill (Abbraccio)

Fleming’s Prime Steakhouse & Wine Bar

_________________
(1)

Includes franchise locations.

GEOGRAPHIC LOCATION

United States of America

Brazil, Hong Kong/China

Brazil

Segment accounting policies are the same as those described in Note 2 - Summary of Significant Accounting Policies. Revenues for all
segments include only transactions with customers and exclude intersegment revenues. Excluded from Income from operations for U.S. and
international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based compensation
expenses and certain bonus expenses.

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

(dollars in thousands)

Total revenues

U.S.

International

Total revenues

FISCAL YEAR

2019

2018

2017

3,687,918 $

3,687,239 $

451,471

439,174

4,139,389 $

4,126,413 $

3,760,867

462,269

4,223,136

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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

(dollars in thousands)

Segment income from operations

U.S.

International

Total segment income from operations

Unallocated corporate operating expense

Total income from operations

Loss on extinguishment and modification of debt

Other (expense) income, net

Interest expense, net

FISCAL YEAR

2019

2018

2017

311,666 $

288,959 $

44,428

356,094

(165,004)

191,090

—

(143)

(49,257)

141,690 $

22,001

310,960

(165,707)

145,253

—

(11)

(44,937)

100,305 $

289,971

28,798

318,769

(180,083)

138,686

(1,069)

14,912

(41,392)

111,137

Income before provision (benefit) for income taxes

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

(dollars in thousands)

Depreciation and amortization

U.S.

International

Corporate

Total depreciation and amortization

FISCAL YEAR

2019

2018

2017

152,881 $

158,307 $

27,491

16,439

26,304

16,982

196,811 $

201,593 $

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

(dollars in thousands)

Capital expenditures

U.S.

International

Corporate

Total capital expenditures

FISCAL YEAR

2019

2018

2017

121,646 $

162,207 $

28,496

8,885

36,962

11,754

159,027 $

210,923 $

149,976

27,796

14,510

192,282

209,260

33,302

13,280

255,842

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

(dollars in thousands)

Assets

U.S.

International

Corporate

Total assets

DECEMBER 29, 2019

DECEMBER 30, 2018

2,941,831 $

462,308

188,544

3,592,683 $

1,841,482

401,557

221,735

2,464,774

Table of Contents

BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Geographic areas — International assets are defined as assets residing in a country other than the U.S. The following table details long-lived
assets, excluding goodwill, operating lease right-of-use assets, intangible assets and deferred tax assets, by major geographic area as of the
periods indicated:

(dollars in thousands)

U.S.

International

Brazil

Other

Total assets

DECEMBER 29, 2019

DECEMBER 30, 2018

1,023,146 $

1,107,679

113,795

16,246

1,153,187 $

115,560

13,663

1,236,902

International revenues are defined as revenues generated from restaurant sales originating in a country other than the U.S. The following table
details Total revenues by major geographic area for the periods indicated:

(dollars in thousands)

U.S.

International

Brazil

Other

Total revenues

22. Selected Quarterly Financial Data (Unaudited)

2019 FISCAL QUARTERS
(dollars in thousands, except per share data)

Total revenues

Income from operations

Net income

Net income attributable to Bloomin’ Brands

Earnings per share:

Basic

Diluted

2018 FISCAL QUARTERS
(dollars in thousands, except per share data)

Total revenues

Income from operations

Net income

Net income attributable to Bloomin’ Brands

Earnings per share:

Basic

Diluted

FISCAL YEAR

2019
3,687,918 $

2018
3,687,239 $

2017

3,760,867

393,700

57,771

376,317

62,857

410,249

52,020

4,139,389 $

4,126,413 $

4,223,136

FIRST (1)

SECOND (1)

THIRD (1)

FOURTH (1)

1,128,131 $

1,021,930 $

967,144 $

1,022,184

82,494

65,649

64,300

0.70 $

0.69 $

43,460

29,809

29,021

0.32 $

21,958

9,373

9,248

0.11 $

43,178

29,286

28,004

0.32

FIRST (2)

SECOND (2)

THIRD (2)

FOURTH (2)

1,116,465 $

1,031,814 $

965,021 $

1,013,113

78,371

66,137

65,398

0.71 $

0.68 $

32,924

26,723

26,721

0.29 $

0.28 $

12,537

4,253

4,072

0.04 $

21,421

12,425

10,907

0.12

____________________
(1)

Income from operations in the first, second, third and fourth quarters include expense of $6.0 million, $3.7 million, $3.9 million and $4.0 million, respectively, for
impairments, closing costs and severance related to certain restructuring activities and the relocation of certain restaurants. Income from operations in the third and
fourth quarters also include $3.8 million of gains related to the sale of certain surplus properties and $6.0 million of benefit from the recognition of certain value-
added tax credits in Brazil, respectively.
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, for
impairments, closing costs and severance related to certain restructuring activities and the relocation of certain restaurants.

(2)

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BLOOMIN’ BRANDS, INC.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us
in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported
within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial 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 Officer concluded that our disclosure controls
and procedures were effective as of December 29, 2019.

Management’s Annual Report on Internal Control over Financial Reporting

Management’s report on our internal control over financial reporting and the attestation report of PricewaterhouseCoopers LLP, our
independent registered certified public accounting firm, on our internal control over financial reporting are included in Item 8, Financial
Statements and Supplementary Data, of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during our most recent quarter ended December 29, 2019 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

101

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PART III

BLOOMIN’ BRANDS, INC.

Item 10. Directors, Executive Officers and Corporate Governance

The 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 Proxy Statement for the
2020 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 “Information About Our Executive
Officers” 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 the caption
“Ownership of Securities—Delinquent Section 16(a) Reports” in our Definitive Proxy Statement and is incorporated 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 of Ethics is
available on our website, free of charge. The Internet address for our website is www.bloominbrands.com, and the Business Conduct and Code
of Ethics may be found on our main webpage by clicking first on “Investors” and then on “Governance—Governance Documents” 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 provision of this
code of ethics by posting such information on our website, on the webpage found by clicking through to “Code of Business Conduct 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 of Directors
—Board Committees and Meetings” in our Definitive Proxy Statement and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by this item will be included under the captions “Proposal No. 1: Election of Directors—Director Compensation” and
“Executive Compensation and Related Information” in our Definitive Proxy Statement and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item will be included under the caption “Ownership of Securities” in our Definitive Proxy Statement and 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 Independence

The information required by this item relating to transactions with related persons will be included under the caption “Certain Relationships and
Related Party Transactions,” and the information required by this item relating to director independence will be included under the caption
“Proposal No. 1: Election of Directors—Independent Directors,” in each case in our Definitive Proxy Statement, and is incorporated herein by
reference.

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BLOOMIN’ BRANDS, INC.

Item 14. Principal Accounting Fees and Services

The information required by this item will be included under the captions “Proposal No. 2: Ratification of Independent Registered Certified
Public Accounting Firm—Principal Accountant Fees and Services” and “—Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Auditor” in our Definitive Proxy Statement and is incorporated herein by reference.

103

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PART IV

BLOOMIN’ BRANDS, INC.

Item 15. Exhibits and Financial Statement Schedules.

(a)(1) LISTING OF FINANCIAL STATEMENTS

The following consolidated financial statements of the Company and subsidiaries are included in Item 8 of this Report:

• Consolidated Balance Sheets – December 29, 2019 and December 30, 2018
• Consolidated Statements of Operations and Comprehensive Income – Fiscal years 2019, 2018, and 2017
• Consolidated Statements of Changes in Stockholders’ Equity – Fiscal years 2019, 2018, and 2017
• Consolidated Statements of Cash Flows – Fiscal years 2019, 2018, and 2017
• Notes to Consolidated Financial Statements

(a)(2) FINANCIAL STATEMENT SCHEDULES

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to
require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto
included in this Report.

(a)(3) EXHIBITS

EXHIBIT
NUMBER

DESCRIPTION OF EXHIBITS

3.1

3.2

4.1

Second Amended and Restated Certificate of Incorporation of Bloomin’ Brands,
Inc.

Third Amended and Restated Bylaws of Bloomin’ Brands, Inc.

Form of Common Stock Certificate

FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE

Registration Statement on Form S-8, File
No. 333-183270, filed on August 13, 2012,
Exhibit 4.1

December 7, 2018 Form 8-K, Exhibit 3.1

Amendment No. 4 to Registration
Statement on Form S-1, File No. 333-
180615, filed on July 18, 2012, Exhibit 4.1

4.2

Description of Common Stock

Filed herewith

10.1

10.2

10.3

Credit Agreement dated as of November 30, 2017, among Bloomin’ Brands, Inc.,
OSI Restaurant Partners, LLC, the lenders party thereto, and Wells Fargo Bank,
National Association, as administrative agent

December 31, 2017 Form 10-K, Exhibit
10.38

Royalty Agreement dated April 1995 among Carrabba’s Italian Grill, Inc.,
Outback Steakhouse, Inc., Mangia Beve, Inc., Carrabba, Inc., Carrabba Woodway,
Inc., John C. Carrabba, III, Damian C. Mandola, and John C. Carrabba, Jr., as
amended by First Amendment to Royalty Agreement dated January 1997 and
Second Amendment to Royalty Agreement made and entered 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, and John C. Carrabba, Jr.

Third Amendment to Royalty Agreement made and entered into effective June 1,
2014, 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, and John C. Carrabba, Jr.

104

Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.6

June 29, 2014 Form 10-Q, Exhibit 10.6

Table of Contents

EXHIBIT
NUMBER

10.4

10.5

BLOOMIN’ BRANDS, INC.

DESCRIPTION OF EXHIBITS

Fourth Amendment to Royalty Agreement made and entered into effective May 1,
2017, 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, and John C. Carrabba, Jr.

FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE

June 25, 2017 Form 10-Q, Exhibit 10.1

Amended and Restated Operating Agreement for OSI/Fleming’s, LLC made as of
June 4, 2010 by and among OS Prime, LLC, a wholly-owned subsidiary of OSI
Restaurant Partners, LLC, FPSH Limited Partnership and AWA III Steakhouses,
Inc.

Registration Statement on Form S-1, File
No. 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

10.7*

OSI Restaurant Partners, LLC HCE Deferred Compensation Plan effective
October 1, 2007

10.8*

Kangaroo Holdings, Inc. 2007 Equity Incentive Plan, as amended

10.9*

Form of Option Agreement for Options under the Kangaroo Holdings, Inc. 2007
Equity Incentive Plan

10.10*

Bloomin’ Brands, Inc. 2012 Incentive Award Plan

December 31, 2013 Form 10-K, Exhibit
10.28

Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.46

Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.1

Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.42

Amendment No. 4 to Registration
Statement on Form S-1, File No. 333-
180615, filed on July 18, 2012, Exhibit
10.2

10.11*

10.12*

10.13*

10.14*

10.15*

10.16*

10.17*

Form of Nonqualified Stock Option Award Agreement for options granted under
the Bloomin’ Brands, Inc. 2012 Incentive Award Plan

December 7, 2012 Form 8-K, Exhibit 10.2

Form of Restricted Stock Award Agreement for restricted stock granted to
directors under the Bloomin’ Brands, Inc. 2012 Incentive Award Plan

December 7, 2012 Form 8-K, Exhibit 10.3

Form of Restricted Stock Award Agreement for restricted stock granted to
employees and consultants under the Bloomin’ Brands, Inc. 2012 Incentive Award
Plan

December 7, 2012 Form 8-K, Exhibit 10.4

Form of Restricted Stock Unit Award Agreement for restricted stock granted to
directors under the Bloomin’ Brands, Inc. 2012 Incentive Award Plan

September 30, 2013 Form 10-Q, Exhibit
10.1

Form of Restricted Stock Unit Award Agreement for restricted stock granted to
employees and consultants under the Bloomin’ Brands, Inc. 2012 Incentive Award
Plan

September 30, 2013 Form 10-Q, Exhibit
10.2

Form of Performance Unit Award Agreement for performance units granted under
the Bloomin’ Brands, Inc. 2012 Incentive Award Plan

December 7, 2012 Form 8-K, Exhibit 10.5

Form of Bloomin’ Brands, Inc. Indemnification Agreement by and between
Bloomin’ Brands, Inc. and each member of its Board of Directors and each of its
executive officers

Amendment No. 4 to Registration
Statement on Form S-1, File No. 333-
180615, filed on July 18, 2012, Exhibit
10.39

10.18*

Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan

March 11, 2016 Definitive Proxy Statement

105

Table of Contents

EXHIBIT
NUMBER

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

BLOOMIN’ BRANDS, INC.

DESCRIPTION OF EXHIBITS

Form of Nonqualified Stock Option Award Agreement for options granted to
executive management under the Bloomin’ Brands, Inc. 2016 Omnibus Incentive
Compensation Plan

Form of Restricted Stock Unit Award Agreement for restricted stock granted to
directors under the Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation
Plan

Form of Restricted Stock Unit Award Agreement for restricted stock granted to
executive management under the Bloomin’ Brands, Inc. 2016 Omnibus Incentive
Compensation Plan

FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE

June 26, 2016 Form 10-Q, Exhibit 10.2

June 26, 2016 Form 10-Q, Exhibit 10.3

June 26, 2016 Form 10-Q, Exhibit 10.4

Form of Performance Award Agreement for performance units granted under the
Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan

June 26, 2016 Form 10-Q, Exhibit 10.5

Form of Restricted Cash Award Agreement for cash awards granted under the
Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan

March 26, 2017 Form 10-Q, Exhibit 10.1

Bloomin’ Brands, Inc. Executive Change in Control Plan, effective December 6,
2012

December 7, 2012 Form 8-K, Exhibit 10.1

10.25*

Option Agreement, dated July 1, 2011, by and between Kangaroo Holdings, Inc.
and Elizabeth A. Smith

Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.41

March 31, 2019 Form 10-Q, Exhibit 10.2

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

10.32*

10.33*

10.34*

10.35*

Second Amended and Restated Employment Agreement, effective April 1, 2019,
by and between Elizabeth A. Smith and Bloomin’ Brands, Inc.

Amended and Restated Officer Employment Agreement, effective April 1, 2019,
by and between David J. Deno and Bloomin’ Brands, Inc.

March 31, 2019 Form 10-Q, Exhibit 10.3

Amended and Restated Employment Agreement dated June 14, 2007, between
Joseph J. Kadow and OSI Restaurant Partners, LLC, as amended on January 1,
2009, June 12, 2009, December 30, 2010 and December 16, 2011

Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.29

Split-Dollar Agreement dated August 12, 2008 and effective March 30, 2006, by
and between OSI Restaurant Partners, LLC (formerly known as Outback
Steakhouse, Inc.) and Joseph J. Kadow

Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.48

Separation Agreement, dated as of July 31, 2019, by and between Joseph J.
Kadow and OSI Restaurant Partners, LLC

June 30, 2019 Form 10-Q, Exhibit 10.5

Employment Offer Letter Agreement, dated as of July 30, 2014, between
Bloomin’ Brands, Inc. and Donagh Herlihy

December 28, 2014 Form 10-K, Exhibit
10.58

Employment Offer Letter Agreement, dated as of February 12, 2016, between
Bloomin’ Brands, Inc. and Michael Kappitt

March 27, 2016 Form 10-Q, Exhibit 10.3

Employment Offer Letter Agreement, dated as of July 29, 2016, between
Bloomin’ Brands, Inc. and Gregg Scarlett

September 25, 2016 Form 10-Q, Exhibit
10.2

Employment Offer Letter Agreement, dated as of January 15, 2019, between
Bloomin’ Brands, Inc. and Jeff Carcara

March 31, 2019 Form 10-Q, Exhibit 10.1

Employment Offer Letter Agreement, dated as of March 7, 2019, between
Bloomin’ Brands, Inc. and Christopher Meyer

March 31, 2019 Form 10-Q, Exhibit 10.4

106

Table of Contents

EXHIBIT
NUMBER

BLOOMIN’ BRANDS, INC.

DESCRIPTION OF EXHIBITS

FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE

Employment Offer Letter Agreement, dated as of May 1, 2019, between Michael
Stutts and Bloomin’ Brands, Inc.

June 30, 2019 Form 10-Q, Exhibit 10.3

Employment Offer Letter Agreement, dated as of May 1, 2019, between Kelly
Lefferts and Bloomin’ Brands, Inc.

June 30, 2019 Form 10-Q, Exhibit 10.4

10.36*

10.37*

10.38*

10.39*

10.40*

21.1

23.1

31.1

31.2

32.1

32.2

Severance Agreement, dated as of January 14, 2020, by and between Donagh H.
Herlihy and OS Management, Inc.

Filed herewith

Resignation Agreement, effective March 6, 2020, by and between Elizabeth A.
Smith and Bloomin’ Brands, Inc.

Filed herewith

Employment Offer Letter Agreement, dated as of February 14, 2020, between
Bloomin’ Brands, Inc. and Gregg Scarlett

Filed herewith

List of Subsidiaries

Consent of PricewaterhouseCoopers LLP

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

Filed herewith

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

Filed herewith

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

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 20021

Filed herewith

101.INS Inline XBRL Instance Document

101.SCH Inline XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in
Exhibit 101)

Filed herewith

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

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

Item 16. Form 10-K Summary

None.

107

Table of Contents

BLOOMIN’ BRANDS, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

Date:

February 26, 2020

Bloomin’ Brands, Inc.

By: /s/ David J. Deno

David J. Deno
Chief 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 on behalf of
the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ David J. Deno

David J. Deno

/s/ Christopher Meyer

Christopher Meyer

/s/ Wendy A. Beck

Wendy A. Beck

/s/ James R. Craigie

James R. Craigie

/s/ David R. Fitzjohn

David R. Fitzjohn

/s/ Tara Walpert Levy

Tara Walpert Levy

/s/ John J. Mahoney

John J. Mahoney

/s/ R. Michael Mohan

R. Michael Mohan

/s/ Elizabeth A. Smith

Elizabeth A. Smith

Chief Executive Officer and Director
(Principal Executive Officer)

Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Director

February 26, 2020

Chairman of the Board and Director

February 26, 2020

BLOOMIN’ BRANDS, INC.

DESCRIPTION OF COMMON STOCK

Exhibit 4.2

The following summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, our second amended and
restated certificate of incorporation (“certificate of incorporation”) and our third amended and restated bylaws (“bylaws”), which have been filed as exhibits
to our most recent Annual Report on Form 10-K. The information in this Exhibit 4.2 is provided as of February 26, 2020.

General

Our certificate of incorporation provides for authorized capital stock of 475,000,000 shares of common stock, par value $0.01 per share, and

25,000,000 shares of undesignated preferred stock.

Common Stock

Dividend Rights. Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of
common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as the Board of Directors may from time to time
determine.

Voting Rights. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of stockholders. Holders of shares

of our common stock do not have cumulative voting rights.

Preemptive Rights. Our common stock is not entitled to preemptive or other similar subscription rights to purchase any of our securities.

Conversion or Redemption Rights. Our common stock is neither convertible nor redeemable.

Liquidation Rights. Upon our liquidation, the holders of our common stock will be entitled to receive pro rata our assets that are legally available

for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding.

Listing. Our shares of common stock are listed on the Nasdaq Global Select Market under the symbol “BLMN.”

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws

Our certificate of incorporation and bylaws contain certain provisions that are intended to enhance the likelihood of continuity and stability in the
composition of our Board of Directors and that may have the effect of delaying, deferring or preventing a future takeover or change in control of the
Company unless that takeover or change in control is approved by our Board of Directors.

These provisions include:

Classified Board. Our certificate of incorporation provides that our Board of Directors be divided into three classes of directors, with the classes as
nearly equal in number as possible. As a result, approximately one-third of our Board of Directors will be elected each year. The classification of directors has
the effect of making it more difficult for stockholders to change the composition of our Board of Directors. In addition, because our Board of Directors is
classified, under Delaware General Corporation Law, directors may only be removed for cause. Our certificate of incorporation also provides that, subject to
any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors is to be fixed exclusively pursuant
to a resolution adopted by our Board of Directors.

Action by Written Consent; Special Meetings of Stockholders. Our certificate of incorporation provides that stockholder action can be taken only at
an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting. Our certificate of incorporation also provides that,
except as otherwise required by law, special meetings of the stockholders can be called only pursuant to a resolution adopted by a majority of the total number
of directors that the Company would have if there were no vacancies.

Advance Notice Procedures. Our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of
our stockholders, including proposed nominations of persons for election to the Board of Directors. Stockholders at an annual meeting are only able to
consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the Board of Directors or by a
stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely
written notice, in accordance with our bylaws, of the stockholder’s intention to bring that business before the meeting. Although the bylaws do not

give the Board of Directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted
at a special or annual meeting, the bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not
followed or may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to
obtain control of the Company.

Super Majority Approval Requirements. The Delaware General Corporation Law generally provides that the affirmative vote of a majority of the
outstanding stock entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless either a corporation’s
certificate of incorporation or bylaws require a greater percentage. Our certificate of incorporation and bylaws provide that the affirmative vote of holders of
at least 75% of the total votes entitled to vote in the election of directors is required to amend, alter, change or repeal our bylaws and specified provisions of
our certificate of incorporation. This requirement of a supermajority vote to approve amendments to our certificate of incorporation and bylaws could enable a
minority of our stockholders to exercise veto power over any such amendments.

Authorized but Unissued Shares. Our authorized but unissued shares of common stock and preferred stock are available for future issuance without
stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more
difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.

Business Combinations with Interested Stockholders. We have elected in our certificate of incorporation not to be subject to Section 203 of the
Delaware General Corporation Law, which generally prohibits a publicly held Delaware corporation from engaging in a business combination, such as a
merger, with a person or group owning 15% or more of the corporation’s voting stock, for a period of three years following the date the person became an
interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is
approved in a prescribed manner. Accordingly, we are not subject to any anti-takeover effects of Section 203. However, our certificate of incorporation
contains provisions that have the same effect as Section 203, except that they provide that our former sponsors (as defined in the certificate of incorporation)
and their respective affiliates will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and
accordingly will not be subject to such restrictions.

Limitations on Liability and Indemnification of Officers and Directors

Our certificate of incorporation limits the liability of our directors to the fullest extent permitted by the Delaware General Corporation Law, and our
bylaws provide that we will indemnify them to the fullest extent permitted by such law. We have entered into indemnification agreements with our current
directors and executive officers and expect to enter into a similar agreement with any new directors or executive officers. We also maintain customary
directors’ and officers’ liability insurance policies that provide coverage to our directors and officers against loss arising from claims made by reason of
breach of duty or other wrongful act and to us with respect to indemnification payments that we may make to directors and officers.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.

SEVERANCE AGREEMENT AND GENERAL RELEASE

Exhibit 10.38

THIS SEVERANCE AGREEMENT AND GENERAL RELEASE (hereinafter "Release") is made and entered into by and
between DONAGH M. HERLIHY (“Employee”) and OS MANAGEMENT, INC. (“Employer”). The parties desire to settle any
and all disputes between them on terms that are mutually agreeable. Accordingly, in consideration of the mutual promises set forth
below, Employer and Employee agree as follows:

Employer will provide Employee with good and valuable consideration as specified below in return for Employee’s
execution of this Release, which is intended to fully and finally resolve any and all matters between Employer and
Employee, whether actual or potential, on terms that are mutually agreeable.

By entering into this Release, Employer does not admit any underlying liability to Employee. Neither Employer nor
Employee is entering this Release because of any wrongful acts of any kind.

Employee promises and obligates himself to perform the following covenants under this Release:

a.)

b.)

Employee agrees his employment with Employer is severed effective January 26, 2020 (“Separation Date”).
However, Employee shall cease performing duties on Employee’s behalf as of January 14, 2020. Employee shall
remain reasonably available to Employer via telephone and e-mail through the Separation Date, for transfer of
knowledge.

Acting for himself, his heirs, personal representatives, administrators and anyone claiming by or through him or
them, Employee unconditionally and irrevocably releases, acquits and discharges Employer and its Releasees (as
defined below) from any and all Claims (as defined below) that Employee (or any person or entity claiming through
Employee) may have against Employer or its Releasees as of the date of this Release.

The phrases “Employer” or “Company” or “Employer and its Releasees” shall mean OS Management Inc.
and all of its direct and indirect parents, (including but not limited to Bloomin’ Brands, Inc. and OSI
Restaurant Partners, LLC), direct and indirect affiliates (including but not limited to Outback Steakhouse of
Florida, LLC, Bonefish Grill, LLC, Carrabba’s Italian Grill, LLC, OS Prime, LLC, OS Pacific, LLC,
DoorSide, LLC and OS Restaurant Services, LLC), and all of the past and present directors, officers,
partners, shareholders, supervisors, employees, representatives, successors, assigns, subsidiaries, parents, and
insurers of OS Management, Inc. and its parents and affiliates.

ii)

The term “Claims” shall include lawsuits, causes of action, liabilities, losses, damages, debts, demands,
controversies, agreements, duties, obligations, promises and rights of every kind. The term “Claims” shall

Page 1 of 10

Employee Initials: /s/ DH

include Claims arising from any source, including but not limited to contracts, statutes, regulations,
ordinances, codes, or the common law, including claims arising under the Civil Rights Act of 1964 (42
U.S.C. § 2000e et seq., as amended), the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.,
as amended), the Family Medical Leave Act of 1993 (29 U.S.C. § 2601, et seq., as amended), the Fair Labor
Standards Act of 1938 (29 U.S.C. 201 et seq., as amended), the Lilly Ledbetter Fair Pay Act of 2009 (Pub.L.
111-2, S. 181), the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq., as
amended), 42 U.S.C. § 1981, the Age Discrimination in Employment Act of 1967 (as amended), the
continuation coverage provisions of the Omnibus Budget Reconciliation Act of 1986 (29 U.S.C. § 623 et
seq., as amended), the Florida Civil Rights Act of 1992 (§ 760.01 et seq., Florida Statutes, as amended), and
all other federal, state, and local laws dealing with discrimination, retaliation, wages, leave, benefits, or
workplace policies, as well as claims for unpaid wages, unpaid commissions, breach of contract, wrongful
termination, retaliation, intentional infliction of emotional distress, negligent hiring, invasion of privacy,
defamation, slander, assault, battery, or any other tort arising out of or connected in any way to the
employment relationship. The term “Claims” shall include injuries or damage of any nature, regardless of
whether such injuries or damage arise from accident, illness, occupational disease, negligence, intentional
act, or some other origin. The term “Claims” specifically includes third-party claims for indemnity or
contribution against Employer or its Releasees. The term “Claims” shall be construed to include any and all
Claims meeting the definitions in this subparagraph without regard to whether those Claims are asserted or
unasserted, known or unknown, ripe or unripe, direct or indirect, conditional or unconditional.

c.)

d.)

Employee was granted the option to purchase 250,000 shares of the common stock of Bloomin’ Brands, Inc.
(formerly Kangaroo Holdings, Inc.) (the "2014 Options") pursuant to that certain Option Agreement with a grant
date of October 1, 2014 (the "2014 Option Agreement”). Employee agrees 187,000 of the 2014 Options were
previously vested and exercised. The remaining 62,500 of the 2014 Options are vested and unexercised and shall
remain vested and exercisable for 365 calendar days following the Separation Date. Employee agrees that as of
12:01 a.m. (Tampa time) on the 365th calendar day immediately following the Separation Date, the 2014 Option
Agreement is hereby cancelled, terminated and deemed null and void ab initio.

Employee was granted the option to purchase 26,471 shares of the common stock of Bloomin’ Brands, Inc.
(formerly Kangaroo Holdings, Inc.) (the "2015 Options") pursuant to that certain Option Agreement with a grant
date of February 26, 2015 (the "2015 Option Agreement”). Employee agrees all 26,471 shares of the 2015 Options
are vested and unexercised and shall remain vested and exercisable for 365 calendar days following the Separation
Date. Employee agrees that as of 12:01 a.m. (Tampa time) on the 365th calendar day immediately following the
Separation

Page 2 of 10

Employee Initials: /s/ DH

e.)

f.)

g.)

h.)

Date, the 2015 Option Agreement is hereby cancelled, terminated and deemed null and void ab initio.

Employee was granted the option to purchase 31,335 shares of the common stock of Bloomin’ Brands, Inc.
(formerly Kangaroo Holdings, Inc.) (the "2016 Options") pursuant to that certain Option Agreement with a grant
date of February 25, 2016 (the "2016 Option Agreement”). Employee agrees 15,667 shares of the 2016 Options
were previously vested and exercised. Employees agrees 7,834 shares of the 2016 Options are vested and
unexercised and shall remain vested and exercisable for 365 calendar days following the Separation Date. Employee
agrees the remaining 7,834 shares of the 2016 Options are unvested and hereby forfeited, cancelled, terminated and
deemed null and void ab initio. Employee agrees that as of 12:01 a.m. (Tampa time) on the 365th calendar day
immediately following the Separation Date, the 2016 Option Agreement is hereby cancelled, terminated and deemed
null and void ab initio.

Employee was granted the option to purchase 32,080 shares of the common stock of Bloomin’ Brands, Inc.
(formerly Kangaroo Holdings, Inc.) (the "2017 Options") pursuant to that certain Option Agreement with a grant
date of February 24, 2017 (the "2017 Option Agreement”). Employee agrees 8,020 shares of the 2017 Options were
previously vested and exercised. Employee agrees 8,020 shares of the 2017 Options are vested and unexercised and
shall remain vested and exercisable for 365 calendar days following the Separation Date. Employee agrees the
remaining 16,040 shares of the 2017 Options are unvested and hereby forfeited, cancelled, terminated and deemed
null and void ab initio. Employee agrees that as of 12:01 a.m. (Tampa time) on the 365th calendar day immediately
following the Separation Date, the 2017 Option Agreement is hereby cancelled, terminated and deemed null and
void ab initio.

Employee was granted the option to purchase 22,284 shares of the common stock of Bloomin’ Brands, Inc.
(formerly Kangaroo Holdings, Inc.) (the "2018 Options") pursuant to that certain Option Agreement with a grant
date of February 23, 2018 (the "2018 Option Agreement”). Employee agrees 5,571 shares of the 2018 Options are
vested and unexercised and shall remain vested and exercisable for 365 calendar days following the Separation Date.
Employee agrees the remaining 16,713 shares of the 2018 Options are unvested and hereby forfeited, cancelled,
terminated and deemed null and void ab initio. Employee agrees that as of 12:01 a.m. (Tampa time) on the 365th
calendar day immediately following the Separation Date, the 2018 Option Agreement is hereby cancelled,
terminated and deemed null and void ab initio.

Employee was granted the option to purchase 27,883 shares of the common stock of Bloomin’ Brands, Inc.
(formerly Kangaroo Holdings, Inc.) (the "2019 Options") pursuant to that certain Option Agreement with a grant
date of February 19, 2019 (the "2019 Option Agreement”). Employee agrees none of the 2019 Options are vested
and all are hereby forfeited, cancelled, terminated and deemed null and void

Page 3 of 10

Employee Initials: /s/ DH

i.)

j.)

k.)

l.)

m.)

ab initio. Employee agrees the 2019 Option Agreement is hereby cancelled, terminated and deemed null and void ab
initio.

Employee was awarded 13,442 Bloomin’ Brands, Inc. (formerly Kangaroo Holdings, Inc.) restricted stock units (the
"2016 Restricted Stock") pursuant to that certain Restricted Stock Agreement with a grant date of February 25, 2016
(the "2016 Restricted Stock Agreement"). Employee agrees 10,081 of the 2016 Restricted stock units were
previously vested and distributed. Employee agrees 3,361 of the 2016 Restricted stock units are unvested and hereby
forfeited, canceled, terminated and deemed null and void ab initio. The 2016 Restricted Stock Agreement is hereby
forfeited, cancelled, terminated and deemed null and void ab initio.

Employee was awarded 13,467 Bloomin’ Brands, Inc. (formerly Kangaroo Holdings, Inc.) restricted stock units (the
"2017 Restricted Stock") pursuant to that certain Restricted Stock Agreement with a grant date of February 24, 2017
(the "2017 Restricted Stock Agreement"). Employee agrees 6,733 of the 2017 Restricted stock units were previously
vested and distributed. Employee agrees 6,734 of the 2017 Restricted stock units are unvested and hereby forfeited,
canceled, terminated and deemed null and void ab initio. The February 2017 Restricted Stock Agreement is hereby
forfeited, cancelled, terminated and deemed null and void ab initio.

Employee was awarded 9,516 Bloomin’ Brands, Inc. (formerly Kangaroo Holdings, Inc.) restricted stock units (the
"2018 Restricted Stock") pursuant to that certain Restricted Stock Agreement with a grant date of February 23, 2018
(the "2018 Restricted Stock Agreement"). Employee agrees 2,379 of the 2018 Restricted stock units were previously
vested and distributed. Employee agrees 7,137 of the 2018 Restricted stock units are unvested and hereby forfeited,
canceled, terminated and deemed null and void ab initio. The February 2018 Restricted Stock Agreement is hereby
forfeited, cancelled, terminated and deemed null and void ab initio.

Employee was awarded 10,731 Bloomin’ Brands, Inc. (formerly Kangaroo Holdings, Inc.) restricted stock units (the
"2019 Restricted Stock") pursuant to that certain Restricted Stock Agreement with a grant date of February 19, 2019
(the "2019 Restricted Stock Agreement"). Employee agrees none of the 2019 Restricted stock units are vested and
all are hereby forfeited, canceled, terminated and deemed null and void ab initio. The February 2019 Restricted
Stock Agreement is hereby forfeited, cancelled, terminated and deemed null and void ab initio.

Employee was awarded 9,915 Bloomin’ Brands, Inc. (formerly Kangaroo Holdings, Inc.) Performance Share Units
awards (the "2017 Performance Share Units") pursuant to that certain Performance Share Units Agreement with a
grant date of February 24, 2017 (the "2017 Performance Share Units Agreement"). Employee agrees none of the
2017 Performance Share Units awards are vested and all are hereby forfeited, cancelled, terminated and deemed null
and void. The 2017

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Employee Initials: /s/ DH

n.)

o.)

p.)

q.)

Performance Share Units Agreement is hereby forfeited, cancelled, terminated and deemed null and void ab initio.

Employee was awarded 7,029 Bloomin’ Brands, Inc. (formerly Kangaroo Holdings, Inc.) Performance Share Units
awards (the "2018 Performance Share Units") pursuant to that certain Performance Share Units Agreement with a
grant date of February 23, 2018 (the "2018 Performance Share Units Agreement"). Employee agrees none of the
2018 Performance Share Units awards are vested and all are hereby forfeited, cancelled, terminated and deemed null
and void. The 2018 Performance Share Units Agreement is hereby forfeited, cancelled, terminated and deemed null
and void ab initio.

Employee was awarded 8,048 Bloomin’ Brands, Inc. (formerly Kangaroo Holdings, Inc.) Performance Share Units
awards (the "2019 Performance Share Units") pursuant to that certain Performance Share Units Agreement with a
grant date of February 19, 2019 (the "2019 Performance Share Units Agreement"). Employee agrees none of the
2019 Performance Share Units awards are vested and all are hereby forfeited, cancelled, terminated and deemed null
and void. The 2019 Performance Share Units Agreement is hereby forfeited, cancelled, terminated and deemed null
and void ab initio.

Employee waives and relinquishes any rights that Employee may have to claim reimbursement from Employer and
its Releasees for attorney’s fees, litigation costs or expenses that Employee may have incurred in the course of
obtaining legal advice on any matter related to Employer, except as otherwise expressly provided for herein.

Employee waives and disclaims any right to any damages, compensation, or other personal relief that may be
recovered at any time after the execution of this Release as a result of any proceeding arising out of or related to the
employment relationship that is brought under the jurisdiction or authority of the Equal Employment Opportunity
Commission ("EEOC"), the Florida Commission on Human Relations, the U.S. Department of Labor, or any other
local, state, or federal court or agency. If any such agency or court assumes jurisdiction of or files any complaint,
charge, or proceeding against Employer or its Releasees, Employee shall request such agency or court to dismiss or
withdraw from the matter. Notwithstanding any other term or provision of this Release, nothing in this Release is
intended or shall be construed to prohibit Employee, with or without notice to the Employer or Employer’s
Releasees, from filing a charge with, directly communicating with or participating in any investigation or proceeding
conducted by any local, state or federal agency regarding any possible law violation. Employee acknowledges and
agrees, however, that, except with respect to any award pursuant to Section 21F of the Securities Exchange Act of
1934, as amended, or any award administered by the U.S. Occupational Safety and Health Administration,
Employee waives any right to monetary damages, attorneys’ fees, costs and equitable remedies related to or arising
from any such charge, or ensuing complaint or lawsuit, filed by Employee or on Employee’s behalf.

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Employee Initials: /s/ DH

r.)

s.)

t.)

u.)

v.)

w.)

Employee agrees that he will preserve the confidentiality of this Release and not discuss or disclose its existence,
substance, or contents to anyone other than his spouse, attorney, accountant, or tax advisors, except as compelled or
authorized by law. Employee further agrees that he will not at any time, disclose, use, or communicate to any person
or entity, whether directly or indirectly, any Confidential Information obtained by the Employee during the term of
Employee's employment with Employer, unless (i) such disclosure or communication is compelled by law, or (ii)
Employee has received specific written authorization in advance from Employer prior to the disclosure, use, or
communication. Confidential Information shall mean any information regarding, affecting, or relating to the clients,
operations, or business of Employer that is treated as confidential by Employer and that is not generally known by or
otherwise available to third parties.

Employee agrees that he will not disparage Employer or its Releasees in any way to any person or entity.
Notwithstanding this provision, in the unlikely event that Employee is subpoenaed as part of a government entity’s
investigation of Employer, Employee may provide truthful information about his employment to the government
entity without violating this Release.

If Employee is asked to discuss the subjects prohibited by subparagraphs 3(r) and (s) above, Employee is authorized
to respond as follows:

I had a good relationship with Bloomin’ Brands, but my position was eliminated. I have no disputes with
Bloomin’ Brands.

For a two-year period commencing on the date Employee executes this Agreement, Employee shall not, individually
or jointly with others, offer employment to, or hire, any employee of Employer, their franchisees or affiliates, or
otherwise solicit or induce, directly or indirectly, any employee of Employer, their franchisees or affiliates to
terminate their employment. This prohibition on solicitation shall include but not be limited to any employee of
Employer or its affiliates assigned to Employer’s Restaurant Support Center in Tampa, Florida, except for non-
management personnel recruited through general solicitations in print or other media.

Employee agrees to submit all requests for reimbursement no later than two weeks after the Separation Date.
Employer reserves the right to deny requests for reimbursement made more than two weeks after the Separation
Date. Reimbursement eligibility will be determined consistent with Employer’s usual policies and procedures.

Employee agrees this Release shall serve as Employee’s resignation from any and all director, officer or other
positions Employee has held at any time for or on behalf of the Employer and/or Employer’s affiliates.

x.)

Employee shall comply with all other terms of this Release as provided for herein.

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Employee Initials: /s/ DH

As consideration for the promises made by Employee in this Release, Employer promises and obligates itself to perform the
following covenants under this Release:

a.)

b.)

c.)

d.)

e.)

Employer shall pay Employee a lump sum severance payment in the gross amount of $1,500,000, less legal
deductions and withholdings.

Employer shall pay Employee a lump sum of $16,500 to reimburse Employee for 12 months continuing coverage of
his benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).

As additional consideration for this Release, Employer will provide Employee with outplacement services with
Challenger, Gray & Christmas for a period of up to 12 months, to be used consecutively, beginning after the
expiration of the Revocation Period referenced in paragraph 6 below.

Employer will not contest any claim for unemployment benefits related to Employee’s employment with Employer
ended on the Separation Date.

Employer shall send the payments described in paragraphs 4(a) and 4(b) above to Employee’s home address within
10 days after the expiration of the Revocation Period referenced in paragraph 6 below.

f.)

Employer shall comply with all other terms of this Release as provided for herein.

Employee shall have a period of 21 calendar days (“the Consideration Period”) from the date he is presented with this
Release to consider the Release’s terms and consequences before executing the Release. Employee is not required to let the
full Consideration Period elapse before executing the Release; the Release may be executed on any date within the
Consideration Period.

Employee and Employer agree that Employee may revoke the Release for any reason at any time during the seven calendar
days immediately following Employee’s execution of the Release ("the Revocation Period"). To revoke this Release,
Employee must cause written notice of his intent to revoke this Release to be delivered to Pablo Brizi at Employer’s
Restaurant Support Center, 2202 N. Westshore Boulevard, 5th Floor, Tampa, FL 33607, within the Revocation Period. This
Release shall not become effective or enforceable until the Revocation Period has expired without such notice having been
delivered to Employer in the specified manner.

Employee agrees that each of the following statements is truthful and accurate:

a.)

b.)

c.)

Employee is of sound mind and body.

Employee has sufficient education and experience to make choices for himself that may affect his legal rights.

Employee has full legal capacity to make decisions for himself.

Page 7 of 10

Employee Initials: /s/ DH

d.)

e.)

f.)

g.)

h.)

Employee is aware that this Release has significant legal consequences.

Employee has been advised to consider consulting with an attorney of his choice prior to signing this Release.

Employee has decided to sign this Release of his own free will, and his decision to sign this Release has not been
unduly influenced or controlled by any mental or emotional impairment or condition.

Employee is not executing this Release because of any duress or coercion imposed on him by anyone.

Employee acknowledges that he has not compromised any claim for unpaid wages under the Fair Labor Standards
Act as he has received full compensation for all hours worked, at the appropriate rate of pay, and no other wages,
overtime, compensation, benefits, or other amounts are due and owing.

10.

Employee represents that he has not sold, transferred, or assigned to a third party any claims that he may have against
Employer and its Releasees. Employee represents that any claims that he may have against Employer and its Releasees are
unencumbered and otherwise within his power to dispose of. Employee represents that he does not have any pending
lawsuits, claims, or actions against Employer and its Releasees, or that if he does, he has fully disclosed such lawsuits,
claims, or actions to Employer prior to executing this Release. Employee further represents that he has not suffered any
injuries, illnesses, or accidents in the course of his employment other than those he has previously disclosed to Employer,
and that any previously disclosed injuries, illnesses, or accidents are included within the scope of the claims settled by this
Release.

Employee has returned all property of Employer and its affiliates in Employee’s possession, including but not limited to,
training materials, laptop computers, customer correspondence, sales information, company discount card and gift cards. All
such materials are the exclusive property of the Employer.

Commencing on the Separation Date, Employee shall not, individually or jointly with others, directly or indirectly, whether
for Employee’s own account or for any other person or entity, engage in or own or hold any ownership interest in any of the
following companies, or any franchisee of those companies: Brinker International, Cheesecake Factory, Chipotle Mexican
Grill, Cracker Barrel, Darden Restaurants, Dine Brands Global, Domino’s Pizza, Jack in the Box, Texas Roadhouse,
Wendy’s, YUM! Brands. Employee shall not act as an officer, director, employee, partner, independent contractor,
consultant, principal, agent, proprietor or in any other capacity for, nor lend any assistance (financial or otherwise) or
cooperation to, any of the aforementioned companies for a continuous period of twelve months. It shall not be a violation
for Employee to own a one percent (1%) or smaller interest in any corporation required to file periodic reports with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended or successor statute.

Page 8 of 10

Employee Initials: /s/ DH

11.

12.

13.

14.

15.

Employee shall not, individually or jointly with others, for the benefit of the Employee or any third party, publish, disclose,
use or authorize anyone else to publish, disclose or use any secret or confidential material or information relating to any
aspect of the business or operations of the Employer or any of its affiliates, including, without limitation, any secret or
confidential information relating to the business, customers, trade or industrial practices, trade secrets, technology, recipes,
product specifications, restaurant operating techniques and procedures, marketing techniques and procedures, financial data,
processes, vendors and other information or know-how of the Employer or any of its affiliates, except (i) to the extent
required by law, regulation or valid subpoena, or (ii) to the extent that such information or material becomes publicly known
or available through no fault of the Employee.

Any and all prior understandings or agreements between Employee and Employer with respect to the subject matter of this
Release are merged into this Release, which fully and completely expresses the entire agreement and understanding of the
parties with respect to the subject matter hereof. Notwithstanding this provision, this Release shall not in any way diminish
any obligation, duty or undertaking owed by the Employee to Employer because of any other contract or agreement or law.
The rights and releases given to Employer in this Release will be in addition to, and not in place of, any and all other rights
held by Employer by virtue of any other contract, agreement or undertaking, and to that extent, the obligations of the
Employee survive the execution of this Release.

In addition to any rights and remedies Employer provided by law, Employer has the right to set-off any amounts for any
damages to Employer and/or its affiliates caused by Employee’s noncompliance with this Release, including as related to
the non-solicitation provision.

This Release cannot be orally amended, modified, or changed. No change, amendment, or modification to the terms of this
Release shall be valid unless such change, amendment, or modification is memorialized in a written agreement between the
parties that expressly references this Release and identifies the provisions herein that are to be changed, amended, or
modified. Such change, amendment, or modification must be signed by Employee and by duly authorized officers or
representatives of Employer.

This Release is made and entered into in the state of Florida, and shall in all respects be interpreted, enforced and governed
under the laws of Florida. In the event of a breach of this Release by either party, the other party shall be entitled to seek
enforcement of this Release exclusively before a state or federal court of competent jurisdiction located in Hillsborough
County, Florida, and the state and federal courts located in Hillsborough County, Florida shall be deemed to have exclusive
jurisdiction and venue over any litigation related to or arising from this Release. This Release shall not be construed to
waive any right of removal that may apply to any action filed in state court by either party to this Release.

16.

At the conclusion of any litigation or dispute arising out of or related to this Release, the prevailing party may recover, in
addition to damages, the costs and fees (including

Page 9 of 10

Employee Initials: /s/ DH

attorney's fees, paralegal fees, and expert fees) reasonably incurred in connection with the litigation or dispute.

17.

18.

19.

The language of all parts of this Release shall in all cases be construed as a whole, according to its fair meaning, and not
strictly for or against any of the parties. As used in this Release, the singular or plural shall be deemed to include the other
whenever the context so indicates or requires.

Should any provision of this Release be declared or be determined by any court to be illegal or invalid, the remaining parts,
terms or provisions shall remain valid unless declared otherwise by the court. Any part, term or provision which is
determined to be illegal or invalid shall be deemed not to be a part of this Release.

The parties agree that a true copy of this Release may be used in any legal proceeding in place of the original and that any
such true copy shall have the same effect as the original.

PLEASE READ CAREFULLY. THIS GENERAL RELEASE INCLUDES
A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

Executed at Tampa, Florida this 28th day of January, 2020.

/s/ Amy Herlihy
Witness

/s/ Donagh Herlihy
Donagh M. Herlihy, Employee

Executed at Tampa, Florida this 28th day of February, 2020.

/s/ Pablo Brizi
Witness

EMPLOYER

By: /s/ Kelly Lefferts
Title: Chief Legal Officer

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Employee Initials: /s/ DH

RESIGNATION AGREEMENT

Exhibit 10.39

THIS RESIGNATION AGREEMENT (this “Agreement”) is made and entered into effective as of March 6, 2020 (the
“Effective Date”), by and between Bloomin’ Brands, Inc., a Delaware corporation (the “Company”), and Elizabeth A. Smith (the
“Executive”). Capitalized terms used but not defined herein have the meanings ascribed to such terms in that certain Second
Amended and Restated Employment Agreement between the Executive and the Company, dated April 1, 2019 (the “Existing
Agreement”).

WHEREAS, the Executive is currently employed by the Company as the Executive Chairman of the Company and is party

to the Existing Agreement;

WHEREAS, the Executive will cease serving as the Executive Chairman of the Board of Directors (the “Board”) of the

Company effective as of the Effective Date; and

WHEREAS, the Company and the Executive desire to enter into this Agreement to terminate the Existing Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions

set forth in this Agreement, the parties hereby agree as follows:

1.
Termination of Agreement. As of the Effective Date and in accordance with the terms of this Agreement, (a) Executive
resigns from employment as the Company’s Executive Chairman and all other positions with the Company or any subsidiaries or
Affiliates thereof, other than membership on the Board, and (b) the Existing Agreement is terminated, other than the terms thereof
that survive as expressly provided herein. Notwithstanding anything to the contrary in the Existing Agreement, nothing in this
Agreement shall result in termination of the Executive’s membership on the Board or require Executive to resign such membership.

Compensation and Benefits. Executive shall receive, as good and valuable consideration in return for Executive’s
2.
execution of this Agreement, which is intended to fully and finally resolve any and all matters between the Company and the
Executive, whether actual or potential, on terms that are mutually agreeable:

(a) Final Compensation; and

(b) all outstanding equity awards held by Executive that were granted by the Company prior to the Effective Date,
whether vested or unvested, shall continue to be governed by the terms of the existing award agreements. For the avoidance of
doubt, Executive’s continued membership on the Board constitutes “Continuous Service” within the meaning of all applicable
equity awards.

3.
Timing of Payments and Section 409A. Notwithstanding anything to the contrary in this Agreement, if any amounts
payable under this Agreement within six (6) months following the Effective Date would be a deferral of compensation within the
meaning of Treasury regulation Section 1.409A-1(b) [(including without limitation by reason of the safe harbor set forth in Section
1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion)]; then such amounts shall instead be
paid on the next business day following the expiration of such six (6) month period.

Effect of Termination of Existing Agreement.

(a) Subject to the other provisions of this Section 4, payment by the Company of the amounts and benefits provided for
under Section 2 shall constitute the entire obligation of the Company to the Executive hereunder. Executive acknowledges and
agrees that the amounts and benefits provided for under Section 2 are conditioned on (i) the Executive signing and returning to the
Company (without revoking) the Release of Claims, by the deadline specified therein, which in all events shall be no later than the
forty fifth (45th) calendar day following the Effective Date and (ii) the Compliance Condition.

(b) Except with respect to any bonus or cash incentive plan or agreement, severance plan or agreement or equity award
plan or agreement, the Executive’s participation in all Employee Benefit Plans shall be determined pursuant to the terms of the
applicable plan documents based on the date of termination of the Executive’s employment without regard to any payment to or on
behalf of the Executive following such date of termination and, in the case of the right of the Executive to continue medical and
dental plan participation, such participation shall be governed in accordance with applicable law. The Executive is entitled to retain
any vested benefits under the Employee Benefit Plans in accordance with the terms of such plans.

(c) The provisions of Sections 7, 8, 9, 10, 11 and 12 of the Existing Agreement shall remain in effect as of and through the

Effective Date on the terms and conditions set forth therein.

5.
required to be withheld by the Company under applicable law.

Withholding. All payments made by the Company under this Agreement shall be reduced by any tax or other amounts

Assignment. Neither the Company nor the Executive may make any assignment of this Agreement or any interest herein,
6.
by operation of law or otherwise, without the prior written consent of the other; provided, however, that the Company may assign
its rights and obligations under this Agreement, without the consent of the Executive, to an Affiliate (that will manage the assets
and carry on the historic business of the Company following such assignment) or a successor that expressly assumes and agrees in
writing to perform this Agreement in the same manner and to the same extent as the Company, including in the event that the
Company shall hereafter affect a reorganization, consolidate with, or merge into, any other Person, or transfer all or substantially all
of its properties, stock, or assets to any other Person. This Agreement shall inure to the benefit of and be binding upon the
Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns.

7.
Severability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a
court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in
circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion
and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. The declaration by a court of
competent jurisdiction that any of the provisions in Sections 7, 8 or 9 of the Existing Agreement, or any portions thereof, are illegal
or unenforceable shall have no effect on the Company’s rights under Section 11 of the Existing Agreement to terminate the benefits
under Section 2 and any outstanding equity awards in the event of the Executive’s failure to comply with the Compliance
Condition.

8.
Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The
failure of either party to require the performance of any term or obligation of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

Notices. Any and all notices, requests, demands and other communications provided for by this Agreement shall be in
9.
writing and shall be effective when delivered in person, consigned to a reputable national courier service or deposited in the United
States mail, postage prepaid, registered or certified, and addressed to the Executive at her last known address on the books of the
Company, or, in the case of the Company, at its principal place of business, attention of the Corporate Secretary of the Company,
with a copy to Baker & Hostetler LLC, 127 Public Square, Suite 2100, Cleveland, Ohio 44114, Attention: John M. Gherlein and
Janet A. Spreen or to such other address as either party may specify by notice to the other actually received.

10.
Entire Agreement. This Agreement and the Release of Claims constitute the entire agreement between the parties and
supersedes and terminates all prior communications, agreements and understandings, written or oral, with respect to the terms and
conditions of the Executive’s employment with the Company, including, but not limited to the Existing Agreement. This
Agreement does not supersede or otherwise affect the terms of any outstanding equity awards, except as expressly set forth herein.

11.
an expressly authorized representative of the Company.

Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by

12.
scope or content of any provision of this Agreement.

Headings. The headings and captions in this Agreement are for convenience only and in no way define or describe the

13.
which together shall constitute one and the same instrument.

Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of

14.
Governing Law. This is a Florida contract and shall be construed and enforced under and be governed in all respects by
the laws of the State of Florida, without regard to the conflict of laws principles thereof. In the event of any alleged breach or
threatened breach of this Agreement, the Executive hereby consents and submits to the jurisdiction of the federal and state courts in
and of the State of Florida.

15.
Cooperation. The Executive shall cooperate fully with all reasonable requests for information and participation by the
Company, its agents or its attorneys at the Company’s expense in prosecuting or defending claims, suits and disputes brought on
behalf of or against the Company and in which Executive is involved or about which Executive has knowledge.

16.
WAIVER OF JURY TRIAL. THE PARTIES TO THIS AGREEMENT KNOW AND UNDERSTAND THAT
THEY HAVE A CONSTITUTIONAL RIGHT TO A JURY TRIAL. THE PARTIES ACKNOWLEDGE THAT ANY
DISPUTE OR CONTROVERSY THAT MAY ARISE OUT OF THIS AGREEMENT WILL INVOLVE COMPLICATED
AND DIFFICULT FACTUAL AND LEGAL ISSUES.

THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
THE PARTIES AGREE THAT EITHER OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT
AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED−FOR AGREEMENT AMONG
THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY PROCEEDING WHATSOEVER
BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS
SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A
JURY.

THE PARTIES INTEND THAT THIS WAIVER OF THE RIGHT TO A JURY TRIAL BE AS BROAD AS
POSSIBLE. BY THEIR SIGNATURES BELOW, THE PARTIES PROMISE, WARRANT AND REPRESENT THAT
THEY WILL NOT PLEAD FOR, REQUEST OR OTHERWISE SEEK TO HAVE A JURY TO RESOLVE ANY AND
ALL DISPUTES THAT MAY ARISE BY, BETWEEN OR AMONG THEM.

IN WITNESS WHEREOF, this parties have executed this Amendment as of the date set forth above.

THE COMPANY:

BLOOMIN’ BRANDS, INC.

By: /s/ Elizabeth Smith

THE EXECUTIVE

/s/ Elizabeth Smith
Elizabeth A. Smith

Exhibit 10.40

February 14, 2020

Gregg Scarlett

Dear Gregg,

This letter agreement confirms the verbal offer extended to you by Bloomin’ Brands, Inc. (the “Company”) to serve as Executive Vice
President, Chief Operating Officer, Casual Dining Restaurants reporting to David Deno, Chief Executive Officer. Your effective date will be
February 14, 2020. The terms of your employment will be:

You will be employed by a subsidiary of the Company (the “Employer”) and will be paid an annual base salary of $675,000 effective February
14, 2020 payable in equal bi-weekly installments.

You will remain eligible to participate in the Company’s annual bonus program and effective February 14, 2020 your target bonus will be 120%
of your base salary based on both Company performance against objectives as set forth in the Company bonus program and individual
performance. Your bonus payout for the 2020 fiscal year will be prorated based on your effective date through the end of the fiscal year,
provided you remain employed by the Employer through the payout date.

The Company will issue you a one-time grant delivered with 35,000 Performance Share Units (“PSUs”), 50,000 Restricted Stock Units
(“RSUs”) and 100,000 Stock Options (“Options”) on the first business day of the month immediately following your effective date. This grant
will have standard vesting of three years contingent on continued employment with the Company or the Employer as follows: PSUs will vest
on a 3-year cliff schedule on the third anniversary of the grant date subject to the Company’s Adjusted EPS performance over fiscal years 2020-
2022, and RSUs and Options shall both ratably vest one-third of the units on each of the first, second and third anniversaries of the grant date,
respectively. All grants are subject to the terms of our 2016 Omnibus Incentive Compensation Plan and Equity Award Policy (collectively, the
“Plan”) and our standard award agreement. Our standard equity agreement includes a “double trigger” provision to protect you in the event of a
change-in-control. The details of the Plan and the form of grant agreement will be provided to you separately.

In addition to your annual bonus, you will be eligible for an annual long-term incentive grant commencing in 2020. Per the current long-term
incentive plan, you will be eligible for a target up to 150% of your base salary, which will be subject to Company and individual performance.

You will remain eligible for Paid Time Off (PTO) benefit.

You will be eligible to participate in the following benefits as applicable and in accordance with the terms of Company policy:

• Medical Benefits Plan
Salaried Short-Term Disability Insurance
•
•
Salaried Long-Term Disability Insurance
• Company Paid Group Term Life Insurance
• Company Paid Accidental Death and Dismemberment Insurance
• Dental Benefits Plan

• Vision Benefits Plan
• Non-Qualified Deferred Compensation Plan

In the ordinary course of business, pay and benefit plans continue to evolve as business needs and laws change. To the extent the Company or
the Employer determines it to be necessary or desirable to change or eliminate any of the plans or programs in which you participate, such
changes will apply to you as they do to other similarly situated employees.

As a condition of your employment, please note the following:

While it is our sincere hope and belief that our relationship will be mutually beneficial, the Company and the Employer do not offer
employment for a specified term. Any statements made to you in this letter and in meetings should not be construed in any manner as a
proposed contract for any such term. Both you and the Employer may terminate employment at any time, with or without prior notice, for any
or no reason, and with or without Cause (as defined on Schedule 1).

As a further condition of your employment you agree to the following:

1. Restrictive Covenant - Non-competition

A. During Employment. You will devote one hundred percent (100%) of your full business time, attention, energies, and effort to the
business affairs of the Employer and the Company. Except with the prior written consent of the Employer, during your employment with the
Company or the Employer, you shall not, individually or jointly with others, directly or indirectly, whether for your own account or for that of
any other person or entity, engage in or own or hold any ownership interest in any person or entity engaged in a full service restaurant business,
and you shall not act as an officer, director, employee, partner, independent contractor, consultant, principal, agent, proprietor or in any other
capacity for, nor lend any assistance (financial or otherwise) or cooperation to, any such person or entity. You shall not serve on the board of
directors or advisory committee of any other company without the prior consent of the Employer, which consent shall not be unreasonably
withheld.

B. Post Term. Commencing on termination your employment with the Employer, you shall not, individually or jointly with others,
directly or indirectly, whether for your own account or for that of any other person or entity, engage in or own or hold any ownership interest in
any person or entity engaged in a full table service restaurant business and that is located or intended to be located anywhere within a radius of
thirty (30) miles of any full table service restaurant owned or operated by the Company or the Employer, or any proposed full table service
restaurant to be owned or operated by the Company or the Employer, and you shall not act as an officer, director, employee, partner,
independent contractor, consultant, principal, agent, proprietor or in any other capacity for, nor lend any assistance (financial or otherwise) or
cooperation to, any such person or entity for the time period specified below:

(i) If your employment with Employer ends as a result of a termination without Cause (as defined in Schedule 1) by the Employer
or your resignation for Good Reason (as defined in Schedule 1), then for a continuous period equal to the period of time used for
calculating the amount of severance paid to you upon termination, if any; or

(ii) If your employment with the Employer ends as a result of your voluntary resignation or termination by the Employer for
Cause, for a continuous period of one (1) year.

For purposes of this non-competition clause, restaurants owned or operated by the Company or the Employer shall include all restaurants
owned or operated by the Company, the Employer, their subsidiaries, franchisees or affiliates and any successor entity to the Company, the
Employer, their subsidiaries, franchisees or affiliates, and any entity in which the Company or the Employer, its subsidiaries or any of their
affiliates has an interest, including but not limited to, an interest as a franchisor. The term “proposed restaurant” shall include all locations for
which the Company, the Employer, or their franchisees or affiliates is conducting active, bona fide negotiations to secure a fee or leasehold
interest with the intention of establishing a restaurant thereon.

C. Limitation. It shall not be a violation of this Non-competition clause for Employee to own a one percent (1%) or smaller interest in any
corporation required to file periodic reports with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, or successor statute.

Restrictive Covenant - Non-disclosure; Non-solicitation; Non-piracy

A. Except in the performance of your duties hereunder, at no time during your employment with the Company or the Employer, or at
any time thereafter, shall you, individually or jointly with others, for your benefit of or for the benefit of any third party, publish, disclose, use
or authorize anyone else to publish, disclose or use any secret or confidential material or information relating to any aspect of the business or
operations of the Employer, the Company or any of their affiliates, including, without limitation, any secret or confidential information relating
to the business, customers, trade or industrial practices, trade secrets, technology, recipes, product specifications, restaurant operating
techniques and procedures, marketing techniques and procedures, financial data, processes, vendors and other information or know-how of the
Employer, the Company or any of their affiliates, except (i) to the extent required by law, regulation or valid subpoena, or (ii) to the extent that
such information or material becomes publicly known or available through no fault of your own.

B. Moreover, during your employment with the Employer and for two (2) years thereafter, except as is the result of a broad
solicitation that is not targeting employees of the Employer, the Company or any of their franchisees or affiliates, you shall not offer
employment to, or hire, any employee of the Employer, the Company or any of their franchisees or affiliates, or otherwise directly or indirectly
solicit or induce any employee of the Employer, the Company or any of their franchisees or affiliates to terminate his or her employment with
the Employer, the Company or any of their franchisees or affiliates; nor shall you act as an officer, director, employee, partner, independent
contractor, consultant, principal, agent, proprietor, owner or part owner, or in any other capacity, of or for any person or entity that solicits or
otherwise induces any employee of the Employer, the Company or any of their franchisees or affiliates to terminate his or her employment with
the Employer, the Company or any of their franchisees or affiliates.

Restrictive Covenant - Company and Employer Property: Duty to Return. All Employer and Company property and assets,
3.
including but not limited to products, recipes, product specifications, training materials, employee selection and testing materials, marketing
and advertising materials, special event, charitable and community activity materials, customer correspondence, internal memoranda, products
and designs, sales information, project files, price lists, customer and vendor lists, prospectus reports, customer or vendor information, sales
literature, territory printouts, call books, notebooks, textbooks, and all other like information or products, including but not limited to all copies,
duplications, replications, and derivatives of such information or products, now in your possession or acquired by you while in the employ of
the Employer shall be the exclusive property of the Employer and shall be returned to the Employer no later than the date of your last day of
work with the Employer.

Restrictive Covenant - Inventions, Ideas, Processes, and Designs. All inventions, ideas, recipes, processes, programs, software and
4.
designs (including all improvements) related to the business of the Employer or the Company shall be disclosed in writing promptly to the
Employer, and shall be the sole and

exclusive property of the Employer, if either (i) conceived, made or used by you during the course of the your employment with the Employer
(whether or not actually conceived during regular business hours) or (ii) made or used by you for a period of six (6) months subsequent to the
termination or expiration of such employment. Any invention, idea, recipe, process, program, software or design (including an improvement)
shall be deemed “related to the business of the Employer or the Company” if (i) it was made with equipment, facilities or confidential
information of the Employer or the Company, (ii) results from work performed by you for the Employer or the Company or (iii) pertains to the
current business or demonstrably anticipated research or development work of the Employer or the Company. You shall cooperate with the
Employer and its attorneys in the preparation of patent and copyright applications for such developments and, upon request, shall promptly
assign all such inventions, ideas, recipes, processes and designs to the Employer. The decision to file for patent or copyright protection or to
maintain such development as a trade secret shall be in the sole discretion of the Employer, and you shall be bound by such decision. You shall
provide, on the back of this Agreement, a complete list of all inventions, ideas, recipes, processes and designs if any, patented or unpatented,
copyrighted or non-copyrighted, including a brief description, that you made or conceived prior to your employment with the Employer, and
that, therefore, are excluded from the scope of the employment with the Employer.

The restrictive covenants contained in this agreement are given and made by you to induce the Employer to employ you and to enter into this
Agreement with you, and you hereby acknowledge that employment with the Employer is sufficient consideration for these restrictive
covenants. The restrictive covenants shall be construed as agreements independent of any other provision in this Agreement, and the existence
of any claim or cause of action you may have against the Employer or the Company, whether predicated upon this Agreement or otherwise,
shall not constitute a defense to the enforcement of any restrictive covenant. The refusal or failure of the Employer or the Company to enforce
any restrictive covenant of this agreement (or any similar agreement) against any other employee, agent, or independent contractor, for any
reason, shall not constitute a defense to the enforcement by the Employer or the Company of any such restrictive covenant, nor shall it give rise
to any claim or cause of action by you against the Employer or the Company.

You agree that a breach of any of the restrictive covenants contained in this Agreement will cause irreparable injury to the Employer and the
Company for which the remedy at law will be inadequate and would be difficult to ascertain and therefore, in the event of the breach or
threatened breach of any such covenants, the Employer and the Company shall be entitled, in addition to any other rights and remedies it may
have at law or in equity, to obtain an injunction to restrain you from any threatened or actual activities in violation of any such covenants. You
hereby consent and agree that temporary and permanent injunctive relief may be granted in any proceedings that might be brought to enforce
any such covenants without the necessity of proof of actual damages, and in the event the Employer or the Company does apply for such an
injunction, you shall not raise as a defense thereto that the Employer or the Company has an adequate remedy at law.

For the avoidance of doubt, the termination of this agreement for any reason, shall not extinguish your obligations specified in these restrictive
covenants.

ALL PARTIES TO THIS AGREEMENT KNOW AND UNDERSTAND THAT THEY HAVE A CONSTITUTIONAL RIGHT TO A JURY
TRIAL. THE PARTIES ACKNOWLEDGE THAT ANY DISPUTE OR CONTROVERSY THAT MAY ARISE OUT OF THIS AGREEMENT
WILL INVOLVE COMPLICATED AND DIFFICULT FACTUAL AND LEGAL ISSUES.

KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY
JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.

THE PARTIES INTEND THAT THIS WAIVER OF THE RIGHT TO A JURY TRIAL BE AS BROAD AS POSSIBLE. BY THEIR
SIGNATURES BELOW, THE PARTIES PROMISE, WARRANT AND REPRESENT THAT THEY WILL NOT PLEAD FOR, REQUEST
OR OTHERWISE SEEK TO HAVE A JURY TO RESOLVE ANY AND ALL DISPUTES THAT MAY ARISE BY, BETWEEN OR AMONG
THEM.

You shall be responsible for the payment of all taxes applicable to payments or benefits received from the Employer or the Company. It is the
intent of the Employer and the Company that the provisions of this agreement and all other plans and programs sponsored by the Employer and
the Company be interpreted to comply in all respects with Internal Revenue Code Section 409A, however, the Employer and the Company shall
have no liability to you, or any of your successors or beneficiaries, in the event taxes, penalties or excise taxes may ultimately be determined to
be applicable to any payment or benefit received by you or your successors or beneficiaries.

The validity, interpretation, and performance of this agreement shall be governed, interpreted, and construed in accordance with the laws of the
State of Florida without giving effect to the principles of comity or conflicts of laws thereof.

This letter constitutes the full commitments which have been extended to you and shall supersede any prior agreements whether oral or written.
However, this does not constitute a contract of employment for any period of time. Should you have any questions regarding these
commitments or your ability to conform to Bloomin’ Brands policies and procedures, please let me know immediately.

By signing this offer, you indicate your acceptance of our offer. Please keep one original copy of this offer letter for your personal files.

We look forward to having you join us as a member of our team.

Sincerely,

/s/ Pablo Brizi

Pablo Brizi
Senior Vice President, Chief Human Resources Officer
Bloomin’ Brands, Inc.

I accept the above offer of employment and I understand the terms as set forth above.

/s/ Gregg Scarlett

Gregg Scarlett

2/14/20

Date

"Cause" shall be defined as:

Schedule 1

1. Your failure to perform the material duties required of you in a manner satisfactory to the Employer, in its reasonable discretion after
the Employer follows the following procedures: (a) the Employer gives you a written notice (''Notice of Deficiency") which shall
specify the deficiencies in your performance of duties; (b) you shall have a period of thirty (30) days, commencing on receipt of the
Notice of Deficiency, in which to cure the deficiencies contained in the Notice of Deficiency; and (c) in the event you do not cure the
deficiencies to the satisfaction of the Employer, in its reasonable discretion, within such thirty (30) day period (or if during such thirty
(30) day period the Employer determines that you are not making reasonable, good faith efforts to cure the deficiencies to the
reasonable satisfaction of the Employer), the Employer shall have the right to immediately terminate your employment for Cause. The
provisions of this paragraph (1) may be invoked by the Employer any number of times and cure of deficiencies contained in any Notice
of Deficiency shall not be construed as a waiver of this paragraph (1) nor prevent the Employer from issuing any subsequent Notices of
Deficiency; or

2. Any willful dishonesty by you in your dealings with the Company, the Employer or their affiliates; your commission of fraud,
negligence in the performance of your duties; insubordination; willful misconduct; or your conviction (or plea of guilty or nolo
contendere), indictment or charge with respect to, any felony, or any other crime involving dishonesty or moral turpitude; or

3. Any material violation of the restrictive covenants of this agreement or

4. Any material violation of any current or future material published policy of the Employer or its Affiliates (material published policies
include, but are not limited to, the Employer's discrimination and harassment policy, management dating policy, responsible alcohol
policy, insider trading policy, ethics policy and security policy).

5. For all purposes of this Agreement, termination for Cause shall be deemed to have occurred in the event of the Employee's resignation

when, because of existing facts and circumstances, subsequent termination for Cause can be reasonably foreseen.

“Good Reason” shall be defined as any one or more of the following

(i) a material diminution in the nature and scope of your responsibilities, duties or authority (any diminution of the business of the

Company shall not constitute Good Reason);

(ii) a material diminution by the Company in your current base salary and/or your annual bonus potential other than as part of an across-
the-board reduction that results in a proportional reduction to you substantially equivalent to that of other employees that are designated
at the same level as you;

(iii) a removal from, or failure to continue in, the your current position, unless you are offered another position that is no less favorable than
your current position in terms of compensation (compensation for these purposes meaning base salary and participation in annual bonus
and long-term incentive programs); or

(iv) an actual relocation of your principal office to another location more than fifty (50) miles from your current office location and such
office relocation results in a material increase in your length of commute; provided that no finding of Good Reason shall be effective
unless and until you have provided the Company, within sixty (60) calendar days of the date when the you became aware, or

should have become aware, of the facts and circumstances underlying the finding of Good Reason, with written notice thereof stating
with specificity all of the facts and circumstances underlying the finding of Good Reason and that the you intends to terminate your
employment for Good Reason no later than the sixtieth (60th) day following the delivery of such notice to the Employer and, if the
basis for such finding of Good Reason is capable of being cured by the Employer, providing the Employer with an opportunity to cure
the same within thirty (30) calendar days after receipt of such notice. If the Company does not cure the same within such thirty (30)
calendar day cure period, no finding of Good Reason shall be effective unless you terminate employment within thirty (30) calendar
days of the expiration of such cure period.

SUBSIDIARY NAME

Annapolis Outback, Inc.

BBI International Holdings, Inc.

BBI Ristorante Italiano, LLC

Bel Air Outback, Inc.

BFG Nebraska, Inc.

BFG New Jersey Services, Limited Partnership

BFG Oklahoma, Inc.

BFG Pennsylvania Services, Ltd

BFG/FPS of Marlton Partnership

Bloom Brands Holdings I C.V.

Bloom Brands Holdings II C.V.

Bloom Group Holdings B.V.

Bloom Group Holdings II, B.V.

Bloom Group Holdings III C.V.

Bloom Group Restaurants, B.V.

Bloom Group Restaurants, LLC

Bloom No.1 Limited

Bloom No.2 Limited

Bloom Participações, Ltda.

Bloom Restaurantes Brasil S.A.

Bloomin’ Brands Gift Card Services, LLC

Bloomin’ Brands International, LLC

Bloomin Hong Kong Limited

Bloomin Puerto Rico L.P.

Bonefish Baltimore County, LLC

Bonefish Beverages, LLC

Bonefish Brandywine, LLC

Bonefish Designated Partner, LLC

Bonefish Grill International, LLC

Bonefish Grill, LLC

Bonefish Holdings, LLC

Bonefish Kansas LLC

Bonefish of Bel Air, LLC

Bonefish of Gaithersburg, Inc.

Bonefish/Anne Arundel, LLC

Bonefish/Asheville, Limited Partnership

Bonefish/Carolinas, Limited Partnership

Bonefish/Centreville, Limited Partnership

Bonefish/Columbus-I, Limited Partnership

Bonefish/Crescent Springs, Limited Partnership

Bonefish/Fredericksburg, Limited Partnership

Bonefish/Glen Burnie, LLC

Bonefish/Greensboro, Limited Partnership

Bonefish/Hyde Park, Limited Partnership

Bonefish/Newport News, Limited Partnership

Bonefish/Richmond, Limited Partnership

Bonefish/Southern Virginia, Limited Partnership

Bonefish/Virginia, Limited Partnership

Carrabba’s Designated Partner, LLC

STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION

Exhibit 21.1

SUBSIDIARY NAME

STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION

Carrabba’s Italian Grill of Howard County, Inc.

Carrabba’s Italian Grill of Overlea, Inc.

Carrabba’s Italian Grill, LLC

Carrabba’s Kansas LLC

Carrabba’s of Bowie, LLC

Carrabba’s of Germantown, Inc.

Carrabba’s of Ocean City, Inc.

Carrabba’s of Pasadena, Inc.

Carrabba’s of Waldorf, Inc.

Carrabba’s/Birmingham 280, Limited Partnership

Carrabba’s/DC-I, Limited Partnership

CIGI Beverages of Texas, LLC

CIGI Florida Services, Ltd

CIGI Holdings, LLC

CIGI Nebraska, Inc.

CIGI Oklahoma, Inc.

CIGI/BFG of East Brunswick Partnership

DoorSide, LLC

Dutch Holdings I, LLC

Dutch Holdings II, LLC

Fleming’s Beverages, LLC

Fleming’s International, LLC

Fleming’s of Baltimore, LLC

Flemings Restaurantes do Brasil Ltda.

Fleming’s/Outback Holdings, LLC

FPS NEBRASKA, INC.

FPS Oklahoma, Inc.

Frederick Outback, Inc.

Hagerstown Outback, Inc.

New Private Restaurant Properties, LLC

OBTex Holdings, LLC

Ocean City Outback, Inc.

OS Management, Inc.

OS Niagara Falls, LLC

OS Prime, LLC

OS Realty, LLC

OS Restaurant Services, LLC

OS Southern, LLC

OS Tropical, LLC

OSF Florida Services, Ltd

OSF Nebraska, Inc.

OSF New Jersey Services, Limited Partnership

OSF New York Services, Limited Partnership

OSF North Carolina Services, Ltd

OSF Oklahoma, Inc.

OSF Pennsylvania Services, Ltd

OSF South Carolina Services, Ltd

OSF Virginia Services, Limited Partnership

OSF/BFG of Deptford Partnership

SUBSIDIARY NAME

OSF/BFG of Lawrenceville Partnership

OSF/CIGI of Evesham Partnership

OSI China Venture

OSI HoldCo, Inc.

OSI HoldCo I, Inc.

OSI HoldCo II, Inc.

OSI International, LLC

OSI Restaurant Partners, LLC

OSI/Fleming’s, LLC

Outback & Carrabba’s of New Mexico, Inc.

Outback Alabama, Inc.

Outback Beverages of Texas, LLC

Outback Designated Partner, LLC

Outback Kansas LLC

Outback of Aspen Hill, Inc.

Outback of Calvert County, Inc.

Outback of Conway, Inc.

Outback of Germantown, Inc.

Outback of La Plata, Inc.

Outback of Laurel, LLC

Outback of Waldorf, Inc.

Outback Philippines Development Holdings Corporation

Outback Puerto Rico Designated Partner, LLC

Outback Steakhouse International Investments, Co.

Outback Steakhouse International, L.P.

Outback Steakhouse International, LLC

Outback Steakhouse of Bowie, Inc.

Outback Steakhouse of Canton, Inc.

Outback Steakhouse of Florida, LLC

Outback Steakhouse of Howard County, Inc.

Outback Steakhouse of Jonesboro, Inc.

Outback Steakhouse of Salisbury, Inc.

Outback Steakhouse of St. Mary’s County, Inc.

Outback Steakhouse Restaurantes Brasil, S.A. (f/k/a Bloom Holdco)

Outback Steakhouse West Virginia, Inc.

Outback/Carrabba’s Partnership

Outback/Fleming’s Designated Partner, LLC

Outback/Hampton, Limited Partnership

Outback/Stone-II, Limited Partnership

Outback-Carrabba’s of Hunt Valley, Inc.

Owings Mills Incorporated

Perry Hall Outback, Inc.

Prince George’s County Outback, Inc.

Private Restaurant Master Lessee, LLC

Snyderman Restaurant Group Inc

Williamsburg Square Joint Venture

Xuanmei Food and Beverage (Shanghai) Co., Ltd.

STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form 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 26, 2020 relating to the financial statements
and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Tampa, Florida
February 26, 2020

Exhibit 31.1

I, David J. Deno, certify that:

CERTIFICATION

I have reviewed this Annual Report on Form 10-K of Bloomin’ Brands, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in 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 designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date:

February 26, 2020

/s/ David J. Deno

David J. Deno
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2

I, Christopher Meyer, certify that:

CERTIFICATION

I have reviewed this Annual Report on Form 10-K of Bloomin’ Brands, Inc.;

(c)

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date:

February 26, 2020

/s/ Christopher Meyer

Christopher Meyer
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-
OXLEY ACT OF 2002

In connection with the Annual Report of Bloomin’ Brands, Inc. (the “Company”) on Form 10-K for the year ended December 29, 2019 as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Deno, Chief Executive Officer of the Company,
hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 operations of the

Company for the dates and periods covered by the Report.

Date:

February 26, 2020

/s/ David J. Deno

David J. Deno
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 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-
OXLEY ACT OF 2002

In connection with the Annual Report of Bloomin’ Brands, Inc. (the “Company”) on Form 10-K for the year ended December 29, 2019 as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher Meyer, Executive Vice President and Chief
Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 operations of the

Company for the dates and periods covered by the Report.

Date:

February 26, 2020

/s/ Christopher Meyer

Christopher Meyer
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)