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 26, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ______ to ______
Commission File Number: 001-35625
BLOOMIN’ BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
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 $2.4 billion.
As of February 18, 2022, 89,425,680 shares of common stock of the registrant were outstanding.
Portions of the registrant’s definitive Proxy Statement for its 2022 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 2021
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. [Reserved]
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 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
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
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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)
(ii)
Consumer reactions to public health and food safety issues;
The severity, extent and duration of the COVID-19 pandemic, its impacts on our business and results of operations, financial
condition and liquidity, including any adverse impact on our stock price and on the other factors listed below, and the responses of
domestic and foreign federal, state and local governments to the pandemic;
(iii) Minimum wage increases, additional mandated employee benefits and fluctuations in the cost and availability of employees;
(iv)
Fluctuations in the price and availability of commodities;
(v)
(vi)
Our ability to compete in the highly competitive restaurant industry with many well-established competitors and new market
entrants;
Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability
of credit and interest rates;
(vii)
Our ability to recruit and retain high-quality leadership, restaurant-level management and team members;
(viii) 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 and limited control with respect to the operations of our franchisees;
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BLOOMIN’ BRANDS, INC.
(ix)
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;
(x)
Dependence on a limited number of suppliers and distributors to meet our beef and other major product supply needs;
(xi)
(xii)
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 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, and the impact of any litigation;
(xiii) Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits, including by
maintaining relationships with third party delivery apps and services;
(xiv) 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 necessary personnel, obtaining adequate
financing and estimating the performance of newly opened, remodeled or relocated restaurants;
(xv)
(xvi)
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 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
(xvii) 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.
Given 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.
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Item 1. Business
BLOOMIN’ BRANDS, INC.
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). OSI Restaurant Partners, LLC (“OSI”), a wholly-owned subsidiary of Bloomin’ Brands, is our primary operating entity.
COVID-19 Pandemic Impact on Our Business
In March 2020, we temporarily closed all restaurant dining rooms to comply with state and local regulations in response to the COVID-19
pandemic (“COVID-19”). In early May 2020, we began to reopen our restaurant dining rooms with limited seating capacity in compliance
with state and local regulations. The temporary closure of our dining rooms and the limitations on seating capacity due to the COVID-
19 pandemic resulted in significantly reduced traffic in our restaurants which negatively impacted our operating results during 2020.
During 2021, the recovery of in-restaurant dining continued as COVID-19 capacity restrictions were eased or eliminated. Though concerns
over variants of COVID-19 impacted recovery, we continued to retain a significant portion of the incremental off-premises volume achieved
while our dining rooms were closed last year.
MARKETS
As of December 26, 2021, we owned and operated 1,169 full-service restaurants and off-premises only kitchens and franchised 329 full-
service restaurants and off-premises only kitchens across 47 states, Guam and 17 countries.
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 26, 2021:
REPORTABLE SEGMENT (1)
CONCEPT
GEOGRAPHIC LOCATION
U.S.
International
Outback Steakhouse
Carrabba’s Italian Grill
Bonefish Grill
Fleming’s Prime Steakhouse & Wine Bar
Outback Steakhouse
Carrabba’s Italian Grill (Abbraccio)
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 26, 2021, in our U.S. segment, we owned and operated 1,013 full-service restaurants and off-premises only kitchens and
franchised 157 full-service restaurants across 47 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,
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BLOOMIN’ BRANDS, INC.
chicken, seafood, pasta, salads and seasonal specials. The menu also offers a selection of 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, hand-cut in-house every day, savory wood-grilled
specialties, and locally created, seasonal Partner Selection dishes featuring high-quality and fresh ingredients. Offering a selection of classic
and signature hand-crafted cocktails, using just-squeezed juices, edible garnishes, and house infusions, Bonefish Grill also features a distinct
list of wines, which are the perfect match for any food pairing.
Fleming’s Prime Steakhouse & Wine Bar - Fleming’s Prime Steakhouse & Wine Bar is a contemporary steakhouse concept featuring prime
cuts of beef, 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 and an award-winning list of wines by the glass. 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 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 26, 2021, in our international segment, we owned and operated 156 full-service restaurants and off-premises only kitchens
and franchised 172 full-service restaurants and off-premises only kitchens across 17 countries and Guam. See Item 2. Properties for
disclosure of our international restaurant count by country and territory.
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 international Carrabba’s Italian Grill restaurant
concept, offers a blend of traditional and modern Italian dishes. The menu varies, with additional pasta and pizza 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 Development
We utilize the ownership structure and market entry strategy that best fits the needs for a particular market, including Company-owned units
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.
During 2021, we opened our first Outback Steakhouse utilizing a smaller-scaled “Joey” prototype. The Joey prototype was designed to
increase return on investment through a reduced restaurant footprint with a more efficient layout. We plan to open additional Joey Outback
Steakhouse restaurants during 2022.
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BLOOMIN’ BRANDS, INC.
During 2021, we continued to test and develop our first fast-casual concept, Aussie Grill by Outback (“Aussie Grill”). Originally created for
our international franchisees, Aussie Grill offers steak, burgers, chicken and salad with fast-casual convenience. After successfully launching
Aussie Grill internationally, we added Company-owned locations in the U.S. and in May 2020 opened the first free standing restaurant. We
opened two additional U.S. Aussie Grill restaurants during 2021 and additional locations are planned to open in 2022.
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.
Off-Premises Only Expansion - Since 2019, our franchisee in South Korea has rolled out delivery-only kitchens, which are food preparation
and cooking facilities that are not located in a traditional retail space and are limited to delivery-only. These kitchens allow for the expansion
of our restaurant concepts into areas where traditional retail space is not available or cost prohibitive. As of December 26, 2021, there were
40 delivery-only kitchens operating in South Korea and 24 additional locations are planned to open in 2022.
System-wide Restaurant Summary - Following is a system-wide rollforward of our full-service restaurants in operation during 2021:
Number of restaurants:
U.S.:
Outback Steakhouse
Company-owned
Franchised
Total
Carrabba’s Italian Grill
Company-owned
Franchised
Total
Bonefish Grill
Company-owned
Franchised
Total
Fleming’s Prime Steakhouse & Wine Bar
Company-owned
Aussie Grill
Company-owned (1)
U.S. total
International:
Company-owned
Outback Steakhouse - Brazil (2)
Other (1)(3)
Franchised
Outback Steakhouse - South Korea (1)
Other (3)
International total
System-wide total
System-wide total - Company-owned
System-wide total - Franchised
DECEMBER 27,
2020
2021 ACTIVITY
OPENINGS
CLOSURES
DECEMBER 26,
2021
U.S. STATE
COUNT
568
138
706
199
21
220
180
7
187
63
3
1,179
109
32
76
56
273
1,452
1,154
298
3
—
3
—
—
—
—
—
—
1
2
6
13
1
5
4
23
29
20
9
(7)
(8)
(15)
—
(1)
(1)
(2)
—
(2)
—
—
(18)
—
—
(3)
(6)
(9)
(27)
(9)
(18)
46
29
30
25
1
564
130
694
199
20
219
178
7
185
64
5
1,167
122
33
78
54
287
1,454
1,165
289
____________________
(1)
(2)
Restaurant counts as of December 27, 2020 have been adjusted to exclude off-premises only kitchens included in the table below.
The restaurant counts for Brazil are reported as of November 30, 2020 and 2021, respectively, to correspond with the balance sheet dates of this subsidiary.
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BLOOMIN’ BRANDS, INC.
(3)
International Company-owned Other included one and two Aussie Grill locations as of December 27, 2020 and December 26, 2021, respectively. International
Franchised Other included three Aussie Grill locations as of December 27, 2020 and December 26, 2021.
Following is a system-wide rollforward of our off-premises only kitchens in operation during 2021:
Number of kitchens (1):
U.S:
Company-owned
International:
Company-owned
Franchised - South Korea
System-wide total
DECEMBER 27,
2020
2021 ACTIVITY
OPENINGS
CLOSURES
DECEMBER 26,
2021
2
1
19
22
2
—
21
23
(1)
—
—
(1)
3
1
40
44
____________________
(1)
Excludes virtual concepts that operate out of existing restaurants and sports venue locations.
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 than our restaurants. Internationally, we face increasing competition due to an increase in the
number of casual dining restaurant options in the markets in which we operate.
REVENUE GENERATING ACTIVITIES
We generate our revenues from our Company-owned restaurants and through sales of franchise rights and ongoing royalties and other fees
from our franchised restaurants.
Company-owned Restaurants - Company-owned restaurants are restaurants wholly-owned by us or in which we have a majority 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 (Loss).
Historically, we paid royalties that ranged 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. paid a one-time lump sum fee to the Carrabba’s Founders in place of a continuing royalty fee. In August
2021, we entered into the Purchase and Sale of Royalty Payment Stream and Termination of Royalty Agreement (the “Royalty Termination
Agreement”) with the Carrabba’s Founders, pursuant to which our obligation to pay future royalties and lump sum royalty fees on Carrabba’s
Italian Grill (and Abbraccio) restaurants was terminated.
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BLOOMIN’ BRANDS, INC.
Following are sales by occasion, sales mix by product type and average check per person for Company-owned restaurants during 2021:
Outback
Steakhouse
Carrabba’s
Italian Grill
Bonefish Grill
U.S.
Fleming’s
Prime Steakhouse
& Wine Bar
INTERNATIONAL
Outback
Steakhouse
Brazil
Occasion:
In-restaurant sales
Off-premises sales
Sales mix by product type:
Food & non-alcoholic beverage
Alcoholic beverage
68 %
32 %
92 %
8 %
63 %
37 %
90 %
10 %
81 %
19 %
82 %
18 %
Average check per person ($USD)
Average check per person (R$)
$
24
$
23
$
30
$
91 %
9 %
79 %
21 %
90
$
R$
75 %
25 %
92 %
8 %
9
50
Delivery - During 2019, we completed the rollout of in-house delivery for substantially all Outback Steakhouse and the majority of
Carrabba’s Italian Grill Company-owned restaurants and expanded our delivery platform through partnerships with leading national delivery
services for our Outback Steakhouse, Carrabba’s Italian Grill and certain Bonefish Grill restaurants.
In March 2020, we pivoted to an off-premises only model in response to the COVID-19 pandemic. While our dining rooms were closed in
the U.S. we tripled our off-premises sales per restaurant, and since reopening our restaurant dining rooms in May 2020, have maintained
strong retention of off-premises sales.
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 for full-service restaurants are generally $40,000 for U.S. franchisees and range between $30,000
and $75,000 for international franchisees, depending on the market. Initial franchise fees for international delivery-only kitchens are
generally $10,000. Some franchisees may also pay advertising and 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:
(as a % of gross Restaurant sales)
U.S. franchisees (1)
International franchisees (2)
MONTHLY ROYALTY FEE
PERCENTAGE
3.50% - 5.75%
2.00% - 5.00%
_________________
(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 spend a certain percentage of gross sales on local advertising, which varies depending on the market.
(2)
On December 27, 2020, we entered into an agreement (the “Resolution Agreement”) with Cerca Trova Southwest Restaurant Group, LLC
(d/b/a Out West Restaurant Group) and certain of its affiliates (collectively, “Out West”), a franchisee of approximately 80 Outback
Steakhouse restaurants in the western United States as of December 26, 2021. Under the terms of the agreement, advertising fees were
reduced to 2.25% of gross sales until December 31, 2023 or upon the earlier occurrence of certain specified events, including the sale of all
or substantially all of the assets or equity of Out West, bankruptcy or a liquidation event.
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Out West also entered into a forbearance agreement with its lenders that, in conjunction with the Resolution Agreement which, among other
things, provides for a pre-determined calculation of available monthly cash (“Available Cash”) that Out West may use to settle its obligations
due to us and its lenders. Under the Resolution Agreement, if Out West is unable to satisfy monthly royalty or advertising fees with Available
Cash, such amounts will be automatically deferred under the Resolution Agreement.
See Note 4 - Revenue Recognition of the Notes to Consolidated Financial Statements for further details regarding the Resolution Agreement.
RESOURCES
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 Company-owned international operations
in South America and Asia. The global 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. Where applicable, 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 2021, we primarily purchased our U.S. beef raw materials from four beef suppliers and
our Brazil beef raw materials from three 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 seafood, poultry, produce, dairy,
bread, oils and pasta, and energy sources to operate our restaurants, such as natural gas and electricity. The cost of such commodities may
fluctuate widely due to government policy and regulation, changing weather patterns and conditions, climate change, and other supply and/or
demand impacting events such as the COVID-19 pandemic, geopolitical events, or other unforeseen circumstances.
Serving safe and high quality food has always been our priority. We utilize both an internal food safety team responsible for supplier
evaluations and external third parties who inspect supplier adherence and restaurant practices to monitor quality, food safety and product
specifications. All of our restaurants implement best practices for food handling, monitoring and innovating to improve procedures. Our
restaurant teams have many touch points to seek to ensure food safety, quality, and freshness through all phases of preparation.
We are committed to building long-term partnerships with suppliers who are dedicated to delivering safe, high quality ingredients in a
sustainable way. All suppliers are required to comply with our Supplier Code of Ethics and we strive to source only products that are raised
in a sustainable, ethical and humane manner.
Information Systems - We leverage technology to support areas such 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
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our online ordering infrastructure to facilitate expanded off-premises dining systems. Additionally, we developed systems to support our
customer loyalty program with a focus on increasing traffic to our restaurants. In recent years, we have made investments in a global supply
chain management system to improve inventory forecasting and replenishment in 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 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.
Restaurant Management - 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 oversee restaurant
operations 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.
®
®
Trademarks - 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 other 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, whenever possible, pursue registration of our marks in countries where we
®
®
®
®
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operate 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 with
Brazil historically experiencing minimal seasonal traffic fluctuations. Holidays may affect sales volumes seasonally in some of our markets.
However, the COVID-19 pandemic has had and may continue to have an impact on consumer behaviors and customer traffic that may result
in temporary changes in the seasonal fluctuations of our business. Additionally, severe storms, extended periods of inclement weather or
climate extremes resulting from climate change may also affect the seasonal operating results of the areas impacted.
See Item 1A. Risk Factors for discussion of risks related to seasonal and periodic fluctuations.
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. - During 2020, several governmental bodies in the U.S. addressed the spread of COVID-19 by imposing limitations on business
operations or recommending that residents and/or employers adopt “social distancing”, vaccination and/or testing measures. Since the onset
of the COVID-19 pandemic, formal and informal restraints, as well as consumer behavior, have materially affected the way we operate our
business and serve our guests.
Alcoholic beverage sales represent 11% 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. At the onset of the COVID-19 pandemic,
many state governors entered executive orders allowing restaurants to sell alcohol for carry-out or delivery. In most jurisdictions, alcohol
licenses for restaurants did not previously allow for off-premises sales. Many of these executive orders remain in effect, with some states
passing permanent legislation. We are currently offering alcohol to-go from certain locations from each of our restaurant concepts.
Our restaurant operations are also subject to federal and state laws for such matters as:
immigration, employment, minimum wage, 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, data privacy, anti-corruption/anti-bribery, cashless payments and gift cards.
•
International - Our restaurants outside of the U.S. are subject to similar regional and local laws and regulations as our U.S. restaurants,
including COVID-19-related mandates, labor, food safety, data privacy, anti-corruption/anti-bribery and information security.
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See Item 1A - Risk Factors for a discussion of risks relating to federal, state, local and international regulation of our business.
HUMAN CAPITAL RESOURCES
Employees - As of December 26, 2021, we employed approximately 82,000 Team Members (our employees), of which approximately 700
are corporate personnel, including more than 200 in international markets.
We are committed to nurturing an inclusive, service-focused culture, founded on respecting and valuing every person, regardless of gender,
race, ethnic origin, religion, sexual orientation, ability, or age. We track a variety of workforce statistics to help us understand the gender,
racial and ethnic diversity of our U.S. Team Members, including the following as of the period indicated:
KEY STATISTICS
Restaurant Support Center
Operations Leadership
Hourly Team Members
DECEMBER 26, 2021
WOMEN
64%
36%
51%
PEOPLE OF COLOR
(1)
21%
30%
48%
_________________
(1)
Denotes U.S. Team Members that identify as Black/African American, Hispanic/Latinx, Asian, Native American, Pacific Islander, or two or more races.
Various jurisdictional mandated industry-wide labor agreements, which are renewed annually, apply to certain of our employees in Brazil.
Celebrating Our People – Team Members, guests, suppliers, and neighbors have always been the heart of our Company’s culture, driven
each day by our founding Principles & Beliefs, which include treating each individual as we would want to be treated. We believe that
creating exceptional guest experiences begins with providing a positive, supportive work environment that welcomes individual differences
and allows employees to grow and have fun. We focus on developing genuine, emotional guest connections through friendly service and
high-quality food. We embrace the communities we serve, from feeding first responders to supporting worthy causes, especially in the Tampa
Bay area of Florida, home to our Restaurant Support Center.
Diversity, Equity & Inclusion - We aim to cultivate a welcoming, safe, and inclusive environment that celebrates diverse backgrounds and
provides equitable access to opportunities. We deliver on this by ensuring everyone is trained, understands their role in inclusivity, and is held
accountable in making our restaurants a place where everyone is valued for who they are and what they bring to the table.
We are constantly working to improve how we support our Team Members. As a part of these efforts, we continually assess our overall racial
diversity at Bloomin’ Brands as we strive to reflect the diversity of the communities we serve. We actively engage and listen to our Team
Members as they share personal perspectives that could serve as insight for others. We have a Diversity & Inclusion Council comprising
individuals across the Company, at all levels, to help guide, monitor, and reinforce short- and long-term diversity and inclusion goals.
Together we drive diversity, equity and inclusion through:
•
•
Leadership & Talent: attracting, retaining, developing and promoting diverse employees who reflect our communities at all levels of
leadership. During 2021, we introduced updated leadership competencies, with inclusive leadership as a core behavior at every level
of the organization. We launched new leadership development programs including Company-sponsored executive coaching, the
Women of Color LeadHERship Development Program and the McKinsey Black Leaders Academy.
Training & Education: strengthening our training and education programs to include listening, sharing and storytelling. Putting
learning into action to inspire change and lead a culture of authenticity.
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•
Employee Resource Groups: connecting Team Members through dedicated networks focused on relationship building, professional
growth and development, and purposeful community involvement, providing direct impact and value to the business. During 2021,
we actively inspired a sense of community through three Employee Resource Groups:
◦ Women’s Interests Network (WIN): To accelerate the advancement of women working at Bloomin’ Brands by sharing
information, best practices, education and experience, and in so doing helping one another develop leadership skills and
career advancement opportunities.
Black Interests Group (BIG): To elevate Black talent at Bloomin’ Brands by building strong networks that champion
professional growth, mentoring and leadership opportunities across the entire organization.
◦
◦ BELONG: To celebrate understanding, acceptance and involvement of the LGBTQ+ community, fostering an environment
where our people belong and thrive.
• Meaningful Partnerships: being good stewards of our communities and engaging with organizations dedicated to cultivating more
diverse and inclusive communities, including:
◦ Harvest Food Donation
◦ National Urban League
◦ Woman’s Foodservice Forum
◦ Multicultural Foodservice & Hospitality Alliance
◦ National Diversity Council
◦ Autism Speaks
◦ Habitat for Humanity
◦ Big Brothers, Big Sisters of America
◦ Boys & Girls Clubs
We use surveys to seek feedback from our Team Members on a variety of topics that include, but are not limited to, confidence in leadership,
our company culture and overall satisfaction with the Company. We regularly monitor and evaluate turnover and attrition metrics throughout
our management teams. Annual strategic talent reviews and succession planning for executive-level roles, senior management and key
restaurant leadership positions help ensure consistency in management talent quality.
We are committed to high standards of ethical, moral, and legal business conduct and strive to be an open and honest workplace, providing a
positive work environment and fostering a culture of integrity and ethical decision-making. To support this commitment, we have a Code of
Conduct that provides clear direction for behavioral expectations. Every employee, officer and director completes situational training
annually. In addition, we maintain an Ethics and Compliance Hotline (the “Hotline”), where violations and other workplace concerns can be
reported. Team Members can confidentially, and if desired, anonymously, use the Hotline to make a report online or to a live third-party
operator in several languages, 24 hours a day, seven days a week. Annually, we provide training and education to our salaried employees and
most hourly employees with respect to our Code of Conduct, including our anti-corruption and anti-bribery policies.
Workplace Safety - Employee health and safety in the workplace is of utmost importance to our Company. We believe that all employees,
regardless of job role or title, have a shared responsibility in the promotion of health and safety in the workplace. We are committed to
providing and following safety laws and rules, including internal policies and procedures. This commitment means carrying out company
activities in ways that preserve and promote a clean, safe and healthy environment.
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Total Rewards - Our total rewards philosophy is to motivate and retain our Team Members by offering, what we believe to be, competitive
salary packages. To align Team Member objectives with the Company and ultimately our stockholders, Bloomin’ Brands offers programs
that reward long-term performance. Additionally, we offer a well-rounded benefit package that includes the following, along with other
benefits:
• Comprehensive health insurance coverage for Team Members working an average of 30 or more hours each week. This program
includes wellness programs intended to proactively support healthcare and access to a health savings account that is eligible for
employer contributions and is fully portable.
• Virtual therapy that takes place via mobile device or computer, allowing all Team Members, regardless of insurance enrollment with
our Company, to access help when and where they need it, along with guided meditation options. The mental well-being of our Team
Members is important to us.
• Our non-executive salaried Team Members are eligible to receive matching contributions in our 401(k) plan and have access to
financial wellness resources.
Company Response to COVID-19 - During 2021, as the COVID-19 pandemic continued to impact the lives of our Team Members, we
offered educational resources to inform their vaccination decision. We also provided paid time off for hourly Team Members who elected to
be vaccinated.
In 2020, in response to the COVID-19 global crisis, we did not furlough any Team Members and provided $44.9 million of relief pay,
excluding employee retention tax credits earned, for our field hourly Team Members who were impacted by closed dining rooms. We also
paid the employee portion of benefits premiums for Team Members who received relief pay. In addition, Team Members who were
quarantined or who had a personal illness related to COVID-19 received pay.
Employee Support and Community Engagement - Our commitment to our Team Members does not stop with competitive salaries,
development and benefits. In 1999, we created a trust (the “Trust”) to support our Team Members in times of personal hardship. All
contributions to the Trust are voluntary, employee-funded, and are not solicited from suppliers, customers or friends. Due to the incredible
generosity and caring nature of our Team Members, the Trust is able to make meaningful monetary support to our Team Members who
experience very difficult, often unexpected and catastrophic issues, in their lives. Since 2017, the Trust has paid approximately $1.6 million
to the benefit of over 1,100 Team Members who applied for support.
We are inspired by the generosity of our Team Members and encourage them to give back to their communities. To facilitate this community
engagement, Team Members at the Restaurant Support Center are given paid time off for approved community service activities during
scheduled work hours.
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 18, 2022:
NAME
David J. Deno
Christopher Meyer
Kelly Lefferts
Gregg Scarlett
Patrick Murtha
AGE
POSITION
64
50
55
60
63
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, Fleming’s, International & Human Resources
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 our 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 the Company, 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 Chief
Financial Officer and later Chief Operating Officer of Yum! Brands, Inc.
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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 March 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.
Patrick Murtha has served as Executive Vice President, Fleming’s, International & Human Resources since April 2021. Mr. Murtha
previously served as Executive Vice President and President, International from November 2013 to January 2018 and Executive Vice
President, Chief Human Resources Officer from February 2021 to April 2021. He also served as Interim Chief Human Resources Officer
from September 2020 to February 2021. Prior to joining the Company, Mr. Murtha was the Principal Consultant of Murtha Consulting from
January 2018 to December 2020. Mr. Murtha also previously served as Chairman of the Board and Managing Director of KFC, Japan, Ltd.,
Chief Operating Officer of Pizza Hut and Chief People Officer of Yum! Restaurants International.
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
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 and this risk may be exacerbated by
current supply chain issues, which could delay deliveries and necessitate alternative sourcing on short notice. 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
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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 COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, and could continue to materially and
adversely affect our business, revenues, financial condition and results of operations for an extended period of time.
The COVID-19 pandemic and related preventative and protective measures have negatively impacted, and are expected to continue to
impact, our business globally. In the United States and in foreign countries in which we operate, individuals are encouraged to practice social
distancing, and numerous jurisdictions have imposed on a temporary or on-going basis, and others in the future may impose or reinstate,
restrictions from gathering in groups, shelter-in-place orders and similar governmental orders and restrictions for residents to control the
spread of COVID-19, all of which impacts our ability to operate our business. These preventative and protective measures, which vary
significantly across the jurisdictions where our restaurants are located, create a rapidly changing and complicated system for ensuring
compliance and predicting our revenues and cost structure.
In response to the COVID-19 pandemic and these changing conditions, we modified work hours for our team members, identified and
implemented cost savings measures throughout our operations, shifted the majority of our corporate employees to remote working and
temporarily limited our services in the U.S. to carry-out and delivery only from March 2020 through early May 2020. Depending on the
future course of the COVID-19 pandemic and future outbreaks and variants of the virus, we could face additional closures or limitations on
our services or capacity for our restaurant dining rooms. If we revert to solely or primarily off-premises sales, there can be no assurance that
our off-premises sales will grow or remain at levels experienced while our dining rooms were previously closed.
Further, if the business interruptions caused by COVID-19 worsen and we were again required to suspend operations or limit capacity in our
restaurant dining rooms or our assumptions regarding liquidity needs prove inaccurate, we could face liquidity challenges and would need to
seek additional sources of liquidity. There can be no guarantee that additional liquidity will be readily available or available on favorable
terms, especially the longer the COVID-19 pandemic lasts.
Our restaurant operations could be further disrupted if any of our employees are diagnosed with COVID-19, since this could require
restaurant closures or require some or all of a restaurant’s employees to self-quarantine. If our customers become ill, a significant percentage
of our or our suppliers’ or distributors’ workforce is unable to work, or if there are similar disruptions in the supply chain generally for
certain products, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19,
we could face disruptions to restaurant operations, cost increases and shortages of food or other supplies, or reputational harm or negative
publicity directed at our brands that causes customers to avoid our restaurants, potentially materially adversely affecting our operations and
sales.
In addition, the operations of our franchisees are subject to the same risks discussed above with respect to our business, and the COVID-19
pandemic has and may continue to cause financial distress to our franchisees. We have deferred or permanently waived certain of our
franchisees’ payment obligations as a result, which deferments or waived payments may not be sufficient if financial distress continues. In
some cases, we are contingently liable for franchisee lease obligations, and a failure by a franchisee to perform its obligations under such
lease could result in direct payment obligations for us.
We have and could continue to experience other material impacts as a result of COVID-19, including, but not limited to, impairment charges.
We cannot accurately predict the amount and timing of any further impairment of assets. A significant amount of judgment is involved in
determining if an indication of impairment exists and the COVID-19 pandemic has made developing forecasts for, and the accounting of,
valuation of goodwill and certain other assets slower and more difficult. Should the value of goodwill or other intangible or long-lived assets
become
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further impaired, there could be an adverse effect on our financial condition and consolidated results of operations. To the extent the COVID-
19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described
in this Report.
We are subject to various federal and state employment and labor laws and regulations.
Various employment and labor laws and regulations govern our relationships with our employees throughout the world and affect operating
costs. 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, including any temporary or
permanent measures implemented in response to COVID-19, 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. As minimum wage increases continue to be implemented in states in which we operate, we expect our labor costs will
continue to increase. In addition, President Biden has called for an increase in the federal minimum wage from $7.25 per hour to $15.00 per
hour, which, if implemented, would materially increase our labor and other costs. 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. In
addition, 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.
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. Further, 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.
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, labor shortages or other reasons. We are anticipating commodity inflation of
approximately 11.0% to 13.0% and mid-single digit labor cost inflation during 2022, but there can be no assurance it will not be greater than
that or that we will be able to pass through increased costs in our prices. 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.
We depend on frequent deliveries of fresh food products that meet our specifications, and we have a limited number of suppliers and
distributors for our major products, such as beef. These factors subject us to the risk that shortages or interruptions in products could
adversely affect the availability, quality or cost of products or require us to incur more costs to obtain adequate products if we are unable to
manage supply chain risk. During 2021, we purchased: (i) more than 90% 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) more than 95% of our Brazil beef raw materials from three beef
suppliers that represent approximately 50% of the total beef marketplace in Brazil. 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. Global economic factors continue to place significant pressure
on suppliers, making the supply environment more expensive and causing
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supply chain issues. Supply shortages or disruptions caused by inclement weather, climate change, natural disasters, pandemics (including
COVID-19), financial or solvency issues of our suppliers or distributors, fuel increases or other conditions beyond our control could
adversely affect our operations and operating results. In addition, if any of our suppliers or distributors were unable to fulfill their
responsibilities or we were unable to maintain current purchasing terms or ensure service availability and we were unable to locate substitutes
in a timely manner, especially given the prolonged effects of COVID-19, we may encounter supply shortages, 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.
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, team members 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 or implement other measures to
better address COVID-related business risks. 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.
Failure to recruit, train and retain high-quality leadership, restaurant-level management and team members may 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.
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, and such
competition could require us to pay higher wages or incur higher costs for retaining and incentivizing our 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. A shortage of team members also could cause our restaurants to operate with reduced staff, which could adversely
affect our ability to provide high quality guest service.
Challenging economic, political and social conditions may have a negative effect on our business and financial results.
Challenging economic, political and social conditions may negatively impact consumer spending and thus cause a challenging sales
environment in the casual dining sector and a decline in our financial results. For example,
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international, domestic and regional economic conditions, consumer income levels, financial market volatility, inflation, social unrest and
governmental, political and budget matters may have a negative effect on consumer confidence and discretionary spending, which the
restaurant industry depends upon. Protests, demonstrations, riots, civil disturbance, disobedience, insurrection, or social and other political
unrest, such as those seen in recent years, have and may continue to result in restrictions, curfews, or other actions and give rise to significant
changes in regional and global economic conditions. If such events or disruptions persist for a prolonged period of time, our overall business
and results of operations may be adversely affected.
In addition, it is difficult to predict what impact, if any, changes in federal policy, including tax policies, will have on our industry, the
economy as a whole, consumer confidence and discretionary spending. As a result, the nature, timing and impact on our business of potential
changes to the current legal and regulatory frameworks are uncertain. It is also difficult to predict what the long-term economic impacts of
the ongoing COVID-19 pandemic may be.
A decline in economic, political or social 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.
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 penetration testing and engage third parties to assess 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
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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, to the extent such costs are not covered by our
applicable insurance policies. 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.
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.
Social media allows 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 at any time, and such
information can quickly reach a wide audience. Social media has also been utilized to target specific companies or brands as a result of a
variety of actions or inactions, or perceived actions or inactions, 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, anticipate and
promptly respond to such developments. 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.
Our failure to use social media responsibly in our marketing efforts may further expose us to these risks. As part of our marketing efforts, we
rely on search engine marketing and social media platforms to attract and retain guests. We need to continuously innovate and develop our
social media strategies in order to maintain broad appeal with guests and brand relevance. 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 or personal information and negative publicity. 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.
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.
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.
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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. In recent years, there were protests in cities throughout the U.S. as well as
globally, including in Hong Kong, in connection with civil rights, liberties, and social and governmental reform.
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.
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
menu labeling rules, nutritional guidelines and 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. Our sales may be negatively affected if these platforms are
damaged or interrupted through technological failures or otherwise. 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.
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 U.S. or foreign tax laws, comprehensive tax
reform measures or other legislative changes and the outcome of income tax audits. For example, the U.S. and Brazil have recently proposed
significant changes to their respective tax laws. Although we cannot predict whether or in what form these proposals may pass, several of the
proposals considered, if enacted into law, could have a material impact on our effective income tax rate, income tax expense and cash flows.
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.
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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. Alcoholic beverage sales represent ten percent 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. We may also incur costs of and challenges in ensuring compliance with
measures implemented in response to COVID-19, such as requirements for physical barriers or other preventative measures in restaurants or
vaccination or testing requirements for our employees, which can vary by the location of the restaurant and may continue to change.
Failure to achieve 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. In addition, during 2020, we implemented certain measures to reduce costs and preserve liquidity in response to the
impacts of COVID-19. If we were required to implement similar measures in the future, they may not be sustainable or may be detrimental to
continued operations. 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.
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.
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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 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 affected.
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 2022
development schedule calls for the construction of approximately 30 new system-wide locations, with half 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
and terms on which we can lease attractive sites for new or relocated restaurants, availability and terms of funding, recruiting, training and
retaining skilled management and restaurant employees, construction or other delays, the availability of construction materials or restaurant
equipment, construction and renovation costs and consumer tastes and acceptance of our restaurant concepts and awareness of our brands in
new regions.
It is difficult to estimate the performance of newly opened restaurants and whether they may attract customers away from other restaurants
we own. If new or existing 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.
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 remodels and relocations and close underperforming restaurants. We incur significant lease termination or continuation
expenses and asset impairment and other charges when we close or relocate a restaurant. 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 initiatives may not yield the desired return on investment, which could have a negative effect on our operating results.
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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 default 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.
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. The COVID-19
pandemic may also have an impact on consumer behaviors and customer traffic that may result in temporary changes in the seasonal
fluctuations of our business. 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 disrupt our operations or supply chain and 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, the COVID-19 pandemic, severe winter weather conditions and hurricanes have impacted our traffic, and that of our
franchises, and results of operations in recent years. Although we cannot predict when or where we will be negatively impacted by adverse
weather events, to the extent that climate change or other factors result in more frequent, widespread or severe events, it could adversely
impact our results. U.S. and foreign governmental officials also have placed an increasing focus on environmental matters, including climate
change, reduction of greenhouse gases and water consumption. This increased focus could lead to legislative, regulatory or other efforts to
combat these environmental concerns. These efforts could result in further increases in taxes, cost of supplies, transportation and utilities,
which could increase our operating costs and those of our franchisees and require future investments in facilities and equipment. There may
also be increased pressure for us to make commitments, set targets or establish goals to take actions to meet them, which could expose us and
our franchisees to market, operational, execution and reputational costs or risks.
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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, 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.
Risks Related to Our Indebtedness
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. For
example, if COVID-19 conditions worsen, inflation persists, or our financial position deteriorates, our revenues and liquidity position may
decline. 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.
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Our leverage could adversely affect our ability to raise additional capital to fund our operations or limit our ability to react to changes in
the economy or our industry.
As of December 26, 2021, our total net indebtedness was $793.1 million and we had $699.3 million in available unused borrowing capacity
under our revolving credit facility, net of undrawn letters of credit of $20.7 million. In May 2020, we issued $230.0 million of 5.00%
convertible senior notes due in 2025 (the “2025 Notes”) and in April 2021 we issued $300.0 million of 5.125% senior notes due in 2029 (the
“2029 Notes”).
Based on the daily closing prices of our stock during the quarter ended December 26, 2021, holders of the 2025 Notes are eligible to convert
their 2025 Notes during the first quarter of 2022.
Our 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 or limiting our ability to obtain additional financing if needed;
reducing our ability to use our cash flow to fund our operations, capital expenditures, dividend payments, and future business and
strategic opportunities; 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 credit agreement. If new
indebtedness is added to our current debt levels, the related risks that we now face could increase.
We cannot be certain that our financial condition or credit and other market conditions will be favorable when our credit agreement matures
in 2026, 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.
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 credit agreement. If our lenders accelerate the repayment of borrowings, we cannot be certain that we will have sufficient assets to
repay them.
Risks Related to Our Common Stock
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
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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, 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.
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, widespread/pandemic illness, natural
disasters, cyber-attacks, terrorist acts, war or other calamities and changes in general market and economic conditions.
Provisions in our certificate of incorporation and bylaws 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 (including provisions related to our classified board structure through
2024 and supermajority voting requirements) that could have the effect of discouraging, delaying or preventing a change of control of our
company or changes in our management. 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.
General Risk Factors
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
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intangible or long-lived assets become impaired, there could be an adverse effect on our financial condition and consolidated results of
operations.
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. 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 a lack of sufficient 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.
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.
Item 1B. Unresolved Staff Comments
Not applicable.
29
Table of Contents
Item 2. Properties
BLOOMIN’ BRANDS, INC.
We had 1,498 system wide full-service restaurants and off-premises only kitchens located across 47 states, Guam and 17 countries as of
December 26, 2021. The following is a summary of our restaurant and kitchen locations by country and territory as of December 26, 2021:
COMPANY-OWNED
FRANCHISED
United States
International:
Brazil (1)
China (Mainland)
Hong Kong
Total international Company-owned
Total Company-owned
1,013 United States
International:
Argentina
Australia
Bahamas
Canada
135
1
20
156
Costa Rica
Dominican Republic
Guam
Indonesia
Total international franchised
1,169 Total franchised
Japan
2
8 Mexico
1
3
Philippines
Qatar
Saudi Arabia
South Korea
Turks and Caicos
1
1
1
3
157
10
5
3
4
11
118
1
172
329
____________________
(1)
The count for Brazil is reported as of November 30, 2021 to correspond with the balance sheet date of this subsidiary.
We lease substantially all of our restaurant properties from third parties. As of December 26, 2021, 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
U.S.
INTERNATIONAL
TOTAL
PERCENTAGE OF
TOTAL
26
682
305
1,013
—
—
156
156
26
682
461
1,169
2 %
58 %
40 %
100 %
We also lease corporate offices in Tampa, Florida and São Paulo, Brazil.
Item 3. Legal Proceedings
For a description of our legal proceedings, see Note 22 - Commitments and Contingencies of the Notes to Consolidated Financial Statements
of this Report.
Item 4. Mine Safety Disclosures
Not applicable.
30
Table of Contents
PART II
BLOOMIN’ BRANDS, INC.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information - Our common stock is listed on the Nasdaq Global Select Market under the symbol “BLMN”.
Dividends - We began paying quarterly cash dividends on shares of our common stock in 2015 but suspended dividends in early 2020 at the
onset of the COVID-19 pandemic. Under our Second Amended and Restated Credit Agreement (the “Credit Agreement”), we were restricted
from paying dividends until after September 26, 2021 and we were compliant with our financial covenants. We were compliant with our
financial covenants as of December 26, 2021 and in February 2022, our Board of Directors (our “Board”) declared a quarterly cash dividend.
Future dividend payments will depend on continued compliance with our financial covenants, as well as our earnings, financial condition,
capital expenditure requirements, surplus and other factors that our Board considers relevant.
Holders - As of February 18, 2022, there were 104 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 26, 2021:
(shares in thousands)
(a)
(b)
(c)
PLAN CATEGORY
NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
(1)
WEIGHTED AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
(2)
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
COMPENSATION PLANS
(EXCLUDING SECURITIES
REFLECTED IN COLUMN
(a)) (3)
Equity compensation plans approved by security holders
5,765 $
20.42
8,911
____________________
(1)
(2)
(3)
Includes 1,489 shares issuable in respect to restricted stock units and performance-based share units (assuming target achievement of applicable performance
metrics).
Amounts in this column relate only to options exercisable for common shares.
The shares remaining available for issuance may be issued in the form of stock options, restricted stock units or other stock awards under the 2020 Omnibus
Incentive Compensation Plan.
Unregistered Sales of Equity Securities - Convertible Senior Notes and Warrants - In May 2020, we issued $230.0 million of 5.00% senior
notes that are convertible into approximately 19.348 million shares of our common stock, at the initial conversion rate, and mature on May 1,
2025, unless earlier converted, redeemed or purchased by us (the “2025 Notes”). In connection with the offering of the 2025 Notes, we also
sold warrants for approximately 19.348 million shares of our common stock with an initial strike price of $16.64.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers - We did not repurchase any shares of our outstanding common stock
during the thirteen weeks ended December 26, 2021. On February 8, 2022, our Board approved a share repurchase program (the “2022 Share
Repurchase Program”), as announced in our press release issued on February 18, 2022, under which we are authorized to repurchase up to
$125.0 million of our outstanding common stock. The 2022 Share Repurchase Program will expire on August 9, 2023.
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BLOOMIN’ BRANDS, INC.
Stock Performance Graph - The following graph depicts total return to stockholders from December 23, 2016 through December 26, 2021,
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 23, 2016 (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 23,
2016
DECEMBER 31,
2017
DECEMBER 30,
2018
DECEMBER 29,
2019
DECEMBER 27,
2020
DECEMBER 26,
2021
100.00 $
100.00 $
118.89 $
120.51 $
99.68 $
114.23 $
125.24 $
151.89 $
110.66 $
176.78 $
100.00 $
121.35 $
121.01 $
157.41 $
204.58 $
122.33
228.79
258.53
Bloomin’ Brands, Inc.
(BLMN)
Standard & Poor’s 500
Standard & Poor’s Consumer
Discretionary
$
$
$
Item 6. [Reserved]
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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 2019, see our Annual Report on Form 10-K for the year ended December 27, 2020, filed
with the SEC on February 24, 2021.
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 26, 2021, we owned and operated 1,169 full-service restaurants and off-premises only kitchens and franchised 329 full-service
restaurants and off-premises only kitchens across 47 states, Guam and 17 countries. We have four founder-inspired concepts: Outback
Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.
Financial Highlights
Our financial highlights for 2021 include the following:
• U.S. combined and Outback Steakhouse comparable restaurant sales of 30.5% and 24.2%, respectively, relative to 2020 and 4.5%
and 3.2%, respectively, relative to 2019;
• An increase in Total revenues of 30.0%, as compared to 2020, and a decrease in Total revenues of 0.4%, as compared to 2019;
• Restaurant-level operating margin of 16.5% for 2021, as compared to 9.9% and 14.9% for 2020 and 2019, respectively;
• Decrease in General and administrative expense of $8.7 million and $29.6 million, as compared to 2020 and 2019, respectively;
•
Income from operations of $309.0 million in 2021, as compared to Loss from operations of $(175.0) million in 2020 and Income
from operations of $191.1 million in 2019; and
• Diluted earnings (loss) per share attributable to common stockholders of $2.00 in 2021 as compared to $(1.85) and $1.45 in 2020 and
2019, respectively.
Business Strategies
In 2022, 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 share repurchases and dividends.
•
•
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.
Accelerate Growth Opportunities. We believe a substantial development opportunity remains for our concepts in the U.S. and
internationally through existing geography fill-in and market expansion. We will
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
continue to pursue U.S. fill-in opportunities in key states such as Florida and Texas with Outback, and California and Florida with
Fleming’s. We will also focus on 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 cost
savings and productivity initiatives across our businesses.
Key Financial Performance Indicators
Key measures that we use in evaluating our restaurants and assessing our business include the following:
•
Average restaurant unit volumes—average sales (excluding gift card breakage) per restaurant to measure changes in customer traffic,
pricing and development of the brand;
• Comparable restaurant sales—year-over-year comparison of the change in 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 (loss) from operations, Net income (loss) and Diluted earnings (loss) 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 Food and
beverage costs, Labor and other related expenses and Other restaurant operating expenses (including advertising expenses) represent,
in each case as such items are reflected in our Consolidated Statements of Operations and Comprehensive Income (Loss). The
following categories of our revenue and operating expenses are not included in restaurant-level operating margin because we do not
consider them reflective of operating performance at the restaurant-level within a period:
(i) Franchise and other revenues which are earned primarily from franchise royalties and other non-food and beverage revenue
streams, such as rental and sublease income.
(ii) Depreciation and amortization which, although substantially all of which is related to restaurant-level assets, represent historical
sunk costs rather than cash outlays for the restaurants.
(iii) General and administrative expense which includes primarily non-restaurant-level costs associated with support of the
restaurants and other activities at our corporate offices.
(iv) Asset impairment charges and restaurant closing costs which are not reflective of ongoing restaurant performance in a period.
Restaurant-level operating margin excludes various expenses, as discussed above, that are essential to support the operations of our
restaurants and may materially impact our Consolidated Statements of Operations and Comprehensive Income (Loss). 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 (loss) or Income (loss) 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; and
34
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
•
Adjusted restaurant-level operating margin, Adjusted income (loss) from operations, Adjusted net income (loss) and Adjusted diluted
earnings (loss) 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.
Selected Operating Data
The table below presents the number of our full-service restaurants in operation as of the periods indicated:
Number of restaurants (at end of the period):
U.S.:
DECEMBER 26, 2021
DECEMBER 27, 2020
Outback Steakhouse
Company-owned
Franchised
Total
Carrabba’s Italian Grill
Company-owned
Franchised
Total
Bonefish Grill
Company-owned
Franchised
Total
Fleming’s Prime Steakhouse & Wine Bar
Company-owned
Aussie Grill
Company-owned (1)
U.S. total
International:
Company-owned
Outback Steakhouse - Brazil (2)
Other (1)(3)
Franchised
Outback Steakhouse - South Korea (1)
Other (3)
International total
System-wide total
System-wide total - Company-owned
System-wide total - Franchised
564
130
694
199
20
219
178
7
185
64
5
568
138
706
199
21
220
180
7
187
63
3
1,167
1,179
122
33
78
54
287
1,454
1,165
289
109
32
76
56
273
1,452
1,154
298
____________________
(1)
(2)
(3)
Restaurant counts as of December 27, 2020 have been adjusted to exclude off-premises only locations included in the table below.
The restaurant counts for Brazil are reported as of November 30, 2021 and 2020, respectively, to correspond with the balance sheet dates of this subsidiary.
International Company-owned Other included two and one Aussie Grill locations as of December 26, 2021 and December 27, 2020, respectively. International
Franchised Other included three Aussie Grill locations as of December 26, 2021 and December 27, 2020.
35
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
The table below presents the number of our off-premises only kitchens in operation as of the periods indicated:
Number of kitchens (at end of the period) (1):
U.S:
Company-owned
International:
Company-owned
Franchised - South Korea
System-wide total
____________________
(1)
Excludes virtual concepts that operate out of existing restaurants and sports venue locations.
Results of Operations
DECEMBER 26, 2021
DECEMBER 27, 2020
3
1
40
44
2
1
19
22
The following table sets forth the percentages of certain items in our Consolidated Statements of Operations in relation to Total revenues or
Restaurant sales for the periods indicated:
FISCAL YEAR
2021
2020
Revenues
Restaurant sales
Franchise and other revenues
Total revenues
Costs and expenses
Food and beverage costs (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 (loss) from operations
Loss on extinguishment and modification of debt
Other income, net
Interest expense, net
Income (loss) before provision (benefit) for income taxes
Provision (benefit) for income taxes
Net income (loss)
Less: net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to Bloomin’ Brands
98.5 %
1.5
100.0
30.3
28.4
24.8
4.0
6.0
0.3
92.5
7.5
(0.1)
*
(1.4)
6.0
0.6
5.4
0.2
5.2 %
99.2 %
0.8
100.0
31.3
32.0
26.9
5.7
8.0
2.4
105.5
(5.5)
(*)
*
(2.1)
(7.6)
(2.6)
(5.0)
(*)
(5.0)%
____________________
(1)
*
As a percentage of Restaurant sales.
Less than 1/10 of one percent of Total revenues.
th
36
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 2020
Change from:
Comparable restaurant sales (1)
Restaurant openings (1)
Restaurant closures
Effect of foreign currency translation
For fiscal year 2021
FISCAL YEAR
2021
3,144.6
912.7
54.4
(35.3)
(15.3)
4,061.1
$
$
____________________
(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 2021 as compared to 2020 was primarily due to: (i) higher comparable restaurant sales from recovery of
in-restaurant dining from the significantly reduced levels in 2020 after the onset of the pandemic and strong retention of off-premises sales
and (ii) the opening of 48 new restaurants not included in our comparable restaurant sales base. The increase in Restaurant sales was partially
offset by the closure of 46 restaurants since December 29, 2019 and the effect of foreign currency translation of the Brazilian Real relative to
the U.S. dollar.
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 5.33 and 4.85 for 2021 and 2020, respectively.
37
$
$
$
$
$
FISCAL YEAR
2021
2020
3,822 $
3,283 $
3,036 $
5,208 $
2,286 $
29,415
10,348
9,318
3,321
5,907
3,062
2,468
2,135
3,189
1,996
29,714
10,474
9,651
3,418
5,389
Table of Contents
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Comparable Restaurant Sales, Traffic and Average Check Per Person Increases (Decreases)
Following is a summary of comparable restaurant sales, traffic and average check per person increases (decreases) for the periods indicated:
FISCAL YEAR
2021
2020
COMPARABLE TO 2019
(1)
COMPARABLE TO 2020 COMPARABLE TO 2019
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
3.2 %
10.5 %
(1.7)%
13.4 %
4.5 %
(12.0)%
(2.6)%
6.4 %
(2.0)%
3.8 %
(0.6)%
(3.6)%
5.8 %
4.1 %
0.3 %
9.6 %
5.1 %
(8.2)%
24.2 %
32.2 %
40.6 %
60.9 %
30.5 %
28.7 %
18.1 %
24.6 %
24.3 %
41.7 %
20.7 %
23.5 %
6.1 %
7.6 %
16.3 %
19.2 %
9.8 %
5.6 %
(16.9)%
(16.4)%
(30.1)%
(29.5)%
(19.9)%
(31.4)%
(17.6)%
(14.6)%
(20.0)%
(26.7)%
(17.6)%
(21.5)%
0.7 %
(1.8)%
(10.1)%
(2.8)%
(2.3)%
(9.9)%
____________________
(1)
Represents comparable restaurant sales, traffic and average check per person increases (decreases) relative to fiscal year 2019 for improved comparability due to
the impact of COVID-19 on fiscal year 2020 restaurant sales.
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 includes the impact of menu pricing changes, product mix and discounts.
(2)
(3)
(4)
38
Table of Contents
Franchise and other revenues
(dollars in millions)
Franchise revenues (1)
Other revenues (2)
Franchise and other revenues
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
FISCAL YEAR
2021
2020
$
$
45.5 $
15.8
61.3 $
21.2
4.7
25.9
____________________
(1)
(2)
Represents franchise royalties, advertising fees and initial franchise fees. Franchise revenues increased during 2021 primarily due to higher franchise sales as a
result of the impact of COVID-19 on 2020 franchise sales.
Includes a $3.1 million benefit in 2021 from the recognition of recoverable Program of Social Integration (“PIS”) and Contribution for the Financing of Social
Security (“COFINS”) taxes in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base. The amount recognized
as a result of the favorable court rulings primarily represents refundable PIS and COFINS taxes for prior years, including accrued interest, and will be recovered
by offsetting future PIS and COFINS taxes due.
Franchisee Deferred Payment Agreement - On December 27, 2020, we entered into the Resolution Agreement with Out West, who currently
franchises approximately 80 Outback Steakhouse restaurants in the western United States, primarily in California. Under the terms of the
Resolution Agreement, we agreed to permanently waive all past due royalties and advertising fees for the period of February 24, 2020 to July
26, 2020 and defer, among other items, all past due royalties and advertising fees for the period of July 27, 2020 to November 22, 2020 due
to the significant impact of the COVID-19 pandemic on Out West’s business. See Note 4 - Revenue Recognition of the Notes to Consolidated
Financial Statements for further details regarding the Resolution Agreement.
During 2021, Out West franchise revenues recovered, approaching historical levels. Following is a summary of franchise and other revenues
and comparable restaurant sales for Out West franchised locations for the periods indicated:
(dollars in millions)
Franchise revenues
Other revenues
Franchise and other revenues (1)
FISCAL YEAR
2021
2020
$
$
22.4
5.3
27.7
$
$
4.4
1.0
5.4
Out West comparable restaurant sales (stores open 18 months or more)
50.7 %
(32.9)%
____________________
(1)
Franchise and other revenues during 2020 were significantly impacted by the COVID-19 pandemic. During 2021, we collected Out West monthly royalty and advertising fees, and
$5.1 million of past due amounts deferred under the Resolution Agreement.
COSTS AND EXPENSES
Food and beverage costs
(dollars in millions)
Food and beverage costs
% of Restaurant sales
FISCAL YEAR
2021
2020
CHANGE
$
1,229.7
$
30.3 %
982.7
31.3 %
(1.0)%
Food and beverage costs decreased as a percentage of Restaurant sales in 2021 as compared to 2020 primarily due to: (i) 0.9% from increases
in average check per person, primarily driven by reduced discounting and an increase in menu pricing, (ii) 0.4% from the impact of certain
cost savings initiatives and (iii) 0.3% from inventory obsolescence and spoilage costs during 2020 associated with the COVID-19 pandemic.
These decreases were partially offset by an increase as a percentage of Restaurant sales of 0.6% from commodity inflation.
39
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
In 2022, we anticipate approximately 11.0% to 13.0% commodity inflation, with approximately 70% of our estimated annual food purchases
currently covered by fixed contracts and the remainder subject to floating market prices.
Labor and other related expenses
(dollars in millions)
Labor and other related
% of Restaurant sales
FISCAL YEAR
2021
2020
CHANGE
$
1,154.6
$
28.4 %
1,005.3
32.0 %
(3.6)%
Labor and other related expenses include all direct and indirect labor costs incurred in operations, including distribution expense to
Restaurant Managing Partners and other field incentive compensation expenses. Labor and other related expenses decreased as a percentage
of Restaurant sales in 2021 as compared to 2020 primarily due to 4.1% from leveraging increased restaurant sales and 0.8% from the 2020
impact of net relief pay. These decreases were partially offset by increases as a percentage of Restaurant sales of 0.8% from wage rate
increases and 0.4% from higher management bonus.
In 2022, we anticipate high-single digit labor cost inflation.
Other restaurant operating expenses
(dollars in millions)
Other restaurant operating
% of Restaurant sales
FISCAL YEAR
2021
2020
CHANGE
$
1,006.4
$
24.8 %
846.6
26.9 %
(2.1)%
In August 2021, we entered into the Royalty Termination Agreement with the Carrabba’s Founders for $61.9 million in cash. See Note 22 -
Commitments and Contingencies for additional details. We recorded Carrabba’s Italian Grill royalty expense of $3.0 million and $3.8 million
during fiscal years 2021 and 2020, respectively.
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 decreased as a percentage of Restaurant sales in 2021 as compared to 2020 primarily due to: (i)
3.2% from leveraging increased restaurant sales, (ii) 1.0% from lower advertising expense and (iii) 0.3% from a decrease in off-premises
related costs. These decreases were partially offset by increases as a percentage of Restaurant sales of 1.5% from the Carrabba’s Italian Grill
royalty termination payment and 0.8% from higher utilities, operating and rent expense.
Depreciation and amortization
(dollars in millions)
Depreciation and amortization
FISCAL YEAR
2021
2020
CHANGE
$
163.4 $
180.3 $
(16.9)
Depreciation and amortization decreased in 2021 as compared to 2020 primarily due to a decreased level of capital expenditures since 2018,
as compared to historical levels, and asset impairments during 2020.
40
Table of Contents
General and administrative
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
General and administrative expense includes salaries and benefits, management incentive programs, related payroll tax and benefits, other
employee-related costs and professional services. Following is a summary of the change in General and administrative expense for the period
indicated:
(dollars in millions)
For fiscal year 2020
Change from:
Transformational costs
Severance
Expected credit losses and contingent lease liabilities
Travel and entertainment
Employee stock-based compensation
Incentive compensation
Other
For fiscal year 2021
Provision for impaired assets and restaurant closings
(dollars in millions)
Provision for impaired assets and restaurant closings
FISCAL YEAR
2021
254.4
(12.7)
(7.0)
(6.9)
(2.3)
9.7
7.6
2.8
245.6
$
$
FISCAL YEAR
2021
2020
CHANGE
$
13.7 $
76.4 $
(62.7)
During 2020, we recognized asset impairment and closure charges of $66.5 million and $3.6 million within the U.S. and international
segments, respectively, primarily related to the COVID-19 pandemic. COVID-19-related pre-tax asset impairments and closure costs include
$23.8 million in connection with the closure of 22 U.S. restaurants and from the update of certain cash flow assumptions, including lease
renewal considerations. During 2020, we also recognized asset impairment charges related to transformational initiatives of $6.3 million,
which were not allocated to our operating segments. See Note 5 - Impairments, Exit Costs and Disposals of the Notes to Consolidated
Financial Statements for further information.
The impairment and closure charges during 2021 resulted primarily from locations identified for closure or relocation.
Income (loss) from operations
(dollars in millions)
Income (loss) from operations
% of Total revenues
FISCAL YEAR
2021
2020
CHANGE
$
309.0
$
7.5 %
(175.0)
(5.5)%
13.0 %
Income from operations during 2021 as compared to Loss from operations during 2020 was primarily due to: (i) higher comparable restaurant
sales and franchise revenues, (ii) COVID-19 pandemic related charges and the impact of transformational and restructuring initiatives during
2020, (iii) lower advertising expense, (iv) the 2020 impact of net relief pay, (v) lower depreciation and amortization expense and (vi) the
impact of certain cost savings initiatives. These increases were partially offset by: (i) the Carrabba’s Italian Grill royalty termination payment,
(ii) higher labor costs and commodity inflation, (iii) an increase in incentive compensation and management bonus and (iv) higher utilities
and operating expense.
41
Table of Contents
Interest expense, net
(dollars in millions)
Interest expense, net
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
FISCAL YEAR
2021
2020
CHANGE
$
57.6 $
64.4 $
(6.8)
The decrease in Interest expense, net during 2021 as compared to 2020 was primarily due to: (i) lower revolver and term loan borrowings, (ii)
the discontinuance of debt discount amortization related to our 2025 Notes resulting from the modified retrospective adoption of a new
accounting standard during 2021 and (iii) lower interest rates on our unhedged variable rate debt. These decreases were partially offset by
increases in interest expense from our 2029 Notes issued in April 2021 and our 2025 Notes issued in May 2020.
Provision (benefit) for income taxes
(dollars in millions)
Income (loss) before provision (benefit) for income taxes
Provision (benefit) for income taxes
Effective income tax rate
FISCAL YEAR
2021
2020
CHANGE
$
$
249.3
26.4
10.6 %
$
$
(239.5)
(80.7)
33.7 %
$
$
488.8
107.1
(23.1)%
The net decrease in the effective income tax rate in 2021 as compared to 2020 was primarily due to the benefit of FICA tax credits on certain
employees’ tips reducing the effective income tax rate in 2021 as a result of pre-tax book income as compared to increasing the effective
income tax rate in 2020 as a result of pre-tax book loss.
We have a blended federal and state statutory rate of approximately 26%. The effective income tax rate was lower in 2021 and higher in 2020
than the blended federal and state statutory rate primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips.
Segments
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 (“CODM”). We aggregate our operating segments into two reportable segments,
U.S. and international. The U.S. segment includes all restaurants operating in the U.S. while restaurants operating outside the U.S. are
included in the international segment.
Revenues for both segments include only transactions with customers and exclude intersegment revenues. Excluded from Income (loss) from
operations for U.S. and international are certain legal and corporate costs not directly related to the performance of the segments, most stock-
based compensation expenses and certain bonus expenses.
During 2020, we recorded $32.4 million of pre-tax charges as a part of transformational initiatives. These costs were primarily recorded
within General and administrative expense and Provision for impaired assets and restaurant closings and were not allocated to our segments
since our CODM does not consider the impact of transformational initiatives when assessing segment performance.
Refer to Note 23 - Segment Reporting of the Notes to Consolidated Financial Statements for reconciliations of segment income (loss) from
operations to the consolidated operating results.
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
U.S. Segment
(dollars in thousands)
Revenues
Restaurant sales
Franchise and other revenues
Total revenues
Restaurant-level operating margin
Income (loss) from operations
Operating income (loss) 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 2020
Change from:
Comparable restaurant sales (1)
Restaurant openings (1)
Restaurant closures
For fiscal year 2021
FISCAL YEAR
2021
2020
$
$
$
3,714,848
45,133
3,759,981
17.1 %
443,887
11.8 %
$
$
$
2,869,547
15,995
2,885,542
9.8 %
(1,630)
(0.1)%
FISCAL YEAR
2021
2,869.5
854.9
25.2
(34.7)
3,714.9
$
$
____________________
(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 U.S. Restaurant sales in 2021 as compared to 2020 was primarily due to: (i) higher comparable restaurant sales from recovery
of in-restaurant dining from the significantly reduced levels in 2020 after the onset of the pandemic and strong retention of off-premises sales
and (ii) the opening of 15 new restaurants not included in our comparable restaurant sales base. These increases were partially offset by the
closure of 45 restaurants since December 29, 2019.
Income (loss) from operations
U.S. Income from operations generated during 2021 as compared to Loss from operations during 2020 was primarily due to: (i) higher
comparable restaurant sales and franchise revenues, (ii) COVID-19 pandemic related charges during 2020, (iii) the 2020 impact of net relief
pay, (iv) lower advertising expense, (v) lower delivery-related costs and (vi) the impact of certain cost savings initiatives. These increases
were partially offset by: (i) the Carrabba’s Italian Grill royalty termination payment, (ii) higher labor costs and commodity inflation, (iii)
higher utilities and operating expense and (iv) higher management bonus.
43
Table of Contents
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
International Segment
(dollars in thousands)
Revenues
Restaurant sales
Franchise and other revenues
Total revenues
Restaurant-level operating margin
Income (loss) from operations
Operating income (loss) margin
Restaurant sales
FISCAL YEAR
2021
2020
$
$
$
346,245
16,159
362,404
12.7 %
16,657
4.6 %
$
$
$
275,089
9,930
285,019
8.3 %
(13,479)
(4.7)%
Following is a summary of the change in international segment Restaurant sales for the period indicated:
(dollars in millions)
For fiscal year 2020
Change from:
Comparable restaurant sales (1)
Restaurant openings (1)
Effect of foreign currency translation
Restaurant closures
For fiscal year 2021
FISCAL YEAR
2021
275.1
57.8
29.2
(15.3)
(0.6)
346.2
$
$
____________________
(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 international Restaurant sales in 2021 as compared to 2020 was primarily due to: (i) higher comparable restaurant sales
principally attributable to the impact of the COVID-19 pandemic on fiscal year 2020 international Restaurant sales and (ii) the opening of 33
new restaurants not included in our comparable restaurant sales base. These increases were partially offset by the effect of foreign currency
translation of the Brazil Real relative to the U.S. dollar.
Income (loss) from operations
International Income from operations generated during 2021 as compared to Loss from operations during 2020 was primarily due to higher
restaurant sales due to the reopening of restaurant dining rooms and increases in average check per person. These increases were partially
offset by: (i) additional utilities, rent and operating expense, (ii) commodity inflation and (iii) higher labor costs.
Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S. GAAP, we provide certain non-GAAP measures, which present operating results
on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with U.S. GAAP
and include the following: (i) system-wide sales, (ii) Adjusted restaurant-level operating margins, (iii) Adjusted income (loss) from
operations and the corresponding margins, (iv) Adjusted net income (loss) and (v) Adjusted diluted earnings (loss) per share.
44
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
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 our Board
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 4 - Revenue Recognition of the Notes to
Consolidated Financial Statements.
The following table provides a summary of sales of franchised restaurants for the periods indicated, 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
Bonefish Grill
U.S. total
International
Outback Steakhouse - South Korea
Other
International total
Total franchise sales (1)
FISCAL YEAR
2021
2020
$
$
445 $
44
11
500
305
112
417
917 $
327
32
8
367
253
66
319
686
____________________
(1)
Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive Income (Loss).
45
Table of Contents
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Restaurant-level operating margin - The following tables reconcile consolidated and segment Income (loss) from operations and the
corresponding margins to Restaurant-level operating income and the corresponding margins for the periods indicated:
Consolidated
(dollars in thousands)
Income (loss) from operations
Operating income (loss) margin
Less:
Franchise and other revenues
Plus:
Depreciation and amortization
General and administrative
Provision for impaired assets and restaurant closings
Restaurant-level operating income
Restaurant-level operating margin
U.S.
(dollars in thousands)
Income (loss) from operations
Operating income (loss) margin
Less:
Franchise and other revenues
Plus:
Depreciation and amortization
General and administrative
Provision for impaired assets and restaurant closings
Restaurant-level operating income
Restaurant-level operating margin
International
(dollars in thousands)
Income (loss) from operations
Operating income (loss) margin
Less:
Franchise and other revenues
Plus:
Depreciation and amortization
General and administrative
Provision for impaired assets and restaurant closings
Restaurant-level operating income
Restaurant-level operating margin
$
$
$
$
$
$
FISCAL YEAR
2021
2020
308,958
$
7.5 %
(174,973)
(5.5)%
61,292
163,391
245,616
13,737
670,410
$
25,925
180,261
254,356
76,354
310,073
16.5 %
9.9 %
FISCAL YEAR
2021
2020
443,887
$
11.8 %
45,133
134,244
89,314
12,368
634,680
$
(1,630)
(0.1)%
15,995
144,298
88,536
66,487
281,696
17.1 %
9.8 %
FISCAL YEAR
2021
2020
16,657
$
4.6 %
16,159
22,650
19,679
1,100
43,927
12.7 %
$
(13,479)
(4.7)%
9,930
23,722
18,916
3,640
22,869
8.3 %
46
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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 Food and beverage costs, 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
table presents the percentages of certain operating cost financial statement line items in relation to Restaurant sales for the periods indicated:
Restaurant sales
Food and beverage costs
Labor and other related
Other restaurant operating
Restaurant-level operating margin
FISCAL YEAR
2021
2020
U.S. GAAP
ADJUSTED (1)
U.S. GAAP
ADJUSTED (1)
100.0 %
100.0 %
100.0 %
100.0 %
30.3 %
28.4 %
24.8 %
16.5 %
30.3 %
28.4 %
23.2 %
18.1 %
31.3 %
32.0 %
26.9 %
9.9 %
30.9 %
32.0 %
26.9 %
10.2 %
_________________
(1)
Includes (favorable) unfavorable adjustments recorded in Other restaurant operating expense (unless otherwise noted below) for the following activities, as
described in the Adjusted income (loss) from operations, Adjusted net income (loss) and Adjusted diluted earnings (loss) per share table below for the periods
indicated:
(dollars in millions)
Royalty termination expense
Legal and other matters
COVID-19-related costs (i)
Asset impairments and closing costs
_________________
(i)
Includes $11.0 million of adjustments recorded in Food and beverage costs.
FISCAL YEAR
2021
2020
(61.9) $
(2.7)
—
—
(64.6) $
—
—
(14.3)
2.7
(11.6)
$
$
47
Table of Contents
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Adjusted income (loss) from operations, Adjusted net income (loss) and Adjusted diluted earnings (loss) per share - The following table
reconciles Adjusted income (loss) from operations and the corresponding margins, Adjusted net income (loss) and Adjusted diluted earnings
(loss) per share to their respective most comparable U.S. GAAP measures for the periods indicated:
(in thousands, except share and per share data)
Income (loss) from operations
Operating income (loss) margin
Adjustments:
Royalty termination expense (1)
Severance and other transformational costs (2)
Legal and other matters (3)
COVID-19-related costs (4)
Asset impairments and closure costs (5)
Total income (loss) from operations adjustments
Adjusted income (loss) from operations
Adjusted operating income (loss) margin
Diluted net income (loss) attributable to common stockholders
Convertible senior notes if-converted method interest adjustment, net of tax (6)
Net income (loss) attributable to common stockholders
Adjustments:
Income (loss) from operations adjustments
Loss on extinguishment and modification of debt
Amortization of debt discount (7)
Total adjustments, before income taxes
Adjustment to provision for income taxes (8)
Redemption of preferred stock in excess of carrying value (9)
Net adjustments
Adjusted net income (loss)
Diluted earnings (loss) per share attributable to common stockholders (10)
Adjusted diluted earnings (loss) per share (11)
Diluted weighted average common shares outstanding (10)
Adjusted diluted weighted average common shares outstanding (11)
FISCAL YEAR
2021
2020
$
308,958
$
(174,973)
7.5 %
(5.5)%
61,880
2,764
(372)
—
—
64,272
373,230
9.1 %
215,900
345
215,555
64,272
2,073
—
66,345
(21,222)
—
45,123
260,678
2.00
2.70
107,803
96,426
$
$
$
$
$
—
32,404
178
93,811
(2,205)
124,188
(50,785)
(1.6)%
(162,211)
—
(162,211)
124,188
—
6,275
130,463
(32,526)
3,496
101,433
(60,778)
(1.85)
(0.69)
87,468
87,468
$
$
$
$
$
_________________
(1)
(2)
(3)
(4)
Payment made to the Carrabba’s Founders in connection with the Royalty Termination Agreement. See Note 22 - Commitments and Contingencies of the Notes to
Consolidated Financial Statements for additional details regarding the Royalty Termination Agreement.
Severance, professional fees and other costs incurred as a result of transformational and restructuring activities.
For 2021, includes: (i) a $3.1 million benefit from the recognition of recoverable PIS and COFINS taxes, including accrued interest, within other revenues as a
result of favorable court rulings and (ii) an accrual of $2.7 million for Imposto sobre Serviços (“ISS”), a Brazilian municipal service tax, in connection with
royalties from our Brazilian subsidiary over the past five years, including related penalties and interest, recorded within Other restaurant operating expense as a
result of an unfavorable Brazilian Supreme Court ruling.
Costs incurred in connection with the COVID-19 pandemic, primarily consisting of fixed asset and right-of-use asset impairments, restructuring charges, inventory
obsolescence and spoilage, contingent lease liabilities and current expected credit losses. See Note 3 - 2020 COVID-19 Charges of the Notes to Consolidated
Financial Statements for additional details regarding the impact of certain COVID-19 pandemic-related charges on our financial results.
48
Table of Contents
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
(5)
(6)
(7)
(8)
(9)
(10)
(11)
Primarily includes a lease termination gain of $2.8 million.
Adjustment for interest expense related to the 2025 Notes weighted for the portion of the period prior to our election under the 2025 Notes indenture to settle the
principal portion of our 2025 Notes in cash. The calculation of adjusted diluted earnings per share excludes 2025 Notes interest adjustment.
Amortization of debt discount related to the issuance of the 2025 Notes. See Note 14 - Convertible Senior Notes of the Notes to Consolidated Financial Statements
for details.
Income tax effect of the adjustments for the periods presented. Also includes a $4.2 million adjustment during 2021 for the reduction of certain unrecognized tax
benefits related to tax positions taken during a prior period.
Consideration paid in excess of the carrying value for the redemption of preferred stock of our Abbraccio concept.
Due to the GAAP net loss, the effect of dilutive securities was excluded from the calculation of GAAP diluted loss per share for 2020.
For fiscal year 2021, adjusted diluted weighted average common shares outstanding was calculated: (i) assuming our February 2021 election to settle the principal
portion of the 2025 Notes in cash was in effect for the entire fiscal year and (ii) excluding the dilutive effect of 9,992 shares to be issued upon conversion of the
2025 Notes to satisfy the amount in excess of the principal since our convertible notes hedge offsets the dilutive impact of the shares underlying the 2025 Notes.
Liquidity and Capital Resources
Cash and Cash Equivalents
As of December 26, 2021, we had $87.6 million in cash and cash equivalents, of which $26.6 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 26, 2021, we had aggregate accumulated foreign earnings of approximately $28.8 million. This amount consisted primarily
of historical earnings from 2017 and prior that were previously taxed in the U.S. under the 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 tax. These amounts are no longer considered
indefinitely reinvested in our foreign subsidiaries. See Note 21 - Income Taxes of the Notes to Consolidated Financial Statements for further
information regarding our indefinite reinvestment assertion.
Borrowing Capacity and Debt Service
Credit Facilities - Following is a summary of our outstanding credit facilities as of the dates indicated and principal payments and debt
issuance during the periods indicated:
SENIOR SECURED CREDIT
FACILITY
FORMER CREDIT FACILITY
(dollars in thousands)
Balance as of December 29, 2019
2020 new debt
2020 payments
Balance as of December 27, 2020
2021 new debt
2021 payments
Balance as of December 26, 2021 (1)
TERM LOAN A
REVOLVING
FACILITY
TERM LOAN
A
REVOLVING
FACILITY
2025 NOTES
2029 NOTES
TOTAL CREDIT
FACILITIES
$
$
—
—
—
—
200,000
(5,000)
195,000
$
$
—
—
—
—
455,000
(375,000)
80,000
$
$
450,000 $
—
(25,000)
425,000
—
(425,000)
599,000 $
505,000
(657,000)
447,000
15,000
(462,000)
— $
— $
—
230,000
—
230,000
—
—
230,000
$
$
—
—
—
—
300,000
—
300,000
$
$
1,049,000
735,000
(682,000)
1,102,000
970,000
(1,267,000)
805,000
Interest rates, as of December 26, 2021
(2)
Principal maturity date
1.60 %
April 2026
3.75 %
April 2026
5.00 %
May 2025
5.13 %
April 2029
____________________
(1)
(2)
Subsequent to December 26, 2021, we repaid the remaining $80.0 million balance on our revolving credit facility.
Interest rate for Term loan A represents the weighted average interest rate. Interest rate for the revolving credit facility represents the base rate option elected in
anticipation of impending repayment.
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
As of December 26, 2021, we had $699.3 million in available unused borrowing capacity under our revolving credit facility, net of letters of
credit of $20.7 million.
2029 Notes - On April 16, 2021, we issued $300.0 million aggregate principal amount of senior unsecured notes due 2029. The 2029 Notes
mature on April 15, 2029, unless earlier redeemed or purchased by us. The 2029 Notes bear cash interest at an annual rate of 5.125% payable
semi-annually in arrears on April 15 and October 15 of each year.
The net proceeds from the 2029 Notes were approximately $294.5 million, after deducting the initial purchaser’s discount and our offering
expenses. The net proceeds were used to repay a portion of our outstanding Term loan A and revolving credit facility in conjunction with the
refinancing of our Former Credit Facility.
Credit Agreement - On April 16, 2021, we and OSI, as co-borrowers, entered into the Credit Agreement, which provides for senior secured
financing of up to $1.0 billion consisting of a $200.0 million Term loan A and an $800.0 million revolving credit facility (the “Senior
Secured Credit Facility”). The Senior Secured Credit Facility matures on April 16, 2026 and replaced our prior senior secured financing of up
to $1.5 billion (the “Former Credit Facility”).
Our Senior Secured Credit Facility contains mandatory prepayment requirements for Term loan A, including the requirement that we prepay
outstanding amounts under these loans with 50% of our annual excess cash flow, as defined in the Credit Agreement, commencing with the
fiscal year ending December 25, 2022. The amount of outstanding loans required to be prepaid in accordance with the debt covenants may
vary based on our Consolidated Senior Secured Net Leverage Ratio and year end results. Other than the annual required minimum
amortization premiums of $10.0 million, we do not anticipate any other payments will be required through December 25, 2022.
See Note 13 - Long-term Debt, Net for additional details regarding the 2029 Notes and Credit Agreement.
As of December 26, 2021 and December 27, 2020, we were in compliance with our debt covenants. We believe that we will remain in
compliance with our debt covenants during the next 12 months.
Cash Flow Hedges of Interest Rate Risk - In October 2018, we entered into 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 London Inter-Bank Offered Rate (“LIBOR”) rate. See Note 17 - Derivative
Instruments and Hedging Activities of the Notes to Consolidated Financial Statements for further information.
In connection with the refinancing of the Former Credit Facility, on April 16, 2021 we terminated our variable-to-fixed interest rate swap
agreements with seven counterparties having an aggregate notional amount of $275.0 million for a payment of approximately $13.3 million,
including accrued interest. Following these terminations, $13.4 million of unrealized losses related to the terminated swap agreements
included in Accumulated Other Comprehensive Loss (“AOCL”) will be amortized on a straight-line basis to Interest expense, net over the
remaining original term of the terminated swaps.
As a result of our anticipated decrease in variable rate debt balances due to significant voluntary debt payments, on December 9, 2021 we
terminated our variable-to-fixed interest rate swap agreements with three counterparties having an aggregate notional amount of $150.0
million for a payment of approximately $4.1 million, including accrued interest. Following these terminations, $4.1 million of unrealized
losses related to the terminated swap agreements included in AOCL will be amortized to Interest expense, net during 2022.
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Use of Cash
BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Cash flows generated from operating activities and availability under our revolving credit facility are our principal sources of liquidity, which
we use for operating expenses, debt payments, share repurchases and dividend payments, development of new restaurants, remodeling or
relocating older restaurants and investment 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. However, our 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.
Capital Expenditures - We estimate that our capital expenditures will total approximately $225 million to $240 million in 2022. The amount
of actual capital expenditures may be affected by general economic, financial, competitive, legislative and regulatory factors, among other
things, including raw material constraints.
Material Cash Requirements - The following table presents current and long-term material cash requirements as of December 26, 2021:
(dollars in thousands)
Operating leases (1)
Long-term debt:
Principal (2)
Interest (3)
Purchase obligations (4)
Other obligations (5)
Total
PAYMENTS DUE BY PERIOD
TOTAL
LESS THAN
1 YEAR
1-3
YEARS
3-5
YEARS
MORE THAN
5 YEARS
$
2,383,335 $
185,093 $
372,180 $
335,428 $
1,490,634
807,376
187,845
206,634
58,963
3,644,153 $
$
10,976
38,524
167,753
20,939
423,285 $
23,683
69,711
37,100
10,842
513,516 $
472,717
44,376
1,781
3,247
857,549 $
300,000
35,234
—
23,935
1,849,803
____________________
(1)
(2)
(3)
(4)
(5)
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 Senior Secured Credit Facility, 2029 Notes, 2025 Notes and finance lease obligations. Amount is not reduced by unamortized debt issuance costs and
finance lease interest totaling $14.3 million.
Projected future interest payments on long-term debt are based on interest rates in effect as of December 26, 2021 and assume only scheduled principal payments.
Estimated interest expense includes the impact of remaining 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, technology, restaurant-level service contracts and advertising.
Includes other long-term liabilities, primarily consisting of deferred compensation obligations, deposits and other accrued obligations. Unrecognized tax benefits
are excluded from this table since it is not possible to estimate when these future payments will occur.
Dividends and Share Repurchases - In April 2021, we entered into our Credit Agreement, the terms of which contained certain restrictions on
cash dividends and share repurchases until after September 26, 2021 and we were compliant with our financial covenants. We were
compliant with our financial covenants as of December 26, 2021 and we believe that we will remain in compliance with our debt covenants
during the next 12 months. As such, absent unanticipated circumstances, we do not believe that compliance with our financial covenants will
materially limit our ability to pay dividends in the near term and future dividend payments will depend on various other factors considered by
our Board as noted below.
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
During the first quarter of 2020, we declared and paid dividends of $0.20 per share. We did not pay dividends during 2021. In February 2022,
our Board declared a quarterly cash dividend of $0.14 per share, payable on March 16, 2022 to shareholders of record at the close of business
on March 2, 2022.
We did not repurchase any shares of our outstanding common stock during 2021. On February 8, 2022, our Board approved the 2022 Share
Repurchase Program under which we are authorized to repurchase up to $125.0 million of our outstanding common stock. The 2022 Share
Repurchase Program will expire on August 9, 2023.
Following is a summary of our former share repurchase programs as of December 26, 2021 (dollars in thousands):
SHARE REPURCHASE
PROGRAM
BOARD APPROVAL
DATE
AUTHORIZED
REPURCHASED
CANCELLED OR
EXPIRED
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
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 $
—
—
—
—
—
—
—
The following table presents our dividends and share repurchases for the periods indicated:
(dollars in thousands)
Fiscal year 2021
Fiscal year 2020
Fiscal year 2019
Fiscal year 2018
Fiscal year 2017
Fiscal year 2016
Fiscal year 2015
Total
DIVIDENDS PAID
SHARE REPURCHASES
TOTAL
$
$
— $
17,480
35,734
33,312
30,988
31,379
29,332
178,225 $
— $
—
106,992
113,967
272,736
309,887
169,999
973,581 $
—
17,480
142,726
147,279
303,724
341,266
199,331
1,151,806
Our ability to pay dividends and make share repurchases is dependent on our ability to obtain funds from our subsidiaries, continued
compliance with the financial covenants in our debt agreements and the existence of surplus, as well as our earnings, financial condition,
capital expenditure requirements and other factors that our Board deems relevant.
Lease Guarantees - We guarantee certain lease agreements primarily related to divested restaurant properties in circumstances where we have
assigned our lease interest. In the event of non-payment by the primary lessees, we may be required to satisfy these lease agreements with
cash. See Note 22 - Commitments and Contingencies for additional details regarding our lease guarantees.
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
obligations due under these plans was $15.5 million and $28.1 million as of December 26, 2021 and December 27, 2020, 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 the deferred compensation plans. The obligation for U.S. Partners’ deferred compensation was fully funded as of
December 26, 2021.
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
Summary of Cash Flows and Financial Condition
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) increase in cash, cash equivalents and restricted cash
FISCAL YEAR
2021
2020
$
$
402,455 $
(104,745)
(317,419)
(1,642)
(21,351) $
138,849
(76,639)
(16,773)
(2,174)
43,263
Operating activities - Net cash provided by operating activities increased during 2021 as compared to 2020 primarily due to a significant
improvement in revenues and operating results, partially offset by: (i) cash paid in connection with the Carrabba’s Italian Grill royalty
termination, (ii) timing of collections of gift card receivables, (iii) higher inventory purchases, (iv) payment of payroll taxes deferred in 2020
as a result of the Coronavirus, Aid, Relief and Economic Security Act, (v) cash paid to terminate interest rate swap agreements and (vi)
timing of operational payments and receipts.
Investing activities - The increase in net cash used in investing activities during 2021 as compared to 2020 was primarily due to higher capital
expenditures, partially offset by higher proceeds from the disposal of property, fixtures and equipment.
Financing activities - The increase in net cash used in financing activities during 2021 as compared to 2020 was primarily due to our capital
restructuring and debt payments throughout the fiscal year that lowered bank debt and unsecured notes by an aggregate of $297.0 million.
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)
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
352,792 $
984,625
(631,833) $
323,854
950,104
(626,250)
Working capital (deficit) includes: (i) Unearned revenue primarily from unredeemed gift cards of $398.8 million and $381.6 million as of
December 26, 2021 and December 27, 2020, respectively, and (ii) current operating lease liabilities of $177.0 million and $176.8 million as
of December 26, 2021 and December 27, 2020, respectively, with the corresponding operating right-of-use assets recorded as non-current on
our Consolidated Balance Sheets. We have, and in the future may continue to have, negative working capital balances (as is common for
many restaurant companies). We operate successfully with negative working capital because cash collected on restaurant sales are 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 typically used to service debt obligations and to make
capital expenditures.
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
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 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. These estimates are subjective and our
ability to realize future cash flows and asset fair values is affected by factors such as ongoing maintenance and improvement of the assets,
changes in economic conditions and changes in our operating performance. Historically, the change in useful lives of our assets as a result of
planned closures or the decision not to renew leases has been a key factor in the impairment we have recognized.
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,
when appropriate, 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. These estimates are subjective, and our ability to achieve the forecasted cash flows used in our fair value
calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating
performance and changes in our business strategies. The fair value of the trade names is determined through a relief from royalty method.
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
The carrying value of the reporting unit or trade name 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 26, 2021 was $268.4 million. We performed our annual impairment test in the second quarter
of 2021 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 - 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. Other assumptions used in determining our incremental
borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data. 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.
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 $53.5 million and $52.8 million as of
December 26, 2021 and December 27, 2020, respectively. In establishing our reserves, we consider certain actuarial assumptions and
judgments regarding economic conditions, and the frequency and severity of claims. The establishment of the reserves utilizing such
estimates and assumptions is in part based on the premise that historical claims experience is indicative of current or future expected activity,
which could differ significantly. 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.
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BLOOMIN’ BRANDS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
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 26, 2021, would have affected net earnings by $0.8 million
in 2021.
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 26, 2021, 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 10-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.
While we consider all of our tax positions to be fully supportable, 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 could
require the use of cash and an increase in the amount of income tax expense we recognize. As of December 26, 2021, we had $18.8 million
of unrecognized tax benefits, including accrued interest and penalties, that if recognized, would impact our effective income tax rate.
Recently Issued Financial Accounting Standards
For a description of recently issued Financial Accounting Standards that we adopted in 2021 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.
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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 commodity prices, labor inflation and foreign currency exchange rates. During 2021, we
substantially reduced our variable rate debt borrowings and terminated a significant portion of our interest rate swap agreements, which
significantly reduced our market risk exposure related to interest rate risk.
Commodity Pricing Risk
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. As of December 26, 2021, approximately 70% of our estimated 2022 annual food purchases were
covered by fixed contracts, most of which are scheduled to expire during 2022.
During 2021, commodity markets began experiencing elevated levels of inflation across all proteins given strong consumer demand and
product shortages due to supply chain disruptions. In addition, higher input costs across labor, fuel, freight and packaging contributed to
increases as well. We anticipate commodity inflation to be approximately 11.0% to 13.0% for 2022. 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. Currently we do not
use financial instruments to hedge our commodity risk.
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 22 - Commitments and Contingencies of the Notes to Consolidated Financial
Statements for further details.
Labor Inflation
Our restaurant operations are subject to federal and state minimum wage and other laws governing such matters as working conditions,
overtime and tip credits. A significant number of our restaurant team members are paid at rates related to the federal and/or state minimum
wage and, accordingly, increases in the minimum wage increase our labor costs. To the extent permitted by competition and the economy, we
have mitigated increased costs by increasing menu prices and may continue to do so if deemed necessary in future years. Substantial
increases in costs and expenses could impact our operating results to the extent such increases cannot be passed through to our guests. We
anticipate high-single digit labor cost inflation during 2022.
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. Currently, we do not use financial instruments to hedge foreign currency
exchange rate changes.
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BLOOMIN’ BRANDS, INC.
For 2021, 8.8% 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 for our foreign entities by $38.9 million. The 10% change would not have had a
material effect on Net income.
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.
As of December 26, 2021, our interest rate risk was primarily from variable interest rate changes on our Senior Secured Credit Facility. 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. To
manage the risk of fluctuations in variable interest rate debt, we have interest rate swaps. As of December 26, 2021, we had interest rate
swaps with an aggregate notional amount of $125.0 million that mature on November 30, 2022. See Note 17 - Derivative Instruments and
Hedging Activities of the Notes to Consolidated Financial Statements for further information.
We utilize valuation models to estimate the effects of changing interest rates. As of December 26, 2021, a potential change from a
hypothetical 100 basis point increase/decrease in short-term interest rates would not materially impact the fair value of our interest rate swaps
or our annual interest expense.
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
PAGE NO.
Management’s Annual Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets — December 26, 2021 and December 27, 2020
Consolidated Statements of Operations and Comprehensive Income (Loss) —
For Fiscal Years 2021, 2020 and 2019
Consolidated Statements of Changes in Stockholders’ Equity —
For Fiscal Years 2021, 2020 and 2019
Consolidated Statements of Cash Flows —
For Fiscal Years 2021, 2020 and 2019
Notes to Consolidated Financial Statements
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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 26, 2021 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 26, 2021.
The effectiveness of our internal control over financial reporting as of December 26, 2021 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 26, 2021 and December 27, 2020, and the related consolidated statements of operations and comprehensive income (loss), of
changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 26, 2021, 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 26, 2021, 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 26, 2021 and December 27, 2020, and the results of its operations and its cash flows for each of the three years in
the period ended December 26, 2021 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 26, 2021,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Changes in Accounting Principles
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible
instruments and contracts in an entity’s own equity in 2021 and the manner in which it accounts for leases in 2019.
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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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to
the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to
which it relates.
Valuation of Insurance Reserves
As described in Notes 2 and 22 to the consolidated financial statements, the Company’s consolidated discounted insurance reserves balance
was $53.5 million as of December 26, 2021. The Company carries insurance programs with specific retention levels or high per-claim
deductibles for a significant portion of expected losses under its workers’ compensation, general or liquor liability, health, property and
management liability insurance programs. The Company records a liability for all unresolved claims and for an estimate of incurred but not
reported claims at the anticipated cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves,
management considers certain actuarial assumptions and judgments regarding economic conditions and the frequency and severity of claims.
Reserves recorded for workers’ compensation and general liability claims are discounted using the average of the one-year and five-year risk-
free rate of monetary assets that have comparable maturities.
The principal considerations for our determination that performing procedures relating to the valuation of insurance reserves is a critical audit
matter are (i) the significant judgment by management when developing the estimated reserves, which in turn led to (ii) a high degree of
auditor judgment, subjectivity, and effort in performing procedures and evaluating the actuarial assumptions related to economic conditions
and the frequency and severity of claims, and (iii) the audit effort included the involvement of professionals with specialized skill and
knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the
consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of insurance
reserves. These procedures also included, among others (i) evaluating management’s process for developing the insurance reserves, (ii)
evaluating the appropriateness of management’s actuarial methods used, (iii) evaluating the reasonableness of the actuarial assumptions
related to economic conditions and the frequency and severity of claims, and (iv) testing the completeness and accuracy of underlying
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BLOOMIN’ BRANDS, INC.
data used in the valuation. Evaluating the actuarial assumptions related to economic conditions and the frequency and severity of claims
involved evaluating whether the assumptions were reasonable considering inflation and the environment, and whether these assumptions
were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in
evaluating the appropriateness of management’s actuarial methods used in determining the insurance reserves and evaluating the
reasonableness of assumptions related to economic conditions.
/s/ PricewaterhouseCoopers LLP
Tampa, Florida
February 23, 2022
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)
DECEMBER 26, 2021
DECEMBER 27, 2020
ASSETS
Current assets
Cash and cash equivalents
Restricted 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
Long-term debt, net
Other long-term liabilities, net
Total liabilities
Commitments and contingencies (Note 22)
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 26, 2021 and December 27, 2020
Common stock, $0.01 par value, 475,000,000 shares authorized; 89,252,823 and 87,855,571 shares
issued and outstanding as of December 26, 2021 and December 27, 2020, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Total Bloomin’ Brands stockholders’ equity
Noncontrolling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
$
$
87,585 $
1,472
79,112
184,623
352,792
842,012
1,130,873
268,444
453,412
168,068
78,670
3,294,271 $
167,978 $
406,894
398,795
10,958
984,625
1,179,447
782,107
125,242
3,071,421
—
893
1,119,728
(698,171)
(205,989)
216,461
6,389
222,850
3,294,271 $
109,980
428
61,928
151,518
323,854
887,687
1,172,910
271,164
459,983
153,883
92,626
3,362,107
141,457
388,321
381,616
38,710
950,104
1,217,921
997,770
185,355
3,351,150
—
879
1,132,808
(918,096)
(211,446)
4,145
6,812
10,957
3,362,107
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 (LOSS)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues
Restaurant sales
Franchise and other revenues
Total revenues
Costs and expenses
Food and beverage costs
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 (loss) from operations
Loss on extinguishment and modification of debt
Other income (expense), net
Interest expense, net
Income (loss) before provision (benefit) for income taxes
Provision (benefit) for income taxes
Net income (loss)
Less: net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to Bloomin’ Brands
Redemption of preferred stock in excess of carrying value
Net income (loss) attributable to common stockholders
Net income (loss)
Other comprehensive income (loss):
Foreign currency translation adjustment
Unrealized gain (loss) on derivatives, net of tax
Reclassification of adjustments for loss on derivatives included in Net income (loss), net of tax
Amortization of terminated interest rate swaps, net of tax
Comprehensive income (loss)
Less: comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income (loss) attributable to Bloomin’ Brands
Earnings (loss) per share attributable to common stockholders:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
Cash dividends declared per common share
2021
FISCAL YEAR
2020
2019
4,061,093 $
61,292
4,122,385
3,144,636 $
25,925
3,170,561
1,229,689
1,154,623
1,006,371
163,391
245,616
13,737
3,813,427
308,958
(2,073)
26
(57,614)
249,297
26,384
222,913
7,358
982,702
1,005,295
846,566
180,261
254,356
76,354
3,345,534
(174,973)
(237)
131
(64,442)
(239,521)
(80,726)
(158,795)
(80)
215,555
—
215,555 $
(158,715)
(3,496)
(162,211) $
4,075,014
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
130,573
—
130,573
222,913 $
(158,795) $
134,117
(6,597)
86
7,392
4,576
228,370
7,358
221,012 $
2.42 $
2.00 $
88,981
107,803
(37,516)
(14,741)
9,923
—
(201,129)
(744)
(200,385) $
(1.85) $
(1.85) $
87,468
87,468
(16,625)
(11,944)
1,805
—
107,353
3,801
103,552
1.47
1.45
88,839
89,777
— $
0.20 $
0.40
$
$
$
$
$
$
$
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)
Balance, December 30, 2018
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
Cumulative-effect from a change
in accounting principle, net of
tax
Net loss
Other comprehensive loss, net of
tax
Cash dividends declared, $0.20
per common share
Stock-based compensation
Consideration for preferred stock
in excess of carrying value, net
of tax
Common stock issued under
stock plans (1)
Purchase of noncontrolling
interests
Distributions to noncontrolling
interests
Contributions from
noncontrolling interests
Equity component value of
convertible note issuance, net of
tax of $650
Sale of common stock warrant
Purchase of convertible note
hedge
Balance,
December 27, 2020
BLOOMIN’ BRANDS
COMMON STOCK
SHARES
AMOUNT
ADDITIONAL
PAID-IN
CAPITAL
ACCUM-
ULATED
DEFICIT
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
NON-
CONTROLLING
INTERESTS
TOTAL
91,272 $
913 $
1,107,582 $
(920,010) $
(142,755) $
9,087 $
54,817
—
—
—
—
(5,469)
—
1,143
—
—
—
—
—
—
—
(55)
—
11
—
—
—
—
—
—
(35,734)
—
19,951
2,696
(157)
—
—
141,285
130,573
—
—
(106,937)
—
—
—
—
—
—
—
—
3,544
141,285
134,117
(27,055)
291
(26,764)
—
—
—
—
34
—
—
—
—
—
—
82
(35,734)
(106,992)
19,951
2,707
(41)
(7,214)
(7,214)
1,349
1,349
86,946 $
869 $
1,094,338 $
(755,089) $
(169,776) $
7,139 $
177,481
—
—
—
—
—
—
910
—
—
—
—
—
—
—
—
—
—
—
—
10
—
—
—
—
—
—
—
—
—
(17,480)
14,802
(3,496)
(17)
(156)
—
—
64,367
46,690
(66,240)
(4,292)
(158,715)
—
—
—
(80)
(4,292)
(158,795)
—
—
—
—
—
—
—
—
—
—
—
(42,187)
(147)
(42,334)
—
—
517
—
—
—
—
—
—
—
—
—
(17,480)
14,802
1,261
(1,718)
—
96
(7)
(60)
(1,908)
(1,908)
451
451
—
—
—
64,367
46,690
(66,240)
87,856 $
879 $
1,132,808 $
(918,096) $
(211,446) $
6,812 $
10,957
(CONTINUED...)
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BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
BLOOMIN’ BRANDS
COMMON STOCK
SHARES
AMOUNT
ADDITIONAL
PAID-IN
CAPITAL
ACCUM-
ULATED
DEFICIT
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
NON-
CONTROLLING
INTERESTS
TOTAL
87,856 $
879 $
1,132,808 $
(918,096) $
(211,446) $
6,812 $
10,957
—
—
—
—
1,397
—
—
—
—
—
—
14
—
—
—
89,253 $
—
893 $
(47,323)
—
—
24,405
9,836
2
—
—
4,370
215,555
—
—
—
—
—
—
—
—
5,457
—
—
—
—
—
1,119,728 $
(698,171) $
(205,989) $
—
7,358
(42,953)
222,913
—
—
—
(5)
5,457
24,405
9,850
(3)
(9,123)
(9,123)
1,347
6,389 $
1,347
222,850
Balance,
December 27, 2020
Cumulative-effect from a change
in accounting principle, net of
tax
Net income
Other comprehensive income,
net of tax
Stock-based compensation
Common stock issued under
stock plans (1)
Purchase of noncontrolling
interests
Distributions to noncontrolling
interests
Contributions from
noncontrolling interests
Balance, December 26, 2021
________________
(1)
Net of forfeitures and shares withheld for employee taxes.
The accompanying notes are an integral part of these consolidated financial statements.
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BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Cash flows provided by operating activities:
Net income (loss)
Adjustments to reconcile Net income (loss) to cash provided by operating activities:
Depreciation and amortization
Amortization of debt discounts and issuance costs
Amortization of deferred gift card sales commissions
Provision for impaired assets and restaurant closings
Amortization of unrealized loss on terminated interest rate swaps
Non-cash operating lease costs
Provision for expected credit losses and contingent lease liabilities
Inventory obsolescence and spoilage
Stock-based and other non-cash compensation expense
Deferred income tax benefit
(Gain) loss on disposal of property, fixtures and equipment
Other, net
Change in assets and liabilities:
(Increase) decrease in inventories
(Increase) decrease in other current assets
(Increase) decrease in other assets
Decrease in operating right-of-use assets, net
Increase (decrease) in accounts payable and accrued and other current liabilities
Increase in unearned revenue
Decrease in operating lease liabilities
(Decrease) increase 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
Capital expenditures
Other investments, net
Net cash used in investing activities
68
2021
FISCAL YEAR
2020
2019
$
222,913 $
(158,795) $
134,117
163,391
4,494
26,012
13,737
6,160
78,272
946
—
24,405
(3,346)
(1,322)
1,516
(18,210)
(58,397)
(2,073)
160
25,619
17,225
(90,387)
(8,660)
402,455
180,261
10,142
20,927
76,354
—
74,436
7,225
10,169
14,802
(88,256)
1,261
(4,956)
19,857
14,392
3,688
412
(61,638)
10,569
(50,626)
58,625
138,849
9,322
—
(122,830)
8,763
(104,745) $
$
2,178
—
(87,842)
9,025
(76,639) $
196,811
2,517
26,094
9,085
—
73,357
—
—
24,651
(25,890)
(2,984)
(10,265)
(15,388)
(40,519)
(890)
391
(23,497)
26,676
(69,886)
13,223
317,603
18,291
7,085
(161,926)
5,259
(131,291)
(CONTINUED...)
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BLOOMIN’ BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Cash flows used in financing activities:
Proceeds from issuance of long-term debt
Repayments of long-term debt and finance lease obligations
Proceeds from borrowings on revolving credit facilities
Repayments of borrowings on revolving credit facilities
Financing fees
Proceeds from issuance of senior notes
Proceeds from issuance of convertible senior notes
Proceeds from issuance of warrants
Purchase of convertible note hedge
Issuance costs related to senior notes
Proceeds (payments of taxes) 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
Redemption of subsidiary preferred stock
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase 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
Increase (decrease) in liabilities from the acquisition of property, fixtures and equipment
2021
FISCAL YEAR
2020
2019
$
$
$
$
$
$
$
200,000 $
(431,166)
470,000
(837,000)
(5,868)
300,000
—
—
—
(5,546)
9,850
(9,123)
1,347
(3)
(9,910)
—
—
—
(317,419)
(1,642)
(21,351)
110,408
89,057 $
47,036 $
36,336 $
43,363 $
1,238 $
2,344 $
— $
(26,326)
505,000
(657,000)
(3,096)
—
230,000
46,690
(66,240)
(8,416)
(7)
(1,908)
451
(60)
(16,906)
—
(17,480)
(1,475)
(16,773)
(2,174)
43,263
67,145
110,408 $
52,630 $
8,415 $
19,451 $
1,367 $
1,152 $
—
(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
67,145
47,893
23,995
67,955
208
(2,899)
The accompanying notes are an integral part of these consolidated financial statements.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Bloomin’ Brands, Inc. (“Bloomin’ Brands” or the “Company”), a holding company that conducts its operations through its subsidiaries, is
one of the largest casual dining restaurant companies in the world, with a portfolio of leading, differentiated restaurant concepts. OSI
Restaurant Partners, LLC (“OSI”) is the Company’s primary operating entity.
The Company owns and operates casual, upscale casual and fine dining restaurants. The Company’s restaurant portfolio has four concepts:
Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar. Additional Outback Steakhouse,
Carrabba’s Italian Grill and Bonefish Grill restaurants in which the Company has no direct investment are operated under franchise
agreements.
2. Summary of Significant Accounting Policies
Basis of Presentation - The Company’s consolidated financial statements include the accounts and operations of Bloomin’ Brands and its
subsidiaries.
To ensure timely reporting, the Company consolidates the results of its Brazil operations on a one-month calendar lag. There were no
intervening events that would materially affect the Company’s consolidated financial position, results of operations or cash flows as of and
for the year ended December 26, 2021.
COVID-19 Pandemic - In March 2020, the Company temporarily closed all restaurant dining rooms to comply with state and local
regulations in response to the COVID-19 pandemic (“COVID-19”). In early May 2020, the Company began to reopen its restaurant dining
rooms with limited seating capacity in compliance with state and local regulations. The temporary closure of the Company’s dining rooms
and the limitations on seating capacity due to the COVID-19 pandemic resulted in significantly reduced traffic in its restaurants which
negatively impacted its operating results during 2020. See Note 3 - 2020 COVID-19 Charges for details regarding certain charges resulting
from the COVID-19 pandemic.
During 2021, the recovery of in-restaurant dining continued as COVID-19 capacity restrictions were eased or eliminated. Concerns over the
variants of COVID-19 impacted this recovery, however, the Company continued to retain a significant portion of the incremental off-
premises volume achieved while its dining rooms were closed last year.
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 329 full-service restaurants and off-premises kitchens as of December 26, 2021, but does
not possess any ownership interests in its franchisees and does not provide material direct financial support to its franchisees. These franchise
relationships are not deemed variable interest entities and are not consolidated.
Investments in entities the Company does not control, but where the Company’s interest is 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. All periods presented consisted
of 52 weeks.
Use of Estimates - The preparation of the accompanying consolidated financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated.
Cash and Cash Equivalents - Cash equivalents consist of investments that are readily convertible to cash with an original maturity date of
three months or less. Cash and cash equivalents include $41.3 million and $37.1 million, as of December 26, 2021 and December 27, 2020,
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
and credit losses are through credit card and trade receivables consisting primarily of amounts due for gift card, vendor, franchise and other
receivables. Gift card, vendor and other receivables consist primarily of amounts due from gift card resellers and vendor rebates. The
Company considers the concentration of credit risk for gift card, vendor and other receivables to be minimal due to the payment histories and
general financial condition of its gift card resellers and vendors. Amounts due from franchisees consist of initial franchise fees, royalty
income and advertising fees. See Note 8 - Other Current Assets, Net for disclosure of trade receivables by category as of December 26, 2021
and December 27, 2020.
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 17 - Derivative Instruments and Hedging Activities for a discussion of the Company’s use of derivative instruments and
management of credit risk inherent in derivative instruments.
Allowance for Expected Credit Losses - The Company evaluates the collectability of credit card and trade receivables based on historical loss
experience by risk pool and records periodic adjustments for factors such as deterioration of economic conditions, specific customer
circumstances and changes in the aging of accounts receivable balances. Losses are charged off in the period in which they are determined to
be uncollectible. See Note 20 - Allowance for Expected Credit Losses for a discussion of the Company’s allowance for expected credit losses.
The Company assigned its interest, and is contingently liable, under certain real estate leases, primarily related to divested restaurant
properties. Contingent lease liabilities related to these guarantees are calculated based on management’s estimate of exposure to losses which
includes historical analysis of credit losses, including known instances of default, and existing economic conditions. See Note 22 -
Commitments and Contingencies for a discussion of the Company’s contingent lease liabilities.
In instances where there is no established loss history, S&P speculative-grade default rates are utilized as an estimated expected credit loss
rate.
Fair Value - Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction
between market participants on the measurement date. 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.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Restricted Cash - From time to time, the Company may have short-term restricted cash balances consisting of amounts pledged for settlement
of deferred compensation plan obligations.
Property, Fixtures and Equipment - Property, fixtures and equipment are stated at cost, net of accumulated depreciation. 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.
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 (Loss).
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 $3.7 million, $2.7 million and $6.4 million were
capitalized during 2021, 2020 and 2019, respectively.
For 2021 and 2020, computer equipment and software costs of $3.4 million and $1.4 million, respectively, were capitalized. As of
December 26, 2021 and December 27, 2020, there was $6.4 million and $8.8 million, respectively, of unamortized computer equipment and
software included in Property, fixtures and equipment, net on the Company’s Consolidated Balance Sheets.
Goodwill and Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business
combinations and is assigned to the reporting unit in which the acquired business will operate. The Company’s indefinite-lived intangible
assets consist of trade names and are recorded at fair value as of the date of acquisition. Goodwill and indefinite-lived intangible assets are
tested for impairment annually, as of the first day of the second fiscal quarter, or whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable.
The Company may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired.
If the qualitative assessment is not performed or if the Company determines that it is not more likely than not that the fair value of the
reporting unit exceeds the carrying value, the fair value of the reporting unit is calculated. The carrying value of the reporting unit is
compared to its 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 and reacquired franchise rights, are recorded at fair value as of the
date of acquisition, amortized over their estimated useful lives and tested for impairment, using the relief from royalty method, whenever
events or changes in circumstances indicate that the carrying value may not be recoverable.
Derivatives - The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of
derivatives depends on the intended use of the derivative, whether the Company has elected to
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria
necessary to apply hedge accounting.
Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted
transactions, are considered cash flow hedges. If the derivative qualifies for hedge accounting treatment, any gain or loss on the derivative
instrument is recognized in equity as a change to Accumulated other comprehensive loss and reclassified into earnings in the same period or
periods during which the hedged transaction affects earnings.
The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting
does not apply or the Company elects not to apply hedge accounting. Derivatives not designated as hedges are not speculative and are used to
manage the Company’s exposure to interest rate movements, foreign currency exchange rate movements, changes in energy prices and other
identified risks. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. The
Company has elected not to offset derivative positions in the balance sheet with the same counterparty under the same agreement.
Deferred Debt Issuance Costs - For its revolving credit facility, the Company records deferred debt issuance costs related to the issuance of
debt obligations in Other assets, net on its Consolidated Balance Sheets. For fees associated with all other debt obligations, the Company
records deferred debt issuance costs as a reduction of Long-term debt, net.
The Company amortizes deferred debt issuance costs to interest expense over the term of the respective financing arrangement, primarily
using the effective interest method. The Company amortized deferred debt issuance costs of $4.5 million, $3.9 million and $2.5 million to
Interest expense, net for 2021, 2020 and 2019, 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.
Insurance Reserves - The Company carries insurance programs with specific retention levels or high per-claim deductibles for a significant
portion of expected losses under its workers’ compensation, general or liquor liability, health, property and management liability insurance
programs. The Company records a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated
cost that falls below its specified retention levels or per-claim deductible amounts. In establishing reserves, the Company considers actuarial
assumptions and judgments regarding economic conditions, and the frequency and severity of claims. Reserves recorded for workers’
compensation and general liability claims are discounted using the average of the one-year and five-year risk-free rate of monetary assets that
have comparable maturities.
Share Repurchase - 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 (Loss). Royalties, which are a percentage of net sales of the franchisee, are recognized as revenue in the period
which the sales are reported to have occurred provided collectability is reasonably assured.
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
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
expedient to account for gift card contracts and performance obligations. Gift card breakage, the amount of gift cards which will not be
redeemed, is recognized using estimates based on historical redemption patterns. If actual redemptions vary from assumptions used to
estimate breakage, gift card breakage income may differ from the amount recorded. 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 (Loss). Approximately 84% of deferred gift card revenue is expected to be recognized within 12 months of
inception.
Gift card sales commissions paid to third-party providers are capitalized and subsequently amortized to Other restaurant operating expense
based on historical gift card redemption patterns. See Note 4 - Revenue Recognition for rollforwards of deferred gift card sales commissions
and unearned gift card revenue.
Advertising fees charged to franchisees are recognized in Franchise and other revenues in the Company’s Consolidated Statements of
Operations and Comprehensive Income (Loss) provided collectability is reasonably assured. Initial franchise and renewal fees are recognized
over the term of the franchise agreement and renewal period, respectively. The weighted average remaining term of franchise agreements and
renewal periods was approximately 12 years as of December 26, 2021.
The Company maintains a customer loyalty program, Dine Rewards, in the U.S., where customers earn a reward after attaining qualified
spend amounts. The Company’s estimate of the value of the reward is recorded as deferred revenue. Each reward must be redeemed within
specified time limits of earning such reward. The revenue associated with the fair value of the reward 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 (Loss).
Leases - The Company’s determination of whether an arrangement contains a lease is based on an evaluation of whether the arrangement
conveys the right to use and control specific property or equipment. The Company leases restaurant and office facilities and certain
equipment under operating leases primarily having initial terms between one and 20 years. Restaurant facility leases generally have renewal
periods totaling five to 30 years, exercisable at the option of the Company. Contingent rentals represent payment of variable lease obligations
based on a percentage of gross revenues, as defined by the terms of the applicable lease agreement for certain restaurant facility leases. The
Company also has certain leases, which reset periodically based on a specified index. Such leases are recorded using the index that existed at
lease commencement. Subsequent changes in the index are recorded as variable rental payments. Variable rental payments are expensed as
incurred in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) and future variable rent obligations are
not included within the lease liabilities on the Consolidated Balance Sheets. The depreciable life of lease assets and leasehold improvements
are limited by the expected lease term. None of the Company’s leases contain any material residual value guarantees or restrictive covenants.
The Company accounts for fixed lease and non-lease components of a restaurant facility lease as a single lease component. Additionally, for
certain equipment leases, the Company applies a portfolio approach to account for the lease assets and liabilities. Leases with an initial term
of 12 months or less are not recorded on its Consolidated Balance Sheets and are recognized on a straight-line basis over the lease term
within Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).
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
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Consolidated Statements of Operations and Comprehensive Income (Loss). Payments received from landlords as incentives for leasehold
improvements are recorded as a reduction of the right-of-use asset and amortized on a straight-line basis over the term of the lease as a
reduction of rent expense.
In April 2020, the FASB issued a question-and-answer document focused on the application of lease accounting guidance to lease
concessions provided as a result of COVID-19 (the “Lease Modification Q&A”). The Lease Modification Q&A provides entities with the
option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease when the total
cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease. The Company elected this
practical expedient for COVID-19-related rent concessions, primarily rent deferrals or rent abatements, and has elected not to remeasure the
related lease liability and right-of-use asset for those leases. Rent deferrals are accrued with no impact to straight-line rent expense. Rent
abatements are recognized as a reduction of variable rent expense in the month they occur. This election will continue while these
concessions are in effect.
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 (Loss).
Consideration Received from Vendors - The Company receives consideration for a variety of vendor-sponsored programs, such as volume
rebates, promotions and advertising allowances. Advertising allowances are intended to offset the Company’s costs of promoting and selling
menu items in its restaurants. Vendor consideration is recorded as a reduction of Food and beverage costs or Other restaurant operating
expense when recognized in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).
Impairment of Long-Lived Assets and Costs Associated with Exit Activities - Long-lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying value may not be recoverable. The evaluation is performed at the lowest level of
identifiable cash flows independent of other assets. For long-lived assets deployed at its restaurants, the Company reviews for impairment at
the individual restaurant level. When evaluating for impairment, the total future undiscounted cash flows expected to be generated by the
asset are compared to the carrying amount. If the total future undiscounted cash flows of the asset are less than its carrying amount,
recoverability is measured by comparing the fair value of the assets to the carrying amount. An impairment loss is recognized in earnings
when the asset’s carrying value exceeds its estimated fair value. Fair value is generally estimated using a discounted cash flow model.
Restaurant closure costs, including lease termination fees, are expensed as incurred. When the Company ceases using the property rights
under a non-cancelable operating lease, it records a liability for the net present value of any remaining non-rent lease-related obligations, less
the estimated subtenant cost recovery that can reasonably be obtained for the property. Any subsequent adjustment to that liability as a result
of lease termination or changes in estimates of cost recovery is recorded in the period incurred. The associated expense is recorded in
Provision for impaired assets and restaurant closings in the Company’s Consolidated Statements of Operations and Comprehensive Income
(Loss).
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 $59.7 million, $67.3 million and $146.1 million for 2021,
2020 and 2019, respectively, was recorded in Other restaurant operating expense in the Company’s Consolidated Statements of Operations
and Comprehensive Income (Loss).
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Legal Costs - Settlement costs are accrued when they are deemed probable and reasonably estimable. Legal fees are recognized as incurred
and are reported in General and administrative expense in the Company’s Consolidated Statements of Operations and Comprehensive Income
(Loss).
Research and Development Expenses (“R&D”) - R&D is expensed as incurred in General and administrative expense in the Company’s
Consolidated Statements of Operations and Comprehensive Income (Loss). R&D primarily consists of payroll and benefit costs. R&D was
$2.6 million, $2.4 million and $3.4 million for 2021, 2020 and 2019, 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 (Loss).
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.
During 2021, the Company issued performance-based share units (“PSUs”) that included a relative total shareholder return (“Relative TSR”)
modifier to the final payout outcome, which can adjust the payout percentage based on the achieved performance metric. The Relative TSR is
measured by comparing the Company’s Relative TSR to that of the constituents of the S&P 1500 Restaurants index.
Basic and Diluted Earnings (Loss) per Share - The Company computes basic earnings (loss) per share based on the weighted average number
of common shares that were outstanding during the period. Except where the result would be antidilutive, diluted earnings per share includes
the dilutive effect of common stock equivalents, consisting of stock options, restricted stock units and performance-based share units,
measured using the treasury stock method, and the Company’s convertible senior notes and related warrants, measured using the if-converted
method. Performance-based share units are considered dilutive when the related performance criterion has been met.
The Company has provided the trustee of the 2025 Notes notice of its irrevocable election under the 2025 Notes indenture to settle the
principal portion of the 2025 Notes upon conversion in cash and any excess in shares. As a result, only the amounts in excess of the principal
amount, if applicable, are considered in diluted earnings per share.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Foreign Currency Translation and Transactions - For non-U.S. operations, the functional currency is the local currency. Foreign currency
denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date with the
translation adjustments recorded in Accumulated other comprehensive loss in the Company’s Consolidated Statements of Changes in
Stockholders’ Equity. Results of operations are translated using the average exchange rates for the reporting period. Foreign currency
exchange transaction losses are recorded in General and administrative expense in the Company’s Consolidated Statements of Operations and
Comprehensive Income (Loss).
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 28, 2020, the Company adopted Accounting Standards Update (“ASU”)
No. 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own
Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” (“ASU No. 2020-06”) which
removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion
feature. ASU No. 2020-06 also requires the application of the if-converted method for calculating diluted earnings per share and the treasury
stock method is no longer available. The Company adopted ASU No. 2020-06 using the modified retrospective approach which resulted in a
cumulative-effect adjustment that increased (decreased) the following Consolidated Balance Sheet accounts during the first quarter of 2021:
ADJUSTMENT
CONSOLIDATED BALANCE SHEET CLASSIFICATION
Deferred tax impact of cumulative-effect adjustment
Debt discount reclassification
Equity issuance costs reclassification
Debt discount amortization reclassification, net of tax
Reversal of separated equity component, net of tax
Deferred income tax assets, net
Long-term debt, net
Long-term debt, net
Accumulated deficit
Additional paid-in capital
AMOUNT
(in millions)
14.9
59.9
(2.1)
4.4
(47.3)
$
$
$
$
$
After adopting ASU No. 2020-06, the Company’s convertible senior notes due 2025 (the “2025 Notes”) are reflected entirely as a liability
since the embedded conversion feature is no longer separately presented within stockholders’ equity. During 2020, the Company recognized
debt discount amortization of $6.3 million within Interest expense, net related to its 2025 Notes.
On December 31, 2018, the Company adopted ASU No. 2016-02: Leases (Topic 842) (“ASU No. 2016-02”), ASU No. 2018-01, “Leases
(Topic 842): Land Easement Practical Expedient for Transitioning to Topic 842,” (“ASU No. 2018-01”) and ASU No. 2018-11: Leases
(Topic 842): Targeted Improvements (“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
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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 and recorded a reduction in
Accumulated deficit of $141.3 million primarily related to the derecognition of deferred gains on sale-leaseback transactions, net of related
deferred tax assets. Consequently, financial information and the disclosures required under the new standard were not provided for dates and
periods before December 31, 2018. The Company also elected a transition package including practical expedients that permitted it not to
reassess the classification and initial direct costs of expired or existing contracts and leases, to not separate lease and non-lease components
of restaurant facility leases executed subsequent to adoption, and to not evaluate land easements that exist or expired before the adoption. In
preparation for adoption, the Company implemented a new lease accounting system.
Reclassifications - The Company reclassified certain items in the accompanying consolidated financial statements for prior periods to be
comparable with the classification for the current period. These reclassifications had no effect on previously reported net income.
3. 2020 COVID-19 Charges
Following is a summary of the charges recorded in connection with the COVID-19 pandemic for the period indicated (dollars in thousands):
CHARGES
Inventory obsolescence and spoilage
Compensation for idle employees (1)
Other operating charges
Lease guarantee contingent liabilities (2)
Allowance for expected credit losses (3)
Other charges
Right-of-use asset impairment (4)
Fixed asset impairment (4)
Goodwill and other impairment (5)
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) CLASSIFICATION
FISCAL YEAR
2020
Food and beverage costs
Labor and other related
Other restaurant operating
General and administrative
General and administrative
General and administrative
Provision for impaired assets and restaurant closings
Provision for impaired assets and restaurant closings
Provision for impaired assets and restaurant closings
$
$
10,450
29,993
3,219
4,188
3,334
2,719
32,992
34,423
3,190
124,508
________________
(1)
(2)
Represents relief pay for hourly employees impacted by the closure of dining rooms, net of $14.9 million of employee retention tax credits earned.
Represents additional contingent liabilities recorded for lease guarantees related to certain former restaurant locations now operated by franchisees or other third
parties.
Includes additional reserves to reflect an increase in expected credit losses, primarily related to franchise receivables.
Includes impairments resulting from the remeasurement of assets utilizing projected future cash flows revised for then-current economic conditions, restructuring
charges, the closure of certain restaurants and in connection with the Out West Resolution Agreement. See Note 5 - Impairments, Exit Costs and Disposals and
Note 4 - Revenue Recognition, for details regarding COVID-19 Restructuring costs and the Out West Resolution Agreement, respectively.
Includes impairment of goodwill for the Company’s Hong Kong subsidiary. See Note 10 - Goodwill and Intangible Assets, Net for details regarding impairment of
goodwill.
(3)
(4)
(5)
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4. Revenue Recognition
BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following table includes the categories of revenue included in the Company’s Consolidated Statements of Operations and
Comprehensive Income (Loss) for the periods indicated:
(dollars in thousands)
Revenues
Restaurant sales
Franchise and other revenues
Franchise revenues
Other revenues (1)
Total Franchise and other revenues
Total revenues
2021
FISCAL YEAR
2020
2019
$
$
4,061,093 $
3,144,636 $
4,075,014
45,520
15,772
61,292
21,195
4,730
25,925
52,147
12,228
64,375
4,122,385 $
3,170,561 $
4,139,389
________________
(1)
For 2021, includes a $3.1 million benefit from the recognition of recoverable Program of Social Integration (“PIS”) and Contribution for the Financing of Social
Security (“COFINS”) taxes within other revenues in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base. The
amount recognized primarily represents refundable PIS and COFINS taxes for prior years, including accrued interest, and will be recovered by offsetting future
PIS and COFINS taxes due.
The following table includes the disaggregation of Restaurant sales and franchise revenues, by restaurant concept and major international
market, for the periods indicated:
(dollars in thousands)
U.S.
$
Outback Steakhouse
Carrabba’s Italian Grill
Bonefish Grill
Fleming’s Prime Steakhouse & Wine Bar
Other
U.S. total
International
Outback Steakhouse Brazil
Other (1)
International total
Total
2021
FISCAL YEAR
2020
2019
RESTAURANT
SALES
FRANCHISE
REVENUES
RESTAURANT
SALES
FRANCHISE
REVENUES
RESTAURANT
SALES
FRANCHISE
REVENUES
2,175,909 $
653,231
544,068
332,607
9,033
3,714,848
258,997
87,248
346,245
29,725 $
2,439
641
—
9
32,814
—
12,706
12,706
1,760,071 $
497,212
396,193
209,564
6,507
2,869,547
206,280
68,809
275,089
9,898 $
1,309
346
—
—
11,553
—
9,642
9,642
2,135,776 $
613,031
574,004
307,199
4,658
3,634,668
355,837
84,509
440,346
$
4,061,093 $
45,520 $
3,144,636 $
21,195 $
4,075,014 $
38,614
2,112
787
—
—
41,513
—
10,634
10,634
52,147
____________________
(1)
Includes Restaurant sales for the Company’s Abbraccio concept in Brazil.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following table includes a detail of assets and liabilities from contracts with customers included on the Company’s Consolidated Balance
Sheets as of the periods indicated:
(dollars in thousands)
Other current assets, net
Deferred gift card sales commissions
Unearned revenue
Deferred gift card revenue
Deferred loyalty revenue
Deferred franchise fees - current
Other
Total Unearned revenue
Other long-term liabilities, net
Deferred franchise fees - non-current
DECEMBER 26, 2021
DECEMBER 27, 2020
17,793 $
19,300
387,945 $
9,386
443
1,021
398,795 $
373,048
8,026
469
73
381,616
4,280 $
4,301
$
$
$
$
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
2021
FISCAL YEAR
2020
2019
$
$
19,300 $
(26,012)
26,625
(2,120)
17,793 $
18,554 $
(20,927)
22,923
(1,250)
19,300 $
16,431
(26,094)
29,894
(1,677)
18,554
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
2021
FISCAL YEAR
2020
2019
$
$
373,048 $
330,841
(298,397)
(17,547)
387,945 $
358,757 $
306,016
(277,675)
(14,050)
373,048 $
333,794
420,229
(376,477)
(18,789)
358,757
Franchisee Deferred Payment Agreement - On December 27, 2020, the Company entered into an agreement (the “Resolution Agreement”)
with Cerca Trova Southwest Restaurant Group, LLC (d/b/a Out West Restaurant Group) and certain of its affiliates (collectively, “Out
West”), who currently franchises approximately 80 Outback Steakhouse restaurants in the western United States, primarily in California. The
Resolution Agreement ends on December 31, 2023 or upon the earlier occurrence of certain specified events, including the sale of all or
substantially all of the assets or equity of Out West, bankruptcy or a liquidation event (“Qualifying Event”) (the “Forbearance Period”). Prior
to the Resolution Agreement, Out West was in default of its franchise agreements for nonpayment of certain amounts due, and
simultaneously in default of its credit agreement with its lenders primarily due to the significant impact of the COVID-19 pandemic. Under
the terms of the Resolution Agreement, the Company agreed to:
•
•
•
not call upon any previous default under the existing franchise agreements during the Forbearance Period;
reduce future advertising fees to 2.25% of gross sales during the Forbearance Period;
permanently waive unpaid royalty and advertising fees for the period of February 24, 2020 to July 26, 2020;
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
•
•
•
•
allow for closure of four restaurants and certain sublease modifications (the “Property Concessions”);
allow for closure of up to ten additional restaurants during the first 12 months of the Resolution Agreement, without imposition of
any penalties or accelerated royalties;
defer all non-waived past due royalties and advertising fees through November 22, 2020, and for certain permitted restaurant closings
in connection with the Property Concessions, defer accelerated rent and royalties that otherwise would have been due under the terms
and conditions of the respective franchise agreements and leases or subleases (the “Initial Deferred Balance”); and
defer all past due rents through December 27, 2020 on subleased properties totaling $3.6 million until April 2021 when the balance
will be repaid over an 18-month period.
In connection with the Property Concessions, the Company recognized $4.7 million of lease right-of-use asset impairment during the thirteen
weeks ended December 27, 2020, within the U.S. segment.
At the time of the Resolution Agreement, no deferred or previously waived amounts had been recorded as revenue, with the exception of a
$3.1 million receivable balance that had been previously fully reserved. Collections of deferred amounts, and any future amounts due under
the Resolution Agreement or the Company’s franchise agreements after November 22, 2020, will be recognized when collectability is
reasonably assured.
Out West also entered into a Forbearance Agreement and Second Amendment to Credit and Guaranty Agreement (“Forbearance
Agreement”) with its lenders that, in conjunction with the Resolution Agreement, provides, among other things, for a pre-determined
calculation of available monthly cash (“Available Cash”) that Out West may use to settle its obligations due to the Company and its lenders.
Available Cash is calculated net of operating expenses, including local marketing expenditures required under the Resolution Agreement.
Under the Resolution Agreement, if Out West is unable to satisfy monthly royalty or advertising fees with Available Cash, such amounts will
automatically increase the Initial Deferred Balance. The entire deferred balance will become collectible upon any Qualifying Event. If the
Qualifying Event is the sale of all or substantially all of the assets or equity of Out West, the sale proceeds will be applied, between the
Company and Out West’s lenders, in accordance with the payment priority established in the Resolution Agreement and Forbearance
Agreement; if the sales proceeds are insufficient to satisfy the deferred balance due to the Company, then the Company agreed to
permanently waive any remaining deferred balance due to the Company.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
5. Impairments, Exit Costs and Disposals
The components of Provision for impaired assets and restaurant closings are as follows for the periods indicated:
(dollars in thousands)
Impairment losses
U.S. (1)
International (1)(2)
Corporate (3)
Total impairment losses
Restaurant closure charges (benefits)
U.S. (1)
International (1)
Total restaurant closure charges (benefits)
Provision for impaired assets and restaurant closings
2021
FISCAL YEAR
2020
2019
$
$
11,945 $
1,186
270
13,401
422
(86)
336
13,737 $
65,129 $
3,468
6,226
74,823
1,358
173
1,531
76,354 $
6,381
2,026
727
9,134
(105)
56
(49)
9,085
____________________
(1)
U.S. and international impairment and closure charges during 2020 primarily relate to the COVID-19 pandemic, including charges related to the COVID-19
Restructuring discussed below and the Out West Resolution Agreement. See Note 3 - 2020 COVID-19 Charges for details regarding the impact of the COVID-19
pandemic on the Company’s financial results.
Includes goodwill impairment charges of $2.0 million during 2020. See Note 10 - Goodwill and Intangible Assets, Net for details regarding impairment of
goodwill.
Corporate impairment charges during 2020 primarily relate to transformational initiatives.
(2)
(3)
COVID-19 Restructuring - During 2020, the Company recognized pre-tax asset impairments and closure charges in connection with the
closure of 22 U.S. restaurants and from the update of certain cash flow assumptions, including lease renewal considerations (the “COVID-19
Restructuring”). Following is a summary of the COVID-19 Restructuring charges recognized in the Consolidated Statements of Operations
and Comprehensive Income (Loss) for the period indicated (dollars in thousands):
DESCRIPTION
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) CLASSIFICATION
FISCAL YEAR
2020
Property, fixtures and equipment impairments
Lease right-of-use asset impairments and closure charges
Severance and other expenses
Provision for impaired assets and restaurant closings
Provision for impaired assets and restaurant closings
General and administrative
$
$
18,766
5,003
1,097
24,866
The remaining impairment and closure charges during the periods presented resulted primarily from locations identified for closure or
relocation.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Accrued Facility Closure and Other Costs Rollforward - The following table is a rollforward of the Company’s closed facility lease liabilities
and other accrued costs associated with closure and restructuring initiatives for the period indicated:
(dollars in thousands)
Beginning of the year
Cash payments
Accretion
Adjustments
End of the year (1)
FISCAL YEAR
2021
12,879
(4,739)
906
(561)
8,485
$
$
________________
(1)
As of December 26, 2021, the Company had exit-related accruals associated with closure and restructuring initiatives of $2.9 million recorded in Accrued and
other current liabilities and $5.6 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.
Surplus Property Disposals - During 2019, the Company completed the sale of five of its U.S. surplus properties to a franchisee for cash
proceeds of $12.7 million, net of certain purchase price adjustments. The transaction resulted in a net gain of $3.6 million, recorded within
Other restaurant operating expense in the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss).
Refranchising - During 2019, the Company completed the sale of 18 of its existing U.S. Company-owned Carrabba’s Italian Grill restaurants
to an existing franchisee for cash proceeds of $3.6 million, net of certain purchase price adjustments. The Company remains contingently
liable on certain real estate lease agreements assigned to the buyer.
6. Earnings (Loss) Per Share
The dilutive effect of the 2025 Notes is calculated using the if-converted method. To the extent the Company has ability to settle its 2025
Notes in shares of its common stock, the principal and conversion spread on the 2025 Notes will have a dilutive impact on diluted earnings
per share when the average market price of the Company’s common stock for a given period exceeds the conversion price of $11.89 per share
of common stock. In February 2021, the Company provided the trustee of its 2025 Notes notice of the Company’s irrevocable election to
settle the principal portion of the 2025 Notes in cash and any excess in shares. As a result, subsequent to the election, only the amounts in
excess of the principal amount are considered in diluted earnings per share under the if-converted method.
In connection with the offering of the 2025 Notes, the Company entered into the Convertible Note Hedge Transactions and Warrant
Transactions described in Note 14 - Convertible Senior Notes. However, the Convertible Note Hedge Transactions are not considered when
calculating dilutive shares given their anti-dilutive impact as an offset to dilution of shares underlying the 2025 Notes. The Warrant
Transactions have a dilutive effect on the Company’s common stock to the extent the price of its common stock exceeds the $16.64 strike
price of the Warrant Transactions. See Note 14 - Convertible Senior Notes for additional information regarding the 2025 Notes, Convertible
Note Hedge Transactions and Warrant Transactions.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following table presents the computation of basic and diluted earnings (loss) per share attributable to common stockholders for the
periods indicated:
(in thousands, except per share data)
Net income (loss) attributable to Bloomin’ Brands
Redemption of preferred stock in excess of carrying value (1)
Net income (loss) attributable to common stockholders
Convertible senior notes if-converted method interest adjustment, net of tax (2)
Diluted net income (loss) attributable to common stockholders
Basic weighted average common shares outstanding
Effect of dilutive securities:
Stock options
Nonvested restricted stock units
Nonvested performance-based share units
Convertible senior notes (2)(3)
Warrants (3)
Diluted weighted average common shares outstanding
Basic earnings (loss) per share attributable to common stockholders
Diluted earnings (loss) per share attributable to common stockholders
2021
FISCAL YEAR
2020
2019
215,555 $
—
215,555
345
215,900 $
(158,715) $
(3,496)
(162,211)
—
(162,211) $
130,573
—
130,573
—
130,573
88,981
87,468
88,839
779
355
61
11,377
6,250
107,803
—
—
—
—
—
87,468
2.42 $
2.00 $
(1.85) $
(1.85) $
571
295
72
—
—
89,777
1.47
1.45
$
$
$
$
________________
(1)
(2)
(3)
Consideration paid in excess of carrying value for the redemption of its Abbraccio preferred stock is considered a deemed dividend and, for purposes of
calculating earnings per share, reduces net income attributable to common stockholders. See Note 16 - Stockholders’ Equity for additional details.
Adjustment for interest related to the 2025 Notes weighted for the portion of the period prior to the Company’s election under the 2025 Notes indenture to settle
the principal portion of its 2025 Notes in cash. Effective with the Company’s election, there will be no further numerator adjustments for interest or denominator
adjustments for shares required to settle the principal portion.
Due to the Company’s net loss during 2020, dilutive excess shares, if applicable, and warrants were excluded from the computation of diluted earnings per share as
their effect would be antidilutive.
Share-based compensation-related weighted average securities outstanding not included in the computation of net earnings (loss) per share
attributable to common stockholders because their effect was antidilutive were as follows, for the periods indicated:
(shares in thousands)
Stock options
Nonvested restricted stock units
Nonvested performance-based share units
2021
FISCAL YEAR
2020
2019
751
128
377
5,155
682
514
4,003
158
277
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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 units
Performance-based share units (1)
2021
FISCAL YEAR
2020
2019
$
$
2,286 $
8,184
13,821
24,291 $
3,743 $
8,559
2,414
14,716 $
5,270
8,949
5,471
19,690
________________
(1)
For 2021, includes a cumulative life-to-date adjustment for PSUs granted in fiscal years 2019, 2020 and 2021 based on revised Company performance projections
of performance criteria set forth in the award agreements.
Stock Options - Stock options generally vest and become exercisable over a period of four years in an equal number of shares each year.
Stock options have an exercisable life of no more than ten years from the date of grant. The Company settles stock option exercises with
authorized but unissued shares of the Company’s common stock.
The following table presents a summary of the Company’s stock option activity:
(in thousands, except exercise price and contractual life)
Outstanding as of December 27, 2020
OPTIONS
Exercised
Forfeited or expired
Outstanding as of December 26, 2021
Exercisable as of December 26, 2021
WEIGHTED
AVERAGE
EXERCISE
PRICE
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE (YEARS)
AGGREGATE
INTRINSIC
VALUE
5,422 $
(936) $
(210) $
4,276 $
3,905 $
19.76
15.98
23.34
20.42
20.36
5.1 $
6,575
4.7 $
4.4 $
7,304
7,032
Assumptions used in the Black-Scholes option pricing model and the weighted average fair value of option awards granted were as follows
for the period indicated:
Assumptions:
Risk-free interest rate (1)
Dividend yield (2)
Expected term (3)
Weighted average volatility (4)
FISCAL YEAR
2019
2.34 %
1.94 %
4.8 years
31.05 %
Weighted average grant date fair value per option
$
5.07
________________
(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.
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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
Unrecognized stock option expense
Remaining weighted average vesting period
2021
FISCAL YEAR
2020
2019
$
$
$
$
$
8,419 $
14,951 $
19,246 $
1,942 $
525
0.6 years
2,201 $
4,609 $
16,468 $
535 $
7,929
6,501
18,136
1,932
Restricted Stock Units - Beginning in 2019, restricted stock units granted generally vest over a period of three years and restricted stock units
granted prior to 2019 generally vest over a period of four years, in an equal number of shares each year. Following is a summary of the
Company’s restricted stock unit activity:
(shares in thousands)
Outstanding as of December 27, 2020
Granted
Vested
Forfeited
Outstanding as of December 26, 2021
NUMBER OF
RESTRICTED STOCK
UNIT AWARDS
WEIGHTED
AVERAGE
GRANT DATE
FAIR VALUE PER
AWARD
1,034 $
319 $
(508) $
(115) $
730 $
18.12
25.93
18.57
18.47
21.16
The following represents 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
2021
FISCAL YEAR
2020
9,434 $
1,592 $
8,973 $
1,614 $
2019
8,200
1,672
9,315
1.8 years
$
$
$
Performance-based Share Units - The number of PSUs that vest is determined for each year based on the achievement of certain performance
criteria as set forth in the award agreement and may range from zero to 200% of the annual target grant. The PSUs are settled in shares of
common stock, with holders receiving one share of common stock for each performance-based share unit that vests. The fair value of PSUs is
based on the closing price of the Company’s common stock on the grant date. Compensation expense for PSUs is recognized over the vesting
period when it is probable the performance criteria will be achieved.
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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 27, 2020
Granted
Vested
Forfeited
Outstanding as of December 26, 2021
PERFORMANCE-
BASED SHARE UNITS
WEIGHTED
AVERAGE
GRANT DATE
FAIR VALUE PER
AWARD
673 $
328 $
(147) $
(95) $
759 $
20.37
28.98
23.05
24.11
23.11
In February 2021, the Company granted 0.3 million PSUs with a three-year cliff vesting period and adjusted diluted earnings per share
performance metric. These grants include a Relative TSR modifier to the final payout outcome, which can adjust the payout by 75%, 100%
or 125% of the achieved performance metric, with the overall payout capped at 200% of the annual target grant. The fair value of PSUs
granted was estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to
estimate the probability that the market conditions will be achieved and is applied to the trading price of the Company’s common stock on the
date of the grant.
Assumptions used in the Monte Carlo simulation model and the grant date fair value of PSUs granted were as follows for the period
indicated:
Assumptions:
Risk-free interest rate (1)
Volatility (2)
Grant date fair value per unit (3)
________________
(1)
(2)
(3)
Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for the performance period of the unit.
Based on the historical volatility of the Company’s stock over the last seven years.
Represents a 14.3% premium above the per share value of the Company’s common stock as of the grant date.
The following represents PSU compensation information for the periods indicated:
FISCAL YEAR
2021
0.20 %
48.45 %
29.73
$
(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.
FISCAL YEAR
2021
2020
2019
134 $
1,570 $
857
16,522
1.4 years
$
$
As of December 26, 2021, the maximum number of shares of common stock available for issuance for equity instruments pursuant to the
2020 Omnibus Incentive Compensation Plan was 8,910,835.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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 $15.5 million and $28.1 million as of December 26, 2021 and
December 27, 2020, respectively. The rabbi trust is funded through the Company’s voluntary contributions and was fully funded as of
December 26, 2021.
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 $6.1 million, $5.5 million and $5.4 million for the 401(k) Plan for 2021,
2020 and 2019, 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.
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 (1)
Accounts receivable - vendors, net (1)
Accounts receivable - franchisees, net (1)
Accounts receivable - other, net (1)
Deferred gift card sales commissions
Assets held for sale
Other current assets, net
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
21,194 $
91,248
11,793
1,701
18,353
17,793
100
22,441
184,623 $
12,148
76,808
8,886
1,007
16,782
19,300
3,831
12,756
151,518
________________
(1)
See Note 20 - Allowance for Expected Credit Losses for a rollforward of the related allowance for expected credit losses.
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 26, 2021
DECEMBER 27, 2020
$
$
38,417 $
1,167,811
460,768
641,715
47,822
(1,514,521)
842,012 $
40,498
1,158,257
450,508
623,982
27,102
(1,412,660)
887,687
Surplus Properties - The Company owns certain U.S. restaurant properties and assets that are no longer utilized to operate its restaurants
(“surplus properties”). Surplus properties primarily consist of closed properties, which include land and a building, and liquor licenses no
longer needed for operations. Surplus properties may be
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
classified on the Consolidated Balance Sheets as assets held for sale or as assets held and used when the Company does not expect to sell
these assets within the next 12 months. Following is a summary of the carrying value and number of surplus properties as of the periods
indicated:
(dollars in thousands)
Surplus properties - assets held for sale
Surplus properties - assets held and used
Total surplus properties
Number of surplus properties owned
CONSOLIDATED BALANCE SHEET
CLASSIFICATION
Other current assets, net
Property, fixtures and equipment, net
$
$
DECEMBER 26, 2021
DECEMBER 27, 2020
100 $
4,505
4,605 $
6
3,831
7,955
11,786
12
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 29, 2019
Translation adjustments
Impairment charges
Balance as of December 27, 2020
Translation adjustments
Balance as of December 26, 2021
2021
FISCAL YEAR
2020
$
$
157,386 $
104,209 $
173,342 $
88,829 $
2019
188,190
106,943
U.S.
INTERNATIONAL
CONSOLIDATED
$
$
170,657 $
—
—
170,657
—
170,657 $
117,782 $
(15,302)
(1,973)
100,507
(2,720)
97,787 $
288,439
(15,302)
(1,973)
271,164
(2,720)
268,444
The following table is a summary of the Company’s gross goodwill balances and accumulated impairments as of the periods indicated:
DECEMBER 26, 2021
DECEMBER 27, 2020
DECEMBER 29, 2019
(dollars in thousands)
U.S.
International
Total goodwill
GROSS CARRYING
AMOUNT
ACCUMULATED
IMPAIRMENTS
GROSS CARRYING
AMOUNT
ACCUMULATED
IMPAIRMENTS
GROSS CARRYING
AMOUNT
ACCUMULATED
IMPAIRMENTS
$
$
838,827 $
217,670
1,056,497 $
(668,170) $
(119,883)
(788,053) $
838,827 $
220,390
1,059,217 $
(668,170) $
(119,883)
(788,053) $
838,827 $
235,692
1,074,519 $
(668,170)
(117,910)
(786,080)
The COVID-19 outbreak was considered a triggering event during the first quarter of 2020, indicating that the carrying amount of goodwill
may not be recoverable. As a result, the Company performed a quantitative assessment for its four U.S. and three international reporting units
to determine whether a reporting unit was impaired. Based on this assessment, which utilized a discounted cash flow analysis, the Company
recorded full impairment of goodwill related to its Hong Kong reporting unit of $2.0 million, within the international segment, during the
first quarter of 2020. Impairment was not recorded for any of the Company’s other reporting units as a result of the quantitative assessment.
The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets each year during the
second quarter. The Company’s 2021 and 2019 assessments utilized a qualitative
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
approach. As a result of these assessments, the Company did not record any goodwill asset impairment charges during 2021 or 2019. Since
the Company performed a quantitative assessment on the last day of the first quarter of 2020, as described above, the Company utilized the
same assumptions and analysis in performing a quantitative annual assessment in its second quarter and concluded that no additional
impairment was required.
Intangible Assets, net - Intangible assets, net, consisted of the following as of the periods indicated:
WEIGHTED
AVERAGE
REMAINING
AMORTIZATION
PERIOD
(IN YEARS)
Indefinite
7
0
9
8
(dollars in thousands)
Trade names
Trademarks
Franchise agreements
Reacquired franchise
rights
Total intangible
assets
GROSS
CARRYING
VALUE
$
414,716
81,951 $
—
DECEMBER 26, 2021
ACCUMULATED
AMORTIZATION
NET
CARRYING
VALUE
GROSS
CARRYING
VALUE
DECEMBER 27, 2020
ACCUMULATED
AMORTIZATION
NET
CARRYING
VALUE
$
(55,736)
—
414,716 $
26,215
—
414,716
81,951 $
14,881
$
(51,797)
(14,881)
414,716
30,154
—
31,944
(19,463)
12,481
33,520
(18,407)
15,113
$
528,611 $
(75,199) $
453,412 $
545,068 $
(85,085) $
459,983
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, franchise agreements and reacquired franchise rights for the periods indicated:
(dollars in thousands)
Amortization expense
2021
FISCAL YEAR
2020
2019
$
6,005 $
6,919 $
8,621
The following table presents expected annual amortization of intangible assets as of December 26, 2021:
(dollars in thousands)
2022
2023
2024
2025
2026
11. Other Assets, Net
$
$
$
$
$
5,807
5,741
5,613
5,378
5,294
Other assets, net, consisted of the following as of the periods indicated:
(dollars in thousands)
Company-owned life insurance (1)
Deferred debt issuance costs (2)
Liquor licenses
Other assets
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
30,970 $
5,861
23,266
18,573
78,670 $
44,814
4,694
24,250
18,868
92,626
________________
(1)
(2)
During 2021, the Company withdrew $9.1 million from its Company-owned life insurance policies to pay deferred compensation obligations.
Net of accumulated amortization of $8.5 million and $9.0 million as of December 26, 2021 and December 27, 2020, respectively.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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 (1)
Accrued insurance
Other current liabilities
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
181,636 $
105,095
22,017
98,146
406,894 $
192,369
79,291
20,648
96,013
388,321
________________
(1)
During 2021, accrued payroll and other compensation increased primarily due to an increase in incentive compensation as a result of increased restaurant sales in
2021 due to the impact of COVID-19 during 2020.
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 (2)
Total Senior Secured Credit Facility
Former Credit Facility:
Term loan A (1)
Revolving credit facility (1)
Total Former Credit Facility
2025 Notes (3)
2029 Notes
Finance lease liabilities
Less: unamortized debt discount and issuance costs (4)
Less: finance lease interest
Total debt, net
Less: current portion of long-term debt
Long-term debt, net
DECEMBER 26, 2021
DECEMBER 27, 2020
OUTSTANDING
BALANCE
INTEREST RATE
OUTSTANDING
BALANCE
INTEREST RATE
$
$
195,000
80,000
275,000
—
—
—
230,000
300,000
2,376
(14,157)
(154)
793,065
(10,958)
782,107
1.60 % $
3.75 %
5.00 %
5.13 %
$
—
—
—
425,000
447,000
872,000
230,000
—
2,405
(67,704)
(221)
1,036,480
(38,710)
997,770
2.88 %
2.88 %
5.00 %
________________
(1)
(2)
Interest rate represents the weighted average interest rate as of the respective periods.
Interest rate represents the Base Rate option elected in anticipation of impending repayment. Subsequent to December 26, 2021, the Company repaid the
remaining $80.0 million balance on its revolving credit facility.
See Note 14 - Convertible Senior Notes for details regarding the 2025 Notes and related hedge and warrant transactions.
In connection with the adoption of ASU No. 2020-06, debt discount of $59.9 million related to the 2025 Notes was derecognized and $2.1 million of equity
issuance costs were reclassified as debt issuance costs during 2021.
(3)
(4)
Bloomin’ Brands, Inc. is a holding company and conducts its operations through its subsidiaries, certain of which have incurred indebtedness
as described below.
2029 Notes - On April 16, 2021, the Company and its wholly-owned subsidiary OSI, as co-issuers, issued $300.0 million aggregate principal
amount of senior unsecured notes due 2029 (the “2029 Notes”).
The 2029 Notes were issued pursuant to an Indenture, dated April 16, 2021 (the “Indenture”), by and among the Company, the guarantors
named therein, and Wells Fargo Bank, National Association, as trustee. The 2029 Notes
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
are guaranteed by each of the Company’s existing and future domestic restricted subsidiaries (other than OSI) that are guarantors or
borrowers under its Senior Secured Credit Facility (as defined below) or certain other indebtedness. The 2029 Notes mature on April 15,
2029, unless earlier redeemed or purchased by the Company. The 2029 Notes bear cash interest at an annual rate of 5.125% payable semi-
annually in arrears on April 15 and October 15 of each year.
The Company may redeem some or all of the 2029 Notes at any time on or after April 15, 2024, at the redemption prices set forth in the
Indenture, plus accrued and unpaid interest. The Company may also redeem up to 40% of the 2029 Notes in an amount not greater than the
proceeds of certain equity offerings completed before April 15, 2024, at a redemption price equal to 105.125% of the principal amount
thereof, plus accrued and unpaid interest. In addition, at any time prior to April 15, 2024, the Company may redeem some or all of the 2029
Notes at a price equal to 100% of the principal amount, plus a make-whole premium, plus accrued and unpaid interest.
The Indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur
additional indebtedness or issue certain preferred stock; pay dividends, redeem stock or make other distributions; make certain investments;
create restrictions on the ability of the Company’s restricted subsidiaries to pay dividends or make other payments to the Company; create
certain liens; transfer or sell certain assets; merge or consolidate; enter into certain transactions with the Company’s affiliates; and designate
subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions and qualifications as set forth in the
Indenture.
The Indenture contains customary events of default, including, without limitation, failure to make required payments, failure to comply with
certain agreements or covenants, cross-acceleration to certain other indebtedness in excess of specified amounts, certain events of bankruptcy
and insolvency, and failure to pay certain judgments.
The net proceeds from the 2029 Notes offering were approximately $294.5 million, after deducting the initial purchaser’s discount and the
Company’s offering expenses. The net proceeds were used to repay a portion of the Company’s outstanding Term loan A and revolving credit
facility in conjunction with the refinancing of its Former Credit Facility.
Credit Agreement - On April 16, 2021, the Company and OSI, as co-borrowers, entered into the Second Amended and Restated Credit
Agreement (the “Credit Agreement”), which provides for senior secured financing of up to $1.0 billion consisting of a $200.0 million Term
loan A and an $800.0 million revolving credit facility (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility matures on
April 16, 2026 and replaced the Company’s prior senior secured financing of up to $1.5 billion (the “Former Credit Facility”).
The commitments under the Senior Secured Credit Facility may be increased in an aggregate principal amount of up to: (i) $425.0 million or
(ii) at the Company’s option, up to an unlimited amount of incremental facilities, so long as the Consolidated Senior Secured Net Leverage
Ratio (“CSSNLR”), as defined in the Credit Agreement, is no more than 3.00 to 1.00 as of the last day of the most recent period of four
consecutive fiscal quarters ended.
The Company may elect an interest rate at each reset period based on the Base Rate or the Eurocurrency Rate, plus an applicable spread. The
Base Rate option is the highest of: (i) the prime rate of Wells Fargo Bank, National Association, (ii) the federal funds effective rate plus 0.5
of 1.0% or (iii) the Eurocurrency rate with a one-month interest period plus 1.0% (the “Base Rate”). The Eurocurrency Rate option is the
seven, 30, 60, 90 or 180-day Eurocurrency rate, subject to a 0% floor (the “Eurocurrency Rate”). The interest rates are as follows:
Term loan A and revolving credit facility
50 to 150 basis points over the Base Rate
150 to 250 basis points over the Eurocurrency Rate
BASE RATE ELECTION
EUROCURRENCY RATE ELECTION
Fees on letters of credit and daily unused availability under the revolving credit facility are 150 to 250 basis points and 25 to 40 basis points,
respectively.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following is a summary of required quarterly amortization payments for the Term loan A (dollars in thousands):
SCHEDULED QUARTERLY PAYMENT DATES
March 27, 2022 through June 30, 2024
September 29, 2024 through June 29, 2025
September 28, 2025 and December 28, 2025
TERM LOAN A
$
$
$
2,500
3,750
5,000
The Senior Secured Credit Facility contains mandatory prepayment requirements for the Term loan A, including the requirement that the
Company prepay outstanding amounts under these loans with 50% of its annual excess cash flow, as defined in the Credit Agreement,
commencing with the fiscal year ending December 25, 2022. The amount of outstanding loans required to be prepaid in accordance with the
debt covenants may vary based on the Company’s CSSNLR and year end results.
Total Net Leverage Ratio (“TNLR”) is the ratio of Consolidated Total Debt (Current portion of long-term debt and Long-term debt, net of
cash, excluding the 2025 Notes) to Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization and certain other
adjustments as defined in the Credit Agreement). The Credit Agreement requires a TNLR not to exceed 4.50 to 1.00.
The Credit Agreement limits, subject to certain exceptions, the Company’s ability and the ability of its subsidiaries to: incur additional
indebtedness; make significant payments; sell assets; pay dividends and other restricted payments; make certain investments; acquire certain
assets; effect mergers and similar transactions; and effect certain other transactions with affiliates. The Company was also limited to
$200.0 million of aggregate capital expenditures during the year ended December 26, 2021.
As of December 26, 2021 and December 27, 2020, the Company was in compliance with its debt covenants.
Maturities - Following is a summary of principal payments of the Company’s total consolidated debt outstanding as of the period indicated:
(dollars in thousands)
2022
2023
2024
2025
2026
Thereafter
Total payments
Less: unamortized debt discount and issuance costs
Less: finance lease interest
Total principal payments
DECEMBER 26, 2021
10,976
10,739
12,944
247,674
225,043
300,000
807,376
(14,157)
(154)
793,065
$
$
Debt Issuance Costs - During 2021, the Company deferred $5.5 million and $5.9 million of financing costs incurred in connection with the
2029 Notes and Credit Agreement, respectively. Debt issuance costs of $3.7 million associated with the revolving credit facility portion of
the Credit Agreement were recorded in Other assets, net and all other debt issuance costs were recorded in Long-term debt, net.
14. Convertible Senior Notes
2025 Notes - In May 2020, the Company completed a $230.0 million principal amount private offering of 5.00% convertible senior
unsecured notes due in 2025. The 2025 Notes are governed by the terms of an indenture between the Company and Wells Fargo Bank,
National Association, as the Trustee. The 2025 Notes mature on May 1, 2025,
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
unless earlier converted, redeemed or purchased by the Company. The 2025 Notes bear cash interest at an annual rate of 5.00%, payable
semi-annually in arrears on May 1 and November 1 of each year. Net proceeds from the 2025 Notes offering were approximately $221.6
million, after deducting the initial purchaser’s discounts and commissions and the Company’s offering expenses.
The initial conversion rate applicable to the 2025 Notes is 84.122 shares of common stock per $1,000 principal amount of 2025 Notes, or a
total of approximately 19.348 million shares for the total $230.0 million principal amount. This initial conversion rate is equivalent to an
initial conversion price of approximately $11.89 per share. The conversion rate is subject to adjustment upon the occurrence of certain
specified events.
Prior to the close of business on the business day immediately preceding November 1, 2024, holders may convert all or a portion of their
2025 Notes under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on June 30,
2020, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20
trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar
quarter; (ii) during the five consecutive business days immediately after any five consecutive trading day period (the “measurement period”)
in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98% of
the product of the last reported sale price per share of the Company’s common stock and the conversion rate on each such trading day; (iii)
upon the occurrence of specified corporate events or distributions on the Company’s common stock; (iv) if the Company calls the 2025 Notes
for redemption, and (v) at any time from, and including November 1, 2024 until the close of business on the second scheduled trading day
immediately before the maturity date.
th
The 2025 Notes will be redeemable by the Company, in whole or in part, at the Company’s option at any time, and from time to time, on or
after May 1, 2023 and on or before the 40 scheduled trading day immediately before the maturity date, at a cash redemption price equal to
the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, but only if the last reported sale price per share of
the Company’s common stock exceeds 130% of the conversion price on: (i) each of at least 20 trading days, whether or not consecutive,
during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related
redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any of the 2025
Notes for redemption will constitute a make-whole fundamental change with respect to that note, in which case the conversion rate applicable
to the conversion of the 2025 Notes will be increased in certain circumstances if it is converted after it is called for redemption.
If a fundamental change occurs prior to the maturity date, holders may require the Company to repurchase all or a portion of their 2025 Notes
for cash at a price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest. Holders of
2025 Notes who convert their 2025 Notes in connection with a notice of a redemption or a make-whole fundamental change may be entitled
to a premium in the form of an increase in the conversion rate of the 2025 Notes.
Based on the daily closing prices of the Company’s stock during the quarter ended December 26, 2021, holders of the 2025 Notes are eligible
to convert their 2025 Notes during the first quarter of 2022. The Company has provided the trustee of the 2025 Notes notice of its irrevocable
election under the 2025 Notes indenture to settle the principal portion of the 2025 Notes upon conversion in cash and any excess in shares.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following table includes the outstanding principal amount and carrying value of the 2025 Notes as of the periods indicated:
(dollars in thousands)
Long-term debt, net
Principal
Less: debt discount (1)
Less: debt issuance costs (1)(2)
Net carrying amount
Equity component (1)
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
$
230,000 $
—
(5,898)
224,102 $
— $
230,000
(59,862)
(5,427)
164,711
64,367
________________
(1)
In connection with the adoption of ASU No. 2020-06, debt discount and the equity component of the 2025 Notes were derecognized and $2.1 million of issuance
costs that were previously allocated to the equity component were reclassified as debt issuance costs during 2021.
Debt issuance costs are amortized to Interest expense, net using the effective interest method over the 2025 Notes’ expected life.
(2)
Following is a summary of interest expense for the 2025 Notes, by component, for the periods indicated:
(dollars in thousands)
Coupon interest
Deferred discount amortization
Deferred issuance cost amortization
Total interest expense (1)
FISCAL YEAR
2021
2020
$
$
11,500 $
—
1,557
13,057 $
7,443
6,275
569
14,287
________________
(1)
The effective rate of the 2025 Notes over their expected life was 5.85% and 13.73% for 2021 and 2020, respectively.
Convertible Note Hedge and Warrant Transactions - In connection with the offering of the 2025 Notes, the Company entered into convertible
note hedge transactions (the “Convertible Note Hedge Transactions”) with certain of the initial purchasers of the 2025 Notes and/or their
respective affiliates and other financial institutions (in this capacity, the “Hedge Counterparties”). Concurrently with the Company’s entry
into the Convertible Note Hedge Transactions, the Company also entered into separate, warrant transactions with the Hedge Counterparties
collectively relating to the same number of shares of the Company’s common stock, subject to customary anti-dilution adjustments, and for
which the Company received proceeds that partially offset the cost of entering into the Convertible Note Hedge Transactions (the “Warrant
Transactions”).
The Convertible Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s
common stock that initially underlie the 2025 Notes, and are expected generally to reduce the potential equity dilution in excess of the
principal amount due upon conversion of the 2025 Notes. The Warrant Transactions have a dilutive effect on the Company’s common stock
to the extent that the price of its common stock exceeds the strike price of the Warrant Transactions. The strike price is initially $16.64 per
share and is subject to certain adjustments under the terms of the Warrant Transactions.
The portion of the net proceeds to the Company from the offering of the 2025 Notes that was used to pay the premium on the Convertible
Note Hedge Transactions, net of the proceeds to the Company from the Warrant Transactions, was approximately $19.6 million. The net
costs incurred in connection with the Convertible Note Hedge Transactions and Warrant Transactions were recorded as a reduction to
Additional paid-in capital on the Company’s Consolidated Balance Sheet during 2020.
The Convertible Note Hedge Transactions are exercisable upon conversion of the 2025 Notes. The Convertible Note Hedge Transactions
expire upon maturity of the 2025 Notes. The Warrant Transactions are exercisable on the expiration dates included in the related forms of
confirmation.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
15. 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
Chef and Restaurant Managing Partner deferred compensation obligations
Deferred payroll tax liabilities (1)
Other long-term liabilities (2)
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
31,517 $
13,971
27,302
52,452
125,242 $
32,128
32,306
55,204
65,717
185,355
_______________
(1)
(2)
During 2021, the Company made a payment of $27.3 million related to payroll taxes deferred under the Coronavirus, Aid, Relief and Economic Security Act.
The Company’s hedge liability decreased by $15.6 million during 2021 primarily from the termination of certain interest rate swaps. See Note 17 - Derivative
Instruments and Hedging Activities for additional details.
16. Stockholders’ Equity
Share Repurchases - On February 8, 2022, the Company’s Board of Directors (the “Board”) approved a share repurchase program (the “2022
Share Repurchase Program”) under which the Company was authorized to repurchase up to $125.0 million of its outstanding common stock.
The 2022 Share Repurchase Program will expire on August 9, 2023.
Dividends - The Company declared and paid dividends per share during the period presented as follows:
(dollars in thousands, except per share data)
First fiscal quarter
FISCAL YEAR
2020
DIVIDENDS PER
SHARE
AMOUNT
$
0.20 $
17,480
In February 2022, the Board declared a quarterly cash dividend of $0.14 per share, payable on March 16, 2022 to shareholders of record at
the close of business on March 2, 2022.
Redeemable Preferred Stock - In connection with the development of its Abbraccio Cucina Italiana (“Abbraccio”) concept in 2015, the
Company sold preferred shares of its Abbraccio concept (“Abbraccio Shares”) to certain investors. During 2020, the Company exercised a
call option to purchase all outstanding Abbraccio Shares for $1.0 million and recorded a reduction to Accumulated deficit and an increase in
Net loss applicable to common stockholders of $3.5 million for the consideration paid in excess of the Abbraccio Shares’ carrying value.
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 26, 2021
DECEMBER 27, 2020
$
$
(195,480) $
(10,509)
(205,989) $
(188,883)
(22,563)
(211,446)
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Following are the components of Other comprehensive income (loss) attributable to Bloomin’ Brands for the periods indicated:
(dollars in thousands)
Bloomin’ Brands:
Foreign currency translation adjustment
Unrealized gain (loss) on derivatives, net of tax (1)
Reclassification of adjustments for loss on derivatives included in Net income (loss), net of tax (2)
Amortization of terminated interest rate swaps, net of tax
Total unrealized gain (loss) on derivatives, net of tax
Other comprehensive income (loss) attributable to Bloomin’ Brands
FISCAL YEAR
2021
2020
2019
$
$
(6,597) $
(36,852) $
(16,882)
86
7,392
4,576
12,054
(14,741)
9,923
—
(4,818)
5,457 $
(41,670) $
(11,944)
1,805
—
(10,139)
(27,021)
________________
(1)
(2)
Unrealized loss on derivatives is net of tax of $5.1 million and $4.1 million for 2020 and 2019, respectively.
Reclassifications of adjustments for loss on derivatives are net of tax. See Note 17 - Derivative Instruments and Hedging Activities for the tax impact of
reclassifications.
17. Derivative Instruments and Hedging Activities
Interest Rate Risk - The Company manages economic risks, including interest rate variability, primarily by managing the amount, sources and
duration of its debt funding and through the use of derivative financial instruments. The Company’s objectives in using interest rate
derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps.
Designated Hedges
Cash Flow Hedges of Interest Rate Risk - In October 2018, the Company entered into variable-to-fixed interest rate swap agreements with 12
counterparties to hedge a portion of the cash flows of the Company’s variable rate debt (the “2018 Swap Agreements”). The 2018 Swap
Agreements have an aggregate notional amount of $550.0 million and mature on November 30, 2022. Under the terms of the 2018 Swap
Agreements, the Company pays a weighted average fixed rate of 3.04% on the notional amount and receives payments from the
counterparties based on the one-month London Inter-Bank Offered Rate (“LIBOR”) rate.
In connection with the refinancing of its Former Credit Facility, on April 16, 2021 the Company terminated its variable-to-fixed interest rate
swap agreements with seven counterparties having an aggregate notional amount of $275.0 million for a payment of approximately $13.3
million, including accrued interest. Following these terminations, $13.4 million of unrealized losses related to the terminated swap
agreements included in AOCL will be amortized on a straight-line basis to Interest expense, net over the remaining original term of the
terminated swaps.
As a result of the Company’s anticipated decrease in variable rate debt balances due to significant voluntary debt payments, on December 9,
2021 the Company terminated its variable-to-fixed interest rate swap agreements with three counterparties having an aggregate notional
amount of $150.0 million for a payment of approximately $4.1 million, including accrued interest. Following these terminations, $4.1 million
of unrealized losses related to the terminated swap agreements included in AOCL will be amortized to Interest expense, net during 2022.
The Company’s swap agreements have been designated and qualify as cash flow hedges, are recognized on its Consolidated Balance Sheets
at fair value and are classified based on the instruments’ maturity dates. As of December 26, 2021, the Company estimated $14.4 million will
be reclassified to Interest expense, net through the November 2022 maturity date of the swaps, including interest expense related to the
terminated swap agreements discussed above.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following table presents the fair value and classification of the Company’s swap agreements, as of the periods indicated:
(dollars in thousands)
Interest rate swaps - liability
Interest rate swaps - liability
$
Total fair value of derivative instruments - liabilities (1) $
Accrued interest
$
DECEMBER 26, 2021
3,056 $
—
3,056 $
276 $
DECEMBER 27, 2020
CONSOLIDATED BALANCE SHEET
CLASSIFICATION
14,855 Accrued and other current liabilities
15,640 Other long-term liabilities, net
30,495
1,237 Accrued and other current liabilities
____________________
(1) See Note 19 - Fair Value Measurements for fair value discussion of the interest rate swaps.
The following table summarizes the effects of the swap agreements on Net income (loss) 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 on Net income (loss)
2021
FISCAL YEAR
2020
$
$
(9,951) $
2,559
(7,392) $
(13,370) $
3,447
(9,923) $
2019
(2,436)
631
(1,805)
The Company records its derivatives on its Consolidated Balance Sheets on a gross balance basis. The Company’s interest rate swaps are
subject to master netting arrangements. As of December 26, 2021, the Company did not have more than one derivative between the same
counterparties and as such, there was no netting.
By utilizing the interest rate swaps, the Company is exposed to credit-related losses in the event that the counterparty fails to perform under
the terms of the derivative contract. To mitigate this risk, the Company enters into derivative contracts with major financial institutions based
upon credit ratings and other factors. The Company continually assesses the creditworthiness of its counterparties. As of December 26, 2021
and December 27, 2020, all counterparties to the interest rate swaps had performed in accordance with their contractual obligations.
The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in
default on its derivative obligations if the repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default
on indebtedness.
As of December 26, 2021 and December 27, 2020, the fair value of the Company’s interest rate swaps was in a net liability position,
including accrued interest but excluding any adjustment for nonperformance risk, of $3.3 million and $32.2 million, respectively. As of
December 26, 2021 and December 27, 2020, the Company has not posted any collateral related to these agreements. If the Company had
breached any of these provisions as of December 26, 2021 and December 27, 2020, it could have been required to settle its obligations under
the agreements at their termination value of $3.3 million and $32.2 million, respectively.
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18. Leases
BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following table includes a detail of lease assets and liabilities included on the Company’s Consolidated Balance Sheets as of the periods
indicated:
(dollars in thousands)
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 (3)
Non-current finance lease liabilities
Total lease liabilities
CONSOLIDATED BALANCE SHEET
CLASSIFICATION
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
$
$
$
$
DECEMBER 26, 2021
DECEMBER 27, 2020
1,130,873 $
2,074
1,132,947 $
177,028 $
958
1,178,998
1,264
1,358,248 $
1,172,910
1,947
1,174,857
176,791
1,210
1,216,666
974
1,395,641
________________
(1)
(2)
Net of accumulated amortization of $3.3 million and $2.3 million as December 26, 2021 and December 27, 2020, respectively.
Excludes COVID-19-related deferred rent accruals of $1.1 million and $12.8 million as of December 26, 2021 and December 27, 2020, respectively, and accrued
contingent percentage rent of $3.5 million and $2.7 million, as of December 26, 2021 and December 27, 2020, respectively.
Excludes COVID-19-related non-current deferred rent accruals of $0.4 million and $1.2 million as of December 26, 2021 and December 27, 2020, respectively.
(3)
Following is a summary of expenses and income related to leases recognized in the Consolidated Statements of Operations and
Comprehensive Income (Loss) for the periods indicated:
(dollars in thousands)
Operating leases (1)
Variable lease cost (2)
Finance leases:
Amortization of leased assets
Interest on lease liabilities
Sublease revenue
Lease costs, net
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) CLASSIFICATION
2021
FISCAL YEAR
2020
2019
Other restaurant operating
Other restaurant operating
Depreciation and amortization
Interest expense, net
Franchise and other revenues
$
$
178,733 $
4,350
1,079
129
(9,396)
174,895 $
178,740 $
(2,326)
1,248
160
(3,121)
174,701 $
181,397
3,504
1,400
264
(6,542)
180,023
________________
(1)
Excludes rent expense for office facilities and Company-owned closed or subleased properties of $12.9 million, $13.8 million and $14.6 million for 2021, 2020
and 2019, respectively, which is included in General and administrative expense. Also excludes certain immaterial supply chain related rent expense included in
Food and beverage costs.
Includes COVID-19-related rent abatements for 2021 and 2020.
(2)
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
As of December 26, 2021, future minimum lease payments and sublease revenues under non-cancelable leases are as follows:
(dollars in thousands)
2022 (2)
2023
2024
2025
2026
Thereafter
Total minimum lease payments (receipts) (3)
Less: Interest
Present value of future lease payments
OPERATING
LEASES (1)
FINANCE
LEASES
SUBLEASE
REVENUES
$
$
185,093 $
189,010
183,170
171,317
164,111
1,490,634
2,383,335
(1,025,773)
1,357,562 $
976 $
739
444
174
43
—
2,376 $
(154)
2,222
(5,130)
(5,212)
(5,182)
(4,983)
(4,971)
(42,823)
(68,301)
____________________
(1)
(2)
(3)
Includes COVID-19-related current and non-current deferred rent accruals of $1.1 million and $0.4 million, respectively, as of December 26, 2021.
Net of operating lease prepaid rent of $5.6 million.
Includes $1.0 billion related to lease renewal options that are reasonably certain of exercise and excludes $80.9 million of signed operating leases that have not yet
commenced.
The following table is a summary of the weighted average remaining lease terms and weighted average discount rates of the Company’s
leases as of the periods indicated:
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 26, 2021
DECEMBER 27, 2020
13.7 years
2.8 years
8.42 %
5.01 %
14.0 years
2.7 years
8.54 %
7.21 %
The following table is a summary of other impacts to the Company’s Consolidated Financial Statements related to its leases for the periods
indicated:
(dollars in thousands)
Cash flows from operating activities:
2021
FISCAL YEAR
2020
2019
Cash paid for amounts included in the measurement of operating lease liabilities
$
205,253 $
177,961
$
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 periods indicated:
(dollars in thousands)
Land
Buildings
Less: accumulated depreciation
Buildings, net
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
$
5,021 $
4,987 $
(3,746)
1,241 $
9,341
10,172
(6,181)
3,991
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
19. Fair Value Measurements
Fair Value Measurements on a Recurring Basis - The following table summarizes the Company’s financial assets and liabilities measured at
fair value by hierarchy level on a recurring basis as of the periods indicated:
(dollars in thousands)
Assets:
Cash equivalents:
Fixed income funds
Money market funds
Restricted cash equivalents:
Money market funds
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 26, 2021
DECEMBER 27, 2020
TOTAL
LEVEL 1
LEVEL 2
TOTAL
LEVEL 1
LEVEL 2
6,714 $
9,039
6,714 $
9,039
1,472
17,225 $
1,472
17,225 $
— $
—
—
— $
15,404 $
16,494
15,404 $
16,494
428
32,326 $
428
32,326 $
—
—
—
—
3,056 $
— $
3,056 $
14,855 $
— $
14,855
—
3,056 $
—
— $
—
15,640
3,056 $
30,495 $
—
— $
15,640
30,495
Fair value of each class of financial instrument is determined based on the following:
FINANCIAL INSTRUMENT
METHODS AND ASSUMPTIONS
Fixed income funds and
Money market funds
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 26, 2021 and December 27, 2020, the Company has determined that the credit valuation adjustments are not significant to
the overall valuation of its derivatives.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
Fair Value Measurements on a Nonrecurring Basis - Assets and liabilities that are measured at fair value on a nonrecurring basis relate
primarily to property, fixtures and equipment, operating lease right-of-use assets, goodwill and other intangible assets, which are remeasured
when carrying value exceeds fair value. Carrying value after impairment approximates fair value. The following table summarizes the
Company’s assets measured at fair value by hierarchy level on a nonrecurring basis, for the periods indicated:
(dollars in thousands)
Assets held for sale (1)
Operating lease right-of-use assets (2)
Property, fixtures and equipment (3)
Goodwill and other assets (4)
2021
2020
2019
REMAINING
CARRYING
VALUE
TOTAL
IMPAIRMENT
REMAINING
CARRYING
VALUE
TOTAL
IMPAIRMENT
REMAINING
CARRYING
VALUE
TOTAL
IMPAIRMENT
$
$
— $
— $
8,647
11,647
—
3,950
8,445
1,006
1,934 $
72,615
26,311
748
123 $
30,940
41,077
2,683
2,049 $
6,597
3,915
—
20,294 $
13,401 $
101,608 $
74,823 $
12,561 $
315
4,284
4,535
—
9,134
________________
(1)
Carrying values measured using Level 3 inputs to estimate fair value totaled $1.2 million during 2020. All other assets were valued using Level 2 inputs. Third-
party market appraisals or executed sales contracts (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value.
Carrying values measured using Level 2 inputs to estimate fair value totaled $0.2 million during 2019. All other assets were valued using Level 3 inputs. Third-
party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value. Refer to Note 5 - Impairments, Exit Costs and
Disposals for a more detailed discussion of impairments.
Carrying values measured using Level 2 inputs to estimate fair value totaled $1.4 million, $2.2 million and $2.3 million for 2021, 2020 and 2019, respectively. All
other assets were valued using Level 3 inputs. Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate the fair
value. Refer to Note 5 - Impairments, Exit Costs and Disposals for a more detailed discussion of impairments.
Other assets generally measured using the quoted market value of comparable assets (Level 2).
(2)
(3)
(4)
See Note 5 - Impairments, Exit Costs and Disposals for information regarding impairment charges resulting from the fair value measurement
performed on a nonrecurring basis during 2020. Projected future cash flows, including discount rate and growth rate assumptions, are derived
from then-current economic conditions, expectations of management and projected trends of current operating results. As a result, the
Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall
within Level 3 of the fair value hierarchy.
In assessment of impairment for operating locations, the Company determined the fair values of individual operating locations using an
income approach, which required discounting projected future cash flows. When determining the stream of projected future cash flows
associated with an individual operating location, management made assumptions, including highest and best use and inputs from restaurant
operations, where necessary, and about key variables including the following unobservable inputs: revenue growth rates, controllable and
uncontrollable expenses, and asset residual values. In order to calculate the present value of those future cash flows, the Company discounted
cash flow estimates at its weighted average cost of capital applicable to the country in which the measured assets reside.
The following table presents quantitative information related to certain unobservable inputs used in the Company’s Level 3 fair value
measurements of Operating lease right-of-use assets and Property, fixtures and equipment for the impairment losses incurred during the
period indicated:
UNOBSERVABLE INPUTS
Weighted average cost of capital
Long-term growth rate
FISCAL YEAR
2020
10.4%
1.5%
to
to
11.3%
2.0%
Fair Value of Financial Instruments - The Company’s non-derivative financial instruments as of December 26, 2021 and December 27, 2020
consist of cash equivalents, accounts receivable, accounts payable and current and
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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
Former Credit Facility:
Term loan A
Revolving credit facility
2025 Notes
2029 Notes
20. Allowance for Expected Credit Losses
DECEMBER 26, 2021
DECEMBER 27, 2020
CARRYING
VALUE
FAIR VALUE LEVEL
2
CARRYING
VALUE
FAIR VALUE LEVEL 2
$
$
$
$
$
$
195,000 $
80,000 $
— $
— $
230,000 $
300,000 $
190,125 $
76,926 $
— $
— $
447,615 $
304,395 $
— $
— $
425,000 $
447,000 $
230,000 $
— $
The following table is a rollforward of the Company’s trade receivables allowance for expected credit losses for the periods indicated:
(dollars in thousands)
Allowance for expected credit losses, beginning of period
Adjustment for adoption of ASU No. 2016-13
Provision for expected credit losses (1)
Charge-off of accounts
Allowance for expected credit losses, end of period
FISCAL YEAR
2021
2020
$
$
4,095 $
—
64
(109)
4,050 $
________________
(1)
In March 2020, the Company fully reserved substantially all of its outstanding franchise receivables in response to the economic impact of the COVID-19
pandemic. See Note 3 - 2020 COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.
The Company is also exposed to credit losses from off-balance sheet lease guarantees primarily related to the divestiture of certain formerly
Company-owned restaurant sites. See Note 22 - Commitments and Contingencies for details regarding these lease guarantees.
21. Income Taxes
The following table presents the domestic and foreign components of Income (loss) before provision (benefit) for income taxes for the
periods indicated:
(dollars in thousands)
Domestic
Foreign
2021
258,202 $
(8,905)
249,297 $
$
$
FISCAL YEAR
2020
(206,941) $
(32,580)
(239,521) $
2019
129,826
11,864
141,690
103
—
—
412,250
419,612
413,818
—
199
1,018
3,472
(594)
4,095
Table of Contents
BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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
Provision (benefit) for income taxes
2021
FISCAL YEAR
2020
2019
$
$
16,951 $
10,917
1,862
29,730
(2,057)
1,194
(2,483)
(3,346)
26,384 $
2,606 $
2,301
2,623
7,530
(66,498)
(12,527)
(9,231)
(88,256)
(80,726) $
13,265
9,696
10,502
33,463
(21,407)
(1,986)
(2,497)
(25,890)
7,573
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
Tax settlements and related adjustments
Net changes in deferred tax valuation allowances
Foreign tax rate differential
Nondeductible expenses
Other, net
Total
2021
FISCAL YEAR
2020 (1)
2019
21.0 %
3.8
(13.2)
(1.7)
(0.7)
(0.2)
2.3
(0.7)
10.6 %
21.0 %
3.3
9.9
0.1
(0.6)
1.1
(1.4)
0.3
33.7 %
21.0 %
4.4
(24.7)
—
(1.6)
3.2
3.9
(0.9)
5.3 %
________________
(1)
Due to the pre-tax book loss, a positive percentage change in the effective income tax rate table reflects a favorable income tax benefit, whereas a negative
percentage change in the effective income tax rate table reflects an unfavorable income tax expense.
The net decrease in the effective income tax rate in 2021 as compared to 2020 was primarily due to the benefit of FICA tax credits on certain
employees’ tips reducing the effective income tax rate in 2021 as a result of pre-tax book income as compared to increasing the effective
income tax rate in 2020 as a result of pre-tax book loss.
The net increase in the effective income tax rate in 2020 as compared to 2019 was primarily due to the benefit of the tax credits for FICA
taxes on certain employees’ tips in 2020 and the 2020 pre-tax book loss.
The Company has a blended federal and state statutory rate of approximately 26%. The effective income tax rate for 2021 was lower than the
blended federal and state statutory rate primarily due to the benefit of tax credits for FICA taxes on certain employees’ tips. The effective
income tax rate for 2020 was higher than the blended federal and state statutory rate primarily due to the benefit of tax credits for FICA taxes
on certain employees’ tips.
On December 28, 2021, the U.S. Treasury and the Internal Revenue Service released final regulations that, among other things, provide
guidance on several aspects of the foreign tax credit rules. These regulations are applicable for years beginning on or after December 28,
2021 and were issued after the Company’s 52-53 week year end. The impact, if any, of these highly technical regulations is being evaluated
and will be reflected in the Company’s 2022 tax provision.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
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
Insurance reserves
Unearned revenue
Deferred compensation
Net operating loss carryforwards
Federal tax credit carryforwards
Other, net (1)
Gross deferred income tax assets
Less: valuation allowance
Deferred income tax assets, net of valuation allowance
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
Deferred income tax assets, net
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
352,041 $
14,329
50,284
25,164
18,227
146,734
21,222
628,001
(16,998)
611,003
(290,697)
(48,284)
(103,954)
168,068 $
360,690
13,695
44,039
32,779
19,285
142,055
28,241
640,784
(18,509)
622,275
(300,387)
(54,725)
(113,280)
153,883
________________
(1)
As of December 26, 2021 and December 27, 2020, the Company maintained deferred tax liabilities for state income taxes on historical earnings of $0.2 million.
As of December 26, 2021, valuation allowances against deferred tax assets in the U.S. and in certain foreign jurisdictions totaled $3.2 million
and $13.8 million, respectively. The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it
is more likely than not the deferred tax assets will be realized. The net change in the deferred tax valuation allowance in 2021 is primarily
attributable to net operating loss carryforwards in certain foreign jurisdictions with full valuation allowances recorded that expired or are no
longer available to the Company.
The Company has considered the impact of the COVID-19 pandemic on the Company’s Brazilian operating subsidiary, including assessing
the realizability of Brazilian deferred tax assets. As part of the Company’s evaluation of positive and negative evidence, management
considered whether there has been cumulative income or loss in the past three years, the impact of non-deductible amounts, the scheduled
reversal of deferred tax assets and liabilities, projected future taxable income and the state of the Company’s business in Brazil. As of
December 26, 2021, the Company has concluded that no valuation allowance is required against the deferred tax assets of its Brazilian
operating subsidiary. Although management uses the best information available, it is reasonably possible that the estimates used by the
Company could be materially different from the actual results. These differences could result in a material adjustment to the Company’s
valuation allowance in a future reporting period.
Undistributed Earnings - As of December 26, 2021, the Company had aggregate accumulated foreign earnings of approximately $28.8
million. This amount consisted primarily of historical earnings from 2017 and prior that were previously taxed in the U.S. under the Tax Cuts
and Jobs Act and post-2017 foreign earnings, which the Company may repatriate to the U.S. without additional material U.S. federal income
taxes. These amounts are no longer considered indefinitely reinvested in the Company’s foreign subsidiaries.
The Company has not recorded a deferred tax liability on the financial statement carrying amount over the tax basis of its investments in
foreign subsidiaries because the Company continues to assert that it is indefinitely reinvested in its underlying investments in foreign
subsidiaries. The determination of any unrecorded deferred tax liability on this amount is not practicable due to the uncertainty of how these
investments would be recovered.
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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 26, 2021 are as
follows:
(dollars in thousands)
Federal tax credit carryforwards
Foreign loss carryforwards
Foreign credit carryforwards
EXPIRATION DATE
AMOUNT
2026 - 2041
2022 -
Indefinite
Indefinite
$
$
$
158,878
71,724
864
As of December 26, 2021, the Company had $155.7 million in general business tax credit carryforwards, which have a 20-year carryforward
period and are utilized on a first-in, first-out basis. The Company currently expects to utilize these tax credit carryforwards within a 10-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.
Unrecognized Tax Benefits - As of December 26, 2021 and December 27, 2020, the liability for unrecognized tax benefits was $19.2 million
and $25.5 million, respectively. Of the total amount of unrecognized tax benefits, including accrued interest and penalties, $18.8 million and
$25.5 million, respectively, if recognized, would impact the Company’s effective income 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
2021
FISCAL YEAR
2020
2019
$
$
25,524 $
166
(4,209)
1,292
(2,674)
(854)
(7)
19,238 $
27,201 $
1,061
(324)
762
(1,290)
(1,857)
(29)
25,524 $
25,190
869
(255)
2,237
(44)
(749)
(47)
27,201
The Company had approximately $0.9 million and $1.9 million accrued for the payment of interest and penalties as of December 26, 2021
and December 27, 2020, 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 $1.0 million to $2.0 million within the next 12 months.
Open Tax Years - Following is a summary of the open audit years by jurisdiction as of December 26, 2021:
United States - federal
United States - state
Foreign
OPEN AUDIT YEARS
2007 - 2020
2009 - 2020
2015 - 2020
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
22. Commitments and Contingencies
Lease Guarantees - The Company assigned its interest, and is contingently liable, under certain real estate leases. These leases have varying
terms, the latest of which expires in 2032. As of December 26, 2021, the undiscounted payments the Company could be required to make in
the event of non-payment by the primary lessees was approximately $25.1 million. The present value of these potential payments discounted
at the Company’s incremental borrowing rate as of December 26, 2021 was approximately $21.2 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 26, 2021 and December 27, 2020, the Company’s recorded contingent lease liability was $8.7 million and $9.6 million,
respectively,
Purchase Obligations - Purchase obligations were $206.6 million and $230.6 million as of December 26, 2021 and December 27, 2020,
respectively. These purchase obligations are primarily due within five years, however, commitments with various vendors extend through
December 2030. Outstanding commitments consist primarily of food and beverage products related to normal business operations,
technology, restaurant-level service contracts and advertising. In 2021, the Company purchased more than 90% 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 - The Company is subject to legal proceedings, claims and liabilities, such as liquor liability, slip and fall cases,
wage-and-hour and other employment-related litigation, which arise in the ordinary course of business. A reserve is recorded when it is both:
(i) probable that a loss has occurred and (ii) the amount of loss can be reasonably estimated. There may be instances in which an exposure to
loss exceeds the recorded reserve. The Company evaluates, on a quarterly basis, developments in legal proceedings that could cause an
increase or decrease in the amount of the reserve that has been previously recorded, or a revision to the disclosed estimated range of possible
losses, as applicable.
The Company’s legal proceedings range from cases brought by a single plaintiff to threatened class actions with many putative class
members. While some matters pending against the Company specify the damages claimed by the plaintiff or class, many seek unspecified
amounts or are at very early stages of the legal process. Even when the amount of damages claimed against the Company are stated, the
claimed amount may be exaggerated, unsupported or unrelated to possible outcomes, and as such, are not meaningful indicators of the
Company’s potential liability or financial exposure. As a result, some matters have not yet progressed sufficiently through discovery or
development of important factual information and legal issues to enable the Company to estimate an amount of loss or a range of possible
loss.
The Company recorded reserves of $7.1 million and $4.6 million for certain of its outstanding legal proceedings as of December 26, 2021
and December 27, 2020, respectively, within Accrued and other current liabilities and Other long-term liabilities on its Consolidated Balance
Sheets. While the Company believes that additional losses beyond these accruals are reasonably possible, it cannot estimate a possible loss
contingency or range of reasonably possible loss contingencies beyond these accruals. During 2021, 2020 and 2019, the Company recognized
$5.4 million, $2.3 million and $1.3 million, respectively, in Other restaurant operating expense in the Company’s Consolidated Statements of
Operations and Comprehensive Income (Loss) for certain legal settlements.
The Company intends to defend itself in legal matters. Some of these matters may be covered, at least in part, by insurance if they exceed
specified retention or deductible amounts. However, it is possible that claims may be denied by the Company’s insurance carriers, the
Company may be required by its insurance carriers to contribute to the payment of claims, or the Company’s insurance coverage may not
continue to be available on acceptable terms or in sufficient amounts. The Company records receivables from third party insurers when
recovery has been determined to be probable. The Company believes that the ultimate determination of liability in connection with legal
claims pending against the Company, if any, in excess of amounts already provided for such matters in the consolidated financial statements,
will not have a material adverse effect on its business, annual results of operations, liquidity or financial position. However, it is possible that
the Company’s business, results of operations,
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
liquidity, or financial condition could be materially affected in a particular future reporting period by the unfavorable resolution of one or
more matters or contingencies during such period.
Royalty Termination - On August 2, 2021, wholly-owned subsidiaries of the Company entered into the Purchase and Sale of Royalty
Payment Stream and Termination of Royalty Agreement (the “Royalty Termination Agreement”) with the Carrabba’s Italian Grill founders
(the “Carrabba’s Founders”), pursuant to which the Company’s obligation to pay future royalties on U.S. Carrabba’s Italian Grill restaurant
sales and lump sum royalty fees on Carrabba’s Italian Grill (and Abbraccio) restaurants opened outside the U.S. was terminated. Upon
execution of the Royalty Termination Agreement, the Company made a cash payment of $61.9 million to the Carrabba’s Founders, which
was recorded in Other restaurant operating expense in its Consolidated Statements of Operations and Comprehensive Income (Loss) during
2021.
Insurance - As of December 26, 2021, the future undiscounted payments the Company expects for workers’ compensation, general liability
and health insurance claims are as follows:
(dollars in thousands)
2022
2023
2024
2025
2026
Thereafter
$
$
22,071
10,819
6,759
3,486
1,838
9,691
54,664
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 on the Company’s Consolidated Balance Sheets:
Accrued and other current liabilities
Other long-term liabilities, net
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
$
$
54,664 $
(1,130)
53,534 $
22,017 $
31,517
53,534 $
53,217
(441)
52,776
20,648
32,128
52,776
____________________
(1) Discount rates of 0.69% and 0.26% were used for December 26, 2021 and December 27, 2020, respectively.
23. 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.
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following is a summary of reporting segments as of December 26, 2021:
REPORTABLE SEGMENT (1)
CONCEPT
GEOGRAPHIC LOCATION
U.S.
International
_________________
(1)
Includes franchise locations.
Outback Steakhouse
Carrabba’s Italian Grill
Bonefish Grill
Fleming’s Prime Steakhouse & Wine Bar
Outback Steakhouse
Carrabba’s Italian Grill (Abbraccio)
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 (loss) from operations for
U.S. and international are certain legal and corporate costs not directly related to the performance of the segments, most stock-based
compensation expenses and certain bonus expenses.
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
2021
FISCAL YEAR
2020
2019
$
$
3,759,981 $
362,404
4,122,385 $
2,885,542 $
285,019
3,170,561 $
3,687,918
451,471
4,139,389
The following table is a reconciliation of segment income (loss) from operations to Income (loss) before provision (benefit) for income taxes,
for the periods indicated:
(dollars in thousands)
Segment income (loss) from operations
U.S.
International
Total segment income (loss) from operations
Unallocated corporate operating expense (1)
Total income (loss) from operations
Loss on extinguishment and modification of debt
Other income (expense), net
Interest expense, net
Income (loss) before provision (benefit) for income taxes
2021
FISCAL YEAR
2020
2019
$
$
443,887 $
16,657
(1,630) $
(13,479)
460,544
(151,586)
308,958
(2,073)
26
(57,614)
(15,109)
(159,864)
(174,973)
(237)
131
(64,442)
249,297 $
(239,521) $
311,666
44,428
356,094
(165,004)
191,090
—
(143)
(49,257)
141,690
____________________
(1)
Includes $32.4 million of charges for 2020 that were not allocated to the Company’s segments related to its transformational initiatives, primarily recorded within
General and administrative expense and Provision for impaired assets and restaurant closings.
109
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BLOOMIN’ BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
The following table is a summary of Depreciation and amortization expense by segment for the periods indicated:
(dollars in thousands)
Depreciation and amortization
U.S.
International
Corporate
Total depreciation and amortization
2021
FISCAL YEAR
2020
2019
$
$
134,243 $
22,649
6,499
163,391 $
144,298 $
23,723
12,240
180,261 $
152,881
27,491
16,439
196,811
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
The following table sets forth Total assets by segment as of the periods indicated:
(dollars in thousands)
Assets
U.S.
International
Corporate
Total assets
2021
FISCAL YEAR
2020
2019
$
$
103,303 $
14,074
9,035
126,412 $
64,516 $
18,542
5,936
88,994 $
121,646
28,496
8,885
159,027
DECEMBER 26, 2021
DECEMBER 27, 2020
$
$
2,626,808 $
383,075
284,388
3,294,271 $
2,672,778
410,322
279,007
3,362,107
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 26, 2021
DECEMBER 27, 2020
$
$
831,634 $
73,706
15,342
920,682 $
879,392
83,041
17,880
980,313
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
FISCAL YEAR
2021
2020
2019
3,759,981 $
2,885,542 $
3,687,918
297,167
65,237
222,283
62,736
393,700
57,771
4,122,385 $
3,170,561 $
4,139,389
$
$
110
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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 26, 2021.
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 26, 2021 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Amendment to CEO Employment Agreement
On February 21, 2022, the Company entered into the Second Amendment to Amended and Restated Officer Employment Agreement (the
“Second Amendment”) with David J. Deno, the Company’s Chief Executive Officer. Pursuant to the Second Amendment, effective February
21, 2022, Mr. Deno’s annual base salary was increased to One Million Dollars ($1,000,000) and his long-term incentive award target was
increased to 4.35 times his annual base salary (collectively, the “Market Adjustment”). The increase to Mr. Deno’s annual base salary and
related annual incentive compensation target will be pro-rated for 2022.
The Market Adjustment was reviewed and approved by the Company’s Compensation Committee after consultation with Frederic W. Cook
& Co., Inc., the Compensation Committee’s independent compensation consultant and brings Mr. Deno’s total target compensation level
more in-line with the Company’s peer group benchmark.
The foregoing summary of the Second Amendment does not purport to be complete and is qualified in its entirety by the full text of the
Second Amendment, a copy of which is filed as Exhibit 10.48 to this Annual Report on Form 10-K and incorporated herein by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
111
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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
2022 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 “Executive Compensation and Related Information—Delinquent Section 16(a) Reports” in our Definitive Proxy Statement and is
incorporated herein by reference.
We have adopted a Code of Conduct that applies to all employees. A copy of our Code of Conduct is available on our website, free of charge.
The Internet address for our website is www.bloominbrands.com, and the Code of Conduct may be found on our main webpage by clicking
first on “Investors” and then on “Governance—Governance Documents” and next on “Code of Conduct.”
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 Governance Documents webpage, 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.
112
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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.
113
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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 26, 2021 and December 27, 2020
• Consolidated Statements of Operations and Comprehensive Income (Loss) – Fiscal years 2021, 2020 and 2019
• Consolidated Statements of Changes in Stockholders’ Equity – Fiscal years 2021, 2020 and 2019
• Consolidated Statements of Cash Flows – Fiscal years 2021, 2020 and 2019
• 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
4.2
4.3
4.4
4.5
Third Amended and Restated Certificate of Incorporation of Bloomin’ Brands,
Inc.
Third Amended and Restated Bylaws of Bloomin’ Brands, Inc.
Form of Common Stock Certificate
Description of Common Stock
Indenture, dated as of May 8, 2020, between Bloomin’ Brands, Inc. and Wells
Fargo Bank, National Association
Form of 5.00% Convertible Senior Notes due 2025
Indenture, dated as of April 16, 2021, by and among Bloomin’ Brands, Inc., OSI
Restaurant Partners, LLC, the guarantors party thereto, and Wells Fargo Bank,
National Association, as trustee
4.6
Form of 5.125% Senior Notes due 2029
10.1
Second Amended and Restated Credit Agreement, dated April 16, 2021, by and
among Bloomin’ Brands, Inc., OSI Restaurant Partners, LLC, the guarantors
party thereto, the lenders party thereto, and Wells Fargo Bank, National
Association, as administrative Agent
FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE
May 19, 2021 Form 8-K, Exhibit 3.1
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
December 29, 2019 Form 10-K, Exhibit 4.2
May 11, 2020 Form 8-K, Exhibit 4.1
May 11, 2020 Form 8-K, Included as
Exhibit A to Exhibit 4.1
April 20, 2021 Form 8-K, Exhibit 4.1
April 20, 2021 Form 8-K, Included as
Exhibit A to Exhibit 4.1
April 20, 2021 Form 8-K, Exhibit 10.1
114
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EXHIBIT
NUMBER
10.2
10.3
10.4
10.5
10.6
BLOOMIN’ BRANDS, INC.
DESCRIPTION OF EXHIBITS
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.
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.
Purchase and Sale of Royalty Payment Stream and Termination of Royalty
Agreement dated August 2, 2021 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.
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.
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
FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE
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
June 25, 2017 Form 10-Q, Exhibit 10.1
August 5, 2021 Form 10-Q, Exhibit 10.2
Registration Statement on Form S-1, File
No. 333-180615, filed on April 6, 2012,
Exhibit 10.8
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*
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
10.12*
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
115
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EXHIBIT
NUMBER
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
BLOOMIN’ BRANDS, INC.
DESCRIPTION OF EXHIBITS
Form of Restricted Stock Award Agreement for restricted stock granted to
employees and consultants under the Bloomin’ Brands, Inc. 2012 Incentive
Award Plan
FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE
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
Form of Performance Unit Award Agreement for performance units granted
under the Bloomin’ Brands, Inc. 2012 Incentive Award Plan
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
September 30, 2013 Form 10-Q, Exhibit
10.2
December 7, 2012 Form 8-K, Exhibit 10.5
Amendment No. 4 to Registration
Statement on Form S-1, File No. 333-
180615, filed on July 18, 2012, Exhibit
10.39
Bloomin’ Brands, Inc. 2016 Omnibus Incentive Compensation Plan
March 11, 2016 Definitive Proxy Statement
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
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. 2020 Omnibus Incentive Compensation Plan
April 9, 2020 Definitive Proxy Statement
Form of Restricted Stock Unit Award Agreement for restricted stock granted to
directors under the Bloomin’ Brands, Inc. 2020 Omnibus Incentive
Compensation Plan
Form of Nonqualified Stock Option Award Agreement for options granted to
executive management under the Bloomin’ Brands, Inc. 2020 Omnibus
Incentive Compensation Plan
Form of Restricted Stock Unit Award Agreement for restricted stock granted to
executive management under the Bloomin’ Brands, Inc. 2020 Omnibus
Incentive Compensation Plan
Form of Performance Award Agreement for performance units granted to
executive management under the Bloomin’ Brands, Inc. 2020 Omnibus
Incentive Compensation Plan
May 29, 2020 Form 8-K, Exhibit 10.2
May 29, 2020 Form 8-K, Exhibit 10.3
May 29, 2020 Form 8-K, Exhibit 10.4
May 29, 2020 Form 8-K, Exhibit 10.5
116
Table of Contents
EXHIBIT
NUMBER
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41*
10.42*
10.43
10.44
10.45*
10.46*
10.47*
BLOOMIN’ BRANDS, INC.
DESCRIPTION OF EXHIBITS
Form of Restricted Cash Award Agreement for cash awards granted to executive
management under the Bloomin’ Brands, Inc. 2020 Omnibus Incentive
Compensation Plan
Amended Form of Performance Award Agreement for performance units
granted to executive management under the Bloomin’ Brands, Inc. 2020
Omnibus Incentive Compensation Plan
Amended Form of Performance Award Agreement with adapted service criteria
for performance units granted to executive management under the Bloomin’
Brands, Inc. 2020 Omnibus Incentive Compensation Plan
Form of Restricted Stock Unit Award Agreement with adapted service criteria
for restricted stock units granted to executive management under the Bloomin’
Brands, Inc. 2020 Omnibus Incentive Compensation Plan
FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE
May 29, 2020 Form 8-K, Exhibit 10.6
December 27, 2020 Form 10-K, Exhibit
10.48
December 27, 2020 Form 10-K, Exhibit
10.49
December 27, 2020 Form 10-K, Exhibit
10.50
Bloomin’ Brands, Inc. Executive Change in Control Plan, effective December 6,
2012
December 7, 2012 Form 8-K, Exhibit 10.1
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 10.2
March 31, 2019 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 March 7, 2019, between
Bloomin’ Brands, Inc. and Christopher Meyer
March 31, 2019 Form 10-Q, Exhibit 10.4
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
Resignation Agreement, effective March 6, 2020, by and between Elizabeth A.
Smith and Bloomin’ Brands, Inc.
December 29, 2019 Form 10-K, Exhibit
10.39
Employment Offer Letter Agreement, dated as of February 14, 2020, between
Bloomin’ Brands, Inc. and Gregg Scarlett
December 29, 2019 Form 10-K, Exhibit
10.40
Amendment to Officer Employment Agreement, dated as of April 6, 2020,
between Bloomin’ Brands, Inc. and David J. Deno
March 29, 2020 Form 10-Q, Exhibit 10.4
Form of Convertible Note Hedge Transactions confirmation
Form of Warrant Transactions confirmation
May 11, 2020 Form 8-K, Exhibit 10.1
May 11, 2020 Form 8-K, Exhibit 10.2
Separation Agreement, dated as of December 20, 2021, by and between Michael
Stutts and Bloomin’ Brands, Inc.
Filed herewith
Employment Offer Letter Agreement, dated as of February 10, 2021, between
Patrick Murtha and Bloomin’ Brands, Inc.
Employment Offer Letter Agreement, dated as of April 14, 2021, between
Patrick Murtha and Bloomin’ Brands, Inc.
Filed herewith
Filed herewith
117
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EXHIBIT
NUMBER
10.48*
21.1
23.1
31.1
31.2
32.1
32.2
BLOOMIN’ BRANDS, INC.
DESCRIPTION OF EXHIBITS
FILINGS REFERENCED FOR
INCORPORATION BY REFERENCE
Second Amendment to Officer Employment Agreement, dated as of February
21,2022, between Bloomin’ Brands, Inc. and David J. Deno
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
Filed herewith
Filed herewith
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
1
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed herewith
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
1
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in
Exhibit 101)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit.
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
1
These certifications are not deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that
section. These certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act,
except to the extent that the registrant specifically incorporates them by reference.
Item 16. Form 10-K Summary
None.
118
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 23, 2022
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/ James R. Craigie
James R. Craigie
/s/ Wendy A. Beck
Wendy A. Beck
/s/ David R. Fitzjohn
David R. Fitzjohn
/s/ John Gainor
John Gainor
/s/ Lawrence Jackson
Lawrence Jackson
/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)
February 23, 2022
February 23, 2022
Chairman of the Board and Director
February 23, 2022
Director
Director
Director
Director
Director
Director
Director
Director
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
Exhibit 10.45
SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE (“Release”) is made and entered into by and between
MICHAEL STUTTS (“Stutts”) and OS MANAGEMENT, INC. (“Company” or “Employer”). The parties desire to settle all
disputes between them, on terms that are mutually agreeable. Accordingly, Employer and Stutts agree as follows:
1.
2.
3.
4.
Employer will provide Stutts with good and valuable consideration in return for Stutts’s execution of this Release, which
is intended to fully resolve all matters between Employer and Stutts, whether actual or potential.
By entering this Release, Employer does not admit any underlying liability to Stutts. Neither Employer nor Stutts is
entering this Release because of any wrongful acts of any kind.
Stutts agrees that his employment with Company will be separated effective December 20, 2021 (“Separation Date”).
Stutts promises and obligates himself to perform the following covenants under this Release:
a.)
Acting for himself, his heirs, personal representatives, administrators, and anyone claiming by or through him or
them, Stutts unconditionally and irrevocably releases, acquits, and discharges Employer and its Releasees from all
Claims (as defined below) that Stutts (or any person or entity claiming through Stutts) may have against Employer
or its Releasees as of the date of this Release.
i)
ii)
The phrases “Employer” 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, OSI/Fleming’s, LLC, OSI International, LLC, Outback Steakhouse International, 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.
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
include Claims arising from any source, including but not limited to contracts, statutes, regulations,
ordinances, codes, or the common law, including claims arising under Title VII of 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. §201et seq., as amended), the
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Occupational Safety and Health Act (29 U.S.C. §651 et seq.), the Genetic Information Nondiscrimination
Act of 2008, the Pregnancy Discrimination Act of 1978 (as amended), the Uniformed Servicemembers
Employment and Reemployment Rights Act 38 U.S.C. §4301 et seq., as amended), the Employee
Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. §1001et seq., as amended), 42 U.S.C. §1981,
the Age Discrimination in Employment Act of 1967 (29 U.S.C. §621 et seq., as amended) (see also Older
Workers Benefits Protection Act Disclosure attached as Exhibit 1), the Florida Civil Rights Act of 1992
(F.S. §760.01et seq., as amended), the Florida Whistle Blower Act (F.S. §448.102 et seq.,), the Florida
Workers’ Compensation Retaliation Statute (F.S. §440.205 et seq.), 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 or overtime, 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 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.
b.)
c.)
d.)
Stutts waives and relinquishes any rights that Stutts may have to claim reimbursement from Employer and its
Releasees for attorney’s fees, costs, or expenses that Stutts may have incurred while obtaining legal advice on any
matter related to Employer, except as expressly provided for below.
Stutts waives and refuses any right to any damages, compensation, or other personal relief that may be recovered
at any time after the execution of this Release because 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, 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, Stutts shall request such agency or court to dismiss or withdraw
from the matter. Further, Stutts agrees never to sue Employer on any claim arising out of his employment with
Employer.
Stutts 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 Stutts during the term of Stutts's employment with
Employer, unless (i) such disclosure or communication is compelled by law, or (ii) Stutts 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 customers, clients, operations, or
business of Employer
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that is treated as confidential by Employer and that is not generally known by or otherwise available to third
parties.
Stutts agrees, for a two-year period following the Separation Date, except as is the result of a broad solicitation
that is not targeting employees of Employer or any of its franchisees or affiliates, not to offer employment to, or
hire, any employee of Employer or any of its affiliates, or otherwise directly or indirectly solicit or induce any
employee of Employer or any of their franchisees or affiliates to terminate his or her employment with Employer
or any of its franchisees or affiliates; nor shall Stutts 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 Employer or any of its franchisees or affiliates
to terminate his or her employment with Employer or any of its franchisees or affiliates.
Stutts 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 Stutts is subpoenaed as part of a government entity’s
investigation of Employer, Stutts may provide truthful information about his employment to the government
entity without violating this Release as long as he has first provided notice to the employer by emailing the
subpoena to subpoenas@BloominBrands.com within two business days of receipt of the subpoena.
Stutts will submit all requests for reimbursement no later one week after the Separation Date. Reimbursement
eligibility will be determined consistent with Employer’s usual policies and procedures.
Stutts agrees to direct any requests for employment verification or reference to www.theworknumber.com.
Prospective employers can obtain his dates of employment and positions held with Employer by furnishing his
identifying information and company code 13799.
e.)
f.)
g.)
h.)
i.)
Stutts shall comply with all other terms of this Release as provided for herein.
5. On December 15, 2021, the Employer informed Stutts of what he had a right to receive upon separation of employment
and explained that, in addition, the Employer will do the following in consideration of the promises made by Stutts in this
Release:
a.)
b.)
c.)
Employer shall provide Stutts severance in the gross amount of $1,600,000, less ordinary deductions and
withholdings.
Employer shall also provide Stutts a net amount of $5,547 which represents the cost of twelve (12) months of
premiums for continuing medical, dental and vision coverage for Stutts.
Notification of Stutts’s rights under COBRA (Consolidated Omnibus Budget Reconciliation Act) will be
forthcoming from The Wex Company under separate cover.
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d.)
e.)
f.)
g.)
h.)
i.)
Employer shall report the payments outlined in this paragraph to governmental tax authorities on an IRS (Internal
Revenue Service) Form W-2.
Employer shall send the payments described above to Stutts’s home address within ten (10) days after the
expiration of the Revocation Period referenced in paragraph 7 below.
As additional consideration for this Release, Employer will provide Stutts with outplacement services with
Challenger, Gray & Christmas for a period of up to twelve (12) months, to be used consecutively, beginning after
the expiration of the Revocation Period.
Employer will not contest any claim for unemployment benefits related to Stutts’s employment with Employer.
Stutts agrees that he is of sound mind and body and has sufficient education and experience to make choices that
may affect his legal rights, has full legal capacity to make decisions for himself, is aware that this Release has
significant legal consequences, has been advised to consulted with an attorney, decided to sign this Release of his
own free will, and is not executing this Release because of any duress or coercion.
Stutts 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 days worked at the appropriate rate of pay.
Stutts shall have a period of twenty-one (21) calendar days (the “Consideration Period”) from December 15, 2021, to
consider the Release’s terms and consequences before executing the Release. The offer made by Employer in this Release
will expire if not accepted by January 5, 2022.
Stutts and Employer agree that Stutts may revoke the Release for any reason at any time during the seven (7) calendar
days immediately following Stutts’s execution of the Release (the “Revocation Period”). To revoke this Release, Stutts
must cause written notice of his
to Heather Brock at
HeatherBrock@BloominBrands.com. 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.
to be delivered
this Release
to revoke
intent
Stutts represents that he has not sold, transferred, or assigned to a third party any claims that he may have against
Employer and its Releasees. Stutts represents that any claims that he may have against Employer and its Releasees are
unencumbered and otherwise within his power to dispose of. Stutts represents that he does not have any pending lawsuits,
claims, or actions against Employer and its Releasees. Stutts 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.
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6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Stutts agrees that he is solely responsible for all federal, state and/or local tax liabilities and consequences that he may
incur because of the payments made under this Release, and that Employer and Releasees shall bear no responsibility for
any such liabilities or consequences. Stutts agrees to defend, indemnify and hold harmless Employer and Releasees from
liability for tax payments, required tax withholdings, penalties, additions to tax and/or interest that they are obligated to
pay because of Stutts’s failure to pay his portion of taxes associated with the payments identified above.
The Employer may deduct or withhold from any compensation or benefits any applicable federal, state, or local tax or
employment with holdings or deductions resulting from any payments or benefits provided under this Release. In
addition, it is the employer's intention that all payments or benefits provided under this release comply with section 409A
of the Internal Revenue Code of 1986, as amended (“Code”). The Employer does not guarantee the tax treatment of any
payments or benefits under this release including without limitation under the Code or federal, state, local or foreign tax
law and regulations.
All prior understandings or agreements between Stutts 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 Stutts 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, all other rights held by Employer
by virtue of any other contract, agreement or undertaking, and to that extent, the obligations of Stutts survive the
execution of this Release.
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 is signed by Stutts and by a duly authorized officer or
representative of Employer.
This Release is made and entered into in the state of Florida, and shall 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 court of competent jurisdiction located in Hillsborough County, Florida
which 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. However, the parties waive any right to a jury trial for any dispute or controversy arising out
of this Release.
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 attorney's fees, paralegal fees, and expert fees) reasonably incurred in
connection with the litigation or dispute.
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
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this Release, the singular or plural shall be deemed to include the other whenever the context so indicates or requires.
16.
17.
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.
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 on
December 20, 2021.
Executed on
December 20, 2021.
Sign:
/s/ Michael Stutts
Michael Stutts
OS Management, Inc.
Sign:
Title:
/s/ Kelly Lefferts
EVP, Chief Legal Officer, Secretary
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Stock Options
Exhibit 1 to Michael Stutts Release
a.) Stutts was granted the option to purchase 50,000 shares of the common stock of BBI (the “2019 Options”)
pursuant to that certain Option Agreement with a grant date of July 1, 2019 (the “2019 Option Agreement”). Stutts
agrees 33,333 shares of the 2019 Options are vested and unexercised and shall remain vested and exercisable for
365 calendar days following the Separation Date. Stutts agrees that 16,667 shares are unvested and hereby
forfeited, canceled terminated, and deemed null and void ab initio. Stutts agrees that as of 12:01 a.m. (Tampa time)
on the 365th calendar day immediately following the Separation Date, the 2019 Option Agreement is hereby
cancelled, terminated and deemed null and void ab initio.
Performance Units
a.) Stutts was awarded 24,178 Bloomin’ Brands, Inc. performance share units (the "2020 Performance Share Units")
pursuant to that certain Agreement with a grant date of February 20, 2020 (the "2020 Performance Share
Agreement"). Stutts agrees none of the 2020 Performance Share Units are vested and all are hereby forfeited,
cancelled, terminated and deemed null and void ab initio. The 2020 Performance Share Agreement is hereby
forfeited, cancelled, terminated and deemed null and void ab initio.
b.) Stutts was awarded 12,334 Bloomin’ Brands, Inc. performance share units (the "2021 Performance Share Units")
pursuant to that certain Agreement with a grant date of February 22, 2021 (the "2021 Performance Share
Agreement"). Stutts agrees none of the 2021 Performance Share Units are vested and all are hereby forfeited,
cancelled, terminated and deemed null and void ab initio. The 2021 Performance Share Agreement is hereby
forfeited, cancelled, terminated and deemed null and void ab initio.
Restricted Stock Units
a.) Stutts was awarded 50,000 Bloomin’ Brands, Inc. restricted stock units (the "2019 Restricted Stock") pursuant to
that certain Restricted Stock Agreement with a grant date of July 1, 2019 (the "2019 Restricted Stock
Agreement"). Stutts agrees 33,333 of the 2020 Restricted Stock units were previously vested and distributed.
Stutts agrees 16,667 of the 2019 Restricted Stock units are unvested and hereby forfeited, canceled terminated,
and deemed null and void ab initio. The 2019 Restricted Stock Agreement is hereby forfeited, cancelled,
terminated and deemed null and void ab initio.
b.) Stutts was awarded 12,089 Bloomin’ Brands, Inc. restricted stock units (the "2020 Restricted Stock") pursuant to
that certain Restricted Stock Agreement with a grant date of February 20, 2020 (the "2020 Restricted Stock
Agreement"). Stutts agrees 4,029 of the 2020 Restricted Stock units were previously vested and distributed. Stutts
agrees 8,060 of the 2020 Restricted Stock units are unvested and hereby forfeited, canceled terminated, and
deemed null and void ab initio. The 2020
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Restricted Stock Agreement is hereby forfeited, cancelled, terminated and deemed null and void ab initio.
c.) Stutts was awarded 7,052 Bloomin’ Brands, Inc. restricted stock units (the "2021 Restricted Stock") pursuant to
that certain Restricted Stock Agreement with a grant date of February 22, 2021 (the "2021 Restricted Stock
Agreement"). Stutts agrees none of the 2021 Restricted Stock are vested and all are hereby forfeited, cancelled,
terminated and deemed null and void ab initio. The 2021 Restricted Stock Agreement is hereby cancelled,
forfeited, terminated and deemed null and void ab initio.
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Exhibit 10.46
February 10, 2021
Patrick Murtha
Dear Patrick,
This letter agreement confirms the verbal offer extended to you by Bloomin’ Brands, Inc. (the “Company”) to serve as Executive Vice
President, Human Resources reporting to David Deno, Chief Executive Officer. Your effective date will be February 8, 2021. 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 $500,000 effective
February 8, 2021 payable in equal bi-weekly installments.
You will be eligible to participate in the Company’s annual bonus program and effective for 2021, your bonus target will be fixed at 85% of
your $500,000 base salary, without proration. Actual bonus payments shall be based on both Company performance against objectives as set
forth in the Company bonus program and individual performance. You must remain continuously employed through the bonus payment date
to remain eligible for this bonus payment.
In addition to your annual bonus, you will be eligible for an annual long-term incentive grant commencing in 2021. Per the current long-term
incentive plan, you will be eligible for a target up to 100% of your base salary, which will be subject to Company and individual
performance.
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
• Restaurant Support Center (RSC) Paid Time Off (PTO)
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 by the Employer, 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.
2. 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.
3. Restrictive Covenant - Company and Employer Property: Duty to Return. All Employer and Company property and assets,
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.
4. Restrictive Covenant - Inventions, Ideas, Processes, and Designs. All inventions, ideas, recipes, processes, programs, software
and 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.
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 ANY 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.
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 Company 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/ David Deno
David Deno
Chief Executive Officer
Bloomin’ Brands, Inc.
I accept the above offer of employment and I understand the terms as set forth above.
/s/ Patrick Murtha
Patrick Murtha
2/12/21
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 Employment Non-Discrimination and Harassment Policy, Confidential Information
Policy, Disclosure and Communications Policy, Social Media Policy, Responsible Alcohol Policy, Insider Trading Policy, Stock
Ownership Guidelines Policy, Code of Conduct and Information Technology Security Policy); or
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.
Exhibit 10.47
April 14, 2021
Patrick Murtha
Dear Patrick,
This letter agreement confirms the verbal offer extended to you by Bloomin’ Brands, Inc. (the “Company”) to serve as Executive Vice
President, Flemings, International and Human Resources reporting to me. Your effective date will be April 9, 2021. The terms of your
employment will be:
You will be employed by a subsidiary of the Company (the “Employer”) and your annual base salary will remain $500,000 payable in equal
bi-weekly installments.
You will remain eligible to participate in the Company’s annual bonus program and effective for 2021, your bonus target remains fixed at
85% of your $500,000 base salary, without proration. Actual bonus payments shall be based on both Company performance against
objectives as set forth in the Company bonus program and individual performance. You must remain continuously employed through the
bonus payment date to remain eligible for this bonus payment.
In addition to your annual bonus, you will remain eligible for an annual long-term incentive grant commencing in 2021. Per the current long-
term incentive plan, you will remain eligible for a target up to 100% of your base salary, which will be subject to Company and individual
performance.
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
• Restaurant Support Center (RSC) Paid Time Off (PTO)
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 by the Employer, 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.
2. 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.
3. Restrictive Covenant - Company and Employer Property: Duty to Return. All Employer and Company property and assets,
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.
4. Restrictive Covenant - Inventions, Ideas, Processes, and Designs. All inventions, ideas, recipes, processes, programs, software
and 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.
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 ANY 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.
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 Company 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.
Congratulations!
Sincerely,
/s/ David Deno
David Deno
Chief Executive Officer
Bloomin’ Brands, Inc.
I accept the above offer of employment and I understand the terms as set forth above.
/s/ Patrick Murtha
Patrick Murtha
4/14/21
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 Employment Non-Discrimination and Harassment Policy, Confidential Information
Policy, Disclosure and Communications Policy, Social Media Policy, Responsible Alcohol Policy, Insider Trading Policy, Stock
Ownership Guidelines Policy, Code of Conduct and Information Technology Security Policy); or
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.
Exhibit 10.48
SECOND AMENDMENT TO
AMENDED AND RESTATED OFFICER EMPLOYMENT AGREEMENT
This Second Amendment to the Amended and Restated Officer Employment Agreement (the “Second Amendment”) is
made and entered into effective February 21, 2022 (the “Effective Date”), by and between Bloomin’ Brands, Inc., a Delaware
corporation (the “Company”) and David J. Deno (the “Executive”).
WHEREAS, the Company and the Executive are parties to the Amended and Restated Officer Employment Agreement
dated April 1, 2019, as amended by the First Amendment to Amended and Restated Officer Employment Agreement effective
April 6, 2020 (the “Employment Agreement”);
WHEREAS, the Compensation Committee (the “Committee”) of the Board of Directors of the Company reviews the
Executive’s compensation arrangements annually based on an analysis conducted by Frederic W. Cook & Co., Inc., the
Committee’s independent compensation consultant (“FWC”);
WHEREAS, FWC’s analysis and benchmarking data, presented to the Committee on February 7, 2022, indicated that the
Executive’s total target compensation level was below the 25 percentile of the Company’s peer group benchmark;
th
WHEREAS, as a result of FWC’s analysis and benchmarking data, and after discussion and consideration by the
Committee, the Committee approved an increase to the Executive’s base salary and annual long-term incentive target as
described herein; and
WHEREAS, the Company wishes to implement the market adjustment approved by the Committee, the Executive
wishes to accept the market adjustment, and the parties mutually desire to enter into this Second Amendment to reflect the
parties’ agreement with respect to the market adjustment.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provision and
condition set forth in this Second Amendment, the parties hereby agree that the Employment Agreement is hereby amended, as of
the Effective Date, as follows:
1.
Section 5(a) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“a. Base Salary. During the Term of Employment, the Executive shall be entitled to an annual base salary equal to One
Million Dollars ($1,000,000), payable in biweekly installments by the Company, subject to annual review for increase, but not
decrease, in the discretion of the Board or the Compensation Committee of the Board (the “Compensation Committee”).”
2.
Section 5(c) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“c. Equity-Based Compensation. With respect to each calendar year during the term of this Agreement beginning in
2022, subject to the Executive’s continuous employment through the date of grant, at or about the time that the Company makes
annual grants generally to its senior officers, the Company shall award the Executive a long-term incentive award under its 2020
Omnibus Incentive Compensation Plan (or successor plan, the “Plan”) and the award agreements thereunder having a target fair
market value at the time of grant of 4.35 times base salary in accordance with applicable guidelines established by the Board or
the Compensation Committee from time to time, in the sole discretion of, and in a form and amount determined by, the Board or
the Compensation Committee. All equity awards shall be subject to the receipt of any required stockholder, Board or
Compensation Committee approvals, the terms of the Company’s equity incentive plan as then in effect and the award agreement
evidencing such award, and the attainment and Compensation Committee certification of any applicable performance goals.”
3.
Effect of Amendment. The amendments set forth in this Second Amendment shall become effective as of the
Effective Date, and any direct or indirect modification to the Executive’s base salary or annual bonus shall be on a pro-rated basis
for fiscal year 2022 based on the Effective Date. Except as expressly amended by this Second Amendment, all other terms and
conditions of the Employment Agreement shall remain unmodified and in full force and effect.
4.
Governing Law. The validity, interpretation and performance of this Second Amendment 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.
5.
Entire Agreement; Counterparts. This Second Amendment constitutes the entire agreement between the parties
hereto concerning the subject matter hereof, and supersedes all prior memoranda, correspondence, conversations, negotiations
and agreements, whether written or oral, with respect thereto. This Second Amendment may be executed in several identical
counterparts that together shall constitute but one and the same Second Amendment. Signatures of the parties transmitted by
facsimile, PDF transmission or other electronic means shall be deemed to be their original signatures for all legal and other
purposes.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have executed this Second Amendment as of the date first written above.
COMPANY
BLOOMIN’ BRANDS, INC.
By:
/s/ Kelly Lefferts
Kelly Lefferts
Chief Legal Officer
EXECUTIVE
/s/ David J. Deno
David J. Deno
[Signature Page to Second Amendment]
/s/ Lori Miklavic
Witness Name:
Lori Miklavic
/s/ Shannon Campbell
Witness Name:
Shannon Campbell
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 Restaurants, LLC
Bloom No.1 Limited
Bloom Participações, Ltda.
Bloomin’ Brands Gift Card Services, LLC
Bloomin’ Brands International, LLC
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
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
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
Exhibit 21.1
MD
FL
FL
MD
FL
FL
FL
FL
FL
NL
NL
NL
FL
HK
BR
FL
FL
CI
MD
TX
MD
DE
FL
FL
TX
KS
MD
MD
MD
FL
FL
FL
FL
FL
FL
MD
FL
FL
FL
FL
FL
FL
DE
MD
MD
FL
KS
MD
MD
MD
MD
MD
FL
FL
SUBSIDIARY NAME
CIGI Beverages of Texas, LLC
CIGI Florida Services, Ltd
CIGI Holdings, LLC
CIGI Oklahoma, Inc.
CIGI/BFG of East Brunswick Partnership
DoorSide, LLC
Dutch Holdings I, LLC
Fleming’s Beverages, LLC
Fleming’s International, LLC
Fleming’s of Baltimore, LLC
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
OSF Florida Services, Ltd
OSF Nebraska, Inc.
OSF New Jersey Services, Limited Partnership
OSF New York Services, Limited Partnership
OSF Oklahoma, Inc.
OSF Pennsylvania Services, Ltd
OSF Virginia Services, Limited Partnership
OSF/BFG of Deptford Partnership
OSF/BFG of Lawrenceville Partnership
OSF/CIGI of Evesham Partnership
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.
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
TX
FL
TX
FL
FL
FL
FL
TX
FL
MD
TX
FL
FL
MD
MD
DE
TX
MD
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
FL
DE
DE
DE
FL
DE
DE
NM
AL
TX
DE
KS
MD
MD
AR
MD
MD
MD
MD
PI
DE
CI
SUBSIDIARY NAME
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
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
Williamsburg Square Joint Venture
Xuanmei Food and Beverage (Shanghai) Co., Ltd.
GA
FL
MD
MD
FL
MD
AR
MD
MD
BR
WV
FL
DE
FL
FL
MD
MD
MD
MD
DE
PA
CN
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, 333-210868 and 333-238805) of Bloomin’ Brands, Inc. of our report dated February 23, 2022 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 23, 2022
Exhibit 31.1
I, David J. Deno, certify that:
CERTIFICATION
1.
2.
3.
4.
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
5.
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 23, 2022
/s/ David J. Deno
David J. Deno
Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
I, Christopher Meyer, certify that:
CERTIFICATION
1.
2.
3.
4.
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
5.
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 23, 2022
/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 26, 2021 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 23, 2022
/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 26, 2021 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 23, 2022
/s/ Christopher Meyer
Christopher Meyer
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting 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.