Published: 2021-08-05 00:00:00 ET

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Description of the Business - Bloomin’ Brands (“Bloomin’ Brands” or 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.

Basis of Presentation - The accompanying interim unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. In the opinion of the Company, all adjustments necessary for fair financial statement presentation for the periods presented have been included and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 27, 2020.

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,” (“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 permitted for convertible instruments. The Company adopted ASU No. 2020-06 using the modified retrospective approach which resulted in a cumulative-effect adjustment that increased (decreased) the following Consolidated Balance Sheet accounts during the first quarter of 2021:

ADJUSTMENT						CONSOLIDATED BALANCE SHEET CLASSIFICATION						AMOUNT (in millions)
Deferred tax impact of cumulative-effect adjustment						Deferred income tax assets, net						$	14.9
Debt discount reclassification						Long-term debt, net						$	59.9
Equity issuance costs reclassification						Long-term debt, net						$	(2.1)
Debt discount amortization reclassification, net of tax						Accumulated deficit						$	4.4
Reversal of separated equity component, net of tax						Additional paid-in capital						$	(47.3)

After adopting ASU No. 2020-06, the 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.

In February 2021, the Company made an irrevocable election under the indenture to require the principal portion of its 2025 Notes to be settled in cash and any excess in shares. Following the irrevocable notice, only the amounts expected to be settled in excess of the principal will be considered in diluted earnings per share under the if-converted method.

Recently Issued Financial Accounting Standards Not Yet Adopted - Recent accounting guidance not discussed herein is not applicable, did not have, or is not expected to have a material impact to the Company.

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

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In March 2020, the Company temporarily closed all restaurant dining rooms in the U.S. to comply with state and local regulations in response to the COVID-19 pandemic (“COVID-19”). Following is a summary of charges recorded in connection with the COVID-19 pandemic for the periods indicated (dollars in thousands):

CHARGES						CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) CLASSIFICATION						THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
												JUNE 28, 2020						JUNE 28, 2020
Inventory obsolescence and spoilage (1)						Food and beverage costs						$	1,163					$	7,345
Compensation for idle employees (2)						Labor and other related						11,388						27,574
Other operating charges						Other restaurant operating						2,467						2,467
Lease guarantee contingent liabilities (3)						General and administrative						—						4,188
Allowance for expected credit losses (4)						General and administrative						—						3,334
Other charges						General and administrative						1,216						1,789
Right-of-use asset impairment (5)						Provision for impaired assets and restaurant closings						5,273						25,757
Fixed asset impairment (5)						Provision for impaired assets and restaurant closings						19,611						31,339
Goodwill and other impairment (6)						Provision for impaired assets and restaurant closings						611						2,999
												$	41,729					$	106,792

________________

(1)Includes the write-off of value-added tax credits during the twenty-six weeks ended June 28, 2020 related to the purchase of inventory by the Company’s Brazil subsidiary.

(2)Represents relief pay for hourly employees impacted by the closure of dining rooms, net of $13.7 million of employee retention tax credits earned during the thirteen and twenty-six weeks ended June 28, 2020.

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

(4)Includes additional reserves to reflect an increase in expected credit losses, primarily related to franchise receivables.

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

(6)Includes impairment of goodwill for the Company’s Hong Kong subsidiary during the twenty-six weeks ended June 28, 2020.

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:

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Revenues
Restaurant sales			$	1,055,227					$	576,261					$	2,034,678					$	1,572,498
Franchise and other revenues
Franchise revenue			12,221						1,951						19,010						11,500
Other revenues (1)			9,918						247						11,151						2,798
Total Franchise and other revenues			22,139						2,198						30,161						14,298
Total revenues			$	1,077,366					$	578,459					$	2,064,839					$	1,586,796

________________

(1)During the thirteen and twenty-six weeks ended June 27, 2021, the Company recognized $6.3 million of other revenues in connection with favorable court rulings in Brazil regarding the calculation methodology and taxable base of Program of Social Integration (“PIS”) and Contribution for the Financing of Social Security (“COFINS”) taxes. 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.

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

			THIRTEEN WEEKS ENDED
			JUNE 27, 2021												JUNE 28, 2020
(dollars in thousands)			RESTAURANT SALES						FRANCHISE REVENUE						RESTAURANT SALES						FRANCHISE REVENUE
U.S.
Outback Steakhouse			$	579,096					$	8,418					$	346,553					$	136
Carrabba’s Italian Grill			171,408						665						93,738						7
Bonefish Grill			149,036						174						63,744						4
Fleming’s Prime Steakhouse & Wine Bar			88,101						—						31,156						—
Other			2,652						—						1,576						—
U.S. total			990,293						9,257						536,767						147
International
Outback Steakhouse Brazil			43,310						—						24,003						—
Other (1)			21,624						2,964						15,491						1,804
International total			64,934						2,964						39,494						1,804
Total			$	1,055,227					$	12,221					$	576,261					$	1,951
			TWENTY-SIX WEEKS ENDED
			JUNE 27, 2021												JUNE 28, 2020
(dollars in thousands)			RESTAURANT SALES						FRANCHISE REVENUE						RESTAURANT SALES						FRANCHISE REVENUE
U.S.
Outback Steakhouse			$	1,126,291					$	11,374					$	877,238					$	6,677
Carrabba’s Italian Grill			329,094						1,282						240,613						468
Bonefish Grill			276,010						304						198,816						140
Fleming’s Prime Steakhouse & Wine Bar			154,412						—						102,116						—
Other			4,545						—						2,873						—
U.S. total			1,890,352						12,960						1,421,656						7,285
International
Outback Steakhouse Brazil			104,158						—						115,593						—
Other (1)			40,168						6,050						35,249						4,215
International total			144,326						6,050						150,842						4,215
Total			$	2,034,678					$	19,010					$	1,572,498					$	11,500

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

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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)			JUNE 27, 2021						DECEMBER 27, 2020
Other current assets, net
Deferred gift card sales commissions			$	12,548					$	19,300
Unearned revenue
Deferred gift card revenue			$	293,955					$	373,048
Deferred loyalty revenue			8,604						8,099
Deferred franchise fees - current			437						469
Total Unearned revenue			$	302,996					$	381,616
Other long-term liabilities, net
Deferred franchise fees - non-current			$	4,174					$	4,301

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Balance, beginning of period			$	13,502					$	13,049					$	19,300					$	18,554
Deferred gift card sales commissions amortization			(5,711)						(2,502)						(14,436)						(11,592)
Deferred gift card sales commissions capitalization			5,297						3,142						8,796						7,466
Other			(540)						(65)						(1,112)						(804)
Balance, end of period			$	12,548					$	13,624					$	12,548					$	13,624

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Balance, beginning of period			$	306,075					$	277,518					$	373,048					$	358,757
Gift card sales			63,921						41,649						108,090						100,088
Gift card redemptions			(71,859)						(37,404)						(176,799)						(170,585)
Gift card breakage			(4,182)						(1,790)						(10,384)						(8,287)
Balance, end of period			$	293,955					$	279,973					$	293,955					$	279,973

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Impairment losses
U.S. (1)			$	5,768					$	23,741					$	7,174					$	54,713
International (1)(2)			(555)						296						152						3,468
Corporate (3)			209						(119)						238						6,161
Total impairment losses			5,422						23,918						7,564						64,342
Restaurant closure charges
U.S. (1)			(92)						1,041						(34)						1,762
International (1)			(153)						—						(153)						173
Total restaurant closure charges			(245)						1,041						(187)						1,935
Provision for impaired assets and restaurant closings			$	5,177					$	24,959					$	7,377					$	66,277

________________

(1)U.S. and international impairment and closure charges for the thirteen and twenty-six weeks ended June 28, 2020 primarily relate to the COVID-19 pandemic, including charges related to the COVID-19 Restructuring discussed below. See Note 2 - COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

(2)Includes goodwill impairment charges of $2.0 million during the twenty-six weeks ended June 28, 2020.

(3)Corporate impairment charges for the twenty-six weeks ended June 28, 2020 primarily relate to transformational initiatives.

COVID-19 Restructuring - During the thirteen and twenty-six weeks ended June 28, 2020, the Company recognized pre-tax asset impairments and closure charges in connection with the closure of 22 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 periods indicated (dollars in thousands):

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) CLASSIFICATION

THIRTEEN AND TWENTY-SIX WEEKS ENDED

DESCRIPTION

JUNE 28, 2020

Property, fixtures and equipment impairments

Provision for impaired assets and restaurant closings

$

16,932

Lease right-of-use asset impairments and closing costs

Provision for impaired assets and restaurant closings

3,920

Severance and other expenses

General and administrative

1,160

$

22,012

The remaining impairment and closure charges during the periods presented resulted primarily from locations identified for relocation or closure.

Annual Goodwill and Intangible Asset Impairment Assessment - The Company performs its annual assessment for impairment of goodwill and other indefinite-lived intangible assets during its second fiscal quarter. The Company’s 2021 assessment was qualitative and its 2020 assessment was quantitative. In connection with these assessments, the Company did not record any impairment charges.

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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 the closure and restructuring initiatives, for the period indicated:

			TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021
Balance, beginning of the period			$	12,879
Cash payments			(2,239)
Accretion			488
Adjustments			(790)
Balance, end of the period (1)			$	10,338

________________

(1)As of June 27, 2021, the Company had exit-related accruals related to certain closure and restructuring initiatives of $3.6 million recorded in Accrued and other current liabilities and $6.7 million recorded in Non-current operating lease liabilities on its Consolidated Balance Sheet.

The dilutive effect of the 2025 Notes is calculated using the if-converted method which was required upon the Company’s adoption of ASU No. 2020-06. To the extent the Company has the 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 10 - Convertible Senior Notes. However, the Convertible Note Hedge Transactions are not considered when calculating dilutive shares given their impact is anti-dilutive. The impact of the Convertible Note Hedge Transactions would offset the dilutive impact of the shares underlying 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 $16.64 strike price of the Warrant Transactions. See Note 10 - Convertible Senior Notes for additional information regarding the 2025 Notes, Convertible Note Hedge Transactions and Warrant Transactions.

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(in thousands, except per share data)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Net income (loss) attributable to Bloomin’ Brands			$	82,545					$	(92,256)					$	151,407					$	(126,867)
Redemption of preferred stock in excess of carrying value (1)			—						—						—						(3,496)
Net income (loss) attributable to common stockholders			82,545						(92,256)						151,407						(130,363)
Convertible senior notes if-converted method interest adjustment, net of tax (2)			—						—						691						—
Diluted net income (loss) attributable to common stockholders			$	82,545					$	(92,256)					$	152,098					$	(130,363)
Basic weighted average common shares outstanding			89,075						87,496						88,721						87,312
Effect of dilutive securities:
Stock options			1,165						—						937						—
Nonvested restricted stock units			351						—						427						—
Nonvested performance-based share units			—						—						47						—
Convertible senior notes (2)(3)			11,231						—						13,212						—
Warrants (3)			7,983						—						6,879						—
Diluted weighted average common shares outstanding			109,805						87,496						110,223						87,312
Basic earnings (loss) per share attributable to common stockholders			$	0.93					$	(1.05)					$	1.71					$	(1.49)
Diluted earnings (loss) per share attributable to common stockholders			$	0.75					$	(1.05)					$	1.38					$	(1.49)

________________

(1)Consideration paid in excess of carrying value for the redemption of preferred stock is considered a deemed dividend and, for purposes of calculating earnings per share, reduces net income attributable to common stockholders for the twenty-six weeks ended June 28, 2020. See Note 12 - Stockholders’ Equity for additional details.

(2)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.

(3)Due to the Company’s net loss during the thirteen and twenty-six weeks ended June 28, 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:

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(shares in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Stock options			—						5,352						682						5,009
Nonvested restricted stock units			9						990						41						821
Nonvested performance-based share units			465						624						448						578

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Stock options			$	469					$	1,038					$	1,334					$	1,870
Restricted stock units			1,964						2,340						4,330						4,023
Performance-based share units (1)			7,318						1,693						8,787						2,392
			$	9,751					$	5,071					$	14,451					$	8,285

________________

(1)The thirteen and twenty-six weeks ended June 27, 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.

In February 2021, the Company granted 0.3 million performance-based share units (“PSUs”). These PSUs maintain a three-year cliff vesting period and the underlying adjusted diluted earnings per share performance metric can range from zero to 200% of the annual target grant. The grants additionally included a Relative Total Shareholder Return (“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 Relative TSR is measured by comparing the Company’s Relative TSR to that of the constituents of the S&P 1500 Restaurants index. 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 was 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:

			TWENTY-SIX WEEKS ENDED
			JUNE 27, 2021
Assumptions:
Risk-free interest rate (1)			0.20		%
Volatility (2)			48.45		%
Grant date fair value per unit (3)			$	29.73

________________

(1)Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for the performance period of the unit.

(2)Based on the historical volatility of the Company’s stock over the last seven years.

(3)Represents a 14.3% premium above the per share value of the Company’s common stock as of the grant date.

The following represents unrecognized stock-based compensation expense and the remaining weighted-average vesting period as of June 27, 2021:

			UNRECOGNIZED COMPENSATION EXPENSE (dollars in thousands)						REMAINING WEIGHTED-AVERAGE VESTING PERIOD (in years)
Stock options			$	1,556					0.9
Restricted stock units			$	13,678					2.1
Performance-based share units			$	24,264					1.8

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

(dollars in thousands)			JUNE 27, 2021						DECEMBER 27, 2020
Prepaid expenses			$	22,668					$	12,148
Accounts receivable - gift cards, net (1)			16,177						76,808
Accounts receivable - vendors, net (1)			9,212						8,886
Accounts receivable - franchisees, net (1)			887						1,007
Accounts receivable - other, net (1)			13,378						16,782
Deferred gift card sales commissions			12,548						19,300
Assets held for sale			1,358						3,831
Other current assets, net			8,756						12,756
			$	84,984					$	151,518

________________

(1)See Note 16 - Allowance for Expected Credit Losses for a rollforward of the related allowance for expected credit losses.

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

(dollars in thousands)			JUNE 27, 2021						DECEMBER 27, 2020
Accrued rent and current operating lease liabilities			$	184,486					$	192,369
Accrued payroll and other compensation (1)			116,951						79,291
Accrued insurance			22,414						20,648
Other current liabilities (2)			115,445						96,013
			$	439,296					$	388,321

________________

(1)During the twenty-six weeks ended June 27, 2021, the Company reclassified $27.3 million of payroll taxes deferred under the Coronavirus, Aid, Relief and Economic Security Act (“CARES Act”) to current.

(2)During the twenty-six weeks ended June 27, 2021, sales tax payable and income tax payable increased by $8.7 million and $6.4 million, respectively, due to increased sales and pre-tax income during the period.

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

			JUNE 27, 2021												DECEMBER 27, 2020
(dollars in thousands)			OUTSTANDING BALANCE						INTEREST RATE						OUTSTANDING BALANCE						INTEREST RATE
Senior Secured Credit Facility:
Term loan A (1)			$	200,000					2.59		%				$	—
Revolving credit facility (1)			134,000						2.59		%				—
Total Senior Secured Credit Facility			334,000												—
Former Credit Facility:
Term loan A (1)			—												425,000						2.88		%
Revolving credit facility (1)			—												447,000						2.88		%
Total Former Credit Facility			—												872,000
2025 Notes (2)			230,000						5.00		%				230,000						5.00		%
2029 Notes			300,000						5.13		%				—
Finance lease liabilities			1,794												2,405
Less: unamortized debt discount and issuance costs (3)			(15,576)												(67,704)
Less: finance lease interest			(155)												(221)
Total debt, net			850,063												1,036,480
Less: current portion of long-term debt			(11,022)												(38,710)
Long-term debt, net			$	839,041											$	997,770

________________

(1)Interest rate represents the weighted-average interest rate as of the respective periods.

(2)See Note 10 - Convertible Senior Notes for details regarding the 2025 Notes and related hedge and warrant transactions.

(3)In connection with the adoption of ASU No. 2020-06, debt discount of $59.9 million related to the 2025 Notes was de-recognized and $2.1 million of equity issuance costs were reclassified as debt issuance costs during the twenty-six weeks ended June 27, 2021.

2029 Notes - On April 16, 2021, the Company and its wholly-owned subsidiary OSI Restaurant Partners, LLC (“OSI”), as co-issuers, issued $300.0 million aggregate principal amount of senior unsecured notes due 2029 (the “2029 Notes”).

The 2029 Notes were issued pursuant to an Indenture, dated April 16, 2021 (the “Indenture”), by and among the Company, the guarantors named therein, and Wells Fargo Bank, National Association, as trustee. The 2029 Notes are guaranteed by each of the Company’s existing and future domestic restricted subsidiaries (other than OSI) that are guarantors or borrowers under its Senior Secured Credit Facility (as defined below) or certain other indebtedness. The 2029 Notes will 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, beginning on October 15, 2021.

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

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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.

Second Amended and Restated Credit Agreement - On April 16, 2021, the Company and OSI, as co-borrowers, entered into the Second Amended and Restated Credit Agreement (the “Second Amended and Restated 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 Second Amended and Restated 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:

			BASE RATE ELECTION						EUROCURRENCY RATE ELECTION
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

Fees on letters of credit and daily unused availability under the revolving credit facility will be 150 to 250 basis points and 25 to 40 basis points, respectively.

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

SCHEDULED QUARTERLY PAYMENT DATES						TERM LOAN A
September 26, 2021 through June 30, 2024						$	2,500
September 29, 2024 through June 29, 2025						$	3,750
September 28, 2025 and December 28, 2025						$	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 Second Amended and Restated Credit Agreement, commencing with the fiscal year ending

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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 Second Amended and Restated Credit Agreement). The Second Amended and Restated Credit Agreement requires a TNLR not to exceed the following thresholds for the periods indicated:

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

________________

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

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

The Second Amended and Restated 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 is also limited to $200.0 million of aggregate capital expenditures during the year ended December 26, 2021. The Second Amended and Restated Credit Agreement also prohibits the Company from paying certain dividends and making certain restricted payments and acquisitions until the Company is in compliance with its TNLR covenant for the period ended September 26, 2021.

As of June 27, 2021 and December 27, 2020, the Company was in compliance with its debt covenants.

Following is a summary of principal payments of the Company’s total consolidated debt outstanding as of the period indicated:

(dollars in thousands)			JUNE 27, 2021
Year 1			$	11,051
Year 2			10,250
Year 3			10,188
Year 4			245,175
Year 5			289,130
Thereafter			300,000
Total payments			865,794
Less: unamortized debt discount and issuance costs			(15,576)
Less: finance lease interest			(155)
Total principal payments			$	850,063

Deferred Financing Fees - During the thirteen weeks ended June 27, 2021, the Company deferred $5.5 million and $5.9 million of financing costs incurred in connection with the 2029 Notes and Second Amended Credit Agreement, respectively. Deferred financing fees of $3.7 million associated with the revolving credit facility portion of the Second Amended Credit Agreement were recorded in Other assets, net and all other deferred financing fees were recorded in Long-term debt, net.

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2025 Notes - In May 2020, the Company completed a $230.0 million principal amount private offering of 5.00% convertible senior 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 will mature on May 1, 2025, unless earlier converted, redeemed or purchased by the Company. The 2025 Notes bear cash interest at an annual rate of 5.00%, payable semi-annually in arrears on May 1 and November 1 of each year. 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.

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 40th 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.

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The following table includes the outstanding principal amount and carrying value of the 2025 Notes as of the periods indicated:

(dollars in thousands)			JUNE 27, 2021						DECEMBER 27, 2020
Long-term debt, net
Principal			$	230,000					$	230,000
Less: Debt discount (1)			—						(59,862)
Less: Debt issuance costs (1)(2)			(6,688)						(5,427)
Net carrying amount			223,312						164,711
Equity component (1)			$	—					$	64,367

________________

(1)In connection with the adoption of ASU No. 2020-06, debt discount and the equity component of the 2025 Notes were de-recognized and $2.1 million of issuance costs that were previously allocated to the equity component were reclassified as debt issuance costs during the twenty-six weeks ended June 27, 2021.

(2)Debt issuance costs are amortized to Interest expense, net using the effective interest method over the expected life of the 2025 Notes.

The effective rate of the 2025 Notes over their expected life is 5.85%. Following is a summary of interest expense for the 2025 Notes, by component, for the periods indicated:

			THIRTEEN WEEKS ENDED						TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 27, 2021
Coupon interest			$	2,875					$	5,750
Deferred issuance cost amortization			386						767
Total interest expense			$	3,261					$	6,517

Based on the daily closing prices of the Company’s stock during the quarter ended June 27, 2021, holders of the 2025 Notes are eligible to convert their 2025 Notes during the third quarter of 2021. In February 2021, the Company 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.

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.

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

(dollars in thousands)			JUNE 27, 2021						DECEMBER 27, 2020
Accrued insurance liability			$	32,704					$	32,128
Chef and Restaurant Managing Partner deferred compensation obligations			20,687						32,306
Deferred payroll tax liabilities (1)			27,302						55,204
Other long-term liabilities (2)			53,601						65,717
			$	134,294					$	185,355

_______________

(1)During the twenty-six weeks ended June 27, 2021, the Company reclassified $27.3 million of payroll taxes deferred under the CARES Act to current.

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 subsidiary (“Abbraccio Shares”) to certain investors.

During the thirteen weeks ended March 29, 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)			JUNE 27, 2021						DECEMBER 27, 2020
Foreign currency translation adjustment			$	(185,443)					$	(188,883)
Unrealized loss on derivatives, net of tax			(16,745)						(22,563)
Accumulated other comprehensive loss			$	(202,188)					$	(211,446)

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Foreign currency translation adjustment			$	10,015					$	(29,146)					$	3,440					$	(36,443)
Unrealized loss on derivatives, net of tax (1)			(128)						(1,556)						(170)						(14,892)
Reclassification of adjustments for loss on derivatives included in Net income (loss), net of tax (2)			1,514						2,585						4,517						3,981
Amortization of terminated interest rate swaps, net of tax			1,471						—						1,471						—
Total unrealized gain (loss) on derivatives, net of tax			2,857						1,029						5,818						(10,911)
Other comprehensive income (loss) attributable to Bloomin’ Brands			$	12,872					$	(28,117)					$	9,258					$	(47,354)

________________

(1)Unrealized loss on derivatives is net of tax of $0.5 million and $5.2 million for the thirteen and twenty-six weeks ended June 28, 2020, respectively.

(2)Reclassifications of adjustments for loss on derivatives are net of tax. See Note 13 - Derivative Instruments and Hedging Activities for the tax impact of reclassifications.

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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 swap agreements have an aggregate notional amount of $550.0 million and mature on November 30, 2022. Under the terms of the swap agreements, the Company pays a weighted-average fixed rate of 3.04% on the notional amount and receives payments from the counterparty based on the one-month 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.

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 June 27, 2021, the Company estimated $16.0 million will be reclassified to Interest expense, net over the next 12 fiscal months, including interest expense related to the terminated swap agreements discussed above.

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

(dollars in thousands)			JUNE 27, 2021						DECEMBER 27, 2020						CONSOLIDATED BALANCE SHEET CLASSIFICATION
Interest rate swaps - liability			$	7,437					$	14,855					Accrued and other current liabilities
Interest rate swaps - liability			3,821						15,640						Other long-term liabilities, net
Total fair value of derivative instruments - liabilities (1)			$	11,258					$	30,495
Accrued interest			$	697					$	1,237					Accrued and other current liabilities

____________________

(1)See Note 15 - 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:

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Interest rate swap expense recognized in Interest expense, net			$	(2,038)					$	(3,482)					$	(6,082)					$	(5,362)
Income tax benefit recognized in Provision (benefit) for income taxes			524						897						1,565						1,381
Total effects on Net income (loss)			$	(1,514)					$	(2,585)					$	(4,517)					$	(3,981)

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 June 27, 2021, 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.

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

(dollars in thousands)			CONSOLIDATED BALANCE SHEET CLASSIFICATION						JUNE 27, 2021						DECEMBER 27, 2020
Operating lease right-of-use assets			Operating lease right-of-use assets						$	1,161,650					$	1,172,910
Finance lease right-of-use assets (1)			Property, fixtures and equipment, net						1,447						1,947
Total lease assets, net									$	1,163,097					$	1,174,857
Current operating lease liabilities (2)			Accrued and other current liabilities						$	177,807					$	176,791
Current finance lease liabilities			Current portion of long-term debt						1,022						1,210
Non-current operating lease liabilities (3)			Non-current operating lease liabilities						1,206,269						1,216,666
Non-current finance lease liabilities			Long-term debt, net						617						974
Total lease liabilities									$	1,385,715					$	1,395,641

________________

(1)Net of accumulated amortization of $2.8 million and $2.3 million as of June 27, 2021 and December 27, 2020, respectively.

(2)Excludes COVID-19-related deferred rent accruals of $3.4 million and $12.8 million as of June 27, 2021 and December 27, 2020, respectively, and accrued contingent percentage rent of $3.3 million and $2.7 million, as of June 27, 2021 and December 27, 2020, respectively.

(3)Excludes COVID-19-related non-current deferred rent accruals of $0.8 million and $1.2 million as of June 27, 2021 and December 27, 2020, respectively.

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

			CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) CLASSIFICATION						THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)									JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Operating leases (1)			Other restaurant operating						$	43,763					$	42,776					$	88,555					$	88,658
Variable lease cost (2)			Other restaurant operating						731						(1,046)						1,508						74
Finance leases
Amortization of leased assets			Depreciation and amortization						258						315						520						657
Interest on lease liabilities			Interest expense, net						31						37						67						83
Sublease revenue (3)			Franchise and other revenues						(2,825)						(109)						(3,660)						(1,786)
Lease costs, net									$	41,958					$	41,973					$	86,990					$	87,686

________________

(1)Excludes rent expense for office facilities and Company-owned closed or subleased properties of $3.2 million and $3.3 million for the thirteen weeks ended June 27, 2021 and June 28, 2020, respectively, and $6.7 million and $6.9 million for the twenty-six weeks ended June 27, 2021 and June 28, 2020, respectively, which is included in General and administrative expense. Also excludes certain supply chain related rent expense of $0.3 million for the thirteen weeks ended June 27, 2021 and June 28, 2020 and $0.6 million for the twenty-six weeks ended June 27, 2021 and June 28, 2020, which is included in Food and beverage costs.

(2)Includes COVID-19-related rent abatement for all periods presented.

(3)Excludes immaterial rental income from Company-owned properties.

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

			TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020
Cash flows from operating activities:
Cash paid for amounts included in the measurement of operating lease liabilities			$	105,323					$	75,688

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

Level 1						Unadjusted quoted market prices in active markets for identical assets or liabilities
Level 2						Observable inputs available at measurement date other than quoted prices included in Level 1
Level 3						Unobservable inputs that cannot be corroborated by observable market data

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:

			JUNE 27, 2021																								DECEMBER 27, 2020
(dollars in thousands)			TOTAL						LEVEL 1						LEVEL 2												TOTAL						LEVEL 1						LEVEL 2
Assets:
Cash equivalents:
Fixed income funds			$	8,664					$	8,664					$	—											$	15,404					$	15,404					$	—
Money market funds			14,054						14,054						—												16,494						16,494						—
Restricted cash equivalents:
Money market funds			1,790						1,790						—												428						428						—
Total asset recurring fair value measurements			$	24,508					$	24,508					$	—											$	32,326					$	32,326					$	—
Liabilities:
Accrued and other current liabilities:
Derivative instruments - interest rate swaps			$	7,437					$	—					$	7,437											$	14,855					$	—					$	14,855
Other long-term liabilities:
Derivative instruments - interest rate swaps			3,821						—						3,821												15,640						—						15,640
Total liability recurring fair value measurements			$	11,258					$	—					$	11,258											$	30,495					$	—					$	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						Carrying value approximates fair value because maturities are less than three months.
Derivative instruments						The Company’s derivative instruments include interest rate swaps. Fair value measurements are based on the contractual terms of the derivatives and 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 June 27, 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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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:

			THIRTEEN WEEKS ENDED
			JUNE 27, 2021												JUNE 28, 2020
(dollars in thousands)			REMAINING CARRYING VALUE						TOTAL IMPAIRMENT						REMAINING CARRYING VALUE						TOTAL IMPAIRMENT
Operating lease right-of-use assets (1)			$	5,687					$	962					$	32,404					$	4,028
Property, fixtures and equipment (2)			8,192						4,460						9,992						19,595
Goodwill and other assets (3)			—						—						748						295
			$	13,879					$	5,422					$	43,144					$	23,918
			TWENTY-SIX WEEKS ENDED
			JUNE 27, 2021												JUNE 28, 2020
(dollars in thousands)			REMAINING CARRYING VALUE						TOTAL IMPAIRMENT						REMAINING CARRYING VALUE						TOTAL IMPAIRMENT
Assets held for sale (1)			$	—					$	—					$	1,182					$	75
Operating lease right-of-use assets (1)			7,651						1,512						85,537						23,591
Property, fixtures and equipment (2)			8,928						6,052						28,390						37,993
Goodwill and other assets (3)			—						—						748						2,683
			$	16,579					$	7,564					$	115,857					$	64,342

____________________

(1)Asset carrying values measured using discounted cash flow models (Level 3).

(2)Carrying values measured using Level 2 inputs to estimate fair value totaled $0.5 million and $2.2 million for the thirteen and twenty-six weeks ended June 28, 2020, 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 fair value.

(3)Other assets generally measured using the quoted market value of comparable assets (Level 2).

See Note 4 - Impairments and Exit Costs for information regarding impairment charges resulting from the fair value measurement performed on a nonrecurring basis during the thirteen and twenty-six weeks ended June 28, 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.

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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 for the periods indicated:

						THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
UNOBSERVABLE INPUTS						JUNE 28, 2020												JUNE 28, 2020
Weighted-average cost of capital						10.9%												10.4%			to			10.9%
Long-term growth rate						1.5%			to			2.0%						1.5%			to			2.0%

Interim Disclosures about Fair Value of Financial Instruments - The Company’s non-derivative financial instruments consist of cash equivalents, accounts receivable, accounts payable and current and long-term debt. The fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts reported on its Consolidated Balance Sheets due to their short duration.

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

			JUNE 27, 2021												DECEMBER 27, 2020
			CARRYING VALUE						FAIR VALUE LEVEL 2						CARRYING VALUE						FAIR VALUE LEVEL 2
(dollars in thousands)
Senior Secured Credit Facility:
Term loan A			$	200,000					$	196,250											$	—					$	—
Revolving credit facility			$	134,000					$	128,850											$	—					$	—
Former Credit Facility:
Term loan A			$	—					$	—											$	425,000					$	412,250
Revolving credit facility			$	—					$	—											$	447,000					$	419,612
2025 Notes			$	230,000					$	559,450											$	230,000					$	413,818
2029 Notes			$	300,000					$	307,503											$	—					$	—

The following table is a rollforward of the Company’s trade receivables allowance for expected credit losses for the periods indicated:

						THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)						JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Allowance for expected credit losses, beginning of period						$	3,997					$	4,551					$	4,095					$	199
Adjustment for adoption of ASU No. 2016-13						—						—						—						1,018
Provision for expected credit losses (1)						—						15						—						3,349
Charge-off of accounts						(8)						—						(106)						—
Allowance for expected credit losses, end of period						$	3,989					$	4,566					$	3,989					$	4,566

________________

(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 2 - COVID-19 Charges for details regarding the impact of the COVID-19 pandemic on the Company’s financial results.

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			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Income (loss) before provision (benefit) for income taxes			$	107,574					$	(128,207)					$	183,965					$	(182,276)
Provision (benefit) for income taxes			$	22,688					$	(35,779)					$	29,281					$	(55,434)
Effective income tax rate			21.1		%				27.9		%				15.9		%				30.4		%

The effective income tax rate for the thirteen and twenty-six weeks ended June 27, 2021 decreased by 6.8 and 14.5 percentage points, respectively, as compared to the thirteen and twenty-six weeks ended June 28, 2020. These decreases were primarily due to the benefit of FICA tax credits on certain employees’ tips reducing the effective tax rate in 2021 as a result of forecasted pre-tax book income as compared to increasing the effective tax rate in 2020 as a result of forecasted pre-tax book loss.

As of December 27, 2020, the Company had $155.3 million in general business tax credits carryforwards, which have a 20-year carryforward period and are utilized on a first-in, first-out basis. The Company does not expect to increase its general business credit carryforwards in 2021 and 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.

The Company has a blended federal and state statutory rate of approximately 26%. The effective income tax rate for the thirteen and twenty-six weeks ended June 27, 2021 was lower than the statutory rate primarily due to the benefit of FICA tax credits on certain employees’ tips.

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 an unspecified amount of damages 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 $5.9 million and $4.6 million for certain of its outstanding legal proceedings as of June 27, 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.

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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 (“CEO”), whom the Company has determined to be its Chief Operating Decision Maker (“CODM”). The Company aggregates its operating segments into two reportable segments, U.S. and international. The U.S. segment includes all restaurants operating in the U.S. while restaurants operating outside the U.S. are included in the international segment. The following is a summary of reporting segments:

REPORTABLE SEGMENT (1)

CONCEPT

GEOGRAPHIC LOCATION

U.S.

Outback Steakhouse

United States of America

Carrabba’s Italian Grill

Bonefish Grill

Fleming’s Prime Steakhouse & Wine Bar

International

Outback Steakhouse

Brazil, Hong Kong/China

Carrabba’s Italian Grill (Abbraccio)

Brazil

_________________

(1)Includes franchise locations.

Segment accounting policies are the same as those described in Note 2 - Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 27, 2020. 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.

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Total revenues
U.S.			$	1,003,058					$	537,080					$	1,907,976					$	1,431,577
International			74,308						41,379						156,863						155,219
Total revenues			$	1,077,366					$	578,459					$	2,064,839					$	1,586,796

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:

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Segment income (loss) from operations
U.S.			$	165,297					$	(62,921)					$	287,032					$	(51,542)
International			2,470						(17,070)						6,007						(10,283)
Total segment income (loss) from operations			167,767						(79,991)						293,039						(61,825)
Unallocated corporate operating expense (1)			(43,130)						(31,921)						(77,404)						(91,655)
Total income (loss) from operations			124,637						(111,912)						215,635						(153,480)
Loss on extinguishment and modification of debt			(2,073)						(237)						(2,073)						(237)
Other income (expense), net			—						581						21						(212)
Interest expense, net			(14,990)						(16,639)						(29,618)						(28,347)
Income (loss) before provision (benefit) for income taxes			$	107,574					$	(128,207)					$	183,965					$	(182,276)

____________________

(1)The thirteen and twenty-six weeks ended June 28, 2020 include $2.4 million and $24.6 million, respectively, of charges 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.

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

			THIRTEEN WEEKS ENDED												TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020						JUNE 27, 2021						JUNE 28, 2020
Depreciation and amortization
U.S.			$	33,578					$	37,308					$	67,223					$	74,948
International			5,566						5,884						11,286						12,642
Corporate			1,395						2,592						3,256						6,462
Total depreciation and amortization			$	40,539					$	45,784					$	81,765					$	94,052

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

			TWENTY-SIX WEEKS ENDED
(dollars in thousands)			JUNE 27, 2021						JUNE 28, 2020
Capital expenditures
U.S.			$	42,574					$	30,692
International			5,531						10,914
Corporate			3,138						2,471
Total capital expenditures			$	51,243					$	44,077

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