(Mark One) | |
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2019 | |
or | |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ______ |
Delaware | 20-8023465 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.01 par value | BLMN | The Nasdaq Stock Market LLC (Nasdaq Global Select Market) |
Page No. | ||
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Item 2. | ||
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Item 2. | ||
Item 6. | ||
MARCH 31, 2019 | DECEMBER 30, 2018 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 82,766 | $ | 71,823 | |||
Inventories | 73,149 | 72,812 | |||||
Other current assets, net | 93,909 | 190,848 | |||||
Total current assets | 249,824 | 335,483 | |||||
Property, fixtures and equipment, net | 1,079,494 | 1,115,929 | |||||
Operating lease right-of-use assets | 1,276,311 | — | |||||
Goodwill | 297,784 | 295,427 | |||||
Intangible assets, net | 479,744 | 503,972 | |||||
Deferred income tax assets, net | 49,766 | 92,990 | |||||
Other assets, net | 119,624 | 120,973 | |||||
Total assets | $ | 3,552,547 | $ | 2,464,774 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 166,320 | $ | 174,488 | |||
Accrued and other current liabilities | 378,272 | 246,653 | |||||
Unearned revenue | 250,703 | 342,708 | |||||
Current portion of long-term debt | 26,680 | 27,190 | |||||
Total current liabilities | 821,975 | 791,039 | |||||
Non-current operating lease liabilities | 1,285,073 | — | |||||
Deferred rent | — | 167,027 | |||||
Deferred income tax liabilities | 14,730 | 14,790 | |||||
Long-term debt, net | 1,037,630 | 1,067,585 | |||||
Long-term portion of deferred gain on sale-leaseback transactions, net | — | 177,983 | |||||
Other long-term liabilities, net | 140,776 | 191,533 | |||||
Total liabilities | 3,300,184 | 2,409,957 | |||||
Commitments and contingencies (Note 16) | |||||||
Stockholders’ equity | |||||||
Bloomin’ Brands stockholders’ equity | |||||||
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding as of March 31, 2019 and December 30, 2018 | — | — | |||||
Common stock, $0.01 par value, 475,000,000 shares authorized; 91,646,542 and 91,271,825 shares issued and outstanding as of March 31, 2019 and December 30, 2018, respectively | 916 | 913 | |||||
Additional paid-in capital | 1,099,346 | 1,107,582 | |||||
Accumulated deficit | (714,425 | ) | (920,010 | ) | |||
Accumulated other comprehensive loss | (141,653 | ) | (142,755 | ) | |||
Total Bloomin’ Brands stockholders’ equity | 244,184 | 45,730 | |||||
Noncontrolling interests | 8,179 | 9,087 | |||||
Total stockholders’ equity | 252,363 | 54,817 | |||||
Total liabilities and stockholders’ equity | $ | 3,552,547 | $ | 2,464,774 | |||
The accompanying notes are an integral part of these consolidated financial statements. |
THIRTEEN WEEKS ENDED | |||||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||||
Revenues | |||||||
Restaurant sales | $ | 1,111,642 | $ | 1,099,003 | |||
Franchise and other revenues | 16,489 | 17,462 | |||||
Total revenues | 1,128,131 | 1,116,465 | |||||
Costs and expenses | |||||||
Cost of sales | 352,111 | 352,132 | |||||
Labor and other related | 319,015 | 311,062 | |||||
Other restaurant operating | 250,854 | 253,345 | |||||
Depreciation and amortization | 49,482 | 50,120 | |||||
General and administrative | 70,589 | 68,696 | |||||
Provision for impaired assets and restaurant closings | 3,586 | 2,739 | |||||
Total costs and expenses | 1,045,637 | 1,038,094 | |||||
Income from operations | 82,494 | 78,371 | |||||
Other (expense) income, net | (168 | ) | 1 | ||||
Interest expense, net | (11,181 | ) | (10,310 | ) | |||
Income before provision for income taxes | 71,145 | 68,062 | |||||
Provision for income taxes | 5,496 | 1,925 | |||||
Net income | 65,649 | 66,137 | |||||
Less: net income attributable to noncontrolling interests | 1,349 | 739 | |||||
Net income attributable to Bloomin’ Brands | $ | 64,300 | $ | 65,398 | |||
Net income | $ | 65,649 | $ | 66,137 | |||
Other comprehensive income: | |||||||
Foreign currency translation adjustment, net of tax | 5,755 | 1,349 | |||||
Unrealized (loss) gain on derivatives, net of tax | (4,381 | ) | 888 | ||||
Reclassification of adjustment for (gain) loss on derivatives included in Net income, net of tax | (364 | ) | 308 | ||||
Comprehensive income | 66,659 | 68,682 | |||||
Less: comprehensive income attributable to noncontrolling interests | 1,257 | 721 | |||||
Comprehensive income attributable to Bloomin’ Brands | $ | 65,402 | $ | 67,961 | |||
Earnings per share: | |||||||
Basic | $ | 0.70 | $ | 0.71 | |||
Diluted | $ | 0.69 | $ | 0.68 | |||
Weighted average common shares outstanding: | |||||||
Basic | 91,415 | 92,268 | |||||
Diluted | 92,661 | 95,782 |
BLOOMIN’ BRANDS, INC. | ||||||||||||||||||||||||||
COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUM- ULATED DEFICIT | ACCUMULATED OTHER COMPREHENSIVE LOSS | NON-CONTROLLING INTERESTS | TOTAL | |||||||||||||||||||||
SHARES | AMOUNT | |||||||||||||||||||||||||
Balance, December 30, 2018 | 91,272 | $ | 913 | $ | 1,107,582 | $ | (920,010 | ) | $ | (142,755 | ) | $ | 9,087 | $ | 54,817 | |||||||||||
Cumulative-effect from a change in accounting principle, net of tax | — | — | — | 141,285 | — | — | 141,285 | |||||||||||||||||||
Net income | — | — | — | 64,300 | — | 1,349 | 65,649 | |||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | 1,102 | (92 | ) | 1,010 | ||||||||||||||||||
Cash dividends declared, $0.10 per common share | — | — | (9,140 | ) | — | — | — | (9,140 | ) | |||||||||||||||||
Stock-based compensation | — | — | 3,993 | — | — | — | 3,993 | |||||||||||||||||||
Common stock issued under stock plans (1) | 375 | 3 | (3,089 | ) | — | — | — | (3,086 | ) | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (2,429 | ) | (2,429 | ) | |||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | 264 | 264 | |||||||||||||||||||
Balance, March 31, 2019 | 91,647 | $ | 916 | $ | 1,099,346 | $ | (714,425 | ) | $ | (141,653 | ) | $ | 8,179 | $ | 252,363 | |||||||||||
(CONTINUED...) | ||||||||||||||||||||||||||
BLOOMIN’ BRANDS, INC. | ||||||||||||||||||||||||||
COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUM- ULATED DEFICIT | ACCUMULATED OTHER COMPREHENSIVE LOSS | NON-CONTROLLING INTERESTS | TOTAL | |||||||||||||||||||||
SHARES | AMOUNT | |||||||||||||||||||||||||
Balance, December 31, 2017 | 91,913 | $ | 919 | $ | 1,081,813 | $ | (913,191 | ) | $ | (99,199 | ) | $ | 10,889 | $ | 81,231 | |||||||||||
Net income | — | — | — | 65,398 | — | 818 | 66,216 | |||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | — | 2,563 | (18 | ) | 2,545 | ||||||||||||||||||
Cash dividends declared, $0.09 per common share | — | — | (8,371 | ) | — | — | — | (8,371 | ) | |||||||||||||||||
Repurchase and retirement of common stock | (2,116 | ) | (21 | ) | — | (50,975 | ) | — | — | (50,996 | ) | |||||||||||||||
Stock-based compensation | — | 5,121 | — | — | — | 5,121 | ||||||||||||||||||||
Common stock issued under stock plans (1) | 1,619 | 16 | 13,663 | — | — | — | 13,679 | |||||||||||||||||||
Change in the redemption value of redeemable interests | — | — | (79 | ) | — | — | — | (79 | ) | |||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (1,069 | ) | (1,069 | ) | |||||||||||||||||
Contributions from noncontrolling interests | — | — | — | — | — | 158 | 158 | |||||||||||||||||||
Balance, April 1, 2018 | 91,416 | $ | 914 | $ | 1,092,147 | $ | (898,768 | ) | $ | (96,636 | ) | $ | 10,778 | $ | 108,435 |
(1) | Net of forfeitures and shares withheld for employee taxes. |
THIRTEEN WEEKS ENDED | |||||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||||
Cash flows provided by operating activities: | |||||||
Net income | $ | 65,649 | $ | 66,137 | |||
Adjustments to reconcile Net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 49,482 | 50,120 | |||||
Amortization of deferred discounts and issuance costs | 634 | 643 | |||||
Amortization of deferred gift card sales commissions | 8,407 | 9,415 | |||||
Provision for impaired assets and restaurant closings | 3,586 | 2,739 | |||||
Amortization of operating lease assets | 17,814 | — | |||||
Stock-based and other non-cash compensation expense | 6,035 | 6,058 | |||||
Deferred income tax (benefit) expense | (501 | ) | 126 | ||||
Loss on sale of a business or subsidiary | 167 | — | |||||
Recognition of deferred gain on sale-leaseback transactions | — | (3,069 | ) | ||||
Other, net | (660 | ) | 114 | ||||
Change in assets and liabilities | (66,730 | ) | (80,748 | ) | |||
Net cash provided by operating activities | 83,883 | 51,535 | |||||
Cash flows used in investing activities: | |||||||
Capital expenditures | (44,710 | ) | (48,347 | ) | |||
Other investments, net | 2,690 | 2,137 | |||||
Net cash used in investing activities | (42,020 | ) | (46,210 | ) | |||
Cash flows used in financing activities: | |||||||
Repayments of long-term debt | (7,428 | ) | (6,436 | ) | |||
Proceeds from borrowings on revolving credit facilities, net | 148,200 | 151,829 | |||||
Repayments of borrowings on revolving credit facilities | (152,300 | ) | (122,000 | ) | |||
(Payments of taxes) proceeds from the exercise of share-based compensation, net | (3,086 | ) | 13,679 | ||||
Distributions to noncontrolling interests | (2,429 | ) | (1,069 | ) | |||
Contributions from noncontrolling interests | 264 | 158 | |||||
Purchase of limited partnership and noncontrolling interests | — | (1,444 | ) | ||||
Repayments of partner deposits and accrued partner obligations | (5,460 | ) | (4,432 | ) | |||
Repurchase of common stock | — | (50,996 | ) | ||||
Cash dividends paid on common stock | (9,140 | ) | (8,371 | ) | |||
Net cash used in financing activities | (31,379 | ) | (29,082 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 459 | 54 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 10,943 | (23,703 | ) | ||||
Cash, cash equivalents and restricted cash as of the beginning of the period | 71,823 | 129,543 | |||||
Cash and cash equivalents as of the end of the period | $ | 82,766 | $ | 105,840 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | 13,637 | $ | 9,401 | |||
Cash paid for income taxes, net of refunds | 4,255 | 1,696 | |||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Leased assets obtained in exchange for new operating lease liabilities | $ | 17,618 | $ | — | |||
Leased assets obtained in exchange for new finance lease liabilities | 76 | — | |||||
Decrease in liabilities from the acquisition of property, fixtures and equipment or capital leases | (6,066 | ) | (4,985 | ) |
(i) | recording of right-of-use assets of $1.3 billion and lease liabilities of $1.5 billion; |
(ii) | a credit to the beginning balance of Accumulated Deficit of $190.4 million to derecognize deferred gains on sale-leaseback transactions and a debit to the beginning balance of Accumulated Deficit of $49.2 million to derecognize the related deferred tax assets; and |
(iii) | derecognition of existing debt obligations of $19.6 million and existing fixed assets of $16.1 million related to restaurant properties sold and leased back from third parties that previously did not qualify for sale accounting, with gains or losses associated with this change recognized in Accumulated Deficit. |
ACCOUNT | CONSOLIDATED BALANCE SHEET CLASSIFICATION UNDER ASC 840 | |
Favorable leases | Intangible assets, net | |
Deferred rent | Deferred rent | |
Unfavorable leases | Other long-term liabilities, net | |
Exit-related lease accruals | Other long-term liabilities, net |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Revenues | |||||||
Restaurant sales | $ | 1,111,642 | $ | 1,099,003 | |||
Franchise and other revenues: | |||||||
Franchise revenue | $ | 13,762 | $ | 14,215 | |||
Other revenue | 2,727 | 3,247 | |||||
Total Franchise and other revenues | $ | 16,489 | $ | 17,462 | |||
Total revenues | $ | 1,128,131 | $ | 1,116,465 |
THIRTEEN WEEKS ENDED | THIRTEEN WEEKS ENDED | ||||||||||||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||||||||||||
(dollars in thousands) | RESTAURANT SALES | FRANCHISE REVENUE | RESTAURANT SALES | FRANCHISE REVENUE | |||||||||||
U.S. | |||||||||||||||
Outback Steakhouse | $ | 586,771 | $ | 10,601 | $ | 571,479 | $ | 11,074 | |||||||
Carrabba’s Italian Grill | 173,475 | 171 | 173,927 | 147 | |||||||||||
Bonefish Grill | 156,434 | 210 | 156,849 | 240 | |||||||||||
Fleming’s Prime Steakhouse & Wine Bar | 83,026 | — | 80,990 | — | |||||||||||
Other | 1,107 | — | 1,099 | — | |||||||||||
U.S. Total | $ | 1,000,813 | $ | 10,982 | $ | 984,344 | $ | 11,461 | |||||||
International | |||||||||||||||
Outback Steakhouse-Brazil | $ | 89,565 | $ | — | $ | 95,123 | $ | — | |||||||
Other | 21,264 | 2,780 | 19,536 | 2,754 | |||||||||||
International Total | $ | 110,829 | $ | 2,780 | $ | 114,659 | $ | 2,754 | |||||||
Total | $ | 1,111,642 | $ | 13,762 | $ | 1,099,003 | $ | 14,215 |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | |||||
Other current assets, net | |||||||
Deferred gift card sales commissions | $ | 11,195 | $ | 16,431 | |||
Unearned revenue | |||||||
Deferred gift card revenue | $ | 240,923 | $ | 333,794 | |||
Deferred loyalty revenue | 9,288 | 8,424 | |||||
Deferred franchise fees - current | 492 | 490 | |||||
Total Unearned revenue | $ | 250,703 | $ | 342,708 | |||
Other long-term liabilities, net | |||||||
Deferred franchise fees - non-current | $ | 4,702 | $ | 4,531 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Balance, beginning of period | $ | 16,431 | $ | 16,231 | |||
Deferred gift card sales commissions amortization | (8,407 | ) | (9,415 | ) | |||
Deferred gift card sales commissions capitalization | 3,833 | 3,858 | |||||
Other | (662 | ) | (635 | ) | |||
Balance, end of period | $ | 11,195 | $ | 10,039 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Balance, beginning of period | $ | 333,794 | $ | 323,628 | |||
Gift card sales | 55,472 | 56,285 | |||||
Gift card redemptions | (141,459 | ) | (144,556 | ) | |||
Gift card breakage | (6,884 | ) | (7,574 | ) | |||
Balance, end of period | $ | 240,923 | $ | 227,783 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Impairment losses | |||||||
U.S. | $ | 3,464 | $ | 111 | |||
International | 18 | 2,160 | |||||
Total impairment losses | $ | 3,482 | $ | 2,271 | |||
Restaurant closure expenses | |||||||
U.S. | $ | 87 | $ | 348 | |||
International | 17 | 120 | |||||
Total restaurant closure expenses | $ | 104 | $ | 468 | |||
Provision for impaired assets and restaurant closings | $ | 3,586 | $ | 2,739 |
THIRTEEN WEEKS ENDED | |||
(dollars in thousands) | MARCH 31, 2019 | ||
Balance, beginning of the period | $ | 18,094 | |
Additions (1) | 1,288 | ||
Cash payments | (1,873 | ) | |
Accretion | 386 | ||
Adjustments | (218 | ) | |
Balance, end of the period (2) | $ | 17,677 |
(1) | Includes closure initiative related lease liabilities recognized as a result of the adoption of ASU No. 2016-02. |
(2) | As of March 31, 2019, the Company had exit-related accruals of $2.9 million recorded in Accrued and other current liabilities and $14.8 million recorded in Non-current operating lease liabilities on the Consolidated Balance Sheet. |
THIRTEEN WEEKS ENDED | |||||||
(in thousands, except per share data) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Net income attributable to Bloomin’ Brands | $ | 64,300 | $ | 65,398 | |||
Basic weighted average common shares outstanding | 91,415 | 92,268 | |||||
Effect of diluted securities: | |||||||
Stock options | 792 | 2,950 | |||||
Nonvested restricted stock units | 358 | 524 | |||||
Nonvested performance-based share units | 96 | 40 | |||||
Diluted weighted average common shares outstanding | 92,661 | 95,782 | |||||
Basic earnings per share | $ | 0.70 | $ | 0.71 | |||
Diluted earnings per share | $ | 0.69 | $ | 0.68 |
THIRTEEN WEEKS ENDED | |||||
(shares in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||
Stock options | 3,384 | 1,950 | |||
Nonvested restricted stock units | 222 | 111 | |||
Nonvested performance-based share units | 260 | 162 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Stock options | $ | 1,159 | $ | 1,897 | |||
Restricted stock units | 1,749 | 2,332 | |||||
Performance-based share units | 1,003 | 596 | |||||
$ | 3,911 | $ | 4,825 |
THIRTEEN WEEKS ENDED | |||||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||||
Assumptions: | |||||||
Weighted-average risk-free interest rate (1) | 2.51 | % | 2.66 | % | |||
Dividend yield (2) | 1.89 | % | 1.50 | % | |||
Expected term (3) | 5.5 years | 5.8 years | |||||
Weighted-average volatility (4) | 31.87 | % | 32.76 | % | |||
Weighted-average grant date fair value per option | $ | 5.76 | $ | 7.23 |
(1) | Risk-free interest rate is the U.S. Treasury yield curve in effect as of the grant date for periods within the expected term of the option. |
(2) | Dividend yield is the level of dividends expected to be paid on the Company’s common stock over the expected term of the option. |
(3) | Expected term represents the period of time that the options are expected to be outstanding. The Company estimates the expected term based on historical exercise experience for its stock options. |
(4) | Based on the historical volatility of the Company’s stock. |
UNRECOGNIZED COMPENSATION EXPENSE (dollars in thousands) | REMAINING WEIGHTED-AVERAGE VESTING PERIOD (in years) | ||||
Stock options | $ | 8,972 | 2.4 | ||
Restricted stock units | $ | 15,816 | 2.5 | ||
Performance-based share units | $ | 8,077 | 1.7 |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | |||||
Prepaid expenses | $ | 24,631 | $ | 38,117 | |||
Accounts receivable - gift cards, net | 9,802 | 91,242 | |||||
Accounts receivable - vendors, net | 9,890 | 10,029 | |||||
Accounts receivable - franchisees, net | 2,775 | 1,303 | |||||
Accounts receivable - other, net | 17,231 | 19,688 | |||||
Deferred gift card sales commissions | 11,195 | 16,431 | |||||
Assets held for sale | 15,134 | 5,143 | |||||
Other current assets, net | 3,251 | 8,895 | |||||
$ | 93,909 | $ | 190,848 |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | |||||
Accrued rent and current operating lease liabilities | $ | 172,712 | $ | 2,850 | |||
Accrued payroll and other compensation | 88,887 | 101,249 | |||||
Accrued insurance | 24,211 | 22,055 | |||||
Other current liabilities | 92,462 | 120,499 | |||||
$ | 378,272 | $ | 246,653 |
MARCH 31, 2019 | DECEMBER 30, 2018 | ||||||||||||
(dollars in thousands) | OUTSTANDING BALANCE | INTEREST RATE | OUTSTANDING BALANCE | INTEREST RATE | |||||||||
Senior Secured Credit Facility: | |||||||||||||
Term loan A (1) | $ | 468,750 | 4.21 | % | $ | 475,000 | 4.14 | % | |||||
Revolving credit facility (1) | 595,400 | 4.20 | % | 599,500 | 4.17 | % | |||||||
Total Senior Secured Credit Facility | $ | 1,064,150 | $ | 1,074,500 | |||||||||
Finance lease liabilities | 3,394 | — | |||||||||||
Financing obligations | — | 19,562 | 7.58% to 7.82% | ||||||||||
Capital lease obligations | — | 3,297 | |||||||||||
Other | 50 | 2.18 | % | 918 | 0.00% to 2.18% | ||||||||
Less: unamortized debt discount and issuance costs | (3,284 | ) | (3,502 | ) | |||||||||
Total debt, net | $ | 1,064,310 | $ | 1,094,775 | |||||||||
Less: current portion of long-term debt | (26,680 | ) | (27,190 | ) | |||||||||
Long-term debt, net | $ | 1,037,630 | $ | 1,067,585 |
(1) | Interest rate represents the weighted-average interest rate for the respective period. |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | |||||
Accrued insurance liability | $ | 33,929 | $ | 33,771 | |||
Unfavorable leases (1) | — | 32,120 | |||||
Chef and Restaurant Managing Partner deferred compensation obligations and deposits | 56,183 | 64,766 | |||||
Other long-term liabilities | 50,664 | 60,876 | |||||
$ | 140,776 | $ | 191,533 |
(1) | Net of accumulated amortization of $36.2 million as of December 30, 2018. |
11. | Stockholders’ Equity |
DIVIDENDS PER SHARE | AMOUNT (in thousands) | ||||||
First fiscal quarter | $ | 0.10 | $ | 9,140 |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | |||||
Foreign currency translation adjustment | $ | (129,302 | ) | $ | (135,149 | ) | |
Unrealized loss on derivatives, net of tax | (12,351 | ) | (7,606 | ) | |||
Accumulated other comprehensive loss | $ | (141,653 | ) | $ | (142,755 | ) |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Foreign currency translation adjustment, net of tax (1) | $ | 5,847 | $ | 1,367 | |||
Unrealized (loss) gain on derivatives, net of tax (2) | $ | (4,381 | ) | $ | 888 | ||
Reclassification of adjustments for (gain) loss on derivatives included in Net income, net of tax (3) | (364 | ) | 308 | ||||
Total unrealized (loss) gain on derivatives, net of tax | $ | (4,745 | ) | $ | 1,196 | ||
Other comprehensive income attributable to Bloomin’ Brands | $ | 1,102 | $ | 2,563 |
(1) | Foreign currency translation adjustment is net of tax of $0.1 million for the thirteen weeks ended April 1, 2018. |
(2) | Unrealized (loss) gain on derivatives is net of tax of ($1.5) million and $0.3 million for the thirteen weeks ended March 31, 2019 and April 1, 2018, respectively. |
(3) | Reclassifications of adjustments for (gain) loss on derivatives are net of tax. See Note 12 - Derivative Instruments and Hedging Activities for discussion of the tax impact of reclassifications. |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | CONSOLIDATED BALANCE SHEET CLASSIFICATION | ||||||
Interest rate swaps - asset (1) | $ | 237 | $ | 765 | Other current assets, net | ||||
Interest rate swaps - liability | $ | 3,217 | $ | 1,393 | Accrued and other current liabilities | ||||
Interest rate swaps - liability | 13,767 | 9,723 | Other long-term liabilities, net | ||||||
Total fair value of derivative instruments - liabilities (1) | $ | 16,984 | $ | 11,116 |
(1) | See Note 14 - Fair Value Measurements for fair value discussion of the interest rate swaps. |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Interest rate swap benefit (expense) recognized in Interest expense, net | $ | 491 | $ | (415 | ) | ||
Income tax (expense) benefit recognized in Provision for income taxes | (127 | ) | 107 | ||||
Total effects of the interest rate swaps on Net income | $ | 364 | $ | (308 | ) |
(dollars in thousands) | CONSOLIDATED BALANCE SHEET CLASSIFICATION | MARCH 31, 2019 | |||
Operating lease right-of-use assets | Operating lease right-of-use assets | $ | 1,276,311 | ||
Finance lease right-of-use assets (1) | Property, fixtures and equipment, net | 3,095 | |||
Total lease assets, net | $ | 1,279,406 | |||
Current operating lease liabilities (2) | Accrued and other current liabilities | $ | 170,039 | ||
Current finance lease liabilities | Current portion of long-term debt | 1,630 | |||
Non-current operating lease liabilities | Non-current operating lease liabilities | 1,285,073 | |||
Non-current finance lease liabilities | Long-term debt, net | 1,764 | |||
$ | 1,458,506 |
(1) | Net of accumulated amortization of $0.3 million. |
(2) | Excludes accrued contingent percentage rent. |
CONSOLIDATED INCOME STATEMENT CLASSIFICATION | THIRTEEN WEEKS ENDED | ||||
(dollars in thousands) | MARCH 31, 2019 | ||||
Operating leases (1) | Other restaurant operating | $ | 45,233 | ||
Variable lease cost | Other restaurant operating | 819 | |||
Finance leases | |||||
Amortization of leased assets | Depreciation and amortization | 324 | |||
Interest on lease liabilities | Interest expense, net | 73 | |||
Sublease revenue (2) | Franchise and other revenues | (1,314 | ) | ||
Lease costs, net (3) | $ | 45,135 |
(1) | Excludes rent expense for office facilities and Company-owned closed or subleased properties of $3.6 million, which is included in General and administrative expense and certain supply chain related rent expense of $0.3 million, which is included in Cost of sales. |
(2) | Excludes rental income from Company-owned properties of $0.7 million. |
(3) | During the thirteen weeks ended April 1, 2018, the Company recorded rent expense of $47.2 million, including $1.3 million of variable rent expense, and $1.6 million of sublease revenue. |
(dollars in thousands) | OPERATING LEASES | FINANCE LEASES | SUBLEASE REVENUES | ||||||||
Year 1 (1) | $ | 177,405 | $ | 1,699 | $ | (5,936 | ) | ||||
Year 2 | 190,733 | 1,301 | (6,028 | ) | |||||||
Year 3 | 186,753 | 730 | (6,012 | ) | |||||||
Year 4 | 182,697 | 39 | (5,956 | ) | |||||||
Year 5 | 177,735 | — | (5,945 | ) | |||||||
Thereafter | 1,774,940 | — | (67,921 | ) | |||||||
Total minimum lease payments (receipts) (2) | $ | 2,690,263 | $ | 3,769 | $ | (97,798 | ) | ||||
Less: Interest | (1,235,151 | ) | (375 | ) | |||||||
Present value of future lease payments (receipts) | $ | 1,455,112 | $ | 3,394 |
(1) | Net of operating lease prepaid rent of $14.6 million. |
(2) | Includes $1.0 billion related to options to extend operating lease terms and excludes $96.3 million of signed operating leases that have not yet commenced. |
MARCH 31, 2019 | ||
Weighted-average remaining lease term: | ||
Operating leases | 14.7 years | |
Finance leases | 2.4 years | |
Weighted-average discount rate (1): | ||
Operating leases | 8.61 | % |
Finance leases | 9.21 | % |
(1) | Based on the Company’s incremental borrowing rate at lease commencement. |
THIRTEEN WEEKS ENDED | |||
(dollars in thousands) | MARCH 31, 2019 | ||
Cash flows from operating activities: | |||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 47,649 |
(dollars in thousands) | MARCH 31, 2019 | ||
Land | $ | 15,247 | |
Buildings and building improvements | $ | 23,120 | |
Less: accumulated depreciation | (10,080 | ) | |
Buildings and building improvements, net | $ | 13,040 |
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 |
MARCH 31, 2019 | DECEMBER 30, 2018 | ||||||||||||||||||||||
(dollars in thousands) | TOTAL | LEVEL 1 | LEVEL 2 | TOTAL | LEVEL 1 | LEVEL 2 | |||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Fixed income funds | $ | 407 | $ | 407 | $ | — | $ | 627 | $ | 627 | $ | — | |||||||||||
Money market funds | 16,661 | 16,661 | — | 17,827 | 17,827 | — | |||||||||||||||||
Other current assets, net: | |||||||||||||||||||||||
Derivative instruments - interest rate swaps | 237 | — | 237 | 765 | — | 765 | |||||||||||||||||
Total asset recurring fair value measurements | $ | 17,305 | $ | 17,068 | $ | 237 | $ | 19,219 | $ | 18,454 | $ | 765 | |||||||||||
Liabilities: | |||||||||||||||||||||||
Accrued and other current liabilities: | |||||||||||||||||||||||
Derivative instruments - interest rate swaps | $ | 3,217 | $ | — | $ | 3,217 | $ | 1,393 | $ | — | $ | 1,393 | |||||||||||
Other long-term liabilities: | |||||||||||||||||||||||
Derivative instruments - interest rate swaps | 13,767 | — | 13,767 | 9,723 | — | 9,723 | |||||||||||||||||
Total liability recurring fair value measurements | $ | 16,984 | $ | — | $ | 16,984 | $ | 11,116 | $ | — | $ | 11,116 |
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 March 31, 2019 and December 30, 2018, the Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. |
THIRTEEN WEEKS ENDED | THIRTEEN WEEKS ENDED | ||||||||||||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||||||||||||
(dollars in thousands) | CARRYING VALUE | TOTAL IMPAIRMENT | CARRYING VALUE | TOTAL IMPAIRMENT | |||||||||||
Assets held for sale (1) | $ | 2,149 | $ | 215 | $ | 50 | $ | 50 | |||||||
Operating lease right-of-use assets (2) | 2,242 | 596 | — | — | |||||||||||
Property, fixtures and equipment (2) | 490 | 2,671 | 320 | 2,221 | |||||||||||
$ | 4,881 | $ | 3,482 | $ | 370 | $ | 2,271 |
(1) | Carrying value approximates fair value with all assets measured using third-party market appraisals or executed sales contracts (Level 2). |
(2) | Carrying value approximates fair value. Carrying values for Operating lease right-of-use assets and Property, fixtures and equipment measured using Level 3 inputs to estimate fair value totaled $2.0 million and $0.5 million, respectively, during the thirteen weeks ended March 31, 2019. Level 2 inputs were used to estimate the fair value for all other assets measured in the periods presented. Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value. |
MARCH 31, 2019 | DECEMBER 30, 2018 | ||||||||||||||
CARRYING VALUE | FAIR VALUE | CARRYING VALUE | FAIR VALUE | ||||||||||||
(dollars in thousands) | LEVEL 2 | LEVEL 2 | |||||||||||||
Senior Secured Credit Facility: | |||||||||||||||
Term loan A | $ | 468,750 | $ | 466,406 | $ | 475,000 | $ | 464,906 | |||||||
Revolving credit facility | $ | 595,400 | $ | 589,446 | $ | 599,500 | $ | 590,508 |
THIRTEEN WEEKS ENDED | |||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||
Effective income tax rate | 7.7 | % | 2.8 | % |
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. |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Total revenues | |||||||
U.S. | $ | 1,014,507 | $ | 998,707 | |||
International | 113,624 | 117,758 | |||||
Total revenues | $ | 1,128,131 | $ | 1,116,465 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Segment income from operations | |||||||
U.S. | $ | 113,035 | $ | 109,134 | |||
International | 13,720 | 8,325 | |||||
Total segment income from operations | 126,755 | 117,459 | |||||
Unallocated corporate operating expense | (44,261 | ) | (39,088 | ) | |||
Total income from operations | 82,494 | 78,371 | |||||
Other (expense) income, net | (168 | ) | 1 | ||||
Interest expense, net | (11,181 | ) | (10,310 | ) | |||
Income before provision for income taxes | $ | 71,145 | $ | 68,062 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Depreciation and amortization | |||||||
U.S. | $ | 38,786 | $ | 39,274 | |||
International | 6,456 | 6,732 | |||||
Corporate | 4,240 | 4,114 | |||||
Total depreciation and amortization | $ | 49,482 | $ | 50,120 |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | |||||
U.S. | $ | 1,059,814 | $ | 1,107,679 | |||
International | |||||||
Brazil | 126,084 | 115,560 | |||||
Other | 13,220 | 13,663 | |||||
Total assets | $ | 1,199,118 | $ | 1,236,902 |
(i) | Consumer reactions to public health and food safety issues; |
(ii) | Our ability to compete in the highly competitive restaurant industry with many well-established competitors and new market entrants; |
(iii) | Minimum wage increases and additional mandated employee benefits; |
(iv) | Economic conditions and their effects on consumer confidence and discretionary spending, consumer traffic, the cost and availability of credit and interest rates; |
(v) | Our ability to protect our information technology systems from interruption or security breach, including cyber security threats, and to protect consumer data and personal employee information; |
(vi) | Fluctuations in the price and availability of commodities; |
(vii) | Our ability to comply with governmental laws and regulations, the costs of compliance with such laws and regulations and the effects of changes to applicable laws and regulations, including tax laws and unanticipated liabilities; |
(viii) | Our ability to effectively respond to changes in patterns of consumer traffic, consumer tastes and dietary habits; |
(ix) | Our ability to implement our remodeling, relocation and expansion plans due to uncertainty in locating and acquiring 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; |
(x) | The effects of international economic, political and social conditions and legal systems on our foreign operations and on foreign currency exchange rates; |
(xi) | 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; |
(xii) | 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; |
(xiii) | Strategic actions, including acquisitions and dispositions, and our success in implementing these initiatives or integrating any acquired or newly created businesses; |
(xiv) | Seasonal and periodic fluctuations in our results and the effects of significant adverse weather conditions and other disasters or unforeseen events; |
(xv) | The effects of our substantial leverage and restrictive covenants in our various credit facilities on our ability to raise additional capital to fund our operations, to make capital expenditures to invest in new or renovate restaurants and to react to changes in the economy or our industry, and our exposure to interest rate risk in connection with our variable-rate debt; |
(xvi) | The adequacy of our cash flow and earnings and other conditions which may affect our ability to pay dividends and repurchase shares of our common stock; and |
(xvii) | Such other factors as discussed in Part I, Item IA. Risk Factors of our Annual Report on Form 10-K for the year ended December 30, 2018. |
• | An increase in Total revenues of 1.0% in the first quarter of 2019, as compared to the first quarter of 2018, was primarily due to higher U.S. comparable restaurant sales and the net impact of restaurant openings and closures, partially offset by foreign currency translation. |
• | Income from operations of $82.5 million in the first quarter of 2019, as compared to $78.4 million in the first quarter of 2018, increased primarily due to higher U.S. comparable restaurant sales and the impact of certain cost savings initiatives. These increases were partially offset by labor and commodity inflation, and the impact of deferred gain amortization no longer recognized upon adoption of the new lease standard. |
• | Average restaurant unit volumes—average sales (excluding gift card breakage) per restaurant to measure changes in customer traffic, pricing and development of the brand; |
• | Comparable restaurant sales—year-over-year comparison of sales volumes (excluding gift card breakage) for Company-owned restaurants that are open 18 months or more in order to remove the impact of new restaurant openings in comparing the operations of existing restaurants; |
• | System-wide sales—total restaurant sales volume for all Company-owned and franchise restaurants, regardless of ownership, to interpret the overall health of our brands; |
• | Restaurant-level operating margin, Income from operations, Net income and Diluted earnings per share — financial measures utilized to evaluate our operating performance. |
(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. |
• | Adjusted restaurant-level operating margin, Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share—non-GAAP financial measures utilized to evaluate our operating performance. |
• | Customer satisfaction scores—measurement of our customers’ experiences in a variety of key areas. |
Number of restaurants (at end of the period): | MARCH 31, 2019 | APRIL 1, 2018 | |||
U.S. | |||||
Outback Steakhouse | |||||
Company-owned | 579 | 584 | |||
Franchised | 153 | 154 | |||
Total | 732 | 738 | |||
Carrabba’s Italian Grill | |||||
Company-owned (1) | 205 | 224 | |||
Franchised (1) | 21 | 3 | |||
Total | 226 | 227 | |||
Bonefish Grill | |||||
Company-owned | 189 | 193 | |||
Franchised | 7 | 7 | |||
Total | 196 | 200 | |||
Fleming’s Prime Steakhouse & Wine Bar | |||||
Company-owned | 70 | 70 | |||
Other | |||||
Company-owned | 2 | 4 | |||
U.S. Total | 1,226 | 1,239 | |||
International | |||||
Company-owned | |||||
Outback Steakhouse - Brazil (2) | 95 | 89 | |||
Other | 34 | 36 | |||
Franchised | |||||
Outback Steakhouse - South Korea | 72 | 76 | |||
Other | 54 | 54 | |||
International Total | 255 | 255 | |||
System-wide total | 1,481 | 1,494 |
(1) | In March 2019, we sold 18 Carrabba’s Italian Grill locations, which are now operated as franchises. |
(2) | The restaurant counts for Brazil are reported as of February 28, 2019 and 2018, respectively, to correspond with the balance sheet dates of this subsidiary. |
THIRTEEN WEEKS ENDED | |||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||
Revenues | |||||
Restaurant sales | 98.5 | % | 98.4 | % | |
Franchise and other revenues | 1.5 | 1.6 | |||
Total revenues | 100.0 | 100.0 | |||
Costs and expenses | |||||
Cost of sales (1) | 31.7 | 32.0 | |||
Labor and other related (1) | 28.7 | 28.3 | |||
Other restaurant operating (1) | 22.6 | 23.1 | |||
Depreciation and amortization | 4.4 | 4.5 | |||
General and administrative | 6.3 | 6.2 | |||
Provision for impaired assets and restaurant closings | 0.3 | 0.2 | |||
Total costs and expenses | 92.7 | 93.0 | |||
Income from operations | 7.3 | 7.0 | |||
Other (expense) income, net | (*) | * | |||
Interest expense, net | (1.0 | ) | (0.9 | ) | |
Income before provision for income taxes | 6.3 | 6.1 | |||
Provision for income taxes | 0.5 | 0.2 | |||
Net income | 5.8 | 5.9 | |||
Less: net income attributable to noncontrolling interests | 0.1 | 0.1 | |||
Net income attributable to Bloomin’ Brands | 5.7 | % | 5.8 | % |
(1) | As a percentage of Restaurant sales. |
* | Less than 1/10th of one percent of Total revenues. |
(dollars in millions) | THIRTEEN WEEKS ENDED | ||
For the period ended April 1, 2018 | $ | 1,099.0 | |
Change from: | |||
Comparable restaurant sales | 26.5 | ||
Restaurant openings | 13.1 | ||
Effect of foreign currency translation | (16.2 | ) | |
Restaurant closings | (10.3 | ) | |
Divestiture of restaurants through refranchising transactions | (0.5 | ) | |
For the period ended March 31, 2019 | $ | 1,111.6 |
THIRTEEN WEEKS ENDED | |||||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||||
Average restaurant unit volumes (weekly): | |||||||
U.S. | |||||||
Outback Steakhouse | $ | 77,198 | $ | 74,439 | |||
Carrabba’s Italian Grill | $ | 59,940 | $ | 59,479 | |||
Bonefish Grill | $ | 63,654 | $ | 62,193 | |||
Fleming’s Prime Steakhouse & Wine Bar | $ | 91,238 | $ | 90,190 | |||
International | |||||||
Outback Steakhouse - Brazil (1) | $ | 74,878 | $ | 84,694 | |||
Operating weeks: | |||||||
U.S. | |||||||
Outback Steakhouse | 7,527 | 7,594 | |||||
Carrabba’s Italian Grill | 2,894 | 2,924 | |||||
Bonefish Grill | 2,458 | 2,522 | |||||
Fleming’s Prime Steakhouse & Wine Bar | 910 | 898 | |||||
International | |||||||
Outback Steakhouse - Brazil | 1,196 | 1,123 |
(1) | Translated at average exchange rates of 3.79 and 3.25 for the thirteen weeks ended March 31, 2019 and April 1, 2018, respectively. |
THIRTEEN WEEKS ENDED | |||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||
Year over year percentage change: | |||||
Comparable restaurant sales (stores open 18 months or more) (1): | |||||
U.S. | |||||
Outback Steakhouse | 3.5 | % | 4.3 | % | |
Carrabba’s Italian Grill | 0.3 | % | 0.9 | % | |
Bonefish Grill | 1.9 | % | (0.1 | )% | |
Fleming’s Prime Steakhouse & Wine Bar | 0.6 | % | 2.9 | % | |
Combined U.S. | 2.4 | % | 2.8 | % | |
International | |||||
Outback Steakhouse - Brazil (2) | 3.7 | % | 1.1 | % | |
Traffic: | |||||
U.S. | |||||
Outback Steakhouse | (0.5 | )% | 2.2 | % | |
Carrabba’s Italian Grill | (1.3 | )% | (5.6 | )% | |
Bonefish Grill | (1.9 | )% | (2.4 | )% | |
Fleming’s Prime Steakhouse & Wine Bar | (1.6 | )% | (2.4 | )% | |
Combined U.S. | (0.9 | )% | (0.2 | )% | |
International | |||||
Outback Steakhouse - Brazil | (2.4 | )% | (1.6 | )% | |
Average check per person (3): | |||||
U.S. | |||||
Outback Steakhouse | 4.0 | % | 2.1 | % | |
Carrabba’s Italian Grill | 1.6 | % | 6.5 | % | |
Bonefish Grill | 3.8 | % | 2.3 | % | |
Fleming’s Prime Steakhouse & Wine Bar | 2.2 | % | 5.3 | % | |
Combined U.S. | 3.3 | % | 3.0 | % | |
International | |||||
Outback Steakhouse - Brazil | 6.5 | % | 3.0 | % |
(1) | Comparable restaurant sales exclude the effect of fluctuations in foreign currency rates. Relocated international restaurants closed more than 30 days and relocated U.S. restaurants closed more than 60 days are excluded from comparable restaurant sales until at least 18 months after reopening. |
(2) | Includes trading day impact from calendar period reporting. |
(3) | Average check per person includes the impact of menu pricing changes, product mix and discounts. |
THIRTEEN WEEKS ENDED | |||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Franchise revenues (1) | $ | 13.8 | $ | 14.2 | |||
Other revenues | 2.7 | 3.3 | |||||
Franchise and other revenues | $ | 16.5 | $ | 17.5 |
(1) | Represents franchise royalties, advertising fees and initial franchise fees. |
THIRTEEN WEEKS ENDED | ||||||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | Change | |||||||
Cost of sales | $ | 352.1 | $ | 352.1 | ||||||
% of Restaurant sales | 31.7 | % | 32.0 | % | (0.3 | )% |
THIRTEEN WEEKS ENDED | ||||||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | Change | |||||||
Labor and other related | $ | 319.0 | $ | 311.1 | ||||||
% of Restaurant sales | 28.7 | % | 28.3 | % | 0.4 | % |
THIRTEEN WEEKS ENDED | ||||||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | Change | |||||||
Other restaurant operating | $ | 250.9 | $ | 253.3 | ||||||
% of Restaurant sales | 22.6 | % | 23.1 | % | (0.5 | )% |
(dollars in millions) | THIRTEEN WEEKS ENDED | ||
For the period ended April 1, 2018 | $ | 68.7 | |
Change from: | |||
Severance | 3.0 | ||
Foreign currency exchange | (1.1 | ) | |
For the period ended March 31, 2019 | $ | 70.6 |
THIRTEEN WEEKS ENDED | |||||||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | Change | ||||||||
Provision for impaired assets and restaurant closings | $ | 3.6 | $ | 2.7 | $ | 0.9 |
THIRTEEN WEEKS ENDED | |||||||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | Change | ||||||||
Income from operations | $ | 82.5 | $ | 78.4 | $ | 4.1 | |||||
% of Total revenues | 7.3 | % | 7.0 | % | 0.3 | % |
THIRTEEN WEEKS ENDED | |||||||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | Change | ||||||||
Interest expense, net | $ | 11.2 | $ | 10.3 | $ | 0.9 |
THIRTEEN WEEKS ENDED | ||||||||
MARCH 31, 2019 | APRIL 1, 2018 | Change | ||||||
Effective income tax rate | 7.7 | % | 2.8 | % | 4.9 | % |
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. |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Revenues | |||||||
Restaurant sales | $ | 1,000,813 | $ | 984,344 | |||
Franchise and other revenues | 13,694 | 14,363 | |||||
Total revenues | $ | 1,014,507 | $ | 998,707 | |||
Restaurant-level operating margin | 16.7 | % | 16.3 | % | |||
Income from operations | $ | 113,035 | $ | 109,134 | |||
Operating income margin | 11.1 | % | 10.9 | % |
(dollars in millions) | THIRTEEN WEEKS ENDED | ||
For the period ended April 1, 2018 | $ | 984.3 | |
Change from: | |||
Comparable restaurant sales | 21.9 | ||
Restaurant openings | 2.6 | ||
Restaurant closings | (7.5 | ) | |
Divestiture of restaurants through refranchising transactions | (0.5 | ) | |
For the period ended March 31, 2019 | $ | 1,000.8 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Revenues | |||||||
Restaurant sales | $ | 110,829 | $ | 114,659 | |||
Franchise and other revenues | 2,795 | 3,099 | |||||
Total revenues | $ | 113,624 | $ | 117,758 | |||
Restaurant-level operating margin | 22.3 | % | 19.4 | % | |||
Income from operations | $ | 13,720 | $ | 8,325 | |||
Operating income margin | 12.1 | % | 7.1 | % |
(dollars in millions) | THIRTEEN WEEKS ENDED | ||
For the period ended April 1, 2018 | $ | 114.7 | |
Change from: | |||
Effect of foreign currency translation | (16.2 | ) | |
Restaurant closings | (2.8 | ) | |
Restaurant openings | 10.5 | ||
Comparable restaurant sales | 4.6 | ||
For the period ended March 31, 2019 | $ | 110.8 |
FRANCHISE SALES | THIRTEEN WEEKS ENDED | ||||||
(dollars in millions) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
U.S. | |||||||
Outback Steakhouse | $ | 138 | $ | 140 | |||
Carrabba’s Italian Grill | 3 | 3 | |||||
Bonefish Grill | 4 | 4 | |||||
U.S. Total | $ | 145 | $ | 147 | |||
International | |||||||
Outback Steakhouse-South Korea | $ | 57 | $ | 53 | |||
Other | 27 | 28 | |||||
International Total | $ | 84 | $ | 81 | |||
Total franchise sales (1) | $ | 229 | $ | 228 |
(1) | Franchise sales are not included in Total revenues in the Consolidated Statements of Operations and Comprehensive Income. |
THIRTEEN WEEKS ENDED | |||||||||||
MARCH 31, 2019 | APRIL 1, 2018 | ||||||||||
U.S. GAAP | ADJUSTED | U.S. GAAP | ADJUSTED (1) | ||||||||
Restaurant sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost of sales | 31.7 | % | 31.7 | % | 32.0 | % | 32.0 | % | |||
Labor and other related | 28.7 | % | 28.7 | % | 28.3 | % | 28.3 | % | |||
Other restaurant operating | 22.6 | % | 22.6 | % | 23.1 | % | 23.1 | % | |||
Restaurant-level operating margin | 17.1 | % | 17.1 | % | 16.6 | % | 16.5 | % |
(1) | Includes unfavorable adjustments recorded in Other restaurant operating for the following activities, as described in the Adjusted income from operations, Adjusted net income and Adjusted diluted earnings per share table below for the period indicated: |
THIRTEEN WEEKS ENDED | |||
(dollars in millions) | APRIL 1, 2018 | ||
Restaurant and asset impairments and closing costs | $ | 0.8 | |
Restaurant relocations and related costs | 0.2 | ||
$ | 1.0 |
THIRTEEN WEEKS ENDED | |||||||
(in thousands, except per share data) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Income from operations | $ | 82,494 | $ | 78,371 | |||
Operating income margin | 7.3 | % | 7.0 | % | |||
Adjustments: | |||||||
Severance (1) | $ | 2,855 | $ | 965 | |||
Restaurant and asset impairments and closing costs (2) | 2,131 | 1,295 | |||||
Restaurant relocations and related costs (3) | 1,032 | 1,725 | |||||
Legal and contingent matters | — | 470 | |||||
Total income from operations adjustments | $ | 6,018 | $ | 4,455 | |||
Adjusted income from operations | $ | 88,512 | $ | 82,826 | |||
Adjusted operating income margin | 7.8 | % | 7.4 | % | |||
Net income attributable to Bloomin’ Brands | $ | 64,300 | $ | 65,398 | |||
Adjustments: | |||||||
Income from operations adjustments | 6,018 | 4,455 | |||||
Total adjustments, before income taxes | 6,018 | 4,455 | |||||
Adjustment to provision for income taxes (4) | (819 | ) | (1,681 | ) | |||
Net adjustments | 5,199 | 2,774 | |||||
Adjusted net income | $ | 69,499 | $ | 68,172 | |||
Diluted earnings per share | $ | 0.69 | $ | 0.68 | |||
Adjusted diluted earnings per share | $ | 0.75 | $ | 0.71 | |||
Diluted weighted average common shares outstanding | 92,661 | 95,782 |
(1) | Relates to severance expense incurred as a result of restructuring activities. |
(2) | Represents asset impairment charges and related costs primarily associated with approved closure initiatives. |
(3) | Represents asset impairment charges and accelerated depreciation incurred in connection with our relocation program. |
(4) | Represents income tax effect of the adjustments for the periods presented. |
SENIOR SECURED CREDIT FACILITY | TOTAL CREDIT FACILITIES | ||||||||||
(dollars in thousands) | TERM LOAN A | REVOLVING FACILITY | |||||||||
Balance as of December 30, 2018 | $ | 475,000 | $ | 599,500 | $ | 1,074,500 | |||||
2019 new debt | — | 148,200 | 148,200 | ||||||||
2019 payments | (6,250 | ) | (152,300 | ) | (158,550 | ) | |||||
Balance as of March 31, 2019 | $ | 468,750 | $ | 595,400 | $ | 1,064,150 | |||||
Weighted-average interest rate, as of March 31, 2019 | 4.21 | % | 4.20 | % | |||||||
Principal maturity date | November 2022 | November 2022 |
THIRTEEN WEEKS ENDED | |||||||
(dollars in thousands) | MARCH 31, 2019 | APRIL 1, 2018 | |||||
Net cash provided by operating activities | $ | 83,883 | $ | 51,535 | |||
Net cash used in investing activities | (42,020 | ) | (46,210 | ) | |||
Net cash used in financing activities | (31,379 | ) | (29,082 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 459 | 54 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 10,943 | $ | (23,703 | ) |
(dollars in thousands) | MARCH 31, 2019 | DECEMBER 30, 2018 | |||||
Current assets | $ | 249,824 | $ | 335,483 | |||
Current liabilities | 821,975 | 791,039 | |||||
Working capital (deficit) (1) | $ | (572,151 | ) | $ | (455,556 | ) |
(1) | The change in net working capital (deficit) during the thirteen weeks ended March 31, 2019 is primarily due to current lease liabilities recognized as a result of the adoption of ASU No. 2016-02. |
(dollars in thousands) | DIVIDENDS PAID | SHARE REPURCHASES (1) | TOTAL | ||||||||
Fiscal year 2015 | $ | 29,332 | $ | 169,999 | $ | 199,331 | |||||
Fiscal year 2016 | 31,379 | 309,887 | 341,266 | ||||||||
Fiscal year 2017 | 30,988 | 272,736 | 303,724 | ||||||||
Fiscal year 2018 | 33,312 | 113,967 | 147,279 | ||||||||
First fiscal quarter 2019 | 9,140 | — | 9,140 | ||||||||
Total | $ | 134,151 | $ | 866,589 | $ | 1,000,740 |
(1) | Excludes share repurchases for the settlement of taxes related to equity awards of $180, $447, and $770 for fiscal years 2017, 2016 and 2015, respectively. |
EXHIBIT NUMBER | DESCRIPTION OF EXHIBITS | FILINGS REFERENCED FOR INCORPORATION BY REFERENCE | ||
10.1* | Filed herewith | |||
10.2* | Filed herewith | |||
10.3* | Filed herewith | |||
10.4* | Filed herewith | |||
31.1 | Filed herewith | |||
31.2 | Filed herewith | |||
32.1 | Filed herewith | |||
32.2 | Filed herewith | |||
101.INS | XBRL Instance Document | Filed herewith | ||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith |
Date: | May 3, 2019 | BLOOMIN’ BRANDS, INC. | |
(Registrant) | |||
By: /s/ Christopher Meyer | |||
Christopher Meyer Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 10.1 |
• | Medical Benefits Plan |
• | Annual Executive Medical Check-Up |
• | Salaried Short-Term Disability Insurance |
• | Salaried Long-Term Disability Insurance |
• | Company Paid Group Term Life Insurance |
• | Company Paid Accidental Death and Dismemberment |
• | Dental Benefits Plan |
• | Vision Benefits Plan |
• | Non-Qualified Deferred Compensation Plan |
• | Comp Meal Benefit Program |
/s/ Jeff Carcara | 4/8/2019 | |
Jeff Carcara | Date |
Exhibit 10.2 |
THE COMPANY: | ||||||
BLOOMIN' BRANDS, INC. | ||||||
Attest: | ||||||
By: | /s/ Kelly Lefferts | By: | /s/ Pablo Brizi | |||
WITNESSES: | THE EXECUTIVE | |||||
/s/ Kelly Lefferts | /s/ Elizabeth A. Smith | |||||
Witness | Elizabeth A. Smith | |||||
Kelly Lefferts | ||||||
Print Witness Name | ||||||
/s/ Claire Whitehurst | ||||||
Witness | ||||||
Claire Whitehurst | ||||||
Print Witness Name |
• | Hilton Worldwide Holdings, Inc. |
• | Federal Reserve Bank of Atlanta |
• | U.S. Fund for UNICEF |
• | H. Lee Moffitt Cancer Center & Research Institute |
Signature: | Date signed: | ||||||||
Bloomin' Brands, Inc. | |||||||||
Name: | |||||||||
Title: | |||||||||
Date: | |||||||||
Exhibit 10.3 |
i. | The Executive or the Executive’s estate, as appropriate, shall be entitled to receive (A) the base salary provided for herein up to and including the effective date of termination, prorated on a daily basis, (B) any vested benefits in tax-qualified pension plans maintained by the Company or other amounts accrued and payable under any employee benefit plan, each pursuant to Section 8 above, and (C) any business expenses incurred by the Executive pursuant to Section 10 above but unreimbursed on the date of termination, provided that such expenses and required substantiation and documentation are submitted under Company policy (all of the foregoing, payable subject to the timing limitations described herein, “Final Compensation”). |
ii. | All equity awards previously granted to Executive that are still outstanding shall be forfeited, except to the extent otherwise provided in the applicable award agreement. |
EXECUTIVE | ||||||||||||||||
/s/ Kelly Lefferts | /s/ David J. Deno | |||||||||||||||
Witness | David J. Deno | |||||||||||||||
Kelly Lefferts | ||||||||||||||||
Printed Name of Witness | ||||||||||||||||
/s/ Claire Whitehurst | ||||||||||||||||
Witness | ||||||||||||||||
Claire Whitehurst | ||||||||||||||||
Printed Name of Witness | ||||||||||||||||
COMPANY | ||||||||||||||||
Attest: | BLOOMIN’ BRANDS, INC., a Delaware corporation | |||||||||||||||
By: | /s/ Kelly Lefferts | By: | /s/ Pablo Brizi | |||||||||||||
Kelly Lefferts, Secretary | Name: Title: | Pablo Brizi SVP, Chief Human Resources Officer |
Signature: | Date signed: | |||||||||
Name: | David J. Deno | |||||||||
Bloomin’ Brands, Inc. | Date signed: | |||||||||
By: | ||||||||||
Name: | ||||||||||
Title: |
Exhibit 10.4 |
• | Medical Benefits Plan |
• | Annual Executive Medical Check-Up |
• | Salaried Short-Term Disability Insurance |
• | Salaried Long-Term Disability Insurance |
• | Company Paid Group Term Life Insurance |
• | Company Paid Accidental Death and Dismemberment |
• | Dental Benefits Plan |
• | Vision Benefits Plan |
• | Non-Qualified Deferred Compensation Plan |
• | Comp Meal Benefit Program |
/s/ Chris Meyer | 03/07/19 | |
Chris Meyer | Date |
1. | I have reviewed this Quarterly Report on Form 10-Q of Bloomin’ Brands, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material 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; |
3. | 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; |
4. | 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: | May 3, 2019 | /s/ David J. Deno |
David J. Deno | ||
Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Bloomin’ Brands, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material 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; |
3. | 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; |
4. | 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: | May 3, 2019 | /s/ Christopher Meyer |
Christopher Meyer | ||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
(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: | May 3, 2019 | /s/ David J. Deno |
David J. Deno | ||
Chief Executive Officer (Principal Executive Officer) |
(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: | May 3, 2019 | /s/ Christopher Meyer |
Christopher Meyer | ||
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
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