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

FORM 8-K/A

CURRENT REPORT

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

Date of Report (Date of earliest event reported)  October 31, 2013

BLOOMIN’ BRANDS, INC.
(Exact name of registrant as specified in its charter)

 	 	 	
Delaware	001-35625	20-8023465	
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer
Identification No.)	

2202 North West Shore Boulevard, Suite 500, Tampa, Florida 33607
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code  (813) 282-1225

 N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 	 	
o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 	 	
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 	 	
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 	 	
o 	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 	 	 	 	 	

EXPLANATORY NOTE

This Amendment No. 1 to Current Report on Form 8-K is being filed to amend the Current Report on Form 8-K (the “Initial 8-K”) dated October 31, 2013 and filed with the Securities and Exchange Commission on November 4, 2013 by Bloomin’ Brands, Inc. (the “Company”) to include the financial information referred to in Item 9.01(a) and (b) below relating to the Company’s acquisition on November 1, 2013 of a controlling interest in PGS Consultoria e Serviços Ltda., in accordance with the Quota Purchase and Sale Agreement entered into on October 31, 2013 by and among the Company, Outback Steakhouse Restaurantes Brasil S.A. (formerly known as Bloom Holdco Participaçơes Ltda.) (“Purchaser”), PGS Participaçơes Ltda. (“PGS Par”), the equity holders of PGS Par, PGS Consultoria e Serviços Ltda., and Bloom Participaçơes Ltda., parent company of Purchaser. The Company hereby amends Item 9.01 of the Initial 8-K to include previously omitted financial information and related exhibits.

2

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited consolidated statement of financial position of PGS Consultoria e Serviços Ltda. and its subsidiaries as of December 31, 2012 and audited consolidated statements of income and comprehensive income, changes in members’ equity and cash flows of PGS Consultoria e Serviços Ltda. for the year ended December 31, 2012, and the notes thereto and the independent auditors’ report thereon of Ernst & Young Auditores Independentes S.S. are filed as Exhibit 99.1 to this report and incorporated herein by reference.

The unaudited condensed consolidated statement of financial position of PGS Consultoria e Serviços Ltda. as of September 30, 2013 and unaudited condensed consolidated statements of income and comprehensive income and cash flows of PGS Consultoria e Serviços Ltda. for the nine months ended September 30, 2013 and 2012, and the notes thereto are filed as Exhibit 99.2 to this report and incorporated herein by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2012, unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2013, unaudited pro forma condensed combined balance sheets as of September 30, 2013, and the notes thereto are filed as Exhibit 99.3 to this report and incorporated herein by reference.

(d) Exhibits.

 	 	 	 	
 	Exhibit
Number	 	 
Description	
 	 	 	 	
 	23.1	 	Consent of Ernst & Young Auditores Independentes S.S.	
 	 	 	 	
 	99.1	 	Audited consolidated statement of financial position of PGS Consultoria e Serviços Ltda. and its subsidiaries as of December 31, 2012 and audited consolidated statements of income, comprehensive income and changes in members’ equity and cash flows of PGS Consultoria e Serviços Ltda. for the year ended December 31, 2012, and the notes thereto and the independent auditors’ report thereon of Ernst & Young Auditores Independentes S.S.	
 	 	 	 	
 	99.2	 	Unaudited condensed consolidated statement of financial position of PGS Consultoria e Serviços Ltda. and its subsidiaries as of September 30, 2013 and unaudited condensed consolidated statements of income and comprehensive income and cash flows of PGS Consultoria e Serviços Ltda. for the nine months ended September 30, 2013 and 2012, and the notes thereto.	
 	 	 	 	
 	99.3	 	Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2012, unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2013, unaudited pro forma condensed combined balance sheet as of September 30, 2013, and the notes thereto.	

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	 	 	
                                          	                                         	BLOOMIN’ BRANDS, INC.	
 	 	(Registrant)	

 Date: January 17, 2014	 	By:	/s/ Joseph J. Kadow	
 	 	 	Joseph J. Kadow	
 	 	 	Executive Vice President and Chief Legal Officer	

4

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference of our report dated January 8, 2014, with respect to the consolidated financial statements of PGS Consultoria e Serviços Ltda. for the year ended December 31, 2012 in the Registration Statements on Form S-8 (No. 333-183270 and No. 333-187035) of Bloomin’ Brands, Inc., appearing in this Current Report on Form 8-K/A of Bloomin’ Brands, Inc.

Săo Paulo, Brazil, January 17, 2014

ERNST & YOUNG
Auditores Independentes S.S.
CRC - 2SP015199/O-6

/s/ Julio Braga Pinto
Julio Braga Pinto
Accountant CRC-1SP209957/O-2

Exhibit 99.1

 	
 	 	 	
 	Consolidated Financial Statements	 	
 	 	 	
 	PGS Consultoria e Serviços Ltda.	 	

 	December 31, 2012	 	
 	with Report of Independent Auditors	 	

PGS Consultoria e Serviços Ltda.

Consolidated financial statements

December 31, 2012

Contents

Report of independent auditors on the consolidated financial statements	1	

Consolidated financial statements	 	
 	 	
Consolidated balance sheet	3	
Consolidated statement of income	5	
Consolidated statement of comprehensive income	6	
Consolidated statement of changes in members’ equity	7	
Consolidated statement of cash flows	8	
Notes to consolidated financial statements	9	

Report of independent auditors on the consolidated financial statements

To the Management and Members of
PGS Consultoria e Serviços Ltda.
Sao Paulo - SP

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of PGS Consultoria e Serviços Ltda. (the “Company”), which comprise the consolidated statement of financial position as of December 31, 2012, and the related consolidated statements of income and comprehensive income, changes in members’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with accounting practices adopted in Brazil, this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

1

Basis for Qualified Opinion

The Company omitted financial statements for a preceding comparative period. In our opinion, disclosures of comparative financial statements and related information are required by the accounting practices adopted in Brazil, as promulgated by the Brazilian Accounting Standards Board. The omission of comparative financial statements and related disclosures represent in an incomplete presentation of the Company's financial statements.

Qualified Opinion

In our opinion, except for the matter described in the Basis for Qualified Opinion paragraph, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of PGS Consultoria e Serviços Ltda. as of December 31, 2012, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting practices adopted in Brazil.

Other Matter

The accounting practices adopted in Brazil differ, in certain significant aspects, from the accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 19 to the consolidated financial statements.

Săo Paulo, Brazil, January 8, 2014

ERNST & YOUNG
Auditores Independentes S.S.
CRC - 2SP015199/O-6

/s/ Julio Braga Pinto
Julio Braga Pinto
Accountant CRC-1SP209957/O-2

2

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated balance sheet
December 31, 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	
Assets	 	 	
Current assets	 	 	
Cash and cash equivalents (Note 5)	 	22,721	
 	
Trade accounts receivable (Note 6)	 	23,780	
 	
Inventories (Note 7)	 	14,628	
 	
Recoverable taxes	 	476	
 	
Advances from suppliers	 	1,237	
 	
Prepaid expenses	 	956	
 	
Other	 	4,403	
 	
Total current assets	 	68,201	

Non-current assets	 	 	
Transactions with related parties (Note 10)	 	314	
 	
Judicial deposits (Note 12)	 	5,503	
 	
Deferred income tax and social contribution (Note 13)	 	10,124	
 	
 	 	15,941	

Properties, fixtures and equipments (Note 8)	 	121,947	
 	
Intangible assets (Note 9)	 	10,151	
 	
 	 	132,098	
 	
Total non-current assets	 	148,039	

 	 	 	

 	 	 	

 	 	 	

Total assets	 	216,240	

3

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated balance sheet (Continued)
December 31, 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	
Liabilities and members’ equity	 	 	
Current liabilities	 	 	
Loans (Note 11)	 	34	
 	
Trade accounts payable	 	16,271	
 	
Rental payable	 	2,280	
 	
Payroll, provisions and social charges	 	13,301	
 	
Income tax and social contribution payable	 	1,684	
 	
Taxes and contributions payable	 	5,013	
 	
Royalties payable (Note 10)	 	2,239	
 	
Franchise fees payable (Note 10)	 	572	
 	
Deferred rentals	 	132	
 	
Current portion of accrued buyout liability	 	1,577	
 	
Accounts payable to non-controlling partners	 	2,444	
 	
Other	 	4,773	
 	
Total current liabilities	 	50,320	

Non-current liabilities	 	 	
Accrued buyout liability	 	6,638	
 	
Non-controlling partner deposit	 	2,667	
 	
Transactions with related parties (Note 10)	 	1,127	
 	
Commitments and contingencies (Note 12)	 	16,061	
 	
Deferred rentals	 	1,721	
 	
Other	 	3,463	
 	
Total non-current liabilities	 	31,677	

 	
Members’ equity (Note 14)	 	 	
Issued capital	 	21,864	
 	
Retained earnings	 	112,379	
 	
 	 	134,243	

 	
Total liabilities and members’ equity	 	216,240	

See accompanying notes.

4

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statement of income
For the year ended December 31, 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	
Net revenue from restaurant sales	 	466,928	
 	
Cost of sales	 	(141,519	)	
Gross profit	 	325,409	

Operating expenses	 	
 	
Restaurant payroll expenses (Note 3)	 	(100,020	)	
Operating stores expenses	 	(54,654	)	
Royalties expenses (Note 10)	 	(23,292	)	
Administrative fee - credit cards/tickets	 	(11,049	)	
Depreciation and amortization	 	(16,470	)	
Loss on impairment of property, fixture and equipment (Note 8)	 	(170	)	
Pre-opening expenses	 	(3,787	)	
Corporate payroll expenses	 	(16,569	)	
General and administrative expenses	 	(22,624	)	
Other operating expenses, net (Note 18)	 	(30,865	)	
 	 	(279,500	)	
 	 	 	
Financial income	 	1,918	
 	
Financial expense	 	(1,807	)	
 	 	111	

Income before income tax and social contribution	 	46,020	

Current income tax and social contribution (Note 13)	 	(26,106	)	
Deferred income tax and social contribution (Note 13)	 	4,348	

Net income for the year	 	24,262	

See accompanying notes.

5

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statement of comprehensive income
For the year ended December 31, 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	
Net income for the year	 	24,262	
 	
Other comprehensive income	 	—	
 	
Income tax effect	 	—	
 	
Total comprehensive income for the year, net of tax	 	24,262	

See accompanying notes.

6

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statements of changes in members’ equity
For the year ended December 31, 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	 	 	 	 	 	 	
 	 	Issued
Capital	 	Retained earnings	 	Total	
 	 	 	 	 	 	 	
Balances as at December 31, 2011	 	21,864	
 	 	88,117	
 	 	109,981	

Net income for the year	 	—	
 	 	24,262	
 	 	24,262	

Balances as at December 31, 2012	 	21,864	
 	 	112,379	
 	 	134,243	

See accompanying notes.

7

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statement of cash flows
For the year ended December 31, 2012
(In thousands of Brazilian reais)

 	 	 	 	
Cash flow from operating activities	 	 	
Income before income tax and social contribution	 	46,020	
 	
Adjustments to reconcile income before tax to net cash flows:	 	 	
Depreciation and amortization	 	16,470	
 	
Provision for contingency	 	9,203	
 	
Provision for CIDE	 	1,220	
 	
Accrued buyouts	 	(341	)	
Disposal of intangibles	 	—	
 	
Loss on impairment of property, fixture and equipment	 	170	
 	
 	 	72,742	
 	
Working capital adjustments:	 	 	
(Increase) decrease in assets	 	 	
Trade accounts receivable	 	(8,227	)	
Inventories	 	(4,563	)	
Recoverable taxes	 	(250	)	
Advances from suppliers	 	(1,172	)	
Prepaid expenses	 	(54	)	
Judicial deposits	 	(1,500	)	
Other assets	 	(3,046	)	
Increase (decrease) in liabilities	 	 	
Trade accounts payable	 	6,273	
 	
Rental payable	 	(96	)	
Payroll, provisions and social charges	 	2,435	
 	
Taxes and contributions payable	 	333	
 	
Royalties and franchise fees payable	 	569	
 	
Deferred rent	 	581	
 	
Accounts payable to non-controlling partners	 	1,367	
 	
Other liabilities	 	5,313	
 	
Transactions with related parties, net	 	162	
 	
Cash flow from operating activities	 	70,867	
 	
Income tax and social contribution paid	 	(26,979	)	
Net cash flows from operating activities	 	43,888	

Investing activities	 	 	
Purchase of property, fixture and equipment	 	(36,368	)	
Purchase of intangible	 	(4,247	)	
Net cash flows used in investing activities	 	(40,615	)	
 	 	 	
Financing activities	 	 	
Proceeds from loans	 	—	
 	
Repayment of loans	 	(2,460	)	
Receipt of non-controlling partner deposit	 	76	
 	
Net cash flows from/(used in) financing activities	 	(2,384	)	
 	 	 	
Increase in cash and cash equivalents	 	889	

 	
Cash and cash equivalents at January 1	 	21,832	
 	
Cash and cash equivalents at December 31	 	22,721	

Net increase in cash and cash equivalents	 	889	
 	
See accompanying notes.

8

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)

1.	Corporate information	

PGS Consultoria e Serviços Ltda. (“PGS Consultoria” or the “Parent Company”) was formed in May 1997 and is headquartered at Av. Dr. Chucri Zaidan, 80, 8 th floor, in the City and State of Săo Paulo.

PGS Consultoria is the holding company of the CLS Companies (collectively referred as the “Group”). The main purpose of the CLS Companies (“CLS”), which is comprised of (i) CLS Săo Paulo Ltda. (“CLS SP”); (ii) CLS Restaurantes Rio de Janeiro Ltda. (“CLS RJ”); (iii) CLS Restaurantes Brasília Ltda. (“CLS BSB”); and (iv) CLS Restaurantes do Sul Ltda. (“CLS do Sul”), is to explore and manage restaurants under the trademark “Outback Steakhouse” in Brazil.

“Outback Steakhouse” is an Australian steakhouse concept, which is open for lunch and dinner. Although beef and steak items make up a good portion of the menu, the concept offers a variety of chicken, ribs, seafood, and pasta dishes. The Group’s strategy is to differentiate its restaurants by emphasizing consistently high-quality food, concentrated service, generous portions at affordable prices and a casual atmosphere suggestive of the Australian Outback.

CLS operates 41 (forty-one) restaurants altogether, in twenty different cities, being: (i) 8 (eight) in Rio de Janeiro and 1 (one) in Niterói, State of Rio de Janeiro, and 1 (one) in Vitoria, State of Espirito Santo (CLS RJ); (ii) 11 (eleven) in Săo Paulo, 2 (two) in Campinas, 1(one) in Barueri, 1 (one) in Săo Bernado do Campo, 1(one) in Săo Caetano do Sul, 1(one) in Săo José dos Campos, 1 (one) in Ribeirăo Preto, 1 (one) in Guarulhos and 1(one) in Jundiaí, State of Săo Paulo (CLS SP); (iii) 2 (two) in Brasília, Federal District, 1 (one) in Belo Horizonte, State of Minas Gerais, 2 (two) in Salvador, State of Bahia, 1 (one) in Goiânia, State of Goiás and 1 (one) in Recife, State of Pernambuco (CLS BSB); and (iv) 1 (one) in Porto Alegre, State of Rio Grande do Sul, 2 (two) in Curitiba, State of Paraná and 1 (one) in Florianópolis, State of Santa Catarina (CLS do Sul).

The consolidated financial statements for the year ended December 31, 2012 were authorized for issue by the Parent Company’s management on January 8, 2014.

9

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
2.	Basis of preparation	

The consolidated financial statements were prepared and are presented in accordance with the accounting practices adopted in Brazil, which comprise the pronouncements, interpretations and guidance issued by the Brazilian Accounting Pronouncements Committee ( Comitê de Pronunciamentos Contábeis  (“CPC”)), which are converged to the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).

The preparation of the accompanying consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts. These estimates were determined based on objective and subjective factors, considering management’s judgment to determine the adequate amounts to be recorded in the consolidated financial statements.

Significant items subject to such estimates and assumptions include selection of useful lives of property, fixtures and equipment and analysis of their recoverability in operations, credit risk assessment to determine the allowance for doubtful accounts, as well as analysis of other risks to determine other provisions, including those set up for contingencies. Settlement of transactions involving these estimates may result in amounts significantly different from those recorded in the consolidated financial statements due to the uncertainties inherent in the estimation process. The Group reviews its estimates and assumptions at least annually.

The consolidated financial statements presented herein do not include the Parent Company’s stand-alone financial statements and are not intended to be used for statutory purposes.

3.	Basis of consolidation	

The consolidated financial statements include the operations of PGS Consultoria and the “CLS Companies”. The details of the participation in CLS Companies comprised of CLS SP, CLS RJ, CLS BSB and CLS do Sul, are summarized as follow:

 	 	 	 	 	 	 	
 	 	Issued	 	Retained	
 	 	capital(1)	 	earnings(2)	
CLS SP	 	90.31	%	 	100	%	
CLS RJ	 	96.37	%	 	100	%	
CLS BSB	 	93.92	%	 	100	%	
CLS do Sul	 	95.38	%	 	100	%	

10

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
3.	Basis of consolidation (Continued)	

(1)	The issued capital of the CLS Companies is shared primarily between PGS Consultoria, proprietors (stores’ managing partners) and JV’s (operating partners who supervise the Rio de Janeiro, Săo Paulo, Brasília and South Region stores), in accordance with their respective interests.	

(2)	According to each individual partners’ association document known as “Protocolo de Entendimentos” (Memorandum of Understanding), dividends are distributed to non-controlling partners (proprietors and JV’s) based on certain criteria, such as a percentage of the pre-tax income results of their respective restaurants and supervision areas and other, being 100% of the remaining undistributed earnings of PGS Consultoria. Such dividends are recognized as compensation expense within the restaurant payroll expenses account for the period earned by the non-controlling partners. Further detail from the income statement is shown in the following table.	

 	
 	 	 	 	
Restaurant Payroll Expense	 	 	
Operating Payroll Expense	 	94,145	
 	
Compensation Expense (Proprietors & JV’s)	 	5,875	
 	
 	 	100,020	

The financial statements of the CLS Companies are prepared for the same reporting period as the Parent Company. Accounting policies of CLS Companies have been adjusted to ensure consistency with the accounting policies adopted by the Group. All intra-group balances, income and expenses, unrealized gain and losses and dividends resulting from intra-group transactions have been eliminated in consolidation.

Capital contributions to the CLS Companies received from the non-controlling partners are recorded as long-term liabilities in the line item “non-controlling partner deposit”. Monthly payments made pursuant to the Memorandum of Understanding are paid as dividends and are recognized as compensation expense in the period earned by the non-controlling partners.

4.	Summary of significant accounting policies	

4.1.	Revenue recognition	

Revenue is recognized to the extent that it is probable that the economic benefits are likely to flow to the Group and the revenue can be reliably measured, regardless of when payment is made. Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes.

Revenue from sales is recognized when the significant risks and rewards have passed to the buyer. No revenue is recognized if there are significant uncertainties regarding its collection.

11

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

4.2.	Foreign currency transactions (Continued)	

The consolidated financial statements are presented in Brazilian Reais, which is also the Parent Company’s and the CLS Companies’ functional currency. Foreign currency transactions are initially recorded by the Group entities at the functional currency exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in foreign currency are translated at the functional currency exchange rate on the reporting date. All differences are recorded to the income statement.
 	 	
4.3.	Financial instruments	

Financial instruments are only recognized as of the date when the Group becomes a part of the contract provisions of financial instruments. Once recognized, they are initially recorded at their fair value plus transaction costs that are directly attributable to their acquisition or issuance, except in the case of financial assets and liabilities classified in the category at fair value through profit or loss (“P&L”), when such costs are directly charged to P&L for the period. Subsequent measurement of financial assets and liabilities is determined by their classification at each balance sheet.

The Group’s most significant financial assets are cash and cash equivalents and accounts receivable, whereas the main financial liabilities are comprised of trade accounts payable.
 	 	
4.4.	Cash and cash equivalents	

Cash and cash equivalents include bank account balances and short-term investments redeemable within three months or less from the date of acquisition, subject to insignificant risk of change in their market value.
 	 	
4.5.	Trade accounts receivable	

Trade accounts receivable are shown at realization amounts, and refer primarily to the amounts to be received from credit card companies due to the sales in the restaurants.

12

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

4.6.	Inventories	

Inventories are valued at the lower of cost and net realizable value. Inventories consist of food and beverages, and are stated at the average purchase cost.
 	 	
4.7.	Property, fixtures and equipment	

Property, fixtures and equipment are stated at acquisition cost, net of accumulated depreciation.

Improvements to leased properties are depreciated over the lease term. Depreciation is computed on the straight-line method over the following estimated useful lives:

 	 	 	
Furniture and fixtures	 	10 years	
Computers	 	5 years	
Equipment and facilities	 	10 years	
Buildings	 	25 years	
Leasehold improvements	 	10 to 15 years	

The CLS companies capitalize all direct costs incurred to construct its restaurants. Upon restaurant opening, these costs are depreciated and charged to the consolidated statements of income. The amount of interest capitalized in connection with restaurant construction was immaterial in all periods.

An item of property, fixtures and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gains or losses arising on derecognition of the asset is included in the consolidated statements of income when the asset is derecognized.

The assets’ residual value, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.
 	 	
4.8.	Intangible assets	

Intangible assets consist primarily of software and franchise fees. Intangible assets acquired separately are measured on initial recognition at cost. After the initial recognition, intangible assets are presented at cost, net of accrued amortization and impairment losses.

13

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

4.8.	Intangible assets (Continued)	

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the useful economic life. Both finite and indefinite intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Gains or losses arising from derecognition of an intangible asset are included in the consolidated statements of income when the asset is derecognized.
 	 	
4.9.	Loans	

Loans are recognized initially at fair value, plus directly attributable transaction costs. Following the initial recognition, loans subject to interest are measured at the amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement at the time when the liabilities are written off, as well as during the amortization process according to the effective interest rate method.
 	 	
4.10.	Other assets and liabilities	

Liabilities are recognized in the balance sheet when the Group has a legal or constructive obligation arising from past events, the settlement of which is expected to result in an outflow of economic benefits. Provisions are recorded reflecting the best estimates of the risk involved. An asset is recognized in the balance sheet when it is likely that its economic benefits will flow to the Group and its cost or value may be safely measured.

Assets and liabilities are classified as current when their realization or settlement is likely to occur within the following twelve months. Otherwise they are stated as noncurrent.
 	 	
4.11.	Taxation	

Taxes on sales

Revenues from restaurant sales are subject to the following taxes and contributions, at the rates shown below:

 	 	
State VAT - ICMS	From 2% to 25%	
Social Contribution Tax on Gross Revenue for Social Integration Program - PIS	From 0.65 to 1.65%	
Social Contribution Tax on Gross Revenue for Social Security Funding - COFINS	From 3.00 to 7.60%	
Service Tax - ISS	From 2% to 5%	

14

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

4.11.	Taxation (Continued)	

Taxes on sales (Continued)

The restaurant sales are presented net from taxes and contributions deductions.

Taxation on income includes the income tax and the social contribution. CLS SP, CLS RJ and CLS Brasília record the income tax and social contribution based on taxable income. Income tax is calculated at a rate of 15%, plus a surtax of 10% on taxable profit exceeding R$ 240 over 12 months, whereas social contribution tax is computed at a rate of 9% on taxable profit, both recognized on an accrual basis.

Income tax and social contribution - current

Therefore, additions to the book profit of expenses, temporarily nondeductible, or exclusions from revenues, temporarily nontaxable, for computation of current taxable profit generate deferred tax credits or debits.

The computation for income tax and social contribution for the CLS Sul was calculated in accordance with the presumed profits method, which basis and rates are set forth in the tax legislation in force.

Advances or amounts subject to offset are stated in current or noncurrent assets, according to the estimate of their realization.

Income tax and social contribution - deferred

Deferred income tax and social contribution are generated by tax loss carryforwards and by temporary differences on the balance sheet date between the tax basis of assets and liabilities and their book values.

The book value of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

15

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

 	 	
4.11.	Taxation (Continued)	

Income tax and social contribution - deferred (Continued)

Deferred income tax and social contribution assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted at the reporting date.

Deferred tax assets and liabilities are offset if a legally enforceable right to offset exists and the deferred taxes relate to the same taxable entity and the same taxation authority.
 	 	
4.12.	Judgments, estimates and significant accounting assumptions	

Judgments

The preparation of the consolidated financial statements requires management to make judgments and estimates, and adopt assumptions that affect the amounts stated for revenues, expenses, assets and liabilities, as well as the disclosures of contingent liabilities on the financial statement date.

However, uncertainties regarding these estimates and assumptions might lead to results that require significant adjustments to the book value of an asset or liability affected in future periods.

Estimates and assumptions

Major assumptions related to sources of uncertainty in future estimates and other relevant sources of uncertainty in estimates on the balance sheet date that entail significant risk of material adjustment to the book value of assets and liabilities in the next financial year are discussed as follows.

16

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

4.12.	Judgments, estimates and significant accounting assumptions (Continued)	

Impairment loss on nonfinancial assets

Impairment loss exists when the carrying value of an asset or cash-generating unit exceeds its recoverable amount, which is the higher of fair value less sales costs and value in use. The fair value less sales cost is calculated based on available information about similar asset sales transactions or market-observable prices less additional costs to dispose of the asset item. In 2012, the Group recorded impairment loss in the amount of R$ 170 related to leasehold improvements located at the stores and office spaces that the Group plans to vacate and re-allocate based on landlords agreements. No other evidence indicating that the asset net book values exceeding their recoverable amounts has been identified.

Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities. The amount of such provisions is based on several factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority.

Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax strategies.

The Group has tax loss carryforwards for both income tax and social contribution amounting to approximately R$ 6,564 at December 31, 2012. These losses, which relate to the Parent Company that has a history of taxable losses, do not expire and may not be used to offset taxable income elsewhere in the Group. Tax offsettable losses generated in Brazil may be offset against future taxable profit up to 30% of the taxable profit determined in any given year. CLS SP, CLS RJ and CLS Brasília have no tax losses, but taxable temporary differences.

17

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

4.12.	Judgments, estimates and significant accounting assumptions (Continued)	

Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the income statement net of any reimbursement.

Provisions are recorded in an amount considered sufficient by the Group’s management, supported by the opinion of their legal advisors, to cover probable losses on lawsuits. Further details on contingencies are disclosed in Note 12.
 	 	
4.13.	Non-controlling partner distributions and buyouts	

The proprietors and the JVs are required to sign a five to seven-year agreement Memorandum of Understanding and to purchase an ownership interest in the CLS Companies. This ownership interest gives the proprietor and the JVs the right to receive distributions based on a percentage of the after-tax income results of their respective restaurants for the duration of the agreement.

PGS Consultoria has the option to purchase the non-controlling partners’ interests after a five to seven-year period based on the terms specified in the agreement.

The Group estimates future purchases of proprietors’ and JVs’ interests using current information on restaurant performance and records the non-controlling partner obligations in the line item “accrued buyout liability” in the consolidated balance sheet. In the period the Group purchases the proprietors’ and JVs’ interest, an adjustment is recorded to recognize any remaining expense associated with the purchase and reduce the related accrued buyout liability.

Distributions made to proprietors and JVs are included in “restaurant payroll expenses” and “general and administrative expenses,” respectively, in the consolidated statement of income.

18

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Summary of significant accounting policies (Continued)	

4.14	Operating Leases	

Rent expense for the Group’s operating leases, which generally have escalating rentals over the term of the lease and may include potential rent holidays, is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably assured. The initial lease term includes the “build-out” period of the Group’s leases, which is typically before rent payments are due under the terms of the lease. The difference between rent expense and rent paid is recorded as deferred rent and is included in the consolidated balance sheet. Payments received from landlords as incentives for leasehold improvements are recorded as deferred rent and are amortized on a straight-line basis over the term of the lease as a reduction of rent expense. Lease termination fees, if any, and future obligated lease payments for closed locations are recorded as an expense in the period that they are incurred.
 	 	
4.15.	Pre-Opening Expenses	

Non-capital expenditures associated with opening new restaurants are expensed as incurred.
 	 	
4.16.	New accounting pronouncements	

The Group adopted all pronouncements, revised pronouncements and interpretations issued by CPC and IASB that were effective as of December 31, 2012. Regarding IAS 12 (R) - Income Taxes, IFRS 1(R) - First-time Adoption of International Financial Reporting Standards and IFRS 7 (R) - Financial Instruments: Disclosures, which were revised by IASB and first adopted in 2012, without any impact on the consolidated financial statements of the Group as at December 31, 2012.

Regarding IAS 1 (R) - Presentation of Financial Statements, IAS 19 (R) - Employee Benefits, IAS 32 (R) - Offsetting Financial Assets and Financial Liabilities, IFRS 1 (R) - First-time Adoption of International Financial Reporting Standards and IFRS 7 (R) - Financial Instruments: Disclosures, IFRS 9 - Financial Instruments: Classification and Measurement, IFRS 10 - Consolidated Financial Statements, IFRS 11 - Joint Arrangements, IFRS 12 - Disclosure of Interests in Other Entities, IFRS 13 - Fair Value Measurement, IAS 27 (R) - Consolidated and Separate Financial Statements and IAS 28 (R) - Investments in Associates and Joint Ventures, which are new or revised pronouncements issued by CPC and IASB prior to 2012, adoption of which is effective for fiscal years beginning on or after January 1, 2013, the Group did not assess if the adoption of these pronouncements will have any impact on its consolidated financial statements.

19

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
5.	Cash and cash equivalents	

 	
 	 	 	 	
Cash	 	638	
 	
Bank deposits	 	612	
 	
Short term investments	 	21,471	
 	
 	 	22,721	

Cash equivalents consist of investments that are readily convertible to cash with an original maturity date of three months or less.

6.	Trade accounts receivable	

Trade accounts receivable consist mainly of amounts receivable from credit card companies, as follows:

 	 	 	 	
Redecard (Mastercard/Diners/Credicard)	 	6,292	
 	
Visanet (Visa/Visa electron)	 	12,052	
 	
American express	 	1,665	
 	
Ticket Refeiçăo	 	1,865	
 	
Other	 	1,906	
 	
 	 	23,780	

No allowance for doubtful accounts has been recorded due to the remote chances of losses on receivables.

7.	Inventories	

 	
 	 	 	 	
Kitchen utensils	 	2,058	
 	
Food and beverage	 	3,172	
 	
Inventories held by third-parties	 	5,544	
 	
Imports in transit	 	1,720	
 	
Other	 	2,134	
 	
 	 	14,628	

20

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
7.	Inventories (Continued)	

Inventory is counted at the end of every month and controlled in all stores and at the distribution center; expired inventories are disposed of immediately and recorded as expense. Inventories differences are adjusted within the month and against the cost of sales for such period, as this is a periodic inventory, everything on hand should be usable and therefore no risk of loss or expiration is expected.

8.	Property, fixtures and equipment	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Land	 	Furniture
and fixture	 	Computers	 	Equipment
and facilities	 	Buildings and Leasehold improvements	 	Construction
in progress	 	Total	
Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	3,363	
 	 	21,072	
 	 	7,012	
 	 	46,687	
 	 	72,682	
 	 	—	
 	 	150,816	
 	
Additions	 	—	
 	 	1,643	
 	 	1,428	
 	 	8,561	
 	 	14,996	
 	 	9,740	
 	 	36,368	
 	
Transfers	 	—	
 	 	1,585	
 	 	85	
 	 	610	
 	 	(658	)	 	(1,622	)	 	—	
 	
Balances at December 31, 2012	 	3,363	
 	 	24,300	
 	 	8,525	
 	 	55,858	
 	 	87,020	
 	 	8,118	
 	 	187,184	

Depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	—	
 	 	(7,532	)	 	(4,456	)	 	(17,428	)	 	(19,933	)	 	—	
 	 	(49,349	)	
Additions	 	—	
 	 	(2,707	)	 	(2,301	)	 	(5,030	)	 	(5,680	)	 	—	
 	 	(15,718	)	
Impairment	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(170	)	 	—	
 	 	(170	)	
Balances at December 31, 2012	 	—	
 	 	(10,239	)	 	(6,757	)	 	(22,458	)	 	(25,783	)	 	—	
 	 	(65,237	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net book value	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Balances at December 31, 2012	 	3,363	
 	 	14,061	
 	 	1,768	
 	 	33,400	
 	 	61,237	
 	 	8,118	
 	 	121,947	
 	
 Average annual depreciation rate	 	—	
 	 	10	%	 	20	%	 	10	%	 	4% to 10%	
 	 	—	

In 2012, the Group recorded impairment loss in the amount of R$ 170 related to leasehold improvements located at the stores and office spaces that the Group plans to vacate. No other evidence indicating that the asset net book values exceed their recoverable amounts has been identified.

21

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
9.	Intangible assets	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Software	 	Franchise
fees	 	Other	 	Total	
Cost	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	2,699	
 	 	3,450	
 	 	2,022	
 	 	8,171	
 	
Additions	 	2,916	
 	 	826	
 	 	505	
 	 	4,247	
 	
Balances at December 31, 2012	 	5,615	
 	 	4,276	
 	 	2,527	
 	 	12,418	

Amortization	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	(148	)	 	(1,018	)	 	(349	)	 	(1,515	)	
Additions	 	(515	)	 	(87	)	 	(150	)	 	(752	)	
Balances at December 31, 2012	 	(663	)	 	(1,105	)	 	(499	)	 	(2,267	)	
 	 	 	 	 	 	 	 	 	
Residual value	 	 	 	 	 	 	 	 	
Balances at December 31, 2012	 	4,952	
 	 	3,171	
 	 	2,028	
 	 	10,151	
 	
Average annual amortization rate	 	20	%	 	5	%	 	20	%	 	 	

Franchise fee

The Group has a franchise agreement with Outback Steakhouse International Investments Co. (“OSI”), which expires generally 20 years after the date the restaurant is opened. The Group has the option to renew the agreement for one consecutive term of 20 years, subject to certain conditions. Pursuant to the Agreement, the Group must operate the restaurant in strict conformity with the methods, standards and specifications prescribed by OSI, regarding training, staff, health standards, suppliers and advertising, among others. The Group is contractually bound to pay franchise fees of US$ 40 at the opening of each restaurant, and monthly royalties of 4% to 5% of net sales after the restaurant is opened. Royalty fees are charged to expenses as incurred.

22

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
10.	Transactions with related parties	

At December 31, 2012, the balance of transactions with related parties can be summarized as follows:

 	 	 	 	 	 	 	
 	 	Assets	 	Liabilities	
Current	 	 	 	 	
Royalties payable	 	 	 	 	
Outback Steakhouse International	 	—	
 	 	2,239	
 	
Franchise fees	 	 	 	 	
Outback Steakhouse International	 	—	
 	 	572	
 	
Total current	 	—	
 	 	2,811	

Noncurrent	 	 	 	 	
Accounts receivable/payable	 	 	 	 	
Outback Steakhouse International	 	314	
 	 	357	
 	
 	 	314	
 	 	357	

Other(1)	 	—	
 	 	770	
 	
Total noncurrent	 	314	
 	 	1,127	
 	
Total	 	314	
 	 	3,938	

(1)    This amount refers to transactions with non-controlling interest parties (restaurant proprietors).

 	 	 	 	 	 	 	
 	 	Royalties (i)	 	Financial results (ii)	
Outback Steakhouse International	 	23,292	
 	 	21	
 	
 	 	23,292	
 	 	21	

 	 	
(i)	Refer to the royalties calculated on the net revenues posted by the stores.	
 	 	
(ii)	Refer, basically, to the interest expenses and exchange variation on Outback Steakhouse International loans.	

OSI

The transactions between the Group and OSI consist of:
 	 	
•	The Group is contractually bound to pay franchise fees of US$ 40 at the opening of each restaurant and monthly royalties of 4% to 5% of net sales after the restaurant is opened. Monthly royalty fees are charged to expenses as incurred.	

23

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)

10.     Transactions with related parties (Continued)

Distribution of Profits - CLS Companies

Dividends paid to proprietors (stores’ managing partners) and to JVs (operating partners who supervise the Rio de Janeiro, Săo Paulo, Brasília and South Region stores) are distributed according to the criteria stated within each individual partner’s association document referred to as Memorandum of Understanding.

Partners are paid dividends according to a percentage of the after-tax income results (“ATI”) of their respective restaurants, as per their P&L statements. It is 7.5% of ATI for managing partners and 3% to 6% for operating partners. Members of top management have also received dividends based on certain monthly fixed amounts stipulated in the previous year’s budget submitted to and approved by OSI.

Based on the above and in accordance with local laws allowing actual distributions to be different than the exact amount owed to a partner, based on his/her members’ position, the CLS Companies distributed the following amounts to its partners during 2012:

 	 	 	 	
Proprietors (stores’ managing partners)	 	4,052	
 	
JVs (operating partners)	 	1,823	
 	
Executives	 	2,395	
 	
 	 	8,270	

Dividends paid to the non-controlling partners (proprietors and JVs) are recognized as compensation expense in the consolidated statements of income in the period earned. Additional detail is provided at Note 3.

There are no guarantees and allowances for doubtful accounts for loans and other transactions with related parties.

24

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
11.	Loans	

As of December 31, 2012 the Group has a R$ 34 outstanding loan balance with Banco Bradesco S.A. which is classified as a current obligation.

On January 10, 2011, CLS Brasília entered into a loan agreement with Banco Nordeste Brasil S.A.. The principal amount of the loan on that date was R$ 2,494 and was to be paid in 36 monthly installments of principal and interest beginning on February 10, 2012 and ending on January 10, 2015. The principal amount was subject to annual interest of 9.5%. The loan was guaranteed by PGS Consultoria. As of December 31, 2012 the Group has fully paid the balance of the loan with no penalties for early payments.

12. Commitments and contingencies

The Group is involved in tax, civil and labor lawsuits arising in the normal course of its activities. These matters are discussed at the administrative and judicial levels. Judicial deposits related to these matters are made, when applicable. The Group accrues for loss contingencies that are probable and reasonably estimable and this assessment is carried out based on the information available and on risk factors inherent to each process, in accordance with the opinion of the Group’s legal advisors. The Group generally does not accrue for legal costs expected to be incurred with a loss contingency until those services are provided.

Based on the information of its legal advisors and on the analysis of legal procedures pending judgment and controversy tax obligation, the Group has decided to set up a provision at an amount deemed sufficient to cover probable losses arising from unfavorable outcomes of lawsuits in progress, tax obligation challenges and tax assessments. Based on the opinion from external legal advisors, the Group has decided to constitute the provision in the amount of R$5,498 under the scenario of adopting the new amnesty program established by the State of Sao Paulo and Rio de Janeiro according to State Laws 58.811/12 and 6.357/12, respectively.

25

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)

12. Commitments and contingencies (Continued)

The most significant cases for the CLS Companies involve amounts totaling approximately R$ 5,573 (CLS SP). These lawsuits were filed by Secretaria de Fazenda do Estado de Săo Paulo seeking additional payments for ICMS under the taxpayer substitution system in addition to fines for noncompliance with other accessory obligations. The most significant case for PGS Consultoria, involves an amount totaling approximately R$ 1,913 and the tax authorities are arguing that the Group did not evidence the source of some amounts received in 1998, considered by the tax authorities as derived from sales of goods without taxation and without a tax invoice (ICMS Tax Assessment).

 	 	 	 	
Provisions for judicial and administrative processes	 	 	
Tax	 	11,828	
 	
Labor	 	4,233	
 	
 	 	16,061	

The table below depicts judicial deposits associated or not with legal contingencies classified in the noncurrent assets group.

 	 	 	 	
Judicial deposits	 	 	
Tax	 	4,891	
 	
Labor	 	612	
 	
 	 	5,503	

Changes in commitments and contingencies provisions for the year ended December 31, 2012 are as follows:

 	 	 	 	 	 	 	 	 	 	
 	 	Tax	 	Labor	 	Total	
Balance at December 31, 2011	 	3,538	
 	 	2,100	
 	 	5,638	
 	
(+) Supplemental provision	 	7,070	
 	 	1,633	
 	 	8,703	
 	
(+) Monetary restatement	 	—	
 	 	500	
 	 	500	
 	
(+) CIDE commitment	 	1,220	
 	 	—	
 	 	1,220	
 	
Balance at December 31, 2012	 	11,828	
 	 	4,233	
 	 	16,061	

26

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)

12. Commitments and contingencies (Continued)

The Group is questioning a matter related to the validity of the social contribution tax for intervention in the economic order (CIDE), established by Law, on the remittance of royalties. Management, supported by preliminary injunctions granted in its favor, is judicially paying this tax. The judicial deposits related to this matter amount to R$ 4,891 at December 31, 2012. The Group maintains a provision of R$ 4,758 related to this tax.

As of December 31, 2012, the Group’s external legal advisors estimate the chances of a final unfavorable outcome as “possible” in certain matters, primarily related to labor, civil and tax claims. The total possible contingencies that are uncertain at this time and could have a material adverse effect on the Group’s financial condition are R$ 15,501 as of December 31, 2012.

13.	Income tax and social contribution	

CLS do Sul has elected to calculate income tax and social contribution using the “presumed profits” method. Under the “presumed profits” method, taxable income is calculated as an amount equal to different percentages of gross revenue based on the activities of the taxpayer.

Under current Brazilian tax law, the percentages of the CLS Companies’ gross revenues are 8% for calculating income tax, and 12% for social contribution. The Parent Company, CLS SP, CLS RJ, and CLS BSB calculate their income tax and social contribution using the “actual profits” method, which is based on total taxable income.

Tax loss carry forwards through December 31, 2012 relating to income tax and social contributions were approximately R$ 6,564 comprised entirely of fiscal results of the Parent Company. These tax loss carry forwards can offset future taxable income. Brazilian tax laws restrict the offset of tax losses to 30% of taxable profits on an annual basis. These losses can be used indefinitely and are not impacted by a change in ownership of the Parent Company.
 	 	
13.1.	Components of income tax and social contribution provision	

 	
 	 	 	 	
Current income tax and social contribution	 	26,106	
 	
Deferred income tax and social contribution	 	(4,348	)	
 	 	21,758	

27

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
13.	Income tax and social contribution (Continued)	

13.2.	Reconciliation income tax and social contribution provision at statutory rate to effective rate	

 	
 	 	 	 	
Income before income tax and social contribution	 	46,020	

Income tax and social contribution at statutory rate of 34%	 	15,647	
 	
Benefits of utilizing presumed profits method of calculating of income tax and social contribution for CLS do Sul	 	(489	)	
Non-deductible expenses for minority partner distributions and buyouts	 	2,559	
 	
Other non-deductible expenses	 	1,916	
 	
Provisions arising from write-down of tax losses	 	1,786	
 	
Benefits of income excluded from income tax surcharge	 	(72	)	
Adjustment recognized in current year for current tax of prior years	 	266	
 	
Other	 	145	
 	
Effective income tax and social contribution provision	 	21,758	
 	
Effective rate	 	47.3	%	

13.3	Components of deferred income tax and social contribution	

 	
 	 	 	 	
Tax loss carry forward	 	2,764	
 	
Temporary differences	 	 	
Pre-opening costs	 	2,766	
 	
Provision for contingency	 	2,398	
 	
Lease	 	576	
 	
Provision for CIDE	 	1,506	
 	
Provision for bonus	 	971	
 	
PP&E basis difference	 	1,237	
 	
Other	 	834	
 	
 	 	13,052	
 	
Unrecognized deferred tax assets	 	(2,928	)	
 	 	10,124	

28

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
13.	Income tax and social contribution (Continued)	

13.3	Components of deferred income tax and social contribution (Continued)	

Deferred income tax and social contribution assets, resulting from tax loss carry forwards and temporary differences are recorded taking into consideration the probable realization thereof, based on projected future results of operations considering internal assumptions and future economic scenarios that are subject to change. These projections indicate that future operating results will provide taxable income for CLS SP, CLS RJ and CLS BSB. The unused credits reflect the assessment of the likelihood of realizing the deferred tax asset comprised of the tax loss carry forwards attributable to the Parent Company.

14.	Members’ equity	

14.1.	Capital stock	

At December 31, 2012, the Parent Company’s subscribed capital amounted to R$ 21,864, divided into 20,244,048 units of interest with par value of R$ 1.08 each, distributed as follows:

 	 	 	 	
 	 	Numbers of units of interest	
PGS Participaçơes Ltda.	 	10,122,024	
 	
OSI	 	10,122,024	
 	
 	 	20,244,048	

 	 	
14.2	Distribution of profits	

The Parent Company’s management decided to maintain profits for 2012 in retained earnings, to be later appropriated in a members’ meeting.

29

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
14.	Members’ equity (Continued)	

14.3.	Non-controlling interest (JV partners and proprietors)	

According to each individual partners’ association document known as Memorandum of Understanding, dividends are distributed to non-controlling partners (proprietors and JVs) based on certain criteria, such as a percentage of the pre-tax income results of their respective restaurants and supervision areas and other components, being 100% of the remaining undistributed earnings of PGS Consultoria’s results. These dividends are effectively paid and recognized as compensation expense and are not fully determined at each CLS’s results level rather on the individual store (proprietors) or group of stores (JV partners), therefore the amount of these dividends is recognized as Operating Expense in the income statement in the period earned by the non-controlling partners.

15.	Financial instruments	

The Group evaluated its financial assets and liabilities in relation to market value through available information available and appropriate evaluation methodologies. The interpretation of market data and the selection of valuation methods require extensive judgment and estimates to calculate the most appropriate realization value.

Consequently, the estimates presented do not necessarily show the amounts that may be realized in the market. The use of different market assumptions and/or methods may have a material effect on the estimated realization values.

The Group’s main financial instruments consist of cash and cash equivalents, trade accounts receivable and trade accounts payable.

Fair value measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and is a market-based measurement. To measure fair value, the Group incorporates assumptions that market participants would use in pricing the asset or liability, and utilizes market data to the maximum extent possible.

30

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
15.	Financial instruments (Continued)	

Set out below is a comparison by financial statement class of the book value and fair value of the Group’s financial instruments that are carried in the consolidated financial statements.

 	 	 	 	 	 	 	
Description	 	Book value	 	Fair value	
Financial assets	 	 	 	 	
Cash and cash equivalents	 	22,721	
 	 	22,721	
 	
Trade accounts receivable	 	23,780	
 	 	23,780	
 	
Recoverable taxes	 	476	
 	 	476	
 	
Credits from related parties	 	314	
 	 	314	
 	
Other assets	 	6,596	
 	 	6,596	
 	
 	 	53,887	
 	 	53,887	

Financial liabilities	 	 	 	 	
Trade accounts payable	 	16,271	
 	 	16,271	
 	
Rental payable, including deferred	 	4,133	
 	 	4,133	
 	
Payroll, provisions and social charges	 	13,301	
 	 	13,301	
 	
Taxes and contributions	 	6,697	
 	 	6,697	
 	
Royalties and franchises fee	 	2,811	
 	 	2,811	
 	
Accounts payable to non-controlling partners	 	2,444	
 	 	2,444	
 	
Accrued buyout liability	 	8,215	
 	 	8,215	
 	
Other liabilities	 	8,236	
 	 	8,236	
 	
 	 	62,108	
 	 	62,108	

The fair values of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term accounts payable approximate their respective book values due to the their short-term maturity.

As a basis for considering the market participant assumptions in fair value measurements, a three-tier fair value hierarchy prioritizes the inputs used in measuring fair values as follows:
 	 	
•	Level 1 - observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group has the ability to access;	

•	Level 2 - inputs, other than the quoted market prices included in Level 1, which are observable for the asset or liability, either directly or indirectly; and	

•	Level 3 - unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market data available.	

31

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
15.	Financial instruments (Continued)	

The fair value measurement of short-term investments classified as cash and cash equivalents at December 31, 2012, in the amount of R$ 21,471, uses inputs that fall within Level 2 of the fair value hierarchy.

The Group is not engaged in any outstanding hedging instruments, term contracts, swap operations, options, futures, or embedded derivatives operations. Therefore, the Group has no risk related to derivatives utilization policies.

Significant market risk factors affecting the Group’s business are as follows:

Exchange rate risk

This risk arises from the possibility of the Group incurring losses because of fluctuations in foreign currency exchange rates.

The Group does not use hedging instruments to protect against exchange rate fluctuations between the Brazilian real and the US dollar.

Credit risk

This risk mainly involves the Groups’ cash and cash equivalents and accounts receivable. The Group carries out operations with highly-rated banks, which minimizes risk.

Accounts receivable are substantially generated from credit card companies resulting from sales in the restaurants. Management does not anticipate losses in the realization of such receivables.

Liquidity risk

Liquidity risk arises from the possibility that the Group may not have sufficient funds to comply with their financial commitments due to the different currencies and settlement terms of their rights and obligations.

In order to mitigate liquidity risk for the Parent Company and its subsidiaries. the Group’s liquidity and cash flow is monitored on a daily basis by Management, assuring that cash flow from operations and available funding, when necessary, is sufficient to meet its commitment schedule.

32

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
15.	Financial instruments (Continued)	

Liquidity risk (Continued)

The tables below summarize the maturity profile of the Group’s financial liabilities on contractual and undiscounted payments.

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Up to 1 year	 	1 to 5 years	 	> 5 years	 	Total	
Trade accounts payable	 	16,271	
 	 	—	
 	 	—	
 	 	16,271	
 	
Rental payable, including deferred	 	2,412	
 	 	1,721	
 	 	—	
 	 	4,133	
 	
Payroll, provisions and social charges	 	13,301	
 	 	—	
 	 	—	
 	 	13,301	
 	
Taxes and contributions	 	6,697	
 	 	—	
 	 	—	
 	 	6,697	
 	
Royalty and franchise fees	 	2,811	
 	 	—	
 	 	—	
 	 	2,811	
 	
Accrued buyout liability	 	1,577	
 	 	6,638	
 	 	—	
 	 	8,215	
 	
Other liabilities	 	4,773	
 	 	3,463	
 	 	—	
 	 	8,236	
 	
 	 	47,842	
 	 	11,822	
 	 	—	
 	 	59,664	

Interest rate risk

Interest rate risk arises from the possibility that the Group incurs losses because of fluctuations in interest rates that could increase certain financial expenses related to loans and financing raised from the market. The Group’s exposure to market risks for changes in interest rates relates primarily to the bank debt and loans with related parties. Considering the Group’s debt profile, management considers the risk of exposure to interest rate variation to be insignificant.

Capital Management

Capital includes units of interest and equity attributable to the equity holders of the Parent.

The primary objective of the Group’s capital management is to ensure that it maintains sufficient capital in order to support its business and maximize member value.

33

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
15.	Financial instruments (Continued)	

Capital Management (Continued)

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to members, return capital to members, take out new loans, or issue new units of interest. No changes were made to the objectives, policies, or processes for managing capital during the year ended December 31, 2012.

Included within net debt are trade accounts payable, less cash and cash equivalents.

 	 	 	 	
Trade accounts payable	 	16,271	
 	
Less: cash and cash equivalents	 	(22,721	)	
Net debt	 	(6,450	)	
Members’ equity	 	134,243	
 	
Members’ equity and net debt	 	127,793	

 	 	
16.	Operating lease commitments	

The Group has entered into operating leases for the restaurants locations. These leases have an average life of between 10 to 15 years. Future minimum rentals payable under non-cancellable operating leases as at December 31 are as described below:

 	 	 	 	
Within one year	 	21,082	
 	
After one year but not more than five years	 	61,782	
 	
More than five years	 	38,106	
 	
 	 	120,970	

Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. Rental expense for operating leases during 2012 was R$ 13,972.

34

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
17.	Insurance coverage	

The Group maintains insurance coverage primarily for risks of loss relating to property damages, loss of profit, fixed asset items and international transportation. Coverage amounts are deemed sufficient by Management to cover any potential losses. At December 31, 2012, the Group had the following main insurance policies contracted with third parties:

 	 	 	 	 	 	 	 	 	
Type	 	Insurance company	 	Inception date	 	Expiry date	 	Maximum indemnity limit	
Property damages	 	RSA - Royal & Sun Alliance Seguros Brasil	 	30/jun/2012	 	30/jun/2013	 	R$10,000	
General civil liability	 	Generali Brasil Seguros	 	30/jun/2012	 	30/jun/2013	 	R$10,000	
Directors and Officers liability	 	Chartis Seguros Brasil	 	11/jul/2012	 	11/jul/2013	 	R$5,000	
International transport	 	Generali Brasil Seguros	 	13/nov/2012	 	13/nov/2013	 	R$300	

 	 	
18.	Other Operating (Income)/Expenses	

 	
 	 	 	 	
Operating rent, leasing & parking expense	 	18,079	
 	
Advertising, promotion & marketing research	 	9,494	
 	
Operating property taxes	 	1,722	
 	
Other expenses	 	1,570	
 	
 	 	30,865	

35

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
19.	Summary and reconciliation of the differences between the accounting practices adopted in Brazil and accounting principles generally accepted in the United States of America	

The consolidated financial statements were prepared and are presented in accordance with accounting practices adopted in Brazil (“BR GAAP”), which comprise the pronouncements, interpretations and guidance issued by the Brazilian Accounting Pronouncements Committee (“CPC”), which are converged to the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). Note 4 to the consolidated financial statements summarize the principal accounting practices adopted by the Group.

BR GAAP differs, in certain significant respects, from U.S. GAAP. The significant differences are described in the reconciliation table below. Other differences do not have a significant effect on either net income or members' equity:

 	 	 	 	 	 	
 	 	Note Reference	 	 	
Net income based on BR GAAP	 	 	 	24,262	
 	
Adjustments:	 	 	 	 	
Uncertain tax position	 	19.a	 	(3,167	)	
Net income based on U.S. GAAP	 	 	 	21,095	

a.Income Taxes

Unlike U.S. GAAP, BR GAAP does not presently contain specific guidance on the accounting for uncertain tax positions. As such, diversity in practice exists regarding the recognition, derecognition and measurement of uncertain tax positions. Companies are required to adopt a policy on accounting for uncertain tax positions upon conversion from US GAAP to BR GAAP that is not inconsistent with the requirement in IAS 12 that tax assets and liabilities should be measured at the amount expected to be paid.

The Group has received tax assessments in the amount of R$ 3,167 subject to income taxes arising from capital gains recognized on a previous corporate reorganization. As a result, under U.S. GAAP, the Parent Company recorded an additional income tax provision related to an uncertain tax position in the amount of R$ 3,167 at December 31, 2012. For BR GAAP purposes, no provision was recorded as the Company’s external lawyers assessed the tax assessments as possible chance of loss and at December 31, 2012 there is no amount expected to be paid.

Classification of statement of cash flows

Under BR GAAP, the classification of certain cash flow items is presented differently from U.S. GAAP. Under BR GAAP, interest paid is recorded in financing activities. For U.S. GAAP purposes, interest paid is classified in operating activities.

36

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)

Recently Issued Accounting Standards

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. The Group will implement the provisions of ASU 2011-11 effective January 1, 2013.

In February 2013, the FASB issued ASU No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU No. 2013-02”), which requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. The guidance requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other required disclosures that provide additional detail about those amounts. ASU No. 2013-02 will be effective for the Group prospectively for reporting periods beginning after December 15, 2012. The adoption of ASU No. 2013-02 on January 1, 2013 is not expected to have an impact on the Group’s financial position, results of operations or cash flows.

In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)” (“ASU No. 2013-11”). Under ASU No. 2013-11, an entity is required to present its unrecognized tax benefits net of its deferred tax assets when settlement in this manner is available under the tax law, which would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events. Gross presentation in the notes to the financial statements will still be required. ASU No. 2013-11 will be effective for the Group for fiscal years beginning on or after December 15, 2013 and interim periods within those fiscal years, with early adoption permitted. ASU No. 2013-11 will apply on a prospective basis to all unrecognized tax benefits that exist at the effective date, with the option to apply it retrospectively. This guidance will not have an impact upon adoption at January 1, 2014 on the Group’s financial position, results of operations or cash flows as the Group currently presents its unrecognized tax benefits net of its deferred tax assets where applicable.

37

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (Continued)
December 31, 2012
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
20.	Subsequent Event	

On October 31, 2013, a Quota Purchase and Sale Agreement (the “Purchase Agreement”), was entered into by and between OSI’s parent company, Bloomin’ Brands, Inc. (“BBI”), a wholly-owned subsidiary of BBI, Bloom Holdco Participaçơes Ltda. (“Purchaser”), PGS Participaçơes Ltda. (“PGS Par”), the equity holders of PGS Par (the “Sellers”), the the Parent Company, and Bloom Participaçơes Ltda., parent company of Purchaser. Pursuant to the Purchase Agreement, effective November 1, 2013, the Purchaser completed the acquisition of a controlling interest in the Parent Company by purchasing 80% of the issued and outstanding capital stock of PGS Par, which held a 50% interest in the Parent Company (the “Acquisition”) for a purchase price of R$240.8 million. Prior to the Acquisition, the Purchaser held a 50% interest in the Parent Company. As a result of the Acquisition, the Purchaser now holds a 90% interest in the Parent Company.

Effective December 1, 2013, the Parent Company was merged into Purchaser with Purchaser remaining as the surviving entity. Purchaser accounted for the Acquisition as a business combination utilizing the step acquisition method and, as a result has recorded the assets and liabilities assumed at fair value as of the acquisitions date.

38

Exhibit 99.2

 	
 	 	 	
 	Consolidated Financial Statements	 	
 	 	 	
 	PGS Consultoria e Serviços Ltda.	 	

 	September 30, 2013 and 2012	 	

PGS Consultoria e Serviços Ltda.

Consolidated financial statements (unaudited)

September 30, 2013

Contents

Consolidated financial statements (unaudited)	 	
 	 	
Consolidated balance sheets	3	
Consolidated statements of income	5	
Consolidated statements of comprehensive income	6	
Consolidated statements of changes in members’ equity	7	
Consolidated statements of cash flows	8	
Notes to consolidated financial statements	9	

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated balance sheets (unaudited)
September 30, 2013 and December 31, 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	 	 	 	
 	 	September 30, 2013	 	December 31, 2012	
 	 	 	 	 	
Assets	 	 	 	 	
Current assets	 	 	 	 	
Cash and cash equivalents (Note 4)	 	34,056	
 	 	22,721	
 	
Trade accounts receivable (Note 5)	 	18,138	
 	 	23,780	
 	
Inventories (Note 6)	 	11,659	
 	 	14,628	
 	
Recoverable taxes	 	16,629	
 	 	476	
 	
Advances from suppliers	 	2,022	
 	 	1,237	
 	
Prepaid expenses	 	1,032	
 	 	956	
 	
Other	 	2,848	
 	 	4,403	
 	
Total current assets	 	86,384	
 	 	68,201	

Non-current assets	 	 	 	 	
Transactions with related parties (Note 9)	 	—	
 	 	314	
 	
Judicial deposits (Note 10)	 	7,387	
 	 	5,503	
 	
Deferred income tax and social contribution (Note 11)	 	9,974	
 	 	10,124	
 	
 	 	17,361	
 	 	15,941	

Properties, fixtures and equipments (Note 7)	 	149,021	
 	 	121,947	
 	
Intangible assets (Note 8)	 	11,282	
 	 	10,151	
 	
 	 	160,303	
 	 	132,098	
 	
Total non-current assets	 	177,664	
 	 	148,039	

 	 	 	 	 	

 	 	 	 	 	

 	 	 	 	 	

Total assets	 	264,048	
 	 	216,240	

3

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated balance sheets (unaudited) (Continued)
September 30, 2013 and December 31, 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	 	 	 	
 	 	September 30, 2013	 	December 31, 2012	
 	 	 	 	 	
Liabilities and members’ equity	 	 	 	 	
Current liabilities	 	 	 	 	
Loans	 	23	
 	 	34	
 	
Trade accounts payable	 	16,627	
 	 	16,271	
 	
Rental payable	 	1,846	
 	 	2,280	
 	
Payroll, provisions and social charges	 	18,402	
 	 	13,301	
 	
Income tax and social contribution payable	 	18,383	
 	 	1,684	
 	
Taxes and contributions payable	 	4,364	
 	 	5,013	
 	
Royalties payable (Note 9)	 	1,835	
 	 	2,239	
 	
Franchise fees payable (Note 9)	 	178	
 	 	572	
 	
Deferred rentals	 	187	
 	 	132	
 	
Current portion of accrued buyout liability	 	122	
 	 	1,577	
 	
Accounts payable to non-controlling partners	 	3,651	
 	 	2,444	
 	
Other	 	1,968	
 	 	4,773	
 	
Total current liabilities	 	67,586	
 	 	50,320	

Non-current liabilities	 	 	 	 	
Accrued buyout liability	 	7,771	
 	 	6,638	
 	
Non-controlling partner deposit	 	2,814	
 	 	2,667	
 	
Transactions with related parties (Note 9)	 	340	
 	 	1,127	
 	
Commitments and contingencies (Note 10)	 	13,299	
 	 	16,061	
 	
Deferred rentals	 	1,994	
 	 	1,721	
 	
Other	 	3,197	
 	 	3,463	
 	
Total non-current liabilities	 	29,415	
 	 	31,677	

 	
Members’ equity (Note 12)	 	 	 	 	
Issued capital	 	21,864	
 	 	21,864	
 	
Retained earnings	 	145,183	
 	 	112,379	
 	
 	 	167,047	
 	 	134,243	

 	
Total liabilities and members’ equity	 	264,048	
 	 	216,240	

See accompanying notes.

4

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statements of income (unaudited)
For the nine months ended September 30, 2013 and 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	 	 	 	
 	 	For the nine months ended	 	For the nine months ended	
 	 	September 30, 2013	 	September 30, 2012	
 	 	 	 	 	
Net revenue from restaurant sales	 	404,091	
 	 	330,173	
 	
Cost of sales	 	(125,350	)	 	(99,669	)	
Gross profit	 	278,741	
 	 	230,504	

Operating expenses	 	 	 	
 	
Restaurant payroll expenses	 	(85,637	)	 	(72,429	)	
Operating stores expenses	 	(47,197	)	 	(39,283	)	
Royalties expenses (Note 9)	 	(20,544	)	 	(16,447	)	
Administrative fee - credit cards/tickets	 	(7,248	)	 	(8,060	)	
Depreciation and amortization	 	(14,272	)	 	(11,225	)	
Loss on impairment of property, fixture and equipment	 	—	
 	 	(170	)	
Pre-opening expenses	 	(1,875	)	 	(1,471	)	
Corporate payroll expenses	 	(14,027	)	 	(11,827	)	
General and administrative expenses	 	(9,517	)	 	(11,542	)	
Other operating expenses, net (Note 15)	 	(26,488	)	 	(23,248	)	
 	 	(226,805	)	 	(195,702	)	
 	 	 	 	 	
Financial income	 	1,937	
 	 	1,440	
 	
Financial expense	 	(1,601	)	 	(1,534	)	
 	 	336	
 	 	(94	)	
 	 	 	 	 	
Income before income tax and social contribution	 	52,272	
 	 	34,708	

Current income tax and social contribution (Note 11)	 	(19,318	)	 	(18,353	)	
Deferred income tax and social contribution (Note 11)	 	(150	)	 	1,778	

Net income for the nine months ended September 30	 	32,804	
 	 	18,133	

See accompanying notes.

5

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statements of comprehensive income (unaudited)
For the nine months ended September 30, 2013 and 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	 	 	 	
 	 	For the nine months ended	 	For the nine months ended	
 	 	September 30, 2013	 	September 30, 2012	
 	 	 	 	 	
Net income for the nine months ended September 30	 	32,804	
 	 	18,133	
 	
Other comprehensive income	 	—	
 	 	—	
 	
Income tax effect	 	—	
 	 	—	
 	
Total comprehensive income for the nine months ended September 30, net of tax	 	32,804	
 	 	18,133	

See accompanying notes.

6

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statements of changes in members’ equity (unaudited)
For the nine months ended September 30, 2013 and 2012
(In thousands of Brazilian reais)

 	
 	 	 	 	 	 	 	 	 	 	
 	 	Issued
Capital	 	Retained earnings	 	Total	
 	 	 	 	 	 	 	
Balances as at December 31, 2012	 	21,864	
 	 	112,379	
 	 	134,243	

Net income for the nine months ended September 30	 	—	
 	 	32,804	
 	 	32,804	

Balances as at September 30, 2013	 	21,864	
 	 	145,183	
 	 	167,047	

 	 	 	 	 	 	 	

 	 	 	 	 	 	 	
Balances as at December 31, 2011	 	21,864	
 	 	88,117	
 	 	109,981	

Net income for the nine months ended September 30	 	—	
 	 	18,133	
 	 	18,133	

Balances as at September 30, 2012	 	21,864	
 	 	106,250	
 	 	128,114	

See accompanying notes.

7

PGS CONSULTORIA E SERVIÇOS LTDA.

Consolidated statements of cash flows (unaudited)
For the nine months ended September 30, 2013 and 2012
(In thousands of Brazilian reais)

 	 	For the nine months ended	 	For the nine months ended	
 	 	September 30, 2013	 	September 30, 2012	
 	 	 	 	 	
Cash flow from operating activities	 	 	 	 	
Income before income tax and social contribution	 	52,272	
 	 	34,708	
 	
Adjustments to reconcile income before tax to net cash flows:	 	 	 	 	
Depreciation and amortization	 	14,272	
 	 	11,225	
 	
Provision for contingency	 	(4,293	)	 	2,161	
 	
Provision for CIDE	 	1,531	
 	 	599	
 	
Accrued buyouts	 	2,202	
 	 	1,273	
 	
Disposal of intangibles	 	4,354	
 	 	1,378	
 	
Loss on impairment of property, fixture and equipment	 	—	
 	 	170	
 	
 	 	70,338	
 	 	51,514	
 	
Working capital adjustments:	 	 	 	 	
(Increase) decrease in assets	 	 	 	 	
Trade accounts receivable	 	5,643	
 	 	(2,777	)	
Inventories	 	2,969	
 	 	(28	)	
Recoverable taxes	 	(16,153	)	 	(14,747	)	
Advances from suppliers	 	(785	)	 	(1,514	)	
Prepaid expenses	 	(76	)	 	(98	)	
Judicial deposits	 	(1,884	)	 	(869	)	
Other assets	 	1,555	
 	 	(488	)	
Increase (decrease) in liabilities	 	 	 	 	
Trade accounts payable	 	355	
 	 	5,024	
 	
Rental payable	 	(433	)	 	302	
 	
Payroll, provisions and social charges	 	5,102	
 	 	624	
 	
Taxes and contributions payable	 	(649	)	 	322	
 	
Royalties and franchise fees payable	 	(798	)	 	(280	)	
Deferred rent	 	328	
 	 	534	
 	
Accounts payable to non-controlling partners	 	(1,317	)	 	1,107	
 	
Other liabilities	 	(3,072	)	 	353	
 	
Transactions with related parties, net	 	(474	)	 	(257	)	
Cash flow from operating activities	 	60,649	
 	 	38,722	
 	
Income tax and social contribution paid	 	(2,620	)	 	(2,779	)	
Net cash flows from operating activities	 	58,029	
 	 	35,943	
 	
Investing activities	 	 	 	 	
Purchase of property, fixture and equipment	 	(44,524	)	 	(27,687	)	
Purchase of intangible	 	(2,308	)	 	(4,903	)	
Net cash flows used in investing activities	 	(46,832	)	 	(32,590	)	
Financing activities	 	 	 	 	
Repayment of loans	 	(10	)	 	(2,459	)	
Receipt of non-controlling partner deposit	 	148	
 	 	254	
 	
Net cash flows from/(used in) financing activities	 	138	
 	 	(2,205	)	
 	 	 	 	 	
Increase in cash and cash equivalents	 	11,335	
 	 	1,148	

 	
Cash and cash equivalents at January 1	 	22,721	
 	 	21,833	
 	
Cash and cash equivalents at September 30	 	34,056	
 	 	22,981	

Net increase in cash and cash equivalents	 	11,335	
 	 	1,148	
 	
See accompanying notes.

8

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)

1.	Corporate information	

PGS Consultoria e Serviços Ltda. (“PGS Consultoria” or the “Parent Company”) was formed in May 1997 and is headquartered at Av. Dr. Chucri Zaidan, 80, 8 th floor, in the City and State of Săo Paulo.

PGS Consultoria is the holding company of the CLS Companies (collectively referred as the “Group”). The main purpose of the CLS Companies (“CLS”), which is comprised of (i) CLS Săo Paulo Ltda. (“CLS SP”); (ii) CLS Restaurantes Rio de Janeiro Ltda. (“CLS RJ”); (iii) CLS Restaurantes Brasília Ltda. (“CLS BSB”); and (iv) CLS Restaurantes do Sul Ltda. (“CLS do Sul”), is to explore and manage restaurants under the trademark “Outback Steakhouse” in Brazil.

“Outback Steakhouse” is an Australian steakhouse concept, which is open for lunch and dinner. Although beef and steak items make up a good portion of the menu, the concept offers a variety of chicken, ribs, seafood, and pasta dishes. The Group’s strategy is to differentiate its restaurants by emphasizing consistently high-quality food, concentrated service, generous portions at affordable prices and a casual atmosphere suggestive of the Australian Outback.

CLS operates 44 (forty-four) restaurants altogether, in twenty different cities, being: (i) 9 (nine) in Rio de Janeiro and 1 (one) in Niterói, State of Rio de Janeiro, and 1 (one) in Vitoria, State of Espirito Santo (CLS RJ); (ii) 12 (twelve) in Săo Paulo, 2 (two) in Campinas, 1 (one) in Barueri, 1 (one) in Săo Bernado do Campo, 1(one) in Săo Caetano do Sul, 1(one) in Săo José dos Campos, 1 (one) in Ribeirăo Preto, 1 (one) in Guarulhos, 1(one) in Jundiaí and 1 (one) in Osasco, State of Săo Paulo (CLS SP); (iii) 2 (two) in Brasília, Federal District, 1 (one) in Belo Horizonte, State of Minas Gerais, 2 (two) in Salvador, State of Bahia, 1 (one) in Goiânia, State of Goiás and 1 (one) in Recife, State of Pernambuco (CLS BSB); and (iv) 1 (one) in Porto Alegre, State of Rio Grande do Sul, 2 (two) in Curitiba, State of Paraná and 1 (one) in Florianópolis, State of Santa Catarina (CLS do Sul).

The consolidated financial statements for nine months ended September 30, 2013 were authorized for issue by the Parent Company’s management on January 10, 2014.

9

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
2.	Basis of preparation	

The consolidated financial statements were prepared and are presented in accordance with the accounting practices adopted in Brazil, which comprise the pronouncements, interpretations and guidance issued by the Brazilian Accounting Pronouncements Committee ( Comitê de Pronunciamentos Contábeis  (“CPC”), which are converged to the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).

The preparation of the accompanying consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts. These estimates were determined based on objective and subjective factors, considering management’s judgment to determine the adequate amounts to be recorded in the consolidated financial statements.

Significant items subject to such estimates and assumptions include selection of useful lives of property, fixtures and equipment and analysis of their recoverability in operations, credit risk assessment to determine the allowance for doubtful accounts, as well as analysis of other risks to determine other provisions, including those set up for contingencies. Settlement of transactions involving these estimates may result in amounts significantly different from those recorded in the consolidated financial statements due to the uncertainties inherent in the estimation process. The Group reviews its estimates and assumptions at least annually.

This interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the annual financial statements as of December 31, 2012.

The consolidated financial statements presented herein do not include the Parent Company’s stand-alone financial statements and are not intended to be used for statutory purposes.

10

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
3.	Basis of consolidation	

The consolidated financial statements include the operations of PGS Consultoria and the “CLS Companies”. The details of the participation in CLS Companies comprised of CLS SP, CLS RJ, CLS BSB and CLS do Sul, are summarized as follow:

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	September 30, 2013	 	September 30, 2012	
 	 	Issued	 	Retained	 	Issued	 	Retained	
 	 	capital(1)	 	earnings(2)	 	capital(1)	 	earnings(2)	
CLS SP	 	96.94	%	 	100	%	 	90.31	%	 	100	%	
CLS RJ	 	96.53	%	 	100	%	 	96.37	%	 	100	%	
CLS BSB	 	96.70	%	 	100	%	 	93.92	%	 	100	%	
CLS do Sul	 	97.89	%	 	100	%	 	95.38	%	 	100	%	
 	 	
(1)	The issued capital of the CLS Companies is shared primarily between PGS Consultoria, proprietors (stores’ managing partners) and JV’s (operating partners who supervise the Rio de Janeiro, Săo Paulo, Brasília and South Region stores), in accordance with their respective interests.	
 	 	
(2)	According to each individual partners’ association document known as “Protocolo de Entendimentos” (Memorandum of Understanding), dividends are distributed to non-controlling partners (proprietors and JV’s) based on certain criteria, such as a percentage of the pre-tax income results of their respective restaurants and supervision areas and other, being 100% of the remaining undistributed earnings of PGS Consultoria. Such dividends are recognized as compensation expense within the restaurant payroll expenses account for the period earned by the non-controlling partners. Further detail from the income statement is shown in the following table.	

 	 	
 	 	 	 	 	 	 	 	
Restaurant Payroll Expense	 	For the nine months ended	 	For the nine months ended	 	
 	 	September 30, 2013	 	September 30, 2012	 	
Operating Payroll Expense	 	80,059	
 	 	64,258	
 	 	
Compensation Expense (Proprietors & JV’s)	 	5,578	
 	 	8,171	
 	 	
 	 	85,637	
 	 	72,429	

The financial statements of the CLS Companies are prepared for the same reporting period as the Parent Company. Accounting policies of CLS Companies have been adjusted to ensure consistency with the accounting policies adopted by the Group. All intra-group balances, income and expenses, unrealized gain and losses and dividends resulting from intra-group transactions have been eliminated in consolidation.

Capital contributions to the CLS Companies received from the non-controlling partners are recorded as long-term liabilities in the line item “non-controlling partner deposit”. Monthly payments made pursuant to the Memorandum of Understanding are paid as dividends and are recognized as compensation expense in the period earned by the non-controlling partners.

11

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
4.	Cash and cash equivalents	

 	
 	 	 	 	 	 	 	
 	 	September 30, 2013	 	December 31, 2012	
Cash	 	668	
 	 	638	
 	
Bank deposits	 	888	
 	 	612	
 	
Short term investments	 	32,500	
 	 	21,471	
 	
 	 	34,056	
 	 	22,721	

Cash equivalents consist of investments that are readily convertible to cash with an original maturity date of three months or less.

5.	Trade accounts receivable	

Trade accounts receivable consist mainly of amounts receivable from credit card companies, as follows:

 	 	 	 	 	 	 	
 	 	September 30, 2013	 	December 31, 2012	
Redecard (Mastercard/Diners/Credicard)	 	4,362	
 	 	6,292	
 	
Visanet (Visa/Visa electron)	 	8,978	
 	 	12,052	
 	
American express	 	1,646	
 	 	1,665	
 	
Ticket Refeiçăo	 	1,133	
 	 	1,865	
 	
Other	 	2,019	
 	 	1,906	
 	
 	 	18,138	
 	 	23,780	

No allowance for doubtful accounts has been recorded due to the remote chances of losses on receivables.

6.	Inventories	

 	
 	 	 	 	 	 	 	
 	 	September 30, 2013	 	December 31, 2012	
Kitchen utensils	 	—	
 	 	2,058	
 	
Food and beverage	 	3,932	
 	 	3,172	
 	
Inventories held by third-parties	 	5,477	
 	 	5,544	
 	
Imports in transit	 	1,445	
 	 	1,720	
 	
Other	 	805	
 	 	2,134	
 	
 	 	11,659	
 	 	14,628	

Inventory is counted at the end of every month and controlled in all stores and at the distribution center; expired inventories are disposed of immediately and recorded as expense. Inventories differences are adjusted within the month and against the cost of sales for such period, as this is a periodic inventory, everything on hand should be usable and therefore no risk of loss or expiration is expected.

12

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
7.	Property, fixtures and equipment	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Land	 	Furniture
and fixture	 	Computers	 	Equipment
and facilities	 	Buildings and Leasehold improvements	 	Construction
in progress	 	Total	
Cost	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	3,363	
 	 	21,072	
 	 	7,012	
 	 	46,687	
 	 	72,682	
 	 	—	
 	 	150,816	
 	
Additions and Transfers	 	—	
 	 	1,532	
 	 	34	
 	 	5,483	
 	 	7,822	
 	 	12,816	
 	 	27,687	
 	
Write off	 	—	
 	 	(1,186	)	 	(193	)	 	—	
 	 	—	
 	 	—	
 	 	(1,379	)	
Balances at September 30, 2012	 	3,363	
 	 	21,418	
 	 	6,853	
 	 	52,170	
 	 	80,504	
 	 	12,816	
 	 	177,124	
 	
Additions and Transfers	 	—	
 	 	2,882	
 	 	1,672	
 	 	3,688	
 	 	6,516	
 	 	(4,698	)	 	10,060	
 	
Balances at December 31, 2012	 	3,363	
 	 	24,300	
 	 	8,525	
 	 	55,858	
 	 	87,020	
 	 	8,118	
 	 	187,184	

Balances at December 31, 2012	 	3,363	
 	 	24,300	
 	 	8,525	
 	 	55,858	
 	 	87,020	
 	 	8,118	
 	 	187,184	
 	
Additions and Transfers	 	—	
 	 	5,075	
 	 	332	
 	 	10,659	
 	 	19,760	
 	 	8,698	
 	 	44,524	
 	
Write off	 	—	
 	 	(1,846	)	 	(1,360	)	 	—	
 	 	—	
 	 	—	
 	 	(3,206	)	
Balances at September 30, 2013	 	3,363	
 	 	27,529	
 	 	7,497	
 	 	66,517	
 	 	106,780	
 	 	16,816	
 	 	228,502	

Depreciation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	—	
 	 	(7,532	)	 	(4,456	)	 	(17,428	)	 	(19,933	)	 	—	
 	 	(49,349	)	
Additions	 	—	
 	 	(1,131	)	 	(625	)	 	(4,023	)	 	(5,024	)	 	—	
 	 	(10,803	)	
Impairment / Write off	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(170	)	 	—	
 	 	(170	)	
Balances at September 30, 2012	 	—	
 	 	(8,663	)	 	(5,081	)	 	(21,451	)	 	(25,127	)	 	—	
 	 	(60,322	)	
Additions	 	—	
 	 	(1,576	)	 	(926	)	 	(1,871	)	 	(656	)	 	—	
 	 	(5,029	)	
Impairment / Write off	 	—	
 	 	—	
 	 	—	
 	 	114	
 	 	—	
 	 	—	
 	 	114	
 	
Balances at December 31, 2012	 	—	
 	 	(10,239	)	 	(6,007	)	 	(23,208	)	 	(25,783	)	 	—	
 	 	(65,237	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balances at December 31, 2012	 	—	
 	 	(10,239	)	 	(6,757	)	 	(22,458	)	 	(25,783	)	 	—	
 	 	(65,237	)	
Additions	 	—	
 	 	(2,729	)	 	(654	)	 	(3,579	)	 	(6,258	)	 	—	
 	 	(13,220	)	
Impairment / Write off	 	—	
 	 	—	
 	 	—	
 	 	(434	)	 	(590	)	 	—	
 	 	(1,024	)	
Balances at September 30, 2013	 	—	
 	 	(12,968	)	 	(7,411	)	 	(26,471	)	 	(32,631	)	 	—	
 	 	(79,481	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net book value	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 Balances at September 30, 2012	 	3,363	
 	 	12,755	
 	 	1,772	
 	 	30,719	
 	 	55,377	
 	 	12,816	
 	 	116,802	
 	
 Balances at December 31, 2012	 	3,363	
 	 	14,061	
 	 	2,518	
 	 	32,650	
 	 	61,237	
 	 	8,118	
 	 	121,947	
 	
 Balances at September 30, 2013	 	3,363	
 	 	14,561	
 	 	86	
 	 	40,046	
 	 	74,149	
 	 	16,816	
 	 	149,021	
 	
 Average annual depreciation rate	 	—	
 	 	10	%	 	20	%	 	10	%	 	4% to 10%	
 	 	—	

In 2013, no evidence has been identified indicating that the asset net book values exceed their recoverable amounts .

13

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
8.	Intangible assets	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Software	 	Franchise
fees	 	Other	 	Total	
Cost	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	2,699	
 	 	3,450	
 	 	2,022	
 	 	8,171	
 	
Additions	 	4,070	
 	 	203	
 	 	630	
 	 	4,903	
 	
Balances at September 30, 2012	 	6,769	
 	 	3,653	
 	 	2,652	
 	 	13,074	
 	
Additions / (Write off)	 	(1,154	)	 	623	
 	 	(125	)	 	(656	)	
Balances at December 31, 2012	 	5,615	
 	 	4,276	
 	 	2,527	
 	 	12,418	

Balances at December 31, 2012	 	5,615	
 	 	4,276	
 	 	2,527	
 	 	12,418	
 	
Additions	 	1,643	
 	 	540	
 	 	125	
 	 	2,308	
 	
Balances at September 30, 2013	 	7,258	
 	 	4,816	
 	 	2,652	
 	 	14,726	

Amortization	 	 	 	 	 	 	 	 	
Balances at December 31, 2011	 	(148	)	 	(1,018	)	 	(349	)	 	(1,515	)	
Additions	 	(177	)	 	(130	)	 	(115	)	 	(422	)	
Balances at September 30, 2012	 	(325	)	 	(1,148	)	 	(464	)	 	(1,937	)	
(Additions) / Write off	 	(338	)	 	43	
 	 	(35	)	 	(330	)	
Balances at December 31, 2012	 	(663	)	 	(1,105	)	 	(499	)	 	(2,267	)	
 	 	 	 	 	 	 	 	 	
Balances at December 31, 2012	 	(663	)	 	(1,105	)	 	(499	)	 	(2,267	)	
Additions	 	(925	)	 	(19	)	 	(108	)	 	(1,052	)	
Other Adjustments	 	(125	)	 	—	
 	 	—	
 	 	(125	)	
Balances at September 30, 2013	 	(1,713	)	 	(1,124	)	 	(607	)	 	(3,444	)	
 	 	 	 	 	 	 	 	 	
Residual value	 	 	 	 	 	 	 	 	
Balances at September 30, 2012	 	6,444	
 	 	2,505	
 	 	2,188	
 	 	11,137	
 	
Balances at December 31, 2012	 	4,952	
 	 	3,171	
 	 	2,028	
 	 	10,151	
 	
Balances at September 30, 2013	 	5,545	
 	 	3,692	
 	 	2,045	
 	 	11,282	
 	
Average annual amortization rate	 	20	%	 	5	%	 	20	%	 	 	

Franchise fee

The Group has a franchise agreement with Outback Steakhouse International Investments Co.(“OSI”), which expires generally 20 years after the date the restaurant is opened. The Group has the option to renew the agreement for one consecutive term of 20 years, subject to certain conditions. Pursuant to the Agreement, the Group must operate the restaurant in strict conformity with the methods, standards and specifications prescribed by OSI, regarding training, staff, health standards, suppliers and advertising, among others. The Group is contractually bound to pay franchise fees of US$ 40 at the opening of each restaurant, and monthly royalties of 4% to 5% of net sales after the restaurant is opened. Royalty fees are charged to expenses as incurred.

14

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
9.	Transactions with related parties	

At September 30, 2013, the balance of transactions with related parties can be summarized as follows:

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Assets	 	Liabilities	
 	 	September 30, 2013	 	December 31, 2012	 	September 30, 2013	 	December 31, 2012	
Current	 	 	 	 	 	 	 	 	
Royalties payable	 	 	 	 	 	 	 	 	
Outback Steakhouse International	 	—	
 	 	—	
 	 	1,835	
 	 	2,239	
 	
Franchise fees	 	 	 	 	 	 	 	 	
Outback Steakhouse International	 	—	
 	 	—	
 	 	178	
 	 	572	
 	
Total current	 	—	
 	 	—	
 	 	2,013	
 	 	2,811	

Noncurrent	 	 	 	 	 	 	 	 	
Accounts receivable/payable	 	 	 	 	 	 	 	 	
Outback Steakhouse International	 	—	
 	 	314	
 	 	84	
 	 	357	
 	
 	 	—	
 	 	314	
 	 	84	
 	 	357	

Other(1)	 	—	
 	 	—	
 	 	256	
 	 	770	
 	
Total noncurrent	 	—	
 	 	314	
 	 	340	
 	 	1,127	
 	
Total	 	—	
 	 	314	
 	 	2,353	
 	 	3,938	

(1)    This amount refers to transactions with non-controlling interest parties (restaurant proprietors).

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	September 30, 2013	 	September 30, 2012	
 	 	Royalties (i)	 	Financial results (ii)	 	Royalties (i)	 	Financial results (ii)	
Outback Steakhouse International	 	20,544	
 	 	—	
 	 	16,447	
 	 	15	
 	
 	 	20,544	
 	 	—	
 	 	16,447	
 	 	15	

 	 	
(i)	Refer to the royalty expenses calculated on the net revenues posted by the stores.	
 	 	
(ii)	Refer, basically, to the interest expenses and exchange variation on Outback Steakhouse International loans.	

OSI

The transactions between the Group and OSI consist of:
 	 	
•	The Group is contractually bound to pay franchise fees of US$ 40 at the opening of each restaurant and monthly royalties of 4% to 5% of net sales after the restaurant is opened. Monthly royalty fees are charged to expenses as incurred.	

15

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)

9.     Transactions with related parties (Continued)

Distribution of Profits - CLS Companies

Dividends paid to proprietors (stores’ managing partners) and to JVs (operating partners who supervise the Rio de Janeiro, Săo Paulo, Brasília and South Region stores) are distributed according to the criteria stated within each individual partner’s association document referred to as Memorandum of Understanding.

Partners are paid dividends according to a percentage of the after-tax income results (“ATI”) of their respective restaurants, as per their P&L statements. It is 7.5% of ATI for managing partners and 3% to 6% for operating partners. Members of top management have also received dividends based on certain monthly fixed amounts stipulated in the previous year’s budget submitted to and approved by OSI.

Based on the above and in accordance with local laws allowing actual distributions to be different than the exact amount owed to a partner, based on his/her members’ position, the CLS Companies distributed the following amounts to its partners during the nine months ended September 30, 2013 and 2012:

 	 	 	 	 	 	 	
 	 	For the nine months ended	 	For the nine months ended	
 	 	September 30, 2013	 	September 30, 2012	
Proprietors (stores’ managing partners)	 	3,271	
 	 	2,660	
 	
JVs (operating partners)	 	1,368	
 	 	1,285	
 	
Executives	 	2,155	
 	 	1,461	
 	
 	 	6,794	
 	 	5,406	

Dividends paid to the non-controlling partners (proprietors and JVs) are recognized as compensation expense in the consolidated statements of income in the period earned. Additional detail is provided at Note 3.

There are no guarantees and allowances for doubtful accounts for loans and other transactions with related parties.

16

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)

10. Commitments and contingencies

The Group is involved in tax, civil and labor lawsuits arising in the normal course of its activities. These matters are discussed at the administrative and judicial levels. Judicial deposits related to these matters are made, when applicable. The Group accrues for loss contingencies that are probable and reasonably estimable and this assessment is carried out based on the information available and on risk factors inherent to each process, in accordance with the opinion of the Group’s legal advisors. The Group generally does not accrue for legal costs expected to be incurred with a loss contingency until those services are provided.

Based on the information of its legal advisors and on the analysis of legal procedures pending judgment and controversy tax obligation, the Group has decided to set up a provision at an amount deemed sufficient to cover probable losses arising from unfavorable outcomes of lawsuits in progress, tax obligation challenges and tax assessments. Based on the opinion from external legal advisors, the Group has decided to constitute the provision in the amount of R$ 2,470 under the scenario of adopting the new amnesty program established by the State of Sao Paulo and Rio de Janeiro according to State Laws 58.811/12 and 6.357/12, respectively.

 	 	 	 	 	 	 	
Provisions for judicial and administrative processes	 	September 30, 2013	 	December 31, 2012	
Tax	 	11,174	
 	 	11,828	
 	
Labor	 	2,125	
 	 	4,233	
 	
 	 	13,299	
 	 	16,061	

The table below depicts judicial deposits associated or not with legal contingencies classified in the non-current assets group.

 	 	 	 	 	 	 	
Judicial deposits	 	September 30, 2013	 	December 31, 2012	
Tax	 	6,392	
 	 	4,891	
 	
Labor	 	995	
 	 	612	
 	
 	 	7,387	
 	 	5,503	

17

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)

10. Commitments and contingencies (Continued)

Balances of the commitments and contingencies provisions as of September 30, 2013 and December 31, 2012 including the applicable changes during the period are as follows:

 	 	 	 	 	 	 	 	 	 	
 	 	Tax	 	Labor	 	Total	
Balance at December 31, 2011	 	3,538	
 	 	2,100	
 	 	5,638	
 	
(+) Supplemental provision	 	7,070	
 	 	1,633	
 	 	8,703	
 	
(-) Payments/Write off	 	—	
 	 	500	
 	 	500	
 	
(+) CIDE commitment	 	1,220	
 	 	—	
 	 	1,220	
 	
Balance at December 31, 2012	 	11,828	
 	 	4,233	
 	 	16,061	

 	 	 	 	 	 	 	
Balance at December 31, 2012	 	11,828	
 	 	4,233	
 	 	16,061	
 	
(-) Payments/Write off	 	(2,185	)	 	(2,108	)	 	(4,293	)	
(+) CIDE commitment	 	1,531	
 	 	—	
 	 	1,531	
 	
Balance at September 30, 2013	 	11,174	
 	 	2,125	
 	 	13,299	

The Group is questioning a matter related to the validity of the social contribution tax for intervention in the economic order (CIDE), established by Law, on the remittance of royalties. Management, supported by preliminary injunctions granted in its favor, is judicially paying this tax. The judicial deposits related to this matter amount to R$ 6,392 at September 30, 2013. The Group maintains a provision of R$ 6,289 related to this tax.

As of September 30, 2013, the Group’s external legal advisors estimate the chances of a final unfavorable outcome as “possible” in certain matters, primarily related to labor, civil and tax claims. The total possible contingencies that are uncertain at this time and could have a material adverse effect on the Group’s financial condition are R$ 8,519 as of September 30, 2013.

11.	Income tax and social contribution	

CLS do Sul has elected to calculate income tax and social contribution using the “presumed profits” method. Under the “presumed profits” method, taxable income is calculated as an amount equal to different percentages of gross revenue based on the activities of the taxpayer.

Under current Brazilian tax law, the percentages of the CLS Companies’ gross revenues are 8% for calculating income tax, and 12% for social contribution. The Parent Company, CLS SP, CLS RJ, and CLS BSB calculate their income tax and social contribution using the “actual profits” method, which is based on total taxable income.

Tax loss carry forwards through September 30, 2013 relating to income tax and social contributions were approximately R$ 11,369 and R$ 13,215 respectively, comprised entirely of fiscal results of the Parent Company. These tax loss carry forwards can offset future taxable income. Brazilian tax laws restrict the offset of tax losses to 30% of taxable profits on an annual basis. These losses can be used indefinitely and are not impacted by a change in ownership of the Parent Company.

18

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)

11. Income tax and social contribution (Continued)
 	 	
11.1.	Components of income tax and social contribution provision	

 	
 	 	 	 	 	 	 	
 	 	September 30, 2013	 	September 30, 2012	
Current income tax and social contribution	 	19,318	
 	 	18,353	
 	
Deferred income tax and social contribution	 	150	
 	 	(1,778	)	
 	 	19,468	
 	 	16,575	

 	 	
11.2.	Reconciliation income tax and social contribution provision at statutory rate to effective rate	

 	
 	 	 	 	 	 	 	
 	 	September 30, 2013	 	September 30, 2012	
Income before income tax and social contribution	 	52,272	
 	 	34,708	

Income tax and social contribution at statutory rate of 34%	 	17,773	
 	 	11,801	
 	
Benefits of utilizing presumed profits method of calculating of income tax and social contribution for CLS do Sul	 	(756	)	 	(605	)	
Non-deductible expenses for minority partner distributions and buyouts	 	1,469	
 	 	3,141	
 	
Other non-deductible expenses	 	(89	)	 	1,359	
 	
Provisions arising from write-down of tax losses	 	1,336	
 	 	(994	)	
Benefits of income excluded from income tax surcharge	 	(54	)	 	(54	)	
Adjustment recognized in current year for current tax of prior years	 	(29	)	 	1,313	
 	
Other	 	(182	)	 	614	
 	
Effective income tax and social contribution provision	 	19,468	
 	 	16,575	
 	
Effective rate	 	37.2	%	 	47.8	%	

19

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)

11. Income tax and social contribution (Continued)
 	 	
11.3	Components of deferred income tax and social contribution	

 	
 	 	 	 	 	 	 	
 	 	September 30, 2013	 	December 31, 2012	
Tax loss carry forward	 	4,032	
 	 	2,764	
 	
Temporary differences	 	 	 	 	
Pre-opening costs	 	3,105	
 	 	2,766	
 	
Provision for contingency	 	2,033	
 	 	2,398	
 	
Lease	 	680	
 	 	576	
 	
Provision for CIDE	 	1,981	
 	 	1,506	
 	
Provision for bonus	 	947	
 	 	971	
 	
PP&E basis difference	 	1,377	
 	 	1,237	
 	
Buyout	 	241	
 	 	—	
 	
Other	 	291	
 	 	834	
 	
 	 	14,687	
 	 	13,052	
 	
Unrecognized deferred tax assets	 	(4,713	)	 	(2,928	)	
 	 	9,974	
 	 	10,124	

Deferred income tax and social contribution assets, resulting from tax loss carry forwards and temporary differences are recorded taking into consideration the probable realization thereof, based on projected future results of operations considering internal assumptions and future economic scenarios that are subject to change. These projections indicate that future operating results will provide taxable income for CLS SP, CLS RJ and CLS BSB. The unused credits reflect the assessment of the likelihood of realizing the deferred tax asset comprised of the tax loss carry forwards attributable to the Parent Company.

20

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
12.	Members’ equity	

12.1.	Capital stock	

At September 30, 2013 the Parent Company’s subscribed capital amounted to R$ 21,864, divided into 20,244,048 units of interest with par value of R$ 1.08 each, distributed as follows:

 	 	 	 	
 	 	Numbers of units of interest	
PGS Participaçơes Ltda.	 	10,122,024	
 	
OSI	 	10,122,024	
 	
 	 	20,244,048	

 	 	
12.2.	Non-controlling interest (JV partners and proprietors)	

According to each individual partners’ association document known as Memorandum of Understanding, dividends are distributed to non-controlling partners (proprietors and JVs) based on certain criteria, such as a percentage of the pre-tax income results of their respective restaurants and supervision areas and other components, being 100% of the remaining undistributed earnings of PGS Consultoria’s results. These dividends are effectively paid and recognized as compensation expense and are not fully determined at each CLS’s results level rather on the individual store (proprietors) or group of stores (JV partners), therefore the amount of these dividends is recognized as Operating Expense in the income statement in the period earned by the non-controlling partners.

13.	Financial instruments	

The Group evaluated its financial assets and liabilities in relation to market value through available information available and appropriate evaluation methodologies. The interpretation of market data and the selection of valuation methods require extensive judgment and estimates to calculate the most appropriate realization value.

Consequently, the estimates presented do not necessarily show the amounts that may be realized in the market. The use of different market assumptions and/or methods may have a material effect on the estimated realization values.

The Group’s main financial instruments consist of cash and cash equivalents, trade accounts receivable and trade accounts payable.

Fair value measurements

Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and is a market-based measurement. To measure fair value, the Group incorporates assumptions that market participants would use in pricing the asset or liability, and utilizes market data to the maximum extent possible.

21

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
13.	Financial instruments (Continued)	

Set out below is a comparison by financial statement class of the book value and fair value of the Group’s financial instruments that are carried in the consolidated financial statements.

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Book Value	 	Fair Value	
Description	 	September 30, 2013	 	December 31, 2012	 	September 30, 2013	 	December 31, 2012	
Financial assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	34,056	
 	 	22,721	
 	 	34,056	
 	 	22,721	
 	
Trade accounts receivable	 	18,138	
 	 	23,780	
 	 	18,138	
 	 	23,780	
 	
Recoverable taxes	 	16,629	
 	 	476	
 	 	16,629	
 	 	476	
 	
Credits from related parties	 	—	
 	 	314	
 	 	—	
 	 	314	
 	
Other assets	 	5,902	
 	 	6,596	
 	 	5,902	
 	 	6,596	
 	
 	 	74,725	
 	 	53,887	
 	 	74,725	
 	 	53,887	

Financial liabilities	 	 	 	 	 	 	 	 	
Trade accounts payable	 	16,627	
 	 	16,271	
 	 	16,627	
 	 	16,271	
 	
Rental payable, including deferred	 	4,027	
 	 	4,133	
 	 	4,027	
 	 	4,133	
 	
Payroll, provisions and social charges	 	18,402	
 	 	13,301	
 	 	18,402	
 	 	13,301	
 	
Taxes and contributions	 	22,747	
 	 	6,697	
 	 	22,747	
 	 	6,697	
 	
Royalties and franchises fee	 	2,013	
 	 	2,811	
 	 	2,013	
 	 	2,811	
 	
Accounts payable to non-controlling partners	 	3,651	
 	 	2,444	
 	 	3,651	
 	 	2,444	
 	
Accrued buyout liability	 	7,893	
 	 	8,215	
 	 	7,893	
 	 	8,215	
 	
Other liabilities	 	5,165	
 	 	8,236	
 	 	5,165	
 	 	8,236	
 	
 	 	80,525	
 	 	62,108	
 	 	80,525	
 	 	62,108	

The fair values of cash and cash equivalents, trade accounts receivable, trade accounts payable and short-term accounts payable approximate their respective book values due to the their short-term maturity.

As a basis for considering the market participant assumptions in fair value measurements, a three-tier fair value hierarchy prioritizes the inputs used in measuring fair values as follows:
 	 	
•	Level 1 - observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group has the ability to access;	

•	Level 2 - inputs, other than the quoted market prices included in Level 1, which are observable for the asset or liability, either directly or indirectly; and	

•	Level 3 - unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market data available.	

22

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
13.	Financial instruments (Continued)	

The fair value measurement of short-term investments classified as cash and cash equivalents at September 30, 2013 and December 31, 2012, in the amount of R$ 32,500 and R$ 21,471, respectively, uses inputs that fall within Level 2 of the fair value hierarchy.

The Group is not engaged in any outstanding hedging instruments, term contracts, swap operations, options, futures, or embedded derivatives operations. Therefore, the Group has no risk related to derivatives utilization policies.

Significant market risk factors affecting the Group’s business are as follows:

Exchange rate risk

This risk arises from the possibility of the Group incurring losses because of fluctuations in foreign currency exchange rates.

The Group does not use hedging instruments to protect against exchange rate fluctuations between the Brazilian real and the US dollar.

Credit risk

This risk mainly involves the Groups’ cash and cash equivalents and accounts receivable. The Group carries out operations with highly-rated banks, which minimizes risk.

Accounts receivable are substantially generated from credit card companies resulting from sales in the restaurants. Management does not anticipate losses in the realization of such receivables.

Liquidity risk

Liquidity risk arises from the possibility that the Group may not have sufficient funds to comply with their financial commitments due to the different currencies and settlement terms of their rights and obligations.

In order to mitigate liquidity risk for the Parent Company and its subsidiaries. the Group’s liquidity and cash flow is monitored on a daily basis by Management, assuring that cash flow from operations and available funding, when necessary, is sufficient to meet its commitment schedule.

23

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
13.	Financial instruments (Continued)	

Liquidity risk (Continued)

The tables below summarize the maturity profile of the Group’s financial liabilities on contractual and undiscounted payments.

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	September 30, 2013	
 	 	Up to 1 year	 	1 to 5 years	 	> 5 years	 	Total	
Trade accounts payable	 	16,627	
 	 	—	
 	 	—	
 	 	16,627	
 	
Rental payable, including deferred	 	2,033	
 	 	974	
 	 	1,020	
 	 	4,027	
 	
Payroll, provisions and social charges	 	18,402	
 	 	—	
 	 	—	
 	 	18,402	
 	
Taxes and contributions	 	22,747	
 	 	—	
 	 	—	
 	 	22,747	
 	
Royalty and franchises fees	 	2,013	
 	 	—	
 	 	—	
 	 	2,013	
 	
Accrued buyout liability	 	122	
 	 	4,223	
 	 	3,548	
 	 	7,893	
 	
Other liabilities	 	1,968	
 	 	3,197	
 	 	—	
 	 	5,165	
 	
 	 	63,912	
 	 	8,394	
 	 	4,568	
 	 	76,874	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	December 31, 2012	
 	 	Up to 1 year	 	1 to 5 years	 	> 5 years	 	Total	
Trade accounts payable	 	16,271	
 	 	—	
 	 	—	
 	 	16,271	
 	
Rental payable, including deferred	 	2,412	
 	 	1,721	
 	 	—	
 	 	4,133	
 	
Payroll, provisions and social charges	 	13,301	
 	 	—	
 	 	—	
 	 	13,301	
 	
Taxes and contributions	 	6,697	
 	 	—	
 	 	—	
 	 	6,697	
 	
Royalty and franchises fees	 	2,811	
 	 	—	
 	 	—	
 	 	2,811	
 	
Accrued buyout liability	 	1,577	
 	 	6,638	
 	 	—	
 	 	8,215	
 	
Other liabilities	 	4,773	
 	 	3,463	
 	 	—	
 	 	8,236	
 	
 	 	47,842	
 	 	11,822	
 	 	—	
 	 	59,664	

Interest rate risk

Interest rate risk arises from the possibility that the Group incurs losses because of fluctuations in interest rates that could increase certain financial expenses related to loans and financing raised from the market. The Group’s exposure to market risks for changes in interest rates relates primarily to the bank debt and loans with related parties. Considering the Group’s debt profile, management considers the risk of exposure to interest rate variation to be insignificant.

Capital Management

Capital includes units of interest and equity attributable to the equity holders of the Parent.

The primary objective of the Group’s capital management is to ensure that it maintains sufficient capital in order to support its business and maximize member value.

24

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
13.	Financial instruments (Continued)	

Capital Management (Continued)

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to members, return capital to members, take out new loans, or issue new units of interest. No changes were made to the objectives, policies, or processes for managing capital during the nine months ended September 30, 2013.

Included within net debt are trade accounts payable, less cash and cash equivalents.

 	 	 	 	 	 	 	
 	 	September 30, 2013	 	December 31, 2012	
Trade accounts payable	 	16,627	
 	 	16,271	
 	
Less: cash and cash equivalents	 	(34,056	)	 	(22,721	)	
Net debt	 	(17,429	)	 	(6,450	)	
Members’ equity	 	167,047	
 	 	134,243	
 	
Members’ equity and net debt	 	149,618	
 	 	127,793	

 	 	
14.	Operating lease commitments	

The Group has entered into operating leases for the restaurants locations. These leases have an average life of between 10 to 15 years. Future minimum rentals payable under non-cancellable operating leases as of September 30, 2013 are as described below:

 	 	 	 	
 	 	September 30, 2013	
Within one year	 	13,324	
 	
After one year but not more than five years	 	42,870	
 	
More than five years	 	45,293	
 	
 	 	101,487	

Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent. Rental expense for operating leases during nine months of 2013 and 2012 were R$ 13,469 and R$ 10,186, respectively.

25

PGS CONSULTORIA E SERVIÇOS LTDA.

Notes to the consolidated financial statements (unaudited) (Continued)
September 30, 2013
(In thousands of Brazilian reais, except when mentioned otherwise)
 	 	
15.	Other Operating (Income)/Expenses	

 	
 	 	 	 	 	 	 	
 	 	For the nine months ended	 	For the nine months ended	
 	 	September 30, 2013	 	September 30, 2013	
Operating rent, leasing & parking expense	 	16,987	
 	 	13,234	
 	
Advertising, promotion & marketing research	 	11,455	
 	 	9,008	
 	
Operating property taxes	 	1,718	
 	 	1,403	
 	
Received compensation	 	(2,141	)	 	—	
 	
Other income	 	(1,531	)	 	(397	)	
 	 	26,488	
 	 	23,248	

 	 	
16.	Differences between the accounting practices adopted in Brazil and accounting principles generally accepted in the United States of America	

The consolidated financial statements were prepared and are presented in accordance with accounting practices adopted in Brazil (“BR GAAP”), which comprise the pronouncements, interpretations and guidance issued by the Brazilian Accounting Pronouncements Committee (“CPC”), which are converged to the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).

BR GAAP differs, in certain significant respects, from U.S. GAAP. As of September 30, 2013, Management did not identify any significant differences that have a significant effect on either net income or members' equity.

26

Exhibit 99.3
BLOOMIN’ BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On November 1, 2013, Bloomin’ Brands, Inc. (the “Company”), through its wholly-owned subsidiary Outback Steakhouse Restaurantes Brasil S.A. (“OB Brasil”) (formerly known as Bloom Holdco Participaçơes Ltda.), completed its previously announced acquisition of a controlling interest in PGS Participaçơes Ltda. (“PGS Par”), the Company’s former joint venture partner, in accordance with the Quota Purchase and Sale Agreement entered into on October 31, 2013 (the “Purchase Agreement”), by purchasing 80% of the issued and outstanding capital stock of PGS Par, which held a 50% interest in PGS Consultoria e Serviços Ltda. (the “Brazilian Joint Venture”) (collectively, the “Acquisition”). Prior to the Acquisition, the Company held a 50% interest in the Brazilian Joint Venture. As a result of the Acquisition, the Company now holds a 90% interest in the Brazilian Joint Venture, which operates Outback Steakhouse restaurants in Brazil.

The following unaudited pro forma condensed combined financial statements of Bloomin’ Brands, Inc. for the year ended December 31, 2012, and as of and for the nine months ended September 30, 2013, are based on historical consolidated financial statements of Bloomin’ Brands, Inc. and give effect to the Acquisition after applying the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements.

The historical consolidated financial statements of the Brazilian Joint Venture were prepared in conformity with accounting principles generally accepted in Brazil, which are converged to International Financial Reporting Standards (“IFRS”) (collectively “BR GAAP”), which differs in certain respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). Necessary adjustments have been made to reconcile the historical consolidated financial statements of the Brazilian Joint Venture to U.S. GAAP. These adjustments relate primarily to differences relating to income tax contingencies.

The Unaudited Pro Forma Condensed Combined Balance Sheet at September 30, 2013 gives effect to the Acquisition by the Company of the Brazilian Joint Venture as if it had occurred on September 30, 2013. The Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended December 31, 2012, and for the nine months ended September 30, 2013, give effect to the Acquisition as if it had occurred on January 1, 2012. The historical consolidated financial information has been adjusted to give effect to estimated pro forma events that are (i) directly attributable to the Acquisition, (ii) factually supportable and (iii) with respect to the statements of operations, expected to have a continuing impact on the consolidated results of operations. In addition, to ensure timely reporting, the Company made the election to consolidate the results of its Brazilian operations on a one-month lag, effective as of the acquisition date.  The accompanying unaudited pro forma condensed combined financial statements do not reflect the lag.

The Unaudited Pro Forma Condensed Combined Statements of Operations do not reflect the following amounts that are not expected to have a continuing impact on the consolidated results of operations: (i) professional fees associated with the Acquisition; (ii) gain on remeasurement to fair value of previously held equity investment in the Brazilian Joint Venture; and (iii) interest expense associated with the borrowings of $100.0 million on the revolving credit facility since the Company repaid the borrowings in full prior to December 31, 2013. Had the Acquisition occurred on January 1, 2012, these amounts would have been an aggregate gain of approximately $34.8 million. In addition, the Unaudited Pro Forma Condensed Combined Statements of Operations do not consider reduced interest expense had the cash used in the Acquisition been applied to lower the Company’s outstanding debt obligation. Actual amounts were or will be recorded by us in the period in which these transactions are completed. The pro forma adjustments exclude the impact of the one-month reporting lag that was adopted by the Company upon acquisition and, therefore, the unaudited pro forma condensed combined financial statements reflect calendar-based periods for all presented periods. In addition, the pro forma adjustments for the Acquisition do not include any post-closing adjustments that may occur pursuant to the Purchase Agreement, which may include adjustments of the purchase price, and any such post-closing adjustments may be material.

1

BLOOMIN’ BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS - Continued

The unaudited pro forma condensed combined financial statements should be read in conjunction with the following:
 	 	
•	the accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements;	

•	the consolidated financial statements of Bloomin’ Brands, Inc. for the year ended December 31, 2012 and the notes thereto;	

•	the unaudited consolidated financial statements of Bloomin’ Brands, Inc. for the nine months ended September 30, 2013 and the notes thereto; and	

•	the consolidated financial information of PGS Consultoria e Serviços Ltda. for the year ended December 31, 2012, the nine months ended September 30, 2013, and the notes thereto, included in this Form 8-K/A.	

The unaudited pro forma condensed combined financial statements contained in this Form 8-K/A are presented for informational purposes only, contain a variety of adjustments, assumptions and preliminary estimates, are subject to numerous other uncertainties and do not purport to represent what the actual financial condition or results of operations of the Company would have been if the Acquisition had been completed as of the date or for the periods indicated above or that may be achieved as of any future date or for any future period. The pro forma adjustments are based on the preliminary information available at the time of the preparation of this Form 8-K/A. For purposes of the unaudited pro forma condensed combined financial information, the Acquisition consideration has been preliminarily allocated to the assets acquired and liabilities assumed based on information presently available to the Company to estimate fair values. The actual amounts as of November 1, 2013, the closing date of the Acquisition, may differ materially from the information presented in the accompanying unaudited pro forma condensed combined financial information.

2

BLOOMIN’ BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2013
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	HISTORICAL	 	 	 	 	 	 	
 	 	BLOOMIN’ BRANDS, INC.	 	BRAZILIAN JOINT VENTURE	 	PRO FORMA ADJUSTMENTS	 	NOTES	 	PRO FORMA COMBINED	
ASSETS	 	 	 	 	 	 	 	 	 	 	
Current Assets	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	183,658	
 	 	$	15,272	
 	 	$	(20,599	)	 	(a)	 	$	178,331	
 	
Current portion of restricted cash	 	3,789	
 	 	—	
 	 	—	
 	 	 	 	3,789	
 	
Inventories	 	70,717	
 	 	5,228	
 	 	—	
 	 	 	 	75,945	
 	
Deferred income tax assets	 	49,446	
 	 	—	
 	 	—	
 	 	 	 	49,446	
 	
Other current assets, net	 	99,770	
 	 	18,238	
 	 	(1,541	)	 	(b)	 	116,467	
 	
Total current assets	 	407,380	
 	 	38,738	
 	 	(22,140	)	 	 	 	423,978	
 	
Restricted cash	 	15,504	
 	 	—	
 	 	10,080	
 	 	(a)	 	25,584	
 	
Property, fixtures and equipment, net	 	1,563,443	
 	 	69,312	
 	 	5,898	
 	 	(c)	 	1,638,653	
 	
Investments in and advances to unconsolidated affiliates, net	 	40,973	
 	 	—	
 	 	(40,453	)	 	(d)	 	520	
 	
Goodwill	 	271,163	
 	 	—	
 	 	87,518	
 	 	(e)	 	358,681	
 	
Intangible assets, net	 	541,214	
 	 	2,573	
 	 	80,816	
 	 	(f)	 	624,603	
 	
Deferred income tax assets	 	2,893	
 	 	4,473	
 	 	(4,473	)	 	(g)	 	2,893	
 	
Other assets, net	 	155,557	
 	 	3,312	
 	 	—	
 	 	 	 	158,869	
 	
Total assets	 	$	2,998,127	
 	 	$	118,408	
 	 	$	117,246	
 	 	 	 	$	3,233,781	

 	 	(CONTINUED...)	 	

3

BLOOMIN’ BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2013
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	HISTORICAL	 	 	 	 	 	 	
 	 	BLOOMIN’ BRANDS, INC.	 	BRAZILIAN JOINT VENTURE	 	PRO FORMA ADJUSTMENTS	 	NOTES	 	PRO FORMA COMBINED	
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY	 	 	

Current Liabilities	 	 	

Accounts payable	 	$	155,445	
 	 	$	7,456	
 	 	$	(369	)	 	(b)	 	$	162,532	
 	
Accrued and other current liabilities	 	171,272	
 	 	21,131	
 	 	(1,172	)	 	(b)	 	191,231	
 	
Current portion of partner deposits and accrued partner obligations	 	13,566	
 	 	506	
 	 	—	
 	 	 	 	14,072	
 	
Unearned revenue	 	202,204	
 	 	—	
 	 	—	
 	 	 	 	202,204	
 	
Current portion of long-term debt	 	13,341	
 	 	—	
 	 	 	 	 	 	13,341	
 	
Total current liabilities	 	555,828	
 	 	29,093	
 	 	(1,541	)	 	 	 	583,380	
 	
Partner deposits and accrued partner obligations	 	77,094	
 	 	5,878	
 	 	—	
 	 	 	 	82,972	
 	
Deferred rent	 	103,024	
 	 	978	
 	 	(978	)	 	(h)	 	103,024	
 	
Deferred income tax liabilities	 	130,636	
 	 	—	
 	 	25,268	
 	 	(i)	 	155,904	
 	
Long-term debt, net	 	1,447,768	
 	 	—	
 	 	100,000	
 	 	(j)	 	1,547,768	
 	
Other long-term liabilities, net	 	261,064	
 	 	7,550	
 	 	3,253	
 	 	(k)	 	271,867	
 	
Total liabilities	 	2,575,414	
 	 	43,499	
 	 	126,002	
 	 	 	 	2,744,915	
 	
Commitments and contingencies	 	 	 	 	 	 	 	 	 	 	
Mezzanine Equity	 	 	 	 	 	 	 	 	 	 	
Redeemable noncontrolling interests	 	—	
 	 	—	
 	 	22,380	
 	 	(l)	 	22,380	
 	
Stockholders’ Equity	 	 	 	 	 	 	 	 	 	 	
Bloomin’ Brands, Inc. Stockholders’ Equity	 	 	 	 	 	 	 	 	 	 	
Preferred stock, $0.01 par value, 25,000,000 shares authorized; no shares issued and outstanding	 	—	
 	 	—	
 	 	—	
 	 	 	 	—	
 	
Common stock, $0.01 par value, 475,000,000 shares authorized; 124,287,148 shares issued and outstanding	 	1,243	
 	 	9,804	
 	 	(9,804	)	 	(m)	 	1,243	
 	
Additional paid-in capital	 	1,057,933	
 	 	—	
 	 	—	
 	 	 	 	1,057,933	
 	
Accumulated deficit	 	(624,070	)	 	65,105	
 	 	(28,142	)	 	(n)	 	(587,107	)	
Accumulated other comprehensive loss	 	(16,780	)	 	—	
 	 	6,810	
 	 	(o)	 	(9,970	)	
Total Bloomin’ Brands, Inc. stockholders’ equity	 	418,326	
 	 	74,909	
 	 	(31,136	)	 	 	 	462,099	
 	
Noncontrolling interests	 	4,387	
 	 	—	
 	 	—	
 	 	 	 	4,387	
 	
Total stockholders’ equity	 	422,713	
 	 	74,909	
 	 	(31,136	)	 	 	 	466,486	
 	
Total liabilities, mezzanine equity and stockholders’ equity	 	$	2,998,127	
 	 	$	118,408	
 	 	$	117,246	
 	 	 	 	$	3,233,781	

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

4

BLOOMIN’ BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	HISTORICAL	 	 	 	 	 	 	
 	 	BLOOMIN’ BRANDS, INC.	 	BRAZILIAN JOINT VENTURE	 	PRO FORMA ADJUSTMENTS	 	NOTES	 	PRO FORMA COMBINED	
Revenues	 	 	 	 	 	 	 	 	 	 	
Restaurant sales	 	$	3,946,116	
 	 	$	246,819	
 	 	$	—	
 	 	 	 	$	4,192,935	
 	
Other revenues	 	41,679	
 	 	—	
 	 	(11,221	)	 	(p)	 	30,458	
 	
Total revenues	 	3,987,795	
 	 	246,819	
 	 	(11,221	)	 	 	 	4,223,393	
 	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	
Cost of sales	 	1,281,002	
 	 	74,808	
 	 	—	
 	 	 	 	1,355,810	
 	
Labor and other related	 	1,117,624	
 	 	52,871	
 	 	—	
 	 	 	 	1,170,495	
 	
Other restaurant operating	 	918,522	
 	 	49,044	
 	 	(11,221	)	 	(p)	 	956,345	
 	
Depreciation and amortization	 	155,482	
 	 	8,706	
 	 	8,865	
 	 	(q)	 	173,053	
 	
General and administrative	 	326,473	
 	 	37,032	
 	 	—	
 	 	 	 	363,505	
 	
Provision for impaired assets and restaurant closings	 	13,005	
 	 	90	
 	 	—	
 	 	 	 	13,095	
 	
Income from operations of unconsolidated affiliates	 	(5,450	)	 	—	
 	 	5,118	
 	 	(s)	 	(332	)	
Total costs and expenses	 	3,806,658	
 	 	222,551	
 	 	2,762	
 	 	 	 	4,031,971	
 	
Income from operations	 	181,137	
 	 	24,268	
 	 	(13,983	)	 	 	 	191,422	
 	
Loss on extinguishment and modification of debt	 	(20,957	)	 	—	
 	 	—	
 	 	 	 	(20,957	)	
Other expense, net	 	(128	)	 	(29	)	 	—	
 	 	 	 	(157	)	
Interest (expense) income, net	 	(86,642	)	 	87	
 	 	—	
 	 	 	 	(86,555	)	
Income before provision for income taxes	 	73,410	
 	 	24,326	
 	 	(13,983	)	 	 	 	83,753	
 	
Provision for income taxes	 	12,106	
 	 	11,501	
 	 	(1,340	)	 	(t)	 	22,267	
 	
Net income	 	61,304	
 	 	12,825	
 	 	(12,643	)	 	 	 	61,486	
 	
Less: net income attributable to noncontrolling interests	 	11,333	
 	 	—	
 	 	530	
 	 	(u)	 	11,863	
 	
Net income attributable to Bloomin’ Brands, Inc.	 	$	49,971	
 	 	$	12,825	
 	 	$	(13,173	)	 	 	 	$	49,623	

Earnings per share:	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.45	
 	 	 	 	 	 	 	 	$	0.44	
 	
Diluted	 	$	0.44	
 	 	 	 	 	 	 	 	$	0.43	
 	
Weighted average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	
Basic	 	111,999	
 	 	 	 	 	 	 	 	111,999	
 	
Diluted	 	114,821	
 	 	 	 	 	 	 	 	114,821	

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

5

BLOOMIN’ BRANDS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2013
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	HISTORICAL	 	 	 	 	 	 	
 	 	BLOOMIN’ BRANDS, INC.	 	BRAZILIAN JOINT VENTURE	 	PRO FORMA ADJUSTMENTS	 	NOTES	 	PRO FORMA COMBINED	
Revenues	 	 	 	 	 	 	 	 	 	 	
Restaurant sales	 	$	3,047,854	
 	 	$	191,551	
 	 	$	—	
 	 	 	 	$	3,239,405	
 	
Other revenues	 	30,821	
 	 	—	
 	 	(9,194	)	 	(p)	 	21,627	
 	
Total revenues	 	3,078,675	
 	 	191,551	
 	 	(9,194	)	 	 	 	3,261,032	
 	
Costs and expenses	 	 	
 	 	 	 	 	 	 	 	 	
Cost of sales	 	993,031	
 	 	59,421	
 	 	—	
 	 	 	 	1,052,452	
 	
Labor and other related	 	858,020	
 	 	40,629	
 	 	—	
 	 	 	 	898,649	
 	
Other restaurant operating	 	717,489	
 	 	36,475	
 	 	(9,194	)	 	(p)	 	744,770	
 	
Depreciation and amortization	 	121,220	
 	 	6,760	
 	 	5,860	
 	 	(q)	 	133,840	
 	
General and administrative	 	199,407	
 	 	23,878	
 	 	(924	)	 	(r)	 	222,361	
 	
Provision for impaired assets and restaurant closings	 	2,706	
 	 	—	
 	 	—	
 	 	 	 	2,706	
 	
Income from operations of unconsolidated affiliates	 	(7,454	)	 	—	
 	 	7,454	
 	 	(s)	 	—	
 	
Total costs and expenses	 	2,884,419	
 	 	167,163	
 	 	3,196	
 	 	 	 	3,054,778	
 	
Income from operations	 	194,256	
 	 	24,388	
 	 	(12,390	)	 	 	 	206,254	
 	
Loss on extinguishment and modification of debt	 	(14,586	)	 	—	
 	 	—	
 	 	 	 	(14,586	)	
Other (expense) income, net	 	(127	)	 	(27	)	 	—	
 	 	 	 	(154	)	
Interest (expense) income, net	 	(56,585	)	 	233	
 	 	—	
 	 	 	 	(56,352	)	
Income before (benefit) provision for income taxes	 	122,958	
 	 	24,594	
 	 	(12,390	)	 	 	 	135,162	
 	
(Benefit) provision for income taxes	 	(30,696	)	 	9,178	
 	 	(933	)	 	(t)	 	(22,451	)	
Net income	 	153,654	
 	 	15,416	
 	 	(11,457	)	 	 	 	157,613	
 	
Less: net income attributable to noncontrolling interests	 	4,269	
 	 	—	
 	 	1,009	
 	 	(u)	 	5,278	
 	
Net income attributable to Bloomin’ Brands, Inc.	 	$	149,385	
 	 	$	15,416	
 	 	$	(12,466	)	 	 	 	$	152,335	

Earnings per share:	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	1.22	
 	 	 	 	 	 	 	 	$	1.24	
 	
Diluted	 	$	1.16	
 	 	 	 	 	 	 	 	$	1.19	
 	
Weighted average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	
Basic	 	122,624	
 	 	 	 	 	 	 	 	122,624	
 	
Diluted	 	128,464	
 	 	 	 	 	 	 	 	128,464	

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

6

BLOOMIN’ BRANDS, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE NOTED)

1.     Transaction Description

On November 1, 2013, the Company, through its wholly-owned subsidiary OB Brasil, completed its previously announced acquisition of a controlling interest in PGS Par, the Company’s former joint venture partner, in accordance with the Purchase Agreement, by purchasing 80% of the issued and outstanding capital stock of PGS Par, which held a 50% interest in the Brazilian Joint Venture. Prior to the Acquisition, the Company held a 50% interest in the Brazilian Joint Venture. As a result of the Acquisition, the Company now holds a 90% interest in the Brazilian Joint Venture, which operates Outback Steakhouse restaurants in Brazil. The Company completed the Acquisition for total consideration of R$240.8 million (BRL) (or approximately $110.5 million) in cash. The Company financed the Acquisition primarily with borrowings of $100.0 million on its existing revolving credit facility and available cash. The revolving credit facility borrowings were subsequently repaid in full prior to December 31, 2013.

2.    Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using U.S. GAAP and was based on the historical consolidated financial statements of the Company and the Brazilian Joint Venture. All pro forma financial statements use the Company’s period end date and no adjustments were made for the one-month lag period that was adopted by the Company at the acquisition date.

The historical consolidated financial statements of the Brazilian Joint Venture were prepared in conformity with BR GAAP, which differs in certain respects from U.S. GAAP. Necessary adjustments have been made to reconcile the historical consolidated financial statements of the Brazilian Joint Venture to U.S. GAAP. These adjustments relate primarily to differences relating to income tax contingencies and are included in the column under the heading “Pro Forma Adjustments”.

The Acquisition will be accounted for under the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting under U.S. GAAP.

The historical unaudited consolidated balance sheet of the Brazilian Joint Venture was prepared in Brazilian Reais and has been translated to U.S. Dollars using a rate of $0.45, which approximates the Brazilian Real conversion rate to U.S. Dollars on September 30, 2013. The Brazilian Joint Venture historical audited consolidated statement of operations for the year ended December 31, 2012 and unaudited consolidated statement of operations for the nine months ended September 30, 2013 have been translated to U.S. Dollars using exchange rates of $0.53 and $0.47, respectively, which approximate the average Brazilian Real conversion rate to U.S. Dollars for the applicable periods. Certain of the pro forma adjustments have been translated to U.S. Dollars using an exchange rate of $0.46, which approximates the Brazilian Real conversion rate to U.S. Dollars on November 1, 2013, the closing date of the Acquisition.

3.    Significant Accounting Policies    

Certain amounts in the historical consolidated financial statements of the Brazilian Joint Venture have been reclassified to conform to the Company’s financial statement presentation. Management will also continue to assess the accounting policies of the Brazilian Joint Venture for adjustments in addition to those reflected in the unaudited pro forma condensed combined financial information that may be required to conform the accounting policies of the Brazilian Joint Venture to the Company’s.

7

BLOOMIN’ BRANDS, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS - Continued
(IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE NOTED)

4.    Assets Acquired and Liabilities Assumed

The following table summarizes the cash paid and preliminary estimated fair values of the assets acquired and the liabilities assumed as if the Acquisition occurred on September 30, 2013:

 	 	 	 	
Cash and cash equivalents	$	15,272	
 	
Inventories	5,228	
 	
Other current assets, net	18,238	
 	
Property, fixtures and equipment	75,210	
 	
Goodwill	140,149	
 	
Intangible assets:	 	
   Reacquired franchise rights	80,542	
 	
   Favorable leases	4,139	
 	
Other assets, net	3,312	
 	
Accounts payable	(7,456	)	
Accrued and other current liabilities	(21,131	)	
Current portion of partner deposits and accrued partner obligations	(506	)	
Long-term portion of partner deposits and accrued partner obligations	(5,878	)	
Deferred income taxes	(25,268	)	
Other long-term liabilities, net	(10,803	)	
 	271,048	
 	
Fair value of previously held equity investment	(138,149	)	
Remaining redeemable noncontrolling interest	(22,380	)	
     Total purchase price	$	110,519	

The above allocation will remain preliminary until the Company has all of the information necessary to finalize the allocation of the purchase price.

Identifiable intangible assets, net

The fair value of net intangible assets has been allocated to the following two categories: (i) reacquired franchise rights and (ii) favorable and unfavorable leases. The reacquired franchise rights will be amortized on a straight-line basis over the remaining life of each restaurants’ franchise agreement, without consideration of renewal. The favorable and unfavorable leases will be amortized on a straight-line basis over the remaining lease term. The following table represents details of the identifiable intangible assets:

8

BLOOMIN’ BRANDS, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS - Continued
(IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE NOTED)

 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	FAIR VALUE AMOUNT	 	ESTIMATED USEFUL LIFE (in years)	 	PRO FORMA FIRST YEAR AMORTIZATION (1)	
Reacquired franchise rights	 	$	80,542	
 	 	4 - 20	 	$	6,860	
 	
Favorable leases	 	4,139	
 	 	1 - 13	 	731	
 	
Unfavorable leases (2)	 	(1,758	)	 	1 - 13	 	(251	)	
Total identifiable intangible assets, net	 	$	82,923	
 	 	 	 	$	7,340	
 	
____________________
 	 	
(1)	Represents amortization expense expected to be recorded over the first 12-month period subsequent to the acquisition date.	
 	 	
(2)	Unfavorable leases are included in Other long-term liabilities, net in the preliminary estimated fair values of the assets acquired and the liabilities assumed table shown above.	

The fair values of the identifiable intangible assets were determined based on the following approach:
 	 	
•	Reacquired franchise rights: The value assigned to the reacquired franchise rights was determined using the income approach. Projected after-tax, post-royalty expense cash flows derived from the franchise rights that were reacquired, net of capital charges, were discounted to present value. Expectations related to future restaurant performance were based on historical data, and a long-term forecast was constructed based on the Company’s financial projections and expectations. The capital charges applied serve to recognize the use of other assets in deriving value from the franchise agreement. The resulting cash flows were then discounted to present value.	

•	Favorable and unfavorable leases: The values assigned to favorable and unfavorable leases were determined using a market approach. The variance between market rent and contract rent over the remaining lease term was discounted to present value on a location-by-location basis.	

Step acquisition

A step acquisition occurs when a controlling ownership interest is gained over a period of time. Applicable accounting guidance requires that a step acquisition in which control is obtained over a business be accounted for as a business combination. The accounting guidance also requires that previously held equity interests be remeasured at fair value and any difference between the fair value and the carrying value of the equity interest held be recognized as a gain or loss on the statement of operations. The fair value assigned to the previously held equity investment in the Brazilian Joint Venture for purposes of calculating the gain or loss was determined using the income approach, based on a discounted cash flow methodology. The resulting gain on remeasurement to fair value of the previously held equity investment in the Brazilian Joint Venture in the amount of $37.0 million has been included as an adjustment to the Accumulated deficit in the Unaudited Pro Forma Condensed Combined Balance Sheet but excluded from the Unaudited Pro Forma Condensed Combined Statements of Operations.
 
Noncontrolling interest

The Acquisition, as described in Note 1, results in a noncontrolling interest of 10% being retained by the sellers. The fair value assigned to the noncontolling interest in the Brazilian Joint Venture was determined using the income approach, based on a discounted cash flow methodology. In accordance with the Purchase Agreement, the noncontrolling interest in the Brazilian Joint Venture is subject to certain put options and call options. The accounting guidance considers these options to be embedded features within the noncontrolling interest that require the noncontrolling interest to be classified within the balance sheet as redeemable equity. The redeemable noncontrolling interest in the Brazilian Joint Venture is presented at fair value in the amount of $22.4 million and has been included as an adjustment to Mezzanine equity in the Unaudited Pro Forma Condensed Combined Balance Sheet.

9

BLOOMIN’ BRANDS, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS - Continued
(IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE NOTED)

5.    Notes to Unaudited Pro Forma Adjustments

Adjustments included in the column under the heading “Pro Forma Adjustments” represent the following:

(a)To reflect adjustments made to cash for the following:

 	 	 	 	
Proceeds from borrowing on revolving credit facility	$	100,000	
 	
Less: Acquisition purchase price	(110,519	)	
Less: Cash placed in indemnity escrow for unrecognized contingent losses	(10,080	)	
 	$	(20,599	)	

(b)	To reflect the elimination of franchise and royalty receivables and payables from the historical consolidated balance sheets of Bloomin’ Brands, Inc. and the Brazilian Joint Venture.	

(c)	To adjust the acquired property, fixtures, and equipment to fair value as of the acquisition date.	

(d)	To reflect the write-off of the previously held equity investment of $40.5 million in the Brazilian Joint Venture.	

(e)	To reflect goodwill resulting from the Acquisition, calculated as follows:	

 	
 	 	 	 	
Acquisition purchase price	$	110,519	
 	
Gain on remeasurement to fair value of previously held equity investment (see note (e)(1))	36,963	
 	
Write-off of previously held equity investment	40,453	
 	
Write-off of the accumulated foreign currency translation adjustment associated with the previously held equity investment	6,810	
 	
Write-off of historical intangible assets associated with the previously held equity investment	1,292	
 	
Remaining redeemable noncontrolling interest	22,380	
 	
Recognition of deferred income tax liability on purchase price fair value adjustments	29,741	
 	
Less: Fair value of assets acquired and liabilities assumed, net (2)	(77,717	)	
Less: Recognition of identifiable intangible assets acquired:	 	
Reacquired franchise rights	(80,542	)	
Favorable leases	(4,139	)	
Unfavorable leases	1,758	
 	
 	$	87,518	

(1)Gain on remeasurement to fair value of the previously held equity investment in the Brazilian Joint Venture is computed as follows:

 	 	 	 	
Fair value of the previously held equity investment	$	138,149	
 	
Less: Carrying value of the previously held equity investment	(40,453	)	
Less: Carrying value of historical goodwill	(52,631	)	
Less: Carrying value of historical intangible assets associated with the previously held equity investment	(1,292	)	
Less: Accumulated foreign currency translation adjustment associated with the previously held equity investment	(6,810	)	
 	$	36,963	

10

BLOOMIN’ BRANDS, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS - Continued
(IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE NOTED)

(2)Fair value of assets acquired and liabilities assumed, net is computed as follows:

 	 	 	 	
Historical book value of assets acquired and liabilities assumed, net	$	74,909	
 	
Remeasurement of assets acquired and liabilities assumed to fair value:	 	
     Fixed assets fair value adjustment	5,898	
 	
     Write-off of deferred rent	978	
 	
Write-off of deferred lease incentive from the historical consolidated balance sheet of the Brazilian Joint Venture	1,417	
 	
Write-off of intangible assets from the historical consolidated balance sheet of the Brazilian Joint Venture	(2,573	)	
 	80,629	
 	
Reconciliation adjustment from BR GAAP to U.S. GAAP:	 	
Recognition of liability for uncertain income tax positions in accordance with U.S. GAAP	(2,912	)	
 	$	77,717	

(f)To reflect the following:

 	 	 	 	
Recognition of the following identifiable intangible assets acquired:	 	
Reacquired franchise rights	$	80,542	
 	
Favorable leases	4,139	
 	
Less: Write-off of the carrying value of the historical intangible assets associated with the previously held equity investment	(1,292	)	
Less: Write-off of intangible assets from the historical consolidated balance sheet of the Brazilian Joint Venture	(2,573	)	
 	$	80,816	

 	 	
(g)	Reclassification adjustment to net deferred income tax asset with deferred income tax liability.	

(h)	To reflect the write-off of deferred rent from the historical consolidated balance sheet of the Brazilian Joint Venture.	

(i)	To reflect the following:	

 	
 	 	 	 	
Recognition of deferred income tax liability on purchase price fair value adjustments	$	29,741	
 	
Less: Reclassification adjustment to net deferred income tax asset with deferred income tax liability (see note (g))	(4,473	)	
 	$	25,268	

 	 	
(j)	To reflect borrowing of $100.0 million from the Company’s revolving credit facility. Borrowings were repaid in full prior to December 31, 2013.	

11

BLOOMIN’ BRANDS, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS - Continued
(IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE NOTED)

(k)	To reflect the following:	

 	
 	 	 	 	
Recognition of unfavorable lease liability at fair value	$	1,758	
 	
Recognition of liability for uncertain tax positions in accordance with U.S. GAAP	2,912	
 	
Less: Write-off of deferred lease incentive from the historical balance sheet of the Brazilian Joint Venture	(1,417	)	
 	$	3,253	

 	 	
(l)	To reflect the recognition at fair value of the 10% redeemable noncontrolling interest in the Brazilian Joint Venture retained by the sellers.	

(m)	To reflect the elimination of the historical common stock of the Brazilian Joint Venture such that on a combined basis only the common stock of Bloomin’ Brands, Inc. remains.	

(n)	To reflect adjustments to Accumulated deficit for the following:	

 	
 	 	 	 	
Gain on remeasurement to fair value of previously held equity investment in the Brazilian Joint Venture, (see note (e)(1))	$	36,963	
 	
Less: Elimination of historical retained earnings of the Brazilian Joint Venture	(65,105	)	
 	$	(28,142	)	

(o)	To reflect the write-off of the foreign currency translation adjustment associated with the previously held equity investment.	

(p)	To reflect the elimination of royalty revenue and royalty expense from the historical consolidated statements of operations of Bloomin’ Brands, Inc. and the Brazilian Joint Venture, respectively.	

(q)	To reflect adjustments to Depreciation and amortization for stores opened as of January 1, 2012 (the assumed date of the transaction for pro forma statements of operations purposes) as follows:	

 	
 	 	 	 	 	 	 	 	
 	FOR THE YEAR ENDED DECEMBER 31, 2012	 	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013	
Amortization expense resulting from the recognition of the reacquired franchise rights and favorable lease intangible assets	$	7,245	
 	 	$	4,899	
 	
Incremental depreciation expense resulting from adjustments to fair value and depreciable lives of property, fixtures and equipment	1,666	
 	 	1,238	
 	
Less: Current year amortization of intangible assets capitalized on the historical consolidated balance sheet of the Brazilian Joint Venture	(46	)	 	(277	)	
 	$	8,865	
 	 	$	5,860	

 	 	
(r)	To reflect the reversal of professional fees associated with the Acquisition that are included in the historical results of Bloomin’ Brands, Inc. for the nine months ended September 30, 2013, which are not ongoing expenses.	

(s)	To reflect the reversal of equity method income from the historical consolidated statements of operations of Bloomin’ Brands, Inc. resulting from the 50% ownership of the Brazilian Joint Venture.	

12

BLOOMIN’ BRANDS, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS - Continued
(IN THOUSANDS OF U.S. DOLLARS, UNLESS OTHERWISE NOTED)

(t)	To reflect the following:	

 	
 	 	 	 	 	 	 	 	
 	FOR THE YEAR ENDED DECEMBER 31, 2012	 	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013	
Recognition of provision for uncertain income tax positions in accordance with U.S. GAAP	$	1,674	
 	 	1,459	
 	
Less: Tax effect of the pro forma adjustments at the Brazilian statutory rate of 34% and combined pro forma income tax provision adjustment	(3,014	)	 	(2,392	)	
 	$	(1,340	)	 	$	(933	)	

(u)	To reflect the net income attributable to the 10% redeemable noncontrolling interest in the Brazilian Joint Venture retained by the sellers, calculated as follows:	

 	
 	 	 	 	 	 	 	 	
 	FOR THE YEAR ENDED DECEMBER 31, 2012	 	FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013	
Historical consolidated net income of the Brazilian Joint Venture	$	12,825	
 	 	$	15,416	
 	
Pro forma adjustments attributable to the Brazilian Joint Venture:	 	 	 	
     Depreciation and amortization (note (q))	(8,865	)	 	(5,860	)	
     Provision for income taxes (note (t))	1,340	
 	 	533	
 	
 	5,300	
 	 	10,089	
 	
Remaining redeemable noncontrolling interest	10	%	 	10	%	
 	$	530	
 	 	$	1,009	

13