
Class A common stock –			206,864
Class B common stock –			2,068,640

BIGLARI HOLDINGS INC.

INDEX


		Page No.
Part I – Financial Information

Item 1.	Financial Statements		1
	Consolidated Balance Sheets — ~~March 31, 2018~~September 30, 2022 and December 31, ~~2017~~2021	1
	Consolidated Statements of Earnings — Third Quarter and First ~~Quarter 2018~~Nine Months 2022 and ~~2017~~2021	2
	Consolidated Statements of Comprehensive Income — Third Quarter and First ~~Quarter 2018~~Nine Months 2022 and ~~2017~~2021	23
	Consolidated Statements of Cash Flows — First ~~Quarter 2018~~Nine Months 2022 and ~~2017~~2021	34
	Consolidated Statements of Changes in Shareholders’ Equity — First ~~Quarter 2018~~Nine Months 2022 and ~~2017~~2021	45
	Notes to Consolidated Financial Statements	57
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2629
Item 4.	Controls and Procedures	2729

Part II – Other Information

Item 1.	Legal Proceedings	2730
Item 1A.	Risk Factors	2730
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2830
Item 3.	Defaults Upon Senior Securities	2830
Item 4.	Mine Safety Disclosures	2830
Item 5.	Other Information	2830
Item 6.	Exhibits	2930
Signatures		3031

~~Index~~Table of Contents

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIGLARI HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

March 31,
2018 December 31, 2017
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 45,444 $ 58,577
Investments 24,157 23,289
Receivables 12,187 16,284
Inventories 7,312 7,268
Other current assets 9,299 7,221
Total current assets 98,399 112,639
Property and equipment 291,625 295,800
Goodwill and other intangible assets 66,774 66,645
Investment partnerships 545,939 566,021
Other assets 17,846 22,479
Total assets $ 1,020,583 $ 1,063,584

Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 106,708 $ 128,744
Current portion of notes payable and other borrowings 6,524 6,748
Total current liabilities 113,232 135,492
Long-term notes payable and other borrowings 254,988 256,994
Deferred taxes 89,387 88,401
Other liabilities 11,269 11,369
Total liabilities 468,876 492,256
Shareholders’ equity
Common stock 1,071 1,071
Additional paid-in capital 381,975 382,014
Retained earnings 563,780 565,504
Accumulated other comprehensive loss (966 ) (1,404 )
Treasury stock, at cost (394,153 ) (375,857 )
Biglari Holdings Inc. shareholders’ equity 551,707 571,328
Total liabilities and shareholders’ equity $ 1,020,583 $ 1,063,584

September 30,
2022 December 31,
2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 64,842 $ 42,349
Investments 70,032 83,061
Receivables 25,826 28,508
Inventories 3,704 3,803
Other current assets 13,147 7,088
Total current assets 177,551 164,809
Property and equipment 414,497 349,351
Operating lease assets 38,539 42,538
Goodwill and other intangible assets 75,933 77,010
Investment partnerships 144,864 250,399
Other assets 10,761 10,700
Total assets $ 862,145 $ 894,807
Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 101,503 $ 100,467
Loss and loss adjustment expenses 14,613 14,609
Unearned premiums 12,493 11,667
Current portion of lease obligations 17,093 16,898
Total current liabilities 145,702 143,641
Lease obligations 95,980 104,479
Line of credit 30,000 —
Deferred taxes 28,515 46,533
Asset retirement obligations 14,721 10,389
Other liabilities 1,819 2,069
Total liabilities 316,737 307,111
Shareholders’ equity
Common stock 1,138 1,138
Additional paid-in capital 381,788 381,788
Retained earnings 566,455 608,528
Accumulated other comprehensive loss (3,777) (1,907)
Treasury stock, at cost (409,119) (401,851)
Biglari Holdings Inc. shareholders’ equity 536,485 587,696
Noncontrolling interests 8,923 —
Total shareholders' equity 545,408 587,696
Total liabilities and shareholders’ equity $ 862,145 $ 894,807

See accompanying Notes to Consolidated Financial Statements.

~~Index~~Table of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(dollars in thousands except per share amounts)

First Quarter
2018 2017
(Unaudited)
Revenues
Restaurant operations $ 193,934 $ 195,694
Insurance premiums and other 6,547 6,080
Media advertising and other 1,744 1,619
202,225 203,393
Cost and expenses
Restaurant cost of sales 158,350 157,298
Insurance losses and underwriting expenses 5,928 5,020
Media cost of sales 1,517 1,493
Selling, general and administrative 32,650 29,486
Depreciation and amortization 4,946 5,621
203,391 198,918
Other income (expenses)
Interest expense (2,754 ) (2,824 )
Interest on obligations under leases (2,186 ) (2,280 )
Investment partnership gains (losses) 3,495 (24,968 )
Total other income (expenses) (1,445 ) (30,072 )
Earnings (loss) before income taxes (2,611 ) (25,597 )
Income tax benefit (797 ) (9,776 )
Net earnings (loss) $ (1,814 ) $ (15,821 )
Earnings per share
Net earnings (loss) per equivalent Class A share * $ (5.15 ) $ (42.72 )

Third Quarter First Nine Months
2022 2021 2022 2021
(Unaudited) (Unaudited)
Revenues
Restaurant operations $ 59,437 $ 59,144 $ 179,608 $ 196,424
Insurance premiums and other 16,312 14,723 47,745 43,729
Oil and gas 14,380 7,353 38,632 24,310
Licensing and media 1,905 863 3,788 2,695
92,034 82,083 269,773 267,158
Cost and expenses
Restaurant cost of sales 36,162 41,694 107,469 129,297
Insurance losses and underwriting expenses 13,245 10,672 40,812 31,733
Oil and gas production costs 4,090 2,050 11,752 6,957
Licensing and media costs 345 880 1,975 1,749
Selling, general and administrative 15,469 16,889 48,275 50,848
Impairments — — 20 559
Depreciation, depletion, and amortization 8,456 7,682 24,127 22,239
Interest expense on leases 1,372 1,462 4,169 4,619
Interest expense on borrowings 67 — 67 1,121
79,206 81,329 238,666 249,122
Other income
Investment gains (losses) (849) 4,534 (4,184) 6,465
Investment partnership gains (losses) 29,658 (20,231) (82,244) 27,344
Total other income (expenses) 28,809 (15,697) (86,428) 33,809
Earnings (loss) before income taxes 41,637 (14,943) (55,321) 51,845
Income tax expense (benefit) 9,598 (4,274) (13,282) 11,544
Net earnings (loss) 32,039 (10,669) (42,039) 40,301
Earnings attributable to noncontrolling interest 34 — 34 —
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders $ 32,005 $ (10,669) $ (42,073) $ 40,301
Net earnings (loss) per equivalent Class A share * $ 109.13 $ (33.74) $ (140.30) $ 125.79

*Net earnings (loss) per equivalent Class B share outstanding are one-fifth of the equivalent Class A share or ~~$(1.03)~~$21.83 and $(28.06) for the third quarter and first ~~quarter~~nine months of ~~2018~~2022, respectively, and ~~$(8.54)~~$(6.75) and $25.16 for the third quarter and first ~~quarter~~nine months of ~~2017.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(dollars in thousands)~~

First Quarter
2018 2017
(Unaudited)

Net earnings (loss) $ (1,814 ) $ (15,821 )
Other comprehensive income:
Net change in unrealized gains and losses on investments —   191
Applicable income taxes —   (67 )
Reclassification to earnings   (73 ) —
Applicable income taxes 15 —
Foreign currency translation 496 185
Other comprehensive income, net 438 309
Total comprehensive loss $ (1,376 ) $ (15,512 )

2021, respectively.

See accompanying Notes to Consolidated Financial Statements.

~~Index~~Table of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~

COMPREHENSIVE INCOME

(dollars in thousands)

First Quarter
2018 2017
(Unaudited)
Operating activities
Net earnings (loss) $ (1,814 ) $ (15,821 )
Adjustments to reconcile net earnings (loss) to operating cash flows:
Depreciation and amortization 4,946 5,621
Provision for deferred income taxes 380 (10,281 )
Asset impairments and other non-cash expenses 239 435
Loss on disposal of assets 96 99
Investment partnership (gains) losses (3,495 ) 24,968
Distributions from investment partnerships 5,200 5,015
Changes in receivables and inventories 3,861 5,202
Changes in other assets 1,121 (114 )
Changes in accounts payable and accrued expenses (19,979 ) (5,261 )
Net cash provided by (used in) operating activities (9,445 ) 9,863
Investing activities
Capital expenditures (2,452 ) (1,990 )
Proceeds from property and equipment disposals 1,524 50
Purchases of investments (18,340 ) (16,945 )
Redemptions of fixed maturity securities 17,492 18,653
Net cash used in investing activities (1,776 ) (232 )
Financing activities
Payments on revolving credit facility (39 ) (20 )
Principal payments on long-term debt (550 ) (15,550 )
Principal payments on direct financing lease obligations (1,400 ) (1,356 )
Proceeds from exercise of stock options 42 30
Net cash used in financing activities (1,947 ) (16,896 )
Effect of exchange rate changes on cash 35 17
Decrease in cash, cash equivalents and restricted cash (13,133 ) (7,248 )
Cash, cash equivalents and restricted cash at beginning of year 67,230 75,833
Cash, cash equivalents and restricted cash at end of first quarter $ 54,097 $ 68,585

Third Quarter First Nine Months
2022 2021 2022 2021
(Unaudited) (Unaudited)
Net earnings (loss) $ 32,039 $ (10,669) $ (42,039) $ 40,301
Foreign currency translation (618) (49) (1,870) (378)
Comprehensive income (loss) 31,421 (10,718) (43,909) 39,923
Comprehensive income attributable to noncontrolling interests 34 — 34 —
Total comprehensive income (loss) attributable to Biglari Holdings Inc. shareholders $ 31,387 $ (10,718) $ (43,943) $ 39,923

See accompanying Notes to Consolidated Financial Statements.

~~Index~~Table of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

First Nine Months
2022 2021
(Unaudited)
Operating activities
Net earnings (loss) $ (42,039) $ 40,301
Adjustments to reconcile net earnings (loss) to operating cash flows:
Depreciation, depletion, and amortization 24,127 22,239
Provision for deferred income taxes (22,289) 16,625
Asset impairments and other non-cash expenses 20 696
Gains on disposal of assets (905) (306)
Investment and investment partnership (gains) losses 86,428 (34,461)
Distributions from investment partnerships 51,200 172,420
Changes in receivables, inventories and other assets 7,240 3,608
Changes in accounts payable and accrued expenses (4,028) (9,877)
Net cash provided by operating activities 99,754 211,245
Investing activities
Capital expenditures (23,437) (46,486)
Proceeds from property and equipment disposals 2,201 2,749
Acquisition of a business, net of cash acquired (54,899) —
Purchases of limited partner interests (23,886) (4,800)
Purchases of investments (110,837) (81,923)
Sales of investments and redemptions of fixed maturity securities 108,394 74,678
Net cash used in investing activities (102,464) (55,782)
Financing activities
Proceeds from revolving credit facility 30,000 —
Principal payments on long-term debt — (149,952)
Principal payments on direct financing lease obligations (4,647) (4,634)
Net cash provided by (used in) financing activities 25,353 (154,586)
Effect of exchange rate changes on cash (150) (85)
Increase in cash, cash equivalents and restricted cash 22,493 792
Cash, cash equivalents and restricted cash at beginning of year 43,687 29,666
Cash, cash equivalents and restricted cash at end of third quarter $ 66,180 $ 30,458

First Nine Months
2022 2021
(Unaudited)
Cash and cash equivalents $ 64,842 $ 27,795
Restricted cash in other long-term assets 1,338 2,663
Cash, cash equivalents and restricted cash at end of third quarter $ 66,180 $ 30,458

See accompanying Notes to Consolidated Financial Statements.

Table of Contents
BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(dollars in thousands)

Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total
Balance at December 31, 2017 $ 1,071 $ 382,014 $ 565,504 $ (1,404 ) $ (375,857 ) $ 571,328
Net earnings (loss) (1,814 ) (1,814 )
Adoption of accounting standards 90 90
Other comprehensive income, net 438 438
Adjustment to treasury stock for holdings in investment partnerships (18,377 ) (18,377 )
Exercise of stock options (39 ) 81 42
Balance at March 31, 2018 $ 1,071 $ 381,975 $ 563,780 $ (966 ) $ (394,153 ) $ 551,707

Balance at December 31, 2016 $ 1,071 $ 381,906 $ 515,433 $ (3,584 ) $ (362,886 ) $ 531,940
Net earnings (loss) (15,821 ) (15,821 )
Other comprehensive income, net 309 309
Adjustment to treasury stock for holdings in investment partnerships 116 (1,600 ) (1,484 )
Exercise of stock options (8 ) 38 30
Balance at March 31, 2017 $ 1,071 $ 382,014 $ 499,612 $ (3,275 ) $ (364,448 ) $ 514,974

Biglari Holdings Inc. Shareholders’ Equity
Common
Stock Additional Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income (Loss) Treasury
Stock Non-controlling Interests Total
Balance at December 31, 2021 $ 1,138 $ 381,788 $ 608,528 $ (1,907) $ (401,851) $ — $ 587,696
Net earnings (loss) (298) (298)
Other comprehensive loss (231) (231)
Adjustment to treasury stock for holdings in investment partnerships 130 130
Balance at March 31, 2022 $ 1,138 $ 381,788 $ 608,230 $ (2,138) $ (401,721) $ — $ 587,297
Net earnings (loss) (73,780) (73,780)
Other comprehensive loss (1,021) (1,021)
Adjustment to treasury stock for holdings in investment partnerships (6,760) (6,760)
Balance at June 30, 2022 $ 1,138 $ 381,788 $ 534,450 $ (3,159) $ (408,481) $ — $ 505,736
Net earnings 32,005 34 32,039
Other comprehensive loss (618) (618)
Adjustment to treasury stock for holdings in investment partnerships (638) (638)
Transactions with noncontrolling interests 8,889 8,889
Balance at September 30, 2022 $ 1,138 $ 381,788 $ 566,455 $ (3,777) $ (409,119) $ 8,923 $ 545,408

Table of Contents
Biglari Holdings Inc. Shareholders’ Equity
Common
Stock Additional Paid-In Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Non-controlling interests Total
Balance at December 31, 2020 $ 1,138 $ 381,788 $ 573,050 $ (1,531) $ (389,617) $ — $ 564,828
Net earnings 71,707 71,707
Other comprehensive loss (444) (444)
Adjustment to treasury stock for holdings in investment partnerships 3,049 3,049
Balance at March 31, 2021 $ 1,138 $ 381,788 $ 644,757 $ (1,975) $ (386,568) $ — $ 639,140
Net earnings (loss) (20,737) (20,737)
Other comprehensive income 115 115
Adjustment to treasury stock for holdings in investment partnerships (5,026) (5,026)
Balance at June 30, 2021 $ 1,138 $ 381,788 $ 624,020 $ (1,860) $ (391,594) $ — $ 613,492
Net earnings (loss) (10,669) (10,669)
Other comprehensive loss (49) (49)
Adjustment to treasury stock for holdings in investment partnerships (4,208) (4,208)
Balance at September 30, 2021 $ 1,138 $ 381,788 $ 613,351 $ (1,909) $ (395,802) $ — $ 598,566

See accompanying Notes to Consolidated Financial Statements.

~~Index~~Table of Contents

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~March 31, 2018~~

September 30, 2022

(dollars in thousands, except share and per share data)

Note 1. Summary of Significant Accounting Policies

Description of Business

The accompanying unaudited consolidated financial statements of Biglari Holdings Inc. ~~(“Biglari Holdings” or the “Company”)~~ have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In our opinion, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal recurring adjustments. The results for the interim periods shown are not necessarily indicative of results for the entire fiscal year. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, ~~2017.~~

2021.

Biglari Holdings is a holding company owning subsidiaries engaged in a number of diverse business activities, including ~~media,~~ property and casualty insurance, licensing and ~~restaurants.~~media, restaurants, and oil and gas. The Company’s largest operating subsidiaries are involved in the franchising and operating of restaurants. Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of the Company. ~~The Company’s long-term objective is to maximize per-share intrinsic value.~~

Biglari Holdings’ management system combines decentralized operations with centralized finance decision-making. Operating decisions for the various business units are made by their respective managers. All major ~~operating,~~ investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari.

As of ~~March 31, 2018,~~September 30, 2022, Mr. ~~Biglari’s beneficial ownership~~Biglari beneficially owns shares of the ~~Company’s~~Company that represent approximately 66.3% of the economic interest and approximately 70.4% of the voting interest.

Business Acquisition

On September 14, 2022, the Company completed the purchase of 685,505 shares of Series A Preferred Stock (the "Preferred Shares") of Abraxas Petroleum Corporation ("Abraxas Petroleum") for a purchase price of $80,000. On October 26, 2022, the Company converted the preferred stock to 90% of the outstanding common stock ~~was approximately 54.8%.~~

~~On March 5, 2018,~~of Abraxas Petroleum. We have concluded that Abraxas Petroleum is a consolidated entity and have recorded noncontrolling interests attributable to the interest held by other shareholders. The Company used working capital including its line of credit to fund the purchase of the Preferred Shares. Abraxas Petroleum operates oil and natural gas properties in the Permian Basin. The Company’s financial results include the results of Abraxas Petroleum from the acquisition date to the end of the third quarter. The revenues and operating results for Abraxas Petroleum were not significant to the Company entered into an agreement with NBHSA Inc. (“New BH”), a direct, wholly owned subsidiary of the Company, and BH Merger Company (“Merger Sub”), a wholly owned subsidiary of New BH. Pursuant to the agreement, on April 30, 2018, Merger Sub merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of New BH. Upon completion of the merger, New BH changed its name to “Biglari Holdings Inc.” and replaced the Company as the publicly held corporation through which our collection of businesses is conducted.

~~New BH has two classes of common stock designated Class A common stock and Class B common stock. A share of Class B common stock has economic rights equivalent to 1/5~~^th ~~of a share of Class A common stock; however, Class B common stock has no voting rights.~~

As a result of the April 30, 2018 transaction, the current shareholders of the Company became shareholders of New BH and received, for every ten (10) shares of common stock of the Company they owned on April 30, 2018, (i) ten (10) shares of Class B common stock of New BH and (ii) one (1) share of Class A common stock of New BH. In other words, shareholders received for a share of common stock of the Company (i) one (1) share of Class B common stock of New BH and (ii) 1/10^th~~of one share of Class A common stock of New BH.~~

Starting on May 1, 2018, the shares of New BH Class A common stock trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “BH.A,” whereas the New BH Class B common stock trades on the NYSE under the ticker symbol “BH,” which is the former ticker symbol for the ~~Company’s common stock.~~

For accounting purposes, the April 30, 2018 transaction will be treated as a merger of entities under common control. Accordingly, the consolidated financial position and results of operations of the Company will be included in the consolidated financial statements of New BH on the same basis as currently presented, except for earnings per share which is impacted by the issuance of the new common shares. The Company has applied the “two-class method” of computing earnings per share as prescribed in ASC 260, “Earnings Per Share.”

third quarter.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries, including Steak n Shake Inc. ~~(“Steak n Shake”)~~, Western Sizzlin Corporation, ~~(“Western”), Maxim Inc. (“Maxim”) and~~ First Guard Insurance Company, Maxim Inc., Southern Pioneer Property & Casualty Insurance Company, Southern Oil Company and ~~its agency, 1st Guard Corporation (collectively “First Guard”).~~Abraxas Petroleum. Intercompany accounts and transactions have been eliminated in consolidation.

~~Index~~

~~Note 2. New Accounting Standards~~

~~In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04,~~~~Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment.~~ ASU 2017-04 provides for the elimination of Step 2 from the goodwill impairment test. If impairment charges are recognized, the amount recorded will be the amount by which the carrying amount exceeds the reporting unit’s fair value with certain limitations. The ASU is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. The Company does not currently anticipate ASU 2017-04 will have a material impact on the consolidated financial statements.

~~In June 2016, the FASB issued ASU 2016-13,~~~~Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments~~. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP; however ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and related disclosures.

~~In February 2016, the FASB issued ASU 2016-02,~~~~Leases~~. ASU 2016-02 requires a lessee to recognize lease assets and lease liabilities on the balance sheet, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect this amended guidance will have on our consolidated balance sheet and results of operations. We anticipate the ASU will have a material impact on our balance sheet, but the ASU is non-cash in nature and will not affect our cash position.

~~In August 2016, the FASB issued ASU 2016-15,~~~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.~~The objective of the update is to reduce diversity in how certain transactions are classified in the statement of cash flows. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU 2016-15 did not have a material effect on our consolidated financial statements.

~~In May 2014, the FASB issued ASU 2014-09,~~~~Revenue from Contracts with Customers (Topic 606)~~. On January 1, 2018, we adopted FASB accounting standards codification Topic 606 (“ASC 606”). In accordance with ASC 606, we changed certain characteristics of our revenue recognition accounting policy as described below. ASC 606 was applied using the modified retrospective method, where the cumulative effect of the initial application is recognized as an adjustment to opening retained earnings at January 1, 2018. Comparative prior periods have not been adjusted.

~~The following table summarizes the impact of the adoption of ASC 606 on revenues, operating expenses and net earnings for the three months ended March 31, 2018.~~

As Reported Adjustments
for the
Adoption of
ASC 606 Amounts without the
Adoption of
ASC 606
Statements of Earnings
Revenues
Restaurant operations
Net sales $ 185,571 $ — $ 185,571
Franchise royalties and fees 7,102 2,369 4,733
Other 1,261 279 982
Selling, general and administrative 32,650 2,522 30,128
Earnings (loss) before income taxes (2,611 ) 126 (2,737 )
Income tax expense (benefit) (797 ) 31 (828 )
Net earnings (loss) (1,814 ) 95 (1,909 )

The impact of ASC 606 on the Company’s balance sheet as of March 31, 2018 was not material. The cumulative change in retained earnings as of January 1, 2018 was $90. Upon adoption of ASC 606, the Company changed its restaurant operations accounting policies for the recognition of franchise fees, recording of advertising arrangements, and recognition of gift card revenue. See additional revenue disclosures in Note 8 Restaurant Operations Revenues. The adoption of ASC 606 did not have any significant impact on our insurance or media businesses.

~~Index~~

Note 3.2. Earnings Per Share

Earnings per share of common stock is based on the weighted average number of shares outstanding during the year. The shares of Company stock attributable to our limited partner interest in The Lion Fund, L.P. and The Lion Fund II, L.P. (collectively, the “investment partnerships”) — based on our proportional ownership during this period — are considered treasury stock on the consolidated balance sheet and thereby deemed not to be included in the calculation of weighted average common shares outstanding. However, these shares are legally outstanding.

On ~~September 16, 2017,~~June 8, 2022, The Lion Fund II, L.P. ~~entered into a Rule 10b5-1 trading plan to purchase up to an aggregate of 110,000~~transferred 83,465 shares of Biglari ~~Holdings common stock at prevailing market prices. During the first quarter of 2018, 45,302 shares were purchased. All of the shares to be purchased under the trading plan remain legally outstanding.~~

~~On April 30, 2018 the Company’s shareholders exchanged their shares of Company common stock for dual common stock –~~Holdings’ Class A common stock and 890,272 shares of Biglari Holdings’ Class B common ~~stock.~~ stock to The Lion Fund, L.P.

Table of Contents

Note 2. Earnings Per Share (continued)

The following table presents shares authorized, issued and outstanding on ~~March 31, 2018~~September 30, 2022 and December 31, ~~2017.~~

March 31,
2018 December 31,
2017
Common stock authorized 2,500,000 2,500,000

Common stock issued 2,142,202 2,142,202
Treasury stock held by the Company (73,667 ) (74,589 )
Outstanding shares 2,068,535 2,067,613

The issuance of dual class common stock on April 30, 2018 is applied on a retrospective basis for the calculation of earnings per share. Accordingly, earnings per share for the first quarters of 2018 and 2017 are impacted by the issuance of the new common shares. 2021.


	September 30, 2022		December 31, 2021
	Class A	Class B	Class A	Class B
Common stock authorized	500,000	10,000,000	500,000	10,000,000
Common stock issued and outstanding	206,864	2,068,640	206,864	2,068,640

The Company has applied the “two-class method” of computing earnings per share as prescribed in ~~ASC~~Accounting Standards Codification (“ASC”) 260, ~~“Earnings~~“Earnings Per ~~Share.~~Share”

~~As of March 31, 2018, the total outstanding shares of the Company were 2,068,535.~~. The calculation of earnings per share reflects an exchange of 2,068,535 outstanding shares of the Company for 206,854 shares of New BH Class A common stock and 2,068,535 shares of New BH Class B common stock. On an equivalent Class A common stock ~~basis, there were 620,592 shares outstanding as of March 31, 2018 and 620,284 shares outstanding as of December 31, 2017.~~

~~For financial reporting purposes,~~applied for computing earnings per share excludes the proportional ~~ownership~~shares of ~~the Company’s common~~Biglari Holdings’ stock ~~owned~~held by the investment ~~partnerships~~partnerships. In the tabulation below is ~~excluded in~~ the ~~earnings per share calculation. After giving effect for the investment partnerships’ proportional ownership of New BH’s common stock, the~~weighted average equivalent Class A ~~weighted average common shares during the first quarter of 2018 and 2017 were 352,191 and 370,344, respectively.~~

~~Each Class A common share is entitled to one vote. Class B~~ common stock ~~possesses economic rights equal~~for earnings per share. There are no dilutive securities outstanding.


	Third Quarter		First Nine Months
	2022	2021	2022	2021
Equivalent Class A common stock outstanding	620,592	620,592	620,592	620,592
Proportional ownership of Company stock held by investment partnerships	327,317	304,356	320,711	300,215
Equivalent Class A common stock for earnings per share	293,275	316,236	299,881	320,377

Note 3. Investments

We classify investments in fixed maturity securities at the acquisition date as either available-for-sale or held-to-maturity and re-evaluate the classification at each balance sheet date. Securities classified as held-to-maturity are carried at amortized cost, reflecting the ability and intent to ~~one-fifth (1/5~~^th)hold the securities to maturity. Realized gains and losses on disposals of ~~such rights of Class A common stock; however, Class B common stock has no voting rights.~~

~~Note 4. Investments~~

~~Investments consisted of the following.~~

March 31,
2018 December 31,
2017
Cost $ 24,099 $ 23,216
Gross unrealized gains 58 73
Fair value $ 24,157 $ 23,289

~~Investments in equity securities and a related put option of $4,463 are included in other current assets as of March 31, 2018 and in other assets as of December 31, 2017. The~~ investments are ~~recorded at fair value.~~

determined on a specific identification basis. Dividends earned on investments are reported as investment income by our insurance companies. We consider investment income as a component of our aggregate insurance operating result. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.

~~Index~~

Investment losses for the third quarter and first nine months of 2022 were $849 and $4,184, respectively. Investment gains in the third quarter and first nine months of 2021 were $4,534 and $6,465, respectively.

Note 5.4. Investment Partnerships

The Company reports on the limited partnership interests in investment partnerships under the equity method of accounting. We record our proportional share of equity in the investment partnerships but exclude Company common stock held by said partnerships. The Company’s pro-rata share of its common stock held by the investment partnerships is recorded as treasury stock even though ~~they~~these shares are legally outstanding. The Company records gains/losses from investment partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated statements of earnings based on our carrying value of these partnerships. The fair value is calculated net of the general partner’s accrued incentive fees. Gains and losses on Company common stock included in the earnings of these partnerships are eliminated because they are recorded as treasury stock.

Biglari Capital Corp. is the general partner of the investment partnerships and is an entity solely owned by Mr. Biglari.

Table of Contents

Note 4. Investment Partnerships(continued)

The fair value and adjustment for Company common stock held by the investment partnerships to determine the carrying value of our partnership interest isare presented below.

Fair Value Company Common Stock Carrying Value
Partnership interest at December 31, 2017 $ 925,279 $ 359,258 $ 566,021
Investment partnership gains (losses) (1,850 ) (5,345 ) 3,495
Contributions (net of distributions) to investment partnerships (5,200 ) (5,200 )
Increase in proportionate share of Company stock held 18,377 (18,377 )
Partnership interest at March 31, 2018 $ 918,229 $ 372,290 $ 545,939

Fair Value Company Common Stock Carrying Value
Partnership interest at December 31, 2016 $ 972,707 $ 395,070 $ 577,637
Investment partnership gains (losses) (59,517 ) (34,549 ) (24,968 )
Contributions (net of distributions) to investment partnerships (5,015 ) (5,015 )
Increase in proportionate share of Company stock held 1,484 (1,484 )
Partnership interest at March 31, 2017 $ 908,175 $ 362,005 $ 546,170


	Fair Value		Company Common Stock		Carrying Value
Partnership interest at December 31, 2021	$	474,201	$	223,802	$	250,399
Investment partnership gains (losses)	(119,864)		(37,620)		(82,244)
Distributions (net of contributions)	(16,023)				(16,023)
Changes in proportionate share of Company stock held			7,268		(7,268)
Partnership interest at September 30, 2022	$	338,314	$	193,450	$	144,864


	Fair Value		Company Common Stock		Carrying Value
Partnership interest at December 31, 2020	$	590,926	$	171,376	$	419,550
Investment partnership gains (losses)	110,690		83,346		27,344
Distributions (net of contributions)	(167,620)				(167,620)
Changes in proportionate share of Company stock held			6,185		(6,185)
Partnership interest at September 30, 2021	$	533,996	$	260,907	$	273,089

The carrying value of the investment partnerships net of deferred taxes is presented below.

March 31,
2018 December 31,
2017
Carrying value of investment partnerships $ 545,939 $ 566,021
Deferred tax liability related to investment partnerships (96,327 ) (95,309 )
Carrying value of investment partnerships net of deferred taxes $ 449,612 $ 470,712


	September 30, 2022		December 31, 2021
Carrying value of investment partnerships	$	144,864	$	250,399
Deferred tax liability related to investment partnerships	(22,176)		(44,532)
Carrying value of investment partnerships net of deferred taxes	$	122,688	$	205,867

The Company’s proportionate share of Company stock held by investment partnerships at cost ~~is $373,316~~was $409,119 and ~~$354,939~~$401,851 at ~~March 31, 2018~~September 30, 2022 and December 31, ~~2017,~~2021, respectively, and iswas recorded as treasury stock.

The carrying value of the partnership interest approximates fair value adjusted by the value of held Company stock. Fair value of our partnership interest is assessed according to our proportional ownership interest of the fair value of investments held by the investment partnerships. ~~The fair value measurement is classified as level 3 within~~Unrealized gains and losses on marketable securities held by the ~~fair value hierarchy.~~

~~Gains (losses)~~investment partnerships affect our net earnings.

Gains/losses from investment partnerships recorded in the Company’s consolidated statements of earnings are presented below.

First Quarter
2018 2017
Gains (losses) on investment partnership $ 3,495 $ (24,968 )
Tax expense (benefit) 420 (9,761 )
Contribution to net earnings (loss) $ 3,075 $ (15,207 )

~~Index~~


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Gains (losses) from investment partnerships	$	29,658	$	(20,231)	$	(82,244)	$	27,344
Tax expense (benefit)	6,601		(4,946)		(20,153)		6,175
Contribution to net earnings (loss)	$	23,057	$	(15,285)	$	(62,091)	$	21,169

On December 31 of each year, the general partner of the investment partnerships, Biglari Capital Corp. ~~(“Biglari Capital”)~~, will earn an incentive reallocation fee for the Company’s investments equal to 25% of the net profits above aan annual hurdle rate of 6% over the previous high-water mark. Our policy is to accrue an estimated incentive fee throughout the year. The ~~Company did not accrue an~~total incentive ~~fee~~reallocation from Biglari Holdings to Biglari Capital Corp. includes gains on the Company’s common stock. Gains and losses on the Company’s common stock and the related incentive reallocations are eliminated in our financial statements.

There were no incentive reallocations from Biglari Holdings to Biglari Capital Corp. during the first ~~quarter~~nine months of ~~2018 or 2017. Our investments in these partnerships are committed on a rolling 5-year basis. Biglari Capital is an entity solely owned by Mr. Biglari.~~

2022 and 2021.

Table of Contents

Note 4. Investment Partnerships(continued)

Summarized financial information for The Lion Fund, L.P. and The Lion Fund II, L.P. is presented below.

Equity in Investment Partnerships
Lion Fund Lion Fund II
Total assets as of March 31, 2018 $ 198,286 $ 1,057,316
Total liabilities as of March 31, 2018 $ 1,481 $ 200,831
Revenue for the first quarter ended March 31, 2018 $ (4,135 ) $ 3,069
Earnings (loss) for the first quarter ended March 31, 2018 $ (4,151 ) $ 922
Biglari Holdings’ ownership interest as of March 31, 2018 65.1 % 92.3 %

Total assets as of December 31, 2017 $ 203,560 $ 1,060,737
Total liabilities as of December 31, 2017 $ 157 $ 199,974
Revenue for the first quarter ended March 31, 2017 $ (15,696 ) $ (52,652 )
Earnings (loss) for the first quarter ended March 31, 2017 $ (15,716 ) $ (53,514 )
Biglari Holdings’ ownership interest as of March 31, 2017 63.6 % 92.5 %


	Equity in Investment Partnerships
	Lion Fund			Lion Fund II
Total assets as of September 30, 2022	$	247,357		$	307,446
Total liabilities as of September 30, 2022	$	9,973		$	162,520
Revenue for the first nine months of 2022	$	(46,341)		$	(88,378)
Earnings for the first nine months of 2022	$	(46,544)		$	(89,771)
Biglari Holdings’ ownership interest as of September 30, 2022	88.2		%	87.7		%

Total assets as of December 31, 2021	$	114,749		$	564,022
Total liabilities as of December 31, 2021	$	7,763		$	130,417
Revenue for the first nine months of 2021	$	35,639		$	94,078
Earnings for the first nine months of 2021	$	35,584		$	93,548
Biglari Holdings’ ownership interest as of September 30, 2021	62.4		%	93.9		%

Revenue in the ~~above summarized~~ financial information of the investment partnerships, summarized above, includes investment income and unrealized gains and losses on investments. ~~The investments held by the investment partnerships are largely concentrated in the common stock of one investee, Cracker Barrel Old Country Store, Inc.~~

Note 6.5. Property and Equipment

Property and equipment is composed of the following.

March 31, 2018 December 31, 2017
Land $ 156,176 $ 156,506
Buildings 151,669 152,610
Land and leasehold improvements 162,518 162,652
Equipment 200,240 203,145
Construction in progress 1,797 1,782
672,400 676,695
Less accumulated depreciation and amortization (380,775 ) (380,895 )
Property and equipment, net $ 291,625 $ 295,800


	September 30, 2022		December 31, 2021
Land	$	142,813	$	144,605
Buildings	151,138		148,605
Land and leasehold improvements	147,765		147,349
Equipment	230,712		224,581
Oil and gas properties	140,916		74,147
Construction in progress	5,744		2,815
	819,088		742,102
Less accumulated depreciation, depletion, and amortization	(404,591)		(392,751)
Property and equipment, net	$	414,497	$	349,351

Depletion expense related to oil and gas properties was $4,345 and $5,875 during the first nine months of 2022 and 2021, respectively.

The Company recorded an impairment to restaurant long-lived assets of $559 in the first nine months of 2021 related to underperforming stores. The fair value of the long-lived assets was determined based on Level 3 inputs using a discounted cash flow model and quoted prices for the properties. There were no impairments of property and equipment in 2022.

As of September 30, 2022, $5,002 of property and equipment is recorded as held for sale within other current assets.

Table of Contents

Note 7.6. Goodwill and Other Intangible Assets

Goodwill

Goodwill consists of the excess of the purchase price over the fair value of the net assets acquired in connection with business acquisitions.

A reconciliation of the change in the carrying value of goodwill is as follows.

Restaurants Other Total
Goodwill at December 31, 2017 $ 28,168 $ 11,913 $ 40,081
Change in foreign exchange rates during first quarter 2018 18 — 18
Goodwill at March 31, 2018 $ 28,186 $ 11,913 $ 40,099

9
	Goodwill
Goodwill at December 31, 2021	$	53,547
Change in foreign exchange rates during the first nine months of 2022	(83)
Goodwill at September 30, 2022	$	53,464

~~Index~~

We ~~are required to assess~~evaluate goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. When evaluating goodwill for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we test for potential impairment using a two-step approach. The first is the estimation of fair value of each reporting unit. If step one indicates that impairment potentially exists, the second step is performed to measure the amount of impairment, if any. Goodwill impairment occurs when the estimated fair value of goodwill is less than its carrying value.

GAAP allows entities testing for impairment the option of performing a qualitative assessment before calculating the fair value of a reporting unit for the goodwill impairment test. We use both qualitative and quantitative assessments. The valuation methodology and underlying financial information included in our quantitative determination of fair value require significant management judgments. We use both market and income approaches to derive fair ~~value.~~value of reporting units utilizing a quantitative assessment. The judgments in these two approaches include, but are not limited to, comparable market multiples, long-term projections of future financial performance, and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in such estimates or the application of alternative assumptions could produce significantly different results. No impairment ~~charges for goodwill were~~was recorded in the first ~~three~~nine months of ~~2018~~2022 or ~~2017.~~

2021. Western Sizzlin has experienced a decline in its franchised units for several years. If Western Sizzlin’s franchised units continue to decline, an impairment of its goodwill may be necessary.

Other Intangible Assets

~~Other intangible~~

Intangible assets with indefinite lives are composed of the following.

March 31, 2018 December 31, 2017
Gross carrying amount Accumulated amortization Total Gross carrying amount Accumulated amortization Total
Franchise agreement $ 5,310 $ (4,248 ) $ 1,062 $ 5,310 $ (4,116 ) $ 1,194
Other 810 (751 ) 59 810 (743 ) 67
Total 6,120 (4,999 ) 1,121 6,120 (4,859 ) 1,261
Intangible assets with indefinite lives:
Trade names 15,876 — 15,876 15,876 — 15,876
Other assets with indefinite lives 9,678 — 9,678 9,427 — 9,427
Total intangible assets $ 31,674 $ (4,999 ) $ 26,675 $ 31,423 $ (4,859 ) $ 26,564

Intangible assets subject to amortization consist of franchise agreements connected with the purchase of Western as well as rights to favorable leases related to prior acquisitions. These intangible assets are being amortized over their estimated weighted average of useful lives ranging from eight to twelve years.

Amortization expense for each of the first quarters of 2018 and 2017 was $140 and $142, respectively. The Company’s intangible assets with definite lives will fully amortize in 2020. Total annual amortization expense for 2019 is expected to be approximately $500.


	Trade Names		Lease Rights		Total
Balance at December 31, 2021	$	15,876	$	7,587	$	23,463
Impairment to lease rights	—		(20)		(20)
Change in foreign exchange rates during the first nine months of 2022	—		(974)		(974)
Balance at September 30, 2022	$	15,876	$	6,593	$	22,469

Intangible assets with indefinite lives consist of trade names ~~franchise rights as well as~~and lease rights.

Fair values were determined using Level 3 inputs and available market data.

Note 8.7. Restaurant Operations Revenues

Restaurant operations revenues were as follows.

First Quarter
2018 2017
Net sales $ 185,571 $ 189,051
Franchise royalties and fees 7,102 5,556
Other 1,261 1,087
$ 193,934 $ 195,694

~~The Company’s accounting policies and practices related to restaurant operations revenues consist of the following under ASC 606.~~

~~Index~~


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Net sales	$	37,448	$	41,916	$	113,345	$	146,269
Franchise partner fees	15,880		11,508		47,929		31,744
Franchise royalties and fees	5,089		4,865		15,472		14,594
Other	1,020		855		2,862		3,817
	$	59,437	$	59,144	$	179,608	$	196,424

Net ~~sales~~

Sales

Net sales ~~were comprised~~are composed of retail sales of food through ~~Company-owned~~company-operated stores. ~~Company-owned~~Company-operated store revenues are recognized, net of discounts and sales taxes, when ~~control of the food items are transferred~~our obligation to ~~our customers~~perform is satisfied at the point of sale. Sales taxes related to these sales are collected from customers and remitted to the appropriate taxing authority and are not reflected in the Company’s consolidated statements of ~~income~~earnings as revenue.

Table of Contents
Note 7. Restaurant Operations Revenues (continued)

Franchise ~~royalties and fees~~

Partner Fees

Franchise ~~royalties and~~partner fees are ~~comprised~~composed of up to 15% of sales as well as 50% of profits. We are therefore fully affected by the operating results of the business, unlike in a traditional franchising arrangement, where the franchisor obtains a royalty fee based on sales only. We generate most of our revenue from our share of the franchise partners’ profits. An initial franchise fee of ten thousand dollars is recognized during the year the operator becomes a franchise partner. The Company recognizes franchise partner fees monthly as underlying restaurant sales occur.

The Company leases or subleases property and equipment to franchise partners under lease arrangements. Both real estate and equipment rental payments are charged to franchise partners and are recognized in accordance with ASC 842, “Leases”. During the third quarter of 2022 and 2021, restaurant operations recognized $5,362 and $4,277, respectively, in franchise partner fees related to rental income. During the first nine months ended September 30, 2022 and September 30, 2021, restaurant operations recognized $15,193 and $10,910, respectively, in franchise partner fees related to rental income.

Franchise Royalties and Fees

Franchise royalties and fees from Steak n Shake and Western Sizzlin ~~franchisees. Royalty revenues~~franchisees are based onupon a percentage of sales of the franchise ~~sales~~restaurant and are recognized ~~when the retail food items~~as earned. Franchise royalties are ~~purchased by franchise customers.~~billed on a monthly basis. Initial franchise fees ~~received~~when a new restaurant opens or at the start of a new franchise term are recorded as deferred revenue when ~~amounts are~~ received and recognized as revenue ~~on a straight-line basis~~ over the term of ~~each respective~~the franchise ~~agreement, which is typically 20 years. This represents a change in methodology for we have historically recognized initial franchise fees upon the opening of a franchise restaurant.~~

During the quarter ended March 31, 2018, restaurant operations recognized $369 in revenue related to initial franchise fees. As of March 31, 2018 and January 1, 2018, restaurant operations had deferred revenue related to franchise fees of $10,818 and $10,581, respectively. Restaurant operations expects to recognize approximately $450 of deferred revenue balance during the remainder of 2018, approximately $600 in 2019 and the balance in the years 2020 through 2037.

Our advertising arrangements with franchisees are reported in franchise royalties and fees. This represents a change in methodology as we have historically reported advertising funds from the franchisees as an offset to marketing expense in our consolidated statement of earnings.

During the quarter ended March 31, 2018, restaurant operations recognized $2,437 in revenue related to franchise advertising fees. As of March 31, 2018 and January 1, 2018, restaurant operations had deferred revenue related to franchisee advertising fees of $2,065 and $2,064, respectively. Restaurant operations expect to recognize approximately $900 of deferred revenue balance during the remainder of 2018 and the balance in 2019.

~~Gift card revenue~~

agreement.

Other Revenue

Restaurant operations sells gift cards to customers which can be redeemed for retail food sales within our stores. Gift cards are recorded as ~~deferred revenue~~a liability when issued and are subsequently recorded as net sales upon redemption. Restaurant operations estimates breakage related to gift cards when the likelihood of redemption is remote. This estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as other revenue in proportion to the rate of gift card redemptions by vintage. This represents a change in the methodology used to estimate breakage as we have historically recognized breakage for the portion of the gift card balances that remained outstanding following 48 months of issuance.

For the quarter ended March 31, 2018, restaurant operations recognized $9,287 of revenue from gift card redemptions. As of March 31, 2018 and January 1, 2018, restaurant operations had deferred revenue related to unredeemed gift cards of $14,993 and $20,968, respectively. The Company expects to recognize approximately $8,700 of deferred revenue balance during the remainder of 2018, approximately $4,200 in 2019, and the balance in the years 2020 through 2022.

~~Index~~

Note 9.8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses include the following.

March 31,
2018 December 31,
2017
Accounts payable $ 36,342 $ 40,616
Gift card liability 14,993 27,436
Salaries, wages, and vacation 9,389 22,875
Taxes payable 11,786 10,571
Workers' compensation and other self-insurance accruals 7,915 9,047
Deferred revenue 17,744 9,522
Other 8,539 8,677
Accounts payable and accrued expenses $ 106,708 $ 128,744


	September 30, 2022		December 31, 2021
Accounts payable	$	34,288	$	36,684
Gift card and other marketing	15,985		19,244
Insurance accruals	5,971		6,428
Salaries, wages and vacation	6,902		5,905
Deferred revenue	4,831		6,683
Taxes payable	21,583		11,392
Professional fees	1,998		11,731
Oil and gas payable	5,586		1,936
Other	4,359		464
Accounts payable and accrued expenses	$	101,503	$	100,467

Note ~~10. Borrowings~~

~~Notes payable~~9. Line of Credit and ~~other borrowings include~~Note Payable

Bigari Holdings Line of Credit

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. The line of credit will be available on a revolving basis until September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. The balance of the ~~following.~~

Current portion of notes payable and other borrowings March 31,
2018 December 31,
2017
Notes payable $ 2,200 $ 2,200
Unamortized original issue discount (324 ) (321 )
Unamortized debt issuance costs (591 ) (585 )
Obligations under leases 5,103 5,279
Western revolver 136 175
Total current portion of notes payable and other borrowings $ 6,524 $ 6,748

Long-term notes payable and other borrowings
Notes payable $ 183,148 $ 183,698
Unamortized original issue discount (690 ) (772 )
Unamortized debt issuance costs (1,255 ) (1,405 )
Obligations under leases 73,785 75,473
Total long-term notes payable and other borrowings $ 254,988 $ 256,994

line of credit on September 30, 2022 was $30,000.

Steak n Shake Credit Facility

On March 19, 2014, Steak n Shake and its subsidiaries entered into a credit agreement which provided for a senior secured term loan facility in an aggregate principal amount of $220,000 and a senior secured revolving credit facility in an aggregate principal amount of up to $30,000. On October 27, 2017, Steak n Shake determined to end the use of its senior secured revolving credit facility. In 2017, Steak n Shake deposited $8,628 to satisfy required collateral for casualty insurance previously collateralized by letters of credit issued through the revolving credit facility. The deposits are recorded in other assets as restricted cash in the consolidated balance sheets.

$220,000. The term loan iswas scheduled to mature on March 19, 2021. ~~It amortizes at an annual rate~~The Company repaid the balance of ~~1.0% in equal quarterly installments, beginning June 30, 2014, at 0.25%~~Steak n Shake’s term facility on February 19, 2021.

Table of Contents

Note 10. Lease Assets and Obligations

Lease obligations include the ~~original principal amount~~following.


Current portion of lease obligations	September 30, 2022		December 31, 2021
Finance lease liabilities	$	1,214	$	1,414
Finance obligations	5,119		4,944
Operating lease liabilities	10,760		10,540
Total current portion of lease obligations	$	17,093	$	16,898

Long-term lease obligations
Finance lease liabilities	$	4,431	$	5,347
Finance obligations	60,009		63,119
Operating lease liabilities	31,540		36,013
Total long-term lease obligations	$	95,980	$	104,479

Nature of ~~the term loan, subject to mandatory prepayments from excess cash flow, asset sales and other events described in the credit agreement. The balance will be due at maturity.~~

Leases

~~Index~~

Steak n Shake ~~has~~and Western Sizzlin operate restaurants that are located on sites owned by us or leased from third parties. In addition, they own sites and lease sites from third parties that are leased and/or subleased to franchise partners and franchisees.

Lease Costs

A significant portion of our operating and finance lease portfolio includes restaurant locations. We recognize fixed lease expense for operating leases on a straight-line basis over the right to request an incremental term loan facility from participating lenders and/or eligible assignees at any time, up to an aggregate total principal amount not to exceed $70,000 if certain customary conditions within the credit agreement are met.

~~The interest rate~~lease term. For finance leases, we recognize amortization expense on the ~~term loan was 5.40%~~right-of-use asset and interest expense on the lease liability over the lease term.

Total lease cost consists of the following.


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Finance lease costs:
Amortization of right-of-use assets	$	309	$	404	$	1,023	$	1,205
Interest on lease liabilities	102		126		325		399
Operating and variable lease costs	3,577		4,011		10,782		11,189
Sublease income	(2,895)		(3,771)		(8,487)		(9,786)
Total lease costs	$	1,093	$	770	$	3,643	$	3,007

Supplemental cash flow information related to leases is as follows.


	First Nine Months
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	1,116	$	1,226
Operating cash flows from finance leases	$	324	$	384
Operating cash flows from operating leases	$	9,347	$	9,806

Table of Contents

Note 10. Lease Assets and Obligations (continued)

Supplemental balance sheet information related to leases is as follows.


	September 30, 2022		December 31, 2021
Finance leases:
Property and equipment, net	$	4,619	$	5,634

Weighted-average lease terms and discount rates are as follows.


	September 30, 2022
Weighted-average remaining lease terms:
Finance leases	4.56 years
Operating leases	4.90 years

Weighted-average discount rates:
Finance leases	7.0	%
Operating leases	7.0	%

Maturities of lease liabilities as of ~~March 31, 2018.~~

September 30, 2022 are as follows.


Year	Operating Leases		Finance Leases
2022	$	4,215	$	394
2023	11,781		1,551
2024	9,985		1,534
2025	8,290		1,298
2026	5,671		959
After 2026	9,967		855
Total lease payments	49,909		6,591
Less interest	7,609		946
Total lease liabilities	$	42,300	$	5,645

Lease Income

The ~~credit agreement includes customary affirmative~~components of lease income recorded in restaurant operations are as follows.


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Operating lease income	$	4,085	$	3,211	$	11,737	$	8,471
Variable lease income	1,556		1,370		4,312		3,375
Total lease income	$	5,641	$	4,581	$	16,049	$	11,846

Table of Contents

Note 10. Lease Assets and ~~negative covenants~~Obligations (continued)

The following table displays the Company’s future minimum rental receipts for non-cancelable leases and ~~events~~subleases as of ~~default. Steak n Shake’s credit facility contains restrictions on its ability to pay dividends to Biglari Holdings.~~

~~The term loan is secured by first priority security interests in substantially all~~September 30, 2022. Franchise partner leases and subleases are short-term leases and have been excluded from the ~~assets of Steak n Shake. Biglari Holdings is not a guarantor under the credit facility. As of March 31, 2018, $185,348 was outstanding under the term loan.~~

~~Western Revolver~~

~~As of March 31, 2018, Western has $136 due June 13, 2018.~~

~~Fair Value of Debt~~

The fair value of long-term debt, excluding capitalized lease obligations, was approximately $165,000 at March 31, 2018. The fair value of our debt was estimated based on quoted market prices. The fair value was determined to be a Level 3 fair value measurement.

table.


	Operating Leases
Year	Subleases		Owned Properties
2022	$	228	$	62
2023	767		247
2024	503		247
2025	454		250
2026	134		247
After 2026	241		805
Total future minimum receipts	$	2,327	$	1,858

Note 11. Accumulated Other Comprehensive Income

Accumulated other comprehensive income decreased by $618 and $49 during the third quarters of 2022 and 2021, respectively. During the first ~~quarters~~nine months of ~~2018 and 2017, the changes in the balances of each component of~~2022, accumulated other comprehensive income ~~net of tax, were as follows.~~

Three months ended March 31, 2018 Three months ended March 31, 2017
Foreign currency translation adjustments

Investment gain (loss) Accumulated other comprehensive income (loss) Foreign currency translation adjustments

Investment gain (loss) Accumulated
other
comprehensive income (loss)
Beginning Balance   $ (1,462 ) $ 58 $ (1,404 ) $ (3,447 ) $ (137 ) $ (3,584 )
Other comprehensive income (loss) before reclassifications —   —   —   —   124 124
Reclassification to (earnings) loss —   (58 ) (58 ) —   —   —
Foreign currency translation 496 496 185 185
Ending Balance $ (966 ) $ —   $ (966 ) $ (3,262 ) $ (13 ) $ (3,275 )

~~Reclassifications made from accumulated other comprehensive income to the consolidated statement of earnings during~~decreased by $1,870 and $378 in the first ~~quarter~~nine months of ~~2018 was $58; there~~2021. There were no reclassifications from accumulated other comprehensive ~~income~~loss to earnings during the first ~~quarter~~nine months of ~~2017.~~

2022 and 2021. All changes in accumulated other comprehensive loss were due to foreign currency translation adjustments.

Note 12. Income Taxes

In determining the quarterly provision for income taxes, the Company ~~uses~~used an estimated annual effective tax rate for the first nine months of 2022 and a discrete effective tax rate method based on ~~expected annual income,~~ statutory tax rates for the first nine months of 2021. Our periodic effective income tax rate is affected by the relative mix of pre-tax earnings or losses and ~~available~~underlying income tax ~~planning opportunities in~~rates applicable to the various ~~jurisdictions in which~~taxing jurisdictions.

Income tax expense for the ~~Company operates. Unusual or infrequently occurring items are separately recognized during~~third quarter of 2022 was $9,598 compared to an income tax benefit of $4,274 for the third quarter ~~in which they occur.~~

of 2021. Income tax benefit for the first ~~quarter~~nine months of ~~2018~~2022 was ~~$797~~$13,282 compared to ~~$9,776~~an income tax expense of $11,544 for the first ~~quarter~~nine months of ~~2017. The Tax Cuts and Jobs Act was signed into law on December 22, 2017. The U.S. corporate federal statutory income tax rate was reduced from 35.0% to 21.0% for tax years beginning in 2018.~~2021. The variance in income taxes between ~~2018~~2022 and ~~2017~~2021 is attributable to ~~the reduced corporate tax rate and~~ taxes on income ~~and losses~~ generated by the investment partnerships.

As Investment partnership pre-tax gains were $29,658 during the third quarter of ~~March 31, 2018 and December 31, 2017, we had approximately $363 and $357, respectively,~~2022 compared to pre-tax losses of ~~unrecognized tax benefits, which are included in other liabilities in~~$20,231 during the ~~consolidated balance sheets.~~

third quarter of 2021. Investment partnership pre-tax losses were $82,244 during the first nine months of 2022 compared to pre-tax gains of $27,344 during the first nine months of 2021.

~~Index~~

Note 13. Commitments and Contingencies

We are involved in various legal proceedings and have certain unresolved claims pending. We believe, based on examination of these matters and experiences to date, that the ultimate liability, if any, in excess of amounts already provided in our consolidated financial statements is not likely to have a material effect on our results of operations, financial position or cash ~~flows.~~

On January 29, 2018, a shareholder of the Company filed a purported class action complaint against the Company and the members of our Board of Directors in the Superior Court of Hamilton County, Indiana. The shareholder generally alleges claims for breach of fiduciary duty by the individual defendants and unjust enrichment to Mr. Biglari as a result of the agreement with NBHSA Inc. and the issuance of dual class common stock. The shareholder seeks, for himself and on behalf of all other shareholders as a class (other than the individual defendants and those related to or affiliated with them), to seek a declaration that the defendants breached their duty to the shareholder and the class and that Mr. Biglari would be unjustly enriched, and to recover unspecified damages, pre-judgment and post-judgment interest, and an award of their attorneys’ fees and other costs.

On March 26, 2018, a second shareholder of the Company filed a purported class action complaint against the Company, the members of our Board of Directors, New BH, and Merger Sub in the Superior Court of Hamilton County, Indiana. This shareholder generally alleges claims of breach of fiduciary duty by the members of our Board of Directors. This shareholder sought to enjoin the shareholder vote on April 28, 2018 to approve the agreement with NBHSA Inc. and the issuance of dual class common stock. On April 16, 2018, the shareholder withdrew his motion to enjoin the special meeting.

~~The Company believes the claims in each case are without merit and intends to defend these cases vigorously.~~

flow.

Note 14. Fair Value of Financial Assets

The fair values of substantially all of our financial instruments were measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the fair values presented are not necessarily indicative of the amounts that could be realized in an actual current market exchange. The use of alternative market assumptions and/or estimation methodologies may have a material effect on the estimated fair value.

Table of Contents

Note 14. Fair Value of Financial Assets (continued)

The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

•Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

•Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of the issuer or entities in the same industry sector.

•Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and we may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.

The following methods and assumptions were used to determine the fair value of each class of the following assets recorded at fair value in the consolidated balance ~~sheet:~~

sheets:

Cash equivalents: Cash equivalents primarily consist of money market funds which are classified ~~within~~as Level 1 of the fair value hierarchy.

Equity securities:The Company’s investments in equity securities are classified ~~within Level~~as Levels 1 and 2 of the fair value hierarchy.

Bonds: The Company’s investments in bonds consist of both corporate and government debt. Bonds are classified ~~within~~as Level l or Level 2 of the fair value hierarchy.

~~Index~~

Non-qualified deferred compensation plan investments:The assets of the non-qualified plan are set up in a rabbi trust. They represent mutual funds and publicly traded securities, each of which are classified ~~within~~as Level 1 of the fair value hierarchy.

Derivative instruments: Options related to equity securities are marked to market each reporting period and are classified ~~within~~as Level 2 of the fair value ~~hierarchy.~~

hierarchy depending on the instrument.

Table of Contents

Note 14. Fair Value of Financial Assets (continued)

As of ~~March 31, 2018~~September 30, 2022 and December 31, ~~2017,~~2021, the fair values of financial assets were as follows.

March 31, 2018 December 31, 2017

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 4,997 $ —   $ —   $ 4,997 $ 5,785 $ —   $ —   $ 5,785
Equity securities: Consumer goods 2,290 —   —   2,290 2,445 —   —   2,445
Bonds —   26,767 —   26,767 —   25,901 —   25,901
Options on equity securities —   2,173 —   2,173 —   2,018 —   2,018
Non-qualified deferred compensation plan investments 3,277 —   —   3,277 3,459 —   —   3,459
Total assets at fair value $ 10,564 $ 28,940 $ —   $ 39,504 $ 11,689 $ 27,919 $ —   $ 39,608


	September 30, 2022								December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	16,389	$	—	$	—	$	16,389	$	18,447	$	—	$	—	$	18,447
Equity securities
Consumer goods	16,266		932		—		17,198		10,775		2,368		—		13,143
Insurance	49		—		—		49		6,513		—		—		6,513
Technology	1,832		—		—		1,832		2,887		—		—		2,887
Bonds
Government	44,914		—		—		44,914		54,584		—		—		54,584
Corporate	3,003		—		—		3,003		4,512		—		—		4,512
Options on equity securities	—		3,531		—		3,531		—		2,095		—		2,095
Non-qualified deferred compensation plan investments	1,299		—		—		1,299		1,607		—		—		1,607
Total assets at fair value	$	83,752	$	4,463	$	—	$	88,215	$	99,325	$	4,463	$	—	$	103,788

There were no changes in our valuation techniques used to measure fair values on a recurring basis.

Note 15. Related Party Transactions

~~Services~~

Service Agreement

~~On September 15, 2017, the~~

The Company ~~entered into~~is party to a ~~services~~service agreement with Biglari Enterprises LLC and Biglari Capital Corp. (collectively, the “Biglari Entities”). under which the Biglari Entities provide business and administrative related services to the Company. The Biglari Entities are owned by Mr. Biglari.

The ~~services agreement replaces the shared services agreement between the~~ Company ~~and~~paid Biglari ~~Capital dated July 1, 2013. The services agreement was executed~~Enterprises $6,300 in connection with a review of the relationships and transactions between the Company and Biglari Capital. After careful consideration, including an assessment by a public accounting firm of administrative-related costs incurred by the Company in connection with its investments, the Company’s Governance, Compensation and Nominating Committee, comprised solely of independent board members, approved the services agreement. Under the terms of the services agreement, the Company will no longer provide business and administrative-related services to Biglari Capital. Instead, the Biglari Entities will assume the responsibility to provide the services and the Company will pay a fixed fee to the Biglari Entities.

~~The services agreement has a five-year term, effective on October 1, 2017. The fixed fee is $700 per month for~~service fees during the first ~~year with adjustments in years two through five.~~nine months of 2022 and 2021. The ~~services~~service agreement does not alter the hurdle rate connected with the incentive reallocation paid to Biglari Capital byCorp.

Incentive Agreement

The Incentive Agreement establishes a performance-based annual incentive payment for Mr. Biglari contingent upon the ~~Company.~~

~~Investments~~growth in ~~The Lion Fund, L.P. and The Lion Fund II, L.P.~~
~~As of March 31, 2018, the Company’s investments~~adjusted equity in ~~The Lion Fund, L.P. and The Lion Fund II, L.P. had a fair value of $918,229.~~

~~Distributions from The Lion Fund II, L.P. were $5,200 and $5,015 during the first quarters of 2018 and 2017, respectively.~~

~~As the general partner of the investment partnerships, Biglari Capital on December 31 of~~ each year ~~will earn an incentive reallocation fee~~attributable to our operating businesses. In order for the Company’s investments equal to 25% of the net profits above a hurdle rate of 6% over the previous high water mark. Our policy is to accrue an estimated incentive fee throughout the year. The Company did not accrue incentive fees for Biglari Capital during the first quarters of 2018 and 2017.

~~Index~~

~~Incentive Agreement Amendment~~

During 2013, Biglari Holdings and Mr. Biglari entered into an amendment to the Incentive Agreement to exclude earnings by the investment partnerships from the calculation of Mr. Biglari’s incentive bonus. Under the Amended and Restated Incentive Agreement Mr. Biglari would receive a payment of approximately $13,000 if an event occurred entitling him to a severance payment.

~~License Agreement~~

On January 11, 2013, the Company entered into a Trademark License Agreement (the “License Agreement”) with Mr. Biglari. The License Agreement was unanimously approved by the Governance, Nominating and Compensation Committee (comprised of independent members of the Company’s Board of Directors). In addition, the license under the License Agreement is provided on a royalty-free basis in the absence of specified extraordinary events described below. Accordingly, the Company and its subsidiaries have paid no royalties to Mr. Biglari under the License Agreement since its inception.

Under the License Agreement, Mr. Biglari granted to the Company an exclusive license to use the Biglari and Biglari Holdings names (the “Licensed Marks”) in association with various products and services (collectively the “Products and Services”). Upon (a) the expiration of twenty years from the date of the License Agreement (subject to extension as provided in the License Agreement), (b) Mr. Biglari’s death, (c) the termination of Mr. Biglari’s employment by the Company for Cause (as defined in the License Agreement), or (d) Mr. Biglari’s resignation from his employment with the Company absent an Involuntary Termination Event (as defined in the License Agreement), the Licensed Marks for the Products and Services will transfer from Mr. Biglari to receive any incentive, our operating businesses must achieve an annual increase in shareholders’ equity in excess of 6% (the “Hurdle Rate”) above the ~~Company, without any compensation, if the Company is continuing to use the Licensed Marks in the ordinary course of its business. Otherwise, the rights will revert to Mr. Biglari.~~

If (i) a Change of Control (as defined in the License Agreement) of the Company; (ii) the termination of Mr. Biglari’s employment by the Company without Cause; or (iii) Mr. Biglari’s resignation from his employment with the Company due to an Involuntary Termination Event (each, a “Triggering Event”previous highest level (the “High Water Mark”) ~~were to occur,~~. Mr. Biglari ~~would be entitled~~will receive 25% of any incremental book value created above the High Water Mark plus the Hurdle Rate. In any year in which book value declines, our operating businesses must completely recover their deficit from the previous High Water Mark, along with attaining the Hurdle Rate, before Mr. Biglari becomes eligible to receive a 2.5% royalty on “Revenues” with respect to the “Royalty Period.” The royalty payment to Mr. Biglari would not apply to all revenues received by Biglari Holdings and its subsidiaries nor would it apply retrospectively (~~i.e.~~, to revenues received with respect to the period prior to the Triggering Event). The royalty would apply to revenues recorded by the Company on an accrual basis under GAAP, solely with respect to the defined periodany further incentive payment.

Table of time after the Triggering Event equal to the Royalty Period, from a covered Product, Service or business that (1) has used the Biglari Holdings or Biglari name at any time during the term of the License Agreement, whether prior to or after a Triggering Event, or (2) the Company has specifically identified, prior to a Triggering Event, will use the name Biglari or Biglari Holdings.

“Revenues” means all revenues received, on an accrual basis under GAAP, by the Company, its subsidiaries and affiliates from the following: (1) all Products and Services covered by the License Agreement bearing or associated with the names Biglari and Biglari Holdings at any time (whether prior to or after a Triggering Event). This category would include, without limitation, the use of Biglari or Biglari Holdings in the public name of a business providing any covered Product or Service; and (2) all covered Products, Services and businesses that the Company has specifically identified, prior to a Triggering Event, will bear, use or be associated with the name Biglari or Biglari Holdings.

The Governance, Nominating and Compensation Committee unanimously approved the association of the Biglari name and mark with all of Steak n Shake’s restaurants (including Company operated and franchised locations), products and brands. On May 14, 2013, the Company, Steak n Shake, LLC and Steak n Shake Enterprises, Inc. entered into a Trademark Sublicense Agreement in connection therewith. Accordingly, revenues received by the Company, its subsidiaries and affiliates from Steak n Shake’s restaurants, products and brands would come within the definition of Revenues for purposes of the License Agreement.

Contents

~~Index~~

The “Royalty Period” is a defined period of time, after the Triggering Event, calculated as follows: (i) if, following three months after a Triggering Event, the Company or any of its subsidiaries or affiliates continues to use the Biglari or Biglari Holdings name in connection with any covered product or service, or continues to use Biglari as part of its corporate or public company name, then the Royalty Period will equal (a) the period of time during which the Company or any of its subsidiaries or affiliates continues any such use, plus (b) a period of time after the Company, its subsidiaries and affiliates have ceased all uses of the names Biglari and Biglari Holdings equal to the length of the term of the License Agreement prior to the Triggering Event, plus three years. As an example, if a Triggering Event occurs five years after the date of the License Agreement, and the Company ceases all uses of the Biglari and Biglari Holdings names two years after the Triggering Event, the Royalty Period will equal a total of ten years (the sum of two years after the Triggering Event during which the Biglari and Biglari Holdings names are being used, plus a period of time equal to the five years prior to the Triggering Event, plus three years); or (ii) if the Company, its subsidiaries and affiliates cease all uses of the Biglari and Biglari Holdings names within three months after a Triggering Event, then the Royalty Period will equal the length of the term of the License Agreement prior to the Triggering Event, plus three years. As an example, if a Triggering Event occurs five years after the date of the License Agreement, and the Company ceases all uses of the Biglari and Biglari Holdings names two months after the Triggering Event, the Royalty Period will equal a total of eight years (the sum of the period of time equal to the five years prior to the Triggering Event, plus three years). Notwithstanding the above methods of determining the Royalty Period, the minimum Royalty Period is five years after a Triggering Event.

The actual amount of royalties paid to Mr. Biglari following the occurrence of a Triggering Event (as defined in the License Agreement) would depend on the Company’s revenues during the applicable period following the Triggering Event, and, therefore, depends on material assumptions and estimates regarding future operations and revenues. Assuming for purposes of illustration a Triggering Event occurred on December 31, 2017, using revenue from 2017 as an estimate of future revenue and calculated according to terms of the License Agreement, Mr. Biglari would receive approximately $20,000 in royalty payments annually. At a minimum, the royalties would be earned on revenue generated from January 1, 2018 through December 21, 2024. Royalty payments beyond the minimum period would be subject to the licensee's continued use of the licensed marks.

~~Index~~

Note 16. Business Segment Reporting

Our reportable business segments are organized in a manner that reflects how management views those business activities. Our restaurant operations ~~includes~~include Steak n Shake and ~~Western.~~Western Sizzlin. Our insurance operations include First Guard and Southern Pioneer. Our oil and gas operations include Southern Oil and Abraxas Petroleum. The Company also reports segment information for ~~First Guard and~~ Maxim. Other business activities not specifically identified with reportable business segments are presented in ~~“other” within total operating businesses.~~corporate. We report our earnings from investment partnerships separate from our corporate expenses. We assess and measure segment operating results based on segment earnings as disclosed below. Segment earnings from operations are neither necessarily indicative of cash available to fund cash requirements, nor synonymous with cash flow from operations. The tabular information that follows shows data of our reportable segments reconciled to amounts reflected in the consolidated financial statements.

~~Revenue and earnings (losses) before income taxes~~

A disaggregation of our consolidated data for the third quarters and first ~~quarters~~nine months of ~~2018~~2022 and ~~2017 were as follows.~~

Revenue
First Quarter
2018 2017
Operating Businesses:
Restaurant Operations:
Steak n Shake $ 190,293 $ 192,690
Western 3,641 3,004
Total Restaurant Operations 193,934 195,694
First Guard 6,547 6,080
Maxim 1,744 1,619
$ 202,225 $ 203,393

Earnings (Losses) Before Income Taxes
First Quarter
2018 2017
Operating Businesses:
Restaurant Operations:
Steak n Shake $ (992 ) $ 3,352
Western 374 450
Total Restaurant Operations (618 ) 3,802
First Guard 510 969
Maxim (217 ) (324 )
Other 139 148
Total Operating Businesses (186 ) 4,595
Corporate and Investments:
Corporate (3,166 ) (2,400 )
Investment partnership gains 3,495 (24,968 )
Total Corporate and Investments 329 (27,368 )
Interest expense on notes payable and other borrowings (2,754 ) (2,824 )
$ (2,611 ) $ (25,597 )

2021 is presented in the tables which follow.

Revenue
Third Quarter First Nine Months
2022 2021 2022 2021
Operating Businesses:
Restaurant Operations:
Steak n Shake $ 56,949 $ 56,993 $ 172,444 $ 190,517
Western Sizzlin 2,488 2,151 7,164 5,907
Total Restaurant Operations 59,437 59,144 179,608 196,424
Insurance Operations:
Underwriting
First Guard 9,112 8,458 26,858 24,760
Southern Pioneer 6,004 5,443 17,653 16,406
Investment income and other 1,196 822 3,234 2,563
Total Insurance Operations 16,312 14,723 47,745 43,729
Oil and Gas Operations:
Southern Oil 12,688 7,353 36,940 24,310
Abraxas Petroleum 1,692 — 1,692 —
Total Oil and Gas Operations 14,380 7,353 38,632 24,310
Maxim 1,905 863 3,788 2,695
$ 92,034 $ 82,083 $ 269,773 $ 267,158

~~Index~~Table of Contents

Note 16. Business Segment Reporting (continued)


	Earnings (Losses) Before Income Taxes
	Third Quarter				First Nine Months
	2022		2021		2022		2021
Operating Businesses:
Restaurant Operations:
Steak n Shake	$	3,964	$	(2,959)	$	11,777	$	5,733
Western Sizzlin	369		247		997		707
Total Restaurant Operations	4,333		(2,712)		12,774		6,440

Insurance Operations:
Underwriting:
First Guard	2,354		2,832		4,800		7,922
Southern Pioneer	(483)		397		(1,101)		1,511
Investment income and other	1,221		613		3,188		1,965
Total Insurance Operations	3,092		3,842		6,887		11,398

Oil and Gas Operations:
Southern Oil	6,795		2,982		19,137		9,047
Abraxas Petroleum	446		—		446		—
Total Oil and Gas Operations	7,241		2,982		19,583		9,047

Maxim	1,534		(56)		1,699		867
Interest expense not allocated to segments	(67)		—		(67)		(1,121)
Total Operating Businesses	16,133		4,056		40,876		26,631

Corporate and other	(3,305)		(3,302)		(9,769)		(8,595)
Investment gains (losses)	(849)		4,534		(4,184)		6,465
Investment partnership gains (losses)	29,658		(20,231)		(82,244)		27,344
	$	41,637	$	(14,943)	$	(55,321)	$	51,845

Table of Contents

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(dollars in thousands except per share data)

Overview

Biglari Holdings Inc. ~~(“Biglari Holdings” or the “Company”)~~ is a holding company owning subsidiaries engaged in a number of diverse business activities, including ~~media,~~ property and casualty insurance, licensing and ~~restaurants.~~media, restaurants, and oil and gas. The Company’s largest operating subsidiaries are involved in the franchising and operating of restaurants. Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of the Company. ~~The Company’s long-term objective is to maximize per-share intrinsic value.~~

~~On March 5, 2018 the Company entered into an agreement with NBHSA Inc. (“New BH”), a direct, wholly owned subsidiary~~

As of September 30, 2022, Mr. Biglari beneficially owns shares of the Company that represent approximately 66.3% of the economic interest and ~~BH Merger Company (“Merger Sub”), a wholly owned subsidiary~~70.4% of ~~New BH. Pursuant to~~ the ~~agreement, on April 30, 2018, Merger Sub merged with and into~~voting interest.

On September 14, 2022, the Company ~~with~~completed the purchase of 685,505 shares of Series A Preferred Stock (the "Preferred Shares") of Abraxas Petroleum Corporation ("Abraxas Petroleum") for a purchase price of $80,000. On October 26, 2022, the Company ~~continuing as~~converted the ~~surviving corporation and a wholly owned subsidiary of New BH. Upon completion~~preferred stock to 90% of the ~~merger, New BH changed its name to “Biglari Holdings Inc.” and replaced the Company as the publicly held corporation through which our collection of businesses is conducted.~~

~~New BH has two classes of common stock designated Class A common stock and Class B common stock. A share of Class B common stock has economic rights equivalent to 1/5~~^th ~~of a share of Class A common stock, however, Class B common stock has no voting rights.~~

~~As a result of the April 30, 2018 transaction, the current shareholders of the Company became shareholders of New BH and received, for every ten (10) shares of~~outstanding common stock of Abraxas Petroleum. We have concluded that Abraxas Petroleum is a consolidated entity and have recorded noncontrolling interests attributable to the interest held by other shareholders. The Company used working capital including its line of credit to fund the purchase of the Preferred Shares. Abraxas Petroleum operates oil and natural gas properties in the Permian Basin. The Company’s financial results include the results of Abraxas Petroleum from the acquisition date to the end of the third quarter. The revenues and operating results for Abraxas Petroleum were not significant to the Company they owned on April 30, 2018, (i) ten (10) shares of Class B common stock of New BH and (ii) one (1) share of Class A common stock of New BH. In other words, shareholders received for a share of common stock of the Company (i) one (1) share of Class B common stock of New BH and (ii) 1/10^th~~of one share of Class A common stock of New BH.~~

Starting on May 1, 2018, the shares of New BH Class A common stock trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “BH.A,” whereas the New BH Class B common stock trade on the NYSE under the ticker symbol “BH,” which is the former ticker symbol for the ~~Company’s common stock.~~

third quarter.

Net earnings (loss) attributable to Biglari Holdings shareholders are disaggregated in the table that follows. Amounts are recorded after deducting income taxes.

First Quarter
2018 2017
Operating businesses:
Restaurant $ (456 ) $ 2,497
Insurance 394 626
Media (168 ) (208 )
Other 102 90
Total operating businesses (128 ) 3,005
Corporate (2,695 ) (1,868 )
Investment partnership gains (losses) 3,075 (15,207 )
Interest expense on notes payable and other borrowings (2,066 ) (1,751 )
$ (1,814 ) $ (15,821 )

Third Quarter First Nine Months
2022 2021 2022 2021
Operating businesses:
Restaurant $ 3,320 $ (1,515) $ 9,588 $ 5,146
Insurance 2,389 2,985 5,292 8,902
Oil and gas 5,574 2,325 14,867 7,016
Brand licensing 1,150 (43) 1,274 662
Interest expense (52) — (52) (841)
Corporate and other (2,742) (2,526) (7,630) (6,649)
Total operating businesses 9,639 1,226 23,339 14,236
Investment gains (657) 3,390 (3,287) 4,896
Investment partnership gains (losses) 23,057 (15,285) (62,091) 21,169
32,039 (10,669) (42,039) 40,301
Earnings attributable to noncontrolling interest 34 — 34 —
$ 32,005 $ (10,669) $ (42,073) $ 40,301

~~Index~~Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Restaurants

Our restaurant businesses, which include Steak n Shake ~~Inc. (“Steak n Shake”)~~ and Western Sizzlin, ~~Corporation (“Western”).~~ comprise 552 company-operated and franchise restaurants as of September 30, 2022.


	Steak n Shake			Western Sizzlin
	Company- operated	Franchise Partner	Traditional Franchise	Company- operated	Franchise	Total
Total stores as of December 31, 2021	199	159	178	3	38	577
Corporate stores transitioned	(12)	12	—	—	—	—
Net restaurants opened (closed)	(6)	—	(19)	—	—	(25)
Total stores as of September 30, 2022	181	171	159	3	38	552

Total stores as of December 31, 2020	276	86	194	3	39	598
Corporate stores transitioned	(54)	54	—	—	—	—
Net restaurants opened (closed)	(1)	—	(15)	—	(1)	(17)
Total stores as of September 30, 2021	221	140	179	3	38	581

As of ~~March 31, 2018,~~September 30, 2022, 39 of the 181 company-operated Steak n Shake ~~comprised 415~~stores were closed. We plan to refranchise a majority of our closed company-operated restaurants.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Restaurant operations are summarized below.


	Third Quarter								First Nine Months
	2022				2021				2022				2021
Revenue
Net sales	$	37,448			$	41,916			$	113,345			$	146,269
Franchise partner fees	15,880				11,508				47,929				31,744
Franchise royalties and fees	5,089				4,865				15,472				14,594
Other revenue	1,020				855				2,862				3,817
Total revenue	59,437				59,144				179,608				196,424

Restaurant cost of sales
Cost of food	11,359		30.3	%	13,123		31.3	%	33,684		29.7	%	43,404		29.7	%
Restaurant operating costs	20,745		55.4	%	24,496		58.4	%	61,127		53.9	%	71,751		49.1	%
Occupancy costs	4,058		10.8	%	4,075		9.7	%	12,658		11.2	%	14,142		9.7	%
Total cost of sales	36,162				41,694				107,469				129,297

Selling, general and administrative
General and administrative	9,556		16.1	%	9,255		15.6	%	28,327		15.8	%	27,416		14.0	%
Marketing	2,758		4.6	%	2,302		3.9	%	9,589		5.3	%	10,212		5.2	%
Other expenses	(825)		(1.4)	%	1,332		2.3	%	(1,141)		(0.6)	%	2,266		1.2	%
Total selling, general and administrative	11,489		19.3	%	12,889		21.8	%	36,775		20.5	%	39,894		20.3	%

Impairments	—				—				(20)				(559)
Depreciation and amortization	(6,081)				(5,811)				(18,401)				(15,615)
Interest on finance leases and obligations	(1,372)				(1,462)				(4,169)				(4,619)

Earnings (loss) before income taxes	4,333				(2,712)				12,774				6,440

Income tax expense (benefit)	1,013				(1,197)				3,186				1,294

Contribution to net earnings (loss)	$	3,320			$	(1,515)			$	9,588			$	5,146

Cost of food, restaurant operating costs, and occupancy costs are expressed as a percentage of net sales.

General and administrative, marketing and other expenses are expressed as a percentage of total revenue.

The novel coronavirus (“COVID-19”), declared a pandemic by the World Health Organization in March 2020, caused governments to impose restrictive measures to contain its spread. The COVID-19 pandemic adversely affected our restaurant operations and financial results. Our restaurants were required to close their dining rooms during the first quarter of 2020. The majority of Steak n Shake’s dining rooms were reopened during 2021, and ~~201 franchised~~in doing so a self-service model has been implemented.

Net sales for the third quarter and first nine months of 2022 were $37,448 and $113,345, respectively, representing a decrease of $4,468 or 10.7% and $32,924 or 22.5%, compared to the third quarter and first nine months of 2021, respectively. The decrease in revenue of company-owned restaurants is primarily due to the shift of company units to franchise partner units. ~~Western comprised 4~~For company-operated ~~restaurants~~units, sales to the end customer are recorded as revenue generated by the Company, but for franchise partner units, only our share of the restaurant’s profits, along with certain fees, are recorded as revenue. Because we derive most of our revenue from our share of the profits, revenue will continue to decline as we transition from company-operated units to franchise partner units.

Table of Contents

Item 2. Management’s Discussion and ~~58 franchised units.~~

Analysis of Financial Condition and Results of Operations (continued)

Franchise partner fees were $15,880 during the third quarter of 2022, as compared to $11,508 during the third quarter of 2021.Franchise partner fees were $47,929 and $31,744 during the first nine months of 2022 and 2021, respectively. As of September 30, 2022, there were 171 franchise partner units, compared to 140 franchise partner units as of September 30, 2021. For a franchise partner to be awarded a restaurant, he or she must demonstrate the gold standard in service.

The franchise royalties and fees generated by the traditional franchising business were $5,089 during the third quarter of 2022, as compared to $4,865 during the third quarter of 2021. Franchise royalties and fees during the first nine months of 2022 were $15,472 compared to $14,594 during the first nine months of 2021.

The cost of food as a percentage of net sales during the third quarter and first nine months of 2022 was 30.3% and 29.7%, respectively, as compared to 31.3% and 29.7% of net sales during the third quarter and first nine months of 2021, respectively. Cost of food as a percentage of net sales were lower during the third quarter of 2022 compared to 2021 primarily because of higher menu prices.

Restaurant operating costs as a percentage of net sales during the third quarter of 2022 were 55.4%, as compared to 58.4% of net sales in the third quarter of 2021.Restaurant operating costs during the first nine months of 2022 were 53.9% of net sales, as compared to 49.1% of net sales in 2021. The increase during the first nine months was primarily the result of higher wages.

Selling, general and administrative costs during the third quarter and first nine months of 2022 were $11,489 and $36,775, respectively, compared to $12,889 and $39,894 in the third quarter and first nine months of 2021, respectively. Steak n Shake recorded gains on the disposal of assets of $1,084 and $1,749 in the third quarter and first nine months of 2022, respectively.

The Company recorded no impairment charges in the third quarter and $20 in the first nine months of 2022. The Company recorded no impairment charges in the third quarter and $559 in the first nine months of 2021, respectively. Impairments during 2021 are related to underperforming stores.

Insurance

We view our insurance businesses as possessing two activities: underwriting and investing. Underwriting decisions are the responsibility of the unit managers, whereas investing decisions are the responsibility of our Chairman and CEO, Sardar Biglari. Our business units are operated under separate local management. Biglari Holdings’ insurance ~~business is composed~~operations consist of First Guard and Southern Pioneer.

Underwriting results of our insurance operations are summarized below.


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Underwriting gain (loss) attributable to:
First Guard	$	2,354	$	2,832	$	4,800	$	7,922
Southern Pioneer	(483)		397		(1,101)		1,511
Pre-tax underwriting gain	1,871		3,229		3,699		9,433
Income tax expense	392		681		776		1,984
Net underwriting gain	$	1,479	$	2,548	$	2,923	$	7,449

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Earnings of our insurance operations are summarized below.


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Premiums earned	$	15,116	$	13,901	$	44,511	$	41,166
Insurance losses	8,814		6,657		27,646		20,040
Underwriting expenses	4,431		4,015		13,166		11,693
Pre-tax underwriting gain	1,871		3,229		3,699		9,433
Other income and expenses
Investment income	362		195		832		652
Other income (expenses)	859		418		2,356		1,313
Total other income	1,221		613		3,188		1,965
Earnings before income taxes	3,092		3,842		6,887		11,398
Income tax expense	703		857		1,595		2,496
Contribution to net earnings (loss)	$	2,389	$	2,985	$	5,292	$	8,902

Insurance ~~Company~~premiums and ~~its agency, 1st~~other on the consolidated statement of earnings includes premiums earned, investment income, other income, and commissions.

First Guard ~~Corporation (collectively “First Guard”).~~

First Guard is a direct underwriter of commercial ~~trucking~~truck insurance, selling physical damage and nontrucking liability insurance to truckers.

~~Our media business is composed of Maxim Inc. (“Maxim”). Maxim’s business lies principally in media and licensing.~~

~~Restaurants~~

~~Steak n Shake and Western comprise 678 company-operated and franchised restaurants as of March 31, 2018.~~

Steak n Shake Western Sizzlin
Company- operated Franchised Company-operated Franchised Total
Total stores as of December 31, 2017 415 200 4 58 677
Net restaurants opened (closed) — 1 — — 1
Total stores as of March 31, 2018 415 201 4 58 678

Total stores as of December 31, 2016 417 173 3 64 657
Net restaurants opened (closed) — 9 — (2 ) 7
Total stores as of March 31, 2017 417 182 3 62 664

~~Index~~

~~Earnings of our restaurant operations are summarized below.~~

First Quarter
2018 2017
Revenue
Net sales $ 185,571 $ 189,051
Franchise royalties and fees 7,102 5,556
Other revenue 1,261 1,087
Total revenue 193,934 195,694

Restaurant cost of sales
Cost of food 55,928 30.1 % 54,401 28.8 %
Restaurant operating costs 97,815 52.7 % 98,347 52.0 %
Rent 4,607 2.5 % 4,550 2.4 %
Total cost of sales 158,350 157,298

Selling, general and administrative
General and administrative 15,087 7.8 % 13,952 7.1 %
Marketing 13,593 7.0 % 12,435 6.4 %
Other expenses 552 0.3 % 678 0.3 %
Total selling, general and administrative 29,232 15.1 % 27,065 13.8 %

Depreciation and amortization 4,784 2.5 % 5,249 2.7 %

Interest on obligations under leases 2,186 2,280

Earnings (loss) before income taxes (618 ) 3,802

Income tax expense (benefit) (162 ) 1,305

Contribution to net earnings $ (456 ) $ 2,497

~~Cost of food, restaurant operating costs and rent expense are expressed as a percentage of net sales.~~

~~General and administrative, marketing, other expenses and depreciation and amortization are expressed as a percentage of total revenue.~~

Net sales during the first quarter of 2018 were $185,571, representing a decrease of $3,480 over the first quarter of 2017. The decreased performance of our restaurant operations was largely driven by Steak n Shake’s same-store sales, which decreased 1.7% whereas customer traffic decreased 7.2% during the first quarter. The term “same-store sales” refers to the sales of company-operated units open at least 18 months at the beginning of the current period and have remained open through the end of the period.

In the first quarter of 2018 franchise royalties and fees increased $1,546 or 27.8% compared to those in 2017. The adoption of the new accounting guidance increased franchise fees and royalties by $2,369. The first quarter of 2017 included $987 in international decommitment fees. Steak n Shake opened eight franchise units and closed seven franchise units during the first quarter of 2018. There were 201 Steak n Shake franchise units as of March 31, 2018 compared to 182 franchise units as of March 31, 2017.

Cost of food in the first quarter of 2018 was $55,928 or 30.1% of net sales compared to the first quarter in 2017 of $54,401 or 28.8% of net sales. The increase during 2018 was attributable to increased costs primarily related to bacon, cheese and beef.

Restaurant operating costs during the first quarter of 2018 were $97,815 or 52.7% of net sales compared to $98,347 or 52.0% of net sales in 2017. The increase in costs as a percentage of net sales during the first quarter of 2018 compared to 2017 was principally due to higher wages and benefits.

~~Index~~

General and administrative expenses during the first quarter of 2018 were $15,087 or 7.8% of total revenues compared to expenses in the first quarter of 2017, which were $13,952 or 7.1% of total revenues. The increase in general and administrative expenses during the first quarter of 2018 compared to 2017 was principally tied to higher recruiting expenses.

Marketing expenses during the first quarter of 2018 were $13,593 or 7.0% of total revenues compared to expenses in the first quarter of 2017, which were $12,435 or 6.4% of total revenues. The increase in marketing expenses during the first quarter of 2018 compared to 2017 was principally due to the adoption of the new accounting guidance. The new ASC 606 accounting guidance requires the Company to expense franchise ad funds and recognize franchise fees as revenue instead of marketing expenses.

~~Insurance~~

~~First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and nontrucking liability insurance to truckers. Earnings of our insurance business are summarized below.~~

First Quarter
2018 2017
Premiums written $ 6,328 $ 5,907

Insurance losses 4,360 3,762
Underwriting expenses 1,568 1,258
Pre-tax underwriting gain 400 887
Other income and expenses
Investment income and commissions 219 173
Other expense (109 ) (91 )
Total other income 110 82
Earnings before income taxes 510 969
Income tax expense 116 343
Contribution to net earnings $ 394 $ 626

First Guard’s insurance products are marketed primarily through direct response methods via the Internet or by telephone. First Guard’s cost-efficient direct response marketing methods enable it to be a low-cost ~~trucking~~ insurer.

~~Premiums written during the first quarter~~ A summary of ~~2018 were $6,328, an increase~~First Guard’s underwriting results follows.


	Third Quarter								First Nine Months
	2022				2021				2022				2021
	Amount		%		Amount		%		Amount		%		Amount		%
Premiums earned	$	9,112	100.0	%	$	8,458	100.0	%	$	26,858	100.0	%	$	24,760	100.0	%

Insurance losses	4,815		52.8	%	3,935		46.5	%	16,468		61.3	%	11,746		47.4	%
Underwriting expenses	1,943		21.3	%	1,691		20.0	%	5,590		20.8	%	5,092		20.6	%
Total losses and expenses	6,758		74.1	%	5,626		66.5	%	22,058		82.1	%	16,838		68.0	%
Pre-tax underwriting gain	$	2,354			$	2,832			$	4,800			$	7,922

Southern Pioneer

Southern Pioneer underwrites garage liability and commercial property insurance, as well as homeowners and dwelling fire insurance. A summary of ~~$421~~Southern Pioneer’s underwriting results follows.


	Third Quarter								First Nine Months
	2022				2021				2022				2021
	Amount		%		Amount		%		Amount		%		Amount		%
Premiums earned	$	6,004	100.0	%	$	5,443	100.0	%	$	17,653	100.0	%	$	16,406	100.0	%

Insurance losses	3,999		66.6	%	2,722		50.0	%	11,178		63.3	%	8,294		50.6	%
Underwriting expenses	2,488		41.4	%	2,324		42.7	%	7,576		42.9	%	6,601		40.2	%
Total losses and expenses	6,487		108.0	%	5,046		92.7	%	18,754		106.2	%	14,895		90.8	%
Pre-tax underwriting gain (loss)	$	(483)			$	397			$	(1,101)			$	1,511

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Insurance - Investment Income

A summary of net investment income attributable to our insurance operations follows.


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Interest, dividends and other investment income:
First Guard	$	202	$	54	$	398	$	84
Southern Pioneer	160		141		434		568
Pre-tax investment income	362		195		832		652
Income tax expense	76		41		175		137
Net investment income	$	286	$	154	$	657	$	515

We consider investment income as a component of our aggregate insurance operating results. However, we consider investment gains and losses, whether realized or ~~7.1% compared to 2017. Pre-tax underwriting gain was $400~~unrealized, as non-operating.

Oil and Gas

Southern Oil

Southern Oil primarily operates oil and natural gas properties offshore in the ~~first quarter~~shallow waters of ~~2018 compared to $887~~the Gulf of Mexico. Earnings for Southern Oil are summarized below.


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Oil and gas revenue	$	12,688	$	7,353	$	36,940	$	24,310
Oil and gas production costs	3,484		2,050		11,146		6,957
Depreciation, depletion and accretion	1,873		1,717		4,926		6,286
General and administrative expenses	536		604		1,731		2,020
Earnings before income taxes	6,795		2,982		19,137		9,047
Income tax expense	1,564		657		4,613		2,031
Contribution to net earnings	$	5,231	$	2,325	$	14,524	$	7,016

Abraxas Petroleum

Abraxas Petroleum operates oil and gas properties in the ~~first quarter~~Permian Basin. Earnings for Abraxas Petroleum from the date of ~~2017.~~

~~Insurance premiums and other~~acquisition on ~~the statement of earnings includes premiums written, investment income and commissions. In the preceding table, commissions~~September 14, 2022 are ~~included in other income.~~

summarized below.

22
	Third Quarter
	2022
Oil and gas revenue	$	1,692
Oil and gas production costs	606
Depreciation, depletion and accretion	360
General and administrative expenses	280
Earnings before income taxes	446
Income tax expense	103
Contribution to net earnings	343
Earnings attributable to noncontrolling interests	34
Net earnings attributable to Biglari Holdings Inc. shareholders	$	309

~~Index~~Table of Contents

~~Media~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Brand Licensing

Maxim’s business lies principally in ~~media~~licensing and ~~licensing.~~media. Earnings of ~~our media~~ operations are summarized below.

First Quarter
2018 2017
Revenue $ 1,744 $ 1,619

Media cost of sales 1,517 1,493
General and administrative expenses 436 437
Depreciation and amortization 8 13
Earnings (loss) before income taxes (217 ) (324 )
Income tax expense (benefit) (49 ) (116 )
Contribution to net earnings $ (168 ) $ (208 )


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Licensing and media revenue	$	1,905	$	863	$	3,788	$	2,695

Licensing and media costs	345		880		1,975		1,749
General and administrative expenses	26		39		114		79
Earnings (loss) before income taxes	1,534		(56)		1,699		867
Income tax expense (benefit)	384		(13)		425		205
Contribution to net earnings (loss)	$	1,150	$	(43)	$	1,274	$	662

We acquired Maxim ~~in 2014~~ with the idea of transforming its business model. The magazine developed the Maxim brand, a franchise we are utilizing to generate nonmagazine revenue, notably through licensing, a cash-generating business related to consumer products, services, and events.

Investment Gains

Investment losses net of tax for the third quarter of 2022 were $657 compared to investment gains net of tax for the third quarter of 2021 of $3,390. Investment losses net of tax for the first nine months of 2022 were $3,287 compared to investment gains net of tax for the first nine months of 2021 of $4,896. Dividends earned on investments are reported as investment income by our insurance companies. We ~~have taken the risk on the belief that the probability for gain in value more than justifies the risk~~consider investment income as a component of ~~loss.~~

our aggregate insurance operating results. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.

Investment Partnership Gains ~~(Losses)~~

Earnings (loss) from our investments in partnerships are summarized below.

First Quarter
2018 2017
Investment partnership gains (losses) $ 3,495 $ (24,968 )
Tax expense (benefit) 420 (9,761 )
Contribution to net earnings $ 3,075 $ (15,207 )

~~The Company recorded after-tax~~


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Investment partnership gains (losses)	$	29,658	$	(20,231)	$	(82,244)	$	27,344
Tax expense (benefit)	6,601		(4,946)		(20,153)		6,175
Contribution to net earnings (loss)	$	23,057	$	(15,285)	$	(62,091)	$	21,169

Investment partnership gains ~~from investment partnerships of $3,075 during the first quarter of 2018 and after-tax~~ include gains/losses ~~of $15,207 during the first quarter of 2017. The volatility of the gains and losses during the various periods is attributable to~~from changes in market values of underlying investments ~~held~~and dividends earned by the ~~investment~~ partnerships. ~~The investments held by the investment partnerships are largely concentrated~~Dividend income has a lower effective tax rate than income from capital gains. These gains and losses have caused and will continue to cause significant volatility in ~~the common stock of one investee, Cracker Barrel Old Country Store, Inc.~~

our periodic earnings.

The investment partnerships hold the Company’s common stock as investments. The Company’s pro-rata share of its common stock held by the investment partnerships is recorded as treasury stock even though these shares are legally outstanding. Gains and losses on Company common stock included in the earnings of the partnerships are ~~eliminated.~~

eliminated in the Company’s consolidated financial results.

~~Index~~Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Interest Expense

The Company’s interest expense is summarized below.

First Quarter
2018 2017
Interest expense on notes payable and other borrowings $ 2,754 $ 2,824
Tax benefit 688 1,073
Interest expense net of tax $ 2,066 $ 1,751

Interest expense during the first quarter of 2018 was $2,754 compared to $2,824 for the first quarter of 2017. The outstanding balance on Steak n Shake’s credit facility on March 31, 2018 was $185,348 compared to $187,548 on March 31, 2017. The interest rate was 5.40% as of March 31, 2018.


	Third Quarter				First Nine Months
	2022		2021		2022		2021
Interest expense on notes payable	$	67	$	—	$	67	$	1,121
Tax benefit	15		—		15		280
Interest expense net of tax	$	52	$	—	$	52	$	841

Corporate

and Other

Corporate expenses exclude the activities inof the restaurant, insurance, ~~media~~brand licensing, and oil and gas businesses. Corporate and other ~~companies. Corporate~~ net losses during the third quarter and first nine months of 2022 were relatively flat compared to the same period in 2021.

Income Taxes

Income tax expense for the third quarter of ~~2018 were $2,695 versus net losses~~2022 was $9,598 compared to an income tax benefit of ~~$1,868 during~~$4,274 for the ~~first~~third quarter of ~~2017. Legal and professional expenses associated with shareholder lawsuits and the implementation of dual class stock increased expenses during the first quarter of 2018 as compared to 2017.~~

~~Income Tax Expense~~

2021. Income tax benefit for the first ~~quarter~~nine months of ~~2018~~2022 was ~~$797~~$13,282 compared to ~~$9,776~~an income tax expense of $11,544 for the first ~~quarter~~nine months of ~~2017. The Tax Cuts and Jobs Act was signed into law on December 22, 2017. The U.S. corporate federal statutory income tax rate was reduced from 35.0% to 21.0% for tax years beginning in 2018.~~2021. The variance in income taxes between ~~2018~~2022 and ~~2017~~2021 is attributable to ~~the reduced corporate tax rate and~~ taxes on income ~~and losses~~ generated by the investment partnerships.

~~Financial Condition~~

~~Our consolidated shareholders’ equity on March 31, 2018 was $551,707, a decrease~~ Investment partnership pre-tax gains were $29,658 during the third quarter of ~~$19,621~~2022 compared to pre-tax losses of $20,231 during the ~~December 31, 2017 balance. The decrease~~third quarter of 2021. Investment partnership pre-tax losses were $82,244 during the first ~~quarter~~nine months of ~~2018 was primarily attributable~~2022 compared to ~~an increase in treasury stock. The increase in treasury stock was primarily a result~~pre-tax gains of ~~recording our proportionate interest in 45,302 shares of the Company’s stock purchased~~$27,344 during the first ~~quarter~~nine months of 2018 by The Lion Fund II, L.P. under a Rule 10b5-1 trading plan. The shares purchased by the investment partnership are legally outstanding but under accounting convention the Company’s proportional ownership of the shares is reflected as treasury shares in the consolidated financial statements.

2021.

Financial Condition

Consolidated cash and investments are summarized below.

March 31,
2018 December 31,
2017
Cash and cash equivalents $ 45,444 $ 58,577
Investments 28,620 27,752
Fair value of interest in investment partnerships 918,229 925,279
Total cash and investments 992,293 1,011,608
Less portion of Company stock held by investment partnerships (372,290 ) (359,258 )
Carrying value of cash and investments on balance sheet $ 620,003 $ 652,350

September 30,
2022 December 31,
2021
Cash and cash equivalents $ 64,842 $ 42,349
Investments 70,032 83,061
Fair value of interest in investment partnerships 338,314 474,201
Total cash and investments 473,188 599,611
Less: portion of Company stock held by investment partnerships (193,450) (223,802)
Carrying value of cash and investments on balance sheet $ 279,738 $ 375,809

Unrealized gains/losses of Biglari Holdings’ stock held by the investment partnerships are eliminated in the Company’s consolidated financial results.

~~Index~~Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity

Our balance sheet continues to maintain significant liquidity. Consolidated cash flow activities are summarized below.

First Quarter
2018 2017
Net cash provided by (used in) operating activities $ (9,445 ) $ 9,863
Net cash used in investing activities (1,776 ) (232 )
Net cash used in financing activities (1,947 ) (16,896 )
Effect of exchange rate changes on cash 35 17
Decrease in cash, cash equivalents and restricted cash $ (13,133 ) $ (7,248 )


	First Nine Months
	2022		2021
Net cash provided by operating activities	$	99,754	$	211,245
Net cash used in investing activities	(102,464)		(55,782)
Net cash provided by (used in) financing activities	25,353		(154,586)
Effect of exchange rate changes on cash	(150)		(85)
Increase in cash, cash equivalents and restricted cash	$	22,493	$	792

Cash ~~used in~~provided by operating activities was ~~$9,445~~$99,754 during ~~the first quarter of 2018~~2022 compared to $211,245 in 2021. The decrease in cash provided by operating activities is mainly attributable to distributions from investment partnerships of ~~$9,863~~$51,200 for 2022 and $172,420 for 2021. The distributions during ~~the first quarter of 2017. Net earnings adjusted for non-cash items decreased by $4,669 because of lower revenues and earnings. Cash~~2021 were primarily used ~~in working capital accounts increased $14,824 primarily due~~ to ~~the timing of the 2017 incentive fee payment of $7,353.~~

~~Net cash~~repay Steak n Shake’s debt.

Cash used in investing activities during ~~the first quarter of 2018 of $1,776~~2022 was ~~primarily due~~$102,464 compared to $55,782 in 2021. Capital expenditures were lower during 2022 by $23,049 compared to 2021. Steak n Shake incurred higher capital expenditures ~~of $2,452 and increases of fixed maturity securities (net of maturing securities) of $848 offset~~during 2021 for its transition to a self-service model.

Cash provided by ~~proceeds from property and equipment disposals of $1,524. Net cash~~financing activities was $25,353 in 2022 compared to $154,586 used in ~~investing activities~~2021. The Company repaid Steak n Shake’s debt during ~~the first quarter of 2017 of $232 was primarily due to capital expenditures of $1,990 offset by reductions of fixed maturity securities (net of purchases) of $1,708.~~

During the first quarter of 2018 and 2017 we incurred debt payments of $589 and $15,570, respectively. Debt obligations were reduced during 2017 because of additional principal payments on long-term debt.

2021.

We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated from operations and cash on ~~hand, existing credit facilities, and the sale of excess properties and investments.~~hand. We continually review available financing alternatives.

Biglari Holdings Line of Credit

Steak n Shake Credit Facility

$220,000. The term loan iswas scheduled to mature on March 19, 2021. ~~It amortizes at an annual rate~~The Company repaid the balance of 1.0% in equal quarterly installments, beginning June 30, 2014, at 0.25% of the original principal amount of the term loan, subject to mandatory prepayments from excess cash flow, asset sales and other events described in the credit agreement. The balance will be due at maturity.

Steak n Shake has the right to request an incremental term loan facility from participating lenders and/or eligible assignees at any time, up to an aggregate total principal amount not to exceed $70,000 if certain customary conditions within the credit agreement are met.

~~The interest rate on the term loan was 5.40% as of March 31, 2018.~~

~~The credit agreement includes customary affirmative and negative covenants and events of default. As of March 31, 2018, we were in compliance with all covenants.~~ Steak n Shake’s ~~credit~~term facility ~~contains restrictions~~ on ~~its ability to pay dividends to Biglari Holdings.~~

~~The term loan is secured by first priority security interests in substantially all the assets~~February 19, 2021.

Table of ~~Steak n Shake. Biglari Holdings is not a guarantor under the credit facility. As~~Contents

Item 2. Management’s Discussion and Analysis of ~~March 31, 2018, $185,348 was outstanding under the term loan.~~

~~Western Revolver~~

AsFinancial Condition and Results of ~~March 31, 2018, Western has $136 due June 13, 2018.~~

Operations (continued)

~~Index~~

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain accounting policies require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized in our consolidated financial statements from such estimates are necessarily based on numerous assumptions involving varying and potentially significant degrees of judgment and uncertainty. Accordingly, the amounts currently reflected in our consolidated financial statements will likely increase or decrease in the future as additional information becomes available. There have been no material changes to critical accounting policies previously disclosed in our annual report on Form 10-K for the year ended December 31, ~~2017.~~

2021.

Recently Issued Accounting Pronouncements

~~For detailed information regarding~~

No recently issued accounting pronouncements and the expected impact on our consolidated financial statements, see Note 2, “New Accounting Standards” in the accompanying notes to consolidated financial statements included in Part I, Item 1 ofwere applicable for this Quarterly Report on Form 10-Q.

Cautionary Note Regarding Forward-Looking Statements

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures, or other financial items, and assumptions underlying any of the foregoing. Forward-looking statements reflect management’s current expectations regarding future events and use words such as “anticipate,” “believe,” “expect,” “may,” and other similar terminology. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, many beyond our control, including, but not limited to, the risks and uncertainties described in Item 1A, Risk Factors of our annual report on Form ~~10-K.~~10-K and Item 1A of this report. We undertake no obligation to publicly update or revise them, except as may be required by law.

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Item 3.Quantitative and Qualitative Disclosures About Market Risk

The majority of our investments are conducted through investment partnerships which generally hold common stocks. We also hold marketable securities directly. Through ~~investments in the~~ investment partnerships we hold a concentrated ~~position in the common stock of Cracker Barrel Old Country Store, Inc.~~positions. A significant decline in the general stock market or in the prices of major investments may produce a large net loss and decrease in our consolidated shareholders’ equity. Decreases in values of equity investments can have a materially adverse effect on our earnings and on consolidated shareholders’ equity.

We prefer to hold equity investments for very long periods of time so we are not troubled by short-term price volatility with respect to our investments. Our interests in the investment partnerships are committed on a rolling 5-year basis, and any distributions upon our withdrawal of funds will be paid out over two years (and may be paid in kind rather than in cash). Market prices for equity securities are subject to fluctuation. Consequently, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. A hypothetical 10% increase or decrease in the market price of our investments would result in a respective increase or decrease in the carrying value of our investments of ~~$57,456~~$21,490 along with a corresponding change in shareholders’ equity of approximately ~~8%.~~

Borrowings on Steak n Shake’s credit facility bear interest at a rate per annum equal to a base rate or a Eurodollar rate (minimum of 1%) plus an applicable margin. Interest on the term loan is based on a Eurodollar rate plus an applicable margin of 3.75% or on the prime rate plus an applicable margin of 2.75%3%. Interest on loans under the revolver is based on a Eurodollar rate plus an applicable margin ranging from 2.75% to 4.25% or on the prime rate plus an applicable margin ranging from 1.75% to 3.25%. At March 31, 2018, a hypothetical 100 basis point increase in short-term interest rates would have an impact of approximately $1,400 on our net earnings.

We have had minimal exposure to foreign currency exchange rate fluctuations in the first ~~quarters~~nine months of ~~2018~~2022 and ~~2017.~~

2021.

~~Index~~

Our oil and natural gas business is fundamentally a commodity business. This means our operations and earnings may be significantly affected by changes in oil and gas prices. Such commodity prices depend on local, regional and global events or conditions that affect supply and demand for oil and gas. Any material decline in crude oil or natural gas prices could have a material adverse effect on our operations.

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

Item 4.Controls and Procedures

Based on an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), our Chief Executive Officer and Controller have concluded that our disclosure controls and procedures were effective as of ~~March 31, 2018.~~

September 30, 2022.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended ~~March 31, 2018~~September 30, 2022 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents~~Part~~

PART II ~~Other Information~~

~~Item 1.~~

~~lEGAL~~~~PROCEEDINGS~~

OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

Information in response to this Item is included in Note 13 to the Consolidated Financial Statements included in Part 1, Item 1 of this Form 10-Q and is incorporated herein by reference.

~~Item 1A.~~

~~Risk Factors~~

~~The following are~~

ITEM 1A. RISK FACTORS

There have been no material changes infrom the risk factors as previously disclosed in Item 1A to the Company’s Annual Report on Form 10-K for ~~2017.~~

~~The Class B common stock may not be attractive as acquisition currency.~~

~~We may use shares of Class B common stock from time to time as consideration in connection with~~ the acquisition of other companies. It is possible that companies that we are interested in acquiring will not agree to accept shares of Class B common stock because such shares of stock carry no voting rights or because of the then prevailing trading characteristics of such shares.

~~The trading price for Class A and Class B common stock will depend on a variety of factors.~~

The trading prices of shares of Class A common stock and Class B common stock will depend on many factors, including the future performance of Biglari Holdings, general market conditions, market activity in the Class A and Class B shares, the number of shares of each class outstanding, the relative rights between the two classes of stock, and other pertinent factors. Accordingly, we cannot predict the prices at which shares of Class A common stock and Class B common stock will trade.

The issuance of dual stock may negatively affect the decision of institutional investors to invest in the Company, and could have implications for the inclusion of shares of Class A common stock or Class B common stock in certain stock indices.

The issuance of dual class stock may negatively affect the decision by certain institutional investors to purchase or hold shares of the Company’s common stock. The holding of non-voting stock, such as the Class B common stock, may not be permitted by the investment policies of certain institutional investors or may be less attractive to the portfolio managers of certain institutional investors. Significant sales of shares of Class A and Class B common stock by investors who receive such shares as part of the recapitalization may occur if such investors are unwilling, unable or choose not to hold such shares. These sales could depress trading prices for our common stocks, particularly in the period immediately following the recapitalization. Some stock index providers have announced decisions to exclude companies with multi-class capital structures or limited public voting rights from their indices. There can be no assurance that either class of our stock will be listed in the indices.

year ended December 31, 2021.

~~Index~~

~~Potential changes in law or regulations may have a negative impact on our Class A and Class B common stock.~~

In prior years, bills have been introduced in Congress that, if enacted, would have prohibited the listing of common stock on a national securities exchange if such common stock was part of a class of securities that has no voting rights or carried disproportionate voting rights. Although these bills have not been acted upon by Congress, there can be no assurance that such a bill (or a modified version thereof) will not be introduced in Congress in the future. Legislation or other regulatory developments could make the shares of Class A common stock and Class B common stock ineligible for trading on the NYSE or other national securities exchanges. We are unable to predict whether any such legislation or regulatory proposals will be adopted or whether they will have such effect.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

On September 16, 2017, The Lion Fund II, L.P. entered into a Rule 10b5-1 trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Under the Rule 10b5-1 trading plan, a broker dealer will make periodic purchases of up to an aggregate of 110,000 shares of the Company’s common stock on behalf of The Lion Fund II, L.P. at prevailing market prices, subject to the terms of the Purchase Plan. The trading plan was terminated upon the issuance of dual class stock.

(a)
Total Number
of Shares
Purchased (b)
Average
Price Paid
per Share (c)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (d)
Maximum Number
of Shares That May
Yet Be Purchased
Under Plans or
Programs

January 1, 2018 – January 31, 2018 20,385 $ 416.34 20,385 62,936
February 1, 2018 – February 28, 2018 21,439 $ 405.98 21,439 41,497
March 1, 2018 – March 31, 2018 3,478 $ 419.09 3,478 38,019
Total 45,302 45,302

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

~~Item 3.~~

~~Defaults Upon Senior Securities~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

~~Item 4.~~

~~Mine Safety Disclosures~~

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

~~Item 5.~~

~~Other Information~~

~~None.~~

ITEM 5. OTHER INFORMATION

~~Index~~

None.

ITEM 6. EXHIBITS

~~Item 6.~~

~~Exhibits~~

~~Exhibit Number~~	~~Description~~
Exhibit Number		Description

31.01		Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01*		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Interactive Data Files.

~~_________________~~

~~Furnished herewith.~~

29104

Cover page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

~~Index~~

_________________


*			Furnished herewith.

SIGNATURES

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, thereunto duly authorized.

~~Date: May 4, 2018~~

Biglari Holdings Inc.

~~Biglari Holdings inc.~~

Date: November 4, 2022

By:

/s/ BRUCE LEWIS

~~By:~~

~~/s/~~Bruce Lewis

Controller

~~Bruce Lewis~~
~~Controller~~


Indiana						82-3784946
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)

~~17802 IH 10 West, Suite 400~~ ~~San Antonio, Texas~~	~~78257~~
19100 Ridgewood Parkway,		Suite 1200
San Antonio,		TX	78259
(Address of principal executive offices)			(Zip Code)


Title of each class	Trading Symbols	Name of each exchange on which registered
Class A Common Stock, no par value	BH.A	New York Stock Exchange
Class B Common Stock, no par value	BH	New York Stock Exchange

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

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


~~INDIANA~~				~~82-3784946~~BIGLARI HOLDINGS INC.
(Exact name of registrant as specified in its charter)

	March 31, 2018			December 31, 2017
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	45,444		$	58,577
Investments		24,157			23,289
Receivables		12,187			16,284
Inventories		7,312			7,268
Other current assets		9,299			7,221
Total current assets		98,399			112,639
Property and equipment		291,625			295,800
Goodwill and other intangible assets		66,774			66,645
Investment partnerships		545,939			566,021
Other assets		17,846			22,479
Total assets	$	1,020,583		$	1,063,584

Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	106,708		$	128,744
Current portion of notes payable and other borrowings		6,524			6,748
Total current liabilities		113,232			135,492
Long-term notes payable and other borrowings		254,988			256,994
Deferred taxes		89,387			88,401
Other liabilities		11,269			11,369
Total liabilities		468,876			492,256
Shareholders’ equity
Common stock		1,071			1,071
Additional paid-in capital		381,975			382,014
Retained earnings		563,780			565,504
Accumulated other comprehensive loss		(966	)		(1,404	)
Treasury stock, at cost		(394,153	)		(375,857	)
Biglari Holdings Inc. shareholders’ equity		551,707			571,328
Total liabilities and shareholders’ equity	$	1,020,583		$	1,063,584

	First Quarter
	2018			2017
	(Unaudited)
Revenues
Restaurant operations	$	193,934		$	195,694
Insurance premiums and other		6,547			6,080
Media advertising and other		1,744			1,619
		202,225			203,393
Cost and expenses
Restaurant cost of sales		158,350			157,298
Insurance losses and underwriting expenses		5,928			5,020
Media cost of sales		1,517			1,493
Selling, general and administrative		32,650			29,486
Depreciation and amortization		4,946			5,621
		203,391			198,918
Other income (expenses)
Interest expense		(2,754	)		(2,824	)
Interest on obligations under leases		(2,186	)		(2,280	)
Investment partnership gains (losses)		3,495			(24,968	)
Total other income (expenses)		(1,445	)		(30,072	)
Earnings (loss) before income taxes		(2,611	)		(25,597	)
Income tax benefit		(797	)		(9,776	)
Net earnings (loss)	$	(1,814	)	$	(15,821	)
Earnings per share
Net earnings (loss) per equivalent Class A share *	$	(5.15	)	$	(42.72	)


	Biglari Holdings Inc. Shareholders’ Equity
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
Balance at December 31, 2021	$	1,138	$	381,788	$	608,528	$	(1,907)	$	(401,851)	$	—	$	587,696
Net earnings (loss)					(298)								(298)
Other comprehensive loss							(231)						(231)
Adjustment to treasury stock for holdings in investment partnerships									130				130
Balance at March 31, 2022	$	1,138	$	381,788	$	608,230	$	(2,138)	$	(401,721)	$	—	$	587,297
Net earnings (loss)					(73,780)								(73,780)
Other comprehensive loss							(1,021)						(1,021)
Adjustment to treasury stock for holdings in investment partnerships									(6,760)				(6,760)
Balance at June 30, 2022	$	1,138	$	381,788	$	534,450	$	(3,159)	$	(408,481)	$	—	$	505,736
Net earnings					32,005						34		32,039
Other comprehensive loss							(618)						(618)
Adjustment to treasury stock for holdings in investment partnerships									(638)				(638)
Transactions with noncontrolling interests											8,889		8,889
Balance at September 30, 2022	$	1,138	$	381,788	$	566,455	$	(3,777)	$	(409,119)	$	8,923	$	545,408

	As Reported			Adjustments for the Adoption of ASC 606		Amounts without the Adoption of ASC 606
Statements of Earnings
Revenues
Restaurant operations
Net sales	$	185,571		$	—	$	185,571
Franchise royalties and fees		7,102			2,369		4,733
Other		1,261			279		982
Selling, general and administrative		32,650			2,522		30,128
Earnings (loss) before income taxes		(2,611	)		126		(2,737	)
Income tax expense (benefit)		(797	)		31		(828	)
Net earnings (loss)		(1,814	)		95		(1,909	)

	March 31, 2018			December 31, 2017
Common stock authorized		2,500,000			2,500,000

Common stock issued		2,142,202			2,142,202
Treasury stock held by the Company		(73,667	)		(74,589	)
Outstanding shares		2,068,535			2,067,613

	March 31, 2018		December 31, 2017
Cost	$	24,099	$	23,216
Gross unrealized gains		58		73
Fair value	$	24,157	$	23,289

	Fair Value			Company Common Stock			Carrying Value
Partnership interest at December 31, 2017	$	925,279		$	359,258		$	566,021
Investment partnership gains (losses)		(1,850	)		(5,345	)		3,495
Contributions (net of distributions) to investment partnerships		(5,200	)					(5,200	)
Increase in proportionate share of Company stock held					18,377			(18,377	)
Partnership interest at March 31, 2018	$	918,229		$	372,290		$	545,939

		Fair Value			Company Common Stock			Carrying Value
Partnership interest at December 31, 2016	$	972,707		$	395,070		$	577,637
Investment partnership gains (losses)		(59,517	)		(34,549	)		(24,968	)
Contributions (net of distributions) to investment partnerships		(5,015	)					(5,015	)
Increase in proportionate share of Company stock held					1,484			(1,484	)
Partnership interest at March 31, 2017	$	908,175		$	362,005		$	546,170

	March 31, 2018			December 31, 2017
Land	$	156,176		$	156,506
Buildings		151,669			152,610
Land and leasehold improvements		162,518			162,652
Equipment		200,240			203,145
Construction in progress		1,797			1,782
		672,400			676,695
Less accumulated depreciation and amortization		(380,775	)		(380,895	)
Property and equipment, net	$	291,625		$	295,800

	March 31, 2018							December 31, 2017
	Gross carrying amount		Accumulated amortization			Total		Gross carrying amount		Accumulated amortization			Total
Franchise agreement	$	5,310	$	(4,248	)	$	1,062	$	5,310	$	(4,116	)	$	1,194
Other		810		(751	)		59		810		(743	)		67
Total		6,120		(4,999	)		1,121		6,120		(4,859	)		1,261
Intangible assets with indefinite lives:
Trade names		15,876		—			15,876		15,876		—			15,876
Other assets with indefinite lives		9,678		—			9,678		9,427		—			9,427
Total intangible assets	$	31,674	$	(4,999	)	$	26,675	$	31,423	$	(4,859	)	$	26,564

	Three months ended March 31, 2018									Three months ended March 31, 2017
		Foreign currency translation adjustments			Investment gain (loss)			Accumulated other comprehensive income (loss)			Foreign currency translation adjustments			Investment gain (loss)			Accumulated other comprehensive income (loss)
Beginning Balance	$	(1,462	)	$	58		$	(1,404	)	$	(3,447	)	$	(137	)	$	(3,584	)
Other comprehensive income (loss) before reclassifications		—			—			—			—			124			124
Reclassification to (earnings) loss		—			(58	)		(58	)		—			—			—
Foreign currency translation		496						496			185						185
Ending Balance	$	(966	)	$	—		$	(966	)	$	(3,262	)	$	(13	)	$	(3,275	)

	Steak n Shake				Western Sizzlin
	Company- operated		Franchised		Company-operated		Franchised			Total
Total stores as of December 31, 2017		415		200		4		58			677
Net restaurants opened (closed)		—		1		—		—			1
Total stores as of March 31, 2018		415		201		4		58			678

Total stores as of December 31, 2016		417		173		3		64			657
Net restaurants opened (closed)		—		9		—		(2	)		7
Total stores as of March 31, 2017		417		182		3		62			664

	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs

January 1, 2018 – January 31, 2018		20,385	$	416.34		20,385		62,936
February 1, 2018 – February 28, 2018		21,439	$	405.98		21,439		41,497
March 1, 2018 – March 31, 2018		3,478	$	419.09		3,478		38,019
Total		45,302				45,302