Exhibit 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect to the Company’s acquisition of Southern Oil on September 9, 2019 and include adjustments for certain reclassifications to conform historical financial statement presentation of the Company and Southern Oil.
The following unaudited pro forma combined financial statements and related notes are based on and should be read in conjunction with (i) the historical unaudited consolidated financial statements of the Company for the six months ended June 30, 2019 and the related notes included in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, (ii) the historical unaudited consolidated financial statements of Southern Oil for the six months ended June 30, 2019, which financial statements are filed as Exhibit 99.2 to this Current Report on Form 8-K/A, (iii) the historical audited consolidated financial statements of the Company for the year ended December 31, 2018 and the related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and (iv) the historical audited consolidated financial statements of Southern Oil and the related notes for the year ended December 31, 2018, which financial statements are filed as Exhibit 99.1 to this Current Report on Form 8-K/A.
The unaudited pro forma combined statements of earnings for the six months ended June 30, 2019 and the year ended December 31, 2018 give effect to the acquisition as if it had been completed on January 1, 2018. A consolidated balance sheet as of September 30, 2019, including the assets and liabilities of Southern Oil, is included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 filed with the Securities and Exchange Commission on November 1, 2019.
The adjustments to the historical financial statements are based upon currently available information and certain estimates and assumptions. Actual effects of this transaction will differ from the pro forma adjustments. The unaudited pro forma combined financial statements are not necessarily indicative of the results that would have occurred if the transaction had been completed on the dates indicated or what could be achieved in the future. No adjustments have been made to our historical financial statements to reflect other events subsequent to the periods shown by such financial statements. As no intangibles were identified in the preliminary purchase price allocation, any adjustments to fair value were allocated to oil and gas reserves.
| BIGLARI HOLDINGS INC. |
| UNAUDITED COMBINED STATEMENT OF EARNINGS |
| YEAR ENDED DECEMBER 31, 2018 |
| (in thousands) |
| |
| | | Biglari
Holdings | | Southern Oil | | Pro Forma
Adjustments | | Notes | | Pro Forma
Combined |
| Revenues | | | | | | | | | | |
| Restaurant operations | | $ | 775,690 | | | $ | — | | | $ | — | | | | | | | $ | 775,690 | |
| Insurance premiums and other | | | 27,628 | | | | — | | | | — | | | | | | | | 27,628 | |
| Oil and gas | | | — | | | | 48,189 | | | | 1,872 | | | | A | | | | 50,061 | |
| Media and licensing | | | 6,576 | | | | — | | | | — | | | | | | | | 6,576 | |
| | | | 809,894 | | | | 48,189 | | | | 1,872 | | | | | | | | 859,955 | |
| Cost and expenses | | | | | | | | | | | | | | | | | | | | |
| Restaurant cost of sales | | | 636,456 | | | | — | | | | — | | | | | | | | 636,456 | |
| Insurance losses and underwriting expenses | | | 20,831 | | | | — | | | | — | | | | | | | | 20,831 | |
| Oil and gas production costs | | | — | | | | 15,377 | | | | (1,653 | ) | | | B | | | | 13,724 | |
| Media and licensing costs | | | 4,152 | | | | — | | | | — | | | | | | | | 4,152 | |
| Selling, general and administrative | | | 127,232 | | | | 6,836 | | | | — | | | | | | | | 134,068 | |
| Impairments | | | 5,677 | | | | — | | | | — | | | | | | | | 5,677 | |
| Depreciation, depletion and amortization | | | 19,318 | | | | 9,942 | | | | — | | | | | | | | 29,260 | |
| | | | 813,666 | | | | 32,155 | | | | (1,653 | ) | | | | | | | 844,168 | |
| Other income (expenses) | | | | | | | | | | | | | | | | | | | | |
| Interest expense | | | (11,677 | ) | | | (11 | ) | | | — | | | | | | | | (11,688 | ) |
| Interest on obligations under leases | | | (8,207 | ) | | | — | | | | — | | | | | | | | (8,207 | ) |
| Unrealized gains on commodity derivative instruments | | | — | | | | 1,872 | | | | (1,872 | ) | | | A | | | | — | |
| Other income | | | — | | | | 2,853 | | | | (2,853 | ) | | | B | | | | — | |
| Investment partnership gains | | | 40,411 | | | | — | | | | — | | | | | | | | 40,411 | |
| Total other income (expenses) | | | 20,527 | | | | 4,714 | | | | (4,725 | ) | | | | | | | 20,516 | |
| Earnings (loss) before income taxes | | | 16,755 | | | | 20,748 | | | | (1,200 | ) | | | | | | | 36,303 | |
| Income tax expense (benefit) | | | (2,637 | ) | | | 5,331 | | | | (312 | ) | | | | | | | 2,382 | |
| Net earnings (loss) | | $ | 19,392 | | | $ | 15,417 | | | $ | (888 | ) | | | | | | $ | 33,921 | |
Adjustment Note A – Unrealized gains on commodity derivative instruments of $1,872 were reclassified to revenue to conform with Biglari Holdings Inc.’s reporting.
Adjustment Note B – A non-recurring intercompany management fee of $1,200 reported in other income was eliminated from the combined financial statements. Property tax and other refunds of $1,653 were reclassified to oil and gas production costs to conform with Biglari Holdings Inc.’s reporting.
| BIGLARI HOLDINGS INC. |
| UNAUDITED COMBINED STATEMENT OF EARNINGS |
| FIRST SIX MONTHS ENDED JUNE 30, 2019 |
| (in thousands) |
| |
| | | Biglari
Holdings | | Southern Oil | | Pro Forma
Combined |
| Revenues | | | | | | |
| Restaurant operations | | $ | 333,836 | | | $ | — | | | $ | 333,836 | |
| Insurance premiums and other | | | 14,624 | | | | — | | | | 14,624 | |
| Oil and gas | | | — | | | | 39,927 | | | | 39,927 | |
| Media and licensing | | | 1,742 | | | | — | | | | 1,742 | |
| | | | 350,202 | | | | 39,927 | | | | 390,129 | |
| Cost and expenses | | | | | | | | | | | | |
| Restaurant cost of sales | | | 284,199 | | | | — | | | | 284,199 | |
| Insurance losses and underwriting expenses | | | 11,158 | | | | — | | | | 11,158 | |
| Oil and gas production costs | | | — | | | | 9,822 | | | | 9,822 | |
| Media and licensing costs | | | 1,589 | | | | — | | | | 1,589 | |
| Selling, general and administrative | | | 58,941 | | | | 3,051 | | | | 61,992 | |
| Impairments | | | 2,338 | | | | — | | | | 2,338 | |
| Depreciation, depletion and amortization | | | 10,677 | | | | 9,804 | | | | 20,481 | |
| | | | 368,902 | | | | 22,677 | | | | 391,579 | |
| Other income (expenses) | | | | | | | | | | | | |
| Interest expense | | | (6,208 | ) | | | (9 | ) | | | (6,217 | ) |
| Interest on finance leases and obligations | | | (4,012 | ) | | | — | | | | (4,012 | ) |
| Investment partnership gains | | | 68,352 | | | | — | | | | 68,352 | |
| Total other income (expenses) | | | 58,132 | | | | (9 | ) | | | 58,123 | |
| Earnings before income taxes | | | 39,432 | | | | 17,241 | | | | 56,673 | |
| Income tax expense | | | 7,640 | | | | 4,215 | | | | 11,855 | |
| Net earnings | | $ | 31,792 | | | $ | 13,026 | | | $ | 44,818 | |
