Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 03, 2020 | |
Document Information Line Items | ||
Entity Registrant Name | BIGLARI HOLDINGS INC. | |
Entity Central Index Key | 0001726173 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2020 | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Entity Common Stock Shares Outstanding | 206,864 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-38477 | |
Entity Incorporation State Country Code | IN | |
Entity Tax Identification Number | 82-3784946 | |
Entity Address City Or Town | San Antonio | |
Entity Address Address Line 2 | Suite 400 | |
Entity Address State Or Province | TX | |
Entity Address Postal Zip Code | 78257 | |
City Area Code | 210 | |
Local Phone Number | 344-3400 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 17802 IH 10 West | |
Class A Common Stock [Member] | ||
Document Information Line Items | ||
Security 12b Title | Class A Common Stock, no par value | |
Security Exchange Name | NYSE | |
Trading Symbol | BH.A | |
Class B Common Stock [Member] | ||
Document Information Line Items | ||
Entity Common Stock Shares Outstanding | 2,068,640 | |
Security 12b Title | Class B Common Stock, no par value | |
Security Exchange Name | NYSE | |
Trading Symbol | BH |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 33,164 | $ 67,772 |
Investments | 85,082 | 44,856 |
Receivables | 16,151 | 21,640 |
Inventories | 2,908 | 4,674 |
Other current assets | 5,622 | 6,449 |
Total current assets | 142,927 | 145,391 |
Property and equipment | 320,966 | 350,627 |
Operating lease assets | 46,345 | 59,719 |
Goodwill and other intangible assets | 75,656 | 67,389 |
Investment partnerships | 383,670 | 505,542 |
Other assets | 14,037 | 10,641 |
Total assets | 983,601 | 1,139,309 |
Current liabilities: | ||
Accounts payable and accrued expenses | 117,888 | 121,079 |
Current portion of operating lease liabilities | 10,671 | 11,635 |
Current portion of notes payable and other borrowings | 159,631 | 7,103 |
Total current liabilities | 288,190 | 139,817 |
Long-term notes payable and other borrowings | 76,099 | 263,182 |
Operating lease liabilities | 39,865 | 53,271 |
Deferred taxes | 30,130 | 54,230 |
Asset retirement obligations | 9,896 | 10,447 |
Other liabilities | 1,203 | 2,064 |
Total liabilities | 445,383 | 523,011 |
Shareholders' equity | ||
Common stock | 1,138 | 1,138 |
Additional paid-in capital | 381,788 | 381,788 |
Retained earnings | 536,721 | 611,039 |
Accumulated other comprehensive loss | (1,976) | (2,810) |
Treasury stock, at cost | (379,453) | (374,857) |
Biglari Holdings Inc. shareholders' equity | 538,218 | 616,298 |
Total liabilities and shareholders' equity | $ 983,601 | $ 1,139,309 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues | ||||
Restaurant operations | $ 79,674,000 | $ 145,111,000 | $ 272,582,000 | $ 478,947,000 |
Insurance premiums and other | 14,413,000 | 7,681,000 | 38,692,000 | 22,305,000 |
Oil and gas | 6,029,000 | 6,500,000 | 19,554,000 | 6,500,000 |
Media and licensing | 1,719,000 | 924,000 | 3,209,000 | 2,666,000 |
Revenues | 101,835,000 | 160,216,000 | 334,037,000 | 510,418,000 |
Cost and expenses | ||||
Restaurant cost of sales | 54,062,000 | 113,398,000 | 194,737,000 | 397,597,000 |
Insurance losses and underwriting expenses | 11,290,000 | 5,242,000 | 28,866,000 | 16,400,000 |
Oil and gas production costs | 2,171,000 | 2,595,000 | 6,570,000 | 2,595,000 |
Media and licensing costs | 548,000 | 514,000 | 1,491,000 | 2,103,000 |
Selling, general and administrative | 19,902,000 | 22,930,000 | 60,687,000 | 81,871,000 |
Impairments | 3,698,000 | 5,079,000 | 21,817,000 | 7,417,000 |
Depreciation and amortization | 7,275,000 | 7,514,000 | 24,284,000 | 18,191,000 |
Interest expense | 3,743,000 | 5,024,000 | 11,652,000 | 15,244,000 |
Total | 102,689,000 | 162,296,000 | 350,104,000 | 541,418,000 |
Other income | ||||
Gain on debt extinguishment | 0 | 0 | 5,713,000 | 0 |
Investment gains | 354,000 | 0 | 1,863,000 | 0 |
Investment partnership gains (losses) | 27,218,000 | 1,449,000 | (89,276,000) | 69,801,000 |
Total | 27,572,000 | 1,449,000 | (81,700,000) | 69,801,000 |
Earnings (loss) before income taxes | 26,718,000 | (631,000) | (97,767,000) | 38,801,000 |
Income tax expense (benefit) | 5,617,000 | (614,000) | (23,449,000) | 7,026,000 |
Net earnings (loss) | $ 21,101,000 | $ (17,000) | $ (74,318,000) | $ 31,775,000 |
Earnings per share | ||||
Net earnings (loss) per equivalent Class A share * | $ 60.07 | $ (0.05) | $ (213.31) | $ 92.04 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | ||||
Net earnings (loss) | $ 21,101 | $ (17) | $ (74,318) | $ 31,775 |
Other comprehensive income (loss): | ||||
Foreign currency translation | 344 | (628) | 834 | (736) |
Other comprehensive income (loss), net | 344 | (628) | 834 | (736) |
Total comprehensive income (loss) | $ 21,445 | $ (645) | $ (73,484) | $ 31,039 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities | ||
Net earnings (loss) | $ (74,318,000) | $ 31,775,000 |
Adjustments to reconcile net earnings (loss) to operating cash flows: | ||
Depreciation and amortization | 24,284,000 | 18,191,000 |
Provision for deferred income taxes | (23,755,000) | (35,902,000) |
Asset impairments and other non-cash expenses | 22,545,000 | 8,105,000 |
(Gains) losses on disposal of assets | (1,251,000) | 200,000 |
Gain on debt extinguishment | (5,713,000) | 0 |
Investment gains | (1,863,000) | 0 |
Investment partnership (gains) losses | 89,276,000 | (69,801,000) |
Distributions from investment partnerships | 97,330,000 | 64,329,000 |
Changes in receivables and inventories | 9,964,000 | 8,817,000 |
Changes in other assets | 955,000 | (1,241,000) |
Changes in accounts payable and accrued expenses | (31,087,000) | 15,386,000 |
Net cash provided by operating activities | 106,367,000 | 39,859,000 |
Investing activities | ||
Capital expenditures | (13,297,000) | (8,357,000) |
Proceeds from property and equipment disposals | 3,914,000 | 815,000 |
Acquisition of business, net of cash acquired | (34,240,000) | (51,057,000) |
Distributions from investment partnerships | 0 | 40,000,000 |
Purchases of limited partner interests | (69,330,000) | (40,000,000) |
Purchases of investments | (240,351,000) | (91,927,000) |
Redemptions of fixed maturity securities | 241,223,000 | 87,250,000 |
Net cash used in investing activities | (112,081,000) | (63,276,000) |
Financing activities | ||
Proceeds from revolving credit facility | 500,000 | 0 |
Principal payments on long-term debt | (22,729,000) | (1,650,000) |
Principal payments on direct financing lease obligations | (4,152,000) | (4,353,000) |
Net cash used in financing activities | (26,381,000) | (6,003,000) |
Effect of exchange rate changes on cash | (13,000) | (29,000) |
Decrease in cash, cash equivalents and restricted cash | (32,108,000) | (29,449,000) |
Cash, cash equivalents and restricted cash at beginning of year | 70,696,000 | 55,010,000 |
Cash, cash equivalents and restricted cash at end of third quarter | $ 38,588,000 | $ 25,561,000 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock |
Balance, amount at Dec. 31, 2018 | $ 570,455 | $ 1,138 | $ 381,904 | $ 564,160 | $ (2,516) | $ (374,231) |
Net earnings | 9,818 | 9,818 | ||||
Adoption of accounting standards | 1,499 | 1,499 | ||||
Other comprehensive income, net | (304) | (304) | ||||
Adjustment to treasury stock for holdings in investment partnerships | (114) | (114) | ||||
Balance, amount at Mar. 31, 2019 | 581,354 | 1,138 | 381,904 | 575,477 | (2,820) | (374,345) |
Net earnings | 21,974 | 21,974 | ||||
Other comprehensive income, net | 196 | 196 | ||||
Adjustment to treasury stock for holdings in investment partnerships | (1,162) | (1,162) | ||||
Balance, amount at Jun. 30, 2019 | 602,362 | 1,138 | 381,904 | 597,451 | (2,624) | (375,507) |
Net earnings | (17) | (17) | ||||
Other comprehensive income, net | (628) | (628) | ||||
Adjustment to treasury stock for holdings in investment partnerships | (197) | (197) | ||||
Balance, amount at Sep. 30, 2019 | 601,520 | 1,138 | 381,904 | 597,434 | (3,252) | (375,704) |
Balance, amount at Dec. 31, 2019 | 616,298 | 1,138 | 381,788 | 611,039 | (2,810) | (374,857) |
Net earnings | (137,885) | (137,885) | ||||
Other comprehensive income, net | (312) | (312) | ||||
Adjustment to treasury stock for holdings in investment partnerships | 1,089 | 1,089 | ||||
Balance, amount at Mar. 31, 2020 | 479,190 | 1,138 | 381,788 | 473,154 | (3,122) | (373,768) |
Net earnings | 42,466 | 42,466 | ||||
Other comprehensive income, net | 802 | 802 | ||||
Adjustment to treasury stock for holdings in investment partnerships | 92 | 92 | ||||
Balance, amount at Jun. 30, 2020 | 522,550 | 1,138 | 381,788 | 515,620 | (2,320) | (373,676) |
Net earnings | 21,101 | 21,101 | ||||
Other comprehensive income, net | 344 | 344 | ||||
Adjustment to treasury stock for holdings in investment partnerships | (5,777) | (5,777) | ||||
Balance, amount at Sep. 30, 2020 | $ 538,218 | $ 1,138 | $ 381,788 | $ 536,721 | $ (1,976) | $ (379,453) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Note 1. Summary of Significant Accounting Policies | Note 1. Summary of Significant Accounting Policies Description of Business The accompanying unaudited consolidated financial statements of Biglari Holdings Inc. 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, 2019. Biglari Holdings is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance, media and licensing, 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. All major investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari. As of September 30, 2020, Mr. Biglari’s beneficial ownership was approximately 66.30% of the Company’s outstanding Class A common stock and 56.60% of the Company’s outstanding Class B common stock. The novel coronavirus (“COVID-19”) was declared a pandemic by the World Health Organization, which caused governments to contain its spread, thereby significantly affecting our operating businesses beginning in March and adversely affecting nearly all of our operations during the second and third quarters. Our restaurants were required to close their dining rooms during the first quarter. In order to reopen the dining rooms profitably, Steak n Shake will require funds for capital expenditures, which are limited under its current debt agreement. The purpose of the capital spending is to convert Steak n Shake’s full-service model into a self-service one. In addition, our restaurants have incurred costs to ensure compliance with health and safety standards in response to COVID-19. The COVID-19 pandemic has caused oil demand to decrease significantly, creating oversupplied markets that have resulted in lower commodity prices and margins. In response, the Company has significantly cut production and expenses in its oil and gas business. The risks and uncertainties resulting from the pandemic may continue to affect our future earnings, cash flows and financial condition. Business Acquisition On March 9, 2020, Biglari Holdings acquired the stock of Southern Pioneer Property & Casualty Insurance Company, and its agency, Southern Pioneer Insurance Agency, Inc. (collectively “Southern Pioneer”). Southern Pioneer underwrites specialty insurance products including garage liability insurance, commercial property coverage, as well as homeowners and dwelling fire insurance coverages. The financial results for Southern Pioneer from the acquisition date to the end of the third quarter are included in the Company’s consolidated financial statements. The acquisition date fair values of assets and liabilities of Southern Pioneer are provisional and subject to revision as the related valuations are completed. Pro-forma financial information of Southern Pioneer is not material. On September 9, 2019, a wholly-owned subsidiary of the Company, Southern Oil Company, acquired the stock of Southern Oil of Louisiana Inc. (collectively “Southern Oil”). Southern Oil primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico. Pro-forma financial information of Southern Oil is not material. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries including Steak n Shake Inc, Western Sizzlin Corporation, Maxim Inc., Southern Oil, First Guard Insurance Company, and Southern Pioneer. Intercompany accounts and transactions have been eliminated in consolidation. Change in Presentation Interest expense on finance leases and obligations has been combined with interest expense in 2020 and reclassified as a component of cost and expenses in the consolidated statement of earnings. Prior period balances have been adjusted to conform to the change in presentation. |
New Accounting Standards
New Accounting Standards | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Note 2. New Accounting Standards | Note 2. New Accounting Standards In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings per share | |
Note 3. Earnings Per Share | Note 3. 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. The following table presents shares authorized, issued and outstanding on September 30, 2020 and December 31, 2019. September 30, 2020 December 31, 2019 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 260, “Earnings Per Share.” On an equivalent Class A common stock basis, there were 620,592 shares outstanding as of September 30, 2020 and December 31, 2019. There are no dilutive securities outstanding. For financial reporting purposes, the proportional ownership of the Company’s common stock owned by the investment partnerships is excluded in the earnings per share calculation. After giving effect for the investment partnerships’ proportional ownership of common stock, the equivalent Class A weighted average number of common shares during the third quarters of 2020 and 2019 were 351,288 and 343,519, respectively. The equivalent Class A weighted average number of common shares during the first nine months of 2020 and 2019 were 348,396 and 345,249, respectively. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments | |
Note 4. Investments | Note 4. Investments Available for sale investments were $80,619 and $40,393 as of September 30, 2020 and December 31, 2019, respectively. Investments in equity securities and a related derivative position of $4,463 are also included in investments. The investments are recorded at fair value. The fair value of investments acquired with Southern Pioneer was $36,876. The Company recorded $354 and $1,863 in investment gains during the third quarter and first nine months of 2020, respectively. The Company did not have investment gains/losses during the first quarter of 2020 and during the first nine months of 2019. Interest and dividends earned on investments are reported as other income by our insurance companies. We consider investment income as a component of our aggregate insurance operating results. However, we consider investment gains and losses, whether realized or unrealized, as non-operating. |
Investment Partnerships
Investment Partnerships | 9 Months Ended |
Sep. 30, 2020 | |
Investment Partnerships | |
Note 5. Investment Partnerships | Note 5. 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 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. (“Biglari Capital”) is the general partner of the investment partnerships and is an entity solely owned by Mr. Biglari. The fair value and adjustment for Company common stock held by the investment partnerships to determine the carrying value of our partnership interest is presented below. Fair Value Company Common Stock Carrying Value Partnership interest at December 31, 2019 $ 666,123 $ 160,581 $ 505,542 Investment partnership gains (losses) (123,524 ) (34,248 ) (89,276 ) Distributions (net of contributions) to investment partnerships (28,000 ) - (28,000 ) Increase in proportionate share of Company stock held - 4,596 (4,596 ) Partnership interest at September 30, 2020 $ 514,599 $ 130,929 $ 383,670 Fair Value Company Common Stock Carrying Value Partnership interest at December 31, 2018 $ 715,102 $ 157,622 $ 557,480 Investment partnership gains (losses) 63,419 (6,382 ) 69,801 Distributions (net of contributions) to investment partnerships (64,329 ) - (64,329 ) Increase in proportionate share of Company stock held - 1,473 (1,473 ) Partnership interest at September 30, 2019 $ 714,192 $ 152,713 $ 561,479 The carrying value of the investment partnerships net of deferred taxes is presented below. September 30, December 31, 2019 Carrying value of investment partnerships $ 383,670 $ 505,542 Deferred tax liability related to investment partnerships (38,313 ) (56,518 ) Carrying value of investment partnerships net of deferred taxes $ 345,357 $ 449,024 The Company’s proportionate share of Company stock held by investment partnerships at cost is $379,453 and $374,857 at September 30, 2020 and December 31, 2019, respectively, and is recorded as treasury stock. The carrying value of the partnership interest approximates fair value adjusted by the value of held Company stock. Fair value is 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 the fair value hierarchy. Gains/losses from investment partnerships recorded in the Company’s consolidated statements of earnings are presented below. Third Quarter First Nine Months 2020 2019 2020 2019 Gains (losses) on investment partnership $ 27,218 $ 1,449 $ (89,276 ) $ 69,801 Tax expense (benefit) 6,163 49 (21,337 ) 15,910 Net earnings (loss) $ 21,055 $ 1,400 $ (67,939 ) $ 53,891 On December 31 of each year, the general partner of the investment partnerships, Biglari Capital, will earn an incentive reallocation fee for the Company’s investments equal to 25% of the net profits above an annual hurdle rate of 6% over the previous high-water mark. Our policy is to accrue an estimated incentive fee throughout the year. The total incentive reallocation from Biglari Holdings to Biglari Capital 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. Our investments in these partnerships are committed on a rolling 5-year basis. There were no incentive reallocations from Biglari Holdings to Biglari Capital during the first nine months of 2020 and 2019. 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 September 30, 2020 $ 98,041 $ 497,761 Total liabilities as of September 30, 2020 $ 120 $ 27,768 Revenue for the first nine months of 2020 $ (18,941 ) $ (119,644 ) Earnings for the first nine months of 2020 $ (18,992 ) $ (120,849 ) Biglari Holdings' ownership interest as of September 30, 2020 66.20 % 95.30 % Total assets as of December 31, 2019 $ 117,135 $ 758,663 Total liabilities as of December 31, 2019 $ 158 $ 114,639 Revenue for the first nine months of 2019 $ 3,332 $ 71,578 Earnings for the first nine months of 2019 $ 3,278 $ 65,637 Biglari Holdings' ownership interest as of September 30, 2019 66.10 % 93.50 % Revenue in the above summarized financial information of the investment partnerships includes investment income and unrealized gains and losses on investments. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property and Equipment | |
Note 6. Property and Equipment | Note 6. Property and Equipment Property and equipment is composed of the following. September 30, December 31, 2019 Land $ 143,839 $ 150,147 Buildings 139,320 144,243 Land and leasehold improvements 140,940 157,141 Equipment 192,201 196,264 Oil and gas properties 75,853 77,475 Construction in progress 1,036 3,789 693,189 729,059 Less accumulated depreciation and amortization (372,223 ) (378,432 ) Property and equipment, net $ 320,966 $ 350,627 Depletion expense related to oil and gas properties was $9,249 during the first nine months of 2020 and is included in depreciation and amortization in the consolidated statement of earnings. The COVID-19 pandemic had an adverse effect on our restaurant operations, thereby resulting in the evaluation of company-operated restaurants for recoverability. Consequently, the Company recorded impairment charges of $3,698 in the third quarter of 2020 and $18,117 in the first nine months of 2020 mainly because of the decision to permanently close some Steak n Shake restaurants as well as to close the dining rooms of all company-operated restaurants. The Company recorded an impairment to long-lived assets of $5,079 in the third quarter of 2019 and $7,417 in the first nine months of 2019 primarily related to Steak n Shake closed stores. The fair value of the long-lived assets was determined based on Level 3 inputs using a discounted cash flow model. Moreover, we also applied a market analysis for certain properties. The COVID-19 pandemic has caused oil demand to decrease significantly, creating oversupplied markets that have resulted in lower commodity prices and margins. The Company evaluated the potential impact on its oil and gas properties, but concluded they were not impaired during the first nine months of 2020. However, protracted low commodity prices may require impairments in future periods. The duration and extent of the COVID-19 pandemic cannot be reasonably estimated at this time. The risks and uncertainties resulting from the pandemic may lead to future impairment of long-lived assets including right-of-use assets. In addition, significant estimates and assumptions used in the evaluation of long-lived assets for impairment may be subject to significant adjustments in future periods. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Other Intangible Assets | |
Note 7. Goodwill and Other Intangible Assets | Note 7. 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. The Company purchased Southern Pioneer on March 9, 2020. The preliminary purchase price allocation reflects goodwill of $11,865. A reconciliation of the change in the carrying value of goodwill is as follows. September 30, Balance at beginning of year $ 40,040 Goodwill from acquisition 11,865 Change in foreign exchange rates during the first nine months of 2020 27 Balance at end of period $ 51,932 We evaluate goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. Goodwill impairment occurs when the estimated fair value of goodwill is less than its carrying value. The valuation methodology and underlying financial information included in our determination of fair value require significant management judgments. We use both market and income approaches to derive fair value. 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 recorded in the first nine months of 2020 or 2019. In response to the adverse effects of the COVID-19 pandemic, we considered whether goodwill needed to be evaluated for impairment as of September 30, 2020, specifically related to goodwill for certain restaurant reporting units. Making estimates of the fair value of reporting units at this time are significantly affected by assumptions on the severity, duration and long-term effects of the pandemic on the reporting unit’s operations. We considered the available facts and made qualitative assessments and judgments for what we believed represent reasonably possible outcomes. Although the fair values of certain of these reporting units declined since the time that the most recent annual impairment tests were conducted, we concluded it is more likely than not that goodwill was not impaired as of September 30, 2020. However, COVID-19 pandemic events will continue to evolve and the negative effects on our operations could prove to be worse than we currently estimate. The Company may record goodwill impairment charges in future periods. Other Intangible Assets Other intangible assets are composed of the following. September 30, 2020 December 31, 2019 Gross carrying amount Accumulated amortization Total Gross carrying amount Accumulated amortization Total Franchise agreement $ 5,310 $ (5,310 ) $ - $ 5,310 $ (5,178 ) $ 132 Other 810 (810 ) - 810 (792 ) 18 Total 6,120 (6,120 ) - 6,120 (5,970 ) 150 Intangible assets with indefinite lives: Trade names 15,876 - 15,876 15,876 - 15,876 Other assets with indefinite lives 7,848 - 7,848 11,323 - 11,323 Total intangible assets $ 29,844 $ (6,120 ) $ 23,724 $ 33,319 $ (5,970 ) $ 27,349 Intangible assets with indefinite lives consist of trade names, franchise rights as well as lease rights. During the first nine months of 2020, the Company recorded impairment charges of $3,700 on lease rights related to our international restaurant operations because of the adverse effects of the COVID-19 pandemic. The impairment and fair value were determined using Level 3 inputs and available market data. Amortization expense for the first nine months of 2020 and 2019 was $150 and $412, respectively. The Company’s intangible assets with definite lives are fully amortized. |
Restaurant Operations Revenues
Restaurant Operations Revenues | 9 Months Ended |
Sep. 30, 2020 | |
Restaurant Operations Revenues | |
Note 8. Restaurant Operations Revenues | Note 8. Restaurant Operations Revenues Restaurant operations revenues were as follows. Third Quarter First Nine Months 2020 2019 2020 2019 Net sales $ 67,617 $ 136,651 $ 241,832 $ 454,344 Franchise royalties and fees 4,421 6,638 13,704 20,017 Franchise partner fees 6,894 989 14,775 1,668 Other 742 833 2,271 2,918 $ 79,674 $ 145,111 $ 272,582 $ 478,947 Net sales Net sales are composed of retail sales of food through company-operated stores. Company-operated store revenues are recognized, net of discounts and sales taxes, when our obligation to 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 earnings as revenue. Franchise royalties and fees Franchise royalties and fees are composed of royalties and fees from Steak n Shake and Western Sizzlin franchisees. Royalties are based upon a percentage of sales of the franchise restaurant and are recognized as earned. Franchise royalties are billed on a monthly basis. Initial franchise fees when a new restaurant opens or at the start of a new franchise term are recorded as deferred revenue when received and recognized as revenue over the term of the franchise agreement. Our advertising arrangements with franchisees are reported in franchise royalties and fees. Franchise partner fees Steak n Shake is in the process of transitioning company-operated restaurants to franchise partners. The franchise agreement stipulates that the franchisee make an upfront investment totaling ten thousand dollars. Potential franchise partners are screened based on entrepreneurial attitude and ability, but they become franchise partners based on achievement. Each must meet the gold standard in service. Franchise partners are required to be hands-on operators. We limit a franchisee to a single location. As the franchisor Steak n Shake assesses a fee of up to 15% of sales as well as 50% of profits. Gift card 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 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. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Accounts Payable and Accrued Expenses | |
Note 9. Accounts Payable and Accrued Expenses | Note 9. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses include the following. September 30, December 31, 2019 Accounts payable $ 26,546 $ 32,626 Gift card and other marketing 19,762 23,787 Salaries and wages 8,441 10,667 Taxes payable 14,497 29,275 Insurance accruals 32,091 11,418 Deferred revenue 10,905 10,454 Other 5,646 2,852 Accounts payable and accrued expenses $ 117,888 $ 121,079 |
Notes Payable and Other Borrowi
Notes Payable and Other Borrowings | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable and Other Borrowings | |
Note 10. Notes Payable and Other Borrowings | Note 10. Notes Payable and Other Borrowings Notes payable and other borrowings include the following. Current portion of notes payable and other borrowings September 30, December 31, Notes payable $ 153,056 $ 2,200 Unamortized original issue discount and debt issuance costs (506 ) (982 ) Western Sizzlin revolver 500 - Finance obligations 4,948 4,252 Finance lease liabilities 1,633 1,633 Total current portion of notes payable and other borrowings $ 159,631 $ 7,103 Long-term notes payable and other borrowings Notes payable $ - $ 179,298 Unamortized original issue discount and debt issuance costs - (252 ) Finance obligations 69,663 74,497 Finance leases liabilities 6,436 9,639 Total long-term notes payable and other borrowings $ 76,099 $ 263,182 Steak n Shake Credit Facility On March 19, 2014, Steak n Shake and its subsidiaries entered into a credit agreement that provided for a senior secured term loan facility in an aggregate principal amount of $220,000. The term loan is scheduled to mature on March 19, 2021. As of September 30, 2020, $153,056 was outstanding. Biglari Holdings is not a guarantor under the credit facility and has no plans to provide a guarantee to the term loan lenders. Absent a resolution with the lenders, Steak n Shake may need to seek refinancing options, which may not be available. The term loan amortizes in equal quarterly installments at an annual rate of 1.00% 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. 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%. The interest rate on the term loan was 4.75% as of September 30, 2020. The credit agreement includes customary affirmative and negative covenants and events 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 the assets of Steak n Shake. Disruptions in debt capital markets that restrict access to funding when needed could adversely affect the results of operations, liquidity and capital resources of Steak n Shake. The fair value of long-term debt, excluding capitalized lease obligations, was approximately $80,000 at September 30, 2020. 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. The Company retired $26,792 of debt during the first nine months of 2020. Interest expense is summarized as follows. Third Quarter First Nine Months 2020 2019 2020 2019 Interest expense $ 2,150 $ 3,090 $ 6,973 $ 9,298 Interest on finance leases and obligations 1,593 1,934 4,679 5,946 $ 3,743 $ 5,024 $ 11,652 $ 15,244 Western Sizzlin Revolver Western Sizzlin had $500 and $0 of debt outstanding under its revolver as of September 30, 2020 and December 31, 2019, respectively. Western Sizzlin reduced its revolver to $0 on October 30, 2020. |
Leased Assets and Lease Commitm
Leased Assets and Lease Commitments | 9 Months Ended |
Sep. 30, 2020 | |
Leased Assets and Lease Commitments | |
Note 11. Leased Assets and Lease Commitments | Note 11. Leased Assets and Lease Commitments A significant portion of our operating and finance lease portfolio includes restaurant locations. The Company’s operating leases with a term of 12 months or greater were recognized as operating right-of-use assets and liabilities and recorded as operating lease assets and operating lease liabilities. Historical capital leases and certain historical build-to-suit leases were reclassified from obligations under leases to finance lease assets and liabilities. Finance lease assets are recorded in property and equipment and finance lease liabilities are recorded in notes payable and other borrowings. Historical sale-and-leaseback transactions in which the Company is deemed to have a continued interest in the leased asset are recorded as property and equipment and as finance obligations. Finance obligations are recorded in notes payable and other borrowings. Operating lease expense and finance lease depreciation expense are recognized on a straight-line basis over the lease term. During 2020, the Company negotiated lease concessions on certain lease arrangements related to the COVID-19 pandemic and has accounted for these under the ASC 842 COVID-19 Election. Total lease cost consists of the following. Third Quarter First Nine Months 2020 2019 2020 2019 Finance lease costs: Amortization of right-of-use assets $ 279 $ 487 $ 1,087 $ 1,466 Interest on lease liabilities 136 208 392 630 Operating lease costs * 2,096 4,445 8,321 12,305 Total lease costs $ 2,511 $ 5,140 $ 9,800 $ 14,401 *Includes short-term leases, variable lease costs and sublease income, which are immaterial. Supplemental cash flow information related to leases is as follows. First Nine Months 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ 1,132 $ 1,201 Operating cash flows from finance leases $ 463 $ 630 Operating cash flows from operating leases $ 10,382 $ 12,558 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities $ - $ 1,097 Operating lease liabilities $ 73 $ 11,069 Supplemental balance sheet information related to leases is as follows. September 30, December 31, Finance leases: Property and equipment, net $ 6,476 $ 10,783 Current portion of notes payable and other borrowings $ 1,633 $ 1,633 Long-term notes payable and other borrowings 6,436 9,639 Total finance lease liablities $ 8,069 $ 11,272 Weighted-average lease terms and discount rates are as follows. September 30, Weighted-average remaining lease terms: Finance leases 5.8 years Operating leases 5.8 years Weighted-average discount rates: Finance leases 7.10 % Operating leases 6.90 % Maturities of lease liabilities as of September 30, 2020 are as follows. Year Operating Leases Finance 2020 $ 3,853 $ 545 2021 13,244 2,135 2022 11,162 1,614 2023 9,821 1,410 2024 7,902 1,373 After 2024 15,680 2,756 Total lease payments 61,662 9,833 Less interest 11,126 1,764 Total lease liabilities $ 50,536 $ 8,069 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2020 | |
Accumulated Other Comprehensive Income | |
Note 12. Accumulated Other Comprehensive Income | Note 12. Accumulated Other Comprehensive Income During the third quarter of 2020 accumulated other comprehensive losses decreased by $344 and increased by $628 during the third quarter of 2019. During the first nine months of 2020 accumulated other comprehensive losses decreased by $834 and increased by $736 during the first nine months of 2019. As of September 30, 2020 and 2019, the balances in accumulated other comprehensive loss were $1,976 and $3,252, respectively. There were no reclassifications from accumulated other comprehensive income to earnings during the first nine months of 2020 and 2019. All changes in accumulated other comprehensive income during the first nine months of 2020 and 2019 were because of foreign currency translation adjustments. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Taxes | |
Note 13. Income Taxes | Note 13. Income Taxes In determining the quarterly provision for income taxes, the Company used a discrete effective tax rate method based on statutory tax rates for the first nine months of 2020 and 2019. Our periodic effective income tax rate is affected by the relative mix of pre-tax earnings or losses and underlying income tax rates applicable to the various taxing jurisdictions. Income tax expense for the third quarter of 2020 was $5,617 compared to a tax benefit of $614 for the third quarter of 2019. Income tax benefit for the first nine months of 2020 was $23,449 compared to an income tax expense of $7,026 for the first nine months of 2019. The variance in income taxes between 2020 and 2019 is attributable to taxes on income generated by the investment partnerships. Investment partnership pretax losses were $89,276 during the first nine months of 2020, compared to pretax gains of $69,801 during the first nine months of 2019. As of September 30, 2020 and December 31, 2019, we had $348 of unrecognized tax benefits, which are included in other liabilities in the consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Note 14. Commitments and Contingencies | Note 14. 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 flow. 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 of breach of fiduciary duty by the members of our Board of Directors and unjust enrichment to Mr. Biglari as a result of the dual class structure. On March 26, 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. 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 26, 2018 to approve the dual class structure. On April 16, 2018, the shareholder withdrew the motion to enjoin the shareholder vote on April 26, 2018. On May 17, 2018, the shareholders who filed the January 29, 2018 complaint and the March 26, 2018 complaint filed a new, consolidated complaint against the Company and the members of our Board of Directors in the Superior Court of Hamilton County, Indiana. The shareholders generally allege claims of breach of fiduciary duty by the members of our Board of Directors and unjust enrichment to Mr. Biglari arising out of the dual class structure, including the ability to vote the Company’s shares that are eliminated for financial reporting purposes. The shareholders seek, for themselves and on behalf of all other shareholders as a class, a declaration that the defendants breached their duty to the shareholders and the class, and to recover unspecified damages, pre-judgment and post-judgment interest, and an award of their attorneys’ fees and other costs. On December 14, 2018, the judge of the Superior Court of Hamilton County, Indiana issued an order granting the Company’s motion to dismiss the shareholders’ lawsuits. On January 11, 2019, the shareholders filed an appeal of the judge’s order dismissing the lawsuits. On December 4, 2019, the Indiana Court of Appeals issued a unanimous decision affirming the trial court’s decision to dismiss the shareholder litigation. On January 20, 2020, the shareholders filed a petition to transfer with the Indiana Supreme Court seeking review of the decision of the Court of Appeals. The Company opposed the petition. On April 7, 2020, the Indiana Supreme Court denied the petition to transfer. All of the cases referenced above are completed and each case was concluded in the Company’s favor. |
Fair Value of Financial Assets
Fair Value of Financial Assets | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value of Financial Assets | |
Note 15. Fair Value of Financial Assets | Note 15. 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. 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 sheets: Cash equivalents: Equity securities: Bonds: Non-qualified deferred compensation plan investments: Derivative instruments: As of September 30, 2020 and December 31, 2019, the fair values of financial assets were as follows. September 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 17,719 $ - $ - $ 17,719 $ 43,095 $ - $ - $ 43,095 Equity securities 6,488 5,691 - 12,179 25 6,397 - 6,422 Bonds 55,007 - - 55,007 38,911 - - 38,911 Options on equity securities - 2,872 - 2,872 - 2,166 - 2,166 Non-qualified deferred compensation plan investments 1,382 - - 1,382 2,175 - - 2,175 Total assets at fair value $ 80,596 $ 8,563 $ - $ 89,159 $ 84,206 $ 8,563 $ - $ 92,769 There were no changes in our valuation techniques used to measure fair values on a recurring basis. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions | |
Note 16. Related Party Transactions | Note 16. Related Party Transactions Services Agreement During 2017, the Company entered into a services agreement with Biglari Enterprises LLC and Biglari Capital Corp. (collectively, the “Biglari Entities”) under which the Biglari Entities provide services to the Company. The services agreement has a five-year term, effective on October 1, 2017. The fixed fee of $700 per month can be adjusted annually. The monthly fee will remain at $700 during 2020. The Company paid Biglari Enterprises $6,300 in service fees during the first nine months of 2020 and 2019. The services agreement does not alter the hurdle rate connected with the incentive reallocation paid to Biglari Capital Corp. The Biglari Entities are owned by Mr. Biglari. Incentive Agreement Amendment The Incentive Agreement was amended on March 26, 2019 to remove the annual limitation on Mr. Biglari’s incentive compensation, as well as the requirement of Mr. Biglari to use 30% of his incentive payments to purchase shares of the Company. In connection with the amendment, the change of control and severance provisions contained in the Incentive Agreement were eliminated and the License Agreement was terminated. The amendment became effective in 2019. |
Business Segment Reporting
Business Segment Reporting | 9 Months Ended |
Sep. 30, 2020 | |
Business Segment Reporting | |
Note 17. Business Segment Reporting | Note 17. Business Segment Reporting Our reportable business segments are organized in a manner that reflects how management views those business activities. Our restaurant operations include Steak n Shake and Western Sizzlin. Our insurance operations include First Guard and Southern Pioneer. The Company also reports segment information for Maxim and Southern Oil. Other business activities not specifically identified with reportable business segments are presented in 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. A disaggregation of our consolidated data for the third quarters and first nine months of 2020 and 2019 is presented in the tables which follow. Revenue Third Quarter First Nine Months 2020 2019 2020 2019 Operating Businesses: Restaurant Operations: Steak n Shake $ 78,313 $ 141,354 $ 267,637 $ 467,471 Western Sizzlin 1,361 3,757 4,945 11,476 Total Restaurant Operations 79,674 145,111 272,582 478,947 Insurance Operations: First Guard 7,898 7,681 23,194 22,305 Southern Pioneer 6,515 - 15,498 - Total Insurance Operations 14,413 7,681 38,692 22,305 Southern Oil 6,029 6,500 19,554 6,500 Maxim 1,719 924 3,209 2,666 $ 101,835 $ 160,216 $ 334,037 $ 510,418 Earnings (Losses) Before Income Taxes Third Quarter First Nine Months 2020 2019 2020 2019 Operating Businesses: Restaurant Operations: Steak n Shake $ (63 ) $ (861 ) $ (12,075 ) $ (22,776 ) Western Sizzlin (396 ) 544 (937 ) 1,433 Total Restaurant Operations (459 ) (317 ) (13,012 ) (21,343 ) Insurance Operations: First Guard 2,152 2,279 7,193 5,673 Southern Pioneer 518 - 1,458 - Total Insurance Operations 2,670 2,279 8,651 5,673 Southern Oil 592 1,448 1,355 1,448 Maxim 1,150 364 1,605 428 Total Operating Businesses 3,953 3,774 (1,401 ) (13,794 ) Corporate and Investments: Corporate (2,657 ) (2,764 ) (7,693 ) (7,908 ) Investment gains 354 - 1,863 - Investment partnership gains (losses) 27,218 1,449 (89,276 ) 69,801 Total Corporate and Investments 24,915 (1,315 ) (95,106 ) 61,893 Interest expense and debt exinguishment gains not allocated to segments (2,150 ) (3,090 ) (1,260 ) (9,298 ) $ 26,718 $ (631 ) $ (97,767 ) $ 38,801 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Description of Business | The accompanying unaudited consolidated financial statements of Biglari Holdings Inc. 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, 2019. Biglari Holdings is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance, media and licensing, 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. All major investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari. As of September 30, 2020, Mr. Biglari’s beneficial ownership was approximately 66.30% of the Company’s outstanding Class A common stock and 56.60% of the Company’s outstanding Class B common stock. The novel coronavirus (“COVID-19”) was declared a pandemic by the World Health Organization, which caused governments to contain its spread, thereby significantly affecting our operating businesses beginning in March and adversely affecting nearly all of our operations during the second and third quarters. Our restaurants were required to close their dining rooms during the first quarter. In order to reopen the dining rooms profitably, Steak n Shake will require funds for capital expenditures, which are limited under its current debt agreement. The purpose of the capital spending is to convert Steak n Shake’s full-service model into a self-service one. In addition, our restaurants have incurred costs to ensure compliance with health and safety standards in response to COVID-19. The COVID-19 pandemic has caused oil demand to decrease significantly, creating oversupplied markets that have resulted in lower commodity prices and margins. In response, the Company has significantly cut production and expenses in its oil and gas business. The risks and uncertainties resulting from the pandemic may continue to affect our future earnings, cash flows and financial condition. |
Business Acquisition | On March 9, 2020, Biglari Holdings acquired the stock of Southern Pioneer Property & Casualty Insurance Company, and its agency, Southern Pioneer Insurance Agency, Inc. (collectively “Southern Pioneer”). Southern Pioneer underwrites specialty insurance products including garage liability insurance, commercial property coverage, as well as homeowners and dwelling fire insurance coverages. The financial results for Southern Pioneer from the acquisition date to the end of the third quarter are included in the Company’s consolidated financial statements. The acquisition date fair values of assets and liabilities of Southern Pioneer are provisional and subject to revision as the related valuations are completed. Pro-forma financial information of Southern Pioneer is not material. On September 9, 2019, a wholly-owned subsidiary of the Company, Southern Oil Company, acquired the stock of Southern Oil of Louisiana Inc. (collectively “Southern Oil”). Southern Oil primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico. Pro-forma financial information of Southern Oil is not material. |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries including Steak n Shake Inc, Western Sizzlin Corporation, Maxim Inc., Southern Oil, First Guard Insurance Company, and Southern Pioneer. Intercompany accounts and transactions have been eliminated in consolidation. |
Change in Presentation | Interest expense on finance leases and obligations has been combined with interest expense in 2020 and reclassified as a component of cost and expenses in the consolidated statement of earnings. Prior period balances have been adjusted to conform to the change in presentation. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings per share | |
Summary of outstanding shares | September 30, 2020 December 31, 2019 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 |
Investment Partnerships (Tables
Investment Partnerships (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investment Partnerships | |
Fair value and carrying value of our partnership interest | Fair Value Company Common Stock Carrying Value Partnership interest at December 31, 2019 $ 666,123 $ 160,581 $ 505,542 Investment partnership gains (losses) (123,524 ) (34,248 ) (89,276 ) Distributions (net of contributions) to investment partnerships (28,000 ) - (28,000 ) Increase in proportionate share of Company stock held - 4,596 (4,596 ) Partnership interest at September 30, 2020 $ 514,599 $ 130,929 $ 383,670 Fair Value Company Common Stock Carrying Value Partnership interest at December 31, 2018 $ 715,102 $ 157,622 $ 557,480 Investment partnership gains (losses) 63,419 (6,382 ) 69,801 Distributions (net of contributions) to investment partnerships (64,329 ) - (64,329 ) Increase in proportionate share of Company stock held - 1,473 (1,473 ) Partnership interest at September 30, 2019 $ 714,192 $ 152,713 $ 561,479 |
Carrying value of investment partnerships net of deferred taxes | September 30, December 31, 2019 Carrying value of investment partnerships $ 383,670 $ 505,542 Deferred tax liability related to investment partnerships (38,313 ) (56,518 ) Carrying value of investment partnerships net of deferred taxes $ 345,357 $ 449,024 |
Gains (loss) from investment partnerships | Third Quarter First Nine Months 2020 2019 2020 2019 Gains (losses) on investment partnership $ 27,218 $ 1,449 $ (89,276 ) $ 69,801 Tax expense (benefit) 6,163 49 (21,337 ) 15,910 Net earnings (loss) $ 21,055 $ 1,400 $ (67,939 ) $ 53,891 |
Summarized financial information for equity in investment partnerships | Equity in Investment Partnerships Lion Fund Lion Fund II Total assets as of September 30, 2020 $ 98,041 $ 497,761 Total liabilities as of September 30, 2020 $ 120 $ 27,768 Revenue for the first nine months of 2020 $ (18,941 ) $ (119,644 ) Earnings for the first nine months of 2020 $ (18,992 ) $ (120,849 ) Biglari Holdings' ownership interest as of September 30, 2020 66.20 % 95.30 % Total assets as of December 31, 2019 $ 117,135 $ 758,663 Total liabilities as of December 31, 2019 $ 158 $ 114,639 Revenue for the first nine months of 2019 $ 3,332 $ 71,578 Earnings for the first nine months of 2019 $ 3,278 $ 65,637 Biglari Holdings' ownership interest as of September 30, 2019 66.10 % 93.50 % |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property and Equipment | |
Schedule of Property and Equipment | September 30, December 31, 2019 Land $ 143,839 $ 150,147 Buildings 139,320 144,243 Land and leasehold improvements 140,940 157,141 Equipment 192,201 196,264 Oil and gas properties 75,853 77,475 Construction in progress 1,036 3,789 693,189 729,059 Less accumulated depreciation and amortization (372,223 ) (378,432 ) Property and equipment, net $ 320,966 $ 350,627 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Other Intangible Assets | |
Schedule of goodwill | September 30, Balance at beginning of year $ 40,040 Goodwill from acquisition 11,865 Change in foreign exchange rates during the first nine months of 2020 27 Balance at end of period $ 51,932 |
Schedule of other intangible assets | September 30, 2020 December 31, 2019 Gross carrying amount Accumulated amortization Total Gross carrying amount Accumulated amortization Total Franchise agreement $ 5,310 $ (5,310 ) $ - $ 5,310 $ (5,178 ) $ 132 Other 810 (810 ) - 810 (792 ) 18 Total 6,120 (6,120 ) - 6,120 (5,970 ) 150 Intangible assets with indefinite lives: Trade names 15,876 - 15,876 15,876 - 15,876 Other assets with indefinite lives 7,848 - 7,848 11,323 - 11,323 Total intangible assets $ 29,844 $ (6,120 ) $ 23,724 $ 33,319 $ (5,970 ) $ 27,349 |
Restaurant Operations Revenues
Restaurant Operations Revenues (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Restaurant Operations Revenues (Tables) | |
Schedule of restaurant operations revenues | Third Quarter First Nine Months 2020 2019 2020 2019 Net sales $ 67,617 $ 136,651 $ 241,832 $ 454,344 Franchise royalties and fees 4,421 6,638 13,704 20,017 Franchise partner fees 6,894 989 14,775 1,668 Other 742 833 2,271 2,918 $ 79,674 $ 145,111 $ 272,582 $ 478,947 |
Accounts Payable And Accrued _2
Accounts Payable And Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounts Payable and Accrued Expenses | |
Schedule of accounts payable and accrued expenses | September 30, December 31, 2019 Accounts payable $ 26,546 $ 32,626 Gift card and other marketing 19,762 23,787 Salaries and wages 8,441 10,667 Taxes payable 14,497 29,275 Insurance accruals 32,091 11,418 Deferred revenue 10,905 10,454 Other 5,646 2,852 Accounts payable and accrued expenses $ 117,888 $ 121,079 |
Notes Payable and Other Borro_2
Notes Payable and Other Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable and Other Borrowings | |
Schedule of notes payable and other borrowings | Current portion of notes payable and other borrowings September 30, December 31, Notes payable $ 153,056 $ 2,200 Unamortized original issue discount and debt issuance costs (506 ) (982 ) Western Sizzlin revolver 500 - Finance obligations 4,948 4,252 Finance lease liabilities 1,633 1,633 Total current portion of notes payable and other borrowings $ 159,631 $ 7,103 Long-term notes payable and other borrowings Notes payable $ - $ 179,298 Unamortized original issue discount and debt issuance costs - (252 ) Finance obligations 69,663 74,497 Finance leases liabilities 6,436 9,639 Total long-term notes payable and other borrowings $ 76,099 $ 263,182 |
Schedule of interest expense | Third Quarter First Nine Months 2020 2019 2020 2019 Interest expense $ 2,150 $ 3,090 $ 6,973 $ 9,298 Interest on finance leases and obligations 1,593 1,934 4,679 5,946 $ 3,743 $ 5,024 $ 11,652 $ 15,244 |
Leased Assets and Lease Commi_2
Leased Assets and Lease Commitments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leased Assets and Lease Commitments | |
Schedule of lease cost | Third Quarter First Nine Months 2020 2019 2020 2019 Finance lease costs: Amortization of right-of-use assets $ 279 $ 487 $ 1,087 $ 1,466 Interest on lease liabilities 136 208 392 630 Operating lease costs * 2,096 4,445 8,321 12,305 Total lease costs $ 2,511 $ 5,140 $ 9,800 $ 14,401 |
Schedule of supplemental cash flow information related to leases | First Nine Months 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ 1,132 $ 1,201 Operating cash flows from finance leases $ 463 $ 630 Operating cash flows from operating leases $ 10,382 $ 12,558 Right-of-use assets obtained in exchange for lease obligations: Finance lease liabilities $ - $ 1,097 Operating lease liabilities $ 73 $ 11,069 |
Schedule of supplemental balance sheet information related to leases | September 30, December 31, Finance leases: Property and equipment, net $ 6,476 $ 10,783 Current portion of notes payable and other borrowings $ 1,633 $ 1,633 Long-term notes payable and other borrowings 6,436 9,639 Total finance lease liablities $ 8,069 $ 11,272 |
Schedule of weighted-average lease terms and discount rates | September 30, Weighted-average remaining lease terms: Finance leases 5.8 years Operating leases 5.8 years Weighted-average discount rates: Finance leases 7.10 % Operating leases 6.90 % |
Schedule of maturities of lease liabilities at September 30, 2020 | Year Operating Leases Finance 2020 $ 3,853 $ 545 2021 13,244 2,135 2022 11,162 1,614 2023 9,821 1,410 2024 7,902 1,373 After 2024 15,680 2,756 Total lease payments 61,662 9,833 Less interest 11,126 1,764 Total lease liabilities $ 50,536 $ 8,069 |
Fair Value of Financial Assets
Fair Value of Financial Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value of Financial Assets | |
Schedule of fair value assets | September 30, 2020 December 31, 2019 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 17,719 $ - $ - $ 17,719 $ 43,095 $ - $ - $ 43,095 Equity securities 6,488 5,691 - 12,179 25 6,397 - 6,422 Bonds 55,007 - - 55,007 38,911 - - 38,911 Options on equity securities - 2,872 - 2,872 - 2,166 - 2,166 Non-qualified deferred compensation plan investments 1,382 - - 1,382 2,175 - - 2,175 Total assets at fair value $ 80,596 $ 8,563 $ - $ 89,159 $ 84,206 $ 8,563 $ - $ 92,769 |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Segment Reporting | |
Schedule of revenue by segment | Revenue Third Quarter First Nine Months 2020 2019 2020 2019 Operating Businesses: Restaurant Operations: Steak n Shake $ 78,313 $ 141,354 $ 267,637 $ 467,471 Western Sizzlin 1,361 3,757 4,945 11,476 Total Restaurant Operations 79,674 145,111 272,582 478,947 Insurance Operations: First Guard 7,898 7,681 23,194 22,305 Southern Pioneer 6,515 - 15,498 - Total Insurance Operations 14,413 7,681 38,692 22,305 Southern Oil 6,029 6,500 19,554 6,500 Maxim 1,719 924 3,209 2,666 $ 101,835 $ 160,216 $ 334,037 $ 510,418 |
Schedule of earnings (losses) before income taxes by segment | Earnings (Losses) Before Income Taxes Third Quarter First Nine Months 2020 2019 2020 2019 Operating Businesses: Restaurant Operations: Steak n Shake $ (63 ) $ (861 ) $ (12,075 ) $ (22,776 ) Western Sizzlin (396 ) 544 (937 ) 1,433 Total Restaurant Operations (459 ) (317 ) (13,012 ) (21,343 ) Insurance Operations: First Guard 2,152 2,279 7,193 5,673 Southern Pioneer 518 - 1,458 - Total Insurance Operations 2,670 2,279 8,651 5,673 Southern Oil 592 1,448 1,355 1,448 Maxim 1,150 364 1,605 428 Total Operating Businesses 3,953 3,774 (1,401 ) (13,794 ) Corporate and Investments: Corporate (2,657 ) (2,764 ) (7,693 ) (7,908 ) Investment gains 354 - 1,863 - Investment partnership gains (losses) 27,218 1,449 (89,276 ) 69,801 Total Corporate and Investments 24,915 (1,315 ) (95,106 ) 61,893 Interest expense and debt exinguishment gains not allocated to segments (2,150 ) (3,090 ) (1,260 ) (9,298 ) $ 26,718 $ (631 ) $ (97,767 ) $ 38,801 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - Mr. Biglari [Member] | Sep. 30, 2020 |
Class A Common Stock [Member] | |
Equity method investment, ownership percentage | 66.30% |
Class B Common Stock [Member] | |
Equity method investment, ownership percentage | 56.60% |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | Sep. 30, 2020 | Dec. 31, 2019 |
Class A Common Stock [Member] | ||
Common stock authorized | 500,000 | 500,000 |
Common stock issued and outstanding | 206,864 | 206,864 |
Class B Common Stock [Member] | ||
Common stock authorized | 10,000,000 | 10,000,000 |
Common stock issued and outstanding | 2,068,640 | 2,068,640 |
Earnings Per Share (Details Nar
Earnings Per Share (Details Narrative) - shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Earnings per share | |||||
Equivalent Class A weighted average number of common shares | 351,288 | 343,519 | 348,396 | 345,249 | |
Equivalent Class A common stock outsanding | 620,592 | 620,592 | 620,592 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Available for sale investments | $ 80,619 | $ 80,619 | $ 40,393 |
Investments in equity securities and a related derivative position | 4,463 | 4,463 | |
Gain on investment | 354 | 1,863 | |
Southern Pioneer [Member] | |||
Fair value of investment | $ 36,876 | $ 36,876 |
Investment Partnerships (Detail
Investment Partnerships (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Fair Value [Member] | ||
Partnership interest at Beginning | $ 666,123,000 | $ 715,102,000 |
Investment partnership gains (losses) | (123,524,000) | 63,419,000 |
Distributions (net of contributions) to investment partnerships | (28,000,000) | (64,329,000) |
Increase in proportionate share of Company stock held | 0 | 0 |
Partnership interest at Ending | 514,599,000 | 714,192,000 |
Company Common Stock [Member] | ||
Partnership interest at Beginning | 160,581,000 | 157,622,000 |
Investment partnership gains (losses) | (34,248,000) | (6,382,000) |
Distributions (net of contributions) to investment partnerships | 0 | 0 |
Increase in proportionate share of Company stock held | 4,596,000 | 1,473,000 |
Partnership interest at Ending | 130,929,000 | 152,713,000 |
Carrying Value [Member] | ||
Partnership interest at Beginning | 505,542,000 | 557,480,000 |
Investment partnership gains (losses) | (89,276,000) | 69,801,000 |
Distributions (net of contributions) to investment partnerships | (28,000,000) | (64,329,000) |
Increase in proportionate share of Company stock held | (4,596,000) | (1,473,000) |
Partnership interest at Ending | $ 383,670,000 | $ 561,479,000 |
Investment Partnerships (Deta_2
Investment Partnerships (Details 1) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Investment Partnerships | ||
Carrying value of investment partnerships | $ 383,670 | $ 505,542 |
Deferred tax liability related to investment partnerships | (38,313) | (56,518) |
Carrying value of investment partnerships net of deferred taxes | $ 345,357 | $ 449,024 |
Investment Partnerships (Deta_3
Investment Partnerships (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Investment Partnerships | ||||
Gains (losses) on investment partnership | $ 27,218 | $ 1,449 | $ (89,276) | $ 69,801 |
Tax expense (benefit) | 6,163 | 49 | (21,337) | 15,910 |
Net earnings (loss) | $ 21,055 | $ 1,400 | $ (67,939) | $ 53,891 |
Investment Partnerships (Deta_4
Investment Partnerships (Details 3) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Lion Fund [Member] | |||
Total assets | $ 98,041 | $ 117,135 | |
Total liabilities | 120 | 158 | |
Revenue | (18,941) | $ 3,332 | |
Earnings | $ (18,992) | $ 3,278 | |
Biglari Holdings' ownership interest | 66.20% | 66.10% | |
Lion Fund II [Member] | |||
Total assets | $ 497,761 | 758,663 | |
Total liabilities | 27,768 | $ 114,639 | |
Revenue | (119,644) | $ 71,578 | |
Earnings | $ (120,849) | $ 65,637 | |
Biglari Holdings' ownership interest | 95.30% | 93.50% |
Investment Partnerships (Deta_5
Investment Partnerships (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Investment Partnerships | ||
Proportionate share of Company stock held by investment partnerships at cost | $ 379,453 | $ 374,857 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Property and Equipment | ||
Land | $ 143,839 | $ 150,147 |
Buildings | 139,320 | 144,243 |
Land and leasehold improvements | 140,940 | 157,141 |
Equipment | 192,201 | 196,264 |
Oil and gas properties | 75,853 | 77,475 |
Construction in progress | 1,036 | 3,789 |
Property and equipment, gross | 693,189 | 729,059 |
Less accumulated depreciation and amortization | (372,223) | (378,432) |
Property and equipment, net | $ 320,966 | $ 350,627 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property and Equipment | ||||
Oil and gas properties, depletion expenses | $ 9,249 | |||
Impairments charges | $ 3,698 | $ 18,117 | ||
Impairment to long-lived assets | $ 5,079 | $ 7,417 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill and Other Intangible Assets | |
Goodwill, beginning balance | $ 40,040 |
Goodwill from acquisition | 11,865 |
Change in foreign exchange rates during the first nine months of 2020 | 27 |
Goodwill, ending balance | $ 51,932 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Gross carrying amount | $ 29,844,000 | $ 33,319,000 |
Accumulated amortization | (6,120,000) | (5,970,000) |
Total intangible assets | 23,724,000 | 27,349,000 |
Finite-Lived Intangible Assets [Member] | ||
Gross carrying amount | 6,120,000 | 6,120,000 |
Accumulated amortization | (6,120,000) | (5,970,000) |
Total intangible assets | 0 | 150,000 |
Finite-Lived Intangible Assets [Member] | Franchise Agreement [Member] | ||
Gross carrying amount | 5,310,000 | 5,310,000 |
Accumulated amortization | (5,310,000) | (5,178,000) |
Total intangible assets | 0 | 132,000 |
Finite-Lived Intangible Assets [Member] | Other [Member] | ||
Gross carrying amount | 810,000 | 810,000 |
Accumulated amortization | (810,000) | (792,000) |
Total intangible assets | 0 | 18,000 |
Indefinite-lived Intangible Assets [Member] | Other [Member] | ||
Gross carrying amount | 7,848,000 | 11,323,000 |
Accumulated amortization | 0 | 0 |
Total intangible assets | 7,848,000 | 11,323,000 |
Indefinite-lived Intangible Assets [Member] | Trade names [Member] | ||
Gross carrying amount | 15,876,000 | 15,876,000 |
Accumulated amortization | 0 | 0 |
Total intangible assets | $ 15,876,000 | $ 15,876,000 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Other Intangible Assets | ||
Amortization expense | $ 150 | $ 412 |
Effect of preliminary price allocation on goodwill | 11,865 | |
Impairment charges | $ 3,700 |
Restaurant Operations Revenue_2
Restaurant Operations Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restaurant Operations Revenues | ||||
Net sales | $ 67,617 | $ 136,651 | $ 241,832 | $ 454,344 |
Franchise royalties and fees | 4,421 | 6,638 | 13,704 | 20,017 |
Franchise partner fees | 6,894 | 989 | 14,775 | 1,668 |
Other | 742 | 833 | 2,271 | 2,918 |
Restaurant operations revenue | $ 79,674 | $ 145,111 | $ 272,582 | $ 478,947 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 26,546 | $ 32,626 |
Gift card and other marketing | 19,762 | 23,787 |
Salaries and wages | 8,441 | 10,667 |
Taxes payable | 14,497 | 29,275 |
Insurance accruals | 32,091 | 11,418 |
Deferred revenue | 10,905 | 10,454 |
Other | 5,646 | 2,852 |
Accounts payable and accrued expenses | $ 117,888 | $ 121,079 |
Notes Payable and Other Borro_3
Notes Payable and Other Borrowings (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current portion of notes payable and other borrowings | ||
Notes payable | $ 153,056,000 | $ 2,200,000 |
Unamortized original issue discount and debt issuance costs | (506,000) | (982,000) |
Western Sizzlin revolver | 500,000 | 0 |
Finance obligations | 4,948,000 | 4,252,000 |
Finance lease liabilities | 1,633,000 | 1,633,000 |
Total current portion of notes payable and other borrowings | 159,631,000 | 7,103,000 |
Long-term notes payable and other borrowings | ||
Notes payable | 0 | 179,298,000 |
Unamortized original issue discount and debt issuance costs | 0 | (252,000) |
Finance obligations | 69,663,000 | 74,497,000 |
Finance lease liabilities | 6,436,000 | 9,639,000 |
Total long-term notes payable and other borrowings | $ 76,099,000 | $ 263,182,000 |
Notes Payable and Other Borro_4
Notes Payable and Other Borrowings (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Notes Payable and Other Borrowings | ||||
Interest expense | $ 2,150 | $ 3,090 | $ 6,973 | $ 9,298 |
Interest on finance leases and obligations | 1,593 | 1,934 | 4,679 | 5,946 |
Total interest expense | $ 3,743 | $ 5,024 | $ 11,652 | $ 15,244 |
Notes Payable and Other Borro_5
Notes Payable and Other Borrowings (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Mar. 19, 2014 | Sep. 30, 2020 | Oct. 30, 2020 | Dec. 31, 2019 | |
Secured debt retired | $ 26,792,000 | |||
Fair value of long-term debt | $ 80,000,000 | |||
Steak n Shake Credit Facility [Member] | ||||
Debt instrument, interest rate | 4.75% | |||
Debt instrument, face amount | $ 220,000,000 | |||
Debt instrument, maturity date | March 19, 2021 | |||
Debt instrument, outstanding balance | $ 153,056,000 | |||
Loan amortization rate | 1.00% | |||
Western Sizzlin [Member] | ||||
Debt, line of credit | $ 500,000 | $ 0 | ||
Subsequent Event [Member] | Western Sizzlin [Member] | ||||
Reduction in revolver | $ 0 |
Leased Assets and Lease Commi_3
Leased Assets and Lease Commitments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Finance lease costs: | ||||
Amortization of right-of-use assets | $ 279 | $ 487 | $ 1,087 | $ 1,466 |
Interest on lease liabilities | 136 | 208 | 392 | 630 |
Operating lease costs | 2,096 | 4,445 | 8,321 | 12,305 |
Total lease costs | $ 2,511 | $ 5,140 | $ 9,800 | $ 14,401 |
Leased Assets and Lease Commi_4
Leased Assets and Lease Commitments (Details 1) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash paid for amounts included in the measurement of lease liablities: | ||
Financing cash flows from finance leases | $ 1,132 | $ 1,201 |
Operating cash flows from finance leases | 463 | 630 |
Operating cash flows from operating leases | 10,382 | 12,558 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Finance lease liabilities | 0 | 1,097 |
Operating lease liabilities | $ 73 | $ 11,069 |
Leased Assets and Lease Commi_5
Leased Assets and Lease Commitments (Details 2) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finance leases: | ||
Property and equipment, net | $ 6,476 | $ 10,783 |
Current portion of notes payable and other borrowings | 1,633 | 1,633 |
Long-term notes payable and other borrowings | 6,436 | 9,639 |
Total finance lease liablities | $ 8,069 | $ 11,272 |
Leased Assets and Lease Commi_6
Leased Assets and Lease Commitments (Details 3) | 9 Months Ended |
Sep. 30, 2020 | |
Weighted-average remaining lease terms: | |
Finance leases | 5.8 years |
Operating leases | 5.8 years |
Weighted-average discount rates: | |
Finance leases | 7.10% |
Operating leases | 6.90% |
Leased Assets and Lease Commi_7
Leased Assets and Lease Commitments (Details 4) $ in Thousands | Sep. 30, 2020USD ($) |
Operating Leases [Member] | |
2020 | $ 3,853 |
2021 | 13,244 |
2022 | 11,162 |
2023 | 9,821 |
2024 | 7,902 |
After 2024 | 15,680 |
Total lease payments | 61,662 |
Less interest | 11,126 |
Total lease liabilities | 50,536 |
Finance Leases [Member] | |
2020 | 545 |
2021 | 2,135 |
2022 | 1,614 |
2023 | 1,410 |
2024 | 1,373 |
After 2024 | 2,756 |
Total lease payments | 9,833 |
Less interest | 1,764 |
Total lease liabilities | $ 8,069 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income | |||||
Accumulated other comprehensive loss increase/decrease | $ 344 | $ 628 | $ 834 | $ 736 | |
Accumulated other comprehensive loss | $ (1,976) | $ (3,252) | $ (1,976) | $ (3,252) | $ (2,810) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Taxes | |||||
Income tax (benefit) expense | $ 5,617,000 | $ 614,000 | $ 23,449,000 | $ 7,026,000 | |
Unrecognized tax benefits | $ 348,000 | 348,000 | $ 348 | ||
Investment partnership pretax gains (losses) | $ 89,276,000 | $ 69,801,000 |
Fair Value of Financial Asset_2
Fair Value of Financial Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash equivalents | $ 17,719 | $ 43,095 |
Equity securities | 12,179 | 6,422 |
Bonds | 55,007 | 38,911 |
Options on equity securities | 2,872 | 2,166 |
Non-qualified deferred compensation plan investments | 1,382 | 2,175 |
Total assets at fair value | 89,159 | 92,769 |
Level 1 [Member] | ||
Assets | ||
Cash equivalents | 17,719 | 43,095 |
Equity securities | 6,488 | 25 |
Bonds | 55,007 | 38,911 |
Options on equity securities | 0 | 0 |
Non-qualified deferred compensation plan investments | 1,382 | 2,175 |
Total assets at fair value | 80,596 | 84,206 |
Level 2 [Member] | ||
Assets | ||
Cash equivalents | 0 | 0 |
Equity securities | 5,691 | 6,397 |
Bonds | 0 | 0 |
Options on equity securities | 2,872 | 2,166 |
Non-qualified deferred compensation plan investments | 0 | 0 |
Total assets at fair value | 8,563 | 8,563 |
Level 3 [Member] | ||
Assets | ||
Cash equivalents | 0 | 0 |
Equity securities | 0 | 0 |
Bonds | 0 | 0 |
Options on equity securities | 0 | 0 |
Non-qualified deferred compensation plan investments | 0 | 0 |
Total assets at fair value | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - Services Agreement [Member] - Biglari Entities [Member] - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Period fees payment | $ 700,000 | |
Services fees | $ 6,300,000 | $ 6,300 |
Business Segment Reporting (Det
Business Segment Reporting (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total revenues | $ 101,835,000 | $ 160,216,000 | $ 334,037,000 | $ 510,418,000 |
Steak n Shake [Member] | ||||
Total revenues | 78,313,000 | 141,354,000 | 267,637,000 | 467,471,000 |
Western Sizzlin [Member] | ||||
Total revenues | 1,361,000 | 3,757,000 | 4,945,000 | 11,476,000 |
Total Restaurant Operations [Member] | ||||
Total revenues | 79,674,000 | 145,111,000 | 272,582,000 | 478,947,000 |
First Guard [Member] | ||||
Total revenues | 7,898,000 | 7,681,000 | 23,194,000 | 22,305,000 |
Southern Pioneer [Member] | ||||
Total revenues | 6,515,000 | 0 | 15,498,000 | 0 |
Total Insurance Operations [Member] | ||||
Total revenues | 14,413,000 | 7,681,000 | 38,692,000 | 22,305,000 |
Southern Oil [Member] | ||||
Total revenues | 6,029,000 | 6,500,000 | 19,554,000 | 6,500,000 |
Maxim [Member] | ||||
Total revenues | $ 1,719,000 | $ 924,000 | $ 3,209,000 | $ 2,666,000 |
Business Segment Reporting (D_2
Business Segment Reporting (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings (loss) before income taxes | $ 26,718 | $ (631) | $ (97,767) | $ 38,801 |
Restaurant [Member] | Total Restaurant Operations [Member] | ||||
Earnings (loss) before income taxes | (459) | (317) | (13,012) | (21,343) |
Restaurant [Member] | Western Sizzlin [Member] | ||||
Earnings (loss) before income taxes | (396) | 544 | (937) | 1,433 |
Restaurant [Member] | Steak n Shake [Member] | ||||
Earnings (loss) before income taxes | (63) | (861) | (12,075) | (22,776) |
Operating Business [Member] | ||||
Earnings (loss) before income taxes | 3,953 | 3,774 | (1,401) | (13,794) |
Operating Business [Member] | First Guard [Member] | ||||
Earnings (loss) before income taxes | 2,152 | 2,279 | 7,193 | 5,673 |
Operating Business [Member] | Southern Pioneer [Member] | ||||
Earnings (loss) before income taxes | 518 | 0 | 1,458 | 0 |
Operating Business [Member] | Total Insurance Operations [Member] | ||||
Earnings (loss) before income taxes | 2,670 | 2,279 | 8,651 | 5,673 |
Operating Business [Member] | Southern Oil [Member] | ||||
Earnings (loss) before income taxes | 592 | 1,448 | 1,355 | 1,448 |
Operating Business [Member] | Maxim [Member] | ||||
Earnings (loss) before income taxes | 1,150 | 364 | 1,605 | 428 |
Corporate [Member] | Corporate 1 [Member] | ||||
Earnings (loss) before income taxes | (2,657) | (2,764) | (7,693) | (7,908) |
Corporate [Member] | Investment Gains [Member] | ||||
Earnings (loss) before income taxes | 354 | 0 | 1,863 | 0 |
Corporate [Member] | Investment Partnership Gains (Losses) [Member] | ||||
Earnings (loss) before income taxes | 27,218 | 1,449 | (89,276) | 69,801 |
Corporate [Member] | Total Corporate And Investments [Member] | ||||
Earnings (loss) before income taxes | 24,915 | (1,315) | (95,106) | 61,893 |
Reconciliation Of Segments [Member] | Interest expense on notes payable and other borrowings [Member] | ||||
Earnings (loss) before income taxes | $ (2,150) | $ (3,090) | $ (1,260) | $ (9,298) |