What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-02-28 compared with 2021-03-01 · 91 added, 114 removed, 237 unchanged (46% of the section changed)

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Biglari Holdings Inc.

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.

is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance, licensing and media, restaurants, and oil and gas.

The Company’s largest operating subsidiaries are involved in the franchising and operating of restaurants.

Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of Biglari Holdings.

The Company’s long-term objective is to maximize per-share intrinsic value.

Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of the Company.

Biglari Holdings’ management system combines decentralized operations with centralized finance decision-making.

Operating decisions for the various business units are made by their respective managers.

All major investment and capital allocation decisions are made for the Company and its subsidiaries by Mr.

As of December 31, 2021, Mr.

Biglari’s beneficial ownership was approximately 67.2% of the Company’s outstanding Class A common stock and 60.6% of the Company’s outstanding Class B common stock.

Biglari beneficially owns shares of the Company that represent approximately 66.2% of the economic interest and approximately 70.4% of the voting interest.

Overview of the Impact of COVID-19

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Those shutdowns significantly affected our operating businesses to varying degrees.

The risks and uncertainties resulting from the pandemic may continue to affect our future earnings, cash flows, and financial condition.

The risks and uncertainties resulting from COVID-19 and its variants may continue to affect our future earnings, cash flows, and financial condition.

Accordingly, estimates used in the preparation of our financial statements, including those associated with the evaluation of certain long-lived assets, goodwill, and other intangible assets for impairment, may be subject to significant adjustments in future periods.

Business Acquisitions

On March 9, 2020, Biglari Holdings acquired the stock of Southern Pioneer Property & Casualty Insurance Company, and its agency, Southern Pioneer Insurance Agency, Inc.

Business Acquisition

On March 9, 2020, Biglari Holdings acquired the stock of Southern Pioneer Property & Casualty Insurance Company and its affiliated agency, Southern Pioneer Insurance Agency, Inc.

(collectively “Southern Pioneer”).

Southern Pioneer underwrites garage liability and commercial property as well as homeowners and dwelling fire insurance coverages.

Southern Pioneer underwrites garage liability and commercial property as well as homeowners and dwelling fire insurance coverage.

The Company’s financial results include the results of Southern Pioneer from the date of acquisition.

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.

Discussion of Operations

Net earnings attributable to Biglari Holdings shareholders are disaggregated in the table that follows.

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Oil and gas 7,528 1,890 5,921

Media 1,374 572 796

Brand licensing 2,364 1,374 572

Interest expense (841) (6,940) (8,817)

Total operating businesses 1,203 (7,474) (5,659)

Corporate and other (9,829) (9,563) (7,919)

Total operating businesses 21,747 (8,360) (15,393)

Investment partnership gains 8,899 (32,506) 60,773

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Our Management Discussion and Analysis generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020.

Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 can be found in

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 24, 2020.

Discussions of 2019 items and year-to-year comparisons between 2020 and 2019 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 1, 2021.

Management’s Discussion and Analysis (continued)

Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 577 company-operated and franchise restaurants as of December 31, 2021.

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Total stores as of December 31, 2018 413 — 213 4 55 685

Corporate stores transitioned (29) 29 — — — —

Net restaurants opened (closed) (16) — — — (7) (23)

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As of December 31, 2021, 42 of the 199 company-operated Steak n Shake stores were closed.

Throughout 2020, it became increasingly clear that the problems leading to operational shortfalls of certain restaurants could be fixed, thereby enabling those restaurants to produce a satisfactory return on investment.

Steak n Shake reopened 33 locations which were previously closed.

In addition, we plan to reopen most of our closed company-operated restaurants.

As of December 31, 2019, 107 of the 368 company-operated Steak n Shake stores were closed.

Over the past two years, Steak n Shake reopened 50 locations that were previously closed.

We plan to refranchise a majority of our closed company-operated restaurants.

Management’s Discussion and Analysis (continued)

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Restaurant operating costs 92,543 49.2 % 137,574 44.9 % 307,337 53.2 %

Rent 20,383 6.6 % 17,266 3.0 % 19,835 2.7 %

Occupancy costs 19,633 10.4 % 20,383 6.6 % 17,266 3.0 %

Total cost of sales 167,491 246,655 500,949

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Contributions to net earnings $ 11,235 $ (4,961) $ (10,734)

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

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

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

The COVID-19 pandemic has adversely affected our restaurant operations and financial results.

Our restaurants were required to close their dining rooms during the first quarter of 2020, and the majority of our dining rooms remained closed through the end of 2020.

To mitigate high labor costs associated with full service, Steak n Shake is seeking to reopen dining rooms with a self-service model, which will require an investment of between $100 and $200 per restaurant.

Net sales during 2020 were $306,577, representing a decrease of $271,587, as compared to 2019.

The decreased performance of our restaurant operations in 2020 was primarily due to the closing of dining rooms and stores over the course of the year.

Our restaurants were required to close their dining rooms during the first quarter of 2020.

The majority of Steak n Shake’s dining rooms remained closed through the end of 2020 but were reopened during 2021, and in doing so implemented a self-service model.

The transformation has resulted in higher capital expenditures in 2021 as compared to prior years.

Steak n Shake has spent approximately $40,000 in capital expenditures related to the conversion of table-service restaurants to self-service restaurants.

Net sales during 2021 were $187,913, as compared to $306,577 during 2020.

The decrease in revenue of company-owned restaurants is primarily due to the shift of company units to franchise partner units.

For company-operated units, sales to the end customer are recorded as revenue generated by the Company, but for franchise partner units, only our share of the restaurant's profits, along with certain fees, are recorded as revenue.

Because we derive most of our revenue from our share of the profits, revenue will continue to decline as we transition from company-operated units to franchise partner units.

Management’s Discussion and Analysis (continued)

Franchise partner fees were $55,641 during 2021, as compared to $22,213 during 2020.

As of December 31, 2021, there were 159 franchise partner units, as compared to 86 franchise partner units as of December 31, 2020.

We continue to transition from company-operated units to franchise-operated ones.

For a franchise partner to be awarded a restaurant, he or she must demonstrate the gold standard in service.

The traditional franchising business generates franchise royalties and fees, which decreased by $4,566, or 19.5% during 2020, as compared to 2019.

The decrease in franchise royalties and fees was primarily due to franchise stores that closed during the pandemic.

Management’s Discussion and Analysis (continued)

The franchise royalties and fees generated by the traditional franchising business were $21,736 during 2021, as compared to $18,794 during 2020.

The increase in franchise royalties and fees was primarily due to the reopening of dining rooms in 2021.

Our drive-through, carryout, and delivery capabilities positioned us to improve profitability in 2021 and 2020;

however, our business has been challenged by COVID-19 related labor availability.

The cost of food in 2021 was $55,315, or 29.4% of net sales, as compared to $88,698, or 28.9% of net sales in 2020.

Restaurant operating costs during 2021 were $92,543, or 49.2% of net sales, as compared to $137,574, or 44.9% of net sales in 2020.

The decrease in the cost of food and restaurant operating costs during 2020 as compared to 2019 was attributable to lower net sales resulting from store closures as well as dining room closures.

Throughout 2020, our business was mainly off-premises — drive-through, delivery, and takeout.

The decreases in the cost of food and operating costs are mainly attributable to the transitioning of company-operated units to franchise partner units.

The increase in operating costs as a percentage of net sales is mainly attributable to increasing wages — in our pursuit to become the maximum-wage employer in our category.

Selling, general and administrative expenses during 2021 were $57,186, or 21.1% of total revenues compared to $60,401, or 17.2% of total revenues during 2020.

General and administrative expenses decreased by $11,763 during 2020, as compared to 2019, primarily because of decreased personnel costs.

General and administrative expenses increased as a percentage of net sales during 2021, as compared to 2020, primarily because of an increase in legal fees.

Marketing expenses decreased by $7,584 in 2021 as compared to 2020, primarily by shifting to a digital strategy.

Asset impairments increased $15,460 during 2020 compared to 2019 primarily due to the impact of COVID-19.

The pandemic caused dining room closures and had a negative impact on store level cash flows.

Asset impairments decreased $19,011 during 2021 compared to 2020.

Higher asset impairments were recorded in 2020 primarily because of dining room closures and uncertainties caused by the pandemic.

Interest on obligations under leases was $6,039 during 2021, versus $6,274 during 2020.

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Underwriting decisions are the responsibility of the unit managers, whereas investing decisions are the responsibility of our Chairman and CEO, Sardar Biglari.

Business units are operated under separate local management.

Our business units are operated under separate local management.

Biglari Holdings’ insurance operations consist of First Guard and Southern Pioneer.

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Net underwriting gain $ 9,730 $ 7,899 $ 5,182

Management’s Discussion and Analysis (continued)

Earnings of our insurance operations are summarized below.

2021 2020 2019

Premiums written $ 49,220 $ 28,746 $ 26,465

Premiums earned $ 55,411 $ 49,220 $ 28,746

Insurance losses 27,649 24,828 16,924

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Commissions are in other income (expense) in the above table.

Management’s Discussion and Analysis (continued)

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

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Amount % Amount % Amount %

Premiums written $ 30,210 100.0 % $ 28,746 100.0 % $ 26,465 100.0 %

Premiums earned $ 33,521 100.0 % $ 30,210 100.0 % $ 28,746 100.0 %

Insurance losses 16,338 48.7 % 14,031 46.5 % 16,924 58.9 %

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Southern Pioneer

Southern Pioneer underwrites garage liability insurance, commercial property, as well as homeowners and dwelling fire insurance.

Southern Pioneer underwrites garage liability and commercial property insurance, as well as homeowners and dwelling fire insurance.

The financial results for Southern Pioneer are from the date of acquisition March 9, 2020.

A summary of Southern Pioneer’s underwriting results follows.

Premiums written $ 19,010 100.0 %

Amount % Amount %

Premiums earned $ 21,890 100.0 % $ 19,010 100.0 %

Insurance losses 11,311 51.7 % 10,797 56.8 %

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Pre-tax underwriting gain $ 1,744 $ 620

Management’s Discussion and Analysis (continued)

Insurance – Investment Income

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

Management’s Discussion and Analysis (continued)

Southern Oil primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico.

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Earnings for Southern Oil are summarized below.

2021 2020 2019

Oil and gas revenue $ 33,004 $ 26,255 $ 24,436

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Contribution to net earnings $ 7,528 $ 1,890 $ 5,921

The COVID-19 pandemic has caused oil demand to significantly decrease, creating oversupplied markets that have resulted in lower commodity prices and margins.

In response, the Company significantly cut its production and expenses during the first and second quarters of 2020.

However, crude oil prices improved in mid-2020 in response to the lifting of COVID-19 restrictions, resulting in the increase of oil demand.

As a consequence, Southern Oil began to restore the majority of its curtailed production.

Southern Oil is a debt-free company.

Media and Licensing

Maxim’s business lies principally in media and licensing.

Earnings of our media and licensing operations are summarized below.

Initially, the COVID-19 pandemic caused oil demand to significantly decrease, creating oversupplied markets that have resulted in lower commodity prices and margins.

In response, the Company cut production and expenses in its oil and natural gas business during 2020.

In 2021, however, the significant increase in average crude oil and natural gas prices resulting from the lifting of COVID-19 restrictions, the resumption of normal economic activity, and the resulting improvement in supply and demand fundamentals caused Southern Oil to return to full production.

Brand Licensing

Maxim’s business lies principally in licensing and media.

Earnings of operations are summarized below.

2021 2020 2019

Media and licensing revenue $ 4,083 $ 4,099 $ 6,576

Media and licensing cost 2,156 3,181 4,152

Licensing and media revenue $ 3,203 $ 4,083 $ 4,099

Licensing and media cost 2,275 2,156 3,181

General and administrative expenses 114 143 176

Depreciation and amortization — — 27

Earnings before income taxes 814 1,784 742

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Contribution to net earnings $ 2,364 $ 1,374 $ 572

Management’s Discussion and Analysis (continued)

We acquired Maxim with the idea of transforming its business model.

The magazine developed the Maxim brand, a franchise we are utilizing to generate nonmagazine revenue, notably through licensing, a cash-generating business related to consumer products, services, and events.

Investment Gains

Investment gains were $3,644 ($2,877 net of tax) during 2020.

The Company did not have investment gains/losses during 2019.

Investment Gains and Investment Partnership Gains

Investment gains were $6,401 ($4,832 net of tax) in 2021 and $3,644 ($2,877 net of tax) in 2020.

Investment gains in 2021 included a gain from the sale of real estate of $5,047 ($3,785, net of tax).

Dividends earned on investments are reported as investment income by our insurance companies.

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

Management’s Discussion and Analysis (continued)

Investment Partnership Gains

Earnings from our investments in partnerships are summarized below.

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Dividend income has a lower effective tax rate than income from capital gains.

Changes in the market values of investments can be highly volatile.

These gains and losses have caused and will continue to cause significant volatility in our periodic earnings.

The investment partnerships hold the Company’s common stock as investments.

The Company’s pro-rata share of its common stock held by the investment partnerships is recorded as treasury stock even though these shares are legally outstanding.

Gains and losses on Company common stock included in the earnings of the partnerships are eliminated.

Gains and losses on Company common stock included in the earnings of the partnerships are eliminated in the Company’s consolidated financial results.

Interest Expense

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Interest expense net of tax $ (841) $ (6,940) $ (8,817)

Interest expense during 2020 decreased by $3,180 compared to 2019 due to lower debt balances and lower average interest rates during 2020.

Consolidated income tax benefit was $12,212 in 2020 versus an expense of $9,761 in 2019.

Income tax expense decreased during 2020 compared to 2019, primarily due to a tax benefit of $10,526 for investment partnership losses of $43,032.

Interest expense during 2021 decreased by $8,141 compared to 2020 due to the repayment of Steak n Shake’s term loan in full on February 19, 2021.

Consolidated income tax expense was $6,789 in 2021 versus a benefit of $12,212 in 2020.

Income tax expense increased during 2021 compared to 2020, primarily due to a tax benefit of $10,526 for investment partnership losses of $43,032 in 2020.

Corporate and Other

Corporate expenses exclude the activities in the restaurant, insurance, media and licensing, and oil and gas businesses.

Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses.

Corporate and other net losses of $9,829 during 2021 increased compared to 2020 due to higher legal expenses.

Financial Condition

Our consolidated shareholders’ equity on December 31, 2020 was $564,828, a decrease of $51,470 compared to the December 31, 2019 balance.

The decrease was primarily due to net loss of $37,989 and an increase in treasury stock of $14,760.

Our consolidated shareholders’ equity on December 31, 2021 was $587,696, an increase of $22,868 compared to the December 31, 2020 balance.

The increase was primarily due to net income of $35,478 offset by an increase in treasury stock of $12,234.

Management’s Discussion and Analysis (continued)

Consolidated cash and investments are summarized below.

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Carrying value of cash and investments on balance sheet $ 375,809 $ 538,914

Management’s Discussion and Analysis (continued)

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

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In 2021, cash from operating activities increased by $111,211, as compared to 2020.

The increase was primarily due to increased operating income (excluding impairments and depreciation) of $30,283, as compared to 2019.

Net cash used in investing activities increased during 2020 by $59,505, as compared to 2019.

The increase was primarily due to purchases of investment partnership interests in the amount of $70,130 during 2020.

The increase was primarily attributable to distributions from investment partnerships of $180,170 for 2021 and $98,330 for 2020.

The distributions during 2021 were primarily used to repay Steak n Shake’s term loan.

Net cash used in investing activities decreased during 2021 by $70,962, as compared to 2020.

The decrease was primarily due to the acquisition of Southern Pioneer and purchases of limited partner interests during 2020.

Net cash used in financing activities increased by $127,048 in 2021, as compared to 2020.

The increase was primarily due to voluntary prepayments of Steak n Shake term debt during 2020.

We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated from operations and cash on hand.

The increase was primarily due to the repayment of Steak n Shake’s outstanding balance of its term debt during 2021.

We intend to meet the working capital needs of our operating subsidiaries, principally through cash flows generated from operations and cash on hand.

We continually review available financing alternatives.

Steak n Shake Credit Facility

On March 19, 2014, Steak n Shake and its subsidiaries entered into a credit agreement which provided for a senior secured term loan facility in an aggregate principal amount of $220,000.

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 was scheduled to mature on March 19, 2021.

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A discussion of our principal accounting policies that required the application of significant judgments as of December 31, 2021, follows.

Management’s Discussion and Analysis (continued)

Consolidation

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and the wholly owned subsidiaries of Biglari Holdings Inc.

We consolidate limited partnership entities if we are the general partner of such entities and for which no substantive removal rights exist.

The analysis as to whether to consolidate an entity is subject to a significant amount of judgment.

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We test for impairment by comparing the carrying value of the asset to the undiscounted future cash flows expected to be generated by the asset.

If the total estimated future cash flows are less than the carrying amount of the asset, the carrying value

Management’s Discussion and Analysis (continued)

is written down to the estimated fair value, and a loss is recognized in earnings.

The future cash flows expected to be generated by an asset requires significant judgment regarding future performance of the asset, fair market value if the asset were to be sold, and other financial and economic assumptions.

If the total estimated future cash flows are less than the carrying amount of the asset, the carrying value is written down to the estimated fair value, and a loss is recognized in earnings.

Determining the future cash flows expected to be generated by an asset requires significant judgment regarding future performance of the asset, fair market value if the asset were to be sold, and other financial and economic assumptions.

Oil and Natural Gas Reserves

The estimation of proved reserves, which is based on the requirement of reasonable certainty, is an ongoing process based on rigorous technical evaluations, commercial and market assessments and detailed analysis of well and reservoir information such as flow rates and reservoir pressures.

Although we are reasonably confident that proved reserves will be produced, the timing and amount recovered can be affected by a number of factors including, reservoir performance, government policies, and significant changes in long-term oil and natural gas price levels.

In addition, proved reserves could be affected by an extended period of low prices which could reduce the level of our partners’ capacity to fund their share of joint projects.

Accordingly, reserve estimates are generally different from the quantities of natural gas and oil that are ultimately recovered.

We cannot predict the amounts or timing of future reserve revisions.

Crude oil and natural gas reserves are estimates of future production that impact certain asset and expense accounts.

Proved reserves are the estimated quantities of oil and gas that geoscience and engineering data demonstrate with reasonable certainty to be economically producible in the future under existing economic conditions, operating methods and government regulations.

Proved reserves include both developed and undeveloped volumes.

Proved developed reserves represent volumes expected to be recovered through existing wells with existing equipment and operating methods.

Proved undeveloped reserves are volumes expected to be recovered from new wells on undrilled proved acreage, or from existing wells where expenditure is required for recompletion.

We estimate our proved oil and natural gas reserves in accordance with the guidelines established by the SEC.

Due to the inherent uncertainties and the limited nature of reservoir data, estimates of reserves are subject to change as additional information becomes available.

We record deferred tax assets or liabilities based on differences between financial reporting and the tax basis of assets and liabilities using currently enacted rates and laws that will be in effect when the differences are expected to reverse.

We record deferred tax assets to the extent we believe there will be sufficient future taxable income to utilize those assets prior to their expiration.

To the extent deferred tax assets would be unable to be utilized;

we would record a valuation allowance against the unrealizable amount and record that amount as a charge against earnings.

Due to changing tax laws and state income tax rates, significant judgment is required to estimate the effective tax rate expected to apply to tax differences that are expected to reverse in the future.

To the extent deferred tax assets are unable to be utilized, we would record a valuation allowance against the unrealizable amount and record that amount as a charge against earnings.

Due to changing tax laws and state income tax rates, significant judgment is required to estimate the effective tax rate applicable to tax differences arising from reversal in the future.

We must also make estimates about the sufficiency of taxable income in future periods to offset any deductions related to deferred tax assets currently recorded.

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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.

The valuation methodology and underlying financial information included in our determination of fair value require significant managerial judgment.

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.

The methods behind 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.

We determine whether a contract is or contains a lease at contract inception based on the presence of identified assets and our right to obtain substantially all of the economic benefit from, or to direct the use of, such assets.

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Lease liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term.

As the discount rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

As the discount rate

Management’s Discussion and Analysis (continued)

implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

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For finance leases, we recognize amortization expense on the right-of-use asset and interest expense on the lease liability over the lease term.

Management’s Discussion and Analysis (continued)

Contractual Obligations

Our significant contractual obligations and commitments as of December 31, 2020 are shown in the following table.

Payments due by period

Contractual Obligations Less than

1 year 1 – 3 years 3 – 5 years More than

5 years Total

Short-term debt (1) $ 153,512 $ — $ — $ — $ 153,512

Finance obligations and finance lease liabilities (2) 12,642 20,728 14,034 9,582 56,986

Operating leases (3) 13,521 20,553 13,548 9,447 57,069

Purchase commitments (4) 7,044 1,755 — — 8,799

Other long-term liabilities (5) — — — 1,368 1,368

Total $ 186,719 $ 43,036 $ 27,582 $ 20,397 $ 277,734

________________

(1) Steak n Shake's term debt was paid in full on February 19, 2021.

(2) Includes principal and interest.

(3) Excludes amounts to be paid for contingent rents.

Includes amounts to be paid for subleased properties.

(4) Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms.

Excludes agreements that are cancelable without penalty.

(5) Includes liabilities for Non-Qualified Deferred Compensation Plan.

Excludes our unrecognized tax benefits of $204 as of December 31, 2020 because we cannot make a reliable estimate of the timing of cash payments.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Recently Issued Accounting Pronouncements

For detailed information regarding recently issued accounting pronouncements and the expected impact on our consolidated financial statements, see Note 1, “Summary of Significant Accounting Policies” in the accompanying notes to consolidated financial statements included in Part II, Item 8 of this report on Form 10-K.

Cautionary Note Regarding Forward-Looking Statements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis