What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-02-28 · 124 added, 75 removed, 253 unchanged (44% of the section changed)

5 unchanged sentences

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.

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

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

2 unchanged sentences

Biglari beneficially owns shares of the Company that represent approximately 66.3% of the economic interest and approximately 70.4% of the voting interest.

Overview of the Impact of COVID-19

The novel coronavirus (“COVID-19”), declared a pandemic by the World Health Organization in March 2020, caused governments to impose restrictive measures to contain its spread.

Those shutdowns significantly affected our operating businesses to varying degrees.

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 Acquisition

Business Acquisitions

On September 14, 2022, the Company purchased 685,505 shares of Series A Preferred Stock (the “Preferred Shares”) of Abraxas Petroleum Corporation (“Abraxas Petroleum”) for a purchase price of $80,000.

On October 26, 2022, the Company converted the Preferred Shares to 90% of the outstanding common stock of Abraxas Petroleum.

The Company used working capital including its line of credit to fund the purchase of the Preferred Shares.

Abraxas Petroleum operates oil and natural gas properties in the Permian Basin.

The preliminary purchase price allocation includes $70,200 of oil and gas properties, cash of $21,726, and liabilities, net of other assets, of $11,926.

The Company’s financial results include the results of Abraxas Petroleum from the acquisition date to the end of the calendar year.

The revenues and operating results for Abraxas Petroleum were not significant to the Company.

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.

3 unchanged sentences

Discussion of Operations

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

Amounts are recorded after deducting income taxes.

Net earnings attributable to Biglari Holdings Inc.

shareholders are disaggregated in the table that follows.

2022 2021 2020

7 unchanged sentences

Total operating businesses 27,338 21,747 (8,360)

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

Investment gains 4,832 2,877 —

$ 35,478 $ (37,989) $ 45,380

Investment partnership gains (losses) (56,961) 8,899 (32,506)

Investment gains (losses) (2,682) 4,832 2,877

Net earnings (loss) (32,305) 35,478 (37,989)

Earnings (loss) attributable to noncontrolling interest (287) — —

Net earnings (loss) attributable to Biglari Holdings Inc.

shareholders $ (32,018) $ 35,478 $ (37,989)

The following discussion should be read in conjunction with Item 1, Business and our Consolidated Financial Statements and the notes thereto included in this Form 10-K.

The following discussion should also be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and the risks and uncertainties described in Item 1A, Risk Factors, set forth above.

Our Management Discussion and Analysis generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 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 Management Discussion and Analysis generally discusses 2022 and 2021 items.

Discussions of 2020 items 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, 2021, filed with the SEC on February 28, 2022.

Investment gains and losses in 2022 and 2021 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period.

We believe that investment and derivative gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly and annual results.

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

Through our subsidiaries, we engage in numerous diverse business activities.

We operate on a decentralized management structure.

The business segment data (Note 17 to the accompanying Consolidated Financial Statements) should be read in conjunction with this discussion.

Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 545 company-operated and franchise restaurants as of December 31, 2022.

4 unchanged sentences

operated Franchise Total

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

Stores open on December 31, 2019 368 29 213 4 48 662

Corporate stores transitioned (58) 57 1 — — —

8 unchanged sentences

As of December 31, 2022, 39 of the 177 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.

15 unchanged sentences

Marketing 13,921 5.8 % 13,923 5.1 % 21,507 6.1 %

Other expenses 3,323 1.2 % 2,972 0.8 % 1,753 0.3 %

Other expenses (income) (2,294) (0.9) % 3,323 1.2 % 2,972 0.8 %

Total selling, general and administrative 51,833 21.5 % 57,186 21.1 % 60,401 17.2 %

4 unchanged sentences

Income tax expense (benefit) 3,579 3,220 (391)

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

Contribution to net earnings $ 9,383 $ 11,235 $ (4,961)

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.

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

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

The majority of Steak n Shake’s dining rooms 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.

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

Net sales during 2022 were $149,184 as compared to $187,913 during 2021.

3 unchanged sentences

Management’s Discussion and Analysis (continued)

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

To better convey the underlying economics of the franchise partnership model, the table below shows the average unit sales, the cost of food, and the labor costs of franchise partners.

The average was based on 137 comparable franchise partner units, out of a total of 175.

To be included as a comparable franchise partner unit, a unit had to be operated by a franchise partner for all of 2022, and had to be open in 2021 as either a company-operated or a franchise partner unit.

Net sales $ 1,819 $ 1,595

Cost of food 502 27.6 % 448 28.1 %

Labor costs 500 27.5 % 435 27.3 %

Our franchise partner fees were $63,853 during 2022 as compared to $55,641 during 2021.

As of December 31, 2022, there were 175 franchise partner units as compared to 159 franchise partner units as of December 31, 2021.

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

Included in franchise partner fees were $20,426 and $15,483 of rental income during 2022 and 2021, respectively.

Franchise partners rent buildings and equipment from Steak n Shake.

The franchise royalties and fees generated by the traditional franchising business were $19,678 during 2022 as compared to $21,736 during 2021.

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 franchise royalties and fees was primarily due to the closing of certain traditional franchise stores.

There were 190 traditional units open on December 31, 2022, as compared to 216 units open on December 31, 2021.

Other revenue in 2022 was $8,853 as compared to $6,000 in 2021.

The increase was primarily a result of gift card breakage, as our restaurants have seen fewer gift card redemptions since the onset of the pandemic.

The cost of food at company-operated units in 2022 was $44,461, or 29.8% of net sales as compared to $55,315, or 29.4% of net sales in 2021.

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 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 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.

The cost of food expressed as a percentage of net sales remained consistent with 2021.

The operating costs at company-operated restaurants during 2022 were $79,921, or 53.6% of net sales as compared to $92,543, or 49.2% of net sales in 2021.

As we transition to franchise partner units, the remaining company-operated units generate lower average unit volumes and correspondingly higher operating costs (including higher wages) as a percentage of net sales.

Selling, general and administrative expenses during 2022 were $51,833, or 21.5% of total revenue as compared to $57,186, or 21.1% of total revenue during 2021.

Selling, general and administrative expenses decreased during 2022 as compared to 2021 primarily because of lower professional costs.

Asset impairments decreased $1,115 during 2022 as compared to 2021.

Higher asset impairments were recorded in 2021 primarily because a large number of underperforming stores were affected by the pandemic.

Depreciation and amortization expense increased $6,012 during 2022 as compared to 2021.

The year-over-year increase is primarily attributable to higher capital expenditures in 2021.

Interest on obligations under leases was $5,493 during 2022 versus $6,039 during 2021.

5 unchanged sentences

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

Management’s Discussion and Analysis (continued)

Underwriting results of our insurance operations are summarized below.

2022 2021 2020

Underwriting gain attributable to:

Underwriting gain (loss) attributable to:

First Guard $ 6,578 $ 10,573 $ 9,379

3 unchanged sentences

Net underwriting gain $ 4,188 $ 9,730 $ 7,899

Management’s Discussion and Analysis (continued)

Earnings of our insurance operations are summarized below.

6 unchanged sentences

Investment income 1,380 704 1,212

Other income (expense) 1,414 1,220 (164)

Other income 3,223 1,414 1,220

Total other income 4,603 2,118 2,432

3 unchanged sentences

Insurance premiums and other on the consolidated statement of earnings includes premiums earned, investment income, other income, and commissions.

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

Commissions are in other income in the above table.

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

9 unchanged sentences

Pre-tax underwriting gain $ 6,578 $ 10,573 $ 9,379

First Guard’s ratio of losses and loss adjustment expenses to premiums earned was 62.1% during 2022 as compared to 48.7% during 2021.

First Guard’s underwriting results in 2022 were in line with its historical performance despite cost inflation in property and physical damage claims, which began to accelerate in 2022.

However, 2021 was an abnormally favorable year with low claim frequency despite a return to pre-pandemic traffic patterns.

Management’s Discussion and Analysis (continued)

Southern Pioneer

2 unchanged sentences

A summary of Southern Pioneer’s underwriting results follows.

Amount % Amount %

2022 2021 2020

Amount % Amount % Amount %

Premiums earned $ 24,035 100.0 % $ 21,890 100.0 % $ 19,010 100.0 %

2 unchanged sentences

Total losses and expenses 25,312 105.3 % 20,146 92.1 % 18,390 96.7 %

Pre-tax underwriting gain $ 1,744 $ 620

Management’s Discussion and Analysis (continued)

Pre-tax underwriting gain (loss) $ (1,277) $ 1,744 $ 620

Southern Pioneer’s ratio of losses and loss adjustment expenses to premiums earned was 61.9% during 2022 as compared to 51.7% during 2021.

Southern Pioneer’s 2022 performance was primarily attributable to higher claim frequency and severity (mainly related to adverse weather) in several niche lines.

Insurance – Investment Income

9 unchanged sentences

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

Management’s Discussion and Analysis (continued)

Biglari Holdings’ oil and gas operations consist of Southern Oil and Abraxas Petroleum.

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

Southern Oil was acquired on September 9, 2019.

Earnings for Southern Oil are summarized below.

7 unchanged sentences

Contribution to net earnings $ 18,593 $ 7,528 $ 1,890

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.

Our oil and gas business is highly dependent on oil and natural gas prices.

Demand for petroleum grew in 2022, with our financial results benefiting from stronger prices and margins.

The average West Texas Intermediate price per barrel for the year ended December 31, 2022, was approximately $94.53 as compared to approximately $68.17 for the year ended December 31, 2021.

It is expected that the prices of oil and gas commodities will remain volatile, which will be reflected in our financial results.

Depreciation, depletion, and accretion expense during 2022 decreased $2,570 as compared to 2021, primarily due to temporarily shutting in producing wells.

Abraxas Petroleum

Abraxas Petroleum operates oil and natural gas properties in the Permian Basin.

Earnings for Abraxas Petroleum from the date of acquisition, September 14, 2022, are summarized below.

Oil and gas revenue $ 11,455

Oil and gas production costs 4,487

Depreciation, depletion, and accretion 2,510

General and administrative expenses 3,806

Earnings before income taxes 652

Income tax expense 154

Contribution to net earnings $ 498

Management’s Discussion and Analysis (continued)

Brand Licensing

8 unchanged sentences

Contribution to net earnings $ 1,313 $ 2,364 $ 1,374

Management’s Discussion and Analysis (continued)

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

1 unchanged sentence

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 losses were $3,393 ($2,682 net of tax) in 2022 as compared to investment gains of $6,401 ($4,832 net of tax) in 2021.

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

7 unchanged sentences

Contribution to net earnings $ (56,961) $ 8,899 $ (32,506)

Investment partnership gains include gains/losses from changes in market values of underlying investments and dividends earned by the partnerships.

Investment partnership gains include gains/losses from changes in the market values of underlying investments and dividends earned by the partnerships.

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

3 unchanged sentences

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

Investment gains and losses in 2022 and 2021 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period.

We believe that investment and derivative gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly or annual results.

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

Management’s Discussion and Analysis (continued)

Interest Expense

4 unchanged sentences

Interest expense net of tax $ (305) $ (841) $ (6,940)

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.

The Company paid Steak n Shake’s outstanding credit facility in full in February 2021.

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000.

The balance on the line of credit was $10,000 on December 31, 2022.

The consolidated income tax benefit was $10,722 in 2022 versus an expense of $6,789 in 2021.

The change in income tax expense was primarily due to a tax benefit of $18,992 for investment partnership losses in 2022.

Corporate and Other

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.

Corporate and other net losses for 2022 remained consistent with the preceding year.

Financial Condition

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)

Our consolidated shareholders’ equity on December 31, 2022, was $546,966, a decrease of $40,730 as compared to the December 31, 2021 balance.

The decrease in shareholders’ equity was primarily due to a net loss of $32,018 and an increase in treasury stock of $7,829.

Consolidated cash and investments are summarized below.

11 unchanged sentences

Net cash used in investing activities (136,605) (58,525) (129,487)

Net cash used in financing activities (156,157) (29,109) (8,010)

Net cash provided by (used in) financing activities 3,860 (156,157) (29,109)

Effect of exchange rate changes on cash 38 (64) 10

Increase (decrease) in cash, cash equivalents, and restricted cash $ (4,882) $ 14,021 $ (41,030)

In 2021, cash from operating activities increased by $111,211, as compared to 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 the repayment of Steak n Shake’s outstanding balance of its term debt during 2021.

Management’s Discussion and Analysis (continued)

In 2022, cash from operating activities decreased by $100,942 as compared to 2021.

The change was primarily attributable to a decrease in distributions from investment partnerships from $180,170 in 2021 to $70,700 in 2022.

The distributions during 2022 were primarily used to acquire Abraxas Petroleum, and the distributions during 2021 were primarily used to repay Steak n Shake’s term loan.

Net cash used in investing activities increased during 2022 by $78,080 as compared to 2021.

The change was primarily due to the acquisition of Abraxas Petroleum of $58,274, net of cash acquired, as well as purchases of limited partner interests of $48,570 during 2022.

Cash provided by financing activities of $3,860 during 2022 was primarily because of the $10,000 draw on the Company’s line of credit.

Cash used in financing activities of $156,157 during 2021 was primarily attributable to the repayment of Steak n Shake’s outstanding balance of its term debt.

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.

Biglari Holdings Line of Credit

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000.

The line of credit will be available on a revolving basis until September 12, 2024.

The line of credit includes customary covenants, as well as financial maintenance covenants.

As of December 31, 2022, we were in compliance with all covenants.

The balance of the line of credit on December 31, 2022, was $10,000.

Our interest rate was 6.53% on December 31, 2022, which is based on the 30-day Secured Overnight Financing Rate plus 2.728%.

Steak n Shake Credit Facility

1 unchanged sentence

The term loan was scheduled to mature on March 19, 2021.

As of December 31, 2020, $152,506 was outstanding.

The Company repaid Steak n Shake’s outstanding balance in full on February 19, 2021.

Western Sizzlin Revolver

Western Sizzlin’s available line of credit is $500.

As of December 31, 2022 and 2021, Western Sizzlin had no debt outstanding under its revolver.

4 unchanged sentences

A discussion of our principal accounting policies that required the application of significant judgments as of December 31, 2022, follows.

Management’s Discussion and Analysis (continued)

Consolidation

4 unchanged sentences

Our interests in the investment partnerships are accounted for as equity method investments because of our retained limited partner interest in the investment partnerships.

The Company records gains from investment partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated statement of earnings based on our proportional ownership interest in the investment partnerships.

The Company records gains from the investment partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated statement of earnings based on our proportional ownership interest in the investment partnerships.

Impairment of Restaurant Long-lived Assets

4 unchanged sentences

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.

Management’s Discussion and Analysis (continued)

Oil and Natural Gas Reserves

6 unchanged sentences

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 or liabilities, which are based on differences between financial reporting and the tax basis of assets and liabilities and are measured using the 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.

6 unchanged sentences

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 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.

Based on a review of the qualitative factors, if we determine it is not more likely than not that the fair value is less than the carrying value, we may bypass the quantitative impairment test.

We may also elect not to perform the qualitative assessment for the reporting unit or intangible assets and perform a quantitative impairment test instead.

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.

2 unchanged sentences

Lease liabilities represent our obligation to make lease payments arising from the lease.

Right-of-use assets are recognized at commencement date at the value of the lease liability and are adjusted for any prepayments, lease incentives received, and initial direct costs incurred.

Right-of-use assets are recognized at the commencement date at the value of the lease liability and are adjusted for any prepayments, lease incentives received, and initial direct costs incurred.

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

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.

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 the 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.

11 unchanged sentences

We undertake no obligation to publicly update or revise them, except as may be required by law.

Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

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