What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-27 · 137 added, 122 removed, 932 unchanged (22% of the section changed)

41 unchanged sentences

• With the assistance of our fair value specialists, for the properties where management applied a market analysis, we evaluated the reasonableness of the valuation methodology and used comparable current market data to develop a range of independent estimates and compare our estimates to those used by management.

• We evaluated the discount rates used by management in the performance of discounted cash flow analyses by testing management’s calculation, performing sensitivity analyses, comparing components to external market information as applicable, and assessed the mathematical accuracy of the Company’s calculations of potential impairment.

• We evaluated the discount rates used by management in the performance of discounted cash flow analyses by testing management’s calculation, performing sensitivity analyses, and assessed the mathematical accuracy of the Company’s calculations of potential impairment.

/s/ DELOITTE & TOUCHE LLP

8 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 25, 2023, expressed an unqualified opinion on those financial statements and included an emphasis of a matter paragraph relating to the Company’s investment in related party investment partnerships.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Abraxas Petroleum, which was acquired on September 14, 2022, and whose financial statements constitute approximately 9.8% of total assets, 3.1% of revenues, and 2.5% of net earnings of the consolidated financial statement amounts as of and for the year ended December 31, 2022.

Accordingly, our audit did not include the internal control over financial reporting at Abraxas Petroleum.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 24, 2024, expressed an unqualified opinion on those financial statements and included an emphasis of matter paragraph relating to the Company’s investment in related party investment partnerships.

Basis for Opinion

40 unchanged sentences

Current portion of lease obligations 14,855 16,981

Current portion of line of credit 10,000 —

Line of credit — 10,000

Total current liabilities 111,100 134,897

25 unchanged sentences

Licensing and media 2,118 4,577 3,203

368,231 366,106 433,683

Total revenue 365,318 368,231 366,106

Cost and expenses

4 unchanged sentences

Selling, general and administrative 77,002 70,608 76,018

Gain on sale of oil and gas properties ( 13,563 ) — —

Impairments 3,947 3,520 4,635

2 unchanged sentences

Interest expense on debt 681 399 1,121

331,912 341,193 444,496

Total cost and expenses 322,122 331,912 341,193

Other income (expenses)

11 unchanged sentences

See accompanying Notes to Consolidated Financial Statements.

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

4 unchanged sentences

Foreign currency translation 272 ( 883 ) ( 376 )

Comprehensive income (loss) ( 33,188 ) 35,102 ( 36,710 )

Comprehensive income (loss) attributable to noncontrolling interest ( 287 ) — —

Total comprehensive income (loss) attributable to Biglari Holdings Inc.

Comprehensive income 55,811 ( 33,188 ) 35,102

Comprehensive income attributable to noncontrolling interest 591 ( 287 ) —

Total comprehensive income attributable to Biglari Holdings Inc.

shareholders $ 55,220 $ ( 32,901 ) $ 35,102

10 unchanged sentences

Provision for deferred income taxes 6,567 ( 15,582 ) 5,269

Asset impairments and other non-cash expenses 3,520 4,772 24,636

Losses on disposal of assets ( 1,578 ) ( 25 ) ( 868 )

Asset impairments 3,947 3,520 4,772

Gains on sale of assets ( 21,241 ) ( 1,578 ) ( 25 )

Investment (gains) losses ( 2,211 ) 3,393 ( 6,214 )

9 unchanged sentences

Acquisition of business, net of cash acquired — ( 58,274 ) —

Purchases of limited partner interests ( 48,569 ) ( 12,300 ) ( 70,130 )

Purchases of noncontrolling interests ( 5,387 ) — —

Purchases of interests in limited partnerships ( 45,030 ) ( 48,569 ) ( 12,300 )

Purchases of investments ( 107,866 ) ( 134,451 ) ( 110,199 )

30 unchanged sentences

Other comprehensive income, net ( 376 ) ( 376 )

Adjustment to treasury stock for holdings in investment partnerships ( 14,760 ) ( 14,760 )

Adjustment for holdings in investment partnerships ( 12,234 ) ( 12,234 )

Balance at December 31, 2021 $ 1,138 $ 381,788 $ 608,528 $ ( 1,907 ) $ ( 401,851 ) $ — $ 587,696

Net earnings 35,478 35,478

Net earnings (loss) ( 32,018 ) ( 287 ) ( 32,305 )

Other comprehensive income, net ( 883 ) ( 883 )

Adjustment to treasury stock for holdings in investment partnerships ( 12,234 ) ( 12,234 )

Adjustment for holdings in investment partnerships ( 7,829 ) ( 7,829 )

Transactions with noncontrolling interests 8,889 8,889

Balance at December 31, 2022 $ 1,138 $ 381,788 $ 576,510 $ ( 2,790 ) $ ( 409,680 ) $ 8,602 $ 555,568

1 unchanged sentence

Other comprehensive income, net 272 272

Adjustment to treasury stock for holdings in investment partnerships ( 7,829 ) ( 7,829 )

Transactions with noncontrolling interest 8,889 8,889

Adjustment for holdings in investment partnerships ( 6,662 ) ( 6,662 )

Purchases of noncontrolling interests 3,806 ( 9,193 ) ( 5,387 )

Balance at December 31, 2023 $ 1,138 $ 385,594 $ 631,458 $ ( 2,518 ) $ ( 416,342 ) $ — $ 599,330

3 unchanged sentences

(Years Ended December 31, 2023, 2022, and 2021)

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

(dollars in thousands, except per-share data)

Summary of Significant Accounting Policies

12 unchanged sentences

Intercompany accounts and transactions have been eliminated in consolidation.

Change in Presentation

Loss and loss adjustment expenses of $ 1,508 were reclassified to accounts payable and accrued expenses as of December 31, 2021 to conform to current year presentation.

Cash, Cash Equivalents, and Restricted Cash

19 unchanged sentences

The investment partnerships are, for purposes of generally accepted accounting principles (“GAAP”), investment companies under the AICPA Audit and Accounting Guide Investment Companies.

Summary of Significant Accounting Policies (continued)

Concentration of Equity Price Risk

2 unchanged sentences

We concentrate a high percentage of the investments in a small number of equity securities.

Table of Conten t s

Summary of Significant Accounting Policies (continued)

A significant decline in the general stock market or in the prices of our major investments may have a materially adverse effect on our earnings and on consolidated shareholders’ equity.

31 unchanged sentences

We perform reviews for impairment of intangible assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

An impairment loss is recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value.

An impairment loss is recognized when

Summary of Significant Accounting Policies (continued)

estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value.

When an impairment is identified, we reduce the carrying value of the asset to its estimated fair value.

During 2022 and 2021, no impairments were recorded to goodwill and other intangible assets.

During 2020, we recorded an impairment to goodwill of $ 300 and an impairment to indefinite life intangible assets of $ 3,728 .

During 2023, 2022 and 2021, no impairments were recorded to goodwill.

During 2023, we recorded impairments to indefinite life intangible assets of $ 20 .

During 2022 and 2021, no impairments were recorded to other intangible assets.

Refer to Note 8 for information regarding our goodwill and other intangible assets.

Table of Conten t s

Summary of Significant Accounting Policies (continued)

Dual Class Common Stock

28 unchanged sentences

$ 250,857 $ 241,568 $ 271,290

Table of Conten t s

Summary of Significant Accounting Policies (continued)

38 unchanged sentences

Payment is due within 30 days of delivery.

Table of Conten t s

Summary of Significant Accounting Policies (continued)

31 unchanged sentences

Actual results could differ from the estimates.

New Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance to improve reportable segment disclosure requirements.

The new guidance requires that public entities disclose additional information related to significant segment expenses regularly provided to the chief operating decision maker and other segment items.

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We are evaluating the impact of the new guidance on our disclosures.

In December 2023, the FASB issued authoritative guidance modifying the disclosure requirements for income tax.

Notable changes in the new guidance include disaggregation of income tax information by jurisdiction and changes to the presentation of information for the reconciliation of effective tax rates.

The guidance is effective for fiscal years beginning after December 15, 2024.

We are evaluating the impact of the new guidance on our disclosures.

Business Acquisitions

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

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

We have concluded that Abraxas Petroleum is a consolidated entity and have recorded noncontrolling interests attributable to the interest held by other shareholders.

On September 14, 2022, the Company purchased Preferred Shares of Abraxas Petroleum for $ 80,000 .

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

On June 14, 2023, the remaining 10 % of the outstanding common stock of Abraxas Petroleum was acquired for $ 5,387 .

We have concluded that Abraxas Petroleum is a consolidated entity and recorded noncontrolling interests attributable to the interest held by other shareholders.

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

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

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

The purchase price allocation is provisional and subject to revision as the related valuations are completed.

The Company’s financial results include the results of Abraxas Petroleum from the acquisition date.

The purchase price allocation is as follows.

September 14, 2022

7 unchanged sentences

Total liabilities assumed ( 14,755 )

Minority interest ( 8,889 )

Noncontrolling interest ( 8,889 )

Total consideration $ 80,000

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 garage liability insurance and commercial property coverage, homeowners and dwelling fire insurance coverage, among other lines.

The financial results for Southern Pioneer are included from the date of acquisition.

Pro-forma financial information of Southern Pioneer is not material.

Investments were $ 91,879 and $ 69,466 as of December 31, 2023 and 2022, respectively.

We classify investments in fixed maturity securities at the acquisition date as either available-for-sale or held-to-maturity and re-evaluate the classification at each balance sheet date.

Securities classified as held-to-maturity are carried at amortized cost, reflecting the ability and intent to hold the securities to maturity.

We classify investments in fixed maturity securities at the acquisition date as available-for-sale.

Realized gains and losses on disposals of investments are determined on a specific identification basis.

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

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

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 gains in 2023 were $ 2,211 .

Investment losses in 2022 were $ 3,393 .

Investment gains in 2021 were $ 6,401 , which includes a $ 5,047 gain on the sale of real estate.

The Company purchased 26 acres of land in Murfreesboro, Tennessee, in 2014 for $ 2,145 and sold it in the third quarter of 2021.

Investment gains were $ 3,644 in 2020.

Investment gains were $ 6,401 in 2021, which includes a $ 5,047 gain on the sale of real estate.

Investment Partnerships

5 unchanged sentences

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

Biglari Capital Corp.

is the general partner of the investment partnerships.

Biglari Capital Corp.

is solely owned by Mr.

Investment Partnerships (continued)

11 unchanged sentences

Investment partnership gains (losses) 59,238 39,797 19,441

Distributions (net of contributions) ( 10,823 ) ( 10,823 )

Contributions (net of distributions) 30,530 30,530

Increase in proportionate share of Company stock held 6,662 ( 6,662 )

4 unchanged sentences

Carrying value of investment partnerships net of deferred taxes $ 171,207 $ 132,151

The Company’s proportionate share of Company stock held by the investment partnerships at cost was $ 409,680 and $ 401,851 at December 31, 2022 and 2021, respectively, and was recorded as treasury stock.

Because of a transaction that occurred between The Lion Fund, L.P., and The Lion Fund II, L.P., in 2022, we expect that a majority of the $ 27,896 deferred tax liability enumerated above will not become due until the dissolution of the investment partnerships.

In effect, the tax-basis cost increased for the common stock of certain unaffiliated securities held by the investment partnerships.

The Company’s proportionate share of Company stock held by the investment partnerships at cost was $ 416,342 and $ 409,680 at December 31, 2023 and 2022, respectively.

The carrying value of the partnership interest approximates fair value adjusted by the value of held Company stock.

6 unchanged sentences

Contribution to net earnings $ 14,646 $ ( 56,961 ) $ 8,899

Investment Partnerships (continued)

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.

An incentive reallocation from Biglari Holdings to Biglari Capital would include gains on the Company’s common stock.

Gains and losses on the Company’s common stock and the related incentive reallocations are eliminated in our financial statements.

There were no incentive reallocations from Biglari Holdings to Biglari Capital during 2022 and 2021.

There were $ 987 of incentive reallocations from Biglari Holdings to Biglari Capital during 2020, including $ 253 associated with gains on the Company’s common stock.

Investment Partnerships (continued)

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

There were no incentive reallocations from Biglari Holdings to Biglari Capital during 2023, 2022, or 2021.

Summarized financial information for The Lion Fund, L.P.

and The Lion Fund II, L.P., is presented below.

Equity in Investment Partnerships

19 unchanged sentences

Deferred commissions on gift cards sold by third parties $ 1,019 $ 1,454

Asset held for sale 4,700 —

Assets held for sale 773 4,700

Prepaid contractual obligations 5,593 4,341

Other current assets $ 7,385 $ 10,495

The asset held for sale is Abraxas Petroleum’s office building in San Antonio, Texas.

The assets classified as held for sale at December 31, 2023, include properties owned by Steak n Shake, which were previously company-operated restaurants.

The asset held for sale at December 31, 2022, is Abraxas Petroleum’s office building in San Antonio, Texas.

Abraxas Petroleum sold its office building for $ 4,719 with no gain or loss recorded.

Property and Equipment

13 unchanged sentences

Depletion and accretion expense are included in depreciation, depletion, and amortization expense within the consolidated statement of earnings.

Accumulated depreciation, depletion, and accretion on oil and gas properties was $ 44,716 and $ 35,072 as of December 31, 2023 and 2022, respectively.

The Company recorded impairments to restaurant long-lived assets of $ 3,947 , $ 3,520 , and $ 4,635 during 2023, 2022, and 2021, respectively.

The fair value of the long-lived assets was determined based on Level 3 inputs using a discounted cash flow model and quoted prices for the properties.

During 2023, Abraxas Petroleum entered into a royalty-based arrangement with an unaffiliated party to conduct development activities that will establish proved undeveloped reserves on its proportional share;

however, Abraxas Petroleum will not be required to fund any exploration expenditures on its undeveloped properties.

As a result of the transaction, a gain of $ 13,563 was recorded in 2023.

Also during 2023, Steak n Shake recognized a net gain of $ 7,918 in connection with property sales, lease terminations, and asset disposals.

The property and equipment cost related to finance obligations as of December 31, 2023, is as follows:

11 unchanged sentences

No goodwill was recorded with the acquisition of Southern Oil or Abraxas Petroleum.

Goodwill and Other Intangible Assets (continued)

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

9 unchanged sentences

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.

Goodwill and indefinite-lived intangible asset impairment evaluations include determining the estimated fair values of our reporting units and indefinite-lived intangible assets.

The key assumptions and inputs used in such determinations may include forecasting revenue and expenses, cash flows, and capital expenditures, as well as an appropriate discount rate and other inputs.

Significant judgment by management is required in estimating the fair value of a reporting unit and in performing impairment reviews.

Due to the inherent subjectivity and uncertainty in forecasting future cash flows and earnings over long periods of time, actual results may differ materially from the forecasts.

If the carrying value of the indefinite-lived intangible asset exceeds fair value, the excess is charged to earnings as an impairment loss.

If the carrying value of a reporting unit exceeds the estimated fair value of the reporting unit, then the excess, limited to the carrying amount of goodwill, will be charged to earnings as an impairment loss.

GAAP allows entities testing for impairment the option of performing a qualitative assessment before calculating the fair value of a reporting unit for the goodwill impairment test.

1 unchanged sentence

No indicators of impairment were noted.

If a quantitative test were to be utilized for our reporting units, it would estimate the fair value of each reporting unit and compare it to its carrying value.

To the extent the fair value was in excess of the carrying value, no impairment would be recognized.

Otherwise, an impairment loss would be recognized for the amount that the carrying value of our reporting units, including goodwill, exceeded its fair value.

In performing the quantitative test of goodwill, fair value would be determined based on a calculation that gives consideration to an income approach utilizing the discounted cash flow method and to a market approach using the market comparable and market transaction methods.

No impairment was recorded for our reporting units in 2022 and 2021.

The fair value of certain of Steak n Shake’s reporting units declined in 2020, and an impairment to goodwill of $ 300 was recorded in 2020.

An impairment of Western Sizzlin’s goodwill may be necessary if a significant decline in its franchise units occurs.

No impairment was recorded for our reporting units in 2023 or 2022.

Other Intangible Assets

7 unchanged sentences

Balance as of December 31, 2022 $ 15,876 $ 7,161 $ 23,037

Impairment — ( 20 ) ( 20 )

Change in foreign exchange rates during 2023 — 213 213

1 unchanged sentence

Intangible assets with indefinite lives consist of trade names and lease rights.

During 2023, $ 20 of impairment was recorded.

No impairment was recorded in 2022 or 2021.

During 2020, the Company recorded impairment charges of $ 3,728 on lease rights to our international operations because of the adverse effects of the COVID-19 pandemic.

Accounts Payable and Accrued Expenses

3 unchanged sentences

Insurance accruals 2,565 6,012

Salaries, wages, and vacation 4,400 5,905

Compensation 12,821 4,400

Deferred revenue 5,314 4,445

Taxes payable 11,050 14,896

Professional fees 600 11,731

Oil and gas payable 3,560 3,877

3 unchanged sentences

Other liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under insurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims.

A reconciliation of the changes in claim liabilities, net of reinsurance, is as follows.

Amount of claim liabilities at the beginning of the year, net of reinsurance loss recoverable of $ 1,892 and $ 1,544 , respectively

$ 13,101 $ 12,429

A reconciliation of the changes in claim liabilities, net of reinsurance, for each of the years ended December 31, 2023 and 2022 follows.

Balances at beginning of year:

Gross liabilities $ 17,520 $ 14,993

Reinsurance recoverable on unpaid losses ( 715 ) ( 1,892 )

Net liabilities 16,805 13,101

Incurred losses and loss adjustment expenses:

Provision for insured events in the current year 37,837 29,343

Change in provision for insured events of prior years ( 652 ) ( 1,695 )

Total incurred losses and loss adjustment expenses 37,185 27,648

Losses and loss adjustment expenses attributable to insured events of the current year 27,415 21,926

Losses and loss adjustment expenses attributable to insured events of prior years 6,066 5,050

Total payments 33,481 26,976

Amount of claim liabilities at the end of each year, net of reinsurance loss recoverable of $ 715 and $ 1,892 , respectively

$ 16,805 $ 13,101

Incurred losses and loss adjustment expenses shown in the preceding table were recorded in earnings and related to insured events occurring in the current year and events occurring in all prior years.

Incurred and paid loss and loss adjustment expenses are net of reinsurance recoveries.

Current accident year 39,303 37,837

Prior accident years ( 3,634 ) ( 652 )

Total 35,669 37,185

Paid losses and loss adjustment expenses:

Current accident year 30,554 27,415

Prior accident years 6,752 6,066

Total 37,306 33,481

Balances at December 31:

Net liabilities 15,168 16,805

Reinsurance recoverable on unpaid losses 937 715

Gross liabilities $ 16,105 $ 17,520

We recorded net reductions of estimated ultimate liabilities for prior accident years of $ 3,634 in 2023 and $ 652 in 2022.

11 unchanged sentences

2022 34,356 32,137 3,399 3,876

2023 35,450 8,198 3,611

Cumulative Paid Losses and Loss Adjustment Expenses through December 31,

5 unchanged sentences

2021 19,649 22,800 24,393

2022 24,775 28,738

Paid losses and loss adjustment expenses 183,736

Incurred less paid losses and loss adjustment expenses 14,259

Unpaid loss adjustment expenses 909

Net unpaid losses and loss adjustment expenses $ 15,168

*Unaudited required supplemental information

5 unchanged sentences

The methods for making such estimates and for establishing the resulting reserves are continually reviewed, and any adjustments are reflected in operations annually.

Unpaid Losses and Loss Adjustment Expenses (continued)

First Guard’s claim liabilities predominately relate to commercial truck claims.

1 unchanged sentence

Claim liabilities include average case, case development, and IBNR estimates.

Unpaid losses and loss adjustment expenses (continued)

Southern Pioneer

15 unchanged sentences

Valuation allowance 709 614 ( 723 )

162(m) compensation limitation 1,506 — —

Foreign tax rate differences ( 97 ) ( 124 ) ( 78 )

Abraxas tax attributes ( 5,660 ) — —

Other 138 ( 332 ) ( 145 )

1 unchanged sentence

The Company did not have a net tax expense or benefit on income from international operations.

Losses before income taxes derived from domestic operations during 2022 were $ 40,624 , earnings before income taxes derived from domestic operations during 2021 were $ 43,886 , and losses before income taxes derived from domestic operations during 2020 were $ 40,989 .

Earnings before income taxes derived from domestic operations during 2023 were $ 67,736 , losses before income taxes derived from domestic operations during 2022 were $ 40,624 , and earnings before income taxes derived from domestic operations during 2021 were $ 43,886 .

Losses before income taxes derived from international operations during 2023, 2022, and 2021 were $ 2,889 , $ 2,403 , and $ 1,619 , respectively.

During 2023, the Company recognized tax benefits associated with the tax attributes of Abraxas Petroleum’s oil and gas properties.

Income Taxes (continued)

As of December 31, 2023, we had $ 348 of unrecognized tax benefits, including $ 48 of interest and penalties, which are included in other long-term liabilities in the consolidated balance sheet.

7 unchanged sentences

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

Income Taxes (continued)

Our deferred tax assets and liabilities consist of the following.

5 unchanged sentences

Valuation allowance on net operating losses ( 14,643 ) ( 6,043 )

Fixed assets and depletable assets basis difference ( 3,867 ) 588

Income tax credit carryforward — 813

Deferred income 351 830

6 unchanged sentences

Goodwill and intangibles 16,350 16,027

Fixed assets and depletable assets basis difference 3,069 3,867

Total deferred tax liabilities 47,603 43,340

Net deferred tax liability $ ( 37,939 ) $ ( 31,343 )

Accounts payable and accrued expenses include income taxes payable of $ 3,881 as of December 31, 2022.

Receivables include income taxes receivable of $ 344 as of December 31, 2021.

Line of Credit and Note Payable

Accounts payable and accrued expenses include income taxes payable of $ 980 as of December 31, 2023, and $ 3,881 as of December 31, 2022.

Lines of Credit

Biglari Holdings Line of Credit

2 unchanged sentences

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

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 .

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

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

There was no balance of the line of credit on December 31, 2023.

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

Our interest rate was 8.06 % and 6.53 % on December 31, 2023 and 2022, respectively, which is based on the 30-day Secured Overnight Financing Rate plus 2.73 %.

Western Sizzlin Revolver

27 unchanged sentences

*Includes short-term leases, variable lease costs, and sublease income.

Lease Asset and Obligations (continued)

Supplemental cash flow information related to leases is as follows.

5 unchanged sentences

Supplemental balance sheet information related to leases is as follows.

December 31, 2022 December 31, 2021

Finance leases:

Property and equipment, net $ 3,574 $ 4,352

Lease Asset and Obligations (continued)

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

21 unchanged sentences

Rent expense $ 12,785 $ 14,438 $ 15,063

Lease Asset and Obligations (continued)

The components of lease income are as follows.

3 unchanged sentences

Total lease income $ 23,692 $ 21,573 $ 16,652

Lease Asset and Obligations (continued)

The following table displays the Company’s future minimum rental receipts for non-cancelable leases and subleases as of December 31, 2023.

11 unchanged sentences

The services agreement has a rolling five-year term, with annual adjustments to the fixed fee.

The fixed fee has not been adjusted, remaining at $ 700 per month since inception.

The Company paid Biglari Enterprises $ 8,400 in service fees during 2022 and 2021.

The fixed fee increased from $ 700 per month to $ 800 per month in December 2023.

The fixed fee had not been adjusted since its inception in October 2017.

The Company paid Biglari Enterprises $ 8,500 in service fees during 2023 and $ 8,400 during 2022.

The services agreement does not alter the Company’s hurdle rate connected with the incentive reallocation paid to Biglari Capital Corp.

8 unchanged sentences

There were no incentive reallocations in 2023, 2022, or 2021.

There were $ 987 of incentive reallocations from Biglari Holdings to Biglari Capital during 2020, including $ 253 associated with gains on the Company’s common stock.

Gains on the Company’s common stock and the related incentive reallocations are eliminated in our financial statements.

Related Party Transactions (continued)

Incentive Agreement

4 unchanged sentences

Biglari will receive 25 % of any incremental book value created above the high-water mark plus the hurdle rate.

In any year in which book value declines, our operating businesses must completely recover their deficit from the previous high-water mark, and attain the hurdle rate, before Mr.

Biglari becomes eligible to receive any further incentive payment.

Biglari earned an incentive fee of $ 7,271 .

The incentive fee will be paid in 2024 and is recorded as accrued compensation within accounts payable and accrued expenses as of December 31, 2023.

No incentive fees were earned during 2022 or 2021.

21 unchanged sentences

Equity securities:

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

The Company’s investments in equity securities are classified within Level 1 of the fair value hierarchy.

The Company’s investments in bonds consist of both corporate and government debt.

Bonds are classified as Level 1 of the fair value hierarchy.

Fair Value of Financial Assets (continued)

Non-qualified deferred compensation plan investments:

1 unchanged sentence

They represent mutual funds and publicly traded securities, each of which are classified within Level 1 of the fair value hierarchy.

Derivative instruments:

Options related to equity securities are marked to market each reporting period and are classified within Level 2 of the fair value hierarchy depending on the instrument.

Fair Value of Financial Assets (continued)

As of December 31, 2023 and 2022, the fair values of financial assets were as follows.

6 unchanged sentences

Corporate 3,199 — — 3,199 2,199 — — 2,199

Options on equity securities — — — — — 2,095 — 2,095

Non-qualified deferred compensation plan investments — — — — 699 — — 699

7 unchanged sentences

The Company also reports segment information for Maxim.

Other business activities not specifically identified with reportable business segments are presented in corporate.

Other business activities not specifically identified with reportable business segments are presented under corporate and other.

We report our earnings from investment partnerships separate from our corporate expenses.

17 unchanged sentences

Oil and Gas Operations:

Southern Oil 46,091 33,004 26,255

Abraxas Petroleum 27,576 11,455 —

Southern Oil 17,495 46,091 33,004

Total Oil and Gas Operations 45,071 57,546 33,004

16 unchanged sentences

Oil and Gas Operations:

Southern Oil 24,539 9,713 2,018

Abraxas Petroleum 22,410 652 —

Southern Oil 3,356 24,539 9,713

Total Oil and Gas Operations 25,766 25,191 9,713

14 unchanged sentences

Corporate and other 1,258 2,812 1,806

Consolidated results $ 29,746 $ 64,549 $ 20,702

$ 23,405 $ 29,746 $ 64,549

Business Segment Reporting (continued)

7 unchanged sentences

Corporate and other 1,270 741 317

Consolidated results $ 36,443 $ 30,050 $ 32,222

$ 38,979 $ 36,443 $ 30,050

A disaggregation of our consolidated assets is presented in the table that follows.

10 unchanged sentences

Oil and Gas Operations:

Southern Oil 49,416 53,359

Abraxas Petroleum 66,155 81,339

Southern Oil 43,644 49,416

Total Oil and Gas Operations 109,799 130,755

2 unchanged sentences

Investment partnerships 199,103 155,794

Total assets $ 828,474 $ 894,807

$ 849,422 $ 828,474

Supplemental Disclosures of Cash Flow Information

10 unchanged sentences

Supplemental Oil and Gas Disclosures (Unaudited)

The Company has determined it had significant oil and gas producing activities during the years ended December 31, 2022 and December 31, 2021 in accordance with ASC 932 “ Extractive Activities — Oil and Gas.

” The Company did not have significant oil and gas producing activities within the meaning of ASC 932 during the year ended December 31, 2020.

The Company has determined it had significant oil and gas producing activities during the years ended December 31, 2023, December 31, 2022, and December 31, 2021, in accordance with ASC 932 “ Extractive Activities — Oil and Gas.

Estimated Quantities of Proved Oil and Natural Gas Reserves

14 unchanged sentences

Supplemental Oil and Gas Disclosures (Unaudited) (continued)

The following table sets forth our estimate of the net proved oil and gas reserves for the year ended December 31, 2022 and 2021.

Oil (MBbl) Gas (MMcf) Liquids (Bbl) MBOE

The following table sets forth our estimate of the net proved oil and gas reserves for the years ended December 31, 2023 and 2022.

Oil (MBbl) Gas (MMcf) Liquids (MBbl) MBOE

Total proved reserves at December 31, 2021 2,361 26,544 — 6,785

1 unchanged sentence

Extensions — — — —

Acquisition of reserves 3,415 19,334 1,550 8,188

Production ( 450 ) ( 2,341 ) ( 42 ) ( 882 )

40 unchanged sentences

Sales of oil and natural gas, net of production expenses ( 41,859 )

Extensions 104

Acquisition of reserves 141,051

Revisions of previous quantity estimates ( 9,072 )

6 unchanged sentences

Sales of oil and natural gas, net of production expenses ( 27,706 )

Acquisition of reserves 141,051

Extensions 8,836

Revisions of previous quantity estimates ( 59,164 )

6 unchanged sentences

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 8. Financial Statements and Supplementary Data