Part I [Business](index=4&type=section&id=Item%201.%20Business) Biglari Holdings Inc. is a diversified holding company primarily operating in restaurants, insurance, media, and oil and gas, with significant investments in private funds controlled by its CEO - The company operates across **four main segments**: restaurants, insurance, media/licensing, and oil/gas[4](index=4&type=chunk) - Chairman and CEO Sardar Biglari beneficially owned approximately **64.4% of Class A** and **55.4% of Class B** common stock as of December 31, 2019, giving him significant control over the company[5](index=5&type=chunk) - On September 9, 2019, the company acquired Southern Oil of Louisiana Inc., entering the oil and gas business[19](index=19&type=chunk) Restaurant Units as of December 31, 2019 | Brand | Company-Operated | Franchise Partner | Traditional Franchise | Total | | :--- | :--- | :--- | :--- | :--- | | **Steak n Shake** | 368 (107 temporarily closed) | 29 | 213 | 610 | | **Western Sizzlin** | 4 | 0 | 48 | 52 | - The company has significant investments in The Lion Fund, L.P. and The Lion Fund II, L.P., with a fair value of **$666.1 million** as of December 31, 2019, subject to a rolling five-year lock-up period[22](index=22&type=chunk) [Risk Factors](index=6&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including heavy dependence on its controlling CEO, declining restaurant profitability, concentrated investment exposure, and upcoming debt maturities - The company is **highly dependent** on its Chairman and CEO, Sardar Biglari, who makes all major investment and capital allocation decisions and holds **over 50%** of voting stock[26](index=26&type=chunk)[27](index=27&type=chunk) - Steak n Shake's credit facility, with **$181.5 million** outstanding, matures on March 19, 2021, and the inability to refinance this debt could negatively impact operations[39](index=39&type=chunk) - The company's investments are **unusually concentrated**, primarily in the common stock of Cracker Barrel Old Country Store, Inc., held through investment partnerships, making shareholders' equity vulnerable to stock value declines[51](index=51&type=chunk) - Capital invested in The Lion Fund partnerships is subject to a **five-year lock-up period**, restricting access to a significant portion of the company's capital[48](index=48&type=chunk) - The restaurant business faces intense competition, and Steak n Shake has experienced declining sales and profitability, with **107 stores** temporarily closed as of year-end 2019[37](index=37&type=chunk)[41](index=41&type=chunk) [Unresolved Staff Comments](index=11&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[64](index=64&type=chunk) [Properties](index=12&type=section&id=Item%202.%20Properties) As of December 31, 2019, the company's restaurant operations comprised 662 locations, with 152 owned land and buildings, primarily in the United States, while oil and gas properties are offshore in the Gulf of Mexico Total Restaurant Locations by Type (as of Dec 31, 2019) | Type | Steak n Shake | Western Sizzlin | Total | | :--- | :--- | :--- | :--- | | **Company Operated** | 368 | 4 | 372 | | **Franchise Partner** | 29 | 0 | 29 | | **Traditional Franchise** | 213 | 48 | 261 | | **Total** | **610** | **52** | **662** | - Of the **368** company-operated Steak n Shake restaurants, **107** were temporarily closed at year-end[67](index=67&type=chunk) - The company owns the land and building for **152** of its restaurant locations[66](index=66&type=chunk) [Legal Proceedings](index=13&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, including a shareholder class action lawsuit regarding its dual-class stock structure and a settled class-action lawsuit with former restaurant managers - A shareholder class action lawsuit alleging breach of fiduciary duty concerning the dual-class stock structure was dismissed but is subject to a pending petition for review by the Indiana Supreme Court[72](index=72&type=chunk)[73](index=73&type=chunk) - On July 26, 2019, the company settled two class-action lawsuits (Drake v. Steak n Shake and Clendenen v. Steak n Shake) for **$8.35 million** related to the alleged improper classification of managerial employees as exempt[74](index=74&type=chunk) [Mine Safety Disclosures](index=13&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[75](index=75&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=13&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Biglari Holdings' Class A and Class B common stocks are traded on the NYSE, with no dividends ever declared, and the CEO made personal stock purchases in late 2019 - The company's Class A (BH.A) and Class B (BH) common stocks are listed on the New York Stock Exchange[76](index=76&type=chunk) - Biglari Holdings has never declared a dividend[77](index=77&type=chunk) - From November 5 to November 26, 2019, Sardar Biglari purchased **7,699 shares** of Class A common stock at an average price of **$557.33** per share[79](index=79&type=chunk) - The company does not have any equity compensation plans[82](index=82&type=chunk) [Selected Financial Data](index=15&type=section&id=Item%206.%20Selected%20Financial%20Data) The company's total revenues have declined over the past five years, while net earnings have been volatile, and total assets and shareholders' equity have shown modest growth Selected Financial Data (2015-2019, in thousands) | (in thousands) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $668,838 | $809,894 | $839,804 | $850,076 | $861,452 | | **Net earnings (loss)** | $45,380 | $19,392 | $50,071 | $99,451 | $(15,843) | | **Total assets** | $1,139,309 | $1,029,493 | $1,063,584 | $1,096,967 | $987,079 | | **Long-term notes payable** | $263,182 | $240,001 | $256,994 | $281,555 | $296,062 | | **Shareholders' equity** | $616,298 | $570,455 | $571,328 | $531,940 | $451,372 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2019, net earnings increased to $45.4 million, primarily driven by investment partnership gains, despite a larger loss in the restaurant segment and the acquisition of Southern Oil Net Earnings by Segment (After-Tax, in thousands) | (in thousands) | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **Restaurant** | $(10,734) | $(2,613) | $9,725 | | **Insurance** | $5,584 | $4,915 | $3,097 | | **Oil and gas** | $5,921 | — | — | | **Media** | $572 | $796 | $435 | | **Total operating businesses** | $2,085 | $3,570 | $13,763 | | **Investment partnership gains** | $60,773 | $33,240 | $11,080 | | **Total Net Earnings** | **$45,380** | **$19,392** | **$50,071** | - On September 9, 2019, the company acquired Southern Oil for **$51.5 million** in cash, marking its entry into the oil and gas sector[88](index=88&type=chunk) - Consolidated shareholders' equity increased by **$45.8 million** to **$616.3 million** at year-end 2019, primarily due to net income of **$45.4 million**[119](index=119&type=chunk) - Net cash from operating activities increased to **$93.7 million** in 2019 from **$20.7 million** in 2018, largely due to a **$99.7 million** increase in distributions from investment partnerships[122](index=122&type=chunk) [Results of Operations](index=17&type=section&id=7.1%20Results%20of%20Operations) The restaurant segment's loss widened in 2019 due to declining sales and traffic at Steak n Shake, while insurance gains grew, and the new oil and gas segment contributed positively Restaurant Operations Key Metrics (2019 vs 2018) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Net Sales** | $578.2M | $740.9M | | **Same-Store Sales Change** | -6.9% | N/A | | **Customer Traffic Change** | -11.2% | N/A | | **Earnings (loss) before tax** | $(16.8M) | $(8.6M) | Insurance Operations Pre-Tax Underwriting Gain | (in thousands) | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | **Pre-tax underwriting gain** | $6,477 | $5,634 | +15.0% | Oil and Gas Operations (Post-Acquisition 2019) | (in thousands) | Amount | | :--- | :--- | | **Oil and gas revenue** | $24,436 | | **Earnings before income taxes** | $8,032 | - Investment partnership gains, which are highly volatile and concentrated in Cracker Barrel stock, increased to **$78.1 million** pre-tax in 2019 from **$40.4 million** in 2018[113](index=113&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=22&type=section&id=7.2%20Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) The company maintains significant liquidity, primarily from investment partnerships, with cash from operations surging in 2019, while evaluating refinancing options for Steak n Shake's debt maturing in 2021 Consolidated Cash and Investments (in thousands) | Category | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $67,772 | $48,557 | | Investments | $44,856 | $33,860 | | Fair value of interest in investment partnerships | $666,123 | $715,102 | | **Total cash and investments** | **$778,751** | **$801,982** | Summary of Cash Flow Activities (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash from operating activities | $93,683 | $20,678 | | Net cash used in investing activities | $(69,982) | $(25,290) | | Net cash used in financing activities | $(8,010) | $(7,530) | - Steak n Shake's term loan of **$181.5 million** matures on March 19, 2021, and the company is evaluating refinancing options, but alternatives may not be available on commensurate terms[125](index=125&type=chunk) [Critical Accounting Policies](index=24&type=section&id=7.3%20Critical%20Accounting%20Policies) The company's critical accounting policies involve significant management judgment and estimates, particularly for consolidation, asset impairment, reserve estimation, and tax and lease accounting - Significant judgment is required for policies including: consolidation, impairment of restaurant assets, estimation of oil and gas reserves, income taxes, goodwill impairment testing, and lease accounting[130](index=130&type=chunk) - Impairment of restaurant assets is tested when events indicate a possible impairment by comparing the asset's carrying value to its undiscounted future cash flows[134](index=134&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually using both market and income approaches, which require significant management judgment[137](index=137&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces significant market risks from its concentrated equity investments, interest rate exposure on variable-rate debt, and commodity price volatility in its oil and gas segment - The company has significant equity price risk due to a concentrated investment in Cracker Barrel Old Country Store, Inc., where a hypothetical **10%** price change would alter investment fair value by **$55.0 million**[144](index=144&type=chunk)[145](index=145&type=chunk) - The company is exposed to interest rate risk on Steak n Shake's credit facility, where a hypothetical **100 basis point** rate increase would impact net earnings by approximately **$1.4 million**[146](index=146&type=chunk) - The Southern Oil business is exposed to commodity price risk, as its earnings are significantly affected by changes in oil and gas prices[148](index=148&type=chunk) [Financial Statements and Supplementary Data](index=28&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the independent auditor's unqualified opinion on the consolidated financial statements, which also highlight the adoption of a new lease accounting standard and significant related-party investments [Report of Independent Registered Public Accounting Firm](index=28&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on the company's consolidated financial statements, noting the adoption of ASC 842 and emphasizing significant related-party investment partnerships - The auditor, Deloitte & Touche LLP, issued an unqualified opinion on the financial statements[151](index=151&type=chunk) - The audit report emphasizes the matter of significant investments in related-party investment partnerships, which totaled **$505.5 million** at carrying value as of December 31, 2019[156](index=156&type=chunk) - The audit of internal controls excluded Southern Oil Company, which was acquired on September 9, 2019[161](index=161&type=chunk) [Consolidated Financial Statements](index=30&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial position, results of operations, and cash flows, showing total assets of $1.14 billion and net earnings of $45.4 million for 2019 Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | $1,139,309 | $1,029,493 | | Investment partnerships | $505,542 | $557,480 | | **Total Liabilities** | $523,011 | $459,038 | | Long-term notes payable | $263,182 | $240,001 | | **Shareholders' Equity** | $616,298 | $570,455 | Consolidated Statement of Earnings Highlights (in thousands) | Account | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **Total Revenues** | $668,838 | $809,894 | $839,804 | | Restaurant operations revenue | $610,220 | $775,690 | $807,153 | | Investment partnership gains | $78,133 | $40,411 | $6,965 | | **Net Earnings** | $45,380 | $19,392 | $50,071 | [Notes to Consolidated Financial Statements](index=34&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, including the Southern Oil acquisition, concentrated related-party investments, ASC 842 adoption, and segment reporting highlighting restaurant losses versus investment gains - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, resulting in the recognition of operating lease assets of **$63.3 million** and liabilities of **$69.7 million** on the balance sheet[219](index=219&type=chunk) - The carrying value of investments in The Lion Fund partnerships was **$505.5 million** at year-end 2019, controlled by CEO Sardar Biglari and subject to a rolling **5-year lock-up**[224](index=224&type=chunk)[227](index=227&type=chunk) - The company has a services agreement with entities owned by Mr. Biglari, paying a fixed fee of **$8.4 million** in 2019 for business and administrative services[283](index=283&type=chunk) Segment Earnings (Loss) Before Tax (in thousands) | Segment | 2019 | 2018 | | :--- | :--- | :--- | | **Restaurant Operations** | $(16,819) | $(8,611) | | **First Guard (Insurance)** | $7,103 | $6,215 | | **Southern Oil** | $8,032 | — | | **Maxim (Media)** | $742 | $1,068 | | **Investment partnership gains** | $78,133 | $40,411 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=58&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable - Not applicable[320](index=320&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2019, excluding the recently acquired Southern Oil, with no material changes to internal controls during the fourth quarter - The CEO and Controller concluded that disclosure controls and procedures were effective as of December 31, 2019[321](index=321&type=chunk) - The assessment of internal controls over financial reporting excluded Southern Oil, which was acquired on September 9, 2019[321](index=321&type=chunk)[324](index=324&type=chunk) - The effectiveness of internal control over financial reporting was audited by Deloitte & Touche LLP, who issued an unqualified opinion[325](index=325&type=chunk) [Other Information](index=58&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[325](index=325&type=chunk) Part III [Directors, Executive Compensation, Security Ownership, and Related Transactions](index=59&type=section&id=Items%2010-14) Information for Items 10 through 14 is incorporated by reference from the company's definitive proxy statement for its 2020 Annual Meeting of Shareholders - The information for Part III (Items 10-14) is not included in this 10-K and is incorporated by reference from the company's 2020 definitive proxy statement[327](index=327&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=60&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements included in the report and provides a comprehensive list of exhibits filed with the 10-K, including governance documents and required certifications - This section lists all financial statements, the auditor's report, and management's report on internal control included in Item 8[329](index=329&type=chunk) - A list of exhibits filed with the report is provided, including governance documents, material contracts, and required certifications[331](index=331&type=chunk)[333](index=333&type=chunk) [Form 10-K Summary](index=61&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[334](index=334&type=chunk)

Part I – Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company presents its unaudited consolidated financial statements and key events for the period ended September 30, 2019 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $1.15 billion, driven by property and equipment increases and new operating lease assets Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 (Unaudited) | Dec 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $19,058 | $48,557 | | Investment partnerships | $561,479 | $557,480 | | Property and equipment, net | $355,489 | $274,716 | | Operating lease assets | $65,939 | $— | | **Total Assets** | **$1,153,950** | **$1,029,493** | | **Liabilities & Equity** | | | | Accounts payable and accrued expenses | $138,822 | $117,265 | | Long-term notes payable and other borrowings | $264,857 | $240,001 | | Operating lease liabilities | $59,668 | $— | | **Total Liabilities** | **$552,430** | **$459,038** | | **Total Shareholders' Equity** | **$601,520** | **$570,455** | [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) Net earnings reached $31.8 million for the first nine months of 2019, driven by investment gains despite lower revenue Statement of Earnings Summary (in thousands) | Metric | Q3 2019 | Q3 2018 | First Nine Months 2019 | First Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $160,216 | $203,582 | $510,418 | $614,546 | | Restaurant Operations Revenue | $145,111 | $195,041 | $478,947 | $589,569 | | Investment partnership gains (losses) | $1,449 | $(19,008) | $69,801 | $(23,854) | | Earnings (loss) before income taxes | $(631) | $(24,902) | $38,801 | $(35,942) | | **Net Earnings (Loss)** | **$(17)** | **$(13,703)** | **$31,775** | **$(23,056)** | | Net earnings (loss) per equivalent Class A share | $(0.05) | $(39.50) | $92.04 | $(66.12) | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was $39.9 million, while investing activities used $63.3 million for the Southern Oil acquisition Cash Flow Summary - First Nine Months (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $39,859 | $(5,584) | | Net cash provided by (used in) investing activities | $(63,276) | $2,221 | | Net cash used in financing activities | $(6,003) | $(5,797) | | **Decrease in cash, cash equivalents and restricted cash** | **$(29,449)** | **$(9,223)** | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the Southern Oil acquisition, adoption of ASC 842, investment concentrations, and impairment charges - On September 9, 2019, the company acquired Southern Oil Company for **$51.5 million** in cash, marking its entry into the oil and gas exploration and production business[15](index=15&type=chunk) - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, resulting in the recognition of operating lease assets of **$63.3 million** and operating lease liabilities of **$69.7 million**[26](index=26&type=chunk) - The company's investments in The Lion Fund partnerships are **highly concentrated** in the common stock of Cracker Barrel Old Country Store, Inc[42](index=42&type=chunk)[127](index=127&type=chunk) - Impairment charges of **$7.4 million** were recorded in the first nine months of 2019, primarily due to the temporary closure of 106 Steak n Shake restaurants[44](index=44&type=chunk) - The company settled the Drake v. Steak n Shake and Clendenen v. Steak n Shake class action lawsuits for **$8.35 million** regarding the classification of managerial employees[81](index=81&type=chunk) [Management's Discussion and Analysis (MD&A)](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Southern Oil acquisition, challenges at Steak n Shake, and the impact of investment gains - Steak n Shake's sales have declined since 2017, leading to lower profitability and the **temporary closure of 106 company-operated restaurants** as of September 30, 2019[101](index=101&type=chunk) - The significant swing to net earnings in 2019 is primarily due to gains from investment partnerships, which contributed **$53.9 million to net earnings** compared to a loss of $15.7 million in the prior year[103](index=103&type=chunk)[126](index=126&type=chunk) [Results of Operations: Restaurants](index=22&type=section&id=MD%26A%20-%20Restaurants) The restaurant segment saw a significant sales decline and operating loss due to store closures and reduced traffic Restaurant Segment Earnings (in thousands) | Metric | First Nine Months 2019 | First Nine Months 2018 | | :--- | :--- | :--- | | Total Revenue | $478,947 | $589,569 | | Earnings (loss) before income taxes | $(21,343) | $59 | | Contribution to net earnings (loss) | $(14,888) | $1,914 | - Steak n Shake's same-store sales **decreased 6.4%** and customer traffic **decreased 9.7%** during the first nine months of 2019[111](index=111&type=chunk) - As of September 30, 2019, **106 Steak n Shake restaurants were temporarily closed** pending identification of a franchise partner[106](index=106&type=chunk) [Results of Operations: Insurance](index=26&type=section&id=MD%26A%20-%20Insurance) The insurance segment delivered solid growth in premiums earned and underwriting gains, increasing its net earnings Insurance Segment Earnings (in thousands) | Metric | First Nine Months 2019 | First Nine Months 2018 | | :--- | :--- | :--- | | Premiums written | $21,302 | $19,576 | | Pre-tax underwriting gain | $4,902 | $4,029 | | Contribution to net earnings | $4,465 | $3,629 | [Results of Operations: Oil and Gas](index=27&type=section&id=MD%26A%20-%20Oil%20and%20Gas) The newly acquired Oil and Gas segment contributed $6.5 million in revenue and $1.1 million in net earnings Oil and Gas Segment Earnings - Q3 2019 (in thousands) | Metric | Amount | | :--- | :--- | | Oil and gas revenue | $6,500 | | Earnings before income taxes | $1,448 | | Contribution to net earnings | $1,060 | [Results of Operations: Investment Partnership Gains (Losses)](index=28&type=section&id=MD%26A%20-%20Investment%20Partnership%20Gains%20(Losses)) Investment partnership gains of $69.8 million drove overall profitability, reversing prior year losses Investment Partnership Contribution (in thousands) | Metric | Q3 2019 | Q3 2018 | First Nine Months 2019 | First Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Investment partnership gains (losses) | $1,449 | $(19,008) | $69,801 | $(23,854) | | Contribution to net earnings (loss) | $1,400 | $(12,889) | $53,891 | $(15,691) | - The investments held by the partnerships are **largely concentrated** in the common stock of Cracker Barrel Old Country Store, Inc[127](index=127&type=chunk) [Financial Condition and Liquidity](index=28&type=section&id=MD%26A%20-%20Financial%20Condition%20and%20Liquidity) Shareholders' equity grew to $601.5 million, supported by strong operating cash flow despite acquisition spending - Consolidated shareholders' equity increased to **$601.5 million** at September 30, 2019, up from $570.5 million at year-end 2018, primarily due to net income of $31.8 million[131](index=131&type=chunk)[6](index=6&type=chunk) - Cash used in investing activities was **$63.3 million**, which included **$51.1 million** for the acquisition of Southern Oil[134](index=134&type=chunk)[135](index=135&type=chunk) - The outstanding balance on Steak n Shake's credit facility was **$182.0 million** as of September 30, 2019, with the loan maturing in March 2021[129](index=129&type=chunk)[140](index=140&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces significant market risk from its concentrated equity investments and interest rate risk from its debt - The company's primary market risk is from its **concentrated equity position** in Cracker Barrel Old Country Store, Inc, held through its investment partnerships[145](index=145&type=chunk) - A hypothetical **10% change** in investment market prices would result in a corresponding change to carrying value of **$60.5 million** and an approximate **8% change** in shareholders' equity[146](index=146&type=chunk) - A hypothetical **100 basis point increase** in short-term interest rates would reduce annual net earnings by approximately **$1.4 million** due to the variable-rate term loan[147](index=147&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The Chief Executive Officer and Controller concluded that the company's disclosure controls and procedures were **effective** as of the end of the period[148](index=148&type=chunk) - There were **no material changes** in internal control over financial reporting during the quarter ended September 30, 2019[149](index=149&type=chunk) Part II – Other Information [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company discloses ongoing litigation, including an appealed shareholder lawsuit and settled employee class actions - A shareholder class action lawsuit alleging breach of fiduciary duty related to the company's dual-class stock structure was dismissed by the Superior Court but is **currently under appeal**[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) - The company settled two purported class action lawsuits (Drake v. Steak n Shake and Clendenen v. Steak n Shake) for **$8.35 million**[81](index=81&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported during the quarter - **No material changes** to risk factors were reported for the quarter[150](index=150&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[150](index=150&type=chunk)

[Part I – Financial Information](index=3&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company achieved **$31.8 million** net earnings in H1 2019, reversing a **$9.4 million** loss in H1 2018, driven by investment gains and an increase in total assets to **$1.15 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 ($ thousands) | December 31, 2018 ($ thousands) | | :--- | :--- | :--- | | **Total Assets** | **$1,154,669** | **$1,029,493** | | Cash and cash equivalents | $27,662 | $48,557 | | Investment partnerships | $622,066 | $557,480 | | **Total Liabilities** | **$552,307** | **$459,038** | | **Total Shareholders' Equity** | **$602,362** | **$570,455** | Consolidated Earnings Summary (in thousands) | Period | Revenues ($ thousands) | Investment Partnership Gains (Losses) ($ thousands) | Net Earnings (Loss) ($ thousands) | | :--- | :--- | :--- | :--- | | **Q2 2019** | $168,343 | $34,198 | $21,974 | | **Q2 2018** | $208,739 | $(8,341) | $(7,539) | | **First Six Months 2019** | $350,202 | $68,352 | $31,792 | | **First Six Months 2018** | $410,964 | $(4,846) | $(9,353) | Consolidated Cash Flow Summary - First Six Months (in thousands) | Activity | 2019 ($ thousands) | 2018 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,295) | $(465) | | Net cash used in investing activities | $(8,619) | $(5,714) | | Net cash used in financing activities | $(3,984) | $(3,932) | | **Decrease in cash** | **$(20,895)** | **$(10,166)** | - The company adopted ASC 842 on January 1, 2019, recognizing **$63.3 million** in operating lease assets and **$69.7 million** in operating lease liabilities[18](index=18&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes H1 2019 profitability to strong investment partnerships, despite significant restaurant segment operational challenges and a strategic shift to a franchise partnership model - Steak n Shake's sales have declined since 2017, leading to **103** temporary restaurant closures as of June 30, 2019, as the company emphasizes its franchise partnership program for profitability improvement[101](index=101&type=chunk) Net Earnings (Loss) Contribution by Segment - First Six Months (in thousands) | Segment | 2019 ($ thousands) | 2018 ($ thousands) | | :--- | :--- | :--- | | Restaurant | $(14,767) | $1,184 | | Insurance | $2,675 | $2,204 | | Media | $48 | $(155) | | Investment partnership gains (losses) | $52,491 | $(2,802) | | **Total Net Earnings (Loss)** | **$31,792** | **$(9,353)** | [Restaurants](index=20&type=section&id=Restaurants) - The restaurant segment reported a pre-tax loss of **$21.0 million** in H1 2019, reversing a **$2.7 million** profit in H1 2018, primarily due to declining Steak n Shake sales[106](index=106&type=chunk) - Steak n Shake's same-store sales decreased by **6.5%** and customer traffic fell by **8.1%** in H1 2019, largely due to temporary store closures[108](index=108&type=chunk) - Cost of food as a percentage of net sales increased to **32.2%** in H1 2019 from **30.0%** in 2018 due to a promotion, while operating costs also rose due to higher wages[110](index=110&type=chunk)[111](index=111&type=chunk) [Insurance](index=23&type=section&id=Insurance) Insurance Segment Performance - First Six Months (in thousands) | Metric | 2019 ($ thousands) | 2018 ($ thousands) | | :--- | :--- | :--- | | Premiums written | $13,926 | $12,833 | | Pre-tax underwriting gain | $2,768 | $2,432 | | **Contribution to net earnings** | **$2,675** | **$2,204** | - Premiums earned in H1 2019 increased by **8.5%** year-over-year, indicating steady growth in the insurance business[115](index=115&type=chunk) [Investment Partnership Gains (Losses)](index=24&type=section&id=Investment%20Partnership%20Gains%20%28Losses%29) - The company recorded pre-tax investment partnership gains of **$68.4 million** in H1 2019, a significant turnaround from a **$4.8 million** loss in H1 2018, driving overall net earnings[120](index=120&type=chunk) - Investment partnerships hold a highly concentrated position in the common stock of Cracker Barrel Old Country Store, Inc[121](index=121&type=chunk) [Financial Condition and Liquidity](index=24&type=section&id=Financial%20Condition%20and%20Liquidity) - Consolidated shareholders' equity increased by **$31.9 million** to **$602.4 million** in H1 2019, primarily driven by **$31.8 million** in net income[126](index=126&type=chunk) - Cash used in operating activities increased significantly to **$8.3 million** in H1 2019 from **$0.5 million** in the prior year, mainly due to decreased restaurant revenues[129](index=129&type=chunk) - Steak n Shake had **$182.6 million** outstanding on its term loan facility as of June 30, 2019, maturing in March 2021 with an interest rate of **6.19%**[124](index=124&type=chunk)[135](index=135&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk stems from its concentrated equity investment in Cracker Barrel Old Country Store, Inc., and interest rate risk on its variable-rate term loan - The company's investment partnerships hold a concentrated position in Cracker Barrel Old Country Store, Inc. common stock, exposing it to price fluctuations[140](index=140&type=chunk) - A hypothetical **10%** change in investment market prices would alter the carrying value by approximately **$66.4 million**[141](index=141&type=chunk) - The company faces interest rate risk on its term loan, where a hypothetical **100 basis point** increase in short-term rates would impact net earnings by approximately **$1.4 million**[142](index=142&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal control over financial reporting - The CEO and Controller concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[143](index=143&type=chunk) [Part II – Other Information](index=27&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company settled two class action lawsuits against Steak n Shake for **$8.35 million** and is appealing the dismissal of a shareholder lawsuit regarding its dual-class stock structure - The company settled two class action lawsuits (Drake v. Steak n Shake and Clendenen v. Steak n Shake) for **$8.35 million**, related to managerial employee classification[82](index=82&type=chunk) - A shareholder lawsuit alleging breach of fiduciary duty regarding the dual-class stock structure was dismissed, but an appeal was filed on January 11, 2019, which the company is defending[80](index=80&type=chunk)[81](index=81&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) A material change to risk factors highlights the significant risk that Steak n Shake's franchise conversion strategy may not succeed in reversing declining sales and profitability - A key risk is that Steak n Shake's franchise partnership conversion strategy may fail to reverse declining sales and profitability[146](index=146&type=chunk) - There is no assurance Steak n Shake will find suitable franchise partners for its **103** temporarily closed stores or that the new model will succeed, potentially requiring additional financing[147](index=147&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Between May and June 2019, Chairman and CEO Sardar Biglari purchased **7,702** Class A and **23,646** Class B common shares through open market transactions - From May to June 2019, CEO Sardar Biglari purchased **7,702** shares of Class A and **23,646** shares of Class B common stock in open market transactions[154](index=154&type=chunk)[155](index=155&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbols Name of each exchange on which registered Class A Common Stock, no par value Class B Common Stock, no par value BH.A BH New York Stock Exchange New York Stock Exchange FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number 001-38477 BIGLARI HOLDINGS INC. (Exact name of registrant as specified in its charter) INDIANA 82-3784946 (State or other jurisdiction of ...