BIGLARI HOLDINGS INC.
|
(Exact name of registrant as specified in its charter)
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INDIANA
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37-0684070
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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17802 IH 10 West, Suite 400
San Antonio, Texas
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78257
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(Address of principal executive offices)
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(Zip Code)
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(210) 344-3400
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(Registrant’s telephone number, including area code)
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer
¨
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Accelerated filer
x
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page No.
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1
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2
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3
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4
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5
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6
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16
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22
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22
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23
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23
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23
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23
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23
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24
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25
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(In thousands, except share and per share data)
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April 10,
2013
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September 26,
2012
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||||||
(Unaudited)
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||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
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$ | 19,031 | $ | 60,359 | ||||
Investments
|
386,080 | 269,858 | ||||||
Receivables, net of allowance of $703 and $744, respectively
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7,842 | 7,001 | ||||||
Inventories
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6,294 | 6,624 | ||||||
Assets held for sale
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461 | 2,357 | ||||||
Other current assets
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3,929 | 2,798 | ||||||
Total current assets
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423,637 | 348,997 | ||||||
Property and equipment, net
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351,648 | 356,638 | ||||||
Goodwill
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27,529 | 27,529 | ||||||
Other intangible assets, net
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8,104 | 6,248 | ||||||
Other assets
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8,580 | 9,109 | ||||||
Investments held by consolidated affiliated partnerships
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26,384 | 25,266 | ||||||
Total assets
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$ | 845,882 | $ | 773,787 | ||||
Liabilities and shareholders’ equity
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||||||||
Liabilities
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
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$ | 37,787 | $ | 33,210 | ||||
Accrued expenses
|
47,671 | 53,866 | ||||||
Revolving credit
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6,000 | — | ||||||
Deferred income taxes
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46,366 | 19,367 | ||||||
Current portion of obligations under leases
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6,243 | 5,713 | ||||||
Current portion of long-term debt
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9,763 | 12,138 | ||||||
Total current liabilities
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153,830 | 124,294 | ||||||
Deferred income taxes
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6,912 | 8,675 | ||||||
Obligations under leases
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108,544 | 110,353 | ||||||
Long-term debt
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115,375 | 120,250 | ||||||
Other long-term liabilities
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9,307 | 9,002 | ||||||
Total liabilities
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393,968 | 372,574 | ||||||
Commitments and contingencies (Note 14)
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||||||||
Redeemable noncontrolling interests of consolidated affiliated partnerships
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52,671 | 52,088 | ||||||
Shareholders’ equity
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||||||||
Common stock – $0.50 stated value, 2,500,000 shares authorized – 1,511,174 shares issued, 1,228,038 and 1,227,928 shares outstanding (net of treasury stock), respectively
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756 | 756 | ||||||
Additional paid-in capital
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142,158 | 143,035 | ||||||
Retained earnings
|
258,725 | 251,983 | ||||||
Accumulated other comprehensive income
|
88,140 | 43,897 | ||||||
Treasury stock – at cost: 283,136 and 283,246 shares (includes 205,743 shares held by consolidated affiliated partnerships) at April 10, 2013 and September 26, 2012, respectively
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(90,536 | ) | (90,546 | ) | ||||
Biglari Holdings Inc. shareholders’ equity
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399,243 | 349,125 | ||||||
Total liabilities and shareholders’ equity
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$ | 845,882 | $ | 773,787 |
(In thousands, except share and per share data)
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||||||||||||||||
Sixteen Weeks Ended
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Twenty-Eight Weeks Ended
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|||||||||||||||
April 10,
2013
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April 11,
2012
|
April 10,
2013
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April 11,
2012
|
|||||||||||||
Net revenues
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||||||||||||||||
Restaurant Operations:
|
||||||||||||||||
Net sales
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$ | 218,737 | $ | 218,358 | $ | 382,476 | $ | 379,874 | ||||||||
Franchise royalties and fees
|
3,281 | 2,603 | 5,755 | 4,747 | ||||||||||||
Other revenue
|
797 | 790 | 1,322 | 1,320 | ||||||||||||
Total
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222,815 | 221,751 | 389,553 | 385,941 | ||||||||||||
Investment Management Operations:
|
||||||||||||||||
Consolidated Affiliated Partnerships:
|
||||||||||||||||
Investment gains/losses
|
2,285 | 1,842 | 1,937 | 3,966 | ||||||||||||
Other income/loss
|
110 | 91 | 231 | 167 | ||||||||||||
Total
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2,395 | 1,933 | 2,168 | 4,133 | ||||||||||||
Total net revenues
|
225,210 | 223,684 | 391,721 | 390,074 | ||||||||||||
Costs and expenses
|
||||||||||||||||
Cost of sales
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64,837 | 63,272 | 112,791 | 108,696 | ||||||||||||
Restaurant operating costs
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105,377 | 102,807 | 182,737 | 176,770 | ||||||||||||
General and administrative
|
23,624 | 19,854 | 37,201 | 33,112 | ||||||||||||
Depreciation and amortization
|
7,750 | 8,098 | 13,693 | 14,399 | ||||||||||||
Marketing
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11,766 | 11,390 | 21,999 | 20,277 | ||||||||||||
Rent
|
5,485 | 5,445 | 9,497 | 9,492 | ||||||||||||
Pre-opening costs
|
5 | 322 | 5 | 423 | ||||||||||||
Provision for restaurant closings
|
286 | 320 | 286 | 320 | ||||||||||||
Impairment of intangible assets
|
1,244 | — | 1,244 | — | ||||||||||||
Loss on disposal of assets
|
632 | 153 | 839 | 369 | ||||||||||||
Other operating (income) expense
|
(400 | ) | (125 | ) | (505 | ) | (644 | ) | ||||||||
Total costs and expenses, net
|
220,606 | 211,536 | 379,787 | 363,214 | ||||||||||||
Other income (expense)
|
||||||||||||||||
Interest, dividend and other investment income
|
2,436 | 776 | 4,980 | 1,402 | ||||||||||||
Interest on obligations under leases
|
(2,991 | ) | (3,102 | ) | (5,199 | ) | (5,427 | ) | ||||||||
Interest expense
|
(2,059 | ) | (2,533 | ) | (3,796 | ) | (4,388 | ) | ||||||||
Realized investment gains/losses
|
— | 378 | 1 | 3,973 | ||||||||||||
Other than temporary impairment losses on investments
|
(570 | ) | — | (570 | ) | — | ||||||||||
Total other income (expense)
|
(3,184 | ) | (4,481 | ) | (4,584 | ) | (4,440 | ) | ||||||||
Earnings before income taxes
|
1,420 | 7,667 | 7,350 | 22,420 | ||||||||||||
Income taxes
|
(1,965 | ) | 2,136 | (422 | ) | 6,896 | ||||||||||
Net earnings
|
3,385 | 5,531 | 7,772 | 15,524 | ||||||||||||
Earnings attributable to redeemable noncontrolling interest:
|
||||||||||||||||
Income allocation
|
(1,205 | ) | (1,003 | ) | (1,051 | ) | (2,237 | ) | ||||||||
Incentive fee
|
— | — | 21 | 36 | ||||||||||||
Total earnings/loss attributable to redeemable noncontrolling interests
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(1,205 | ) | (1,003 | ) | (1,030 | ) | (2,201 | ) | ||||||||
Net earnings attributable to Biglari Holdings Inc.
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$ | 2,180 | $ | 4,528 | $ | 6,742 | $ | 13,323 | ||||||||
Earnings per share attributable to Biglari Holdings Inc.
|
||||||||||||||||
Basic earnings per common and common equivalent share
|
$ | 1.64 | $ | 3.39 | $ | 5.06 | $ | 9.99 | ||||||||
Diluted earnings per common and common equivalent share
|
$ | 1.63 | $ | 3.39 | $ | 5.05 | $ | 9.97 | ||||||||
Weighted average shares and equivalents
|
||||||||||||||||
Basic
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1,333,161 | 1,333,848 | 1,333,225 | 1,333,685 | ||||||||||||
Diluted
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1,335,938 | 1,337,446 | 1,335,888 | 1,336,904 |
(In thousands)
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Sixteen Weeks Ended
|
Twenty-Eight Weeks Ended
|
||||||||||||||
April 10,
2013
|
April 11,
2012
|
April 10,
2013
|
April 11,
2012
|
|||||||||||||
Net earnings attributable to Biglari Holdings Inc.
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$ | 2,180 | $ | 4,528 | $ | 6,742 | $ | 13,323 | ||||||||
Other comprehensive income:
|
||||||||||||||||
Reclassification of investment appreciation in net earnings
|
— | (2 | ) | (1 | ) | (1,455 | ) | |||||||||
Applicable income taxes
|
— | 1 | — | 553 | ||||||||||||
Reclassification of other than temporary impairment losses on investments
|
461 | — | 461 | — | ||||||||||||
Applicable income taxes
|
(175 | ) | — | (175 | ) | — | ||||||||||
Net change in unrealized gains and losses on investments
|
80,554 | 17,369 | 71,055 | 37,785 | ||||||||||||
Applicable income taxes
|
(30,611 | ) | (6,600 | ) | (27,001 | ) | (14,358 | ) | ||||||||
Foreign currency translation
|
(96 | ) | — | (96 | ) | — | ||||||||||
Other comprehensive income, net
|
50,133 | 10,768 | 44,243 | 22,525 | ||||||||||||
Total comprehensive income
|
$ | 52,313 | $ | 15,296 | $ | 50,985 | $ | 35,848 | ||||||||
(In thousands)
|
Twenty-Eight Weeks Ended
|
|||||||
|
April 10,
2013
|
April 11,
2012
|
||||||
Operating activities
|
||||||||
Net earnings
|
$
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7,772
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$
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15,524
|
|
|||
Adjustments to reconcile net earnings to operating cash flows (excluding investment
operations of consolidated affiliated partnerships):
|
|
|||||||
Depreciation and amortization
|
13,693
|
14,399
|
||||||
Provision for deferred income taxes
|
(1,944
|
)
|
(204
|
)
|
||||
Asset impairments and provision for restaurant closings
|
286
|
320
|
||||||
Impairment of intangible assets
|
1,244
|
—
|
||||||
Stock-based compensation and other non-cash expenses
|
240
|
638
|
||||||
Loss on disposal of assets
|
839
|
369
|
||||||
Realized investment gains/losses
|
(1
|
)
|
(3,973
|
)
|
||||
Other than temporary impairment on investments
|
570
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—
|
||||||
Changes in receivables and inventories
|
(390
|
)
|
(4,749
|
)
|
||||
Changes in other assets
|
(481
|
)
|
(6,156
|
)
|
||||
Changes in accounts payable and accrued expenses
|
(1,893
|
)
|
2,475
|
|||||
Investment operations of consolidated affiliated partnerships:
|
||||||||
Purchases of investments
|
—
|
(6,356
|
)
|
|||||
Sales of investments
|
1,015
|
12,103
|
||||||
Realized investment gains, net
|
(156
|
)
|
(1,585
|
)
|
||||
Unrealized gains/losses on marketable securities held by consolidated affiliated partnerships
|
(1,781
|
)
|
(2,381
|
)
|
||||
Changes in cash and cash equivalents held by consolidated affiliated partnerships
|
(203
|
)
|
(6,598
|
)
|
||||
Net cash provided by operating activities
|
18,810
|
13,826
|
||||||
Investing activities
|
||||||||
Additions of property and equipment
|
(7,526
|
)
|
(4,702
|
)
|
||||
Proceeds from property and equipment disposals
|
2,352
|
1,595
|
||||||
Purchase of business and lease rights
|
(3,770
|
)
|
—
|
|||||
Purchases of investments
|
(45,277
|
)
|
(93,857
|
)
|
||||
Sales of investments
|
1
|
31,739
|
||||||
Changes in due to/from broker
|
—
|
(3,420
|
)
|
|||||
Net cash used in investing activities
|
(54,220
|
)
|
(68,645
|
)
|
||||
Financing activities
|
||||||||
Proceeds from revolving credit facility
|
15,000
|
—
|
|
|||||
Payments on revolving credit facility
|
(9,000
|
)
|
—
|
|||||
Principal payments on long-term debt
|
(7,250
|
)
|
(5,585
|
)
|
||||
Principal payments on direct financing lease obligations
|
(3,353
|
)
|
(3,009
|
)
|
||||
Proceeds from exercise of stock options
|
9
|
3
|
||||||
Excess tax benefits from stock-based awards
|
4
|
383
|
||||||
Financing activities of consolidated affiliated partnerships:
|
||||||||
Contributions from noncontrolling interests
|
538
|
1,107
|
||||||
Distributions to noncontrolling interests
|
(1,866
|
)
|
(25
|
)
|
||||
Net cash used in financing activities
|
(5,918
|
)
|
(7,126
|
)
|
||||
Decrease in cash and cash equivalents
|
(41,328
|
)
|
(61,945
|
)
|
||||
Cash and cash equivalents at beginning of period
|
60,359
|
98,987
|
||||||
Cash and cash equivalents at end of period
|
$ 19,031
|
$ 37,042
|
(In thousands)
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Treasury
Stock
|
Total
|
||||||||||||||||||
Balance at September 26, 2012
|
$ | 756 | $ | 143,035 | $ | 251,983 | $ | 43,897 | $ | (90,546 | ) | $ | 349,125 | |||||||||||
Net earnings attributable to Biglari Holdings Inc.
|
6,742 | 6,742 | ||||||||||||||||||||||
Other comprehensive
income, net
|
44,243 | 44,243 | ||||||||||||||||||||||
Exercise of stock options and other stock compensation transactions
|
4 | 10 | 14 | |||||||||||||||||||||
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value
|
(881 | ) | (881 | ) | ||||||||||||||||||||
Balance at April 10, 2013
|
$ | 756 | $ | 142,158 | $ | 258,725 | $ | 88,140 | $ | (90,536 | ) | $ | 399,243 | |||||||||||
Balance at September 28, 2011
|
$ | 756 | $ | 144,569 | $ | 230,390 | $ | (5,468 | ) | $ | (90,569 | ) | $ | 279,678 | ||||||||||
Net earnings attributable to Biglari Holdings Inc.
|
13,323 | 13,323 | ||||||||||||||||||||||
Other comprehensive income, net
|
22,525 | 22,525 | ||||||||||||||||||||||
Exercise of stock options and other stock compensation transactions
|
453 | 2 | 455 | |||||||||||||||||||||
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value
|
(6,287 | ) | (6,287 | ) | ||||||||||||||||||||
Balance at April 11, 2012
|
$ | 756 | $ | 138,735 | $ | 243,713 | $ | 17,057 | $ | (90,567 | ) | $ | 309,694 |
Sixteen Weeks Ended
|
Twenty-Eight Weeks Ended
|
|||||||||||||||
April 10,
|
April 11,
|
April 10,
|
April 11,
|
|||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Basic earnings per share:
|
|
|||||||||||||||
Weighted average common shares
|
1,333,161 | 1,333,848 | 1,333,225 | 1,333,685 | ||||||||||||
Diluted earnings per share:
|
||||||||||||||||
Weighted average common shares
|
1,333,161 | 1,333,848 | 1,333,225 | 1,333,685 | ||||||||||||
Dilutive effect of stock awards
|
2,777 | 3,598 | 2,663 | 3,219 | ||||||||||||
Weighted average common and incremental shares
|
1,335,938 | 1,337,446 | 1,335,888 | 1,336,904 | ||||||||||||
Number of share-based awards excluded from the calculation of earnings per share as the awards’ exercise prices were greater than the average market price of the Company’s common stock
|
705 | 705 | 705 | 705 |
April 10,
2013
|
September 26,
2012
|
|||||||
Cost
|
$ | 243,764 | $ | 199,057 | ||||
Gross unrealized gains
|
142,384 | 71,416 | ||||||
Gross unrealized losses
|
(68 | ) | (615 | ) | ||||
Fair value
|
$ | 386,080 | $ | 269,858 |
Sixteen Weeks Ended
|
Twenty-Eight Weeks Ended
|
|||||||||||||||
April 10,
|
April 11,
|
April 10,
|
April 11,
|
|||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Gross realized gains on sales
|
$ | — | $ | 378 | $ | 1 | $ | 4,357 | ||||||||
Gross realized losses on sales
|
$ | — | $ | — | $ | — | $ | (384 | ) | |||||||
Total realized gains/losses
|
$ | — | $ | 378 | $ | 1 | $ | 3,973 |
April 10,
2013
|
September 26,
2012
|
|||||||
Equity securities:
|
||||||||
Cost
|
$ | 9,427 | $ | 10,288 | ||||
Fair value
|
$ | 14,066 | $ | 13,151 |
April 10,
2013
|
September 26,
2012
|
|||||||
|
||||||||
Fair value of equity securities
|
$ | 14,066 | $ | 13,151 | ||||
Cash
|
12,318 | 12,115 | ||||||
Investments held by consolidated affiliated partnerships
|
$ | 26,384 | $ | 25,266 |
Sixteen Weeks Ended
|
Twenty-Eight Weeks Ended
|
|||||||||||||||
April 10,
2013
|
April 11,
2012
|
April 10,
2013
|
April 11,
2012
|
|||||||||||||
Net unrealized gains/losses
|
$ | 2,216 | $ | 1,683 | $ | 1,781 | $ | 2,381 | ||||||||
Net realized gains/losses from sale
|
$ | 69 | $ | 159 | $ | 156 | $ | 1,585 | ||||||||
Total net unrealized and realized gains/losses
|
$ | 2,285 | $ | 1,842 | $ | 1,937 | $ | 3,966 |
Twenty-Eight Weeks Ended
|
||||||||
April 10,
2013
|
April 11,
2012
|
|||||||
Carrying value at beginning of period
|
$ | 52,088 | $ | 45,252 | ||||
Contributions from noncontrolling interests
|
538 | 1,107 | ||||||
Distributions to noncontrolling interests
|
(1,866 | ) | (25 | ) | ||||
Incentive fee
|
(21 | ) | (36 | ) | ||||
Income allocation
|
1,051 | 2,237 | ||||||
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value
|
881 | 6,287 | ||||||
Carrying value at end of period
|
$ | 52,671 | $ | 54 , 822 |
April 10,
2013
|
September 26,
2012
|
|||||||
Land and buildings
|
$ | 461 | $ | 2,050 | ||||
Improvements
|
— | 307 | ||||||
Total assets held for sale
|
$ | 461 | $ | 2,357 |
April 10,
2013
|
September 26, 2012
|
|||||||
Land
|
$ | 162,977 | $ | 162,685 | ||||
Buildings
|
152,811 | 150,601 | ||||||
Land and leasehold improvements
|
155,955 | 155,702 | ||||||
Equipment
|
207,273 | 204,340 | ||||||
Construction in progress
|
3,659 | 2,605 | ||||||
|
682,675 | 675,933 | ||||||
Less accumulated depreciation and amortization
|
(331,027 | ) | (319,295 | ) | ||||
Property and equipment, net
|
$ | 351,648 | $ | 356,638 |
April 10, 2013
|
September 26, 2012
|
|||||||||||||||||||||||
Gross
carrying
amount
|
Accumulated
amortization
|
Total
|
Gross
carrying
amount
|
Accumulated
amortization
|
Total
|
|||||||||||||||||||
Right to operate
|
$ | 1,480 | $ | (1,299 | ) | $ | 181 | $ | 1,480 | $ | (1,235 | ) | $ | 245 | ||||||||||
Franchise agreement
|
5,310 | (1,593 | ) | 3,717 | 5,310 | (1,328 | ) | 3,982 | ||||||||||||||||
Other
|
810 | (555 | ) | 255 | 810 | (533 | ) | 277 | ||||||||||||||||
Total
|
7,600 | (3,447 | ) | 4,153 | 7,600 | (3,096 | ) | 4,504 | ||||||||||||||||
Intangible assets with indefinite lives
|
3,951 | — | 3,951 | 1,744 | — | 1,744 | ||||||||||||||||||
Total intangible assets
|
$ | 11,551 | $ | (3,447 | ) | $ | 8,104 | $ | 9,344 | $ | (3,096 | ) | $ | 6,248 |
|
·
|
Level 1:
|
Unadjusted quoted prices in active markets for identical assets and liabilities.
|
|
·
|
Level 2:
|
Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
|
|
·
|
Level 3:
|
Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
|
April 10, 2013
|
September 26, 2012
|
|||||||||||||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||
Cash equivalents
|
$ | 3,676 | $ | — | $ | — | $ | 3,676 | $ | 14,286 | $ | — | $ | — | $ | 14,286 | ||||||||||||||||
Equity securities:
|
||||||||||||||||||||||||||||||||
Restaurant/Retail
|
377,797 | — | — | 377,797 | 266,940 | — | — | 266,940 | ||||||||||||||||||||||||
Insurance
|
6,828 | — | — | 6,828 | 1,574 | — | — | 1,574 | ||||||||||||||||||||||||
Other
|
1,455 | — | — | 1,455 | 1,344 | — | — | 1,344 | ||||||||||||||||||||||||
Equity securities held by consolidated affiliated partnerships:
|
||||||||||||||||||||||||||||||||
Restaurant/Retail
|
12,987 | — | — | 12,987 | 11,156 | — | — | 11,156 | ||||||||||||||||||||||||
Other
|
893 | — | — | 893 | 1,805 | — | — | 1,805 | ||||||||||||||||||||||||
Non—qualified deferred compensation plan investments
|
985 | — | — | 985 | 888 | — | — | 888 | ||||||||||||||||||||||||
Investment held by consolidated affiliated partnership
|
— | — | 186 | 186 | — | — | 190 | 190 | ||||||||||||||||||||||||
Total assets at fair value
|
$ | 404,621 | $ | — | $ | 186 | $ | 404,807 | $ | 297,993 | $ | — | $ | 190 | $ | 298,183 | ||||||||||||||||
Liabilities
|
||||||||||||||||||||||||||||||||
Interest rate swaps
|
— | 588 | — | 588 | — | 351 | — | 351 | ||||||||||||||||||||||||
Total liabilities at fair value
|
$ | — | $ | 588 | $ | — | $ | 588 | $ | — | $ | 351 | $ | — | $ | 351 |
Net Revenue
|
||||||||||||||||
Sixteen Weeks
|
Twenty-Eight Weeks
|
|||||||||||||||
April 10, 2013
|
April 11, 2012
|
April 10, 2013
|
April 11, 2012
|
|||||||||||||
Operating Business:
|
||||||||||||||||
Restaurant Operations:
|
||||||||||||||||
Steak n Shake
|
$ | 219,067 | $ | 217,921 | $ | 382,222 | $ | 378,413 | ||||||||
Western
|
3,748 | 3,830 | 7,331 | 7,528 | ||||||||||||
Total Restaurant Operations
|
222,815 | 221,751 | 389,553 | 385,941 | ||||||||||||
Investment Management:
|
||||||||||||||||
Consolidated affiliated partnerships
|
2,395 | 1,933 | 2,168 | 4,133 | ||||||||||||
Total Investment Management Operations
|
2,395 | 1,933 | 2,168 | 4,133 | ||||||||||||
$ | 225,210 | $ | 223,684 | $ | 391,721 | $ | 390,074 |
Earnings before income taxes and
noncontrolling interests
|
Net earnings attributable to
Biglari Holdings Inc.
|
|||||||||||||||||||||||||||||||
Sixteen Weeks
|
Twenty-Eight Weeks
|
Sixteen Weeks
|
Twenty-Eight Weeks
|
|||||||||||||||||||||||||||||
April 10, 2013
|
April 11, 2012
|
April 10, 2013
|
April 11, 2012
|
April 10, 2013
|
April 11, 2012
|
April 10, 2013
|
April 11, 2012
|
|||||||||||||||||||||||||
Operating Business:
|
||||||||||||||||||||||||||||||||
Restaurant Operations:
|
||||||||||||||||||||||||||||||||
Steak n Shake
|
$ | 8,353 | $ | 13,070 | $ | 16,855 | $ | 26,719 | $ | 6,931 | $ | 8,738 | $ | 12,597 | $ | 17,697 | ||||||||||||||||
Western
|
(856 | ) | 463 | (574 | ) | 854 | (533 | ) | 287 | (373 | ) | 528 | ||||||||||||||||||||
Total Restaurant Operations
|
7,497 | 13,533 | 16,281 | 27,573 | 6,398 | 9,025 | 12,224 | 18,225 | ||||||||||||||||||||||||
Investment Management:
|
||||||||||||||||||||||||||||||||
Biglari Capital Corp. (Incentive Fee)
|
— | — | 21 | 36 | — | — | 13 | 22 | ||||||||||||||||||||||||
Consolidated affiliated partnerships
|
2,160 | 1,476 | 1,870 | 3,574 | 729 | 191 | 687 | 467 | ||||||||||||||||||||||||
Total Investment Management Operations
|
2,160 | 1,476 | 1,891 | 3,610 | 729 | 191 | 700 | 489 | ||||||||||||||||||||||||
Corporate and Other:
|
||||||||||||||||||||||||||||||||
Corporate and other
|
(5,608 | ) | (5,187 | ) | (6,436 | ) | (8,312 | ) | (3,317 | ) | (3,351 | ) | (3,476 | ) | (5,133 | ) | ||||||||||||||||
Investment and derivative gains/losses
|
(570 | ) | 378 | (569 | ) | 3,973 | (353 | ) | 234 | (352 | ) | 2,463 | ||||||||||||||||||||
Total Corporate and Other
|
(6,178 | ) | (4,809 | ) | (7,005 | ) | (4,339 | ) | (3,670 | ) | (3,117 | ) | (3,828 | ) | (2,670 | ) | ||||||||||||||||
Reconciliation of segments to consolidated amount:
|
||||||||||||||||||||||||||||||||
Eliminations
|
— | — | (21 | ) | (36 | ) | — | — | — | — | ||||||||||||||||||||||
Interest expense, excluding interest allocated to operating businesses
|
(2,059 | ) | (2,533 | ) | (3,796 | ) | (4,388 | ) | (1,277 | ) | (1,571 | ) | (2,354 | ) | (2,721 | ) | ||||||||||||||||
$ | 1,420 | $ | 7,667 | $ | 7,350 | $ | 22,420 | $ | 2,180 | $ | 4,528 | $ |
6,742
|
$ | 13,323 |
Ite
m 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Company-operated
|
Franchised
|
Total
|
||||
Steak n Shake
|
414
|
94
|
508
|
|||
Western
|
5
|
84
|
89
|
|||
Total
|
419
|
178
|
597
|
Sixteen Weeks Ended
|
Twenty-Eight Weeks Ended
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net revenues
|
||||||||||||||||
Restaurant Operations:
|
||||||||||||||||
Net sales
|
97.1 | % | 97.6 | % | 97.6 | % | 97.4 | % | ||||||||
Franchise royalties and fees
|
1.5 | 1.2 | 1.5 | 1.2 | ||||||||||||
Other revenue
|
0.4 | 0.4 | 0.3 | 0.3 | ||||||||||||
Total
|
98.9 | 99.1 | 99.4 | 98.9 | ||||||||||||
Investment Management Operations:
|
||||||||||||||||
Consolidated Affiliated Partnerships:
|
||||||||||||||||
Investment gains/losses
|
1.0 | 0.8 | 0.5 | 1.0 | ||||||||||||
Other income
|
0.0 | 0.0 | 0.1 | 0.0 | ||||||||||||
Total
|
1.1 | 0.9 | 0.6 | 1.1 | ||||||||||||
Total net revenues
|
100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
Costs and expenses
|
||||||||||||||||
Cost of sales
(1)
|
29.6 | 29.0 | 29.5 | 28.6 | ||||||||||||
Restaurant operating costs
(1)
|
48.2 | 47.1 | 47.8 | 46.5 | ||||||||||||
General and administrative
|
10.5 | 8.9 | 9.5 | 8.5 | ||||||||||||
Depreciation and amortization
|
3.4 | 3.6 | 3.5 | 3.7 | ||||||||||||
Marketing
|
5.2 | 5.1 | 5.6 | 5.2 | ||||||||||||
Rent
|
2.4 | 2.4 | 2.4 | 2.4 | ||||||||||||
Pre-opening costs
|
0.0 | 0.1 | 0.0 | 0.1 | ||||||||||||
Provision for restaurant closings
|
0.1 | 0.1 | 0.1 | 0.1 | ||||||||||||
Impairment of intangible assets
|
0.6 | — | 0.3 | — | ||||||||||||
Loss on disposal of assets
|
0.3 | 0.1 | 0.2 | 0.1 | ||||||||||||
Other operating (income) expense
|
(0.2 | ) | (0.1 | ) | (0.1 | ) | (0.2 | ) | ||||||||
Other income (expenses)
|
||||||||||||||||
Interest, dividend and other investment income
|
1.1 | 0.3 | 1.3 | 0.4 | ||||||||||||
Interest on obligations under leases
|
(1.3 | ) | (1.4 | ) | (1.3 | ) | (1.4 | ) | ||||||||
Interest expense
|
(0.9 | ) | (1.1 | ) | (1.0 | ) | (1.1 | ) | ||||||||
Realized investment gains/losses
|
— | 0.2 | 0.0 | 1.0 | ||||||||||||
Other-than-temporary impairment losses on investments
|
(0.3 | ) | — | (0.1 | ) | — | ||||||||||
Total other income (expenses)
|
(1.4 | ) | (2.0 | ) | (1.2 | ) | (1.1 | ) | ||||||||
Earnings before income taxes
|
0.6 | 3.4 | 1.9 | 5.7 | ||||||||||||
Income taxes
|
(0.9 | ) | 1.0 | (0.1 | ) | 1.8 | ||||||||||
Net earnings
|
1.5 | 2.5 | 2.0 | 4.0 | ||||||||||||
Earnings attributable to redeemable noncontrolling interest:
|
||||||||||||||||
Income allocation
|
(0.5 | ) | (0.4 | ) | (0.3 | ) | (0.6 | ) | ||||||||
Incentive fee
|
— | — | 0.0 | 0.0 | ||||||||||||
Total earnings/loss attributable to redeemable noncontrolling interests
|
(0.5 | ) | (0.4 | ) | (0.3 | ) | (0.6 | ) | ||||||||
Net earnings attributable to Biglari Holdings Inc.
|
1.0 | % | 2.0 | % | 1.7 | % | 3.4 | % |
|
·
|
the ability of the restaurant operations to increase store traffic on a profitable basis;
|
|
·
|
competition in the restaurant industry for customers, staff, locations, and new products;
|
|
·
|
disruptions in the overall economy and the financial markets;
|
|
·
|
the Company’s ability to comply with the restrictions and covenants to its debt agreements;
|
|
·
|
declines in the market price of our common stock, which could adversely affect our goodwill impairment analysis;
|
|
·
|
the potential to recognize additional impairment charges on our long-lived assets;
|
|
·
|
fluctuations in food commodity and energy prices and the availability of food commodities;
|
|
·
|
the ability of our franchisees to operate profitable restaurants;
|
|
·
|
the poor performance or closing of even a small number of restaurants;
|
|
·
|
changes in customer preferences, tastes, and dietary habits;
|
|
·
|
changes in minimum wage rates and the availability and cost of qualified personnel;
|
|
·
|
harsh weather conditions or losses due to casualties;
|
|
·
|
unfavorable publicity relating to food safety or food-borne illness;
|
|
·
|
exposure to liabilities related to the ownership and leasing of significant amounts of real estate;
|
|
·
|
our ability to comply with existing and future governmental regulations;
|
|
·
|
our ability to adequately protect our trademarks, service marks, and other components of our brand;
|
|
·
|
changes in market prices of our investments; and
|
|
·
|
other risks identified in the periodic reports we file with the Securities and Exchange Commission.
|
Ite
m 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Ite
m 4.
|
Controls and Procedures
|
Ite
m 1A.
|
Risk Factors
|
Ite
m 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Ite
m 3.
|
Defaults Upon Senior Securities
|
Ite
m 4.
|
Mine Safety Disclosures
|
It
em 5.
|
Other Information
|
Ite
m 6.
|
Exhibits
|
Exhibit Number
|
Description
|
|
10.01
|
Trademark Sublicense Agreement, entered as of May 14, 2013, by and among the Company, Steak n Shake, LLC and Steak n Shake Enterprises, Inc.
|
|
31.01
|
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.02
|
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.01*
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101**
|
Interactive Data Files.
|
*
|
Furnished herewith.
|
**
|
In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
Date: May 17, 2013
|
|||||
Biglari Holdings inc.
|
|||||
|
By:
|
/s/
Bruce Lewis
|
|||
Bruce Lewis
Controller
|
|
1.
|
License.
|
|
1.01
|
Licensee hereby grants to Sublicensees, and Sublicensees hereby accept from Licensee, a right and license to use the Licensed Marks in connection with marks owned by Sublicensees in association with restaurant franchising (including business management assistance in the establishment and/or operating of restaurants), restaurant services, retail and retail related services, real estate services and apparel (the products and services which are the subject of this Agreement are hereinafter referred to as the “
Products
” and the “
Services
”) throughout the world (the “
Territory
”), including any advertising and promotion associated therewith. Licensee, in its reasonable discretion, by written notice to Sublicensees, may add additional marks to
Schedule A
, and such marks shall be deemed to be Licensed Marks hereunder, provided that those marks are Licensed Marks under the Trademark License Agreement. The foregoing license granted in this Paragraph 1.01 shall hereinafter be known as the “
Trademark Sublicense.
” The Trademark Sublicense is granted without warranties or assurances as to the registrability or availability of the Licensed Marks.
|
|
1.02
|
The Licensed Marks shall not be used by Sublicensees in association with any goods or services other than the Products and Services without the express written consent of Licensee and Licensor. The Trademark Sublicense is granted on a non-exclusive basis vis-à-vis Licensee’s use of the Licensed Marks.
|
|
1.03
|
Sublicensees shall not have the right to assign, transfer, or devise any rights granted herein, except that Sublicensees shall have the right to grant further sublicenses hereunder, with Licensee’s and Licensor’s approval, such approval not to be unreasonably withheld or delayed.
|
|
1.04
|
Notwithstanding the foregoing, Sublicensees (and their permitted sublicensees) shall have the right to permit third parties to provide Services and produce and manufacture Products or the packaging thereof for Sublicensees consistent with the quality standards and other requirements of this Agreement and the Trademark License Agreement for use in connection with activities encompassed within the scope of the Products and Services. Sublicensees (and their permitted sublicensees) will identify their Products and Services and manufacturers for the Products to Licensee and/or Licensor upon request. Sublicensees agree that any person or entity permitted to manufacture such Products shall be prohibited from manufacturing, producing, selling, distributing, or shipping Products other than to Sublicensees (or their permitted sublicensees). Sublicensees further agree to enforce such prohibition at their own expense and upon reasonable demand by Licensee and/or Licensor.
|
|
1.05
|
Any and all permitted sublicenses granted by Sublicensees shall be subject to the terms hereof and of the Trademark License Agreement and must reflect and contain all the restrictions, protections and provisions of this Agreement for the benefit of Licensee and the Trademark License Agreement for the benefit of Licensor, and must be approved in advance in writing by Licensee and Licensor, whose approval will not be unreasonably withheld or delayed.
|
|
1.06
|
Sublicensees acknowledge that Licensee is the exclusive licensee of the Licensed Marks and that Licensor is the owner of the entire right, title and interest in and to the Licensed Marks. Sublicensees will not at any time do, or cause to be done, any act or thing in any way impairing or tending to impair any part of such right title and interest. In connection with the use of the Licensed Marks, Sublicensees shall not in any manner represent that they have any ownership interest in the Licensed Marks. Sublicensees shall only have the right to register the Composite Mark in the joint name of Licensor and Sublicensees and may only use the Composite Mark for the purposes for which, and for so long as, it may use the Licensed Marks hereunder. Sublicensees hereby assign, and agree to assign in the future, any right they may have acquired or will acquire in the Licensed Marks, including any goodwill associated therewith. The foregoing shall not be applied to impair the registration and maintenance by Sublicensees of marks containing the Licensed Marks and additional marks owned independently by Sublicensees, provided, however, that Sublicensees shall promptly cancel all registrations for trademarks that contain any of the Licensed Marks if the Trademark License Agreement is terminated.
|
|
1.07
|
Sublicensees acknowledge that, pursuant to the Trademark License Agreement, Licensor retained the right to use and/or register his name, and variations thereof, as a trademark or service mark in all media fields, including, but not limited to, television, print publications, film, radio, personal appearances, public addresses and other types of media.
|
|
1.08
|
All restrictions, protections and provisions of the Trademark License Agreement that run to the benefit of Licensor are incorporated herein explicitly and/or by reference and apply to Sublicensees and to all permitted sublicensees of Sublicensees, and must be contained in any further proposed sublicense agreement.
|
|
2.
|
License Term.
|
|
2.01
|
This Agreement shall be effective as of the date hereof, and shall continue for the period during which the Trademark License Agreement is effective (the “
Term
”).
|
|
3.
|
Royalty
.
|
|
3.01
|
From and after the occurrence of a Triggering Event, Sublicensees shall pay to Licensee that portion of the Royalty that is attributable to Sublicensees’ Revenues with respect to the Royalty Period (as such terms are defined in the Trademark License Agreement). Without limiting any other provision of this Agreement, the terms of Section 3 of the Trademark License Agreement shall apply to Sublicensees and to all permitted sublicensees of Sublicensees and are hereby incorporated by reference into this Agreement, and must be contained in any further proposed sublicense agreement.
|
|
4.
|
Quality Control
. Without limiting any other provision of this Agreement, the terms of Section 4 of the Trademark License Agreement shall apply to Sublicensees and to all permitted sublicensees of Sublicensees and are hereby incorporated by reference into this Agreement, and must be contained in any further proposed sublicense agreement.
|
|
5.
|
Goodwill and Enforcement of Rights
. Without limiting any other provision of this Agreement, the terms of Section 5 of the Trademark License Agreement shall apply to Sublicensees and to all permitted sublicensees of Sublicensees and are hereby incorporated by reference into this Agreement, and must be contained in any further proposed sublicense agreement.
|
|
6.
|
Use of Licensed Marks
. Without limiting any other provision of this Agreement, the terms of Section 6 of the Trademark License Agreement shall apply to Sublicensees and to all permitted sublicensees of Sublicensees and are hereby incorporated by reference into this Agreement, and must be contained in any further proposed sublicense agreement.
|
|
7.
|
Termination.
|
|
7.01
|
Breach of this Agreement shall be defined and treated as in Section 7.01 of the Trademark License Agreement.
|
|
7.02
|
Licensee may terminate this Agreement on any basis on which Licensor is entitled to terminate the Trademark License Agreement, as enumerated in Section 7.02 of the Trademark License Agreement.
|
|
7.03
|
Within six (6) months following the expiration or termination of this Agreement, Sublicensees (and any of their sublicensees) must cease using the Licensed Marks and at Licensee’s and/or Licensor’s sole options shall destroy or allow Licensee and/or Licensor to pick up all printed matter, tangible matter, and Product bearing any of the Licensed Marks.
|
|
8.
|
Indemnification and Insurance
. Without limiting any other provision of this Agreement, the terms of Section 8 of the Trademark License Agreement shall apply to Sublicensees and to all permitted sublicensees of Sublicensees and are hereby incorporated by reference into this Agreement, and must be contained in any further proposed sublicense agreement.
|
|
9.
|
Notices
. Except as otherwise set forth herein, any notices, statements or payments required to be made or given under this Agreement shall be hand delivered or sent via overnight courier, to the following persons and addresses which may change or be modified at any time in writing by the receiving parties.
|
|
10.
|
Miscellaneous.
Without limiting any other provision of this Agreement, the terms of Section 10 of the Trademark License Agreement shall apply to Sublicensees and to all permitted sublicensees of Sublicensees and are hereby incorporated by reference into this Agreement, and must be contained in any further proposed sublicense agreement.
|
|
11.
|
Third Party Beneficiary.
Licensee and Sublicensees agree that Licensor is an intended third party beneficiary of this Agreement and all further sublicense agreements and shall have the full right and authority to enforce this Agreement and all further sublicense agreements against Sublicensees and its sublicensees.
|
LICENSEE:
|
||||
Biglari Holdings Inc., an Indiana Corporation
|
||||
By:
|
/s/ Bruce Lewis | |||
Name: | Bruce Lewis | |||
Title: | Controller | |||
SUBLICENSEES:
|
||||
Steak ‘n Shake, LLC an Indiana Limited Liability Company
|
||||
By:
|
/s/ Duane Geiger | |||
Name:
|
Duane Geiger | |||
Title:
|
Chief Financial Officer | |||
Steak ‘n Shake Enterprises, Inc., an Indiana Corporation
|
||||
By:
|
/s/ Duane Geiger | |||
Name:
|
Duane Geiger | |||
Title:
|
Chief Financial Officer |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 17, 2013
|
||||
/s/ Sardar Biglari
|
||||
Sardar Biglari
|
||||
Chairman and Chief Executive Officer
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 17, 2013
|
||||
/s/ Bruce Lewis
|
||||
Bruce Lewis
|
||||
Controller
|
/s/ Sardar Biglari
|
||||
Sardar Biglari
|
||||
Chairman and Chief Executive Officer
May 17, 2013
|
||||
/s/ Bruce Lewis
|
||||
Bruce Lewis
|
||||
Controller
May 17, 2013
|