Biglari Holdings Inc. Annual Report 2014

FY2014 Annual Report · Biglari Holdings Inc.

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Dear Shareholders of Biglari Holdings Inc.:

The metamorphosis of Biglari Holdings originally stemmed from a base of a nearly
insolvent, money-losing restaurant company. We burrowed in where others feared to tread and
turned a money loser into a launching pad for a dynamic enterprise. Biglari Holdings began
fiscal 2014 with a highly profitable restaurant business and ended the year with ownership in
two unrelated industries: insurance and media. I will discuss both acquisitions — First Guard
Insurance Company and Maxim Inc. — later in the letter.

We founded Biglari Holdings with a multiplicity of advantages, which have allowed us
to benefit from remunerative business and investment opportunities. As a result, we have grown
our cash and investments from a meager $1.6 million when we commenced over six years ago to
a total of $766.6 million at the end of fiscal 2014. Of course, two rights offerings in the last two
years to existing shareholders accounted for $161.5 million of the increase. The remainder,
about $600 million, was created through effective management of our operating units along with
sensible, sound redeployment of capital. Phil Cooley, Vice Chairman of BH, and I believe we
1
have shaped a concept that maximizes the per-share intrinsic value of the company.
So far, so
good.

Our enterprise is structured as a holding company — a corporation with diverse,
unrelated concerns — whose objective is to aggrandize its eventual net worth. Biglari Holdings
is devoted to acquisitions that will continue to expand its ownership of other businesses.
Although we expect moderate growth in cash earnings from our existing base of companies, we
can develop more rapidly through acquisitions. Our cardinal idea is to assemble an outstanding
collection of businesses under the aegis of Biglari Holdings. Think of Biglari Holdings as a
museum — a museum for businesses. Some people like to collect art; Phil and I like to collect
businesses. Although this concept is at its embryonic stage, you should note that we are
accumulating businesses, such as Steak n Shake and First Guard, not to auction off later but as
permanent holdings. Such a philosophy should bode well for us because there are numerous
sellers who want and value a permanent place for their prized creations. We will continue to
search for strong cash flow generators to add to our collection and thus to build an even more
formidable holding company.

We are developing a multi-industry company designed to amalgamate multiple streams
of cash. Along with permanent capital, significant holdings in investments, and maximum
flexibility in capital allocation, we are positioning ourselves with a significant competitive
advantage. In essence, we are building Biglari Holdings to endure. A strongly constructed
enterprise at the top will empower maximum potential for its units to function far more
efficaciously.

As we continue to add to our workforce through acquisitions, the parent company staff
will remain small. We have a total of 23,130 employees on our payroll, of whom only 5 reside at
headquarters. We heartily believe in simplicity because money is spent, not made at
headquarters. We do not have a plethora of departments as other firms do, such as public
relations, legal, human resources, investor relations, etc., etc., etc. Accordingly, our central costs

1 Intrinsic value is measured by taking all future cash flows into and out of the business and

discounting the net figures at an appropriate interest rate.

are sharply limited because of the concentration of decision-making power. Capital allocation
responsibility is highly centralized and managed exclusively by myself rather than through a
committee. We do not employ analysts or advisors. A bureaucracy suffocates decision-making
acuity and agility. An enterprise’s wealth is derived from the underlying businesses, minus
unnecessary corporate overhead. By taking our approach, we sidestep diseconomies of scale
resulting from a bloated bureaucracy.

The combination of cash earnings generated by operating businesses along with my
capital allocation work will stoke our corporate performance, which according to our criterion
must outdo our benchmark, the S&P 500 Index. Over the last six years, we believe BH’s gain in
per-share intrinsic value has far outstripped that of the S&P.

Two components — investments and operating businesses — remain critical to

assessing BH’s progress. We will present the dual segments as if BH were split into two parts.

Investments

By the end of fiscal 2014, total investments (cash, marketable securities, and BH’s
investments in The Lion Fund) amounted to $766.6 million, increasing from $635.4 million in
the preceding year. Although 2014’s investments grew by $131.2 million, this increment was
largely propelled by adjusting the capital structure, but it was also partially offset by the
acquisition of two companies.

Over the last six years BH’s investments have climbed by $759.7 million. The following

table displays the company’s exponential rise in investments since fiscal 2008:

Cash and Cash-Equivalents ....... $ 124.3 $ 94.6

$ 60.4

99.0

47.6

51.4

6.9

2014

2013

2012

2011

2010

2009

2008

Fiscal Year (In Millions)

Marketable Securities ................

21.5

85.5

269.9

115.3

2
The Lion Fund
455.3
Total Investments ....................... $ 766.6 $ 635.4

......................... 620.8

48.3

38.5

32.5

38.6

3.0

–

$ 378.6

$ 252.8

$ 118.7

54.4

6.9

Enjoy reading the above increases. Just do not become accustomed to them.

We have improved capital utilization by redeploying funds based on encountering
unusual and worthwhile opportunities. As the capital deployer unconstrained by institutional
limitations, I maintain enormous latitude in capital allocation. I appraise on the basis of value
and allocate on the basis of opportunity. Our scope of investment activity is limited only by our
scope of knowledge.

These sums are BH’s investments in The Lion Fund, L.P. and The Lion Fund II, L.P. The
interests of the other limited partners are not included. Both partnerships throughout this letter
will be referenced as The Lion Fund.

A vital advantage that has facilitated BH’s results of the past six years has been the
adoption of operating and capital allocation policies logical to us but unconventional in
corporate America. For instance, most companies do not consider fractional ownership of
businesses by means of the stock market. By refusing to restrict ourselves to the purchase of
entire businesses in negotiated transactions, we magnify our investment domain.

In selecting stocks of businesses, we favor concentration. Our range may be limited, but
our knowledge of selected companies must be supreme in order to achieve performance
superiority. By our assuming a long-term perspective and concentrating on equities, we are
accepting near-term volatility in exchange for higher long-term results. Our view, we caution,
runs against convention. We believe a concentrated approach can be a highly profitable
operation for those who possess the proper mental equipment. However, he who thinks he
knows but actually does not know, he is, as Shakespeare wrote in Hamlet, “Hoist with his own
petard” — or ruined by his own ignorance.

Our approach has enabled us to seize lucrative investments, substantially advancing
BH’s per-share intrinsic value. Our most significant noncontrolled holding is Cracker Barrel Old
Country Store, Inc. in which we own 4,737,794 shares, or a 19.8% equity interest. BH holds
Cracker Barrel shares through The Lion Fund.

We purchased the stake in Cracker Barrel for $241 million between May 2011 and
December 2012. In 2014 our pro-rata share of Cracker Barrel’s earnings amounted to $26.2
million or 10.9% of our cost. Based on the company’s current dividend rate, in the coming year
The Lion Fund should receive cash distributions of about $19 million, approximately 7.9% of
our cost. The market value of our stake at the end of our fiscal year 2014 was about $490
million. Along the way we have thus far collected a total of $34.9 million in dividends.

In gauging BH’s economic progress, Phil and I include the substantial pro-rata earnings
of noncontrolled businesses. Although noncontrolled interests are escalating BH’s “economic”
earnings, our preference remains to purchase entire businesses.

In seeking to augment our economic earnings through business acquisitions, we are quite
discerning, for we seldom discover opportunities that meet our criteria. For every hundred
businesses we review for acquisition, only one or two may interest us. When we find the few
enterprises that rise to our high standards, we do not dawdle. We move aggressively but
conscientiously. In 2014 we made progress by acquiring First Guard Insurance Company as well
as Maxim Inc.

First Guard Insurance Company

On March 19, 2014 we entered the property/casualty insurance business with a gem of a
company. The man responsible for creating such a remarkable gem is Edmund B. Campbell, III,
from whom we purchased First Guard Insurance Company and its affiliated agency, 1st Guard
Corporation. First Guard — a direct underwriter of commercial trucking insurance — is a low-
cost operator, one with extraordinary efficiency. This fact should arouse your interest: First
Guard has never registered an underwriting loss in its history.

1st Guard Corporation began in 1937 as an insurance agency targeting small businesses
and later adding trucking insurance. In 1965 Edmund B. Campbell, Jr. purchased the company.
Recognizing the inherent potential for insurance products for independent truckers, Ed Jr. by
1969 turned 1st Guard into an exclusive provider of trucking insurance for owner-operators.

In 1991, Ed Jr. sold the company to his son, Ed III. Under Ed III the company instituted
efficient operational strategies that in 1997 led to the formation of First Guard Insurance
Company. By directly selling insurance to truckers, maintaining underwriting discipline, and
sustaining a low-cost operation, First Guard offers exceptional value to truckers and auspicious
economics for its owner.

Shown below are the results of First Guard (combined with its affiliated agency), in

aggregate, since its formation:

Time Period
August 1, 1997 – September 30, 2014

Revenues3

Earnings Before Taxes Combined Ratio4

$145,207,947

$42,698,277

79.1%

In their nearly 50 years in the insurance business, the Campbell family has maintained a
noteworthy record and earned an extraordinary reputation. Over the years, Ed III had been
approached by other buyers, but the idea of his creation left in the hands of a “strategic” buyer or
a private equity firm failed to appeal to him because of the disruptions such owners would cause
for the business and its employees.

We were in a uniquely good position because we did not merely want to buy the
business; we wanted Ed and his management team to continue to operate in the future as they
had done in the past. The only exception was my assuming responsibility for First Guard’s
investment portfolio. Our financial strength as well as our decentralized management structure
offered great appeal.

First Guard is an ideal acquisition because of its excellent management. We believe that
Biglari Holdings’ ownership will permit Ed and his team to unleash First Guard’s potential to
attain higher earnings in the coming years than would have existed if it had remained on its own.
The prime reasons are that Biglari Holdings has deep capital strength and the willingness to
withstand variability in results so long as the decisions involve the prospects of higher long-term
profits. In fact, we expect net premium volume to increase in the coming year because, effective
September 1, 2014, we materially reduced insurance premiums ceded to our reinsurer. Without
question, we will clearly remain sufficiently disciplined to weigh underwriting profits over
premium volume.

First Guard is an exemplary acquisition for Biglari Holdings’ collection of businesses.

3 Revenues comprise net premium volume, commissions, and management fees.

The combined ratio represents losses incurred plus expenses as compared to revenue from
premiums. A combined ratio beneath 100 percent denotes an underwriting profit whereas a ratio
above 100 percent signifies a loss.

Maxim Inc.

Although our preference is to purchase a well-managed business with terrific economic
dynamics and at a prudent price, we will also venture into troubled companies, but only ones
whose underlying business we think will become sound and promising once our methods are
implemented. In such instances we find safety in a bargain price.

On February 27, 2014 we purchased Maxim — one of the largest men’s magazines — a
cash-depleting business except one that we ascertained could be converted into a cash generator
and consequently achieve outsized overall results. Therefore, Maxim represents an archetypical
entrepreneurial investment.

We purchased Maxim at a moment of maximum uncertainty. Many potential buyers had
fled, advertisers en masse were abandoning the publication, and the magazine was suffering
losses. Nevertheless, where most viewed chaos and losses, we viewed opportunity and profit
possibilities. As an entrepreneur, I am comfortable operating in an ambiguous, nebulous, and
tumultuous environment.

The magazine built the Maxim brand, and now we intend to utilize that brand to build
cash-generating businesses. We view Maxim as a franchise that can develop high-margin lines
of business, such as licensing the brand to spawn royalties related to consumer products and
services. But the initial step has been to fix the fundamentals of the business. The magazine
itself has been upgraded — from the quality of the paper to the content to the photography —
thereby projecting a new vision and a new image. An ethos must shine through the pages of the
periodical depicting sophistication and style. With uplifting success stories, the new Maxim is
aimed at becoming both inspirational and aspirational. The culmination of these efforts to
produce a quality product should grow advertising revenue. As we rebuild the business, both
print and digital, we are concurrently investing in the emergence of the licensing business.

We are allotting significant money to transform the business. Since our acquisition,
Maxim’s pre-tax operating losses total $16 million. However, we view the bulk of the losses as
investments necessary to repair the revenue/expense problem. Our expectation is for Maxim to
become profitable during 2016. Nevertheless, our pathway to profit, we anticipate, will be
highly irregular. By my next Chairman’s letter, I will be in a position to assess whether we are
on track in reaching our goal.

The transformation of Maxim will either make history or be history. Because such a
commitment to an entrepreneurial investment does not involve, let alone imply, the surety of
success, we risk being quite wrong. Nevertheless, our duty is not to avoid discomfiture but to
take action after judging we have a mathematical edge. Anyone desiring a 100% probability of
success best take Clint Eastwood’s advice in the film The Rookie, “If you want a guarantee, buy
a toaster.”

Operating Businesses

We have four major controlled businesses, each 100%-owned: Steak n Shake, Western
Sizzlin, First Guard, and Maxim. We started with Steak n Shake in 2008 and have been plowing
its excess cash into a disparate collection of businesses and investments. We are constructing
Biglari Holdings one acquisition at a time.

Because we are driven by intrinsic value not by an income statement, in our view, our
reported earnings do not properly represent a meaningful measure of our economic progress.
Nevertheless, as a first step in evaluating BH’s performance, the following table delineates an
unconventional breakdown of our earnings in a form we find more useful than the conventional
one in our consolidated statements.

Operating Earnings:

Steak n Shake ........................................................
Western Sizzlin .....................................................
First Guard ...........................................................
Maxim ..................................................................
(1) ..........................................
Corporate and Other
Operating Earnings Before Interest and Taxes .........
Interest Expense
.....................................................
Income Taxes ............................................................

(2)

Net Operating Earnings ............................................
BH Investment Gains (net of taxes) ..........................

The Lion Fund (net of taxes) ....................................

(In 000’s)

2014

2013

$ 26,494
1,765
1,461

(15,981)

(8,003)

5,736

10,299
(2,746)

(1,817)
–

30,621

$ 28,376
511
–

–

(10,592)

18,295
6,551
(299)

12,043
1

128,227

Total Earnings ..........................................................

$ 28,804

$ 140,271

(1) Includes earnings from consolidated affiliated partnerships
(2) Includes loss on debt extinguishment

For the last two years moving securities from BH to The Lion Fund necessitated our
booking an accounting net profit of $18.3 million in 2014 and $114.9 million in 2013. These
gains do not impact the intrinsic value of BH. To explain, accounting standards call for the
market value of shares within such a transfer to be recorded at the new cost basis on the date of
the exchange, with the difference between the new basis and the prior historical cost recognized
in the financial statements as an investment gain. For tax return purposes, the interchange is
recorded at the original cost of the securities. We did not harvest any gains, nor did we pay any
taxes. Nevertheless, the recognition of the $18.3 million gain plus a $12.3 million after-tax
increase in the carrying value of The Lion Fund affected BH’s reported earnings by $30.6
million.

As noted earlier in this letter, BH now maintains all its Cracker Barrel shares through
The Lion Fund. Henceforth, changes in the value of Cracker Barrel’s shares plus their dividends
impact the value of The Lion Fund, which in turn will be recorded on BH’s quarterly income
statement. Historically the dividends received from Cracker Barrel on shares held by BH were
recorded as part of operating earnings. Thus, BH’s net operating earnings are reduced by
holding dividend-paying securities through The Lion Fund. But shifting the geography of the
accounting does not change the value of BH.

Furthermore, Phil and I are indifferent about the variability in reported earnings caused
by the accounting of The Lion Fund. We simply separate changes in the partnerships’ values
from those in operating businesses when we report BH’s earnings. In addition, we appraise our

equity holdings based on their underlying business performance, not on their stock performance.
We are value-minded investors, not quotation-minded speculators. Patently, our operating and
capital deployment decisions are not founded on their accounting consequences but on their
economic consequences. We opt for economic profits over accounting optics.

Last year I told you that the performance of our operating businesses in fiscal 2013 was
acceptable. We now submit the comparable assessment for 2014. A casual reader would fail to
conclude correctly, adjudging only by net operating results, which show a loss of $1.8 million in
2014 versus a profit of $12 million in 2013. Ostensibly, BH’s net operating earnings have been
declining for the last few years. Nonetheless, a conclusion based on earnings would be
incomplete and erroneous, for we could easily take action that would set record earnings. Our
aim is not to create earnings, but to create wealth. Value is not predicated on an annual figure
but on the present value of future cash flows.

Restaurant Operations

Our restaurant business — the cash machine behind Biglari Holdings — had a decent
year. Our two wholly-owned restaurant businesses are Steak n Shake and Western Sizzlin,
though the business models of each differ. Steak n Shake primarily operates restaurants, sporting
a total of 544 locations, of which 417 are company operated. However, Western is mainly
engaged in franchising restaurants, with 75 units — all but 4 are franchisee run.

In fiscal 2014, Western sent BH $2.7 million of cash. Because of our discipline in capital
allocation, we have been cash-cowing Western for years. Since our purchase in March 2010, an
aggregate of $13.1 million has been sent to Biglari Holdings, through which we have redeployed
the capital into more gainful opportunities.

* * *

A little over six years ago, we gained control of Steak n Shake, which then was a failing
restaurant chain. Prior to our taking control in August 2008, in the fourth quarter of fiscal 2005
Steak n Shake began to record declining same-store sales, which lasted 13 consecutive quarters.
Steak n Shake was unable to increase same-store customer traffic during these periods of
economic expansion and contraction because the chain was not providing patrons with excellent
service, excellent products, and excellent prices. By the time we took over, the company’s
deterioration was worsening. In the fall of 2008 Steak n Shake was losing about 10% in year-
over-year customer traffic and also losing around $100,000 per day. But in a matter of
months — and in the depths of the recession — Steak n Shake underwent an exceptional
turnaround. Since then we have registered 23 consecutive quarterly increases in same-store sales.
Below is a side-by-side comparison of same-store performances before and after we took over.

Same-Store Sales

Pre-Takeover

Post-Takeover

2005 2006 2007

2008

1st Quarter

2nd Quarter

3rd Quarter

–

-1.1% -1.7% -9.5%

-0.3% -4.7% -6.3%

-3.9% -4.3% -5.8%

4th Quarter -3.0% -3.4% -3.9% -7.4%

2012

2013

2009 2010 2011

2014
-1.4% 14.4% 2.1% 5.5% 1.3% 3.0%
2.4% 5.1% 4.3% 4.8% 0.3% 3.7%
5.0% 7.5% 4.9% 2.9% 4.2% 1.0%
10.1% 6.8% 5.3% 1.8% 3.3% 3.4%

We always make the assumption that our ultimate boss — the customer — is intelligent,
and neither irrational nor ignorant. We are a customer-focused rather than a competitor-focused
company. As a corollary, we do not use competition as our primary benchmark. Rather, our
objective is to expand customer traffic profitably year in and year out even if our competitors
fail to do so. The more relevant we are to customers, the less relevant we find the competition.
We refuse to use alibis for poor performance. If we blame the economy or weather for weak
performance, then we should also give credit to external factors for strong performance. We
never forget we are in the restaurant business, not the excuse business.

Here is a review of Steak n Shake’s results over the last seven years:

(Dollars in 000’s)

Net Revenue

Operating
Earnings

Number of
Customers

Number of
Company Stores
at Year-End

Operating
Earnings
Per Store

2008 ........................ $ 610,061

$ (30,754)

85,000,000

2009 (53 weeks) .....

628,726

11,473

91,000,000

2010 ........................

662,891

38,316

101,000,000

2011 ........................

689,325

41,247

105,000,000

2012 ........................

718,010

45,622

110,000,000

2013 ........................

737,090

28,376

112,000,000

2014 ........................

765,600

26,494

114,000,000

423

412

413

414

415

416

$ (72.7)

27.8

93.0

99.9

110.2

68.4

63.7

Notes: Present management took control in the fourth quarter of fiscal 2008. Customer count is only for company-operated units.

Phil and I believe that in fiscal 2014 Steak n Shake’s intrinsic value increased, even
though its earnings before interest and taxes of $26.5 million declined from $28.4 million in
2013. Voluntarily, we have been trading near-term earnings to develop higher long-term cash
flows. As the table indicates, Steak n Shake’s earnings were materially higher in fiscal 2012.
The major factor for the recent downturn has been our aggressive spending to stoke our
franchise business. Our capital continues to be apportioned on the expectation that we are
creating consequential, greater dollar value for each dollar spent.

We have also been investing to strengthen our long-term competitive position by
providing our customers with an extremely strong value proposition on America’s favorite
pastime — burgers and shakes — that will not go out of style. But we do not serve just any
burgers and shakes; our savory steakburgers and delicious hand-dipped milkshakes have
propelled Steak n Shake into a multigenerational brand. Viewing all company-operated units as
a single, united, gigantic store, we served 85 million patrons in 2008. However, in 2014 we
served 114 million customers. In other words, 29 million additional customers (some of whom
were repeats) went through the same four walls in 2014, compared to those in 2008. Because of
the commitment and passion of our over 23,000 associates, we are doing our part with
immeasurable satisfaction to improve the quality of life for millions of people.

Clearly, it is easy to gain more customers by opening more units. All it takes is capital.
But to earn more customers profitably through existing stores — and leveraging fixed
restaurant-level costs — is axiomatically a difficult but far more rewarding concept. The
pendulum swing from losses in 2008 to profit in subsequent years is attributable to our
bolstering the stores in our domain to become more productive. How our people outperform is
based on old-fashioned ideals of ingenuity and determination.

Through the amalgamation of daily improvements, relentlessly reducing operating costs
and increasing efficiencies, we are creating a solid enterprise. Our pricing philosophy is not to
maximize profit per customer but to offer products at the lowest possible prices to an ever-
increasing number of customers, thereby continuing to stimulate aggregate profits. Our strategy
has enabled us to maintain constant prices on core menu items even though beef costs alone, in
company-operated stores, were about $19 million higher in 2014 than in 2009. To remain
successful, we must persist within a culture of thrift, squeezing out expenses and applying
methods to lower our cost structure. We have instituted a system in which all expenses are
defined as variable. Our discipline using analysis and expense control enables us to achieve
sustainable cost advantages. Naturally, cutting expenses is like cutting grass, a never-ending
task.

Steak n Shake’s accomplishment over the last six years is extraordinary because we
attained it without major capital expenditures or retention of earnings. Under BH’s ownership,
Steak n Shake has paid more in dividends than it has earned in profits, a dividend ratio well
beyond 100%. In fact, Steak n Shake has distributed over $300 million of capital to BH. Steak n
Shake cascades cash well beyond its requirements, including funding its growth.

To become a global brand without major capital outlays, we are leveraging the Steak n
Shake brand to capitalize on noncapital-intensive businesses that foster high returns. In a
franchising arrangement the major capital funding required to expand the brand is borne by
franchisees. As the franchisor, we mainly collect royalties. Our fundamental idea is to produce
long-term cash flows yet concomitantly reduce operating risks. But to fill these rivers of ever-
increasing cash, we have been investing aggressively to build the infrastructure and system-wide
standards to channel our growth. Because of the upfront costs, public companies desiring to
enlarge their near-term accounting earnings would not follow similar initiatives. Thus far, we
gauge our investments in franchising to have produced reasonable results. The impact of our
investments is displayed below in the number of franchise units and the revenues derived from
them:

Number of
Franchise Units

2010 ...................................

2011 ...................................

2012 ...................................

2013 ...................................

2014 ...................................

Overall Gain (2010-2014)

104

124

(Dollars in 000’s)

Franchise
Revenue

$ 4,205

5,348

6,499

8,707

12,183

$ 7,978

Revenue
Growth Rate

N/A

27.2

21.5

34.0

39.9

189.7%

Although Steak n Shake was founded in 1934 in Normal, Illinois, the first franchised
unit opened in 1939. From 1939 to 2010 Steak n Shake grew by an average of one franchised
unit per year. In contrast, the end of 2015 will mark the fifth anniversary since present
management assertively began to pursue franchising. We anticipate that in this five-year interval
we will surpass the 71 units achieved in our preceding 71-year history of franchising. Franchise
revenue has been compounding by an average of 30% per annum over the last four years, a rate
that is almost certain to decline. However, we have signed agreements with domestic and
international franchisees who in the coming years have committed to opening a total of 239
units.

We remain confident and enthusiastic about our prospects to broaden both domestic and
international franchising. We have creatively adapted Steak n Shake, yet maintained consistency
in quality. Because of the modularity of Steak n Shake’s design, we are now present in
universities, casinos, airports, gas stations, shopping centers, and other arenas.

In our quest to become a global brand, we have seeded select company-operated units in
high-profile, iconic locations to create more awareness of the brand as well as to showcase Steak
n Shake’s new counter-service model.

In the U.S. the most recent unit has opened in Santa Monica, California at the famed
Third Street Promenade. Along with our location in New York City, our visibility from the East
Coast to the West Coast has increased interest in the brand.

Internationally, we have two company-operated units along the Mediterranean Sea: one
on the island of Ibiza, Spain, and the other in Cannes, France. Our overseas presence through
franchising is developing traction. We are about to open a unit in Marseille, France, and in the
coming months we plan to open in Madrid, Spain; Kuwait City, Kuwait; and Riyadh, Saudi
Arabia. Europe and the Middle East are fertile grounds for franchise expansion. But to ensure
that the Steak n Shake in Kuwait City and the one in Kansas City consistently serve high-quality
products to our specifications, we are building an efficient system to maintain uniformity.

In addition to franchising, we have been pursuing a licensing business because we have
long believed that Steak n Shake is a brand with extensive potential that could proliferate
beyond the restaurant. To reach more customers effectively and profitably, we are licensing
Steak n Shake products and earning royalties. Recently we have introduced several food
products at various retailers. The Steak n Shake brand can reach additional customers through
supermarkets, which most American households must frequent, whereas not all of them will
enter a Steak n Shake restaurant in the coming year. As one pertinent example of licensing, we
are now present in approximately 2,400 Walmarts. We think that licensing will aid in spreading
the brand to become ubiquitous.

Franchising and licensing are businesses that in the long run we think will add streams
of cash to Steak n Shake, which will ultimately go to the parent company. Phil and I believe that
because of the positive actions we have taken, Steak n Shake is a far more valuable concept
today than at any other time in its history and also is the type of business we want to own in the
coming decades.

Capital Structure

Capital structure management is a critical component at BH but one neither extensively
nor fully understood because of the necessity to consolidate subsidiary debt on BH’s balance
sheet. For BH we have designed a method that allows us to take advantage of leverage without
assuming financial liability at the parent level. To achieve this desired outcome, we have
separated the debt obligations of subsidiaries from those of BH. Furthermore, each subsidiary’s
capital structure risk will vary and will be inversely related to its business risk. For instance,
Maxim has no debt, whereas Steak n Shake has an appropriate level of debt relative to its assets
and its earning power. Steak n Shake’s debt — or that of other subsidiaries — is not guaranteed
by BH. The parent company itself carries no debt, and thus retains maximum capital strength.

In fiscal 2014, Steak n Shake refinanced its credit facility and in doing so increased its
leverage. At the end of fiscal 2014, Steak n Shake had $219.5 million in debt, up from $120.3
million as of the prior year. The pre-tax interest rate is now at 4.8%. We continue to adjust Steak
n Shake’s capital structure to conserve a sensible level of debt and of debt capacity. The
refinancing increased optionality with the resultant consequence of fortifying BH’s balance
sheet.

BH’s balance sheet contains significant liquid assets, including cash raised from a
recently completed rights offering. In sum, BH raised capital through this rights offering by
issuing 344,261 shares at $250 per share, raising a total of $86.1 million. Now BH has 2,065,586
total shares outstanding. Our flotation costs were exceptionally low relative to traditional
financing, equaling 22 basis points or 0.22% of the capital raised.

Shareholder Communications

My communications with shareholders are generally limited to the annual report and the
annual meeting. We do not provide earnings guidance, nor do we hold quarterly conference calls
in that neither activity would jibe with managing our entrepreneurial enterprise. On the other
hand, we wish to provide all shareholders simultaneously with the same information. One-on-
one meetings are neither productive nor practicable.

My aim in the Chairman’s Letter is to impart our business philosophy, explain how the
business has performed, and supply the information necessary to arrive at your own estimate of
the intrinsic value of the company. However, outside of regulatory requirements, we will not
share our thoughts, discuss our intentions, or telegraph our investment ideas.

Past Chairman’s Letters are also important in that they help you gain more knowledge of
the business. These letters can be easily accessed on our website, biglariholdings.com. We are
providing information we ourselves would want to know if our roles were reversed and we were
passive investors.

We have changed our fiscal year to the calendar year, switching from one ending on the
Wednesday nearest September 30 to one that will end on December 31. With the change in
reporting, we will file the results from September 25, 2014 to December 31, 2014 on March 13,
2015. We will then issue press releases on 2015 quarterly results after the market closes on May
8, August 7, and November 6. The 2015 annual report will be posted on our website on
Saturday, February 20, 2016.

Our annual meeting will be held at 1:00 pm on Thursday, April 9, 2015 in New York
City at the St. Regis Hotel. Be aware that the meeting is just for our owners; thus, to attend, you
must own shares and show proof thereof. The bulk of the gathering is a question-and-answer
session that usually lasts about five hours covering myriad topics on shareholders’ minds. Phil
and I look forward to spending the time required to answer your questions. We find the annual
meeting to be an effective channel to communicate with you.

* * *

Shareholders who invest in BH should do so just as they would in a partnership with
conditions they find agreeable. We want only partners who understand and affirm our
entrepreneurial approach and therefore are in accord with our philosophy, objectives,
governance, and time horizons.

For example, be sure your commitment would extend as long as a decade or more;
otherwise, you would be mistaken in owning BH. Our job over a decade is to create value in
excess of the S&P. We are making decisions and measuring results over highly extended
intervals.

We are not shaping our views or methods according to the expectations of others. We
are guided by fact and logical reasoning, not by conventional ideology. The unimaginative and
the unenterprising moderate their actions and achieve mediocrity. But in doing so, they leave
opportunity ripe for exploitation, especially by the resourceful, self-reliant entrepreneur. When
we depart from arbitrary codes and conventions, we invite unease, which we handle with great
equanimity. In the end the validity of our ideas, not the opinions of others, will triumph.

Biglari Holdings is an enterprise embodying entrepreneurship. Our unwavering focus is
based on the advancement of per-share intrinsic value. Those of you who choose to partner with
us in the stock because you like our idiosyncrasies know that Phil and I will do all we can to
make your journey a prosperous one.

Sardar Biglari
Chairman of the Board

November 21, 2014

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended September 24, 2014

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 0-8445

BIGLARI HOLDINGS INC.

(Exact name of registrant as specified in its charter)

INDIANA
(State or other jurisdiction of incorporation)

37-0684070
(I.R.S. Employer Identification No.)

17802 IH 10 West, Suite 400
San Antonio, Texas
(Address of principal executive offices)

78257
(Zip Code)

(210) 344-3400
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, stated value $.50 per share

Name of each exchange on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).Yes 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-
K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes  No 

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of April 9, 2014 was approximately
$662,300,256 based on the closing stock price of $460.94 per share on that day.

As of November 14, 2014, 2,065,586 shares of the registrant’s Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive Proxy Statement to be filed for its 2015 Annual Meeting of Shareholders are incorporated by reference into Part III of this
Form 10-K.

Table of Contents

Part I

Page No.

Item 1. Business ...........................................................................................................................................................
Item 1A. Risk Factors ....................................................................................................................................................
Item 1B. Unresolved Staff Comments ..........................................................................................................................
Properties ........................................................................................................................................................
Item 2.
Item 3. Legal Proceedings ...........................................................................................................................................
Item 4. Mine Safety Disclosures ..................................................................................................................................

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities .............................................................................................................................................
Selected Financial Data ..................................................................................................................................
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................
Item 7A. Quantitative and Qualitative Disclosures about Market Risk ....................................................................
Financial Statements and Supplementary Data ...........................................................................................
Item 8.
Consolidated Statements of Earnings—

1
4
9
10
11
11

11
14
15
26
27

Years ended September 24, 2014, September 25, 2013, and September 26, 2012 .....................................

Consolidated Statements of Comprehensive Income—

Years ended September 24 2014, September 25, 2013, and September 26, 2012 ......................................

Consolidated Balance Sheets—

As of September 24, 2014 and September 25, 2013 ...................................................................................

Consolidated Statements of Cash Flows—

Years ended September 24, 2014, September 25, 2013, and September 26, 2012 .....................................

Consolidated Statements of Changes in Shareholders’ Equity—

Years ended September 24, 2014, September 25, 2013, and September 26, 2012 .....................................
Notes to Consolidated Financial Statements ....................................................................................................
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..................
Item 9A. Controls and Procedures ...............................................................................................................................
Item 9B. Other Information ..........................................................................................................................................

Part III

Item 10. Directors, Executive Officers and Corporate Governance .........................................................................
Item 11. Executive Compensation ................................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters .........................................................................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence ........................................
Item 14. Principal Accountant Fees and Services .......................................................................................................

34
35
61
61
61

62
62

62
62
62

Item 15. Exhibits and Financial Statement Schedules ...............................................................................................

Signatures ...........................................................................................................................................................................
Exhibit Index ......................................................................................................................................................................

64
71

Part IV

Item 1.

Business

Part I

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities, including
media, property and casualty insurance, as well as restaurants. The Company’s largest operating subsidiaries are involved in the
franchising and operating of restaurants. The Company is led by Sardar Biglari, Chairman and Chief Executive Officer of
Biglari Holdings and its major operating subsidiaries. The Company’s long-term objective is to maximize per-share intrinsic
value. All major operating, investment, and capital allocation decisions are made for the Company and its subsidiaries by Sardar
Biglari, Chairman and Chief Executive Officer.

Biglari Holdings’ fiscal year ends on the last Wednesday in September. Fiscal years 2014, 2013, and 2012 each contain 52
weeks. On October 16, 2014, the Company’s Board of Directors approved a change in the Company’s fiscal year-end moving
from the last Wednesday in September to December 31 of each year. The Company will file a Transition Report on Form 10-KT
for the transition period from September 25, 2014 through December 31, 2014.

Restaurant Operations
The Company’s restaurant operations’ activities are conducted through two restaurant concepts operated by subsidiaries Steak n
Shake Operations, Inc. (“Steak n Shake”) and Western Sizzlin Corporation (“Western”). As of September 24, 2014, Steak n
Shake operated 416 company-operated restaurants and 124 franchised units. Western operated 4 company-operated restaurants
and 71 franchised units.

Steak n Shake is engaged in the ownership, operation, and franchising of Steak n Shake restaurants. Founded in 1934 in Normal,
Illinois, Steak n Shake is a classic American brand serving premium burgers and milkshakes.

Western is engaged primarily in the franchising of restaurants. Founded in 1962 in Augusta, Georgia, Western offers signature
steak dishes as well as other classic American menu items. Western also operates other concepts, Great American Steak &
Buffet, and Wood Grill Buffet consisting of hot and cold food buffet style dining.

Operations
A typical restaurant’s management team consists of a general manager, a restaurant manager and other managers depending on
the operating complexity and sales volume of the restaurant. Each restaurant’s general manager has primary responsibility for the
day-to-day operations of his or her unit. Restaurant operations obtain food products and supplies from independent national
distributors. Purchases are centrally negotiated to ensure uniformity in product quality.

Franchising
Restaurant operations’ franchising program extends the brands to areas in which there are no current development plans for
Company stores. The expansion plans include seeking qualified new franchisees and expanding relationships with current
franchisees.

Restaurant operations typically seek franchisees with both the financial resources necessary to fund successful development and
significant experience in the restaurant/retail business. Both restaurant chains assist franchisees with the development and
ongoing operation of their restaurants. In addition, personnel assist franchisees with site selection, approve restaurant sites, and
provide prototype plans, construction support and specifications. Restaurant operations’ staff provides both on-site and off-site
instruction to franchised restaurant management and associates. Moreover, Steak n Shake franchised restaurants are required to
serve only approved menu items.

International
We have a corporate office in Monaco to support expansion of Steak n Shake in the Middle East and Europe. We are developing
an international organization with personnel in various functions to support international efforts. In 2014 we opened two
company-operated locations in Europe to introduce and promote the Steak n Shake brand to prospective franchisees. Similar to
our domestic franchise agreements, a typical international franchise development agreement provides the vehicle for payment of
development fees and franchise fees in addition to subsequent royalty fees based on the gross sales of each restaurant.

Competition
The restaurant business is one of the most intensely competitive industries. As there are virtually no barriers to entry into the
restaurant business, competitors may include national, regional and local establishments. There may be established competitors
with financial and other resources that are greater than the Company’s restaurant operations capabilities. Restaurant businesses
compete on the basis of price, menu, food quality, location, personnel and customer service. The restaurant business is often
affected by changes in consumer tastes and by national, regional, and local economic conditions. The performance of individual
restaurants may be impacted by factors such as traffic patterns, demographic trends, severe weather conditions, and competing
restaurants. Additional factors that may adversely affect the restaurant industry include, but are not limited to, food and wage
inflation, safety, and food-borne illness.

Government regulations
The Company is subject to various global, federal, state and local laws affecting its restaurant operations. Each of the restaurants
must comply with licensing and regulation by a number of governmental authorities, which include health, sanitation, safety and
fire agencies in the jurisdiction in which the restaurant is located. In addition, each restaurant must comply with various laws
that regulate the franchisor/franchisee relationship, employment and pay practices and child labor laws. To date, none of the
Company restaurant operations have been materially adversely affected by such laws or been affected by any difficulty, delay or
failure to obtain required licenses or approvals.

Trademark and licenses
The name and reputation of Steak n Shake is a material asset and management protects it and other service marks through
appropriate registrations.

The Company has an exclusive license with Mr. Biglari for the use of the Biglari and Biglari Holdings names and marks in
association with various products and services, and has entered into a sublicense agreement with Steak n Shake, LLC and Steak n
Shake Enterprises, Inc. providing for the association of the Biglari name and mark with all of Steak n Shake’s restaurants
(including Company-operated and franchised locations), products and brands. See “Certain agreements with our Chairman and
CEO may deter a change of control or proxy contest” under Part I, Item 1A and Note 16, “Related Party Transactions” in the
accompanying notes to consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Insurance Business
Our insurance business is comprised of First Guard Insurance Company and its agency, 1st Guard Corporation (collectively
“First Guard”) which we acquired on March 19, 2014. First Guard is a direct underwriter of commercial trucking insurance,
selling physical damage and nontrucking liability insurance to truckers. First Guard is headquartered in Venice, Florida.

First Guard competes for truck insurance with other companies. The trucking insurance business is highly competitive in the
areas of price and service. Vigorous competition is provided by large, well-capitalized companies and by small regional insurers.
First Guard’s cost-efficient system and focus on customer service has enabled it to offer competitive rates and achieve an
underwriting profit. First Guard uses its own claim staff to manage claims. Seasonal variations in First Guard’s insurance
business are not significant. However, extraordinary weather conditions or other factors may have a significant effect upon the
frequency or severity of claims.

The insurance business is stringently regulated by state insurance departments. First Guard operates under licenses issued by
various insurance authorities. Such supervision and regulation include matters relating to authorized lines of business, capital and
surplus requirements, licensing of insurers, investments, the filing of annual and other financial reports prepared on the basis of
Statutory Accounting Principles, the filing and form of actuarial reports, dividends, and a variety of other financial and non-
financial matters.

Media Business
Our media business is composed of Maxim. We acquired certain assets and liabilities of Maxim on February 27, 2014. Maxim
is a brand management company whose business lies in media, in print and digital, and in licensing of products and services.
Maxim is headquartered in New York City, New York.

Publishing is a highly competitive business. The Company's magazines and related publishing products and services compete
with other mass media, including the Internet and many other leisure-time activities. Competition for advertising dollars is based
primarily on advertising rates, circulation levels, reader demographics, advertiser results, and sales team effectiveness.

Maxim products are marketed under various registered brand names, including, but not limited to, “MAXIM®” and “Maxim®”.

Investments
The Company and its subsidiaries have invested in The Lion Fund, L.P. and The Lion Fund II, L.P. (collectively, “the investment
partnerships”). The investment partnerships operate as private investment funds. As of September 24, 2014, the fair value of the
investments was $620.8 million. These investments are subject to a rolling five-year lock-up period under the terms of the
respective partnership agreements.

Employees
The Company employs 23,130 persons.

Additional information with respect to Biglari Holdings’ businesses
Information related to our reportable segments may be found in Part II, Item 8 of this Form 10-K.

Biglari Holdings maintains a website (www.biglariholdings.com) where its annual reports, press releases, interim shareholder
reports and links to its subsidiaries’ websites can be found. Biglari Holdings’ periodic reports filed with the Securities and
Exchange Commission (the “SEC”), which include Form 10-K, Form 10-Q, Form 8-K and amendments thereto, may be
accessed by the public free of charge from the SEC and through Biglari Holdings’ website. In addition, corporate governance
documents such as Corporate Governance Guidelines, Code of Conduct, Governance, Compensation and Nominating Committee
Charter and Audit Committee Charter are posted on the Company’s website and are available without charge upon written
request. The Company’s website and the information contained therein or connected thereto are not intended to be incorporated
into this report on Form 10-K.

Item 1A.

Risk Factors

Biglari Holdings and its subsidiaries (referred to herein as “we,” us,” “our,” or similar expressions) are subject to certain risks
and uncertainties in our business operations which are described below. The risks and uncertainties described below are not the
only risks we face. Additional risks and uncertainties not presently known or that are currently deemed immaterial may also
impair our business operations.

Risks Relating to Biglari Holdings

We are dependent on our Chairman and CEO.
Our success depends on the services of Sardar Biglari, Chairman and Chief Executive Officer. All major operating, investment,
and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari. Moreover, certain counterparties
have requested and obtained a provision in their agreements with the right to terminate in the event Mr. Biglari ceases to be our
Chairman and Chief Executive Officer. If for any reason the services of Mr. Biglari were to become unavailable, a material
adverse effect on our business could occur. In addition, as described further below, if the Company were to lose the services of
Mr. Biglari, the counterparties maintaining certain contracts with the Company may have a right to terminate those contracts. At
that time, the Company may owe significant amounts of money to Mr. Biglari pursuant to the terms of a license agreement.
Taken as a whole, the losses pertaining to these contracts and the liabilities imposed by the license agreement connected to the
loss of Mr. Biglari may materially impact the Company in an adverse manner.

Our historical growth rate is not indicative of our future growth.
When evaluating our historical growth and prospects for future growth, it is important to consider that while our business
philosophy has remained relatively constant our mix of business has changed and will continue to change. Our dynamic business
model makes it difficult to assess our prospects for future growth. Restrictions on our access to capital described further below
may also adversely affect our ability to execute our plans for future growth.

Biglari Holdings’ access to capital is subject to restrictions that may adversely affect its ability to satisfy its cash requirements
or implement its growth strategy.
We are a holding company and are largely dependent upon dividends and other sources of funds from our subsidiaries in order to
meet our needs. Steak n Shake’s credit facility contains restrictions on its ability to pay dividends to Biglari Holdings. In
addition, the ability of our insurance subsidiaries to pay dividends to Biglari Holdings is regulated by state insurance laws, which
limit the amount of, and in certain circumstances may prohibit the payment of, cash dividends. Furthermore, as a result of our
substantial investments in The Lion Fund, L.P. and The Lion Fund II, L.P., investment partnerships controlled by Mr. Biglari,
our access to capital is restricted by the terms of their respective partnership agreements, as described more fully below. There is
also a high likelihood that we will make additional investments in these investment partnerships. Taken together, these
restrictions may result in our having insufficient funds to satisfy our cash requirements. As a result, we may need to look to
other sources of capital which may be more expensive or may not be available.

Competition.
Each of our operating businesses faces intense competitive pressure within the markets in which they operate. Competition may
arise domestically as well as internationally. While we manage our businesses with the objective of achieving long-term
sustainable growth by developing and strengthening competitive advantages, many factors, including market changes, may erode
or prevent the strengthening of competitive advantages. Accordingly, future operating results will depend to some degree on
whether our operating units are successful in protecting or enhancing their competitive advantages. If our operating businesses
are unsuccessful in these efforts, our periodic operating results may decline from current levels in the future. We also highlight
certain competitive risks in the sections below.

Unfavorable domestic and international economic, societal and political conditions could hurt our operating businesses.
To the extent that the recovery from the economic recession continues to be slow or the economy worsens for a prolonged period
of time, one or more of our significant operations could be materially harmed. In addition, our restaurant operations depend on
having access to borrowed funds through the capital markets at reasonable rates. To the extent that access to credit is restricted or
the cost of funding increases, our business could be adversely affected.

Our operating businesses face a variety of risks associated with doing business in foreign markets.
There is no assurance that our international operations will be profitable. Our international operations are subject to all of the
risks associated with our domestic operations, as well as a number of additional risks, varying substantially country by country.
These include, inter alia, international economic and political conditions, corruption, terrorism, social and ethnic unrest, foreign
currency fluctuations, differing cultures and consumer preferences. Our expansion into international markets could also create
risks to our brands.

In addition, we may become subject to foreign governmental regulations that impact the way we do business with our
international franchisees and vendors. These include antitrust and tax requirements, anti-boycott regulations, international trade
regulations, the USA Patriot Act, the Foreign Corrupt Practices Act, and applicable local law. Failure to comply with any such
legal requirements could subject us to monetary liabilities and other sanctions, which could harm our business and our financial
condition.

We may not be able to adequately protect our intellectual property, which could decrease the value of our brand and products.
The success of our business depends on the continued ability to use the existing trademarks, service marks, and other
components of our brand to increase brand awareness and further develop branded products. While we take steps to protect our
intellectual property, our rights to our trademarks could be challenged by third parties or our use of these trademarks may result
in liability for trademark infringement, trademark dilution, or unfair competition, adversely affecting our profitability. We may
also become subject to these risks in the international markets in which we operate and in which we plan to expand. Any
impairment of our intellectual property or brands, including due to changes in U.S. or foreign intellectual property laws or the
absence of effective legal protections or enforcement measures, could adversely impact our business, financial condition and
results of operations.

Litigation could have a material adverse effect on our financial position, cash flows and results of operations.
We are or may be from time to time a party to various legal actions, investigations and other proceedings brought by employees,
consumers, policyholders, suppliers, shareholders, government agencies or other third parties in connection with matters
pertaining to our business, including related to our investment activities. The outcome of such matters is often difficult to assess
or quantify and the cost to defend future proceedings may be significant. Even if a claim is unsuccessful or is not fully pursued,
the negative publicity surrounding any negative allegation regarding our Company, our business or our products could adversely
affect our reputation. While we believe that the ultimate outcome of routine legal proceedings individually and in the aggregate
will not have a material impact on our financial position, we cannot assure that an adverse outcome on, or reputational damage
from, any of these matters would not, in fact, materially impact our business and results of operations for the period when these
matters are completed or otherwise resolved.

Certain agreements with our Chairman and CEO may deter a change of control or proxy contest.
We have entered into a license agreement with Sardar Biglari, Chairman and Chief Executive Officer, under which Mr. Biglari
has granted the Company an exclusive license to use his name when connected to the provision of certain products and services,
as well as a sublicense agreement with Steak n Shake that, inter alia, grants Steak n Shake the right to use the trademark “Steak n
Shake by Biglari.” In the event of a change of control of the Company or Mr. Biglari’s termination without cause or resignation
following specified occurrences, including (1) his removal as Chairman of the Board or Chief Executive Officer or (2) his no
longer maintaining sole capital allocation authority, Mr. Biglari would be entitled to receive revenue-based royalty payments
related to the usage of his name under the terms of the license agreement for a defined period of no less than five years.
Revenue-based royalties derived from Steak n Shake’s restaurants (including Company operated and franchised locations),
products and brands would be included in calculating these royalty payments, which would thus represent significant liability for
the Company. A change of control would also enable franchisees to terminate their franchise agreement with us. In addition, we
have an incentive agreement with Mr. Biglari, in which he is entitled to receive performance-based annual incentive payments
contingent on the growth of the Company’s adjusted book value in each fiscal year. In the event of a change in control or Mr.
Biglari’s termination without cause or resignation following specified occurrences, including (1) his removal as Chairman of the
Board or Chief Executive Officer or (2) his no longer maintaining sole capital allocation authority, Mr. Biglari would receive
specified payments thereunder. The combination of these provisions along with others referenced (e.g., contracts cancellable if
Mr. Biglari is no longer Chairman and Chief Executive Officer) all together could create the prevention of a transaction
involving a change of control of the Company or deterrence of a potential proxy contest.

The Lion Fund, L.P.’s ownership position in the Company enables it to exert significant influence over matters requiring
shareholder approval.
The Lion Fund, L.P., controlled by Mr. Biglari, has the ability to exert significant influence on actions the Company may take in
the future that require shareholder approval, including change of control transactions. The Lion Fund, L.P.’s ownership position
may conflict with the interests of the Company’s other shareholders.

Risks Relating to Our Restaurant Operations

Our restaurant operations face intense competition from a wide range of industry participants.
The restaurant business is one of the most competitive industries. As there are virtually no barriers to entry into the restaurant
business, competitors may include national, regional and local establishments. There may be established competitors with
financial and other resources that are greater than the Company’s restaurant operations capabilities. Restaurant businesses
compete on the basis of price, menu, food quality, location, personnel and customer service. The restaurant business is often
affected by changes in consumer tastes and by national, regional, and local economic conditions. The performance of individual
restaurants may be impacted by factors such as traffic patterns, demographic trends, severe weather conditions, and competing
restaurants. Additional factors that may adversely affect the restaurant industry include, but are not limited to, food and wage
inflation, safety, and food-borne illness.

Changes in economic conditions may have an adverse impact on our restaurant operations.
Our restaurant operations are subject to normal economic cycles affecting the economy in general or the restaurant industry in
particular. The restaurant industry has been affected by economic factors, including the deterioration of global, national, regional
and local economic conditions, declines in employment levels, and shifts in consumer spending patterns. The disruptions
experienced in the global economy and volatility in the financial markets have reduced, and may continue to reduce, consumer
confidence in the economy, negatively affecting consumer restaurant spending, which could be harmful to our financial position
and results of operations. As a result, decreased cash flow generated from our business may adversely affect our financial
position and our ability to fund our operations. In addition, macroeconomic disruptions could adversely impact the availability of
financing for our franchisees’ expansions and operations.

Our cash flows and financial position could be negatively impacted if we are unable to comply with the restrictions and
covenants in Steak n Shake’s debt agreements.
The Company’s subsidiaries currently maintain debt instruments, including Steak n Shake’s credit agreement, dated as of March
19, 2014, with the lenders party thereto. Covenants in the debt agreements impose operating and financial restrictions, including
requiring operating subsidiaries to maintain certain financial ratios and thereby restricting, among other things, their ability to
incur additional indebtedness and make distributions to the Company. Their failure to comply with these covenants and
restrictions could constitute an event of default that, if not cured or waived, could result, among other things, in the acceleration
of their indebtedness, which could negatively impact our operations and business and may also significantly affect our ability to
obtain additional or alternative financing. In such event, our cash flows may not be sufficient to fully repay this indebtedness and
we cannot assure you that we would be able to refinance or restructure this debt. In addition, the restrictions contained in these
debt instruments could adversely affect our ability to finance our operations, acquisitions or investments.

Steak n Shake’s ability to make payments on its credit facility and to fund operations depends on its ability to generate cash,
which is subject to general economic, financial, competitive, regulatory and other factors that are beyond our control. Steak n
Shake may not generate sufficient cash flow from operations to service this debt or to fund its other liquidity needs.

Fluctuations in commodity and energy prices and the availability of commodities, including beef, fried products, poultry, and
dairy, could affect our restaurant business.
The cost, availability and quality of ingredients restaurant operations use to prepare their food is subject to a range of factors,
many of which are beyond their control. A significant component of our restaurant business’ costs is related to food
commodities, including beef, fried products, poultry, and dairy products, which can be subject to significant price fluctuations
due to seasonal shifts, climate conditions, industry demand, changes in international commodity markets, and other factors. If
there is a substantial increase in prices for these food commodities, our results of operations may be negatively affected. In
addition, our restaurants are dependent upon frequent deliveries of perishable food products that meet certain specifications.
Shortages or interruptions in the supply of perishable food products caused by unanticipated demand, problems in production or
distribution, disease or food-borne illnesses, inclement weather, or other conditions could adversely affect the availability,
quality, and cost of ingredients, which would likely lower revenues, damage our reputation, or otherwise harm our business.

Adverse weather conditions or losses due to casualties could negatively impact our operating performance.
Property damage caused by casualties and natural disasters, instances of inclement weather, flooding, hurricanes, fire, and other
acts of nature can adversely impact sales in several ways. Many of Steak n Shake’s and Western’s restaurants are located in the
Midwest and Southeast portions of the United States. During the first and second fiscal quarters, restaurants in the Midwest may
face harsh winter weather conditions. During the first and fourth fiscal quarters, restaurants in the Southeast may experience
hurricanes or tropical storms. Our sales and operating results may be negatively affected by these harsh weather conditions,
which could make it more difficult for guests to visit our restaurants, necessitate the closure of restaurants for a period of time or
costly repairs due to physical damage, or lead to a shortage of employees resulting from unsafe road conditions or an evacuation
of the general population.

We are subject to health, employment, environmental, and other government regulations, and failure to comply with existing
or future government regulations could expose us to litigation or penalties, damage our reputation, and lower profits.
We are subject to various global, federal, state, and local laws and regulations affecting our restaurant operations. Changes in
existing laws, rules and regulations applicable to us, or increased enforcement by governmental authorities, may require us to
incur additional costs and expenses necessary for compliance. If we fail to comply with any of these laws, we may be subject to
governmental action or litigation, and our reputation could be accordingly harmed. Injury to our reputation would, in turn, likely
reduce revenues and profits.

The development and construction of restaurants is subject to compliance with applicable zoning, land use, and environmental
regulations. Difficulties in obtaining, or failure to obtain, the required licenses or approvals could delay or prevent the
development of a new restaurant in a particular area.

In recent years, there has been an increased legislative, regulatory, and consumer focus on nutrition and advertising practices in
the food industry. As a result, restaurant operations may become subject to regulatory initiatives in the area of nutrition
disclosure or advertising, such as requirements to provide information about the nutritional content of our food products, which
could increase expenses. The operation of the Steak n Shake and Western franchise system is also subject to franchise laws and
regulations enacted by a number of states, and to rules promulgated by the U.S. Federal Trade Commission. Any future
legislation regulating franchise relationships may negatively affect our operations, particularly our relationship with franchisees.
Failure to comply with new or existing franchise laws and regulations in any jurisdiction or to obtain required government
approvals could result in a ban or temporary suspension on future franchise sales. Further national, state and local government
initiatives, such as mandatory health insurance coverage, “living wage” or other proposed increases in minimum wage rates
could adversely affect our business.

Risks Relating to Our Investment Activities

Our investment activities are conducted primarily through outside investment partnerships, The Lion Fund, L.P. and The
Lion Fund II, L.P., which are controlled by Mr. Biglari.
As a result of our sale of Biglari Capital Corp. (“Biglari Capital”), general partner of The Lion Fund, L.P. and The Lion Fund II,
L.P. (collectively, the “investment partnerships”), to Mr. Biglari, and the contribution of our investments to these funds in
exchange for limited partner interests, our investment activities are conducted mainly through these outside investment
partnerships. Under the terms of their partnership agreements, each contribution made by the Company to the investment
partnerships is subject to a five-year lock-up period, and any distribution upon our withdrawal of funds will be paid out over a
two-year period (and may be paid in-kind rather than in cash, thus increasing the difficulty of liquidating these investments). As
a result of these provisions and our consequent inability to access this capital for a defined period, our capital invested in the
investment partnerships may be subject to an increased risk of loss of all or a significant portion of value, and we may become
unable to meet our capital requirements. There is a high likelihood that we will make additional investments in these investment
partnerships in the future.

In connection with the sale of Biglari Capital, we also entered into a Shared Services Agreement with Biglari Capital pursuant to
which we agreed to provide certain services to Biglari Capital (e.g., use of space at our corporate headquarters) in exchange for a
6% hurdle rate for the Company and its subsidiaries (as compared to a 5% hurdle rate for all other limited partners), above which
Biglari Capital is entitled to receive an incentive reallocation in its capacity as general partner of the investment partnerships.
There can be no assurance that the benefit, if any, we may realize from this increased hurdle rate will enable us to recoup our
costs incurred in performing services for Biglari Capital under the Shared Services Agreement.

The incentive allocation to which Mr. Biglari, as Chairman and Chief Executive Officer of Biglari Capital, general partner of the
investment partnerships, is entitled under the terms of the respective partnership agreements is equal to 25% of the net profits
allocated to the limited partners in excess of their applicable hurdle rate. Unlike Mr. Biglari’s compensation under his incentive
agreement with the Company, which may not exceed $10 million for any one-year performance period, the incentive allocation
concerning investments held by the investment partnerships is not subject to any such limitation. Investments made by the
Company in the investment partnerships may lead to significant increases in this compensation to Mr. Biglari.

Our investments are unusually concentrated and fair values are subject to a loss in value.
Our investments are predominantly held through the investment partnerships, which generally invest in common stocks. These
investments are largely concentrated in the common stock of one investee, Cracker Barrel Old Country Store, Inc. A significant
decline in the major values of these investments may produce a large decrease in our consolidated shareholders’ equity and can
have a material adverse effect on our consolidated book value per share and earnings.

We are subject to the risk of possibly becoming an investment company under the Investment Company Act of 1940.
Because we are a holding company and a significant portion of our assets may, from time to time, consist of investments in
entities in which we do not have a controlling interest, we run the risk of inadvertently becoming an investment company, which
would require us to register under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
Registered investment companies are subject to extensive, restrictive and potentially adverse regulations relating to, among other
things, operating methods, management, capital structure, dividends and transactions with affiliates. Registered investment
companies are not permitted to operate their business in the manner in which we operate our business, nor are registered
investment companies permitted to have many of the relationships that we have with our affiliated companies.

To avoid becoming and registering as an investment company under the Investment Company Act, we monitor the value of our
investments and structure transactions accordingly. As a result, we may structure transactions in a less advantageous manner than
if we did not have Investment Company Act concerns, or we may avoid otherwise economically desirable transactions due to
those concerns. In addition, events beyond our control, including significant appreciation or depreciation in the market value of
certain of our publicly traded holdings or adverse developments with respect to our ownership of certain of our subsidiaries,
could result in our inadvertently becoming an investment company. If it were established that we were an investment company,
there would be a risk, among other material adverse consequences, that we could become subject to monetary penalties or
injunctive relief, or both, in an action brought by the Securities and Exchange Commission (the “SEC”), that we would be unable
to enforce contracts with third parties or that third parties could seek to obtain rescission of transactions with us undertaken
during the period it was established that we were an unregistered investment company.

Risks Relating to Our Insurance Business

Our success depends on our ability to underwrite risks accurately and to charge adequate rates to policyholders.
Our results of operations depend on our ability to underwrite and set rates accurately for risks assumed. A primary role of the
pricing function is to ensure that rates are adequate to generate sufficient premiums to pay losses, loss adjustment expenses, and
underwriting expenses, and earning a profit.

Our insurance business is vulnerable to significant catastrophic property loss, which could have an adverse effect on its
financial condition and results of operations.
Our insurance business faces a significant risk of loss in the ordinary course of its business for property damage resulting from
natural disasters, man-made catastrophes and other catastrophic events. These events typically increase the frequency and
severity of commercial property claims. Because catastrophic loss events are by their nature unpredictable, historical results of
operations may not be indicative of future results of operations, and the occurrence of claims from catastrophic events may result
in significant volatility in our insurance business’ financial condition and results of operations from period to period. We attempt
to manage our exposure to these events through reinsurance programs, although there is no assurance we will be successful in
doing so.

Inability to obtain reinsurance or to collect ceded losses and loss adjustment expenses could adversely affect our insurance
business’s ability to write new policies.
Our insurance business’s purchases reinsurance to help manage its exposure to risk. Under these ceded reinsurance
arrangements, another insurer assumes a specified portion of our exposure in exchange for a specified portion of policy
premiums. The availability, amount and cost of reinsurance depend on market conditions and may vary significantly. Thus, any
decrease in the amount of this reinsurance will increase the risk of loss. If our insurance business is unable to obtain sufficient
reinsurance at a cost it deems acceptable, it may be unwilling to bear the increased risk and may reduce the level of its
underwriting commitments.

Ceded reinsurance does not discharge our insurance business’s direct obligations under the policies it writes. Our insurance
business remains liable to policyholders even if it is unable to obtain recoveries under which it believes it is entitled to receive
under the reinsurance contracts. Losses may not be recovered from the reinsurers until claims are paid.

Our insurance business is subject to extensive existing state, local and foreign governmental regulations that restrict its
ability to do business and generate revenues.
Our insurance business is subject to regulation in the jurisdictions in which it operates. These regulations may relate to, among
other things, the types of business that can be written, the rates that can be charged for coverage, the level of capital and reserves
that must be maintained, and restrictions on the types and size of investments that can be placed. Regulations may also restrict
the timing and amount of dividend payments. Accordingly, existing or new regulations related to these or other matters or
regulatory actions imposing restrictions on our insurance business may adversely impact its results of operations.

Risks Relating to Our Media Business

Our media business faces significant competition from other magazine publishers and new forms of media, including digital
media, and as a result our media business may not be able to improve its operating results.
Our media business competes principally with other magazine publishers. The proliferation of choices available to consumers for
information and entertainment has resulted in audience fragmentation and has negatively impacted overall consumer demand for
print magazines and intensified competition with other magazine publishers for share of print magazine readership. Our media
business also competes with digital publishers and other forms of media. This competition has intensified as a result of the
growing popularity of mobile devices and the shift in preference of some consumers from print media to digital media for the
delivery and consumption of content.

Our media business derives a significant percentage of its revenues from advertising. Competition among print magazine and
digital publishers for advertising is primarily based on the circulation and readership of magazines and the number of visitors to
websites, respectively, and the demographics of customers, advertising rates, plus the effectiveness of advertising sales teams.
The proliferation of new platforms available to advertisers, combined with continuing competition from print platforms, has
impacted both the amount of advertising our media business is able to sell as well as the rates advertisers are willing to pay. Our
media business’ ability to compete successfully for advertising also depends on its ability to prove the value of its advertising.

Our pursuit of licensing opportunities for the Maxim brand may prove to be unsuccessful.
The transformation of the business depends to a significant degree upon its ability to develop new licensing agreements to
expand the Maxim brand. However, these licensing efforts may be unsuccessful. We may be unable to secure favorable terms
for future licensing arrangements, which could lead to, among other things, disputes with licensing partners that hinder our
ability to grow the Maxim brand. Future licensing partners may also fail to honor their contractual obligations or take other
actions that can diminish the value of the Maxim brand. Disputes could also arise that prevent or delay our ability to collect
licensing revenues under these arrangements. If any of these developments occur or our licensing efforts are otherwise not
successful, the value and recognition of the Maxim brand, as well as the prospects of our media business, could be materially,
adversely affected.

Our media business is exposed to risks associated with weak economic conditions.
Because magazines are generally discretionary purchases for consumers, circulation revenues are sensitive to general economic
conditions and economic cycles. Certain economic conditions such as general economic downturns, including periods of
increased inflation, unemployment levels, interest rates, gasoline and other energy prices, or declining consumer confidence, may
negatively impact consumer spending. Reduced consumer spending or a shift in consumer spending patterns away from
discretionary items will likely result in reduced demand for our media business’s magazines and may also require us to incur
increased operating expenses.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

Properties

Office Facilities

Use
Executive Office
Executive Office
Executive Office
Executive Office
Executive Office
Executive Office
Executive Office

Location

San Antonio, TX

New York, NY
Venice, FL
Roanoke, VA
Los Angeles, CA
Monte-Carlo, Monaco

Indianapolis, IN

Own/Lease
Lease
Lease
Lease
Lease
Lease
Lease
Own

Restaurant Properties
As of September 24, 2014, restaurant operations included 615 company-operated and franchised locations. Restaurant operations
own the land and building for 154 restaurants. The following table lists the locations of the restaurants, as of September 24,
2014:

Steak n Shake

Company-
operated Franchised

Western Sizzlin
Company-
operated Franchised Total

Domestic:
Alabama ..................................................................................
Arizona .....................................................................................
Arkansas ...................................................................................
California .................................................................................
Colorado ...................................................................................
Florida ......................................................................................
Georgia .....................................................................................
Illinois ......................................................................................
Indiana ......................................................................................
Iowa ..........................................................................................
Kansas ......................................................................................
Kentucky ..................................................................................
Louisiana .................................................................................
Maryland ..................................................................................
Michigan ..................................................................................
Mississippi ................................................................................
Missouri ....................................................................................
Montana ...................................................................................
Nevada .....................................................................................
New Jersey ...............................................................................
New York .................................................................................
North Carolina ..........................................................................
Ohio ..........................................................................................
Oklahoma .................................................................................
Pennsylvania.............................................................................
South Carolina ..........................................................................
Tennessee .................................................................................
Texas ........................................................................................
Virginia ....................................................................................
West Virginia ...........................................................................
International:
France ......................................................................................
Spain ........................................................................................
United Arab Emirates ...............................................................
Total ........................................................................................

2
1
—
—
2
80
23
63
68
3
—
14
—
—
19
—
39
—
—
—
1
6
63
—
6
1
9
14
—
—

7
—
2
1
1
2
17
7
3
—
4
3
1
—
1
2
24
1
2
1
—
6
—
5
3
4
10
9
4
2

1
1
—
416

—
—
2
124

—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3
1

—
—
—
4

6
—
17
2
—
1
7
—
—
—
1
—
1
2
—
2
1
—
—
—
—
10
1
9
—
3
4
—
4
—

—
—
—
71

15
1
19
3
3
83
47
70
71
3
5
17
2
2
20
4
64
1
2
1
1
22
64
14
9
8
23
23
11
3

1
1
2
615

Item 3.

Legal Proceedings

We are involved in various legal proceedings and have certain unresolved claims pending. We believe, based on examination of
these matters and experiences to date, that the ultimate liability, if any, in excess of amounts already provided in our consolidated
financial statements is not likely to have a material effect on our results of operations, financial position or cash flows.

On June 3, 2013 and July 2, 2013, two shareholders of the Company filed derivative actions putatively on behalf of the Company
against the members of our board of directors in the United States District Courts for the Southern District of Indiana and the
Western District of Texas. The actions were consolidated in the Southern District of Indiana in 2014. The shareholders allege
claims for breach of fiduciary duty, gross mismanagement, contribution and indemnification, abuse of control, waste, and unjust
enrichment relating to certain Company transactions, including the Company’s acquisition of Biglari Capital, Mr. Biglari’s
incentive agreement, the trademark license agreement between the Company and Mr. Biglari, and the Company’s rights offering.
The shareholders seek to recover unspecified damages, various forms of injunctive relief, and an award of their attorneys’ fees.
The Company believes these claims are without merit and intends to defend these cases vigorously.

Item 4.

Mine Safety Disclosures

Not applicable.

Part II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

Rights Offering
In fiscal years 2014 and 2013, Biglari Holdings completed offerings of transferable subscription rights, distributing one
transferable subscription right (“Rights”) for each share of its common stock to shareholders. Every five Rights entitled a
shareholder to subscribe for one share of common stock at a price of $250.00 and $265.00, respectively. Shareholders on the
record date who fully exercised the Rights distributed to them were also entitled to subscribe for and purchase additional shares
of common stock not purchased by other Rights holders through their basic subscription privileges. The offerings were
oversubscribed and 344,261 and 286,767 new shares of common stock were issued, respectively. The Company received net
proceeds of $85.9 million and $75.6 million from the offerings, respectively. Including the issuance of the newly subscribed
shares the Company had 2,065,566 shares outstanding as of September 24, 2014.

Market Information
Biglari Holdings’ common stock is listed for trading on the New York Stock Exchange (the “NYSE”), trading symbol: BH. The
following table sets forth the high and low sales prices per share, as reported on the NYSE List and adjusted for the 2014 and
2013 offerings of transferable subscription rights during the periods indicated:

Shareholders
Biglari Holdings had approximately 10,700 beneficial shareholders, of which approximately 1,100 were record holders of its
common stock at November 14, 2014.

Dividends
Biglari Holdings has not declared a cash dividend during the fiscal years ended September 24, 2014, September 25, 2013 and
September 26, 2012.

HighLowHighLowFirst quarter ........................................................................................460.28$ $ 381.26 $ 328.74 $ 283.20 Second quarter ...................................................................................482.14 384.05 347.90 314.85 Third quarter ......................................................................................430.82 378.03 357.77 321.11 Fourth quarter ....................................................................................415.97 338.88 401.74 357.62 20142013

Issuer Purchases of Equity Securities
The following table presents information on purchases of our common stock during the quarterly period ended September 24,
2014 by The Lion Fund, L.P. and Sardar Biglari, each of whom may be deemed to be an “affiliated purchaser” as defined in Rule
10b-18(a)(3) under the Securities Exchange Act of 1934, as amended:

(a) Total Number of Shares Purchased(b)Average Price Paid per Share(c)Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(d) Maximum Number of Shares That May Yet Be Purchased Under Plans or ProgramsJuly 3, 2014 – August 2, 2014 ...........................- -$ - - August 3, 2014 – September 2, 2014 .................- -$ - - September 3, 2014 – September 24, 2014 ..........59,006 (1)250.00$ - - Total ...................................................................59,006 (1)- - (1) Includes(a)50,037and5,110sharespurchasedbyTheLionFund,L.P.andSardarBiglari,respectively,pursuanttotheexerciseoftheirbasicsubscriptionprivilegesinconnectionwiththeCompany’ssubscriptionrightsofferingand(b)3,502and357sharespurchasedbyTheLionFund,L.P.andSardarBiglari,respectively,pursuanttotheexerciseoftheiroversubscriptionprivilegesinconnection with the Company’s subscription rights offering.

Performance Graph
The following chart compares the subsequent value of $100 invested in Biglari Holdings’ common stock on September 30, 2009
with a similar investment in the Standard and Poor’s 500 Stock Index and Standard and Poor’s Restaurant Index.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Biglari Holdings Inc., the S&P 500 Index
and the S&P Restaurants Index

$300

$250

$200

$150

$100

$50

9/09

9/10

9/11

9/12

9/13

9/14

Biglari Holdings Inc.

S&P 500

S&P Restaurants

*$100 invested on 9/30/09 in stock or index, including reinvestment of dividends.
Fiscal year ending September 30.

The preceding stock price performance graph and related information shall not be deemed “soliciting material” or to be “filed”
with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings
under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except to the extent that we
specifically incorporate it by reference into such filings.

Securities Authorized for Issuance Under Equity Compensation Plans
The “Equity Compensation Plan Information” required by Item 201(d) of Regulation S-K will be contained in our definitive
Proxy Statement for the 2015 Annual Meeting of Shareholders, to be filed on or before January 22, 2015, and such information is
incorporated herein by reference.

Item 6.

Selected Financial Data

Selected Financial Data for the Past Five Years
(dollars in thousands except per share data)

Revenue: Total revenues .......................................................................................................793,811$ 755,822$ 740,207$ 709,200$ 673,781$ Earnings:Net earnings attributable to Biglari Holdings Inc. ................................................28,804$ 140,271$ 21,593$ 34,565$ 28,094$ Basic earnings per share attributable to Biglari Holdings Inc. (1) ........................16.85$ 90.89$ 13.92$ 22.35$ 17.29$ Diluted earnings per share attributable to Biglari Holdings Inc. (1) .....................16.82$ 90.69$ 13.88$ 22.23$ 17.19$ Year-end data:Total assets ...........................................................................................................1,174,732$ 988,543$ 773,787$ 672,860$ 563,839$ Long-term notes payable and other borrowings ....................................................315,196 216,747 230,603 217,483 142,028 Biglari Holdings Inc. shareholders’ equity ...........................................................638,717$ 564,589$ 349,125$ 279,678$ 248,995$ 52 Weeks Ended Fiscal 2014(2)(4)Fiscal 2013(2)(4)Fiscal 2012(2)(3)Fiscal 2011(2)(3)Fiscal 2010 (2)(3)(1)Earningspershareofcommonstockisbasedontheweightedaveragenumberofsharesoutstandingduringtheyear.Infiscalyear2014and2013theCompanycompletedrightsofferingsinwhich344,261and286,767newsharesofcommonstockwereissued,respectively. The theoretical earnings per share have been retroactively restated for all years to give effect to the rights offerings.(2)Fiscalyears2014,2013,2012,2011,and2010endedonSeptember24,2014,September25,2013,September26,2012,September28, 2011, and September 29, 2010, respectively. (3)ForfinancialreportingpurposesallcommonsharesoftheCompanyheldbytheconsolidatedaffiliatedpartnershipsarerecordedintreasurystockontheconsolidatedbalancesheet.Forpurposesofcomputingtheweightedaveragecommonsharesoutstanding,thesharesoftreasurystockattributabletotheunrelatedlimitedpartnersoftheconsolidatedaffiliatedpartnerships-basedontheirproportional ownership during the period - are considered outstanding shares.(4)Forfinancialreportingpurposesandforpurposesofcomputingtheweightedaveragecommonsharesoutstanding,thesharesofCompanystockattributabletotheunrelatedlimitedpartnersofTheLionFund,L.P.-basedontheirproportionalownershipduringtheperiod - are considered outstanding shares.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(dollars in thousands except per share data)

Net earnings attributable to Biglari Holdings shareholders for each of the past three years are disaggregated in the table that
follows. Amounts are recorded after deducting income taxes.

Our restaurant businesses generated after-tax earnings in each of the last three years. Restaurant businesses include Steak n
Shake and Western. As of September 24, 2014, Steak n Shake comprised 416 company-operated restaurants and 124 franchised
units. Western comprised 4 company-operated restaurants and 71 franchised units. Steak n Shake’s same-store sales increased in
each of the last 23 quarters. Steak n Shake’s same-store sales increased 2.9%, 2.2% and 3.8% during 2014, 2013, and 2012,
respectively. Steak n Shake’s same-store traffic increased 2.0%, 2.1%, and 3.7% during 2014, 2013, and 2012, respectively.
The term “same-store sales” refers to the sales of Company-operated units open at least 18 months at the beginning of the current
period and remained open through the end of the period. Same-store traffic measures the number of patrons who walk through
the same units.

Our insurance business is composed of First Guard Insurance Company and its agency, 1st Guard Corporation (collectively
“First Guard”), which we acquired on March 19, 2014. First Guard is a direct underwriter of commercial trucking insurance,
selling physical damage and nontrucking liability insurance to truckers. Our insurance business generated after-tax earnings of
$964 during fiscal year 2014.

Our media business is composed of Maxim. We acquired certain assets and liabilities of Maxim on February 27, 2014. Maxim
is a brand management company whose business lies principally in media and licensing. Our media business generated an after-
tax loss of $9,949 from the purchase date to the end of the fiscal year.

In 2014 and 2013 the Company completed rights offerings in which 344,261 and 286,767 new shares of common stock were
issued, respectively. The Company received net proceeds of $85,873 and $75,595 from the offerings, respectively. Earnings per
share have been retroactively restated for all three years to account for the rights offerings.

We have a 52/53 week fiscal year that ended on the last Wednesday in September. Fiscal years 2014, 2013, and 2012 all
contained 52 weeks. On October 16, 2014, the Company’s Board of Directors approved a change in the Company’s fiscal year-
end, moving from the last Wednesday in September to December 31 of each year. The Company will file a Transition Report on
Form 10-KT for the transition period from September 25, 2014 through December 31, 2014.

The following discussion should be read in conjunction with Item 1, Business and our Consolidated Financial Statements and the
notes thereto included in this Form 10-K. The following discussion should also be read in conjunction with the “Cautionary Note
Regarding Forward-Looking Statements” and the risks and uncertainties described in Item 1A, Risk Factors set forth above.

201420132012Operating businesses:Restaurant .....................................................................................17,965$ 21,361$ 33,110$ Insurance .......................................................................................964 - - Media ............................................................................................(9,949) - - Total operating businesses ...............................................................8,980 21,361 33,110 Corporate and other ..........................................................................(4,412) (7,133) (9,806) Investment gains (including contributions) ......................................18,305 115,568 2,604 Investment partnership gains ............................................................12,316 14,537 1,953 Interest expense, not allocated to businesses ....................................(6,385) (4,062) (6,268) 28,804$ 140,271$ 21,593$

Restaurants

Steak n Shake and Western comprise 615 company-operated and franchised restaurants. Earnings of our restaurant operations
are summarized below.

The total number of company-operated and franchised restaurants at September 24, 2014 was as follows:

201420132012RevenueNet sales ............................................................................759,889$ 736,968$ 721,754$ Franchise royalties and fees ...............................................15,032 11,741 9,631 Other revenue ....................................................................3,234 3,210 2,520 Total revenue ........................................................................778,155 751,919 733,905 Restaurant cost of salesCost of food .......................................................................226,436 29.8%218,199 29.6%207,234 28.7%Restaurant operating costs ................................................358,998 47.2%348,654 47.3%337,905 46.8%Rent ...................................................................................17,073 2.2%16,150 2.2%15,916 2.2%Total cost of sales .................................................................602,507 583,003 561,055 Selling, general and administrativeGeneral and administrative ................................................64,872 8.3%56,485 7.5%44,003 6.0%Marketing ..........................................................................43,324 5.6%44,375 5.9%42,531 5.8%Other expenses ..................................................................5,409 0.7%4,458 0.6%2,303 0.3%Total selling, general and administrative ...............................113,605 105,318 88,837 Depreciation and amortization .............................................24,064 3.1%24,882 3.3%26,161 3.6%Interest on obligations under leases ......................................9,720 9,829 10,073 Earnings before income taxes ................................................28,259 28,887 47,779 Income tax expense ...............................................................10,294 7,526 14,669 Net earnings ..........................................................................17,965$ 21,361$ 33,110$ Cost of food, restaurant operating costs and rent expense are expressed as a percentage of net sales.General and administrative, marketing, other expenses and depreciation and amortization are expressed as a percentage of total revenue.Company- operatedFranchisedCompany-operatedFranchisedTotalTotal stores as of September 26, 2012 .......................414 83 5 87 589 Net restaurants opened (closed) .................................1 21 (1) (5) 16 Total stores as of September 25, 2013 .......................415 104 4 82 605 Net restaurants opened (closed) .................................1 20 - (11) 10 Total stores as of September 24, 2014 ...................416 124 4 71 615 Steak n ShakeWestern Sizzlin

Net sales during 2014 were $759,889, an increase of $22,921 over 2013. The increased performance of our restaurant operations
was largely driven by Steak n Shake’s same-store sales. Steak n Shake’s same-store sales increased 2.9% during 2014, whereas
customer traffic increased by 2.0%. In 2013, net sales increased 2.1% from $721,754 to $736,968, also primarily because of the
increase in Steak n Shake’s same-store sales. Steak n Shake’s same-store sales increased 2.2% during 2013 whereas customer
traffic increased by 2.1%.

Franchise royalties and fees increased 28.0% during 2014. The franchised units numbered 195 at the end of 2014, compared to
186 at the end of 2013. The increase in franchise fees is primarily attributable to royalties by 41 newly franchised Steak n Shake
stores which opened in 2013 and 2014. Franchise royalties and fees increased 21.9% during 2013. However, franchise fees in
conjunction with the opening of the franchised stores by themselves accounted for a 4.7% increase in 2013. The remaining
17.2% increase is primarily attributable to royalties from Steak n Shake’s newly franchised stores, which opened in 2012 and
2013.

Cost of food in the current year was $226,436 or 29.8% of net sales, compared with $218,199 or 29.6% of net sales in 2013. The
increase in costs was primarily attributable to higher sales. The price of beef rose during 2014; however, the increased costs
were mostly offset by reductions in the prices of other commodities. In 2013 higher revenues increased cost of food by
approximately $5.4 million, and higher commodity prices impacted cost of food by approximately $3.2 million. The cost of food
in 2012 was $207,234 or 28.7% of net sales.

Restaurant operating costs were $358,998 or 47.2% of net sales compared to $348,654 or 47.3% in 2013. The increased costs
were mainly based on higher sales. Restaurant operating costs were $337,905 or 46.8% of net sales in 2012. Restaurant
operating costs increased in 2013 over 2012, inter alia, because of increased staffing in our stores of $4.3 million, higher supply
costs of $2.3 million, and higher insurance costs of $1.6 million.

Rent expense attributable to restaurant operations remained consistent at 2.2% of net sales, compared to that of the prior years.

General and administrative expenses increased from $56,485 or 7.5% of total revenues in 2013 to $64,872 or 8.3% of total
revenues. The increased costs were primarily attributable to higher compensation expense of $4.1 million and higher recruiting
and legal fees of $4.2 million for Steak n Shake’s domestic and international development. General and administrative expenses
increased from $44,003 or 6.0% of total revenues in 2012 to $56,485 or 7.5% of total revenues in 2013. Increased training in
2013 resulted in a higher expense of $2.7 million, which was largely tied to franchise openings. Our efforts to franchise the Steak
n Shake concept domestically and internationally have steadily increased general and administrative expenses.

Marketing expense was $43,324 or 5.6% of total revenues in the current year, versus $44,375 or 5.9% of total revenues in 2013
and $42,531 or 5.8% of total revenues in 2012.

Depreciation and amortization expense was $24,064 or 3.1% of total revenues in the current year, versus $24,882 or 3.3% of
total revenues in 2013 and $26,161 or 3.6% of total revenues in 2012.

Interest on obligations under leases was $9,720 during the current year, versus $9,829 during 2013 and $10,073 during 2012.
Steak n Shake’s total obligations under leases have decreased as the leases mature. The total obligations under leases
outstanding at the end of 2014, 2013 and 2012 were $106,189, $112,486 and $116,066, respectively.

Insurance

First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and nontrucking liability insurance
to truckers. Earnings of our insurance business are summarized below.

Media

Maxim is a brand management company whose business lies principally in media and licensing. Earnings of our media
operations are summarized below.

We purchased Maxim on February 27, 2014. During the year we made investments into the brand, many of which are reflected
in the reported expenses. We have recruited personnel to rebuild the media business, both in print and in digital, and to build a
licensing business.

2014Premiums written ............................................................................................................................................................5,330$ Insurance losses ...............................................................................................................................................................2,765 Underwriting expenses ....................................................................................................................................................1,489 Total losses and expenses ................................................................................................................................................4,254 Pre-tax underwriting gain.................................................................................................................................................1,076 Commissions ...................................................................................................................................................................205 Investment income ..........................................................................................................................................................126 Investment gains ..............................................................................................................................................................54 Earnings before income taxes ..........................................................................................................................................1,461 Income tax expense .........................................................................................................................................................497 Contribution to net earnings ............................................................................................................................................964$ 2014Revenue ................................................................................................................................................................9,941$ Media cost of sales ...............................................................................................................................................19,399 Selling, general and administrative expenses .........................................................................................................6,523 Loss before income taxes ......................................................................................................................................(15,981) Income tax benefit ................................................................................................................................................(6,032) Contribution to net earnings .................................................................................................................................(9,949)$

Investment Gains

Earnings from our investments are summarized below.

Investment gains/losses in any given period will vary; therefore, for analytical purposes, management measures operating
performance by analyzing earnings before realized and unrealized investment gains/losses.

On July 1, 2013, Biglari Holdings sold all of the outstanding shares of Biglari Capital Corp. to Mr. Biglari, Chairman and CEO
of Biglari Holdings, and recorded a gain of $1,597. Biglari Capital Corp. is the general partner of The Lion Fund, L.P. and The
Lion Fund II, L.P. (collectively “investment partnerships”). The investment partnerships are limited partnerships operating as
private investment funds. The Company has a limited interest in each of the partnerships.

Biglari Holdings recognized non-cash pre-tax gains of $29,524 ($18,305 net of tax) during 2014 and $182,746 ($114,931 net of
tax) during 2013 on the contribution of securities to investment partnerships. Biglari Holdings’ management does not regard the
gains that were recorded, as required by generally accepted accounting principles, as meaningful. The gains recognized for
financial reporting purposes are deferred for income tax purposes. These transactions essentially had no effect on our
consolidated shareholders’ equity because the gains included in earnings were accompanied by a corresponding reduction of
unrealized investment gains included in accumulated other comprehensive income.

Realized investment gains of $1 during 2013 and $4,200 during 2012 are gains from securities held directly by the Company and
its subsidiaries.

Investment Partnership Gains

Earnings from our investments in partnerships are summarized below.

Prior to sale of Biglari Capital Corp., the Company held a controlling interest in The Lion Fund, L.P. and Western Acquisitions,
L.P. (the “consolidated affiliated partnerships”), and we accounted for the partnerships’ gains and losses in our consolidated
financial statements. As a result of the sale of Biglari Capital Corp., the Company no longer has a controlling interest in the
consolidated affiliated partnerships. Because we ceased to have a controlling interest in the consolidated affiliated partnerships,
these entities were no longer consolidated in the Company’s financial statements. From July 1, 2013, we record gains/losses
from investment partnerships (inclusive of the investment partnerships’ unrealized gains and losses on the securities) in the
consolidated statements of earnings based on the carrying value of our proportional ownership interests in the investment
partnerships. The Company recorded after-tax earnings from investment partnership gains of $12,316 during 2014 and $13,296
during 2013. The Company recorded after-tax earnings from the consolidated affiliated partnerships of $1,241 during 2013 and
$1,953 during 2012.

201420132012Gain on contributions to investment partnerships ...........................................29,524$ 182,746$ -$ Gain on sale of Biglari Capital Corp. ................................................................- 1,597 - Realized investment gains .................................................................................- 1 4,200 Other than temporary impairment ....................................................................- (570) - Total gain before tax expense ............................................................................29,524 183,774 4,200 Tax expense .......................................................................................................11,219 68,206 1,596 Contribution to net earnings .............................................................................18,305$ 115,568$ 2,604$ 201420132012Investment partnership gains ............................................................................14,055$ 20,068$ -$ Gains from consolidated affiliated partnerships ...............................................- 3,903 6,302 Earnings attributable to redeemable noncontrolling interest .............................- (1,901) (3,152) Total partnership gains before tax expense .......................................................14,055 22,070 3,150 Tax expense .......................................................................................................1,739 7,533 1,197 Contribution to net earnings .............................................................................12,316$ 14,537$ 1,953$

Certain of the investment partnerships hold the Company’s common stock as investments. The Company’s pro-rata share of its
common stock held by the investment partnerships is recorded as treasury stock. Gains and losses on Company common stock
included in the earnings of these partnerships are eliminated.

The consolidated affiliated partnerships held the Company’s common stock as investments. Net earnings of the Company
included the realized and unrealized appreciation/depreciation of the investments held by consolidated affiliated partnerships,
other than the realized and unrealized appreciation/depreciation of investments the consolidated affiliated partnerships held in the
Company’s common stock, which was eliminated in the consolidation.

Interest Expense

The Company’s interest expense by year is summarized below.

Interest expense increased from $6,551 in 2013 to $9,166 in the current year. This increase primarily pertained to higher
balances and interest on Steak n Shake’s current credit facility, entered into on March 19, 2014, compared to Steak n Shake’s
former credit facility. The outstanding balance at September 24, 2014 was $219,450 with a 4.75% interest rate compared to
$120,250 with a 3.94% interest rate on September 25, 2013. Interest expense in 2013 decreased from $8,155 in 2012. The
decrease primarily pertained to lower interest rates. On September 26, 2012, the total outstanding debt for Steak n Shake was
$132,388.

The loss on extinguishment of debt for 2014 of $1,133 and 2012 of $1,955 related to the write-off of deferred loan costs
associated with Steak n Shake’s then outstanding credit facilities.

Corporate and Other

Corporate and other exclude restaurant, insurance and media companies. Corporate and other registered a net loss of $4,412 in
the current year versus a net loss of $7,133 during 2013, and a net loss of $9,806 during 2012. The after-tax loss decreased in
2014 compared to 2013 primarily because of a decrease in incentive compensation. The after-tax loss decreased in 2013 as
compared to that in 2012 because of an increase in dividend income.

Income Tax Expense

Consolidated income tax expense was 26.2% of pretax income in the current year, versus 34.3% in 2013 and 20.7% in
2012. The decrease in the Company’s tax rate in 2014 as compared to 2013 was primarily attributable to reduced contributions
of securities to investment partnerships. The Company recognized gains of $29,524 during 2014 and $182,746 during 2013 on
the contribution of securities to investment partnerships. In 2014 and 2013, gains on contributions to investment partnerships
were taxed at 38.0% and 37.1%, respectively. The increase in the Company’s tax rate in 2013 compared to 2012 was primarily
because of higher effective tax rates for gains on contributions to investment partnerships in 2013.

201420132012Interest expense, not attributable to businesses ...............................................(9,166)$ (6,551)$ (8,155)$ Loss on debt extinguishment .............................................................................(1,133) - (1,955) Total interest expense .......................................................................................(10,299) (6,551) (10,110) Tax expense (benefit) ........................................................................................(3,914) (2,489) (3,842) Contribution to net earnings .............................................................................(6,385)$ (4,062)$ (6,268)$

Financial Condition

Our balance sheet continues to maintain significant liquidity. Our consolidated shareholders’ equity on September 24, 2014 was
$638,717, an increase of $289,592 compared to the September 26, 2012 balance. The combined increase during 2014 and 2013
in consolidated shareholders’ equity was primarily attributable to an increase in comprehensive income of $124,656 as well as
funds raised in equity offerings amounting to $161,468. The increase in comprehensive income was primarily due to
appreciation of our investments.

Consolidated cash and investments are summarized below.

The Company’s pro-rata share of its common stock held by the investment partnerships is recorded as treasury stock. Unrealized
gains/losses of Biglari Holdings’ stock held by the investment partnerships are eliminated in the Company’s results.

Liquidity
During 2014 cash flows from operations primarily consisted of $23,470 of cash flows from earnings (excluding gains) and
$10,340 of cash dividends from investment partnerships. During 2013 and 2012 cash flows from earnings (excluding gains)
were $40,234 and $48,597, respectively.

Net cash used in investing activities during 2014 was primarily because of contributions to investment partnerships of $100,000,
acquisitions of businesses of $40,143 and capital expenditures of $35,812. Net cash used in investing activities of $60,765
during 2013 primarily consisted of purchases of investments of $45,277 and capital expenditures of $14,167. During 2012 net
cash used in investing activities was $87,885 based primarily on purchases of investments of $108,825 offset by sales of
investments of $38,108.

During 2014 we generated cash from financing activities which primarily resulted from an increase in Steak n Shake borrowings
of $101,411 and proceeds from an equity offering of $85,873. $50,000 of Steak n Shake’s increased borrowings were used to
pay a cash dividend to Biglari Holdings and the remaining loan proceeds will be used by Steak n Shake for working capital and
general corporate purposes. During 2013 we generated $75,595 of cash from financing activities from an equity offering.
During 2012 we used $709 of cash in financing activities.

We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated
from operations, cash on hand, existing credit facilities, and the sale of excess properties and investments. We continually review
available financing alternatives.

Steak n Shake Credit Facility
On March 19, 2014, Steak n Shake and its subsidiaries entered into a new credit agreement. This credit agreement provides for a
senior secured term loan facility in an aggregate principal amount of $220.0 million and a senior secured revolving credit facility
in an aggregate principal amount of up to $30.0 million.

The term loan is scheduled to mature on March 19, 2021. It amortizes at an annual rate of 1.0% in equal quarterly installments,
beginning June 30, 2014, at 0.25% of the original principal amount of the term loan, subject to mandatory prepayments from
excess cash flow, asset sales and other events described in the credit agreement. The balance will be due at maturity. The
revolver will be available on a revolving basis until March 19, 2019.

Steak n Shake has the right to request an incremental term loan facility from participating lenders and/or eligible assignees at any
time, up to an aggregate total principal amount not to exceed $70.0 million if certain customary conditions within the credit
agreement are met.

20142013Cash and cash equivalents ...............................................................................................................124,290$ 94,626$ Investments .....................................................................................................................................21,523 85,479 Fair value of interest in investment partnerships ............................................................................620,811 455,297 Total cash and investments..............................................................................................................766,624 635,402 Less: portion of Company stock held by investment partnerships ...............................................(63,573) (57,598) Carrying value of cash and investments on balance sheet ...............................................................703,051$ 577,804$

Borrowings bear interest at a rate per annum equal to a base rate or a Eurodollar rate (minimum of 1%) plus an applicable
margin. Interest on the term loan is based on a Eurodollar rate plus an applicable margin of 3.75% or on the prime rate plus an
applicable margin of 2.75%. Interest on loans under the revolver is based on a Eurodollar rate plus an applicable margin ranging
from 2.75% to 4.25% or on the prime rate plus an applicable margin ranging from 1.75% to 3.25%. The applicable margins on
revolver loans are contingent on Steak n Shake’s total leverage ratio. The revolver also carries a commitment fee ranging from
0.40% to 0.50% per annum, according to Steak n Shake’s total leverage ratio, on the unused portion of the revolver.

As of September 24, 2014, the interest rate on the term loan was 4.75%.

The credit agreement includes customary affirmative and negative covenants and events of default, as well as a financial
maintenance covenant, solely with respect to the revolver, relating to the maximum total leverage ratio.

Both the term loan and the revolver have been secured by first priority security interests on substantially all the assets of Steak n
Shake. Biglari Holdings is not a guarantor under the credit facility. Approximately $118,589 of the proceeds of the term loan
were used to repay all outstanding amounts under Steak n Shake’s former credit facility and to pay related fees and expenses,
$50,000 of such proceeds were used to pay a cash dividend to Biglari Holdings, and the remaining term loan proceeds of
approximately $51,411 will be used by Steak n Shake for working capital and general corporate purposes. As of September 24,
2014, $219,450 was outstanding under the term loan, and no amount is outstanding under the revolver.

Steak n Shake had $10,188 and $6,588 in standby letters of credit outstanding as of September 24, 2014 and September 25, 2013,
respectively.

Western Revolver
During fiscal year 2014, Western drew $1,000 due June 13, 2015.

Interest Rate Swap
During fiscal year 2013, Steak n Shake entered into an interest rate swap for a notional amount of $65,000 through September
30, 2015. The agreement hedges potential changes in the Eurodollar rate. The fair value of the interest rate swap was a liability
of $170 and $214 on September 24, 2014 and September 25, 2013, respectively, and is included in accrued expenses on the
consolidated balance sheet.

During fiscal year 2011, Steak n Shake entered into an interest rate swap agreement for a notional amount of $20,000, which
effectively fixed the interest rate on a prior credit facility at 3.25% through February 15, 2016. The notional amount decreases
$1,000 quarterly through its maturity on February 15, 2016. The notional amount of the interest rate swap was $6,000 on
September 24, 2014. The fair value of the interest rate swap was a liability of $63 and $187 on September 24, 2014 and
September 25, 2013, respectively, and is included in accrued expenses on the consolidated balance sheet.

Critical Accounting Policies
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain
accounting policies require management to make estimates and judgments concerning transactions that will be settled several
years in the future. Amounts recognized in our consolidated financial statements from such estimates are necessarily based on
numerous assumptions involving varying and potentially significant degrees of judgment and uncertainty. Accordingly, the
amounts currently reflected in our consolidated financial statements will likely increase or decrease in the future as additional
information becomes available.

We believe the following critical accounting policies represent our more significant judgments and estimates used in preparation
of our consolidated financial statements. Given the current composition of our business, we do not believe that any accounting
policies related to our insurance or media businesses were critical to the preparation of our consolidated financial statements as
of and for the fiscal year ended September 24, 2014.

Consolidation
The consolidated financial statements include the accounts of (i) Biglari Holdings Inc., (ii) the wholly-and majority-owned
subsidiaries of Biglari Holdings Inc. in which control can be exercised and (iii) limited partnership investment entities in which
we have a controlling interest as the general partner. In evaluating whether we have a controlling interest in entities in which we
would consolidate, we consider the following: (1) for voting interest entities, we consolidate those entities in which we own a
majority of the voting interests; and (2) for limited partnership entities, we consolidate those entities if we are the general partner
of such entities and for which no substantive removal rights exist. The analysis as to whether to consolidate an entity is subject
to a significant amount of judgment. Some of the criteria considered include the determination as to the degree of control over an
entity by its various equity holders and the design of the entity.

Before the sale of Biglari Capital and liquidation of Western Acquisitions, L.P., the Company consolidated its affiliated
partnerships in its consolidated financial statements, which included the accounts of (i) the Company, (ii) its wholly-owned
subsidiaries Biglari Capital, Steak n Shake, and Western, and (iii) The Lion Fund, L.P. and Western Acquisitions, L.P. (the
“consolidated affiliated partnerships”), in which the Company had a substantive controlling interest. As a result of the sale of
Biglari Capital and the related liquidation of Western Acquisitions, L.P., the Company has ceased to have a controlling interest
in the consolidated affiliated partnerships, which, accordingly, are no longer consolidated in the Company’s financial statements.
Beginning July 1, 2013, the consolidated financial statements only include the accounts of the Company and its wholly-owned
subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Prior to July 1, 2013 the consolidated affiliated partnerships’ assets and liabilities were consolidated on the consolidated balance
sheet even though outside limited partners had majority ownership in the consolidated affiliated partnerships. The Company did
not guarantee any of the liabilities of its subsidiaries that were serving as general partners to these consolidated affiliated
partnerships.

Beginning July 1, 2013, our interests in the investment partnerships are accounted for as equity method investments because of
our retained limited partner interest in the investment partnerships. The Company records gains from investment partnerships
(inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated statement of
earnings based on our proportional ownership interest in the investment partnerships.

Impairment of Long-lived Assets
We review company-operated restaurants for impairment on a restaurant-by-restaurant basis when events or circumstances
indicate a possible impairment. We test for impairment by comparing the carrying value of the asset to the undiscounted future
cash flows expected to be generated by the asset. If the total estimated future cash flows are less than the carrying amount of the
asset, the carrying value is written down to the estimated fair value, and a loss is recognized in earnings. The future cash flows
expected to be generated by an asset requires significant judgment regarding future performance of the asset, fair market value if
the asset were to be sold, and other financial and economic assumptions.

Insurance Reserves
We currently self-insure a significant portion of expected losses under our workers’ compensation, general liability, directors’
and officers’ liability, and auto liability insurance programs. For certain programs, we purchase reinsurance for individual and
aggregate claims that exceed predetermined limits. We record a liability for all unresolved claims and our estimates of incurred
but not reported (“IBNR”) claims at the anticipated cost to us. The liability estimate is based on information received from
insurance companies, combined with management’s judgments regarding frequency and severity of claims, claims development
history, and settlement practices. Significant judgment is required to estimate IBNR claims as parties have yet to assert a claim,
and therefore the degree to which injuries have been incurred and the related costs have not yet been determined. Additionally,
estimates about future costs involve significant judgment regarding legislation, case jurisdictions, and other matters.

We self-insure our group health insurance risk. We record a liability for our group health insurance for all applied claims and our
estimate of claims incurred but not yet reported. Our estimate is based on information received from our insurance company and
claims processing practices.

Our reserves for self-insured liabilities at September 24, 2014 and September 25, 2013 were $9,221 and $8,629, respectively.

Income Taxes
We record deferred tax assets or liabilities based on differences between financial reporting and tax basis of assets and liabilities
using currently enacted rates and laws that will be in effect when the differences are expected to reverse. We record deferred tax
assets to the extent we believe there will be sufficient future taxable income to utilize those assets prior to their expiration. To the
extent deferred tax assets would be unable to be utilized, we would record a valuation allowance against the unrealizable amount
and record that amount as a charge against earnings. Due to changing tax laws and state income tax rates, significant judgment is
required to estimate the effective tax rate expected to apply to tax differences that are expected to reverse in the future. We must
also make estimates about the sufficiency of taxable income in future periods to offset any deductions related to deferred tax
assets currently recorded. Based on 2014 results, a change of one percentage point in the annual effective tax rate would have an
impact of $390 on net earnings.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be
sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in
the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate resolution.

Goodwill and Other Intangible Assets
We are required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if
circumstances indicate impairment may have occurred. The required analysis of potential impairment of goodwill requires a two-
step approach. The first step is the estimation of fair value of each reporting unit. If step one indicates that impairment potentially
exists, the second step is performed to measure the amount of impairment, if any. Goodwill impairment exists when the
estimated fair value of goodwill is less than its carrying value. The valuation methodology and underlying financial information
included in our determination of fair value require significant management judgments. We use both market and income
approaches to derive fair value. The judgments in these two approaches include, but are not limited to, comparable market
multiples, long-term projections of future financial performance, and the selection of appropriate discount rates used to
determine the present value of future cash flows. Changes in such estimates or the application of alternative assumptions could
produce significantly different results.

Leases
Restaurant operations lease certain properties under operating leases. Many of these lease agreements contain rent holidays, rent
escalation clauses and/or contingent rent provisions. Rent expense is recognized on a straight-line basis over the expected lease
term, including cancelable option periods when failure to exercise such options would result in an economic penalty. We use a
time period for straight-line rent expense calculation that equals or exceeds the time period used for depreciation. In addition, the
rent commencement date of the lease term is the earlier of the date when they become legally obligated for the rent payments or
the date when they take access to the grounds for build out. Accounting for leases involves significant management judgment.

Effects of Governmental Regulations and Inflation
Most Restaurant operations employees are paid hourly rates related to minimum wage laws. Any increase in the legal minimum
wage would directly increase our operating costs. We are also subject to various laws related to zoning, land use, health and
safety standards, working conditions, and accessibility standards. Any changes in these laws that require improvements to our
restaurants would increase our operating costs.

Inflation in food, labor, fringe benefits, energy costs, transportation costs and other operating costs directly affect our operations.

The federal healthcare reform legislation that became law in March 2010 (known as the Patient Protection and Affordable Care
Act [“PPACA”]) mandates menu labeling of certain nutritional aspects of restaurant menu items such as caloric, sugar, sodium,
and fat content. Altering our recipes in response to such legislation could increase our costs and/or change the flavor profile of
our menu offerings which could have an adverse impact on our results of operations. Additionally, if our customers perceive our
menu items to contain unhealthy caloric, sugar, sodium, or fat content, our results of operations could be further adversely
affected.

Additionally, minimum employee health care coverage mandated by state or federal legislation, such as the PPACA, could
significantly increase our employee health benefit costs or require us to alter the benefits we provide to our employees. While we
are assessing the potential impact the PPACA will have on our business, certain of the mandates in the legislation are not yet
effective. If our employee health benefit costs increase, we cannot provide assurance that we will be able to offset these costs
through increased revenue or reductions in other costs, which could have an adverse effect on our results of operations and
financial condition.

Contractual Obligations
Our significant contractual obligations and commitments as of September 24, 2014 are shown in the following table:

Payments due by period

Contractual Obligations
Long-term debt (1) (2) .......................................................................
Capital leases and finance obligations (1) ........................................
Operating leases (3) .........................................................................
Purchase commitments (4) ...............................................................
Other long-term liabilities (5) ...........................................................
Total ................................................................................................

Less
than
1 year

1 – 3
years

More than
5 years

3 – 5
years
$ 13,478 $ 26,738 $ 26,458 $ 224,582 $ 291,256
63,628
126,758
3,435
1,650
$ 48,280 $ 80,128 $ 65,110 $ 293,209 $ 486,727

15,586 24,837 15,302
23,315
35
—

16,935 27,434
2,281 1,119
—

7,903
59,074
—

1,650

Total

—

(1)

(5)

Includes principal and interest and assumes payoff of indebtedness at maturity date.
Includes outstanding borrowings under Steak n Shake’s credit facility.

(2)
(3) Excludes amounts to be paid for contingent rents. Includes amounts to be paid for subleased properties.
(4)

Includes agreements to purchase goods or services that are enforceable and legally binding on us and that specify all
significant terms. Excludes agreements that are cancelable without penalty.
Includes liabilities for Non-Qualified Deferred Compensation Plan. Excludes our unrecognized tax benefits of $444 as of
September 24, 2014 because we cannot make a reliable estimate of the timing of cash payments.

Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements other than operating leases entered into in the normal course of business.

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

Cautionary Note Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In
general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures, or other financial
items, and assumptions underlying any of the foregoing. Forward-looking statements reflect management’s current expectations
regarding future events and use words such as “anticipate,” “believe,” “expect,” “may,” and other similar terminology. A
forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or
circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as
of the date of this report. These forward-looking statements are all based on currently available operating, financial, and
competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ
materially depending on a variety of factors, many beyond our control, including, but not limited to, the risks and uncertainties
described in Item 1A, Risk Factors set forth above. We undertake no obligation to publicly update or revise them, except as may
be required by law.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

The majority of our investments are conducted through investment partnerships which generally hold common stocks. We also
hold marketable securities directly. Through investments in the investment partnerships we hold a concentrated position in the
common stock of Cracker Barrel Old Country Store, Inc. A significant decline in the general stock market or in the prices of
major investments may produce a large net loss and decrease in our consolidated shareholders’ equity. Decreases in values of
equity investments can have a materially adverse effect on our earnings and on consolidated shareholders’ equity.

We prefer to hold equity investments for very long periods of time so we are not troubled by short-term price volatility with
respect to our investments. Our interests in the investment partnerships are committed on a rolling 5-year basis, and any
distributions upon our withdrawal of funds will be paid out over two years (and may be paid in kind rather than in cash). Market
prices for equity securities are subject to fluctuation. Consequently the amount realized in the subsequent sale of an investment
may significantly differ from the reported market value. A hypothetical 10% increase or decrease in the market price of our
investments would result in a respective increase or decrease in the fair market value of our investments of $57,876, along with a
corresponding change in shareholders’ equity of approximately 6%.

Borrowings on Steak n Shake’s credit facility bear interest at a rate per annum equal to a base rate or a Eurodollar rate (minimum
of 1%) plus an applicable margin. Interest on the term loan is based on a Eurodollar rate plus an applicable margin of 3.75% or
on the prime rate plus an applicable margin of 2.75%. Interest on loans under the revolver is based on a Eurodollar rate plus an
applicable margin ranging from 2.75% to 4.25% or on the prime rate plus an applicable margin ranging from 1.75% to 3.25%. At
September 24, 2014, a hypothetical 100 basis point increase in short-term interest rates would have an impact of approximately
$236 on our net earnings. On October 11, 2012, Steak n Shake entered into an interest rate swap for a notional amount of
$65,000 through September 30, 2015. The agreement hedges potential changes in the Eurodollar rate. The fair value of the
interest rate swap was a liability of $170 on September 24, 2014. In February 2011, in connection with the issuance of the term
loan under Steak n Shake’s previous credit facility, Steak n Shake entered into an interest rate swap agreement with the lender
for a notional amount of $20,000, which effectively fixed the interest rate on the term loan at 3.25% through its maturity. The
fair value of the interest rate swap was a liability of $63 at September 24, 2014.

We have had minimal exposure to foreign currency exchange rate fluctuations in 2014 and 2013 and no exposure in 2012.

Item 8.

Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Biglari Holdings Inc.
San Antonio, Texas

We have audited the accompanying consolidated balance sheets of Biglari Holdings Inc. and subsidiaries (the "Company") as of
September 24, 2014 and September 25, 2013, and the related consolidated statements of earnings, comprehensive income,
changes in shareholders' equity, and cash flows for each of the three years in the periods ended September 24, 2014, September
25, 2013, and September 26, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15. These
financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is
to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Biglari
Holdings Inc. and subsidiaries as of September 24, 2014 and September 25, 2013, and the results of their operations and their
cash flows for the years ended September 24, 2014, September 25, 2013, and September 26, 2012, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the
information set forth therein.

As discussed in Note 5 to the financial statements, during 2014 and 2013, the Company contributed cash and securities with an
aggregate value of $174.4 million and $377.6 million, respectively to investment partnerships. The Company and its subsidiaries
have invested in the investment partnerships in the form of limited partner interests. These investments are subject to a rolling
five-year lock up period under the terms of the respective partnership agreements for the investment partnerships.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
Company's internal control over financial reporting as of September 24, 2014, based on the criteria established in Internal
Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated November 22, 2014 expressed an unqualified opinion on the Company's internal control over financial
reporting.

/s/ DELOITTE & TOUCHE LLP
Indianapolis, Indiana
November 22, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Biglari Holdings Inc.
San Antonio, Texas

We have audited the internal control over financial reporting of Biglari Holdings Inc. and subsidiaries (the "Company") as of
September 24, 2014, based on criteria established in Internal Control — Integrated Framework (1992) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control Over
Financial Reporting, management excluded from its assessment the internal control over financial reporting at Maxim Inc. and
subsidiaries which was acquired on February 27, 2014, and First Guard Insurance Company and its agency, 1st Guard
Corporation, which were acquired on March 19, 2014, and whose financial statements constitute 5% and 2% of consolidated
total assets and consolidated total revenues, respectively, of the consolidated financial statement amounts as of and for the year
ended September 24, 2014. Accordingly, our audit did not include the internal control over financial reporting at Maxim Inc.,
First Guard Insurance Company, 1st Guard Corporation and their respective subsidiaries. The Company's management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our
audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's
principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board
of directors, management, and other personnel 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. A
company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely
basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are
subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
September 24, 2014, based on the criteria established in Internal Control — Integrated Framework (1992) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated financial statements and financial statement schedule as of and for the year ended September 24, 2014 of the
Company and our report dated November 22, 2014 expressed an unqualified opinion on those financial statements and financial
statement schedule and included an emphasis of a matter paragraph relating to the contribution of cash and securities to
investment partnerships.

/s/ DELOITTE & TOUCHE LLP
Indianapolis, Indiana
November 22, 2014

Management’s Report on Internal Control Over Financial Reporting

The management of Biglari Holdings Inc. is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Pursuant to the rules and regulations of the
Securities and Exchange Commission, internal control over financial reporting is a process designed by, or under the supervision
of, the Company’s principal executive and principal financial officers, and effected by the board of directors, management and
other personnel, to provide assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with accounting principles generally accepted in the United States of America and includes
those policies and procedures that:

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of assets of the Company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the
financial statements in accordance with accounting principles generally accepted in the United States of
America, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the Company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.

Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has evaluated the effectiveness of its internal control over financial reporting as of September 24, 2014 based on
the criteria set forth in a report entitled Internal Control — Integrated Framework (1992), issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, we have concluded that, as of
September 24, 2014, our internal control over financial reporting is effective based on those criteria.

Management's assessment of the effectiveness of the Company's internal control over financial reporting excluded Maxim Inc.,
First Guard Insurance Company, 1st Guard Corporation and their respective subsidiaries, which were acquired in fiscal year
2014. These acquisitions represented 5% and 2% of consolidated total assets and consolidated total revenues, respectively, of
the Company as of and for the year ended September 24, 2014. These acquisitions are more fully discussed in Note 1 of the notes
to the consolidated financial statements. Under guidelines established by the Securities and Exchange Commission, companies
are permitted to exclude acquisitions from their assessment of internal control over financial reporting within one year of the date
of the acquisition.

The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on the
Company’s internal control over financial reporting and its report is included herein.

/s/ Sardar Biglari
Sardar Biglari
Chairman and Chief Executive Officer

/s/ Bruce Lewis
Bruce Lewis
Controller

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF EARNINGS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands except per-share amounts)

201420132012(52 weeks)(52 weeks)(52 weeks)RevenuesRestaurant operations .....................................................................778,155$ 751,919$ 733,905$ Insurance premiums and other ......................................................5,715 - - Media advertising and other ..........................................................9,941 - - Other ..................................................................................................- 3,903 6,302 793,811 755,822 740,207 Cost and expensesRestaurant cost of sales .................................................................602,507 583,003 561,055 Insurance losses and underwriting expenses .............................4,254 - - Media cost of sales .........................................................................19,399 - - Selling, general and administrative ...............................................128,472 126,835 109,547 Depreciation and amortization .......................................................24,905 25,250 26,424 779,537 735,088 697,026 Other income (expenses)Interest and dividends ....................................................................1,182 8,265 4,000 Interest expense ...............................................................................(10,299) (6,551) (10,110) Interest on obligations under leases.............................................(9,720) (9,829) (10,073) Gain on sale of Biglari Capital Corp. .............................................- 1,597 - Investment gains (including contributions) ................................29,524 182,177 4,200 Investment partnership gains ........................................................14,055 20,068 - Total other income (expenses) ....................................................24,742 195,727 (11,983) Earnings before income taxes ..........................................................39,016 216,461 31,198 Income tax expense ..........................................................................10,212 74,289 6,453 Net earnings .......................................................................................28,804 142,172 24,745 Less: Earnings attributable to noncontrolling interests ............- (1,901) (3,152) Net earnings attributable to Biglari Holdings Inc. ......................28,804$ 140,271$ 21,593$ Earnings per share Basic earnings per common share ....................................................16.85$ 90.89$ 13.92$ Diluted earnings per common share ................................................16.82$ 90.69$ 13.88$ Weighted average shares and equivalentsBasic .....................................................................................................1,709,621 1,543,370 1,551,613 Diluted ..................................................................................................1,712,775 1,546,665 1,555,406 See accompanying Notes to Consolidated Financial Statements.

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands)

See accompanying Notes to Consolidated Financial Statements.

201420132012(52 Weeks)(52 Weeks)(52 Weeks)Net earnings attributable to Biglari Holdings Inc. ............................................28,804$ 140,271$ 21,593$ Other comprehensive income:Reclassification of investment appreciation in net earnings ...............................(29,578) (182,286) (1,455) Applicable income taxes .....................................................................................11,237 67,640 553 Net change in unrealized gains and losses on investments ..................................(4,930) 146,079 81,075 Applicable income taxes .....................................................................................1,874 (53,881) (30,808) Foreign currency translation ...............................................................................(582) 8 - Other comprehensive (loss) income, net ...................................................................(21,979) (22,440) 49,365 Total comprehensive income ...................................................................................6,825$ 117,831$ 70,958$

BIGLARI HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands)

September 24, 2014September 25, 2013AssetsCurrent assets:Cash and cash equivalents ...................................................................................... $ 124,290 $ 94,626 Investments ............................................................................................................ 21,523 85,479 Receivables.............................................................................................................. 15,962 7,055 Inventories .............................................................................................................. 6,892 6,475 Other current assets ............................................................................................... 17,601 3,851 Total current assets ................................................................................................... 186,268 197,486 Property and equipment ........................................................................................... 354,147 346,147 Goodwill .................................................................................................................... 40,164 28,251 Other intangible assets .............................................................................................. 22,907 7,721 Investment partnerships ........................................................................................... 557,238 397,699 Other assets ............................................................................................................... 14,008 11,239 Total assets .............................................................................................................. $ 1,174,732 $ 988,543 Liabilities and shareholders’ equityLiabilitiesCurrent liabilities:Accounts payable ................................................................................................... $ 39,207 $ 31,140 Accrued expenses ................................................................................................... 64,440 65,885 Current portion of notes payable and other borrowings ........................................ 9,387 15,989 Total current liabilities .............................................................................................. 113,034 113,014 Long-term notes payable and other borrowings ........................................................ 315,196 216,747 Deferred taxes ............................................................................................................ 96,762 84,525 Other liabilities .......................................................................................................... 11,023 9,668 Total liabilities ....................................................................................................... 536,015 423,954 Shareholders’ equityCommon stock - 2,065,566 and 1,720,782 shares outstanding ................................. 1,071 899 Additional paid-in capital .......................................................................................... 391,878 269,810 Retained earnings ....................................................................................................... 340,775 348,339 Accumulated other comprehensive income .............................................................. (522) 21,457 Treasury stock, at cost .............................................................................................. (94,485) (75,916)Biglari Holdings Inc. shareholders’ equity ......................................................... 638,717 564,589 Total liabilities and shareholders’ equity ........................................................... $ 1,174,732 $ 988,543 See accompanying Notes to Consolidated Financial Statements.

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands)

201420132012(52 Weeks)(52 Weeks)(52 Weeks)Operating activitiesNet earnings ..........................................................................................................28,804$ 142,172$ 24,745$ Adjustments to reconcile net earnings to operating cash flows:Depreciation and amortization ........................................................................24,905 25,250 26,424 Provision for deferred income taxes ................................................................9,164 72,035 (2,727) Asset impairments and other non-cash expenses ..............................................3,253 3,508 3,744 Loss on disposal of assets .................................................................................977 1,111 611 Gain on sale of Biglari Capital Corp. ................................................................- (1,597) - Investment gains (including contributions) .......................................................(29,578) (182,177) (4,200) Investment partnership gains ...........................................................................(14,055) (20,068) - Distributions from investment partnerships .....................................................10,340 - - Changes in receivables and inventories .............................................................(5,926) 195 (3,659) Changes in other assets ....................................................................................(2,599) (2,742) 1,019 Changes in accounts payable and accrued expenses ...........................................2,290 3,764 10,491 Investment operations of consolidated affiliated partnerships:Purchases of investments .................................................................................- - (14,477) Sales of investments ........................................................................................- 1,516 26,052 Investment gains/losses ....................................................................................- (3,597) (5,942) Changes in cash and cash equivalents ...............................................................- (578) (12,115) Net cash provided by operating activities ........................................................27,575 38,792 49,966 Investing activitiesAdditions of property and equipment ...............................................................(35,812) (14,167) (8,675) Proceeds from property and equipment disposals .............................................2,641 2,449 2,379 Acquisitions of businesses, net of cash acquired ................................................(40,143) - - Purchase of lease rights ....................................................................................- (3,770) - Proceeds from sale of Biglari Capital Corp., net of cash on hand .....................- 1,699 - Purchases of investments and contributions to investment partnerships ..........(112,530) (46,977) (108,825) Sales of investments ........................................................................................11,986 1 38,108 Changes in due to/from broker .........................................................................- - (7,272) Changes in restricted assets ..............................................................................3,098 - (3,600) Net cash used in investing activities ................................................................(170,760) (60,765) (87,885) Financing activitiesProceeds from revolving credit facility ............................................................11,700 17,000 - Payments on revolving credit facility ..............................................................(10,700) (17,000) (15,000) Borrowings on long-term debt ..........................................................................217,800 - 130,000 Principal payments on long-term debt .............................................................(120,800) (12,138) (110,170) Deferred financing charges ...............................................................................(4,754) - (1,961) Principal payments on direct financing lease obligations ..................................(6,278) (5,904) (5,272) Proceeds from stock rights offering .................................................................85,873 75,595 - Proceeds from exercise of stock options and employee stock purchase plan ....24 16 403 Financing activities of consolidated affiliated partnerships:Contributions from and distributions to noncontrolling interests, net ...............- (1,226) 1,291 Net cash (used in) provided by financing activities ........................................172,865 56,343 (709) Effect of exchange rate changes on cash .........................................................(16) (103) - Increase (decrease) in cash and cash equivalents .....................................................29,664 34,267 (38,628) Cash and cash equivalents at beginning of year .......................................................94,626 60,359 98,987 Cash and cash equivalents at end of year .......................................................124,290$ 94,626$ 60,359$ See accompanying Notes to Consolidated Financial Statements.

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands)

See accompanying Notes to Consolidated Financial Statements.

Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock TotalBalance at September 28, 2011 .....................756$ 144,569$ 230,390$ (5,468)$ (90,569)$ 279,678$ Net earnings .................................................21,593 21,593 Other comprehensive income, net ................49,365 49,365 Exercise of stock options .............................859 23 882 Adjustment of redeemable noncontrolling interest to maximum redemption value ......(2,393) (2,393) Balance at September 26, 2012 .....................756$ 143,035$ 251,983$ 43,897$ (90,546)$ 349,125$ Net earnings .................................................140,271 140,271 Other comprehensive income, net ................(22,440) (22,440) Deconsolidation of affiliated partnerships .....12,224 25,640 37,864 Adjustment to treasury stock for holdings in investment partnerships ...........(11,033) (11,033) Issuance of stock for rights offering ..............143 119,367 (43,915) 75,595 Exercise of stock options .............................(6) 23 17 Adjustment of redeemable noncontrolling interest to maximum redemption value ......(4,810) (4,810) Balance at September 25, 2013 .....................899$ 269,810$ 348,339$ 21,457$ (75,916)$ 564,589$ Net earnings ..............................................28,804 28,804 Other comprehensive income, net ..........(21,979) (21,979) Adjustment to treasury stock for holdings in investment partnerships ...(18,594) (18,594) Issuance of stock for rights offering .......172 122,069 (36,368) 85,873 Exercise of stock options ..........................(1) 25 24 Balance at September 24, 2014 ................1,071$ 391,878$ 340,775$ (522)$ (94,485)$ 638,717$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 1. Summary of Significant Accounting Policies

Description of Business
Biglari Holdings Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities, including
media, property and casualty insurance, as well as restaurants. The Company’s largest operating subsidiaries are involved in the
franchising and operating of restaurants. The Company is led by Sardar Biglari, Chairman and Chief Executive Officer of
Biglari Holdings and its major operating subsidiaries. The Company’s long-term objective is to maximize per-share intrinsic
value. All major operating, investment, and capital allocation decisions are made for the Company and its subsidiaries by Sardar
Biglari, Chairman and Chief Executive Officer.

Fiscal Year
Our fiscal year ends on the last Wednesday in September. Fiscal years 2014, 2013, and 2012 each contain 52 weeks. On October
16, 2014, the Company’s Board of Directors approved a change in the Company’s fiscal year-end moving from the last
Wednesday in September to December 31 of each year. The Company will file a Transition Report on Form 10-KT for the
transition period from September 25, 2014 through December 31, 2014.

Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries including Steak n
Shake Operations, Inc. (“Steak n Shake”) and Western Sizzlin Corporation (“Western”). The consolidated financial statements
also include the accounts of Maxim Inc. (“Maxim”) and First Guard Insurance Company and its agency, 1st Guard Corporation
(collectively “First Guard”) from the dates of their respective acquisitions. In addition to consolidating wholly-owned entities
we consolidate entities if we have a controlling interest in the general partner. Intercompany accounts and transactions have
been eliminated in consolidation.

Prior to July 2013, the consolidated financial statements included the accounts of the Company, its wholly-owned subsidiaries
(including Biglari Capital Corp. [“Biglari Capital”]), and investment related limited partnerships The Lion Fund, L.P. and
Western Acquisitions, L.P. (collectively the “consolidated affiliated partnerships”), in which we had a controlling interest.

In July 2013 the Company liquidated the partners’ interest in Western Acquisitions, L.P. by distributing assets of the partnership
to the partners and Biglari Holdings sold all of the outstanding shares of Biglari Capital to Mr. Biglari. Biglari Capital is the
general partner of The Lion Fund, L.P. and The Lion Fund II, L.P. (collectively the “investment partnerships"), which are limited
partnerships that operate as private investment funds.

As a result of the sale of Biglari Capital and the related liquidation of Western Acquisitions, L.P. the Company ceased to have a
controlling interest in Biglari Capital and the consolidated affiliated partnerships. Accordingly, Biglari Capital and the
consolidated affiliated partnerships are no longer consolidated in the Company’s consolidated financial statements.

Western’s, Maxim’s, First Guard’s and the investment partnerships’ September 30 period end for financial reporting purposes
differs from the end of the Company’s fiscal year. There were no significant transactions in the intervening period.

Business Acquisitions
On February 27, 2014 the Company acquired certain assets and liabilities of Maxim. Maxim is a brand management company
whose business lies in media, both in print and in digital, and in licensing of products and services. On March 19, 2014, the
Company acquired the stock of First Guard, a direct underwriter of commercial trucking insurance, selling physical damage and
nontrucking liability insurance to truckers. These acquisitions were not material, individually or in aggregate, to the Company.
The fair value of the assets and liabilities acquired — other than investments, goodwill and intangibles — was not material.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 1. Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents
Cash equivalents primarily consist of U.S. Government securities and money market accounts, all of which have original
maturities of three months or less. Cash equivalents are carried at fair value.

Investments
Our investments consist of available-for-sale securities and are carried at fair value with net unrealized gains or losses reported
as a component of accumulated other comprehensive income in shareholders’ equity. Realized gains and losses on disposals of
investments are determined by specific identification of cost of investments sold and are included in investment gains/losses, a
component of other income.

Investment Partnerships
Our interests in the investment partnerships are accounted as equity method investments because of our retained limited partner
interests. The Company records investment partnership gains (inclusive of the investment partnerships’ unrealized gains and
losses on their securities) as a component of other income based on our proportional ownership interest in the partnerships.

The investment partnerships are for purposes of accounting principles generally accepted in the United States (“GAAP”),
investment companies under the AICPA Audit and Accounting Guide Investment Companies. For periods prior to July 1, 2013,
the Company retained the specialized accounting for the consolidated affiliated partnerships, pursuant to Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946-810-45.

Concentration of Equity Price Risk
The majority of our investments are conducted through investment partnerships which generally hold common stocks. We also
hold marketable securities directly. Through the investment partnerships we hold a concentrated position in the common stock of
Cracker Barrel Old Country Store, Inc. A significant decline in the general stock market or in the prices of major investments
may have a materially adverse effect on our earnings and on consolidated shareholders’ equity.

Receivables
Our accounts receivable balance consists primarily of franchisee, customer, and other receivables. We carry our accounts
receivable at cost less an allowance for doubtful accounts, which is based on a history of past write-offs and collections and
current credit conditions. Allowance for doubtful accounts was $1,512 and $804 at September 24, 2014 and September 25,
2013, respectively. Amounts charged to expense and deductions from the allowance totaled $898 and $190, respectively, in
2014. Amounts charged to expense and deductions from the allowance in 2013 and 2012 were insignificant.

Inventories
Inventories are valued at the lower of cost (first-in, first-out method) or market, and consist primarily of restaurant food items
and supply inventory.

Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are
recognized on the straight-line method over the estimated useful lives of the assets (10 to 30 years for buildings and land
improvements, and 3 to 10 years for equipment). Leasehold improvements are amortized on the straight-line method over the
shorter of the estimated useful lives of the improvements or the term of the related leases. Interest costs associated with the
construction of new restaurants are capitalized. Major improvements are also capitalized while repairs and maintenance are
expensed as incurred. We review our long-lived assets whenever events or changes in circumstances indicate that their carrying
amounts may not be recoverable. For purposes of this assessment, assets are evaluated at the lowest level for which there are
identifiable cash flows. If the future undiscounted cash flows of an asset are less than the recorded value, an impairment is
recorded for the difference between the carrying value and the estimated fair value of the asset. Refer to Note 3 for information
regarding asset impairments.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 1. Summary of Significant Accounting Policies (continued)

Goodwill and Other Intangible Assets
Goodwill and indefinite life intangibles are not amortized, but are tested for potential impairment on an annual basis, or more
often if events or circumstances change that could cause goodwill or indefinite life intangibles to become impaired. Other
purchased intangible assets are amortized over their estimated useful lives, generally on a straight-line basis. 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. When an impairment is identified, we reduce the carrying
value of the asset to its estimated fair value. No impairments were recorded on goodwill during fiscal years 2014, 2013, or 2012.
During fiscal year 2013, the Company recorded an impairment related to the trade name of Western’s company-operated stores.
Refer to Note 8 for information regarding our goodwill and other intangible assets.

Operating Leases
The Company leases certain property under operating leases. Many of these lease agreements contain rent holidays, rent
escalation clauses and/or contingent rent provisions. Rent expense is recognized on a straight-line basis over the expected lease
term, including cancellable option periods when failure to exercise such options would result in an economic penalty. In
addition, the rent commencement date of the lease term is the earlier due date when we become legally obligated for the rent
payments, the date when we take access to the property, or the grounds for build out.

Common Stock and Treasury Stock
The Company’s common stock is $0.50 stated value. The following table presents shares authorized, issued and outstanding:

Revenue Recognition
Restaurant operations
We record revenue from restaurant sales at the time of sale, net of discounts. Revenue from the sale of gift cards is deferred at
the time of sale and recognized either upon redemption by the customer or at expiration of the gift cards. Sales revenues are
presented net of sales taxes. Unit franchise fees and area development fees are recorded as revenue when said-related restaurant
begins operations. Royalty fees and administrative services fees based on franchise sales are recognized as revenue as earned.
License revenue and rental revenues are recognized as revenue when earned.

Restaurant operations revenues were as follows:

September 24, 2014September 25, 2013Common stock authorized ......................................................................................................2,500,000 2,500,000 Common stock issued .............................................................................................................2,142,2021,797,941Treasury stock held by the Company ..................................................................................(76,636)(77,159)Outstanding shares .................................................................................................................2,065,5661,720,782Proportional ownership of the Company's common stock in The Lion Fund, L.P. .......(187,109)(132,406)Net outstanding shares for financial reporting purposes .................................................1,878,4571,588,376201420132012Net sales ..................................................................................................................759,889$ 736,968$ 721,754$ Franchise royalties and fees ....................................................................................15,032 11,741 9,631 Other .......................................................................................................................3,234 3,210 2,520 778,155$ 751,919$ 733,905$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 1. Summary of Significant Accounting Policies (continued)

Insurance premiums and commissions
Insurance premiums are earned over the terms of the related policies. Expenses incurred in connection with acquiring new
insurance business, including acquisition costs, are charged to operations as incurred. Premiums earned are stated net of amounts
ceded to reinsurer. Commissions, gains and investment income for fiscal year 2014 were not significant.

Media advertising and other
Magazine subscription and advertising revenues are recognized at the magazine cover date. The unearned portion of magazine
subscriptions is deferred until the magazine’s cover date, at which time a proportionate share of the gross subscription price is
recognized as revenues, net of any commissions paid to subscription agents. Also included in subscription revenues are revenues
generated from single-copy sales of magazines through retail outlets such as newsstands, supermarkets, convenience stores and
drugstores and on certain digital devices, which may or may not result in future subscription sales. Revenues from retail outlet
sales are recognized based on gross sales less a provision for estimated returns.

Other revenue
Other revenue represents realized and unrealized gains/losses on investments held by consolidated affiliated partnerships.
Realized gains/losses from the disposal of investments held by consolidated affiliated partnerships are determined by specific
identification of cost of investments sold.

Restaurant cost of sales
Cost of sales includes the cost of food, restaurant operating costs and restaurant rent expense. Cost of sales excludes
depreciation and amortization, which is presented as a separate line item on the consolidated statement of earnings.

Earnings Per Share
Earnings per share of common stock is based on the weighted average number of shares outstanding during the year. In fiscal
years 2014 and 2013, Biglari Holdings completed offerings of transferable subscription rights. The offerings were
oversubscribed and 344,261 and 286,767 new shares of common stock were issued, respectively. The Company received net
proceeds of $85,873 and $75,595 from the offerings, respectively. Earnings per share for the 2013 and 2012 fiscal years have
been retroactively restated to account for the rights offerings.

For periods after July 1, 2013, the shares of Company stock attributable to our limited partner interest in The Lion Fund, L.P. —
based on our proportional ownership during this period — are considered treasury stock on the consolidated balance sheet and
thereby deemed not to be included in the calculation of weighted average common shares outstanding.

For financial reporting purposes for periods before July 1, 2013, all common shares of the Company held by the consolidated
affiliated partnerships are recorded in treasury stock on the consolidated balance sheet. In order to compute the weighted
average common shares outstanding, only the shares of treasury stock attributable to the unrelated limited partners of the
consolidated affiliated partnerships — based on their proportional ownership during the period — were considered outstanding
shares.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 1. Summary of Significant Accounting Policies (continued)

The following table presents a reconciliation of basic and diluted weighted average common shares:

2014

2013

2012

Basic earnings per share:
Weighted average common shares ....................................................................................... 1,709,621
Diluted earnings per share:
Weighted average common shares ....................................................................................... 1,709,621
Dilutive effect of stock awards .............................................................................................
3,154
Weighted average common and incremental shares ............................................................. 1,712,775
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 ..............................................................

—

1,543,370 1,551,613

1,543,370 1,551,613
3,793
1,546,665 1,555,406

3,295

705

Marketing Expense
Advertising costs are charged to expense at the later of the date the expenditure is incurred or the date the promotional item is
first communicated. Marketing expense is included in selling, general and administrative expenses on the consolidated statement
of earnings.

Insurance Losses
Liabilities for losses and loss adjustment expenses are established under insurance contracts issued by our insurance subsidiaries.
These losses and loss adjustment expenses include an amount for reported losses and an amount for losses incurred but not
reported. Reserves for incurred but not reported losses are estimates based upon past experience. Reinsurance contracts do not
relieve the ceding company of its obligations to indemnify policyholders with respect to the underlying insurance contracts.
Liabilities for insurance losses of $769 are included in accrued expenses in the consolidated balance sheet.

Insurance Reserves
We self-insure a significant portion of expected losses under our workers’ compensation, general liability, auto, directors’ and
officers’ and medical liability insurance programs, and record a reserve for our estimated losses on all unresolved open claims
and our estimated incurred but not reported claims at the anticipated cost to us. Insurance reserves are recorded in accrued
expenses in the consolidated balance sheet.

Savings Plans
Several of our subsidiaries also sponsor deferred compensation and defined contribution retirement plans, such as 401(k) or
profit sharing plans. Employee contributions to the plans are subject to regulatory limitations and the specific plan provisions.
Some of the plans allow for discretionary contributions as determined by management. Employer contributions expensed with
respect to these plans were $207, $207 and $213 for fiscal years 2014, 2013 and 2012, respectively.

Use of Estimates
Preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results
could differ from the estimates.

New Accounting Standards
In August 2014, the Financial Accounting Standards Board (the “FASB”) issued under Accounting Standards Update (“ASU”)
2014-15 Presentation of Financial Statements-Going Concern. The amendments in this update provide guidance in GAAP about
management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern
and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of
footnote disclosures. The amendments in this update are effective for the annual periods ending after December 15, 2016, and for
annual periods and interim periods thereafter. Early application is permitted. The Company is evaluating the effect, if any, on its
consolidated financial statements.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 1. Summary of Significant Accounting Policies (continued)

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provides a
comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or
services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.
The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows
arising from customer contracts. This update is effective for annual periods beginning after December 15, 2016 and interim
periods therein, which will require us to adopt these provisions in the first quarter of 2017. Early adoption is not permitted. We
are evaluating the effect this guidance will have on our consolidated financial statements and related disclosures.

In April 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers. The amendments in this update create
Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605. The
objective of the amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for
U.S. GAAP and International Financial Reporting Standards ("IFRS"). The amendment is effective for annual reporting periods
beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is evaluating the
effect, if any, on its consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08 Reporting of Discontinued Operations and Disclosures of Disposals of
Components of an Entity. ASU 2014-08 provides a narrower definition of discontinued operations than under existing generally
accepted accounting principles (“GAAP”). ASU 2014-08 requires that only disposals of components of an entity (or groups of
components) that represent a strategic shift that has or will have a major effect on the reporting entity’s operations are reported in
the financial statements as discontinued operations. ASU 2014-08 also provides guidance on the financial statement
presentations and disclosures of discontinued operations. ASU 2014-08 is effective prospectively for disposals (or classifications
of held-for-sale) of components of an entity that occur in annual or interim periods beginning after December 15, 2014. We do
not believe the adoption of ASU 2014-08 will have a material effect on the Company’s consolidated financial statements.

In February 2013, the FASB issued ASU 2013-04, Liabilities (Topic 405), which provides guidance for the recognition,
measurement, and disclosure of obligations resulting from joint and several liability arrangements. The guidance requires an
entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement
among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance
also requires an entity to disclose the nature and amount of the obligation as well as other information about those
obligations. ASU 2013-04 is effective for fiscal years beginning after December 15, 2013, which is effective for the Company’s
first quarter of fiscal year 2015. We do not believe the adoption of ASU 2013-04 will have a material effect on the Company’s
consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive
Income. ASU 2013-02 requires disclosure of the amounts reclassified out of each component of accumulated other
comprehensive income and into net earnings during the reporting period and is effective for reporting periods beginning after
December 15, 2012. The adoption of ASU 2013−02 did not have a material impact on the measurement of net earnings or other
comprehensive income.

In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities and in January 2013, the
FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2011-11, as
clarified, enhances disclosures surrounding offsetting (netting) assets and liabilities. The clarified standard applies to derivatives,
repurchase agreements and securities lending transactions and requires companies to disclose gross and net information about
financial instruments and derivatives eligible for offset and to disclose financial instruments and derivatives subject to master
netting arrangements in financial statements. The clarified standard did not have a material effect on our financial position or
results of operations.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 1. Summary of Significant Accounting Policies (continued)

Change in Presentation
Because in the current year the acquisition of businesses that operate in industries other than restaurant operations, management
changed the historical presentation of the financial statements to more clearly present the consolidated financial statements for
our diversified business. Management also consolidated certain line items that were no longer significant concerning the
consolidated financial statements. Prior periods have been reclassified to conform to the current year presentation. Such
changes had no impact on total assets, total revenue, or total net income.

Note 2. Divestitures

In July 2013, Biglari Holdings sold all of the outstanding shares of Biglari Capital to Mr. Biglari for $1,700. The Company
recorded a gain on the sale of $1,597. Biglari Capital is the general partner of the investment partnerships. The Company also
liquidated the partners’ interests in Western Acquisitions, L.P. by distributing assets of the partnership to the partners.

Note 3. Impairment and Restaurant Closings

Steak n Shake recorded asset impairment during fiscal years 2014, 2013 and 2012 of $1,433, $1,666, and $901, respectively, in
selling, general and administrative expenses. Steak n Shake closed two restaurants and sold two restaurants to franchisees in
fiscal year 2014. No company-operated restaurants were closed in fiscal years 2013 and 2012.

Western recorded restaurant closing costs of $72 during fiscal year 2013 in selling, general and administrative expenses. Western
closed one company-operated restaurant in each of fiscal years 2014 and 2013.

Note 4. Investments

Investments consisted of the following:

Investment gains/losses are recognized when investments are sold (as determined on a specific identification basis) or as
otherwise required by GAAP. The timing of realized gains and losses from sales can have a material effect on periodic earnings.
However, such realized gains or losses usually have little, if any, impact on total shareholders’ equity because the investments
are carried at fair value with any unrealized gains/losses included as a component of accumulated other comprehensive income in
shareholders’ equity. We believe that realized investment gains/losses are often meaningless in terms of understanding reported
results. Short-term investment gains/losses have caused and may continue to cause significant volatility in our results.

Investment gains were as follows:

20142013Cost .......................................................................................................................................................21,439$ 50,884$ Gross unrealized gains ...........................................................................................................................129 34,595 Gross unrealized losses .........................................................................................................................(45) - Fair value ...............................................................................................................................................21,523$ 85,479$ 201420132012Gain on contributions to investment partnerships ...........................................29,524$ 182,746$ -$ Gross realized gains on sales .............................................................................- 1 4,584 Gross realized losses on sales ...........................................................................- - (384) Other than temporary impairment ....................................................................- (570) - Investment gains (including contributions) .......................................................29,524$ 182,177$ 4,200$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 4. Investments (continued)

The Company recognized a pre-tax gain of $29,524 ($18,305 net of tax) on a contribution of $74,418 in securities and $182,746
($114,931 net of tax) on a contribution of $375,936 in securities to the investment partnerships during fiscal years 2014 and
2013, respectively. The gains had a material accounting effect on the Company’s fiscal 2014 and 2013 earnings. However,
these gains had no impact on total shareholders’ equity because the investments were carried at fair value prior to the
contribution, with the unrealized gains included as a component of accumulated other comprehensive income.

In connection with the acquisition of First Guard we acquired $15,043 of investments.

Note 5. Investment Partnerships

Beginning July 1, 2013, as a result of the sale of Biglari Capital the Company reports on the limited partnership interests in
investment partnerships under the equity method of accounting. We record our proportional share of equity in the investment
partnerships but exclude Company common stock held by said partnerships. The Company’s pro-rata share of its common stock
held by the investment partnerships is recorded as treasury stock. The Company records gains/losses from investment
partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated
statements of earnings based on our carrying value of these partnerships. The fair value is calculated net of the general partner’s
accrued incentive fees. Gains and losses on Company common stock included in the earnings of these partnerships are
eliminated because they are recorded as treasury stock.

The fair value and adjustment for Company common stock held by the investment partnerships to determine carrying value of
our partnership interest is presented below:

The Company’s proportionate share of Company stock held by investment partnerships at cost is $73,207 and $54,613 at
September 24, 2014 and September 25, 2013, respectively, and is recorded as treasury stock.

The carrying value of the partnership interest approximates fair value adjusted by changes in the value of held Company stock.
Fair value is according to our proportional ownership interest of the fair value of investments held by the investment
partnerships. The fair value measurement is classified as level 3 within the fair value hierarchy.

Fair ValueCompany Common StockCarrying ValuePartnership interest at July 1, 2013 .......................................................54,608$ $ 43,580 $ 11,028 Investment partnership gains (losses) ................................................23,053 2,985 20,068 Contributions of cash and securities to investment partnerships ..377,636 - 377,636 Increase in proportionate share of Company stock held ..................- 11,033 (11,033)Partnership interest at September 25, 2013 .........................................455,297 57,598 397,699 Investment partnership gains (losses) ...............................................1,436 (12,619) 14,055 Contributions of cash and securities (net ofdistributions of $10,340) to investment partneships ....................164,078 - 164,078 Increase in proportionate share of Company stock held ................- 18,594 (18,594) Partnership interest at September 24, 2014 ....................................620,811$ 63,573$ 557,238$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 5. Investment Partnerships (continued)

We recorded $14,055 and $20,068 of gains from investment partnerships during fiscal years 2014 and 2013, respectively. 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%. Our policy is to accrue an
estimated incentive fee throughout the fiscal year. The total incentive reallocation from Biglari Holdings to Biglari Capital for
calendar year 2013 was $14,702, including $3,655 associated with gains on the Company’s common stock, whose gains are
eliminated in our financial statements. As of September 25, 2013, the Company accrued $5,033 for the incentive fee for Biglari
Capital. No amount was accrued as of September 24, 2014 because net profits for the calendar year to date do not exceed the
hurdle. Our investments in these partnerships are committed on a rolling 5-year basis.

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

The investments held by the investment partnerships are largely concentrated in the common stock of one investee, Cracker
Barrel Old Country Store, Inc.

Consolidated Affiliated Partnerships
Prior to July 2013, The Lion Fund, L.P. and Western Acquisitions, L.P. were referred to as consolidated affiliated partnerships of
the Company. Certain of the consolidated affiliated partnerships held the Company’s common stock as investments. Net
earnings for fiscal year 2013 and 2012 of the Company included the realized and unrealized appreciation and depreciation of the
investments held by consolidated affiliated partnerships, other than realized and unrealized appreciation and depreciation of
investments the consolidated affiliated partnerships held in the Company’s common stock which were eliminated in
consolidation. The affiliated partnerships were no longer consolidated as of September 24, 2014 or September 25, 2013.

Realized investment gains/losses in the consolidated affiliated partnerships arose when investments were sold. The net
unrealized and realized gains/losses from investments held by consolidated affiliated partnerships, other than holdings of the
Company’s debt and equity securities, for the fiscal years ended September 25, 2013 and September 26, 2012 were as follows:

Lion FundLion Fund IICurrent and total assets as of September 30, 2014 ...............................................................154,561$ 548,923$ Current and total liabilities as of September 30, 2014 ...........................................................58$ 25$ Revenue for the twelve month period ending September 30, 2014 .......................................(12,860)$ 19,832$ Earnings for the twelve month period ending September 30, 2014 .......................................(12,950)$ 19,789$ Biglari Holdings’ Ownership Interest ....................................................................................61.6%95.8%Current and total assets as of September 30, 2013 ...............................................................126,121$ 408,883$ Current and total liabilities as of September 30, 2013............................................................83$ 11$ Revenue for the twelve month period ending September 30, 2013 .......................................9,200$ 25,109$ Earnings for the twelve month period ending September 30, 2013 .......................................9,170$ 25,098$ Biglari Holdings’ Ownership Interest ....................................................................................52.1%96.3%Equity in Investment Partnerships20132012Gross unrealized gains .........................................................................................................................3,746$ 3,047$ Gross unrealized losses .......................................................................................................................(410) - Net realized gains from sale ................................................................................................................261 2,895 Other income .........................................................................................................................................306 360 Total .......................................................................................................................................................3,903$ 6,302$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 5. Investment Partnerships (continued)

The limited partners of each of the investment funds had the ability to redeem their capital upon certain occurrences; therefore,
the ownership of the investment funds held by the limited partners was presented as redeemable noncontrolling interests of
consolidated affiliated partnerships and measured at the greater of carrying value or fair value. The affiliated partnerships are no
longer consolidated.

The following is a reconciliation of the redeemable noncontrolling interests in the consolidated affiliated partnerships:

Note 6. Other Current Assets

Other current assets primarily include deferred tax assets, prepaid rent and other prepaid contractual obligations.

Note 7. Property and Equipment

Property and equipment is composed of the following:

Depreciation and amortization expense for property and equipment for fiscal years 2014, 2013, and 2012 was $23,112, $23,422,
and $24,290, respectively.

20132012Carrying value at beginning of year ............................................................................................52,088$ 45,252$ Contributions from noncontrolling interests .............................................................................1,076 1,545 Distributions to noncontrolling interests ...................................................................................(2,302) (254) Incentive fee .....................................................................................................................................(21) (36) Income allocation ...........................................................................................................................1,922 3,188 Adjustment to redeemable noncontrolling interest to reflect maximum redemption value .........................................................................................................................4,810 2,393 Adjustment to reflect deconsolidation of affiliated partnerships ............................................(57,573) - Carrying value at end of year .......................................................................................................-$ 52,088$ 20142013Land .................................................................................................................................................162,731$ 162,488$ Buildings .........................................................................................................................................160,086152,891Land and leasehold improvements .............................................................................................157,622155,962Equipment .......................................................................................................................................218,985209,913Construction in progress .............................................................................................................9,4505,538 708,874686,792Less accumulated depreciation and amortization .....................................................................(354,727)(340,645)Property and equipment, net .......................................................................................................354,147$ 346,147$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 8. Goodwill and Other Intangibles

Goodwill
Goodwill consists of the excess of the purchase price over the fair value of the net assets acquired in connection with business
acquisitions.

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

We are required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if
circumstances indicate impairment may have occurred. The analysis of potential impairment of goodwill requires a two-step
approach. The first is the estimation of fair value of each reporting unit. If step one indicates that impairment potentially exists,
the second step is performed to measure the amount of impairment, if any. Goodwill impairment occurs when the estimated fair
value of goodwill is less than its carrying value.

The valuation methodology and underlying financial information included in our determination of fair value require significant
management judgments. We use both market and income approaches to derive fair value. The judgments in these two approaches
include, but are not limited to, comparable market multiples, long-term projections of future financial performance, and the
selection of appropriate discount rates used to determine the present value of future cash flows. Changes in such estimates or the
application of alternative assumptions could produce significantly different results. No impairment charges for goodwill were
recorded in fiscal years 2014, 2013 or 2012.

Other Intangibles
Other intangibles are composed of the following:

Intangible assets subject to amortization consist of franchise agreements connected with the purchase of Western as well as rights
to favorable leases related to prior acquisitions. These intangible assets are being amortized over their estimated weighted
average of useful lives ranging from eight to twelve years.

Amortization expense for fiscal years 2014, 2013, and 2012 was $690, $690 and $702, respectively. Total annual amortization
expense for each of the next five years will approximate $567.

The Company acquired Maxim and First Guard during fiscal year 2014 and lease rights during fiscal year 2013. Portions of the
purchase prices were allocated to intangible assets with indefinite lives.

RestaurantsOtherTotalGoodwill at September 26, 2012 ...............................................................................27,529$ -$ 27,529$ Acquisitions during 2013 ..........................................................................................722 - 722 Goodwill at September 25, 2013 ...............................................................................28,251 - 28,251 Acquisitions during 2014 .......................................................................................- 11,913 11,913 Goodwill at September 24, 2014 ............................................................................28,251$ 11,913$ 40,164$ Gross carrying amountAccumulated amortizationTotalGross carrying amountAccumulated amortizationTotalRight to operate ............................................1,480$ (1,471)$ 9$ 1,480$ (1,353)$ 127$ Franchise agreement ......................................5,310 (2,390) 2,920 5,310 (1,859) 3,451 Other .............................................................810 (615) 195 810 (574) 236 Total ..............................................................7,600 (4,476) 3,124 7,600 (3,786) 3,814 Intangible assets with indefinite lives:Trade names ..................................................15,876 - 15,876 - - - Other assets with indefinite lives...................3,907 - 3,907 3,907 - 3,907 Total intangible assets ..................................27,383$ (4,476)$ 22,907$ 11,507$ (3,786)$ 7,721$ 20142013

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 8. Goodwill and Other Intangibles (continued)

Intangible assets with indefinite lives consist of trade names, franchise rights as well as lease rights. During fiscal year 2013, the
Company recorded an impairment loss for an intangible asset of $1,244 in selling, general and administrative. This number
represents the trade name of Western’s company-operated stores, which we decided not to use any longer. The calculation of
fair value for the trade name was determined primarily by using a discounted cash flow analysis.

Note 9. Other Assets

Other assets primarily include non-qualified plan investments, the non-current portion of capitalized loan acquisition costs,
restricted cash and bonds and the non-current portion of prepaid rent.

Note 10. Accrued Expenses

Accrued expenses include the following:

Note 11. Other Liabilities

Other liabilities include the following:

20142013Salaries, wages, and vacation ...................................................................................................14,681$ 22,379$ Taxes payable .............................................................................................................................14,072 12,986 Gift card liability ..........................................................................................................................9,089 6,371 Deferred income taxes ................................................................................................................- 5,511 Deferred revenue ........................................................................................................................8,781 4,756 Workers' compensation and other self-insurance accruals .................................................9,221 8,629 Other .............................................................................................................................................8,596 5,253 Accrued expenses ......................................................................................................................64,440$ 65,885$ 20142013Deferred rent expense ................................................................................................................6,447$ 6,469$ Other .............................................................................................................................................4,576 3,199 Other liabilities ............................................................................................................................11,023$ 9,668$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 12. Income Taxes

The components of the provision for income taxes consist of the following:

Income taxes paid totaled $4,829 in fiscal year 2014, $1,518 in fiscal year 2013, and $16,802 in fiscal year 2012. Income tax
refunds totaled $17 in fiscal year 2014, $52 in fiscal year 2013 and $641 in fiscal year 2012.

As of September 24, 2014, we had approximately $444 of unrecognized tax benefits, including approximately $61 of interest and
penalties, which are included in other long-term liabilities in the consolidated balance sheet. During fiscal year 2014, we
recognized approximately $37 in potential interest and penalties associated with uncertain tax positions. Our continuing practice
is to recognize interest expense and penalties related to income tax matters in income tax expense. The unrecognized tax benefits
of $444 would impact the effective income tax rate if recognized.

The following table summarizes the Company’s unrecognized tax benefits, excluding interest and penalties:

201420132012Current:Federal ..........................................................................................................................571$ 506$ 7,275$ State ..............................................................................................................................477 1,748 1,905 Deferred ........................................................................................................................9,164 72,035 (2,727) Total income taxes ......................................................................................................10,212$ 74,289$ 6,453$ Reconciliation of effective income tax: Tax at U.S. statutory rates (35%) .............................................................................13,656$ 75,762$ 10,919$ State income taxes, net of federal benefit ...............................................................1,369 5,043 1,063 Federal income tax credits .........................................................................................(4,298) (4,249) (3,517) Tax attributed to noncontrolling interests ..............................................................- (666) (1,103) Dividends received deduction .................................................................................(3,650) (2,647) (963) Valuation allowance ....................................................................................................985 - - Foreign tax rate differences.........................................................................................1,993 - - Other .............................................................................................................................157 1,046 54 Total income taxes ......................................................................................................10,212$ 74,289$ 6,453$ September 28, 2011 .........................................................................................................................................................1,480$ Gross increases – current period tax positions .........................................................................................................109Lapse of statute of limitations ......................................................................................................................................(843)September 26, 2012 .........................................................................................................................................................746Gross increases – current period tax positions .........................................................................................................25Gross decreases – prior period tax positions .............................................................................................................(6)Lapse of statute of limitations ......................................................................................................................................(62)September 25, 2013 .........................................................................................................................................................703Gross increases – current period tax positions ......................................................................................................37Gross decreases – prior period tax positions ...........................................................................................................(1)Lapse of statute of limitations .....................................................................................................................................(356)September 24, 2014 ......................................................................................................................................................383$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 12. Income Taxes (continued)

We file income tax returns which are periodically audited by various foreign, federal, state, and local jurisdictions. With few
exceptions, we are no longer subject to federal, state, and local tax examinations for fiscal years prior to 2011. We believe we
have certain state income tax exposures related to fiscal years 2010 through 2014. Because of the expiration of the various state
statutes of limitations for these fiscal years, it is possible that the total amount of unrecognized tax benefits will decrease by
approximately $216 within 12 months.

Deferred tax assets and liabilities are determined based on differences between financial reporting and 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. Our deferred tax assets and liabilities consist of the following:

Receivables on the consolidated balance sheet include income tax receivables of $5,050 and $1,662 as of September 24, 2014
and September 25, 2013, respectively. The current deferred tax asset of $10,812 as of September 24, 2014 is included in other
current assets on the consolidated balance sheet. The current deferred tax liability of $5,511 as of September 25, 2013 is
included in accrued expenses on the consolidated balance sheet.

In September 2013, the IRS issued final and proposed regulations under IRC Sections 162, 263(a), and 168. These regulations
provide guidance regarding the deduction and capitalization of expenditures related to tangible property and the disposition of
tangible depreciable property. The regulations are generally effective for tax years beginning on or after January 1, 2014 and
taxpayers will be allowed to rely on, and early adopt, both the final regulations and the proposed disposition rules to facilitate
implementation efforts. The application of the new regulations did not have a material effect on the Company’s consolidated
financial statements.

20142013Deferred tax assets:Insurance reserves ..............................................................................................................................3,321$ 2,938$ Share-based payments ........................................................................................................................1013Compensation accruals .......................................................................................................................2,2761,952Gift card accruals .................................................................................................................................1,303942Net operating loss credit carryforward .............................................................................................1,29260 Valuation allowance on international net operating losses ..........................................................(1,232)- Income tax credit carryforward ..........................................................................................................1,695- Other ......................................................................................................................................................2,8242,027Total deferred tax assets .....................................................................................................................11,4897,932Deferred tax liabilities:Investments ..........................................................................................................................................88,05091,405Fixed asset basis difference ...............................................................................................................4,4793,187Goodwill and intangibles ....................................................................................................................4,9103,376Total deferred tax liabilities ................................................................................................................97,43997,968Net deferred tax liability ......................................................................................................................(85,950)(90,036)Less current portion ............................................................................................................................10,812(5,511)Long-term liability ................................................................................................................................(96,762)$ (84,525)$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 13. Notes Payable and Other Borrowings

Notes payable and other borrowings include the following:

Note 14. Borrowings

Steak n Shake Credit Facility
On March 19, 2014, Steak n Shake and its subsidiaries entered into a new credit agreement. This credit agreement provides for a
senior secured term loan facility in an aggregate principal amount of $220,000 and a senior secured revolving credit facility in an
aggregate principal amount of up to $30,000.

Steak n Shake has the right to request an incremental term loan facility from participating lenders and/or eligible assignees at any
time, up to an aggregate total principal amount not to exceed $70,000 if certain customary conditions within the credit agreement
are met.

The interest rate on the term loan was 4.75% on September 24, 2014.

Both the term loan and the revolver have been secured by first priority security interests in substantially all the assets of Steak n
Shake. Biglari Holdings is not a guarantor under the credit facility. Approximately $118,589 of the proceeds of the term loan
were used to repay all outstanding amounts under Steak n Shake’s former credit facility and to pay related fees and expenses,
$50,000 of such proceeds were used to pay a cash dividend to Biglari Holdings, and the remaining term loan proceeds of
approximately $51,411 will be used by Steak n Shake for working capital and general corporate purposes. As of September 24,
2014, $219,450 was outstanding under the term loan, and no amount was outstanding under the revolver.

20142013Notes payable .............................................................................................................................2,200$ 9,750$ Unamortized original issue discount .......................................................................................(284) Obligations under leases ...........................................................................................................6,471 6,239 Western revolver ........................................................................................................................1,000 - Total current portion of notes payable and other borrowings ............................................9,387$ 15,989$ Notes payable .............................................................................................................................217,250$ 110,500$ Unamortized original issue discount .......................................................................................(1,772) - Obligations under leases ...........................................................................................................99,718 106,247 Total long-term notes payable and other borrowings...........................................................315,196$ 216,747$

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 14. Borrowings (continued)

We recorded losses of $1,133 and $1,955 in interest expense for the extinguishment of debt for fiscal years 2014 and 2012,
respectively, related to the write-off of deferred loan costs associated with former credit facilities. We capitalized $4,754 in debt
issuance costs in 2014.

We had $10,188 and $6,588 in standby letters of credit outstanding as of September 24, 2014 and September 25, 2013,
respectively.

Western Revolver
During fiscal year 2014, Western drew $1,000 due June 13, 2015.

The carrying amounts for debt reported in the consolidated balance sheet did not differ materially from their fair values at
September 24, 2014 and September 25, 2013. The fair value was determined to be a Level 3 fair value measurement.

Expected principal payments for all outstanding borrowings as of September 24, 2014, are as follows:

2015 ..................... $
2016 .....................
2017 .....................
2018 .....................
2019 .....................
2020 ......................
2021 ......................
Total ...................... $

3,200
2,200
2,200
2,200
2,200
2,200
206,250
220,450

Interest
No interest was capitalized in connection with financing additions to property and equipment during fiscal years 2014, 2013, and
2012. Interest paid on debt amounted to $8,158 in 2014, $4,950 in 2013 and $7,359 in 2012. Interest paid on obligations under
leases was $9,720, $9,829 and $10,073 in 2014, 2013, and 2012, respectively.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 15. Leased Assets and Lease Commitments

We lease certain physical facilities under non-cancelable lease agreements. These leases require the payment of real estate taxes,
insurance and maintenance costs. Certain leased facilities, which are no longer operated but are subleased to third parties or
franchisees, are classified below as non-operating properties. Minimum future rental payments for non-operating properties have
not been reduced by minimum sublease rentals of $11,920 related to operating leases receivable under non-cancelable subleases.
The property and equipment cost related to finance obligations and capital leases as of September 24, 2014 is as follows: $72,941
buildings, $61,663 land, $29,506 land and leasehold improvements, $2,361 equipment and $70,612 accumulated depreciation.

On September 24, 2014, obligations under non-cancelable finance obligations, capital leases, and operating leases (excluding
real estate taxes, insurance and maintenance costs) require the following minimum future rental payments:

Operating Leases

Finance

Capital
Leases

Operating
Property

Non-Operating
Property

Total

Obligations

Year
2015 ......................................................................................................... $
555
557
13,908
2016 .........................................................................................................
648
10,929
2017 .........................................................................................................
836
8,669
2018 .........................................................................................................
975
6,632
2019 .........................................................................................................
7,904
8,102
After 2019 ...............................................................................................
63,628 $ 115,085 $ 11,673
Total minimum future rental payments ...................................................
35,195
Less amount representing interest ...........................................................
28,433
Total principal obligations under leases ..................................................
6,471
Less current portion .................................................................................
21,962
Non-current principal obligations under leases .......................................
Residual value at end of lease term .........................................................
77,756
Obligations under leases .......................................................................... $ 98,777 $ 941 $ 99,718

673 $ 15,586 $ 16,380 $
13,940
487
12,289
300
11,266
232
10,238
—
50,972
—
1,692
149
1,543
602
941
—

14,913 $
13,421
10,629
8,437
6,632
7,904
61,936
35,046
26,890
5,869
21,021
77,756

Contingent rent totaling $1,549 in fiscal year 2014, $1,356 in fiscal year 2013 and $1,173 in fiscal year 2012 is recorded in
restaurant cost of sales in the accompanying consolidated statement of earnings.

Non-cancellable finance obligations were created when the Company, under prior management, entered into certain build-to-suit
or sale leaseback arrangements. As a result of continuing involvement in the underlying leases (generally due to right of
substitution or purchase option provisions of the leases), the Company accounts for the leases as financings.

Note 16. Related Party Transactions

On July 1, 2013, Biglari Holdings entered into the following agreements with Mr. Biglari, its Chairman and Chief Executive
Officer: (i) a Stock Purchase Agreement for the sale of Biglari Capital to Mr. Biglari; (ii) a Shared Services Agreement with
Biglari Capital, and (iii) a First Amendment to the Amended and Restated Incentive Bonus Agreement, dated September 28,
2010, with Mr. Biglari (the “Incentive Agreement Amendment”). The transactions contemplated thereby were unanimously
approved by the independent Governance, Compensation and Nominating Committee of the Board of Directors of the Company
(the “Committee”), which retained separate counsel, tax/accounting advisors, an independent compensation consultant, and a
financial advisor to assist the Committee in the structuring, evaluation, and negotiation of such transactions.

Stock Purchase Agreement
Pursuant to the Stock Purchase Agreement, Biglari Holdings sold all the shares of Biglari Capital to Mr. Biglari for a purchase
price of $1,700 in cash (the “Biglari Capital Transaction”) and recorded a gain of $1,597. Prior to the execution and delivery of
the Stock Purchase Agreement, Biglari Capital distributed to the Company substantially all of Biglari Capital’s partnership
interests in The Lion Fund, L.P. (including, without limitation, Biglari Capital’s adjusted capital balance in its capacity as
general partner of The Lion Fund, L.P., which totaled $5,721). Biglari Capital thus retained solely a general partner interest in
each of The Lion Fund, L.P. and The Lion Fund II, L.P. at the time of the Biglari Capital Transaction.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 16. Related Party Transactions (continued)

Shared Services Agreement
Connected with the Biglari Capital Transaction, Biglari Holdings and Biglari Capital entered into the Shared Services Agreement
pursuant to which Biglari Holdings provides certain services to Biglari Capital in exchange for a 6% hurdle rate for Biglari
Holdings and its subsidiaries (as compared to a 5% hurdle rate for all other limited partners) in order to determine the incentive
reallocation to Biglari Capital, as general partner of The Lion Fund, L.P. and The Lion Fund II, L.P., under their respective
partnership agreements. The incentive reallocation to Biglari Capital is equal to 25% of the net profits allocated to the limited
partners in excess of their applicable hurdle rate. The Shared Services Agreement runs for an initial five-year term, and
automatically renews for successive five-year periods, unless terminated by either party effective at the end of the initial or the
renewed term, as applicable. The term of the Shared Services Agreement coincides with the lock-up period for the Company’s
investments in The Lion Fund, L.P. and The Lion Fund II, L.P. under their respective partnership agreements. During fiscal
years 2014 and 2013, the Company provided services for Biglari Capital under the Shared Services Agreement costing an
aggregate of $1,590 and $101, respectively.

Investments in The Lion Fund, L.P. and The Lion Fund II, L.P.
During fiscal years 2014 and 2013, the Company contributed cash and securities it owned with an aggregate value of $174,418
and $377,636, respectively, in exchange for limited partner interests in The Lion Fund, L.P. and The Lion Fund II, L.P. As o f
September 24, 2014, the Company’s investments in The Lion Fund, L.P. and The Lion Fund II, L.P. had a fair value of
$620,811.

As the general partner of the investment partnerships, Biglari Capital on December 31 of each year 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%. Our policy is
to accrue an estimated incentive fee throughout the fiscal year. The total incentive reallocation from Biglari Holdings to Biglari
Capital for calendar year 2013 was $14,702, including $3,655 associated with gains on the Company’s common stock, whose
gains are eliminated in our financial statements. As of September 25, 2013, the Company accrued $5,033 for the incentive fee
for Biglari Capital. No amount was accrued as of September 24, 2014 because net profits for the calendar year to date do not
exceed the hurdle.

Incentive Agreement Amendment
Also in connection with the Biglari Capital Transaction, Biglari Holdings and Mr. Biglari entered into the Incentive Agreement
Amendment which amends the Amended and Restated Incentive Bonus Agreement with Mr. Biglari to reflect and give effect to
the Biglari Capital Transaction, which excludes earnings by the investment partnerships from the calculation of Mr. Biglari’s
incentive bonus.

License Agreement
On January 11, 2013, the Company entered into a Trademark License Agreement (the “License Agreement”) with Mr. Biglari.
The License Agreement was unanimously approved by the Committee.

Under the License Agreement, Mr. Biglari granted to the Company an exclusive license to use the Biglari and Biglari Holdings
names (the “Licensed Marks”) in association with various products and services (collectively the “Products and Services”). Upon
(a) the expiration of twenty years from the date of the License Agreement (subject to extension as provided in the License
Agreement), (b) Mr. Biglari’s death, (c) the termination of Mr. Biglari’s employment by the Company for Cause (as defined in
the License Agreement), or (d) Mr. Biglari’s resignation from his employment with the Company absent an Involuntary
Termination Event (as defined in the License Agreement), the Licensed Marks for the Products and Services will transfer from
Mr. Biglari to the Company without any compensation if the Company is continuing to use the Licensed Marks in the ordinary
course of its business. Otherwise, the rights will revert to Mr. Biglari.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 16. Related Party Transactions (continued)

The license provided under the License Agreement is royalty-free unless and until one of the following events occurs: (i) a
Change of Control (as defined in the License Agreement) of the Company; (ii) the termination of Mr. Biglari’s employment by
the Company without Cause; or (iii) Mr. Biglari’s resignation from his employment with the Company due to an Involuntary
Termination Event (each, a “Triggering Event”). Following the occurrence of a Triggering Event, Mr. Biglari is entitled to
receive a 2.5% royalty on “Revenues” with respect to the “Royalty Period.” The royalty payment to Mr. Biglari does not apply
to all revenues received by Biglari Holdings and its subsidiaries nor does it apply retrospectively (i.e., to revenues received with
respect to the period prior to the Triggering Event). The royalty applies to revenues recorded by the Company on an accrual
basis under GAAP, solely with respect to the defined period of time after the Triggering Event equal to the Royalty Period, from
a covered Product, Service or business that (1) has used the Biglari Holdings or Biglari name at any time during the term of the
License Agreement, whether prior to or after a Triggering Event, or (2) the Company has specifically identified, prior to a
Triggering Event, will use the name Biglari or Biglari Holdings.

“Revenues” means all revenues received, on an accrual basis under GAAP, by the Company, its subsidiaries and affiliates from
the following: (1) all Products and Services covered by the License Agreement bearing or associated with the names Biglari and
Biglari Holdings at any time (whether prior to or after a Triggering Event). This category would include, without limitation, the
use of Biglari or Biglari Holdings in the public name of a business providing any covered Product or Service; and (2) all covered
Products, Services and businesses that the Company has specifically identified, prior to a Triggering Event, will bear, use or be
associated with the name Biglari or Biglari Holdings.

The Committee unanimously approved the association of the Biglari name and mark with all of Steak n Shake’s restaurants
(including Company operated and franchised locations), products and brands. On May 14, 2013, the Company, Steak n Shake,
LLC and Steak n Shake Enterprises, Inc. entered into a Trademark Sublicense Agreement in connection therewith. Accordingly,
revenues received by the Company, its subsidiaries and affiliates from Steak n Shake’s restaurants, products and brands would
come within the definition of Revenues for purposes of the License Agreement.

The “Royalty Period” is a defined period of time, after the Triggering Event, calculated as follows: (i) if, following three months
after a Triggering Event, the Company or any of its subsidiaries or affiliates continues to use the Biglari or Biglari Holdings
name in connection with any covered product or service, or continues to use Biglari as part of its corporate or public company
name, then the “Royalty Period” will equal (a) the period of time during which the Company or any of its subsidiaries or
affiliates continues any such use, plus (b) a period of time after the Company, its subsidiaries and affiliates have ceased all uses
of the names Biglari and Biglari Holdings equal to the length of the term of the License Agreement prior to the Triggering Event,
plus three years. As an example, if a Triggering Event occurs five years after the date of the License Agreement, and the
Company ceases all uses of the Biglari and Biglari Holdings names two years after the Triggering Event, the Royalty Period will
equal a total of ten years (the sum of two years after the Triggering Event during which the Biglari and Biglari Holdings names
are being used, plus a period of time equal to the five years prior to the Triggering Event, plus three years); or (ii) if the
Company, its subsidiaries and affiliates cease all uses of the Biglari and Biglari Holdings names within three months after a
Triggering Event, then the “Royalty Period” will equal the length of the term of the License Agreement prior to the Triggering
Event, plus three years. As an example, if a Triggering Event occurs five years after the date of the License Agreement, and the
Company ceases all uses of the Biglari and Biglari Holdings names two months after the Triggering Event, the Royalty Period
will equal a total of eight years (the sum of the period of time equal to the five years prior to the Triggering Event, plus three
years). Notwithstanding the above methods of determining the Royalty Period, the minimum Royalty Period is five years after a
Triggering Event.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 17. Common Stock Plans

On March 7, 2008, our shareholders approved the 2008 Equity Incentive Plan. During fiscal 2010, we resolved to suspend,
indefinitely, the future issuance of stock-based awards under the 2008 plan. No shares were granted under the 2008 plan in fiscal
year 2014, 2013 or 2012. To date, 11,660 restricted stock awards have vested and 10,235 stock options have been granted under
the 2008 plan.

The following table summarizes the options activity under all of our stock option plans:

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life

Aggregate
Intrinsic
Value

Options

Outstanding at September 25, 2013 ................................................................
Exercised ........................................................................................................
Canceled or forfeited ......................................................................................
Outstanding at September 24, 2014 .................................................................
Vested or expected to vest at September 24, 2014 .........................................
Exercisable at September 24, 2014 .................................................................

9,381 $ 281.64
(1,733) $ 309.61
(325) $ 280.47
7,323 $ 275.08 2.47 years $
7,323 $ 275.08 2.47 years $
7,323 $ 275.08 2.47 years $

583
583
583

There was no unrecognized stock option compensation cost at September 24, 2014. No amounts were charged to expense during
2014 or 2013. Amounts charged to expense for 2012, and the intrinsic value of options exercised in 2014, 2013 and 2012 were
not material.

Note 18. Commitments and Contingencies

On June 3, 2013 and July 2, 2013, two shareholders of the Company filed derivative actions putatively on behalf of the Company
against the members of our board of directors in the United States District Courts for the Southern District of Indiana and the
Western District of Texas. The actions were consolidated in the Southern District of Indiana in 2014. The shareholders allege
claims for breach of fiduciary duty, gross mismanagement, contribution and indemnification, abuse of control, waste, and unjust
enrichment relating to certain Company transactions, including the Company’s acquisition of Biglari Capital, Mr. Biglari’s
incentive agreement, the trademark license agreement between the Company and Mr. Biglari, and the Company’s 2013 rights
offering. The shareholders seek to recover unspecified damages, various forms of injunctive relief, and an award of their
attorneys’ fees. The Company believes these claims are without merit and intends to defend these cases vigorously.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 19. Fair Value of Financial Assets and Liabilities

The fair values of substantially all of our financial instruments were measured using market or income approaches. Considerable
judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the fair values
presented are not necessarily indicative of the amounts that could be realized in an actual current market exchange. The use of
alternative market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The
hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

 Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

 Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for
similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities
exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or
liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default
rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other
means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for
instruments with similar characteristics, such as credit ratings, estimated durations and yields for other instruments of
the issuer or entities in the same industry sector.

 Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required
to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or
liabilities and we may be unable to corroborate the related observable inputs. Unobservable inputs require management
to make certain projections and assumptions about the information that would be used by market participants in pricing
assets or liabilities.

The following methods and assumptions were used to determine the fair value of each class of the following assets and liabilities
recorded at fair value in the consolidated balance sheet:

Cash equivalents: Cash equivalents primarily consist of money market funds which are classified within Level 1 of the fair value
hierarchy.

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

Bonds: The Company’s investments in bonds are classified within Level 2 of the fair value hierarchy.

Non-qualified deferred compensation plan investments: The assets of the non-qualified plan are set up in a rabbi trust. They
represent mutual funds and are classified within Level 1 of the fair value hierarchy.

Interest rate swaps: Interest rate swaps are marked to market each reporting period and are classified within Level 2 of the fair
value hierarchy. Interest rate swaps at September 24, 2014 and September 25, 2013 represent the fair market value for Steak n
Shake’s two interest rate swaps.

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 19. Fair Value of Financial Assets and Liabilities (continued)

As of September 24, 2014 and September 25, 2013, the fair values of financial assets and liabilities were as follows:

There were no changes in our valuation techniques used to measure fair values on a recurring basis.

During fiscal years 2014, 2013 and 2012, the Company recorded impairments on long-lived assets of $1,433, $1,666 and $901,
respectively. The fair value of the long-lived assets was determined based on Level 2 inputs using quoted prices for similar
properties and quoted prices for the properties from brokers. The fair value of the assets impaired was not material for the years
ended 2014, 2013, and 2012.

During fiscal year 2013, the Company recorded impairment on intangible assets of $1,244. The fair value was determined based
on a discounted cash flow analysis which is a level 3 measurement. The fair value of the trade name was not material at
impairment.

Note 20. Accumulated Other Comprehensive Income

During fiscal year 2014 and 2013, the changes in the balances of each component of accumulated other comprehensive income,
net of tax, were as follows:

Level 1Level 2Level 3TotalLevel 1Level 2Level 3TotalAssetsCash equivalents ..................................348$ -$ -$ 348$ -$ -$ -$ -$ Equity securities: Restaurant/Retail ..............................- - - - 79,357 - - 79,357 Insurance ..........................................6,117 - - 6,117 6,122 - - 6,122 Bonds...................................................- 18,008 - 18,008 - - - - Non-qualified deferredcompensation plan investments........1,633 - - 1,633 1,169 - - 1,169 Total assets at fair value ......................8,098$ 18,008$ -$ 26,106$ 86,648$ -$ -$ 86,648$ LiabilitiesInterest rate swaps ..............................-$ 233$ -$ 233$ -$ 401$ -$ 401$ Total liabilities at fair value .................-$ 233$ -$ 233$ -$ 401$ -$ 401$ September 24, 2014September 25, 2013Foreign Currency Translation AdjustmentsInvestment GainAccumulated Other Comprehensive IncomeForeign Currency Translation AdjustmentsInvestment GainAccumulated Other Comprehensive IncomeBeginning Balance ............................8$ 21,449$ 21,457$ -$ 43,897$ 43,897$ Other comprehensive loss beforereclassifications .............................(582) (3,056) (3,638) 8 92,198 92,206 Reclassification to (earnings) loss .....- (18,341) (18,341) - (114,646) (114,646) Ending Balance ................................(574)$ 52$ (522)$ 8$ 21,449$ 21,457$ 20142013

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 20. Accumulated Other Comprehensive Income (continued)

The following reclassifications were made from accumulated other comprehensive income to the consolidated statement of
earnings:

Note 21. Business Segment Reporting

Our reportable business segments are organized in a manner that reflects how management views those business activities.
Certain businesses have been grouped together for segment reporting based upon operations even though those business units are
operated under separate management.

Our restaurant operations segment includes Steak n Shake and Western. As a result of the acquisitions of Maxim and First
Guard, the Company now reports segment information for these businesses. As a result of the sale of Biglari Capital and related
deconsolidation of the consolidated affiliated partnerships during July 2013, the Company no longer has an investment
management segment. Revenue and earnings before income taxes from the consolidated affiliated partnerships is included in
Corporate and other. Beginning in fiscal 2014, we report our earnings from investment partnerships separate from Corporate and
other. Other business activities not specifically identified with reportable business segments are presented in Corporate and
other. The segment related financial information as of September 25, 2013 and for the years ended September 25, 2013 and
September 26, 2012 has been restated to conform to the current year presentation.

We assess and measure segment operating results based on segment earnings as disclosed below. Segment earnings from
operations are not necessarily indicative of cash available to fund cash requirements, nor are they synonymous with cash flow
from operations.

The tabular information that follows shows data of our reportable segments reconciled to amounts reflected in the consolidated
financial statements.

A disaggregation of select data from our consolidated statements of earnings for the three most recent fiscal years is presented in
the tables that follow.

Reclassifications from Accumulated Other Comprehensive Income20142013Affected Line Item in the Consolidated Statement of EarningsInvestment gain29,524$ 182,286$ Investment gains (including contributions)54 - Insurance premiums and other11,237 67,640 Income tax expense18,341$ 114,646$ Net of tax

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 21. Business Segment Reporting (continued)

Revenue and earnings before income taxes for the years ended September 24, 2014, September 25, 2013, and September 26,
2012 were as follows:

201420132012Operating Businesses:Restaurant Operations:Steak n Shake ...................................................................................765,599$ 737,090$ 718,010$ Western ............................................................................................12,556 14,829 15,895 Total Restaurant Operations ..............................................................778,155 751,919 733,905 First Guard ..........................................................................................5,715 - - Maxim .................................................................................................9,941 - - Total Operating Businesses ...................................................................793,811 751,919 733,905 Other.......................................................................................................- 3,903 6,302 793,811$ 755,822$ 740,207$ 201420132012Operating Businesses:Restaurant Operations:Steak n Shake ...................................................................................26,494$ 28,376$ 45,622$ Western ............................................................................................1,765 511 2,157 Total Restaurant Operations ..............................................................28,259 28,887 47,779 First Guard ..........................................................................................1,461 - - Maxim .................................................................................................(15,981) - - Total Operating Businesses ...................................................................13,739 28,887 47,779 Corporate and other:Corporate and other ............................................................................(8,003) (9,717) (10,671) Investment gains (including contributions) .........................................29,524 183,774 4,200 Investment partnership gains ..............................................................14,055 20,068 - Total corporate and other ......................................................................35,576 194,125 (6,471) Interest expense, not allocated to segments ...........................................(10,299) (6,551) (10,110) 39,016$ 216,461$ 31,198$ RevenueEarnings before income taxes

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 21. Business Segment Reporting (continued)

A disaggregation of our consolidated capital expenditure and depreciation, and amortization captions for fiscal years ended
September 24, 2014, September 25, 2013, and September 26, 2012 is presented in the table that follows:

A disaggregation of our consolidated asset captions as of September 24, 2014 and September 25, 2013 is presented in the table
that follows:

201420132012201420132012Reportable segments:Operating Businesses:Restaurant Operations:Steak n Shake ......................................25,398$ 6,337$ 7,513$ 23,402$ 24,230$ 25,432$ Western ...............................................1,113 64 58 662 693 729 Total Restaurant Operations .................26,511 6,401 7,571 24,064 24,923 26,161 First Guard .............................................- - - 38 - - Maxim ....................................................312 - - 211 - - Total Operating Businesses ......................26,823 6,401 7,571 24,313 24,923 26,161 Corporate and other ..................................8,989 7,766 1,104 592 327 263 Consolidated results ..............................35,812$ 14,167$ 8,675$ 24,905$ 25,250$ 26,424$ Capital ExpendituresDepreciation and Amortization20142013Reportable segments:Restaurant Operations:Steak n Shake ..........................................................................................................................416,051$ 389,273$ Western ..................................................................................................................................18,802 18,324 Total Restaurant Operations .....................................................................................................434,853 407,597 First Guard ................................................................................................................................36,076 - Maxim .......................................................................................................................................23,913 - Corporate and other ..................................................................................................................122,652 183,247 Investment partnerships ...........................................................................................................557,238 397,699 Total assets ..............................................................................................................................1,174,732$ 988,543$ Identifiable Assets

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(dollars in thousands, except share and per-share data)

Note 22. Quarterly Financial Data (Unaudited)

Note 23. Supplemental Disclosures of Cash Flow Information

During fiscal year 2014, we had no new capital lease obligations or lease retirements, and had $2,269 of capital expenditures in
accounts payable at year-end. During fiscal year 2013, we had four new capital lease obligations of $2,311 and had $1,043 of
capital expenditures in accounts payable at year-end. During fiscal year 2012, we had no new capital lease obligations or lease
retirements, and had $589 of capital expenditures in accounts payable at year-end.

1st Quarter2nd Quarter3rd Quarter (3)4th Quarter (3)172,339$ 234,574$ 193,229$ 193,669$ 38,377 52,191 39,724 37,359 167,843 224,753 190,429 196,512 24,864 (12,263) 13,367 13,048 16,491 (5,803) 9,594 8,522 9.62$ (3.39)$ 5.67$ 4.96$ 9.60$ (3.39)$ 5.66$ 4.95$ 166,511$ 225,210$ 184,602$ 179,499$ 37,613 50,189 43,476 41,541 159,181 220,606 178,137 177,164 5,930 1,420 169,834 39,277 4,562 2,180 106,704 26,825 2.94$ 1.41$ 69.08$ 17.46$ 2.94$ 1.40$ 68.92$ 17.43$ (1)(2)(3)(4)(5)Werecordedpre-taxgainoncontributiontoinvestmentpartnershipsof$29,524duringthethirdquarterof2014,$162,869duringthe third quarter of 2013 and $19,877 during the fourth quarter of 2013.Earningspershareofcommonstockisbasedontheweightedaveragenumberofsharesoutstandingduringtheyear.Infiscalyear2014and2013theCompanycompletedrightsofferingsinwhich344,261and286,767newsharesofcommonstockwereissued, respectively. Earnings per share have been retroactively restated to give effect to the rights offerings.NetearningsattributabletoBiglariHoldingsInc.includesinvestmentpartnershipgainsof$14,055($12,316netoftax)in2014and $20,068 ($13,296 net of tax) in 2013.Earnings before income taxes ........................................................Net earnings attributable to Biglari Holdings Inc. (5) ...................Basic earnings per common share (4) ...........................................Diluted earnings per common share (4) ........................................Ourfiscalyearincludesquartersconsistingof12,16,12and12weeks,respectively.Managementchangedthehistoricalpresentationofthefiancialstatementsduringthefourthquarterof2014tomoreclearlypresenttheconsolidatedfinancialstatements for our diversified business. Prior periods have been reclassified to conform to the current year presentation.Wedefinegrossprofitasnetrevenuelessrestaurantcostofsales,mediacostofsales,andinsurancelossesandunderwritingexpenses, which excludes depreciation and amortization.Costs and expenses .......................................................................For the year ended September 24, 2014 (52 weeks) (1)Total revenues ............................................................................Gross profit (2) ............................................................................Costs and expenses ....................................................................Earnings before income taxes ...................................................Net earnings attributable to Biglari Holdings Inc. (5) ..........Basic earnings per common share (4) ......................................Diluted earnings per common share (4) ..................................For the year ended September 25, 2013 (52 weeks) (1)Total revenues ..............................................................................Gross profit (2) ............................................................................

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A.

Controls and Procedures

Based on an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)),
our Chief Executive Officer and Controller have concluded that our disclosure controls and procedures were effective as of
September 24, 2014.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 24,
2014 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.

Other Information

None.

Item 10.

Directors, Executive Officers and Corporate Governance

Part III

The information required by this Item will be contained in our definitive Proxy Statement for the 2015 Annual Meeting of
Shareholders, to be filed on or before January 22, 2015, and such information is incorporated herein by reference.

Item 11.

Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Item 14.

Principal Accountant Fees and Services

Item 15.

Exhibits and Financial Statement Schedules

Part IV

(a) 1. Financial Statements

The following Consolidated Financial Statements, as well as the Reports of Independent Registered Public Accounting Firm, are
included in Part II, Item 8 of this report:

Reports of Independent Registered Public Accounting Firm ............................................................................................
Management’s Report on Internal Control over Financial Reporting ...............................................................................
Consolidated Balance Sheets at September 24, 2014 and September 25, 2013 .................................................................
For the years ended September 24, 2014, September 25, 2013, and September 26, 2012:

Consolidated Statements of Earnings ..........................................................................................................................
Consolidated Statements of Comprehensive Income ...................................................................................................
Consolidated Statements of Cash Flows ......................................................................................................................
Consolidated Statements of Changes in Shareholders’ Equity ....................................................................................
Notes to Consolidated Financial Statements ................................................................................................................

2. Financial Statement Schedule

Schedule I—Parent Company
Condensed Balance Sheets at September 24, 2014 and September 25, 2013 ....................................................................
For the years ended September 24, 2014, September 25, 2013, and September 26, 2012:

Condensed Statements of Earnings ..............................................................................................................................
Condensed Statements of Comprehensive Income ......................................................................................................
Condensed Statements of Cash Flows .........................................................................................................................
Notes to Condensed Parent Company Financial Statements .......................................................................................

Other schedules have been omitted for the reason that they are not required, are not applicable, or the required
information is set forth in the financial statements or notes thereto.

PAGE
27-28
29
32

30
31
33
34
35

66
66
67
68

(b) Exhibits

See the “Exhibit Index” at page 71.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 22, 2014.

SIGNATURES

BIGLARI HOLDINGS INC.

By:

/s/ BRUCE LEWIS
Bruce Lewis
Controller

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated, on November 22, 2014.

Signature

/s/ SARDAR BIGLARI
Sardar Biglari

/s/ BRUCE LEWIS
Bruce Lewis

/s/ PHILIP COOLEY
Philip Cooley

/s/ DR. RUTH J. PERSON
Dr. Ruth J. Person

/s/ KENNETH R. COOPER
Kenneth R. Cooper

/s/ WILLIAM L. JOHNSON
William L. Johnson

/s/ JAMES P. MASTRIAN
James P. Mastrian

Chief Executive Officer and Chairman of the Board (Principal Executive Officer)

Title

Controller (Principal Financial and Accounting Officer)

Director

Biglari Holdings Inc. (Parent Company)
(amounts in thousands)
Schedule I

Condensed Balance Sheets

See accompanying Notes to Condensed Parent Company Financial Statements.

September 24, 2014September 25, 2013AssetsCash and cash equivalents .........................................................................................82,344$ 72,279$ Investments ..................................................................................................................6,117 6,122 Receivables ...................................................................................................................5,050 - Other ..............................................................................................................................5,377 4,696 Investment partnerships .............................................................................................386,893 346,514 Investments in and advances to/from subsidiaries ................................................224,341 218,186 Total assets ......................................................................................................................710,122$ 647,797$ Liabilities and shareholders’ equityAccounts payable and accrued expenses ................................................................1,406$ 11,960$ Deferred income taxes .................................................................................................69,999 71,248 Total liabilities .................................................................................................................71,405 83,208 Shareholders’ equity ......................................................................................................638,717 564,589 Total liabilities and shareholders’ equity ....................................................................710,122$ 647,797$

Biglari Holdings Inc. (Parent Company)
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(amounts in thousands)
Schedule I (continued)

Condensed Statements of Earnings and Condensed Statements of Comprehensive Income

Condensed Statements of Comprehensive Income

See accompanying Notes to Condensed Parent Company Financial Statements.

201420132012(52 Weeks)(52 Weeks)(52 Weeks)Income items:From consolidated subsidiaries:Dividends ...................................................................................................................32,223$ -$ -$ Undistributed earnings ...............................................................................................(5,009) 29,777 28,306 27,214 29,777 28,306 Costs and expense items:General and administrative ............................................................................................8,522 19,685 18,388 Other income:Other income .................................................................................................................19 5,220 3,412 Investment gains (including contributions) ...................................................................- 162,300 4,152 Investment partnership gains .........................................................................................6,749 20,068 - Gain on sale of Biglari Capital Corp. .............................................................................- 1,597 - Total other income.............................................................................................................6,768 189,185 7,564 Earnings before income taxes ...........................................................................................25,460 199,277 17,482 Income taxes .....................................................................................................................(3,344) 59,006 (4,111) Net earnings ......................................................................................................................28,804$ 140,271$ 21,593$ 201420132012(52 Weeks)(52 Weeks)(52 Weeks)Net earnings attributable to Biglari Holdings Inc. ............................................28,804$ 140,271$ 21,593$ Other comprehensive income:Reclassification of investment appreciation in net earnings ...............................(29,578) (182,286) (1,455) Applicable income taxes .....................................................................................11,237 67,640 553 Net change in unrealized gains and losses on investments ..................................(4,930) 146,079 81,075 Applicable income taxes .....................................................................................1,874 (53,881) (30,808) Foreign currency translation ...............................................................................(582) 8 - Other comprehensive (loss) income, net ...................................................................(21,979) (22,440) 49,365 Total comprehensive income ...................................................................................6,825$ 117,831$ 70,958$

Condensed Statements of Cash Flows

Biglari Holdings Inc. (Parent Company)
(Years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(amounts in thousands)
Schedule I (continued)

See accompanying Notes to Condensed Parent Company Financial Statements.

Notes to Condensed Parent Company Financial Statements
Biglari Holdings Inc. (Parent Company)
(years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(amounts in thousands)

Note 1. Basis of Presentation

Biglari Holdings Inc.’s (the “Company”) condensed financial information has been derived from the consolidated financial
statements and should be read in conjunction with the consolidated financial statements included in this Annual Report on Form
10-K.

Prior to July 2013, the consolidated financial statements included the accounts of the Company, its wholly-owned subsidiaries
(including Biglari Capital Corp. (“Biglari Capital”)), and investment related limited partnerships The Lion Fund, L.P. and
Western Acquisitions, L.P. (collectively the “consolidated affiliated partnerships”), in which we had a controlling interest.

During fiscal years 2014 and 2013, the Company contributed cash and securities in exchange for limited partner interests in the
investment partnerships. Prior to the contributions of securities to the investment partnerships the Company accounted for the
securities as available-for-sale securities with unrealized gains and losses recorded as a component of shareholders’ equity in the
condensed balance sheet. Our interests in the investment partnerships are accounted for as equity method investments due to our
retained limited partner interest. The Company records earning from investment partnerships in the condensed statement of
earnings based on our proportional ownership interest in the investment partnerships’ total earnings.

Our investments consist of available-for-sale securities and are carried at fair value with net unrealized gains or losses reported
as a component of accumulated other comprehensive income in shareholders’ equity. Realized gains and losses on disposals of
investments are determined by specific identification of cost of investments sold and are included in realized investment
gains/losses, a component of investment gains.

In each of fiscal years 2014 and 2013, Biglari Holdings completed an offering of transferable subscription rights. The offerings
were oversubscribed and 344,261 and 286,767, respectively, new shares of common stock were issued. The Company received
net proceeds of $85,873 and $75,595 from the offerings, respectively.

Notes to Condensed Parent Company Financial Statements
Biglari Holdings Inc. (Parent Company)
(years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(amounts in thousands)

Note 2. Subsidiary Transactions

Dividends
During fiscal year 2014, the Company received cash dividends from subsidiaries of $52,564, which included distribution of
current year earnings of $32,223 and historical earnings of $20,341. No cash dividends were received during fiscal year 2013 or
2012.

One of our wholly-owned subsidiaries has a credit facility that imposes restrictions on its ability to transfer funds to the
Company through intercompany loans, distributions, or dividends.

Investment in Subsidiaries
The Company’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries.

Note 3. Investments

Investments consisted of the following:

As of September 24, 2014, the Company retained a balance of $6,117 of investments deemed as available-for-sale securities.

Investment gains were as follows:

The Company recognized a pre-tax gain of $162,869 ($102,607 net of tax) on contributions of $324,751 in securities to
investment partnerships for fiscal year 2013. The gain had a material effect on the Company’s fiscal 2013 earnings. However,
this gain had no impact on total shareholders’ equity because the investments were carried at fair value prior to the contribution,
with the unrealized gains included as a component of accumulated other comprehensive income.

During fiscal year 2013, the Company had unrealized losses on available-for-sale securities in a continuous unrealized loss
position for more than twelve consecutive months. Therefore, we recorded an impairment of $570 in fiscal year 2013.

20142013Cost .....................................................................................................................................................5,989$ 5,989$ Gross unrealized gains ......................................................................................................................128 133 Fair value ............................................................................................................................................6,117$ 6,122$ 20132012Gain on contributions to investment partnerships .............................................................................. $ 162,869 $ - Gross realized gains on sales ................................................................................................................ 1 4,536 Gross realized losses on sales .............................................................................................................. - (384) Other than temporary impairment ....................................................................................................... (570) - Gains on contributions and sales of investments ................................................................................. $ 162,300 $ 4,152

Notes to Condensed Parent Company Financial Statements
Biglari Holdings Inc. (Parent Company)
(years ended September 24, 2014, September 25, 2013, and September 26, 2012)
(amounts in thousands)

Note 4. Investment Partnerships

The Company reports on the limited partnership interests in The Lion Fund, L.P. and The Lion Fund II, L.P. (collectively the
“investment partnerships”) under the equity method of accounting. We record our proportional share of equity in the investment
partnerships but exclude Company common stock held by said partnerships. The Company’s pro-rata share of its common stock
held by the investment partnerships is recorded as treasury stock. The Company records gains/losses from investment
partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated
statements of earnings based on our carrying value of these partnerships. The fair value is calculated net of the general partner’s
accrued incentive fees. Gains and losses on Company common stock included in the earnings of these partnerships are
eliminated because they are recorded as treasury stock.

The fair value and adjustment for Company common stock held by the investment partnerships to determine carrying value of
our partnership interest is presented below:

For purposes of distinguishing investment partnership gains and losses, we use the investment partnerships’ results for a similar
period. For the Company’s period ending September 24, 2014, the investment partnerships’ value was utilized as of the period
ending September 30, 2014. Therefore, during 2014 and 2013, we recorded $6,749 and $20,068, respectively, of investment
partnership gains. 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%. Our
policy is to accrue an estimated incentive fee throughout the fiscal year. The total incentive reallocation from Biglari Holdings
to Biglari Capital for calendar year 2013 was $13,946, including $3,655 associated with gains on the Company’s common stock,
whose gains are eliminated in our financial statements. As of September 25, 2013, the Company accrued $5,033 for the
incentive fee for Biglari Capital. No amount was accrued as of September 24, 2014 because net profits for the calendar year to
date do not exceed the hurdle. Our investments in these partnerships are committed on a rolling 5-year basis.

The investments held by the investment partnerships are largely concentrated in the common stock of one investee, Cracker
Barrel Old Country Store, Inc.

Note 5. Income Taxes

Federal income taxes are paid based on the consolidated results of Biglari Holdings.

Fair ValueCompany Common StockCarrying ValuePartnership interest at July 1, 2013 ..........................................................54,608$ 43,580$ 11,028$ Investment partnership gains (losses) ....................................................23,053 2,985 20,068 Contributions of cash and securities to investment partnerships ......326,451 - 326,451 Increase in proportionate share of Company stock held .....................- 11,033 (11,033) Partnership interest at September 25, 2013 .............................................404,112 57,598 346,514 Investment partnership gains (losses)....................................................1,071 (5,678) 6,749 Contributions of cash and securities (net of distributions) to investment partnerships.........................................................................52,224 - 52,224 Increase in proportionate share of Company stock held.....................- 18,594 (18,594) Partnership interest at September 24, 2014.........................................457,407$ 70,514$ 386,893$

Exhibit
Number

INDEX TO EXHIBITS

Description

All documents referenced below were filed pursuant to the Securities Exchange Act of 1934 by the Company, file number
0-8445, unless otherwise indicated.

2.01

3.01

3.02

4.01

Agreement and Plan of Merger, dated as of October 22, 2009, by and among the Company, Grill Acquisition
Corporation and Western. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K
dated October 23, 2009).

Amended and Restated Articles of Incorporation of the Company, filed March 27, 2002, as amended by Articles of
Amendment dated December 17, 2009, January 27, 2010 and April 8, 2010. (Incorporated by reference to Exhibit 4.1
to the Company’s Registration Statement on Form S-8 dated April 15, 2010).

Restated Bylaws of the Company, as amended through July 1, 2009. (Incorporated by reference to Exhibit 3.01 to the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2009).

Specimen certificate representing Common Stock of the Company. (Incorporated by reference to Exhibit 4.01 to the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 11, 2001).

10.01*

1997 Employee Stock Option Plan. (Incorporated by reference to the Appendix to the Company’s definitive Proxy
Statement dated December 24, 1996).

10.02*

Amendment No. 1 to 1997 Employee Stock Option Plan. (Incorporated by reference to the Appendix to the
Company’s definitive Proxy Statement dated December 19, 2001).

10.03*

Form of Stock Option Agreement under the Company’s 1997 Employee Stock Option Plan. (Incorporated by
reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended September 29, 2004
filed on December 16, 2004).

10.04*

2005 Director Stock Option Plan. (Incorporated by reference to Appendix B to the Company’s definitive Proxy
Statement dated December 20, 2004).

10.05*

2006 Employee Stock Option Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K dated February 8, 2006).

10.06*

2006 Incentive Bonus Plan. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-
K dated February 8, 2006).

10.07*

Form of Incentive Stock Option Agreement under the 2006 Employee Stock Option Plan (Incorporated by reference
to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated February 8, 2006).

10.08*

2007 Non-Employee Director Restricted Stock Plan. (Incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed February 9, 2007).

10.09*

2008 Equity Incentive Plan. (Incorporated by reference to Appendix A to the Company’s definitive Proxy Statement
dated February 8, 2008).

10.10*

10.11*

Form of Employee Stock Option Agreement under the Company’s 2008 Equity Incentive Plan. (Incorporated by
reference to Exhibit 10.01 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended April 9,
2008).

Form of 2008 Equity Incentive Plan Restricted Stock Agreement under the Company’s 2008 Equity Incentive Plan.
(Incorporated by reference to Exhibit 10.02 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended April 9, 2008).

10.12*

The Steak n Shake Non-Qualified Savings Plan, amended and restated as of March 15, 2010. (Incorporated by
reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 dated April 22, 2010).

10.13

Multiple Unit Franchise Agreement, dated as of September 21, 2005, by and among the Company, Reinwald
Enterprises Emory, LLC and Reinwald Enterprises Wild Geese, LLC. (Incorporated by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed September 27, 2005).

Exhibit
Number
10.14*

10.15*

10.16*

10.17

10.18

Description
Form of Indemnity Agreement entered into on October 9, 2007 with the following Officers and Directors of the
Company: Jeffrey A. Blade, Duane E. Geiger, Alan B. Gilman, Omar Janjua, David C. Milne, Thomas Murrill, Gary
T. Reinwald, Steven M. Schiller, J. Michael Vance, Geoff Ballotti, Wayne Kelley, Charles Lanham, Ruth Person,
John W. Ryan, J. Fred Risk, Steven M. Schmidt, Edward Wilhelm, and James Williamson, Jr. (Incorporated by
reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 26,
2007).

Severance Agreement, dated as of January 26, 2010, by and between the Company and Duane Geiger. (Incorporated
by reference to Exhibit 10.01 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
December 23, 2009).

Amended and Restated Incentive Bonus Agreement, dated September 28, 2010, by and between the Company and
Sardar Biglari. (Incorporated by reference to Annex A to the Company’s definitive Proxy Statement dated September
28, 2011).

Trademark License Agreement, dated as of January 11, 2013, by and between Biglari Holdings Inc. and Sardar
Biglari. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 11,
2013).

Trademark Sublicense Agreement, entered as of May 14, 2013, by and among the Company, Steak n Shake, LLC
and Steak n Shake Enterprises, Inc. (Incorporated by reference to Exhibit 10.01 to the Company’s Quarterly Report
on Form 10-Q for the quarterly period ended April 10, 2013).

10.19

Stock Purchase Agreement, dated July 1, 2013, by and between Biglari Holdings Inc. and Sardar Biglari.

(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 2, 2013).

10.20

Shared Services Agreement, dated July 1, 2013, by and between Biglari Holdings Inc. and Biglari Capital Corp.

(Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated July 2, 2013).

10.21* First Amendment, dated as of July 1, 2013, to the Amended and Restated Incentive Bonus Agreement, dated as of
September 28, 2010, by and between Biglari Holdings Inc. and Sardar Biglari. (Incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K dated July 2, 2013).

10.22

Credit Agreement, dated as of March 19, 2014, among Steak n Shake Operations, Inc., as borrower, Steak n Shake
Enterprises, Inc. and Steak n Shake, LLC, as subsidiary guarantors, the lenders party thereto, Jefferies Finance LLC,
as joint lead arranger, syndication agent, documentation agent, book manager, administrative agent and collateral
agent, and Fifth Third Bank, as joint lead arranger, swingline lender and issuing bank. (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 21, 2014).

10.23

Security Agreement, dated as of March 19, 2014, by Steak n Shake Operations, Inc., Steak n Shake Enterprises, Inc.
and Steak n Shake, LLC, as pledgors, assignors and debtors, in favor of Jefferies Finance LLC, in its capacity as
collateral agent, pledgee, assignee and secured party. (Incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K dated March 21, 2014).

14.01

Code of Conduct, dated May 17, 2010.

21.01

Subsidiaries of the Company.

23.01

Consent of Independent Registered Public Accounting Firm.

31.01

Rule 13(a)-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.02

Rule 13(a)-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.01

Section 1350 Certifications.

Exhibit
Number

101**

Interactive Data Files.

Description

Indicates management contract or compensatory plans or arrangements required to be filed as an exhibit to the
Annual Report on Form 10-K.

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 19 of the Securities Exchange Act of 1934, as amended, and otherwise are
not subject to liability under those sections.

*
**