10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended July 4, 2012

or

oTRANSITION 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	37-0684070
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

17802 IH 10 West, Suite 400 San Antonio, Texas	78257
(Address of principal executive offices)	(Zip Code)

(210) 344-3400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 x  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 x     No o

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 x
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company o

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

As of August 8, 2012 1,433,552 shares of the registrant’s Common Stock, $.50 stated value, were outstanding.

BIGLARI HOLDINGS INC.

INDEX

		Page No.
Part I – Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets —
	July 4, 2012 and September 28, 2011	1
	Consolidated Statements of Earnings—
	Twelve and Forty Weeks Ended July 4, 2012 and July 6, 2011	2
	Consolidated Statements of Cash Flows—
	Forty Weeks Ended July 4, 2012 and July 6, 2011	3
	Consolidated Statements of Changes in Shareholders’ Equity—
	Forty Weeks Ended July 4, 2012 and July 6, 2011	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	20
Part II – Other Information
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
Signatures		23

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIGLARI HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)	July 4, 2012			September 28, 2011
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	46,471		$	98,987
Investments		245,691			115,321
Receivables, net of allowance of $928 and $559, respectively		7,489			4,133
Inventories		6,017			5,886
Deferred income taxes		—			6,150
Assets held for sale		5,743			6,870
Other current assets		6,111			3,237
Total current assets		317,522			240,584
Property and equipment, net		358,052			371,736
Goodwill		27,529			27,529
Other intangible assets, net		6,417			6,950
Other assets		9,173			7,278
Investments held by consolidated affiliated partnerships		24,092			18,783
Total assets	$	742,785		$	672,860
Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable	$	36,540		$	29,236
Due to broker		259			7,272
Accrued expenses		52,430			46,948
Revolving credit		15,000			15,000
Deferred income taxes		12,956			—
Current portion of obligations under leases		5,657			5,272
Current portion of long-term debt		11,137			11,141
Total current liabilities		133,979			114,869
Deferred income taxes		9,709			6,664
Obligations under leases		111,325			116,066
Long-term debt		93,042			101,417
Other long-term liabilities		8,893			8,914
Total liabilities		356,948			347,930
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests of consolidated affiliated partnerships		53,651			45,252
Shareholders’ equity
Common stock – $0.50 stated value, 2,500,000 shares authorized – 1,511,174 shares issued, 1,227,809 and 1,227,276 shares outstanding (net of treasury stock), respectively		756			756
Additional paid-in capital		140,761			144,569
Retained earnings		248,566			230,390
Accumulated other comprehensive income (loss)		32,649			(5,468	)
Treasury stock – at cost: 283,365 and 283,898 shares (includes 205,743 shares held by consolidated affiliated partnerships) on July 4, 2012 and September 28, 2011, respectively		(90,546	)		(90,569	)
Biglari Holdings Inc. shareholders’ equity		332,186			279,678
Total liabilities and shareholders’ equity	$	742,785		$	672,860

See accompanying Notes to Consolidated Financial Statements.

1

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(Twelve and Forty Weeks Ended July 4, 2012 and July 6, 2011)

(Unaudited)

(In thousands, except share and per share data)	Twelve Weeks Ended						Forty Weeks Ended
	2012			2011			2012			2011
Net revenues
Restaurant Operations:
Net sales	$	172,128		$	166,893		$	552,002		$	527,848
Franchise fees		2,475			2,065			7,222			6,415
Other revenue		583			606			1,903			1,828
Total		175,186			169,564			561,127			536,091
Investment Management Operations:
Management fee income		—			—			—			224
Consolidated Affiliated Partnerships:
Investment gains/losses		501			1,231			4,467			4,177
Other income		86			66			253			368
Total		587			1,297			4,720			4,769
Total net revenues		175,773			170,861			565,847			540,860
Costs and expenses
Cost of sales		49,812			48,144			158,508			146,967
Restaurant operating costs		81,326			78,317			258,096			253,646
General and administrative		15,006			12,082			48,118			37,691
Depreciation and amortization		6,031			6,563			20,430			21,855
Marketing		11,666			10,031			31,943			29,762
Rent		4,044			3,980			13,536			13,000
Pre-opening costs		7			—			430			76
Asset impairments and provision for restaurant closings		26			2			346			15
Loss on disposal of assets		115			232			484			489
Other operating income		(149	)		(1,659	)		(793	)		(894	)
Total costs and expenses, net		167,884			157,692			531,098			502,607
Other income (expenses)
Interest, dividend and other investment income		1,003			86			2,405			239
Interest on obligations under leases		(2,321	)		(2,436	)		(7,748	)		(8,146	)
Interest expense		(1,812	)		(602	)		(6,200	)		(2,034	)
Realized investment gains/losses		227			1,433			4,200			4,677
Derivative and short sale gains/losses		—			(499	)		—			(292	)
Total other income (expenses)		(2,903	)		(2,018	)		(7,343	)		(5,556	)
Earnings before income taxes		4,986			11,151			27,406			32,697
Income taxes		(17	)		1,836			6,879			8,864
Consolidated net earnings		5,003			9,315			20,527			23,833
Earnings attributable to redeemable noncontrolling interest:
Income allocation		(150	)		(639	)		(2,387	)		(2,559	)
Incentive fee		—			—			36			2,510
Total earnings attributable to redeemable noncontrolling interests		(150	)		(639	)		(2,351	)		(49	)
Net earnings attributable to Biglari Holdings Inc.	$	4,853		$	8,676		$	18,176		$	23,784
Earnings per share attributable to Biglari Holdings Inc.
Basic earnings per common and common equivalent share	$	3.64		$	6.52		$	13.63		$	17.90
Diluted earnings per common and common equivalent share	$	3.63		$	6.49		$	13.59		$	17.79
Weighted average shares and equivalents
Basic		1,334,339			1,331,434			1,333,880			1,328,666
Diluted		1,337,538			1,336,253			1,337,199			1,336,851

See accompanying Notes to Consolidated Financial Statements.

2

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Forty Weeks Ended July 4, 2012 and July 6, 2011)

(Unaudited)

(In thousands)	Forty Weeks Ended
	2012			2011
Cash flows from operating activities
Net earnings	$	20,527		$	23,833
Adjustments to reconcile net earnings to operating cash flows (excluding investment operations of consolidated affiliated partnerships):
Depreciation and amortization		20,430			21,855
Provision for deferred income taxes		(1,373	)		1,305
Asset impairments and provision for restaurant closings		346			15
Stock-based compensation and other non-cash expenses		781			741
Loss on disposal of assets		484			489
Gain on sale of subsidiary		—			(1,559	)
Realized investment gains/losses		(4,200	)		(4,677	)
Derivative and short sale gains/losses		—			292
Changes in operating assets and liabilities:
Increase in receivables and inventories		(3,540	)		(3,669	)
(Increase) decrease in other assets		(5,608	)		878
Increase in accounts payable and accrued expenses		12,118			6,836
Investment operations of consolidated affiliated partnerships:
Purchases of investments		(14,477	)		(47,548	)
Sales of investments		14,537			50,092
Realized investment gains, net		(1,685	)		(3,316	)
Unrealized gains on marketable securities held by consolidated affiliated partnerships		(2,782	)		(861	)
Changes in due to/from broker and cash and cash equivalents held by consolidated affiliated partnerships		(902	)		5,114
Net cash provided by operating activities		34,656			49,820
Cash flows from investing activities
Additions of property and equipment		(6,804	)		(10,521	)
Proceeds from property and equipment disposals		2,288			2,006
Proceeds from sale of subsidiary, net of cash on hand		—			196
Purchases of investments		(102,800	)		(127,553	)
Sales of investments		38,108			64,642
Changes in due to/from broker		(7,013	)		5,487
Net cash used in investing activities		(76,221	)		(65,743	)
Cash flows from financing activities
Proceeds from revolving credit facility		—			179,045
Payments on revolving credit facility		—			(176,045	)
Borrowings on long-term debt		—			20,000
Principal payments on long-term debt		(8,379	)		(16,333	)
Principal payments on direct financing lease obligations		(4,356	)		(6,153	)
Proceeds from exercise of stock options and employees stock purchase plan		29			543
Excess tax benefits from stock-based awards		383			—
Repurchase of employee shares for tax withholding		(8	)		(541	)
Financing activities of consolidated affiliated partnerships:
Contributions from noncontrolling interests		1,534			1,018
Distributions to noncontrolling interests		(154	)		(15,853	)
Net cash used in financing activities		(10,951	)		(14,319	)
Decrease in cash and cash equivalents		(52,516	)		(30,242	)
Cash and cash equivalents at beginning of period		98,987			47,563
Cash and cash equivalents at end of period	$	46,471		$	17,321

See accompanying Notes to Consolidated Financial Statements.

3

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Forty Weeks Ended July 4, 2012 and July 6, 2011)

(Unaudited)

(In thousands)	Common Stock		Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance on September 28, 2011	$	756	$	144,569		$	230,390	$	(5,468	)	$	(90,569	)	$	279,678
Net earnings attributable to Biglari Holdings Inc.							18,176								18,176
Reclassification of investment appreciation in net earnings, net of $(553) tax									(902	)					(902	)
Net change in unrealized gains and losses on investments, net of $23,915 tax									39,019						39,019
Total comprehensive income															56,293
Exercise of stock options and other stock compensation transactions				860								23			883
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value				(4,668	)										(4,668	)
Balance on July 4, 2012	$	756	$	140,761		$	248,566	$	32,649		$	(90,546	)	$	332,186
Balance on September 29, 2010	$	756	$	143,521		$	195,825	$	(1,152	)	$	(89,955	)	$	248,995
Net earnings attributable to Biglari Holdings Inc.							23,784								23,784
Reclassification of investment appreciation in net earnings, net of $789 tax									1,235						1,235
Net change in unrealized gains and losses on investments, net of $3,342 tax									5,226						5,226
Total comprehensive income															30,245
Exercise of stock options and other stock compensation transactions				851								(614	)		237
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value				(4,271	)										(4,271	)
Balance on July 6, 2011	$	756	$	140,101		$	219,609	$	5,309		$	(90,569	)	$	275,206

See accompanying Notes to Consolidated Financial Statements.

4

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

JULY 4, 2012

(In thousands, except share and per share data)

Note 1. General

The accompanying unaudited consolidated financial statements of Biglari Holdings Inc. (“we”, “us”, “our”, “Biglari Holdings”, or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion, all adjustments considered necessary to present fairly the results of the interim periods  have been included and consist only of normal recurring adjustments. The results for the interim periods shown are not necessarily indicative of results for the entire fiscal years. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 28, 2011 and Quarterly Reports on Form 10-Q for the fiscal periods ended December 21, 2011 and April 11, 2012.

Biglari Holdings Inc. is a diversified holding company engaged in a number of diverse business activities.  The Company is led by Sardar Biglari, Chairman and Chief Executive Officer of Biglari Holdings and its major operating subsidiaries. Our long-term objective is to maximize per-share intrinsic value of the Company. Our strategy is to reinvest cash generated from our operating subsidiaries into any investments with the objective of achieving high risk-adjusted returns.  All major operating, investment, and capital allocation decisions are made for the Company and its subsidiaries by Sardar Biglari, Chairman and Chief Executive Officer.

Basis of Presentation and Consolidation

As of July 4, 2012, the consolidated financial statements include the accounts of (i) the Company, (ii) its wholly-owned subsidiaries Steak n Shake Operations, Inc. (“Steak n Shake”), Western Sizzlin Corporation (“Western”), and Biglari Capital Corp. (“Biglari Capital”), and (iii) investment related subsidiaries and limited partnerships (the “consolidated affiliated partnerships”). As a result of our acquisitions of Western and Biglari Capital during fiscal year 2010, we acquired financial interests in The Lion Fund, L.P. (the “Lion Fund”), Western Acquisitions, L.P., Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P., investment limited partnerships (collectively referred to as consolidated affiliated partnerships), for which we have a substantive controlling interest. During the first quarter of fiscal year 2011, Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P. were liquidated and the funds distributed to the partners. During the third quarter of fiscal year 2011, Western Mustang Holdings, L.L.C. sold its interests in Mustang Capital Management, L.L.C. and Mustang Capital Advisors, L.P.

We consolidate entities in which we have a wholly-owned or controlling interest in the general partner. The consolidated affiliated partnerships’ assets and liabilities are consolidated on our balance sheet even though outside limited partners have majority ownership in all of the investment partnerships. We do not guarantee any of the liabilities of our subsidiaries that are serving as general partners to these consolidated affiliated partnerships. All intercompany accounts and transactions have been eliminated in consolidation.

Western’s and Biglari Capital’s June 30 quarter end for financial reporting purposes differs from the end of the Company’s fiscal quarter of July 4, 2012. There were no significant transactions in the intervening period.

Note 2. New Accounting Standards

In July 2012, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2012−02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.  The revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a “qualitative” assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test.  The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted.  We do not expect the provisions of ASU 2012-02 to have a material effect on our financial position or results of operations.

In December 2011, the FASB ASU 2011−12, Comprehensive Income. The amendments in ASU 2011-12 superseded certain pending paragraphs in ASU 2011−05, Presentation of Comprehensive Income to effectively defer only those changes in ASU 2011−05 that related to the presentation of reclassification adjustments out of accumulated other comprehensive income. The requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements will become effective in the first quarter of fiscal 2013.  The adoption of ASU 2011−12 will not impact the measurement of net earnings or other comprehensive income.

5

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

Note 3. Earnings Per Share

Earnings per share of common stock is based on the weighted average number of shares outstanding during the year. For financial reporting purposes all common shares of the Company held by the consolidated affiliated partnerships are recorded in treasury stock on the consolidated balance sheet. For purposes of computing the weighted average common shares outstanding, the shares of treasury stock attributable to the unrelated limited partners of the consolidated affiliated partnerships — based on their proportional ownership during the period — are considered outstanding shares.

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

	Twelve Weeks Ended		Forty Weeks Ended
	July 4,	July 6,	July 4,	July 6,
	2012	2011	2012	2011
Basic earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Diluted earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Dilutive effect of stock awards	3,199	4,819	3,319	8,185
Weighted average common and incremental shares	1,337,538	1,336,253	1,337,199	1,336,851
Number of share-based awards excluded from the calculation of earnings per share as the awards’ exercise prices were greater than the average market price of the Company’s common stock	705	963	705	963

Note 4. Investments

Investments consisted of the following:

	July 4, 2012			September 28, 2011
Cost	$	193,032		$	124,140
Gross unrealized gains		53,285			1,956
Gross unrealized losses		(626	)		(10,775	)
Fair value	$	245,691		$	115,321

On July 4, 2012, most of the Company’s investments (along with gross unrealized gains) were concentrated in one security. Unrealized losses on marketable equity securities on July 4, 2012 have been in an unrealized loss for less than 12 months. A majority of the gross unrealized losses on September 28, 2011 related only to one investment. We consider several factors in determining other-than-temporary impairment losses, including the current and long-term business prospects of the issuers, the length of time and relative magnitude of the price decline, and our ability and intent to hold the investment until the price recovers.

Investment gains/losses are recognized when investments are sold (as determined on a specific identification basis) or as otherwise required by U.S. 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 within shareholders’ equity on the consolidated balance sheet.

6

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

Realized investment gains/losses were as follows:

	Twelve Weeks Ended					Forty Weeks Ended
	July 4,		July 6,			July 4,			July 6,
	2012		2011			2012			2011
Gross realized gains on sales	$	227	$	1,444		$	4,584		$	4,694
Gross realized losses on sales	$	—	$	(11	)	$	(384	)	$	(17	)

Note 5. Consolidated Affiliated Partnerships

Collectively, The Lion Fund L.P., Western Acquisitions, L.P., Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P. are referred to as consolidated affiliated partnerships of the Company. Investments held directly by the consolidated affiliated partnerships usually consist of domestic equity securities. Certain of the consolidated affiliated partnerships hold the Company’s common stock as investments. Within our consolidated financial statements, we classify this common stock as treasury stock despite the shares being legally outstanding. As of July 4, 2012 and September 28, 2011, the consolidated affiliated partnerships held 205,743 shares of the Company’s common stock ($69,221 at cost).

Consolidated net earnings of the Company include 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 hold in the Company’s equity securities, which has been eliminated in consolidation.

In fiscal year 2010, Biglari Holdings invested a total of $35,697 in the Lion Fund, both in the form of the acquisition of the general partner and as a direct limited partner investment. The fair value of these investments in the Lion Fund totaled $49,650 as of the end of the fiscal 2012 third quarter. No amounts were invested in the year-to-date period in fiscal year 2012 or in fiscal year 2011. These investments in the Lion Fund do not appear explicitly in the our consolidated balance sheet because of the requirement to consolidate fully the Lion Fund (inclusive of third party interests) in our financial statements. Further, the Lion Fund’s portfolio holds significant interests in Biglari Holdings’ common stock, which as described above is classified on our consolidated balance sheet as a reduction to shareholders’ equity. Biglari Holdings’ pro-rata ownership of its Company common stock through the Lion Fund was 98,339 shares of stock (with a fair value of $37,997) based on Biglari Holdings’ ownership interest in the Lion Fund as of the end of the fiscal 2012 third quarter.

During the first quarter of fiscal year 2011, Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P. were liquidated and the funds distributed to the partners. The distribution of $15,660, including $1,421 of noncash distributions, is noted in the distributions to noncontrolling interests line in the reconciliation below.

During the third quarter of fiscal year 2011, Western Mustang Holdings, L.L.C. sold its interests in Mustang Capital Management, L.L.C. and Mustang Capital Advisors, L.P. As a result of the sale, the Company does not have involvement in the operations of Mustang Capital Management, L.L.C. and Mustang Capital Advisors, L.P. Although these entities meet the definition of “discontinued operations,” as defined in FASB ASC paragraph 205-20-45-1, Reporting Discontinued Operations (“ASC paragraph 205-20-45-1”), we have not separated the results of operations because the amounts are immaterial to our consolidated financial numbers. Net earnings after tax related to the entities were approximately $1,544 and $2,606 for the twelve and forty weeks ended July 6, 2011, including $0 and $1,246, respectively, that were attributable to noncontrolling interests.

The following table summarizes the cost and fair value of the investments held by the consolidated affiliated partnerships, other than holdings of the Company’s equity securities:

	July 4, 2012		September 28, 2011
Equity securities:
Cost	$	20,596	$	19,122
Fair value	$	23,190	$	18,783

Investments held by consolidated affiliated partnerships on the consolidated balance sheet include $902 and $0 of cash that is only available for use by the consolidated affiliated partnerships on July 4, 2012 and September 28, 2011, respectively.

7

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

Realized investment gains/losses arise when investments are sold (as determined on a specific identification basis). The net realized gains/losses from investments held by consolidated affiliated partnerships, other than holdings of the Company’s equity securities, were as follows:

	Twelve Weeks Ended				Forty Weeks Ended
	July 4,  2012		July 6, 2011		July 4,  2012		July 6, 2011
Net unrealized gains	$	401	$	482	$	2,782	$	861
Net realized gains from sale	$	100	$	749	$	1,685	$	3,316

The limited partners of each of the investment funds have the ability to redeem their capital upon certain occurrences; therefore, the ownership of the investment funds held by the limited partners is presented as redeemable noncontrolling interests of consolidated affiliated partnerships and measured at the greater of carrying value or fair value on the consolidated balance sheet.  The maximum redemption amount of the redeemable noncontrolling interests as of July 4, 2012 was $53,651.

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

	Forty Weeks Ended
	July 4, 2012			July 6, 2011
Carrying value at beginning of period	$	45,252		$	62,245
Contributions from noncontrolling interests		1,534			1,018
Distributions to noncontrolling interests		(154	)		(17,274	)
Incentive fee		(36	)		(2,510	)
Income allocation		2,387			2,559
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value		4,668			4,271
Carrying value at end of period	$	53,651		$	50,309

The Company, through its ownership of Biglari Capital and Western Investments Inc., is entitled to an incentive fee to the extent investment performance of the consolidated affiliated partnerships exceeds specified hurdle rates. Any such fee is included in net earnings attributable to the Company in the period in which the fee is earned.

Biglari Capital, the general partner of the Lion Fund, earned a $36 incentive reallocation fee at December 31, 2011. At December 31, 2010, Biglari Capital earned a $5,199 incentive reallocation fee; however, $2,689 was eliminated, for that amount represents the Company’s fee as a limited partner, uncharged because the Company owns the general partner. The remaining $2,510 is an incentive fee that was charged and reallocated from outside limited partners of the Lion Fund. The incentive fee is assessed only once a year, on December 31, and no predictability of such earnings exists because the Lion Fund’s annual performance is unpredictable.

Net earnings attributable to the Company only includes the Company’s share of earnings and losses related to its investments in the consolidated affiliated partnerships; all other earnings or losses from the consolidated affiliated partnerships are allocated to the redeemable noncontrolling interests.

Note 6. Assets Held for Sale

Assets held for sale are composed of the following:

	July 4, 2012		September 28, 2011
Land and buildings	$	5,274	$	6,262
Improvements		469		608
Total assets held for sale	$	5,743	$	6,870

The July 4, 2012 balance included the following assets: one office building, four restaurants, and seven parcels of land.  The Company expects to sell these properties within one year of their classification as assets held for sale. For any of these properties that are unsold within one year, we expect to reclassify them as other long-term assets.

8

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

Note 7. Other Current Assets

Other current assets primarily include prepaid rent, prepaid contractual obligations and current portion of capitalized loan acquisition costs.

Note 8. Property and Equipment

Property and equipment is composed of the following:

	July 4, 2012			September 28, 2011
Land	$	160,286		$	161,339
Buildings		149,779			149,444
Land and leasehold improvements		155,361			153,731
Equipment		203,963			202,933
Construction in progress		2,591			1,850
		671,980			669,297
Less accumulated depreciation and amortization		(313,928	)		(297,561	)
Property and equipment, net	$	358,052		$	371,736

Note 9. 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. There was no change to the carrying value of goodwill from September 28, 2011.

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 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.

During the quarter ended September 28, 2011, we performed our annual assessment of the recoverability of our goodwill related to four reporting units related to our Steak n Shake operations. During the second quarter of fiscal year 2012, we performed our annual assessment of our recoverability of goodwill related to two reporting units related to our Western operations. The valuation methodology and underlying financial information included in our determination of fair value require significant judgments to be made by management. 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.

Other Intangibles

Other intangibles are composed of the following:

	July 4, 2012							September 28, 2011
	Gross carrying amount		Accumulated amortization			Total		Gross carrying amount		Accumulated amortization			Total
Right to operate	$	1,480	$	(1,208	)	$	272	$	1,480	$	(1,117	)	$	363
Franchise agreement		5,310		(1,195	)		4,115		5,310		(797	)		4,513
Other		810		(524	)		286		810		(480	)		330
Total		7,600		(2,927	)		4,673		7,600		(2,394	)		5,206
Intangible assets with indefinite lives		1,744		—			1,744		1,744		—			1,744
Total intangible assets	$	9,344	$	(2,927	)	$	6,417	$	9,344	$	(2,394	)	$	6,950

9

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

Intangible assets subject to amortization consist of franchise agreements acquired in connection with the acquisition of Western, a right to operate and favorable leases acquired in connection with prior acquisitions and are being amortized over their estimated weighted average useful lives ranging from eight to twelve years.

Amortization expense for the twelve weeks ended July 4, 2012 and July 6, 2011 was $169 and $186, respectively. Amortization expense for the forty weeks ended July 4, 2012 and July 6, 2011 was $533 and $567, respectively. Total annual amortization expense for each of the next five years will approximate $625.

Intangible assets with indefinite lives consist of a trade name acquired in connection with the acquisition of Western and reacquired franchise rights acquired in connection with previous acquisitions.

Note 10. Other Assets

Other assets primarily include capitalized software, non-qualified plan investments, non-current portion of capitalized loan acquisition costs, and a note receivable.

Note 11. Borrowings

There were no material changes in our borrowings from September 28, 2011.

Steak n Shake’s Credit Facility includes customary affirmative and negative covenants and events of default, as well as financial covenants relating to a maximum total leverage ratio and a minimum consolidated fixed charge coverage ratio.

Steak n Shake was in compliance with all covenants under the Credit Facility as of July 4, 2012.

Note 12. Other Long-term Liabilities

Other long-term liabilities include deferred rent expense, non-qualified plan obligations, deferred gain on sale-leaseback transactions, uncertain tax positions, and deferred compensation.

Note 13. Income Taxes

In determining the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which the Company operates.  Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.

Our effective income tax rate for the forty weeks ended July 4, 2012 was 25.1%, compared to the effective income tax rate of 27.1% in the same period in the prior year.  The decrease in the tax rate is primarily attributable to dividends received from equity investments, which are taxed at lower rates than is the income derived from wholly owned businesses. Moreover, the reserves related to unrecognized tax benefits were released because of the expiration of statutes of limitations.

As of July 4, 2012 and September 28, 2011, we had approximately $865 and $1,750, respectively, of unrecognized tax benefits, which are included in other long-term liabilities in the consolidated balance sheet.

Note 14. Commitments and Contingencies

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 the consolidated financial statements is not likely to have a material effect on our results of operations, financial position or cash flows.

10

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

Note 15. Fair Value of Financial Assets and Liabilities

The fair value framework as established in ASC paragraph 820-10-50-2 requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair values, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

· Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

· Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

· Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

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. Money market funds that are carried at fair value, based on quoted market prices, are classified within Level 1 of the fair value hierarchy.  All other cash equivalents carried at fair value based on observable inputs for which a quoted market price is not available are classified within Level 2 of the fair value hierarchy. Consolidated affiliated partnerships did not hold cash equivalents on July 4, 2012 and September 28, 2011.

Equity securities: The Company’s investments in equity securities are carried at fair value, based on quoted market prices, and are classified within Level 1 of the fair value hierarchy.

Non-qualified deferred compensation plan investments: The assets of the Company’s Non-Qualified Savings Plan are set up in a rabbi trust. They represent mutual funds that are carried at fair value, based on quoted market prices, and are classified within Level 1 of the fair value hierarchy.

Investment held by consolidated affiliated partnership: Investments of $193 as of July 4, 2012 and September 28, 2011 have been classified within Level 3 of the fair value hierarchy and represent a private security.

Investment derivatives and interest rate swaps: Investment derivatives and interest rate swaps are marked to market each reporting period with fair value based on readily available market quotes, and are classified within Level 2 of the fair value hierarchy. Interest rate swaps on July 4, 2012 and September 28, 2011 represent the mark to market adjustment for Steak n Shake’s interest rate swap.

The fair values of financial assets and liabilities were as follows:

	July 4, 2012								September 28, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	—	$	14,570	$	—	$	14,570	$	—	$	88,022	$	—	$	88,022
Equity securities:
Restaurant/Retail		244,276		—		—		244,276		89,971		—		—		89,971
Other		1,415		—		—		1,415		25,350		—		—		25,350
Equity securities held by consolidated affiliated partnerships:
Restaurant/Retail		10,435		—		—		10,435		7,677		—		—		7,677
Other		12,562		—		—		12,562		10,913		—		—		10,913
Non-qualified deferred compensation plan investments		811		—		—		811		546		—		—		546
Investment held by consolidated affiliated partnership		—		—		193		193		—		—		193		193
Total assets at fair value	$	269,499	$	14,570	$	193	$	284,262	$	134,457	$	88,022	$	193	$	222,672
Liabilities
Interest rate swaps	$	—	$	356	$	—	$	356	$	—	$	439	$	—	$	439

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

11

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs is as follows:

	Forty Weeks Ended
	July 4,		July 6,
	2012		2011
Beginning of period balance	$	193	$	323
Sale of assets		—		(124	)
Loss included in earnings		—		(10	)
End of period balance	$	193	$	189

For the year-to-date period in fiscal year 2012, we had no significant fair value adjustments applicable to items that are subject to non-recurring fair value measurement after the initial measurement date.

Note 16. Related Party Transactions

Mr. Biglari, along with his affiliates, and certain directors of the Company make investments in the Lion Fund (other than the amounts invested by the Company), which are not subject to special profits, interest allocations, or incentive allocations. However, Mr. Biglari does not pay an incentive allocation fee as a limited partner in the Lion Fund. As of July 4, 2012 and September 28, 2011, the total fair value of these investments was approximately $2,576 and $1,997, respectively.

Note 17. Business Segment Reporting

Net revenue, earnings before income taxes and noncontrolling interest, and net earnings attributable to Biglari Holdings Inc. for the twelve and forty weeks ended July 4, 2012 and July 6, 2011 were as follows:

	Net Revenue
	Twelve Weeks				Forty Weeks
	2012		2011		2012		2011
Operating Business:
Restaurant Operations:
Steak n Shake	$	170,925	$	165,228	$	549,338	$	524,266
Western		4,261		4,336		11,789		11,825
Total Restaurant Operations		175,186		169,564		561,127		536,091
Investment Management:
Management fees		—		—		—		224
Consolidated affiliated partnerships		587		1,297		4,720		4,545
Total Investment Management Operations		587		1,297		4,720		4,769
	$	175,773	$	170,861	$	565,847	$	540,860

12

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

JULY 4, 2012

(In thousands, except share and per share data)

	Earnings before income taxes and noncontrolling interest												Net earnings attributable to Biglari Holdings Inc.
	Twelve Weeks						Forty Weeks						Twelve Weeks						Forty Weeks
	2012			2011			2012			2011			2012			2011			2012			2011
Operating Business:
Restaurant Operations:
Steak n Shake	$	9,018		$	10,091		$	35,737		$	29,122		$	6,961		$	7,571		$	24,658		$	20,938
Western		682			828			1,536			1,705			437			506			965			1,044
Total Restaurant Operations		9,700			10,919			37,273			30,827			7,398			8,077			25,623			21,982
Investment Management:
Biglari Capital Corp. (incentive fee)		—			—			36			2,510			—			—			22			1,535
Management fees		—			—			—			224			—			—			—			139
Consolidated affiliated partnerships		325			2,702			3,899			4,543			108			1,889			624			1,810
Total Investment Management Operations		325			2,702			3,935			7,277			108			1,889			646			3,484
Corporate and Other:
Corporate and other		(3,454	)		(2,802	)		(11,766	)		(5,248	)		(1,671	)		(1,824	)		(6,853	)		(3,379	)
Investment and derivative gains/losses		227			934			4,200			4,385			141			589			2,604			2,763
Total Corporate and Other		(3,227	)		(1,868	)		(7,566	)		(863	)		(1,530	)		(1,235	)		(4,249	)		(616	)
Reconciliation of segments to consolidated amount:
Eliminations		—			—			(36	)		(2,510	)		—			318			—			195
Interest expense, excluding interest allocated to operating businesses		(1,812	)		(602	)		(6,200	)		(2,034	)		(1,123	)		(373	)		(3,844	)		(1,261	)
	$	4,986		$	11,151		$	27,406		$	32,697		$	4,853		$	8,676		$	18,176		$	23,784

The earnings presentation was adjusted from the prior year to show interest expense, excluding interest allocated to operating businesses, as a reconciliation of segments to consolidated amounts in order to more accurately reflect the earnings before and after tax of the restaurant operations.

Biglari Capital, the general partner of the Lion Fund, earned a $36 incentive reallocation fee at December 31, 2011. At December 31, 2010, Biglari Capital earned a $5,199 incentive reallocation fee; however, $2,689 was eliminated, for that amount represents the Company’s fee as a limited partner, which was uncharged because the Company owns the general partner. The remaining $2,510 is an incentive fee that was charged and reallocated from outside limited partners of the Lion Fund. The incentive fee is assessed only once a year, on December 31, and no predictability of such earnings exists because the Lion Fund annual performance is unpredictable.

13

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In thousands, except share and per share data)

Biglari Holdings Inc. (“Biglari Holdings” or the “Company”) is a diversified holding company engaged in a number of diverse business activities. The Company is led by Sardar Biglari, Chairman and Chief Executive Officer of Biglari Holdings, Steak n Shake Operations, Inc. (“Steak n Shake”), Western Sizzlin Corporation (“Western”), and Biglari Capital Corp. (“Biglari Capital”). The Company’s long-term objective is to maximize per-share intrinsic value of the Company. The Company’s strategy is to reinvest cash generated from its operating subsidiaries into any investments with the objective of achieving high risk-adjusted returns. All major operating, investment, and capital allocation decisions are made for the Company and its subsidiaries by Sardar Biglari, Chairman and Chief Executive Officer.

In the following discussion, the term “same-store sales” refers to the sales of only those units open at least 18 months as of the beginning of the current period being discussed and which remained open through the end of the period.

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.

Twelve Weeks Ended July 4, 2012

We recorded net earnings attributable to Biglari Holdings Inc. of $4,853 for the third quarter of 2012, as compared with net earnings attributable to Biglari Holdings Inc. of $8,676 in the third quarter of 2011.

Forty Weeks Ended July 4, 2012

We recorded net earnings attributable to Biglari Holdings Inc. of $18,176 for the current year-to-date period, as compared with net earnings attributable to Biglari Holdings Inc. of $23,784 in the same period of 2011.

As of July 4, 2012, the total number of company-operated and franchised restaurants was 588 as follows:

	Company-operated		Franchised		Total
Steak n Shake		414		82		496
Western		5		87		92
Total		419		169		588

In the third quarter of 2012, Steak n Shake opened four franchised units and closed one. During the current year-to-date period, Steak n Shake opened seven franchised units and one company-operated unit but closed one franchised unit. During the third quarter of 2012, one Western Sizzlin franchised unit was closed, and no franchised units were opened. For the current year-to-date period, five Western Sizzlin franchised units were closed and three franchised units were opened.

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 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 financial statements will likely increase or decrease in the future as additional information becomes available. There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended September 28, 2011.

14

Results of Operations

The following table sets forth the percentage relationship to total net revenues, unless otherwise noted, of items included in the consolidated statements of earnings for the twelve and forty weeks ended July 4, 2012 and July 6, 2011.

	Twelve Weeks Ended						Forty Weeks Ended
	2012			2011			2012			2011
Net revenues
Restaurant Operations:
Net sales		97.9	%		97.7	%		97.6	%		97.6	%
Franchise fees		1.4			1.2			1.3			1.2
Other revenue		0.3			0.4			0.3			0.3
Total		99.7			99.2			99.2			99.1
Investment Management Operations:
Management fee income		—			—			—			0.0
Consolidated Affiliated Partnerships:
Investment gains/losses		0.3			0.7			0.8			0.8
Other income		0.0			0.0			0.0			0.1
Total		0.3			0.8			0.8			0.9
Total net revenues		100.0			100.0			100.0			100.0
Costs and expenses
Cost of sales (1)		28.9			28.8			28.7			27.8
Restaurant operating costs (1)		47.2			46.9			46.8			48.1
General and administrative		8.5			7.1			8.5			7.0
Depreciation and amortization		3.4			3.8			3.6			4.0
Marketing		6.6			5.9			5.6			5.5
Rent		2.3			2.3			2.4			2.4
Pre-opening costs		0.0			—			0.1			0.0
Asset impairments and provision for restaurant closings		0.0			0.0			0.1			0.0
Loss on disposal of assets		0.1			0.1			0.1			0.1
Other operating income		(0.1	)		(1.0	)		(0.1	)		(0.2	)
Other income (expenses)
Interest, dividend and other investment income		0.6			0.1			0.4			0.0
Interest on obligations under leases		(1.3	)		(1.4	)		(1.4	)		(1.5	)
Interest expense		(1.0	)		(0.4	)		(1.1	)		(0.4	)
Realized investment gains/losses		0.1			0.8			0.7			0.9
Derivative and short sale gains/losses		—			(0.3	)		—			(0.1	)
Total other income (expenses)		(1.7	)		(1.2	)		(1.3	)		(1.0	)
Earnings before income taxes		2.8			6.5			4.8			6.0
Income taxes		(0.0	)		1.1			1.2			1.6
Consolidated net earnings		2.8			5.5			3.6			4.4
Earnings attributable to redeemable noncontrolling interest:
Income allocation		(0.1	)		(0.4	)		(0.4	)		(0.5	)
Incentive fee		—			—			0.0			0.5
Total earnings attributable to redeemable noncontrolling interests		(0.1	)		(0.4	)		(0.4	)		0.0
Net earnings attributable to Biglari Holdings Inc.		2.8	%		5.1	%		3.2	%		4.4	%

(1)Cost of sales and Restaurant operating costs are expressed as a percentage of net sales.

Comparison of Twelve Weeks Ended July 4, 2012 to Twelve Weeks Ended July 6, 2011

Net Earnings Attributable to Biglari Holdings Inc.

We recorded net earnings attributable to Biglari Holdings Inc. of $4,853, or $3.63 per diluted share, for the current quarter, as compared with net earnings attributable to Biglari Holdings Inc. of $8,676, or $6.49 per diluted share, for the third quarter of 2011.

15

Net Sales

In the third quarter of 2012, net sales increased 3.1% from $166,893 to $172,128 primarily because of the performance of our Restaurant Operations, mainly through the increase in Steak n Shake’s same-store sales. Steak n Shake’s same-store sales increased 2.9% during the third quarter of 2012. The increase in same-store sales resulted from an increment in customer traffic of 2.2%.

Franchise fees increased 19.9% during the third quarter of 2012. The number of franchised units was 169 on July 4, 2012 as compared to 164 on July 6, 2011. The increase in franchise fees is primarily attributable to the openings of franchised units in the third quarter of 2012 compared to the absence of openings in the third quarter of 2011. Furthermore, franchisee sales were higher in the third quarter of 2012 as compared with the third quarter of 2011.

Costs and Expenses

Cost of sales was $49,812 or 28.9% of net sales, compared with $48,144 or 28.8% of net sales in the third quarter of 2011.  The  increase in expenses created primarily by inflationary pressures on commodities was offset by the benefit of certain cost-saving initiatives.

Restaurant operating costs were $81,326 or 47.2% of net sales compared to $78,317 or 46.9% of net sales in the third quarter of 2011.  Restaurant operating costs were higher because of changes in the state unemployment tax rates, higher staffing in our stores, and unfavorable development of prior-year cases in workers compensation and general liability.

General and administrative expenses increased from $12,082 or 7.1% of total net revenues in the third quarter of 2011 to $15,006 or 8.5% of total net revenues because of our significant efforts to franchise the Steak n Shake concept, higher incentive compensation costs, and an increase in legal and professional expenses.

Marketing expense was $11,666 or 6.6% of total net revenues versus $10,031 or 5.9% of total net revenues in the third quarter of 2011, principally attributable to an increase in marketing efforts and higher production costs associated with our television commercials.

Other operating income decreased to $149 compared to $1,659 for the third quarter of 2011.  The decrease primarily related to the change in value of a purchase obligation of $1,558 which was relieved upon the sale of Mustang Capital Management L.L.C. and Mustang Capital Advisors, L.P in the third quarter of 2011.

Other Income (Expenses)

We recorded interest, dividend and other investment income of $1,003 mostly through accruing dividends pertinent to one investment versus $86 recorded in the third quarter of 2011.

Interest expense increased from $602 for the third quarter of 2011 to $1,812 for the current quarter.  The increase primarily pertained to the interest on Steak n Shake’s credit facility.  The outstanding debt on the Steak n Shake credit facility on July 4, 2012 was $116,750, which included the revolver. The interest rate on the Steak n Shake credit facility increased from 1.8% on July 6, 2011 to a blended rate of 5.3% on July 4, 2012.  The total outstanding debt for the Company on July 4, 2012 was $119,179 compared to $42,599 on July 6, 2011.

Income tax expense decreased from an expense of $1,836 in the third quarter of 2011 to a benefit of $17 for the current quarter.  The decrease in the tax expense is primarily attributable to dividends received from equity investments, which are taxed at lower rates than is the income derived from wholly owned businesses. Moreover, the reserves related to unrecognized tax benefits were released because of the expiration of statutes of limitations.

Biglari Holdings Investment Gains

We recorded net realized investment gains of $227 for the current quarter related to dispositions of marketable equity securities compared to $1,433 in the third quarter of 2011.  We also recorded $499 of investment losses related to the change in fair value of derivatives during the third quarter of 2011. We directly hold these investments, not our consolidated affiliated partnerships.

Consolidated Affiliated Partnerships Investment Gains

In the third quarter of 2012, investment gains of consolidated affiliated partnerships decreased from $1,231 to $501.  We recorded a net realized gain of $100 for the current quarter related to dispositions of investments held by our consolidated affiliated partnerships, plus an unrealized net investment gain of $401 for a total of $501. These totals were offset by $150 connected to earnings attributable to redeemable noncontrolling interests.  During the third quarter of 2011, we recorded a net realized gain of $749 related to dispositions of investments held by our consolidated affiliated partnerships as well as an unrealized net investment gain of $482 for a total of $1,231. However, these amounts were offset by $639 related to earnings attributable to redeemable noncontrolling interests.

16

Comparison of Forty Weeks Ended July 4, 2012 to Forty Weeks Ended July 6, 2011

Net Earnings Attributable to Biglari Holdings Inc.

We recorded net earnings attributable to Biglari Holdings Inc. of $18,176, or $13.59 per diluted share, for the current year-to-date period, as compared with net earnings attributable to Biglari Holdings Inc. of $23,784, or $17.79 per diluted share, for the same period of 2011.

Net Sales

Net sales increased 4.6% from $527,848 to $552,002 primarily because of the performance of our Restaurant Operations, through the growth in Steak n Shake’s same-store sales. Steak n Shake’s same-store sales increased 4.4%. The increase in same-store sales resulted from an increment in customer traffic of 4.4%.

Franchise fees increased 12.6%  largely because of higher franchisee sales. Restaurant Operations opened ten franchised units and closed six franchised ones during the 2012 year-to-date period. However, Restaurant Operations opened four franchised units during the prior year’s comparable period.

Costs and Expenses

Cost of sales was $158,508 or 28.7% of net sales, compared with $146,967 or 27.8% of net sales in the same period of 2011. This increase in percentage of net sales was created primarily by inflationary pressures on commodities.

Restaurant operating costs were $258,096 or 46.8% of net sales compared to $253,646 or 48.1% of net sales in the same period of 2011. Restaurant operating costs were increased by changes in the state unemployment tax rates, higher staffing in our stores, and unfavorable development of prior-year cases in workers compensation and general liability. These increases in costs were offset by the implementation of several operating initiatives, which have generated higher productivity and labor efficiency.

General and administrative expenses increased from $37,691 or 7.0% of total net revenues in the prior year-to-date period of 2011 to $48,118 or 8.5% of total net revenues because of our efforts to franchise the Steak n Shake concept, higher incentive compensation costs and an increase in legal and professional services.

Marketing expense for the current year-to-date period was $31,943 or 5.6% of total net revenues versus $29,762 or 5.5% of total net revenues in the same period of 2011, primarily attributable to an increase in marketing efforts and higher production costs associated with our television commercials.

Other operating income for the current year-to-date period was $793 compared to $894 for the same period of 2011. Other operating income for the prior year-to-date period included $1,558 related to the change in value of a purchase obligation which was relieved upon the sale of Mustang Capital Management, L.L.C and Mustang Capital Advisors, L.P. in the third quarter of 2011.

Other Income (Expenses)

We recorded interest, dividend and other investment income of $2,405 mostly through accruing dividends pertinent to one investment versus $239 recorded in the same period of 2011.

Interest expense increased from $2,034 from the prior year-to-date period to $6,200 for the 2012 year-to-date period.  The increase primarily pertained to the interest on Steak n Shake’s credit facility.  The outstanding debt on the Steak n Shake credit facility on July 4, 2012 was $116,750, which included the revolving credit line.  The interest rate on the Steak n Shake credit facility increased from 1.8% on July 6, 2011 to a blended rate of 5.3% on July 4, 2012.   The total outstanding debt for the Company on July 4, 2012 was $119,179 compared to $42,599 on July 6, 2011.

Our effective income tax rate for the forty weeks ended July 4, 2012 was 25.1%, compared with our effective income tax rate of 27.1% in the same period in the prior year. The decrease in the tax rate is primarily attributable to dividends received from equity investments, which are taxed at lower rates than is the income derived from wholly owned businesses.

17

Biglari Holdings Investment Gains

We recorded net realized investment gains of $4,200 for the current year-to-date period related to dispositions of marketable equity securities. We recorded $4,677 of net realized gains on investments and $292 of investment losses related to the change in fair value of derivatives and dispositions during the same period of 2011.  We directly hold these investments, not our consolidated affiliated partnerships.

Consolidated Affiliated Partnerships Investment Gains

In the current year-to-date period, investment gains of consolidated affiliated partnerships increased 6.9% from $4,177 to $4,467.  We recorded a net realized gain of $1,685 for the current year-to-date period related to dispositions of investments held by our consolidated affiliated partnerships, plus an unrealized net investment gain of $2,782 for a total of $4,467. We also received an incentive fee of $36. These totals were offset by $2,387 connected to earnings attributable to redeemable noncontrolling interests. During the same period of 2011, we recorded a net realized gain of $3,316 related to dispositions of investments held by our consolidated affiliated partnerships as well as an unrealized net investment gain of $861 for a total of $4,177. We also received an incentive fee of $2,510. However, these amounts were offset by $2,559 related to earnings attributable to redeemable noncontrolling interests.

Consolidated Affiliated Partnerships

Investments held directly by the consolidated affiliated partnerships usually consist of domestic equity securities. Certain of the consolidated affiliated partnerships hold the Company’s common stock as investments. In our consolidated financial statements, we classify this common stock as treasury stock despite the shares being legally outstanding. As of July 4, 2012 and September 28, 2011, the consolidated affiliated partnerships held 205,743 shares of the Company’s common stock ($69,221 at cost).

In fiscal year 2010, Biglari Holdings invested a total of $35,697 in the Lion Fund, both in the form of the acquisition of the general partner and as a direct limited partner investment. The fair value of these investments in the Lion Fund totaled $49,650 as of the end of the fiscal 2012 third quarter. These investments in the Lion Fund do not appear explicitly in our consolidated balance sheet because of the requirement to consolidate fully the Lion Fund (inclusive of third party interests) in our financial statements. Further, the Lion Fund’s portfolio holds a significant interest in Biglari Holdings’ common stock, which is classified on our consolidated balance sheet as a reduction to shareholders’ equity. Biglari Holdings’ pro-rata ownership of its Company common stock through the Lion Fund was 98,339 shares of stock (with a fair value of $37,997) based on Biglari Holdings’ ownership interest in the Lion Fund as of the end of the fiscal 2012 third quarter.

Liquidity and Capital Resources

We generated $34,656 in cash flows from operations during the current year-to-date period as compared to $49,820 during the same period of 2011. In part, the decrease  resulted from the investment activities of the consolidated affiliated partnerships, including a $6,016 decrease in the change in the due from broker and cash equivalents balance held by the consolidated affiliated partnerships.  Additionally, net purchases and sales activities of the consolidated affiliated partnerships reduced from $2,544 to $60 during the same period of 2011.

Net cash used in investing activities during the current year-to-date period was $76,221 compared to $65,743 during the same period of 2011. The decline primarily resulted from a $12,500 decrease in the change in the due from broker balance compared to the same period of 2011.  Additionally, reduced sales of investments partially offset a smaller decrease in purchases of investments during the current year-to-date period of 2012.

Net cash used in financing activities during the current year-to-date period was $10,951 compared to net cash used in financing activities of $14,319 during the same period of 2011.  Net cash used in financing activities during the current year primarily related to principal payments on Steak n Shake’s credit facility, which were issued during the fourth quarter of 2011.  Cash used for financing during 2011 primarily resulted from the consolidated affiliated partnerships’ distributions to noncontrolling interests.

Our balance sheet continues to maintain significant liquidity. We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated from operations, existing credit facilities and the sale of excess properties and investments. We continually review available financing alternatives.

Steak n Shake Credit Facility

Steak n Shake’s Credit Facility includes customary affirmative and negative covenants and events of default as well as financial covenants relating to a maximum total leverage ratio and a minimum consolidated fixed charge coverage ratio.

Steak n Shake was in compliance with all financial covenants under the Credit Facility as of July 4, 2012.

18

New Accounting Standards

Refer to Note 2 in our Notes to Consolidated Financial Statements within Item 1 of Part I of this Quarterly Report on Form 10-Q.

Effects of Governmental Regulations and Inflation

Most employees are paid hourly rates related to federal and state minimum wage laws. Any increase in the legal minimum wage would directly increase the Company’s operating costs. The Company is also subject to various federal, state and local laws related to zoning, land use, safety standards, working conditions, and accessibility standards. Any changes in these laws that require improvements to its restaurants would increase operating costs. In addition, the Company is subject to franchise registration requirements and certain related federal and state laws regarding franchise operations. Any changes in these laws could affect its ability to attract and retain franchisees.

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

Risks Associated with 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 ability of the restaurant operations to increase store traffic on a profitable basis;

· competition in the restaurant industry for customers, staff, locations, and new products;

· disruptions in the overall economy and the financial markets;

· the Company’s ability to comply with the restrictions and covenants to its debt agreements;

· declines in the market price of our common stock, which could adversely affect our goodwill impairment analysis;

· the potential to recognize additional impairment charges on our long-lived assets;

· fluctuations in food commodity and energy prices and the availability of food commodities;

· the ability of our franchisees to operate profitable restaurants;

· the poor performance or closing of even a small number of restaurants;

· changes in customer preferences, tastes, and dietary habits;

· changes in minimum wage rates and the availability and cost of qualified personnel;

· harsh weather conditions or losses due to casualties;

· unfavorable publicity relating to food safety or food-borne illness;

· exposure to liabilities related to the ownership and leasing of significant amounts of real estate;

· our ability to comply with existing and future governmental regulations;

· our ability to adequately protect our trademarks, service marks, and other components of our brand;

· changes in market prices of our investments; and

· other risks identified in the periodic reports we file with the Securities and Exchange Commission.

Accordingly, such forward-looking statements do not purport to be predictions of future events or circumstances and may not be realized. Additional risks and uncertainties not currently known to us or that are currently deemed immaterial may also become important factors that may harm our business, financial condition, results of operations or cash flows. We assume no obligation to update forward-looking statements except as required in our periodic reports.

19

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our investments are generally concentrated in common stocks. On July 4, 2012, most of our investments are in the common stock of one entity. A significant decline in the general stock market or in the price of major investments may produce a large decrease in our consolidated shareholders’ equity and under certain circumstances may require the recognition of losses in the consolidated statement of earnings. Decreases in values of equity investments can have a material adverse effect on our consolidated shareholders’ equity.

On July 4, 2012 interest on the term loan under Steak n Shake’s Credit Facility was based on a base rate or Eurodollar rate plus an applicable margin of 3.5% and 4.5%, respectively. Interest on the revolver under Steak n Shake’s Credit Facility was based on a base rate or Eurodollar rate plus an applicable margin ranging from 2.0% to 2.5% and 3.0% to 3.5%, respectively, based on Steak n Shake’s total leverage ratio. On July 4, 2012, a hypothetical 100 basis point increase in short-term interest rates would have an impact of approximately $724 on our annual net earnings. 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 loss of $356 on July 4, 2012.

We do not have exposure to foreign currency exchange rate fluctuations, as we do not transact business in international markets and are not a party to any material non-U.S. dollar denominated contracts.

ITEM 4. 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 July 4, 2012.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended July 4, 2012 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

20

PART II OTHER INFORMATION

ITEM 1A. RISK FACTORS

An investment in the common stock of any company involves a degree of risk. Investors should consider carefully the risks and uncertainties described in the Company’s Annual Report on Form 10−K filed with the SEC, and those other risks described elsewhere in this report, before deciding whether to purchase our common stock. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also become important factors that may harm the Company’s business, financial condition, and results of operations. The occurrence of risk factors could harm the Company’s business, financial condition, and results of operations. The trading price of the Company’s common stock could decline due to any of these risks and uncertainties, and stockholders may lose part or all of their investment.

There have been no material changes in the risk factors described in the Company’s Annual Report on Form 10-K for the year ended September 28, 2011.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth the purchases made during the quarter ended July 4, 2012 by or on behalf of the Company or an affiliated purchaser of shares of our common stock registered pursuant to Section 12 of the Exchange Act:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
April 12 through May 9		19	$	408.71		—		—
May 10 through June 6		—		—		—		—
June 7 through July 4		—		—		—		—
Total		19	$	408.71		—		—

The shares indicated consist of shares tendered by employees to the Company during the quarter ended July 4, 2012 to pay for the taxes on the exercise of non-qualified stock options.  The price paid for shares repurchased by the Company is based on the closing share price over the five day period prior to the transaction.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

21

ITEM 6. EXHIBITS

Exhibit Number	Description
31.01	Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**	The following financial information from Biglari Holdings Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended July 4, 2012, formatted in XBRL (Extensible Business Reporting Language), includes: (i) the Consolidated Balance Sheets as of July 4, 2012 and September 28, 2011, (ii) the Consolidated Statements of Earnings for the Twelve and Forty Weeks Ended July 4, 2012 and July 6, 2011, (iii) the Consolidated Statements of Cash Flows for the Forty Weeks Ended July 4, 2012 and July 6, 2011, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the Forty Weeks Ended July 4, 2012 and July 6, 2011, and (v) the Notes to Consolidated Financial Statements, tagged in summary and detail.

­­­­­­_________________

* Furnished herewith.

** In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

22

SIGNATURES

Pursuant to the requirements 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.

Date:  August 10, 2012
	Biglari Holdings inc.
	By:	/s/ Bruce Lewis
		Bruce Lewis Controller

23

EX-31.01

Exhibti 31.01

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sardar Biglari, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Biglari Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2012
	/s/ Sardar Biglari
	Sardar Biglari
	Chairman and Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce Lewis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Biglari Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2012
	/s/ Bruce Lewis
	Bruce Lewis
	Controller

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Biglari Holdings Inc. (the “Company”) on Form 10-Q for the period ended July 4, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Sardar Biglari

Sardar Biglari

Chairman and Chief Executive Officer

August 10, 2012

/s/ Bruce Lewis

Bruce Lewis

Controller

August 10, 2012

XML

5. Consolidated Affiliated Partnerships (Details Narrative) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	9 Months Ended
	Jul. 06, 2011	Apr. 11, 2012	Jul. 04, 2012	Jul. 06, 2011	Sep. 28, 2011	Dec. 31, 2010	Sep. 29, 2010
Notes to Financial Statements
Cost of consolidated affiliated partnerships' holdings of the Company's common stock			$ 69,221		$ 69,221
Consolidated affiliated partnerships' holdings of the Company's common stock			205,743		205,743
Company's initial investment in consolidated affiliated partnerships							35,697
Fair value of the Company's investment in consolidated affiliated partnerships			49,650
Company's pro rata ownership of Company common stock through consolidated affiliated partnerships			98,339
Fair value of the Company's pro rata ownership of Company common stock through consolidated affiliated partnerships			37,997
Distribution of funds from liquidation of consolidated affiliated partnerships	15,660
Non-cash distribution of funds from liquidation of consolidated affiliated partnerships	1,421
Net earnings after tax of consolidated affiliated partnerships	1,544			2,606
Net earnings after tax of consolidated affiliated partnerships attributable to noncontrolling interest				1,246
Restricted cash included in investments held by consolidated affiliated partnerships			902		0
Redeemable noncontrolling interest			53,651
General partner incentive fee earned		36
Elimination of incentive fee earned for consolidation						2,689
Incentive fee on a consolidated basis			$ (36)	$ (2,510)

XML

16. Related Party Transactions (Details Narrative) (USD $) In Thousands, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Notes to Financial Statements
Fair value of related party investments in consolidated affiliated partnerships	$ 2,576	$ 1,997

XML

15. Schedule Of Fair Value Assets And Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Equity Securities
Fair value	$ 245,691	$ 115,321
Other Assets
Non-qualified Deferred Compensation Plan Investments	811	546
Cash equivalents	14,570	88,022
Investments held by consolidated affiliated partnerships	193	193
Total assets at fair value	284,262	222,672
Liabilities
Interest rate swaps	356	439
Level 1
Other Assets
Total assets at fair value	269,499	134,457
Level 2
Other Assets
Cash equivalents	14,570	88,022
Total assets at fair value	14,570	88,022
Liabilities
Interest rate swaps	356	439
Level 3
Other Assets
Investments held by consolidated affiliated partnerships	193	193
Total assets at fair value	193	193
Resturant Retail | Level 1
Equity Securities
Fair value	244,276	89,971
Equity Securities Held by Consolidated Affiliated Partnerships
Fair value Securities Held by Consolidated Affiliated Partnerships	10,435	7,677
Others | Level 1
Equity Securities
Fair value	1,415	25,350
Equity Securities Held by Consolidated Affiliated Partnerships
Fair value Securities Held by Consolidated Affiliated Partnerships	12,562	10,913
Non Qualified Deferred Compensation Plan Investments | Level 1
Other Assets
Non-qualified Deferred Compensation Plan Investments	$ 811	$ 546

XML

3. Reconcilation of shares outstanding (Details)	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Basic earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Diluted earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Dilutive effect of stock awards	3,199	4,819	3,319	8,185
Weighted average common and incremental shares	1,337,538	1,336,253	1,337,199	1,336,851
Number of share-based awards excluded from the calculation of earnings per share as the awards' exercise prices were greater than the average market price of the Company's common stock	705	963	705	963

XML

3. Earnings Per Share (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Reconcilation of shares outstanding

	Twelve Weeks Ended		Forty Weeks Ended
	July 4,	July 6,	July 4,	July 6,
	2012	2011	2012	2011
Basic earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Diluted earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Dilutive effect of stock awards	3,199	4,819	3,319	8,185
Weighted average common and incremental shares	1,337,538	1,336,253	1,337,199	1,336,851
Number of share-based awards excluded from the calculation of earnings per share as the awards’ exercise prices were greater than the average market price of the Company’s common stock	705	963	705	963

XML

17. Schedule of reconciliation of segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Earnings before income taxes	$ 4,986	$ 11,151	$ 27,406	$ 32,697
Net earnings attributable to Biglari Holdings Inc.	4,853	8,676	18,176	23,784
Restaurant Operations | Steak n Shake
Earnings before income taxes	9,018	10,091	35,737	29,122
Net earnings attributable to Biglari Holdings Inc.	6,961	7,571	2,458	20,938
Restaurant Operations | Western
Earnings before income taxes	682	828	1,536	1,705
Net earnings attributable to Biglari Holdings Inc.	437	506	965	1,044
Restaurant Operations | Total Restaurant Operations
Earnings before income taxes	9,700	10,919	37,273	30,827
Net earnings attributable to Biglari Holdings Inc.	7,398	8,077	25,623	21,982
InvestmentManagement | IncentiveFee
Earnings before income taxes			36	2,510
Net earnings attributable to Biglari Holdings Inc.			22	1,535
InvestmentManagement | Management fees
Earnings before income taxes				224
Net earnings attributable to Biglari Holdings Inc.				139
InvestmentManagement | Consolidated affiliated partnerships
Earnings before income taxes	325	2,702	3,899	4,543
Net earnings attributable to Biglari Holdings Inc.	108	1,889	624	1,810
InvestmentManagement | Total Investment Management Operations
Earnings before income taxes	325	2,702	3,935	7,277
Net earnings attributable to Biglari Holdings Inc.	108	1,889	646	3,484
Corporate | Corporate And Other
Earnings before income taxes	(3,454)	(2,802)	(11,766)	(5,248)
Net earnings attributable to Biglari Holdings Inc.	(1,671)	(1,824)	(6,853)	(3,379)
Corporate | Investment And Derivative Gains Losses
Earnings before income taxes	227	934	4,200	4,385
Net earnings attributable to Biglari Holdings Inc.	141	589	2,604	2,763
Corporate | TotalCorporateAndOtherMember
Earnings before income taxes	(3,227)	(1,868)	(7,566)	(863)
Net earnings attributable to Biglari Holdings Inc.	(1,530)	(1,235)	(4,249)	(616)
ReconciliationOfSegmentsMember | ConsolidationEliminationsMember
Earnings before income taxes			(36)	(2,510)
Net earnings attributable to Biglari Holdings Inc.		318		195
ReconciliationOfSegmentsMember | InterestExpenseMember
Earnings before income taxes	(1,812)	(602)	(6,200)	(2,034)
Net earnings attributable to Biglari Holdings Inc.	$ (1,123)	$ (373)	$ (3,844)	$ (1,261)

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8. Schedule Of Property, Plant And Equipment (Details) (USD $)	Jul. 04, 2012	Sep. 28, 2011
Notes to Financial Statements
Land	$ 160,286,000	$ 161,339,000
Buildings	149,779,000	149,444,000
Land and leasehold improvements	155,361,000	153,731,000
Equipment	203,963,000	202,933,000
Construction in progress	2,591,000	1,850,000
Property and equipment, gross	671,980,000	669,297,000
Less accumulated depreciation and amortization	(313,928,000)	(297,561,000)
Property and equipment, net	$ 358,052,000	$ 371,736,000

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5. Schedule of gains/losses on affiliated partnerships(Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Schedule of investments of Consolidated Affiliated Partnerships
Net unrealized gains/losses	$ 401	$ 482	$ 2,782	$ 861
Net realized gains/losses from sale	$ 100	$ 749	$ 1,685	$ 3,316

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15. Reconciliation of assets using Level 3 inputs (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011
Notes to Financial Statements
Beginning of period balance	$ 193	$ 323
Sale of Assets		(124)
Loss included in earnings		(10)
End of period balance	$ 193	$ 189

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2. New Accounting Standards

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

2. New Accounting Standards

Note 2. New Accounting Standards

In July 2012, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2012−02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The revised standard is intended to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. It allows companies to perform a “qualitative” assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. We do not expect the provisions of ASU 2012-02 to have a material effect on our financial position or results of operations.

In December 2011, the FASB ASU 2011−12, Comprehensive Income. The amendments in ASU 2011-12 superseded certain pending paragraphs in ASU 2011−05, Presentation of Comprehensive Income to effectively defer only those changes in ASU 2011−05 that related to the presentation of reclassification adjustments out of accumulated other comprehensive income. The requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements will become effective in the first quarter of fiscal 2013. The adoption of ASU 2011−12 will not impact the measurement of net earnings or other comprehensive income.

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9. Schedule Of Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Gross carrying amount	$ 7,600	$ 7,600
Accumulated amortization	(2,927)	(2,394)
Net definite-lived intangible assets	4,673	5,206
Intangible assets with indefinite lives	1,744	1,744
Total intangible assets	6,417	6,950
Right to Operate
Gross carrying amount	1,480	1,480
Accumulated amortization	(1,208)	(1,117)
Net definite-lived intangible assets	272	363
Franchise Agreement
Gross carrying amount	5,310	5,310
Accumulated amortization	(1,195)	(797)
Net definite-lived intangible assets	4,115	4,513
Other
Gross carrying amount	810	810
Accumulated amortization	(524)	(480)
Net definite-lived intangible assets	286	330
Intangible assets with indefinite lives
Intangible assets with indefinite lives	$ 1,744	$ 1,744

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8. Property and Equipment (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Schedule Of Property, Plant And Equipment

	July 4, 2012			September 28, 2011
Land	$	160,286		$	161,339
Buildings		149,779			149,444
Land and leasehold improvements		155,361			153,731
Equipment		203,963			202,933
Construction in progress		2,591			1,850
		671,980			669,297
Less accumulated depreciation and amortization		(313,928	)		(297,561	)
Property and equipment, net	$	358,052		$	371,736

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6. Assets Held for Sale (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Schedule of assets held for sale

	July 4, 2012		September 28, 2011
Land and buildings	$	5,274	$	6,262
Improvements		469		608
Total assets held for sale	$	5,743	$	6,870

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9. Goodwill and Other Intangibles (Details Narrative) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Notes to Financial Statements
Amortization expense	$ 169	$ 186	$ 533	$ 567
Future amortization expense for each of the next five years	$ 625		$ 625
Estimated weighted average useful life of definite-lived intangible assets	eight to twelve years		eight to twelve years

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9. Goodwill and Other Intangibles (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Schedule Of Definite and Indefinite Lived Intangible Assets

	July 4, 2012							September 28, 2011
		Gross carrying amount		Accumulated amortization			Total		Gross carrying amount		Accumulated amortization			Total
Right to operate	$	1,480	$	(1,208	)	$	272	$	1,480	$	(1,117	)	$	363
Franchise agreement		5,310		(1,195	)		4,115		5,310		(797	)		4,513
Other		810		(524	)		286		810		(480	)		330
Total		7,600		(2,927	)		4,673		7,600		(2,394	)		5,206
Intangible assets with indefinite lives		1,744		—			1,744		1,744		—			1,744
Total intangible assets	$	9,344	$	(2,927	)	$	6,417	$	9,344	$	(2,394	)	$	6,950

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15. Fair Value of Financial Assets and Liabilities (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Schedule Of Fair Value Assets And Liabilities

	July 4, 2012								September 28, 2011
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	—	$	14,570	$	—	$	14,570	$	—	$	88,022	$	—	$	88,022
Equity securities:
Restaurant/Retail		244,276		—		—		244,276		89,971		—		—		89,971
Other		1,415		—		—		1,415		25,350		—		—		25,350
Equity securities held by consolidated affiliated partnerships:
Restaurant/Retail		10,435		—		—		10,435		7,677		—		—		7,677
Other		12,562		—		—		12,562		10,913		—		—		10,913
Non-qualified deferred compensation plan investments		811		—		—		811		546		—		—		546
Investment held by consolidated affiliated partnership		—		—		193		193		—		—		193		193
Total assets at fair value	$	269,499	$	14,570	$	193	$	284,262	$	134,457	$	88,022	$	193	$	222,672
Liabilities
Interest rate swaps	$	—	$	356	$	—	$	356	$	—	$	439	$	—	$	439

Reconciliation of assets measured using Level 3 inputs

	Forty Weeks Ended
		July 4,		July 6,
		2012		2011
Beginning of period balance	$	193	$	323
Sale of assets		—		(124	)
Loss included in earnings		—		(10	)
End of period balance	$	193	$	189

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1. General

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

1. General

Note 1. General

The accompanying unaudited consolidated financial statements of Biglari Holdings Inc. (“we”, “us”, “our”, “Biglari Holdings”, or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal recurring adjustments. The results for the interim periods shown are not necessarily indicative of results for the entire fiscal years. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 28, 2011 and Quarterly Reports on Form 10-Q for the fiscal periods ended December 21, 2011 and April 11, 2012.

Biglari Holdings Inc. is a diversified holding company engaged in a number of diverse business activities.  The Company is led by Sardar Biglari, Chairman and Chief Executive Officer of Biglari Holdings and its major operating subsidiaries. Our long-term objective is to maximize per-share intrinsic value of the Company. Our strategy is to reinvest cash generated from our operating subsidiaries into any investments with the objective of achieving high risk-adjusted returns.  All major operating, investment, and capital allocation decisions are made for the Company and its subsidiaries by Sardar Biglari, Chairman and Chief Executive Officer. 

Basis of Presentation and Consolidation

As of July 4, 2012, the consolidated financial statements include the accounts of (i) the Company, (ii) its wholly-owned subsidiaries Steak n Shake Operations, Inc. (“Steak n Shake”), Western Sizzlin Corporation (“Western”), and Biglari Capital Corp. (“Biglari Capital”), and (iii) investment related subsidiaries and limited partnerships (the “consolidated affiliated partnerships”). As a result of our acquisitions of Western and Biglari Capital during fiscal year 2010, we acquired financial interests in The Lion Fund, L.P. (the “Lion Fund”), Western Acquisitions, L.P., Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P., investment limited partnerships (collectively referred to as consolidated affiliated partnerships), for which we have a substantive controlling interest. During the first quarter of fiscal year 2011, Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P. were liquidated and the funds distributed to the partners. During the third quarter of fiscal year 2011, Western Mustang Holdings, L.L.C. sold its interests in Mustang Capital Management, L.L.C. and Mustang Capital Advisors, L.P.

We consolidate entities in which we have a wholly-owned or controlling interest in the general partner. The consolidated affiliated partnerships’ assets and liabilities are consolidated on our balance sheet even though outside limited partners have majority ownership in all of the investment partnerships. We do not guarantee any of the liabilities of our subsidiaries that are serving as general partners to these consolidated affiliated partnerships. All intercompany accounts and transactions have been eliminated in consolidation.

Western’s and Biglari Capital’s June 30 quarter end for financial reporting purposes differs from the end of the Company’s fiscal quarter of July 4, 2012. There were no significant transactions in the intervening period.

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17. Business Segment Reporting (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Schedule Of Net Revenue by Segment

	Net Revenue
	Twelve Weeks				Forty Weeks
		2012		2011		2012		2011
Operating Business:
Restaurant Operations:
Steak n Shake	$	170,925	$	165,228	$	549,338	$	524,266
Western		4,261		4,336		11,789		11,825
Total Restaurant Operations		175,186		169,564		561,127		536,091
Investment Management:
Management fees		—		—		—		224
Consolidated affiliated partnerships		587		1,297		4,720		4,545
Total Investment Management Operations		587		1,297		4,720		4,769
	$	175,773	$	170,861	$	565,847	$	540,860

Schedule of reconciliation of segments to consolidated

	Earnings before income taxes and noncontrolling interest															Net earnings attributable to Biglari Holdings Inc.
	Twelve Weeks						Forty Weeks						Twelve Weeks						Forty Weeks
		2012			2011			2012			2011			2012			2011				2012			2011
Operating Business:
Restaurant Operations:
Steak n Shake	$	9,018		$	10,091		$	35,737		$	29,122		$	6,961		$	7,571			$	24,658		$	20,938
Western		682			828			1,536			1,705			437			506				965			1,044
Total Restaurant Operations		9,700			10,919			37,273			30,827			7,398			8,077				25,623			21,982
Investment Management:
Biglari Capital Corp. (incentive fee)		—			—			36			2,510			—			—				22			1,535
Management fees		—			—			—			224			—			—				—			139
Consolidated affiliated partnerships		325			2,702			3,899			4,543			108			1,889				624			1,810
Total Investment Management Operations		325			2,702			3,935			7,277			108			1,889				646			3,484
Corporate and Other:
Corporate and other		(3,454	)		(2,802	)		(11,766	)		(5,248	)		(1,671	)		(1,824	)			(6,853	)		(3,379	)
Investment and derivative gains/losses		227			934			4,200			4,385			141			589				2,604			2,763
Total Corporate and Other		(3,227	)		(1,868	)		(7,566	)		(863	)		(1,530	)		(1,235	)			(4,249	)		(616	)
Reconciliation of segments to consolidated amount:
Eliminations		—			—			(36	)		(2,510	)		—			318				—			195
Interest expense, excluding interest allocated to operating businesses		(1,812	)		(602	)		(6,200	)		(2,034	)		(1,123	)		(373	)			(3,844	)		(1,261	)
	$	4,986		$	11,151		$	27,406		$	32,697		$	4,853		$	8,676			$	18,176		$	23,784

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6. Schedule of assets held for sale (Details) (USD $) In Thousands, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Notes to Financial Statements
Land and buildings	$ 5,274	$ 6,262
Improvements	469	608
Total assets held for sale	$ 5,743	$ 6,870

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Current assets:
Cash and cash equivalents	$ 46,471	$ 98,987
Investments	245,691	115,321
Receivables, net of allowance of $742 and $559, respectively	7,489	4,133
Inventories	6,017	5,886
Deferred income taxes	0	6,150
Assets held for sale	5,743	6,870
Other current assets	6,111	3,237
Total current assets	317,522	240,584
Property and equipment, net	358,052	371,736
Goodwill	27,529	27,529
Other intangible assets, net	6,417	6,950
Other assets	9,173	7,278
Investments held by consolidated affiliated partnerships	24,092	18,783
Total assets	742,785	672,860
Current liabilities:
Accounts payable	36,540	29,236
Due to broker	259	7,272
Accrued expenses	52,430	46,948
Revolving credit	15,000	15,000
Deferred income taxes	12,956	0
Current portion of obligations under leases	5,657	5,272
Current portion of long-term debt	11,137	11,141
Total current liabilities	133,979	114,869
Deferred income taxes	9,709	6,664
Obligations under leases	111,325	116,066
Long-term debt	93,042	101,417
Other long-term liabilities	8,893	8,914
Total liabilities	356,948	347,930
Commitments and contingencies
Redeemable noncontrolling interests of consolidated affiliated partnerships	53,651	45,252
Shareholders' equity
Common stock - $0.50 stated value, 2,500,000 shares authorized - 1,511,174 shares issued, 1,227,558 and 1,227,276 shares outstanding (net of treasury stock), respectively	756	756
Additional paid-in capital	140,761	144,569
Retained earnings	248,566	230,390
Accumulated other comprehensive income (loss)	32,649	(5,468)
Treasury stock - at cost: 283,616 and 283,898 shares (includes 205,743 shares held by consolidated affiliated partnerships) at April 11, 2012 and September 28, 2011, respectively	(90,546)	(90,569)
Biglari Holdings Inc. shareholders' equity	332,186	279,678
Total liabilities and shareholders' equity	$ 742,785	$ 672,860

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13. Income Taxes (Details Narrative) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Sep. 28, 2011
Notes to Financial Statements
Effective tax rate	$ 25.10%	$ 27.10%
Unrecognized tax benefits	$ 865		$ 1,750

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Consolidated Statements of Changes in Shareholders Equity (Unaudited) (USD $) In Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Total
Beginning Balance at Sep. 29, 2010	$ 756	$ 143,521	$ 195,825	$ (1,152)	$ (89,955)	$ 248,995
Net earnings attributable to Biglari Holdings Inc.			23,784			23,784
Reclassification of investment appreciation in net earnings, net of tax				1,235		1,235
Net change in unrealized gains and losses on investments, net of tax				5,226		5,226
Total comprehensive income						30,245
Exercise of stock options and other stock compensation transactions		851			(614)	237
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value		(4,271)				(4,271)
Ending Balance at Jul. 06, 2011	756	140,101	219,609	5,309	(90,569)	275,206
Beginning Balance at Sep. 28, 2011	756	144,569	230,390	(5,468)	(90,569)	279,678
Net earnings attributable to Biglari Holdings Inc.			18,176			18,176
Reclassification of investment appreciation in net earnings, net of tax				(902)		(902)
Net change in unrealized gains and losses on investments, net of tax				39,019		39,019
Total comprehensive income						56,293
Exercise of stock options and other stock compensation transactions		860			23	883
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value		(4,668)				(4,668)
Ending Balance at Jul. 04, 2012	$ 756	$ 140,761	$ 248,566	$ 32,649	$ (90,546)	$ 332,186

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4. Schedule of investment gains/losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Notes to Financial Statements
Gross realized gains on sales	$ 227	$ 1,444	$ 4,584	$ 4,694
Gross realized losses on sales		$ (11)	$ (384)	$ (17)

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15. Fair Value of Financial Assets and Liabilities

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

15. Fair Value of Financial Assets and Liabilities

Note 15. Fair Value of Financial Assets and Liabilities

The fair value framework as established in ASC paragraph 820-10-50-2 requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair values, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

• Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

• Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

• Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

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. Money market funds that are carried at fair value, based on quoted market prices, are classified within Level 1 of the fair value hierarchy. All other cash equivalents carried at fair value based on observable inputs for which a quoted market price is not available are classified within Level 2 of the fair value hierarchy. Consolidated affiliated partnerships did not hold cash equivalents on July 4, 2012 and September 28, 2011.

Equity securities: The Company’s investments in equity securities are carried at fair value, based on quoted market prices, and are classified within Level 1 of the fair value hierarchy. 

Non-qualified deferred compensation plan investments: The assets of the Company’s Non-Qualified Savings Plan are set up in a rabbi trust. They represent mutual funds that are carried at fair value, based on quoted market prices, and are classified within Level 1 of the fair value hierarchy.

Investment held by consolidated affiliated partnership: Investments of $193 as of July 4, 2012 and September 28, 2011 have been classified within Level 3 of the fair value hierarchy and represent a private security.

Investment derivatives and interest rate swaps: Investment derivatives and interest rate swaps are marked to market each reporting period with fair value based on readily available market quotes, and are classified within Level 2 of the fair value hierarchy. Interest rate swaps on July 4, 2012 and September 28, 2011 represent the mark to market adjustment for Steak n Shake’s interest rate swap.

The fair values of financial assets and liabilities were as follows:

	July 4, 2012										September 28, 2011
		Level 1		Level 2		Level 3		Total		Level 1			Level 2		Level 3		Total
Assets
Cash equivalents	$	—	$	14,570	$	—	$	14,570	$	—		$	88,022	$	—	$	88,022
Equity securities:
Restaurant/Retail		244,276		—		—		244,276		89,971			—		—		89,971
Other		1,415		—		—		1,415		25,350			—		—		25,350
Equity securities held by consolidated affiliated partnerships:
Restaurant/Retail		10,435		—		—		10,435		7,677			—		—		7,677
Other		12,562		—		—		12,562		10,913			—		—		10,913
Non-qualified deferred compensation plan investments		811		—		—		811		546			—		—		546
Investment held by consolidated affiliated partnership		—		—		193		193		—			—		193		193
Total assets at fair value	$	269,499	$	14,570	$	193	$	284,262	$	134,457		$	88,022	$	193	$	222,672
Liabilities
Interest rate swaps	$	—	$	356	$	—	$	356	$	—		$	439	$	—	$	439

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

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs is as follows:

	Forty Weeks Ended
		July 4,		July 6,
		2012		2011
Beginning of period balance	$	193	$	323
Sale of assets		—		(124	)
Loss included in earnings		—		(10	)
End of period balance	$	193	$	189

For the year-to-date period in fiscal year 2012, we had no significant fair value adjustments applicable to items that are subject to non-recurring fair value measurement after the initial measurement date.

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5. Schedule of affiliated partnerships securities. (Details) (USD $) In Thousands, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Equity securities:
Cost	$ 20,596	$ 19,122
Fair value	$ 23,190	$ 18,783

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17. Business Segment Reporting

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Business Segment Reporting

Note 17. Business Segment Reporting

Net revenue, earnings before income taxes and noncontrolling interest, and net earnings attributable to Biglari Holdings Inc. for the twelve and forty weeks ended July 4, 2012 and July 6, 2011 were as follows:

	Net Revenue
	Twelve Weeks				Forty Weeks
		2012		2011		2012		2011
Operating Business:
Restaurant Operations:
Steak n Shake	$	170,925	$	165,228	$	549,338	$	524,266
Western		4,261		4,336		11,789		11,825
Total Restaurant Operations		175,186		169,564		561,127		536,091
Investment Management:
Management fees		—		—		—		224
Consolidated affiliated partnerships		587		1,297		4,720		4,545
Total Investment Management Operations		587		1,297		4,720		4,769
	$	175,773	$	170,861	$	565,847	$	540,860

	Earnings before income taxes and noncontrolling interest												Net earnings attributable to Biglari Holdings Inc.
	Twelve Weeks						Forty Weeks						Twelve Weeks						Forty Weeks
		2012			2011			2012			2011			2012			2011				2012			2011
Operating Business:
Restaurant Operations:
Steak n Shake	$	9,018		$	10,091		$	35,737		$	29,122		$	6,961		$	7,571			$	24,658		$	20,938
Western		682			828			1,536			1,705			437			506				965			1,044
Total Restaurant Operations		9,700			10,919			37,273			30,827			7,398			8,077				25,623			21,982
Investment Management:
Biglari Capital Corp. (incentive fee)		—			—			36			2,510			—			—				22			1,535
Management fees		—			—			—			224			—			—				—			139
Consolidated affiliated partnerships		325			2,702			3,899			4,543			108			1,889				624			1,810
Total Investment Management Operations		325			2,702			3,935			7,277			108			1,889				646			3,484
Corporate and Other:
Corporate and other		(3,454	)		(2,802	)		(11,766	)		(5,248	)		(1,671	)		(1,824	)			(6,853	)		(3,379	)
Investment and derivative gains/losses		227			934			4,200			4,385			141			589				2,604			2,763
Total Corporate and Other		(3,227	)		(1,868	)		(7,566	)		(863	)		(1,530	)		(1,235	)			(4,249	)		(616	)
Reconciliation of segments to consolidated amount:
Eliminations		—			—			(36	)		(2,510	)		—			318				—			195
Interest expense, excluding interest allocated to operating businesses		(1,812	)		(602	)		(6,200	)		(2,034	)		(1,123	)		(373	)			(3,844	)		(1,261	)
	$	4,986		$	11,151		$	27,406		$	32,697		$	4,853		$	8,676			$	18,176		$	23,784

The earnings presentation was adjusted from the prior year to show interest expense, excluding interest allocated to operating businesses, as a reconciliation of segments to consolidated amounts in order to more accurately reflect the earnings before and after tax of the restaurant operations.

Biglari Capital, the general partner of the Lion Fund, earned a $36 incentive reallocation fee at December 31, 2011. At December 31, 2010, Biglari Capital earned a $5,199 incentive reallocation fee; however, $2,689 was eliminated, for that amount represents the Company’s fee as a limited partner, which was uncharged because the Company owns the general partner. The remaining $2,510 is an incentive fee that was charged and reallocated from outside limited partners of the Lion Fund. The incentive fee is assessed only once a year, on December 31, and no predictability of such earnings exists because the Lion Fund annual performance is unpredictable.

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Changes in Shareholders Equity (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011
Changes In Shareholders Equity Parenthetical
Reclassification of investment appreciation in net earnings, tax	$ (553)	$ 789
Net change in unrealized gains and losses on investments, tax	$ 23,915	$ 3,342

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Assets
Receivables, allowance for doubtful accounts	$ 928	$ 559
Shareholders' equity
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	2,500,000	2,500,000
Common stock, shares issued	1,511,174	1,511,174
Common stock, shares outstanding	1,227,809	1,227,276
Treasury stock - at cost, shares	283,365	283,898
Partnership Member
Treasury stock - at cost, shares held by consolidated affiliated partnerships	205,743	205,743

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10. Other Assets

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

10. Other Assets

Note 10. Other Assets

Other assets primarily include capitalized software, non-qualified plan investments, non-current portion of capitalized loan acquisition costs, and a note receivable.

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Document and Entity Information	9 Months Ended
	Jul. 04, 2012	Aug. 08, 2012
Document And Entity Information
Entity Registrant Name	BIGLARI HOLDINGS INC.
Entity Central Index Key	0000093859
Document Type	10-Q
Document Period End Date	Jul. 04, 2012
Amendment Flag	false
Current Fiscal Year End Date	--09-26
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		1,433,552
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

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11. Borrowings

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

11. Borrowings

Note 11. Borrowings

There were no material changes in our borrowings from September 28, 2011.

Steak n Shake’s Credit Facility includes customary affirmative and negative covenants and events of default, as well as financial covenants relating to a maximum total leverage ratio and a minimum consolidated fixed charge coverage ratio.

Steak n Shake was in compliance with all covenants under the Credit Facility as of July 4, 2012.

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Consolidated Statements of Earnings (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Restaurant Operations:
Net sales	$ 172,128	$ 166,893	$ 552,002	$ 527,848
Franchise fees	2,475	2,065	7,222	6,415
Other revenue	583	606	1,903	1,828
Total	175,186	169,564	561,127	536,091
Investment Management Operations:
Management fee income	0	0	0	224
Consolidated Affiliated Partnerships:
Investment gains/losses	501	1,231	4,467	4,177
Other income/loss	86	66	253	368
Total	587	1,297	4,720	4,769
Total net revenues	175,773	170,861	565,847	540,860
Costs and expenses
Cost of sales	49,812	48,144	158,508	146,967
Restaurant operating costs	81,326	78,317	258,096	253,646
General and administrative	15,006	12,082	48,118	37,691
Depreciation and amortization	6,031	6,563	20,430	21,855
Marketing	11,666	10,031	31,943	29,762
Rent	4,044	3,980	13,536	13,000
Pre-opening costs	7	0	430	76
Asset impairments and provision for restaurant closings	26	2	346	15
Loss on disposal of assets	115	232	484	489
Other operating income	(149)	(1,659)	(793)	(894)
Total costs and expenses, net	167,884	157,692	531,098	502,607
Other income (expenses)
Interest, dividend and other investment income	1,003	86	2,405	239
Interest on obligations under leases	(2,321)	(2,436)	(7,748)	(8,146)
Interest expense	(1,812)	(602)	(6,200)	(2,034)
Realized investment gains/losses	227	1,433	4,200	4,677
Derivative and short sale gains/losses	0	(499)	0	(292)
Total other income (expense)	(2,903)	(2,018)	(7,343)	(5,556)
Earnings before income taxes	4,986	11,151	27,406	32,697
Income taxes	(17)	1,836	6,879	8,864
Consolidated net earnings	5,003	9,315	20,527	23,833
Earnings attributable to redeemable noncontrolling interests:
Income allocation	(150)	(639)	(2,387)	(2,559)
Incentive fee	0	0	36	2,510
Total earnings/loss attributable to redeemable noncontrolling interests	(150)	(639)	(2,351)	(49)
Net earnings attributable to Biglari Holdings Inc.	$ 4,853	$ 8,676	$ 18,176	$ 23,784
Earnings per share attributable to Biglari Holdings Inc.
Basic earnings per common and common equivalent share	$ 3.64	$ 6.52	$ 13.63	$ 17.90
Diluted earnings per common and common equivalent share	$ 3.63	$ 6.49	$ 13.59	$ 17.79
Weighted average shares and equivalents
Basic	1,334,339	1,331,434	1,333,880	1,328,666
Diluted	1,337,538	1,336,253	1,337,199	1,336,851

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5. Consolidated Affiliated Partnerships

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

5. Consolidated Affiliated Partnerships

Note 5. Consolidated Affiliated Partnerships

Collectively, The Lion Fund L.P., Western Acquisitions, L.P., Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P. are referred to as consolidated affiliated partnerships of the Company. Investments held directly by the consolidated affiliated partnerships usually consist of domestic equity securities. Certain of the consolidated affiliated partnerships hold the Company’s common stock as investments. Within our consolidated financial statements, we classify this common stock as treasury stock despite the shares being legally outstanding. As of July 4, 2012 and September 28, 2011, the consolidated affiliated partnerships held 205,743 shares of the Company’s common stock ($69,221 at cost).  

Consolidated net earnings of the Company include 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 hold in the Company’s equity securities, which has been eliminated in consolidation. 

In fiscal year 2010, Biglari Holdings invested a total of $35,697 in the Lion Fund, both in the form of the acquisition of the general partner and as a direct limited partner investment. The fair value of these investments in the Lion Fund totaled $49,650 as of the end of the fiscal 2012 third quarter. No amounts were invested in the year-to-date period in fiscal year 2012 or in fiscal year 2011. These investments in the Lion Fund do not appear explicitly in the our consolidated balance sheet because of the requirement to consolidate fully the Lion Fund (inclusive of third party interests) in our financial statements. Further, the Lion Fund’s portfolio holds significant interests in Biglari Holdings’ common stock, which as described above is classified on our consolidated balance sheet as a reduction to shareholders’ equity. Biglari Holdings’ pro-rata ownership of its Company common stock through the Lion Fund was 98,339 shares of stock (with a fair value of $37,997) based on Biglari Holdings’ ownership interest in the Lion Fund as of the end of the fiscal 2012 third quarter.

During the first quarter of fiscal year 2011, Mustang Capital Partners I, L.P. and Mustang Capital Partners II, L.P. were liquidated and the funds distributed to the partners. The distribution of $15,660, including $1,421 of noncash distributions, is noted in the distributions to noncontrolling interests line in the reconciliation below.

During the third quarter of fiscal year 2011, Western Mustang Holdings, L.L.C. sold its interests in Mustang Capital Management, L.L.C. and Mustang Capital Advisors, L.P. As a result of the sale, the Company does not have involvement in the operations of Mustang Capital Management, L.L.C. and Mustang Capital Advisors, L.P. Although these entities meet the definition of “discontinued operations,” as defined in FASB ASC paragraph 205-20-45-1, Reporting Discontinued Operations (“ASC paragraph 205-20-45-1”), we have not separated the results of operations because the amounts are immaterial to our consolidated financial numbers. Net earnings after tax related to the entities were approximately $1,544 and $2,606 for the twelve and forty weeks ended July 6, 2011, including $0 and $1,246, respectively, that were attributable to noncontrolling interests.

The following table summarizes the cost and fair value of the investments held by the consolidated affiliated partnerships, other than holdings of the Company’s equity securities:

	July 4, 2012		September 28, 2011
Equity securities:
Cost	$	20,596	$	19,122
Fair value	$	23,190	$	18,783

Investments held by consolidated affiliated partnerships on the consolidated balance sheet include $902 and $0 of cash that is only available for use by the consolidated affiliated partnerships on July 4, 2012 and September 28, 2011, respectively.

Realized investment gains/losses arise when investments are sold (as determined on a specific identification basis). The net realized gains/losses from investments held by consolidated affiliated partnerships, other than holdings of the Company’s equity securities, were as follows:

	Twelve Weeks Ended				Forty Weeks Ended
		July 4, 2012		July 6, 2011		July 4, 2012		July 6, 2011
Net unrealized gains	$	401	$	482	$	2,782	$	861
Net realized gains from sale	$	100	$	749	$	1,685	$	3,316

The limited partners of each of the investment funds have the ability to redeem their capital upon certain occurrences; therefore, the ownership of the investment funds held by the limited partners is presented as redeemable noncontrolling interests of consolidated affiliated partnerships and measured at the greater of carrying value or fair value on the consolidated balance sheet. The maximum redemption amount of the redeemable noncontrolling interests as of July 4, 2012 was $53,651.

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

	Forty Weeks Ended
		July 4, 2012			July 6, 2011
Carrying value at beginning of period	$	45,252		$	62,245
Contributions from noncontrolling interests		1,534			1,018
Distributions to noncontrolling interests		(154	)		(17,274	)
Incentive fee		(36	)		(2,510	)
Income allocation		2,387			2,559
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value		4,668			4,271
Carrying value at end of period	$	53,651		$	50,309

The Company, through its ownership of Biglari Capital and Western Investments Inc., is entitled to an incentive fee to the extent investment performance of the consolidated affiliated partnerships exceeds specified hurdle rates. Any such fee is included in net earnings attributable to the Company in the period in which the fee is earned.

Biglari Capital, the general partner of the Lion Fund, earned a $36 incentive reallocation fee at December 31, 2011. At December 31, 2010, Biglari Capital earned a $5,199 incentive reallocation fee; however, $2,689 was eliminated, for that amount represents the Company’s fee as a limited partner, uncharged because the Company owns the general partner. The remaining $2,510 is an incentive fee that was charged and reallocated from outside limited partners of the Lion Fund. The incentive fee is assessed only once a year, on December 31, and no predictability of such earnings exists because the Lion Fund’s annual performance is unpredictable.

Net earnings attributable to the Company only includes the Company’s share of earnings and losses related to its investments in the consolidated affiliated partnerships; all other earnings or losses from the consolidated affiliated partnerships are allocated to the redeemable noncontrolling interests.

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4. Investments

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

4. Investments

Note 4. Investments

Investments consisted of the following:

	July 4, 2012			September 28, 2011
Cost	$	193,032		$	124,140
Gross unrealized gains		53,285			1,956
Gross unrealized losses		(626	)		(10,775	)
Fair value	$	245,691		$	115,321

On July 4, 2012, most of the Company’s investments (along with gross unrealized gains) were concentrated in one security. Unrealized losses on marketable equity securities on July 4, 2012 have been in an unrealized loss for less than 12 months. A majority of the gross unrealized losses on September 28, 2011 related only to one investment. We consider several factors in determining other-than-temporary impairment losses, including the current and long-term business prospects of the issuers, the length of time and relative magnitude of the price decline, and our ability and intent to hold the investment until the price recovers.

Investment gains/losses are recognized when investments are sold (as determined on a specific identification basis) or as otherwise required by U.S. 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 within shareholders’ equity on the consolidated balance sheet.

Realized investment gains/losses were as follows:

	Twelve Weeks Ended		Forty Weeks Ended
	July 4,	July 6,	July 4,	July 6,
	2012	2011	2012	2011
Gross realized gains on sales	227	1444	4584	4694
Gross realized losses on sales	—	(11)	-384	(17)

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16. Related Party Transactions

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

16. Related Party Transactions

Note 16. Related Party Transactions

Mr. Biglari, along with his affiliates, and certain directors of the Company make investments in the Lion Fund (other than the amounts invested by the Company), which are not subject to special profits, interest allocations, or incentive allocations. However, Mr. Biglari does not pay an incentive allocation fee as a limited partner in the Lion Fund. As of July 4, 2012 and September 28, 2011, the total fair value of these investments was approximately $2,576 and $1,997, respectively.

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12. Other Long-term Liabilities

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

12. Other Long-term Liabilities

Note 12. Other Long-term Liabilities

Other long-term liabilities include deferred rent expense, non-qualified plan obligations, deferred gain on sale-leaseback transactions, uncertain tax positions, and deferred compensation.

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8. Property and Equipment

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

8. Property and Equipment

Note 8. Property and Equipment

Property and equipment is composed of the following:

	July 4, 2012			September 28, 2011
Land	$	160,286		$	161,339
Buildings		149,779			149,444
Land and leasehold improvements		155,361			153,731
Equipment		203,963			202,933
Construction in progress		2,591			1,850
		671,980			669,297
Less accumulated depreciation and amortization		(313,928	)		(297,561	)
Property and equipment, net	$	358,052		$	371,736

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6. Assets Held for Sale

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

6. Assets Held for Sale

Note 6. Assets Held for Sale

Assets held for sale are composed of the following:

	July 4, 2012		September 28, 2011
Land and buildings	$	5,274	$	6,262
Improvements		469		608
Total assets held for sale	$	5,743	$	6,870

The July 4, 2012 balance included the following assets: one office building, four restaurants, and seven parcels of land. The Company expects to sell these properties within one year of their classification as assets held for sale. For any of these properties that are unsold within one year, we expect to reclassify them as other long-term assets.

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7. Other Current Assets

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

7. Other Current Assets

Note 7. Other Current Assets

Other current assets primarily include prepaid rent, prepaid contractual obligations and current portion of capitalized loan acquisition costs.

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9. Goodwill and Other Intangibles

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

9. Goodwill and Other Intangibles

Note 9. 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. There was no change to the carrying value of goodwill from September 28, 2011.

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 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.

During the quarter ended September 28, 2011, we performed our annual assessment of the recoverability of our goodwill related to four reporting units related to our Steak n Shake operations. During the second quarter of fiscal year 2012, we performed our annual assessment of our recoverability of goodwill related to two reporting units related to our Western operations. The valuation methodology and underlying financial information included in our determination of fair value require significant judgments to be made by management. 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.

Other Intangibles

Other intangibles are composed of the following:

	July 4, 2012							September 28, 2011
		Gross carrying amount		Accumulated amortization			Total		Gross carrying amount		Accumulated amortization			Total
Right to operate	$	1,480	$	(1,208	)	$	272	$	1,480	$	(1,117	)	$	363
Franchise agreement		5,310		(1,195	)		4,115		5,310		(797	)		4,513
Other		810		(524	)		286		810		(480	)		330
Total		7,600		(2,927	)		4,673		7,600		(2,394	)		5,206
Intangible assets with indefinite lives		1,744		—			1,744		1,744		—			1,744
Total intangible assets	$	9,344	$	(2,927	)	$	6,417	$	9,344	$	(2,394	)	$	6,950

Intangible assets subject to amortization consist of franchise agreements acquired in connection with the acquisition of Western, a right to operate and favorable leases acquired in connection with prior acquisitions and are being amortized over their estimated weighted average useful lives ranging from eight to twelve years.

Amortization expense for the twelve weeks ended July 4, 2012 and July 6, 2011 was $169 and $186, respectively. Amortization expense for the forty weeks ended July 4, 2012 and July 6, 2011 was $533 and $567, respectively. Total annual amortization expense for each of the next five years will approximate $625.

Intangible assets with indefinite lives consist of a trade name acquired in connection with the acquisition of Western and reacquired franchise rights acquired in connection with previous acquisitions.

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4. Schedule of fair value of investments (Details) (USD $) In Thousands, unless otherwise specified	Jul. 04, 2012	Sep. 28, 2011
Notes to Financial Statements
Cost	$ 190,231	$ 124,140
Gross unrealized gains	53,285	1,956
Gross unrealized losses	(626)	(10,775)
Fair value	$ 245,691	$ 115,321

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14. Commitments and Contingencies

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

14. Commitments and Contingencies

Note 14. Commitments and Contingencies

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 the consolidated financial statements is not likely to have a material effect on our results of operations, financial position or cash flows.

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4. Investments (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Schedule of fair value of investments

	July 4, 2012			September 28, 2011
Cost	$	193,032		$	124,140
Gross unrealized gains		53,285			1,956
Gross unrealized losses		(626	)		(10,775	)
Fair value	$	245,691		$	115,321

Schedule of investment gains/losses

	Twelve Weeks Ended		Forty Weeks Ended
	July 4,	July 6,	July 4,	July 6,
	2012	2011	2012	2011
Gross realized gains on sales	227	1444	4584	4694
Gross realized losses on sales	—	(11)	(384)	(17)

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17. Schedule Of Net Revenue by Segment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Net Revenue	$ 175,773	$ 170,861	$ 565,847	$ 540,860
Steak n Shake
Net Revenue	107,925	165,228	549,338	524,266
Western
Net Revenue	4,261	4,336	11,789	11,825
Total Restaurant Operations
Net Revenue	175,186	169,564	561,127	536,091
Management fees
Net Revenue				224
Consolidated affiliated partnerships
Net Revenue	587	1,297	4,720	4,545
Total Investment Management Operations
Net Revenue	1,933	1,297	4,720	4,769
Total Revenue
Net Revenue	$ 175,773	$ 170,861	$ 565,847	$ 540,860

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6. Schedule of assets held for sale in numbers (Details)	Jul. 04, 2012
Schedule Of Assets Held For Sale In Numbers Details
Number of office buildings included in assets held for sale	1
Number of restaurants included in assets held for sale	4
Number of land parcels included in assets held for sale	7

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Consolidated Statement of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011
Cash flows from operating activities
Net earnings	$ 20,527	$ 23,833
Adjustments to reconcile net earnings to operating cash flows (excluding investment operations of consolidated affiliated partnerships):
Depreciation and amortization	20,430	21,855
Provision for deferred income taxes	(1,373)	1,305
Asset impairments and provision for restaurant closings	346	15
Stock-based compensation and other non-cash expenses	781	741
Loss on disposal of assets	484	489
Gain on sale of subsidiary	0	(1,559)
Realized investment gains/losses	(4,200)	(4,677)
Derivative and short sale gains/losses	0	292
Changes in operating assets and liabilities
Increase in receivables and inventories	(3,540)	(3,669)
(Increase) decrease in other assets	(5,608)	878
Increase in accounts payable and accrued expenses	12,118	6,836
Investment operations of consolidated affiliated partnerships:
Purchases of investments	(14,477)	(47,548)
Sales of investments	14,537	50,092
Realized investment gains, net	(1,685)	(3,316)
Unrealized gains on marketable securities held by consolidated affiliated partnerships	(2,782)	(861)
Changes in due to/from broker and cash and cash equivalents held by consolidated affiliated partnerships	(902)	5,114
Net cash provided by operating activities	34,656	49,820
Cash flows from investing activities
Additions of property and equipment	(6,804)	(10,521)
Proceeds from property and equipment disposals	2,288	2,006
Proceeds from sale of subsidiary, net of cash on hand	0	196
Purchases of investments	(102,800)	(127,553)
Sales of investments	38,108	64,642
Changes in due to/from broker	(7,013)	5,487
Net cash used in by investing activities	(76,221)	(65,743)
Cash flows from financing activities
Proceeds from revolving credit facility	0	179,045
Payments on revolving credit facility	0	(176,045)
Borrowings on long-term debt	0	20,000
Principal payments on long-term debt	(8,379)	(16,333)
Principal payments on direct financing lease obligations	(4,356)	(6,153)
Proceeds from exercise of stock options and employees stock purchase plan	29	543
Excess tax benefits from stock-based awards	383	0
Repurchase of employee shares for tax withholding	(8)	(541)
Financing activities of consolidated affiliated partnerships:
Contributions from noncontrolling interests	1,534	1,018
Distributions to noncontrolling interests	(154)	(15,853)
Net cash used in financing activities	(10,951)	(14,319)
Decrease in cash and cash equivalents	(52,516)	(30,242)
Cash and cash equivalents at beginning of period	98,987	47,563
Cash and cash equivalents at end of period	$ 46,471	$ 17,321

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3. Earnings Per Share

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

3. Earnings Per Share

Note 3. Earnings Per Share

Earnings per share of common stock is based on the weighted average number of shares outstanding during the year. For financial reporting purposes all common shares of the Company held by the consolidated affiliated partnerships are recorded in treasury stock on the consolidated balance sheet. For purposes of computing the weighted average common shares outstanding, the shares of treasury stock attributable to the unrelated limited partners of the consolidated affiliated partnerships — based on their proportional ownership during the period — are considered outstanding shares.

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

	Twelve Weeks Ended		Forty Weeks Ended
	July 4,	July 6,	July 4,	July 6,
	2012	2011	2012	2011
Basic earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Diluted earnings per share:
Weighted average common shares	1,334,339	1,331,434	1,333,880	1,328,666
Dilutive effect of stock awards	3,199	4,819	3,319	8,185
Weighted average common and incremental shares	1,337,538	1,336,253	1,337,199	1,336,851
Number of share-based awards excluded from the calculation of earnings per share as the awards’ exercise prices were greater than the average market price of the Company’s common stock	705	963	705	963

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5. Consolidated Affiliated Partnerships (Tables)

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

Tabular disclosure of available-for-sale securities at cost and fair market value of consolidated affiliated partnerships.

	July 4, 2012		September 28, 2011
Equity securities:
Cost	$	20,596	$	19,122
Fair value	$	23,190	$	18,783

Tabular disclosure of realized and unrealized gains and losses on investments of consolidated affiliated partnerships reported in the statement of income.

	Twelve Weeks Ended				Forty Weeks Ended
		July 4, 2012		July 6, 2011		July 4, 2012		July 6, 2011
Net unrealized gains	$	401	$	482	$	2,782	$	861
Net realized gains from sale	$	100	$	749	$	1,685	$	3,316

Tabular disclosure of redeemable noncontrolling interests of consolidated affiliated partnerships reported in the balance sheet.

	Forty Weeks Ended
		July 4, 2012			July 6, 2011
Carrying value at beginning of period	$	45,252		$	62,245
Contributions from noncontrolling interests		1,534			1,018
Distributions to noncontrolling interests		(154	)		(17,274	)
Incentive fee		(36	)		(2,510	)
Income allocation		2,387			2,559
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value		4,668			4,271
Carrying value at end of period	$	53,651		$	50,309

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5. Schedule of redeemable noncontrolling interests (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jul. 04, 2012	Jul. 06, 2011	Jul. 04, 2012	Jul. 06, 2011
Notes to Financial Statements
Carrying value at beginning of period			$ 45,252	$ 62,645
Contributions from noncontrolling interests			1,534	1,018
Distributions to noncontrolling interests			154	15,853
Incentive fee			(36)	(2,510)
Income / loss allocation	150	639	2,387	2,559
Adjustment to redeemable noncontrolling interest to reflect maximum redemption value			4,668	4,271
Carrying value at end of period	$ 53,651	$ 52,821	$ 53,651	$ 52,821

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13. Income Taxes

9 Months Ended

Jul. 04, 2012

Notes to Financial Statements

13. Income Taxes

Note 13. Income Taxes

In determining the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which the Company operates. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.

Our effective income tax rate for the forty weeks ended July 4, 2012 was 25.1%, compared to the effective income tax rate of 27.1% in the same period in the prior year. The decrease in the tax rate is primarily attributable to dividends received from equity investments, which are taxed at lower rates than is the income derived from wholly owned businesses. Moreover, the reserves related to unrecognized tax benefits were released because of the expiration of statutes of limitations.

As of July 4, 2012 and September 28, 2011, we had approximately $865 and $1,750, respectively, of unrecognized tax benefits, which are included in other long-term liabilities in the consolidated balance sheet.