EX-99.3 5 bh-8kaexx99320221130.htm EX-99.3 Document
Exhibit 99.3
BIGLARI HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
On September 14, 2022, Biglari Holdings Inc. (the “Company”) completed the purchase of 685,505 shares of Series A Preferred Stock (the “Preferred Shares”) of Abraxas Petroleum Corporation (“Abraxas”) for a purchase price of $80 million. The Preferred Shares were purchased pursuant to a Preferred Stock Purchase Agreement between the Company and AG Energy Funding, LLC. On October 26, 2022, the Company converted the Preferred Shares to 90% of the outstanding common stock of Abraxas.

The Company used working capital including its line of credit to fund the purchase of the Preferred Shares. The unaudited pro forma condensed combined statements of earnings for the nine months ended September 30, 2022 and December 31, 2021, gives effect to the acquisition as if it had occurred on January 1, 2021.

The historical consolidated financial statements of the Company and Abraxas have been prepared in accordance with accounting principles generally accepted in the United States of America. The historical consolidated financial information has been adjusted to give effect to pro forma events that are (i) directly attributable to the acquisition, (ii) factually supportable, and (iii) with respect to the statement of earnings, expected to have a continuing impact on the combined results.

The data is solely for the purpose of providing the unaudited pro forma financial information presented below and is not necessarily indicative of the combined results of operations or financial position that would have occurred if the acquisition had occurred on January 1, 2021, nor is it necessarily indicative of future operating results or financial position of the combined companies.

The purchase price allocations are preliminary, subject to further adjustments as additional information becomes available and as additional analyses are performed. The unaudited pro forma financial information was prepared using the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, consideration paid by the Company has been allocated to Abraxas’s assets and liabilities based upon their estimated fair values as of the date of completion of the acquisition. The Company estimated the fair value of Abraxas’s assets and liabilities. These fair values are provisional and subject to revision as the related valuations are completed.





BIGLARI HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF EARNINGS
(dollars in thousands, except per share amounts)
Nine Months ended September 30, 2022
Biglari Holdings Inc.Abraxas Petroleum CorporationActivity September 15 to September 30, 2022Pro Forma AdjustmentsPro Forma Combined
Revenues  
Restaurant operations$179,608 $— $— $179,608 
Insurance premiums and other47,745 — — $47,745 
Oil and gas38,632 39,973 (1,692)— $76,913 
Licensing and media3,788 — — $3,788 
269,773 39,973 (1,692)— 308,054 
Cost and expenses
Restaurant cost of sales107,469 — — $107,469 
Insurance losses and underwriting expenses40,812 — — $40,812 
Oil and gas production costs11,752 11,448 (606)— $22,594 
Licensing and media costs1,975 — — $1,975 
Selling, general and administrative48,275 10,303 (280)(3,296)D$55,002 
Impairments20 — — $20 
Depreciation, depletion, and amortization24,127 4,807 (360)1,875 B$30,449 
Interest expense on leases4,169 — — $4,169 
Interest expense on borrowings67 — — $67 
238,666 26,558 (1,246)(1,421)262,557 
Other income
Investment gains (losses)(4,184)— — $(4,184)
Investment partnership gains (losses)(82,244)— — $(82,244)
Other income (expense)— 35,893 (35,893)F$— 
Total other income (expenses)(86,428)35,893 — (35,893)(86,428)
Earnings (loss) before income taxes(55,321)49,308 (446)(34,472)(40,931)
Income tax expense (benefit)(13,282)— 3,310 E(9,972)
Net earnings (loss)(42,039)49,308 (446)(37,782)(30,959)
Accretion of preferred stock— 6,198 (6,198)A— 
Net earnings (loss)(42,039)43,110 (446)(31,584)(30,959)
Earnings attributable to noncontrolling interest34 — 1,108 C1,142 
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders$(42,073)$43,110 $(446)$(32,692)$(32,101)
Net earnings (loss) per equivalent Class A share*$(140.30)$(107.05)
Equivalent Class A common stock299,881 299,881 

*Net earnings (loss) per equivalent Class B share outstanding are one-fifth of the equivalent Class A share or $(28.06) for Biglari Holdings and $(21.41) for the pro forma combined company.



BIGLARI HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF EARNINGS
(dollars in thousands, except per share amounts)

Year ended December 31, 2021
Biglari Holdings Inc.Abraxas Petroleum CorporationPro Forma AdjustmentsPro Forma Combined
Revenues  
Restaurant operations$271,290 $— $— $271,290 
Insurance premiums and other58,609 — — 58,609 
Oil and gas33,004 78,858 — 111,862 
Licensing and media3,203 — — 3,203 
366,106 78,858 — 444,964 
Cost and expenses
Restaurant cost of sales167,491 — — 167,491 
Insurance losses and underwriting expenses43,094 — — 43,094 
Oil and gas production costs10,470 24,615 — 35,085 
Licensing and media costs2,275 — — 2,275 
Selling, general and administrative76,018 8,072 (1,312)D82,778 
Impairments4,635 — — 4,635 
Depreciation, depletion, and amortization30,050 15,643 3,000 B48,693 
Interest expense on leases6,039 — — 6,039 
Interest expense on borrowings1,121 — — 1,121 
341,193 48,330 1,688 391,211 
Other income
Investment gains (losses)6,401 (33,022)— (26,621)
Investment partnership gains 10,953 — — 10,953 
Other income (expense)— (42,073)42,073 F— 
Total other income (expenses)17,354 (75,095)42,073 (15,668)
Earnings (loss) before income taxes42,267 (44,567)40,385 38,085 
Income tax expense6,789 — (962)E5,827 
Net earnings (loss)35,478 (44,567)41,347 32,258 
Accretion of preferred stock— — — — 
Net earnings (loss)35,478 (44,567)41,347 32,258 
Earnings attributable to noncontrolling interest— — (322)C(322)
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders$35,478 $(44,567)$41,669 $32,580 
Net earnings (loss) per equivalent Class A share*$111.83 $102.69 
Equivalent Class A common stock317,251 317,251 

*Net earnings per equivalent Class B share outstanding are one-fifth of the equivalent Class A share or $22.37 for Biglari Holdings and $20.54 for the pro forma combined company.



BIGLARI HOLDINGS INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(dollars in thousands)
Note 1. Basis of Presentation

The accompanying unaudited pro forma condensed combined financial information presents the pro forma condensed combined results of operations of the consolidated company based upon the historical financial statements of the Company and Abraxas.

The summary unaudited pro forma financial information has been derived from, or prepared on a basis consistent with, the unaudited pro forma condensed combined financial statements.

This data is presented for illustrative purposes only and is not necessarily indicative of the combined results of operations or financial position that would have occurred if the acquisition had occurred on January 1, 2021, nor is it necessarily indicative of future operating results or financial position of the combined company.

The purchase price allocation included within the accompanying unaudited pro forma financial information is based upon a purchase price of $80,000. The purchase price allocation is provisional and subject to revision as the related valuations are completed.
September 14,
2022
(in thousands)(Unaudited)
Cash and cash equivalents$25,101 
Receivables5,402 
Other current assets3,943 
Property and equipment75,025 
Other assets257 
Total identifiable assets acquired109,728 
Accounts payable and accrued expenses(12,638)
Asset retirement obligation(3,587)
Deferred taxes(4,614)
Total liabilities assumed(20,839)
Minority interest(8,889)
Total consideration$80,000 

Note 2. Unaudited Pro Forma Adjustments

A.To eliminate accretion expense associated with historical preferred shares.
B.To record estimated depreciation and depletion expense using the straight-line amortization method based on the fair value of oil and gas properties and equipment acquired.
C.To record the estimated earnings (loss) attributable to noncontrolling interests.
D.To eliminate historical stock compensation expense.
E.To record the income tax effects of including Abraxas Petroleum in Biglari Holdings’ consolidated tax group and the impact of the unaudited pro forma adjustments.
F.To eliminate nonrecurring items including the following:
Abraxas recorded $35,773 in interest expense, $2,716 gain on debt extinguishment, $4,804 amortization of deferred financing fees and $4,212 deferred finance fees and warrant cancellations during the year ended December 31, 2021 and recorded interest expense of $111 and a gain on debt extinguishment of $6,645 during the nine months ended September 30, 2022 on credit facilities and loans that no longer existed at the date of acquisition.
Abraxas recorded a gain on sale of oil and gas assets of $29,359 during the nine months ended September 30, 2022.