ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenues:
|
(In millions, except per unit amounts)
|
|
Net sales
|
$
|
2,484
|
|
|
$
|
2,815
|
|
|
$
|
7,371
|
|
|
$
|
7,998
|
|
|
Other revenues from operations
|
170
|
|
|
166
|
|
|
504
|
|
|
491
|
|
|
Net (loss) gain from investment activities
|
(657
|
)
|
|
(514
|
)
|
|
(1,968
|
)
|
|
328
|
|
|
Interest and dividend income
|
69
|
|
|
36
|
|
|
192
|
|
|
98
|
|
|
Gain on disposition of assets, net
|
249
|
|
|
65
|
|
|
256
|
|
|
65
|
|
|
Other income (loss), net
|
5
|
|
|
1
|
|
|
16
|
|
|
(5
|
)
|
|
|
2,320
|
|
|
2,569
|
|
|
6,371
|
|
|
8,975
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
2,069
|
|
|
2,372
|
|
|
6,098
|
|
|
6,786
|
|
|
Other expenses from operations
|
141
|
|
|
138
|
|
|
409
|
|
|
397
|
|
|
Selling, general and administrative
|
352
|
|
|
329
|
|
|
1,027
|
|
|
1,012
|
|
|
Restructuring, net
|
4
|
|
|
17
|
|
|
15
|
|
|
20
|
|
|
Impairment
|
—
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
Interest expense
|
153
|
|
|
125
|
|
|
443
|
|
|
391
|
|
|
|
2,719
|
|
|
2,981
|
|
|
7,993
|
|
|
8,609
|
|
|
(Loss) income from continuing operations before income tax benefit
|
(399
|
)
|
|
(412
|
)
|
|
(1,622
|
)
|
|
366
|
|
|
Income tax benefit
|
26
|
|
|
78
|
|
|
12
|
|
|
77
|
|
|
(Loss) income from continuing operations
|
(373
|
)
|
|
(334
|
)
|
|
(1,610
|
)
|
|
443
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
176
|
|
|
(24
|
)
|
|
388
|
|
|
Net (loss) income
|
(373
|
)
|
|
(158
|
)
|
|
(1,634
|
)
|
|
831
|
|
|
Less: net (loss) income attributable to non-controlling interests
|
(324
|
)
|
|
(276
|
)
|
|
(693
|
)
|
|
279
|
|
|
Net (loss) income attributable to Icahn Enterprises
|
$
|
(49
|
)
|
|
$
|
118
|
|
|
$
|
(941
|
)
|
|
$
|
552
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Icahn Enterprises from:
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
(49
|
)
|
|
$
|
(45
|
)
|
|
$
|
(917
|
)
|
|
$
|
201
|
|
|
Discontinued operations
|
—
|
|
|
163
|
|
|
(24
|
)
|
|
351
|
|
|
|
$
|
(49
|
)
|
|
$
|
118
|
|
|
$
|
(941
|
)
|
|
$
|
552
|
|
|
Net (loss) income attributable to Icahn Enterprises allocated to:
|
|
|
|
|
|
|
|
|
Limited partners
|
$
|
(48
|
)
|
|
$
|
116
|
|
|
$
|
(922
|
)
|
|
$
|
541
|
|
|
General partner
|
(1
|
)
|
|
2
|
|
|
(19
|
)
|
|
11
|
|
|
|
$
|
(49
|
)
|
|
$
|
118
|
|
|
$
|
(941
|
)
|
|
$
|
552
|
|
|
Basic and diluted (loss) income per LP unit:
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
(0.24
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(4.56
|
)
|
|
$
|
1.11
|
|
|
Discontinued operations
|
—
|
|
|
0.88
|
|
|
(0.12
|
)
|
|
1.93
|
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.64
|
|
|
$
|
(4.68
|
)
|
|
$
|
3.04
|
|
|
Basic and diluted weighted average LP units outstanding
|
202
|
|
|
183
|
|
|
197
|
|
|
178
|
|
|
Cash distributions declared per LP unit
|
$
|
2.00
|
|
|
$
|
1.75
|
|
|
$
|
6.00
|
|
|
$
|
5.25
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Net (loss) income
|
$
|
(373
|
)
|
|
$
|
(158
|
)
|
|
$
|
(1,634
|
)
|
|
$
|
831
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Translation adjustments
|
(3
|
)
|
|
(11
|
)
|
|
(4
|
)
|
|
(86
|
)
|
|
Post-retirement benefits and other
|
(1
|
)
|
|
3
|
|
|
1
|
|
|
18
|
|
|
Other comprehensive loss, net of tax
|
(4
|
)
|
|
(8
|
)
|
|
(3
|
)
|
|
(68
|
)
|
|
Comprehensive (loss) income
|
(377
|
)
|
|
(166
|
)
|
|
(1,637
|
)
|
|
763
|
|
|
Less: Comprehensive (loss) income attributable to non-controlling interests
|
(325
|
)
|
|
(278
|
)
|
|
(694
|
)
|
|
271
|
|
|
Comprehensive (loss) income attributable to Icahn Enterprises
|
$
|
(52
|
)
|
|
$
|
112
|
|
|
$
|
(943
|
)
|
|
$
|
492
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributable to Icahn Enterprises allocated to:
|
|
|
|
|
|
|
|
|
Limited partners
|
$
|
(51
|
)
|
|
$
|
110
|
|
|
$
|
(924
|
)
|
|
$
|
482
|
|
|
General partner
|
(1
|
)
|
|
2
|
|
|
(19
|
)
|
|
10
|
|
|
|
$
|
(52
|
)
|
|
$
|
112
|
|
|
$
|
(943
|
)
|
|
$
|
492
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Icahn Enterprises
|
|
|
|
|
|
|
General Partner’s (Deficit) Equity
|
|
Limited Partners’ Equity
|
|
Total Partners’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|
Balance, December 31, 2018
|
$
|
(790
|
)
|
|
$
|
7,350
|
|
|
$
|
6,560
|
|
|
$
|
6,420
|
|
|
$
|
12,980
|
|
|
Net loss
|
(8
|
)
|
|
(386
|
)
|
|
(394
|
)
|
|
(270
|
)
|
|
(664
|
)
|
|
Distribution payable
|
(8
|
)
|
|
(383
|
)
|
|
(391
|
)
|
|
—
|
|
|
(391
|
)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
(30
|
)
|
|
Changes in subsidiary equity and other
|
2
|
|
|
62
|
|
|
64
|
|
|
(307
|
)
|
|
(243
|
)
|
|
Balance, March 31, 2019
|
(804
|
)
|
|
6,643
|
|
|
5,839
|
|
|
5,813
|
|
|
11,652
|
|
|
Net loss
|
(10
|
)
|
|
(488
|
)
|
|
(498
|
)
|
|
(99
|
)
|
|
(597
|
)
|
|
Other comprehensive loss
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Distribution payable reversal
|
8
|
|
|
383
|
|
|
391
|
|
|
—
|
|
|
391
|
|
|
Partnership distributions
|
(1
|
)
|
|
(54
|
)
|
|
(55
|
)
|
|
—
|
|
|
(55
|
)
|
|
Partnership contributions
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|
70
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
(26
|
)
|
|
Changes in subsidiary equity and other
|
—
|
|
|
3
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
Balance, June 30, 2019
|
(807
|
)
|
|
6,498
|
|
|
5,691
|
|
|
5,755
|
|
|
11,446
|
|
|
Net loss
|
(1
|
)
|
|
(48
|
)
|
|
(49
|
)
|
|
(324
|
)
|
|
(373
|
)
|
|
Other comprehensive loss
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
Partnership distributions
|
(1
|
)
|
|
(27
|
)
|
|
(28
|
)
|
|
—
|
|
|
(28
|
)
|
|
Partnership contributions
|
1
|
|
|
24
|
|
|
25
|
|
|
—
|
|
|
25
|
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|
150
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
(34
|
)
|
|
Changes in subsidiary equity and other
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(31
|
)
|
|
(34
|
)
|
|
Balance, September 30, 2019
|
$
|
(808
|
)
|
|
$
|
6,441
|
|
|
$
|
5,633
|
|
|
$
|
5,515
|
|
|
$
|
11,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Icahn Enterprises
|
|
|
|
|
|
|
General Partner’s (Deficit) Equity
|
|
Limited Partners’ Equity
|
|
Total Partners’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|
Balance, December 31, 2017
|
$
|
(234
|
)
|
|
$
|
5,402
|
|
|
$
|
5,168
|
|
|
$
|
6,318
|
|
|
$
|
11,486
|
|
|
Net income
|
3
|
|
|
129
|
|
|
132
|
|
|
280
|
|
|
412
|
|
|
Other comprehensive income
|
—
|
|
|
40
|
|
|
40
|
|
|
3
|
|
|
43
|
|
|
Distribution payable
|
(6
|
)
|
|
(304
|
)
|
|
(310
|
)
|
|
—
|
|
|
(310
|
)
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
280
|
|
|
280
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(31
|
)
|
|
Cumulative effect adjustment from adoption of accounting principle
|
(1
|
)
|
|
(28
|
)
|
|
(29
|
)
|
|
—
|
|
|
(29
|
)
|
|
Changes in subsidiary equity and other
|
1
|
|
|
—
|
|
|
1
|
|
|
10
|
|
|
11
|
|
|
Balance, March 31, 2018
|
(237
|
)
|
|
5,239
|
|
|
5,002
|
|
|
6,860
|
|
|
11,862
|
|
|
Net income
|
6
|
|
|
296
|
|
|
302
|
|
|
275
|
|
|
577
|
|
|
Other comprehensive loss
|
(1
|
)
|
|
(93
|
)
|
|
(94
|
)
|
|
(9
|
)
|
|
(103
|
)
|
|
Distribution payable reversal
|
6
|
|
|
304
|
|
|
310
|
|
|
—
|
|
|
310
|
|
|
Partnership distributions
|
(1
|
)
|
|
(47
|
)
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
(47
|
)
|
|
Changes in subsidiary equity and other
|
(1
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|
Balance, June 30, 2018
|
(228
|
)
|
|
5,694
|
|
|
5,466
|
|
|
7,078
|
|
|
12,544
|
|
|
Net income (loss)
|
2
|
|
|
116
|
|
|
118
|
|
|
(276
|
)
|
|
(158
|
)
|
|
Other comprehensive loss
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
(2
|
)
|
|
(8
|
)
|
|
Partnership distributions
|
(1
|
)
|
|
(24
|
)
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(31
|
)
|
|
Changes in subsidiary equity and other
|
3
|
|
|
90
|
|
|
93
|
|
|
6
|
|
|
99
|
|
|
Balance, September 30, 2018
|
$
|
(224
|
)
|
|
$
|
5,870
|
|
|
$
|
5,646
|
|
|
$
|
6,775
|
|
|
$
|
12,421
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Cash flows from operating activities:
|
|
|
|
|
Net (loss) income
|
$
|
(1,634
|
)
|
|
$
|
831
|
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
Loss (income) from discontinued operations
|
24
|
|
|
(388
|
)
|
|
Net loss (gain) from securities transactions
|
314
|
|
|
(858
|
)
|
|
Purchases of securities
|
(3,885
|
)
|
|
(3,911
|
)
|
|
Proceeds from sales of securities
|
2,133
|
|
|
5,538
|
|
|
Payments to cover securities sold, not yet purchased
|
(451
|
)
|
|
(1,390
|
)
|
|
Proceeds from securities sold, not yet purchased
|
142
|
|
|
949
|
|
|
Changes in receivables and payables relating to securities transactions
|
609
|
|
|
(609
|
)
|
|
Gain on disposition of assets, net
|
(256
|
)
|
|
(65
|
)
|
|
Depreciation and amortization
|
389
|
|
|
383
|
|
|
Deferred taxes
|
(84
|
)
|
|
(85
|
)
|
|
Other, net
|
(1
|
)
|
|
48
|
|
|
Changes in operating assets and liabilities
|
832
|
|
|
(548
|
)
|
|
Net cash used in operating activities from continuing operations
|
(1,868
|
)
|
|
(105
|
)
|
|
Net cash provided by operating activities from discontinued operations
|
—
|
|
|
436
|
|
|
Net cash (used in) provided by operating activities
|
(1,868
|
)
|
|
331
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Capital expenditures
|
(195
|
)
|
|
(193
|
)
|
|
Acquisition of businesses, net of cash acquired
|
(52
|
)
|
|
(13
|
)
|
|
Purchases of investments
|
(50
|
)
|
|
(25
|
)
|
|
Proceeds from sale of investments
|
458
|
|
|
1
|
|
|
Proceeds from disposition of businesses and assets
|
491
|
|
|
158
|
|
|
Other, net
|
(21
|
)
|
|
(7
|
)
|
|
Net cash provided by (used in) investing activities from continuing operations
|
631
|
|
|
(79
|
)
|
|
Net cash used in investing activities from discontinued operations
|
—
|
|
|
(393
|
)
|
|
Net cash provided by (used in) investing activities
|
631
|
|
|
(472
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
Investment segment contributions from non-controlling interests
|
220
|
|
|
280
|
|
|
Partnership contributions
|
35
|
|
|
—
|
|
|
Partnership distributions
|
(83
|
)
|
|
(73
|
)
|
|
Purchase of additional interests in consolidated subsidiaries
|
(241
|
)
|
|
—
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
(90
|
)
|
|
(95
|
)
|
|
Proceeds from Holding Company senior unsecured notes
|
1,757
|
|
|
—
|
|
|
Repayments of Holding Company senior unsecured notes
|
(1,700
|
)
|
|
—
|
|
|
Proceeds from subsidiary borrowings
|
565
|
|
|
1,003
|
|
|
Repayments of subsidiary borrowings
|
(597
|
)
|
|
(1,046
|
)
|
|
Other, net
|
(3
|
)
|
|
12
|
|
|
Net cash (used in) provided by financing activities from continuing operations
|
(137
|
)
|
|
81
|
|
|
Net cash used in financing activities from discontinued operations
|
—
|
|
|
(159
|
)
|
|
Net cash used in financing activities
|
(137
|
)
|
|
(78
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash and restricted cash equivalents
|
(2
|
)
|
|
(1
|
)
|
|
Add back change in cash and restricted cash of assets held for sale
|
(83
|
)
|
|
70
|
|
|
Net decrease in cash and cash equivalents and restricted cash and restricted cash equivalents
|
(1,459
|
)
|
|
(150
|
)
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, beginning of period
|
5,338
|
|
|
1,911
|
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, end of period
|
$
|
3,879
|
|
|
$
|
1,761
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
ASSETS
|
(in millions)
|
|
Cash and cash equivalents
|
$
|
3,266
|
|
|
$
|
2,656
|
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
613
|
|
|
2,682
|
|
|
Investments
|
9,437
|
|
|
8,337
|
|
|
Due from brokers
|
842
|
|
|
664
|
|
|
Accounts receivable, net
|
500
|
|
|
474
|
|
|
Inventories, net
|
1,817
|
|
|
1,779
|
|
|
Property, plant and equipment, net
|
4,592
|
|
|
4,688
|
|
|
Goodwill
|
281
|
|
|
247
|
|
|
Intangible assets, net
|
449
|
|
|
501
|
|
|
Other assets
|
1,460
|
|
|
1,493
|
|
|
Total Assets
|
$
|
23,257
|
|
|
$
|
23,521
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Accounts payable
|
$
|
895
|
|
|
$
|
832
|
|
|
Accrued expenses and other liabilities
|
2,342
|
|
|
1,012
|
|
|
Deferred tax liability
|
625
|
|
|
694
|
|
|
Unrealized loss on derivative contracts
|
461
|
|
|
36
|
|
|
Securities sold, not yet purchased, at fair value
|
223
|
|
|
468
|
|
|
Due to brokers
|
114
|
|
|
141
|
|
|
Debt
|
7,452
|
|
|
7,330
|
|
|
Total liabilities
|
12,112
|
|
|
10,513
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 17)
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
Limited partner
|
6,503
|
|
|
7,452
|
|
|
General partner
|
(873
|
)
|
|
(864
|
)
|
|
Equity attributable to Icahn Enterprises Holdings
|
5,630
|
|
|
6,588
|
|
|
Equity attributable to non-controlling interests
|
5,515
|
|
|
6,420
|
|
|
Total equity
|
11,145
|
|
|
13,008
|
|
|
Total Liabilities and Equity
|
$
|
23,257
|
|
|
$
|
23,521
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenues:
|
(in millions)
|
|
Net sales
|
$
|
2,484
|
|
|
$
|
2,815
|
|
|
$
|
7,371
|
|
|
$
|
7,998
|
|
|
Other revenues from operations
|
170
|
|
|
166
|
|
|
504
|
|
|
491
|
|
|
Net (loss) gain from investment activities
|
(657
|
)
|
|
(514
|
)
|
|
(1,968
|
)
|
|
328
|
|
|
Interest and dividend income
|
69
|
|
|
36
|
|
|
192
|
|
|
98
|
|
|
Gain on disposition of assets, net
|
249
|
|
|
65
|
|
|
256
|
|
|
65
|
|
|
Other income (loss), net
|
5
|
|
|
1
|
|
|
16
|
|
|
(5
|
)
|
|
|
2,320
|
|
|
2,569
|
|
|
6,371
|
|
|
8,975
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
2,069
|
|
|
2,372
|
|
|
6,098
|
|
|
6,786
|
|
|
Other expenses from operations
|
141
|
|
|
138
|
|
|
409
|
|
|
397
|
|
|
Selling, general and administrative
|
352
|
|
|
329
|
|
|
1,027
|
|
|
1,012
|
|
|
Restructuring, net
|
4
|
|
|
17
|
|
|
15
|
|
|
20
|
|
|
Impairment
|
—
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
Interest expense
|
153
|
|
|
125
|
|
|
442
|
|
|
390
|
|
|
|
2,719
|
|
|
2,981
|
|
|
7,992
|
|
|
8,608
|
|
|
(Loss) income from continuing operations before income tax benefit
|
(399
|
)
|
|
(412
|
)
|
|
(1,621
|
)
|
|
367
|
|
|
Income tax benefit
|
26
|
|
|
78
|
|
|
12
|
|
|
77
|
|
|
(Loss) income from continuing operations
|
(373
|
)
|
|
(334
|
)
|
|
(1,609
|
)
|
|
444
|
|
|
Income (loss) from discontinued operations
|
—
|
|
|
176
|
|
|
(24
|
)
|
|
388
|
|
|
Net (loss) income
|
(373
|
)
|
|
(158
|
)
|
|
(1,633
|
)
|
|
832
|
|
|
Less: net (loss) income attributable to non-controlling interests
|
(324
|
)
|
|
(276
|
)
|
|
(693
|
)
|
|
279
|
|
|
Net (loss) income attributable to Icahn Enterprises Holdings
|
$
|
(49
|
)
|
|
$
|
118
|
|
|
$
|
(940
|
)
|
|
$
|
553
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Icahn Enterprises from:
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
(49
|
)
|
|
$
|
(45
|
)
|
|
$
|
(916
|
)
|
|
$
|
202
|
|
|
Discontinued operations
|
—
|
|
|
163
|
|
|
(24
|
)
|
|
351
|
|
|
|
$
|
(49
|
)
|
|
$
|
118
|
|
|
$
|
(940
|
)
|
|
$
|
553
|
|
|
Net (loss) income attributable to Icahn Enterprises Holdings allocated to:
|
|
|
|
|
|
|
|
|
Limited partner
|
$
|
(49
|
)
|
|
$
|
116
|
|
|
$
|
(931
|
)
|
|
$
|
547
|
|
|
General partner
|
—
|
|
|
2
|
|
|
(9
|
)
|
|
6
|
|
|
|
$
|
(49
|
)
|
|
$
|
118
|
|
|
$
|
(940
|
)
|
|
$
|
553
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Net (loss) income
|
$
|
(373
|
)
|
|
$
|
(158
|
)
|
|
$
|
(1,633
|
)
|
|
$
|
832
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
Translation adjustments
|
(3
|
)
|
|
(11
|
)
|
|
(4
|
)
|
|
(86
|
)
|
|
Post-retirement benefits and other
|
(1
|
)
|
|
3
|
|
|
1
|
|
|
18
|
|
|
Other comprehensive loss, net of tax
|
(4
|
)
|
|
(8
|
)
|
|
(3
|
)
|
|
(68
|
)
|
|
Comprehensive (loss) income
|
(377
|
)
|
|
(166
|
)
|
|
(1,636
|
)
|
|
764
|
|
|
Less: Comprehensive (loss) income attributable to non-controlling interests
|
(325
|
)
|
|
(278
|
)
|
|
(694
|
)
|
|
271
|
|
|
Comprehensive (loss) income attributable to Icahn Enterprises Holdings
|
$
|
(52
|
)
|
|
$
|
112
|
|
|
$
|
(942
|
)
|
|
$
|
493
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributable to Icahn Enterprises Holdings allocated to:
|
|
|
|
|
|
|
|
|
Limited partner
|
$
|
(52
|
)
|
|
$
|
111
|
|
|
$
|
(933
|
)
|
|
$
|
488
|
|
|
General partner
|
—
|
|
|
1
|
|
|
(9
|
)
|
|
5
|
|
|
|
$
|
(52
|
)
|
|
$
|
112
|
|
|
$
|
(942
|
)
|
|
$
|
493
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Icahn Enterprises Holdings
|
|
|
|
|
|
|
General Partner’s Equity (Deficit)
|
|
Limited
Partner’s Equity
|
|
Total Partners’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|
Balance, December 31, 2018
|
$
|
(864
|
)
|
|
$
|
7,452
|
|
|
$
|
6,588
|
|
|
$
|
6,420
|
|
|
$
|
13,008
|
|
|
Net loss
|
(4
|
)
|
|
(390
|
)
|
|
(394
|
)
|
|
(270
|
)
|
|
(664
|
)
|
|
Distribution payable
|
(4
|
)
|
|
(387
|
)
|
|
(391
|
)
|
|
—
|
|
|
(391
|
)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
(30
|
)
|
|
Changes in subsidiary equity and other
|
1
|
|
|
63
|
|
|
64
|
|
|
(307
|
)
|
|
(243
|
)
|
|
Balance, March 31, 2019
|
(871
|
)
|
|
6,738
|
|
|
5,867
|
|
|
5,813
|
|
|
11,680
|
|
|
Net loss
|
(5
|
)
|
|
(492
|
)
|
|
(497
|
)
|
|
(99
|
)
|
|
(596
|
)
|
|
Other comprehensive loss
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
Distribution payable reversal
|
4
|
|
|
387
|
|
|
391
|
|
|
—
|
|
|
391
|
|
|
Partnership distributions
|
(1
|
)
|
|
(54
|
)
|
|
(55
|
)
|
|
—
|
|
|
(55
|
)
|
|
Partnership contribution
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|
70
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
(26
|
)
|
|
Changes in subsidiary equity and other
|
1
|
|
|
2
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
Balance, June 30, 2019
|
(872
|
)
|
|
6,592
|
|
|
5,720
|
|
|
5,755
|
|
|
11,475
|
|
|
Net loss
|
—
|
|
|
(49
|
)
|
|
(49
|
)
|
|
(324
|
)
|
|
(373
|
)
|
|
Other comprehensive loss
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
Partnership distributions
|
(1
|
)
|
|
(59
|
)
|
|
(60
|
)
|
|
—
|
|
|
(60
|
)
|
|
Partnership contribution
|
—
|
|
|
25
|
|
|
25
|
|
|
—
|
|
|
25
|
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
150
|
|
|
150
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
(34
|
)
|
|
Changes in subsidiary equity and other
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
(31
|
)
|
|
(34
|
)
|
|
Balance, September 30, 2019
|
$
|
(873
|
)
|
|
$
|
6,503
|
|
|
$
|
5,630
|
|
|
$
|
5,515
|
|
|
$
|
11,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Icahn Enterprises Holdings
|
|
|
|
|
|
|
General Partner’s Equity (Deficit)
|
|
Limited
Partner’s Equity
|
|
Total Partners’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|
Balance, December 31, 2017
|
$
|
(286
|
)
|
|
$
|
5,481
|
|
|
$
|
5,195
|
|
|
$
|
6,318
|
|
|
$
|
11,513
|
|
|
Net income
|
1
|
|
|
131
|
|
|
132
|
|
|
280
|
|
|
412
|
|
|
Other comprehensive income
|
1
|
|
|
39
|
|
|
40
|
|
|
3
|
|
|
43
|
|
|
Distribution payable
|
(3
|
)
|
|
(307
|
)
|
|
(310
|
)
|
|
—
|
|
|
(310
|
)
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
280
|
|
|
280
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(31
|
)
|
|
Cumulative effect adjustment from adoption of accounting principle
|
—
|
|
|
(29
|
)
|
|
(29
|
)
|
|
—
|
|
|
(29
|
)
|
|
Changes in subsidiary equity and other
|
—
|
|
|
1
|
|
|
1
|
|
|
10
|
|
|
11
|
|
|
Balance, March 31, 2018
|
(287
|
)
|
|
5,316
|
|
|
5,029
|
|
|
6,860
|
|
|
11,889
|
|
|
Net loss
|
3
|
|
|
300
|
|
|
303
|
|
|
275
|
|
|
578
|
|
|
Other comprehensive loss
|
(1
|
)
|
|
(93
|
)
|
|
(94
|
)
|
|
(9
|
)
|
|
(103
|
)
|
|
Distribution payable reversal
|
3
|
|
|
307
|
|
|
310
|
|
|
—
|
|
|
310
|
|
|
Partnership distributions
|
(1
|
)
|
|
(47
|
)
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
(47
|
)
|
|
Changes in subsidiary equity and other
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
(1
|
)
|
|
(7
|
)
|
|
Balance, June 30, 2018
|
(283
|
)
|
|
5,777
|
|
|
5,494
|
|
|
7,078
|
|
|
12,572
|
|
|
Net loss (loss)
|
2
|
|
|
116
|
|
|
118
|
|
|
(276
|
)
|
|
(158
|
)
|
|
Other comprehensive loss
|
(1
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|
(2
|
)
|
|
(8
|
)
|
|
Partnership distributions
|
—
|
|
|
(25
|
)
|
|
(25
|
)
|
|
—
|
|
|
(25
|
)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(31
|
)
|
|
Changes in subsidiary equity and other
|
1
|
|
|
92
|
|
|
93
|
|
|
6
|
|
|
99
|
|
|
Balance, September 30, 2018
|
$
|
(281
|
)
|
|
$
|
5,955
|
|
|
$
|
5,674
|
|
|
$
|
6,775
|
|
|
$
|
12,449
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Cash flows from operating activities:
|
|
|
|
|
Net (loss) income
|
$
|
(1,633
|
)
|
|
$
|
832
|
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
Loss (income) from discontinued operations
|
24
|
|
|
(388
|
)
|
|
Net loss (gain) from securities transactions
|
314
|
|
|
(858
|
)
|
|
Purchases of securities
|
(3,885
|
)
|
|
(3,911
|
)
|
|
Proceeds from sales of securities
|
2,133
|
|
|
5,538
|
|
|
Payments to cover securities sold, not yet purchased
|
(451
|
)
|
|
(1,390
|
)
|
|
Proceeds from securities sold, not yet purchased
|
142
|
|
|
949
|
|
|
Changes in receivables and payables relating to securities transactions
|
609
|
|
|
(609
|
)
|
|
Gain on disposition of assets, net
|
(256
|
)
|
|
(65
|
)
|
|
Depreciation and amortization
|
389
|
|
|
383
|
|
|
Deferred taxes
|
(84
|
)
|
|
(85
|
)
|
|
Other, net
|
(2
|
)
|
|
47
|
|
|
Changes in operating assets and liabilities
|
832
|
|
|
(548
|
)
|
|
Net cash used in operating activities from continuing operations
|
(1,868
|
)
|
|
(105
|
)
|
|
Net cash provided by operating activities from discontinued operations
|
—
|
|
|
436
|
|
|
Net cash (used in) provided by operating activities
|
(1,868
|
)
|
|
331
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Capital expenditures
|
(195
|
)
|
|
(193
|
)
|
|
Acquisition of businesses, net of cash acquired
|
(52
|
)
|
|
(13
|
)
|
|
Purchases of investments
|
(50
|
)
|
|
(25
|
)
|
|
Proceeds from sale of investments
|
458
|
|
|
1
|
|
|
Proceeds from disposition of businesses and assets
|
491
|
|
|
158
|
|
|
Other, net
|
(21
|
)
|
|
(7
|
)
|
|
Net cash provided by (used in) investing activities from continuing operations
|
631
|
|
|
(79
|
)
|
|
Net cash used in investing activities from discontinued operations
|
—
|
|
|
(393
|
)
|
|
Net cash provided by (used in) investing activities
|
631
|
|
|
(472
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
Investment segment contributions from non-controlling interests
|
220
|
|
|
280
|
|
|
Partnership contributions
|
35
|
|
|
—
|
|
|
Partnership distributions
|
(83
|
)
|
|
(73
|
)
|
|
Purchase of additional interests in consolidated subsidiaries
|
(241
|
)
|
|
—
|
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
(90
|
)
|
|
(95
|
)
|
|
Proceeds from Holding Company senior unsecured notes
|
1,757
|
|
|
—
|
|
|
Repayments of Holding Company senior unsecured notes
|
(1,700
|
)
|
|
—
|
|
|
Proceeds from subsidiary borrowings
|
565
|
|
|
1,003
|
|
|
Repayments of subsidiary borrowings
|
(597
|
)
|
|
(1,046
|
)
|
|
Other, net
|
(3
|
)
|
|
12
|
|
|
Net cash (used in) provided by financing activities from continuing operations
|
(137
|
)
|
|
81
|
|
|
Net cash used in financing activities from discontinued operations
|
—
|
|
|
(159
|
)
|
|
Net cash used in financing activities
|
(137
|
)
|
|
(78
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash and restricted cash equivalents
|
(2
|
)
|
|
(1
|
)
|
|
Add back change in cash and restricted cash of assets held for sale
|
(83
|
)
|
|
70
|
|
|
Net decrease in cash and cash equivalents and restricted cash and restricted cash equivalents
|
(1,459
|
)
|
|
(150
|
)
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, beginning of period
|
5,338
|
|
|
1,911
|
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, end of period
|
$
|
3,879
|
|
|
$
|
1,761
|
|
See notes to condensed consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
1.
|
Description of Business.
|
Overview
Icahn Enterprises L.P. (“Icahn Enterprises”) is a master limited partnership formed in Delaware on February 17, 1987. Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”) is a limited partnership formed in Delaware on February 17, 1987. References to “we,” “our” or “us” herein include both Icahn Enterprises and Icahn Enterprises Holdings and their subsidiaries, unless the context otherwise requires.
Icahn Enterprises owns a 99% limited partner interest in Icahn Enterprises Holdings. Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), which is owned and controlled by Mr. Carl C. Icahn, owns a 1% general partner interest in each of Icahn Enterprises and Icahn Enterprises Holdings as of September 30, 2019. Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Therefore, the financial results of Icahn Enterprises and Icahn Enterprises Holdings are substantially the same, with differences relating primarily to the allocation of the general partner interest, which is reflected as an aggregate 1.99% general partner interest in the financial statements of Icahn Enterprises. In addition to the above, Mr. Icahn and his affiliates owned approximately 92.0% of Icahn Enterprises’ outstanding depositary units as of September 30, 2019.
Description of Continuing Operating Businesses
We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Energy, Automotive, Food Packaging, Metals, Real Estate and Home Fashion. We also report the results of our Holding Company, which includes the results of certain subsidiaries of Icahn Enterprises and Icahn Enterprises Holdings (unless otherwise noted), and investment activity and expenses associated with our Holding Company. Our historical results also report the results of our Mining segment, until sold on August 1, 2019, and our Railcar segment through the date we sold our last remaining railcars on lease, which occurred in the third quarter of 2018. See Note 12, “Segment Reporting,” for a reconciliation of each of our reporting segment’s results of operations to our consolidated results. Certain additional information with respect to our segments is discussed below.
Investment
Our Investment segment is comprised of various private investment funds (“Investment Funds”) in which we have general partner interests and through which we invest our proprietary capital. As general partner, we provide investment advisory and certain administrative and back office services to the Investment Funds but do not provide such services to any other entities, individuals or accounts. We and certain of Mr. Icahn’s wholly owned affiliates are the only investors in the Investment Funds. Interests in the Investment Funds are not offered to outside investors. We had interests in the Investment Funds with a fair value of approximately $4.3 billion and $5.1 billion as of September 30, 2019 and December 31, 2018, respectively.
Energy
We conduct our Energy segment through our majority owned subsidiary, CVR Energy, Inc. (“CVR Energy”). CVR Energy is a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses through its holdings in CVR Refining, LP (“CVR Refining”) and CVR Partners, LP (“CVR Partners”), respectively. CVR Refining is an independent petroleum refiner and marketer of high value transportation fuels. CVR Partners produces and markets nitrogen fertilizers in the form of urea ammonium nitrate and ammonia. As of September 30, 2019, we owned approximately 70.8% of the total outstanding common stock of CVR Energy.
On August 1, 2018, CVR Energy completed an exchange offer whereby CVR Refining’s public unitholders tendered a total of 21,625,106 common units of CVR Refining in exchange for 13,699,549 shares of CVR Energy common stock. In connection with this transaction, our equity attributable to Icahn Enterprises and Icahn Enterprises Holdings increased by $99 million.
On January 29, 2019, CVR Energy, pursuant to the exercise of its right to purchase all of the issued and outstanding common units in CVR Refining, purchased the remaining common units of CVR Refining not already owned by CVR Energy, including the purchase of CVR Refining common units owned directly by us. Prior to this, CVR Energy owned approximately 80.6% of the common units of CVR Refining and we directly owned approximately 3.9% of the common units of CVR Refining. As a result of exercising its purchase right, as of January 29, 2019, CVR Energy owns all of the common units of CVR Refining and we no longer have any direct ownership in CVR Refining. In addition, the common units of CVR Refining have subsequently ceased to be publicly traded or listed on the New York Stock Exchange or any other national securities
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
exchange. The remaining common units of CVR Refining acquired in this transaction were purchased for $241 million, excluding the amount paid by CVR Energy to us for the common units of CVR Refining directly owned by us.
Automotive
We conduct our Automotive segment through our wholly owned subsidiary, Icahn Automotive Group LLC (“Icahn Automotive”). Icahn Automotive is engaged in the retail and wholesale distribution of automotive parts in the aftermarket (“aftermarket parts”) as well as providing automotive repair and maintenance services (“automotive services”) to its customers. Icahn Automotive’s aftermarket parts and automotive services businesses serve different customer channels and have distinct strategies, opportunities and requirements. As a result, the board of directors of Icahn Automotive has approved the separation of its aftermarket parts and automotive services businesses into two independent operating companies, each with its own Chief Executive Officer and management teams, and both of which are supported by a central shared service group. Our Automotive segment also includes our separate equity method investment in 767 Auto Leasing LLC (“767 Leasing”), a joint venture created by us to purchase vehicles for lease, as described further in Note 3, “Related Party Transactions.” Although 767 Leasing is separate from Icahn Automotive, we include it as a component of our Automotive segment due to the nature of the joint venture activities.
Food Packaging
We conduct our Food Packaging segment through our majority owned subsidiary, Viskase Companies, Inc. (“Viskase”). Viskase is a producer of cellulosic, fibrous and plastic casings used to prepare and package processed meat products.
During January 2018, Viskase received $50 million in connection with its common stock rights offering. In connection with this rights offering, we fully exercised our subscription rights under our basic and over subscription privileges to purchase additional shares of Viskase common stock, thereby increasing our ownership of Viskase from 74.6% to 78.6%, for an aggregate additional investment of $44 million.
Metals
We conduct our Metals segment through our wholly-owned subsidiary, PSC Metals LLC (“PSC Metals”). PSC Metals is principally engaged in the business of collecting, processing and selling ferrous and non-ferrous metals, as well as the processing and distribution of steel pipe and plate products. PSC Metals collects industrial and obsolete scrap metal, processes it into reusable forms and supplies the recycled metals to its customers.
Real Estate
Our Real Estate operations consist primarily of rental real estate, property development and associated club activities. Our rental real estate operations consist primarily of office and industrial properties leased to single corporate tenants. Our property development operations are run primarily through a real estate investment, management and development subsidiary that focuses primarily on the construction and sale of single-family and multi-family homes, lots in subdivisions and planned communities, and raw land for residential development. Our property development locations also operate golf and club operations. In addition, our Real Estate operations also includes a hotel, timeshare and casino resort property in Aruba as well as a casino property in Atlantic City, New Jersey, which ceased operations in 2014 prior to our obtaining control of the property.
In August 2018, our Real Estate segment sold a commercial rental property for $139 million, resulting in a pretax gain on disposition of assets of $67 million.
Home Fashion
We conduct our Home Fashion segment through our wholly owned subsidiary, WestPoint Home LLC (“WPH”). WPH’s business consists of manufacturing, sourcing, marketing, distributing and selling home fashion consumer products.
Mining
We conducted our Mining segment through our majority owned subsidiary, Ferrous Resources Ltd. (“Ferrous Resources”). Ferrous Resources acquired certain rights to iron ore mineral resources in Brazil and develops mining operations and related infrastructure to produce and sell iron ore products to the global steel industry. Prior to the sale of Ferrous Resources, as discussed below, we owned approximately 77.2% of its total outstanding common stock.
On December 5, 2018, we announced a definitive agreement to sell Ferrous Resources for total consideration of $550 million (including repaid indebtedness). This transaction met all the criteria to be classified as held for sale on December 5, 2018 upon execution of the definitive agreement. On August 1, 2019, we closed on the sale of Ferrous Resources. Our
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
proportionate share of the cash proceeds from the sale, net of adjustments, was $451 million. As a result of the sale of Ferrous Resources, our Mining segment recorded a pretax gain on disposition of assets of $252 million in the third quarter of 2019, subject to additional post-closing adjustments. Subsequent to the sale, we no longer operate an active Mining segment.
Railcar
We conducted our Railcar segment through our wholly owned subsidiary, American Railcar Leasing, LLC (“ARL”). ARL operated a leasing business consisting of purchased railcars leased to third parties under operating leases. During 2018, we sold all remaining railcars of ARL not previously sold and as a result, we no longer operate an active Railcar segment. For the nine months ended September 30, 2018, we had proceeds of $17 million in connection with the sale of railcars and we recorded a pretax gain on disposition of assets of $5 million.
Description of Discontinued Operating Businesses
We also report discontinued operations previously reported in our Automotive and Railcar segments and former Gaming segment.
Our discontinued Automotive operations consists of our previously wholly owned subsidiary, Federal-Mogul LLC (“Federal-Mogul”).
Our discontinued Gaming operations consists of our previous majority ownership in Tropicana Entertainment Inc. (“Tropicana”).
Our discontinued Railcar operations consists of our previous majority ownership in American Railcar Industries, Inc. (“ARI”).
Each of these businesses were sold in the fourth quarter of 2018 and are reflected in discontinued operations for the three and nine months ended September 30, 2018. See Note 13, “Discontinued Operations,” for additional information with respect to our discontinued operating businesses.
|
|
|
|
2.
|
Basis of Presentation and Summary of Significant Accounting Policies.
|
We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Therefore, no more than 40% of our total assets can be invested in investment securities, as such term is defined in the Investment Company Act. In addition, we do not invest or intend to invest in securities as our primary business. We intend to structure our investments to continue to be taxed as a partnership rather than as a corporation under the applicable publicly traded partnership rules of the Internal Revenue Code, as amended.
Events beyond our control, including significant appreciation or depreciation in the market value of certain of our publicly traded holdings or adverse developments with respect to our ownership of certain of our subsidiaries, could result in our inadvertently becoming an investment company that is required to register under the Investment Company Act. Our recent sales of Federal-Mogul, Tropicana and ARI did not result in our being considered an investment company. However, additional transactions involving the sale of certain assets could result in our being considered an investment company. Following such events or transactions, an exemption under the Investment Company Act would provide us up to one year to take steps to avoid becoming classified as an investment company. We expect to take steps to avoid becoming classified as an investment company, but no assurance can be made that we will successfully be able to take the steps necessary to avoid becoming classified as an investment company.
The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2018. The condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) related to interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary to present fairly the results for the interim periods. All such adjustments are of a normal and recurring nature.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Principles of Consolidation
As of September 30, 2019, our condensed consolidated financial statements include the accounts of (i) Icahn Enterprises and Icahn Enterprises Holdings and (ii) the wholly and majority owned subsidiaries of Icahn Enterprises and Icahn Enterprises Holdings, in addition to variable interest entities (“VIEs”) in which we are the primary beneficiary. In evaluating whether we have a controlling financial interest in entities that we consolidate, we consider the following: (1) for voting interest entities, including limited partnerships and similar entities that are not VIEs, we consolidate these entities in which we own a majority of the voting interests; and (2) for VIEs, we consolidate these entities in which we are the primary beneficiary. See below for a discussion of our VIEs. Kick-out rights, which are the rights underlying the limited partners’ ability to dissolve the limited partnership or otherwise remove the general partners, held through voting interests of partnerships and similar entities that are not VIEs are considered the equivalent of the equity interests of corporations that are not VIEs.
Except for our Investment segment, for equity investments in which we own 50% or less but greater than 20%, we generally account for such investments using the equity method. All other equity investments are accounted for at fair value.
Change in Accounting Principle
Effective January 1, 2019, CVR Energy revised its accounting policy method for the costs of planned major maintenance activities (“turnarounds”) specific to its petroleum business from being expensed as incurred (the direct expensing method) to the deferral method. Turnarounds are planned shutdowns of refinery processing units for significant overhaul and refurbishment. Under the deferral method, the costs of turnarounds are deferred and amortized on a straight-line basis over a four-year period, which represents the estimated time until the next turnaround occurs. The new method of accounting for turnarounds is considered preferable as it is more consistent with the accounting policy of CVR Energy’s peer companies and better reflects the economic substance of the benefits earned from turnaround expenditures. The comparative condensed consolidated balance sheet as of December 31, 2018, the condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 have been retrospectively adjusted to apply the new accounting method. These turnaround costs, and related accumulated amortization, are included within other assets in the condensed consolidated balance sheets. The amortization expense related to turnaround costs is included in cost of goods sold in the condensed consolidated statement of operations. CVR Partners will continue to follow the direct expensing method, therefore this change had no impact on its current or comparative condensed consolidated financial statements.
As a result of this accounting change, our Energy segment increased other assets by $108 million and decreased property, plant and equipment, net by $15 million as of December 31, 2018. In addition, our Energy segment increased deferred tax liability by $18 million and total equity by $75 million, including $31 million attributable to Icahn Enterprises and Icahn Enterprises Holdings as of December 31, 2018. As of December 31, 2017, our Energy segment increased total equity by $118 million, including $62 million attributable to Icahn Enterprises and Icahn Enterprises Holdings. For the three and nine months ended September 30, 2018, the effect on net income for our Energy segment as a result of this accounting change was a reduction to net income of $11 million and $33 million, respectively, including a reduction of $8 million and $20 million, respectively, attributable to Icahn Enterprises and Icahn Enterprises Holdings. The impact on net income was comprised of a $14 million increase to cost of goods sold and a $3 million decrease to income tax expense for the three months ended September 30, 2018. For the nine months ended September 30, 2018, the impact on net income was comprised of a $41 million increase to cost of goods sold and a $8 million decrease to income tax expense.
Reclassifications
Certain other reclassifications have been made within the condensed consolidated statements of operations to include gains and losses on derivatives within cost of goods sold for our Energy segment. Prior year balances have been reclassified to conform to the current year presentation. The reclassification of gain on derivatives from other income, net to costs of goods sold was $5 million and $75 million for the three and nine months ended September 30, 2018, respectively. These reclassifications did not have an impact on previously reported net income.
We have also recast certain historical results for discontinued operations, which we disclose in Note 13, “Discontinued Operations.” In addition, certain other reclassifications from the prior year presentation have been made to conform to the current year presentation, which did not have an impact on previously reported net income and equity and are not deemed material.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Discontinued Operations
As described above, we operated businesses classified as discontinued operations, each of which were sold in the fourth quarter of 2018, and which are reported in our condensed consolidated statements of operations for the three and nine months ended September 30, 2018 as discontinued operations. During the second quarter of 2019, certain pending adjustments relating to the sale of Federal-Mogul were finalized, resulting in an adjustment to income tax expense from discontinued operations of $24 million with an offsetting adjustment to deferred liability. In accordance with U.S. GAAP, such adjustment is recorded as discontinued operations in the second quarter of 2019.
Consolidated Variable Interest Entities
The following is a discussion of variable interest entities in which we are deemed to be the primary beneficiary and in which we therefore consolidate. In addition, as discussed in Note 3, “Related Party Transactions,” we have a variable interest in an entity in which we are not the primary beneficiary and therefore we do not consolidate.
Icahn Enterprises Holdings
We determined that Icahn Enterprises Holdings is a VIE because it is a limited partnership that lacks both substantive kick-out and participating rights. Although Icahn Enterprises is not the general partner of Icahn Enterprises Holdings, Icahn Enterprises is deemed to be the primary beneficiary of Icahn Enterprises Holdings principally based on its 99% limited partner interest in Icahn Enterprises Holdings, as well as our related party relationship with the general partner, and therefore continues to consolidate Icahn Enterprises Holdings. The condensed consolidated financial statements of Icahn Enterprises Holdings are included in this Report. The balances with respect to Icahn Enterprises Holdings’ consolidated VIEs are discussed below, comprising the Investment Funds, CVR Refining (prior to January 2019), CVR Partners and Viskase’s joint venture.
Investment
We determined that each of the Investment Funds are considered VIEs because these limited partnerships lack both substantive kick-out and participating rights. Because we have a general partner interest in each of the Investment Funds and have significant limited partner interests in each of the Investment Funds, coupled with our significant exposure to losses and benefits in each of the Investment Funds, we are the primary beneficiary of each of the Investment Funds and therefore continue to consolidate each of the Investment Funds.
Energy
CVR Refining (prior to January 2019) and CVR Partners are each considered VIEs because each of these limited partnerships lack both substantive kick-out and participating rights. In addition, CVR Energy also concluded that, based upon its general partner’s roles and rights in CVR Refining and CVR Partners as afforded by their respective partnership agreements, coupled with its exposure to losses and benefits in each of CVR Refining and CVR Partners through its significant limited partner interests, intercompany credit facilities and services agreements, it is the primary beneficiary of both CVR Refining (prior to January 2019) and CVR Partners. Beginning in January 2019, CVR Refining is no longer considered a VIE as it is a wholly-owned subsidiary of CVR Energy.
Food Packaging
Viskase holds a variable interest in a joint venture for which Viskase is the primary beneficiary. Viskase’s interest in the joint venture includes a 50% equity interest and also relates to the sales, operations, administrative and financial support to the joint venture through providing many of the assets used in its business.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table includes balances of assets and liabilities of VIE’s included in Icahn Enterprises Holdings’ condensed consolidated balance sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
(in millions)
|
|
Cash and cash equivalents
|
$
|
84
|
|
|
$
|
415
|
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
600
|
|
|
2,648
|
|
|
Investments
|
8,718
|
|
|
6,951
|
|
|
Due from brokers
|
842
|
|
|
664
|
|
|
Inventories, net
|
57
|
|
|
380
|
|
|
Property, plant and equipment, net
|
1,125
|
|
|
3,012
|
|
|
Intangible assets, net
|
256
|
|
|
278
|
|
|
Other assets
|
345
|
|
|
930
|
|
|
Accounts payable, accrued expenses and other liabilities
|
1,481
|
|
|
516
|
|
|
Securities sold, not yet purchased, at fair value
|
223
|
|
|
468
|
|
|
Due to brokers
|
114
|
|
|
141
|
|
|
Debt
|
632
|
|
|
1,167
|
|
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, cash held at consolidated affiliated partnerships and restricted cash, accounts receivable, due from brokers, accounts payable, accrued expenses and other liabilities and due to brokers are deemed to be reasonable estimates of their fair values because of their short-term nature. See Note 4, “Investments,” and Note 5, “Fair Value Measurements,” for a detailed discussion of our investments and other non-financial assets and/or liabilities.
The fair value of our long-term debt is based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The carrying value and estimated fair value of our long-term debt as of September 30, 2019 was approximately $7.4 billion and $7.7 billion, respectively. The carrying value and estimated fair value of our long-term debt as of December 31, 2018 was approximately $7.3 billion and $7.3 billion, respectively.
Cash Flow
Cash and cash equivalents and restricted cash and restricted cash equivalents on our condensed consolidated statements of cash flows is comprised of (i) cash and cash equivalents and (ii) cash held at consolidated affiliated partnerships and restricted cash.
Cash Held at Consolidated Affiliated Partnerships and Restricted Cash
Our cash held at consolidated affiliated partnerships balance was $286 million and $2,648 million as of September 30, 2019 and December 31, 2018, respectively. Cash held at consolidated affiliated partnerships relates to our Investment segment and consists of cash and cash equivalents held by the Investment Funds that, although not legally restricted, are not available to fund the general liquidity needs of the Investment segment or Icahn Enterprises.
Our restricted cash balance was $327 million and $34 million as of September 30, 2019 and December 31, 2018, respectively. Restricted cash primarily relates to our Investment segment’s cash pledged and held for margin requirements on derivative transactions.
Leases
As discussed below, on January 1, 2019, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases, using the modified retrospective approach, which does not require the application of this Topic to periods prior to January 1, 2019. With the exception of the requirement to recognize right-of-use assets on the balance sheet for operating leases in which we are the lessee beginning in 2019, our accounting policy with respect to leases is not significantly different from prior periods and therefore, our prior period accounting policy is not separately disclosed. Financing leases under current U.S. GAAP are classified and accounted for in substantially the same
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
manner as capital leases under prior U.S. GAAP and therefore, we do not distinguish between financing leases and capital leases unless the context requires.
The determination of whether an arrangement is or contains a lease occurs at inception. We account for arrangements that contain lease and non-lease components as a single lease component for all classes of underlying assets. Leases in which we are the lessor are primarily within our Real Estate segment. Refer to Real Estate below for further discussion. In addition, all of our businesses, including our Real Estate segment, enter into lease arrangements as the lessee. The following is our accounting policy for leases in which we are the lessee.
All Segments and Holding Company
Leases are classified as either operating or financing by the lessee depending on whether or not the lease terms provide for control of the underlying asset to be transferred to the lessee. When control transfers to the lessee, we classify the lease as a financing lease. All other leases are recorded as operating leases. Effective January 1, 2019, for all leases with an initial lease term in excess of twelve months, we record a right-of-use asset with a corresponding liability in the condensed consolidated balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at commencement of the lease based on the present value of the lease payments over the lease term. Right-of-use assets are adjusted for any lease payments made on or before commencement of the lease, less any lease incentives received. As most of our leases do not provide an implicit rate, we use the incremental borrowing rate with respect to each of our businesses based on the information available at commencement of the lease in determining the present value of lease payments. We use the implicit rate when readily determinable. The lease terms used in the determination of our right-of-use assets and lease liabilities reflect any options to extend or terminate the lease when it is reasonably certain that we will exercise such option. We and our subsidiaries, independently of each other, apply a portfolio approach to account for the right-of-use assets and lease liabilities when we or our subsidiaries do not believe that applying the portfolio approach would be materially different from accounting for right-of-use assets and lease liabilities individually.
Operating lease expense is recorded as a single expense recognized on a straight-line basis over the lease term. Operating lease right-of-use assets are amortized for the difference between the straight-line expense less the accretion of interest of the related lease liability. Financing lease expense consists of interest expense on the financing lease liability as well as amortization of the right-of-use financing lease assets on a straight-line basis over the lease term.
Real Estate
Leases are classified as either operating, sales-type or direct financing by the lessor. Our Real Estate segment’s net lease portfolio consists of commercial real estate leased to others under long-term operating leases and we account for these leases in accordance with FASB ASC Topic 842. These assets leased to others are recorded at cost, net of accumulated depreciation, and are included in property, plant and equipment, net on our condensed consolidated balance sheets. Assets leased to others are depreciated on a straight-line basis over the useful lives of the assets, ranging from 5 years to 39 years. Lease revenue is recognized on a straight-line basis over the lease term. Cash receipts for all lease payments received are included in net cash flows from operating activities in the condensed consolidated statements of cash flows. Our Real Estate segment’s accounting policy for assets leased to others is not significantly different from prior periods.
Revenue From Contracts With Customers and Contract Balances
Due to the nature of our business, we derive revenue from various sources in various industries. With the exception of all of our Investment segment’s and our Holding Company’s revenues, and our Real Estate segment’s leasing revenue, our revenue is generally derived from contracts with customers in accordance with U.S. GAAP. Such revenue from contracts with customers are included in net sales and other revenues from operations in the condensed consolidated statements of operations, however, our Real Estate segment’s leasing revenue, as disclosed in Note 9, “Leases,” is also included in other revenues from operations. Related contract assets are included in accounts receivable, net or other assets and related contract liabilities are included in accrued expenses and other liabilities in the condensed consolidated balance sheets. Our disaggregation of revenue information includes our net sales and other revenues from operations for each of our reporting segments as well as additional disaggregation of revenue information for our Energy and Automotive segments. See Note 12, “Segment Reporting,” for our complete disaggregation of revenue information. In addition, we disclose additional information with respect to revenue from contracts with customers and contract balances for our Energy and Automotive segments below.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Energy
Our Energy segment’s deferred revenue is a contract liability that primarily relates to fertilizer sales contracts requiring customer prepayment prior to product delivery to guarantee a price and supply of nitrogen fertilizer. Deferred revenue is recorded at the point in time in which a prepaid contract is legally enforceable and the associated right to consideration is unconditional prior to transferring product to the customer. An associated receivable is recorded for uncollected prepaid contract amounts. Contracts requiring prepayment are generally short-term in nature and, as discussed above, revenue is recognized at the point in time in which the customer obtains control of the product. Our Energy segment had deferred revenue of $16 million and $69 million as of September 30, 2019 and December 31, 2018, respectively. For the nine months ended September 30, 2019 and 2018, our Energy segment recorded revenue of $68 million and $34 million, respectively, with respect to deferred revenue outstanding as of the beginning of each respective year.
As of September 30, 2019, our Energy segment had $7 million of remaining performance obligations for contracts with an original expected duration of more than one year. Our Energy segment expects to recognize approximately $1 million of these performance obligations as revenue by the end of 2019 and the remaining balance thereafter.
Automotive
Our Automotive segment has deferred revenue with respect to extended warranty plans of $42 million and $42 million as of September 30, 2019 and December 31, 2018, respectively, which are included in accrued expenses and other liabilities on the condensed consolidated balance sheets. For the nine months ended September 30, 2019 and 2018, our Automotive segment recorded revenue of $17 million and $18 million, respectively, with respect to deferred revenue outstanding as of the beginning of each respective year.
Adoption of New Accounting Standards
Lease Accounting Standards Updates
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases. This ASU requires the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. In addition, among other changes to the accounting for leases, this ASU retains the distinction between finance leases and operating leases. The classification criteria for distinguishing between financing leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases under previous guidance. Furthermore, quantitative and qualitative disclosures, including disclosures regarding significant judgments made by management, will be required. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The amendments in this ASU should be applied using a modified retrospective approach. In addition, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), which provides an additional (and optional) transition method to adopt the new leases standard. We adopted the new leases standards using the new transition method option effective January 1, 2019, which required a cumulative-effect adjustment recognized in equity at such date. No adjustment to prior period presentation and disclosure were required. The most significant impact related to the recognition of right-of-use assets and lease liabilities in the condensed consolidated balance sheets for long-term operating leases with the significant majority of the impact within our Automotive segment, and to a lesser extent, our Energy and Food Packaging segments. Our Automotive segment has identified approximately 2,300 leases, primarily for real estate (operating leases) and vehicles (financing leases) and recognized operating lease right-of-use assets of $589 million (which includes the impact of above market leases, net of below market leases) and related liabilities of $621 million as of January 1, 2019 as well as additional financing lease right-of-use assets and obligations of $20 million and $22 million, respectively. Our Energy segment recognized operating lease right-of-use assets and liabilities of $56 million and additional financing lease right-of-use assets and obligations of $26 million and $23 million, respectively, as of January 1, 2019. Our Food Packaging segment recognized operating lease right-of-use assets and liabilities of $35 million and $39 million, respectively, as of January 1, 2019. The aggregate impact for all other segments and our Holding Company was the recognition of operating lease right-of-use assets and liabilities of $28 million as of January 1, 2019.
Other Accounting Standards Updates
In March 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends FASB ASC Sub-Topic 310-20, Receivables-Nonrefundable Fees and Other Costs. This ASU amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
fiscal years. We have adopted this standard on January 1, 2019 using the modified retrospective application method. The adoption of this standard did not have a significant impact on our condensed consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which amends FASB ASC Topic 815, Derivatives and Hedging. This ASU includes amendments to existing guidance to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We have adopted this standard on January 1, 2019. The adoption of this standard did not have a significant impact on our condensed consolidated financial statements.
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends FASB ASC Topic 220, Income Statement - Reporting Comprehensive Income. This ASU allows a reclassification out of accumulated other comprehensive loss within equity for standard tax effects resulting from the Tax Cuts and Jobs Act and consequently, eliminates the stranded tax effects resulting from the Tax Cuts and Jobs Act. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We have adopted this standard effective on January 1, 2019. See Note 15, “Changes in Accumulated Other Comprehensive Loss,” for the impact on our accumulated other comprehensive loss, which is attributable to our Food Packaging segment.
Recently Issued Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which amends FASB ASC Topic 326, Financial Instruments - Credit Losses. In addition, in May 2019, the FASB issued ASU 2019-05, Targeted Transition Relief, which updates FASB ASU 2016-13. These ASU’s require financial assets measured at amortized cost to be presented at the net amount to be collected and broadens the information, including forecasted information incorporating more timely information, that an entity must consider in developing its expected credit loss estimate for assets measured. These ASU’s are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted for fiscal years beginning after December 15, 2018. Most of our financial assets are excluded from the requirements of this standard as they are measured at fair value or are subject to other accounting standards. In addition, certain of our other financial assets are short-term in nature and therefore are not likely to be subject to significant credit losses beyond what is already recorded under current accounting standards. As a result, we currently do not anticipate this standard to have a significant impact on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurements, which amends FASB ASC Topic 820, Fair Value Measurements. This ASU eliminates, modifies and adds various disclosure requirements for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain disclosures are required to be applied using a retrospective approach and others using a prospective approach. Early adoption is permitted. The various disclosure requirements being eliminated, modified or added are not significant to us. As a result, we currently do not anticipate this standard to have a significant impact on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which amends FASB ASC Subtopic 350-40, Intangibles-Goodwill and Other-Internal-Use Software. This ASU adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this ASU should be applied either using a retrospective or prospective approach. Early adoption is permitted. We currently do not anticipate this standard to have a significant impact on our consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
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|
|
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3.
|
Related Party Transactions.
|
Our second amended and restated agreement of limited partnership expressly permits us to enter into transactions with our general partner or any of its affiliates, including, without limitation, buying or selling properties from or to our general partner and any of its affiliates and borrowing and lending money from or to our general partner and any of its affiliates, subject to limitations contained in our partnership agreement and the Delaware Revised Uniform Limited Partnership Act. The indentures governing our indebtedness contain certain covenants applicable to transactions with affiliates.
Investment Funds
During the three months ended September 30, 2019, Mr. Icahn and his affiliates (excluding us) invested $150 million in the Investment Funds. During the nine months ended September 30, 2019 and 2018, Mr. Icahn and his affiliates (excluding us) invested $220 million and $280 million, respectively, in the Investment Funds, net of redemptions. As of September 30, 2019 and December 31, 2018, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates (excluding us) was approximately $4.5 billion and $5.0 billion, respectively, representing approximately 51% and 50% of the Investment Funds’ assets under management as of each respective date.
We pay for expenses pertaining to the operation, administration and investment activities of our Investment segment for the benefit of the Investment Funds (including salaries, benefits and rent). Effective April 1, 2011, based on an expense-sharing arrangement, certain expenses borne by us are reimbursed by the Investment Funds. For the three months ended September 30, 2019 and 2018, $4 million and $4 million, respectively, was allocated to the Investment Funds based on this expense-sharing arrangement and for the nine months ended September 30, 2019 and 2018, such allocation was $9 million and $6 million, respectively.
Hertz Global Holdings, Inc.
As discussed in Note 4, “Investments,” the Investment Funds have an investment in the common stock of Hertz Global Holdings, Inc. (“Hertz”) measured at fair value that would have otherwise been subject to the equity method of accounting. Icahn Automotive provides services to Hertz in the ordinary course of business. For the three months ended September 30, 2019 and 2018, revenue from Hertz was $15 million and $11 million, respectively, and $40 million and $29 million for the nine months ended September 30, 2019 and 2018, respectively. Additionally, Federal-Mogul had payments to Hertz in the ordinary course of business of zero and $1 million for the three and nine months ended September 30, 2018, respectively.
For the nine months ended September 30, 2018, the Investment Funds purchased shares of a certain investment from Hertz in the amount of $36 million.
In addition to our transactions with Hertz disclosed above, in January 2018, we entered into a Master Motor Vehicle Lease and Management Agreement with Hertz, pursuant to which Hertz granted 767 Leasing the option to acquire certain vehicles from Hertz at rates aligned with the rates at which Hertz sells vehicles to third parties. Under this agreement, as amended, Hertz will lease the vehicles that 767 Leasing purchases from Hertz, or from third parties, under a mutually developed fleet plan and Hertz will manage, service, repair, sell and maintain those leased vehicles on behalf of 767 Leasing. Additionally, Hertz will rent the leased vehicles to transportation network company drivers from rental counters within locations leased or owned by us. This agreement had an initial term of 18 months and is subject to automatic six-month renewals thereafter, unless terminated by either party (with or without cause) prior to the start of any such six-month renewal. Our agreement with Hertz was unanimously approved by the independent directors of Icahn Enterprises’ audit committee. Due to the nature of our involvement with 767 Leasing, which includes Icahn Enterprises and Icahn Enterprises Holdings guaranteeing the payment obligations of 767 Leasing and sharing in the profits of 767 Leasing with Hertz, we determined that 767 Leasing is a variable interest entity. Furthermore, we determined that we are not the primary beneficiary as we do not have the power to direct the activities of 767 Leasing that most significantly impact its economic performance. Therefore, we do not consolidate the results of 767 Leasing. Our exposure to loss with respect to 767 Leasing is primarily limited to our direct investment in 767 Leasing as well as any payment obligations of 767 Leasing that we guarantee, which are not material as of September 30, 2019 and December 31, 2018. As of September 30, 2019 and December 31, 2018, 767 Leasing had total assets of $116 million and $59 million, respectively (primarily vehicles for lease) and total liabilities of $0 million and $1 million, respectively. For the three months ended September 30, 2019 and 2018, we invested $5 million and $15 million, respectively, in 767 Leasing and for the nine months ended September 30, 2019 and 2018, we invested $50 million and $25 million, respectively, in 767 Leasing. As of September 30, 2019 and December 31, 2018, we had an equity method investment in 767 Leasing of $117 million and $59 million, respectively, which we report in our Automotive segment.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
ACF Industries LLC
Our Railcar operations, prior to December 5, 2018 (the date we closed on the sale of ARI), had certain transactions with ACF Industries LLC (“ACF”), an affiliate of Mr. Icahn, under various agreements, as well as on a purchase order basis. ACF is a manufacturer and fabricator of specialty railcar parts and miscellaneous steel products. Agreements and transactions with ACF include (i) railcar component purchases from ACF, (ii) railcar parts purchases from and sales to ACF, (iii) railcar purchasing and engineering services agreements with ACF, (iv) lease of certain intellectual property to ACF and (v) railcar repair services and support for ACF
Purchases from ACF were $1 million and $2 million for the three and nine months ended September 30, 2018, respectively. For the three and nine months ended September 30, 2018, revenues from ACF were $3 million and $3 million, respectively.
Insight Portfolio Group LLC
Insight Portfolio Group LLC (“Insight Portfolio Group”) is an entity formed and controlled by Mr. Icahn in order to maximize the potential buying power of a group of entities with which Mr. Icahn has a relationship in negotiating with a wide range of suppliers of goods, services and tangible and intangible property at negotiated rates. Icahn Enterprises Holdings has a minority equity interest in Insight Portfolio Group and agreed to pay a portion of Insight Portfolio Group’s operating expenses. In addition to the minority equity interest held by Icahn Enterprises Holdings, certain subsidiaries of ours, including CVR Energy, Viskase, PSC Metals, WPH, Federal-Mogul (prior to October 1, 2018), ARI (prior to December 5, 2018) and Tropicana (prior to October 1, 2018) also acquired minority equity interests in Insight Portfolio Group and agreed to pay a portion of Insight Portfolio Group’s operating expenses. A number of other entities with which Mr. Icahn has a relationship also have minority equity interests in Insight Portfolio Group and also agreed to pay certain of Insight Portfolio Group’s operating expenses. For the nine months ended September 30, 2019 and 2018, we and certain of our subsidiaries paid certain of Insight Portfolio Group’s operating expenses of $2 million and $2 million, respectively.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Investment
Investments and securities sold, not yet purchased consist of equities, bonds, bank debt and other corporate obligations, all of which are reported at fair value in our condensed consolidated balance sheets. These investments are considered trading securities. In addition, our Investment segment has certain derivative transactions which are discussed in Note 6, “Financial Instruments.” The carrying value and detail by security type, including business sector for equity securities, with respect to investments and securities sold, not yet purchased held by our Investment segment consist of the following:
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|
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|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
Assets
|
(in millions)
|
|
Investments:
|
|
|
|
|
Equity securities:
|
|
|
|
|
Basic materials
|
$
|
262
|
|
|
$
|
414
|
|
|
Consumer, non-cyclical
|
1,704
|
|
|
2,161
|
|
|
Consumer, cyclical
|
2,149
|
|
|
1,161
|
|
|
Energy
|
1,943
|
|
|
1,598
|
|
|
Financial
|
264
|
|
|
167
|
|
|
Technology
|
2,092
|
|
|
1,040
|
|
|
Other
|
135
|
|
|
145
|
|
|
|
8,549
|
|
|
6,686
|
|
|
Corporate debt securities
|
169
|
|
|
181
|
|
|
|
$
|
8,718
|
|
|
$
|
6,867
|
|
|
Liabilities
|
|
|
|
|
Securities sold, not yet purchased, at fair value:
|
|
|
|
|
Equity securities:
|
|
|
|
|
Consumer, non-cyclical
|
$
|
12
|
|
|
$
|
57
|
|
|
Consumer, cyclical
|
93
|
|
|
106
|
|
|
Energy
|
118
|
|
|
305
|
|
|
|
$
|
223
|
|
|
$
|
468
|
|
The portion of unrealized (losses) gains that relates to securities still held by our Investment segment, primarily equity securities, was $(513) million and $(4) million for the three months ended September 30, 2019 and 2018, respectively, and $(99) million and $356 million for nine months ended September 30, 2019 and 2018, respectively.
Our Investment segment is deemed to have significant influence with respect to its investments in Hertz, Herbalife Ltd. (“Herbalife”) and Caesars Entertainment Corporation (“Caesars”) after considering the collective ownership in such entities by the Investment Funds and affiliates of Mr. Icahn, as well as their collective representation on each of the boards of directors. Our Investment segment has elected the fair value option with respect to each of these investments as such investments would have otherwise been subject to the equity method of accounting. Hertz, Herbalife and Caesars each file annual, quarterly and current reports, and proxy and information statements with the SEC, which are publicly available.
As of September 30, 2019, the Investment Funds owned approximately 23.5% of the outstanding common stock of Hertz. Our Investment segment recorded net (losses) gains of $(29) million and $23 million for the three months ended September 30, 2019 and 2018, respectively, and net gains (losses) of $39 million and $(135) million for the nine months ended September 30, 2019 and 2018, respectively, with respect to its investment in Hertz. As of September 30, 2019 and December 31, 2018, the aggregate fair value of our Investment segment’s investment in Hertz was $462 million and $320 million, respectively.
As of September 30, 2019, the Investment Funds owned approximately 18.6% of the outstanding common stock of Herbalife. Our Investment segment recorded net (losses) gains of $(138) million and $23 million for the three months ended September 30, 2019 and 2018, respectively, and net (losses) gains of $(594) million and $740 million for the nine months ended
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 2019 and 2018, respectively, with respect to its investment in Herbalife. As of September 30, 2019 and December 31, 2018, the aggregate fair value of our Investment segment’s investment in Herbalife was approximately $1.1 billion and $1.7 billion, respectively.
As of September 30, 2019, the Investment Funds owned approximately 13.5% of the outstanding common stock of Caesars. We obtained significant influence over Caesars, and elected the fair value option with respect to our investment in Caesars, beginning in the first quarter of 2019. Our Investment segment recorded net gains of $26 million and $301 million for the three and nine months ended September 30, 2019 with respect to its investment in Caesars. As of September 30, 2019, the aggregate fair value of our Investment segment’s investment in Caesars was approximately $1.1 billion. During the second quarter of 2019, we agreed to vote our Caesars’ shares in favor of the proposed merger between Caesars and Eldorado Resorts, Inc. (“Eldorado”). Pursuant to the merger, Caesars will merge into a subsidiary of Eldorado and Caesars stockholders will have the right, subject to certain allocation limitations, to elect to receive cash, stock in Eldorado, or a combination of cash and stock. Upon consummation of the merger, depending on what consideration we and other stockholders elect, we expect to receive a combination of cash and Eldorado shares. The transaction has not yet been consummated as of September 30, 2019.
Other Segments and Holding Company
With the exception of certain equity method investments at our operating subsidiaries and our Holding Company disclosed in the table below, our investments are measured at fair value in our condensed consolidated balance sheets. The carrying value of investments held by our other segments and our Holding Company consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
(in millions)
|
|
Equity method investments
|
$
|
199
|
|
|
$
|
143
|
|
|
Other investments (measured at fair value)
|
520
|
|
|
1,327
|
|
|
|
$
|
719
|
|
|
$
|
1,470
|
|
The portion of unrealized gains (losses) that relates to equity securities still held by our other segments and our Holding Company was $42 million and $36 million for the three months ended September 30, 2019 and 2018, respectively, and $(438) million and $91 million for the nine months ended September 30, 2019 and 2018, respectively.
|
|
|
|
5.
|
Fair Value Measurements.
|
U.S. GAAP requires enhanced disclosures about investments and non-recurring non-financial assets and liabilities that are measured and reported at fair value and has established a hierarchal disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments or non-financial assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Investments and non-financial assets and/or liabilities measured and reported at fair value are classified and disclosed in one of the following categories:
Level 1 - Quoted prices are available in active markets for identical investments and non-financial assets and/or liabilities as of the reporting date.
Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies where all significant inputs are observable. The inputs and assumptions of our Level 2 investments are derived from market observable sources including reported trades, broker/dealer quotes and other pertinent data.
Level 3 - Pricing inputs are unobservable for the investment and non-financial asset and/or liability and include situations where there is little, if any, market activity for the investment or non-financial asset and/or liability. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the investments’, non-financial assets’ and/or liabilities’ level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the investment. Significant transfers, if any, between the levels within the fair value hierarchy are recognized at the beginning of the reporting period when changes in circumstances require such transfers.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the valuation of our assets and liabilities by the above fair value hierarchy levels measured on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Assets
|
(in millions)
|
|
Investments (Note 4)
|
$
|
8,918
|
|
|
$
|
305
|
|
|
$
|
3
|
|
|
$
|
9,226
|
|
|
$
|
7,493
|
|
|
$
|
317
|
|
|
$
|
372
|
|
|
$
|
8,182
|
|
|
Derivative contracts, at fair value (Note 6)(1)
|
—
|
|
|
149
|
|
|
—
|
|
|
149
|
|
|
7
|
|
|
517
|
|
|
—
|
|
|
524
|
|
|
|
$
|
8,918
|
|
|
$
|
454
|
|
|
$
|
3
|
|
|
$
|
9,375
|
|
|
$
|
7,500
|
|
|
$
|
834
|
|
|
$
|
372
|
|
|
$
|
8,706
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold, not yet purchased (Note 4)
|
$
|
223
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
223
|
|
|
$
|
468
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
468
|
|
|
Derivative contracts, at fair value (Note 6)
|
—
|
|
|
461
|
|
|
—
|
|
|
461
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
|
Other liabilities
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
|
$
|
223
|
|
|
$
|
470
|
|
|
$
|
—
|
|
|
$
|
693
|
|
|
$
|
468
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
506
|
|
|
|
|
|
(1)
|
Amounts are classified within other assets in our condensed consolidated balance sheets.
|
Assets Measured at Fair Value on a Recurring Basis for Which We Use Level 3 Inputs to Determine Fair Value
The changes in investments measured at fair value on a recurring basis for which we use Level 3 inputs to determine fair value are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Balance at January 1
|
$
|
372
|
|
|
$
|
278
|
|
|
Net gains recognized in income
|
89
|
|
|
91
|
|
|
Sales
|
(458
|
)
|
|
—
|
|
|
Other
|
—
|
|
|
(1
|
)
|
|
Balance at September 30
|
$
|
3
|
|
|
$
|
368
|
|
As of December 31, 2018, we had a certain equity investment which was considered a Level 3 investment due to unobservable market data and was measured at fair value on a recurring basis. We determined the fair value of this investment based on recent market transactions. During the first quarter of 2019, we sold this investment in its entirety.
Assets Measured at Fair Value on a Non-Recurring Basis for Which We Use Level 3 Inputs to Determine Fair Value
Certain assets measured at fair value using Level 3 inputs on a non-recurring basis have been impaired. During the nine months ended September 30, 2019 and 2018, we recorded impairment charges of $1 million and $3 million, respectively, relating to property, plant and equipment. We determined the fair value of property, plant and equipment by applying probability weighted, expected present value techniques to the estimated future cash flows using assumptions a market participant would utilize. Refer to Note 12, “Segment Reporting,” for total impairment recorded by each of our segments.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
6.
|
Financial Instruments.
|
Overview
Investment
In the normal course of business, the Investment Funds may trade various financial instruments and enter into certain investment activities, which may give rise to off-balance-sheet risks, with the objective of capital appreciation or as economic hedges against other securities or the market as a whole. The Investment Funds’ investments may include futures, options, swaps and securities sold, not yet purchased. These financial instruments represent future commitments to purchase or sell other financial instruments or to exchange an amount of cash based on the change in an underlying instrument at specific terms at specified future dates. Risks arise with these financial instruments from potential counterparty non-performance and from changes in the market values of underlying instruments.
Credit concentrations may arise from investment activities and may be impacted by changes in economic, industry or political factors. The Investment Funds routinely execute transactions with counterparties in the financial services industry, resulting in credit concentration with respect to the financial services industry. In the ordinary course of business, the Investment Funds may also be subject to a concentration of credit risk to a particular counterparty. The Investment Funds seek to mitigate these risks by actively monitoring exposures, collateral requirements and the creditworthiness of its counterparties.
The Investment Funds have entered into various types of swap contracts with other counterparties. These agreements provide that they are entitled to receive or are obligated to pay in cash an amount equal to the increase or decrease, respectively, in the value of the underlying shares, debt and other instruments that are the subject of the contracts, during the period from inception of the applicable agreement to its expiration. In addition, pursuant to the terms of such agreements, they are entitled to receive or obligated to pay other amounts, including interest, dividends and other distributions made in respect of the underlying shares, debt and other instruments during the specified time frame. They are also required to pay to the counterparty a floating interest rate equal to the product of the notional amount multiplied by an agreed-upon rate, and they receive interest on any cash collateral that they post to the counterparty at the federal funds or LIBOR rate in effect for such period.
The Investment Funds may trade futures contracts. A futures contract is a firm commitment to buy or sell a specified quantity of a standardized amount of a deliverable grade commodity, security, currency or cash at a specified price and specified future date unless the contract is closed before the delivery date. Payments (or variation margin) are made or received by the Investment Funds each day, depending on the daily fluctuations in the value of the contract, and the whole value change is recorded as an unrealized gain or loss by the Investment Funds. When the contract is closed, the Investment Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The Investment Funds may utilize forward contracts to seek to protect their assets denominated in foreign currencies and precious metals holdings from losses due to fluctuations in foreign exchange rates and spot rates. The Investment Funds’ exposure to credit risk associated with non-performance of such forward contracts is limited to the unrealized gains or losses inherent in such contracts, which are recognized in other assets and accrued expenses and other liabilities in our condensed consolidated balance sheets.
The Investment Funds may also enter into foreign currency contracts for purposes other than hedging denominated securities. When entering into a foreign currency forward contract, the Investment Funds agree to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed-upon future date unless the contract is closed before such date. The Investment Funds record unrealized gains or losses on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into such contracts and the forward rates at the reporting date.
The Investment Funds may also purchase and write option contracts. As a writer of option contracts, the Investment Funds receive a premium at the outset and then bear the market risk of unfavorable changes in the price of the underlying financial instrument. As a result of writing option contracts, the Investment Funds are obligated to purchase or sell, at the holder’s option, the underlying financial instrument. Accordingly, these transactions result in off-balance-sheet risk, as the Investment Funds’ satisfaction of the obligations may exceed the amount recognized in our condensed consolidated balance sheets.
Certain terms of the Investment Funds’ contracts with derivative counterparties, which are standard and customary to such contracts, contain certain triggering events that would give the counterparties the right to terminate the derivative instruments. In such events, the counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all of the Investment Funds’ derivative instruments with credit-risk-related
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
contingent features that are in a liability position as of September 30, 2019 and December 31, 2018 was $108 million and zero, respectively.
The following table summarizes the volume of our Investment segment’s derivative activities based on their notional exposure, categorized by primary underlying risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
Long Notional Exposure
|
|
Short Notional Exposure
|
|
Long Notional Exposure
|
|
Short Notional Exposure
|
|
Primary underlying risk:
|
(in millions)
|
|
Equity contracts
|
$
|
742
|
|
|
$
|
10,019
|
|
|
$
|
118
|
|
|
$
|
8,368
|
|
|
Credit contracts(1)
|
—
|
|
|
593
|
|
|
—
|
|
|
479
|
|
|
Commodity contracts
|
—
|
|
|
52
|
|
|
—
|
|
|
114
|
|
|
|
|
|
(1)
|
The short notional amount on our credit default swap positions was approximately $3.5 billion at September 30, 2019. However, because credit spreads cannot compress below zero, our downside short notional exposure to loss is $593 million as of September 30, 2019. The short notional amount on our credit default swap positions was approximately $1.8 billion as of December 31, 2018. However, because credit spreads cannot compress below zero, our downside short notional exposure to loss is $479 million as of December 31, 2018.
|
Certain derivative contracts executed by each of the Investment Funds with a single counterparty are reported on a net-by-counterparty basis where a legal right of offset exists under an enforceable netting agreement. Values for the derivative financial instruments, principally swaps, forwards, over-the-counter options and other conditional and exchange contracts, are reported on a net-by-counterparty basis.
The following table presents the fair values of our Investment segment’s derivatives that are not designated as hedging instruments in accordance with U.S. GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives(1)
|
|
Liability Derivatives
|
|
September 30, 2019
|
|
December 31, 2018
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
(in millions)
|
|
Equity contracts
|
$
|
188
|
|
|
$
|
568
|
|
|
$
|
408
|
|
|
$
|
170
|
|
|
Credit contracts
|
—
|
|
|
76
|
|
|
108
|
|
|
—
|
|
|
Commodity contracts
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
Sub-total
|
188
|
|
|
651
|
|
|
516
|
|
|
170
|
|
|
Netting across contract types(2)
|
(55
|
)
|
|
(134
|
)
|
|
(55
|
)
|
|
(134
|
)
|
|
Total(2)
|
$
|
133
|
|
|
$
|
517
|
|
|
$
|
461
|
|
|
$
|
36
|
|
|
|
|
|
(1)
|
Net asset derivatives are classified within other assets in our condensed consolidated balance sheets.
|
|
|
|
|
(2)
|
Excludes netting of cash collateral received and posted. The total collateral posted at September 30, 2019 and December 31, 2018 was $314 million and $0 million, respectively, across all counterparties, which are included in cash held at consolidated affiliated partnerships and restricted cash in the condensed consolidated balance sheets.
|
The following table presents the amount of gain (loss) recognized in the condensed consolidated statements of operations for our Investment segment’s derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Recognized in Income(1)
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Equity contracts
|
$
|
(213
|
)
|
|
$
|
(564
|
)
|
|
$
|
(1,464
|
)
|
|
$
|
(653
|
)
|
|
Credit contracts
|
(52
|
)
|
|
12
|
|
|
(184
|
)
|
|
65
|
|
|
Commodity contracts
|
3
|
|
|
13
|
|
|
(6
|
)
|
|
57
|
|
|
|
$
|
(262
|
)
|
|
$
|
(539
|
)
|
|
$
|
(1,654
|
)
|
|
$
|
(531
|
)
|
|
|
|
|
(1)
|
Gains (losses) recognized on derivatives are classified in net gain (loss) from investment activities in our condensed consolidated statements of operations for our Investment segment.
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Energy
CVR Energy's businesses are subject to price fluctuations caused by supply conditions, weather, economic conditions, interest rate fluctuations and other factors. To manage price risk on crude oil and other inventories and to fix margins on certain future production, CVR Refining from time to time enters into various commodity derivative transactions. CVR Refining holds derivative instruments, such as exchange-traded crude oil futures and certain over-the-counter forward swap agreements, which it believes provide an economic hedge on future transactions, but such instruments are not designated as hedges under U.S. GAAP. There are no premiums paid or received at inception of the derivative contracts and upon settlement.
As of September 30, 2019 and December 31, 2018, CVR Refining had open forward purchase and sale commitments for 6 million barrels and 2 million barrels, respectively, of Canadian crude oil priced at fixed differentials that are not considered probable of physical settlement and are accounted for as derivatives. CVR Refining may enter into forward purchase or sale contracts associated with renewable identification numbers (“RINs”). As of September 30, 2019, CVR Refining had open fixed-price commitments to purchase 38 million RINs.
Certain derivative contracts executed by our Energy segment with a single counterparty are reported on a net-by-counterparty basis where a legal right of offset exists under an enforceable netting agreement. As of September 30, 2019 and December 31, 2018, our Energy segment had gross asset derivatives of $17 million and $8 million, respectively, however, when netted with gross liability derivatives, such net asset derivatives were $16 million and $7 million, respectively. Net asset derivatives are included in other assets on the condensed consolidated balance sheets. Gains recognized on derivatives for our Energy segment were $18 million and $5 million for the three months ended September 30, 2019 and 2018, respectively, and $38 million and $75 million for the nine months ended September 30, 2019 and 2018, respectively. Gains recognized on derivatives for our Energy segment are included in cost of goods sold on the condensed consolidated statements of operations.
Inventories, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
(in millions)
|
|
Raw materials
|
$
|
225
|
|
|
$
|
217
|
|
|
Work in process
|
91
|
|
|
70
|
|
|
Finished goods
|
1,501
|
|
|
1,492
|
|
|
|
$
|
1,817
|
|
|
$
|
1,779
|
|
|
|
|
|
8.
|
Goodwill and Intangible Assets, Net.
|
Goodwill consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
Gross Carrying Amount
|
|
Accumulated
Impairment
|
|
Net
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Impairment
|
|
Net
Carrying
Value
|
|
|
(in millions)
|
|
Automotive
|
$
|
336
|
|
|
$
|
(87
|
)
|
|
$
|
249
|
|
|
$
|
328
|
|
|
$
|
(87
|
)
|
|
$
|
241
|
|
|
Food Packaging
|
6
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
Metals
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Home Fashion
|
21
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
$
|
368
|
|
|
$
|
(87
|
)
|
|
$
|
281
|
|
|
$
|
334
|
|
|
$
|
(87
|
)
|
|
$
|
247
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Intangible assets, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
|
(in millions)
|
|
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
$
|
395
|
|
|
$
|
(149
|
)
|
|
$
|
246
|
|
|
$
|
396
|
|
|
$
|
(134
|
)
|
|
$
|
262
|
|
|
Other
|
284
|
|
|
(143
|
)
|
|
141
|
|
|
316
|
|
|
(139
|
)
|
|
177
|
|
|
|
$
|
679
|
|
|
$
|
(292
|
)
|
|
$
|
387
|
|
|
$
|
712
|
|
|
$
|
(273
|
)
|
|
$
|
439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indefinite-lived intangible assets
|
|
|
|
|
$
|
62
|
|
|
|
|
|
|
$
|
62
|
|
|
Intangible assets, net
|
|
|
|
|
$
|
449
|
|
|
|
|
|
|
$
|
501
|
|
Amortization expense associated with definite-lived intangible assets was $10 million and $12 million for the three months ended September 30, 2019 and 2018, respectively, and $31 million and $36 million for the nine months ended September 30, 2019 and 2018, respectively. We utilize the straight-line method of amortization, recognized over the estimated useful lives of the assets.
Acquisitions during the three and nine months ended September 30, 2019 were not material individually or in the aggregate. As a result of certain acquisitions, our Automotive segment allocated $8 million to goodwill and $1 million to definite-lived intangible assets in the first quarter of 2019. In addition, as a result of certain acquisitions, our Home Fashion segment allocated $22 million to goodwill in the second quarter of 2019 and our Metals segment allocated $5 million and $6 million to goodwill and definite-lived intangible assets, respectively, also in the second quarter of 2019.
All Segments and Holding Company
We have operating and finance leases primarily within our Automotive, Energy and Food Packaging segments. Our Automotive segment leases assets, primarily real estate (operating) and vehicles (financing) and which primarily consist of leases that expire within 14 years. Our Energy segment leases certain pipelines, storage tanks, railcars, office space, land and equipment (operating and financing). Our Food Packaging segment leases assets, primarily real estate, equipment and vehicles (primarily operating). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Right-of-use assets and related liabilities are recorded on the balance sheet for leases with an initial lease term in excess of twelve months and therefore, do not include any lease arrangements with initial lease terms of twelve months or less.
Right-of-use assets and lease liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
(in millions)
|
|
Operating Leases:
|
|
|
|
|
Right-of-use assets (other assets)
|
$
|
635
|
|
|
$
|
—
|
|
|
Lease liabilities (accrued expenses and other liabilities)
|
664
|
|
|
—
|
|
|
|
|
|
|
|
Financing Leases:
|
|
|
|
|
Right-of-use assets (property, plant and equipment, net)
|
80
|
|
|
41
|
|
|
Lease liabilities (debt)
|
93
|
|
|
52
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Additional information with respect to our operating leases as of September 30, 2019 is presented below. The lease terms and discount rates for our Energy, Automotive and Food Packaging segments represent weighted averages based on their respective lease liability balances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
Right-Of-Use Assets
|
|
Lease Liabilities
|
|
Lease Term
|
|
Discount Rate
|
|
|
|
(in millions)
|
|
|
|
|
|
Energy
|
|
$
|
48
|
|
|
$
|
47
|
|
|
3.9 years
|
|
5.7%
|
|
Automotive
|
|
521
|
|
|
547
|
|
|
5.3 years
|
|
5.7%
|
|
Food Packaging
|
|
34
|
|
|
38
|
|
|
12.7 years
|
|
7.5%
|
|
Other segments and Holding Company
|
|
32
|
|
|
32
|
|
|
|
|
|
|
|
|
$
|
635
|
|
|
$
|
664
|
|
|
|
|
|
Maturities of lease liabilities as of September 30, 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Operating Leases
|
|
Financing
Leases
|
|
|
|
(in millions)
|
|
Remainder of 2019
|
|
$
|
54
|
|
|
$
|
6
|
|
|
2020
|
|
176
|
|
|
19
|
|
|
2021
|
|
152
|
|
|
14
|
|
|
2022
|
|
131
|
|
|
14
|
|
|
2023
|
|
80
|
|
|
12
|
|
|
Thereafter
|
|
206
|
|
|
67
|
|
|
Total lease payments
|
|
799
|
|
|
132
|
|
|
Less: imputed interest
|
|
(135
|
)
|
|
(39
|
)
|
|
|
|
$
|
664
|
|
|
$
|
93
|
|
The components of lease expense are presented in the following table. Operating lease expense is net of immaterial amounts for sublease income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Operating lease expense
|
$
|
48
|
|
|
$
|
48
|
|
|
$
|
145
|
|
|
$
|
142
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of financing lease right-of-use assets
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
5
|
|
|
Interest expense on financing lease liabilities
|
2
|
|
|
2
|
|
|
6
|
|
|
4
|
|
Real Estate
Our Real Estate segment leases real estate, primarily commercial properties under long-term operating leases. As of September 30, 2019 and December 31, 2018, our Real Estate segment has assets leased to others included in property, plant and equipment of $220 million and $217 million, respectively, net of accumulated depreciation. Our Real Estate segment’s revenue from operating leases were $9 million and $9 million for the three months ended September 30, 2019 and 2018, respectively, and $25 million and $30 million for the nine months ended September 30, 2019 and 2018, respectively, and are included in other revenue from operations in the condensed consolidated statements of operations. Our Real Estate segment’s anticipated future receipts of minimum operating lease payments receivable are $9 million for the remainder of 2019, $33 million in 2020 and $10 million in 2021 and thereafter.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|
|
(in millions)
|
|
Holding Company:
|
|
|
|
|
6.000% senior unsecured notes due 2020
|
$
|
—
|
|
|
$
|
1,702
|
|
|
5.875% senior unsecured notes due 2022
|
1,345
|
|
|
1,344
|
|
|
6.250% senior unsecured notes due 2022
|
1,212
|
|
|
1,213
|
|
|
6.750% senior unsecured notes due 2024
|
498
|
|
|
498
|
|
|
4.750% senior unsecured notes due 2024
|
498
|
|
|
—
|
|
|
6.375% senior unsecured notes due 2025
|
748
|
|
|
748
|
|
|
6.250% senior unsecured notes due 2026
|
1,250
|
|
|
—
|
|
|
|
5,551
|
|
|
5,505
|
|
|
Reporting Segments:
|
|
|
|
|
Energy
|
1,195
|
|
|
1,170
|
|
|
Automotive
|
403
|
|
|
372
|
|
|
Food Packaging
|
269
|
|
|
273
|
|
|
Metals
|
10
|
|
|
—
|
|
|
Real Estate
|
2
|
|
|
2
|
|
|
Home Fashion
|
19
|
|
|
4
|
|
|
|
1,898
|
|
|
1,821
|
|
|
Total Debt
|
$
|
7,449
|
|
|
$
|
7,326
|
|
Holding Company
During the second quarter of 2019, Icahn Enterprises and Icahn Enterprises Finance Corp. (together the “Issuers”) issued $1.250 billion in aggregate principal amount of 6.250% senior unsecured notes due 2026 (the “New 2026 Notes”). Proceeds from the New 2026 Notes, plus cash on hand, were used to repay in full our 6.000% senior unsecured notes due 2020, and to pay accrued interest and related fees and expenses, during the third quarter of 2019. During the third quarter of 2019, the Issuers issued $500 million in aggregate principal amount of 4.750% senior unsecured notes due 2024 (the “New 2024 Notes” and together with the New 2026 Notes, the “New Notes”). The New Notes are guaranteed by Icahn Enterprises Holdings (the “Guarantor”). Interest on the New Notes is payable semi-annually. In connection with these transactions, our Holding Company recorded a gain on extinguishment of debt of $2 million.
The New Notes and the related guarantee are the senior unsecured obligations of the Issuers and rank equally with all of the Issuers’ and the Guarantor’s existing and future senior unsecured indebtedness and senior to all of the Issuers’ and the Guarantor’s existing and future subordinated indebtedness. The New Notes and the related guarantee are effectively subordinated to the Issuers’ and the Guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness. The New Notes and the related guarantee are also effectively subordinated to all indebtedness and other liabilities of the Issuers’ subsidiaries other than the Guarantor.
The indenture governing the New Notes restricts the payment of cash distributions, the purchase of equity interests or the purchase, redemption, defeasance or acquisition of debt subordinated to the senior unsecured notes. The indenture also restricts the incurrence of debt or the issuance of disqualified stock, as defined in the indentures, with certain exceptions. In addition, the indenture requires that on each quarterly determination date, Icahn Enterprises and the guarantor of the New Notes (currently only Icahn Enterprises Holdings) maintain certain minimum financial ratios, as defined therein. The indenture also restricts the creation of liens, mergers, consolidations and sales of substantially all of our assets, and transactions with affiliates.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Covenants
All of our subsidiaries are currently in compliance with all covenants and restrictions as described in the various executed agreements and contracts with respect to each debt instrument. These covenants include limitations on indebtedness, liens, investments, acquisitions, asset sales, dividends and other restricted payments and affiliate and extraordinary transactions.
Non-Cash Charges to Interest Expense
The amortization of deferred financing costs and debt discounts and premiums included in interest expense in the condensed consolidated statements of operations were $1 million and $2 million for the three months ended September 30, 2019 and 2018, respectively, and $5 million and $4 million for the nine months ended September 30, 2019 and 2018, respectively.
|
|
|
|
11.
|
Net Income Per LP Unit.
|
The components of the computation of basic and diluted income (loss) per LP unit from continuing and discontinued operations of Icahn Enterprises are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions, except per unit amounts)
|
|
Net (loss) income attributable to Icahn Enterprises from continuing operations
|
$
|
(49
|
)
|
|
$
|
(45
|
)
|
|
$
|
(917
|
)
|
|
$
|
201
|
|
|
Net (loss) income attributable to Icahn Enterprises from continuing operations allocated to limited partners (98.01% allocation)
|
$
|
(48
|
)
|
|
$
|
(44
|
)
|
|
$
|
(899
|
)
|
|
$
|
197
|
|
|
Net income (loss) attributable to Icahn Enterprises from discontinued operations allocated to limited partners (98.01% allocation)
|
$
|
—
|
|
|
$
|
160
|
|
|
$
|
(23
|
)
|
|
$
|
344
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) income per LP unit:
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
(0.24
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(4.56
|
)
|
|
$
|
1.11
|
|
|
Discontinued operations
|
—
|
|
|
0.88
|
|
|
(0.12
|
)
|
|
1.93
|
|
|
|
$
|
(0.24
|
)
|
|
$
|
0.64
|
|
|
$
|
(4.68
|
)
|
|
$
|
3.04
|
|
|
Basic and diluted weighted average LP units outstanding
|
202
|
|
|
183
|
|
|
197
|
|
|
178
|
|
LP Unit Distributions
During 2019, Icahn Enterprises declared three quarterly distributions in which each depositary unitholder had the option to make an election to receive either cash or additional depositary units. As a result of these distributions declared, during the three and nine months ended September 30, 2019, Icahn Enterprises distributed an aggregate 5,583,252 and 15,617,442, respectively, depositary units to unitholders electing to receive depositary units. In connection with these distributions, aggregate cash distributions to all depositary unitholders was $27 million and $81 million during the three and nine months ended September 30, 2019, respectively.
Mr. Icahn and his affiliates received an aggregate 15,406,011 depositary units during the nine months ended September 30, 2019 with respect to these three quarterly distributions.
2019 At-The-Market Offering
On May 2, 2019, Icahn Enterprises announced the commencement of its “at-the-market” offering pursuant to its Open Market Sale Agreement, pursuant to which Icahn Enterprises may sell its depositary units, from time to time, for up to $400 million in aggregate sale proceeds. During the three and nine months ended September 30, 2019, Icahn Enterprises sold
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
349,699 and 487,223, respectively, depositary units pursuant to the Open Market Sale Agreement, resulting in gross proceeds of $24 million and $34 million, respectively.
2017 Incentive Plan
During the three months ended September 30, 2019 and 2018, Icahn Enterprises distributed 4,817 and 1,329 depositary units, respectively, and 18,304 and 19,487 depositary units during the nine months ended September 30, 2019 and 2018, respectively, net of payroll withholdings, with respect to certain restricted depositary units and deferred unit awards that vested during the period in connection with the Icahn Enterprises L.P. 2017 Long Term Incentive Plan (the “2017 Incentive Plan”). The aggregate impact of the 2017 Incentive Plan is not material with respect to our condensed consolidated financial statements, including the calculation of potentially dilutive units and diluted income per LP unit.
We report segment information based on the various industries in which our businesses operate and how we manage those businesses in accordance with our investment strategies, which may include: identifying and acquiring undervalued assets and businesses, often through the purchase of distressed securities; increasing value through management, financial or other operational changes; and managing complex legal, regulatory or financial issues, which may include bankruptcy or insolvency, environmental, zoning, permitting and licensing issues. Therefore, although many of our businesses are operated under separate local management, certain of our businesses are grouped together when they operate within a similar industry, comprising similarities in products, customers, production processes and regulatory environments, and when such businesses, when considered together, may be managed in accordance with one or more investment strategies specific to those businesses. Among other measures, we assess and measure segment operating results based on net income from continuing operations attributable to Icahn Enterprises and Icahn Enterprises Holdings. Certain terms of financings for certain of our businesses impose restrictions on the business’ ability to transfer funds to us, including restrictions on dividends, distributions, loans and other transactions.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Condensed Statements of Operations
Icahn Enterprises’ condensed statements of operations by reporting segment are presented below. Icahn Enterprises Holdings’ condensed statements of operations are substantially the same, with immaterial differences relating to our Holding Company’s interest expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2019
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Holding Company
|
|
Consolidated
|
|
|
(in millions)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
1,622
|
|
|
$
|
596
|
|
|
$
|
98
|
|
|
$
|
82
|
|
|
$
|
6
|
|
|
$
|
51
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
2,484
|
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
148
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
Net (loss) gain from investment activities
|
(699
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
(657
|
)
|
|
Interest and dividend income
|
50
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
69
|
|
|
(Loss) gain on disposition of assets, net
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
252
|
|
|
—
|
|
|
249
|
|
|
Other income (loss), net
|
—
|
|
|
5
|
|
|
5
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
2
|
|
|
5
|
|
|
|
(649
|
)
|
|
1,625
|
|
|
749
|
|
|
92
|
|
|
82
|
|
|
29
|
|
|
51
|
|
|
280
|
|
|
61
|
|
|
2,320
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
1,440
|
|
|
409
|
|
|
80
|
|
|
84
|
|
|
5
|
|
|
43
|
|
|
8
|
|
|
—
|
|
|
2,069
|
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
125
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141
|
|
|
Selling, general and administrative
|
5
|
|
|
36
|
|
|
271
|
|
|
15
|
|
|
3
|
|
|
4
|
|
|
12
|
|
|
2
|
|
|
4
|
|
|
352
|
|
|
Restructuring, net
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Interest expense
|
27
|
|
|
27
|
|
|
5
|
|
|
3
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
88
|
|
|
153
|
|
|
|
32
|
|
|
1,503
|
|
|
811
|
|
|
100
|
|
|
89
|
|
|
25
|
|
|
56
|
|
|
11
|
|
|
92
|
|
|
2,719
|
|
|
(Loss) income from continuing operations before income tax (expense) benefit
|
(681
|
)
|
|
122
|
|
|
(62
|
)
|
|
(8
|
)
|
|
(7
|
)
|
|
4
|
|
|
(5
|
)
|
|
269
|
|
|
(31
|
)
|
|
(399
|
)
|
|
Income tax (expense) benefit
|
—
|
|
|
(30
|
)
|
|
14
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
45
|
|
|
26
|
|
|
Net (loss) income from continuing operations
|
(681
|
)
|
|
92
|
|
|
(48
|
)
|
|
(12
|
)
|
|
(7
|
)
|
|
4
|
|
|
(5
|
)
|
|
270
|
|
|
14
|
|
|
(373
|
)
|
|
Less: net (loss) income from continuing operations attributable to non-controlling interests
|
(339
|
)
|
|
13
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(324
|
)
|
|
Net (loss) income from continuing operations attributable to Icahn Enterprises
|
$
|
(342
|
)
|
|
$
|
79
|
|
|
$
|
(48
|
)
|
|
$
|
(10
|
)
|
|
$
|
(7
|
)
|
|
$
|
4
|
|
|
$
|
(5
|
)
|
|
$
|
266
|
|
|
$
|
14
|
|
|
$
|
(49
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
20
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
63
|
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
88
|
|
|
$
|
25
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
129
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Holding Company
|
|
Consolidated
|
|
|
(in millions)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
1,935
|
|
|
$
|
591
|
|
|
$
|
98
|
|
|
$
|
120
|
|
|
$
|
7
|
|
|
$
|
38
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
2,815
|
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
144
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
166
|
|
|
Net (loss) gain from investment activities
|
(549
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
(514
|
)
|
|
Interest and dividend income
|
27
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
36
|
|
|
Gain (loss) on disposition of assets, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
65
|
|
|
Other income (loss), net
|
—
|
|
|
3
|
|
|
(2
|
)
|
|
(2
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
|
|
(522
|
)
|
|
1,938
|
|
|
733
|
|
|
97
|
|
|
121
|
|
|
101
|
|
|
38
|
|
|
27
|
|
|
36
|
|
|
2,569
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
1,751
|
|
|
372
|
|
|
77
|
|
|
115
|
|
|
6
|
|
|
33
|
|
|
18
|
|
|
—
|
|
|
2,372
|
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
124
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
138
|
|
|
Selling, general and administrative
|
4
|
|
|
31
|
|
|
253
|
|
|
14
|
|
|
5
|
|
|
2
|
|
|
8
|
|
|
6
|
|
|
6
|
|
|
329
|
|
|
Restructuring, net
|
—
|
|
|
4
|
|
|
4
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
17
|
|
|
Interest expense
|
6
|
|
|
26
|
|
|
4
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|
125
|
|
|
|
10
|
|
|
1,812
|
|
|
757
|
|
|
106
|
|
|
120
|
|
|
22
|
|
|
40
|
|
|
24
|
|
|
90
|
|
|
2,981
|
|
|
(Loss) income from continuing operations before income tax (expense) benefit
|
(532
|
)
|
|
126
|
|
|
(24
|
)
|
|
(9
|
)
|
|
1
|
|
|
79
|
|
|
(2
|
)
|
|
3
|
|
|
(54
|
)
|
|
(412
|
)
|
|
Income tax (expense) benefit
|
—
|
|
|
(28
|
)
|
|
11
|
|
|
(2
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
103
|
|
|
78
|
|
|
Net (loss) income from continuing operations
|
(532
|
)
|
|
98
|
|
|
(13
|
)
|
|
(11
|
)
|
|
1
|
|
|
73
|
|
|
(2
|
)
|
|
3
|
|
|
49
|
|
|
(334
|
)
|
|
Less: net (loss) income from continuing operations attributable to non-controlling interests
|
(326
|
)
|
|
40
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(289
|
)
|
|
Net (loss) income from continuing operations attributable to Icahn Enterprises
|
$
|
(206
|
)
|
|
$
|
58
|
|
|
$
|
(13
|
)
|
|
$
|
(9
|
)
|
|
$
|
1
|
|
|
$
|
73
|
|
|
$
|
(2
|
)
|
|
$
|
3
|
|
|
$
|
50
|
|
|
$
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
16
|
|
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
67
|
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
83
|
|
|
$
|
23
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2019
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Holding Company
|
|
Consolidated
|
|
|
(in millions)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
4,794
|
|
|
$
|
1,736
|
|
|
$
|
290
|
|
|
$
|
270
|
|
|
$
|
17
|
|
|
$
|
134
|
|
|
$
|
130
|
|
|
$
|
—
|
|
|
$
|
7,371
|
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
445
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
504
|
|
|
Net loss from investment activities
|
(1,619
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(349
|
)
|
|
(1,968
|
)
|
|
Interest and dividend income
|
132
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
55
|
|
|
192
|
|
|
Gain (loss) on disposition of assets, net
|
—
|
|
|
5
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
252
|
|
|
—
|
|
|
256
|
|
|
Other (loss) income, net
|
(1
|
)
|
|
10
|
|
|
12
|
|
|
(8
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
|
2
|
|
|
16
|
|
|
|
(1,488
|
)
|
|
4,812
|
|
|
2,191
|
|
|
282
|
|
|
271
|
|
|
79
|
|
|
134
|
|
|
382
|
|
|
(292
|
)
|
|
6,371
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
4,229
|
|
|
1,190
|
|
|
230
|
|
|
269
|
|
|
14
|
|
|
115
|
|
|
51
|
|
|
—
|
|
|
6,098
|
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
368
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
409
|
|
|
Selling, general and administrative
|
10
|
|
|
107
|
|
|
779
|
|
|
44
|
|
|
11
|
|
|
16
|
|
|
31
|
|
|
15
|
|
|
14
|
|
|
1,027
|
|
|
Restructuring, net
|
—
|
|
|
—
|
|
|
3
|
|
|
9
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
Impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Interest expense
|
66
|
|
|
80
|
|
|
15
|
|
|
12
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
264
|
|
|
443
|
|
|
|
76
|
|
|
4,416
|
|
|
2,355
|
|
|
296
|
|
|
284
|
|
|
71
|
|
|
147
|
|
|
70
|
|
|
278
|
|
|
7,993
|
|
|
(Loss) income from continuing operations before income tax (expense) benefit
|
(1,564
|
)
|
|
396
|
|
|
(164
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|
8
|
|
|
(13
|
)
|
|
312
|
|
|
(570
|
)
|
|
(1,622
|
)
|
|
Income tax (expense) benefit
|
—
|
|
|
(98
|
)
|
|
36
|
|
|
(2
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
76
|
|
|
12
|
|
|
Net (loss) income from continuing operations
|
(1,564
|
)
|
|
298
|
|
|
(128
|
)
|
|
(16
|
)
|
|
(13
|
)
|
|
9
|
|
|
(13
|
)
|
|
311
|
|
|
(494
|
)
|
|
(1,610
|
)
|
|
Less: net (loss) income from continuing operations attributable to non-controlling interests
|
(779
|
)
|
|
77
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
(693
|
)
|
|
Net (loss) income from continuing operations attributable to Icahn Enterprises
|
$
|
(785
|
)
|
|
$
|
221
|
|
|
$
|
(128
|
)
|
|
$
|
(13
|
)
|
|
$
|
(13
|
)
|
|
$
|
9
|
|
|
$
|
(13
|
)
|
|
$
|
299
|
|
|
$
|
(494
|
)
|
|
$
|
(917
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
85
|
|
|
$
|
42
|
|
|
$
|
12
|
|
|
$
|
20
|
|
|
$
|
18
|
|
|
$
|
4
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
195
|
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
265
|
|
|
$
|
73
|
|
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
13
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
389
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Railcar
|
|
Holding Company
|
|
Consolidated
|
|
|
(in millions)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
5,386
|
|
|
$
|
1,732
|
|
|
$
|
299
|
|
|
$
|
370
|
|
|
$
|
14
|
|
|
$
|
125
|
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,998
|
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
426
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
491
|
|
|
Net gain from investment activities
|
233
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95
|
|
|
328
|
|
|
Interest and dividend income
|
73
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
7
|
|
|
98
|
|
|
(Loss) gain on disposition of assets, net
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
(2
|
)
|
|
5
|
|
|
—
|
|
|
65
|
|
|
Other (loss) income, net
|
(1
|
)
|
|
6
|
|
|
(2
|
)
|
|
(15
|
)
|
|
1
|
|
|
—
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
(2
|
)
|
|
(5
|
)
|
|
|
305
|
|
|
5,388
|
|
|
2,156
|
|
|
285
|
|
|
371
|
|
|
161
|
|
|
126
|
|
|
78
|
|
|
5
|
|
|
100
|
|
|
8,975
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
4,914
|
|
|
1,116
|
|
|
234
|
|
|
349
|
|
|
11
|
|
|
108
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
6,786
|
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
355
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
397
|
|
|
Selling, general and administrative
|
6
|
|
|
102
|
|
|
769
|
|
|
44
|
|
|
14
|
|
|
15
|
|
|
26
|
|
|
18
|
|
|
1
|
|
|
17
|
|
|
1,012
|
|
|
Restructuring, net
|
—
|
|
|
4
|
|
|
4
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
Impairment
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
Interest expense
|
33
|
|
|
80
|
|
|
12
|
|
|
12
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
251
|
|
|
391
|
|
|
|
39
|
|
|
5,100
|
|
|
2,259
|
|
|
300
|
|
|
363
|
|
|
68
|
|
|
136
|
|
|
74
|
|
|
2
|
|
|
268
|
|
|
8,609
|
|
|
Income (loss) from continuing operations before income tax (expense) benefit
|
266
|
|
|
288
|
|
|
(103
|
)
|
|
(15
|
)
|
|
8
|
|
|
93
|
|
|
(10
|
)
|
|
4
|
|
|
3
|
|
|
(168
|
)
|
|
366
|
|
|
Income tax (expense) benefit
|
—
|
|
|
(52
|
)
|
|
38
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
101
|
|
|
77
|
|
|
Net income (loss) from continuing operations
|
266
|
|
|
236
|
|
|
(65
|
)
|
|
(15
|
)
|
|
8
|
|
|
87
|
|
|
(10
|
)
|
|
2
|
|
|
1
|
|
|
(67
|
)
|
|
443
|
|
|
Less: net income (loss) from continuing operations attributable to non-controlling interests
|
154
|
|
|
93
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
242
|
|
|
Net income (loss) from continuing operations attributable to Icahn Enterprises
|
$
|
112
|
|
|
$
|
143
|
|
|
$
|
(65
|
)
|
|
$
|
(12
|
)
|
|
$
|
8
|
|
|
$
|
87
|
|
|
$
|
(10
|
)
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
(66
|
)
|
|
$
|
201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
68
|
|
|
$
|
53
|
|
|
$
|
17
|
|
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193
|
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
252
|
|
|
$
|
72
|
|
|
$
|
19
|
|
|
$
|
13
|
|
|
$
|
15
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
383
|
|
Disaggregation of Revenue
In addition to the condensed statements of operations by reporting segment above, we provide additional disaggregated revenue information for and Energy and Automotive segments below.
Energy
Disaggregated revenue for our Energy segment net sales is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Petroleum products
|
$
|
1,533
|
|
|
$
|
1,855
|
|
|
$
|
4,476
|
|
|
$
|
5,133
|
|
|
Nitrogen fertilizer products
|
89
|
|
|
80
|
|
|
318
|
|
|
253
|
|
|
|
$
|
1,622
|
|
|
$
|
1,935
|
|
|
$
|
4,794
|
|
|
$
|
5,386
|
|
Automotive
Disaggregated revenue for our Automotive segment net sales and other revenues from operations is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Automotive services
|
$
|
356
|
|
|
$
|
341
|
|
|
$
|
1,028
|
|
|
$
|
992
|
|
|
Aftermarket parts sales
|
388
|
|
|
394
|
|
|
1,153
|
|
|
1,166
|
|
|
|
$
|
744
|
|
|
$
|
735
|
|
|
$
|
2,181
|
|
|
$
|
2,158
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Condensed Balance Sheets
Icahn Enterprises’ condensed balance sheets by reporting segment are presented below. Icahn Enterprises Holdings’ condensed balance sheets are substantially the same, with immaterial differences relating to our Holding Company’s other assets, debt and equity attributable to Icahn Enterprises Holdings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Holding Company
|
|
Consolidated
|
|
|
(in millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
9
|
|
|
$
|
692
|
|
|
$
|
48
|
|
|
$
|
18
|
|
|
$
|
3
|
|
|
$
|
40
|
|
|
$
|
3
|
|
|
$
|
2,453
|
|
|
$
|
3,266
|
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
600
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
9
|
|
|
613
|
|
|
Investments
|
8,718
|
|
|
82
|
|
|
117
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
505
|
|
|
9,437
|
|
|
Accounts receivable, net
|
—
|
|
|
181
|
|
|
158
|
|
|
84
|
|
|
41
|
|
|
4
|
|
|
32
|
|
|
—
|
|
|
500
|
|
|
Inventories, net
|
—
|
|
|
388
|
|
|
1,210
|
|
|
103
|
|
|
38
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
1,817
|
|
|
Property, plant and equipment, net
|
—
|
|
|
2,919
|
|
|
936
|
|
|
160
|
|
|
122
|
|
|
387
|
|
|
68
|
|
|
—
|
|
|
4,592
|
|
|
Goodwill and intangible assets, net
|
—
|
|
|
263
|
|
|
385
|
|
|
30
|
|
|
13
|
|
|
18
|
|
|
21
|
|
|
—
|
|
|
730
|
|
|
Other assets
|
1,155
|
|
|
222
|
|
|
696
|
|
|
124
|
|
|
21
|
|
|
33
|
|
|
21
|
|
|
30
|
|
|
2,302
|
|
|
Total assets
|
$
|
10,482
|
|
|
$
|
4,747
|
|
|
$
|
3,550
|
|
|
$
|
520
|
|
|
$
|
239
|
|
|
$
|
499
|
|
|
$
|
223
|
|
|
$
|
2,997
|
|
|
$
|
23,257
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities
|
$
|
1,500
|
|
|
$
|
1,185
|
|
|
$
|
1,305
|
|
|
$
|
195
|
|
|
$
|
65
|
|
|
$
|
40
|
|
|
$
|
55
|
|
|
$
|
92
|
|
|
$
|
4,437
|
|
|
Securities sold, not yet purchased, at fair value
|
223
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223
|
|
|
Debt
|
—
|
|
|
1,195
|
|
|
403
|
|
|
269
|
|
|
10
|
|
|
2
|
|
|
19
|
|
|
5,551
|
|
|
7,449
|
|
|
Total liabilities
|
1,723
|
|
|
2,380
|
|
|
1,708
|
|
|
464
|
|
|
75
|
|
|
42
|
|
|
74
|
|
|
5,643
|
|
|
12,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to Icahn Enterprises
|
4,283
|
|
|
1,342
|
|
|
1,842
|
|
|
42
|
|
|
164
|
|
|
457
|
|
|
149
|
|
|
(2,646
|
)
|
|
5,633
|
|
|
Equity attributable to non-controlling interests
|
4,476
|
|
|
1,025
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,515
|
|
|
Total equity
|
8,759
|
|
|
2,367
|
|
|
1,842
|
|
|
56
|
|
|
164
|
|
|
457
|
|
|
149
|
|
|
(2,646
|
)
|
|
11,148
|
|
|
Total liabilities and equity
|
$
|
10,482
|
|
|
$
|
4,747
|
|
|
$
|
3,550
|
|
|
$
|
520
|
|
|
$
|
239
|
|
|
$
|
499
|
|
|
$
|
223
|
|
|
$
|
2,997
|
|
|
$
|
23,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Holding Company
|
|
Consolidated
|
|
|
(in millions)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
5
|
|
|
$
|
668
|
|
|
$
|
43
|
|
|
$
|
46
|
|
|
$
|
20
|
|
|
$
|
39
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1,834
|
|
|
$
|
2,656
|
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
2,648
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
26
|
|
|
2
|
|
|
—
|
|
|
4
|
|
|
2,682
|
|
|
Investments
|
6,867
|
|
|
84
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
1,312
|
|
|
8,337
|
|
|
Accounts receivable, net
|
—
|
|
|
169
|
|
|
149
|
|
|
74
|
|
|
48
|
|
|
3
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
474
|
|
|
Inventories, net
|
—
|
|
|
380
|
|
|
1,203
|
|
|
93
|
|
|
39
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
1,779
|
|
|
Property, plant and equipment, net
|
—
|
|
|
3,027
|
|
|
941
|
|
|
169
|
|
|
115
|
|
|
367
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
4,688
|
|
|
Goodwill and intangible assets, net
|
—
|
|
|
278
|
|
|
412
|
|
|
32
|
|
|
2
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
748
|
|
|
Other assets
|
1,230
|
|
|
225
|
|
|
217
|
|
|
96
|
|
|
8
|
|
|
34
|
|
|
5
|
|
|
299
|
|
|
11
|
|
|
2,125
|
|
|
Total assets
|
$
|
10,750
|
|
|
$
|
4,831
|
|
|
$
|
3,024
|
|
|
$
|
511
|
|
|
$
|
233
|
|
|
$
|
508
|
|
|
$
|
172
|
|
|
$
|
299
|
|
|
$
|
3,161
|
|
|
$
|
23,489
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities
|
$
|
181
|
|
|
$
|
1,043
|
|
|
$
|
905
|
|
|
$
|
164
|
|
|
$
|
56
|
|
|
$
|
41
|
|
|
$
|
35
|
|
|
$
|
112
|
|
|
$
|
178
|
|
|
$
|
2,715
|
|
|
Securities sold, not yet purchased, at fair value
|
468
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
468
|
|
|
Debt
|
—
|
|
|
1,170
|
|
|
372
|
|
|
273
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
5,505
|
|
|
7,326
|
|
|
Total liabilities
|
649
|
|
|
2,213
|
|
|
1,277
|
|
|
437
|
|
|
56
|
|
|
43
|
|
|
39
|
|
|
112
|
|
|
5,683
|
|
|
10,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to Icahn Enterprises
|
5,066
|
|
|
1,274
|
|
|
1,747
|
|
|
55
|
|
|
177
|
|
|
465
|
|
|
133
|
|
|
165
|
|
|
(2,522
|
)
|
|
6,560
|
|
|
Equity attributable to non-controlling interests
|
5,035
|
|
|
1,344
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
6,420
|
|
|
Total equity
|
10,101
|
|
|
2,618
|
|
|
1,747
|
|
|
74
|
|
|
177
|
|
|
465
|
|
|
133
|
|
|
187
|
|
|
(2,522
|
)
|
|
12,980
|
|
|
Total liabilities and equity
|
$
|
10,750
|
|
|
$
|
4,831
|
|
|
$
|
3,024
|
|
|
$
|
511
|
|
|
$
|
233
|
|
|
$
|
508
|
|
|
$
|
172
|
|
|
$
|
299
|
|
|
$
|
3,161
|
|
|
$
|
23,489
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
13.
|
Discontinued Operations.
|
Income from discontinued operations is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
Federal-Mogul
|
|
Tropicana
|
|
ARI
|
|
Total
|
|
Revenues:
|
|
|
Net sales
|
$
|
1,890
|
|
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
1,930
|
|
|
Other revenues from operations
|
—
|
|
|
233
|
|
|
60
|
|
|
293
|
|
|
Interest and dividend income
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Gain on disposition of assets, net
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
Other (loss) income, net
|
(4
|
)
|
|
2
|
|
|
11
|
|
|
9
|
|
|
|
1,952
|
|
|
235
|
|
|
111
|
|
|
2,298
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
1,562
|
|
|
—
|
|
|
42
|
|
|
1,604
|
|
|
Other expenses from operations
|
—
|
|
|
105
|
|
|
36
|
|
|
141
|
|
|
Selling, general and administrative
|
185
|
|
|
78
|
|
|
11
|
|
|
274
|
|
|
Restructuring, net
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
Impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Interest expense
|
45
|
|
|
1
|
|
|
5
|
|
|
51
|
|
|
|
1,807
|
|
|
184
|
|
|
94
|
|
|
2,085
|
|
|
Income from discontinued operations before income tax expense
|
145
|
|
|
51
|
|
|
17
|
|
|
213
|
|
|
Income tax expense
|
(28
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|
(37
|
)
|
|
Income from discontinued operations
|
117
|
|
|
46
|
|
|
13
|
|
|
176
|
|
|
Less: income from discontinued operations attributable to non-controlling interests
|
1
|
|
|
7
|
|
|
5
|
|
|
13
|
|
|
Income from discontinued operations attributable to Icahn Enterprises
|
$
|
116
|
|
|
$
|
39
|
|
|
$
|
8
|
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
88
|
|
|
$
|
17
|
|
|
$
|
57
|
|
|
$
|
162
|
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
15
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
|
|
Federal-Mogul
|
|
Tropicana
|
|
ARI
|
|
Total
|
|
Revenues:
|
|
|
Net sales
|
$
|
5,993
|
|
|
$
|
—
|
|
|
$
|
194
|
|
|
$
|
6,187
|
|
|
Other revenues from operations
|
—
|
|
|
679
|
|
|
169
|
|
|
848
|
|
|
Interest and dividend income
|
2
|
|
|
1
|
|
|
1
|
|
|
4
|
|
|
Gain on disposition of assets, net
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
Other income, net
|
5
|
|
|
1
|
|
|
13
|
|
|
19
|
|
|
|
6,065
|
|
|
681
|
|
|
377
|
|
|
7,123
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
4,999
|
|
|
—
|
|
|
184
|
|
|
5,183
|
|
|
Other expenses from operations
|
—
|
|
|
311
|
|
|
96
|
|
|
407
|
|
|
Selling, general and administrative
|
601
|
|
|
238
|
|
|
30
|
|
|
869
|
|
|
Restructuring, net
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
Impairment
|
2
|
|
|
—
|
|
|
4
|
|
|
6
|
|
|
Interest expense
|
137
|
|
|
4
|
|
|
16
|
|
|
157
|
|
|
|
5,752
|
|
|
553
|
|
|
330
|
|
|
6,635
|
|
|
Income from discontinued operations before income tax expense
|
313
|
|
|
128
|
|
|
47
|
|
|
488
|
|
|
Income tax expense
|
(69
|
)
|
|
(19
|
)
|
|
(12
|
)
|
|
(100
|
)
|
|
Income from discontinued operations
|
244
|
|
|
109
|
|
|
35
|
|
|
388
|
|
|
Less: income from discontinued operations attributable to non-controlling interests
|
7
|
|
|
17
|
|
|
13
|
|
|
37
|
|
|
Income from discontinued operations attributable to Icahn Enterprises
|
$
|
237
|
|
|
$
|
92
|
|
|
$
|
22
|
|
|
$
|
351
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
303
|
|
|
$
|
58
|
|
|
$
|
81
|
|
|
$
|
442
|
|
|
Depreciation and amortization
|
$
|
100
|
|
|
$
|
19
|
|
|
$
|
46
|
|
|
$
|
165
|
|
For the three months ended September 30, 2019, we recorded an income tax benefit of $26 million on pre-tax loss from continuing operations of $399 million compared to an income tax benefit of $78 million on pre-tax loss from continuing operations of $412 million for the three months ended September 30, 2018. Our effective income tax rate was 6.5% and 18.9% for the three months ended September 30, 2019 and 2018, respectively.
For the three months ended September 30, 2019, the effective tax rate was lower than the statutory federal rate of 21%, primarily due to partnership loss for which there was no tax benefit, as such loss is allocated to the partners.
For the three months ended September 30, 2018, the effective tax rate was lower than the statutory federal rate of 21%, primarily due to partnership loss for which there was no tax benefit, as such loss is allocated to the partners.
For the nine months ended September 30, 2019, we recorded an income tax benefit of $12 million on pre-tax loss from continuing operations of $1,622 million compared to an income tax benefit of $77 million on pre-tax income from continuing operations of $366 million for the nine months ended September 30, 2018. Our effective income tax rate was 0.7% and (21.0)% for the nine months ended September 30, 2019 and 2018, respectively.
For the nine months ended September 30, 2019, the effective tax rate was lower than the statutory federal rate of 21%, primarily due to partnership loss for which there was no tax benefit, as such loss is allocated to the partners.
For the nine months ended September 30, 2018, the effective tax rate was lower than the statutory federal rate of 21%, primarily due to partnership income for which there was no tax expense, as such income is allocated to the partners, and
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
favorable permanent tax adjustments, including estimated deductions related to internal reorganization of certain corporate entities within the American Entertainment Properties Corp. consolidated group.
|
|
|
|
15.
|
Changes in Accumulated Other Comprehensive Loss.
|
Changes in accumulated other comprehensive loss consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation Adjustments, Net of Tax
|
|
Post-Retirement Benefits and Other, Net of Tax
|
|
Total
|
|
|
(in millions)
|
|
Balance, December 31, 2018
|
$
|
(38
|
)
|
|
$
|
(47
|
)
|
|
$
|
(85
|
)
|
|
Other comprehensive loss before reclassifications, net of tax
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|
Reclassifications from accumulated other comprehensive loss to earnings, net of tax
|
—
|
|
|
1
|
|
|
1
|
|
|
Other comprehensive (loss) income, net of tax
|
(4
|
)
|
|
1
|
|
|
(3
|
)
|
|
Elimination of stranded tax effects resulting from tax legislation
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
Balance, September 30, 2019
|
$
|
(42
|
)
|
|
$
|
(52
|
)
|
|
$
|
(94
|
)
|
Other income, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Equity earnings from non-consolidated affiliates
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
16
|
|
|
$
|
5
|
|
|
Foreign currency transaction loss
|
(6
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
—
|
|
|
Non-service pension and other post-retirement benefits expense
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(8
|
)
|
|
Gain on extinguishment of debt
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
Other
|
2
|
|
|
4
|
|
|
7
|
|
|
(2
|
)
|
|
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
$
|
(5
|
)
|
|
|
|
|
17.
|
Commitments and Contingencies.
|
Environmental Matters
Due to the nature of our business, certain of our subsidiaries’ operations are subject to numerous existing and proposed laws and governmental regulations designed to protect the environment, particularly regarding plant wastes and emissions and solid waste disposal. Our consolidated environmental liabilities were $34 million and $37 million as of September 30, 2019 and December 31, 2018, respectively, primarily within our Metals and Energy segments and which are included in accrued expenses and other liabilities in our condensed consolidated balance sheets. We do not believe that environmental matters will have a material adverse impact on our consolidated results of operations and financial condition.
On August 21, 2018, CVR Refining received a letter from the United States Department of Justice (the “DOJ”) on behalf of the Environmental Protection Agency (the “EPA”) and Kansas Department of Health and Environment (“KDHE”) alleging violations of the Clean Air Act and a 2012 Consent Decree between CVR Refining, the United States (on behalf of the EPA) and KDHE at CVR Energy’s Coffeyville refinery. In September 2018, CVR Refining executed a tolling agreement with the DOJ and KDHE extending time for negotiation regarding the agencies’ allegations through March 2019, which was extended in March 2019 through November 30, 2019. At this time CVR Energy cannot reasonably estimate the potential penalties, costs, fines or other expenditures that may result from this matter or any subsequent enforcement or litigation relating thereto and,
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
therefore, CVR Energy cannot determine if the ultimate outcome of this matter will have a material impact on its financial position, results of operations or cash flows.
Renewable Fuel Standards
CVR Refining is subject to the Renewable Fuel Standard (“RFS”) of the EPA which requires refiners to either blend renewable fuels in with their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending. CVR Refining is not able to blend the substantial majority of its transportation fuels and has to purchase RINs on the open market and may have to obtain waiver credits for cellulosic biofuels from the EPA, in order to comply with the RFS.
The net cost of RINs for the three months ended September 30, 2019 and 2018 was a benefit of $2 million and expense of $20 million, respectively, and expense of $31 million and $47 million for the nine months ended September 30, 2019 and 2018, respectively, which is included in cost of goods sold in the condensed consolidated statements of operations. Our Energy segment’s cost to comply with the RFS includes the purchased cost of RINs acquired, the impact of recognizing CVR Refining’s uncommitted biofuel blending obligation at fair value based on market prices at each reporting date and the valuation change of RINs acquired in excess of CVR Refining’s RFS obligation as of the reporting date.
Litigation
From time to time, we and our subsidiaries are involved in various lawsuits arising in the normal course of business. We do not believe that such normal routine litigation will have a material effect on our financial condition or results of operations.
Energy
CVR Energy, CVR Refining and its general partner, Icahn Enterprises and certain other affiliates and individuals have each been named in nine lawsuits filed in the Court of Chancery of the State of Delaware by purported former unitholders of CVR Refining, on behalf of themselves and an alleged class of similarly situated unitholders (the “Call Option Lawsuits”). The Call Option Lawsuits primarily allege breach of contract, tortious interference and breach of the implied covenant of good faith and fair dealing and seek monetary damages and attorneys’ fees, among other remedies, relating to CVR Energy’s exercise of the call option under the CVR Refining Amended and Restated Agreement of Limited Partnership assigned to it by CVR Refining’s general partner. The Call Option Lawsuits have been consolidated in the Chancery Court and are in the earliest stages of litigation. CVR Energy believes the Call Option Lawsuits are without merit and intends to vigorously defend against them.
Other Matters
Pension Obligations
Mr. Icahn, through certain affiliates, owns 100% of Icahn Enterprises GP and approximately 92.0% of Icahn Enterprises’ outstanding depositary units as of September 30, 2019. Applicable pension and tax laws make each member of a “controlled group” of entities, generally defined as entities in which there is at least an 80% common ownership interest, jointly and severally liable for certain pension plan obligations of any member of the controlled group. These pension obligations include ongoing contributions to fund the plan, as well as liability for any unfunded liabilities that may exist at the time the plan is terminated. In addition, the failure to pay these pension obligations when due may result in the creation of liens in favor of the pension plan or the Pension Benefit Guaranty Corporation (the “PBGC”) against the assets of each member of the controlled group.
As a result of the more than 80% ownership interest in us by Mr. Icahn’s affiliates, we and our subsidiaries are subject to the pension liabilities of entities in which Mr. Icahn has a direct or indirect ownership interest of at least 80%, which includes the liabilities of pension plans sponsored by ACF. All the minimum funding requirements of the Internal Revenue Code, as amended, and the Employee Retirement Income Security Act of 1974, as amended, for the ACF plans have been met as of September 30, 2019. If the plans were voluntarily terminated, they would be underfunded by approximately $64 million as of September 30, 2019. These results are based on the most recent information provided by the plans’ actuary. These liabilities could increase or decrease, depending on a number of factors, including future changes in benefits, investment returns, and the assumptions used to calculate the liability. As members of the controlled group, we would be liable for any failure of ACF to make ongoing pension contributions or to pay the unfunded liabilities upon a termination of the ACF pension plans. In addition, other entities now or in the future within the controlled group in which we are included may have pension plan obligations that are, or may become, underfunded and we would be liable for any failure of such entities to make ongoing pension contributions or to pay the unfunded liabilities upon termination of such plans.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
The current underfunded status of the ACF pension plans requires them to notify the PBGC of certain “reportable events,” such as if we cease to be a member of the ACF controlled group, or if we make certain extraordinary dividends or stock redemptions. The obligation to report could cause us to seek to delay or reconsider the occurrence of such reportable events.
Starfire Holding Corporation (“Starfire”), which is 99.6% owned by Mr. Icahn, has undertaken to indemnify us and our subsidiaries from losses resulting from any imposition of certain pension funding or termination liabilities that may be imposed on us and our subsidiaries or our assets as a result of being a member of the Icahn controlled group, including ACF. The Starfire indemnity provides, among other things, that so long as such contingent liabilities exist and could be imposed on us, Starfire will not make any distributions to its stockholders that would reduce its net worth to below $250 million. Nonetheless, Starfire may not be able to fund its indemnification obligations to us.
Other
The U.S. Attorney’s office for the Southern District of New York contacted Icahn Enterprises L.P. in September 2017 seeking production of information pertaining to our and Mr. Icahn’s activities relating to the Renewable Fuels Standard and Mr. Icahn’s former role as an advisor to the President. We cooperated with the request and provided information in response to the subpoena. The U.S. Attorney’s office for the Southern District of New York contacted Icahn Enterprises L.P. in June 2018 seeking production of information pertaining to trading in Manitowoc Company, Inc. securities. We cooperated with the request and provided documents in response to the subpoena. The U.S. Attorney’s office has not made any claims or allegations against us or Mr. Icahn with respect to either of the foregoing inquiries. We maintain a strong compliance program and, while no assurances can be made, we do not believe these inquiries will have a material impact on our business, financial condition, results of operations or cash flows.
|
|
|
|
18.
|
Supplemental Cash Flow Information.
|
Supplemental cash flow information from continuing operations consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2019
|
|
2018
|
|
|
(in millions)
|
|
Cash payments for interest, net of amounts capitalized
|
$
|
400
|
|
|
$
|
400
|
|
|
Cash payments (receipts) for income taxes, net of refunds
|
58
|
|
|
(4
|
)
|
In addition to the above, Icahn Enterprises Holdings reduced its receivable from Icahn Enterprises in a non-cash distribution to limited partner in the amount of $32 million in the third quarter of 2019. This transaction is reported as a non-cash related party transaction with respect to Icahn Enterprises Holdings and is eliminated in consolidation with respect to Icahn Enterprises.
Icahn Enterprises
LP Unit Distribution
On October 31, 2019, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $2.00 per depositary unit, which will be paid on or about December 20, 2019 to depositary unitholders of record at the close of business on November 15, 2019. Depositary unitholders will have until December 11, 2019 to make an election to receive either cash or additional depositary units; if a unitholder does not make an election, it will automatically be deemed to have elected to receive the distribution in cash. Depositary unitholders who elect to receive additional depositary units will receive units valued at the volume weighted average trading price of the units on NASDAQ during the 5 consecutive trading days ending December 18, 2019. No fractional depositary units will be issued pursuant to the distribution payment. Icahn Enterprises will make a cash payment in lieu of issuing fractional depositary units to any unitholders electing to receive depositary units. Any unitholders that would only be eligible to receive a fraction of a depositary unit based on the above calculation will receive a cash payment.