0000813762-13-000032.txt : 20130503 0000813762-13-000032.hdr.sgml : 20130503 20130503172028 ACCESSION NUMBER: 0000813762-13-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20130331 FILED AS OF DATE: 20130503 DATE AS OF CHANGE: 20130503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICAHN ENTERPRISES L.P. CENTRAL INDEX KEY: 0000813762 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 133398766 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09516 FILM NUMBER: 13813834 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVENUE STREET 2: SUITE 4600 CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 212-702-4300 MAIL ADDRESS: STREET 1: 767 FIFTH AVENUE STREET 2: SUITE 4600 CITY: NEW YORK STATE: NY ZIP: 10153 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN REAL ESTATE PARTNERS L P DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICAHN ENTERPRISES HOLDINGS L.P. CENTRAL INDEX KEY: 0001034563 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 133398767 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-118021-01 FILM NUMBER: 13813835 BUSINESS ADDRESS: STREET 1: 767 FIFTH AVENUE STREET 2: SUITE 4600 CITY: NEW YORK STATE: NY ZIP: 10153 BUSINESS PHONE: 212-702-4300 MAIL ADDRESS: STREET 1: 767 FIFTH AVENUE STREET 2: SUITE 4600 CITY: NEW YORK STATE: NY ZIP: 10153 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN REAL ESTATE HOLDINGS L P DATE OF NAME CHANGE: 19980311 10-Q 1 iep-33113x10q.htm 10-Q IEP-3.31.13-10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q


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

For the Quarterly Period Ended March 31, 2013

(Commission File Number)
(Exact Name of Registrant as Specified in Its Charter)
(Address of Principal Executive Offices) (Zip Code)
(Telephone Number)
(State or Other Jurisdiction of Incorporation or Organization)
(IRS Employer Identification No.)
1-9516
ICAHN ENTERPRISES L.P.
Delaware
13-3398766
 
767 Fifth Avenue, Suite 4700
New York, NY 10153
(212) 702-4300
 
 
 
 
 
 
333-118021-01
ICAHN ENTERPRISES HOLDINGS L.P.
Delaware
13-3398767
 
767 Fifth Avenue, Suite 4700
New York, NY 10153
(212) 702-4300
 
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Icahn Enterprises L.P. Yes x No o         Icahn Enterprises Holdings L.P. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     
Icahn Enterprises L.P. Yes x No o         Icahn Enterprises Holdings L.P. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check One):
Icahn Enterprises L.P.
 
Icahn Enterprises Holdings L.P.
Large Accelerated Filer o
Accelerated Filer x
 
Large Accelerated Filer o
Accelerated Filer o
Non-accelerated Filer o
Smaller reporting company o
 
Non-accelerated Filer x
Smaller reporting company o

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

As of May 2, 2013, there were 109,547,363 of Icahn Enterprises' depositary units outstanding.



ICAHN ENTERPRISES L.P.
ICAHN ENTERPRISES HOLDINGS L.P.
TABLE OF CONTENTS






i


EXPLANATORY NOTE

This Quarterly Report on Form 10-Q ("Report") is a joint report being filed by Icahn Enterprises L.P. and Icahn Enterprises Holdings L.P. Each registrant hereto is filing on its own behalf all of the information contained in this Report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information.




ii


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In millions, except unit amounts)
 
March 31,
 
December 31,
 
2013
 
2012
ASSETS
(Unaudited)
 
 
Cash and cash equivalents
$
2,437

 
$
3,071

Cash held at consolidated affiliated partnerships and restricted cash
1,424

 
1,419

Investments
7,690

 
5,491

Accounts receivable, net
2,028

 
1,841

Due from brokers
50

 
94

Inventories, net
1,968

 
1,955

Property, plant and equipment, net
6,571

 
6,523

Goodwill
2,089

 
2,082

Intangible assets, net
1,180

 
1,206

Other assets
824

 
874

Total Assets
$
26,261

 
$
24,556

LIABILITIES AND EQUITY
 
 
 
Accounts payable
$
1,349

 
$
1,383

Accrued expenses and other liabilities
1,920

 
1,496

Deferred tax liability
1,398

 
1,335

Securities sold, not yet purchased, at fair value
620

 
533

Due to brokers
423

 

Post-employment benefit liability
1,438

 
1,488

Debt
8,184

 
8,548

Total liabilities
15,332

 
14,783

 
 
 
 
Commitments and contingencies (Note 17)

 

 
 
 
 
Equity:
 
 
 
Limited partners: Depositary units: 108,025,417 and 104,850,813 units issued and outstanding at March 31, 2013 and December 31, 2012, respectively
5,304

 
4,913

General partner
(236
)
 
(244
)
Equity attributable to Icahn Enterprises
5,068

 
4,669

Equity attributable to non-controlling interests
5,861

 
5,104

Total equity
10,929

 
9,773

Total Liabilities and Equity
$
26,261

 
$
24,556





See notes to consolidated financial statements.


1


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit amounts)
 
Three Months Ended March 31,
 
2013
 
2012
Revenues:
(Unaudited)
   Net sales
$
4,574

 
$
2,399

   Other revenues from operations
189

 
192

   Net gain from investment activities
578

 
58

   Interest and dividend income
24

 
25

   Other (loss) income, net
(46
)
 
10

 
5,319

 
2,684

Expenses:
 
 
 
   Cost of goods sold
3,893

 
2,072

   Other expenses from operations
100

 
106

   Selling, general and administrative
369

 
309

   Restructuring
8

 
7

   Impairment

 
2

   Interest expense
134

 
117

 
4,504

 
2,613

Income before income tax (expense) benefit
815

 
71

Income tax (expense) benefit
(120
)
 
30

Net income
695

 
101

Less: net income attributable to non-controlling interests
(418
)
 
(52
)
Net income attributable to Icahn Enterprises
$
277

 
$
49

 
 
 
 
Net income attributable to Icahn Enterprises allocable to:
 
 
 
   Limited partners
$
271

 
$
48

   General partner
6

 
1

 
$
277

 
$
49

 
 
 
 
Basic income per LP unit
$
2.56

 
$
0.48

Basic weighted average LP units outstanding
106

 
99

 
 
 
 
Diluted income per LP unit
$
2.50

 
$
0.48

Diluted weighted average LP units outstanding
109

 
99

Cash distributions declared per LP unit
$
1.00

 
$
0.10





See notes to consolidated financial statements.


2


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
 
Three Months Ended March 31,
 
2013
 
2012
 
(Unaudited)
Net income
$
695

 
$
101

Other comprehensive income (loss), net of tax:
 
 
 
Post-employment benefits
13

 
9

Hedge instruments
6

 
14

Translation adjustments and other
(41
)
 
84

Other comprehensive (loss) income, net of tax
(22
)
 
107

Comprehensive income
673

 
208

Less: Comprehensive income attributable to non-controlling interests
(412
)
 
(79
)
Comprehensive income attributable to Icahn Enterprises
$
261

 
$
129

 
 
 
 
Comprehensive income attributable to Icahn Enterprises allocable to:
 
 
 
   Limited partners
$
256

 
$
127

   General partner
5

 
2

 
$
261

 
$
129


Accumulated other comprehensive loss was $1,004 million and $982 million at March 31, 2013 and December 31, 2012, respectively.






















See notes to consolidated financial statements.


3


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(In millions, Unaudited)

 
Equity Attributable to Icahn Enterprises
 
 
 
 
 
General Partner's (Deficit) Equity
 
Limited
Partners' Equity
 
Total Partners' Equity
 
Non-controlling Interests
 
Total Equity
Balance, December 31, 2012
$
(244
)
 
$
4,913

 
$
4,669

 
$
5,104

 
$
9,773

Net income
6

 
271

 
277

 
418

 
695

Other comprehensive loss
(1
)
 
(15
)
 
(16
)
 
(6
)
 
(22
)
Partnership distributions
(2
)
 
(103
)
 
(105
)
 

 
(105
)
Proceeds from equity offering
4

 
194

 
198

 

 
198

Dividends paid to non-controlling interests in subsidiaries

 

 

 
(92
)
 
(92
)
Proceeds from CVR Refining IPO
1

 
48

 
49

 
438

 
487

Changes in subsidiary equity and other

 
(4
)
 
(4
)
 
(1
)
 
(5
)
Balance, March 31, 2013
$
(236
)
 
$
5,304

 
$
5,068

 
$
5,861

 
$
10,929


































See notes to consolidated financial statements.


4


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 
Three Months Ended March 31,
 
2013
 
2012
Cash flows from operating activities:
(Unaudited)
Net income
$
695

 
$
101

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
 
 
Net gain from securities transactions
(1,158
)
 
(490
)
Purchases of securities
(1,756
)
 
(474
)
Proceeds from sales of securities
780

 
4,218

Purchases to cover securities sold, not yet purchased

 
(4,317
)
Proceeds from securities sold, not yet purchased
79

 
536

Changes in receivables and payables relating to securities transactions
449

 
(2,412
)
Loss on sale of discontinued operations
47

 

Depreciation and amortization
164

 
108

Deferred taxes
64

 
(42
)
Other, net
(4
)
 
13

Changes in cash held at consolidated affiliated partnerships and restricted cash
595

 
2,729

Changes in other operating assets and liabilities
86

 
115

Net cash provided by operating activities
41

 
85

Cash flows from investing activities:
 
 
 
Capital expenditures
(278
)
 
(197
)
Net payments associated with business dispositions
(40
)
 

Acquisitions of businesses, net of cash acquired

 
(3
)
Proceeds from sale of investments
13

 
170

Purchases of investments
(46
)
 
(210
)
Other, net
(3
)
 

Net cash used in investing activities
(354
)
 
(240
)
Cash flows from financing activities:
 
 
 
Proceeds from equity offerings
198

 
510

Partnership distributions

 
(10
)
Proceeds from offering of subsidiary equity
556

 

Distributions to non-controlling interests in subsidiaries
(92
)
 

Proceeds from issuance of senior unsecured notes

 
716

Proceeds from other borrowings
64

 
174

Repayments of borrowings
(427
)
 
(56
)
Change in restricted cash relating to variable rate note discharge
(600
)
 

Other, net
(7
)
 
(8
)
Net cash (used in) provided by financing activities
(308
)
 
1,326

Effect of exchange rate changes on cash and cash equivalents
(13
)
 
18

Net (decrease) increase in cash and cash equivalents
(634
)
 
1,189

Cash and cash equivalents, beginning of period
3,071

 
2,278

Cash and cash equivalents, end of period
$
2,437

 
$
3,467

Supplemental information:
 
 
 
Cash payments for interest, net of amounts capitalized
$
203

 
$
161

Net cash payments for income taxes
$
61

 
$
30

Distribution payable to LP unitholders
$
105

 
$

Net unrealized gain on available-for-sale securities
$

 
$
3

Redemptions payable to non-controlling interests
$

 
$
17

See notes to consolidated financial statements.


5



ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In millions)
 
March 31,
 
December 31,
 
2013
 
2012
ASSETS
(Unaudited)
 
 
Cash and cash equivalents
$
2,437

 
$
3,071

Cash held at consolidated affiliated partnerships and restricted cash
1,424

 
1,419

Investments
7,690

 
5,491

Accounts receivable, net
2,028

 
1,841

Due from brokers
50

 
94

Inventories, net
1,968

 
1,955

Property, plant and equipment, net
6,571

 
6,523

Goodwill
2,089

 
2,082

Intangible assets, net
1,180

 
1,206

Other assets
838

 
888

Total Assets
$
26,275

 
$
24,570

LIABILITIES AND EQUITY
 
 
 
Accounts payable
$
1,349

 
$
1,383

Accrued expenses and other liabilities
1,920

 
1,496

Deferred tax liability
1,398

 
1,335

Securities sold, not yet purchased, at fair value
620

 
533

Due to brokers
423

 

Post-employment benefit liability
1,438

 
1,488

Debt
8,176

 
8,540

Total liabilities
15,324

 
14,775

 
 
 
 
Commitments and contingencies (Note 17)

 

 
 
 
 
Equity:
 
 
 
Limited partner
5,377

 
4,984

General partner
(287
)
 
(293
)
Equity attributable to Icahn Enterprises Holdings
5,090

 
4,691

Equity attributable to non-controlling interests
5,861

 
5,104

Total equity
10,951

 
9,795

Total Liabilities and Equity
$
26,275

 
$
24,570








See notes to consolidated financial statements.


6


ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
 
Three Months Ended March 31,
 
2013
 
2012
Revenues:
(Unaudited)
   Net sales
$
4,574

 
$
2,399

   Other revenues from operations
189

 
192

   Net gain from investment activities
578

 
58

   Interest and dividend income
24

 
25

   Other (loss) income, net
(46
)
 
10

 
5,319

 
2,684

Expenses:
 
 
 
   Cost of goods sold
3,893

 
2,072

   Other expenses from operations
100

 
106

   Selling, general and administrative
369

 
309

   Restructuring
8

 
7

   Impairment

 
2

   Interest expense
134

 
117

 
4,504

 
2,613

Income before income tax (expense) benefit
815

 
71

Income tax (expense) benefit
(120
)
 
30

Net income
695

 
101

Less: net income attributable to non-controlling interests
(418
)
 
(52
)
Net income attributable to Icahn Enterprises Holdings
$
277

 
$
49

 
 
 
 
Net income attributable to Icahn Enterprises Holdings allocable to:
 
 
 
   Limited partner
$
274

 
$
49

   General partner
3

 

 
$
277

 
$
49











See notes to consolidated financial statements.


7


ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
 
Three Months Ended March 31,
 
2013
 
2012
 
(Unaudited)
Net income
$
695

 
$
101

Other comprehensive income (loss), net of tax:
 
 
 
Post-employment benefits
13

 
9

Hedge instruments
6

 
14

Translation adjustments and other
(41
)
 
84

Other comprehensive (loss) income, net of tax
(22
)
 
107

Comprehensive income
673

 
208

Less: Comprehensive income attributable to non-controlling interests
(412
)
 
(79
)
Comprehensive income attributable to Icahn Enterprises Holdings
$
261

 
$
129

 
 
 
 
Comprehensive income attributable to Icahn Enterprises Holdings allocable to:
 
 
 
   Limited partner
$
258

 
$
128

   General partner
3

 
1

 
$
261

 
$
129


Accumulated other comprehensive loss was $1,004 million and $982 million at March 31, 2013 and December 31, 2012, respectively.

























See notes to consolidated financial statements.


8


ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(In millions, Unaudited)
 
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, 2012
$
(293
)
 
$
4,984

 
$
4,691

 
$
5,104

 
$
9,795

Net income
3

 
274

 
277

 
418

 
695

Other comprehensive loss

 
(16
)
 
(16
)
 
(6
)
 
(22
)
Partnership distributions
(1
)
 
(104
)
 
(105
)
 

 
(105
)
Proceeds from equity offering
4

 
194

 
198

 

 
198

Dividends paid to non-controlling interests in subsidiaries

 

 

 
(92
)
 
(92
)
Proceeds from CVR Refining IPO

 
49

 
49

 
438

 
487

Changes in subsidiary equity and other

 
(4
)
 
(4
)
 
(1
)
 
(5
)
Balance, March 31, 2013
$
(287
)
 
$
5,377

 
$
5,090

 
$
5,861

 
$
10,951



































See notes to consolidated financial statements.


9


ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
 
Three Months Ended March 31,
 
2013
 
2012
Cash flows from operating activities:
(Unaudited)
Net income
$
695

 
$
101

Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
 
 
Net gain from securities transactions
(1,158
)
 
(490
)
Purchases of securities
(1,756
)
 
(474
)
Proceeds from sales of securities
780

 
4,218

Purchases to cover securities sold, not yet purchased

 
(4,317
)
Proceeds from securities sold, not yet purchased
79

 
536

Changes in receivables and payables relating to securities transactions
449

 
(2,412
)
Loss on sale of discontinued operations
47

 

Depreciation and amortization
164

 
108

Deferred taxes
64

 
(42
)
Other, net
(4
)
 
13

Changes in cash held at consolidated affiliated partnerships and restricted cash
595

 
2,729

Changes in other operating assets and liabilities
86

 
115

Net cash provided by operating activities
41

 
85

Cash flows from investing activities:
 
 
 
Capital expenditures
(278
)
 
(197
)
Net payments associated with business dispositions
(40
)
 

Acquisitions of businesses, net of cash acquired

 
(3
)
Proceeds from sale of investments
13

 
170

Purchases of investments
(46
)
 
(210
)
Other, net
(3
)
 

Net cash used in investing activities
(354
)
 
(240
)
Cash flows from financing activities:
 
 
 
Proceeds from equity offerings
198

 
510

Partnership distributions

 
(10
)
Proceeds from offering of subsidiary equity
556

 

Distributions to non-controlling interests in subsidiaries
(92
)
 

Proceeds from issuance of senior unsecured notes

 
716

Proceeds from other borrowings
64

 
174

Repayments of borrowings
(427
)
 
(56
)
Change in restricted cash relating to variable rate note discharge
(600
)
 

Other, net
(7
)
 
(8
)
Net cash (used in) provided by financing activities
(308
)
 
1,326

Effect of exchange rate changes on cash and cash equivalents
(13
)
 
18

Net (decrease) increase in cash and cash equivalents
(634
)
 
1,189

Cash and cash equivalents, beginning of period
3,071

 
2,278

Cash and cash equivalents, end of period
$
2,437

 
$
3,467

Supplemental information:
 
 
 
Cash payments for interest, net of amounts capitalized
$
203

 
$
161

Net cash payments for income taxes
$
61

 
$
30

Distribution payable to Icahn Enterprises LP unitholders
$
105

 
$

Net unrealized gain on available-for-sale securities
$

 
$
3

Redemptions payable to non-controlling interests
$

 
$
17

See notes to consolidated financial statements.


10


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)


1.
Description of Business and Basis of Presentation.
General
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 March 31, 2013. 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 debt, as discussed further in Note 10, "Debt," and 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 as of March 31, 2013. In addition to the above, Mr. Icahn and his affiliates owned 97,764,251, or approximately 90.5%, of Icahn Enterprises' outstanding depositary units as of March 31, 2013.
We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Automotive, Energy, Metals, Railcar, Gaming, Food Packaging, 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 the Holding Company. Further information regarding our continuing reportable segments is contained in Note 2, “Operating Units,” and Note 13, “Segment Reporting.”
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 “'40 Act”). Therefore, no more than 40% of our total assets can be invested in investment securities, as such term is defined in the '40 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 (the “Code”).
The accompanying 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, 2012. The consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“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.
Reclassifications
Certain reclassifications from the prior year presentation have been made to conform to the current year presentation.
Purchase Price Allocation
On May 4, 2012, we acquired a controlling interest in CVR Energy, Inc. ("CVR") and have allocated the total purchase price to the fair value of assets acquired and liabilities assumed based on their fair values at the acquisition date, with amounts exceeding fair values recorded as goodwill. The purchase price allocation is preliminary and is subject to additional adjustments. The purchase price allocation will be finalized during the second quarter of 2013.
Principles of Consolidation
General
Our consolidated financial statements include the accounts of (i) Icahn Enterprises and (ii) the wholly and majority owned subsidiaries of Icahn Enterprises, in addition to those entities in which we have a controlling interest as a general partner interest or in which we may be the primary beneficiary of a variable interest entity (“VIE”). In evaluating whether we have a


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ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

controlling financial interest in entities in which we would consolidate, we consider the following: (1) for voting interest entities, we consolidate these entities in which we own a majority of the voting interests; and (2) for limited partnership entities that are not considered VIEs, we consolidate these entities if we are the general partner of such entities and for which no substantive kick-out rights (the rights underlying the limited partners' ability to dissolve the limited partnership or otherwise remove the general partners are collectively referred to as “kick-out” rights) or participating rights exist. All material intercompany accounts and transactions have been eliminated in consolidation.
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 Related Matters,” and Note 5, “Fair Value Measurements,” for a detailed discussion of our investments.
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 March 31, 2013 was approximately $8.2 billion and $8.3 billion, respectively. The carrying value and estimated fair value of our long-term debt as of December 31, 2012 was approximately $8.5 billion and $8.6 billion, respectively.
Restricted Cash
Our restricted cash balance was approximately $1.3 billion and $0.7 billion as of March 31, 2013 and December 31, 2012, respectively.
Adoption of New Accounting Standards
In December 2011, the FASB issued ASU No. 2011-11, which amends FASB ASC Topic 210, Balance Sheet. This ASU requires companies to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210) - Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This ASU limits the scope of the original guidance. These ASUs are effective retrospectively for interim and annual periods beginning on or after January 1, 2013. We adopted these additional disclosure requirements effective January 1, 2013 which had minimal impact on our disclosures.
In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. This ASU requires an entity to provide information about amounts reclassified out of accumulated other comprehensive income by component. The guidance is effective prospectively for interim and annual periods beginning after December 15, 2012. We adopted these additional disclosure requirements effective January 1, 2013. See Note15, "Changes in Accumulated Other Comprehensive Loss," for additional information.
Recently Issued Accounting Standards
In February 2013, the FASB issued ASU No. 2013-04, which amends FASB ASC Topic 405, Liabilities. This ASU requires the measurement of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the sum of (1) the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and (2) any additional amount the reporting entity expects to pay on behalf of its co-obligors. This guidance also requires the disclosure of the nature and amount of the obligation as well as other information about those obligations. The guidance is effective for interim and annual periods beginning after December 15, 2013. We anticipate that the adoption of this guidance will not have a material impact on our consolidated financial position, results of operations and cash flows.
In March 2013, the FASB issued ASU No. 2013-05, which amends FASB ASC Topic 830, Foreign Currency Matters. This ASU resolves the accounting for certain foreign currency matters with respect to the release of cumulative translation adjustment into net income within a foreign entity under certain circumstances. This ASU is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. This ASU should be applied prospectively to derecognition events occurring after the effective date. Early adoption is permitted provided that if the entity early adopts this guidance, it apply them as of the beginning of the entity's fiscal year of adoption. The adoption of this ASU will not have a material impact on our consolidated financial position, results of operations or cash flows.


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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

Filing Status of Subsidiaries
Federal-Mogul Corporation (“Federal-Mogul”), CVR, American Railcar Industries, Inc. (“ARI”) and Tropicana Entertainment Inc. (“Tropicana”) are each a public reporting entity under the Securities Exchange Act of 1934, as amended, and file annual, quarterly and current reports and proxy and information statements with the Securities and Exchange Commission ("SEC"). Each of these reports is publicly available at www.sec.gov.

2.
Operating Units.
Investment
Icahn Onshore LP and Icahn Offshore LP (together, the “General Partners”) act as general partner of Icahn Partners LP ("Icahn Partners") and the Master Funds (as defined herein), respectively. The General Partners provide investment advisory and certain administrative and back office services to the Investment Funds (as defined below) but do not provide such services to any other entities, individuals or accounts. The “Master Funds” consist of (i) Master Fund I, (ii) Master Fund II and (iii) Master Fund III. Icahn Partners and the Master Funds are collectively referred to herein as 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 $2.6 billion and $2.4 billion as of March 31, 2013 and December 31, 2012, respectively. Mr. Icahn and his affiliates (excluding Icahn Enterprises and Icahn Enterprises Holdings) had direct investments in the Investment Funds of approximately $3.9 billion and $3.5 billion as of March 31, 2013, and December 31, 2012, respectively.
Automotive
We conduct our Automotive segment through our majority ownership in Federal-Mogul. Federal-Mogul is a leading global supplier of technology and innovation in vehicle and industrial products for fuel economy, emissions reduction and safety systems. Federal-Mogul serves the world's foremost original equipment manufacturers (“OEM”) and servicers (“OES”) (collectively “OE”) of automotive, light, medium and heavy-duty commercial vehicles, off-road, agricultural, marine, rail, aerospace, power generation and industrial equipment, as well as the worldwide aftermarket.
Effective September 1, 2012, Federal-Mogul began operating with two end-customer focused business units. The Powertrain (“PT”) unit focuses on original equipment powertrain and systems protection products for automotive, heavy-duty and industrial applications. The Vehicle Components Solutions (“VCS”) unit sells and distributes a broad portfolio of products in the global vehicle aftermarket and OES market, while also serving OEMs with vehicle products including brake friction, chassis, wipers and other vehicle components. The new organizational model allows for a strong product line focus benefiting both original equipment and aftermarket customers and will enable the global Federal-Mogul teams to be responsive to customers' needs for superior products and to promote greater identification with Federal-Mogul premium brands. The division of the global Federal-Mogul business into two business units is expected to enhance management focus to capitalize on opportunities for organic or acquisition growth, profit improvement, resource utilization and business model optimization in line with the unique requirements of the two different customer bases.
As of March 31, 2013, we owned approximately 77.6% of the total outstanding common stock of Federal-Mogul.
Accounts Receivable, net
Federal-Mogul's subsidiaries in Brazil, France, Germany, Italy, Japan and the United States are party to accounts receivable factoring and securitization facilities. Gross accounts receivable transferred under these facilities were $248 million and $217 million as of March 31, 2013 and December 31, 2012, respectively. Of those gross amounts, $244 million and $216 million, respectively, qualify as sales as defined in FASB ASC Topic 860, Transfers and Servicing. The remaining transferred receivables were pledged as collateral and accounted for as secured borrowings and recorded in the consolidated balance sheets within accounts receivable, net and debt. Under the terms of these facilities, Federal-Mogul is not obligated to draw cash immediately upon the transfer of accounts receivable. As of both March 31, 2013 and December 31, 2012, Federal-Mogul had no outstanding transferred receivables for which cash had not yet been drawn. Proceeds from the transfers of accounts receivable qualifying as sales were approximately $333 million and $414 million for the three months ended March 31, 2013 and 2012, respectively.
For the three months ended March 31, 2013 and 2012, expenses associated with transfers of receivables were $1 million and $2 million, respectively, and were recorded in the consolidated statements of operations within other income, net. Where


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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

Federal-Mogul receives a fee to service and monitor these transferred receivables, such fees are sufficient to offset the costs and as such, a servicing asset or liability is not incurred as a result of such activities.
Certain of the facilities contain terms that require Federal-Mogul to share in the credit risk of the sold receivables. The maximum exposures to Federal-Mogul associated with certain of these facilities' terms were $29 million and $19 million at March 31, 2013 and December 31, 2012, respectively. Based on Federal-Mogul's analysis of the creditworthiness of its customers on which such receivables were sold and outstanding as of March 31, 2013 and December 31, 2012, Federal-Mogul estimated the loss to be immaterial.
Restructuring
In June 2012, Federal-Mogul announced a restructuring plan ("Restructuring 2012") to reduce or eliminate capacity at several high-cost VCS facilities and transfer production to lower-cost locations. Restructuring 2012 is anticipated to be completed within two years. In connection Restructuring 2012, Federal-Mogul recorded $1 million in restructuring charges for the three months ended March 31, 2013, all of which pertain to employee costs.
In February 2013, Federal-Mogul's Board of Directors approved the evaluation of restructuring opportunities in order to improve operating performance. Federal-Mogul obtained its Board of Director's approval to commence a restructuring plan ("Restructuring 2013"). Restructuring 2013 is intended to take place between 2013 and 2015 with an expected total cost of $82 million, of which $65 million and $17 million pertains to employee costs and facility costs, respectively. In connection with Restructuring 2013, Federal-Mogul recorded $7 million in restructuring charges for the three months ended March 31, 2013, all of which pertain to employee costs.
Energy
We conduct our Energy segment through our majority ownership in CVR. We acquired a controlling interest in CVR on May 4, 2012.
CVR is a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries 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 nitrogen fertilizers in the form of ammonia and urea ammonium nitrate ("UAN"). As of March 31, 2013, CVR owned the general partner and approximately 81% of the common units of CVR Refining (following the initial public offering of CVR Refining ("CVR Refining IPO") as discussed below) and approximately 70% of the common units of CVR Partners.
On January 23, 2013, CVR Refining completed its initial public offering of its common units representing limited partner interests, resulting in gross proceeds of $600 million, before giving effect to underwriting discounts and other offering expenses. Included in these proceeds is $100 million paid by us for the purchase of common units of CVR Refining in connection with this offering. Additionally, on January 30, 2013, the underwriters closed their option to purchase additional common units of CVR Refining, resulting in gross proceeds of $90 million, before giving effect to underwriting discounts and other offering costs.
Following the CVR Refining IPO, CVR indirectly owned approximately 81% of CVR Refining's outstanding common units and 100% of the Partnership's general partner, which holds a non-economic general partner interest.
As of March 31, 2013, we owned 82.0% of the total outstanding common stock of CVR. In addition, as of March 31, 2013, as a result of purchasing common units of CVR Refining as discussed above, we owned approximately 2.7% of the total outstanding common stock of CVR Refining.
Petroleum business. The petroleum business consists of CVR's interest in CVR Refining. CVR's petroleum business includes a 115,000 barrels per day ("bpd") complex full coking medium-sour crude oil refinery in Coffeyville, Kansas and a 70,000 bpd crude oil unit refinery in Wynnewood, Oklahoma. The combined production capacity represents approximately 22% of the region's refining capacity. The Coffeyville refinery is situated on approximately 440 acres in southeast Kansas, approximately 100 miles from Cushing, Oklahoma, a major crude oil trading and storage hub. The Wynnewood refinery is situated on approximately 400 acres located approximately 65 miles south of Oklahoma City, Oklahoma and approximately 130 miles from Cushing, Oklahoma.
In addition to the refineries, CVR's petroleum business owns and operates the following: (1) a crude oil gathering system with a gathering capacity of approximately 50,000 bpd serving Kansas, Oklahoma, Missouri, Nebraska and Texas, (2) a rack


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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

marketing division supplying product through tanker trucks directly to customers located in close geographic proximity to Coffeyville, Kansas and Wynnewood, Oklahoma and at throughput terminals on Magellan and NuStar Energy, LP's ("NuStar") refined products distribution systems, (3) a 145,000 bpd pipeline system (supported by approximately 350 miles of CVR's owned and leased pipeline) that transports crude oil to its Coffeyville refinery from its Broome Station tank farm and associated crude oil storage tanks with a capacity of 1.2 million barrels, (4) crude oil storage tanks with a capacity of 0.5 million barrels in Wynnewood, Oklahoma, (5) an additional 3.3 million barrels of leased storage capacity located in Cushing, Oklahoma and other locations and (6) 1.0 million barrels of company owned crude oil storage in Cushing, Oklahoma.
Nitrogen fertilizer business. The nitrogen fertilizer business consists of CVR's interest in CVR Partners. The nitrogen fertilizer business consists of a nitrogen fertilizer manufacturing facility that is the only operation in North America that utilizes a petroleum coke, or pet coke, gasification process to produce nitrogen fertilizer. The facility includes a 1,225 ton-per-day ammonia unit, a 3,000 ton-per-day UAN unit and a gasifier complex having a capacity of 84 million standard cubic feet per day of hydrogen. The gasifier is a dual-train facility, with each gasifier able to function independently of the other, thereby providing redundancy and improving reliability.
Metals
We conduct our Metals segment through our indirect wholly owned subsidiary, PSC Metals, Inc. (“PSC Metals”). PSC Metals collects industrial and obsolete scrap metal, processes it into reusable forms and supplies the recycled metals to its customers including electric-arc furnace mills, integrated steel mills, foundries, secondary smelters and metals brokers. PSC Metals' ferrous products include busheling, plate and structural, shredded, sheared and bundled scrap metal and other purchased scrap metal such as turnings (steel machining fragments), cast furnace iron and broken furnace iron. PSC Metals processes the scrap into a size, density and purity required by customers to meet their production needs. PSC Metals also processes non-ferrous metals including aluminum, copper, brass, stainless steel and nickel-bearing metals. Non-ferrous products are a significant raw material in the production of aluminum and copper alloys used in manufacturing. PSC Metals also operates a steel products business that includes the supply of secondary plate and structural grade pipe that is sold into niche markets for counterweights, piling and foundations, construction materials and infrastructure end-markets.
Railcar
We conduct our Railcar segment through our majority ownership in ARI and our indirect wholly-owned subsidiary AEP Leasing LLC ("AEP Leasing"). ARI manufactures railcars, which are offered for sale or lease, custom designed railcar parts and other industrial products, primarily aluminum and special alloy steel castings. These products are sold to various types of companies including leasing companies, railroads, industrial companies and other non-rail companies. ARI leases railcars that it manufactures to certain markets. ARI provides railcar repair and maintenance services for railcar fleets. In addition, ARI provides fleet management, maintenance, engineering and field services for railcars owned by certain customers. Such services include maintenance planning, project management, tracking and tracing, regulatory compliance, mileage audit, rolling stock taxes and online service access.
On August 17, 2012, AEP Leasing was formed for the purpose of leasing railcars. AEP Leasing's business is managed by American Railcar Leasing LLC ("ARL"), an entity controlled by Mr. Icahn and which also manages ARI's leasing business. AEP Leasing began purchasing railcars from ARI in the third quarter of 2012 with terms and pricing not less favorable to ARI than the terms and pricing available to unaffiliated third parties. Transactions between AEP Leasing and ARI have been eliminated in consolidation.
As of March 31, 2013, we owned approximately 55.6% of the total outstanding common stock of ARI.
Gaming
We conduct our Gaming segment through our majority ownership in Tropicana. Tropicana currently owns and operates a diversified, multi-jurisdictional collection of casino gaming properties. The eight casino facilities it operates feature approximately 372,000 square feet of gaming space with 7,100 slot machines, 210 table games and 6,000 hotel rooms with three casino facilities located in Nevada and one in each of Mississippi, Indiana, Louisiana, New Jersey and Aruba.
As of March 31, 2013, we owned approximately 67.9% of the total outstanding common stock of Tropicana.
Food Packaging
We conduct our Food Packaging segment through our majority ownership in Viskase Companies, Inc. ("Viskase"). Viskase is a worldwide leader in the production and sale of cellulosic, fibrous and plastic casings for the processed meat and


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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

poultry industry. Viskase currently operates eight manufacturing facilities and ten distribution centers throughout North America, Europe, South America and Asia and derives approximately 73% of its total net sales from customers located outside the United States.
As of March 31, 2013, we owned approximately 70.8% of the total outstanding common stock of Viskase.
Real Estate
Our Real Estate segment consists of rental real estate, property development and resort activities.
As of March 31, 2013, we owned 29 commercial rental real estate properties. Our property development operations are run primarily through Bayswater Development LLC, 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 New Seabury development property in Cape Cod, Massachusetts and our Grand Harbor and Oak Harbor development property in Vero Beach, Florida include land for future residential development of approximately 322 and 870 units of residential housing, respectively. Both developments operate golf and resort operations as well. In addition, our Real Estate segment owns an unfinished development property which is located on approximately 23 acres in Las Vegas, Nevada.
As of March 31, 2013 and December 31, 2012, $72 million and $73 million, respectively, of the net investment in financing leases and net real estate leased to others which is included in property, plant and equipment, net, were pledged to collateralize the payment of nonrecourse mortgages payable.
Home Fashion
We conduct our Home Fashion segment through our indirect wholly owned subsidiary, WestPoint Home LLC (“WPH”), a manufacturer and distributor of home fashion consumer products. WPH is engaged in the business of manufacturing, sourcing, designing, marketing, distributing and selling home fashion consumer products. WPH markets a broad range of manufactured and sourced bed and bath products, including sheets, pillowcases, bedspreads, quilts, comforters and duvet covers, featherbeds, bath and beach towels, bath accessories, bed skirts, bed pillows, flocked blankets, woven blankets and throws, and mattress pads. WPH recognizes revenue primarily through the sale of home fashion products to a variety of retail and institutional customers. In addition, WPH receives a small portion of its revenues through the licensing of its trademarks.
WPH has transitioned a significant majority of its manufacturing to low-cost countries but continues to maintain its corporate offices and certain distribution operations in the United States.

3.
Related Party Transactions.
Our 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
Mr. Icahn, along with his affiliates (excluding Icahn Enterprises and Icahn Enterprises Holdings), makes investments in the Investment Funds. As of March 31, 2013 and December 31, 2012, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates was approximately $3.9 billion and $3.5 billion, respectively.
Effective April 1, 2011, based on an expense-sharing arrangement, certain expenses borne by Icahn Capital are reimbursed by the Investment Funds, generally when such expenses are paid. Such expenses relate to the operation, administration and investment activities of Icahn Capital for the benefit of the Investment Funds (including salaries, benefits and rent) and shall be allocated pro rata in accordance with each investor's capital accounts in the Investment Funds. For the three months ended March 31, 2013 and 2012, $27 million and $3 million, respectively, was allocated to the Investment Funds based on this expense-sharing arrangement.


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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

Railcar
Agreements with American Railcar Leasing LLC
Effective April 16, 2011, ARI entered into a fleet services agreement ("Railcar Services Agreement") with ARL, a company controlled by Mr. Icahn, for a term of three years that will automatically renew for additional one-year periods unless either party provides at least 60 days written prior notice of termination. As stipulated in the Railcar Services Agreement, ARI provides railcar repair, engineering, administrative and other services, on an as needed basis, for ARL's lease fleet at mutually agreed-upon prices. Railcar services revenues, included in other revenues from operations in our consolidated statements of operations, recorded by ARI were $5 million under this agreement for each of the three months ended March 31, 2013 and 2012, respectively. The terms and pricing on services to related parties are not less favorable to ARI than the terms and pricing on services provided to unaffiliated third parties. The Railcar Services Agreement was unanimously approved by the independent directors of ARI's audit committee on the basis that the terms were no less favorable than those terms that could have been obtained in a comparable transaction with an unaffiliated third party.
On February 29, 2012, ARI entered into a railcar management agreement (the "ARI Railcar Management Agreement") with ARL, pursuant to which ARI engaged ARL to sell or lease ARI's railcars in certain markets, subject to the terms and conditions of the ARI Railcar Management Agreement. The ARI Railcar Management Agreement was effective as of January 1, 2011, will continue through December 31, 2015 and may be renewed upon written agreement by both parties. In December 2012, a subsidiary of ARI entered into a similar agreement with ARL with a term of five years.
On August 30, 2012, AEP Leasing entered into a railcar management agreement with ARL (the "AEP Railcar Management Agreement" and together with the ARI Railcar Management Agreement, the "Railcar Management Agreements"), pursuant to which AEP Leasing engaged ARL to sell or lease AEP Leasing's railcars in certain markets, subject to the terms and conditions of the AEP Railcar Management Agreement. The AEP Railcar Management Agreement was effective as of August 30, 2012, will continue through December 31, 2022 and may be renewed upon written agreement by both parties.
The Railcar Management Agreements also provide that ARL will manage ARI's and AEP Leasing's leased railcars including arranging for services, such as repairs or maintenance, as deemed necessary. Subject to the terms and conditions of the agreement, ARL will receive, in respect of leased railcars, a fee consisting of a lease origination fee and a management fee based on the lease revenues, and, in respect of railcars sold by ARL, sales commissions. The ARI Railcar Management Agreement was unanimously approved by ARI's special committee and Icahn Enterprises' audit committee who were advised by independent counsel and an independent financial advisor. The AEP Railcar Management Agreement was unanimously approved by Icahn Enterprises' audit committee was advised by independent counsel and an independent financial advisor. Each of the Railcar Management Agreements was approved by the applicable special or audit committees on the basis that the terms of the Railcar Management Agreements were not materially less favorable than those terms that could have been obtained in a comparable transaction with an unaffiliated third party. Combined fees incurred by ARI and AEP Leasing in connection with the Railcar Management Agreements were immaterial for each of the three months ended March 31, 2013 and 2012.   
As of March 31, 2013 and December 31, 2012, our Railcar segment had accounts receivable of $3 million and $2 million, respectively, due from ARL. These amounts are included in other assets in our consolidated balance sheets.
Insight Portfolio Group LLC (formerly known as Icahn Sourcing, LLC)
Icahn Sourcing, LLC ("Icahn Sourcing") 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 was a member of the buying group in 2012. Prior to December 31, 2012 Icahn Enterprises did not pay Icahn Sourcing any fees or other amounts with respect to the buying group arrangement.
In December, 2012, Icahn Sourcing advised Icahn Enterprises that effective January 1, 2013 it would restructure its ownership and change its name to Insight Portfolio Group LLC (“Insight Portfolio Group”).  In connection with the restructuring, Icahn Enterprises Holdings acquired a minority equity interest in Insight Portfolio Group and agreed to pay a portion of Insight Portfolio Group's operating expenses in 2013. In addition to the minority equity interest held by Icahn Enterprises Holdings, certain subsidiaries of Icahn Enterprises Holdings, including Federal-Mogul, CVR, Tropicana, ARI, Viskase, PSC Metals and WPH also acquired minority equity interests in Insight Portfolio Group and agreed to pay a portion of Insight Portfolio Group's operating expenses in 2013. A number of other entities with which Mr. Icahn has a relationship also


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ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

acquired equity interests in Insight Portfolio Group and also agreed to pay certain of Insight Portfolio Group's operating expenses in 2013. 

4.
Investments and Related Matters.
Investment
Investments, and securities sold, not yet purchased consist of equities, bonds, bank debt and other corporate obligations, and derivatives, all of which are reported at fair value in our consolidated balance sheets. See Note 5, "Fair Value Measurements-Investment," for details of the investments for our Investment segment.
Our Investment segment assesses the applicability of equity method accounting with respect to their investments based on a combination of qualitative and quantitative factors, including overall stock ownership of the Investment Funds combined with those of our affiliates along with board of directors representation.
Our Investment segment applied the fair value option to certain of its investments that would have otherwise been subject to the equity method of accounting.  As of March 31, 2013, the fair value of these investments was $354 million. During the three months ended March 31, 2013 and 2012, our Investment segment recorded gains of $40 million and $121 million, respectively, associated with these investments. Such amounts are included in net gain from investment activities in our consolidated statements of operations. Included in these investment gains and losses is the Investment Funds' gains and losses in The Hain Celestial Group, Inc. (“Hain”) and Metro-Golden-Mayer Inc. ("MGM"). As of March 31, 2013, the Investment Funds, together with their affiliates held, in the aggregate, approximately 16% of the outstanding shares of Hain. As of March 31, 2013, the Investment Funds no longer held any shares of MGM. The General Partners have applied the fair value option to their investments in Hain and previously to MGM.
We believe that these investments to which we applied the fair value option are not material, individually or in the aggregate, to our consolidated financial statements. Hain is a registered SEC reporting companies whose financial statements are available at www.sec.gov. 
Other Segments
The carrying value of investments held by our Automotive, Gaming, Railcar and Home Fashion segments and our Holding Company consist of the following:
 
March 31, 2013
 
December 31, 2012
 
(in millions)
Equity method investments
$
303

 
$
299

Other investments
161

 
108

 
$
464

 
$
407

Our Holding Company applies the fair value option to its investments that would otherwise be subject to the equity method of accounting. We record unrealized gains and losses for the change in fair value of such investments as a component of net gain from investment activities in the consolidated statements of operations. We believe that these investments, individually, or in the aggregate, are not material to our consolidated financial statements.



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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

5.
Fair Value Measurements.
U.S. GAAP requires enhanced disclosures about investments and non-recurring non-financial assets and non-financial 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 as of the reporting date. The types of investments included in Level 1 include listed equities and listed derivatives. We do not adjust the quoted price for these investments, even in situations where we hold a large position.
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. Investments that are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives. 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.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's 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 considers 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.


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ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

Investment
The following table summarizes the valuation of the Investment Funds' investments and derivative contracts by the above fair value hierarchy levels as of March 31, 2013 and December 31, 2012: 
 
March 31, 2013
 
December 31, 2012
  
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
(in millions)
Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Basic materials
$
53

 
$
9

 
$

 
$
62

 
$
144

 
$
9

 
$

 
$
153

      Communications
1,036

 
14

 

 
1,050

 
560

 
16

 

 
576

      Consumer, non-cyclical
1,894

 

 

 
1,894

 
1,340

 

 

 
1,340

      Consumer, cyclical
337

 

 

 
337

 
261

 

 

 
261

      Diversified
28

 

 

 
28

 

 

 

 

      Energy
1,921

 
19

 

 
1,940

 
1,052

 
55

 

 
1,107

      Financial
234

 

 

 
234

 
244

 

 

 
244

      Funds

 

 

 

 

 
308

 

 
308

      Technology
641

 
525

 

 
1,166

 
325

 

 

 
325

      Utilities
2

 

 

 
2

 
208

 

 

 
208

 
6,146

 
567

 

 
6,713

 
4,134

 
388

 

 
4,522

   Corporate debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Consumer, cyclical

 

 
290

 
290

 

 

 
288

 
288

      Financial

 
15

 

 
15

 

 
50

 

 
50

      Sovereign debt

 
3

 

 
3

 

 
5

 

 
5

      Utilities

 
30

 

 
30

 

 
31

 

 
31

 

 
48

 
290

 
338

 

 
86

 
288

 
374

   Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Financial

 
175

 

 
175

 

 
188

 

 
188

 
6,146

 
790

 
290

 
7,226

 
4,134

 
662

 
288

 
5,084

Derivative contracts, at fair value(1)

 
1

 

 
1

 

 

 

 

 
$
6,146

 
$
791

 
$
290

 
$
7,227

 
$
4,134

 
$
662

 
$
288

 
$
5,084

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities sold, not yet purchased, at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Equity securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Consumer, cyclical
$
620

 
$

 
$

 
$
620

 
$
473

 
$

 
$

 
$
473

      Funds

 

 

 

 

 
60

 

 
60

 
620

 

 

 
620

 
473

 
60

 

 
533

Derivative contracts, at fair value(2)

 
478

 

 
478

 

 
84

 

 
84

 
$
620

 
$
478

 
$

 
$
1,098

 
$
473

 
$
144

 
$

 
$
617


(1) 
Included in other assets in our consolidated balance sheets.
(2) 
Included in accrued expenses and other liabilities in our consolidated balance sheets.


20


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

The changes in investments measured at fair value for which our Investment segment has used Level 3 input to determine fair value are as follows:
 
Three Months Ended March 31,
  
2013
 
2012
 
(in millions)
Balance at January 1
$
288


$
289

Gross realized and unrealized gains (losses)
4

 
(13
)
Gross proceeds
(2
)
 
(3
)
Balance at March 31
$
290


$
273

Unrealized gains of $4 million are included in earnings related to Level 3 investments still held at March 31, 2013. Total realized and unrealized gains and losses recorded for Level 3 investments, if any, are reported in net gain from investment activities in our consolidated statements of operations.
The Investment Funds held one Level 3 corporate debt investment at March 31, 2013.  Fair value was determined through yield analysis of comparable loans to which we applied a risk premium that we determined to be appropriate, which resulted in a lower valuation for our Level 3 investment.  Adjusting the risk premium by 1% in either direction would result in a 2% change in the fair value of the loan.
Other Segments and Holding Company
The following table summarizes the valuation of our Automotive and Energy segments and our Holding Company investments, derivative contracts and other liabilities by the above fair value hierarchy levels as of March 31, 2013 and December 31, 2012:
 
March 31, 2013
 
December 31, 2012
  
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
(in millions)
Marketable equity and debt securities
$
1

 
$

 
$

 
$
1

 
$
1

 
$

 
$

 
$
1

Trading securities

 

 
125

 
125

 

 

 
60

 
60

Derivative contracts, at fair value(1)

 
1

 

 
1

 

 
1

 
21

 
22

 
$
1

 
$
1

 
$
125


$
127

 
$
1

 
$
1

 
$
81

 
$
83

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other liabilities
$

 
$
32

 
$

 
$
32

 
$

 
$
1

 
$

 
$
1

Derivative contracts, at fair value(2)

 
45

 

 
45

 

 
89

 

 
89

 
$

 
$
77

 
$

 
$
77

 
$

 
$
90

 
$

 
$
90


(1) 
Amounts are classified within other assets in our consolidated balance sheets.
(2) 
Amounts are classified within accrued expenses and other liabilities in our consolidated balance sheets.

The changes in trading securities measured at fair value for which our Holding Company have used Level 3 input to determine fair value are as follows:
 
Three Months Ended March 31,
 
2013
 
2012
 
(in millions)
Balance at January 1
$
81

 
$

Purchase
46

 

Gross unrealized losses
(2
)
 

Balance at March 31
$
125

 
$



21


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

6.
Financial Instruments.
Certain derivative contracts with a single counterparty executed by the Investment Funds, our Automotive or Energy segments, or by our Holding Company 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. As a result, the net exposure to counterparties is reported in either other assets or accrued expenses and other liabilities in our consolidated balance sheets.
Investment Segment and Holding Company
The Investment Funds currently maintain cash deposits and cash equivalents with financial institutions. Certain account balances may not be covered by the Federal Deposit Insurance Corporation, while other accounts may exceed federally insured limits. The Investment Funds have prime broker arrangements in place with multiple prime brokers as well as a custodian bank. The Investment Funds also have relationships with several financial institutions with which they trade derivative and other financial instruments.
In the normal course of business, the Investment Funds and the Holding Company 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 Fund's and the Holding Company's 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.
Securities sold, not yet purchased, at fair value represent obligations to deliver the specified security, thereby creating a liability to repurchase the security in the market at prevailing prices. Accordingly, these transactions result in off-balance-sheet risk, as the satisfaction of the obligations may exceed the amount recognized in our consolidated balance sheets. Our investments in securities and amounts due from brokers are partially restricted until we satisfy the obligation to deliver the securities sold, not yet purchased.
The Investment Funds and the Holding Company may enter into derivative contracts, including swap contracts, futures contracts and option contracts. The Investment Funds may also enter into foreign currency derivative contracts with the objective of capital appreciation or to economically hedge against foreign currency exchange rate risks on all or a portion of their non-U.S. dollar denominated investments.
The Investment Funds and the Holding Company 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 other payments, 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 and the Holding Company 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 and the Holding Company 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 and the Holding Company. When the contract is closed, the Investment Funds and the Holding Company 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 and the Holding Company 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' and the Holding Company's 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 consolidated balance sheets.


22


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

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 gain or loss 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 consolidated balance sheets. At March 31, 2013, the maximum payout amounts relating to certain put options written by the Investment Funds were approximately $859 million.  At December 31, 2012, the maximum payout amounts relating to certain put options written by the Investment Funds approximated $7.9 billion, of which approximately $6.8 billion related to covered put options on existing short positions on a certain stock index. As of March 31, 2013 and December 31, 2012, there were unrealized gains of $1 million and $180 million, respectively.
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 derivative instruments with credit-risk-related contingent features that are in a liability position at March 31, 2013 and December 31, 2012 was $478 million and $84 million, respectively.
At March 31, 2013 and December 31, 2012, the Investment Funds had $40 million and $148 million, respectively, posted as collateral for derivative positions, including those derivative instruments with credit-risk-related contingent features; these amounts are included in cash held at consolidated affiliated partnerships and restricted cash in our consolidated balance sheets.
U.S. GAAP requires the disclosure of information about obligations under certain guarantee arrangements. Such guarantee arrangements requiring disclosure include contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity's failure to perform under an agreement as well as indirect guarantees of the indebtedness of others.
Each Investment Fund's assets may be held in one or more accounts maintained for the Investment Fund by its prime broker or at other brokers or custodian banks, which may be located in various jurisdictions. The prime broker and custodian banks are subject to various laws and regulations in the relevant jurisdictions in the event of their insolvency. Accordingly, the practical effect of these laws and their application to the Investment Fund's assets may be subject to substantial variations, limitations and uncertainties. The insolvency of any of the prime brokers, custodian banks or clearing corporations may result in the loss of all or a substantial portion of the Investment Fund's assets or in a significant delay in the Investment Fund's having access to those assets.
Credit concentrations may arise from investment activities and may be impacted by changes in economic, industry or political factors. The Investment Funds and the Holding Company routinely execute transactions with counterparties in the financial services industry, resulting in credit concentration with respect to this industry. In the ordinary course of business, the Investment Funds and the Holding Company may also be subject to a concentration of credit risk to a particular counterparty.
The Investment Funds and the Holding Company seek to mitigate these risks by actively monitoring exposures, collateral requirements and the creditworthiness of our counterparties.
Automotive
Interest Rate Risk
During 2008, Federal-Mogul entered into a series of five-year interest rate swap agreements with a total notional value of $1,190 million to hedge the variability of interest payments associated with its variable-rate term loans. During the first quarter of 2013, the majority of these interest swap agreements expired. As of March 31, 2013 the remaining five-year interest swap agreements have a total notional value of $140 million. As of March 31, 2013 and December 31, 2012, unrealized net losses of $2 million and $10 million, respectively, were recorded in accumulated other comprehensive loss as a result of these hedges. As of March 31, 2013, losses of $2 million are expected to be reclassified from accumulated other comprehensive loss to the consolidated statement of operations within the next 9 months.


23


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

These interest rate swaps reduce Federal-Mogul's overall interest rate risk. However, due to the remaining outstanding borrowings on Federal-Mogul's debt facilities and other borrowing facilities that continue to have variable interest rates, management believes that interest rate risk to Federal-Mogul could be material if there are significant adverse changes in interest rates. To the extent that interest rates change by 25 basis points, Federal-Mogul's annual interest expense would show a corresponding change of approximately $7 million and $2 million for the years 2014 and 2015, respectively, representing the term of Federal-Mogul's variable-rate term loans.
Commodity Price Risk
Federal-Mogul's production processes are dependent upon the supply of certain raw materials that are exposed to price fluctuations on the open market. The primary purpose of Federal-Mogul's commodity price forward contract activity is to manage the volatility associated with forecasted purchases. Federal-Mogul monitors its commodity price risk exposures regularly to maximize the overall effectiveness of its commodity forward contracts. Principal raw materials hedged include natural gas, copper, nickel, tin, zinc, high-grade aluminum and aluminum alloy. Forward contracts are used to mitigate commodity price risk associated with raw materials, generally related to purchases forecast for up to 15 months in the future.
Federal-Mogul had commodity price hedge contracts outstanding with combined notional values of $52 million and $45 million at March 31, 2013 and December 31, 2012, respectively, substantially all of which mature within one year in each of the respective periods and substantially all were designated as hedging instruments for accounting purposes. Unrealized net (losses) gains of $(1) million and $1 million were recorded in accumulated other comprehensive loss as of March 31, 2013 and December 31, 2012, respectively.
Foreign Currency Risk
Federal-Mogul manufactures and sells its products in North America, South America, Asia, Europe and Africa. As a result, Federal-Mogul's financial results can be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets in which Federal-Mogul manufactures and sells its products. Federal-Mogul's operating results are primarily exposed to changes in exchange rates between the U.S. dollar and European currencies.
Federal-Mogul generally tries to use natural hedges within its foreign currency activities, including the matching of revenues and costs, to minimize foreign currency risk. Where natural hedges are not in place, Federal-Mogul considers managing certain aspects of its foreign currency activities and larger transactions through the use of foreign currency options or forward contracts. Principal currencies hedged have historically included the euro, British pound and Polish zloty. Federal-Mogul had notional values of $126 million and $160 million of foreign currency hedge contracts outstanding at March 31, 2013 and December 31, 2012, respectively, of which $14 million and $11 million, respectively, were designated as cash flow hedging instruments for accounting purposes. Unrealized net gains of zero and $1 million were recorded in accumulated other comprehensive loss as of March 31, 2013 and December 31, 2012, respectively, for the contracts designated as hedging instruments. The remaining outstanding contracts as of March 31, 2013 were entered into by Federal-Mogul in order to offset fluctuations in consolidated earnings caused by changes in currency rates used to translate earnings at foreign subsidiaries into U.S. dollars over the next 12 months. These contracts are not designated as hedging instruments for accounting purposes and are marked to market through the income statement. Unrealized gains of $3 million related to these contracts were recorded in other income, net for the three months ended March 31, 2013.
Concentrations of Credit Risk
Financial instruments, which potentially subject Federal-Mogul to concentrations of credit risk, consist primarily of accounts receivable and cash investments. Federal-Mogul's customer base includes virtually every significant global light and commercial vehicle manufacturer and a large number of distributors, installers and retailers of automotive aftermarket parts. Federal-Mogul's credit evaluation process and the geographical dispersion of sales transactions help to mitigate credit risk concentration. No individual customer accounted for more than 6% of Federal-Mogul's direct sales during the three months ended March 31, 2013. Federal-Mogul had one VCS customer that accounted for 18% of its net accounts receivable balance as of March 31, 2013. Federal-Mogul requires placement of cash in financial institutions evaluated as highly creditworthy.
Energy
CVR is 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 from time to time enters into various commodity derivative transactions.


24


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

CVR has adopted accounting standards which impose extensive record-keeping requirements in order to designate a derivative financial instrument as a hedge. CVR 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 for GAAP purposes. Gains or losses related to the change in fair value and periodic settlements of these derivative instruments are included in other (loss) income, net in the consolidated statement of operations.
CVR maintains a margin account to facilitate other commodity derivative activities. A portion of this account may include funds available for withdrawal. These funds are included in cash and cash equivalents within the consolidated balance sheets. The maintenance margin balance is included within other assets within consolidated balance sheets. Depending upon the position of the open commodity derivatives as of the reporting date, the amounts are classified either as an asset or liability within the consolidated balance sheets. From time to time, CVR may be required to deposit additional funds into this margin account. The fair value of the open commodity positions as of each of March 31, 2013 and December 31, 2012 was a net loss of less than $1 million which is included in accrued expenses and other liabilities. For the three months ended March 31, 2013, CVR recognized a net realized and unrealized loss of $2 million which is included in other (loss) income, net in the consolidated statements of operations.
Commodity Swap
In September 2011, CVR Refining entered into several commodity swap contracts with effective periods beginning in January 2012. The physical volumes are not exchanged and these contracts are net settled with cash. The contract fair value of the commodity swaps is reflected on the consolidated balance sheets with changes in fair value currently recognized in the consolidated statement of operations. Quoted prices for similar assets or liabilities in active markets (Level 2) are considered to determine the fair values for the purpose of marking to market the hedging instruments at each period end. As of March 31, 2013 and December 31, 2012, CVR had open commodity hedging instruments consisting of 22.8 million and 23.3 million barrels, respectively, of crack spreads primarily to fix the margin on a portion of its future gasoline and distillate production. The fair value of the outstanding contracts at March 31, 2013 and December 31, 2012 was a net liability of $34 million and $67 million, respectively. For the three months ended March 31, 2013, CVR recognized a net realized and unrealized loss of $18 million which is included in other (loss) income, net in the consolidated statements of operations.
Interest Rate Swap
On June 30 and July 1, 2011, Coffeyville Resources Nitrogen Fertilizers, LLC ("CRNF") entered into two floating-to-fixed interest rate swap agreements for the purpose of hedging the interest rate risk associated with a portion of its $125 million floating rate term debt which matures in April 2016. The aggregate notional amount covered under these agreements totals $63 million (split evenly between the two agreement dates) and commenced on August 12, 2011 and expires on February 12, 2016. Under the terms of the interest rate swap agreement entered into on June 30, 2011, CRNF will receive a floating rate based on three month LIBOR and pay a fixed rate of 1.94%. Under the terms of the interest rate swap agreement entered into on July 1, 2011, CRNF will receive a floating rate based on three month LIBOR and pay a fixed rate of 1.975%. Both swap agreements are settled every 90 days. The effect of these swap agreements is to lock in a fixed rate of interest of approximately 1.96% plus the applicable margin paid to lenders over three-month LIBOR as governed by the CRNF credit agreement. As of both March 31, 2013 and December 31, 2012, the effective rate was approximately 4.6%. The agreements were designated as cash flow hedges at inception and accordingly, the effective portion of the gain or loss on the swap is reported as a component of accumulated other comprehensive income (loss) and will be reclassified into interest expense when the interest rate swap transaction affects earnings. The ineffective portion of the gain or loss will be recognized immediately in current interest expense in the consolidated statement of operations. The realized loss on the interest rate swap reclassified from accumulated other comprehensive loss into interest expense was less than $1 million for the three months ended March 31, 2013.


25


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

Consolidated Derivative Information
At March 31, 2013, the volume of our derivative activities based on their notional exposure, categorized by primary underlying risk, are as follows:
  
Long Notional Exposure
 
Short Notional Exposure
Primary underlying risk:
(in millions)
Equity swaps
$
2

 
$
6,128

Foreign currency forwards
126

 
2,162

Interest rate swap contracts
203

 

Commodity contracts
66

 
39

The following table presents the consolidated fair values of our derivatives that are not designated as hedging instruments:
 
 
Asset Derivatives(1)
 
Liability Derivatives(2)
Derivatives Not Designated as Hedging Instruments
 
March 31,
 
December 31,
 
March 31,
 
December 31,
 
2013
 
2012
 
2013
 
2012
 
 
(in millions)
Equity contracts
 
$

 
$
21

 
$
483

 
$
35

Foreign exchange contracts
 
6

 

 
4

 
59

Commodity contracts
 
20

 
8

 
54

 
74

Sub-total
 
26

 
29

 
541

 
168

Netting across contract types(3)
 
(24
)
 
(7
)
 
(24
)
 
(7
)
Total(3)
 
$
2

 
$
22

 
$
517

 
$
161


(1) 
Net asset derivatives are located within other assets in our consolidated balance sheets.
(2) 
Net liability derivatives are located within accrued expenses and other liabilities in our consolidated balance sheets.
(3) 
Excludes netting of cash collateral received and posted.  The total collateral posted at March 31, 2013 and December 31, 2012 was $40 million and $148 million, respectively, across all counterparties.
The following table presents the effects of our derivative instruments not designated as hedging instruments on the statements of operations for the three months ended March 31, 2013 and 2012:
 
 
Gain (Loss) Recognized in Income(1)
 
 
Three Months Ended March 31,
Derivatives Not Designated as Hedging Instruments
 
2013
 
2012
 
 
(in millions)
Equity contracts
 
$
(645
)
 
$
(399
)
Foreign exchange contracts
 
68

 
(41
)
Commodity contracts
 
(51
)
 

 
 
$
(628
)
 
$
(440
)
 
(1) 
Gains (losses) recognized on derivatives are classified in net gain from investment activities in our consolidated statements of operations for our Investment segment and are included in other income (loss), net for all other segments.



26


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

The following table presents the fair values of our derivative instruments that are designated as cash flow hedging instruments:
 
 
Asset Derivatives(1)
 
Liability Derivatives(2)
Derivatives Designated as Cash Flow Hedging Instruments
 
March 31, 2013
 
December 31, 2012
 
March 31, 2013
 
December 31, 2012
 
 
(in millions)
Interest rate swap contracts
 
$

 
$

 
$
5

 
$
13

Commodity contracts
 
1

 
2

 
2

 
1

Sub-total
 
1

 
2

 
7

 
14

Netting across contract types
 
(1
)
 
(2
)
 
(1
)
 
(2
)
Total
 
$

 
$

 
$
6

 
$
12


(1) 
Located within other assets in our consolidated balance sheets.
(2) 
Located within accrued expenses and other liabilities in our consolidated balance sheets.

The following tables present the effect of our derivative instruments that are designated as cash flow hedging instruments on our consolidated financial statements for the three months ended March 31, 2013 and 2012:
Three Months Ended March 31, 2013
Derivatives Designated as Hedging Instruments
 
Amount of (Loss) Gain Recognized in OCI on Derivatives (Effective Portion)
 
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)
 
Location of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)
 
 
(in millions)
 
(in millions)
 
 
Interest rate swap contracts
 
$
(1
)
 
$
(7
)
 
Interest expense
Commodity contracts
 
(2
)
 

 
Cost of goods sold
Foreign currency contracts
 

 

 
 
 
 
$
(3
)
 
$
(7
)
 
 

Three Months Ended March 31, 2012
Derivatives Designated as Hedging Instruments
 
Amount of (Loss) Gain Recognized in OCI on Derivatives (Effective Portion)
 
Amount of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)
 
Location of (Loss) Gain Reclassified from AOCI into Income (Effective Portion)
 
 
(in millions)
 
(in millions)
 
 
Interest rate swap contracts
 
$
(3
)
 
$
(10
)
 
Interest expense
Commodity contracts
 
7

 
(3
)
 
Cost of goods sold
Foreign currency contracts
 
(3
)
 

 
 
 
 
$
1

 
$
(13
)
 
 



27


ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2013 (Unaudited)

7.
Inventories, Net.
Inventories, net consists of the following:
  
March 31, 2013
 
December 31, 2012
 
(in millions)
Raw materials
$
490

 
$
495

Work in process
263

 
248

Finished goods
1,215

 
1,212

 
$
1,968

 
$
1,955


8.
Goodwill and Intangible Assets, Net.
Goodwill consists of the following:
 
March 31, 2013
 
December 31, 2012
 
Gross Carrying Amount
 
Accumulated
Impairment
 
Net
Carrying
Value
 
Gross
Carrying
Amount
 
Accumulated
Impairment
 
Net
Carrying
Value
 
(in millions)
Automotive
$
1,375

 
$
(226
)
 
$
1,149

 
$
1,368

 
$
(226
)
 
$
1,142

Energy
930

 

 
930

 
930

 

 
930

Railcar
7

 

 
7

 
7

 

 
7

Food Packaging
3

 

 
3

 
3

 

 
3

 
$
2,315

 
$
(226
)
 
$
2,089

 
$
2,308

 
$
(226
)