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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the Quarterly Period Ended March 31, 2023

OR

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

For the Transition Period from to

(Commission File Number)

(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

16690 Collins Avenue, PH-1

Sunny Isles Beach, FL 33160

(305) 422-4100

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

Title of Each Class

    

Trading Symbol(s)

    

Name of Each Exchange on Which Registered

Depositary Units of Icahn Enterprises L.P.
Representing Limited Partner Interests

IEP

 

Nasdaq Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes No

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

Large Accelerated Filer

Accelerated Filer

Emerging Growth Company

Non-accelerated Filer

Smaller Reporting Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

As of May 9, 2023, there were 369,197,424 of Icahn Enterprises’ depositary units outstanding.

ICAHN ENTERPRISES L.P.

TABLE OF CONTENTS

Page No.

Forward-Looking Statements

1

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

2

Item 2.

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

33

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

46

Item 4.

Controls and Procedures

47

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

48

Item 1A.

Risk Factors

48

Item 5.

Other Information

50

Item 6.

Exhibits

51

i

Table of Contents

FORWARD-LOOKING STATEMENTS

This Report contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or by the Private Securities Litigation Reform Act. All statements included in this Report, other than statements that relate solely to historical fact, are “forward-looking statements.” Such statements include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events, or any statement that may relate to strategies, plans or objectives for, or potential results of, future operations, financial results, financial condition, business prospects, growth strategy or liquidity, and are based upon management’s current plans and beliefs or current estimates of future results or trends. Forward-looking statements can generally be identified by phrases such as “believes,” “expects,” “potential,” “continues,” “may,” “should,” “seeks,” “predicts,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “could,” “designed,” “should be” and other similar expressions that denote expectations of future or conditional events rather than statements of fact.

Forward-looking statements include certain statements made under the caption, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under Part I, Item 2 of this Report, but also forward-looking statements that appear in other parts of this Report. Forward-looking statements reflect our current views with respect to future events and are based on certain assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from trends, plans, or expectations set forth in the forward-looking statements. These include risks related to economic downturns, substantial competition and rising operating costs; risks related to the severity, magnitude and duration of the COVID-19 pandemic and its impact on the global economy, financial markets and industries in which our subsidiaries operate; the impacts from the Russia/Ukraine conflict, including economic volatility and the impacts of export controls and other economic sanctions; risks related to our investment activities, including the nature of the investments made by the private funds in which we invest, declines in the fair value of our investments as a result of the COVID-19 pandemic, losses in the private funds and loss of key employees; risks related to our ability to continue to conduct our activities in a manner so as to not be deemed an investment company under the Investment Company Act of 1940, as amended, or be taxed as a corporation; risks relating to short sellers and associated litigation and regulatory inquires; risks related to our energy business, including the volatility and availability of crude oil, other feed stocks and refined products, declines in global demand for crude oil, refined products and liquid transportation fuels, unfavorable refining margin (crack spread), interrupted access to pipelines, significant fluctuations in nitrogen fertilizer demand in the agricultural industry and seasonality of results; the success of the proposed spin-off of the fertilizer business; risks related to our automotive activities and exposure to adverse conditions in the automotive industry, including as a result of the COVID-19 pandemic and the Chapter 11 filing of our automotive parts subsidiary; risks related to our food packaging activities, including competition from better capitalized competitors, inability of our suppliers to timely deliver raw materials, and the failure to effectively respond to industry changes in casings technology; supply chain issues; inflation, including increased costs of raw materials and shipping, including as a result of the Russia/Ukraine conflict; interest rate increases; labor shortages and workforce availability; risks related to our real estate activities, including the extent of any tenant bankruptcies and insolvencies; risks related to our home fashion operations, including changes in the availability and price of raw materials, and changes in transportation costs and delivery times. These risks and uncertainties also include the risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2022 and below in Item 1A. Risk Factors, of Part II of this Quarterly Report on Form 10-Q. Additionally, there may be other factors not presently known to us or which we currently consider to be immaterial that may cause our actual results to differ materially from the forward-looking statements.

1

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 31, 

December 31, 

    

2023

    

2022

(in millions, except unit amounts)

ASSETS

Cash and cash equivalents

$

2,608

$

2,337

Cash held at consolidated affiliated partnerships and restricted cash

 

2,481

 

2,549

Investments

 

6,637

 

6,809

Due from brokers

 

6,314

 

7,044

Accounts receivable, net

 

527

 

606

Related party notes receivable, net

207

Inventories, net

 

1,097

 

1,531

Property, plant and equipment, net

 

3,986

 

4,038

Derivative assets, net

363

812

Goodwill

 

288

 

288

Intangible assets, net

 

517

 

533

Other assets

 

1,244

 

1,367

Total Assets

$

26,269

$

27,914

LIABILITIES AND EQUITY

 

  

 

  

Accounts payable

$

774

$

870

Accrued expenses and other liabilities

 

2,646

 

1,981

Deferred tax liabilities

 

336

 

338

Derivative liabilities, net

 

608

 

691

Securities sold, not yet purchased, at fair value

 

5,654

 

6,495

Due to brokers

 

664

 

885

Debt

 

7,091

 

7,096

Total liabilities

 

17,773

 

18,356

Commitments and contingencies (Note 17)

 

  

 

  

Equity:

 

  

 

  

Limited partners: Depositary units: 356,967,535 units issued and outstanding at March 31, 2023 and 353,572,182 units issued and outstanding at December 31, 2022

 

3,854

 

4,647

General partner

 

(763)

 

(747)

Equity attributable to Icahn Enterprises

 

3,091

 

3,900

Equity attributable to non-controlling interests

 

5,405

 

5,658

Total equity

 

8,496

 

9,558

Total Liabilities and Equity

$

26,269

$

27,914

See notes to condensed consolidated financial statements.

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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended March 31, 

    

2023

    

2022

Revenues:

Net sales

$

2,758

$

2,968

Other revenues from operations

 

187

 

168

Net (loss) gain from investment activities

 

(443)

 

939

Interest and dividend income

 

171

 

42

Other loss, net

 

(32)

 

(24)

 

2,641

 

4,093

Expenses:

Cost of goods sold

 

2,260

 

2,538

Other expenses from operations

 

158

 

137

Selling, general and administrative

 

229

 

301

Loss on deconsolidation of subsidiary

 

226

 

Interest expense

 

142

 

134

 

3,015

 

3,110

(Loss) income before income tax benefit (expense)

 

(374)

 

983

Income tax benefit (expense)

 

16

 

(98)

Net (loss) income

 

(358)

 

885

Less: net (loss) income attributable to non-controlling interests

 

(88)

 

562

Net (loss) income attributable to Icahn Enterprises

$

(270)

$

323

Net (loss) income attributable to Icahn Enterprises allocated to:

Limited partners

$

(265)

$

317

General partner

 

(5)

 

6

$

(270)

$

323

Basic (loss) income per LP unit

$

(0.75)

$

1.08

Basic weighted average LP units outstanding

 

354

 

294

Diluted (loss) income per LP unit

$

(0.75)

$

1.06

Diluted weighted average LP units outstanding

 

354

 

299

Distributions declared per LP unit

$

2.00

$

2.00

See notes to condensed consolidated financial statements.

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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

Three Months Ended March 31, 

    

2023

    

2022

Net (loss) income

$

(358)

$

885

Other comprehensive income, net of tax:

 

 

Translation adjustments

 

4

 

Post-retirement benefits and other

 

 

Other comprehensive income, net of tax

 

4

 

Comprehensive (loss) income

 

(354)

 

885

Less: Comprehensive (loss) income attributable to non-controlling interests

 

(88)

 

562

Comprehensive (loss) income attributable to Icahn Enterprises

$

(266)

$

323

Comprehensive (loss) income attributable to Icahn Enterprises allocated to:

 

 

Limited partners

$

(261)

$

317

General partner

 

(5)

 

6

$

(266)

$

323

See notes to condensed consolidated financial statements.

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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

Equity Attributable to Icahn Enterprises

 

General 

Limited  

Non-

Partner’s

Partners’ 

Total Partners’ 

controlling 

    

 Deficit

    

Equity

    

Equity

    

Interests

    

Total Equity

(in millions)

Balance, December 31, 2022

$

(747)

$

4,647

$

3,900

$

5,658

$

9,558

Net loss

(5)

 

(265)

(270)

(88)

(358)

Other comprehensive income

 

 

4

 

4

 

 

4

Partnership distributions payable

 

(15)

 

(709)

 

(724)

 

 

(724)

Partnership contributions

 

4

 

175

 

179

 

 

179

Investment segment distributions to non-controlling interests

 

 

 

 

(80)

 

(80)

Dividends and distributions to non-controlling interests in subsidiaries

 

 

 

 

(85)

 

(85)

Changes in subsidiary equity and other

 

 

2

 

2

 

 

2

Balance, March 31, 2023

 

$

(763)

 

$

3,854

 

$

3,091

 

$

5,405

 

$

8,496

Equity Attributable to Icahn Enterprises

 

General 

Limited  

Non-

Partner’s

Partners’ 

Total Partners’ 

controlling 

    

 Deficit

    

Equity

    

Equity

    

Interests

    

Total Equity

(in millions)

Balance, December 31, 2021

$

(754)

$

4,298

$

3,544

$

5,799

$

9,343

Net income

6

 

317

323

562

885

Partnership distributions payable

 

(12)

 

(591)

 

(603)

 

 

(603)

Partnership contributions

 

4

 

180

 

184

 

 

184

Dividends and distributions to non-controlling interests in subsidiaries

 

 

 

 

(36)

 

(36)

Changes in subsidiary equity and other

 

 

(5)

 

(5)

 

(10)

 

(15)

Balance, March 31, 2022

 

$

(756)

 

$

4,199

 

$

3,443

 

$

6,315

 

$

9,758

See notes to condensed consolidated financial statements.

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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31, 

    

2023

    

2022

(in millions)

Cash flows from operating activities:

Net (loss) income

$

(358)

    

$

885

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

Net gain (loss) from securities transactions

 

196

 

(1,133)

Purchases of securities

 

(380)

 

(20)

Proceeds from sales of securities

 

565

 

3,330

Payments to cover securities sold, not yet purchased

 

(1,228)

 

(1,913)

Proceeds from securities sold, not yet purchased

 

205

 

816

Changes in receivables and payables relating to securities transactions

 

655

 

(416)

Changes in derivative assets and liabilities

 

366

 

85

Depreciation and amortization

 

122

 

122

Loss on deconsolidation of subsidiary

226

Deferred taxes

 

(60)

 

57

Other, net

 

(19)

 

26

Changes in other operating assets and liabilities

 

(43)

 

81

Net cash provided by operating activities

 

247

 

1,920

Cash flows from investing activities:

 

  

 

  

Capital expenditures

 

(58)

 

(55)

Turnaround expenditures

(8)

(15)

Proceeds from sale of investments

 

 

107

Other, net

 

21

 

1

Net cash (used in) provided by investing activities

 

(45)

 

38

Cash flows from financing activities:

 

  

 

  

Investment segment contributions from non-controlling interests

 

 

2

Investment segment distributions to non-controlling interests

(82)

Partnership contributions

 

173

 

178

Partnership distributions

 

 

(1)

Dividends and distributions to non-controlling interests in subsidiaries

 

(85)

 

(36)

Repayments of Holding Company senior unsecured notes

 

 

(500)

Proceeds from subsidiary borrowings

 

16

 

32

Repayments of subsidiary borrowings

 

(19)

 

(97)

Other, net

 

(2)

 

(13)

Net cash provided by (used in) financing activities

 

1

 

(435)

Effect of exchange rate changes on cash and cash equivalents and restricted cash and restricted cash equivalents

 

 

2

Net increase in cash and cash equivalents and restricted cash and restricted cash equivalents

 

203

 

1,525

Cash and cash equivalents and restricted cash and restricted cash equivalents, beginning of period

 

4,886

 

4,436

Cash and cash equivalents and restricted cash and restricted cash equivalents, end of period

$

5,089

$

5,961

See notes to condensed consolidated financial statements.

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1.  Description of Business

Overview

Icahn Enterprises L.P. (“Icahn Enterprises”) is a master 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 L.P. (“Icahn Enterprises Holdings”). Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), which is indirectly 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, 2023, representing an aggregate 1.99% general partner interest in Icahn Enterprises Holdings and us. Mr. Icahn and his affiliates owned approximately 84% of our outstanding depositary units as of March 31, 2023.

Description of Continuing Operating Businesses

We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Energy, Automotive, Food Packaging, Real Estate, Home Fashion and Pharma. We also report the results of our Holding Company, which includes the results of certain subsidiaries of Icahn Enterprises (unless otherwise noted), and investment activity and expenses associated with our Holding Company. See Note 13, “Segment Reporting,” for a reconciliation of each of our reporting segment’s results of operations to our consolidated results. Certain additional information with respect to our segments is discussed below.

Investment

Our Investment segment is comprised of various private investment funds (“Investment Funds”) in which we have general partner interests and through which we invest our proprietary capital. As general partner, we provide investment advisory and certain administrative and back-office services to the Investment Funds but do not provide such services to any other entities, individuals or accounts. We and certain of Mr. Icahn’s family members and affiliates are the only investors in the Investment Funds. Interests in the Investment Funds are not offered to outside investors. We had interests in the Investment Funds with a fair value of approximately $4.0 billion and $4.2 billion as of March 31, 2023 and December 31, 2022, respectively.

Energy

We conduct our Energy segment through our majority owned subsidiary, CVR Energy, Inc. (“CVR Energy”). CVR Energy is a diversified holding company primarily engaged in the petroleum refining and marketing businesses as well as in the nitrogen fertilizer manufacturing businesses through its holdings in CVR Partners, LP, a publicly traded limited partnership (“CVR Partners”). CVR Energy is an independent petroleum refiner and marketer of high value transportation fuels primarily in the form of gasoline and diesel fuels, as well as renewable diesel. CVR Partners produces and markets nitrogen fertilizers in the form of urea ammonium nitrate and ammonia. CVR Energy holds 100% of the general partner interest in CVR Partners. In addition, CVR Energy owns approximately 37% of the outstanding common units of CVR Partners as of March 31, 2023. As of March 31, 2023, we owned approximately 71% of the total outstanding common stock of CVR Energy.

On November 21, 2022, CVR Energy’s board of directors authorized its management to explore a potential spin-off of CVR Energy’s interest in the nitrogen fertilizer business into a newly created and separately traded public company. If completed, upon effectiveness of the potential spin-off transaction, current CVR Energy stockholders would own shares of both CVR Energy, holding the refinery and renewables businesses, and a holding company, holding CVR Energy’s current ownership of the general partner interest in, and approximately 37% of the common units (representing limited partner interests) of, CVR Partners. The potential spin-off would be intended to be structured as a tax-free, pro-rata distribution to all of CVR Energy’s stockholders, including Icahn Enterprises, as of a record date to be determined by CVR Energy’s board of directors. Completion of any potential spin-off will be subject to various conditions, including

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final approval of CVR Energy’s board of directors, and there can be no assurance that the potential spin-off will be completed in the manner described above, or at all.

Automotive

We conduct our Automotive segment through our wholly owned subsidiary, Icahn Automotive Group LLC (“Icahn Automotive”). Icahn Automotive is engaged in providing a full range of automotive repair and maintenance services (“automotive services”) to its customers as well as a retail business which consists of sales of automotive aftermarket parts and retailed merchandise (“aftermarket parts”).

On January 31, 2023, a subsidiary of Icahn Automotive, IEH Auto Parts Holding LLC and its subsidiaries (“Auto Plus”), an aftermarket parts distributor held within our Automotive segment, filed voluntary petitions in the United States Bankruptcy Court. As a result of Auto Plus’s filings for bankruptcy protections on January 31, 2023, we no longer controlled the operations of Auto Plus, therefore, we deconsolidated Auto Plus as of January 31, 2023. See Note 3, “Subsidiary Bankruptcy and Deconsolidation”, for a detailed discussion of the Auto Plus bankruptcy and deconsolidation.

Food Packaging

We conduct our Food Packaging segment through our majority owned subsidiary, Viskase Companies, Inc. (“Viskase”). Viskase is a producer of cellulosic, fibrous and plastic casings used to prepare and package processed meat products. As of March 31, 2023, we owned approximately 90% of the total outstanding common stock of Viskase.

Real Estate

Our Real Estate segment consists primarily of investment properties, the development and sale of single-family homes and the management of a country club.

Home Fashion

We conduct our Home Fashion segment through our wholly owned subsidiary, WestPoint Home LLC (“WPH”). WPH’s business consists of manufacturing, sourcing, marketing, distributing and selling home fashion consumer products.

Pharma

We conduct our Pharma segment through our wholly owned subsidiary, Vivus LLC, formerly Vivus, Inc. (“Vivus”). Vivus is a specialty pharmaceutical company with two approved therapies and one product candidate in active clinical development.

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2.  Basis of Presentation and Summary of Significant Accounting Policies

We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Therefore, no more than 40% of our total assets can be invested in investment securities, as such term is defined in the Investment Company Act. In addition, we do not invest or intend to invest in securities as our primary business. We structure and intend to continue structuring our investments to be taxed as a partnership rather than as a corporation under the applicable publicly traded partnership rules of the Internal Revenue Code, as amended.

Events beyond our control, including significant appreciation or depreciation in the market value of certain of our publicly traded holdings or adverse developments with respect to our ownership of certain of our subsidiaries, could result in our inadvertently becoming an investment company that is required to register under the Investment Company Act. Our sales of Federal-Mogul LLC, Tropicana Entertainment Inc., American Railcar Industries, Inc., Ferrous Resources Ltd., and PSC Metals in recent years did not result in our being considered an investment company. However, additional transactions involving the sale of certain assets could result in our being considered an investment company. Following such events or transactions, an exemption under the Investment Company Act would provide us up to one year to take steps to avoid becoming classified as an investment company. We expect to take steps to avoid becoming classified as an investment company, but no assurance can be made that we will successfully be able to take the steps necessary to avoid becoming classified as an investment company.

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022. The condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) related to interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary to present fairly the results for the interim periods. All such adjustments are of a normal and recurring nature.

Principles of Consolidation

Our condensed consolidated financial statements include the accounts of (i) Icahn Enterprises and (ii) the wholly and majority owned subsidiaries of Icahn Enterprises, in addition to variable interest entities (“VIEs”) in which we are the primary beneficiary. In evaluating whether we have a controlling financial interest in entities that we consolidate, we consider the following: (1) for voting interest entities, including limited partnerships and similar entities that are not VIEs, we consolidate these entities in which we own a majority of the voting interests; and (2) for VIEs, we consolidate these entities in which we are the primary beneficiary. See below for a discussion of our VIEs. Kick-out rights, which are the rights underlying the limited partners’ ability to dissolve the limited partnership or otherwise remove the general partners, held through voting interests of partnerships and similar entities that are not VIEs are considered the equivalent of the equity interests of corporations that are not VIEs. For entities over which the Company does not have significant influence, the Company accounts for its equity investment at fair value, except for the Company’s equity interest in Auto Plus.

Except for our Investment segment and Holding Company, for equity investments in which we own 50% or less but greater than 20%, we generally account for such investments using the equity method. All other such equity investments are accounted for at fair value.

Consolidated Variable Interest Entities

We determined that Icahn Enterprises Holdings is a VIE because it is a limited partnership that lacks both substantive kick-out and participating rights. Although Icahn Enterprises is not the general partner of Icahn Enterprises Holdings, Icahn Enterprises is deemed to be the primary beneficiary of Icahn Enterprises Holdings principally based on its 99% limited partner interest in Icahn Enterprises Holdings, as well as our related party relationship with the general

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partner, and therefore continues to consolidate Icahn Enterprises Holdings. Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and therefore, the balance sheets of Icahn Enterprises and Icahn Enterprises Holdings are substantially the same.

Reclassifications

Certain reclassifications from the prior year presentation have been made to conform to the current year presentation, which did not have an impact on previously reported net income and equity and are not deemed material.

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 5, “Investments,” and Note 6, “Fair Value Measurements,” for a detailed discussion of our investments and other non-financial assets and/or liabilities.

The fair value of our long-term debt is based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The carrying value and estimated fair value of our long-term debt as of March 31, 2023 was approximately $7.1 billion and $6.5 billion, respectively. The carrying value and estimated fair value of our long-term debt as of December 31, 2022 was approximately $7.1 billion and $6.6 billion, respectively.

Cash Flow

Cash and cash equivalents and restricted cash and restricted cash equivalents on our condensed consolidated statements of cash flows is comprised of (i) cash and cash equivalents and (ii) cash held at consolidated affiliated partnerships and restricted cash.

Cash Held at Consolidated Affiliated Partnerships and Restricted Cash

Our cash held at consolidated affiliated partnerships balance was $568 million and $1,019 million as of March 31, 2023 and December 31, 2022, respectively. Cash held at consolidated affiliated partnerships relates to our Investment segment and consists of cash and cash equivalents held by the Investment Funds that, although not legally restricted, are not available to fund the general liquidity needs of the Investment segment or Icahn Enterprises.

Our restricted cash balance was $1,913 million and $1,530 million as of March 31, 2023 and December 31, 2022, respectively. Restricted cash includes, but is not limited to, our Investment segment’s cash pledged and held for margin requirements on derivative transactions.

Revenue From Contracts With Customers and Contract Balances

Due to the nature of our business, we derive revenue from various sources in various industries. With the exception of all of our Investment segment’s and our Holding Company’s revenues, and our Real Estate and Automotive segment’s leasing revenue, our revenue is generally derived from contracts with customers in accordance with U.S. GAAP. Such revenue from contracts with customers is included in net sales and other revenues from operations in the condensed consolidated statements of operations, however, our Real Estate and Automotive segment’s leasing revenue, as disclosed in Note 10, “Leases,” is also included in other revenues from operations. Related contract assets are included in accounts receivable, net or other assets and related contract liabilities are included in accrued expenses and other liabilities in the condensed consolidated balance sheets. Our disaggregation of revenue information includes our net sales and other revenues from operations for each of our reporting segments as well as additional disaggregation of revenue information for our Energy and Automotive segments. See Note 13, “Segment Reporting,” for our complete disaggregation of revenue information. In addition, we disclose additional information with respect to revenue from contracts with customers and contract balances for our Energy and Automotive segments below.

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Energy

Our Energy segment’s deferred revenue is a contract liability that primarily relates to fertilizer sales contracts requiring customer prepayment prior to product delivery to guarantee a price and supply of nitrogen fertilizer. Deferred revenue is recorded at the point in time in which a prepaid contract is legally enforceable and the associated right to consideration is unconditional prior to transferring product to the customer. An associated receivable is recorded for uncollected prepaid contract amounts. Contracts requiring prepayment are generally short-term in nature and revenue is recognized at the point in time in which the customer obtains control of the product. In the three months ended March 31, 2023, our Energy segment recorded deferred revenue of $46 million related to certain tax credits available under Section 45Q of the Internal Revenue Code (the “45Q Transaction”). Our Energy segment had deferred revenue of $83 million and $48 million as of March 31, 2023 and December 31, 2022, respectively. For the three months ended March 31, 2023 and 2022, our Energy segment recorded revenue of $12 million and $17 million, respectively, with respect to deferred revenue outstanding as of the beginning of each respective period.

As of March 31, 2023, our Energy segment had $3 million of remaining performance obligations for contracts with an original expected duration of more than one year. Our Energy segment expects to recognize a majority of these performance obligations as revenue by the end of 2023 and the remaining nominal balance in 2024.

Automotive

Our Automotive segment had deferred revenue with respect to extended warranty plans of $44 million at each of March 31, 2023 and December 31, 2022, respectively, which are included in accrued expenses and other liabilities on the condensed consolidated balance sheets. For the three months ended March 31, 2023 and 2022, our Automotive segment recorded deferred revenue of $6 million and $6 million, respectively, outstanding as of the beginning of each period.

Adoption of New Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which amends FASB ASC Topic 848, Reference Rate Reform. By June 30, 2023, banks will no longer be required to report information that is used to determine London Interbank Offered Rate (“LIBOR”) which is used globally by all types of entities for various types of transactions. As a result, LIBOR could be discontinued, as well as other interest rates used globally. This ASU provides companies with optional expedients for contract modifications under U.S. GAAP, excluded components of certain hedging relationships, fair value hedges, and cash flow hedges, as well as certain exceptions, which are intended to help ease the potential accounting burden associated with transitioning away from these reference rates. We adopted this ASU effective January 1, 2023. The adoption of this standard did not have a significant impact on our condensed consolidated financial statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities- Supplier Finance Programs (Subtopic 405-50) Disclosure of Supplier Finance Program Obligations to require entities that use supplier finance programs in connection with purchase of goods and services to disclose the key terms of such programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations of where in the financial statements outstanding amounts are present. The guidance does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. The amendments are effective in periods beginning after December 15, 2022, except that the amendments to disclose a rollforward of obligations outstanding will be effective beginning after December 15, 2023. We early adopted provisions of this ASU effective January 1, 2023, with the exception of the amendment on rollforward information, which will be adopted in the fourth quarter of 2023. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

Recently Issued Accounting Standards

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which amends guidance in Topic 820, Fair Value Measurement. The guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security

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and, therefore, is not considered in measuring the fair value. The guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendment requires the following disclosures for equity securities subject to contractual sale restrictions: the fair value of equity securities subject to contractual sale restrictions; the nature and remaining duration of the restriction(s); and the circumstances that could cause a lapse in the restriction(s). The amended guidance is effective January 1, 2024 on a prospective basis. Early adoption is permitted. We are currently assessing the impact of adopting this new accounting standard on our condensed consolidated financial statements.

3. Subsidiary Bankruptcy and Deconsolidation

On January 31, 2023, a subsidiary of Icahn Automotive, IEH Auto Parts Holding LLC and its subsidiaries, (collectively, “Auto Plus”), an aftermarket parts distributor held within our Automotive segment, filed voluntary petitions (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code. In the course of the Chapter 11 Cases, Auto Plus will seek to sell substantially all of its assets pursuant to Section 363 of the Bankruptcy Code, with the proceeds of such sale used to satisfy obligations to its creditors, and to settle or discharge all of its obligations, in each case subject to approval by the Bankruptcy Court. Auto Plus has agreed to a global settlement in the Chapter 11 Cases with its non-Auto Plus affiliates and the Official Committee of Unsecured Creditors appointed in the Chapter 11 Cases (the "Committee”) that provides for a guaranteed recovery to unsecured creditors, the payment of all administrative and priority claims in the Chapter 11 Cases, and the resolution of all disputes between Auto Plus, its non-Auto Plus affiliates, and the Committee.

As a result of the filing of the Chapter 11 Cases, the Company has determined that it no longer controls Auto Plus under the criteria set out in Statement of Financial Accounting Standards (“FASB”) ASC Topic 810, “Consolidation” and has deconsolidated its investment effective January 31, 2023. In order to deconsolidate Auto Plus, we removed the carrying values of the assets and liabilities of Auto Plus as of January 31, 2023, and we recorded our investment in Auto Plus at its estimated fair value of $0 resulting in a non-cash charge of $226 million recorded in the three months ended March 31, 2023, related to the deconsolidation of Auto Plus, net of a $188 million note receivable. Subsequent to deconsolidation, we no longer had the ability to exercise significant influence over Auto Plus and concluded the retained equity investment should be accounted for utilizing FASB ASC Topic 321 “Investments-Equity Securities” (“ASC 321”) measurement alternative, whereby the investment was measured at a fair value of $0 and will continue to be monitored for observable price changes that would indicate a remeasurement of its fair value.

4.  Related Party Transactions

Our second amended and restated agreement of limited partnership expressly permits us to enter into transactions with our general partner or any of its affiliates, including buying or selling properties from or to our general partner and any of its affiliates and borrowing and lending money from or to our general partner and any of its affiliates, subject to limitations contained in our partnership agreement and the Delaware Revised Uniform Limited Partnership Act. The indentures governing our indebtedness contain certain covenants applicable to transactions with affiliates.

Investment Funds

As of March 31, 2023 and December 31, 2022, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates (excluding us and Brett Icahn) was approximately $4.6 billion and $4.9 billion, respectively, representing approximately 53% and 54% of the Investment Funds’ assets under management as of each respective date. During the three months ended March 31, 2023, Mr. Icahn and his affiliates had redemptions of $80 million from the Investment Funds. There were no redemptions in the three months ending March 31, 2022.

We pay for expenses pertaining to the operation, administration and investment activities of our Investment segment for the benefit of the Investment Funds (including salaries, benefits and rent). Based on an expense-sharing arrangement, certain expenses borne by us are reimbursed by the Investment Funds. For the three months ended March 31, 2023 and 2022, $3 million and $3 million, respectively, was allocated to the Investment Funds based on this expense-sharing arrangement.

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Auto Plus

As discussed in Note 3. Subsidiary Bankruptcy and Deconsolidation, Auto Plus was deconsolidated as of January 31, 2023. Subsequent to January 31, 2023, Auto Plus had certain transactions with entities within our Automotive and Real Estate segments. Agreements and transactions include (i) lease agreements between Auto Plus and entities in the Automotive segment in which Auto Plus is the lessee, (ii) lease agreements between Auto Plus and entities in the Automotive segment in which Auto Plus is the lessor, (iii) auto parts purchases of entities in the Automotive segment from Auto Plus, (iv) auto parts sales from entities within the Automotive segment to Auto Plus, and (v) lease agreements between entities in the Real Estate segment and Auto Plus in which Auto Plus is the lessee.

For the two months from the date of deconsolidation of January 31, 2023 through March 31, 2023, the total lease revenues of entities within the Automotive segment from leases with Auto Plus was $2 million. Total inventory purchases of entities within the Automotive segment from Auto Plus were $3 million and total net trade accounts payable due to Auto Plus as of March 31, 2023 was $3 million.

For the two months from the date of deconsolidation of January 31, 2023 through March 31, 2023, the total lease revenues of entities within the Real Estate segment from Auto Plus were $2 million.

Note Receivable from Auto Plus

Upon the deconsolidation of Auto Plus, transactions between the Company and Auto Plus are no longer eliminated in consolidation and are treated as related party transactions. As of March 31, 2023, the Company had a related party note receivable from Auto Plus to the Company of $189 million, which is included in related party notes receivable, net in the condensed consolidated balance sheet.

Debtor in Possession (“DIP”) Financing

In connection with the Auto Plus bankruptcy filing, we entered into a priming, senior secured, super priority debtor-in-possession credit facility with Auto Plus (the “DIP Credit Facility”) on January 31, 2023, under which (i) we agreed to provide new loans in an aggregate amount of up to $75 million and (ii) subject to final approval of the DIP Credit Facility by the Bankruptcy Court, all the loans under our pre-petition credit facility with Auto Plus will be rolled-up and converted into loans under the DIP Credit Facility. As of March 31, 2023, the Company funded $18 million under the DIP Credit Facility, which is included in related party notes receivable, net in the condensed consolidated balance sheet.

Other Related Party Agreements

On October 1, 2020, we entered into a manager agreement with Brett Icahn, the son of Carl C. Icahn, and affiliates of Brett Icahn. Under the manager agreement, Brett Icahn serves as the portfolio manager of a designated portfolio of assets within the Investment Funds over a seven-year term, subject to veto rights by our Investment segment and Carl C. Icahn. On May 5, 2022, we entered into an amendment to the manager agreement, which allows the Investment Funds to add, from time to time, two additional separately tracked portfolios, in addition to the existing portfolios, which will not be subject to the manager agreement. Additionally, Brett Icahn provides certain other services, at our request, which may entail research, analysis and advice with respect to a separate designated portfolio of assets within the Investment Funds. Subject to the terms of the manager agreement, at the end of the seven-year term, Brett Icahn will be entitled to receive a one-time lump sum payment as described in and computed pursuant to the manager agreement. Brett Icahn will not be entitled to receive from us any other compensation (including any salary or bonus) in respect of the services he is to provide under the manager agreement other than restricted depositary units granted under a restricted unit agreement. In accordance with the manager agreement, Brett Icahn will co-invest with the Investment Funds in certain positions, will make cash contributions to the Investment Funds in order to fund such co-investments and will have a special limited partnership interest in the Investment Funds through which the profit and loss attributable to such co-investments will be allocated to him. Brett Icahn did not make contributions in accordance with the manager agreement in the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022 Brett Icahn had investments in the Investment Funds with a total fair market value of $49 million and $50 million, respectively. We also entered into a guaranty agreement with an affiliate of Brett Icahn, pursuant to which we guaranteed the payment of

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certain amounts required to be distributed by the Investment Funds to such affiliate pursuant to the terms and conditions of the manager agreement.

5.  Investments

Investments

Investments and securities sold, not yet purchased consist of equities, bonds, bank debt and other corporate obligations, all of which are reported at fair value in our condensed consolidated balance sheets. In addition, our Investment segment has certain derivative transactions which are discussed in Note 7, “Financial Instruments.” The carrying value and detail by security type, including business sector for equity securities, with respect to investments and securities sold, not yet purchased held by our Investment segment consist of the following:

March 31, 

December 31, 

    

2023

    

2022

(in millions)

Assets

Investments:

 

  

 

  

Equity securities:

 

  

 

  

Communications

$

132

$

199

Consumer, cyclical

 

590

 

692

Energy

 

903

 

909

Utilities

 

1,417

 

1,205

Healthcare

 

490

 

320

Technology

 

658

 

655

Materials

 

145

 

153

Industrial

 

26

 

486

 

4,361

 

4,619

Debt Securities:

Financials

1,968

1,958

Real Estate

146

131

Communications

45

11

 

2,159

 

2,100

$

6,520

$

6,719

Liabilities

 

  

 

  

Securities sold, not yet purchased, at fair value:

 

  

 

  

Equity securities:

 

  

 

  

Consumer, non-cyclical

$

889

$

1,006

Consumer, cyclical

288

352

Energy

 

2,193

 

2,690

Utilities

 

788

 

813

Healthcare

 

417

 

387

Materials

 

736

 

598

Industrial

166

480

5,477

6,326

Debt securities:

Materials

177

169

$

5,654

$

6,495

The portion of unrealized (losses) and gains that relates to securities still held by our Investment segment, primarily equity securities, was $(208) million and $403 million for the three months ended March 31, 2023 and 2022, respectively.

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Other Segments and Holding Company

With the exception of certain equity method investments at our operating subsidiaries and our Holding Company disclosed in the table below, our investments are measured at fair value in our condensed consolidated balance sheets. The carrying value of investments held by our other segments and our Holding Company consist of the following:

March 31, 

December 31, 

    

2023

    

2022

(in millions)

Equity method investments

$

103

$

76

Other investments measured at fair value

 

14

 

14

$

117

$

90

The portion of unrealized gains and (losses) that relates to equity securities still held by our other segments and Holding Company was zero and $58 million for each of the three months ended March 31, 2023 and 2022, respectively.

6.  Fair Value Measurements

U.S. GAAP requires enhanced disclosures about assets and liabilities that are measured and reported at fair value and has established a hierarchal disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of, and the characteristics specific to, the assets and liabilities. Assets and liabilities 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.

Assets and 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 assets and liabilities as of the reporting date.

Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies where all significant inputs are observable. The inputs and assumptions of our Level 2 assets and liabilities are derived from market observable sources including reported trades, broker/dealer quotes and other pertinent data.

Level 3 - Pricing inputs are unobservable for the assets and liabilities and include situations where there is little, if any, market activity for the assets and liabilities. 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, the level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the assets and liabilities. 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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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the valuation of our assets and liabilities by the above fair value hierarchy levels measured on a recurring basis:

March 31, 2023

December 31, 2022

    

Level 1

    

Level 2

    

Level 3

    

Total

    

Level 1

    

Level 2

    

Level 3

    

Total

(in millions)

Assets

Investments (Note 5)

$

5,291

$

1,190

$

42

$

6,523

$

5,538

$

1,142

$

42

$

6,722

Derivative assets, net (Note 7)

 

 

363

 

 

363

 

 

812

 

 

812

$

5,291

$

1,553

$

42

$

6,886

$

5,538

$

1,954

$

42

$

7,534

Liabilities

Securities sold, not yet purchased (Note 5)

$

5,477

$

177

$

$

5,654

$

6,326

$

169

$

$

6,495

Derivative liabilities, net (Note 7)

 

 

608

 

 

608

 

 

691

 

 

691

RFS obligations (Note 17)

 

 

582

 

 

582

 

 

692

 

 

692

$

5,477

$

1,367

$

$

6,844

$

6,326

$

1,552

$

$

7,878

Assets Measured at Fair Value on a Non-Recurring Basis for Which We Use Level 3 Inputs to Determine Fair Value

Energy

CVR Partners performed a non-recurring fair value measurement of the equity interest received as part of the 45Q Transaction. Such valuation used a combination of the market approach and the discounted cash flow methodology with key inputs including the discount rate, contractual and expected future cash flows, and market multiples. CVR Partners determined the estimated fair value of the consideration received to be $46 million, which is a non-recurring Level 3 measurement.

Holding Company

The estimated fair value of the Company’s note receivable from Auto Plus was measured at January 31, 2023 using the income approach with Level 3 inputs by discounting the forecasted cash inflows associated with the note using an estimated market discount rate.

In determining the fair value of our noncontrolling retained equity interest in Auto Plus at deconsolidation, management used a market approach. The market value approach uses prices and other relevant information generated by market transactions involving comparable businesses. We hold a remaining equity interest in Auto Plus in which we determined we do not have a controlling financial interest and are unable to exercise significant influence. We concluded the remaining equity interest should be accounted for utilizing the ASC 321 measurement alternative, whereby the investment was measured at a fair value of $0 and will continue to be monitored for observable price changes that would indicate a remeasurement of its fair value.

7.  Financial Instruments

Overview

Investment

In the normal course of business, the Investment Funds may trade various financial instruments and enter into certain investment activities, which may give rise to off-balance-sheet risks, with the objective of capital appreciation or

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as economic hedges against other securities or the market as a whole. The Investment Funds’ investments may include futures, options, swaps and securities sold, not yet purchased. These financial instruments represent future commitments to purchase or sell other financial instruments or to exchange an amount of cash based on the change in an underlying instrument at specific terms at specified future dates. Risks arise with these financial instruments from potential counterparty non-performance and from changes in the market values of underlying instruments.

Credit concentrations may arise from investment activities and may be impacted by changes in economic, industry or political factors. The Investment Funds routinely execute transactions with counterparties in the financial services industry, resulting in credit concentration with respect to the financial services industry. In the ordinary course of business, the Investment Funds may also be subject to a concentration of credit risk to a particular counterparty. The Investment Funds seek to mitigate these risks by actively monitoring exposures, collateral requirements and the creditworthiness of their counterparties.

The Investment Funds have entered into various types of swap contracts with other counterparties. These agreements provide that they are entitled to receive or are obligated to pay in cash an amount equal to the increase or decrease, respectively, in the value of the underlying shares, debt and other instruments that are the subject of the contracts, during the period from inception of the applicable agreement to its expiration. In addition, pursuant to the terms of such agreements, they are entitled to receive or obligated to pay other amounts, including interest, dividends and other distributions made in respect of the underlying shares, debt and other instruments during the specified time frame. They are also required to pay to the counterparty a floating interest rate equal to the product of the notional amount multiplied by an agreed-upon rate, and they receive interest on any cash collateral that they post to the counterparty at the federal funds, or the overnight bank funding rate in effect for such period.

The Investment Funds may trade futures contracts. A futures contract is a firm commitment to buy or sell a specified quantity of a standardized amount of a deliverable grade commodity, security, currency or cash at a specified price and specified future date unless the contract is closed before the delivery date. Payments (or variation margin) are made or received by the Investment Funds each day, depending on the daily fluctuations in the value of the contract, and the whole value change is recorded as an unrealized gain or loss by the Investment Funds. When the contract is closed, the Investment Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

The Investment Funds may utilize forward contracts to seek to protect their assets denominated in foreign currencies and precious metals holdings from losses due to fluctuations in foreign exchange rates and spot rates. The Investment Funds’ exposure to credit risk associated with non-performance of such forward contracts is limited to the unrealized gains or losses inherent in such contracts, which are recognized in other assets and accrued expenses and other liabilities in our condensed consolidated balance sheets.

The Investment Funds may also enter into foreign currency contracts for purposes other than hedging denominated securities. When entering into a foreign currency forward contract, the Investment Funds agree to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed-upon future date unless the contract is closed before such date. The Investment Funds record unrealized gains or losses on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into such contracts and the forward rates at the reporting date.

The Investment Funds may also purchase and write option contracts. As a writer of option contracts, the Investment Funds receive a premium at the outset and then bear the market risk of unfavorable changes in the price of the underlying financial instrument. As a result of writing option contracts, the Investment Funds are obligated to purchase or sell, at the holder’s option, the underlying financial instrument. Accordingly, these transactions result in off-balance-sheet risk, as the Investment Funds’ satisfaction of the obligations may exceed the amount recognized in our condensed consolidated balance sheets.

Certain terms of the Investment Funds’ contracts with derivative counterparties, which are standard and customary to such contracts, contain certain triggering events that would give the counterparties the right to terminate the derivative instruments. In such events, the counterparties to the derivative instruments could request immediate payment on

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derivative instruments in net liability positions. There were no Investment Funds’ derivative instruments with credit-risk-related contingent features in a liability position as of March 31, 2023 and December 31, 2022.

The following table summarizes the volume of our Investment segment’s derivative activities based on their notional exposure, categorized by primary underlying risk:

March 31, 2023

December 31, 2022

    

Long Notional Exposure

    

Short Notional Exposure

    

Long Notional Exposure

    

Short Notional Exposure

(in millions)

Primary underlying risk:

Equity contracts

$

2,419

$

5,732

$

1,816

$

5,354

Credit contracts(1)

 

 

795

 

945

Commodity contracts

 

 

21

22

(1)The short notional amount on our credit default swap positions was approximately $3.2 billion and $3.5 billion at March 31, 2023 and December 31, 2022, respectively. However, because credit spreads cannot compress below zero, our downside short notional exposure to loss is approximately $0.8 billion and $0.9 billion as of March 31, 2023 and December 31, 2022, respectively.

Certain derivative contracts executed by each of the Investment Funds with a single counterparty are reported on a net-by-counterparty basis where a legal right of offset exists under an enforceable netting agreement. Values for the derivative financial instruments, principally swaps, forwards, over-the-counter options and other conditional and exchange contracts, are reported on a net-by-counterparty basis.

The following table presents the fair values of our Investment segment’s derivatives that are not designated as hedging instruments in accordance with U.S. GAAP:

Derivative Assets

Derivative Liabilities

    

March 31, 2023

    

December 31, 2022

    

March 31, 2023

    

December 31, 2022

(in millions)

Equity contracts

$

134

$

392

$

740

$

719

Credit contracts

 

334

 

447

 

1

 

1

Commodity contracts

 

 

 

 

1

Sub-total

 

468

 

839

 

741

 

721

Netting across contract types(1)

 

(134)

 

(34)

 

(134)

 

(34)

Total(1)

$

334

$

805

$

607

$

687

(1)Excludes netting of cash collateral received and posted. The total collateral posted at March 31, 2023 and December 31, 2022 was $1,816 million and $1,436 million, respectively, across all counterparties, which are included in cash held at consolidated affiliated partnerships and restricted cash in the condensed consolidated balance sheets.

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The following table presents the amount of gain (loss) recognized in the condensed consolidated statements of operations for our Investment segment’s derivatives not designated as hedging instruments:

Three Months Ended March 31, 

2023

    

2022

Equity contracts

$

(284)

$

90

Credit contracts

 

36

 

(285)

Commodity contracts

 

1

 

$

(247)

$

(195)

(1)Gains (losses) recognized on derivatives are classified in net (loss) gain from investment activities in our condensed consolidated statements of operations for our Investment segment.

Energy

CVR Energy’s businesses are subject to fluctuations of commodity prices caused by supply conditions, weather, economic conditions, interest rates, and other factors. To manage price risk on crude oil and other inventories and to fix margins on future production, CVR Energy from time to time enters into various commodity derivative transactions and hold derivative instruments, such as futures and swaps, which it believes provide an economic hedge on future transactions, but such instruments are not designated as hedge instruments. CVR Energy may enter into forward purchase or sale contracts associated with its feedstocks, expected future gasoline and diesel production and/or renewable identification numbers (“RINs”).

As of March 31, 2023 and December 31, 2022, CVR Energy had 15 million and less than a million outstanding commodity swap positions, respectively. As of March 31, 2023 and December 31, 2022, CVR Energy had future contracts of 1 million and less than 1 million barrels, respectively. As of March 31, 2023 and December 31, 2022, CVR Energy had open fixed-price commitments to purchase a net 43 million and 34 million RINs, respectively.

The following table presents the fair value of our Energy segment’s derivatives and the effect of the collateral netting:

Derivative Assets

Derivative Liabilities

    

March 31, 2023

    

December 31, 2022

    

March 31, 2023

    

December 31, 2022

(in millions)

Commodity contracts

 

29

 

 

(3)

 

(5)

Netting across contract types(1)

 

 

 

2

 

1

Total(1)

$

29

$

$

(1)

$

(4)

(1)Excludes netting of derivatives primarily related to initial margin requirements of $13 million and $7 million at March 31, 2023 and December 31, 2022, respectively, which was not offset against derivatives assets, net in the condensed consolidated balance sheets.

Gains (losses) recognized on derivatives for our Energy segment were $45 million and $2 million for the three months ended March 31, 2023 and 2022, respectively. Gains and losses recognized on derivatives for our Energy segment are included in cost of goods sold on the condensed consolidated statements of operations.

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8.  Inventories, Net

Inventories, net consists of the following:

March 31, 

December 31, 

    

2023

    

2022

(in millions)

Raw materials

$

350

$

335

Work in process

 

117

 

105

Finished goods

 

630

 

1,091

$

1,097

$

1,531

The bankruptcy and deconsolidation of Auto Plus resulted in a decrease of inventories of $440 million.

9.  Goodwill and Intangible Assets, Net

Goodwill consists of the following:

March 31, 2023

December 31, 2022

    

Gross

    

    

Net

    

Gross

    

    

Net

Carrying

Accumulated

Carrying