UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
For the Quarterly Period Ended
OR
For the Transition Period from to
(
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol(s) |
| Name of Each Exchange on Which Registered | |
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).
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):
⌧ | 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
As of November 2, 2023, there were
i
ICAHN ENTERPRISES L.P.
TABLE OF CONTENTS
Page No. | ||
1 | ||
PART I. FINANCIAL INFORMATION | ||
2 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 37 | |
55 | ||
55 | ||
PART II. OTHER INFORMATION | ||
56 | ||
56 | ||
59 | ||
60 |
i
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; the impacts from the Russia/Ukraine conflict and conflict in the Middle East, 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, 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 general partner and controlling unitholder; 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 a spin-off of the fertilizer business including risks related to any decision to cease exploration of a spin-off; risks related to our automotive activities and exposure to adverse conditions in the automotive industry, including as a result of 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 and conflict in the Middle East; 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, manufacturing disruptions, 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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30, | December 31, | |||||
| 2023 |
| 2022 | |||
(in millions, except unit amounts) | ||||||
ASSETS | ||||||
Cash and cash equivalents | $ | $ | | |||
Cash held at consolidated affiliated partnerships and restricted cash |
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Investments |
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Due from brokers |
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Accounts receivable, net |
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Related party notes receivable, net | — | |||||
Inventories, net |
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Property, plant and equipment, net |
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Deferred tax asset | | |||||
Derivative assets, net | | |||||
Goodwill |
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Intangible assets, net |
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Other assets |
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Total Assets | $ | | $ | | ||
LIABILITIES AND EQUITY |
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Accounts payable | $ | $ | | |||
Accrued expenses and other liabilities |
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Deferred tax liabilities |
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Derivative liabilities, net |
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Securities sold, not yet purchased, at fair value |
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Due to brokers |
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Debt |
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Total liabilities |
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Commitments and contingencies (Note 18) |
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Equity: |
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Limited partners: Depositary units: |
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General partner |
| ( |
| ( | ||
Equity attributable to Icahn Enterprises |
| |
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Equity attributable to non-controlling interests |
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Total equity |
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Total Liabilities and Equity | $ | | $ | |
See notes to condensed consolidated financial statements.
2
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2023 |
| 2022 |
| 2023 |
| 2022 | |||||
(in millions, except per unit amounts) | |||||||||||
Revenues: | |||||||||||
Net sales | $ | | $ | | $ | | $ | | |||
Other revenues from operations |
| |
| |
| |
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Net (loss) gain from investment activities |
| ( |
| ( |
| ( |
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Interest and dividend income |
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| |
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Other loss, net |
| ( |
| ( |
| ( |
| ( | |||
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Expenses: | |||||||||||
Cost of goods sold |
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Other expenses from operations |
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Selling, general and administrative |
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Restructuring, net |
| |
| — |
| |
| — | |||
Credit loss on related party note receivable | | — | | — | |||||||
Loss on deconsolidation of subsidiary |
| — |
| — |
| |
| — | |||
Interest expense |
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Income (loss) before income tax (expense) benefit |
| |
| ( |
| ( |
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Income tax (expense) benefit |
| ( |
| |
| ( |
| ( | |||
Net (loss) income |
| ( |
| ( |
| ( |
| | |||
Less: net (loss) income attributable to non-controlling interests |
| ( |
| ( |
| ( |
| | |||
Net (loss) income attributable to Icahn Enterprises | $ | ( | $ | ( | $ | ( | $ | | |||
|
| ||||||||||
Net (loss) income attributable to Icahn Enterprises allocated to: | |||||||||||
Limited partners | $ | ( | $ | ( | $ | ( | $ | | |||
General partner |
| — |
| ( |
| ( |
| | |||
$ | ( | $ | ( | $ | ( | $ | | ||||
Basic and Diluted (loss) income per LP unit | $ | ( | $ | ( | $ | ( | $ | | |||
Basic and Diluted weighted average LP units outstanding |
| |
| |
| |
| | |||
Distributions declared per LP unit | $ | | $ | | $ | | $ | |
See notes to condensed consolidated financial statements.
3
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
(in millions) | ||||||||||||
Net (loss) income | $ | ( | $ | ( | $ | ( | $ | | ||||
Other comprehensive (loss) income, net of tax: |
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| ||||||||
Translation adjustments |
| ( |
| ( |
| — |
| ( | ||||
Post-retirement benefits and other |
| ( |
| |
| |
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Other comprehensive (loss) income, net of tax |
| ( |
| ( |
| |
| ( | ||||
Comprehensive (loss) income |
| ( |
| ( |
| ( |
| | ||||
Less: Comprehensive (loss) income attributable to non-controlling interests |
| ( |
| ( |
| ( |
| | ||||
Comprehensive (loss) income attributable to Icahn Enterprises | $ | ( | $ | ( | $ | ( | $ | | ||||
Comprehensive (loss) income attributable to Icahn Enterprises allocated to: |
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| |||||||
Limited partners | $ | ( | $ | ( | $ | ( | $ | | ||||
General partner |
| — |
| ( |
| ( |
| | ||||
$ | ( | $ | ( | $ | ( | $ | |
See notes to condensed consolidated financial statements.
4
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 | $ | ( | $ | | $ | | $ | | $ | | |||||
Net loss | ( |
| ( | ( | ( | ( | |||||||||
Other comprehensive income |
| — |
| |
| |
| — |
| | |||||
Partnership distributions payable |
| ( |
| ( |
| ( |
| — |
| ( | |||||
Partnership contributions |
| |
| |
| |
| — |
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Investment segment distributions to non-controlling interests |
| — |
| — |
| — |
| ( |
| ( | |||||
Dividends and distributions to non-controlling interests in subsidiaries |
| — |
| — |
| — |
| ( |
| ( | |||||
Changes in subsidiary equity and other |
| — |
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| |
| — |
| | |||||
Balance, March 31, 2023 |
| ( |
| |
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Net loss |
| ( |
| ( |
| ( |
| ( |
| ( | |||||
Other comprehensive income |
| — | |
| |
| — |
| | ||||||
Partnership distributions payable reversal | | | | — | | ||||||||||
Partnership distributions |
| ( |
| ( |
| ( |
| — |
| ( | |||||
Investment segment distributions to non-controlling interests |
| — |
| — |
| — |
| ( |
| ( | |||||
Dividends and distributions to non-controlling interests in subsidiaries |
| — |
| — |
| — |
| ( |
| ( | |||||
Changes in subsidiary equity and other |
| — |
| |
| |
| — |
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Balance, June 30, 2023 |
| ( |
| |
| |
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Net loss |
| — |
| ( |
| ( |
| ( |
| ( | |||||
Other comprehensive loss |
| — |
| ( |
| ( |
| — |
| ( | |||||
Partnership distributions |
| ( |
| ( |
| ( |
| — |
| ( | |||||
Investment segment distributions to non-controlling interests |
| — |
| — |
| — |
| ( |
| ( | |||||
Dividends and distributions to non-controlling interests in subsidiaries |
| — |
| — |
| — |
| ( |
| ( | |||||
Changes in subsidiary equity and other |
| |
| |
| |
| |
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Balance, September 30, 2023 | $ | ( | $ | | $ | | $ | | $ | |
5
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 | $ | ( | $ | | $ | | $ | | $ | | |||||
Net income | |
| | | | | |||||||||
Partnership distributions payable |
| ( |
| ( |
| ( |
| — |
| ( | |||||
Partnership contributions |
| |
| |
| |
| — |
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Dividends and distributions to non-controlling interests in subsidiaries |
| — |
| — |
| — |
| ( |
| ( | |||||
Changes in subsidiary equity and other |
| — |
| ( |
| ( |
| ( |
| ( | |||||
Balance, March 31, 2022 |
| ( |
| |
| |
| |
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Net loss |
| ( |
| ( |
| ( |
| ( |
| ( | |||||
Other comprehensive loss |
| — |
| ( |
| ( |
| — |
| ( | |||||
Partnership distributions payable reversal |
| |
| |
| |
| — |
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Partnership distributions |
| ( |
| ( |
| ( |
| — |
| ( | |||||
Partnership contributions | |
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| — | | |||||||
Investment segment contributions from non-controlling interests |
| — |
| — |
| — |
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Investment segment distributions to non-controlling interests |
| — |
| — |
| — |
| ( |
| ( | |||||
Dividends and distributions to non-controlling interests in subsidiaries |
| — |
| — |
| — |
| ( |
| ( | |||||
Changes in subsidiary equity and other | ( |
| |
| |
| ( | | |||||||
Balance, June 30, 2022 |
| ( |
| |
| |
| |
| | |||||
Net loss |
| ( |
| ( |
| ( |
| ( |
| ( | |||||
Other comprehensive loss |
| — |
| ( |
| ( |
| — |
| ( | |||||
Partnership distributions |
| ( |
| ( |
| ( |
| — |
| ( | |||||
Partnership contributions |
| |
| |
| |
| — |
| | |||||
Investment segment contributions from non-controlling interests |
| — |
| — |
| — |
| ( |
| ( | |||||
Dividends and distributions to non-controlling interests in subsidiaries |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance, September 30, 2022 | $ | ( | $ | | $ | | $ | | $ | |
See notes to condensed consolidated financial statements.
6
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, | ||||||
| 2023 |
| 2022 | |||
(in millions) | ||||||
Cash flows from operating activities: | ||||||
Net (loss) income | $ | ( |
| $ | | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
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Net loss (gain) from securities transactions |
| |
| ( | ||
Purchases of securities |
| ( |
| ( | ||
Proceeds from sales of securities |
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Payments to cover securities sold, not yet purchased |
| ( |
| ( | ||
Proceeds from securities sold, not yet purchased |
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Changes in receivables and payables relating to securities transactions |
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| ( | ||
Changes in derivative assets and liabilities |
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| ( | ||
Loss on disposition of assets, net |
| ( |
| ( | ||
Depreciation and amortization |
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Loss on deconsolidation of subsidiary | | — | ||||
Credit loss expense | | — | ||||
Deferred taxes |
| ( |
| ( | ||
Other, net |
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Changes in other operating assets and liabilities |
| ( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Capital expenditures |
| ( |
| ( | ||
Turnaround expenditures | ( | ( | ||||
Proceeds from partial sale of interests in consolidated subsidiaries |
| |
| — | ||
Proceeds from sale of investments |
| — |
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Proceeds from disposition of businesses and assets |
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Other, net |
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| — | ||
Net cash used in investing activities |
| ( |
| ( | ||
Cash flows from financing activities: |
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Investment segment contributions from non-controlling interests |
| — |
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Investment segment distributions to non-controlling interests | ( | ( | ||||
Partnership contributions |
| |
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Partnership distributions |
| ( |
| ( | ||
Dividends and distributions to non-controlling interests in subsidiaries |
| ( |
| ( | ||
Repayments of Holding Company senior unsecured notes |
| — |
| ( | ||
Proceeds from subsidiary borrowings |
| |
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Repayments of subsidiary borrowings |
| ( |
| ( | ||
Other, net |
| ( |
| ( | ||
Net cash used in financing activities |
| ( |
| ( | ||
Effect of exchange rate changes on cash and cash equivalents and restricted cash and restricted cash equivalents |
| — |
| | ||
Net increase in cash and cash equivalents and restricted cash and restricted cash equivalents |
| |
| | ||
Cash and cash equivalents and restricted cash and restricted cash equivalents, beginning of period |
| |
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Cash and cash equivalents and restricted cash and restricted cash equivalents, end of period | $ | | $ | |
See notes to condensed consolidated financial statements.
7
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 L.P. (“Icahn Enterprises Holdings”) and their subsidiaries, unless the context otherwise requires.
Icahn Enterprises owns a
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 14, “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 $
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
Automotive
We conduct our Automotive segment through our wholly owned subsidiaries, Icahn Automotive Group LLC (“Icahn Automotive”) and AEP PLC LLC (“AEP PLC”). The Automotive segment is engaged in providing a full range of automotive repair and maintenance services, along with the sale of any installed parts or materials related to automotive services (“Automotive Services”) to its customers, as well as sales of automotive aftermarket parts and
8
retailed merchandise (“Aftermarket Parts”). In addition to its primary businesses, the Automotive segment leases available and excess real estate in certain locations under long-term operating leases.
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 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 September 30, 2023, we owned approximately
Real Estate
We conduct our Real Estate segment through various wholly owned subsidiaries. Our Real Estate segment consists of investment properties which includes land, retail, office and industrial properties leased to corporate tenants, the development and sale of single-family homes, and the operations of a resort and 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
9
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
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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.
On May 1, 2023, we established a captive insurance program to supplement the insurance coverage of the officers, directors, employees and agents of the Company, its subsidiaries and our general partner, in addition to our newly established commercial insurance program. We hold assets in a protected cell, which we are the primary beneficiary of, and therefore consolidate the protected cell. At September 30, 2023, total assets related to the protected cell were $
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 September 30, 2023 was approximately $
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 $
Our restricted cash balance was $
Long-Lived Assets
The Company reviews long-lived assets for impairment when impairment indicators exist. An evaluation of impairment consists of reviewing the carrying value of a long-lived asset for recoverability. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future net cash flows expected to be generated by the asset. If the carrying value of the long-lived asset is not determined to be recoverable, a fair value assessment is performed.
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During the second quarter of 2023, a significant tenant of a commercial high-rise property, within our Real Estate segment, was notified of default for non-payment. The tenant was unable to cure the default status and the lease was terminated. We considered this default, along with other facts and circumstances, a triggering event for potential impairment and we assessed the carrying value of this long-lived asset for recoverability using the undiscounted cash flow method during the second quarter of 2023. We determined the total undiscounted cash flows of the property exceeded its carrying value and therefore, no impairment is required.
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 segments’ 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 segments’ leasing revenue, as disclosed in Note 11, “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 14, “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.
Energy
Our Energy segment’s deferred revenue is a contract liability that includes 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 addition, it includes deferred revenue associated with agreements entered into with third-party investors that has allowed our Energy segment to monetize certain tax credits available under Section 45Q of the Internal Revenue Code (the “45Q Transaction”). Our Energy segment had deferred revenue of $
As of September 30, 2023, our Energy segment had $
Automotive
Our Automotive segment had deferred revenue with respect to extended warranty plans of $
Adoption of New Accounting Standards
In March 2020, the Statement of Financial Accounting Standards (“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. Banks are no longer 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
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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 the 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 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, 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. On May 2, 2023, the Bankruptcy Court approved a global settlement in the Chapter 11 Cases between Auto Plus, 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. On May 19, 2023, the Bankruptcy Court approved
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 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 recorded our investment in Auto Plus at $
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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 September 30, 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 $
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 nine months ended September 30, 2023 and 2022, $
Auto Plus and AEP PLC
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 by 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 eight months from the date of deconsolidation of January 31, 2023 through September 30, 2023, the total lease revenues of entities within the Automotive segment from leases with Auto Plus was $
For the eight months from the date of deconsolidation of January 31, 2023 through September 30, 2023, the total lease revenues of entities within the Real Estate segment from Auto Plus were $
Note Receivable from Auto Plus
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 $
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AEP PLC
In connection with the Auto Plus auction, AEP PLC acquired $
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
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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:
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