Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion is intended to assist you in understanding our present business and the results of operations together with our present financial condition. This section should be read in conjunction with our consolidated financial statements and the accompanying notes contained in this Report.
Executive Overview
Introduction
Icahn Enterprises L.P. (“Icahn Enterprises”) is a master limited partnership formed in Delaware on February 17, 1987. Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”) is a limited partnership formed in Delaware on February 17, 1987. References to “we,” “our” or “us” herein include both Icahn Enterprises and Icahn Enterprises Holdings and their subsidiaries, unless the context otherwise requires.
Icahn Enterprises owns a 99% limited partner interest in Icahn Enterprises Holdings. Icahn Enterprises Holdings and its subsidiaries own substantially all of the assets and liabilities of Icahn Enterprises and conduct substantially all of its operations. Therefore, the financial results of Icahn Enterprises and Icahn Enterprises Holdings are substantially the same, with differences relating primarily to allocations to the general and limited partners. We do not discuss Icahn Enterprises and Icahn Enterprises Holdings separately unless we believe it is necessary to an understanding of the businesses.
We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Energy, Automotive, Food Packaging, Metals, Real Estate and Home Fashion. We also report the results of our Holding Company, which includes the results of certain subsidiaries of Icahn Enterprises and Icahn Enterprises Holdings (unless otherwise noted), and investment activity and expenses associated with our Holding Company. Our historical results also report the results of our Mining segment, until sold on August 1, 2019, and our Railcar segment through the date we sold our last remaining railcars on lease, which occurred in the third quarter of 2018.
Significant Transactions and Developments
On May 2, 2019, Icahn Enterprises announced the commencement of its “at-the-market” offering pursuant to its Open Market Sale Agreement, pursuant to which Icahn Enterprises may sell its depositary units, from time to time, for up to $400 million in aggregate sale proceeds. Refer to “Liquidity and Capital Resources,” below for further discussion.
On August 1, 2019, we closed on the previously announced sale of Ferrous Resources Ltd. (“Ferrous Resources”). Our proportionate share of the cash proceeds from the sale, net of adjustments, was $463 million. As a result of the sale of Ferrous Resources, our Mining segment recorded a pretax gain on disposition of assets of $252 million.
During 2019, Icahn Enterprises and Icahn Enterprises Finance Corp. (together the “Issuers”) issued $1.250 billion in aggregate principal amount of 6.250% senior unsecured notes due 2026 (the “New 2026 Notes”). The proceeds from the New 2026 Notes, together with cash on hand, were used to redeem all of our prior outstanding $1.7 billion principal amount of 6.000% senior unsecured notes due 2020, and to pay accrued interest, related fees and expenses.
In addition, during 2019, the Issuers issued $500 million in aggregate principal amount of 4.750% senior unsecured notes due 2024 (the “New 2024 Notes”) and $750 million in aggregate principal amount of 5.250% senior unsecured notes due 2027 (the “New 2027 Notes”). The proceeds from the New 2024 Notes and the New 2027 Notes were used for general limited partnership purposes.
In January 2020, the Issuers issued an additional $600 million in aggregate principal amount of the New 2024 Notes and an additional $250 million in aggregate principal amount of the New 2027 Notes. The additional proceeds from the New 2024 Notes and the New 2027 Notes issued in January 2020, together with cash on hand, were used to redeem all of our prior outstanding $1.35 billion principal amount of 5.875% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses.
Results of Operations
Consolidated Financial Results
Our operating businesses comprise consolidated subsidiaries which operate in various industries and are managed on a decentralized basis. In addition to our Investment segment’s revenues from investment transactions, revenues for our continuing operating businesses primarily consist of net sales of various products, services revenue, franchisor operations and leasing of real estate. Due to the structure and nature of our business, we primarily discuss the results of operations by individual reporting segment in order to better understand our consolidated operating performance. Certain other financial information is discussed
on a consolidated basis following our segment discussion, including other revenues and expenses included in continuing operations as well as our results from discontinued operations. In addition to the summarized financial results below, refer to Note 13, “Segment and Geographic Reporting,” to the consolidated financial statements for a reconciliation of each of our reporting segment’s results of continuing operations to our consolidated results.
The comparability of our summarized consolidated financial results presented below is affected by, among other factors, (i) the performance of the Investment Funds, (ii) the results of our Energy segment’s operations, impacted by the relationship of its refined product prices and prices for crude oil and other feedstocks, (iii) impairment charges, primarily in our Automotive segment in 2018 and certain transformation expenses in 2019, (iv) acquisitions of businesses, primarily in our Automotive segment during 2017, (v) gains on dispositions of assets, primarily in our Railcar and Real Estate segments in 2017, including the impact of the disposed income generating assets on subsequent operations, and in our Mining segment as a result of the sale of Ferrous Resources in 2019, (vi) our Holding Company’s unrealized equity investment gains and losses and (vii) the enactment of tax legislation in the United States in 2017. Refer to our respective segment discussions and “Other Consolidated Results of Operations,” below for further discussion.
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Revenues
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Net Income (Loss) From Continuing Operations
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Net Income (Loss) From Continuing Operations Attributable to Icahn Enterprises
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Year Ended December 31,
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Year Ended December 31,
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Year Ended December 31,
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2019
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|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
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(in millions)
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|
|
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|
|
|
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Investment
|
$
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(1,414)
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|
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$
|
737
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|
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$
|
297
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|
|
$
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(1,543)
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|
|
$
|
679
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|
|
$
|
118
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|
|
$
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(775)
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|
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$
|
319
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|
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$
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80
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Holding Company
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(261)
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(291)
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68
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(599)
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(639)
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|
|
355
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|
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(599)
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|
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(638)
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|
|
355
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|
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Other Operating Segments:
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Energy
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6,385
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|
|
7,135
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|
|
5,988
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|
|
314
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|
|
334
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|
|
316
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|
|
246
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|
|
213
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|
|
253
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Automotive
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2,895
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2,856
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2,728
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(197)
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(230)
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(51)
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(197)
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(230)
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(51)
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Food Packaging
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375
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|
|
379
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|
|
389
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|
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(22)
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|
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(15)
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(6)
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(17)
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(12)
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|
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(5)
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Metals
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341
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467
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408
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(22)
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5
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(44)
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(22)
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5
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(44)
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Real Estate
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103
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|
|
212
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|
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628
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|
16
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|
|
112
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549
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16
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|
112
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|
549
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Home Fashion
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186
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171
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183
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(17)
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(11)
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(20)
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(17)
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(11)
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(20)
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Mining
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382
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|
106
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|
|
93
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|
311
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|
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1
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|
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10
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|
|
299
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|
|
3
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|
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9
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Railcar
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—
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|
5
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1,837
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—
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1
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|
|
1,171
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|
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—
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1
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|
|
1,171
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Other operating segments
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10,667
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11,331
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12,254
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|
|
383
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|
|
197
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|
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1,925
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|
|
308
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|
|
81
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|
|
1,862
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Consolidated
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$
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8,992
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|
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$
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11,777
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|
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$
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12,619
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$
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(1,759)
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|
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$
|
237
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|
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$
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2,398
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|
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$
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(1,066)
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$
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(238)
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|
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$
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2,297
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Management’s Discussion and Analysis of Results of Operations discusses the comparisons between the years ended December 31, 2019 and 2018. Certain discussions of results of operations for the comparisons between the years ended December 31, 2018 and 2017 are not included in this Report. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed on March 1, 2019, for such discussions.
Investment
We invest our proprietary capital through various private investment funds (the “Investment Funds”). As of December 31, 2019 and 2018, we had investments with a fair market value of approximately $4.3 billion and $5.1 billion, respectively, in the Investment Funds. As of December 31, 2019 and 2018, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates (excluding us) was approximately $4.5 billion and $5.0 billion, respectively.
Our Investment segment’s results of operations are reflected in net income (loss) in the consolidated statements of operations. Our Investment segment’s net income (loss) is driven by the amount of funds allocated to the Investment Funds and the performance of the underlying investments in the Investment Funds. Future funds allocated to the Investment Funds may increase or decrease based on the contributions and redemptions by our Holding Company and by Mr. Icahn and his affiliates. Additionally, historical performance results of the Investment Funds are not indicative of future results as past market conditions, investment opportunities and investment decisions may not occur in the future. Changes in general market
conditions coupled with changes in exposure to short and long positions have significant impact on our Investment segment’s results of operations and the comparability of results of operations year over year and as such, future results of operations will be impacted by our future exposures and future market conditions, which may not be consistent with prior trends. Refer to the “Investment Segment Liquidity” section of our “Liquidity and Capital Resources” discussion for additional information regarding our Investment segment’s exposure as of December 31, 2019.
For the years ended December 31, 2019, 2018 and 2017, our Investment Funds’ returns were (15.4)%, 7.9% and 2.1%, respectively. Our Investment Funds’ returns represent a weighted-average composite of the average returns, net of expenses. The following table sets forth the performance attribution for the Investment Funds’ returns:
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Year Ended December 31,
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2019
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2018
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2017
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Long positions
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16.4
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%
|
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(0.8)
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%
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5.4
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%
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Short positions
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(31.9)
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%
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7.8
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%
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(3.0)
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%
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Other
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0.1
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%
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0.9
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%
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(0.3)
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%
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(15.4)
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%
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7.9
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%
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2.1
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%
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The following table presents net income (loss) for our Investment segment:
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|
Year Ended December 31,
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|
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2019
|
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2018
|
|
2017
|
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(in millions)
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|
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|
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Long positions
|
$
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1,492
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|
|
$
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(329)
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|
|
$
|
2,035
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Short positions
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(3,045)
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|
|
931
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|
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(1,787)
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Other
|
10
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|
|
77
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|
|
(130)
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|
|
$
|
(1,543)
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|
|
$
|
679
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|
|
$
|
118
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|
For 2019, the Investment Funds’ negative performance was driven by net losses in their short positions offset in part by net gains in their long positions. The negative performance of our Investment segment’s short positions was driven by the negative performance of broad market hedges of approximately $2.5 billion and the aggregate performance of short positions with net losses across various sectors. The positive performance of our Investment segment’s long positions was driven by gains from a consumer, cyclical sector investment, two technology sector investments, two financial sector investments and a consumer, non-cyclical sector investment with gains aggregating approximately $1.7 billion. The aggregate performance of investments with net gains across various other sectors accounted for an additional $495 million positive performance of our Investment segment’s long positions. The positive performance of long positions was offset in part by losses from a consumer, non-cyclical sector investment, an energy sector investment and a technology sector investment with losses aggregating $727 million.
For 2018, the Investment Funds’ positive performance was driven by net gains in their short positions offset in part by net losses in their long positions. The positive performance of our Investment segment’s short positions was driven by the positive performance of broad market hedges of $642 million and the aggregate performance of multiple other short positions with net gains across various sectors, primarily the energy sector. The negative performance of our Investment segment’s long positions was driven by losses from two consumer, cyclical sector investments, a basic material sector investment, two consumer, non-cyclical sector investments, a technology sector investment and an industrial sector investment with losses aggregating approximately $1.4 billion. The aggregate performance of investments with net losses across various other sectors accounted for an additional negative performance of our Investment segment’s long positions. Losses in long positions were offset in part by gains from a consumer, non-cyclical sector investment, a technology sector investment and an energy sector investment with gains aggregating approximately $1.3 billion.
Energy
Our Energy segment is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses. The sale of petroleum products accounted for approximately 94%, 95% and 94% of our Energy segment’s net sales for the years ended December 31, 2019, 2018 and 2017, respectively.
The results of operations of the petroleum business are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into petroleum products, such as gasoline, diesel fuel and jet fuel, that are produced by a refinery (“refined products”). The cost to acquire crude oil and other feedstocks and the price for which refined products are ultimately sold depend on factors beyond our Energy segment’s control,
including the supply of and demand for crude oil, as well as gasoline and other refined products. This supply and demand depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, production levels, the availability of imports, the marketing of competitive fuels and the extent of government regulation. Because the petroleum business applies first-in, first-out accounting to value its inventory, crude oil price movements may impact gross margin in the short-term fluctuations in the market price of inventory. The effect of changes in crude oil prices on the petroleum business’ results of operations is influenced by the rate at which the prices of refined products adjust to reflect these changes.
In addition to current market conditions, there are long-term factors that may impact the demand for refined products. These factors include mandated renewable fuels standards, proposed climate change laws and regulations, and increased mileage standards for vehicles. The petroleum business is also subject to the Renewable Fuel Standard of the United States Environmental Protection Agency, which requires it to either blend “renewable fuels” with its transportation fuels or purchase renewable identification numbers (“RINs”), in lieu of blending. The price of RINs has been extremely volatile and the future cost of RINs for the petroleum business is difficult to estimate. Additionally, the cost of RINs is dependent upon a variety of factors, which include the availability of RINs for purchase, the price at which RINs can be purchased, transportation fuel production levels, the mix of the petroleum business’ petroleum products, as well as the fuel blending performed at its refineries and downstream terminals, all of which can vary significantly from period to period. Refer to Note 18, “Commitments and Contingencies,” to the consolidated financial statements for further discussion of RINs.
The following table presents our Energy segment’s net sales, cost of goods sold and gross margin:
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
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|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Net sales
|
$
|
6,364
|
|
|
$
|
7,124
|
|
|
$
|
5,988
|
|
Cost of goods sold
|
5,707
|
|
|
6,508
|
|
|
5,761
|
|
Gross margin
|
$
|
657
|
|
|
$
|
616
|
|
|
$
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales for our Energy segment decreased by approximately $760 million (11%) for the year ended December 31, 2019 as compared to the comparable prior year period. The decrease was primarily due to a decrease in our petroleum business’ net sales offset in part by an increase in our nitrogen fertilizer business’ net sales. Our petroleum business’ net sales decreased $813 million due to a decrease in sales of gasoline as well as a decrease in distillates sales, with higher volumes more than offset by unfavorable pricing conditions. Our nitrogen fertilizer business’ net sales increased $53 million primarily due to an increase in UAN and ammonia sales due to favorable pricing and higher volumes.
Cost of goods sold for our Energy segment decreased by $801 million (12%) for the year ended December 31, 2019 as compared to the comparable prior year period. The decrease was primarily due to our petroleum business as a result of lower cost of consumed crude oil due to a decrease in crude oil prices and lower RINs expense, offset in part by lower derivative gains.
Gross margin for our Energy segment increased by $41 million for the year ended December 31, 2019 as compared to the comparable prior year period. Gross margin as a percentage of net sales was 10% and 9% for the year ended December 31, 2019 and 2018, respectively. The increase in the gross margin as a percentage of net sales for our petroleum business was primarily due to due to an increase in volumes and lower RINs expense, offset in part by lower derivative gains over the comparable periods. The increase in the gross margin as a percentage of net sales for our nitrogen fertilizer business was due to improved pricing for UAN and ammonia.
Automotive
Our Automotive segment’s results of operations are generally driven by the distribution and installation of automotive aftermarket parts and are affected by the relative strength of automotive part replacement trends, among other factors. Acquisitions in recent years within our Automotive segment provided operating synergies, expanded our market presence, strengthened our parts distribution channel and enhanced our Automotive segment’s ability to better service its customers. However, our automotive aftermarket parts business is in a highly competitive industry and is smaller than several of its competitors, who have greater financial resources and operational capabilities.
Our Automotive segment is in the process of implementing a multi-year transformation plan, which includes the integration and restructuring of the operations of its businesses. The transformation plan includes streamlining Icahn Automotive’s corporate and field support teams; facility closures, consolidations and conversions; inventory optimization
actions; and the re-focusing of its automotive parts business on certain core markets. Costs to implement the transformation plan will include restructuring charges, which will be recorded when specific plans are approved and which may be significant.
Our Automotive segment’s priorities include:
•Positioning the service business to take advantage of opportunities in the do-it-for-me market and vehicle fleets;
•Optimizing the value of the commercial parts distribution business in certain high-volume core markets;
•Exiting the automotive parts distribution business in certain low volume, non-core markets;
•Improving inventory management across Icahn Automotive’s parts and tire distribution network;
•Select digital initiatives that support revenue growth;
•Investment in customer experience initiatives such as enhanced customer loyalty programs and selective upgrades in facilities;
•Investment in employees with focus on training and career development investments; and
•Business process improvements, including investments in our supply chain and information technology capabilities.
The following table presents our Automotive segment’s operating revenue, cost of revenue and gross margin. Our Automotive segment’s results of operations also include automotive services labor. Automotive services labor revenues are included in other revenues from operations in our consolidated statements of operations; however, the sale of any installed parts or materials related to automotive services are included in net sales. Therefore, we discuss the combined results of our automotive net sales and automotive services labor revenues below.
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|
|
|
|
|
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|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and other revenue from operations
|
$
|
2,884
|
|
|
$
|
2,858
|
|
|
$
|
2,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold and other expenses from operations
|
2,089
|
|
|
1,976
|
|
|
1,978
|
|
Gross margin
|
$
|
795
|
|
|
$
|
882
|
|
|
$
|
745
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net sales and other revenue from operations for our Automotive segment for the year ended December 31, 2019 increased by $26 million (1%) as compared to the comparable prior year period. The increase was attributable to an increase in automotive services revenues of $52 million (4%), including an increase of $46 million on an organic basis, due to growing do-it-for-me and fleet businesses, offset in part by a decrease in aftermarket parts sales of $26 million (2)%, including $10 million on an organic basis and additional declines primarily resulting due to store closures. On an organic basis, the decrease in aftermarket parts sales over the comparable periods was due to a decrease in retail sales of $49 million offset in part by an increase in commercial sales of $39 million, driven by increases in Pep Boys commercial programs.
Cost of goods sold and other expenses from operations for the year ended December 31, 2019 increased by $113 million (6%) as compared to the comparable prior year period. The increase was primarily due to additional costs to source inventory subsequent to the sale of Federal-Mogul on October 1, 2018, which contributed $45 million to the increase. The increase was also due to higher sales volumes as well as a reduction in vendor support funds. Gross margin on net sales and other revenue from operations for the year ended December 31, 2019 decreased by $87 million (10%) as compared to the comparable prior year period. Gross margin as a percentage of net sales and automotive services labor revenues was 28% and 31% for the year ended December 31, 2019 and 2018, respectively. The additional costs to source inventory, as described above, was the primary reason for the decline. Our Automotive segment has also experienced some margin rate contraction for its services and parts businesses due to the reduction in vendor support funds and other unfavorable margin adjustments, including from a shift in aftermarket parts sales from retail to commercial, as described above.
Food Packaging
Our Food packaging segment’s results of operations are primarily driven by the production and sale of cellulosic, fibrous and plastic casings for the processed meat and poultry industry and derives a majority of its total net sales from customers located outside the United States.
Net sales for the year ended December 31, 2019 decreased by $12 million (3%) as compared to the comparable prior year period. The decrease was primarily due to lower volumes and the unfavorable effects of foreign exchange offset in part by increases due to price and product mix. Cost of goods sold for the year ended December 31, 2019 decreased by $7 million (2%)
as compared to the comparable prior year period primarily due to lower volume. Gross margin as a percentage of net sales was 19% and 20% for the year ended December 31, 2019 and 2018, respectively.
Metals
The scrap metals business is highly cyclical and is substantially dependent upon the overall economic conditions in the United States and other global markets. Ferrous and non-ferrous scrap has been historically vulnerable to significant declines in consumption and product pricing during prolonged periods of economic downturn or stagnation.
Net sales for the year ended December 31, 2019 decreased by $126 million (27%) compared to the comparable prior year period due to lower shipment volumes of ferrous and non-ferrous material and lower market selling prices for most grades of metal due to unfavorable market conditions and lower prices on non-ferrous residue resulting from uncertainty with the trade dispute with China.
Cost of goods sold for the year ended December 31, 2019 decreased by $98 million (22%) compared to the comparable prior year period. The decrease was primarily due to lower shipment volumes, as discussed above, and lower material costs due to lower market prices. Gross margin as a percentage of net sales was (1)% and 5% for the year ended December 31, 2019 and 2018, respectively. The decrease was primarily due to lower selling prices.
Real Estate
Real Estate revenues and expenses primarily include sales of residential units, results from club operations, rental income and expenses, including income from financing leases, and hotel, timeshare and casino operations. Sales of residential units are included in net sales in our consolidated statements of operations. Results from club and rental operations, including financing lease income, and hotel, timeshare and casino operations are included in other revenues from operations in our consolidated financial statements. Revenue from our real estate operations for the years ended December 31, 2019, 2018 and 2017 were substantially derived from income from club and rental operations.
Home Fashion
Our Home Fashion segment is significantly influenced by the overall economic environment, including consumer spending, at the retail level, for home textile products.
Net sales for the year ended December 31, 2019 increased by $16 million (9%) compared to the comparable prior year period due to higher sales volume attributable to a business acquired in the second quarter of 2019, offset in part by lower organic net sales of $14 million. Cost of goods sold for the year ended December 31, 2019 increased by $15 million (10%) compared to the comparable prior year period which was also attributable to the acquired business. Gross margin as a percentage of net sales was 15% for the year ended December 31, 2019 compared to 16%, with the increase primarily due to sale mix.
Mining
Our Mining segment’s performance was driven by global iron ore prices and demand for raw materials from Chinese steelmakers. Since acquiring Ferrous Resources Ltd in 2015, our Mining segment concentrated on sales in its domestic market, Brazil. As disclosed above, we sold Ferrous Resources on August 1, 2019.
Our Mining segment’s results of operations during 2019 are for the seven-month period ended August 1, 2019 and therefore, are not comparative to the full year 2018. However, the increase in our Mining segment’s net sales for the seven-month period ended August 1, 2019 compared to the year ended December 31, 2018 was due to iron ore price increases as well as volume increases.
Railcar
Our Railcar segment’s other revenues from operations primarily related to its railcar leasing revenue. On June 1, 2017 we sold American Railcar Leasing, LLC (“ARL”) along with a majority of its railcar lease fleet. We sold the remaining railcars previously owned by ARL throughout the remainder of 2017 and the first nine months of 2018.
Holding Company
Our Holding Company’s results of operations primarily reflect the interest expense on its senior unsecured notes for each of the years ended December 31, 2019, 2018 and 2017. We discuss interest expense in consolidation below. In addition, our Holding Company has investment gains and losses from debt and equity investments. During the year ended December 31, 2019, net gains and losses from investment activities were primarily attributable to unrealized losses from an equity investment offset in part by realized gains from an equity investment. During 2018, net loss from investment activities was primarily attributable to an unrealized loss from an equity investment offset in part by unrealized gains from an equity and debt
investment. During 2017, unrealized gains from an equity investment was offset in part by unrealized losses from a debt investment.
Other Consolidated Results of Operations
Gain On Disposition of Assets, Net
As discussed in Note 1, "Description of Business," to the consolidated financial statements, we sold Ferrous Resources, resulting in a pretax gain on disposition of assets of $252 million for the year ended December 31, 2019.
During 2018, our Real Estate segment sold two commercial rental properties, resulting in aggregate pretax gain on disposition of assets of $89 million for the year ended December 31, 2018. In addition, our Railcar segment sold its remaining railcars previously owned by ARL, resulting in aggregate pretax gain on disposition of assets of $5 million for the year ended December 31, 2018.
During 2017, we sold ARL along with a majority of its railcar lease fleet, resulting in an aggregate pretax gain on disposition of assets of approximately $1.7 billion recorded by our Railcar segment for the year ended December 31, 2017. In August 2017, our Real Estate segment sold a development property in Las Vegas Nevada, resulting in a pretax gain on disposition of assets of $456 million for the year ended December 31, 2017. Our Real Estate segment also sold additional properties during 2017, primarily within its rental operations, resulting in an additional pretax gain on disposition of assets aggregating $40 million for the year ended December 31, 2017.
Selling, General and Administrative
Our consolidated selling, general and administrative for the year ended December 31, 2019 decreased by $10 million (1%) as compared to the comparable prior year period. The decrease was primarily attributable to our Automotive segment as a result of certain shared service center cost reductions as well as other cost reduction initiatives offset in part by an increase from our Energy segment of $8 million primarily related to certain asset write offs in 2019 as well as increased personnel costs.
Restructuring
Our consolidated restructuring, net for the years ended December 31, 2019, 2018 and 2017 was $18 million, $21 million and $4 million, respectively, and was primarily attributable to our Food Packaging segment. During the years ended December 31, 2019 and 2018, our Food Packaging segment recorded $8 million and $9 million, respectively, of restructuring charges for employee costs relating to certain of its European operations. During the year ended December 31, 2018, our Energy segment recorded $5 million of restructuring charges for employee costs and other exit costs relating to an office closure. During the year ended December 31, 2019 and 2018, our Automotive segment recorded $6 million and $5 million, respectively, of restructuring charges primarily for exit costs relating to facility closures. Refer to Note 13, “Segment and Geographic Reporting,” to the consolidated financial statements for net restructuring charges recorded by each of our segments.
Impairment
Refer to Note 5, “Fair Value Measurements,” and Note 9, “Goodwill and Intangible Assets, Net,” to the consolidated financial statements for a discussion of impairments of assets.
Interest Expense
Our consolidated interest expense during the year ended December 31, 2019 increased by $81 million (15%) as compared the comparable prior year period. The increase was primarily due to higher interest expense from our Investment segment attributable to an increase in average due to broker balances over the respective periods as well as higher interest expense at our Holding Company as a result of certain debt offerings in the second and fourth quarters of 2019.
Income Tax Expense
Certain of our subsidiaries are partnerships not subject to taxation in our consolidated financial statements and certain other subsidiaries are corporations, or subsidiaries of corporations, subject to taxation in our consolidated financial statements. Therefore, our consolidated effective tax rate generally differs from the statutory federal tax rate. Refer to Note 15, “Income Taxes,” to the consolidated financial statements for a discussion of income taxes.
In addition, in accordance with FASB ASC Topic 740, Income Taxes, we analyze all positive and negative evidence and maintain a valuation allowance on deferred tax assets that are not considered more likely than not to be realized.
Liquidity and Capital Resources
Holding Company Liquidity
We are a holding company. Our cash flow and our ability to meet our debt service obligations and make distributions with respect to depositary units likely will depend on the cash flow resulting from divestitures, equity and debt financings, interest income, returns on our interests in the Investment Funds and the payment of funds to us by our subsidiaries in the form of loans, dividends and distributions. We may pursue various means to raise cash from our subsidiaries. To date, such means include receipt of dividends and distributions from subsidiaries, obtaining loans or other financings based on the asset values of subsidiaries or selling debt or equity securities of subsidiaries through capital market transactions. To the degree any distributions and transfers are impaired or prohibited, our ability to make payments on our debt or distributions on our depositary units could be limited. The operating results of our subsidiaries may not be sufficient for them to make distributions to us. In addition, our subsidiaries are not obligated to make funds available to us and distributions and intercompany transfers from our subsidiaries to us may be restricted by applicable law or covenants contained in debt agreements and other agreements.
As of December 31, 2019, our Holding Company had cash and cash equivalents of approximately $3.0 billion and total debt of approximately $6.3 billion. As of December 31, 2019, our Holding Company had investments in the Investment Funds with a total fair market value of approximately $4.3 billion. Subsequent to December 31, 2019, we invested an additional $1.0 billion in the Investment Funds. We may redeem our direct investment in the Investment Funds upon notice. See “Investment Segment Liquidity” below for additional information with respect to our Investment segment liquidity. See “Consolidated Cash Flows” below for additional information with respect to our Holding Company liquidity.
Holding Company Borrowings and Availability
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
6.000% senior unsecured notes due 2020
|
$
|
—
|
|
|
$
|
1,702
|
|
5.875% senior unsecured notes due 2022
|
1,345
|
|
|
1,344
|
|
6.250% senior unsecured notes due 2022
|
1,211
|
|
|
1,213
|
|
6.750% senior unsecured notes due 2024
|
498
|
|
|
498
|
|
4.750% senior unsecured notes due 2024
|
498
|
|
|
—
|
|
6.375% senior unsecured notes due 2025
|
748
|
|
|
748
|
|
6.250% senior unsecured notes due 2026
|
1,250
|
|
|
—
|
|
5.250% senior unsecured notes due 2027
|
747
|
|
|
—
|
|
|
$
|
6,297
|
|
|
$
|
5,505
|
|
Holding Company debt consists of various issues of fixed-rate senior unsecured notes issued by the Issuers and guaranteed by Icahn Enterprises Holdings (the “Guarantor”). Interest on each tranche of senior unsecured notes are payable semi-annually.
During 2019, the Issuers issued $1.250 billion in aggregate principal amount of the New 2026 Notes. The proceeds from the New 2026 Notes, together with cash on hand, were used to redeem all of our prior outstanding 6.000% senior unsecured notes due 2020, and to pay accrued interest, related fees and expenses.
In addition, during 2019, the Issuers issued $500 million in aggregate principal amount of the New 2024 Notes and $750 million in aggregate principal amount of the New 2027 Notes. The proceeds from the New 2024 Notes and the New 2027 Notes were used for general limited partnership purposes.
In January 2020, the Issuers issued an additional $600 million in aggregate principal amount of the New 2024 Notes and an additional $250 million in aggregate principal amount of the New 2027 Notes. The additional proceeds from the New 2024 Notes and the New 2027 Notes issued in January 2020, together with cash on hand, were used to redeem all of our prior outstanding 5.875% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses.
Each of our senior unsecured notes and the related guarantees are the senior unsecured obligations of the Issuers and rank equally with all of the Issuers’ and the Guarantor’s existing and future senior unsecured indebtedness and senior to all of the Issuers’ and the Guarantor’s existing and future subordinated indebtedness. Each of our senior unsecured notes and the related guarantees are effectively subordinated to the Issuers’ and the Guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness. Each of our senior unsecured notes and the related guarantees are also effectively subordinated to all indebtedness and other liabilities of the Issuers’ subsidiaries other than the Guarantor.
The indentures governing each of our senior unsecured notes restrict the payment of cash distributions, the purchase of equity interests or the purchase, redemption, defeasance or acquisition of debt subordinated to the senior unsecured notes. The indentures also restrict the incurrence of debt or the issuance of disqualified stock, as defined in the indentures, with certain exceptions. In addition, the indentures require that on each quarterly determination date, we and the guarantor of the notes (currently only Icahn Enterprises Holdings) maintain certain minimum financial ratios, as defined therein. The indentures also restrict the creation of liens, mergers, consolidations and sales of substantially all of our assets, and transactions with affiliates. Additionally, each of the senior unsecured notes outstanding as of December 31, 2019, except for the New 2024 Notes and the New 2027 Notes, are subject to optional redemption premiums in the event we redeem any of the notes prior to certain dates as described in the indentures.
As of December 31, 2019, we were in compliance with all covenants, including maintaining certain minimum financial ratios, as defined in the indentures. Additionally, as of December 31, 2019, based on covenants in the indentures governing our senior unsecured notes, we are not permitted to incur additional indebtedness. However, as a result of our subsequent debt activity in January 2020, as described above, we are permitted to borrow an additional $469 million as of the date of this Report.
2019 At-The-Market Offering
On May 2, 2019, Icahn Enterprises announced the commencement of its “at-the-market” offering pursuant to its Open Market Sale Agreement, pursuant to which Icahn Enterprises may sell its depositary units, from time to time, during the term of the program ending on March 31, 2021, for up to $400 million in aggregate sale proceeds. During 2019, Icahn Enterprises sold 794,349 depositary units pursuant to this agreement, resulting in gross proceeds of $54 million. No assurance can be made that any or all amounts will be sold during the term of the program.
LP Unit Distributions
On February 26, 2020, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $2.00 per depositary unit. The quarterly distribution is payable in either cash or additional depositary units, at the election of each depositary unitholder and will be paid on or about April 28, 2020 to depositary unitholders of record at the close of business on March 20, 2020.
During the year ended December 31, 2019, we declared four quarterly distributions aggregating $8.00 per depositary unit. Mr. Icahn and his affiliates elected to receive their proportionate share of these distributions in depositary units. Mr. Icahn and his affiliates owned approximately 92.0% of Icahn Enterprises’ outstanding depositary units as of December 31, 2019. In connection with these distributions, aggregate cash distributions to all depositary unitholders was $110 million during the year ended December 31, 2019.
The declaration and payment of distributions is reviewed quarterly by Icahn Enterprises GP’s board of directors based upon a review of our balance sheet and cash flow, our expected capital and liquidity requirements, the provisions of our partnership agreement and provisions in our financing arrangements governing distributions, and keeping in mind that limited partners subject to U.S. federal income tax have recognized income on our earnings even if they do not receive distributions that could be used to satisfy any resulting tax obligations. The payment of future distributions will be determined by the board of directors quarterly, based upon the factors described above and other factors that it deems relevant at the time that declaration of a distribution is considered. Payments of distributions are subject to certain restrictions, including certain restrictions on our subsidiaries which limit their ability to distribute dividends to us. There can be no assurance as to whether or in what amounts any future distributions might be paid.
Subsequent Events
Subsequent to December 31, 2019, CVR Energy declared a quarterly dividend which should result in an additional $57 million in dividends payable to us in the first quarter of 2020.
Investment Segment Liquidity
During the year ended December 31, 2019, affiliates of Mr. Icahn (excluding us and our subsidiaries) invested $220 million in the Investment Funds. Subsequent to December 31, 2019, we invested an additional $1.0 billion in the Investment Funds. In addition to investments by us and Mr. Icahn, the Investment Funds historically have access to significant amounts of cash available from prime brokerage lines of credit, subject to customary terms and market conditions.
Additionally, our Investment segment liquidity is driven by the investment activities and performance of the Investment Funds. As of December 31, 2019, the Investment Funds’ had a net short notional exposure of 56%. The Investment Funds’ long exposure was 114% (112% long equity and 2% long credit and other) and its short exposure was 170% (163% short equity and 7% short credit and other). The notional exposure represents the ratio of the notional exposure of the Investment Funds’ invested capital to the net asset value of the Investment Funds at December 31, 2019.
Of the Investment Funds’ 114% long exposure, 105% was comprised of the fair value of its long positions (with certain adjustments) and 9% was comprised of single name equity forward contracts and credit contracts. Of the Investment Funds’ 170% short exposure, 0.13 was comprised of the fair value of our short positions and 157% was comprised of short credit default swap contracts and short broad market index swap derivative contracts.
With respect to both our long positions that are not notionalized (105% long exposure) and our short positions that are not notionalized (0.13 short), each 1% change in exposure as a result of purchases or sales (assuming no change in value) would have a 1% impact on our cash and cash equivalents (as a percentage of net asset value). Changes in exposure as a result of purchases and sales as well as adverse changes in market value would also have an effect on funds available to us pursuant to prime brokerage lines of credit.
With respect to the notional value of our other short positions (157% short exposure), our liquidity would decrease by the balance sheet unrealized loss if we were to close the positions at year end prices. This would be offset by a release of restricted cash balances collateralizing these positions as well as an increase in funds available to us pursuant to certain prime brokerage lines of credit. If we were to increase our short exposure by adding to these short positions, we would be required to provide cash collateral equal to a small percentage of the initial notional value at counterparties that require cash as collateral and then post additional collateral equal to 100% of the mark to market on adverse changes in fair value. For our counterparties who do not require cash collateral, funds available from lines of credit would decrease.
Other Segment Liquidity
Segment Cash and Cash Equivalents
Segment cash and cash equivalents (excluding our Investment segment) consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Energy
|
$
|
652
|
|
|
$
|
668
|
|
Automotive
|
46
|
|
|
43
|
|
Food Packaging
|
22
|
|
|
46
|
|
Metals
|
3
|
|
|
20
|
|
Real Estate
|
53
|
|
|
39
|
|
Home Fashion
|
1
|
|
|
1
|
|
|
$
|
777
|
|
|
$
|
817
|
|
Segment Borrowings and Availability
Segment debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Energy
|
$
|
1,195
|
|
|
$
|
1,170
|
|
Automotive
|
405
|
|
|
372
|
|
Food Packaging
|
268
|
|
|
273
|
|
Metals
|
7
|
|
|
—
|
|
Real Estate
|
2
|
|
|
2
|
|
Home Fashion
|
18
|
|
|
4
|
|
|
$
|
1,895
|
|
|
$
|
1,821
|
|
As of December 31, 2019, all of our subsidiaries were in compliance with all debt covenants.
Our segments have additional borrowing availability under certain revolving credit facilities as summarized below:
|
|
|
|
|
|
|
December 31, 2019
|
|
(in millions)
|
Energy
|
$
|
443
|
|
Automotive
|
107
|
|
Food Packaging
|
7
|
|
Metals
|
29
|
|
Home Fashion
|
21
|
|
|
$
|
607
|
|
The above outstanding debt and borrowing availability with respect to each of our continuing operating segments reflects third-party obligations. Certain terms of financings for certain of our businesses impose restrictions on the business’ ability to transfer funds to us, including restrictions on dividends, distribution, loans and other transactions. See Note 11, “Debt,” to the consolidated financial statements for further discussion regarding our segment debt, including information relating to maturities, interest rates and borrowing availabilities.
On January 27, 2020, CVR Energy issued $600 million in aggregate principal amount of 5.25% senior unsecured notes due 2025 and $400 million in aggregate principal amount of 5.75% senior unsecured notes due 2028. A portion of the net proceeds from the issuance of these notes were used to fund the redemption of CVR Energy’s existing senior unsecured notes due 2022. The remaining net proceeds will be used for CVR Energy’s general corporate purposes, which may include funding (i) acquisitions, (ii) capital projects, and/or (iii) share repurchases or other distributions to CVR Energy’s stockholders.
Subsidiary Stock Repurchase Program
On October 23, 2019, the Board of Directors of CVR Energy approved a stock repurchase program which would enable it to repurchase up to $300 million of its common stock from time to time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws. The stock repurchase program has a duration of four years, which may be terminated by the Board of Directors of CVR Energy at any time. Repurchases, if any, including the timing, price and amount, may be made at the discretion of CVR Energy management and CVR Energy is not obligated to make any repurchases. CVR Energy did not repurchase any of its shares of common stock during 2019.
Consolidated Cash Flows
Our Holding Company’s cash flows are generally driven by payments and proceeds associated with our senior unsecured debt obligations and payments and proceeds associated with equity transactions with Icahn Enterprises’ depositary unitholders. Additionally, our Holding Company’s cash flows include transactions with our Investment and other operating segments. Our Investment segment’s cash flows are primarily driven by investment transactions, which are included in net cash flows from operating activities due to the nature of its business, as well as contributions to and distributions from Mr. Icahn and his affiliates (including Icahn Enterprises and Icahn Enterprises Holdings), which are included in net cash flows from financing activities. Our other operating segments’ cash flows are driven by the activities and performance of each business as well as transactions with our Holding Company, as discussed below.
The following table summarizes cash flow information for Icahn Enterprises’ reporting segments and our Holding Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019
|
|
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
Net Cash Provided By (Used In)
|
|
|
|
|
|
Net Cash Provided By (Used In)
|
|
|
|
|
|
Net Cash Provided By (Used In)
|
|
|
|
|
|
Operating Activities
|
|
Investing Activities
|
|
Financing Activities
|
|
Operating Activities
|
|
Investing Activities
|
|
Financing Activities
|
|
Operating Activities
|
|
Investing Activities
|
|
Financing Activities
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holding Company
|
$
|
(322)
|
|
|
$
|
898
|
|
|
$
|
738
|
|
|
$
|
(315)
|
|
|
$
|
1,729
|
|
|
$
|
(102)
|
|
|
$
|
(340)
|
|
|
$
|
565
|
|
|
$
|
73
|
|
Investment
|
(1,873)
|
|
|
—
|
|
|
220
|
|
|
(116)
|
|
|
—
|
|
|
2,018
|
|
|
(1,914)
|
|
|
—
|
|
|
1,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operating Segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
747
|
|
|
(121)
|
|
|
(642)
|
|
|
628
|
|
|
(108)
|
|
|
(334)
|
|
|
248
|
|
|
(276)
|
|
|
(226)
|
|
Automotive
|
(134)
|
|
|
(104)
|
|
|
241
|
|
|
(190)
|
|
|
(134)
|
|
|
315
|
|
|
(284)
|
|
|
(302)
|
|
|
583
|
|
Food Packaging
|
—
|
|
|
(17)
|
|
|
(5)
|
|
|
9
|
|
|
(25)
|
|
|
46
|
|
|
24
|
|
|
(57)
|
|
|
8
|
|
Metals
|
13
|
|
|
(30)
|
|
|
5
|
|
|
14
|
|
|
(20)
|
|
|
(1)
|
|
|
17
|
|
|
(29)
|
|
|
31
|
|
Real Estate
|
20
|
|
|
(22)
|
|
|
(8)
|
|
|
412
|
|
|
168
|
|
|
(552)
|
|
|
110
|
|
|
269
|
|
|
(410)
|
|
Home Fashion
|
(4)
|
|
|
(27)
|
|
|
36
|
|
|
3
|
|
|
(4)
|
|
|
—
|
|
|
(2)
|
|
|
(5)
|
|
|
5
|
|
Mining
|
93
|
|
|
(14)
|
|
|
4
|
|
|
4
|
|
|
(40)
|
|
|
32
|
|
|
8
|
|
|
(38)
|
|
|
31
|
|
Railcar
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
11
|
|
|
(222)
|
|
Other operating segments
|
735
|
|
|
(335)
|
|
|
(369)
|
|
|
880
|
|
|
(163)
|
|
|
(494)
|
|
|
215
|
|
|
(427)
|
|
|
(200)
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
474
|
|
|
(437)
|
|
|
(121)
|
|
|
691
|
|
|
(580)
|
|
|
(280)
|
|
Total before eliminations
|
(1,460)
|
|
|
563
|
|
|
589
|
|
|
923
|
|
|
1,129
|
|
|
1,301
|
|
|
(1,348)
|
|
|
(442)
|
|
|
1,493
|
|
Eliminations
|
—
|
|
|
23
|
|
|
(23)
|
|
|
—
|
|
|
1,458
|
|
|
(1,458)
|
|
|
—
|
|
|
1,124
|
|
|
(1,124)
|
|
Consolidated
|
$
|
(1,460)
|
|
|
$
|
586
|
|
|
$
|
566
|
|
|
$
|
923
|
|
|
$
|
2,587
|
|
|
$
|
(157)
|
|
|
$
|
(1,348)
|
|
|
$
|
682
|
|
|
$
|
369
|
|
Eliminations
Eliminations in the table above relate to certain of our Holding Company’s transactions with our Investment and other operating segments. Our Holding Company’s net (investments in) distributions from the Investments Funds, when applicable, are included in cash flows from investing activities for our Holding Company and cash flows from financing activities for our Investment segment. Similarly, our Holding Company’s net distributions from (investments in) our other operating segments are included in cash flows from investing activities for our Holding Company and cash flows from financing activities for our other operating segments. In addition, during January 2019, our Holding Company sold its direct investment in CVR Refining to CVR Energy, which is included in cash flows from investing activities for our Holding Company and cash flows from financing activities for our Energy segment.
Holding Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
Cash payments for interest on senior unsecured notes
|
$
|
(374)
|
|
|
$
|
(339)
|
|
|
$
|
(312)
|
|
Interest and dividend income
|
69
|
|
|
24
|
|
|
12
|
|
Net cash receipts (payments) for income taxes, net of refunds
|
7
|
|
|
15
|
|
|
(17)
|
|
Operating transactions with subsidiaries
|
—
|
|
|
13
|
|
|
(2)
|
|
Operating costs and other
|
(24)
|
|
|
(28)
|
|
|
(21)
|
|
|
$
|
(322)
|
|
|
$
|
(315)
|
|
|
$
|
(340)
|
|
Investing Activities:
|
|
|
|
|
|
Proceeds from sale of businesses and assets
|
$
|
463
|
|
|
$
|
3,187
|
|
|
$
|
1,808
|
|
Proceeds from sale of investments
|
458
|
|
|
—
|
|
|
1
|
|
Proceeds from sale of CVR Refining common units to CVR Energy
|
60
|
|
|
—
|
|
|
—
|
|
Net (investments in) distributions from the Investment Funds
|
—
|
|
|
(1,708)
|
|
|
(1,300)
|
|
Net distributions from (investments in) other operating segments
|
(83)
|
|
|
250
|
|
|
56
|
|
|
|
|
|
|
|
|
$
|
898
|
|
|
$
|
1,729
|
|
|
$
|
565
|
|
Financing Activities:
|
|
|
|
|
|
Partnership contributions
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
612
|
|
Partnership distributions
|
(112)
|
|
|
(97)
|
|
|
(81)
|
|
Payments to acquire additional interests in subsidiaries
|
—
|
|
|
(5)
|
|
|
(349)
|
|
Net debt transactions
|
795
|
|
|
—
|
|
|
11
|
|
Note (repayment) proceeds from other operating segments
|
—
|
|
|
—
|
|
|
(120)
|
|
|
$
|
738
|
|
|
$
|
(102)
|
|
|
$
|
73
|
|
Increase in cash and cash equivalents and restricted cash and restricted cash equivalents
|
$
|
1,314
|
|
|
$
|
1,312
|
|
|
$
|
298
|
|
The increase in interest payments in 2019 compared to 2018 is primarily due to timing of debt refinancing transactions. The increases in interest payments during 2018 compared to 2017 is due to higher interest rates on certain of our senior unsecured notes due to certain debt refinancings in the first and fourth quarters of 2017.
Interest and dividend income increased over the comparable periods primarily due to the increase in our cash balances, which were held in interest bearing accounts.
Net cash receipts (payments) for income taxes, net of refunds, is net of tax sharing (payments) receipts from certain of our consolidated subsidiaries aggregating $(3) million, $27 million and $28 million during the years ended December 31, 2019, 2018 and 2017, respectively.
Proceeds from the sale of businesses includes proceeds from the sales Ferrous Resources in 2019, Federal-Mogul, Tropicana and ARI in 2018 and ARL in 2017 (and residual sales of ARL’s remaining railcars in 2018). The cash flows with respect to each of Federal-Mogul, Tropicana and ARI are reported in discontinued operations for all periods presented and the cash proceeds from each of the sales remain with our Holding Company in continuing operations.
Proceeds from the sale of investments in 2019 related to the sale of a certain equity investment.
During 2019, we received $55 million (including $1 million from our general partner) in connection with our “at-the-market” offering pursuant to our Open Market Sale Agreement announced in May 2019, as discussed above. During 2017, we received $600 million in connection with a rights offering for Icahn Enterprises depositary units as well as $12 million from our general partner in connection with the rights offering in order to maintain its aggregate 1.99% general partner interest in Icahn Enterprises.
Payments to acquire additional interests in subsidiaries during 2018 relates to the acquisition of the remaining interests in a hotel, timeshare and casino resort property in Aruba, previously a subsidiary of Tropicana, in which we had an indirect majority controlling interest in. During 2017, we increased our ownership in Federal-Mogul and Tropicana.
Net (investments in) distributions from the Investment Funds, Net distributions from (investments in) other operating segments and Note (repayment) proceeds from other operating segments are eliminated in consolidation and discussed further below.
Investment Segment
Our Investment segment’s cash flows from operating activities for the comparable periods were attributable to its net investment transactions.
Our Investment segment’s cash flows from financing activities for the comparable periods were due to contributions from, and distributions to, our Holding Company and Mr. Icahn and his affiliates. Our Investment segment had net cash provided by financing activities of $220 million for the year ended December 31, 2019, for contributions received from Mr. Icahn and his affiliates (excluding us). For the year ended December 31, 2018, our Investment segment had net cash provided by financing activities of $2.0 billion, which included our $1.7 billion net investment in the Investment Funds as well as $310 million received from Mr. Icahn and his affiliates (excluding us). For the year ended December 31, 2017, our Investment segment had net cash provided by financing activities of $1,900 million, which included our $1.3 billion net investment in the Investment Funds as well as $600 million received from Mr. Icahn and his affiliates (excluding us).
Other Operating Segments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
Net cash flow from operating activities before changes in operating assets and liabilities
|
$
|
652
|
|
|
$
|
784
|
|
|
$
|
419
|
|
Changes in operating assets and liabilities
|
83
|
|
|
104
|
|
|
(205)
|
|
Transactions with Holding Company
|
—
|
|
|
(8)
|
|
|
1
|
|
|
$
|
735
|
|
|
$
|
880
|
|
|
$
|
215
|
|
Investing Activities:
|
|
|
|
|
|
Capital expenditures
|
$
|
(250)
|
|
|
$
|
(272)
|
|
|
$
|
(316)
|
|
Acquisition of businesses, net of cash acquired
|
(39)
|
|
|
(15)
|
|
|
(249)
|
|
Proceeds from sale of assets
|
42
|
|
|
183
|
|
|
175
|
|
Note loan repayment from Holding Company
|
—
|
|
|
—
|
|
|
120
|
|
Other
|
(88)
|
|
|
(59)
|
|
|
(157)
|
|
|
$
|
(335)
|
|
|
$
|
(163)
|
|
|
$
|
(427)
|
|
Financing Activities:
|
|
|
|
|
|
Net debt and supply chain financing activity
|
$
|
(37)
|
|
|
$
|
(78)
|
|
|
$
|
(96)
|
|
Distributions to non-controlling interests
|
(119)
|
|
|
(139)
|
|
|
(75)
|
|
Payments to acquire additional interests in consolidated subsidiaries
|
(301)
|
|
|
—
|
|
|
—
|
|
Net contributions from (distributions to) Holding Company
|
83
|
|
|
(292)
|
|
|
(37)
|
|
Other
|
5
|
|
|
15
|
|
|
8
|
|
|
$
|
(369)
|
|
|
$
|
(494)
|
|
|
$
|
(200)
|
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash and restricted cash equivalents
|
(2)
|
|
|
(2)
|
|
|
3
|
|
Add back change in cash and restricted cash of assets held for sale
|
—
|
|
|
(8)
|
|
|
9
|
|
Increase in cash and cash equivalents and restricted cash and restricted cash equivalents
|
$
|
29
|
|
|
$
|
213
|
|
|
$
|
(400)
|
|
Our other operating segments’ net cash flow from operating activities before changes in operating assets and liabilities were primarily attributable to our Energy segment’s positive results from operations for all periods, and for 2017, were also attributable to our Railcar segment prior to the sale of its railcar lease fleet.
Changes in operating assets and liabilities for 2019 were primarily attributable to our Energy segment resulting primarily from an increase in accounts payable. Changes in operating assets and liabilities for 2018 were primarily attributable to our Real Estate segment receiving payment for its mortgage receivables relating to its 2017 sale of a development property in Las Vegas, Nevada, offset in part by changes in operating assets and liabilities for our Energy and Automotive segments. Changes
in operating assets and liabilities for 2017 were primarily attributable to our Energy segment resulting from changes in the biofuel blending obligation caused by changes in RINs prices.
Capital expenditures are primarily from our Energy and Automotive segments. For the year ended December 31, 2019, our Energy segment’s capital expenditures were $121 million, primarily for maintenance, and our Automotive segment’s capital expenditures were $47 million, primarily for store improvements,. For the years ended December 31, 2018 and 2017, our Energy segment’s capital expenditures were $102 million and $120 million, respectively, and our Automotive segment’s capital expenditures were $66 million and $86 million, respectively.
Acquisition of businesses, net of cash acquired, primarily relates to our Automotive segment. Our Automotive segment’s acquisitions included various service businesses aggregating $10 million in 2019, $15 million in 2018, and the acquisitions of Precision Tune, American Driveline and various other service businesses aggregating $218 million in 2017. In addition, our Home Fashion and Metals segments acquired businesses for $21 million and $8 million, respectively, in 2019 (excluding contingent consideration not yet paid), and our Food Packaging segment acquired a casings manufacturer for $31 million in 2017.
Proceeds from sale of assets are primarily due to our Energy segment in 2019 and our Real Estate segment’s dispositions of certain properties in 2018 and 2017.
During the year ended December 31, 2017, our Railcar segment received $120 million from our Holding Company for the repayment of an intercompany loan.
Distributions to non-controlling interests were from our Energy segment for the years ended December 31, 2019, 2018 and 2017, relating to its regular quarterly dividends and distributions, excluding payments made to us.
Net distributions to and contributions from our Holding Company include the dividends and distributions paid by our Energy segment of $217 million, $192 million and $148 million for the years ended December 31, 2019, 2018 and 2017, respectively, as well as by our Real Estate segment of $24 million, $543 million and $374 million, respectively, and by our Railcar segment of $47 million in 2017. During the years ended December 31, 2019, 2018 and 2017, our Automotive segment received funds in the form of investments from our Holding Company of $276 million, $365 million and $504 million, respectively, for the acquisition of businesses, investments in 767 Auto Leasing LLC and costs associated with our Automotive segment's multi-year transformation plan. Our other operating segments received funds in the form of loans and investments from our Holding Company aggregating $17 million, $34 million and $28 million during the years ended December 31, 2019, 2018 and 2017, respectively. Our Food Packaging segment also received $50 million in 2018 in connection with a rights offering, including $44 million from our Holding Company.
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
Operating Activities:
|
|
|
|
Federal-Mogul
|
$
|
225
|
|
|
$
|
416
|
|
Tropicana
|
120
|
|
|
150
|
|
ARI
|
122
|
|
|
128
|
|
Transactions with Holding Company
|
7
|
|
|
(3)
|
|
|
$
|
474
|
|
|
$
|
691
|
|
Investing Activities:
|
|
|
|
Federal-Mogul
|
$
|
(263)
|
|
|
$
|
(370)
|
|
Tropicana
|
(55)
|
|
|
(56)
|
|
ARI
|
(119)
|
|
|
(154)
|
|
|
$
|
(437)
|
|
|
$
|
(580)
|
|
Financing Activities:
|
|
|
|
Federal-Mogul
|
$
|
(56)
|
|
|
$
|
(35)
|
|
Tropicana
|
(75)
|
|
|
(188)
|
|
ARI
|
(32)
|
|
|
(38)
|
|
Net contributions from (distributions to) Holding Company
|
42
|
|
|
(19)
|
|
|
$
|
(121)
|
|
|
$
|
(280)
|
|
Consolidated Capital Spending
Refer to Note 13, “Segment and Geographic Reporting,” for a reconciliation of our segments’ capital expenditures to consolidated capital expenditures for each of the years ended December 31, 2019, 2018 and 2017.
We estimate that our consolidated capital expenditures for our continuing operating businesses to be approximately $133 million to $150 million for our Energy segment, a majority of which is planned for maintenance, $69 million for our Automotive segment, primarily for maintenance and restructuring related activities, and approximately $39 million in the aggregate for all other segments.
Our Energy segment’s petroleum business capitalized $38 million and $8 million of turnaround expenditures incurred during the years ended December 31, 2019 and 2018, respectively. The next planned major turnaround within our Energy segment’s petroleum businesses commences in the first quarter of 2020 with total estimated expenditures of $145 million to $155 million, of which $130 million to $140 million is expected to be incurred and capitalized in the spring of 2020. Turnaround expenditures are reported separately from capital expenditures in our consolidated statements of cash flows.
Consolidated Contractual Commitments and Contingencies
The following table reflects, at December 31, 2019, our contractual cash obligations, subject to certain conditions, due over the indicated periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt obligations
|
$
|
35
|
|
|
$
|
640
|
|
|
$
|
3,055
|
|
|
$
|
645
|
|
|
$
|
1,000
|
|
|
$
|
2,751
|
|
|
$
|
8,126
|
|
Financing lease obligations
|
20
|
|
|
17
|
|
|
15
|
|
|
13
|
|
|
12
|
|
|
53
|
|
|
130
|
|
Interest payments
|
506
|
|
|
487
|
|
|
393
|
|
|
257
|
|
|
210
|
|
|
286
|
|
|
2,139
|
|
Pension and other post-retirement benefit plans
|
10
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
25
|
|
|
71
|
|
Operating lease obligations
|
181
|
|
|
159
|
|
|
135
|
|
|
85
|
|
|
57
|
|
|
142
|
|
|
759
|
|
Purchase obligations
|
99
|
|
|
80
|
|
|
77
|
|
|
75
|
|
|
71
|
|
|
375
|
|
|
777
|
|
Letters of credit
|
48
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
Total
|
$
|
899
|
|
|
$
|
1,392
|
|
|
$
|
3,684
|
|
|
$
|
1,084
|
|
|
$
|
1,359
|
|
|
$
|
3,632
|
|
|
$
|
12,050
|
|
Certain of CVR Energy’s and PSC Metals’ facilities are environmentally impaired. As of December 31, 2019, CVR Energy and PSC Metals have recorded environmental liabilities of $6 million and $27 million, respectively. For further discussion regarding these commitments, among others, see Note 18, “Commitments and Contingencies,” to the consolidated financial statements.
As discussed in Note 4, “Investments,” to the consolidated financial statements, we have contractual liabilities of $1,190 million related to securities sold, not yet purchased as of December 31, 2019. This amount has not been included in the table above as maturity is not subject to a contract and cannot be properly estimated.
Consolidated Off-Balance Sheet Arrangements
We have off-balance sheet risk related to investment activities associated with certain financial instruments, including futures, options, credit default swaps and securities sold, not yet purchased. For additional information regarding these arrangements, refer to Note 6, “Financial Instruments,” to the consolidated financial statements contained elsewhere in this Report.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to the consolidated financial statements. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Among others, estimates are used when accounting for valuation of investments. Estimates used in determining fair value measurements
include, but are not limited to, expected future cash flow assumptions, market rate assumptions for contractual obligations, actuarial assumptions for benefit plans, settlement plans for litigation and contingencies, and appropriate discount rates. Estimates and assumptions are evaluated on an ongoing basis and are based on historical and other factors believed to be reasonable under the circumstances. The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results, under conditions and circumstances different from those assumed, may differ from estimates.
We believe the following accounting policies are critical to our business operations and the understanding of results of operations and affect the more significant judgments and estimates used in the preparation of our consolidated financial statements.
Income Taxes
Except as described below, no provision has been made for federal, state, local or foreign income taxes on the results of operations generated by partnership activities as such taxes are the responsibility of the partners. Our corporate subsidiaries account for their income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Management periodically evaluates all evidence, both positive and negative, in determining whether a valuation allowance to reduce the carrying value of deferred tax assets is still needed. For each of the three years ended December 31, 2019, we concluded, based on the projections of taxable income, that certain of our corporate subsidiaries more likely than not will realize a partial benefit from their deferred tax assets and loss carry forwards. Ultimate realization of the deferred tax assets is dependent upon, among other factors, our corporate subsidiaries’ ability to generate sufficient taxable income within the carryforward periods and is subject to change depending on the tax laws in effect in the years in which the carryforwards are used.
See Note 15, “Income Taxes,” to the consolidated financial statements for further discussion regarding our income taxes.
Valuation of Investments
The fair value of our investments, including securities sold, not yet purchased, is based on observable market prices when available. Securities owned by the Investment Funds that are listed on a securities exchange are valued at their last sales price on the primary securities exchange on which such securities are traded on such date. Securities that are not listed on any exchange but are traded over-the-counter are valued at the mean between the last “bid” and “ask” price for such security on such date. Securities and other instruments for which market quotes are not readily available are valued at fair value as determined in good faith by the applicable general partner. For some investments little market activity may exist; management’s determination of fair value is then based on the best information available in the circumstances and may incorporate management’s own assumptions and involves a significant degree of judgment.
Long-Lived Assets and Goodwill
We calculate depreciation and amortization on a straight-line basis over the estimated useful lives of the various definite-lived assets. When assets are placed in service, we make estimates of what we believe are their reasonable useful lives.
Long-lived assets held and used by our various operating segments and long-lived assets to be disposed of are reviewed for impairment whenever events or changes in circumstances, such as vacancies and rejected leases and reduced production capacity, indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, we estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows, undiscounted and without interest charges, is less than the carrying amount of the asset an impairment loss is recognized. Measurement of an impairment loss for long-lived assets that we expect to hold and use is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Definite-lived assets held by our various segments are periodically reviewed for impairment indicators. If impairment indicators exist, we perform the required analysis and an impairment loss is recognized in accordance with U.S. GAAP.
Indefinite-lived intangible assets, such as goodwill and trademarks, held by our various segments are reviewed for impairment annually, or more frequently if impairment indicators exist. Goodwill impairment testing consists of (i) a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, and/or, if necessary, (ii) a quantitative analysis which involves comparing the fair value of our reporting
units to their respective carrying values. If the fair value of the reporting unit exceeds its carrying value, no impairment is necessary. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss, equal to the difference (limited to the total amount of goodwill allocated to the tested reporting unit), is recognized in accordance with U.S. GAAP. As of December 31, 2019, our consolidated goodwill was $282 million, primarily within our Automotive segment’s Service reporting unit. We perform the annual goodwill impairment test for our Automotive segment as of October 1 of each year. Based on our annual goodwill impairment analysis for our Automotive segment, we determined that the fair value of our Automotive segment’s Service reporting unit was significantly in excess of its carrying value and therefore, no impairment is required. As of December 31, 2019, our Automotive segment had remaining goodwill of $249 million, which is allocated entirely to its Service reporting unit.
When performing the quantitative analysis for goodwill impairment testing, we base the fair value of our reporting units on consideration of various valuation methodologies, including projecting future cash flows discounted at rates commensurate with the risks involved (“DCF”). Assumptions used in a DCF require the exercise of significant judgment, including judgment about appropriate discount rates and terminal values, growth rates, and the amount and timing of expected future cash flows. The forecasted cash flows are based on current plans and for years beyond that plan, the estimates are based on assumed growth rates. We believe that our assumptions are consistent with the plans and estimates used to manage the underlying businesses. The discount rates, which are intended to reflect the risks inherent in future cash flow projections, used in a DCF are based on estimates of the weighted-average cost of capital of a market participant. Such estimates are derived from our analysis of peer companies and consider the industry weighted average return on debt and equity from a market participant perspective. The inputs used to determine the fair values of our reporting units, including future cash flows, discount rates and growth rates and other assumptions involves a significant degree of judgment.
See Note 5, “Fair Value Measurements,” and Note 9, “Goodwill and Intangible Assets, Net,” to the consolidated financial statements for further discussion regarding the fair value measurements of our long-live assets as well as goodwill and intangible assets.
Recently Issued Accounting Standards
See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to the consolidated financial statements for a discussion of recent accounting pronouncements applicable to us.
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Partners
Icahn Enterprises L.P.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Icahn Enterprises L.P. (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2019, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 28, 2020 expressed an adverse opinion.
Change in accounting principle
As discussed in Note 2 and Note 10 to the consolidated financial statements, the Partnership has changed its method of accounting for leases in 2019 due to the adoption of FASB ASC 842, Leases (“ASC 842”).
Basis for opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnerships financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Adoption of new accounting principle
As described further in Note 2 to the Partnership’s consolidated financial statements, the Partnership adopted ASC 842, on January 1, 2019 which resulted in the recognition of a right-of-use asset (“ROU asset”) and a lease liability for operating leases (other than leases that meet the definition of a short-term lease), at the commencement of the lease term. The liability will be equal to the present value of future lease payments. The ROU asset will be based on the liability, subject to certain adjustments.
We identified adoption of ASC 842 as a critical audit matter because it is a substantial change in accounting for leases and as such requires significant auditor judgment in obtaining sufficient appropriate audit evidence related to management’s determination of the lease liability and ROU asset and their selection of a discount rate to be applied to future lease payments.
Our audit procedures related to the adoption of ASC 842 included the following, among others.
•We tested the effectiveness of controls over management’s adoption of ASC 842, including the appropriateness of the methodology applied, accounting and business assumptions used in the analysis, and the mathematical accuracy of the overall model used to record the initial ROU asset and lease liability.
•We evaluated the independent auditor’s report on operating effectiveness of controls at the Partnership’s third-party lease software vendor, which included testing the design and operating effectiveness of the relevant user controls due to the Partnership’s reliance on the third-party software to appropriately calculate the ROU asset and lease liability.
•We verified the completeness of the population of leases that the Partnership evaluated, including analyzing agreements for embedded leases.
•We obtained and inspected a sample of lease contracts, compared the relevant inputs in the lease software to underlying lease documentation, and recalculated the related ROU asset and lease liability.
•With the assistance of our fair value specialists we evaluated the reasonableness of the Partnership’s yield curves used in the calculation by obtaining evidence from knowledgeable sources that are independent from the Partnership to benchmark, challenge and assess management’s key assumptions to different pools of leases with varying remaining terms to determine the discount rate used by the Partnership in establishing the ROU asset and lease liability.
/s/GRANT THORNTON LLP
We have served as the Partnership’s auditor since 2004.
New York, New York
February 28, 2020
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Partners
Icahn Enterprises Holdings L.P.
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Icahn Enterprises Holdings L.P. (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Change in accounting principle
As discussed in Note 2 and Note 10 to the consolidated financial statements, the Partnership has changed its method of accounting for leases in 2019 due to the adoption of FASB ASC 842, Leases (“ASC 842”).
Basis for opinion
These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/GRANT THORNTON LLP
We have served as the Partnership’s auditor since 2004.
New York, New York
February 28, 2020
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
ASSETS
|
(In millions, except unit amounts)
|
|
|
Cash and cash equivalents
|
$
|
3,794
|
|
|
$
|
2,656
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
1,151
|
|
|
2,682
|
|
Investments
|
9,945
|
|
|
8,337
|
|
Due from brokers
|
858
|
|
|
664
|
|
Accounts receivable, net
|
475
|
|
|
474
|
|
Inventories, net
|
1,812
|
|
|
1,779
|
|
Property, plant and equipment, net
|
4,541
|
|
|
4,688
|
|
Goodwill
|
282
|
|
|
247
|
|
Intangible assets, net
|
431
|
|
|
501
|
|
Other assets
|
1,350
|
|
|
1,461
|
|
Total Assets
|
$
|
24,639
|
|
|
$
|
23,489
|
|
LIABILITIES AND EQUITY
|
|
|
|
Accounts payable
|
$
|
945
|
|
|
$
|
832
|
|
Accrued expenses and other liabilities
|
1,453
|
|
|
1,012
|
|
Deferred tax liability
|
639
|
|
|
694
|
|
Unrealized loss on derivative contracts
|
1,224
|
|
|
36
|
|
Securities sold, not yet purchased, at fair value
|
1,190
|
|
|
468
|
|
Due to brokers
|
54
|
|
|
141
|
|
Debt
|
8,192
|
|
|
7,326
|
|
Total liabilities
|
13,697
|
|
|
10,509
|
|
|
|
|
|
Commitments and contingencies (Note 18)
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
Limited partners: Depositary units: 214,078,558 and 191,366,097 units issued and outstanding at December 31, 2019 and 2018, respectively
|
6,268
|
|
|
7,350
|
|
General partner
|
(812)
|
|
|
(790)
|
|
Equity attributable to Icahn Enterprises
|
5,456
|
|
|
6,560
|
|
Equity attributable to non-controlling interests
|
5,486
|
|
|
6,420
|
|
Total equity
|
10,942
|
|
|
12,980
|
|
Total Liabilities and Equity
|
$
|
24,639
|
|
|
$
|
23,489
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Revenues:
|
(In millions, except per unit amounts)
|
|
|
|
|
Net sales
|
$
|
9,720
|
|
|
$
|
10,576
|
|
|
$
|
9,306
|
|
Other revenues from operations
|
666
|
|
|
647
|
|
|
743
|
|
Net (loss) gain from investment activities
|
(1,931)
|
|
|
322
|
|
|
302
|
|
Interest and dividend income
|
265
|
|
|
148
|
|
|
127
|
|
Gain on disposition of assets, net
|
253
|
|
|
84
|
|
|
2,163
|
|
Other income (loss), net
|
19
|
|
|
—
|
|
|
(22)
|
|
|
8,992
|
|
|
11,777
|
|
|
12,619
|
|
Expenses:
|
|
|
|
|
|
Cost of goods sold
|
8,212
|
|
|
9,002
|
|
|
8,220
|
|
Other expenses from operations
|
518
|
|
|
529
|
|
|
518
|
|
Selling, general and administrative
|
1,376
|
|
|
1,386
|
|
|
1,269
|
|
Restructuring
|
18
|
|
|
21
|
|
|
4
|
|
Impairment
|
2
|
|
|
92
|
|
|
87
|
|
Interest expense
|
605
|
|
|
524
|
|
|
655
|
|
|
10,731
|
|
|
11,554
|
|
|
10,753
|
|
(Loss) income from continuing operations before income tax (expense) benefit
|
(1,739)
|
|
|
223
|
|
|
1,866
|
|
Income tax (expense) benefit
|
(20)
|
|
|
14
|
|
|
532
|
|
(Loss) income from continuing operations
|
(1,759)
|
|
|
237
|
|
|
2,398
|
|
(Loss) income from discontinued operations
|
(32)
|
|
|
1,764
|
|
|
234
|
|
Net (loss) income
|
(1,791)
|
|
|
2,001
|
|
|
2,632
|
|
Less: net (loss) income attributable to non-controlling interests
|
(693)
|
|
|
519
|
|
|
178
|
|
Net (loss) income attributable to Icahn Enterprises
|
$
|
(1,098)
|
|
|
$
|
1,482
|
|
|
$
|
2,454
|
|
|
|
|
|
|
|
Net (loss) income attributable to Icahn Enterprises from:
|
|
|
|
|
|
Continuing operations
|
$
|
(1,066)
|
|
|
$
|
(238)
|
|
|
$
|
2,297
|
|
Discontinued operations
|
(32)
|
|
|
1,720
|
|
|
157
|
|
|
$
|
(1,098)
|
|
|
$
|
1,482
|
|
|
$
|
2,454
|
|
Net (loss) income attributable to Icahn Enterprises allocated to:
|
|
|
|
|
|
Limited partners
|
$
|
(1,076)
|
|
|
$
|
2,039
|
|
|
$
|
2,405
|
|
General partner
|
(22)
|
|
|
(557)
|
|
|
49
|
|
|
$
|
(1,098)
|
|
|
$
|
1,482
|
|
|
$
|
2,454
|
|
Basic and diluted (loss) income per LP unit:
|
|
|
|
|
|
Continuing operations
|
$
|
(5.23)
|
|
|
$
|
(1.29)
|
|
|
$
|
13.98
|
|
Discontinued operations
|
(0.15)
|
|
|
12.62
|
|
|
0.96
|
|
|
$
|
(5.38)
|
|
|
$
|
11.33
|
|
|
$
|
14.94
|
|
Basic and diluted weighted average LP units outstanding
|
200
|
|
|
180
|
|
|
161
|
|
Cash distributions declared per LP unit
|
$
|
8.00
|
|
|
$
|
7.00
|
|
|
$
|
6.00
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(In millions)
|
|
|
|
|
Net (loss) income
|
$
|
(1,791)
|
|
|
$
|
2,001
|
|
|
$
|
2,632
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
Translation adjustments
|
(2)
|
|
|
(86)
|
|
|
124
|
|
Post-retirement benefits and other
|
3
|
|
|
18
|
|
|
49
|
|
Other comprehensive income (loss), net of tax
|
1
|
|
|
(68)
|
|
|
173
|
|
Comprehensive (loss) income
|
(1,790)
|
|
|
1,933
|
|
|
2,805
|
|
Less: Comprehensive (loss) income attributable to non-controlling interests
|
(693)
|
|
|
512
|
|
|
194
|
|
Comprehensive (loss) income attributable to Icahn Enterprises
|
$
|
(1,097)
|
|
|
$
|
1,421
|
|
|
$
|
2,611
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributable to Icahn Enterprises allocated to:
|
|
|
|
|
|
Limited partners
|
$
|
(1,075)
|
|
|
$
|
1,979
|
|
|
$
|
2,559
|
|
General partner
|
(22)
|
|
|
(558)
|
|
|
52
|
|
|
$
|
(1,097)
|
|
|
$
|
1,421
|
|
|
$
|
2,611
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Icahn Enterprises
|
|
|
|
|
|
|
|
|
|
General Partner’s (Deficit) Equity
|
|
Limited
Partners’ Equity
|
|
Total Partners’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
$
|
(293)
|
|
|
$
|
2,485
|
|
|
$
|
2,192
|
|
|
$
|
5,902
|
|
|
$
|
8,094
|
|
Net income
|
49
|
|
|
2,405
|
|
|
2,454
|
|
|
178
|
|
|
2,632
|
|
Other comprehensive income
|
3
|
|
|
154
|
|
|
157
|
|
|
16
|
|
|
173
|
|
Partnership distributions
|
(2)
|
|
|
(79)
|
|
|
(81)
|
|
|
—
|
|
|
(81)
|
|
Partnership contribution
|
12
|
|
|
600
|
|
|
612
|
|
|
—
|
|
|
612
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
600
|
|
|
600
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(92)
|
|
|
(92)
|
|
Cumulative effect adjustment from adoption of accounting principle
|
(1)
|
|
|
(46)
|
|
|
(47)
|
|
|
—
|
|
|
(47)
|
|
Changes in subsidiary equity and other
|
(2)
|
|
|
(117)
|
|
|
(119)
|
|
|
(286)
|
|
|
(405)
|
|
Balance, December 31, 2017
|
(234)
|
|
|
5,402
|
|
|
5,168
|
|
|
6,318
|
|
|
11,486
|
|
Net (loss) income
|
(557)
|
|
|
2,039
|
|
|
1,482
|
|
|
519
|
|
|
2,001
|
|
Other comprehensive loss
|
(1)
|
|
|
(60)
|
|
|
(61)
|
|
|
(7)
|
|
|
(68)
|
|
Partnership distributions
|
(2)
|
|
|
(95)
|
|
|
(97)
|
|
|
—
|
|
|
(97)
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
310
|
|
|
310
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(153)
|
|
|
(153)
|
|
Cumulative effect adjustment from adoption of accounting principle
|
(1)
|
|
|
(28)
|
|
|
(29)
|
|
|
—
|
|
|
(29)
|
|
Changes in subsidiary equity and other
|
5
|
|
|
92
|
|
|
97
|
|
|
(567)
|
|
|
(470)
|
|
Balance, December 31, 2018
|
(790)
|
|
|
7,350
|
|
|
6,560
|
|
|
6,420
|
|
|
12,980
|
|
Net loss
|
(22)
|
|
|
(1,076)
|
|
|
(1,098)
|
|
|
(693)
|
|
|
(1,791)
|
|
Other comprehensive income
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Partnership distributions
|
(2)
|
|
|
(110)
|
|
|
(112)
|
|
|
—
|
|
|
(112)
|
|
Partnership contributions
|
1
|
|
|
54
|
|
|
55
|
|
|
—
|
|
|
55
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
220
|
|
|
220
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(119)
|
|
|
(119)
|
|
Changes in subsidiary equity and other
|
1
|
|
|
49
|
|
|
50
|
|
|
(342)
|
|
|
(292)
|
|
Balance, December 31, 2019
|
$
|
(812)
|
|
|
$
|
6,268
|
|
|
$
|
5,456
|
|
|
$
|
5,486
|
|
|
$
|
10,942
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Cash flows from operating activities:
|
(In millions)
|
|
|
|
|
Net (loss) income
|
$
|
(1,791)
|
|
|
$
|
2,001
|
|
|
$
|
2,632
|
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
Loss (income) from discontinued operations
|
32
|
|
|
(1,764)
|
|
|
(234)
|
|
Net (gain) loss from securities transactions
|
(570)
|
|
|
476
|
|
|
(2,273)
|
|
Purchases of securities
|
(4,948)
|
|
|
(4,810)
|
|
|
(781)
|
|
Proceeds from sales of securities
|
3,648
|
|
|
6,763
|
|
|
2,413
|
|
Purchases to cover securities sold, not yet purchased
|
(938)
|
|
|
(1,083)
|
|
|
(1,078)
|
|
Proceeds from securities sold, not yet purchased
|
1,523
|
|
|
1,077
|
|
|
1,222
|
|
Changes in receivables and payables relating to securities transactions
|
(220)
|
|
|
(1,195)
|
|
|
(1,704)
|
|
Gain on disposition of assets, net
|
(253)
|
|
|
(84)
|
|
|
(2,163)
|
|
Depreciation and amortization
|
519
|
|
|
508
|
|
|
518
|
|
Impairment
|
2
|
|
|
92
|
|
|
87
|
|
Deferred taxes
|
(89)
|
|
|
(29)
|
|
|
(560)
|
|
Other, net
|
16
|
|
|
123
|
|
|
(27)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable, net
|
(33)
|
|
|
45
|
|
|
(72)
|
|
Inventories, net
|
(20)
|
|
|
(86)
|
|
|
(185)
|
|
Other assets
|
356
|
|
|
316
|
|
|
2
|
|
Accounts payable
|
145
|
|
|
(59)
|
|
|
130
|
|
Unrealized gain/loss on derivative contracts
|
1,181
|
|
|
(1,763)
|
|
|
155
|
|
Accrued expenses and other liabilities
|
(20)
|
|
|
(84)
|
|
|
(124)
|
|
Net cash (used in) provided by operating activities from continuing operations
|
(1,460)
|
|
|
444
|
|
|
(2,042)
|
|
Net cash provided by operating activities from discontinued operations
|
—
|
|
|
479
|
|
|
694
|
|
Net cash (used in) provided by operating activities
|
(1,460)
|
|
|
923
|
|
|
(1,348)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Capital expenditures
|
(250)
|
|
|
(272)
|
|
|
(316)
|
|
Acquisition of businesses, net of cash acquired
|
(39)
|
|
|
(15)
|
|
|
(249)
|
|
Purchases of investments
|
(50)
|
|
|
(60)
|
|
|
(77)
|
|
Proceeds from sale of investments
|
458
|
|
|
1
|
|
|
1
|
|
Proceeds from disposition of assets
|
505
|
|
|
3,370
|
|
|
1,983
|
|
Other, net
|
(38)
|
|
|
—
|
|
|
(80)
|
|
Net cash provided by investing activities from continuing operations
|
586
|
|
|
3,024
|
|
|
1,262
|
|
Net cash used in investing activities from discontinued operations
|
—
|
|
|
(437)
|
|
|
(580)
|
|
Net cash provided by investing activities
|
586
|
|
|
2,587
|
|
|
682
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Investment segment contributions from non-controlling interests
|
220
|
|
|
310
|
|
|
600
|
|
Partnership contributions
|
55
|
|
|
—
|
|
|
612
|
|
Partnership distributions
|
(112)
|
|
|
(97)
|
|
|
(81)
|
|
Purchase of additional interests in consolidated subsidiaries
|
(241)
|
|
|
(5)
|
|
|
(349)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
(119)
|
|
|
(139)
|
|
|
(75)
|
|
Proceeds from Holding Company senior unsecured notes
|
2,507
|
|
|
—
|
|
|
2,470
|
|
Repayments of Holding Company senior unsecured notes
|
(1,700)
|
|
|
—
|
|
|
(2,450)
|
|
Proceeds from subsidiary borrowings
|
810
|
|
|
1,268
|
|
|
1,334
|
|
Repayments of subsidiary borrowings
|
(847)
|
|
|
(1,346)
|
|
|
(1,430)
|
|
Other, net
|
(7)
|
|
|
15
|
|
|
(1)
|
|
Net cash provided by financing activities from continuing operations
|
566
|
|
|
6
|
|
|
630
|
|
Net cash used in financing activities from discontinued operations
|
—
|
|
|
(163)
|
|
|
(261)
|
|
Net cash provided by (used in) financing activities
|
566
|
|
|
(157)
|
|
|
369
|
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash and restricted cash equivalents
|
(2)
|
|
|
(7)
|
|
|
3
|
|
Add back change in cash and restricted cash of assets held for sale
|
(83)
|
|
|
81
|
|
|
321
|
|
Net (decrease) increase in cash and cash equivalents and restricted cash and restricted cash equivalents
|
(393)
|
|
|
3,427
|
|
|
27
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, beginning of period
|
5,338
|
|
|
1,911
|
|
|
1,884
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, end of period
|
$
|
4,945
|
|
|
$
|
5,338
|
|
|
$
|
1,911
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
ASSETS
|
(In millions)
|
|
|
Cash and cash equivalents
|
$
|
3,794
|
|
|
$
|
2,656
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
1,151
|
|
|
2,682
|
|
Investments
|
9,945
|
|
|
8,337
|
|
Due from brokers
|
858
|
|
|
664
|
|
Accounts receivable, net
|
475
|
|
|
474
|
|
Inventories, net
|
1,812
|
|
|
1,779
|
|
Property, plant and equipment, net
|
4,541
|
|
|
4,688
|
|
Goodwill
|
282
|
|
|
247
|
|
Intangible assets, net
|
431
|
|
|
501
|
|
Other assets
|
1,350
|
|
|
1,493
|
|
Total Assets
|
$
|
24,639
|
|
|
$
|
23,521
|
|
LIABILITIES AND EQUITY
|
|
|
|
Accounts payable
|
$
|
945
|
|
|
$
|
832
|
|
Accrued expenses and other liabilities
|
1,453
|
|
|
1,012
|
|
Deferred tax liability
|
639
|
|
|
694
|
|
Unrealized loss on derivative contracts
|
1,224
|
|
|
36
|
|
Securities sold, not yet purchased, at fair value
|
1,190
|
|
|
468
|
|
Due to brokers
|
54
|
|
|
141
|
|
Debt
|
8,195
|
|
|
7,330
|
|
Total liabilities
|
13,700
|
|
|
10,513
|
|
|
|
|
|
Commitments and contingencies (Note 18)
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
Limited partner
|
6,328
|
|
|
7,452
|
|
General partner
|
(875)
|
|
|
(864)
|
|
Equity attributable to Icahn Enterprises Holdings
|
5,453
|
|
|
6,588
|
|
Equity attributable to non-controlling interests
|
5,486
|
|
|
6,420
|
|
Total equity
|
10,939
|
|
|
13,008
|
|
Total Liabilities and Equity
|
$
|
24,639
|
|
|
$
|
23,521
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Revenues:
|
(In millions)
|
|
|
|
|
Net sales
|
$
|
9,720
|
|
|
$
|
10,576
|
|
|
$
|
9,306
|
|
Other revenues from operations
|
666
|
|
|
647
|
|
|
743
|
|
Net (loss) gain from investment activities
|
(1,931)
|
|
|
322
|
|
|
302
|
|
Interest and dividend income
|
265
|
|
|
148
|
|
|
127
|
|
Gain on disposition of assets, net
|
253
|
|
|
84
|
|
|
2,163
|
|
Other income (loss), net
|
19
|
|
|
—
|
|
|
(22)
|
|
|
8,992
|
|
|
11,777
|
|
|
12,619
|
|
Expenses:
|
|
|
|
|
|
Cost of goods sold
|
8,212
|
|
|
9,002
|
|
|
8,220
|
|
Other expenses from operations
|
518
|
|
|
529
|
|
|
518
|
|
Selling, general and administrative
|
1,376
|
|
|
1,386
|
|
|
1,269
|
|
Restructuring
|
18
|
|
|
21
|
|
|
4
|
|
Impairment
|
2
|
|
|
92
|
|
|
87
|
|
Interest expense
|
604
|
|
|
523
|
|
|
653
|
|
|
10,730
|
|
|
11,553
|
|
|
10,751
|
|
(Loss) income from continuing operations before income tax (expense) benefit
|
(1,738)
|
|
|
224
|
|
|
1,868
|
|
Income tax (expense) benefit
|
|
(20)
|
|
|
14
|
|
|
532
|
|
(Loss) income from continuing operations
|
|
(1,758)
|
|
|
238
|
|
|
2,400
|
|
(Loss) income from discontinued operations
|
|
(32)
|
|
|
1,764
|
|
|
234
|
|
Net (loss) income
|
|
(1,790)
|
|
|
2,002
|
|
|
2,634
|
|
Less: net (loss) income attributable to non-controlling interests
|
|
(693)
|
|
|
519
|
|
|
178
|
|
Net (loss) income attributable to Icahn Enterprises Holdings
|
$
|
(1,097)
|
|
|
$
|
1,483
|
|
|
$
|
2,456
|
|
|
|
|
|
|
|
Net (loss) income attributable to Icahn Enterprises Holdings from:
|
|
|
|
|
|
Continuing operations
|
$
|
(1,065)
|
|
|
$
|
(237)
|
|
|
$
|
2,299
|
|
Discontinued operations
|
(32)
|
|
|
1,720
|
|
|
157
|
|
|
$
|
(1,097)
|
|
|
$
|
1,483
|
|
|
$
|
2,456
|
|
Net (loss) income attributable to Icahn Enterprises Holdings allocated to:
|
|
|
|
|
|
Limited partner
|
$
|
(1,086)
|
|
|
$
|
2,060
|
|
|
$
|
2,431
|
|
General partner
|
(11)
|
|
|
(577)
|
|
|
25
|
|
|
$
|
(1,097)
|
|
|
$
|
1,483
|
|
|
$
|
2,456
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(In millions)
|
|
|
|
|
Net (loss) income
|
$
|
(1,790)
|
|
|
$
|
2,002
|
|
|
$
|
2,634
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
Translation adjustments
|
(2)
|
|
|
(86)
|
|
|
124
|
|
Post-retirement benefits and other
|
3
|
|
|
18
|
|
|
49
|
|
Other comprehensive income (loss), net of tax
|
1
|
|
|
(68)
|
|
|
173
|
|
Comprehensive (loss) income
|
(1,789)
|
|
|
1,934
|
|
|
2,807
|
|
Less: Comprehensive (loss) income attributable to non-controlling interests
|
(693)
|
|
|
512
|
|
|
194
|
|
Comprehensive (loss) income attributable to Icahn Enterprises Holdings
|
$
|
(1,096)
|
|
|
$
|
1,422
|
|
|
$
|
2,613
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributable to Icahn Enterprises Holdings allocated to:
|
|
|
|
|
|
Limited partner
|
$
|
(1,085)
|
|
|
$
|
2,000
|
|
|
$
|
2,587
|
|
General partner
|
(11)
|
|
|
(578)
|
|
|
26
|
|
|
$
|
(1,096)
|
|
|
$
|
1,422
|
|
|
$
|
2,613
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Attributable to Icahn Enterprises Holdings
|
|
|
|
|
|
|
|
|
|
General Partner’s Equity (Deficit)
|
|
Limited Partner’s Equity
|
|
Total Partners’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2016
|
$
|
(316)
|
|
|
$
|
2,533
|
|
|
$
|
2,217
|
|
|
$
|
5,902
|
|
|
$
|
8,119
|
|
Net income
|
25
|
|
|
2,431
|
|
|
2,456
|
|
|
178
|
|
|
2,634
|
|
Other comprehensive income
|
2
|
|
|
155
|
|
|
157
|
|
|
16
|
|
|
173
|
|
Partnership distributions
|
(1)
|
|
|
(80)
|
|
|
(81)
|
|
|
—
|
|
|
(81)
|
|
Partnership contribution
|
6
|
|
|
606
|
|
|
612
|
|
|
—
|
|
|
612
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
600
|
|
|
600
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(92)
|
|
|
(92)
|
|
Cumulative effect adjustment from adoption of accounting principle
|
—
|
|
|
(47)
|
|
|
(47)
|
|
|
—
|
|
|
(47)
|
|
Changes in subsidiary equity and other
|
(2)
|
|
|
(117)
|
|
|
(119)
|
|
|
(286)
|
|
|
(405)
|
|
Balance, December 31, 2017
|
(286)
|
|
|
5,481
|
|
|
5,195
|
|
|
6,318
|
|
|
11,513
|
|
Net (loss) income
|
(577)
|
|
|
2,060
|
|
|
1,483
|
|
|
519
|
|
|
2,002
|
|
Other comprehensive loss
|
(1)
|
|
|
(60)
|
|
|
(61)
|
|
|
(7)
|
|
|
(68)
|
|
Partnership distributions
|
(1)
|
|
|
(96)
|
|
|
(97)
|
|
|
—
|
|
|
(97)
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
310
|
|
|
310
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(153)
|
|
|
(153)
|
|
Cumulative effect adjustment from adoption of accounting principle
|
—
|
|
|
(29)
|
|
|
(29)
|
|
|
—
|
|
|
(29)
|
|
Changes in subsidiary equity and other
|
1
|
|
|
96
|
|
|
97
|
|
|
(567)
|
|
|
(470)
|
|
Balance, December 31, 2018
|
(864)
|
|
|
7,452
|
|
|
6,588
|
|
|
6,420
|
|
|
13,008
|
|
Net loss
|
(11)
|
|
|
(1,086)
|
|
|
(1,097)
|
|
|
(693)
|
|
|
(1,790)
|
|
Other comprehensive income
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Partnership distributions
|
(2)
|
|
|
(142)
|
|
|
(144)
|
|
|
—
|
|
|
(144)
|
|
Partnership contributions
|
1
|
|
|
54
|
|
|
55
|
|
|
—
|
|
|
55
|
|
Investment segment contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
220
|
|
|
220
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
(119)
|
|
|
(119)
|
|
Changes in subsidiary equity and other
|
1
|
|
|
49
|
|
|
50
|
|
|
(342)
|
|
|
(292)
|
|
Balance, December 31, 2019
|
$
|
(875)
|
|
|
$
|
6,328
|
|
|
$
|
5,453
|
|
|
$
|
5,486
|
|
|
$
|
10,939
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Cash flows from operating activities:
|
(In millions)
|
|
|
|
|
Net (loss) income
|
$
|
(1,790)
|
|
|
$
|
2,002
|
|
|
$
|
2,634
|
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
Income from discontinued operations
|
32
|
|
|
(1,764)
|
|
|
(234)
|
|
Net (gain) loss from securities transactions
|
(570)
|
|
|
476
|
|
|
(2,273)
|
|
Purchases of securities
|
(4,948)
|
|
|
(4,810)
|
|
|
(781)
|
|
Proceeds from sales of securities
|
3,648
|
|
|
6,763
|
|
|
2,413
|
|
Purchases to cover securities sold, not yet purchased
|
(938)
|
|
|
(1,083)
|
|
|
(1,078)
|
|
Proceeds from securities sold, not yet purchased
|
1,523
|
|
|
1,077
|
|
|
1,222
|
|
Changes in receivables and payables relating to securities transactions
|
(220)
|
|
|
(1,195)
|
|
|
(1,704)
|
|
Gain on disposition of assets, net
|
(253)
|
|
|
(84)
|
|
|
(2,163)
|
|
Depreciation and amortization
|
519
|
|
|
508
|
|
|
518
|
|
Impairment
|
2
|
|
|
92
|
|
|
87
|
|
Deferred taxes
|
(89)
|
|
|
(29)
|
|
|
(560)
|
|
Other, net
|
15
|
|
|
122
|
|
|
(29)
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
Accounts receivable, net
|
(33)
|
|
|
45
|
|
|
(72)
|
|
Inventories, net
|
(20)
|
|
|
(86)
|
|
|
(185)
|
|
Other assets
|
356
|
|
|
316
|
|
|
2
|
|
Accounts payable
|
145
|
|
|
(59)
|
|
|
130
|
|
Unrealized gain/loss on derivative contracts
|
1,181
|
|
|
(1,763)
|
|
|
155
|
|
Accrued expenses and other liabilities
|
(20)
|
|
|
(84)
|
|
|
(124)
|
|
Net cash (used in) provided by operating activities from continuing operations
|
(1,460)
|
|
|
444
|
|
|
(2,042)
|
|
Net cash provided by operating activities from discontinued operations
|
—
|
|
|
479
|
|
|
694
|
|
Net cash (used in) provided by operating activities
|
(1,460)
|
|
|
923
|
|
|
(1,348)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Capital expenditures
|
(250)
|
|
|
(272)
|
|
|
(316)
|
|
Acquisition of businesses, net of cash acquired
|
(39)
|
|
|
(15)
|
|
|
(249)
|
|
Purchases of investments
|
(50)
|
|
|
(60)
|
|
|
(77)
|
|
Proceeds from sale of investments
|
458
|
|
|
1
|
|
|
1
|
|
Proceeds from disposition of assets
|
505
|
|
|
3,370
|
|
|
1,983
|
|
Other, net
|
(38)
|
|
|
—
|
|
|
(80)
|
|
Net cash provided by investing activities from continuing operations
|
586
|
|
|
3,024
|
|
|
1,262
|
|
Net cash used in investing activities from discontinued operations
|
—
|
|
|
(437)
|
|
|
(580)
|
|
Net cash provided by investing activities
|
586
|
|
|
2,587
|
|
|
682
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Investment segment contributions from non-controlling interests
|
220
|
|
|
310
|
|
|
600
|
|
Partnership contributions
|
55
|
|
|
—
|
|
|
612
|
|
Partnership distributions
|
(112)
|
|
|
(97)
|
|
|
(81)
|
|
Purchase of additional interests in consolidated subsidiaries
|
(241)
|
|
|
(5)
|
|
|
(349)
|
|
Dividends and distributions to non-controlling interests in subsidiaries
|
(119)
|
|
|
(139)
|
|
|
(75)
|
|
Proceeds from Holding Company senior unsecured notes
|
2,507
|
|
|
—
|
|
|
2,470
|
|
Repayments of Holding Company senior unsecured notes
|
(1,700)
|
|
|
—
|
|
|
(2,450)
|
|
Proceeds from subsidiary borrowings
|
810
|
|
|
1,268
|
|
|
1,334
|
|
Repayments of subsidiary borrowings
|
(847)
|
|
|
(1,346)
|
|
|
(1,430)
|
|
Other, net
|
(7)
|
|
|
15
|
|
|
(1)
|
|
Net cash provided by financing activities from continuing operations
|
566
|
|
|
6
|
|
|
630
|
|
Net cash used in financing activities from discontinued operations
|
—
|
|
|
(163)
|
|
|
(261)
|
|
Net cash provided by (used in) financing activities
|
566
|
|
|
(157)
|
|
|
369
|
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash and restricted cash equivalents
|
(2)
|
|
|
(7)
|
|
|
3
|
|
Add back change in cash and restricted cash of assets held for sale
|
(83)
|
|
|
81
|
|
|
321
|
|
Net (decrease) increase in cash and cash equivalents and restricted cash and restricted cash equivalents
|
(393)
|
|
|
3,427
|
|
|
27
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, beginning of period
|
5,338
|
|
|
1,911
|
|
|
1,884
|
|
Cash and cash equivalents and restricted cash and restricted cash equivalents, end of period
|
$
|
4,945
|
|
|
|
$
|
5,338
|
|
|
|
$
|
1,911
|
|
See notes to consolidated financial statements.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business.
Overview
Icahn Enterprises L.P. (“Icahn Enterprises”) is a master limited partnership formed in Delaware on February 17, 1987. Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”) is a limited partnership formed in Delaware on February 17, 1987. References to “we,” “our” or “us” herein include both Icahn Enterprises and Icahn Enterprises Holdings and their subsidiaries, unless the context otherwise requires.
Icahn Enterprises owns a 99% limited partner interest in Icahn Enterprises Holdings. Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), which is owned and controlled by Mr. Carl C. Icahn, owns a 1% general partner interest in each of Icahn Enterprises and Icahn Enterprises Holdings as of December 31, 2019. Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Therefore, the financial results of Icahn Enterprises and Icahn Enterprises Holdings are substantially the same, with differences relating primarily to the allocation of the general partner interest, which is reflected as an aggregate 1.99% general partner interest in the financial statements of Icahn Enterprises. In addition to the above, Mr. Icahn and his affiliates owned approximately 92.0% of Icahn Enterprises’ outstanding depositary units as of December 31, 2019.
Description of Operating Businesses
We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment, Energy, Automotive, Food Packaging, Metals, Real Estate and Home Fashion. We also report the results of our Holding Company, which includes the results of certain subsidiaries of Icahn Enterprises and Icahn Enterprises Holdings (unless otherwise noted), and investment activity and expenses associated with our Holding Company. Our historical results also report the results of our Mining segment, until sold on August 1, 2019, and our Railcar segment through the date we sold our last remaining railcars on lease, which occurred in the third quarter of 2018. See Note 13, “Segment and Geographic 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 are 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. We and certain of Mr. Icahn’s wholly-owned affiliates are the only investors in the Investment Funds. 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. Interests in the Investment Funds are not offered to outside investors. We had interests in the Investment Funds with a fair market value of approximately $4.3 billion and $5.1 billion as of December 31, 2019 and 2018, respectively.
Energy
We conduct our Energy segment through our majority owned subsidiary, CVR Energy, Inc. (“CVR Energy”). CVR Energy is a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses through its holdings in CVR Refining, LP (“CVR Refining”) and CVR Partners, LP (“CVR Partners”), respectively. CVR Refining is an independent petroleum refiner and marketer of high value transportation fuels. CVR Partners produces and markets nitrogen fertilizers in the form of urea ammonium nitrate and ammonia. CVR Energy has a general partner interest in each of CVR Refining and CVR Partners. In addition, CVR Energy is the sole limited partner of CVR Refining and owns 34.4% of the outstanding common units of CVR Partners as of December 31, 2019.
As of December 31, 2019, we owned approximately 70.8% of the total outstanding common stock of CVR Energy.
On January 29, 2019, CVR Energy, pursuant to the exercise of its right to purchase all of the issued and outstanding common units in CVR Refining, purchased the remaining common units of CVR Refining not already owned by CVR Energy, including the purchase of CVR Refining common units owned directly by us. Prior to this, CVR Energy owned approximately 80.6% of the common units of CVR Refining and we directly owned approximately 3.9% of the common units of CVR Refining. As a result of exercising its purchase right, as of January 29, 2019, CVR Energy owns all of the common units of CVR Refining and we no longer have any direct ownership in CVR Refining. In addition, the common units of CVR Refining have subsequently ceased to be publicly traded or listed on the New York Stock Exchange or any other national securities exchange. The remaining common units of CVR Refining acquired in this transaction were purchased for $241 million, excluding the amount paid by CVR Energy to us for the common units of CVR Refining directly owned by us.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Prior to this, on August 1, 2018, CVR Energy completed an exchange offer whereby CVR Refining’s public unitholders tendered a total of 21,625,106 common units of CVR Refining in exchange for 13,699,549 shares of CVR Energy common stock. In connection with this transaction, our equity attributable to Icahn Enterprises and Icahn Enterprises Holdings increased by $99 million.
Automotive
We conduct our Automotive segment through our wholly-owned subsidiary, Icahn Automotive Group LLC (“Icahn Automotive”). Icahn Automotive is engaged in the retail and wholesale distribution of automotive parts in the aftermarket (“aftermarket parts”) as well as providing automotive repair and maintenance services (“automotive services”) to its customers. Icahn Automotive’s aftermarket parts and automotive services businesses serve different customer channels and have distinct strategies, opportunities and requirements. As a result, the board of directors of Icahn Automotive has approved the separation of its aftermarket parts and automotive services businesses into two independent operating companies, each with its own Chief Executive Officer and management teams, and both of which are supported by a central shared service group.
Icahn Automotive is the parent company of various automotive businesses acquired in recent years, including the franchise businesses of Precision Tune Auto Care (“Precision Tune”) and American Driveline Systems, the franchisor of AAMCO and Cottman Transmission service centers (“American Driveline”). Precision Tune and American Driveline were acquired in 2017 for an aggregate purchase price of $162 million. Our Automotive segment also includes our separate equity method investment in 767 Auto Leasing LLC (“767 Leasing”), a joint venture created by us to purchase vehicles for lease, as described further in Note 3, “Related Party Transactions.” Although 767 Leasing is separate from Icahn Automotive, we include it as a component of our Automotive segment due to the nature of the joint venture activities.
Food Packaging
We conduct our Food Packaging segment through our majority owned subsidiary, Viskase Companies, Inc. (“Viskase”). Viskase is a producer of cellulosic, fibrous and plastic casings used to prepare and package processed meat products.
During January 2018, Viskase received $50 million in connection with its common stock rights offering. In connection with this rights offering, we fully exercised our subscription rights under our basic and over subscription privileges to purchase additional shares of Viskase common stock, thereby increasing our ownership of Viskase from 74.6% to 78.6%, for an aggregate additional investment of $44 million.
Metals
We conduct our Metals segment through our indirect wholly-owned subsidiary, PSC Metals, LLC (“PSC Metals”). PSC Metals is principally engaged in the business of collecting, processing and selling ferrous and non-ferrous metals, as well as the processing and distribution of steel pipe and plate products. PSC Metals collects industrial and obsolete scrap metal, processes it into reusable forms and supplies the recycled metals to its customers.
Real Estate
Our Real Estate operations consist primarily of rental real estate, property development and associated club activities. Our rental real estate operations consist primarily of office and industrial properties leased to single corporate tenants. Our property development operations are run primarily through a real estate investment, management and development subsidiary that focuses primarily on the construction and sale of single-family and multi-family homes, lots in subdivisions and planned communities, and raw land for residential development. Our property development locations also operate golf and club operations. In addition, our Real Estate operations also includes a hotel, timeshare and casino resort property in Aruba as well as a casino property in Atlantic City, New Jersey, which ceased operations in 2014 prior to our obtaining control of the property.
During 2018, our Real Estate segment sold two commercial rental properties for aggregate proceeds of $179 million, resulting in aggregate pretax gain on disposition of assets of $89 million.
In August 2017, our Real Estate segment sold a development property in Las Vegas, Nevada for $600 million, resulting in a pretax gain on disposition of assets of $456 million. The transaction included cash proceeds from the sale of $225 million and two tranches of seller financing totaling $375 million (including a $345 million first-lien mortgage and a $30 million second-lien mortgage). The seller financing receivables were received in full during 2018.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Home Fashion
We conduct our Home Fashion segment through our wholly-owned subsidiary, WestPoint Home LLC (“WPH”). WPH’s business consists of manufacturing, sourcing, marketing, distributing and selling home fashion consumer products.
Mining
We conducted our Mining segment through our majority owned subsidiary, Ferrous Resources Ltd. (“Ferrous Resources”). Ferrous Resources acquired certain rights to iron ore mineral resources in Brazil and develops mining operations and related infrastructure to produce and sell iron ore products to the global steel industry. Prior to the sale of Ferrous Resources, as discussed below, we owned approximately 77.2% of its total outstanding common stock.
On December 5, 2018, we announced a definitive agreement to sell Ferrous Resources for total consideration of $550 million (including repaid indebtedness). This transaction met all the criteria to be classified as held for sale on December 5, 2018 upon execution of the definitive agreement. On August 1, 2019, we closed on the sale of Ferrous Resources. Our proportionate share of the cash proceeds from the sale, net of adjustments, was $463 million. As a result of the sale of Ferrous Resources, our Mining segment recorded a pretax gain on disposition of assets of $252 million in 2019. Subsequent to the sale, we no longer operate an active Mining segment.
Railcar
We conducted our Railcar segment through our wholly-owned subsidiary, American Railcar Leasing, LLC (“ARL”). ARL operated a leasing business consisting of purchased railcars leased to third parties under operating leases.
During 2017, we sold ARL and a majority of its railcar lease fleet for aggregate cash consideration of approximately $1.8 billion and reassigned the debt of ARL to the purchaser. During 2018, we sold all remaining railcars of ARL not previously sold for additional cash consideration of $17 million. In connection with these transactions, we recorded a pretax gain on disposition of assets of approximately $1.7 billion in 2017 and an additional pretax gain of $5 million in 2018.
As a result of the sale of all remaining railcars during 2018, our business no longer includes an active Railcar segment.
Description of Discontinued Operating Businesses
We also report discontinued operations previously reported in our Automotive and Railcar segments and former Gaming segment. In addition below, see Note 14, “Discontinued Operations,” for additional information with respect to our discontinued operating businesses.
Automotive
Our discontinued Automotive operations consists of our previously wholly-owned subsidiary, Federal-Mogul LLC (“Federal-Mogul”). During January 2017, we increased our ownership in Federal-Mogul from 82.0% to 100% for an aggregate purchase price of $305 million.
On October 1, 2018, we closed on the previously announced sale of Federal-Mogul to Tenneco Inc. (“Tenneco”). In connection with the sale, we received $800 million in cash and approximately 29.5 million shares of Tenneco common stock, of which approximately 23.8 million shares are non-voting shares that will convert to voting shares if and when sold. The remaining approximately 5.7 million voting shares received by us represents approximately 9.9% of the aggregate voting interest in Tenneco. There were restrictions on how many shares of Tenneco common stock that could be sold by us within the first 150 days after the closing of the sale. The voting and non-voting shares of Tenneco common stock have the same economic value. As of October 1, 2018, the approximately 29.5 million voting and non-voting shares of Tenneco common stock had a fair market value of approximately $1.2 billion, which our Holding Company will hold and record as a Level 1 investment measured at fair value on a recurring basis. In addition, Federal-Mogul’s outstanding debt was assumed by Tenneco.
As a result of the sale of Federal-Mogul, we recorded a pretax gain on sale of discontinued operations attributable to Icahn Enterprises of $251 million in the fourth quarter of 2018.
Gaming
Our discontinued Gaming operations consists of our previous majority ownership in Tropicana Entertainment Inc. (“Tropicana”) and the Trump Taj Mahal Casino Resort (“Taj Mahal”). In August 2017, we increased our ownership in Tropicana from 72.5% to 83.9% through a tender offer for additional shares of Tropicana common stock not already owned by us for an aggregate purchase price of $95 million. In addition, Tropicana repurchased and retired shares of its common stock in
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
connection with this tender offer for an aggregate purchase price of $36 million. Taj Mahal closed in October 2016 and was subsequently sold on March 31, 2017.
On October 1, 2018, Tropicana closed on the previously announced real estate sales and merger transaction for aggregate cash consideration, net of adjustments, of approximately $1.8 billion. The transaction did not include Tropicana Aruba Resort and Casino, which was retained by us and is now reported within our Real Estate segment. Our proportionate share of the cash proceeds, net of adjustments, was approximately $1.5 billion.
As a result of the sale of Tropicana, we recorded a pretax gain on sale of discontinued operations attributable to Icahn Enterprises of $779 million in the fourth quarter of 2018.
Railcar
Our discontinued Railcar operations consists of our previous majority ownership in American Railcar Industries, Inc. (“ARI”). On December 5, 2018, we closed on the previously announced sale of ARI for aggregate cash consideration of $831 million.
As a result of the sale of ARI, we recorded a pretax gain on sale of discontinued operations attributable to Icahn Enterprises of $400 million in the fourth quarter of 2018.
2. Basis of Presentation and Summary of Significant Accounting Policies.
The audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Therefore, no more than 40% of our total assets can be invested in investment securities, as such term is defined in the Investment Company Act. In addition, we do not invest or intend to invest in securities as our primary business. We intend to structure our investments to continue to be taxed as a partnership rather than as a corporation under the applicable publicly traded partnership rules of the Internal Revenue Code, as amended.
Events beyond our control, including significant appreciation or depreciation in the market value of certain of our publicly traded holdings or adverse developments with respect to our ownership of certain of our subsidiaries, could result in our inadvertently becoming an investment company that is required to register under the Investment Company Act. Our recent sales of Federal-Mogul, Tropicana and ARI did not result in our being considered an investment company. However, additional transactions involving the sale of certain assets could result in our being considered an investment company. Following such events or transactions, an exemption under the Investment Company Act would provide us up to one year to take steps to avoid becoming classified as an investment company. We expect to take steps to avoid becoming classified as an investment company, but no assurance can be made that we will successfully be able to take the steps necessary to avoid becoming classified as an investment company.
Principles of Consolidation
As of December 31, 2019, our consolidated financial statements include the accounts of (i) Icahn Enterprises and Icahn Enterprises Holdings and (ii) the wholly and majority owned subsidiaries of Icahn Enterprises and Icahn Enterprises Holdings, in addition to variable interest entities (“VIEs”) in which we are the primary beneficiary. In evaluating whether we have a controlling financial interest in entities that we consolidate, we consider the following: (1) for voting interest entities, including limited partnerships and similar entities that are not VIEs, we consolidate these entities in which we own a majority of the voting interests; and (2) for VIEs, we consolidate these entities in which we are the primary beneficiary. See below for a discussion of our VIEs. Kick-out rights, which are the rights underlying the limited partners’ ability to dissolve the limited partnership or otherwise remove the general partners, held through voting interests of partnerships and similar entities that are not VIEs are considered the equivalent of the equity interests of corporations that are not VIEs.
Except for our Investment segment, for equity investments in which we own 50% or less but greater than 20%, we generally account for such investments using the equity method. All other equity investments are accounted for at fair value.
Discontinued Operations and Held For Sale
We classify assets and liabilities as held for sale when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
in its present condition. We also consider whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate it is unlikely significant changes to the plan will be made or the plan will be withdrawn.
In accordance with U.S. GAAP, we classify operations as discontinued when they meet all the criteria to be classified as held for sale and when the sale represents a strategic shift that will have a major impact on our financial condition and results of operations.
Change in Accounting Principle
Effective January 1, 2019, CVR Energy revised its accounting policy method for the costs of planned major maintenance activities (“turnarounds”) specific to its petroleum business from being expensed as incurred (the direct expensing method) to the deferral method. Turnarounds are planned shutdowns of refinery processing units for significant overhaul and refurbishment. Under the deferral method, the costs of turnarounds are deferred and amortized on a straight-line basis over a four-year period, which represents the estimated time until the next turnaround occurs. The new method of accounting for turnarounds is considered preferable as it is more consistent with the accounting policy of CVR Energy’s peer companies and better reflects the economic substance of the benefits earned from turnaround expenditures. The comparative consolidated balance sheet as of December 31, 2018 and the consolidated statements of operations and cash flows for the years ended December 31, 2018 and 2017 have been retrospectively adjusted to apply the new accounting method. These turnaround costs, and related accumulated amortization, are included within other assets in the consolidated balance sheets. The amortization expense related to turnaround costs is included in cost of goods sold in the consolidated statement of operations. CVR Partners will continue to follow the direct expensing method, therefore this change had no impact on its current or comparative consolidated financial statements.
As a result of this accounting change, our Energy segment increased other assets by $108 million and decreased property, plant and equipment, net by $15 million as of December 31, 2018. In addition, our Energy segment increased deferred tax liability by $18 million and total equity by $75 million, including $31 million attributable to Icahn Enterprises and Icahn Enterprises Holdings as of December 31, 2018.
The impact of the accounting change on our statements of operations is summarized as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
As Historically Stated
|
|
Effect of Accounting Change
|
|
As Currently Stated
|
|
As Historically Stated
|
|
Effect of Accounting Change
|
|
As Currently Stated
|
Total revenues
|
$
|
11,777
|
|
|
$
|
—
|
|
|
$
|
11,777
|
|
|
$
|
12,619
|
|
|
$
|
—
|
|
|
$
|
12,619
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
8,947
|
|
|
55
|
|
|
9,002
|
|
|
8,258
|
|
|
(38)
|
|
|
8,220
|
|
All other expenses
|
2,552
|
|
|
—
|
|
|
2,552
|
|
|
2,533
|
|
|
—
|
|
|
2,533
|
|
Total expenses
|
11,499
|
|
|
55
|
|
|
11,554
|
|
|
10,791
|
|
|
(38)
|
|
|
10,753
|
|
Income from continuing operations before income tax expense
|
278
|
|
|
(55)
|
|
|
223
|
|
|
1,828
|
|
|
38
|
|
|
1,866
|
|
Income tax expense
|
4
|
|
|
10
|
|
|
14
|
|
|
529
|
|
|
3
|
|
|
532
|
|
Income from continuing operations
|
282
|
|
|
(45)
|
|
|
237
|
|
|
2,357
|
|
|
41
|
|
|
2,398
|
|
Less: Income from continuing operations attributable to non-controlling interests
|
495
|
|
|
(20)
|
|
|
475
|
|
|
84
|
|
|
17
|
|
|
101
|
|
Income from continuing operations attributable to Icahn Enterprises
|
$
|
(213)
|
|
|
$
|
(25)
|
|
|
$
|
(238)
|
|
|
$
|
2,273
|
|
|
$
|
24
|
|
|
$
|
2,297
|
|
Net income attributable to Icahn Enterprises
|
$
|
1,507
|
|
|
$
|
(25)
|
|
|
$
|
1,482
|
|
|
$
|
2,430
|
|
|
$
|
24
|
|
|
$
|
2,454
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Use of Estimates in Preparation of Financial Statements
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Due to the inherent uncertainty involved in making estimates, actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements.
Reclassifications
Certain reclassifications have been made from prior year presentations to conform to the current year presentation.
Consolidated Variable Interest Entities
The following is a discussion of variable interest entities in which we are deemed to be the primary beneficiary and in which we therefore consolidate. In addition, as discussed in Note 3, “Related Party Transactions,” we have a variable interest in an entity in which we are not the primary beneficiary and therefore we do not consolidate.
Icahn Enterprises Holdings
We determined that Icahn Enterprises Holdings is a VIE because it is a limited partnership that lacks both substantive kick-out and participating rights. Although Icahn Enterprises is not the general partner of Icahn Enterprises Holdings, Icahn Enterprises is deemed to be the primary beneficiary of Icahn Enterprises Holdings principally based on its 99% limited partner interest in Icahn Enterprises Holdings, as well as our related party relationship with the general partner, and therefore continues to consolidate Icahn Enterprises Holdings. The consolidated financial statements of Icahn Enterprises Holdings are included in this Report. The balances with respect to Icahn Enterprises Holdings’ consolidated VIEs are discussed below, comprising the Investment Funds, CVR Refining (prior to January 2019), CVR Partners and Viskase’s joint venture.
Investment
We determined that each of the Investment Funds are considered VIEs because these limited partnerships lack both substantive kick-out and participating rights. Because we have a general partner interest in each of the Investment Funds and have significant limited partner interests in each of the Investment Funds, coupled with our significant exposure to losses and benefits in each of the Investment Funds, we are the primary beneficiary of each of the Investment Funds and therefore continue to consolidate each of the Investment Funds.
Energy
CVR Refining (prior to January 2019) and CVR Partners are each considered VIEs because each of these limited partnerships lack both substantive kick-out and participating rights. In addition, CVR Energy also concluded that, based upon its general partner’s roles and rights in CVR Refining and CVR Partners as afforded by their respective partnership agreements, coupled with its exposure to losses and benefits in each of CVR Refining and CVR Partners through its significant limited partner interests, intercompany credit facilities and services agreements, it is the primary beneficiary of both CVR Refining (prior to January 2019) and CVR Partners. Beginning in January 2019, CVR Refining is no longer considered a VIE as it is a wholly-owned subsidiary of CVR Energy.
Food Packaging
Viskase holds a variable interest in a joint venture for which Viskase is the primary beneficiary. Viskase’s interest in the joint venture includes a 50% equity interest and also relates to the sales, operations, administrative and financial support to the joint venture through providing many of the assets used in its business.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table includes balances of assets and liabilities of VIE’s included in Icahn Enterprises Holdings’ consolidated balance sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Cash and cash equivalents
|
$
|
42
|
|
|
$
|
420
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
989
|
|
|
2,648
|
|
Investments
|
9,207
|
|
|
6,951
|
|
Due from brokers
|
858
|
|
|
664
|
|
Inventories, net
|
54
|
|
|
380
|
|
Property, plant and equipment, net
|
1,123
|
|
|
3,023
|
|
Intangible assets, net
|
258
|
|
|
278
|
|
Other assets
|
260
|
|
|
932
|
|
Accounts payable, accrued expenses and other liabilities
|
1,338
|
|
|
523
|
|
Securities sold, not yet purchased, at fair value
|
1,190
|
|
|
468
|
|
Due to brokers
|
54
|
|
|
141
|
|
Debt
|
633
|
|
|
1,171
|
|
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, cash held at consolidated affiliated partnerships and restricted cash, accounts receivable, due from brokers, accounts payable, accrued expenses and other liabilities and due to brokers are deemed to be reasonable estimates of their fair values because of their short-term nature. See Note 4, “Investments,” and Note 5, “Fair Value Measurements,” for a detailed discussion of our investments and other non-financial assets and/or liabilities.
The fair value of our long-term debt is based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities. The carrying value and estimated fair value of our debt as of December 31, 2019 was approximately $8.2 billion and $7.7 billion, respectively. The carrying value and estimated fair value of our debt as of December 31, 2018 was approximately $7.3 billion and $7.3 billion, respectively.
Acquisitions of Businesses
We account for business combinations under the acquisition method of accounting (other than acquisitions of businesses under common control), which requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement.
Accounting for business combinations requires us to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies, and contingent consideration, where applicable. In valuing our acquisitions, we estimate fair values based on industry data and trends and by reference to relevant market rates and transactions, and discounted cash flow valuation methods, among other factors. The discount rates used were commensurate with the inherent risks associated with each type of asset and the level and timing of cash flows appropriately reflect market participant assumptions. The primary items that generate goodwill include the value of the synergies between the acquired company and our existing businesses and the value of the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset.
Acquisition, Investments and Disposition of Entities under Common Control
Acquisitions or investments of entities under common control are reflected in a manner similar to pooling of interests. The general partner’s capital account or non-controlling interests, as applicable, are charged or credited for the difference between the consideration we pay for the entity and the related entity’s basis prior to our acquisition or investment. Net gains or losses of an acquired entity prior to its acquisition or investment date are allocated to the general partner’s capital account or non-controlling interests, as applicable. In allocating gains and losses upon the sale of a previously acquired common control entity,
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
we allocate a gain or loss for financial reporting purposes by first restoring the general partner’s capital account or non-controlling interests, as applicable, for the cumulative charges or credits relating to prior periods recorded at the time of our acquisition or investment and then allocating the remaining gain or loss (“Common Control Gains or Losses”) among our general partner, limited partners and non-controlling interests, as applicable, in accordance with their respective ownership percentages. In the case of acquisitions of entities under common control, such Common Control Gains or Losses are allocated in accordance with their respective partnership percentages under the Amended and Restated Agreement of Limited Partnership dated as of May 12, 1987, as amended from time to time (together with the partnership agreement of Icahn Enterprises Holdings, the “Partnership Agreement”) (i.e., 98.01% to the limited partners and 1.99% to the general partner).
Cash Flow
Cash and cash equivalents and restricted cash and restricted cash equivalents in our 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 and Cash Equivalents
We consider short-term investments, which are highly liquid with original maturities of three months or less at date of purchase, to be cash equivalents.
Cash Held at Consolidated Affiliated Partnerships and Restricted Cash
Our cash held at consolidated affiliated partnerships balance was $86 million and $2,648 million as of December 31, 2019 and 2018, respectively. Cash held at consolidated affiliated partnerships relates to our Investment segment and consists of cash and cash equivalents held by the Investment Funds that, although not legally restricted, is not available to fund the general liquidity needs of the Investment segment or Icahn Enterprises.
Our restricted cash balance was $1,065 million and $34 million as of December 31, 2019 and 2018, respectively. Restricted cash includes, but is not limited to, our Investment segment’s cash pledged and held for margin requirements on derivative transactions.
Investments and Related Transactions
Investment
Investment Transactions and Related Investment Income (Loss). Investment transactions of the Investment Funds are recorded on a trade date basis. Realized gains or losses on sales of investments are based on the first-in, first-out or the specific identification method. Realized and unrealized gains or losses on investments are recorded in the consolidated statements of operations. Interest income and expenses are recorded on an accrual basis and dividends are recorded on the ex-dividend date. Premiums and discounts on fixed income securities are amortized using the effective yield method.
Investments held by our Investment segment are carried at fair value. Our Investment segment applies the fair value option to those investments that are otherwise subject to the equity method of accounting.
Valuation of Investments. Securities of the Investment Funds that are listed on a securities exchange are valued at their last sales price on the primary securities exchange on which such securities are traded on such date. Securities that are not listed on any exchange but are traded over-the-counter are valued at the mean between the last “bid” and “ask” price for such security on such date. Securities and other instruments for which market quotes are not readily available are valued at fair value as determined in good faith by the Investment Funds.
Foreign Currency Transactions. The books and records of the Investment Funds are maintained in U.S. dollars. Assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars at the rate of exchange in effect at the balance sheet date. Transactions during the period denominated in currencies other than U.S. dollars are translated at the rate of exchange applicable on the date of the transaction. Foreign currency translation gains and losses are recorded in the consolidated statements of operations. The Investment Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities. Such fluctuations are reflected in net gain (loss) from investment activities in the consolidated statements of operations.
Fair Values of Financial Instruments. The fair values of the Investment Funds’ assets and liabilities that qualify as financial instruments under applicable U.S. GAAP approximate the carrying amounts presented in the consolidated balance sheets.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Securities Sold, Not Yet Purchased. The Investment Funds may sell an investment they do not own in anticipation of a decline in the fair value of that investment. When the Investment Funds sell an investment short, they must borrow the investment sold short and deliver it to the broker-dealer through which they made the short sale. A gain, limited to the price at which the Investment Funds sold the investment short, or a loss, unlimited in amount, will be recognized upon the cover of the short sale.
Due From Brokers. Due from brokers represents cash balances with the Investment Funds’ clearing brokers. These funds as well as fully-paid for and marginable securities are essentially restricted to the extent that they serve as collateral against securities sold, not yet purchased. Due from brokers may also include unrestricted balances with derivative counterparties.
Due To Brokers. Due to brokers represents margin debit balances collateralized by certain of the Investment Funds’ investments in securities.
Other Segments and Holding Company
Investments in equity and debt securities are carried at fair value with the unrealized gains or losses reflected in the consolidated statements of operations. For purposes of determining gains and losses, the cost of securities is based on specific identification. Dividend income is recorded when declared and interest income is recognized when earned.
Fair Value Option for Financial Assets and Financial Liabilities
The fair value option gives entities the option to measure eligible financial assets, financial liabilities and firm commitments at fair value (i.e., the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value pursuant to the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes in fair value must be recorded in earnings. In estimating the fair value for financial instruments for which the fair value option has been elected, we use the valuation methodologies in accordance to where the financial instruments are classified within the fair value hierarchy as discussed in Note 5, “Fair Value Measurements.” For our Investment segment, we apply the fair value option to our investments that would otherwise be accounted under the equity method.
Derivatives
From time to time, our subsidiaries enter into derivative contracts, including purchased and written option contracts, swap contracts, futures contracts and forward contracts. U.S. GAAP requires recognition of all derivatives as either assets or liabilities in the balance sheet at their fair value. The accounting for changes in fair value depends on the intended use of the derivative and its resulting designation. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. Gains and losses related to a hedge are either recognized in income immediately to offset the gain or loss on the hedged item or are deferred and reported as a component of accumulated other comprehensive loss and subsequently recognized in earnings when the hedged item affects earnings. The change in fair value of the ineffective portion of a financial instrument, determined using the hypothetical derivative method, is recognized in earnings immediately. The gain or loss related to financial instruments that are not designated as hedges are recognized immediately in earnings. Cash flows related to hedging activities are included in the operating section of the consolidated statements of cash flows. For further information regarding our derivative contracts, see Note 6, “Financial Instruments.”
Accounts Receivable, Net
Accounts receivable, net consists of trade receivables from customers, including contract assets when we have an unconditional right to receive consideration. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the date of the consolidated financial statements, assessments of collectability based on an evaluation of historic and anticipated trends, the financial condition of our customers, and an evaluation of the impact of economic conditions. Our allowance for doubtful accounts is an estimate based on specifically identified accounts as well as general reserves based on historical experience.
Inventories, Net
Energy
Our Energy segment inventories consist primarily of domestic and foreign crude oil, blending stock and components, work in progress, fertilizer products, and refined fuels and by-products. Inventories are valued at the lower of FIFO cost, or net realizable value for fertilizer products, refined fuels and by-products for all periods presented. Refinery unfinished and finished
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
products inventory values were determined using the ability-to-bear process, whereby raw materials and production costs are allocated to work-in-process and finished goods based on their relative fair values. Other inventories, including other raw materials, spare parts and supplies, are valued at the lower of moving-average cost, which approximates FIFO, or net realizable value. The cost of inventories includes inbound freight costs.
Automotive, Food Packaging, and Home Fashion
Our Automotive, Food Packaging and Home Fashion segment inventories are stated at the lower of cost or market. Cost is determined by using the first-in, first-out basis method (“FIFO”), except for our Automotive segment, which also utilizes weighted-average cost and the last-in, first-out method for certain of its subsidiaries. Inventory recorded using the last-in, first-out method was $869 million and $846 million as of December 31, 2019 and 2018, respectively, all of which relates to finished goods. The cost of manufactured goods includes the cost of direct materials, labor and manufacturing overhead. Our Automotive, Food Packaging and Home Fashion segments reserve for estimated excess, slow-moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable value.
Metals
Our Metals segment inventories are stated at the lower of cost or market. Cost is determined using the average cost method. The production and accounting process utilized by our Metals segment to record recycled metals inventory quantities relies on significant estimates. Our Metals segment relies upon perpetual inventory records that utilize estimated recoveries and yields that are based upon historical trends and periodic tests for certain unprocessed metal commodities. Over time, these estimates are reasonably good indicators of what is ultimately produced; however, actual recoveries and yields can vary depending on product quality, moisture content and source of the unprocessed metal. To assist in validating the reasonableness of the estimates, our Metals segment performs periodic physical inventories which involve the use of estimation techniques. Physical inventories may detect significant variations in volume, but because of variations in product density and production processes utilized to manufacture the product, physical inventories will not generally detect smaller variations. To help mitigate this risk, our Metals segment adjusts its physical inventories when the volume of a commodity is low and a physical inventory can more accurately estimate the remaining volume.
Long-Lived Assets
Long-lived assets such as property, plant, and equipment, and definite-lived intangible assets are recorded at cost or fair value established at acquisition, less accumulated depreciation or amortization, unless the expected future use of the assets indicate a lower value is appropriate. Long-lived asset groups are evaluated for impairment when impairment indicators exist. If the carrying value of a long-lived asset group is impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset group exceeds its fair value. Depreciation and amortization are computed principally by the straight-line method for financial reporting purposes.
Land and construction in progress are stated at the lower of cost or net realizable value. Interest is capitalized on expenditures for long-term projects until a salable or ready-for-use condition is reached. The interest capitalization rate is based on the interest rate on specific borrowings to fund the projects.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill and indefinite-lived intangible assets primarily include trademarks and brand names acquired in acquisitions. For a complete discussion of the impairment of goodwill and indefinite-lived intangible assets related to our various segments, see Note 9, “Goodwill and Intangible Assets, Net.”
Goodwill
Goodwill is determined as the excess of fair value over amounts attributable to specific tangible and intangible net assets. Goodwill is reviewed for impairment annually, or more frequently if impairment indicators exist. An impairment exists when a reporting unit’s carrying value exceeds its fair value. When performing the goodwill impairment testing, we first consider qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Qualitative factors include considering macroeconomic conditions, industry and market conditions, overall financial performance and other factors. If necessary, a quantitative impairment test is performed. When a quantitative impairment test is performed, a reporting units’ fair value is based on valuation techniques using the best available information, primarily discounted cash flows projections, guideline transaction multiples, and multiples of current and future earnings. The impairment charge, if any, is the excess of the tested reporting unit’s carrying value over its fair value, limited to the total amount of goodwill allocated to the tested reporting unit.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets are stated at fair value established at acquisition or cost. These indefinite-lived intangible assets are reviewed for impairment annually, or more frequently if impairment indicators exist. An impairment exists when a trademark or brand names’ carrying value exceeds its fair value. The fair values of these assets are based upon the prospective stream of hypothetical after-tax royalty cost savings discounted at rates that reflect the rates of return appropriate for these intangible assets. The impairment charge, if any, is the excess of the assets carrying value over its fair value.
Pension and Other Post-Retirement Benefit Plan Obligations
Post-retirement benefit liabilities were $73 million and $77 million as of December 31, 2019 and 2018, respectively, and are included in accrued expenses and other liabilities in our consolidated balance sheets.
Appropriate actuarial methods and assumptions are used in accounting for defined benefit pension plans and other post-retirement benefit plans. These assumptions include long-term rate of return on plan assets, discount rates and other factors. Actual results that differ from the assumptions used are accumulated and amortized over future periods. Therefore, assumptions used to calculate benefit obligations as of the end of the year directly impact the expense to be recognized in future periods. The measurement date for all defined benefit plans is December 31 of each year.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss is included in the limited partners and general partner components of equity in the consolidated balance sheets in the amounts of $89 million and $85 million as of December 31, 2019 and 2018, respectively. Refer to Note 16, “Changes in Accumulated Other Comprehensive Loss,” for further information.
Allocation of Net Profits and Losses in Consolidated Affiliated Partnerships
Net investment income and net realized and unrealized gains and losses on investments of the Investment Funds are allocated to the respective partners of the Investment Funds based on their percentage ownership in such Investment Funds on a monthly basis. Except for our limited partner interest, such allocations made to the limited partners of the Investment Funds are represented as non-controlling interests in our consolidated statements of operations.
General Partnership Interest of Icahn Enterprises and Icahn Enterprises Holdings
The general partner’s capital account generally consists of its cumulative share of our net income less cash distributions plus capital contributions. Additionally, in acquisitions of common control companies accounted for at historical cost similar to a pooling of interests, the general partner’s capital account would be charged (or credited) in a manner similar to a distribution (or contribution) for the excess (or deficit) of the fair value of consideration paid over historical basis in the business acquired.
Capital Accounts, as defined under the Partnership Agreement, are maintained for our general partner and our limited partners. The capital account provisions of our Partnership Agreement incorporate principles established for U.S. federal income tax purposes and are not comparable to the equity accounts reflected under U.S. GAAP in our consolidated financial statements. Under our Partnership Agreement, the general partner is required to make additional capital contributions to us upon the issuance of any additional depositary units in order to maintain a capital account balance equal to 1.99% (1% in the case of Icahn Enterprises Holdings) of the total capital accounts of all partners.
Generally, net earnings for U.S. federal income tax purposes are allocated 1.99% (1% in the case of Icahn Enterprises Holdings) and 98.01% (99% in the case of Icahn Enterprises Holdings) between the general partner and the limited partners, respectively, in the same proportion as aggregate cash distributions made to the general partner and the limited partners during the period. This is generally consistent with the manner of allocating net income under our Partnership Agreement; however, it is not comparable to the allocation of net income reflected in our consolidated financial statements.
Pursuant to the Partnership Agreement, in the event of our dissolution, after satisfying our liabilities, our remaining assets would be divided among our limited partners and the general partner in accordance with their respective percentage interests under the Partnership Agreement. If a deficit balance still remains in the general partner’s capital account after all allocations are made between the partners, the general partner would not be required to make whole any such deficit.
Basic and Diluted Income Per LP Unit
For Icahn Enterprises, basic income (loss) per LP unit is based on net income or loss attributable to Icahn Enterprises allocated to limited partners. Net income or loss allocated to limited partners is divided by the weighted-average number of LP units outstanding. Diluted income (loss) per LP unit, when applicable, is based on basic income (loss) adjusted for the potential effect of dilutive securities as well as the related weighted-average number of units and equivalent units outstanding.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For accounting purposes, when applicable, earnings prior to dates of acquisitions of entities under common control are excluded from the computation of basic and diluted income per LP unit as such earnings are allocated to our general partner.
Income Taxes
Except as described below, no provision has been made for federal, state, local or foreign income taxes on the results of operations generated by partnership activities, as such taxes are the responsibility of the partners. Provision has been made for federal, state, local or foreign income taxes on the results of operations generated by our corporate subsidiaries and these are reflected within continuing and discontinued operations. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets are limited to amounts considered to be realizable in future periods. A valuation allowance is recorded against deferred tax assets if management does not believe that we have met the “more-likely-than-not” standard to allow recognition of such an asset.
U.S. GAAP provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is “more-likely-than-not” to be sustained if the position were to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. If an uncertain tax position meets the “more-likely-than-not” threshold, the largest amount of tax benefit that is greater than 50 percent likely to be recognized upon ultimate settlement with the taxing authority is recorded. See Note 15, “Income Taxes,” for additional information.
Leases
As discussed below, on January 1, 2019, we adopted FASB ASC Topic 842, Leases, using the modified retrospective approach, which does not require the application of this Topic to periods prior to January 1, 2019. The application of this Topic requires the recognition of right-of-use assets and related lease liabilities on the balance sheet for operating leases in which we are the lessee beginning in 2019. Financing leases under current U.S. GAAP are classified and accounted for in substantially the same manner as capital leases under prior U.S. GAAP and therefore, we do not distinguish between financing leases and capital leases unless the context requires.
The determination of whether an arrangement is or contains a lease occurs at inception. We account for arrangements that contain lease and non-lease components as a single lease component for all classes of underlying assets. Leases in which we are the lessor are primarily within our Real Estate segment. Refer to Real Estate below for further discussion. In addition, all of our businesses, including our Real Estate segment, enter into lease arrangements as the lessee. The following is our accounting policy for leases in which we are the lessee.
All Segments and Holding Company
Leases are classified as either operating or financing by the lessee depending on whether or not the lease terms provide for control of the underlying asset to be transferred to the lessee. When control transfers to the lessee, we classify the lease as a financing lease. All other leases are recorded as operating leases. Effective January 1, 2019, for all leases with an initial lease term in excess of twelve months, we record a right-of-use asset with a corresponding liability in the consolidated balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at commencement of the lease based on the present value of the lease payments over the lease term. Right-of-use assets are adjusted for any lease payments made on or before commencement of the lease, less any lease incentives received. As most of our leases do not provide an implicit rate, we use the incremental borrowing rate with respect to each of our businesses based on the information available at commencement of the lease in determining the present value of lease payments. We use the implicit rate when readily determinable. The lease terms used in the determination of our right-of-use assets and lease liabilities reflect any options to extend or terminate the lease when it is reasonably certain that we will exercise such option. We and our subsidiaries, independently of each other, apply a portfolio approach to account for the right-of-use assets and lease liabilities when we or our subsidiaries do not believe that applying the portfolio approach would be materially different from accounting for right-of-use assets and lease liabilities individually.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating lease costs are recorded as a single expense recognized on a straight-line basis over the lease term. Operating lease right-of-use assets are amortized for the difference between the straight-line expense less the accretion of interest of the related lease liability. Financing lease costs consists of interest expense on the financing lease liability as well as amortization of the right-of-use financing lease assets on a straight-line basis over the lease term.
Real Estate
Leases are classified as either operating, sales-type or direct financing by the lessor. Our Real Estate segment’s net lease portfolio consists of commercial real estate leased to others under long-term operating leases and we account for these leases in accordance with FASB ASC Topic 842. These assets leased to others are recorded at cost, net of accumulated depreciation, and are included in property, plant and equipment, net on our consolidated balance sheets. Assets leased to others are depreciated on a straight-line basis over the useful lives of the assets, ranging from 5 years to 39 years. Lease revenue is recognized on a straight-line basis over the lease term. Cash receipts for all lease payments received are included in net cash flows from operating activities in the consolidated statements of cash flows. Our Real Estate segment’s accounting policy for assets leased to others is not significantly different from prior periods.
Revenue From Contracts With Customers and Contract Balances
Due to the nature of our business, we derive revenue from various sources in various industries. With the exception of all of our Investment segment’s and our Holding Company’s revenues, and our Real Estate segment’s leasing revenue, our revenue is generally derived from contracts with customers in accordance with U.S. GAAP. Such revenue from contracts with customers are included in net sales and other revenues from operations in the consolidated statements of operations; however, our Real Estate 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 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 and Geographic 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
Revenue: Our Energy segment revenues from the sale of petroleum products are recorded upon delivery of the products to customers, which is the point at which title is transferred and the customer has assumed the risk of loss. This generally takes place as product passes into the pipeline, as a product transfer order occurs within a pipeline system, or as product enters equipment or locations supplied or designated by the customer. For our Energy segment’s nitrogen fertilizer products sold, revenues are recorded at the point in time at which the customer obtains control of the product, which is generally upon delivery and acceptance by the customer. Nitrogen fertilizer products are sold on a wholesale basis under a contract or by purchase order. Excise and other taxes collected from customers and remitted to governmental authorities by our Energy segment are not included in reported revenues.
The petroleum business’ contracts with its customers state the terms of the sale, including the description, quantity, and price of each product sold. Depending on the product sold, and the type of contract, payments from customers are generally due in full within 30 days of product delivery or invoice date. Many of the petroleum business’ contracts have index-based pricing which is considered variable consideration that should be estimated in determining the transaction price. Our Energy segment determined that it does not need to estimate the variable consideration because the uncertainty related to the consideration is resolved on the pricing date or the date when the product is delivered. The nitrogen fertilizer business has an immaterial amount of variable consideration for contracts with an original duration of less than a year. A small portion of the nitrogen fertilizer partnership’s revenue includes contracts extending beyond one year and contain variable pricing in which the majority of the variability is attributed to the market-based pricing. The nitrogen fertilizer business’ contracts do not contain a significant financing component.
Our Energy segment generally provides no warranty other than the implicit promise that goods delivered are free of liens and encumbrances and meet the agreed upon specifications. In addition, product returns are very rare and are accounted for as they occur; however, contracts do include provisions which state that the petroleum business will except returns of off-spec product, refund the customer, provide on-spec product, and pay for damages to any customer equipment which resulted from off-spec product. Typically, if a customer is not satisfied with a product, the price is adjusted downward instead of the product being returned or exchanged.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2019, our Energy segment had $9 million of remaining performance obligations for contracts with an original expected duration of more than one year. Our Energy segment expects to recognize approximately $4 million of these performance obligations as revenue by the end of 2020 and the remaining balance thereafter.
Contract balances: Our Energy segment’s deferred revenue is a contract liability that primarily relates to fertilizer sales contracts requiring customer prepayment prior to product delivery to guarantee a price and supply of nitrogen fertilizer. Deferred revenue is recorded at the point in time in which a prepaid contract is legally enforceable and the associated right to consideration is unconditional prior to transferring product to the customer. An associated receivable is recorded for uncollected prepaid contract amounts. Contracts requiring prepayment are generally short-term in nature and, as discussed above, revenue is recognized at the point in time in which the customer obtains control of the product. Our Energy segment had deferred revenue of $28 million and $69 million as of December 31, 2019 and 2018, respectively. Deferred revenue is included in accrued expense and other liabilities in the consolidated balance sheets. For the year ended December 31, 2019 and 2018, our Energy segment recorded revenue of $68 million and $34 million, respectively, with respect to deferred revenue outstanding as of the beginning of each respective year.
Automotive
Revenue: Our Automotive segment recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Our Automotive segment revenue from retail and commercial parts sales is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. Automotive service revenues are recognized on completion of the service and consist of products and the labor charged for installing products or maintaining or repairing vehicles. Automotive services labor revenues are included in other revenues from operations in our consolidated statements of operations; however, the sale of any installed parts or materials related to automotive services are included in net sales. Our Automotive segment recognizes revenues from extended warranties offered to its customers on tires its sells, including lifetime warranties for road hazard assistance (recognized over 3 years) and 1-year, 3-year and lifetime plans for alignments (recognized over 1 year, 3 years and 5 years, respectively), for which it receives payment upfront. Revenues from extended warranties are recognized over the term of the warranty contract with the satisfaction of its performance obligations measured using the output method. Our Automotive segment recognizes revenues from franchise fees, which it receives payment upfront, and franchise royalties, for which it receives payment over time. Revenues from upfront franchise fees are recognized at the time the store opens, as that is when our Automotive segment’s performance obligations are deemed complete, and revenues from franchise royalties are recognized in the period in which royalties are earned, generally based on a percentage of franchise sales.
Contract balances: Our Automotive segment has deferred revenue with respect to extended warranty plans of $42 million and $42 million as of December 31, 2019 and 2018, respectively, which are included in accrued expenses and other liabilities in our consolidated balance sheets. For the year ended December 31, 2019 and 2018, our Automotive segment recorded revenue of $21 million and $18 million, respectively, with respect to deferred revenue outstanding as of the beginning of each respective year. For deferred revenue outstanding as of December 31, 2019, our Automotive segment expects to recognize approximately $21 million in 2020 and the remainder thereafter.
Food Packaging
Our Food Packaging segment revenues are recognized at the time products are shipped to the customer, under F.O.B. shipping point or F.O.B. port terms, which is the point at which title is transferred, the customer has the assumed risk of loss, and payment has been received or collection is reasonably assumed. Revenues are net of discounts, rebates and allowances. Viskase records all labor, raw materials, in-bound freight, plant receiving and purchasing, warehousing, handling and distribution costs as a component of costs of goods sold.
Metals
Our Metals segment’s primary source of revenue is from the sale of processed ferrous scrap metal, non-ferrous scrap metals, steel pipe and steel plate. PSC Metals also generates revenues from sales of secondary plate and pipe, the brokering of scrap metals and from services performed. All sales are recognized when title passes to the customer. Revenues from services are recognized as the service is performed. Sales adjustments related to price and weight differences are reflected as a reduction of revenues when settled.
Home Fashion
Our Home Fashion segment records revenue upon delivery and when title is transferred and the customer has assumed the risk of loss. Unless otherwise agreed in writing, title and risk of loss pass from WPH to the customer when WPH delivers the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
merchandise to the designated point of delivery, to the designated point of destination or to the designated carrier, free on board. Provisions for certain rebates, sales incentives, product returns and discounts to customers are recorded in the same period the related revenue is recorded.
Mining
Our Mining segment recognized revenue when title, ownership, and risk of loss pass to the customer, all of which occur upon shipment or delivery of the product and is based on the applicable shipping terms. Revenue was measured at the fair value of the consideration received or receivable, with any adjustments as a result of provisional pricing recorded against revenue.
Other Revenue and Expense Recognition
Real Estate
Revenue Recognition: Revenue from real estate sales and related costs are recognized at the time of closing primarily by specific identification. Substantially all of the property comprising our net lease portfolio is leased to others under long-term net leases and we account for these leases in accordance with applicable U.S. GAAP. We account for our leases as follows: (i) for operating leases, revenue is recognized on a straight line basis over the lease term and (ii) for financing leases (x) minimum lease payments to be received plus the estimated value of the property at the end of the lease are considered the gross investment in the lease and (y) unearned income, representing the difference between gross investment and actual cost of the leased property, is amortized to income over the lease term so as to produce a constant periodic rate of return on the net investment in the lease.
Railcar
Revenue recognition: Revenues from railcar leasing were generated from operating leases that were priced as an integrated service that includes amounts related to executory costs, such as certain maintenance, insurance, and ad valorem taxes and are recognized on a straight-line basis per terms of the underlying lease. If railcars were sold under a lease that is less than one year old, the proceeds from the railcars sold that were on lease will be shown on a gross basis in revenues and cost of revenues at the time of sale. Sales of leased railcars that have been on lease for more than one year were recognized as a net gain or loss from the disposal of the long-term asset as a component of earnings from operations. During the year ended December 31, 2017, our Railcar segment recognized $165 million of revenue from operating leases, prior to our sale of ARL.
Energy
Shipping Costs: Our Energy segment’s pass-through finished goods delivery costs reimbursed by customers are reported in net sales, while an offsetting expense is included in cost of goods sold.
Automotive
Shipping Costs: Our Automotive segment recognizes shipping and handling costs as incurred and is included in selling, general and administrative in the consolidated statements of operations for its commercial and retail parts businesses.
Environmental Liabilities
We recognize environmental liabilities when a loss is probable and reasonably estimable. Estimates of these costs are based upon currently available facts, internal and third-party assessments of contamination, available remediation technology, site-specific costs, and currently enacted laws and regulations. In reporting environmental liabilities, no offset is made for potential recoveries. Loss contingency accruals, including those for environmental remediation, are subject to revision as further information develops or circumstances change, and such accruals can take into account the legal liability of other parties. Environmental expenditures are capitalized at the time of the expenditure when such costs provide future economic benefits.
Litigation
On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. In assessing probable losses, we make estimates of the amount of insurance recoveries, if any. We accrue a liability when we believe a loss is probable and the amount of loss can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recovery, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Foreign Currency Translation
Exchange adjustments related to international currency transactions and translation adjustments for international subsidiaries whose functional currency is the U.S. dollar (principally those located in highly inflationary economies) are reflected in the consolidated statements of operations. Translation adjustments of international subsidiaries for which the local currency is the functional currency are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income. Deferred taxes are not provided on translation adjustments, other than for intercompany loans not designated as permanently reinvested, as the earnings of the subsidiaries are considered to be permanently reinvested.
Concentrations of credit risk
Concentrations of credit risk relate primarily to derivative instruments from our Investment segment. See Note 6, “Financial Instruments,” for further discussion.
In addition, at our Holding Company, financial instruments that potentially subject us to concentrations of credit risk are primarily cash and cash equivalent deposits. These cash and cash equivalent deposits are maintained with several financial institutions. The deposits held at the various financial institutions may exceed federally insured limits. Exposure to this credit risk is reduced by placing such deposits with major financial institutions and monitoring their credit ratings and, therefore, these deposits bear minimal credit risk.
Adoption of New Accounting Standards
Lease Accounting Standards Updates
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases. This ASU requires the recognition of right-of-use assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. In addition, among other changes to the accounting for leases, this ASU retains the distinction between finance leases and operating leases. The classification criteria for distinguishing between financing leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases under previous guidance. Furthermore, quantitative and qualitative disclosures, including disclosures regarding significant judgments made by management, will be required. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The amendments in this ASU should be applied using a modified retrospective approach. In addition, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), which provides an additional (and optional) transition method to adopt the new leases standard. We adopted the new leases standards using the new transition method option effective January 1, 2019, which required a cumulative-effect adjustment recognized in equity at such date. No adjustment to prior period presentation and disclosure were required. The most significant impact related to the recognition of right-of-use assets and lease liabilities in the consolidated balance sheets for long-term operating leases with the significant majority of the impact within our Automotive segment, and to a lesser extent, our Energy and Food Packaging segments. Our Automotive segment has identified approximately 2,300 leases, primarily for real estate (operating leases) and vehicles (financing leases) and recognized operating lease right-of-use assets of $589 million (which includes the impact of above market leases, net of below market leases) and related liabilities of $621 million as of January 1, 2019 as well as additional financing lease right-of-use assets and obligations of $20 million and $22 million, respectively. Our Energy segment recognized operating lease right-of-use assets and liabilities of $56 million and additional financing lease right-of-use assets and obligations of $26 million and $23 million, respectively, as of January 1, 2019. Our Food Packaging segment recognized operating lease right-of-use assets and liabilities of $35 million and $39 million, respectively, as of January 1, 2019. The aggregate impact for all other segments and our Holding Company was the recognition of operating lease right-of-use assets and liabilities of $34 million and $28 million, respectively, as of January 1, 2019.
Other Accounting Standards Updates
In March 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends FASB ASC Sub-Topic 310-20, Receivables-Nonrefundable Fees and Other Costs. This ASU amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We have adopted this standard on January 1, 2019 using the modified retrospective application method. The adoption of this standard did not have a significant impact on our consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which amends FASB ASC Topic 815, Derivatives and Hedging. This ASU includes amendments to existing guidance to better align
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We have adopted this standard on January 1, 2019. The adoption of this standard did not have a significant impact on our consolidated financial statements.
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends FASB ASC Topic 220, Income Statement - Reporting Comprehensive Income. This ASU allows a reclassification out of accumulated other comprehensive loss within equity for standard tax effects resulting from the Tax Cuts and Jobs Act and consequently, eliminates the stranded tax effects resulting from the Tax Cuts and Jobs Act. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We have adopted this standard effective on January 1, 2019. See Note 16, “Changes in Accumulated Other Comprehensive Loss,” for the impact on our accumulated other comprehensive loss, which is attributable to our Food Packaging segment.
Recently Issued Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which amends FASB ASC Topic 326, Financial Instruments - Credit Losses. In addition, in May 2019, the FASB issued ASU 2019-05, Targeted Transition Relief, which updates FASB ASU 2016-13. These ASU’s require financial assets measured at amortized cost to be presented at the net amount to be collected and broadens the information, including forecasted information incorporating more timely information, that an entity must consider in developing its expected credit loss estimate for assets measured. These ASU’s are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early application is permitted for fiscal years beginning after December 15, 2018. Most of our financial assets are excluded from the requirements of this standard as they are measured at fair value or are subject to other accounting standards. In addition, certain of our other financial assets are short-term in nature and therefore are not likely to be subject to significant credit losses beyond what is already recorded under current accounting standards. As a result, we currently do not anticipate this standard to have a significant impact on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurements, which amends FASB ASC Topic 820, Fair Value Measurements. This ASU eliminates, modifies and adds various disclosure requirements for fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain disclosures are required to be applied using a retrospective approach and others using a prospective approach. Early adoption is permitted. The various disclosure requirements being eliminated, modified or added are not significant to us. As a result, we currently do not anticipate this standard to have a significant impact on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which amends FASB ASC Subtopic 350-40, Intangibles-Goodwill and Other-Internal-Use Software. This ASU adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this ASU should be applied either using a retrospective or prospective approach. Early adoption is permitted. We currently do not anticipate this standard to have a significant impact on our consolidated financial statements.
3. Related Party Transactions.
Our second amended and restated agreement of limited partnership expressly permits us to enter into transactions with our general partner or any of its affiliates, including, without limitation, buying or selling properties from or to our general partner and any of its affiliates and borrowing and lending money from or to our general partner and any of its affiliates, subject to limitations contained in our partnership agreement and the Delaware Revised Uniform Limited Partnership Act. The indentures governing our indebtedness contain certain covenants applicable to transactions with affiliates.
Investment Funds
During the years ended December 31, 2019, 2018 and 2017, Mr. Icahn and his affiliates (excluding us) invested $220 million, $310 million and $600 million, respectively, in the Investment Funds, net of redemptions. As of December 31, 2019
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and 2018, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates (excluding us) was approximately $4.5 billion and $5.0 billion, respectively, representing approximately 51% and 50% of the Investment Funds’ assets under management as of each respective date.
We pay for expenses pertaining to the operation, administration and investment activities of our Investment segment for the benefit of the Investment Funds (including salaries, benefits and rent). Effective April 1, 2011, based on an expense-sharing arrangement, certain expenses borne by us are reimbursed by the Investment Funds. For the years ended December 31, 2019, 2018 and 2017, $23 million, $12 million and $13 million, respectively, was allocated to the Investment Funds based on this expense-sharing arrangement.
Hertz Global Holdings, Inc.
As discussed in Note 4, “Investments,” the Investment Funds have an investment in the common stock of Hertz Global Holdings, Inc. (“Hertz”) measured at fair value that would have otherwise been subject to the equity method of accounting. Icahn Automotive provides services to Hertz in the ordinary course of business. For the years ended December 31, 2019, 2018 and 2017, revenue from Hertz was $54 million, $40 million and $17 million, respectively. Additionally, Federal-Mogul had payments to Hertz in the ordinary course of business of $1 million and $2 million for the years ended December 31, 2018 and 2017, respectively.
During the year ended December 31, 2018, the Investment Funds purchased shares of a certain investment from Hertz in the amount of $36 million.
In addition to our transactions with Hertz disclosed above, in January 2018, we entered into a Master Motor Vehicle Lease and Management Agreement with Hertz, pursuant to which Hertz granted 767 Leasing the option to acquire certain vehicles from Hertz at rates aligned with the rates at which Hertz sells vehicles to third parties. Under this agreement, as amended, Hertz will lease the vehicles that 767 Leasing purchases from Hertz, or from third parties, under a mutually developed fleet plan and Hertz will manage, service, repair, sell and maintain those leased vehicles on behalf of 767 Leasing. Additionally, Hertz will rent the leased vehicles to transportation network company drivers from rental counters within locations leased or owned by us. This agreement had an initial term of 18 months and is subject to automatic six-month renewals thereafter, unless terminated by either party (with or without cause) prior to the start of any such six-month renewal. Our agreement with Hertz was unanimously approved by the independent directors of Icahn Enterprises’ audit committee. Due to the nature of our involvement with 767 Leasing, which includes Icahn Enterprises and Icahn Enterprises Holdings guaranteeing the payment obligations of 767 Leasing and sharing in the profits of 767 Leasing with Hertz, we determined that 767 Leasing is a variable interest entity. Furthermore, we determined that we are not the primary beneficiary as we do not have the power to direct the activities of 767 Leasing that most significantly impact its economic performance. Therefore, we do not consolidate the results of 767 Leasing. Our exposure to loss with respect to 767 Leasing is primarily limited to our direct investment in 767 Leasing as well as any payment obligations of 767 Leasing that we guarantee, which are not material as of December 31, 2019 and 2018. As of December 31, 2019 and 2018, 767 Leasing had assets of $121 million and $59 million, respectively, (primarily vehicles for lease) and total liabilities of $1 million and $1 million, respectively, which represents a payable to Icahn Automotive in connection with a shared services agreement. For the year ended December 31, 2019 and 2018, we invested $50 million and $60 million, respectively, in 767 Leasing. During the years ended December 31, 2019 and 2018, we had equity earnings (losses) from 767 Leasing of $11 million and $(1) million, respectively. As of December 31, 2019 and December 31, 2018, we had an equity method investment in 767 Leasing of $120 million and $59 million, respectively, which we report in our Automotive segment.
ACF Industries LLC
Our Railcar operations, prior to December 5, 2018 (the date we closed on the sale of ARI), had certain transactions with ACF Industries LLC (“ACF”), an affiliate of Mr. Icahn, under various agreements, as well as on a purchase order basis. ACF is a manufacturer and fabricator of specialty railcar parts and miscellaneous steel products. Agreements and transactions with ACF include (i) railcar component purchases from ACF, (ii) railcar parts purchases from and sales to ACF, (iii) railcar purchasing and engineering services agreements with ACF, (iv) lease of certain intellectual property to ACF and (v) railcar repair services and support for ACF.
Purchases from ACF were $3 million and $6 million for the years ended December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and 2017, revenues from ACF were $6 million and $1 million, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Insight Portfolio Group LLC
Insight Portfolio Group LLC (“Insight Portfolio Group”) is an entity formed and controlled by Mr. Icahn in order to maximize the potential buying power of a group of entities with which Mr. Icahn has a relationship in negotiating with a wide range of suppliers of goods, services and tangible and intangible property at negotiated rates. Icahn Enterprises Holdings has a minority equity interest in Insight Portfolio Group and agreed to pay a portion of Insight Portfolio Group’s operating expenses. In addition to the minority equity interest held by Icahn Enterprises Holdings, certain subsidiaries of ours, including CVR Energy, Viskase, PSC Metals, WPH, Federal-Mogul (prior to October 1, 2018), ARI (prior to December 5, 2018) and Tropicana (prior to October 1, 2018) also acquired minority equity interests in Insight Portfolio Group and agreed to pay a portion of Insight Portfolio Group’s operating expenses. A number of other entities with which Mr. Icahn has a relationship also have minority equity interests in Insight Portfolio Group and also agreed to pay certain of Insight Portfolio Group’s operating expenses. For the years ended December 31, 2019, 2018 and 2017, we and certain of our subsidiaries paid certain of the Insight Portfolio Group’s operating expenses of $3 million, $4 million and $2 million, respectively. Insight Portfolio Group ceased operations effective January 1, 2020.
4. Investments.
Investment
Investments and securities sold, not yet purchased consist of equities, bonds, bank debt and other corporate obligations, all of which are reported at fair value in our consolidated balance sheets. These investments are considered trading securities. In addition, our Investment segment has certain derivative transactions which are discussed in Note 6, “Financial Instruments.” The carrying value and detail by security type, including business sector for equity securities, with respect to investments and securities sold, not yet purchased held by our Investment segment consist of the following:
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|
|
|
|
|
|
|
|
|
|
December 31,
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|
|
|
2019
|
|
2018
|
Assets
|
(in millions)
|
|
|
Investments:
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|
|
|
Equity securities:
|
|
|
|
Basic materials
|
$
|
281
|
|
|
$
|
414
|
|
Consumer, non-cyclical
|
2,085
|
|
|
2,161
|
|
Consumer, cyclical
|
2,427
|
|
|
1,161
|
|
Energy
|
1,717
|
|
|
1,598
|
|
Financial
|
—
|
|
|
167
|
|
Technology
|
2,425
|
|
|
1,040
|
|
Other
|
127
|
|
|
145
|
|
|
9,062
|
|
|
6,686
|
|
Corporate debt securities
|
145
|
|
|
181
|
|
|
$
|
9,207
|
|
|
$
|
6,867
|
|
Liabilities
|
|
|
|
Securities sold, not yet purchased, at fair value:
|
|
|
|
Equity securities:
|
|
|
|
Basic materials
|
$
|
209
|
|
|
$
|
—
|
|
Consumer, non-cyclical
|
29
|
|
|
57
|
|
Consumer, cyclical
|
379
|
|
|
106
|
|
Energy
|
124
|
|
|
305
|
|
Financial
|
152
|
|
|
—
|
|
Technology
|
217
|
|
|
—
|
|
Other
|
80
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
$
|
1,190
|
|
|
$
|
468
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The portion of unrealized gains (losses) that relates to securities still held by our Investment segment, primarily equity securities, was $706 million, $(800) million and $1,413 million for the years ended December 31, 2019, 2018 and 2017, respectively.
As discussed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” when certain investments become subject to the equity method of accounting, our Investment segment elects the fair value option to such investment. Investments become subject to the equity method of accounting when we possess the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when we possess more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. Conversely, there is a presumption that for investments in which we have less than 20% of the voting interests of the investee that we do not have the ability to exercise significant influence. However, such presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is present, such as when we have representation on the board of directors of such investee.
After considering specific facts and circumstances, including the collective ownership in entities by the Investment Funds and affiliates of Mr. Icahn, as well as their collective representation on each of the boards of directors, we have determined that we have the ability to exercise significant influence over the operating and financial policies of certain investees below. The following table summarizes our direct ownership in such investees as well as certain financial information with respect to such investees in our consolidated financial statements during the respective periods in which we possessed the ability to exercise significant influence over the operating and financial policies of the investee.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voting Interests(1)
|
|
Fair Value of Investment
|
|
|
|
Gains (Losses)
Recognized in Income
|
|
|
|
|
|
December 31, 2019
|
|
December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2017
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Herbalife Nutrition Ltd.
|
19.1%
|
|
|
$
|
1,343
|
|
|
$
|
1,661
|
|
|
$
|
(318)
|
|
|
|
$
|
864
|
|
|
|
$
|
357
|
|
Hertz Global Holdings, Inc.
|
24.6%
|
|
|
551
|
|
|
320
|
|
|
105
|
|
|
|
(197)
|
|
|
|
13
|
|
Caesars Entertainment Corporation
|
13.4%
|
|
|
1,243
|
|
|
—
|
|
|
478
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
$
|
3,137
|
|
|
|
$
|
1,981
|
|
|
$
|
265
|
|
|
|
$
|
667
|
|
|
|
$
|
370
|
|
(1) Voting interest represents our share of the voting common stock currently held as of December 31, 2019; however, voting common stock held by Mr. Icahn and his affiliates (excluding us) are not included.
The following tables contain summarized financial information with respect to these investees as if such investees were consolidated in our financial statements during the respective periods (or partial periods) in which we possessed the ability to exercise significant influence over the operating and financial policies of the investee. In addition, each of these investees file annual, quarterly and current reports, and proxy and information statements with the SEC.
Herbalife Nutrition Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Total assets
|
$
|
2,679
|
|
|
$
|
2,790
|
|
Total liabilities
|
3,069
|
|
|
3,513
|
|
Equity (deficit)
|
(390)
|
|
|
(723)
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Revenue
|
$
|
4,877
|
|
|
|
$
|
4,892
|
|
|
|
$
|
4,428
|
|
Net income attributable to shareholders
|
311
|
|
|
|
297
|
|
|
|
214
|
|
Hertz Global Holdings, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Total assets
|
$
|
24,627
|
|
|
$
|
21,382
|
|
Total liabilities
|
22,739
|
|
|
20,262
|
|
Equity
|
1,888
|
|
|
1,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Revenue
|
$
|
9,779
|
|
|
|
$
|
9,504
|
|
|
|
$
|
8,803
|
|
Net income attributable to shareholders
|
(58)
|
|
|
|
(225)
|
|
|
|
327
|
|
Caesars Entertainment Corporation
We obtained significant influence over Caesars Entertainment Corporation (“Caesars”), and elected the fair value option with respect to our investment in Caesars, beginning in the first quarter of 2019. As of December 31, 2019, Caesars had total assets of approximately $25.3 billion, total liabilities of $23.1 billion and equity of $2.2 billion. For 2019, during the period in which we had significant influence over Caesars, revenues were $8.7 billion and net income attributable to Caesars’ shareholders was $(1.2) billion. During the second quarter of 2019, we agreed to vote our Caesars’ shares in favor of the proposed merger between Caesars and Eldorado Resorts, Inc. (“Eldorado”). Pursuant to the merger, Caesars will merge into a subsidiary of Eldorado and Caesars stockholders will have the right, subject to certain allocation limitations, to elect to receive cash, stock in Eldorado, or a combination of cash and stock. Upon consummation of the merger, depending on what consideration we and other stockholders elect, we expect to receive a combination of cash and Eldorado shares. The transaction has not yet been consummated as of December 31, 2019.
Other Segments and Holding Company
With the exception of certain equity method investments at our operating subsidiaries and our Holding Company disclosed in the table below, our investments are measured at fair value in our consolidated balance sheets. The carrying value of investments held by our other segments and our Holding Company consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Equity method investments
|
$
|
201
|
|
|
$
|
143
|
|
Other investments (measured at fair value)
|
537
|
|
|
1,327
|
|
|
$
|
738
|
|
|
$
|
1,470
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The portion of unrealized (losses) gains that relates to equity securities still held by our other segments and our Holding Company was $(421) million, $(339) million and $67 million for the years ended December 31, 2019, 2018 and 2017, respectively.
5. Fair Value Measurements.
U.S. GAAP requires enhanced disclosures about investments and non-recurring non-financial assets and liabilities that are measured and reported at fair value and has established a hierarchal disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments or non-financial assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Investments and non-financial assets and/or liabilities measured and reported at fair value are classified and disclosed in one of the following categories:
Level 1 - Quoted prices are available in active markets for identical investments and non-financial assets and/or liabilities as of the reporting date.
Level 2 - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies where all significant inputs are observable. The inputs and assumptions of our Level 2 investments are derived from market observable sources including reported trades, broker/dealer quotes and other pertinent data.
Level 3 - Pricing inputs are unobservable for the investment and non-financial asset and/or liability and include situations where there is little, if any, market activity for the investment or non-financial asset and/or liability. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the investments’, non-financial assets’ and/or liabilities’ level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the investment. Significant transfers, if any, between the levels within the fair value hierarchy are recognized at the beginning of the reporting period when changes in circumstances require such transfers.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the valuation of our assets and liabilities by the above fair value hierarchy levels measured on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments (Note 4)
|
$
|
9,448
|
|
|
$
|
281
|
|
|
$
|
3
|
|
|
$
|
9,732
|
|
|
$
|
7,493
|
|
|
$
|
317
|
|
|
$
|
372
|
|
|
$
|
8,182
|
|
Derivative contracts, at fair value (Note 6)(1)
|
—
|
|
|
182
|
|
|
—
|
|
|
182
|
|
|
7
|
|
|
517
|
|
|
—
|
|
|
524
|
|
|
$
|
9,448
|
|
|
$
|
463
|
|
|
$
|
3
|
|
|
$
|
9,914
|
|
|
$
|
7,500
|
|
|
$
|
834
|
|
|
$
|
372
|
|
|
$
|
8,706
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities sold, not yet purchased (Note 4)
|
$
|
1,190
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,190
|
|
|
$
|
468
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
468
|
|
Other liabilities
|
—
|
|
|
7
|
|
|
6
|
|
|
13
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Derivative contracts, at fair value (Note 6)
|
—
|
|
|
1,224
|
|
|
—
|
|
|
1,224
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
|
$
|
1,190
|
|
|
$
|
1,231
|
|
|
$
|
6
|
|
|
$
|
2,427
|
|
|
$
|
468
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
506
|
|
(1)Amounts are classified within other assets in our consolidated balance sheets.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Refer to Note 19, “Pension and Other Post-Retirement Benefit Plans,” for our Food Packaging segment’s defined benefit plan assets measured at fair value on a recurring basis as of December 31, 2019 and 2018.
Assets Measured at Fair Value on a Recurring Basis for Which We Use Level 3 Inputs to Determine Fair Value
The changes in investments measured at fair value on a recurring basis for which we use Level 3 inputs to determine fair value are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
|
Balance at January 1
|
$
|
372
|
|
|
$
|
278
|
|
Net gains recognized in income
|
89
|
|
|
95
|
|
Sales
|
(458)
|
|
|
—
|
|
Other
|
—
|
|
|
(1)
|
|
Balance at December 31
|
$
|
3
|
|
|
$
|
372
|
|
As of December 31, 2018, we had a certain equity investment which was considered a Level 3 investment due to unobservable market data and was measured at fair value on a recurring basis. We determined the fair value of this investment based on recent market transactions. During 2019, we sold this investment in its entirety.
Assets Measured at Fair Value on a Non-Recurring Basis for Which We Use Level 3 Inputs to Determine Fair Value
Certain assets measured at fair value using Level 3 inputs on a nonrecurring basis have been impaired. During the years ended December 31, 2019, 2018 and 2017, we recorded impairment charges of $2 million, $5 million and $10 million, respectively, relating to property, plant and equipment. We determined the fair value of property, plant and equipment by applying probability weighted, expected present value techniques to the estimated future cash flows using assumptions a market participant would utilize. In addition, during the year ended December 31, 2017, we recorded a loss of $8 million from marking inventory down to net realizable value at our Automotive segment. Additionally, in connection with our reclassification of certain Railcar segment assets from held and used to assets held for sale, we recorded aggregate impairment charges of $68 million for the year ended December 31, 2017, which represents the difference between the carrying value and fair value less cost to sell of such assets.
Refer to Note 9, “Goodwill and Intangible Assets, Net,” for discussion of our goodwill and intangible asset impairments.
Refer to Note 13, “Segment and Geographic Reporting,” for total impairment recorded by each of our segments.
6. Financial Instruments.
Overview
Investment
In the normal course of business, the Investment Funds may trade various financial instruments and enter into certain investment activities, which may give rise to off-balance-sheet risks, with the objective of capital appreciation or as economic hedges against other securities or the market as a whole. The Investment Funds’ investments may include futures, options, swaps and securities sold, not yet purchased. These financial instruments represent future commitments to purchase or sell other financial instruments or to exchange an amount of cash based on the change in an underlying instrument at specific terms at specified future dates. Risks arise with these financial instruments from potential counterparty non-performance and from changes in the market values of underlying instruments.
Credit concentrations may arise from investment activities and may be impacted by changes in economic, industry or political factors. The Investment Funds routinely execute transactions with counterparties in the financial services industry, resulting in credit concentration with respect to the financial services industry. In the ordinary course of business, the Investment Funds may also be subject to a concentration of credit risk to a particular counterparty. The Investment Funds seek to mitigate these risks by actively monitoring exposures, collateral requirements and the creditworthiness of its counterparties.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Investment Funds have entered into various types of swap contracts with other counterparties. These agreements provide that they are entitled to receive or are obligated to pay in cash an amount equal to the increase or decrease, respectively, in the value of the underlying shares, debt and other instruments that are the subject of the contracts, during the period from inception of the applicable agreement to its expiration. In addition, pursuant to the terms of such agreements, they are entitled to receive or obligated to pay other amounts, including interest, dividends and other distributions made in respect of the underlying shares, debt and other instruments during the specified time frame. They are also required to pay to the counterparty a floating interest rate equal to the product of the notional amount multiplied by an agreed-upon rate, and they receive interest on any cash collateral that they post to the counterparty at the federal funds or LIBOR rate in effect for such period.
The Investment Funds may trade futures contracts. A futures contract is a firm commitment to buy or sell a specified quantity of a standardized amount of a deliverable grade commodity, security, currency or cash at a specified price and specified future date unless the contract is closed before the delivery date. Payments (or variation margin) are made or received by the Investment Funds each day, depending on the daily fluctuations in the value of the contract, and the whole value change is recorded as an unrealized gain or loss by the Investment Funds. When the contract is closed, the Investment Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The Investment Funds may utilize forward contracts to seek to protect their assets denominated in foreign currencies and precious metals holdings from losses due to fluctuations in foreign exchange rates and spot rates. The Investment Funds’ exposure to credit risk associated with non-performance of such forward contracts is limited to the unrealized gains or losses inherent in such contracts, which are recognized in other assets and accrued expenses and other liabilities in our 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 consolidated balance sheets.
Certain terms of the Investment Funds’ contracts with derivative counterparties, which are standard and customary to such contracts, contain certain triggering events that would give the counterparties the right to terminate the derivative instruments. In such events, the counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all of the Investment Funds’ derivative instruments with credit-risk-related contingent features that are in a liability position at December 31, 2019 and 2018 was $266 million and zero, respectively.
The following table summarizes the volume of our Investment segment’s derivative activities based on their notional exposure, categorized by primary underlying risk:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
December 31, 2018
|
|
|
|
Long Notional Exposure
|
|
Short Notional Exposure
|
|
Long Notional Exposure
|
|
Short Notional Exposure
|
Primary underlying risk:
|
(in millions)
|
|
|
|
|
|
|
Equity contracts
|
$
|
806
|
|
|
$
|
13,113
|
|
|
$
|
118
|
|
|
$
|
8,368
|
|
|
|
|
|
|
|
|
|
Credit contracts(1)
|
—
|
|
|
622
|
|
|
—
|
|
|
479
|
|
Commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
(1)The short notional amount on our credit default swap positions was approximately $4.7 billion at December 31, 2019. However, because credit spreads cannot compress below zero, our downside short notional exposure to loss is $622 million as of December 31, 2019. The short notional amount on our credit default swap positions was approximately $1.8 billion as of December 31, 2018. However, because credit spreads cannot compress below zero, our downside short notional exposure to loss is $479 million as of December 31, 2018.
Certain derivative contracts executed by each of the Investment Funds with a single counterparty are reported on a net-by-counterparty basis where a legal right of offset exists under an enforceable netting agreement. Values for the derivative
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
financial instruments, principally swaps, forwards, over-the-counter options and other conditional and exchange contracts, are reported on a net-by-counterparty basis.
The following table presents the fair values of our Investment segment’s derivatives that are not designated as hedging instruments in accordance with U.S. GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Derivatives(1)
|
|
|
|
Liability Derivatives
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
|
(in millions)
|
|
|
|
|
|
|
Equity contracts
|
$
|
291
|
|
|
$
|
568
|
|
|
$
|
1,058
|
|
|
$
|
170
|
|
Credit contracts
|
—
|
|
|
76
|
|
|
266
|
|
|
—
|
|
Commodity contracts
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
Sub-total
|
291
|
|
|
651
|
|
|
1,324
|
|
|
170
|
|
Netting across contract types(2)
|
(109)
|
|
|
(134)
|
|
|
(109)
|
|
|
(134)
|
|
Total(2)
|
$
|
182
|
|
|
$
|
517
|
|
|
$
|
1,215
|
|
|
$
|
36
|
|
(1)Net asset derivatives are classified within other assets in our consolidated balance sheets.
(2)Excludes netting of cash collateral received and posted. The total collateral posted at December 31, 2019 and December 31, 2018 was $903 million and $0 million, respectively, across all counterparties, which are included in cash held at consolidated affiliated partnerships and restricted cash in the consolidated balance sheets.
The following table presents the amount of gain (loss) recognized in the consolidated statements of operations for our Investment segment’s derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Recognized in Income(1)
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
|
|
|
(in millions)
|
|
|
|
|
Equity contracts
|
|
|
|
|
$
|
(2,152)
|
|
|
$
|
603
|
|
|
$
|
(1,815)
|
|
Credit contracts
|
|
|
|
|
(342)
|
|
|
129
|
|
|
(42)
|
|
Commodity contracts
|
|
|
|
|
(8)
|
|
|
66
|
|
|
(112)
|
|
|
|
|
|
|
$
|
(2,502)
|
|
|
$
|
798
|
|
|
$
|
(1,969)
|
|
(1)Gains (losses) recognized on derivatives are classified in net gain (loss) from investment activities in our consolidated statements of operations for our Investment segment.
Energy
CVR Energy’s businesses are subject to price fluctuations caused by supply conditions, weather, economic conditions, interest rate fluctuations and other factors. To manage price risk on crude oil and other inventories and to fix margins on certain future production, CVR Refining from time to time enters into various commodity derivative transactions. CVR Refining holds derivative instruments, such as exchange-traded crude oil futures and certain over-the-counter forward swap agreements, which it believes provide an economic hedge on future transactions, but such instruments are not designated as hedges under U.S. GAAP. There are no premiums paid or received at inception of the derivative contracts and upon settlement.
As of December 31, 2019 and 2018, CVR Refining had open forward purchase and sale commitments for 5 million barrels and 2 million barrels, respectively, of Canadian crude oil priced at fixed differentials that are not considered probable of physical settlement and are accounted for as derivatives. CVR Refining may enter into forward purchase or sale contracts associated with renewable identification numbers (“RINs”). As of December 31, 2019, CVR Refining had open fixed-price commitments to purchase 20 million RINs.
Certain derivative contracts executed by our Energy segment with a single counterparty are reported on a net-by-counterparty basis where a legal right of offset exists under an enforceable netting agreement. As of December 31, 2019 and 2018, our Energy segment had gross asset derivatives of $3 million and $8 million, respectively; however, when netted with gross liability derivatives, such net asset derivatives were $0 million and $7 million, respectively. Net asset derivatives are included in other assets on the consolidated balance sheets. Gains (losses) recognized on derivatives for our Energy segment were $19 million, $146 million and $(70) million for the years ended December 31, 2019, 2018 and 2017, respectively. Gains
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
recognized on derivatives for our Energy segment are included in cost of goods sold on the consolidated statements of operations.
7. Inventories, Net.
Inventories, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Raw materials
|
$
|
223
|
|
|
$
|
217
|
|
Work in process
|
94
|
|
|
70
|
|
Finished goods
|
1,495
|
|
|
1,492
|
|
|
$
|
1,812
|
|
|
$
|
1,779
|
|
Inventories in the table above is presented net of reserves of $27 million and $39 million as of December 31, 2019 and 2018, respectively.
8. Property, Plant and Equipment, Net.
Property, plant and equipment, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
Useful Life
|
|
2019
|
|
2018
|
|
(in years)
|
|
(in millions)
|
|
|
Land
|
|
|
$
|
412
|
|
|
$
|
416
|
|
Buildings and improvements
|
3 - 40
|
|
915
|
|
|
865
|
|
Machinery, equipment and furniture
|
2 - 30
|
|
5,348
|
|
|
5,208
|
|
Assets leased to others
|
5 - 39
|
|
289
|
|
|
279
|
|
Other finance leases
|
1 - 25
|
|
27
|
|
|
|
—
|
|
Construction in progress
|
|
|
218
|
|
|
221
|
|
|
|
|
7,209
|
|
|
6,989
|
|
Less: Accumulated depreciation and amortization
|
|
|
(2,668)
|
|
|
(2,301)
|
|
Property, plant and equipment, net
|
|
|
$
|
4,541
|
|
|
$
|
4,688
|
|
Depreciation and amortization expense related to property, plant and equipment for the years ended December 31, 2019, 2018 and 2017 was $410 million, $398 million and $430 million, respectively.
See Note 5, “Fair Value Measurements,” for discussion regarding certain impairments to our property, plant and equipment.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Goodwill and Intangible Assets, Net.
Goodwill consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Home Fashion
|
|
Consolidated
|
|
(in millions)
|
|
|
|
|
|
|
|
|
Gross carrying amount, Jan 1
|
$
|
328
|
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
334
|
|
Acquisitions
|
8
|
|
|
|
—
|
|
|
4
|
|
|
|
22
|
|
|
34
|
|
Foreign exchange
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
1
|
|
|
1
|
|
Gross carrying amount, Dec 31
|
336
|
|
|
6
|
|
|
4
|
|
|
23
|
|
|
369
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated impairment, Jan 1
|
(87)
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(87)
|
|
Impairment
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Accumulated impairment, Dec 31
|
(87)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87)
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying value, Dec 31
|
$
|
249
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
23
|
|
|
$
|
282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
Automotive
|
|
Food Packaging
|
|
Consolidated
|
|
|
|
|
|
|
Gross carrying amount, Jan 1
|
$
|
320
|
|
|
|
$
|
7
|
|
|
$
|
327
|
|
Acquisitions
|
8
|
|
|
|
—
|
|
|
8
|
|
Foreign exchange
|
—
|
|
|
|
(1)
|
|
|
(1)
|
|
Gross carrying amount, Dec 31
|
328
|
|
|
6
|
|
|
334
|
|
|
|
|
|
|
|
Accumulated impairment, Jan 1
|
—
|
|
|
|
—
|
|
|
—
|
|
Impairment
|
(87)
|
|
|
|
—
|
|
|
(87)
|
|
Accumulated impairment, Dec 31
|
(87)
|
|
|
—
|
|
|
(87)
|
|
|
|
|
|
|
|
Net carrying value, Dec 31
|
$
|
241
|
|
|
$
|
6
|
|
|
$
|
247
|
|
Intangible assets, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
Gross Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
$
|
397
|
|
|
$
|
(155)
|
|
|
$
|
242
|
|
|
$
|
397
|
|
|
$
|
(135)
|
|
|
$
|
262
|
|
Other
|
274
|
|
|
(147)
|
|
|
127
|
|
|
316
|
|
|
(139)
|
|
|
177
|
|
|
$
|
671
|
|
|
$
|
(302)
|
|
|
$
|
369
|
|
|
$
|
713
|
|
|
$
|
(274)
|
|
|
$
|
439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indefinite-lived intangible assets
|
|
|
|
|
$
|
62
|
|
|
|
|
|
|
$
|
62
|
|
Intangible assets, net
|
|
|
|
|
$
|
431
|
|
|
|
|
|
|
$
|
501
|
|
We recorded amortization expense associated with definite-lived intangible assets for the years ended December 31, 2019, 2018 and 2017 of $40 million, $47 million and $41 million, respectively. We utilize the straight-line method of amortization,
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
recognized over the estimated useful lives of the assets. Additionally, during the year ended December 31, 2017, we impaired intangible assets by $1 million.
The estimated future amortization expense for our definite-lived intangible assets is as follows:
|
|
|
|
|
|
|
|
|
Year
|
|
Amount
|
|
|
(in millions)
|
|
2020
|
|
$
|
43
|
|
2021
|
|
34
|
|
2022
|
|
33
|
|
2023
|
|
31
|
|
2024
|
|
30
|
|
Thereafter
|
|
198
|
|
|
|
$
|
369
|
|
Acquisitions
Acquisitions during the year ended December 31, 2019 were not material individually or in the aggregate. As a result of certain acquisitions, our Automotive segment allocated $8 million to goodwill and $1 million to definite-lived intangible assets during 2019. In addition, as a result of certain acquisitions, our Home Fashion segment allocated $22 million to goodwill and $1 million to definite-lived intangible assets during 2019 and our Metals segment allocated $4 million and $6 million to goodwill and definite-lived intangible assets, respectively, also during 2019.
Impairment of Goodwill
When performing the quantitative analysis for goodwill impairment testing, we base the fair value of our reporting units on consideration of various valuation methodologies, including projecting future cash flows discounted at rates commensurate with the risks involved (“DCF”). Assumptions used in a DCF require the exercise of significant judgment, including judgment about appropriate discount rates and terminal values, growth rates, and the amount and timing of expected future cash flows. The forecasted cash flows are based on current plans and for years beyond that plan, the estimates are based on assumed growth rates. We believe that our assumptions are consistent with the plans and estimates used to manage the underlying businesses. The discount rates, which are intended to reflect the risks inherent in future cash flow projections, used in a DCF are based on estimates of the weighted-average cost of capital of a market participant. Such estimates are derived from our analysis of peer companies and consider the industry weighted average return on debt and equity from a market participant perspective.
Automotive
We perform the annual goodwill impairment test for our Automotive segment as of October 1 of each year, or more frequently if impairment indicators exist.
In the fourth quarter of 2018, coinciding with our annual goodwill impairment analysis, we reorganized our Automotive segment's reporting units. Prior to the reorganization, our Automotive segment had two reporting units, Pep-Boys and AutoPlus, with all of its goodwill allocated to the Pep-Boys reporting unit. A goodwill impairment analysis just prior to the reorganization did not have an impact on the Pep-Boys reporting unit goodwill. Upon reorganization of the reporting units, a portion of the Pep-Boys reporting unit was reallocated to the AutoPlus reporting unit, which resulted in our Automotive segment continuing to have two redefined reporting units, Service and Parts. As a result, a portion of the goodwill was reallocated using a relative fair value allocation approach, which resulted in approximately 27% of the goodwill being reallocated to the Parts reporting unit. Based on our annual goodwill impairment analysis for our Automotive segment, which reflected our reorganized reporting units, we determined that the carrying value of its Parts reporting unit exceeded its fair value and as a result, we recognized a goodwill impairment charge of $87 million in the fourth quarter of 2018, which represented the full amount of the goodwill allocated to the Parts reporting unit. This impairment was the result of our reporting unit reorganization, which resulted in a significant amount of carrying value of net assets being reallocated to the Parts reporting unit, primarily for inventory, with a significantly lesser fair value due to the future projected cash flows of the Parts reporting unit, which resulted in the Parts reporting unit having a carrying value in excess of its fair value. Therefore, the goodwill reallocated to the Parts reporting unit was immediately impaired. We also determined that the fair value of our Automotive
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
segment's Service reporting unit was significantly in excess of its carrying value and therefore, no additional impairment is required.
During 2019, our Automotive segment considered qualitative factors to determine that goodwill at its Service reporting unit does not require further testing for impairment.
10. Leases.
All Segments and Holding Company
We have operating and finance leases primarily within our Automotive, Energy and Food Packaging segments. Our Automotive segment leases assets, primarily real estate (operating) and vehicles (financing) and which primarily consist of leases that expire within 14 years. Our Energy segment leases certain pipelines, storage tanks, railcars, office space, land and equipment (operating and financing). Our Food Packaging segment leases assets, primarily real estate, equipment and vehicles (primarily operating). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Right-of-use assets and related liabilities are recorded on the balance sheet for leases with an initial lease term in excess of twelve months and therefore, do not include any lease arrangements with initial lease terms of twelve months or less.
Right-of-use assets and lease liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
(in millions)
|
|
|
Operating Leases:
|
|
|
|
Right-of-use assets (other assets)
|
$
|
622
|
|
|
$
|
—
|
|
Lease liabilities (accrued expenses and other liabilities)
|
647
|
|
|
—
|
|
|
|
|
|
Financing Leases:
|
|
|
|
Right-of-use assets (property, plant and equipment, net)
|
77
|
|
|
41
|
|
Lease liabilities (debt)
|
93
|
|
|
52
|
|
Additional information with respect to our operating leases as of December 31, 2019 is presented below. The lease terms and discount rates for our Energy, Automotive and Food Packaging segments represent weighted averages based on their respective lease liability balances.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
Right-Of-Use Assets
|
|
Lease Liabilities
|
|
Lease Term
|
|
Discount Rate
|
|
|
(in millions)
|
|
|
|
|
|
|
Energy
|
|
$
|
48
|
|
|
$
|
48
|
|
|
3.7 years
|
|
5.6%
|
|
Automotive
|
|
501
|
|
|
527
|
|
|
5.2 years
|
|
5.7%
|
|
Food Packaging
|
|
34
|
|
|
38
|
|
|
11.7 years
|
|
7.4%
|
|
Other segments and Holding Company
|
|
39
|
|
|
34
|
|
|
|
|
|
|
|
$
|
622
|
|
|
$
|
647
|
|
|
|
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maturities of lease liabilities as of December 31, 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Operating Leases
|
|
Financing
Leases
|
|
|
(in millions)
|
|
|
2020
|
|
$
|
181
|
|
|
$
|
20
|
|
2021
|
|
159
|
|
|
17
|
|
2022
|
|
135
|
|
|
15
|
|
2023
|
|
85
|
|
|
13
|
|
2024
|
|
57
|
|
|
12
|
|
Thereafter
|
|
142
|
|
|
53
|
|
Total lease payments
|
|
759
|
|
|
130
|
|
Less: imputed interest
|
|
(112)
|
|
|
(37)
|
|
|
|
$
|
647
|
|
|
$
|
93
|
|
For the year ended December 31, 2019, lease cost was comprised of operating lease cost of $202 million, amortization of financing lease right-of use assets of $13 million and interest expense on financing lease liabilities of $7 million.
Rent expense under operating leases for the years ended December 31, 2018 and 2017, prior to the adoption of ASC 842, was $168 million and $155 million, respectively.
Real Estate
Our Real Estate segment leases real estate, primarily commercial properties under long-term operating leases. As of December 31, 2019 and 2018, our Real Estate segment has assets leased to others included in property, plant and equipment of $220 million and $217 million, respectively, net of accumulated depreciation. Our Real Estate segment’s revenue from operating leases were $33 million, $39 million and $44 million for the years ended December 31, 2019, 2018 and 2017, respectively, and are included in other revenue from operations in the consolidated statements of operations. Our Real Estate segment’s anticipated future receipts of minimum operating lease payments receivable are $33 million for 2020, $6 million in 2021 and $3 million in 2022 and thereafter.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Debt.
Debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Holding Company:
|
|
|
|
6.000% senior unsecured notes due 2020
|
$
|
—
|
|
|
$
|
1,702
|
|
5.875% senior unsecured notes due 2022
|
1,345
|
|
|
1,344
|
|
6.250% senior unsecured notes due 2022
|
1,211
|
|
|
1,213
|
|
6.750% senior unsecured notes due 2024
|
498
|
|
|
498
|
|
4.750% senior unsecured notes due 2024
|
498
|
|
|
—
|
|
6.375% senior unsecured notes due 2025
|
748
|
|
|
748
|
|
6.250% senior unsecured notes due 2026
|
1,250
|
|
|
—
|
|
5.250% senior unsecured notes due 2027
|
747
|
|
|
—
|
|
|
6,297
|
|
|
5,505
|
|
Reporting Segments:
|
|
|
|
Energy
|
1,195
|
|
|
1,170
|
|
Automotive
|
405
|
|
|
372
|
|
Food Packaging
|
268
|
|
|
273
|
|
Metals
|
7
|
|
|
—
|
|
Real Estate
|
2
|
|
|
2
|
|
Home Fashion
|
18
|
|
|
4
|
|
|
1,895
|
|
|
1,821
|
|
Total Debt
|
$
|
8,192
|
|
|
$
|
7,326
|
|
Holding Company
Our Holding Company debt consists of various issues of fixed-rate senior unsecured notes issued by Icahn Enterprises and Icahn Enterprises Finance Corp. (the “Issuers”) and guaranteed by Icahn Enterprises Holdings (the “Guarantor”). Interest on each of the senior unsecured notes are payable semi-annually.
In May and June 2019, the Issuers issued $1.250 billion in aggregate principal amount of 6.250% senior unsecured notes due 2026. The proceeds from these notes, together with cash on hand, were used to redeem all of the prior outstanding 6.000% senior unsecured notes due 2020 and to pay accrued interest, related fees and expenses.
In September 2019, the Issuers issued $500 million in aggregate principal amount of 4.750% senior unsecured notes due 2024. The proceeds from these notes were used for general limited partnership purposes.
In December 2019, the Issuers issued $750 million in aggregate principal amount of 5.250% senior unsecured notes due 2027. The proceeds from these notes were used for general limited partnership purposes.
In January 2017, the Issuers issued $500 million in aggregate principal amount of 6.750% senior unsecured notes due 2024 and $695 million in aggregate principal amount of 6.250% senior unsecured notes due 2022. The proceeds from these notes were used to redeem all of the prior outstanding senior unsecured notes due 2017 and to pay accrued interest, related fees and expenses.
In December 2017, the Issuers issued $750 million in aggregate principal amount of 6.375% senior unsecured notes due 2025 and an additional $510 million in aggregate principal amount of its existing 6.250% senior unsecured notes due 2022. The proceeds from these notes, together with cash on hand, were used to redeem all of the prior outstanding senior unsecured notes due 2019 and to pay accrued interest, related fees and expenses.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Icahn Enterprises recorded a gain on extinguishment of debt of $2 million in 2019 and a loss on extinguishment of debt of $12 million in the fourth quarter of 2017 in connection with the debt transactions discussed above.
Each of our senior unsecured notes and the related guarantees are the senior unsecured obligations of the Issuers and rank equally with all of the Issuers’ and the Guarantor’s existing and future senior unsecured indebtedness and senior to all of the Issuers’ and the Guarantor’s existing and future subordinated indebtedness. All of our senior unsecured notes and the related guarantees are effectively subordinated to the Issuers’ and the Guarantor’s existing and future secured indebtedness to the extent of the collateral securing such indebtedness. All of our senior unsecured notes and the related guarantees are also effectively subordinated to all indebtedness and other liabilities of the Issuers’ subsidiaries other than the Guarantor.
The indentures governing each of our senior unsecured notes restrict the payment of cash distributions, the purchase of equity interests or the purchase, redemption, defeasance or acquisition of debt subordinated to the senior unsecured notes. The indentures also restrict the incurrence of debt or the issuance of disqualified stock, as defined in the indentures, with certain exceptions. In addition, the indentures require that on each quarterly determination date, we and the guarantor of the notes (currently only Icahn Enterprises Holdings) maintain certain minimum financial ratios, as defined therein. The indentures also restrict the creation of liens, mergers, consolidations and sales of substantially all of our assets, and transactions with affiliates. Additionally, each of the senior unsecured notes outstanding as of December 31, 2019, except for the New 2024 Notes and the New 2027 Notes, are subject to optional redemption premiums in the event we redeem any of the notes prior to certain dates as described in the indentures.
As of December 31, 2019 and 2018, we were in compliance with all covenants, including maintaining certain minimum financial ratios, as defined in the indentures. Additionally, as of December 31, 2019, based on covenants in the indentures governing our senior unsecured notes, we are not permitted to incur additional indebtedness. However, as a result of our subsequent debt activity in January 2020, as described below, we are permitted to borrow an additional $469 million as of the date of this Report.
Subsequent Event
In January 2020, the Issuers issued an additional $600 million in aggregate principal amount of 4.750% senior unsecured notes due 2024 and an additional $250 million of 5.250% senior unsecured notes due 2027. The additional proceeds from these notes issued in January 2020, together with cash on hand, were used to repay in full our 5.875% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses.
Reporting Segments
Energy
CVR Energy’s debt primarily consists of a $500 million second lien senior unsecured note (issued by CVR Refining) and a $645 million senior secured note (issued by CVR Partners) maturing in 2022 and 2023, respectively, and with interest rates of 6.50% and 9.25%, respectively. Interest for each of these notes are accrued and paid based on contractual terms.
The second lien senior unsecured notes were fully and unconditionally guaranteed by CVR Refining and each of its’ finance subsidiaries’ existing domestic subsidiaries on a joint and several basis as of December 31, 2019. On January 29, 2019, the second lien senior unsecured notes were amended such that CVR Refining was replaced by CVR Energy as the primary guarantor, on a senior unsecured basis. The senior secured notes are guaranteed on a senior secured basis by all of CVR Partner’s existing subsidiaries. CVR Energy is not a guarantor of these notes. The indentures governing these notes contain certain covenants that restrict the ability of the issuers and subsidiary guarantors to issue debt, incur or otherwise cause liens to exist on any of their property or assets, declare or pay dividends, repurchase equity, make payments on subordinated or unsecured debt, make certain investments, sell certain assets, merge, consolidate with or into another entity, or sell all or substantially all of their assets or enter into certain transactions with affiliates.
As of December 31, 2019 and 2018, total availability under CVR Refining and CVR Partners variable rate asset based revolving credit facilities aggregated $443 million and $444 million, respectively. CVR Refining also had $7 million and $6 million of letters of credit outstanding as of December 31, 2019 and 2018.
Subsequent Event
On January 27, 2020, CVR Energy issued $600 million in aggregate principal amount of 5.25% senior unsecured notes due 2025 and $400 million in aggregate principal amount of 5.75% senior unsecured notes due 2028. A portion of the net proceeds from the issuance of these notes were used to fund the redemption of the CVR Energy’s existing senior unsecured
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
notes due 2022. The remaining net proceeds will be used for CVR Energy’s general corporate purposes, which may include funding (i) acquisitions, (ii) capital projects, and/or (iii) share repurchases or other distributions to CVR Energy’s stockholders.
Automotive
Icahn Automotive’s debt primarily consists of an asset-based revolving credit facility and a first in-last out revolving credit facility, each with variable interest rates. Icahn Automotive debt outstanding under these credit facilities was $382 million and $370 million as of December 31, 2019 and 2018, respectively, with maturity dates ranging from 2019 and 2021. Interest for each of these notes are accrued and paid based on contractual terms. The weighted average interest rate on these notes was 4.15% and 4.37% as of December 31, 2019 and 2018, respectively. Substantially all of Icahn Automotive’s assets are pledged as collateral under the above credit facilities.
As of December 31, 2019 and 2018, there was availability under revolving credit facilities of $107 million and $90 million, respectively. Icahn Automotive also had $41 million and $40 million of letters of credit outstanding as of December 31, 2019 and 2018, respectively.
Food Packaging
Viskase’s debt primarily consists of a credit agreement providing for a senior secured term loan facility issued in 2014 and maturing in 2021. Interest for this note is accrued and paid based on contractual terms. The interest rate on this note was 5.19% and 6.05% as of December 31, 2019 and 2018, respectively.
Covenants
All of our subsidiaries are currently in compliance with all covenants and restrictions as described in the various executed agreements and contracts with respect to each debt instrument. These covenants include limitations on indebtedness, liens, investments, acquisitions, asset sales, dividends and other restricted payments and affiliate and extraordinary transactions.
Non-Cash Charges to Interest Expense
The amortization of deferred financing costs and debt discounts and premiums included in interest expense in the consolidated statements of operations were $7 million, $5 million and $10 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Consolidated Maturities
The following is a summary of the maturities of our debt:
|
|
|
|
|
|
|
|
|
Year
|
|
Amount
|
|
|
(in millions)
|
|
2020
|
|
$
|
35
|
|
2021
|
|
640
|
|
2022
|
|
3,055
|
|
2023
|
|
645
|
|
2024
|
|
1,000
|
|
Thereafter
|
|
2,751
|
|
Total debt payments (excluding financing lease payments)
|
|
8,126
|
|
Less: unamortized discounts, premiums and deferred financing fees
|
|
(27)
|
|
Financing leases (Note 10)
|
|
93
|
|
|
|
$
|
8,192
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Net Income Per LP Unit.
The components of the computation of basic and diluted income (loss) per LP unit from continuing and discontinued operations of Icahn Enterprises are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions, except per unit data)
|
|
|
|
|
Net (loss) income attributable to Icahn Enterprises from continuing operations
|
$
|
(1,066)
|
|
|
$
|
(238)
|
|
|
$
|
2,297
|
|
Net (loss) income attributable to Icahn Enterprises from continuing operations allocated to limited partners (98.01% allocation)
|
$
|
(1,045)
|
|
|
$
|
(233)
|
|
|
$
|
2,251
|
|
|
|
|
|
|
|
Net (loss) income attributable to Icahn Enterprises from discontinued operations
|
$
|
(32)
|
|
|
$
|
1,720
|
|
|
$
|
157
|
|
Less: net loss attributable to Icahn Enterprises from discontinued operations allocated 100% to general partner
|
—
|
|
|
598
|
|
|
—
|
|
Net (loss) income attributable to Icahn Enterprises from discontinued operations allocable to limited partners
|
$
|
(32)
|
|
|
$
|
2,318
|
|
|
$
|
157
|
|
Net (loss) income attributable to Icahn Enterprises from discontinued operations allocated to limited partners (98.01% allocation)
|
$
|
(31)
|
|
|
$
|
2,272
|
|
|
$
|
154
|
|
|
|
|
|
|
|
Basic and diluted (loss) income per LP unit:
|
|
|
|
|
|
Continuing operations
|
$
|
(5.23)
|
|
|
$
|
(1.29)
|
|
|
$
|
13.98
|
|
Discontinued operations
|
(0.15)
|
|
|
12.62
|
|
|
0.96
|
|
|
$
|
(5.38)
|
|
|
$
|
11.33
|
|
|
$
|
14.94
|
|
Basic and diluted weighted average LP units outstanding
|
200
|
|
|
180
|
|
|
161
|
|
GP Allocation
As disclosed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies - Acquisition, Investments and Disposition of Entities under Common Control,” upon the sale of common control entities, such as Federal-Mogul and ARI, a portion of the gain or loss on the sale is first allocated to the general partner in order to restore the general partners’ capital account for cumulative charges or credits relating to periods prior to our obtaining a controlling interest in such entities from Mr. Icahn and his affiliates. After such general partner allocation, the remaining gain is allocated among our general partner and limited partners, in accordance with their respective ownership percentages.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LP Unit Transactions
The following table summarizes the changes in Icahn Enterprises outstanding depositary units during each of the years ended December 31, 2019, 2018 and 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Icahn and Affiliates
|
|
Public Unitholders
|
|
Total
|
December 31, 2016
|
129,999,050
|
|
|
|
14,742,099
|
|
|
144,741,149
|
|
Unit distributions
|
17,374,427
|
|
|
|
269,725
|
|
|
17,644,152
|
|
2017 Incentive Plan
|
—
|
|
|
|
7,902
|
|
|
7,902
|
|
Rights offering
|
10,525,105
|
|
|
|
645,999
|
|
|
11,171,104
|
|
December 31, 2017
|
157,898,582
|
|
|
15,665,725
|
|
|
173,564,307
|
|
Unit distributions
|
17,543,006
|
|
|
|
235,944
|
|
|
|
17,778,950
|
|
2017 Incentive Plan
|
—
|
|
|
|
22,840
|
|
|
|
22,840
|
|
December 31, 2018
|
175,441,588
|
|
|
|
15,924,509
|
|
|
|
191,366,097
|
|
Unit distributions
|
21,608,064
|
|
|
|
290,789
|
|
|
|
21,898,853
|
|
2017 Incentive Plan
|
—
|
|
|
|
19,259
|
|
|
|
19,259
|
|
2019 at-the-market offering
|
—
|
|
|
|
794,349
|
|
|
|
794,349
|
|
December 31, 2019
|
197,049,652
|
|
|
|
17,028,906
|
|
|
|
214,078,558
|
|
Unit Distributions
During each of the years ended December 31, 2019, 2018 and 2017, we declared four quarterly distributions. Depositary unitholders were given the option to make an election to receive the distributions in either cash or additional depositary units. If a holder did not make an election, it was automatically deemed to have elected to receive the distributions in cash.
2019 At-The-Market Offering
On May 2, 2019, Icahn Enterprises announced the commencement of its “at-the-market” offering pursuant to its Open Market Sale Agreement, pursuant to which Icahn Enterprises may sell its depositary units, from time to time, for up to $400 million in aggregate sale proceeds. During the year ended December 31, 2019, we received gross proceeds of $54 million in connection with this offering.
2017 Incentive Plan
During the years ended December 31, 2019, 2018 and 2017, Icahn Enterprises distributed depositary units, net of payroll withholdings, with respect to certain restricted depositary units and deferred unit awards that vested during the respective periods in connection with the Icahn Enterprises L.P. 2017 Long Term Incentive Plan (the “2017 Incentive Plan”). The aggregate impact of the 2017 Incentive Plan is not material with respect to our consolidated financial statements, including the calculation of potentially dilutive units and diluted income per LP unit.
Rights Offering
In January 2017, Icahn Enterprises commenced a rights offering entitling holders of the rights to acquire newly issued depositary units of Icahn Enterprises. In connection with this rights offering, we received aggregate proceeds of $600 million in 2017 from depositary unitholders and an additional $12 million from our general partner in order to maintain its aggregate 1.99% interest in us.
13. Segment and Geographic Reporting.
We report segment information based on the various industries in which our businesses operate and how we manage those businesses in accordance with our investment strategies, which may include: identifying and acquiring undervalued assets and businesses, often through the purchase of distressed securities; increasing value through management, financial or other operational changes; and managing complex legal, regulatory or financial issues, which may include bankruptcy or insolvency, environmental, zoning, permitting and licensing issues. Therefore, although many of our businesses are operated under separate local management, certain of our businesses are grouped together when they operate within a similar industry, comprising
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
similarities in products, customers, production processes and regulatory environments, and when such businesses, when considered together, may be managed in accordance with one or more investment strategies specific to those businesses. Among other measures, we assess and measure segment operating results based on net income from continuing operations attributable to Icahn Enterprises and Icahn Enterprises Holdings. Certain terms of financings for certain of our businesses impose restrictions on the business’ ability to transfer funds to us, including restrictions on dividends, distributions, loans and other transactions.
Condensed Statements of Operations
Icahn Enterprises’ condensed statements of operations by reporting segment are presented below. Icahn Enterprises Holdings’ condensed statements of operations are substantially the same, with immaterial differences relating to our Holding Company’s interest expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Railcar
|
|
Holding Company
|
|
Consolidated
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
6,364
|
|
|
$
|
2,293
|
|
|
$
|
383
|
|
|
$
|
340
|
|
|
$
|
23
|
|
|
$
|
187
|
|
|
$
|
130
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,720
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
591
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
666
|
|
Net (loss) gain from investment activities
|
(1,599)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(332)
|
|
|
(1,931)
|
|
Interest and dividend income
|
190
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
69
|
|
|
265
|
|
Gain (loss) on disposition of assets, net
|
—
|
|
|
4
|
|
|
(4)
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
252
|
|
|
—
|
|
|
—
|
|
|
253
|
|
Other (loss) income, net
|
(5)
|
|
|
13
|
|
|
15
|
|
|
(8)
|
|
|
—
|
|
|
4
|
|
|
(1)
|
|
|
(1)
|
|
|
—
|
|
|
2
|
|
|
19
|
|
|
(1,414)
|
|
|
6,385
|
|
|
2,895
|
|
|
375
|
|
|
341
|
|
|
103
|
|
|
186
|
|
|
382
|
|
|
—
|
|
|
(261)
|
|
|
8,992
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
5,707
|
|
|
1,625
|
|
|
309
|
|
|
343
|
|
|
18
|
|
|
159
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
8,212
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
464
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
518
|
|
Selling, general and administrative
|
23
|
|
|
146
|
|
|
1,032
|
|
|
56
|
|
|
15
|
|
|
21
|
|
|
42
|
|
|
15
|
|
|
—
|
|
|
26
|
|
|
1,376
|
|
Restructuring, net
|
—
|
|
|
—
|
|
|
6
|
|
|
8
|
|
|
3
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
Interest expense
|
106
|
|
|
106
|
|
|
20
|
|
|
17
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
350
|
|
|
605
|
|
|
129
|
|
|
5,959
|
|
|
3,147
|
|
|
391
|
|
|
363
|
|
|
93
|
|
|
203
|
|
|
70
|
|
|
—
|
|
|
376
|
|
|
10,731
|
|
(Loss) income from continuing operations before income tax (expense) benefit
|
(1,543)
|
|
|
426
|
|
|
(252)
|
|
|
(16)
|
|
|
(22)
|
|
|
10
|
|
|
(17)
|
|
|
312
|
|
|
—
|
|
|
(637)
|
|
|
(1,739)
|
|
Income tax (expense) benefit
|
—
|
|
|
(112)
|
|
|
55
|
|
|
(6)
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
38
|
|
|
(20)
|
|
Net (loss) income from continuing operations
|
(1,543)
|
|
|
314
|
|
|
(197)
|
|
|
(22)
|
|
|
(22)
|
|
|
16
|
|
|
(17)
|
|
|
311
|
|
|
—
|
|
|
(599)
|
|
|
(1,759)
|
|
Less: net (loss) income from continuing operations attributable to non-controlling interests
|
(768)
|
|
|
68
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
(693)
|
|
Net (loss) income from continuing operations attributable to Icahn Enterprises
|
$
|
(775)
|
|
|
$
|
246
|
|
|
$
|
(197)
|
|
|
$
|
(17)
|
|
|
$
|
(22)
|
|
|
$
|
16
|
|
|
$
|
(17)
|
|
|
$
|
299
|
|
|
$
|
—
|
|
|
$
|
(599)
|
|
|
$
|
(1,066)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
121
|
|
|
$
|
47
|
|
|
$
|
17
|
|
|
$
|
24
|
|
|
$
|
22
|
|
|
$
|
5
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
352
|
|
|
$
|
98
|
|
|
$
|
26
|
|
|
$
|
19
|
|
|
$
|
17
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
519
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Railcar
|
|
Holding Company
|
|
Consolidated
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
7,124
|
|
|
$
|
2,295
|
|
|
$
|
395
|
|
|
$
|
466
|
|
|
$
|
22
|
|
|
$
|
171
|
|
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,576
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
563
|
|
|
—
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
647
|
|
Net gain (loss) from investment activities
|
635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(313)
|
|
|
322
|
|
Interest and dividend income
|
104
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
24
|
|
|
148
|
|
(Loss) gain on disposition of assets, net
|
—
|
|
|
(6)
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|
—
|
|
|
(3)
|
|
|
5
|
|
|
—
|
|
|
84
|
|
Other (loss) income, net
|
(2)
|
|
|
15
|
|
|
(1)
|
|
|
(17)
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
737
|
|
|
7,135
|
|
|
2,856
|
|
|
379
|
|
|
467
|
|
|
212
|
|
|
171
|
|
|
106
|
|
|
5
|
|
|
(291)
|
|
|
11,777
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
6,508
|
|
|
1,502
|
|
|
316
|
|
|
441
|
|
|
18
|
|
|
144
|
|
|
73
|
|
|
—
|
|
|
—
|
|
|
9,002
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
474
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
529
|
|
Selling, general and administrative
|
12
|
|
|
138
|
|
|
1,051
|
|
|
57
|
|
|
19
|
|
|
22
|
|
|
34
|
|
|
27
|
|
|
1
|
|
|
25
|
|
|
1,386
|
|
Restructuring, net
|
—
|
|
|
5
|
|
|
5
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
Impairment
|
—
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
Interest expense
|
46
|
|
|
104
|
|
|
16
|
|
|
16
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
337
|
|
|
524
|
|
|
58
|
|
|
6,755
|
|
|
3,138
|
|
|
398
|
|
|
461
|
|
|
95
|
|
|
182
|
|
|
103
|
|
|
2
|
|
|
362
|
|
|
11,554
|
|
Income (loss) from continuing operations before income tax (expense) benefit
|
679
|
|
|
380
|
|
|
(282)
|
|
|
(19)
|
|
|
6
|
|
|
117
|
|
|
(11)
|
|
|
3
|
|
|
3
|
|
|
(653)
|
|
|
223
|
|
Income tax (expense) benefit
|
—
|
|
|
(46)
|
|
|
52
|
|
|
4
|
|
|
(1)
|
|
|
(5)
|
|
|
—
|
|
|
(2)
|
|
|
(2)
|
|
|
14
|
|
|
14
|
|
Net income (loss) from continuing operations
|
679
|
|
|
334
|
|
|
(230)
|
|
|
(15)
|
|
|
5
|
|
|
112
|
|
|
(11)
|
|
|
1
|
|
|
1
|
|
|
(639)
|
|
|
237
|
|
Less: net income (loss) from continuing operations attributable to non-controlling interests
|
360
|
|
|
121
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(1)
|
|
|
475
|
|
Net income (loss) from continuing operations attributable to Icahn Enterprises
|
$
|
319
|
|
|
$
|
213
|
|
|
$
|
(230)
|
|
|
$
|
(12)
|
|
|
$
|
5
|
|
|
$
|
112
|
|
|
$
|
(11)
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
(638)
|
|
|
$
|
(238)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
66
|
|
|
$
|
25
|
|
|
$
|
21
|
|
|
$
|
13
|
|
|
$
|
5
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
272
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
339
|
|
|
$
|
92
|
|
|
$
|
26
|
|
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
Railcar
|
|
Holding Company
|
|
Consolidated
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
5,988
|
|
|
$
|
2,225
|
|
|
$
|
392
|
|
|
$
|
409
|
|
|
$
|
15
|
|
|
$
|
183
|
|
|
$
|
94
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,306
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
498
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
173
|
|
|
—
|
|
|
743
|
|
Net gain from investment activities
|
241
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
302
|
|
Interest and dividend income
|
106
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
12
|
|
|
127
|
|
(Loss) gain on disposition of assets, net
|
—
|
|
|
(3)
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
496
|
|
|
—
|
|
|
—
|
|
|
1,664
|
|
|
1
|
|
|
2,163
|
|
Other (loss) income, net
|
(50)
|
|
|
2
|
|
|
—
|
|
|
(3)
|
|
|
(1)
|
|
|
38
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(6)
|
|
|
(22)
|
|
|
297
|
|
|
5,988
|
|
|
2,728
|
|
|
389
|
|
|
408
|
|
|
628
|
|
|
183
|
|
|
93
|
|
|
1,837
|
|
|
68
|
|
|
12,619
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
5,761
|
|
|
1,540
|
|
|
297
|
|
|
389
|
|
|
11
|
|
|
162
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
8,220
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
438
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
518
|
|
Selling, general and administrative
|
13
|
|
|
143
|
|
|
919
|
|
|
61
|
|
|
19
|
|
|
18
|
|
|
39
|
|
|
14
|
|
|
10
|
|
|
33
|
|
|
1,269
|
|
Restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Impairment
|
—
|
|
|
—
|
|
|
15
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
87
|
|
Interest expense
|
166
|
|
|
109
|
|
|
13
|
|
|
13
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
6
|
|
|
23
|
|
|
323
|
|
|
655
|
|
|
179
|
|
|
6,013
|
|
|
2,925
|
|
|
374
|
|
|
409
|
|
|
79
|
|
|
203
|
|
|
80
|
|
|
135
|
|
|
356
|
|
|
10,753
|
|
Income (loss) from continuing operations before income tax benefit (expense)
|
118
|
|
|
(25)
|
|
|
(197)
|
|
|
15
|
|
|
(1)
|
|
|
549
|
|
|
(20)
|
|
|
13
|
|
|
1,702
|
|
|
(288)
|
|
|
1,866
|
|
Income tax benefit (expense)
|
—
|
|
|
341
|
|
|
146
|
|
|
(21)
|
|
|
(43)
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
(531)
|
|
|
643
|
|
|
532
|
|
Net income (loss) from continuing operations
|
118
|
|
|
316
|
|
|
(51)
|
|
|
(6)
|
|
|
(44)
|
|
|
549
|
|
|
(20)
|
|
|
10
|
|
|
1,171
|
|
|
355
|
|
|
2,398
|
|
Less: net income (loss) from continuing operations attributable to non-controlling interests
|
38
|
|
|
63
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
101
|
|
Net income (loss) from continuing operations attributable to Icahn Enterprises
|
$
|
80
|
|
|
$
|
253
|
|
|
$
|
(51)
|
|
|
$
|
(5)
|
|
|
$
|
(44)
|
|
|
$
|
549
|
|
|
$
|
(20)
|
|
|
$
|
9
|
|
|
$
|
1,171
|
|
|
$
|
355
|
|
|
$
|
2,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
120
|
|
|
$
|
86
|
|
|
$
|
26
|
|
|
$
|
30
|
|
|
$
|
9
|
|
|
$
|
5
|
|
|
$
|
38
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
316
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
322
|
|
|
$
|
111
|
|
|
$
|
25
|
|
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
518
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Disaggregation of Revenue
In addition to the condensed statements of operations by reporting segment above, we provide additional disaggregated revenue information for certain reportable segments below.
Energy
Disaggregated revenue for our Energy segment net sales is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
|
Petroleum products
|
$
|
5,960
|
|
|
$
|
6,773
|
|
|
$
|
5,657
|
|
Nitrogen fertilizer products
|
404
|
|
|
351
|
|
|
331
|
|
|
$
|
6,364
|
|
|
$
|
7,124
|
|
|
$
|
5,988
|
|
Automotive
Disaggregated revenue for our Automotive segment net sales and other revenues from operations is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
|
Automotive services
|
$
|
1,373
|
|
|
$
|
1,321
|
|
|
$
|
1,186
|
|
Aftermarket parts sales
|
1,511
|
|
|
1,537
|
|
|
1,537
|
|
|
$
|
2,884
|
|
|
$
|
2,858
|
|
|
$
|
2,723
|
|
Condensed Balance Sheets
Icahn Enterprises’ condensed balance sheets by reporting segment are presented below. Icahn Enterprises Holdings’ condensed balance sheets are substantially the same, with immaterial differences relating to our Holding Company’s other assets, debt and equity attributable to Icahn Enterprises Holdings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
|
|
Holding Company
|
|
Consolidated
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
11
|
|
|
$
|
652
|
|
|
$
|
46
|
|
|
$
|
22
|
|
|
$
|
3
|
|
|
$
|
53
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
$
|
3,006
|
|
|
$
|
3,794
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
989
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6
|
|
|
2
|
|
|
7
|
|
|
—
|
|
|
|
|
146
|
|
|
1,151
|
|
Investments
|
9,207
|
|
|
81
|
|
|
120
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
|
|
522
|
|
|
9,945
|
|
Accounts receivable, net
|
—
|
|
|
182
|
|
|
143
|
|
|
78
|
|
|
32
|
|
|
4
|
|
|
36
|
|
|
—
|
|
|
|
|
—
|
|
|
475
|
|
Inventories, net
|
—
|
|
|
390
|
|
|
1,215
|
|
|
100
|
|
|
32
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
|
|
—
|
|
|
1,812
|
|
Property, plant and equipment, net
|
—
|
|
|
2,888
|
|
|
916
|
|
|
161
|
|
|
122
|
|
|
386
|
|
|
68
|
|
|
—
|
|
|
|
|
—
|
|
|
4,541
|
|
Goodwill and intangible assets, net
|
—
|
|
|
258
|
|
|
382
|
|
|
30
|
|
|
11
|
|
|
8
|
|
|
24
|
|
|
—
|
|
|
|
|
—
|
|
|
713
|
|
Other assets
|
1,076
|
|
|
222
|
|
|
673
|
|
|
125
|
|
|
27
|
|
|
46
|
|
|
20
|
|
|
—
|
|
|
|
|
19
|
|
|
2,208
|
|
Total assets
|
$
|
11,283
|
|
|
$
|
4,673
|
|
|
$
|
3,495
|
|
|
$
|
517
|
|
|
$
|
233
|
|
|
$
|
514
|
|
|
$
|
231
|
|
|
$
|
—
|
|
|
|
|
$
|
3,693
|
|
|
$
|
24,639
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities
|
$
|
1,310
|
|
|
$
|
1,180
|
|
|
$
|
1,340
|
|
|
$
|
196
|
|
|
$
|
70
|
|
|
$
|
38
|
|
|
$
|
66
|
|
|
$
|
—
|
|
|
|
|
$
|
115
|
|
|
$
|
4,315
|
|
Securities sold, not yet purchased, at fair value
|
1,190
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
1,190
|
|
Debt
|
—
|
|
|
1,195
|
|
|
405
|
|
|
268
|
|
|
7
|
|
|
2
|
|
|
18
|
|
|
—
|
|
|
|
|
6,297
|
|
|
8,192
|
|
Total liabilities
|
2,500
|
|
|
2,375
|
|
|
1,745
|
|
|
464
|
|
|
77
|
|
|
40
|
|
|
84
|
|
|
—
|
|
|
|
|
6,412
|
|
|
13,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to Icahn Enterprises
|
4,296
|
|
|
1,312
|
|
|
1,750
|
|
|
40
|
|
|
156
|
|
|
474
|
|
|
147
|
|
|
—
|
|
|
|
|
(2,719)
|
|
|
5,456
|
|
Equity attributable to non-controlling interests
|
4,487
|
|
|
986
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
5,486
|
|
Total equity
|
8,783
|
|
|
2,298
|
|
|
1,750
|
|
|
53
|
|
|
156
|
|
|
474
|
|
|
147
|
|
|
—
|
|
|
|
|
(2,719)
|
|
|
10,942
|
|
Total liabilities and equity
|
$
|
11,283
|
|
|
$
|
4,673
|
|
|
$
|
3,495
|
|
|
$
|
517
|
|
|
$
|
233
|
|
|
$
|
514
|
|
|
$
|
231
|
|
|
$
|
—
|
|
|
|
|
$
|
3,693
|
|
|
$
|
24,639
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
Energy
|
|
Automotive
|
|
Food Packaging
|
|
Metals
|
|
Real Estate
|
|
Home Fashion
|
|
Mining
|
|
|
|
Holding Company
|
|
Consolidated
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
5
|
|
|
$
|
668
|
|
|
$
|
43
|
|
|
$
|
46
|
|
|
$
|
20
|
|
|
$
|
39
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
$
|
1,834
|
|
|
$
|
2,656
|
|
Cash held at consolidated affiliated partnerships and restricted cash
|
2,648
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
26
|
|
|
2
|
|
|
—
|
|
|
|
|
4
|
|
|
2,682
|
|
Investments
|
6,867
|
|
|
84
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
|
|
1,312
|
|
|
8,337
|
|
Accounts receivable, net
|
—
|
|
|
169
|
|
|
149
|
|
|
74
|
|
|
48
|
|
|
3
|
|
|
31
|
|
|
—
|
|
|
|
|
—
|
|
|
474
|
|
Inventories, net
|
—
|
|
|
380
|
|
|
1,203
|
|
|
93
|
|
|
39
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
|
|
—
|
|
|
1,779
|
|
Property, plant and equipment, net
|
—
|
|
|
3,027
|
|
|
941
|
|
|
169
|
|
|
115
|
|
|
367
|
|
|
69
|
|
|
—
|
|
|
|
|
—
|
|
|
4,688
|
|
Goodwill and intangible assets, net
|
—
|
|
|
278
|
|
|
412
|
|
|
32
|
|
|
2
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
748
|
|
Other assets
|
1,230
|
|
|
225
|
|
|
217
|
|
|
96
|
|
|
8
|
|
|
34
|
|
|
5
|
|
|
299
|
|
|
|
|
11
|
|
|
2,125
|
|
Total assets
|
$
|
10,750
|
|
|
$
|
4,831
|
|
|
$
|
3,024
|
|
|
$
|
511
|
|
|
$
|
233
|
|
|
$
|
508
|
|
|
$
|
172
|
|
|
$
|
299
|
|
|
|
|
$
|
3,161
|
|
|
$
|
23,489
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities
|
$
|
181
|
|
|
$
|
1,043
|
|
|
$
|
905
|
|
|
$
|
164
|
|
|
$
|
56
|
|
|
$
|
41
|
|
|
$
|
35
|
|
|
$
|
112
|
|
|
|
|
$
|
178
|
|
|
$
|
2,715
|
|
Securities sold, not yet purchased, at fair value
|
468
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
468
|
|
Debt
|
—
|
|
|
1,170
|
|
|
372
|
|
|
273
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
|
|
5,505
|
|
|
7,326
|
|
Total liabilities
|
649
|
|
|
2,213
|
|
|
1,277
|
|
|
437
|
|
|
56
|
|
|
43
|
|
|
39
|
|
|
112
|
|
|
|
|
5,683
|
|
|
10,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to Icahn Enterprises
|
5,066
|
|
|
1,274
|
|
|
1,747
|
|
|
55
|
|
|
177
|
|
|
465
|
|
|
133
|
|
|
165
|
|
|
|
|
(2,522)
|
|
|
6,560
|
|
Equity attributable to non-controlling interests
|
5,035
|
|
|
1,344
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
|
|
—
|
|
|
6,420
|
|
Total equity
|
10,101
|
|
|
2,618
|
|
|
1,747
|
|
|
74
|
|
|
177
|
|
|
465
|
|
|
133
|
|
|
187
|
|
|
|
|
(2,522)
|
|
|
12,980
|
|
Total liabilities and equity
|
$
|
10,750
|
|
|
$
|
4,831
|
|
|
$
|
3,024
|
|
|
$
|
511
|
|
|
$
|
233
|
|
|
$
|
508
|
|
|
$
|
172
|
|
|
$
|
299
|
|
|
|
|
$
|
3,161
|
|
|
$
|
23,489
|
|
Geographic Information
The following table presents our consolidated geographic net sales from external customers, other revenues from operations and property, plant and equipment, net for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
|
|
|
Other Revenues From Operations
|
|
|
|
|
|
Property, Plant and Equipment, Net
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
9,271
|
|
|
$
|
10,170
|
|
|
$
|
8,897
|
|
|
$
|
652
|
|
|
$
|
629
|
|
|
$
|
716
|
|
|
$
|
4,386
|
|
|
$
|
4,458
|
|
International
|
449
|
|
|
406
|
|
|
409
|
|
|
14
|
|
|
18
|
|
|
27
|
|
|
155
|
|
|
230
|
|
|
$
|
9,720
|
|
|
$
|
10,576
|
|
|
$
|
9,306
|
|
|
$
|
666
|
|
|
$
|
647
|
|
|
$
|
743
|
|
|
$
|
4,541
|
|
|
$
|
4,688
|
|
Geographic locations for net sales and other revenues from operations are based on locations of the customers and geographic locations for property, plant, and equipment are based on the locations of the assets.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Discontinued Operations.
Income from discontinued operations is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
Automotive
|
|
Gaming
|
|
Railcar
|
|
Total
|
|
Automotive
|
|
Gaming
|
|
Railcar
|
|
Total
|
|
Automotive
|
|
Gaming
|
|
Railcar
|
|
Total
|
Revenues:
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,993
|
|
|
$
|
—
|
|
|
$
|
228
|
|
|
$
|
6,221
|
|
|
$
|
7,720
|
|
|
$
|
—
|
|
|
$
|
265
|
|
|
$
|
7,985
|
|
Other revenues from operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
679
|
|
|
213
|
|
|
892
|
|
|
—
|
|
|
898
|
|
|
197
|
|
|
1,095
|
|
Net gain on investment activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Interest and dividend income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
5
|
|
|
6
|
|
|
1
|
|
|
2
|
|
|
9
|
|
Gain (loss) on disposition of assets, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
7
|
|
|
(1)
|
|
|
—
|
|
|
6
|
|
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
1
|
|
|
13
|
|
|
19
|
|
|
31
|
|
|
27
|
|
|
3
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,065
|
|
|
681
|
|
|
456
|
|
|
7,202
|
|
|
7,764
|
|
|
925
|
|
|
469
|
|
|
9,158
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,999
|
|
|
—
|
|
|
215
|
|
|
5,214
|
|
|
6,553
|
|
|
—
|
|
|
249
|
|
|
6,802
|
|
Other expenses from operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
311
|
|
|
114
|
|
|
425
|
|
|
—
|
|
|
425
|
|
|
100
|
|
|
525
|
|
Selling, general and administrative
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
601
|
|
|
238
|
|
|
40
|
|
|
879
|
|
|
862
|
|
|
371
|
|
|
37
|
|
|
1,270
|
|
Restructuring, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
Impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
4
|
|
|
6
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|
4
|
|
|
19
|
|
|
160
|
|
|
154
|
|
|
11
|
|
|
22
|
|
|
187
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,752
|
|
|
553
|
|
|
392
|
|
|
6,697
|
|
|
7,615
|
|
|
807
|
|
|
408
|
|
|
8,830
|
|
Income (loss) from discontinued operations before gain (loss) on sale and income tax (expense) benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
313
|
|
|
128
|
|
|
64
|
|
|
505
|
|
|
149
|
|
|
118
|
|
|
61
|
|
|
328
|
|
Gain (loss) on sale of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
251
|
|
|
779
|
|
|
400
|
|
|
1,430
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
(3)
|
|
Income (loss) from discontinued operations before income tax (expense) benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
564
|
|
|
907
|
|
|
464
|
|
|
1,935
|
|
|
149
|
|
|
115
|
|
|
61
|
|
|
325
|
|
Income tax (expense) benefit
|
(32)
|
|
|
—
|
|
|
—
|
|
|
(32)
|
|
|
(69)
|
|
|
(89)
|
|
|
(13)
|
|
|
(171)
|
|
|
(33)
|
|
|
(93)
|
|
|
35
|
|
|
(91)
|
|
(Loss) income from discontinued operations
|
(32)
|
|
|
—
|
|
|
—
|
|
|
(32)
|
|
|
495
|
|
|
818
|
|
|
451
|
|
|
1,764
|
|
|
116
|
|
|
22
|
|
|
96
|
|
|
234
|
|
Less: income from discontinued operations attributable to non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
17
|
|
|
20
|
|
|
44
|
|
|
11
|
|
|
13
|
|
|
53
|
|
|
77
|
|
(Loss) income from discontinued operations attributable to Icahn Enterprises
|
$
|
(32)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(32)
|
|
|
$
|
488
|
|
|
$
|
801
|
|
|
$
|
431
|
|
|
$
|
1,720
|
|
|
$
|
105
|
|
|
$
|
9
|
|
|
$
|
43
|
|
|
$
|
157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
303
|
|
|
$
|
58
|
|
|
$
|
125
|
|
|
$
|
486
|
|
|
$
|
393
|
|
|
$
|
112
|
|
|
$
|
171
|
|
|
$
|
676
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
100
|
|
|
$
|
19
|
|
|
$
|
47
|
|
|
$
|
166
|
|
|
$
|
397
|
|
|
$
|
73
|
|
|
$
|
58
|
|
|
$
|
528
|
|
15. Income Taxes.
The difference between the book basis and the tax basis of our net assets, not directly subject to income taxes, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Icahn Enterprises
|
|
|
|
Icahn Enterprises Holdings
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
|
|
(in millions)
|
|
|
|
Book basis of net assets
|
$
|
5,456
|
|
|
$
|
6,560
|
|
|
$
|
5,453
|
|
|
$
|
6,588
|
|
Book/tax basis difference
|
(1,397)
|
|
|
(1,940)
|
|
|
(1,397)
|
|
|
(1,940)
|
|
Tax basis of net assets
|
$
|
4,059
|
|
|
$
|
4,620
|
|
|
$
|
4,056
|
|
|
$
|
4,648
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income (loss) from continuing operations before income tax expense (benefit) is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Domestic
|
$
|
(1,765)
|
|
|
$
|
235
|
|
|
$
|
1,836
|
|
International
|
26
|
|
|
(12)
|
|
|
30
|
|
|
$
|
(1,739)
|
|
|
$
|
223
|
|
|
$
|
1,866
|
|
Income tax benefit (expense) attributable to continuing operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Current:
|
|
|
|
|
|
|
Domestic
|
$
|
(106)
|
|
|
$
|
(11)
|
|
|
$
|
(15)
|
|
International
|
(3)
|
|
|
(4)
|
|
|
(13)
|
|
Total current
|
(109)
|
|
|
(15)
|
|
|
(28)
|
|
Deferred:
|
|
|
|
|
|
Domestic
|
87
|
|
|
30
|
|
|
547
|
|
International
|
2
|
|
|
(1)
|
|
|
13
|
|
Total deferred
|
89
|
|
|
29
|
|
|
560
|
|
|
$
|
(20)
|
|
|
$
|
14
|
|
|
$
|
532
|
|
A reconciliation of the income tax benefit (expense) calculated at the federal statutory rate to income tax benefit (expense) on continuing operations as shown in the consolidated statements of operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
|
Income tax benefit (expense) at U.S. statutory rate
|
$
|
365
|
|
|
|
$
|
(47)
|
|
|
|
$
|
(653)
|
|
Tax effect from:
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
(63)
|
|
|
|
(4)
|
|
|
|
529
|
|
Non-controlling interest
|
(4)
|
|
|
26
|
|
|
(6)
|
|
Goodwill impairment
|
—
|
|
|
(18)
|
|
|
—
|
|
Stock dispositions
|
—
|
|
|
|
69
|
|
|
|
—
|
|
Income not subject to taxation
|
(314)
|
|
|
|
14
|
|
|
|
220
|
|
Enactment of U.S. tax legislation, net of valuation allowance
|
—
|
|
|
—
|
|
|
392
|
|
Other
|
(4)
|
|
|
|
(26)
|
|
|
|
50
|
|
Income tax benefit (expense)
|
$
|
(20)
|
|
|
|
$
|
14
|
|
|
|
$
|
532
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tax effect of significant differences representing deferred tax assets (liabilities) (the difference between financial statement carrying value and the tax basis of assets and liabilities) is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Deferred tax assets:
|
|
|
|
Property, plant and equipment
|
$
|
17
|
|
|
$
|
17
|
|
Net operating loss
|
791
|
|
|
791
|
|
Tax credits
|
29
|
|
|
46
|
|
Capital loss
|
155
|
|
|
50
|
|
Leases
|
133
|
|
|
—
|
|
Other
|
71
|
|
|
82
|
|
Total deferred tax assets
|
1,196
|
|
|
986
|
|
Less: Valuation allowance
|
(619)
|
|
|
(518)
|
|
Net deferred tax assets
|
$
|
577
|
|
|
$
|
468
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
Property, plant and equipment
|
$
|
(125)
|
|
|
$
|
(129)
|
|
Intangible assets
|
(37)
|
|
|
(33)
|
|
Investment in partnerships
|
(652)
|
|
|
(699)
|
|
Investment in U.S. subsidiaries
|
(184)
|
|
|
(184)
|
|
Leases
|
(125)
|
|
|
—
|
|
Other
|
(61)
|
|
|
(79)
|
|
Total deferred tax liabilities
|
(1,184)
|
|
|
(1,124)
|
|
|
$
|
(607)
|
|
|
$
|
(656)
|
|
We recorded deferred tax assets and deferred tax liabilities of $32 million and $639 million, respectively, as of December 31, 2019 and $38 million and $694 million, respectively, as of December 31, 2018. Deferred tax assets are included in other assets in our consolidated balance sheets.
We analyze all positive and negative evidence to consider whether it is more likely than not that all of the deferred tax assets will be realized. Projected future income, tax planning strategies and the expected reversal of deferred tax liabilities are considered in making this assessment. As of December 31, 2019 we had a valuation allowance of approximately $619 million primarily related to tax loss and credit carryforwards and other deferred tax assets. The current and future provisions for income taxes may be significantly impacted by changes to valuation allowances. These allowances will be maintained until it is more likely than not that the deferred tax assets will be realized. For the year ended December 31, 2019, the valuation allowance on deferred tax assets increased by $101 million. The increase was primarily attributable to capital loss and state net operating loss carryforwards.
At December 31, 2019, American Entertainment Properties Corp. (“AEPC”), a wholly-owned corporate subsidiary of Icahn Enterprises and Icahn Enterprises Holdings, which includes all or parts of our Automotive, Metals, Home Fashion and Real Estate segments had U.S federal net operating loss carryforwards of approximately $2.0 billion with expiration dates from 2029 through 2037.
At December 31, 2019, CVR Energy had state income tax credits of $16 million, which are available to reduce future state income taxes. These credits can be carried forward indefinitely.
At December 31, 2019, Viskase had U.S. federal net operating loss carryforwards of $58 million which will begin expiring in the year 2024 and forward, and foreign net operating loss carryforwards of $40 million with unlimited carryforward period and $5 million with a five-year carryforward period.
On August 1, 2018, CVR Energy completed an exchange offer whereby CVR Refining’s public unitholders tendered a total of 21,625,106 common units of CVR Refining in exchange for 13,699,549 shares of CVR Energy common stock. As a
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
result of the exchange offer, AEPC owned less than 80% of the common stock of CVR Energy and CVR Energy deconsolidated from the AEPC consolidated federal income tax group. Beginning with the tax period after the exchange, CVR Energy became the parent of a new consolidated group for U.S. federal income tax purposes and will file and pay its federal income tax obligations directly to the Internal Revenue Service.
As of December 31, 2019, we have not provided taxes on approximately $61 million of undistributed earnings in foreign subsidiaries which are deemed to be indefinitely reinvested. If at some future date these earnings cease to be permanently reinvested, we may be subject to foreign income and withholding taxes upon repatriation of such amounts. An estimate of the tax liability that would be incurred upon repatriation of foreign earnings is not practicable to determine.
Enactment of U.S. Tax Legislation
In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of The Tax Legislation. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. We report additional tax from the GILTI inclusion as incurred and currently estimate no additional tax due in 2019.
Under the Tax Legislation, an entity must pay a Base Erosion Anti-Abuse Tax (“BEAT”) if the BEAT is greater than its regular tax liability. We currently estimate no additional tax due in 2018 pursuant to the BEAT provisions.
Accounting for Uncertainty in Income Taxes
A summary of the changes in the gross amounts of unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
|
Balance at January 1
|
$
|
34
|
|
|
$
|
34
|
|
|
$
|
52
|
|
Addition based on tax positions related to the current year
|
2
|
|
|
—
|
|
|
—
|
|
Increase for tax positions of prior years
|
—
|
|
|
6
|
|
|
—
|
|
Decrease for tax positions of prior years
|
—
|
|
|
—
|
|
|
(3)
|
|
Decrease for statute of limitation expiration
|
(3)
|
|
|
(6)
|
|
|
(15)
|
|
Balance at December 31
|
$
|
33
|
|
|
$
|
34
|
|
|
$
|
34
|
|
At December 31, 2019, 2018 and 2017, we had unrecognized tax benefits of $33 million, $34 million and $34 million, respectively. Of these totals, $27 million, $30 million and $28 million represent the amount of unrecognized tax benefits that if recognized, would affect the annual effective tax rate in the respective periods. The total unrecognized tax benefits differ from the amount which would affect the effective tax rate primarily due to the impact of valuation allowances.
During the next 12 months, CVR Energy believes that it is reasonably possible that unrecognized tax benefits of CVR Energy may decrease by approximately $3 million due to statute expirations. We do not anticipate any significant changes to the amount of our unrecognized tax benefits in our other business segments during the next 12 months.
We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. We recorded $1 million, $1 million and $2 million as of December 31, 2019, 2018 and 2017, respectively, in liabilities for tax related net interest and penalties in our consolidated balance sheets. Income tax (benefit) expense related to interest and penalties were $0 million, $(1) million and $(7) million for the years December 31, 2019, 2018 and 2017, respectively. We or certain of our subsidiaries file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various non-U.S. jurisdictions. We and our subsidiaries are no longer subject to U.S. federal tax examinations for years before 2015 or state and local examinations for years before 2013, with limited exceptions. AEPC has been notified by the IRS that the group’s income tax return for the period ended December 31, 2017 will be examined.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Changes in Accumulated Other Comprehensive Loss.
Changes in accumulated other comprehensive loss consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation Adjustments, Net of Tax
|
|
Post-Retirement Benefits and Other, Net of Tax
|
|
Total
|
|
(in millions)
|
|
|
|
|
Balance, December 31, 2018
|
$
|
(38)
|
|
|
$
|
(47)
|
|
|
$
|
(85)
|
|
Other comprehensive loss before reclassifications, net of tax
|
(2)
|
|
|
—
|
|
|
(2)
|
|
Reclassifications from accumulated other comprehensive loss to earnings, net of tax
|
—
|
|
|
3
|
|
|
3
|
|
Other comprehensive (loss) income, net of tax
|
(2)
|
|
|
3
|
|
|
1
|
|
Elimination of stranded tax effects resulting from tax legislation
|
—
|
|
|
(5)
|
|
|
(5)
|
|
Balance, December 31, 2019
|
$
|
(40)
|
|
|
$
|
(49)
|
|
|
$
|
(89)
|
|
17. Other Income, Net.
Other income, net consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Other derivative loss
|
$
|
—
|
|
|
|
$
|
(1)
|
|
|
|
$
|
(41)
|
|
Dividend expense
|
(5)
|
|
|
|
(2)
|
|
|
|
(10)
|
|
Equity earnings from non-consolidated affiliates
|
21
|
|
|
|
7
|
|
|
|
1
|
|
Foreign currency transaction (loss) income
|
(5)
|
|
|
|
(1)
|
|
|
|
1
|
|
Tax settlement gain
|
—
|
|
|
|
—
|
|
|
|
38
|
|
Non-service pension and other post-retirement benefits expense
|
(3)
|
|
|
|
(8)
|
|
|
|
(4)
|
|
Gain (loss) on extinguishment of debt
|
2
|
|
|
|
—
|
|
|
|
(12)
|
|
Other
|
9
|
|
|
|
5
|
|
|
|
5
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
(22)
|
|
18. Commitments and Contingencies.
Environmental Matters
Due to the nature of our business, certain of our subsidiaries’ operations are subject to numerous existing and proposed laws and governmental regulations designed to protect the environment, particularly regarding plant wastes and emissions and solid waste disposal. Our consolidated environmental liabilities on an undiscounted basis were $34 million and $37 million as of December 31, 2019 and December 31, 2018, respectively, primarily within our Energy and Metals segments and which are included in accrued expenses and other liabilities in our consolidated balance sheets. We do not believe that environmental matters will have a material adverse impact on our consolidated results of operations and financial condition.
Energy
On August 21, 2018, CVR Refining received a letter from the United States Department of Justice (the “DOJ”) on behalf of the Environmental Protection Agency (the “EPA”) and Kansas Department of Health and Environment (“KDHE”) alleging violations of the Clean Air Act and a 2012 Consent Decree between CVR Refining, the United States (on behalf of the EPA) and KDHE at CVR Energy’s Coffeyville refinery. In September 2018, CVR Refining executed a tolling agreement with the DOJ and KDHE extending time for negotiation regarding the agencies’ allegations through March 2019, and this tolling agreement was extended through April 30, 2020. At this time CVR Energy cannot reasonably estimate the potential penalties, costs, fines or other expenditures that may result from this matter or any subsequent enforcement or litigation relating thereto
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and, therefore, CVR Energy cannot determine if the ultimate outcome of this matter will have a material impact on its financial position, results of operations or cash flows.
As of December 31, 2019 and 2018, our Energy segment had environmental accruals of $6 million and $8 million, respectively, representing estimated costs for future remediation efforts at certain sites.
Metals
PSC Metals has been designated as a potentially responsible party (“PRP”) under U.S. federal and state superfund laws with respect to certain sites with which PSC Metals may have had a direct or indirect involvement. It is alleged that PSC Metals and its subsidiaries or their predecessors transported waste to the sites, disposed of waste at the sites or operated the sites in question. In addition, one of PSC Metals’ Knoxville, Tennessee locations was the subject of investigations by the State of Tennessee under the federal Superfund law. These investigations were performed by the State of Tennessee pursuant to a contract with the EPA. PSC Metals has entered into Tennessee’s Voluntary Clean-Up Oversight and Assistance Program (“VOAP”) and expects to enter into a settlement with the Tennessee Department of Environment and Conservation (“TDEC”) in the future. Currently, PSC Metals believes that it has adequately reserved for the cost of any potential future remediation associated with its Knoxville location, but cannot fully assess the impact of all costs or liabilities associated with TDEC’s investigations. With respect to all other matters in which PSC Metals has been designated as a PRP under U.S. federal and state superfund laws, PSC Metals has reviewed the nature and extent of the allegations, the number, connection and financial ability of other named and unnamed PRPs and the nature and estimated cost of the likely remedy. Based on reviewing the nature and extent of the allegations, PSC Metals has estimated its liability to remediate these other sites to be immaterial as of both December 31, 2019 and 2018. If it is determined that PSC Metals has liability to remediate those sites and that more expensive remediation approaches are required in the future, PSC Metals could incur additional obligations, which could be material to its operations.
Certain of PSC Metals’ facilities are environmentally impaired in part as a result of operating practices at the sites prior to their acquisition by PSC Metals and as a result of PSC Metals’ operations. PSC Metals has established procedures to periodically evaluate these sites, giving consideration to the nature and extent of the contamination. PSC Metals has provided for the remediation of these sites based upon its management’s judgment and prior experience. PSC Metals has estimated the liability to remediate these sites to be $27 million and $27 million at December 31, 2019 and 2018, respectively. PSC Metals believes, based on past experience, that the vast majority of these environmental liabilities and costs will be assessed and paid over an extended period of time. PSC Metals believes that it will be able to fund such costs in the ordinary course of business. Estimates of PSC Metals’ liability for remediation of a particular site and the method and ultimate cost of remediation require a number of assumptions that are inherently difficult to make, and the ultimate outcome may be materially different from current estimates. Moreover, because PSC Metals has disposed of waste materials at numerous third-party disposal facilities, it is possible that PSC Metals will be identified as a PRP at additional sites. The impact of such future events cannot be estimated at the current time.
Renewable Fuel Standards
CVR Refining is subject to the Renewable Fuel Standard (“RFS”) of the EPA which requires refiners to either blend renewable fuels in with their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending. CVR Refining is not able to blend the substantial majority of its transportation fuels and has to purchase RINs on the open market and may have to obtain waiver credits for cellulosic biofuels from the EPA, in order to comply with the RFS.
CVR Refining’s expenses for its compliance with RFS were $43 million, $60 million and $249 million for years ended December 31, 2019, 2018 and 2017, respectively, which are included in cost of goods sold in our consolidated financial statements. CVR Refining’s costs to comply with RFS include the purchased cost of RINs, the impact of recognizing CVR Refining’s uncommitted biofuel blending obligation at fair value based on market prices at each reporting date and the valuation change of RINs purchases in excess of CVR Refining’s RFS obligation as of the reporting date. As of December 31, 2019 and 2018, CVR Refining’s biofuel blending obligation was $7 million and $4 million, respectively, which is included in accrued expenses and other liabilities in our consolidated balance sheets.
Litigation
From time to time, we and our subsidiaries are involved in various lawsuits arising in the normal course of business. We do not believe that such normal routine litigation will have a material effect on our financial condition or results of operations.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Energy
CVR Energy, CVR Refining and its general partner, Icahn Enterprises and certain other affiliates and individuals have each been named in nine lawsuits filed in the Court of Chancery of the State of Delaware by purported former unitholders of CVR Refining, on behalf of themselves and an alleged class of similarly situated unitholders (the “Call Option Lawsuits”). The Call Option Lawsuits primarily allege breach of contract, tortious interference and breach of the implied covenant of good faith and fair dealing and seek monetary damages and attorneys’ fees, among other remedies, relating to CVR Energy’s exercise of the call option under the CVR Refining Amended and Restated Agreement of Limited Partnership assigned to it by CVR Refining’s general partner. In January 2020, the court dismissed CVR Holdings and certain former directors of CVR Refining’s general partner from the Call Option Lawsuits, though permitted some or all of the claims to proceed against each remaining defendant. CVR Energy believes the Call Option Lawsuits are without merit and intends to vigorously defend against them. The Call Option Lawsuits remain in the early stages of litigation. Accordingly CVR Energy cannot determine at this time the outcome of the Call Option Lawsuits, including whether the outcome of this matter would have a material impact on the its financial position, results of operations, or cash flows.
Other Matters
Pension Obligations
Mr. Icahn, through certain affiliates, owns 100% of Icahn Enterprises GP and approximately 92.0% of Icahn Enterprises’ outstanding depositary units as of December 31, 2019. Applicable pension and tax laws make each member of a “controlled group” of entities, generally defined as entities in which there is at least an 80% common ownership interest, jointly and severally liable for certain pension plan obligations of any member of the controlled group. These pension obligations include ongoing contributions to fund the plan, as well as liability for any unfunded liabilities that may exist at the time the plan is terminated. In addition, the failure to pay these pension obligations when due may result in the creation of liens in favor of the pension plan or the Pension Benefit Guaranty Corporation (the “PBGC”) against the assets of each member of the controlled group.
As a result of the more than 80% ownership interest in us by Mr. Icahn’s affiliates, we and our subsidiaries are subject to the pension liabilities of entities in which Mr. Icahn has a direct or indirect ownership interest of at least 80%, which includes the liabilities of pension plans sponsored by ACF. All the minimum funding requirements of the Internal Revenue Code, as amended, and the Employee Retirement Income Security Act of 1974, as amended, for the ACF plans have been met as of December 31, 2019. If the plans were voluntarily terminated, they would be underfunded by approximately $71 million as of December 31, 2019. These results are based on the most recent information provided by the plans’ actuary. These liabilities could increase or decrease, depending on a number of factors, including future changes in benefits, investment returns, and the assumptions used to calculate the liability. As members of the controlled group, we would be liable for any failure of ACF to make ongoing pension contributions or to pay the unfunded liabilities upon a termination of the ACF pension plans. In addition, other entities now or in the future within the controlled group in which we are included may have pension plan obligations that are, or may become, underfunded and we would be liable for any failure of such entities to make ongoing pension contributions or to pay the unfunded liabilities upon termination of such plans.
The current underfunded status of the ACF pension plans requires them to notify the PBGC of certain “reportable events,” such as if we cease to be a member of the ACF controlled group, or if we make certain extraordinary dividends or stock redemptions. The obligation to report could cause us to seek to delay or reconsider the occurrence of such reportable events.
Starfire Holding Corporation (“Starfire”), which is 99.6% owned by Mr. Icahn, has undertaken to indemnify us and our subsidiaries from losses resulting from any imposition of certain pension funding or termination liabilities that may be imposed on us and our subsidiaries or our assets as a result of being a member of the Icahn controlled group, including ACF. The Starfire indemnity provides, among other things, that so long as such contingent liabilities exist and could be imposed on us, Starfire will not make any distributions to its stockholders that would reduce its net worth to below $250 million. Nonetheless, Starfire may not be able to fund its indemnification obligations to us.
Other
The U.S. Attorney’s office for the Southern District of New York contacted Icahn Enterprises L.P. in September 2017 seeking production of information pertaining to our and Mr. Icahn’s activities relating to the Renewable Fuels Standard and Mr. Icahn’s former role as an advisor to the President. We cooperated with the request and provided information in response to the subpoena. The U.S. Attorney’s office for the Southern District of New York contacted Icahn Enterprises L.P. in June 2018 seeking production of information pertaining to trading in Manitowoc Company, Inc. securities. We cooperated with the request and provided documents in response to the subpoena. The U.S. Attorney’s office has not made any claims or allegations against
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
us or Mr. Icahn with respect to either of the foregoing inquiries. We maintain a strong compliance program and, while no assurances can be made, we do not believe these inquiries will have a material impact on our business, financial condition, results of operations or cash flows.
Unconditional Purchase Obligations
Unconditional purchase obligations are primarily within our Energy segment relating to commitments for petroleum products storage and transportation, electricity supply agreements, product supply agreements, commitments related to CVR Energy’s biofuel blending obligation and various agreements for gas and gas transportation. The minimum required payments for our Energy segment’s unconditional purchase obligations are as follows:
|
|
|
|
|
|
|
|
|
Year
|
|
Amount
|
|
|
(in millions)
|
|
2020
|
|
$
|
95
|
|
2021
|
|
80
|
|
2022
|
|
77
|
|
2023
|
|
75
|
|
2024
|
|
71
|
|
Thereafter
|
|
375
|
|
|
|
$
|
773
|
|
CVR Energy is a party to various supply agreements which commit it to purchase minimum volumes of crude oil, hydrogen, oxygen, nitrogen, petroleum coke and natural gas to run its facilities’ operations. For the years ended December 31, 2019, 2018 and 2017, amounts purchased under these supply agreements totaled approximately $167 million, $214 million and $209 million, respectively.
19. Pension and Other Post-Retirement Benefit Plans.
Pension and other post-retirement benefit plan costs and obligations are primarily within our Food Packaging segment. Pension plans and other post-retirement benefit plans for other segments are not material and are not included in our disclosures below.
Viskase sponsors several defined benefit pension plans, including defined contribution plans, varying by country and subsidiary. Additionally, Viskase sponsors health care and life insurance benefits for certain employees and retirees around the world. The pension benefits are funded based on the funding requirements of federal and international laws and regulations, as applicable, in advance of benefit payments and the other benefits are funded as benefits are provided to participating employees.
Components of net periodic benefit cost (credit) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. and Non-U.S. Pension Benefits
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
6
|
|
|
6
|
|
|
7
|
|
Expected return on plan assets
|
(4)
|
|
|
(5)
|
|
|
(8)
|
|
Amortization of actuarial losses
|
1
|
|
|
1
|
|
|
5
|
|
Settlement loss recognized
|
—
|
|
|
7
|
|
|
—
|
|
|
$
|
3
|
|
|
$
|
10
|
|
|
$
|
5
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides disclosures for Viskase’s benefit obligations, plan assets, funded status, and recognition in the consolidated balance sheets. As pension costs for Viskase are not material to our consolidated financial position and results of operations, we do not provide information regarding their inputs and valuation assumptions.
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S and Non-U.S. Pension Benefits
|
|
|
|
2019
|
|
2018
|
|
(in millions)
|
|
|
Change in benefit obligation:
|
|
|
|
Benefit obligation, beginning of year
|
$
|
148
|
|
|
$
|
188
|
|
Service cost
|
—
|
|
|
1
|
|
Interest cost
|
6
|
|
|
6
|
|
Benefits paid
|
(7)
|
|
|
(8)
|
|
Actuarial (gain) loss
|
11
|
|
|
(10)
|
|
Plan settlements
|
—
|
|
|
(28)
|
|
Currency translation
|
(4)
|
|
|
(1)
|
|
Benefit obligation, end of year
|
154
|
|
|
148
|
|
Change in plan assets:
|
|
|
|
Fair value of plan assets, beginning of year
|
77
|
|
|
115
|
|
Actual return on plan assets
|
15
|
|
|
(6)
|
|
Employer contributions
|
4
|
|
|
3
|
|
Plan settlements
|
—
|
|
|
(28)
|
|
Benefits paid
|
(7)
|
|
|
(7)
|
|
Fair value of plan assets, end of year
|
89
|
|
|
77
|
|
Funded status of the plan and amounts recognized in the consolidated balance sheets
|
$
|
(65)
|
|
|
$
|
(71)
|
|
Amounts recognized in accumulated other comprehensive loss, inclusive of tax impacts
|
$
|
(39)
|
|
|
$
|
(44)
|
|
Defined Benefit Plans Measured at Fair Value on a Recurring Basis
The following table presents Viskase’s defined benefit plan assets measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
U.S. and Non-U.S. Plans:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Government debt securities
|
1
|
|
|
2
|
|
|
3
|
|
|
1
|
|
|
2
|
|
|
3
|
|
Exchange traded funds
|
18
|
|
|
—
|
|
|
18
|
|
|
16
|
|
|
—
|
|
|
16
|
|
Mutual funds
|
26
|
|
|
2
|
|
|
28
|
|
|
22
|
|
|
2
|
|
|
24
|
|
Common stock
|
27
|
|
|
—
|
|
|
27
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|
$
|
75
|
|
|
$
|
4
|
|
|
$
|
79
|
|
|
$
|
63
|
|
|
$
|
4
|
|
|
$
|
67
|
|
Investments measured at net asset value
|
|
|
|
|
11
|
|
|
|
|
|
|
10
|
|
Plan assets measured at fair value
|
|
|
|
|
$
|
90
|
|
|
|
|
|
|
$
|
77
|
|
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Supplemental Cash Flow Information.
Supplemental cash flow information consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
(in millions)
|
|
|
|
|
Cash payments for interest, net of amounts capitalized
|
$
|
524
|
|
|
$
|
484
|
|
|
$
|
499
|
|
Net cash (receipts) payments for income taxes, net of refunds
|
64
|
|
|
20
|
|
|
39
|
|
Equity investment consideration received from sale of business
|
—
|
|
|
1,241
|
|
|
—
|
|
Acquisition of subsidiary common stock included in accrued expenses and other liabilities
|
—
|
|
|
|
—
|
|
|
|
51
|
|
Seller financing secured mortgages resulting from disposition of assets
|
—
|
|
|
|
—
|
|
|
|
375
|
|
In addition to the above, Icahn Enterprises Holdings reduced its receivable from Icahn Enterprises in a non-cash distribution to limited partner in the amount of $32 million during 2019. This transaction is reported as a non-cash related party transaction with respect to Icahn Enterprises Holdings and is eliminated in consolidation with respect to Icahn Enterprises.
21. Subsequent Events.
Icahn Enterprises
Distribution
On February 26, 2020, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $2.00 per depositary unit, which will be paid on or about April 28, 2020 to depositary unitholders of record at the close of business on March 20, 2020. Depositary unitholders will have until March 17, 2020 to make an election to receive either cash or additional depositary units; if a holder does not make an election, it will automatically be deemed to have elected to receive the distribution in cash. Depositary unitholders who elect to receive additional depositary units will receive units valued at the volume weighted average trading price of the units on NASDAQ during the 5 consecutive trading days ending April 24, 2020. No fractional depositary units will be issued pursuant to the distribution payment. Icahn Enterprises will make a cash payment in lieu of issuing fractional depositary units to any holders electing to receive depositary units. Any holders that would only be eligible to receive a fraction of a depositary unit based on the above calculation will receive a cash payment.
Debt Transactions
Refer to Note 11, “Debt,” for subsequent events relating to our Holding Company debt and Energy segment debt transactions occurring in January 2020.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
ICAHN ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22. Quarterly Financial Data (Unaudited).
Unaudited quarterly financial data for Icahn Enterprises is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
June 30,
|
|
|
|
September 30,
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(in millions, except per unit data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
2,300
|
|
|
$
|
2,364
|
|
|
$
|
2,588
|
|
|
$
|
2,819
|
|
|
$
|
2,484
|
|
|
$
|
2,815
|
|
|
$
|
2,349
|
|
|
$
|
2,578
|
|
Gross margin on net sales
|
400
|
|
|
377
|
|
|
459
|
|
|
392
|
|
|
415
|
|
|
443
|
|
|
235
|
|
|
362
|
|
Total revenues
|
1,855
|
|
|
2,983
|
|
|
2,196
|
|
|
3,423
|
|
|
2,320
|
|
|
2,569
|
|
|
2,621
|
|
|
2,802
|
|
Income (loss) from continuing operations
|
(664)
|
|
|
367
|
|
|
(573)
|
|
|
410
|
|
|
(373)
|
|
|
(334)
|
|
|
(149)
|
|
|
(206)
|
|
Income (loss) from discontinued operations
|
—
|
|
|
45
|
|
|
(24)
|
|
|
167
|
|
|
—
|
|
|
176
|
|
|
(8)
|
|
|
1,376
|
|
Net income (loss)
|
(664)
|
|
|
412
|
|
|
(597)
|
|
|
577
|
|
|
(373)
|
|
|
(158)
|
|
|
(157)
|
|
|
1,170
|
|
Net loss (income) attributable to non-controlling interests
|
(270)
|
|
|
280
|
|
|
(99)
|
|
|
275
|
|
|
(324)
|
|
|
(276)
|
|
|
—
|
|
|
240
|
|
Net income (loss) attributable to Icahn Enterprises
|
$
|
(394)
|
|
|
$
|
132
|
|
|
$
|
(498)
|
|
|
$
|
302
|
|
|
$
|
(49)
|
|
|
$
|
118
|
|
|
$
|
(157)
|
|
|
$
|
930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per LP unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
(2.02)
|
|
|
$
|
0.55
|
|
|
$
|
(2.37)
|
|
|
$
|
0.81
|
|
|
$
|
(0.24)
|
|
|
$
|
(0.24)
|
|
|
$
|
(0.70)
|
|
|
$
|
(2.30)
|
|
Discontinued operations
|
0.00
|
|
|
0.19
|
|
|
(0.12)
|
|
|
0.85
|
|
|
0.00
|
|
|
0.88
|
|
|
(0.04)
|
|
|
10.31
|
|
|
$
|
(2.02)
|
|
|
$
|
0.74
|
|
|
$
|
(2.49)
|
|
|
$
|
1.66
|
|
|
$
|
(0.24)
|
|
|
$
|
0.64
|
|
|
$
|
(0.74)
|
|
|
$
|
8.01
|
|
Diluted income (loss) per LP unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
(2.02)
|
|
|
$
|
0.55
|
|
|
$
|
(2.37)
|
|
|
$
|
0.81
|
|
|
$
|
(0.24)
|
|
|
$
|
(0.24)
|
|
|
$
|
(0.70)
|
|
|
$
|
(2.30)
|
|
Discontinued operations
|
0.00
|
|
|
0.19
|
|
|
(0.12)
|
|
|
0.85
|
|
|
0.00
|
|
|
0.88
|
|
|
(0.04)
|
|
|
10.31
|
|
|
$
|
(2.02)
|
|
|
$
|
0.74
|
|
|
$
|
(2.49)
|
|
|
$
|
1.66
|
|
|
$
|
(0.24)
|
|
|
$
|
0.64
|
|
|
$
|
(0.74)
|
|
|
$
|
8.01
|
|
The comparability of our unaudited quarterly financial data is affected by, among other things, (i) the performance of the Investment Funds, (ii) our Holding Company’s realized and unrealized equity investment gains and losses, (iii) the results of our Energy segment’s operations, impacted by the relationship of its refined product prices and prices for crude oil and other feedstocks and (iv) gains on dispositions of assets, primarily in our Mining segment in the third quarter of 2019. In addition, in connection with our sales of Federal-Mogul, Tropicana and ARI, we recorded aggregate pre-tax gains on the sales of discontinued operations of approximately $1.4 billion in the fourth quarter of 2018.