ICAHN ENTERPRISES L.P. AND SUBSIDIARIES |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT |
On February 20, 2008, American Entertainment Properties Corp. (“AEP”), our wholly owned subsidiary, completed the sale of all of the issued and outstanding membership interests of American Casino & Entertainment Properties, LLC (“ACEP”), which comprise our gaming operations, to W2007/ACEP Holdings, LLC, an affiliate of Whitehall Street Real Estate Funds, a series of real estate investment funds affiliated with Goldman, Sachs & Co. The unaudited pro forma condensed combined financial statements that follow are presented to reflect the pro forma effects of the sale, as if such transaction occurred on the date indicated as discussed below.
The unaudited pro forma condensed combined balance sheet as of September 30, 2007 has been prepared as if the sale had occurred on September 30, 2007. The unaudited consolidated statements of operations for the nine months ended September 30, 2007 included in our Form 10-Q filed with the SEC on November 9, 2007 and the audited restated consolidated statements of operations for the years ended December 31, 2006, 2005 and 2004 included in our Form 8-K filed with the SEC on December 5, 2007 presented the results of ACEP as discontinued operations in the consolidated statements of operations.
The unaudited pro forma condensed combined balance sheet as of September 30, 2007 provides our historical balance sheet as presented in our Form 10-Q. However, our supplemental condensed balance sheet is also presented herein as it reflects our most current financial position as of September 30, 2007 giving effect to the acquisition of PSC Metals, Inc. on November 5, 2007 as described in Note 2 to the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information does not purport to be indicative of the financial position and results of operations that we will obtain in the future, or that we would have obtained if the sale of ACEP was effective as of the date indicated above. The pro forma adjustments are based upon currently available information and upon certain assumptions that we believe are reasonable. The unaudited pro forma condensed combined financial information should be read in conjunction with our historical consolidated financial statements included in our annual reports on Form 10-K and quarterly reports on Form 10-Q, and related amendments.
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES |
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET |
September 30, 2007 |
(in $000s) |
Historical | Pro Forma Adjustments | |||||||||||||||
ASSETS | Originally Reported | Supplemental (2) | Sale of ACEP | Pro Forma Results | ||||||||||||
Investment Management: | ||||||||||||||||
Cash and cash equivalents | $ | 4,095 | $ | 4,095 | $ | - | $ | 4,095 | ||||||||
Cash held at consolidated affiliated partnerships and restricted cash | 1,136,546 | 1,136,546 | - | 1,136,546 | ||||||||||||
Securities owned, at fair value | 5,585,669 | 5,585,669 | - | 5,585,669 | ||||||||||||
Unrealized gains on derivative contracts at fair value | 55,855 | 55,855 | - | 55,855 | ||||||||||||
Due from brokers | 1,600,306 | 1,600,306 | - | 1,600,306 | ||||||||||||
Other assets | 154,003 | 154,003 | - | 154,003 | ||||||||||||
8,536,474 | 8,536,474 | - | 8,536,474 | |||||||||||||
Holding company and other operations: | ||||||||||||||||
Cash and cash equivalents | 2,836,403 | 2,839,705 | (169,531 | ) | (3a | ) | 2,670,174 | |||||||||
Restricted cash | 41,405 | 41,405 | 1,156,500 | (3a | ) | 1,197,905 | ||||||||||
Investments | 501,604 | 508,459 | - | 508,459 | ||||||||||||
Unrealized gains on derivative contracts, at fair value | 1,849 | 1,849 | - | 1,849 | ||||||||||||
Inventories, net | 233,865 | 302,520 | - | 302,520 | ||||||||||||
Trade, notes and other receivables, net | 148,742 | 243,653 | - | 243,653 | ||||||||||||
Assets of discontinued operations held for sale | 646,278 | 646,278 | (589,054 | ) | (3b | ) | 57,224 | |||||||||
Property, plant and equipment, net | 445,365 | 523,730 | - | 523,730 | ||||||||||||
Intangible assets and goodwill | 20,400 | 35,308 | - | 35,308 | ||||||||||||
Other assets | 51,700 | 87,475 | - | 87,475 | ||||||||||||
4,927,611 | 5,230,382 | 397,915 | 5,628,297 | |||||||||||||
Total assets | $ | 13,464,085 | $ | 13,766,856 | $ | 397,915 | $ | 14,164,771 | ||||||||
LIABILITIES AND PARTNERS’ EQUITY | ||||||||||||||||
Investment Management: | ||||||||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 29,219 | $ | 29,219 | $ | - | $ | 29,219 | ||||||||
Deferred management fee payable | 146,863 | 146,863 | - | 146,863 | ||||||||||||
Subscriptions received in advance | 23,336 | 23,336 | - | 23,336 | ||||||||||||
Payable for purchases of securities | 211,279 | 211,279 | - | 211,279 | ||||||||||||
Securities sold, not yet purchased, at fair value | 1,068,262 | 1,068,262 | - | 1,068,262 | ||||||||||||
Unrealized losses on derivative contracts, at fair value | 116,498 | 116,498 | - | 116,498 | ||||||||||||
1,595,457 | 1,595,457 | - | 1,595,457 | |||||||||||||
Holding company and other operations: | ||||||||||||||||
Accounts payable | 76,487 | 109,227 | - | 109,227 | ||||||||||||
Accrued expenses and other liabilities | 113,235 | 126,646 | 217,283 | (3c | ) | 343,929 | ||||||||||
Unrealized losses on derivative contracts, at fair value | 5,687 | 5,687 | - | 5,687 | ||||||||||||
Accrued environmental costs | - | 24,012 | - | 24,012 | ||||||||||||
Liabilities of discontinued operations held for sale | 314,895 | 314,895 | (302,698 | ) | (3b | ) | 12,197 | |||||||||
Long-term debt | 2,040,058 | 2,077,106 | - | 2,077,106 | ||||||||||||
Preferred limited partnership units | 122,049 | 122,049 | - | 122,049 | ||||||||||||
2,672,411 | 2,779,622 | (85,415 | ) | 2,694,207 | ||||||||||||
Total Liabilities | 4,267,868 | 4,375,079 | (85,415 | ) | 4,289,664 | |||||||||||
Commitments and contingencies | ||||||||||||||||
Non-controlling interests in Income of Consolidated Entities: | ||||||||||||||||
Investment Management | 6,601,480 | 6,601,480 | - | 6,601,480 | ||||||||||||
Holding company and other operations: | 164,472 | 164,472 | - | 164,472 | ||||||||||||
6,765,952 | 6,765,952 | - | 6,765,952 | |||||||||||||
Partners’ equity: | ||||||||||||||||
Partners’ equity | 2,430,265 | 2,625,825 | 483,330 | (3d | ) | 3,109,155 | ||||||||||
Total liabilities and partners’ equity | $ | 13,464,085 | $ | 13,766,856 | $ | 397,915 | $ | 14,164,771 |
See accompanying notes. |
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Sale of American Casino & Entertainment Properties LLC
On February 20, 2008, American Entertainment Properties Corp. (“AEP”), a wholly owned indirect subsidiary of Icahn Enterprises, completed the sale of all of the issued and outstanding membership interests of ACEP, which comprises all of our remaining gaming operations, to W2007/ACEP Holdings, LLC, an affiliate of Whitehall Street Real Estate Funds, a series of real estate investment funds affiliated with Goldman Sachs & Co. for $1.2 billion, plus or minus certain adjustments such as working capital, more fully described in the agreement. Pursuant to the terms of the agreement, AEP caused ACEP to repay from funds provided by AEP, the principal, interest, prepayment penalty or premium due on ACEP’s 7.85% senior secured notes due 2012 and ACEP’s senior secured credit facility. With this transaction, Icahn Enterprises anticipates realizing a gain of approximately $700 million on its investments in ACEP, before income taxes. ACEP’s casino assets are comprised of the Stratosphere Casino Hotel & Tower, the Arizona Charlie’s Decatur, the Arizona Charlie’s Boulder and the Aquarius Casino Resort.
On November 5, 2007, Icahn Enterprises acquired, through a subsidiary, all of the issued and outstanding capital stock of PSC Metals from Philip Services Corporation (“Philip”) for $335.0 million in cash. PSC Metals is engaged in transporting, recycling and processing metals.
On December 5, 2007, we filed a current report on Form 8-K to provide our supplemental consolidated financial statements relating to our acquisition of PSC Metals, Inc. (“PSC Metals”). PSC Metals is considered an entity under common control. As a result, we provided supplemental consolidated financial statements to include PSC Metals’ financial results since December 31, 2003, the period of common control.
3. Pro Forma Adjustments — Disposition of ACEP
3a | To record the following adjustments to cash: |
(in 000s) | ||||
Estimated gross proceeds from sale of ACEP | $ | 1,200,000 | (1) | |
Add: net working capital | 65,964 | |||
Total proceeds | 1,265,964 | |||
Repayment of long-term debt | (255,000 | ) | ||
Debt interest and redemption fees | (12,972 | ) | ||
Estimated transaction costs | (7,405 | ) | ||
Stay bonuses | (3,618 | ) | ||
Total adjustments to cash | $ | 986,969 |
(1) We elected to deposit approximately $1.156 billion of the gross proceeds from the sale into escrow accounts to fund investment activities through tax-deferred exchanges under Section 1031 of the Internal Revenue Code. Such proceeds were received into the escrow accounts pending the fulfillment of Section 1031 exchange requirements, which amount is presented as restricted cash in the accompanying pro forma balance sheet. There are no assurances that we will fulfill our Section 1031 exchange obligations using the entire amount of proceeds placed into escrow.
3b | Reflects the elimination of the September 30, 2007 carrying value of the assets and liabilities of ACEP. |
3c | Reflects the estimated amount of income taxes payable relating to the sale of ACEP. |
3d | Reflects the amount of the estimated net gain on the transaction, net of income taxes. |