Exhibit 99.1
Contact: John P. Saldarelli
Secretary and Treasurer
(914) 242-7700
FOR IMMEDIATE RELEASE
AMERICAN REAL ESTATE PARTNERS, L.P.
REPORTS FULL YEAR AND FOURTH QUARTER RESULTS AND THAT NO
DISTRIBUTIONS ARE EXPECTED TO BE MADE IN 2004
Mount Kisco, New York, March 15, 2004 - American Real Estate Partners, L.P.
(NYSE:ACP) today reported the following full year and fourth quarter financial
results:
For the year ended December 31, 2003, revenues decreased to $283,773,000 from
$353,502,000 in 2002. Operating income decreased to $65,615,000 from $84,262,000
in 2002 and diluted earnings from continuing operations per weighted average
limited partnership unit outstanding decreased to $1.01 from $1.06 in 2002.
Earnings decreased to $68,097,000 for the year ended December 31, 2003 from
$73,866,000 in the year ended December 31, 2002 primarily due to a write-down of
mortgages and notes receivable, decreased earnings from land, house and
condominium operations and decreased interest income. This was partially offset
by increased income tax benefit, a decrease in write-down of equity securities
and limited partnership interests, an increase in income from discontinued
operations, an increase in gain on sale of marketable equity securities and a
decreased provision for loss on real estate.
For the fourth quarter ended December 31, 2003, revenues decreased to
$70,741,000 from $95,250,000 in 2002. Operating income decreased to $17,464,000
from $20,295,000 in 2002. Diluted earnings from continuing operations per
weighted average limited partnership unit outstanding increased from $.23 in
2002 to $.71 in 2003, and earnings for the fourth quarter ended December 31,
2003 increased to $38,160,000 from $17,602,000 in the fourth quarter ended
December 31, 2002. These increases were primarily due to increased income tax
benefits derived from its subsidiaries Stratosphere Corporation and National
Energy Group, Inc.
In accordance with newly adopted accounting standards, effective July 1, 2003,
Limited Partnership Preferred Units are treated as a liability rather than as
equity and therefore the preferred pay-in-kind distribution for the year ended
December 31, 2003 ($2.4 million), has been recorded as interest expense for the
year ended December 31, 2003. However, because these units are considered to be
equivalent units for the computation of diluted earnings per weighted average
limited partnership unit, this interest expense is added back to earnings for
the year ended December 31, 2003.
The Company's consolidated financial statements for 2002 and 2001 have been
restated to reflect the acquisition of 50.1% of the outstanding stock of
National Energy Group, Inc.
On March 15, 2004, AREP announced that no distributions on its Depositary Units
are expected to be made in 2004. AREP continues to believe that it should hold
and utilize in its business, rather than distribute, cash. No distributions were
made in 2003, 2002 or 2001. AREP intends to continue to apply available cash
flow toward its operations, repayment of maturing indebtedness, tenant
requirements, investments, acquisitions and other capital expenditures. Proceeds
from the Company's marketing of its rental real estate assets will be utilized
to attempt to further diversify its business operations outside of real estate,
including but not limited to sectors such as insurance and oil and gas and
gaming, as well as in real estate if opportunities to do so at favorable prices
are found. AREP will seek investments that provide rates of return in excess of
AREP's cost of capital. There can be no assurance that AREP will successfully
market its rental real estate assets, successfully make acquisitions from any
proceeds it obtains from the sale of such assets or achieve the returns it would
seek in making such acquisitions.
American Real Estate Partners, L.P. is a master limited partnership.
AMERICAN REAL ESTATE PARTNERS, L.P.
REPORTS FULL YEAR AND FOURTH QUARTER RESULTS AND THAT NO
DISTRIBUTIONS ARE EXPECTED TO BE MADE IN 2004
CONSOLIDATED RESULTS OF EARNINGS
In thousands of dollars except per unit data
Year Ended December 31, 2003 2002
- ----------------------- ---- ----
(unaudited) (Restated)
Revenues $ 283,773 $ 353,502
=========== ===========
Operating income $ 65,615 $ 84,262
Provision for loss on real estate (750) (3,212)
Write-down of equity securities
available for sale (961) (8,476)
Write-down of mortgages
and notes receivable (18,798) --
Gain on sales and disposition
of real estate 7,121 8,990
Loss on limited partnership interests -- (3,750)
Gain on sale of marketable equity securities 2,607 --
Income tax benefit (expense) 6,495 (7,480)
----------- ------------
Income from continuing operations 61,329 70,334
Income from discontinued operations 6,768 3,532
----------- -----------
Net earnings $ 68,097 $ 73,866
=========== ===========
Net earnings per L.P. unit:
Basic:
Income from continuing operations $ 1.09 $ 1.20
Income from discontinued operations .14 .07
----------- -----------
Basic earnings per L.P. unit $ 1.23 $ 1.27
=========== ===========
Weighted average units
outstanding 46,098,284 46,098,284
=========== ===========
Diluted:
Income from continuing operations $ 1.01 $ 1.06
-
Income from discontinued operations .12 .06
----------- -----------
Diluted earnings per L.P. unit $ 1.13 $ 1.12
=========== ===========
Weighted average units and
equivalent units outstanding 54,489,943 56,466,698
=========== ===========
AMERICAN REAL ESTATE PARTNERS, L.P.
REPORTS FULL YEAR AND FOURTH QUARTER RESULTS AND THAT NO
DISTRIBUTIONS ARE EXPECTED TO BE MADE IN 2004
CONSOLIDATED RESULTS OF EARNINGS
In thousands of dollars except per unit data
Fourth Quarter Ended December 31, 2003 2002
- --------------------------------- ---- ----
(unaudited) (Restated)
Revenues $ 70,741 $ 95,250
========== ==========
Operating income $ 17,464 $ 20,295
Provision for loss on real estate (450) (2,286)
Gain on sales and disposition
of real estate 5,754 4,460
Loss on limited partnership interests -- (3,750)
Gain on sales of marketable equity securities 439 --
Income tax benefit (expense) 14,099 (2,000)
----------- -----------
Income from continuing operations 37,306 16,719
Income from discontinued operations 854 883
----------- -----------
Net earnings $ 38,160 $ 17,602
=========== ===========
Net earnings per L.P. unit:
Basic:
Income from continuing operations $ .79 $ .27
Income from discontinued operations .02 .02
----------- -----------
Basic earnings per L.P. unit $ .81 $ .29
=========== ===========
Weighted average units
outstanding 46,098,284 46,098,284
=========== ===========
Diluted:
Income from continuing operations $ .71 $ .23
Income from discontinued operations .02 .02
----------- -----------
Diluted earnings per L.P. unit $ .73 $ .25
=========== ===========
Weighted average units and
equivalent units outstanding 53,420,895 57,087,165
=========== ===========
(p: 8K-3-16-04-Full Year and Fourth Quarter)