SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): August 7, 2007
American
Real Estate Partners, L.P.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
1-9516
|
13-3398766
|
||
|
(State
or Other Jurisdiction of Incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
No.)
|
|
767
Fifth Avenue, Suite 4700, New York, NY 10153
|
|
(Address
of Principal Executive Offices) (Zip
Code)
|
Registrant’s
Telephone Number, Including Area Code: (212)
702-4300
N/A
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written
communication
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Section 2
- Financial Information
Item
2.02 Results of Operations and Financial Condition
The
following information is furnished pursuant to Item 2.02, “Results of Operations
and Financial Condition.”
On
August
7, 2007, American Real Estate Partners, L.P. (“AREP”) issued a press release
setting forth AREP’s second quarter 2007 financial results. A copy of AREP’s
press release is attached as Exhibit 99.1.
Section 9
- Financial Statements and Exhibits
Item
9.01(d) Exhibits
Exhibit
Index
99.1 Press
Release dated August 7, 2007
[remainder
of page intentionally left blank; signature page follows]
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
AMERICAN
REAL ESTATE PARTNERS, L.P.
(Registrant)
|
||
| |
By: |
American Property Investors, Inc., its
General Partner
|
| By: /s/ Andrew R. Skobe | ||
|
Andrew
R. Skobe
Chief
Financial Officer
American
Property Investors, Inc.,
the
General Partner of
American
Real Estate Partners, L.P.
|
||
Date: August
7,
2007
3
Investor
Contact:
Andrew
Skobe
Interim
CFO
(212)
702-4300
For
Release: August 7, 2007
American
Real Estate Partners, L.P. Reports Second-Quarter Financial
Results
| · |
Ended
quarter with cash, cash equivalents and liquid investments of $3.6
billion
|
| · |
Agreed
to sell Nevada Gaming operations for $1.3
billion
|
| · |
Issued
$600 million of variable rate senior convertible
notes
|
| · |
Sold
common stock of SandRidge for $243
million
|
| · |
Board
of Directors approved $0.15 per depositary unit quarterly
distribution
|
New
York, NY -
American Real Estate Partners, L.P. (“AREP”) (NYSE: ACP) today reported second
quarter 2007 net loss of $25.5 million, or ($0.40) per depositary unit, compared
to second quarter 2006 net earnings of $79.1 million, or $1.28 per depositary
unit. In addition, the AREP Board of Directors approved a payment of a quarterly
distribution of $0.15 per unit on our depositary units, payable in the third
quarter of fiscal 2007. The distribution will be paid on September 7, 2007
to
depositary unitholders of record at the close of business on August 27,
2007.
Three
Months Ended June 30, 2007
For
the
second quarter of 2007, revenues decreased by $94.0 million to $191.4 million
from $285.4 million in the second quarter of 2006. The decrease was due to
reduced Home Fashion and Real Estate revenues of $71.4 million and $22.7
million, respectively, in the second quarter. AREP
reported an operating loss of $55.9 million for the second quarter of 2007,
compared to an operating loss of $37.9 million in the second quarter of 2006.
The increase in operating loss was primarily attributed to the decrease in
Real
Estate operating income, principally in the property development segment. Net
interest income was $5.7 million in the second quarter of 2007, compared to
a
net interest expense of $9.1 million for the same period last year. This
improvement was due to the large positive cash position created by the sales
of
our Oil and Gas and Atlantic City gaming operations in November 2006. Other
income (expense) for the second quarter of 2007 was a net other expense of
$16.7
million compared to net other income of $44.8 million in the same period in
2006. This fluctuation of other income (expense) is primarily attributed to
changes in the unrealized gains and losses of the holding company’s investment
portfolio. Securities in our investment portfolio are marked-to-market quarterly
resulting in
1
gains
and
losses in other income that are non-recurring in nature. Income from
discontinued operations was $21.9 million for the second quarter of 2007
compared to $47.6 million for the second quarter of 2006. Discontinued
operations for the prior period included the operating results of our former
Oil
and Gas and Atlantic City gaming operations.
Six
Months Ended June 30, 2007
For
the
six months ended June 30, 2007, revenues decreased 21.7% to $429.7 million
from
the same period last year due to reduced Home Fashion and Real Estate revenues
of $104.2 million and $15.5 million, respectively. AREP reported an operating
loss of $98.3 million for the six months ended June 30, 2007 compared to $83.6
million for the same period last year due to overall lower revenues for the
first six months of 2007. Net interest income was $9.2 million for the first
six
months of 2007, compared to a net interest expense of $18.9 million for the
same
period last year. This improvement was due to the large positive cash position
created by the sales of our Oil and Gas and Atlantic City gaming operations
in
November 2006. Other income for the first six months of 2007 was $68.1 million
compared to $66.2 million in the same period in 2006. Income from discontinued
operations was $61.8 million for the first six months of 2007 compared to $116.3
million for the first six months of 2006. Discontinued operations for the prior
period included the operating results of our former Oil and Gas and Atlantic
City gaming operations.
Three
Months Ended June 30, 2007
The
following table presents results for the second quarter of 2007 and 2006 by
segment and for discontinued operations (in millions):
|
Operating
Income / (Loss)
|
Depreciation,
Depletion &
Amortization
|
||||||||||||
|
Quarter
Ended June 30,
|
|||||||||||||
|
2007
|
2006
|
2007
|
2006
|
||||||||||
|
Real
Estate
|
$
|
1.0
|
$
|
14.2
|
$
|
1.5
|
$
|
1.3
|
|||||
|
Home
Fashion
|
(53.0
|
)
|
(48.3
|
)
|
4.6
|
9.5
|
|||||||
|
Holding
Company
|
(3.9
|
)
|
(3.8
|
)
|
-
|
-
|
|||||||
|
Total
|
$
|
(55.9
|
)
|
$
|
(37.9
|
)
|
$
|
6.1
|
$
|
10.8
|
|||
|
Discontinued
Ops.
|
$
|
32.5
|
$
|
62.9
|
$
|
-
|
$
|
33.8
|
|||||
Six
Months Ended June 30, 2007
The
following table presents results for the six months ended June 30, 2007 and
2006
2
by
segment and for discontinued operations (in millions):
|
Depreciation,
Depletion &
|
|||||||||||||
|
Operating
Income / (Loss)
|
Amortization
|
||||||||||||
|
Six
Months Ended June 30,
|
|||||||||||||
|
2007
|
2006
|
2007
|
2006
|
||||||||||
|
Real
Estate
|
$
|
5.2
|
$
|
17.7
|
$
|
3.0
|
$
|
2.5
|
|||||
|
Home
Fashion
|
(92.0
|
)
|
(86.3
|
)
|
9.4
|
19.9
|
|||||||
|
Holding
Company
|
(11.5
|
)
|
(15.0
|
)
|
-
|
-
|
|||||||
|
Total
|
$
|
(98.3
|
)
|
$
|
(83.6
|
)
|
$
|
12.4
|
$
|
22.4
|
|||
|
Discontinued
Ops.
|
$
|
56.9
|
$
|
148.6
|
$
|
8.4
|
$
|
67.6
|
|||||
Real
Estate
Three
Months Ended June 30, 2007
AREP’s
Real Estate activities is comprised of three segments: rental real estate,
property development and resort operations. For the second quarter of 2007,
Real
Estate operations had revenues of $25.6 million, a decrease of 47.0% from the
second quarter of 2006; operating income of $1.0 million, a decrease of 93.0%
from the second quarter of 2006; and depreciation and amortization of $1.5
million.
Six
Months Ended June 30, 2007
For
the
six months ended June 30, 2007, Real Estate reported revenues of $53.3 million,
down 22.6% from the same period last year; operating income of $5.2 million,
a
decrease of 70.6% from the same period last year; and depreciation and
amortization of $3.0 million.
Home
Fashion
Three
Months Ended June 30, 2007
WestPoint
International, Inc. is
engaged in the business of manufacturing, sourcing, marketing and distributing
bed and bath home fashion products. For the second quarter of 2007, AREP’s Home
Fashion segment had revenues of $165.8 million, a decrease of 30.1% from the
second quarter of 2006; an operating loss of $53.0 million, an increase of
9.6%
from the second quarter of 2006; and depreciation and amortization of $4.6
million.
Six
Months Ended June 30, 2007
3
For
the
six months ended June 30, 2007, Home Fashion reported revenues of $376.4
million, down 21.7% from the same period last year; operating loss of $92.0
million, up 6.6% over the same period last year; and depreciation and
amortization of $9.4 million.
Holding
Company Activity
In
April
2007, we sold an aggregate of $600.0 million of Variable Rate Senior Convertible
Notes due 2013, or the Notes. The Notes were sold in a private placement
pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Notes
bear interest at a rate of three month LIBOR minus 125 points, but no less
than
4.0% nor higher than 5.5%, and are convertible into depositary units of AREP
at
a conversion price of $132.595 per share, subject to adjustments in certain
circumstances.
On
April 4, 2007, our subsidiaries signed agreements to sell their entire position
in the common stock of SandRidge (formerly Riata Energy, Inc.) to a consortium
of investors in a series of private transactions. The per share selling price
was $18, and total cash consideration received at closing was approximately
$243.2 million.
Three
Months Ended June 30, 2007
Total
general and administrative expenses incurred by the Holding Company was $3.9
million in the second quarter of 2007, an increase of $0.1 million, or 0.6%,
from $3.8 million over the same period last year.
Six
Months Ended June 30, 2007
Holding
Company costs decreased $3.5 million, or 23.0%, to $11.5 million for the first
six months of 2007, as compared to $15.0 million for the first six months of
2006, due primarily to the impact of a compensation charge related to the
cancellation of unit options of $6.2 million in fiscal 2006, offset in part
by
higher legal and professional fees in fiscal 2007 relating to increased merger
and acquisition activities and financing transactions.
Discontinued
Operations
On
November 17, 2006, our indirect majority owned subsidiary, Atlantic Coast
Entertainment Holdings, Inc., completed the sale to Pinnacle Entertainment,
Inc., or Pinnacle, of the outstanding membership interests in ACE Gaming LLC,
the owner of The Sands Hotel and Casino, or The Sands, in Atlantic City, New
Jersey, and 100% of the equity interests in certain subsidiaries of American
Real Estate Holdings, LP that owned parcels of real estate adjacent to The
Sands, including the Traymore site, to Pinnacle.
On
November 21, 2006, our indirect wholly owned subsidiary, AREP O & G Holdings
LLC, consummated the sale of all of the issued and outstanding membership
interests of NEG Oil & Gas LLC, to SandRidge Energy, Inc., formerly Riata
Energy, Inc.
On
April
22, 2007, American Entertainment Properties Corp. or AEP, a wholly owned
indirect subsidiary of AREP, entered into a Membership Interest Purchase
Agreement with W2007/ACEP Holdings, LLC, an affiliate of Whitehall Street Real
Estate Funds, a series of real
4
estate
investment funds affiliated with Goldman, Sachs & Co., to sell all of the
issued and outstanding membership interests of American Casino &
Entertainment Properties LLC or ACEP, which comprised our gaming operations,
for
$1.3 billion, plus or minus certain adjustments such as working capital, as
more
fully described in the agreement. Pursuant to the terms of the agreement, AEP
is
also responsible to pay off ACEP’s debt.
Quarterly
Distribution
AREP’s
quarterly cash distribution of $0.15 per unit on its depositary units is payable
on September 7, 2007 to depositary unitholders of record at the close of
business on August 27, 2007. In addition to the cash distribution to
unitholders, AREP will also make a $0.05 per depositary unit equivalent
distribution to holders of its Variable Rate Senior Convertible Notes due 2013
based on a formula set forth in the indenture governing the Notes. The payment
of future distributions will be determined by the board of directors of AREP’s
general partner.
Conference
Call Information
AREP
will
discuss second quarter results on a conference call and Webcast on Thursday,
August 9, 2007 at 2:00 p.m. EST. The Webcast can be viewed live on AREP’s
website at www.arep.com.
It will
also be archived and made available at www.arep.com
under
the Investor Relations Section. The toll-free dial-in number for the conference
call in the US is (800) 289-0485. The international number is 1-913-981-5518.
The access code for both is 8876451.
*
* *
American
Real Estate Limited Partners, L.P. (NYSE: ACP), a master limited partnership,
is
a diversified holding company engaged in two primary business segments: Real
Estate and Home Fashion. For more information, please visit the company’s
website at www.arep.com.
Caution
Concerning Forward-Looking Statements
This
release contains certain “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995, many of which are beyond
our
ability to control or predict. Forward-looking statements may be identified
by
words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “will,” or words of similar meaning and include, but are not
limited to, statements about the expected future business and financial
performance of AREP and its subsidiaries. Among these risks and uncertainties
are risks related to our gaming and associated hotel, restaurant and
entertainment operations, including the effects of regulation, substantial
competition, rising operating costs and economic downturns; risks related to
our
real estate activities, including the extent of any tenant bankruptcies and
insolvencies, our ability to maintain tenant occupancy at current levels, our
ability to obtain, at reasonable costs, adequate insurance coverage and
competition for
5
investment
properties; risks
related to our home fashion operations, including changes in the availability
and price of raw materials, changes in customer preferences and changes in
transportation costs and delivery times; and other risks and uncertainties
detailed from time to time in our filings with the SEC. We undertake no
obligation to publicly update or review any forward-looking information, whether
as a result of new information, future developments or otherwise.
6
|
APPENDIX
I
|
|||||||
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
|||||||
|
In
millions of dollars except per unit data
|
|||||||
|
|
Three
Months
Ended
|
||||||
|
|
June
30,
|
||||||
|
2007
|
2006
|
||||||
|
|
(Restated)
|
||||||
|
Revenues
|
$
|
191.4
|
$
|
285.4
|
|||
|
Operating
loss
|
$
|
(55.9
|
)
|
$
|
(37.9
|
)
|
|
|
Interest
expense
|
(35.5
|
)
|
(21.1
|
)
|
|||
|
Interest
income
|
41.2
|
12.0
|
|||||
|
Other
income (expense), net
|
(16.7
|
)
|
44.8
|
||||
|
Equity
in earnings of affiliate
|
-
|
8.0
|
|||||
|
Pre-tax
(loss) income
|
(66.9
|
)
|
5.8
|
||||
|
Income
tax expense
|
(1.1
|
)
|
-
|
||||
|
Minority
interests
|
20.6
|
25.7
|
|||||
|
(Loss)
income from continuing operations
|
(47.4
|
)
|
31.5
|
||||
|
Income
from discontinued operations
|
21.9
|
47.6
|
|||||
|
Net
(loss) earnings
|
$
|
(25.5
|
)
|
$
|
79.1
|
||
|
Net
(loss) earnings attributable to:
|
|||||||
|
Limited
partners
|
$
|
(25.0
|
)
|
$
|
77.5
|
||
|
General
partner
|
(0.5
|
)
|
1.6
|
||||
|
(25.5
|
)
|
79.1
|
|||||
|
Net
(loss) earnings per LP unit:
|
|||||||
|
Basic
(loss) earnings:
|
|||||||
|
(Loss)
income from continuing operations
|
$
|
(0.75
|
)
|
$
|
0.53
|
||
|
Income
from discontinued operations
|
0.35
|
0.75
|
|||||
|
Basic
(loss) earnings per LP unit
|
$
|
(0.40
|
)
|
$
|
1.28
|
||
|
Weighted
average units
|
|||||||
|
outstanding
(in 000s)
|
61,857
|
61,857
|
|||||
|
Diluted
(loss) earnings:
|
|||||||
|
(Loss)
income from continuing operations
|
$
|
(0.75
|
)
|
$
|
0.51
|
||
|
Income
from discontinued operations
|
0.35
|
0.72
|
|||||
|
Diluted
(loss) earnings per L.P. unit
|
$
|
(0.40
|
)
|
$
|
1.23
|
||
|
Weighted
average units and
|
|||||||
|
equivalent
units outstanding (in 000s)
|
61,857
|
64,535
|
|||||
7
|
APPENDIX
II
|
|||||||
|
CONSOLIDATED
STATEMENT OF OPERATIONS
|
|||||||
|
In
millions of dollars except per unit data
|
|||||||
|
|
Six
Months
Ended
|
||||||
|
|
June
30,
|
||||||
|
2007
|
2006
|
||||||
|
|
(Restated)
|
||||||
|
Revenues
|
$
|
429.7
|
$
|
549.4
|
|||
|
Operating
loss
|
$
|
(98.3
|
)
|
$
|
(83.6
|
)
|
|
|
Interest
expense
|
(63.0
|
)
|
(41.5
|
)
|
|||
|
Interest
income
|
72.2
|
22.7
|
|||||
|
Other
income (expense), net
|
68.1
|
66.2
|
|||||
|
Equity
in earnings of affiliate
|
-
|
8.0
|
|||||
|
Pre-tax
loss
|
(21.0
|
)
|
(28.2
|
)
|
|||
|
Income
tax expense
|
(1.9
|
)
|
-
|
||||
|
Minority
interests
|
32.2
|
40.7
|
|||||
|
Income
from continuing operations
|
9.3
|
12.5
|
|||||
|
Income
from discontinued operations
|
61.8
|
116.3
|
|||||
|
Net
earnings
|
$
|
71.1
|
$
|
128.8
|
|||
|
Net
earnings attributable to:
|
|||||||
|
Limited
partners
|
$
|
69.7
|
$
|
126.2
|
|||
|
General
partners
|
1.4
|
2.6
|
|||||
|
71.1
|
128.8
|
||||||
|
Net
earnings per LP unit:
|
|||||||
|
Basic
earnings:
|
|||||||
|
Income
from continuing operations
|
$
|
0.15
|
$
|
0.22
|
|||
|
Income
from discontinued operations
|
0.98
|
1.84
|
|||||
|
Basic
earnings per LP unit
|
$
|
1.13
|
$
|
2.06
|
|||
|
Weighted
average units
|
|||||||
|
outstanding
(in 000s)
|
61,857
|
61,857
|
|||||
|
Diluted
earnings:
|
|||||||
|
Income
from continuing operations
|
$
|
0.15
|
$
|
0.22
|
|||
|
Income
from discontinued operations
|
0.98
|
1.84
|
|||||
|
Diluted
earnings per L.P. unit
|
$
|
1.13
|
$
|
2.06
|
|||
|
Weighted
average units and
|
|||||||
|
equivalent
units outstanding (in 000s)
|
61,857
|
61,857
|
|||||
8
|
APPENDIX
III
|
|||||||
|
CONSOLIDATED
SUMMARY BALANCE SHEET
|
|||||||
|
The
following table presents AREP's consolidated summary balance sheet
data
|
|||||||
|
(in
millions)
|
|||||||
|
|
June
30,
|
December
31,
|
|||||
|
2007
|
2006
|
||||||
|
Assets
|
|||||||
|
Cash
and cash equivalents
|
$
|
3,134.7
|
$
|
1,857.3
|
|||
|
Investments
|
309.5
|
535.7
|
|||||
|
Other
current assets
|
458.7
|
530.0
|
|||||
|
Assets
of disc. ops. held for sale
|
628.0
|
600.0
|
|||||
|
Total
current assets
|
4,530.9
|
3,523.0
|
|||||
|
Noncurrent
investments
|
177.5
|
179.9
|
|||||
|
Property,
plant and equipment
|
458.2
|
484.4
|
|||||
|
Intangible
assets
|
23.4
|
23.4
|
|||||
|
Other
assets
|
30.7
|
34.0
|
|||||
|
Total
assets
|
$
|
5,220.7
|
$
|
4,244.7
|
|||
|
Liabilities
|
|||||||
|
Current
liabilities
|
$
|
570.6
|
$
|
580.3
|
|||
|
Long-term
debt
|
2,017.7
|
927.7
|
|||||
|
Other
noncurrent liabilities
|
15.0
|
16.2
|
|||||
|
Preferred
limited partnership units
|
120.6
|
117.7
|
|||||
|
Total
liabilities
|
2,723.9
|
1,641.9
|
|||||
|
Minority
interests
|
182.7
|
292.2
|
|||||
|
Partners'
equity
|
2,314.1
|
2,310.6
|
|||||
|
Total
liabilities and partners' equity
|
$
|
5,220.7
|
$
|
4,244.7
|
|||
9