UNITED
STATES
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): March 6, 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, NY10153
|
|
(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
March
6, 2007, American
Real Estate Partners, L.P. (“AREP”) issued
a
press release reporting its financial results for the fourth quarter and full
year of 2006. A copy of the press release is attached hereto as Exhibit
99.1.
Section
9 - Financial Statements and Exhibits
Item
9.01(d) Exhibits.
Exhibit
99.1 - Press
Release dated March 6, 2007.
[remainder
of page intentionally left blank; signature page follows]
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/
Hillel Moerman
Hillel
Moerman
Chief
Financial Officer
American
Property Investors, Inc.,
the
General Partner of American
Real Estate Partners, L.P.
Date:March
6,
2007
EXHIBIT
99.1
Investor
Contact:
Andrew
Skobe
Treasurer
212-702-4300
For
Immediate Release: March 6, 2007
AMERICAN
REAL ESTATE PARTNERS, L.P. REPORTS FULL YEAR
AND
FOURTH QUARTER FINANCIAL RESULTS
|
·
|
Earnings
of $798.8 million for 2006, compared to losses of $25.7 million for
2005
|
|
·
|
Board
of Directors approved $0.10 per depositary unit quarterly
distribution
|
|
·
|
Sold
The Sands Hotel and Casino
|
|
·
|
Sold
Oil & Gas operations
|
New
York, NY -
American Real Estate Partners, L.P. (“AREP”) (NYSE:ACP) today reported its full
year 2006 earnings of $798.8 million, or $12.69 per LP unit, compared to full
year 2005 losses of $25.7 million, or $0.36 per LP unit, and its fourth quarter
2006 earnings of $565.4 million, or $8.96 per LP unit, compared to fourth
quarter 2005 earnings of $63.0 million, or $1.00 per LP unit.
Full
Year 2006
For
2006,
revenues increased to $1.5 billion from $901.0 million for 2005. The increase
in
revenues was primarily due to the inclusion of revenue from AREP’s Home Fashion
segment, which was acquired in August 2005, for the full year. AREP reported
an
operating loss of $89.8 million for 2006 compared to operating income of $45.2
million for 2005. This loss is primarily attributable to operating losses at
AREP’s Home Fashion segment and the inclusion of restructuring and impairment
expense of $45.6 million attributable to AREP’s Home Fashion segment for the
full year 2006.
-1-
The
following table presents results for 2006 and 2005 by segment and for
discontinued operations ($ in millions):
|
Operating
Income (Loss)
|
Depreciation
& Amortization
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Gaming
(1)
|
$
|
58.7
|
$
|
67.0
|
$
|
27.6
|
$
|
22.3
|
|||||
|
Real
Estate
|
27.9
|
17.8
|
6.1
|
5.1
|
|||||||||
|
Home
Fashion (2)
|
(150.6
|
)
|
(22.4
|
)
|
31.6
|
19.4
|
|||||||
|
Holding
Company
|
(25.8
|
)
|
(17.2
|
)
|
6.2
|
3.5
|
|||||||
|
Total
|
$
|
(89.8
|
)
|
$
|
45.2
|
$
|
71.5
|
$
|
50.3
|
||||
|
Discontinued
Ops
|
$
|
174.3
|
$
|
34.9
|
$
|
106.9
|
$
|
108.5
|
|||||
|
(1)
|
Includes
Aquarius since May 19, 2006.
|
|
(2)
|
Home
Fashion results included from August 8,
2005.
|
Fourth
Quarter 2006
For
the
fourth quarter of 2006, revenues decreased to $375.3 million from $404.5 million
during the fourth quarter of 2005. The decrease in revenues was primarily due
to
lower revenue from AREP’s Home Fashion segment in the fourth quarter of 2006.
AREP reported an operating loss of $26.7 million for the fourth quarter of
2006
compared to an operating loss of $0.8 million for the fourth quarter of 2005.
This loss is primarily attributable to operating losses at AREP’s Home Fashion
segment and the inclusion of restructuring and impairment charges of $12.0
million incurred by AREP’s Home Fashion segment for the fourth quarter of
2006.
The
following table presents results for the fourth quarter of 2006 and 2005 by
segment and for discontinued operations (in millions):
|
Operating
Income (Loss)
|
Depreciation
& Amortization
|
||||||||||||
|
For
three months:
|
2006
|
2005
|
2006
|
2005
|
|||||||||
|
Gaming
(1)
|
$
|
16.0
|
$
|
14.9
|
$
|
7.8
|
$
|
5.9
|
|||||
|
Real
Estate
|
4.0
|
7.8
|
1.8
|
1.4
|
|||||||||
|
Home
Fashion
|
(40.0
|
)
|
(17.3
|
)
|
5.4
|
12.5
|
|||||||
|
Holding
Company
|
(6.7
|
)
|
(6.2
|
)
|
2.9
|
0.8
|
|||||||
|
Total
|
$
|
(26.7
|
)
|
$
|
(0.8
|
)
|
$
|
17.9
|
$
|
20.6
|
|||
|
Discontinued
Ops
|
$
|
(19.6
|
)
|
$
|
66.1
|
$
|
22.0
|
$
|
27.8
|
||||
|
(1)
|
Includes
Aquarius since May 19, 2006.
|
-2-
Gaming
AREP’s
wholly-owned subsidiary, American Casino & Entertainment Properties LLC,
owns three Las Vegas casinos: Stratosphere Casino Hotel and Tower, Arizona
Charlie’s Decatur and Arizona Charlie’s Boulder, and one casino in Laughlin,
Nevada, the Aquarius Casino Resort, acquired on May 19, 2006.
For
2006,
AREP’s Gaming segment, excluding the Aquarius, had net revenues of $328.1
million, a slight increase from 2005, operating income of $59.1 million, a
decrease of 11.8% from 2005, and depreciation and amortization of $23.6 million.
For
the
fourth quarter of 2006, AREP’s Gaming
segment,
excluding the Aquarius, had net revenues of $81.7 million, a slight decrease
from the fourth quarter of 2005, operating income of $14.2 million, a decrease
of 4.9% from the fourth quarter of 2005, and depreciation and amortization
of
$6.0 million.
Real
Estate
AREP’s
Real Estate segment is comprised of three groups: rental real estate; property
development and resort operations.
For
2006,
real estate activities had revenues of $134.6 million, an increase of 34.2%
from
2005, operating income of $27.9 million, an increase of 56.7% from 2005, and
depreciation and amortization of $6.1 million.
For
the
fourth quarter of 2006, real estate activities had revenues of $31.8 million,
a
decrease of 5.4% from the fourth quarter of 2005, operating income of $4.0
million, a decrease of 48.7% from the fourth quarter of 2005, and depreciation
and amortization of $1.8 million.
Home
Fashion
AREP’s
Home Fashion segment is comprised of the operations of WestPoint International,
Inc., or WPI, an indirect subsidiary of AREP. On August 8, 2005, WPI completed
the acquisition of substantially all the assets of WestPoint Stevens Inc. Prior
to August 8, 2005, WPI did not have any operations. WPI is engaged in the
business of manufacturing, sourcing, marketing and distributing bed and bath
home fashion products.
For
2006,
AREP’s Home Fashion segment had revenues of $957.6 million, an operating loss of
$150.6 million and depreciation of $31.6 million. Included in the operating
loss
are $45.6 million of restructuring and impairment charges.
For
the
fourth quarter of 2006, AREP’s Home Fashion segment had net revenues of $236.6
million, a decrease of 18.2% from the fourth quarter of 2005, an operating
loss
of $40.0 million, an increase of 131.2% from the fourth quarter of 2005, and
depreciation and amortization of $5.4 million. Included in the operating loss
are $12.0 million of restructuring charges.
-3-
AREP
believes that much stronger results will be realized at the Home Fashion segment
in 2007 and that gross margins for the Home Fashion segment should more than
double on average from 6% in 2006, to the low teens by the end of 2007. AREP
believes that the Home Fashion segment may potentially reach a break-even EBITDA
by the end of the fourth quarter of 2007.
Discontinued
Operations
During
the fourth quarter, we sold our Atlantic City Gaming operations and Oil &
Gas operations for an aggregate gain of approximately $663.7 million, or a
return on investment of 21% and 49%, respectively.
Sale
of Atlantic City Gaming Operations
On
November 17, 2006, our indirect majority-owned subsidiary, Atlantic Coast
Entertainment Holdings, Inc., ACE Gaming LLC, or ACE, a New Jersey limited
liability company and a wholly-owned subsidiary of Atlantic Coast which owns
The
Sands Hotel and Casino in Atlantic City, AREH, and certain other entities owned
by or affiliated with AREH completed the sale to Pinnacle Entertainment, Inc.
of
the outstanding membership interests in ACE and 100% of the equity interests
in
certain subsidiaries of AREH which owned parcels of real estate adjacent to
The
Sands, including 7.7 acres of land known as the Traymore site. The aggregate
price was approximately $274.8 million, of which approximately $200.6 million
was paid to Atlantic Coast and approximately $74.2 million was paid to
affiliates of AREH for subsidiaries which owned the Traymore site and the
adjacent properties.
For
2006,
our Atlantic City Gaming activities had revenues of $138.4 million, a decrease
of 14.8% from 2005, and an operating loss of $13.1 million. For
the
fourth quarter of 2006, our Atlantic City Gaming activities had revenues of
$14.4 million, a decrease of 61.1% from the fourth quarter of 2005, and an
operating loss of $3.8 million.
Sale
of Oil & Gas Operations
On
November 21, 2006, we sold all of the issued and outstanding membership
interests of our indirect wholly-owned subsidiary, NEG Oil & Gas LLC, to
SandRidge Energy, Inc., formerly Riata Energy, Inc., for consideration
consisting of $1.025 billion in cash, 12,842,000 shares of SandRidge’s common
stock, valued at $18 per share at the date of closing, and the repayment by
SandRidge of $300.0 million of debt of NEG Oil & Gas.
On
November 21, 2006, National Energy Group, Inc., or NEGI, our majority-owned
subsidiary, sold its membership interest in NEG Holding LLC to NEG Oil & Gas
for approximately $260.8 million. NEG Oil & Gas owned the managing
membership interest in NEG Holding LLC, which constituted all of the membership
interests in NEG Holding LLC other than those held by NEGI.
For
2006,
our Oil & Gas activities had revenues of $353.5 million, an increase of
77.7% from 2005, and operating income of $183.3 million compared to operating
income of $37.5
-4-
million
for 2005. For the fourth quarter of 2006, our Oil & Gas activities had
revenues of $23.0 million, compared to $112.2 million for the fourth quarter
of
2005, and an operating loss of $17.6 million compared to operating income of
$66.2 million for the fourth quarter of 2005. 2006 results for our Oil & Gas
activities are presented for the period from January 1, 2006 through November
21, 2006, the date of the sale.
Holding
Company Activity
Total
general and administrative expenses (including acquisition costs) incurred
by
the Holding Company were $6.7 million for the fourth quarter of 2006 compared
to
$6.2 million for the fourth quarter of 2005 and $25.8 million for 2006 compared
to $17.1 million for 2005.
Conference
Call Information
AREP
will
discuss full year and fourth quarter results on a conference call and Webcast
on
Tuesday, March 6, 2007 at 10:00 a.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 dial-in number for the conference call
is
(800) 310-1961. There is no access code.
*
* *
American
Real Estate Partners, L.P. (NYSE: ACP), a master limited partnership, is a
diversified holding company engaged in three primary business segments: Gaming,
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 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
-5-
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
STATEMENTS OF OPERATIONS
(In
millions of dollars except per unit data)
(unaudited)
|
Three
Months Ended
December
31,
|
|||||||
|
2006
|
2005
|
||||||
|
Revenues
|
$
|
375.3
|
$
|
404.5
|
|||
|
Operating
income (loss)
|
$
|
(26.7
|
)
|
$
|
(0.8
|
)
|
|
|
Interest
expense
|
(27.5
|
)
|
(24.5
|
)
|
|||
|
Interest
income
|
16.9
|
7.4
|
|||||
|
Other
income (expense), net
|
10.7
|
3.5
|
|||||
|
Equity
in earnings of affiliate
|
3.1
|
0.8
|
|||||
|
Pre-tax
income (loss)
|
(23.5
|
)
|
(13.6
|
)
|
|||
|
Income
tax expense
|
(3.1
|
)
|
(4.8
|
)
|
|||
|
Minority
interests
|
18.5
|
7.7
|
|||||
|
Income
(loss) from continuing operations
|
(8.1
|
)
|
(10.7
|
)
|
|||
|
Income
(loss) from discontinued operations
|
573.5
|
73.7
|
|||||
|
Net
earnings (loss)
|
$
|
565.4
|
$
|
63.0
|
|||
|
Net
earnings (loss) attributable to:
|
|||||||
|
Limited
partners
|
$
|
554.1
|
$
|
61.7
|
|||
|
General
partner
|
11.3
|
1.3
|
|||||
|
$
|
565.4
|
$
|
63.0
|
||||
|
Net
earnings (loss) per LP unit:
|
|||||||
|
Basic
earnings (loss):
|
|||||||
|
Income
(loss) from continuing operations
|
$
|
(0.13
|
)
|
$
|
(0.17
|
)
|
|
|
Income
(loss) from discontinued operations
|
9.09
|
1.17
|
|||||
|
Basic
earnings (loss) per LP unit
|
$
|
8.96
|
$
|
1.00
|
|||
|
Weighted
average units
|
|||||||
|
outstanding
|
61,857
|
61,857
|
|||||
|
Diluted
earnings (loss):
|
|||||||
|
Income
(loss) from continuing operations
|
$
|
(0.13
|
)
|
$
|
(0.17
|
)
|
|
|
Income
(loss) from discontinued operations
|
9.09
|
1.17
|
|||||
|
Diluted
earnings (loss) per L.P. unit
|
$
|
8.96
|
$
|
1.00
|
|||
|
Weighted
average units and
|
|||||||
|
equivalent
units outstanding
|
61,857
|
61,857
|
|||||
APP-I-1
APPENDIX
II
CONSOLIDATED
STATEMENTS OF EARNINGS
In
millions of dollars except unit and per unit data
(unaudited)
|
Year
Ended
December
31,
|
|||||||
|
2006
|
2005
|
||||||
|
Revenues
|
$
|
1,477.9
|
$
|
901.0
|
|||
|
Operating
income (loss)
|
$
|
(89.8
|
)
|
$
|
45.3
|
||
|
Interest
expense
|
(106.6
|
)
|
(91.2
|
)
|
|||
|
Interest
income
|
52.7
|
42.8
|
|||||
|
Other
income (expense), net
|
99.3
|
(12.9
|
)
|
||||
|
Equity
in earnings of affiliate
|
12.6
|
1.4
|
|||||
|
Pre-tax
income (loss)
|
(31.8
|
)
|
(14.6
|
)
|
|||
|
Income
tax expense
|
(13.3
|
)
|
(18.2
|
)
|
|||
|
Minority
interests
|
68.2
|
10.1
|
|||||
|
Income
(loss) from continuing operations
|
23.1
|
(22.7
|
)
|
||||
|
Income
(loss) from discontinued operations
|
775.7
|
(3.0
|
)
|
||||
|
Net
earnings (loss)
|
$
|
798.8
|
$
|
(25.7
|
)
|
||
|
Net
earnings (loss) attributable to:
|
|||||||
|
Limited
partners
|
$
|
782.9
|
$
|
(20.3
|
)
|
||
|
General
partner
|
15.9
|
(5.4
|
)
|
||||
|
$
|
798.8
|
$
|
(25.7
|
)
|
|||
|
Net
earnings (loss) per LP unit:
|
|||||||
|
Basic
earnings (loss):
|
|||||||
|
Income
(loss) from continuing operations
|
$
|
0.40
|
$
|
(0.31
|
)
|
||
|
Income
(loss) from discontinued operations
|
12.29
|
(0.05
|
)
|
||||
|
Basic
earnings (loss) per LP unit
|
$
|
12.69
|
$
|
(0.36
|
)
|
||
|
Weighted
average units outstanding
|
61,857
|
54,085
|
|||||
|
Diluted
earnings (loss):
|
|||||||
|
Income
(loss) from continuing operations
|
$
|
0.40
|
$
|
(0.31
|
)
|
||
|
Income
(loss) from discontinued operations
|
12.29
|
(0.05
|
)
|
||||
|
Diluted
earnings (loss) per L.P. unit
|
$
|
12.69
|
$
|
(0.36
|
)
|
||
|
Weighted
average units and
|
|||||||
|
equivalent
units outstanding
|
61,857
|
54,085
|
|||||
APP-II-1
APPENDIX
III
CONSOLIDATED
SUMMARY BALANCE SHEET
(unaudited)
The
following table presents AREP’s consolidated summary balance sheet data as of
December
31, 2006 and December 31, 2005 ($ in millions):
|
December
31,
|
December
31,
|
||||||
|
2006
|
2005
|
||||||
|
Assets
|
|||||||
|
Cash
and cash equivalents
|
$
|
1,912.2
|
$
|
460.1
|
|||
|
Investments
|
539.1
|
720.5
|
|||||
|
Assets
of discontinued operations available for sale
|
47.5
|
1,177.4
|
|||||
|
Other
current assets
|
557.0
|
654.4
|
|||||
|
Total
current assets
|
3,055.8
|
3,012.4
|
|||||
|
Non-current
investments
|
179.9
|
100.3
|
|||||
|
Property,
plant and equipment
|
907.1
|
749.7
|
|||||
|
Other
assets
|
76.0
|
77.7
|
|||||
|
Intangible
assets
|
25.9
|
23.4
|
|||||
|
Total
assets
|
$
|
4,244.7
|
$
|
3,963.5
|
|||
|
Liabilities
|
|||||||
|
Current
liabilities
|
$
|
317.0
|
$
|
426.1
|
|||
|
Liabilities
of discontinued operations available for sale
|
—
|
489.6
|
|||||
|
Long-term
debt
|
1,185.0
|
1,111.7
|
|||||
|
Other
long term-term liabilities
|
22.2
|
24.0
|
|||||
|
Preferred
limited partnership units
|
117.7
|
112.0
|
|||||
|
Total
liabilities
|
1,641.9
|
2,163.4
|
|||||
|
Minority
interests
|
292.2
|
304.6
|
|||||
|
Partners’
equity
|
2,310.6
|
1,495.5
|
|||||
|
Total
liabilities and partners’ equity
|
$
|
4,244.7
|
$
|
3,963.5
|
|||
APP-III-1