Icahn
Enterprises L.P.
July 8,
2010
VIA
ELECTRONIC TRANSMISSION
AND
OVERNIGHT COURIER
Mr. Kevin
Woody
Accounting
Branch Chief
United
States Securities and Exchange Commission
100 F
Street, N.E.
Washington,
D.C. 20549
Re: Icahn
Enterprises L.P.
Form 10-K
for Fiscal Year ended December 31, 2009
Filed on
March 3, 2010
File No.
1-9516
-and-
Form 10-Q
for the Quarterly Period ended March 31, 2010
Filed on
May 6, 2010
Dear Mr.
Woody:
Reference
is made to the comments of the Staff of the Securities and Exchange Commission
(the “Staff”) in your letter dated June 23, 2010 (the “Comment Letter”) with
respect to the Annual Report on Form 10-K (the “2009 Form 10-K”) of Icahn
Enterprises L.P., a Delaware limited partnership (the “Company”), for the fiscal
year ended December 31, 2009 (“fiscal 2009”).
We are
writing to respond to the comments contained in the Comment
Letter. For your convenience, the Staff’s comments have been
retyped below in boldface type, and the Company’s responses are provided
immediately after each comment.
Form 10-K for the fiscal
year ended December 31, 2009
Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital
Resources, page 83
Contractual Commitments,
page 85
1.
Please tell us why the funding requirements beyond 2014 for your Pension and
other postretirement benefit plans are not available. It appears that as of
December 31, 2009, you were able to determine the projected benefit payments
applicable for your majority investment in Federal-Mogul Corporation, which
includes obligations for the five years following 2014 totaling $735 million as
of December 31, 2009.
In Note
14 to the Company’s consolidated financial statements contained in the 2009 Form
10-K, the Company disclosed that the projected benefit payments from the plans
for its majority investment in Federal-Mogul Corporation (“Federal-Mogul”) for
the five years subsequent to the fiscal year ending December 31, 2014 were $735
million as of December 31, 2009, comprised of the following amounts: $406
million for U.S. pension benefits, $127 million for non-U.S. pension benefits
and $202 million for other benefits.
767 Fifth
Avenue, New York, New York 10153 Telephone
(212) 702-4300 Fax (212) 750-5841
NYSE -
IEP
The
amounts shown in the contractual commitment table for the line item entitled,
“Pension and other postemployment benefit plans” in the 2009 Form 10-K relate to
the projected contributions that Federal-Mogul will be required to make into its
funded pension plans as well as direct benefit payments that Federal-Mogul will
make for other unfunded benefits.
The item
entitled, “Pension and other postemployment benefit plans” in the contractual
commitment table should have included a total of $447 million, comprised of the
following amounts: $202 million for other benefits and $127 million for direct
benefit payments for the fiscal years ending December 31, 2015 through 2019 and
$118 million for contributions into funded pension plans for the fiscal years
ending December 31, 2015 through 2016. Federal-Mogul’s external actuaries have
estimated that the pension plans are projected to be fully funded after the
combined total contributions of $118 million for the fiscal years ending
December 31, 2015 through 2016 have been made.
The
Company will include this more comprehensive disclosure in the contractual
commitment table in its future Annual Reports on Form 10-K filed with the
Securities and Exchange Commission (the “SEC”).
2.
We note that the maturity for Securities sold, not yet purchased are not subject
to contracts and therefore you have concluded that such amounts cannot be
properly estimated for inclusion within the contractual obligations table. With
regard to such repurchase agreements, please tell us your accounting policy for
such obligations (i.e., whether you account for any of those agreements as sales
or collateralized borrowings for accounting purposes in your financial
statements) and the amounts involved. Within your response, please quantify the
amount of contracts that have been accounted for as either collateralized
borrowings or sales and tell us how the lack of contractual maturity effects
your application of your accounting policy.
As of
December 31, 2009, the Company had $2 billion related to securities sold,
not yet purchased. As stated on page 85 of the Company’s 2009
Form 10-K under "Contractual Commitments," these amounts were not included
in the contractual commitment table because their maturities were not subject to
a contract and cannot be properly estimated. To clarify, there
is no maturity date for securities sold, not yet purchased. The
Company’s accounting policy with respect to securities sold, not yet purchased
as noted on Page 112 of the Company’s 2009 Form 10-K is as follows:
Securities Sold, Not Yet
Purchased. The Private Funds may sell an investment they do
not own in anticipation of a decline in the fair value of that investment. When
the Private 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 Private Funds sold the
investment short, or a loss, unlimited in amount, will be recognized upon the
cover of the short sale.
Historically
and at the current time, the Company has not entered into any form of
repurchase agreements with respect to any of its financial
instruments. In the future, should the Company have any repurchase
agreements, it will include those amounts in the contractual commitments table,
including a description of an accounting policy in the footnotes to the
Company’s financial statements with respect to such repurchase
agreements.
Item 7A. Quantitative and
Qualitative Disclosures About Market Risk
Automotive, page
99
Foreign Currency Risk, page
99
3.
Considering that fluctuations may vary significantly by currency, in future
filings please provide disclosure indicating the currencies for which your
Automotive segment is primarily exposed, as well as a sensitivity analysis for
each currency that may have an individually significant impact on future
earnings.
767 Fifth
Avenue, New York, New York 10153 Telephone
(212) 702-4300 Fax (212) 750-5841
NYSE -
IEP
The
Company acknowledges the Staff’s comment and will, in future filings, add
additional disclosure regarding our Automotive segment’s exposure to foreign
currencies in accordance with Item 305 of Regulation S-K. Such disclosure
will include currencies to which the Company’s Automotive segment is primarily
exposed, as well as a sensitivity analysis for each currency that may have an
individually significant impact on the Company’s Automotive segment’s
earnings.
Item 8. Financial Statements
and Supplementary Data
Consolidated Statements of
Cash Flows, page 107
4.
Please tell us how your presentation of Cash flows from operating activities,
which begins with Income (loss) from continuing operations and not Net income
(loss), complies with FASB Accounting Standards Codification (ASC)
230-10-45-28.
The
Company historically has disclosed net cash flows from discontinued operations
separate from net cash flows from continuing operations. We note the
Staff’s comment and, in applicable future filings with the SEC, the Company will
present cash flows from operating activities to directly reconcile net income to
net cash flows from operating activities by adjusting net income for income from
discontinued operations.
Item 11.
Executive
Compensation, page 191
5.
We note that you have not included any disclosure in response to Item 402(s) of
Regulation S-K. Please tell us of the basis for your conclusion that disclosure
is not necessary, and describe the process you undertook to reach that
conclusion.
In its
preparation of Part III, Item 11 (Executive Compensation), of its
2009 Form 10-K, the Company reviewed the requirements of Regulation S-K Item
402(s), narrative disclosure of compensation policies and practices as they
might relate to the Company’s risk management. The Company
concluded that the risks arising from its compensation policies and practices
for its employees are not reasonably likely to have a material adverse effect on
the Company.
In its
analysis of potential disclosure requirements under Regulation S-K Item 402(s),
the Company reviewed the examples provided therein that may trigger disclosure,
including, among others, compensation policies and practices: at a
business unit of the company that carries a significant portion of the
registrant's risk profile; at a business unit with compensation structured
significantly differently than other units within the registrant; at a business
unit that is significantly more profitable than others within the registrant; at
a business unit where compensation expense is a significant percentage of the
unit's revenues; and that vary significantly from the overall risk and reward
structure of the registrant, such as when bonuses are awarded upon
accomplishment of a task, while the income and risk to the registrant from the
task extend over a significantly longer period of time.
The
Company undertook a comprehensive review of its material compensation policies
and practices and those of each of its subsidiaries. The review addressed each
element of material short-term and long-term compensation arrangements of the
Company and its subsidiaries. The Company further reviewed its
compensation policies and practices for any other possible scenarios including
the specific examples provided in Regulation S-K Item 402(s) that might
reasonably be likely to have a material adverse effect on the Company, and thus
trigger disclosure in response to Regulation S-K Item 402(s), and concluded that
none existed for the Company and/or its subsidiaries, individually.
Compensation Discussion and
Analysis, page 191
6.
We note that you have identified Messrs. Icahn, Meister, Ragone and Shea as your
named executive officers for 2009. Please tell as what consideration you gave in
deciding not to include Mr. Vincent J. Intrieri and members of your
subsidiaries' senior management as named executive officers. Please refer to
Item 402(a)(3) and the instructions thereto.
767 Fifth
Avenue, New York, New York 10153 Telephone
(212) 702-4300 Fax (212) 750-5841
NYSE -
IEP
Mr.
Vincent J. Intrieri serves as a member of the Board of Directors of Icahn
Enterprises G.P. Inc., the Company’s general partner (“Icahn Enterprises
GP”). Mr. Intrieri does not hold an executive position with the
Company nor is he an “executive officer” of the Company as such term is defined
in Rule 3b-7 under the Securities Exchange Act of 1934, as
amended. In addition, Mr. Intrieri serves as Senior Managing
Director of Icahn Capital L.P., an indirect wholly owned subsidiary of the
Company, which constitutes its Investment Management segment (“Icahn
Capital”). In such capacity, Mr. Intrieri’s responsibilities and
duties are limited to Icahn Capital.
The
instructions to Regulation S-K Item 402(a)(3), specifically “Inclusion of
Executive Officer of Subsidiary,” state that it may be appropriate for a
registrant to include as named executive officers one or more executive officers
or other employees of subsidiaries and references Rule 3b-7. In
particular, Rule 3b-7 states that executive officers of subsidiaries may be
deemed executive officers of the registrant if they perform policy-making
functions for the registrant. Neither Mr. Intrieri, in his capacity
as Senior Managing Director of Icahn Capital, nor other subsidiaries’ senior
management, perform such policy-making functions for the Company and, thus, are
not deemed executive officers of the Company. Compensation received
by Mr. Intrieri in his capacity as Senior Managing Director of Icahn Capital was
reported in the Directors Compensation table on page 206 of the 2009 Form 10-K,
as detailed in Footnote 1 thereof.
Summary Compensation Table,
page 195
7.
Please tell us how you calculated the $1,229,743 salary amount paid to Mr.
Meister in 2009. Footnote (4) to the table indicates that his salary for 2009
consisted of an annual salary of $300,000 plus a Net Target Special Profits
Interest Amount of $887,435, which would be a total of $1,187,435. Also, please
explain why you included the Net Target Special Profits Interest Amount in Mr.
Meister's base salary column.
Pursuant
to various employment agreements then in effect, Mr. Meister’s annual salary for
fiscal 2009 was calculated as follows: (i) an amount of $164,615,
representing an annual base salary of $400,000, pro rated for the period January
1, 2009 through May 31, 2009 and an amount of $177,693, representing an annual
base salary of $300,000, pro rated for the period June 1, 2009 through December
31, 2009, for an aggregate amount of $342,308 for fiscal 2009; and (ii) a Net
Target Special Profits Interest Amount of $887,435, for an aggregate total
salary of $1,229,743. The Company will include such detailed disclosure in
its future Annual Reports on Form 10-K filed with the SEC.
As
described in the 2009 Form 10-K, Part III, Item 11 (Executive Compensation),
under the section entitled "Employment Agreements-Meister Employment Agreement,"
commencing on page 198, Mr. Meister was entitled to receive a portion
of the Net Target Special Profits Interest Amount as an employee of Icahn
Capital (reportable as salary on a Form W-2) and, prior to June 1, 2009, a
portion of the Net Special Profits Interest Allocation as a partner of Icahn
Onshore LP and Icahn Offshore LP (collectively referred to as the “General
Partners”) (not reportable as salary on a Form W-2). Accordingly, the
amount of Net Target Special Profits Interest Amount for Mr. Meister of $887,435
included in ”Salary” in the Summary Compensation Table reflects the amount Mr.
Meister received as cash compensation as an employee of Icahn Capital, and the
amount of Net Target Special Profits Interest Allocation of $2,306,777 included
in “All Other Compensation” in the Summary Compensation Table reflects the
amount received by Mr. Meister as a partner of the General Partners, which is
discussed in more detail below.
8.
We refer to footnote (4) to the Summary Compensation Table and note that Mr.
Meister received other compensation of $2,306,777 as a percentage of Net Special
Profits Interest Allocation. Please tell us the amount of the Net Special
Profits Interest Allocation for 2009 and how you calculated this amount. Confirm
for us that you will include similar disclosure in future filings. In addition,
as discussed on page 201, it appears that Mr. Meister received a one-time
payment of $3,427,662 in 2009. Please tell us where in the Summary Compensation
Table this has been disclosed, or why it has been omitted.
As
described in the 2009 Form 10-K, Part III, Item 11 (Executive Compensation),
under the section entitled "Employment Agreements-Meister Employment Agreement,"
Mr. Meister was entitled to receive a portion of the Net Target Special Profits
Interest Amount as an employee of Icahn Capital, as discussed in our response to
Comment 7 above. He was also entitled to receive, prior to June 1, 2009
(as discussed further below), a portion of the Target Special Profits Interest
Amount (subject to certain adjustments and expenses and, as adjusted, referred
to as the Net Special Profits Interest Allocation) as a partner in the General
Partners.
767 Fifth
Avenue, New York, New York 10153 Telephone
(212) 702-4300 Fax (212) 750-5841
NYSE -
IEP
The
following table details Mr. Meister’s share of the Net Special Profits Interest
Allocation for fiscal 2009:
|
Balance
of
|
||||||||||
|
Target
Special
|
||||||||||
|
Profits
Interest Amount
|
Mr.
Meister's
|
|||||||||
|
Description
|
Period
Covered
|
for
all Investment Funds
|
Share
|
|||||||
|
Gross
Target Special Profits Interest Amount(1)
|
Fiscal
2008
|
$ | 122,391,451 | $ | 2,353,787 |
(2)
|
||||
|
Forgiven
special profits interest amount(1)
|
Fiscal
2008
|
(14,191,576) | (274,662) | |||||||
|
Hypothetical
return and other activity(1)
|
Fiscal
2008
|
(37,831,533) | (734,992) | |||||||
|
Sub-total
balance for Fiscal 2008
|
|
70,368,342 |
(4)
|
1,344,133 | ||||||
|
Gross
Target Special Profits Interest Amount(1)
|
Fiscal
2009(5)
|
53,769,407 | 451,203 |
(3)
|
||||||
|
Hypothetical
return and other activity(1)
|
Fiscal
2009(5)
|
29,580,801 | 511,441 | |||||||
|
Sub-total
balance for Fiscal 2009
|
83,350,208 | 962,644 | ||||||||
|
Grand
Total
|
$ | 153,718,550 | $ | 2,306,777 | ||||||
|
1
|
See
below for detailed narrative description of the calculation of "Target
Special Profits Interest Amount" and appropriate
adjustments.
|
|
2
|
Net
Target Special Profits Interest Allocation for fiscal 2008 was
$94,151,493. Mr. Meister's 2.5% share of this amount was
$2,353,787.
|
|
3
|
Net
Target Special Profits Interest Allocation for the period January 1, 2009
through May 31, 2009 was $16,793,712. Mr.
Meister's 2.5% share of this amount was $419,842 plus an adjustment amount
of $31,360.
|
|
4
|
In
fiscal 2008, the Investment Funds had losses and therefore did not
generate sufficent profits to meetthe Target Special Profits
Interest Amount. Accordingly the shortfall amount of
$70,368,342 was carried forward to fiscal
2009.
|
|
5
|
As
discussed below, Mr. Meister was no longer entitled to receive a share of
the Net Target Special Profits Interest Allocation as a partner of
the General Partners after May 31,
2009.
|
Pursuant
to his employment contracts then in effect, Mr. Meister was entitled to 2.5% of
the Net Target Special Profit Interest Allocation for the period January 1, 2008
through May 31, 2009. Mr. Meister was allocated a portion of
the forgiven special profits interest amount, hypothetical return and other
activity based on his pro-rata share of the balance in the Target Special
Profits Interest Amount account.
The
“Target Special Profits Interest Amount” is calculated as follows:
Pursuant
to various employment agreements then in effect, as a partner in the General
Partners, Mr. Meister was entitled to receive a portion of the special profits
interest allocations allocated to the General Partners from the Private Funds
(as defined in the 2009 Form 10-K). As discussed in detail on page 3 of
the Company’s 2009 Form 10-K, the applicable General Partner is eligible to
receive a special profits interest allocation, generally at the end of each
calendar year. This allocation is generally equal to 0.625% (prior to July 1,
2009) of the balance in each fee-paying capital account as of the beginning of
each quarter (referred to as the “Target Special Profits Interest Amount”)
except that amounts are allocated to the General Partners in respect of special
profits interest allocations only to the extent net increases (i.e., net
profits) are allocated to an Investor for the fiscal year. Accordingly,
any special profits interest allocations allocated to the General Partners in
any year cannot exceed the net profits allocated to such Investor. In the
event that sufficient net profits are not generated by an Investment Fund with
respect to a capital account to meet the full Target Special Profits Interest
Amount, a special profits interest allocation will be made for an Investor in a
calendar year to the extent of such net profits, if any, and the shortfall will
be carried forward and added to the Target Special Profits Interest Amount
determined for such Investor in the next calendar year. In the event that
an Investor redeems in full from a Feeder Fund or the Onshore Fund before the
full Target Special Profits Interest Amount determined for such Investor has
been allocated to the General Partners in the form of a special profits interest
allocation, the Target Special Profits Interest Amount that has not yet been
allocated to the General Partner will be eliminated and the General Partner will
never receive it (i.e., amounts are “forgiven”).
767 Fifth
Avenue, New York, New York 10153 Telephone
(212) 702-4300 Fax (212) 750-5841
NYSE -
IEP
Each
Target Special Profits Interest Amount will be deemed contributed to a separate
hypothetical capital account in the applicable Investment Fund and any gains or
losses that would have been allocated on such amounts will be credited or
debited, as applicable, to such hypothetical capital account. The special
profits interest allocation attributable to an Investor will be deemed to be
made (and thereby debited) from such hypothetical capital account and,
accordingly, the aggregate amount of any special profits interest allocation
attributable to such Investor will also depend upon the investment returns of
the Investment Funds in which such hypothetical capital account is
maintained.
Effective
June 1, 2009, the Company and Icahn Capital entered into a new employment
contract with Mr. Meister (the “June 2009 Meister Employment Agreement”)
terminating Mr. Meister’s right to receive a share of the Net Target Special
Profits Interest Allocation as a partner of the General Partners; other than an
immaterial amount of unearned Net Target Special Profits Interest Allocation at
December 31, 2009, Mr. Meister will no longer earn any special profits interest
allocation as a partner of the General Partner. In addition, pursuant to
the June 2009 Meister Employment Agreement, Mr. Meister will earn Net Target
Special Profits Interest Amounts, irrespective of the net profits allocated to
an Investor, as an employee of Icahn Capital. In its future Annual
Reports on Form 10-K filed with the SEC, the Company will provide additional
information regarding the calculation of the Net Target Special Profits Interest
Amounts earned by Mr. Meister.
Pursuant
to the June 2009 Meister Employment Agreement entered into among Mr. Meister,
the Company and Icahn Capital, Mr. Meister received partnership distributions
from the General Partners of $3,427,662. These distributions included balances
resulting from prior year incentive allocations that had been re-invested and
earnings on such re-invested incentive allocations from the Private Funds since
inception in fiscal 2004 through May 31, 2009. These amounts were included in
"All Other Compensation" in the Summary Compensation Table for the fiscal years
2007 through 2009. For a detailed discussion regarding prior year
incentive allocations that had been re-invested and earnings thereon, see pages
196 and 197 of the Company’s 2009 Form 10-K.
Ragone Employment Agreement,
page 202
9.
We note that for fiscal 2009, Mr. Ragone received a discretionary bonus of
$1,150,000 and an additional special bonus of $195,925 pursuant to the terms of
his employment agreement. Please tell us the factors considered by the board in
determining the amount of discretionary bonus, and tell us how the special bonus
amount was calculated. For the special bonus, we note that specified deductions
are taken from a baseline bonus amount. Please clarify how the baseline amount
was established, and discuss the deductions and any other factors that were
considered in determining the bonus amount. Confirm for us that you will include
similar disclosure in your future filings.
The
factors considered by the Board of Directors in determining the amount of Mr.
Ragone’s discretionary bonus include his overall job performance, job
responsibilities, including unique skills necessary to support the Company’s
long-term performance, including that of the Company’s subsidiaries, and
teamwork. The special bonus amount is calculated in accordance with the terms of
Mr. Ragone’s employment agreement, which is $1,200,000 less a transition bonus
of $612,225 received by Mr. Ragone from his former employer. The balance of
$587,775 is being paid to Mr. Ragone in three equal installments on the first
business day in July 2009, July 2010 and July 2011. The Company will include
similar disclosure in its future Annual Reports on Form 10-K filed with the
SEC.
767 Fifth
Avenue, New York, New York 10153 Telephone
(212) 702-4300 Fax (212) 750-5841
NYSE -
IEP
Item 12. Security Ownership
of Certain Beneficial Owners and Management, page 208
10.
We refer to the beneficial ownership table. Footnote 1 to the table and
disclosure on page 1 of the 10-K states that Mr. Icahn, through affiliates, is
the owner of 68,644,590 depositary units. The table, however, notes that Mr.
Icahn is the beneficial owner of 74,792,659 depositary units. Please advise. If
the table reflects holdings of Icahn Enterprises G.P. Inc., please provide with
your response a table that reflects the beneficial ownership of Icahn
Enterprises L.P.
Footnote
1 to the Beneficial Ownership Table on Page 208 of the Company’s 2009 Form 10-K
to the table incorrectly stated that “Carl C. Icahn, through his affiliates, is
the beneficial owner of the 68,644,590 depositary units set forth
above.” The number of depositary units that Carl Icahn (through his
affiliates) owned as noted in Footnote 1 should have been 74,792,659, reflecting
his depositary unit ownership as of March 1, 2010. Icahn Enterprises
GP does not hold any of the Company’s depositary units and, thus, no such
holdings were included in the beneficial ownership table.
11.
We refer to the beneficial ownership table and note that six persons are
included in "all directors and executive officers as a group." It would appear
from your disclosure, however, that this group should comprise seven
individuals, your six board members plus Mr. Ragone, your chief financial
officer. Please confirm for us the correct number.
The
correct number of directors and executive officers as of March 1, 2010 should
have been seven. The beneficial ownership and percent of class for
each of the depositary and preferred units as stated for the group therein were
otherwise correct.
Item 14, Principal
Accountant Fees and Services, page 211
12.
Please confirm that you will revise future filings to separately disclose audit
fees and audit-related fees billed in each of the last two fiscal years. It
appears that your current disclosure combines these amounts. Refer to Item 9(e)
of Schedule 14A.
The
Company notes that all services provided by its principal accountants in fiscal
2009 and fiscal 2008 were properly disclosed as audit fees in accordance with
Item 9(e) of Schedule 14A since all services provided were in connection with
regulatory filings. However, the Company also notes that the description of
audit fees in Item 14 of the 2009 Form 10-K performed during fiscal 2009 and
fiscal 2008 inaccurately included “assistance with offering documents,” as the
Company did not incur any such fees. In future Annual Reports on Form
10-K filed with the SEC, the Company will revise the description of audit fees
to properly describe services identified as such.
As stated
in the “Application of the Commission's Rules on Auditor Independence Frequently
Asked Questions,” question number 7 (issued August 13, 2003), the Staff
describes various services to be considered for disclosure as audit-related fees
as:
“In
general, ‘Audit-Related Fees’ are assurance and related services (e.g., due
diligence services) that traditionally are performed by the independent
accountant. More specifically, these services would include, among others:
employee benefit plan audits, due diligence related to mergers and acquisitions,
accounting consultations and audits in connection with acquisitions, internal
control reviews, attest services related to financial reporting that are not
required by statute or regulation and consultation concerning financial
accounting and reporting standards”.
The
Company notes that no audit-related services were performed by the Company’s
principal accountants in fiscal 2009 or fiscal 2008 and, therefore, concluded
that no disclosure was necessary. To the extent that the Company incurs
audit-related fees in the future, it will appropriately disclose them separate
from audit fees.
767 Fifth
Avenue, New York, New York 10153 Telephone
(212) 702-4300 Fax (212) 750-5841
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IEP
Form 10-Q for period ended
March 31, 2010
Item 1. Financial
Statements
Notes to Consolidated
Financial Statements
Description of Business and
Basis of Presentation
Change in Reporting Entity,
page 6
13.
It does not appear that Mr. Icahn and his affiliates owned 100% of the interests
in American Railcar Industries, Inc. ("ARI") and Viskase Companies, Inc.
("Viskase") immediately preceding the contribution of such companies'
controlling interests to you. If Mr. Icahn and his affiliates did not own 100%
of the outstanding interests in ARI and Viskase prior to the company's
acquisition, please tell us how you have accounted for such non-controlling
interests. Please cite accounting literature relied upon.
As per
ASC 805-10-15-4, the guidance in the Business Combinations Topic does not apply
to transfers of entities under common control. The accounting for common control
transactions is set forth in ASC 805-50-30-5 which states:
“When
accounting for a transfer of assets or exchange of shares between entities under
common control, the entity that receives the net assets or the equity interests shall initially measure the recognized
assets and liabilities transferred at their carrying amounts in the accounts of
the transferring entity at the date of transfer.
If the carrying amounts of the assets and
liabilities transferred differ from the historical cost of the parent of the
entities under common control, for example, because pushdown accounting had not been applied, then the
financial statements of the receiving entity shall reflect the transferred
assets and liabilities at the historical cost of the parent of the entities
under common control.”
The
Company recorded the non-controlling interests relating to ARI and Viskase at
their historical basis. This is consistent with the common control “as-if
pooling” accounting methodology because common control transactions, by
definition, do not result in a change in control. This concept is supported by
ASC 810-10-30-1, which addresses transfers of common control entities from a primary beneficiary to a variable interest entity (“VIE”). This
guidance provides that the primary beneficiary shall initially measure the
assets, liabilities and non-controlling interests
of the VIE at amounts at which they are carried in the accounts of the reporting
entity that controls the VIE.
In
connection with responding to the Comment Letter, the Company acknowledges
that:
|
•
|
the
Company is responsible for the adequacy and accuracy of the disclosure in
its filings;
|
|
•
|
Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the SEC from taking any action with respect to its filings;
and
|
|
•
|
the
Company may not assert Staff comments as a defense in any proceeding
initiated by the SEC or any person under the federal securities laws of
the United States.
|
Please
contact me should you have any questions or additional comments.
Very
truly yours,
/s/
Dominick Ragone
Dominick
Ragone
Chief
Financial Officer
Icahn
Enterprises G.P. Inc., the General Partner of
Icahn
Enterprises L.P.
cc: Keith
A. Meister (Icahn Enterprises L.P.)
767 Fifth
Avenue, New York, New York 10153 Telephone
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