UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 10-Q

 
 	 	 	
(Mark One)	 	  	
x	 	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934	
For the Quarterly Period Ended June 30, 2008
OR
 	 	 	
o	 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934	
For the Transition Period from to 
Commission File Number 1-9516

 
ICAHN ENTERPRISES L.P.
(Exact Name of Registrant as Specified in Its Charter)

 
 	 	 	
Delaware	 	13-3398766	
(State or Other Jurisdiction of
Incorporation or Organization)	 	(IRS Employer
Identification No.)	
767 Fifth Avenue, Suite 4700
New York, NY 10153
(Address of Principal Executive Offices) (Zip Code)
(212) 702-4300
(Registrant’s Telephone Number, Including Area Code)

 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One).
 	 	 	
Large Accelerated Filer o	 	Accelerated Filer x	
Non-accelerated Filer o	 	Smaller Reporting Company o	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No  x
As of August 8, 2008, there were 70,489,510 depositary units and 12,502,254 preferred units outstanding.

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P.
INDEX
 	 	 	
 	 	Page	
PART I. FINANCIAL INFORMATION
	 	 	  	 	
Item 1.Financial Statements	 	 	1	 	
Consolidated Balance Sheets – June 30, 2008 (unaudited) and December 31, 2007	 	 	1	 	
Consolidated Statements of Operations – Three Months Ended June 30, 2008 and 2007 (unaudited)	 	 	2	 	
Consolidated Statements of Operations – Six Months Ended June 30, 2008 and 2007 (unaudited)	 	 	3	 	
Consolidated Statement of Changes in Partners’ Equity and Comprehensive Income –  Six Months Ended June 30, 2008 (unaudited)	 	 	4	 	
Consolidated Statements of Cash Flows – Six Months Ended June 30, 2008 and 2007 (unaudited)	 	 	5	 	
Notes to Consolidated Financial Statements
	 	 	  	 	
1.Description of Business and Basis of Presentation	 	 	7	 	
2.Operating Units	 	 	9	 	
3.Discontinued Operations and Assets Held for Sale	 	 	17	 	
4.Related Party Transactions	 	 	19	 	
5.Investments and Related Matters	 	 	21	 	
6.Fair Value Measurements	 	 	24	 	
7.Financial Instruments, Off-Balance-Sheet Risk, Concentrations of Credit Risk and Guarantees	 	 	25	 	
8.Inventories, Net	 	 	27	 	
9.Property, Plant and Equipment, Net	 	 	28	 	
10.Non-Controlling Interests	 	 	28	 	
11.Debt	 	 	29	 	
12.Compensation Arrangements	 	 	31	 	
13.Employee Benefit Plans	 	 	33	 	
14.Preferred Limited Partnership Units	 	 	33	 	
15.Earnings Per LP Unit	 	 	35	 	
16.Segment Reporting	 	 	35	 	
17.Income Taxes	 	 	38	 	
18.Commitments and Contingencies	 	 	39	 	
19.Subsequent Events	 	 	42	 	
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of
Operations	 	 	44	 	
1.Overview	 	 	45	 	
2.Results of Operations	 	 	46	 	
3.Liquidity and Capital Resources	 	 	64	 	
4.Critical Accounting Policies and Estimates	 	 	68	 	
5.Recently Issued Accounting Pronouncements	 	 	69	 	
6.Forward-Looking Statements	 	 	70	 	
Item 3.Quantitative and Qualitative Disclosures About Market Risk	 	 	70	 	
Item 4.Controls and Procedures	 	 	70	 	
PART II. OTHER INFORMATION
	 	 	  	 	
Item 1.Legal Proceedings	 	 	72	 	
Item 1A.Risk Factors	 	 	73	 	
Item 6.Exhibits	 	 	73	 	
Signatures	 	 	74	 	
Exhibits Index	 	 	75	 	
i

TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
CONSOLIDATED BALANCE SHEETS
(In $000s, except unit amounts)
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
  	 	(unaudited)	 	  	
ASSETS
	 	 	  	 	 	 	  	 	
Investment Management Operations:
	 	 	  	 	 	 	  	 	
Cash and cash equivalents	 	$	11,649	 	 	$	26,027	 	
Cash held at consolidated affiliated partnerships and restricted cash	 	 	2,102,613	 	 	 	1,104,748	 	
Securities owned, at fair value	 	 	6,433,524	 	 	 	5,920,209	 	
Unrealized gains on derivative contracts, at fair value	 	 	79,522	 	 	 	110,181	 	
Due from brokers	 	 	716,849	 	 	 	847,891	 	
Other assets	 	 	26,958	 	 	 	40,831	 	
  	 	 	9,371,115	 	 	 	8,049,887	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Cash and cash equivalents	 	 	2,074,985	 	 	 	2,086,805	 	
Restricted cash	 	 	1,182,604	 	 	 	41,681	 	
Investments	 	 	279,088	 	 	 	512,560	 	
Unrealized gains on derivative contracts, at fair value	 	 	1,324	 	 	 	2,621	 	
Inventories, net	 	 	245,635	 	 	 	266,223	 	
Trade, notes and other receivables, net	 	 	248,092	 	 	 	178,990	 	
Assets of discontinued operations held for sale	 	 	15,113	 	 	 	632,277	 	
Property, plant and equipment, net	 	 	520,423	 	 	 	533,127	 	
Goodwill and intangible assets	 	 	41,151	 	 	 	39,579	 	
Other assets	 	 	101,365	 	 	 	89,896	 	
  	 	 	4,709,780	 	 	 	4,383,759	 	
Total Assets	 	$	14,080,895	 	 	$	12,433,646	 	
LIABILITIES AND PARTNERS’ EQUITY
	 	 	  	 	 	 	  	 	
Investment Management Operations:
	 	 	  	 	 	 	  	 	
Accounts payable, accrued expenses and other liabilities	 	$	238,064	 	 	$	116,990	 	
Deferred management fee payable to related party	 	 	130,266	 	 	 	143,972	 	
Due to broker	 	 	847,256	 	 	 	—	 	
Subscriptions received in advance	 	 	4,250	 	 	 	144,838	 	
Payable for purchases of securities	 	 	6,600	 	 	 	46,055	 	
Securities sold, not yet purchased, at fair value	 	 	1,114,828	 	 	 	206,128	 	
Unrealized losses on derivative contracts, at fair value	 	 	157,425	 	 	 	15,726	 	
  	 	 	2,498,689	 	 	 	673,709	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Accounts payable, accrued expenses and other liabilities	 	 	203,372	 	 	 	193,611	 	
Accrued income taxes	 	 	237,888	 	 	 	8,641	 	
Unrealized losses on derivative contracts, at fair value	 	 	8,631	 	 	 	3,462	 	
Accrued environmental costs	 	 	24,614	 	 	 	24,296	 	
Liabilities of discontinued operations held for sale	 	 	3,749	 	 	 	317,345	 	
Debt	 	 	2,035,376	 	 	 	2,041,453	 	
Preferred limited partnership units	 	 	126,589	 	 	 	123,538	 	
  	 	 	2,640,219	 	 	 	2,712,346	 	
Total Liabilities	 	 	5,138,908	 	 	 	3,386,055	 	
Commitments and contingencies (Note 18)
	 	 	  	 	 	 	  	 	
Non-controlling interests:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	 	6,179,469	 	 	 	6,594,014	 	
All Other Operations	 	 	123,283	 	 	 	140,549	 	
Partners’ equity:
	 	 	  	 	 	 	  	 	
Limited partners:
	 	 	  	 	 	 	  	 	
Depositary units; 92,400,000 authorized; issued 71,626,710 at June 30, 2008 and December 31, 2007; outstanding 70,489,510 at June 30, 2008 and December 31, 2007	 	 	3,400,581	 	 	 	3,056,598	 	
General partner	 	 	(749,425	) 	 	 	(731,649	) 	
Treasury units at cost: 1,137,200 depositary units	 	 	(11,921	) 	 	 	(11,921	) 	
Partners’ equity	 	 	2,639,235	 	 	 	2,313,028	 	
Total Liabilities and Partners’ Equity	 	$	14,080,895	 	 	$	12,433,646	 	

See notes to consolidated financial statements.
1

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF OPERATIONS
(In 000s, except per unit amounts)
 	 	 	 	 	
 	 	Three Months Ended June 30,	
  	 	2008	 	2007	
  	 	(unaudited)	
Revenues:
	 	 	  	 	 	 	  	 	
Investment Management Operations:
	 	 	  	 	 	 	  	 	
Interest, dividends and other income	 	$	62,982	 	 	$	42,857	 	
Net (loss) gain from investment activities	 	 	(772,533	) 	 	 	323,366	 	
Management fees, related parties	 	 	—	 	 	 	2,565	 	
  	 	 	(709,551	) 	 	 	368,788	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Metals	 	 	434,106	 	 	 	214,493	 	
Real Estate	 	 	24,329	 	 	 	25,948	 	
Home Fashion	 	 	96,018	 	 	 	151,111	 	
Interest and other income	 	 	16,731	 	 	 	41,383	 	
Net loss from investment activities	 	 	(9,455	) 	 	 	(17,843	) 	
Other income (expense), net	 	 	(1,868	) 	 	 	(780	) 	
  	 	 	559,861	 	 	 	414,312	 	
Total revenues	 	 	(149,690	) 	 	 	783,100	 	
Expenses:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	 	6,494	 	 	 	35,090	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Metals	 	 	371,090	 	 	 	209,441	 	
Real Estate	 	 	21,415	 	 	 	24,421	 	
Home Fashion	 	 	120,119	 	 	 	202,638	 	
Holding Company	 	 	7,602	 	 	 	3,860	 	
Interest expense	 	 	36,103	 	 	 	35,515	 	
  	 	 	556,329	 	 	 	475,875	 	
Total expenses	 	 	562,823	 	 	 	510,965	 	
(Loss) income from continuing operations before income taxes and
non-controlling interests in (income) loss	 	 	(712,513	) 	 	 	272,135	 	
Income tax expense	 	 	(22,290	) 	 	 	(2,190	) 	
Non-controlling interests in (income) loss:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	 	630,012	 	 	 	(246,446	) 	
All Other Operations	 	 	7,872	 	 	 	20,116	 	
  	 	 	637,884	 	 	 	(226,330	) 	
(Loss) income from continuing operations	 	 	(96,919	) 	 	 	43,615	 	
Discontinued operations:
	 	 	  	 	 	 	  	 	
Income from discontinued operations, net of income taxes	 	 	189	 	 	 	19,254	 	
Non-controlling interests in (income) loss	 	 	(4	) 	 	 	519	 	
(Loss) gain on dispositions, net of income taxes	 	 	(2,109	) 	 	 	841	 	
(Loss) income from discontinued operations	 	 	(1,924	) 	 	 	20,614	 	
Net (loss) earnings	 	$	(98,843	) 	 	$	64,229	 	
Net (loss) earnings attributable to:
	 	 	  	 	 	 	  	 	
Limited partners	 	$	(96,876	) 	 	$	(25,010	) 	
General partner	 	 	(1,967	) 	 	 	89,239	 	
  	 	$	(98,843	) 	 	$	64,229	 	
Net (loss) earnings per LP unit:
	 	 	  	 	 	 	  	 	
Basic and diluted earnings (loss):
	 	 	  	 	 	 	  	 	
Loss from continuing operations	 	$	(1.35	) 	 	$	(0.73	) 	
(Loss) income from discontinued operations	 	 	(0.02	) 	 	 	0.33	 	
Basic and diluted loss per LP unit	 	$	(1.37	) 	 	$	(0.40	) 	
Weighted average LP units outstanding	 	 	70,490	 	 	 	61,857	 	
Cash dividends declared per LP unit	 	$	0.25	 	 	$	0.15	 	

See notes to consolidated financial statements.
2

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF OPERATIONS
(In 000s, except per unit amounts)
 	 	 	 	 	
 	 	Six Months Ended June 30,	
  	 	2008	 	2007	
  	 	(unaudited)	
Revenues:
	 	 	  	 	 	 	  	 	
Investment Management Operations:
	 	 	  	 	 	 	  	 	
Interest, dividends and other income	 	$	103,103	 	 	$	81,924	 	
Net (loss) gain from investment activities	 	 	(798,596	) 	 	 	687,875	 	
Management fees, related parties	 	 	—	 	 	 	3,376	 	
  	 	 	(695,493	) 	 	 	773,175	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Metals	 	 	736,941	 	 	 	423,379	 	
Real Estate	 	 	46,914	 	 	 	53,992	 	
Home Fashion	 	 	209,874	 	 	 	347,749	 	
Interest and other income	 	 	38,747	 	 	 	72,643	 	
Net (loss) gain from investment activities	 	 	(7,284	) 	 	 	61,491	 	
Other income (expense), net	 	 	(1,893	) 	 	 	5,082	 	
  	 	 	1,023,299	 	 	 	964,336	 	
Total revenues	 	 	327,806	 	 	 	1,737,511	 	
Expenses:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	 	21,591	 	 	 	62,481	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Metals	 	 	647,291	 	 	 	405,131	 	
Real Estate	 	 	40,481	 	 	 	47,731	 	
Home Fashion	 	 	257,894	 	 	 	435,987	 	
Holding Company	 	 	15,003	 	 	 	11,539	 	
Interest expense	 	 	72,321	 	 	 	63,292	 	
  	 	 	1,032,990	 	 	 	963,680	 	
Total expenses	 	 	1,054,581	 	 	 	1,026,161	 	
(Loss) income from continuing operations before income taxes and
non-controlling interests in (income) loss	 	 	(726,775	) 	 	 	711,350	 	
Income tax expense	 	 	(32,725	) 	 	 	(3,855	) 	
Non-controlling interests in (income) loss:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	 	628,159	 	 	 	(511,518	) 	
All Other Operations	 	 	15,537	 	 	 	30,963	 	
  	 	 	643,696	 	 	 	(480,555	) 	
(Loss) income from continuing operations	 	 	(115,804	) 	 	 	226,940	 	
Discontinued operations:
	 	 	  	 	 	 	  	 	
Income from discontinued operations, net of income taxes	 	 	7,745	 	 	 	45,234	 	
Non-controlling interests in loss (income)	 	 	50	 	 	 	(531	) 	
Gain on dispositions, net of income taxes	 	 	479,517	 	 	 	14,026	 	
Income from discontinued operations	 	 	487,312	 	 	 	58,729	 	
Net earnings	 	$	371,508	 	 	$	285,669	 	
Net earnings (loss) attributable to:
	 	 	  	 	 	 	  	 	
Limited partners	 	$	388,383	 	 	$	69,646	 	
General partner	 	 	(16,875	) 	 	 	216,023	 	
  	 	$	371,508	 	 	$	285,669	 	
Net (loss) earnings per LP unit:
	 	 	  	 	 	 	  	 	
Basic and diluted earnings (loss):
	 	 	  	 	 	 	  	 	
(Loss) income from continuing operations	 	$	(1.61	) 	 	$	0.20	 	
Income from discontinued operations	 	 	7.12	 	 	 	0.93	 	
Basic and diluted earnings per LP unit	 	$	5.51	 	 	$	1.13	 	
Weighted average LP units outstanding	 	 	70,490	 	 	 	61,857	 	
Cash dividends declared per LP unit	 	$	0.50	 	 	$	0.25	 	

See notes to consolidated financial statements.
3

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENT OF CHANGES
IN PARTNERS’ EQUITY AND COMPREHENSIVE INCOME
Six Months Ended June 30, 2008
(Unaudited) (In 000s)
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	General
Partner’s
Equity
(Deficit)	 	Limited
Partner’s
Equity
Depositary Units	 	  
  
Held in Treasury	 	Total
Partners’
Equity	 	
  	 	 	 	 	 	Amounts	 	Units	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2007	 	$	(731,649	) 	 	$	3,056,598	 	 	$	(11,921	) 	 	 	1,137	 	 	$	2,313,028	 	 	 	 	 	 	 	 	 	
Comprehensive (loss) income:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	 	 	
Net (loss) earnings	 	 	(16,875	)(1) 	 	 	388,383	 	 	 	—	 	 	 	—	 	 	 	371,508	 	 	 	 	 	 	 	 	 	
Net unrealized losses on available-for-sale securities	 	 	(197	) 	 	 	(9,711	) 	 	 	—	 	 	 	—	 	 	 	(9,908	) 	 	 	 	 	 	 	 	 	
Translation adjustments	 	 	(18	) 	 	 	(916	) 	 	 	—	 	 	 	—	 	 	 	(934	) 	 	 	 	 	 	 	 	 	
Comprehensive (loss) income	 	 	(17,090	) 	 	 	377,756	 	 	 	—	 	 	 	—	 	 	 	360,666	 	 	 	 	 	 	 	 	 	
Partnership distributions	 	 	(715	) 	 	 	(35,245	) 	 	 	—	 	 	 	—	 	 	 	(35,960	) 	 	 	 	 	 	 	 	 	
Change in subsidiary equity and other	 	 	29	 	 	 	1,472	 	 	 	—	 	 	 	—	 	 	 	1,501	 	 	 	 	 	 	 	 	 	
Balance, June 30, 2008	 	$	(749,425	) 	 	$	3,400,581	 	 	$	(11,921	) 	 	 	1,137	 	 	$	2,639,235	 	 	 	 	 	 	 	 	 	
Accumulated Other Comprehensive Loss at June 30, 2008 was $2,300.

 	(1)	Includes a charge of $24,761 relating to the sale of ACEP.	

See notes to consolidated financial statements.
4

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 2008 and 2007
(Unaudited) (In $000s)
 	 	 	 	 	
 	 	Six Months Ended June 30,	
  	 	2008	 	2007	
Cash flows from operating activities:
	 	 	  	 	 	 	  	 	
Net (loss) earnings:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	$	(89,197	) 	 	$	197,572	 	
All Other Operations	 	 	(26,607	) 	 	 	29,368	 	
Income from discontinued operations	 	 	487,312	 	 	 	58,729	 	
Net earnings	 	$	371,508	 	 	$	285,669	 	
Earnings (loss) from continuing operations:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	$	(89,197	) 	 	$	197,572	 	
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
	 	 	  	 	 	 	  	 	
Non-controlling interests in (loss) income	 	 	(628,159	) 	 	 	511,518	 	
Deferred income tax expense	 	 	—	 	 	 	1,320	 	
Investment losses (gains)	 	 	957,347	 	 	 	(649,630	) 	
Purchases of securities	 	 	(4,280,037	) 	 	 	(4,346,548	) 	
Proceeds from sales of securities	 	 	2,780,528	 	 	 	2,940,457	 	
Purchases to cover securities sold, not yet purchased	 	 	(179,490	) 	 	 	(1,061,959	) 	
Proceeds from securities sold, not yet purchased	 	 	1,117,037	 	 	 	519,087	 	
Net premiums received on derivative contracts	 	 	122,722	 	 	 	—	 	
Changes in operating assets and liabilities:
	 	 	  	 	 	 	  	 	
Cash held at consolidated affiliated partnerships and restricted cash	 	 	(997,865	) 	 	 	21,886	 	
Due from brokers	 	 	131,042	 	 	 	(50,957	) 	
Other assets	 	 	159	 	 	 	6,895	 	
Payable for purchases of securities	 	 	(39,455	) 	 	 	50,471	 	
Unrealized gains on derivative contracts, at fair value, net	 	 	49,636	 	 	 	49,992	 	
Due to broker	 	 	847,256	 	 	 	—	 	
Accounts payable, accrued expenses and other liabilities	 	 	(5,895	) 	 	 	3,976	 	
Net cash used in continuing operations	 	 	(214,371	) 	 	 	(1,805,920	) 	
All Other Operations	 	 	(26,607	) 	 	 	29,368	 	
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
	 	 	  	 	 	 	  	 	
Depreciation and amortization	 	 	18,359	 	 	 	20,020	 	
Investment losses (gains)	 	 	22,683	 	 	 	(61,491	) 	
Preferred LP unit interest expense	 	 	3,051	 	 	 	2,906	 	
Non-controlling interests in loss	 	 	(15,537	) 	 	 	(30,963	) 	
Deferred income tax expense	 	 	(3,246	) 	 	 	(1,266	) 	
Impairment loss on long-lived assets	 	 	580	 	 	 	17,653	 	
Net cash provided by (used in) activities on trading securities	 	 	7,894	 	 	 	(5,202	) 	
Other, net	 	 	4,507	 	 	 	7,499	 	
Changes in operating assets and liabilities:
	 	 	  	 	 	 	  	 	
Trade, notes and other receivables, net	 	 	(68,987	) 	 	 	(4,101	) 	
Other assets	 	 	(4,227	) 	 	 	2,742	 	
Inventories, net	 	 	21,644	 	 	 	(22,765	) 	
Accounts payable, accrued expenses and other liabilities	 	 	16,445	 	 	 	7,654	 	
Net cash used in continuing operations	 	 	(23,441	) 	 	 	(37,946	) 	
Net cash used in continuing operations	 	 	(237,812	) 	 	 	(1,843,866)	 	
Income from discontinued operations	 	 	487,312	 	 	 	58,729	 	
Depreciation and amortization	 	 	5	 	 	 	9,044	 	
Net gain from sales of businesses and properties	 	 	(479,517	) 	 	 	(22,294	) 	
Other, net	 	 	(14,611	) 	 	 	7,048	 	
Net cash (used in) provided by discontinued operations	 	 	(6,811	) 	 	 	52,527	 	
Net cash used in operating activities	 	 	(244,623	) 	 	 	(1,791,339	) 	

See notes to consolidated financial statements.
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF CASH FLOWS – (continued)
Six Months Ended June 30, 2008 and 2007
(Unaudited) (In $000s)
 	 	 	 	 	
 	 	Six Months Ended June 30,	
  	 	2008	 	2007	
Cash flows from investing activities:
	 	 	  	 	 	 	  	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Capital expenditures	 	 	(25,043	) 	 	 	(35,350	) 	
Purchases of marketable equity and debt securities	 	 	(1,612	) 	 	 	(74,412	) 	
Proceeds from sales of marketable equity and debt securities	 	 	208,251	 	 	 	326,786	 	
Net change in restricted cash relating to Section 1031 exchange
transactions	 	 	(1,150,630	) 	 	 	—	 	
Net proceeds from the sales and disposition of long-lived assets	 	 	20,710	 	 	 	15,060	 	
Acquisitions of businesses, net of cash acquired	 	 	(5,709	) 	 	 	(6,930	) 	
Net cash (used in) provided by investing activities from continuing operations	 	 	(954,033	) 	 	 	225,154	 	
Discontinued operations:
	 	 	  	 	 	 	  	 	
Capital expenditures	 	 	(5,265	) 	 	 	(15,238	) 	
Net proceeds from the sales and disposition of assets	 	 	1,222,232	 	 	 	4,359	 	
Net change in restricted cash relating to sales and disposition of assets	 	 	646	 	 	 	58,172	 	
Other, net	 	 	(15,376	) 	 	 	(47,283	) 	
Net cash provided by investing activities from discontinued operations	 	 	1,202,237	 	 	 	10	 	
Net cash provided by investing activities	 	 	248,204	 	 	 	225,164	 	
Cash flows from financing activities:
	 	 	  	 	 	 	  	 	
Investment Management Operations:
	 	 	  	 	 	 	  	 	
Capital subscriptions received in advance	 	 	4,250	 	 	 	252,173	 	
Capital distributions to non-controlling interests	 	 	(221,038	) 	 	 	(30,083	) 	
Capital contributions by non-controlling interests	 	 	416,781	 	 	 	1,591,193	 	
Net cash provided by financing activities from continuing operations	 	 	199,993	 	 	 	1,813,283	 	
All Other Operations:
	 	 	  	 	 	 	  	 	
Partners’ equity:
	 	 	  	 	 	 	  	 	
Partnership distributions	 	 	(35,960	) 	 	 	(15,778	) 	
Dividends paid to minority holders of subsidiary	 	 	—	 	 	 	(18,529	) 	
Proceeds from issuance of senior notes payable	 	 	—	 	 	 	492,130	 	
Proceeds from variable rate notes	 	 	—	 	 	 	600,000	 	
Proceeds from other borrowings	 	 	283	 	 	 	27,204	 	
Repayments of credit facilities	 	 	—	 	 	 	(27,393	) 	
Repayments of other borrowings	 	 	(7,306	) 	 	 	(2,571	) 	
Debt issuance cost	 	 	—	 	 	 	(275	) 	
Net cash (used in) provided by financing activities from continuing operations	 	 	(42,983	) 	 	 	1,054,788	 	
Net cash provided by financing activities from continuing operations	 	 	157,010	 	 	 	2,868,071	 	
Net cash used in financing activities from discontinued operations	 	 	(254,915	) 	 	 	(245	) 	
Net cash (used in) provided by financing activities	 	 	(97,905	) 	 	 	2,867,826	 	
Effect of exchange rate changes on cash	 	 	(934	) 	 	 	2,086	 	
Net (decrease) increase in cash and cash equivalents*	 	 	(95,258	) 	 	 	1,303,737	 	
Net change in cash of assets held for sale	 	 	69,060	 	 	 	(29,086	) 	
Cash and cash equivalents, beginning of period	 	 	2,112,832	 	 	 	1,884,477	 	
Cash and cash equivalents, end of period	 	$	2,086,634	 	 	$	3,159,128	 	
*Net (decrease) increase in cash and cash equivalents
consists of the following:
	 	 	  	 	 	 	  	 	
Investment Management Operations	 	$	(14,378	) 	 	$	7,363	 	
All Other Operations	 	 	(1,021,391	) 	 	 	1,244,082	 	
Discontinued operations	 	 	(940,511	) 	 	 	52,292	 	
  	 	$	(95,258	) 	 	$	1,303,737	 	
Supplemental information:
	 	 	  	 	 	 	  	 	
Cash payments for interest	 	$	77,307	 	 	$	66,998	 	
Cash payments for income taxes, net of refunds	 	$	37,569	 	 	$	15,944	 	
Net realized losses on securities available for sale	 	$	(9,908	) 	 	$	(2,943	) 	
Redemptions payable to non-controlling interests	 	$	214,722	 	 	$	5,417	 	

See notes to consolidated financial statements.
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TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
1. Description of Business and Basis of Presentation
General
Icahn Enterprises L.P. (“Icahn Enterprises” or the “Company”) is a master limited partnership formed in Delaware on February 17, 1987. We own a 99% limited partner interest in Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”). Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), which is owned and controlled by Mr. Carl C. Icahn, owns a 1% general partner interest in both us and Icahn Enterprises Holdings, representing an aggregate 1.99% general partner interest in us and Icahn Enterprises Holdings. As of June 30, 2008, affiliates of Mr. Icahn owned 64,288,061 of our depositary units and 10,819,213 of our preferred units, which represented approximately 91.2% and 86.5% of our outstanding depositary units and preferred units, respectively.
We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment Management, Metals, Real Estate and Home Fashion. We also report the results of our Holding Company, which includes the unconsolidated results of Icahn Enterprises and Icahn Enterprises Holdings, and investment activity and expenses associated with the Holding Company. Detailed information regarding our continuing reportable segments is contained in Note 2, “Operating Units,” and Note 16, “Segment Reporting.”
The accompanying consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2007. The financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) related to interim financial statements. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary to present fairly the results for the interim periods. All such adjustments are of a normal and recurring nature. Certain prior year amounts have been reclassified in order to conform to the current year presentation.
In accordance with United States generally accepted accounting principles (“U.S. GAAP”), assets transferred between entities under common control are accounted for at historical cost similar to a pooling of interests, and the financial statements of previously separate companies for all periods under common control prior to the acquisition are restated on a consolidated basis.
The consolidated financial statements include the accounts of (i) Icahn Enterprises, (ii) the wholly and majority owned subsidiaries of Icahn Enterprises in which control can be exercised and (iii) entities in which Icahn Enterprises has a controlling, general partner interest or in which it is the primary beneficiary of a variable interest entity in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46R,  Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51  (“FIN 46R”). Icahn Enterprises is considered to have control if it has a direct or indirect ability to make decisions about an entity’s activities through voting or similar rights. As a result, there are entities that are consolidated in our financial statements in which we only have a minority interest in the equity and income. The majority interests in these entities are reflected as non-controlling interests in our financial statements. All material intercompany accounts and transactions have been eliminated in consolidation.
We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company under the Investment Company Act of 1940 (the “40 Act”). Therefore, no more than 40% of our total assets will be invested in investment securities, as such term is defined in the ’40 Act. In addition, we do not invest or intend to invest in securities as our primary business. We intend to structure our investments to continue to be taxed as a partnership rather than as a corporation under the applicable publicly traded partnership rules of the Internal Revenue Code, as amended (the “Code”).
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TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
1. Description of Business and Basis of Presentation  – (continued)
Because of the nature of our business, the results of operations for quarterly and other interim periods are not indicative of the results to be expected for the full year. Variations in the amount and timing of gains and losses on our investments can be significant. The results of our Real Estate and Home Fashion segments are seasonal.
Discontinued Operations
Gaming Divestiture
On February 20, 2008, we consummated the sale of our subsidiary, American Casino & Entertainment Properties LLC (“ACEP”), for $1.2 billion to an affiliate of Whitehall Street Real Estate Fund, realizing a gain of approximately $473.9 million, after taxes. The sale of ACEP included the Stratosphere and three other Nevada gaming properties, which represented all of our remaining gaming operations.
In connection with the closing, we repaid all of ACEP’s outstanding 7.85% Senior Secured Notes due 2012, which were tendered pursuant to ACEP’s previously announced tender offer and consent solicitation. In addition, ACEP repaid in full all amounts outstanding, and terminated all commitments, under its credit facility with Bear Stearns Corporate Lending Inc., as administrative agent, and the other lenders thereunder.
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 Code. These funds are classified as restricted cash. Such proceeds were deposited into the escrow accounts pending the fulfillment of Section 1031 exchange requirements. There are no assurances that we will fulfill our Section 1031 exchange obligations using the proceeds placed into escrow.
Other
WPI closed all of its retail stores based on a comprehensive evaluation of the stores’ long-term growth prospects and their on-going value to the business. On October 18, 2007, WPI entered into an agreement to sell the inventory at all of its retail stores and subsequently ceased operations of its retail stores. Accordingly, it has reported the retail outlet stores business as discontinued operations for all periods presented. These operations met the criteria for discontinued operations during the third quarter of the fiscal year ended December 31, 2007 (“fiscal 2007”). Therefore, the portion of the business related to the stores’ retail operations has been classified for all periods presented as discontinued operations.
Operating properties of our real estate segment are reclassified to held for sale when subject to a contract. The operations of such properties are classified as discontinued operations. The properties classified as discontinued operations have changed during the three and six months ended June 30, 2008 and certain amounts in the consolidated statements of operations for the three and six months ended June 30, 2007 and consolidated cash flows for the six months ended June 30, 2007 have been reclassified to conform to the properties that have been classified as held for sale in the current periods.
New Accounting Policies
The Investment Management operations adopted Method 2 of Emerging Issues Task Force (“EITF”) Topic D-96,  Accounting for Management Fees Based on a Formula  (“EITF D-96”) related to a new special profits interest allocation agreement, effective January 1, 2008 as more fully described in Note 2, “Operating Units — Investment Management Operations.”
The Investment Management operations enter into various derivative contracts, such as credit default swaps, and have adopted FASB Interpretation No. 45 , Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others  (“FIN 45”), as more fully described in Note 7, “Financial Instruments, Off-Balance-Sheet Risk, Concentrations of Credit Risk and Guarantees.”
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TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
1. Description of Business and Basis of Presentation  – (continued)
Recently Issued Accounting Pronouncements
SFAS No. 141(R).  In December 2007, the FASB issued Standard of Financial Accounting Standards (“SFAS”) No. 141(R),  Business Combinations  (“SFAS No. 141(R)”). SFAS No. 141(R) requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values. Certain forms of contingent consideration and certain acquired contingencies will be recorded at fair value at the acquisition date. SFAS No. 141(R) also requires that acquisition-related costs be expensed as incurred and restructuring costs be expensed in periods after the acquisition date. This statement is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption of SFAS No. 141(R) is not permitted. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009.
SFAS No. 160.  In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51  (“SFAS No. 160”). SFAS No. 160 requires a company to clearly identify and present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section but separate from the company’s equity. It also requires that the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; changes in ownership interest be accounted for similarly, as equity transactions; and, when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary be measured at fair value. This statement is effective for fiscal years beginning after December 15, 2008. Early adoption of SFAS No. 160 is not permitted. We are currently evaluating the impact that SFAS No. 160 will have on our consolidated financial statements.
2. Operating Units
a. Investment Management Operations
On August 8, 2007, we entered into a Contribution and Exchange Agreement (the “Contribution Agreement”) with CCI Offshore Corp. (“CCI Offshore”), CCI Onshore Corp. (“CCI Onshore”), Icahn Management LP, a Delaware limited partnership (“Icahn Management” and, together with CCI Offshore and CCI Onshore, collectively referred to herein as the “Contributors”), and Carl C. Icahn. Pursuant to the Contribution Agreement, we acquired the general partnership interests in Icahn Onshore LP (the “Onshore GP”) and Icahn Offshore LP (the “Offshore GP” and, together with the Onshore GP, the “General Partners”), acting as general partners of Icahn Partners LP (the “Onshore Fund”) and the Offshore Master Funds (as defined below), and Icahn Capital Management L.P. (“New Icahn Management”), a Delaware limited partnership.
Prior to January 1, 2008, the General Partners and New Icahn Management provided investment advisory and certain management services to the Private Funds (as defined below). As further discussed below, effective January 1, 2008, in addition to providing investment advisory services to the Private Funds, the General Partners provide certain administrative and back office services to the Private Funds (as defined below) that had been previously provided by New Icahn Management. The General Partners do not provide such services to any other entities, individuals or accounts. Interests in the Private Funds are offered only to certain sophisticated and accredited investors on the basis of exemptions from the registration requirements of the federal securities laws and are not publicly available. The Offshore Fund consists of Icahn Fund Ltd. (and, together with Icahn Fund II Ltd. and Icahn Fund III Ltd. are collectively referred to herein as the “Offshore Funds”). As referred to herein, the “Offshore Master Funds” consist of (i) Icahn Partners Master Fund LP (“Offshore Master Fund I”); (ii) Icahn Partners Master Fund II L.P. (“Offshore Master Fund II”) and (iii) Icahn Partners Master Fund III L.P. (“Offshore Master Fund III”). The Onshore Fund and the Offshore Master Funds are collectively referred to herein as the “Investment Funds.”
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
The Offshore GP also acts as general partner of certain funds formed as Cayman Islands exempted limited partnerships that invest in the Offshore Master Funds. These funds, together with other funds that also invest in the Offshore Master Funds, constitute the “Feeder Funds” and, together with the Investment Funds, are referred to herein as the “Private Funds.”
Effective January 1, 2008, the management agreements between New Icahn Management and the Private Funds were terminated, resulting in the termination of the Feeder Funds’ and the Onshore Fund’s obligations to pay management fees thereunder. In addition, the limited partnership agreements of the Investment Funds (the “Investment Fund LPAs”) were amended to provide that, as of January 1, 2008, the General Partners will provide or cause their affiliates to provide to the Private Funds the administrative and back office services that were formerly provided by New Icahn Management (the “Services”) and, in consideration of providing the Services, the General Partners will receive special profits interest allocations from the Investment Funds. As of January 1, 2008, New Icahn Management distributed its net assets to Icahn Capital L.P. (“Icahn Capital”). Effective January 1, 2008, we have adopted a new revenue recognition policy with respect to the special profits interest allocation as discussed below.
Prior to January 1, 2008, the management agreements provided for the management fees to be paid by each of the Feeder Funds and the Onshore Fund to New Icahn Management at the beginning of each quarter, generally in an amount equal to 0.625% (2.5% annualized) of the net asset value of each Investor’s (as defined below) investment in the Feeder Fund or the Onshore Fund, as applicable, and the management fees were recognized quarterly.
Effective January 1, 2008, the Investment Fund LPAs provide that the applicable General Partner will receive a special profits interest allocation at the end of each calendar year from each capital account maintained at the Investment Funds that is attributable to: (i) in the case of the Onshore Fund, each limited partner in the Onshore Fund and (ii) in the case of the Feeder Funds, each investor in the Feeder Funds (excluding certain investors that were not charged management fees which include affiliates of Mr. Icahn) (in each case, an “Investor”). This allocation is generally equal to 0.625% of the balance in each fee-paying capital account as of the beginning of each quarter (for each Investor, 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 respect of an Investor in any year cannot exceed the net profits allocated to such Investor in such year.
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 for an Investor for a calendar year, a special profits interest allocation will generally be made to the extent of such net profits, if any, and the shortfall will be carried forward (without interest or a preferred return thereon) and added to the Target Special Profits Interest Amount determined for such Investor for the next calendar year. Appropriate adjustments will be made to the calculation of the special profits interest allocation for new subscriptions and withdrawals by Investors. In the event that an Investor withdraws or redeems in full from a Feeder Fund or the Onshore Fund before the entire Target Special Profits Interest Amount determined for such Investor has been allocated to the applicable General Partner in the form of a special profits interest allocation, the amount of the Target Special Profits Interest Amount that has not yet been allocated to such General Partner will be eliminated and the General Partner will never receive it.
Each Target Special Profits Interest Amount will be deemed contributed to a separate hypothetical capital account (that is not subject to an incentive allocation or a special profits interest allocation) 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 from (and thereby debited from) such hypothetical capital account
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
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 Fund in which such hypothetical capital account is maintained.
In addition to receiving special profits interest allocations as described above, the General Partners receive incentive allocations from the Private Funds. Incentive allocations, which are primarily earned on an annual basis, are generally 25% of the net profits (both realized and unrealized) generated by fee-paying investors in the Private Funds that we manage. The incentive allocations are subject to a “high water mark” (whereby the General Partners do not earn incentive allocations during a particular year even though the fund had a positive return in such year until losses in prior periods are recovered). These allocations are calculated and allocated to the capital accounts of the General Partners annually except for incentive allocations earned as a result of investor redemption events during interim periods. Therefore, our Investment Management operations’ revenues will be affected by the combination of fee-paying assets under management (“AUM”) and the investment performance of the Private Funds.
Summarized income statement information for our Investment Management operations for the three and six months ended June 30, 2008 and 2007 is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Management fees from related
parties	 	$	—	 	 	$	2,565	 	 	$	—	 	 	$	3,376	 	
Consolidated affiliated partnerships:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Realized gains – securities	 	 	337,754	 	 	 	249,835	 	 	 	329,422	 	 	 	515,481	 	
Unrealized (losses) gains – securities	 	 	(903,696	) 	 	 	142,354	 	 	 	(1,290,840	) 	 	 	134,438	 	
Realized (losses) gains – derivative contracts	 	 	(235,708	) 	 	 	37,621	 	 	 	210,992	 	 	 	103,448	 	
Unrealized gains (losses) – derivative contracts	 	 	29,117	 	 	 	(106,444	) 	 	 	(48,170	) 	 	 	(65,492	) 	
Interest, dividends and other
income	 	 	62,871	 	 	 	42,670	 	 	 	102,343	 	 	 	81,617	 	
Other income	 	 	111	 	 	 	187	 	 	 	760	 	 	 	307	 	
  	 	 	(709,551	) 	 	 	368,788	 	 	 	(695,493	) 	 	 	773,175	 	
Costs and expenses:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Compensation	 	 	5,238	 	 	 	12,375	 	 	 	11,168	 	 	 	24,596	 	
Shareholder actions	 	 	1,087	 	 	 	2,616	 	 	 	1,447	 	 	 	3,106	 	
General and administrative	 	 	3,993	 	 	 	1,043	 	 	 	5,709	 	 	 	2,681	 	
Consolidated affiliated partnerships:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Interest expense	 	 	2,398	 	 	 	6,331	 	 	 	3,256	 	 	 	9,545	 	
Dividend expense	 	 	4,332	 	 	 	53	 	 	 	5,519	 	 	 	591	 	
Other investment expenses	 	 	574	 	 	 	10,787	 	 	 	4,164	 	 	 	18,062	 	
Other expenses, net	 	 	(11,128	) 	 	 	1,885	 	 	 	(9,672	) 	 	 	3,900	 	
  	 	 	6,494	 	 	 	35,090	 	 	 	21,591	 	 	 	62,481	 	
(Loss) income before taxes and
non-controlling interests in income	 	 	(716,045	) 	 	 	333,698	 	 	 	(717,084	) 	 	 	710,694	 	
Non-controlling interests in loss (income)	 	 	630,012	 	 	 	(246,446	) 	 	 	628,159	 	 	 	(511,518	) 	
Income tax benefit (expense)	 	 	215	 	 	 	(855	) 	 	 	(272	) 	 	 	(1,604	) 	
Net (loss) earnings	 	$	(85,818	) 	 	$	86,397	 	 	$	(89,197	) 	 	$	197,572	 	
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
The table below reflects changes to the Private Funds’ AUM for the three and six months ended June 30, 2008 and 2007 (in $000s). Amounts presented are net of any special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) and any accrued incentive allocations and include deferred balances and amounts invested by us and certain other affiliated parties for which we are charged no special profits interest allocation effective January 1, 2008 (and prior to January 1, 2008, management fees) and pay no incentive allocations for the periods presented. Accordingly, the amounts presented below are not the amounts used to calculate the Target Special Profits Interest Amount effective January 1, 2008 (and prior to January 1, 2008, management fees) for the respective periods.
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Balance, beginning of period	 	$	7,894,921	 	 	$	5,337,435	 	 	$	7,510,670	 	 	$	4,019,993	 	
Net (out-flows) in-flows	 	 	(166,406	) 	 	 	679,901	 	 	 	211,473	 	 	 	1,614,207	 	
(Depreciation) appreciation	 	 	(719,596	) 	 	 	338,654	 	 	 	(713,224	) 	 	 	721,790	 	
Balance, end of period	 	$	7,008,919	 	 	$	6,355,990	 	 	$	7,008,919	 	 	$	6,355,990	 	
Fee-paying AUM	 	$	4,749,237	 	 	$	4,804,594	 	 	$	4,749,237	 	 	$	4,804,594	 	
The amount of any special profits interest allocations (and prior to January 1, 2008, management fees) and incentive allocations accrued before related eliminations for the periods stated is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Special Profits Interest Allocations:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Investment Funds	 	$	(5,046	) 	 	$	—	 	 	$	—	 	 	$	—	 	
Management Fees:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Consolidated Private Funds	 	$	—	 	 	$	32,284	 	 	$	—	 	 	$	62,468	 	
Unconsolidated Private Funds	 	 	—	 	 	 	2,565	 	 	 	—	 	 	 	3,376	 	
Total	 	$	—	 	 	$	34,849	 	 	$	—	 	 	$	65,844	 	
Incentive Allocations:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Investment Funds	 	$	(477	) 	 	$	51,735	 	 	$	—	 	 	$	120,509	 	
The General Partners’ incentive allocations and special profits interest allocations earned from the Private Funds are accrued on a quarterly basis in accordance with Method 2 of EITF Topic D-96 and are allocated to the General Partners at the end of the Private Funds’ fiscal year (or sooner on redemptions). Such quarterly accruals may be reversed as a result of subsequent investment performance prior to the conclusion of the Private Funds’ fiscal year.
For the three and six months ended June 30, 2008, the Target Special Profits Interest Amount was $27.6 million and $60.0 million, respectively. There was a special profits interest allocation reversal of $5.0 million made for the three months ended June 30, 2008 due to losses in the Investment Funds. No accrual for special profits interest allocation was made for the six months ended June 30, 2008 due to losses in the Investment Funds. The Target Special Profits Interest Amount of $60.0 million will be carried forward and will be accrued to the extent that there are sufficient net profits in the Investment Funds to cover such amounts. There was no special profits interest allocation for the first three and six months ended June 30, 2007 because the special profits interest allocations started effective January 1, 2008.
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
b. Metals
We conduct our Metals operations through our indirect wholly owned subsidiary, PSC Metals, Inc. (“PSC Metals”). PSC Metals collects industrial and obsolete scrap metal, processes it into reusable forms and supplies the recycled metals to its customers including electric-arc furnace mills, integrated steel mills, foundries, secondary smelters and metals brokers. PSC Metals’ ferrous products include shredded, sheared and bundled scrap metal and other purchased scrap metal such as turnings (steel machining fragments), cast furnace iron and broken furnace iron. PSC Metals also processes non-ferrous metals including aluminum, copper, brass, stainless steel and nickel-bearing metals. Non-ferrous products are a significant raw material in the production of aluminum and copper alloys used in manufacturing. PSC Metals also operates a secondary products business that includes the supply of secondary plate and structural grade pipe that is sold into niche markets for counterweights, piling and foundations, construction materials and infrastructure end-markets.
Summary balance sheet information for our Metals operations as of June 30, 2008 and December 31, 2007 included in the consolidated balance sheets is as follows (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Cash and cash equivalents	 	$	12,830	 	 	$	20,215	 	
Investments	 	 	7,311	 	 	 	7,299	 	
Accounts receivable, net of allowance for doubtful accounts	 	 	172,155	 	 	 	77,281	 	
Inventories, net	 	 	72,877	 	 	 	72,282	 	
Property, plant and equipment, net	 	 	94,028	 	 	 	83,398	 	
Other assets	 	 	62,176	 	 	 	62,196	 	
Total assets	 	$	421,377	 	 	$	322,671	 	
Accounts payable, accrued expenses and other liabilities	 	$	75,510	 	 	$	36,707	 	
Debt and capital lease obligations	 	 	3,230	 	 	 	3,223	 	
Accrued environmental costs	 	 	24,614	 	 	 	24,296	 	
Total liabilities	 	$	103,354	 	 	$	64,226	 	
Summarized income statement information for our Metals operations for the three and six months ended June 30, 2008 and 2007 included in the consolidated statements of operations is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Net sales	 	$	434,106	 	 	$	214,493	 	 	$	736,941	 	 	$	423,379	 	
Expenses:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Cost of sales	 	 	362,763	 	 	 	204,014	 	 	 	632,558	 	 	 	394,772	 	
Selling, general and administrative expenses	 	 	8,327	 	 	 	5,427	 	 	 	14,733	 	 	 	10,359	 	
Total expenses	 	 	371,090	 	 	 	209,441	 	 	 	647,291	 	 	 	405,131	 	
Income from continuing operations before interest, income taxes and non-controlling interests in income	 	$	63,016	 	 	$	5,052	 	 	$	89,650	 	 	$	18,248	 	
For the six months ended June 30, 2008 and 2007, sales to PSC Metals’ top five customers amounted to approximately 42% and 33% of net sales, respectively. Two customers accounted for approximately 23% of PSC Metals’ net sales for the six months ended June 30, 2008.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
The following is a breakdown of depreciation expense for the three and six months ended June 30, 2008 and 2007 (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Depreciation expense included in cost of sales	 	$	3,371	 	 	$	3,011	 	 	$	6,615	 	 	$	5,092	 	
Depreciation expense included in selling, general and administrative expenses	 	 	56	 	 	 	65	 	 	 	117	 	 	 	131	 	
Total depreciation expense	 	$	3,427	 	 	$	3,076	 	 	$	6,732	 	 	$	5,223	 	
c. Real Estate
Our Real Estate operations consist of rental real estate, property development and associated resort activities.
Rental Real Estate
As of June 30, 2008 and December 31, 2007, we owned 29 and 32 rental real estate properties, respectively. As of June 30, 2008, these primarily consisted of fee and leasehold interests in real estate in 13 states. Most of these properties are net-leased to single corporate tenants. Approximately 94% of these properties are currently net-leased, 3% are operating properties and 3% are vacant.
Property Development and Associated Resort Activities
Our property development operations are run primarily through Bayswater, a real estate investment, management and development subsidiary that focuses primarily on the construction and sale of single-family and multi-family homes, lots in subdivisions and planned communities and raw land for residential development. Our New Seabury development property in Cape Cod, Massachusetts and our Grand Harbor and Oak Harbor development property in Vero Beach, Florida each include land for future residential development of approximately 370 and 900 units of residential housing, respectively. Both developments operate golf and resort operations as well. We are also completing a residential community in Westchester County, New York.
Summarized income statement information for our continuing Real Estate operations for the three and six months ended June 30, 2008 and 2007 is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Rental real estate	 	$	3,873	 	 	$	3,754	 	 	$	7,800	 	 	$	7,593	 	
Property development	 	 	12,635	 	 	 	14,736	 	 	 	24,804	 	 	 	32,881	 	
Resort operations	 	 	7,821	 	 	 	7,458	 	 	 	14,310	 	 	 	13,518	 	
Total revenues	 	 	24,329	 	 	 	25,948	 	 	 	46,914	 	 	 	53,992	 	
Expenses:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Rental real estate	 	 	1,533	 	 	 	1,286	 	 	 	2,859	 	 	 	2,590	 	
Property development	 	 	12,177	 	 	 	15,073	 	 	 	23,097	 	 	 	30,685	 	
Resort operations	 	 	7,705	 	 	 	8,062	 	 	 	14,525	 	 	 	14,456	 	
Total expenses	 	 	21,415	 	 	 	24,421	 	 	 	40,481	 	 	 	47,731	 	
Income from continuing operations before interest, income taxes and non-controlling interests in income	 	$	2,914	 	 	$	1,527	 	 	$	6,433	 	 	$	6,261	 	
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
For each of the three and six months ended June 30, 2008, property development expenses include asset impairment charges of approximately $0.6 million primarily attributable to inventory units at our Grand Harbor, Florida division. For each of the three and six months ended June 30, 2007, property development expenses include asset impairment charges of approximately $1.8 million related to certain condominium land in our Oak Harbor, Florida subdivision.
The following is a consolidated summary of our Real Estate operating unit property and equipment as of June 30, 2008 and December 31, 2007 included in the consolidated balance sheets (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Rental properties	 	$	111,711	 	 	$	115,843	 	
Property development	 	 	101,964	 	 	 	107,036	 	
Resort properties	 	 	44,618	 	 	 	43,823	 	
Total real estate	 	$	258,293	 	 	$	266,702	 	
As of June 30, 2008 and December 31, 2007, $95.9 million and $80.0 million, respectively, of the net investment in financing leases and net real estate leased to others was pledged to collateralize the payment of nonrecourse mortgages payable.
d. Home Fashion
We conduct our Home Fashion operations through our majority ownership in WestPoint International, Inc. (“WPI”), a manufacturer and distributor of home fashion consumer products. WPI is engaged in the business of manufacturing, sourcing, marketing and distributing bed and bath home fashion products, including, among others, sheets, pillowcases, comforters, blankets, bedspreads, pillows, mattress pads, towels and related products. WPI recognizes revenue primarily through the sale of home fashion products to a variety of retail and institutional customers. In addition, WPI receives a small portion of its revenues through the licensing of its trademarks. During the fourth quarter of fiscal 2007, WPI sold the inventory at all of its 30 retail outlet stores and subsequently ceased operations of its retail stores. Therefore, the portion of the business related to the stores’ retail operations has been classified for all periods presented as discontinued operations.
The following is summary balance sheet information for our Home Fashion operations as of June 30, 2008 and December 31, 2007, as included in the consolidated balance sheets (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Cash and cash equivalents	 	$	128,770	 	 	$	135,667	 	
Restricted cash	 	 	139	 	 	 	1,827	 	
Trade receivables, net	 	 	68,882	 	 	 	93,085	 	
Inventories, net	 	 	172,758	 	 	 	193,941	 	
Assets of discontinued operations held for sale	 	 	12,255	 	 	 	13,587	 	
Property, plant and equipment, net	 	 	165,383	 	 	 	183,027	 	
Investments	 	 	13,162	 	 	 	13,290	 	
Other assets	 	 	28,488	 	 	 	31,375	 	
Total assets	 	$	589,837	 	 	$	665,799	 	
Accounts payable, accrued expenses and other liabilities	 	$	68,509	 	 	$	87,651	 	
Debt	 	 	5,132	 	 	 	9,243	 	
Liabilities of discontinued operations held for sale	 	 	3,749	 	 	 	8,616	 	
Total liabilities	 	$	77,390	 	 	$	105,510	 	
Non-controlling interests	 	$	99,290	 	 	$	116,496	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
Summarized income statement information for our Home Fashion operations for the three and six months ended June 30, 2008 and 2007 is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Net sales	 	$	96,018	 	 	$	151,111	 	 	$	209,874	 	 	$	347,749	 	
Expenses:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Cost of sales	 	 	89,198	 	 	 	155,104	 	 	 	194,104	 	 	 	352,084	 	
Selling, general and administrative expenses	 	 	23,902	 	 	 	27,152	 	 	 	50,123	 	 	 	59,210	 	
Restructuring and impairment charges	 	 	7,019	 	 	 	20,382	 	 	 	13,667	 	 	 	24,693	 	
Total expenses	 	 	120,119	 	 	 	202,638	 	 	 	257,894	 	 	 	435,987	 	
Loss from continuing operations before interest, income taxes and
non-controlling interests in loss	 	$	(24,101	) 	 	$	(51,527	) 	 	$	(48,020	) 	 	$	(88,238	) 	
A relatively small number of customers have historically accounted for a significant portion of WPI’s net sales. For the six months ended June 30, 2008 and 2007, sales to five customers amounted to approximately 45% and 47% of net sales, respectively. Two customers accounted for approximately 13% each of WPI’s net sales in the six months ended June 30, 2008 and one customer accounted for approximately 19% of WPI’s net sales in the six months ended June 30, 2007.
The following is a breakdown of depreciation expense for the three and six months ended June 30, 2008 and 2007 (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended
June 30,	 	Six Months Ended
June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Depreciation expense included in cost of sales	 	$	1,780	 	 	$	3,512	 	 	$	3,570	 	 	$	7,222	 	
Depreciation expense included in selling, general and administrative expenses	 	 	1,111	 	 	 	930	 	 	 	1,991	 	 	 	1,878	 	
Total depreciation expenses	 	$	2,891	 	 	$	4,442	 	 	$	5,561	 	 	$	9,100	 	
Total expenses for the three months ended June 30, 2008 included $1.5 million of non-cash impairment charges related to plants that have closed and $5.5 million of restructuring charges (of which $1.0 million related to severance costs and $4.5 million related to continuing costs of closed plants and transition expenses). Total expenses for the six months ended June 30, 2008 included $1.5 million of non-cash impairment charges related to plants that have closed and $12.1 million of restructuring charges (of which $2.5 million related to severance costs and $9.6 million related to continuing costs of closed plants and transition expenses). Total expenses for the three months ended June 30, 2007 included $15.4 million of fixed asset impairment charges and $5.0 million restructuring charges (of which approximately $1.4 million related to severance and $3.6 million related to continuing costs of closed plants and transition expenses). Total expenses for the six months ended June 30, 2007 included $15.4 million of fixed asset impairment charges and $9.3 million restructuring charges (of which approximately $1.8 million related to severance and $7.5 million related to continuing costs of closed plants and transition expenses).
To improve WPI’s competitive position, WPI management intends to continue to significantly reduce its cost of goods sold by restructuring its operations in the plants located in the United States, increasing production within its non-U.S. facilities and joint venture operation and sourcing goods from lower cost overseas
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
2. Operating Units  – (continued)
facilities. In the second quarter of fiscal 2008, WPI entered into an agreement with a third party to manage the majority of its U.S. warehousing and distribution operations which WPI is consolidating into its Wagram, NC facility. As of June 30, 2008, approximately $176.8 million of WPI’s assets are located outside of the United States, primarily in Bahrain.
Included in restructuring expenses are cash charges associated with the ongoing costs of closed plants, employee severance, benefits and related costs. The amount of accrued restructuring costs at December 31, 2007 was $0.8 million. During the six months ended June 30, 2008, WPI incurred additional restructuring costs of $12.1 million. WPI paid $11.8 million of restructuring charges during the six months ended June 30, 2008. As of June 30, 2008, the accrued liability balance was $1.1 million, which is included in accounts payable, accrued expenses and other liabilities in our consolidated balance sheet.
Total cumulative impairment and restructuring charges from August 8, 2005 (acquisition date) through June 30, 2008 were $110.3 million.
WPI anticipates that restructuring charges will continue to be incurred throughout the fiscal year ending December 31, 2008 (“fiscal 2008”). WPI anticipates incurring restructuring costs and impairment charges in fiscal 2008 relating to the current restructuring plan of between $17.0 million and $20.0 million primarily related to the continuing costs of its closed facilities. Restructuring costs could be affected by, among other things, WPI’s decision to accelerate or delay its restructuring efforts. As a result, actual costs incurred could vary materially from these anticipated amounts.
3. Discontinued Operations and Assets Held for Sale
Results of Discontinued Operations and Assets and Liabilities Held for Sale
Gaming Operations
On February 20, 2008, we consummated the sale of our subsidiary, ACEP, to an affiliate of Whitehall Street Real Estate Fund for $1.2 billion, realizing a gain of approximately $473.9 million, after taxes. The sale of ACEP included the Stratosphere and three other Nevada gaming properties, which represented all of our remaining gaming operations. Therefore, the results of our Gaming operations are reflected as discontinued operations through February 20, 2008.
Home Fashion Operations — Retail Stores
WPI closed all of its retail stores based on a comprehensive evaluation of the stores’ long-term growth prospects and their on-going value to the business. On October 18, 2007, WPI entered into an agreement to sell the inventory at all of its retail stores and subsequently ceased operations of its retail stores. Accordingly, it has reported the retail outlet stores business as discontinued operations for all periods presented. As a result of the sale, WPI accrued in fiscal 2007 approximately $8.1 million of expense relating to the estimated liability for termination of the leases relating to its retail outlet stores facilities. As of June 30, 2008 and December 31, 2007, the accrued lease termination liability balance was approximately $3.5 million and $7.1 million, respectively, which is included in liabilities of discontinued operations in our consolidated balance sheets.
Real Estate Operations
Operating properties are reclassified to held for sale when subject to a contract. The operations of such properties are classified as discontinued operations. The properties classified as discontinued operations changed during the three and six months ended June 30, 2008 and certain amounts in the consolidated statements of operations for the three and six months ended June 30, 2007 and cash flows for the six months ended June 30, 2007 have been reclassified to conform to the properties that have been classified as held for sale in the current periods.
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
3. Discontinued Operations and Assets Held for Sale  – (continued)
Results of Operations and Assets Held for Sale
The financial position and results of operations for our Gaming and certain portions of the Home Fashion and Real Estate operations described below are presented as assets and liabilities of discontinued operations held for sale in the consolidated balance sheets and discontinued operations in the consolidated statements of operations for all periods presented in accordance with SFAS No. 144,  Accounting for the Impairment or Disposal of Long-Lived Asset (“SFAS No. 144”).
A summary of the results of operations for our discontinued operations for the three and six months ended June 30, 2008 and 2007 is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended
June 30,	 	Six Months Ended
June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Gaming(1)	 	$	—	 	 	$	114,138	 	 	$	59,619	 	 	$	227,026	 	
Real Estate	 	 	274	 	 	 	995	 	 	 	811	 	 	 	2,076	 	
Home Fashion – retail stores	 	 	—	 	 	 	14,678	 	 	 	—	 	 	 	28,644	 	
Total revenues	 	$	274	 	 	$	129,811	 	 	$	60,430	 	 	$	257,746	 	
Income (loss) from discontinued operations:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Gaming	 	$	—	 	 	$	31,319	 	 	$	13,430	 	 	$	54,546	 	
Real Estate	 	 	179	 	 	 	636	 	 	 	601	 	 	 	1,266	 	
Home Fashion – retail stores	 	 	13	 	 	 	(1,475	) 	 	 	(154	) 	 	 	(3,779	) 	
Total income from discontinued operations before income taxes, interest and other income	 	 	192	 	 	 	30,480	 	 	 	13,877	 	 	 	52,033	 	
Interest expense	 	 	—	 	 	 	(5,461	) 	 	 	(2,564	) 	 	 	(10,901	) 	
Interest and other income	 	 	—	 	 	 	273	 	 	 	322	 	 	 	19,334	 	
Income from discontinued operations before income taxes and non-controlling interests in loss	 	 	192	 	 	 	25,292	 	 	 	11,635	 	 	 	60,466	 	
Income tax expense	 	 	(3	) 	 	 	(6,038	) 	 	 	(3,890	) 	 	 	(15,232	) 	
  	 	 	189	 	 	 	19,254	 	 	 	7,745	 	 	 	45,234	 	
Non-controlling interest in (income) loss	 	 	(4	) 	 	 	519	 	 	 	50	 	 	 	(531	) 	
(Loss) gain on sales of discontinued operations, net of income tax expense	 	 	(2,109	) 	 	 	841	 	 	 	479,517	 	 	 	14,026	 	
(Loss) income from discontinued operations	 	$	(1,924	) 	 	$	20,614	 	 	$	487,312	 	 	$	58,729	 	

 	(1)	Gaming segment results for the six months ended June 30, 2008 are through February 20, 2008, the date of the ACEP sale.	
Interest and other income for the six months ended June 30, 2007 includes approximately $8.3 million relating to a real estate tax refund received by Atlantic Coast Entertainment Holdings, Inc. (“Atlantic Coast”) and approximately $10.1 million representing the net gain on settlement of litigation relating to GB Holdings Inc. (“GBH”).
The gain on sales of discontinued operations for the six months ended June 30, 2008 includes approximately $473.9 million, net of income taxes of approximately $258.4 million, recorded on the sale of ACEP on February 20, 2008. The gain on sales of discontinued operations for the six months ended June 30, 2007 includes approximately $4.7 million of gain on sales of real estate assets and $9.3 million relating to a working capital adjustment to the gain recorded on the sale of the Oil and Gas business in November 2006.
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
3. Discontinued Operations and Assets Held for Sale  – (continued)
Assets and Liabilities of Discontinued Operations
A summary of assets and liabilities of discontinued operations held for sale as of June 30, 2008 and December 31, 2007 is as follows (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Cash and cash equivalents	 	$	—	 	 	$	107,265	 	
Trade, notes and other receivables	 	 	—	 	 	 	5,615	 	
Property, plant and equipment	 	 	15,113	 	 	 	459,149	 	
Other assets	 	 	—	 	 	 	60,248	 	
Assets of discontinued operations held for sale	 	$	15,113	 	 	$	632,277	 	
Accounts payable and accrued expenses	 	$	—	 	 	$	49,013	 	
Debt	 	 	—	 	 	 	257,330	 	
Other liabilities	 	 	3,749	 	 	 	11,002	 	
Liabilities of discontinued operations held for sale	 	$	3,749	 	 	$	317,345	 	
4. Related Party Transactions
From time to time, we have entered into several transactions with entities affiliated with Carl C. Icahn. The transactions include purchases by us of business and business interests, including debt, of the affiliated entities. Additionally, other transactions have occurred as described below. (See Note 19, “Subsequent Events,” for additional information.)
All related party transactions are reviewed and approved by our Audit Committee. Our audit committee obtains independent legal counsel on all related party transactions and independent financial advice when appropriate.
In accordance with U.S. GAAP, assets transferred between common control entities are accounted for at historical cost similar to a pooling of interests, and the financial statements of previous separate companies for periods prior to the acquisition are restated on a consolidated basis. Additionally, prior to the acquisition, the earnings, losses, capital contributions and distributions of the acquired entities are allocated to the general partner as an adjustment to equity, and the consideration in excess of the basis of net assets acquired is shown as a reduction to the general partner’s capital account.
a. Investment Management Operations
Until August 8, 2007, Icahn Management elected to defer management fees from the Offshore Funds and such amounts remain invested in the Offshore Funds. At June 30, 2008, the balance of the deferred management fees payable by the consolidated Offshore Fund to Icahn Management was $130.3 million and the depreciation upon them was $13.8 million and $13.7 million for the three and six months ended June 30, 2008, respectively. For the three and six months ended June 30, 2007, the deferred management fees from the Offshore Funds and related appreciation were eliminated in consolidation. (Prior to August 8, 2007, Icahn Management’s financial results were consolidated into our consolidated financial statements).
Effective January 1, 2008, Icahn Capital and the Holding Company paid for salaries and benefits of certain employees who may also perform various functions on behalf of certain other entities beneficially owned by Carl C. Icahn (collectively, “Icahn Affiliates”), including accounting, administrative, investment, legal and tax services. Prior to January 1, 2008, Icahn & Co. LLC paid for such services. Under a separate expense-sharing agreement, Icahn Capital and the Holding Company have charged Icahn Affiliates $1.1 million and $1.8 million for such services for the three and six months ended June 30, 2008, respectively. Icahn Affiliates charged Icahn Management $2.3 million and $4.0 million for such services for the three
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
4. Related Party Transactions  – (continued)
and six months ended June 30, 2007, respectively. Management believes that all allocated amounts are reasonable based upon the nature of the services provided.
In addition, effective January 1, 2008, certain expenses borne by Icahn Capital have been reimbursed by Icahn Affiliates, as appropriate, when such expenses were incurred. The expenses included investment-specific expenses for investments acquired by both the Private Funds and Icahn Affiliates that were allocated based on the amounts invested by each party, as well as investment management-related expenses that were allocated based on estimated usage agreed upon by Icahn Capital and Icahn Affiliates.
Carl C. Icahn, along with his affiliates (other than Icahn Enterprises and its affiliates), makes investments in the Private Funds. These investments are not subject to special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) or incentive allocations. As of June 30, 2008, the total of these investments was approximately $1.36 billion.
b. All Other Operations
Metals
Prior to our acquisition of PSC Metals on November 5, 2007, PSC Metals was wholly owned by Philip Services Corporation (“Philip”), which entered into a Tax Allocation Agreement (the “Agreement”) with Starfire Holding Corporation (“Starfire”). Mr. Icahn is the sole shareholder of Starfire. The Agreement provided that Starfire would pay all consolidated federal income taxes on behalf of the Philip consolidated group, which included PSC Metals. Philip was required to make payments to Starfire in an amount equal to the tax liability, if any, that it would have if it was to file as a consolidated group separate and apart from Starfire. Subsequent to our acquisition of PSC Metals on November 5, 2007, PSC Metals is no longer a party to the Agreement with Starfire.
PSC Metals sold material to Alliance Castings for the three and six months ended June 30, 2008 of approximately $5.8 million and $8.7 million, respectively, and for the three and six months ended June 30, 2007, approximately $3.1 million and $5.1 million, respectively. Mr. Icahn is a major shareholder of Alliance Castings.
Philip issued approximately $5.9 million and $6.3 million in letters of credit collateralizing certain of PSC Metals’ obligations, which remained outstanding at June 30, 2008 and December 31, 2007, respectively. During the third quarter of fiscal 2008, PSC Metals will replace the letters of credit issued through Philip and issue its own letters of credit to collaterize its obligations that it anticipates funding with cash generated through current operations.
Administrative Services
In July 2005, we entered into a license agreement with an affiliate for the non-exclusive use of approximately 1,514 square feet for which we paid monthly base rent of $13,000 plus 16.4% of certain “additional rent” (as defined herein). The license agreement was amended effective August 8, 2007 to reflect an increase in our portion of the office space to approximately 4,246 square feet or approximately 64.76% of the total space leased to an affiliate, of which 3,125 square feet is allocated to Icahn Capital. Under the amended license agreement, effective August 8, 2007, the monthly base rent is approximately $147,500, of which approximately $39,000 is allocated to the Holding Company and approximately $108,500 is allocated to Icahn Capital. We also pay 64.76% of the additional rent payable under the license agreement, which is allocated 17.10% to the Holding Company and 47.66% to Icahn Capital. The license agreement expires in May 2012. Under the amended agreement, base rent is subject to increases in July 2008 and December 2011. We are also entitled to certain annual rent credits each December beginning December 2005 and continuing through December 2011. For the three and six months ended June, 2008, we paid such affiliate $0.5 million and $1.0 million, respectively, and for the three and six months ended June 30, 2007, $0.4 million and $0.8 million, respectively, in connection with this licensing agreement.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
4. Related Party Transactions  – (continued)
An affiliate occupies a portion of certain office space leased by us. Monthly payments from the affiliate for the use of the space began on October 12, 2006. For each of the three and six months ended June 30, 2008 and 2007, we received $21,000 and $40,000, for the use of such space, respectively.
For the three and six months ended June 30, 2008, we paid $188,000 and $357,000, respectively, to XO Holdings, Inc., an affiliate of Icahn Enterprises GP, our general partner, for telecommunication services, and for the three and six months ended June 30, 2007, we paid $251,000 and $500,000, respectively.
We provide certain professional services to an affiliate of Icahn Enterprises GP for which we charged $0.5 million and $1.0 million for three and six months ended June 30, 2008, respectively, and for each of three and six months ended June 30, 2007, we charged $100,000. In October 2006, an affiliate remitted $0.4 million to us as an advance payment for future services. As of June 30, 2008, accounts payable, accrued expenses and other liabilities in the consolidated balance sheet included $3.5 million to be applied to our charges to the affiliate for services to be provided to it.
An affiliate provided certain professional services to WPI for which it incurred charges of approximately $50,000 and $74,000 for the three and six months ended June 30, 2008, respectively, and for the three and six months ended June 30, 2007, it incurred $222,000 and $314,000, respectively.
5. Investments and Related Matters
a. Investment Management Operations
Securities owned, and securities sold, not yet purchased consist of equities, bonds, bank debt and other corporate obligations, and derivatives, all of which are reported at fair value in our consolidated balance sheets. The following table summarizes the Private Funds’ securities owned, securities sold, not yet purchased and unrealized gains and losses on derivatives (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	June 30, 2008	 	December 31, 2007	
  	 	Amortized
Cost	 	Carrying
Value	 	Amortized
Cost	 	Carrying
Value	
Securities Owned, at fair value:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Common stock	 	$	6,407,223	 	 	$	5,260,137	 	 	$	4,929,067	 	 	$	5,133,486	 	
Convertible preferred stock	 	 	30,400	 	 	 	19,988	 	 	 	30,400	 	 	 	28,272	 	
Call options	 	 	131,334	 	 	 	63,293	 	 	 	196,562	 	 	 	177,127	 	
Put options	 	 	76,563	 	 	 	193,892	 	 	 	48,325	 	 	 	67,387	 	
Corporate debt	 	 	931,386	 	 	 	896,214	 	 	 	558,402	 	 	 	513,937	 	
Total Securities Owned, at fair value	 	$	7,576,906	 	 	$	6,433,524	 	 	$	5,762,756	 	 	$	5,920,209	 	
Securities Sold, Not Yet Purchased, at fair value:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Common stock	 	$	1,090,842	 	 	$	1,101,861	 	 	$	177,157	 	 	$	192,935	 	
Call options	 	 	13,038	 	 	 	1,702	 	 	 	—	 	 	 	—	 	
Put options	 	 	7,119	 	 	 	9,777	 	 	 	5,315	 	 	 	8,480	 	
Corporate debt	 	 	1,504	 	 	 	1,488	 	 	 	11,061	 	 	 	4,713	 	
Total Securities Sold, Not Yet Purchased, at fair value	 	$	1,112,503	 	 	$	1,114,828	 	 	$	193,533	 	 	$	206,128	 	
Unrealized Gains on Derivative
Contracts, at fair value:	 	$	15,057	 	 	$	79,522	 	 	$	74,340	 	 	$	110,181	 	
Unrealized Losses on Derivative
Contracts, at fair value:	 	$	81,041	 	 	$	157,425	 	 	$	17,602	 	 	$	15,726	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
5. Investments and Related Matters  – (continued)
Upon the adoption of Statement of Position No. 07-1, Clarification of the Scope of the Audit and Accounting Guide — Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investment Companies  (“SOP 07-1”), the General Partners lost their ability to retain specialized accounting pursuant to the AICPA Audit and Accounting Guide — Investment Companies. For those investments (i) that were deemed to be available-for-sale securities, (ii) that fall outside the scope of SFAS No. 115,  Accounting for Certain Investments in Debt and Equity Securities  (“SFAS No. 115”), or (iii) which the Private Funds would otherwise account for under the equity method, the Private Funds apply the fair value option pursuant to SFAS No. 159,  The Fair Value Option for Financial Assets and Financial Liabilities —  Including an Amendment of FAS 115  (“SFAS No. 159”), for such investments. The application of the fair value option pursuant to SFAS No. 159 is irrevocable. The Private Funds record unrealized gains and losses for the change in the fair value of these securities as a component of net gain from investment activities in the consolidated statements of operations.
The following table summarizes those investments for which the Private Funds would otherwise apply the equity method of accounting under Accounting Principles Board Opinion No. 18,  The Equity Method of Accounting for Investments in Common Stock  (“APB 18”), and are presented before non-controlling interests. The Private Funds applied the fair value option pursuant to SFAS No. 159 to such investments through June 30, 2008 (in $000s):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Private
Funds
Stock
Ownership
Percentage	 	Fair Value
June 30, 2008	 	Gains (Losses)	 	Gains (Losses)	 	
  	 	 	 	 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	 	 	 	 	 	 	 	 	 	
Investment	 	 	 	 	 	2008	 	2007	 	2008	 	2007	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adventrx
Pharmaceuticals Inc.	 	 	3.83	% 	 	$	1,289	 	 	$	(579	) 	 	$	138	 	 	$	(268	) 	 	$	(1,418	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BKF Capital Group Inc.	 	 	8.72	% 	 	 	1,564	 	 	 	229	 	 	 	(654	) 	 	 	21	 	 	 	(723	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Blockbuster Inc.	 	 	7.75	% 	 	 	35,304	 	 	 	(11,694	) 	 	 	(28,875	) 	 	 	(21,057	) 	 	 	(13,412	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Lear Corporation(1)	 	 	12.41	% 	 	 	136,071	 	 	 	(112,561	) 	 	 	(8,636	) 	 	 	(129,353	) 	 	 	58,343	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Motorola Inc.	 	 	6.39	% 	 	 	1,057,840	 	 	 	(300,048	) 	 	 	1,458	 	 	 	(784,619	) 	 	 	(66,625	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
WCI Communities Inc.	 	 	11.42	% 	 	 	6,984	 	 	 	(9,151	) 	 	 	(22,445	) 	 	 	(11,222	) 	 	 	(13,379	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
  	 	 	 	 	 	$	1,239,052	 	 	$	(433,804	) 	 	$	(59,014	) 	 	$	(946,498	) 	 	$	(37,214	) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

 	(1)	Holding Company owns approximately 0.4% as of June 30, 2008. See below for additional information.	
The Private Funds assess the applicability of APB 18 to their investments based on a combination of qualitative and quantitative factors, including overall stock ownership of the Private Funds combined with those of affiliates of Icahn Enterprises.
We believe that these investments as noted in the above table are not material, individually or in the aggregate, to our consolidated financial statements. These companies are registered SEC filers and their consolidated financial statements are available at  www.sec.gov .
Investments in Variable Interest Entities
The General Partners consolidate certain variable interest entities (“VIEs”) when they are determined to be their primary beneficiary, either directly or indirectly through other consolidated subsidiaries. The assets of the consolidated VIEs are primarily classified within cash and cash equivalents and securities owned, at fair value in the consolidated balance sheets. The liabilities of the consolidated VIEs are primarily classified within
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
5. Investments and Related Matters  – (continued)
securities sold, not yet purchased, at fair value, subscriptions received in advance and redemptions payable in the consolidated balance sheets and are non-recourse to the General Partners’ general credit. Any creditors of VIEs do not have recourse against the general credit of the General Partners solely as a result of our including these VIEs in our consolidated financial statements.
The consolidated VIEs consist of the Offshore Fund and each of the Offshore Master Funds. The General Partners sponsored the formation of and manage each of these VIEs and, in some cases, have an investment therein.
The following table presents information regarding interests in VIEs for which the General Partners hold a variable interest as of June 30, 2008 (in $000s):
 	 	 	 	 	 	 	 	 	 	 	
 	 	General Partners
are the Primary Beneficiary	 	General Partners
are not the Primary Beneficiary	
  	 	Net Assets	 	General
Partners'
Interests	 	Pledged
Collateral (1)	 	Net Assets	 	General
Partners'
Interests	
Offshore Fund and
Offshore Master Funds	 	$	4,123,396	 	 	$	7,067	(2) 	 	$	276,769	 	 	$	710,359	 	 	$	134	(2) 	

 	(1)	Includes collateral pledged in connection with securities sold, not yet purchased and derivative contracts.	
 	(2)	Amount represents General Partners' maximum exposure to loss.	
b. All Other Operations
Investments consist of the following (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	June 30, 2008	 	December 31, 2007	
  	 	Amortized
Cost	 	Carrying
Value	 	Amortized
Cost	 	Carrying
Value	
Available for Sale
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Marketable equity and debt securities	 	$	82,683	 	 	$	74,966	 	 	$	118,785	 	 	$	118,872	 	
Other investments	 	 	—	 	 	 	—	 	 	 	172,197	 	 	 	173,323	 	
Total available for sale	 	 	82,683	 	 	 	74,966	 	 	 	290,982	 	 	 	292,195	 	
Trading
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Investment in ImClone Systems, at fair value	 	 	122,122	 	 	 	184,644	 	 	 	122,122	 	 	 	196,235	 	
Investment in Lear Corporation, at fair value	 	 	12,500	 	 	 	4,758	 	 	 	12,500	 	 	 	9,282	 	
Total trading	 	 	134,622	 	 	 	189,402	 	 	 	134,622	 	 	 	205,517	 	
Other securities	 	 	14,720	 	 	 	14,720	 	 	 	14,848	 	 	 	14,848	 	
Total investments	 	$	232,025	 	 	$	279,088	 	 	$	440,452	 	 	$	512,560	 	
The following table summarizes those investments for which the Holding Company has applied the fair value option pursuant to SFAS No. 159 through June 30, 2008 (in $000s). It is our policy to apply the fair value option to all of our investments that would be subject to the equity method of accounting pursuant to APB 18. We record unrealized gains and losses for the change in fair value of such investments as a component of net gain (loss) from investments in the consolidated statements of operations. We believe that these investments, individually or in the aggregate, are not material to our consolidated financial statements. These companies are registered SEC filers and their consolidated financial statements are available at  www.sec.gov .
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
5. Investments and Related Matters  – (continued)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Holding
Company
Stock
Ownership
Percentage	 	Fair Value
June 30, 2008	 	Gains (Losses)	 	Gains (Losses)	 	
  	 	 	 	 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	 	 	 	 	 	 	 	 	 	
Investment	 	 	 	 	 	2008	 	2007	 	2008	 	2007	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
ImClone Systems Incorporated	 	 	5.3	% 	 	$	184,644	 	 	$	(8,945	) 	 	$	(24,689	) 	 	$	(11,592	) 	 	$	39,247	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Lear Corporation	 	 	0.4	% 	 	 	4,758	 	 	 	(3,936	) 	 	 	—	 	 	 	(4,523	) 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
  	 	 	 	 	 	$	189,402	 	 	$	(12,881	) 	 	$	(24,689	) 	 	$	(16,115	) 	 	$	39,247	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
6. Fair Value Measurements
We adopted SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), as of January 1, 2007, which, among other things, requires enhanced disclosures about investments that are measured and reported at fair value. SFAS No. 157 establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Investments measured and reported at fair value are classified and disclosed in one of the following categories:
Level 1 — Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include listed equities and listed derivatives. As required by SFAS No. 157, we do not adjust the quoted price for these investments, even in situations where we hold a large position.
Level 2 — Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments that are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives.
Level 3 — Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
6. Fair Value Measurements  – (continued)
The following table summarizes the valuation of our investments by the above SFAS No. 157 fair value hierarchy levels as of June 30, 2008 (in $000s).
Investment Management Operations
 	 	 	 	 	 	 	
 	 	Level 1	 	Level 2	 	Total	
ASSETS
	 	 	  	 	 	 	  	 	 	 	  	 	
Securities owned	 	$	5,032,631	 	 	$	1,400,893	 	 	$	6,433,524	 	
Unrealized gains on derivative contracts	 	 	42,615	 	 	 	36,907	 	 	 	79,522	 	
  	 	$	5,075,246	 	 	$	1,437,800	 	 	$	6,513,046	 	
LIABILITIES
	 	 	  	 	 	 	  	 	 	 	  	 	
Securities sold, not yet purchased	 	$	1,100,503	 	 	$	14,325	 	 	$	1,114,828	 	
Unrealized losses on derivative contracts	 	 	—	 	 	 	157,425	 	 	 	157,425	 	
  	 	$	1,100,503	 	 	$	171,750	 	 	$	1,272,253	 	
All Other Operations
 	 	 	 	 	 	 	
 	 	Level 1	 	Level 2	 	Total	
ASSETS
	 	 	  	 	 	 	  	 	 	 	  	 	
Available for sale investments:
	 	 	  	 	 	 	  	 	 	 	  	 	
Marketable equity and debt securities	 	$	74,966	 	 	$	—	 	 	$	74,966	 	
Other securities	 	 	—	 	 	 	—	 	 	 	—	 	
  	 	 	74,966	 	 	 	—	 	 	 	74,966	 	
Trading investments:
	 	 	  	 	 	 	  	 	 	 	  	 	
Investment in ImClone Systems Inc.	 	 	184,644	 	 	 	—	 	 	 	184,644	 	
Investment in Lear Corporation	 	 	4,758	 	 	 	—	 	 	 	4,758	 	
  	 	 	189,402	 	 	 	—	 	 	 	189,402	 	
Unrealized gains on derivative contracts	 	 	—	 	 	 	1,324	 	 	 	1,324	 	
  	 	$	264,368	 	 	$	1,324	 	 	$	265,692	 	
LIABILITIES
	 	 	  	 	 	 	  	 	 	 	  	 	
Unrealized losses on derivative contracts	 	$	—	 	 	$	8,631	 	 	$	8,631	 	
  	 	$	—	 	 	$	8,631	 	 	$	8,631	 	
7. Financial Instruments, Off-Balance-Sheet Risk, Concentrations of Credit Risk and Guarantees
The Private Funds currently maintain cash deposits and cash equivalents with major financial institutions. Most of the Onshore Fund’s and Offshore Master Funds’ investments are held by, and its depository and clearing operations are transacted by, several prime brokers and a custodian. These financial institutions are members of major securities exchanges. The Onshore Fund and Offshore Master Funds also have relationships with several financial institutions with whom they trade derivatives and other financial instruments.
In the normal course of business, the Private Funds trade various financial instruments and enter into certain investment activities, which may give rise to off-balance-sheet risk. Currently, the Private Funds invest in futures, options, credit default swaps and securities sold, not yet purchased. These financial instruments represent future commitments to purchase or sell other financial instruments or to exchange an amount of cash
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
7. Financial Instruments, Off-Balance-Sheet Risk, Concentrations of Credit Risk and Guarantees  – (continued)
based on the change in an underlying instrument at specific terms at specified future dates. Risks arise with these financial instruments from potential counterparty non-performance and from changes in the market values of underlying instruments.
Securities sold, not yet purchased represent obligations of the Private Funds to deliver the specified security, thereby creating a liability to repurchase the security in the market at prevailing prices. Accordingly, these transactions result in off-balance-sheet risk, as the Private Funds’ satisfaction of the obligations may exceed the amount recognized in the consolidated balance sheets. The Private Funds’ investments in securities and amounts due from broker are partially restricted until the Private Funds satisfy the obligation to deliver the securities sold, not yet purchased.
The Private Funds and the Holding Company have entered into various types of swap contracts with other counterparties. These agreements provide that we are entitled to receive or are obligated to pay in cash an amount equal to the increase or decrease, respectively, in the value of the underlying shares, debt and other instruments that are the subject of the contracts, during the period from inception of the applicable agreement to its expiration. In addition, pursuant to the terms of such agreements, we are entitled to receive other payments, including interest, dividends and other distributions made in respect of the underlying shares, debt and other instruments during the specified time frame. We are also required to pay to our counterparty a floating interest rate equal to the product of the notional amount multiplied by an agreed-upon rate, and we receive interest on any cash collateral that we post to the counterparty at the federal funds or LIBOR rate in effect for such period.
The Private Funds trade futures contracts. A futures contract is a firm commitment to buy or sell a specified quantity of a standardized amount of a deliverable grade commodity, security, currency or cash at a specified price and specified future date unless the contract is closed before the delivery date. Payments (or variation margin) are made or received by the Private Funds each day, depending on the daily fluctuations in the value of the contract, and the whole value change is recorded as an unrealized gain or loss by the Private Funds. When the contract is closed, the Private Funds record a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The Private Funds utilize forward contracts to seek to protect their assets denominated in foreign currencies from losses due to fluctuations in foreign exchange rates. The Private Funds’ exposure to credit risk associated with non-performance of forward foreign currency contracts is limited to the unrealized gains or losses inherent in such contracts, which are recognized in unrealized gains or losses on derivative, futures and foreign currency contracts, at fair value in the consolidated balance sheets.
From time to time, the Private Funds also purchase and write option contracts. As a writer of option contracts, the Private Funds receive a premium at the outset and then bear the market risk of unfavorable changes in the price of the underlying financial instrument. As a result of writing option contracts, the Private Funds are obligated to purchase or sell, at the holder’s option, the underlying financial instrument. Accordingly, these transactions result in off-balance-sheet risk, as the Private Funds’ satisfaction of the obligations may exceed the amount recognized in the consolidated balance sheets. At June 30, 2008 and December 31, 2007, the maximum payout amounts relating to written put options were $101.1 million and $461.4 million, respectively. As of June 30, 2008 and December 31, 2007, the carrying amounts of the liability under written put options recorded within securities sold, not yet purchased, at fair value was $7.4 million and $8.5 million, respectively.
FIN 45 requires the disclosure of information about obligations under certain guarantee arrangements. FIN 45 defines guarantees as contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity’s failure to perform under an agreement as well as indirect guarantees of the indebtedness of others.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
7. Financial Instruments, Off-Balance-Sheet Risk, Concentrations of Credit Risk and Guarantees  – (continued)
The Private Funds have entered into certain derivative contracts, in the form of credit default swaps, that meet the accounting definition of a guarantee under FIN 45, whereby the occurrence of a credit event with respect to the issuer of the underlying financial instrument may obligate the Private Funds to make a payment. As of June 30, 2008 and December 31, 2007, the Private Funds have such credit default swaps with a maximum notional amount of approximately $319.1 million and $252.0 million, respectively, with terms ranging from one to five years. We estimate that our potential risk related to these credit default swaps approximates 10% of such notional amounts.
8. Inventories, Net
Metals Inventories.  Inventories at our Metals segment are stated at the lower of cost or market. Cost is determined using the average cost method. The production and accounting process utilized by the Metals segment to record recycled metals inventory quantities relies on significant estimates.
Metals inventories consisted of the following (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Ferrous	 	$	42,167	 	 	$	39,078	 	
Non-ferrous	 	 	13,325	 	 	 	9,658	 	
Secondary	 	 	17,385	 	 	 	23,546	 	
  	 	$	72,877	 	 	$	72,282	 	
Home Fashion Inventories.  Inventories at our Home Fashion segment are stated at the lower of cost or market. Cost is determined using the first-in-first-out method. The cost of manufactured goods includes material, labor and factory overhead. WPI maintains reserves for estimated excess, slow-moving and obsolete inventory as well as inventory whose carrying value is in excess of net realizable value. A portion of its inventories serves as collateral under West Point Home Inc.’s unused senior secured revolving credit facility.
Home Fashion inventories consisted of the following (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Raw materials and supplies	 	$	12,862	 	 	$	14,427	 	
Goods in process	 	 	35,545	 	 	 	46,483	 	
Finished goods	 	 	124,351	 	 	 	133,031	 	
  	 	$	172,758	 	 	$	193,941	 	
Total Inventories (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Metals segment	 	$	72,877	 	 	$	72,282	 	
Home Fashion segment	 	 	172,758	 	 	 	193,941	 	
  	 	$	245,635	 	 	$	266,223	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
9. Property, Plant and Equipment, Net
Property, plant and equipment consist of the following (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Land	 	$	52,003	 	 	$	52,299	 	
Buildings and improvements	 	 	139,003	 	 	 	139,673	 	
Machinery, equipment and furniture	 	 	212,497	 	 	 	223,104	 	
Assets leased to others	 	 	127,063	 	 	 	128,186	 	
Construction in progress	 	 	112,692	 	 	 	101,700	 	
  	 	 	643,258	 	 	 	644,962	 	
Less accumulated depreciation and amortization	 	 	(122,835	) 	 	 	(111,835	) 	
Property, plant and equipment, net	 	$	520,423	 	 	$	533,127	 	
Depreciation and amortization expense from continuing operations related to property, plant and equipment for the three and six months ended June 30, 2008 were $7.7 million and $14.9 million, respectively, and for the three and six months ended June 30, 2007, $8.9 million and $17.1 million, respectively.
10. Non-Controlling Interests
Non-controlling interests consist of the following (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Investment Management operations	 	$	6,179,469	 	 	$	6,594,014	 	
All Other operations:
	 	 	  	 	 	 	  	 	
WPI	 	 	99,290	 	 	 	116,496	 	
NEGI	 	 	23,993	 	 	 	24,053	 	
Total other	 	 	123,283	 	 	 	140,549	 	
Total non-controlling interests	 	$	6,302,752	 	 	$	6,734,563	 	
Investment Management Operations
The Investment Management operations consolidate those entities in which (i) they have an investment of more than 50% and have control over significant operating, financial and investing decisions of the entity, (ii) they have a controlling, general partner interest pursuant to EITF Issue No. 04-05,  Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“EITF 04-05”), or (iii) they are the primary beneficiary of a VIE pursuant to FIN 46R. The Investment Funds and the Offshore Fund are consolidated into our financial statements even though we have only a minority interest in the equity and income of these funds. As a result, our consolidated financial statements reflect the assets, liabilities, revenues, expenses and cash flows of these funds on a gross basis, rather than reflecting only the value of our investments in such funds. As of June 30, 2008, the net asset value of the consolidated Private Funds on our consolidated balance sheet was approximately $6.9 billion, while the net asset value of our investments in these consolidated funds was approximately $693.0 million. The majority ownership interests in these funds, which represent the portion of the consolidated Private Funds’ net assets and net income attributable to the limited partners and shareholders in the consolidated Private Funds for the periods presented, are reflected as non-controlling interests in the consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
11. Debt
Debt consists of the following (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Senior unsecured variable rate convertible notes due 2013 – Icahn Enterprises	 	$	600,000	 	 	$	600,000	 	
Senior unsecured 7.125% notes due 2013 – Icahn Enterprises	 	 	974,043	 	 	 	973,387	 	
Senior unsecured 8.125% notes due 2012 – Icahn Enterprises	 	 	351,731	 	 	 	351,570	 	
Senior secured 7.85% notes due 2012 – ACEP	 	 	—	 	 	 	215,000	 	
Borrowings under credit facility – ACEP	 	 	—	 	 	 	40,000	 	
Mortgages payable	 	 	101,240	 	 	 	104,030	 	
Other	 	 	8,362	 	 	 	14,796	 	
Total debt	 	 	2,035,376	 	 	 	2,298,783	 	
Less debt related to assets held for sale	 	 	—	 	 	 	(257,330	) 	
  	 	$	2,035,376	 	 	$	2,041,453	 	
Senior Unsecured Variable Rate Convertible Notes Due 2013 — Icahn Enterprises
In April 2007, we issued an aggregate of $600.0 million of variable rate senior convertible notes due 2013 (the “variable rate notes”). The variable rate notes were sold in a private placement pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and issued pursuant to an indenture dated as of April 5, 2007, by and among us, as issuer, Icahn Enterprises Finance Corp. (“Icahn Enterprises Finance”), as co-issuer, and Wilmington Trust Company, as trustee. Icahn Enterprises Finance, our wholly owned subsidiary, was formed solely for the purpose of serving as a co-issuer of our debt securities in order to facilitate offerings of the debt securities. The variable rate notes bear interest at a rate of three-month LIBOR minus 125 basis points, but the all-in-rate can be no less than 4.0% nor more than 5.5%, and are convertible into our depositary units at a conversion price of $132.595 per unit per $1,000 principal amount, subject to adjustments in certain circumstances. As of June 30, 2008, the interest rate was 4.0%. The interest on the variable rate notes is payable quarterly on each January 15, April 15, July 15 and October 15. The variable rate notes mature on January 15, 2013, assuming they have not been converted to depositary units before their maturity date.
In the event that we declare a cash dividend or similar cash distribution in any calendar quarter with respect to our depositary units in an amount in excess of $0.10 per depositary unit (as adjusted for splits, reverse splits and/or stock dividends), the indenture governing the variable rate notes requires that we simultaneously make such distribution to holders of the variable rate notes in accordance with a formula set forth in the indenture. On April 1, 2008 and June 3, 2008, we paid cash dividends aggregating $1.4 million to holders of our variable rate notes in respect to our dividend payment to our depositary unit holders.
Senior Unsecured Notes — Icahn Enterprises
Senior Unsecured 7.125% Notes Due 2013
On February 7, 2005, we issued $480.0 million aggregate principal amount of 7.125% senior unsecured notes due 2013 (the “7.125% notes”), priced at 100% of principal amount. The 7.125% notes were issued pursuant to an indenture dated February 7, 2005 among us, as issuer, Icahn Enterprises Finance, as co-issuer, Icahn Enterprises Holdings, as guarantor, and Wilmington Trust Company, as trustee (referred to herein as the “2005 Indenture”). Other than Icahn Enterprises Holdings, no other subsidiaries guarantee payment on the notes.
On January 16, 2007, we issued an additional $500.0 million aggregate principal amount of 7.125% notes (the “additional 7.125% notes” and, together with the 7.125% notes, the “notes”), priced at 98.4% of par, or at a discount of 1.6%, pursuant to the 2005 Indenture. The notes have a fixed annual interest rate of 7.125%, which is paid every six months on February 15 and August 15, and will mature on February 15, 2013.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
11. Debt  – (continued)
As described below, the 2005 Indenture restricts the ability of Icahn Enterprises and Icahn Enterprises Holdings, subject to certain exceptions, to, among other things: incur additional debt; pay dividends or make distributions; repurchase units; create liens; and enter into transactions with affiliates.
Senior Unsecured 8.125% Notes Due 2012
On May 12, 2004, Icahn Enterprises and Icahn Enterprises Finance co-issued senior unsecured 8.125% notes due 2012 (“8.125% notes”) in the aggregate principal amount of $353.0 million. The 8.125% notes were issued pursuant to an indenture, dated as of May 12, 2004, among Icahn Enterprises, Icahn Enterprises Finance, Icahn Enterprises Holdings, as guarantor, and Wilmington Trust Company, as trustee. The 8.125% notes were priced at 99.266% of principal amount and have a fixed annual interest rate of 8.125%, which is paid every six months on June 1 and December 1. The 8.125% notes will mature on June 1, 2012. Other than Icahn Enterprises Holdings, no other subsidiaries guarantee payment on the notes.
As described below, the indenture governing the 8.125% notes restricts the ability of Icahn Enterprises and Icahn Enterprises Holdings, subject to certain exceptions, to, among other, things: incur additional debt; pay dividends or make distributions; repurchase units; create liens and enter into transactions with affiliates.
Senior Unsecured Notes Restrictions and Covenants
The 2005 Indenture governing our senior unsecured 7.125% notes and the indenture governing our senior unsecured 8.125% notes restrict the payment of cash distributions, the purchase of equity interests or the purchase, redemption, defeasance or acquisition of debt subordinated to the senior unsecured notes. The indentures also restrict the incurrence of debt or the issuance of disqualified stock, as defined in the indentures, with certain exceptions. In addition, the indentures governing our senior unsecured notes require that on each quarterly determination date that we and the guarantor of the notes (currently only Icahn Enterprises Holdings) maintain certain minimum financial ratios, as defined in the applicable indenture. The indentures also restrict the creation of liens, mergers, consolidations and sales of substantially all of our assets, and transactions with affiliates.
As of June 30, 2008, we are in compliance with all covenants, including maintaining certain minimum financial ratios, as defined in the applicable indentures, and we and Icahn Enterprises Holdings could have incurred up to approximately $1.6 billion of additional indebtedness.
Senior Secured Revolving Credit Facility — Icahn Enterprises
On August 21, 2006, we and Icahn Enterprises Finance as the borrowers, and certain of our subsidiaries, as guarantors, entered into a credit agreement with Bear Stearns Corporate Lending Inc., as administrative agent, and certain other lender parties. Under the credit agreement, we are permitted to borrow up to $150.0 million, including a $50.0 million sub-limit that may be used for letters of credit. Borrowings under the agreement, which are based on our credit rating, bear interest at LIBOR plus 1.0% to 2.0%. We pay an unused line fee of 0.25% to 0.5%. As of June 30, 2008, there were no borrowings under the facility.
Obligations under the credit agreement are guaranteed and secured by liens on substantially all of the assets of certain of our indirect wholly owned holding company subsidiaries. The credit agreement has a term of four years and all amounts are due and payable on August 21, 2010. The credit agreement includes covenants that, among other things, restrict the creation of liens and certain dispositions of property by holding company subsidiaries that are guarantors. Obligations under the credit agreement are immediately due and payable upon the occurrence of certain events of default.
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
11. Debt  – (continued)
Senior Secured 7.85% Notes Due 2012 and Senior Secured Revolving Credit Facility — ACEP
As described in Note 1, “Description of Business and Basis of Presentation — Gaming Divestiture,” on February 20, 2008, American Entertainment Properties Corp (“AEP”), sold all of the issued and outstanding membership interests of ACEP. Pursuant to the terms of the agreement, AEP repaid the principal and ACEP repaid the interest, prepayment penalty or premiums due on ACEP’s 7.85% senior secured notes due 2012 and ACEP’s senior secured credit facility.
Mortgages Payable
Mortgages payable, all of which are non-recourse to us, bear interest at rates between 4.97% and 7.99% and have maturities between September 1, 2008 and July 1, 2016.
Secured Revolving Credit Agreement — WestPoint Home, Inc.
On June 16, 2006, WestPoint Home, Inc. an indirect wholly owned subsidiary of WPI, entered into a $250.0 million loan and security agreement with Bank of America, N.A., as administrative agent and lender. On September 18, 2006, The CIT Group/Commercial Services, Inc., General Electric Capital Corporation and Wells Fargo Foothill, LLC were added as lenders under this credit agreement. Under the five-year agreement, borrowings are subject to a monthly borrowing base calculation and include a $75.0 million sub-limit that may be used for letters of credit. Borrowings under the agreement bear interest, at the election of WestPoint Home, either at the prime rate adjusted by an applicable margin ranging from minus 0.25% to plus 0.50% or LIBOR adjusted by an applicable margin ranging from plus 1.25% to 2.00%. WestPoint Home pays an unused line fee of 0.25% to 0.275%. Obligations under the agreement are secured by WestPoint Home’s receivables, inventory and certain machinery and equipment.
The agreement contains covenants including, among others, restrictions on the incurrence of indebtedness, investments, redemption payments, distributions, acquisition of stock, securities or assets of any other entity and capital expenditures. However, WestPoint Home is not precluded from effecting any of these transactions if excess availability, after giving effect to such transaction, meets a minimum threshold.
As of June 30, 2008, there were no borrowings under the agreement, but there were outstanding letters of credit of approximately $12.7 million. Based upon the eligibility and reserve calculations within the agreement, WestPoint Home had unused borrowing availability of approximately $65.2 million at June 30, 2008.
12. Compensation Arrangements
Investment Management Operations
Prior to January 1, 2008, the General Partners, Icahn Management (for periods through August 8, 2007) and New Icahn Management (for the period from August 8, 2007 through December 31, 2007) had agreements with certain of their employees whereby these employees had been granted rights to participate in a portion of the management fees and incentive allocations earned by the General Partners, Icahn Management and New Icahn Management. As discussed below, effective January 1, 2008, these employee rights to receive a portion of the management fees were terminated. As discussed further in Note 2, “Operating Units —  Investment Management Operations,” effective January 1, 2008, (i) the management agreements and the management fee payable thereunder were terminated and (ii) the partnership agreements of the Offshore Master Funds and the Onshore Fund were amended to provide that the General Partners will provide, or direct their affiliates to provide, the Services to the Private Funds and in consideration thereof the General Partners will receive special profits interest allocations in the Onshore Fund and the Offshore Master Funds. In addition, we amended the Contribution Agreement and the employment agreements of certain employees to accommodate the termination of the management agreements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
12. Compensation Arrangements  – (continued)
Effective January 1, 2008, the General Partners amended employment agreements with certain of their employees whereby such employees have been granted rights to participate in a portion of the special profits interest allocations (in certain cases, whether or not such special profits interest is earned by the Investment Funds) effective January 1, 2008 and incentive allocations by the General Partners, typically net of certain expenses and generally subject to various vesting provisions. The vesting period of these rights is generally between two and seven years, and such rights expire at the end of the contractual term of each respective employment agreement. The unvested amounts and vested amounts that have not been withdrawn by the employee remain generally invested in the Investment Funds and earn the rate of return of these funds, before the effects of any special profits interest allocations effective January 1, 2008 or incentive allocations, which are waived on such amounts. Accordingly, these rights are accounted for as liabilities in accordance with SFAS No. 123 (Revised 2004),  Share-Based Payment  (“SFAS 123R”), and remeasured at fair value each reporting period until settlement.
Prior to January 1, 2008, certain employees were granted rights to participate in a portion of the management fees and incentive allocations earned by the General Partners, Icahn Management (for periods through August 8, 2007) and New Icahn Management (for the period from August 8, 2007 through December 31, 2007). The vesting period of such rights was generally between two and seven years and expired at the end of the contractual term of each respective employment agreement. Up to 100% of the amounts earned annually under such rights in respect of management fees were eligible to be deferred for a period not to exceed ten years from the date of deferral, based on an annual election made by the employee. Effective January 1, 2008, the employees’ rights to receive a portion of the management fees were terminated.
The fair value of unvested amounts and vested amounts that have not been withdrawn by the employee in respect of special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) is determined at the end of each reporting period based, in part, on the (i) fair value of the underlying net assets of the Private Funds, upon which the respective special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) are based and (ii) performance of the funds in which such amounts are reinvested. The carrying value of such amounts represents the allocable special profits interest allocation effective January 1, 2008 (and prior to January 1, 2008, management fees) and the appreciation or depreciation thereon. These amounts approximate fair value because the appreciation or depreciation on such amounts is based on the fair value of the Private Funds’ investments, which are marked-to-market through earnings on a quarterly basis.
The General Partners, Icahn Management (for periods through August 8, 2007) and New Icahn Management (for the period from August 8, 2007 through December 31, 2007) recorded compensation expense of $1.3 million and $4.2 million related to these rights for the three and six months ended June 30, 2008, respectively, and for the three and six months ended June 30, 2007, $8.2 million and $17.0 million, respectively. Compensation expense is included in expenses of our Investment Management operations in the consolidated statements of operations. Compensation expense arising from grants in special profits interest allocations is recognized in the consolidated financial statements over the vesting period. Accordingly, unvested balances of special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) allocated to certain employees are not reflected in the consolidated financial statements. Unvested amounts not yet recognized as compensation expense within the consolidated statements of operations were $6.8 million and $9.7 million as of June 30, 2008 and December 31, 2007, respectively. That cost is expected to be recognized over a weighted average of 3.29 years. Cash paid to settle rights that had been withdrawn for the six months ended June 30, 2008 and 2007 was $4.0 million and $6.6 million, respectively.
The liabilities incurred by Icahn Management related to the rights granted to certain employees to participate in a portion of the management fees earned by Icahn Management remained with Icahn Management upon the execution of the Contribution Agreement on August 8, 2007. However, because the employees to
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
12. Compensation Arrangements  – (continued)
whom these rights were granted became employees of New Icahn Management on August 8, 2007, New Icahn Management recognized the future compensation expense associated with the unvested portion of rights granted by Icahn Management through December 31, 2007, even though such liability will be settled by Icahn Management, with a corresponding increase to partners’ equity. As of January 1, 2008, New Icahn Management distributed its net assets to Icahn Capital. Accordingly, effective January 1, 2008, employees of New Icahn Management became employees of Icahn Capital and such future compensation expense associated with the unvested portion of rights granted by Icahn Management were recognized by Icahn Capital.
13. Employee Benefit Plans
We and certain of our subsidiaries have retirement savings plans under Section 401(k) of the Code covering our non-union employees. Under the plans, employees are entitled to defer, within prescribed limits, a portion of their income on a pre-tax basis through contributions to the plans. We currently match the deferrals based upon certain criteria, including levels of participation by our employees. We recorded charges for matching contributions of $0.6 million and $1.2 million for the three and six months ended June 30, 2008, respectively, and for the three and six months ended June 30, 2007, $0.5 million and $1.3 million, respectively.
We adopted SFAS No. 158, Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans — An Amendment to FASB Statement Nos. 87, 88, 106 and 132  (“SFAS No. 158”), as of December 31, 2007. The adoption of SFAS No. 158 did not have a material impact on our consolidated financial statements. SFAS No. 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit pension plan as an asset or liability in the statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.
14. Preferred Limited Partnership Units
Pursuant to certain rights offerings consummated in 1995 and 1997, preferred units were issued. Each preferred unit has a liquidation preference of $10.00 and entitles the holder to receive distributions, payable solely in additional preferred units, at the rate of $0.50 per preferred unit per annum (which is equal to a rate of 5% of the liquidation preference thereof), payable annually at the end of March (each referred to herein as a Payment Date). On any Payment Date, we, with the approval of the Audit Committee, may opt to redeem all of the preferred units for a price, payable either in all cash or by issuance of additional depositary units, equal to the liquidation preference of the preferred units, plus any accrued but unpaid distributions thereon. On March 31, 2010, we must redeem all of the preferred units on the same terms as any optional redemption.
Pursuant to the terms of the preferred units, on February 29, 2008, we declared our scheduled annual preferred unit distribution payable in additional preferred units at the rate of 5% of the liquidation preference per preferred unit of $10.00. The distribution was paid on March 28, 2008 to holders of record as of March 14, 2008. A total of 595,181 additional preferred units were issued. As of June 30, 2008, the number of authorized preferred units was 13,000,000. As of June 30, 2008 and December 31, 2007, 12,502,254 and 11,907,073 preferred units were issued and outstanding, respectively.
We recorded $1.6 million and $3.1 million of interest expense for the three and six months ended June 30, 2008, and $1.5 and $2.9 million for the three and six months ended June 30, 2007, respectively, in connection with the preferred units distribution.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
15. Earnings Per LP Unit
Basic earnings per LP unit are based on net earnings that are attributable to limited partners after deducting preferred pay-in-kind distributions to preferred unitholders. Net earnings available for limited partners are divided by the weighted average number of LP units outstanding. Diluted earnings per LP unit are based on basic earnings adjusted for interest charges applicable to the variable rate notes and earnings before the preferred pay-in-kind distributions as well as the weighted average number of units and equivalent units outstanding. The preferred units are considered to be equivalent units for the purpose of calculating net earnings per LP unit. All equivalent units have been excluded from the calculation of diluted earnings per LP unit for the three and six months ended June 30, 2008 and 2007 as the effect of including them would have been anti-dilutive.
The following table sets forth the allocation of net income attributable to limited partners and the computation of basic and diluted earnings per LP unit for the periods indicated (in 000s, except per unit data):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Net (loss) income from continuing operations	 	$	(96,919	) 	 	$	43,615	 	 	$	(115,804	) 	 	$	226,940	 	
Less: Income from common control acquisitions allocated to general partner	 	 	—	 	 	 	(89,749	) 	 	 	—	 	 	 	(214,610	) 	
  	 	 	(96,919	) 	 	 	(46,134	) 	 	 	(115,804	) 	 	 	12,330	 	
Limited partners' 98.01% share of (loss) income	 	 	(94,990	) 	 	 	(45,214	) 	 	 	(113,500	) 	 	 	12,085	 	
Basic and diluted (loss) income from continuing operations allocated to limited partners	 	$	(94,990	) 	 	$	(45,214	) 	 	$	(113,500	) 	 	$	12,085	 	
Basic and diluted (loss) income from discontinued operations allocated to limited partners	 	$	(1,886	) 	 	$	20,204	 	 	$	501,883	(1) 	 	$	57,561	 	
Weighted average LP units outstanding	 	 	70,490	 	 	 	61,857	 	 	 	70,490	 	 	 	61,857	 	
Net (loss) earnings per LP unit (basic and diluted)	 	$	(1.35	) 	 	$	(0.73	) 	 	$	(1.61	) 	 	$	0.20	 	
Net (loss) income from discontinued operations per LP unit (basic and diluted)	 	 	(0.02	) 	 	 	0.33	 	 	 	7.12	 	 	 	0.93	 	
Basic and diluted (loss) earnings per LP Unit	 	$	(1.37	) 	 	$	(0.40	) 	 	$	5.51	 	 	$	1.13	 	

 	(1)	Includes a charge of $24,761 allocated to the general partner relating to the sale of ACEP.	
34

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
15. Earnings Per LP Unit  – (continued)
As their effect would have been anti-dilutive, the following equivalent units have been excluded from the weighted average LP units outstanding for the periods indicated (in 000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended
June 30,	 	Six Months Ended
June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Redemption of preferred LP units	 	 	1,493	 	 	 	1,236	 	 	 	1,309	 	 	 	1,125	 	
Variable rate notes	 	 	4,525	 	 	 	4,326	 	 	 	4,525	 	 	 	2,175	 	
16. Segment Reporting
As of June 30, 2008, our four reportable segments are: (1) Investment Management; (2) Metals; (3) Real Estate; and (4) Home Fashion. Our Investment Management segment provides investment advisory and certain management services to the Private Funds, but does not provide such services to any other entities, individuals or accounts. Our Metals segment consists of PSC Metals. Our Real Estate segment includes rental real estate, property development and the operation of resort properties associated with our residential developments. The three related operating lines of our Real Estate segment are all individually immaterial and have been aggregated for purposes of reporting financial information related to its operations. Our Home Fashion segment consists of WPI. In addition to our four reportable segments, we present the results of the Holding Company which includes the unconsolidated results of Icahn Enterprises and Icahn Enterprises Holdings, and investment activity and expenses associated with the activities of the Holding Company.
We assess and measure segment operating results based on segment earnings as disclosed below. Segment earnings from operations are not necessarily indicative of cash available to fund cash requirements, nor synonymous with cash flow from operations. Certain terms of financings for our Home Fashion and Real Estate segments impose restrictions on the segments’ ability to transfer funds to us, including restrictions on dividends, distributions, loans and other transactions.
In the table below, the Investment Management segment is represented by the first four columns. The first column, entitled Icahn Enterprises’ Interests, represents our interests in the results of operations of the Investment Management segment without the impact of eliminations arising from the consolidation of the Private Funds. This includes the gross amount of any special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees), incentive allocations and returns on investments in the Private Funds that are attributable to Icahn Enterprises only. This also includes gains and losses on Icahn Enterprises’ direct investments in the Private Funds. The second column represents the total consolidated income and expenses of the Private Funds for all investors, including Icahn Enterprises, before eliminations. The third column represents the eliminations required in order to arrive at our consolidated U.S. GAAP reported income for the segment.
35

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
16. Segment Reporting  – (continued)
The following tables set forth consolidated operating results for our segments to arrive at our consolidated income from continuing operations (in $000s):
For the Three Months Ended June 30, 2008

 	 	Investment Management Operations	 	All Other Operations	 	Total
U.S. GAAP
Reported
Income	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds
	 	Eliminations
	 	U.S. GAAP
Reported
Income	 	Metals	 	Real
Estate	 	Home
Fashion	 	Holding
Company	 	 	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Special profits interest
allocation	 	$	(5,046	) 	 	$	—	 	 	$	5,046	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	
Incentive
allocations	 	 	(477	) 	 	 	—	 	 	 	477	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Net loss from investment activities	 	 	(70,803	)(1) 	 	 	(772,533	) 	 	 	70,803	 	 	 	(772,533	) 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(9,455	) 	 	 	(781,988	) 	
Interest, dividends and other income	 	 	611	 	 	 	62,371	 	 	 	—	 	 	 	62,982	 	 	 	27	 	 	 	871	 	 	 	537	 	 	 	15,296	 	 	 	79,713	 	
Other income (expense), net	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(447	) 	 	 	(2,158	) 	 	 	521	 	 	 	216	 	 	 	(1,868	) 	
Other segment revenues	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	434,106	 	 	 	24,329	 	 	 	96,018	 	 	 	—	 	 	 	554,453	 	
  	 	 	(75,715	) 	 	 	(710,162	) 	 	 	76,326	 	 	 	(709,551	) 	 	 	433,686	 	 	 	23,042	 	 	 	97,076	 	 	 	6,057	 	 	 	(149,690	) 	
Costs and expenses	 	 	10,318	 	 	 	(6,222	) 	 	 	—	 	 	 	4,096	 	 	 	371,090	 	 	 	21,415	 	 	 	120,119	 	 	 	7,602	 	 	 	524,322	 	
Interest expense	 	 	—	 	 	 	2,398	 	 	 	—	 	 	 	2,398	 	 	 	300	 	 	 	1,811	 	 	 	395	 	 	 	33,597	 	 	 	38,501	 	
(Loss) income from continuing
operations before income taxes and non-controlling interests	 	 	(86,033	) 	 	 	(706,338	) 	 	 	76,326	 	 	 	(716,045	) 	 	 	62,296	 	 	 	(184	) 	 	 	(23,438	) 	 	 	(35,142	) 	 	 	(712,513	) 	
Income tax (expense) benefit	 	 	215	 	 	 	—	 	 	 	—	 	 	 	215	 	 	 	(24,293	) 	 	 	53	 	 	 	(55	) 	 	 	1,790	 	 	 	(22,290	) 	
Non-controlling interests in loss	 	 	—	 	 	 	692,382	 	 	 	(62,370	) 	 	 	630,012	 	 	 	—	 	 	 	—	 	 	 	7,763	 	 	 	109	 	 	 	637,884	 	
(Loss) income from continuing
operations	 	$	(85,818	) 	 	$	(13,956	) 	 	$	13,956	 	 	$	(85,818	) 	 	$	38,003	 	 	$	(131	) 	 	$	(15,730	) 	 	$	(33,243	) 	 	$	(96,919	) 	
36

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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
16. Segment Reporting  – (continued)
For the Three Months Ended June 30, 2007

 	 	Investment Management Operations	 	All Other Operations	 	Total
U.S. GAAP
Reported
Income	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds
	 	Eliminations
	 	U.S. GAAP
Reported
Income	 	Metals	 	Real
Estate	 	Home
Fashion	 	Holding
Company	 	 	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Management fees	 	$	34,849	 	 	$	 	 	 	$	(32,284	) 	 	$	2,565	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	2,565	 	
Incentive
allocations	 	 	51,735	 	 	 	—	 	 	 	(51,735	) 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Net gain (loss) from investment activities	 	 	16,512	 	 	 	323,366	 	 	 	(16,512	) 	 	 	323,366	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(17,843	) 	 	 	305,523	 	
Interest, dividends and other income	 	 	187	 	 	 	42,670	 	 	 	—	 	 	 	42,857	 	 	 	147	 	 	 	1,601	 	 	 	1,729	 	 	 	37,906	 	 	 	84,240	 	
Other income (expense), net	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(1,390	) 	 	 	200	 	 	 	(116	) 	 	 	526	 	 	 	(780	) 	
Other segment revenues	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	214,493	 	 	 	25,948	 	 	 	151,111	 	 	 	—	 	 	 	391,552	 	
  	 	 	103,283	 	 	 	366,036	 	 	 	(100,531	) 	 	 	368,788	 	 	 	213,250	 	 	 	27,749	 	 	 	152,724	 	 	 	20,589	 	 	 	783,100	 	
Costs and expenses	 	 	16,031	 	 	 	12,728	 	 	 	—	 	 	 	28,759	 	 	 	209,441	 	 	 	24,421	 	 	 	202,638	 	 	 	3,860	 	 	 	469,119	 	
Interest expense	 	 	—	 	 	 	6,331	 	 	 	—	 	 	 	6,331	 	 	 	277	 	 	 	1,909	 	 	 	559	 	 	 	32,770	 	 	 	41,846	 	
Income (loss) from continuing operations before income taxes and non-controlling interests	 	 	87,252	 	 	 	346,977	 	 	 	(100,531	) 	 	 	333,698	 	 	 	3,532	 	 	 	1,419	 	 	 	(50,473	) 	 	 	(16,041	) 	 	 	272,135	 	
Income tax (expense) benefit	 	 	(855	) 	 	 	—	 	 	 	—	 	 	 	(855	) 	 	 	(180	) 	 	 	82	 	 	 	(84	) 	 	 	(1,153	) 	 	 	(2,190	) 	
Non-controlling interests in (income) loss	 	 	—	 	 	 	(246,446	) 	 	 	—	 	 	 	(246,446	) 	 	 	—	 	 	 	—	 	 	 	20,253	 	 	 	(137	) 	 	 	(226,330	) 	
Income (loss) from continuing
operations	 	$	86,397	 	 	$	100,531	 	 	$	(100,531	) 	 	$	86,397	 	 	$	3,352	 	 	$	1,501	 	 	$	(30,304	) 	 	$	(17,331	) 	 	$	43,615	 	
For the Six Months Ended June 30, 2008

 	 	Investment Management Operations	 	All Other Operations	 	 	 	 	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds
	 	Eliminations
	 	U.S. GAAP
Reported
Income	 	Metals	 	Real
Estate	 	Home
Fashion	 	Holding
Company	 	Total
U.S. GAAP
Reported
Income	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	
Net loss from investment activities	 	$	(71,361) (1)	 	 	$	(798,596	) 	 	$	71,361	 	 	$	(798,596	) 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	(7,284	) 	 	$	(805,880	) 	
Interest, dividends and other income	 	 	760	 	 	 	102,343	 	 	 	—	 	 	 	103,103	 	 	 	185	 	 	 	2,393	 	 	 	1,682	 	 	 	34,487	 	 	 	141,850	 	
Other income (expense), net	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	5	 	 	 	(2,151	) 	 	 	71	 	 	 	182	 	 	 	(1,893	) 	
Other segment revenues	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	736,941	 	 	 	46,914	 	 	 	209,874	 	 	 	—	 	 	 	993,729	 	
  	 	 	(70,601	) 	 	 	(696,253	) 	 	 	71,361	 	 	 	(695,493	) 	 	 	737,131	 	 	 	47,156	 	 	 	211,627	 	 	 	27,385	 	 	 	327,806	 	
Costs and expenses	 	 	18,324	 	 	 	11	 	 	 	—	 	 	 	18,335	 	 	 	647,291	 	 	 	40,481	 	 	 	257,894	 	 	 	15,003	 	 	 	979,004	 	
Interest expense	 	 	—	 	 	 	3,256	 	 	 	—	 	 	 	3,256	 	 	 	568	 	 	 	3,647	 	 	 	804	 	 	 	67,302	 	 	 	75,577	 	
(Loss) income from continuing operations before income taxes and non-controlling interests	 	 	(88,925	) 	 	 	(699,520	) 	 	 	71,361	 	 	 	(717,084	) 	 	 	89,272	 	 	 	3,028	 	 	 	(47,071	) 	 	 	(54,920	) 	 	 	(726,775	) 	
Income tax (expense) benefit	 	 	(272	) 	 	 	—	 	 	 	—	 	 	 	(272	) 	 	 	(35,265	) 	 	 	280	 	 	 	(105	) 	 	 	2,637	 	 	 	(32,725	) 	
Non-controlling interests in loss	 	 	—	 	 	 	691,711	 	 	 	(63,552	) 	 	 	628,159	 	 	 	—	 	 	 	—	 	 	 	15,476	 	 	 	61	 	 	 	643,696	 	
(Loss) income from continuing operations	 	$	(89,197	) 	 	$	(7,809	) 	 	$	7,809	 	 	$	(89,197	) 	 	$	54,007	 	 	$	3,308	 	 	$	(31,700	) 	 	$	(52,222	) 	 	$	(115,804	) 	
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TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
16. Segment Reporting  – (continued)
For the Six Months Ended June 30, 2007

 	 	Investment Management Operations	 	All Other Operations	 	Total
U.S. GAAP
Reported
Income	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds
	 	Eliminations
	 	U.S. GAAP
Reported
Income	 	Metals	 	Real
Estate	 	Home
Fashion	 	Holding
Company	 	 	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Management fees	 	$	65,844	 	 	$	—	 	 	$	(62,468	) 	 	$	3,376	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	3,376	 	
Incentive
allocations	 	 	120,509	 	 	 	—	 	 	 	(120,509	) 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Net gain from investment activities	 	 	42,896	 	 	 	687,875	 	 	 	(42,896	) 	 	 	687,875	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	61,491	 	 	 	749,366	 	
Interest, dividends and other income	 	 	307	 	 	 	81,617	 	 	 	—	 	 	 	81,924	 	 	 	369	 	 	 	2,930	 	 	 	3,836	 	 	 	65,508	 	 	 	154,567	 	
Other income (expense), net	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(901	) 	 	 	263	 	 	 	3,689	 	 	 	2,031	 	 	 	5,082	 	
Other segment revenues	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	423,379	 	 	 	53,992	 	 	 	347,749	 	 	 	—	 	 	 	825,120	 	
  	 	 	229,556	 	 	 	769,492	 	 	 	(225,873	) 	 	 	773,175	 	 	 	422,847	 	 	 	57,185	 	 	 	355,274	 	 	 	129,030	 	 	 	1,737,511	 	
Costs and expenses	 	 	30,380	 	 	 	22,556	 	 	 	—	 	 	 	52,936	 	 	 	405,131	 	 	 	47,731	 	 	 	435,987	 	 	 	11,539	 	 	 	953,324	 	
Interest expense	 	 	—	 	 	 	9,545	 	 	 	—	 	 	 	9,545	 	 	 	318	 	 	 	3,866	 	 	 	1,022	 	 	 	58,086	 	 	 	72,837	 	
Income (loss) from continuing
operations before income taxes and non-controlling interests	 	 	199,176	 	 	 	737,391	 	 	 	(225,873	) 	 	 	710,694	 	 	 	17,398	 	 	 	5,588	 	 	 	(81,735	) 	 	 	59,405	 	 	 	711,350	 	
Income tax (expense) benefit	 	 	(1,604	) 	 	 	—	 	 	 	—	 	 	 	(1,604	) 	 	 	(360	) 	 	 	319	 	 	 	(247	) 	 	 	(1,963	) 	 	 	(3,855	) 	
Non-controlling interests in (income) loss	 	 	—	 	 	 	(511,518	) 	 	 	—	 	 	 	(511,518	) 	 	 	—	 	 	 	—	 	 	 	31,302	 	 	 	(339	) 	 	 	(480,555	) 	
Income (loss) from continuing
operations	 	$	197,572	 	 	$	225,873	 	 	$	(225,873	) 	 	$	197,572	 	 	$	17,038	 	 	$	5,907	 	 	$	(50,680	) 	 	$	57,103	 	 	$	226,940	 	

 	(1)	The Holding Company made three equal investments in September, October and November 2007 aggregating $700 million in the Private Funds for which no special profits interest allocation effective January 1, 2008 (and prior to January 1, 2008, management fees) or incentive allocations are applicable. As of June 30, 2008, the total value of this investment is approximately $620.7 million, with an unrealized loss of $62.4 million and $63.6 million for the three and six months ended June 30, 2008, respectively. These amounts are reflected in the General Partners’ net assets and earnings but are eliminated at the Holding Company level. However, the General Partners’ allocated share of net assets and earnings from the Private Funds includes the amount of these eliminated amounts.	
17. Income Taxes
We recorded the following income tax expense attributable to continuing operations for the three and six months ended June 30, 2008 and 2007 as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended
June 30,	 	Six Months Ended
June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Current	 	$	26,408	 	 	$	(148	) 	 	$	35,971	 	 	$	1,226	 	
Deferred	 	 	(4,118	) 	 	 	2,338	 	 	 	(3,246	) 	 	 	2,629	 	
  	 	$	22,290	 	 	$	2,190	 	 	$	32,725	 	 	$	3,855	 	
38

TABLE OF CONTENTS
ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
17. Income Taxes  – (continued)
We recorded income tax provisions of $32.7 million and $3.9 million on pre-tax loss of $726.8 million and pre-tax income of $711.4 million for the six months ended June 30, 2008 and 2007, respectively. Our effective income tax rate was (4.5)% and 0.5% for the respective periods. We recorded income tax provisions of $22.3 million and $2.2 million on pre-tax loss of $712.5 million and pre-tax income of $272.1 million for the three months ended June 30, 2008 and 2007, respectively. Our effective income tax rate was (3.1)% and 0.8% for the respective periods. The difference between the effective tax rate and the statutory federal rate of 35% is due principally to income or losses from partnership entities in which taxes are the responsibility of the partners, as well as changes in valuation allowances.
We adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109  (“FIN 48”), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with SFAS No. 109,  Accounting for Income Taxes  (“SFAS No. 109”), and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The adoption of FIN 48 did not have a material impact on our consolidated financial statements.
As of the date of adoption, our unrecognized tax benefits totaled $5.0 million, all of which, if recognized, would affect the annual effective tax rate. During the six months ended June 30, 2008, the amount of unrecognized tax benefits increased by $0.2 million.
We recognize interest accrued related to uncertain tax positions in interest expense. Penalties are recognized as a component of income tax expense. The amount of accrued interest and penalties on uncertain tax positions was $0.9 million and $0.8 million as of June 30, 2008 and December 31, 2007, respectively.
We or certain of our subsidiaries file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various non-U.S. jurisdictions. We are no longer subject to U.S. federal, state and non-U.S. income tax examinations for fiscal years prior to 2003.
18. Commitments and Contingencies
WPI Litigation
Federal Proceedings
In November and December 2005, the U.S. District Court for the Southern District of New York, or the District Court, rendered a decision in  Contrarian Funds LLC v. WestPoint Stevens, Inc. et al.,  and issued orders reversing certain provisions of the Bankruptcy Court order (the “Sale Order”), pursuant to which we acquired our ownership of a majority of the common stock of WPI. WPI acquired substantially all of the assets of WestPoint Stevens, Inc. The District Court remanded to the Bankruptcy Court for further proceedings.
On April 13, 2006, the Bankruptcy Court entered a remand order (the “Remand Order”), which provided, among other things, that all of the shares of common stock and rights to acquire shares of common stock of WPI issued to us and the other first lien lenders or held in escrow pursuant to the Sale Order constituted “replacement collateral.” The Bankruptcy Court held that the 5,250,000 shares of common stock that we acquired for cash were not included in the replacement collateral. The Bankruptcy Court also held that, in the event of a sale of the collateral, including the sale of the shares we received upon exercise of certain subscription rights (the “Exercise Shares”), all proceeds would be distributed, pro rata, among all first lien lenders, including us, until the first lien debt was satisfied, in full. The parties filed cross-appeals of the Remand Order.
On October 9, 2007, the District Court entered an Order (the “October 9th Order”) on the appeal and cross-appeal. The District Court affirmed the Remand Order but held that, as to the Exercise Shares, any sale proceeds would be divided between us and the first lien lenders (including us), generally based upon the ratio of the amount we paid to exercise the rights to the total value of the Exercise Shares on the date they were
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
18. Commitments and Contingencies  – (continued)
acquired. We are holders of approximately 39.99% of the outstanding first lien debt and approximately 51.21% of the outstanding second lien debt.
Each of the parties has filed a notice of appeal with the United States Court of Appeals for the Second Circuit. As part of that appeal, the parties have the right to raise issues relating to the District Court’s November 2005 opinion, and the Orders entered thereon, as well as issues relating to the October 9th Order. Briefing has been completed on the appeal, but the Court has not yet scheduled oral argument.
Delaware Proceedings
On October 3, 2007, the Court of Chancery of the State of Delaware in and for New Castle County, or the Chancery Court, issued a Limited Status Quo Order (“the Order”) in  Beal Bank, S.S.B., et al. v. WestPoint International, Inc. et al ., in connection with the complaint filed on January 19, 2007, as amended, by Beal Bank, S.S.B. and certain creditors of WestPoint Stevens, Inc. collectively, the Plaintiffs. The Order required that WPI and subsidiaries seek a further court order, obtain consent or give notice before engaging in certain actions. On October 15, 2007, the Chancery Court issued a Modified Limited Status Quo Order (the “Modified Order”), modifying certain provisions of the prior order to permit WPI and its subsidiaries to conduct ordinary course of business activities without further notice, consent, or order, including (i) ordinary course of business sales and purchases provided any particular transaction does not exceed $20,000,000 and (ii) transfers of excess inventory, unused equipment and/or unused real property to an unrelated third party provided the sale price for any particular real property transaction does not exceed $30,000,000.
On June 4, 2008, the Chancery Court granted defendants’ motion for summary judgment on Plaintiffs’ claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and conversion, and dismissed those claims. The Court granted Plaintiffs’ motion for summary judgment, on liability only, on Plaintiffs’ claim that WPI breached the Registration Rights Agreement, holding that WPI was obliged to proceed with the registration of its securities with the SEC. The Court denied the remainder of the parties’ summary judgment motions. In further proceedings, the Chancery Court held that because a decision of the Second Circuit on the appeal in the federal proceedings may directly affect some claims and may influence the issues to be tried on other claims in the Chancery Court, the trial should be held in Delaware after the decision by the Second Circuit. Therefore, no trial date has been set.
We continue to vigorously defend against all claims asserted in the federal and Delaware proceedings and believe that we have valid defenses. However, we cannot predict the outcome of these proceedings or the ultimate impact on our investment in WPI and its subsidiaries or the business prospects of WPI and its subsidiaries.
If we were to lose control of WPI, it could adversely affect the business and prospects of WPI and the value of our investment in it. In addition, we consolidated the balance sheet of WPI as of June 30, 2008 and WPI’s results of operations for the period from the date of acquisition (August 8, 2005) through June 30, 2008. If we were to own less than 50% of the outstanding common stock or the challenge to our preferred stock ownership is successful, we would have to evaluate whether we should consolidate WPI and, if so, our consolidated financial statements could be materially different than those presented for all periods presented.
Lear Corporation
We and certain of our affiliates, among others, were named as defendants in various actions filed in connection with our proposed merger with Lear Corporation (“Lear”). The Lear shareholders rejected the merger, and the merger agreement has been terminated. The remaining action is an action captioned “Fourth Amended Consolidated Shareholder Derivative Complaint” that has been filed in the court of Chancery of the State of Delaware against us and certain of our affiliates, among others (the “Fourth Amended Complaint”). The Fourth Amended Complaint challenges the amended merger agreement by alleging breach of fiduciary duty, aiding and abetting breaches of fiduciary duty, unjust enrichment and waste. Motions to dismiss the
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
18. Commitments and Contingencies  – (continued)
Fourth Amended Complaint are currently pending. We continue to vigorously defend the claims asserted in the Fourth Amended Complaint and believe that we have valid defenses, but cannot predict the outcome at this stage of the litigation.
National Energy Group, Inc.
NEGI was informed that on February 1, 2008 a purported stockholder derivative and class action lawsuit styled Andrew T. Berger v. Icahn Enterprises LP, et al.  (Case No. 3522-VCS) was filed in the Delaware Court of Chancery against NEGI, as a nominal defendant, Icahn Enterprises and various individuals, including one of our current directors, as additional defendants. We indirectly beneficially own 50.1% of NEGI’s outstanding common stock. The complaint alleges, among other things, that certain of NEGI’s current and former officers and directors breached their fiduciary duties to NEGI and its stockholders in connection with NEGI’s previously announced November 21, 2006 sale to NEG Oil & Gas LLC, or NEG Oil & Gas, of NEGI’s former unconsolidated non-controlling 50% limited liability company interest in NEG Holding LLC, or NEG Holding, as a result of the exercise by NEG Oil & Gas of its contractual redemption option under the operating agreement governing NEG Holding.
Since the redemption of NEGI’s former interest in NEG Holding, NEGI has had no business operations and its principal assets consist of its cash and short-term investment balances, which currently aggregate approximately $47.8 million. On March 14, 2008, the shareholders voted to approve the liquidation and dissolution of NEGI. NEGI filed a Form 15 with the SEC on March 26, 2008 deregistering its securities under the Securities and Exchange Act of 1934, as amended. As a result, NEGI’s status as a public company has been suspended. No cash distributions will be made to NEGI’s shareholders until the NEGI board determines that NEGI has paid, or made adequate provision for the payment of, its liabilities and obligations, including any liabilities relating to the lawsuit.
NEGI believes it has meritorious defenses to all claims and will vigorously defend the action; however, we cannot predict the outcome of the litigation on us or on our interest in NEGI.
Metals
PSC Metals is subject to a variety of environmental, health and safety laws and regulations and the cost of complying, or PSC Metals’ failure to comply, with such requirements may have a material adverse effect on its business, financial condition and results of operations. PSC Metals is subject to a variety of federal, state and local environmental laws and regulations relating to the release or discharge of materials into the environment, the management, use, processing, handling, storage, transport or disposal of hazardous waste materials, or otherwise relating to the protection of public and employee health, safety and the environment. These laws and regulations expose PSC Metals to liability for the environmental condition of its current facilities, and also may expose PSC Metals to liability for the conduct of others or for PSC Metals’ actions that were in compliance with all applicable laws at the time these actions were taken. To the best of its knowledge, PSC Metals believes that it is currently in compliance with all such laws and regulations and intends to remain in compliance in the future. Despite its best intentions to comply at all times, however, PSC Metals may from time to time be unknowingly exposed to certain liabilities, the result of which would cause PSC Metals not to comply with certain laws and regulations. The cost of complying with these requirements may also increase substantially in future years. If PSC Metals violates or fails to comply with these requirements, PSC Metals could be fined or otherwise sanctioned by regulators. These requirements are complex, change frequently and may become more stringent over time, which could have a material adverse effect on PSC Metals’ business.
Certain of PSC Metals’ facilities are environmentally impaired in part as a result of operating practices at the sites prior to their acquisition by PSC Metals and as a result of PSC Metals operations. PSC Metals has established procedures to periodically evaluate these sites, giving consideration to the nature and extent of the
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
18. Commitments and Contingencies  – (continued)
contamination. PSC Metals has provided for the remediation of these sites based upon management’s judgment and prior experience. PSC Metals has estimated the liability to remediate these sites to be $24.6 million and $24.3 million at June 30, 2008 and December 31, 2007, respectively. Management believes, based on past experience, that the vast majority of these environmental liabilities and costs will be assessed and paid over an extended period of time. PSC Metals believes that it will be able to fund such costs in the ordinary course of business.
PSC Metals has been named as a potentially responsible or liable party under U.S. federal and state superfund laws in connection with various sites. It is alleged that PSC Metals and its subsidiaries or their predecessors transported waste to the sites, disposed of waste at the sites or operated the sites in question. PSC Metals has reviewed the nature and extent of the allegations, the number, connection and financial ability of other named and unnamed potentially responsible parties and the nature and estimated cost of the likely remedy. Based on its review, PSC Metals has estimated its liability to remediate these sites to be immaterial at June 30, 2008 and December 31, 2007. If it is determined that PSC has liability to remediate those sites and that more expensive remediation approaches are required in the future, PSC Metals could incur additional obligations, which could be material.
Estimates of PSC Metals’ liability for remediation of a particular site and the method and ultimate cost of remediation require a number of assumptions that are inherently difficult to make, and the ultimate outcome may differ from current estimates. As additional information becomes available, estimates are adjusted. It is possible that technological, regulatory or enforcement developments, the results of environmental studies or other factors could alter estimates and necessitate the recording of additional liabilities, which could be material. Moreover, because PSC Metals has disposed of waste materials at numerous third-party disposal facilities, it is possible that PSC Metals will be identified as a potentially responsible party at additional sites. The impact of such future events cannot be estimated at the current time.
19. Subsequent Events
Acquisition of Federal-Mogul Corporation Shares
On July 3, 2008, Icahn Enterprises Holdings and its newly formed, wholly owned subsidiary, IEH FM Holdings LLC (“Acquisition Sub”), entered into a Stock Purchase Agreement (the “Agreement”) with Thornwood Associates Limited Partnership (“Thornwood”) and Thornwood’s general partner, Barberry Corp. (“Barberry”), pursuant to which we acquired a majority interest in Federal-Mogul Corporation (“Federal-Mogul”). Thornwood and Barberry are wholly owned by Mr. Carl C. Icahn. Prior to the acquisition of the shares by Icahn Enterprises Holdings, Thornwood owned 75,241,924 shares of Federal-Mogul’s Class A common stock (“Federal-Mogul Stock”), which represented approximately 74.87% of the total issued and outstanding shares of capital stock of Federal-Mogul. Thornwood acquired 50,100,000 shares of Federal-Mogul Stock pursuant to the exercise of two options acquired in December 2007 from the Federal-Mogul Asbestos Personal Injury Trust (the “Trust Stock”) and 25,141,924 shares of Federal-Mogul Stock pursuant to and in connection with the Federal-Mogul Plan of Reorganization under Chapter 11 of the United States Code, which become effective on December 27, 2007, in respect of certain securities of Federal-Mogul held by Thornwood prior to Federal-Mogul's reorganization (the “Claims Stock”).
Pursuant to the Agreement, on July 3, 2008, Acquisition Sub purchased from Thornwood 50,750,000 shares of Federal-Mogul Stock for an aggregate purchase price of $862,750,000 in cash (or $17.00 per share, which represents a discount to Thornwood's purchase price for such shares). The purchased shares represent approximately 50.5% of the total issued and outstanding shares of capital stock of Federal-Mogul. In addition, if Federal-Mogul issues additional shares of Federal-Mogul Stock before October 31, 2008, Thornwood will automatically and simultaneously sell a number of additional shares of Federal-Mogul Stock equal to 50% of the number of additional shares of Federal-Mogul Stock then issued to Icahn Enterprises Holdings at a purchase price equal to the lower of $17.00 per share or the then-current closing price of Federal-Mogul Stock.
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ICAHN ENTERPRISES L.P. AND SUBSIDIARIES
  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2008
19. Subsequent Events  – (continued)
The transaction was approved by the audit committee of the independent directors of the general partner of Icahn Enterprises Holdings and Icahn Enterprises. The audit committee was advised by its own legal counsel and independent financial advisor with respect to the transaction. The audit committee received an opinion from its financial adviser as to the fairness to us, from a financial point of view, of the consideration paid.
In our Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2008 (the “third quarter”), the financial results and related disclosures of Federal-Mogul’s operations will be reflected in our consolidated financial statements as a new segment, retrospectively restated on a consolidated basis for all periods in which Federal-Mogul was under common control. Federal-Mogul is a registered SEC filer and its consolidated financial statements are available at  www.sec.gov .
Investment Management Operations
Subsequent to June 30, 2008, through the date of this report, the Onshore Fund received $6.0 million in subscriptions from Onshore Fund fee-paying limited partners, of which $0.5 million was paid prior to July 1, 2008 and is reflected as a liability in the consolidated balance sheets. In addition, there were withdrawals of $72.9 million from the Onshore Fund subsequent to June 30, 2008 that are reflected as a liability on the consolidated balance sheets.
Subsequent to June 30, 2008 through the date of this report, Offshore Master Fund I received $7.6 million in subscriptions from Offshore Master Fund I fee-paying limited partners, of which $3.8 million was paid prior to July 1, 2008 and is reflected as a liability in the consolidated balance sheets. In addition, there were withdrawals of $141.1 million from Offshore Master Fund I that are reflected as a liability on the consolidated balance sheets.
The Onshore Fund also received $250 million in subscriptions from Mr. Icahn and his affiliates (other than Icahn Enterprises and its affiliates) subsequent to June 30, 2008 for which no special profits interest allocation or incentive allocations are applicable.
Declaration of Distribution on Depositary Units
On August 6, 2008, the Board of Directors approved a payment of a quarterly cash distribution of $0.25 per unit on our depositary units payable in the third quarter of fiscal 2008. The distribution will be paid on September 5, 2008 to depositary unitholders of record at the close of business on August 22, 2008. Under the terms of the indenture dated April 5, 2007 governing our variable rate notes due 2013, we will also be making a $0.15 distribution to holders of these notes in accordance with the formula set forth in the indenture.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis of financial condition and results of operations is comprised of the following sections:
(1) Overview
 	•	Introduction	
 	•	Gaming Divestiture	
 	(2)	Results of Operations	
 	•	Overview	
 	•	Other Significant Events	
 	•	Consolidated Financial Results of Continuing Operations	
 	•	Investment Management Operations	
 	•	All Other Operations	
 	•	Metals	
 	•	Real Estate	
 	•	Home Fashion	
 	•	Holding Company	
 	•	All Other Operations — Interest, other income and interest expense	
 	•	Income Taxes	
 	•	Discontinued Operations	
(3) Liquidity and Capital Resources
 	•	Consolidated Liquidity and Capital Resources	
 	•	Cash Flows	
 	•	Borrowings	
 	•	Contractual Commitments	
 	•	Off-Balance Arrangements	
 	•	Segment Liquidity and Capital Resources	
 	•	Investment Management Operations	
 	•	All Other Operations	
 	•	Metals	
 	•	Real Estate	
 	•	Home Fashion	
 	•	Distributions	
 	(4)	Critical Accounting Policies and Estimates	
 	(5)	Recently Issued Accounting Pronouncements	
 	(6)	Forward-Looking Statements	
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The following discussion is intended to assist you in understanding our present business and the results of operations together with our present financial condition. This section should be read in conjunction with our Consolidated Financial Statements and the accompanying notes.
Overview
Introduction
Icahn Enterprises L.P., or Icahn Enterprises, is a master limited partnership formed in Delaware on February 17, 1987. We own a 99% limited partner interest in Icahn Enterprises Holdings L.P., or Icahn Enterprises Holdings. Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Icahn Enterprises G.P. Inc., or Icahn Enterprises GP, which is owned and controlled by Mr. Carl C. Icahn, owns a 1% general partner interest in both us and Icahn Enterprises Holdings, representing an aggregate 1.99% general partner interest in us and Icahn Enterprises Holdings. As of June 30, 2008, affiliates of Mr. Icahn owned 64,288,061 of our depositary units and 10,819,213 of our preferred units, which represented approximately 91.2% and 86.5% of our outstanding depositary units and preferred units, respectively.
We are a diversified holding company owning subsidiaries currently engaged in the following continuing operating businesses: Investment Management, Metals, Real Estate and Home Fashion. We also report the results of our Holding Company which includes the unconsolidated results of Icahn Enterprises and Icahn Enterprises Holdings, and investment activity and expenses associated with the Holding Company. Detailed information regarding our continuing reportable segments is contained in Note 2, “Operating Units,” and Note 16, “Segment Reporting,” to our consolidated financial statements.
In accordance with U.S. GAAP, assets transferred between entities under common control are accounted for at historical cost similar to a pooling of interests, and the financial statements of previously separate companies for all periods under common control prior to the acquisition are restated on a consolidated basis.
Because of the nature of our business, the results of operations for quarterly and other interim periods are not indicative of the results to be expected for the full year. Variations in the amount and timing of gains and losses on our investments can be significant. The results of our Real Estate and Home Fashion segments are seasonal.
Gaming Divestiture
On February 20, 2008, we consummated the sale of our subsidiary, American Casino & Entertainment Properties LLC, or ACEP, to an affiliate of Whitehall Street Real Estate Fund for $1.2 billion, realizing a gain of approximately $473.9 million, after taxes. The sale of ACEP included the Stratosphere and three other Nevada gaming properties, which represented all of our remaining gaming operations.
In connection with the closing, we repaid all of ACEP’s outstanding 7.85% Senior Secured Notes due 2012, which were tendered pursuant to ACEP’s previously announced tender offer and consent solicitation. In addition, ACEP repaid in full all amounts outstanding, and terminated all commitments, under its credit facility with Bear Stearns Corporate Lending Inc., as administrative agent, and the other lenders thereunder.
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, or the Code. Such proceeds were deposited into the escrow accounts pending the fulfillment of Section 1031 exchange requirements. There are no assurances that we will fulfill our Section 1031 exchange obligations using the proceeds placed into escrow.
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Results of Operations
Overview
The key factors affecting our financial results for the three months ended June 30, 2008, or the second quarter of the fiscal year ending December 31, 2008 (referred to herein as fiscal 2008), compared to the three months ended June 30, 2007, or the second quarter of the fiscal year ended December 31, 2007 (referred to herein as fiscal 2007), are as follows:
 	•	Increased revenues from the Metals segment of approximately $219.6 million resulting from an increase in the average selling price of ferrous scrap, increased volume of shipped ferrous production and the inclusion of financial results of acquisitions made subsequent to the second quarter of fiscal 2007; and	
 	•	Net loss from investment activities from the Investment Management segment of $772.5 million during the first quarter of fiscal 2008 resulting from reduced investment profits from the Private Funds (as defined below) which were affected by the decline in the value of the Private Funds’ largest core equity positions; and	
 	•	Reduced revenues from the Home Fashion segment of $55.1 million due to the weak home textile retail environment and the exit of unprofitable programs.	
The key factors affecting our financial results for the six months ended June 30, 2008 compared to the six months ended June 30, 2007:
 	•	Consummation of the sale of ACEP for $1.2 billion, realizing a gain of approximately $473.9 million, after $258.4 million of taxes; and	
 	•	Increased revenues from the Metals segment of $313.6 million resulting from an increase in the average selling price of ferrous scrap, increased volume of shipped ferrous production and the inclusion of financial results of acquisitions made during fiscal 2007; and	
 	•	Net loss from investment activities from the Investment Management segment of approximately $798.6 million during the first six months of fiscal 2008 related to reduced investment profits from the Private Funds which were affected by the decline in the value of the Private Funds’ largest core equity positions; and	
 	•	Reduced revenues from the Home Fashion segment of $137.8 million due to the weak home textile retail environment and the exit of unprofitable programs.	
Other Significant Events
Acquisition of Federal-Mogul Corporation Shares
On July 3, 2008, Icahn Enterprises Holdings and its newly formed, wholly owned subsidiary, IEH FM Holdings LLC (“Acquisition Sub”), entered into a Stock Purchase Agreement (the “Agreement”) with Thornwood Associates Limited Partnership (“Thornwood”) and Thornwood’s general partner, Barberry Corp. (“Barberry”), pursuant to which we acquired a majority interest in Federal-Mogul Corporation (“Federal-Mogul”). We own a 99% limited partnership interest in Icahn Enterprises Holdings. Thornwood and Barberry are wholly owned by Mr. Carl C. Icahn. Prior to the acquisition of the shares by Icahn Enterprises Holdings, Thornwood owned 75,241,924 shares of Federal-Mogul’s Class A common stock (“Federal-Mogul Stock”), which represented approximately 74.87% of the total issued and outstanding shares of capital stock of Federal-Mogul. Thornwood acquired 50,100,000 shares of Federal-Mogul Stock pursuant to the exercise of two options acquired in December 2007 from the Federal-Mogul Asbestos Personal Injury Trust (the “Trust Stock”) and 25,141,924 shares of Federal-Mogul Stock pursuant to and in connection with the Federal-Mogul Plan of Reorganization under Chapter 11 of the United States Code, which become effective on December 27, 2007, in respect of certain securities of Federal-Mogul held by Thornwood prior to Federal-Mogul's reorganization (the “Claims Stock”).
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Pursuant to the Agreement, on July 3, 2008, Acquisition Sub purchased from Thornwood 50,750,000 shares of Federal-Mogul Stock for an aggregate purchase price of $862,750,000 in cash (or $17.00 per share, which represents a discount to Thornwood's purchase price for such shares). The purchased shares represent approximately 50.5% of the total issued and outstanding shares of capital stock of Federal-Mogul. In addition, if Federal-Mogul issues additional shares of Federal-Mogul Stock before October 31, 2008, Thornwood will automatically and simultaneously sell a number of additional shares of Federal-Mogul Stock equal to 50% of the number of additional shares of Federal-Mogul Stock then issued to Icahn Enterprises Holdings at a purchase price equal to the lower of $17.00 per share or the then-current closing price of Federal-Mogul Stock. The transaction was approved by the audit committee of the independent directors of the general partner of Icahn Enterprises Holdings and Icahn Enterprises. The audit committee was advised by its own legal counsel and independent financial advisor with respect to the transaction. The audit committee received an opinion from its financial adviser as to the fairness to us, from a financial point of view, of the consideration paid.
In our Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2008 (the “third quarter”), the financial results and related disclosures of Federal-Mogul’s operations will be reflected in our consolidated financial statements as a new segment, retrospectively restated on a consolidated basis for all periods in which Federal-Mogul was under common control. Federal-Mogul is a registered SEC filer and its consolidated financial statements are available at  www.sec.gov .
Declaration of Distribution on Depositary Units
On August 6, 2008, the Board of Directors approved a payment of a quarterly cash distribution of $0.25 per unit on our depositary units payable in the third quarter of fiscal 2008. The distribution will be paid on September 5, 2008 to depositary unitholders of record at the close of business on August 22, 2008. Under the terms of the indenture dated April 5, 2007 governing our variable rate notes due 2013, we will also be making a $0.15 distribution to holders of these notes in accordance with the formula set forth in the indenture.
See Note 19, “Subsequent Events,” of the consolidated financial statements for additional information regarding other significant events.
Consolidated Financial Results of Continuing Operations
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Total revenues in the second quarter of fiscal 2008 decreased by approximately $932.8 million, or 119.1%, to $(149.7) million as compared to the second quarter of fiscal 2007. The decrease is primarily due to a decline in Investment Management segment revenues of approximately $1.1 billion. This decline was primarily due to a decrease in the value of the Private Funds’ largest core equity positions in the second quarter of fiscal 2008 compared to an increase in the value of the Private Funds’ largest core equity positions in the second quarter of fiscal 2007. Results were also negatively affected by decreased Home Fashion segment revenues of approximately $55.1 million as a result of a weaker home textile retail environment and the exit of unprofitable programs. In addition, interest, dividends and other income decreased by $24.6 million resulting from lower realized gains recorded on the Holding Company’s investment portfolio and lower yields on cash balances. Real Estate segment revenues decreased by approximately $1.6 million primarily attributable to decrease in property development sales activity due to the general slowdown in residential and vacation home sales. Offsetting these decreases in revenues was an increase in Metals segment revenues of approximately $219.6 million, attributable to an increase in the average selling price of ferrous scrap, increased volume of shipped ferrous production and the inclusion of financial results of acquisitions made subsequent to the second quarter of fiscal 2007.
Total expenses for the second quarter of fiscal 2008 increased by approximately $51.9 million, or 10.1%, as compared to the second quarter of fiscal 2007. Contributing to this increase was an increase in our Metals segment expenses of approximately $161.6 million primarily due to higher cost of sales related to increased sales. The overall increase was offset by a decrease in Home Fashion segment expenses of approximately $82.5 million primarily due to lower cost of sales and lower selling, general and administrative expenses. Additionally, there was a decrease in Investment Management expenses of $28.6 million primarily due to lower compensation expense, financing expense and a reduction in deferred management fee payable as a
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result of the decline in the Investment Management segment performance in the second quarter of fiscal 2008, and a decrease in our Real Estate segment expenses of $3.0 million primarily due to a decrease in development sales activity.
Loss from continuing operations was $96.9 million for the second quarter of fiscal 2008 compared to income from continuing operations of $43.6 million for the second quarter of fiscal 2007. This represented a decrease of $140.5 million, or 322.2%, for the comparable periods and was primarily due to a decline in income from our Investment Management and Real Estate segments and the Holding Company. Earnings from the Investment Management segment decreased by $172.2 million, as a result of a decline in performance of the Private Funds in the second quarter of fiscal 2008. Holding Company earnings decreased by $15.9 million, primarily due to lower realized gains recorded on investment portfolio and lower yields on cash balances compared to the second quarter of fiscal 2007. Additionally, Real Estate segment earnings decreased by $1.6 million, primarily due to decreased property development sales activity due to the general slowdown in residential and vacation home sales. Offsetting the decline in income was an increase in earnings of the Metals segment by $34.7 million and reduced losses in our Home Fashion segment of $14.6 million. The increase in earnings of the Metals segment was primarily due to an increase in the average selling price of ferrous scrap, increased volume of shipped ferrous production and the inclusion of financial results of acquisitions made subsequent to the second quarter of fiscal 2007. The reduction in the Home Fashion segment losses was primarily due to lower selling, general and administrative expenses coupled with improved gross margins.
Six Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Total revenues in the first six months of fiscal 2008 decreased by approximately $1.4 billion, or 81.1%, to $327.8 million as compared to the first six months of fiscal 2007. The decrease is primarily due to a decline in Investment Management segment revenues of approximately $1.5 billion. This decline was primarily due to a decrease in the value of the Private Funds’ largest core equity positions in the first six months of fiscal 2008 compared to an increase in the value of the Private Funds’ largest core equity positions in the first six months of fiscal 2007. Results were also negatively affected by decreased Home Fashion segment revenues of approximately $137.8 million as a result of a weaker home textile retail environment and the exit of unprofitable programs. In addition, net gain from non-asset management investment activities and interest, dividends and other income decreased by $68.8 million and $33.9 million, respectively, resulting from lower realized gains recorded on the Holding Company’s investment portfolio and lower yields on cash balances, respectively. Real Estate segment revenues decreased by approximately $7.1 million primarily attributable to decrease in property development sales activity due to the general slowdown in residential and vacation home sales. Offsetting these decreases in revenues were an increase in Metals segment revenues of approximately $313.6 million, attributable to an increase in the average selling price of ferrous scrap, increased volume of shipped ferrous production and the inclusion of financial results of acquisitions made during fiscal 2007.
Total expenses for the first six months of fiscal 2008 increased by approximately $28.4 million, or 2.8%, as compared to the first six months of fiscal 2007. Contributing to this increase was an increase in our Metals segment expenses of approximately $242.2 million primarily due to higher cost of sales related to increased sales. The overall increase was offset by a decrease in Home Fashion segment expenses of approximately $178.1 million primarily due to lower cost of sales and lower selling, general and administrative expenses. Additionally, there was a decrease in Investment Management expenses of $40.9 million primarily due to lower compensation expense, financing expense and a reduction in deferred management fee payable as a result of the decline in the Investment Management segment performance in the first six months of fiscal 2008 and a decrease in our Real Estate segment expenses of $7.3 million primarily due to a decrease in development sales activity.
Loss from continuing operations was $115.8 million for the first six months of fiscal 2008 compared to income from continuing operations of $226.9 million for the first six months of fiscal 2007. This represented a decrease of $342.7 million, or 151.0%, for the comparable periods and was primarily due to a decline in income from our Investment Management and Real Estate segments and the Holding Company. Earnings from the Investment Management segment decreased by $286.8 million, as a result of a decline in performance of the Private Funds in the first six months of fiscal 2008. Holding Company earnings decreased by $109.3 million, primarily due to lower realized gains recorded on investment portfolio and lower yields on
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cash balances compared to the first six months of fiscal 2007. Additionally, Real Estate segment earnings decreased by $2.6 million, primarily due to decreased property development sales activity due to the general slowdown in residential and vacation home sales. Offsetting the decline in income was an increase in earnings of the Metals segment by $37.0 million and reduced losses in our Home Fashion segment of $19.0 million. The increase in earnings of the Metals segment was primarily due to an increase in the average selling price of ferrous scrap, increased volume of shipped ferrous production and the inclusion of financial results of acquisitions made during fiscal 2007. The reduction in the Home Fashion segment losses was primarily due to lower selling, general and administrative expenses coupled with improved gross margins.
Investment Management Operations
Overview
On August 8, 2007, we acquired the general partnership interests in Icahn Onshore LP, or the Onshore GP, and Icahn Offshore LP, or the Offshore GP (and, together with the Onshore GP, being referred to herein as the General Partners), acting as general partners of Icahn Partners LP, or the Onshore Fund, and the Offshore Master Funds (as defined below) and Icahn Capital Management L.P., or New Icahn Management, a Delaware limited partnership. Prior to January 1, 2008, the General Partners and New Icahn Management provided investment advisory and certain management services to the Private Funds (as defined below). Effective January 1, 2008, in addition to providing investment advisory services to the Private Funds, the General Partners provide certain administrative and back office services to the Private Funds that had been previously provided by New Icahn Management. The General Partners do not provide such services to any other entities, individuals or accounts. Interests in the Private Funds are offered only to certain sophisticated and accredited investors on the basis of exemptions from the registration requirements of the federal securities laws and are not publicly available. As referred to herein, the Offshore Master Funds consist of (i) Icahn Partners Master Fund L.P.; (ii) Icahn Partners Master Fund II L.P., and (iii) Icahn Partners Master Fund III L.P. The Onshore Fund and the Offshore Master Funds are collectively referred to herein as the Investment Funds.
The Offshore GP also acts as general partner of certain funds formed as Cayman Islands exempted limited partnerships that invest in the Offshore Master Funds. These funds, together with other funds that also invest in the Offshore Master Funds, constitute the Feeder Funds and, together with the Investment Funds, are referred to herein as the Private Funds.
Revenues
Through December 31, 2007, the Investment Management segment derived revenues from three sources: (1) management fees; (2) incentive allocations; and (3) gains and losses from our investments in the Private Funds. Effective January 1, 2008, the Investment Management segment derives its income from (1) special profits interest allocations; (2) incentive allocations; and (3) gains and losses from our investments in the Private Funds.
Prior to January 1, 2008, the management agreements between New Icahn Management and the Private Funds provided for the management fees to be paid by each of the Feeder Funds and the Onshore Fund to New Icahn Management at the beginning of each quarter generally in an amount equal to 0.625% (2.5% annualized) of the net asset value of each Investor’s (defined below) investment in the Feeder Fund or Onshore Fund, as applicable, and were recognized quarterly.
Effective January 1, 2008, the management agreements were terminated resulting in the termination of the Feeder Funds’ and the Onshore Fund’s obligations to pay management fees thereunder. In addition, the limited partnership agreements of the Investment Funds, or the Investment Fund LPAs, were amended to provide that, as of January 1, 2008, the General Partners will provide or cause their affiliates to provide to the Private Funds the administrative and back office services that were formerly provided by New Icahn Management (referred to herein as the Services) and, in consideration of providing the Services, the General Partners will receive special profits interest allocations (as further discussed below) from the Investment Funds. As of January 1, 2008, New Icahn Management distributed its net assets to Icahn Capital L.P., or Icahn Capital.
Effective January 1, 2008, the Investment Fund LPAs provide that the applicable General Partner will receive a special profits interest allocation at the end of each calendar year from each capital account maintained in the Investment Funds that is attributable to: (i) in the case of the Onshore Fund, each fee-paying
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limited partner in the Onshore Fund and (ii) in the case of the Feeder Funds, each fee-paying investor in the Feeder Funds (excluding certain investors that are affiliates of Mr. Icahn) (in each case, referred to herein as an Investor). This allocation is generally equal to 0.625% of the balance in each fee-paying capital account as of the beginning of each quarter (for each Investor, 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 that 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 respect of an Investor in any year cannot exceed the net profits allocated to such Investor in such year. 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 for an Investor for a calendar year, a special profits interest allocation will be made to the extent of such net profits, if any, and the shortfall will be carried forward (without interest or a preferred return thereon) and added to the Target Special Profits Interest Amount determined for such Investor for the next calendar year. Appropriate adjustments will be made to the calculation of the special profits interest allocation for new subscriptions and withdrawals by Investors. In the event that an Investor withdraws or redeems in full from a Feeder Fund or the Onshore Fund before the entire Target Special Profits Interest Amount determined for such Investor has been allocated to the General Partner 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.
The General Partners waived the special profits interest allocations effective January 1, 2008 (and for periods prior to January 1, 2008, New Icahn Management waived management fees) and incentive allocations for Icahn Enterprises’ investments in the Private Funds and Mr. Icahn’s direct and indirect holdings and may, in their sole discretion, modify or may elect to reduce or waive such fees with respect to any shareholder that is an affiliate, employee or relative of Mr. Icahn or his affiliates, or for any other investor.
All of the special profits interest allocations (earned by the General Partners effective January 1, 2008), substantially all of the management fees (earned by Icahn Management and New Icahn Management prior to January 1, 2008) from certain consolidated entities and all of the incentive allocations earned by the General Partners from the Onshore Fund and the Offshore Master Funds are eliminated in consolidation; however, the General Partners’ share of the net income (and prior to January 1, 2008, Icahn Management’s and New Icahn Management’s share of net income) from the Private Funds includes the amount of these eliminated fees and allocations.
Prior to January 1, 2008, our Investment Management results were driven by the combination of the Private Funds’ assets under management, or AUM, and the investment performance of the Private Funds. Effective January 1, 2008, our Investment Management results continue to be driven by the combination of the Private Funds’ AUM and the investment performance of the Private Funds, except, as discussed above, that special profits interest allocations are only earned to extent that there are sufficient net profits generated from the Private Funds to cover such allocations. Prior to January 1, 2008, as AUM increased, management fee revenues generally increased in tandem because New Icahn Management charged management fees based on the net asset value of fee-paying capital in the Private Funds, generally at the beginning of each quarter. Effective January 1, 2008, the General Partners receive special profits interest allocations which are calculated based on the net asset value of fee-paying capital in the Private Funds, generally at the beginning of each quarter, and allocated to the General Partners generally at the end of each year only to the extent that there are sufficient net profits generated from the Private Funds to cover such allocations. Incentive allocations are determined based on the aggregate amount of net profits earned by the Investment Funds (after the special profits interest allocation is made). Incentive allocations are determined by the investment performance of the Private Funds, which is a principal determinant of the long-term success of the Investment Management operations because it enables AUM to increase through retention of fund profits and by making it more likely to attract new investment capital and minimize redemptions by Private Fund investors.
Incentive allocations are generally 25% of the net profits (both realized and unrealized) generated by fee-paying investors in the Investment Funds and are subject to a “high water mark” (whereby the General Partners do not earn incentive allocations during a particular year even though the fund had a positive return in such year until losses in prior periods are recovered). These allocations are calculated and allocated to the
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capital accounts of the General Partners annually except for incentive allocations earned as a result of investor redemption events during interim periods.
The General Partners and their affiliates may also earn income through their investments in the Investment Funds. Icahn Enterprises Holdings may earn income through its investment in the Investment Funds. In both cases the income may consist of realized and unrealized gains and losses on investment activities along with interest, dividends and other income.
AUM and Fund Performance
The table below reflects changes to AUM for the three and six months ended June 30, 2008 and 2007. The end-of-period balances represent total AUM, including accrued special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, deferred management fees) and incentive allocations and our own investments in the Private Funds as well as investments of other affiliated parties who have not been charged special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) or incentive allocations for the periods presented (in $000s).
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Balance, beginning of period	 	$	7,894,921	 	 	$	5,337,435	 	 	$	7,510,670	 	 	$	4,019,993	 	
Net (out-flows) in-flows	 	 	(166,406	) 	 	 	679,901	 	 	 	211,473	 	 	 	1,614,207	 	
(Depreciation) appreciation	 	 	(719,596	) 	 	 	338,654	 	 	 	(713,224	) 	 	 	721,790	 	
Balance, end of period	 	$	7,008,919	 	 	$	6,355,990	 	 	$	7,008,919	 	 	$	6,355,990	 	
Fee-paying AUM	 	$	4,749,237	 	 	$	4,804,594	 	 	$	4,749,237	 	 	$	4,804,594	 	
The following table sets forth performance information for the Private Funds that were in existence for the comparative periods presented. These gross returns represent a weighted average composite of the average gross returns, net of expenses for the Private Funds.
 	 	 	 	 	 	 	 	 	
 	 	Gross Return(1) for the
Three Months Ended June 30,	 	Gross Return(1) for the
Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Private Funds	 	 	-9.1	% 	 	 	6.0	% 	 	 	-8.9	% 	 	 	15.6	% 	

 	(1)	These returns are indicative of a typical investor who has been invested since inception of the Private Funds. The performance information is presented gross of any special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) but net of expenses. Past performance is not necessarily indicative of future results.	
The Private Funds’ aggregate gross performance was a loss of 9.1% for the second quarter of fiscal year 2008 and loss of 8.9% for the first six months of fiscal year 2008. During the second quarter of fiscal 2008, losses were primarily a result of the decline in the value of core holdings of Motorola Inc. and Yahoo!, which represented over 70% of the Private Funds’ total losses for the first six months of fiscal 2008. During the first six months of fiscal 2008, the Private Funds’ short equity exposure produced gains due to the negative performance of U.S. equity markets and the Private Funds’ short exposure to the financial sector. Long and short exposure to the credit markets, including fixed income, bank debt and derivative instruments, contributed gains for the first six months of fiscal 2008.
The Private Funds’ aggregate gross performance was 6.0% for the second quarter of fiscal 2007 and 15.6% for the first six months of fiscal 2007. Performance during the first six months of fiscal 2007 was driven by a few core positions, including MedImmune (which was acquired by AstraZeneca), Temple Inland Inc. and Lear Corporation. Motorola Inc., the Private Funds’ largest position, was a negative contributor to performance. Short equity exposure, of which the energy hedge was the largest component, had a negative impact on performance but helped to mitigate volatility. Overall, the energy sector was profitable for the first six months of fiscal 2007.
Equity positions in Motorola Inc., Yahoo!, MedImmune, Temple Inland Inc. and Lear Corporation have been previously disclosed in other SEC filings.
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Since inception in November 2004, the Private Funds’ gross returns are 75.3%, representing an annualized rate of return of 16.6% through June 30, 2008, which is indicative of a typical investor who has invested since inception of the Private Funds. These returns have been the result of bottom-up security selection, largely driven by our core activist equity positions. Past performance is not necessarily indicative of future results.
Operating Results
We consolidate certain of the Private Funds into our results. Accordingly, in accordance with U.S. GAAP, all special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, substantially all of the management fees) and incentive allocations in the Private Funds are eliminated in consolidation. These eliminations had no impact on our net income, however, as our allocated share of the net income from the Private Funds includes the amount of these eliminated fees and allocations.
The tables below provide a reconciliation of the unconsolidated revenues and expenses of our interest in the General Partners and Icahn Capital (and, for periods prior to January 1, 2008, our interest in the General Partners and New Icahn Management) to the consolidated U.S. GAAP revenues and expenses. The first column represents the results of operations of our interest in the General Partners and Icahn Capital (and, for periods prior to January 1, 2008, our interest in the General Partners and New Icahn Management) without the impact of consolidating the Private Funds or the eliminations arising from the consolidation of these funds. This includes the gross amount of special profits interest allocations, effective January 1, 2008 (and, prior to January 1, 2008, management fees), incentive allocations and returns on investments in the Private Funds that is attributable to Icahn Enterprises only. This also includes gains and losses on Icahn Enterprises’ direct investments in the Private Funds. The second column represents the total consolidated income and expenses of the Private Funds for all investors, including Icahn Enterprises, before eliminations. The third column represents the eliminations required in order to arrive at our consolidated U.S. GAAP reported income for the segment.
Summarized income statement information on a deconsolidated basis and on a U.S. GAAP basis for the three and six months ended June 30, 2008 and 2007 as follows ($000s):
For the Three Months Ended June 30, 2008
 	 	 	 	 	 	 	 	 	
 	 	Investment Management Operations	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds	 	Eliminations	 	U.S. GAAP
Reported
Income	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Special profits interest allocation	 	$	(5,046	) 	 	$	—	 	 	$	5,046	 	 	$	—	 	
Incentive allocations	 	 	(477	) 	 	 	—	 	 	 	477	 	 	 	—	 	
Net loss from investment activities	 	 	(70,803	)(1) 	 	 	(772,533	) 	 	 	70,803	 	 	 	(772,533	) 	
Interest, dividends and other income	 	 	611	 	 	 	62,371	 	 	 	—	 	 	 	62,982	 	
  	 	 	(75,715	) 	 	 	(710,162	) 	 	 	76,326	 	 	 	(709,551	) 	
Costs and expenses	 	 	10,318	 	 	 	(6,222	) 	 	 	—	 	 	 	4,096	 	
Interest expense	 	 	—	 	 	 	2,398	 	 	 	—	 	 	 	2,398	 	
Loss from continuing operations before income taxes and non-controlling interests	 	 	(86,033	) 	 	 	(706,338	) 	 	 	76,326	 	 	 	(716,045	) 	
Income tax benefit	 	 	215	 	 	 	—	 	 	 	—	 	 	 	215	 	
Non-controlling interests in loss	 	 	—	 	 	 	692,382	 	 	 	(62,370	) 	 	 	630,012	 	
Loss from continuing operations	 	$	(85,818	) 	 	$	(13,956	) 	 	$	13,956	 	 	$	(85,818	) 	
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For the Three Months Ended June 30, 2007
 	 	 	 	 	 	 	 	 	
 	 	Investment Management Operations	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds	 	Eliminations	 	U.S. GAAP
Reported
Income	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Management fees	 	$	34,849	 	 	$	 	 	 	$	(32,284	) 	 	$	2,565	 	
Incentive allocations	 	 	51,735	 	 	 	—	 	 	 	(51,735	) 	 	 	—	 	
Net gain from investment activities	 	 	16,512	 	 	 	323,366	 	 	 	(16,512	) 	 	 	323,366	 	
Interest, dividends and other income	 	 	187	 	 	 	42,670	 	 	 	—	 	 	 	42,857	 	
  	 	 	103,283	 	 	 	366,036	 	 	 	(100,531	) 	 	 	368,788	 	
Costs and expenses	 	 	16,031	 	 	 	12,728	 	 	 	—	 	 	 	28,759	 	
Interest expense	 	 	—	 	 	 	6,331	 	 	 	—	 	 	 	6,331	 	
Income from continuing operations before income taxes and
non-controlling interests	 	 	87,252	 	 	 	346,977	 	 	 	(100,531	) 	 	 	333,698	 	
Income tax expense	 	 	(855	) 	 	 	—	 	 	 	—	 	 	 	(855	) 	
Non-controlling interests in income	 	 	—	 	 	 	(246,446	) 	 	 	—	 	 	 	(246,446	) 	
Income from continuing operations	 	$	86,397	 	 	$	100,531	 	 	$	(100,531	) 	 	$	86,397	 	
For the Six Months Ended June 30, 2008
 	 	 	 	 	 	 	 	 	
 	 	Investment Management Operations	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds	 	Eliminations	 	U.S. GAAP
Reported
Income	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Net loss from investment activities	 	$	(71,361	)(1) 	 	$	(798,596	) 	 	$	71,361	 	 	$	(798,596	) 	
Interest, dividends and other income	 	 	760	 	 	 	102,343	 	 	 	—	 	 	 	103,103	 	
  	 	 	(70,601	) 	 	 	(696,253	) 	 	 	71,361	 	 	 	(695,493	) 	
Costs and expenses	 	 	18,324	 	 	 	11	 	 	 	—	 	 	 	18,335	 	
Interest expense	 	 	—	 	 	 	3,256	 	 	 	—	 	 	 	3,256	 	
Loss income from continuing operations before income taxes and
non-controlling interests	 	 	(88,925	) 	 	 	(699,520	) 	 	 	71,361	 	 	 	(717,084	) 	
Income tax expense	 	 	(272	) 	 	 	—	 	 	 	—	 	 	 	(272	) 	
Non-controlling interests in loss	 	 	—	 	 	 	691,711	 	 	 	(63,552	) 	 	 	628,159	 	
Loss from continuing operations	 	$	(89,197	) 	 	$	(7,809	) 	 	$	7,809	 	 	$	(89,197	) 	
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For the Six Months Ended June 30, 2007
 	 	 	 	 	 	 	 	 	
 	 	Investment Management Operations	
  	 	Icahn
Enterprises’
Interests	 	Consolidated
Private
Funds	 	Eliminations	 	U.S. GAAP
Reported
Income	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Management fees	 	$	65,844	 	 	$	—	 	 	$	(62,468	) 	 	$	3,376	 	
Incentive allocations	 	 	120,509	 	 	 	—	 	 	 	(120,509	) 	 	 	—	 	
Net gain from investment activities	 	 	42,896	 	 	 	687,875	 	 	 	(42,896	) 	 	 	687,875	 	
Interest, dividends and other income	 	 	307	 	 	 	81,617	 	 	 	—	 	 	 	81,924	 	
  	 	 	229,556	 	 	 	769,492	 	 	 	(225,873	) 	 	 	773,175	 	
Costs and expenses	 	 	30,380	 	 	 	22,556	 	 	 	—	 	 	 	52,936	 	
Interest expense	 	 	—	 	 	 	9,545	 	 	 	—	 	 	 	9,545	 	
Income from continuing operations before income taxes and
non-controlling interests	 	 	199,176	 	 	 	737,391	 	 	 	(225,873	) 	 	 	710,694	 	
Income tax expense	 	 	(1,604	) 	 	 	—	 	 	 	—	 	 	 	(1,604	) 	
Non-controlling interests in income	 	 	—	 	 	 	(511,518	) 	 	 	—	 	 	 	(511,518	) 	
Income from continuing operations	 	$	197,572	 	 	$	225,873	 	 	$	(225,873	) 	 	$	197,572	 	

 	(1)	The Holding Company made three equal investments in September, October and November 2007 aggregating $700 million in the Private Funds for which no special profits interest allocation effective January 1, 2008 (and prior to January 1, 2008, management fees) or incentive allocations are applicable. As of June 30, 2008, the total value of this investment is approximately $620.7 million, with an unrealized loss of $62.4 million and $63.6 million for the three and six months ended June 30, 2008, respectively. These amounts are reflected in the General Partners’ net assets and earnings but are eliminated at the Holding Company level. However, the General Partners’ allocated share of net assets and earnings from the Private Funds includes the amount of these eliminated amounts.	
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
For the second quarter of fiscal 2008, the Target Special Profits Interest Amount was $27.6 million. Because of losses incurred by the Private Funds during the second quarter of fiscal 2008, there was a special profits interest allocation reversal of $5.0 million made for the second quarter of fiscal 2008. The Target Special Profits Interest Amount of $60.0 million (representing the sum of the first and second quarter 2008 Target Special Profits Interest Amount of $32.4 million and $27.6 million, respectively) will be carried forward and will be accrued to the extent that there are sufficient net profits in the Investment Funds to cover such amounts. There was no special profits interest allocations in the second quarter of fiscal 2007 because special profits interest allocations started effective January 1, 2008.
There were no management fees in the second quarter of fiscal 2008 as these fees were terminated on January 1, 2008. Management fees were $34.8 million for the second quarter of fiscal 2007.
We had an incentive allocation reversal of $0.5 million in the second quarter of fiscal 2008 compared to an incentive allocation of $51.7 million in the second quarter of fiscal 2007. This represented a decrease of $52.2 million, or approximately 100%, between the comparable periods. This decrease was due to the decline in performance of the Private Funds during the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007 as the Private Funds’ largest core equity positions declined in value. Incentive allocations earned from the Private Funds are accrued on a quarterly basis and are generally allocated to the General Partners at the end of the Private Funds’ fiscal year. There is no incentive allocation accrued at June 30, 2008.
The net loss from investment activities of $70.8 million accrued by the interests of Icahn Enterprises in the General Partners and in its direct investment in the Private Funds in the second quarter of fiscal 2008 consists of two components. The first reflects a net loss of $8.4 million relating to the decrease in the General Partners’ investment in the Private Funds as a result of the decline in the performance of the General Partners’
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investment. This compares with $16.5 million in the second quarter of fiscal 2007. The second component includes a net investment loss in the second quarter of fiscal 2008 of $62.4 million on the original aggregate $700 million invested in the Private Funds by the Holding Company. The Holding Company made three equal investments in September, October and November 2007 aggregating to the $700 million.
Net realized and unrealized losses of the Private Funds on investment activities were $772.5 million for the second quarter of fiscal 2008, compared to a gain of $323.4 million for the second quarter of fiscal 2007. This decrease relates to the decline in performance of the Private Funds during the second quarter of fiscal 2008 caused by the decline in the value of the Private Funds’ largest core equity positions.
Interest, dividends and other income increased by $20.2 million, or 47.0%, to $63.0 million for the second quarter of fiscal 2008, compared to $42.8 million for the second quarter of fiscal 2007. The increase was primarily attributable to amounts earned on interest-paying investments.
The General Partners’ costs and expenses decreased by $5.7 million, or 35.6%, to $10.3 million for the second quarter of fiscal 2008, compared to $16.0 million for the second quarter of fiscal 2007. This decrease is primarily due to a decrease in compensation awards as there was no accrual made for special profits interest allocations and incentive allocations in the second quarter of fiscal 2008.
Private Funds’ costs and expenses decreased by $22.9 million, or 120.1%, to $(3.8) million for the second quarter of fiscal 2008, compared to $19.1 million for the second quarter of fiscal 2007. This decrease is primarily attributable to net loss accrued on the deferred management fee payable by the consolidated Offshore Fund.
Non-controlling interests in loss was $630.0 million for the second quarter of fiscal 2008, as compared to non-controlling interests in income of $246.4 million for the second quarter of fiscal 2007. This decrease was due to the decline in performance of the Private Funds during the second quarter of fiscal 2008 as discussed above.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
For the first six months of fiscal 2008, the Target Special Profits Interest Amount was $60.0 million. Because of losses incurred by the Private Funds for the first six months of fiscal 2008, there was no accrual for special profits interest allocation for the first six months of fiscal 2008. The Target Special Profits Interest Amount of $60.0 will be carried forward and will be accrued to the extent that there are sufficient net profits in the Investment Funds to cover such amounts. There was no special profits interest allocations in the first six months of fiscal 2007 because special profits interest allocations started effective January 1, 2008.
There were no management fees in the first six months of fiscal 2008 as these fees were terminated on January 1, 2008. Management fees were $65.8 million for the first six months of fiscal 2007.
There was no incentive allocation to the General Partners in the first six months of fiscal 2008 compared to an incentive allocation of $120.5 million in the first six months of fiscal 2007. This represented a decrease of $120.5 million, or approximately 100%, between the comparable periods. This decrease was due to the decline in performance of the Private Funds during the first six months of fiscal 2008 compared to the first six months of fiscal 2007 as the Private Funds’ largest core equity positions declined in value. Incentive allocations earned from the Private Funds are accrued on a quarterly basis and are generally allocated to the General Partners at the end of the Private Funds’ fiscal. There is no incentive allocation accrued at June 30, 2008.
The net loss from investment activities of $71.4 million accrued by the interests of Icahn Enterprises in the General Partners and in its direct investment in the Private Funds in the first six months of fiscal 2008 consists of two components. The first reflects a net loss of $7.8 million relating to the decrease in the General Partners’ investment in the Private Funds as a result of the decline in the performance of the General Partners’ investment. This compares with a gain of $42.9 million in the first six months of fiscal 2007. The second component includes a net investment loss in the first six months of fiscal 2008 of $63.6 million on the original aggregate $700 million invested in the Private Funds by the Holding Company. The Holding Company made three equal investments in September, October and November 2007 aggregating to the $700 million.
Net realized and unrealized losses of the Private Funds on investment activities were $798.6 million for the first six months of fiscal 2008, compared to a gain of $687.9 million for the first six months of fiscal
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2007. This decrease relates to the decline in performance of the Private Funds during the first six months of fiscal 2008 caused by the decline in the value of the Private Funds’ largest core equity positions.
Interest, dividends and other income increased by $21.2 million, or 25.9%, to $103.1 million for the first six months of fiscal 2008, compared to $81.9 million for the first six months of fiscal 2007. The increase was primarily attributable to amounts earned on interest-paying investments.
The General Partners’ costs and expenses decreased by $12.1 million, or 39.7%, to $18.3 million for the first six months of fiscal 2008, compared to $30.4 million for the first six months of fiscal 2007. This decrease is primarily due to a decrease in compensation awards as there was no accrual made for special profits interest allocations and incentive allocations in the first six months of fiscal 2008.
Private Funds’ costs and expenses decreased by $28.8 million, or 89.8%, to $3.3 million for the first six months of fiscal 2008, compared to $32.1 million for the first six months of fiscal 2007. This decrease is primarily attributable to decreases in interest expense relating to securities sold, not yet purchased and a decrease in other investment expenses.
Non-controlling interests in loss was $628.2 million for the first six months of fiscal 2008, as compared to non-controlling interests in income of $511.5 million for the first six months of fiscal 2007. This decrease was due to the decline in performance of the Private Funds during the first six months of fiscal 2008 as discussed above.
All Other Operations
Metals
Our Metals segment is conducted through our indirect wholly owned subsidiary, PSC Metals.
Summarized statements of operations and performance data for PSC Metals for the three and six months ended June 30, 2008 and 2007 (in 000s) are as follows:
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Net sales	 	$	434,106	 	 	$	214,493	 	 	$	736,941	 	 	$	423,379	 	
Cost of sales	 	 	362,763	 	 	 	204,014	 	 	 	632,558	 	 	 	394,772	 	
Gross profit	 	 	71,343	 	 	 	10,479	 	 	 	104,383	 	 	 	28,607	 	
Selling, general and administrative expenses	 	 	8,327	 	 	 	5,427	 	 	 	14,733	 	 	 	10,359	 	
Income from continuing operations before interest, income taxes and non-controlling interests in income	 	$	63,016	 	 	$	5,052	 	 	$	89,650	 	 	$	18,248	 	
Ferrrous tons sold	 	 	588	 	 	 	425	 	 	 	1,137	 	 	 	835	 	
Non-ferrous pounds sold	 	 	39,333	 	 	 	30,746	 	 	 	73,349	 	 	 	57,183	 	
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Net sales for the second quarter of fiscal 2008 increased by $219.6 million, or 102.4%, to $434.1 million as compared to $214.5 million for the second quarter of fiscal 2007. This increase was primarily driven by a $189.9 million improvement in ferrous revenues. Ferrous average pricing was approximately $245 per gross ton higher and ferrous shipments were 164,000 gross tons higher than the second quarter of fiscal 2007. Ferrous pricing reached historically high levels in the second quarter of fiscal 2008, with shredded material prices quoted at $551 per gross ton in the June  American Metals Market Scrap Composites Index . The increased prices are being driven by strong worldwide demand for recycled metals. All product lines contributed to the revenue increase: non-ferrous $6.1 million, secondary products $13.1 million, brokerage $3.7 million, non-ferrous residue $5.7 million and mill service revenue $1.1 million compared to the second quarter of fiscal 2007. Scrap yards acquired subsequent to the second quarter of fiscal 2007 contributed $53.8 million of the overall sales increase, including $39.4 million and 93,000 gross tons of the ferrous revenue and volume increases, respectively.
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Gross profit for the second quarter of fiscal 2008 increased by $60.9 million, or 580.8%, to $71.3 million compared to the second quarter of fiscal 2007. As a percentage of net sales, cost of sales was 83.6% and 95.1% for the second quarter of fiscal 2008 and fiscal 2007, respectively. The increase in gross profit and lower cost of sales percentage are primarily due to increased selling prices in the second quarter of fiscal 2008 that exceeded the increased cost of scrap supply. Yards acquired subsequent to the second quarter of fiscal 2007 also contributed to the increase in the gross profit in the second quarter of fiscal 2008.
Selling, general and administrative expenses increased approximately $2.9 million, or 53.4%, to $8.3 million for the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007. The increase was attributed to $3.0 million of employee-related costs, partly offset by lower spending in other cost categories. Headcount increases supported growth and the acquired yards, and reduced the cost of using external contractors. The increase in expenses also included increased incentive compensation expenses related to the Metals segment’s strong level of operating performance.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Net sales for the first six months of fiscal 2008 increased by $313.5 million, or 74.1%, to $736.9 million as compared to $423.4 million for the first six months of fiscal 2007. The increase is primarily due to the impact of continued increases in ferrous pricing in the first six months of fiscal 2008. Ferrous market prices grew to historically high levels in the first six months of fiscal 2008. Ferrous revenues in the yards were $269.0 million, or 111%, higher compared to those for the first six months of fiscal 2007. Revenues of secondary products and non-ferrous sales increased by $17.0 million and $14.7 million, respectively, compared to the first six months of fiscal 2007. Scrap yards acquired during fiscal 2007 contributed $99.9 million of the overall sales increase in the first six months of fiscal 2008, including $73.3 million and 185,000 gross tons of the ferrous revenue and volume increases, respectively.
Gross profit for the first six months of fiscal 2008 increased by $75.8 million, or 264.9%, to $104.4 million compared to the first six months of fiscal 2007. As a percentage of net sales, cost of sales was 85.8% and 93.2% for the first six months of fiscal 2008 and fiscal 2007, respectively. The increase in gross profit and lower cost of sales percentage are primarily due to increased selling prices in the first six months of fiscal 2008 that exceeded the increased cost of scrap supply.
Selling, general and administrative expenses increased approximately $4.4 million, or 42.2%, to $14.7 million for the first six months of fiscal 2008 compared to the first six months of fiscal 2007. Employee- related costs accounted for $3.7 million of the increase compared to the first six months of fiscal 2007, reflecting headcount increases to support growth and the acquired yards and increased incentive compensation expenses related to the Metals segment’s strong level of operating performance.
Real Estate
Our Real Estate segment is comprised of rental real estate, property development and associated resort activities associated with property development. The three related operating lines of our real estate segment are all individually immaterial and have been aggregated for purposes of reporting our operating results below.
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The following table summarizes the key operating data for real estate activities for the three and six months ended June 30, 2008 and 2007 (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Rental real estate	 	$	3,873	 	 	$	3,754	 	 	$	7,800	 	 	$	7,593	 	
Property development	 	 	12,635	 	 	 	14,736	 	 	 	24,804	 	 	 	32,881	 	
Resort operations	 	 	7,821	 	 	 	7,458	 	 	 	14,310	 	 	 	13,518	 	
Total revenues	 	 	24,329	 	 	 	25,948	 	 	 	46,914	 	 	 	53,992	 	
Expenses:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Rental real estate	 	 	1,533	 	 	 	1,286	 	 	 	2,859	 	 	 	2,590	 	
Property development	 	 	12,177	 	 	 	15,073	 	 	 	23,097	 	 	 	30,685	 	
Resort operations	 	 	7,705	 	 	 	8,062	 	 	 	14,525	 	 	 	14,456	 	
Total expenses	 	 	21,415	 	 	 	24,421	 	 	 	40,481	 	 	 	47,731	 	
Income from continuing operations before interest, income taxes and non-controlling interests in income	 	$	2,914	 	 	$	1,527	 	 	$	6,433	 	 	$	6,261	 	
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Total revenues decreased by $1.6 million, or 6.2%, to $24.3 million in the second quarter of fiscal 2008 from $25.9 million in the second quarter of fiscal 2007. The decrease was primarily attributable to a decrease in property development sales activity due to the general slowdown in residential and vacation home sales. In the second quarter of fiscal 2008, we sold 15 residential units for approximately $12.6 million at an average price of $0.8 million with a profit margin of 8.2%. In the second quarter of fiscal 2007, we sold 19 residential units for approximately $14.7 million at an average price of $0.8 million with a profit margin of 10.0%.
Total expenses decreased by $3.0 million, or 12.3%, to $21.4 million in the second quarter of fiscal 2008 from $24.4 million in second quarter of fiscal 2007. The decrease was primarily due to lower expenses due to decrease in property development sales activity. In fiscal 2008, property development expenses included asset impairment charges of approximately $0.6 million primarily attributable to inventory units in our Grand Harbor, Florida subdivision. In fiscal 2007, property development expenses included an asset impairment charge of $1.8 million related to certain condominium land in our Oak Harbor, Florida subdivision.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Total revenues decreased by $7.1 million, or 13.1%, to $46.9 million in the first six months of fiscal 2008 from $54.0 million in the first six months of fiscal 2007. The decrease was primarily attributable to a decrease in property development sales activity due to the general slowdown in residential and vacation home sales. In the first six months of fiscal 2008, we sold 26 residential units for approximately $24.8 million at an average price of $1.0 million with a profit margin of 9.2%. In the first six months of fiscal 2007, we sold 56 residential units for approximately $32.9 million at an average price of $0.6 million with a profit margin of 12.2%.
Total expenses decreased by $7.2 million, or 15.2%, to $40.5 million in the first six months of fiscal 2008 from $47.7 million in first six months of fiscal 2007. The decrease was attributable to lower expenses due to decrease in property development sales activity. In the first six months of fiscal 2008, property development expenses included asset impairment charges of approximately $0.6 million compared to an asset impairment charge of $1.8 million in the first six months of fiscal 2007.
Based on current residential sales conditions, coupled with the pending completion of our Westchester, New York properties and the depressed Florida real estate market, we anticipate that property development sales and profits will decline for the full year in fiscal 2008 from levels achieved in fiscal 2007. We may incur additional asset impairment charges if sales price assumptions and unit absorptions are not achieved, and credit market conditions continue to have a negative impact on commercial real estate valuations.
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Certain properties are reclassified as discontinued operations when subject to a contract and are excluded from income from continuing operations.
Home Fashion
Historically, WPI has been adversely affected by a variety of unfavorable conditions, including the following items that continue to have an impact on its operating results:
 	•	adverse competitive conditions for U.S. manufacturing facilities compared to manufacturing facilities located outside of the United States;	
 	•	growth of low-priced imports from Asia and Latin America resulting from lifting of import quotas; and	
 	•	a difficult U.S. retail market for home textiles.	
During the first six months of fiscal 2008, WPI’s performance continued to be affected by the weak retail environment, but its gross earnings/margins improved resulting from both lower costs of production from shifting a significant portion of its manufacturing base overseas and lower factory underutilization charges as the result of U.S. plant closures in fiscal 2007 and early fiscal 2008, coupled with a better sales mix due to the exit of unprofitable programs.
Summarized statements of operations for the three and six months ended June 30, 2008 and 2007 included in the consolidated statements of operations is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Net sales	 	$	96,018	 	 	$	151,111	 	 	$	209,874	 	 	$	347,749	 	
Cost of sales	 	 	89,198	 	 	 	155,104	 	 	 	194,104	 	 	 	352,084	 	
Gross earnings/margins	 	 	6,820	 	 	 	(3,993	) 	 	 	15,770	 	 	 	(4,335	) 	
Expenses:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Selling, general and administrative expenses	 	 	23,902	 	 	 	27,152	 	 	 	50,123	 	 	 	59,210	 	
Restructuring and impairment charges	 	 	7,019	 	 	 	20,382	 	 	 	13,667	 	 	 	24,693	 	
Total expenses	 	 	30,921	 	 	 	47,534	 	 	 	63,790	 	 	 	83,903	 	
Loss from continuing operations before interest, income taxes and
non-controlling interests in loss	 	$	(24,101	) 	 	$	(51,527	) 	 	$	(48,020	) 	 	$	(88,238	) 	
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
The second quarter of fiscal 2008 continued to reflect lower sales due to the weak home textile retail environment and the exit of unprofitable programs, but reflected improvements in both gross earnings/margins and operating earnings as a result of shifting manufacturing capacity from the United States to lower cost countries and lowering selling, general and administrative expenditures and reduced restructuring and impairment charges, coupled with a better sales mix. Net sales were $96.0 million, a decrease of 36.5%, compared to $151.1 million in the second quarter of fiscal 2007. Bed products net sales for the second quarter of fiscal 2008 were $62.4 million, a decrease of $26.6 million from $89.0 million in the second quarter of fiscal 2007, and bath products net sales were $33.6 million, a decrease of $27.8 million compared to $61.4 million in the second quarter of fiscal 2007.
Total depreciation expense for the second quarter of fiscal 2008 was $2.9 million, of which $1.8 million was included in cost of sales and $1.1 million was included in selling, general and administrative expenses. Total depreciation expense for the second quarter of fiscal 2007 was $4.4 million, of which $3.5 million was included in cost of sales and $0.9 million was included in selling, general and administrative expenses. The reduction in depreciation expense was primarily due to U.S. plant closures made during fiscal 2007.
Gross earnings/margins for the second quarter of fiscal 2008 were $6.8 million, or 7.1% of net sales, compared with $(4.0) million, or (2.6)% of net sales, for the second quarter of fiscal 2007. Gross
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earnings/margins improved as a result of shifting manufacturing capacity from the United States to lower cost countries and closing numerous U.S. plants during fiscal 2007 and early fiscal 2008. WPI will continue to realign its manufacturing operations to optimize its cost structure, pursuing offshore sourcing arrangements that employ a combination of owned and operated facilities, joint ventures and third-party supply contracts.
Selling, general and administrative expenses for the second quarter of fiscal 2008 were $23.9 million as compared to $27.1 million for the second quarter of fiscal 2007, reflecting WPI’s continuing efforts to reduce its selling, warehousing, shipping and general and administrative expenses. WPI continues to lower its selling, general and administrative expenditures by consolidating its locations, reducing headcount and applying more stringent oversight of expense areas where potential savings may be realized.
Total expenses for the second quarter of fiscal 2008 include $1.5 million of non-cash impairment charges related to plants that have closed and $5.5 million of restructuring charges (of which $1.0 million related to severance costs and $4.5 million related to continuing costs of closed plants and transition expenses). Total expenses for the second quarter of fiscal 2007 included $15.4 million of non-cash fixed asset impairment charges related to plants that had been or have now been closed and $5.0 million of restructuring charges (of which $1.4 million related to severance costs and $3.6 million related to continuing costs of closed plants and transition expenses).
WPI continues its restructuring efforts and, accordingly, anticipates that restructuring charges (particularly with respect to the carrying costs of closed facilities until such time as these locations are sold) and operating losses will continue to be incurred throughout fiscal 2008. If WPI’s restructuring efforts are unsuccessful or its existing strategic manufacturing plans are amended, it may be required to record additional impairment charges related to the carrying value of long-lived assets.
WPI’s business continues to be significantly influenced by the overall economic environment, including consumer spending, at the retail level, for home textile products. Certain U.S. retailers continue to report comparable store sales that were either negative or below their stated expectations. Many of these retailers are customers of WPI. Fiscal 2008 will continue to be a challenging year for these same retailers. WPI believes that it provides adequate reserves against its accounts receivable to mitigate exposure to known or likely bad debt situations, as well as sufficient overall reserve for reasonably estimated situations, should this arise.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
The first six months of fiscal 2008 continued to reflect lower sales due to the weak home textile retail environment and the exit of unprofitable programs, but reflected improvements in both gross earnings/margins and operating earnings as a result of shifting manufacturing capacity from the United States to lower cost countries and lowering selling, general and administrative expenditures and reduced restructuring and impairment charges, coupled with a better sales mix. Net sales were $209.9 million, a decrease of 39.6% compared to $347.7 million in the first six months of fiscal 2007. Bed products net sales for the first six months of fiscal 2008 were $135.7 million, a decrease of $77.8 million compared to $213.5 million in the first six months of fiscal 2007 and bath products net sales were $74.2 million, a decrease of $58.5 million compared to $132.7 million in the first six months of fiscal 2007.
Total depreciation expense for the first six months of fiscal 2008 was $5.6 million, of which $3.6 million was included in cost of sales and $2.0 million was included in selling, general and administrative expenses. Total depreciation expense for the first six months of fiscal 2007 was $9.1 million, of which $7.2 million was included in cost of sales and $1.9 million was included in selling, general and administrative expenses. The reduction in depreciation expense was primarily due to U.S. plant closures made during fiscal 2007.
Gross earnings/margins for the first six months of fiscal 2008 were $15.8 million, or 7.5% of net sales, compared with $(4.3) million, or (1.3)% of net sales, for the first six months of fiscal 2007. Gross earnings/margins improved as a result of shifting manufacturing capacity from the United States to lower cost countries and closing numerous U.S. plants during fiscal 2007 and early fiscal 2008. WPI will continue to realign its manufacturing operations to optimize its cost structure, pursuing offshore sourcing arrangements that employ a combination of owned and operated facilities, joint ventures and third-party supply contracts.
Selling, general and administrative expenses for the first six months of fiscal 2008 were $50.1 million as compared to $59.2 million for the first six months of fiscal 2007, reflecting WPI’s continuing efforts to reduce
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its selling, warehousing, shipping and general and administrative expenses. WPI continues to lower its selling, general and administrative expenditures by consolidating its locations, reducing headcount and applying more stringent oversight of expense areas where potential savings may be realized.
Total expenses for the first six months of fiscal 2008 include $1.5 million of non-cash impairment charges related to plants that have closed and $12.1 million of restructuring charges (of which $2.5 million related to severance costs and $9.6 million related to continuing costs of closed plants and transition expenses). Total expenses for the first six months of fiscal 2007 included $15.4 million of non-cash fixed asset impairment charges related to plants that had been or have now been closed and $9.3 million of restructuring charges (of which $1.8 million related to severance costs and $7.5 million related to continuing costs of closed plants and transition expenses).
Holding Company
The Holding Company engages in various investment activities. The activities include those associated with investing its available liquidity, investing to earn returns from increases or decreases in the market price of securities, and investing with the prospect of acquiring operating businesses that we would control. Holding Company expenses, excluding interest expense, are principally related to payroll, legal and other professional fees and general expenses of the Holding Company.
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Net loss from investment activities decreased by $8.3 million, or 47.0%, to $9.5 million in the second quarter of fiscal 2008 as compared to a net loss of $17.8 million in the second quarter of fiscal 2007. The decrease was primarily due to higher realized gains recorded on the investment portfolio in the second quarter of fiscal 2008.
Expenses, excluding interest expense, increased by $3.7 million, or 96.9%, to $7.6 million for the second quarter of fiscal 2008 as compared to $3.9 million for the second quarter of fiscal 2007. The increase is primarily due to increase in professional fees.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Net gain from investment activities decreased by $68.8 million, or 111.9%, to a loss of $7.3 million in the first six months of fiscal 2008 as compared to a gain of $61.5 million in the first six months of fiscal 2007. The decrease was primarily due to lower realized gains recorded on the investment portfolio in the first six months of fiscal 2008.
Expenses, excluding interest expense, increased by $3.5 million, or 30.0%, to $15.0 million for the first six months of fiscal 2008 as compared to $11.5 million for the first six months of fiscal 2007. The increase is primarily due to increase in professional fees.
All Other Operations — Interest, Other Income and Interest Expense
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
Interest, dividends and other income decreased by $24.6 million, or 59.6%, to $16.7 million in the second quarter of fiscal 2008 as compared to $41.3 million in the second quarter of fiscal 2007. This decrease was primarily due to lower yields on cash balances in the second quarter of fiscal 2008 compared to the second quarter of fiscal 2007.
Interest expense increased by $0.6 million, or 1.7%, to $36.1 million in the second quarter of fiscal 2008 as compared to $35.5 million in the second quarter of fiscal 2007.
Non-controlling interests in loss for the second quarter of fiscal 2008 decreased by $12.2 million, or 60.9%, compared to the second quarter of fiscal 2007, primarily as a result of the impact of the minority interests’ share of the losses incurred by WPI.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
Interest, dividends and other income decreased by $33.9 million, or 46.7%, to $38.7 million in the first six months of fiscal 2008 as compared to $72.6 million in the first six months of fiscal 2007. This decrease was primarily due to lower yields on cash balances in the first six months of fiscal 2008 compared to the first six months of fiscal 2007.
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Interest expense increased by $9.0 million, or 14.3%, to $73.3 million in the first six months of fiscal 2008 as compared to $63.3 million in the first six months of fiscal 2007. This increase is primarily due to interest incurred on the $600 million of variable rate notes issued in April 2007.
Non-controlling interests in loss for the first six months of fiscal 2008 decreased by $15.4 million, or 49.8%, compared to the first six months of fiscal 2007, primarily as a result of the impact of the minority interests’ share of the losses incurred by WPI.
Income Taxes
Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007
For the second quarter of fiscal 2008, we recorded an income tax provision of $22.3 million on pre-tax loss of $712.5 million. For the second quarter of fiscal 2007, we recorded an income tax provision of $2.2 million on pre-tax income of $272.1 million. Our effective income tax rate was (3.1)% and 0.8% for the respective periods. The difference between the effective tax rate and statutory federal rate of 35% is principally due to changes in the valuation allowance and partnership income not subject to taxation, as such taxes are the responsibility of the partners.
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
For the second quarter of fiscal 2008, we recorded an income tax provision of $32.7 million on pre-tax loss of $726.8 million. For the second quarter of fiscal 2007, we recorded an income tax provision of $3.9 million on pre-tax income of $711.4 million. Our effective income tax rate was (4.5)% and 0.5% for the respective periods. The difference between the effective tax rate and statutory federal rate of 35% is principally due to changes in the valuation allowance and partnership income not subject to taxation, as such taxes are the responsibility of the partners.
Discontinued Operations
American Casino & Entertainment Properties LLC
On February 20, 2008, we consummated the sale of our subsidiary, ACEP, to an affiliate of Whitehall Street Real Estate Fund for $1.2 billion, realizing a gain of approximately $473.9 million, after taxes (subject to resolution of post-closing adjustments). The sale of ACEP included the Stratosphere and three other Nevada gaming properties, which represented all of our remaining gaming operations.
In connection with the closing, we repaid all of ACEP’s outstanding 7.85% senior secured notes due 2012, which were tendered pursuant to ACEP’s previously announced tender offer and consent solicitation. In addition, ACEP repaid in full all amounts outstanding, and terminated all commitments, under its credit facility with Bear Stearns Corporate Lending Inc., as administrative agent, and the other lenders thereunder.
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 Code. Such proceeds were deposited into the escrow accounts pending the fulfillment of Section 1031 exchange requirements. There are no assurances that we will fulfill our Section 1031 exchange obligations using the proceeds placed into escrow.
Real Estate
Operating properties are reclassified to held for sale when subject to a contract. The operations of such properties are classified as discontinued operations. Upon entry into a contract to sell a property, the operating results and cash flows associated with the property are reclassified to discontinued operations and historical financial statements are reclassified to conform to the current classification.
In the first six months of fiscal 2008, we sold three rental properties for $11.8 million for a net gain of $5.7 million compared to one property sold for $4.4 million for a net gain of $3.9 million in the first six months of fiscal 2007.
Home Fashion — Retail Stores
WPI closed all of its retail stores based on a comprehensive evaluation of the stores’ long-term growth prospects and their on-going value to the business. On October 18, 2007, WPI entered into an agreement to sell the inventory at all of its retail stores and subsequently ceased operations of its retail stores. Accordingly,
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it has reported the retail outlet stores business as discontinued operations for all periods presented. As a result of the sale, in fiscal 2007 WPI accrued approximately $8.1 million of expense relating to the estimated liability for termination of the leases relating to its retail outlet stores facilities. As of June 30, 2008 and December 31, 2007, the accrued lease termination liability balance was approximately $3.5 million and $7.1 million, respectively, which is included in liabilities of discontinued operations in our consolidated balance sheets.
Results of Discontinued Operations
The financial position and results of these operations are presented as assets and liabilities of discontinued operations held for sale in the consolidated balance sheets and discontinued operations in the consolidated statements of operations, respectively, for all periods presented in accordance with Statement of Financial Accounting Standards, or SFAS, No. 144, Accounting for the Impairment or Disposal of Long-Lived Asset.  For further discussion, see Note 3, “Discontinued Operations and Assets Held for Sale,” to our consolidated financial statements.
Summarized financial information for discontinued operations for the three and six months ended June 30, 2008 and 2007 is as follows (in $000s):
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended June 30,	 	Six Months Ended June 30,	
  	 	2008	 	2007	 	2008	 	2007	
Revenues:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Gaming(1)	 	$	—	 	 	$	114,138	 	 	$	59,619	 	 	$	227,026	 	
Real Estate	 	 	274	 	 	 	995	 	 	 	811	 	 	 	2,076	 	
Home Fashion – retail stores	 	 	—	 	 	 	14,678	 	 	 	—	 	 	 	28,644	 	
Total revenues	 	$	274	 	 	$	129,811	 	 	$	60,430	 	 	$	257,746	 	
Income (loss) from discontinued
operations:
	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	
Gaming	 	$	—	 	 	$	31,319	 	 	$	13,430	 	 	$	54,546	 	
Real Estate	 	 	179	 	 	 	636	 	 	 	601	 	 	 	1,266	 	
Home Fashion – retail stores	 	 	13	 	 	 	(1,475	) 	 	 	(154	) 	 	 	(3,779	) 	
Total income from discontinued
operations before income taxes,
interest and other income	 	 	192	 	 	 	30,480	 	 	 	13,877	 	 	 	52,033	 	
Interest expense	 	 	—	 	 	 	(5,461	) 	 	 	(2,564	) 	 	 	(10,901	) 	
Interest and other income	 	 	—	 	 	 	273	 	 	 	322	 	 	 	19,334	 	
Income from discontinued operations before income taxes and non-controlling interests in income of	 	 	192	 	 	 	25,292	 	 	 	11,635	 	 	 	60,466	 	
Income tax expense	 	 	(3	) 	 	 	(6,038	) 	 	 	(3,890	) 	 	 	(15,232	) 	
  	 	 	189	 	 	 	19,254	 	 	 	7,745	 	 	 	45,234	 	
Non-controlling interest in loss (income)	 	 	(4	) 	 	 	519	 	 	 	50	 	 	 	(531	) 	
(Loss) gain on sales of discontinued operations, net of income tax expense	 	 	(2,109	) 	 	 	841	 	 	 	479,517	 	 	 	14,026	 	
(Loss) income from discontinued
operations	 	$	(1,924	) 	 	$	20,614	 	 	$	487,312	 	 	$	58,729	 	

 	(1)	Gaming segment results for the six months ended June 30, 2008 are through February 20, 2008, the date of the ACEP sale.	
Interest and other income for the six months ended June 30, 2007 includes approximately $8.5 million relating to a real estate tax refund received by Atlantic Coast Entertainment Holdings, Inc. and approximately $10.1 million representing the net gain on settlement of litigation relating to GB Holdings Inc.
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The gain on sales of discontinued operations for the six months ended June 30, 2008 includes approximately $473.9 million, net of income taxes of approximately $258.4 million, recorded on the sale of ACEP on February 20, 2008. The gain on sales of discontinued operations for the six months ended June 30, 2007 includes approximately $3.9 million of gain on sales of real estate assets and $9.3 million relating to a working capital adjustment to the gain recorded on the sale of the Oil and Gas business in November 2006.
Liquidity and Capital Resources
Consolidated Liquidity and Capital Resources
As of June 30, 2008, we had cash and cash equivalents of $2.1 billion, investments of $279.1 million and total debt of $2.0 billion. The Holding Company made three equal investments in September, October and November 2007 aggregating $700 million in the Private Funds for which no special profits interest allocations effective January 1, 2008 (and prior to January 1, 2008, management fees) or incentive allocations are applicable. As of June 30, 2008, the total value of this investment is approximately $620.7 million, with an unrealized loss of $63.6 million for the first six months of fiscal 2008. These amounts are eliminated in our consolidated financial statements. In addition, we also have the ability to draw down on our credit facility. In August 2006, we entered into a credit agreement with a consortium of banks pursuant to which we will be permitted to borrow up to $150.0 million. As of June 30, 2008 there were no borrowings under the facility. See “Borrowings” below for additional information concerning credit facilities for our subsidiaries.
We are a holding company. Our cash flow and our ability to meet our debt service obligations and make distributions with respect to depositary units and preferred units likely will depend on the cash flow resulting from divestitures, equity and debt financings, interest income and the payment of funds to us by our subsidiaries in the form of loans, dividends and distributions. We may pursue various means to raise cash from our subsidiaries. To date, such means include payment of dividends from subsidiaries, obtaining loans or other financings based on the asset values of subsidiaries or selling debt or equity securities of subsidiaries through capital market transactions. To the degree any distributions and transfers are impaired or prohibited, our ability to make payments on our debt or distributions on our depositary units and preferred units could be limited. The operating results of our subsidiaries may not be sufficient for them to make distributions to us. In addition, our subsidiaries are not obligated to make funds available to us, and distributions and intercompany transfers from our subsidiaries to us may be restricted by applicable law or covenants contained in debt agreements and other agreements to which our subsidiaries may be subject or enter into in the future.
Cash Flows
Operating Activities
Net cash used in operating activities for the first six months of fiscal 2008 was approximately $244.6 million compared to $1.8 billion for the first six months of fiscal 2007, primarily attributable to the activity of our Investment Management operations. Net cash used in continuing operations from our Investment Management operations was $214.4 million for the first six months of fiscal 2008 compared to $1.8 billion for the comparable period in fiscal 2007 due primarily from investment activities which provided cash of approximately $518.1 million during the first six months of fiscal 2008 compared to a net use of cash of approximately $2.6 billion for the comparable period in fiscal 2007, offset in part by earnings from continuing operations and non-controlling interests in income and loss as well as changes in operating assets and liabilities. Net cash used in operating activities from continuing operations for all other operations was approximately $23.4 million for the first six months of fiscal 2008 and $37.9 million for the comparable prior year period primarily due to investment losses offset by year to date net losses for fiscal 2008 and net changes in operating assets and liabilities.
Investing Activities
Net cash provided by investing activities for the first six months of fiscal 2008 was $248.2 million compared to $225.2 million for the first six months of fiscal 2007. Net cash used in investing activities from continuing operations was approximately $954.0 million for the first six months of fiscal 2008 compared to net cash provided by investing activities from continuing operations of $225.2 million for the comparable period in fiscal 2007 primarily due to the restricted cash relating to Section 1031 exchange transactions generated from the sale of ACEP in the first quarter of fiscal 2008. Similarly, net cash provided by investing
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activities from discontinued operations increased $1.2 billion year over year primarily due to the proceeds from the sale of ACEP of approximately $1.2 billion in the first quarter of fiscal 2008.
Financing Activities
Net cash used in financing activities for the first six months of fiscal 2008 was approximately $97.9 million compared to net cash provided by financing activities of approximately $2.9 billion for the comparable period in fiscal 2007. Within our Investment Management operations, cash received from capital contributions by non-controlling interests decreased approximately $1.2 billion for the first six months of fiscal 2008 compared to the comparable period in fiscal 2007. Additionally, we had proceeds from the issuance of senior notes and from variable rate notes during the first six months of fiscal 2007 totaling approximately $1.1 billion. In addition, we repaid $255.0 million balance of credit facilities relating to ACEP in the first quarter of fiscal 2008.
Borrowings
Debt consists of the following (in $000s):
 	 	 	 	 	
 	 	June 30,
2008	 	December 31,
2007	
Senior unsecured variable rate convertible notes due 2013 – 
Icahn Enterprises	 	$	600,000	 	 	$	600,000	 	
Senior unsecured 7.125% notes due 2013 – Icahn Enterprises	 	 	974,043	 	 	 	973,387	 	
Senior unsecured 8.125% notes due 2012 – Icahn Enterprises	 	 	351,731	 	 	 	351,570	 	
Senior secured 7.85% notes due 2012 – ACEP	 	 	—	 	 	 	215,000	 	
Borrowings under credit facility – ACEP	 	 	—	 	 	 	40,000	 	
Mortgages payable	 	 	101,240	 	 	 	104,030	 	
Other	 	 	8,362	 	 	 	14,796	 	
Total debt	 	 	2,035,376	 	 	 	2,298,783	 	
Less debt related to assets held for sale	 	 	—	 	 	 	(257,330	) 	
  	 	$	2,035,376	 	 	$	2,041,453	 	
See Note 11, “Debt,” of our consolidated financial statements for additional information concerning terms, restrictions and covenants of our debt. As of June 30, 2008, we are in compliance with all debt covenants.
On February 20, 2008, American Entertainment Properties Corp, our wholly owned indirect subsidiary, sold all of the issued and outstanding membership interests of ACEP. The sale of ACEP included the Stratosphere and three other Nevada gaming operations, which comprised our remaining gaming operations. As a result, we no longer have the senior secured 7.85% notes or borrowings under credit facilities – ACEP as summarized in the above table.
Contractual Commitments
Except for the repayment of ACEP’s senior secured 7.85% notes due 2012 and borrowings under ACEP’s credit facility upon the sale of ACEP which was consummated on February 20, 2008, there were no other material changes in our contractual obligations or any other liabilities reflected on our consolidated balance sheet as compared to those reported in our Annual Report on Form 10-K for fiscal 2007 filed with the SEC on March 17, 2008.
Off-Balance Sheet Arrangements
We have off-balance sheet risk related to investment activities associated with certain financial instruments, including futures, options, credit default swaps and securities sold, not yet purchased. For additional information regarding these arrangements, please see Note 7, “Financial Instruments, Off-Balance Sheet Risk, Concentrations of Credit Risk and Guarantees,” in our consolidated financial statements.
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Segment Liquidity and Capital Resources
Investment Management Operations
Historically, the growth in the AUM of the Private Funds resulted primarily from capital from new investors. Prior to January 1, 2008, as management fees were earned and received by Icahn Management (and for the period from August 8, 2007 through December 31, 2007, New Icahn Management) generally at the beginning of each quarter, such growth directly impacted our cash flows. As discussed above, effective January 1, 2008, the management fees were terminated and the General Partners are eligible to receive special profits interest allocations which, to the extent that they are earned, will generally be paid annually.
For periods prior to January 1, 2008, management fees generated by the Investment Management operations had been sufficient to cover operating expenses as they were earned and paid quarterly. Effective January 1, 2008, the management fees were terminated and the Investment Management operations may receive special profits interest allocations. Special profits interest allocations are paid annually to the extent that there are sufficient net profits of the Private Funds to cover such amounts. In the event that there are not sufficient net profits of the Private Funds to cover the entire Targeted Special Profits Interest Amount in any given year, the Investment Management operations may require intercompany loans from the Holding Company to fund its operations. As of June 30, 2008, we believe that the Investment Management operations had sufficient liquidity to cover its operating expenses over the next 12 months. However, should there be a shortfall in cash, the Holding Company will make intercompany loans to the Investment Management to fund their operations.
As of June 30, 2008, the ratio of the notional exposure of our invested capital to net asset value of the Private Funds was approximately 1.25 to 1.00 on the long side and 0.92 to 1.00 on the short side. (The notional principal amount of an investment instrument is the reference amount that is used to calculate profit or loss on that instrument). We believe that the Private Funds have access to significant amounts of cash from prime brokers, subject to customary terms and market conditions.
Net cash used in operating activities is largely comprised of purchases of securities and sales proceeds from securities transactions. Purchases of securities during each of the first six months of fiscal 2008 and fiscal 2007 were approximately $4.3 billion while proceeds from sales of securities were approximately $2.8 billion and $2.9 billion for the first six months of fiscal 2008 and fiscal 2007, respectively. Net cash used in operating activities was $214.4 million and $1.8 billion for the first six months of fiscal 2008 and fiscal 2007, respectively, due to the changes in investment activities.
There were no cash flows attributable to investing activities during any of the relevant periods, as investments-related cash flows in the consolidated Private Funds are classified within operating activities in our consolidated statements of cash flows.
Cash inflows from investors in the Private Funds are classified within financing activities in our consolidated statements of cash flows. These amounts are reported as contributions to and distributions from non-controlling interests in consolidated affiliated partnerships. Net cash provided by financing activities was $200.0 million and $1.8 billion for the first six months of fiscal 2008 and fiscal 2007, respectively. The decrease in the first six months of fiscal 2008 was due to decreased capital contributions from investors in the Private Funds of $1.2 billion compared to the first six months of fiscal 2007.
All Other Operations
Metals
The primary source of cash from our Metals segment is from the operation of its properties. Historically Metals segment’s liquidity requirements primarily pertained to the funding of acquisitions, capital expenditures and payment of dividends. Prior to our acquisition on November 5, 2007, the Metals segment funded acquisitions principally from net cash provided by operating activities, from borrowings and capital contributions from Philip.
As of June 30, 2008, the Metals segment had cash and cash equivalents of approximately $12.8 million.
During the first six months of fiscal 2008, net cash generated from operating activities was $8.4 million, resulting primarily from $54.0 million of net income and $10.6 million of favorable non-cash adjustments to
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income, offset by a $56.2 million increase in working capital. The increase in working capital was due to a $94.7 million increase in accounts receivable that was attributed to higher levels of sales during the second quarter of fiscal 2008. Increased inventory turnover resulted in reduced inventory of $0.5 million, and accounts payable and accrued expenses increased $38.5 million primarily due to higher income taxes payable.
Net cash used in investing activities for the first six months of fiscal 2008 included capital spending of $20.6 million, which included the acquisition of Slippery Rock Towing and Salvage, and $1.6 million for the purchase of additional shares of common stock. Capital expenditures for the remainder of fiscal 2008 are expected to total approximately $32.0 million for existing facilities, and include a new shredder and ongoing growth and maintenance capital for existing recycling facilities.
Net cash provided by financing activities was $7.0 million. This was generated from the net proceeds of an intercompany revolving loan from Icahn Enterprises. Outstanding intercompany borrowings at the end of the first quarter of fiscal 2008 were repaid during the second quarter of fiscal 2008, but strong market conditions and increased sales levels in the second quarter of fiscal 2008 necessitated additional short-term borrowing. The outstanding balance was repaid in July 2008.
The Metals segment believes that increased cash flows from operations coupled with funds available from Icahn Enterprises will be sufficient to fund working capital requirements, acquisitions and anticipated dividend requirements over the next 12 months. The Metals segment also believes that the timing and size of future capital requirements, consistent with the Metals segment’s strategy, are subject to change. Metals segment’s management anticipates that capital spending will increase over the next three to five years, as the Metals segment vertically integrates into feeder yards and increased mobile car crushing and transportation. The Metals segment expects to continue to upgrade its processing equipment and invest in the latest technologies for recovery of non-ferrous material within its shredded product.
Real Estate
Our Real Estate segment generates cash through rentals, leases and asset sales (principally sales of rental and residential properties) and the operation of resorts. All of these operations generate cash flows from operations.
At June 30, 2008, we had cash and cash equivalents of $195.7 million compared to $172.2 million at December 31, 2007.
In the first six months of fiscal 2008, cash provided by operating activities from continuing operations was $15.9 million primarily from income from continuing operations of $3.3 million, non-cash charges of $3.0 million and a decrease in property development inventory of $4.3 million. Cash used in investing activities was $2.6 million for capital expenditures. Cash used in financing activities was $2.8 million for payments of mortgage debt.
In the first six months of fiscal 2008, we sold three rental properties for $11.8 million.
We anticipate operating cash flows to be positive across all real estate segments for the remainder of fiscal 2008. In fiscal 2008, property development construction expenditures are expected to be approximately $30 million which we will fund from unit sales and, if proceeds are insufficient, from available cash reserves. We have a $20 million mortgage due in September of 2008, which we anticipate to refinance.
Home Fashion
For the first six months of fiscal 2008, the Home Fashion segment had a negative operating cash flow from continuing operations of $9.7 million as compared to a negative operating cash flow from continuing operations of $54.5 million for the first six months of fiscal 2007. Such negative cash flow reduction was principally due to decreased losses and reductions in working capital. WPI anticipates that its operating losses and restructuring charges will continue to be incurred for the remainder of fiscal 2008.
At June 30, 2008, WPI had approximately $128.8 million of unrestricted cash and cash equivalents. There were no borrowings under the WestPoint Home revolving credit agreement as of June 30, 2008, but there were outstanding letters of credit of $12.7 million. Based upon the eligibility and reserve calculations within the agreement, WestPoint Home had unused borrowing availability of approximately $65.2 million at June 30, 2008.
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Capital expenditures by WPI were $7.5 million and $21.6 million for the first six months of fiscal 2008 and fiscal 2007, respectively. Capital expenditures for fiscal 2008 are expected to total between $12.0 and $15.0 million.
The senior secured revolving credit agreement contains various covenants including, among others, restrictions on indebtedness, investments, redemption payments, distributions, acquisition of stock, securities or assets of any other entity and capital expenditures. However, WestPoint Home is not precluded from effecting any of these, if excess availability, as defined, after giving effect to any such debt issuance, investment, redemption, distribution or other transition or payment restricted by covenant, meets a minimum threshold.
Through a combination of its existing cash on hand and its borrowing availability under the WestPoint Home senior secured revolving credit facility (together, an aggregate of $194.0 million), WPI believes that it has adequate capital resources and liquidity to meet its anticipated requirements to continue its operational restructuring initiatives and for working capital, capital spending and scheduled payments on the notes payable through the next 12 months. In its analysis with respect to the sufficiency of adequate capital resources and liquidity, WPI has considered that its retail customers may continue to face either negative or flat comparable store sales for home textile products in fiscal 2008. However, depending upon the levels of additional acquisitions and joint venture investment activity, if any, additional financing, if needed, may not be available to WPI or, if available, the financing may not be on terms favorable to WPI. WPI’s estimates of its anticipated liquidity needs may not be accurate and new business opportunities or other unforeseen events could occur, resulting in the need to raise additional funds from outside sources.
Distributions
Depositary Units
On April 1, 2008 and June 3, 2008, we paid a distribution of $0.25 per unit, aggregating $35.9 million, to depositary unitholders of record at the close of business on March 18, 2008 and May 22, 2008, respectively.
On August 6, 2008, the board of directors approved a payment of a quarterly cash distribution of $0.25 per unit on our depositary units payable in the third quarter of fiscal 2008. The distribution will be paid on September 5, 2008 to depositary unitholders of record at the close of business on August 22, 2008. Under the terms of the indenture dated April 5, 2007 governing our variable rate notes due 2013, we will also be making a $0.15 distribution to holders of these notes in accordance with the formula set forth in the indenture.
The payment of future distributions will be determined by the board of directors quarterly. There can be no assurances as to whether or in what amounts any future distributions might be paid.
Preferred Units
Pursuant to the terms of the preferred units, on March 28, 2008, we distributed 595,181 preferred units to holders of record of our preferred units at the close of business on March 14, 2008.
Our preferred units are subject to redemption at our option on any payment date, and the preferred units must be redeemed by us on or before March 31, 2010. The redemption price is payable, at our option, subject to the indenture, either all in cash or by the issuance of depositary units, in either case, in an amount equal to the liquidation preference of the preferred units plus any accrued but unpaid distributions thereon.
Critical Accounting Policies and Estimates
Except for our Investment Management operations’ new revenue recognition policy on special profits interest allocations as discussed below, there were no other material changes to our critical accounting policies and estimates during the six months ended June 30, 2008 as compared to those reported in our Annual Report on Form 10-K for the fiscal year 2007 filed with the SEC on March 17, 2008.
Revenue Recognition on Special Profits Interest Allocations
The General Partners generate income from amounts earned pursuant to contractual arrangements with the Private Funds.
Prior to January 1, 2008, such amounts typically included an annual management fee of 2.5% of the net asset value before a performance-based incentive allocation of 25% of capital appreciation (both realized and
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unrealized) earned by the Private Funds subject to a “high water mark” (whereby the General Partners did not earn incentive allocations during a particular year even though the fund had a positive return in such year until losses in prior periods are recovered). Such amounts have been (and may in the future be) modified or waived in certain circumstances. The General Partners (and New Icahn Management prior to January 1, 2008) and their affiliates may also earn income through their investments in the Private Funds. Effective January 1, 2008, the management fees were eliminated and the General Partners are eligible to receive special profits interest allocations as discussed below.
Effective January 1, 2008, the Investment Fund LPAs provide that the applicable General Partner will receive a special profits interest allocation at the end of each calendar year from each capital account maintained at the Investment Fund that is attributable to, (i) in the case of the Onshore Fund, each limited partner in the Onshore Fund and, (ii) in the case of the Feeder Funds, each investor in the Feeder Funds (excluding certain investors that were not charged management fees including affiliates of Mr. Icahn) (in each case, an “Investor”). This allocation is generally equal to 0.625% of the balance in each fee-paying capital account as of the beginning of each quarter (for each Investor, 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 respect of an Investor in any year cannot exceed the net profits allocated to such Investor in such year.
Each Target Special Profits Interest Amount will be deemed contributed to a separate hypothetical capital account (that is not subject to an incentive allocation or a special profits interest allocation) 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 from (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 Fund in which such hypothetical capital account is maintained.
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 for an Investor for a calendar year, a special profits interest allocation will be made 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 for the next calendar year. Appropriate adjustments will be made to the calculation of the special profits interest allocations for new subscriptions and withdrawals by Investors. In the event that an Investor withdraws or redeems in full from a Feeder Fund or the Onshore Fund before the full targeted Target Special Profits Interest Amount determined for such Investor has been allocated to the General Partner in the form of a special profits interest allocation, the amount of 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.
The General Partners’ special profits interest allocations earned from the Private Funds are accrued on a quarterly basis in accordance with Method 2 of EITF Topic D-96,  Accounting for Management Fees Based on a Formula , and are allocated to the General Partners at the end of Private Funds’ fiscal year (or sooner on redemptions). Such accruals may be reversed as a result of subsequent investment performance prior to the conclusion of the Private Funds’ fiscal year.
Recently Issued Accounting Pronouncements
SFAS No. 141(R).  In December 2007, the FASB issued Standard of Financial Accounting Standards (“SFAS”) No. 141(R),  Business Combinations  (“SFAS No. 141(R)”). SFAS No. 141(R) requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values. Certain forms of contingent consideration and certain acquired contingencies will be recorded at fair value at the acquisition date. SFAS No. 141(R) also requires that acquisition-related costs be expensed as incurred and restructuring costs be expensed in periods after the acquisition date. This statement is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption of SFAS No. 141(R) is not permitted. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009.
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SFAS No. 160.  In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51  (“SFAS No. 160”). SFAS No. 160 requires a company to clearly identify and present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section but separate from the company’s equity. It also requires that the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; changes in ownership interest be accounted for similarly, as equity transactions; and, when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary be measured at fair value. This statement is effective for fiscal years beginning after December 15, 2008. Early adoption of SFAS No. 160 is not permitted. We are currently evaluating the impact that SFAS No. 160 will have on our consolidated financial statements.
Forward-Looking Statements
Statements included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act and Section 21E of the Securities and Exchange Act of 1934, or the Exchange Act, as amended, or by Public Law 104-67.
Forward-looking statements regarding management’s present plans or expectations involve risks and uncertainties and changing economic or competitive conditions, as well as the negotiation of agreements with third parties, which could cause actual results to differ from present plans or expectations, and such differences could be material.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this document. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those predicted. Also, please see Item 1A “Risk Factors” in our Annual Report on Form 10-K for fiscal 2007 that we filed with the SEC on March 17, 2008.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our significant market risks are primarily associated with interest rates and equity prices. Reference is made to Part II, Item 7A of our Annual Report on Form 10-K for fiscal 2007 that we filed with the SEC on March 17, 2008 for disclosures relating to interest rates and our equity prices. Except for changes to the market risk in our Investment Management operations as discussed below, there have been no other material changes as of June 30, 2008.
Investment Management Operations — Market Risk
The Private Funds hold investments that are reported at fair value as of the reporting date, which include securities owned, securities sold, not yet purchased and derivatives as reported on our consolidated balance sheets. Based on their respective balances as of June 30, 2008, we estimate that in the event of a 10% decline in fair value of these investments, the fair value of securities owned and securities sold, not yet purchased would decrease by $604.6 million and increase by $109.7 million, respectively, and the fair value of derivatives would increase by $186.5 million. However, we estimate that the impact to our share of the net gain (loss) from investment activities reported on our consolidated statement of operations would be significantly less than the change in fair value since we have an investment of approximately 10% in these Private Funds, and the non-controlling interests in income would correspondingly offset approximately 90% of the change in fair value.
Item 4. Controls and Procedures
As of June 30, 2008, our management, including our Principal Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of Icahn Enterprises’ and our subsidiaries’ disclosure controls and procedures pursuant to the Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon that evaluation, our Principal Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are currently effective to ensure that information required to
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be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the first six months of fiscal 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II.
OTHER INFORMATION
Item 1. Legal Proceedings
WPI Litigation
Federal Proceedings
In November and December 2005, the U.S. District Court for the Southern District of New York, or the District Court, rendered a decision in  Contrarian Funds LLC v. WestPoint Stevens, Inc. et al.,  and issued orders reversing certain provisions of the Bankruptcy Court Sale Order, pursuant to which we acquired our ownership of a majority of the common stock of WPI. WPI acquired substantially all of the assets of WestPoint Stevens, Inc. The District Court remanded to the Bankruptcy Court for further proceedings.
On April 13, 2006, the Bankruptcy Court entered a remand order (the “Remand Order”), which provided, among other things, that all of the shares of common stock and rights to acquire shares of common stock of WPI issued to us and the other first lien lenders or held in escrow pursuant to the Sale Order constituted “replacement collateral.” The Bankruptcy Court held that the 5,250,000 shares of common stock that we acquired for cash were not included in the replacement collateral. The Bankruptcy Court also held that, in the event of a sale of the collateral, including the sale of the shares we received upon exercise of certain subscription rights, or the Exercise Shares, all proceeds would be distributed, pro rata, among all first lien lenders, including us, until the first lien debt was satisfied, in full. The parties filed cross-appeals of the Remand Order.
On October 9, 2007, the District Court entered an Order, or the October 9th Order, on the appeal and cross-appeal. The District Court affirmed the Remand Order but held that, as to the Exercise Shares, any sale proceeds would be divided between us and the first lien lenders (including us), generally based upon the ratio of the amount we paid to exercise the rights to the total value of the Exercise Shares on the date they were acquired. We are holders of approximately 39.99% of the outstanding first lien debt and approximately 51.21% of the outstanding second lien debt.
Each of the parties has filed a notice of appeal with the United States Court of Appeals for the Second Circuit. As part of that appeal, the parties have the right to raise issues relating to the District Court’s November 2005 opinion, and the Orders entered thereon, as well as issues relating to the October 9th Order. Briefing has been completed on the appeal, but the Court has not yet scheduled oral argument.
Delaware Proceedings
On October 3, 2007, the Court of Chancery of the State of Delaware in and for New Castle County, or the Chancery Court, issued a Limited Status Quo Order (“the Order”) in Beal  Bank, S.S.B., et al. v. WestPoint International, Inc. et al.,  in connection with the complaint filed on January 19, 2007, as amended, by Beal Bank, S.S.B. and certain creditors of WestPoint Stevens, Inc., collectively, the Plaintiffs. The Order required that WPI and subsidiaries seek a further court order, obtain consent or give notice before engaging in certain actions. On October 15, 2007, the Chancery Court issued a Modified Limited Status Quo Order, or the Modified Order, modifying certain provisions of the prior order to permit WPI and its subsidiaries to conduct ordinary course of business activities without further notice, consent, or order, including (i) ordinary course of business sales and purchases provided any particular transaction does not exceed $20,000,000 and (ii) transfers of excess inventory, unused equipment and/or unused real property to an unrelated third party provided the sale price for any particular real property transaction does not exceed $30,000,000.
On June 4, 2008, the Chancery Court granted defendants’ motion for summary judgment on Plaintiffs’ claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and conversion, and dismissed those claims. The Court granted Plaintiffs’ motion for summary judgment, on liability only, on Plaintiffs’ claim that WPI breached the Registration Rights Agreement, holding that WPI was obliged to proceed with the registration of its securities with the SEC. The Court denied the remainder of the parties’ summary judgment motions. In further proceedings, the Chancery Court held that because a decision of the Second Circuit on the appeal in the federal proceedings may directly affect some claims and may influence the issues to be tried on other claims in the Chancery Court, the trial should be held in Delaware after the decision by the Second Circuit. Therefore, no trial date has been set.
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We continue to vigorously defend against all claims asserted in the federal and Delaware proceedings and believe that we have valid defenses. However, we cannot predict the outcome of these proceedings or the ultimate impact on our investment in WPI and its subsidiaries or the business prospects of WPI and its subsidiaries.
If we were to lose control of WPI, it could adversely affect the business and prospects of WPI and the value of our investment in it. In addition, we consolidated the balance sheet of WPI as of June 30, 2008 and WPI’s results of operations for the period from the date of acquisition (August 8, 2005) through June 30, 2008. If we were to own less than 50% of the outstanding common stock or the challenge to our preferred stock ownership is successful, we would have to evaluate whether we should consolidate WPI and, if so, our consolidated financial statements could be materially different than those presented for all periods presented.
Lear Corporation
We and certain of our affiliates, among others, were named as defendants in various actions filed in connection with our proposed merger with Lear Corporation (“Lear”). The Lear shareholders rejected the merger and the merger agreement has been terminated. The remaining action is an action captioned “Fourth Amended Consolidated Shareholder Derivative Complaint” that has been filed in the court of Chancery of the State of Delaware against us and certain of our affiliates, among others (the “Fourth Amended Complaint”). The Fourth Amended Complaint challenges the amended merger agreement by alleging breach of fiduciary duty, aiding and abetting breaches of fiduciary duty, unjust enrichment and waste. Motions to dismiss the Fourth Amended Complaint are currently pending. We continue to vigorously defend the claims asserted in the Fourth Amended Complaint and believe that we have valid defenses, but cannot predict the outcome at this stage of the litigation.
National Energy Group, Inc.
National Energy Group, Inc, or NEGI, was informed that on February 1, 2008 a purported stockholder derivative and class action lawsuit styled  Andrew T. Berger v. Icahn Enterprises LP, et al.  (Case No. 3522-VCS) was filed in the Delaware Court of Chancery against NEGI, as a nominal defendant, Icahn Enterprises and various individuals, including one of our current directors, as additional defendants. We indirectly beneficially own 50.1% of NEGI’s outstanding common stock. The complaint alleges, among other things, that certain of NEGI’s current and former officers and directors breached their fiduciary duties to NEGI and its stockholders in connection with NEGI’s previously announced November 21, 2006 sale to NEG Oil & Gas LLC, or NEG Oil & Gas, of NEGI’s former unconsolidated non-controlling 50% limited liability company interest in NEG Holding LLC, or NEG Holding, as a result of the exercise by NEG Oil & Gas of its contractual redemption option under the operating agreement governing NEG Holding.
Since the redemption of NEGI’s former interest in NEG Holding, NEGI has had no business operations and its principal assets consist of its cash and short-term investment balances, which currently aggregate approximately $47.8 million. On March 14, 2008, the shareholders voted to approve the liquidation and dissolution of NEGI. NEGI filed a Form 15 with the SEC on March 26, 2008 deregistering its securities under the Exchange Act. As a result, NEGI’s status as a public company has been suspended. No cash distributions will be made to NEGI’s shareholders until the NEGI board determines that NEGI has paid, or made adequate provision for the payment of, its liabilities and obligations, including any liabilities relating to the lawsuit.
NEGI believes it has meritorious defenses to all claims and will vigorously defend the action; however, we cannot predict the outcome of the litigation on us or on our interest in NEGI.
Item 1A. Risk Factors
The risk factors included in our Annual Report on Form 10-K for fiscal 2007, filed with the SEC on March 17, 2008, did not materially change during the period covered by this report.
Item 6. Exhibits
The list of exhibits required by Item 601 of Regulation S-K and filed as part of this report is set forth in the Exhibit Index.
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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 thereunto duly authorized.
 	 	 	
 	 	ICAHN ENTERPRISES L.P.	
  	 	By:
Icahn Enterprises G.P. Inc.,
its general partner	
  	 	By:
/s/ Dominick Ragone

Dominick Ragone
Principal Financial Officer	
Date: August 11, 2008
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EXHIBITS INDEX
 	 	 	
Exhibit No.	 	Description	
Exhibit 31.1	 	Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.	
Exhibit 31.2	 	Certification of Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.	
Exhibit 32.1	 	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.	
Exhibit 32.2	 	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.	
75

EXHIBIT 31.1
 
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Keith A. Meister, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Icahn Enterprises L.P. for the period ended June 30, 2008 (the “Report”);
 
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
 
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Registrant and we have:
 
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):
 
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 	 	

 	 
 	
 	  	/s/ Keith A. Meister	

Keith A Meister
Principal Executive Officer and Vice Chairman of the Board of
Icahn Enterprises G.P. Inc., the General Partner of Icahn Enterprises L.P.	

Date: August 11, 2008

EXHIBIT 31.2
 
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Dominick Ragone, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Icahn Enterprises L.P. for the period ended June 30, 2008 (the “Report”);
 
2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;
 
4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Registrant and have:
 
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in the Report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):
 
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 	 	

 	 
 	
 	 	/s/ Dominick Ragone	

Dominick Ragone
Principal Financial Officer of Icahn Enterprises G.P. Inc.,
the General Partner of Icahn Enterprises L.P.	

Date: August 11, 2008

EXHIBIT 32.1
 
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
I, Keith A. Meister, Principal Executive Officer of Icahn Enterprises G.P. Inc., the General Partner of Icahn Enterprises L.P. (the “Registrant”), certify that, to the best of my knowledge, based upon a review of the Icahn Enterprises L.P., quarterly report on Form 10-Q for the period ended June 30, 2008 of the Registrant (the “Report”):
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 	 	

 	 
 	
 	 	/s/ Keith A. Meister	

Keith A Meister
Principal Executive Officer and Vice Chairman of the Board of
Icahn Enterprises G.P. Inc., the General Partner of Icahn Enterprises L.P.	

Date: August 11, 2008

EXHIBIT 32.2
 
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
I, Dominick Ragone, Chief Financial Officer (Principal Financial Officer) of Icahn Enterprises G.P. Inc., the General Partner of Icahn Enterprises L.P. (the “Registrant”), certify that, to the best of my knowledge, based upon a review of the Icahn Enterprises L.P., quarterly report on Form 10-Q for the period ended June 30, 2008 of the Registrant (the “Report”):
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

 	 	

 	 
 	
 	 	/s/ Dominick Ragone	

Dominick Ragone
Principal Financial Officer of Icahn Enterprises G.P. Inc.,
the General Partner of Icahn Enterprises L.P.	

Date: August 11, 2008