##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K/A
 Amendment
No. 1
 x
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission File No. 0-30900
 XO Holdings, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    54-1983517(State or other jurisdiction of
    
    (I.R.S. employerincorporation or organization)
    
    identification no.)
 11111 Sunset Hills Road
Reston, Virginia 20190
(Address of principal executive offices, including zip code)
(703) 547-2000
(Registrants telephone number, including area code)
 þ o
  o þ o
 o þ
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
 þ o




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##### 



EXPLANATORY NOTE
  i




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##### 



TABLE OF CONTENTS
 PageExplanatory Note
    
    
    iPART II5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    1PART III10. Directors, Executive Officers and Corporate Governance
    
    
    311. Executive Compensation
    
    
    912. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    1913. Certain Relationships and Related Transactions, Director Independence
    
    
    2214. Principal Accounting Fees and Services
    
    
    23PART IV15. Exhibits, Financial Statement Schedules
    
    
    25Signatures
    
    
    26EX-31.1EX-31.2EX-32.1




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##### 



Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  2006
    
    2005High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    3.95
    
    
    $
    1.84
    
    
    $
    3.37
    
    
    $
    2.30Second Quarter
    
    $
    5.40
    
    
    $
    3.71
    
    
    $
    3.09
    
    
    $
    1.75Third Quarter
    
    $
    4.90
    
    
    $
    3.80
    
    
    $
    3.01
    
    
    $
    2.22Fourth Quarter
    
    $
    4.95
    
    
    $
    3.50
    
    
    $
    2.63
    
    
    $
    1.76
  STOCK PERFORMANCE GRAPH
PRE-BANKRUPTCY REORGANIZATION XO COMMUNICATIONS, INC.
(December 31, 2000  November 30, 2001)
 
 1




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##### 



COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH
(December 31, 2002  December 29, 2006)
 
  2




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##### 



PART III
 Item 10. Directors, Executive Officers and Corporate Governance
 Directors
  Name
    
    Age
    
    PositionCarl C. Icahn(1)
    
    
    71
    
    
    Chairman of the Board of DirectorsCarl J. Grivner
    
    
    53
    
    
    Chief Executive Officer, President and DirectorAdam Dell(2)(4)
    
    
    37
    
    
    DirectorVincent J. Intrieri(3)
    
    
    50
    
    
    DirectorPeter K. Shea
    
    
    56
    
    
    DirectorKeith Meister(1)(3)
    
    
    34
    
    
    DirectorRobert Knauss(1)(2)(4)
    
    
    76
    
    
    DirectorFredrik Gradin(2)(4)
    
    
    45
    
    
    Director
 
 (1)
    
    Member of the Executive Committee(2)
    
    Member of the Audit Committee(3)
    
    Member of the Compensation Committee(4)
    
    Member of the Special Committee Carl C. Icahn.
 3




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##### 



Carl J. Grivner.
 Adam Dell.
 Vincent J. Intrieri.
 Peter K. Shea.
 4




---



##### 



Keith Meister.
 Robert Knauss.
 Fredrik Gradin.
 5




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##### 



Management
  Name
    
    Age
    
    PositionCarl J. Grivner
    
    
    53
    
    
    President and Chief Executive OfficerWayne M. Rehberger
    
    
    51
    
    
    Executive Vice President & Chief Operating OfficerGregory W. Freiberg
    
    
    40
    
    
    Chief Financial Officer and Senior Vice PresidentWilliam Garrahan
    
    
    49
    
    
    Senior Vice President, Corporate DevelopmentHeather Burnett Gold
    
    
    53
    
    
    Senior Vice President, External AffairsRobert Geller
    
    
    54
    
    
    Chief Information OfficerRonald E. Scott
    
    
    57
    
    
    Senior Vice PresidentSimone Wu
    
    
    42
    
    
    Senior Vice President, Secretary, General CounselTom Cady
    
    
    52
    
    
    President, Business ServicesErnest Ortega
    
    
    42
    
    
    President, Carrier SalesTerri L. Burke
    
    
    46
    
    
    Vice President, Human ResourcesRobert Beran
    
    
    47
    
    
    Senior Vice President and Chief Executive Officer
of Nextlink Wireless, Inc.
 Carl J. Grivner.
 Wayne M. Rehberger.
 Gregory W. Freiberg.
 William Garrahan.
 Heather Burnett Gold.
 6




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##### 



Robert Geller.
 Ronald E. Scott.
 Simone Wu.
 Tom Cady
 Ernest Ortega.
 Terri L. Burke.
 Robert E. Beran
 Corporate Governance
 Code of Ethics
  7




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##### 



Section 16(a) Beneficial Ownership Reporting Compliance
  Audit Committee
    Director Nominations
  8




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##### 



Item 11. Executive Compensation
 Compensation Discussion and Analysis
 Overview
  Compensation Program Objectives and Philosophy
     Determination of Compensation Awards
   Review of Base Compensation, Bonus and Equity Holdings
  Base Compensation
  9




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##### 



Annual Cash Bonus Awards
  Equity Compensation
    Event
    
    Award vesting
    
    Exercise termTermination
by the Company
for reason other
than death, total
and permanent
disability or cause
    
    Unvested options terminate
immediately upon termination of employment
    
    Vested options are exercisable for 3 months following
cessation of
employment, but in no event after the
expiration date of such optionsTotal and permanent
disability or death
    
    Unvested options terminate
immediately upon total and permanent disability or death
    
    Vested options are exercisable for 12 months following
cessation of
employment, but in
no event after the
expiration date of
such optionsTermination for cause
    
    Vested and unvested options
immediately upon termination for cause
    
    NoneTermination by the Company without good cause or
termination by certain executives for good
reason within 1 year of a change in control
    
    Immediate vesting of all unvested
options
    
    Vested options are exercisable for
3 months following cessation of employment, but in no event after the
expiration date of such options
  Executive Benefits and Perquisites
 In General.
 Change in Control and Severance Benefits
 In General.
 10




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##### 



Compensation Committee Report
  
 Compensation Committee Interlocks
and Insider Participation.
 Summary Compensation Table
  Non-EquityIncentive Plan
    
    All Other
    
    TotalSalary
    
    Bonus
    
    Stock Awards
    
    Compensation
    
    Compensation
    
    CompensationName and principal position
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    ($)Carl J. Grivner
    
    
    700,000
    
    
    
    751,500
    
    
    
    
    
    
    
    
    
    
    
    13,606
    
    
    
    1,465,106Chief
Executive Officer (Principal Executive Officer)Gregory Freiberg
    
    
    210,769
    
    
    
    124,000
    
    
    
    
    
    
    
    
    
    
    
    5,500
    
    
    
    340,269Chief
Financial Officer (Principal Financial Officer)Wayne M. Rehberger
    
    
    390,000
    
    
    
    270,000
    
    
    
    
    
    
    
    
    
    
    
    5,600
    
    
    
    665,600Chief Operating OfficerRobert Geller
    
    
    275,000
    
    
    
    165,000
    
    
    
    
    
    
    
    
    
    
    
    5,600
    
    
    
    445,600Chief Information OfficerHeather Burnett Gold
    
    
    245,000
    
    
    
    165,000
    
    
    
    
    
    
    
    
    
    
    
    5,500
    
    
    
    415,500Senior Vice President, External Affairs
 2006 Grants of Plan-Based Awards
  Estimated future payouts
    
    
    All other optionunder non-equity incentive
    
    
    awards: number of
    
    
    Exercise orplan awards
    
    
    securities underlying
    
    
    base price of
    
    
    Grant dateTarget(1)
    
    
    options
    
    
    option awards
    
    
    fair value ofName
    
    Grant date
    
    
    ($)
    
    
    (#)
    
    
    ($/sh)
    
    
    option awardsCarl J. Grivner
    
    
    
    
    
    $
    700,000
    
    
    
    
    
    
    
    
    
    
    
    Gregory
    

4/21/2006 (35,000) and
    
    
    
    
    
    
    
    
    
    
    $5.00 (35,000)Freiberg
    
    
    5/7/2006 (100,000)
    
    
    
    110,450
    
    
    
    135,000
    
    
    
    $5.30 (100,000)
    
    
    $
    74,047Wayne M. Rehberger
    
    
    
    
    
    
    234,000
    
    
    
    
    
    
    
    
    
    
    
    Robert Geller
    
    
    
    
    
    
    151,250
    
    
    
    
    
    
    
    
    
    
    
    Heather Burnett Gold
    
    
    
    
    
    
    137,500
    
    
    
    
    
    
    
    
    
    
    $
    
 
 (1)
    
    In the table above, the Target column represents the amount payable if the specified corporate financial and individual target objectives were met in 2006. Target amounts are pro-rated based upon hire and promotion
dates. The actual bonus amount earned by each named executive officer in 2006 is shown in the Summary Compensation Table above. 11




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##### 



Employee Benefits Plans
 2002 Stock Incentive Plan
   Number ofsecuritiesto be issued upon
    
    Weightedexercise of
    
    averageoutstanding options,
    
    exercise price of
    
    Remaining for futurewarrants and
    
    outstanding
    
    issuance under equityPlan Category
    
    rights(1)
    
    options
    
    compensation plansEquity compensation plans
approved by XO
stockholders
    
    
    9,788,204
    
    
    $
    5.06
    
    
    
    5,902,998Equity compensation plans
not approved by XO
stockholders
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    
    9,788,204
    
    
    $
    5.06
    
    
    
    5,902,998
 
 (1)
    
    Includes options issued pursuant to two separate programs that the
Company had adopted under the 2002 Stock Incentive Plan: the 2003
Employee Retention and Incentive Plan and the 2003 Annual Bonus Plan.
  2002 Stock Incentive Plan Programs.
 2003 Employee Retention and Incentive Plan.
 2003 Annual Bonus Plan.
 12




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##### 



Long-Term Incentive Plans and Pension Plans
  Outstanding Equity Awards at December 31, 2006
  Options AwardsNumber of
    
    Number ofSecurities
    
    SecuritiesUnderlying
    
    UnderlyingUnexercised
    
    Unexercised
    
    Option
    
    OptionOptions
    
    Options
    
    Exercise
    
    ExpirationName
    
    Exercisable
    
    Unexercisable
    
    Price
    
    DateCarl Grivner
    
    
    2,000,000
    
    
    
    
    
    
    $
    4.80
    
    
    
    4/25/2013
    (1)14,292
    
    
    
    4,765
    
    
    $
    6.53
    
    
    
    3/4/2014
    (1)Gregory Freiberg
    
    
    8,750
    
    
    
    26,250
    
    
    $
    5.00
    
    
    
    4/21/2016
    (2)
    
    
    
    100,000
    
    
    $
    5.30
    
    
    
    5/7/2016
    (2)Wayne Rehberger
    
    
    450,000
    
    
    
    
    
    
    $
    5.00
    
    
    
    1/16/2013
    (1)11,452
    
    
    
    
    
    
    $
    5.84
    
    
    
    7/3/2013
    (3)8,947
    
    
    
    596
    
    
    $
    5.84
    
    
    
    3/4/2014
    (4)100,000
    
    
    
    100,000
    
    
    $
    5.50
    
    
    
    4/7/2014
    (2)Robert Geller
    
    
    190,000
    
    
    
    
    
    
    $
    5.00
    
    
    
    1/16/2013
    (1)5,268
    
    
    
    
    
    
    $
    5.84
    
    
    
    7/3/2013
    (3)6,585
    
    
    
    438
    
    
    $
    5.84
    
    
    
    3/4/2014
    (4)50,000
    
    
    
    50,000
    
    
    $
    5.50
    
    
    
    4/7/2014
    (2)Heather Burnett Gold
    
    
    75,000
    
    
    
    75,000
    
    
    $
    5.00
    
    
    
    8/19/2014
    (2)
 
 (1)
    
    Vests 25% immediately on the date of grant, with the remaining 75% vesting ratably every year for 3 years.(2)
    
    Vests ratably every year for 4 years.(3)
    
    Vests 50% immediately on the date of grant, with the remaining 50% vesting ratably every month for 24 months.(4)
    
    Vests 25% immediately on the date of grant, with the remaining 75% vesting ratably every month for 36 months.
 13




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##### 



Option
Exercises and Stock Vested in 2006
  Option awardsNumber ofshares
    
    Valueacquired on
    
    realized onexercise
    
    exerciseName
    
    (#)
    
    ($)Carl Grivner
    
    
    
    
    
    
    Gregory Freiberg
    
    
    
    
    
    
    Wayne Rehberger
    
    
    
    
    
    
    Robert Geller
    
    
    
    
    
    
    Heather
Burnett Gold
    
    
    
    
    
    
    
 Employment Agreements and Change of Control Arrangements
 Executive Agreements.
     
    
    failure substantially to perform the executives duties (which remains uncured for thirty (30) days after receipt of
written notice by the executive),
    
    misconduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, or
    
    act or acts constituting a felony under the laws of the United States or any state thereof, or a misdemeanor involving
moral turpitude.
 14




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##### 




    
    failure to substantially perform the executives duties and functions, if such failure constitutes gross neglect or
willful malfeasance,
    
    fraud or embezzlement or other conduct that results in the executive being convicted of a felony from which all appeals
have been exhausted,
    
    intentional act in a manner which is materially detrimental or damaging to the Companys reputation, business,
operations or relations with its employees, suppliers or customers (which remains uncured after receipt of written
notice by the executive),
    
    chronic or habitual abuse of alcohol or prescription drugs or controlled substances, or
    
    material breach of the executive agreement (which remains uncured for thirty (30) days after receipt of written notice
by the executive).
  
    
    willful and continued failure to perform all of the executives duties (which remains uncured thirty (30) days after
receipt of written notice by the executive),
    
    willful gross misconduct (including, without limitation, fraud or embezzlement) while employed by the Company, or
    
    conviction of, or plea of guilty or nolo contendere to, a felony while employed by the Company.
  
    
    the assignment to the executive of any duties inconsistent with the executives status as a key management employee of
the Company or a substantial adverse alteration in the nature or status of the executives responsibilities,
    
    a reduction in the executives annual base salary or target annual bonus,
    
    a geographic relocation of more than thirty-five (35) miles from the executives current principal location, or
    
    a material reduction in the benefits and allotment of vacation days provided to the executive.
  
    
    a reduction in the executives initial base salary or in the target annual bonus percentage,
    
    a material change in the nature or extent of the executives title or responsibilities that is inconsistent with the
executives intended position and status,
    
    a geographic relocation of more than fifty (50) miles from the executives current principal location, or
    
    a material breach by the Company of any provision of the executive agreement (which remains uncured for thirty (30)
days after receipt of written notice by the Company).
  
    
    a reduction in the executives title or the assignment of the executive to duties which
result in a substantial diminution of the executives position, duties or responsibilities,
excluding a temporary or occasional assignment by the Company made for reasons of business
necessity and in the good faith judgment of the Company (which remains uncured for thirty (30)
says after receipt of written notice by the Company),
 15




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##### 




    
    any reduction of more than ten percent in the executives annual base salary or cash bonus percentage target,
    
    a geographic relocation of more than fifty (50) miles from the executives current location,
    
    any failure by the Company to obtain from any successors in interest to, or acquiror of, the Company a written
agreement reasonably satisfactory to the executive to assume and perform the change in control severance plan, and
    
    any violation of a material term of the change in control severance plan by the Company or the Companys successors in
interest.
  
    
    any person becomes the beneficial owner, directly or indirectly,
of the securities of the Company representing fifty percent (50%)
or more of the combined voting power of the then outstanding
securities of the Company, (other than those that own securities
that represent more than ten percent (10%) of the Companys voting
power as of April 1, 2003),
    
    the merger or consolidation with any other company (other than a
merger or consolidation that would result in the Companys
shareholders immediately prior thereto continuing to hold more
than sixty-five percent of the combined voting power of the voting securities of
the Company), or
    
    the Companys complete liquidation or the sale or disposition by
the Company of all or substantially all of the Companys assets.
  
    
    a merger, consolidation or reorganization of the Company with or
into another company resulting in the holders of the Companys
voting securities immediately prior to such transaction holding
less than a majority of the voting power of the surviving entity,
    
    a sale or transfer of all or substantially all of the Companys
assets to any other company resulting in the holders of the
Companys voting securities immediately prior to such transaction
holding less than a majority of the voting power of the surviving
entity, or
    
    a report is filed on Schedule 13D or Schedule 14D-1 disclosing
that any person other than Craig O. McCaw and his affiliates have
become the beneficial owner of securities representing fifty
percent (50%) or more of the voting securities of the Company.
  
    
    the closing of a sale or conveyance of assets of the Company
representing fifty percent (50%) or more of the total book value
of the consolidated total assets of the Company, exclusive of cash
and marketable securities, or to which fifty percent (50%) or more
of the consolidated total annual revenues of the Company from
operations are attributable,
    
    any merger, liquidation, business combination or consolidation
transaction in which shares of the Companys common stock are
converted into the right to receive cash and/or securities of an
acquiring person or any other entity or issuer,
    
    the effective time of any merger, share exchange, consolidation or
other reorganization or business combination of the Company if the
holders of the voting capital stock of the company do not hold a
majority of the outstanding voting securities of the surviving
entity,
    
    any other transaction or series of related transactions having an
economic effect substantially equivalent to any of the foregoing;
provided, however, that any transaction entered into solely among
the Company and other affiliates of Mr. Icahn shall not be deemed
a change in control.
 16




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##### 



Termination
by XO Holdings without Cause;
Termination by Executive for Good Reason or Constructive
Termination;
(Following a Change of Control)
 Severance Amount
    
    OtherName
    
    (1)
    
    (2)
    
    TotalCarl J. Grivner
    
    
    $2,100,000
    
    
    
    $80,769
    
    
    
    $2,180,769Gregory Freiberg
    
    
    $534,750
    
    
    
    $18,734
    
    
    
    $553,484Wayne M. Rehberger
    
    
    $936,000
    
    
    
    $45,000
    
    
    
    $981,000Robert Geller
    
    
    $639,375
    
    
    
    $28,227
    
    
    
    $667,602Heather Burnett Gold
    
    
    $581,250
    
    
    
    $22,115
    
    
    
    $603,365
 
 
 
 17




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##### 



Director
Compensation for 2006
  Fees earned
    
    
    
    
    
    Totalor paid in cash
    
    Stock awards
    
    compensationName
    
    ($)
    
    ($)
    
    ($)Carl C. Icahn
    
    
    
    
    
    
    
    
    
    
    Carl J. GrivnerJon C. Weber (1)
    
    
    
    
    
    
    
    
    
    
    Vincent J. IntrieriKeith Meister
    
    
    
    
    
    
    
    
    
    
    Peter Shea (1)
    
    
    
    
    
    
    
    
    
    
    Adam Dell (2)
    
    
    80,000
    
    
    
    
    
    
    
    80,000Robert Knauss (2)
    
    
    80,000
    
    
    
    
    
    
    
    80,000Frederick Gradin (2)
    
    
    80,000
    
    
    
    
    
    
    
    80,000
 
 (1)
    
    Mr. Weber resigned as director on December 27, 2006; Mr. Shea was unanimously approved by the Board the same day.(2)
    
    Payment for Board of Director members is determined as
follows: each member receives four payments of $10,000 annually for serving on the board. In addition to this each member receives $30,000 for serving on a special committee and four payments of $2,500 a piece for serving on the Audit Committee.
 Summary of Director Compensation
  18




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##### 



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Beneficial Ownership of Company common stock by the Board and management
  Shares Beneficially OwnedAmount and Nature
    
    
    Percent of ClassName & Address(1)
    
    of Ownership(2)
    
    
    (%)Carl C. Icahn(3)
    
    
    128,457,358
    
    
    
    58.8Carl J. Grivner(4)
    
    
    2,034,057
    
    
    
    1.1Gregory W. Freiberg(9)
    
    
    33,750
    
    
    
    *Vincent J. Intrieri
    
    
    
    
    
    
    *Keith Meister
    
    
    
    
    
    
    *Adam Dell
    
    
    
    
    
    
    *Fredrik C. Gradin
    
    
    
    
    
    
    *Robert L. Knauss(5)
    
    
    3,000
    
    
    
    *Wayne M. Rehberger(6)
    
    
    620,995
    
    
    
    *Robert Geller(7)
    
    
    277,291
    
    
    
    *Heather Burnett Gold(8)
    
    
    75,000
    
    
    
    *Peter Shea
    
    
    
    
    
    
    *All directors and executive officers as a group (12 persons)(10)
    
    
    131,501,451
    
    
    
    59.4
 
 *
    
    The Percentage of Class is less than one percent (1%).(1)
    
    The address of all persons listed is c/o XO Holdings, Inc., 11111 Sunset Hills Road, Reston, Virginia 20190.(2)
    
    Under the rules of the SEC, a person is deemed to be the beneficial owner of a security if such person, directly or
indirectly, has or shares the power to vote or direct the voting of such security or the power to dispose or direct the disposition
of such security. A person is also deemed to be a beneficial owner of any securities if that person has the right to acquire
beneficial ownership within 60 days after any given date, which, for the purposes of the foregoing table is March 31, 2007.
Accordingly, more than one person may be deemed to be a beneficial owner of the same securities. Unless otherwise indicated by
footnote, the named individuals have sole voting and investment power with respect to the shares of Company common stock beneficially
owned.(3)
    
    As reported in the March 31, 2007 Form 4 for
Mr. Icahn, and the May 1, 2006 Amendment No. 8 to
Schedule 13D filed by Cardiff Holding LLC (Cardiff) and
other parties to such joint filing, represents 128,457,358 shares of Company common stock beneficially held by Cardiff, comprised of
(i) 91,945,386 outstanding shares of Company common stock, (ii) 10,202,455 shares of Company common stock issuable upon exercise of
Series A warrants, Series B warrants, and Series C warrants, all held by Cardiff, and (iii) 26,309,517 shares of Company common stock
issuable upon conversion of the 2,075,000 shares of the
Companys 6% Class A Convertible Preferred Stock (the
Preferred Stock) held by Cardiff. The
liquidation preference on the preferred stock accretes on the last day of each calendar quarter. Cardiff is approximately 98% owned
by ACF Industries Holding Corp., a Delaware corporation, which is wholly-owned by Highcrest Investors Corp., a Delaware corporation,
which is approximately 99% owned by Buffalo Investors Corp., a New York corporation, which is wholly-owned by Starfire Holding
Corporation, a Delaware corporation, which is wholly-owned by Mr. Icahn. Mr. Icahn is the chairman, president and sole director of
Starfire Holding Corporation, the chairman and a director of ACF Industries and the chairman, president and a director of Highcrest
Investors.(4)
    
    Represents (i) 15,000 shares of Company common stock acquired by Mr. Grivner in May 2004, and (ii) shares of Company common stock
issuable to Mr. Grivner upon the exercise of nonqualified stock options that were exercisable as of March 31, 2007 or that were to
become exercisable within 60 days thereafter, which options were granted to Mr. Grivner pursuant to the 2002 Stock Incentive Plan. 19




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(5)
    
    Represents shares of Company common stock acquired by Mr. Knauss in August 2004.(6)
    
    Represents shares of Company common stock issuable to Mr. Rehberger upon the
exercise of nonqualified stock options that were exercisable as of March 31,
2007or that were to become exercisable within 60 days thereafter, which options
were granted to Mr. Rehberger pursuant to the 2002 Stock Incentive Plan.(7)
    
    Represents shares of Company common stock issuable to Mr. Geller upon the
exercise of nonqualified stock options that were exercisable as of March 31,
2007 or that were to become exercisable within 60 days thereafter, which
options were granted to Mr. Geller pursuant to the 2002 Stock Incentive Plan.(8)
    
    Represents (i) 75,000 shares of Company common stock
acquired by Ms. Gold
in August 2004, and (ii) shares of Company common stock issuable to Ms. Gold
upon the exercise of nonqualified stock options were exercisable as of
March 31, 2007 or that were to become exercisable within 60 days thereafter,
which options were granted to Ms. Gold pursuant to the 2002 Stock Incentive
Plan.(9)
    
    Represents shares of Company common stock issuable to Mr. Freiberg upon the
exercise of nonqualified stock options that were exercisable as of March 31,
2007 or that were to become exercisable within 60 days thereafter, which
options were granted to Mr. Freiberg pursuant to the 2002 Stock Incentive Plan.(10)
    
    Represents (i) 128,457,358 shares of Company common stock beneficially held by
Cardiff, as described in note (3) above, (ii) 18,000 outstanding shares of
Company common stock owned by directors and executive officers as of March 31,
2007 (other than shares held by Cardiff) (see notes (4) and (5)), and (iii)
3,104,671 shares of Company common stock issuable upon the exercise of stock
options exercisable as of March 31, 2007 or 60 days thereafter. See notes (4),
(6), (7), (8) and (9) above. Beneficial Ownership of Company common stock by certain beneficial owners
  Shares Beneficially OwnedAmount and Nature
    
    
    Percent of ClassName
    
    Address
    
    of Ownership(2)
    
    

(%)Carl C. Icahn(1)
    
    Icahn Associates Corp.767 Fifth Avenue,47th Floor,New York, New York 10153
    
    
    128,457,358
    
    
    
    58.8Amalgamated Gadget, L.P.
    
    301 Commerce Street,(R2 Investors)(3)
    
    Suite 2975,Fort Worth, Texas 76102
    
    
    14,854,295
    
    
    
    8.1JPMorgan Chase
& Co.(4)
    
    270 Park AvenueNew York, New York 10017
    
    
    14,322,310
    
    
    
    7.9Third Point LLC(5)
    
    Third Point LLC390 Park Avenue,18th FloorNew York, New York 10022
    
    
    11,607,531
    
    
    
    6.1All listed 5% or greater beneficial
owners
    
    
    
    
    169,241,494
    
    
    
    74.1
 
 (1)
    
    See Note (3) to Table under heading titled Beneficial ownership of Company common stock by the Board and management.
 20




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(2)
    
    Under the rules of the SEC, a person is deemed to be
the beneficial owner of a security if such person, directly
or indirectly, has or shares the power to vote or direct the
voting of such security or the power to dispose or direct
the disposition of such security. A person is also deemed to
be a beneficial owner of any securities if that person has
the right to acquire beneficial ownership within 60 days
after any given date, which, for the purposes of the
foregoing table is March 31, 2007. Accordingly, more than
one person may be deemed to be a beneficial owner of the
same securities. Unless otherwise indicated by footnote, the
named individuals have sole voting and investment power with
respect to the shares of our common stock beneficially
owned.(3)
    
    As reported in the December 31, 2006 Amendment No. 4 to
Schedule 13G filed on February 8, 2007 by Amalgamated
Gadget, represents (i) 14,854,295 shares of Common Stock
held by Amalgamated Gadget on behalf of
R2
Investments, LDC which includes 344,846 shares of Company common stock issuable upon
exercise of Series A warrants, 258,635 shares of Common
Stock issuable upon exercise of Series B warrants, and
258,635 shares of Common Stock issuable upon exercise of
Series C warrants, all held by Amalgamated Gadget.
Amalgamated Gadget is a limited partnership of which Scepter
Holdings, Inc., a Texas corporation, as its sole general
partner. Scepter Holdings, Inc. is wholly owned by Mr.
Geoffrey Raynor.(4)
    
    As reported in the December 29, 2006 Schedule 13G filed on
February 12, 2007 by JPMorgan Chase and Co., (JPMorgan),
represents 14,322,310 shares of Company common stock issued
to JPMorgan.(5)
    
    As reported in the December 31, 2006 Amendment No. 1 to
Schedule 13G filed jointly on February 13, 2007 by Third
Point LLC (Third Point) and Daniel S. Loeb, represents
11,607,531 shares of Company common stock beneficially owned
by Third Point and Mr. Loeb, consisting of 2,550,000 shares
of Company common stock owned by funds managed by Third
Point and of 9,057,531 shares of Company common stock
issuable upon conversion of shares of the Companys 6% Class
A Convertible Preferred Stock owned by funds managed by
Third Point. Third Point is investment manager or adviser to
a variety of hedge funds and managed accounts and, as a
result, is beneficial owned of shares directly owned by such
funds. Mr. Loeb is Chief Executive Officer of Third Point
and controls its business activities, and, as a result, is
an indirect beneficial owner of shares beneficially owned by
Third Point.
 21




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##### 



Item 13. Certain Relationships and Related Transactions, and Director Independence
 Transactions with Related Persons
  Outstanding
    
    Series A, B and CCommon Stock
    
    Warrants
    
    Credit Facility
    
    Preferred StockAt December 31, 2005
    
    Greater than 50%
    
    Greater than 40%
    
    Greater than 90%
    
    
    95
    %At December 31, 2006(1)
    
    Greater than 50%
    
    Greater than 40%
    
    Greater than 90%
    
    
    52
    %
 
 (1)
    
    According to Amendment No. 8 to the Schedule 13D of Cardiff, filed with the Securities and Exchange Commission on May 1, 2006, on April 28, 2006, Cardiff,
an entity affiliated with the Companys Chairman, sold in a private sale to qualified institutional buyers an aggregate of 1,725,000 shares of the Companys 6% Class A
Convertible Preferred Stock (the Preferred Stock).
        22




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##### 



Item 14. Principal Accounting Fees and Services
  2006
    
    2005Audit fees(1)
    
    $
    2,232,000
    
    
    $
    2,136,199Audit-related fees(2)
    
    $
    202,000
    
    
    $
    100,190Tax fees(3)
    
    $
    270,000
    
    
    $
    89,150Non-audit, non-tax fees
    
    $
    
    
    
    $
    TOTAL
    
    $
    2,704,000
    
    
    $
    2,325,539
 
 (1)
    
    Audit fees relate to services that consisted of the audit of
the financial
statements, as well as work generally only the independent auditors can reasonably be expected to provide,
such as review of documents filed with the Securities and Exchange Commission.(2)
    
    Audit-related fees relate to services that consisted of consultation with respect to the application of
accounting policies and the annual audit of an employee benefit plan.(3)
    
    Tax fees relate to services that consisted of assistance with matters related to tax compliance and consulting.
 23




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##### 



Approval of Independent Auditor Provision of Audit and Non-Audit Services.
  24




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##### 



PART IV
 Item 15. Exhibits
 Exhibit
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as
amended.32.1
    
    Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
 25




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##### 



Date: April 30, 2007 By:
    /s/ Carl J. GrivnerCarl J. GrivnerPresident and Chief Executive Officer
(Principal Executive Officer)  Name
    
    
    
    Title/s/ Carl J. Grivner

Carl J. Grivner
    
    
    
    President and Chief Executive Officer, Director
(Principal Executive Officer)/s/ Gregory W. Freiberg

Gregory W. Freiberg
    
    
    
    Senior Vice President and Chief Financial Officer
(Principal Financial Officer)/s/ Carl C. Icahn

Carl C. Icahn
    
    
    
    Chairman of the Board of Directors/s/ Keith Meister

Keith Meister
    
    
    
    Director/s/ Adam Dell

Adam Dell
    
    
    
    Director/s/ Fredrik Gradin

Fredrik Gradin
    
    
    
    Director/s/ Vincent J. Intrieri
    
    
    
    DirectorVincent J. Intrieri/s/ Robert L. Knauss

Robert L. Knauss
    
    
    
    Director/s/ Peter Shea

Peter Shea
    
    
    
    Director
 26