**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-K**





**(Mark
                One)****x**
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d)**
              **OF
                THE SECURITIES EXCHANGE ACT OF 1934**




**For
      the Fiscal Year Ended December 31, 2007**




**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 HOLDINGS L.P.**


(Exact
      Name of Registrant as Specified in Its Charter)





**Delaware**
            
            **13-3398767**(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            
            (I.R.S.
                Employer
              Identification
                No.)




**767
      Fifth Avenue, Suite 4700**


**New
      York, New York 10153**


**(212)
      702-4300**


(Address,
      Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s
      Principal Executive Offices)




Securities
      registered pursuant to Section 12(b) of the Act:
**None**




Securities
      registered pursuant to Section 12(g) of the Act: **None**




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes o NO x




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Exchange Act. Yes o NO x




Note — Checking
      the box above will not relieve any registrant required to file reports pursuant
      to Section 13 or 15(d) of the Exchange Act from their obligations under those
      Sections.




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 if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. x




Indicate
      by a check mark whether the registrant is a large accelerated filer, an
      accelerated file, a non-accelerated file, 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 Filero
            
            Accelerated
                Filer oNon-accelerated
                Filer x
              (Do
                not check if a smaller reporting company)
            
            Smaller
                reporting companyo




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 the
      last business day of the registrant’s most recently completed second
      fiscal quarter, none of the voting or non-voting
      common equity was held by non-affiliates.




TABLE
          OF CONTENTS




**DEFINED
      TERMS**


As
        used
        in this Annual Report on Form 10-K, the following terms shall have the following
        corresponding meanings:
  “ *ACE* ”
means
        ACE Gaming LLC.
  “ *ACEP* ”
means
        American Casino and Entertainment Properties LLC.
  “ *AEP* ”
means
        American Entertainment Properties Corp.
  “ *Atlantic
        Coast* ”
means
        Atlantic Coast Entertainment Holdings, Inc.
  “ *Contribution
        Agreement* ”
means
        the Contribution and Exchange Agreement dated as of August 8, 2007 among
        Icahn
        Enterprises, the Contributors and Carl C. Icahn.
  “ *Contributors* ”
means
        collectively Icahn Management, CCI Offshore and CCI Onshore.
  “ *Feeder
        Funds* ”
refer
        to certain funds formed as Cayman Islands exempted limited companies that
        invest
        in the Offshore Master Funds, together with other funds that also invest
        in the
        Offshore Master Funds, including, but not limited to, the Offshore
        Fund.
  “ *General
        Partners* ”
means
        collectively the Onshore GP and the Offshore GP.
  “ *Icahn
        Enterprises* ”
means
        Icahn Enterprises L.P., which was formerly known as American Real Estate
        Partners, L.P.
  “
*Icahn
        Enterprises Holdings*”
means
        Icahn Enterprises Holdings L.P., which was formerly known as American Real
        Estate Holdings Limited Partnership.
  *“Investment
        Funds* ”
means
        collectively the Onshore Fund and the Offshore Master Funds.
  “ *Investment
        Management Entities* ”
means
        either Icahn Management (for the period prior to the acquisition of the
        Partnership Interests on August 8, 2007) or New Icahn Management (for the
        period
        subsequent to the acquisition of the Partnership Interests on August 8, 2007
        through December 31, 2007) and, in either case, the General
        Partners.
  “ *NEGI* ”
means
        National Energy Group, Inc.
  “ *New
        Icahn Management* ”
means
        Icahn Capital Management L.P.
  “ *Offshore
        Fund* ”
means
        Icahn Fund Ltd.
  “ *Offshore
        Fund II* ”
means
        Icahn Fund II Ltd.
  “ *Offshore
        Fund III* ”
means
        Icahn Fund III Ltd.
  “ *Offshore
        Funds* ”
means
        collectively the Offshore Fund, Offshore Fund II and Offshore Fund
        III.
  “ *New
        Icahn Management Partnership Interests* ”
means
        100% of Icahn Management’s general partnership interests in New Icahn Management
        contributed by Icahn Management to Icahn Enterprises.
  “ *Offshore
        GP* ”
means
        Icahn Offshore LP.
  “ *Offshore
        Master Fund I* ”
means
        Icahn Partners Master Fund LP.
  “ *Offshore
        Master Fund II* ”
means
        Icahn Partners Master Fund II L.P.
  “ *Offshore
        Master Fund III* ”
means
        Icahn Partners Master Fund III L.P.
  “ *Offshore
        Master Funds* ”
means
        collectively Offshore Master Fund I, Offshore Master Fund II and Offshore
        Master
        Fund III.
  “ *Offshore
        Partnership Interests* ”
means
        100% of CCI Offshore’s general partnership interests in the Offshore GP
        contributed by CCI Offshore to Icahn Enterprises.
  “ *Onshore
        Fund* ”
means
        Icahn Partners LP.
  “ *Onshore
        GP* ”
means
        Icahn Onshore LP.
  “ *Onshore
        Partnership Interests* ”
means
        100% of CCI Onshore’s general partnership interests in the Onshore GP
        contributed by CCI Onshore to Icahn Enterprises.
  “ *Partnership
        Interests* ”
means
        collectively the Onshore Partnership Interests, the Offshore Partnership
        Interests and the New Icahn Management Partnership Interests.
  “ *Private
        Funds* ”
means
        collectively the Investment Funds and the Feeder Funds.
  “ *WPI* ”
means
        WestPoint International Inc.
  TABLE
            OF CONTENTS




**TABLE
      OF CONTENTS**


**Page****PART
                  I**Item
                  1.
              Business
              
              1Introduction
              
              1Business
                  Strategy
              
              1Key
                  Company Developments
              
              1Key
                  Financing Developments
              
              3Investment
                  Management
              
              3All
                  Other Operations
              
              7Metals
              
              7Real
                  Estate
              
              8Home
                  Fashion
              
              9Holding
                  Company
              
              12Item
                  1A.
              Risk
                  Factors
              
              13Item
                  1B.
              Unresolved
                  Staff Comments
              
              32Item
                  2.
              Properties
              
              32Item
                  3.
              Legal
                  Proceedings
              
              33Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              
              34**PART
                  II**Item
                  5.
              Market
                  for Registrant’s Common Equity, Related Security
                  Holder Matters and Issuer Purchases of Equity
                  Securities
              
              35Item
                  6.
              Selected
                  Financial Data
              
              36Item
                  7.
              Management’s
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
              
              38Item
                  7A.
              Quantitative
                  and Qualitative Disclosures about Market
                  Risk
              
              69Item
                  8.
              Financial
                  Statements and Supplementary
                  Data
              
              72Item
                  9.
              Changes
                  in and Disagreements With Accountants on Accounting
                  and Financial Disclosure
              
              145Item
                  9A.
              Controls
                  and Procedures
              
              145Item
                  9B.
              Other
                  Information
              
              145**PART
                  III**Item
                  10.
              Directors,
                  Executive Officers and Corporate
                  Governance
              
              146Item
                  11.
              Executive
                  Compensation
              
              150Item
                  12.
              Security
                  Ownership of Certain Beneficial Owners and
                  Management and Related Security Holder Matters
              
              162Item
                  13.
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              
              163Item
                  14.
              Principal
                  Accounting Fees and Services
              
              167**PART
                  IV**Item
                  15.
              Exhibits
                  and Financial Statement
                  Schedules
              
              168





i
 TABLE
          OF CONTENTS


**PART
          I**
 **Item
        1. Business**
  **Introduction**
  Icahn
        Enterprises Holdings L.P., or Icahn Enterprises Holdings, is a limited
        partnership formed in Delaware on February 17, 1987. On September 17, 2007,
        we
        changed our name from American Real Estate Holdings Limited
        Partnership to Icahn Enterprises Holdings L.P. We are a diversified holding
        company owning subsidiaries engaged in the following continuing operating
        businesses: Investment Management, Metals, Real Estate and Home Fashion.
        In
        addition, as of December 31, 2007, we operated our Gaming segment, which
        under
        generally accepted accounting principles is considered discontinued operations
        as it was in the process of being sold at such date.
  Our
          sole
          limited partner is Icahn Enterprises L.P., or Icahn Enterprises, which
          was
          formerly known as American Real Estate Partners, L.P., a Delaware master
          limited
          partnership which owns a 99% limited partnership interest in us. Our general
          partner is Icahn Enterprises G.P. Inc., or Icahn Enterprises GP, which
          was
          formerly known as American Property Investors, Inc., a Delaware corporation,
          which is also the general partner of Icahn Enterprises. Icahn Enterprises
          GP is a wholly owned subsidiary of Beckton Corp., a Delaware Corporation.
          All of the outstanding capital stock of Beckton Corp., is owned by Carl
          C.
          Icahn. References to Icahn Enterprises Holdings in this annual report on
          Form
          10-K include Icahn Enterprises Holdings and its subsidiaries, unless the
          context
          otherwise requires.
  We
          have guaranteed the 7.125% senior notes due 2013 issued by Icahn
          Enterprises. Icahn Enterprises, as issuer, filed a registration statement
          on
          Form S-4 with respect to the notes for which we were a registrant guarantor.
          The
          registration statement went effective on December 31, 2007. This Annual
          Report
          on Form 10-K is being filed in accordance with Section 15(d) of the Securities
          Exchange Act of 1934, as amended, or the Exchange Act, as a result of such
          registration statement. At December 31, 2007, there were fewer than 300
          holders
          of the notes and guarantees. We are filing a Form 15 simultaneously
          with this Annual Report on Form 10-K to
          notify
          the Securities and Exchange Commission that our reporting obligations
          automatically were suspended pursuant to Section 15(d) of the Exchange
          Act.
  On
          March 17, 2007, Icahn Enterprises L.P. filed its Form
          10-K with the SEC, which is available at www.sec.gov.
 **Business
        Strategy**
  Our
        business strategy includes:
  *Grow
        Our Investment Management Business.* We
        intend to continue to grow and expand our investment management
        business.
  *Operate
        and Enhance Value of Core Businesses.* We
        continually evaluate our operating businesses with a view to maximizing their
        value to us. In each of our businesses, we place management with the expertise
        to run their businesses and we give management specific operating objectives
        that they must achieve.
  *Invest
        Capital to Grow Existing Operations or Add New Operating
        Platforms.* We
        may look to make acquisitions of assets or operations that complement our
        existing operations or look to acquire new business segments. Our management
        team has extensive experience in identifying, acquiring and developing
        undervalued businesses or assets.
  *Enhance
        Returns on Assets.* We
        continually look for opportunities to enhance returns on both liquid and
        operating assets.
  **2007
        Key Company Developments**
  ***Acquisition
        of Investment Management Business***
  On
        August
        8, 2007, we acquired the Partnership Interests consisting of the general
        partnership interests in the General Partners and Icahn Capital Management
        L.P.,
        or New Icahn Management. These entities provide investment advisory and certain
        administrative and back office services to the Private Funds but 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. Through December 31, 2007,
        these
        entities received management fees and incentive allocations from the Private
        Funds. Management fees were generally 2.5% of the net asset value of the
        fee-paying capital of certain Private Funds. Incentive allocations, which
        are
        performance-based and primarily earned on an annual basis, are generally
        25% of
        the net profits generated by the Private Funds.
  As
        further described below, effective January 1, 2008, the management agreements
        with the Private Funds were terminated as was the obligation to pay management
        fees thereunder resulting from the termination of such agreements. Additionally,
        effective January 1, 2008, the General Partners undertook to provide the
        services previously provided by New Icahn Management in consideration of
        which
        the General Partners will receive special profits interest allocations from
        the
        Investment Funds (as defined below).
  1
 TABLE
            OF CONTENTS
  The
        total
        initial consideration paid for the acquisition was $810 million of depositary
        units of Icahn Enterprises based on the volume-weighted average price of
        Icahn Enterprises’ depositary units on the New York Stock Exchange, or the NYSE,
        for the 20-trading-day period ending on August 7, 2007 (the day before the
        closing). In addition, we have agreed to make certain earn-out payments to
        the
        Contributors over a five-year period payable in additional depositary units
        of
        Icahn Enterprises based on our after-tax earnings from the General Partners
        and
        New Icahn Management subsequent to the acquisition. There is a potential
        maximum
        aggregate earn-out (including any catch-up) of $1.121 billion which is subject
        to achieving total after-tax earnings during the five-year period of at least
        $3.906 billion.
  Icahn
        Enterprises, our sole limited partner, entered into a Contribution and Exchange
        Agreement, or the Contribution Agreement, with CCI Offshore Corp., or CCI
        Offshore, CCI Onshore Corp., or CCI Onshore, Icahn Management LP, or Icahn
        Management, and Carl C. Icahn. CCI Onshore, CCI Offshore and Icahn Management
        are collectively referred to herein as the Contributors. Pursuant to the
        Contribution Agreement, we acquired the general partnership interests in
        Icahn
        Onshore LP, or the Onshore GP, and Icahn Offshore LP, or the Offshore GP
        (collectively referred to herein as the General Partners), acting as general
        partners of Icahn Partners L.P., or the Onshore Fund, and the Offshore Master
        Funds managed and controlled by Mr. Icahn. As referred to herein, the Offshore
        Master Funds consist of (i) Icahn Partners Master Fund LP, or Offshore Master
        Fund I, (ii) Icahn Partners Master Fund II L.P., or Offshore Master Fund
        II, and
        (iii) Icahn Partners Master Fund III L.P., or Offshore Master Fund III. The
        Onshore Fund and the Offshore Master Funds are collectively referred to herein
        as the Investment Funds.
  The
        General Partners also act as general partners 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, are collectively referred to herein as the Feeder Funds. The Feeder
        Funds
        and the Investment Funds are collectively referred to herein as the Private
        Funds. As referred to and discussed below, the Feeder Funds include, but
        are not
        limited to, Icahn Fund Ltd., Icahn Fund II Ltd. and Icahn Fund III
        Ltd.
  Icahn
        Enterprises also acquired the general partnership interest in New Icahn
        Management, a newly formed management company that provided certain management
        and administrative services to the Private Funds. As referred to herein,
        the
        term Investment Management Entities includes Icahn Management (for the period
        prior to the acquisition on August 8, 2007) or New Icahn Management (for
        the
        period subsequent to the acquisition on August 8, 2007 through December 31,
        2007) and, in either case, the General Partners.
  The
        acquisition of the Investment Management business was approved by a special
        committee of independent members of Icahn Enterprises GP’s board of directors.
        The special committee was advised by its own legal counsel and independent
        financial adviser with respect to the transaction. The special committee
        received an opinion from its financial adviser as to the fairness to us,
        from a
        financial point of view, of the consideration paid by us.
  ***Acquisition
        of PSC Metals***
  On
        November 5, 2007, through a wholly owned subsidiary, we acquired all of the
        issued and outstanding capital stock of PSC Metals Inc., or PSC Metals, for
        $335
        million in cash from Philip Services Corporation, or Philip. Mr. Icahn
        indirectly owns a 95.6% interest and we indirectly own the remaining 4.4%
        interest in Philip. PSC Metals is principally engaged in the business of
        collecting, processing and selling ferrous and non-ferrous metals.
  The
        transaction was approved by a special committee of independent members
        of Icahn Enterprises GP’s board of directors. The special committee was
        advised by its own legal counsel and independent financial adviser with respect
        to the transaction. The special committee received an opinion from its financial
        adviser as to the fairness to us, from a financial point of view, of the
        consideration paid by us.
  ***Sale
        of Nevada Gaming Operations***
  On
        April
        22, 2007, American Entertainment Properties Corp., or AEP, our wholly owned
        indirect subsidiary and the direct parent of ACEP, entered into a Membership
        Interest Purchase Agreement with W2007/ACEP Holdings, LLC, an affiliate of
        Whitehall Street Real Estate Funds, a series of real estate investment funds
        affiliated with Goldman, Sachs & Co., or Whitehall Street Real Estate Funds,
        to sell all of the issued and outstanding membership interests in
        ACEP.
  2
 TABLE
            OF CONTENTS
  On
        February 20, 2008, we completed the sale of ACEP, resulting in a gain of
        approximately $700 million, before taxes, subject to resolution of post-closing
        adjustments.
  **Key
        Financing Developments**
  ***Senior
        Notes Offering***
  In
        January 2007, Icahn Enterprises and Icahn Enterprises Finance Corp.,
        or Icahn Enterprises Finance, formerly known as American Real Estate Finance
        Corp., issued $500.0 million of 7 1/8% senior notes due 2013, or the Additional
        Notes. The Additional Notes were issued pursuant to an indenture dated February
        7, 2005, among Icahn Enterprises, as issuer, Icahn Enterprises Finance, as
        co-issuer, us, as Guarantor, and Wilmington Trust Company, as trustee. The
        Additional Notes were issued by Icahn Enterprises at 99.5% of principal
        amount or at a 0.5% discount, and the amount paid to Icahn Enterprises included
        accrued interest from August 15, 2006 through the issue date. The Additional
        Notes have a fixed annual interest rate of 7 1/8% per annum, which is payable
        every six months on February 15 and August 15 that commenced on February
        15,
        2007. The notes will mature on February 15, 2013. Simultaneously,
        we executed a note in favor of Icahn Enterprises in the original principal
        amount of $500.0 million and Icahn Enterprises distributed to us the net
        proceeds of the note offering. The loan is under the same terms and conditions
        as Icahn Enterprises notes.
  ***Senior
        Unsecured Variable Rate Convertible Notes Due 2013***
  In
        April
        2007, Icahn Enterprises issued $600.0 million of variable rate senior
        convertible notes due 2013, or the variable rate notes. The variable rate
        notes
        were sold in a private placement and issued pursuant to an indenture dated
        as of
        April 5, 2007, by and among Icahn Enterprises, as issuer, Icahn Enterprises
        Finance, as co-issuer, and Wilmington Trust Company, as trustee. The variable
        rate notes bear interest at a rate of three-month LIBOR minus 125 basis points;
        however, the all-in-rate can be no less than 4.0% nor higher than 5.5%. The
        variable rate notes are convertible into depositary units of Icahn Enterprises
        at a conversion price of $132.595 per share per $1,000 principal amount of
        variable rate notes, subject to adjustments in certain circumstances. As
        of
        December 31, 2007, the interest rate was 4.0%. The interest on the variable
        rate
        notes is payable quarterly on January 15, April 15, July 15 and October 15
        that
        commenced on January 15, 2007. The variable rate notes mature on January
        15,
        2013 assuming they have not been converted to depositary units before their
        maturity date. Simultaneously,
        we executed a note in favor of Icahn Enterprises in the original principal
        amount of $500.0 million and Icahn Enterprises distributed to us the net
        proceeds of the note offering. The loan is under the same terms and conditions
        as Icahn Enterprises notes.
  In
        the
        event that Icahn Enterprises declares a cash dividend or similar cash
        distribution in any calendar quarter with respect to its 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 requires that Icahn
        Enterprises simultaneously make such distribution to holders of the variable
        rate notes in accordance with a formula set forth in the indenture.
  **Investment
        Management**
  ***Background***
  As
        noted
        above, on August 8, 2007, Icahn Enterprises acquired the Investment Management
        business (i.e., Partnership Interests consisting of the general partnership
        interests in the General Partners and New Icahn Management). The Investment
        Management Entities provide investment advisory and certain administrative
        and
        back office services to the Private Funds.
  The
        Private Funds began operations in November 2004 with the formation of the
        Onshore Fund, Offshore Master Fund I, a Cayman Island exempted limited
        partnership, and Icahn Fund Ltd., a Cayman Islands exempted limited liability
        company. Icahn Sterling Fund Ltd. was established in early 2006 and on October
        1, 2006 its assets were contributed to Icahn Fund Ltd. In fiscal 2007 the
        following entities commenced operations: (i) Offshore Master Fund II, a Cayman
        Islands exempted limited partnership; (ii) Icahn Fund II Ltd., a Cayman Islands
        exempted limited liability company, that invests substantially all of its
        assets
        in Offshore Master Fund II; (iii) Offshore Master Fund III, a Cayman Islands
        exempted limited partnership; and (iv) Icahn Fund III Ltd., a Cayman Island
        exempted limited liability company, that invests substantially all of its
        assets
        in Offshore Master Fund III.
  Pursuant
        to the Contribution Agreement, CCI Offshore contributed to Icahn Enterprises
        100% of its general partnership interests in the Offshore GP, referred to
        herein
        as the Offshore Partnership Interests. In addition, CCI Onshore contributed
        to
        Icahn Enterprises 100% of its general partnership interests in Onshore GP,
        referred to herein as the Onshore Partnership Interests.
  3
 TABLE
            OF CONTENTS
  Immediately
        prior to the execution and delivery of the Contribution Agreement, Icahn
        Management and New Icahn Management entered into an agreement pursuant to
        which
        Icahn Management contributed substantially all of its assets and liabilities,
        other than certain rights in respect of deferred management fees, to New
        Icahn
        Management in exchange for 100% of the general partnership interests in New
        Icahn Management. Such contribution included the assignment of certain
        management agreements with the Private Funds. Pursuant to the Contribution
        Agreement, Icahn Management contributed to Icahn Enterprises 100% of its
        general
        partnership interests in New Icahn Management, referred to herein as the
        New
        Icahn Management Partnership Interests. The Onshore Partnership Interests,
        the
        Offshore Partnership Interests and the New Icahn Management Partnership
        Interests are collectively referred to herein as the Partnership
        Interests.
  In
        connection with the acquisition, Icahn Enterprises and New Icahn Management
        entered into an employment agreement with Mr. Icahn pursuant to which, over
        a
        five-year term, Mr. Icahn will serve as Chairman and Chief Executive Officer
        of
        New Icahn Management, in addition to his current role as Chairman of Icahn
        Enterprises. Mr. Icahn also serves as the Chief Executive Officer of the
        General
        Partners. New Icahn Management also assumed employment agreements with Mr.
        Vincent Intrieri, a member of Icahn Enterprises GP’s, board of directors, and
        Mr. Keith A. Meister, Vice Chairman of Icahn Enterprises GP’s board of directors
        and Icahn Enterprises’ Principal Executive Officer. See Part III, Item 11,
“Executive Compensation — Employment Agreements,” for further
        discussion of the employment agreements.
  The
        diagram below depicts our Investment Management operations’ organizational
        structure immediately following our acquisition (1) :


Note:
        Fund entities depicted as circles in the above diagram are collectively referred
        to as the “Investment Funds.”
 
 (1)
              This
                  diagram depicts consolidated entities only and does not include
                  certain
                  unconsolidated Feeder Funds.
 
 (2)
              Effective
                  December 10, 2007, Icahn Partners Holdings LP changed its name
                  to Icahn
                  Capital LP.
  4
 TABLE
            OF CONTENTS
 
 (3)
              As
                  described below, effective January 1, 2008, the management agreements
                  between New Icahn Management and the Private Funds were terminated
                  pursuant to which New Icahn Management provided administrative
                  and back
                  office services to the Private
                  Funds.
  ***Strategy***
  The
        investment strategy of the General Partners of the Private Funds is set and
        led
        by Mr. Icahn. The Private Funds seek to acquire securities in companies that
        trade at a discount to inherent value as determined by various metrics including
        replacement cost, break-up value, cash flow and earnings power and liquidation
        value.
  The
        General Partners utilize a process-oriented, research-intensive, value-based
        investment approach. This approach generally involves three critical steps:
        (i)
        fundamental credit, valuation and capital structure analysis; (ii) intense
        legal
        and tax analysis of fulcrum issues such as litigation and regulation that
        often
        affect valuation; and (iii) combined business valuation analysis and legal
        and
        tax review to establish a strategy for gaining an attractive risk-adjusted
        investment position within a specific credit, industry or litigation segment.
        This approach focuses on exploiting market dislocations or misjudgments that
        may
        result from market euphoria, litigation, complex contingent liabilities,
        corporate malfeasance and weak corporate governance, general economic conditions
        or market cycles and complex and inappropriate capital structures.
  The
        Private Funds are often activist investors ready to take the steps necessary
        to
        unlock value, including tender offers, proxy contests and demands for management
        accountability. The Private Funds may employ a number of strategies and are
        permitted to invest across a variety of industries and types of securities,
        including long and short equities, long and short bonds, bank debt and other
        corporate obligations, options, swaps and other derivative instruments thereof,
        risk arbitrage and capital structure arbitrage and other special situations.
        The
        Private Funds invest a material portion of their capital in publicly traded
        equity and debt securities of companies that the General Partners believe
        to be
        undervalued by the marketplace. The Private Funds sometimes take significant
        positions in the companies in which they invest.
  ***Income***
  In
        general, the results of our Investment Management segment were primarily
        driven
        by assets under management, or AUM, and the performance of the Private Funds.
        Through December 31, 2007, revenues from this segment were principally derived
        from three sources: (1) management fees; (2) incentive allocations; (3) and
        gains and losses from our principal investments in the Private
        Funds.
  Prior
        to
        January 1, 2008, the management agreements provided that management fees
        were
        generally 2.5% per annum of the net asset value of fee-paying capital in
        the
        Private Funds before the incentive allocation. These fees were paid by each
        Feeder Fund and the Onshore Fund to New Icahn Management at the beginning
        of
        each quarter in an amount equal to 0.625% of the balance of each capital
        account
        of a fee-paying limited partner.
  Incentive
        allocations are generally 25% of the net profits (both realized and unrealized)
        generated by 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
        distributed to the Investment Management Entities annually other than incentive
        allocations earned as a result of investor redemption events during interim
        periods.
  The
        Investment Management Entities and their affiliates may also earn income
        through
        their principal investments in the Investment Funds. Icahn Enterprises Holdings
        also may earn income through its investment in the Investment Funds. In both
        cases the income consists of realized and unrealized gains and losses on
        investment activities along with interest, dividends and other
        income.
  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.
  5
 TABLE
            OF CONTENTS
  As
        noted
        above, 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% of the net asset value of each Investor’s (defined below)
        investment in the Feeder Fund or Onshore Fund, as applicable.
  The
        Investment Fund LPAs provide, effective January 1, 2008, 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, in the case of the Onshore Fund, each limited partner
        in the Onshore Fund and, in the case of the Feeder Funds, each investor in
        the
        Feeder Funds (excluding certain investors that are affiliates of Mr. Icahn)
        (each, 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 any year cannot
        exceed
        the net profits allocated to such Investor. In the event that sufficient
        net
        profits are not generated by an Investment Fund with respect to a capital
        account to meet the full Target Special Profits Interest Amount 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) 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 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 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
        Investment Management Entities waived the 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.
  The
        Investment Management Entities will waive the special profits interest
        allocation and incentive allocations for 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.
  ***Lock-up***
  Investors
        in the Private Funds are typically initially subject to a one-year absolute
        lock-up and may redeem in the second and third years with an early redemption
        fee of 8% and 4%, respectively, paid to the applicable Private Fund. After
        the
        lock-up period expires, investors may redeem on June 30 th and
        December 31 st provided
        they have given 90 days prior written notice. Certain investors with reduced
        fees are subject to a three-year absolute lock-up. Redemptions are subject
        to
        certain additional restrictions.
  ***Affiliate
        Investments***
  Icahn
        Enterprises, our sole limited partner, along with the Private Funds, entered
        into a covered affiliate agreement, simultaneously with the closing of the
        transactions contemplated by the Contribution Agreement, pursuant to which
        we
        (and certain of our subsidiaries) agreed, in general, to be bound by certain
        restrictions on our investments in any assets that the General Partners deem
        suitable for the Private Funds, other than government and agency bonds, cash
        equivalents and investments in non-public companies. We and our subsidiaries
        will not be restricted from making investments in the securities of certain
        companies in which Mr. Icahn or companies he controlled had an interest as
        of
        the date of the initial launch of the Private Funds, and companies in which
        we
        had an interest on August 8, 2007, the date of acquisition. We and our
        subsidiaries, either alone or acting together with a group, will not be
        restricted from (i) acquiring all or any portion of the assets of any public
        company in connection
        with a negotiated transaction or series of related negotiated transactions
        or
        (ii) engaging in a negotiated merger transaction with a public company and,
        pursuant thereto, conducting and completing a tender offer for securities
        of the
        company. In addition, Mr. Icahn and his affiliates (other than Icahn
        Enterprises, Icahn Enterprises Holdings and their subsidiaries) continue
        to have
        the right to co-invest with the Private Funds. We have no interest in, nor
        do we
        generate any income from, any such co-investments, which have been and may
        continue to be substantial. The terms of the covered affiliate agreement
        may be
        amended, modified or waived with our consent and the consent of each of the
        Private Funds, provided, however, that a majority of the members of an investor
        committee maintained for certain of the Private Funds may (with our consent)
        amend, modify or waive any provision of the covered affiliate agreement with
        respect to any particular transaction or series of related
        transactions.
  6
 TABLE
            OF CONTENTS
  ***Employees***
  Our
        Investment Management business currently employs an experienced team of 28
        professionals, including an investment, legal and operations group, which
        consists of the same individuals supporting the Private Funds’ operations prior
        to the acquisition. In many cases, team members have worked together
        successfully and have provided business, investing and legal acumen for a
        number
        of years with respect to the Private Funds’ operations.
  **All
        Other Operations**
  **Metals**
  ***Background***
  PSC
        Metals is principally engaged in the business of collecting, processing and
        selling ferrous and non-ferrous 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. These services are provided through PSC Metals’ recycling facilities
        located in eight states. 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.
  ***The
        Ferrous Scrap Metal Business***
  PSC
        Metals purchases ferrous scrap metal from various sources, including recycled
        aluminum cans, traditional “junk yards” for cars and appliances, industrial
        manufacturers who recycle the offal from their metal-forming processes and
        steel
        mills who look to PSC Metals to remarket secondary product they would otherwise
        scrap. PSC Metals sets the price paid to scrap suppliers based on market
        factors
        of the underlying metal contents of the scrap metal. Changes in scrap prices
        can
        cause collection rates of scrap to increase (when prices are higher) or decrease
        (when prices are lower). These variations have a significant affect on sales
        volumes through PSC Metals’ scrap yards. The scrap is then processed to separate
        between ferrous and non-ferrous metals. PSC Metals then sells processed ferrous
        scrap to end-users such as steel producing mini-mills and integrated steel
        makers and foundries, as well as brokers who aggregate materials for other
        large
        users.
  Demand
        for processed ferrous scrap metal is highly dependent on the overall strength
        of
        the domestic steel industry, particularly producers utilizing electric-arc
        furnaces technology. Most of PSC Metals’ customers purchase processed ferrous
        scrap through negotiated spot sales contracts, which establishes the quantity
        purchased for the current month. The price PSC Metals charges for ferrous
        scrap
        depends upon market demand relative to the supply of scrap and scrap substitutes
        and transportation costs, as well as the quality and grade of scrap. In many
        cases, PSC Metals’ selling price also includes the cost of transportation to the
        end-user.
  7
 TABLE
            OF CONTENTS
 ***The
        Non-ferrous Scrap Metal Business***
  The
        primary non-ferrous commodities that PSC Metals recycles are aluminum, copper,
        brass, stainless steel and other nickel-bearing metals. The geographic markets
        for non-ferrous scrap tend to be larger than those for ferrous scrap due
        to the
        higher selling prices of non-ferrous metals relative to their weight, which
        justify the cost of shipping over greater distances. Non-ferrous scrap is
        typically sold on a spot basis, either directly or through brokers, to
        intermediate or end-users, which include smelters, foundries and aluminum
        sheet
        and ingot manufacturers. Prices for non-ferrous scrap are driven by demand
        for
        finished non-ferrous metal goods and by the general level of economic activity,
        with prices generally related to the price of the primary metal on the London
        Metals Exchange or the New York Commodity Exchange.
  ***Locations***
  PSC
        Metals is headquartered in Mayfield Heights, Ohio, and operates 27 yards,
        three
        mill service operations and one pipe storage center. PSC Metals’ facilities are
        strategically located in high volume scrap markets throughout the upper
        Midwestern and Southeastern United States, placing PSC Metals in proximity
        to
        both suppliers and consumers of scrap metals.
  ***Strategy***
  PSC
        Metals’ business strategy consists of growing its core scrap yard business
        through expansion, ensuring a consistent supply to its customers through
        vertical integration by working closely with supply sources and owning
        distribution and transportation systems, and investing in PSC Metals’
infrastructure and operating equipment.
  ***Sources
        of Raw Materials/Competition***
  The
        scrap
        metal recycling industry is highly competitive, cyclical in nature and
        commodity-based. Operating results tend to reflect and be amplified by changes
        in general economic conditions, which in turn drive domestic manufacturing
        and
        the consumption of scrap in the production of steel and foundry products.
        The
        demand for product and production activity of PSC Metals’ scrap consumers drives
        market pricing levels in PSC Metals’ ferrous and non-ferrous scrap sales. Demand
        is driven by mill production schedules related to regional manufacturing
        requirements and service center stocking levels. Due to its low price-to-weight
        ratio, raw ferrous scrap is generally purchased locally. Ferrous scrap prices
        are local and regional in nature. Where there are overlapping regional markets,
        however, the prices do not tend to differ significantly between the regions
        due
        to the ability of companies to ship scrap metal from one region to another.
        The
        most significant limitation on the size of the geographic market for the
        procurement of ferrous scrap is the transportation cost. This leads to
        significant fluctuations in demand and pricing for PSC Metals’ products. The
        secondary products business is less cyclical but is affected by the rate
        of
        secondary product generated by steel mills generating these products and
        the
        market demands in plate and pipe markets.
  PSC
        Metals procures scrap inventory from numerous sources. These suppliers generally
        are not bound by long-term contracts and have no contractual obligation to
        sell
        scrap metals to us. In periods of low industry prices, suppliers may elect
        to
        hold scrap to wait for higher prices or intentionally slow their scrap
        collection activities. These activities will impact the volume and average
        pricing of scrap in PSC Metals’ scrap yard operations.
  ***Employees***
  As
        of
        December 31, 2007, PSC Metals employed 1,085 persons, including 256 employees
        with collective bargaining agreements.
  **Real
        Estate**
  ***Background***
  Our
        Real
        Estate operations consist of rental real estate, property development and
        associated resort activities. The three related operating lines of our Real
        Estate operations are all individually immaterial and have been aggregated
        for
        purposes of presenting their financial results.
  Our
        rental real estate operations consist primarily of retail, office and industrial
        properties leased to single corporate tenants. Historically, substantially
        all
        of our real estate assets leased to others have been
        net-leased under
        long-term leases. With certain exceptions, these tenants are required to
        pay all
        expenses relating to the leased property and, therefore, we are typically
        not
        responsible for payment of expenses, including maintenance, utilities, taxes,
        insurance or any capital items associated with such properties.
  8
 TABLE
            OF CONTENTS
  Our
        property development and resort 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 houses, 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 400 and
        900
        units of residential housing, respectively. Both developments operate golf
        and
        resort activities as well. We are also completing residential communities
        in
        Naples, Florida and Westchester County, New York. Our long-term investment
        horizon and operational expertise allow us to acquire properties with limited
        current income and complex entitlement and development issues.
  ***Seasonality***
  Resort
        operations are highly seasonal with peak activity in Cape Cod from June to
        September and in Florida from November to February. Sales activity for our
        real
        estate developments in Cape Cod and New York typically peak in late winter
        and
        early spring, while in Florida our peak selling season is during the winter
        months.
  ***Employees***
  Our
        real
        estate-related activities, including rental real estate, real estate development
        and hotel and resort operations, have approximately 400 full and part-time
        employees, which fluctuates due to the seasonal nature of certain of our
        businesses. No employees are covered by collective bargaining
        agreements.
  **Hom****e
        Fashion**
  ***Background***
  We
        conduct our Home Fashion operations through WestPoint International Inc.,
        or
        WPI, a manufacturer and distributor of home fashion consumer products based
        in
        New York, NY. On August 8, 2005, WPI and its subsidiaries completed the purchase
        of substantially all the assets of WestPoint Stevens Inc. and certain of
        its
        subsidiaries pursuant to an asset purchase agreement, or the Purchase Agreement,
        approved by The United States Bankruptcy Court for the Southern District
        of New
        York in connection with Chapter 11 proceedings of WestPoint Stevens. WestPoint
        Stevens was a premier manufacturer and marketer of bed and bath home fashions
        supplying leading U.S. retailers and institutional customers. Before the
        asset
        purchase transaction, WPI did not have any operations.
  On
        August
        8, 2005, we acquired 13.2 million, or 67.7%, of the 19.5 million outstanding
        common shares of WPI. In consideration for the shares, we paid $219.9 million
        in
        cash and received the balance in respect of a portion of the debt of WestPoint
        Stevens. Pursuant to the Purchase Agreement, rights to subscribe for an
        additional 10.5 million shares of common stock at a price of $8.772 per share,
        or the rights offering, were allocated among former creditors of WestPoint
        Stevens. Under the Purchase Agreement and the Bankruptcy Court order approving
        the sale, or the Sale Order, we would receive rights to subscribe for at
        least
        2.5 million of such shares and we agreed to purchase up to an additional
        8.0
        million shares of common stock to the extent that any rights were not exercised
        by other holders of subscription rights. Accordingly, upon completion of
        the
        rights offering and depending upon the extent to which the other holders
        exercise certain subscription rights, we would beneficially own between 15.7
        million and 23.7 million shares of WPI common stock representing between
        52.3%
        and 79.0% of the 30.0 million shares that would then be
        outstanding.
  On
        December 20, 2006, we acquired: (a) 1,000,000 shares of Series A-1 Preferred
        Stock of WPI for a purchase price of $100 per share, for an aggregate purchase
        price of $100.0 million, and (b) 1,000,000 shares of Series A-2 Preferred
        Stock
        of WPI for a purchase price of $100 per share, for an aggregate purchase
        price
        of $100.0 million. Each of the Series A-1 and Series A-2 Preferred Stock
        has a
        4.50% annual dividend, which is paid quarterly. For the first two years after
        issuance, the dividends are to be paid in the form of additional preferred
        stock. Thereafter, the dividends are to be paid in cash or in additional
        preferred stock at the option of WPI. Each of the Series A-1 and Series A-2
        Preferred Stock is convertible into common shares of WPI at a rate
        of
        $10.50 per share, subject to certain anti-dilution provisions, provided,
        however, that under certain circumstances, $92.1 million of the Series A-2
        Preferred Stock may be converted at a rate of $8.772 per share.
  9
 TABLE
            OF CONTENTS
  WPI
        has
        its own board of directors and audit committee. We are the only holders of
        WPI’s
        preferred stock, and, in accordance with its terms, we have the right to
        elect
        six of the ten directors of the WPI board of directors. None of the independent
        directors of the board of directors of Icahn Enterprises GP serves on the
        WPI
        board of directors.
  In
        2005,
        certain of the first lien lenders of WestPoint Stevens appealed portions
        of the
        Bankruptcy Court’s Sale Order. In connection with that appeal, the subscription
        rights distributed to the second lien lenders at closing were placed in escrow.
        In 2006, these first lien lenders also filed a complaint in the Delaware
        Chancery Court together with the trustee for the first lien lenders, Beal
        Bank,
        S.S.O., seeking, among other things, an order to unwind the issuance of the
        preferred stock, or alternatively directing that such preferred stock be
        held in
        trust. We are vigorously contesting both proceedings. Depending on the
        implementation of any changes to the Sale Order or any action taken by the
        Delaware Chancery Court, ownership in WPI may be distributed in a different
        manner than described above, we may own less than a majority of WPI’s shares of
        common stock and our ownership of the preferred stock may change. Our loss
        of
        control of WPI could adversely affect WPI’s business and the value of our
        investment.
  We
        consolidated WPI as of December 31, 2007, 2006 and 2005 and for the period
        from
        the date of acquisition through December 31, 2007. If we were to own less
        than
        50% of the outstanding common stock, we would have to evaluate whether we
        should
        continue to consolidate WPI and our financial statements could be materially
        different than as presented as of December 31, 2007, 2006 and 2005 and for
        the
        periods then ended. See Item 1A, “Risk Factors” and Item 3, “Legal
        Proceedings.”
  ***Business***
  WPI’s
        business consists of manufacturing, sourcing, distributing, marketing and
        selling home fashion consumer products. WPI differentiates itself in the
        $14.0
        billion home fashion textile industry based on its nearly 200-year reputation
        for providing its customers with (1) a full assortment of home fashion products,
        (2) good customer service, (3) a superior value proposition and (4) branded
        and
        private label products with strong consumer recognition. WPI markets a broad
        range of manufactured and sourced bed, bath and basic bedding products,
        including sheets, pillowcases, bedspreads, quilts, comforters and duvet covers,
        bath towels, bath rugs, beach towels, bath accessories, bed skirts, bed pillows,
        flocked blankets, woven blankets and throws, and heated blankets and mattress
        pads. WPI continues to serve substantially all the former customers of WestPoint
        Stevens using assets acquired from WestPoint Stevens and through sourcing
        activities.
  WPI
        manufactures and sources its products in a wide assortment of colors and
        patterns from a variety of fabrics, including chambray, twill, sateen, flannel
        and linen, and from a variety of fibers, including cotton, synthetics and
        cotton
        blends. WPI seeks to position its business as a single-source supplier to
        retailers of bed and bath products, offering a broad assortment of products
        across multiple price points. WPI believes that product and price point breadth
        allows it to provide a comprehensive product offering for each major
        distribution channel.
  WPI
        has
        transitioned the majority of its manufacturing to low-cost countries and
        continues to maintain its corporate offices as well as distribution in the
        United States.
  ***Strategy***
  WPI’s
        strategy is to lower its cost of goods sold and improve its long-term
        profitability by lessening its dependence upon higher-cost domestic sources
        of
        manufactured products through establishing offshore manufacturing and sourcing
        arrangements. This may entail further U.S. plant closings in addition to
        those
        already closed. WPI’s offshore sourcing arrangements employ a combination of
        owned and operated facilities, joint ventures and third-party supplier
        arrangements. In addition, WPI is lowering its general and administrative
        expense by consolidating its locations and its outsourcing initiative, reducing
        headcount and applying more stringent oversight of expense areas where potential
        savings may be realized. WPI is also seeking to increase its revenues by
        selling
        more licensed, differentiated and proprietary products to WPI’s existing
        customers. WPI believes that it can improve margins over time through upgraded
        marketing, selective product development, enhanced design and improved customer
        service capabilities.
  10
 TABLE
            OF CONTENTS
  Beginning
        in late 2005, WPI began to identify potentially viable manufacturing and
        third-party sourcing opportunities outside of the United States. In 2006,
        WPI
        entered into an equity joint venture in Pakistan with Indus Dyeing &
Manufacturing Ltd. This joint venture, Indus Home Ltd., began production
        in
        October 2006 of bath products and is in the process of expanding its existing
        capacity. In December 2006, WPI acquired bed products manufacturing facilities
        from Manama Textile Mills WLL in Bahrain, creating WestPoint Home (Bahrain)
        WLL.
        These initiatives have permitted WPI to replace certain of its higher cost
        U.S.-based manufacturing capacity.
  ***Brands,
        Trademarks and Licenses***
  WPI
        markets its products under trademarks, brand names and private labels. WPI
        uses
        trademarks, brand names and private labels as merchandising tools to assist
        its
        customers in coordinating their product offerings and differentiating their
        products from those of their competitors.
  WPI
        manufactures and sells its own branded line of home fashion products consisting
        of merchandise bearing trademarks that include Atelier Martex®, Grand
        Patrician®, Martex®, Patrician®, Lady Pepperell®, Luxor®, Seduction®, Utica®,
        Vellux®, Baby Martex® and Chatham®.
  In
        addition, some of WPI’s home fashion products are manufactured and sold pursuant
        to licensing agreements under designer and brand names that include, among
        others, Lauren/Ralph Lauren, Charisma, Rachael Ray, Pink Panther, Little
        MissMatched, Scooby Doo and Harley Davidson.
  Private
        label brands, also known as “store brands,” are controlled by individual retail
        customers through use of their own brands or through an exclusive license
        or
        other arrangement with brand owners. Private label brands provide retail
        customers with a way to promote consumer loyalty. As the brand is owned and
        controlled by WPI’s retail customers and not by WPI. As WPI’s customer base has
        experienced consolidation, there has been an increasing focus on proprietary
        branding strategies.
  The
        percentage of WPI’s net sales derived from the sale of private label branded and
        unbranded products for fiscal 2007 was approximately 43%. For fiscal 2007,
        the
        percentage of WPI net sales derived from sales under brands it owns and controls
        was 33%, and the percentage of WPI net sales derived from sales under brands
        owned by third parties pursuant to licensing arrangements with WPI was
        24%.
  ***Marketing***
  WPI
        markets its products through leading department stores, mass merchants,
        specialty stores and institutional channels. Through marketing efforts directed
        towards retailers and institutional clients, WPI seeks to create products
        and
        services in direct response to recognized consumer trends by focusing on
        elements such as product design, product innovation, packaging, store displays
        and other marketing support.
  WPI
        works
        closely with its major customers to assist them in merchandising and promoting
        WPI’s products to consumers. In addition, WPI periodically meets with its
        customers in an effort to maximize product exposure and sales and to jointly
        develop merchandise assortments and plan promotional events specifically
        tailored to the customer. WPI provides merchandising assistance with store
        layouts, fixture designs, advertising and point-of-sale displays. A national
        consumer and trade advertising campaign and comprehensive internet website
        have
        served to enhance brand recognition. WPI also provides its customers with
        suggested customized advertising materials designed to increase product sales.
        A
        heightened focus on consumer research provides needed products on a continual
        basis. WPI distributes finished products directly to retailers. The majority
        of
        WPI’s remaining sales of home fashion products are through the institutional
        channel, which includes hospitality and healthcare establishments, as well
        as
        laundry supply businesses.
  Until
        October 2007, WPI also sold its and other manufacturer’s products through 30
        retail stores. On October 18, 2007, WPI entered into an agreement to sell
        the
        inventory at all of its 30 retail outlet stores and as of December 31, 2007
        had
        terminated the majority of the leases for the 28 leased locations. The operation
        of the retail stores business is included in the results from discontinued
        operations.
  ***Distribution***
  In
        order
        to gain operating efficiencies, increase supply chain visibility and to achieve
        substantial cost savings, WPI engaged a third-party provider of logistics
        services to consolidate WPI’s domestic towel & sheet warehousing and
        distribution operations.
  11
 TABLE
            OF CONTENTS
  ***Selling,
        General, and Administrative***
  WPI
        continues to focus on reducing its general and administrative costs by shifting
        its back office and manufacturing operations to offshore locations as well
        as
        outsourcing many of these job functions to third-party outsourcing
        providers.
  ***Competition***
  The
        home
        fashion industry is highly competitive in terms of price, quality and service.
        Future success will, to a large extent, depend on WPI’s ability to be a
        competitive low-cost producer. WPI competes with both foreign and domestic
        companies on, among other factors, the basis of price, quality and customer
        service. In the sheet and towel markets, WPI competes with many suppliers.
        WPI
        may also face competition in the future from companies that are currently
        third-party suppliers to WPI. Future success depends on the ability to remain
        competitive in the areas of marketing, product development, price, quality,
        brand names, manufacturing capabilities, distribution and order processing.
        Additionally, the easing of trade restrictions over time has led to growing
        competition from low priced products imported from Asia and Latin
        America.
  ***Seasonality
        and Cyclicality***
  The
        home
        fashion industry is somewhat seasonal, with a peak sales season in the fall
        with
        respect to WPI’s blanket products. In response to this seasonality, WPI
        increases its blanket inventory levels during the first six months of the
        year
        to meet customer demands for the peak fall season. In addition, the home
        fashion
        industry is cyclical and performance may be negatively affected by downturns
        in
        consumer spending.
  ***Employees***
  WPI
        and
        its subsidiaries employed approximately 4,500 employees as of December 31,
        2007.
        Currently, approximately 1% of WPI’s employees are unionized.
  **Holding
        Company**
  We
        seek
        to invest our available cash and cash equivalents in debt and equity securities
        with a view to enhancing returns as we continue to assess further acquisitions
        of operating businesses. During fiscal 2007, we had a net gain on investment
        activity of approximately $82.6 million, comprised of approximately $28.6
        million in realized gains and $54.0 million in unrealized gains.
  As
        of
        December 31, 2007, 29.9% of our total investments, or $153.5 million, were
        managed by an unaffiliated third-party investment manager. These investments
        are
        predominantly fixed income securities that have an average duration of less
        than
        one month, and, in total, are managed to have an average S&P credit quality
        of above A-. As of March 13, 2008, this portfolio was approximately 96% invested
        in cash and cash equivalents.
  We
        made
        three equal investments in September, October and November 2007 aggregating
        $700
        million in the Private Funds for which no management fees or incentive
        allocations were applicable. As of December 31, 2007, the total value of
        this
        investment is approximately $684.3 million, with an unrealized loss of $15.7
        million for fiscal 2007. These amounts are reflected in the Investment
        Management Entities’ net assets, earnings and non-controlling interest but are
        eliminated at the Holding Company level. However, the Investment Management
        Entities’ allocated share of net assets and earnings from the Private Funds
        includes the amount of these eliminated amounts.
  We
        conduct our activities in a manner so as not to be deemed an investment company
        under the Investment Company Act of 1940, as amended, or the Investment Company
        Act. Generally, this means that we do not invest or intend to invest in
        securities as our primary business and that no more than 40% of our total
        assets
        will be invested in investment securities as such term is defined in the
        Investment Company Act. In addition, we intend to structure our investments
        so
        as 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 of
        1986, as amended.
  12
 TABLE
            OF CONTENTS
 **Item
        1A. Risk Factors**
  **Risks
        Relating to Our Structure**
  ***Our
        general partner and its control person could exercise their influence over
        us to
        your detriment.***
  Mr.
        Icahn, through affiliates, currently owns 100% of Icahn Enterprises GP, our
        general partner, and approximately 86.5% of Icahn Enterprises’outstanding
        preferred units and approximately 91.2% of Icahn Enterprises’ depositary
        units
        and, as a result, has the ability to influence many aspects of our operations
        and affairs. Icahn Enterprises GP also is our general partner. Icahn Enterprises
        owns all of our outstanding limited partnership interests.
  In
        addition, if Mr. Icahn were to sell, or otherwise transfer, some or all of
        his
        interests in us to an unrelated party or group, a change of control could
        be
        deemed to have occurred under the terms of the indentures governing Icahn
        Enterprises’
        notes which would require Icahn Enterprises to offer to repurchase all
        outstanding notes at 101% of their principal amount plus accrued and unpaid
        interest and liquidated damages, if any, to the date of repurchase. However,
        it
        is possible that we will not have sufficient funds at the time of the change
        of
        control to make the required repurchase of notes.
  ***We
        have engaged, and in the future may engage, in transactions with our
        affiliates.***
  We
        have
        invested and may in the future invest in entities in which Mr. Icahn also
        invests. We also have purchased and may in the future purchase entities or
        investments from him or his affiliates. Although Icahn Enterprises GP has
        never
        received fees in connection with our investments, our partnership agreement
        allows for the payment of these fees. Mr. Icahn may pursue other business
        opportunities in industries in which we compete and there is no requirement
        that
        any additional business opportunities be presented to us. We continuously
        identify, evaluate and engage in discussions concerning potential investments
        and acquisitions, including potential investments in and acquisitions of
        affiliates of Mr. Icahn. There cannot be any assurance that any potential
        transactions that we consider will be completed.
  13
 TABLE
            OF CONTENTS
  ***To
        service our indebtedness, we require a significant amount of cash. Our ability
        to maintain our current cash position or generate cash depends on many factors
        beyond our control.***
  Our
        ability to make payments on and to refinance our indebtedness and to fund
        operations depends on existing cash balances and our ability to generate
        cash in
        the future. This, to a certain extent, is subject to general economic,
        financial, competitive, regulatory and other factors that are beyond our
        control.
  Our
        current businesses and businesses that we acquire may not generate sufficient
        cash to service our debt. In addition, we may not generate sufficient cash
        flow
        from operations or investments and future borrowings may not be available
        to us
        in an amount sufficient to enable us to service our indebtedness or to fund
        our
        other liquidity needs. Based on our current level of indebtedness which includes
        all unsecured senior notes and related interest payments due thereon, mortgage
        payable and credit facilities, approximately $437 million of indebtedness
        will
        come due in the three-year period ending December 31, 2010. We may need to
        refinance all or a portion of our indebtedness on or before maturity. We
        cannot
        assure you that we will be able to refinance any of our indebtedness on
        commercially reasonable terms or at all.
  ***We
        are a holding company and depend on the businesses of our subsidiaries to
        satisfy our obligations.***
  We
        are a
        holding company. In addition to cash and cash equivalents, U.S. government
        and
        agency obligations, marketable equity and debt securities and other short-term
        investments, our assets consist primarily of investments
        in our subsidiaries. Moreover, if we make significant investments in operating
        businesses, it is likely that we will reduce the liquid assets at Icahn
        Enterprises and Icahn Enterprises Holdings in order to fund those investments
        and the ongoing operations of our subsidiaries. Consequently, 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 of our subsidiaries and the payment of funds to us by our subsidiaries
        in
        the form of dividends, distributions, loans or otherwise.
  14
 TABLE
            OF CONTENTS
  The
        operating results of our subsidiaries may not be sufficient 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 these subsidiaries may be subject
        or enter into in the future. The terms of any borrowings of our subsidiaries
        or
        other entities in which we own equity may restrict dividends, distributions
        or
        loans to us. For example, we have credit facilities for WPI, our majority
        owned
        subsidiary, and our real estate development properties that also restrict
        dividends, distributions and other transactions with us. To the degree any
        distributions and transfers are impaired or prohibited, our ability to make
        payments on our debt and to make distributions on our depository units will
        be
        limited.
  ***We
        or our subsidiaries may be able to incur substantially more
        debt.***
  We
        or our
        subsidiaries may be able to incur substantial additional indebtedness in
        the
        future. The terms of the indentures governing Icahn Enterprises' 8.125% senior
        notes due 2012, 7.125% senior notes due 2013 and variable rate notes due
        2013 do
        not prohibit us or our subsidiaries from doing so. We and Icahn Enterprises
        may
        incur additional indebtedness if we comply with certain financial tests
        contained in the indentures that govern these notes. As of December 31, 2007,
        based upon these tests, we and Icahn Enterprises could have incurred up to
        approximately $1.7 billion of additional indebtedness. However, subsidiaries
        other than us are not subject to any of the covenants contained in the
        indentures with respect to the senior notes, including the covenant
        restricting debt incurrence. If new debt is added to our and our subsidiaries’
current debt levels, the related risks that we, and they, now face could
        intensify.
  ***Our
        failure to comply with the covenants contained under any of our debt
        instruments, including the indentures governing the outstanding notes, including
        our failure as a result of events beyond our control, could result in an
        event
        of default which would materially and adversely affect our financial
        condition.***
  If
        there
        were an event of default under one of our debt instruments, the holders of
        the
        defaulted debt could cause all amounts outstanding with respect to that debt
        to
        be due and payable immediately. In addition, any event of default or declaration
        of acceleration under one debt instrument could result in an event of default
        under one or more of our other debt instruments. It is possible that, if
        the
        defaulted debt is accelerated, our assets and cash flow may not be sufficient
        to
        fully repay borrowings under our outstanding debt instruments and we cannot
        assure you that we would be able to refinance or restructure the payments
        on
        those debt securities.
  ***We
        may be subject to the pension liabilities of our
        affiliates.***
  Mr.
        Icahn, through certain affiliates, currently owns 100% of Icahn Enterprises
        GP
        and approximately 91.2% of our outstanding depositary units and 86.5% of
        our
        outstanding preferred units. Applicable pension and tax laws make each member
        of
        a “controlled group” of entities, generally defined as entities in which there
        are at least an 80% common ownership interest, jointly and severally liable
        for
        certain pension plan obligations of any member of the controlled group. These
        pension obligations include ongoing contributions to fund the plan, as well
        as
        liability for any unfunded liabilities that may exist at the time the plan
        is
        terminated. In addition, the failure to pay these pension obligations when
        due
        may result in the creation of liens in favor of the pension plan or the Pension
        Benefit Guaranty Corporation, or the PBGC, against the assets of each member
        of
        the controlled group.
  As
        a
        result of the more than 80% ownership interest in us by Mr. Icahn’s affiliates,
        we and our subsidiaries are subject to the pension liabilities of all entities
        in which Mr. Icahn has a direct or indirect ownership interest of at least
        80%.
        One such entity, ACF Industries LLC, is the sponsor of several pension plans
        which, as
        of
        December 31, 2007, were not underfunded on an ongoing actuarial basis but
        would
        be underfunded by approximately $93.3 million if those plans were terminated,
        as
        most recently reported by the plans’ actuaries. These liabilities could increase
        or decrease, depending on a number of factors, including future changes in
        promised benefits, investment returns, and the assumptions used to calculate
        the
        liability. As members of the controlled group, we would be liable for any
        failure of ACF to make ongoing pension contributions or to pay the unfunded
        liabilities upon a termination of the ACF pension plans. In addition, other
        entities now or in the future within the controlled group that includes us
        may
        have pension plan obligations that are, or may become, underfunded and we
        would
        be liable for any failure of such entities to make ongoing pension contributions
        or to pay the unfunded liabilities upon a termination of such
        plans.
  15
 TABLE
            OF CONTENTS
  The
        current underfunded status of the ACF pension plans requires ACF to notify
        the
        PBGC of certain “reportable events,” such as if we cease to be a member of the
        ACF controlled group, or if we make certain extraordinary dividends or stock
        redemptions. The obligation to report could cause us to seek to delay or
        reconsider the occurrence of such reportable events.
  Starfire
        Holding Corporation, or Starfire, which is 100% owned by Mr. Icahn, has
        undertaken to indemnify us and our subsidiaries from losses resulting from
        any
        imposition of certain pension funding or termination liabilities that may
        be
        imposed on us and our subsidiaries or our assets as a result of being a member
        of the Icahn controlled group. The Starfire indemnity (which does not extend
        to
        pension liabilities of our subsidiaries that would be imposed on us as a
        result
        of our interest in these subsidiaries and not as a result of Mr. Icahn and
        his
        affiliates more than 80% ownership interest in us) provides, among other
        things,
        that so long as such contingent liabilities exist and could be imposed on
        us,
        Starfire will not make any distributions to its stockholders that would reduce
        its net worth to below $250.0 million. Nonetheless, Starfire may not be able
        to
        fund its indemnification obligations to us.
  ***We
        are subject to the risk of possibly becoming an investment
        company.***
  Because
        we are a holding company and a significant portion of our assets may, from
        time
        to time, consist of investments in companies in which we own less than a
        50%
        interest, we run the risk of inadvertently becoming an investment company
        that
        is required to register under the Investment Company Act. Registered investment
        companies are subject to extensive, restrictive and potentially adverse
        regulations relating to, among other things, operating methods, management,
        capital structure, dividends and transactions with affiliates. Registered
        investment companies are not permitted to operate their business in the manner
        in which we operate our business, nor are registered investment companies
        permitted to have many of the relationships that we have with our affiliated
        companies.
  In
        order
        not to become an investment company required to register under the Investment
        Company Act, we monitor the value of our investments and structure transactions
        with an eye toward the Investment Company Act. As a result, we may structure
        transactions in a less advantageous manner than if we did not have Investment
        Company Act concerns, or we may avoid otherwise economically desirable
        transactions due to those concerns. In addition, events beyond our control,
        including significant appreciation or depreciation in the market value of
        certain of our publicly traded holdings or adverse developments with respect
        to
        our ownership of certain of our subsidiaries, such as our potential loss
        of
        control of WPI, could result in our inadvertently becoming an investment
        company. See Part II, Item 8, Note 17, “Commitments and Contingencies,” and Part
        I, Item 3, “Legal Proceedings,” for further discussion.
  If
        it
        were established that we were an investment company, there would be a risk,
        among other material adverse consequences, that we could become subject to
        monetary penalties or injunctive relief, or both, in an action brought by
        the
        SEC, that we would be unable to enforce contracts with third parties or that
        third parties could seek to obtain rescission of transactions with us undertaken
        during the period it was established that we were an unregistered investment
        company.
  ***We
        may become taxable as a corporation.***
  We
        believe that we have been and are properly treated as a partnership for federal
        income tax purposes. This allows us to pass through our income and deductions
        to
        our partners. However, the Internal Revenue Service, or IRS, could challenge
        our
        partnership status and we could fail to qualify as a partnership for past
        years
        as well as future years. Qualification as a partnership involves the application
        of highly technical and complex
        provisions of the Internal Revenue Code of 1986, as amended. For example,
        a
        publicly traded partnership is generally taxable as a corporation unless
        90% or
        more of its gross income is “qualifying” income, which includes interest,
        dividends, oil and gas revenues, real property rents, gains from the sale
        or
        other disposition of real property, gain from the sale or other disposition
        of
        capital assets held for the production of interest or dividends, and certain
        other items. We believe that in all prior years of our existence at least
        90% of
        our gross income was qualifying income and we intend to structure our business
        in a manner such that at least 90% of our gross income will constitute
        qualifying income this year and in the future. However, there can be no
        assurance that such structuring will be effective in all events to avoid
        the
        receipt of more than 10% of non-qualifying income. If less than 90% of our
        gross
        income constitutes qualifying income, we may be subject to corporate tax
        on our
        net income, at a Federal rate of up to 35% plus possible state taxes. Further,
        if less than 90% of our gross income constituted qualifying income for past
        years, we may be subject to corporate level tax plus interest and possibly
        penalties. In addition, if we register under the Investment Company Act,
        it is
        likely that we would be treated as a corporation for U.S. federal income
        tax
        purposes. The cost of paying federal and possibly state income tax, either
        for
        past years or going forward, could be a significant liability and would reduce
        our funds available to make distributions to holders of units, and to make
        interest and principal payments on our debt securities. To meet the qualifying
        income test we may structure transactions in a manner which is less advantageous
        than if this were not a consideration, or we may avoid otherwise economically
        desirable transactions.
  16
 TABLE
            OF CONTENTS
  Legislation
        has been introduced into Congress which, if enacted, could have a material
        and
        adverse effect on us. These proposals include legislation which would tax
        publicly traded partnerships engaged in the investment management business,
        such
        as us, as corporations. Other proposals would treat the income from carried
        interests, when recognized for tax purposes, as ordinary income and as not
        qualifying as investment income for purposes of the 90% investment income
        test
        that publicly traded partnerships must meet to be classified as partnerships.
        It
        is unclear whether such legislation will be enacted. Moreover, it is unclear
        what specific provisions may be enacted, including what the effective date
        will
        be, and accordingly what any such legislation’s impact will be on us. It is
        possible that if such legislation were enacted we would be treated as an
        association, taxable as a corporation, which would materially increase our
        taxes. As an alternative, we might be required to restructure our operations,
        and possibly dispose of certain businesses, in order to avoid or mitigate
        the
        impact of any such legislation.
  ***If
        we discover significant deficiencies in our internal controls over financial
        reporting or at any recently acquired entity, it may adversely affect our
        ability to provide timely and reliable financial information and satisfy
        our
        reporting obligations under federal securities laws, which also could affect
        the
        market price of our depositary units or our ability to remain listed on the
        NYSE.***
  Effective
        internal and disclosure controls are necessary for us to provide reliable
        financial reports and effectively prevent fraud and to operate successfully
        as a
        public company. If we cannot provide reliable financial reports or prevent
        fraud, our reputation and operating results would be harmed. As of December
        31,
        2007, we completed remediation of previously reported significant deficiencies
        in internal controls, as defined under interim standards adopted by the Public
        Company Accounting Oversight Board, or PCAOB; in two instances at Icahn
        Enterprises and one at a subsidiary. A “significant deficiency” is a deficiency,
        or combination of deficiencies, in internal control over financial reporting
        that is less severe than a material weakness, yet important enough to merit
        attention of those responsible for oversight of the registrant’s financial
        reporting.
  To
        the
        extent that any material weakness or significant deficiency exists in our
        or our
        consolidated subsidiaries internal control over financial reporting, such
        material weakness or significant deficiency may adversely affect our ability
        to
        provide timely and reliable financial information necessary for the conduct
        of our
        business and satisfaction of our reporting obligations under federal securities
        laws. Ineffective internal and disclosure controls could cause investors
        to lose
        confidence in our reported financial information, which could have a negative
        effect on the rating of our debt.
  17
 TABLE
            OF CONTENTS
  ***Since
        we are a limited partnership, you may not be able to pursue legal claims
        against
        us in U.S. federal courts.***
  We
        are a
        limited partnership organized under the laws of the state of Delaware. Under
        the
        federal rules of civil procedure, you may not be able to sue us in federal
        court
        on claims other than those based solely on federal law, because of lack of
        complete diversity. Case law applying diversity jurisdiction deems us to
        have
        the citizenship of each of our limited partners. Because we are a publicly
        traded limited partnership, it may not be possible for you to attempt to
        sue us
        in a federal court because we have citizenship in all 50 U.S. states and
        operations in many states. Accordingly, you will be limited to bringing any
        claims in state court.
  ***Certain
        members of our management team may be involved in other business activities
        that
        may involve conflicts of interest.***
  Certain
        individual members of our management team may, from time to time, be involved
        in
        the management of other businesses, including those owned or controlled by
        Mr.
        Icahn and his affiliates. Accordingly, these individuals may focus a portion
        of
        their time and attention on managing these other businesses. Conflicts may
        arise
        in the future between our interests and the interests of the other entities
        and
        business activities in which such individuals are involved.
  **Risks
        Relating to Our Business**
  **General**
  In
        addition to the following risk factors specific to each of our businesses,
        all
        of our businesses are subject to the effects of the following:
 
 ·
              the
                  continued threat of terrorism;
 
 ·
              economic
                  downturn;
 
 ·
              loss
                  of any of our or our subsidiaries key
                  personnel;
 
 ·
              the
                  unavailability, as needed, of additional financing;
                  and
 
 ·
              the
                  unavailability of insurance at acceptable
                  rates.
  **Investment
        Management Operations**
  ***The
        historical financial information for our investment management operations
        is not
        necessarily indicative of the future performance of our investment management
        operations.***
  The
        financial results of our investment management operations are primarily driven
        by AUM and the performance of the Private Funds. The historical consolidated
        financial information contained elsewhere in our Annual Report on Form 10-K
        for
        our investment management operations is not indicative of the future financial
        results of our investment management operations. In particular, with respect
        to
        the historical returns of our investment management operations:
 
 ·
              in
                  the past few years, the rates of returns of certain of the Private
                  Funds
                  have benefited from favorable market conditions and profitable
                  investment
                  opportunities that may not repeat
                  themselves;
 
 ·
              the
                  rates of return reflect the historical cost configuration of our
                  investment management operations, which may change in the future
                  due to
                  factors beyond our control, including changes in laws;
                  and
 
 ·
              future
                  returns may be affected by the risks described elsewhere in this
                  report,
                  including risks of the industries and businesses in which a particular
                  fund invests.
  18
 TABLE
            OF CONTENTS
  ***Poor
        performance of the Private Funds could cause a decline in our investment
        management operations revenue, may reduce or eliminate our incentive allocations
        for one or more periods, and may adversely affect AUM for the Private
        Funds.***
  Our
        revenue from our investment management operations is derived principally
        from
        three sources: (1) special profits interest allocations; (2) incentive
        allocations earned based upon the Private Funds’ performance; and (3) gains or
        losses in our investments in the Private Funds. In the event that one or
        more of
        the Private Funds were to perform poorly, our investment management operations
        revenue could decline and we may not receive special profits interest
        allocations or incentive allocations. Moreover, in the event that the
        performance of one or more Private Funds is negative, our investment management
        operations revenue could decline and we may not receive any incentive
        allocation. Furthermore, if a Private Fund has net losses (from net realized
        and
        unrealized losses), such losses will be carried forward and incentive
        allocations will not be earned until such losses are recovered. Moreover,
        we
        could experience losses on our investments of our own principal as a result
        of
        any such poor performance of the Private Funds. Poor performance could make
        it
        more difficult for the Private Funds to raise new capital. Poor performance
        may
        cause existing investors in the Private Funds to redeem their investments
        in the
        Private Funds. Investors and potential investors in the Private Funds
        continually assess the Private Funds’ performance. The ability of the Private
        Funds to raise capital, and the avoidance of excessive redemption levels,
        will
        depend on the Private Funds’ continued performance at a level that is
        satisfactory to investors and potential investors in the Private
        Funds.
  ***Successful
        execution of the Private Funds’ activist investment activities involves many
        risks, certain of which are outside of our control.***
  The
        success of the Private Funds’ investment strategy may require, among other
        things: (i) that the Investment Management Entities properly identify companies
        whose securities prices can be improved through corporate and/or strategic
        action; (ii) that the Private Funds acquire sufficient securities of such
        companies at a sufficiently attractive price; (iii) that the Private Funds
        avoid
        triggering anti-takeover and regulatory obstacles while aggregating their
        positions; (iv) that management of portfolio companies and other security
        holders respond positively to our proposals; and (v) that the market price
        of
        portfolio companies’ securities increases in response to any actions taken by
        the portfolio companies. We cannot assure you that any of the foregoing will
        succeed.
  Our
        investment management operations are materially affected by conditions in
        the
        global markets and economic conditions throughout the world. The global market
        and economic climate may deteriorate because of many factors beyond the control
        of the Investment Management Entities, including rising interest rates or
        inflation, terrorism or political uncertainty. In the event of a market
        downturn, the Private Funds could be affected in different ways. Furthermore,
        while difficult market conditions may increase opportunities to make certain
        distressed asset investments, such conditions may also increase the risk
        of
        default with respect to investments held by the Private Funds that have
        significant debt investments.
  ***The
        Private Funds may fail to realize any profits from their investment activities
        for a considerable period of time and we may lose some or all of the principal
        amount we invest in the Private Funds. This risk may be magnified due to
        concentration of investments and investments in undervalued
        securities.***
  Our
        investment management operations revenue depends on the investments made
        by the
        Private Funds. Certain investment positions in which each Private Fund may
        have
        an interest may be illiquid. The Private Funds may own restricted or
        non-publicly traded securities and securities traded on foreign exchanges.
        These
        investments could prevent a Private Fund from liquidating unfavorable positions
        promptly and subject the Private Fund to substantial losses.
  At
        any
        given time, a Private Funds’ assets may become highly concentrated within a
        particular company, industry, asset category, trading style or financial
        or
        economic market. In that event, the Private Fund’s investment portfolio will be
        more susceptible to fluctuations in value resulting from adverse economic
        conditions affecting the performance of that particular company, industry,
        asset
        category, trading style or economic market than a less concentrated portfolio
        would be. As a result, the Private Funds’ investment portfolio could become
        concentrated and its aggregate return may be volatile and may be affected
        substantially by the performance of only one or a few holdings.
  19
 TABLE
            OF CONTENTS
  The
        Private Funds seek to invest in securities that are undervalued. The
        identification of investment opportunities in undervalued securities is a
        difficult task, and there are no assurances that such opportunities will
        be
        successfully recognized or acquired. While investments in undervalued securities
        offer the opportunity for above-average capital appreciation, these investments
        involve a high degree of financial risk and can result in substantial losses.
        Returns generated from the Private Funds’ investments may not adequately
        compensate for the business and financial risks assumed.
  From
        time
        to time, each Private Fund may invest in bonds or other fixed income securities,
        such as commercial paper and higher yielding (and, therefore, higher risk)
        debt
        securities. It is likely that a major economic recession could disrupt severely
        the market for such securities and may have an adverse impact on the value
        of
        such securities. In addition, it is likely that any such economic downturn
        could
        adversely affect the ability of the issuers of such securities to repay
        principal and pay interest thereon and increase the incidence of default
        for
        such securities.
  For
        reasons not necessarily attributable to any of the risks set forth in this
        Form
        10-K (for example, supply/demand imbalances or other market forces), the
        prices
        of the securities in which the Private Funds invest may decline substantially.
        In particular, purchasing assets at what may appear to be undervalued levels
        is
        no guarantee that these assets will not be trading at even more undervalued
        levels at a time of valuation or at the time of sale.
  ***The
        use of leverage in investments by the Private Funds poses a significant degree
        of risk and enhances the possibility of significant loss in the value of
        the
        investments in the Private Funds.***
  Each
        Private Fund may leverage its capital if its general partner believes that
        the
        use of leverage may enable the Private Fund to achieve a higher rate of return.
        Accordingly, a Private Fund may pledge its securities in order to borrow
        additional funds for investment purposes. Each Private Fund may also leverage
        its investment return with options, short sales, swaps, forwards and other
        derivative instruments. The amount of borrowings that each Private Fund may
        have
        outstanding at any time may be substantial in relation to its capital. While
        leverage may present opportunities for increasing a Private Fund’s total return,
        leverage may increase losses as well. Accordingly, any event that adversely
        affects the value of an investment by a Private Fund would be magnified to
        the
        extent such fund is leveraged. The cumulative effect of the use of leverage
        by
        each Private Fund in a market that moves adversely to the Private Fund’s
        investments could result in a substantial loss to the Private Fund that would
        be
        greater than if the Private Fund was not leveraged.
  In
        general, the use of short-term margin borrowings results in certain additional
        risks to the Private Funds. For example, should the securities pledged to
        brokers to secure any Private Fund’s margin accounts decline in value, the
        Private Fund could be subject to a “margin call,” pursuant to which it must
        either deposit additional funds or securities with the broker, or suffer
        mandatory liquidation of the pledged securities to compensate for the decline
        in
        value. In the event of a sudden drop in the value of any of the Private Fund’s
        assets, the Private Fund might not be able to liquidate assets quickly enough
        to
        satisfy its margin requirements.
  Any
        of
        the Private Funds may enter into repurchase and reverse repurchase agreements.
        When a Private Fund enters into a repurchase agreement, it “sells” securities
        issued by the U.S. or a non-U.S. government, or agencies thereof, to a
        broker-dealer or financial institution, and agrees to repurchase such securities
        for the price paid by the broker-dealer or financial institution, plus interest
        at a negotiated rate. In a reverse repurchase transaction, the Private Fund
        “buys” securities issued by the U.S. or a non-U.S. government, or agencies
        thereof, from a broker-dealer or financial institution, subject to the
        obligation of the broker-dealer or financial institution to repurchase such
        securities at the price paid by the Private Fund, plus interest at a negotiated
        rate. The use of repurchase and reverse repurchase agreements by any of the
        Private Funds involves certain risks. For example, if the seller of securities
        to a Private Fund under a reverse repurchase agreement defaults on its
        obligation to repurchase the underlying securities, as a result of its
        bankruptcy or otherwise, the Private Fund will seek to dispose of such
        securities, which action could involve costs or delays. If the seller becomes
        insolvent and subject to liquidation or reorganization under applicable
        bankruptcy or other laws, the Private Fund’s ability to dispose of the
        underlying securities may be restricted. Finally, if a seller defaults on
        its
        obligation to repurchase securities under a reverse repurchase agreement,
        the
        Private Fund
        may
        suffer a loss to the extent it is forced to liquidate its position in the
        market, and proceeds from the sale of the underlying securities are less
        than
        the repurchase price agreed to by the defaulting seller.
  20
 TABLE
            OF CONTENTS
  The
        financing used by each Private Fund to leverage its portfolio will be extended
        by securities brokers and dealers in the marketplace in which the Private
        Fund
        invests. While the Private Fund will attempt to negotiate the terms of these
        financing arrangements with such brokers and dealers, its ability to do so
        will
        be limited. The Private Fund is therefore subject to changes in the value
        that
        the broker-dealer ascribes to a given security or position, the amount of
        margin
        required to support such security or position, the borrowing rate to finance
        such security or position and/or such broker-dealer’s willingness to continue to
        provide any such credit to the Private Fund. Because each Private Fund currently
        has no alternative credit facility which could be used to finance its portfolio
        in the absence of financing from broker-dealers, it could be forced to liquidate
        its portfolio on short notice to meet its financing obligations. The forced
        liquidation of all or a portion of the Private Fund’s portfolios at distressed
        prices could result in significant losses to the Private Fund.
  ***The
        possibility of increased regulatory focus could result in additional burdens
        on
        our investment management operations. Changes in tax law could adversely
        affect
        us.***
  As
        a
        result of highly publicized financial scandals, investors have exhibited
        concerns over the integrity of the U.S. financial markets, and the regulatory
        environment in which our investment management business operates is subject
        to
        further regulation in addition to the rules already promulgated. In particular,
        in recent years, there has been ongoing debate by U.S. and foreign governments
        regarding new rules and regulations for investment funds. Our investment
        management operations may be adversely affected by the enactment of new or
        revised regulations, or changes in the interpretation or enforcement of rules
        and regulations imposed by the SEC, other U.S. or foreign governmental
        regulatory authorities or self-regulatory organizations that supervise the
        financial markets. For example, the SEC may require all hedge fund managers
        to
        register under the Investment Advisors Act of 1940. Such changes could place
        limitations on the type of investor that can invest in the Private Funds.
        Further, such changes may limit the scope of investment activities that may
        be
        undertaken by the Private Funds’ managers. Any such changes could increase the
        cost of our investment management operations doing business and/or materially
        adversely impact our profitability. In addition, the securities and futures
        markets are subject to comprehensive statutes, regulations and margin
        requirements. The SEC, other regulators and self-regulatory organizations
        and
        exchanges are authorized to take extraordinary actions in the event of market
        emergencies. The regulation of derivatives transactions and funds that engage
        in
        such transactions is an evolving area of law and is subject to modification
        by
        government and judicial action. The effect of any future regulatory change
        on
        the Private Funds could be substantial and adverse.
  In
        addition, changes in tax law could adversely affect us. Legislation has been
        introduced in Congress which, if enacted, could have a material and adverse
        effect on us. Proposals include legislation which would tax publicly traded
        partnerships engaged in the investment management business, such as us, as
        corporations. Other proposals would treat the income from carried interests,
        when recognized for tax purposes, as ordinary income and as not qualifying
        as
        investment income for purposes of the 90% investment income test that publicly
        traded partnerships must meet to be classified as partnerships. It is unclear
        whether such legislation will be enacted. Moreover, it is unclear what specific
        provisions may be enacted, including what the effective date will be, and
        accordingly what any such legislation’s impact will be on us. It is possible
        that if such legislation were enacted we would be treated as an association,
        taxable as a corporation, which would materially increase our taxes. As an
        alternative, we might be required to restructure our operations, and possibly
        dispose of certain businesses, in order to avoid or mitigate the impact of
        any
        such legislation.
  ***The
        investment management business is intensely
        competitive.***
  The
        investment management business is intensely competitive, with competition
        based
        on a variety of factors, including investment performance, the quality and
        experience of investment professionals and business reputation. The Private
        Funds compete for fund investors, investment opportunities and talent with
        an
        increasing number of hedge funds, private equity funds, specialized funds,
        traditional asset managers, commercial banks and other financial
        institutions.
  Several
        of our competitors have raised or are expected to raise, significant amounts
        of
        capital and many of them have investment objectives similar to the Private
        Funds, which may create additional competition for investment
        opportunities for the Private Funds and may reduce the size and duration
        of
        pricing inefficiencies that many alternative investment strategies seek to
        exploit. Our competitors may benefit from a lower cost of capital or have
        higher
        risk tolerance or different risk assessments, which may allow them to bid
        more
        aggressively than us.
  21
 TABLE
            OF CONTENTS
  The
        Private Funds may lose investment opportunities in the future if they do
        not
        match investment prices, structures and terms offered by competitors.
        Alternatively, the Private Funds may experience decreased rates of return
        and
        increased risks of loss if they match investment price structures and terms
        offered by competitors. In addition, changes in the global capital markets
        could
        diminish the attractiveness of the Private Funds relative to investments
        in
        other investment products. This competitive pressure could materially adversely
        affect the ability of the Investment Management Entities to make successful
        investments for the Private Funds and reduce the AUM of the Private
        Funds.
  These
        and
        other factors could reduce our investment management operations revenue and
        earnings and materially adversely affect our investment management
        operations.
  ***The
        failure of Mr. Icahn to participate in the management of the Private Funds
        could
        have a material adverse effect on the Private Funds and on
        us.***
  The
        success of the Private Funds depends upon the ability of the Investment
        Management Entities to develop and implement investment strategies that achieve
        the Private Funds’ investment objectives. Subjective decisions made by employees
        of the Investment Management Entities may cause the Private Funds to incur
        losses or to miss profit opportunities on which the Private Funds would
        otherwise have capitalized. In the event that Mr. Icahn ceases to participate
        in
        the management of the Private Funds, the consequences to the Private Funds
        and
        our investment in them could be material and adverse and could lead to the
        premature termination of the Private Funds. In the event that Mr. Icahn dies,
        or
        is unable, by reason of illness or injury, to perform his duties as chief
        executive officer of the General Partners for 90 consecutive days, or for
        any
        reason other than death, illness or injury ceases to perform those duties,
        the
        investors in each of the Private Funds will have certain redemption rights.
        The
        occurrence of such an event could have a material adverse effect on the revenues
        and earnings of our investment management business, and the ability of the
        Private Funds to maintain or grow their AUM. Such redemptions could lead
        possibly to a liquidation of one or more of the Private Funds and a
        corresponding elimination of our special profits interest allocations and
        potential to earn incentive allocations. The loss of Mr. Icahn could, therefore,
        ultimately result in a loss of substantially all of the earnings of our
        investment management business.
  ***The
        Private Funds make investments in companies we do not
        control.***
  Investments
        by the Private Funds include investments in debt or equity securities of
        publicly traded companies that we do not control. Such investments may be
        acquired by a Private Fund through open market trading activities or through
        purchases of securities from the issuer. These investments will be subject
        to
        the risk that the company in which the investment is made may make business,
        financial or management decisions with which the Investment Management Entities
        disagree or that the majority of stakeholders or the management of the company
        may take risks or otherwise act in a manner that does not serve the best
        interests of the Private Fund. In addition, a Private Fund may make investments
        in which it shares control over the investment with co-investors, which may
        make
        it more difficult for it to implement its investment approach or exit the
        investment when it otherwise would. If any of the foregoing were to occur,
        the
        values of the investments by the Private Funds could decrease and our investment
        management operations revenues could suffer as a result.
  ***The
        ability to hedge investments successfully is subject to numerous
        risks.***
  The
        Private Funds may utilize financial instruments, both for investment purposes
        and for risk management purposes in order to (i) protect against possible
        changes in the market value of a Private Fund’s investment portfolios resulting
        from fluctuations in the securities markets and changes in interest rates;
        (ii)
        protect a Private Fund’s unrealized gains in the value of the their investment
        portfolios; (iii) facilitate the sale of any such investments; (iv) enhance
        or
        preserve returns, spreads or gains on any investment in the Private Fund’s
        portfolio; (v) hedge the interest rate or currency exchange rate on any of
        the
        Private Fund’s liabilities
        or assets; (vi) protect against any increase in the price of any securities
        the
        Investment Management Entities anticipate purchasing at a later date; or
        (vii)
        for any other reason that the Investment Management Entities deem
        appropriate.
  22
 TABLE
            OF CONTENTS
  The
        success of any hedging activities will depend, in part, upon the degree of
        correlation between the performance of the instruments used in the hedging
        strategy and the performance of the portfolio investments being hedged. Since
        the characteristics of many securities change as markets change or time passes,
        the success of the our investment management operations’ hedging strategy will
        also be subject to the ability of the Investment Management Entities to
        continually recalculate, readjust and execute hedges in an efficient and
        timely
        manner. While a Private Fund may enter into hedging transactions to seek
        to
        reduce risk, such transactions may result in a poorer overall performance
        for
        the Private Fund than if it had not engaged in such hedging transactions.
        For a
        variety of reasons, a Private Fund may not seek to establish a perfect
        correlation between the hedging instruments utilized and the portfolio holdings
        being hedged. Such an imperfect correlation may prevent the Private Fund
        from
        achieving the intended hedge or expose the Private Fund to risk of loss.
        A
        Private Fund may determine not to hedge against a particular risk because
        it
        does not regard the probability of the risk occurring to be sufficiently
        high as
        to justify the cost of the hedge. The Investment Management Entities may
        not
        foresee the occurrence of the risk and therefore may not hedge against all
        risks.
  ***We
        are subject to third-party litigation risks attributable to our investment
        management operations that could result in significant liabilities, which
        could
        adversely affect our results of operations, financial condition and
        liquidity.***
  Some
        of
        the tactics that the Private Funds may use involve litigation. The Private
        Funds
        could be a party to lawsuits that they initiate or that are initiated by
        a
        company in which the Private Funds invest, other shareholders, or state and
        federal governmental bodies. There can be no assurance that litigation, once
        begun, would be resolved in favor of the Private Funds.
  In
        addition, we will be exposed to risk of litigation by a Private Fund’s investors
        if the Investment Management Entities’ management of the Private Fund is alleged
        to constitute gross negligence, willful misconduct or dishonesty or breach
        of
        contract or organizational documents. Further, the Private Fund may be subject
        to third-party litigation arising from investors’ dissatisfaction with the
        performance of the Private Fund or based on claims that it improperly exercised
        control or influence over portfolio investments. The Private Funds and the
        Investment Management Entities may also be exposed to the risk of litigation
        or
        investigation by investors or regulators relating to transactions which
        presented conflicts of interest that were not properly addressed. In such
        actions, we would be obligated to bear legal, settlement and other costs
        (which
        may exceed our available insurance coverage). In addition, our rights to
        indemnification from the applicable Private Funds may be
        challenged.
  Certain
        of the Private Funds are incorporated or formed under the laws of the Cayman
        Islands. Cayman Islands laws, particularly with respect to shareholder rights,
        partner rights and bankruptcy, may differ from the laws of the United States
        and
        could change possibly to the detriment of the applicable Private
        Fund.
  ***The
        Private Funds may invest in companies that are based outside of the United
        States, which may expose the Private Funds to additional risks not typically
        associated with investing in companies that are based in the United
        States.***
  Investments
        in securities of non-U.S. issuers (including non-U.S. governments) and
        securities denominated or whose prices are quoted in non-U.S. currencies
        pose,
        to the extent not successfully hedged, currency exchange risks (including
        blockage, devaluation and non-exchangeability), as well as a range of other
        potential risks, which could include expropriation, confiscatory taxation,
        imposition of withholding or other taxes on dividends, interest, capital
        gains
        or other income, political or social instability, illiquidity, price volatility
        and market manipulation. In addition, less information may be available
        regarding securities of non-U.S. issuers, and non-U.S. issuers may not be
        subject to accounting, auditing and financial reporting standards and
        requirements comparable to, or as uniform as, those of U.S. issuers. Transaction
        costs of investing in non-U.S. securities markets are generally higher than
        in
        the United States. There is generally less government supervision and regulation
        of exchanges, brokers and issuers than there is in the United States. The
        Private Funds may have greater difficulty taking appropriate legal action
        in
        non-U.S. courts. Non-U.S. markets also have different
        clearance and settlement procedures which in some markets have at times failed
        to keep pace with the volume of transactions, thereby creating substantial
        delays and settlement failures that could adversely affect the Private Funds’
performance. Investments in non-U.S. markets may result in imposition of
        non-U.S. taxes or withholding on income and gains recognized with respect
        to
        such securities. There can be no assurance that adverse developments with
        respect to such risks will not materially adversely affect the Private Funds’
investments that are held in certain countries or the returns from these
        investments.
  23
 TABLE
            OF CONTENTS
  ***The
        Private Funds’ investments are subject to numerous additional
        risks.***
 
 ·
              Generally,
                  there are few limitations on the execution of the Private Funds’
                  investment activities, which are subject to the sole discretion
                  of the
                  Investment Management Entities.
 
 ·
              A
                  Private Fund may buy or sell (or write) both call options and put
                  options,
                  and when it writes options, it may do so on a covered or an uncovered
                  basis. When the Private Fund sells (or writes) an option, the risk
                  can be
                  substantially greater than when it buys an option. The seller of
                  an
                  uncovered call option bears the risk of an increase in the market
                  price of
                  the underlying security above the exercise price. The risk is
                  theoretically unlimited unless the option is covered. If it is
                  covered,
                  the Private Fund would forego the opportunity for profit on the
                  underlying
                  security should the market price of the security rise above the
                  exercise
                  price. Swaps and certain options and other custom instruments are
                  subject
                  to the risk of non-performance by the swap counterparty, including
                  risks
                  relating to the creditworthiness of the swap counterparty, market
                  risk,
                  liquidity risk and operations risk.
 
 ·
              The
                  Private Funds may engage in short-selling, which is subject to
                  a
                  theoretically unlimited risk of loss because there is no limit
                  on how much
                  the price of a security may appreciate before the short position
                  is closed
                  out. The Private Funds may be subject to losses if a security lender
                  demands return of the borrowed securities and an alternative lending
                  source cannot be found or if the Private Funds are otherwise unable
                  to
                  borrow securities that are necessary to hedge its
                  positions.
 
 ·
              The
                  Private Funds may effect transactions through over-the-counter
                  or
                  interdealer markets. The participants in such markets are typically
                  not
                  subject to credit evaluation and regulatory oversight as are members
                  of
                  exchange-based markets. This exposes the Private Funds to the risk
                  that a
                  counterparty will not settle a transaction in accordance with its
                  terms
                  and conditions because of a dispute over the terms of the contract
                  (whether or not*bona
                  fide*)
                  or because of a credit or liquidity problem, thus causing the Private
                  Fund
                  to suffer a loss. Such “counterparty risk” is accentuated for contracts
                  with longer maturities where events may intervene to prevent settlement,
                  or where a Private Fund has concentrated its transactions with
                  a single or
                  small group of its counterparties. The Private Funds are not restricted
                  from dealing with any particular counterparty or from concentrating
                  any or
                  all of the Private Funds transactions with one
                  counterparty.
 
 ·
              Credit
                  risk may arise through a default by one of several large institutions
                  that
                  are dependent on one another to meet their liquidity or operational
                  needs,
                  so that a default by one institution causes a series of defaults
                  by other
                  institutions. This systemic risk may materially adversely affect
                  the
                  financial intermediaries (such as prime brokers, clearing agencies,
                  clearing houses, banks, securities firms and exchanges) with which
                  the
                  Private Funds interact on a daily
                  basis.
 
 ·
              The
                  efficacy of investment and trading strategies depends largely on
                  the
                  ability to establish and maintain an overall market position in
                  a
                  combination of financial instruments. The Private Funds’ trading orders
                  may not be executed in a timely and efficient manner due to various
                  circumstances, including systems failures or human error. In such
                  event,
                  the Private Funds might only be able to acquire some but not all
                  of the
                  components of the position, or if the overall positions were to
                  need
                  adjustment, the Private Funds might not be able to make such adjustment.
                  As a result, the Private Funds would not be able to achieve the
                  market
                  position selected by the Investment Management Entities and might
                  incur a
                  loss in liquidating their position.
  24
 TABLE
            OF CONTENTS
  **Metals
        Operations**
  ***The
        principal markets served by our scrap metals operations are highly competitive.
        We may have difficulty competing with companies that have a lower cost structure
        than ours.***
  Our
        scrap
        metals business operates in a highly competitive environment. We primarily
        provide services to industrial companies. Many other companies offer the
        same or
        similar services and compete with our metals business on a number of bases
        including, but not limited to: (i) price; (ii) quality of service; (iii)
        proximity to the consumer; (iv) proximity to sources of supply; (v) local
        or
        regional presence; (vi) technology; (vii) safety performance; and (viii)
        financial strength. Many of these competitors have greater financial resources
        than we do either nationally or in the particular locale in which they operate.
        Some of these competitors are larger and have more diverse businesses than
        we
        do. In addition, we also face increased competition from steel mills that
        are
        vertically integrated into the scrap metal business. Some of our foreign
        competitors may be able to pursue business opportunities without regard for
        the
        laws and regulations with which we must comply, such as environmental
        regulations. These companies may have a lower cost structure, more operating
        flexibility and consequently they may be able to offer better prices and
        more
        services than we can. We cannot assure you that we will be able to compete
        successfully with these companies. In addition to larger companies, we compete
        with many smaller competitors operating locally in this highly fragmented
        market. Some of the companies may have lower operating costs and may be able
        to
        compete more effectively on price.
  ***Prices
        of commodities are volatile and markets are
        competitive.***
  We
        are
        exposed to commodity price risk during the period that we have title to products
        that are held in inventory for processing and/or resale. Prices of commodities,
        including scrap metals, can be volatile due to numerous factors beyond our
        control, including:
 
 ·
              general
                  economic conditions;
 
 ·
              labor
                  costs;
 
 ·
              competition;
 
 ·
              financial
                  condition of our major customers;
 
 ·
              access
                  and costs associated with transportation
                  systems;
 
 ·
              the
                  availability of imports;
 
 ·
              the
                  availability and relative pricing of scrap metal substitutes;
                  and
 
 ·
              import
                  duties, ocean freight costs, tariffs and currency exchange
                  rates.
  In
        an
        increasing price environment for raw materials, competitive conditions may
        limit
        our ability to pass on price increases to our consumers. In a decreasing
        price
        environment for processed scrap, we may not have the ability to fully recoup
        the
        cost of raw scrap metal we process and sell to our customers. New entrants
        into
        our markets could result in higher purchase prices for raw materials and
        lower
        margins from our scrap metals. Prices in the scrap metal industry are
        established and adjusted monthly by the major steel producers. The price
        of
        ferrous scrap is a significant factor influencing the profitability of the
        scrap
        metals industry.
  ***Increases
        in steel imports could adversely affect the demand for scrap metals
        domestically.***
  Our
        scrap
        metals operations may be adversely affected by increases in steel imports
        into
        the United States, which will have an adverse impact on domestic steel
        production and a corresponding adverse impact on the demand for scrap metals
        domestically. Additionally, our scrap metals business could be negatively
        affected by strengthening in the U.S. dollar or increased freight costs which
        could negatively impact export sales and a stronger U.S. dollar could also
        attract imports of scrap or scrap substitutes, reducing demand for our scrap
        metals.
  ***A
        significant increase in the use of scrap metals alternatives by consumers
        of
        processed scrap metals could reduce demand for our
        products.***
  During
        periods of high demand for scrap metals, tightness can develop in the supply
        and
        demand for ferrous scrap. The relative scarcity of ferrous scrap, particularly
        prime or industrial grades, and its high price during
        such periods have created opportunities for producers of alternatives to
        scrap
        metals, such as pig iron and direct reduced iron pellets and others. Although
        these alternatives have not been a major factor in the industry to date,
        we
        cannot assure you that the use of alternatives to scrap metals may not
        proliferate in the future if the prices for scrap metals rise, if the supplies
        of available unprepared ferrous scrap tighten or if costs to import scrap
        decline precipitously.
  25
 TABLE
            OF CONTENTS
  ***The
        profitability of our scrap recycling operations depends, in part, on the
        availability of an adequate source of supply.***
  As
        part
        of our scrap metals operations, we procure scrap inventory from numerous
        sources. These suppliers generally are not bound by long-term contracts and
        have
        no obligation to sell scrap metals to us. In periods of low industry prices,
        suppliers may elect to hold scrap to wait for higher prices or intentionally
        slow their scrap collection activities. If a substantial number of scrap
        suppliers cease selling scrap metals to us, our scrap metals operations could
        be
        materially and adversely affected. In addition, a slowdown of industrial
        production in the United States would reduce the supply of industrial grades
        of
        scrap metal to the scrap metals recycling industry, resulting in our metals
        operations having less scrap to process and market.
  ***Our
        scrap metals operations present significant risk of injury or
        death.***
  Because
        of the heavy industrial activities conducted at our facilities, there exists
        a
        risk of serious injury or death to our employees or other visitors
        notwithstanding the safety precautions we take. Our scrap metals operations
        are
        subject to regulation by federal, state and local agencies responsible for
        employee health and safety, including the Occupational Safety and Health
        Administration. While we have in place policies to minimize such risks, we
        may
        nevertheless be unable to avoid material liabilities for any death or injury
        that may occur in the future and these types of incidents may have a material
        adverse effect on our scrap metals operations.
  ***Our
        scrap metals operations are subject to stringent regulations, particularly
        under
        applicable environmental laws.***
  We
        are
        subject to comprehensive local, state and federal statutory and regulatory
        environmental requirements relating to, among others:
 
 ·
              the
                  acceptance, storage, handling and disposal of solid, hazardous
                  and Toxic
                  Substances Control Act waste;
 
 ·
              the
                  discharge of materials into the
                  air;
 
 ·
              the
                  management and treatment of wastewater and storm
                  water;
 
 ·
              the
                  remediation of soil and groundwater
                  contamination;
 
 ·
              the
                  restoration of natural resource damages;
                  and
 
 ·
              the
                  protection of our employees’ health and
                  safety.
  We
        believe that we are currently in material compliance with applicable statutes
        and regulations governing the protection of human health and the environment,
        including employee health and safety. We can give you no assurance, however,
        that we will continue to be in material compliance or avoid material fines,
        penalties and expenses associated with compliance issues in the
        future.
  Such
        laws
        and regulations also require manifests to be completed and delivered in
        connection with any shipment of prescribed materials so that the movement
        and
        disposal of such materials can be traced and the persons responsible for
        any
        mishandling of such materials identified. Regulatory requirements may also
        be
        imposed as conditions of operating permits or licenses both initially and
        upon
        renewal or modification. As part of our scrap metals business, we must properly
        remove, handle, recycle or dispose of waste materials or incur liability.
        Transportation, transfer, storage and disposal of waste are difficult and
        accidents may occur. These laws and regulations are stringent and are likely
        to
        become more stringent. Existing and new laws and regulations may require
        our
        scrap metals operations to modify, supplement, replace or curtail its operating
        methods or to modify or replace facilities or equipment at costs that may
        be
        substantial without any corresponding increase in revenues.
  26
 TABLE
            OF CONTENTS
  Hazardous
        substances are present in some of the processing, transfer and storage
        facilities owned or leased by our scrap metal business and landfill facilities
        used by our scrap metals business. Remediation may be required at these sites
        at
        substantial cost. We cannot assure you that the ultimate cost and expense
        of
        corrective action will not substantially exceed any reserves and have a material
        adverse impact on our scrap metals operations. In addition, governments have
        from time to time required companies to remediate sites where materials were
        properly disposed because those governments have instituted higher
        standards.
  We
        are
        required to obtain, and must comply with, various permits and licenses to
        conduct our scrap metals operations. Failure to obtain or violations of any
        permit or license, if not remedied, could result in our incurring substantial
        fines, suspension of our scrap metals operations or closure of a site. Further,
        our scrap metals operations are conducted primarily outdoors and as such,
        depending on the nature of the ground cover, involve the risk of releases
        of
        wastes and other regulated materials to the soil and, possibly, to groundwater.
        From time to time, as part of our continuous improvement programs, we incur
        costs to improve environmental control systems.
  ***Our
        scrap metals operations may be subject to public opposition and adverse
        publicity that could delay or limit our scrap metals development and
        expansion.***
  A
        high
        level of public concern exists over industrial by-products recovery operations,
        including the location and operation of transfer, processing, storage and
        disposal facilities and the collection, processing or handling of industrial
        by-products and waste materials, particularly hazardous materials. Zoning,
        permit and licensing applications and proceedings and regulatory enforcement
        proceedings are all matters open to public scrutiny and comment. As a result,
        from time to time, our scrap metals operations may be subject to citizen
        opposition and adverse publicity that may have a negative effect on operations
        and delay or limit the expansion and developing of operating properties,
        and
        could have a material adverse effect on our scrap metals operation.
  ***We
        may be unable to obtain adequate environmental
        insurance.***
  Our
        scrap
        metals business is subject to potential liability for personal injuries and
        property damage caused by releases of hazardous substances and for remediation
        of risks posed by hazardous substances. Consistent with industry trends,
        we may
        be unable to obtain an adequate amount of environmental impairment insurance
        for
        our scrap metals business at a reasonable premium to cover liability to third
        persons for environmental damage. Accordingly, if our scrap metals operations
        were to incur liability for environmental damage either not provided for
        under
        such coverage or in excess of such coverage, our scrap metals operations
        could
        be materially or adversely affected.
  **Real
        Estate Operations**
  ***Our
        investment in property development may be more costly than
        anticipated.***
  We
        have
        invested and expect to continue to invest in unentitled land, undeveloped
        land
        and distressed development properties. These properties involve more risk
        than
        properties on which development has been completed. Unentitled land may not
        be
        approved for development. These investments do not generate any operating
        revenue, while costs are incurred to obtain government approvals and develop
        the
        properties. Construction may not be completed within budget or as scheduled
        and
        projected rental levels or sales prices may not be achieved and other
        unpredictable contingencies beyond our control could occur. We will not be
        able
        to recoup any of such costs until such time as these properties, or parcels
        thereof, are either disposed of or developed into income-producing assets.
        In
        addition, we may not be able to recoup our investment in our inventory of
        unsold
        residential units and credit market disruptions may negatively impact commercial
        real estate values.
  ***We
        may be subject to environmental liability as an owner or operator of development
        and rental real estate.***
  Under
        various federal, state and local laws, ordinances and regulations, an owner
        or
        operator of real property may become liable for the costs of removal or
        remediation of certain hazardous substances, pollutants and contaminants
        released on, under, in or from its property. These laws often impose liability
        without regard to whether the owner or operator knew of, or was responsible
        for,
        the release of such substances. To the
        extent any such substances are found in or on any property invested in by
        us, we
        could be exposed to liability and be required to incur substantial remediation
        costs. The presence of such substances or the failure to undertake proper
        remediation may adversely affect the ability to finance, refinance or dispose
        of
        such property. We generally conduct a Phase I environmental site assessment
        on
        properties in which we are considering investing. A Phase I environmental
        site
        assessment involves record review, visual site assessment and personnel
        interviews, but does not typically include invasive testing procedures such
        as
        air, soil or groundwater sampling or other tests performed as part of a Phase
        II
        environmental site assessment. Accordingly, there can be no assurance that
        any
        assessments we conduct will disclose all potential liabilities or that future
        property uses or conditions or changes in applicable environmental laws and
        regulations or activities at nearby properties will not result in the creation
        of environmental liabilities with respect to a property.
  27
 TABLE
            OF CONTENTS
  **Home
        Fashion Operations**
  ***Pending
        legal proceedings may result in our ownership of WPI’s common stock being
        reduced to less than 50%. A legal action in Delaware challenges the issuance
        to
        us of the preferred stock of WPI. Uncertainties arising from these proceedings
        may adversely affect WPI’s operations and prospects and the value of our
        investment in it.***
  As
        of
        December 31, 2007, we owned approximately 67.7% of the outstanding shares
        of
        common stock and 100% of the preferred stock of WPI. As a result of a decision
        of the U.S. District Court for the Southern District of New York reversing
        certain provisions of the Bankruptcy Court order pursuant to which we acquired
        our ownership of a majority of the common stock of WPI, the proceedings in
        the
        Bankruptcy Court on remand and the proceedings filed in the Court of Chancery
        in
        the State of Delaware, our percentage of the outstanding shares of common
        stock
        of WPI could be reduced to less than 50% and perhaps substantially less and
        our
        ownership of the preferred stock of WPI could also be affected.
  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 December 31, 2007 and WPI’s results
        of operations for the period from the date of acquisition (August 8, 2005)
        through December 31, 2007. 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 financial
        statements could be materially different than as presented as of December
        31,
        2007, December 31, 2006 and December 31, 2005 and for the periods then
        ended.
  ***We
        cannot assure you that WPI will be able to operate
        profitably.***
  WPI
        operated at a loss during fiscal 2007, and we expect that WPI will continue
        to
        operate at a loss during fiscal 2008. We cannot assure you that it will be
        able
        to operate profitably in the future.
  ***The
        loss of any of WPI’s large customers could have an adverse effect on WPI’s
        business.***
  During
        fiscal 2007, WPI’s six largest customers accounted for approximately 51% of its
        net sales. Other retailers have indicated that they intend to significantly
        increase their direct sourcing of home fashion products from foreign sources.
        The loss of any of WPI’s largest accounts, or a material portion of sales to
        those accounts, would have an adverse effect upon WPI’s business, which could be
        material.
  ***A
        portion of WPI’s sales are derived from licensed designer brands. The loss of a
        significant license could have an adverse effect on WPI’s
        business.***
  A
        portion
        of WPI’s sales is derived from licensed designer brands. The license agreements
        for WPI’s designer brands generally are for a term of two or three years. Some
        of the licenses are automatically renewable for additional periods, provided
        that sales thresholds set forth in the license agreements are met. The loss
        of a
        significant license could have an adverse effect upon WPI’s business, which
        could be material. Under certain circumstances, these licenses can be terminated
        without WPI’s consent due to circumstances beyond WPI’s control.
  28
 TABLE
            OF CONTENTS




***A
      shortage of the principal raw materials WPI uses to manufacture its products
      could force WPI to pay more for those materials and, possibly, cause WPI to
      increase its prices, which could have an adverse effect on WPI’s
      operations.***




Any
      shortage in the raw materials WPI uses to manufacture its products could
      adversely affect its operations. The principal raw materials that WPI uses
      in
      the manufacture of its products are cotton of various grades and staple lengths
      and polyester and nylon in staple and filament form. Since cotton is an
      agricultural product, its supply and quality are subject to weather patterns,
      disease and other factors. The price of cotton is also influenced by supply
      and
      demand considerations, both domestically and worldwide, and by the cost of
      polyester. Although WPI has been able to acquire sufficient quantities of cotton
      for its operations in the past, any shortage in the cotton supply by reason
      of
      weather patterns, disease or other factors, or a significant increase in the
      price of cotton, could adversely affect its operations. The price of man-made
      fibers, such as polyester and nylon, is influenced by demand, manufacturing
      capacity and costs, petroleum prices, cotton prices and the cost of polymers
      used in producing these fibers. In particular, the effect of increased energy
      prices may have a direct impact upon the cost of dye and chemicals, polyester
      and other synthetic fibers. Any significant prolonged petrochemical shortages
      could significantly affect the availability of man-made fibers and could cause
      a
      substantial increase in demand for cotton. This could result in decreased
      availability of cotton and possibly increased prices and could adversely affect
      WPI’s operations.




***The
      home fashion industry is highly competitive and WPI’s success depends on its
      ability to compete effectively in the market.***




The
      home
      fashion industry is highly competitive. WPI’s future success will, to a large
      extent, depend on its ability to remain a low-cost producer and to remain
      competitive. WPI competes with both foreign and domestic companies on, among
      other factors, the basis of price, quality and customer service. In the home
      fashion market, WPI competes with many companies. WPI’s future success depends
      on its ability to remain competitive in the areas of marketing, product
      development, price, quality, brand names, manufacturing capabilities,
      distribution and order processing. We cannot assure you of WPI’s ability to
      compete effectively in any of these areas. Any failure to compete effectively
      could adversely affect WPI’s sales and, accordingly, its operations.
      Additionally, the easing of trade restrictions over time has led to growing
      competition from low priced products imported from Asia and Latin America.
      The
      lifting of import quotas in 2005 has accelerated the loss of WPI’s market share.
      There can be no assurance that the foreign competition will not grow to a level
      that could have an adverse effect upon WPI’s ability to compete
      effectively.




***WPI
      has increased the percentage of its products that are made outside of the United
      States and is subject to additional risks relating to doing business
      overseas.***




WPI
      has
      increased the percentage of its products that are made overseas and faces
      additional risks associated with these efforts. Adverse factors that WPI may
      encounter include:




·
            logistical
                challenges caused by distance;




·
            language
                and cultural differences;





·
            legal
                and regulatory restrictions;





·
            the
                difficulty of enforcing agreements with overseas
                suppliers;





·
            currency
                exchange rate fluctuations;





·
            political
                and economic instability; and





·
            potential
                adverse tax consequences.




***WPI
      continues to restructure its operations but these efforts may not be
      successful.***




To
      improve WPI’s competitive position, WPI 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 facilities. There is no assurance that WPI will be successful in its
      continuing restructuring efforts, the failure of which could adversely impact
      WPI’s profitability and ability to compete effectively.




29
 TABLE
          OF CONTENTS




***There
      has been consolidation of retailers of WPI’s products that may reduce its
      profitability.***




Retailers
      of consumer goods have consolidated and become more powerful over time. As
      buying power has become more concentrated, pricing pressure on vendors has
      grown. With the ability to buy imported products directly from foreign sources,
      retailers’ pricing leverage has increased and also allowed for growth in private
      label brands that displace and compete with WPI proprietary brands. Retailers’
pricing leverage has resulted in a decline in WPI’s unit pricing and margins and
      resulted in a shift in product mix to more private label programs. If WPI is
      unable to diminish the decline in its pricing and margins, it may not be able
      to
      achieve or maintain profitability.




***The
      retail industry in the U.S. is highly competitive and subject to the various
      economic cycles of consumer demand. WPI is subject to the retailers’ demand for
      products as manifest by underlying consumer spending.***




Retailers
      of consumer goods are dependent upon consumer spending. In turn, consumer
      spending is broadly a function of the overall economic environment. Given the
      reported weaknesses, both in the overall economy and of comparable retail store
      sales, WPI’s financial results are subject to changes in the level of consumer
      retail spending for home textile products.




***WPI
      may incur adverse financial consequences if its retail store customers
      experience adverse financial results.***




To
      the
      extent that WPI’s retail store company customers are faced with financial
      difficulties due to weakened consumer demand, depending upon the amount of
      business that WPI does with any such customer, WPI’s financial results may be
      adversely affected. This adverse impact could arise out of the potential
      recoverability of a receivable from a financially impaired retail store customer
      or from this customer doing less business with WPI or other of its vendors.
      WPI
      believes it maintains adequate receivable reserves for specifically known events
      and an overall general provision for unknown circumstances. However, depending
      upon the magnitude of any future unknown event, these reserves may or may not
      be
      sufficient.




***WPI
      is subject to various federal, state and local environmental and health and
      safety laws and regulations. If it does not comply with these regulations,
      it
      may incur significant costs in the future to become
      compliant.***




WPI
      is
      subject to various federal, state and local laws and regulations governing,
      among other things, the discharge, storage, handling, usage and disposal of
      a
      variety of hazardous and non-hazardous substances and wastes used in, or
      resulting from, its operations, including potential remediation obligations
      under those laws and regulations. WPI’s operations are also governed by federal,
      state and local laws and regulations relating to employee safety and health
      which, among other things, establish exposure limitations for cotton dust,
      formaldehyde, asbestos and noise, and which regulate chemical, physical and
      ergonomic hazards in the workplace. Consumer product safety laws, regulations
      and standards at the federal and state level govern the manufacture and sale
      of
      products by WPI. Although WPI does not expect that compliance with any of these
      laws and regulations will adversely affect its operations, we cannot assure
      you
      that regulatory requirements will not become more stringent in the future or
      that WPI will not incur significant costs to comply with those
      requirements.




**Holding
      Company Investments**




***We
      may not be able to identify suitable investments, and our investments may not
      result in favorable returns or may result in losses.***




Our
      partnership agreement allows us to take advantage of investment opportunities
      we
      believe exist outside of our operating businesses. The equity securities in
      which we may invest may include common stock, preferred stock and securities
      convertible into common stock, as well as warrants to purchase these securities.
      The debt securities in which we may invest may include bonds, debentures, notes
      or non-rated mortgage-related securities, municipal obligations, bank debt
      and
      mezzanine loans. Certain of these securities may include lower rated or
      non-rated securities which may provide the potential for higher yields and
      therefore may entail higher risk and may include the securities of bankrupt
      or
      distressed companies. In addition, we may
      engage in various investment techniques, including derivatives, options and
      futures transactions, foreign currency transactions, “short” sales and
      leveraging for either hedging or other purposes. We may concentrate our
      activities by owning significant or controlling interest in certain investments.
      We may not be successful in finding suitable opportunities to invest our cash
      and our strategy of investing in undervalued assets may expose us to numerous
      risks.




30
 TABLE
          OF CONTENTS




Icahn
      Enterprises has entered into a covered affiliate agreement, pursuant to which
      we
      (and certain of its subsidiaries, including us) have agreed, in general, to
      be bound by certain restrictions on our investments in any assets that the
      General Partners deem suitable for the Private Funds, other than government
      and
      agency bonds, cash equivalents and investments in non-public companies. We
      and
      our subsidiaries will not be restricted from making investments in the
      securities of certain companies in which Mr. Icahn or companies he controlled
      had an interest in as of the date of the initial launch of the Private Funds,
      and companies in which we had an interest as of the date of the acquisition
      on
      August 8, 2007 of our investment management operations. We and our subsidiaries,
      either alone or acting together with a group, will not be restricted from (i)
      acquiring all or any portion of the assets of any public company in connection
      with a negotiated transaction or series of related negotiated transactions
      or
      (ii) engaging in a negotiated merger transaction with a public company and,
      pursuant thereto, conducting and completing a tender offer for securities of
      the
      company.




***Our
      investments may be subject to significant
      uncertainties.***




Our
      investments may not be successful for many reasons including, but not limited
      to:





·
            fluctuations
                of interest rates;





·
            lack
                of control in minority investments;





·
            worsening
                of general economic and market
                conditions;





·
            lack
                of diversification;





·
            fluctuations
                of U.S. dollar exchange rates; and





·
            adverse
                legal and regulatory developments that may affect particular
                businesses.




31
 TABLE
          OF CONTENTS




**Item
      1B. Unresolved Staff Comments.**




There
      are
      no unresolved SEC staff comments.




**Item
      2. Properties**




**Metals**




PSC
      Metals is headquartered in Mayfield Heights, Ohio, and operates 27 yards, three
      mill service operations and one pipe storage center. PSC Metals’ facilities are
      strategically located in high volume scrap markets throughout the upper
      Midwestern and Southeastern United States, placing PSC Metals in proximity
      to
      both suppliers and consumers of scrap metals.




**Real
      Estate**




As
      of
      December 31, 2007, we owned 32 retail, office and industrial properties, the
      majority of which are net leased to single corporate tenants. These primarily
      consist of fee and leasehold interests in 16 states. Approximately 88% of these
      properties are currently net-leased, 3% are operating properties and 9% are
      vacant as of December 31, 2007.




We
      own,
      primarily through our subsidiary, Bayswater Development LLC, residential
      development properties. Bayswater, a real estate investment, management and
      development company, focuses primarily on the construction and sale of
      single-family houses, multi-family homes and lots in subdivisions and planned
      communities and raw land for residential development.




Our
      residential development properties consist of our New Seabury Resort in Cape
      Cod, Massachusetts, the waterfront communities of Grand Harbor and Oak Harbor
      in
      Vero Beach, Florida and communities in Westchester County, New York and Naples,
      Florida. These communities include properties in various stages of development.
      We also own 400 acres of developable land adjacent to Grand Harbor.




At
      our
      New Seabury Resort we operate a golf club, with two championship golf courses,
      the Popponesset Inn, a private beach club, a fitness center and a tennis
      facility.




We
      also
      own three golf courses, a tennis complex, fitness center, beach club and
      clubhouses and an assisted living facility located adjacent to the Intercoastal
      Waterway in Vero Beach, Florida.




**Home
      Fashion**




WPI’s
      properties are indirectly owned or leased through its subsidiaries. Its
      properties include approximately 85,425 square feet of leased office, showroom
      and design space in New York, New York. WPI leases approximately 33,663 square
      feet elsewhere for other administrative, storage and office space. WPI owns
      and
      utilizes four manufacturing facilities located in Alabama, Florida, Maine and
      North Carolina which contain, in the aggregate, approximately 1.0 million square
      feet. WPI leases and utilizes two manufacturing facilities which contain, in
      the
      aggregate, approximately 237,000 square feet. In 2007, WPI closed the following
      manufacturing operations, including: Carter bath facility; Lanier, bath
      facility; Opelika, bed facility; Abbeville, bed facility; Marianna, bed
      facility; Bob Stevens, bath facility; Bob Stevens, bath facility; WestPoint
      Graphics; Transportation Center; Grifftex Chemicals; and 30 retail outlet
      stores. Four manufacturing facilities remain after these closures. WPI also
      sold
      its facilities in Burlington, NC and Clemson, SC.




WPI
      also
      owns a manufacturing facility in Bahrain containing approximately 764,000 square
      feet. The facility is located on land leased from the Kingdom of Bahrain under
      various long-term leases.




WPI
      owns
      and operates six distribution centers and warehouses for its operations which
      contain, in the aggregate, approximately two and a half million square feet
      of
      floor space and leases and operates one warehouse containing approximately
      280,000 square feet of floor space.




**Gaming**




Until
      the
      consummation of the sale on February 20, 2008, through our ownership interest
      in
      ACEP, we owned and operated four hotel and casino properties in Nevada. The
      Stratosphere Casino Hotel & Tower, located in Las Vegas, Nevada, is centered
      around the Stratosphere Tower and contains the tallest free-standing observation
      tower in the United States. The hotel and entertainment facility is located
      on
      34 acres, has 2,444 rooms and suites, an 80,000 square foot casino and related
      amenities.




32
 TABLE
          OF CONTENTS




We
      also
      owned Arizona Charlie’s Decatur and Arizona Charlie’s Boulder. Arizona Charlie’s
      Decatur is located on 17 acres, has 258 hotel rooms and a 52,000 square foot
      casino and related amenities. Arizona Charlie’s Boulder is located on 24 acres,
      has 303 hotel rooms and a 47,000 square foot casino and related
      amenities.




Our
      fourth property was the Aquarius located on approximately 18 acres next to
      the
      Colorado River in Laughlin, Nevada. The Aquarius features the largest hotel
      in
      Laughlin with 1,907 hotel rooms, a 57,000 square foot casino, seven dining
      options, 2,420 parking spaces, over 35,000 square feet of meeting space and a
      3,300-seat outdoor amphitheater.




**Item
      3. Legal Proceedings.**




We
      are
      from time to time party to various legal proceedings arising out of our
      businesses. We believe however, that other than the proceedings discussed below,
      there are no proceedings pending or threatened against us which, if determined
      adversely, would have a material adverse effect on our business, financial
      condition, results of operations or liquidity.




**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.




***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.




33
 TABLE
          OF CONTENTS




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.




**Lear
      Corporation**




Icahn
      Enterprises was named as a defendant in various actions filed in connection
      with
      its merger agreement with Lear Corporation, or Lear. The Lear shareholders
      rejected the merger and the merger agreement has terminated. Icahn Enterprises
      remains a party to an action filed in the Court of Chancery of the State of
      Delaware challenging the payment to Icahn Enterprises of a break-up fee as
      provided in the merger agreement. Icahn Enterprises intends to vigorously defend
      the Delaware action but we cannot predict the outcome of the
      action.




**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 individual including one of
      our
      current directors. Icahn Enterprises indirectly beneficially owns 50.1% of
      the
      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.
      As a
      result, on November 12, 2007, NEGI’s board of directors concluded that the
      liquidation and dissolution of NEGI, or the Dissolution, and the distribution
      of
      NEGI’s assets, or the Distribution, in connection therewith was in the best
      interests of the NEGI stockholders when compared to other alternatives. A
      special meeting of NEGI’s shareholders was scheduled for February 7, 2008 for
      all shareholders of record on December 27, 2007, or the Record Date, to consider
      and vote Dissolution and the Distribution.




As
      a
      result of the filing of the complaint, NEGI adjourned the special meeting to
      March 14, 2008 to permit the shareholders of NEGI to evaluate the
      lawsuit.




On
      March
      14, 2008, the shareholders voted to approve the Dissolution and on March
      26, 2008 NEGI filed a Form 15 with the Securities and Exchange Commission
      for the purpose of deregistering its securities under the Exchange Act. As
      a result, NEGI suspended the filing of any further periodic reports under
      the Exchange Act and, absent contrary action by the SEC, its status as a
      public company will be terminated. 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, the lawsuit is in its early stages and we cannot predict
      the outcome of the litigation on us or on our interest in NEGI.




**Item
      4. Submission of Matters to a Vote of Security
      Holders.**




Not
      applicable.




34
 TABLE
          OF CONTENTS




**PART
      II**




**Item
      5. Market for Registrant’s Common Equity, Related Security Holder
      Matters and Issuer Purchases of Equity Securities.**




There
        is
        no public market for our common equity. Our 1% general partner, Icahn
        Enterprises GP, and our 99% limited partner, Icahn Enterprises, own all of
        our
        equity. Mr. Icahn and affiliates of Mr. Icahn beneficially own approximately
        91.2% of Icahn Enterprises’ limited partnership units and 100% of the stock of
        Icahn Enterprises GP.




**Distributions**




During
      fiscal 2007, Icahn Enterprises paid four quarterly distributions to holders
      of its depositary units. The first distribution was $0.10 per depositary
      unit and the remaining three distributions were each $0.15 per depositary
      unit.




On
      February 29, 2008 the board of directors of Icahn Enterprises GP approved an
      increase in the quarterly cash distribution from $0.15 to $0.25 per unit
      on Icahn Enterprises’ depositary
      units
      payable in the first quarter of fiscal 2008. The distribution is payable on
      April 1, 2008 to depositary unitholders of record at the close of business
      on
      March 18, 2008.




The
      declaration and payment of distributions is reviewed quarterly by Icahn
      Enterprises GP’s board of directors based upon a review of their balance sheet
      and cash flow, the ratio of current assets to current liabilities, their
      expected capital and liquidity requirements, the provisions of their partnership
      agreement and provisions in their financing arrangements governing
      distributions, and keeping in mind that limited partners subject to U.S. federal
      income tax have recognized income on their earnings without receiving
      distributions that could be used to satisfy any resulting tax obligations.
      The
      payment of future distributions will be determined by the board of directors
      quarterly, based upon the factors described above and other factors that it
      deems relevant at the time that declaration of a distribution is considered.
      There can be no assurance as to whether or in what amounts any future
      distributions might be paid.




35
 TABLE
          OF CONTENTS




**Item
      6. Selected Financial Data.**




**SELECTED
      FINANCIAL DATA**




The
      following table contains our selected historical consolidated financial data,
      which should be read in conjunction with our consolidated financial statements
      and the related notes thereto, and “Management’s Discussion and Analysis of
      Financial Condition and Results of Operations” contained in this annual report
      on Form 10-K. The selected historical consolidated financial data as of December
      31, 2007 and 2006 and for the years ended December 31, 2007, 2006 and 2005
      have
      been derived from our audited consolidated financial statements at those dates
      and for those periods, contained elsewhere in this annual report on Form 10-K.
      The selected historical consolidated financial data as of December 31, 2005,
      2004 and 2003 and for the years ended December 31, 2004 and 2003 have been
      derived from our audited consolidated financial statements at those dates and
      for those periods, not contained in this annual report on Form 10-K, as adjusted
      retrospectively for (1) our acquisitions of PSC Metals and the Partnership
      Interests, which consist of the general partnership interests in the General
      Partners and New Icahn Management and which now constitute our Investment
      Management business and (2) reclassifications of our Oil and Gas and Atlantic
      City and Nevada gaming properties, certain real estate operations and the retail
      stores within our Home Fashion segment’s results of operations as discontinued
      operations.




**For
                the Year Ended December 31,******
            
            **2007**
            
            **2006**
            
            **2005**
            
            **2004**
            
            **2003******
            
            (In
                000s Except Per Unit Amounts)**Statement
                of Operations Data:**Total
                revenues
            
            $
            2,487,626
            
            $
            3,003,964
            
            $
            1,524,705
            
            $
            852,446
            
            $
            44,983Income
                from continuing operations
            
            $
            223,699
            
            $
            315,267
            
            $
            58,043
            
            $
            159,002
            
            $
            18,085Total
                income from discontinued operations, net of income taxes
            
            $
            91,047
            
            $
            798,541
            
            $
            29,601
            
            $
            110,370
            
            $
            52,784Earnings
                before cumulative effect of accounting change
            
            $
            314,746
            
            $
            1,113,808
            
            $
            87,644
            
            $
            269,372
            
            $
            70,869Cumulative
                effect of accounting change
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            1,912Net
                earnings
            
            $
            314,746
            
            $
            1,113,808
            
            $
            87,644
            
            $
            269,372
            
            $
            72,781Net
                earnings (loss) attributable to:Limited
                partner
            
            $
            110,385
            
            $
            518,067
            
            $
            (15,237
            )
            $
            137,232
            
            $
            54,014General
                partner
            
            
            204,361
            
            
            595,741
            
            
            102,881
            
            
            132,140
            
            
            18,767Net
                earnings
            
            $
            314,746
            
            $
            1,113,808
            
            $
            87,644
            
            $
            269,372
            
            $
            72,781




36
 TABLE
          OF CONTENTS




**December
                31,******
            
            **2007**
            
            **2006**
            
            **2005**
            
            **2004**
            
            **2003******
            
            (In
                000s)**Balance
                Sheet Data:**Cash
                and cash equivalents
            
            $
            2,112,832
            
            $
            1,884,376
            
            $
            366,290
            
            $
            787,147
            
            $
            410,116Investments
            
            
            511,045
            
            
            698,345
            
            
            814,618
            
            
            350,527
            
            
            165,477Property,
                plant and equipment, net
            
            
            513,304
            
            
            535,273
            
            
            497,033
            
            
            600,262
            
            
            298,784Total
                assets
            
            
            12,442,831
            
            
            9,286,862
            
            
            7,261,345
            
            
            3,064,717
            
            
            2,172,561Long-term
                debt
            
            
            2,020,583
            
            
            930,083
            
            
            892,540
            
            
            730,185
            
            
            303,043Partners’
                equity
            
            
            2,453,742
            
            
            2,966,729
            
            
            1,866,623
            
            
            1,908,920
            
            
            1,616,524




37
 TABLE
          OF CONTENTS




**Item
      7. 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





·
            Acquisitions





·
            Divestitures





(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 and other income, interest expense and
                income
                tax





·
            Discontinued
                Operations





(3)
            Liquidity
                and Capital Resources





·
            Consolidated
                Liquidity and Capital Resources





·
            Cash
                Flows





·
            Borrowings





·
            Contractual
                Commitments





·
            Metals
                and Home Fashion Purchase Orders





·
            Obligations
                Related to Securities





·
            Off-Balance
                Arrangements





·
            Segment
                Liquidity and Capital Resources




38
 TABLE
          OF CONTENTS





·
            Investment
                Management Operations





·
            All
                Other Operations





·
            Metals





·
            Real
                Estate





·
            Home
                Fashion





·
            Discontinued
                Operations





·
            Distributions





(4)
            Critical
                Accounting Policies and Estimates





(5)
            Forward-Looking
                Statements





(6)
            Certain
                Trends and Uncertainties




*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 Holdings L.P., or Icahn Enterprises Holdings, formerly known
        as
        American Real Estate Holdings Limited Partnership, is a limited partnership
        formed in Delaware on February 17, 1987. We are a diversified holding company
        owning subsidiaries engaged in the following operating businesses: Investment
        Management (effective August 8, 2007), Metals (effective November 5, 2007),
        Real
        Estate and Home Fashion. As of December 31, 2007, we also operated discontinued
        operations, including our former Gaming segment. In addition to our operating
        businesses, we discuss the Holding Company. The Holding Company includes
        the
        unconsolidated results of Icahn Enterprises and Icahn Enterprises Holdings,
        and
        investment activity and expenses associated with the activities of the Holding
        Company.
  Icahn
        Enterprises L.P., or Icahn Enterprises, owns a 99% limited partner interest
        in
        us. Icahn Enterprises G.P., Inc., or Icahn Enterprises GP, owns a 1% general
        partner interest in both us and Icahn Enterprises, representing an aggregate
        1.99% interest in us and Icahn Enterprises. Icahn Enterprises GP is owned
        and
        controlled by Mr. Carl C. Icahn.




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.




***Acquisitions***




*Acquisition
      of Investment Management Business*




As
      discussed elsewhere in this annual report on Form 10-K, on August 8,
      2007, Icahn Enterprises acquired the Partnership Interests, which
      consisted of the general partnership interests in the General Partners and
      New
      Icahn Management. See Part I, Item 1, “Acquisition of Investment Management
      Business,” for further discussion. Icahn Enterprises, our sole limited
      partner, entered into the Contribution Agreement with the Contributors and
      Mr.
      Icahn. Pursuant to the Contribution Agreement, Icahn Enterprises acquired
      general partnership interests in the General Partners, acting as general
      partners of the Onshore Fund and the Offshore Master Funds managed and
      controlled by Mr. Icahn.




Icahn
      Enterprises also acquired the Partnership Interests consisting of the
      general partnership interest in New Icahn Management, a newly formed management
      company that provided certain administrative and back office services
      to the Private Funds. Prior to the acquisition on August 8, 2007, Icahn
      Management performed such services. As referred to herein, the term Investment
      Management Entities includes Icahn Management (for the period prior to the
      acquisition on August 8, 2007) and New Icahn Management (for the period
      subsequent to the acquisition on August 8, 2007 through December 31, 2007)
      and,
      in either case, the General Partners. The Investment Management Entities do
      not
      provide investment advisory or other administrative and back office 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.




39
 TABLE
          OF CONTENTS




The
      total
      initial consideration paid for the acquisition was $810 million of Icahn
      Enterprises’ depositary units. In addition, Icahn Enterprises has agreed to make
      certain earn-out payments to the Contributors over a five-year period payable
      in
      additional Icahn Enterprises’ depositary units based on Icahn Enterprises
      has after-tax earnings from the General Partners and New Icahn Management
      subsequent to the acquisition. There is a potential maximum aggregate earn-out
      (including any catch-up) of $1.121 billion which is subject to achieving total
      after-tax earnings during the five-year period of at least $3.906 billion.
      As of
      December 31, 2007, there has been no earn-out paid to the
      Contributors.




*Acquisition
      of PSC Metals*




On
      November 5, 2007, we acquired, through a subsidiary, all of the issued and
      outstanding capital stock of PSC Metals from Philip, an affiliate of Carl C.
      Icahn, for $335 million in cash. Mr. Icahn indirectly owned a 95.6% interest
      and
      we indirectly owned the remaining 4.4% interest in Philip. PSC Metals is
      principally engaged in the business of collecting, processing and selling
      ferrous and non-ferrous metals. As a result of Mr. Icahn’s and our ownership
      interests in Philip, the former parent of PSC Metals, PSC Metals is considered
      a
      company under common control. Accordingly, the accompanying consolidated
      financial statements and footnotes include the assets and operations of PSC
      Metals for all periods presented.




***Divestitures***




On
      April
      22, 2007, we entered into an agreement to sell our remaining gaming operations,
      which transaction was consummated on February 20, 2008. During the fourth
      quarter of fiscal 2006, we divested our Oil and Gas segment and our Atlantic
      City gaming properties. These segments are discussed below as part of our
      discontinued operations.




**Results
      of Operations**




***Overview***




A
      summary
      of the significant events for fiscal 2007 is as follows:





·
            The
                acquisition of the Investment Management business (i.e., the Partnership
                Interests) on August 8, 2007 for an initial consideration of 8,632,679
                of Icahn Enterprises’ depositary
                units, valued at $810 million;





·
            The
                acquisition of PSC Metals from Philip on November 5, 2007 for a total
                consideration of $335 million in
                cash;





·
            An
                increase in the Investment Management segment’s AUM of $3.5 billion
                compared to December 31, 2006;





·
            The
                issuance of $500 million of additional 7.125% senior unsecured notes
                in
                January 2007;





·
            The
                issuance of $600 million of variable rate notes in April
                2007;





·
            The
                sale of our position in common stock of SandRidge Energy, Inc., or
                SandRidge, for total cash consideration of $243.2 million on April
                4,
                2007;





·
            The
                execution of an agreement to sell ACEP, comprising our remaining
                Gaming
                segment, which transaction was consummated on February 20,
                2008;





·
            Income
                from continuing operations from our Investment Management segment
                of
                approximately $170.2 million due to overall positive returns of the
                Private Funds despite broad, volatile market conditions in fiscal
                2007;
                and





·
            The
                continued restructuring efforts of WPI, including the closure of
                all of
                WPI’s retail stores and related inventory disposal. WPI recorded a charge
                of approximately $14.0 million related to this restructuring effort,
                which
                is included in discontinued
                operations.




40
 TABLE
          OF CONTENTS




A
      summary
      of the significant events for fiscal 2006 is as follows:





·
            The
                sale of our former Oil and Gas operating unit and Atlantic City gaming
                properties in the fourth quarter of fiscal 2006, which resulted in
                a gain
                of $663.7 million;





·
            Enhancement
                of our liquidity — our total Holding Company cash and cash
                equivalents and investments as of December 31, 2006 increased to
                approximately $2.6 billion, as compared to $1.2 billion as of December
                31,
                2005, resulting from the proceeds from the sale of our Oil and Gas
                and
                Atlantic City gaming properties;





·
            Execution
                of a credit agreement providing for additional borrowings by Icahn
                Enterprises of up to $150.0
                million;





·
            The
                acquisition of the Aquarius Casino Resort in Laughlin, Nevada in
                May
                2006;





·
            Increase
                in our investment in WPI through the purchase of $200.0 million of
                preferred stock, the proceeds of which, in part, WPI used to acquire
                a
                manufacturing facility in Bahrain;





·
            Increased
                loss from continuing operations of $61.8 million from our Home Fashion
                segment, of which $44.0 million relates to restructuring costs consisting
                primarily of impairment charges in connection with the closing of
                plants,
                the effect of which on net earnings was offset in part by the $56.4
                million increase in the minority interests’ share in WPI’s
                losses;





·
            Net
                realized and unrealized gains on investments of $91.3 million in
                fiscal
                2006 compared to net realized and unrealized losses on investments
                of
                $21.3 million in fiscal 2005 in our all other operations;
                and





·
            Recording
                $56.4 million of income tax benefits in fiscal 2006 as a result of
                the
                reversal of deferred tax valuation allowances for our Metals segment,
                our
                former Oil and Gas operating unit and our former Atlantic City gaming
                operations.




***Other
      Significant Events***




*Investment
      Management Operations*




Amendments
      to Management Agreements




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.




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% of
      the
      net asset value of each Investor’s (defined below) investment in the Feeder Fund
      or Onshore Fund, as applicable.




The
      Investment Fund LPAs provide, effective January 1, 2008, 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, in the case of the Onshore Fund, each limited partner
      in the Onshore Fund and, in the case of the Feeder Funds, each investor in
      the
      Feeder Funds (excluding certain investors that are not charged fees including
      affiliates of Mr. Icahn) (each, an “Investor”). This allocation is generally
      equal to 0.625% of the balance in each 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 allocation allocated to the General Partners 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) 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 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 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.




41
 TABLE
          OF CONTENTS




Effective
      January 1, 2008, the Contribution Agreement and certain employment agreements
      were amended to accommodate the termination of the management agreements. See,
      Part III, Item 11, “Additional Information Regarding Executive
      Compensation—Employment Agreements,” for further discussion regarding changes to
      Mr. Keith Meister’s and Mr. Vince Intrieri’s employment agreements.




Effective
      January 1, 2008, Icahn Enterprises entered into an agreement with Carl
      C. Icahn, CCI Onshore, CCI Offshore, Icahn Management LP and Icahn Management.
      This agreement, (the “Icahn Amendment Agreement”) amends certain provisions of
      (A) the Contribution Agreement and (B) the Icahn Employment Agreement, as
      defined herein, dated as of August 8, 2007 among Icahn Enterprises, the New
      Icahn Management and Carl Icahn. Pursuant to the Icahn Amendment Agreement,
      the
      reference to “(i) management fees payable to New Icahn Management with respect
      to the Private Funds pursuant to the management agreements in the definition
      of
“Hedge Fund Earnings” in the Contribution Agreement was deleted and replaced
      with “(i) special profits interest allocation made to the Onshore GP and the
      Offshore GP with respect to the Investment pursuant to the limited partnership
      agreement of each Master Fund in effect from time to time. Similarly, the
      references to “management fee” in Section 1(a) and Section 2(a) of Exhibit A of
      the Icahn Employment Agreement were deleted and replaced with “special profits
      interest allocation.” Furthermore, although the obligation of the Onshore Fund
      and the Feeder Funds to pay management fees was terminated, it was agreed in
      the
      Icahn Amendment Agreement provides that Mr. Icahn would continue to be obligated
      to pay a 2% fee on (i) the fifty percent of his annual bonus incentive that
      under the Icahn Employment Agreement is deferred and deemed invested in the
      Private Funds, and (ii) the amount of his personal funds that Mr. Icahn is
      required to keep invested in the Private Funds if prior to August 8, 2012 he,
      for any reason, ceases to serve as Chief Executive Officer of New Icahn
      Management and as the individual primarily responsible for the management of
      the
      Private Funds’ investment portfolios.




*Other*




See
      Note
      18, “Subsequent Events,” of our consolidated financial statements for additional
      information regarding the Private Funds’ capital contributions and withdrawals
      made subsequent to December 31, 2007.




***Consummation
      of ACEP Sale***




On
      February 20, 2008, we consummated on the sale of our subsidiary, ACEP, which
      owns the Stratosphere and three other Nevada gaming properties. The purchaser
      was an affiliate of Whitehall Street Real Estate Fund. With the consummation
      of
      this transaction at a purchase price of $1.2 billion, we anticipate realizing
      a
      gain of approximately $700 million, subject to post-closing adjustments, before
      taxes. See Note 18, “Subsequent Events,” of our consolidated financial
      statements for additional information.




***NEGI***




On
      February 1, 2008, NEGI was informed that 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, and Icahn Enterprises and 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 of NEGI’s
      former unconsolidated non-controlling 50% limited liability company interest
      in
      NEG Holding, as a result of the exercise by NEG Oil & Gas of its contractual
      redemption option under the operating agreement governing NEG
      Holding.




42
 TABLE
          OF CONTENTS




NEGI
      believes it has meritorious defenses to all claims; however, the lawsuit is
      in
      its early stages and we cannot predict the outcome of the litigation on our
      interest in NEGI. See Note 17, “Commitments and Contingencies,” of our
      consolidated financial statements for additional information.




***Declaration
      of Dividends on Preferred Units***




On
      February 29, 2008, Icahn Enterprises declared its scheduled annual
      preferred unit distribution payable in additional preferred units at the rate
      of
      5% of the liquidation preference of $10.00. The distribution is payable on
      March
      29, 2008 to holders of record as of March 14, 2008. Icahn
      Enterprises also increased the number of authorized preferred units by
      900,000 to 13,000,000 required for the distribution.




***Declaration
      of Distribution on Depositary Units***




On
      February 29, 2008, the board of directors of Icahn Enterprises GP approved
      an
      increase in the quarterly cash distribution from $0.15 to $0.25 per unit
      on Icahn Enterprises’ depositary units payable in the first quarter of
      fiscal 2008. The distribution will be paid on April 1, 2008 to depositary
      unitholders of record at the close of business on March 18, 2008.




***Consolidated
      Financial Results of Continuing Operations***




*Year
      Ended December 31, 2007 Compared to the Year Ended December 31,
      2006*




Total
      revenues in fiscal 2007 decreased by approximately $516.4 million, or 17.2%,
      to
      $2.5 billion as compared to fiscal 2006. The decrease is primarily due to
      decreased Investment Management segment revenues of approximately $516.0 million
      as a result of reduced investment profits. Results were also negatively affected
      by decreased Home Fashion segment revenues of approximately $207.2 million
      as a
      result of efforts to reduce revenue from less profitable programs, a weaker
      home
      textile retail environment and competition from other manufacturers. In
      addition, Real Estate segment revenues decreased by approximately $29.7 million,
      primarily attributable to the current residential slowdown of real estate
      development sales and decreased rental renewal rates at certain commercial
      properties. Offsetting these decreases in revenues were an increase in Metals
      segment revenues of approximately $124.1 million and an increase in the Holding
      Company’s interest, dividends and other income of approximately $86.1 million
      due to higher cash balances from the issuance of $500 million of additional
      7.125% senior unsecured notes in January 2007 and $600 million of variable
      rate
      notes in April 2007. The increase in Metals segment revenues was primarily
      due
      to the increase in ferrous revenues generated by both an increase in average
      selling price of ferrous scrap and an increased volume of shipped ferrous
      production.




Total
      expenses for fiscal 2007 increased by approximately $2.4 million, or 0.1%,
      as
      compared to fiscal 2006. Contributing to this increase was an increase in our
      Metals segment expenses of approximately $129.1 million primarily due to higher
      metals prices and higher volume, and an increase in interest expense of $53.5
      million due to the issuance of $500 million of additional 7.125% senior
      unsecured notes in January 2007 and $600 million of variable rate notes in
      April
      2007. Additionally, Investment Management segment expenses increased by $20.1
      million, primarily attributable to interest and dividend expense relating to
      securities sold, not yet purchased and an increase in fees paid to the Private
      Funds’ administrator which are based on AUM, coupled with an increase in
      compensation expense resulting from compensation awards relating to earned
      incentive income. The overall increase in total expenses was offset by a
      decrease in Home Fashion segment expenses of $192.0 million, which was primarily
      due to lower cost of sales and lower selling, general administrative
      expenses.




Income
      from continuing operations decreased by approximately $91.6 million, or 29.0%,
      for fiscal 2007 as compared to fiscal 2006. The decrease resulted primarily
      from
      decreased Investment Management segment earnings of $89.5 million resulting
      primarily from decreased gains from investment activities due to lower
      performance of the Private Funds in fiscal 2007. The overall decrease in income
      from continuing operations also included decreases in earnings in the Home
      Fashion segment ($13.8 million), Real Estate segment ($11.5 million) and Metals
      segment ($8.9 million) in fiscal 2007 compared to fiscal 2006. The decrease
      in
      Home Fashion earnings for fiscal 2007 was primarily attributable to WPI’s
      continuing efforts to reduce revenues from less profitable programs and a weaker
      retail sales environment. The decrease in Real Estate earnings for fiscal 2007
      was primarily due to the slowdown in residential real estate sales and decreased
      rental renewal rates at certain commercial properties. The decrease in Metals’
segment earnings was due to reduced margin and increased general and
      administrative expenses due to increased personnel costs and professional
      fees.




43
 TABLE
          OF CONTENTS




*Year
      Ended December 31, 2006 Compared to the Year Ended December 31,
      2005*




Total
      revenues for fiscal 2006 increased by $1.5 billion, or 97%, as compared to
      fiscal 2005. The increase was primarily due to higher Investment Management
      segment revenues of $751.4 million in fiscal 2006 compared to fiscal 2005
      resulting from the positive performance of the Private Funds during fiscal
      2006.
      This increase also reflects the inclusion of WPI, comprising our Home Fashion
      segment, which we acquired in August 2005, for the entire year in fiscal 2006.
      Increases in revenues were also recorded in our Metals segment ($109.1 million),
      our Real Estate segment ($34.2 million) and net gains on investment activities
      from all other operations ($112.6 million).




Total
      expenses for fiscal 2006 increased $768.5 million, or 63.8%, as compared to
      fiscal 2005. The increase was primarily due to the inclusion of the Home Fashion
      segment, which we acquired in August 2005, for the entire year in fiscal 2006.
      Of the $768.5 million increase in fiscal 2006 compared to fiscal 2005, $572.1
      was due to the inclusion of our Home Fashion segment. Expenses in our Metals
      segment increased by $97.3 million due to higher metals prices and an increase
      in volume.




Income
      from continuing operations for fiscal 2006 increased $257.2 million, or 443.2%,
      as compared to fiscal 2005. The increase was primarily due to higher income
      from
      the Investment Management segment of $175.1 million, primarily due to positive
      performance of the Private Funds and higher AUM compared to fiscal 2005. The
      Holding Company contributed $105.1 million to this increase primarily from
      an
      increase in the net gains from investment activities compared to fiscal 2005.
      The Metals segment contributed $27.3 million to the increase due to increased
      metals volume and increases in metals prices. The overall increase in fiscal
      2006 was partially offset by losses incurred by the Home Fashion segment
      compared to fiscal 2005.




***Investment
      Management Operations***




*Overview*




The
      Investment Management Entities provide investment advisory and certain
      administrative and back office services to the Private Funds. The Investment
      Management Entities do not provide investment advisory or other administrative
      and back office services to any other entities, individuals or accounts, and
      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
      Investment Management Entities generated income from amounts earned pursuant
      to
      contractual arrangements with the Private Funds through December 31, 2007.
      Such
      amounts typically included an annual management fee of 2.5% of the net asset
      value of fee-paying capital in the Private Funds before a performance-based
      incentive allocation of 25% of the net profits earned by the Private Funds
      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).
      The
      Investment Management Entities may modify or waive such amounts in certain
      circumstances including where (a) an investor has reduced fees based on the
      amount invested and related lock-up periods or (b) investments are made by
      Mr.
      Icahn or his affiliates. The Investment Management Entities and their affiliates
      may also earn income through their principal investments in the Private Funds.
      Substantially all of the management fees earned from certain consolidated
      entities by New Icahn Management through December 31, 2007 (and, prior to the
      acquisition of the Partnership Interests on August 8, 2007, by Icahn Management)
      and the incentive allocations earned by the Onshore GP and the Offshore GP
      from
      the Onshore Fund and the Offshore Master Funds, respectively, are eliminated
      in
      consolidation; however, the Investment Management Entities’ share of the net
      income from the Private Funds includes the amount of these eliminated fees
      and
      allocations. Any management fees earned from unconsolidated Private Funds are
      recorded and reflected separately on the consolidated statements of
      operations.




Through
      December 31, 2007, our Investment Management results were driven by the
      combination of the Private Funds’ AUM and the investment performance of the
      Private Funds. 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. Incentive allocations were determined based on the
      aggregate amount of net profits earned by the Investment Funds. Incentive
      allocations were determined by the investment performance of the Private Funds,
      which was a principal determinant of the long-term success of the investment
      management operations because it enabled AUM
      to be
      increased through retention of fund profits and by making it more likely to
      attract new investment capital and minimize redemptions by Private Fund
      investors.




44
 TABLE
          OF CONTENTS




Effective
      January 1, 2008, the management agreements and the management fees payable
      thereunder by the Onshore Fund and the Feeder Funds were terminated. In
      addition, the partnership agreements of the Offshore Master Funds and the
      Onshore Fund were amended to provide that the General Partners would provide,
      or
      direct their affiliates to provide, the administrative and back office services
      to the Private Funds and in consideration thereof the General Partners would
      receive special profits interest allocations in the Onshore Fund and the
      Offshore Master Funds (as such term is defined in their respective limited
      partnership agreements). See above, “Other Significant Events—Investment
      Management Operations,” for further discussion.




*AUM
      and Fund Performance*




The
      table
      below reflects changes to AUM for the years ended December 31, 2007, 2006 and
      2005. The end of period balances represent total AUM, including 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 management fees or incentive allocations for the periods presented
      (in
      $000s).




**Years
                Ended December 31,******
            
            **2007**
            
            **2006**
            
            **2005**Balance,
                beginning of period
            
            $
            4,019,993
            
            $
            2,646,652
            
            $
            1,166,578Net
                in-flows
            
            
            3,005,084
            
            
            332,173
            
            
            1,150,158Appreciation
                (depreciation)
            
            
            485,593
            
            
            1,041,168
            
            
            329,916Balance,
                end of period
            
            $
            7,510,670
            
            $
            4,019,993
            
            $
            2,646,652Fee-paying
                AUM
            
            $
            5,049,767
            
            $
            3,193,415
            
            $
            2,136,354




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 Year Ended December 31,******
            
            **2007**
            
            **2006**
            
            **2005**Private
                Funds
            
            
            12.3
            %
            
            37.8
            %
            
            17.9
            %




(1)
            These
                returns are indicative of a typical investor who has been invested
                since
                inception of the funds. The performance information is presented
                gross of
                management fees but net of expenses. Past performance is not necessarily
                indicative of future results.




The
      Private Funds’ aggregate gross performance of 12.3% for 2007 was driven by a few
      core equity positions (2) ,
      including: Anadarko, Medimmune and BEA Systems. Additionally, short positions
      in
      high-yield credit and the broad U.S. equity markets also added to performance
      as
      high-yield spreads widened and the market declined in the last months of the
      year. However, our long investments in energy more than offset the losses from
      the energy hedge and overall, the sector was positive.




The
      Private Funds’ aggregate gross performance of 37.8% for 2006 was driven by a few
      core activist positions as well as strong U.S. equity and credit markets.
      Investments in five positions (2) — Time
      Warner, Kerr McGee, Lear Corporation, Cigna and KT&G — were the
      main drivers of our performance, contributing over 62% of our total profits.
      Profits were somewhat mitigated by hedged positions in energy and shorts against
      a few long hotel and retail positions. Volatility was reduced as a result,
      as is
      our intent with these short positions.




The
      Private Funds’ gross performance for fiscal 2005 of 17.9% was lower than in
      fiscal 2006 as we were in the process of investing the Private Funds. In
      addition, equity market returns were less robust in fiscal 2005 compared to
      fiscal 2006. Returns for the Private Funds were largely driven by their
      investments in the following positions (2) : Kerr
      McGee, Fairmont Hotels and Temple Inland. The Private Funds had a large position
      in




(2)
            These
                equity positions have been previously disclosed in other SEC
                filings.




45
 TABLE
          OF CONTENTS





Time
                Warner during fiscal 2005, however, which slightly detracted from
                performance. The Private Funds’ investment in Blockbuster also detracted
                from their overall performance.




Since
      inception in November 2004, the Private Funds’ gross returns are 92.5%,
      representing an annualized rate of return of 23.0% through December 31, 2007,
      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, substantially all management fees, incentive
      allocations and earnings on investments 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 Investment Management Entities to the
      consolidated U.S. GAAP revenues and expenses. The first column represents the
      results of operations of our interest in the Investment Management Entities
      without the impact of consolidating the Private Funds or the eliminations
      arising from the consolidation of these funds. This includes the gross amount
      of
      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 years ended December 31, 2007, 2006 and 2005 is as follows
      ($000s):




**For
                the Year Ended December 31, 2007****Icahn
                Enterprises**
              **Holdings’
                Interests**
            
            **Consolidated
                Private Funds**
            
            **Eliminations**
            
            **Total
                U.S. GAAP Reported Income**Revenues:Management
                fees
            
            $
            127,994
            
            $
            —
            
            $
            (117,377
            )
            $
            10,617Incentive
                allocations
            
            
            71,329
            
            
            —
            
            
            (71,329
            )
            
            —Net
                gain from investment activities
            
            
            21,234
            (1)
            
            354,873
            
            
            (21,234
            )
            
            354,873Interest,
                dividends and other income
            
            
            752
            
            
            222,012
            
            
            —
            
            
            222,764221,309
            
            
            576,885
            
            
            (209,940
            )
            
            588,254Costs
                and expenses
            
            
            46,824
            
            
            38,442
            
            
            —
            
            
            85,266Interest
                expense
            
            
            —
            
            
            14,521
            
            
            —
            
            
            14,521Income
                from continuing operations before income taxes and
            
            
            174,485
            
            
            523,922
            
            
            (209,940
            )
            
            488,467Income
                tax expense
            
            
            (4,311
            )
            
            —
            
            
            —
            
            
            (4,311
            )Non-controlling
                interests in income
            
            
            —
            
            
            (298,277
            )
            
            (15,705
            )
            
            (313,982
            )Income
                from continuing operations
            
            $
            170,174
            
            $
            225,645
            
            $
            (225,645
            )
            $
            170,174




(1)
            The
                Holding Company made three equal investments in September, October
                and
                November 2007 aggregating $700 million in the Private Funds for which
                no
                management fees or incentive allocations are applicable. The net
                gain from
                investment activities of $21.2 million earned by the interests of
                Icahn
                Enterprises in the Investment Management Entities in fiscal 2007
                consists
                of two components. The first reflects a net gain of $36.9 million
                relating
                to the increase in the General Partners’ investment in the Private Funds
                as a result of earned incentive allocations and the return on the
                General
                Partners’ investment. The second component, which is eliminated in our
                consolidated financial statements, includes a net investment loss
                in
                fiscal 2007 of $15.7 million on the $700 million invested in the
                Private
                Funds by the Holding Company.




46
 TABLE
          OF CONTENTS





**For
                the Year Ended December 31, 2006******
            
            **Icahn****Enterprises
                Holdings’ Interests**
            
            **Consolidated
                Private Funds**
            
            **Eliminations**
            
            **Total
                U.S. GAAP Reported Income**Revenues:Management
                fees
            
            $
            82,415
            
            $
            —
            
            $
            (82,415
            )
            $
            —Incentive
                allocations
            
            
            190,478
            
            
            —
            
            
            (190,478
            )
            
            —Net
                gain from investment activities
            
            
            25,822
            
            
            1,030,740
            
            
            (25,822
            )
            
            1,030,740Interest,
                dividends and other income
            
            
            345
            
            
            73,218
            
            
            —
            
            
            73,563299,060
            
            
            1,103,958
            
            
            (298,715
            )
            
            1,104,303Costs
                and expenses
            
            
            37,629
            
            
            32,205
            
            
            —
            
            
            69,834Interest
                expense
            
            
            —
            
            
            9,901
            
            
            —
            
            
            9,901Income
                from continuing operations before income taxes and non-controlling
                interests
            
            
            261,431
            
            
            1,061,852
            
            
            (298,715
            )
            
            1,024,568Income
                tax expense
            
            
            (1,763
            )
            
            —
            
            
            —
            
            
            (1,763
            )Non-controlling
                interests in income
            
            
            —
            
            
            (763,137
            )
            
            —
            
            
            (763,137
            )Income
                from continuing operations
            
            $
            259,668
            
            $
            298,715
            
            $
            (298,715
            )
            $
            259,668




**For
                the Year Ended December 31, 2005******
            
            **Icahn****Enterprises
                Holdings’ Interests**
            
            **Consolidated
                Private Funds**
            
            **Eliminations**
            
            **Total
                U.S. GAAP Reported Income**Revenues:Management
                fees
            
            $
            44,201
            
            $
            —
            
            $
            (44,201
            )
            $
            —Incentive
                allocations
            
            
            57,302
            
            
            —
            
            
            (57,302
            )
            
            —Net
                gain from investment activities
            
            
            1,887
            
            
            305,440
            
            
            (1,887
            )
            
            305,440Interest,
                dividends and other income
            
            
            168
            
            
            47,268
            
            
            —
            
            
            47,436103,558
            
            
            352,708
            
            
            (103,390
            )
            
            352,876Costs
                and expenses
            
            
            18,093
            
            
            7,914
            
            
            —
            
            
            26,007Interest
                expense
            
            
            —
            
            
            43
            
            
            —
            
            
            43Income
                from continuing operations before income taxes and non-controlling
                interests
            
            
            85,465
            
            
            344,751
            
            
            (103,390
            )
            
            326,826Income
                tax expense
            
            
            (890
            )
            
            —
            
            
            —
            
            
            (890
            )Non-controlling
                interests in income
            
            
            —
            
            
            (241,361
            )
            
            —
            
            
            (241,361
            )Income
                from continuing operations
            
            $
            84,575
            
            $
            103,390
            
            $
            (103,390
            )
            $
            84,575




*Year
      Ended December 31, 2007 Compared to the Year Ended December 31,
      2006*




Management
      fees increased by $45.6 million, or 55.3%, to $128.0 million for fiscal 2007
      from $82.4 million in fiscal 2006. The increase was attributable to increased
      AUM due mainly to net capital inflows but also capital
      appreciation.




Incentive
      allocations decreased by $119.2 million, or 62.6%, to $71.3 million for fiscal
      2007, compared to $190.5 million in fiscal 2006. This decrease relates to the
      decline in performance of the Private Funds during fiscal 2007. The General
      Partners’ incentive allocations earned from the Private Funds are accrued on a
      quarterly basis and are allocated to the General Partners at the end of the
      Private Funds’ fiscal year (or sooner on redemptions).




The
      net
      gain from investment activities of $21.2 million earned by the interests of
      Icahn Enterprises in the Investment Management Entities in fiscal 2007 consists
      of two components. The first reflects a net gain of $36.9 million relating
      to
      the increase in the General Partners’ investment in the Private Funds as a
      result of earned
      incentive allocations and the return on the General Partners’ investment. This
      compares with $25.8 million in fiscal 2006. The second component includes a
      net
      investment loss in fiscal 2007 of $15.7 million on the $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.




47
 TABLE
          OF CONTENTS




Net
      realized and unrealized gains of the Private Funds on investment activities
      were
      $354.9 million for fiscal 2007, compared to $1.0 billion for fiscal 2006. This
      decrease relates to the decline in performance of the Private Funds during
      fiscal 2007 relating to the economic and market factors discussed above but
      partially offset by increased AUM.




Interest,
      dividends and other income increased by $149.2 million, or 202.8%, to $222.8
      million for fiscal 2007, compared to $73.6 million for fiscal 2006. The increase
      was primarily attributable to increases in AUM and the amounts invested in
      interest-paying investments.




Investment
      Management Entities’ costs and expenses increased by $9.2 million, or 24.4%, to
      $46.8 million for fiscal 2007, compared to $37.6 million for fiscal 2006. This
      increase is primarily due to vested compensation awards relating to management
      fees and earned incentive allocations and the return thereon.




Private
      Funds’ costs and expenses increased by $10.9 million, or 25.8%, to $53.0 million
      for fiscal 2007, compared to $42.1 million for fiscal 2006. This increase is
      primarily attributable to increases in financing expenses and interest expense
      relating to securities sold, not yet purchased and an increase in fees paid
      to
      the Private Funds’ administrator that are based on AUM.




Non-controlling
      interests in income was $314.0 million for fiscal 2007, as compared to $763.1
      million for fiscal 2006. This decrease was due to the decline in performance
      of
      the Private Funds during fiscal 2007 as discussed above.




*Year
      Ended December 31, 2006 Compared to the Year Ended December 31,
      2005*




Management
      fees increased by $38.2 million, or 86.5%, to $82.4 million for fiscal year
      2006, from $44.2 million for fiscal 2005. The increase was attributable to
      increases in fee-paying AUM as noted above.




Incentive
      allocations increased by $133.2 million, or 232.4%, to $190.5 million for fiscal
      2006, compared to $57.3 million for fiscal 2005. This increase was primarily
      attributable to the positive performance of the Private Funds during fiscal
      2006
      as a result of the economic and market factors discussed above, as well as
      an
      increase in fee-paying AUM.




The
      net
      gain of $25.8 million, an increase of $23.9 million, or 1,268%, for fiscal
      2006
      compared to $1.9 million for fiscal 2005, earned by the Investment Management
      Entities from their investments in affiliates represents the increase in the
      value, both realized and unrealized, of their investments in the Private Funds.
      This increase relates to the positive performance of the Private Funds during
      fiscal 2006 relating to the economic and market factors discussed
      above.




Net
      realized and unrealized gains earned by the Private Funds on investments and
      derivative contracts were $1.0 billion for fiscal 2006, as compared to net
      realized and unrealized gains on investment activities of $305.4 million for
      fiscal 2005. This increase relates to the positive performance of the Private
      Funds during fiscal 2006 as a result of the economic and market factors
      discussed above.




Interest,
      dividends and other income increased by $26.1 million, or 55.1%, to $73.6
      million for fiscal 2006, compared to $47.4 million for fiscal 2005. The increase
      was attributable to increases in AUM and the amounts invested in interest and
      dividend-paying investments.




Investment
      Management Entities’ costs and expenses increased by $19.5 million, or 108.0%,
      to $37.6 million for fiscal 2006, compared to $18.1 million for fiscal 2005.
      This increase was primarily due to increased compensation expense, much of
      which
      is determined by the performance of the Private Funds.




Private
      Funds’ total costs and expenses increased by $34.1 million, or 426.2%, to $42.1
      million for fiscal 2006, compared to $8.0 million for fiscal 2005. This increase
      is attributable to interest and dividend expense relating to securities sold,
      not yet purchased and an increase in financing and other investment
      expenses.






48
 TABLE
          OF CONTENTS




Non-controlling
      interests in income were $763.1 million for fiscal 2006, as compared to $241.4
      million for fiscal 2005. This increase relates to the positive performance
      of
      the Private Funds during fiscal 2006 relating to the economic and market factors
      discussed above.




***All
      Other Operations***




*Metals*




Our
      Metals segment is conducted through our indirect, wholly owned subsidiary,
      PSC
      Metals. During fiscal 2007, PSC Metals completed the acquisitions of
      substantially all of the assets of three scrap metal recyclers. The aggregate
      purchase price for the acquisitions was approximately $47.7 million, the most
      significant of which was approximately $40 million relating to the September
      2007 acquisition of substantially all of the assets of WIMCO Operating Company,
      Inc., a full-service scrap metal recycler in Ohio. The results of operations
      for
      yards acquired are reflected in the consolidated results of PSC Metals from
      the
      dates of acquisition.




Summarized
      statements of operations and performance data for PSC Metals for fiscal 2007,
      fiscal 2006 and fiscal 2005 are as follows (in 000s):





**Year
                Ended December 31,******
            
            **2007**
            
            **2006**
            
            **2005**Net
                Sales
            
            $
            834,106
            
            $
            710,054
            
            $
            600,989Cost
                of sales
            
            
            777,955
            
            
            652,090
            
            
            555,311Gross
                profit
            
            
            56,151
            
            
            57,964
            
            
            45,678Selling,
                general and administrative expenses
            
            
            18,218
            
            
            15,028
            
            
            14,525Income
                from continuing operations before interest, income taxes and
                non-controlling interests in income
            
            $
            37,933
            
            $
            42,936
            
            $
            31,153Ferrous
                tons sold
            
            
            1,707
            
            
            1,560
            
            
            1,551Non-ferrous
                pounds sold
            
            
            120,470
            
            
            114,086
            
            
            89,960




*Year
      Ended December 31, 2007 Compared to the Year Ended December 31,
      2006*




Net
      sales
      for fiscal 2007 increased by $124.0 million, or 17.5%, to $834.1 million as
      compared to $710.1 million for fiscal 2006. The increase was primarily due
      to
      the increase in ferrous sales generated by both an increase in the average
      selling price of ferrous scrap and increased volume of shipped ferrous
      production. For fiscal 2007, average pricing increased approximately $35 per
      gross ton while ferrous shipments increased by 147,000 gross tons compared
      to
      fiscal 2006. The average selling price of non-ferrous scrap increased $.04
      per
      pound, and non-ferrous shipments increased by 6.4 million pounds in fiscal
      2007
      compared to fiscal 2006. In fiscal 2007, our non-ferrous operations benefited
      from higher prices for copper. The increase in price was evident in data
      published by the London Market Exchange (“LME”) and COMEX. We believe the
      non-ferrous prices were higher than historical average prices due to continued
      increases in industrial production and demand from industrializing countries
      such as China.




Gross
      profit for fiscal 2007 decreased by $1.8 million, or 3.1%, to $56.2 million
      compared to fiscal 2006. As a percentage of net sales, the cost of sales was
      93.3% and 91.8% in fiscal 2007 and fiscal 2006, respectively. The increase
      is
      due to increased cost of secondary products caused by reduced supply of material
      from PSC Metals’ key suppliers.




Selling,
      general and administrative expenses increased approximately $3.2 million, or
      21.2%, to $18.2 million in fiscal 2007 compared to fiscal 2006. The increase
      is
      primarily due to additional headcount and employee-related costs of $2.2 million
      and professional fees of $0.8 million.




*Year
      Ended December 31, 2006 Compared to the Year Ended December 31,
      2005*




Net
      sales
      for fiscal 2006 increased by $109.1 million, or 18.1%, as compared to fiscal
      2005. The increase was primarily attributable to an increase in non-ferrous
      sales generated by increased average selling prices and an increase in shipped
      volume. In fiscal 2006, the average selling price of non-ferrous products
      increased $0.49 per pound, or 71%, to $1.19 per pound, while non-ferrous
      shipments increased by 24.1 million pounds, or
      27%,
      compared to fiscal 2005. In fiscal 2006, PSC Metals’ non-ferrous operations
      benefited from higher prices for copper, aluminum and stainless steel. The
      increase in non-ferrous prices was evident in data published by the LME and
      COMEX. According to LME data (high grade, spot bid), average aluminum prices
      were 35% higher in fiscal 2006 compared to fiscal 2005. According to COMEX
      data
      (high grade cathode, spot price, close), average prices for copper were 84%
      higher in fiscal 2006 compared to fiscal 2005. We believe the non-ferrous prices
      were significantly higher than historical average prices due, in part, to
      increases in industrial production and demand from industrializing countries
      such as China.




49
 TABLE
          OF CONTENTS




Gross
      profit in fiscal 2006 increased by $12.3 million, or 27.0%, to $58.0 million
      as
      compared to fiscal 2005. As a percentage of net sales, cost of sales was 91.8%
      and 92.4% for fiscal 2006 and 2005, respectively. The primary improvement in
      the
      gross profit was due to the strength of the non-ferrous markets which generated
      an increase of $7.4 million in non-ferrous contribution. The improvements in
      the
      average ferrous pricing were offset by increased competition which required
      higher average buying prices for ferrous scrap supply. The increased competition
      for available scrap supply increasingly requires the downstream integration
      into
      PSC Metals’ supply chain of collection yards for low-cost material. Also
      offsetting the ferrous margin was the lost contribution from the PSC Metals’
joint venture with Royal Green which expired in April 2006 resulting in a $1.0
      million reduction from fiscal 2005, and reduced contribution of $1.2 million
      from fiscal 2005 during the installation and start-up of the new shredder in
      PSC
      Metals’ Canton, Ohio operation completed in September 2006.




Selling,
      general and administrative expenses in fiscal 2006 of $15.0 million were
      relatively consistent with the $14.5 million in fiscal 2005. The fiscal 2006
      expenses included $0.7 million for the costs of a marketing campaign from April
      through September. In addition, PSC Metals’ incurred $1.2 million in fiscal 2006
      due to staff bonus incentives associated with a company-wide incentive plan.
      There were no bonuses accrued or paid in fiscal 2005. Largely offsetting the
      bonus incentive payments was the additional recovery of $1.2 million associated
      with the bankruptcy settlement of Keystone Consolidated Industries,
      Inc.




*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.




The
      following table summarizes the key operating data for real estate activities
      for
      the years ended December 31, 2007, 2006 and 2005 (in $000s):




**Year
                Ended December 31,******
            
            **2007**
            
            **2006**
            
            **2005**Revenues:Rental
                real estate
            
            $
            12,298
            
            $
            13,528
            
            $
            13,000Property
                development
            
            
            60,796
            
            
            90,955
            
            
            58,270Resort
                activities
            
            
            29,828
            
            
            28,127
            
            
            27,122Total
                revenues
            
            
            102,922
            
            
            132,610
            
            
            98,392Expenses:Rental
                real estate
            
            
            5,190
            
            
            4,622
            
            
            4,065Property
                development
            
            
            57,488
            
            
            73,041
            
            
            48,679Resort
                operations
            
            
            29,215
            
            
            28,162
            
            
            28,852Total
                expenses
            
            
            91,893
            
            
            105,825
            
            
            81,596Income
                from continuing operations before interest, income taxes and
                non-controlling interests in income
            
            $
            11,029
            
            $
            26,785
            
            $
            16,796




50
 TABLE
          OF CONTENTS




*Year
      Ended December 31, 2007 Compared to the Year Ended December 31,
      2006*




Total
      revenues decreased by $29.7 million, or 22.4%, to $102.9 million in fiscal
      2007
      from $132.6 million in fiscal 2006. 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 fiscal 2007, we sold 76 units for
      approximately $60.8 million at an average price of $0.8 million with a profit
      margin of 5.4%. Our profit margin was negatively impacted by impairment charges
      of $2.5 million and a litigation loss reserve of $1.6 million. In fiscal 2006,
      we sold 128 units for approximately $91.0 million at an average price of $0.7
      million with a profit margin of 19.7%. In fiscal 2006, our New Seabury, MA
      property sales and margins were stronger principally due to closings from its
      grand opening in fiscal 2005.




Total
      expenses decreased by $13.9 million, or 13.2%, to $91.9 million in fiscal 2007
      from $105.8 million in fiscal 2006. The decrease was primarily due to a decrease
      in property development sales activity. Contributing to the overall decrease
      in
      fiscal 2007 was the reversal of a prior year hurricane loss provision of $0.9
      million related to our rental properties. Included in total expenses for fiscal
      2007 was a litigation loss reserve of $1.6 million, an impairment charge of
      $2.5
      million related to our development properties and a $1.4 million impairment
      charge related to our rental properties. Impairment charges in our property
      development segment primarily related to decreased condominium land values
      in
      our Oak Harbor, FL subdivision caused by the current real estate slowdown.
      Impairment charges in our rental real estate were primarily due to a decrease
      in
      rental renewal rates at certain of our commercial properties.




Based
      on
      current residential sales conditions, coupled with the pending completion of
      our
      Westchester, NY properties and the depressed Florida real estate market, we
      expect property development sales and profits to decline 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 if the
      current credit market continues to have a negative impact on commercial real
      estate valuations.




Certain
      properties are reclassified as discontinued operations when subject to a
      contract or letter of intent and are excluded from income from continuing
      operations.




*Year
      Ended December 31, 2006 Compared to the Year Ended December 31,
      2005*




Total
      revenues increased by $34.2 million, or 34.8%, to $132.6 million in fiscal
      2006
      from $98.4 million compared to the fiscal 2005. The increase was primarily
      attributable to an increase in property development sales activity.




In
      fiscal
      2006, we sold 128 units for approximately $91.0 million at an average price
      of
      $0.7 with a profit margin of 19.7%, reflecting a greater sales mix of higher
      priced units in New Seabury, MA. In fiscal 2005, we sold 104 units for $58.3
      million at an average price of $0.6 with a profit margin of 16.5%, which
      included a greater sales mix of lower priced condominium units in Naples,
      FL.




Total
      expenses increased by $24.2 million, or 29.7%, to $105.8 million in fiscal
      2006
      from $81.6 million in fiscal 2005. The increase was primarily attributable
      to an
      increase in property development sales activity.




The
      primary driver of our increased revenues and income from continuing operations
      was the approval of our New Seabury property for residential
      development.




*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;





·
            fewer
                and more powerful retailers of consumer goods over time;
                and





·
            a
                difficult retail market for home
                textiles.




For
      fiscal 2007, gross earnings were primarily affected by reduced revenue due
      to a
      weaker home textile retail environment and lower manufacturing plant
      utilizations at our U.S. bedding and towel plants, which were closed during
      the
      year. 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.




51
 TABLE
          OF CONTENTS




During
      fiscal 2007, WPI continued to successfully implement its strategic plans to
      shift manufacturing capacity from the United States to lower-cost countries.
      WPI’s bedding operation in Bahrain is producing product as planned, with
      significantly lower production costs than its U.S. operations. Additionally,
      the
      expansion of WPI’s joint venture bath manufacturing operation in Pakistan is
      proceeding to build its output volume of finished goods. Moreover, WPI continues
      to dispose of its closed plants, thereby lowering its cash expenses related
      to
      maintaining these facilities. WPI anticipates improvements in gross earnings
      through both lower costs of production and declining factory underutilization
      charges for the fiscal year ending December 31, 2008, or fiscal
      2008.




Summarized
      statement of operations for fiscal 2007, fiscal 2006 and the period from August
      8, 2005 (acquisition date) to December 31, 2005 is as follows (in
      $000s):





**Year
                Ended December 31, 2007**
            
            **Year
                Ended December 31, 2006**
            
            **August
                8, 2005 to December 31, 2005**Net
                sales
            
            $
            683,670
            
            $
            890,840
            
            $
            441,771Cost
                of sales
            
            
            681,281
            
            
            857,947
            
            
            401,576Gross
                earnings
            
            
            2,389
            
            
            32,893
            
            
            40,195ExpensesSelling,
                general and administrative expenses
            
            
            111,557
            
            
            130,622
            
            
            58,881Restructuring
                and impairment charges
            
            
            49,345
            
            
            45,647
            
            
            1,658Total
                expenses
            
            
            160,902
            
            
            176,269
            
            
            60,539Loss
                from continuing operations before interest, income taxes and
                non-controlling interests in income
            
            $
            (158,513
            )
            $
            (143,376
            )
            $
            (20,344
            )




*Year
      Ended December 31, 2007 Compared to Year Ended December 31,
      2006*




Fiscal
      2007 represented a challenging combination of efforts to reduce revenue from
      less profitable programs, a weaker home textile retail environment, competition
      from other manufacturers, repositioning WPI’s manufacturing operations offshore
      and realigning selling, general and administrative expenditures. Net sales
      were
      $683.7 million, a decrease of 23.3% compared to $890.8 million for fiscal 2006.
      The decrease, which affected all lines of business, was primarily attributable
      to our continuing efforts to reduce revenues from less profitable programs
      coupled with a continued weaker retail sales environment in the United States
      for home textile products. Bed products net sales for fiscal 2007 were $445.8
      million, a decrease of $126.8 million from $572.6 million. Bath products net
      sales were $235.6 million, a decrease of $76.2 million compared to $311.8
      million, and other net sales were $2.3 million, a decrease of $4.1 million
      compared to $6.4 million for fiscal 2006.




Total
      depreciation expense for fiscal 2007 was $14.3 million, of which $11.4 million
      was included in cost of sales and $2.9 million was included in selling, general
      and administrative expenses. Total depreciation expense for fiscal 2006 was
      $30.7 million, of which $25.5 million was included in cost of sales and $5.2
      million was included in selling, general and administrative expenses. The
      reduction in depreciation expenses was primarily due to plant closures during
      fiscal 2006 and continuing through fiscal 2007.




Gross
      earnings for fiscal 2007 were $2.4 million, or 0.4% of net sales, compared
      with
      $32.9 million, or 3.7% of net sales, during fiscal 2006. Gross earnings were
      affected by competitive pricing and a continued weaker retail environment,
      and
      lower manufacturing plant utilizations at our U.S. plants, which were closed
      in
      fiscal 2007. 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 fiscal 2007 were $111.6 million as
      compared to $130.6 million for fiscal 2006, reflecting WPI’s continuing efforts
      to reduce its selling, warehousing, shipping and general
      and administrative expenses. WPI is continuing 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, including the headcount reductions taken during the second
      quarter of fiscal 2007.




52
 TABLE
          OF CONTENTS




Total
      expenses for fiscal 2007 include $24.8 million of non-cash fixed asset and
      other
      impairment charges related to plants that have been or will be closed and $19.3
      million of restructuring charges (of which $3.6 million related to severance
      costs and $15.7 million related to continuing costs of closed plants).
      Additionally, in accordance with SFAS No. 142, WPI reduced the carrying value
      of
      the trademarks and recorded intangible asset impairment charges of $ 5.2
      million. Total expenses for fiscal 2006 included $33.3 million of non-cash
      fixed
      asset impairment charges related to plant closures during fiscal 2006 and $12.3
      million of restructuring charges (of which $3.4 million related to severance
      costs and $8.9 million related to continuing costs of closed
      plants).




We
      continue our restructuring efforts and, accordingly, expect 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 our restructuring efforts are
      unsuccessful or our existing strategic manufacturing plans are amended, we
      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. During fiscal 2007, certain U.S. retailers reported comparable store
      sales that were either negative or below their stated expectations. Many of
      these retailers are customers of WPI. The initial indications are that 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.




WPI
      closed all of its 30 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. The net impact of these closings during fiscal 2007 was
      $ 14.0
      million of related closure charges and impairments (including lease
      terminations), which has been included as part of discontinued
      operations.




Results
      of the discontinued operations are excluded from the consolidated financial
      statements for all periods presented.




*Year
      Ended December 31, 2006 Compared to the Period from August 8, 2005 (Acquisition
      Date) to December 31, 2005*




Net
      sales
      for fiscal 2006 were $890.8 million. Bed products net sales were $572.6 million,
      bath products net sales were $311.8 million and other net sales were $6.4
      million. Net sales for the period August 8, 2005 (acquisition date) to December
      31, 2005 were $441.8 million. Bed products net sales were $294.9 million, bath
      products net sales were $144.0 million and other net sales were $2.9
      million.




Total
      depreciation expense for fiscal 2006 was $30.7 million, of which $25.5 million
      was included in cost of sales and $5.2 million was included in selling, general
      and administrative expenses. Total depreciation expense for the period from
      August 8, 2005 (acquisition date) to December 31, 2005 was $19.0 million, of
      which $16.0 million was included in cost of sales and $3.0 million was included
      in selling, general and administrative expenses.




Gross
      earnings for fiscal 2006 were $32.9 million, and reflect gross margins of 3.7%.
      Gross earnings during fiscal 2006 were negatively impacted by the carrying
      costs
      of certain U.S.-based manufacturing facilities that were closed in fiscal 2006
      or were scheduled to be closed during fiscal 2007. Gross earnings before
      selling, general and administrative expenses for the period August 8, 2005
      (acquisition date) to December 31, 2005 were $40.2 million, and reflect gross
      margins of 9.1%.




Selling,
      general and administrative expenses were $130.6 million for fiscal 2006.
      Selling, general and administrative expenses were $58.9 million for the period
      from August 8, 2005 (acquisition date) to December 31, 2005.




53
 TABLE
          OF CONTENTS






Total
      expenses for fiscal 2006 included $33.3 million of non-cash impairment charges
      related to the fixed assets of plants that were closed or were scheduled to
      be
      closed and $12.3 million of restructuring charges (of which $3.4 million related
      to severance costs and $8.9 million related to continuing costs of closed
      plants). Total expenses for the period from August 8, 2005 (acquisition date)
      to
      December 31, 2005 included $1.7 million of restructuring charges (of which
      $0.1
      million related to severance costs and $1.6 million related to continuing costs
      relating to closed plants).




*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.




*Year
      Ended December 31, 2007 Compared to the Year Ended December 31,
      2006*




Net
      gain
      from investment activities decreased by $8.7 million, or 9.5%, to $82.6 million
      in fiscal 2007 as compared to $91.3 million in fiscal 2006. The decrease was
      primarily due to lower realized gains recorded on the investment portfolio
      in
      fiscal 2007.




Expenses,
      excluding interest expense, increased by $10.8 million, or 41.6%, to $36.6
      million for fiscal 2007 as compared to $25.8 million for fiscal 2006. The
      increase is primarily attributable to professional fees and legal expenses
      related to the acquisition of the Investment Management business (i.e.,
      Partnership Interests) on August 8, 2007.




*Year
      Ended December 31, 2006 Compared to the Year Ended December 31,
      2005*




Net
      gain
      from investment activities were $91.3 million during fiscal 2006 as compared
      to
      a net loss of $21.3 million in fiscal 2005. The change is primarily due to
      the
      higher gains on investment sales in fiscal 2006.




Expenses,
      excluding interest expense, increased by $8.7 million, or 50.6%, to $25.8
      million in fiscal 2006 as compared to $17.1 million in fiscal 2005 due largely
      to the impact of a compensation charge related to the cancellation of unit
      options of $6.2 million and increased legal and other professional fees of $3.2
      million and $2.8 million, respectively.




*All
      Other Operations —Interest and other income, interest expense and income
      tax*




*Year
      Ended December 31, 2007 Compared to the Year Ended December 31,
      2006*




Interest
      and other income increased by $92.7 million, or 183.9%, to $143.2 million in
      fiscal 2007 as compared to $50.4 million in fiscal 2006. This increase was
      primarily due to the increase in the Holding Company’s cash position relating to
      the sale of our Oil and Gas operations and Atlantic City gaming operations
      in
      the fourth quarter of fiscal 2006 and the proceeds from the issuance of
      additional 7.125% senior notes in January 2007 and variable rate notes in April
      2007.




Interest
      expense increased by $48.5 million, or 61.1%, to $127.9 million in fiscal 2007
      as compared to $79.4 million in fiscal 2006. This increase is a result of
      interest incurred on the $500 million of additional 7.125% senior notes issued
      in January 2007 and the $600 million of variable rate notes issued in April
      2007.




For
      fiscal 2007, we recorded an income tax provision of $8.4 million on pre-tax
      income of $486.7 million. For fiscal 2006, we recorded an income tax benefit
      of
      $0.7 million on pre-tax income of $1.0 billion. Our effective income tax rate
      was 1.7% and (0.1)% 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.


54
 TABLE
          OF CONTENTS




Non-controlling
      interests in income for fiscal 2007 decreased $12.9 million, or 19.5%, compared
      to fiscal 2006, primarily as a result of the impact of the minority interests’
share of the losses incurred by WPI.




*Year
      Ended December 31, 2006 Compared to the Year Ended December 31,
      2005*




Interest
      and other income increased by $7.8, or 18.3%, to $50.4 million in fiscal 2006
      as
      compared to $42.6 million in fiscal 2005. This was primarily due to the
      substantial increase in the Holding Company’s cash position from the sale of our
      Oil and Gas operations and Atlantic City gaming operations in the fourth quarter
      of fiscal 2006.




Interest
      expense increased by $12.5 million, or 18.7%, to $79.4 million during fiscal
      2006 as compared to $66.9 million in fiscal 2005. This increase reflects
      increased borrowings in fiscal 2006 as a result of margin expense of $7.9
      million, borrowing under the ACEP revolving credit facility, which was increased
      to $60.0 million in May 2006, and a $32.5 million mortgage obtained in June
      2006.




For
      fiscal 2006, we recorded an income tax benefit of $0.7 million on pre-tax income
      of $1.0 billion. For the year ended December 31, 2005, we recorded an income
      tax
      provision of $11.2 million on pre-tax income of $295.4 million. Our effective
      income tax rate was (0.1)% and 3.8% 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.




Non-controlling
      interests in income for fiscal 2006 increased $56.4 million, or 595.4%, compared
      to fiscal 2005, primarily as a result of the impact of the minority interests’
share of the losses incurred by WPI.




***Discontinued
      Operations***




*The
      Sands and Related Assets*




On
      November 17, 2006, our indirect majority owned subsidiary, Atlantic Coast,
      ACE
      Gaming LLC, a New Jersey limited liability company and a wholly owned subsidiary
      of Atlantic Coast which owns The Sands Hotel and Casino in Atlantic City, Icahn
      Enterprises Holdings and certain other entities owned by or affiliated with
      Icahn Enterprises Holdings completed the sale to Pinnacle Entertainment, Inc.,
      of the outstanding membership interests in ACE and 100% of the equity interests
      in certain subsidiaries of Icahn Enterprises Holdings that own parcels of real
      estate adjacent to The Sands, including 7.7 acres of land known as the Traymore
      site. We owned, through subsidiaries, approximately 67.6% of Atlantic Coast,
      which owns 100% of ACE. The aggregate price was approximately $274.8 million,
      of
      which approximately $200.6 million was paid to Atlantic Coast and approximately
      $74.2 million was paid to affiliates of Icahn Enterprises Holdings for
      subsidiaries that owned the Traymore site and the adjacent properties. $51.8
      million of the amount paid to Atlantic Coast was deposited into an escrow
      account to fund indemnification obligations, of which $50 million related to
      claims of creditors and stockholders of GB Holdings Inc., or GBH, a holder
      of
      stock in Atlantic Coast. On February 22, 2007, we resolved all outstanding
      litigation involving GBH, resulting in a release of all claims against us.
      After
      the settlement, our ownership of Atlantic Coast increased from 67.6% to 96.9%
      and $50.0 million of the amount placed into escrow was released to us. In the
      second quarter of fiscal 2007, we and several other investors exercised warrants
      to purchase shares of common stock of Atlantic Coast, resulting in an increase
      of the minority interest in Atlantic Coast, and a decrease in our ownership
      to
      94.2%.




On
      November 15, 2007, ACE HI Merger Corp., or Merger Corp, our indirect wholly
      owned subsidiary and the owner of approximately 94.2% of the outstanding shares
      of Atlantic Coast common stock, completed a short-form merger transaction,
      or
      the Merger, under Section 253 of Delaware Law, pursuant to which Merger Corp
      merged with and into Atlantic Coast and Atlantic Coast became our wholly owned
      subsidiary. Pursuant to the Merger, the holders of Atlantic Coast common stock
      (other than Merger Corp) are entitled to receive $21.19 per share in cash in
      exchange for their shares.




On
      November 16, 2007, Atlantic Coast filed a Form 15 with the SEC, thereby
      terminating its reporting obligations under the Exchange Act, and its
      status as a public company.




55
 TABLE
          OF CONTENTS




*Oil
      and Gas Operations*




On
      November 21, 2006, our indirect wholly owned subsidiary, AREP O & G Holdings
      LLC, completed the sale of all of the issued and outstanding membership
      interests of NEG Oil & Gas LLC to SandRidge for consideration consisting of
      $1.025 billion in cash, 12,842,000 shares of SandRidge’s common stock, valued at
      $18 per share on the date of closing, and the repayment by SandRidge of $300.0
      million of debt of NEG Oil & Gas. On April 4, 2007, we sold our entire
      position in SandRidge for cash consideration of approximately $243.2
      million.




On
      November 21, 2006, pursuant to an agreement dated October 25, 2006 among Icahn
      Enterprises Holdings, NEG Oil & Gas and NEGI, NEGI sold its membership
      interest in NEG Holding LLC to NEG Oil & Gas in consideration of
      approximately $261.1 million paid in cash. Of that amount, $149.6 million was
      used to repay the NEGI 10.75% senior notes due 2007, including principal and
      accrued interest, all of which was held by us.




On
      November 12, 2007, the board of directors of NEGI determined that it is in
      the
      best interests of NEGI’s shareholders to liquidate all of NEGI’s assets and
      approved the dissolution of NEGI and a plan of dissolution and liquidation,
      or
      the Plan, subject to required shareholder approval.




A
      special
      meeting of shareholders was scheduled for February 7, 2008 for all shareholders
      of record on December 27, 2007 to consider and vote on the Plan. On February
      5,
      2008, NEGI was informed that on February 1, 2008 a purported stockholder
      derivative and class action lawsuit was filed in the Delaware Court of Chancery
      against NEGI, as a nominal defendant, Icahn Enterprises, and certain current
      and
      former officers and members of the board of directors of NEGI. The lawsuit
      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 November 21, 2006 sale of its membership interest in NEG
      Holding LLC to NEG Oil & Gas. See Note 18, “Subsequent Events,” of our
      consolidated financial statements for further discussion.




As
      a
      result of the filing of the complaint, NEGI adjourned the special meeting to
      March 14, 2008 to permit the shareholders of NEGI to evaluate the
      lawsuit.




On
      March
      14, 2008, the shareholders voted to approve the Dissolution and on March 26,
      2008 NEGI filed a Form 15 with the Securities and Exchange Commission for
      the purpose of deregistering its securities under the Exchange Act. As a result,
      NEGI suspended the filing of any further periodic reports under the Exchange
      Act
      and, absent contrary action by the SEC, its status as a public company will
      be
      terminated. 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.




*American
      Casino & Entertainment Properties LLC*




On
      April
      22, 2007, American Entertainment Properties Corp., or AEP, a wholly owned
      indirect subsidiary of Icahn Enterprises, entered into a Membership Interest
      Purchase Agreement with W2007/ACEP Holdings, LLC, an affiliate of Whitehall
      Street Real Estate Funds, a series of real estate investment funds affiliated
      with Goldman Sachs & Co., to sell all of the issued and outstanding
      membership interests of ACEP, which comprises our gaming operations, for $1.3
      billion, plus or minus certain adjustments such as working capital, as more
      fully described in the agreement. The purchase price was subsequently adjusted
      to $1.2 billion in an agreement dated February 8, 2008. ACEP’s casino assets
      were comprised of the Stratosphere Casino Hotel & Tower, the Arizona
      Charlie’s Decatur, the Arizona Charlie’s Boulder and the Aquarius Casino Resort.
      Pursuant to the terms of the agreement, AEP caused ACEP to repay from funds
      provided by AEP, the principal, interest, prepayment penalty or premium due
      under the terms of ACEP’s 7.85% senior secured notes due 2012 and ACEP’s senior
      secured credit facility. The transaction was consummated on February 20, 2008,
      resulting in a gain of approximately $700 million on our investment in ACEP,
      before income taxes.




*Real
      Estate*




Operating
      properties are reclassified to held for sale when subject to a contract or
      letter of intent. The operations of such properties are classified as
      discontinued operations. Upon entry into a contract or letter of intent 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 addition, during fiscal 2007, seven properties
      were reclassified to held for sale.




56
 TABLE
          OF CONTENTS




*Home
      Fashion*




We
      closed
      all of our WPI 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, we entered into an agreement to sell the inventory at all of our
      retail stores. Accordingly, we have reported the retail outlet stores business
      as discontinued operations for all periods presented.




*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 No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* (“SFAS
      No. 144”). For further discussion, see Note 5, “Discontinued Operations and
      Assets Held for Sale,” to our consolidated financial statements.




Summarized
      financial information for discontinued operations for the years ended December
      31, 2007, 2006 and 2005 is set forth below (in 000s):


**Year
                  Ended December 31,****2007**
              
              **2006**
              
              **2005**Revenues:Oil
                  and Gas
              
              $
              —
              
              $
              353,539
              
              $
              198,854Gaming
              
              
              444,208
              
              
              524,077
              
              
              490,321Real
                  Estate
              
              
              6,064
              
              
              7,108
              
              
              8,847Home
                  Fashion - retail stores
              
              
              47,398
              
              
              66,816
              
              
              30,910Total
                  revenues
              
              $
              497,670
              
              $
              951,540
              
              $
              728,932Income
                  (loss) from discontinued operations:Oil
                  and Gas
              
              $
              —
              
              $
              183,281
              
              $
              37,521Gaming
              
              
              99,945
              
              
              45,624
              
              
              60,179Real
                  Estate
              
              
              4,800
              
              
              5,300
              
              
              5,170Home
                  Fashion - retail stores
              
              
              (20,003
              )
              
              (7,261
              )
              
              (2,085
              )Total
                  income from discontinued operations before income taxes, interest
                  and
                  other income
              
              
              84,742
              
              
              226,944
              
              
              100,785Interest
                  expense
              
              
              (21,634
              )
              
              (47,567
              )
              
              (32,851
              )Interest
                  and other income
              
              
              20,710
              
              
              13,004
              
              
              7,539Impairment
                  loss on GBH bankruptcy
              
              
              —
              
              
              —
              
              
              (52,366
              )Income
                  from discontinued operations before income taxes and non-controlling
                  interests in income
              
              
              83,818
              
              
              192,381
              
              
              23,107Income
                  tax expense
              
              
              (18,677
              )
              
              (17,119
              )
              
              (19,711
              )65,141
              
              
              175,262
              
              
              3,396Non-controlling
                  interest in (income) loss
              
              
              5,108
              
              
              (53,165
              )
              
              4,356Gain
                  on sales of discontinued operations, net of income tax
                  expense
              
              
              20,798
              
              
              676,444
              
              
              21,849$
              91,047
              
              $
              798,541
              
              $
              29,601




57
 TABLE
          OF CONTENTS




**Liquidity
      and Capital Resources**




***Consolidated
      Liquidity and Capital Resources***




As
      of
      December 31, 2007, the Holding Company had a cash and cash equivalents balance
      of $2.1 billion, investments of $511.0 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
      management fee or incentive allocations are applicable. As of December 31,
      2007,
      the total value of this investment is approximately $684.3 million, with an
      unrealized loss of $15.7 million for fiscal 2007. 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 December 31, 2007, there were no borrowings
      under the facility. See “Borrowings” below for more 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 Icahn Enterprises’ 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 Icahn Enterprises’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 the
      future.




During
      fiscal 2007, we consummated the following transactions that provided aggregate
      proceeds of approximately $1.3 billion:





·
            On
                January 16, 2007, Icahn Enterprises issued $500.0 million aggregate
                principal amount of additional 7.125% senior notes due 2013. The
                additional 7.125% senior notes were issued pursuant to an indenture
                dated
                February 7, 2005, between Icahn Enterprises, as issuer, and Icahn
                Enterprises Finance Corp, which was formerly known as American Real
                Estate
                Finance Corp., as co-issuer, us, as guarantor, and Wilmington Trust
                Company, as trustee. The additional 7.125% senior notes have a fixed
                annual interest rate of 7.125%, which will be paid every six months
                on
                February 15 and August 15 and will mature on February 15,
                2013.





·
            In
                April 2007, Icahn Enterprises issued $600.0 million aggregate principal
                amount of variable rate notes due 2013. The notes bear interest of
                LIBOR
                minus 125 basis points, but the all-in-rate can be no less than 4%
                nor
                higher than 5.5%, and are convertible into depositary units of Icahn
                Enterprises at a conversion price of $132.595 per share, subject
                to
                adjustments in certain circumstances. We guarantee the variable rate
                notes.





·
            On
                April 4, 2007, our subsidiaries executed agreements to sell their
                entire
                position in the common stock of SandRidge to a consortium of investors
                in
                a series of private transactions. The per share selling price was
                $18, and
                total cash consideration received at closing was approximately $243.2
                million.




On
      April
      22, 2007, AEP, a wholly owned indirect subsidiary of Icahn Enterprises Holdings,
      entered into an agreement to sell all of the issued and outstanding membership
      interests of ACEP, which comprises the remainder of Icahn Enterprises’ gaming
      operations, for $1.3 billion, plus or minus certain adjustments such as working
      capital, more fully described in the agreement. The purchase price was
      subsequently adjusted to $1.2 billion in an agreement dated February 8, 2008.
      ACEP’s Nevada casino assets are comprised of the Stratosphere Casino Hotel &
Tower, the Arizona Charlie’s Decatur, the Arizona Charlie’s Boulder and the
      Aquarius Casino Resort. Pursuant to the terms of the agreement, AEP caused
      ACEP
      to repay from funds provided by AEP, the principal, interest, prepayment penalty
      or premium due under the terms of ACEP’s 7.85% senior secured notes due 2012 and
      ACEP’s senior secured credit facility. The sale was consummated on February 20,
      2008, resulting in a
      gain of
      approximately $700 million on our investments in ACEP, before income taxes,
      subject to resolution of post-closing adjustments. In connection with the ACEP
      sale in fiscal 2008, 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.
      Such proceeds were received 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 entire amount of proceeds placed
      into escrow.




58
 TABLE
          OF CONTENTS




***Cash
      Flows***




*Operating
      Activities:*




Net
      cash
      used in operating activities for fiscal 2007 was approximately $2.9 billion
      compared to $17.7 million for fiscal 2006 due primarily from activity within
      our
      Investment Management segment. Cash used in continuing operations from our
      Investment Management segment was approximately $3.0 billion for 2007 compared
      to approximately $0.4 billion for fiscal 2006. The net cash resulting from
      continuing operations for our Investment Management segment primarily relates
      to
      purchases and proceeds from securities transactions for the Private Funds.
      Purchases of securities in fiscal 2007 was approximately $9.0 billion compared
      to $4.3 billion in fiscal 2006, while proceeds from sales of securities were
      approximately $6.4 billion and $5.2 billion in fiscal 2007 and 2006,
      respectively. Additionally, purchases to cover securities sold, not yet
      purchased were approximately $2.2 billion in fiscal 2007 compared to $0.8
      billion in fiscal 2006, while proceeds from securities sold, not yet purchased,
      were approximately $1.6 billion in fiscal 2007 compared to $1.0 billion in
      fiscal 2006. The net cash provided by continuing operations from all other
      operations was $24.8 million for fiscal 2007 compared to approximately $111.9
      million for fiscal 2006 primarily due to changes in our operating assets and
      liabilities offset in part by a change in cash resulting from activities on
      trading securities.




*Investing
      Activities:*




Net
      cash
      provided by investing activities for fiscal 2007 was approximately $90.9 million
      as compared to $1.0 billion in fiscal 2006. The primary driver was greater
      net
      proceeds from the sales and disposition of assets classified as discontinued
      operations offset by a decrease in capital expenditures resulting from the
      discontinued operation of our Gaming segment. Net cash provided by investing
      activities from continuing operations decreased approximately $118.5 million
      due
      to changes in our purchases and proceeds from sales of marketable
      securities.




*Financing
      Activities:*




Net
      cash
      provided by financing activities for fiscal 2007 improved approximately $2.8
      billion to $3.1 billion when compared to $0.3 billion for fiscal 2006. This
      increase is primarily due to proceeds from senior notes of approximately $1.1
      billion in fiscal 2007 and capital contributions relating to our Investment
      Management operations of approximately $2.4 billion for fiscal 2007 compared
      to
      $0.3 billion of capital contributions for fiscal 2006. These increases were
      partially offset by a distribution of $335.0 million relating to the acquisition
      of PSC Metals.




We
      are
      continuing to pursue the purchase of businesses and assets, including businesses
      and assets that may not generate positive cash flow, are difficult to finance
      or
      may require additional capital, such as properties for development,
      non-performing loans, securities of companies that are undergoing or that may
      undergo restructuring, and companies that are in need of capital. All of these
      activities require us to maintain a strong capital base and
      liquidity.




59
 TABLE
          OF CONTENTS




***Borrowings***




Long-term
      debt consists of the following (in $000s):


**December
                  31,****2007**
              
              
              **2006**Senior
                  unsecured variable rate convertible notes due
                  2013 -
                Icahn
                  Enterprises
              
              $
              600,000
              
              $
              —Senior
                  unsecured 7.125% notes due 2013 - Icahn
                  Enterprises
              
              
              969,638
              
              
              475,500Senior
                  unsecured 8.125% notes due 2012 - Icahn
                  Enterprises
              
              
              347,328
              
              
              346,027Senior
                  secured 7.85% notes due 2012 - ACEP
              
              
              215,000
              
              
              215,000Borrowings
                  under credit facility - ACEP
              
              
              40,000
              
              
              40,000Mortgages
                  payable
              
              
              104,030
              
              
              109,289Other
              
              
              14,796
              
              
              15,684Total
                  long-term debt
              
              
              2,290,792
              
              
              1,201,500Less
                  debt related to assets held for sale
              
              
              (270,209
              )
              
              (271,417
              )$
              2,020,583
              
              $
              930,083




See
      Note
      12, “Long-Term Debt,” of our consolidated financial statements for additional
      information concerning terms, restrictions and covenants of our long-term debt.
      As of December 31, 2007, we are in compliance with all debt
      covenants.




***Contractual
      Commitments***




The
      following table reflects, at December 31, 2007, our contractual cash
      obligations, subject to certain conditions, due over the indicated periods
      and
      when they come due ($ in millions):




**Less
                  Than 1 Year**
              
              
              **1 - 3
                  Years**
              
              
              **3 - 5
                  Years**
              
              
              **After
                  5 Years**
              
              
              **Total**Senior
                  unsecured 7.125% notes
                due
                  2013 - Icahn Enterprises
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              980.0
              
              $
              980.0Senior
                  unsecured 8.125% notes
                due
                  2012 - Icahn Enterprises
              
              
              —
              
              
              —
              
              
              353.0
              
              
              —
              
              
              353.0Senior
                  unsecured variable rate convertible notes due
                  2013 -
                Icahn
                  Enterprises
              
              
              —
              
              
              —
              
              
              —
              
              
              600.0
              
              
              600.0Senior
                  secured 7.85% notes - ACEP
              
              
              215.0
              
              
              —
              
              
              —
              
              
              —
              
              
              215.0Senior
                  debt interest
              
              
              125.4
              
              
              245.0
              
              
              215.7
              
              
              14.5
              
              
              600.6Borrowing
                  under credit facilities - ACEP
              
              
              40.0
              
              
              —
              
              
              —
              
              
              —
              
              
              40.0Mortgages
                  payable
              
              
              36.6
              
              
              8.0
              
              
              32.3
              
              
              27.1
              
              
              104.0Lease
                  obligations
              
              
              9.4
              
              
              12.2
              
              
              19.8
              
              
              —
              
              
              41.4Unused
                  lines or letters of credit
              
              
              95.5
              
              
              —
              
              
              —
              
              
              —
              
              
              95.5Construction
                  and development obligations
              
              
              8.1
              
              
              —
              
              
              —
              
              
              —
              
              
              8.1Other
              
              
              23.0
              
              
              9.1
              
              
              4.5
              
              
              2.5
              
              
              39.1Total
              
              $
              553.0
              
              $
              274.3
              
              $
              625.3
              
              $
              1,624.1
              
              $
              3,076.7




On
      February 20, 2008, AEP, our wholly owned indirect subsidiary, sold all of the
      issued and outstanding membership interests of ACEP, which comprises 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.




60
 TABLE
          OF CONTENTS




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 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 $24.3 million at December 31,
      2007.




Estimates
      of PSC Metals’ liability for remediation of a particular site and the method and
      ultimate cost of remediation require a number of assumptions and 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. In addition,
      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.




*Metals
      and Home Fashion Purchase Orders*




Purchase
      orders or contracts for the purchase of certain inventory and other goods and
      services are not included in the table above. We are not able to determine
      the
      aggregate amount of such purchase orders that represent contractual obligations,
      as purchase orders may represent authorizations to purchase rather than binding
      agreements. Purchase orders are based on our current needs and are fulfilled
      by
      vendors within short time horizons. We do not have significant agreements for
      the purchase of inventory or other goods that specify minimum quantities or
      set
      prices that exceed expected requirements.




*Obligations
      Related to Securities*




As
      discussed in Note 7, “Investments and Related Matters,” to the consolidated
      financial statements as of December 31, 2007, we have contractual liabilities
      of
      $0.2 billion related to securities sold not yet purchased as of December 31,
      2007. This amount has not been included in the table above as their maturity
      is
      not subject to a contract and cannot properly be estimated.




*Off-Balance
      Sheet Arrangements*




We
      do not
      maintain any off-balance sheet transactions, arrangements, obligations or other
      relationships with unconsolidated entities or others.




***Discussion
      of Segment Liquidity and Capital Resources***




*Investment
      Management Operations*




The
      growth in the AUM of the Private Funds for fiscal 2007, fiscal 2006 and fiscal
      2005 resulted from gains on investments made in the Private Funds as well as
      from capital from new investors. Such growth directly impacted our cash flows
      due to management fees paid to Icahn Management (and after August 8, 2007,
      New
      Icahn Management). Positive performance also resulted in higher incentive
      allocations paid to the General Partners.




The
      Private Funds have historically not utilized significant amounts of leverage.
      As
      of December 31, 2007, for example, the ratio of the notional exposure of our
      invested capital to net asset value of the Private Funds was approximately
      0.92
      to 1.00 on the long side and 0.85 to 1.00 on the short side. Due to the low
      leverage, we believe that we have access to significant amounts of cash from
      prime brokers, subject to customary conditions.




Historically,
      the management fees generated by our Investment Management Entities have been
      more than sufficient to cover operating expenses.




Net
      cash
      used in operating activities is largely comprised of purchases of securities
      and
      sales proceeds from securities transactions. Purchases of securities during
      fiscal 2007 were approximately $9.0 billion compared to $4.3 billion for the
      comparable prior year period while proceeds from sales of securities were
      approximately $6.4 billion and $5.2 billion for fiscal 2007 and fiscal 2006,
      respectively. Net cash used in operating activities was $3.0 billion and $0.4
      billion for fiscal 2007 and fiscal 2006, respectively.




61
 TABLE
          OF CONTENTS




Purchases
      of securities by the Private Funds were $4.3 billion and $3.2 billion for fiscal
      2006 and fiscal 2005, respectively, while proceeds from sales of securities
      were
      $5.2 billion and $1.3 billion, for fiscal 2006 and fiscal 2005, respectively.
      Net cash used in operating activities was $0.4 billion and $0.9 billion for
      fiscal 2006 and fiscal 2005, respectively.




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 $2.3 billion and $0.4 billion for fiscal 2007 and fiscal 2006, respectively.
      The increase in fiscal 2007 was due to increased capital contributions from
      investors in the Private Funds of $2.1 billion compared to fiscal
      2006.




Net
      cash
      provided from financing activities was $0.4 billion and $0.9 billion for fiscal
      2006 and fiscal 2005, respectively. This decrease in cash provided by financing
      activities was primarily a result of lower net cash inflows from investors
      in
      the Private Funds in fiscal 2006.




***All
      Other Operations***




*Metals*




The
      primary source of cash from our PSC Metals operating unit is from the operation
      of its properties. Historically PSC Metals’ liquidity requirements primarily
      pertained to the funding of acquisitions, capital expenditures and payment
      of
      dividends. Prior to our acquisition on November 5, 2007, PSC Metals has funded
      acquisitions principally from net cash provided by operating activities, from
      borrowings and capital contributions from Philip.




As
      of
      December 31, 2007, PSC Metals had cash and cash equivalents of approximately
      $20.2 million, which includes the proceeds from an intercompany loan from Icahn
      Enterprises of $10.0 million. For fiscal 2007, net cash generated from operating
      activities totaled $18.9 million, compared to $56.9 million for fiscal 2006
      and
      $32.0 million for fiscal 2005. The decrease in cash generated from operating
      activities in fiscal 2007 from fiscal 2006 primarily relates to a decrease
      in
      net income ($41.8 million as compared to $50.8 million) and a net increase
      in
      working capital resulting primarily from higher accounts receivable. The
      increase in accounts receivable is due to the additional revenues generated
      from
      the WIMCO acquisition and higher monthly sales leading up to December 2007
      as
      compared to the monthly sales leading up to December 2006. The increase in
      cash
      generated from operating activities in fiscal 2006 from fiscal 2005 primarily
      relates to an increase in net income and a net decrease in working
      capital.




PSC
      Metals’ primary use of cash for fiscal 2007 was $47.7 million for acquisitions,
      including approximately $40.0 million for the assets of WIMCO Operating Company,
      Inc. in September 2007, operating expenses and capital spending. Capital
      spending was approximately $27.4 million for fiscal 2007 compared to $15.9
      million and $27.0 million for fiscal 2006 and 2005, respectively. Capital
      expenditures for fiscal 2008 are expected to total between $46.0 million and
      $48.0 million for its existing facilities, which PSC Metals anticipates will
      include new shredders and ongoing growth and maintenance capital for its yard
      and other operating facilities.




Net
      cash
      provided by financing activities was $50.3 million in fiscal 2007 as compared
      to
      net cash used in financing activities of $36.2 million and $18.4 million in
      fiscal 2006 and fiscal 2005, respectively. During fiscal 2007, prior to our
      acquisition of PSC Metals on November 5, 2007, PSC Metals borrowed $73.2
      million, of which $10.0 million was an intercompany loan made by Icahn
      Enterprises and $63.2 million was under a credit facility with UBS Securities
      LLC. PSC Metals repaid $27.7 million of these borrowings while their former
      parent company, Philip, repaid $34.6 million. Net cash used in financing
      activities by PSC Metals for fiscal 2006 and fiscal 2005 included $35.0 million
      and $10.0 million, respectively, representing dividends paid to
      Philip.




PSC
      Metals is currently under negotiations to enter into a $100 million asset-based
      borrowing agreement, which is expected to close the second quarter of 2008.
      PSC Metals believes that increased cash flows from operations together with
      funds available under the proposed credit facility will be sufficient to fund
      working capital
      requirements, acquisitions and anticipated dividend requirements over the next
      12 months. PSC Metals also believes that the timing and size of future capital
      requirements, consistent with PSC Metals’ strategy, are subject to change. PSC
      Metals’ management anticipates that capital spending will increase over the next
      three to five years, as PSC Metals vertically integrates into feeder yards,
      mobile car crushing and transportation, as it continues to upgrade its
      processing equipment, and as it continues to invest in the latest technologies
      for recovery of non-ferrous material within its shredded product. Future
      acquisitions, if any, may require funding in excess of borrowing availability
      under the proposed credit facility.




62
 TABLE
          OF CONTENTS




*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
      December 31, 2007, we had cash and cash equivalents of $172.2 million compared
      to $110.0 million at December 31, 2006.




In
      fiscal
      2007, cash provided by operating activities from continuing operations was
      $48.3
      million primarily from income from continuing operations of $12.4 million,
      non-cash charges of $9.2 million and a decrease in property development
      inventory of $16.6 million. Cash flows from investing activities were $14.8
      million primarily from the sale of five rental properties. Cash used in
      financing activities was $5.3 million from payments of mortgage
      debt.




We
      expect
      operating cash flows to be positive across all real estate segments in 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 expect to refinance.




*Home
      Fashion*




In
      fiscal
      2007, our Home Fashion segment had a negative operating cash flow from
      continuing operations of $62.1 million as compared to $29.9 million in fiscal
      2006. Such negative cash flow was principally due to losses from operations
      and
      ongoing restructuring efforts partially offset by reductions in working capital.
      As discussed above, WPI expects to continue its restructuring efforts and,
      accordingly, expects that restructuring charges and operating losses will
      continue to be incurred through the end of fiscal 2008.




At
      December 31, 2007, WPI had approximately $135.7 million of unrestricted cash
      and
      cash equivalents.




Capital
      expenditures by WPI were $29.7 million and $10.9 million for fiscal 2007 and
      2006, respectively. Capital expenditures for fiscal 2008 are expected to total
      between $12.0 and $15.0 million. During fiscal 2006, WPI invested approximately
      $12.4 million to acquire a 50% ownership interest in a joint venture in Pakistan
      for a bath products manufacturing facility. WPI may expend additional amounts
      in
      connection with further joint ventures and acquisitions, and such amounts may
      be
      significant.




On
      December 20, 2006, pursuant to a subscription and standby commitment agreement,
      Icahn Enterprises Holdings purchased from WPI 1,000,000 shares of WPI’s Series
      A-1 Preferred Stock, par value $0.01 per share, and 1,000,000 shares of WPI’s
      series A-2 Preferred Stock, par value of $0.01 per share, for an aggregate
      purchase price of $200.0 million. Each share of Series A-1 and Series A-2
      Preferred Stock is convertible into WPI common stock at a conversion price
      of
      $10.50 per share, subject to adjustment in certain events provided, however,
      that in certain circumstances, approximately $92.1 million of the series A-2
      Preferred Stock may be converted at $8.772 per share. However, until certain
      conditions are met, the Series A-1 and Series A-2 Preferred Stock may not be
      converted into common stock. In addition, WPI may cause the conversion of all
      Series A-1 or Series A-2 Preferred Stock upon the occurrence of certain
      events.




On
      December 21, 2006, WPI used $98.6 million of the proceeds to finance the
      acquisition of certain bed products manufacturing facilities from Manama Textile
      Mills WLL in Bahrain. The remainder of the proceeds from the preferred stock
      offering has been used for additional payments due under this purchase
      agreement, working capital, capital expenditures and general corporate
      purposes.




63
 TABLE
          OF CONTENTS




On
      June
      16, 2006, WPI’s primary operating subsidiary, WestPoint Home, Inc., entered into
      a $250.0 million senior secured revolving credit facility from Bank of America,
      N.A. with an expiration date of June 15, 2011. The borrowing availability under
      the senior credit facility is subject to a monthly borrowing base calculation
      less outstanding loans, letters of credit and other reserves under the facility.
      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 at 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.




At
      December 31, 2007, there were no borrowings under the agreement, but there
      were
      outstanding letters of credit of $15.3 million. Based upon the eligibility
      and
      reserve calculations within the agreement, WestPoint Home had unused borrowing
      availability of approximately $95.5 million at December 31, 2007.




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 $231.2 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 at least through the next twelve
      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
      reasonably 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.




***Discontinued
      Operations***




On
      October 18, 2007, WPI entered into an agreement to sell the inventory at all
      of
      its 30 retail outlet stores. The decision to close all of the stores was based
      on a comprehensive evaluation of long-term growth prospects and strategic value
      to the WPI business. For the year ended December 31, 2007, our Home Fashion
      segment had a negative cash flow from discontinued operations of $6.7 million
      as
      compared to $7.1 million in 2006.




***Distributions***




*Depositary
      Units*




In
      fiscal
      2007, Icahn Enterprises paid four quarterly distributions to holders of its
      depositary units. The first distribution was $0.10 per depositary unit and
      the
      remaining three distributions were each $0.15 per depositary units for an
      aggregate amount of $37.4 million. On February 29, 2008, the board of directors
      of Icahn Enterprises GP approved an increase in the quarterly cash
      distribution to $0.25 per unit on Icahn Enterprises’ depositary
      units
      for the first quarter of fiscal 2008. The distribution is payable on April
      1,
      2008 to depositary unitholders of record at the close of business on March
      18,
      2008.




During
      fiscal 2005, Icahn Enterprises began to pay distributions to its
      unitholders. Total distributions of $0.40 per depositary unit were declared
      and
      paid during fiscal 2006 in an aggregate amount of $25.2 million.




64
 TABLE
          OF CONTENTS




**Critical
      Accounting Policies and Estimates**




Our
      significant accounting policies are described in Note 2, “Summary of Significant
      Accounting Policies,” of our consolidated financial statements for fiscal 2007.
      Our consolidated financial statements have been prepared in accordance with
      U.S.
      GAAP. The preparation of financial statements in conformity with U.S. GAAP
      requires management to make estimates and assumptions that affect the reported
      amounts of assets, liabilities, revenues and expenses and the disclosure of
      contingent assets and liabilities. Among others, estimates are used when
      accounting for valuation of investments and estimated costs to complete land,
      house and condominium developments. Estimates and assumptions are evaluated
      on
      an ongoing basis and are based on historical and other factors believed to
      be
      reasonable under the circumstances. The results of these estimates may form
      the
      basis of the carrying value of certain assets and liabilities and may not be
      readily apparent from other sources. Actual results, under conditions and
      circumstances different from those assumed, may differ from
      estimates.




We
      believe the following accounting policies are critical to our business
      operations and the understanding of results of operations and affect the more
      significant judgments and estimates used in the preparation of our consolidated
      financial statements.




***Investment
      Management Operations***




*Consolidation*




The
      consolidated financial statements include the accounts of (i) Icahn Enterprises
      Holdings and (ii) the wholly and majority owned subsidiaries of Icahn
      Enterprises Holdings in which control can be exercised, in addition to those
      entities in which Icahn Enterprises Holdings has a substantive controlling
      general partner interest or in which it is the primary beneficiary of a variable
      interest entity. We are considered to have control if we have a direct or
      indirect ability to make decisions about an entity’s activities through voting
      or similar rights. We use the guidance set forth in Emerging Issues Task Force
      (“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
      No. 04-05”), FASB Interpretation No. 46R, *Consolidation
      of Variable Interest Entities, an Interpretation of ARB No. 51* (“FIN
      46R”), and SFAS No. 94, *Consolidation
      of All Majority-Owned Subsidiaries — An Amendment of ARB No. 51, with
      Related Amendments of APB Opinion No. 18, and ARB No. 43 Chapter
      12* (“SFAS
      No. 94”), with respect to our investments in partnerships and limited liability
      companies. All intercompany balances and transactions are
      eliminated.




Our
      consolidated financial statements also include the Investment Management
      Entities and certain consolidated Private Funds during the periods presented.
      The Investment Management Entities 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 pursuant to SFAS No. 94, (ii)
      they have a substantive, controlling general partner interest pursuant to EITF
      No. 04-05 or (iii) they are the primary beneficiary of a variable interest
      entity pursuant to FIN 46R. With respect to the consolidated Private Funds,
      the
      limited partners and shareholders have no substantive rights to impact ongoing
      governance and operating activities.




The
      analysis as to whether to consolidate an entity is subject to a significant
      amount of judgment. Some of the criteria considered include the determination
      as
      to the degree of control over an entity by its various equity holders, the
      design of the entity, how closely related the entity is to each of its equity
      holders, the relation of the equity holders to each other and a determination
      of
      the primary beneficiary in entities in which we
      have a
      variable interest. These analyses involve estimates, probability weighting
      of
      subjectively determined cash flows scenarios and other estimates based on the
      assumptions of management.




65
 TABLE
          OF CONTENTS




*Revenue
      Recognition on Management Fee and Incentive Allocation*




The
      Investment Management Entities generate income from amounts earned pursuant
      to
      contractual arrangements with the Private Funds. Prior to January 1, 2008,
      such
      amounts typically include 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 unrealized) earned by the Private Funds 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). Such amounts have
      been (and may in the future be) modified or waived in certain circumstances.
      The
      Investment Management Entities and their affiliates may also earn income through
      their principal investments in the Private Funds.




The
      General Partner incentive 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* (“EITF
      Topic D-96”), and are allocated to the Onshore GP and the Offshore GP,
      respectively, at the end of the Onshore Fund’s and each Offshore Master Fund’s
      fiscal year (or sooner on redemptions). Such accruals may be reversed as a
      result of subsequent investment performance prior to the conclusion of each
      Investment Fund’s fiscal year.




*Compensation
      Arrangements*




The
      Investment Management Entities have entered into agreements with certain of
      their employees whereby these employees have been granted rights to participate
      in a portion of the management fees and incentive allocations earned by the
      Investment Management Entities, typically net of certain expenses and generally
      subject to various vesting provisions. The vesting period of these rights is
      generally between two to seven years, and such rights expire 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 may
      be
      deferred for a period not to exceed ten years from the date of deferral, based
      on an annual election made by the employee for the upcoming fiscal year’s
      respective management fee. These amounts remain invested in the Private Funds
      and generally earn the rate of return of these funds, before the effects of
      any
      levied management fees or incentive allocations, which are waived on such
      deferred amounts. Accordingly, these rights are accounted for as liabilities
      in
      accordance with SFAS No. 123R (Revised 2004), *Share-Based
      Payment,* and
      remeasured at fair value for each reporting period until
      settlement.




The
      fair
      value of amounts deferred under these rights is determined at the end of each
      reporting period based, in part, on the (i) fair value of the underlying
      fee-paying net assets of the Private Funds, upon which the respective management
      fees are based, and (ii) performance of the funds in which the deferred amounts
      are reinvested. The carrying value of such amounts represents the allocable
      management fees initially deferred and the appreciation or depreciation on
      any
      reinvested deferrals. These amounts approximate fair value because the
      appreciation or depreciation on the deferrals is based on the fair value of
      the
      Private Funds’ investments, which are marked-to-market through earnings on a
      monthly basis.




*Valuation
      of Investments*




The
      fair
      value of our investments, including securities sold, not yet purchased, is
      based
      on observable market prices when available. Securities of the Private Funds
      that
      are listed on a securities exchange are valued at their last sales price on
      the
      primary securities exchange on which such securities are traded on such date.
      Securities that are not listed on any exchange but are traded over-the-counter
      are valued at the mean between the last “bid” and “ask” price for such security
      on such date. Securities and other instruments for which market quotes are
      not
      readily available are valued at fair value as determined in good faith by the
      applicable general partner. For some investments little market activity may
      exist; management’s determination of fair value is then based on the best
      information available in the circumstances, and may incorporate management’s own
      assumptions and involves a significant degree of management’s
      judgment.




66
 TABLE
          OF CONTENTS




***All
      Other Operations***




*Accounting
      for the Impairment of Long-Lived Assets Other Than Goodwill*




Long-lived
      assets held and used by us and long-lived assets to be disposed of are reviewed
      for impairment whenever events or changes in circumstances, such as vacancies
      and rejected leases, indicate that the carrying amount of an asset may not
      be
      recoverable. In performing the review for recoverability, we estimate the future
      cash flows expected to result from the use of the asset and its eventual
      disposition. If the sum of the expected future cash flows, undiscounted and
      without interest charges, is less than the carrying amount of the asset an
      impairment loss is recognized. Measurement of an impairment loss for long-lived
      assets that we expect to hold and use is based on the fair value of the asset.
      Long-lived assets to be disposed of are reported at the lower of carrying amount
      or fair value less cost to sell.




*Accounting
      for the Impairment of Goodwill*




We
      perform impairment tests on goodwill on an annual basis, or on an interim basis
      if events or circumstances indicate that it is more likely than not that
      impairment has occurred. Goodwill is potentially impaired if the carrying value
      of the reporting unit that contains the goodwill exceeds its estimated fair
      value. The fair value of the reporting unit is determined using a combination
      of
      an income approach, which estimates fair value based upon future discounted
      cash
      flows, and a market approach, which estimates fair value using market multiples,
      ratios, and valuations of a set of comparable companies within the
      industry.




The
      valuation methodology and underlying financial information that is used to
      estimate the fair value of our reporting units requires significant judgments
      to
      be made by management. These judgments include, but are not limited to, the
      long-term projections of future financial performance and the selection of
      appropriate discount rates used to present value future cash flows. Our
      five-year strategic operating plan serves as the basis for these valuations
      and
      represents our best estimate of future business conditions in our industry
      as
      well as our ability to compete. Discount rates are determined based upon the
      weighted average cost of capital for a set of comparable companies adjusted
      for
      risks associated with our different operations. If there was a significant
      downturn in a reporting unit business, we could incur a goodwill
      impairment.




*Commitments
      and Contingencies — Litigation*




On
      an
      ongoing basis, we assess the potential liabilities related to any lawsuits
      or
      claims brought against us. While it is typically very difficult to determine
      the
      timing and ultimate outcome of such actions, we use our best judgment to
      determine if it is probable that we will incur an expense related to the
      settlement or final adjudication of such matters and whether a reasonable
      estimation of such probable loss, if any, can be made. In assessing probable
      losses, we make estimates of the amount of insurance recoveries, if any. We
      accrue a liability when we believe a loss is probable and the amount of loss
      can
      be reasonably estimated. Due to the inherent uncertainties related to the
      eventual outcome of litigation and potential insurance recovery, it is possible
      that certain matters may be resolved for amounts materially different from
      any
      provisions or disclosures that we have previously made.




*Environmental
      Remediation*




Due
      to
      nature of the operations of our Metals segment, we may be subject to
      environmental remediation claims. Our Metals segment is subject to federal,
      state, local and foreign environmental laws and regulations concerning
      discharges to the air, soil, surface and subsurface waters and the generation,
      handling, storage, transportation, treatment and disposal of waste materials
      and
      hazardous substances. PSC Metals is also subject to other Federal, state, local
      and foreign laws and regulations including those that require PSC Metals to
      remove or mitigate the effects of the disposal or release of certain materials
      at various sites. While it is typically very difficult to determine the timing
      and ultimate outcome of such actions, if any, PSC Metals’ management uses its
      best judgment to determine if it is probable that it will incur an expense
      related to the settlement or final adjudication of such matters and whether
      a
      reasonable estimation of such probable loss, if any, can be made. In assessing
      probable losses, PSC Metals’ management makes estimates of the amount of
      insurance recoveries, if any. PSC Metals accrues a liability when management
      believes a loss is probable and the amount of loss can be reasonably estimated.
      Due to the inherent uncertainties related to the eventual outcome of litigation
      and potential insurance recovery, it is possible that certain matters may be
      resolved for amounts materially different from any provisions or disclosures
      that have previously been made.




67
 TABLE
          OF CONTENTS




It
      is
      impossible to predict precisely what effect these laws and regulations will
      have
      on PSC Metals in the future. Compliance with environmental laws and regulations
      may result in, among other things, capital expenditures, costs and liabilities.
      Management believes, based on past experience and its best assessment of future
      events, that 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.




*Use
      of Estimates in Preparation of Financial Statements*




The
      preparation of the consolidated financial statements in conformity with U.S.
      GAAP requires management to make estimates and assumptions that affect the
      reported amount of assets and liabilities at the date of the financial
      statements and the reported amount of revenues and expenses during the period.
      The more significant estimates include: (1) the valuation allowances of accounts
      receivable and inventory; (2) the valuation of long-lived assets, mortgages
      and
      notes receivable; (3) costs to complete for land, house and condominium
      developments; (4) deferred tax assets; (5) environmental liabilities; and (6)
      fair value of derivatives. Actual results may differ from the estimates and
      assumptions used in preparing the consolidated financial
      statements.




*Income
      Taxes*




Except
      as
      described below, no provision has been made for federal, state or local income
      taxes on the results of operations generated by partnership activities as such
      taxes are the responsibility of the partners. Our corporate subsidiaries account
      for their income taxes under the asset and liability method. Deferred tax assets
      and liabilities are recognized for the future tax consequences attributable
      to
      differences between the financial statement carrying amounts of existing assets
      and liabilities and their respective tax bases and operating loss and tax credit
      carry forwards.




Deferred
      tax assets and liabilities are measured using enacted tax rates expected to
      apply to taxable income in the years in which those temporary differences are
      expected to be recovered or settled. The effect on deferred tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that
      includes the enactment date.




Through
      December 31, 2007, New Icahn Management (and Icahn Management prior to the
      acquisition on August 8, 2007) was subject to New York City Unincorporated
      Business Tax, or UBT, at a statutory rate of 4% on a portion of its income.
      UBT
      is accounted for under SFAS No. 109, *Accounting
      for Income Taxes* (“SFAS
      No. 109”). New Icahn Management accounts for these taxes using the asset and
      liability method under which deferred tax assets and liabilities are recognized
      for the future tax consequences attributable to differences between the
      financial statement carrying amounts of existing assets and liabilities and
      their respective tax bases.




Management
      periodically evaluates all evidence, both positive and negative, in determining
      whether a valuation allowance to reduce the carrying value of deferred tax
      assets is still needed. In fiscal 2007, fiscal 2006 and fiscal 2005, we
      concluded, based on the projections of taxable income, that certain of our
      corporate subsidiaries more likely than not will realize a partial benefit
      from
      their deferred tax assets and loss carryforwards. Ultimate realization of the
      deferred tax assets is dependent upon, among other factors, our corporate
      subsidiaries’ ability to generate sufficient taxable income within the
      carryforward periods and is subject to change depending on the tax laws in
      effect in the years in which the carryforwards are used.




**Recently
      Issued Accounting Pronouncements**




In
      February 2008, the FASB issued FSP No. SOP 07-1-1, *Effective
      Date of AICPA Statement of Position 07-1* (“FSP
      No. SOP 07-1-1”). FSP No. 07-1-1 amends SOP 07-1 by delaying indefinitely the
      effective date of the SOP 07-1 and prohibits the adoption of SOP 07-1 for an
      entity that has not early adopted SOP 07-1 before the issuance of FSP No.
      07-1-1. An entity that early adopts SOP 07-1 before the issuance of FSP No.
      07-1-1 would be permitted but not required to continue to apply the provisions
      of the SOP 07-1. An entity that did not early adopt SOP 07-1 would not be
      permitted to adopt it. Because we early adopted SOP 07-1 before the issuance
      of
      FSP 07-1-1, we are permitted to continue to apply the provisions of SOP
      07-1.




*SFAS
      No. 141(R).* In
      December 2007, the FASB issued 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
      considerations and certain acquired contingencies will be recorded at fair
      value
      at the acquisition date.




68
 TABLE
          OF CONTENTS




Additionally,
      SFAS No. 141(R) also requires 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. We are currently evaluating the impact that
      SFAS No. 141(R) will have on our consolidated financial statements.




*SFAS
      No 160* . In
      December 2007, the FASB issued Statement 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 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 after December 15, 2008. 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 Exchange Act, as amended 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. Readers should consider that such statements speak only as of
      the
      date hereof.




**Certain
      Trends and Uncertainties**




We
      have
      in the past and may in the future make forward-looking statements. Certain
      of
      the statements contained in this document involve risks and uncertainties.
      Our
      future results could differ materially from those statements. 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,” of this Form
      10-K.




**Item
      7A. 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, equity prices and derivatives. The following sections address the
      significant market risks associated with our business activities.




***Investment
      Management Operations***




Our
      predominant exposure to market risk is related to our Investment Management
      operations and the sensitivities to movements in the fair value of the Private
      Funds’ investments, including the effect on our management fees through December
      31, 2007 or special profits interest allocations, as the case may be, and
      incentive allocations.




The
      fair
      value of the financial assets and liabilities of the Private Funds primarily
      fluctuates in response to changes in the value of securities. The net effect
      of
      these fair value changes impacts the net gains (losses) from investment
      activities in our consolidated statements of operations. However, the majority
      of these fair value changes are absorbed by the non-controlling interest holders
      in the Private Funds.




The
      Private Funds’ risk is evaluated daily and is managed on a position basis as
      well as on a portfolio basis. Our investment team meets on a regular basis
      to
      assess and review concentration risk, correlation risk and credit risk for
      significant positions. Risk metrics and other analytical tools are prepared
      in
      the normal course of business and made available to the General
      Partners.




69
 TABLE
          OF CONTENTS




***Effect
      on Private Fund Management Fees***




Our
      management fees are based on a specified percentage of the net asset value
      of
      the fee-paying capital of a Private Fund (before an incentive allocation based
      on the net profits of a Private Fund subject to a loss carryforward provision),
      as described in our consolidated financial statements. Accordingly, our
      management fees will be directly affected by changes in market risk. These
      management fees will be increased (or reduced) in direct proportion to the
      effect of changes in the market value of the net assets in the related funds.
      Although the majority of our management fees are eliminated in consolidation,
      our allocated share of the net income of the Private Funds includes the amount
      of these eliminated fees and allocations.




***Impact
      on Incentive Allocations***




Our
      incentive allocations are based on a specified percentage of the net profits
      earned by the Private Funds subject to a loss carryforward provision. Our
      incentive allocations will be impacted by changes in market risk but are not
      readily predicted or estimated. Although our incentive allocations are
      eliminated in consolidation, our allocated share of the net income of the
      Private Funds includes the amount of these eliminated fees and
      allocations.




***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 December 31, 2007, 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 $637.6
      million and increase by $19.8 million, respectively, and the fair value of
      derivatives would increase by $537.0 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 1% in these
      Private Funds, and the non-controlling interests in income would correspondingly
      offset approximately 99% of the change in fair value.




***Exchange
      Rate Risk***




The
      Private Funds are not materially exposed to foreign exchange risk since foreign
      investments are economically hedged by foreign currency forward
      contracts.




***Credit
      Risk***




Icahn
      Enterprises Holdings and certain of its consolidated Private Funds are subject
      to certain inherent risks through their investments.




Our
      entities typically invest excess cash in large money market funds. The money
      market funds primarily invest in government securities and other short-term,
      highly liquid instruments with a low risk of loss. The Private Funds also
      maintain free credit balances with their prime brokers and in interest bearing
      accounts at major banking institutions. We seek to diversify our cash
      investments across several accounts and institutions and monitor performance
      and
      counterparty risk.




The
      Private Funds and, to a lesser extent, other entities hold derivative
      instruments that are subject to credit risk in the event that the counterparties
      are unable to meet the terms of such agreements. When the Private Funds make
      such investments or enter into other arrangements where they might suffer a
      significant loss through the default or insolvency of a counterparty, the
      General Partners monitor the credit quality of such counterparty and seek to
      do
      business with creditworthy counterparties. Counterparty risk is monitored by
      obtaining and reviewing public information filed by the counterparties and
      others.




***All
      Other Operations***




*Interest
      Rate Risk*




The
      fair
      values of our long-term debt and other borrowings will fluctuate in response
      to
      changes in market interest rates. Increases and decreases in prevailing interest
      rates generally translate into decreases and increases in fair values of those
      instruments. Additionally, fair values of interest rate sensitive instruments
      may be affected by the creditworthiness of the issuer, relative values of
      alternative investments, the liquidity of the instrument and other general
      market conditions.




70
 TABLE
          OF CONTENTS




We
      do not
      invest in derivative financial instruments, interest rate swaps or other
      investments that alter interest rate exposure.




We
      have
      predominately long-term fixed interest rate debt. Generally, the fair market
      value of debt securities with a fixed interest rate will increase as interest
      rates fall, and the fair market value will decrease as interest rates rise.
      At
      December 31, 2007, the impact of a 100 basis point increase in interest rates
      on
      fixed rate debt would result in a decrease in market value of approximately
      $51.6 million. A 100 basis point decrease would result in an increase in market
      value of approximately $51.6 million.




*Equity
      Price Risk*




The
      carrying values of investments subject to equity price risks are based on quoted
      market prices or management’s estimates of fair value as of the balance sheet
      dates. Market prices are subject to fluctuation and, consequently, the amount
      realized in the subsequent sale of an investment may significantly differ from
      the reported market value. Fluctuation in the market price of a security may
      result from perceived changes in the underlying economic characteristics of
      the
      investee, the relative price of alternative investments and general market
      conditions. Furthermore, amounts realized in the sale of a particular security
      may be affected by the relative quantity of the security being
      sold.




Based
      on
      a sensitivity analysis for our equity price risks as of December 31, 2007 the
      effects of a hypothetical 10% increase or decrease in market prices as of those
      dates would result in a gain or loss that would be approximately $35.1 million.
      The selected hypothetical change does not reflect what could be considered
      the
      best or worst case scenarios. Indeed, results could be far worse due to the
      nature of equity markets.




71
 TABLE
          OF CONTENTS




**Item
      8. Financial Statements and Supplementary
      Data**




**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 Board
        of
        Directors and Partners of
 **Icahn
        Enterprises Holdings L.P.**
 
 We
        have
        audited the accompanying consolidated balance sheets of Icahn Enterprises
        Holdings L.P. and Subsidiaries (the “Partnership”) (a Delaware limited
        partnership) as of December 31, 2007 and 2006, and the related consolidated
        statements of operations, changes in partners’ equity and comprehensive income,
        and cash flows for each of the three years in the period ended December 31,
        2007. These consolidated financial statements are the responsibility of the
        Partnership’s management. Our responsibility is to express an opinion on these
        consolidated financial statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. The Partnership is not required
        to
        have, nor were we engaged to perform an audit of its internal control over
        financial reporting. Our audit included consideration of internal control
        over
        financial reporting as basis for designing audit procedures that are appropriate
        in the circumstances, but not for the purpose of expressing an opinion on
        the
        effectiveness of the Partnership’s internal control over financial reporting.
        Accordingly, we express no such opinion. An audit also includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements, assessing the accounting principles used and significant estimates
        made by management, as well as evaluating the overall financial statement
        presentation. We believe that our audits provide a reasonable basis for our
        opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Icahn
        Enterprises Holdings L.P. and Subsidiaries as of December 31, 2007 and 2006,
        and
        the consolidated results of their operations and their consolidated cash
        flows
        for each of the three years in the period ended December 31, 2007, in conformity
        with accounting principles generally accepted in the United States of
        America.
 
 As
        discussed in Notes 2 and 7 to the consolidated financials statements, in
        2007,
        the Partnership changed its method of accounting for its investments with
        the
        adoption of SOP 07-1, SFAS 157 and SFAS 159 .
 
 As
        discussed in Note 2 to the consolidated financial statements, in 2007, the
        Partnership changed its method of allocating gains and losses related to
        dispositions of common control acquisitions.
 
 As
        discussed in Note 1, these consolidated financial statements have been adjusted
        to reflect the acquisition of entities under common control, which have been
        accounted for in a manner similar to a pooling-of-interests, as well as the
        reclassification of assets held for sale or sold to discontinued
        operations.
 
 
 /s/
        GRANT
        THORNTON LLP
 
 
 New
        York,
        New York
 March
        17,
        2008




72
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES** ****




**CONSOLIDATED
      BALANCE SHEETS**




**December
      31, 2007 and 2006**


**December
                  31,****2007**
              
              **2006**(in
                  000s)**ASSETS**Investment
                  Management Operations:Cash
                  and cash equivalents
              
              $
              26,027
              
              $
              4,822Cash
                  held at consolidated affiliated partnerships and restricted
                  cash
              
              
              1,104,748
              
              
              1,106,809Securities
                  owned, at fair value
              
              
              5,920,209
              
              
              2,757,229Unrealized
                  gains on derivative contracts, at fair value
              
              
              110,181
              
              
              80,216Due
                  from brokers
              
              
              847,891
              
              
              838,620Other
                  assets
              
              
              40,831
              
              
              27,4608,049,887
              
              
              4,815,156All
                  Other Operations:Cash
                  and cash equivalents
              
              
              2,086,805
              
              
              1,879,554Restricted
                  cash
              
              
              41,681
              
              
              87,159Investments
              
              
              511,045
              
              
              698,345Unrealized
                  gains on derivative contracts, at fair value
              
              
              2,621
              
              
              20,538Inventories,
                  net
              
              
              266,223
              
              
              282,921Trade,
                  notes and other receivables, net
              
              
              178,990
              
              
              225,606Assets
                  of discontinued operations held for sale
              
              
              652,100
              
              
              620,974Property,
                  plant and equipment, net
              
              
              513,304
              
              
              535,273Goodwill
                  and intangible assets
              
              
              39,579
              
              
              23,402Other
                  assets
              
              
              100,596
              
              
              97,9344,392,944
              
              
              4,471,706**Total
                  Assets**
              
              $
              12,442,831
              
              $
              9,286,862**LIABILITIES
                  AND PARTNERS’ EQUITY**Investment
                  Management Operations:Accounts
                  payable, accrued expenses and other liabilities
              
              $
              116,990
              
              $
              59,286Deferred
                  management fee payable to related party
              
              
              143,972
              
              
              —Subscriptions
                  received in advance
              
              
              144,838
              
              
              66,030Payable
                  for purchases of securities
              
              
              46,055
              
              
              11,687Securities
                  sold, not yet purchased, at fair value
              
              
              206,128
              
              
              691,286Unrealized
                  losses on derivative contracts, at fair value
              
              
              15,726
              
              
              1,770673,709
              
              
              830,059All
                  Other Operations:Accounts
                  payable
              
              
              81,432
              
              
              85,447Accrued
                  expenses and other liabilities
              
              
              120,820
              
              
              176,917Securities
                  sold, not yet purchased, at fair value
              
              
              —
              
              
              25,398Unrealized
                  losses on derivative contracts, at fair value
              
              
              3,462
              
              
              —Accrued
                  environmental costs
              
              
              24,296
              
              
              19,861Liabilities
                  of discontinued operations held for sale
              
              
              330,224
              
              
              331,677Long-term
                  debt
              
              
              2,020,583
              
              
              930,0832,580,817
              
              
              1,569,383**Total
                  Liabilities**
              
              
              3,254,526
              
              
              2,399,442Commitments
                  and contingencies (Note 17)Non-controlling
                  interests:Investment
                  Management Operations
              
              
              6,594,014
              
              
              3,628,470All
                  Other Operations
              
              
              140,549
              
              
              292,221Partners’
                  equity:Limited
                  partner:
              
              
              3,216,976
              
              
              2,393,997General
                  partner
              
              
              (763,234
              )
              
              572,732Partners’
                  equity
              
              
              2,453,742
              
              
              2,966,729**Total
                  Liabilities and Partners’ Equity**
              
              $
              12,442,831
              
              $
              9,286,862




*See
      notes to consolidated financial statements.*




73
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES** ****




**CONSOLIDATED
      STATEMENTS OF OPERATIONS**




**Years
      Ended December 31, 2007, 2006 and 2005**


**Year
                  Ended December 31,****2007**
              
              **2006**
              
              **2005**(in
                  000s)Revenues:Investment
                  Management Operations:Interest,
                  dividends and other income
              
              $
              222,764
              
              $
              73,563
              
              $
              47,436Net
                  gain from investment activities
              
              
              354,873
              
              
              1,030,740
              
              
              305,440Management
                  fees, related parties
              
              
              10,617
              
              
              —
              
              
              —588,254
              
              
              1,104,303
              
              
              352,876All
                  Other Operations:Metals
              
              
              834,106
              
              
              710,054
              
              
              600,989Real
                  Estate
              
              
              102,922
              
              
              132,610
              
              
              98,392Home
                  Fashion
              
              
              683,670
              
              
              890,840
              
              
              441,771Interest
                  and other income
              
              
              143,178
              
              
              50,417
              
              
              42,631Net
                  gain (loss) from investment activities
              
              
              82,642
              
              
              91,308
              
              
              (21,260
              )Other
                  income, net
              
              
              52,854
              
              
              24,432
              
              
              9,3061,899,372
              
              
              1,899,661
              
              
              1,171,829Total
                  revenues
              
              
              2,487,626
              
              
              3,003,964
              
              
              1,524,705Expenses:Investment
                  Management Operations
              
              
              99,787
              
              
              79,735
              
              
              26,050All
                  Other Operations:Metals
              
              
              796,173
              
              
              667,118
              
              
              569,836Real
                  Estate
              
              
              91,893
              
              
              105,825
              
              
              81,596Home
                  Fashion
              
              
              842,183
              
              
              1,034,216
              
              
              462,115Holding
                  Company
              
              
              36,563
              
              
              25,822
              
              
              17,142Interest
                  expense
              
              
              127,869
              
              
              79,360
              
              
              66,8501,894,681
              
              
              1,962,341
              
              
              1,197,539Total
                  expenses
              
              
              1,994,468
              
              
              1,992,076
              
              
              1,223,589Income
                  from continuing operations before income taxes and non-controlling
                  interests
                in
                  (income) loss
              
              
              493,158
              
              
              1,011,888
              
              
              301,116Income
                  tax (expense) benefit
              
              
              (8,436
              )
              
              689
              
              
              (11,178
              )Non-controlling
                  interests in (income) loss:Investment
                  Management Operations
              
              
              (313,982
              )
              
              (763,137
              )
              
              (241,361
              )All
                  Other Operations
              
              
              52,959
              
              
              65,827
              
              
              9,466(261,023
              )
              
              (697,310
              )
              
              (231,895
              )Income
                  from continuing operations
              
              
              223,699
              
              
              315,267
              
              
              58,043Discontinued
                  operations:Income
                  from discontinued operations, net of income taxes
              
              
              65,141
              
              
              175,262
              
              
              3,396Non-controlling
                  interests in (income) loss
              
              
              5,108
              
              
              (53,165
              )
              
              4,356Gain
                  on dispositions
              
              
              20,798
              
              
              676,444
              
              
              21,849Income
                  from discontinued operations
              
              
              91,047
              
              
              798,541
              
              
              29,601Net
                  Earnings
              
              $
              314,746
              
              $
              1,113,808
              
              $
              87,644Net
                  earnings (loss) attributable to:Limited
                  partner
              
              $
              110,385
              
              $
              518,067
              
              $
              (15,237
              )General
                  partner
              
              
              204,361
              
              
              595,741
              
              
              102,881$
              314,746
              
              $
              1,113,808
              
              $
              87,644




*See
      notes to consolidated financial statements.*




74
 TABLE
          OF CONTENTS


**ICAHN
                      ENTERPRISES HOLDINGS L.P. AND
                      SUBSIDIARIES****CONSOLIDATED
                      STATEMENTS OF CHANGES****IN
                      PARTNERS' EQUITY AND COMPREHENSIVE INCOME
                      (LOSS)****YEARS
                      ENDED DECEMBER 21, 2007, 2006 and
                      2005****(In
                      000's)****General****Partner's**
                  
                  **Limited**
                  
                  **Total****Equity**
                  
                  **Partner's**
                  
                  **Partners'****(Deficit)**
                  
                  **Equity**
                  
                  **Equity****Balance,
                      December 31, 2004**
                  
                  $
                  482,750
                  
                  $
                  1,426,169
                  
                  $
                  1,908,919Comprehensive
                      income:Net
                      earnings (loss)
                  
                  
                  102,881
                  
                  
                  (15,237
                  )
                  
                  87,644Net
                      unrealized losses on available-for-sale securities
                  
                  
                  (42
                  )
                  
                  (4,155
                  )
                  
                  (4,197
                  )Other
                      comprehensive income (loss)
                  
                  
                  169
                  
                  
                  (76
                  )
                  
                  93Comprehensive
                      income (loss)
                  
                  
                  103,008
                  
                  
                  (19,468
                  )
                  
                  83,540Partners’
                      contribution
                  
                  
                  4,784
                  
                  
                  4,495
                  
                  
                  9,279AREP
                      Oil & Gas acquisition
                  
                  
                  (616,740
                  )
                  
                  444,998
                  
                  
                  (171,742
                  )GBH/Atlantic
                      Coast acquisition
                  
                  
                  46,127
                  
                  
                  12,122
                  
                  
                  58,249Change
                      in reporting entity and other
                  
                  
                  (836
                  )
                  
                  3,286
                  
                  
                  2,450Return
                      of capital to GB Holdings, Inc.
                  
                  
                  (2,598
                  )
                  
                  -
                  
                  
                  (2,598
                  )Partnership
                      distributions
                  
                  
                  (126
                  )
                  
                  (12,496
                  )
                  
                  (12,622
                  )PSC
                      Metals dividend distribution
                  
                  
                  (9,557
                  )
                  
                  -
                  
                  
                  (9,557
                  )Equity
                      in ImClone capital transactions
                  
                  
                  2
                  
                  
                  210
                  
                  
                  212CEO
                      stock based compensation expense
                  
                  
                  5
                  
                  
                  487
                  
                  
                  492**Balance,
                      December 31, 2005**
                  
                  
                  6,819
                  
                  
                  1,859,803
                  
                  
                  1,866,622Comprehensive
                      income:Net
                      earnings
                  
                  
                  595,741
                  (1)
                  
                  518,067
                  
                  
                  1,113,808Net
                      unrealized gains on available-for-sale securities
                  
                  
                  3,129
                  
                  
                  29,387
                  
                  
                  32,516Other
                      comprehensive income
                  
                  
                  638
                  
                  
                  148
                  
                  
                  786Comprehensive
                      income
                  
                  
                  599,508
                  
                  
                  547,602
                  
                  
                  1,147,110Atlantic
                      Coast bond conversion
                  
                  
                  22
                  
                  
                  2,189
                  
                  
                  2,211Partnership
                      distributions
                  
                  
                  (252
                  )
                  
                  (24,993
                  )
                  
                  (25,245
                  )PSC
                      Metals dividend distribution
                  
                  
                  (33,460
                  )
                  
                  -
                  
                  
                  (33,460
                  )Equity
                      in ImClone capital transactions
                  
                  
                  33
                  
                  
                  3,210
                  
                  
                  3,243CEO
                      stock based compensation expense
                  
                  
                  62
                  
                  
                  6,186
                  
                  
                  6,248**Balance,
                      December 31, 2006**
                  
                  
                  572,732
                  
                  
                  2,393,997
                  
                  
                  2,966,729Cumulative
                      effect of adjustment from adoption of SFAS No. 159
                  
                  
                  (423
                  )
                  
                  (41,761
                  )
                  
                  (42,184
                  )Comprehensive
                      income:Net
                      earnings
                  
                  
                  204,361
                  
                  
                  110,385
                  
                  
                  314,746Net
                      unrealized gains (losses) on available-for-sale securities
                  
                  
                  (67
                  )
                  
                  (24,302
                  )
                  
                  (24,369
                  )Other
                      comprehensive income
                  
                  
                  3,898
                  
                  
                  47
                  
                  
                  3,945Comprehensive
                      income
                  
                  
                  208,192
                  
                  
                  86,130
                  
                  
                  294,322Partners’
                      contribution
                  
                  
                  8,264
                  
                  
                  8,182
                  
                  
                  16,446Partnership
                      distributions
                  
                  
                  (374
                  )
                  
                  (36,980
                  )
                  
                  (37,354
                  )Investment
                      Management business acquisition
                  
                  
                  (810,000
                  )
                  
                  810,000
                  
                  
                  -Investment
                      Management business distributions
                  
                  
                  (444,638
                  )
                  
                  -
                  
                  
                  (444,638
                  )PSC
                      Metals acquisition
                  
                  
                  (335,000
                  )
                  
                  -
                  
                  
                  (335,000
                  )PSC
                      Metals contribution
                  
                  
                  39,380
                  
                  
                  -
                  
                  
                  39,380Change
                      in subsidiary equity
                  
                  
                  (26
                  )
                  
                  (2,597
                  )
                  
                  (2,623
                  )Cumulative
                      effect of adjustment from adoption of FIN 48 and other
                  
                  
                  (1,341
                  )
                  
                  5
                  
                  
                  (1,336
                  )**Balance,
                      December 31, 2007**
                  
                  $
                  (763,234
                  )
                  $
                  3,216,976
                  
                  $
                  2,453,742


*Accumulated
      Other Comprehensive Income (Loss) at December 31, 2007, 2006, and 2005 was
      $8.7
      million, $25.4 million and $(4.5) million, respectively.*





(1)
            See
                Note 2, “Summary of Significant Accounting Policies,” for discussion of
                retrospective application change in accounting principle of allocation
                of
                gains and losses related to disposition of common-control
                acquisitions.




*See
      notes to consolidated financial statements.*




75
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES** ****




**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**




**Years
      Ended December 31, 2007, 2006 and 2005**


**Year
                  Ended December 31,****2007**
              
              **2006**
              
              **2005**(in
                  000s)**Cash
                  Flows from Operating Activities:**Net
                  Earnings (Loss):Investment
                  Management Operations
              
              $
              170,174
              
              $
              259,668
              
              $
              84,575All
                  Other Operations
              
              
              53,525
              
              
              55,599
              
              
              (26,532
              )Income
                  from discontinued operations
              
              
              91,047
              
              
              798,541
              
              
              29,601Net
                  Earnings
              
              $
              314,746
              
              $
              1,113,808
              
              $
              87,644Income
                  (loss) from continuing operations:Investment
                  Management operations
              
              $
              170,174
              
              $
              259,668
              
              $
              84,575Adjustments
                  to reconcile net earnings to net cash used in operating
                  activities:Income
                  attributable to non-controlling interests in consolidated
                affiliated
                  partnerships
              
              
              313,982
              
              
              763,137
              
              
              241,361Deferred
                  income tax expense
              
              
              2,311
              
              
              1,670
              
              
              808Investment
                  gains
              
              
              (386,310
              )
              
              (963,328
              )
              
              (292,487
              )Purchases
                  of securities
              
              
              (8,998,181
              )
              
              (4,267,933
              )
              
              (3,186,738
              )Proceeds
                  from sales of securities
              
              
              6,353,752
              
              
              5,154,820
              
              
              1,252,706Purchases
                  to cover securities sold, not yet purchased
              
              
              (2,209,646
              )
              
              (764,723
              )
              
              (127,324
              )Proceeds
                  from securities sold not yet purchased
              
              
              1,592,247
              
              
              989,829
              
              
              455,319Changes
                  in operating assets and liabilities:Cash
                  held at consolidated affiliated partnerships and restricted
                  cash
              
              
              2,061
              
              
              (966,953
              )
              
              420,643Due
                  from brokers
              
              
              (9,271
              )
              
              (494,813
              )
              
              244,209Payable
                  for purchases of securities
              
              
              34,368
              
              
              (11,451
              )
              
              23,138Unrealized
                  gains (losses) on derivative contracts
              
              
              (16,009
              )
              
              (87,768
              )
              
              8,528Deferred
                  management fee payable to related party
              
              
              143,972
              
              
              —
              
              
              —Accounts
                  payable, accrued expenses and other liabilities
              
              
              (6,220
              )
              
              28,483
              
              
              2,687Other,
                  net
              
              
              (15,684
              )
              
              (3,889
              )
              
              (19,633
              )Net
                  cash used in continuing operations
              
              
              (3,028,454
              )
              
              (363,251
              )
              
              (892,208
              )All
                  Other Operations
              
              
              53,525
              
              
              55,599
              
              
              (26,532
              )Adjustments
                  to reconcile net earnings to net cash provided by
                operating
                  activities:Depreciation
                  and amortization
              
              
              35,411
              
              
              45,774
              
              
              30,910Investment
                  (gains) losses
              
              
              (82,642
              )
              
              (94,493
              )
              
              21,260Loss
                  attributable to non-controlling interests in income
              
              
              (52,959
              )
              
              (65,827
              )
              
              (9,466
              )Equity
                  in earnings of affiliate
              
              
              —
              
              
              (12,620
              )
              
              (1,375
              )Stock
                  based compensation expense
              
              
              —
              
              
              6,248
              
              
              492Deferred
                  income tax expense (benefit)
              
              
              (15,838
              )
              
              (5,827
              )
              
              5,076Impairment
                  loss on long-lived assets
              
              
              27,085
              
              
              33,701
              
              
              —Net
                  cash (used in) provided by activities on trading
                  securities
              
              
              (10,833
              )
              
              70,636
              
              
              28,560Other,
                  net
              
              
              3,394
              
              
              (6,946
              )
              
              (3,581
              )Changes
                  in operating assets and liabilities:Trade,
                  notes and other receivables
              
              
              22,638
              
              
              63,576
              
              
              10,651Other
                  assets
              
              
              7,261
              
              
              35,033
              
              
              (10,222
              )Inventories,
                  net
              
              
              23,736
              
              
              5,683
              
              
              37,515Accounts
                  payable, accrued expenses and other liabilities
              
              
              13,934
              
              
              (18,869
              )
              
              (47,478
              )Other,
                  net
              
              
              106
              
              
              245
              
              
              (547
              )Net
                  cash provided by continuing operations
              
              
              24,818
              
              
              111,913
              
              
              35,263




*See
      notes to consolidated financial statements.*




76
 TABLE
          OF CONTENTS


**ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES** ****
  **CONSOLIDATED
        STATEMENTS OF CASH FLOWS - (continued)**
 **Years
        Ended December 31, 2007, 2006 and 2005**
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005******
              
              (in
                  000s)Net
                  cash used in continuing operations
              
              
              (3,003,636
              )
              
              (251,338
              )
              
              (856,945
              )Income
                  from discontinued operations
              
              
              91,047
              
              
              798,541
              
              
              29,601Depreciation,
                  depletion and amortization
              
              
              9,618
              
              
              138,922
              
              
              131,598Net
                  gain from sales of businesses and properties
              
              
              (20,798
              )
              
              (676,444
              )
              
              (21,849
              )Other,
                  net
              
              
              7,951
              
              
              (27,348
              )
              
              76,847Net
                  cash provided by discontinued operations
              
              
              87,818
              
              
              233,671
              
              
              216,197**Net
                  cash used in operating activites**
              
              
              (2,915,818
              )
              
              (17,667
              )
              
              (640,748
              )**Cash
                  flows from investing activities:**All
                  Other Operations:Capital
                  expenditures
              
              
              (60,260
              )
              
              (30,387
              )
              
              (35,133
              )Purchases
                  of marketable equity and debt securities
              
              
              (154,697
              )
              
              (244,342
              )
              
              (764,271
              )Proceeds
                  from sales of marketable equity and debt securities
              
              
              337,492
              
              
              570,201
              
              
              190,287Net
                  proceeds from the sales and disposition of long-lived
                  assets
              
              
              37,956
              
              
              23,116
              
              
              9,360Acquisitions
                  of businesses, net of cash acquired
              
              
              (47,651
              )
              
              (99,206
              )
              
              (293,649
              )Other,
                  net
              
              
              (11,789
              )
              
              130
              
              
              9,868Net
                  cash provided by (used in) investing activities from
                continuing
                  operations
              
              
              101,051
              
              
              219,512
              
              
              (883,538
              )Discontinued
                  operations:Capital
                  expenditures
              
              
              (23,813
              )
              
              (353,547
              )
              
              (354,528
              )Net
                  proceeds from the sales and disposition of assets
              
              
              19,620
              
              
              1,309,181
              
              
              54,795Other,
                  net
              
              
              (5,943
              )
              
              (127,996
              )
              
              4,422Net
                  cash (used in) provided by investing activities from
                discontinued
                  operations
              
              
              (10,136
              )
              
              827,638
              
              
              (295,311
              )**Net
                  cash provided by (used in) investing activities**
              
              
              90,915
              
              
              1,047,150
              
              
              (1,178,849
              )**Cash
                  flows from financing activities:**Investment
                  Management Operations:Capital
                  distributions to partners
              
              
              (156,375
              )
              
              —
              
              
              —Capital
                  contributions by and receipt of subscriptions receivable frompartners
              
              
              1,006
              
              
              —
              
              
              20Capital
                  subscriptions received in advance
              
              
              144,838
              
              
              66,030
              
              
              40,560Capital
                  distributions to non-controlling interests
              
              
              (42,674
              )
              
              (113
              )
              
              (5,191
              )Capital
                  contributions by non-controlling interests
              
              
              2,402,863
              
              
              299,815
              
              
              857,937Net
                  cash provided by financing activities from continuing
                  operations
              
              
              2,349,658
              
              
              365,732
              
              
              893,326
  *See
        notes to consolidated financial statements.*
  77
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES** ****
  **CONSOLIDATED
        STATEMENTS OF CASH FLOWS - (continued)**
 **Years
        Ended December 31, 2007, 2006 and 2005**
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005******
              
              (in
                  000s)All
                  Other Operations:Partners’
                  equity:Partnership
                  distributions
              
              
              (37,354
              )
              
              (25,245
              )
              
              (12,622
              )PSC
                  Metals acquisition
              
              
              (335,000
              )
              
              —
              
              
              —Partners’
                  contribution
              
              
              16,446
              
              
              —
              
              
              9,279Dividends
                  paid to minority holders of subsidiary
              
              
              (18,529
              )
              
              —
              
              
              —Proceeds
                  from senior notes payable
              
              
              492,130
              
              
              —
              
              
              474,000Proceeds
                  from variable rate notes
              
              
              600,000
              
              
              —
              
              
              —Proceeds
                  from other borrowings
              
              
              63,218
              
              
              34,261
              
              
              5,357Repayments
                  of credit facilities
              
              
              (27,654
              )
              
              —
              
              
              —Repayments
                  of other borrowings
              
              
              (4,546
              )
              
              (8,252
              )
              
              (16,568
              )Net
                  change in due from affiliates
              
              
              101
              
              
              675
              
              
              19,908Debt
                  issuance costs
              
              
              (275
              )
              
              (7,809
              )
              
              (8,952
              )PSC
                  Metals dividend payment
              
              
              —
              
              
              (33,460
              )
              
              (9,557
              )Other
              
              
              4,780
              
              
              —
              
              
              4,490Net
                  cash provided by (used in) financing activities from
                continuing
                  operations
              
              
              753,317
              
              
              (39,830
              )
              
              465,335Net
                  cash provided by financing activities from continuing
                  operations
              
              
              3,102,975
              
              
              325,902
              
              
              1,358,661Net
                  cash (used in) provided by financing activities from discontinued
                  operations
              
              
              (1,208
              )
              
              14,803
              
              
              218,886**Net
                  cash provided by financing activities**
              
              
              3,101,767
              
              
              340,705
              
              
              1,577,547Effect
                  of exchange rate changes on cash
              
              
              3,945
              
              
              391
              
              
              717Net
                  increase (decrease) in cash and cash equivalents*
              
              
              280,809
              
              
              1,370,579
              
              
              (241,333
              )Net
                  change in cash of assets held for sale
              
              
              (52,353
              )
              
              147,508
              
              
              (105,587
              )Cash
                  and cash equivalents, beginning of period
              
              
              1,884,376
              
              
              366,289
              
              
              713,209Cash
                  and cash equivalents, end of period
              
              $
              2,112,832
              
              $
              1,884,376
              
              $
              366,289**Cash
                  balances per balance sheet:**Investment
                  Management Operations
              
              $
              26,027
              
              $
              4,822
              
              $
              2,341All
                  Other Operations
              
              
              2,086,805
              
              
              1,879,554
              
              
              363,948$
              2,112,832
              
              $
              1,884,376
              
              $
              366,289***Net
                  increase (decrease) in cash and cash equivalents consists of****the
                  following:**Investment
                  Management Operations
              
              $
              (678,796
              )
              $
              2,481
              
              $
              1,118All
                  Other Operations
              
              
              883,131
              
              
              291,986
              
              
              (382,223
              )Discontinued
                  operations
              
              
              76,474
              
              
              1,076,112
              
              
              139,772$
              280,809
              
              $
              1,370,579
              
              $
              (241,333
              )Supplemental
                  information:Cash
                  payments for interest, net of amounts capitalized
              
              $
              149,909
              
              $
              111,529
              
              $
              78,015Cash
                  payments for income taxes, net of refunds
              
              $
              26,614
              
              $
              16,924
              
              $
              13,001Conversion
                  of bonds in connection with acquisition of WPI
              
              $
              —
              
              $
              —
              
              $
              205,850Net
                  realized gains (losses) on securities available for sale
              
              $
              (24,369
              )
              $
              29,684
              
              $
              (4,197
              )LP
                  unit issuance
              
              $
              810,000
              
              $
              —
              
              $
              456,998Change
                  in tax asset related to acquisitions
              
              $
              —
              
              $
              —
              
              $
              7,329Debt
                  conversion relating to Atlantic Coast
              
              $
              —
              
              $
              2,211
              
              $
              29,500Equity
                  received in consideration for sale of oil and gas
                  operations
              
              $
              —
              
              $
              231,156
              
              $
              —Receipt
                  of Lear common stock
              
              $
              12,500
              
              $
              —
              
              $
              —Redemptions
                  payable to non-controlling interests
              
              $
              87,754
              
              $
              23,830
              
              $
              —Philip’s
                  contribution to redeem PSC Metal’s debt
              
              $
              34,600
              
              $
              —
              
              $
              —
  *See
        notes to consolidated financial statements.*
  78
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **1.
        Description of Business and Basis of Presentation**
  ***General***
  Icahn
        Enterprises Holdings L.P. (“Icahn Enterprises Holdings” or the “Company”), which
        was formerly known as American Real Estate Holdings Limited Partnership,
        is a
        limited partnership formed in Delaware on February 17, 1987. We are a
        diversified holding company owning subsidiaries currently engaged in the
        following continuing operating businesses: Investment Management, Metals,
        Real
        Estate and Home Fashion. Our operating businesses also include the Holding
        Company. The Holding Company includes the unconsolidated results of Icahn
        Enterprises Holdings, and investment activity and expenses associated with
        the
        activities of the Holding Company. Further information regarding our continuing
        reportable segments is contained in Note 4, “Operating Units,” and Note 15,
“Segment Reporting.” We also operate discontinued operations as further
        discussed below and in Note 5, “Discontinued Operations and Assets Held for
        Sale.”
 Our
          sole
          limited partner is Icahn Enterprises L.P., or Icahn Enterprises, a Delaware
          master limited partnership, which owns a 99% limited partnership interest
          in us.
          Our general partner is Icahn Enterprises G.P. Inc., or Icahn Enterprises
          GP,
          which was formerly known as American Property Investors, Inc., a Delaware
          corporation, which is also the general partner of Icahn Enterprises. Icahn
          Enterprises GP is a wholly owned subsidiary of Beckton Corp., a Delaware
          corporation. All of the outstanding capital stock of Beckton Corp. is owned
          by
          Carl C. Icahn. References to Icahn Enterprises Holdings, “we” or “us” herein
          include Icahn Enterprises Holdings and its subsidiaries, unless the context
          otherwise requires.
  We
          have guaranteed the 7.125% senior notes due 2013
          issued by Icahn Enterprises. Icahn Enterprises, as issuer, filed a registration
          statement on Form S-4 with respect to the notes for which we were a registrant
          guarantor. The registration statement went effective on December 31, 2007.
          This
          Annual Report on Form 10-K is being filed in accordance with Section 15(d)
          of
          the Securities Exchange Act of 1934, as amended, or the Exchange Act, as
          a
          result of such registration statement. At December 31, 2007, there were
          fewer
          than 300 holders of the notes and guarantees. We are filing a Form 15 simultaneously
          with this Annual Report on Form 10-Kto
          notify
          the Securities and Exchange Commission that our reporting obligations
          automatically were suspended pursuant to Section 15(d) of the Exchange
          Act.
  We
        intend
        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”). Generally,
        this means that 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,
        other
        than in connection with the operations of our Investment Management operations
        discussed below. 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
        of
        December 31, 2007 affiliates of Mr. Icahn owned 10,304,013 of Icahn
        Enterprises’ preferred units and 64,288,061 of Icahn Enterprises’
depositary units, which represented approximately 86.5% and 91.2% of Icahn
        Enterprises’ outstanding preferred units and depositary units,
        respectively.
  ***Change
        in Reporting Entity***
  In
        accordance with U.S. 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 periods prior to the acquisition are
        retrospectively adjusted on a consolidated basis.
  As
        discussed in further detail below, on November 5, 2007, we acquired, through
        a
        subsidiary, all of the issued and outstanding capital stock of PSC Metals,
        Inc.
        (“PSC Metals”). PSC Metals is considered a company under common control.
        Accordingly, the accompanying consolidated financial statements and footnotes
        include the assets and operations of PSC Metals.
  As
        discussed in further detail below, on August 8, 2007, Icahn Enterprises acquired
        the general partnership interests in the General Partners (as defined below)
        and
        Icahn Capital Management L.P. (“New Icahn Management”). These interests are
        considered entities under common control. Our historical financial statements
        contained herein have been adjusted to reflect this acquisition.
  The
        accounting policies, which include our Investment Management and Metals
        segments, are set out in Note 2, “Summary of Significant Accounting
        Policies.”
  79
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **1.
        Description of Business and Basis of Presentation
 - (continued)**
  ***Basis
        of Presentation***
  The
        consolidated financial statements include the accounts of (i) Icahn Enterprises
        Holdings and (ii) the wholly and majority owned subsidiaries of Icahn
        Enterprises Holdings in which control can be exercised, in addition to those
        entities in which Icahn Enterprises Holdings has a substantive controlling,
        general partner interest or in which it is the primary beneficiary of a variable
        interest entity in accordance with FIN 46R, as described below. Icahn
        Enterprises Holdings 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. All material intercompany accounts and transactions have
        been
        eliminated in consolidation.
  As
        further described in Note 2, “Summary of Significant Accounting Policies,” the
        Investment Funds and the Offshore Fund (as each term is defined herein) are
        consolidated into our financial statements even though we only have a minority
        interest in the equity and income of these funds. The majority ownership
        interests in these funds, which represent the portion of the consolidated
        net
        assets and net income attributable to the limited partners and shareholders
        in
        the consolidated Private Funds (as defined below) for the periods presented,
        are
        reflected as non-controlling interests in income of consolidated
        entities — Investment Management operations in the accompanying
        financial statements.
  ***Change
        in Presentation***
  As
        a
        result of the acquisition of the Partnership Interests (as defined below)
        on
        August 8, 2007 and the consolidation of the affiliated partnership entities,
        as
        described in Note 2, “Summary of Significant Accounting Policies,” we have
        changed the presentation of our consolidated balance sheets to an unclassified
        format in the accompanying financial statements as of December 31, 2007 and
        2006.
  We
        have
        also changed the presentation of our consolidated statements of operations.
        The
        reclassifications to the consolidated statements of operations
        included:
 
 (1)
              The
                  grouping of revenues and expenses to arrive at “operating income” and
                  certain categories of “other income and expense” has been
                  discontinued.
 
 (2)
              Interest
                  and other income, net gain from investment activities and other
                  income,
                  net are now classified as revenues.
 
 (3)
              Interest
                  expense is included in total
                  expenses.
 ***Reclassifications***
  Certain
          reclassifications have been made to the prior year’s financial statements to
          conform to the current year’s presentation. These reclassifications have had no
          impact on the net equity or net earnings.
  ***Acquisition
        of PSC Metals***
  On
        November 5, 2007, we acquired, through a subsidiary, all of the issued and
        outstanding capital stock of PSC Metals from Philip Services Corporation
        (“Philip”), an affiliate of Carl C. Icahn. PSC Metals is principally engaged in
        the business of collecting, processing and selling ferrous and non-ferrous
        metals. The consideration for the transaction was $335 million in cash. See
        Note
        3, “Acquisitions — Acquisition of PSC Metals,” for further
        discussion.
  ***Acquisition
        of Investment Management Business***
  On
        August
        8, 2007, Icahn Enterprises acquired the Partnership Interests, which consist
        of
        the general partnership interests in the General Partners and New Icahn
        Management for an initial consideration of $810 million of our depositary
        units.
        There is a potential maximum aggregate earn-out (including any catch-up)
        of
        $1.121 billion of our depositary units, which is subject to achieving total
        after-tax earnings from the General Partners and New
        Icahn
        Management subsequent to the acquisition, which includes both management
        fees
        and performance-based or incentive allocations paid by the Private Funds
        to New
        Icahn Management and the General Partners during the five-year period of
        at
        least $3.906 billion. These entities provide investment advisory and certain
        management services to the Private Funds but 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. See Note 3, “Acquisitions — Acquisition of
        Investment Management Business,” for additional information.
  80
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **1.
        Description of Business and Basis of Presentation
 - (continued)**
  ***Other
        Acquisitions***
  On
        May
        19, 2006, our wholly owned subsidiaries, AREP Laughlin Corporation (“AREP
        Laughlin”) and AREP Boardwalk Properties LLC, completed the purchases,
        respectively, of the Flamingo Laughlin Hotel and Casino, now known as the
        Aquarius Casino Resort (the “Aquarius”), in Laughlin, Nevada, and 7.7 acres of
        land that was adjacent to the former Sands Hotel and Casino (“The Sands”), in
        Atlantic City, New Jersey, known as the Traymore site, from affiliates of
        Harrah’s Operating Company, Inc. (“Harrah’s”). Operating results for the
        Aquarius are included with Icahn Enterprises Holdings’ results beginning as of
        May 19, 2006. On November 17, 2006, we sold the Atlantic City gaming operations,
        including the Traymore site. As discussed below, on April 22, 2007, we entered
        into an agreement to sell our Nevada gaming operations. We consummated the
        sale
        on February 20, 2008. See Note 18, “Subsequent Events,” for additional
        information.
  On
        August
        8, 2005, WestPoint International Inc. (“WPI”), our indirect majority owned
        subsidiary, completed the acquisition of substantially all of the assets
        of
        WestPoint Stevens Inc. (“WPS”). Operating results for WPI are included with
        Icahn Enterprises Holdings’ results beginning as of August 8, 2005. In December
        2006, WPI acquired a manufacturing facility in Bahrain for an aggregate cash
        consideration of $98.6 million and a seller note of $10.6 million. The purchase
        price was subject to working capital adjustments.
  ***Discontinued
        Operations***
  As
        discussed further below, on October 18, 2007, within our Home Fashion segment,
        WPI entered into an agreement to sell the inventory at all of its 30 retail
        outlet stores. These operations met the criteria for discontinued operations
        during the third quarter of fiscal 2007. Therefore, the portion of the business
        related to the stores’ retail operations has been classified for all years
        presented as discontinued operations.
  On
        April
        22, 2007, within our former Gaming segment, American Entertainment Properties
        Corp (“AEP”), our wholly owned indirect subsidiary, entered into an agreement to
        sell all of the issued and outstanding membership interests of American Casino
        and Entertainment Properties LLC (“ACEP”), which comprises our remaining gaming
        operations. We consummated the sale on February 20, 2008. See Note 18,
“Subsequent Events,” for additional information.
  On
        November 21, 2006, within our former Oil and Gas segment, our indirect wholly
        owned subsidiary, AREP O & G Holdings LLC, consummated the sale of all of
        the issued and outstanding membership interests of NEG Oil & Gas LLC (“NEG
        Oil & Gas”) to SandRidge Energy, Inc. (“SandRidge”).
  On
        November 17, 2006, within our former Gaming segment, our indirect majority
        owned
        subsidiary, Atlantic Coast Entertainment Holdings, Inc. (“Atlantic Coast”),
        completed the sale to Pinnacle Entertainment, Inc. (“Pinnacle”) of the
        outstanding membership interests in ACE Gaming LLC (“ACE”), the owner of The
        Sands and 100% of the equity interests in certain subsidiaries of Icahn
        Enterprises Holdings which own parcels of real estate adjacent to The Sands,
        including the Traymore site.
  Certain
        of our real estate properties are classified as discontinued operations.
        The
        properties classified as discontinued operations have changed during the
        fiscal
        year ended December 31, 2007 (“fiscal 2007”) and, accordingly, certain amounts
        in the accompanying financial statements for the fiscal year ended December
        31,
        2006 (“fiscal 2006”) and the fiscal year ended December 31, 2005 (“fiscal 2005”)
        have been reclassified to conform to the current classification of properties.
        In addition, during fiscal 2007, within our Real Estate segment, seven
        properties of our Real Estate segment were reclassified to held for sale
        as they
        were subject to a contract or letter of intent. The operations of these
        properties were classified as discontinued operations for all years
        presented.
  81
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **1.
        Description of Business and Basis of Presentation
 - (continued)**
  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.
  ***Filing
        Status of Subsidiary***
  As
        of
        December 31, 2007, ACEP voluntarily filed annual, quarterly and current reports
        under the Exchange Act. The sale of ACEP was consummated on February 20,
        2008. See Note 18, “Subsequent Events,” for additional information.
  **2.
        Summary of Significant Accounting Policies**
  As
        discussed in Note 1, “Description of Business and Basis of Presentation,” we
        operate in several diversified segments. The accounting policies related
        to the
        specific segments or industries are differentiated, as required, in the list
        of
        significant accounting policies set out below.
  ***Principles
        of Consolidation***
  *General*
  The
        consolidated financial statements include the accounts of (i) Icahn Enterprises
        Holdings and (ii) the wholly and majority owned subsidiaries of Icahn
        Enterprises Holdings in which control can be exercised, in addition to those
        entities in which Icahn Enterprises Holdings has a substantive controlling,
        general partner interest or in which it is the primary beneficiary of a variable
        interest entity. We are considered to have control if we have a direct or
        indirect ability to make decisions about an entity’s activities through voting
        or similar rights. We use the guidance set forth in AICPA Statement of Position
        No.78-9, *Accounting
        for Investments in Real Estate Ventures* (“SOP
        78-9”), Emerging Issues Task Force (“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
        No. 04-05”), FASB Interpretation No. 46R, *Consolidation
        of Variable Interest Entities, an Interpretation of ARB No. 51* (“FIN
        46R”), and in SFAS No. 94, *Consolidation
        of All Majority-Owned Subsidiaries — An Amendment of ARB No. 51, with
        Related Amendments of APB Opinion No. 18, and ARB No. 43 Chapter
        12* (“SFAS
        No. 94”), with respect to our investments in partnerships and limited liability
        companies. All intercompany balances and transactions are
        eliminated.
  In
        accordance with U.S. GAAP, assets and liabilities transferred between entities
        under common control are accounted for at historical cost in a manner similar
        to
        a pooling of interests, and the financial statements of previously separate
        companies for periods prior to their acquisition are retrospectively adjusted
        on
        a combined basis.
  *Investment
        Management Operations*
  The
        accompanying financial statements include the consolidated financial statements
        of the Investment Management Entities and certain consolidated Private Funds
        during the periods presented. As referred to herein, the term “Investment
        Management Entities” includes either Icahn Management (for the period prior to
        the acquisition on August 8, 2007) or New Icahn Management (for the period
        subsequent to the acquisition on August 8, 2007 through December 31, 2007)
        and,
        in either case, the General Partners. The Investment Management Entities
        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 pursuant to SFAS No. 94, (ii)
        they
        have a substantive controlling, general partner interest pursuant to EITF
        No.
        04-05 or (iii) they are the primary beneficiary of a variable interest entity
        (a
“VIE”) pursuant to FIN 46R. With respect to the consolidated Private Funds, the
        limited partners and shareholders have no substantive rights to impact ongoing
        governance and operating activities.
  82
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  Icahn
        Management (and, subsequent to the acquisition of the Partnership Interests
        on
        August 8, 2007, New Icahn Management) and the General Partners are consolidated
        into Icahn Enterprises Holdings pursuant to SFAS No. 94 as Icahn Enterprises
        Holdings owns greater than 50% of the partnership interests in these entities.
        Icahn Enterprises Holdings has a substantive controlling, general partnership
        interest in these entities.
  Icahn
        Partners LP (the “Onshore Fund”) is consolidated into Icahn Onshore LP (the
“Onshore GP”) pursuant to EITF 04-05, which defines the criteria for determining
        whether a general partner controls a limited partnership when the limited
        partners have certain rights, such as “kick-out” rights. According to EITF
        04-05, consolidation of a limited partnership by the general partner is required
        when these rights do not exist.
  Icahn
        Partners Master Fund LP (“Offshore Master Fund I”) is consolidated into Icahn
        Fund Ltd. (the “Offshore Fund”). In addition, the Offshore Fund, Icahn Partners
        Master Fund II L.P. (“Offshore Master Fund II”), Icahn Partners Master Fund III
        L.P. (“Offshore Master Fund III”), and, through October 1, 2006, Icahn Sterling
        Fund Ltd. (the “Sterling Fund”) are consolidated into the Offshore GP, pursuant
        to FIN 46R. On October 1, 2006, the Sterling Fund’s assets were contributed to
        the Offshore Fund. A VIE is defined in FIN 46R as an entity in which equity
        investors do not have the characteristics of a controlling financial interest
        or
        do not have sufficient equity at risk for the entity to finance its activities
        without additional subordinated financial support from other parties. A VIE
        must
        be consolidated only by its primary beneficiary, which is defined as the
        party
        who, along with its affiliates and agents, will absorb a majority of the
        VIE’s
        expected losses or receive a majority of the expected residual returns as
        a
        result of holding variable interests.
  Although
        the Private Funds are not investment companies within the meaning of the
’40
        Act, each of the consolidated Private Funds is, for purposes of U.S. GAAP,
        an
        investment company under the AICPA Audit and Accounting
        Guide — Investment Companies (the “AICPA Guide”). The Investment
        Management Entities adopted 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 Investments
        in Investment Companies* (“SOP
        07-1”) as of January 1, 2007. SOP 07-1, issued in June 2007, addresses whether
        the accounting principles of the AICPA Guide may be applied to an entity
        by
        clarifying the definition of an investment company and whether those accounting
        principles may be retained by a parent company in consolidation or by an
        investor in the application of the equity method of accounting. Upon the
        adoption of SOP 07-1, (i) the Offshore GP lost its ability to retain specialized
        accounting pursuant to the AICPA Guide for either its equity method investment
        in Offshore Master Fund I or for its consolidation of the Offshore Fund,
        Offshore Master Fund II and Offshore Master Fund III, and (ii) the Onshore
        GP
        lost its ability to retain specialized accounting for its consolidation of
        the
        Onshore Fund, in each case, because both the Offshore GP and the Onshore
        GP do
        not meet the requirements for retention of specialized accounting under SOP
        07-1, as the Offshore GP and Onshore GP and their affiliates acquire interests
        for strategic operating purposes in the same companies in which their subsidiary
        investment companies invest.
  However,
        upon losing their ability to retain specialized accounting, the Investment
        Management Entities applied SFAS No. 115, *Accounting
        for Investments in Debt and Equity Securities* (“SFAS
        No. 115”), to their investments held by the consolidated Private Funds in debt
        securities and in those equity securities with readily determinable fair
        values,
        as defined by that Statement, and classified such investments as
        available-for-sale securities and elected the fair value option pursuant
        to SFAS
        No. 159, *The
        Fair Value Option for Financial Assets and Financial
        Liabilities — including an Amendment of FASB Statement No.
        115* (“SFAS
        No. 159”), and reclassified such securities as trading securities. For those
        equity securities that fall outside the scope
        of
        SFAS No. 115 because they do not have readily determinable fair values as
        defined by that Statement, the Investment Management Entities elected the
        fair
        value option pursuant to SFAS No. 159 and measured the fair value of such
        securities in accordance with the requirements of SFAS No. 157,*Fair
        Value Measurements*(“SFAS
        No. 157”). For those investments in which the Investment Management Entities
        would otherwise account for such investments under the equity method, the
        Investment Management Entities, in accordance with their accounting policy,
        elected the fair value option pursuant to SFAS No. 159 for all such investments.
        The election of the fair value option pursuant to SFAS No. 159 was deemed
        to
        most accurately reflect the nature of our business relating to
        investments.
  83
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  Derivative
        contracts entered into by the consolidated Private Funds continue to be
        accounted for pursuant to SFAS No. 133, *Accounting
        for Derivative Instruments and Hedging Activities* (“SFAS
        No. 133”), which was amended by SFAS No. 138, *Accounting
        for Certain Derivative Instruments and Certain Hedging
        Activities* (“SFAS
        No. 138”). These pronouncements require recognition of all derivatives as either
        assets or liabilities in the balance sheet at their fair value. All changes
        in
        the fair values of derivatives held by the consolidated Private Funds are
        reported in earnings.
  The
        management fees earned by New Icahn Management (and by Icahn Management prior
        to
        the acquisition on August 8, 2007) from certain consolidated entities and
        the
        incentive allocations earned by the Onshore GP and the Offshore GP from the
        Onshore Fund and the Offshore Master Funds, respectively, are eliminated
        in
        consolidation; however, the Investment Management Entities’ allocated share of
        the net income from the Private Funds includes the amount of these eliminated
        fees and allocations. Accordingly, the consolidation of the Private Funds
        has no
        material net effect on the Investment Management Entities’ earnings from the
        Private Funds.
  ***Accounting
        for Investment in ImClone Systems Incorporated***
  As
        further described below, we adopted SFAS No. 159 as of January 1, 2007 and
        elected to apply the fair value option to our investment in ImClone Systems
        Incorporated (“ImClone”). Previously, we accounted for our investment in ImClone
        under the equity method.
  ***Use
        of Estimates in Preparation of Financial Statements***
  The
        preparation of the consolidated financial statements in conformity with U.S.
        GAAP requires management to make estimates and assumptions that affect the
        reported amount of assets and liabilities at the date of the financial
        statements and the reported amount of revenues and expenses during the period.
        The more significant estimates include: (1) the valuation allowances of accounts
        receivable and inventory; (2) the valuation of long-lived assets, mortgages
        and
        notes receivable; (3) costs to complete for land, house and condominium
        developments; (4) deferred tax assets; (5) environmental liabilities; and
        (6)
        fair value of derivatives. Actual results may differ from the estimates and
        assumptions used in preparing the consolidated financial
        statements.
  ***Cash
        and Cash Equivalents***
  We
        consider short-term investments, which are highly liquid with original
        maturities of three months or less at date of purchase, to be cash
        equivalents.
  ***Cash
        Held at Consolidated Affiliated Partnerships and Restricted
        Cash***
  Cash
        held
        at consolidated affiliated partnerships and restricted cash consists of (i)
        cash
        and cash equivalents held by the Onshore Fund and Offshore Master Funds that,
        although not legally restricted, is not available to fund the general liquidity
        needs of the Investment Management Entities or Icahn Enterprises Holdings
        and
        (ii) restricted cash relating to derivatives held on deposit.
  84
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  ***Investments
        and Related Transactions — Investment Management
        Operations***
  *Investment
        Transactions and Related Investment Income.* Investment
        transactions of the Private Funds are recorded on a trade date basis. Realized
        gains or losses on sales of investments are based on the first-in, first-out
        or
        the specific identification methods. Realized and unrealized gains or losses
        on
        investments are recorded in the consolidated statements of operations. Interest
        income and expenses are recorded on an accrual basis and dividends are recorded
        on the ex-dividend date. Premiums and discounts on fixed income securities
        are
        amortized using the effective yield method.
  *Valuation
        of Investments.* Securities
        of the Private Funds that are listed on a securities exchange are valued
        at
        their last sales price on the primary securities exchange on which such
        securities are traded on such date. Securities that are not listed on any
        exchange but are traded over-the-counter are valued at the mean between the
        last
“bid” and “ask” price for such security on such date. Securities and other
        instruments for which market quotes are not readily available are valued
        at fair
        value as determined in good faith by the applicable general
        partner.
  *Foreign
        Currency Transactions.* The
        books and records of the Private Funds are maintained in U.S. dollars. Assets
        and liabilities denominated in currencies other than U.S. dollars are translated
        into U.S. dollars at the rate of exchange in effect at the balance sheet
        date.
        Transactions during the period denominated in currencies other than U.S.
        dollars
        are translated at the rate of exchange applicable on the date of the
        transaction. Foreign currency translation gains and losses are recorded in
        the
        consolidated statements of operations. The Private Funds do not isolate that
        portion of the results of operations resulting from changes in foreign exchange
        rates on investments from the fluctuations arising from changes in the market
        prices of securities. Such fluctuations are included in the net realized
        gains
        (losses) from securities transactions and the net unrealized gains (losses)
        on
        securities positions.
  *Fair
        Values of Financial Instruments.* The
        fair values of the Private Funds’ assets and liabilities that qualify as
        financial instruments under SFAS No. 107, *Disclosures
        About Fair Value of Financial Instruments,* approximate the carrying amounts presented in the consolidated balance
        sheets.
  *Securities
        Sold, Not Yet Purchased.* The
        Private Funds may sell an investment they do not own in anticipation of a
        decline in the fair value of that investment. When the Private Funds sell
        an
        investment short, they must borrow the investment sold short and deliver
        it to
        the broker-dealer through which they made the short sale. A gain, limited
        to the
        price at which the Private Funds sold the investment short, or a loss, unlimited
        in amount, will be recognized upon the cover of the short sale.
  *Due
        From Brokers.* Due
        from brokers represents cash balances with the Private Funds’ clearing brokers.
        A portion of the cash at brokers is related to securities sold, not yet
        purchased; its use is therefore restricted until the securities are purchased.
        Securities sold, not yet purchased are collateralized by certain of the Private
        Funds’ investments in securities. Margin debit balances, which may exist from
        time to time, are collateralized by certain of the Private Funds’ investments in
        securities.
  ***Investments — All
        Other Operations***
  Investments
        in equity and debt securities are classified as either trading or
        available-for-sale based upon whether we intend to hold the investment for
        the
        foreseeable future. Trading securities are valued at quoted market value
        at each
        balance sheet date with the unrealized gains or losses reflected in the
        consolidated statements of operations. Available-for-sale securities are
        carried
        at fair value on our balance sheet. Unrealized holding gains and losses on
        available-for-sale securities are excluded from earnings and reported as
        a
        separate component of partners’ equity and when sold are reclassified out of
        partners’ equity to the consolidated statements of operations. For purposes of
        determining gains and losses, the cost of securities is based on specific
        identification.
  85
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  A
        decline
        in the market value of any available-for-sale security below cost that is
        deemed
        to be other than temporary results in an impairment that is charged to earnings
        and the establishment of a new cost basis for the investment. Dividend income
        is
        recorded when declared and interest income is recognized when
        earned.
  ***Fair
        Value of Financial Instruments***
  The
        carrying values of cash and cash equivalents, restricted cash, accounts
        receivable, and payable, other accruals, securities sold under agreements
        to
        purchase and other liabilities are deemed to be reasonable estimates of their
        fair values because of their short-term nature.
  The
        fair
        values of investments are based on quoted market prices for those or similar
        investments. See Note 7, “Investments and Related Matters,” for further
        discussion.
  The
        fair
        value of our long-term debt is based on the quoted market prices for the
        same or
        similar issues or on the current rates offered to us for debt of the same
        remaining maturities. The carrying value and estimated fair value of our
        long-term debt as of December 31, 2007 are approximately $2.03 billion and
        $1.95
        billion, respectively. The carrying value and estimated fair value of our
        long-term debt as of December 31, 2006 are approximately $0.94
        billion.
  ***Fair
        Value Option for Financial Assets and Financial
        Liabilities***
  We
        adopted SFAS No. 159 as of January 1, 2007. SFAS No. 159 gives entities the
        option to measure eligible financial assets, financial liabilities and firm
        commitments at fair value (i.e., the fair value option), on an
        instrument-by-instrument basis, that are otherwise not permitted to be accounted
        for at fair value under other accounting standards. The election to use the
        fair
        value option is available when an entity first recognizes a financial asset
        or
        financial liability or upon entering into a firm commitment. Subsequent changes
        in fair value must be recorded in earnings. We apply the fair value option
        to
        our investments that would otherwise be accounted under the equity
        method.
  ***Derivatives***
  From
        time
        to time, our subsidiaries enter into derivative contracts, including (a)
        commodity price collar agreements entered into by our former Oil and Gas
        segment
        to reduce our exposure to price risk in the spot market for natural gas and
        oil
        (prior to the sale of our Oil and Gas segment to SandRidge in November 2006),
        and (b) purchased and written option contracts, swap contracts, futures
        contracts and forward contracts entered into by the Private Funds. We follow
        SFAS No. 133, which was amended by SFAS No. 138. These pronouncements
        established accounting and reporting standards for derivative instruments
        and
        for hedging activities, which generally require recognition of all derivatives
        as either assets or liabilities in the balance sheet at their fair value.
        The
        accounting for changes in fair value depends on the intended use of the
        derivative and its resulting designation. Through December 31, 2007, we did
        not
        use hedge accounting and accordingly, all unrealized gains and losses are
        reflected in our consolidated statements of operations.
  ***Trade,
        Notes and Other Receivables, Net***
  An
        allowance for doubtful accounts is determined through analysis of the aging
        of
        accounts receivable at the date of the consolidated financial statements,
        assessments of collectibility based on an evaluation of historic and anticipated
        trends, the financial condition of our customers, and an evaluation of the
        impact of economic conditions. Our allowance for doubtful accounts is an
        estimate based on specifically identified accounts as well as general reserves
        based on historical experience.
  86
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  ***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. The Metals segment relies upon perpetual
        inventory records that utilize estimated recoveries and yields that are based
        upon historical trends and periodic tests for certain unprocessed metal
        commodities. Over time, these estimates are reasonably good indicators of
        what
        is ultimately produced; however, actual recoveries and yields can vary depending
        on product quality, moisture content and source of the unprocessed metal.
        To
        assist in validating the reasonableness of the estimates, the Metals segment
        performs periodic physical inventories. Physical inventories may detect
        significant variations in volume, but because of variations in product density
        and production processes utilized to manufacture the product, physical
        inventories will not generally detect smaller variations. To help mitigate
        this
        risk, the Metals segment adjusts its physical inventories when the volume
        of a
        commodity is low and a physical inventory can more accurately predict the
        remaining volume.
  Inventories
        consisted of the following (in $000s):
 
 **December
                  31,******
              
              **2007**
              
              **2006**Ferrous
              
              $
              39,078
              
              $
              30,360Non-ferrous
              
              
              9,658
              
              
              7,871Secondary
              
              
              23,546
              
              
              20,207$
              72,282
              
              $
              58,438
  *Home
        Fashion Inventories.* Inventories
        at our Home Fashion segment are stated at the lower of cost (first-in, first-out
        method) or market. The cost of manufactured goods includes material, labor
        and
        factory overhead. We maintain 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 our inventories serves as collateral under
        West
        Point Home Inc.’s unused senior secured revolving credit facility.
  Inventories
        consisted of the following (in $000s):
 
 **December
                  31,******
              
              **2007**
              
              **2006**Raw
                  materials and supplies
              
              $
              14,427
              
              $
              32,059Goods
                  in process
              
              
              46,483
              
              
              83,592Finished
                  goods
              
              
              133,031
              
              
              108,832$
              193,941
              
              $
              224,483
  ***Total
        Inventories (in $000s):***
 
 **December
                  31,******
              
              **2007**
              
              **2006**Metals
                  segment
              
              $
              72,282
              
              $
              58,438Home
                  Fashion segment
              
              
              193,941
              
              
              224,483$
              266,223
              
              $
              282,921
  87
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  ***Property,
        Plant and Equipment, Net***
  Land
        and
        construction-in-progress costs are stated at the lower of cost or net realizable
        value. Interest is capitalized on expenditures for long-term projects until
        a
        salable condition is reached. The interest capitalization rate is based on
        the
        interest rate on specific borrowings to fund the projects.
  Buildings,
        furniture and equipment are stated at cost less accumulated depreciation
        unless
        declines in the values of the fixed assets are considered other than temporary,
        at which time the property is written down to net realizable value. Depreciation
        is principally computed using the straight-line method over the estimated
        useful
        lives of the particular property or equipment, as follows: buildings and
        improvements, four to 40 years; furniture, fixtures and equipment, one to
        25
        years. Leasehold improvements are amortized over the life of the lease or
        the
        life of the improvement, whichever is shorter.
  Maintenance
        and repairs are charged to expense as incurred. The cost of additions and
        improvements is capitalized and depreciated over the remaining useful lives
        of
        the assets. The cost and accumulated depreciation of assets sold or retired
        are
        removed from our consolidated balance sheet, and any gain or loss is recognized
        in the year of disposal.
  Real
        estate properties held for use or investment purposes, other than those
        accounted for under the financing method, are carried at cost less accumulated
        depreciation. Where declines in the values of the properties are determined
        to
        be other than temporary, the cost basis of the property is written down to
        net
        realizable value. A property is classified as held for sale at the time
        management determines that the criteria in SFAS No. 144, *Accounting
        for the Impairment or Disposal of Long-Lived Assets,* (“SFAS
        No. 144”) have been met. Properties held for sale are carried at the lower of
        cost or net realizable value. Such properties are no longer depreciated and
        their results of operations are included in discontinued operations. As a
        result
        of the reclassification of certain real estate to properties held for sale
        during fiscal 2007, income and expenses of such properties are reclassified
        to
        discontinued operations for all prior periods. If management determines that
        a
        property classified as held for sale no longer meets the criteria in SFAS
        No.
        144, the property is reclassified as held for use.
  ***Goodwill
        and Intangible Assets***
  We
        account for goodwill and intangibles in accordance with SFAS No 142, *Goodwill
        and Other Intangible Assets* (“SFAS
        No. 142”). Goodwill and intangible assets include trademarks and non-compete
        agreements acquired in acquisitions.
  *Accounting
        for the Impairment of Goodwill*
  We
        evaluate the carrying value of goodwill during the fourth quarter of each
        year
        and between annual evaluations if events occur or circumstances change that
        would more likely than not reduce the fair value of the reporting unit below
        its
        carrying amount. Such circumstances could include, but are not limited to:
        (1) a
        significant adverse change in legal factors or in business climate, (2)
        unanticipated competition, or (3) an adverse action or assessment by a
        regulator. When evaluating whether goodwill is impaired, we compare the fair
        value of the reporting unit to which the goodwill is assigned to the reporting
        unit’s carrying amount, including goodwill. The fair value of the reporting unit
        is estimated using a combination of the income, or discounted cash flows
        approach and the market approach, which utilizes comparable companies’ data. If
        the carrying amount of a reporting unit exceeds its fair value, then the
        amount
        of the impairment loss must be measured. The impairment loss would be calculated
        by comparing the implied fair value of reporting unit goodwill to its carrying
        amount. In calculating the implied fair value of reporting unit goodwill,
        the
        fair value of the reporting unit is allocated to all of the other assets
        and
        liabilities of that unit based on their fair values. The excess of the fair
        value of a reporting unit over the amount assigned to its other assets and
        liabilities is the
        implied fair value of goodwill. An impairment loss would be recognized when
        the
        carrying amount of goodwill exceeds its implied fair value. Our evaluation
        of
        goodwill completed during fiscal 2007 resulted in no impairment
        losses.
  88
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  *Accounting
        for the Impairment of Intangibles*
  We
        evaluate the recoverability of identifiable intangible assets whenever events
        or
        changes in circumstances indicate that an intangible asset’s carrying amount may
        not be recoverable. Such circumstances could include, but are not limited
        to:
        (1) a significant decrease in the market value of an asset, (2) a significant
        adverse change in the extent or manner in which an asset is used, or (3)
        an
        accumulation of costs significantly in excess of the amount originally expected
        for the acquisition of an asset. We measure the carrying amount of the asset
        against the estimated undiscounted future cash flows associated with it.
        Should
        the sum of the expected future net cash flows be less than the carrying value
        of
        the asset being evaluated, an impairment loss would be recognized. The
        impairment loss would be calculated as the amount by which the carrying value
        of
        the asset exceeds its fair value. The fair value is measured based on quoted
        market prices, if available. If quoted market prices are not available, the
        estimate of fair value is based on various valuation techniques, including
        the
        discounted value of estimated future cash flows. The evaluation of asset
        impairment requires we make assumptions about future cash flows over the
        life of
        the asset being evaluated. These assumptions require significant judgment
        and
        actual results may differ from assumed and estimated amounts. During fiscal
        2007, we recorded an impairment loss of $5.2 million related to our intangibles.
        We did not incur any impairment loss related to our intangibles in fiscal
        2006
        or fiscal 2005.
  ***Accounting
        for the Impairment of Long-Lived Assets***
  We
        evaluate our long-lived assets in accordance with the application of SFAS
        No.
        144. Accordingly, we evaluate the realizability of our long-lived assets
        whenever events or changes in circumstances indicate that the carrying amount
        of
        an asset may not be recoverable. Inherent in the reviews of the carrying
        amounts
        of the above assets are various estimates, including the expected usage of
        the
        asset. Assets must be tested at the lowest level for which identifiable cash
        flows exist. Future cash flow estimates are, by their nature, subjective
        and
        actual results may differ materially from our estimates. If our ongoing
        estimates of future cash flows are not met, we may have to record impairment
        charges in future accounting periods. Our estimates of cash flows are based
        on
        the current regulatory, social and economic climates, recent operating
        information and budgets of the operating properties.
  ***Accounting
        for Asset Retirement Obligations***
  Effective
        January 1, 2003, we adopted the provisions of SFAS No. 143, *Accounting
        for Asset Retirement Obligations* (“SFAS
        No. 143”). SFAS No. 143 provides accounting requirements for costs associated
        with legal obligations to retire tangible, long-lived assets. Under SFAS
        No.
        143, an asset retirement obligation is recorded at fair value in the period
        in
        which it is incurred by increasing the carrying amount for the related
        long-lived asset which is depreciated over its useful life. In each subsequent
        period, the liability is adjusted to reflect the passage of time and changes
        in
        the estimated future cash flows underlying the obligation. Our asset retirement
        obligations related to our oil and gas operating unit, which was sold to
        SandRidge in November 2006.
  ***Allocation
        of Net Profits and Losses in Consolidated Affiliated
        Partnerships***
  Net
        investment income and net realized and unrealized gains and losses on
        investments of the Private Funds are allocated to both the respective general
        partner and the limited partners or shareholders of the Private Funds based
        on
        the ratio of their respective capital balances at the beginning of each
        allocation period to the total capital of all partners or shareholders of
        the
        Private Funds. Such allocations made to the limited partners or shareholders
        of
        the Private Funds are represented as non-controlling interests in our
        consolidated statements
        of operations. The beginning of an allocation period is defined as the beginning
        of each fiscal year, the date of admission of any new partner or shareholder
        of
        the Private Funds or the date of any additional subscription or redemption
        by a
        partner or shareholder of the Private Funds. Upon the allocation to partners
        based on their respective capital balances, generally 25% of the capital
        appreciation (both realized and unrealized) allocated to the Investment Funds’
limited partners or lesser amounts for certain limited partners are then
        reallocated to the Investment Funds’ General Partners. Such reallocation is
        referred to as the General Partners’ incentive allocation. The total profits and
        losses allocated to the respective General Partners of the Investment Funds
        are
        included in the net income of the consolidated Investment Management Entities
        (as either the Onshore GP or Offshore GP act as general partner to the
        Investment Funds) and are allocated in a manner consistent with the manner
        in
        which capital is allocated to the partners of the Investment Management Entities
        as further discussed below.  89
 TABLE
              OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  ***Partners’
        Capital of the Investment Management Entities***
  The
        Investment Management Entities are each organized as a limited partnership
        formed pursuant to the provisions of the Delaware Revised Uniform Limited
        Partnership Act. Limited partnership interests have been granted in the
        Investment Management Entities to allow certain employees and individuals
        to
        participate in a share of the management fees and incentive allocations earned
        by the Investment Management Entities. Prior to the completion of our
        acquisition of the Partnership Interests on August 8, 2007, all limited
        partnership admissions to the Investment Management Entities were determined
        by
        the respective general partner entity of the Investment Management Entities,
        each of which was principally owned by Mr. Icahn.
  The
        Investment Management Entities, individually, intend to be treated as
        partnerships for federal income tax purposes, and as such shall maintain
        a
        capital account for each of their partners. Each limited partner will be
        allocated an amount of the management fees and incentive allocations subject
        to,
        and as determined by, the provisions of such limited partner’s agreements with
        each of the Investment Management Entities. Incentive allocations and management
        fees not allocated to the limited partners per their respective agreements
        are
        generally allocated to the general partners. Other partnership profits and
        losses of each of the Investment Management Entities will be allocated among
        the
        respective partners in each of the Investment Management Entities pro rata
        in
        accordance with their capital accounts (except in the case of New Icahn
        Management whose partnership profits and losses other than incentive
        allocations, management fees and net interest income are allocated entirely
        to
        the general partner.)
  Income
        allocations to all partners in each of the Investment Management Entities,
        except the general partner entity and any limited partnership interests held
        directly by Mr. Icahn, are accounted for as compensation expense as more
        fully
        described in Note 13, “Compensation Arrangements.” All amounts allocated to
        these partners’ capital accounts and their respective capital contributions are
        included in accounts payable and accrued expenses and other liabilities on
        the
        consolidated balance sheets until those amounts are paid out in accordance
        with
        the terms of each respective partner’s agreement. Payments made to the
        respective general partner and any limited partnership interests held by
        Mr.
        Icahn are treated as equity distributions.
  ***Income
        Taxes***
  Except
        as
        described below, no provision has been made for federal, state or local income
        taxes on the results of operations generated by partnership activities, as
        such
        taxes are the responsibility of the partners. Provision has been made for
        federal, state or local income taxes on the results of operations generated by
        our corporate subsidiaries and these are reflected within continuing and
        discontinued operations. Deferred tax assets and liabilities are recognized
        for
        the future tax consequences attributable to differences between the financial
        statement carrying amounts of existing assets and liabilities and their
        respective tax bases and operating loss and tax credit carryforwards. Deferred
        tax assets and liabilities are measured using enacted tax rates expected
        to
        apply to taxable income in the years in which those temporary differences
        are
        expected to be recovered
        or settled. The effect on deferred tax assets and liabilities of a change
        in tax
        rates is recognized in income in the period that includes the enactment
        date.
  90
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  Deferred
        tax assets are limited to amounts considered to be realizable in future periods.
        A valuation allowance is recorded against deferred tax assets if management
        does
        not believe that we have met the “more likely than not” standard imposed by SFAS
        No. 109 to allow recognition of such an asset.
  Through
        December 31, 2007, New Icahn Management (and Icahn Management prior to the
        acquisition on August 8, 2007) was subject to a New York City Unincorporated
        Business tax (“UBT”), at a statutory rate of 4% on a portion of its income. UBT
        is accounted for under SFAS No. 109, *Accounting
        for Income Taxes* (“SFAS
        No. 109”). New Icahn Management accounts for these taxes using the asset and
        liability method under which deferred tax assets and liabilities are recognized
        for the future tax consequences attributable to differences between the
        financial statement carrying amounts of existing assets and liabilities and
        their respective tax bases.
  We
        adopted FASB Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes — an Interpretation of FASB Statement
        109* (“FIN
        48”) as of January 1, 2007. FIN 48 clarifies the accounting for uncertainty
        in
        tax positions taken or expected to be taken in a tax return, including issues
        relating to financial statement recognition and measurement. FIN 48 provides
        that the tax effects from an uncertain tax position can be recognized in
        the
        financial statements only if the position is “more-likely-than-not” to be
        sustained if the position were to be challenged by a taxing authority. The
        assessment of the tax position is based solely on the technical merits of
        the
        position, without regard to the likelihood that the tax position may be
        challenged. If an uncertain tax position meets the “more-likely-than-not”
threshold, the largest amount of tax benefit that is greater than 50 percent
        likely to be recognized upon ultimate settlement with the taxing authority
        is
        recorded. The adoption of FIN 48 did not have a material impact on our
        consolidated financial statements. See Note 16, “Income Taxes,” for additional
        information.
  ***Compensation
        Arrangements***
  In
        December 2004, SFAS No. 123 (Revised 2004), *Share-Based
        Payment* (“SFAS
        No. 123R”) was issued. This accounting standard eliminated the ability to
        account for share-based compensation transactions using the intrinsic value
        method in accordance with APB Opinion No. 25, *Accounting
        for Stock Issued to Employees* (“APB
        25”), and requires instead that such transactions be accounted for using a
        fair-value-based method. SFAS No. 123R requires public entities to record
        non-cash compensation expense related to payment for employee services by
        an
        equity award, such as stock options, in their financial statements over the
        requisite service period. We have adopted SFAS No. 123R as of June 30,
        2005.
  The
        Investment Management Entities have entered into agreements with certain
        of
        their employees whereby these employees have been granted rights to participate
        in a portion of the management fees and incentive allocations earned by the
        Investment Management Entities, typically net of certain expenses and generally
        subject to various vesting provisions. These rights are accounted for as
        liabilities in accordance with SFAS No. 123R and remeasured at fair value
        each
        reporting period until settlement. See Note 13, “Compensation Arrangements,” for
        a further description of these arrangements.
  ***Oil
        and Natural Gas Properties***
  In
        November 2006, we sold our oil and gas operating units to SandRidge. Therefore,
        as of December 31, 2007 and 2006, we have no capitalized costs relating to
        these
        operations. Prior to such sale, we utilized the full cost method of accounting
        for our crude oil and natural gas properties. Under the full cost method,
        all
        productive and nonproductive costs incurred in connection with the acquisition,
        exploration and development of crude oil and natural gas reserves were
        capitalized and amortized on the units-of-production method based upon total
        proved reserves. The costs of unproven properties were excluded from the
        amortization calculation until
        the
        individual properties were evaluated and a determination made as to whether
        reserves existed. Conveyances of properties, including gains or losses on
        abandonment of properties, were treated as adjustments to the cost of crude
        oil
        and natural gas properties, with no gain or loss recognized. Under the full
        cost
        method, the net book value of oil and natural gas properties, less related
        deferred income taxes, may not exceed the estimated after-tax future net
        revenues from proved oil and natural gas properties, discounted at 10% per
        year
        (the ceiling limitation). In arriving at estimated future net revenues,
        estimated lease operating expenses, development costs, abandonment costs
        and
        certain production related and ad-valorem taxes were deducted. In calculating
        future net revenues, prices and costs in effect at the time of the calculation
        were held constant indefinitely, except for changes that were fixed and
        determinable by existing contracts. The net book value of oil and gas properties
        was compared to the ceiling limitation on a quarterly basis. We did not incur
        a
        ceiling write-down in fiscal 2006 and fiscal 2005.
  91
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  Prior
        to
        the sale of our oil and natural gas properties, such properties were subject
        to
        extensive federal, state and local environmental laws and regulations. These
        laws, which are constantly changing, regulate the discharge of materials
        into
        the environment and may require us to remove or mitigate the environment
        effects
        of the disposal or release of petroleum or chemical substances at various
        sites.
        Environmental expenditures are expensed or capitalized depending on their
        future
        economic benefit. Expenditures that relate to an existing condition caused
        by
        past operations and that have no future economic benefit are expensed.
        Liabilities for expenditures of a non-capital nature are recorded when
        environmental assessment and/or remediation is probable, and the costs can
        be
        reasonably estimated.
  ***Revenue
        and Expense Recognition***
  *Investment
        Management Operations* — The
        Investment Management Entities generate income from amounts earned pursuant
        to
        contractual arrangements with the Private Funds. Such amounts typically include
        an annual management fee of 2.5% of the net asset value of the fee-paying
        capital of certain Private Funds before a performance-based incentive allocation
        of 25% of capital appreciation (both realized and unrealized) earned by the
        Investment Funds 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).
        Such amounts have been (and may in the future be) modified or waived in certain
        circumstances. The Investment Management Entities and their affiliates may
        also
        earn income through their principal investments in the Private
        Funds.
  At
        the
        end of each fiscal year of the Onshore Fund (or sooner upon the occurrence
        of
        withdrawals), 25% of the capital appreciation (based on realized and unrealized
        gains and losses), if any, that is allocated to each capital account of a
        fee-paying limited partner of the Onshore Fund (20% of the capital appreciation,
        if any, for certain limited partners) for such fiscal year is reallocated
        to the
        capital account of the Onshore GP subject to a loss carryforward provision
        as
        described in the Third Amended and Restated Limited Partnership Agreement
        of the
        Onshore Fund, dated as of January 1, 2006, as amended from time to time,
        and,
        since February 1, 2007, the Fourth Amended and Restated Limited Partnership
        Agreement.
  At
        the
        end of each fiscal year of Offshore Master Funds and, at certain other times,
        25% of the capital appreciation (based on realized and unrealized gains and
        losses), if any, that is allocated to each capital account of a fee-paying
        limited partner of Offshore Master Funds (20% in some cases) for such fiscal
        year is reallocated to the capital account of the Offshore GP subject to
        a loss
        carryforward provision as described in the limited partnership agreement
        of each
        Offshore Master Fund in effect at such time.
  Prior
        to
        December 31, 2007, Icahn Management recognized management fee income in the
        period in which the related services were performed and in accordance with
        certain management agreements with each of (i) the Onshore Fund; (ii) the
        Offshore Funds and (iii) from May 1, 2006 through October 1, 2006, the Sterling
        Fund.
  92
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  On
        January 1, 2008, (i) the management agreements between New Icahn Management
        and
        the Private Funds and the management fees 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 administrative and back office 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 (as such term is defined in their respective limited partnership
        agreements). See Note 18, “Subsequent Events,” for further
        discussion.
  The
        general partner incentive allocations earned from the Onshore Fund and Offshore
        Master 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* (“EITF
        Topic D-96”) and are allocated to the Onshore GP and the Offshore GP,
        respectively, at the end of the Onshore Fund’s and each Offshore Master 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
        Onshore Fund’s and Offshore Master Funds’ fiscal year at December
        31.
  The
        incentive allocations earned by the Onshore GP and the Offshore GP from the
        Onshore Fund and Offshore Master Funds, respectively, and the management
        fees
        earned by New Icahn Management (and Icahn Management prior to August 8, 2007)
        from certain of the consolidated Private Funds, are eliminated in consolidation;
        however, the Investment Management Entities’ allocated share of the net income
        from the Private Funds includes the amount of these eliminated fees and
        allocations.
  *Metals* — PSC
        Metals’ primary source of revenue is from the sale of processed ferrous and
        non-ferrous scrap metals. PSC Metals also generates revenues from secondary
        sales of plates and pipes, the brokering of scrap metals and from services
        performed. Revenues from processed ferrous and non-ferrous scrap metal and
        from
        secondary plate and pipe sales are recognized when title passes to the customer.
        Revenues relating to brokered sales are recognized upon receipt of the materials
        by the customer. Revenues from services are recognized as the service is
        performed. Sales adjustments related to price and weight differences and
        allowances for uncollectible receivables are accrued against revenues as
        incurred.
  *Home
        Fashion* — WPI
        records revenue when the following criteria are met: persuasive evidence
        of an
        arrangement exists, delivery has occurred, the price to the customer is fixed
        and determinable and collectibility is reasonably assured. Unless otherwise
        agreed in writing, title and risk of loss pass from WPI to the customer when
        WPI
        delivers the merchandise to the designated point of delivery, to the designated
        point of destination or to the designated carrier, free on board. Provisions
        for
        certain rebates, sales incentives, product returns and discounts to customers
        are recorded in the same period the related revenue is recorded.
  Customer
        incentives are provided to major WPI customers. These incentives begin to
        accrue
        when a commitment has been made to the customer and are recorded as a reduction
        to sales.
  *Gaming* — As
        previously discussed, in November 2006, we divested our Atlantic City gaming
        properties. In addition, on April 22, 2007, we entered into an agreement
        to sell
        all of the issued and outstanding membership interests of ACEP, which comprise
        all of our remaining gaming properties. As discussed above, the financial
        position and results of operations of our gaming operations are presented
        as
        discontinued operations in our consolidated financial statements. We consummated
        the sale on February 20, 2008. See Note 18, “Subsequent Events,” for additional
        information.
  Our
        former Gaming segment revenue consists of casino, hotel and restaurant revenues.
        We recognize revenues in accordance with industry practice. Casino revenue
        is
        the net win from gaming activities (the difference between gaming wins and
        losses). Casino revenues are net of accruals for anticipated payouts of
        progressive and certain other slot machine jackpots. Gross revenues include
        the
        estimated retail value of hotel rooms,
        food and beverage and other items that are provided to customers on a
        complimentary basis. A corresponding amount is deducted as promotional
        allowances. The costs of such complimentary revenues are included in gaming
        expenses. Hotel and restaurant revenue is recognized when services are
        performed.
  93
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  We
        also
        reward our customers, through the use of loyalty programs with points based
        on
        amounts wagered, that can be redeemed for a specified period of time for
        cash.
        We deduct the cash incentive amounts from casino revenue.
  *Real
        Estate* — Revenue
        from real estate sales and related costs are recognized at the time of closing
        primarily by specific identification. We follow the guidelines for profit
        recognition set forth by SFAS No. 66, *Accounting
        for Sales of Real Estate* .
  Substantially
        all of the property comprising our net lease portfolio is leased to others
        under
        long-term net leases and we account for these leases in accordance with the
        provisions of SFAS No. 13, *Accounting
        for Leases* , as
        amended. This statement sets forth specific criteria for determining whether
        a
        lease is to be accounted for as a financing lease or an operating lease.
        Under
        the financing method, minimum lease payments to be received plus the estimated
        value of the property at the end of the lease are considered the gross
        investment in the lease. Unearned income, representing the difference between
        gross investment and actual cost of the leased property, is amortized to
        income
        over the lease term so as to produce a constant periodic rate of return on
        the
        net investment in the lease. Under the operating method, revenue is recognized
        as rentals become due, and expenses (including depreciation) are charged
        to
        operations as incurred.
  ***General
        Partnership Interest of Icahn Enterprises Holdings***
  The
        general partner’s capital account generally consists of its cumulative share of
        our net income less cash distributions plus capital contributions. Additionally,
        in acquisitions of common control companies accounted for at historical cost
        similar to a pooling of interests, the general partner’s capital account would
        be charged
        or credited in a manner similar to a distribution for the excess (or deficit)
        of
        the fair value of consideration paid over historical basis in the business
        acquired.
  94
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  Capital
        Accounts, as defined under our Amended and
        Restated Agreement of Limited Partnership dated as of May 12, 1987, as amended
        from time to time (together with the partnership agreement of Icahn Enterprises
        Holdings, the “Partnership Agreement”), are maintained for our general partner
        and our limited partner. The capital account provisions of our Partnership
        Agreement incorporate principles established for U.S. federal income tax
        purposes and are not comparable to the equity accounts reflected under U.S.
        GAAP, in our consolidated financial statements.
  Generally,
        net earnings for U.S. federal income tax purposes are allocated 1.0% and
        99.0%
        between the general partner and the limited partner, respectively, in the
        same
        proportion as aggregate cash distributions made to the general partner and
        the
        limited partner during the period. This is generally consistent with the
        manner
        of allocating net income under our Partnership Agreement; however, it is
        not
        comparable to the allocation of net income reflected in our consolidated
        financial statements. Additionally, as discussed below, we elected to change
        the
        allocation of gains or losses on disposition of common control acquisitions
        accounted for as a pooling of interests.
  Pursuant
        to the Partnership Agreement, in the event of our dissolution, after satisfying
        our liabilities, our remaining assets would be divided among our limited
        partner
        and the general partner in accordance with their respective percentage interests
        under the Partnership Agreement (i.e., 99.0% to the limited partners and
        1.0% to
        the general partner). If a deficit balance still remains in the general
        partner’s capital account after all allocations are made between the partners,
        the general partner would not be required to make whole any such
        deficit.
  ***Change
        in Accounting Principle — Method of Allocating Gains and Losses
        Related to Dispositions of Common Control
        Acquisitions***
  In
        the
        third quarter of fiscal 2007, we elected to change our method of allocating
        gains and losses for financial reporting purposes related to dispositions
        of
        common control entities accounted for on an as-if pooling basis when acquired.
        Both the historical method and the new method are acceptable alternative
        principles under U.S. GAAP. The new method of allocating gains and losses
        from
        dispositions to third parties of common control acquisitions for financial
        reporting purposes would not affect the amounts distributable to the partners
        in
        accordance with their respective percentage interests under the Partnership
        Agreement (i.e., 99.0% to the limited partner and 1.0% to the general partner).
        This change in accounting principle was applied retrospectively in accordance
        with the provisions of SFAS No. 154, *Accounting
        Changes and Error Corrections — A Replacement of APB Opinion No. 20
        and FASB Statement No. 3.*
  When
        we
        acquire an entity under common control, we will continue to reflect the acquired
        entity in a manner similar to a pooling of interests, as we have in the past.
        We
        will also continue to charge or credit the general partner’s capital account
        with the difference between the consideration we pay for the entity and the
        predecessor basis prior to our acquisition.
  Historically,
        upon later sale of the entity to a third party, the entire gain or loss was
        allocated between the general partner and the limited partner in accordance
        with
        their respective percentage interests under the Partnership Agreement (i.e.,
        99.0% to the limited partners and 1.0% to the general partner).
  The
        newly
        adopted accounting principle only affects transactions involving the sale
        of a
        previously acquired common control entity. The newly adopted accounting
        principle allocates gain or loss for financial reporting purposes by first
        restoring the general partner’s capital account for the cumulative charges or
        credits relating to prior periods recorded at the time of our acquisition
        and
        then allocating the remaining gain or loss among
        the
        general and limited partners in accordance with their respective percentage
        interests under the Partnership Agreement (i.e., 99.0% to the limited partner
        and 1.0% to the general partner).
  95
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  The
        impact of this change in accounting principle only affects the financial
        statements for fiscal 2006, related to the gains on sale of our former Oil
        and
        Gas segment as well as the Atlantic City operations from our former Gaming
        segment which occurred in the quarter ended December 31, 2006, or the fourth
        quarter of fiscal 2006. The following information details the financial
        statement line items for fiscal 2006 that were affected by the change in
        accounting principle, which includes amounts from the common control acquisition
        of the Partnership Interests made on August 8, 2007 as more fully described
        in
        Note 1, “Description of Business and Basis of Presentation,” and Note 3,
“Acquisitions.” Net earnings attributable to limited partners decreased from
        $795.4 million to $518.1 million while net earnings attributable to the general
        partner increased from $318.4 million to $595.7 million. Total net earnings
        did
        not change. Total partners’ equity, which is 99.0% attributable to the
        limited partners pursuant to the Partnership Agreement, did not
        change.
  ***Environmental
        Liability***
  PSC
        Metals accrues environmental remediation costs associated with identified
        sites
        where an assessment has indicated that cleanup costs are probable and can
        be
        reasonably estimated. Such accruals are based on currently available
        information, existing technology and enacted laws and regulations. The liability
        for environmental and closure costs is included in the consolidated balance
        sheet under accrued environmental costs. PSC Metals accounts for its
        environmental remediation costs in accordance with AICPA Statement of Position
        96-1, *Environmental
        Remediation Liabilities.*
  ***Sales
        of Subsidiary Stock***
  SEC
        Staff
        Accounting Bulletin No. 51, *Accounting
        for Sales of Stock by a Subsidiary* (“SAB
        51”), provides guidance on accounting for the effect of issuances on a
        subsidiary’s stock on the parent’s investment in that subsidiary. SAB 51 allows
        registrants to elect an accounting policy of recording such increases or
        decreases in a parent’s investment (SAB 51 credits or charges, respectively) as
        either a gain or loss in the statement of operations or reflected as an equity
        transaction. In accordance with the election provided in SAB 51, we adopted
        a
        policy of recording such SAB 51 credits or charges directly to partners’ equity.
        As further discussed in Note 11, “Non-Controlling Interests,” during the quarter
        ended June 30, 2007, we recognized certain SAB 51 charges to partners’ equity of
        approximately $6.1 million related to our investment in Atlantic Coast under
        our
        adopted policy.
  ***Recently
        Issued Accounting Pronouncements***
  *FSP
        No. SOP 07-1-1.* In
        February 2008, the FASB issued FSP No. SOP 07-1-1, *Effective
        Date of AICPA Statement of Position 07-1* (“FSP
        No. SOP 07-1-1”). FSP No. 07-1-1 amends SOP 07-1 by delaying indefinitely the
        effective date of the SOP 07-1 and prohibits the adoption of SOP 07-1 for
        an
        entity that has not early adopted SOP 07-1 before the issuance of FSP No.
        07-1-1. An entity that early adopts SOP 07-1 before the issuance of FSP No.
        07-1-1 would be permitted but not required to continue to apply the provisions
        of the SOP 07-1. An entity that did not early adopt SOP 07-1 would not be
        permitted to adopt it. Because we early adopted SOP 07-1 before the issuance
        of
        FSP 07-1-1, we are permitted to continue to apply the provisions of SOP
        07-1.
  *SFAS
        No. 141(R).* In
        December 2007, the FASB issued 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.
        Additionally, 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. We are currently evaluating the impact that SFAS
        No.
        141(R) will have on our consolidated financial statements.
  96
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **2.
        Summary of Significant Accounting Policies
 - (continued)**
  *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 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 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.
  **3.
        Acquisitions**
  ***a.
        Acquisition of PSC Metals***
  On
        November 5, 2007, we acquired, through a subsidiary, all of the issued and
        outstanding capital stock of PSC Metals from Philip. PSC Metals is engaged
        in
        transporting, recycling and processing metals. The consideration for the
        transaction was $335 million in cash.
  Mr.
        Icahn
        indirectly owned a 95.6% interest and we indirectly owned the remaining 4.4%
        interest in Philip. The transaction was approved by a special committee of
        independent members of our board of directors. The special committee was
        advised
        by its own legal counsel and independent financial adviser with respect to
        the
        transaction. The special committee received an opinion from its financial
        adviser as to the fairness to us, from a financial point of view, of the
        consideration paid by us.
  ***b.
        Acquisition of Investment Management Business***
  On
        August
        8, 2007, Icahn Enterprises entered into the Contribution Agreement with the
        Contributors and Carl C. Icahn. Pursuant to the Contribution Agreement, we
        acquired general partnership interests in the General Partners, acting as
        general partners of the Onshore Fund and the Offshore Master Funds, and acquired
        the general partnership interests in New Icahn Management. These entities
        provide investment advisory and certain management services to the Private
        Funds
        but 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
        transaction was approved by a special committee of independent members of
        our
        board of directors. The special committee was advised by its own legal counsel
        and independent financial adviser with respect to the transaction. The special
        committee received an opinion from its financial adviser as to the fairness
        to
        us, from a financial point of view, of the consideration paid by
        us.
  Icahn
        Enterprises entered into a Contribution and Exchange Agreement (the
“Contribution Agreement”), dated as of August 8, 2007, 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 general partnership
        interests in the Onshore GP and Icahn Offshore LP (the “Offshore GP” and,
        together with the Onshore GP, the “General Partners”), acting as general
        partners of the Onshore Fund and the Offshore Master Funds (as defined below)
        managed and controlled by Mr. Icahn. As referred to herein, the “Offshore Master
        Funds” consist of (i) Offshore Master Fund I; (ii) Offshore Master Fund II; and
        (iii) Offshore Master Fund III. The Onshore Fund and the Offshore Master
        Funds
        are collectively referred to herein as the “Investment
        Funds.”
  97
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **3.
        Acquisitions  - (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.” Icahn Enterprises’ also
        acquired the
        general partnership interests in New Icahn Management, a Delaware limited
        partnership, which is a newly formed management company that provides certain
        management and administrative services to the Private Funds.
  The
        total
        initial consideration paid for the acquisition was $810 million of Icahn
        Enterprises’depositary
        units based on the volume-weighted average price of our
        depositary units on the NYSE for the 20-trading-day period ending on August
        7,
        2007 (the day before the closing). In addition, Icahn Enterprises’ 
has agreed
        to make certain earn-out payments to the Contributors over a five-year period
        payable in additional depositary units based on our after-tax earnings from
        the
        General Partners and New Icahn Management subsequent to the acquisition,
        which
        includes both management fees and performance-based incentive allocations
        paid
        by the Private Funds to New Icahn Management and the General Partners. There
        is
        a potential maximum aggregate earn-out (including any catch-up) of $1.121
        billion of Icahn Enterprises’ depositary
        units,
        which is subject to achieving total after-tax earnings during the five-year
        period of at least $3.906 billion.
  Prior
        to
        the acquisition of the Partnership Interests on August 8, 2007, CCI Offshore
        was
        the general partner of the Offshore GP, which, in turn, is the general partner
        of the Offshore Master Funds, each of which is a Cayman Islands exempted
        limited
        partnership. Offshore Master Fund I commenced investment operations on November
        1, 2004 and each of Offshore Master Fund II and Offshore Master Fund III
        commenced operations in fiscal 2007. In addition, CCI Onshore was the general
        partner of the Onshore GP, which, in turn, is the general partner of the
        Onshore
        Fund, which is a Delaware limited partnership that commenced investment
        operations on November 1, 2004.
  CCI
        Offshore contributed to us 100% of CCI Offshore’s general partnership interests
        in the Offshore GP (the “Offshore Partnership Interests”) and CCI Onshore
        contributed to us 100% of CCI Onshore’s general partnership interests in the
        Onshore GP (the “Onshore Partnership Interests”). The General Partners’ capital
        account with respect to the Offshore Partnership Interests and the Onshore
        Partnership Interests at the time of our acquisition aggregated $10
        million.
  Immediately
        prior to the execution and delivery of the Contribution Agreement, Icahn
        Management and New Icahn Management entered into an agreement pursuant to
        which
        Icahn Management contributed substantially all of its assets and liabilities,
        other than certain rights in respect of deferred management fees, to New
        Icahn
        Management in exchange for 100% of the general partnership interests in New
        Icahn Management. Such contribution included the assignment of the management
        agreements with the Private Funds. Pursuant to the Contribution Agreement,
        Icahn
        Management contributed to us 100% of Icahn Management’s general partnership
        interests in New Icahn Management (the “New Icahn Management Partnership
        Interests” and, together with the Onshore Partnership Interests and the Offshore
        Partnership Interests, referred to herein as the “Partnership
        Interests”).
  Prior
        to
        the formation of New Icahn Management, Icahn Management provided management
        and
        administrative services to the Private Funds. New Icahn Management provided
        management and administrative services to the Private Funds from August 8,
        2007.
  98
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **3.
        Acquisitions  - (continued)**
  On
        January 1, 2008, (i) the management agreements and the management fees 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 administrative
        and back office 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 (as such term is defined in their
        respective limited partnership agreements). See Note 18, “Subsequent Events,”
for additional information.
  The
        consolidated Private Funds and the Investment Management Entities are considered
        entities under common control with us. Accordingly, the accompanying
        consolidated financial statements and footnotes include the net assets and
        results of operations of the consolidated Private Funds and the Investment
        Management Entities during the period of common control, commencing November
        1,
        2004. See Note 2, “Summary of Significant Accounting Policies,” for a discussion
        on principles of consolidation.
  ***c.
        Acquisition of WPI***
  On
        August
        8, 2005, we acquired 13.2 million, or 67.7%, of the 19.5 million outstanding
        common shares of WPI. In consideration for the shares, we paid $219.9 million
        in
        cash and received the balance in respect of a portion of the debt of WPS
        owned
        by us. Pursuant to the asset purchase agreement between WPI and WPS, rights
        to
        subscribe for an additional 10.5 million shares of common stock at a price
        of
        $8.772 per share, or the rights offering, were allocated among former creditors
        of WPS. Under the asset purchase agreement and the bankruptcy court order
        approving the sale, we would have received rights to subscribe for 2.5 million
        of such shares and we agreed to purchase up to an additional 8.0 million
        shares
        of common stock to the extent that any rights were not exercised by the holders
        of such rights. Accordingly, upon completion of the rights offering and
        depending upon the extent to which the other holders exercise certain
        subscription rights, we would beneficially own between 15.7 million and 23.7
        million shares of WPI common stock representing between 52.3% and 79.0% of
        the
        30.0 million shares that would then be outstanding.
  On
        December 20, 2006, we acquired (1) 1,000,000 shares of Series A-1 Preferred
        Stock for a purchase price of $100 per share, for an aggregate purchase price
        of
        $100.0 million, and (2) 1,000,000 shares of Series A-2 Preferred Stock for
        a
        purchase price of $100.0 per share, for an aggregate purchase price of $100.0
        million. Each of the Series A-1 Preferred Stock and Series A-2 Preferred
        Stock
        have a 4.50% annual dividend rate which is paid quarterly. For the first
        two
        years after issuance, the dividends are paid in the form of additional preferred
        stock. Thereafter, the dividends are to be paid in either cash or in additional
        preferred stock at the option of WPI. Each of Series A-1 Preferred Stock
        and
        Series A-2 Preferred Stock is convertible into common shares of WPI at a
        rate of
        $10.50 per share, subject to certain anti-dilution provisions, provided,
        however, that under certain circumstances, $92.1 million of the Series A-2
        Preferred Stock may be converted at a rate of $8.772 per share. Assuming
        full
        conversion of both series of preferred stock into common shares, prior to
        completion of the rights offering, we would have owned, as of December 31,
        2007,
        33.1 million shares, representing 84.0% of the 39.4 million shares that would
        then have been outstanding. Assuming the rights offering were to have been
        completed as of December 31, 2007, we would have owned between 33.6 million
        shares, or 70.1% and 34.9 million shares, or 84.7% of the 47.9 million shares
        or
        41.2 million shares of WPI common stock, respectively, that would be outstanding
        depending upon the extent to which the other shareholders exercised their
        subscription rights.
  As
        discussed in Note 17, “Commitments and Contingencies,” legal proceedings with
        respect to the acquisition are ongoing.
  **4.
        Operating Units**
  Through
        the second quarter of 2006, we conducted our continuing operating businesses
        in
        four principal areas: Oil and Gas, Gaming, Real Estate and Home Fashion.
        As
        described herein, in November 2006, we sold our
        Oil
        and Gas and our Atlantic City Gaming operations. In addition, on April 22,
        2007,
        we entered into an agreement to sell our remaining Gaming operations. We
        consummated the sale on February 20, 2008. See Note 18, “Subsequent Events,” for
        additional information. As a result, our former Oil and Gas and Gaming
        businesses are now classified as discontinued operations and thus are not
        considered part of our continuing operations. As discussed herein, on August
        8,
        2007, we acquired the Partnership Interests, and on November 5, 2007 we acquired
        PSC Metals. We now conduct our operating businesses in four principal areas:
        Investment Management, Metals, Real Estate and Home Fashion. See Note 15,
        “Segment Reporting,” for additional information concerning our
        segments.
  99
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
  ***a.
        Investment Management Operations***
  The
        Investment Management Entities provide investment advisory and certain
        management services to the Private Funds, but 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 Investment Management Entities receive
        management fees and incentive allocations from the Private Funds. Management
        fees are generally 2.5% of the net asset value of the fee-paying capital
        of
        certain Private Funds. Incentive allocations, which are primarily earned
        on an
        annual basis, are generally 25% of the net profits generated by the Private
        Funds. Therefore, our Investment Management operations’ revenues will be
        affected by the combination of fee-paying capital under management (“AUM”) and
        the investment performance of the Private Funds.
  Summary
        financial information for our Investment Management operations as of December
        31, 2007 and 2006 included in our consolidated balance sheets, are as follows
        (in $000s):
 
 **December
                  31,******
              
              **2007**
              
              **2006**Cash
                  and cash equivalents
              
              $
              26,027
              
              $
              4,822Cash
                  held at consolidated affiliated partnerships and restricted
                  cash
              
              
              1,104,748
              
              
              1,106,809Securities
                  owned, at fair value
              
              
              5,920,209
              
              
              2,757,229Unrealized
                  gains on derivative contracts, at fair value
              
              
              110,181
              
              
              80,216Due
                  from brokers
              
              
              847,891
              
              
              838,620Other
                  assets
              
              
              40,831
              
              
              27,460Total
                  assets
              
              $
              8,049,887
              
              $
              4,815,156Accounts
                  payable, accrued expenses and other liabilities
              
              $
              116,990
              
              $
              59,286Deferred
                  management fee payable to related party
              
              
              143,972
              
              
              —Subscriptions
                  received in advance
              
              
              144,838
              
              
              66,030Payable
                  for purchases of securities
              
              
              46,055
              
              
              11,687Securities
                  sold, not yet purchased, at fair value
              
              
              206,128
              
              
              691,286Unrealized
                  losses on derivative contracts, at fair value
              
              
              15,726
              
              
              1,770Total
                  liabilities
              
              $
              673,709
              
              $
              830,059Non-controlling
                  interests
              
              $
              6,594,014
              
              $
              3,628,470
  100
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
  Summarized
        consolidated income statement information for our Investment Management
        operations for the years ended December 31, 2007, 2006 and 2005 is as follows
        (in $000s):
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Revenues:Management
                  fees from related parties
              
              $
              10,617
              
              $
              —
              
              $
              —Consolidated
                  affiliated partnerships:Realized
                  gains — securities
              
              
              616,003
              
              
              805,122
              
              
              110,481Unrealized
                  gains (losses) — securities
              
              
              (231,473
              )
              
              158,206
              
              
              182,006Realized
                  gains (losses) — derivative contracts
              
              
              11,070
              
              
              (20,357
              )
              
              21,481Unrealized
                  gains (losses) — derivative contracts
              
              
              (40,727
              )
              
              87,769
              
              
              (8,528
              )Interest,
                  dividends and other income
              
              
              222,012
              
              
              73,218
              
              
              47,268Other
                  income
              
              
              752
              
              
              345
              
              
              168588,254
              
              
              1,104,303
              
              
              352,876Costs
                  and expenses:Compensation
              
              
              37,107
              
              
              29,732
              
              
              12,929Shareholder
                  actions
              
              
              4,105
              
              
              4,952
              
              
              3,185General
                  and administrative
              
              
              5,612
              
              
              2,945
              
              
              1,979Consolidated
                  affiliated partnerships:Interest
                  expense
              
              
              14,521
              
              
              9,901
              
              
              43Dividend
                  expense
              
              
              6,260
              
              
              6,256
              
              
              2,149Financing
                  expense
              
              
              23,794
              
              
              13,853
              
              
              —Other
                  investment expenses
              
              
              4,330
              
              
              8,260
              
              
              1,701Other
                  expenses
              
              
              4,058
              
              
              3,836
              
              
              4,06499,787
              
              
              79,735
              
              
              26,050Income
                  before taxes and non-controlling interests in income
              
              
              488,467
              
              
              1,024,568
              
              
              326,826Non-controlling
                  interests in income
              
              
              (313,982
              )
              
              (763,137
              )
              
              (241,361
              )Income
                  tax expense
              
              
              (4,311
              )
              
              (1,763
              )
              
              (890
              )Net
                  earnings
              
              $
              170,174
              
              $
              259,668
              
              $
              84,575
  The
        General Partners’ incentive allocations earned from the Onshore Fund and
        Offshore Master Funds are accrued on a quarterly basis in accordance with
        Method
        2 of EITF Topic D-96 and are allocated to the Onshore GP and Offshore GP,
        respectively, at the end of the Onshore Fund’s and each Offshore Master Fund’s
        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
        Onshore Fund’s and each Offshore Master Fund’s fiscal year. The management fees
        earned by Icahn Management (and by New Icahn Management subsequent to the
        acquisition on August 8, 2007 through December 31, 2007) are calculated based
        on
        the net asset values of the fee-paying capital of certain Private Funds and
        are
        earned and paid quarterly.
  The
        table
        below reflects changes to the Private Funds’ AUM for fiscal 2007, fiscal 2006
        and fiscal 2005. Amounts presented are net of management fees and accrued
        incentive allocations and include deferred balances and amounts invested
        by us
        and certain other affiliated parties for which we are charged no management
        fees
        and pay no incentive allocations for the periods presented. Accordingly,
        the
        amounts presented below are not the amounts used to calculate management
        fees
        for the respective periods.
  101
 TABLE
            OF CONTENTS


**ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
 
 **December
                  31,******
              
              **2007**
              
              **2006**
              
              **2005**Balance,
                  beginning of period
              
              $
              4,019,993
              
              $
              2,646,652
              
              $
              1,166,578Net
                  in-flows
              
              
              3,005,084
              
              
              332,173
              
              
              1,150,158Appreciation
              
              
              485,593
              
              
              1,041,168
              
              
              329,916Balance,
                  end of period
              
              $
              7,510,670
              
              $
              4,019,993
              
              $
              2,646,652Fee-paying
                  AUM
              
              $
              5,049,767
              
              $
              3,193,415
              
              $
              2,136,354
  For
        fiscal 2007, fiscal 2006 and fiscal 2005 the amount of gross management fees
        and
        incentive allocations earned and allocated before related eliminations for
        the
        periods stated is as follows (in $000s):
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Management
                  Fees:Onshore
                  Fund
              
              $
              35,035
              
              $
              21,018
              
              $
              15,029Offshore
                  Funds
              
              
              82,342
              
              
              61,397
              
              
              29,172Unconsolidated
                  Offshore Funds
              
              
              10,617
              
              
              —
              
              
              —Total
              
              $
              127,994
              
              $
              82,415
              
              $
              44,201Incentive
                  Allocations:Onshore
                  Fund
              
              $
              22,814
              
              $
              68,867
              
              $
              21,836Offshore
                  Master Funds
              
              
              48,515
              
              
              121,611
              
              
              35,466Total
              
              $
              71,329
              
              $
              190,478
              
              $
              57,302
  ***b.
        Metals***
  We
        conduct our Metals operations through our 100% ownership in 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.
  102
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
  Summary
        financial information for the Metals operations as of December 31, 2007 and
        2006, included in the consolidated balance sheets are as follows (in
        $000s):
  **December
                  31,******
              
              **2007**
              
              **2006**Cash
                  and cash equivalents
              
              $
              20,215
              
              $
              22,332Investments
              
              
              7,299
              
              
              5,543Accounts
                  receivable, net of allowance for doubtful accounts
              
              
              77,281
              
              
              55,308Inventories,
                  net
              
              
              72,282
              
              
              58,438Property,
                  plant and equipment, net
              
              
              83,398
              
              
              50,917Other
                  assets
              
              
              62,196
              
              
              27,529Total
                  assets
              
              $
              322,671
              
              $
              220,067Accounts
                  payable, accrued expenses and other liabilities
              
              $
              36,707
              
              $
              32,768Long-term
                  debt and capital lease obligations
              
              
              3,223
              
              
              2,259Accrued
                  enivornmental costs
              
              
              24,296
              
              
              19,861Total
                  liabilities
              
              $
              64,226
              
              $
              54,888
  Summarized
        consolidated income statement information for our Metals operations for fiscal
        2007, fiscal 2006 and fiscal 2005 included in the consolidated statements
        of
        operations is as follows (in $000s):
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Net
                  sales
              
              $
              834,106
              
              $
              710,054
              
              $
              600,989Expenses:Cost
                  of sales
              
              
              777,955
              
              
              652,090
              
              
              555,311Selling,
                  general and administrative expenses
              
              
              18,218
              
              
              15,028
              
              
              14,525Total
                  expenses
              
              
              796,173
              
              
              667,118
              
              
              569,836Income
                  from continuing operations before interest, income taxes and
                  non-controlling interests in income
              
              $
              37,933
              
              $
              42,936
              
              $
              31,153
  The
        following is a breakdown of depreciation expense for the periods indicated
        in
        ($000s):
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Depreciation
                  expense included in cost of sales
              
              $
              9,447
              
              $
              6,553
              
              $
              3,847Depreciation
                  expense included in selling, general and administrative
                  expenses
              
              
              259
              
              
              263
              
              
              250Total
                  depreciation expense
              
              $
              9,706
              
              $
              6,816
              
              $
              4,097
  During
        fiscal 2007, PSC Metals completed the acquisitions of substantially all of
        the
        assets of three scrap metal recyclers. The aggregate purchase price for the
        acquisitions was approximately $47.7 million, the most significant of which
        was
        approximately $40 million relating to the September 2007 acquisition of
        substantially all of the assets of WIMCO Operating Company, Inc., a full
        service
        scrap metal recycler located in Ohio. Approximately $15.1 million of goodwill
        was recorded in fiscal 2007 relating to these acquisitions, which is based
        on a
        preliminary allocation of the purchase price based on the fair value of the
        assets and liabilities acquired. The results of operations for yards acquired
        are reflected in the consolidated results of PSC Metals from
        the
        dates of acquisition. If the acquisitions had occurred at the beginning of
        fiscal 2007 or fiscal 2006, our consolidated unaudited pro forma net revenue,
        net income and diluted earnings per share for fiscal 2007 or fiscal 2006
        would
        not have been materially different than the amounts we reported, and, therefore,
        pro forma results are not presented.
  103
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
  ***c.
        Real Estate***
  For
        fiscal 2007, fiscal 2006 and fiscal 2005, our Real Estate operations consisted
        of rental real estate, property development and associated resort activities.
        As
        of December 31, 2007, our three related operating units of our Real Estate
        segment are all individually immaterial and have been aggregated.
  Summarized
        income statement information attributable to our continuing Real Estate
        operations for the periods indicated included in the consolidated statements
        of
        operations is as follows (in $000s):
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Revenues:Rental
                  real estate
              
              $
              12,298
              
              $
              13,528
              
              $
              13,000Property
                  development
              
              
              60,796
              
              
              90,955
              
              
              58,270Resort
                  activities
              
              
              29,828
              
              
              28,127
              
              
              27,122Total
                  revenues
              
              
              102,922
              
              
              132,610
              
              
              98,392Expenses:Rental
                  real estate
              
              
              5,190
              
              
              4,622
              
              
              4,065Property
                  development
              
              
              57,488
              
              
              73,041
              
              
              48,679Resort
                  operations
              
              
              29,215
              
              
              28,162
              
              
              28,852Total
                  expenses
              
              
              91,893
              
              
              105,825
              
              
              81,596Income
                  from continuing operations before interest, income taxes and
                  non-controlling interests in income
              
              $
              11,029
              
              $
              26,785
              
              $
              16,796
  The
        Real
        Estate operations compares the carrying value of its real estate portfolio,
        which includes commercial property for rent and residential property for
        current
        and future development, to its estimated realizable value to determine if
        its
        carrying costs will be recovered. In cases where the Real Estate operations
        does
        not expect to recover its carrying cost, an impairment charge is recorded
        as an
        expense and a reduction in the carrying cost of the asset.
  For
        fiscal 2007, fiscal 2006 and fiscal 2005, the Real Estate operations recorded
        impairment charges of $3.9 million, $0.4 million and $0.2 million, respectively.
        In fiscal 2007, impairment charges of $2.5 million related to development
        properties and $1.4 million related to rental properties. In fiscal 2006
        and
        fiscal 2005, the impairment charges were recorded against the rental
        properties.
  In
        developing its assumptions as to realizable value the Real Estate operations
        consider current and future house prices, construction and carrying costs
        and
        sales absorptions for its residential inventory and current and future rental
        rates for its commercial properties.
  *Rental
        Real Estate*
  As
        of
        December 31, 2007, we owned 32 rental real estate properties. These primarily
        consist of fee and leasehold interests in real estate in 16 states. Most
        of
        these properties are net-leased to single corporate tenants. Approximately
        88%
        of these properties are currently net-leased, 3% are operating properties
        and 9%
        are vacant.
  104
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
  *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 houses, 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 400 and
        900
        units of residential housing, respectively. Both developments operate golf
        and
        resort activities as well. We are also completing residential communities
        in
        Naples, Florida and Westchester County, New York.
  The
        following is a consolidated summary of our Real Estate operating unit property
        and equipment as of December 31, 2007 and 2006, included in the consolidated
        balance sheets (in $000s):
 
 **December
                  31,******
              
              **2007**
              
              **2006**Rental
                  properties
              
              $
              96,020
              
              $
              112,505Property
                  development
              
              
              107,036
              
              
              126,537Resort
                  properties
              
              
              43,823
              
              
              44,932Total
                  real estate
              
              $
              246,879
              
              $
              283,974
  The
        following is a summary of the anticipated future receipts of the minimum
        lease
        payments receivable under the financing and operating method at December
        31,
        2007 (in $000s):
  **Year**
              
              **Amount**2008
              
              $
              19,2112009
              
              
              18,1082010
              
              
              14,3962011
              
              
              13,8482012
              
              
              13,343Thereafter
              
              
              48,060$
              126,966
  At
        December 31, 2007 and 2006, $80.0 million and $83.3 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***
  *Operations*
  We
        conduct our Home Fashion operations through our majority ownership in 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. On October 18, 2007, WPI entered into an agreement to sell the
        inventory at all of its 30 retail outlet stores. Therefore, the portion of
        the
        business related to the stores’ retail operations has been classified for all
        years presented as discontinued operations.
  105
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
  The
        following are summary balance sheets for our Home Fashion operating segment
        as
        of December 31, 2007 and 2006 as included in the consolidated balance sheets
        (in
        $000s):
 
 **December
                  31,******
              
              **2007**
              
              **2006**Cash
                  and cash equivalents
              
              $
              135,667
              
              $
              178,464Restricted
                  cash
              
              
              1,827
              
              
              3,312Trade
                  receivables, net
              
              
              93,085
              
              
              128,033Inventories,
                  net
              
              
              193,941
              
              
              224,483Assets
                  held for sale
              
              
              13,587
              
              
              44,857Property,
                  plant and equipment, net
              
              
              183,027
              
              
              200,383Other
                  assets
              
              
              44,665
              
              
              50,306Total
                  assets
              
              $
              665,799
              
              $
              829,838Accounts
                  payable, accrued expenses and other liabilities
              
              $
              96,267
              
              $
              99,989Debt
              
              
              9,243
              
              
              10,600Total
                  liabilities
              
              $
              105,510
              
              $
              110,589Non-controlling
                  interests
              
              $
              116,496
              
              $
              178,843
  Summarized
        statements of operations for fiscal 2007, fiscal 2006 and for the period
        from
        August 8, 2005 (acquisition date) to December 31, 2005 is as follows (in
        $000s):
  **Year
                  Ended December 31, 2007**
              
              **Year
                  Ended December 31, 2006**
              
              **August
                  8, 2005 to December 31, 2005**Net
                  sales
              
              $
              683,670
              
              $
              890,840
              
              $
              441,771Expenses:Cost
                  of sales
              
              
              681,281
              
              
              857,947
              
              
              401,576Selling,
                  general and administrative expenses
              
              
              111,557
              
              
              130,622
              
              
              58,881Restructuring
                  and impairment charges
              
              
              49,345
              
              
              45,647
              
              
              1,658Total
                  expenses
              
              
              842,183
              
              
              1,034,216
              
              
              462,115Loss
                  from continuing operations before interest, income taxes and
                  non-controlling interests in income
              
              $
              (158,513
              )
              $
              (143,376
              )
              $
              (20,344
              )
  A
        relatively small number of customers have historically accounted for a
        significant portion of WPI’s net revenue. For fiscal 2007, fiscal 2006, and for
        the period commencing August 8, 2005 to December 31, 2005, sales to six
        customers amounted to approximately 51% of net revenues. One customer accounted
        for 15% or more of WPI’s net revenue in all three periods.
  106
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **4.
        Operating Units  - (continued)**
  The
        following is a breakdown of depreciation expense for the periods indicated
        in
        ($000s):
 
 **Year
                  Ended December 31, 2007**
              
              **Year
                  Ended December 31, 2006**
              
              **August
                  8, 2005 to December 31, 2005**Depreciation
                  expense included in cost of sales
              
              $
              11,337
              
              $
              25,484
              
              $
              16,041Depreciation
                  expense included in selling, general and administrative
                  expenses
              
              
              2,922
              
              
              5,240
              
              
              2,940Total
                  depreciation expenses
              
              $
              14,259
              
              $
              30,724
              
              $
              18,981
  Total
        expenses for fiscal 2007 included $24.8 million of non-cash fixed asset and
        other impairment charges related to the plants that have been or will be
        closed
        and $19.3 million of restructuring charges (of which $3.6 million relates
        to
        severance costs and $15.7 million relates to continuing costs of closed plants).
        Additionally, WPI reduced the carrying value of the trademarks and recorded
        intangible asset impairment charges of $5.2 million.
  Impairment
        and restructuring charges for fiscal 2007 and fiscal 2006 are included in
        Home
        Fashion operating expenses in the accompanying consolidated statements of
        operations.
  To
        improve WPI’s competitive position, we intend to continue to significantly
        reduce our cost of goods sold by restructuring our operations in the plants
        located in the United States, increasing production within our non-U.S.
        facilities and joint venture operation and sourcing goods from lower cost
        overseas facilities. We have incurred impairment charges to write-down the
        value
        of WPI plants taken out of service to their estimated liquidation value.
        As of
        December 31, 2007, approximately $183.4 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, 2006 was $1.2 million. During
        fiscal
        2007, we incurred additional restructuring costs of $19.3 million, of which
        $19.7 million was paid during the period. As of December 31, 2007, the accrued
        liability balance was $0.8 million which is included in accounts payable
        and
        accrued expenses in our consolidated balance sheet.
  Total
        cumulative impairment and restructuring charges for the period from August
        8,
        2005 (acquisition date), through December 31, 2007 were $96.6
        million.
  We
        expect
        that restructuring charges will continue to be incurred throughout fiscal
        2008.
        As of December 31, 2007, WPI expects to incur additional restructuring costs
        and
        impairment charges for fiscal 2008 relating to the current restructuring
        plan of
        between $17.0 million and $20.0 million primarily related to the continuing
        costs of our closed facilities. Restructuring costs could be affected by,
        among
        other things, our decision to accelerate or delay restructuring efforts.
        As a
        result, actual costs incurred could vary materially from these
        amounts.
  **5.
        Discontinued Operations and Assets Held for Sale**
  ***Results
        of Discontinued Operations and Assets and Liabilities Held for
        Sale***
  The
        financial position and results of our 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, respectively, for all periods presented in accordance
        with SFAS No. 144.
  107
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **5.
        Discontinued Operations and Assets Held for Sale
 - (continued)**
  A
        summary
        of the results of operations for our discontinued operations for fiscal 2007,
        fiscal 2006 and fiscal 2005 is as follows (in $000s):
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Revenues:Oil
                  and Gas
              
              $
              —
              
              $
              353,539
              
              $
              198,854Gaming
              
              
              444,208
              
              
              524,077
              
              
              490,321Real
                  Estate
              
              
              6,064
              
              
              7,108
              
              
              8,847Home
                  Fashion - retail stores
              
              
              47,398
              
              
              66,816
              
              
              30,910Total
                  revenues
              
              $
              497,670
              
              $
              951,540
              
              $
              728,932Income
                  (loss) from discontinued operations:Oil
                  and Gas
              
              $
              —
              
              $
              183,281
              
              $
              37,521Gaming
              
              
              99,945
              
              
              45,624
              
              
              60,179Real
                  Estate
              
              
              4,800
              
              
              5,300
              
              
              5,170Home
                  Fashion - retail stores
              
              
              (20,003
              )
              
              (7,261
              )
              
              (2,085
              )Total
                  income from discontinued operations before income taxes, interest
                  and
                  other income
              
              
              84,742
              
              
              226,944
              
              
              100,785Interest
                  expense
              
              
              (21,634
              )
              
              (47,567
              )
              
              (32,851
              )Interest
                  and other income
              
              
              20,710
              
              
              13,004
              
              
              7,539Impairment
                  loss on GBH bankruptcy
              
              
              —
              
              
              —
              
              
              (52,366
              )Income
                  from discontinued operations before income taxes and non-controlling
                  interests in income
              
              
              83,818
              
              
              192,381
              
              
              23,107Income
                  tax expense
              
              
              (18,677
              )
              
              (17,119
              )
              
              (19,711
              )65,141
              
              
              175,262
              
              
              3,396Non-controlling
                  interest in (income) loss
              
              
              5,108
              
              
              (53,165
              )
              
              4,356Gain
                  on sales of discontinued operations, net of income tax
                  expense
              
              
              20,798
              
              
              676,444
              
              
              21,849Income
                  from discontinued operations
              
              $
              91,047
              
              $
              798,541
              
              $
              29,601
  Interest
        and other income for fiscal 2007 includes approximately $8.3 million relating
        to
        a real estate tax refund received by Atlantic Coast and approximately $10.1
        million representing the net gain on settlement of litigation relating to
        GB
        Holdings.
  The
        gain
        on sales of discontinued operations for fiscal 2007 includes approximately
        $12.4
        million of gain on sales of real estate and $9.3 million relating to working
        capital adjustment to the gain recorded on the sale of Oil and Gas business
        in
        November 2006. In accordance with SFAS No. 144, we ceased depreciation on
        fixed
        assets of ACEP commencing in the second quarter of 2007. The amount of the
        depreciation and amortization not expensed by us was approximately $27.4
        million
        for fiscal 2007.
  108
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **5.
        Discontinued Operations and Assets Held for Sale
 - (continued)**
  ***Assets
        and Liabilities of Discontinued Operations***
  A
        summary
        of assets of discontinued operations held for sale and liabilities of
        discontinued operations held for sale as of December 31, 2007 and 2006 is
        as
        follows (in $000s):
 
 **December
                  31,******
              
              **2007**
              
              **2006**Cash
                  and cash equivalents
              
              $
              107,265
              
              $
              54,912Trade,
                  notes and other receivables
              
              
              5,615
              
              
              6,752Property,
                  plant and equipment
              
              
              478,972
              
              
              470,218Other
                  assets
              
              
              60,248
              
              
              89,092Assets
                  of discontinued operations held for sale
              
              $
              652,100
              
              $
              620,974Accounts
                  payable and accrued expenses
              
              $
              49,013
              
              $
              54,267Long-term
                  debt
              
              
              270,209
              
              
              271,417Other
                  liabilities
              
              
              11,002
              
              
              5,993Liabilities
                  of discontinued operations held for sale
              
              $
              330,224
              
              $
              331,677
  ***Gaming
        Operations***
  On
        May
        19, 2006, our wholly owned subsidiaries, AREP Laughlin and AREP Boardwalk
        Properties, completed the purchases of the Aquarius and the Traymore site,
        respectively, from affiliates of Harrah’s. The transactions were completed
        pursuant to an asset purchase agreement, dated as of November 28, 2005, between
        AREP Laughlin, AREP Boardwalk LLC, Harrah’s and certain affiliates of
        Harrah’s.
  On
        November 17, 2006, Atlantic Coast, ACE, we and certain other entities owned
        by or affiliated with us completed the sale to Pinnacle of the outstanding
        membership interests in ACE and 100% of the equity interests in certain of
        our
        subsidiaries which own parcels of real estate adjacent to The Sands, including
        7.7 acres of land known as the Traymore site. We owned, through subsidiaries,
        approximately 67.6% of Atlantic Coast, which owned 100% of ACE. The aggregate
        purchase price was approximately $274.8 million, of which approximately $200.6
        million was paid to Atlantic Coast and approximately $74.2 million was paid
        to
        our affiliates for subsidiaries which owned the Traymore site and the adjacent
        properties. $51.8 million of the purchase price paid to Atlantic Coast was
        deposited into escrow to fund indemnification obligations, of which $50.0
        million related to claims of creditors and stockholders of GBH, a holder
        of
        stock in Atlantic Coast. On February 22, 2007, we resolved all outstanding
        litigation involving GBH, resulting in a release of all claims against us.
        As a
        result of the settlement, our ownership of Atlantic Coast increased from
        67.6%
        to 96.9% and $50.0 million of the amount placed into escrow was released
        to us.
        In the second quarter of fiscal 2007, we and several other investors exercised
        warrants to purchase shares of common stock of Atlantic Coast, resulting
        in an
        increase of the minority interest in Atlantic Coast, and a decrease in our
        ownership to 94.2%.
  On
        November 15, 2007, ACE HI Merger Corp., (“Merger Corp”), our indirect wholly
        owned subsidiary and the owner of approximately 94.2% of the outstanding
        shares
        of Atlantic Coast common stock, completed a short-form merger transaction,
        or
        the Merger, under Section 253 of Delaware Law, pursuant to which Merger Corp
        merged with and into Atlantic Coast and Atlantic Coast became our wholly
        owned
        subsidiary. Pursuant to the Merger, the holders of Atlantic Coast common
        stock
        (other than Merger Corp) are entitled to receive $21.19 per share in cash
        in
        exchange for their shares. Alternatively, by following procedures set forth
        under Delaware Law, any of these stockholders who do not wish to accept the
        $21.19 per share cash consideration are entitled to receive payment in cash
        of
        the “fair value” of these shares as determined by an appraisal proceeding by the
        Delaware Court of Chancery.
  109
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **5.
        Discontinued Operations and Assets Held for Sale
 - (continued)**
  On
        November 16, 2007, Atlantic Coast filed a Form 15 with the SEC, thereby
        terminating its reporting obligations under the Exchange Act, and its status
        as
        a public company.
  On
        April
        22, 2007, AEP, our wholly owned indirect subsidiary, entered into a
        Membership Interest Purchase Agreement with W2007/ACEP Holdings, LLC, an
        affiliate of Whitehall Street Real Estate Funds, a series of real estate
        investment funds affiliated with Goldman, Sachs & Co., to sell all of the
        issued and outstanding membership interests of ACEP, which comprise our gaming
        operations, for $1.3 billion, plus or minus certain adjustments such as working
        capital, more fully described in the agreement. The purchase price was
        subsequently adjusted to $1.2 billion in an agreement dated February 8, 2008.
        Pursuant to the terms of the agreement, AEP is required to cause ACEP to
        repay
        from funds provided by AEP, the principal, interest, prepayment penalty or
        premium due on ACEP’s 7.85% senior secured notes due 2012 and ACEP’s senior
        secured credit facility. The sale of ACEP was consummated on February 20,
        2008.
        With this transaction, we anticipate realizing a gain of approximately $700
        million on our investments in ACEP, before income taxes, subject to resolution
        of post-closing adjustments. ACEP’s casino assets are comprised of the
        Stratosphere Casino Hotel & Tower, the Arizona Charlie’s Decatur, the
        Arizona Charlie’s Boulder and the Aquarius Casino Resort. See Note 18,
“Subsequent Events,” for additional information.
  ***GBH
        Impairment***
  On
        September 29, 2005, GBH filed a voluntary petition for bankruptcy relief
        under
        Chapter 11 of the U.S. Bankruptcy Code. As a result of this filing, we
        determined that we no longer controlled GBH and deconsolidated our investment
        effective the date of the bankruptcy filing. As a result of GBH’s bankruptcy, we
        recorded impairment charges of $52.4 million related to the write-off of
        the
        remaining carrying amount of our investment ($6.7 million) and also to reflect
        a
        dilution in our effective ownership percentage of Atlantic Coast, 41.7% of
        which
        is owned directly by GBH ($45.7 million).
  We
        recorded $34.5 million of income tax benefits in the third quarter of fiscal
        2006 as a result of the reversal of deferred tax valuation allowances for
        our
        oil and gas and Atlantic City gaming operations. See Note 16, “Income Taxes,”
for further information.
  ***Oil
        and Gas Operations***
  On
        November 21, 2006, our indirect wholly owned subsidiary, AREP O & G
        Holdings, consummated the sale of all of the issued and outstanding membership
        interests of NEG Oil & Gas to SandRidge, for consideration consisting of
        $1.025 billion in cash, 12,842,000 shares of SandRidge’s common stock, valued,
        at the date of closing, at $18 per share, and the repayment by SandRidge
        of
        $300.0 million of debt of NEG Oil & Gas. On April 4, 2007, we sold our
        entire position in SandRidge for cash consideration of approximately $243.2
        million.
  SandRidge
        is a working interest owner and the operator of a majority of the Longfellow
        Ranch area oil and gas properties. The interest in Longfellow Ranch was the
        single largest oil and gas property owned by NEG Oil & Gas.
  On
        November 21, 2006, pursuant to an agreement dated October 25, 2006 among
        Icahn
        Enterprises Holdings, NEG Oil & Gas and NEGI, NEGI sold its membership
        interest in NEG Holding to NEG Oil & Gas for consideration of approximately
        $261.1 million. Of that amount, $149.6 million was used to repay the principal
        of and accrued interest with respect to the NEGI 10.75% senior notes due
        2007,
        all of which was held by us.
  110
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **5.
        Discontinued Operations and Assets Held for Sale
 - (continued)**
  ***Real
        Estate***
  Certain
        of our real estate properties are classified as discontinued operations.
        The
        properties classified as discontinued operations have changed during fiscal
        2007
        and, accordingly, certain amounts in the accompanying fiscal 2007, fiscal
        2006
        and fiscal 2005 financial statements have been reclassified to conform to
        the
        current classification of properties. In addition, during fiscal 2007, seven
        properties of our real estate segment were reclassified to discontinued
        operations.
  ***Home
        Fashion***
  We
        closed
        all of WPI’s 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, we entered into an agreement to sell the inventory at all of WPI’s
        retail stores. In accordance with SFAS No. 144, we have reported the retail
        outlet stores business as discontinued operations for all periods
        presented.
  **6.
        Related Party Transactions**
  We
        have
        entered into several transactions with entities affiliated with Carl C. Icahn.
        The transactions include purchases by us of businesses and business interests,
        including debt, of the affiliated entities. Additionally, other transactions
        have occurred as described below.
  All
        related party transactions are reviewed and approved by our Audit Committee.
        Where appropriate, our Audit Committee obtains independent financial advice
        and
        legal counsel on the transactions.
  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 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 is shown as a reduction to the general
        partner’s capital account.
  ***a.
        Investment Management Operations***
  On
        August
        8, 2007, in a related party transaction, Icahn Enterprises  acquired the
        general partnership interests in the General Partners, acting as general
        partners of the Onshore Fund and the Offshore Master Funds managed and
        controlled by Carl C. Icahn, and the general partnership interests in New
        Icahn
        Management, the newly formed management company that provides certain management
        and administrative services to the Private 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 and that, together
        with
        other funds that also invest in the Offshore Master Funds, constitute the
        Feeder
        Funds. See Note 3, “Acquisitions —  Acquisition of Investment
        Management Business” for further discussion of the acquisition.
  Icahn
        Enterprises, along with the Private Funds, entered into an agreement (the
“Covered Affiliate Agreement”), simultaneously with the closing of the
        transactions contemplated by the Contribution Agreement, pursuant to which
        Icahn
        Enterprises (and certain of its subsidiaries, including us) agreed, in
        general, to be bound by certain restrictions on our investments in any assets
        that the General Partners deem suitable for the Private Funds, other than
        government and agency bonds, cash equivalents and investments in non-public
        companies. We and our subsidiaries will not be restricted from making
        investments in the securities of certain companies in which Mr. Icahn or
        companies he controlled had an interest in as of the date of the initial
        launch
        of the Private Funds, and companies in which we had an interest as of the
        date
        of acquisition on August 8, 2007. We and our subsidiaries, either alone or
        acting together with a group, will not be restricted from (i) acquiring all
        or
        any portion of the assets of any public company in connection with a negotiated
        transaction or series of related negotiated transactions or (ii) engaging
        in a
        negotiated merger transaction with a public company and, pursuant thereto,
        conducting and completing
        a tender offer for securities of the company. The terms of the Covered Affiliate
        Agreement may be amended, modified or waived with the consent of us and each
        of
        the Private Funds, provided, however, that a majority of the members of an
        investor committee maintained for certain of the Private Funds may (with
        our
        consent) amend, modify or waive any provision of the Covered Affiliate Agreement
        with respect to any particular transaction or series of related
        transactions.
  111
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **6.
        Related Party Transactions  - (continued)**
  Icahn
        Enterprises has also entered into an employment agreement (the “Icahn Employment
        Agreement”) with Mr. Icahn pursuant to which, over a five-year term, Mr. Icahn
        will serve as Chairman and Chief Executive Officer of New Icahn Management,
        in
        addition to his current role as Chairman of Icahn Enterprises. Mr. Icahn
        also
        serves as the Chief Executive Officer of the General Partners. During the
        employment term, we will pay Mr. Icahn an annual base salary of $900,000
        and an
        annual incentive bonus based on a bonus formula with two components. The
        first
        component is based on the annual return on AUM by the Private Funds. The
        second
        component of the annual bonus payable by us is tied to the growth in our
        annual
        net income (other than income or losses resulting from the operations of
        the
        Investment Management Entities).
  Fifty
        percent of all bonus amounts payable under the Icahn Employment Agreement
        shall
        be subject to mandatory deferral and treated as though invested in the Private
        Funds and as though subject to a 2% annual management fee (but no incentive
        allocation). Such deferred amounts are subject to vesting in equal annual
        installments over a three-year period commencing from the last day of the
        year
        giving rise to the bonus. Amounts deferred generally are not subject to
        acceleration and unvested deferred amounts will be forfeited if Mr. Icahn
        ceases
        to be employed under his employment agreement, provided that all deferred
        amounts will vest in full and be payable in a lump sum payment thereafter
        if the
        employment of Mr. Icahn is terminated without Cause or Mr. Icahn terminates
        his
        employment for Good Reason, as such terms are defined in the Icahn Employment
        Agreement, or upon Mr. Icahn’s death or disability during the employment term.
        In addition, upon Mr. Icahn’s completion of service through the end of the
        employment term, Mr. Icahn will also vest in full in any mandatory deferrals.
        Vested deferred amounts (and all deferred returns, earnings and profits thereon)
        are payable to Mr. Icahn within 60 days following the vesting date.
  The
        Investment Management Entities provide investment advisory and certain
        management services to the Private Funds. The Investment Management Entities
        do
        not provide investment advisory or other management 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. See Note 2, “Summary of Significant Accounting
        Policies — Revenue Recognition,” for a further description of the
        management fees and incentive allocations earned by the Investment Management
        Entities with respect to these services.
  Each
        of
        the General Partners may, in its sole discretion, elect to reduce or waive
        the
        incentive allocations with respect to the capital account of any limited
        partner
        of the Onshore Fund or Offshore Master Funds, respectively. For fiscal 2007,
        fiscal 2006 and fiscal 2005, the Onshore GP received an incentive allocation
        of
        $22.8 million, $68.9 million and $21.8 million, respectively, and the Offshore
        GP received an incentive allocation of $48.5 million, $121.6 million and
        $35.5
        million, respectively. Such amounts are eliminated in the consolidated financial
        statements.
  As
        further described in Note 2, “Summary of Significant Accounting
        Policies — Revenue Recognition,” pursuant to the management
        agreements, Icahn Management (and subsequent to the acquisition of the
        Partnership Interests on August 8, 2007 through December 31, 2007, New Icahn
        Management) typically was entitled to receive certain quarterly management
        fees.
        From August 8, 2007 through December 31, 2007, New Icahn Management earned
        $53.8
        million in such management fees. Such amounts received from the Onshore Fund
        and
        the consolidated Offshore Fund are eliminated in our consolidated financial
        statements. The management fees earned for fiscal 2007, fiscal 2006 and fiscal
        2005 were $128.0 million, $82.4 million and $44.2 million, respectively,
        including earnings on deferred management fees. Most of these amounts were
        eliminated in our consolidated financial statements. Management fees not
        eliminated in the consolidated financial statements were $10.6 million in
        fiscal
        2007 and $0 in fiscal 2006 and 2005.
  112
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **6.
        Related Party Transactions  - (continued)**
  In
        addition, pursuant to the provisions of a deferred fee arrangement, Icahn
        Management was eligible to defer receipt of all or a portion of the management
        fee earned from the Offshore Fund during a particular fiscal quarter in a
        fiscal
        year, and to have a portion or all of the deferred fee invested in the same
        manner as the Offshore Fund’s other assets, or in another manner approved by
        both the Offshore Fund and Icahn Management. The value of such deferred amounts
        constitutes a liability of the Offshore Fund to Icahn Management. Any amounts
        invested under the provisions of the deferred fee arrangement continue for
        all
        purposes to be part of the general assets of the Offshore Fund and generally
        earn the same return as other investors (except where fees are waived), and
        Icahn Management has no proprietary interest in any such assets.
  Icahn
        Management elected to defer an aggregate of 94% of the management fees from
        most
        of the Offshore Funds and such amounts remain invested in the Offshore Funds
        for
        fiscal 2007 (95% and 97% were deferred in the Offshore Funds for fiscal 2006
        and
        fiscal 2005, respectively). For fiscal 2007, fiscal 2006 and fiscal 2005
        the
        amounts of management fees elected to be deferred were $51.5 million, $39.1
        million and $26.0 million, respectively, and the appreciation earned upon
        them,
        was $14.3 and $19.7 million in fiscal 2007 and fiscal 2006, respectively.
        At
        December 31, 2007, the balance of deferred management fees payable to Icahn
        Management was $144.0 million.
  Under
        separate employment agreements, certain employees are entitled to receive
        a
        percentage of the management fees which is subject to deferral. As of December
        31, 2007, deferred compensation related to management fees of Icahn Management
        and New Icahn Management amounted to $12.5 million, which included appreciation
        since inception on such deferred amounts of $2.4 million. As of December
        31,
        2006, deferred compensation related to management fees of Icahn Management
        amounted to $6.7 million, which included appreciation since inception on
        such
        deferred amounts of $1.7 million. Refer to Note 13, “Compensation Arrangements,”
for additional information regarding these agreements.
  On
        January 1, 2008, (i) the management agreements and the management fees 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 administrative
        and back office 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 (as such term is defined in their
        respective limited partnership agreements). See Note 18, “Subsequent Events,”
for additional information.
  Icahn
        & Co. LLC and certain other entities beneficially owned by Carl C. Icahn and
        affiliates of Icahn Management (collectively “Icahn Affiliates”) have paid for
        the salaries and benefits of employees who perform various functions including
        accounting, administrative, investment, legal and tax services. Under a separate
        expense-sharing agreement, Icahn Affiliates have charged Icahn Management
        for a
        portion of these expenses. For fiscal 2007, fiscal 2006 and fiscal 2005,
        the
        amounts charged to Icahn Management were $13.9 million, $12.4 million and
        $9.6
        million, respectively. Management believes that all allocated amounts are
        reasonable based upon the nature of the services provided (e.g. occupancy,
        salaries and benefits, etc.).
  Icahn
        Affiliates have paid rent for the occupancy of space shared by Icahn Management
        and New Icahn Management. Under a separate expense-sharing agreement, Icahn
        Affiliates have charged Icahn Management and New Icahn Management for a portion
        of these expenses. For fiscal 2007, fiscal 2006 and fiscal 2005, the amounts
        charged to Icahn Management and New Icahn Management were $1.5 million, $1.4
        million and $1.5 million, respectively.
  113
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **6.
        Related Party Transactions  - (continued)**
  In
        addition, certain expenses borne by Icahn Management and New Icahn Management
        have been reimbursed by Icahn Affiliates, as appropriate, and when such expenses
        were incurred. The expenses included investment-specific expenses for
        investments acquired by both the Private Funds (prior to our acquisition
        of the
        Partnership Interests on August 8, 2007) and Icahn Affiliates which were
        allocated based on the amounts invested by each party, as well as investment
        management-related expenses which were allocated based on estimated usage
        agreed
        upon by both Icahn Management and New Icahn Management and the Icahn
        Affiliates.
  The
        Holding Company made three equal investments in September, October and November
        2007 aggregating $700 million in the Private Funds for which no management
        fees
        or incentive allocations are applicable. As of December 31, 2007, the total
        value of this investment is approximately $684.3 million, with an unrealized
        loss of $15.7 million for fiscal 2007. These amounts are reflected in the
        Investment Management Entities’ net assets and earnings but are eliminated at
        the Holding Company level. However, the Investment Management Entities’
allocated share of net assets and earnings from the Private Funds includes
        the
        amount of these eliminated amounts.
  Carl
        Icahn, along with his affiliates (other than Icahn Enterprises and its
        affiliates), makes investments in the Private Funds. These investments are
        not
        subject to management fees or incentive allocations. As of December 31, 2007
        and
        2006, the total of these investments were $1.5 billion and $524.6 million,
        respectively **.**
  ***b.
        All Other Operations***
 *Metals*
  Philip
        entered into a Tax Allocation Agreement (the “Agreement”) with Starfire Holding
        Corporation (“Starfire”). The Agreement provides that Starfire will pay all
        consolidated federal income taxes on behalf of the consolidated group which
        includes Philip. Philip is 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. See Note 3, “Acquisitions —
Acquisition of PSC Metals,” for a discussion of our acquisition of PSC Metals
        from Philip on November 5, 2007.
  PSC
        Metals sold material to Alliance Castings of approximately $8.8 million,
        $11.0
        million, $9.1 million for fiscal 2007, fiscal 2006 and fiscal 2005,
        respectively. Material sold to Chicago Castings was approximately $0.0 million,
        $0.5 million and $2.3 million for fiscal 2007, fiscal 2006 and fiscal 2005,
        respectively. Mr. Icahn is a major shareholder of these companies.
  Philip
        issued approximately $6.3 million in letters of credits collateralizing certain
        PSC Metals’ obligations which remain outstanding at December 31, 2007. PSC
        Metals is currently negotiating its own credit facilities.
  Included
        in selling, general and administrative costs is approximately $0.1 million
        paid
        to Philip for certain services provided to PSC Metals for each of fiscal
        2007,
        fiscal 2006 and fiscal 2005.
  *Oil
        and Gas*
  In
        October 2003, pursuant to a purchase agreement dated as of May 16, 2003,
        we
        acquired certain debt and equity securities of NEGI from entities affiliated
        with Mr. Icahn for an aggregate cash consideration of $148.1 million plus
        $6.7
        million in cash for accrued interest on the debt securities. The securities
        acquired were $148.6 million in principal amount of outstanding 10.75% senior
        notes due 2006 of NEGI and 5,584,044 shares of common stock of NEGI. As a
        result
        of the foregoing transaction and the acquisition by us of additional securities
        of NEGI prior to the closing, we beneficially owned in excess of 50% of the
        outstanding common stock of NEGI. In connection with the acquisition of stock
        in
        NEGI, the excess of cash disbursed over the historical cost, which amounted
        to
        $2.8 million, was charged to the general partner’s equity. NEGI owned a 50%
        interest in NEG Holdings; the other 50% interest in NEG Holdings was held
        by an
        affiliate of Mr.
        Icahn
        prior to our acquisition of the interest during the second quarter of fiscal
        2005. NEG Holdings owned NEG Operating LLC which owned operating oil and
        gas
        properties managed by NEGI.
  114
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **6.
        Related Party Transactions  - (continued)**
  In
        January 2005, we entered into an agreement to acquire TransTexas (subsequently
        known as National Onshore), Panaco (subsequently known as National Offshore)
        and
        the membership interest in NEG Holdings other than that already owned by
        NEGI
        for cash consideration of $180.0 million and depositary units valued, in
        the
        aggregate, at $445.0 million, from affiliates of Mr. Icahn. The acquisition
        of
        TransTexas was completed on April 6, 2005 for $180.0 million in cash. The
        acquisition of Panaco and the membership interest in NEG Holdings was completed
        on June 30, 2005 for 15,344,753 depositary units, valued at $445.0
        million.
  As
        discussed above, on November 21, 2006, our indirect wholly owned subsidiary,
        AREP O & G Holdings, consummated the sale of all of the issued and
        outstanding membership interests of NEG Oil & Gas to SandRidge. See Note 5,
“Discontinued Operations and Assets Held for Sale,” for additional information
        regarding the sale.
  *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.” 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 the Investment Management Entities. 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 the Investment Management Entities.
        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 the Investment
        Management Entities. The license agreement expires in May 2012. Under the
        amended agreement, base rent is subject to increases in July 2008 and December
        2011. Additionally, we are entitled to certain annual rent credits each December
        beginning December 2005 and continuing through December 2011. For fiscal
        2007,
        fiscal 2006 and fiscal 2005, we paid such affiliate $0.2 million, $0.2 million,
        and $0.1 million, respectively, in connection with this licensing
        agreement.
  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 fiscal 2007 and the period beginning October 12, 2006 and ending December
        31, 2006, we received $84,000 and $17,000, respectively, for the use of such
        space.
  For
        fiscal 2007, fiscal 2006 and fiscal 2005, we paid $0.9 million, $0.8 million,
        and $1.0 million, respectively, to XO Holdings, Inc., an affiliate of the
        general partner, for telecommunication services.
  An
        affiliate of the general partner provided certain professional services to
        WPI
        for which WPI incurred charges from the affiliate of $0.3 million for fiscal
        2005. No charges were incurred in fiscal 2007 or fiscal 2006.
  We
        provide certain professional services to an affiliate of the general partner
        for
        which we charged $1.0 million, $0.7 million and $0.3 million for fiscal 2007,
        fiscal 2006 and fiscal 2005, respectively. In October 2006, an affiliate
        remitted $0.4 million to us as an advance payment for future services. As
        of
        December 31, 2006, current liabilities in the consolidated balance sheet
        included $0.1 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 $0.4 million and $.2 million for fiscal 2007 and
        fiscal
        2006, respectively.
  115
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **6.
        Related Party Transactions  - (continued)**
  Icahn
        Sourcing, LLC (“Icahn Sourcing”) is an entity formed and controlled by Carl C.
        Icahn in order to leverage the potential buying power of a group of entities
        with which Mr. Icahn has a relationship in negotiating with a wide range
        of
        suppliers of goods, services and tangible and intangible property. We are
        a
        member of the buying group and, as such, are afforded the opportunity to
        purchase goods, services and property from vendors with whom Icahn Sourcing
        has
        negotiated rates and terms. Icahn Sourcing does not guarantee that we will
        purchase any goods, services or property from any such vendors, and we are
        under
        no obligation to do so. We do not pay Icahn Sourcing any fees or other amounts
        with respect to the buying group arrangement. We have purchased a variety
        of
        goods and services as members of the buying group at prices and on terms
        that we
        believe are more favorable than those which would be achieved on a stand-alone
        basis.
  **7.
        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):
 
 **December
                  31, 2007**
              
              **December
                  31, 2006******
              
              **Amortized
                  Cost**
              
              **Carrying
                  Value**
              
              **Amortized
                  Cost**
              
              **Carrying
                  Value**Securities
                  Owned, at fair value:Common
                  Stock
              
              $
              4,926,853
              
              $
              5,133,400
              
              $
              1,929,634
              
              $
              2,230,569Convertible
                  Preferred Stock
              
              
              30,400
              
              
              28,272
              
              
              30,400
              
              
              39,064Call
                  Options
              
              
              196,562
              
              
              177,127
              
              
              221,740
              
              
              347,840Put
                  Options
              
              
              48,325
              
              
              67,387
              
              
              —
              
              
              —REIT
              
              
              
              
              
              
              
              
              123,971
              
              
              127,063Corporate
                  Debt
              
              
              558,402
              
              
              513,937
              
              
              6,434
              
              
              6,960Warrants
              
              
              2,215
              
              
              86
              
              
              2,214
              
              
              5,733Total
                  Securities Owned, at fair value
              
              $
              5,762,757
              
              $
              5,920,209
              
              $
              2,314,393
              
              $
              2,757,229Securities
                  Sold Not Yet Purchased, at fair value:Common
                  Stock
              
              $
              177,157
              
              $
              192,935
              
              $
              422,256
              
              $
              483,122Put
                  Options
              
              
              5,315
              
              
              8,480
              
              
              195
              
              
              —REIT
              
              
              —
              
              
              —
              
              
              75,836
              
              
              81,784Corporate
                  Debt
              
              
              11,061
              
              
              4,713
              
              
              126,491
              
              
              126,380Total
                  Securities Sold Not YetPurchased,
                  at fair value
              
              $
              193,533
              
              $
              206,128
              
              $
              624,778
              
              $
              691,286Unrealized
                  Gains on Derivative Contracts, at fair value:
              
              $
              74,340
              
              $
              110,181
              
              $
              —
              
              $
              80,216Unrealized
                  Losses on DervivativeContracts,
                  at fair value:
              
              $
              17,602
              
              $
              15,726
              
              $
              —
              
              $
              1,770
  As
        discussed in Note 2, “Summary of Significant Accounting Policies,” upon the
        adoption of SOP 07-1, the Investment Management Entities lost their ability
        to
        retain specialized accounting pursuant to the AICPA Guide. For those investments
        (i) that were deemed to be available-for-sale securities, (ii) that fall
        outside
        the scope of SFAS No. 115 or (iii) in 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 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.
  116
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **7.
        Investments and Related Matters  - (continued)**
  The
        following table summarizes those investments for which the Private Funds
        would
        otherwise apply the equity method of accounting under APB 18, *The
        Equity Method of Accounting for Investments in Common Stock,* (“APB
        18”). The Private Funds applied the fair value option pursuant to SFAS No. 159
        to such investments through December 31, 2007 (in $000s):
 
 **Gains
                  (Losses)******
              
              
              
              
              
              **Year
                  Ended December 31,****Investment**
              
              **Private
                  Funds Stock**
                **Ownership
                  Percentage**
              
              **Fair
                  Value**
                **December
                  31,**
                **2007**
              
              **2007**
              
              **2006**
              
              **2005**Adventrx
                  Pharmaceuticals Inc.
              
              
              3.83
              %
              $
              1,557
              
              $
              (8,649
              )
              $
              (1,142
              )
              $
              7,161BKF
                  Capital Group Inc.
              
              
              8.72
              %
              
              1,544
              
              
              (786
              )
              
              (10,846
              )
              
              1,514Blockbuster
                  Inc.
              
              
              7.75
              %
              
              56,361
              
              
              (19,031
              )
              
              21,139
              
              
              (75,671
              )Lear
                  Corp(1)
              
              
              12.45
              %
              
              265,424
              
              
              (17,944
              )
              
              78,895
              
              
              —WCI
                  Communities Inc.
              
              
              11.44
              %
              
              18,206
              
              
              (75,511
              )
              
              4,851
              
              
              —$
              343,092
              
              $
              (121,921
              )
              $
              92,897
              
              $
              (66,996
              )
  (1)
              Holding
                  Company owns approximately 0.4% as of December 31, 2007. 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 readily available at *www.sec.gov* .
  ***Investments
        in Variable Interest Entities***
  The
        Investment Management Entities consolidate certain 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 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 Investment Management Entities’
general credit.
  Any
        creditors of the VIEs do not have recourse against the general credit of
        Investment Management Entities solely as a result of including these variable
        interest entities in our consolidated financial statements.
  The
        consolidated VIEs consist of the Offshore Fund and each of the Offshore Master
        Funds, whose purpose and activities are further described in Note 1,
“Description of Business and Basis of Presentation”. The Investment Management
        Entities sponsored the formation of and manage each of these VIEs and, in
        some
        cases, have a principal investment therein.
  117
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **7.
        Investments and Related Matters  - (continued)**
  The
        following table presents information regarding interests in VIEs for which
        the
        Investment Management Entities hold a variable interest as of December 31,
        2007
        (in $000s):
  **Investment
                  Management**
                **Entities
                  are the**
                **Primary
                  Beneficiary**
              
              **Investment
                  Management**
                **Entities
                  are not the**
                **Primary
                  Beneficiary****Net
                  Assets**
              
              **Investment
                  Management Entities’****Interests**
              
              
              
              **Pledged**
                **Collateral**
              
              **Net
                  Assets**
              
              
              **Investment
                  Management Entities’**
                **Interests**Offshore
                  Funds andOffshore
                  Master Funds
              
              $
              4,376,464
              
              $
              7,658
              (2)
              
              
              $
              216,451
              
              $
              623,344
              
              $
              149
              (2)
  (1)
              Includes
                  collateral pledged in connection with securities sold, not yet
                  purchased,
                  derivative contracts and collateral held for securities
                  loaned.
 
 (2)
              Amount
                  represents Investment Management Entites’ maximum exposure to
                  loss.
  ***b.
        All Other Operations***
  Investments
        consist of the following (in $000s):
 
 **December
                  31, 2007**
              
              **December
                  31, 2006******
              
              **Amortized
                  Cost**
              
              **Carrying
                  Value**
              
              **Amortized
                  Cost**
              
              **Carrying
                  Value***Available
                  for Sale*Marketable
                  equity and debt securities
              
              $
              118,785
              
              $
              118,872
              
              $
              242,080
              
              $
              270,954Other
                  investments
              
              
              172,197
              
              
              173,323
              
              
              247,674
              
              
              249,708Total
                  available for sale
              
              
              290,982
              
              
              292,195
              
              
              489,754
              
              
              520,662*Trading*Investment
                  in ImClone Systems, at fair value
              
              
              122,122
              
              
              196,235
              
              
              146,794
              
              
              164,306Investment
                  in Lear Corporation, at fair value
              
              
              12,500
              
              
              9,282
              
              
              —
              
              
              —Total
                  trading
              
              
              134,622
              
              
              205,517
              
              
              146,794
              
              
              164,306Other
                  securities
              
              
              13,333
              
              
              13,333
              
              
              13,377
              
              
              13,377Total
                  investments
              
              $
              438,937
              
              $
              511,045
              
              $
              649,925
              
              $
              698,345
  Net
        realized and unrealized gains (losses) of our Holding Company and other
        investments were as follows:
 
 **Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Net
                  realized gains on sales of marketable securities
              
              $
              30,730
              
              $
              69,099
              
              $
              10,120Unrealized
                  gains on marketable securities
              
              
              49,516
              
              
              21,288
              
              
              9,856Net
                  realized losses on securities sold short
              
              
              (2,176
              )
              
              (17,146
              )
              
              (37,058
              )Unrealized
                  gains (losses) on securities sold short
              
              
              4,572
              
              
              18,067
              
              
              (4,178
              )Net
                  gain (loss) from investment activities
              
              $
              82,642
              
              $
              91,308
              
              $
              (21,260
              )
  118
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **7.
        Investments and Related Matters  - (continued)**
  Proceeds
        from the sales of available-for-sale securities were $281.2 million, $726.8
        million and $96.9 million for fiscal 2007, fiscal 2006 and fiscal 2005,
        respectively. The gross realized gains on available-for-sale securities sold
        for
        fiscal 2007, fiscal 2006 and fiscal 2005 were $2.7 million, $47.5 million
        and
        $8.6 million, respectively. The net unrealized gains for trading securities
        for
        fiscal 2007, fiscal 2006 and fiscal 2005 were approximately $70.9 million,
        $0.0
        million and $6.3 million, respectively. The net unrealized gains for trading
        securities still held at December 31, 2007 was $70.1 million. For purposes
        of
        determining gains and losses, the cost of securities is based on specific
        identification. Net unrealized holding gains (losses) on available-for-sale
        securities in the amount of ($24.2) and $29.7 million for fiscal 2007 and
        fiscal
        2006, respectively, and net unrealized holding losses on available for sale
        securities in the amount of $4.2 million for fiscal 2005 have been included
        in
        accumulated other comprehensive income.
  The
        Holding Company made three equal investments in September, October and November
        2007 aggregating $700 million in the Private Funds for which no management
        fees
        or incentive allocations are applicable. As of December 31, 2007, the total
        value of this investment is approximately $684.3 million, with an unrealized
        loss of $15.7 million for fiscal 2007. These amounts are reflected in the
        Investment Management Entities’ net assets and earnings but are eliminated at
        the Holding Company level. However, the Investment Management Entities’
allocated share of net assets and earnings from the Private Funds includes
        the
        amount of these eliminated amounts.
  ***Investment
        in Lear Corporation***
  In
        the
        third quarter of fiscal 2007, we adopted the fair value option pursuant to
        SFAS
        No. 159 to Lear Corporation common stock which became eligible for the fair
        value option at the time we first recognized them in our consolidated financial
        statements. We have adopted SFAS No. 159 to our investment in Lear Corporation
        common stock to be consistent with the Private Funds’ accounting for its
        investment in Lear Corporation common stock. We record unrealized gains and
        losses for the change in fair value of such shares as a component of net
        gain
        (loss) from investment activities in the consolidated statements of operations.
        As of December 31, 2007, the fair value of Lear Corporation common stock
        owned
        by us, which we believe is not material to our total assets, amounted to
        approximately $9.3 million. For fiscal 2007, we recorded $3.2 million in
        unrealized losses resulting from the change in market value of Lear common
        stock. As of December 31, 2007, the total shares of Lear Corporation common
        stock held by the Holding Company as a percentage of Lear Corporation’s total
        outstanding shares was approximately 0.4%. Lear Corporation is a registered
        SEC
        filer and its consolidated financial statements are readily available at *www.sec.gov* .
  ***Investment
        in ImClone Systems Incorporated***
  We
        adopted SFAS No. 159 as of January 1, 2007 and elected to apply the fair
        value
        option to our investment in ImClone. 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. In the fourth quarter of fiscal 2006, we first
        applied the equity method of accounting to our investment in ImClone due
        to
        changes in ImClone’s board, resulting in our having the ability to exercise
        significant influence over ImClone. We believe that the quality of the earnings
        and the value of the investment that we report over time relating to our
        investment in ImClone are more accurately reflected by the market value
        methodology of SFAS No. 159 rather than the equity method of accounting.
        The
        equity method of accounting would require an appraisal of the fair values
        of
        ImClone’s assets and liabilities at the dates that we acquired shares of common
        stock of ImClone as well as future appraisals should there be any material
        indications of impairment. We believe that such an appraisal would be subjective
        given the nature of ImClone’s pharmaceutical operations.
  As
        of the
        date of adoption, the carrying value of our investment in ImClone was
        approximately $164.3 million and the fair value of our investment was
        approximately $122.2 million. In accordance with the transition requirements
        of
        SFAS No. 159, we recorded a cumulative effect adjustment to beginning partners’
equity
        for the difference between the fair value and carrying value on the date
        of
        adoption, which reduced partners’ equity by approximately $42.2
        million.
  119
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **7.
        Investments and Related Matters  - (continued)**
  For
        fiscal 2007, we recorded approximately $74.1 million of unrealized gains
        resulting from the change in the market value of ImClone’s stock. We record
        unrealized gains and losses for the change in fair value of such shares as
        a
        component of net gain (loss) from investment activities in the consolidated
        statements of operations.
  At
        December 31, 2007 and 2006, the carrying value of our equity investment in
        ImClone was $196.2 million based on the fair value method of accounting and
        $164.3 million based on the equity method of accounting, respectively. As
        of
        December 31, 2007 and 2006, the market value of our ImClone shares held was
        $196.2 million and $122.2 million, respectively, which we believe is not
        material to our total assets. As of December 31, 2007, the total shares of
        ImClone common stock held by us as a percentage of ImClone’s total outstanding
        shares was approximately 5.3%. ImClone is a registered SEC filer and its
        consolidated financial statements are readily available at w *ww.sec.gov* .
  **8.
        Fair Value Measurements**
  We
        adopted 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 and a sale could reasonably impact the quoted
        price.
  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 which 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.
  120
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **December
        31, 2007, 2006 and 2005**
  **8.
        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 December 31, 2007 (in
          $000s).
  ***Investment
        Management Operations***
 
 **Level
                  1**
              
              **Level
                  2**
              
              **Total****Assets**Securities
                  Owned
              
              $
              4,828,548
              
              $
              1,091,661
              
              $
              5,920,209Unrealized
                  Gains on Derivative Contracts
              
              
              —
              
              
              110,181
              
              
              110,181$
              4,828,548
              
              $
              1,201,842
              
              $
              6,030,390**Liabilities**Securities
                  Sold, Not Yet Purchased
              
              $
              192,935
              
              $
              13,194
              
              $
              206,128Unrealized
                  Losses on Derivative Contracts
              
              
              —
              
              
              15,726
              
              
              15,726$
              192,935
              
              $
              28,920
              
              $
              221,854
  ***All
        Other Operations***
 
 **Level
                  1**
              
              **Level
                  2**
              
              **Total****Assets**Available
                  for sale investments:Marketable
                  equity and debt securities
              
              $
              118,872
              
              $
              —
              
              $
              118,872Other
                  securities
              
              
              173,323
              
              
              —
              
              
              173,323292,195
              
              
              —
              
              
              292,195Trading:Investment
                  in ImClone Systems Inc.
              
              
              196,235
              
              
              —
              
              
              196,235Investment
                  in Lear Corp
              
              
              9,282
              
              
              —
              
              
              9,282205,517
              
              
              —
              
              
              205,517Unrealized
                  gains on derivative contracts
              
              
              —
              
              
              2,621
              
              
              2,621$
              497,712
              
              $
              2,621
              
              $
              500,333**Liabilities**Unrealized
                  losses on derivative contracts
              
              $
              —
              
              $
              3,462
              
              $
              3,462
  **9.
        Financial Instruments, Off-Balance-Sheet Risk and Concentrations of Credit
        Risk**
  ***Investment
        Management Operations***
  The
        Private Funds maintain their cash deposits with major financial institutions.
        Certain account balances may not be covered by the Federal Deposit Insurance
        Corporation, while other accounts, at times, may exceed federally insured
        limits. We believe that this risk is not significant. Most of the Onshore
        Fund’s
        and Offshore Master Funds’ investments are held by, and its depository
        operations are transacted by, multiple prime brokers and a custodian. Clearing
        operations are transacted by the prime brokers which are members of major
        securities exchanges.
  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
        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 based on the change in an underlying instrument
        at
        specific terms at specified future dates. Risks arise with these financial
        instruments from potential counter-party non-performance and from changes
        in the
        market values of underlying instruments.
  121
 TABLE
            OF CONTENTS
  **ICAHN
        ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**
  **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2007, 2006 and 2005**
  **9.
        Financial Instruments, Off-Balance-Sheet Risk and Concentrations of Credit
        Risk
 - (continued)**
  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 also may 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. The
        Private
        Funds write put options that may require them to purchase assets from the
        option
        holder and generally are net settled in cash at a specified date in the future.
        At December 31, 2007 and 2006, the maximum payout amounts relating to written
        put options were $461.4 million and $510.5 million, respectively. As of December
        31, 2007, the carrying amounts of the liability under written put options
        recorded within securities sold, not yet purchased, at fair value was $8.5
        million. As of December 31, 2006, such amounts were immaterial.
  The
        Private Funds have entered into various types of swap contracts that involve
        an
        exchange of cash flows based on a commitment to pay a variable rate of interest
        in exchange for a market-linked return based on a notional amount. The
        market-linked return may include, among other things, the total return of
        a
        security or index.
  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 an 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 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 inherent
        in such contracts, which are recognized in unrealized losses on derivative,
        futures and foreign currency contracts, at fair value in the consolidated
        balance sheets.
  ***All
        Other Operations***
  We
        have
        entered into total return swap contracts that involve an exchange of cash
        flows
        based on a commitment to pay a variable rate of interest in exchange for
        a
        market-linked return based on a notional amount. The market-linked return
        may
        include, among other things, the total return of a security or
        index.
  122
 TABLE
            OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**10.
      Property, Plant and Equipment, Net**




Property,
      plant and equipment consist of the following (in $000s):




**December
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Land
              
              $
              52,299
              
              $
              63,006Buildings
                  and improvements
              
              
              139,673
              
              
              127,180Machinery,
                  equipment and furniture
              
              
              223,104
              
              
              219,673Assets
                  leased to others
              
              
              106,120
              
              
              123,398Construction
                  in progress
              
              
              101,700
              
              
              96,902622,896
              
              
              630,159Less
                  accumulated depreciation and amortization
              
              
              (109,592
              )
              
              (94,886
              )Net
                  property, plant and equipment
              
              $
              513,304
              
              $
              535,273




Depreciation
      and amortization expense from continuing operations related to property, plant
      and equipment for fiscal 2007, fiscal 2006 and fiscal 2005 was $29.5 million,
      $44.9 million and $28.6 million, respectively.




**11.
      Non-Controlling Interests**




Non-controlling
      interests consist of the following (in $000s):




**December
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Investment
                  Management Operations
              
              $
              6,594,014
              
              $
              3,628,470All
                  Other Operations:WPI
              
              
              116,496
              
              
              178,843Atlantic
                  Coast
              
              
              —
              
              
              70,563NEGI
              
              
              24,053
              
              
              42,815Total
                  Other
              
              
              140,549
              
              
              292,221Total
                  Non-Controlling Interests
              
              $
              6,734,563
              
              $
              3,920,691




***Investment
      Management Operations***




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 December 31, 2007, the net asset value of the consolidated Private Funds
      on our consolidated balance sheet was $7.5 billion, while the net asset value
      of
      our investments in these consolidated funds was approximately $88.5 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.




***All
      Other Operations***




*Atlantic
      Coast*




On
      November 15, 2007, ACE HI Merger Corp. (“Merger Corp”), our indirect wholly
      owned subsidiary and the owner of approximately 94.2% of the outstanding shares
      of Atlantic Coast common stock, completed a short-form merger transaction
      pursuant to which Merger Corp merged with and into Atlantic Coast and Atlantic
      Coast became our wholly owned subsidiary. Pursuant to the merger, the holders
      of
      Atlantic Coast common
      stock (other than Merger Corp) are entitled to receive $21.19 per share in
      cash
      in exchange for their shares. On November 16, Atlantic Coast filed a Form 15
      with the SEC, thereby terminating its reporting obligations under the Exchange
      Act and its status as a public company.




123
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**11.
      Non-Controlling Interests  - (continued)**




Prior
      to
      the merger, in February 2007, Atlantic Coast settled the litigation relating
      to
      GBH. As a result, our ownership in Atlantic Coast increased from 67.6% to 96.9%
      at that time. In the second quarter of 2007, we and several other investors
      exercised warrants to purchase shares of common stock of Atlantic Coast,
      resulting in an increase of the minority interest in Atlantic Coast, and a
      decrease in our ownership to 94.2%. This resulted in a SAB 51 charge of $6.1
      million to partners’ equity.




*NEGI*




On
      February 15, 2007, NEGI paid a one-time cash dividend to stockholders of record
      of the close of business on February 1, 2007 in the amount of $3.31 per share,
      or $37.0 million in the aggregate. Of this amount, $18.5 million was paid to
      minority holders of NEGI stock.




**12.
      Long-Term Debt**




Long-term
      debt consists of the following (in $000s):




**December
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Senior
                  unsecured variable rate convertible notes due 2013 - Icahn
                  Enterprises
              
              $
              600,000
              
              $
              —Senior
                  unsecured 7.125% notes due 2013 — Icahn
                  Enterprises
              
              
              969,638
              
              
              475,500Senior
                  unsecured 8.125% notes due 2012 — Icahn
                  Enterprises
              
              
              347,328
              
              
              346,027Senior
                  secured 7.85% notes due 2012 — ACEP
              
              
              215,000
              
              
              215,000Borrowings
                  under credit facility — ACEP
              
              
              40,000
              
              
              40,000Credit
                  agreement and capital lease obligations - PSC
                  Metals
              
              
              3,223
              
              
              2,259Mortgages
                  payable
              
              
              104,030
              
              
              109,289Other
              
              
              11,573
              
              
              13,425Total
                  long-term debt
              
              
              2,290,792
              
              
              1,201,500Less
                  debt related to assets held for sale
              
              
              (270,209
              )
              
              (271,417
              )$
              2,020,583
              
              $
              930,083




***Senior
      Unsecured Variable Rate Convertible Notes Due 2013 — Icahn
      Enterprises***




In
      April
      2007, Icahn Enterprises 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., which was formerly known as American Real
      Estate 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 higher than 5.5%,
      and
      are convertible into depositary units of Icahn Enterprises at a conversion
      price
      of $132.595 per share per $1,000 principal amount, subject to adjustments in
      certain circumstances. As of December 31, 2007, the interest rate was 4.0%.
      The
      interest on the variable rate notes is payable quarterly on January 15, April
      15, July 15 and Oct 15 that commenced on January 15, 2007. The variable rate
      notes mature on January 15, 2013 assuming they have not been converted to
      depositary units before their maturity date. Simultaneously,
      we executed a note in favor of Icahn Enterprises in the original principal
      amount of $600.0 million and Icahn Enterprises distributed to us the net
      proceeds of the note offering.




124
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**12.
      Long-Term Debt  - (continued)**




In
      the
      event that Icahn Enterprises declares a cash dividend or similar cash
      distribution in any calendar quarter with respect to its 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 requires that they simultaneously
      make such distribution to holders of the variable rate notes in accordance
      with
      a formula set forth in the indenture. On February 29, 2008 the board of
      directors of Icahn Enterprises GP approved an increase in the quarterly cash
      distribution from $0.15 to $0.25 per unit on Icahn Enterprises’ depositary
      units
      payable in the first quarter of fiscal 2008. The distribution is payable on
      April 1, 2008 to depositary unitholders of record at the close of business
      on
      March 18, 2008. Holders of the variable rate notes will be entitled to a
      distribution equal to the excess of $0.10 per depositary unit with respect
      to
      the increased quarterly cash distribution.




In
      connection with the sale of the variable rate notes, Icahn Enterprises and
      the initial buyers entered into a registration rights agreement, pursuant to
      which Icahn Enterprises agreed to file a shelf registration statement on Form
      S-3 with respect to resales of depositary units issuable upon conversion of
      the
      variable rate notes. A registration statement on Form S-3 with respect thereto
      was declared effective by the SEC on December 31, 2007. A total of 4,525,058
      depositary units have been registered for resale, an amount sufficient to
      convert the full amount of variable rate notes held by each selling
      securityholder at the conversion rate of 132.595 depositary units per $1,000
      principal amount of variable rate notes.




***Senior
      Unsecured Notes — Icahn Enterprises***




*Senior
      Unsecured 7.125% Notes Due 2013*




On
      February 7, 2005, Icahn Enterprises 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 Icahn Enterprises, as issuer, Icahn
      Enterprises Finance Corp., as co-issuer, us, as guarantor, and Wilmington Trust
      Company, as trustee (referred to herein as the “2005 Indenture”). Other than us,
      no other subsidiaries guarantee payment on the notes. The notes have a fixed
      annual interest rate of 7.125%, which will be paid every six months on February
      15 and August 15 and will mature on February 15, 2013. Simultaneously, we
      executed a note in favor of Icahn Enterprises in the original principal amount
      of $480.0 million and Icahn Enterprises distributed to us the net proceeds
      of
      the note offering.




On
      January 16, 2007, Icahn Enterprises issued an additional $500.0 million
      aggregate principal amount of 7.125% notes, or the additional 7.125% notes
      (the
      7.125% notes and the additional 7.125% notes being referred to herein as 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. Simultaneously, we executed a note in favor of Icahn Enterprises in the
      original principal amount of $500.0 million and Icahn Enterprises distributed
      to
      us the net proceeds of the note offering.




In
      connection with the sale of the additional 7.125% notes, Icahn
      Enterprises entered into a registration rights agreement pursuant to which
      it agreed to offer to exchange the additional 7.125% notes for new notes which
      have been registered under the Securities Act. A Registration Statement on
      Form
      S-4 with respect to the exchange offer was declared effective by the SEC on
      December 31, 2007. The exchange offer was consummated on February 7, 2008.




As
      described below, the 2005 Indenture restricts the ability of Icahn Enterprises
      and us, 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,
      us, 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, since December 1, 2004. The 8.125%
      notes will mature on June 1, 2012. Other than Icahn Enterprises Holdings, no
      other subsidiaries guarantee payment on the notes.




125
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**12.
      Long-Term Debt  - (continued)**




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
      indentures governing Icahn Enterprises’ senior
      unsecured
      7.125% and 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, with
      certain exceptions, provided that we may incur debt or issue disqualified stock
      if, immediately after such incurrence or issuance, the ratio of the aggregate
      principal amount of all outstanding indebtedness of Icahn Enterprises and its
      subsidiaries  (including us) on a consolidated basis to the tangible net
      worth of Icahn Enterprises and its subsidiaries on a consolidated basis would
      be
      less than 1.75 to 1.0. As of December 31, 2007, such ratio was less than 1.75
      to
      1.0. Based on this ratio, we and Icahn Enterprises could have incurred up to
      approximately $1.7 billion of additional indebtedness.




In
      addition, the indentures governing our senior unsecured notes require that
      on
      each quarterly determination date Icahn Enterprises and we, the guarantor of
      the
      notes, maintain a minimum ratio of cash flow to fixed charges each as defined,
      of 1.5 to 1.0, for the four consecutive fiscal quarters most recently completed
      prior to such quarterly determination date. For the four quarters ended December
      31, 2007, the ratio of cash flow to fixed charges was greater than 1.5 to
      1.0.




The
      indentures also require, on each quarterly determination date, that the ratio
      of
      total unencumbered assets, as defined, to the principal amount of unsecured
      indebtedness, as defined, be greater than 1.5 to 1.0 as of the last day of
      the
      most recently completed fiscal quarter. As of December 31, 2007, such ratio
      was
      in excess of 1.5 to 1.0.




The
      indentures also restrict the creation of liens, mergers, consolidations and
      sales of substantially all of our assets, and transactions with
      affiliates.




***Senior
      Secured Revolving Credit Facility — Icahn
      Enterprises***




On
      August
      21, 2006, Icahn Enterprises and Icahn Enterprises Finance as the borrowers,
      and we, as guarantor, entered into a credit agreement with Bear Stearns
      Corporate Lending Inc., as administrative agent, and certain other lender
      parties. Under the credit agreement, Icahn Enterprises is 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 December 31, 2007, 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 Icahn Enterprises’ 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.




***Senior
      Secured 7.85% Notes Due 2012 — ACEP***




In
      January 2004, ACEP issued senior secured notes due 2012. The notes, in the
      aggregate principal amount of $215.0 million, bore interest at the rate of
      7.85%
      per annum, which will be paid every six months, on February 1 and August
      1.




126
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**12.
      Long-Term Debt  - (continued)**




The
      indenture governing the ACEP’s 7.85% senior secured notes due 2012 restricted
      the payment of cash dividends or distributions by ACEP, the purchase of its
      equity interests, the purchase, redemption, defeasance or acquisition of debt
      subordinated to ACEP’s notes and investments as “restricted payments.” The
      indenture also prohibited the incurrence of debt or the issuance of disqualified
      or preferred stock, as defined, by ACEP, with certain exceptions, provided
      that
      ACEP may incur debt or issue disqualified stock if, immediately after such
      incurrence or issuance, the ratio of consolidated cash flow to fixed charges
      (each as defined) for the most recently ended four full fiscal quarters for
      which internal financial statements are available immediately preceding the
      date
      on which such additional indebtedness is incurred or disqualified stock or
      preferred stock is issued would have been at least 2.0 to 1.0, determined on
      a
      pro forma basis giving effect to the debt incurrence or issuance. As of December
      31, 2007, such ratio was in excess of 2.0 to 1.0. The indenture also restricted
      the creation of liens, the sale of assets, mergers, consolidations or sales
      of
      substantially all of ACEP’s assets, the lease or grant of a license, concession,
      other agreements to occupy, manage or use ACEP’s assets, the issuance of capital
      stock of restricted subsidiaries and certain related party transactions. The
      indenture governing the ACEP notes allowed ACEP and its restricted subsidiaries
      to incur indebtedness, among other things, of up to $50.0 million under credit
      facilities, non-recourse financing of up to $15.0 million to finance the
      construction, purchase or lease of personal or real property used in its
      business, permitted affiliate subordinated indebtedness (as defined), the
      issuance of additional 7.85% senior secured notes due 2012 in an aggregate
      principal amount not to exceed 2.0 times net cash proceeds received from equity
      offerings and permitted affiliate subordinated debt, and additional indebtedness
      of up to $10.0 million.




***Senior
      Secured Revolving Credit Facility — ACEP***




Effective
      May 11, 2006, ACEP, and certain of ACEP’s subsidiaries, as guarantors, entered
      into an amended and restated credit agreement with Wells Fargo Bank N.A., as
      syndication agent, Bear Stearns Corporate Lending Inc., as administrative agent,
      and certain other lender parties. As of December 31, 2007, the interest rate
      on
      the outstanding borrowings under the credit facility was 6.35% per annum. The
      credit agreement amends and restates, and is on substantially the same terms
      as,
      a credit agreement entered into as of January 29, 2004. Under the credit
      agreement, ACEP will be permitted to borrow up to $60.0 million. Obligations
      under the credit agreement are secured by liens on substantially all of the
      assets of ACEP and its subsidiaries. The credit agreement has a term of four
      years and all amounts will be due and payable on May 10, 2010. As of December
      31, 2007, there were $40.0 million of borrowings under the credit agreement.
      The
      borrowings were incurred to finance a portion of the purchase price of the
      Aquarius.




The
      credit agreement includes covenants that, among other things, restrict the
      incurrence of additional indebtedness by ACEP and its subsidiaries, the issuance
      of disqualified or preferred stock, as defined, the creation of liens by ACEP
      or
      its subsidiaries, the sale of assets, mergers, consolidations or sales of
      substantially all of ACEP’s assets, the lease or grant of a license or
      concession, other agreements to occupy, manage or use ACEP’s assets, the
      issuance of capital stock of restricted subsidiaries and certain related party
      transactions. The credit agreement also requires that, as of the last date
      of
      each fiscal quarter, ACEP’s ratio of consolidated first lien debt to
      consolidated cash flow not be more than 1.0 to 1.0.




As
      described in Note 18, “Subsequent Events,” on February 20, 2008, AEP sold all of
      the issued and outstanding membership interests of ACEP. Pursuant to the terms
      of the agreement, AEP caused ACEP to repay from funds provided by AEP the
      principal, interest, prepayment penalty or premiums due on ACEP’s 7.85% senior
      secured notes due 2012 and ACEP’s senior secured credit facility.




***Senior
      Secured Revolving Credit Facility — NEG Oil & Gas
      LLC***




On
      December 22, 2005, NEG Oil & Gas entered into a credit facility, dated as of
      December 20, 2005, with Citicorp USA, Inc. as administrative agent, Bear Stearns
      Corporate Lending Inc., as syndication agent, and certain other lender
      parties.




127
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**12.
      Long-Term Debt  - (continued)**




Under
      the
      credit facility, NEG Oil & Gas was permitted to borrow up to $500.0 million.
      Borrowings under the revolving credit facility was subject to a borrowing base
      determination based on the oil and gas properties of NEG Oil & Gas and its
      subsidiaries and the reserves and production related to those properties.
      Obligations under the credit facility were secured by liens on all of the assets
      of NEG Oil & Gas and its wholly owned subsidiaries. The credit facility had
      a term of five years and all amounts were due and payable on December 20, 2010.
      Advances under the credit facility would be in the form of either base rate
      loans or Eurodollar loans, each as defined. At December 31, 2005, the interest
      rate on the outstanding amount under the credit facility was 6.44%. Commitment
      fees for the unused credit facility ranged from 0.375% to 0.50% and were payable
      quarterly.




NEG
      Oil
& Gas used the proceeds of the initial $300.0 million borrowings to (1)
      purchase the existing obligations of its indirect subsidiary, NEG Operating,
      from the lenders under NEG Operating’s credit facility with Mizuho Corporate
      Bank, Ltd., as administrative agent; (2) repay a National Onshore loan borrowed
      from Icahn Enterprises of approximately $85.0 million used to purchase
      properties in the Minden Field; (3) pay a distribution to Icahn Enterprises
      of
      $78.0 million and (4) pay transaction costs.




As
      discussed above, on November 21, 2006, our indirect wholly owned subsidiary,
      AREP O & G Holdings LLC, consummated the sale of all of the issued and
      outstanding membership interests of NEG Oil & Gas LLC to SandRidge, for
      aggregate consideration consisting of $1.025 billion in cash, 12,842,000 shares
      of SandRidge’s common stock, valued at $18 per share on the date closing, and
      the repayment by SandRidge of the outstanding borrowings under the NEG Oil
&
Gas $300.0 million credit facility.




***Credit
      Agreement — Metals***




On
      December 30, 2004, Philip and its subsidiaries, including PSC Metals, entered
      into a credit agreement (the “Credit Agreement”) with UBS Securities LLC, as
      lead arranger, and three other financial institutions, of up to $120.0 million,
      which matures on December 30, 2009. Prior to our acquisition of PSC Metals
      on
      November 5, 2007, PSC Metals was a co-borrower under the Credit Agreement and
      had granted a security interest in substantially all of its assets to secure
      its
      obligation thereunder. The Credit Agreement provides for a revolving line of
      credit, subject to a borrowing base formula calculated on eligible accounts
      receivable and eligible scrap metal inventory. Borrowings under the Credit
      Agreement bear interest at a rate equal to the base rate (which is based on
      the
      UBS AG Bank “prime rate”) plus 1.00%, 1.25% or 1.50% depending on Philip’s total
      liquidity.




In
      connection with our acquisition of PSC Metals on November 5, 2007, approximately
      $34.6 million of the proceeds from the transaction were used to release PSC
      Metals from all claims, guarantees and future obligations under the Credit
      Agreement. In addition, Philip used a portion of the proceeds to collaterize
      PSC
      Metals’ letters of credit of approximately $6.3 million. PSC Metals is currently
      under negotiations to enter into a $100.0 million asset-based borrowing
      agreement. Subsequent to the consummation of the borrowing agreement, PSC Metals
      will fund its letters of credit from its borrowing base and funds used to
      collaterize the letters of credit by Philip will be released.




128
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**12.
      Long-Term Debt  - (continued)**




***Mortgages
      Payable***




Mortgages
      payable, all of which are non-recourse to us, are summarized below. The
      mortgages bear interest at rates between 4.97 and 7.99% and have maturities
      between September 1, 2008 and July 1, 2016. The following is a summary of
      mortgages payable (in $000s):




**December
                  31,****2007**
              
              **2006**Total
                  mortgages
              
              $
              104,030
              
              $
              109,289Less
                  mortgages on properties held for sale
              
              
              (12,879
              )
              
              (13,592
              )$
              91,151
              
              $
              95,697




On
      June
      30, 2006, certain of our indirect subsidiaries engaged in property development
      and associated resort activities entered into a $32.5 million loan agreement
      with Textron Financial Corp. The loan is secured by a mortgage on our New
      Seabury golf course and resort in Mashpee, Massachusetts. The loan bears
      interest at the rate of 7.96% per annum and matures in five years with a balloon
      payment due of $30.0 million. Annual debt service payments of $3.0 million
      are
      required, which are payable in monthly installment amounts based on a 25-year
      amortization schedule.




***Secured
      Revolving Credit Agreement — WestPoint Home***




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
      December 31, 2007, there were no borrowings under the agreement, but there
      were
      outstanding letters of credit of approximately $15.3 million.




129
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**12.
      Long-Term Debt  - (continued)**




***Maturities***




The
      following is a summary of the maturities of our debt obligations (in
      $000s):




2008
              
              $
              302,6612009
              
              
              7,6612010
              
              
              2,1112011
              
              
              31,8732012
              
              
              354,100Thereafter
              
              
              1,608,421$
              2,306,827




**13.
      Compensation Arrangements**




***a.***
              ***Investment
                  Management
                  Operations***




The
      Investment Management Entities have entered into agreements with certain of
      their employees whereby these employees have been granted rights to participate
      in a portion of the management fees and incentive allocations earned by the
      Investment Management Entities, typically net of certain expenses and generally
      subject to various vesting provisions. The vesting period of these rights is
      generally between two to seven years, and such rights expire 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 may
      be
      deferred for a period not to exceed ten years from the date of deferral, based
      on an annual election made by the employee for the upcoming fiscal year’s
      respective management fee. These amounts remain invested in the Private Funds
      and generally earn the rate of return of these funds, before the effects of
      any
      management fees or incentive allocations, which are waived on such deferred
      amounts. Accordingly, these rights are accounted for as liabilities in
      accordance with SFAS No. 123R and remeasured at fair value each reporting period
      until settlement.




Prior
      to
      the adoption of SFAS No. 123R, the Investment Management Entities had accounted
      for such rights under APB 25, which measured the liability at intrinsic value.
      The adoption of SFAS No. 123R and the remeasurement of all previously
      outstanding rights did not have any impact on the consolidated financial
      statements as the intrinsic value of these awards, as further described herein,
      approximates their fair value.




The
      fair
      value of amounts deferred in respect of 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 management fees
      are
      based and (ii) performance of the funds in which the deferred amounts are
      reinvested. The carrying value of such amounts represents the allocable
      management fees initially deferred and the appreciation or depreciation on
      any
      reinvested deferrals. These amounts approximate fair value because the
      appreciation or depreciation on the deferrals is based on the fair value of
      the
      Private Funds’ investments, which are marked-to-market through earnings on a
      quarterly basis.




The
      Investment Management Entities recorded compensation expense of $21.8 million,
      $17.3 million and $3.3 million related to these rights for the fiscal 2007,
      fiscal 2006 and fiscal 2005, respectively, which is included in expenses of
      our
      Investment Management operations in the consolidated statements of operations.
      Compensation expense arising from deferral arrangements is recognized in the
      consolidated financial statements over the vesting period. Accordingly, unvested
      balances of deferred management fee allocations to certain employees are not
      reflected in the consolidated financial statements. Deferred amounts not yet
      recognized as compensation expense within the consolidated statements of
      operations were $9.7 million, $8.0 million and $3.4 million as of December
      31,
      2007, 2006 and 2005, respectively. That cost is expected to be
      recognized over a weighted average of 3.4 years. Cash paid to settle rights
      that
      had been withdrawn for fiscal 2007, fiscal 2006 and fiscal 2005 was $13.8,
      $6.4
      million and $1.0 million, respectively.




130
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**13.
      Compensation Arrangements  - (continued)**




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
      whom
      these rights were granted became employees of New Icahn Management on August
      8,
      2007, New Icahn Management recognizes the future compensation expense associated
      with the unvested portion of rights granted by Icahn Management, even though
      such liability will be settled by Icahn Management, with a corresponding
      increase to partners’ equity.


***b.***
              ***All
                  Other Operations***
 
 On
        June
        29, 2005, Icahn Enterprises granted 700,000 nonqualified unit options to
        the
        then chief executive officer to purchase up to 700,000 of Icahn
        Enterprises’depositary units at an exercise price of $35 per unit which would
        vest over a period of eight years. The options were granted for services
        performed for both us and Icahn Enterprises. On March 14, 2006, our chief
        executive officer resigned from that position, became a director and Vice
        Chairman of the Board of Icahn Enterprises GP, and was designated as Icahn
        Enterprises GP’s principal executive officer. These changes in status caused the
        options to be cancelled in accordance with their terms.
 
 In
        accordance SFAS No. 123R, the cancellation required that any previously
        unrecognized compensation cost be recognized at the date of cancellation
        and
        accordingly we recorded a compensation charge of $6.2 million in the quarter
        ended December 31, 2006, or the fourth quarter of fiscal 2006, related to the
        previously unrecognized compensation cost.




**14.
      Employee Benefit Plans**




We
      and
      certain of our subsidiaries have retirement savings plans under Section 401(k)
      of the Internal Revenue Code covering our non-union employees. The plans allow
      employees 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 $2.6 million,
      $1.8
      million and $1.4 million for fiscal 2007, fiscal 2006 and fiscal 2005,
      respectively.




We
      adopted SFAS No. 158, *Employer’s
      Accounting for Defined Benefit Pension and Other Postretirement
      Plans — an amendment to FASB Statements No. 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 postretirement 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.




131
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**15.
      Segment Reporting**




As
      of
      December 31, 2007, 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. 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.
      Our Real Estate segment includes rental real estate that primarily consists
      of
      fee and leasehold properties in 16 states as of December 31, 2007, property
      development that is primarily focused on the construction and sale of
      single-family houses and residential developments 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, through our subsidiary, WPI, markets
      a
      broad range of manufactured and sourced bed, bath and basic bedding
      products.




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. As discussed in Note 12, “Long-Term Debt,” the terms of financings
      for the Home Fashion and Real Estate segments impose restrictions on their
      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 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.




132
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**15.
      Segment Reporting  - (continued)**




We
        do not
        present geographic segment information because sales derived outside of North
        America are immaterial compared to our consolidated revenues for fiscal 2007,
        fiscal 2006 and fiscal 2005. The following tables set forth consolidated
        operating results for our segments to arrive at our consolidated income from
        continuing operations (in $000s):




***For
      the Year Ended December 31, 2007***




**Investment
                  Management Operations**
              
              **All
                  Other Operations**
              
              **Total****Icahn****Enterprises**
                **Holdings’ Interests**
              
              **Consolidated
                  PrivateFunds**
              
              **Eliminations**
              
              **U.S.
                  GAAP ReportedIncome**
              
              **Metals**
              
              **Real
                  Estate**
              
              **Home**
                **Fashion**
              
              **Holding
                  Company**
              
              **U.S.
                  GAAP Reported Income**Revenues:Management
                  fees
              
              $
              127,994
              
              $
              —
              
              $
              (117,377
              )
              $
              10,617
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              10,617Incentive
                  allocations
              
              
              71,329
              
              
              —
              
              
              (71,329
              )
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  gain from investment activities
              
              
              21,234
              (1)
              
              354,873
              
              
              (21,234
              )
              
              354,873
              
              
              —
              
              
              —
              
              
              —
              
              
              82,642
              
              
              437,515Interest,
                  dividends and other income
              
              
              752
              
              
              222,012
              
              
              —
              
              
              222,764
              
              
              734
              
              
              7,139
              
              
              6,032
              
              
              129,273
              
              
              365,942Other
                  income, net
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,160
              )
              
              301
              
              
              15,785
              
              
              37,928
              
              
              52,854Other
                  segment revenues
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              834,106
              
              
              102,922
              
              
              683,670
              
              
              —
              
              
              1,620,698221,309
              
              
              576,885
              
              
              (209,940
              )
              
              588,254
              
              
              833,680
              
              
              110,362
              
              
              705,487
              
              
              249,843
              
              
              2,487,626Costs
                  and expenses
              
              
              46,824
              
              
              38,442
              
              
              —
              
              
              85,266
              
              
              796,173
              
              
              91,893
              
              
              842,183
              
              
              36,563
              
              
              1,852,078Interest
                  expense
              
              
              —
              
              
              14,521
              
              
              —
              
              
              14,521
              
              
              676
              
              
              6,556
              
              
              1,946
              
              
              118,691
              
              
              142,390Income
                  (loss) from continuing operations before income taxes and non-controlling
                  interests
              
              
              174,485
              
              
              523,922
              
              
              (209,940
              )
              
              488,467
              
              
              36,831
              
              
              11,913
              
              
              (138,642
              )
              
              94,589
              
              
              493,158Income
                  tax (expense) benefit
              
              
              (4,311
              )
              
              —
              
              
              —
              
              
              (4,311
              )
              
              5,007
              
              
              440
              
              
              (19
              )
              
              (9,553
              )
              
              (8,436
              )Non-controlling
                  interests in (income) loss
              
              
              —
              
              
              (298,277
              )
              
              (15,705
              )
              
              (313,982
              )
              
              —
              
              
              —
              
              
              53,421
              
              
              (462
              )
              
              (261,023
              )Income
                  (loss) from continuing operations
              
              $
              170,174
              
              $
              225,645
              
              $
              (225,645
              )
              $
              170,174
              
              $
              41,838
              
              $
              12,353
              
              $
              (85,240
              )
              $
              84,574
              
              $
              223,699




(1)
            The
                Holding Company made three equal investments in September, October
                and
                November 2007 aggregating $700 million in the Private Funds for which
                no
                management fees or incentive allocations are applicable. The net
                gain from
                investment activities of $21.2 million earned by the interests of
                Icahn
                Enterprises in the Investment Management Entities in fiscal 2007
                consists
                of two components. The first reflects a net gain of $36.9 million
                relating
                to the increase in the General Partners’ investment in the Private Funds
                as a result of earned incentive allocations and the return on the
                General
                Partners’ investment. The second component, which is eliminated in our
                consolidated financial statements, includes a net investment loss
                in
                fiscal 2007 of $15.7 million on the $700 million invested in the
                Private
                Funds by the Holding Company.




133
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**15.
      Segment Reporting  - (continued)**




***For
      the Year Ended December 31, 2006***




**Investment
                  Management Operations**
              
              **All
                  Other Operations**
              
              **Total******
              
              **Icahn
                  Enterprises****Holdings’ Interests**
              
              **Consolidated
                  Private Funds**
              
              **Eliminations**
              
              **U.S.
                  GAAP Reported Income**
              
              **Metals**
              
              **Real
                  Estate**
              
              **Home**
                **Fashion**
              
              **Holding
                  Company**
              
              **U.S.
                    GAAP Reported Income**Revenues:Management
                  fees
              
              $
              82,415
              
              $
              —
              
              $
              (82,415
              )
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Incentive
                  allocations
              
              
              190,478
              
              
              —
              
              
              (190,478
              )
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  gain from investment activities
              
              
              25,822
              
              
              1,030,740
              
              
              (25,822
              )
              
              1,030,740
              
              
              —
              
              
              —
              
              
              —
              
              
              91,308
              
              
              1,122,048Interest,
                  dividends and other income
              
              
              345
              
              
              73,218
              
              
              —
              
              
              73,563
              
              
              —
              
              
              2,708
              
              
              4,520
              
              
              43,189
              
              
              123,980Other
                  income, net
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              5,144
              
              
              (92
              )
              
              2,309
              
              
              17,071
              
              
              24,432Other
                  segment revenues
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              710,054
              
              
              132,610
              
              
              890,840
              
              
              —
              
              
              1,733,504299,060
              
              
              1,103,958
              
              
              (298,715
              )
              
              1,104,303
              
              
              715,198
              
              
              135,226
              
              
              897,669
              
              
              151,568
              
              
              3,003,964Costs
                  and expenses
              
              
              37,629
              
              
              32,205
              
              
              —
              
              
              69,834
              
              
              667,118
              
              
              105,825
              
              
              1,034,216
              
              
              25,822
              
              
              1,902,815Interest
                  expense
              
              
              —
              
              
              9,901
              
              
              —
              
              
              9,901
              
              
              160
              
              
              5,734
              
              
              613
              
              
              72,853
              
              
              89,261Income
                  (loss) from continuing operations before income taxes and non-controlling
                  interests
              
              
              261,431
              
              
              1,061,852
              
              
              (298,715
              )
              
              1,024,568
              
              
              47,920
              
              
              23,667
              
              
              (137,160
              )
              
              52,893
              
              
              1,011,888Income
                  tax (expense) benefit
              
              
              (1,763
              )
              
              —
              
              
              —
              
              
              (1,763
              )
              
              2,845
              
              
              234
              
              
              (114
              )
              
              (513
              )
              
              689Non-controlling
                  interests in (income) loss
              
              
              —
              
              
              (763,137
              )
              
              —
              
              
              (763,137
              )
              
              —
              
              
              —
              
              
              65,827
              
              
              —
              
              
              (697,310
              )Income
                  (loss) from continuing operations
              
              $
              259,668
              
              $
              298,715
              
              $
              (298,715
              )
              $
              259,668
              
              $
              50,765
              
              $
              23,901
              
              $
              (71,447
              )
              $
              52,380
              
              $
              315,267




134
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**15.
      Segment Reporting  - (continued)**




***For
      the Year Ended December 31, 2005***




**Investment
                    Management Operations**
                
                **All
                    Other Operations**
                
                **Total******
                
                **Icahn
                    Enterprises Holdings’ Interests**
                
                **Consolidated
                    Private Funds**
                
                **Eliminations**
                
                **U.S.
                    GAAP Reported Income**
                
                **Metals**
                
                **Real
                    Estate**
                
                **Home**
                  **Fashion**
                
                **Holding
                    Company**
                
                **U.S.
                      GAAP Reported Income**Revenues:Management
                    fees
                
                $
                44,201
                
                $
                —
                
                $
                (44,201
                )
                $
                —
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                —Incentive
                    allocations
                
                
                57,302
                
                
                —
                
                
                (57,302
                )
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —Net
                    gain (loss) from investment activities
                
                
                1,887
                
                
                305,440
                
                
                (1,887
                )
                
                305,440
                
                
                —
                
                
                —
                
                
                —
                
                
                (21,260
                )
                
                284,180Interest,
                    dividends and other income
                
                
                168
                
                
                47,268
                
                
                —
                
                
                47,436
                
                
                1,457
                
                
                619
                
                
                1,819
                
                
                38,736
                
                
                90,067Other
                    income, net
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                3
                
                
                (379
                )
                
                9,682
                
                
                9,306Other
                    segment revenues
                
                
                —
                
                
                —
                
                
                —
                
                
                —
                
                
                600,989
                
                
                98,392
                
                
                441,771
                
                
                —
                
                
                1,141,152103,558
                
                
                352,708
                
                
                (103,390
                )
                
                352,876
                
                
                602,446
                
                
                99,014
                
                
                443,211
                
                
                27,158
                
                
                1,524,705Costs
                    and expenses
                
                
                18,093
                
                
                7,914
                
                
                —
                
                
                26,007
                
                
                569,836
                
                
                81,596
                
                
                462,115
                
                
                17,142
                
                
                1,156,696Interest
                    expense
                
                
                —
                
                
                43
                
                
                —
                
                
                43
                
                
                278
                
                
                4,451
                
                
                67
                
                
                62,054
                
                
                66,893Income
                    (loss) from continuing operations before income taxes and non-controlling
                    interests
                
                
                85,465
                
                
                344,751
                
                
                (103,390
                )
                
                326,826
                
                
                32,332
                
                
                12,967
                
                
                (18,971
                )
                
                (52,038
                )
                
                301,116Income
                    tax expense
                
                
                (890
                )
                
                —
                
                
                —
                
                
                (890
                )
                
                (8,907
                )
                
                (567
                )
                
                (125
                )
                
                (689
                )
                
                (11,178
                )Non-controlling
                    interests in (income) loss
                
                
                —
                
                
                (241,361
                )
                
                —
                
                
                (241,361
                )
                
                —
                
                
                —
                
                
                9,466
                
                
                —
                
                
                (231,895
                )Income
                    (loss) from continuing operations
                
                $
                84,575
                
                $
                103,390
                
                $
                (103,390
                )
                $
                84,575
                
                $
                23,425
                
                $
                12,400
                
                $
                (9,630
                )
                $
                (52,727
                )
                $
                58,043
  135
 TABLE
            OF CONTENTS


**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**15.
      Segment Reporting  - (continued)**




Total
      assets by reportable segment were as follows for the periods indicated (in
      $000s):




**December
                  31,******
              
              **2007**
              
              **2006**Assets:Investment
                  Management operations
              
              $
              8,049,887
              
              $
              4,815,156All
                  other operationsMetals
              
              
              322,671
              
              
              220,067Real
                  Estate
              
              
              397,432
              
              
              382,220Home
                  Fashion
              
              
              652,212
              
              
              784,981Subtotal
              
              
              9,422,202
              
              
              6,202,424Assets
                  held for sale
              
              
              652,100
              
              
              620,974Reconciling
                  items(1)
              
              
              2,368,529
              
              
              2,463,464Total
                  assets
              
              $
              12,442,831
              
              $
              9,286,862




(1)
            Reconciling
                items relate principally to cash and investments of the Holding
                Company.




Total
      depreciation and amortization by reportable segment were as follows for the
      periods indicated (in $000s):




**Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**All
                  other operationsMetals
              
              $
              10,418
              
              $
              6,816
              
              $
              4,097Real
                  Estate
              
              
              5,669
              
              
              5,692
              
              
              4,730Home
                  Fashion
              
              
              15,416
              
              
              30,724
              
              
              18,981Amortization
                  of interest expense - Holding Company
              
              
              3,908
              
              
              2,542
              
              
              3,102$
              35,411
              
              $
              45,774
              
              $
              30,910




Total
      capital expenditures by reportable segment were as follows for the periods
      indicated (in $000s):




**Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**All
                  other operationsMetals
              
              $
              27,346
              
              $
              15,900
              
              $
              26,972Real
                  Estate
              
              
              3,236
              
              
              3,378
              
              
              2,443Home
                  Fashion
              
              
              29,678
              
              
              11,107
              
              
              5,718$
              60,260
              
              $
              30,385
              
              $
              35,133




136
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**16.
      Income Taxes**




The
      difference between the book basis and the tax basis of our net assets, not
      directly subject to income taxes, is as follows:




**December
                  31,******
              
              **2007**
              
              **2006**Book
                  basis of net assets excluding corporate entities
              
              $
              2,453,742
              
              $
              2,310,878Book/tax
                  basis difference
              
              
              (255,149
              )
              
              (95,300
              )Tax
                  basis of net assets
              
              $
              2,198,593
              
              $
              2,215,578




Our
      corporate subsidiaries recorded the following income tax (expense) benefit
      attributable to operations for our taxable subsidiaries (in $000s):




**Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005****Continuing
                  Operations**Current
              
              $
              (21,963
              )
              $
              (5,138
              )
              $
              (4,617
              )Deferred
              
              
              13,527
              
              
              5,827
              
              
              (6,561
              )$
              (8,436
              )
              $
              689
              
              $
              (11,178
              )




**Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005****Discontinued
                  Operations**Current
              
              $
              (15,991
              )
              $
              (18,513
              )
              $
              (9,785
              )Deferred
              
              
              (2,685
              )
              
              1,394
              
              
              (9,926
              )$
              (18,676
              )
              $
              (17,119
              )
              $
              (19,711
              )




The
      tax
      effect of significant differences representing deferred tax assets (liabilities)
      (the difference between financial statement carrying value and the tax basis
      of
      assets and liabilities) is as follows at December 31, (in $000s):




**December
                  31,******
              
              **2007**
              
              **2006**Deferred
                  tax assets:Property,
                  plant and equipment
              
              $
              44,379
              
              $
              51,642Net
                  operating loss
              
              
              128,487
              
              
              74,252Other
              
              
              41,470
              
              
              24,791Total
                  deferred tax assets
              
              
              214,336
              
              
              150,685Less:
                  Valuation allowance
              
              
              (167,038
              )
              
              (116,799
              )Total
                  deferred tax assets after valuation allowance
              
              
              47,298
              
              
              33,886Deferred
                  tax liabilitiesOther
              
              
              (310
              )
              
              (2,588
              )Net
                  deferred tax assets
              
              $
              46,988
              
              $
              31,298




137
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**16.
      Income Taxes  - (continued)**




A
      reconciliation of the effective tax rate on continuing operations as shown
      in
      the consolidated statements of operations to the federal statutory rate is
      as
      follows:




**Year
                  Ended December 31,******
              
              **2007**
              
              **2006**
              
              **2005**Federal
                  statutory rate
              
              
              35.0
              %
              
              35.0
              %
              
              35.0
              %Valuation
                  allowance
              
              
              3.0
              
              
              0.5
              
              
              4.8Income
                  not subject to taxation
              
              
              (37.6
              )
              
              (36.0
              )
              
              (34.7
              )Other
              
              
              1.3
              
              
              0.4
              
              
              (1.30
              )1.7
              %
              
              (0.1
              )%
              
              3.8
              %




For
      the
      year ended December 31, 2007, the valuation allowance on deferred tax assets
      increased approximately $ 50.2 million. The increase is primarily attributable
      to a $ 71.1 million increase attributable to the additional valuation allowance
      established on the deferred tax assets of WPI, offset by a $20.2 million
      reversal of the valuation allowance at PSC Metals and a $0.7 million reversal
      at
      Atlantic Coast.




***Former
      Gaming Segment***




SFAS
      No.
      109 requires a “more likely than not” criterion be applied when evaluating the
      realizability of a deferred tax asset. As of December 31, 2005, given Atlantic
      Coast’s history of losses for income tax purposes and certain other factors,
      Atlantic Coast had established a valuation allowance of $27.7 million on its
      deferred tax assets. However, at December 31, 2006, based on various factors
      including the sale of its gaming operations and the future taxable income
      projections from the reinvestment of the sales proceeds, Atlantic Coast
      determined that it was more likely than not that a significant portion of the
      deferred tax assets will be realized and removed $25.7 million of the valuation
      allowance.




At
      December 31, 2007, Atlantic Coast had federal net operating loss carryforwards
      totaling approximately $23.7 million, which will begin expiring in the year
      2023
      and forward. Additionally, Atlantic Coast had federal alternative minimum tax
      and general business credit carryforwards of approximately $2.1 million which
      expire in 2009 through 2026, and New Jersey alternative minimum assessment
      (AMA)
      credit carryforwards of approximately $1.4 million, which can be carried forward
      indefinitely.




***Investment
      Management Segment***




Through
      December 31, 2007, certain of the hedge fund entities within our Investment
      Management operations were subject to a New York City Unincorporated Business
      Tax (“UBT”) at a statutory rate of 4% on a portion of its net income. UBT is
      accounted for under SFAS No. 109.




***Metals
      Segment***




Management
      considers whether it is more likely than not that all of the deferred tax assets
      will be realized. Projected future income, tax-planning strategies, and the
      expected reversal of deferred tax liabilities are considered in making this
      assessment. Based on the projected taxable income for 2007 and beyond, the
      Company has adjusted its valuation allowance with regard to its U.S. deferred
      tax assets. Accordingly, for the years ended December 31, 2007 and December
      31,
      2006, the valuation allowance has decreased by $20.2 and $21.9 million,
      respectively.




***FIN
      48***




Certain
      of our subsidiaries file income tax returns in the U.S. federal jurisdiction,
      and various states and foreign jurisdictions. We are no longer subject to U.S.
      federal, state and local, or non-U.S. income tax examinations by tax authorities
      for years before 2003.




138
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**16.
      Income Taxes  - (continued)**




We
        adopted the provisions FIN 48 on January 1, 2007. As a result of the adoption
        of
        FIN 48, we recognized approximately a $1.3 million increase in the liability
        for
        unrecognized tax benefits, which was accounted for as a reduction to the
        January
        1, 2007 balance of partners’ equity. A reconciliation of the beginning and
        ending amount of unrecognized tax benefits is as follows (in
        $000s):




Balance
                  at January 1, 2007
              
              $
              6,166Additions
                  based on tax positions related to the current year
              
              
              120Additions
                  for tax positions of prior years
              
              
              —Reductions
                  for tax positions of prior years
              
              
              (3,056
              )Settlements
              
              
              —Balance
                  at December 31, 2007
              
              $
              3,230




All
      of
      the unrecognized tax benefits at December 31, 2007, if recognized, would affect
      the annual effective tax rate. We believe it is reasonably possible that the
      unrecognized tax benefits could decrease by $1.8 million prior to December
      31,
      2008 as a result of settlements due to audits or the expiration of statutes
      of
      limitations. We recognize interest accrued related to unrecognized tax benefits
      in interest expense and penalties as a component of income tax expense. The
      amount of accrued interest and penalties was $0.8 million and $1.2 million
      as of
      December 31, 2007 and January 1, 2007, respectively. The decrease in the accrued
      interest and penalties during the twelve months ended December 31, 2007 is
      a
      result of the decrease in the unrecognized tax benefit during the
      period.




**17.
      Commitments and Contingencies**




We
      are
      from time to time parties to various legal proceedings arising out of our
      businesses. We believe however, that other than the proceedings discussed below,
      there are no proceedings pending or threatened against us which, if determined
      adversely, would have a material adverse effect on our business, financial
      condition, results of operations or liquidity.




***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 acquired. We are holders of approximately 39.99%
      of
      the outstanding first lien debt and approximately 51.21% of the outstanding
      second lien debt.




139
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**17.
      Commitments and Contingencies  - (continued)**




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.




*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.




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 December 31, 2007 and WPI’s results
      of operations for the period from the date of acquisition (August 8, 2005)
      through December 31, 2007. 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 financial
      statements could be materially different than as presented as of December 31,
      2007, December 31, 2006 and December 31, 2005 and for the periods then
      ended.




***Lear
      Corporation***




Icahn
      Enterprises was named as a defendant in various actions filed in connection
      with
      its proposed merger agreement with Lear Corporation (“Lear”). The Lear
      shareholders rejected the merger and the merger agreement has terminated. Icahn
      Enterprises remains a party to an action filed in the Court of Chancery of
      the
      State of Delaware challenging the payment to us of a break-up fee as provided
      in
      the merger agreement. We intend to vigorously defend the Delaware action but
      we
      cannot predict the outcome of the action.




***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 individual including one of
      our
      current directors. Icahn Enterprises indirectly beneficially owns 50.1% of
      the
      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.




140
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**17.
      Commitments and Contingencies  - (continued)**




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.
      As a
      result, on November 12, 2007, NEGI’s board of directors concluded that the
      liquidation and dissolution of NEGI, or the Dissolution, and the distribution
      of
      NEGI’s assets, or the Distribution, in connection therewith was in the best
      interests of the NEGI stockholders when compared to other alternatives. A
      special meeting of NEGI’s shareholders was scheduled for February 7, 2008 for
      all shareholders of record on December 27, 2007, or the Record Date, to consider
      and vote Dissolution and the Distribution.




As
      a
      result of the filing of the complaint, NEGI adjourned the special meeting to
      March 14, 2008 to permit the shareholders of NEGI to evaluate the
      lawsuit.




On
      March
      14, 2008, the shareholders voted to approve the Dissolution. NEGI anticipates
      filing a Form 15 with the Securities and Exchange Commission, on or about March
      26, 2008 for the purpose of deregistering its securities under the Exchange
      Act.
      As a result, NEGI suspended the filing of any further periodic reports under
      the
      Exchange Act and, absent contrary action by the SEC, its status as a public
      company will be terminated. 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, the lawsuit is in its early stages and we cannot predict
      the outcome of the litigation on us or on our interest in NEGI.




**Metals**




PSC
      Metals is subject to federal, state, local and foreign environmental laws and
      regulations concerning discharges to the air, soil, surface and subsurface
      waters and the generation, handling, storage, transportation, treatment and
      disposal of waste materials and hazardous substances. PSC Metals is also subject
      to other federal, state, local and foreign laws and regulations including those
      that require PSC Metals to remove or mitigate the effects of the disposal or
      release of certain materials at various sites.




It
      is
      impossible to predict precisely what effect these laws and regulations will
      have
      on PSC Metals in the future. Compliance with environmental laws and regulations
      may result in, among other things, capital expenditures and costs and
      liabilities. Management believes, based on past experience and its best
      assessment of future events, that 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.




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 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 $24.3 million and $19.9 million
      at
      December 31, 2007 and 2006, respectively.




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 December
      31, 2007 and 2006. 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.




141
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**17.
      Commitments and Contingencies  - (continued)**




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.




***Leases***




Future
      minimum lease payments under operating leases and capital leases with initial
      or
      remaining terms of one or more years consist of the following at December 31,
      2007 (in $000s):




**Operating
                  Leases**
              
              **Capital
                  Leases**2008
              
              $
              15,971
              
              $
              862009
              
              
              10,472
              
              
              602010
              
              
              8,985
              
              
              642011
              
              
              7,750
              
              
              582012
              
              
              7,033
              
              
              —Thereafter
              
              
              37,280
              
              
              —Total
                  minimum lease payments
              
              $
              87,491
              
              $
              268




***Other***




In
      the
      ordinary course of business, we, our subsidiaries and other companies in which
      we invest are parties to various legal actions. In management’s opinion, the
      ultimate outcome of such legal actions will not have a material effect on our
      consolidated financial statements taken as a whole.




**18.
      Subsequent Events**




***Investment
      Management Operations***




*Amendments
      to Management Agreements*




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.




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% of
      the
      net asset value of each Investor’s (defined below) investment in the Feeder Fund
      or Onshore Fund, as applicable.




142
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**18.
      Subsequent Events  - (continued)**




The
      Investment Fund LPAs provide, effective January 1, 2008, 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, in the case of the Onshore Fund, each limited partner
      in the Onshore Fund and, 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) (each, 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 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) 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
      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.




Effective
      January 1, 2008, the Contribution Agreement and the employment agreements of
      Messrs. Carl C. Icahn, Keith A. Meister and Vincent J. Intrieri were amended
      to
      accommodate the termination of the management agreements.




Effective
      January 1, 2008, Icahn Enterprises entered into an agreement with Carl C. Icahn,
      CCI Onshore, CCI Offshore, Icahn Management LP and Icahn Management. This
      agreement, (the “Icahn Amendment Agreement”) amends certain provisions of (A)
      the Contribution Agreement and (B) the Icahn Employment Agreement, as defined
      herein, dated as of August 8, 2007 among the New Icahn Management and Carl
      Icahn. Pursuant to the Icahn Amendment Agreement, the reference to (i)
      management fees payable to New Icahn Management with respect to the Private
      Funds pursuant to the management agreements in the definition of “Hedge Fund
      Earnings” in the Contribution Agreement was deleted and replaced with (i)
      special profits interest allocation made to the Onshore GP and the Offshore
      GP
      with respect to the Investment pursuant to the limited partnership agreement
      of
      each Master Fund in effect from time to time. Similarly, the references to
      “management fee” in Section 1(a) and Section 2(a) of Exhibit A of the Icahn
      Employment Agreement were deleted and replaced with “special profits interest
      allocation.” Furthermore, although the obligation of the Onshore Fund and the
      Feeder Funds to pay management fees was terminated, it was agreed in the Icahn
      Amendment Agreement provided that Mr. Icahn would continue to be obligated
      to
      pay a 2% fee on (i) the fifty percent of his annual bonus incentive that under
      the Icahn Employment Agreement is deferred and deemed invested in the Private
      Funds, and (ii) the amount of his personal funds that Mr. Icahn is required
      to
      keep invested in the Private Funds if prior to August 8, 2012 he, for any
      reason, ceases to serve as Chief Executive Officer of New Icahn Management
      and
      as the individual primarily responsible for the management of the Private Funds’
investment portfolios.




*Other*




Subsequent
      to December 31, 2007, through March 17, 2008, the Onshore Fund received $60.0
      million in subscriptions from Onshore Fund fee paying limited partners, of
      which
      $24.8 million was received prior to January 1, 2008 and is reflected as a
      liability in the consolidated balance sheets. Subsequent to December
      31, 2007, there were partnership withdrawals of $40.9 million from the Onshore
      Fund fee paying limited partners which are reflected as a liability in the
      consolidated balance sheets.




143
 TABLE
          OF CONTENTS




**ICAHN
      ENTERPRISES HOLDINGS L.P. AND SUBSIDIARIES**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**




**18.
      Subsequent Events  - (continued)**




Subsequent
      to December 31, 2007, through March 17, 2008, Offshore Master Fund I received
      $165.3 million in subscriptions from Offshore Master Fund I fee paying limited
      partners, of which $120.0 million was received prior to January 1, 2008 and
      is
      reflected as a liability in the consolidated balance sheets. Subsequent to
      December 31, 2007, there were partnership withdrawals of $46.8 million from
      Offshore Master Fund I fee paying limited partners which are reflected as a
      liability in the consolidated balance sheets.




Subsequent
      to December 31, 2007, through March 17, 2008, Offshore Master Fund II received
      $105.1 million in capital contributions from external investors. After these
      contributions, Offshore Master Fund II has no unfunded capital
      commitments.




Subsequent
      to December 31, 2007, through March 17, 2008, Offshore Master Fund III received
      $40.0 million in capital contributions from external investors. After these
      contributions, Offshore Master Fund III has no unfunded capital
      commitments.




In
      addition there were net contributions of $9.3 million to the Private Funds
      from
      affiliated parties.




***Consummation
      of ACEP Sale***




On
      February 20, 2008, we consummated on the sale of our subsidiary, ACEP, which
      owns the Stratosphere and three other Nevada gaming properties. The purchaser
      was an affiliate of Whitehall Street Real Estate Fund. With the consummation
      of
      this transaction at a purchase price of $1.2 billion, we anticipate realizing
      a
      gain of approximately $700 million, before taxes, subject to resolution of
      post-closing adjustments.




In
      connection with the closing, ACEP has accepted for payment and has repaid all
      of
      its 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 has 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. Such proceeds were
      received 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 entire amount of proceeds placed into
      escrow.




***NEGI***




On
      February 1, 2008, NEGI was informed that 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, and Icahn Enterprises and 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 of NEGI’s
      former unconsolidated non-controlling 50% limited liability company interest
      in
      NEG Holding, as a result of the exercise by NEG Oil & Gas of its contractual
      redemption option under the operating agreement governing NEG
      Holding.




NEGI
      believes it has meritorious defenses to all claims; however, the lawsuit is
      in
      its early stages and we cannot predict the outcome of the litigation on our
      interest in NEGI. See Note 17, “Commitments and Contingencies,” for additional
      information.




144
 TABLE
          OF CONTENTS




**Item
      9. Changes In and Disagreements With Accountants on Accounting
      and Financial Disclosure**




None.




**Item
      9A. Controls and Procedures**




**Conclusion
      Regarding the Effectiveness of Disclosure Controls and
      Procedures**




As
      of
      December 31, 2007, our management, including our Principal Executive Officer
      and
      Chief Financial Officer, evaluated the effectiveness of the design and operation
      of our disclosure controls and procedures pursuant to the Exchange Act Rule
      13a-15(e) and 15d-15(e). 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 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 Securities and Exchange Commission 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.




We
      made
      no change in our internal control over financial reporting during the fourth
      quarter ended December 31, 2007 that has materially affected, or is reasonably
      likely to materially affect, such internal control over financial
      reporting.




**Management’s
      Report on Internal Control over Financial Reporting**




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting and for an assessment of the effectiveness
      of
      internal control over financial reporting; as such items are defined in Rule
      13a-15f under the Exchange Act.




Our
      control over financial reporting is designed to provide reasonable assurance
      that our financial reporting and preparation of financial statements is reliable
      and in accordance with generally accepted accounting principles. Our policies
      and procedures are designed to provide reasonable assurance that transactions
      are recorded and records maintained in reasonable detail as necessary to
      accurately and fairly reflect transactions and that all transactions are
      properly authorized by management in order to prevent or timely detect
      unauthorized transactions or misappropriation of assets that could have a
      material effect on our financial statements.




Management
      is required to base its assessment on the effectiveness of our internal control
      over financial reporting on a suitable, recognized control framework. Management
      has utilized the criteria established in the Internal Control-Integrated
      Framework issued by the Committee of Sponsoring Organizations of the Treadway
      Commission (COSO) to evaluate the effectiveness of internal control over
      financial reporting, which is a suitable framework as published by the Public
      Company Accounting Oversight Board (PCAOB).




Our
      management has performed an assessment according to the guidelines established
      by COSO. Based on the assessment, management has concluded that our system
      of
      internal control over financial reporting, as of December 31, 2007, is
      effective.




PSC
      Metals is excluded from our assessment of the effectiveness of internal
      controls over financial reporting as of December 31, 2007. PSC Metals
      constitutes approximately 2.6% and 33.5% of our consolidated total assets and
      total revenues for fiscal 2007, respectively. Because this acquisition occurred
      in the fourth quarter of 2007, Icahn Enterprises Holdings is not including
      PSC
      Metals in its assessment because it is not required to do so nor is it
      practicable to do so.




This
        annual report does not include an attestation report of the Company’s
        independent registered public accounting firm regarding internal control
        over
        financial reporting. Management’s report is not subject to attestation by the
        Company’s registered public accounting firm pursuant to temporary rules of the
        Securities and Exchange Commission that permit the Company to provide only
        management’s report in this annual report.




**Item
      9B. Other Information**




None.




145
 TABLE
          OF CONTENTS




**PART
      III**




**Item
      10. Directors, Executive Officers and Corporate
      Governance.**




The
      names, offices held and ages of the directors and executive officers of Icahn
      Enterprises GP as of March 10, 2008 are as follows:





**Name**
            
            **Age**
            
            **Position**Carl
                C. Icahn
            
            72
            
            Chairman
                of the BoardWilliam
                A. Leidesdorf
            
            62
            
            DirectorVincent
                J. Intrieri
            
            51
            
            DirectorJames
                L. Nelson
            
            58
            
            DirectorJack
                G. Wasserman
            
            71
            
            DirectorKeith
                A. Meister
            
            34
            
            Principal
                Executive Officer and Vice Chairman of the BoardPeter
                K. Shea
            
            56
            
            PresidentAndrew
                R. Skobe
            
            43
            
            Interim
                Chief Financial Officer, Chief Accounting Officer and
                Treasurer




***Carl
      C. Icahn*** has
      served as Chairman of the Board of Icahn Enterprises GP since 1990. As discussed
      elsewhere in further detail, on August 8, 2007, we acquired the Partnership
      Interests, which consists of the general partnership interests in the General
      Partners and New Icahn Management. Since the acquisition, Mr. Icahn has served
      as Chief Executive Officer of our subsidiary, New Icahn Management. Mr. Icahn
      also serves as Chief Executive Officer of the General Partners. The investment
      strategy of the General Partners is set and led by Mr. Icahn. See Part I, Item
      1, “Business — Acquisition of Investment Management Business,” for a
      further description of our Investment Management Business. Prior to the
      acquisition of the Partnership Interests on August 8, 2007, Mr. Icahn managed
      these private investment funds through his entities, CCI Onshore and CCI
      Offshore. In addition, from September 2004 to February 2005, Mr. Icahn served
      as
      the sole member of the predecessors of CCI Onshore and CCI Offshore, CCI Onshore
      LLC and CCI Offshore LLC, respectively. Mr. Icahn has served as a director
      of
      WPI since October, 2005. Since 1984, Mr. Icahn has also served as Chairman
      of
      the Board and a director of Starfire Holding Corporation, a privately held
      holding company. Mr. Icahn was also Chairman of the Board and president of
      Icahn
& Co., Inc., a registered broker-dealer and a member of the National
      Association of Securities Dealers, from 1968 to 2005. Mr. Icahn has served
      as
      chairman of the board and as a director of American Railcar Industries, Inc.,
      or
      ARI, a company that is primarily engaged in the business of manufacturing
      covered hopper and tank railcars, since 1994. From October 1998 through May
      2004, Mr. Icahn was the president and a director of Stratosphere Corporation,
      the owner and operator of the Stratosphere Hotel and Casino in Las Vegas, which
      was recently sold as part of the sale of our membership interest in ACEP. From
      September 2000 to February 2007, Mr. Icahn served as the chairman of the board
      of GB Holdings, Inc., which owned an interest in Atlantic Coast, the owner
      and
      operator of The Sands casino in Atlantic City until November 2006. Mr. Icahn
      has
      been chairman of the board and a director of XO Holdings, Inc., a
      telecommunications services provider, since February 2006, and of its
      predecessor from January 2003 to February 2006. Mr. Icahn has served as a
      director of Cadus Corporation, a company engaged in the ownership and licensing
      of yeast-based drug discovery technologies since July 1993. In May 2005, Mr.
      Icahn became a director of Blockbuster Inc., a provider of in-home movie rental
      and game entertainment. In September 2006, Mr. Icahn became a director of
      ImClone, a biopharmaceutical company, and since October 2006, has been the
      chairman of the board of ImClone. In August 2007, Mr. Icahn became a director
      of
      WCI Communities, Inc., or WCI, a homebuilding company, and since September
      2007,
      has been the chairman of the board of WCI. In December 2007, Mr. Icahn became
      a
      director of Federal-Mogul Corporation, or Federal-Mogul, a supplier of
      automotive products, and since January 2008, has been the chairman of the board
      of Federal-Mogul.




***William
      A. Leidesdorf*** has
      served as a director of Icahn Enterprises GP since March 1991. Since December
      2003, Mr. Leidesdorf has served as a director of AEP. From May 2005 until
      November 15, 2007, Mr. Leidesdorf served as a director of Atlantic Coast. Mr.
      Leidesdorf was a director of Renco Steel Group, Inc. and was a director of
      its
      subsidiary, WCI Steel, Inc., a steel producer which filed for Chapter 11
      bankruptcy protection in September 2003. Since June 1997, Mr. Leidesdorf has
      been an owner and a managing director
      of Renaissance Housing, LLC, a company primarily engaged in acquiring
      multifamily residential properties. From April 1995 through December 1997,
      Mr.
      Leidesdorf acted as an independent real estate investment banker.




146
 TABLE
          OF CONTENTS




***Vincent
      J. Intrieri*** has
      served as a Director of Icahn Enterprises GP since July 2006. Since December
      2006, Mr. Intrieri has been a director of NEGI. Since August 2005, Mr. Intrieri
      has been a director of WPI. Since November 2004, Mr. Intrieri has been a Senior
      Managing Director of the Onshore Fund (whose General Partner is the Onshore
      GP)
      and the Offshore Master Funds (whose General Partner is the Offshore GP). On
      August 8, 2007, we acquired the general partnership interests in the General
      Partners. See Part I, Item 1, “Business — Acquisition of Investment
      Management Business,” for a further description of Investment Management
      Business. Since January 1, 2005, Mr. Intrieri has been Senior Managing Director
      of Icahn Associates Corp. and High River Limited Partnership, entities primarily
      engaged in the business of holding and investing in securities. Since April
      2005, Mr. Intrieri has been the President and Chief Executive Officer of Philip,
      an industrial services company. Since August 2005, Mr. Intrieri has served
      as a
      director of ARI. From March 2005 to December 2005, Mr. Intrieri was a Senior
      Vice President, the Treasurer and the Secretary of ARI. Since April 2003, Mr.
      Intrieri has been chairman of the board of directors and a director of Viskase
      Companies, Inc., a producer of cellulosic and plastic casings used in preparing
      and packaging processed meat products. Mr. Intrieri also serves on the boards
      of
      directors of the following companies: Lear Corporation, a supplier of automotive
      interior systems and components; XO Holdings., a telecommunications company;
      and
      Federal-Mogul, a supplier of automotive products. With respect to each company
      mentioned above, Mr. Icahn, directly or indirectly, either (i) controls such
      company or (ii) has an interest in such company through the ownership of
      securities. Mr. Intrieri is a certified public accountant.




***James
      L. Nelson*** has
      served as a director of Icahn Enterprises GP since June 2001. Since December
      2003, Mr. Nelson has served as a director of AEP. From May 2005 until November
      15, 2007, Mr. Nelson served as a director of Atlantic Coast. From 1986 until
      the
      present, Mr. Nelson has been Chairman and Chief Executive Officer of Eaglescliff
      Corporation, a specialty investment banking, consulting and wealth management
      company. From March 1998 through 2003, Mr. Nelson was Chairman and Chief
      Executive Officer of Orbit Aviation, Inc., a company engaged in the acquisition
      and completion of Boeing Business Jets for private and corporate clients. From
      August 1995 until July 1999, Mr. Nelson was Chief Executive Officer and
      Co-Chairman of Orbitex Management, Inc., a financial services company in the
      mutual fund sector. From August 1995 until March 2001, he was on the Board
      of
      Orbitex Financial Services Group. Mr. Nelson currently serves as a director
      and
      Chairman of the Audit Committee of Viskase Companies, Inc., and as a director
      of
      Shuffle Master, Inc.




***Jack
      G. Wasserman*** has
      served as a director of Icahn Enterprises GP since December 1993. Since December
      2003, Mr. Wasserman served as a director of AEPC. From May 2005 until November
      15, 2007, Mr. Wasserman has served as a director of Atlantic Coast. Mr.
      Wasserman is an attorney and a member of the Bars of New York, Florida and
      the
      District of Columbia. From 1966 until 2001, he was a senior partner of
      Wasserman, Schneider, Babb & Reed, a New York-based law firm, and its
      predecessors. Since September 2001, Mr. Wasserman has been engaged in the
      practice of law as a sole practitioner. Since December 1998, Mr. Wasserman
      has
      been a director of NEGI. Mr. Wasserman is also a director of Cadus Corporation,
      a biotechnology company. Affiliates of Mr. Icahn is a controlling shareholder
      of
      Cadus. Since March 2004, Mr. Wasserman has been a director of Triarc Companies,
      Inc., a publicly traded diversified holding company. Mr. Wasserman serves on
      the
      audit and compensation committees of Triarc.




***Keith
      A. Meister*** has
      served as Principal Executive Officer and Vice Chairman of the Board of Icahn
      Enterprises GP since March 2006. He served as Chief Executive Officer of Icahn
      Enterprises GP from August 2003 until March 2006 and as President of Icahn
      Enterprises GP from August 2003 until April 2005. From August 8, 2007 until
      December 31, 2007, Mr. Meister served as an executive officer of New Icahn
      Management and, commencing January 1, 2008, Mr. Meister serves as Chief
      Executive Officer of Icahn Capital LP, or Icahn Capital. In addition, Mr.
      Meister is a Managing Director of the Onshore Fund (whose General Partner is
      the
      Onshore GP) and the Offshore Master Funds (whose General Partner is the Offshore
      GP). On August 8, 2007, we acquired the general partnership interests in the
      General Partners and New Icahn Management. See Part I, Item 1,
“Business — Acquisition of Investment Management Business,” for a
      further description
      of Investment Management Business. Since June 2002, Mr. Meister has served
      as
      senior investment analyst of High River Limited Partnership, an entity primarily
      engaged in the business of holding and investing in securities. Mr. Meister
      also
      serves as a director of various direct and indirect subsidiaries of Icahn
      Enterprises. He also serves on the Boards of Directors of the following
      companies: XO Holdings, WCI and Federal-Mogul.




147
 TABLE
          OF CONTENTS




***Peter
      K. Shea*** has
      served as President of Icahn Enterprises GP since December 2006. Since December
      2006, Mr. Shea has been Head of Portfolio Company Operations at Icahn
      Enterprises Holdings. Since December 27, 2006, Mr. Shea has also served as
      a
      director of XO Holdings. Since December 2006, Mr. Shea has served as a director
      of ARI. Since December 20, 2006, Mr. Shea has served as a director of WPI.
      Since
      November 2006, Mr. Shea has been a director of Viskase Companies, Inc. Mr.
      Shea
      was an independent consultant to various companies and an advisor to private
      equity firms from 2002 until December 2006. During this period, he also served
      as Executive Chairman of Roncadin GmbH, a European food company, and a Board
      Director with Sabert Corporation, a manufacturer of plastics and packaging
      products. From 1997 to 2001, he was a Managing Director of H.J. Heinz Company
      in
      Europe, a manufacturer and marketer of a broad line of food products across
      the
      globe. Mr. Shea has been Chairman, Chief Executive Officer or President of
      other
      companies including SMG Corporation, John Morrell & Company and Polymer
      United. SMG and John Morrell were international meat processing firms and
      Polymer United was a leading plastics manufacturer operating throughout Central
      America. Previously, he held various executive positions, including Head of
      Global Corporate Development, with United Brands Company, a Fortune 100 company
      with a broad portfolio of companies operating in many sectors. Mr. Shea began
      his career with General Foods Corporation. He has also served on the Boards
      of
      Premium Standard Farms and New Energy Company of Indiana.




***Andrew
      R. Skobe*** has
      served as interim Chief Financial Officer and Chief Accounting Officer of Icahn
      Enterprises GP since April 2, 2007 and as Treasurer of Icahn Enterprises GP
      since August 2006. Since November 15, 2007, Mr. Skobe has served as a director
      of Atlantic Coast. From January 2006 until August 2006, Mr. Skobe held the
      position of Treasury Director for Icahn Enterprises GP. Prior to that time,
      from
      2002, Mr. Skobe was Vice President and Treasurer for the Columbia House Company.
      From 2001 to 2002, he was a Financial Consultant for Parsons Consulting and
      before that he was Chief Financial Officer and Director of Raging Knowledge,
      a
      privately held software company. Mr. Skobe has also held senior financial
      positions at the Dun & Bradstreet Corporation, Marvel Entertainment Group,
      Inc., General Motors and Manufacturers Hanover.




***Audit
      Committee***




James
      L.
      Nelson, William A. Leidesdorf and Jack G. Wasserman serve on our audit
      committee. We believe that the audit committee members are “independent” as
      defined in the currently applicable listing standards of the New York Stock
      Exchange. A copy of the audit committee charter is available on Icahn
      Enterprises' website at
      www.icahnenterprises.com/files/pdf/audit_committee_charter.pdf or may be
      obtained without charge by writing to Icahn Enterprises L.P., 767 Fifth Avenue,
      Suite 4700, New York, NY 10153, Attention: Investor Relations.




Our
      audit
      committee meets formally at least once every month, and more often if necessary.
      In addition to the functions set forth in its charter, pursuant to our amended
      and restated agreement of limited partnership, the audit committee reviews
      potential conflicts of interest that may arise between us and Icahn Enterprises
      GP and its affiliates and Mr. Icahn.




The
      functions of our audit committee as set forth in our amended and restated
      partnership agreement include: (1) the review of our financial and accounting
      policies and procedures; (2) the review of the results of audits of thebooks
      and
      records performed by our outside auditors; (3) the review of allocations of
      overhead expenses in connection with the reimbursement of expenses to Icahn
      Enterprises GP and its affiliates; and (4) the review and approval of related
      party transactions and conflicts of interest in accordance with the terms of
      our
      partnership agreement.




Our
      board
      of directors has determined that we do not have an “audit committee financial
      expert,” within the meaning of Item 401(h) of Regulation S-K, serving on our
      audit committee. We believe that each member of the audit committee is
      financially literate and possesses sufficient experience, both professionally
      and by virtue of his service as a director and member of the audit committee
      of
      Icahn Enterprises GP, to be fully capable
      of discharging his duties as a member of our audit committee. However, none
      of
      the members of our audit committee has a professional background in accounting
      or “preparing, auditing, analyzing or evaluating financial statements.” If our
      audit committee determines that it requires additional financial expertise,
      it
      will either engage professional advisers or seek to recruit a member who would
      qualify as an “audit committee financial expert” within the meaning of Item
      401(h) of Regulation S-K.




148
 TABLE
          OF CONTENTS




Jack
      G.
      Wasserman has been chosen to preside and currently presides at executive
      sessions of our non-management directors.




Interested
      parties may directly communicate with the presiding director or with the
      non-management directors as a group by directing all inquiries to our ethics
      hotline at (877) 888-0002.




***Audit
      Committee Report***




The
      audit
      committee has confirmed that: (1) the audit committee reviewed and discussed
      our
      2007 audited financial statements with management; (2) the audit committee
      has
      discussed with our independent auditors the matters required to be discussed
      by
      SAS 61 (Codification of Statements on Auditing Standards, AU§380); (3) the audit
      committee has received the written disclosures and the letter from the
      independent accountants required by Independence Standards Board Standard No.
      1;
      and (4) based on the review and discussions referred to in clauses (1), (2)
      and
      (3) above, the audit committee recommended to the board of directors that our
      2007 audited financial statements be included in this annual report on Form
      10-K.




This
      report is provided by the following independent directors, who constitute the
      audit committee:




William
      A. Leidesdorf


James
      L.
      Nelson


Jack
      G.
      Wasserman




***Code
      of Ethics***




On
      October 25, 2004, Icahn Enterprises GP’s board of directors adopted a Code of
      Ethics applicable to its principal executive officer, principal financial
      officer and principal accounting officer. A copy of the Code of Ethics is
      available on Icahn Enterprises’ website
      at *www.icahnenterprises.com/files/pdf/code_of_ethics.pdf* and may
      be obtained without charge by writing to Icahn Enterprises L.P., 767 Fifth
      Avenue, Suite 4700, New York, NY 10153, attention: Investor
      Relations.




**Corporate
      Governance Guidelines**




On
      October 25, 2004, Icahn Enterprises GP’s board of directors adopted Corporate
      Governance Guidelines for Icahn Enterprises and its subsidiaries, including
      Icahn Enterprises Holdings. A copy of the Corporate Governance Guidelines is
      available on Icahn Enterprises’website
      at *www.icahnenterprises.com/files/pdf/corporate_governance.pdf* and may
      be obtained without charge by writing to Icahn Enterprises L.P., 767 Fifth
      Avenue, Suite 4700, New York, NY 10153, attention: Investor
      Relations.




149
 TABLE
          OF CONTENTS




**Item
      11. Executive Compensation.**




**Compensation
      Discussion and Analysis**




In
      this
      section, we will provide an overview and analysis of the compensation
      programs of Icahn Enterprises GP, our general partner, the compensation
      decisions made under those programs, and the factors considered in making
      those decisions. Icahn
      Enterprises Holdings does not have any separate compensation programs, other
      than the compensation programs described herein of Icahn Enterprises GP for
      services provided to Icahn Enterprises and its subsidiaries, including Icahn
      Enterprises Holdings. Later
      in
      this section, under the heading “Additional Information Regarding Executive
      Compensation,” you will find a table containing specific information about the
      compensation earned by the following individuals in fiscal 2007, whom we refer
      to as the named executive officers of Icahn Enterprises GP, and who
      provided services in all capacities to Icahn Enterprises and its subsidiaries,
      including Icahn Enterprises Holdings:





·
            Carl
                C. Icahn, Chairman of the Board(1)





·
            Keith
                A. Meister, Principal Executive Officer and Vice
                Chairman





·
            Peter
                A. Shea, President





·
            Andrew
                R. Skobe, Interim Chief Financial Officer, Principal Accounting Officer
                and Treasurer. Mr. Skobe has held the title of Interim Chief Financial
                Officer and Principal Accounting Officer since April 2,
                2007





·
            Hillel
                Moerman, former Chief Financial Officer and Chief Accounting Officer,
                who
                held this position until March 28,
                2007




The
      discussion below is intended to help you understand the detailed information
      provided in the table and put that information into context within our overall
      compensation program.




***Overview
      of Compensation Program***




Throughout
      this narrative discussion and in the accompanying table, we refer to our named
      executive officers. The key compensation package provided to our named executive
      officers consists of (i) base salary, (ii) incentive compensation and (iii)
      Icahn Enterprises’401(k)
      Plan and other benefits. The key compensation provided to Messrs.
      Icahn and Meister consists of salary and bonus pursuant to employment agreements
      entered into with Icahn Enterprises and/or our subsidiary, New Icahn Management,
      and the General Partners and, in the case of Mr. Meister, for fiscal 2007,
      certain management fees and incentive allocations. See “Additional Information
      Regarding Executive Compensation — Summary Compensation Table” for the
      compensation received by each of our named executive officers for fiscal 2007.
      Executive compensation levels and bonuses are established based upon the
      recommendation of our chairman, which are discussed with members of the board.
      The board of directors does not delegate the authority to establish executive
      officer compensation to any other person and has not retained any compensation
      consultants to determine or recommend the amount or form of executive and
      director compensation.




***Compensation
      Philosophy and Objectives***




Our
      executive compensation philosophy is designed to support our key business
      objectives while maximizing value to Icahn Enterprises’ unitholders.
      The
      objectives of our compensation structure are to attract and retain valuable
      employees, assure fair and internally equitable pay levels and provide a mix
      of
      base salary and variable bonuses that provides motivation and awards
      performance. At the same time, we seek to optimize and manage compensation
      costs.




The
      primary components of our executive compensation are base salary and annual
      bonus, payable in cash. In addition, Mr. Meister receives certain management
      fees and incentive allocations as described elsewhere in this report. Base
      salary is paid for ongoing performance throughout the year and is determined
      based on job function and each executive’s contribution to our performance and
      achievement of our overall business objectives. Our annual bonuses are intended
      to reward particular achievement during the year, motivate future performance
      and attract and retain highly qualified key employees. We generally do not
      pay
      compensation in options, units or other equity-based awards.





(1)
            In
                addition, since our acquisition of the Partnership Interests on August
                8,
                2007, Mr. Icahn serves as Chief Executive Officer of our subsidiary,
                New
                Icahn Management. Mr. Icahn also serves as Chief Executive Officer
                of the
                General Partners.




150
 TABLE
          OF CONTENTS




***Determination
      of Appropriate Pay Levels***




We
      compete with many other companies for experienced and talented executives.
      Market information in general regarding pay practices at peer companies (as
      provided in the public reports filed by such companies with the SEC) may be
      reviewed and considered in assessing the reasonableness of compensation and
      ensuring that compensation levels remain competitive in the marketplace. As
      described elsewhere in this report, several of our named executive officers
      have
      entered into employment agreements with either Icahn Enterprises or our
      subsidiary, New Icahn Management. For a further description of these agreements,
      see “Additional Information Regarding Executive
      Compensation — Employment Agreements.”




Each
      element of compensation is reviewed so that the overall compensation package
      will attract, motivate and retain our key employees, including our named
      executive officers, by rewarding superior performance. The following factors
      are
      considered to determine the amount of compensation paid to each executive
      officer:





·
            overall
                job performance, including performance against corporate and individual
                objectives;





·
            job
                responsibilities, including unique skills necessary to support our
                long-term performance, including that of our subsidiaries,
                and





·
            teamwork,
                both contributions as a member of the executive management team and
                fostering an environment of personal and professional growth for
                the
                entire work force.




***Allocation
      of Compensation***




There
      is
      no pre-established policy or target for the allocation of compensation, other
      than the employment agreements with certain of our named executive officers.
      The
      factors described above, as well as the overall compensation philosophy, is
      reviewed by the board of directors to determine the appropriate level and mix
      of
      compensation. We are not required to (and do not) maintain a compensation
      committee. Historically, and in fiscal 2007, the total compensation granted
      to
      named executive officers was in the form of cash compensation.




***Compensation
      Components for Fiscal Year 2007***




*Base
      Salary*




Base
      salaries for executive officers are determined based on job performance, job
      responsibilities and teamwork. In addition, Icahn Enterprises has also entered
      into employment contracts with Carl C. Icahn (referred to as the Icahn
      Employment Agreement), Keith A. Meister (referred to as the Meister Employment
      Agreement) and Peter A. Shea (referred to as the Shea Employment
      Agreement).




During
      2007, pursuant to the Icahn Employment Agreement by and among Icahn Enterprises,
      New Icahn Management and Mr. Icahn, Mr. Icahn served as Chairman of the Board
      of
      Icahn Enterprises GP and as Chairman and Chief Executive Officer of New Icahn
      Management and Chief Executive Officer of the General Partners. He is entitled
      to receive an annual base salary of $900,000.




Mr.
      Meister serves as our Principal Executive Officer, but does not receive a salary
      from us in such capacity. Mr. Meister is entitled to an annual fee of $100,000
      for serving as the Vice Chairman of the board of directors of Icahn Enterprises
      GP. During 2007, pursuant to the Meister Employment Agreement by and among
      Icahn
      Enterprises, New Icahn Management, Mr. Meister and the other parties referred
      therein. Mr. Meister served as a Managing Director of New Icahn Management
      and
      is entitled to receive an annual base salary of $500,000 (less the aggregate
      salary and/or director fees actually paid to Mr. Meister by or on behalf of
      Icahn Enterprises, Icahn Enterprises Holdings and/or Icahn Enterprises GP),
      as
      well as certain management fees and incentive allocations.




Pursuant
      to the Shea Employment Agreement by and between Icahn Enterprises and Mr. Shea,
      Mr. Shea is entitled to receive an annual base salary of $450,000.




For
      fiscal 2007, Mr. Skobe received a salary of $244,801.




Generally,
      total compensation is used in determining the amount of contributions permitted
      under Icahn Enterprises’401(k)
      Plan.




See
      “Additional Information Regarding Executive Compensation — Summary
      Compensation Table” for detailed information on the compensation received by
      each of our named executive officers for fiscal 2007.


151
 TABLE
          OF CONTENTS




*Bonus*




Each
      of
      Messrs. Icahn and Shea is eligible for a discretionary annual bonus, and Mr.
      Meister receives a fixed annual bonus of $1 million, in each case, as determined
      pursuant to the terms of his respective employment agreement. For a further
      description of the employment agreements, including salary and bonuses, see
      “Additional Information Regarding Executive Compensation — Employment
      Agreements.”




Mr.
      Skobe’s bonus for fiscal 2007 was determined as part of a year-end review of
      performance and compensation in the manner described above.




*401(k)
      Plan and Other Benefits*




Certain
      of our named executive officers participate in a qualified 401(k) Retirement
      Savings Plan adopted by Icahn Enterprises and are entitled to receive medical,
      dental and paid time-off benefits that are offered to all of our employees
      and
      are designed to enable us to attract and retain our workforce in a competitive
      environment. Retirement savings plans help employees save and prepare
      financially for retirement. Health and paid time-off benefits help ensure that
      we have a productive and focused workforce.




The
      qualified 401(k) Plan allows employees to contribute up to 50% of their eligible
      compensation, up to the limits imposed by the Internal Revenue Code on a pre-tax
      basis. Icahn Enterprises currently matches, within prescribed limits, 50% of
      eligible employees’ contributions up to 6.25% of their eligible compensation.
      Participants choose to invest their account balances from an array of investment
      options as selected by plan fiduciaries from time to time. The 401(k) Plan
      provides distributions in a lump sum. Under certain circumstances, loans and
      withdrawals are permitted.




*Perquisites*




The
      total
      value of all perquisites and personal benefits provided to each of our named
      executive officers for fiscal 2007 and/or fiscal 2006 was less than $10,000
      per
      person, except for Carl C. Icahn and Hillel Moerman, for whom perquisites and
      other benefits are identified in the Summary Compensation Table under the “All
      Other Compensation” column and in related footnotes.




**Compensation
      Committee Report**




The
      board
      of directors does not have a standing compensation committee. The board of
      directors has reviewed and discussed the Compensation Disclosure and Analysis
      required by Item 402(b) of Regulation S-K with management. Based on that review
      and discussion, the board of directors recommended that the Compensation
      Disclosure and Analysis be included in this annual report on Form
      10-K.




This
      report is provided by the board of directors:




Carl
      C.
      Icahn


Vincent
      J. Intrieri


William
      A. Leidesdorf


Keith
      A.
      Meister


James
      L.
      Nelson


Jack
      G.
      Wasserman




**Compensation
      Committee Interlocks and Insider Participation**




During
      fiscal 2007, our entire board of directors participated in deliberations
      concerning executive compensation. Mr. Meister serves as our principal executive
      officer. During fiscal 2007, none of our executive officers served on the
      compensation committee (or equivalent), or the board of directors, of another
      entity whose executive officer(s) served on our board of directors.




152
 TABLE
          OF CONTENTS




**Additional
      Information Regarding Executive Compensation**




**Summary
      Compensation Table**




**Annual
                Compensation****(1)****Name
                and Principal Position**
            
            **Year**
            
            **Salary
                ($)**
            
            **Bonus
                ($)**
            
            **All
                Other Compensation ($)**
            
            **Total
                ($)**Carl
                C. Icahn(2)
            
            
            2007
            
            
            357,534
            
            
            —
            
            
            11,053
            (3)
            
            368,587Chairman
                of the Board
            
            
            2006
            
            
            —
            
            
            —
            
            
            —
            
            
            —Keith
                A. Meister(4)
            
            
            2007
            
            
            127,123
            
            
            317,808
            
            
            4,552,230
            
            
            4,997,161Principal
                Executive Officer and Vice Chairman
            
            
            2006
            
            
            49,038
            
            
            —
            
            
            80,000
            
            
            129,038Peter
                A. Shea(5)
            
            
            2007
            
            
            450,000
            
            
            225,000
            
            
            8,957
            (3)
            
            683,957President
            
            
            2006
            
            
            36,346
            
            
            —
            
            
            —
            
            
            36,346Andrew
                R. Skobe(6)
            
            
            2007
            
            
            244,801
            
            
            255,000
            
            
            209
            (3)
            
            500,010Interim
                Chief Financial Officer and Principal Accounting Officer
            
            
            2006
            
            
            —
            
            
            —
            
            
            —
            
            
            —Hillel
                Moerman(7)
            
            
            2007
            
            
            103,209
            
            
            —
            
            
            1,211
            
            
            104,420Former
                Chief Financial Officer and ChiefAccounting
                Officer
            
            
            2006
            
            
            210,480
            
            
            250,000
            
            
            17,810
            (3)
            
            478,290




The
      following table sets forth information in respect of the compensation earned
      for
      services to Icahn Enterprises and/or our subsidiaries by each of our named
      executive officers for fiscal 2007 and fiscal 2006, as applicable.





(1)
            Pursuant
                to applicable regulations, certain columns of the Summary Compensation
                Table and each of the remaining tables have been omitted, as there
                has
                been no compensation awarded to, earned by or paid to any of the
                named
                executive officers by Icahn Enterprises, us, any of our subsidiaries
                or by
                Icahn Enterprises GP, which was subsequently reimbursed by us, required
                to
                be reported in those columns or tables, except as noted
                below.





(2)
            The
                salary indicated above represents compensation paid to Mr. Icahn
                in fiscal
                2007 for his services as Chief Executive Officer of our subsidiary,
                New
                Icahn Management, and of the General Partners pursuant to the Icahn
                Employment Agreement, reflecting a*pro
                rata*share of his annual compensation from August 8, 2007, the date we
                acquired
                the Partnership Interests. Pursuant to the Icahn Employment Agreement,
                Mr.
                Icahn is eligible to receive an annual incentive bonus based on a
                two-component bonus formula, 50% of which bonus, if payable, is subject
                to
                mandatory deferral and vesting and treated as though invested in
                the
                Private Funds and as though subject to a 2% fee (but no incentive
                allocation). For fiscal 2007, Mr. Icahn did not receive an annual
                incentive bonus. See “Additional Information Regarding Executive
                Compensation — Employment Agreements” for a further discussion
                of the Icahn Employment Agreement. Mr. Icahn does not receive director
                fees from us.





(3)
            Represents
                other compensation paid to the following named executive officers:
                (i)
                Carl C. Icahn, $10,844 in medical and dental benefits and $209 in
                life
                insurance premiums; (ii) Peter A. Shea, $5,693 in matching contributions
                under the 401(k) Plan, $209 in life insurance premiums and $3,055 in
                medical and dental benefits; (iii) Andrew R. Skobe, $209 in life
                insurance
                premiums; and (iv) Hillel Moerman, for fiscal 2007, $1,141 in matching
                contributions under the 401(k) Plan and $70 in life insurance
                premiums and, for fiscal 2006, $11,748 in medical and dental benefits,
                $5,808 in matching contributions and $254 in life insurance premiums.
                In
                each of fiscal 2007 and fiscal 2006, a matching contribution was
                made to
                the employee’s individual 401(k) Plan account in the amount of one-half
                (1/2) of the first six and one-quarter (6.25%) percent of gross salary
                contributed by the employee. Other than Mr. Icahn and Mr. Moerman,
                no
                named executive officer received medical and dental benefits of $10,000
                or
                greater. Neither of Messrs. Icahn, Meister or Skobe participates
                in the
                401(k) Plan and thus did not receive any matching contributions for
                fiscal
                2007 or fiscal 2006.




153
 TABLE
          OF CONTENTS





(4)
            Mr.
                Meister has served as Principal Executive Officer and Vice Chairman
                of the
                Board of Icahn Enterprises GP since March 2006. Prior to March 2006,
                Mr.
                Meister served as Chief Executive Officer and received salary in
                that
                capacity. Effective March 14, 2006, Mr. Meister was elected Principal
                Executive Officer and Vice Chairman of the Board of Icahn Enterprises
                GP.
                Mr. Meister receives a fee of $100,000 per annum for serving as the
                Vice
                Chairman of the board of directors, but does not receive any other
                compensation from us in his capacity as Principal Executive Officer.
                The
                salary and bonus indicated above represent compensation paid to Mr.
                Meister in fiscal 2007 for his services as a Managing Director for
                New
                Icahn Management pursuant to the Meister Employment Agreement, reflecting
                a*pro
                rata*share of his annual salary and $1 million fixed bonus from August
                8, 2007.
                The “All Other Compensation” indicated above for fiscal 2007 includes the
                $100,000 paid to Mr. Meister for his services as Vice Chairman. The
“All
                Other Compensation” for fiscal 2006 is the*pro
                rata*share of such fee for that year. In addition to the $100,000 fee
                for
                services as Vice Chairman as referenced above, the “All Other
                Compensation” paid or allocated to (or deferred by) Mr. Meister for fiscal
                2007 pursuant to the Meister Employment Agreement includes the following:
                (i) an amount of $2,848,766, equal to 4.0% of the incentive allocations
                allocated to the General Partners by the Onshore Fund and the Offshore
                Master Funds (of which $1,778,897 (or 2.5%) is subject to vesting);
                (ii)
                earnings on Mr. Meister’s share of prior year incentive allocations that
                were reinvested in the amount of $762,179; and (iii) an amount of
                $849,990, equal to 4.0% of net management fees payable by the Onshore
                Fund
                and the Feeder Funds (of which $517,145 (or 2.5%) is subject to vesting
                and was deferred by Mr. Meister for fiscal 2007 and is deemed invested
                in
                the Feeder Funds), offset by a loss of $8,705 relating to the current
                year
                deferred management fees that were deemed invested in the Feeder
                Funds.
                The management fees paid to Mr. Meister for fiscal 2007 as indicated
                in
                the above table represents his share of such fees for that year since
                the
                acquisition of the Partnership Interests on August 8, 2007. The incentive
                allocations allocated to Mr. Meister for fiscal 2007 indicated in
                the
                above table represents incentive allocations made for such year because
                Icahn Enterprises assumed the right to receive all incentive allocations
                allocated to the General Partners in fiscal 2007, including incentive
                allocations allocated prior to the acquisition of the Partnership
                Interests. See “Additional Information Regarding Executive
                Compensation — Employment Agreements” for a further discussion
                of the Meister Employment
                Agreement.





(5)
            Mr.
                Shea has served as President since December
                2006.





(6)
            Mr.
                Skobe has served as interim Chief Financial Officer and Principal
                Accounting Officer since April 2,
                2007.





(7)
            Mr.
                Moerman’s service in this position terminated on March 28,
                2007.




Each
      of
      our executive officers may perform services for affiliates of Mr. Icahn for
      which we receive reimbursement. See Item 13, “Related Transactions with Our
      General Partner and Its Affiliates.”




There
      are
      no family relationships between or among any of our directors and/or executive
      officers.




**Employment
      Agreements**




***Icahn
      Employment Agreement***




Pursuant
      to the Icahn Employment Agreement, over a five-year term, Mr. Icahn will serve
      as the Chairman and Chief Executive Officer of New Icahn Management, in addition
      to his current role as Chairman of Icahn Enterprises. Mr. Icahn also serves
      as
      the Chief Executive Officer of the General Partners. During the employment
      term,
      Mr. Icahn will receive an annual base salary of $900,000 and an annual incentive
      bonus based on a bonus formula with two components. The first component is
      based
      on the annual return on assets under management by the Private Funds. The second
      component of the annual bonus payable by us is tied to the growth in our annual
      net income (other than income or losses resulting from the operations of our
      Investment Management business).




Fifty
      percent of all bonus amounts payable are subject to mandatory deferral and
      treated as though invested in the Private Funds and subject to a 2% annual
      fee
      (but no incentive allocation). Such deferred amounts are subject to vesting
      in
      equal annual installments over a three-year period commencing from the last
      day
      of the year giving rise to the bonus. Amounts deferred generally are not subject
      to acceleration and unvested deferred amounts will be forfeited if Mr. Icahn
      ceases to be employed under his employment agreement, provided that all deferred
      amounts will vest in full and be payable in a lump sum payment thereafter if
      the
      employment of Mr. Icahn is terminated without Cause, Mr. Icahn terminates his
      employment for Good Reason (as such terms are defined in the Icahn Employment
      Agreement), or upon Mr.
      Icahn’s death or disability during the employment term. In addition, upon Mr.
      Icahn’s completion of service through the end of the employment term, Mr. Icahn
      will also vest in full in any mandatory deferrals. Vested deferred amounts
      (and
      all deferred returns, earnings and profits thereon) are payable to Mr. Icahn
      within 60 days following the vesting date. Returns on amounts subject to
      deferral also are subject to 2% annual management fees charged by New Icahn
      Management.




154
 TABLE
          OF CONTENTS




Effective
      January 1, 2008, the Icahn Employment Agreement was amended to provide the
      following: (i) references to “management fee” in section 1(a) and section 2(a)
      in Exhibit A therein was deleted and replaced with “special profits interest
      allocation”; and (ii) notwithstanding the fact that the management fee is being
      terminated, the obligation to pay a 2% fee as set forth in Section 6 of the
      Icahn Employment Agreement and in Section 3 in Exhibit A therein will remain
      in
      effect as an obligation to pay a 2% fee.




In
      the
      event that Mr. Icahn is terminated without “Cause” or he terminates his
      employment for “Good Reason” (which is limited to defined events relating to a
      material adverse change in his position and responsibilities, a material breach
      of the Icahn Employment Agreement by the employer or the relocation of his
      principal place of work) prior to the end of the term, he will be entitled
      to a
      lump sum payment equal to (i) one year of base salary, (ii) the average Annual
      Bonus Incentive (as defined in the Icahn Employment Agreement) paid to him
      during the three most recently completed years (or the average Annualized Bonus
      Incentive paid to him for any shorter period during which he has been employed
      as further adjusted if such termination occurs prior to December 31, 2008)
      (the
“Average Bonus”) and (iii) a *pro
      rata* Annual
      Bonus Incentive for the year of termination. If, within 12 months following
      the
      occurrence of a change in control, Mr. Icahn is terminated without “Cause” or he
      resigns for “Good Reason,” Mr. Icahn will be entitled to a payment equal to two
      times his base salary and two times the Average Bonus and the *pro
      rata* Annual
      Bonus Incentive for the year of termination. If Mr. Icahn is terminated as
      a
      result of his death or disability, he (or his estate, if applicable) will
      receive a lump sum payment equal to the remaining base salary payable through
      December 31 of the year of termination and one-half of the *pro
      rata* Annual
      Bonus Incentive for the year of termination. If Mr. Icahn voluntarily terminates
      (without Good Reason), he will receive a lump sum payment equal to one-half
      of
      the *pro
      rata* Annual
      Bonus Incentive for the year of termination. In the event of early termination
      for any reason, Mr. Icahn would also be entitled to his accrued and unpaid
      salary, accrued vacation pay, and accrued but unpaid Annual Bonus Incentive
      for
      the prior year except if he is terminated for “Cause” or if he voluntarily
      terminates (without Good Reason) he will only receive 50% of unpaid Annual
      Bonus
      Incentive for the prior year. All such payments will be conditioned on Mr.
      Icahn
      (or his estate, if applicable) signing a general release in favor of Icahn
      Enterprises and its affiliates.




***Meister
      Employment Agreement***




Keith
      A.
      Meister entered into an agreement dated as of December 31, 2004 (referred to
      as
      the Original Agreement) with Icahn Management, the General Partners, Icahn
      Associates Corp., or IAC, High River Limited Partnership, or High River, and
      each entity beneficially owned 100% by Carl C. Icahn which has its offices
      at
      767 Fifth Avenue, New York, New York 10153, for so long as it remains
      beneficially owned 100% by Carl C. Icahn (referred to as the Icahn Entities)
      (IAC, High River and the Icahn Entities together being referred to as the Icahn
      Related Entities).




On
      August
      8, 2007, (i) Icahn Management assigned the Original Agreement (as amended)
      to
      New Icahn Management, whereby New Icahn Management succeeded to Icahn
      Management’s obligations as the “Employer” thereunder and Icahn Management
      retained the liabilities and obligations arising prior to August 8, 2007 and
      (ii) Icahn Enterprises became jointly and severally liable for the obligations
      of New Icahn Management thereunder. On January 1, 2008, the Original Agreement
      (as amended) was further amended (as amended through such date, the Meister
      Employment Agreement) to, among other things, (a) substitute Icahn Capital
      as
      the “Employer” thereunder and (b) provide that Icahn Enterprises will be jointly
      and severally obligated for the obligations of Icahn Capital and the General
      Partners thereunder.




The
      term
      of the Meister Employment Agreement runs from January 1, 2005 until December
      31,
      2011 unless sooner terminated (referred to as the Term). Mr. Meister is employed
      to act as a senior executive officer with the title of Managing Director. Mr.
      Meister agrees to work for any or all of the Icahn Related Entities for the
      aggregate consideration described below. In addition to the compensation
      described below, Mr. Meister is entitled
      to three weeks of paid vacation annually and participates in all benefit
      programs and plans for which he is eligible which are made available to all
      senior executive employees of Icahn Related Entities.




155
 TABLE
          OF CONTENTS




Mr.
      Meister is entitled to receive cash compensation during the Term equal to (i)
      a
      base salary at the rate of $500,000 per annum less the aggregate salary and/or
      director fees actually paid to him in respect of such year by or on behalf
      of
      Icahn Enterprises GP, Icahn Enterprises Holdings and Icahn Enterprises, if
      any,
      which net amount is earned and payable every two weeks; *plus* (ii) a
      bonus equal to $1,000,000 per annum which is earned and payable on June 10
      of
      each calendar year (referred to as the Bonus); *plus* (iii)
      from January 1, 2008, the Net Target Special Profits Interest Amount described
      below.




Prior
      to
      January 1, 2008, Icahn Management and New Icahn Management provided
      administrative and back office services (referred to as the Services) to the
      Private Funds pursuant to management agreements.




Prior
      to
      January 1, 2008, Mr. Meister was entitled during the Term to receive, in
      addition to his cash compensation described above: (i) until December 31, 2005,
      2.5% of the management fees payable by the Onshore Fund and the Feeder Funds
      under their management agreements and 2.5% of the incentive allocations
      allocated to the General Partners by the Onshore Fund and the Offshore Master
      Funds, each subject to vesting; and (ii) from January 1, 2006, 4.0% of the
      management fees payable by the Onshore Fund and the Feeder Funds net of the
      expenses incurred by Icahn Management (until August 8, 2007) and by New Icahn
      Management (after such date) in providing the Management Services to the Private
      Funds, and 4.0%, of the incentive allocations allocated to the General Partners
      by the Onshore Fund and the Offshore Master Funds, in each case 1.5% being
      payable currently and 2.5% being subject to vesting.




On
      January 1, 2008, (i) the management agreements and the management fees 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 (as such term is defined in their respective limited partnership
      agreements).




Effective
      January 1, 2008, the Meister Employment Agreement was amended to provide that
      his former right to receive 4.0% of the net management fees was terminated,
      and
      for all periods during the Term from and after January 1, 2008 he is entitled
      to
      receive: (i) from Icahn Capital as additional cash compensation on the first
      day
      of each quarter, 1.5% of the Target Special Profits Interest Amounts of the
      limited partners of the Onshore Fund and the Offshore Master Funds net of the
      General Partners’ expenses incurred in providing the Management Services to the
      Private Funds (with the Target Special Profits Interest Amounts and General
      Partners’ and/or their affiliates’ expenses being defined such that the 1.5% of
      net Target Special Profits Interest Amounts that Mr. Meister will receive will
      be computed in the same manner as the 1.5% interest in the net management fees
      Mr. Meister was previously entitled to receive) (each net amount being referred
      to as the Net Target Special Profits Interest Amount); and (ii) from the General
      Partners, 2.5% of their Special Profits Interest Allocations, if any, again
      net
      of the General Partners’ and/or their affiliates’ expenses incurred in providing
      the Management Services to the Private Funds (referred to as the Net Special
      Profits Interest Allocation).




As
      noted
      above, the 1.5% interest in net management fees and incentive allocations added
      to Mr. Meister’s compensation from January 1, 2006, and the Net Target Special
      Profits Interest Amount replacing his 1.5% interest in net management fees
      from
      January 1, 2008, are payable currently. The 2.5% balance of Mr. Meister’s
      interest in net management fees and incentive allocations, and his 2.5% interest
      in Net Special Profits Interest Allocations replacing his 2.5% interest in
      net
      management fees from January 1, 2008, (collectively, referred to as his Profit
      Participation) are subject to vesting. Amounts equal to Mr. Meister’s Profit
      Participation as earned by or allocated to him are invested by the General
      Partners in the Onshore Fund and Offshore Master Funds and his Profit
      Participation includes all gains and losses earned thereon. Mr. Meister’s Profit
      Participation (including the gains and losses thereon) vests, but only while
      Mr.
      Meister is an employee pursuant to the Meister Employment Agreement, at the
      rate
      of 14.285% per annum, vesting ratably on a monthly basis so that on December
      31,
      2011 the entire Profit Participation will be fully vested. Vesting of the Profit
      Participation will accelerate such that the Profit Participation will be 100%
      vested upon the occurrence of any of the following events during the Term:
      (i)
      the termination of Mr. Meister’s employment by Icahn Capital
      or the Icahn Related Entities without cause; (ii) neither the General Partners
      nor their respective successors are engaged in the ongoing management of the
      Private Funds; (iii) Mr. Carl C. Icahn sells all or substantially all of his
      beneficial interests in the General Partners and Icahn Capital to an unrelated
      third party; or (iv) the failure to pay any cash compensation due Mr. Meister
      within five business days following his written demand.




156
 TABLE
          OF CONTENTS




In
      addition, the portion of Mr. Meister’s Profit Participation made up of his 2.5%
      interest in management fees received by Icahn Management and New Icahn
      Management through December 31, 2007 (referred to as the Management Fee
      Participation) was deferred by Mr. Meister until January 30, 2012 and may not
      be
      withdrawn by him prior to such date except upon the following events (subject
      to
      certain qualifications and limitations): (i) 100% of the Management Fee
      Participation may be withdrawn upon the dissolution or liquidation of the Feeder
      Funds, the death or disability of Mr. Meister, the cessation of his employment
      for any reason, or a change in the applicable tax regulations that would cause
      the General Partners to be subject to current income taxes with respect to
      applicable amounts deferred; and (ii) upon the occurrence of an Unforeseeable
      Emergency (as defined in the applicable tax regulations) other than disability,
      the amount needed to satisfy the financial need giving rise to such
      Unforeseeable Emergency may be withdrawn.




Icahn
      Capital or any of the Icahn Related Entities may terminate the Term and the
      employment of Mr. Meister under the Meister Employment Agreement on behalf
      of
      and in respect of all persons employing Mr. Meister, at any time, with cause
      or
      in their sole and absolute discretion without cause. In the event that Mr.
      Meister’s employment is terminated: (i) for cause or by his action such as by
      resignation or retirement, then Mr. Meister will be paid the entire amount
      of
      the cash compensation earned through the date of termination but not yet paid
      (no prorated Bonus being payable in respect of a partial bonus year); (ii)
      by
      the Employer or the Icahn Related Entities without cause, then, unless the
      provisions of clause (iii) below apply, Mr. Meister will be paid the entire
      amount of cash compensation earned through the date of termination and not
      yet
      paid and a *pro
      rata* portion
      of a single $1,000,000 Bonus (based upon the number of days elapsed in the
      period beginning on the June 10 prior to such termination to the date of
      termination, divided by 365); or (iii) by death or disability, then Mr. Meister
      or his estate will be paid the entire amount of cash compensation earned through
      the date of his death or disability but not yet paid (no prorated Bonus being
      payable in respect of a partial bonus year). Upon any termination of Mr.
      Meister’s employment he will also be entitled to receive the unpaid vested
      amounts of his Profit Participation.




Mr.
      Meister is subject to a covenant not to solicit any employees of, or to compete
      with, the Private Funds, the General Partners, Icahn Capital or any other Icahn
      Related Entity during the Term and for one year thereafter except that his
      non-competition covenant shall not extend beyond the end of the Term if the
      Meister Employment Agreement is terminated by Mr. Meister for failure to pay
      him
      any amounts due thereunder.




*Shea
      Employment Agreement*




Pursuant
      to the Shea Employment Agreement, Mr. Shea receives an annual base salary of
      $450,000 and is eligible for a discretionary bonus, to be determined by the
      board of directors of Icahn Enterprises GP, of up to 50% of his base salary.
      The
      Shea Employment Agreement has a two-year term, ending December 31, 2008, and
      may
      be terminated by Mr. Shea at any time upon 30 days’ prior written notice or by
      us at any time. If Mr. Shea’s employment is terminated by us without Cause (as
      defined therein), Mr. Shea will be entitled to receive (1) any amount of base
      salary previously earned through the date of termination and unpaid and (2)
      a
      lump sum payment in the amount of $225,000. The employment agreement also
      contains non-disclosure, non-compete and non-solicitation
      provisions.




**Stock
      Award, Option and Non-Equity Incentive Plans**




We
      do not
      have any stock award, option or non-equity incentive plans. There were no stock
      awards, options or other similar awards outstanding at December 31, 2007, nor
      were there any exercise of options or other similar awards during fiscal
      2007.


157
 TABLE
          OF CONTENTS




**Nonqualified
      Deferred Compensation Table**





**Name**
              **(a)**
            
            **Executive
                Contributions in Last Fiscal Year****(1)**
              **(b)**
            
            **Company
                Contributions in Last Fiscal Year**
              **(c)**
            
            **Aggregate**
              **Earnings
                (Loss) in**
              **Last
                Fiscal**
              **Year**
              **(d)**
            
            **Aggregate**
              **Withdrawals/**
              **Distributions**
              **(e)**
            
            **Aggregate
                Balance at Last Fiscal Year End****(2)**
              **(f)**Keith
                A. Meister
            
            $
            517,145
            
            $
            —
            
            $
            (8,705
            )
            
            —
            
            $
            508,440




(1)
            The
                amount reported in column (b) reflects mandatory deferrals of management
                fees of Mr. Meister pursuant to the Meister Employment Agreement
                earned by
                and paid to Mr. Meister in fiscal 2007. This amount is reported as
                compensation in the Summary Compensation
                Table.





(2)
            The
                amount reported in column (f) for Mr. Meister was not reported in
                the
                Company’s Summary Compensation Table in previous years, since the Company
                did not control the General Partners or New Icahn Management prior
                to
                August 8, 2007.




As
      noted
      above, pursuant to the Meister Employment Agreement, Mr. Meister deferred,
      until
      January 30, 2012, a portion of his annual management fees that he was eligible
      to receive and such deferrals are deemed invested in the Feeder Funds. Such
      mandatory deferral arrangements are made on an unfunded nonqualified deferred
      compensation basis. For fiscal 2007, Mr. Meister received management fees in
      an
      amount of $848,990, equal to 4.0% of the net management fees received by New
      Icahn Management from the Onshore Fund and the Feeder Funds, of which $517,145
      (equal to 2.5% of the total) is subject to vesting and was deferred by Mr.
      Meister, offset by a loss of $8,705 on the current year deferred management
      fees
      that were deemed invested in the Feeder Funds. The management fees paid to
      Mr.
      Meister for fiscal 2007 represent his share of such fees for that year since
      the
      acquisition of the Partnership Interests on August 8, 2007. Upon termination
      of
      employment of Mr. Meister for any reason, Mr. Meister would be entitled to
      receive all deferrals payable in a lump sum. See “Additional Information
      Regarding Executive Compensation — Employment Agreements” for a
      further discussion of the Meister Employment Agreement, including the annual
      mandatory management fee deferrals.




Neither
      Icahn Enterprises nor us make any matching contributions in respect of the
      management fee deferrals. Pursuant to the Meister Employment Agreement, Mr.
      Meister’s deferrals vest at 14.285% annually. Vesting will accelerate at any
      time that Mr. Meister’s employment is terminated without cause (as defined in
      the agreement).




**Potential
      Payments Upon Termination or Change in Control**




The
      following tables summarize the value of the termination payments and benefits
      that Messrs. Icahn, Meister and Shea would receive if they had terminated
      employment on December 31, 2007 (the last day of fiscal 2007) under the
      circumstances shown, pursuant to the Icahn Employment Agreement, the Meister
      Employment Agreement and the Shea Employment Agreement, respectively. For a
      further description of the employment agreements, see “ — Employment
      Agreements.” The tables exclude (i) amounts accrued through December 31, 2007
      that would be paid in the normal course of continued employment, such as accrued
      but unpaid salary for fiscal 2007 and reimbursed business expenses and (ii)
      vested account balances under the 401(k) Plan that is generally available to
      all
      of our employees. The tables include bonuses accrued but not yet paid for fiscal
      2007 to the extent a *pro
      rata* bonus is
      payable in respect of fiscal 2007 under the applicable
      circumstances.




Neither
      we nor Icahn Enterprises have entered into any other employment agreements,
      severance agreements or any other type of termination or change in control
      agreements with any of our named executive officers, except for the employment
      agreements referenced above. Andrew R. Skobe is not entitled to any payments
      in
      connection with any termination, including, without limitation, resignation,
      severance, retirement, death, disability, without cause or as a result of a
      change in control. Hillel Moerman did not receive any payments in respect of
      his
      termination as Chief Financial Officer on March 28, 2007.




158
 TABLE
          OF CONTENTS


**Carl
      C. Icahn**




**Benefit**
            
            **Death
                or Disability**
              **($)**
            
            **Termination
                by Company Without Cause or by Executive with Good
                Reason**
              **($)**
            
            **Termination
                by Company with Cause or by**
              **Executive
                Without Good Reason (Including Retirement) ($)**
            
            **Termination
                without Cause or for Good Reason Within 12 Months Following Change
                in
                Control**
              **($)**Cash
                Severance
            
            
            —
            (1)
            
            900,000
            (2)
            
            —
            (3)
            
            1,800,000
            (4)Acceleration
                of unvested mandatory deferrals
            
            
            —
            (5)
            
            —
            (5)
            
            —
            
            
            —
            (5)Health
                & Welfare Benefits
            
            
            —
            (6)
            
            —
            (6)
            
            —
            (6)
            
            —
            (6)Total
            
            
            —
            
            
            900,000
            
            
            —
            
            
            1,800,000




(1)
            Excluding
                accrued, but unpaid, base salary, executive (or his estate, if applicable)
                would be entitled to receive a lump sum payment equal to any unpaid
                bonus
                relating to prior years. Mr. Icahn did not receive an annual bonus
                for
                fiscal 2007.





(2)
            Excluding
                accrued, but unpaid, base salary, executive would be entitled to
                receive a
                lump sum payment equal to one year of base salary, plus the Average
                Bonus
                (as defined in the Icahn Employment Agreement). Mr. Icahn did not
                receive
                an Average Bonus for fiscal 2007.





(3)
            Excluding
                accrued, but unpaid, base salary, executive would be entitled to
                receive a
                lump sum payment equal to one-half of any unpaid bonus relating to
                prior
                years. Mr. Icahn did not receive an annual bonus for fiscal
                2007.





(4)
            Excluding
                accrued, but unpaid, base salary, executive would be entitled to
                receive a
                lump sum payment equal to two times his base salary, plus two times
                the
                Average Bonus. Mr. Icahn did not receive an Average Bonus for fiscal
                2007.





(5)
            Reflects
                amount of any bonus mandatorily deferred that would have been previously
                subject to vesting but for which vesting would be accelerated upon
                triggering event payable in a lump sum. Executive would also be fully
                vested in any mandatorily deferred bonus upon completion of service
                through the end of his employment term. Mr. Icahn did not receive
                any
                bonus for fiscal 2007.





(6)
            Executive
                is entitled to continued participation in the group health plan,
                assuming he makes a timely election of continuation coverage under
                the
                Consolidated Omnibus Budget Reconciliation act of 1985, as amended,
                or
                COBRA, at the executive’s expense.




**Keith
      A. Meister**





**Benefit**
            
            **Retirement
                or**
              **Resignation
                ($)**
            
            **Death
                or Disability**
              **($)**
            
            **Termination
                by Company Without Cause**
              **($)**
            
            **Termination
                by Company with Cause**
              **($)**
            
            **Termination
                Following Change in Control**
              **($)**Cash
                Severance
            
            
            —
            (1)
            
            —
            (1)
            
            317,808
            (2)
            
            —
            (1)
            
            —
            (3)Payment
                of Deferred Management Fees
            
            
            217,903
            (4)
            
            217,903
            (4)
            
            508,439
            (4)
            
            217,903
            (4)
            
            217,903
            (4)Acceleration
                of unvestedManagement
                Fees and Incentive Allocations
            
            
            —
            
            
            —
            
            
            5,642,422
            (5)
            
            —
            
            
            —Health
                & Welfare Benefits
            
            
            —
            (6)
            
            —
            (6)
            
            —
            (6)
            
            —
            (6)
            
            —
            (6)Total
            
            
            217,903
            
            
            217,903
            
            
            6,468,669
            
            
            217,903
            
            
            217,903




(1)
            Executive
                would not be entitled to receive any payments, excluding accrued,
                but
                unpaid, base salary; executive would not be entitled to any*pro
                rata*portion of his bonus for fiscal
                2007.





(2)
            Excluding
                accrued, but unpaid, base salary, executive would be entitled to
                receive a*pro
                rata*portion of his $1,000,000 annual bonus for fiscal
                2007.





(3)
            Executive
                would not be entitled to any specific payments upon a change in control,
                other than such payments
                that executive would otherwise be entitled to if termination upon
                a change
                in control was by reason of a termination by the company without
                cause or
                by Executive for Good
                Reason.




159
 TABLE
          OF CONTENTS




(4)
            Reflects
                amount of any management fees mandatorily deferred that are payable
                in a
                lump sum upon triggering event. Payment of management fee deferrals
                upon
                termination by the company without cause includes the acceleration
                of
                vesting of deferrals that would be triggered upon such event. Mandatory
                deferrals of management fees for fiscal 2007 are included and identified
                under the column entitled “All Other Compensation” in the Summary
                Compensation Table as well as in the Nonqualified Deferred Compensation
                Table.





(5)
            Reflects
                amount of management fees and incentive allocations, if any, that
                would
                have been previously subject to vesting but for which vesting would
                be
                accelerated upon termination of the executive by the Company without
                Cause
                pursuant to the Meister Employment
                Agreement.





(6)
            Executive
                is entitled to continued participation in the group health plan,
                assuming he makes a timely election of continuation coverage under
                COBRA,
                at the executive’s expense.




**Peter
      A. Shea**





**Benefit**
            
            **Retirement
                or**
              **Resignation
                ($)**
            
            **Death
                or Disability**
              **($)**
            
            **Termination
                by Company Without Cause**
              **($)**
            
            **Termination
                by Company with Cause or by**
              **Executive
                Without Good Reason**
              **($)**
            
            **Termination
                Following Change in Control**
              **($)**Cash
                Severance
            
            
            —
            (1)
            
            —
            (1)
            
            225,000
            (2)
            
            —
            (1)
            
            —
            (3)Health
                & Welfare Benefits
            
            
            —
            (4)
            
            —
            (4)
            
            —
            (4)
            
            —
            (4)
            
            —
            (4)Total
            
            
            —
            
            
            —
            
            
            225,000
            
            
            —
            
            
            —




(1)
            Executive
                would not be entitled to receive any payments, excluding accrued,
                but
                unpaid, base salary; executive would not be entitled to any*pro
                rata*portion of his bonus for fiscal
                2007.





(2)
            Excluding
                accrued, but unpaid, base salary, executive would be entitled to
                receive a
                lump sum in the amount of $225,000.





(3)
            Executive
                is not entitled to any specific payments upon a change in control,
                other
                than such payments that executive would otherwise be entitled to
                if
                termination upon a change in control was by reason of a termination
                by the
                Company without Cause.





(4)
            Executive
                is entitled to continued participation in the group health plan,
                assuming he makes a timely election of continuation coverage under
                COBRA,
                at the executive’s expense.




**Director
      Compensation**




The
      following table provides compensation information for the directors of
      Icahn Enterprises LP in fiscal 2007, except for Messrs. Icahn and Meister.
      Compensation received by Messrs. Icahn and Meister is included in the Summary
      Compensation Table.


**Name**
            
            **FeesEarned
                or Paid**
              **in
                Cash**
              **($)**
            
            **All
                Other**
              **Compensation**
              **($)**
            
            **Total**
              **($)**Vincent
                J. Intrieri(1)
            
            
            —
            
            
            3,702,735
            
            
            3,702,735William
                A. Leidesdorf
            
            
            55,000
            
            
            25,000
            
            
            80,000James
                L. Nelson
            
            
            55,000
            
            
            25,000
            
            
            80,000Jack
                G. Wasserman
            
            
            55,000
            
            
            50,000
            
            
            105,000




(1)
            Mr.
                Intrieri did not receive director fees from Icahn Enterprises GP in
                fiscal 2007. Pursuant to an employment agreement by and among Icahn
                Enterprises, New Icahn Management, Mr. Intrieri and the other parties
                referred to therein (referred to as the Intrieri Employment Agreement),
                during fiscal 2007, Mr. Intrieri served as a Senior Managing Director
                of
                New Icahn Management. The “All Other Compensation” paid or allocated to
                (or deferred by) Mr. Intrieri for fiscal 2007 pursuant to the Intrieri
                Employment Agreement includes the following: (i) salary and bonus
                for
                services as Senior Managing Director of New Icahn Management in the
                amounts of
                $127,123 and $397,260, respectively, reflecting a*pro
                rata*share of his annual salary and bonus from August 8, 2007; (ii) an
                amount
                of $1,783,115, equal to 2.5% of the incentive allocations allocated
                to the
                General Partners by the Onshore Fund and the Offshore Master Funds,
                which
                is subject to vesting; (iii) earnings on Mr. Intrieri’s share of prior
                year incentive allocations that were reinvested in the amount of
                $592,703;
                and (iv) an amount of $817,145, equal to 2.5% of gross management
                fees
                payable by the Onshore Fund and the Feeder Funds, which is subject
                to
                vesting and was deferred by Mr. Intrieri for fiscal 2007, offset
                by a loss
                of $14,611 on current year deferred management fees that were deemed
                invested in the Feeder Funds. The management fees paid to Mr. Intrieri
                for
                fiscal 2007 as indicated in the above table represents his share
                of such
                fees for that year since the acquisition of the Partnership Interests
                on
                August 8, 2007. The incentive allocations allocated to Mr. Intrieri
                for
                fiscal 2007 indicated in the above table represents all incentive
                allocations made for such year because Icahn Enterprises assumed
                the right
                to receive all incentive allocations allocated to the General Partners
                in
                fiscal 2007, including incentive allocations allocated prior to the
                acquisition of the Partnership Interests. See “Intrieri Employment
                Agreement” below for a further discussion of the Intrieri Employment
                Agreement.




160
 TABLE
          OF CONTENTS




Each
      director will hold office until his successor is elected and qualified.
      Directors who are also audit committee members each received fees of $55,000
      in
      fiscal 2007 and may receive additional compensation for special committee
      assignments. In fiscal 2007, Messrs. Leidesdorf, Nelson and Wasserman received
      special committee fees of $25,000, $25,000 and $50,000
      respectively.




Directors
      receive only cash compensation, if applicable, and currently are not granted
      any
      options, units or other equity-based awards.




***Intrieri
      Employment Agreement***




Vincent
      J. Intrieri entered into an agreement dated as of December 31, 2004 (referred
      to
      as the Original Agreement) with Icahn Management, the General Partners, Icahn
      Associates Corp., or IAC, High River Limited Partnership, or High River, and
      each entity beneficially owned 100% by Carl C. Icahn which has its offices
      at
      767 Fifth Avenue, New York, New York 10153, for so long as it remains
      beneficially owned 100% by Carl C. Icahn (referred to as the Icahn Entities)
      (IAC, High River and the Icahn Entities together being referred to as the Icahn
      Related Entities).




On
      August
      8, 2007, (i) Icahn Management assigned the Original Agreement (as amended)
      to
      New Icahn Management, whereby New Icahn Management succeeded to Icahn
      Management’s obligations as the “Employer” thereunder and Icahn Management
      retained the liabilities and obligations arising prior to August 8, 2007 and
      (ii) Icahn Enterprises agreed to pay Mr. Intrieri any amounts that were not
      paid
      to him by New Icahn Management when due. On January 1, 2008, the Original
      Agreement (as amended) was further amended (as amended through such date, the
      Intrieri Employment Agreement) to, among other things, (a) substitute Icahn
      Capital as the “Employer” thereunder and (b) provide that Icahn Enterprises will
      be jointly and severally obligated for the obligations of Icahn Capital and
      the
      General Partners thereunder.




The
      term
      of the Intrieri Employment Agreement runs from January 1, 2005 until December
      31, 2011 unless sooner terminated (referred to as the Term). Mr. Intrieri is
      employed to act as a senior executive officer with the title of Senior Managing
      Director. Mr. Intrieri agrees to work for any or all of the Icahn Related
      Entities for the aggregate consideration described below. In addition to the
      compensation described below, Mr. Intrieri is entitled to three weeks of paid
      vacation annually and participates in all benefit programs and plans for which
      he is eligible which are made available to all senior executive employees of
      Icahn Related Entities.




Mr.
      Intrieri is entitled to receive cash compensation during the Term equal to
      (i) a
      base salary at the rate of $400,000 per annum, which amount is earned and
      payable every two weeks; *plus* (ii) a
      bonus of between $1,000,000 and $1,250,000 per annum, as determined by the
      Icahn
      Related Entities, earned on each December 31 during the Term and payable at
      the
      end of each calendar year (referred to as the Bonus).




Prior
      to
      January 1, 2008, Icahn Management and New Icahn Management provided
      administrative and back office services (referred to as the Services) to the
      Private Funds pursuant to management agreements.




161
 TABLE
          OF CONTENTS




Prior
      to
      January 1, 2008 Mr. Intrieri was entitled during the Term to receive, in
      addition to his cash compensation described above, 2.5% of the gross management
      fees payable by the Onshore Fund and the Feeder Funds under their management
      agreements and 2.5% of the incentive allocations allocated to the General
      Partners by the Onshore Fund and the Offshore Master Funds, each subject to
      vesting.




On
      January 1, 2008, (i) the management agreements and the management fees 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 Management
      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 (as such term is defined in their respective limited
      partnership agreements).




Effective
      January 1, 2008, the Intrieri Employment Agreement was amended to provide that
      his former right to receive 2.5% of the management fees was terminated, and
      for
      all periods during the Term from and after January 1, 2008 he is entitled to
      receive from the General Partners, 2.5% of their Special Profits Interest
      Allocations, if any.




Mr.
      Intrieri’s 2.5% interest in management fees and incentive allocations, and his
      2.5% interest in the General Partners’ Special Profits Interest Allocations
      replacing his 2.5% interest in management fees from January 1, 2008,
      (collectively referred to as his Profit Participation) are subject to vesting.
      Amounts equal to Mr. Intrieri’s Profit Participation as earned by or allocated
      to him are invested by the General Partners in the Onshore Fund and Offshore
      Master Funds and his Profit Participation includes all gains and losses earned
      thereon. Mr. Intrieri’s Profit Participation (including the gains and losses
      thereon) vests, but only while Mr. Intrieri is an employee under the Intrieri
      Employment Agreement, at varying rates so that on December 31, 2009 the entire
      Profit Participation will be fully vested.




In
      addition, the portion of Mr. Intrieri’s Profit Participation made up of his 2.5%
      interest in management fees received by Icahn Management and New Icahn
      Management through December 31, 2007 (referred to as the Management Fee
      Participation) was deferred by Mr. Intrieri until January 30, 2010 and may
      not
      be withdrawn by him prior to such date except upon the following events (subject
      to certain qualifications and limitations): (i) 100% of the Management Fee
      Participation may be withdrawn upon the dissolution or liquidation of the Feeder
      Funds, the death or disability of Mr. Intrieri, the cessation of his employment
      for any reason, or a change in the applicable tax regulations that would cause
      the General Partners to be subject to current income taxes with respect to
      applicable amounts deferred; and (ii) upon the occurrence of an Unforeseeable
      Emergency (as defined in the applicable tax regulations) other than disability,
      the amount needed to satisfy the financial need giving rise to such
      Unforeseeable Emergency may be withdrawn.




Icahn
      Capital or any of the Icahn Related Entities may terminate the Term and the
      employment of Mr. Intrieri under the Intrieri Employment Agreement on behalf
      of
      and in respect of all persons employing Mr. Intrieri, at any time, with cause,
      or in their sole and absolute discretion without cause. In the event that Mr.
      Intrieri’s employment is terminated: (i) for cause (as defined therein) or by
      his action such as by resignation or retirement, then Mr. Intrieri will be
      paid
      the entire amount of the cash compensation earned through the date of
      termination but not yet paid (no prorated Bonus being payable in respect of
      a
      partial calendar year); or (ii) by the Employer or the Icahn Related Entities
      without cause (or by his death), Mr. Intrieri (or his estate) will be paid
      the
      entire amount of cash compensation earned through the date of termination (or
      death) and not yet paid and a *pro
      rata* portion
      of a single $1,000,000 Bonus (based upon the number of days elapsed from the
      most recent January 1 until the date of termination, divided by 365). Upon
      any
      termination of Mr. Meister’s employment he will also be entitled to receive the
      unpaid vested amounts of his Profit Participation.




**Item
      12. Security Ownership of Certain Beneficial Owners and
      Management and Related Security Holder Matters.**




As
      of
      March 1, 2008, affiliates of Mr. Icahn, including High Coast Limited
      Partnership, a Delaware limited partnership, owned 64,288,061 depositary units
      of Icahn Enterprises, or approximately 91.2% of the outstanding depositary
      units, and 10,304,013 preferred units of Icahn Enterprises, or approximately
      86.5%, of the outstanding preferred units. Icahn Enterprises owns all of our
      outstanding limited partnership interests.




162
 TABLE
          OF CONTENTS




The
      affirmative vote of unitholders holding more than 75% of the total number of
      all
      depositary units then outstanding, including depositary units held by Icahn
      Enterprises GP and its affiliates, is required to remove Icahn Enterprises
      GP as
      general partner of Icahn Enterprises. Thus, since Mr. Icahn, through affiliates,
      holds approximately 91.2% of the outstanding depositary units of Icahn
      Enterprises, Icahn Enterprises GP will not be able to be removed pursuant to
      the
      terms of Icahn Enterprises’ partnership
      agreement without Mr. Icahn’s consent. Moreover, under the partnership
      agreement, the affirmative vote of Icahn Enterprises GP and unitholders owning
      more than 50% of the total number of all outstanding depositary units then
      held
      by Icahn Enterprises unitholders, including affiliates of Mr. Icahn, is required
      to approve, among other things, selling or otherwise disposing of all or
      substantially all of Icahn Enterprises’ assets
      in a
      single sale or in a related series of multiple sales, our dissolution or
      electing to continue Icahn Enterprises in certain instances, electing a
      successor general partner, making certain amendments to the partnership
      agreement or causing Icahn Enterprises, in its capacity as our sole limited
      partner, to consent to certain proposals submitted for the approval of our
      limited partners. Accordingly, as affiliates of Mr. Icahn hold in excess of
      50%
      of the outstanding depositary units of Icahn Enterprises, Mr. Icahn,
      through affiliates, will have effective control over such approval
      rights.




The
      following table provides information, as of March 1, 2008, as to the beneficial
      ownership of the depositary units and preferred units of Icahn
      Enterprises for each director of Icahn Enterprises GP and all directors and
      executive officers of Icahn Enterprises GP, as a group. Except for Mr. Icahn,
      none of our named executive officers beneficially owns any of the depositary
      units or preferred units.




**Name
                of Beneficial Owner**
            
            **Beneficial
                Ownership of Depositary Units**
            
            **Percent
                of Class**
            
            **Beneficial
                Ownership of Preferred Units**
            
            **Percent
                of Class**Carl
                C. Icahn(1)
            
            
            64,288,061
            
            
            91.2
            %
            
            10,304,013
            
            
            86.5
            %All
                directors and executive officers as a group(six
                persons)
            
            
            64,288,061
            
            
            91.2
            %
            
            10,304,013
            
            
            86.5
            %




(1)
            Carl
                C. Icahn, through affiliates, is the beneficial owner of the 64,288,061
                depositary units of Icahn Enterprises set forth above. The foregoing
                is exclusive of a 1.99% ownership interest which Icahn Enterprises
                GP
                holds by virtue of its 1% general partner interest in each of us
                and Icahn
                Enterprises.




**Item
      13. Certain Relationships and Related Transactions and Director
      Independence.**




**Related
      Party Transaction Policy**




Our
      amended and restated agreement of limited partnership expressly permits us
      to
      enter into transactions with our general partner or any of its affiliates,
      including, without limitation, buying or selling properties from or to our
      general partner and any of its affiliates and borrowing and lending money from
      or to our general partner and any of its affiliates, subject to the limitations
      contained in our partnership agreement and the Delaware Revised Uniform Limited
      Partnership Act. In general, a related person transaction is any transaction
      or
      any series of similar transactions in which we or our subsidiaries are a
      participant and any related person has a direct or indirect material interest.
      Examples of a related person include any person who is a director or executive
      officer of the general partner, a person known by us to be the beneficial owner
      of more than 5% of any class of our voting securities, any immediate family
      member of any of the foregoing, and any entity in which any of the foregoing
      persons is employed or has a 5% or greater beneficial ownership
      interest.




Our
      board
      of directors recognizes that related person transactions can present potential
      or actual conflicts of interest. Accordingly, we have followed and continue
      to
      follow certain procedures for reviewing related person transactions. These
      procedures are designed to ensure that transactions with related persons are
      fair to us and in our best interests. If a proposed transaction appears to
      or
      does involve a related person, the transaction is presented to the audit
      committee for review. The audit committee is authorized to retain and pay such
      independent advisors as it deems necessary to properly evaluate the proposed
      transaction, including, without limitation, outside legal counsel and financial
      advisors to determine the fair value of the transaction.




163
 TABLE
          OF CONTENTS




All
      related person transactions that have been approved or ratified by the audit
      committee are disclosed to the full board of directors. All related person
      transactions are also disclosed in our applicable filings if required by the
      Securities Act and the Exchange Act and related rules and
      regulations.




**Related
      Transactions with Our General Partner and Its Affiliates**




***Preferred
      and Depositary Units***




Mr.
      Icahn, in his capacity as majority unitholder of Icahn Enterprises, will not
      receive any additional benefit with respect to distributions and allocations
      of
      profits and losses not shared on a *pro
      rata* basis by
      all other unitholders. In addition, Mr. Icahn has confirmed to us that neither
      he nor any of his affiliates will receive any fees from us or Icahn Enterprises
      in consideration for services rendered in connection with non-real estate
      related investments by us or Icahn Enterprises. We have and in the future may
      determine to make investments in entities in which Mr. Icahn or his affiliates
      also have investments. We may enter into other transactions with Mr. Icahn
      and
      his affiliates, including, without limitation, buying and selling assets from
      or
      to affiliates of Mr. Icahn and participating in joint venture investments in
      assets with affiliates of Mr. Icahn, whether real estate or non-real estate
      related, provided the terms of all such transactions are fair and reasonable
      to
      us. Furthermore, it should be noted that our partnership agreement provides
      that
      Icahn Enterprises GP and its affiliates are permitted to have other business
      interests and may engage in other business ventures of any nature whatsoever,
      and may compete directly or indirectly with our business. Mr. Icahn and his
      affiliates currently invest in services with respect to assets that may be
      similar to those in which we may invest and Mr. Icahn and his affiliates intend
      to continue to do so. Pursuant to the partnership agreement, however, we will
      not have any right to participate therein or receive or share in any income
      or
      profits derived therefrom.




During
      fiscal 2007, Icahn Enterprises paid four quarterly distributions to holders
      of
      Icahn Enterprises’ depositary
      units.
      The first distribution was $0.10 per depositary unit and the remaining three
      distributions were each $0.15 per depositary units. Icahn Enterprises GP, as
      general partner, received its proportionate share of each distribution. On
      February 29, 2008, the board of directors approved an increase in the quarterly
      cash distribution from $0.15 to $0.25 per unit on its depositary units payable
      in the first quarter of fiscal 2008. The distribution will be paid on April
      1,
      2008 to Icahn Enterprises’depositary
      unitholders of record at the close of business on March 18, 2008.




The
      payment of future distributions will be determined by Icahn Enterprises GP’s
      board. In fiscal 2007, Icahn Enterprises GP was allocated approximately $205.3
      million of our net earnings as a result of its combined 1.99% general partner
      interests in us and Icahn Enterprises.




Pursuant
      to registration rights agreements, Mr. Icahn has certain registration rights
      with regard to Icahn Enterprises’depositary
      units
      and preferred units.




***Investments***




We
      may,
      on occasion, invest in securities in which entities affiliated with Mr. Icahn
      are also investing. Additionally, Mr. Icahn and his affiliated entities may
      also
      invest in securities in which Icahn Enterprises and its consolidated
      subsidiaries invest. Mr. Icahn, along with his affiliates (other than Icahn
      Enterprises and its affiliates), makes investments in the Private Funds. These
      investments are not subject to management fees or incentive allocations. As
      of
      December 31, 2007 and 2006, the total of these investments were $1.5 billion
      and
      $524.6 million, respectively.




***Acquisition
      of Investment Management Business***




On
      August
      8, 2007, Icahn Enterprises entered into the Contribution Agreement with the
      Contributors and Carl C. Icahn, pursuant to which we acquired the Partnership
      Interests, which consist of the general partnership interests in the General
      Partners and New Icahn Management. See Part I, Item 1, “Acquisition of
      Investment Management Business,” for further discussion.




Icahn
      Enterprises has also entered into an employment agreement with Mr. Icahn
      pursuant to which, over a five-year term, Mr. Icahn will serve as the Chairman
      and Chief Executive Officer of New Icahn Management, in addition to his current
      role as Chairman of Icahn Enterprises. Mr. Icahn also serves as the Chief
      Executive Officer of the General Partners. See Part III, Item 11, “Executive
      Compensation” for a further discussion of the Icahn Employment
      Agreement.




164
 TABLE
          OF CONTENTS




***Acquisition
      of PSC Metals***




On
      November 5, 2007, we acquired, through a subsidiary, all of the issued and
      outstanding capital stock of PSC Metals, from Philip, an affiliate of Carl
      C.
      Icahn. Carl C. Icahn indirectly owned a 95.6% interest and we indirectly owned
      the remaining 4.4% interest in Philip. See Part 1, Item 1, “Acquisition of PSC
      Metals,” for further discussion.




**Other
      Related Transactions**




For
      fiscal 2007, we paid approximately $0.9 million to an affiliate of Icahn
      Enterprises GP, XO Holdings, Inc., for telecommunication services.




In
      1997,
      we entered into a license agreement with Icahn Associates Corp. for office
      space. The license agreement expired in June 2005. In July 2005, we entered
      into
      a new license agreement with Icahn Associates Corp. for the non-exclusive use
      of
      approximately 1,514 square feet for which it pays monthly base rent of $13,000
      plus 16.4% of certain “additional rent.” 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 the
      Investment Management Entities. 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 the Investment Management Entities. 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 the Investment Management Entities.
      The license agreement expires in May 2012. Under the amended agreement, base
      rent is subject to increases in July 2008 and December 2011. The terms of the
      license agreement were reviewed and approved by the audit committee.
      Additionally, we are entitled to certain annual rent credits each December
      beginning December 2005 and continuing through December 2011. For fiscal 2007,
      we paid Icahn Associates Corp. $0.2 million for use of such office
      space.




Starfire,
      which is 100% owned by Mr. Icahn, occupies a portion of certain office space
      leased by us. Monthly payments from it for the use of the space began on October
      12, 2006. For fiscal 2007, we received $84,000 for the use of such
      space.




We
      may
      also enter into other transactions with Icahn Enterprises GP and its affiliates,
      including, without limitation, buying and selling properties and borrowing
      and
      lending funds from or to Icahn Enterprises GP or its affiliates, joint venture
      developments and issuing securities to Icahn Enterprises GP or its affiliates
      in
      exchange for, among other things, assets that they now own or may acquire in
      the
      future, provided the terms of such transactions are fair and reasonable to
      us.
      Icahn Enterprises GP is also entitled to reimbursement by us for all allocable
      direct and indirect overhead expenses, including, but not limited to, salaries
      and rent, incurred in connection with the conduct of our business.




In
      addition, from time to time, our employees may provide services to affiliates
      of
      Icahn Enterprises GP, with us being reimbursed therefor, and we may pay
      affiliates of Icahn Enterprises GP for administrative services provided to
      us.
      Reimbursement to us by such affiliates in respect of such services is subject
      to
      review and approval by our audit committee. In fiscal 2007, we were paid an
      aggregate of $1.0 million for services rendered by us to ImClone Foundation
      for
      a Greater Opportunity, Icahn Partners Masters Fund LP, XO Holdings, Viskase,
      Philip Services, ARI, Icahn Associates Corp., Federal-Mogul, and Blockbuster
      Inc., each of which is an affiliate of Mr. Icahn.




The
      Holding Company made three equal investments in September, October and November
      2007 aggregating $700 million in the Private Funds for which no management
      fees
      or incentive allocations are applicable. As of December 31, 2007, the total
      value of this investment is approximately $684.3 million, with an unrealized
      loss of $15.7 million for fiscal 2007. These amounts are eliminated in our
      consolidated financial statements.




Icahn
      Sourcing, LLC (“Icahn Sourcing”) is an entity formed and controlled by Carl C.
      Icahn in order to leverage the potential buying power of a group of entities
      with which Mr. Icahn has a relationship in negotiating with a wide range of
      suppliers of goods, services and tangible and intangible property. We are a
      member of the buying group and, as such, are afforded the opportunity to
      purchase goods, services and property from vendors with whom Icahn Sourcing
      has
      negotiated rates and terms. Icahn Sourcing does not guarantee that we will
      purchase any goods, services or property from any such vendors, and we are
      under
      no obligation to do so. We do not pay Icahn Sourcing any fees or other amounts
      with respect to the buying group arrangement. We have purchased a variety of
      goods and services as members of the buying group at prices and on terms that
      we
      believe are more favorable than those which would be achieved on a stand-alone
      basis.




165
 TABLE
          OF CONTENTS




**Partnership
      Provisions Concerning Property Management**




Icahn
      Enterprises GP and its affiliates may receive fees in connection with the
      acquisition, sale, financing, development, construction, marketing and
      management of new properties acquired by us. As development and other new
      properties are acquired, developed, constructed, operated, leased and financed,
      Icahn Enterprises GP or its affiliates may perform acquisition functions,
      including the review, verification and analysis of data and documentation with
      respect to potential acquisitions, and perform development and construction
      oversight and other land development services, property management and leasing
      services, either on a day-to-day basis or on an asset management basis, and
      may
      perform other services and be entitled to fees and reimbursement of expenses
      relating thereto, provided the terms of such transactions are fair and
      reasonable to us in accordance with our partnership agreement and customary
      to
      the industry. It is not possible to state precisely what role, if any, Icahn
      Enterprises GP or any of its affiliates may have in the acquisition, development
      or management of any new investments. Consequently, it is not possible to state
      the amount of the income, fees or commissions Icahn Enterprises GP or its
      affiliates might be paid in connection therewith since the amount thereof is
      dependent upon the specific circumstances of each investment, including the
      nature of the services provided, the location of the investment and the amount
      customarily paid in such locality for such services. Subject to the specific
      circumstances surrounding each transaction and the overall fairness and
      reasonableness thereof to us, the fees charged by Icahn Enterprises GP and
      its
      affiliates for the services described below generally will be within the ranges
      set forth below:





·
            *Property
                Management and Asset Management Services.*To
                the extent that we acquire any properties requiring active management
                (e.g., operating properties that are not net-leased) or asset management
                services, including on site services, we may enter into management
                or
                other arrangements with Icahn Enterprises GP or its affiliates. Generally,
                it is contemplated that under property management arrangements, the
                entity
                managing the property would receive a property management fee (generally
                3% to 6% of gross rentals for direct management, depending upon the
                location) and under asset management arrangements, the entity managing
                the
                asset would receive an asset management fee (generally .5% to 1%
                of the
                appraised value of the asset for asset management services, depending
                upon
                the location) in payment for its services and reimbursement for costs
                incurred.





·
            *Brokerage
                and Leasing Commissions.*We
                also may pay affiliates of Icahn Enterprises GP real estate brokerage
                and
                leasing commissions (which generally may range from 2% to 6% of the
                purchase price or rentals depending on location; this range may be
                somewhat higher for problem properties or lesser-valued
                properties).





·
            *Lending
                Arrangements.*Icahn
                Enterprises GP or its affiliates may lend money to, or arrange loans
                for,
                us. Fees payable to Icahn Enterprises GP or its affiliates in connection
                with such activities include mortgage brokerage fees (generally .5%
                to 3%
                of the loan amount), mortgage origination fees (generally .5% to
                1.5% of
                the loan amount) and loan servicing fees (generally .10% to .12%
                of the
                loan amount), as well as interest on any amounts loaned by Icahn
                Enterprises GP or its affiliates to
                us.





·
            *Development
                and Construction Services.*Icahn
                Enterprises GP or its affiliates may also receive fees for development
                services, generally 1% to 4% of development costs, and general contracting
                services or construction management services, generally 4% to 6%
                of
                construction costs.




No
      fees
      were paid under these provisions during fiscal 2007.




**Director
      Independence**




We
      believe that Messrs Leidesdorf, Nelson and Wasserman are “independent” as
      defined in the currently applicable listing standards of the NYSE. Messrs
      Leidesdorf, Nelson and Wasserman serve on our audit committee. We are not
      required to have a majority of independent directors or to have compensation
      and
      nominating committees consisting entirely of independent directors.




166
 TABLE
          OF CONTENTS




Icahn
      Enterprises GP’s board of directors presently consists of half independent
      directors and the audit committee consists entirely of independent
      directors.




**Item
      14. Principal Accounting Fees and
      Services.**




The
      following tables summarize Grant Thornton LLP Fees for professional services
      rendered for Icahn Enterprises and its consolidated subsidiaries:




**Summary
      of Grant Thornton LLP Fees for Professional Services
      Rendered**


**For
      the Years Ended December 31, 2007 and 2006**





**2007**
            
            **2006**Audit
                fees(1)
            
            $
            6,351,000
            
            $
            4,965,000Audit
                related fees(2)
            
            $
            168,000
            
            
            —Total
                fees
            
            $
            6,519,000
            
            $
            4,965,000




(1)
            Services
                related to audit of annual consolidated financial statements and
                internal
                controls, review of quarterly financial statements, review of reports
                filed with the SEC and other services, including services related
                to
                consents, assistance with review of offering documents and registration
                statement filed with the SEC.





(2)
            Diligence
                services related to potential
                acquisitions.




In
      accordance with Icahn Enterprises’ Amended and Restated Audit Committee Charter
      adopted on March 12, 2004, the audit committee is required to approve in advance
      any and all audit services and permitted non-audit services provided to Icahn
      Enterprises and its consolidated subsidiaries by its independent auditors
      (subject to the de minimis exception of Section 10A (i) (1) (B) of the
      Exchange Act), all as required by applicable law or listing standards. All
      of the fees in fiscal 2007 and fiscal 2006 were pre-approved by the audit
      committee. For fiscal 2007 and fiscal 2006, none of the services described
      above
      under the captions “Audit Related Fees” was covered by the de minimis
      exception.




167
 TABLE
          OF CONTENTS




**PART
      IV**




**Item
      15. Exhibits and Financial Statement
      Schedules.**




**(a)(1)
      Financial Statements:**




The
      following financial statements of Icahn Enterprises Holdings L.P. are included
      in Part II, Item 8:


**Page**
                **Number**Report
                  of Independent Registered Public Accounting Firms
              
              
              72Consolidated
                  Balance Sheets—December 31, 2007 and 2006
              
              
              73Consolidated
                  Statements of Operations—Years Ended December 31, 2007, 2006 and
                  2005
              
              
              74Consolidated
                  Statements of Changes in Partners’ Equity and Comprehensive Income
                  (Loss)—Years Ended December 31, 2007, 2006 and 2005
              
              
              75Consolidated
                  Statements of Cash Flows—Years Ended December 31, 2007, 2006 and
                  2005
              
              
              76Notes
                  to Consolidated Financial Statements
              
              
              79




**(a)(2)
      Financial Statement Schedules:**




All
      other
      financial statement schedules have been omitted because the required financial
      information is not applicable or the information is shown in the financial
      statements or notes thereto.




**(a)(3)
      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.




168
 TABLE
          OF CONTENTS




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) 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 Holdings L.P.**By:
            Icahn
                Enterprises G.P. Inc., itsGeneral
                Partner




By:
            /s/
                Keith A. MeisterKeith
                A. Meister,
              Principal
                Executive Officer and
              Vice
                Chairman of the Board




Date:
      March 31, 2008




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons in the capacities indicated with respect
      to Icahn Enterprises G.P., Inc., the general partner of Icahn Enterprises
      Holdings L.P., and on behalf of the registrant and on the dates indicated
      below by the following persons in the capacities and on the dates
      indicated.





**Signature**
            
            **Title**
            
            **Date**/s/
                Keith A. Meister
              Keith
                A. Meister
            
            Principal
                Executive Officer andVice
                Chairman of the Board(Principal
                Executive Officer)
            
            March
                31, 2008/s/
                Andrew R. Skobe
              
              Andrew
                R. Skobe
            
            Chief
                Financial Officer (Principal Financial Officer) and Chief Accounting
                Officer (Principal Accounting Officer)
            
            March
                31, 2008Jack
                G. Wasserman
            
            Director
            
            March
                31, 2008/s/
                William A. Leidesdorf
              
              William
                A. Leidesdorf
            
            Director
            
            March
                31, 2008/s/
                James L. Nelson
              
              James
                L. Nelson
            
            Director
            
            March
                31, 2008/s/
                Vincent J. Intrieri
              
              Vincent
                J. Intrieri
            
            Director
            
            March
                31, 2008/s/
                Carl C. Icahn
              
              Carl
                C. Icahn
            
            Chairman
                of the Board
            
            March
                31, 2008




169
 TABLE
          OF CONTENTS




**EXHIBIT
      INDEX**





3.1
            
            Certificate
                of Limited Partnership of Icahn Enterprises L.P., f/k/a American
                Real
                Estate Partners, L.P. (“Icahn Enterprises”) dated February 17, 1987, as
                thereafter amended from time to time (incorporated by reference to
                Exhibit
                3.1 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                September 20, 2007).3.2
            
            Amended
                and Restated Agreement of Limited Partnership of Icahn Enterprises,
                dated
                May 12, 1987 (incorporated by reference to Exhibit 3.2 to Icahn
                Enterprises’ Form 10-Q for the quarter ended March 31, 2004 (SEC File No.
                1-9516), filed on May 10, 2004).3.3
            
            Amendment
                No. 6 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises, dated December 17, 2007 (incorporated by reference
                to
                Exhibit 99.1 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on December 21, 2007).3.4
            
            Amendment
                No. 5 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises, dated September 17, 2007 (incorporated by reference
                to
                Exhibit 99.1 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on December 21, 2007).3.5
            
            Amendment
                No. 4 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises, dated June 29, 2005 (incorporated by reference
                to
                Exhibit 3.1 to Icahn Enterprises’ Form 10-Q for the quarter ended March
                31, 2005 (SEC File No. 1-9516), filed on June 30,
                2005).3.6
            
            Amendment
                No. 3 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises, dated May 9, 2002 (incorporated by reference to
                Exhibit
                3.8 to Icahn Enterprises’ Form 10-K for the year ended December 31, 2002
                (SEC File No. 1-9516), filed on March 31, 2003).3.7
            
            Amendment
                No. 2 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises, dated August 16, 1996 (incorporated by reference
                to
                Exhibit 10.1 to Icahn Enterprises’ Form 8-K SEC FileNo. 1-9516), filed on
                August 16, 1996).3.8
            
            Amendment
                No. 1 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises, dated February 22, 1995 (incorporated by reference
                to
                Exhibit 3.3 to Icahn Enterprises’ Form 10-K for the year ended December
                31, 1994 (SEC File No. 1-9516), filed on March 31,
                1995).3.9
            
            Certificate
                of Limited Partnership of Icahn Enterprises Holdings L.P., f/k/a
                American
                Real Estate Holdings Limited Partnership (“Icahn Enterprises Holdings”),
                dated February 17, 1987, as amended pursuant to First Amendment thereto,
                dated March 10, 1987 (incorporated by reference to Exhibit 3.5 to
                Icahn
                Enterprises’ Form 10-Q for the quarter ended March 31, 2004 (SEC File No.
                1-9516), filed on May 10, 2004, as further amended pursuant to the
                Certificate of Amendment thereto, dated September 17, 2007, filed
                herewith.3.10
            
            Amended
                and Restated Agreement of Limited Partnership of Icahn Enterprises
                Holdings , dated as of July 1, 1987 (incorporated by reference to
                Exhibit
                3.5 to Icahn Enterprises’ Form 10-Q for the quarter ended March 31, 2004
                (SEC File No. 1-9516), filed on May 10, 2004).3.11
            
            Amendment
                No. 4 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises Holdings, dated September 17, 2007.3.12
            
            Amendment
                No. 3 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises Holdings, dated June 29, 2005 (incorporated by
                reference
                to Exhibit 3.2 to Icahn Enterprises’ Form 10-Q for the quarter ended March
                31, 2005 (SEC File No. 1-9516), filed on June 30,
                2005).3.13
            
            Amendment
                No. 2 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises Holdings, dated June 14, 2002 (incorporated by
                reference
                to Exhibit 3.9 to Icahn Enterprises’ Form 10-K for the year ended December
                31, 2002 (SEC File No. 1-9516), filed on March 31,
                2003).3.14
            
            Amendment
                No. 1 to the Amended and Restated Agreement of Limited Partnership
                of
                Icahn Enterprises Holdings, dated August 16, 1996 (incorporated by
                reference to Exhibit 10.2 to Icahn Enterprises’ Form 8-K (SEC FileNo.
                1-9516), filed on August 16, 1996).




TABLE
          OF CONTENTS





4.1
            
            Depositary
                Agreement among Icahn Enterprises, Icahn Enterprises G.P. Inc., f/k/a
                American Property Investors, Inc. (“Icahn Enterprises GP”) and Registrar
                and Transfer Company, dated as of July 1, 1987 (incorporated by reference
                to Exhibit 4.1 to Icahn Enterprises’ Form 10-Q for the quarter ended March
                31, 2004 (SEC File No. 1-9516), filed on May 10, 2004).4.2
            
            Amendment
                No. 1 to the Depositary Agreement dated as of February 22, 1995
                (incorporated by reference to Exhibit 4.2 to Icahn Enterprises’ Form 10-K
                for the year ended December 31, 1994 (SEC File No. 1-9516), filed
                on March
                31, 1995).4.3
            
            Form
                of Transfer Application (incorporated by reference to Exhibit 4.4
                to Icahn
                Enterprises’ Form 10-K for the year ended December 31, 2004 (SEC File No.
                1-9516), filed on March 16, 2005).4.4
            
            Specimen
                Depositary Receipt (incorporated by reference to Exhibit 4.3 to Icahn
                Enterprises’ Form 10-K for the year ended December 31, 2004 (SEC File No.
                1-9516), filed on March 16, 2005).4.5
            
            Specimen
                Certificate representing preferred units (incorporated by reference
                to
                Exhibit 4.9 to Icahn Enterprises’ Form S-3 (SEC File No. 33-54767), filed
                on February 22, 1995).4.6
            
            Registration
                Rights Agreement between AREP and X LP (now known as High Coast Limited
                Partnership) (incorporated by reference to Exhibit 10.2 to Icahn
                Enterprises’ Form 10-K for the year ended December 31, 2004 (SEC File No.
                1-9516), filed on March 16, 2005).4.7
            
            Registration
                Rights Agreement, dated June 30, 2005 between AREP and Highcrest
                Investors
                Corp., Amos Corp., Cyprus, LLC and Gascon Partners (incorporated
                by
                reference to Exhibit 10.6 to Icahn Enterprises’ Form 10-Q (SEC File No.
                1-9516), filed on August 9, 2005), as amended.by Amendment No. 1
                thereto,
                dated as of August 8, 2007 (incorporated by reference to Exhibit
                10.5 to
                Icahn Enterprises’ Form 10-Q for the quarter ended June 30, 2007. (SEC
                File No. 1-9516), filed on August 9, 2007).10.1
            
            Amended
                and Restated Agency Agreement (incorporated by reference to Exhibit
                10.12
                to Icahn Enterprises’ Form 10-K for the year ended December 31, 1994 (SEC
                File No. 1-9516), filed on March 31, 1995).10.2
            
            Purchase
                Agreement, dated January 21, 2005, by and among Icahn Enterprises,
                as
                Purchaser, and Cyprus, LLC as Seller (incorporated by reference to
                Exhibit
                99.4 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516) filed on January
                27, 2005).10.3
            
            Amendment
                No. 1, dated as of May 23, 2005, to the Purchase Agreement, dated
                January
                21, 2005, by and among Icahn Enterprises, as Purchaser, and Cyprus,
                LLC as
                seller (incorporated by reference to Exhibit 99.1 to Icahn Enterprises’
                Form 8-K (SEC File No. 1-9516) filed on May 27, 2005).10.4
            
            Indenture,
                dated as of February 7, 2005, among Icahn Enterprises, Icahn Enterprises
                Finance Corp., f/k/a American Real Estate Finance Corp. (“Icahn
                Enterprises Finance”) and Icahn Enterprises Holdings, as Guarantor, and
                Wilmington Trust Company, as Trustee (incorporated by reference to
                Exhibit
                4.9 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                February 10, 2005).10.5
            
            Form
                of Icahn Enterprises and Icahn Enterprises Finance 7 1/8% Senior
                Note due
                2013 (incorporated by reference to Exhibit 4.10 to Icahn Enterprises’ Form
                8-K (SEC File No. 1-9516), filed on February 10, 2005).10.6
            
            Indenture,
                dated as of May 12, 2004, among Icahn Enterprises, Icahn Enterprises
                Finance, Icahn Enterprises Holdings, as guarantor and Wilmington
                Trust
                Company, as Trustee (incorporated by reference to Exhibit 4.1 to
                Icahn
                Enterprises’ Form S-4 (SEC File No. 333-118021), filed on August 6,
                2004).10.7
            
            Form
                of 8 1/8% Senior Note due 2012 (incorporated by reference to Exhibit
                4.1
                to Icahn Enterprises’ Form S-4 (SEC File No. 333-118021), filed on August
                6, 2004).10.8
            
            Credit
                Agreement, dated as of December 20, 2005, with Citicorp USA, Inc.,
                as
                Administrative Agent, Bear Stearns Corporate Lending Inc., as Syndication
                Agent, and other lender parties thereto. (incorporated by reference
                to
                Exhibit 10.1 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on December 22, 2005).




TABLE
          OF CONTENTS




10.9
            
            Security
                Agreement, dated as of December 20, 2005, from the Guarantors referred
                to
                therein to Citicorp USA, Inc., as Administrative Agent (incorporated
                by
                reference to Exhibit 10.2 to Icahn Enterprises’ Form 8-K (SEC File No.
                1-9516), filed on December 22, 2005).10.10
            
            Guaranty,
                dated as of December 20, 2005, from the guarantors named therein
                and the
                Additional Guarantors referred to therein in favor of the Guaranteed
                Parties referred to therein (incorporated by reference to Exhibit
                10.3 to
                Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on December 22,
                2005).10.11
            
            Equity
                Commitment Agreement, dated June 23, 2005, by and among WS Textile
                Co.,
                Inc., Textile Holding, Icahn Enterprises Holdings and Aretex LLC
                (incorporated by reference to Exhibit 10.2 to Icahn Enterprises’ Form 8-K
                (SEC File No. 1-9516), filed on July 1, 2005).10.12
            
            Rights
                Offering Sponsor Agreement, dated June 23, 2005, by and between WS Textile
                Co., Inc. and Icahn Enterprises Holdings (incorporated by reference
                to
                Exhibit 10.3 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on July 1, 2005).10.13
            
            Option
                Grant Agreement, dated June 29, 2005, between Icahn Enterprises and
                Keith
                A. Meister (incorporated by reference to Exhibit 10.1 to Icahn
                Enterprises’ Form 8-K (SEC File No. 1-9516), filed on July 6,
                2005).10.14
            
            Agreement
                and Plan of Merger dated December 7, 2005, by and among American
                Real
                Estate Partners Oil & Gas LLC, National Energy Group, Inc., NEG IPOCO,
                Inc. (now known as NEG, Inc.), and, solely for purposes of Sections
                3.2,
                3.3 and 4.16 of the Agreement, Icahn Enterprises Holdings (incorporated
                by
                reference to Exhibit 10.1 to Icahn Enterprises’ Form 8-K (SEC File No.
                001-09516), filed on December 7, 2005).10.15
            
            Undertaking,
                dated November 20, 1998, by Starfire Holding Corporation, for the
                benefit
                of Icahn Enterprises and its subsidiaries (incorporated by reference
                to
                Exhibit 10.42 to Icahn Enterprises’ Form 10-K for the year ended December
                31, 2005 (SEC File No. 1-9516), filed on March 16,
                2006).10.16
            
            Loan
                and Security Agreement, dated as of June 16, 2006, among WestPoint
                Home,
                Inc., as the Borrower, the Lenders from time to time party thereto,
                and
                Bank of America, N.A., as the Administrative Agent (incorporated
                by
                reference to Exhibit 10.1 to Icahn Enterprises’ Form 8-K (SEC File No.
                1-9156), filed on June 22, 2006).10.17
            
            Credit
                Agreement, dated as of August 21, 2006, among Icahn Enterprises and
                Icahn
                Enterprises Finance as the Borrowers, certain subsidiaries of the
                Borrowers from time to time party thereto, as Guarantors, the several
                lenders from time to time party thereto, and Bear Stearns Corporate
                Lending Inc., as Administrative Agent (incorporated by reference
                to
                Exhibit 10.1 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on August 25, 2006).10.18
            
            Pledge
                and Security Agreement, dated as of August 21, 2006, among AREP Home
                Fashion Holdings LLC, American Casino & Entertainment LLC, AREP New
                Jersey Land Holdings LLC, AREP Oil & Gas Holdings LLC and AREP Real
                Estate Holdings LLC, collectively as the AREH Subsidiary Guarantors,
                and
                Bear Stearns Corporate Lending Inc., as Collateral Agent (incorporated
                by
                reference to Exhibit 10.2 to Icahn Enterprises’ Form 8-K (SEC File No.
                1-9516), filed on August 25, 2006).10.19
            
            Exclusivity
                Agreement and Letter of Intent, dated September 7, 2006, by and among
                Icahn Enterprises, Icahn Enterprises Holdings and Riata Energy, Inc.
                (incorporated by reference to Exhibit 10.1 to Icahn Enterprises’ Form 8-K
                (SEC File No. 1-9516), filed on September 8, 2006).10.20
            
            Acquisition
                Agreement, dated September 3, 2006, by and among Pinnacle Entertainment,
                Inc., Atlantic Coast Entertainment Holdings, Inc., ACE Gaming LLC,
                American Real Estate Holdings Limited Partnership, AREP Boardwalk
                Properties LLC, PSW Properties LLC, AREH MLK LLC and Mitre Associates
                LLC
                (incorporated by reference to Icahn Enterprises’ Exhibit 10.1 to Form 8-K
                (SEC File No. 1-9516), filed on September 8,
                2006).




TABLE
          OF CONTENTS




10.21
            
            Stockholders
                Agreement, dated as of September 3, 2006, among Pinnacle Entertainment,
                Inc., Icahn Enterprises Holdings and AREP Sands Holding, LLC (incorporated
                by reference to Exhibit 10.2 to Icahn Enterprises’ Form 8-K (SEC File No.
                1-9516), filed on September 8, 2006).10.22
            
            Agreement,
                dated as of October 25, 2006 by and among National Energy Group,
                Inc., NEG
                Oil & Gas LLC, NEG, Inc. and Icahn Enterprises Holdings (incorporated
                by reference to Exhibit 10.1 to Icahn Enterprises’ Form 8-K (SEC File No.
                1-9516), filed on October 31, 2006).10.23
            
            Purchase
                and Sale Agreement, dated November 21, 2006, by and among Icahn
                Enterprises, Icahn Enterprises Holdings, AREP Oil & Gas Holdings LLC,
                AREP O & G Holdings LLC, NEG Oil & Gas LLC and SandRidge Holdings,
                Inc. and solely for purposes of Article V, Article XII, Section 9.5
                and
                Section 10.2, Riata Energy, Inc. (incorporated by reference to Exhibit
                10.1 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                November 28, 2006).10.24
            
            Shareholders
                Agreement, dated November 21, 2006, among Riata Energy, Inc. and
                Certain
                Shareholders of Riata Energy, Inc. (incorporated by reference to
                Exhibit
                10.2 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                November 28, 2006).10.25
            
            Interest
                Transfer Agreement, dated as of November 24, 2006, among Highcrest
                Investors Corp., Meadow Star Partner LLC, AREP O&G Holdings LLC and
                AREH Oil & Gas Corp. (incorporated by reference to Exhibit 10.1 to
                Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on November 30,
                2006).10.26
            
            Agreement
                of Limited Partnership of Rome Acquisition Limited Partnership, effective
                as of November 15, 2006, among WH Rome Partners LLC and Meadow Star
                LLC
                (incorporated by reference to Exhibit 10.2 to Icahn Enterprises’ Form 8-K
                (SEC File No. 1-9516), filed on November 30, 2006).10.27
            
            Subscription
                and Standby Commitment Agreement, dated as of December 7, 2006, by
                and
                among WestPoint International, Inc. and Icahn Enterprises Holdings
                (incorporated by reference to Exhibit 10.1 to Icahn Enterprises’ Form 8-K
                (SEC File No. 1-9516), filed on December 8, 2006).10.28
            
            Employment
                Agreement, dated December 1, 2006, between Icahn Enterprises Holdings
                and
                Peter Shea (incorporated by reference to Icahn Enterprises’ Exhibit 10.1
                to Form 8-K (SEC File No. 1-9516), filed on December 28,
                2006).10.29
            
            Registration
                Rights Agreement, dated January 17, 2007, among Icahn Enterprises,
                Icahn
                Enterprises Finance, Icahn Enterprises Holdings as Guarantor, and
                Jefferies & Company, Inc., as the Initial Purchaser (incorporated by
                reference to Exhibit 4.3 to Icahn Enterprises’ Form 8-K. (SEC File No.
                1-9516), filed on January 19, 2007).10.30
            
            Securities
                Purchase Agreement, dated April 4, 2007, by and among Icahn Enterprises
                and the Initial Buyers (incorporated by reference to Exhibit 10.41
                to
                Icahn Enterprises’ Form 8-K. (SEC File No. 1-9516), filed on April 5,
                2007).10.31
            
            Registration
                Rights Agreement, dated April 4, 2007, by and among Icahn Enterprises
                and
                the Initial Buyers (incorporated by reference to Exhibit 10.42 to
                Icahn
                Enterprises’ Form 8-K. (SEC File No. 1-9516), filed on April 5,
                2007).10.32
            
            Form
                of Indenture, dated April 5, 2007, by and among Icahn Enterprises,
                Icahn
                Enterprises Finance, Icahn Enterprises Holdings and Wilmington Trust
                Company, as Trustee (incorporated by reference to Exhibit 10.43 to
                Icahn
                Enterprises’ Form 8-K. (SEC File No. 1-9516), filed on April 5,
                2007).10.33
            
            Form
                of Variable Rate Senior Convertible Notes due 2013 (incorporated
                by
                reference to Exhibit 10.44 to Icahn Enterprises’ Form 8-K. (SEC File No.
                1-9516), filed on April 17, 2007).10.34
            
            Membership
                Interest Purchase Agreement, dated April 22, 2007, by and between
                W2007/ACEP Holdings, LLC and American Entertainment Properties Corp.
                (incorporated by reference to Exhibit 10.45 to Icahn Enterprises’ Form
                8-K. (SEC File No. 1-9516), filed on April 24, 2007), as amended
                by the
                Second Amendment thereto, dated February 8, 2008 (incorporated by
                reference to Exhibit 10.46 to Icahn Enterprises’ Form 8-K. (SEC File No.
                1-9516), filed on Febuary 11,
                2008).




TABLE
          OF CONTENTS




10.35
            
            Contribution
                and Exchange Agreement by and among Icahn Enterprises, CCI Offshore
                Corp.,
                CCI Onshore Corp., Icahn Management LP and Carl C. Icahn (incorporated
                by
                reference to Exhibit 10.1 to Icahn Enterprises’ Form 10-Q for the quarter
                ended June 30, 2007. (SEC File No. 1-9516), filed on August 9,
                2007).10.36
            
            Employment
                Agreement by and among Icahn Enterprises, Icahn Capital Management
                LP and
                Carl C. Icahn (incorporated by reference to Exhibit 10.2 to Icahn
                Enterprises’ Form 10-Q for the quarter ended June 30, 2007. (SEC File No.
                1-9516), filed on August 9, 2007).10.37
            
            Non-Competition
                Agreement by and between Icahn Enterprises and Carl C. Icahn (incorporated
                by reference to Exhibit 10.3 to Icahn Enterprises’ Form 10-Q for the
                quarter ended June 30, 2007. (SEC File No. 1-9516), filed on August
                9,
                2007).10.38
            
            Covered
                Affiliate and Shared Expenses Agreement by and among Icahn Enterprises,
                Icahn Partners LP, Icahn Fund Ltd., Icahn Fund II Ltd., Icahn Fund
                III
                Ltd., Icahn Partners Master Fund L.P., Icahn Partners Master Fund
                II L.P.,
                Icahn Partners Master Fund III L.P., Icahn Cayman Partners, L.P.
                and Icahn
                Partners Master Fund II Feeder LP (incorporated by reference to Exhibit
                10.4 to Icahn Enterprises’ Form 10-Q for the quarter ended June 30, 2007.
                (SEC File No. 1-9516), filed on August 9, 2007).10.39
            
            Stock
                Purchase Agreement, dated as of November 5, 2007, by and among Cloud
                Holding LLC, Icahn Enterprises Holdings, Arnos Corp, Philip Services
                Corporation and PSC Metals Inc. (incorporated by reference to Exhibit
                10.1
                to Icahn Enterprises’ Form 10-Q for the quarter ended September 30, 2007.
                (SEC File No. 1-9516), filed on November 9, 2007).10.40
            
            Carl
                C. Icahn Amendment Agreement (incorporated by reference to Exhibit
                10.1 to
                Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on January 7,
                2008).10.41
            
            Amended
                Keith A. Meister Employment Agreement (incorporated by reference
                to
                Exhibit 10.2 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).10.42
            
            June
                1, 2005 Keith A. Meister Amendment (incorporated by reference to
                Exhibit
                10.3 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                January 7, 2008).10.43
            
            January
                1, 2006 Keith A. Meister Amendment (incorporated by reference to
                Exhibit
                10.4 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                January 7, 2008).10.44
            
            March
                14, 2006 Keith A. Meister Amendment (incorporated by reference to
                Exhibit
                10.5 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                January 7, 2008).10.45
            
            April
                11, 2006 Keith A. Meister Amendment (incorporated by reference to
                Exhibit
                10.6 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                January 7, 2008).10.46
            
            February
                1, 2007 Keith A. Meister Amendment (incorporated by reference to
                Exhibit
                10.7 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                January 7, 2008).10.47
            
            April
                19, 2007 Keith A. Meister Amendment (incorporated by reference to
                Exhibit
                10.8 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                January 7, 2008).10.48
            
            First
                August 8, 2007 Keith A. Meister Amendment (incorporated by reference
                to
                Exhibit 10.9 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).10.49
            
            Second
                August 8, 2007 Keith A. Meister Amendment (incorporated by reference
                to
                Exhibit 10.10 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).10.50
            
            Keith
                A. Meister Amendment Agreement (incorporated by reference to Exhibit
                10.11
                to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on January 7,
                2008).10.51
            
            Amended
                Vincent J. Intrieri Employment Agreement (incorporated by reference
                to
                Exhibit 10.12 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).10.52
            
            February
                1, 2007 Vincent J. Intrieri Amendment (incorporated by reference
                to
                Exhibit 10.13 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).10.53
            
            April
                19, 2007 Vincent J. Intrieri Amendment (incorporated by reference
                to
                Exhibit 10.14 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).




TABLE
          OF CONTENTS





10.54
            
            First
                August 8, 2007 Vincent J. Intrieri Amendment (incorporated by reference
                to
                Exhibit 10.15 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).10.55
            
            Second
                August 8, 2007 Vincent J. Intrieri Amendment (incorporated by reference
                to
                Exhibit 10.16 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed
                on January 7, 2008).10.56
            
            Vincent
                J. Intrieri Amendment Agreement (incorporated by reference to Exhibit
                10.17 to Icahn Enterprises’ Form 8-K (SEC File No. 1-9516), filed on
                January 7, 2008).12.1
            
            Ratio
                of earnings to fixed charges.14.1
            
            Code
                of Business Conduct and Ethics (incorporated by reference to Exhibit
                99.2
                to AREP’s Form 10-Q for the quarter ended September 30, 2004 (SEC File No.
                1-9516), filed on November 9, 2004).18.1
            
            Preferability
                letter received from Grant Thornton LLP, dated November 7, 2007
                (incorporated by reference to Exhibit 18.1 to Icahn Enterprises’ Form 10-Q
                for the quarter ended September 30, 2007. (SEC File No. 1-9516),
                filed on
                November 9, 2007).21
            
            Subsidiaries
                of the Registrant.31.1
            
            Certification
                of Principal Executive Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of Principal Financial Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Principal Executive Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.32.2
            
            Certification
                of Principal Financial Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.